The President's News Conference

BALANCING THE BUDGET

THE PRESIDENT. I have received many hundred inquiries this morning from different parts of the country as to the prospects of balancing the budget and other information connected therewith.

I am confident that the undertaking of the representatives of both political parties to balance the budget remains and will be fulfilled. It is, in fact, the very keystone of recovery, and it must be done. Without it the several measures for restoration of public confidence and reconstruction that we have undertaken will be incomplete, and the depression will be prolonged indefinitely.

For a clear view of the situation our people should understand that the deficit for the next fiscal year, excluding further reduction of the national debt, is about $1,250 million, and that this follows a deficit of $500 million for last year, and $2 billion for the current fiscal year, likewise excluding the debt redemption. Of course, as you know, those deficits are almost wholly due to decreased tax receipts.

So that we must eliminate the deficit for next year by the further reduction of governmental expenditures and by increases in taxes. The expenditures budgeted for the next fiscal year as sent to Congress amounted to about $4,100 million after a reduction by the administration of $365 million from the previous year. When we consider further economies, we have to take into account the fact that about $2,100 million of the Federal expenditure cannot be reduced. It is largely the inheritance of the Great War, through increase of payment on Government obligations and the care of veterans and their families. In addition, our Army and Navy costs about $700 million. We should not further reduce the strength of our defense. So that we must make our further economies mainly out of this balance of $1,300 million remaining from the total of $4,100 million, together with economies in the Post Office, as to which only the net operations are included in these figures. Out of this sum of $1,300 million the many other vital services of the Government must be carried on. Every reduction that can be made without serious injury to these services and injustice to our people should be effected. Further economies can be made, and I am confident will be made, through authority of the Congress to eliminate unnecessary functions of the Government or in postponement of less essential activities, together with businesslike reorganization and coordination of Government activities. The appropriation and economy committees of the Congress are now earnestly engaged on all these problems. But when all this is done the balancing of the budget must, in the main, be accomplished by an increase in taxation, which will restore Government revenues.

Economies in expenditure or increase in taxes alike call for sacrifices-sacrifices which are a part of the country's war on depression. The Government no more than individual families can continue to expend more than it receives without inviting serious consequences. To continue to live on borrowed money only postpones the difficulty and in the meantime begets all manner of new evils and dangers, which create costs and losses to every workman, every farmer, and every businessman far in excess of the cost of courageous action in balancing the budget.

The American people are no less courageous and no less wise than the people of other nations. All other great nations of the world have been faced with even greater necessity during the past year. In order to preserve their national credit those countries have increased their taxes far more severely than our deficit demands of the American people.

One of the first requirements to the accomplishment of the absolute necessity of a balanced budget is that the people and all their organizations should support and not obstruct the Members of Congress in sound efforts to both reduce expenditures and adjust taxation.

It must not be forgotten that the needs of the Government are inseparable from the welfare of the people. Those most vitally concerned in recovery are the ones whose margins of savings are the smallest. They are affected by the depression more seriously than any others; ultimately they will pay the biggest price for any failure on our part of the Government to take the necessary action at this time. We can overcome this national difficulty as we have overcome all our difficulties in the past by willingness to sacrifice and by the resolute unity of national action.

RECONSTRUCTION FINANCE CORPORATION

I have one other note here. I have the report of the Reconstruction Finance Corporation, which shows the distribution of their activities. I will give you this table. It shows loans made to 587 banks and trust companies, 18 building and loan associations, 13 insurance companies, 13 railroads, 2 joint stock land banks, 3 mortgage loan companies, 1 livestock credit association, and the $50 million allocated to the Secretary of Agriculture; all of which make up $234 million. The banks and trust companies receiving total of $126 million are located in 45 States. The great majority of them are in the smaller communities. Less than $3,500,000 has been authorized in cities of over 1 million of population; more than $116 million of this total has been authorized in towns of under half a million population.

I will give you those figures.