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Statement by the President on the Improved Budget Outlook.

April 19, 1947

REVISED ESTIMATES now indicate that there will be a surplus of about $1.25 billion in the fiscal year 1947. This is a sharp improvement over the estimated deficit of $2.3 billion shown for fiscal 1947 in the Budget Document last January.

The improvement is due to two factors. First of all, we have been able to hold expenditures below our earlier expectations. While some items, such as refunds, terminal leave payments, and international payments will exceed the earlier estimates, these increases will be more than offset by reductions in the areas where economy is .possible.

It is now estimated that expenditures will amount to about $41.25 billion in the fiscal year, or $1.25 billion lower than the estimate last January.

I have required the major departments of the Government to limit their expenditures to the fullest possible extent. Economies in the War and Navy Departments and in the Public Works expenditures of the Government have contributed substantially to the reduced estimate for expenditures.

The second factor accounting for the improved budgetary situation is that revenues have been running ahead of our earlier estimates. It now appears that receipts of the Government will amount to $42.5 billion in fiscal 1947--an increase of $2.3 billion above the January estimate. This has been due to the extraordinary high levels of economic activity that have been achieved--and also, I regret to say, to the sharp increase in prices that has taken place since the removal of controls. This has inflated the entire economic structure and currently is resulting in very sharply increased corporate profits.

Arrangements have been made to add a new section to the Daily Treasury Statement, effective immediately, comparing the budget estimates for this fiscal year with the actual figures to date each day. This comparison now shows a surplus for the fiscal year to April 15 of $2.6 billion, or more than $1 billion in excess of the new estimate for the entire fiscal year. This is ben cause of an important concentration of expenditure in the last part of the fiscal year. For example, the heaviest payments of interest on the public debt are made in the month of June. Also, there will be large payments to the National Service Life Insurance Fund during the last part of the fiscal year. These and other items account for the difference between the surplus now shown in the Daily Treasury Statement and the expected surplus for the entire fiscal year.

I have stated on many occasions my firm resolve to balance the Budget and provide for reduction of the public debt. Now that we are achieving a balanced budget I want to emphasize the need for reducing the public debt to the fullest possible extent now, while times are good. A good start has been made on this objective by bringing the debt down from its all-time peak of almost $280 billion to the present level of $258 billion. The soundness of our policies in managing the debt is evident from the fact that almost all the reduction to date has occurred in the holdings of Federal securities by banks. But the most important thing we can do in debt management today is to continue to reduce the debt as rapidly as possible.

It is natural for taxpayers to wish to see taxes reduced. But to do this now would promote inflation, so that the benefits of any reduction would be largely dissipated.

Harry S Truman, Statement by the President on the Improved Budget Outlook. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/232927

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