THE WHITE HOUSE
WASH INGTON

November 21, 1978
To Dominick Cortese

On October 24th, I outlined to the American people the need
for concerted efforts if we are to deal effectively with the
inflation we have been experiencing for the last ten years.

That same day, I sent to you and other national leaders a
White Paper describing my proposals in detail.

As you know, I have pledged to do everything in my power to
control inflation.

I will impose ^Ustere restraint-^ on Federal spending
and reduce the nuitiber of Federal employees.

I have alrea^-limited Federal pay raises^ to 5.5
percent, and frozen "all executive salaries.

I will significantly feduced the Federal^deficit
next year, and thereafter.

—

I am confident that the Congress will cooperate
in this effort, but, if necessary, I will
inflationary legislabion.-

I will also ensure that regulatory and other
Administrative actions do not raise costs and
prices unnecessarily.

Carrying out these measures will be tough on everyone, but
the battle against inflation requires sacrifices from all of
us.

Since the Federal Government is a major purchaser of goods

and services, beginning this January, wherever possible it '
will act as a prudent buyer, directing procurement activities
to firms that abide by our wage and price standards in order
to reduce the cost of procurement.

Because state and local

governments are also important purchasers, I hope you will
also review procurement programs with an eye to minimizing
inflationary pressures.

In August, I asked national associations of state and local
governments to help us identify anti-inflation actions in

such areas as housing, food, and medical care. There is a
lot that state and local governments can do in these areas,
both with and without cooperation from the Federal Government.

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Association representatives have been working with Jack
Watson to develop an agenda of these actions. When that
agenda is complete, I will seek your advice on how best to

proceed.

In the meantime, I would appreciate your initiating

anti-inflationary steps in all areas under your control and
jurisdiction.

Specifically, I strongly urge you to:

1.

Urge your ppbl-ie-^-feL-litv commissions to enforce

the waqe^nd price stand^ds and to explore every
possibTlity of improving rate designs so they
encourage conservation and economical use of
electricity, gas, and communications services.

2.

Include in your procurement regulations wage and
price provisions similar to those we have intro

duced at the Federal level (a copy of the Federal
regulation draft is enclosed).

3. Introduce requl^OQ^-^revlews that take into account
the economic intact of all state and local regula

tory activities as well as the potential benefits

of regulations.

4. Keep wage imrefgas^s for state and local workers
within theliming enunciated in the Administra
tion's standards.

5.

Impose similar wage restraij^ts on participants
in programs assisted by state grants-in-aici.

Your leadership — in your states and communities — is

essential if we are to win the battle against inflation.

I

need your personal commitment in the joint effort, and your
help in explaining to all our citizens the need for immediate
and full cooperation with our program.

Sincerely,

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