Statement on the 1970 Budget.

I HAVE today signed into law the final supplemental appropriations bill for the fiscal year ended June 30. In addition to providing budget authority for the operation of the Federal Government, the measure removes a restriction that had been placed on Federal hiring by the Revenue and Expenditure Control Act of 1968.

Written into the law is another ceiling-on Federal spending during the fiscal year 1970, the one we have just entered. This new ceiling is set at 191.9 billion---one billion dollars below my own fiscal 1970 expenditure recommendations of last April.

However, the Congress has made this new ceiling somewhat flexible. There are a number of categories in the Federal budget--such as medicare, interest on the public debt, social insurance benefits, and farm price supports--where costs can rise without new appropriation action. Congress has determined that increases in these items--up to $2 billion--will be exempt from the $191.9 billion ceiling.

There are other outlays such as military expenditures in Southeast Asia, public assistance, Medicaid benefits, and veterans benefits, where it is also very difficult to budget a precise figure. Any additional appropriations the Congress votes, in these categories, above our 1970 revised budget estimates, will result in an upward adjustment of that $191.9 billion ceiling.

There is another aspect to the proposal. If, after voting this new lower ceiling, Congress fails to cut the budget to fit under it, the President must take over and finish the job. On the other hand, if Congress should cut the budget below $191.9 billion, that new lower figure automatically becomes a new ceiling. The latter hypothesis does not appear at this point to be a strong probability.

In making the new ceiling somewhat flexible, the Congress has acted wisely. However, the new ceiling will be of little help in keeping Federal spending under control if the Congress that imposed it does not cooperate fully with the administration in meeting it.

Last April I presented a revised 1970 budget to the Congress. That budget contained specific reductions totaling $4 billion from the budget left by the previous administration. It brought the proposed Federal spending figure for this fiscal year down to $192.9 billion, a figure I still believe reflects a responsible fiscal policy in our highly inflationary environment. If we hold the line on that spending figure, as I intend to, and if the requisite revenues are provided, this fiscal year will produce the kind of budget surplus needed to cool off an economy that was dangerously overheated before we assumed office.

Three months have passed since the administration's revised budget was sent to the Congress. We are already 3 weeks into the 1970 fiscal year, and the Congress has not completed its action on a single regular 1970 appropriations bill. It seems apparent that it will not be known until the late fall just how much of a contribution the Congress intends to make toward meeting the spending ceiling Congress itself has imposed.

In the meantime, since April, the budget picture has worsened. We now anticipate further increases of approximately $2.5 billion in expenditure for such uncontrollable items as interest on the public debt, Medicare, social security, civil service retirement benefits, reduced receipts from offshore oil leases, public assistance, and veterans benefits.

In addition, congressional action to date has been inconsistent with a number of my proposals in April. For example, Congress has not acted on my recommendation for a postal rate increase to be effective July I. Nor has it terminated the special milk and agricultural conservation programs as I recommended. Instead of reducing aid to schools in impacted areas, it is moving to increase such aid. These, and similar actions, could add at least another billion dollars net to Federal spending in 1970.

Thus our current estimate of fiscal 1970 spending has risen to $196.4 billion even though we in the administration have done nothing in the way of discretionary action to add to our earlier $ $192.9 billion estimate.

Given our commitment to hold Federal spending to the April figure of $192.9 billion there is only one course of action open to the administration, and we are taking it. I am directing the heads of all departments and agencies to reduce spending in the fiscal year just begun by an additional $3.5 billion, the amount necessary to bring current estimates back in line with the $192.9 billion target figure we set in April.

No Federal program is above scrutiny. Some highly desirable programs will have to be stretched out, others reduced. The dollar reductions will be accompanied by a further lowering of the personnel ceilings established last April.

I know the Congress shares my determination to make the budget an effective instrument against the inflation that has wrought so much damage to the income and savings of millions of Americans. If the Congress did not share that commitment, it would not have imposed this spending ceiling. However, this general expression of support for fiscal restraint must now be matched by specific acts of the Congress.

The Congress should also recognize that if it approves further increases above the April budget estimates, we cannot live within the $192.9 billion figure unless more offsetting cuts are made.

I would prefer that the Congress make these offsetting cuts in programs it considers of lesser priority, if it votes increases over my April budget for activities it considers essential. If it does not do so, the duty of making such cuts clearly becomes mine.