Statement on Government Expenditures.

THE PRESIDENT said:

"I have reviewed the present fiscal situation with Secretary Mellon and Under Secretary Mills, and I can state that there is no ground now for the predictions in the press this morning that a deficit was impending which would prevent the continuation of tax reductions established last year.

"The indications of decreasing revenue and increasing expenses during the past 6 weeks, upon which calculations were very properly based, do not take several factors into account. Imports and consequently customs receipts have been temporarily reduced because of advance imports to anticipate the new tariff law. We have been expediting construction expenditure to give the maximum employment in the first 9 months of this fiscal year. The calculations as to possible deficit take no account of the receipts from payment on foreign debt, nor the revision of expenditures downward from the estimates of the first of last July, which were then placed at $4,203 million (including the Postal deficit).

"I have not as yet received the reports from all of the departments of the result of their drive for economies, but from the results already obtained in the departments that have reported, we have an indicated reduction of about $75 million in expenditures. In such reductions must be borne in mind that of the total estimated governmental expenditures, approximately $2,200 million are for such fixed charges as interest and redemption of the public debt, payment of pensions. No part of it can be reduced by administrative action. The field of economy is therefore limited to about $2 billion, of which something like $400 million are commitments for construction work of one kind or another which were increased and must be maintained in order to maintain employment."