Statement by the President Announcing Revised Budget Estimates.

SINCE THE BUDGET MESSAGE was issued in January, the outlook for both revenues and expenditures for 1946 has changed materially. Revenues proved to be considerably higher than we anticipated, while expenditures are now expected to be lower than the January estimates. The reasons for these changes are numerous. As usual, as the year advances, revisions of the Budget are necessary.

The main reason for the improved revenue outlook is that we are well on the highroad to full peacetime production. There have been many headaches for the Administration; the readjustment pains of our economy have been acute--and they are not yet over. But when we look at the record of Production and employment since V-J Day, we see that we have done better than we felt warranted in counting on a few months ago. In spite of the difficulties and complexities of the dynamic period through which we are moving, we are better off than we were after World War I, and we have good reason to be gratified. We now anticipate net receipts for fiscal 1946 of $42.9 billion, which is about $4.3 billion above the January estimate.

The reductions in the expenditure estimates are due to a variety of causes. Some expected expenditures have not materialized; others have been deferred to a future period; some have been reduced; and some savings have been effected. Some of the largest reductions are due to the high civilian demands for goods of every description, which have deferred execution of the Government's programs. The public works program has been delayed owing to shortages of materials and the difficulty of placing contracts. Disbursements by the Export-Import Bank have fallen below expectations since the countries to which we extended lines of credit have been unable to get goods. Outlays of the Commodity Credit Corporation have been much lower than anticipated because buoyant demand has kept agricultural prices at their ceiling levels. Consequently, price support operations have been lower than anticipated and the Corporation has been able to liquidate large inventories.

Part of the reduction in expenditures can be ascribed to greater economies of Government operation and more rapid demobilization than we had expected. On the other hand, veterans' expenditures are expected to be above the original estimates. It is now estimated that budget expenditures will amount to about $64.7 billion in fiscal 1946, which is about $2.6 billion below the January estimate.

Thus, with receipts of $4.3 billion higher, and expenditures of $2.6 billion lower, we expect a budget deficit of about $21.7 billion, which is almost $7 billion below the January estimate.

For the second half of fiscal year 1946, we expect a deficit of about $3.6 billion. For the January-March quarter in 1946 receipts exceeded expenditures by $3.8 billion-for the first time since 1930. This surplus was, of course, due to the heavy tax receipts in March. For the April-June quarter, expenditures are expected to exceed receipts by $4.4 billion, owing largely to the payment on account of the International Monetary Fund and increases in interest, refunds, and public works expenditures.

We are on the way toward a balanced budget. Receipts in fiscal 1947 will be substantially higher than estimated. However, some of the reduction in expenditures for 1946 is a deferral of expenditures into 1947 or subsequent years. It is too early, therefore, to make any reasonably accurate betterment of estimates for 1947.

It is the aim of our fiscal policy to balance the budget for 1947 and to retire national debt in boom times such as these. In our present fight against inflation, fiscal policy has a vital role to play. A continuation of our present policy, which is to maintain the existing tax structure for the present, and to avoid nonessential expenditures, is the best fiscal contribution we can make to economic stability.

The following table summarizes the budget outlook for fiscal 1946.

FEDERAL BUDGET EXPENDITURES AND BUDGET RECEIPTS

FISCAL 1946

Including net outlays of Government corporations and credit agencies (based on existing and

proposed legislation)

January

Budget^a Revised

estimate estimate Change

Expenditures

^aExpenditures under supplemental appropriations are distributed among categories.