Evening star., 1946-08-04
Text of Tumo Statement Budget Prospects for Current Year

pay increase and larger naval ap-
preparations recommended and en-
acted since January. The Secre-
taries OF War and Navy, at my re-
quest, will reduce projected expendi-
| lures for the Army and Navy by
1850 million dollars to the level
shown in the revised estimates of
this review. I believe that this
adjustment can be accomplished
without impairing the effectiveness
of our military establishment. SIM
ilarly, I have requested the chair
man of the Maritime Commission
to adjust the current program for
new ship construction SO that ex-
penditures for this purpose will not
exceed so million dollars in the fiscal
year 1947. This action will reduce
projected maritime expenditures by
so million dollars. These reduc-
tions do not directly appear in the
tabular comparison of the original
and revised estimates. These cuts
prevent a corresponding increase
that otherwise would have occurred.
| I cannot at this time estimate
what additional reductions will be
feasible under the re-examination
of the defense program which. as I
have stated above, the Secretaries
of War and Navy will undertake.
For the military activities Of the
War and Navy Departments the
balances of prior year appropria-
tions available for expenditure, to-
gether with new appropriations for
the fiscal year 1947, amount to over
22.9 billion dollars.
The expenditure program for
these activities in the fiscal year
1947 is 1872 billion dollars One
third or more of the military ex-
penditures in the fiscal year l947 will
be made from unexpended balances
of war-year appropriations. After
allowing an operating margin this
should still leave considerable
amounts of carried-over funds to
be repealed or to lapse. I believe
it quite likely that the re-examina-
ton of our defense program will
reveal the necessity for further
downward adjustments in .appro-
priations.
3. REVISED REVENUE ESTI-
MATES AND TAX POLICY.
In January. net receipts were esti-
mated at 315 billion dollars for the
fiscal year 1947. The revised esti-
mate is 1915 billion dollars as shown
in table l. The upward revision by
81 billion dollars has been made in
the expectation that the high dollar
:, volume of economic activity will
! continue, with high level of tax
able individual and corporate In
comes and large sales of taxable
commodities,
Tax Stability Assumed.
In making the revenue estimates.
it has been assumed that taxes will
,, be maintained at their present level.
It has also been assumed that the
collections under the Federal Insur-
ance Contributions Act will be con-
tinued at 2 per cent total rate
through the fiscal year.
The tax reductions and adjust
ments made last year fully met the
needs for adapting the wartime
revenue system to the reconversion
period. I repeat, no further tax
reductions should be made until
the present inf1ationary situation
. has passed Our tax policy should
be designed not only to check infia-
tion but to prevent any particular
group from profiting by it.
4. THE DEFICIT AND THE
NATIONAL DEBT.
Between the January and August
estimates, receipts have gone up
more than expenditures by about
26 billion dollars. Hence, the ex-
pected deficit for the fiscal year
1947, dropped from As to l.9 billion
dollars. Without the expenditures
under new Observation-Disclosures
not contemplated last January-the
budget for the fiscal year 1947 would
have shown a surplus.
I shall endeavor throughout the
fiscal year to reduce expenditures
whenever and wherever they can be
reduced without harm to our Sc
curity and the general welfare A
substantial budget surplus must be
our objective for the following year.
The Bureau of the Budget, at my
direction, has informed all Federal
agencies of this goal
Retirement of Debt Proceeding.
The retirement of the public debt
is proceeding more rapidly than
previously expected. In the Janu-
ary budget the Federal debt was
estimated at 271 billion dollars on
June 30, 1947. BY the end of the
fiscal year 1947 1t will decline to an
estimated 26l billion dollars on the
basis of present estimates. Liqui-
dation of the Treasury cash balance
was somewhat less than expected
in the fiscal year l946 and this will
permit correspondingly more debt
retirement. during the current fiscal
year.
5. PAYMENTS TO AND RE-
CEIPTS FROM THE PUBLIC.
The immediate economic impact
of the budget is felt when the Fed
eral Government either collects
money from individuals and busi-
ness or disburses money to indi-
viduals and business. The budget
in its traditional form does not
give an adequate picture of these
cash transactions between the Gov
ernment as unit and the public.
! Budget expenditures include cer-
tain intragovernmental transac-
J tions, such as transfers to trust &C
counts. They also include. for the
fiscal year l947, substantial amounts
OF noncash expenditures, such as
$50 million dollars in notes to be
issued to the International None
tary Fund and 81 billion dollars in
terminal leave bonds. On the other
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