The President's News Conference on the Budget

THE PRESIDENT. Sit down, gentlemen, please. Let anybody in who wants to come.

Mr. Ross: In the meantime, we have here mimeographed--prepared by the Budget-a sort of synopsis of it.

This is the so-called Budget Seminar, as you know. The information given here may be used, but without attribution. This is for background purposes only, except where the President may specifically state otherwise. The preliminary statement he will make, however, will be on the record, and copies of it will be made later and passed out to those who wish them, in mimeographed form.

Q. Will we be able to get them late this afternoon ?

Mr. Ross: Yes, after the conference.

Q. On the record, Charlie, as a press conference would be ?

Mr. Ross: Yes.

THE PRESIDENT. The statement will be on the record and will be handed out to you in the form in which it is, as a statement. Are you ready?

Well, I am going to sit down and talk into this microphone, because this is--has every chance to be quite a long session.

[1.] The Budget which I shall transmit to Congress on Friday is a balanced budget. If our estimates are realized, the budget will be in balance for the first time since 1930. The President sent down a balanced budget in 1938, but the recession came on, if you remember, and receipts fell off, and the relief appropriations had to be increased, and so 1938 finally wound up with a deficit.

It is realistic and as complete as we know how to make it. It is based on a careful study of the needs of the various departments, and the funds required to carry out the obligations of the Federal Government under programs established by the Congress.

It is a tight budget. I believe it is fair to say that no department or agency feels that its needs are fully met. They are all quarreling about the meanness with which they have been treated by the President. In its preparation I instructed the Director of the Budget to require thorough and conclusive justification for every item which he recommended to me. There isn't an article--an item in this budget that has not been thoroughly and completely justified. In every borderline case the decision has been to eliminate expenditures rather than to include them. It has been necessary for us to be more hard-boiled in making many decisions than I like to be. I hope I am not naturally hard-boiled. We have had to reduce sharply requests for a number of programs which in my opinion would be worthwhile were it not for our urgent need to reduce expenditures.

[2.] Those of you who have studied the Budget Message have found, I am sure, the answers to most of your questions. However, the table shows the major categories of expense which are included. And they are as follows: several certain fixed charges which will be reduced, and you know how much they amount to? Within just a few millions of $33 billion.

The first category of those fixed charges, of course, is Interest on the Public Debt, Refunds, Veterans Pensions and Insurance, Employees Retirement and Workmen's Compensation, Philippine War Damage Commission, and so forth. That amounts to 4 billion--$10,499 million.

[3.] And the next item is National Defense, the Army, the Navy, Terminal Leave for Enlisted Personnel--amounts to $11,256 million.

[4.] And then commitments, largely uncontrollable, is the next item in that fixed set up; that is, grants to States and cities, government and relief of occupied areas, international commitments and loans, domestic loans, subsidies and contributions, veterans readjustment benefits and hospital care and administration; and the total for veterans runs about 7 billion, in this budget. And if anybody feels that he can reduce that to any extent, he is much better than I give him credit for being.

The issuance and payment of Government obligations, revenue collections, and net postal operations, legislative, judicial, and the General Accounting Office--that is the pay for Senators and Congressmen--and for charges and things of that sort, and that amounts to $11,228 million. That makes a total of $32,983 million. And the total budget is $37,528 million. I have been told by my staff that this budget has been more difficult to prepare than any ever issued before, and I can believe it.

[5.] Corporations and war agencies have been included in detail in the Budget for the first time. Last year we sent up three budgets at different periods of the year--the Annual Budget, the War Supplement, and the Corporation Budget. This year they have all been integrated into one budget. For 4 years the war agencies have been presented in a special budget and in supplements in the spring, and only the preliminary estimate of their total was included in the January budget.

[6.] In this year's budget, expenditures and appropriations are grouped under a new functional classification, in order to present to the Congress and the people a clearer picture of the purposes for which Federal funds are intended. I hope the press will use the new classification. We have put the figures for 10 years, 1939 to 1948, on this basis. The new classification is a part of a continuing effort to make the budget understandable in spite of its inherent complexities.

Now we are living in a new age, so far as Government expenditures and taxes and things of that sort are concerned. I can remember, when I was a very small boy, when the first billion dollar Congress came along. I don't think that anybody in this audience is old enough to remember that. That was in 1892, and I remember the terrific campaign that was made for the re-election of Grover Cleveland on that billion-dollar Congress.

Well, now we are living in the days of the $40-billion-a-year--not a $40 billion Congress, but a $40-billion-a-year expenditure for the Government of the United States; and for your information, we are not going back to a billion-dollar Congress. We are going to meet this age as we faced--just as we are going to adjust ourselves to the machine age, which we have not succeeded in doing.

[7.] I have got a chart here that is a most interesting thing, that I would like for all of you to look at when we get through. That's [indicating] what the balance of the budget, which I didn't read to you, is expended for. That's the executive branch of the Government. You see the President up there in the ring with all the various people who are responsible to him and who have to report to him in operating the Government of the United States. If I should see one of these individuals each day, it would take me 3 months to see them all, right straight along, day after day. Of course, the President works from 5 o'clock in the morning until 12 o'clock at night, every day, and still it is almost impossible to get on top of the things that have to be done.

I have had three separate and distinct messages for preparation for the Congress at this time, for the first time in the history of the layout, and those three messages have to be in harmony. The Message on the State of the Union, the Economic Report of the President, which contains some 54 pages, and the Budget, which is, I think--is thicker this year than it has ever been in the history of the country because of those comparisons that had to be made over the 10-year period. Yet the President is supposed to know all about the contents of each single one of them.

And for your information, he is as well informed as it is possible for one man to be on the subject! [Laughter] And for that reason I want you to be exceedingly painstaking and careful in the study of this Budget Message. This Summary which has been gotten out for your benefit, I think answers nearly all the questions, technical and otherwise; and then the preliminary statement which is in the first part of the Budget, and which is the Message on the Budget, covers the rest of the situation. I think it has been more clearly set out this year than it ever has been in history, in the history of my connection with the Government.

I have been working on these budgets since 1935. I was on the Appropriations Committee of the Senate from January 3d, 1935, until I became Vice President, and then President; and I have had a lot of experience with those things. And I think this is the most comprehensive budget statement that has ever been gotten out in my memory. And I hope you will study it carefully. It is a very important document and it ought to be read in conjunction with the Economic Report and with the Message on the State of the Union, which was read to the Congress on the 6th.

And now then, any questions you want to ask--I have got the technical staff here to answer them in detail and in total--any way you want.

[8.] Q. Mr. President, in the Budge resume, the figures as set up do not conform either to the receipts and revenues as they would be under existing law as it now is, or under your recommendations.

THE PRESIDENT. Why don't they?

Q. I don't know.

THE PRESIDENT. Well--

Director Webb: I think Mr. Jones, who is head of our Fiscal Division, can give you the answer on that.

Mr. Jones: There is a footnote, isn't there? That's the two exceptions. Otherwise it does reflect existing

Q. The thing I couldn't follow was why

Mr. Jones: Would you read the first three paragraphs. He indicates there that he did not take those two recommendations into his budget.

Q. Why wasn't it? Why not?

THE PRESIDENT. Because I don't want to take them in there until they are facts.

Q. Well, the transfer of corporate funds is taken in, Mr. President.

THE PRESIDENT. That's right.

Q. It isn't a fact yet.

THE PRESIDENT. It will be.

Q. It will require legislation, will it?

THE PRESIDENT. I don't think so. If it does, why we will get that legislation, because everybody is interested in that.

Q. I have a question on the same point, Mr. President. In the first paragraph it says that revenues under existing law are--actually the phrase is "existing tax laws at 37.7 billions." In the Budget resume it says based on existing legislation the revenues will be 37.531. Now to my way of thinking laws on the books are sound, and there are two figures for the same thing.

THE PRESIDENT. One of them is the postal deficit. One of them counts, the other doesn't.

Q. The difference is $379 million, which is to be added under proposed legislation?

THE PRESIDENT. That's right.

Director Webb: That's right.

Q. But it is included in existing laws in the one case and excluded in the other.

THE PRESIDENT. No. I think you are mistaken. It is included in the budget, which a President has a right to include when he asks for legislation. It is not included in existing laws because it will require a law to balance the postal deficit, if we are going to meet that situation.

Q. The Congress can change then--can consider this the balanced budget, despite the fact that it will require some transfers--

THE PRESIDENT. Of course.

Q. --to be balanced ?

THE PRESIDENT. That's it. The President has the right to take into consideration the fact that he is asking for things that will create the situation.

[9.] Q. In your estimates here for National Defense, for the Army and Navy, sir, are you contemplating the saving that could be effected by merger? I believe you told the Congress Monday that a substantial saving could result, and I wonder

THE PRESIDENT. No, no. I am including in the Army and Navy budget what the Army and Navy asked for and what I finally concluded to give them.

Q. Could you tell us, sir, how much you think might be saved by merger?

THE PRESIDENT. NO, I cannot.

Q. Any figures been--put out?

THE PRESIDENT. NO. NO, they have not.

Q. Would you tell us what the Army figure is, what they originally asked for?

THE PRESIDENT. No, no--the Army and Navy figure is what they asked for and what I finally concluded to give them, which is not nearly what they asked for.

[10.] Q. Mr. President, what is the type of additional revenue sought for the Post Office Department?

THE PRESIDENT. Well, the--there's a certain subsidy in the Post Office Department.

Q. Second-class mail?

THE PRESIDENT. Yes, which ought not to be paid by the Government. The people who profit by that subsidy are the ones who quarrel about other people having subsidies.

Q. Will you send a recommendation of any kind to Congress on the matter?

THE PRESIDENT. I am asking the Congress to meet that deficit.

Q. Your message doesn't indicate by what means

THE PRESIDENT. No, that is up to the Congress.

Q. Mr. President, have they given you any figures on the cost of that second-class subsidy?

THE PRESIDENT. No, I have no figures.

Q. Always a controversy--

THE PRESIDENT. That has always been a matter of controversy, that's true.

[11.] Q. Mr. President, can you give us the figure, that is, the difference between the military's request and the budget figures, sir?

THE PRESIDENT. Oh, it's--how much was it?--I think about $3 or $4 billion--13 billion they asked for, was it?

Director Webb: No, considerably more than that. Just one minute--I can give you that. It's complicated. Let Mr. Martin give you that figure.

Mr. Martin: The original estimates for the War Department, my recollection tells me, is about 9 billion, two.

THE PRESIDENT. They got 6 billion, 658. Mr. Martin: Yes, sir.

Q. Is that appropriations?

Mr. Martin: Now some of that difference is because we are classifying occupied areas as other than military, and also the Manhattan Project, or the Atomic Service is being classified under Natural Resources. The Navy figure, I believe, was somewhat over 6 billion, four.

THE PRESIDENT. They will get 4 billion, 423.

Q. Are you speaking of appropriations in both cases?

Mr. Martin: Expenditures.

THE PRESIDENT. Expenditures.

[12.] Q. Mr. President, I would like-one point I am still not dear on are your receipts. You include, as I understand it, in your net budget receipts your changes under proposed legislation, referring that to the postal deficit.

THE PRESIDENT. That is correct.

Q. I am not clear on why the distinction, if we are including that number, including the additional excise taxes which you also ask for, in other words which is also proposed

legislation?

THE PRESIDENT. Well, the additional excise taxes will amount to about a billion, two or three--I think--a billion, two or three hundred million dollars, and my proclamation of December 31st would eliminate them beginning on July 1st. I am asking the Congress to restore them. Congress is talking about taking them off fight now. I don't know what they are going to do. So I wanted to show that even without that we would still be in balance, but if we get that we will have a billion, two or three hundred million dollars to be applied on the debt, which I hope will take place.

Director Webb: The postal deficit, too, you haven't included it.

THE PRESIDENT. Any one of the legislative requests have been included in the figure for arriving at the balance.

Q. That is gravy stuff then?

THE PRESIDENT. NO it isn't gravy. It all ought to be done, in my opinion.

Q. I mean it's gravy--surplus--

THE PRESIDENT. In my opinion--only one man's opinion.

Q. It makes the surplus larger?

THE PRESIDENT. It makes the surplus larger. Would go to reduce the debt which, if we only reduce the debt at the rate of a billion and a half a year--259 billion--will take a long time to pay off. [Laughter]

[13.] Q. Mr. President, have those corporate funds been extended?

THE PRESIDENT. I am hoping the will legislate on the subject and will make arrangements -

Q. That is what's baffling me, that they are included in this resume.

THE PRESIDENT. Well, we have got the money. The money is in the Treasury. All it needs is a bookkeeping proposition to transfer it to the general fund.

Secretary Snyder: Not a matter of raising any money.

THE PRESIDENT. It's not a matter of raising any money.

Q. I don't understand that. It does require legislation, doesn't it?

Director Webb: Yes it does, Mr. president, but there has been no controversy.

THE PRESIDENT, He tells me that it does, but there has been no controversy about it. Well, I hope you will become unconfused. If you will read all this and keep asking us questions, we will try to dear your mind up.

Q. We will question you as much as we can.

[14.] Q. Mr. President, what has that military figure been adjusted to, without the Manhattan Project and the Occupied Areas?

THE PRESIDENT. Manhattan Project amounts to $443 million, and the--what's that?

Director Webb: Occupied Areas.

THE PRESIDENT. 645--amounts to 645 million--that would be about a billion

Q. A billion, 80.

THE PRESIDENT. A billion, 80 million dollars.

Q. Mr. President, on that basis, if you subtract the atomic energy cost and the occupied areas cost from your military defense cost, it seems to me that you have a figure for military defense which is running higher than the figure for military defense in your last budget.

THE PRESIDENT. NO it doesn't. Read the last budget. Doesn't do anything of the kind. Couldn't possibly run that much because we have reduced the number of men from 11 million--more than that--it is less than 2 million now.

Q. Mr. President, I am honestly confused. On page M16 (p. 63)¹ of your Budget Message the estimate for 1948 is 6 billion, 658--

THE PRESIDENT. For the Army, and 4 billion, 423 for the Navy. Now turn to last year's budget and see what it was.

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 7); all other references correspond to the page numbers in the Budget as published in House Document 19 (80th Cong., 1st sess.).

Q. On that same page the estimate for 1947 was 6.741 and Navy was 5.588. Now you divide

THE PRESIDENT. With the same things out as are out this year.

Q. Atomic Energy and Areas out?

THE PRESIDENT. Taken out here for comparison purely.

Director Webb: Let's let Mr. Martin clear that up.

Mr. Martin: In addition, you must add to that 6 billion, seven in the 1947 column approximately 1 billion, 500 thousand, which represents the amounts which the War Department will expend in 1948 from funds which the Treasury Department had charged the War Department with in the fiscal year 1946. In other words, it's a Treasury assessment there, in order to account for the--for the cash in both European currency and United States currency in the hands of disbursing officers abroad which were charged as expenditures in 1946, but the payments will be made in 1947.

Q. Is that military defense category, or international defense category?

Mr. Martin: Military defense category. There's a footnote on there about national defense which will explain that, as well as the paragraph in the President's Message.

Q. Mr. Martin, one more question. On that page, is that 6.741 figure for the military and military defense--does that include Atomic Energy, Manhattan, Occupied Areas ?

Mr. Martin: No sir. Manhattan, as you notice--I believe it is 179 million--that shows right below it

THE PRESIDENT. That's right.

Mr. Martin: --.and that carries Manhattan up to the first half of the year, and the second half of the year when the Atomic Energy takes over. It is included under Natural Resources, both the second half of 1947 and all of 1948.

Q. Incidentally, while I have the Budget open to the page, I would like to direct your attention to the third paragraph on page M17 (p. 64), right opposite that table which you are talking about--the supplement legislation in that paragraph. I would like to know whether that is supplemental legislation that has been enacted or supplemental legislation for the enactment of which you are asking Congress ?

Mr. Martin: Well, prior to the war it was a practice for the Army and Navy to appear before legislative committees of the Congress and obtain specific authorization for public works projects. During the war that procedure was abandoned because of the speed with which you had to handle public works. The President has directed that now we will go back to the previous practice. We will make allowances in the Budget for these projects but will consider them as items for specific authorization before we will send up the estimates.

Q. In other words, if Congress should fall to give the supplemental authority, these

projects will not be undertaken? Mr. Martin: Correct.

Q. Mr. President, can we have some explanation of the rather substantial increases in the amount of money to be spent for atomic energy, from 355 to 445?

THE PRESIDENT. I don't think it's really a substantial increase. It's all in one pot is what makes

Mr. Martin: One reason is because the War Department withheld certain replacement work both in facilities and equipment when they knew the atomic energy would be taken over before long; and for that reason the 1947 expenditures are lower than 1948 because they will now go ahead with those increased facilities.

[15.] Q. I would like to ask a question. Apparently the budget contains a new revision of the 1947 fiscal year budget as a whole.

Director Webb: That is correct.

Q. And your August revision places Government expenditures at 41.5 billions. Current revisions place them at 42.5 billions, despite the fact that there are anticipated supplemental appropriations totaling 3.980 million. That is a 1-billion-dollar increase as opposed to a 4-billion item, and I wonder what the explanation of that is ?

Mr. Martin: In both cases we have always taken into consideration the estimate of supplementals that will come along every time we get a figure as to our estimated expenditures. We try to forecast every probable expenditure that will be included.

Q. In other words, the August revision contained part of the supplementals?

Mr. Martin: That's right.

THE PRESIDENT. That's correct, but--,

Q. Mr. President, a year ago you said that you wanted to get the budget down to $25 billion

THE PRESIDENT. I hope that the time would come when we could have a $25 billion budget. It is not in sight. Not in sight yet. I read you what the fixed charges are now. If there is any way in the world that those fixed charges could be lowered, I don't know how to do it. My--maybe those informed in Congress can tell me. [Laughter]

Q. I just wanted to get up to date on that.

THE PRESIDENT. Of course we want the budget to be as low as we can it, and I have cut this one to the bone myself. I don't know how much further the Congress will want to cut it, but I don't see how they can cut it and run the Government.

[16.] Q. You have got $500,000 for emergency funds for the White House, which says fund assistance and also unforeseen expenditures.

THE PRESIDENT. Well, last year, I think that figure last year was 5 million, and before that it was a hundred million.

Q. This is just a continuation of that?

THE PRESIDENT. That's all it is--for emergency purposes that may come along, and that fund is audited by the Comptroller General whenever it is necessary. It's open to Congress any time they want to see it.

Q. Nothing of any importance contemplated under that?

THE PRESIDENT. NO.

Q. Could you give us an example of the general type of thing that comes under that heading?

THE PRESIDENT. Well, during the war there were--it was all war emergency items that came under it. During the last year the operation of the coal mines and the operation of the Montgomery Ward came out of that fund--and wherever there was a deficit--and whenever it is necessary to-whenever it was necessary to take over any of those things, a fund had to be set up to begin with--to operate. It came out of that money. In many cases it was paid back. There really wasn't a great deal of expenditure. I think in the $5-million fund that I had last year there was about a--one million and a quarter spent for the jobs like the ones I have named to you.

Q. The balance goes back?

THE PRESIDENT. Goes back in the Treasury.

[17.] Q. Mr. President, you have mentioned both a "balanced budget" and a "budget in balance." Those are technical terms which I don't understand.

THE PRESIDENT. This is a balanced budget. That's right. There are two situations with regard to the budget. One is cash and one is bookkeeping. For instance, if you yourself have a certain income and you borrow a lot of money at the bank, you may take in more than you pay out, but you still owe what's in the bank--what the note calls for in the bank. In the case of the Federal budgets there is a certain cash expenditure, and I will say to you that the cash expenditures and cash intake of the Treasury was greater in 1947 than the cash outgo in 1947, but it is more than 4 billion greater. The income in the Treasury is $4 billion greater. But we still have obligations created in 1947 that have not been paid and have to be charged on the bookkeeping budget. In 1948 the income will be $3 billion greater than the outgo, but we will, according to the bookkeeping figures, we will be within a few hundred millions--we will be over only a few hundred million dollars. It is an actual bookkeeping balanced budget as well as a cash balanced budget, which was not the case in 1947.

Q. 1947 was a cash balance?

THE PRESIDENT. 1947 was a cash balance, but not a bookkeeping balance.

Q. That is what Congress is going to take advantage of.

THE PRESIDENT. How do you mean?

Q. Well, what I mean is the fact that your budget has been balanced for some time in cash--

THE PRESIDENT. But still those obligations have to be paid.

[18.] Q. Aren't those mostly social security obligations, Mr. President?

THE PRESIDENT. NO. It was the pay to the soldiers. Social security is part of it--social security is part of it.

Secretary Snyder: The reserves set up for social security are part of it.

THE PRESIDENT. The Secretary of the Treasury tells me the reserves set up for social security are part of it, but the big item in the 1947 budget was the terminal leave pay.

[19.] Q. Didn't the Treasury refinancing in this calendar year retire about $20 billion on the public debt?

THE PRESIDENT. We retired $20 billion on the public debt, but it was retired out of the cash balance by the sale of bonds.

[20.] Q. Mr. President, on the opening page of your Message here, at the bottom (p. 56, col. 1), you speak of the effect of a deficit on income and spending. You say it will cause tax yields to drop, also raise expenses for certain costs. Then you add, "Should such a recession occur, there will be a temporary slump growing out of the transition period difficulties, and would call for no revision in our budget policy."

THE PRESIDENT. That's right.

Q. That is a little unclear to me. How do you mean it would not call for revision when it would both affect your income-reduce it

THE PRESIDENT. I have revised the budget to its extreme limit so far as I am concerned. There is nothing more I can do to it.

Q. You mean--would it affect your totals?

THE PRESIDENT. Well of course, if the situation develops so that we couldn't collect the taxes that we anticipate, naturally there would be a deficit. I am hoping that won't happen.

Director Webb: He is thinking more about figures. You spoke in terms of policy. You seem to be thinking in terms of actual budgeting expenditure receipts. The President in his Message is speaking about budget policy.

Q. Mr. President, in that same general connection, on page M12 (p. 60), you estimate that receipts from direct taxes on individuals in the 1948 fiscal year will be appreciated and increased from higher income from those individuals. On what figure is the estimate of higher income in fiscal 1948 based?

THE PRESIDENT. Based on $166-billion national income.

Q. That's the overall national income ?

THE PRESIDENT. That's right.

[21.] Q. Mr. President, where, in the Veterans accounting, does the enlisted men's terminal leave pay appear?

THE PRESIDENT. It's in National Defense.

Q. Not under Veterans ?

THE PRESIDENT. No, National Defense. Mr. Martin: Military expenses.

[22.] Q. Mr. President, what was the 1947 figure on national income as revised in this Message?

THE PRESIDENT. $160 billion, so the Secretary of the Treasury tells me. That's 1947.

Q. 1947, yes.

Q. Mr. President, if I recall in the August revision, it was said that it was 165.

THE PRESIDENT. I think 165 is the right figure.

Q. The 1947 figure.

THE PRESIDENT. 1947--165--that's correct. 165 was the figure.

Q. That's for the fiscal year, Mr. President?

THE PRESIDENT. Fiscal year.

Q. 1948--166.

THE PRESIDENT. 166--1948.

[23.] Q. You said in your Message that the budget has been reduced by 20 billion this year, sir, and I can't quite figure that, when I look at table 5 on page A8. It looks like 9 billion.

THE PRESIDENT. Well, the public debt at the end of the war was about $280 billion, and now it is $259 billion. So if I can subtract correctly in my head, it's in the neighborhood of 20 billion. We have paid $20 billion in cash on the public debt.

Mr. Jones: The statement says we have reduced the debt from its peak by about 20 billion, doesn't it?

THE PRESIDENT. Yes.

Mr. Jones: And this is a redemption in this year 1947-48 that you are looking at.

Q. This is calendar year?

Mr. Jones: Fiscal year.

Q. Fiscal year. In other words, it went up and down in the same year, isn't that what it adds up to? Up to the peak and down in the same year?

Mr. Jones: It got to the peak on my birthday, if I remember rightly. [Laughter] Got to the peak and started right down.

THE PRESIDENT. It went up anyway just before the war--then it went to the top just before the Japanese folded up. I think we said in February they folded up in April-then it began to go down, and when we had the last bond drive, we had 25 billion, didn't we ?

Mr. Martin: 25 or 26 billion in cash.

THE PRESIDENT. And we paid it on the national debt.

Q. Mr. President, I wonder if you would permit direct quotation of your remarks regarding the $25 billion budget, simply saying

THE PRESIDENT. No, no. I am talking off the record except for the statement that I made.

Mr. Ross: Except for that part which will be mimeographed.

THE PRESIDENT. It will be mimeographed and handed out to you.

Q. When is that released?

Mr. Ross: That will be released in connection with the release of the Message-simultaneous release.

THE PRESIDENT. I am talking to you frankly and freely and I don't want to be quoted.

Q. Now this is all off the record ?

THE PRESIDENT. Everything I have said. All except what I have read to you is off the record. This is only done for your information, and I am talking very frankly to you because I want you to know exactly what is in my mind on this subject. But I don't want to be quoted on this directly except so far as the statement is concerned.

[24.] Q. Mr. President, several times, in fact many times in this Message you make recommendations and say that there should be legislation. For instance, there is one on farm subsidies, and one on roads. Will you make a special--send a message on that, or is this Message considered notification?

THE PRESIDENT. This Message is considered notification.

Q. No further messages needed on those points ?

THE PRESIDENT. Not unless it's absolutely necessary. I might find it necessary to write letters to the chairmen of the various committees.

Q. This is the particular notice

THE PRESIDENT. This is the particular notice and notification right here.

[25.] Q. Mr. President, on page M61 (p. 96) of the Message--what in Heaven's name is antibiotic?

THE PRESIDENT. Well, you will have to ask some expert. Tell him what it is--[to Mr. Webb ]--I don't know. [Laughter] Director Webb: Germ control.

Q. Well, why not say so?

Q. Mr. President, on page 19--

THE PRESIDENT. We wouldn't have had that good question if that item hadn't been in there! [Laughter] What was that question back there? [26.] Q. On page M19 (pp. 66, 67) you say you have to provide some modest relief program for a few countries that are still in desperate straits, providing on page M20 (p. 66) an item there of $326 million, but you don't name the countries. Are you going to send a special message on that item to Congress?

THE PRESIDENT. That matter will be explained as soon as we know what is necessary in regard to it. It was an estimate as to what we may anticipate. You gentlemen are as well acquainted with the difficulties in Europe and Asia as I am and know what the--which countries are likely to be the ones that will be benefited by that.

[27.] Q. Mr. President, on page M20 (p. 66), beneath International Affairs and finance, which of those items are fixed and which of them might be subject to revision by Congress?

THE PRESIDENT. I will let the experts answer that for you.

Mr. Martin: This word "fixed" is a pretty relative term.

Q. It has become so, yes sir.

Mr. Martin: The Treasury loan to the United Kingdom, would you call that fixed ?

THE PRESIDENT. That is fixed by legislation, of course.

Director Webb: The only variation in that would be the amount they draw down on the loan. This is the estimate on the amount they will draw during the fiscal year 1948. That was done on consultation with them.

Q. Perhaps I should clarify my own question. By "fixed" I mean established by law by Congress, such as the British loan.

THE PRESIDENT. The amount of the British loan is established by law.

Mr. Martin: I am going to say everything but the last three items have been established by law would be the answer, I think.

Q. In the sums as presented, sir?

Mr. Martin: The sums of what would be withdrawn may be.

Q. How about UNRRA? Mr. Martin: That is fixed.

Q. War Department and occupied countries. Neither of those is actually fixed by existing statutes.

Mr. Martin: Now with regard to UNRRA, that 305 is really unliquidated obligations already made, so they are bound to go in winding up UNRRA.

Mr. Jones: Already on the books to be paid--Philippine Aid has been approved by the Congress, Membership in the International Organizations are fixed. State Department-those last three you might--

Q. How about that War Department figure?

Secretary Snyder: That is Occupied Areas.

Mr. Jones: Occupied Areas have to be appropriated for.

THE PRESIDENT. Have to be appropriated for, but it is a fixed charge. You can't get out of it.

Q. How about the last item, 326 million? .

Director Webb: Proposed legislation.

Mr. Jones: Not fixed.

THE PRESIDENT. That is the item the gentleman was talking about a minute ago, what we may have to hand out for relief to those countries that can't support themselves.

Q. Occupied relief?

THE PRESIDENT. No. No, that doesn't necessarily--is not necessarily confined to occupied countries. We don't occupy Greece.

Q. That figure would be in addition to the occupied territories administered by the Army?

THE PRESIDENT. That's right.

Q. Is the Export-Import Bank figure of $730 million actually obligated by legislation up to this point, or is that something you estimate that they will estimate?

Director Webb: That they will

THE PRESIDENT. That is what they will hand out during the year. We estimate that is what they will hand out.

Director Webb: Congress has already provided for it.

THE PRESIDENT. The money is already in the bank.

Q. Is it committed?

Director Webb: It has been committed, yes.

THE PRESIDENT. It has been committed. It has been committed, yes.

[28.] Q. Mr. President, on page M56 (p. 93) right under Federal Civilian Personnel, "Federal Agencies have reduced their civilian personnel to 2 million, three," where is the figure as to the cost of that-annual cost of that 2 million, three; because I understand Mr. Knutson is going to take a million off of it?

THE PRESIDENT. Well, I will give him "good" if he can do it.

Q. Scattered?

THE PRESIDENT. In every department, that is.

Q. Has it been broken down?

THE PRESIDENT. NO.

Q. This is 3 million

THE PRESIDENT. Three million! You have got to speak in billions when you talk about the budget. [Laughter]

Q. But there was a compilation as to the cost of that?

THE PRESIDENT. No, except in each department you will find an item which sets out what the personnel calls for. You can take each item and add them all up. The Budget Director tells me that the final figure will be 2,100,000 at the end of fiscal year 1948.

Q. Is that the figure for the cost of all civilian departments including personnel?

THE PRESIDENT. That's the total number of personnel, 2,100,000--the total number of people.

Director Webb: Civilians.

THE PRESIDENT. Civilians who will be on the Government payroll at the end of 1948.

Q. What is the total cost of the Government departments ?

THE PRESIDENT. 37--500--or 700--whatever the total is. Read it!

Q. I mean the cost of running the Treasury Department and RFC?

THE PRESIDENT. You can go through the Budget and pick them all out. They are set out in detail. I haven't got them in my head. All you have to do is read the Budget. I will give you the whole book if you want it.

Q. Mr. President, how does this figure of 2,100,000 employees compare with prewar?

THE PRESIDENT. I don't know what last year's

Director Webb: About 900,000 is the figure most people use.

Q. What is it?

Director Webb: About 900,000, the figure most generally accepted.

Q. Prewar?

THE PRESIDENT. Prewar.

Q. As of 1939?

Director Webb: Approximately 1939, yes. Secretary Snyder: 1938.

Q. You give us the figure of nearly 33 billion as being fixed charges?

THE PRESIDENT. Yes. It's about--that figure is about correct for fixed charges.

Q. You were good enough to tell us some of the items in that. Can you tell us a few of the items that fall outside of that?

THE PRESIDENT. That's all the civil sections of the Government that are necessary to make it run. The President's Office is one of them, and this row of things you see around here [indicating the chart previously referred to]. The President, as I told you, is in the center of the executive branch of the Government. You will have a chance to look at this, and you will see all these things here.

Q. Congressional employees too?

THE PRESIDENT. Congressional employees, and the cost of the legislative government, and everything of that sort.

[29.] Q. In that category then, is it correct to say whether the Army and Navy figure has been cut so near to the bone that it can be considered as a fixed figure ?

THE PRESIDENT. It is, in my mind. I don't know what the Congress will think about it. I have had a terrible lot of weeping and wailing and gnashing of teeth over that thing. The Secretary of the Navy and the Secretary of War, and the Chief of Staff of the Army and the Chief of Naval Operations have been on my neck from time to time. In fact, I had almost in every one of these instances to personally pass on the amount of money that each department should have, and it wasn't in anywhere--not anywhere nearly in the neighborhood of what they thought they ought to have.

[30.] Q. Mr. President, I would like to ask Mr. Webb a question, to clarify something. As I understand it

THE PRESIDENT. Sure.

Q.--the number of employees, civilian employees, including those outside the United States, will be down to 2,100,000 at the end of the 1948 fiscal year. Now the comparable prewar figure was 900,000 ?

Director Webb: I am sure that is comparable. Just when it was--is that '38 or '39? We will have people on duty at the Bureau to better give you accurate information like that.

Q. It says here 900,000 at the end of 1939.

THE PRESIDENT. This young man says that the next paragraph says it was 900,000 at the end of 1939.

Q. Mr. Webb, was the 2 million, 1 at the end of fiscal year 1947 or 1948?

THE PRESIDENT. Fiscal 1948.

[31.] Q. Mr. President, on M58 (p. 94) you speak of extending statutory authority for RFC and that a new charter is to be submitted. What will be the form of that presentation--will it be a special message to Congress ?

THE PRESIDENT. Well, when the finance Committee meets--I mean when the Ways and Means Committee in the House and the finance Committee meets in the Senate, I will send them the information, if they want it; and I know they will want it.

Q. Will this be the same draft that was proposed at the time Mr. Allen ¹ resigned?

THE PRESIDENT. I can't say as to that. We are still working on it.

1 George E. Allen, a Director of the Reconstruction Finance Corporation.]

[32.] Q. Mr. President, could a minor item be clarified? The appropriations for the Secretary of War went up 11 million and the Secretary of the Navy went down million

THE PRESIDENT. I don't think that happened.

Q. It says back here in the table

THE PRESIDENT. No, no, I don't think that happened at all.

Q. The office

THE PRESIDENT. It couldn't have happened--

Director Webb: Let's let Mr. Martin

THE PRESIDENT.__because they were treated exactly alike proportionately. I think--I am sure he has his figures mixed up, because they were treated alike so far as--

Q. The figures I am speaking about, sir, are on the page-- table-- 639 and 825.

THE PRESIDENT. You experts look at that and see what's the matter with the table.

Director Webb: While Mr. Martin is looking that up, I would like to check one item. You mentioned that the Legislative and Judicial expenditures were down in this General Government group. They have been excluded in the--

THE PRESIDENT. They are not in the lower group. I said Judicial were in. They are not. It's only this big table here that's in the middle group.

[33.] Q. Mr. President, could you elaborate at all on the ideas on page (p. 61)? You say, "For example, I believe that a reasonable share of the cost to the Federal Government for providing specialized transportation facilities, such as airways, should be recovered."

THE PRESIDENT. That's true. Everybody who rides at Government expense ought to pay his way. We have been hauling a lot of people around all over the world, including your boss. [Laughter]

Q. Yes sir. [More laughter]

THE PRESIDENT. And I think he ought to pay his way.

Q. Airways?

THE PRESIDENT. That also has to do with airways.

Q. Including trucks in that?

THE PRESIDENT. Yes.

Q. Retroactive, is it?

THE PRESIDENT. Everything.

Q. All these newspaper junkets are going to be recovered?

THE PRESIDENT. Well, why not? I am making Congressmen and Senators pay their way.

Q. Being a taxpayer, I would just as soon have you recover.

THE PRESIDENT. I think you are right.

Q. Not referring to mileage, were you, Mr. President?

THE PRESIDENT. How's that?

Q. Not referring to mileage?

THE PRESIDENT. NO, not necessarily.

[34.] Director Webb: Mr. Martin will answer your question.

THE PRESIDENT. Mr. Martin will answer your question now. Go ahead.

Mr. Martin: for the Office of the Secretary of the Navy there were several increases offset by some decreases, resulting in a net minus of $10 million. The increase is four and a half million for Miscellaneous Expense, five and a half for Island Governments, decreases of 10 million in Research, and 9 million, 600 for the Petroleum Reserves. War Department, 11 million increase is all in contingencies of the Army.

Q. Thank you.

THE PRESIDENT. There was no favoritism shown in that. They were treated exactly alike.

[35.] Q. On M12 and M13 (pp. 60, 61) you have got around $700 million in employment taxes, and on page M13 (p. 61) you say this is due mostly to increases--larger payrolls and mostly to increases in rates as provided by law. There have been many recommendations to freeze that law for the last 5 years.

THE PRESIDENT. That has been Senator Vandenberg's pet every year to freeze that law. I hope he won't do that this time.

Q. You assume that he will let the law

THE PRESIDENT. If this fund is going to remain solvent, the law has got to go into effect.

Q. In other words, 700 million--I was going to say 700 million--

THE PRESIDENT. That's right.

Q. --if they freeze it again, you are going to be out $700 million?

THE PRESIDENT. It's a trust fund which the Budget Director tells me has no effect on the total budget, but it should be allowed to go into effect so as to make that fund solvent.

Q. It wouldn't unbalance the budget?

THE PRESIDENT. Has no effect on the budget.

Q. Doesn't affect balancing the budget?

THE PRESIDENT. That's right. Those are trust funds and they go into the trust fund figure in the Treasury Department.

[36.] Q. I have not been able to find an estimate in here, although there is one, I am sure, of how much tax refunds there are going to be to corporations during 1948 fiscal year as a result of the excess profits tax carried back. I just haven't been able to find that figure. I wonder if

THE PRESIDENT. Can any of you experts tell anything about that figure?

Director Webb: I tell you, if you will call the Budget Bureau, we will get that for you.

THE PRESIDENT. The Secretary of the Treasury says about 21 billion.

Secretary Snyder: Let him check it.

Director Webb: I think it's a little more than that.

THE PRESIDENT. We will send the--we are going to have the Bureau's office open as usual to answer all your detail questions.

Q. What's that phone number again?

THE PRESIDENT. Executive 3300--extension 118.

[37.] Q. Mr. President, may I ask an overall question? I was a little confused at some of these questions earlier. Is there any legislation needed to make this a balanced budget?

THE PRESIDENT. The legislation to restore the Post Office deficit and the legislation to restore these luxury taxes is needed, but it will not--the budget will still be in balance if they don't pass either one of those items.

Q. That would merely add another billion?

THE PRESIDENT. That would merely add a billion and a half to the Budget so that we could pay some on the national debt. As I said, with 289 billion, if we only pay it off a billion dollars a year, you and I won't be here when we finish it.

[38.] Q. To go back to that question, that means no legislation is required to transfer corporate funds ?

THE PRESIDENT. You are the expert on that.

Q. I have been confused by

THE PRESIDENT. This one is an attempt to be as little confusing as possible.

Mr. Jones: I think it does need some legislation to transfer those corporate funds. Some of it is Federal Reserve, FDIC. Funds are available.

THE PRESIDENT. The money is all in the Treasury. Doesn't affect the budget.

Q. Might affect the budget--would affect the bookkeeping

THE PRESIDENT. Might. Might.

Director Webb: Really no controversial issue. The money is there. It's a question of what the Government does with the money.

Q. That's the whole point, sir. It's the same thing that had me confused, too, and that is this: that the items of 379 are composed of repayments by the FDIC and Federal Reserve Bank and the Treasury ultimately, and the money now lies in the FDIC and the Federal Reserve Bank which is part of the Government, and yet when it is paid into the Treasury it results in receipts of that amount.

THE PRESIDENT. That's right.

Q. And those receipts are required to bring the budget into balance. Therefore, is it correct to consider those actual receipts in a balanced budget or is the money already there and it really is not a balanced budget, be off by about

THE PRESIDENT. The budget is balanced when the President makes the recommendations in the budget for legislation to meet that situation.

Director Webb: There are a good many recommendations here for increases in expenditure. They are all totaled on page M61 (p. 96) under Proposed Legislation. The proposal deals with both sides of the budget.

THE PRESIDENT. You take it off both ways. If they don't comply with what you request you have the situation of expenditures and receipts about coming out even.

Q. Simply taking it out of one pocket and putting it into another?

THE PRESIDENT. That's all.

Q. so it isn't actual receipts to Government?

THE PRESIDENT. Yes they are.

Director Webb: Up to now, when the Government put up the money for the FDIC, that was charged out as an expense and it has been carried outside. Now, if they pass this legislation and permit it to be paid back into the Treasury, it will be shown as receipts, although the money has been right in the Treasury all the time.

THE PRESIDENT. Certain appropriations are estimated in there. You will come out even, anyway.

Director Webb: If you are disturbed about that, we will give you a statement about it. Give us a ring on it. Come over and see us.

THE PRESIDENT. It's complex if you want to make it that way, but it isn't complex to me. I understand it. [Laughter]

[39.] Q. On the bottom of page M17 (p. 64), expenditures for the War and Navy Departments, on estimates, include contemplated projects of highest priority at overseas bases and in the continental United States. I am curious to know what a high priority at overseas base might be?

THE PRESIDENT. I can't tell you. It's a diplomatic secret, and until we find out ourselves--[laughter]. I will tell you one of these days, but not now. [Pause]

Well gentlemen, are you out of questions? That's a mighty thick book to be over with so quickly. [Laughter]

Mr. Ross: I would like to repeat--may I repeat that the attributable part of the President's statement I will have mimeographed and give out this afternoon. Only that part may be attributed directly.

Reporter: Thank you, Mr. President.