Statement About Balancing the Budget.

THE PRESIDENT said:

"I have received many hundred inquiries from different parts of the country as to the prospects of balancing the budget and for 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 the very keystone of recovery. It must be done. Without it the several measures for restoration of public confidence and reconstruction which we have already undertaken will be incomplete and the depression 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 during that year, is estimated at about $1,250 million. This follows a deficit of $500 million last year and a deficit of over $2 billion this year, likewise calculated without reduction of the debt. These deficiencies are almost wholly due to decrease in tax receipts.

"We must eliminate this deficit for next year by the further reduction of governmental expenditures and by increases in taxation. The expenditures budgeted for the next fiscal year as sent to the Congress amounted to about $4,100 million after a reduction by the administration of $365 million under the total for the current year. In considering possible further economies in expenditures we must not forget that of this total about $2,100 million is of such character that it cannot be reduced; it is largely an 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. Thus 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 creates 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 these 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."