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Letters Calling for Reductions in Expenditures for National Defense.

August 03, 1946

[Released August 3, 1946. Dated August 2, 1946 ]

To the Secretary of the Navy:

My dear Mr. Secretary:

I must request your assistance in a most serious fiscal situation. The Federal Government is faced with a continued substantial Budget deficit in the present fiscal year, because betterments on the revenue side since my annual Budget was submitted in January have been nullified by projected increases in expenditures. The increases in projected expenditures are largest in the national defense category, for which I programmed $15,000,000,000 in my annual Budget. Comparable expenditures in this category are now projected at close to $20,500,000,000. A great portion of this increase of $5,500,000,000 is in the expenditures estimated for the War and Navy Departments, including proposed terminal leave pay for enlisted personnel.

In my annual Budget submitted to the Congress last January, I included an estimate for expenditures for the Naval Establishment in the fiscal year 1947 amounting to $4,850,000,000 ($5,000,000,000 less $150,000,000 included for the Coast Guard which has subsequently been transferred to the Treasury Department). The detailed recommendations which I submitted later to the Congress, and the congressional action thereon, would require increased expenditures of $300,000,000 above the January total. A still further increase of $250,000,000 is required for military pay increase costs authorized by legislation enacted in June. Thus my January expenditure program for the Naval Establishment, as adjusted for my further recommendations and for actions of Congress, would total $5,400,000,000.

A review of the naval program for the fiscal year 1947 now indicates prospective expenditures for naval functions of $5,800,000,000, excluding terminal leave pay for enlisted personnel. It appears, therefore, that there is a prospective expenditure of $400,000,000 in excess of the program expenditure contemplated in my January Message to the Congress, aside from changes resulting from congressional action.

In view of the present inflationary situation it is necessary to keep expenditures to the very minimum and to postpone expenditures that can possibly be deferred to a later year. It is therefore essential that the expenditures of the Federal Government stay within the estimates of expenditures transmitted to the Congress in the January Budget, except as such estimates have been substantially changed by reason of legislative enactments. Beyond that, we should strive for reductions below the January estimates wherever possible. To the largest possible extent an effort must be made to absorb the increases due to new legislation by corresponding reductions in other areas.

I wish, therefore, that you would forthwith take the necessary action to adjust the current naval program so that total expenditures in the fiscal year 1947 will not exceed $5,150,000,000, plus any cost for terminal leave pay for enlisted personnel. This will necessitate a reduction in prospective expenditures of $650,000,000, including $400,000,000 on account of potential increased program and $250,000,000 to offset military pay increases.

I am convinced that this modification in program can be accomplished without impairing our effective defense. So far as possible, the adjustment should be concentrated in the areas which will release materials and labor resources which are urgently needed to augment production for the civilian economy to relieve inflationary pressures. These adjustments should be effected also with a view to preserving a balanced defense establishment. In addition, I ask you to explore and recommend any possible further reductions in the naval program which will bring expenditures in the fiscal year 1947 to a level below the limit of $5,150,000,000 (plus enlisted terminal leave pay) that would still be compatible with our national security and international commitments.

Please let me know promptly the measures you take to carry out these instructions.

Sincerely yours,

HARRY S. TRUMAN

Note: Similar letters were also addressed to the Secretary of War and to Vice Admiral W. W. Smith, Chairman of the U.S. Maritime Commission.

The letter to the Secretary of War requested him to take necessary action to adjust the military program so that total expenditures in fiscal 1947 would not exceed $8 billion (plus enlisted terminal leave pay), a reduction in prospective expenditures of $1 billion, including $625 million on account of potential increased program and $375 million to offset military pay increases.

The letter to the Chairman of the U.S. Maritime Commission directed him to adjust the Commission's program so chat the total expenditure in fiscal 1947 for new construction would not exceed $60 million, a reduction of $60 million below the projected program of $120 million.

Harry S. Truman, Letters Calling for Reductions in Expenditures for National Defense. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/231988

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