To the Congress of the United States:
I am transmitting, with this Message, the Budget of the United States Government for the fiscal year ending June 30, 1954.
This Budget represents my judgment as to the amount of funds needed to carry forward our programs for the security and welfare of our people and for world peace. It is based, like all those I have transmitted in previous years, on the policy that the Government should undertake to do only what is essential for the safety and well-being of the Nation, and that what must be done should be done in the most efficient manner.
This Budget has been prepared under unique circumstances. It is the first Budget since the adoption of the Twentieth Amendment to the Constitution to be presented to the Congress by a President who will leave office a few days after its transmission. My successor will be inaugurated as President on January 20. His will be the Executive responsibility during the time when this Budget is being considered by the Congress, and his will be the responsibility for the administration of Federal programs for the period of time covered by this Budget. I have done all in my power to ease the problems of transition to the new administration, including informing the President-elect, through a representative of his choice, of the background and considerations which have entered into the preparation of this Budget. However, I wish to make it clear that neither my successor in office nor any of his staff has participated in the decisions herein represented. The President-elect has no responsibility for the amounts included in this Budget, and will be entirely free, of course, to propose changes in them.
Because of the particular circumstances, there is one significant difference between this Budget and others I have transmitted. In previous years, the Budget estimates have included the cost of new legislation which I recommended to the Congress. Such a practice is a sound rule for Federal budgeting. This year, however, I am not transmitting specific proposals for new legislation. Accordingly, the usual estimates of the fiscal effects of such legislation are not included. For example, neither estimated expenditures for aid to medical education nor estimated receipts from increased postal rates are included. I still support these and certain other legislative proposals as strongly as ever, but since I will not be in office during the fiscal year 1954, I do not think it proper for me to transmit specific new legislative proposals or to budget for them. However, funds are included in this Budget to carry forward certain activities already under way which will require renewed legislative authority to continue into the next fiscal year, such as the programs under the Mutual Security Act and the Defense Production Act.
In this Budget, I am recommending that the Congress enact 72.9 billion dollars in new authority to incur financial obligations during the fiscal year 1954. Total expenditures, from these funds and from balances of authorizations previously enacted, are estimated at 78.6 billion dollars. Receipts under present tax laws, which provide for the expiration of some of the post-Korean tax increases, are estimated at 68.7 billion dollars. On this basis, the deficit is estimated at 9.9 billion dollars. The following table shows the Budget totals for the five fiscal years 1950 through 1954.
These figures show very clearly the budgetary impact of the defense mobilization program on which we embarked after the communist aggression in Korea in June 1950•
BUDGET TOTALS
|
[ Fiscal years. In billions ] |
1950 1951 1952 1953 1954
actual actual actual estimated estimated
New authority to incur obligations $50.2 $84.1 $92.9 $80.8 $72.9
Expenditures 40.1 44.6 66.1 74.6 78.6
Receipts (under existing tax laws) 37.0 48. 1 62.1 68.7 68.7
Deficit (--) or surplus(+) --3.1 +3.5 --4.0 --5.9 --9.9
|
This program required, among other things, that we increase our active military forces by about two million men and women, equip those larger forces with new and improved weapons, and maintain them for an indefinite period. These were steps judged necessary not only to carry out the commitment we undertook in Korea, but also to increase our defense preparedness in the light of the continuing possibility of fighting on a much larger scale. We are now well along in this program. Our armed forces have long since reached the level of 3.6 million; the initial equipment to outfit them has been ordered, and much of it has been delivered. |
New obligational authority, primarily to finance the purchase of military weapons and equipment, rose sharply after the attack on Korea and reached a peak of 92.9 billion dollars in the fiscal year 1952. Since then, new obligational authority has been declining. The amount recommended for the fiscal year 1954 is 20 billion dollars less than the amount enacted for 1952.
Although new obligational authority is declining, expenditures are still rising. This is due to the long lead-time involved in the procurement of military equipment--the time required to design, produce, test, and deliver such complex items as planes, tanks, ships, and guns, after contracts are let. Because of this long lead-time, most items of military equipment are not usually delivered and completely paid for until two or sometimes three years after they are ordered.
Each year from 1951 through 1953, new obligational authority has exceeded expenditures, because new obligational authority represented for the most part orders being placed, and expenditures represented for the most part payments for goods being delivered. In the fiscal year 1954, fewer orders will be placed, but more goods will be delivered. As a result, expenditures are expected to exceed new obligational authority for the first time since before Korea.
Under our present defense program, military expenditures are expected to reach their peak in the fiscal year 1954 and to start declining in subsequent years. If our armed forces are stabilized at their presently approved goals and if no new aggressions occur, new obligational authority and expenditures may be expected to level off in future years at the amounts necessary to maintain these forces and to replace current equipment with new and better items as they are developed. It is difficult to forecast with any precision the amount by which total Federal expenditures may be expected to drop in future years under these assumptions, but it may be in the neighborhood of 15 billion dollars. In my judgment, however, a drop of this magnitude cannot be expected for at least two or three years.
BUDGET EXPENDITURES
This Budget is dominated, as the last three have been, by the cost of national security. About 73 percent of all Budget expenditures in the fiscal year 1954 will be for six major national security programs--military services, international security and foreign relations, the development of atomic energy, the' promotion of defense production and economic stabilization, civil defense, and merchant marine activities. In the fiscal year 1954 these programs will cost approximately 57.3 billion dollars.
An additional 14 percent of Budget expenditures in 1954 will be for interest and for veterans' services and benefits. These expenditures, which will amount to approximately 11 billion dollars, represent for the most part a continuing cost of World War 11; in addition, they include the costs of services and benefits for the growing number of veterans of the fighting in Korea.
The remaining 13 percent, or 10.3 billion dollars, will be for all other activities of the Government. Some of these activities--such as the port security program of the Coast Guard and the internal security program of the Federal Bureau of Investigation--have a direct bearing on our national security. Others--such as our programs for agriculture, housing and community development, education and general research, labor, social security, welfare, and health--help to assure our continued social and economic progress and to strengthen the Nation for the long, hard period of world tension that lies ahead of us. Still others represent basic functions of Government, such as making and enforcing the laws, collecting taxes, and maintaining Federal records and property.
As the following table indicates, expenditures for major national security programs not only dominate this Budget, but also account for most of the increase in total Budget expenditures since 1950, the last full fiscal year before the attack on Korea.
BUDGET EXPENDITURES
|
[ Fiscal years. In billions ] |
Program 1950 1951 1952 1953 1954
|
actual actual actual estimated estimated Major national security $27.8 $26.4 $47.2 $53.2 $57.3 Total 40. 1 44.6 66. 1 74.6 78. 6 |
EXPENDITURE POLICY
In the preparation of this Budget, every Government program--including those directly concerned with national security-has been reviewed in the light of the current outlook for international developments, in the light of the heavy tax burden, and in the light of the long-term needs of the Nation. The recommended estimates reflect our constant effort to adjust expenditure programs to make sure they are at the minimum level consistent with our national objectives. Proposals for military procurement, for example, reflect our policy of relying, wherever possible, on a continuing flow of weapons and equipment from production lines, rather than on the accumulation of large inventories of reserve stocks.
Increased funds have been included in this Budget only for those programs where, in my judgment, a clear and definite need exists that cannot be longer deferred without impairing the public interest. In the case of several regulatory agencies, such as the Interstate Commerce Commission, the Federal Trade Commission, the Securities and Exchange Commission, and the Federal Communications Commission, earlier cutbacks were so severe that steps have been taken in this Budget to restore some of them. Even in these instances, however, the policies have been strict. Funds have been provided for handling increased workloads or backlogs of unfinished work only when failure to do so would result in delays which would have to be made up later at an even greater expense, or in a serious impairment of an agency's ability to carry out the responsibilities assigned to it by law. It would be shortsighted to do less.
Because of the overriding requirements of the national security programs, many important Government services to businessmen, farmers, and the public at large have been held, in recent years, to levels below those justified by our growing population and expanding economy. Rising prices have also increased the cost of Government and have reduced the actual service to the public per dollar spent just as they have reduced the purchasing power of private individuals and firms. When defense spending has declined, we must bring these services to levels consistent with the long-range development of the Nation and its resources.
The recommended appropriations anticipate increases in efficiency resulting from reorganizations, improved management procedures, and better programing of the work to be done. Substantial progress has been made in strengthening Federal management in the last few years so as to get more work done at less cost. This progress is reflected in this Budget, and will continue to be a factor in future Budgets.
Government organization and procedures are not static. They must be continually reviewed and modernized in order to adapt the machinery of Government to its current tasks. An examination of needed actions to improve Government organization and management is now a regular and continuing part of the process of preparing and administering the Federal Budget. Reorganization plans transmitted under the Reorganization Act of 1949 have made a number of far-reaching improvements in providing officials of the executive branch with more effective organization and more adequate authority to do their jobs. I believe it will be found to be most desirable to extend the authority in that act, which expires April 1, 1953, as one of the steps needed to assure continued progress in increasing the efficiency with which the executive branch is managed.
TAX POLICY
I have always held that the Government's fiscal policy should aim at promoting the stable growth of our economy. This means that normally in times of high employment and rising national income the Federal Government should operate with a balanced Budget.
In the years following the end of World War II, when the economy was operating at a full-employment level, my Budget Messages called for balanced budgets and debt reduction. During the four fiscal years 1947 through 1950, the Government had an overall net surplus of 4.3 billion dollars.
After the outbreak of hostilities in Korea, I recommended that we finance our rearmament effort on a pay-as-we-go basis. In response to my recommendations, the Congress raised tax rates in 1950 and again in 1951. These tax increases were substantial. They helped produce a Budget surplus in the fiscal year 1951, but they have not met our subsequent revenue requirements. The fiscal year 1952 ended with a deficit of 4 billion dollars. A deficit of 5.9 billion dollars is now estimated for the current fiscal year. An even larger deficit, 9.9 billion dollars, is estimated for the fiscal year 1954.
Under present law, a number of the tax increases enacted in 1950 and 1951 will terminate in 1953 and 1954. The excess profits tax on corporations is scheduled to expire on June 30, 1953. Under the Revenue Act of 1951, the rate increases on individuals' income will terminate on December 31, 1953, and the increases in normal rates on corporations' income will expire on March 31, 1954. Virtually all of the excise tax rate increases under this act will also expire on March 31, 1954. The purpose of the Congress in setting termination dates was to assure early review of the tax increases enacted after Korea. Responsibility for this review falls on this session of the Congress.
If the increases are allowed to expire as scheduled, the Government will lose about 2 billion dollars in revenue in the fiscal year 1954. The full effect of the expirations will be an annual revenue loss of approximately four times this amount.
The continuing increase in expenditures for national security and the prospect of a substantial deficit in the fiscal year 1954 pose an immediate and serious problem in tax policy. While I do not wish to make any specific recommendations, I do wish to make it clear that in my judgment it would not be wise to plan for a large Budget deficit during a period when business activity, civilian employment, and national income are reaching unprecedented heights. The course of prudence and wisdom would be to continue to strive for a balanced Budget and a pay-as-we-go policy in our rearmament program.
In its consideration of the level of tax rates, I hope the Congress will also give serious consideration to improving the equity of the tax system. The injustices and loss of revenue arising out of loopholes in the tax laws should be eliminated. Confidence in the equity of tax laws is essential in a democracy.
BUDGET RECEIPTS
The following table shows the source of estimated Budget receipts for the fiscal year 1954, compared to revised estimates of receipts for the current fiscal year and actual receipts for the fiscal year 1952. The estimates for 1954 are based on present tax laws.
BUDGET RECEIPTS
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[ Fiscal years. In millions ] Item 1952 1953 1954 Budget receipts 62, 128 68, 697 68, 665 BORROWING AND THE PUBLIC DEBT |
On the basis of the present fiscal outlook and existing tax laws, the public debt is expected to increase from 259 billion dollars at the beginning of the current fiscal year to about 264 billion dollars by June 30, 1953, and 274 billion dollars by June 30, 1954.
Last spring substantial revisions both from the standpoint of increased rate and increased intermediate yields were announced in the savings bond program, designed to put these widely held issues on a basis more nearly comparable with alternative investments. Holders of almost three-quarters of the maturing savings bonds are taking advantage of the new arrangements under which interest continues to accrue on bonds not presented for cash redemption at maturity.
EXPENDITURES AND AUTHORIZATIONS BY MAJOR FUNCTION
The following table shows estimated expenditures and recommended new obligational authority for the fiscal year 1954, classified by major function. It also compares estimated expenditures in the fiscal year 1954 with revised estimates for the current fiscal year and with actual expenditures in 1952.
The estimates for 1954 include several hundreds of millions of dollars of receipts, authorizations, and expenditures relating to foreign credits and currencies for which no comparable figures appear in the 1952 and 1953 totals.
EXPENDITURES AND AUTHORIZATION BY MAJOR FUNCTION
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[ Fiscal years. In millions ] Recom- 1952 1953 1954 authority Function actual estimated estimated for 1954 Total 66, 145 74, 593 78, 587 72,883 |
Until now foreign credits and currencies have been available to certain agencies without the normal processes of budgeting. Recent legislation requires that foreign credits be budgeted and reported in the same manner as regular funds of the Government. This step is desirable in order to obtain adequate control over the use of such credits, to promote effective utilization of the foreign credits on hand or otherwise available in lieu of dollars, and to make full disclosure of the Government's financial operations in the Budget totals.
Accordingly, this Budget includes appropriation estimates for the dollar equivalent of the agencies' estimated use of foreign currencies in 1954. The appropriations would be used to purchase foreign currencies from the Treasury as they are required for expenditure. These transactions will add the same amount to both Budget receipts and expenditures, and will therefore have no effect on the deficit.
MILITARY SERVICES
This year we are budgeting for the fourth fiscal year following the attack on Korea. During the past 30 months, we and our allies of the United Nations have been fighting and holding the communist aggressors. In addition, we have been expanding our armed forces toward larger goals--21 Army divisions, 3 Marine divisions, a Navy of 408 combatant ships with air support, and an Air Force of 143 wings. This is an expensive program, but our national security depends on it. We cannot afford to lower these goals until the free world is secure against the communist menace.
In order to appraise properly the budgetary impact of our rearmament program, it is necessary to examine the four fiscal years 1951 through 1954 as a single time span, and to bear in mind the relationship between new obligational authority and expenditures. In the fiscal year 1951, new obligational authority for the military functions of the Department of Defense totaled 48.2 billion dollars, and in 1952 it reached 60.3 billion dollars. In the current fiscal year, it is expected to drop to 48.1 billion dollars, and I am recommending a further reduction to 41.2 billion dollars for 1954.
Because of the long lead-time involved in military procurement, expenditures for most types of weapons and equipment occur many months after the Congress has enacted the authority for their purchase. Thus, as a result of the 1952 peak of new obligational authority, expenditures are expected to reach their peak in the fiscal year 1954. If we maintain the force level I am recommending in this Budget, expenditures for the military functions of the Department of Defense should begin to decline in the fiscal year 1955 and should continue to decline until they reach the level required to keep our armed forces in a state of readiness. On the basis of present rough estimates, that level may be in the neighborhood of 35 to 40 billion dollars annually.
In addition to the military functions of the Department of Defense, the military services category includes certain supporting activities such as the stockpiling of strategic and critical materials, the research programs of the National Advisory Committee for Aeronautics, and the Selective Service System. Expenditures for all programs in the military services category are estimated at 46.3 billion dollars in the fiscal year 1954. This is an increase of 1.9 billion dollars over 1953 and 6.6 billion dollars over 1952.
Military personnel.--Expenditures for military personnel are for the pay, subsistence, clothing, and transportation of our armed forces. This Budget provides for an average strength of more than 3.6 million service men and women, an increase of more than 2.1 million since the beginning of the Korean conflict and slightly above the average provided for in the 1953 Budget.
Despite the slight increase in average strength, expenditures for military personnel in the fiscal year 1954 are expected to be 200 million dollars less than in 1953 since expenditures in 1953 include outlays for retroactive combat-duty pay and mustering-out pay.
MILITARY SERVICES
[Fiscal years. In billions]
New obligational authority Expenditures
|
1953 1954 1953 1954 Department of Defense, military Subtotal 48. 2 60. 3 48.1 41. 2 19.7 38. 9 43.2 45.4 Total 51.2 61.0 48.3 41.5 20.5 39.7 44.4 46.3 1Less than 50 million dollars. As a result of two amendments to the 1953 Department of Defense Appropriation Act placing percentage limitations on officer grades and restricting the retirement of officers, the Department has been unable to administer our military personnel program in the best interests of the Government and the men. One amendment, which limits the proportion of officers of each rank, unduly restricts the flexibility of the services in assigning rank commensurate with responsibility. Apparently intended to slow down promotions of officers in the higher ranks, it has had its greatest impact on those in the lower ranks. The second amendment discourages the voluntary retirement of certain officers when it might be in the best long-run interests of both the Government and the officers to encourage some of these retirements. It has the damaging long-range effect of limiting the number of career-minded young junior officers from whom we must draw our future military leaders and on whom we must depend for the future effectiveness of our military forces. While I am in sympathy with the basic purpose of these two amendments, I believe they are doing more harm than good. Therefore, I believe they should be repealed as soon as possible. |
Operation and maintenance.--To operate and maintain the divisions, ships, and aircraft of our military establishment in the fiscal year 1954, I am recommending 10.3 billion dollars in new obligational authority. This is 800 million dollars less than the amount estimated for 1953, and 2.1 billion dollars less than the amount enacted for 1952. The decline is due primarily to the fact that the Congress has already provided a large part of the funds needed to fill the pipeline for supplying our expanded forces, to complete the rehabilitation of our military installations, and to purchase a mobilization reserve of spare parts and soft goods. Expenditures for operation and maintenance are estimated at 10.6 billion dollars, which is 800 million dollars more than the estimate for 1953. The 1954 estimate makes no specific allowance for additional costs that would result from the continuation of combat operations in Korea.
Major procurement and production.--The Congress has already authorized most of the funds needed initially to 'purchase aircraft, ships, vehicles, artillery, weapons, ammunition, guided missiles, electronics, and other major items of military equipment for our defense buildup. A large part of this equipment has been placed on order and is in production. Deliveries are increasing substantially. However, additional funds are required to bring us closer to our armed force goals and to replace weapons and equipment that are worn out, obsolescent, or destroyed or consumed in battle.
In this Budget I am recommending 14.2 billion dollars of new obligational authority for major procurement and production, compared with 19.8 billion dollars estimated for 1953 and 29.2 billion dollars enacted for 1952. About 58 percent of my 1954 recommendation is for aircraft, about 34 percent is for artillery, ammunition, and other major items, and nearly 8 percent is for shipbuilding.
Expenditures for major procurement and production, which largely reflect deliveries, are expected to reach a peak of 17.4 billion dollars in the fiscal year 1954. Under our present production plans, they should thereafter begin to decline gradually toward the level necessary to keep our armed forces equipped with modern weapons.
In this Budget, as in the 1953 Budget, maximum reliance is placed on maintaining a continuing flow of production along with the ability to expand that production rapidly if necessary, rather than on the accumulation of large reserves of weapons and equipment. In general, the production of reserve stocks for full mobilization is scheduled at the minimum rate which would preserve as many of our existing military production lines as possible in operation for a long period in the future. A noteworthy exception to the application of this general principle is ammunition, for which additional funds may be required in the spring of 1953 unless it becomes clear that combat consumption will cease during the calendar year.
Military construction.--To properly house, train, supply, and deploy our expanded military forces, it has been necessary to repair, rehabilitate, and construct military installations from which our forces operate. For the three fiscal years 1951 through 1953, Congress has enacted 8.7 billion dollars of new obligational authority for this purpose. An additional 700 million dollars is recommended in this Budget for building projects which have already been authorized by the Congress, but for which funds have not yet been provided. Almost all of this 700 million dollars is for Air Force bases in the United States and overseas. Nearly 60 percent of the post-Korean military construction program has been for Air Force operating bases here and abroad. These are necessary to accommodate the increased number of air wings which are being formed. The problem of the need for additional authorizations is being studied by the Department of Defense.
Although the new obligational authority recommended for 1954 is considerably below the amount enacted in each of the preceding three years, expenditures for military construction are expected to rise from 2.3 billion dollars in the current fiscal year to 2.7 billion dollars in 1954 as work already under way nears completion.
Civilian components.--The civilian components of the armed forces consist of the Organized Reserve, the Army National Guard, the Air National Guard, and the Reserve Officers' Training Corps. These units provide the trained nucleus around which a rapid expansion of our active military forces could be accomplished in a minimum time. This Budget provides for an increase in the strength of our civilian components receiving drill pay from 845,000 at the end of the fiscal year 1953 to 978,000 at the end of the fiscal year 1954, because an increasing number of men who are released from active service are becoming members of the civilian components.
Research and development.--As a result of research and development work done in the past few years, our forces are now being equipped with many new types of weapons and equipment far superior to those of World War II. Additional new and improved weapons are now going into production, and we are making intensive efforts to perfect still others which will contribute directly to our military strength in the years immediately ahead. These new developments will eventually give our forces capabilities far beyond those of the present. Advances in almost every field of science are being applied to weapons and techniques of warfare. These developments are complex and costly, and the time required to translate new ideas into practical military weapons is long. Our gratification in the progress we are making must be sobered by the realization that parallel developments are undoubtedly under way behind the Iron Curtain.
Expenditures of the Department of Defense for research and development are estimated at 1.6 billion dollars in 1954, an increase of 200 million dollars over 1953.
Industrial mobilization. The industrial mobilization activities of the Department of Defense include (1) the maintenance of reserve industrial plants and tools, (2) engineering and management studies to improve manufacturing methods and to reduce the quantities of the scarce critical materials now being used, and (3) mobilization planning in conjunction with other agencies to insure the availability of industrial capacity which can be expanded to meet the requirements of total mobilization. All of these programs are essential to the maintenance of a strong mobilization base.
Since Korea, our military procurement program has added to our mobilization base, and the need for separate industrial mobilization activities has thereby been reduced. However, there are still deficiencies in our capacity to swing rapidly into full-scale production of the military items needed in wartime. A study is now being made to determine the nature and extent of these deficiencies.
For the purpose of filling such gaps in the mobilization base, I am recommending that 500 million dollars be appropriated to the Department of Defense to purchase the plants, tools, and productive facilities that would be needed. Most of this fund will be used to acquire tools and facilities beyond those needed for currently planned procurement. The requested amount will be adequate for the first year, but additional amounts may be needed later.
A second problem of industrial readiness concerns the maintenance of existing elements of the mobilization base. As the production and procurement of military equipment decline during or after the fiscal year 1954, a part of the expanded capacity for producing military items will be converted to civilian production, or otherwise disappear from the mobilization base. Steps should therefore be taken to prevent such loss. The cost of acquiring these facilities will be borne by this new fund in an amount not to exceed 100 million dollars as well as by regular appropriations to the Department of Defense.
It should be made clear that present legislative authority, and the funds herein requested, will not meet the needs of the mobilization base outside the capacity which is directly related to the production of military items. For other elements of the base, such as certain kinds of basic industrial facilities, new legislation and funds may be needed.
Stockpiling.--During the fiscal year 1954, it is estimated that nearly 900 million dollars worth of strategic and critical materials will be added to our stockpile. By the end of 1954 our stockpile inventory will be valued at 5.5 billion dollars in June 1952 prices. This is more than double the value of our stockpile inventory at the end of the fiscal year 1950, and represents nearly 75 percent of our total objective, which amounts to 7.4 billion dollars.
INTERNATIONAL SECURITY AND FOREIGN RELATIONS
The Budget recommendations for international security and foreign relations are designed to further the common effort of the United States and other free nations to establish the foundations for lasting peace and security. In this joint undertaking, we are helping our allies to build the strength needed by them and by us to resist the forces which jeopardize the peace and threaten our security. If this aid is to be effective, it must meet the particular and most urgent needs of each individual country. In some instances, it consists largely of the weapons necessary for the expansion of military strength. In others, it takes the form of goods, services, and the technical skills needed to help millions of people in their struggle against poverty, disease, and starvation--conditions which create unrest and invite subversion. By providing this assistance, we are helping ourselves just as much as we are helping our allies. When the members of a flood-threatened community join together to build a dike, each man's effort helps to protect his own house as well as his neighbor's.
During the past two years, under the mutual security program, we have made significant progress in helping our allies to achieve greater military strength, economic growth, and political stability. I am confident that the Congress, by extending the Mutual Security Act, will make it possible to continue this progress.
INTERNATIONAL SECURITY AND FOREIGN RELATIONS
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[ Fiscal years. In millions ] |
Recommended
Expenditures new
obligational
1952 1953 1954 authority for
actual estimated estimated 1954
Military and economic assistance:
Present programs $5,026 $5,775 $5, 559 $89
Mutual security program (proposed legislation) 2,000 7,600
Conduct of foreign affairs:
Overseas information and education, including acquisition
and construction of radio facilities 99 101 123 135
Participation in international organizations and other 143 159 179 187
Total 5, 268 6, 035 7, 861 8, 011
|
The magnitude and duration of future grant aid programs, and the attainment of the long range objectives of our foreign economic policy, will depend on the success of efforts to increase the level of United States imports, and United States private and public investment abroad. |
Military and economic assistance.--This Budget includes 7.6 billion dollars in new obligational authority for the mutual security program, 1.1 billion dollars more than the Congress enacted for the fiscal year 1953. This increase is required primarily because of the urgent need to help our allies meet certain critical deficiencies in equipment and supplies for their armed forces. Another factor is the necessity of expanding our efforts to deal with critical economic problems in the underdeveloped areas of the world.
As of November 1, 1952, we had shipped to our allies more than 3 billion dollars worth of weapons and military equipment, including 17,230 tanks and combat vehicles, 92,700 military transport vehicles, 1,403,213 small arms and machine guns, 19,843 artillery pieces for the ground forces, 432 naval vessels, and 2,673 aircraft. Deliveries are rising, and in the fiscal year 1954 are expected to rise still further.
In Europe, economic assistance has been an indispensable factor in expanding military forces. In the underdeveloped areas of the world, our economic and technical assistance has been an important element in helping to raise food production, improve health standards, and increase the technical knowledge needed to build stronger economic and political institutions.
Aid to Europe.--During the fiscal year 1954 our aid will enable the North Atlantic Treaty Organization to improve the combat effectiveness and increase the size of present land, naval, and air forces. A year ago, firm goals for December 1952 were set at 50 divisions, 4,000 front line operating aircraft, and 1,600 naval vessels. These goals are now being reviewed by the North Atlantic Treaty Organization in Paris.
As new units are added to the growing defense budgets of our NATO allies it becomes increasingly important to weigh carefully the added military strength achieved against the new economic burden which is incurred. European defense expenditures have more than doubled since Korea and are continuing to increase. In spite of this effort, the European nations are still unable to provide and maintain, out of their own resources, all the complex and expensive modern weapons required by their armed forces. The mutual security program helps to provide the crucial margin of resources they need.
An increasing volume of the required weapons and equipment is being purchased in Europe under United States contract. This offshore procurement is essential to the expansion of military production capacity in Europe. Such capacity will not only increase the ability of our European allies to provide their own weapons in the years ahead, but also will support prolonged combat operations in the event of aggression. During the fiscal year 1952, contracts for offshore procurement totaled 621 million dollars. In the current fiscal year, this amount is expected to nearly double. This Budget assumes a further increase in the fiscal year 1954.
Economic aid will be needed by several European countries. France will need this type of assistance in order to meet her NATO commitments and still continue her fight against the communist guerrillas in Indochina. The United Kingdom also will need economic assistance to carry forward her expanded defense effort in the face of a severe drain on her dollar reserves. Some economic aid also will be needed by other European nations to enable them to fill critical gaps in the NATO defenses.
Assistance to other areas of the free world.--In areas outside of Europe there are many friendly nations, containing nearly half of the earth's population and much of its material wealth, which are struggling against conditions that threaten their continued existence as free nations. Our economic and technical assistance is helping the people of these nations to help themselves-to develop the economic and political strength required to combat the threat of communist imperialism. Where necessary, we are also supplying military aid to help these nations resist aggression and thereby secure time for the economic changes which will make them less vulnerable to subversion.
In the Middle East, we are assisting in the relief of Arab refugees through our contribution to the United Nations refugee agency. Point Four technical assistance is being provided most countries in the Middle East to help them expand and strengthen their economies. In some instances, notably Israel and certain Arab states, this technical assistance is supplemented by limited economic aid.
In Indochina, our military assistance has been a crucial factor in strengthening the troops of France and the Associated States of Viet Nam, Laos, and Cambodia in their fight against a powerful, communist-led revolt. The security of the island of Formosa has been markedly increased. The communist-led uprising in the Philippines has been reduced to small proportions through the energetic efforts of the Philippine Government, aided by United States military equipment. Father military assistance is needed if these countries are to continue their resistance to aggression.
Our economic assistance to India and to other nations in Asia is helping them to continue the progress they have already made toward alleviating famine and disease--the necessary first steps in their efforts to improve the living conditions of their peoples. These countries can make a vital contribution to the strength of the free world if their economic development programs are given the extra momentum which outside aid can provide.
In Latin America the United States has helped finance economic development mainly through loans from the Export-Import Bank. This area also offers attractive fields for private United States investment, which in the calendar year 1951 increased by nearly 200 million dollars. In order to further economic development in Latin America, the United States has for a number of years extended technical assistance on a grant basis for certain projects undertaken jointly with Latin American governments.
Conduct of foreign affairs.--The efficient functioning of our diplomatic and consular missions, and our extensive participation in the United Nations and other international organizations, constitute vital links in the chain of international security which we are seeking to forge.
Expenditures for the conduct of foreign affairs in the fiscal year 1954 are estimated at 302 million dollars, an increase of 42 million dollars over the current year. This increase is due, first, to the fact that the dollar equivalent of foreign currencies spent by the United States is included in the 1954 estimate for the first time; second, to the added workload of investigations and clearances required by the Immigration and Nationality Act of 1952 in connection with the issuance of visas and passports in the United States and at our overseas missions; and third, to an anticipated increase in expenditures for construction of overseas radio facilities for the "Voice of America."
I have repeatedly emphasized the importance of our overseas information and education program. In this Budget I am recommending appropriations of 135 million dollars to continue and expand this vital work.
FINANCE, COMMERCE, AND INDUSTRY
The vast expansion of our productive capacity which we have achieved since Korea would not have been possible without the authority granted under the Defense Production Act. To assure further progress toward our mobilization goals, I believe it is necessary to continue this legislation through the fiscal year 1954, including authority to allocate critical materials and equipment, provide incentives for the expansion of defense production, and stabilize prices, wages, and rents. No new obligational authority will be needed to provide financial assistance for expanding defense production, but 54 million dollars has been included in this Budget for administering production and stabilization and export controls.
More than 90 percent of the 1954 expenditures for finance, commerce, and industry programs will be for the promotion of defense production and economic stabilization. These expenditures are expected to decline in 1954 as military and economic expansion goals are achieved.
Expansion of defense production .--Under the authority of the Defense Production Act and related legislation, the Government has offered a wide variety of incentives to private industry to expand defense production and to broaden the economic base for any future mobilization effort. Producers of aluminum, copper, machine tools, and other critical commodities have received long-term purchase commitments totaling about 3.5 billion dollars to guarantee markets for the output of their new facilities, and the Government has bought 1.5 billion dollars of scarce materials for resale to private business. In addition, nearly 400 million dollars in loan commitments have been made, as well as grants for the exploration of mineral resources, for the subsidization of high-cost production, and for the purchase of equipment to be leased to defense contractors. The transactions already approved total about 6 billion dollars, and additional transactions totaling 2 billion dollars have been authorized. Since most of this assistance either will not involve Government expenditures or will be repaid, the net ultimate cost is expected to be less than 800 million dollars. In addition, a substantial volume of private defense production loans have been guaranteed and large investments in defense facilities have been stimulated by permitting accelerated amortization of these investments for tax purposes.
FINANCE, COMMERCE, AND INDUSTRY
|
[ Fiscal years. In millions ] |
Recom-
Net expenditures or net mended
receipts (--) new obligational
1952 1953 1954 authority
Program or agency actual estimated estimated for 1954
Promotion of defense production and economic stabilization:
Expansion of defense production $128 $320 $200
Production and stabilization controls and other:
Present programs 48 107 2
Proposed legislation 4 50 $54
Business loans and guarantees (Reconstruction Finance
Corporation) --37 --4 --10
Promotion or regulation of trade and industry 26 26 28 28
Promotion or regulation of financial institutions --24 5 5 6
Total 241 458 275 88
Budget expenditures for expansion of defense production in the fiscal year 1954 are estimated at 200 million dollars, primarily from commitments already made. Since much of the planned expansion has been completed, new commitments are expected to decline substantially.
Small business.--The Small Defense Plants Administration, the Department of Commerce, and other Federal agencies are helping small businesses to make their full contribution to the defense effort. Under an agreement between the Small Defense Plants Administration and the Department of Defense, more than 200 million dollars in defense contracts has already been reserved exclusively for small firms. The total amount of defense contracts going to small business is, of course, substantially larger. The Reconstruction Finance Corporation has made many loans to small businesses which have not been able to obtain private credit. Nearly 300 of these loans, amounting to 37 million dollars, have been made upon recommendation of the Small Defense Plants Administration.
Business loans and guarantees.--New lending activity under the regular business loan authority of the Reconstruction Finance Corporation has been sharply reduced from the levels prevailing before Korea. The 1954 Budget assumes no significant increase in new loans. Accordingly, the Corporation plans to close a number of local offices, maintaining only small information units to provide advice and assistance to loan applicants.
TRANSPORTATION AND COMMUNICATION
Federal programs in the fields of transportation and communication are designed to help assure that these important services are adequate to meet the needs of a peacetime economy, as well as possible mobilization needs in the event of war. In carrying out these programs, the Government provides facilities and services which private enterprise cannot suitably supply, grants subsidies where authorized, and regulates economic and safety aspects of transportation and communications operations. In the fiscal year 1954, expenditures for these programs are estimated at 2 billion dollars, or 40 million dollars below the level for 1953. This reduction is due mainly to an expected decline in ship construction expenditures.
Merchant marine.--Through subsidies for ship construction and operation, the Government helps to maintain an active maritime industry adequate to the needs of defense and commerce. In recent years, this continuing subsidy program has been supplemented by emergency measures arising from defense mobilization needs. The Maritime Administration, for example, is building 35 cargo ships of advanced design to meet special defense requirements for high speed ocean transportation. This program will be largely completed during the fiscal year 1954. The reduction in expenditures for this emergency program will be partly offset by the cost of building other vessels, which I believe should be started in the fiscal year 1954. An appropriation of 108 million dollars is recommended for construction of four passenger-cargo ships needed for commercial operation on essential trade routes, and an appropriation of 11 million dollars for the construction of a prototype high-speed tanker incorporating design features important for defense operations. Experience gained from the prototype project will enable the Maritime Administration to expand construction of this type of ship rapidly in the event of a future emergency.
TRANSPORTATION AND COMMUNICATION
|
[ Fiscal years. In millions ] |
Recom-
|
Net expenditures or net mended Total 1,923 2,056 2,016 2,061 Since the outbreak of hostilities in Korea, the emergency operation of Government-owned cargo ships by the National Shipping Authority has helped to overcome a worldwide shortage of shipping capacity. As the shortage of private capacity has eased, the Government has steadily withdrawn from this operation, and has returned its ships to inactive status in the reserve fleet. By the end of the fiscal year 1954, only about 50 ships will remain in active operation under this program, as compared to a maximum of 538 during the fiscal year 1952. This Budget includes funds to maintain the reserve fleet in a condition to meet any future emergency. |
Navigation aids and facilities.--Construction of navigation facilities by the Corps of Engineers is limited in this Budget to projects already under way, and to those which should not be deferred any longer in view of national defense requirements or essential civilian needs. To permit the efficient handling of essential water-borne traffic, five new starts are recommended, including the Warrior River Lock and Dam in Alabama for the replacement of obsolete and structurally unsound locks, and harbor improvements at New York, Duluth-Superior, Redwood City, California, and Portland, Maine. In addition, an extension of the existing sea wall at the Galveston harbor project will be started to protect a highly developed urban area. These new projects will involve a total cost of 42 million dollars, of which an estimated 4 million dollars will be spent in the fiscal year 1954. Maintenance activity on existing 'projects is being held to minimum levels required to permit continued operation and prevention of excessive deterioration.
Highways.--Federal assistance for highway improvement is provided principally through grants to State and local governments. Construction activity, which had been retarded by the steel shortage and other factors, has expanded considerably in recent months. As a result, Federal-aid expenditures for highway construction are expected to increase from 417 million dollars in the fiscal year 1952 to 511 million dollars in 1953, and 540 million dollars in 1954.
The level of highway grants in any given year is determined by legislative authorizations previously enacted by the Congress and by the volume of State and local construction activity on Federal-aid road systems. Therefore there is little control over the expenditure level of this program through the Budget process. For example, the funds included in this Budget for the fiscal year 1954 represent merely an estimate of the grants that will be required to meet commitments incurred under the Federal-Aid Highway Act of 1950. The Highway Act of 1952 increased the annual authorization from 500 million dollars to 575 million dollars and will cause expenditures to increase in the fiscal years 1955 and 1956.
In addition to Federal-aid highway grants, the Bureau of Public Roads will spend 50 million dollars in the fiscal year 1954 for other highway programs, such as forest highways and access roads to defense plants, military installations, and sources of strategic materials.
Aviation.--Despite major technological and financial gains in recent years, the aviation industry is still in a developmental stage, and continues to need substantial Federal assistance in order to realize its full potential growth. Such aid is provided principally through the Federal airways program, grants-in-aid for airport construction, and airline subsidies.
In keeping with the general restriction on public works activity during this emergency, airport construction grants to State and local governments have been curtailed in recent years. With the continued growth of air traffic, serious airport inadequacies have developed. To permit increased Federal assistance for the most urgently needed projects, it is recommended that new obligational authority for this program be increased from the 14 million dollars enacted for the fiscal year 1953 to 30 million dollars for 1954.
Subsidies for airline operation are now merged with compensation for carrying mail, and are included in postal expenditures. However, recent studies by the Civil Aeronautics Board provide for the first time an official estimate of the cost of this subsidy program. For the fiscal year 1954, it is estimated that airline subsidies will amount to 71 million dollars, or slightly more than half of the total air mail payments.
Postal service.--With presently authorized rates, the postal deficit for the fiscal year 1954 is estimated at 669 million dollars, about the same as in 1953.
Unless postal rates are increased, the fiscal year 1954 will be the sixth consecutive year in which the postal deficit will exceed one half billion dollars. The largest part of these deficits results from the grossly inadequate postal rates being charged for magazines and other second-class mail, and for advertising circulars and other third-class mail.
I have repeatedly urged the Congress to relieve the taxpayers of this unnecessary burden by increasing postal rates sufficiently to reduce the postal deficit to the cost of handling Government mail, airline subsidies and other items which are properly chargeable to general tax revenues--a cost in the neighborhood of 170 million dollars.
Regulation.--Recent reductions in the appropriations for the regulatory agencies-particularly the Interstate Commerce Commission and the Federal Communications Commission--have seriously impaired their ability to carry out the responsibilities assigned to them by law. The administrative expenditures of these agencies are small in relation to the importance of their activities to the Nation's economy. This Budget provides moderate increases for these agencies to enable them to overcome serious backlogs of pending cases, and to deal more effectively with emerging new problems.
NATURAL RESOURCES
Expenditures for natural resources programs in the fiscal year 1954 are estimated at 4.1 billion dollars, an increase of 727 million dollars over the current fiscal year and 1.1 billion dollars over 1952. Almost all of this increase is in the atomic energy program, which will account for two-thirds of the expenditures for natural resources in 1954. Other major expenditures will be for flood control, irrigation, and multiple-purpose river basin development, including related power facilities. The remaining expenditures will be largely for the management and development of the national forests, parks, and public lands, and for our mineral resources programs.
The money we spend for the orderly conservation, development, and use of our natural resources represents a sound investment. In many cases the activities are wholly or partially self-liquidating. But what is more important, they contribute to our military strength and to long-range economic progress. They are prerequisite in many fields to the needed expansion of private investment. While exercising the utmost economy in these programs, I believe we should allow for some work made urgent by the continuing drain on our resource base and by the postponement of needed development during and since World War II.
Atomic energy.--Ten years ago, scientists working at the University of Chicago under Federal sponsorship brought about the world's first nuclear chain reaction. Since then, our efforts in the development of atomic energy have of necessity been devoted primarily to meeting the needs of national security. Two major expansions of facilities for the production of fissionable materials and atomic weapons have been authorized by the Congress since the attack on Korea. The first was authorized in the fiscal year 1951 and the second early in the fiscal year 1953. The rise in atomic energy expenditures results largely from construction work on the new facilities. As a result of this expansion, our ability to meet the threat of aggression will be significantly increased.
The new obligational authority which I am recommending for 1954 is substantially less than the amount enacted for the current fiscal year, because the bulk of the construction funds needed to finance the expansion programs has already been provided. However, I am recommending an increase in funds for operations. These funds will provide for increases in our reserve of atomic weapons and for the development and testing of improved weapons. I am also recommending an increase in funds for the development of atomic power for naval ships. The keel of the first nuclear-powered submarine was laid last summer. The funds recommended for aircraft reactor research will enable this program to proceed at an effective pace.
NATURAL RESOURCES
|
[ Fiscal years. In millions ] Recommended Atomic energy $1, 670 $2, 000 $2, 700 $1, 997 Total 2, 948 3, 370 4, 097 3,459 Research in the peacetime uses of atomic energy shows steady progress. We have developed new techniques in medical research, and substantial progress has been made in the fields of physics, chemistry, and biology. This research will continue in 1954. This Budget also provides for continuing research in the development of atomic reactors for the production of electric power--a program which promises to have a major impact on future power developments. |
Land and water resources.--In the fiscal year 1954, the Federal Government will spend 1.1 billion dollars for the development of land and water resources. More than half of this amount will be for the 133 river basin development projects and units now under construction by the Bureau of Reclamation and the Corps of Engineers. Much of this work is multiple-purpose development for irrigation, flood control, navigation, and hydroelectric power, creating substantial benefits for industry and agriculture and making an important contribution to defense. Seven flood control projects and seven irrigation projects or units will be substantially completed during the year.
The major part of the task of developing our river basins is still ahead of us. I believe we should no longer defer certain flood control and power projects which we have repeatedly postponed since the beginning of World War II. I am therefore recommending funds in the 1954 Budget for starting construction on eight new projects and five additions to existing projects, where planning is for the most part well advanced and where there is clear economic justification. This new work is required to protect important areas which are highly vulnerable to floods, or to meet defense or essential civilian power needs in critical shortage areas. The ultimate cost of these new projects and features is estimated at 325 million dollars, of which about 16 million dollars will be spent in the fiscal year 1954. Funds also have been included in this Budget for advance planning of some high priority projects already authorized by the Congress.
Six of the new projects I am recommending are for flood control. These include Toronto Reservoir in Kansas, and five local protection works at Wheeling-Benwood on the Ohio, Sny Basin in Illinois, Lake Pontchartrain in Louisiana, Cape Girardeau in Missouri, and on the Little Missouri River near Murfreesboro, Arkansas.
This Budget also includes funds to enable the Tennessee Valley Authority to start construction of a steam electric plant in the western part of the system, and to begin installation of additional units in the Kingston and John Sevier steam electric plants. These facilities are required to meet the growing power needs of the area for defense, industrial, and domestic purposes. I also recommend that construction be started on Ice Harbor Lock and Dam in the Pacific Northwest and that work begin on the installation of power facilities in three reclamation projects. These are the Deer Creek power plant of the Provo River project in Utah, the American Falls power division of the Minidoka project in Idaho, and the Roza power plant in the Yakima project in Washington. I also believe that the Congress should authorize the Hells Canyon power project in the Pacific Northwest.
The situation regarding the St. Lawrence project is somewhat different now from what it has been. When the last Congress did not approve the 1941 Canadian-United States agreement calling for joint construction of both the seaway and power phases of the project, Canada and the United States proceeded with alternate arrangements, under which the main river control works necessary for power development would be built by appropriate entities in the two countries, and Canada would build the necessary additional works to provide a deep waterway between Montreal and Lake Erie on the Canadian side of the international boundary. As I have repeatedly informed the Congress, I regard these alternate arrangements as much less desirable than the 1941 agreement but in the absence of congressional action they represent the only way to get the project built.
The alternate arrangements are well along. The International Joint Commission has approved the plans for the main dams and control structures in the International Rapids section of the St. Lawrence River. The Province of Ontario is ready to construct the Canadian share of these works. Applications are pending before the Federal Power Commission for a license to build the United States share. The Government of Canada is prepared to construct the waterway. Under these circumstances, the Canadian Government have informed us that they consider it no longer practicable to revert to the 1941 agreement.
I believe, however, that there is still an opportunity for the United States to join, as we should have long ago, in building the St. Lawrence seaway. If the new administration and the new Congress propose practical arrangements for sharing the cost and the construction of the seaway, I believe the Canadians will, even at this late date, admit us to partnership in the seaway. I hope very strongly that this will be done, for it is clearly in the best interest of both countries that this important waterway along our common boundary should be built and controlled by both countries together.
Water resources policy.--In the past few years I have frequently informed the Congress of the need for new concepts and procedures to modernize the outdated ways of handling our water resources development. I have supported efforts to plan and operate water resources projects on a regional basis. From time to time I have reported to the Congress that certain projects failed to meet standards for sound Federal investment, and have indicated that present Federal law is in need of clarification or revision.
In 1950, I established the Water Resources Policy Commission to examine these problems and report their findings to me. At my request, the Bureau of the Budget has been making an intensive study of the Commission's findings, recommendations, and legislative proposals, working with representatives of other Federal agencies and consulting with State and interstate bodies and private associations.
Also at my request, the Director of the Budget has recently established uniform standards and procedures to be used in reviewing proposed water resources programs and projects. These guides will strengthen and improve Executive Office review of water resources development proposals. However, major changes must be made in present Federal legislation before up-to-date policies for comprehensive development of water resources can be made fully effective.
I also suggest that the Congress may wish to study its own machinery for dealing with water and related land resources programs in order to provide a sounder basis for consideration of interrelated, multiple-purpose programs.
A year ago, I established a Missouri Basin Survey Commission to study the policies and organizational problems involved in the water resources development of this basin, the scene of two serious floods within the past two years. The forthcoming report of this Commission should make a substantial contribution to the sound program planning and improved administration needed for the balanced development of this large basin.
AGRICULTURE AND AGRICULTURAL RESOURCES
Our agricultural programs are designed primarily to achieve three related goals: first, to preserve a healthy farm economy; second, to conserve and improve our soil resources; and third, to assist farmers in attaining the high level of production necessary to meet the food and clothing needs of our people.
Net expenditures for agricultural programs in the fiscal year 1954 are estimated at 1.8 billion dollars, 116 million dollars lower than the estimate for the current fiscal year.
Stabilization of farm prices and income.-Expenditures for stabilization of farm prices and income are made under the agricultural price-support program, the International Wheat Agreement, the permanent appropriation for removal of surplus agricultural commodities, the Sugar Act, and the Federal crop insurance program.
Net expenditures for price support, made by the Commodity Credit Corporation, represent primarily the excess of outlays for loans and purchases over loan repayments and proceeds from sales of inventories. Whether the Corporation has net receipts or net expenditures in any particular fiscal year depends mainly on factors affecting the supply and demand for commodities under price support--such as the acreage planted, weather conditions, food needs in this country and abroad, and general economic conditions. Estimated expenditures of 729 million dollars in 1954, including the costs of the International Wheat Agreement, are 72 million dollars below the current estimate for 1953. This is due largely to an expected decline in outlays for wheat, offset in part by increased outlays for corn. The substantial change between the net receipts in 1952 and the large estimated expenditures in 1953 is accounted for mainly by the increase in corn and wheat production and the decrease in wheat exports between the two years.
AGRICULTURE AND AGRICULTURAL RESOURCES
|
[ Fiscal years. In millions ] |
Recom-
Net expenditures or net mended
receipts (--) new obligational
1952 1953 1954 authority
Program or agency actual estimated estimated for 1954
Stabilization of farm prices and farm income:
Price support, supply, and purchase programs (including the
International Wheat Agreement) --$70 $801 $719 $2.87,
Removal of surplus agricultural commodities 38 67 75 173
Sugar Act 60 65 65 65
Federal crop insurance 7 6 5 8
Agricultural production programs 10 10 8 8
Financing farm ownership and operation:
Farm Credit Administration and agencies 92 70 49 49
Farmers' Home Administration 167 173 175 175
Disaster loans 13 22 -5
Financing rural electrification and rural telephones 244 233 239 209
Agricultural land and water resources:
Agricultural conservation program (Production and Market-
ing Administration) 274 275 254 252
Soil Conservation Service, flood prevention, and other 67 74 79 82
Research and other agricultural services 143 147 154 152
Total 1, 045 1, 943 1, 827 1, 455
|
The present International Wheat Agreement expires on July 31, 1953• Further negotiations for its extension will be undertaken this month. This Budget assumes that United States participation in the Agreement will be continued. |
Financing farm ownership and operation.--Agricultural credit programs supplement private credit sources. The loan programs of the Farmers' Home Administration help new farmers and low-income farmers unable to obtain credit from other sources to develop and operate efficient family-size farm units. Despite the numerous applications for these loans, other budgetary requirements impel me to recommend that the program be kept to approximately the same level as in the fiscal year 1953.
The programs supervised by the Farm Credit Administration--including the activities of the Federal land banks, Federal intermediate credit banks, production credit corporations, and banks for cooperatives-are also directed toward achieving more efficient family-size farm operations, and toward the development of farmers' cooperatives.
Financing rural electrification and rural telephones.--The rural electrification program has made great strides since its inception in 1935. Less than 11 percent of all farms had the benefit of central station electric service in that year; less than 12 percent were without this service on June 30, 1952. The loan program which I am recommending for rural electrification is 30 million dollars less than in 1953, but it allows 135 million dollars for further progress toward bringing electricity to the Nation's farms.
The 1950 census showed that only 38 percent of our farms had telephones--a smaller percentage than in 1920. Furthermore, many farms with telephones had unreliable service. I am therefore recommending an increase of 30 million dollars in the loan program for rural telephones.
Conservation of agricultural land and water resources.--From the long-run view, conservation of our soil resources is the most important of our agricultural goals. Without adequate conservation measures, neither a high level of production nor a healthy farm economy can be long maintained.
For this reason I recommend that the advance authorization for the agricultural conservation payments program in the crop year 1954 be continued at the 250-million-dollar level authorized by the Congress for the 1953 crop year. I am also recommending an increase of 2 million dollars in the Soil Conservation Service appropriation to provide technical services to new soil conservation districts, which are being established at the rate of about 125 each year. This is the minimum program which I feel is compatible with the sound management of our soil resources.
Effective soil and water conservation is an indispensable part of our Nation's efforts to prevent and control floods. By increasing the amount of water held on the land on which it falls, by slowing the rate of runoff, and by controlling the course which the water takes in major watersheds, we not only prevent loss and improve the productivity of the soil, but we also lessen the danger of flood damage and siltation on the main streams. Thus far, however, flood prevention efforts of this kind in the upper reaches of our rivers have generally lagged behind the flood control work we have been doing on the main streams. For that reason this Budget recommends appropriations of 22 million dollars to accelerate upstream flood prevention work, compared with 8 million dollars in the current fiscal year. Fourteen million dollars of the total amount recommended for 1954 will be allotted to the 11 watersheds on which work was begun in 1947; 8 million dollars will be for work to be started on seven new watersheds and for investigations and surveys. The commencement of work on the new watersheds is recommended because it will not only have important flood prevention and conservation benefits, but also because it will enhance the value of downstream projects constructed by the Corps of Engineers, the Bureau of Reclamation, and non-Federal interests. The 18 watersheds on which work is either being done or is proposed in this Budget represent only a small fraction of the agricultural and forest lands on which work needs to be done.
Research and other agricultural services.-Expenditures for research and other continuing basic services for agriculture, such as extension work and insect and pest control, are expected to increase from 147 million dollars in the fiscal year 1953 to 154 million dollars in 1954. This is due largely to construction of the laboratory for research on foot-and-mouth disease for which the Congress appropriated funds last year. Also, I am recommending increases in a few of the most essential research activities, such as the Federal grant to State experiment stations, marketing research under the Agricultural Marketing Act, and research on plants and animals and on insect and disease control.
LABOR
The labor programs of the Federal Government help to promote the effective use of our manpower resources, which is necessary for the strengthening of our military defenses and for the continued vigorous growth of our economy. These programs furnish basic economic protection to the working force against the hazards of unemployment, safeguard workers against substandard wages and working conditions, bring together the job opportunity and the job seeker, and speed the movement of manpower into defense industries.
In the fiscal year 1954, expenditures for labor programs are estimated at 268 million dollars. Eighty percent of this amount will be for direct grants to the States for the administration of employment service and unemployment compensation programs, including the recently established unemployment compensation program for veterans. Increases in these grants will account for most of the rise in labor expenditures over 1953. Small increases are recommended to strengthen Federal labor-management relations activities and to enable the Department of Labor to cooperate with the States in finding more effective ways to deal with the distressing economic and social problems of migratory farm workers and their families. In addition, increases in appropriations for employment service, industrial safety, and apprentice training programs are recommended to enable the Department to continue work previously financed through a special appropriation for defense production activities.
Placement and unemployment compensation administration.--Part of the estimated increase in grants to the States for administration of unemployment compensation is due to changes in legislation. The Veterans' Readjustment Assistance Act of 1952 provides for unemployment compensation payments to veterans who do not find work after release from the armed forces. These payments are administered through State employment security agencies under agreements with the Secretary of Labor. Another factor in the increase is that the cost of administering the Federal-State unemployment compensation program is greater because State salary rates continue to increase and the expanded coverage under State laws results in more claims for unemployment compensation even though the general level of unemployment remains low. Finally, experience now indicates that a higher claims load than was assumed in the last Budget will develop in 1953 and continue in 1954, as a result of temporary unemployment due to industry-by-industry adjustments. These increased workloads, which could not be foreseen at the time the 1953 Budget was prepared, will require a supplemental appropriation tentatively estimated at 6.7 million dollars for grants to the States in the fiscal year 1953.
Although some State unemployment compensation programs have been strengthened by extending coverage, there is still need for basic improvements in the Federal-State system along the lines I have previously recommended.
LABOR
|
[ Fiscal years. In millions ] Recommended Placement and unemployment compensation administration: Total 243 252 268 278 More attractive job opportunities in industry for the domestic labor force make necessary the recruitment of additional workers from Mexico for seasonal farm employment. These workers are brought in under conditions which protect them from exploitation and protect the employment opportunities and labor standards of available United States workers. About 275,000 Mexican workers will be needed to meet farm production requirements in 1954. Legislation authorizing such recruitment expires on December 31, 1953. I believe it will be necessary to continue this program. |
Labor standards and training.--Increasing defense production has reversed a downward trend in accidents on the job. In 1951, more than 2 million workers were injured, resulting in a loss of 140,000 man-years of working time. To reduce these individual tragedies with their accompanying losses to national production, the Department of Labor is planning to intensify its safety training program in cooperation with safety organizations, private industry, and State and other Federal agencies. Provision also is made in this Budget for enforcement of the recently enacted Coal Mine Safety Act.
The Bureau of Apprenticeship will continue to encourage and assist in establishing training programs for apprentices needed to meet critical shortages in skilled occupations essential to defense production. Greater emphasis will be given to general programs for training semiskilled and unskilled workers on the job to increase their productivity and skills in a wide variety of defense production occupations.
The report of the Commission on Migratory. Labor in 1951 pointed up the unique social and economic problems of migratory farm workers, which call for special attention by Federal and State governments and local communities. That report has stimulated increased interest and action by a number of States. This Budget includes 156 thousand dollars to enable the Department of Labor to start a program of cooperation with the States in developing more effective ways to bring to these workers and their families a reasonable share of the advantages normally enjoyed by other citizens.
Unemployment trust fund.--Receipts of the unemployment trust fund in the fiscal year 1954 are expected to be slightly higher than in 1953. Benefit payments are also expected to be slightly higher, because more unemployed workers will be eligible for benefit payments under the expanded coverage of State laws, even though it is assumed the level of unemployment will remain low. These receipts and payments are not included in the Budget totals.
UNEMPLOYMENT TRUST FUND
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[ Fiscal years. In millions ] Item 1952 1953 1954 HOUSING AND COMMUNITY DEVELOPMENT |
The Federal Government, by insuring and guaranteeing private loans, has helped to finance the construction of nearly half of the 7 million new homes built since the end of World War II, as well as the purchase and improvement of many million existing homes. A large number of these units has been bought by veterans of World War II with the assistance of loans guaranteed by the Veterans Administration. Since the attack on Korea, special emphasis has been placed on providing housing and community facilities in critical defense areas. The record levels of construction both before and since June 1950 have materially improved the housing of the average American citizen. Adequate housing is still unavailable, however, for millions of low-income families.
Net expenditures for housing and community development in the fiscal year 1954 are estimated at 509 million dollars, a decline of 248 million dollars from the current fiscal year. Principal factors in the expected decline are a lower volume of mortgage purchases and direct loans for veterans' housing, and substantial net receipts instead of expenditures for the public housing programs.
Defense housing and community facilities.--To help meet the most urgent defense requirements, Federal assistance has been granted or is planned for about 200,000 new housing units in critical defense housing areas and near military posts. Private builders are constructing most of these homes with the aid of liberal Federal mortgage insurance backed in many cases by Federal mortgage purchase commitments.
In those areas where private builders, even with these special financing aids, are unable to provide the needed housing, the Federal Government is supplying 19,000 temporary units to meet short-term needs near defense installations. Federal grants and loans are also helping local communities to finance the expansion of community facilities where defense activities have made such expansion necessary. To provide a small part of the additional temporary housing units urgently needed near military installations, I am recommending supplemental appropriations of 12.5 million dollars for the current fiscal year. Moreover, since it is now apparent that we cannot complete the needed minimum program before the Defense Housing and Community Facilities Act expires next June 30, I believe that the major provisions of the act should be extended for another year, with increased authorizations and additional appropriations of 100 million dollars.
Aids to private housing.--Most of the private housing built in critical defense housing areas is being financed with mortgages insured by the Federal Housing Administration. Since the successive relaxations of real estate credit controls in 1951 and 1952, applications for Federal insurance of mortgages in other areas have been rising steadily. If this trend continues, it is expected that there will be a need in the fiscal year 1954 for mortgage insurance commitments to finance nearly 300,000 new housing units. In addition, it is estimated that there will be a need for the Federal Housing Administration to insure mortgages covering purchases of more than 200,000 existing houses and 2 million other loans for improvement and repair of existing housing. To meet these needs will require increases of 1.5 billion dollars in the maximum mortgage insurance authorizations and 500 million dollars in the authority to insure property-improvement loans. Neither of these steps is likely to increase Budget expenditures, since the premiums paid for the insurance usually exceed administrative expenses and losses.
HOUSING AND COMMUNITY DEVELOPMENT
|
[ Fiscal years. In millions ] |
Net expenditures or net Recommended
Program or agency receipts (--) new obliga-
tional
1952 1953 1954 authority
Defense housing and community facilities: actual estimated estimated for 1954
Present programs $12 $77 $29
Proposed legislation 50 $100
Aids to private housing:
Housing and Home Finance Agency:
Federal National Mortgage Association 458 460 354
Federal Housing Administration --29 --38 --63
Other -- 15 -- 26 --23
Veterans' housing loans (Veterans Administration) 70 86 --12
Farm housing (Department of Agriculture) 22 19 19 19
Reconstruction Finance Corporation -- 6 --7 --7
Public housing programs 136 18 --48 51
General housing aids:
Housing and Home Finance Agency:
College housing loans 1 22 40
Other 10 7 6 5
Urban development and redevelopment, 6 17 33 350
Provision of community facilities 9 31 51 16
Civil defense 33 84 74 150
Disaster loans and relief 28 13 6
Total 735 757 509 691
|
The Federal National Mortgage Association is authorized by law to purchase certain mortgages insured by the Federal Housing Administration or guaranteed by the Veterans Administration. The Veterans Administration also has authority, until June 30, 1953, to make direct loans to veterans in areas where guaranteed loans are not readily available. Over the past two years, both substantial purchases of veterans' housing mortgages and direct housing loans to veterans have been necessary, because the 4 percent interest rate on the guaranteed mortgages has been unattractive to many private lenders. The expenditure estimates in this Budget assume that under the restrictive policies adopted last fall a smaller volume of veterans' mortgage purchases will be necessary in the fiscal year 1954. Purchases of defense housing mortgages are expected to increase under the additional authority provided by the Congress last summer. |
Public housing.--Since the attack on Korea, the low-rent public housing program has been held far below the average annual level of 135,000 starts authorized in 1949. For the fiscal year 1953, the Congress has limited the program to 35,000 new units, which will meet only a small part of the needs of low-income families now living in substandard units. For the fiscal year 1954, I am including in this Budget, as I did for 1952 and 1953, provisions for starting a minimum of 75,000 new units.
In this program, local authorities construct and operate the housing units. The Federal Government lends the authorities money or underwrites private loans to start construction, and pledges an annual contribution to help maintain the rents at levels which the tenants can afford. During the fiscal year 1954, the local authorities expect to sell substantial amounts of long-term bonds to private investors, using the proceeds to repay short-term loans from the Federal Government. As a result, receipts are expected to exceed expenditures for new loans under this program. In addition, the Public Housing Administration plans to sell 16,000 war housing units built during World War II. This will mean a further increase in receipts.
College housing loans.--In May 1950, the Congress authorized 300 million dollars in loans to help educational institutions obtain adequate housing for their students and faculty. This program has been held at low levels and has been confined to defense-related housing construction. However, applications for loans which qualify under these limitations have been increasing, and expenditures are expected to rise substantially in the fiscal year 1954.
Urban development and redevelopment.-The broad program for slum clearance and urban redevelopment authorized by the Housing Act of 1949 has been moving slowly, partly because of the time required by the local communities to make specific plans for projects which meet both local needs and Federal requirements. At present, about 180 cities are actively planning projects, but actual clearance and redevelopment operations have begun on only 23 approved projects in 14 cities. By the end of the fiscal year 1954, it is expected that 10 projects will be completed and about 110 others will be under way.
Under the original statute, additional loan and grant authority totaling 350 million dollars becomes available in the fiscal year 1954. However, because of the limited progress of the program to date and the plans to use private funds to replace most of the direct Federal lending, expenditures are estimated at only 33 million dollars.
Civil defense.--Recent advances in the techniques of warfare make it imperative that we immediately provide the essentials of a civil defense program. I have repeatedly warned that failure to do so could leave a fatal gap in our security structure. Passive civil defense of the World War II type cannot be effective against atomic warfare. Rather, the emphasis must shift to strong pre-attack measures, the success of which depend largely on advance warning. In this Budget, therefore, I am recommending appropriations which would enable the Federal Government to complete the air-raid warning system in the 191 cities which are likely to be principal targets in the event of an enemy attack on the United States. Because the effectiveness of civil defense organizations and techniques depends so directly on an adequate Nation-wide warning system, the Federal Government should pay the full cost of the warning program. The Government also should continue to accept full financial responsibility for the stockpiling of a national reserve of medical and engineering supplies and equipment. The present 50 percent matching arrangement should continue for other civil defense programs, since primary responsibility for organization and training of voluntary forces remains with the States and cities.
I am recommending total appropriations of 150 million dollars for civil defense in the fiscal year 1954. Because of anticipated delays in deliveries of medical and engineering supplies, expenditures are expected to decline from 84 million dollars in the current fiscal year to 74 million dollars in 1954.
EDUCATION AND GENERAL RESEARCH
Expenditures for education and general research in the fiscal year 1954 are estimated at 288 million dollars, an increase of 16 million dollars from the present fiscal year. These expenditures, of course, do not include the amounts spent for education and research in carrying out military, veterans', atomic energy, and other programs.
Sixty-five percent of the expenditures for education and general research in the fiscal year 1954 will be for grants to those local school districts that have been overburdened by defense activities. Another 10 percent will be for grants to States to help support their vocational education programs and their land-grant colleges. The Federal Government also assists Howard University and educational institutions for the deaf and blind, and it maintains major library and museum services at the National Capital. Expenditures for general purpose research are for the work of the Census Bureau, the National Bureau of Standards, and the National Science Foundation.
Promotion of education.--Payments to help build schools in districts overburdened by Federal Government activities and for children living on Federal property are estimated at 140 million dollars in the current fiscal year and, because of the expiration of the law authorizing these payments, will decline to an estimated 111 million dollars in 1954. Under present law, payments will be made only on applications filed before last July, and expenditures will be made from appropriations now available. Nearly 1,000 school districts are being helped to build more than 1,200 schools under this program.
Payments for school operating costs in overburdened districts and for children living on Federal property are estimated at 76 million dollars in the fiscal year 1954, a rise of nearly 25 million dollars over 1953. The increase results largely from the fact that enrollments and costs per pupil are rising. This program covers more than a million children in 2,600 school districts. The law authorizing these payments will expire on June 30, 1954.
EDUCATION AND GENERAL RESEARCH
[ Fiscal years. In millions ]
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Recommended Total 171 272 288 177 These programs to aid school districts affected directly by defense activities have been very useful. They do not, of course, help the thousands of other school districts which are struggling with the problems of overcrowded schools, underpaid teachers, and obsolete or inadequate buildings. I hope the Congress will consider ways and means of helping the States to meet these needs. |
National Science Foundation.--The National Science Foundation was created by the Congress in recognition of the need to formulate an adequate scientific research policy for the Nation, to remedy gaps in our basic scientific knowledge, and to overcome shortages of specialized manpower. However, sufficient funds have not been appropriated to permit the Foundation to perform these functions effectively. As I have pointed out in previous Messages, the Foundation should become the primary instrumentality through which the Federal Government gives support to basic research that is not directly related to the statutory functions of other Federal agencies. For this reason, the appropriation recommended for the Foundation in 1954 contains amounts for support of basic research and for fellowships which would otherwise be included in the estimates of other departments and agencies.
I urge the Congress, in the light of these considerations, to provide the Foundation in the fiscal year 1954 the full 15 million dollars authorized by present law. The law should be amended so as to permit a higher level of appropriations in the future.
Census Bureau.--Expenditures for census work will rise substantially in the fiscal year 1954 because the Census Bureau will take the basic 5-year censuses of business, transportation, manufactures, and mineral industries, and will begin preliminary work on the 1954 census of agriculture. As a result of improvements in the methods of collecting and compiling data, the total expenditure for the censuses of business and manufactures will be less than the last time they were taken despite increases in salary rates and other costs.
SOCIAL SECURITY, WELFARE, AND HEALTH
Expenditures for social security, welfare, and health are estimated at 2.6 billion dollars in the fiscal year 1954, approximately 15 million dollars less than the estimate for the current year. The chief factor in the expected decline is a drop in expenditures for hospital construction.
More than half of the expenditures for social security, welfare, and health are in the form of Federal grants to the States for public assistance. Most of the grants are for assistance payments to the needy aged. At present, 20 percent of the people over 65 years of age depend on this program for support.
Railroad retirement.--Budget expenditures for railroad retirement are mainly transfers of railroad payroll taxes to a trust account. The expenditures for the fiscal year 1954 also include approximately 35 million dollars as the final installment of a 1949 appropriation of 167 million dollars from general revenues to the railroad retirement account to cover the cost of granting railroad workers credit for time spent in military service during World War II.
Public assistance.--The Federal Government makes grants to the States to pay part of the cost of monthly payments to four categories of people in need--the aged, the blind, the permanently and totally disabled, and dependent children. In the fiscal year 1954, these grants are estimated at 1.3 billion dollars, the same as in the current fiscal year. Although the number of beneficiaries on State and local rolls is somewhat lower than last year, individual payments have been rising steadily. This reflects action by the States to cover earlier increases in the cost of living and to provide more adequate relief. It also reflects congressional action last summer increasing Federal contribution rates, effective from October 1, 1952, for a period of two years.
SOCIAL SECURITY, WELFARE, AND HEALTH
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[ Fiscal years. In millions ] Recommended Retirement and dependents insurance (Railroad Retirement Total 2,491 2,594 2, 579 2, 563 The need for public assistance should decline as more and more people acquire the protection of old-age and survivors insurance and qualify for higher benefit payments. Eighty percent of the gainfully employed people in the United States are now covered by this insurance. These people can look forward to monthly benefits in their old age as a matter of right, and at their death their dependents may also be entitled to monthly payments. This system of contributory social insurance was designed as our principal instrument for providing social security. It is now beginning to achieve that position. At present, the total of old-age and survivors insurance benefits is about equal to the combined expenditures of the Federal, State, and local governments for public assistance payments for all persons in need. Further improvements in our social insurance program should be made; they will quicken the rate at which public assistance can be reduced to its intended role as a second line of defense against want, filling gaps in the social insurance program. |
Promotion of public health.--Federal expenditures for all public health programs-exclusive of medical care for military personnel and veterans--are estimated at 309 million dollars in the fiscal year 1954. About half of this amount will be for grants-in-aid to State governments and local communities for hospital construction, general health services, maternal and child health, and the control of such major diseases as tuberculosis, venereal disease, cancer, mental illness, and heart ailments. Other expenditures are for operation of Public Health Service hospitals, for payments to medical schools and universities for medical research and training, and for clinical and laboratory research conducted by the Federal Government. This Budget also includes appropriations for grants administered by the National Institutes of Health to private and public institutions for construction or major alteration of medical research facilities.
The expected decline in expenditures for these programs is due to several factors. Federal payments for hospital construction grants are expected to be 32 million dollars less because of prior year reductions in new obligational authority. Construction outlays for health research facilities are expected to drop by 11 million dollars with completion of the clinical research center during the current year. These decreases will be partly offset by increases in expenditures for research.
Several problems in the health field require congressional attention. We do not have enough doctors, dentists, and nurses to serve the whole population. Many localities are without adequately staffed health offices. Measures are needed to bridge the financial gap between good medical care and the average family's ability to pay for it. The Commission on the Health Needs of the Nation, which I established a year ago to study and report on long-term health requirements, has now published its findings and recommendations. I urge the Congress to give this report prompt and careful study to the end that appropriate action may be taken to meet our national needs.
Aid to special groups.--Essential improvements in hospital, school and employment services for our 400,000 native Indians will require some increase in expenditures these services in the fiscal year 1954. Most of this is for a program to provide Indiana with training for employment in industry and agriculture and to help them make satisfactory adjustments in new locations. A small increase is recommended for the Federal-State vocational rehabilitation program, which now helps about 65,000 disabled persons annually to become capable of gainful employment. Under another federally aided program, low-priced school lunches are now available to one-fourth of our school children.
SOCIAL SECURITY, WELFARE, AND HEALTH
(Trust funds)
[ Fiscal years. In millions ]
Fund and item 1952 1953 1954
actual estimated estimated
Federal old-age and survivors insurance trust fund:
Receipts:
Appropriation from general receipts $3, 569 $4, 000 $4 198
Interest and other 363 435 482
Payments of benefits and administration expenses --2, 067 --2, 650 --3, 169
Net accumulation 1, 865 1, 785 1,611
Balance in fund at close of year 16, 590 18, 375 19, 986
Railroad retirement account:
Receipts:
Transfers from Budget accounts 768 684 695,
Interest 79 90 98
Payments of benefits, salaries, and expenses --391 --466 --482
Net accumulation 456 308 311
Balance in fund at close of year 2, 901 3, 209 3,520
Federal employees' retirement funds:
Receipts:
Employee contributions 418 434 400
Transfer from Budget accounts and other 310 321 430
Interest 189 215 250
Payments of annuities and refunds, and expenses --300 --367 --384
Net accumulation 617 603 696
Balance in funds at close of year 5,054 5,657 6, 353
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Trust funds.--Each of the three major civilian retirement systems sponsored by the Federal Government is financed through a separate trust fund with payroll contributions as the principal source of revenue. For the fiscal year 1954, receipts in these trust funds are expected to exceed the benefit payments by 2.6 billion dollars. This will raise the balances in the three accounts to nearly 30 billion dollars. It is desirable to build up reserves now because the cost of benefits will increase over the years as more and more people become eligible for retirement. The interest earned by the reserves which are being accumulated will help to meet this future cost. |
In the case of old-age and survivors insurance, present law provides for gradual increases in the tax rate. Effective January 1, 1954, the rate is scheduled to rise from 1 1/2 percent to 2 percent each on employers and employees.
The receipts and payments of these trust funds are not included in the Budget totals.
VETERANS' SERVICES AND BENEFITS
In the fiscal year 1954, the Federal Government will spend an estimated 4.6 billion dollars for a wide variety of veterans' services and benefits, ranging from medical and readjustment assistance to service pensions and burial benefits. These services and benefits are provided to veterans or dependents of veterans who died or were disabled in the service, and in many instances also to veterans without service-connected injuries or to their families.
Expenditures for veterans' programs have declined 38 percent from the post-World War II high of 7.4 billion dollars. However, the total for 1954 continues at about the 1953 level, and the outlook for future years is for increases rather than decreases.
VETERANS' SERVICES AND BENEFITS
|
[ Fiscal years. In millions ] |
Recommended
Expenditures new obli-
gational
1952 1953 1954 authority
Program or agency actual estimated estimated for 1954
Compensation and pensions $2, 178 $2, 444 $2, 546 $2, 546
Insurance and servicemen's indemnities 216 102 66 62
Hospitals and medical care: 661 660 691 717
Current expenses
Hospital construction 123 103 83 100
Readjustment benefits:
Education and training 1, 325 854 809 810
Other (Veterans Administration and Department of Labor) 122 144 158 158
Other services and administration (Veterans Administration and
other) 238 239 211 224
Total 4, 863 4, 546 4, 564 4, 617
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Two main factors point to an upward trend in expenditures. The basic factor is the rapid growth of the veteran population. Since 1940 the number of veterans has increased from 4.3 million to approximately 19.8 million. New veterans are now being discharged at a rate of approximately one million a year. If our armed forces continue at their present size, most of the people in the United States will eventually be veterans or dependents of veterans. |
Compensation and pensions.--It is estimated that an average of 3,348,000 individuals and families will receive veterans' compensation and pension payments totaling more than 2.5 billion dollars in the fiscal year 1954. Expenditures for these programs are increasing steadily. Even if no new legislation is enacted and no allowance is made for a further increase of the veteran population, it is estimated that expenditures for veterans' compensation and pensions will double in the next 30 to 40 years.
Insurance and servicemen's indemnities.-Under the Servicemen's Indemnity Act of 1951 the Government pays 10 thousand dollars to the family of each serviceman who dies on duty or within 120 days thereafter. This supersedes the optional system of national service life insurance. In the case of policyholders who acquired national service life insurance or United States Government life insurance before the indemnity law was enacted, the Government continues to reimburse the trust funds for deaths traceable to war hazards. Expenditures for indemnities are expected to rise from about 6 million dollars in the fiscal year 1952 to nearly 15 million dollars in 1954, while Government payments to the insurance funds are expected to decline from 210 million dollars to 51 million dollars.
Hospital and medical care.--The increase in current expenses of the veterans' hospital and medical program reflects the opening of new hospitals being completed under the construction program authorized after World War II. My Budget recommendations for the fiscal year 1954 provide for an estimated daily average beneficiary load of 136,250 in veterans' hospitals, in contract hospitals, and in State homes. By June 30, 1954, the Veterans Administration is expected to have in operation 170 hospitals and 17 domiciliary homes. This Budget includes a recommendation for new obligational authority of 80 million dollars to build the final four hospitals in the current construction program, and an million dollars for modernization, improvement, and repair of existing hospitals.
Readjustment benefits.--Expenditures for readjustment benefits in the fiscal year 1954 are expected to decline slightly from the level now estimated for 1953. Expenditures for benefits to World War II veterans are declining, but outlays for benefits to veterans of the Korean conflict are rising, because the Veterans' Readjustment Assistance Act of 1952 extended to the veterans of the current emergency benefits similar to those which had been provided under the "GI bill" to World War II veterans. In the fiscal year 1954 it is estimated that about 70 percent of the readjustment expenditures will be for benefits under the new law.
The estimated 1954 expenditures provide for an average enrollment in school, job, and farm training courses of 715,000 veterans, of whom 475,000 are expected to be veterans of the Korean conflict. They also provide for unemployment allowances of 47 million dollars under the new law for an estimated weekly average of 55,200 veterans, and 75 million dollars to cover interest gratuities and losses under the veterans' loan guarantee program. It is expected that 368,000 new loans totaling 3.1 billion dollars will be guaranteed during the year.
Trust funds.--Under the national service life insurance and United States Government life insurance trust funds, 50 billion dollars of insurance continues in force in about 7 million policies issued before the Servicemen's Indemnity Act of 1951. In the three fiscal years 1952 through 1954, expenditures from these funds are expected to exceed receipts by a decreasing margin as special dividend payments decline. The receipts and payments of these trust funds are not included in the Budget totals.
VETERANS' LIFE INSURANCE FUNDS
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(Trust funds) [ Fiscal years. In millions ] 1952 1953 1954 Total 877 717 666 Expenditures: Total 1, 088 787 710 GENERAL GOVERNMENT |
Expenditures in the general government category are largely for making and enforcing laws, collecting taxes, managing the public debt, administering Federal records and property, and for payments to the Civil Service retirement trust fund.
Expenditures for general government are expected to increase from 1.4 billion dollars in the current fiscal year to 1.5 billion dollars in the fiscal year 1954. The increase is chiefly due to higher Federal payments to the Civil Service retirement system and to increased expenditures for maintenance and repair of Government buildings.
Federal financial management.--Under the reorganization plan approved by the Congress last March, the Bureau of Internal Revenue has reconstituted its Washington office, decentralized certain supervisory functions to 17 newly established districts, and made its inspection service independent of the rest of the Bureau. Well-qualified personnel have been selected to fill the key positions, all of which, except the position of Commissioner of Internal Revenue, are now part of the classified civil service. These steps, by strengthening supervision and more clearly defining responsibilities, should not only tighten enforcement of the revenue laws, but also permit the Bureau to give better assistance to taxpayers. This Budget provides for increased activity in the collection of delinquent taxes.
Large numbers of savings bonds purchased during World War II are now reaching maturity. The owners of most of these bonds are continuing to hold them under the extension program authorized in 1951. Nevertheless, more than one-quarter of these bonds are being presented for redemption. These redemptions, plus an increase in current sales of new savings bonds, have sharply increased the workload of the Bureau of the Public Debt. I am therefore recommending an increase in the Bureau's appropriation.
Central property and records management.--Under the Federal Property and Administrative Services Act of 1949, as amended, the General Services Administration has taken major steps to manage more efficiently the buildings owned or operated by the Federal Government, to buy more economically the items used by many Government agencies, and to reduce materially the cost of handling and storing Government records.
The sharp reductions in appropriations last year have made it impossible to maintain and operate public buildings properly. I am therefore recommending an increase to restore these services to levels more nearly adequate--but still below those maintained by operators of comparable private buildings. I am also recommending increases to permit necessary repairs to Government buildings, to finance the first installment of a three-year program for modernizing major post office facilities in the interests of increased efficiency, to extend the central procurement of common-use items, and to obtain the increased savings that may be expected from wider use of surplus equipment and supplies. The funds recommended in this Budget would also finance the last two of ten record centers started two years ago, and thus would complete a program which has already made large savings through better utilization of space and release of filing equipment.
GENERAL GOVERNMENT
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[ Fiscal years. In millions ] |
Recommended
Expenditures new obli-
gational
1952 1953 1954 authority
Program or agency actual estimated estimated for 1954
Legislative and judicial functions $70 $76 $77 $75
Executive direction and management 9 8 7 7
Federal financial management:
Tax collection 270 273 281 273
Customs collection, debt management, and other 168 173 186 182
Other central services:
Central property and records management 191 164 205 202
Civil Service Commission 20 21 21 20
Other 24 22 23 40
Retirement for Federal civilian employees 313 324 430 430
Protective services and alien control:
Federal Bureau of Investigation 91 70 76 77
Immigration and Naturalization Service 40 441 47 48
Other 33 21 21 21
Territories, possessions, and District of Columbia 50 59 59 59
Other general government:
Payment of claims and relief acts (Treasury Department) 76 76 65 (1)
Weather Bureau 26 27 27 28
Other 30 30 11 16
Total 1, 411 1, 385 1, 547 1, 478
1Less than one-half million dollars.
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Civilian personnel management.--The great improvements made in the Federal civilian service in recent years have brought us nearer to our goal of a real career service throughout the Government, in which all appointments and promotions are based on merit and the conditions of employment provide positive incentives to honest, efficient work. To continue this progress, the funds proposed in this Budget would increase the proportion of placements made through competitive examinations conducted by the Civil Service Commission and boards of examiners in the agencies, extend the Commission's inspections of personnel management in the agencies, and bring certain overseas personnel under the competitive civil service. |
The Classification Act of 1949 authorized a limited number of positions in grades GS-16, 17, and 18 created under that act. This authorization has been amended by a series of subsequent enactments, frequently in appropriation acts, each allowing a few positions for selected agencies and programs. The lack of consistency in these several statutes constitutes an obstacle to effective management and should be eliminated through the enactment of a single general authorization covering the requirements of all executive branch agencies. For this reason, appropriation requests do not include authority to individual agencies for additional positions in these grades.
Retirement for Federal civilian personnel.--I am recommending appropriations of 427 million dollars to cover the Government's obligations to the Civil Service Retirement and Disability fund and 3 million dollars to pay annuities under special laws. The Government's obligations to the Civil Service Retirement and Disability fund include 59 million dollars to cover the cost for 1953 and 1954 of the temporary increase in benefits voted last summer for persons then receiving annuities from the Civil Service retirement system, and 368 million dollars for its contribution as employer for the fiscal year 1954. The amounts I am recommending do not provide for payments on the Government's outstanding liability to the fund, since this is one of the problems to be studied by the Committee on Retirement Policy for Federal Personnel recently established by the Congress.
Protective services and alien control.--The Immigration and Nationality Act, which became effective on December 24, 1952, has considerably expanded the responsibility of the Department of Justice and other departments in such fields as investigation, deportation, inspection, and naturalization. The law also expands Federal controls over alien crewmen and registered aliens, increases visa requirements, and adds new grounds for exclusion and deportation. Also, the Government must pay almost all of the costs of detention, hospitalization, and deportation which were previously borne in part by private carriers. To finance the substantial increases in staff necessary to administer the new law, as well as to strengthen enforcement along the Mexican border, it is recommended that the appropriation for the Immigration and Naturalization Service be increased to 48 million dollars in 1954, and that a supplemental appropriation of 1.7 million dollars be enacted for 1953.
I continue to believe that the new law contains many provisions that are unwise, unfair, and incompatible with our foreign policy objectives. The Commission on Immigration and Naturalization has now published its findings and recommendations. I urge the Congress to give them its prompt attention.
INTEREST
Interest payments constitute a large and growing charge on the Budget. They represent mainly the current cost of the fivefold increase in our public debt which occurred as a result of World War II. As fixed charges, they cannot be reduced by congressional or Executive action, but vary only as securities are issued, retired, or refunded under changing interest rates and with varying payment periods.
INTEREST
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[ Fiscal years. In millions ] Recom- Interest on public debt $5,853 $6,450 $6,350 $6,350 Total 5,934 6, 520 6, 420 6, 420 Interest on the public debt.--The cost of interest on the public debt in the fiscal year 1954 is estimated at 6,350 million dollars. The decrease of 100 million dollars from the 1953 estimate does not indicate a reversal of the upward trend in interest payments, but merely reflects an unusual situation which occurred during the fiscal year 1953. More than 15 billion dollars in certificates of indebtedness which paid almost a year's interest at maturity were refunded early in the fiscal year 1953 into new obligations on which interest payments for half a year or more are due on June 1, 1953. Thus, about 20 months' interest on this portion of the debt falls due during the current fiscal year. |
Although interest expenditures in 1954 will be lower than in 1953 because of this unusual situation, interest costs are still rising. These increases are due in large part to the higher interest rates paid on securities issued or refunded during the past two years. In addition, each year an increasing amount of special issues is held by Government agencies and trust funds. The interest rates on these issues are slightly above the average rate on the debt as a whole. Furthermore, these interest rates tend to increase when the average interest rate on the total debt rises.
Recent increases in the size of the interest-bearing debt are the second major reason for the rise in interest costs. By the end of the current fiscal year, the outstanding debt will have increased by 6.5 billion dollars since Korea, and the 9.9 billion dollar deficit estimated for the fiscal year 1954 will cause a further increase.
My interest in and study of the Federal Budget began many years before I became President. As President, I have given the Budget my constant attention. It should receive that same attention from the Congress, particularly because of one basic fact often overlooked and often misunderstood.
This fact is that the financial program of the Government cannot be planned in terms of a single fiscal year. It must be planned in the light of security, economic, and budgetary goals--not just for the ensuing year but for three and even four years ahead.
The Budgets I have transmitted have always reflected such planning. My recommendations on taxes and appropriations have had as their objectives the meeting of all our responsibilities for the security and welfare of our people and for a growing economy with a stable currency and a balanced budget.
Budget and fiscal policies are tools of national policy. As such, they are subjects of controversy and evolution. I believe that the policies I have supported are sound, and that the recommendations in this Budget will enable us to meet our national needs in the fiscal year 1954 in the light of the Nation-wide and world-wide objectives of the United States.
HARRY S. TRUMAN
January 9, 1953
Note: The message was transmitted to the Senate and the House of Representatives on January 9.
The message and the budget document (1155 pp.) are published in House Document 16 (83d Cong., 1st Sess.).
As printed above, references to special analysis appearing in the budget document have been omitted.
Harry S Truman, Annual Budget Message to the Congress: Fiscal Year 1954. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/231318