Evening star., 1946-08-05
Federal Fiscal Crisis

President Truman's concern over
the Governments serious" fiscal
situation is shared by all who have
seen the erstWhile prospects for a
balanced Federal budget go glim-
mering in recent months. Earlier
hopes that the end of the war would
pave the way for closing the gap
between governmental income and
outgo have faded as new inroads on
the Treasury have been authorized
by Congress without compensatory
measures to offset expenditures and
increase revenues.
The cessation of war spending and
nearly year of Federal reconver-
sion to a peacetime basis of opera
tion failed to bring any reduction
in the public debt, although Mr.
Truman's budget report gives hope
Of a reduced deficit by next July.
The debt today totals approximately
270 billions of dollars, which is an
increase of more than six billions
since July 30. 1945. There are a
number of reasons for this increase.
In the first place the demobiliza-
ton of the civil establishment has
In no way kept pace with the mill
tary and naval demobilization. Al
though hopes for drastic economies
in governmental administration were
high when Congress passed the Re-
organization Act of 1945, authorizing
the President to recommend" plans
for eliminating overlapping and du-
plication in the Federal establish
ment, the Presidents initial rec
ommendatiOnS-none of them very
drastic-ran into traditional legisla-
tive opposition. AS result only
two-thirdS of three-part program
emerged unScathed, and even the
optimists do not look for any tre-
mendouS savings from the few
mergers approved. The Joint Con-
gressional Committee on Reduction
of Nonessential Federal EXpendi-
lures, of which Senator Byrd of Vir-
ginia is chairman, is preparing a
report Which will point out that
although there has been a reduction
of about 250,000 employees in war
agencies, old-line agencies added
about 10000 persons to, the Gov
ernment payroll. The. net result
has been a reduction of only IS 900
employees.
And the payroll disbursements are
on the way up, because of Federal
pay increases deemed necessary by
the rising cost of living. On top of
these soaring expenditures have
come a number of appropriations
not foreseen by those who had
looked forward to an early end of
deficit spending The most recent
and most costly of these is the GI
terminal pay legislation, estimated
conServatively to involve an ultimate
cost Of nearly three billions of dol
lars in cash and bonds Other bene-
fits for veterans have upped the
deficit.
The drab outlook is such as to
Justify Mr.. Truman's anxiety and
to give force to his urgent request
for retrenchment wherever possible.
1t will not be easy to obtain appre-
ciable results from such a voluntary
enterprise, since it entails self-ap-
praisal and sacrifice of bureaucratic
power in many cases. 1t will be
even harder to make reductions at
the expense of the already shrunken
War and Navy Departments, in view
Of the heavy responsibilities which
still rest upon them in the disturbed
postwar world. The warnings of
General Eisenhower and Admiral
Nimitz against any further reduction
Of Army and Navy budgets cannot
lightly be ignored, for the dangers
Of military weakness are no less
acute than the perils of imitation.