Cut to $60 Billion Now

February 18, 1957

Sen. Margaret Chase Smith has called the Federal budget for 1958 “fantastic.” To appreciate just how fantastic it is, we may begin by comparing once more its proposed record-breaking peacetime “visible” spending of $71.8 billion with the $4.1 billion annual average in the Hoover Administration, the $7.4 billion annual average in the first Roosevelt Administration, the $55.8 billion annual average in the second Truman Administration, and the $66.6 billion annual average in the first Eisenhower Administration.

But this is just a beginning. As Raymond Moley pointed out in Newsweek of Feb. 4, the government is spending huge sums which do not appear in the regular budget. In 1958, for example, it will be paying out $14.4 billion from various trust funds, compared with $9.4 billion in 1956 and only $5.3 billion four years ago. And there are other “hidden” expenditures of billions.

NONDEFENSE SPENDING

One favorite excuse for all this is that defense costs money. Let’s disregard defense expenditures for the last ten years entirely, therefore, and compare nondefense expenditures alone (in billions).

The President proposes nondefense spending for the fiscal year 1958 of $28.5 billion. This is $7.6 billion, or 36 percent, more than in 1954. It is, in short, the biggest paternalistic “welfare” spending in any country in the history of the world.

Administration officials have an uneasy conscience about all this. So at the same time as they recommend this immensely overgrown spending program they also recommend that it should be cut. But even under pressure from Congressional committees they decline to name any specific place where a cut can be made. Until they are ready not merely to generalize but to specify, their commendation of economy must be set down as merely lip service.

There will be no real economy until the government is ready to slash drastically or to halt entirely whole categories of spending. And it is not hard to point out what some of these categories are. We may begin with expenditures that the Federal government should avoid on principle—e.g., the proposal of Federal aid for local school construction. (The economic fallacies and political dangers of this program were discussed in this column of Dec. 26, 1955.)

WHERE TO CUT

Next we come to expenditures which, even if we admit that there is a case for the Federal government getting into them at all, are completely contraindicated in the midst of an inflationary boom like the present one. They can only increase inflationary pressures. These would include Federal aid for the grandiose interstate highway system, and mounting subsidies and other artificial stimulants for “low-cost” housing.

Next, we come to the proposal to spend a total of $4.4 billion on foreign aid in 1958. Probably three-quarters of this amount could with advantage be stopped at once. Most of the net proposed expenditures of nearly $5 billion for agricultural subsidies (mainly for supporting food prices above the market or rewarding farmers for not producing) represents huge and inexcusable waste. Veterans’ benefits for 1958 are scheduled at more than $5 billion—$570 million higher even than in 1955.

Clearly it is not a problem of knowing where cuts in the budget can be made, but of daring to say. It has been customary for years to treat our mounting military budget as sacrosanct; yet Congressional investigations, and the Hoover report, have exposed profligate waste.

When Mr. Eisenhower announced his $72 billion budget for 1958, a few newspapers wistfully recalled his 1952 campaign promise to reduce spending to $60 billion a year by 1955. But this $60 billion goal, far from having become chimerical, could be achieved in the new fiscal year, to the great economic benefit of the nation. All that is needed is the political courage and will to achieve it.