The President's News Conference on the Budget

THE PRESIDENT. [1.] This Budget is set out in more detail, and the introduction is the most comprehensive one that we have put out since I have been President. I hope every one of you have carefully read the first 71 pages in the large, condensed Budget, and if you have you won't need to ask any questions. That very specifically sets out just exactly what the budget provides, and while there isn't very much to be said in addition to what is said in that 71 pages, so if you ask too many questions, I am going to suggest that you start in and read those 71 pages. You all should have had it digested. [Laughter]

What we are over here for is, of course, to answer any questions that we possibly can in connection with the income and expenditures of the Government.

I never had as much difficulty in the 14 years I have had connection with a budget as I have had with getting this one ready, on account of conditions over which I really had no control. Conditions have created a situation where we had to--for the last year, the budget for 1948--increase the expenditures; and we had to--in the 1949 budget which is being worked out now--we had to increase expenditures due to circumstances that were necessary in foreign affairs for us to meet.

You will find, however, that the budget is an exceedingly tight one, and that we almost reached the point where expenditures would not exceed the income.

The budget of 1945 and 1946--from June 1945 to June 1946--if you remember, called for about $103 billion. Due to the end of the war, we were able to rescind about $60 or $65 billion of that. And then in the next year's budget--1947--June 1946-1947--we managed to come so close to a balance that we finally wound up in pretty good shape. And in the 1947-1948 budget, we had an $8 billion surplus, and expenditures by that time had been reduced from something over $50 billion in 1945-1946 to a little over $33 billion in that year.

And then our foreign affairs caused us to have to increase the expenditures for last year, and that is a continuing charge in the 1949-1950 and 1951 budgets. And that accounts for our present situation, along with that rich man's tax bill, which I vetoed three times.

We are asking this time for the restoration of $4 billion in revenue so that we can continue to make payments on the national debt. And we are asking also that the fake transfer of $3 billion from the 1948-49 budget be rescinded and that the surplus be applied to the national debt, as it should be.

You will find all these things set out in the budget very clearly in that first 71 pages, and I hope--as I say--that every one of you, if you haven't read that first 71 pages will read that carefully, because you can't fail to understand what is meant by the figures if you read that first 71 pages.

Now we will try to answer questions.

[2.] Q. Mr. President, is 5 billion, 960 correct for new taxes?

THE PRESIDENT. Four billion is asked for, for new taxes.

Q. Additional billion, 960 million is payroll deductions actually?

THE PRESIDENT. Probably it ought to be there. It should have been there 5 years ago. They keep postponing it until that fund is going to be insolvent, but that is an asset. That is for the purpose of making those funds solvent, as the law provides for.

Q. Considered as a tax?

THE PRESIDENT. Considered as a tax.

Q. Considered as a tax--that's right.

THE PRESIDENT. It is, but it isn't an expenditure.

Q. I am talking about taxes.

Q. 5 billion, 960 the correct tax figure?

THE PRESIDENT. Why yes, if you want to add those payroll taxes to it you can, but the tax that I am asking for is $4 billion--to pay some on the national debt. That doesn't have anything to do with the operation of the Government.

[3.] Q. Mr. President, you suggested moving ahead the date when the payroll taxes increased to half of one percent.

THE PRESIDENT. That's right.

[4.] Q. And then you made a recommendation, something to the effect that there should be some additional increase in the payroll taxes to cover medical care. Do you have an estimate as to how much that will be?

THE PRESIDENT. It is going to be set out in the medical message. You will find the figures in there, if you look hard enough.

Secretary Snyder: Mr. President, so that there wouldn't be any--just let Mr. Lawton speak on this medical situation.

THE PRESIDENT. All right--wait a minute-Secretary of the Treasury wants to clear up something.

Secretary Snyder: The President mentioned he canceled that $3 billion transfer from 1947 to 1948. That will--we have already applied that in reduction of the debt, so there will not be a further reduction of the debt.

THE PRESIDENT. No.

Secretary Snyder: But it will be a permanent reduction.

THE PRESIDENT. Permanent reduction, that's right. All right--you tell them about that health.

Q. $280 million? Secretary Snyder: 260.

Q. $260 million rate for health tax. How is that levied?

Secretary Snyder: Levied on payroll.

Q. How much?

THE PRESIDENT. I can't answer that question.

Director Webb: Half of one percent.

Q. Employer or employee? Secretary Snyder: Both.

THE PRESIDENT. Just like social security did. A figure of $260 million is the estimate.

Q. Both employer and employee, Mr. President?

THE PRESIDENT. That is up to the Congress to decide that. All those details will be set out in the message which I am going to send Congress on the subject, and that message will go down in about 5 or 10 days.

Q. Mr. President, can you tell us about the half of one percent? Is that the half of one percent that you are recommending in here?

THE PRESIDENT. No.

Q. Is that additional?

THE PRESIDENT. That is the additional half of one percent. It is the additional half of one percent to keep that social security fund solvent. This tax increase should have been automatic each year, but every time it came up to pass a resolution in the Senate, none was appropriated, so we have known that that fund was piling up. That tax should be levied every year. I sincerely hope that they will not do that same thing this year, because I want to see that fund actually get solvent so that there won't be any danger of our having to make appropriations from current revenue to meet that situation when it comes about.

[5.] Q. Mr. President, on the first page of your message--M5 (p. 45)¹--the last two sentences on the page, the last sentence, "Because of the normal lag in the collection of taxes, however, tax receipts in the fiscal year 1950 would be considerably less," that means considerably less than the--

THE PRESIDENT. Less than the 4 billion.

¹Page references in parentheses, throughout this news conference, indicate where the subjects referred to may be found in the Budget Message as printed herein (Item 8); all other references correspond to the page numbers in the Budget as published in House Document 17 (81st Cong., 1st sess.).

Q.--estimate?

THE PRESIDENT. About a billion. About 2 billion.

Q. About 2 billion.

[6.] THE PRESIDENT. See the next point, when you come to military aid to Europe.

Q. Where is that?

Q. The idea is that will not mean an estimate at this time as to the military aid to Europe?

THE PRESIDENT. That's right, because there is no way to make an estimate on it.

Q. Have you any estimate on that?

THE PRESIDENT. No, not yet. It isn't anywhere near the estimate stage yet, because it requires a lot of maneuvering yet to arrive at; a position where we would be in any position internationally to do anything of the kind, I haven't made.

Q. How much will you ask, probably, as an arbitrary authority to start off operations of that--

THE PRESIDENT. I can't answer that question.

Q. Mr. President, will it be in the budget?

THE PRESIDENT. It will, eventually, and if it works out in this fiscal year.

[7.] Q. Mr. President, do you estimate new taxes at 2 billion or 4 billion?

THE PRESIDENT. The 1950 estimate is-if the increase is made--a possibility of collecting 2 billion in additional taxes in 1950. That depends altogether on what the Ways and Means Committee does in the House, and I can't tell them what to do. They are, by the Constitution, the tax authority.

[8.] Q. Now another point. Both for fiscal year 1949 and fiscal 1950, what estimated national income is used in the calculation?

Secretary Snyder: 215.

THE PRESIDENT. 215 billions.

Q. Is that figure used by Commerce?

Secretary Snyder: That is the present Commerce figure, yes.

THE PRESIDENT. That's right.

Q. That is for both 1949 and 1950?

THE PRESIDENT. Yes.

Secretary Snyder: Using it for--in the adjustment of 1949 for the projection of 1950.

Q. Is that personal payments? Is that a personal payments figure?

Secretary Snyder: Personal income tax level, yes.

Q. Mr. President, what would the expenditure figure have been for this budget under the old accounting system? How would it compare?

THE PRESIDENT. $2 billion greater.

Q. The trust fund figure would not be added in as well?

THE PRESIDENT. The trust fund figure is never added in the budget. The thing that is used in the budget is the refund. They never should be in the budget because they are overpayments.

Secretary Snyder: We have here a release that explains that. If anybody didn't see that release some weeks ago, we have it here for you, and I have another statement showing deductions from the receipts--shows a net receipts estimate.

THE PRESIDENT. That's the idea.

[9.] Q. Mr. President, on page 7 (p. 46), in connection with military aid, it says, "To further this objective, I expect later to request funds for providing military supplies for those countries"--the Western European countries, of course--"and certain other countries where the provision of such assistance is important to our national security." Could you say anything about the "certain other countries"?

THE PRESIDENT. I can't discuss that situation at all. All that can be said is in the Budget Message.

Q. Mr. President, if this military aid shows in the 1950 fiscal year, will that mean higher expenditures than you are now anticipating?

THE PRESIDENT. It certainly would.

Q. And in that connection, then, would you agree with your Council of Economic Advisers that that will probably mean increases in all brackets of personal income taxes?

THE PRESIDENT, No, I would not. I set out what I believed in my Message on the State of the Union. I made that very clear.

[10.] Q. Mr. President, returning for a moment to the trust fund figure--

THE PRESIDENT. Sure.

Q.--that the Secretary spoke of, I understood him to say that that money had already been applied to reduction of the national debt?

THE PRESIDENT. Oh no.

Secretary Snyder: Not the trust fund.

THE PRESIDENT. Not the trust fund, the surplus.

Q. $3 billion?

THE PRESIDENT. The surplus that was

Q. It was called trust fund, I believe, at the time it was created.

THE PRESIDENT. $3 billion. It has already been applied on the national debt.

Q. Already applied?

THE PRESIDENT. Yes.

Secretary Snyder: With receipts over expenditures, we can certainly pay that on the debt, even if we have to borrow that back in order to keep interest 'payments down. So we had already actually gone ahead and applied it on reduction of the debt. It shows the 'permanent reduction in 1947 instead of 1948.

Q. So that if they would adopt your recommendation to repeal that provision of the law, it would go up--

THE PRESIDENT. That is correct.

Q.--that much more, I understand?

THE PRESIDENT. That is correct.

Secretary Snyder: No, no--it would not affect the total of the debt a bit.

THE PRESIDENT. No, it wouldn't. It's a matter of bookkeeping.

Secretary Snyder: It was set up as a bookkeeping device. We want to get it back like it always had been, don't you see.

THE PRESIDENT. It doesn't make any difference in the total national debt at all.

Q. I am completely confused then, Mr. President, because as I understand it--

Secretary Snyder: Maybe I should outline the thing and try to remove the confusion. We would have had a little over $8 billion surplus in 1948--I mean 1949; and then Congress took 3 billion out of that surplus and moved it over into 1949. We are simply putting that 3 billion back in the year in which it actually was a surplus. So far as the debt--we are doing that for future reference to the revenue and expenditures of those relative years so that they will be in their true light. So far as the debt is concerned, for efficient management of the debt, we apply our excess receipts over expenditures each month in the refunding that we have to meet, even though later we have to raise the amount we select and to make up for any deficit that occurs, don't you see. So actually it doesn't affect it. If we had saved all that money in the cash period, it would have meant that we could have reduced the money now, but we didn't apply it in immediately in reduction during those months' refundings, and so as a result why permanent reduction of the debt will show in 1948, rather than in 1949.

Q. And the 600 million deficit for fiscal year 1949 shown in this budget?

Secretary Snyder: That's right.

Q. And the debt would be increased, let us say, by $600 million?

Secretary Snyder: That is correct. Net increase would be by that much. Is that cleared up?

Q. Yes.

[11.] Q. Mr. President, how much has been set aside in the budget for reduction of the national debt in 1950?

THE PRESIDENT. Nothing.

Q. All right, assume that Congress increases taxes over $4 billion, how much--

THE PRESIDENT. Whatever the surplus would be. If you take the budget, add $2 billion to whatever income is set out in the budget, and subtract the deficit from that, that is what will be applied on the debt.

Q. Subtract the amount for military aid to Europe?

THE PRESIDENT. If there is any military aid.

Q. Is that item, Mr. President, kept in reserve for contingencies?

THE PRESIDENT. No, it is not.

Q. Did you say if there is any military aid?

THE PRESIDENT. Yes.

Q. Is there some question about that?

THE PRESIDENT. The matter cannot be discussed.

[12.] Q. Mr. President, you have a list of items in here for possible expenses on new legislation. In your message you proposed a survey of the steel industry.

THE PRESIDENT. Yes.

Q. To see whether there was additional capacity required. Is there an item in the budget to conduct that survey?

THE PRESIDENT. A million dollars from the President's fund--for purposes of that sort.

[13.] Q. Mr. President, on page 13 (p. 51) the table shows that estimated expenditures for 1950 are 41.8, but in the adjoining columns the combination of new appropriations and other authorizations come to 44.6.

THE PRESIDENT. Well now, I tried to explain here one time the difference between the cash expenditures in the budget and the appropriations, and that's what that amounts to.

Director Webb: The trend is up.

THE PRESIDENT. And that means the trend is up. There is a difference now. The cash outlay for 1950 will be what it says here-$38 billion, but the appropriations will authorize expenditures up to 44, part of which will be paid in 1951 and 1952, in all likelihood.

Q. Mr. President, is that what you call a 44.6 budget?

THE PRESIDENT. It should not. It should be called a budget at the figure set out right there.

[14.] Q. $7 million for survey of capacity and supply. What sort of--what type group will make that survey? Will it be congressional or executive?

THE PRESIDENT. I will cross that bridge when I get to it and tell you all about it.

[15.] Q. Mr. President, may I go back to the comparison of the old accounting basis, on page M11 (p. 50)?

THE PRESIDENT. Page what?

Q. M11--table headed Budget Receipts. The footnote says that payments of refunds are now reported as deductions rather than as expenditures, as previously; and then goes on to refer to the payments by whollyowned Government corporations and enter. prises. Were those payments formerly included on the expenditure side of the budget?

Secretary Snyder: One offsets the other.

THE PRESIDENT. Entry on both sides of the budget. It did not affect the final figure--it was a debit and a credit both.

Q. But if it were reported on both sides, then to get a valid figure wouldn't you have to add as well the $2 billion figure for refunds and the $2 billion, 420 for appropriations to trust funds?

THE PRESIDENT. No, no.

Director Webb: If you look on page 2 of the press release, you will find what we do and which will indicate to you the kind of items that are affected.

THE PRESIDENT. Have you got one of those?

Q. Yes, I have it, sir.

Q. All the figures in this new budget, past and present, are adjusted to reflect this new accounting method?

THE PRESIDENT. That is correct--that is correct. The old figures are adjusted to meet the same situation, so there is no fake comparison there at all.

Q. The only place where we might go wrong in making comparisons--and you would have to point out the change--would be in taking it back, say, 5 or 10 or 15 years.

THE PRESIDENT. That's right, we went back 5 years in this release here.

Q. Yes, I know.

THE PRESIDENT. Of course, if you go beyond that, you would have to adjust the old figures, just as we have adjusted this in this 5 years.

Secretary Snyder: We selected this year to make this adjustment in accounting. The Treasury Department, the Budget, and the General Accounting Office all worked over it here, to try to unify the accounting system of the Government. This is one of the steps--continuing steps or simplification of our daily statement. We chose this particular year as the ideal year to do it, because we could do it with less complications this particular year than any other year; and there is no idea--the President has no idea of using it to show a reduction in the budget, or anything of the sort, because he frankly tells you that the other side was a reduction identically the same.

THE PRESIDENT. If you read page 1399 in this green book, it is all set out for 10 years and adjusted.

[16.] Q. Mr. President, in the last Congress-which you praised so highly--there was quite a bit of excitement over a 70-group air force, which Congress approved. I notice you have a 48-group, on page M22 (p. 58). I was wondering whether that would carry out a 7D-group air force program in the 4 years allotted by Congress ?

THE PRESIDENT. No, it would not. It allows as many airplanes as they originally wanted for the 7D-group air force, but that almost doubled the group--that's what the difference is. We anticipated a question like that, so I have got some facts together for you.

[Reading] "The number of groups is a somewhat misleading measure of air power since the character, size, number of aircraft, and other elements of the groups are not fixed but constantly change as conditions require. The size of the Air Force is better indicated by the number and size of aircraft rather than by the number of groups. The number of first and second line aircraft I have recommended for the Air Force for the fiscal year 1950 is 9,200. As you will note from my message, this budget represents a better balance between the various components of military strength than we have had in the past. To provide in the next budget a still better use of our military dollars, I am planning to recommend substantial improvements in the organization of the National Military Establishment. The funds provided by Congress for the Air Force in fiscal year 1949 were intended to provide an increase in the number of first and second line aircraft to 10,297 by June 30, 1949. The Air Force has reduced this number by 700 training planes as a result of revised training requirements. The approximately 400 other planes to be dropped are largely Army support planes which were planned for tactical purposes.

"Also it should be borne in mind that the Air Force Reserve and Air National Guard will grow in strength in 1950. In the Air National Guard it is contemplated that strength will increase from 35,000 at present to 49,500 by July 1, 1950."

Actually there is a tremendous increase.

Q. Did you say, Mr. President, that in the next 4 years the number of first line planes will be approximately the same as under the program contemplated by Congress?

THE PRESIDENT. No, no.

Q. Does that follow?

THE PRESIDENT. No. We are trying to get an integrated defense system without playing favorites either with the Navy or the Army or the Marine Corps. I will have a message on that at a later date.

[17.] Q. There was considerable talk about a $15 billion ceiling to include about 600 million for critical materials. I am wondering with which figure that $15 billion should be compared, this 15.9 authorization or this 14.3?

THE PRESIDENT. 15.9.

Q. In other words, what you did was to increase that ceiling by the extent of UMT, is that correct?

THE PRESIDENT. That is correct--that is correct. Stockpiling UMT.

[18.] Q. Mr. President, on page M34 (p. 67), where you say, quote: "In addition, I propose that we raise the ceiling on taxable earnings"--on which social security is based--will there be any specific recommendation as to whether that be raised 4200 or 4800 or some other figure?

THE PRESIDENT. It will be gone into in detail in a message on that subject. I will have that message ready in a few days, and

it will be set out very clearly.

Q. Medical message?

THE PRESIDENT. No, that is an entirely different one. I am going to have message after message. I am going to keep you busy from now on! [Laughter]

[19.] Q. Mr. President, on page M66 (P. 93) you refer to the War Assets Administration due to wind up the end of February, and to a new single property management agency. It is not quite clear from your remark here whether you contemplate that War Assets Administration will be dissolved at the end of February or whether it will be temporarily extended?

THE PRESIDENT. I can't tell about that. It depends on what conditions are at that time. I had hoped it would be through by that time.

[20.] Q. Mr. President, there are a lot of estimates here in the budget. Just for our guidance, could you give us an estimate of the number of messages you plan to send up?

THE PRESIDENT. No, I can't. I will send them as they are needed.

[21.] Q. Mr. President, I am not quite sure, was the Air Force given the number of planes that they want?

THE PRESIDENT. Not quite. You never can satisfy them. I have to put my foot down and tell them what they can have. If you didn't do that, they would take all the money in the budget.

Q. On page M25 (p. 60)--Naval Ship Construction--are there any superaircraft carriers provided in that?

THE PRESIDENT. One. There is one, and that's the cost of it.

Q. Is that the one under construction now?

Director Webb: That's right.

THE PRESIDENT. Yes, it has been started.

[22.] Q. Mr. President, I have been trying to find the figure here--I have been trying to find the figure that would show the total cash intake of the Federal Government for the fiscal year 1950. The budget receipts figure, as I understand it, has had money put in the trust funds taken out of it?

THE PRESIDENT. No, no, I don't think so. What is that, John?

Secretary Snyder: That is the total figure.

THE PRESIDENT. The total figure is right there.

Secretary Snyder: That is why I was so cautious about using that word "trust fund." That $3 billion transfer was called in the legislative act a trust fund. That has no bearing on the trust funds that are set up for the various .governmental funds.

Q. Mr. Secretary, on page M11 (p. 50)-Appropriations to Trust Funds, for social security, etc.--are those actually deducted from the receipts at all?

THE PRESIDENT. Tax refunds are deducted from the receipts.

Secretary Snyder: That is the estimated tax refunds that will be probably paid back for overpayment of taxes, and does not involve trust funds.

THE PRESIDENT. Doesn't involve the question of trust funds at all.

Director Webb: This is cash receipts to and from the public, as set out on page 123.

THE PRESIDENT. It has been called to my attention that if you turn to page A123 in the Green Book, you will find it all set out in detail.

[23.] Q. Mr. President, in the Economic Message you recommended the deduction of certain excises. Would that offset part of the $4 billion in new taxes?

THE PRESIDENT. No--I don't know--it would not. I am asking for $4 billion in new taxes, and the adjustment will have to be made so that it will be $4 billion, if I get what I want.

Q. $4 billion net?

THE PRESIDENT. That's right.

[24.] Q. Mr. President, on page M50 (p. 80)--I know what, you are going to send a message--[laughter]--on M50, the next to the last paragraph: "A flood control survey report covering the watershed of the Missouri will soon be presented to the Congress." Is that going to be an overall--

THE PRESIDENT. Yes. That is a flood control proposition entirely with the whole Mississippi Valley.

Q. Containing MVA?

THE PRESIDENT. No.

Q. What about the MVA?

THE PRESIDENT. You know all about it as well as I do. Ten of those are drainage projects in the Missouri, and 9 of them I got--9 of them including Missouri.

Q. Might be well to assume that you are going to go slow on all of those basin improvements and concentrate on hydroelectric power increases?

THE PRESIDENT. No. No, that is not true at all. I expect to make recommendations on several of those projects. In fact, I have made a recommendation in the Message on the State of the Union. I didn't specifically name the projects, for the simple reason that there are two or three projects, that are in a situation where we can go right to work on them. But I don't want to make that recommendation until this Budget Message and the Economic Message and this Message on the State of the Union have been digested, and then I will take care of that.

Q. Well, it says in here that the increased costs and the need for other things indicates the wisdom of going slow?

THE PRESIDENT. I think that is correct, but that doesn't mean we must go slow in an effort to get them.

Q. You are going to ask for authorizations but not appropriations, is that correct?

THE PRESIDENT. That's right. At any rate, get the thing started. I am particularly interested in the St. Lawrence Seaway.

[25.] Q. On M25 (p. 60) you say that the increased costs will be $279 million for the same number of naval craft, and in another place in the message you have $42 billion for the same number of vessels because of increased costs, etc. Has the Budget Bureau worked out a figure showing how much the inflation will cost the Government for the same number of units of--physical units--

THE PRESIDENT. No, no. It hasn't been worked out. You can do that yourself-just get last year's budget, and this one, and the year before--you won't have much trouble. [Laughter]

[26.] Q. Mr. President, on page M28 (pp. 62, 63), I have a question.

THE PRESIDENT. What was that? Director Webb: M28.

Q. Veterans.

THE PRESIDENT. Yes.

Q. "The necessity for new or extended benefits for veterans without service disabilities should be judged, not solely from the standpoint of service in our armed forces, but in the light of existing social welfare programs available to all, veterans and nonveterans alike." Wouldn't that--the tenor of that whole passage--isn't that a sort of warning against a bonus?

THE PRESIDENT. You can take it for that, if you like. I have said in previous instances that those things should come under the normal business of the Government. The boys here prepared a statement which goes into detail, and I will read it to you, if you like.

[Reading] "We should not continue to expand benefits to this group, regardless of other benefits to which they may be entitled, through existing or expanded social security programs. Veterans have the same opportunity as nonveterans to accumulate benefit rights under the social security programs. It is undesirable to have a duplicate or dual system of benefits, and as the message points out, veterans and their families will soon be two-fifths of the total population. Therefore, any proposal to extend the present benefits available to veterans who do not have service-connected disabilities should be considered only in relation to other available benefits ."

What we are trying to do is make the social security system so good that nobody will want any special benefits.

[27.] Q. Mr. President, is the Navy getting funds to build that supercarrier?

THE PRESIDENT. Yes, $100 million.

Q. Mr. President, does that super aircraft carrier represent a decision on your part as Commander in Chief in the controversy over strategic air warfare?

THE PRESIDENT. It does not. It does not.

Q. Mr. President, isn't that carrier construction pretty well underway?

THE PRESIDENT. No. The keel has been laid down in Norfolk navy yard.

[28.] Q. The table on A123--

THE PRESIDENT. 123? That's the one about cash income and outgo, isn't it?

Q. Yes, sir.

THE PRESIDENT. What about it?

Q. Two things on that. One, does the cash inflow there include the proposed social security legislation?

Director Webb: Yes.

THE PRESIDENT. Yes, it does, the experts say.

Q. The other thing: would it be true to say, would it not, that the total impact on the economy, fiscal years 1940 and 1950, would be deflationary, since there will be-the Federal Government will take in more cash than it will pay out?

THE PRESIDENT. That depends on what action the Congress takes. These are estimated figures.

Q. If this budget is carried out?

THE PRESIDENT. If this budget is carried out, that is true. That is what we are trying to do.

[29.] Q. Mr. President, is there anything in the budget which takes into account the proposed--extended expenses that may be incurred if the Federal Security Agency is given departmental status--a new Department of Health, Welfare, and Education is created?

THE PRESIDENT. I don't think there will be any increase in cost in that case. There will be an increase in dignity and title is all.

[30.] Q. Mr. President, on that very subject, inflation and deflation, page M32 (p. 66), there is a statement that this initial dividend of about $2 billion would be paid throughout the year for servicemen. Won't that be inflation?

THE PRESIDENT. It so states in the budget that it will be, if you will read that section.

Q. That would offset the other question?

THE PRESIDENT. Just about.

Q. Is it definite that the veterans will get the refund this year? I recall years ago

THE PRESIDENT. I can't answer that question definitely. They will try with everything they have to get in shape so that they can meet those things as they come up. The bookkeeping over at Veterans Administration has had to be completely overhauled. As soon as they get that job done, that payment is due and payable, and it should be. That is the only reason it is being paid out.

Q. This payment is included on the table on page A123?

THE PRESIDENT. Yes.

Q. Is that included in 1949 or 1950?

THE PRESIDENT. It's in 1950.

[31.] Q. Mr. President, on M70 (p. 96), with reference to the St. Lawrence, you estimate expenditures in 1950 fiscal at 8 million, and refer to anticipated supplemental appropriations or authorizations as 20 million. Were you suggesting there an appropriation of 20 million, of which 8 million might be spent in fiscal 1950?

THE PRESIDENT. That is correct--that is correct.

[32.] Q. Mr. President, on M56 (p. 85) you speak of a postal deficit. Do you intend--the rates--last paragraph--

THE PRESIDENT. Yes, I think newspapers and magazines ought to pay for their advertising they send through the mails, if that is what you want to know. They ought to pay what it costs. [Laughter] I don't see why they should be subsidized any more than anybody else.

Q. What about the effect of that on small papers ? That's what always bothers me.

THE PRESIDENT. They should be in the same boat.

Q. Small papers?

THE PRESIDENT. Small papers. I have always advocated that, Pete,² ever since I came to the Senate. It is just good business and good sense. There isn't any reason why we should have a subsidy of those things at all. Some of them wouldn't be so thick if they had to pay what it costs to go through the mails--we wouldn't have to go through so many pages of advertising to read the news.

² Raymond P. Brandt of the St. Louis Post-Dispatch.

Q. The point Pete was raising, Mr. President, is do you suggest that the free delivery system now prevailing for the rural press within a given quota be abandoned?

THE PRESIDENT. Oh no, not that. I want the cost of transportation of these things to be paid.

Q. This is the rural free delivery?

THE PRESIDENT. I don't know about that. I never ran a paper in my life, so I don't know how they handle those things, but I think that a postal deficit should not exist, and the things that cause the deficit should pay the deficit. That is what I am trying to get at. If you read the paragraph on M56 (p. 85), I think it clears it up pretty thoroughly.

Q. Well, Mr. President, I am a little surprised at your criticism of subsidies to newspapers, when pretty nearly everything else gets subsidies.

THE PRESIDENT. Well, you don't mean to tell me that they need a subsidy in order to operate, do you?

Q. The little, small ones.

THE PRESIDENT. I don't think the papers do.

This is a controversial matter. I am taking a stand on it. As I have just said, I don't think that a Post Office deficit ought to be in the nature of a subsidy. I am making it as plain as I can.

[33.] Q. On page M55 (p. 84), middle of first paragraph: "I recommend legislation to provide for proper conservation and planned use of the oil reserves under the sea which are vested in the Federal Government."

THE PRESIDENT. That's right.

Q. What type of legislation on that?

THE PRESIDENT. Legislation necessary to make it clear on the leasing of those lands, and it should be done for the protection of the 'people. There is an authority now under which it can be operated, but I don't think it's a clear authority, and I think the Congress ought to clear it up, so as to make it perfectly plain as to how we can develop those resources in the interest of the public.

Q. That includes tidelands and continental shelf?

THE PRESIDENT. The whole thing.

Q. The whole thing?

THE PRESIDENT. The whole thing.

[34.] Q. Is there any figure in this budget which puts in one figure the sum total of all subsidies proposed?

Director Webb: No.

THE PRESIDENT. No, I don't think there is, the Budget Director says. It would be rather interesting to see, I think.

Q. On those subsidies--I can't find the page now--but it's on farm parity. You say that that flexible provision should be amended. What have you in mind there?

THE PRESIDENT. That is a matter for the Congress to work out. I can't tell them exactly all the details. I am in favor of farm parity and always have been, ever since I have been in the Congress, and it ought to be worked out so that it is a fair deal for everybody, including the consumer and the fellow that raises the crops.

Q. You mentioned it specifically. Do you think that there will be a revision of the Tobey-Aiken bill?

THE PRESIDENT. I do.

Q. Upward, for the farmers?

THE PRESIDENT. I say it should be revised. Don't put words in my mouth, Pete.

Q. Are you in favor of a flexible price support system?

THE PRESIDENT. I haven't given the matter thought. That is a matter for the Congress to work out. If they like it, I will sign it.

Q. Mr. President, M50 (p. 80), reduction in the Commodity Credit Corporation outlay is contemplated. I wonder if that was assuming flexible price support?

THE PRESIDENT. No. It is based on crop estimates. It is based on the crop estimate, putting into effect the quotas where there is a great surplus of the crop. You read the book on that. I am not going to give you a lecture on that this morning.

[35.] Q. Mr. President, on page 9 (p. 48), you suggest revision--has there ever been--page 9 refers to suggested revision of the Classification Act. Has there ever been any figure as to just what those figures should be?

THE PRESIDENT. No, I don't think it has been worked out in detail, but it should be worked out. The Classification Act should be worked out on a basis of fairness to the people who work under the Classification Act. Some of them are grossly underpaid, and they are not in line with other people who draw a salary from the Government elsewhere.

[36.] Q. On that 4 billion tax increase, it would yield only 2 billion in 1950.

THE PRESIDENT. That is correct.

Q. Do you mean by that that the other 2 billion of it would be paid by corporations?

THE PRESIDENT. No. When I say only $2 billion of it can be collected in 1950, you can't get ready for the collection until the budget year will be half gone. That's what the difficulty is. We hope to get a tax arrangement that will bring us in an additional $4 billion. The most we can expect to get out of that in 1950 would be 2 billion. That is just a fiscal matter.

Q. Mr. President, have you given up on the excess profits idea?

THE PRESIDENT. The Message on the State of the Union states where I stand on that.

Q. On that $2 billion, any additional taxes would have to be paid immediately, would they not? In other words, the lag that you are talking about would not apply to individuals?

THE PRESIDENT. It applies each year to individuals. The half of the fiscal year would apply to individuals because it would be applied--

Q. In other words, this would not be effective until January 1, 1949?

THE PRESIDENT. It is due to the fiscal situation--June 30th would be assumed until the thing would go in.

Q. In table 1 of the Budget Resume, Based On Existing And Proposed Legislation, employment taxes--you have proposed legislation--the proposed additional $4 billion in taxes is not in there, is it?

THE PRESIDENT. No. That is a different thing entirely.

Q. Is that the only item missing in that-on that proposed legislation, do you know?

THE PRESIDENT. That is about the only one that is missing. But it does not reflect the additional corporation and personal income taxes.

Q. Mr. President, I would like to get something straight.

THE PRESIDENT. All right.

Q. These new taxes that we are going to ask for apply to calendar year 1949, do they not?

THE PRESIDENT. The budget year 1950.

Q. Taxes will apply to income on taxpayers for the calendar year 1949?

THE PRESIDENT. The last half of it, yes, if the Congress enacts it. That is a 1950 budget.

Q. Do you mean that the new taxes are to apply to income received only beginning July 1st?

THE PRESIDENT. That is up to the Congress. I can't go into detail. The Ways and Means Committee are going to write this tax bill--whatever they put in it. We have made an estimate that we will probably get $2 billion. If we get the tax bill, that in the long run will give us $4 billion. It is an estimate entirely.

Secretary Snyder: Mr. President, may I just say one word there? That $2 billion is not a sacred figure. [Laughter] The--it isn't anything to laugh about--the President asked for 4 billion increase in taxes. We will have to just consider that some tax increase would come in the calendar year 1950. Now it may be, if the Congress should happen to work on personal income taxes, or something of that sort, part of that--half of it would move over into the 1950 budget. But just for ease of purpose, half of it is estimated to fall within the fiscal year 1950. Now, it might go up or down, either way, so far as half of it is concerned, see?

THE PRESIDENT. It is merely a guess. It is merely a guess.

Q. That increase in corporate taxes applying to calendar year 1950 would not show up at all in the 1950 budget, would it?

Secretary Snyder: If it was for the year 1949. It all depends on how the Congress writes the tax bill. If they make it effective, say, for 1949, the corporate taxes would begin to show up in 1950.

Q. You would assume, would you not, that in any case you would get approximately half of it in fiscal year 1950?

THE PRESIDENT. That's right.

Secretary Snyder: For the fiscal year 1950 we are just assuming we would collect half the recommended tax increase. That could vary with the tax bill that Congress finally imposes.

Q. You are leaving up to Congress whether those taxes shall start January 1, 1949, or January 1, 1950?

THE PRESIDENT. On July 1, 1949.

Director Webb: July 1, 1949.

Q. Three dates possible?

THE PRESIDENT. Depends altogether on the attitude of the Congress and whether they want a deficit or not.

Q. What is your request, or recommendation, as to when that should start?

THE PRESIDENT. I didn't make any such recommendation. I asked for the money, and told them what the condition of the budget is. Now it's up to Congress to take advantage of the situation and do what they see fit.

Q. If they want to make it retroactive to January 1st, you will collect some funds in fiscal year 1949?

THE PRESIDENT. You just can do all the speculating you want on that. I am going to wait until I see the bill. I can't tell you what will happen. We have made an estimate on what we hope will happen.

Q. Which would retire the debt?

THE PRESIDENT. I don't think we can arrive at that point in 1949. We are hoping to in 1950.

Q. If the date were January 1, 1949, wouldn't it be $2 billion which could be applied to the fiscal 1950 budget?

THE PRESIDENT. It .might be in 1949

Secretary Snyder: Fiscal 1950, part of that could be applied.

THE PRESIDENT. That is correct.

Q. What was the estimate based on, what date, what is the estimate here?

THE PRESIDENT. July 1st--July 1st.

Director Webb: 1949.

THE PRESIDENT. That's right.

Director Webb: But it is not included in the budget figures at all.

THE PRESIDENT. It isn't included in the budget figures at all. That is not included in the budget. If we get it, why we will be able, I think, not to have a deficit; if we don't have it, we will have a deficit.

Q. Don't believe they should consider taxation until after the March 15th returns. Do you agree with that viewpoint?

THE PRESIDENT. I have no argument with the Congress on how they are going to do it. I have asked them to do it.

[37.] Q. In that connection, Mr. President, I would like to ask my perennial question, is there any reason why revenue for fiscal 1949 was underestimated by a billion, 6 in August?

THE PRESIDENT. Yes, the Secretary of the Treasury can answer that for you.

Secretary Snyder: The corporate earnings were higher than were anticipated, and there was an increase in the individual incomes in the latter part there that were not anticipated.

[38.] Q. Mr. President, I want to get one thing clear--on the offshore oil lands the administration had a very good bill, a very long detailed one, a year ago, and it had a lease provision in it to show where the Federal Government would spend the money. Is there reference to change that in a new bill?

THE PRESIDENT. I am not familiar with that bill.

Director Webb: The Attorney General has a bill down before Congress now.

THE PRESIDENT. The Budget Director says the Attorney General has a bill down before the Congress now. I have not gone into it in detail. I never do that until it comes before me for consideration.

[39.] Q. Did you say your tax estimate was based on the thought that the increased taxes would go into effect on July 1, 1949?

THE PRESIDENT. That is the reason we made it a $2 billion estimate. That is the reason for the $2 billion estimate.

Q. Is there any estimate of refunds that would go to individual taxpayers on the overpayments from January through April, under this $5 billion tax cut?

Secretary Snyder: Under increased taxes?

Q. Under this $5 billion tax cut, is there any estimate of what the refund would be January through April ?

Secretary Snyder: Right there under the present tax laws it shows you on page M11 (p. 50), and shows for the various years what the deductions have been for refunds and receipts. That is all broken down there.

Q. The overpayment for 4 months, though, from January through April?

Secretary Snyder: It is not separated at all.

THE PRESIDENT. It is not separated.

Q. Is there any estimate on that?

THE PRESIDENT. No, We haven't got it.

Secretary Snyder: We could probably get it up for you, the actual effect of it.

Q. Sort of a windfall?

THE PRESIDENT. You were instructed to turn it into the Republican campaign fund. [Laughter]

[40.] Q. On page A123, I notice that there is an estimate of a sizable increase in receipts and excise taxes. I am wondering if--the third item down, under Receipts From the Public, Excise Taxes. There seems to be a sizable increase estimated, and I was wondering what that would be due to?

Secretary Snyder: Well, Customs receipts are slightly increasing. There is no great change--if you will look across the board there--there is no great change in excise tax collections, because they go up and down, they are going up in one area and down in another, so there isn't any great change across the board there for 1948, 1949, and 1950.

Q. $200 million anticipated extra in 1950?

THE PRESIDENT. Yes--well, that's in the overall total of the tax program.

Secretary Snyder: That is not a large amount, with the volume of business we are doing now, see?

THE PRESIDENT. We have been hoping that international business will increase and we will make more money.

Secretary Snyder: Some of them go down and some of them go up.

Q. That would be applicable more to customs than to excise taxes?

THE PRESIDENT. No.

Secretary Snyder: The excise collection area goes up and down. Sugar will sell high one time and then it will drop off. Then costume jewelry will go up--perfume, and things of that sort; they vary with the different years. We hope that by holding to present levels of income that there will be an increased sale of those things.

Mr. Lawton: The details are on A12-start with page A12, you will find excise taxes all set out.

THE PRESIDENT. Is that 12A? A12, the experts say, the detail is all set out.

[41.] Q. Mr. President, on page M13 (p. 51), Interest on the Public Debt, we find that the interest budgeted for 1950 is $125 million higher than the estimate for 1949. Can that be taken to mean that the present rate is going to go up a little bit?

Secretary Snyder: No, it is not. We have explained that each year, as we have maturing obligations under the savings bonds. As you know, each year there is accumulated interest on those savings bonds that is written in there, don't you see, and that rate is around 2 1/2, which is a higher rate than short-term borrowing. Each year we make material reductions in the debt, which will cut interest charges, but if the debt remains static, where it is today, there will be a constant rising of that cost of servicing the debt in the way of interest paid.

THE PRESIDENT. Interest on the long-time obligations is 2 1/4, 2 1/2.

Secretary Snyder: On short term it is less than 1 percent. And on trust funds, that raises the general average, of course, of the cost of the interest charge--runs around 2.1.

[42.] Q. Mr. Secretary, on page A123, under employment taxes, fourth item, you go up there from 2 1/2 billion to 5 billion, 2. Does all that contemplate--inclusion of the medical tax--contemplate action by Congress?

Secretary Snyder: That is just inclusion of the things he recommends in that message.

THE PRESIDENT. That includes the recommendations.

[43.] Q. Mr. President, apart from the military aid program, which is not accounted for here, are there any other important items which are not budgeted for here, but predicted

Director Webb: No.

THE PRESIDENT. None that I know of. We have got everything here but the kitchen stove.

[44.] Q. Mr. President, a year ago the Secretary said these estimates of receipts were conservative, and it sort of turned out that way. Are these still conservative?

THE PRESIDENT. They always are and should be.

Secretary Snyder: These are based on the very latest reports from Commerce, and we are hoping to sustain that base throughout this coming year.

[45.] Q. This $15 billion figure should be called personal income rather than national income? Is there a difference between those two terms?

THE PRESIDENT. Yes there is.

Q. Personal income payments, rather than national income?

Secretary Snyder: That's the term that they use. That's the national personal income figure, don't you see?

[46.] Q. Mr. President, to go back to the Secretary's explanation a minute ago on the rising employment taxes from 2 billion, 599 to 5,253

THE PRESIDENT. That includes the increased taxes I have asked.

Q. That includes taxes that will be specified in this message?

THE PRESIDENT. They are already specified in this message here.

Q. Tax rates on employment, etc.?

THE PRESIDENT. They are specified right here in this message. If you read that 71 pages, you will find that clearly set out. Turn to page M11 (p. 50) and read it.

[47.] Q. In the budget you are asking $134 billion in new appropriations and authorizations. I am curious to know whether under the Constitution you are required to expend all of it, even if it is appropriated?

THE PRESIDENT. No.

Q. You are not?

THE PRESIDENT. No. I canceled $65 billion in 1945.

Q. Well, are you obligated--do you have to use any of it--

THE PRESIDENT. No.

Q. I just wanted to settle an argument on that. [Laughter]

THE PRESIDENT. These are authorized by the Congress, but I don't think you will have very many where any department feels that they cannot use all of the authorization when they had it, unless there was a cancellation by the President.

[48.] Q. Mr. President, did I understand you to say the rates for this year in your expanded social security are in the budget somewhere?

THE PRESIDENT. Not health insurance. Health insurance is not in here. Social security increases, that is included in this budget. There is no estimate now in this budget on the health budget. I am told all the money--the Director says--is included.

Q. $260 million, that is not in the budget, as I understand it--doesn't figure in the budget. Your health insurance program was $15 million?

THE PRESIDENT. That's the trust fund, you see. That goes just like the other.

Q. How would that be raised, Mr. President?

THE PRESIDENT. It's 1/4 percent--it will come in the message. I will tell you all about it in the message. About 1/4 percent.

Q. 1/4 on each--employer and employee?

THE PRESIDENT. Yes, 1/2 percent of the total payroll.

Q. That is included in the other you were speaking of a minute ago? That 5.2?

THE PRESIDENT. Yes, that's right.

[49.] Q. Mr. President, I was just going to ask, that 5.2, does that include aid to education in the things that you mention?

THE PRESIDENT. That is in the regular appropriation.

Q. Regular appropriation.

THE PRESIDENT. That is a trust fund, that 5.2 is--5 billion, 2.

[50.] Q. Mr. President, Public Debt Estimates and Budget Resume of 1949 and 1950, does that include application of the Treasury cash balance, or no such application has been made?

THE PRESIDENT. It includes the public debt as it stands now, and those applications are made monthly. If there is any surplus in income, usually refinancing takes place every month or so. They just don't borrow more money when they have cash in the Treasury.

Q. That figure contemplates some cash balance will be appropriated?

THE PRESIDENT. It does not, because there is a deficit anticipated in both those years.

Q. I think it was in August that there was an explanation about operating deficit and operating surplus. Can we forget about that now?

THE PRESIDENT. Yes.

Secretary Snyder: Congress will have to do it.

THE PRESIDENT. Congress will have to do it.

Q. Am I correct in thinking that in August you predicted an operating surplus, or was it an operating deficit?

THE PRESIDENT. It was an operating deficit.

Q. Mr. President, in past years Mr. Webb has given us telephone numbers and names of people--

THE PRESIDENT. Have you got any good telephone numbers to give? [Laughter]

Director Webb: Yes sir, we have; 421 at the Budget. Somebody will be there over the weekend to help you.

THE PRESIDENT. I don't know whether he has got any more good telephone numbers or not.

Reporter: Thank you, Mr. President.

Director Webb: Wait just one moment! We want to settle one thing.

[51.] THE PRESIDENT. On the reference to raising rates of second-class postal matters, the Postmaster General will have a bill which represents the views on this matter. I have not specified a position on the free delivery situation because I wasn't familiar with it, and I don't think you ought to quote me on that until you see the message, then that will set the thing up. We will make a mimeographed copy of that explaining statement, if you want it, and it will be ready later in the day. And any other information that we can furnish, you are perfectly at liberty to ask for it, and if I can get it to you, I will be glad to do so; and if we can't, all these experts can.

Q. Next year can we have the Seminar on some day other than Saturday?

THE PRESIDENT. It would have been some other day this time except for the situation as it developed. You see, the Budget Message happened to come on Monday this time. If it comes on some other weekday, why we will have the Seminar the day before.

Q. A wonderful day for golf.

THE PRESIDENT. Well, I hope you haven't wasted too much time. [Laughter]