It Can Be Balanced

January 10, 1955

It is increasingly sad to follow the record of the Eisenhower Administration on the budget.

Just before the Republican convention of 1952, General Eisenhower expressed the opinion that the Federal budget could be cut as much as $40 billion in the next few years. In his first State of the Union message, on Feb. 2, 1953, he said: “The first order of business is the elimination of the annual deficit.” He has since successively explained why, because of this or that unforeseen condition, he could not balance the budget for the 1953 fiscal year, or for the 1954 fiscal year, or for the present 1955 fiscal year which ends on June 30. The same dismal note was sounded once again on Dec. 6 by Treasury Secretary Humphrey, when he declared that “we cannot balance the budget” for the fiscal year 1956. This statement was followed a week later by an announcement that the President would ask Congress to cancel the $3 billion in corporate and excise tax reductions that had been scheduled for April 1.

There is, alas, nothing novel in this record. It merely continues the record of the last quarter of a century.

In Newsweek of Nov. 2, 1953, in a column called “In the Sweet By and By,” I presented in as full detail as space would permit the budget record of Franklin D. Roosevelt and Harry Truman. It was a record of constantly promising a balanced budget—but always for some day in the future, never now. “The plan is to reduce the cost of current Federal government operations by 25 percent,” said candidate Roosevelt in 1932. “We should plan to have a definitely balanced budget for the third year of recovery,” he was saying on Jan. 4, 1934, “and from that time on seek a continuing reduction of the national debt.” “We approach a balance of the national budget,” he was announcing on Jan. 3, 1936. And so it went.

Harry S. Truman, in his budget message of Jan. 12, 1948, promised not only a balanced budget but a surplus of $4.8 billion for the fiscal year 1949. There was, alas, actually a deficit of $1.8 billion. In his budget message of Jan. 10, 1949, he once more deplored deficits, and once more promised a balance. Nevertheless the deficit for the fiscal year 1950 was $3.1 billion.

To sum the whole matter up, we have had deficits in 22 out of the last 25 years. And now we are told we must have still another.

It is not true. The budget can be balanced. And it can be balanced in the next fiscal year. What stands in the way is not, as apologists declare, either military or economic necessities. It is false economic theories and lack of political courage.

There is neither space nor need to go into the subject in great detail here. In April of 1954 the Committee on Federal Tax Policy, a private group under the leadership of former Under Secretary of the Treasury Roswell Magill, made a careful study and concluded that a total of at least $8 billion could be cut from Federal budget obligations for the fiscal year 1955 without even touching defense items.

The budget is not to be cut by a horizontal slash of expenditures by 10 or 20 percent all along the line. Such proposals are hopelessly naïve when they are not plainly insincere. The chief way to cut the budget is to abandon whole categories of expenditures that are being made either because of naïve delusions (this applies to almost the whole of the $5 billion a year we are throwing away on foreign aid) or because of sheer political expediency (i.e., the farm price-support program which raises the price of food for city workers and has created appalling surpluses).

There is unfortunately still another leading factor responsible for the continuance of deficits. This is the belief, concealed or candid, that deficits are necessary to prosperity, full employment, and re-election. It is the doctrine of salvation through inflation.

So this is how the matter really stands. Anybody who sincerely believes that the budget cannot be balanced in the next fiscal year, or that the present fantastic level of expenditures cannot be cut without danger, is a victim of delusions.