Budgetary Chaos

April 17, 1961

The budget message that President Kennedy sent to Congress on March 25 was a baffling document. Here is both sample and summary: “This, then, is the revised budget—apart from defense additions—that I now present to the Congress: A budget that is in balance in terms of my pledge of Jan. 30. A budget that is likely to be in deficit unless economic conditions rapidly improve to meet the levels predicted in the Jan. 16 budget. A budget that would be in surplus if the economy were operating at or near its full potential.” How does one get a budget that is at the same time in balance, likely to be in deficit, and would be in surplus?

Mr. Kennedy’s pledge of Jan. 30 was that he would submit a program of expenditures that “will not of and by themselves unbalance the earlier [Eisenhower] budget.” He felt safe in making this pledge, it now becomes clear, because he expected a deficit even without new spending.

Mr. Eisenhower forecast a thin surplus of $79 million at the end of this fiscal year and a substantial one of $1.5 billion at the end of fiscal 1962. Whether or not he overestimated revenues and underestimated expenditures even on the basis of his own proposals, as Mr. Kennedy charges, Mr. Kennedy’s own proposals obviously add billions to the expenditure side of the budget. Hence his estimate that instead of a thin surplus there will be a $2.2 billion deficit in the current fiscal year, and instead of $1.5 billion a deficit of $2.8 billion in fiscal 1962. The expenditure estimate for fiscal 1962 is raised from Mr. Eisenhower’s $81.5 billion to $84.3 billion. The increase in requests for new obligational authority is even more striking. Mr. Eisenhower recommended $80.9 billion; Mr. Kennedy $86 billion.

COST OF NON-DEFENSE

“The point I wish to stress,” says Mr. Kennedy, “is that any budgetary unbalance at the close of fiscal 1962 will not be the result of any nondefense programs I have submitted.” This implies that it is defense spending that will cause a budgetary unbalance. Yet Mr. Kennedy’s defense spending proposals for 1962 are only $890 million higher than his predecessor’s; his non-defense spending proposals are $2.6 billion higher—almost equal to the total expected deficit.

Mr. Kennedy seems anxious to prove that whatever deficit occurs in 1962 will not be his fault. But in view of his own contention that a deficit in any one year isn’t important anyway—that the only thing that counts is that the budget be “in balance over the years of the business cycle”—this anxiety is hard to understand.

IRRESPONSIBLE SYSTEM

But the present budgetary chaos is not wholly the fault of Mr. Kennedy. It is even more the fault of our lack of any responsible budget system. “It is a legal absurdity [I quote my own Newsweek column for Jan. 26, 1953, on the Truman budget for fiscal 1954] that an outgoing President should be required to frame and present a budget for a year in which he will not be in office and for which he cannot and should not assume any responsibility.” The result is mainly to obscure the fiscal responsibility of a new President for his first year and a half in office. This absurdity is imposed by the Budget and Accounting Act of 1921. That act should be drastically amended, now. Each President should be made unmistakably responsible for his full period in office.

This is a minimum reform, but it is far from enough. There can be no executive responsibility for the budget until the President, like the governors of 43 states, has the power to veto individual items in appropriation bills. Even this would not be enough to give us a truly responsible budget. In New York, the governor’s annual budget must not only give estimated expenditures and revenues for the next fiscal year, but must be accompanied by bills containing all the proposed appropriations and any proposed new taxes. The legislature (I quote the state constitution) “may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein.” Here is a guide for the Federal system. Congress will not be a resolute watchman of the public purse as long as it is permitted to put its own hands into the purse.