[Released January 9, 1950. Dated January 3, 1950]
To the Congress of the United States:
I am transmitting my recommendations for the Budget of the United States for the fiscal year ending June 30, 1951.
This Budget is a statement of the financial program for the United States Government, under both existing laws and new legislation which I am recommending to the Congress. It is an expression, in financial terms, of the actions this Government can and should take at this time to build toward economic growth and the expansion of human freedom, in our own country and in the world.
For the fiscal year 1951, Budget expenditures under this financial program are estimated at 42.4 billion dollars, about 860 million dollars below estimated expenditures for the current year. Budget receipts under existing tax laws are estimated to be 37.3 billion dollars, a decrease of about 460 million dollars below the present year. The estimated Budget deficit for the fiscal year 1951 is thus 5.1 billion dollars under present tax laws, compared with an anticipated deficit of 5.5 billion dollars in the fiscal year 1950.
I shall shortly recommend to the Congress certain adjustments in our tax laws which will produce some net additional revenue in 1951, not reflected in this Budget. These adjustments will result in a larger revenue increase in subsequent years.
A reduction, greater than that in expenditures, has been made in the requests for new appropriations and other obligational authority in 1951. Expenditures occur when the Government pays its obligations, and the Congress grants authority to incur obligations when it enacts appropriations, contract authorizations, and authorizations to borrow from the Treasury. The authority to incur new obligations which I am recommending for the fiscal year 1951 totals 40.5 billion dollars, considerably below the 1950 level. This fact is significant as an indication that the downward trend in expenditures from 1950 to 1951 may be expected to continue.
BUDGET TOTALS
[ Fiscal years. In millions ]
1949 1950 1951
actual estimated estimated
Receipts $38,246 $37,763 $37,306
Expenditures 40,057 43,297 42,439
Deficit --1,811 --5,534 --5,133
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NOTE.--Estimated receipts exclude new tax proposals. |
This financial program provides a sound basis on which to proceed. It will properly support the extraordinary responsibilities of the Federal Government, both at home and abroad, and at the same time meet our obligation to pursue a policy of financial prudence and restraint. Such a policy must be directed at producing a surplus as soon as possible under favorable economic conditions. The reductions in expenditures, which I recommend, can be achieved and still permit our Government to carry on its necessary operations effectively. The moderate increase in revenue, which I shall recommend in conjunction with specific tax reforms, can be achieved without impairing continued economic progress.
In preparing this Budget, I have carefully evaluated the possible alternatives in the light of the realities of our present situation. The soundness of a fiscal program cannot properly be judged simply by the year-to-year change in the expected margin between receipts and expenditures. A prudent program must meet much broader tests, if it is to serve the long-range interests of our people.
The soundness of a fiscal program must first of all be judged by whether it allows the people, through their Government, to meet the demands which the foreign and domestic situations put upon them. The necessary functions of the Government in our complex society are varied and widespread. They require large expenditures but they are vital to our security, to the protection of our liberties, to continued social and economic progress, and to the welfare of our people. I have reviewed the expenditure programs in the Budget, one by one, and found them necessary to achieve these purposes. I am confident that the Congress will come to essentially the same conclusion.
The soundness of the Government's fiscal program must also be judged by its impact on the economy. The Federal Budget is a substantial part of the total flow of incomes and expenditures in our country each year. Federal receipts and expenditures must both be planned to encourage the prosperity of the economy and keep it healthy and growing. Irresponsible and short-sighted budgetary action could contribute to a worsening of the world situation and to a decline in production and employment in the United States. Under either of these circumstances, we would find ourselves faced by the necessity of Budget outlays much larger than those I am proposing, while the prospect for increased revenues would be much less encouraging. I am convinced that the recommendations I am making, both for expenditures and for revenues, will contribute to continued economic development.
The soundness of a fiscal program must be judged, finally, in the light of where that program will take us over a period of years. This is partly a matter of necessity: most Government programs are based on a time schedule extending over a number of years, and a large part of the Budget in any one year represents binding commitments to spend established in previous years on the one hand, and tax liabilities already incurred on the other. It is primarily a matter of wisdom: sharp and arbitrary changes in Government programs, even where feasible, involve economic loss and dislocations, and may cause serious damage to parts of the economy. I am confident that the fiscal recommendations provide a solid basis for moving toward budgetary balance in the next few years. My confidence is based on three main considerations.
First, it has been possible to reduce anticipated expenditures for the fiscal year 1951 by close to 1 billion dollars below the estimated level for 1950, and an even greater reduction has been made in the request for new obligational authority. Thus, the policies followed in preparing this Budget will permit further reductions in subsequent years. Specifically, the largest item in the Budget, national defense expenditures, is expected to approximate the 1951 level in the next few years; and the costs of our foreign aid and veterans' programs should continue the decline already expected between 1950 and 1951. It should also be possible in future years to reduce the cost of programs which have helped to meet the postwar transition problems of specific major areas of our economy, notably the support of agricultural prices and the creation of an adequate secondary market for housing mortgages. Finally, if the Congress enacts the proposed increase in postal rates, the burden of the postal deficit on recent Budgets will be largely eliminated.
The programs mentioned above constitute the bulk of the Federal Budget. With respect to other programs, relating primarily to domestic activities, Federal responsibilities will increase as the Nation grows. But the additional budgetary requirements for these programs, under a prudent fiscal policy, should be substantially less than the decline to be expected in the extraordinary postwar programs. In this connection it should be emphasized that the urgently needed insurance measures which are recommended in the fields of unemployment compensation, old-age security, and medical care will be primarily financed by special taxes designed to defray their costs.
Thus, assuming continued favorable economic and international developments, it is possible to plan on further reductions in total expenditures after 1951.
The second major consideration supporting my confidence in this fiscal program is the fact that our economy is a dynamic and growing one. Each year our population and the productivity of our labor force rise, and our total national output must rise also if we are to fulfill our obligation to maintain high employment. As our economy grows, tax revenues will grow also. The effects of this growth are not fully reflected in the receipts estimates for 1951, because the temporary decline in incomes during this past year will affect some tax yields in 1951.
Federal expenditures are themselves of fundamental importance to our prospects for steady economic growth. Programs for such purposes as national defense and international recovery are essential to maintain a favorable international situation. In addition, many Federal expenditures constitute direct supports for important sectors of our economy, or direct investments in assets such as power facilities or in better education and other services, which add to the productive capacity of the Nation. Thus this Budget is not only consistent with an expanding economy, but will make a substantial contribution to that objective.
In analyzing the economic impact of Federal financial operations on our economy, increasing attention is also being paid to the aggregate of Federal cash transactions with the public, which are not fully reflected in the totals of Budget expenditures and receipts. Primarily important is the fact that, as long as the social insurance trust funds are building reserves to cover liabilities in future years, they show a substantial excess of receipts over payments. Therefore, the current economic impact of Federal financial activities, as reflected in the net difference between all cash receipts from and all cash payments to the public, is usually different from that indicated by the Budget surplus or deficit. In 1951, for example, the excess of cash payments over receipts is estimated at 2.7 billion dollars, 2.4 billion dollars less than the estimated Budget deficit. Continuing improvement in our fiscal position, which our present plans should achieve, will therefore probably result in an excess of total cash income over cash outgo before the Budget will show a surplus. This aspect of our over-all fiscal position is important in supporting the basic economic soundness of the fiscal program, although it does not lessen the need for the greatest possible prudence in the conduct of our financial operations as reflected in the Budget, which is the proper instrument of Executive and Legislative control.
The third major consideration supporting the soundness of this fiscal program is the fact that the tax recommendations which I shall transmit to the Congress will both improve our tax structure and place us in a better position to meet our continuing fiscal requirements. It is highly important that we begin to make the basic changes in the tax system which are needed to make it more equitable and to provide better incentives for producing the amounts and types of investment, consumption, and savings which will contribute to an expanding economy. The large and badly devised tax reduction of 1948 sharply limits the extent to which we can make changes at the present time. Nevertheless, we can and should make now some of the changes which are needed in our tax laws, and bring nearer the time when the Budget can be balanced. Because of the time lag in tax collections after changes in the law, and the fact that some of the changes will result in an immediate loss in revenue, the tax recommendations which I shall submit to the Congress will produce less additional revenue in 1951 than in subsequent years, when the changes will be fully effective.
For all these reasons, the financial program which I am recommending represents a sound, long-range basis on which to plan our governmental operations at this time. It is directed at achieving a budgetary balance in the only way in which it can be achieved-by measures which support rather than impair the continued growth of our country. It is based on expenditure plans which can be sustained in the years following 1951 without embarrassment to our fiscal position. Its accomplishment does, however, depend upon our continued self-control in holding expenditure programs to no more than necessary levels.
As in all recent years, the Budget for 1951 is dominated by financial requirements to pay the costs of past wars and to achieve a peaceful world. Estimated expenditures for these purposes are 30 billion dollars, or about 71 percent of the total Budget. This is a reduction of 1.8 billion dollars from estimated expenditures for the same purposes in 1950. National defense and international programs, designed to insure our security and to create the economic and political conditions necessary for world peace, will require about 18 billion dollars. Veterans' programs and interest on the public debt, commitments arising mainly from the last war, will require about 12 billion dollars.
Our unprecedentedly large expenditures in recent years for international programs have been undertaken to assist free peoples to recover from the devastation of the war and to restore their capacity for future growth both in material things and in the practice of democratic principles. These programs are proving to be an investment paying dividends, far beyond their cost, in enhancing our own security and in providing a basis for world peace and prosperity. The job is not yet done, the goals are not yet reached; but the progress so far achieved makes possible in 1951 a substantial reduction in the dollar costs of these programs. Total expenditures for international affairs and finance are estimated at 4.7 billion dollars, a reduction of 1.3 billion dollars from 1950. This amount reflects the minimum requirements for these programs, and their success to date emphasizes the compelling need to carry them through on the planned basis.
As progress is made toward achieving the short-range objectives of recovery and relief, two other international activities assume increasing importance. First, I am renewing the recommendation for a program of technical and capital assistance to underdeveloped countries. The Budget expenditures in 1951 will be relatively small but they represent a step of great significance in the encouragement of world economic expansion and the growth of world trade, which are essential to our national prosperity. Second, I am recommending additional funds in 1951 for the mutual defense assistance program, authorized by the Congress last year, and now getting under way. This program is a necessary supplement to economic growth as a bulwark against aggression, and is an integral part of the cooperative effort to assure the continued independence of free nations.
Expenditures for national defense must be sufficient to provide us with the balanced military strength we must maintain in the present world situation, at a level which can be sustained over a period of years. In 1951, expenditures for national defense are estimated at 13.5 billion dollars, an increase of about 400 million dollars over 1950. The present level of expenditures is substantially less than was anticipated a year ago, and is the result of careful Budget planning and vigorous administrative action.
Expenditures for veterans' services and benefits are estimated at 6.1 billion dollars in 1951, a decline of 825 million dollars from 1950. Our veterans' programs represent commitments which the Government has made to those who have served in its armed forces, and these commitments must be met. While that part which represents pensions, medical care, and similar services will continue to rise gradually, the program of readjustment benefits was intended to be transitional, and we should plan on a continued reduction in its cost during the next few years.
Interest on the public debt is estimated at 5.6 billion dollars in 1951, slightly lower than in 1950. This is, of course, a fixed commitment of the Government, and represents predominantly the cost of financing the last war.
All expenditures, other than those for international, national defense, and veterans' programs, and interest on the debt, total 12.5 billion dollars, about 29 percent of the total Budget. This is an increase of about 1 billion dollars from estimated expenditures for these purposes in 1950. They include many important activities such as the Atomic Energy Commission and the Maritime Commission, which are closely related to our national security. Furthermore, they represent those positive functions which Government must fulfill if we are to have a healthy and growing economy. Federal expenditures for these purposes in 1951 are expected to constitute a substantially lower percentage of the total national income than the corresponding percentage in 1939.
The 12.5 billion dollars which this Budget provides for these domestic programs, viewed item by item, reflects--and has been generally recognized by the Congress to reflect-the necessary contributions of the Federal Government in our modern economy. The major question in my mind is not whether we are doing too much, but whether the budgetary requirements of the major national security and war-connected programs have constrained us to undertake too little toward supporting and stimulating the realization of our country's great potential development. It must be recognized that failure to support essential Federal activities would impede the continued expansion upon which the well-being of our economy and the soundness of the Government's fiscal position alike depend.
Expenditures in this Budget, designed to assist economic development in the categories of housing and community development, agriculture, natural resources, transportation and communication, finance, commerce, and industry, and labor, together amount to 7.9 billion dollars, 19 percent of total estimated expenditures.
We must push ahead, for example, with atomic energy development, and the Budget provides 817 million dollars for this purpose. We must maintain and develop adequate aviation facilities and services, for which 230 million dollars is included. The Federal Government should continue to assist States in developing an adequate national highway system; Federal expenditures for this purpose are estimated at 507 million dollars in 1951. The development of our rivers for flood control, navigation, reclamation, power, and other uses is of fundamental importance for economic growth, and is largely a Federal responsibility, for which this Budget includes 1.4 billion dollars. The Government is substantially aiding private industry and local communities in producing more and better housing at prices people can afford; 1.3 billion dollars is included for these purposes. Over 800 million dollars is provided to further the conservation of farm lands and to make loans for extending electricity to farms.
There is one aspect of these expenditures which has properly received widespread attention by the Congress and the public as having an important bearing on the long-run fiscal position of the Government. Many expenditures represent the acquisition of assets which are recoverable or will give continuing returns in future years, and which in normal business accounting would not usually be considered as current expense. It is estimated that in the 1951 Budget such expenditures, excluding military public works and equipment, amount to about 5.6 billion dollars, of which about 4 billion dollars is anticipated to be in the recoverable category. In the case of the Federal Government, in contrast to private business, these investment expenditures cannot properly be financed differently from other items in the Budget. But their size and nature are important in evaluating the strength of our fiscal position. A special analysis of the nature and extent of investment expenditures is included in part III of the Budget this year for the first time.
Economic growth must be matched by comparable development in the social well-being and living standards of all our people. Continued progress depends in large part upon the increasing fulfillment of the responsibilities of Government in such fields as social welfare, education, and public health. In addition to the transfer of 594 million dollars of pay-roll taxes to the railroad retirement trust fund, the Budget proposes total funds of 2.1 billion dollars for social welfare, health, and security, and 434 million dollars for education and general research, about one-sixteenth of total Federal expenditures. These, too, are investments in the future of our country. Over 80 percent of these funds is for grants to States and localities.
The remaining programs, classified under general government, are estimated to cost 1.3 billion dollars. These funds provide for over-all legislative, judicial, and executive operations of the Government, and for various central services such as the maintenance of public buildings. Included in this total are 424 million dollars for tax collection and other financial operations, and 333 million dollars for the Government's payment to the civil service retirement fund.
The detailed activities of Government agencies in all fields have been closely reviewed to eliminate all but the minimum operations required. This has made necessary the denial of request after request for additional funds which--taken by themselves and in the judgment of particular groups affected--are highly meritorious. The progress made in this Budget in reversing the trend toward higher expenditures and in achieving a substantial reduction has been made possible only by the most vigorous application, in every area, of a policy of holding the numerous activities to essential levels.
In a very few cases--mainly middle-income housing--the exigencies of particular situations justify the recommendation of limited new domestic programs. In addition, I am renewing proposals previously made for aid to education and expanded public assistance, primarily in the form of grants to States, and for the enactment of certain social insurance legislation which would be financed primarily by special taxes. Beyond this, however, I am recommending no new programs which would require large expenditures in future years, above the amounts included in this Budget. In the case of existing programs, while vigorous effort is being devoted to improving their efficiency, they must in the public interest be given sufficient funds to allow effective operation.
The rise from 2.5 billion dollars in 1950 to 3.1 billion dollars in 1951 in estimated civil public works expenditures, including grants and loans, reflects almost entirely the minimum requirements of projects and programs now under way. With respect to Federal public works in such fields as reclamation, flood control, and rivers and harbors, this Budget does not provide for starting any new projects, despite the pressures that exist for initiating construction of a large number of additional projects which are already authorized. Federal grants to States for public works have also been generally limited to the necessary costs required to carry forward continuing construction programs, primarily those for highways, airports, and hospitals.
Our policies with respect to expenditures must of course remain flexible to meet shifts in international or economic conditions. The policies I have outlined represent the sound and necessary basis for Budget programs in the light of the outlook at this time.
MANAGEMENT IMPROVEMENT
PROGRAM
The past year has been one of outstanding achievement in improving the organization and operating methods of the executive branch. This is an important fact to note in the Budget Message as the accomplishment of better management in Government is essential to the fulfillment of our established fiscal goals. It is also a responsibility to which every official must give increased attention if the public is to receive a full return on its tax dollar. Action has been taken on many fronts. To cite but a few: the Department of State has been reorganized; improved operating methods have been installed in the Treasury Department; further progress toward unification has been made with the creation of a Department of Defense; central service functions of the Government have been reorganized in the General Services Administration; significant reorganizations have occurred in the Post Office Department, the Department of Commerce, and the Civil Service Commission.
In cooperation with the Congress, I intend to continue a vigorous program to achieve further improvements in governmental management.
One phase of this program requires the enactment of legislation and the approval of reorganization plans. During the coming year I recommend that the Congress enact basic personnel legislation to make possible further improvements in the way the Government recruits, trains, and supervises its employees. I also recommend that the Congress take action to allow the Post Office to maintain its own accounts and conduct its financial affairs on a businesslike basis and to permit appointment of postmasters by the Postmaster General.
During the session I shall transmit to the Congress a number of reorganization plans. The objective of these plans will be the establishment of clear lines of responsibility and authority for the management of Government activities and the more effective grouping of Government programs within departments and agencies.
A second phase of the management improvement program includes Governmentwide activities in which all agencies participate. Major undertakings in this area are the installation of more efficient property and records management practices under the leadership of the General Services Administration; strengthening of personnel management activities under the leadership of the Civil Service Commission; and institution, under the sponsorship of the Bureau of the Budget, of systematic review by all agencies of operating effectiveness and economy as required by the Classification Act of 1949. In addition, more modern accounting practices are being installed throughout the Government under the guidance of a joint committee consisting of the Secretary of the Treasury, the Comptroller General and the Director of the Budget.
In the field of programing and budgeting, the progress made toward .presentation of this 1951 Budget on a "performance" basis is an example of results stemming from the improvement program. An examination of the body of this document will indicate a substantial change from that of previous years. The activities for which funds are recommended are described so that the Congress and the citizens may see more dearly the relationship between the activities to be performed and the costs of those activities. Future Budget documents will include additional improvements. Some of these will reflect current efforts both to strengthen and simplify Government accounting and to develop better measures of work performance. Others will provide additional kinds of analyses to enable examination and understanding of the Budget from different standpoints.
The third aspect of the management improvement program is the work being done by individual departments and agencies. I have instructed each department and agency head to inaugurate an aggressive program of management improvement in his department. These departmental programs have been reviewed in terms of their relation to financial requirements and their contribution to the solution of known problems. I will announce shortly certain areas to which priority will be given in the management improvement work of the executive branch during the year 1950. The special fund for management improvement which was authorized by the Congress last year will be utilized to carry out some of the specific projects. In following through to secure results from this entire program I will have the assistance and advice of my Advisory Committee on Management Improvement.
Under our Federal form of government, many public services are the common concern of Federal, State, and local government. Continuing attention needs to be given by all levels of government to the problems arising from the interrelations of our tax systems and the administration of common governmental functions. Federal and State and local officials are currently studying the possibilities of further cooperative arrangements in tax administration in order to reduce costs and improve coordination. We are also cooperating in developing legislative proposals to deal with several current problems of mutual concern: provision of certain local services to Federal personnel, application of local taxes to personnel and transactions on Federal reservations, and the establishment of a general system of payments to State and local governments whose property-tax base has been reduced by Federal acquisitions of real estate.
The reports of the Commission on Organization of the Executive Branch of the Government have provided the framework for much of the improved organization and management which has been achieved and which I hope to achieve during the coming year. While work has been started in a number of the areas containing the greatest potential for economy and improved operations, many further legislative and administrative actions are needed. It should be realized that the greater effectiveness and economy and better service to the public, which come from improved management, are the cumulative result of a great many individual actions. Realization of those goals requires the coordinated and unrelenting efforts of all Federal officials and employees. We must continue to emphasize the achievement of better management as an important part of the job of public service in which the Congress and the executive branch are engaged.
BUDGET RECEIPTS
Budget receipts in the fiscal year 1951 are estimated at 37.3 billion dollars under existing tax legislation, 457 million dollars below the estimate for the current year. Decreased collections from corporation income taxes account for the principal decline in receipts between the 2 years, reflecting the fact that the reduction in corporate profits from the calendar year 1948 peak does not have its full effect on tax receipts until the fiscal year 1951. The estimates of receipts assume economic activity at approximately the same level as at the present time.
I will shortly transmit to the Congress my recommendations for changes in our tax laws to provide a more balanced and equitable tax structure and to increase Federal revenues. The net increase in revenues during 1951 will be substantially smaller than in subsequent years, owing to the time required for some of the changes to become fully effective.
BUDGET RECEIPTS
[ Fiscal years. In millions ]
1949 1950 1951
Source actual estimated estimated
Direct taxes on individuals:
Individual income taxes $17,929 $17,971 $18,246
Estate and gift taxes 797 697 692
Direct taxes on corporations:
Corporation income taxes 11,343 11,075 10,458
Excess profits taxes 211 100 60
Excises 7,551 7,63 7,642
Employment taxes:
Existing legislation:
Federal Insurance Contributions Act 1,690 2,245 2,515
Federal Unemployment Tax Act 223 223 224
Railroad Retirement Tax Act 564 570 594
Railroad Unemployment Insurance Act 10 10 10
Proposed legislation:
Medical care insurance ........ ........ 250
Improvement of old-age and survivors insurance ........ ........ 1,200
Customs 384 375 37
Miscellaneous receipts:
Existing legislation 2,072 1,288 1,096
Proposed legislation ....... .......... ......... 60
Deduct:
Appropriation to trust funds:
Existing legislation --1,690 --2,245 --2,515
Proposed legislation:
Medical care insurance ........... ............ --250
Improvement of old-age and survivors insurance .......... ............ --x, 200
Refunds of receipts --2,838 --2,177 --2,151
Budget receipts 38,246 37,763 37,306
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NOTE.--Estimated receipts for 1951 exclude new tax proposals, except for recommended changes in employment taxes and miscellaneous receipts. Direct taxes on individuals.--Receipts from the income tax on individuals exceed those from any other tax. The total of 18.9 billion dollars estimated for 1951 for direct taxes on individuals is practically unchanged from the 1950 total, and reflects continued high levels of employment and income. |
Direct taxes on corporations.--The fiscal year 1951 estimate of receipts from taxes on corporations is 10.5 billion dollars. During the fiscal year 1951 corporations will pay income tax on the profits earned during the calendar years 1949 and 1950. The decline in profits from the peak level of 1948 will therefore adversely affect these receipts for the fiscal year 1951.
Excises and customs.--Under present laws very little change is anticipated in collections of excise taxes and customs.
Employment taxes.--The tax rate for oldage and survivors insurance was increased from 1 to 1 l/2 percent on the first of this month; hence the receipts estimate for 1950 includes taxes based upon both the old rate and the new. Receipts for 1951 under existing legislation represent a full year's collection at the new higher rate.
I have recommended expansion and improvement of the old-age and survivors insurance system and a new program of medical care insurance. It is estimated that the additional taxes to be collected for these programs will amount to 1.4 billion dollars in 1951. Since these sums will be transferred immediately to trust accounts, Budget receipts will not be increased.
Miscellaneous receipts.--Miscellaneous receipts have been declining steadily since 1947, primarily because of the drop in sales of surplus property originally acquired for war purposes. During 1951 receipts from surplus property will be only about 0.1 billion dollars compared to the peak of 2.9 billion dollars in 1947.
There are other decreases in the estimates of miscellaneous receipts which are in the nature of changes in reporting. Certain receipts, notably of the Farmers' Home Administration and of the public housing program, were formerly deposited into miscellaneous receipts, but are now deducted from the expenditures of the programs involved. These changes, of course, have no effect on the surplus or deficit.
The estimate of miscellaneous receipts for 1951 reflects my recommendation that legislation be enacted to permit the acceleration of capital repayment by the Federal home loan banks. An increase in patent fees is also necessary to make the Patent Office more nearly self-supporting.
Refunds of receipts.--Refunds for 1951 are estimated at about the same level as for the current year, 0.7 billion dollars less than in 1949. The decline is the result of the fact that 1949 refunds were unusually high because of the retroactive features of the Revenue Act of 1948•
PUBLIC DEBT
The public debt amounted to 252.8 billion dollars on June 30, 1949. Estimated Budget deficits of 5.5 billion dollars in the fiscal year 1950 and 5.1 billion dollars in the fiscal year 1951, together with certain minor adjustments, will cause the debt to increase to 263.8 billion dollars by the end of 1951. In 1951, about 2.5 billion dollars of the increase in the debt will be financed by new investments in Federal securities by trust accounts and other Government agencies.
BUDGET EXPENDITURES AND AUTHORIZATIONS
A summary of Budget expenditures according to the broad programs or functions for which the money is spent is set forth in the table below. This table includes all expenditures from the general and special funds of the Treasury and the net expenditures of wholly owned Government corporations. Expenditures from the trust funds are excluded.
All expenditures flow from obligational authority enacted by the Congress. The net new appropriations and other authorizations recommended for the fiscal year 1951 total 40.5 billion dollars. Of this total, 33.1 billion dollars is now formally recommended for action by the Congress, while 7.4 billion dollars is tentatively estimated for later submission. In addition, this Budget includes appropriations of 4.5 billion dollars to liquidate obligations incurred under prior year contract authorizations, more than half in programs for the national defense.
Since contracts with industry must be let well ahead of deliveries, a considerable lead time is required for the economical operation of many Government programs. This is especially true for public works and military procurement. Financial obligations incurred in prior years, therefore, will have already fixed a substantial part of the estimated Budget expenditures for 1951. Of the total Budget expenditures of 42.4 billion dollars estimated for 1951, about 12.1 billion dollars, 29 percent, will be payments for obligations incurred in 1950 or in earlier years; the remainder will be for 1951 obligations.
BUDGET EXPENDITURES AND AUTHORIZATIONS BY MAYOR FUNCTION
[ Fiscal years. In millions ]
New obligational
Expenditures authority for 1951
1949 1950 1951 Appropria-
Function actual estimated estimated tions Other
International affairs and finance $6,462 $5,964 $4,711 $4,505 $530
National defense 11,914 13,148 13,545 111,359 1 1,441
Veterans' services and benefits 6,669 6,905 6,080 5,847 ..........
Social welfare, health, and security 1,907 2,297 2,714 2,625 165
Housing and community development 282 1,006 1,329 117 704
Education and general research 70 125 434 117 7
Agriculture and agricultural resources 2,512 2,671 2,206 875 580
Natural resources 1,512 1,845 2,218 1,594 370
Transportation and communication 1,622 1,894 1,682 973 673
Finance, commerce, and industry 120 225 212 60 250
Labor 193 219 243 266 ........
General government 1,170 1,223 1,267 1,231 3
Interest on the public debt 5,352 5,725 5,625 5,625 .. ......
Reserve for contingencies ... ...... 50 175 200 ......
Adjustment to daily Treasury statement 272 ...... ...... ...... ......
Total 49,057 43,297 42,439 235,731 4,723
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1 In addition 851 million dollars of reserved 1950 contract authorizations and 22 million dollars of 1950 appropriations will be available for 1951 programs. |
Net new appropriations recommended for 1951 are 1.6 billion dollars less than those estimated for 1950. They represent total appropriations (including permanent appropriations) less those to be used to liquidate prior year contract authorizations. New contract authorizations (which will require later appropriations to liquidate) totaling 3.4 billion dollars are also included in this Budget, also about 1.6 billion dollars less than the estimated new contract authority for 1950. Special authorizations to use the proceeds of Treasury borrowing in the financing of certain Government programs are included in the 1951 recommendations to the amount of 1.4 billion dollars. This represents a decline of 6 billion dollars from the 1950 estimate for this type of authorization. The estimate for 1950, however, anticipates action by the Congress in providing supplemental public debt authorizations of 2 billion dollars for the Commodity Credit Corporation, one-half billion dollars for the Reconstruction Finance Corporation, and stand-by borrowing authority of 1.'7 billion dollars for the Federal Savings and Loan Insurance Corporation and the Federal home loan banks.
PROGRAMS
The following sections describe the programs undertaken in each of the major functions of the Government and the new proposals I am making in this Budget. In addition, this year for the first time the Budget contains (in part II) improved presentations showing in detail the programs and performance of all Government agencies.
INTERNATIONAL AFFAIRS AND FINANCE
In 1951, as in every year since the war, the cost of our international programs will be large because far-reaching problems remain to be solved. Notable progress has been made toward foreign economic recovery, but some of the most difficult steps lie ahead. The threat of aggression still exists, requiring continued efforts to bolster the defenses of free nations. The economic underdevelopment of great areas of the world deprives their peoples of the adequate living standards in which free institutions can flourish, and deprives other peoples of needed resources which expanded world trade could bring.
The 1951 Budget provides for 4.7 billion dollars of expenditures on our international activities. This is 1.3 billion dollars, or more than 20 percent, below estimated expenditures in 1950. This very substantial reduction reflects the declining costs of our recovery and relief programs as they have stimulated and supported economic reconstruction, rising living standards, and growing political stability. My recommendations for 1951 represent the minimum amount required to carry our plans forward toward a successful conclusion. The continuing and grave uncertainties which remain in the world situation make it imperative that we be prepared to adjust our efforts to accord with developments. If, however, we make at this time the investment necessary to achieve continued economic recovery, I expect the trend in total expenditures for our international activities to continue downward in subsequent years.
Recovery and relief costs, which in 1951 will be over 75 percent of international expenditures, will diminish rapidly as recovery programs near completion, although new measures may become necessary to attain specific objectives in particular areas. At the same time, our programs for stimulating foreign economic development assume increasing importance, and expenditures for this purpose should increase somewhat in future years as political conditions stabilize and opportunities for mutually advantageous technological improvement and productive investment abroad increase. Furthermore, expenditures for foreign military assistance will remain substantial for several years as shipments are made under the programs authorized in 1950 and proposed for 1951.
Conduct of foreign affairs.--Expenditures in 1951 for the State Department, through which we conduct our foreign affairs, will be about the same as for the current year. The decline of war claims payments will be about offset by increased requirements in other programs, notably the Department's recent assumption of responsibilities in Germany. The international information and education program will continue at the expanded level to be reached this year.
Our Government also participates in many international agencies, principally the United Nations and its affiliates. Through such participation we are actively engaged in a cooperative and world-wide effort to build the foundations for continued peace and the social and economic betterment of all peoples. One important aspect of this effort has been the development of a set of principles and a mechanism, through the proposed International Trade Organization, for facilitating the growth of world trade on a multilateral basis. I again urge that the Congress approve the charter of the International Trade Organization and pass the necessary implementing legislation.
European recovery program.--A major problem of foreign policy today is the fact that certain key areas of the world, principally western Europe, are faced with the necessity of making fundamental and complex adjustments to the far-reaching changes in their trade and financial relationships which resulted from the war. The great achievement of the European recovery program to date has been to help these countries to recover from the devastation of war, to restore living standards, and to maintain political stability, and thus to place them in a position to make the adjustments that are required.
INTERNATIONAL AFFAIRS AND FINANCE
[ Fiscal years. In millions ]
|
New obligational Program or agency actual estimated estimated tions Other Conduct of foreign affairs: Total 6,462 5,964 4,711 3 4,505 530 1 Includes transfer from funds for aid to occupied areas. |
2 Less than one-half million dollars.
3 This Budget also includes 518 million dollars of appropriations to liquidate prior year contract authorizations.
As a consequence of their situation, these countries have experienced an extraordinary need in recent years for commodities and equipment which could, for the most part, be supplied only by this country, but for which they were not able to pay by the export of goods and services. If we had permitted their imports to sink to the temporarily reduced level which they could finance, it would have drastically reduced their living standards and invited unrest and destructive economic nationalism. Instead, we have undertaken a planned and mutual effort designed to achieve, during a relatively short period of United States assistance, expanded foreign production and trade, an increase in exports yielding dollars and a lessening need for imports requiring dollars, and an increased international flow of investment capital, thus establishing the basis for economic growth and prosperity.
The European recovery program has made notable progress toward these objectives since its inception almost 2 years ago. As a result, 1951 appropriation requirements for all segments of the program, including that portion of our aid to western Germany which has previously been provided separately from funds for aid to occupied areas, will be more than 1 billion dollars below the amounts provided by the Congress for the same purposes in 1950. Serious obstacles, however, remain to be surmounted. A substantial expansion in international trade and investment is necessary if the remaining adjustments are to be completed without involving serious economic and political dislocation.
The .past year has shown that this task will not be easy. To achieve an increased flow of trade and investment will require far-sighted and vigorous steps by the European countries, and by other nations as well, including our own, if international economic relationships are to be established on a sound basis. The funds included in this Budget for continuing our participation in the European recovery program are an essential element for further progress. Other international recovery and relief programs.--Our economic aid to occupied areas similarly takes the form of recovery programs designed to balance their trade at levels adequate to maintain stability without continued United States assistance. During the current fiscal year, responsibility for economic aid to western Germany has been transferred from the Department of the Army to the Economic Cooperation Administration, and these costs will be met in 1951 from European recovery program funds. Army-administered aid to occupied areas in 1951 will therefore be limited almost wholly to Japan and the Ryukyu Islands. The substantial sums invested in Japanese recovery since the end of the war are yielding results which permit a reduction in 1951 outlays for this purpose, and bring us nearer to termination of this program.
Although I have urged the Congress to authorize a similar recovery program for the Republic of Korea, funds provided to date permit operation at only a relief level. Early enactment of the legislation now pending will permit recovery to .proceed and hasten the date when our aid can be concluded. The estimates in this Budget anticipate a start toward recovery in the remainder of the current fiscal year and substantial further progress in 1951.
Our remaining international requirements for purposes of relief, as contrasted with recovery, are chiefly those for assistance to refugees. The work of the International Refugee Organization will extend through 1951; its remaining work load, however, is substantially reduced, allowing a 65 percent reduction in our contribution below the 1950 level. The estimate for the Displaced Persons Commission reflects my recommendation that the present Displaced Persons Act be speedily amended to make it fair and workable. The provision for aid to Palestine refugees is the present estimate of our share of the cost of the proposed United Nations' program for restoring to productive activity the several hundred thousand persons displaced during the recent conflict in Palestine.
Foreign economic development.--Since the end of the war, the urgent, though temporary, requirements for international recovery and relief have of necessity taken priority over longer-range efforts to promote world economic development. The devastation left by war had to be overcome. The restoration of economic strength to the world's principal industrial areas necessarily had to precede any real economic progress in the less-developed parts of the world.
Now that recovery is well under way, we must increasingly turn our attention to measures for the gradual and permanent expansion of world production, trade, and living standards which are necessary for enduring world peace. Great potentialities for such expansion lie in the underdeveloped areas of the world, with resulting benefits to the peoples of these areas and to other countries, including our own.
I again urge the Congress to authorize a program of technical assistance to enable the peoples of these areas to learn, and to adapt to their own needs, modern technological and scientific knowledge in such fields as agriculture, health, education, transportation, and industry. The achievements of our present technical assistance activities in the American Republics and in Europe attest to the success and practicability of this approach. This Budget provides for expenditures of 25 million dollars for the new program. This includes the United States share in the cost of the program for technical assistance recently approved by the United Nations.
A second basic requirement for economic progress in underdeveloped areas is a substantial increase in the inflow of capital for Productive investment. These areas should offer opportunities for private capital and private enterprise, if there is assurance of fair and equitable treatment for foreign capital such as is contained in the commercial treaties which are now being negotiated with many nations. Nevertheless, there will remain certain abnormal risks which deter potential investors, and I again urge the enactment of legislation authorizing an experimental program by the Export-Import Bank to guarantee private developmental investments against such risks.
In many cases the flow of private capital may not be available or adequate, or particular circumstances may make governmental action preferable. In such cases, the investment of public funds may be needed, through such institutions as the International Bank for Reconstruction and Development and the Export-Import Bank. These institutions are currently directing their emphasis to loans for developmental purposes.
Foreign military assistance.--Although economic recovery is the most essential condition to the maintenance of freedom and stability in western Europe and other regions of vital importance to our own security, economic vitality alone will not suffice to prevent aggression. Stronger military defenses are required, but these nations cannot unaided strengthen their defenses to a point sufficient to deter aggression without seriously retarding their recovery efforts. To solve their dilemma and to strengthen our own defenses, we agreed last year to unite with our neighbors of the North Atlantic community in developing and putting into effect an integrated defense plan for that area.
We have implemented that decision through the Mutual Defense Assistance Act of 1949, which provides for the supply of arms to the Treaty nations to supplement their own defense measures. The act also continues our previous program of assistance to Greece and Turkey, which has already achieved substantial success in ending the guerrilla threat to Greek independence and in strengthening Turkish defenses. In addition the act provides for military aid to certain other areas in the Middle and Far East.
The North Atlantic Treaty nations are now proceeding with the development of an integrated defense plan, the translation of that plan into equipment and supply needs, and a realistic determination of what each participant can do, both for itself and for the others, in meeting those requirements. For the current year the Congress provided 1 billion dollars for military assistance to the Treaty nations, and 359 million dollars for the other nations covered by the act. For the fiscal year 1951 I am recommending new obligational authority of 1.1 billion dollars, including 500 million dollars new contract authority.
Except for the previously authorized Greek-Turkish program, expenditures in 1950 will be relatively low, owing to late enactment of the new program and the time required for agreement on joint plans and for the subsequent determination of detailed requirements. Expenditures in 1951 for foreign military assistance will be almost twice as great as in 1950, and may rise somewhat further thereafter, owing to the long delivery time characteristic of military procurement.
Philippine aid.--The special concern and responsibility we feel for the progress of the Philippine Republic have taken the principal form, since the war, of assistance in the physical rehabilitation of damaged facilities and the payment of war damage claims. The cost of both of these programs will decline sharply in 1951 as they approach completion. We will continue to follow with sympathetic interest the achievements of the Philippine people and to assist them in making their contribution to our common objectives.
NATIONAL DEFENSE
Our expenditures for national defense continue to be the largest item in the Budget. Under current world circumstances, in which the strength of the United States is making such a vital contribution toward world peace, we must continue to make the expenditures necessary to maintain a position of relative military readiness. At the same time, we must plan our expenditures for national defense so that we will achieve our purpose at a reasonable cost, well within our capacity to sustain over a period of years.
This Budget represents a further step toward these objectives. It provides for active forces in a high state of training, available for immediate use if necessary and as a nucleus for rapid expansion in the event of an emergency, and for reserve forces, organized and trained for early mobilization if necessary. This Budget contemplates the continued development of planning for industrial mobilization and the accumulation of a stockpile of strategic and critical materials. It continues to emphasize research and development to keep our military technology abreast of scientific developments, and procurement of newly developed weapons to improve the equipment of the ready forces. At the same time this program is sufficiently flexible to provide a basis for rapid changes should developments in technology or international conditions make them necessary.
The recommendations for national defense in this Budget take into account the progress which has been made and can reasonably be anticipated in the programs now being developed for the effective integration of our defense plans and organizations with those of other North Atlantic Treaty nations. These defense plans, together with our assistance in strengthening the forces of these countries through the mutual defense assistance program, should provide an increasing measure of security to free peoples on both sides of the Atlantic as well as elsewhere in the world.
For the past 2 years we have been adjusting our military programs to achieve a balanced structure which can be maintained over a period of years without an undue use of national resources. The National Security Act of 1947 and the amendments to that act in 1949 have provided a sound organizational framework within which to work toward this objective. Vigorous actions have been taken to reduce overhead, to improve efficiency, to eliminate activities of low priority, and to realign our armed forces in accordance with a unified strategic concept. As a result, the estimate of obligational authority for the 1951 program of the Department of Defense, including certain obligations in 1951 from 1950 authority, is 13 billion dollars, as compared with 14.2 billion dollars recommended for 1950 in the Budget a year ago.
My recommendations in this Budget provide for balanced land, naval, and air forces. In order to avoid the creation of forces involving commitments over a period of years beyond what we could reasonably expect to provide, I have had placed in reserve certain authorizations for the current year which were provided primarily for the expansion of the Air Force. These recommendations for the Defense Department for 1951 contemplate substantially the continuation of the revised 1950 program.
The estimated obligational authority of 13.7 billion dollars for 1951 includes 4.0 billions for the Army, 3.9 billions for the Navy, and 4.4 billions for the Air Force. In addition the recommendations include 0.8 billion for other Department of Defense activities, including retired pay and proposed legislation; and 0.6 billion for other national defense activities, mainly stockpiling of strategic and critical materials. Of this obligational authority expected to be required in 1951, 11.4 billion dollars is appropriations and 1.4 billion dollars is contract authorizations, both requiring action by the Congress. In addition, 873 million dollars is to come from appropriations and contract authorizations which were placed in reserve in 1950 and are available for 1951 needs.
The estimated expenditures for national defense in 1951 of 13.5 billions, including stockpiling and other defense items, are an increase of about 400 million dollars from estimated expenditures for 1950. The increase results almost entirely from procurement and other commitments made under authorizations previously approved by the Congress. Expenditures in subsequent years will reflect the reduction of new obligational authority for 1951.
Military strength.--Extension of authority for selective service, for which I plan to submit legislation, is vital as a positive demonstration of our resolve to maintain the strength of the free world. With it we will retain our ability to expand our armed forces rapidly in an emergency and will also insure adequate replacements to maintain the required strength of our active forces.
The extension of selective service authority will provide a temporary solution to the military manpower problem of the active forces, but will leave unsolved the problem of trained manpower for our reserve forces. I point out again the necessity of a program of universal training if we are to provide on a continuing basis sufficient numbers of men for the reserve forces, adequately trained to use effectively the increasingly complex machines of war.
NATIONAL DEFENSE
[ Fiscal years. In millions ]
New obligational
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Expenditures authority or 1951 1949 1950 1951 Appropri- Program or agency actual estimated estimated ations Other Department of Defense, military functions: Subtotal, Department of Defense 11,548 12,560 12,852 110,908 22,177 Subtotal 11,914 13,148 13,545 111,381 22,292 Deduct 1950 obligational authority |
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Total 11,914 13,148 13,545 3 11,359 1,441 |
1Includes appropriations of 22 million dollars made for the fiscal year 1950 which will be available for obligation in the fiscal year 1951.
2Includes contract authorizations of 851 million dollars made for the fiscal year 1950 which will be available for obligation in the fiscal year 1951.
3This Budget also includes 2,533 million dollars of appropriations to liquidate prior year contract authorizations.
The total personnel assigned to combat forces will be the greatest since the completion of the demobilization following World War II, although the amounts recommended for 1951 will provide about 3 percent fewer officers and enlisted personnel on full-time active duty than at present. In 1951, it is planned to continue the organized units of the reserve forces at approximately the strength which is expected to be achieved by the end of the current year, but with better equipment, facilities, and training.
MILITARY PAY STRENGTH
[ In thousands ]
Regular and reserves on full-time Reserves in drill pay
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active duty status Dec. 31, 1951 1951 Mar. 31, 1949 average October average Army 538 639 630 565 605 Total 1,394 1,547 1,507 860 979 Under these recommendations for the Army, this Budget will provide 10 divisions, 48 antiaircraft battalions, and other combat and service units. Complementing the active Army will be the National Guard with 350,000 personnel and the Organized Reserve with 255,000 in regular training. |
The Navy under these recommendations will operate an active naval fleet of 652 ships including 238 combatant ships. Six Marine Corps battalion landing teams will be maintained. A total of 5,900 aircraft will be operated by the active forces, and 2,500 by the reserve forces. Supplementing the Navy and Marine Corps will be 204,850 members of the Naval Reserve and 50,772 of the Marine Corps Reserve in regular training.
It is contemplated that the active Air Force will be organized into 48 groups and 13 separate squadrons, approximately its present strength. The Air National Guard and Air Force Reserve will be organized into 27 groups and 25 base wings, respectively. A total of 8,800 airplanes, from trainers to heavy bombers, will be operated by the active Air Force, and in addition 3,400 by the Air National Guard and the Air Force Reserve.
Pay and support of active duty military Personnel.--The services of the officers and enlisted men and women on active duty will require 4.3 billion dollars, over one-third of Defense Department military expenditures. This will provide for pay, allowances, subsistence, travel, and clothing for the active forces at the new rates of pay and allowances set by the Career Compensation Act of 1949.
Operation and maintenance of equipment and facilities.--Estimated expenditures of 3.3 billion dollars will provide for operating and maintaining the aircraft, ships and vehicles, the airfields, training centers, hospitals, depots, various headquarters, ports, and other stations. Most of this amount will be required for the pay of civilian employees in these activities. These employees constitute the bulk of the approximately 725,000 civilian employees expected to be engaged in the military functions of the Defense Department in 1951. This represents a substantial reduction from the 865,000 provided for in the 1950 Budget.
Civilian components.--I have consistently stressed the importance of the civilian components of our armed forces. The Army and Air National Guard and the Air Force, Army, Navy, and Marine Corps Reserves will require estimated expenditures of 696 million dollars in 1951, as compared with the 663 million dollars estimated for 1950. This will provide for the training of forces totaling 979,000, which approximates the number expected to be in regular training by the end of the current year. Continued improvements are planned in the equipment available to these forces and in the effectiveness of their training programs. In order to overcome a major deficiency in the program for these forces, I recommend that the Congress authorize the construction of additional armories and similar training facilities. Funds for this purpose are included in the amount estimated for proposed legislation.
In addition the Reserve Officers' Training Corps of the Air Force, Army, and Navy will necessitate expenditures of 44 million dollars in 1951 to provide a continuing source of junior officers for the reserve forces and a portion of the junior officers required by the active forces. This will provide an estimated 19,000 new junior officers in 1951, an increase of 2,000 over the estimate for 1950.
Research and development.--The experiences of the last war clearly demonstrated the decisive importance in modern warfare of superior weapons and equipment and of the application of scientific research to the production of new weapons and techniques of combat. In peacetime, as well as war, scientific and technical advances here and abroad make .possible continuing improvements in the performance of military weapons, and open to us and to other nations the possibilities of new types of weapons which can profoundly affect military concepts and tactics.
We must continue a broad and active program of military research and development. The research and development programs of the Department of Defense, together with the related programs of the Atomic Energy Commission, the National Advisory Committee for Aeronautics, and other agencies of the Government, have as their objectives to develop improved weapons and equipment for the modernization of our military forces, to exploit the possibilities of new types of weapons and devise defenses against them, and to stimulate scientific research likely to have future military applications.
Expenditures of the Department of Defense for research and development in 1951 are estimated at 606 million dollars, slightly less than in the current year. This amount includes the principal costs of the research and development activities, except for the construction of research facilities and the pay and support of military personnel engaged in research and development activities.
Aircraft procurement.--Procurement of complete aircraft will require expenditures of 2.1 billion dollars in 1951 for approximately 2,300 airplanes, compared with 1.7 billion dollars for approximately 2,800 airplanes in 1950. The change in average unit cost reflects the increasing complexity and cost of individual airplanes.
The recommendations in this Budget will provide for new contracts to be made in 1951 totaling 2.0 billion dollars, compared with 1.9 billion dollars in 1950. This contemplates that 851 million dollars of 1950 authorizations being held in reserve will be applied against requirements for aircraft to be contracted for in 1951.
Approximately 3.3 billion dollars of unexpended authorizations contracted for in 1950 and prior years will be carried forward into 1951. This carry-over, together with the contracts to be made in 1951, will provide 5.3 billion dollars of complete aircraft to be delivered and paid for in 1951 and subsequently. Under present procurement plans it is estimated that, in addition to the 1951 deliveries of 2,300 airplanes, approximately 3,100 airplanes will be delivered in 1952 and later years from authorizations provided prior to that time.
Construction of ships.--Naval ship construction will require 298 million dollars of estimated expenditures in 1951. While no new obligational authority is recommended in this Budget, the 1951 expenditures will be only slightly less than the 314 million dollars estimated for 1950. Various substitutions and adjustments have been made during the past year in the uncompleted portion of the shipbuilding program. In addition to work completed in 1951, 467 million dollars of presently authorized naval ship construction will remain to be completed in 1952 and later years.
Major procurement other than aircraft and ships.--Major procurement other than aircraft procurement and ship construction, will require expenditures of 678 million dollars, a 50 percent increase over the estimate for the current year and more than three times as much as in 1949. This will provide, mainly, combat equipment for Army and Marine Corps troops, equipment for modernizing the fleet, noncombat vehicles for the three military departments, and ammunition, torpedoes, and guided missiles. The substantial increase in expenditures in 1951 results largely from the sizable expansion in this program during the past 2 years. The new obligational authority recommended for 1951, totaling 755 million dollars, will be at a moderately higher level than 1950. This will continue the larger procurement program embarked on in 1949 and continued with increases in 1950.
Amounts included for combat vehicles, artillery, guns, and other equipment for Army and Marine Corps troops will permit substantial modernization of the equipment for the ready forces, and will reflect the progress of our research and development efforts. It will provide an orderly step in the replacement of the equipment left over from World War II which by the end of 1951 will be at least 6 years old and therefore in need of substantial improvements in design as a result of technical and scientific developments. The equipment for modernizing the fleet will give emphasis to the role of antisubmarine warfare.
Military public works.--Construction of military public works will result in considerably smaller expenditures in 1951 than in 1950. This is largely because only part of the authorizations proposed in my 1950 Budget were enacted. Exclusive of the construction for which legislative authorization will need to be made, 1951 expenditures are estimated at 182 million dollars compared with 299 million dollars for 1950. This will provide for such construction as housing for troops and their families, operational facilities, and facilities for research and development. The obligational authority necessary for additional projects not yet authorized by legislation are included in the tentative estimate for proposed legislation.
Industrial mobilization, service-wide administration and finance, interservice projects, and Office of the Secretary of Defense.-The Defense Department's part in industrial mobilization planning will provide for maintaining machine tools and stand-by industrial plants, for tooling of pilot production lines, and for placing educational orders, as well as for continuing industrial mobilization planning studies with industry. Expenditures for this purpose are estimated at 109 million dollars in 1951 compared with 117 million dollars in 1950.
Other Defense Department activities largely of service-wide nature, will result in expenditures estimated at 382 million dollars, a slight increase from 1950.
Proposed legislation (including military public works) .--In order to provide for early starts on projects and activities for which legislation is proposed I am including an estimate of 372 million dollars for new obligational authority, the largest part of which is for military public works for both regular and reserve forces.
Unexpended reimbursements from mutual defense assistance program.--The Defense Department receives reimbursements for some of the equipment which it takes from its stocks to ship to other countries under the mutual defense assistance program. The manufacture and delivery of equipment out of these reimbursements will, for the most part, not be possible before the following year. Hence these reimbursements will appear as credits in Defense Department expenditures in 1950 and 1951. As deliveries from these funds are made in future years, compensating increases in Defense Department expenditures will result.
Pay of retired military personnel.-Amounts are appropriated annually to provide the cost of pay for retired military personnel. The expenditures of 345 million dollars estimated for 1951 provide this retirement pay for persons whose services were for the most part rendered prior to World War II. The Government is at present incurring obligations for future payments at a rate two and one-half times the current retired pay expenditures.
Stockpiling of strategic and critical materials.--The stockpile program will provide the means for augmenting the supplies of materials expected to be available to us in time of emergency. Accelerated progress toward present objectives will be made during the year since available supplies have increased somewhat, partly as a result of orders placed previously to encourage new development.
I recommend 500 million dollars of new obligational authority for this program in 1951. This amount when added to the authority already available will provide total authority for deliveries in 1951 and later years of 1.1 billion dollars. Expenditures are expected to rise from 580 million dollars in 1950 to 650 million dollars in 1951.
The recommended new obligational authority will bring the funds for the stockpile to within 729 million dollars of the present total objective of 3.3 billion dollars. By the end of 1951, 65 percent of the stockpile will be delivered, and an additional 13 percent will be under contract for delivery after 1951. We will be nearer to our goals for the materials the supply of which would be the most susceptible to interruption, than for the stockpile as a whole.
National Advisory Committee for Aeronautics and other activities supporting defense.--Expenditures for all other activities supporting defense will total 43 million dollars, after deducting 48 million dollars of net receipts in the defense activities of the Reconstruction Finance Corporation. Slight increases in funds will be necessary for the National Advisory Committee for Aeronautics to move forward with its basic research activities in aeronautics. The funds for the National Security Resources Board will be maintained at about the present level, and the cost of maintaining industrial reserve plants by the General Services Administration will decline slightly. Other activities provided for include the Selective Service System as well as various defense activities of other agencies. The defense activities of the Reconstruction Finance Corporation, having to do with rubber, tin, and fibers, will result in larger receipts than expenditures, mainly as a result of reduction of inventories.
VETERANS' SERVICES AND BENEFITS
Expenditures of 6.1 billion dollars are estimated for veterans' programs, one-seventh of all Budget expenditures estimated for 1951. The size of these requirements reflects the fivefold increase since 1939 in the number of living veterans and the new readjustment benefits provided for the World War II veterans, as well as the increases in rates of benefits and in services to veterans generally.
Most of the expenditures for veterans' benefits and services are not controllable by the ordinary appropriation process. Expenditures depend largely on how many of our 19,000,000 living veterans, and how many dependents of deceased veterans, apply and qualify for aid under some 300 laws. The variable impact of veterans' programs on the Budget is indicated by the fact that expenditures for the fiscal year 1950 are now estimated 1.4 billion dollars higher than they were estimated a year ago. As a result, it now is necessary not only to request restoration of the appropriations for the Veterans Administration eliminated by the last session of the Congress, but also to recommend additional supplemental appropriations for 1950.
Expenditures in the fiscal year 1951 are estimated to decline 825 million dollars from the level for the current year. In the next few years we should be able to see a further substantial reduction in Budget expenditures for veterans' programs, as the temporary readjustment benefit programs taper off or expire under existing legislation. On the other hand, it should be recognized that permanent veterans' laws will necessitate high expenditures for many years. In particular, expenditures for pensions and for hospital and medical care will continue to increase from year to year.
I have called attention in previous Messages to the responsibilities which our Nation has toward its veterans and to our efforts to assist them to resume as nearly as possible their normal places in our society. We have provided a comprehensive and complete program of special Government benefits for veterans of all wars--including extensive economic aids, education and training assistance, job reinstatement and preference rights, as well as extensive medical and other services. Veterans, as citizens, of course, are also benefited under the general programs developed in the last 15 years to maintain high employment and to advance the Nation's economic welfare.
Almost 2,000,000 veterans with disabilities incurred in the service, and over 300,000 families of veterans deceased from service causes, are now being assisted under the veterans' programs. Our primary long-run obligations in providing veterans' benefits and services are to this group. We must give them timely help to surmount the economic and physical handicaps sustained as the result of military service and to assist them to assume the full responsibilities of civilian life. In the last 2 years, substantial additional increases in compensation rates to dependents and to veterans of World Wars I and II have brought the rates to this group reasonably into line with the rise in the cost of living since 1939.
The remaining 17,000,000 veterans are practically all without service disabilities. The Government has made available liberal benefits to help all veterans of the two world wars make the transition from military to civilian life. The veterans of World War II, in particular, have received readjustment benefits to assist them in obtaining education, training, jobs, businesses, and homes. Most of the citizen-soldiers of World War II returned to civilian life 4 years ago and have had adequate opportunity to reestablish themselves in their communities. The original, sound purposes of the Servicemen's Readjustment Act have largely been served. Some of the benefits under the act have already terminated and the need for others, such as education and training benefits, is drawing to a close.
Veterans without service disabilities will continue to be eligible for liberal benefits under the permanent veterans' laws after the termination of temporary programs. At the same time, these veterans are eligible in many cases for benefits under the general social security programs of the Government. We now seek to improve and to broaden the general social security programs to provide protection against the economic hazards of old age, disability, illness, and unemployment. The social security proposals pending in the Congress apply to all the people, including veterans. In the pending bill to improve the old-age and survivors insurance system, veterans would receive credit for the period of military service during World War II toward benefits under the system. On the other hand, proposals are also pending in the Congress to increase greatly the special programs for veterans, who with their dependents now comprise about two-fifths of our total population. There is real cause for concern that we may overlook the close relationship of these two systems and superimpose on the general system of benefits an overlapping and unwarranted series of special benefits for veterans.
I again urge that in considering new or additional aids for veterans without service disabilities, the Congress judge their necessity not merely from the standpoint of military service, but also on the basis of benefits under the general social security, health, and education programs available to all the people, including veterans. Our objective should be to make our social security system more comprehensive in coverage and more adequate, so that it will provide the basic protection needed by all citizens. We should provide through the veterans' programs only for the special and unique needs of veterans arising directly from military service.
I am sure that our veterans are willing to share with other citizens in the benefits which can be gained for all through a positive program of economic and social advancement. They recognize that their best interest is inseparable from the best interest of the Nation. For a democratic Nation like ours can thrive only as all its citizens--veterans and nonveterans alike--are enabled through fair and equal opportunities to live as self-respecting, self-reliant men and women in a free and prosperous country.
VETERANS' SERVICES AND BENEFITS
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Readjustment benefits Total 6,669 6,905 6,080 15,847 1This Budget also includes 160 million dollars of appropriations to liquidate prior year contract authorizations for hospital construction. Readjustment benefits.--By the end of the fiscal year 1951 it is estimated that under the Servicemen's Readjustment Act 8,000,000 veterans will have received education and training benefits at a cost of 12.9 billion dollars, and that 9,000,000 will have drawn unemployment and self-employment allowances totaling 3.9 billion dollars. In addition 2,400,000 veterans will have obtained 13 billion dollars in loans for homes, farms, and businesses under the Government loan guarantee program for veterans. |
The average enrollment in school, job, and farm training courses under the education and training provisions of the Servicemen's Readjustment Act is expected to decline from 1,986,000 in the current year to 1,837,000 in 1951 and to require expenditures of 2.5 billion dollars.
The education and training program, however, is now considerably bigger than had been expected. The average number of participants in 1950 is estimated at 400,000 above the level anticipated a year ago. Largely because of this unexpected increase I shall soon transmit to the Congress a supplemental appropriation estimate of about 700 million dollars to cover the higher expenditures now estimated for the current fiscal year. The bulk of the increase is in schools below the college level, particularly in trade and vocational schools. While enrollment in other courses is decreasing, enrollment in these courses is still increasing and in 1951 is estimated to average 936,000-41 percent higher than in 1949 and 14 percent higher than estimated for the current fiscal year.
The continued expansion of enrollment in schools below college level, more than 4 years after most veterans have been returned to civilian life, raises the question whether this program still conforms to the original sound objectives of the Servicemen's Readjustment Act--to enable veterans to resume education or training interrupted by the war or to restore skills lost during military service. There is some question whether large numbers of veterans enrolled in these schools are in fact being trained for occupations for which they are suited and in which they will be able to find jobs when they finish their training. I have asked the Administrator of Veterans' Affairs and the Director of the Bureau of the Budget to study this situation thoroughly and to recommend to me any corrective measures, administrative or legislative, which should be taken to assure that our expenditures for this program yield a proper return both to the veterans and to the Nation as a whole.
Since July 1949, under the terms of the "GI bill", veterans discharged from service remain eligible for unemployment and self-employment allowances for only 2 years after date of discharge. On the average 59,000 claimants are expected to draw allowances, estimated at 61 million dollars, in the fiscal year 1951. This compares with an average of 1,400,000 veterans receiving allowances in the peak year of this program, fiscal year 1947.
Under the Government loan guarantee program, it is expected that 386,000 veterans will obtain loans, almost all for homes, amounting to over 2 billion dollars in the fiscal year 1951. The estimated outlays of 68 million dollars for this program are chiefly for the payment of the first year's interest on the guaranteed portion of the loans. Expenditures for losses on defaulted loans are now relatively small, although the contingent liability is sizable since the amount of the Government guarantees is now about 48 percent of the total loans. In addition to guaranteeing veterans' loans, the Government also purchases guaranteed mortgages held by financing institutions. (Mortgage purchases are classified under housing and community development.)
The "other" expenditures for readjustment benefits cover allowances for burial expenses of veterans, tuition and supplies for disabled veteran trainees, and Government grants for special housing for certain seriously disabled veterans.
Compensation and pensions.--It is estimated that an average of 3,058,000 individuals and families will receive compensation and pension payments totaling more than 2.2 billion dollars in the fiscal year 1951. Beginning in 1951 disability retirement payments of 78 million dollars to 31,000 Reserve officers, shown in this item in prior years, have been transferred to the military retired pay account of the Department of Defense. Apart from this reclassification to national defense, there is an estimated net increase in 1951 of 99,000 in the average number of cases, and of 71 million dollars in expenditures over the current year, entirely for cases without service disabilities.
The 1951 expenditure estimate of 2.2 billion dollars includes 1.5 billion dollars in compensation for service-connected cases, covering an average of 344,000 families of deceased veterans and 1,981,000 veterans with disabilities. The compensation and pension total also includes 160 million dollars for subsistence allowances to service disabled veterans in the vocational education and training program. Pension payments to an average of 732,000 non-service-connected cases in 1951 are estimated to total 553 million dollars, about two-thirds to living veterans and one-third to survivors of deceased veterans.
Insurance.--The Government reimburses the veterans' life insurance trust funds for payments on account of deaths traceable to war hazards, and also pays directly certain claims to veterans who failed to meet the regular standards of insurability. The expenditures in the fiscal year 1950 include nonrecurring transfers of 413 million dollars to the national service life insurance fund arising from a resurvey of the Government's liability for such contributions. Expenditures in 1951 for insurance claims payable by the Government are estimated at 39 million dollars.
Hospital and domiciliary construction.-Construction of hospitals to provide 37,000 new beds and additional domiciliary facilities, costing 872 million dollars, is now about one-third completed. By June 1951 it is estimated that three-fourths of the work will have been done. When this program is finished, there will be sufficient beds to provide adequately for foreseeable needs for all service-connected cases and a more liberal allowance of beds than at present for nonservice-connected cases. Obligational authority already available is more than adequate to meet the needs of the program now under way.
Hospital and other services and administration.--Current expenses for hospital and medical care are estimated at 590 million dollars in the fiscal year 1951. About fourfifths of these expenditures are for the inpatient care program, and in this program two-thirds of the cases currently are nonservice-connected. A daily average of 138,000 patients in hospitals and homes is estimated for 1951, about 9,000 more than were cared for in 1949 and 4,000 more than in the current year. The other one-fifth of the expenditures is largely for the outpatient medical and dental care programs.
Other current expenses, which are chiefly the costs of administering and operating the nonmedical benefits programs and of general administration of the Veterans Administration, are estimated to decline in 1951 to 269 million dollars.
VETERANS' LIFE INSURANCE FUNDS
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(Trust accounts) [Fiscal years. In millions] 1949 1950 1951 Item actual estimated estimated Receipts: Total 775 1,194 708 Expenditures: Total 393 2,730 999 Net accumulation 381 1,536 291 Trust accounts.--The national service life insurance and Government life insurance trust funds operate as mutual insurance systems on a commercial pattern, except that no administrative expenses are paid by them and the amounts held in reserve and as surplus are invested in Government obligations by the Secretary of the Treasury. Veterans of World Wars I and II and present servicemen now hold about 6,800,000 active policies in these two systems. Premiums and earnings, supplemented by Government payments of over 4 billion dollars for claims involving deaths and disabilities resulting from extra hazards of military service, have built up assets in these two funds to an estimated 9.7 billion dollars at the present time. |
The Government life insurance fund has been on a dividend-paying basis since 1921. A special dividend of 40 million dollars was paid early in the fiscal year 1950. The first national service life insurance dividend, amounting to an estimated 2.8 billion dollars and payable to all servicemen of World War II who hold or have held policies, has been declared. Payments are now scheduled to begin shortly. It is estimated that 2.2 billion dollars will be disbursed in the current fiscal year and the balance in 1951 or later, as applications are filed. In the next few years a regular dividend schedule is to be established for national service life insurance. These dividends are not a Budget expenditure since they are paid from the trust funds.
SOCIAL WELFARE, HEALTH, AND SECURITY
The coming year will be an extremely significant one for the Nation's social security program. The decisions of the Congress on pending legislation will determine the direction which this country will follow in providing basic protection against the major economic hazards of old age, unemployment, illness, and disability. It is my strong belief that it is a responsibility of the Government to provide this protection, and to provide it in a manner that is consistent with our ideals of independence and self-reliance--through the already established and tested principle of contributory social insurance. This was the basic philosophy of the Social Security Act, in which the major role was given to social insurance, financed mutually by employers and employees, with benefits available as a matter of right without a means test. Public assistance was given only a supplementary role to fill in the diminishing gaps in insurance protection.
The effects of our failure in recent years to carry out this philosophy are already dramatized by the increase in the public assistance rolls. Because the protection of social insurance is so limited and inadequate, far too many people have been forced to seek public relief. In some States, for example, half the aged people are on the relief rolls. Approximately 2,700,000 aged people and 1,500,000 dependent children now receive public assistance. By contrast, only 1,900,000 aged persons receive insurance benefits and 800,000 children and their mothers receive survivors benefits under the old-age and survivors insurance system. Average old-age insurance benefits are only 26 dollars a month compared with average old-age public assistance benefits of 45 dollars.
Public demand for some form of basic financial protection against loss of earning power is evident in the keen interest of wage earners in industrial pension and insurance plans. There can be no question that our society can and should provide such protection. What I wish to emphasize is that the basic approach should be through a comprehensive public program of old-age, survivors, and disability insurance, rather than through a multiplicity of unrelated private plans, which would inevitably omit large numbers of the working population and treat others unequally. Private plans and voluntary insurance can then provide desirable supplemental protection.
I urge that the Congress enact legislation to expand and improve the old-age and survivors insurance system in accordance with the recommendations made last spring. Specifically, nearly all gainfully employed people, including farmers and the self-employed, should be covered; benefits should be increased sharply; and disability should be added to the risks covered. It is also important that the tax base be raised to the first 4,800 dollars of earned income, not only to reflect changes in wage levels since 1939, but also to bring both receipts and benefits to proper levels.
The recommended program will cover about 85 percent of all employed people, and will thus gradually reduce the need for public assistance. In the meantime, however, it is necessary to provide some help for those persons not yet protected by social insurance, as well as for those who would need public aid even with an adequate social insurance system. I therefore renew my recommendation of last year that the program of Federal grants to States for public assistance be extended and improved. The proposal that I submitted to the Congress last spring was designed to permit Federal sharing in the cost of aid to needy persons excluded from the present program, as well as in the cost of essential medical and welfare services. It was also designed to make Federal grants more responsive to the financial resources of each State. Within the framework of general policy under the Social Security Act, the States are responsible for determining the size of benefit payments and the eligibility of individuals for assistance. In adopting amendments to the present program, we should continue to rely on the States to bear a considerable share of the financial responsibility.
In the field of health, I presented a set of recommendations to the Congress on April 22, 1949, outlining in some detail a program for the Nation, centering in a national system of medical-care insurance. Since that time, the extension and enlargement of the hospital construction program which I recommended has been enacted, and considerable headway has been made on some of my other recommendations. I hope that the Congress will soon complete action on legislation to increase Federal assistance to local health services. Strengthening of these is fundamental to our national health. In addition, legislation should be enacted to provide financial aid to medical and related schools to encourage the training of additional medical personnel. In the case of nurses, tuition scholarships and subsistence aids should be made available for training graduate nurses, and grants should be made to States for vocational education for practical nurses, to encourage more young women to enter the profession.
To fill in a major gap in our social security system, I again strongly urge the adoption of legislation providing for a comprehensive system of prepaid medical care insurance. This should be geared in with our other social insurance programs and financed predominantly by employer and employee contributions.
Action on these measures should no longer be delayed. We cannot in good conscience let our social security system remain in the blueprint stage, and allow relief programs to become our primary defense against want.
This Budget contains estimates for all of my proposals. The greater part of them would be financed through special taxes, with receipts going into Government trust funds and payments being made directly from the funds. Social insurance benefits, by providing support for the aged and disabled and their dependents, help to relieve individual families, employers, and communities of this burden. At the same time, by replacing the present haphazard arrangements with a comprehensive pattern of social insurance, we promote the stability of the economy and preserve the self-respect of all our citizens.
My proposals will add an estimated 271 million dollars to Budget expenditures in 1951, principally in the form of grants to States. Of this amount, 200 million dollars is for improvement of public assistance and 67 million dollars for health programs. These items, plus increases under existing legislation in these two fields, are expected to cause Budget expenditures for social welfare, health, and security to rise in the fiscal year 1951 to a level of 2.7 billion dollars, an increase of 417 million dollars over the current year. Aside from proposed legislation, the primary cause of the increase is a rise in grants to States for public assistance and hospital construction. Included in the total is 594 million dollars representing the transfer of pay-roll tax receipts to the railroad retirement trust fund.
I recommend again that the Federal Security Agency be given departmental status; its functions are so important to the domestic policies of the Government that the head of this Agency should be a member of the President's Cabinet.
Assistance to the aged and other special groups.--Grants-in-aid to States for public assistance to the needy aged, the blind, and dependent children are expected to reach 1.2 billion dollars in 1951 under the present program, with the Federal share averaging about 52 percent of total payments by State and local governments to these groups. For some time, the number of recipients has been increasing and now exceeds 4,000,000 persons; it is expected to average 4,600,000 during 1951. Average benefits are also expected to continue their rise. As a result, Federal expenditures will exceed those for the current year by an estimated 55 million dollars. The Budget contains an additional 200 million dollars as the first-year expenditure estimated for proposed legislation to cover all the needy and to put the program on a variable grant basis. The revised formula which I have recommended would relate grants to the financial resources of the individual States and would also permit the Federal share to be held within reasonable limits.
SOCIAL WELFARE, HEALTH, AND SECURITY
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[ Fiscal years. In millions ] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Assistance to the aged and other Total 1,907 2,297 2,714 12,625 165 1This Budget also includes 151 million dollars of appropriations to liquidate prior year contract authorizations. |
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I am also proposing legislation to strengthen the Federal-State program of vocational rehabilitation and to provide additional opportunities for rehabilitation of the more severely handicapped. By enabling these people to become productive workers, instead of liabilities to their families and communities, we are enhancing our national supply of skills and productive ability. The Budget includes 4 million dollars for the first year under the proposed legislation. |
Railroad retirement insurance. -- The amount of 594 million dollars included as an expenditure in the Budget is actually the transfer of special tax receipts to a trust account for payment of benefits to retired railroad workers and their survivors. Apart from credits for military service, the program is financed by taxes on railroad wages, shared equally by employees and employers. Under present law, the transfers of tax receipts to the fund must be made in advance of collection and thus interest begins to accrue to the fund before the taxes are collected. To avoid this payment of interest on money not yet received, the Congress should direct that these taxes be transferred to the trust fund when received, as is now done with the oldage and survivors insurance taxes.
I recommend also that the Congress revise the procedure for making Federal Government payments for military service credits allowed to railroad employees. Such payments to the railroad retirement trust fund should be made annually in the years ahead on the basis of claims actually approved as workers retire. As the law now stands, these payments are made in advance, without adequate relationship to eventual requirements for actual benefits. To cover such future claims, 193 million dollars has already been advanced to the trust fund. Unless the law is amended as recommended in this Budget, further payments of approximately 33 million dollars will be required in each of the next four fiscal years.
Promotion of public health.--Federal expenditures for public health are mainly for grants-in-aid to States and for research. Of the 334 million dollars estimated for existing programs in the fiscal year 1951, 213 million dollars is for financial assistance to the States for general public health services and for a wide variety of special State and local programs, including hospital construction, maternal and child health, tuberculosis control, and mental health. The increase of 75 million dollars in expenditures over 1950 for existing programs is caused largely by a rise in grants to liquidate prior years' hospital construction authorizations. This program is helping communities throughout the Nation to reduce the hospital shortage.
Because adequate general public health services are basic in our health program, I am recommending that grants for this purpose be increased by 9 million dollars, bringing them up to 23 million dollars, the maximum authorized under existing law. An additional 5 million dollars is included for proposed legislation to increase these grants beyond the existing ceiling. At the present time, most of the counties of this Nation lack, either wholly or in part, the basic local public health services which must form the foundation for our efforts to improve the Nation's health. The increase permitted by existing law will provide only a start toward meeting this serious deficiency. New legislation is, therefore, needed to remove the existing statutory ceiling and provide a sound basis for aiding States in the future development of adequate local health services.
Other proposed legislation is expected to add 62 million dollars to expenditures, of which 30 million dollars is for aid to medical education to increase enrollments in schools of medicine, nursing, dentistry, and public health, and 7 million dollars is for expansion of health and welfare services to mothers and children. Expenditures under pending legislation authorizing special health services to school children are estimated at 25 million dollars.
The direct research activities of the Public Health Service and the grants to individuals and institutions for research, teaching, and training, will require an estimated 47 million dollars in 1951, a moderate increase over 1950. No provision is made in this Budget for further expansion of Public Health Service grants to medical schools for undergraduate teaching and for construction of additional research facilities on the basis of special disease categories. This anticipates early enactment of legislation for general aid to medical education, which would contain adequate provisions for aid to medical schools in meeting their costs of teaching and in constructing additional facilities. Such legislation would permit an integrated program of research and teaching at medical schools, which should be far more conducive to good results than separate financing for each major type of disease.
Trust accounts.--Under the old-age and survivors insurance, railroad retirement, and Federal employee retirement programs, benefit disbursements are made from the trust funds and are not included in Budget expenditures. On the receipts side, the payroll contributions for old-age and survivors insurance are transferred directly to the trust fund and not included in total Budget receipts. Receipts and payments under the proposed health insurance program would also be handled in this manner. Railroad retirement taxes, on the other hand, are included in total Budget receipts and are transferred to the trust account as a Budget expenditure. The Government contribution to its employee retirement funds is, of course, a Budget expenditure (classified under general government).
SOCIAL WELFARE, HEALTH, AND SECURITY
(Major trust accounts)
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[Fiscal years. In millions] 1949 1950 1951 Fund and item actual estimated estimated Federal old-age and survivors insurance trust fund: Net accumulation 215 The money in these trust funds is invested in Government securities, and the interest earned is added to the principal of each trust fund. Accumulated assets now total 18 billion dollars. |
Under present law, the old-age and survivors insurance tax rate advanced on January 1, 1950, to 1 1/2 percent each for employers and employees. In view of the recommended increase in benefits and addition of disability coverage, I propose that the further tax increase to 2 percent each, presently scheduled for January 1, 1952, be moved up to January 1, 1951. The proposed legislation would raise benefits in the fiscal year 1951 from about 800 million dollars under existing law to approximately 2.2 billion dollars. Thereafter disbursements for benefits can be expected to climb gradually as claims mature. The 4 percent combined tax should produce revenues of approximately 5 billion dollars a year with employment at a high level, so that for the next several years reserves would continue to accumulate.
A period of preparation will be required to set up the health insurance system. I am proposing that in the meantime a small pay-roll tax of one-fourth of 1 percent each on employers and employees become effective January 1, 1951, to defray initial expenses. Setting up this tax will also make possible the establishment of eligibility and other administrative records.
HOUSING AND COMMUNITY DEVELOPMENT
Last year the Congress adopted as the declared objective of national housing policy "a decent home and suitable living environment for every American family." Real progress has been made toward achieving this goal. Private enterprise, with extensive Government assistance, built a million new houses last year, more than ever before, and at generally reduced prices. Far-sighted new legislation was enacted, which gives practical support to private and local initiative in clearing slums and developing our cities, in providing special assistance for low-income families in cities and on farms, and in promoting better methods and lower costs for all types of housing construction.
Our task this year is twofold. We must continue to push ahead rapidly in carrying out these major new programs. We must also further improve Federal housing legislation. In particular, to close the biggest remaining gap, I am recommending legislation which will aid middle-income groups to obtain adequate housing they can afford.
Budget expenditures for housing and community development are estimated at 1.3 billion dollars in 1951. Of this total, almost 1 billion dollars, or about 75 percent, represents the current estimate of expenditures for mortgage purchases by the Reconstruction Finance Corporation to support the private mortgage market. The Corporation will subsequently be reimbursed for its expenditures in buying these mortgages, either through collections or through sale to private institutions.
Most of the Federal expenditures for housing and community development, including mortgage purchases, are financed by public debt authorizations rather than by appropriations. The public housing and urban redevelopment programs will require relatively small appropriations in the early years, with substantial increases in later years. The Federal Housing Administration insures each year about 3 billion dollars in private home mortgages, but since this is an insurance operation it has only a minor effect on current Budget expenditures.
HOUSING AND COMMUNITY DEVELOPMENT
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[ Fiscal years. In millions ] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Aids to private housing: Total 282 1,006 1,329 2 117 704 |
1Stand-by borrowing authority of 1,750 million dollars is recommended to become available in 1950.
2This Budget also includes 18 million dollars of appropriations to liquidate prior year contract authorizations.
Federal Housing Administration.--Almost half the record volume of private new housing now under construction is being financed with mortgages insured or guaranteed by the Federal Government, largely by the Federal Housing Administration, and also by the Veterans Administration (classified under veterans' services and benefits). By removing all major risks from mortgage lending, these insurance and guarantee programs make is possible for American families to buy housing on substantially better terms than they could obtain otherwise. About 350,000 other families now live in rental housing which was financed by Government, insured mortgages. In the case of both sales and rental housing, established procedures of the Federal Housing Administration, including inspections, provide assurance that recognized housing standards are met.
As long as favorable economic conditions continue, income from premiums and other sources will exceed expenses and permit substantial investment in Government securities to build up reserves against possible later losses.
In the past year the mortgage insurance program has successfully stimulated construction of rental housing and lower-cost housing for sale. I have already recommended additional legislation to encourage further the construction of lower-cost housing for sale. I shall shortly transmit recommendations to provide, on a permanent rather than an emergency basis, a more effective stimulus to lower rental housing. For both rental and sales housing, the new proposals would also provide needed incentives to construction of units of adequate size for family living.
Reconstruction Finance Corporation.-Since last spring, the Federal National Mortgage Association, a subsidiary of the Reconstruction Finance Corporation, has been making heavy purchases of mortgages from private lenders, of which the major portion is guaranteed by the Veterans Administration. These purchases have made it possible for veterans in all parts of the country to buy houses on the advantageous terms offered under the Servicemen's Readjustment Act. Substantial commitments to purchase mortgages insured by the Federal Housing Administration have also been particularly helpful in assuring the availability of adequate funds for rental housing construction.
The continuing need for a stand-by secondary market does not mean that Government purchases should be regarded as a permanent substitute for private financing. Accordingly, the administration of this program will be directed toward encouraging private lenders to hold a larger portion of these mortgages as well as to repurchase the mortgages previously sold to the Federal Government. Important administrative steps are being taken but they can be only gradually effective, and substantial future expenditures will be necessary to carry through on the large volume of commitments already outstanding. Estimated commitments will exhaust the present authorization of 2.5 billion dollars shortly after the close of the current fiscal year. Because the rate of commitment is uncertain, I am recommending an additional 500 million dollars in public debt authorizations in fiscal year 1950 and 250 million dollars in 1951.
Prospective expenditures for mortgage purchases cannot be estimated accurately, since their amount depends largely on whether private lenders decide to hold the mortgages as permanent investments or to sell them to the Government. For example, the initial estimate a year ago of 200
million dollars in such purchases for the fiscal year 1950 was later revised upward to 1.3 billion dollars and is now reduced to 940 million dollars.
The Reconstruction Finance Corporation also has special authority to lend up to 50 million dollars to producers of prefabricated housing and large-scale builders using advanced construction methods. I recommend that the Corporation be authorized to lend an additional 25 million dollars for these and related purposes. The accomplishments of this program to date have been below our expectations, but the potential benefits from the development of new housing production methods are so great that I believe a further limited investment of Federal funds, building upon the experience already gained, will yield good returns.
Cooperative housing for middle-income families.--Even with these various Federal aids, enough private housing of the fight types is not yet being produced generally throughout the country at prices which families with modest incomes can afford. As a necessary supplement to our other housing programs, I am recommending new legislation to authorize Federal assistance to cooperatives and nonprofit corporations in building and managing housing projects. Under the plan I am proposing, the Federal Government would provide technical assistance in organizing housing cooperatives and adequate arrangements for their financing. Through financial and other savings, material reductions in rents or charges are anticipated.
Because of the limited American experience with housing cooperatives, this program initially must be viewed as experimental, and cannot be expected to attain a large volume in 1951. With proper Federal leadership and assistance, however, it offers real promise that middle-income families will be able to help themselves obtain good housing at costs within their means.
Home Loan Bank Board.--This Board supervises the operation of the Home Owners' Loan Corporation, the Federal homeloan banks, and the Federal Savings and Loan Insurance Corporation.
The Home Owners' Loan Corporation is rapidly liquidating the remainder of its mortgages by selling them to private lenders. During the depression years, the Corporation made more than 3 billion dollars in loans, thus enabling over 1,000,000 families to keep their homes. By the end of the fiscal year 1951, all of these loans will be repaid or sold.
Savings and loan associations supervised by the Federal home-loan banks provide roughly a third of all home-mortgage financing. The share accounts of most of these associations are insured by the Federal Savings and Loan Insurance Corporation. The favorable experience of these associations in recent years has permitted the Corporation to build up reserves against possible future losses. To further protect investors in these associations in the event of future emergency, I again recommend legislation to provide, on a stand-by basis, authority for both the Federal home-loan banks and the Insurance Corporation to borrow from the Treasury. These provisions, which should become effective in 1950, would be roughly comparable to the Federal assistance already available for the commercial banking system. As in the case of the banking system, moreover, they should be accompanied by measures to authorize more rapid repayment of the Federal Government's investment in these institutions, and to provide more effective and specific authority for the Home Loan Bank Board to regulate lending by the member institutions.
Farm housing.--During the first 2 years of the new farm housing program, about 40,000 low-income farmers will receive help in obtaining better housing. In 1951, the Department of Agriculture will lend an estimated 45 million dollars, as well as provide general technical assistance and some direct grants for farm repairs and improvements.
Public housing programs.--The Public Housing Administration and local housing authorities throughout the country have been taking the steps necessary to get the new low-rent public housing program promptly under way. Preliminary loans have already been authorized to assist 227 communities plan projects which will comprise an estimated 220,000 dwelling units.
Our goal is to have 175,000 units under construction or completed by the end of the fiscal year 1951. Most of the Federal expenditures during this period will be for temporary loans for planning, site acquisition, and initial construction. Private funds will be used for much of the construction financing and nearly all of the permanent financing. The Federal Government indirectly guarantees the local housing authority obligations issued for these purposes by contracting to pay annual contributions sufficient to maintain the low rents required for the projects.
In addition, the Public Housing Administration supervises the management and disposition of 450,000 permanent and temporary housing units constructed to meet emergency war and veterans' needs. In the fiscal year 1951, an estimated 20,000 permanent units will be sold and 38,000 temporary units will be transferred to local agencies or demolished. This disposition of both types of housing can be accelerated if the Congress enacts the amendments to basic legislation which I have previously recommended. Expenditures of these programs are more than covered by receipts from sales and rentals; in addition to covering current expenses, receipts from sales and rentals will result in 62 million dollars in miscellaneous receipts to the Treasury in the fiscal year 1951.
General housing aids.--Under recent legislation, the Housing and Home Finance Administrator is initiating the comprehensive program of housing research which I have long advocated as a necessity to achieve our national housing objective. The longrange objective of this program is to improve knowledge about housing in order to aid in cost reduction and in stimulating the increased and sustained production of housing. Emphasis is being placed upon development of research plans with full participation by other interested public and private groups, so as to assure the maximum possible utilization of existing information and research facilities.
Slum clearance and community development.--Orderly development and redevelopment of our cities and metropolitan areas is essential if we are to realize the full potential growth in production and living standards in the decades to come. Each city clearly has the primary responsibility for initiating and carrying through the far-reaching reconstruction plans required to meet its peculiar needs.
Under the provisions of the new slum clearance and community redevelopment program, the Federal Government now can provide financial assistance needed to augment local resources. Actual development will necessarily proceed gradually, area by area, with carefully planned provision for the housing of families displaced from slum areas and for the uses most appropriate for the redeveloped areas. For the first 2 years of the program, Federal expenditures will comprise loans to local public agencies to help them prepare plans and begin acquisition of sites. When acceptable local project plans are presented, the Federal Government contracts to pay a maximum of two-thirds of all net project costs. Contracts for loans and grants up to 325 million dollars for the fiscal year 1951 are authorized in the basic statute. The grants will not actually be paid until several years hence when the land assembly projects are completed, the redeveloped land sold or leased, and net project costs finally determined.
The Reconstruction Finance Corporation will continue to lend to public agencies for transit lines, tunnels, and other self-liquidating projects in cases where private financing is not initially available on reasonable terms. Private refinancing last year of the large outstanding loan to the Triborough Bridge and Tunnel Authority has made sufficient funds available to finance the new commitments currently anticipated.
Under legislation enacted last year, the General Services Administration is again making advances to State and local governments for public works planning. These advances are repayable when the actual construction occurs. The 2-year program of 100 million dollars will permit preparation of plans for public works estimated to cost more than 3 billion dollars. Every effort is being made to achieve proper coordination in the planning of Federal, State, and local public works and to emphasize projects most appropriate in the event of possible economic emergencies.
Major disasters in the future as in the past will from time to time require prompt Federal assistance to stricken communities. I again urge enactment of pending legislation to provide in advance adequate funds to meet such needs.
EDUCATION AND GENERAL RESEARCH
If education and research are to play their full role in strengthening our democratic society, we must expand our basic research, we must devise types of education that will prepare youth more effectively for participation in modern society, and we must provide better educational opportunities for more of our people.
It is predominantly a responsibility of all government--local, State, and Federal--to provide for the education of our citizens. The Federal Government for many years has given financial aid to special aspects of education, such as vocational education, and to institutions for special groups, such as Howard University. It has become increasingly evident that Federal support of a more general character is needed if satisfactory educational opportunities are to be made available for all. The Nation cannot afford to waste human potentialities, as we are now doing, by failing to provide adequate elementary and secondary education for millions of children and by failing to help hundreds of thousands of young people who could benefit from higher education.
The importance of this need requires that we provide substantial Federal assistance to States for general educational purposes and for certain other important programs in this field.
To progress toward these objectives, this Budget includes expenditures for education and general research (not including large amounts in veterans, national defense, and other categories) of 434 million dollars in the fiscal year 1951, compared with 125 million dollars in 1950. More than threefourths is for grants to States. The increase is entirely accounted for by the additional expenditures in 1951 resulting from the new legislation I am recommending. This legislation will entail a further moderate increase in later years.
Promotion of education--Elementary and secondary.--The high mobility that characterizes our people means that no State is immune to the effects of ignorance and illiteracy in other States. The welfare of the Nation as a whole demands that the present educational inequalities be reduced. Educational inequalities are primarily due to differences in the financial resources of States and localities. Income per capita in some States is less than half as great as in others. The States with the lowest incomes have the greatest proportion of school-age children and are unable to finance a fair educational opportunity even with greater effort in terms of tax burden.
School enrollments in practically every State have risen recently and will continue to rise owing to the increased birth rate. Millions of our children are now taught in overcrowded classrooms. For others education is provided only on a part-time basis. At the very time when we need more and better teachers, schools must still employ tens of thousands whose qualifications do not meet the standards necessary to provide a satisfactory quality of teaching. Because salaries are generally inadequate, too few capable young people are preparing to enter the teaching profession.
For these reasons I urge the Congress to complete legislative action to permit the Federal Government to aid the States in support of the maintenance and operation costs of a basic minimum program of elementary and secondary education. The Budget provides for beginning this aid in the fiscal year 1951.
There is a shortage of school buildings in many parts of the country due to the wartime deferment of construction and the increase in the school-age population. In many localities the need for facilities results from the sudden and substantial impact of Federal activities. I recommend that the Congress enact legislation providing for grants to States for surveys of their need for facilities and their resources, and grants for the construction of buildings in those particular areas where Federal activities have been responsible for increased enrollments.
For a number of years several Federal agencies, under separate authorizations, have been helping to finance the education of children living on Federal property and in communities affected by Federal activities. I recommend that the Congress enact general legislation to establish a single program for all Federal agencies.
EDUCATION AND GENERAL RESEARCH
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Promotion of education: Total 70 125 434 2 455 7 1Less than one-half million dollars. Promotion of education--Higher education.--Large numbers of young people and adults wish to continue their education beyond high school in order to prepare for entrance to professional schools, to receive additional technical or vocational training or to round out their general education. For many of our people, postsecondary education on a part-time or full-time basis, provided in institutions located within commuting distance of home, would meet their needs at low cost. Several of the States are now developing community institutions for this purpose. I have asked the Federal Security Administrator to make a comprehensive study of this development in order to determine whether the Federal Government might appropriately take any action to encourage the States and localities to establish and expand "community colleges." |
Primarily because of low family incomes and of the high costs involved, more than half of our young people who could benefit from a college education are now unable to attend. This failure to develop to the fullest extent the capacities of our young people is a matter of national concern. As a step toward correcting this situation, I shall transmit to the Congress a legislative proposal to authorize a limited Federal program to assist capable youth who could not otherwise do so to pursue their desired fields of study at the institutions of their choice.
This Budget includes 1 million dollars as a tentative estimate of appropriations needed in the fiscal year 1951 to establish the required organization and to initiate the program. Assistance to students would begin in the fiscal year 1952.
National Science Foundation.--The Government is investing hundreds of millions of dollars in research--primarily in applied research in the military, atomic energy, and health fields. We must consider, however, not only the ways in which the great reservoir of scientific knowledge already at our disposal can best be utilized, but also the best paths to follow for the discovery of further basic knowledge. To this end, we urgently need a National Science Foundation to stimulate basic research and to assure an effective balance among the Federal research programs. By developing a national research policy and by formulating a truly national research budget it should be possible to relate the activities of public and private institutions in a concerted effort to advance the frontiers of knowledge. The Budget provides 500
thousand dollars for the initial administrative expenses of the proposed National Science Foundation, in the expectation that the Congress will enact legislation, already passed by the Senate, to establish it.
Seventeenth decennial census.--The seventeenth decennial census of population, housing, and agriculture, to be taken this year, will provide basic data essential to important decisions by businessmen, governments, and other groups throughout the Nation. Expenditures for the census, estimated at 45 million dollars in 1950, will drop to 33 million dollars in 1951, and continue to decrease in succeeding years as tabulation and publication of the results are completed.
AGRICULTURE AND AGRICULTURAL
RESOURCES
American agriculture is in a period of transition from the peak production requirements of the war and immediate postwar years to the normal requirements of a peacetime economy. During the war, every effort was made to increase agricultural production to meet the needs of our war economy and of our allies. In some cases desirable long-run goals for conservation of soil resources were deferred in the effort to increase production and to minimize the manpower requirements in agriculture. War dislocations and crop shortages abroad created an abnormal export demand for food grains and a few other farm products, financed largely by United States foreign relief and aid programs. In the next few years, this abnormal demand can be expected to adjust to a more normal level and distribution pattern for world trade.
AGRICULTURE AND AGRICULTURAL RESOURCES
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Loan and investment programs: Total 2,512 2,671 2,206 875 580 1Additional borrowing authority of 2 billion dollars is recommended, to become available in the fiscal year 1950. Although this transition from war to peacetime needs has caused a decline in farm prices and a loss in farm income, the operation of Government price supports has served to cushion the decline and has been a major factor in preventing a serious postwar recession in the economy as a whole. The resulting benefits to workers and employers, as well as to farmers, have been many times the outlay of Federal funds. As the necessary adjustments in agriculture are completed, we should look forward to a reduction in budgetary expenditures for this purpose. The need for food and fiber products will continue to expand as our national income and population increase. Production on existing land, however, must be gradually shifted from the grains and cotton to livestock and dairy production, permitting marginal lands, whose soil is in danger of loss from erosion of wind and water, to be put back into pasture and soil-conserving crops. It is important that Government programs facilitate these adjustments within agriculture as well as between agriculture and the rest of the economy. |
Federal agricultural programs, in addition to promoting adjustments in agriculture and stimulating conservation of soil resources, are designed to improve the efficiency of farm production, to provide low-income farmers an opportunity to improve their economic status, to assure farmers generally a reasonable stability in farm income, and to improve the level of rural living.
Total Federal expenditures for agriculture and agricultural resources increased from 2.5 billion dollars in 1949 to an estimated 2.7 billion dollars in 1950. Both years reflect the operation of price-support programs as farm prices declined. A decrease of 465 million dollars is expected in 1951, resulting from smaller outlays on price supports as acreage allotments and marketing quotas serve to reduce production of some 1950 crops, particularly cotton and corn.
Price support.--Net outlays of the Commodity Credit Corporation amounted to billion dollars in 1949. This was the first year since before the war that mandatory price supports have resulted in large cash expenditures and the accumulation of loans and inventories in the hands of the Corporation. Expenditures in 1950, estimated at 1.5 billion dollars, will be largely for corn and cotton, with smaller outlays for peanuts, rice, tobacco, milk and milk products, potatoes, beans, cottonseed, linseed oil, and various other products. Approximately 90 million dollars of the expenditures will be for construction of new grain-storage facilities. In 1951, estimated Commodity Credit Corporation expenditures decline to 952 million dollars because of the expected effects of acreage allotments and marketing quotas on the 1950 crops. In later years, price-support expenditures should decline further as production is adjusted to normal demand.
Estimates for price-support expenditures are, of course, highly tentative, since the actual expenditures depend upon many factors which cannot be accurately forecast, such as the volume of exports, the rate of domestic consumption, and the influence of insects and weather conditions on yields.
The operation of price supports has resulted in the accumulation of large inventories, particularly of cotton, wheat, and corn. These commodity inventories represent assets which provide insurance against possible crop shortages in future years. It is estimated that the financial requirements of the Commodity Credit Corporation in the fiscal year 1951 may exceed its present borrowing authorization. I recommend that the Corporation be given an additional borrowing authority of 2 billion dollars, to be available beginning in 1950.
Farmers' Home Administration.--The Farmers' Home Administration provides management assistance to low-income farmers, and makes loans for farm enlargement and development, production and subsistence, water facilities, homesteads, and farm housing. (Farm housing loans financed under the borrowing authorization provided in the Housing Act of 1949 are classified under housing and community development.) The apparent decline in expenditures for the Farmers' Home Administration in 1950 and 1951 compared with 1949 is due to a shift in financing provisions. In 1949, loans were financed from appropriated funds, and all loans were shown as expenditures, with collections on old loans going directly into miscellaneous receipts of the Treasury. In 1950 and 1951, most of the loan programs will be financed by a borrowing authorization, and the expenditure figure will reflect loans less collections.
Rural electrification and rural telephones.--On June 30, 1949, approximately 78 percent of all farms were electrified. As coverage is gradually extended to the remaining areas, Rural Electrification Administration loans for electrification will decline. Beginning in the fiscal year 1950, the Rural Electrification Administration will also make loans to rural telephone cooperatives and other independent telephone companies under recently enacted legislation. Loans for this purpose are expected to increase in 1951. Net loan expenditures of the Rural Electrification Administration are estimated to be 427 million dollars in 1951, compared with 355 million dollars in 1950 and 299 million dollars in 1949. I recommend that the Rural Electrification Administration be given new loan authority for the fiscal year 1951 amounting to 450 million dollars, of which 50 million dollars will be available for the rural telephone loan program.
Conservation.--The Soil Conservation Service provides technical advice and assistance to farmers in establishing a sound program of farm management to insure adequate protection and development of soil resources. Conservation practices are also encouraged through the agricultural conservation payments program carried out by the Production and Marketing Administration. By the end of the fiscal year 1951, about 90 percent of the farms of the country will be in organized soil conservation districts. Progress is being made in the preparation and application of desirable farm management plans for the adequate protection of our soil resources, but still greater emphasis will need to be given in future years to soil and water conservation, including the Department's upstream and on-the-farm flood-control program, to reduce siltation in the downstream areas and to enhance the value of projects constructed by the Bureau of Reclamation and the Corps of Engineers.
Expenditures for the Soil Conservation Service and for flood-control work of the Department of Agriculture are expected to increase from 64 million dollars in 1950 to 68 million dollars in 1951. Expenditures for the conservation and use program and for administering acreage allotments and marketing quotas are estimated to be 314 million dollars in 1951 compared with 285 million dollars in 1950 and 182 million dollars in 1949. I am recommending that the advance authorization for the conservation and use program in the 1951 crop year, which will largely determine expenditures in the fiscal year 1952, be maintained at the 1950 crop year level of 285 million dollars.
Other financial aids.--Under the terms of the International Wheat Agreement, the United States will export 168 million bushels of wheat each year for 4 years at a price not in excess of $1.80 a bushel. In return, importing countries have agreed to buy the wheat at not less than certain specified minimum prices. In the first year, the effective export price for United States wheat is $1.80. It is estimated that the Commodity Credit Corporation, through which the program is financed, will spend 82 million dollars in the fiscal year 1950 to bridge the gap between the $1.80 export price and the higher domestic market price. In 1951, such costs are estimated at 76 million dollars. The Corporation is to be reimbursed for each year's cost of the Wheat Agreement from appropriated funds. In 1951, an appropriation of 82 million dollars is recommended to reimburse the Corporation for the cost of the Wheat Agreement in the fiscal year 1950.
Additional financial aid is provided for farmers through the Sugar Act of 1948 and through the permanent appropriation for removal of surplus agricultural commodities. Expenditures under the Sugar Act depend on the volume of domestic sugar production for which sugar growers receive payments at the rates determined in the legislation. It is estimated that expenditures under the Sugar Act will be 69 million dollars in 1951. The permanent appropriation for removal of surplus agricultural commodities, established in 1935, provides a fund each year equal to 30 percent of customs duties. In 1951, it is estimated that 110 million dollars will be available in this fund.
Other development and improvement of agriculture.--Included in this category are the continuing basic services for agriculture, such as research on crop varieties, livestock and poultry, and the production and marketing of farm products; control and eradication of insects and plant and animal diseases; payments to States for experiment stations and cooperative extension work; and the general overhead expenses of the Department. For 1951, I recommend legislation to strengthen the regulation of commodity exchanges by the Commodity Exchange Authority.
NATURAL RESOURCES
This Nation has learned in recent years what it means to have limited natural resources. Our soil, forests, water, and minerals have been drawn upon prodigiously to support two major wars and the rapid economic growth of our country. If we are to continue to expand production and employment we must use our remaining resources with the greatest possible effectiveness, following sustained-yield principles, developing resources as yet unused, and restoring where possible the resources we have depleted.
NATURAL RESOURCES
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Atomic energy: Total 1,512 1,845 2,218 2 1,594 370 1Less than one-half million dollars. A large share of the responsibility for such action falls upon the Federal Government, with respect to both resources on public lands and resources in private ownership. Atomic energy development depends upon our pressing ahead with the present Federal program on a broad scale. Continued economic growth in large areas of our country depends upon steady progress in Federal investment for flood control, reclamation, electric power, and related facilities. The wisdom with which we utilize our mineral resources will influence our economic strength and security for generations to come. Continued public investment in these areas is a prerequisite in many fields to the expansion of the private investment which we want to encourage. |
The dollars which the Federal Government spends on these programs are largely investment dollars. In many cases, such as irrigation, power projects, and the management and improvement of public lands and forests, the activities are wholly or partially self-liquidating. In all cases, economic benefits will accrue to the Nation for many years.
The 1951 Budget provides for total expenditures of 2.2 billion dollars in this area, an increase of 373 million dollars from 1950. Over one-third of the total and of the increase is attributable to expenditures for atomic energy. The balance represents primarily the requirements of projects under way in the fields of flood control and reclamation. This Budget provides for no new projects in these areas. Despite the large number of highly meritorious projects which have already been authorized for construction, we should not at this time add to the present high level of commitments. This policy is necessary both because of our overall fiscal position and in order to provide the greatest possible measure of stability, under present economic conditions, in the rate of Federal public works expenditures.
Atomic energy.--The United States is seeking both to develop atomic energy for national defense purposes and to realize the great promise in its use for industrial and other peacetime purposes. Our atomic energy development program is a large venture in diverse fields--scientific research, medicine, engineering, industry--and will continue to require substantial outlays in the next few years.
The 1951 expenditures include increased amounts for the production of fissionable materials and weapons, and for the advancement of the science and technology of atomic energy, including accelerated construction of new facilities and development of new types of nuclear reactors. It is principally through the development of new reactors to produce fissionable materials and radioisotopes, generate power, and propel ships and aircraft, that the Atomic Energy Commission expects to evolve means of utilizing for peaceful purposes the energy released by nuclear fission.
Land and water resources.--We have learned a great deal in recent years about the extensive benefits which can be achieved by proper development of our land and water resources--including navigation, flood control, reclamation, power development, soil and forest conservation, preservation of fish and wildlife, and recreation. In the interest of sounder and more efficient programs in later years, emphasis in this Budget is placed on more thorough investigation and advance planning, and on assembling more complete basic data. However, the framework of Federal legislation and administrative organization under which we are carrying on development programs is in many respects inadequate and obsolete.
In order to obtain a thorough review of the present basic legislation, I have created by recent Executive Order a Water Resources Policy Commission, which will make recommendations later this year with respect to the broad policies which should guide Federal participation in the development, conservation, and use of water resources--both upstream and downstream--and closely related land-use activities. On the basis of these recommendations, I expect that it will be possible to propose up-to-date and effective policies for the Federal, State, local and private efforts which are needed to make proper use of water resources throughout the country. Some changes in present Federal legislation can and should be made at this session of the Congress, but major changes should be deferred until the Commission's recommendations are available.
We also need to find more effective arrangements for administering Federal laws and programs concerning land and water resource development. I have already recommended that the Congress authorize the consolidation of a number of Federal activities in the Pacific Northwest into a Columbia Valley Administration, and provide for its proper integration with other Federal agencies and with State and local responsibilities. In other areas also we should be alert to the opportunities for better administrative arrangements, building on successful experience in the Tennessee Valley and elsewhere, and adapting organizational patterns to the particular circumstances of different regions.
The activities of the Bureau of Reclamation and the flood-control program of the Corps of Engineers, involving the construction of dams, power facilities, canals, channels, and levees, will be limited in 1951 to continuation of work on projects started in prior years. Bureau of Reclamation projects now under way will require an expenditure increase of 64 million dollars in 1951. Expenditures required in 1951 to continue going work of the Corps of Engineers will increase by 77 million dollars over the 1950 total.
The expenditures by the Corps of Engineers and Bureau of Reclamation will result in materially increased power facilities in the next few years. In addition, continuing progress on the existing programs of the Bonneville and Southwestern power systems will result in a further increase in transmission facilities. An increase of 44 million dollars is recommended for the Tennessee Valley development, notably for expansion of power facilities to meet the growing needs of the atomic energy program.
Experience in recent years has shown that it may not be possible to meet the shortages of water, which are a threat in some areas, through our extensive water-resource programs. I recommend, therefore, that the Congress enact legislation authorizing the initiation of research to find means for transforming salt water into fresh water in large volume at economical costs.
Public lands and national forests.--Over many years, our policy with respect to public lands and forests, now comprising over 900,000,000 acres, has gradually been broadened from one of disposal to one of management and conservation. The range, forest, and mineral resources of these lands have considerable commercial value and bring in substantial receipts; in addition they have important watershed, wildlife, and recreational value. In some respects, we have a long way to go before we shall be managing and conserving these resources to achieve their full use and preservation. We should plan to expand our rehabilitation, protection, and management of these resources in the years ahead; the 1951 Budget includes increased funds for these purposes.
Mineral resources.--The Bureau of Mines and the Geological Survey are carrying on important investigations and research in order to ascertain the extent of our mineral resources and the best means of conserving and using them. In view of the limited domestic supplies of many minerals, there is real need for increased exploration and conservation of strategic and critical minerals.
Through laboratory research and developmental work, including operation of demonstration plants, the Government has shown that some of our liquid fuel demands can be met from synthetic fuels produced from oil shale and coal. This Budget includes funds for a continuation of efforts to improve synthetic liquid fuels, and to narrow the cost differential between synthetic and natural petroleum products.
Use of recreational resources.--During the past travel season there were 32,000,000 visitors to the 181 national park areas. This number of visitors is the highest in the history of the National Park Service; it is double the number before the war. This heavy increase in the use of the park areas has enlarged the requirements for their management and protection. The increase of 9 million dollars in the 1951 Budget for the Park Service will provide for additional management and maintenance costs and for some urgently needed construction.
Alaskan resources.--Alaska is a land of large natural resources--forests, fish and wildlife, minerals, land, and water--which must be developed in order for the area to make its contribution to the security and economy of the Nation. The 1951 programs discussed above include 23 million dollars for the development of natural resources in Alaska. Developmental expenditures in Alaska under other functions--in particular national defense, transportation, and social welfare--will amount to approximately 162 million dollars.
Indian land resources.--Large areas of Indian lands are rich in timber, oil, gas, and other minerals, the conservation and development of which should be related to programs affecting similar lands. As part of our general program for protecting their rights and for helping the Indians to become serf-reliant citizens, funds are included in this Budget for initiating the long-range program for the rehabilitation of the Navajo and Hopi Indians in Arizona and New Mexico. While the greater portion of the amount recommended is for essential construction of educational and health facilities (classified in social welfare, health, and security), provision is made also for expanded conservation and development of the resources of the reservations. Funds are also included for some expansion in conservation activities on Indian lands in other areas, as well as for additional health, education, and other benefits to the Indian population.
TRANSPORTATION AND COMMUNICATION
Efficient transportation and communication services play a major role in promoting the economic growth of our country and in assuring our national security. Throughout our history, the Federal Government has traditionally supplemented private enterprise in this field, wherever necessary to assure adequate services at reasonable cost. To this end, the Government provides basic facilities; it regulates economic and safety aspects of commercial operations; it subsidizes essential services which could not survive without Government aid. In the fiscal year 1951, an estimated 1.7 billion dollars will be spent for these activities, a decline of 212 million dollars from 1950. This assumes a reduction of the postal deficit to a reasonable level, through enactment of postal rate increases.
Most of the Federal transportation expenditures are for the provision and operation of physical facilities. Direct Federal expenditures for aviation facilities; marine navigation aids, waterway improvements, and roads will amount to about 600 million dollars in 1951. In addition, grants to State and local governments for the construction of highways and airports will account for 514 million dollars. Although these programs make important contributions to the development of our economy, over-all budgetary considerations make it impossible to proceed with them as rapidly as we should like. The 1951 Budget recommendations have been held as close to the 1950 level as program commitments would allow.
The long-term interests of the general taxpayer, as well as the users of transportation, will best be served by the development of a balanced transportation system, substantially independent of Government support. It is essential that the various promotional and regulatory activities of the Government fit together into a unified transportation program aimed at achieving that goal. At my request, the Secretary of Commerce recently prepared a report outlining the major policy issues which need to be resolved in order to assure such a program. This report is now being reviewed within the executive branch, and I shall later transmit recommendations for any legislation or other action that may prove appropriate.
Merchant marine.--Under the Merchant Marine Act of 1936, the Federal Government provides both construction and operating subsidies to the maritime industry, intended to offset the competitive effects of lower foreign costs. In the fiscal year 1951, operating subsidies alone are estimated to accrue in the amount of 63 million dollars, about five times the average annual level before the war. Shipbuilding subsidies have recently averaged close to 45 percent of the domestic cost of vessel construction, exclusive of national defense features financed entirely by the Government.
I am seriously concerned by the increasing cost of these existing subsidies and by the potential cost of new subsidies now being advocated. Our national security requires an efficient nucleus of merchant shipping and shipbuilding, adequate to permit such expansion as may be required by a future emergency. However, to limit the burden on the taxpayer, this subsidy program should be held to the minimum level that will satisfy national defense needs. In determining this level, full account must be taken of the availability of vessels from friendly nations in the event of an emergency. The existence of the North Atlantic Treaty provides a framework within which joint international planning of shipping mobilization may proceed.
The entire subject of Government aid to the merchant marine is now under active study by the executive agencies concerned. Until such studies are completed, we should proceed cautiously with existing subsidy programs, and should avoid commitments for any major new programs. The Budget for 1951 has been developed on that basis.
Expenditure increases in 1951 for ship construction and for operating subsidies will be partially offset by reductions in other Maritime Commission activities. The maritime training program is being reduced in size, and consolidated at three locations. Authority for ship chartering, scheduled to expire on June 30, 1950, does not now appear to be required beyond that date. Expenditures will also be lower for the liquidation of wartime obligations.
TRANSPORTATION AND COMMUNICATION
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other promotion of merchant marine: Total 1,622 1,894 1,682 2 973 673 1Less than one-half million dollars. Navigation aids and facilities.--The safety of surface and air operations at sea requires the navigational aids, rescue stations, and other services provided by the Coast Guard. Expenditures for these activities are estimated to increase from 158 million dollars in 1950 to 181 million dollars in 1951. This increase is largely for the replacement of over-age aircraft, and for more adequate maintenance of existing facilities. |
The 1951 recommendations do not provide for starting construction on any new river and harbor projects of the Corps of Engineers. Projects already under way will, however, require an increase in expenditures from 212 million dollars in the fiscal year 1950 to 243 million dollars in 1951, and a further increase in 1952.
I repeat most emphatically my previous recommendations for approval of the Saint Lawrence waterway and power project. Authorization of the seaway, with its related power facilities, is a matter of urgency for our peacetime industry and our national security. In particular, each succeeding year reduces further our domestic reserves of iron ore, and increases correspondingly the importance of the seaway as a means of economical access to the proven ore deposits in Quebec and Labrador.
Aviation.--The Federal Government provides extensive aid, both direct and indirect, to civil aviation. This assistance, which is consistent with our traditional policy of promoting new forms of transportation, has made possible a spectacular development of air transport services, especially during the past decade. Although continued aid is required for the present, the industry should be expected to become increasingly self-supporting in the near future.
At .present, direct financial assistance to the air lines is provided through air-mail payments, which are set generally at levels adequate to cover deficiencies in the carriers' commercial revenues. Subsidy is thus merged with the fair compensation for carrying mail, making it difficult to evaluate the cost of this aid in relation to its benefits. The recent rise in total air-mail payments-to an estimated level of about 125 million dollars in 1950--has made it increasingly important that the subsidy element be separately identified. I recommend, therefore, the immediate enactment of legislation to authorize the separation of subsidy payments from mail compensation. Such subsidies should be paid from funds appropriated to the Civil Aeronautics Board specifically for that 'purpose.
The standard by which subsidy rates are determined under existing legislation may itself merit review in the light of the industry's present stage of development. Setting subsidies on the basis of the carriers' revenue needs may weaken the incentives for managerial economy, thereby increasing the difficulty of effective regulation by the Civil Aeronautics Board. While a considerable gain in efficiency has been realized by the air lines since the end of the war, there are undoubtedly important opportunities for further improvement. The 1951 Budget will permit the Civil Aeronautics Board to conduct more intensive investigations of airline efficiency, and to develop operating cost standards. This should assist the Board in shaping its subsidy policies so as to retain, to the maximum extent possible, the normal business incentives for economy.
The continued growth of air transportation depends upon modernization of our airway facilities to permit safe and regular flights under all weather conditions. Expenditures for the development, installation, and operation of such facilities are estimated at 136 million dollars in the fiscal year 1951, 39 million dollars above 1950. Other activities of the Civil Aeronautics Administration-including safety regulation and airport grants--will require expenditures of 93 million dollars in 1951, 3 million dollars higher than in 1950.
Highways.--Major development of our highway system is required to overcome obsolescence and to handle safely and efficiently the steadily increasing traffic loads. This is primarily the responsibility of States, counties, and municipalities. The Federal Government must, however, continue providing financial assistance to the extent necessary to assure a basic system of national roads, built to uniformly adequate standards. Under existing legislation, the Bureau of Public Roads is expected to spend 504 million dollars for highway improvement in 1951, mainly in the form of grants to States. Apart from the emergency relief programs during the depression, this will be the highest annual level of Federal highway expenditures to date.
All of the Federal-aid funds thus far authorized have been apportioned to the States, and new authorizing legislation is therefore required during the present session of the Congress. I recommend that such legislation provide an annual Federal-aid authorization for the next 2 years of 500 million dollars, an increase of 50 million dollars above the current level. Within this total, increased emphasis should be placed upon the Interstate Highway System, a limited network of routes which is of greatest national importance to peacetime traffic needs as well as to our national defense. The recommended shift in emphasis, and increase in program level, should permit a satisfactory rate of improvement for this System.
Postal service.--Postal rates have not kept pace with increasing costs and, as a result, the postal deficit has reached excessive proportions. Since 1939, the average expense per postal transaction has increased by 67 percent, owing mainly to higher wage and transportation costs; in contrast, average revenue has increased by only 32 percent. On the basis of existing postal rates, the deficit for 1951 is estimated at 555 million dollars. Cases now pending before the regulatory commissions may result in higher payments for transportation, and hence may correspondingly increase the deficit.
The Postmaster General is exploring fully all opportunities for reducing the cost of the postal operation. Modernization of the motor vehicle service, and the mechanization of mail handling, are among the items receiving particular attention. I am confident that the steps now being taken will in the long run help to assure the maximum efficiency of the postal operation. However, the potential savings, if present service standards are maintained, appear small in relation to the prospective deficit; they do not reduce significantly the need for higher revenues at this time.
I have repeatedly urged the Congress to raise postal rates so as to bring them into line with postwar costs. The need for such corrective action becomes steadily more urgent. It is unsound and unnecessary for the postal operation to continue as a growing burden on the general taxpayer. Instead, the users of the postal service should as a group pay the full cost of services received. This requires that the postal deficit be limited to the cost of air-line subsidies, Government mail, franked mail, and other items properly chargeable to the general revenues.
Last year, the Postmaster General recommended to the Congress postal rate revisions designed to yield additional revenue of about 250 million dollars per year. Subsequent increases in employees' pay and in transportation costs have rendered this amount inadequate. I therefore strongly urge again that the Congress pass legislation to bring the postal revenue more in balance with the expenditures of the service. The only alternative to increased rates or a continued large deficit would be an undesirable reduction in the quality of services provided. As a longer range solution to this problem, there should be sufficient flexibility in the postal rate structure to permit at all times a proper relationship between revenues and expenses.
Regulation.--Through regulation, the Federal Government seeks to assure the adequacy, economy, and safety of transportation and communication services. Although the expenditures required for this activity are relatively small, this is one of the more important responsibilities exercised by the Government in this field. The 1951 Budget includes moderate increases for the regulatory commissions, to permit them to reduce backlogs of pending cases, and to meet new problems more promptly.
FINANCE, COMMERCE, AND INDUSTRY
As part of its broad program for balanced economic development, the Federal Government provides a variety of general financial and other aids to promote the stability and growth of independent businesses. These are supplemented by regulatory action designed to remove monopolistic barriers to production and commerce. In addition, in two areas--exports and rents--it is necessary to continue, on a limited basis, wartime controls now in effect. Total expenditures in 1951 are estimated at 212 million dollars, of which net expenditures for loans to business will account for about three-fourths.
Business loans and guarantees.--In the past year, the Reconstruction Finance Corporation has contributed substantially to the financial stability of independent businesses, especially small business. The change in economic conditions last spring resulted in many financing needs which private lenders failed to meet, and consequently applications for Reconstruction Finance Corporation business loans increased rapidly. During recent months, the Corporation has been making about 450 new loans per month, or nearly twice the rate of a year ago. With the favorable business outlook now anticipated, a somewhat lower level of new loan authorizations is estimated in 1951, but net expenditures are expected to rise above 1950 because of disbursements on loans authorized this year. In future years, repayments will provide increasing offsets to disbursements on new loans.
FINANCE, COMMERCE, AND INDUSTRY
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Business loans and guarantees |
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Total 120 225 211 60 250 |
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1Less than one-half million dollars. To make sure that this program will meet the needs of business for long-term credit, I am renewing the recommendation for a substantial increase in the present 10-year maximum on loan maturities. I also recommend an addition to the funds available for business loans. |
Promotion and regulation of business. Since the war we have substantially strengthened our antimonopoly program, but continued improvement is essential. I have asked the Secretary of Commerce, in consultation with the Attorney General, the Federal Trade Commission, and the Council of Economic Advisers, to develop recommendations for increasing the effectiveness of this program. A major aspect of this study will be the development of methods to facilitate establishment of small businesses, to promote their stability and growth, and to remove obstacles to their survival as independent competitive enterprises.
The Budget also provides additional funds for strengthening the antimonopoly activities of the Federal Trade Commission. Among other things, this will permit a study of trends in industrial concentration to guide the formulation of Federal policy and to aid in prosecuting specific cases.
As the record levels of housing construction have gradually reduced the housing shortage, rent controls have been removed in many communities. This trend probably will continue. To prevent serious hardship to tenants in areas where shortages remain critical, I am recommending a 1-year extension of rent control authority beyond the present expiration date of June 30, 1950.
Improvement in the supply situation has permitted removal of most commodities from export control. Export licensing of some strategic commodities, however, remains essential because of the uncertain international situation.
LABOR
The programs of the Federal Government in the field of labor are designed to encourage increasingly effective use of our major productive resource-the skill of the American workingman--with the ultimate objective of assuring higher production and standards of living. To this end, the Government fosters responsible and peaceful labor relations based on collective bargaining by offering voluntary mediation services and providing a remedy for unfair labor practices. It promotes fair labor standards for wages, hours, and employment conditions to prevent exploitation and unfair competition based on substandard conditions. It finances a free placement service to aid industry, agriculture, and workers and insures workers, mainly through a Federal-State system, against total loss of income during periods of temporary unemployment. Finally, it collects and publishes information on wages, employment, prices, construction, and other subjects in order that business and economic planning and decisions may be on a factual basis.
The importance of these programs is by no means measured by the total expenditures of 243 million dollars in 1951, since many of the activities are regulatory in nature and require only minor expenditures. Of total expenditures, about 70 percent consists of grants to States for administration of the Federal-State employment service and unemployment compensation system.
Placement and unemployment compensation activities.--The Federal Government sets standards and pays all administrative costs for State operation of public employment offices and unemployment insurance. Public employment offices placed applicants in more than 12,000,000 jobs during the past fiscal year. Of the total job placements, over 7,000,000 were on farms. Still more placements are expected in 1950 and 1951.
The unemployment compensation work load is closely related to general economic conditions. Last year the Congress recognized this fact by appropriating a contingency fund of 5 percent of the basic grants, to be used if the number of claims increased. It now appears that this contingency fund will not be sufficient to pay for the increase in work load which has occurred. I shall, therefore, request a supplemental appropriation for 1950. For 1951, the Budget recommendations for the basic grants assume a somewhat lower average level of unemployment but call for a contingency fund of 10 percent to obviate delays in paying valid claims, should the volume of claims suddenly rise.
Mediation and regulation of labor relations.--In my State of the Union Message I have discussed the imperative need for basic revision of the Labor-Management Relations Act of 1947 to incorporate sound provisions on the rights and responsibilities of labor and management in relation to each other and to the general public, and to remove unworkable administrative provisions in the present law. This Budget allows for improving mediation and conciliation activities by providing funds to permit relatively equal service for all parts of the country and for the recently expanded organization for adjustment of employee grievances in the railway industry.
Labor standards and labor training.--The 1949 amendments to the Fair Labor Standards Act, while inadequate in many respects, made substantial improvements in the law by raising the minimum wage to 75 cents an hour and tightening the provision against the use of child labor in production for interstate commerce. I am recommending increased funds for the additional inspection and legal staff which effective enforcement will require. Such enforcement is essential, not only to protect the purchasing power of workers who need it most, but also to protect law-abiding employers from unfair competition.
LABOR
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Placement and unemployment compensation Total 193 219 243 266 Two legislative proposals respecting employment conditions, and one on training, should be enacted promptly. First, a permanent Fair Employment Practice Commission should be established. To keep minority groups economically submerged is not only unjust and discriminatory, but also prevents the best use of available manpower. Secondly, I am renewing my recommendation for grants to States to assist them to encourage industrial safety. The Federal Government and the States spend many millions of dollars each year to rehabilitate injured workers. It is only common sense to do what we can to prevent injuries in the first place. Finally, I recommend that a labor extension service be established in the Department of Labor to make available to wage earners educational programs designed to promote sound labor-management relations. Such a program would require about 3 million dollars a year after it gets into operation but would not have substantial effect on the 1951 Budget because of the time required to get under way at the local level. |
Trust accounts and unemployment compensation legislation.--Last year's temporary but sharp rise in unemployment provided the first real test of the Federal-State unemployment insurance system since its establishment 15 years ago. The system was of great help in tiding workers over temporary unemployment and in sustaining markets for the products of employed workers. During the last 12 months, a total of 1.7 billion dollars in benefits was paid from the trust fund. At the same time, major shortcomings of the present system became painfully clear. It does not cover enough workers, and does not replace enough of the wages lost through unemployment. I shall submit proposals for legislation to overcome these and other defects by strengthening the present Federal-State system.
At present, only about two-thirds of the workers employed in nonagricultural industries are insured against the hazards of temporary unemployment. Coverage should be extended to employees of small establishments, of industries processing agricultural products, and of the Federal Government. This would raise coverage to about threefourths of nonagricultural workers. Furthermore, legislation should include minimum Federal standards for eligibility and disqualifications, in order to remove some of the present inequalities in administration among the States.
Present weekly benefits now average about one-third of previously earned weekly wages. The insurance was originally intended to replace at least half of previous earnings-the minimum needed to pay for food and rent--but benefits in many States have not kept up with price rises. In order to assure more nearly adequate benefits throughout the Nation, the Federal law should provide minimum standards for benefits paid from the State trust accounts. These standards should require benefits of 50 percent of previous wages up to 30 dollars a week for single workers, with additional amounts for dependents up to 42 dollars a week for a worker with three dependents. The legislation should also require that benefits be available to eligible claimants for at least 26 weeks,
In addition to these changes in coverage and benefit standards, I shall recommend amendments to the financing provisions of present legislation, including establishment of a reinsurance system to provide grants to States whose reserves for benefits become temporarily low, despite reasonable measures to maintain adequate funds. Although most States have sufficient reserves to pay higher benefits without increasing taxes, one or two States may need assistance by next autumn or shortly thereafter.
UNEMPLOYMENT TRUST FUND
(Trust accounts)
[Fiscal years. In millions]
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1949 1950 1951 Item actual estimated estimated Receipts: |
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Net accumulation --153 --854 --212 |
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The proposed legislation will affect chiefly the trust fund rather than the appropriations for administration. For both the trust fund and the appropriations, the effect in the fiscal year 1951 will be slight because time will be required for the State legislatures to revise their laws to conform with new standards established by the Congress. Benefits for Federal workers will represent the principal continuing budgetary cost of my recommendations. (The estimated expenditures for these benefits in the fiscal year 1951 are shown under general government.) Estimates for proposed reinsurance appropriations are also included in the Budget. Expenditures from these appropriations will be necessary only if State reserves become inadequate to provide for temporarily high numbers of insured unemployed. |
GENERAL GOVERNMENT
The expenditures for general government cover legislative, judicial, and financial management activities, and also many Government-wide administrative services and programs such as property and records management, public buildings construction and maintenance, and the operations of the Civil Service Commission. The total expenditures for these programs for the fiscal year 1951 are estimated at 1.3 billion dollars compared to 1.2 billion for the current fiscal year. The increase is primarily for strengthening further the system of tax collection, for the Government payment to the employees' retirement system, and for public building sites and plans.
Internal revenue operations.--Efficient operation of the Bureau of Internal Revenue, the Federal Government's primary tax collection agency, is essential to protect the Federal revenue and to assure fair treatment to taxpayers. Studies of the organizational structure and administrative procedures of this agency have been under way for some time and have already resulted in many improvements, including the mechanization of some operations. These have enabled the Bureau to strengthen and extend its audit and enforcement activities, thereby collecting additional taxes, not only directly, but also by stimulating a greater degree of voluntary compliance. Further improvements are in prospect. The 1951 appropriation provides for increased funds for these purposes.
Property management.--Under mandate of the Federal Property and Administrative Services Act of 1949, the General Services Administration was established to consolidate a number of Government-wide activities concerned with the procurement, maintenance, and disposal of Federal property. This was in accord with a major recommendation of the Commission on Organization of the Executive Branch of the Government. The General Services Administration is currently undertaking to establish records storage centers and is emphasizing the expansion of inspection services and traffic management, determination of purchasing requirements, and controls to insure proper utilization of Government property.
Civilian employees' retirement system.-Federal employees covered by the civil service retirement and disability system are required by law to contribute 6 percent of their salaries toward future benefits; the Government contributes the remaining cost of benefits provided under the system. The expenditures of 333 million dollars estimated for 1951 represent the Government payment necessary to enable the fund to cover its currently accruing obligations.
GENERAL GOVERNMENT
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[Fiscal years. In millions] New obligational Expenditures authority for 1951 1949 1950 1951 Appropriations Program or agency actual estimated estimated Other Legislative functions $34 $43 $50 $39 |
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Total 1,170 1,223 1,267 11,231 3 1This Budget also includes 41 million dollars of appropriations to liquidate prior year contract authorizations. |
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Construction of public buildings.--Of estimated expenditures of 53 million dollars in |
Operation of the Weather Bureau.-Modest increases are requested to meet the increased demand for the services of the Weather Bureau. These include the requirements for general weather service, aviation forecasts, and assisting in the protection of our forests from fire hazards. Increases in Atlantic weather patrol observations and in forecasting and briefing services to pilots on international flights are to meet commitments under the International Civil Aviation Organization.
Government of Guam, Samoa, and the trust territory of the Pacific islands.--It is the announced aim of this Government to accord civil government to the inhabitants of its non-self-governing Pacific Territories-Guam and American Samoa--which have been under American rule for half a century, and the trust territory of the Pacific islands which we administer under a United Nations trusteeship agreement. As a partial step in this direction I have transferred administrative responsibility for Guam to the Secretary of the Interior and have directed that arrangements be made for a similar transfer on July 1, 1951, with respect to American Samoa and the trust territory. This Budget includes 2 million dollars for Guam as part of a 4 million dollar appropriation recommended for administration of Territories and possessions For the fiscal year 1951. I urge that the Congress enact the proposed organic acts now before it, providing for the civil government of Guam and American Samoa, and similar legislation for the trust territory of the Pacific islands.
Development of the National Capital.-I renew my request that the National Capital Park and Planning Commission be established on a stronger statutory basis. This would enable the Commission to fulfill more effectively its obligations to plan the orderly, coordinated development of the District of Columbia and nearby areas in Maryland and Virginia.
Government Services Corporation.--Several organizations not within the normal governmental framework now provide, in Government buildings and on Government property, cafeteria and recreational services for Federal employees. I recommend that the Congress pass legislation now before it to create a self-supporting Government corporation to carry out these essentially governmental responsibilities.
Federal employees' unemployment compensation.--The proposed broadening of the coverage of the unemployment compensation program, recommended elsewhere in this Message, requires a Government payment to extend coverage to Federal employees. This Budget includes 13.5 million dollars for an appropriation to cover benefit payments in the second half of fiscal year
1951, when it is anticipated the program will be in operation.
Civil rights program.--This Budget includes funds to expand civil rights enforcement activities of the Department of Justice under present laws. In addition to the amount provided for establishing a Fair Employment Practice Commission, there is included 800 thousand dollars as the amount needed under proposed legislation to establish a permanent Commission on Civil Rights, which would continuously review our practices and policies in this field, and to provide for an additional Assistant Attorney General to supervise a needed civil rights division in the Department of Justice.
INTEREST ON THE PUBLIC DEBT
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[ Fiscal years. In millions ] Appropriations for Expenditures 1951 (permanent 1949 1950 1951 indefinite) Agency actual estimated estimated |
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Treasury Department $5,352 $5,725 $5,625 $5,625 |
INTEREST ON THE PUBLIC DEBT
Interest on the public debt is a fixed obligation of the Government, determined by the amount of Federal securities outstanding and their interest rates. Payments are financed by permanent indefinite appropriations which do not require annual congressional action.
Interest payments of 5.6 billion dollars estimated for 1951 are lower than those in 1950, because a shift in reporting methods caused a nonrecurring addition of over 200 million dollars in 1950. Under the new method, effective in the fiscal year 1950, all interest payments are now reported as they become payable rather than when they are actually paid. As a result of the transition, the 1950 total includes interest for prior years that was payable but had not yet been presented for payment at the beginning of the fiscal year 1950. This change does not significantly affect the reporting of interest payments in 1951 and later years.
Apart from this nonrecurring item, total interest payments will continue to rise in the fiscal year 1951. Each year more of the savings bonds sold during the war reach the stage where interest accrues at higher rates. Moreover, continuing accumulations of Government trust funds will cause further increases in special issues to such funds of obligations bearing rates of interest higher than the average on the entire public debt. Finally, the Budget deficits this year and next will add to the total volume of interestbearing debt. Savings in refunding operations, however, will offset some of this increase in interest cost.
Interest payments on the Federal debt are widely distributed, and represent a particularly important source of income to certain institutions and groups. Almost 2 billion dollars of interest in the fiscal year 1951 is expected to go to individuals and unincorporated businesses. About 1 billion dollars will be paid to commercial banks and almost 1.5 billion to insurance companies, mutual savings banks, and other private investors. Another 1 billion dollars will go to Government retirement funds, social security funds, and various other Government trust funds to build up reserves out of which future benefits will be paid. Over 250 million dollars of interest in 1951 will be paid to the Federal Reserve banks; more than half of such payments will be returned to the Treasury and deposited into miscellaneous receipts. The remainder will be used to defray most of the operating expenses of the Federal Reserve System, to pay dividends to member banks, and to add to surplus.
PROPOSED LEGISLATION--A SUMMARY
The following table shows estimated expenditures, appropriations, and other authorizations included in the Budget for programs under proposed legislation. The second table shows the effect of proposed legislation upon the Government trust funds.
PROPOSED LEGISLATION
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(Summary of amounts included in the Budget) [Fiscal years. In millions] Anticipated supplemental Estimated appropriations and other expenditures, authorizations Function and program 1951 1950 1951 EXTENSION OF EXISTING LEGISLATION International affairs and finance: NEW LEGISLATION NOTE.--[ ] indicate contract authorizations. ( ) indicate public debt authorizations. PROPOSED LEGISLATION--Continued [Fiscal years. In millions] Anticipated supplemental Estimated appropriations and other expenditures, authorizations Function and program 1951 1950 1951 NEW LEGISLATION--Continued Housing and community development: 1Estimated additional receipts of 60 million dollars in 1951. NOTE.--[ ] indicate contract authorizations. ( ) indicate public debt authorizations. PROPOSED LEGISLATION AFFECTING TRUST FUNDS [ In millions ] 1951 Function and program estimated SOCIAL WELFARE, HEALTH, AND SECURITY Extend and improve old-age and survivors insurance: |
Many of the programs listed under proposed legislation are actually continuations of programs already in existence but for which new authorizations are required to permit their continuance in 1951. These items are set forth separately in the first part of the table.
The Budget also contains a general reserve for contingencies. It is designed as a minimum provision for activities not now definitely foreseen, but on which action may be required before the end of the fiscal year.
The Budget for the fiscal year 1951 reflects the great strength and the extensive responsibilities of this country. It represents much more than a collection of facts and figures-it represents the program which I am recommending for our Government in the months ahead. It will influence the course of events for years beyond 1951, and the success with which we push ahead toward enduring peace, continuing economic growth, and a steady strengthening of our democratic society.
In preparing this Budget, I have earnestly applied the fundamental principles which, in the present circumstances, should guide us in the conduct of our affairs. It is an honest Budget, which meets the realities which face us. It provides for essential activities on a minimum basis and no more, despite the great pressures which exist on every side for larger expenditures on specific programs. It meets the obligation of our Government to nourish and support the economic and social health of our Nation. It not only provides for substantial progress in 1951 toward our goal of budgetary balance but also lays the basis for further improvement in subsequent years consistent with the welfare of the country.
We are still a young and growing Nation with a great reserve of human skills and productive resources. We have made and shall make more progress toward a less threatening world. Our strength is not being impaired by our present great responsibilities and the temporary deficits required to meet them. Given wise policies, which meet the broadest tests of national welfare, we can look forward to the future with confidence.
HARRY S. TRUMAN.
Note: The message was transmitted to the Senate and to the House of Representatives on January 9.
The message and the budget document (1,198 pp.) are published in House Document 405 (81st Cong., 2d sess.).
Harry S Truman, Annual Budget Message to the Congress: Fiscal Year 1951 Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/230956