Schizophrenic Budget

February 2, 1959

Because the Democratic majority in Congress seems bent on reckless inflationary spending, and is criticizing only the economies and not the extravagances in the President’s budget, there is a temptation to defend that budget as it stands and to praise it as at least an effort toward a balance. But the budget cannot be defended as it stands and it is hard to believe in the “balance” it depicts.

This balance is precarious on its face. To get his estimated budget receipts up to $77.1 billion, the President had to assume an increase in tax revenues of $9 billion for the fiscal year 1960 over 1959, with practically no increase in tax rates or levies. To get his estimated expenditures down to $77 billion, he had to assume a drop of $3.9 billion compared with 1959 in spite of proposed increases in many spending programs and his own failure in the last calendar year to veto huge Congressional appropriations that he had not asked for. Most of the “decline” in 1960 expenditures, moreover, is achieved by charging the $1.4 billion proposed increased subscription to the International Monetary Fund against expenditures for the current year instead of against 1960.

PAST MISCALCULATIONS

Nor does the record of the past two years increase confidence in the accuracy of Mr. Eisenhower’s present estimates. For the fiscal year 1958 he projected a budget surplus of $1.8 billion; we emerged with a deficit of $2.8 billion. For 1959 he predicted a surplus of half a billion; we now face a deficit of $12.9 billion. Receipts of the present fiscal year will be $6.4 billion less than his estimate a year ago; expenditures will be $7 billion more.

Even if we take the new budget at face value, we must remember that it is the biggest budget Mr. Eisenhower has ever proposed. Nor can this be blamed on defense necessities. For it contains the highest nondefense expenditures ever recommended. These total $31.2 billion, compared with $28.1 billion recommended for 1959 (though increased in actuality), and with nondefense expenditures of $27.8 billion in 1958, $25 billion in 1957, and $21.2 billion in 1954. In brief, nondefense expenditures alone are $10 billion greater than in 1954.

Nor does even this tell the full truth about the overall budget. In recent years, the cost of government activities such as social security and highways has been hidden in special segregated budgets. When we put them in a “consolidated” budget, we find that Mr. Eisenhower is really planning to spend in 1960 a total of $92.9 billion.

THE ITEM VETO

And Mr. Eisenhower’s latest budget suffers from the very “schizophrenia” toward economy and spending of which he accuses its critics. On the one hand, he insists that we must “keep our financial house in order” and “examine new programs and proposals with a critical eye. Desirability alone is not a sound criterion for adding to Federal responsibilities.” We must “restrain the forces that would drive prices higher, and thereby cheapen our money and erode our personal savings. The first step is to avoid a deficit by having the government live within its means, especially during prosperous, peacetime periods.” But then he recommends continuation of and increases in so many welfare programs that there is not space to list them here. He even declares proudly that we must “carry forward current public-works programs—now larger than ever before.”

But there is one recommendation in the President’s message that can be endorsed with the sole reservation that it does not go far enough. This is that the President should be given the constitutional power not only to veto individual items in appropriations bills, but to reduce the amount of any appropriation. This power would not in itself, of course, insure a responsible budget. But we can never have a responsible budget, or anything approaching a responsible budget, until this power exists. At present the so-called executive budget is merely a speech which Congress is free to ignore. The President cannot fairly be held responsible for the budget until he has the power to carry out that responsibility. Congress is in no position to blame him for a result that he lacks the power to control.