Annual Budget Message to the Congress-Fiscal Year 1959.

To the Congress of the United States:

The budget for the fiscal year 1959 which I am transmitting with this message reflects the swiftly moving character of the time in which we live. It is clearly a time of growing opportunity as technology and science almost daily open wholly new vistas to all mankind. Yet it is also a time of growing danger. The progress of the Soviets in long-range missiles and other offensive weapons, together with their continuing rejection of a workable disarmament, compels us to increase certain of our defense activities which we have only recently expanded many fold.

We know that we are sturdy today in the many strengths that keep the peace. This budget reflects our determination to remain so in the future.

This budget reflects another determination--that of adhering to those principles of governmental and fiscal soundness that have always guided this administration--economy in expenditures, efficiency in operations, promotion of growth and stability in a free-enterprise economy, a vigorous Federal-State system, concern for human well-being, priority of national security over lesser needs, revenues adequate to cover expenditures and permit debt reduction during periods of high business activity, and revision and reduction of taxes when possible.

To meet the responsibilities imposed on us by world conditions and by the fiscal principles to which we adhere, the budget for 1959 contains recommendations to provide:

I. An immediate increase for 1958 of $1.3 billion in spending authority for the Department of Defense, and a further increase of $2.5 billion in 1959 over 1958, to be applied principally to accelerate missile procurement, to strengthen our nuclear retaliatory power, and to spur military research and development programs;

2. A resulting increase of $2.8 billion in estimated 1959 expenditures over 1957 for missiles, nuclear armed or powered ships, atomic energy, research and development, science and education, plus a further provision of $0.5 billion for defense purposes, if needed; in addition, authority to transfer up to $2 billion between military appropriations, in order to take prompt advantage of new developments;

3. A decrease of $1.5 billion in 1959 expenditures below 1957 for other military arms and equipment and aircraft of declining importance, in favor of the newer weapons;

4. Curtailments, revisions, or eliminations of certain present civil programs, and deferments of previously recommended new programs, in order to restrain nonmilitary spending in 1959 and to provide the basis for budgetary savings of several billion dollars annually within a few years;

5. Continuation of present tax rates to help achieve a balanced budget in 1959

I believe that this budget adequately provides for our Federal responsibilities in the year ahead.

The estimated budget totals for the current fiscal year and for the fiscal year 1959 are compared with actual results of earlier years in the following table:

BUDGET TOTALS

[Fiscal years. In billions]

1956 actual 1957 actual 1958 estimate 1959 estimate

Budget receipts $68. ¹ $71. 0 $72. 4 $74. 4

Budget expenditures 66. 5 69. 4 72. 8 73.9

Budget surplus (+) or

deficit (-) + 1.6 + 1. 6 -.4 +.5

New obligational authority 63. 2 70. 2 74. 4 72. 5

¹ Includes $6.6 billion of anticipated supplemental requests.

DEFENSE, SCIENCE, AND THE BUDGET.--Americans are determined to maintain our ability to deter war and to repel and decisively counter any possible attack. Today we possess military superiority over any potential aggressor or aggressors. Every American should clearly understand that the vast defense programs undertaken during the past several years have greatly advanced our military preparedness and developed and harnessed impressive new scientific achievements. We have sharply increased the numbers of scientists and engineers assigned to top priority defense programs. We have expanded many fold the expenditures for the development of missiles, both defensive and counteroffensive. We have accelerated development of advanced guidance systems, new fuels, and heat-resistant materials. We have greatly enlarged our network of warning devices and communications.

Our longer-range ballistic missile development, in particular, has long had the highest national priority. The result is striking. Whereas in 1953 we spent only $ 1 million on these programs, we spent $ 1 billion in 1957 and will spend more in 1958 and still more in 1959.

Our defenses are strong today, both as a deterrent to war and for use as a crushing response to any attack. Now our concern is for the future. Certain elements of our defense program have reached the point where they can be further accelerated. I will transmit to the Congress, immediately, a supplemental appropriation request of $1.3 billion for the Department of Defense for the fiscal year 1958. Further increases in new obligational authority are requested for the fiscal year 1959. The recommended authority for the military functions of the Department of Defense is $39.1 billion, which is $0.6 billion more than was requested in last year's budget for 1958 and $3.8 billion more than the amount the Congress has thus far enacted for 1958. Spending for military functions of the Department of Defense in 1959 is estimated to total $39.8 billion.

The development of longer-range ballistic missiles, construction of missile sites and detection systems, and other missile programs including guided missile ships will be substantially augmented. The total expenditures for missile research, development and procurement, for guided missile ships, and for missile-related construction will be $4.3 billion in 1958 and $5.3 billion in 1959, compared with $3 billion spent in 1957, $1.7 billion in 1956, and $1.9 billion in 1955. Commencing in 1958, we will procure a number of new missiles which have been recently developed and have now become operational.

As an indispensable part of our efforts to maintain an adequate defense, the budget recommendations for 1959 call for continued contributions to the efforts of free world nations to promote the collective defense and economic growth. The Soviet threat to freedom is far more than military power alone. Poverty and ignorance, and the despair, fear, and unrest that flow from them, have always been enemies to liberty. The Communists well know this and unceasingly exploit these factors to extend their influence and control. This Soviet economic assault on freedom is rapidly growing. Conquest by this route is no less menacing to us and other free nations than conquest by military force. We must, accordingly, vigorously advance our programs to assist other peoples in their efforts to remove poverty and ignorance. As we succeed in these military and economic efforts, our own freedom and security are strengthened, and the prospects for peace are improved.

Scientific and research efforts throughout the Nation must be expanded. This is a task not only for the Government but also for private industry, foundations, and educational institutions. The Government, on its part, will increase its efforts in this area. Supplemental appropriations for 1958 will be requested for the National Advisory Committee for Aeronautics and the National Science Foundation, as well as the Department of Defense. For 1959, new programs to promote education in science are being recommended and basic research activities are being generally expanded.

CHANGES IN EMPHASIS.--total Government expenditures (1) for all procurement to equip our forces and those of our allies with weapons, ships, planes, and missiles, (2) for atomic energy, and (3) for all scientific research and education will be approximately $21.1 billion in 1958 and $21.6 billion in 1959, compared with $20.5 billion in 1957.

Within these totals for procurement and science, we have gradually but substantially changed our emphasis. This administration's continuing attention in recent years to new concepts of defense is shown by the fact that more than 75% of the total funds for procurement in the 1959 budget and 1958 supplemental requests is programmed for new types of equipment which had not been developed in the fiscal year 1955 or were not being bought in production quantities in that year--the first full year following the Korean conflict. In 1953, missiles alone took less than 2 cents of each dollar spent for major procurement; in 1957, missiles took about 15 cents of every procurement dollar; and in 1959 will take about 24 cents.

The greatly increased firepower of modern weapons and the continuing increase in efficiency permit a further reduction in the numbers of military personnel. Procurement of older types of weapons and equipment is also being reduced. Other defense expenditures will be reduced by closing installations that are outmoded or are of limited use, and by tightening maintenance standards, procurement practices, and supply management.

BUDGET AUTHORIZATIONS AND EXPENDITURES.--As a result of the increases in our key protection programs recommended in this budget for the current fiscal year and the coming fiscal year, total new obligational authority and budget expenditures for each of these years will be larger than in 1957--even though it is recommended that certain other programs, both defense and civil, be retarded or reduced.

Total appropriations and other forms of new obligational authority recommended for the fiscal year 1959 amount to $72.5 billion. This is $4.7 billion more than has been enacted for 1958 and $2.3 billion more than for 1957. In addition, $6.6 billion of supplemental authorizations are estimated for the current year, 1958, for the Department of Defense, Commodity Credit Corporation, Export-Import Bank, and other agencies.

Budget expenditures in the fiscal year 1959 are estimated to be $73.9 billion. This is $1.1 billion more than now estimated for 1958 and $4.5 billion more than in 1957.

Not all of the obligational authority enacted for a fiscal year is spent in the same year. Amounts of authority enacted in prior years but which have not yet been spent and are carried forward from one fiscal year to the next are called unexpended balances. These balances are not cash on hand, but represent authority to draw on future receipts of the Treasury in order to pay bills.

The total balances of appropriations to be carried forward at the end of the fiscal year 1959 are estimated to be $39.9 billion. Of this amount 78% will have been obligated; that is, already committed.

The largest part of the unexpended balances of appropriations is in the Department of Defense, reflecting the long time which necessarily elapses between the placing of orders for complex military equipment and delivery and final payment. It is estimated that $32.1 billion will be carried forward by that Department at the end of 1959, of which $24.4 billion will have been obligated.

BUDGET RECEIPTS.--although higher than in previous years, the current estimate of receipts for the fiscal year 1958 is somewhat smaller than earlier expectations, reflecting readjustments currently taking place in our economy following the rapid growth of the past several years. It now appears that 1958 budget receipts will not exceed $72.4 billion, although they will be well above 1957 receipts of $71 billion. A combination of increased defense expenditures and decreased receipts in the revised estimates for the current fiscal year results in an estimated budget deficit of $0.4 billion.

There are strong grounds to support my confidence that the expansion of our economy will soon be resumed, bringing higher levels of receipts with present tax rates. The acceleration of defense efforts already under way, the increasing pace of activity in a number of programs involving State and local as well as Federal expenditures, the rapid pace of technological advance and its application by American industry, the expanding needs and desires of our growing population, and Government policies designed to facilitate the resumption of growth are among the major factors that justify this confidence. While there are many uncertainties in forecasting results 18 months in advance, our best estimate at this time of budget receipts for 1959 is $74.4 billion. This would produce a balanced budget with a surplus of $0.5 billion in 1959.

[Editorial