Franklin D. Roosevelt

Message to Congress on Appropriations for Work Relief for 1938.

April 20, 1937

To the Congress:

In my Budget message of January 5, 1937, I said that I would transmit at a later date an estimate of appropriation for work relief for the fiscal year 1938. In connection with this estimate it is desirable to review our present fiscal situation.

Budget estimates made last December indicated a net deficit for the current fiscal year of $2,248,000,000. They also indicated a net surplus for the fiscal year 1938 of $1,537,000,000, exclusive of any provision for a work relief appropriation. On the basis of these estimates, therefore, an appropriation for work relief for the fiscal year 1938 of any sum less than $1,537,000,000 would have left at the end of that year a budget in balance.

Since then, however, new factors have so altered the fiscal situation as to make it necessary to present revised estimates of receipts and expenditures. There is attached to this message a statement showing the present estimates for the fiscal years 1937 and 1938 as compared with the estimates in my Budget message. A glance at this statement will show that the principal factor is the decline in tax receipts below our previous expectations.

FISCAL YEAR 1937

The analysis of returns received in March, 1937, under the new tax law indicates that income taxes will produce $267,200,000 less than the former estimate for the fiscal year 1937. The receipts for the first nine months of this fiscal year indicate that other revenues will be $337,000,000 less than the estimate, which is due in large part to the obstruction of collections by numerous lawsuits against the Government.

In view of the reduction in revenue it became apparent that every effort should be made to offset this loss as far as possible by a reduction in expenditures. To this end I have directed the heads of various Government activities to make a careful examination of their expenditure requirements for the last three months of the present fiscal year with a view to making substantial savings by eliminating or deferring all expenditures not absolutely necessary during this period, the money so saved to revert to the Treasury. Information thus far available indicates that the 1937 expenditures will probably be $295,000,000 below the estimate of last January.

The amount of the net deficit for the fiscal year 1937 is therefore estimated at $2,557,000,000, an increase of $309,000,000 over the January estimate.

FISCAL YEAR 1938

For the fiscal year 1938 it is now believed that receipts will be $387,600,000 less than was anticipated last January, the reduction of $410,000,000 in the estimate of income taxes being slightly offset by increases in other receipts.

Pending the enactment of the 1938 appropriation bills it has been impossible to make any material revision of the estimates of expenditures for that fiscal year, other than for recovery and relief.

The revised estimates of receipts and expenditures for the fiscal year 1938 as here presented indicate an estimated net deficit of $418,000,000. There is included in the estimates of expenditures the $1,500,000,000 for work relief hereinafter recommended.

I propose to use every means at my command to eliminate this deficit during the coming fiscal year. I expect to accomplish this by taking definite action at the beginning of the next fiscal year (1) to withhold from apportionment for expenditure insofar as possible, with due regard to proper functioning of the executive departments and agencies, a substantial percentage of the funds available for that year, and (2) to increase the receipts of the Treasury through the liquidation of assets of certain of the emergency agencies.

I regard it as extremely important that we should achieve a balance of actual income and outgo for the fiscal year 1938, and I appeal to you to join me in a determined effort to bring about that result.

What I have said is predicated on two highly important conditions. The first is the extension of existing taxes which expire this year. The second is the maintenance of appropriations made at this session within the total of the Budget estimates. An increase in appropriations would, of course, nullify our efforts to prevent a deficit in 1938.

And while I recognize many opportunities to improve social and economic conditions through Federal action, I am convinced that the success of our whole program and the permanent security of our people demand that we adjust all expenditures within the limits of my Budget estimate.

FUTURE FISCAL POLICY

I emphasize here what I said last January with respect to our future fiscal policy:

"Expenditures must be planned with a view to the national needs; and no expansion of Government activities should be authorized unless the necessity for such expansion has been definitely determined and funds are available to defray the cost. In other words, if new legislation imposes any substantial increase in expenditures either in the expansion of existing or the creation of new activities, it becomes a matter of sound policy simultaneously to provide new revenue sufficient to meet the additional cost."

Bills being pressed for enactment during the present session would commit the Government to early expenditures of more than $5,000,000,000. About $3,000,000,000 of these authorizations are for the construction of additional public works, even though there are existing authorizations of almost $2,000,000,000 for this purpose. In the Budget for the past 3 years I have set up a program for general public works and have often said that such a program should be kept within the limit of $500,000,000 a year. An annual program of this size should meet normal needs for highway, flood control, rivers and harbors, reclamation, Federal buildings, and other public works.

I recognize the need for flood prevention and control, but it should be realized that to finance such large immediate expenditures as are contemplated by the majority of the flood control bills now pending in the Congress would impose an unjustifiable burden upon the Federal Treasury.

Bills involving additional authorizations of more than $500,000,000 for highways have been introduced despite the fact that expenditures for this purpose during the last 4 years have exceeded $1,000,000,000 and that there are existing authorizations for expenditures during the next 2 years of nearly $450,000,000.

The maintenance of a sound fiscal policy requires the careful planning of authorizations as well as appropriations. It is impossible to maintain the proper balance between revenues and expenditures unless restraint is exercised with respect to authorizations of appropriations. It is a matter of concern to you and to me who are working for a balanced budget that so many special groups exert the strongest pressure to bring about increases in Government expenditures. They pay little attention to the fact that the budget, as submitted, represents a coordinated fiscal program and that material departures therefrom destroy the whole purpose of the program. If we are to avoid a continuation of deficits, we must resist these importunities or provide the necessary revenues to meet the increasing costs.

It is a matter of common knowledge that the principal danger to modern civilization lies in those nations which largely because of an armament race are headed directly toward bankruptcy. In proportion to national budgets the United States is spending a far smaller proportion of Government income for armaments than the nations to which I refer. It behooves us, therefore, to continue our efforts to make both ends of our economy meet.

SURVEY OF TAX STRUCTURE

It has become apparent that there is an immediate need for a careful survey of the present tax structure. The Treasury will be prepared by November, next, to present to the appropriate committees of the Congress information as to such loopholes as may exist in the present revenue laws, and suggestions for such new or additional taxes as may be necessary to meet deficiencies, if any, in the revenue-producing power of the present levies. This will permit these committees to study such information and suggestions for the purpose of proposing early in the next session of the Congress legislation necessary to remedy defects in the present tax laws.

WORK RELIEF

I recommend that an appropriation of $1,500,000,000 be provided for work relief for the fiscal year 1938, and that it be made available early in June so that its expenditure can be properly planned prior to July 1.

Franklin D. Roosevelt, Message to Congress on Appropriations for Work Relief for 1938. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/209486

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