gains, provides an excellent opportunity for action. Many of the recommendations offered here would be harder to accomplish in a slack economy with high unemployment.

This is not a report on economic policy as such; however, there is no escaping the fact that viable social policies must be built on a solid foundation of prudent economic management. This means facing up to some unpleasant but necessary realities: The Federal deficit should be reduced through steps that achieve real long-term savings rather than one-time or illusory savings. Policy makers must be willing to make politically difficult changes in our entitlement programs, our discretionary non-defense programs, and our non-critical national defense outlays. Citizens must stand ready to provide the revenue necessary to finance national commitments.

We are spending about $150 billion a year just on the interest on the Federal debt. This enormous cost of servicing our government's debt robs money that might be used for our vital social welfare needs. The mounting debt foists costs that we should be paying ourselves onto our children and grandchildren, and will hamper their capacity to meet their own needs down the road.

A more responsible fiscal policy will permit a more expansionary monetary policy, and this combination should help create jobs. Reducing the Federal debt will take some pressure off our meager private savings. But we will still need to arrest the decline in savings and to increase our investments. This means that consumption will have to grow more slowly.

Productivity growth will be facilitated by an increase in saving and investment. We also need to enhance productivity through flexible compensation, incentive pay, and profit-sharing arrangements, along with reforms in obsolete work rules. Measures that allow workers to change jobs without losing pension and health benefits would also foster the kind of flexibility and mobility that we need if our labor force is to become more competitive.