Balance It Now

February 1, 1954

There is cause for gratification in more than one feature of President Eisenhower’s budget for the fiscal year ending June 30, 1955. Here at last is real progress toward a reduction in spending.

Estimated expenditure for the fiscal year 1955 totals $65,600,000,000. This is $5,300,000,000, less than the estimate for the current fiscal year, $12,300,000,000 less than Truman had recommended for this fiscal year, and $8,400,000,000 less than was spent in the Truman-Eisenhower fiscal year 1953.

But if we go a little farther back the comparisons are less favorable. The proposed expenditure is just about the same as that in the fiscal year 1952. It is actually $21,600,000,000 higher than in the fiscal year 1951. And in both of those fiscal years Truman was President and the Korean war was going full tilt. Considerable further reductions are possible in expenditures in the fiscal year 1955.

Mr. Eisenhower estimates a deficit in 1955 of $2,900,000,000. This is lower than the $3,300,000,000 deficit expected in the current fiscal year or the actual deficit of $9,400,000,000 for fiscal 1953. But it is still a deficit. It will be the 22nd annual deficit in the last 25 years. And there is no excuse for it, above all at a time when our national income is running at the highest levels on record.

President Eisenhower has taken over one bad habit from his Democratic predecessors. He points out that because of the payment of social-security payroll taxes, not offset by equal benefit payments, there will be a balance in the “cash” budget in the fiscal year 1955. But this “cash” balance has significance only because it does not cause immediate inflation. It is not a substitute for a balance in the regular budget. The workers are told that they are paying employment taxes to build up a reserve for their own social security. When the government spends these taxes for other purposes as they come in, and slips farther backward in its debtor position, the reserve fund becomes fictitious.

The government could cut spending even further and wipe out this prospective deficit of $2,900,000,000. It might even be able to balance the budget after allowing the scheduled corporate-tax and excise-tax reductions to go through.

Where could the reductions in spending be made? No cuts need be made in the amounts proposed for our national defense. But in the $44,900,000,000 allotted to the whole “national security” program, there is an amount of $4,275,000,000 for arms aid to other countries. This is the highest amount ever proposed for this program. The argument for this expenditure is that the recipient countries cannot afford to pay for their own defense. I have pointed out in previous articles that for most of the beneficiary countries the case for relieving their own taxpayers from their own defense burden and putting it on the American taxpayer has never been proved, or even made very plausible.

In addition, we are planning to give away to other countries in economic and technical aid $1,125,000,000 more in 1955. The case for this will simply not stand realistic economic or political analysis. The whole prospective deficit of $2,900,000,000 could be saved out of the $5,400,000,000 foreign giveaway program alone.

Moreover, a period of great inflation, and one in which a further deficit is in prospect, is surely not the time to pile on additional spending for social security, housing, education, and health programs. Whatever the merits of such expanded programs may be, they should at least be postponed until they can be carried out within a balanced budget. President Eisenhower has himself stated that the test of expenditures should be “necessity rather than mere desirability.” And as he put it so well: “The objective will be to return to the people, to spend for themselves and in their own way, the largest possible share of the money that the government has been spending for them.” This objective should be followed now. This budget, already within 5 percent of balance, can be safely balanced by a little more pruning.