Deficits without End?

February 7, 1955

Mr. Eisenhower is planning the 23rd deficit in the last 26 years. We are supposed to be pleased about this because the expected deficit is only $2.4 billion in the fiscal year 1956 compared with an expected deficit of $4.5 billion in the current year. Yet Mr. Eisenhower a year ago predicted a deficit of only $2.9 billion for the current year. If events force him to write up his present estimate even as much as he has been forced to write up last year’s, we are headed for a new deficit of $4 billion. But Mr. Eisenhower’s present estimates are far more optimistic all along the line even than his estimates a year ago. Raymond Moley discusses this phase of the budget in his own column in this issue. But the devices that have been resorted to are so extraordinary that I cannot forbear calling further attention to them: (1) In order to get his estimate of budget receipts up to $60 billion, the President must assume that employment and production will be increased. (2) In order to keep his apparent total of expenditures down to $62.4 billion, he proposes to set up special budgets (e.g., for roads and schools) outside the Federal budget. (3) The budget gives one set of figures covering the Army, Navy, and Air Force in detail. These add up to $35,750,000,000. But for the three military services as a whole he gives a total of only $34 billion. He deducts this $1,750,000,000 because the Secretary of Defense believes there are possible (but unspecifiable) savings and “slippages.” In other words, allowance is made for unforeseen economies but none for unforeseen spending increases!

There is, of course, always a possible margin of error in estimates of future expenditures and receipts. But that is precisely why conservative Treasury Secretaries of the past aimed at a safe surplus rather than an exact balance.

When Mr. Eisenhower presents a table of annual expenditures in the first part of his budget message, he carries it back only to 1952. This happens to be the last year with which spending comparisons are still in his favor. Had he carried back his comparison only one year more (as the appended table shows), he would have brought out the fact that his proposed spending for 1956 is $18.4 billion more than Mr. Truman spent in 1951. And in both fiscal 1951 and 1952 the Korean war was going full tilt. What is most disheartening about the new budget is the whole spending philosophy implied. Mr. Eisenhower’s message continues to give lip service to conservative spending principles; but his words are not supported by his program. There is, for example, the familiar device of showing as many expenditures as possible under the sacrosanct classification “national security programs.” Mr. Eisenhower thereby gets a total for such programs of $40.5 billion, or 65 percent of the entire budget. Yet this includes $3.7 billion for foreign military aid, the excuse for most of which has vanished. Yet not even plausible perfunctory reasons are presented to explain why a now-prosperous Europe still cannot pay for its own defense. In fact, total expenditures for foreign aid are estimated at $4.7 billion for the fiscal year 1956, which is actually $400 million more than we are spending in the current year.

Then $2.2 billion is to be spent for a farm-price-support program which raises food costs for city workers and makes a liberal trade program impossible; $4.6 billion is allotted for veterans’ benefits—$219 million more than in the current year; and in the offing is a grandiose $101 million ten-year road program.

Mr. Eisenhower has drifted far from the day two years ago when he declared to Congress: “The first order of business is the elimination of the annual deficit.”