Statement About Budget Results for Fiscal Year 1973

THE best way to hold down the cost of living is to hold down the cost of government. Today there is new and encouraging evidence that we can win that battle.

The latest Monthly Statement of Receipts and Outlays shows that Federal outlays for fiscal year 1973 were held to $246.6 billion--a figure well below the $250 billion ceiling on spending that I had recommended to the Congress. Since overall receipts totaled $232.2 billion, the deficit for fiscal year 1973 was $14.4 billion. This was a much smaller deficit than the $24.8 billion deficit projected in my budget message last January. Moreover, the budget was within $2 billion of being in balance during the period from January to June of this year--a period when it was especially important to hold down government spending.

During the debates on budget policy last fall and last winter, it was widely assumed and frequently asserted that we could not hold spending to the $250 billion level and that the only way to produce an anti-inflationary budget was by increasing taxes. I rejected that contention then--and I reject it now, as we look to a new fiscal year. We held the budget line in the year just past without raising taxes. I believe we can do so again--and, in fact, achieve a balanced budget--in fiscal year 1974.

In earlier years, budget deficits have sometimes helped take the slack out of the economy and increase employment. However, we recognized in the summer of 1972 that a major problem was developing as the economic boom got well underway. We could foresee that the pressures from existing Federal programs and new legislation could push spending for fiscal year 1973 to $260 billion or more-much more than we thought an already strong economy could tolerate without greater inflation. I therefore called upon the Congress to hold the line on spending at $250 billion.

The Congress has acted responsibly on that request. There have been many differences between the Congress and the Administration over the level of Federal spending on many specific programs, but the important point is that our overall spending goal has been achieved.

I recall how both Houses of the Congress approved legislation last fall to set a ceiling in Federal spending at the $250 billion level. While technical differences prevented the two Houses from agreeing on a common version of that ceiling, and while overall Congressional action for the last fiscal year eventually contemplated much higher expenditures, it was clear nevertheless that a majority in both Houses of the Congress accepted in principle the advisability of holding spending to a lower level. When the chips were down, it was that spirit of restraint which prevailed.

I trust that the two branches can forge an effective partnership on behalf of budgetary responsibility again in this new fiscal year--and that one year from now the figures will show that the budget for fiscal year 1974 was in balance. The fact that we nearly achieved a balance in the second half of fiscal year 1973 encourages us to believe this a realistic objective.

It should not be overlooked, however, that the veto of certain bills and the reserving of certain funds was essential in achieving our budgetary goals for the past 12 months. Inflation continues to be our most important economic problem--and budget and monetary restraint continue to be our most important tools for fighting it. Our Phase IV controls will help to moderate inflation, but a balanced budget and monetary restraint must be our major weapons against rising prices.

With the economy now operating at a high level, revenues in fiscal year 1974 should approximate, without any tax increases, the overall level of expenditures I proposed last January--about $269 billion. Balancing the budget therefore means that we must hold expenditures to that level in the coming year, despite the fact that higher prices, higher interest rates, and new legislation will all be working • to drive spending higher. I am confident that with the continuing cooperation of the Congress we can meet that goal and thus help protect the American people against the twin dangers of higher prices and higher taxes.