But Is It Balanced?

February 6, 1956

President Eisenhower has abandoned a philosophy of economy to embrace a philosophy of spending.

The evidence of this reversal lies in his budget message for fiscal 1957—in the overall spending estimates, the detailed spending programs, and in pronouncements in the message itself. In the fiscal year 1953 the government spent $74.3 billion. In fiscal 1954 it spent $67.8 billion; and in fiscal 1955, $64.5. The budget which the President submitted a year ago, for the current fiscal year to end on June 30, estimated spending at $62.4 billion. Now the trend has been reversed. Mr. Eisenhower estimates that in the current fiscal year the government will actually spend $64.3 billion, an increase of nearly $2 billion above his estimate a year ago. In the new fiscal year, to begin on July 1, expenditures are estimated at $65.9 billion.

Less than $1 billion of this increase for fiscal 1957 can be blamed on the increase in military expenditures. Practically every other major category of spending is higher—foreign aid, veterans’ benefits, labor and welfare, farm subsidies, housing subsidies, general governmental expenses. And the new spending programs suggested are too numerous to list here. In order to obtain a substantial surplus in the 1957 budget, or to permit of a substantial tax reduction, it would not have been necessary to find new economies, but merely to refrain from any new spending above that originally contemplated for fiscal 1956.

The reversal in the President’s spending philosophy is apparent in the message itself. “A significant increase in revenues is currently anticipated,” the President declares, “as the result of our present unprecedented prosperity. In the achievement of this prosperity, the historic $7.4 billion tax reduction and reform program of 1954 . . . and the confidence born of prudent fiscal and credit management have been strong energizing factors.” But later on in the message he declares: “Budget revenues now permit us to undertake some new and expanded programs for enhancing opportunities for human well-being and economic growth.” This second passage seems to justify more spending mainly on the ground that the government will have more money to spend. It assumes that the way to prosperity and well-being is not to economize and cut taxes, as assumed in the first passage, but to keep up taxes and add new spending programs. It deserts the philosophy of providing incentives for the philosophy of the handout.

The President’s estimate of a balanced budget for 1957, moreover, is not convincing. I have printed tables several times in this column to show the persistent discrepancy between estimates and realities in the budgets of the Roosevelt and Truman Administrations. Mr. Eisenhower’s record is no better. He originally estimated a deficit for fiscal 1955 of $2.9 billion; it turned out to be $4.2 billion. For fiscal 1956 he estimated that budget receipts would be $60 billion and expenditures $62.4 billion. He now estimates expenditures in fiscal 1956 at $64.3 billion, or nearly $2 billion higher; but the situation is saved because estimated receipts are miraculously $4.5 billion higher.

Now these receipts have come because 1955 turned out to be the year of the greatest prosperity and greatest national income on record. Yet instead of considering this perhaps an abnormally high income, continuance of which it might be imprudent to count on, the President actually assumes that 1956 will be an even more prosperous year than 1955, and that revenues will be $1.8 billion higher. He gets this result in part through the dubious assumption that Congress will approve a $350 million postal-rate increase at this session, although it refused to do so last year. And he makes his fiscal 1957 budget “balance,” also, by providing no funds whatever for the new Federal highway program he is recommending. If his slim and precarious surplus for the fiscal year 1957 is actually to be realized, this whole series of doubtful assumptions must turn out to be right. The country desperately needs a responsible budget system.