Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-09-25
More Spending Cuts,
Tax Reductions Seen
BY Senator Butler
BY }. A. o'Leory

Dy J. =, OIeoTy
More economies in Government
and further tax cuts were fore
cast today by Senator Butler,
Republican, of Maryland, as he
praised efforts of the administra-
ton to apply sound principles to
fiscal policy.
The Senator's analysis of the
budget outlook was made in a
speech prepared for delivery to
the Southeastern Group of the
Investment Bankers Association
Of America. at Hot Springs. Va.
It came in the wake Of a state
ment Of Budget Director Row
land Hughes that the Eisen-
hover administration is following
a sound middle course" between
heavy spending and drastic econ
only.
In a letter to Chairman
Bridges Of the Senate Appropri-
atoms Committee. Mr.. Hughes
said: 1--WE have a wonderful
record Of accomplishment" He
admitted. however. it is going
to take "some time" to obtain
a completely balanced budget
because of the situation we in
herited."
More Cuts Expected.
Senator Butler agreed that
the task OF cleaning up a Fed
eral budget that has been out
of control for more than decade
is not a short-range proposition
But an auSnicious start has been
made. More economies and more
tax cuts can be expected"
Senator Bridges has written to
MIR. Hughes saying he is dis
| turbed by the wide range OF
critical views in the press this
week on the midyear review OF
the 1855 budget, made public by
the Treasury on September Is
"One extreme view has beer
expressed that the present ad.
ministraCion has decided or
more non-defense Spending
wrote Senator Bridges. "Thi.
report goes on to say that the
biggest single increase for strictly
civilian schemes will be for hous.
ing programs designed to keer
the home industry booming anc
provide better homes for people
and that the Federal National
Mortgage Association went on a
selling spree last year and will
be buying back this year q LOT
OF what 1t sold a year ago.
"Secret Directive"
ION the other extreme, it is
reported that the Bureau of the
Budget had sent one of the
toughest letters in budget his
tory to members of the cabinet
ordering further cuts for the
fiscal year 1856. This goes on
to say that a secret directive
demands that cabinet officers ap-
ply a heavy ak to loans, etc." \
The mid-year review disclosed
that spending for the year end
ing next June would be down
to $64 billion, a cut of SIS bill
lion under the Presidents esti-
mate when he submitted the
budget last January.
AT the same time, however,
the review showed that the
deficit next June would be I'D to
, SAT- billion instead of 500 bill
lion estimated in January.
Declining tax receipts and an
increase in the cost of general
government, largely in agricul-
ture, and housing OUTLAWS, were
blamed for the prospect of a
greater deficit despite the cut
in the overall spending total.
Savings Seen.
In his letter to Senator
Bridges Mr.. Hughes admitted
departments are under instruc-
tons to look for further econ
omies during the rest of this
year, and predicted this directive
should result in savings that
would reduce the SAT- billion
deficit.
But Mr.. Hughes said the
Budget Bureau letter differs very
little from a similar letter sent
to bureau chiefs last year.
Mr.. Hughes said some miscon-
ception of financial statements
is to be expected. To illustrate,
he cited the net increase in
housing expenditures as COM
pared with the January estimate,
and explained it this way:
For example, the January
budget for the Housing and
Home Finance Agency estimated
that receipts from liquidation of
loans and sale Of mortgages in
fiscal year 1855 would exceed
additional loans by 1895 million
AS a result of the unexpectedly
money market in the early
months of 1854, a large
number of FNMA loans were sold
during fiscal 1854 instead of in
the fall, which would have placed
the sales in fiscal 1855. This re-
suited in changing our estimated
credit for fiscal 1855 to q debit
of $3.50 million chat is, excess
OF advances over receipts) or a
total swing between years OF
S525 million