The President's News Conference on the Budget

THE PRESIDENT. I have got a statement I will read you, then we will go into questions.

Mr. Ross: This conference is for background purposes, and any information given out is not for attribution except as to the statement. The rest of it is informative only, and not for attribution to the President, unless specific permission is given in some particular case.

[1.] THE PRESIDENT [reading]. "The preparation of the budget for the fiscal year 1949 has been a painstaking process.

"Beginning nearly a year ago, I asked the Bureau of the Budget to make advance studies to indicate the expenditure ranges required to carry out alternate policies and present them to me for my decision. In order to achieve maximum economy, the general policy I decided to follow for going programs was to hold 1949 appropriations at or below the 1948 level, despite rising prices, except in circumstances where this was clearly not in the public interest. Under this policy, and if no new legislation were required, the 1949 budget expenditures would not exceed $34 billion.

"The policies on which this budget is based, therefore, mean that under present conditions of high costs, it is even more realistic and hard boiled than the 1948 budget was.

"In order to portray clearly some of the major facts about this budget, I am distributing 10 charts. I should like particularly to refer to 4 of these charts.

"First, the chart covering Federal budget receipts and expenditures for the period 1939 to 1949 shows clearly the effective work which has been done to bring down the wartime peak of expenditures. It shows graphically the important fact that 1949 will be the third consecutive year in which we have achieved a surplus. This surplus is one of the most important factors in combating inflation, and an essential element of prudent fiscal management.

"Second, the chart comparing changes in major Government programs for the years

1939 and 1949 shows that in 1939 only 29 percent of our expenditures was devoted to the categories of national defense, international affairs, veterans, interest on the public debt, and tax refunds, leaving 71 percent for all other Government expenses. In the 1949 budget, this relationship is completely reversed. The five programs mentioned will require 79 percent of expenditures, leaving only 21 percent for all other activities.

"In this 10-year period the per capita increase for these 5 programs has been very great, whereas the per capita increase for all other Government expenditures has been relatively small. Per capita expenditures for national defense have increased from $8 in 1939 to $75 in 1949; international expenditures from 15 cents in 1939 to $48 in 1949. Veterans expenditures have increased from $4 in 1939 to $42 in 1949. Debt interest and tax refunds have increased from $8 in 1939 to $49 in 1949. Contrasted with these, the total for all other expenses of the Federal Government has increased only $7--from $49 in 1939 to $56 in 1949. This is a comparatively small increase when we consider the sharp increase in the cost of all the goods and services the Government must buy.

"The third chart covering civilian employment in the executive branch reveals that, while the number of civilian employees in the War and Navy Departments and emergency war agencies increased rapidly during the war, the number has decreased rapidly since the war. The chart shows clearly that there has been no substantial increase since 1939 in the total of civilian employees for most of the Government agencies. For all departments and agencies other than the War and Navy Departments, the emergency war agencies, the Veterans Administration, and the Post Office, the total of civilian employees was 366,770 in 1939 and 408,000 at the end of November in the present fiscal year. Much of this increase can be traced to the new and expanded programs resulting from war effort. For instance, more employees are now needed by the Bureau of Internal Revenue and the Bureau of Public Debt to handle increased workloads. Also the State Department, the Maritime Commission, and the Panama Canal and Panama Railroad now require more employees than in 1939.

"Fourth, the chart covering Federal budget expenditures by function shows not only the amount recommended for expenditure under each of the major functional categories, but also the trend in these for the 3 fiscal years, 1947, 1948, and 1949.

"I hope these charts will be helpful in understanding the 1949 budget."

The remarkable thing about the budget to me is the fact that we have been able to hold it well below the 1948 fiscal year budget, and had it not been for our requirements for foreign aid and things of that sort, we would have been $3 1/2 billion below the 1948 budget.

And I think you will find, as you analyze the budget and go through it, that it is a budget based on the facts as they will appear. Every Cabinet officer and every head of an independent agency has made the statement to me that this budget was gotten up in better form and in better shape and with more cooperation than anybody's budget that they had any knowledge of. Every Cabinet officer told me that yesterday at the Cabinet meeting, and I have heard from the heads of the independent agencies--and several of them this morning--and they all feel the same way about it.

Now if you want to ask questions, I will try my best to answer them.

[2.] Q. Mr. President, you mention in here other countries that are going to receive aid, without stipulating which they are. Is there anything that can be said in detail about that at this time?

THE PRESIDENT. No, not in detail.

Q. Does that mean countries beyond the 16 European powers?

THE PRESIDENT. It does. Yes.

Q. Do you say anything about the total for China, Mr. President?

THE PRESIDENT. No, that has not been prepared. As soon as that is ready, why you will be informed what that total is. The State Department is working on it now.

Q. Can you name the other countries, Mr. president, besides China and the European nations?

THE PRESIDENT. Well, China is the principal one, and the 16 European nations, and of course there are situations in the Far East which may need looking into the same as the 16 nations in Europe. That will develop as we go along.

[3.] Q. Mr. President, in case the Marshall plan is approved, will it not be necessary for a large expansion of personnel, or will the old establishment in the--UNRRA be used?

THE PRESIDENT. No, UNRRA will not be used. The establishment is--we are trying to maintain the establishment in the various departments as we have it now. If you will read the message which I sent down to Congress, you will find the outline of the program as we expect to implement it. Of course, there will be some additional personnel necessary, but not anything like the setup that was under UNRRA.

[4.] Q. Mr. President, in recent years there seems to have been a growth in the budget insofar as including estimates for expenditures which are not authorized. It has been more and more difficult to get an accurate picture of the actual fiscal year.

THE PRESIDENT. I don't think it has been a bit more difficult. The reason for that is because there are always bills pending in the Congress which may be passed, and we have to anticipate what may happen. For instance, the pay raise of last year, if you will remember, and the year before, had to be anticipated or we would have been in a bad fix budgetwise.

Director Webb: The legislative budget requires us to indicate the things you intend to send up.

THE PRESIDENT. That is true. The Director of the Budget says the legislative budget requires that we do that, but I don't think it's a bit confusing. All you have got to do is to settle down on one side and read the budget. [Laughter]

[5.] Q. Mr. President, at the end of the budget, certain appropriations are referred to as supplemental appropriations--anticipated supplemental appropriations. What is the difference between an anticipated supplemental appropriation and just a regular rundown on all these? I find myself confused on that one.

THE PRESIDENT. Well, supplemental appropriations might be necessary for a salary increase or for a change in the Veterans Administration approach by the Congress, or several different things like that.

Q. It was the terminology that confused me.

THE PRESIDENT. Well, I will get the Director of the Budget to define it for you.

Director Webb: Those are things that are estimated requirements about which we do not have complete information at this time, and are included so that the budget will indicate the total of all the things that the President knows he will have to send down, even though he may not have the detail to substantiate complete submission at this time.

Q. Mr. President, the point I am trying to make--for instance, you have almost $2 billion in the budget here that is unauthorized-things like the Marshall plan--and this shows in the budget figure total. Well, if Congress doesn't approve that $2 billion--

THE PRESIDENT. Then it won't be spent.

Q. Then it won't be spent and it doesn't--the budget doesn't reflect it properly then?

THE PRESIDENT. Doesn't do what?

Q. Wouldn't reflect it properly on that.

THE PRESIDENT. The budget does reflect it properly, and if the Congress doesn't pass the appropriation, it will be just as if it didn't exist. I am anticipating that the Congress will carry out the Marshall plan.

Q. Well, Mr. President, in the section on budget receipts, the paragraph that says, "The tax adjustment I am proposing will mean a reduction in personal income taxes and a corresponding increase in corporation taxes. The estimates in the budget for these taxes are based on existing legislation." Does that mean that the increase in corporation taxes already provided for the machinery there--

THE PRESIDENT. No, no. The Congress would have to pass an increase in the corporation taxes, and the Treasury would have the machinery set up to take care of that situation. That is the simplest approach we could find to it, and was recommended by the Economic Advisers as the most satisfactory way of relieving the cost of living to the small taxpayer.

[6.] Q. Mr. President, can you tell us what national income level this revenue estimate is based on?

THE PRESIDENT. The Director of the Budget can.

Director Webb: I think the Secretary of the Treasury probably--who gets receipts and estimates that, should speak on that.

THE PRESIDENT. Go ahead.

Secretary Snyder: These figures are based on the I would rather give you that in a couple of hours, because we have started out--used a lower figure and then raised it, and I want to be sure of the figure we use. So I will get it for you when you leave.

Director Webb: The President states in his budget the total general assumption, Mr. Secretary, that I think indicates--would you like me to read that? "The estimates assume a continuation of the present high level of business activity and incomes, continued full employment, and stable prices close to the present level."

Q. What page, please?

Director Webb: M9 (p. 23).1

1 Page references in parentheses, throughout this news conference, indicate where the subjects referred to may be found in the Budget Message as printed herein (Item 5); all other references correspond to the page numbers in the Budget as published in House Document 456 (Both Cong., 2d sess.).

Q. What is the present level?

Secretary Snyder: That is the figure that I am going to give you.

THE PRESIDENT. I can tell you, but I am going to let the Secretary of the Treasury give you the actual figure.

[7.] Q. You talked about--in your message to Congress you talk about the natural resources expenditures--increased expenditures.

THE PRESIDENT. Yes.

Q. Where in the budget is that broken down? I do not find but two places, one in the agricultural and the other--

THE PRESIDENT. You will find it in the Department of the Interior and in the Department of Agriculture also. Then you will find it in flood control.

Q. In flood control, but that is--

THE PRESIDENT. Look at that chart, it explains it very definitely.

Director Webb: Mr. President, also in the back we have included a section which draws together all the civil and public works.

Q. That is what I want. Where is that?

Director Webb: Mr. Weldon Jones can give it to you now.

Mr. Jones: Page

THE PRESIDENT. It's in the big book.

[8.] Q. Mr. President, could we turn to your social welfare program, on page M24, (P. 34), at the bottom of the page, old-age and survivors insurance, in which it is proposed to extend coverage to all gainful workers, including agricultural and domestic employees, farmers, and other self-employed persons. In the very next paragraph it says "increases in individual amounts and in the maximum amount of earnings taxable." Does the first portion of that last paragraph mean increases in benefit payments--old-age insurance benefit payments?

THE PRESIDENT. That is what is intended.

Q. On page M8 (pp. 21, 22) you say that you are not recommending at this time any cost-of-living increases in benefits for veterans, social insurance beneficiaries, etc. That was a bit confusing to me, because after reading page MS, where you indicate here that--where you say you are not recommending any cost-of-living increases, I get this proposal for increasing the individual benefits-I mean, on page M24 (p. 34)--

THE PRESIDENT. You have got to increase those enough so that they can have enough to eat. That's what the difficulty is.

Q. You feel--I am still confused.

THE PRESIDENT. I don't think they will clash with each other at all.

Director Webb: Two different things, Mr. President.

Q. Can that be explained, sir?

THE PRESIDENT. Yes.

Director Webb: Weldon, you may want to straighten him out on that.

Mr. Jones: I didn't think there was any clash. That is largely trust funds, and so forth, which do not affect the budgetary expenditures.

THE PRESIDENT. Almost entirely trust funds.

Mr. Jones: That is the proposal.

THE PRESIDENT. You will find it set out in the chart where the trust funds are shown.

Q. Well, doesn't that mean regular Federal old-age insurance?

Mr. Jones: He is not recommending temporarily, as I understand it. This is a permanent proposal, long range. There is a temporary cost-of-living proposal that you have got on page--an earlier page.

Q. Oh, I see. But under this program those increases would begin to go into effect in 1949, wouldn't they?

Mr. Jones: That's right.

Q. Then the difference between that is temporarily a--you are not proposing any temporary increase but you are proposing some long range, which will increase

Mr. Jones: That's right.

THE PRESIDENT. That's right.

Q. All right, then. Then, in connection with the same sentence there, in the maximum amount of earnings taxable, right now we tax up to $3,000. Could you tell us, sir, what maximum? Would it be the same--

THE PRESIDENT. Being worked on now by the social security setup, and I am going to send a special message down on that later.

Q. Along the line already suggested by Mr. Allmeyer¹--$4,800?

THE PRESIDENT. Well, I don't want to make any statement on it right now.

¹Arthur J. Altmeycr, Commissioner for Social Security.

Q. Would that be included in the message you referred to, on welfare, Mr. President?

THE PRESIDENT. Yes.

Q. Mr. President, along the same line, on M28 (p. 37), it speaks of a payroll tax of ½ percent on health insurance. Is that one-half each on employer and employee, or one-quarter each on employer and employee? Director Webb: Weldon? Mr. Jones: Half on each.

THE PRESIDENT. One-half on each, I am sure, but I want to be--

Q. Up to what amount? What would the permanent contribution rate be?

Director Webb: As to what the rate on the employer is, that has to be worked out in accordance with the total plan. I don't believe you would want to find out now that it definitely will be one-half for employer as well as employee. That will be one element in the President's plan when he submits it.

THE PRESIDENT. Depends on how the Congress acts on it.

Q. There is a reference there to a permanent contribution rate, and we can't find it any place in the book. Could you tell us what that might be?

THE PRESIDENT. I will tell you when the message goes down. It isn't in this Budget Message.

[9.] Q. As a result of the later revisions in the 1948 budget that are contained in today's budget, do you have a detailed--more detailed estimate of the reductions Congress made in the original on a comparable basis ? In other words, if Congress had accepted all of your original proposals plus the new ones that alternately went up, what would be the total Government expenditures figure for the 1948 fiscal year?

THE PRESIDENT. Can you answer that?

Director Webb: We haven't made any calculation on that. The increases in the budget between this revision and the one last August are pretty clearly indicated in the budget and relate largely to increases in the international field.

Q. That is what I am trying to get at, what were those increases, the total ?

Director Webb: We have not made a calculation in total on that. If you will contact the people in the Bureau, we can help you with that project, if you want to undertake it. [Laughter] It's a hard project.

[10.] Q. Mr. President, I am a bit confused on M13 (p. 25), first paragraph.

THE PRESIDENT. M13.

Q. Yes. "While the anti-inflation program will require higher expenditures, the total for finance, commerce, and industry will fall sharply because the current year total includes nonrecurring payments of war damage insurance profits to the Treasury."

Director Webb: That is the first paragraph?

Q. My point is how can you fight inflation with increased expenditures?

Director Webb: That is an increase in the particular area of a few million dollars relatively to finance the people necessary for the anti-inflation program. Doesn't refer to the total budget.

THE PRESIDENT. The Director of the Budget says that is for the payment of the overhead cost. Only runs a few million dollars.

[11.] Q. Mr. President, is there any explanation from the Treasury why people up on the Hill were so far ahead of the Treasury in estimating this terrific rise in Federal revenues?

THE PRESIDENT. Was that true?

Q. Yes sir. The Treasury was still holding, I believe, to a round $40 billion estimate up until the time of the adjournment of Congress last year.

THE PRESIDENT. Well, I think the Treasury finally revised its estimate after the first collection period was in. That is the only way it could be revised. The other was probably a guess. The Treasury works on the figures as they are.

Secretary Snyder: They must have had a better insight into the rise in prices. [Laughter] They must have known what they were going to. do to them.

[12.] Q. Is it going to be easy to sell 10hn Taber 1 on that $6.8 billion, whereas you list 4.5 in this budget for expenditures?

THE PRESIDENT. Do you understand the difference between expenditures and the requirements of the budget, do you? I tried to explain that to you. Entirely different figures.

1 Representative John Taber of New York.

Q. That's a pretty big difference, though.

THE PRESIDENT. You understand what a pipeline is?

Director Webb: Four and a half.

THE PRESIDENT. In these things the pipeline has to be filled first, and it takes--it will take considerable time to get that pipeline working, and the rest of the expenditures will extend over into the following fiscal year. That doesn't have anything to do with what is required.

[13.] Q. Mr. President, does your limited shipbuilding recommendation here for the Maritime Commission mean that you have decided against the recommendation of your advisory committee on merchant marine, or that you have not yet made a decision on that?

THE PRESIDENT. The decision is that we will eventually go ahead with the merchant marine program. We have got to do the best we can, though, when we can't get the money. We are asking for what we think we can get.

Director Webb: You can study that report, too.

[14.] Q. On the cost-of-living tax credit, I wonder if you could tell us how you decided on $40, rather than 30, 50, or some other figure?

THE PRESIDENT. Yes, I can tell you. The suggestion came from the Economic Advisers that this was a proper approach to the situation, and then it was figured out what $20 would do, what $25 would do, what $30 would do; and it was finally decided that the 40 figure would come more nearly meeting the necessary cost-of-living program for more people than any other figure, and that the increase in the corporation tax, which would be just enough to offset it, would not in any way injure corporation profits. You see, in 1947 they had the greatest profit they ever had in their history--$12 1/2 billion. This year it's 17 billion. That's how we arrived at that conclusion.

[15.] Q. Mr. President, were you aware that Mrs. Douglas¹ had introduced a bill at the last session for identical exemption?

THE PRESIDENT. I didn't know about Mrs. Douglas's bill.

¹ Representative Helen Gahagan Douglas of California.

Q. She had a hundred dollars.

THE PRESIDENT. I didn't know about Mrs. Douglas's bill.

Q. She had in her bill the excess profits-reimposition of excess profits.

THE PRESIDENT. Excess profits tax.

Q. Why was that rejected? What was the reason?

THE PRESIDENT. It was considered too difficult to administer. It was difficult to administer, and we decided that a straight increase probably would be better. The Treasury is working on the bill now.

Secretary Snyder: Haven't settled on that now.

THE PRESIDENT. The Secretary tells me he hasn't settled on which approach it will be.

Q. You have not yet decided whether it's a flat increase?

THE PRESIDENT. Excess profits?

Q. On excess profits.

THE PRESIDENT. That will be straightened out.

[16.] Q. Again, in connection with the $40 tax exemption figure, could you tell us what consideration was made to give everybody the same--the same tax exemption rather than to weight it on behalf of the people with the lowest income?

THE PRESIDENT. We want to treat everybody just alike. I think everybody is equal before the law, isn't that part of your constitutional teaching? Want to treat everybody just alike.

Q. Mr. President, I am not sure I heard, [p.18] but I had the impression you said that you were weighing whether it should be or will be a straight increase on excess profits tax, is that correct?

THE PRESIDENT. That's right.

Q. Thank you.

THE PRESIDENT. What is it, Miss May? 1

1 Mrs. May Craig of the Portland (Maine) Press-Herald.

Q. Mr. President, do you treat everybody alike, in that you give people with children exemption of $40 too?

THE PRESIDENT. Miss May, that is a question for argument. That is a question for argument. [Laughter]

Q. Mr. President, if the corporate tax is increased to cover the $40 for each taxpayer, will not the prices of the commodities of corporations be increased?

THE PRESIDENT. I don't see why they should, at the rate profits are coming in.

Q. Isn't it true that the profits of corporations which used to run pretty close to 10 percent of the national income are now running less than 10 percent of the national income?

THE PRESIDENT. I can't answer that question. I would be glad if you would furnish me the figures.

Q. Has the Treasury figured out what the corporate percentage increase would be, would it be 12 or 13 percent?

THE PRESIDENT. Somewhere in that neighborhood.

Secretary Snyder: Make it 13.

Q. About 13.

Q. About the maximum.

THE PRESIDENT. Totaling about a straight across-the-board rate.

Q. That would hike the corporate rate to what?

THE PRESIDENT. About 51 percent. I think it is 38 now.

[17.] Q. What sort of an adjustment would you give small business on that?

THE PRESIDENT. Same sort of adjustment they have now. I think there is an exemption of $25,000 or $50,000 now.

[18.] Q. If I could go back to that, I am surprised to hear you say everybody should be treated alike. Don't you think low-income people ought to get more help?

THE PRESIDENT. Yes, and they are going to get more help. Under the plan they will get more help than the one that is proposed in the Congress.

Q. On that point, where is business going to get this $50 billion that you recommended for business investment?

THE PRESIDENT. Where did it get the 23 billion it spent over the last year and a half? From the same place.

Q. Where did they get that, Mr. President?

THE PRESIDENT. They got it from the sale of securities. They got some of it on profits. Just a general business approach to the thing. This is, you understand, to extend over a period of years. It doesn't mean to be a $50 billion expenditure in one year. It's a 10-year period about which I have been talking.

Q. Mr. President, won't such an expansion of expenditures--expenditures for expansion require a rate increase in bank credit, and aren't we trying to contract bank credit in order to fight inflation?

THE PRESIDENT. I don't think so. We are not trying to contract bank credit where it will increase production. We are only trying to contract bank credit where it does not increase production, or for speculative purposes--particularly speculative.

Q. Mr. President, on page M9 (p. 23) your message reads, "Between 1947 and 1948 revenues from corporations and individual income taxes combined increased by $5.5 billion, more than offsetting the decline of [p.19] $3.2 billion in excess profits tax revenues." Is there any connection between that and your recommendation?

THE PRESIDENT. No, that is just a statement of fact.

[19.] Q. Mr. President, have you any estimate of how much of this budget goes to carry out the recommendations of your State of the Union Message on the 10-year plan for health and education and everything else?

THE PRESIDENT. Can you answer that?

Director Webb: You propose certain specific legislation here, and there are estimates for that for this year.

THE PRESIDENT. We have proposed certain specific legislation here and the estimates are in the budget for those specific proposals.

Q. Is that in that table in the back?

THE PRESIDENT. Yes. Yes, that's in that table.

Director Webb: Page M56 (p. 58).

[20.] Q. Mr. President, some of the things that you have proposed in your State of the Union Message are not--are not in this Budget Message.

THE PRESIDENT. No.

Q. For example, the river valley authorities, for example, are not--there is no estimate in the budget for those?

THE PRESIDENT. Well, the reason that estimate is not included is because it hasn't even been reported out of the committee. It has been pending for the last 5 years--ever since I was in the Senate. That is one of the reasons it isn't in there. If you can assure me that the Congress will act on them, why I will put them in the budget by a supplemental.

Q. Quite to the contrary, I question whether they will act on a lot of things that are in here.

THE PRESIDENT. Well, we'll see. The answer will come along about May or June.

Reporter: Thank you, Mr. President.

THE PRESIDENT. You asked about the national income on which this budget was figured. It is 192 billions.