The President's News Conference on the Review of the 1947 Budget

THE PRESIDENT. [1.] We have got arrangements made for an expert to answer any technical questions, from now until Saturday night: Weldon Jones; telephone number is Executive 3300, extension 118. And Saturday his telephone number will he Executive 3308. So if anybody wants to ask him any technical questions about the Budget, you are welcome to do it.

All of you have this summary here on what has happened--what we expect to happen. And the first page (p. 384),¹ I think, sets out the situation in words of one syllable so most anybody can understand it. And those of you who have read the document from one end to the other, I think will not need any seminar; but if you want to ask any questions, I will try to answer them as best I can.

¹Page references in parentheses, throughout this news conference, indicate where the subjects referred to may be found in the Statement by the President on the Review of the 1947 Budget as published herein (Item 193).

[2.] Q. Mr. President, right off for those of us who don't write this stuff regularly, in the first paragraph on the first page (p. 384), you predict a deficit of 1 billion, nine; and in the next paragraph it says when budget and trust accounts are consolidated on a strictly cash basis, and so forth, there will be more income than outgo. Could that be explained briefly?

THE PRESIDENT. Surely. The Budget is an estimated document. The actual cash transactions that take place with the Government are those that are on a 2 billion, 800 million income basis more than goes out.

Mr. Appleby: Mr. President, if I may interject there, I think this particular question has to do with the difference between the trust accounts and the general--

Q. That's right.

Mr. Appleby: --the special.

THE PRESIDENT. That's right.

Mr. Appleby: And the trust accounts include social security funds which during recent years have been drawing in money from out in the country and in greater amount than they pay out. And the President was trying to get to the fact that the net of what is paid out to the country is less-less than we are taking from the country. But the difference here is just intended to differentiate between trust accounts which are not in the regular operating budget of the Government, and the general and special, which is the budget that we talk about.

[3.] Q. Mr. President, sir, is there a breakdown of the difference between the cash and the accounting budget, shall we say? I notice there is a deficit of 1.9 on an accounting basis, and a surplus of 2.8. Add the two together you get $4.7 billion. Now what is the breakdown of the 4.7?

THE PRESIDENT. No you don't. You shouldn't add the two together, you should subtract one from the other.

Mr. Appleby: That's right.

HE PRESIDENT. That's right.

Secretary Snyder: The difference between the accounting and the cash would be the two together. One is the deficit and the other is an increase. The difference between the accounting and the actual cash transaction would be the two together.

THE PRESIDENT. Well yes, but I still say it's a difference in subtraction. But these trust accounts like social security, and those accounts, are--what do I want to say?--is an insurance--an insurance--actuarial reserve, which belongs to the people who pay them in. The operation of the Government is an entirely different thing, which is set out in the table on page 5 (Pg. 387), I think, as completely and thoroughly as it can be.

Q. Well, I was assuming that part of this money comes from the manner in which you expend the--you handle the terminal leave that will go over

THE PRESIDENT. That has nothing to do with it whatever. The handling of terminal leave is included in the $1 billion. That has nothing to do with the 2 billion cash business at all.

[4.] Q. Mr. President, I have a question with regard to page 8 (p. 389). On page 8 (p. 389) of this statement you say that the Secretaries of War and Navy will reduce projected expenditures for the Army and Navy by a billion, six. Then you list some other reductions also. It is still not clear to me, in your deficit estimate have you made allowance already for this billion, six hoped for reduction, or will this billion, six hoped for reduction, if they do it, will that reduce the deficit even further?

THE PRESIDENT. No. That is included in the billion, nine.

Q. The billion, nine ?

THE PRESIDENT. The net billion, nine includes that.

Q. Including this?

THE PRESIDENT. That's right, so that if they do it, there will still be no further reduction. That's right exactly.

Q. Somewhere there you have such a statement that throughout the fiscal year you will endeavor to effect further reductions. You mean even these you have anticipated, such as this 1 billion, 600 million you just mentioned ?

THE PRESIDENT. That's right. It is going to be a most difficult thing to do with the 2 billion, two which we have already ordered into effect.

It's nice to talk about making reductions, but it's hell to do it! [Laughter]

[5.] Q. Mr. President, do you still hope to balance the budget, sir?

THE PRESIDENT. Yes I do.

Q. Do you think there's a chance in January of 1947? And despite this 1 billion, nine deficit ?

THE PRESIDENT. Yes I do. Yes I do. Had the Congress listened carefully, we would have it balanced.

Q. How much of this, sir, can we use?

THE PRESIDENT. Of what?

Q. I mean the statement

Q. Can we quote you on that?

THE PRESIDENT. I would rather you wouldn't.

Q. I mean without the Congress--

THE PRESIDENT. I would rather you wouldn't quote me on that, because I am having enough trouble; and they are going to come back after awhile.

Q. You don't want to predict for publication a full balanced budget?

THE PRESIDENT. No, I would rather not. Let's let it answer for itself when the end of the year comes.

Q. All right to say that you are still hopeful?

THE PRESIDENT. Yes, you can say I am still hopeful. That will be all right. It is much better than it was at the beginning; but I will say this, that under ordinary conditions we would have it balanced.

Q. Well, Mr. President, then it is correct to read into your statement here the implication that you do blame Congress--

THE PRESIDENT. No it isn't. No it isn't. I blame conditions over which nobody really had any control. Of course, the payment of terminal leave, the raising of six or seven hundred million dollars in the pay of the military personnel, and a great many other things, simply added to our troubles.

Q. I have reference to the statement at the bottom of the first paragraph on page 9 (p. 390).

THE PRESIDENT. First paragraph?

Q. It says without the expenditures not contemplated in January, the Budget would have shown a surplus.

THE PRESIDENT. That is true. There is no use blaming anybody for it.

Q. You don't blame anybody?

THE PRESIDENT. No.

Q. You say they are coming back ?

THE PRESIDENT. Of course. We've got to have a Congress. The law provides for it. [Laughter] No, I am not announcing--

Q. Before January 3d?

THE PRESIDENT. No, I am not announcing a special session at this time.

Q. Mr. President, the budget would not have been in balance if Congress had enacted your full legislative program?

THE PRESIDENT. Yes it would.

Mr. Appleby: Yes.

THE PRESIDENT. Yes. They carried out a program of their own. They didn't carry out mine.

Q. Didn't you approve some of the expenditures, though, that are itemized in here on-

Q.--And which you did not recommend.

Q.--on page 6 (p. 388)?

THE PRESIDENT. Page 6 (p. 388)? That's the--I signed those bills, if that's what you mean. I recommended the Philippine War Damage Rehabilitation--the loan to the Philippine Republic. Those are the only two that I really recommended to the Congress. But I signed the bills which created the other.

Q. That establishes what I wanted to know.

Q. Did the others, Mr. President, represent the places where Congress did not listen as carefully as you had hoped they might generally ?

THE PRESIDENT. Well, you can translate it that way, if you like.

[6.] Q. Mr. President, aside from that statement as to cash outlay, taking into consideration the trust accounts, you have here listed terminal leave pay as a cash outlay of 2 billion, four.

THE PRESIDENT. It has to be counted in this year.

Q. Yes sir. Well now, under the bill as you have it, it would not actually be paid out this year?

THE PRESIDENT. Well, the Treasury is responsible for its payment this year, and it's made on the day it becomes due.

Q. Yes sir; but as a matter of cash transaction--cash outlay--if you do not pay out this 2 billion, four, as the bill would keep you from doing--

THE PRESIDENT. Not in actual money, no.

Q.--then you would then have an actual cash or cash transaction, you would still have a balance on that, would you not?

THE PRESIDENT. For practical purposes and refunding the appropriations, that would be true, but we still owe it for this year.

[7.] Q. Mr. President, have you been given any explanation as to why taxes should have been underestimated by 25 percent?

THE PRESIDENT. Yes. Yes--[to Mr. Appleby]--tell him why.

Mr. Appleby: Increased dollar volume of business.

Q. Business has been better than anticipated ?

Mr. Appleby: That's right.

THE PRESIDENT. That's right. Increased dollar volume of business.

Q. How about taxes ?

THE PRESIDENT. I beg your pardon ?

Q. How about tax receipts, are they--

THE PRESIDENT. That's what we are talking about.

Mr. Appleby: For the same reason.

Q. That statement about dollar volume takes into account the price increase

THE PRESIDENT. Takes into account everything.

Q. It should be helpful in that respect.

Q. Mr. President, could I ask whether these tax receipt figures are based on any definite estimate of national income?

THE PRESIDENT. Oh yes, certainly. They are always based on--

Q. Could we have that figure?

THE PRESIDENT. --the national income. And it's only an estimate. It's a total volume of national income of about $165 billion.

Q. May we use the 165 billion?

THE PRESIDENT. Yes, I think you can use it, but that is an estimate. Bear in mind it is the same as the estimate on which we based the first income, which was $140 billion.

[8.] Q. Mr. President, could the Secretary of the Treasury tell us how far he intends to push this debt reduction policy, through the declination of the debt to the January balance ?

THE PRESIDENT. It says that here in this document.

Q. I didn't see it. Has the Secretary of the Treasury any elaboration of that?

Secretary Snyder: That will be determined from month to month, as these maturities become due.

Q. Mr. President, on table 2 (p. 394) despite reduction--

THE PRESIDENT. What page is that?

Mr. Appleby: At the end.

THE PRESIDENT. Oh, at the end of the document.

Q. Despite reductions made from--between January to August in estimates, it seems that the legislative branch, the judiciary, the Executive Office, and .civil agencies and departments, all show budgetary increases between 1945 and 1946.

THE PRESIDENT. Salary raises, mostly.

Q. Is that entirely accounted for by salaries?

THE PRESIDENT. Surely, because personnel in nearly every instance has been reduced--there are, I think, seven hundred thousand fewer people on the payroll now than when the estimate was made.

Q. Are the salary raises supposed to be absorbed--

THE PRESIDENT. I don't know how you would absorb it in the judiciary. I can't fire the judiciary at five thousand dollars a head here. [Laughter]

Q. The point I am trying to get at--

THE PRESIDENT. It's being absorbed in every other department.

Q. Well, for instance, the civil departments and agencies are up, say, from 1945, from 1 billion, 58 to 1 billion, 683.

THE PRESIDENT. Well, the $600 million in there is for Army pay.

Q. Civil departments and agencies ?

THE PRESIDENT. Yes--oh no, not for civil departments. Along which line is that?

Q. About two-thirds of the way down, in that table 2 (p. 394), which says civil departments and agencies, budget 1945 is 1 billion, 58, and estimates for 1946 are 1 billion, 683--that would be--would not be the general trend, but rather a result of salary increases unabsorbed--

THE PRESIDENT. That's right, that's right. That covers the situation thoroughly.

Q. There is also another line there that says "pay increase not absorbed above" which would seem almost a contradiction. Why do you list an unabsorbed increase in one place--

THE PRESIDENT. One of them--the second one is a cutback, isn't it?

Q. Yes.

THE PRESIDENT. The second one is a cutback, which answers your question, I think?

Q. It's a cutback from January, but still an increase over 1945 and 1946.

THE PRESIDENT. I don't see how you get that, because there isn't an increase over 1945, there couldn't be, except for salary raises, because there are over 600 thousand--between six and seven hundred thousand fewer people on the payroll than there were in 1945.

Q. I don't understand either, sir, but the figures seem to show that it is there.

THE PRESIDENT. I was trying to figure out how it got--I'll give you Mr. Appleby.

Mr. Appleby: This is pretty complex. Almost all personnel changes that have taken place have been in the defense category, and so these overall figures are not exactly responsive to the inquiry. I would say that the principal change in this billion, 683 is program change. Some increase in the Department of Labor, there is some increase in there of what we anticipated. There is $3 million more for FBI in here than we anticipated in January. A few other items of that kind.

Q. The fact is, Mr. President, that non-defense employment payrolls have gone up?

THE PRESIDENT. In some places, yes. Not in every instance.

Q. Overall?

THE PRESIDENT. Not in every instance, by any means.

Mr. Appleby. No overall since January.

THE PRESIDENT. No.

Q. I saw some March figures which gave it about--an increase. I haven't checked it recently.

THE PRESIDENT. No, there hasn't been an overall increase since January. There has been a decrease since January. The only place increases have been are in those increased programs in Commerce, and Labor, and the national defense--that is, War and Navy. There has been a tremendous cut--

Mr. Appleby. War Assets.

THE PRESIDENT. War Assets have been reduced.

Mr. Appleby: And the Veterans Administration. There have been substantial increases in the Veterans Administration and the Post Office. In some part, that increase in the Post Office is a bookkeeping increase. There were some people--about sixty thousand--who worked for the Post Office but were not technically and legally employees of the Government. That has not changed, so sixty thousand of the Post Office personnel is bookkeeping.

THE PRESIDENT. That is true.

[9.] Q. Mr. President, under international finance, I notice an increase of from 1 billion, 754 to 3 billion, 093. What is the explanation for that?

Mr. Appleby: That is deferral.

THE PRESIDENT. That's right.

Mr. Appleby: In January we expected the money for the International Monetary Fund to be paid out of the Treasury in fiscal '46. The transaction was not completed because the Fund was not fully organized at that time, so that money will be paid out in fiscal '47.

MR. PRESIDENT. About a billion, four--some such figure as that--that was carried over from '46 to '47. That, I suppose, will be carried over in the '46 budget.

Q. That does not include any estimated increase in the withdrawals of the British loan then?

THE PRESIDENT. No.

Q. Mr. President, can that 2 billion, two figure on page 3 (p. 386) be broken down?

THE PRESIDENT. Yes, I can--2 billion, two that we have asked--that can be broken down--you can get that from the Budget department.

[10.] Q. Mr. President, I have one other question back again on this page 8 (p. 389)?

THE PRESIDENT. Page 8 (p. 389)?

Q. Yes sir. I did a little rough arithmetic on the basis--

THE PRESIDENT. It takes a little more than rough arithmetic to understand the Federal Government, it takes calculus. [Laughter] go ahead.

Q. Well, you base your own proposed reduction in the Army and Navy at 1 billion, 650, and 60 million for Maritime Commission, and another 60 million, making 120. Now, in the event that those reductions could not be made, that would then make a deficit.

THE PRESIDENT. I am not counting that they could not be made. They are going to be made, or we'll break somebody's neck.

Q. Then my next question then from that is whether the Secretaries of War and Navy, for example, have got it laid out to make these reductions?

THE PRESIDENT. They have, yes.

Q. Well, Mr. President, I am just wondering what--how would they follow through these instructions which have been given to them, and what precisely is the force of that directive?

THE PRESIDENT. The force of the directive is that it will not be included in the estimate for payment by the executive branch of the Government. The Budget will not recommend the payment.

Q. Mr. President, could you say that the Secretaries of War and Navy concur in your expressed belief here that the reductions in their budgets can be accomplished without impairing the effectiveness of our military establishment?

THE PRESIDENT. Oh, yes. These are mostly construction items, and things of that sort that can be easily deferred.

[11.] Q. Mr. President, on page 4 (p. 387), where you say "Programs which have increased are: national defense" and so forth, you list refunds. What refunds are those?

THE PRESIDENT. Tax refunds which were included in the last tax bill.

Q. The tax refunds are running higher than anticipated--

THE PRESIDENT. Yes.

Q. --In January?

Q. Could we be provided with some figures as to the rate of increase over the--

THE PRESIDENT. Yes, you can get those figures.

Q. From whom?

THE PRESIDENT. From the Treasury.

[12.] Q. Mr. President, there is a figure of 2 billion, two that has been saved by economizing, and on page 5 (p. 387) there is a figure of 2 billion. I would like to get that squared away.

Mr. Appleby: May I answer that, Mr. President?

THE PRESIDENT. Yes.

Mr. Appleby: There have been a series of economy actions by the President that in total have amounted to a very great deal more of appropriation or money. And there is also--except there is no duplication involved in this--2 billion, two of money that was available to the agencies for expenditure in various forms which has been returned to the Treasury by executive action. That money is definitely saved to the Treasury. That is strictly a financial transaction. Then the 2 billion, two transaction is an expenditure control transaction. Regardless of how much money remains in the appropriation accounts, the President has directed the agencies to limit their expenditures in the fiscal year to a specific amount of money, and that will result in the reduction of the 2 billion, two. Now those two reductions together amount to a saving of 4 billion, four or so. Then there have been other actions taken by the President in recommending the rescissions of appropriations of $58 billion during the year, and the reduction in the estimates requested by the agencies referred to in here of 7 billion; so that the President by his control of the budget in all these various ways has effected a reduction of funds available for expenditure by a total of $70 billion during this year.

[13.] THE PRESIDENT. I want to say, instead of calling the Treasury for that tax refund business, call Mr. Jones, he will have the figures. The Treasury will furnish him the figures, and we will figure the

Mr. Appleby: It might be, on that, that I could give a simple answer and save a telephone call. That is really just a percentage increase on the basis of increased receipts. On the income tax returns, people overpay, sometimes intentionally, but make a claim, so the more your receipts are the larger the refunds are. It is pretty automatic.

[14.] Q. Mr. President, I would like to continue that 2 billion figure. I am referring to the figure of 2 billion on page 5 (p. 387), which does not--which is not identical to the 2 billion--

Mr. Appleby: No.

Q.--figure on page 2 (p. 385). You say that 2 billion figure referred to is moneys transferred to--

Mr. Appleby: No, this is still another 2 billion.

THE PRESIDENT. That is another one--that is still another one. You have got to read this very carefully. Go ahead, Mr. Appleby.

Mr. Appleby: Well, this is a sort of resume of what has happened on the Government front since January. Certain programs were then estimated for expenditures anticipated. Since then there have been changes, such as terminal leave, increase in veterans' programs, amounting in all to 1 billion, eight.

Q. That's the point I originally raised. The figure elsewhere is stated as 2 billion, two.

Mr. Appleby: No, that 2 billion, 200 million is the saving of money already available for expenditures made by Executive action, and is an entirely different sum of money.

[15.] Q. Mr. President, is there any estimate--even a rough one--as to how much it has cost the Government to pay higher prices for the goods and services it has to buy ?

THE PRESIDENT. No, we haven't made an estimate on that.

Q. Well, Mr. President, that raises the question of what kind of price levels are presupposed in this?

THE PRESIDENT. Well, the average price level is presupposed in this, and we are anticipating not a greater increase than 1 percent a month.

[16.] Q. Mr. President, have you any figure showing about the number of Government employees in civilian agencies where reductions are expected in the next 2 or 3 years or so, because of the economy changes you desire?

THE PRESIDENT. No. We are trying to carry out the mandate of Congress and absorb the price raises in decreased personnel in those agencies which are not increased by the Congress itself. It's a difficult job, but we are trying to do it.

[17.] Q. On the international expenditures for budgetary purposes, as I understand it, $950 million for the International Monetary Fund will be in interest-free bonds,

is that correct?

Mr. Appleby: Yes.

THE PRESIDENT. That's right.

Q. But it's being charged against the '47 budget as a cash expenditure?

THE PRESIDENT. It was expected to be charged against the '46 budget, but we didn't get around to it, so it had to go in the '47. Just like the terminal leave pay, it has to be charged against this year's business.

[18.] Q. Mr. President, may we use as background, without attributing it to you, that statement about the average price level presupposed is the average price level, and you don't anticipate that to go over 1 percent a month ?

THE PRESIDENT. You need not attribute that to me, but it is the anticipated situation. If we want to hold the situation in that line, it will take this budget, price control, and every other anti-inflationary thing that we can use to hold that line. I don't know whether we can hold it or not, but we are going to try to do it.

[19.] Q. This increase in international financial obligations, it runs considerably more than the 950 for the International Monetary Fund. Is there any other major item in there contemplated; for instance, such as the question you were also asked about the prospective national income?

THE PRESIDENT. No, it is not included --

Mr. Appleby: Export-Import Bank.

THE PRESIDENT. Export-Import Bank is the rest of the thing. That is, of course--that whole thing is two banks, the Export-Import Bank and the International Bank.

Q. You do not include in that figure, though, the 1 billion and a quarter which you once informed Congress that you would ask Congress for at a later date?

THE PRESIDENT. That is not included, because it was not asked for.

Q. Is the British loan included in this-in its entirety included in the 12-month period?

THE PRESIDENT [to Mr. Appleby]. Is it?

Mr. Appleby: No. This is what will be drawn down under loans, as far as we know, and it is not thought desirable to go any further than to say that this anticipated legislation drawn down for all these items are included.

THE PRESIDENT. It's only that part--we have only included that part of the British loan which we knew would be spent in this year.

Q. How much is that?

THE PRESIDENT. I don't know. I don't know the exact figure. The Treasury has been authorized to set up a $300 million credit for the British at the present time.

[20.] Q. Mr. President, at the bottom of page 2 (p. 385) you say, "Many of us are not yet satisfied with the progress made." Now on page 3 (p. 386) you say, "I shall use all the powers available to the Executive branch." I am wondering--

THE PRESIDENT. They mean just exactly what they say. You can't translate them into anything else except exactly what they say.

Q. Yes. I just wondered if you had any thoughts as to the necessity for increasing the power of the executive branch of the Government over the budget?

THE PRESIDENT. I don't think it needs to be increased.

Q. You think it's adequate?

THE PRESIDENT. Yes.

Q. Mr. President, in that connection, page 3 (P. 386) at the bottom, you speak of letters you are addressing to the heads of agencies--

THE PRESIDENT. They will be released they will be for release at the same time this document is for release.

Q. Yes sir. Well now, any economies that result from the matter that you put into those letters will be additional to what is--I mean .....

THE PRESIDENT, No, that is included in this.

Q. That is already anticipated?

THE PRESIDENT. That is already anticipated, that my suggestions will be carried out.

Q. Yes sir. [Pause]

THE PRESIDENT. You are certainly not out of questions at this stage, are you ? [Laughter] I am anxious for you to see the thing and understand it. We tried to put it in as clear a statement as possible, but we want everybody to have access to the actual figures, to understand it as we think we do. So I want you to be free with your questions, both to me and to Mr. Jones. There is nothing in here--there is no double-talk in this message at all. It means exactly what it says.

[21.] Q. Mr. President, based on price levels existing at the present time, did you say 1 percent a month ?

THE PRESIDENT. Yes--substantially. We have tried to base it on what we anticipated would be the average price level for the year.

Q. Well, it seems that you will have a cash surplus; that is, the cash transactions will produce a 2 billion surplus. Will that mean that you can pay off 2 billion, eight more of the debt?

THE PRESIDENT, No, because they are trust funds. That has nothing whatever to do with paying off the debt. Those trust funds belong to the people who pay the money in. You can't use it for anything else. But it will take that much money out of circulation.

Q. You are deliberately refraining from claiming a cash--

THE PRESIDENT. Yes.

Q.--balance apart from that?

THE PRESIDENT. Why certainly. I want you to understand that the budget and the operation of the Government is an entirely distinct thing from those trust funds, but we are stating that, to show that actually there will be more money turned in that will be paid out which we can turn into credit, because that would be paid in, in any case.

Q. And the situation that exists when you leave out the trust funds--take the terminal leave pay not to be made a known cash payment--

THE PRESIDENT. We are accepting that as a cash payment for this year, charged against the budget for this year.

[22.] Q. Mr. President, what was the explanation why sales of surplus material and plants are running somewhat lower than you expected--anticipated in January ?

THE PRESIDENT. We had such difficulty handling the surplus property program. That is the reason for it. We have had so many hampering things in the way of priorities, and so forth, it was almost impossible to transact business with surplus property. In fact, General Gregory got so disgusted with it, it made him sick, and he had to quit. It would make anybody sick if you tried to do it, but we are trying to do the best we can. This property deteriorates every day we have it, and everything that has been done in the sale of this property has caused a loss, just like any other bankrupt outfit. That's what it amounts to.

[23.] Q. Mr. President, do you expect to ask the next Congress for the billion and a quarter for the Export-Import Bank?

THE PRESIDENT. We'll see what the situation-how the situation develops, and if it's necessary, I will ask for it, and if it isn't, I won't.

[24.] Q. Mr. President, the direct taxes on individuals I notice jumped from 12,874 up to 18,367. That looks like almost a 50 percent increase.

THE PRESIDENT, What table is that in?

Q. Table 2 (p. 393).

Mr. Appleby: Receipts.

Q. Some other factor there, besides this jump from --¹ to 65 that explains that?

THE PRESIDENT. That is reflection of higher income. That's what that is. More people getting money enough to pay taxes, and the dollar increase in value, which increases the income.

1 Official Reporter's transcript illegible.

Q. I thought there might be some other factor, in view of the very drastic--very sharp increase there?

THE PRESIDENT. No. No, there is not.

Q. If there were--if that were the only explanation, is there any clarification--

Q. Mr. President, wouldn't the direct tax on corporations reflect a sharper increase than was shown? It's almost a 50-percent increase on individuals, where it's considerably less than that for corporations.

THE PRESIDENT. A tremendous cut in the corporation tax by the last Congress, if you will read that tax bill.

Mr. Appleby: The graduation figure in the personal tax would make a difference, you see. As incomes are higher, the percentage of income paid in taxes goes up. That is no longer true with respect to corporations.

[25.] Q. In that same table, Mr. President, under national defense, there is a rather large item classified only as "other" 2 billion, six. I wonder if we could get that?

THE PRESIDENT. Yes, I think you will find those things listed--what that includes--over on page 2 (pp. 385-386). It tells exactly what those things are. That includes the veterans' increases and the pay increase for the Army, and things of that sort.

Mr. Appleby: Well, Mr. President, there is the War Assets Administration in there, and foreign surplus disposal, and defense aid, some wind-up of lend-lease. Again, some of that is a deferral from '46 where transactions did not occur in '46.

THE PRESIDENT. Don't get the idea that national defense is just confined to the Army and Navy, because it's included in nearly every department of the Government. In total war it takes every department of the Government in the national defense; and I don't want any confusion about that, because the first objective of everybody who wants to reduce expenditures in Government is to cut the Army and Navy to the bone, because they don't vote. They do now, but they didn't hitherto.

Q. That also includes UNRRA expenses?

THE PRESIDENT. Yes, it includes UNRRA. That's the National Defense Act.

[26.] Q. Mr. President, your statement on taxes is in sharp contrast to the Republican National Committee which predicted that they could effect a 2D-percent reduction in taxes next year.

THE PRESIDENT. I sent for the fellow who made that statement, and he couldn't tell me how he would do it. I talked to him on the subject. I was very anxious to have him point out to me just how he could do it. He couldn't tell me. He had no explanation. It was just a political statement, easy to make but hard to carry out.

Q. What day was it you saw him?

THE PRESIDENT. I beg your pardon?

Q. Knutson you are referring to?

THE PRESIDENT. Yes, day before yesterday, I think.

Q. Can we use that?

THE PRESIDENT. No you can't--it's off the record. I promised him I wouldn't tell you about it. It's off the record entirely. You talk to him about it, maybe he can tell you how he did it. He couldn't tell me. 1

1 See Item 215 [2].

Q. Mr. President, isn't this sharp revision of estimated tax receipts going to add to these tax returns?

THE PRESIDENT. I shouldn't be surprised, but we are trying to tell you the truth, regardless of what the results will be.

[27.] Q. Mr. President, what was the estimated loss in revenue by reason of repeal of the excess profits tax in the last fiscal year? Have you been given any figures on that?

THE PRESIDENT. Yes. Neighborhood of 5 billion.

Mr. Appleby: It shows returns were about 6, I believe, but I think under present conditions, if we had had the excess profits tax still on the books, it would amount to a good deal more than that.

THE PRESIDENT. In my head I had it somewhere that it was about 5 billions. Well, gentlemen?

Reporters: Thank you, Mr. President.

THE PRESIDENT. We want you to be entirely clear in your mind about this, so that is the reason why we have this special phone number that you can call over weekend.