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Attachment A 
Page 1 of 2
Travel Restrictions
Background
During the fourth quarter of 1967 the U.S. balance of payments deteriorated rapidly, causing an accelerated drain on the gold supply. The Administration decided to take a number of rather severe steps to achieve a $2 billion annual reduction in the outward flow of dollars and thus ease the pressure on gold. 
Among the drastic measures taken or goals proposed was a $500 million reduction in the travel deficit for each of the next two years. The Western Hemisphere was excluded form proposed restraint on travel expenditures abroad, as were certain categories of travelers. 
Discussion
The announcement of this program was made by President Johnson on January 1, 1968, but he did not make specific proposals on how travel was to be reduced. However, various suggestions had been studied by the Treasury Department and by the staff of the House Ways and Means Committee. They break down into two types of restrictive measures - one a tax on outbound passengers of sufficient size to discourage travel and a limit on expenditures. The Treasury's conclusions on this will presumably be put forward formally on February 5. 
Our industry should not permit itself to be singled out for import restriction. U. S. resident travel abroad results in imports just like any other imports. In the absence of a broad-scale governmental policy of import restriction, a restriction on travel cannot be justified. Obviously travel is only one of many factors in the total balance of payments picture. Among others, important ones are U. S. investments abroad, overseas military expenditures, foreign aid, and imports and exports. It has been claimed that the U. S. "travel deficit" is $2 billion. On the other hand, the "travel gap" has been labeled as a "questionable statistical invention." It can be argued that the deficit in travel helps make possible the favorable U.S. balance of trade (travel dollars spent abroad finance exports). Specifically, travel restrictions may have an adverse impact on sales of U.S. commercial aircraft - the largest single item in our favorable balance of trade.