Annual Budget Message to the Congress, Fiscal Year 1972.
To the Congress of the United States:
In the 1971 budget, America's priorities were quietly but dramatically reordered: For the first time in 20 years, we spent more to meet human needs than we spent on defense.
In 1972, we must increase our spending for defense in order to carry out the Nation's strategy for peace. Even with this increase, defense spending will drop from 36% of total spending in 1971 to 34% in 1972. Outlays for human resources programs, continuing to rise as a share of the total, will be 42% of total spending in 1972.
The 1972 budget has a historic identity of its own.
• It provides a new balance of responsibility and power in America by proposing the sharing of Federal revenues with States and communities on a grand scale--and in a way that will both alleviate the paralyzing fiscal crisis of State and local governments and enable citizens to have more of a say in the decisions that directly affect their lives.
• It introduces a new fairness in American life, with the development of national strategies to improve the health care of our citizens and to assure, with work incentives and requirements, an income floor for every family in this Nation.
• It adopts the idea of a "lull employment budget," in which spending does not exceed the revenues the economy could generate under the existing tax system at a time of full employment. In this way, the budget is used as a tool to promote orderly economic expansion, but the impact of the resulting actual deficit is in sharp contrast to the inflationary pressure created by the deficits of the late sixties, which were the result of excessive spending that went far beyond full employment revenues. The lull employment budget idea is in the nature of a self-fulfilling prophecy: By operating as if we were at lull employment, we will help to bring about that lull employment.
The 1972 budget reaffirms the determination of the Federal Government to take an activist role in bringing about the kind of prosperity that has rarely existed in the American economy--a prosperity without war and without runaway inflation. In the 1972 budget, the Government accepts responsibility for creating the climate that will lead to steady economic growth with improving productivity and job stability.
Of course, our objective of prosperity without inflation cannot be achieved by budget policy alone. It also requires:
--the monetary policy adopted by the independent Federal Reserve System to provide fully for the growing needs of the economy; and
--increased restraint in wage and price decisions by labor and business--in their own and the Nation's interest and as a matter of common sense. Only by working together can the budget, monetary policy, and common sense in the private sector make orderly expansion the order of the day.
The full employment 1972 budget-expansionary but not inflationary--does its full share to provide a defense strong enough to protect our national security, higher standards of income and care for the poor and the sick, a reorganized and responsive Federal structure, and the basis for a sound prosperity in a full generation of peace.
TOWARD A GROWING NONINFLATIONARY ECONOMY
ECONOMIC SETTING.--When I took office 2 years ago, rampant inflation was the Nation's principal economic problem.
This inflation was a direct result of the economic policies of the period 1966 to 1968, when we were mired in war in Vietnam, and when Federal spending rose sharply. Federal outlays were allowed to exceed full-employment revenues by $6 billion in 1966, $10 billion in 1967, and $25 billion in 1968. Expansive monetary policy in the summer of 1968 helped upset the hoped-for stabilizing impact of an income tax surcharge. The effect of these actions was to turn the thermostat up in an economy that was already hot enough.
My administration acted promptly to move us out of that war and cool the superheated economy.
We controlled Federal spending in 1969 and achieved a budget surplus. Spending was restrained again in 1970. Independently, the Federal Reserve System maintained a monetary policy of restraint which increased in severity throughout calendar year 1969 and continued into early 1970.
The forces of inflation have been durable and persistent--and they remain strong. But their momentum was slowed in calendar year 1969 and early 1970. Excessive demand was eliminated as a source of inflationary pressure during this period. The turnaround of this inflationary trend permitted us to enter the second phase of our plan: to follow more expansive economic policies without losing ground in the battle against inflation.
BUDGET POLICY.--Last July, I set forth the budget policy of this administration:
"At times the economic situation permits--even calls for--a budget deficit. There is one basic guideline for the budget, however, which we should never violate: except in emergency conditions, expenditures must never be allowed to outrun the revenues that the tax system would produce at reasonably full employment. When the Federal government's spending actions over an extended period push outlays sharply higher, increased tax rates or inflation inevitably follow."
The principle of holding outlays to revenues at full employment serves three necessary purposes:
• It imposes the discipline of an upper limit on spending, a discipline that is essential because the upward pressures on outlays are relentless.
• It permits Federal tax and spending programs to be planned and conducted in an orderly manner consistent with steady growth in the economy's productive capacity.
• It helps achieve economic stability by automatically imposing restraint during periods of boom and providing stimulus during periods of slack.
The budget policy of this administration is to keep firm control over Federal spending. The outlay total of $229.2 billion in 1972 is the sum of spending for programs that were scrutinized carefully to make certain that they would be managed effectively and efficiently and that they are essential to carry out present laws or to achieve desirable changes in our national priorities.
THE BUDGET AT A GLANCE
[Fiscal years. In billions]
1970 1971 1972
Description actual estimate estimate
Budget receipts $193.7 $194.2 $217. 6
Budget outlays 196. 6 212.8 229. 2
Actual deficit (--) --2.8 --18.6 --11.6
Full-employment surplus 2.6 . 4 0. 1
Budget authority 213. 0 236. 3 249.0
1 Including loans in expenditure account.
If this careful scrutiny were not maintained--if we weaken in our resolve to control spending--we would risk permitting outlays to build up a momentum that will carry them beyond full employment receipts in the longer run, and we would risk losing the ability to restrain spending in times when a deficit is undesirable.
SUMMARY OF THE 1972 BUDGET
The budget that I propose for 1970 is consistent with the fiscal policy I announced 6 months ago.
Budget receipts in 1972 are estimated to be $217.6 billion, $23.4 billion more than in 1971, but still below the $229.3 billion of revenue that would be produced if the economy were operating at full employment throughout the year.
The estimates reflect a reduction in revenues of $2.7 billion due to the new tax depreciation rules announced on January 11. These rules are part of our plan to expand the economy and help the Nation achieve full employment without inflation.
Budget outlays in 1972 are expected to be $229.2 billion, an increase of $16.4 billion over the previous year.
The increase in outlays will help move the economy toward higher employment and production. At the same time, outlays are being held to full employment receipts.
I am requesting budget authority--the right to make commitments to spend--of $249.0 billion in 1972. Over $170 billion of this total will require new action on the part of the Congress.
REVENUE SHARING: RETURNING
POWER TO PEOPLE
During the 1960's, more governmental initiative and power shifted to Washington and away from elected officials in State and local governments. Towards the end of the decade it became apparent that, despite new programs and massive Federal expenditures, government at all levels was not working well.
When this administration took office, I directed that an intensive review of our governmental system be made. We found that State and local governments were breaking down under an incredible fiscal burden. We also found that the red tape involved in the narrow categorical grant system made it almost impossible for the Federal Government to be effective and responsive to the needs of individuals in different localities.
The financial squeeze on State and local governments is acute, and shows no sign of becoming less painful. These governments rely mainly on receipts from consumer and property taxes, which have not grown nearly as fast as the demand for State and local government services. As a result, combined State and local debt has increased by over 600% since 1948.
The Federal Government helped meet some of this demand by increasing its financial aid, largely through grant programs, which now accounts for 18% of State and local revenues.
The results of grant programs have been impressive in some cases. But the grant structure has become a haphazard collection of hundreds of separate programs, each with its own policies, its own requirements and procedures, and its own funding.
Such a complicated method of providing Federal assistance is not only inefficient, but it:
--restricts the freedom of State and local governments to spend funds in accordance with their priorities;
--is unresponsive to the needs of specific local situations because the funds are distributed and regulated by guidelines that do not--perhaps cannot-sufficiently take account of differences among local communities; and
--separates resources and responsibility, because State and local governments have the responsibility for providing services, but, all too often, they do not have the money to provide those services. The Federal Government dominates the field of income taxation, and its red tape restricts the discretion of State and local governments over the services they provide.
Clearly, not enough authority over the use of resources for federally assisted programs is now lodged at the State and local level. More of the power--and the responsibility--for using federally collected funds must be given to elected officials in these governments.
The need for remedying this situation is urgent. The time for reform is now.
Local freedom of action.--I propose a revenue sharing plan to give State and local governments the money they need to deliver the services that can best be performed by government closest to the people.
This is how the new "freedom of action" plan will work:
In the first full year of the plan, $16 billion will be directed to the States and localities, in a way that will enable them to decide as never before how that money will be spent.
Of this amount, $5 billion will be in the form of general revenue sharing, without restrictions. This will all be "new" money, without matching requirements and with the decision on how it is to be used exclusively a State and local matter.
The remaining $11 billion will be in the form of special revenue sharing, with the discretion on how it will be used within each of six broad subject areas strictly a
State and local matter. These areas are:
--Urban community development,
--Rural community development,
--Law enforcement, and
The hobbling restrictions now on much of the Federal aid in these areas would be removed, along with matching requirements that presently force localities to spend their own matching money on low priority projects for fear of "losing" available Federal aid.
To emphasize the importance of the special revenue sharing funds, the change from the present tightly restrictive categorical grants to special revenue sharing in the six broad areas will be accompanied by an increase of $709 million in the amounts budgeted for 1972 for Federal aid to States and localities. But even more important is the fact that these governments would have far greater freedom of action in deciding how money is to be spent within each of the six areas. For example, although the Federal Government would designate the total amount of special revenue sharing for education, the State or local area would decide how much is to be spent on new textbooks, new schools, equipment, or other matters of priority to it in the field of education.
In this way, both general and special revenue sharing will redirect the control of State and local decisions on $16.1 billion to the States and localities affected most by those decisions. This is about half of Federal Government aid, excluding public assistance grants, to States and communities--a historic and massive reversal
of the flow of power in America.
BUDGET AUTHORITY PROPOSED FOR REVENUE
SHARING PLAN, FIRST FULL YEAR
General revenue sharing $5. 0
Special revenue sharing:
Urban community development 2. 0
Rural community development 1. 0
Education 3. 0
Manpower training 2. 0
Law enforcement 0. 3
Transportation 2. 6
Total 16. 1
We must make provision at the outset of this freedom of action plan for both growing State and local needs and growing State and local capacity to manage their affairs.
The new funds for general revenue sharing will grow in years to come because they will be tied to the Federal personal income tax base. As that tax base expands, more unrestricted money will flow to States and localities.
To help State and local governments develop greater capacity to plan and manage their own affairs, I will send to the Congress a planning-management assistance plan, which will provide $100 million to help these governments make their own long-range plans and enhance their capability for the efficient use of their growing revenues.
In essence, this is what revenue sharing will do:
--for the individual taxpayer, it will provide a stronger voice in how his tax money is spent locally, new confidence in government that comes from more "citizen control," and the hope that, in some States and localities, taxes may be reduced, or that the rising cost of government can be tact without raising taxes;
--for State and local governments, it will not only help meet the current financial crisis, but will also wipe out rigidities and delays in Federal aid and permit them to build their capacity to respond to local needs;
--for our federal system, it will provide new strength by assigning services to the level of government best equipped to perform them; and
--for all our people, it will provide a means of encouraging local diversity and experimentation within the framework of our great national purposes.
Of course, these revenue sharing proposals will not be the vehicle for any retreat from the Federal Government's responsibility to ensure equal treatment and opportunity for all. The proposals I send to the Congress will include the safeguards against discrimination that now accompany all other Federal funds allocated to the States.
This massive revenue sharing proposal is central to my philosophy of giving people the opportunity to become more involved in the decisions that affect their lives. The magnitude of the problem calls for this kind of bold move; by acting decisively and without delay, we will strengthen our federal system and respond better to the needs of our people.
WELFARE REFORM.--One Of the first steps in our review of the federal system was to sort out those activities that are appropriate for the Federal Government from those that are best performed at the State and local level or in the private sector. We decided early on one primary Federal responsibility--providing, with a combination of work incentives and work requirements, an income floor for every American family.
We knew beforehand that the existing welfare system was in desperate need of reform. We also knew that the existing system imposes a crushing and growing financial burden on States.
My welfare reform proposals, described later in this message, are an integral part of our effort to give people the ability to make their own decisions, to build the capacity of State and local government, and to encourage more orderly national growth.
By building a floor under the income of every family everywhere in America with Federal funds, we provide each dependent family a new dignity, we help State and local governments finance what is now their fastest growing expenditure, and we remove one magnet that has already drawn too many persons to our congested cities.
In government operations, form should follow function. Just as revenue sharing decentralizes power to meet one need, welfare reform sets a basic national standard to meet a different need. The decision to centralize or decentralize should be based on which method best serves the larger purposes of 206 million Americans.
Revenue sharing and welfare reform are of a piece: the level of government best equipped to respond should respond in a way that raises standards and Contributes to the sum of personal freedom and human dignity.
RESTORING CONFIDENCE IN GOVERNMENT
In seeking ways to reform the federal system, I have paid particular attention to the ability of the executive branch of the Federal Government to produce the results intended by the Congress and the President.
In 1971, the Federal Government will employ almost 2,900,000 civilians, operate thousands of separate programs, and spend $212.8 billion. Through its tax laws, credit activities, grant programs, and in other ways, the Government affects millions of people and influences the disposition of many more billions of dollars than it controls directly.
Toward the end of the sixties, there was mounting evidence that our Government was so complex, clumsy, and unresponsive, that it was becoming unable to meet the needs and priorities of the people or to use efficiently the funds entrusted to it.
This must not be permitted in America. We have already taken actions to improve the organization and management of the Federal Government and, thereby, make it more efficient and responsive.
But we must do more. The Federal Government is not organized properly to deal with the Nation's most significant problems in the domestic area. Programs that should be joined together to achieve common goals are fragmented among different departments and agencies, impairing the capacity of government to respond effectively to urgent national needs. Modernization of that structure will restore vigor to our federal system, permitting a constructive partnership among Federal, State, and local governments.
In the next few months, I shall propose sweeping legislation to help achieve these goals by merging seven existing departments and several independent agencies into four departments:
--a Department of Natural Resources,
--a Department of Human Resources,
--a Department of Community Development, and
--a Department of Economic Development.
These new departments will match the domestic programs of the Federal Government with the objectives each is intended to fulfill:
--the balanced and constructive use and conservation of the land and other natural resources of the Nation;
--the development and well-being of individuals and families;
--the quality of urban and rural communities as places for people to work and live; and
--the maintenance and strengthening of the American economy. To continue the modernization of the Federal Government, I will also ask an extension of the President's reorganization authority. We must seek to expand current efforts to shift operating responsibility for Federal programs out of Washington and closer to the people these programs are designed to serve.
To fulfill its responsibilities, the Federal Government must attract, develop, and retain capable career executives. We must have a more effective manpower planning and utilization system. I shall propose legislation to establish a Federal Executive Service which will permit:
--more effective career executive search;
--flexibility in the allocation and assignment of available talent; and
--strengthened executive development programs and policies.
By improving the organization and management of government, we will make it more responsive to the needs of the people and the new priorities of the Nation.
REFORMING THE BUDGET PROCESS
Reform of the budget process is long overdue. Fifty years have passed since the Federal budget system currently in use was adopted. The system was a major step forward in 1921. Because of congressional inaction, it has become a travesty a half-century later.
Enactment of appropriations 6 months or more after the start of the fiscal year they are supposed to cover is evidence of a major weakness. I have sent two budgets to the Congress. In each, I have had to formulate budget proposals for the year ahead without knowing what the Congress would provide in its action on the prior year's budget, which was transmitted 11 months earlier. Even now, as this message is being written, action on last year's appropriations request for one department has not been completed.
I have, therefore, had to act on parts of the budget without knowing the totals that would result. This is an intolerable situation, but one that the Congress seems to accept as the normal way of doing business. It completes action on appropriation bills over a 10-to 12-month period without any goal or determination of the total expenditures that will result after the last bill is passed.
Excess in the number and detail of appropriations often diverts attention to minutiae. It also impairs the ability of agency heads to manage their agencies responsibly and economically.
The budget is our principal instrument for coordinated management of Federal programs and finances. Close cooperation between the executive and legislative branches is needed now to make the budget an efficient and effective instrument for this purpose. Therefore we must seek a more rational, orderly budget process. The people deserve one, and our Government, the largest fiscal unit in the free world, requires it.
Furthermore, Federal credit programs which the Congress has placed outside the budget--guaranteed and insured loans, or loans by federally sponsored enterprises--escape regular review by either the executive or the legislative branch. The evaluation of these extrabudgetary programs has not been fully consistent with budget items. Their effects on fiscal policy have not been rigorously included in the overall budget process. And their effects on overall debt management are not coordinated well with the overall public debt policy. For these reasons, I will propose legislation to enable these credit programs to be reviewed and coordinated along with other Federal programs.
TOWARD A FULL GENERATION OF PEACE.
Our goal is a full generation of peace in which all nations can focus their energies on improving the lives of their citizens.
To achieve this, we must continue to work in close cooperation with our allies, move from confrontation to negotiation with those with whom we differ, and together with our allies--maintain enough military strength to deter aggression. Sufficient and effective programs of military and economic assistance to help our friends help themselves are an integral part of our program.
NATIONAL SECURITY.--This Nation's strategy for peace will--as it must--be based upon a position of military strength. The purpose of this strength is to prevent war; and, to this end, we will negotiate with those whose vital interests and policies conflict with our own.
We are pursuing negotiations on strategic arms limitations, on Vietnam, on Berlin, and on the Middle East. These negotiations are difficult and often slow, but we have the stamina and commitment necessary to proceed with patience and purpose.
As we carry on negotiations, we couple them with other efforts to achieve the same goal. The Vietnamization program is an example, and we are making good progress. By this spring, our authorized troop strength will have been cut approximately in half since the time I took office, and we will continue to bring American troops home.
Supporting these efforts, the military forces of this Nation and its allies will provide the armed might necessary to deter aggression or to deal with it effectively where necessary. We expect our allies to do more in their own behalf, and, in the spirit of the Nixon doctrine, many are taking steps in that direction. But we must also do our share. The kind of partnership we seek to forge works both ways. We have a vital interest in peace and stability abroad and we plan to maintain the capabilities necessary to protect that interest.
Our withdrawals from Vietnam and the change in our general purpose force planning and strategy permit a smaller force structure than in the past. At the same time, the preoccupation with Vietnam has limited our ability to meet some of our military needs elsewhere, particularly in NATO. We must be certain that our military forces are combat-ready and properly equipped to fulfill their role in our strategy for peace. In addition, we face formidable Soviet nuclear and conventional forces, including increased naval forces, and a further rise in the costs of our military equipment and personnel.
For these reasons, I am recommending an increase of $6 billion in budget authority for military and military assistance programs. This Nation has the will and the resources to meet its vital national security needs. At a time when we are urging our allies to do more and when our potential adversaries may seek military advantage, I cannot in good conscience recommend less.
We often think of military strength primarily in terms of equipment and massive organizations. While these are important, attracting and holding able citizens in the Armed Forces is the key to an effective and efficient military force. The service of Americans in uniform is worthy of respect, and I am dedicated to the goal of making all such service voluntary. This budget, and subsequent legislation which I will recommend to the Congress, will make significant progress toward ending reliance on the draft.
FOREIGN ASSISTANCE.--Our present foreign assistance programs were established for a world that has long since changed. I will propose legislation to adapt them to the conditions of the 1970's.
We must clearly distinguish the varied purposes of foreign aid--the security of the United States and friendly nations, the long-term development of lower income countries, and humanitarian needs--and make possible a realistic assessment of our progress toward each. In 1972, our assistance programs will:
--promote a strong partnership among nations and a vigorous leadership role for multilateral development institutions;
--recognize that other nations have a growing ability and responsibility to determine their own development priorities;
--continue security assistance at a higher level than in recent years in order to help friendly nations meet the responsibility for their own defense; and
--improve coordination of our humanitarian assistance efforts.
These changes will carry out a major theme of U.S. foreign policy--less direct U.S. involvement in the affairs of other nations, less potential for friction and resentment, and a stable world order more conducive to lasting peace.
MEETING HUMAN NEEDS
The proposals that I submit today are a major step forward in the reform of our Nation's efforts to meet the needs of its 206 million citizens. They will introduce a new fairness into American life by providing:
--a basic income floor under every family with children in this Nation;
--health care to help make needed services possible for all of our people when and where such services are required;
--better systems of support for education and manpower training; and
--continued progress in assuring the civil rights of all citizens, and in controlling crime.
INCOME STRATEGY.--Last year was one of great promise for the long-term income security of American families. Some of that promise reached fruition in the reform of unemployment insurance and food stamp programs:
• Unemployment insurance was extended to 4.8 million additional Americans, including farmworkers and hospital workers, and special extended benefits were established to be triggered automatically by adverse economic conditions.
• Food stamp benefits were improved by establishing national eligibility standards, requiring family allotments large enough to purchase an adequate diet, providing free food stamps to the poorest recipients, and automatically raising benefits with increases in the cost of living.
However, much of that promise was left unrealized. As I have pointed out, in 1972 I will redouble my efforts to make essential and fundamental reforms in income maintenance programs. First, and foremost, I will seek:
• Basic welfare reform.--Last year I proposed that our archaic and demeaning welfare system be reformed. A landmark plan that would have accomplished this was approved by the House but did not come to a vote in the Senate.
The urgency of the need for welfare reform grows with every passing day. I have already stressed the need for early enactment of the Welfare Reform Act of 1971 by the 92d Congress.
This plan would remove the principal evils of the existing system by: --setting national eligibility standards;
--balancing strong training and work requirements with equally strong training and work incentives;
--giving financial relief to the States; and
--establishing a Federal floor under benefit payments for all needy families with children, including those with working fathers, for the first time.
• Social security improvements.--I will propose a significant reform of the social security system, providing automatic adjustments for increases in the cost of living. Such an adjustment now calls for a 6% benefit, effective retroactively to January I, 1971, to cover the cost of living increase since January 1, 1970. I will also propose increases in widows' pensions.
Beyond these basic reforms, I will seek to harmonize related income maintenance programs with the principles of our income strategy. This will include:
--reform of services provided to welfare recipients to encourage greater accountability and effectiveness in the use of funds, and to establish national standards for foster care, with new incentives for the adoption of handicapped children; and
--proposals to put railroad retirement funds on a financially sound basis.
IMPROVING HEALTH CARE.----During the current session, I will send a message to the Congress that will set out a national health strategy for the seventies and propose significant changes in the Federal role in the Nation's system of health care.
This strategy will seek to expand preventive care, to train more doctors and other health personnel, and to achieve greater equity and efficiency in the delivery of health services. It will include a new health insurance program for all low income families with children.
The budget reflects in a preliminary way the emphasis that this administration will place on health in 1971, with:
--an increase of $100 million to accelerate greatly the search for a means of preventing and curing cancer;
--a vigorous effort to find a cure for sickle cell anemia;
--a $95 million increase in Federal support for schools that train our Nation's health manpower; and
--a rational policy of using Federal resources to help bring the rapid increase in medical care costs under control.
The budget also provides for:
--a substantial improvement in the quality of medical care provided to veterans with service-connected injuries;
--expansion of services for mothers and children, Indians and Alaska natives, and women who cannot afford family planning services;
--expanded programs to combat drug abuse and alcoholism;
--emphasis on assuring purity of foods and drugs; and
--encouraging greater use of less costly services and facilities in delivering medical care.
COMMUNITY SAFETY AND CRIME PREVENTION.--My commitment to the reform and revitalization of our system of criminal justice is supported by this budget. The budget proposes a 32% increase in outlays to improve law enforcement, to make our judicial system fairer and more efficient, and to raise the effectiveness of correction and rehabilitation. In this way, we will:
--step up the war on organized crime and the gambling operations that finance it;
--destroy major criminal systems that import and distribute narcotics and dangerous drugs;
--strengthen local law enforcement through the special revenue sharing fund for this purpose;
--continue the antihijacking campaign to protect the Nation's air travelers;
--expand our correctional improvement programs to develop more innovative correctional institutions, and improve probation, parole, and other community-based services; and
--develop, in cooperation with State and local governments, ways to provide more accurate information on law enforcement activities.
GUARANTEEING CIVIL RIGHTS.--The ideals of our Nation require that the civil rights of all citizens be respected, regardless of race, sex, religion, or national origin.
My budget for 1972 proposes to strengthen our efforts to eliminate discrimination in private as well as Federal employment, in activities supported by Federal assistance to State and local governments and other recipients, in education, in housing, and in other aspects of society.
We will take these specific steps to improve the lives of all our people: --increase by more than 50% our efforts to prevent employment discrimination by Federal contractors and other private employers;
--increase nearly threefold the Federal assistance to school districts that are desegregating;
--reorganize the field operations of the Equal Employment Opportunity Commission to make more effective efforts to halt discrimination in private employment;
--focus the activities of the Civil Service Commission to assure equal Federal employment opportunities for all our citizens, with special emphasis on opportunity for Spanish-surnamed Americans;
--serve 46 localities with conciliation assistance through the Community Relations Service;
--expand administration of the fair housing and equal opportunity laws to increase residential housing choices for all Americans; and
--increase by 15% funds to agencies to assure nondiscrimination by recipients in their use of Federal assistance.
EDUCATION AND MANPOWER TRAINING.--The education and manpower training programs proposed in this budget reflect my determination to find better ways to carry out Federal programs. Special revenue sharing is proposed for both of these vital areas. I will also submit major reform proposals to:
--reform Federal aid programs for higher education to increase their effectiveness;
--direct more funds to students from lower income working families;
--establish a National Institute of Education for research and development; and
--provide additional training opportunities and strong incentives under the Welfare Reform Act of 1971 for employable welfare recipients to undertake suitable employment or job training.
RESEARCH AND DEVELOPMENT ON SOCIAL PROBLEMS.---The Office of Economic Opportunity will emphasize its leadership role in research, development, and evaluation in social programs.
IMPROVING OUR ENVIRONMENT
The improvement and prudent use of our physical resources is vital to our Nation's prosperity and to the goal of helping all Americans enjoy a clean environment, adequate housing, and a better standard of living. In 1972, outlays to achieve these objectives will increase by $2.4 billion to $26. 1 billion. The actions that I am proposing will:
--expand my administration's vigorous efforts to protect and enhance the quality of our environment and recreation resources;
--revitalize housing and community development programs; and
--increase Federal research and development efforts.
ENVIRONMENTAL QUALITY.--The primary responsibility for protecting and enhancing the environment lies with State and local governments, industry, and the public, but the Federal Government must--and will--provide vigorous leadership.
During the past year, this administration moved forcefully to exercise that leadership:
• Major Federal pollution control and abatement activities were consolidated in a new Environmental Protection Agency;
• The Council on Environmental Quality was given a major role within the Executive Office of the President to advise on environmental problems and on national policies to deal with them;
• New legislation to strengthen national efforts for reducing pollution was proposed to the Congress; and
• Funds for major environmental quality programs were increased significantly.
Pollution control and abatement programs will get even greater attention in the 1972 budget. Outlays will be increased by $764 million. Budget authority will rise even more, by $1.3 billion. The higher amounts will provide for:
--doubling grants for municipal waste treatment facilities;
--curbing pollution from Federal facilities;
--expanding EPA pollution control operations, including implementation of new air quality and solid waste legislation; and
--developing new pollution abatement techniques.
Legislation is again proposed to create the Environmental Financing Authority, which will assist communities that have difficulty in borrowing at reasonable rates to meet their share of the cost of water pollution control facilities.
I shall shortly propose, in a special message to the Congress, a series of further measures to control pollution and improve the quality of our environment.
RECREATION.--Greater opportunity for leisure is valued highly in America and, as a result, the demand for recreation facilities is growing. The 1972 budget proposes a substantial increase in grants to help State and local governments provide some of these facilities.
I am recommending that the Land and Water Conservation Fund be fully funded to provide:
--grants of $280 million to help States and localities meet local recreation needs; and
--appropriations of $100 million for Federal acquisition to preserve nationally significant natural and historic areas.
I propose that the urban open space program be more than doubled, to $200 million, to provide more recreational areas in and near our cities.
CULTURAL ACTIVITIES.--I have again recommended that we double the appropriation for the National Foundation on the Arts and the Humanities, so that we can bring the benefits of these great cultural efforts to an increasing number of people throughout the country.
HOUSING.--The housing industry has already begun to lead our economic expansion. Fiscal and monetary actions taken in the past year have resulted in a significant easing of mortgage interest rates. Federal policy must help this industry meet the pent-up demand for housing.
The effectiveness of our housing programs will not be improved by merely continuing to increase Federal subsidies. The programs must be simplified and fitted into a rational framework. Inconsistencies must be removed, along with the obsolete rigidities in statutes that at times prevent programs from operating at all.
The administration will again propose legislation to carry out these badly needed reforms, which I urge the Congress to enact.
COMMUNITY DEVELOPMENT.--I will also propose reform of the community development programs of the Department of Housing and Urban Development, and of certain economic development programs of the Departments of Agriculture and Commerce. Narrowly defined categorical grant programs in this field have frequently conflicted with local priorities and unnecessarily generated red tape.
With special urban and rural revenue sharing programs, we will permit localities to plan and carry out community development in accordance with their own needs.
Initial funding of the new urban program will begin at a level of $ 1 billion for the second half of 1972, upon enactment of the necessary legislation. An additional $2 billion appropriation is anticipated for 1973, when the program will be in effect for a full year. Rural development revenue sharing will be $1 billion in the first full year.
SCIENCE AND TECHNOLOGY.--Science and technology can make major contributions to the public by developing creative solutions to a wide range of national problems that will help us all enjoy a better life. I am proposing in this budget a substantial expansion in outlays for federally supported research and development.
While a large portion of this increase is needed to strengthen our defense capabilities I am also recommending substantial increases in civilian areas to:
--make greater use of our scientific and engineering capabilities and resources to cope with major national problems such as pollution, crime, health, transportation, and other environmental and social problems;
--strengthen research essential to the advancement of our technology and economic productivity; and
--increase our investment in fundamental science which leads to the long-term progress of our society.
As an example of the concern of this administration for the use of science and technology in the public service, I am recommending that the budget for the National Science Foundation be increased from $506 million in 1971 to $622 million in 1972. A significant portion of these added funds will be directed to research on pressing national problems.
THE LONGER VIEW
Federal budget decisions must be made with an awareness of their influence on the economy and on resource allocation in the future as well as the present.
Too often in the past, consideration of objectives and priorities focused only on Federal spending. Only immediate issues, rather than longer term goals, were considered. And this fact was ignored: when we increase the priority of some programs, the relative priority assigned to others must be reduced. In short, the sum of the resources allocated to the various functions--such as health, education, defense-cannot exceed the total resources that we command.
Looking to the future, we find that resources likely to be available to the Nation grow more rapidly than the expenditures required by existing commitments. But our freedom to use these resources will shrink as we approach each future year and make financial or program commitments in the interim. Thus, the allocation of each year's resources is largely a reflection of our past priorities.
As we make choices this year, we will be determining the use of our available resources and expenditures in future years.
The resource allocation questions that the Nation will answer--either explicitly or by default--are:
• Shall we increase the available margin by ending some existing commitments?
• Who should use the margin--the Federal Government, State and local governments, or private citizens?
• To what objectives should the available margin be applied?
In answering these questions, the Nation will be setting its priorities for the future.
My preferences are clear. One great objective of my administration is to increase the role of private citizens and State and local governments in allocating our national resources in accordance with individual and local needs. Another great objective is to set minimum standards to make certain that every American family in every locality is treated with a fairness that reflects the national conscience.
Ours is not a regimented economy, nor will it be. Yet, we cannot ignore the influence of the budget on the economy and on the use of our national resources in the present and in the future. To do so is to take the chance that government spending will preempt resources that should be left to be used by private citizens or State and local governments.
In the last few decades, the Federal Government, disturbingly, has taken over the determination of how too many of the Nation's resources will be allocated. In spite of the Federal Government's domination, resources have not been appropriately allocated to overall national needs. Instead, they have been allocated by a process in which small additions were usually made in existing programs, and a few new categorical grant programs were created each year. These new grants were generally aimed at alleviating some narrow problem--without reference to the Nation's real need in that general problem area.
I have in this budget proposed the outlines of a new process for allocating funds according to national priorities.
Instead of continuing "more of the same" to more than a hundred narrow categorical grant programs, I have proposed replacing them with six special revenue sharing programs designed to deal with major national problems. These are problems that have different characteristics in different parts of the country. With these special revenue sharing funds, State and local governments can set their priorities within the national objective, design a solution fitted to their particular needs, and solve their problems locally.
The general revenue sharing program provides unrestricted funds to State and local governments to achieve our Nation's top domestic priority--the creation of a system of government that is effective and responsive to the needs of all of the American people. General revenue sharing will allow State and local governments to overcome their immediate fiscal crises and to come to grips with those problems that concern their citizens most.
The revenue sharing programs which I have proposed result from shared goals, provide federally shared revenues, and involve shared Federal-State-local responsibility for solving America's most important problems. Our system of government must be one of shared goals-shared revenues--shared responsibilities.
The 1972 budget befits a strong, free, compassionate, and enlightened Nation.
• It reverses the trend of the past decade toward Federal domination of the Nation's decisions, and begins to make government more responsive to the will of the people.
• It recognizes that a strong defense is vital to all our objectives, most of all to the attainment of peace.
• It provides the resources needed to meet the Nation's commitments at home, with a new standard of fairness to the poor and sick.
• It accepts the principle that budget policy, together with monetary policy and the active cooperation of the private sector, must be used to help achieve full employment in peacetime with relative price stability.
This budget expresses our fiscal program for the New American Revolution-a peaceful revolution in which power will be turned back to the people---in which government at all levels will be refreshed, renewed, and made truly responsive. This can be a revolution as profound, as far-reaching, as exciting, as that first revolution almost 200 years ago.
January 29, 1971
Note: The message as sent to the Congress included illustrative diagrams which have not been reproduced in this volume.
Richard Nixon, Annual Budget Message to the Congress, Fiscal Year 1972. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/241043