The President's News Conference on the Budget

THE PRESIDENT. [I.] I want to start this thing off with a couple of readings here which will clear up a lot of things for you if you haven't read the Budget Message. This is in addition to the message.

[Reading] "Since drafting the Budget Message, we have completed our studies of the need for an appreciable increase in the production of fissionable material. Accordingly, I have directed the Atomic Energy Commission, in cooperation with the Department of Defense and the Office of Defense Mobilization, to prepare a program for submission to the Congress at its current session.

"While these plans will require immediate authority to begin letting between 5 and 6 billion dollars of contracts, the major cash expenditures for this purpose will not occur until after the fiscal year 1953. Therefore, the expenditures for the fiscal years 1952 and 1953 will not be materially affected by this increase in the atomic energy program."

[2.] Now, I am going to do something I seldom ever do. I am going to read you a couple of pages out of the Budget Message, which will explain a lot of things that you will be asking me. And it is most important.

[Reading] "The expenditures are estimated at $85.4 billion, an increase of $14.5 billion over the current fiscal year, and $45.3 billion over 1950, the last full fiscal year before the attack on Korea.

"Receipts under our present tax laws are estimated at $71 billion, an increase of $8.3 billion over the current fiscal year, and $34 billion over 1950.

"The increase in receipts will fall short of meeting the increase in expenditures. In the absence of new revenue legislation, a deficit of 14.4 billion is in prospect for the fiscal year 1953, 6.2 billion greater than the estimated deficit for the current fiscal year.

"Eighteen months ago the unprovoked attack upon the Republic of Korea made it clear that the Kremlin would not hesitate to resort to war in order to gain its ends. In the face of this grim evidence, this Nation and the other nations of the free world realized that they must rearm in order to survive.

"Since then we have made significant progress in rebuilding our defenses. We have more than doubled the strength of our Armed Forces. We have increased the number of our Army divisions from 10 to 18. We have returned to duty more than 160 combatant vessels from our 'mothball' fleet. We have added more than 40 wings to our Air Force. We have greatly expanded our production of military equipment and our ability to mobilize for any emergency. We have provided our allies overseas with the critical margin of aid necessary to help them grow stronger.

"This Budget reflects the progress we have made thus far, and it lays the groundwork for further progress."

Now, this is the important page I want you to pay particular attention to.

[ Continuing reading] "It reflects our progress to date in two ways. First, the high rate of expenditures for military equipment estimated for 1953 reflects the results of the tremendous effort that has been made during the past 18 months in getting the flow of production started. Second, the smaller amount of new obligational authority which I am recommending indicates the substantial portion of the financial requirements for our military buildup that has been met in the appropriations already made by the Congress.

"This Budget lays the groundwork for further progress by providing for additional increases in the strength of our Armed Forces, additional deliveries of arms to our allies overseas, continued requirements of our atomic energy program, and further development of our economic strength. By the end of the fiscal year 1953, we will have reached or passed the peak production rates for all of our major military items except some of the newer model aircraft and some weapons not yet in production.

"This Budget calls for the largest expenditures in any year since World War II. It will involve a heavy burden for our taxpayers, because the job of building the strength we need to safeguard the security of this Nation is enormously expensive."

And that means the security of the world as a whole from communism.

[Continuing reading] "Despite its size, this is not a Budget for all-out mobilization. It is a Budget carefully planned to carry us a long way forward on the road to security-at a pace which is not only within our present economic capacity but which will enable us to grow stronger in the years to come.

"If new international tensions do not develop, and if no further aggression is attempted, I hope we will be able to reduce the Budget expenditures after fiscal year 1954. By then we should have completed most of our currently planned military expansion.

"More than three-fourths of the total expenditures"--and this is important--"included in this Budget are for major national security programs--military services, international security and foreign relations, the development of atomic energy, the promotion of defense production and the economic stabilization, civil defense, and merchant marine activities."

[3.] Now then, I want to turn over to Page MII, (p. 68) ¹ and in the middle of the page you will find Borrowing and the Public Debt.

¹ page references in parentheses, throughout this news conference, indicate where the subjects referred to may be found in the Budget Message as printed herein (Item 18); all other references correspond to the page numbers in the Budget as published in House Document 285 (82d Cong., 2d sess.).

[Reading] "On the basis of present tax rates, it is estimated that the public debt will increase from 255 billion at the beginning of the current fiscal year to 260 billion by June 30, 1952, and to $275 billion by June 30, 1953--the present statutory limit.

"The prospective debt increase makes it essential that the Government continue to follow policies in the new financing and refunding of maturing issues which reinforce the economic stabilization program. The American people can help the stabilization program by continuing to purchase savings bonds and by taking other steps to increase new savings. The millions of people who own savings bonds maturing in the near future can also help to combat inflation by keeping their bonds and allowing them to continue accumulating interest, rather than cashing them at this time. Legislation enacted last year permits the holders of these bonds to earn interest on them for another 10 years without the necessity of exchanging them for new bonds."

And that is most important.

Now, when I came in here, the national debt was $280 billion. We succeeded in reducing it to 251 billion. But that reduction was greater than the national debt when we got into World War II. Due to the fact that we haven't been able to get the pay-as-you-go policy implemented as it should have been, we are climbing back on the national debt; but that is not an alarming situation because the national income is--well, it's the difference between 40 or 50 billions in 1934 and 284 billions, I believe it was estimated this year. National production is about 330 billions. And the relationship between the national obligations and the national expenditures is well below what it was in the years when we had to spend so much money for an actual all-out war.

I wanted to get that perfectly plain in your minds, because the country is in good shape, financially and physically; and we have been able to impose the defense program on the national economy without very much letup in the things and services that people think they ought to have.

Now I will try to answer questions.

[4.] Q. Mr. President, would you repeat again the figure for the atomic energy increase?

THE PRESIDENT. Between 5 and 6 billions.

Q. Billions?

THE PRESIDENT. Between 5 and 6 billions. But that will not come--be a burden on the economy for a year or two yet.

Q. Mr. President, within the range of security, can you tell us what happened that necessitated that, after this budget was completed ?

THE PRESIDENT. Well, the reason for the increase is due to the fact that we have--as I said in San Francisco--some fantastic weapons for which we have to prepare, which in the long run will save us money.

[5.] Q. Mr. President, will you ask for an increase in the public debt limit, if Congress--

THE PRESIDENT. Not this time, no. It isn't necessary yet.

Q. It says here you will reach it, sir--in that year 1953-54.

THE PRESIDENT. 1954. Principal expenditures on this increase will be in 1954 and 1955.

Q. Well, that brings it right up to the statutory limit then?

THE PRESIDENT. Well, let's wait and see, let's wait and see.

[6.] Q. Mr. President, you said this atomic energy expenditure would eventually save us money. Does that mean that the increase in atomic preparedness will bring about a decrease in conventional armaments eventually?

THE PRESIDENT. That is the hope. I can't say that categorically, but that is the hope.

[7.] Q. Mr. President, will you send a special message to Congress on taxes, or in any way supplement the statements on taxes in the Economic and Budget Messages?

THE PRESIDENT. The statement on the-taxes in the Economic and Budget Messages are all the statements that I intend to make. They state the facts, and it is up to the Congress after that.

Q. There will be no special message, then, indicating the nature of the great increases you desire? You do not plan to send a special tax message?

THE PRESIDENT. No.

Q. Mr. President, I believe you scheduled a program last year breaking down those rates when you submitted the $10 billion program--

THE PRESIDENT. That program of last year is the one I want. We did not get it finished, and that is what I said in both these messages, and it is very carefully set out in last year's special tax message.

Joseph Short (Secretary to the President): In the interest of everyone here, will the questioner please stand and speak clearly?

THE PRESIDENT. This room has acoustic properties like my oval room in the office in the White House. It isn't nearly so good as the one we use for press conferences, but it has more room and more seats.

And that is the reason we come over here.

[8.] Q. Mr. President, can you tell us over what period of time that 5 or 6 billion dollars for atomic energy will be spent?

THE PRESIDENT. In about 5 years.

Q. About 5 years?

THE PRESIDENT. Yes. That is a statement that has to be taken with a grain of salt. We don't know exactly how long it will take.

Q. Aside from saving us money which you said it would--you hoped it would-- will it also bring closer your aim of peace, do you think?

THE PRESIDENT. I do. I wouldn't agree to it if I didn't think so.

Q. I know that.

THE PRESIDENT. That's a fact.

Q. That is in the interest--

THE PRESIDENT. The whole thing of--this thing is done in the interest of peace in the world.

Q. Does it bring it, do you think, more imminent--closer--

THE PRESIDENT. I hope so. I can only hope. That is what I am hoping for all the time.

[9] Q. Mr. President, could you spell out a little more for us the meaning of financing--of maturing issues to reinforce the economic stabilization program ? What sort of financing do you mean that would enter into that picture?

THE PRESIDENT. That is the financing that goes on all the time. We hope that there will be more savings bonds bought which will be of great help in preventing inflation, and also it will help in the re financing of the program.

Q. Continue the present financing program?

THE PRESIDENT. That's right.

[10.] Q. Mr. President, on M-12 (p. 69) you speak of 143 air wings. When is the target date for these 143 wings?

THE PRESIDENT. As quickly as it can be done. That is a matter that the Air force and the Defense Department are working on, and I can't give you an exact date.

Q. Not 1954 or 1955?

THE PRESIDENT. I can't give you an exact date.

[11.] Q. Mr. President, is there any figure we can have as to how much will be unexpended at the end of this coming fiscal year June 30, 1952, from earlier appropriations?

THE PRESIDENT. I will let the Budget Director answer that.

Director Lawton: 72 billion. 72.8.

THE PRESIDENT. I was going to say 71.

Director Lawton: 72.8.

[12.] Q. Mr. President, to clarify this atomic thing, if you don't mind, sir. As I understand it, you don't need any more money this year than you have asked for in this budget, but what you want is authorization for the 5 or 6 billion to be expended over a 5-year period?

THE PRESIDENT. Contract authorization, that is correct. Contract authorization, that's right.

Q. Another question on that subject. Will that be--can you say whether that will be for facilities largely, or will it go largely for end products?

THE PRESIDENT. Facilities.

Q. Mr. President, is the decrease in the obligational authority for the Defense Department a reflection of that 5 or 6 billion for atomic energy?

THE PRESIDENT. No. They go together, though. They should go together. The decrease in the obligational authority for the Defense Department was because it is not physically possible for them to spend the money, and there is no use making an obligation when they can't get the material that they are asking for, and you can't spend the money, so when they cut the obligational authority down for this year, it doesn't in any way hamper the defense program.

[13.] Q. Mr. President, would we be justified in assuming that from this state-i meat that you make--you want to continue policies for the financing and refunding of programs which reinforce the economic stabilization program--would we be justified in assuming that you have accepted and given approval to the dropping of the peg under Government bonds by the Federal Reserve and the Treasury?

THE PRESIDENT. You cannot. I never was in favor of it, and I am not yet. I had some experience after the first World War in that line. You remember we had a lot of 4 1/4 percent bonds at that time, and the people who were working on the very situation you talk about ran those bonds down to 80 or 82--I forget which it was--and we bought them all up, and after that they sold for 125, until they expired. The people who put their savings into these bonds ought to be protected, just the same as the bankers ought to be protected. That is my theory. That has always been my theory. That is the theory of the Secretary of the Treasury.

Q. Hasn't there been a change, though, Mr. president, in it, insofar as each individual now purchasing E bonds is protected as to the redemption value, as against the open market bonds?

THE PRESIDENT. You answer it, John.

Secretary Snyder: On the savings bonds program, the E's, F's, and G's--what you have stated is true. There is a new arrangement there for protecting the face value of the bonds. However, what the President was saying was that there was a lot of savings that went into the regular issues also, and they are the ones that he had in mind.

THE PRESIDENT. That's right--the long-term bonds.

[14.] Q. Mr. President--M57 (p. 100)-in relation to your discussion of this flood and war disaster program, first, do you plan to send a special message of any sort outlining the proposed form the flood insurance program will take?

THE PRESIDENT. Eventually, yes. As soon as I have all the information at hand I hope to do that. The only flood control program included in this budget--the Missouri Valley, which was almost ruined this last spring, and the dam at Keokuk. That dam is disintegrating. When it was built they didn't know how to use concrete very well, and it is about to go down the river, and we have got to save it if we can.

Q. In relation to the second paragraph on that page, discussing the Budget Bureau's proposal last year on the war disaster indemnity program, your last sentence says, "The appropriate agencies of the Government are continuing to review and improve these proposals." Does that mean that some sort of refinement will be sent up to Congress?

THE PRESIDENT. We are trying to find the answer. Nobody knows the answer. For instance, if disaster should befall us so that New York, Philadelphia, or Chicago should be wiped out, the figures in regard to that situation are fantastic. And we haven't yet found a way to meet a disaster insurance situation. And we are working on it. We have all the great insurance companies and everybody else advising us on the subject.

[15.] Q. Mr. President, on that same page--aid to education--that seems to be one of your principal recommendations in this budget. Are you going to send another message on that point? You seem to feel very strongly--

THE PRESIDENT. I may, if it becomes necessary. I am going to talk to those people and see if we can't get some action. If we can't, why I'll make a speech on it.

[16.] Q. Going back to atomic energy, I gathered from what you said that 1 billion, 255 is the first installment on the 5- or 6 billion dollar program?

THE PRESIDENT. Well, no, it isn't. It's the first installment on the present program. That 5 or 6 billion will come later.

Q. I see. That is in addition to this?

THE PRESIDENT. That's right, that is in addition.

[17.] Q. Mr. President, could you discuss how your military budget might affect future aircraft production? Manufacturers seem to expect severe cutbacks in their schedules due to this budget.

THE PRESIDENT. It depends altogether on our ability to obtain scarce materials. It may and it may not. If we can get the material, it will not. That's the difficulty--strategic metals and things that are hard to get, and if we can't get the metals we have got to meet the program. We have made some cutbacks on automobiles and refrigerators, and things of that kind. I hope we won't have to go much further with it.

Q. Mr. President, you don't anticipate that the reduction in new obligational authority for the Defense Department will delay the achievement of a 143 group air force?

THE PRESIDENT. No, I do not. The lag between the order and the plane is so great that that will have no effect on it at all. You see, I have had plenty of experience on that. I used to go around and "'punch" the companies, and try to get things off the line in 1943 and 1944. And usually when they came off the line they were obsolete, and we had to build them over. That is what we want to avoid if we can, in this instance.

[18.] Q. Mr. President, could you give us a carryover figure for fiscal year 1953, comparable to the one you gave for fiscal year 1952?

THE PRESIDENT. That was 1953

Director Lawton: 71.7.

THE PRESIDENT. That figure went into 1953.

Director Lawton: 71.7.

Q. I meant at the end.

Director Lawton: That is into 1954--out of 1953 into 1954.

THE PRESIDENT. About the same.

[19.] Q. Mr. President, you call attention on page M6 (p. 65) to a decline of 9 percent in the other expenditures of Government apart from the military. I wonder if you or Mr. Lawton could give us some of the largest individual items in that list?

THE PRESIDENT. Principally in new starts on reclamation and flood control, and things of that sort.

This budget has been the biggest headache I have ever had. This is my seventh or eighth budget--I think the seventh one I have made since I have been President. I had a hand in implementing 15 more before that, as a Member of the Appropriations Committee of the Senate. And I have never had as much difficulty getting the budget in shape, so I could send it to the Congress, as I have with this one. We have been working on it since the first day of September. I think you can tell that, because I can answer your questions. [Laughter]

Q. Mr. President, on page M6 (p. 64), the paragraph above Budget Expenditures, I am intrigued by the "1954" and the use of the word "we." "I hope we will be able to reduce budget expenditures after the fiscal year 1954." Would you mind explaining what kind of a "we" that is?

THE PRESIDENT. You don't need any explanation for that. You know, there are 531 fellows down the street here that have to work on the budget, and they have to work in cooperation with me if they are going to get anything done.

Q. I thought you were referring to yourself?

THE PRESIDENT. No. I am referring to Congress and the executive branch of the Government. I never call myself "we." I say 'I' when it is necessary. I don't wear a crown yet. [Laughter]

[20.] Q. In connection with that, Mr. President, I wonder if you wouldn't tell us if you would take some pleasure from being able to submit the 1955 budget?

THE PRESIDENT. I will answer that question at a later date.

[21.] Q. Mr. President, in your Navy budget you have got a billion and a quarter for ships and facilities. Does that include any more flush-deck carriers?

THE PRESIDENT. I am not sure whether it does or not, because I haven't got the details on it yet. I think probably it does.

It includes one, the Budget Director says.

Q. One. One more?

THE PRESIDENT. One more.

[22.] Q. Mr. President, I have a question I think is fiscal--[laughter]--

THE PRESIDENT. Good. Go ahead, May. ²

Q. We asked Mr. Churchill3 yesterday at his off the record press conference whether he had won off you at poker. His answer was off the record, but since this is off the record, I wonder if--on the record--I wonder if you would answer?

THE PRESIDENT. I support Mr. Churchill's answer. [Laughter]

² Mrs. May Craig of the Portland (Maine) Press Herald.

³ Winston S. Churchill, Prime Minister of the United Kingdom.

[23.] Q. Mr. President, as I recall, when you sent your last budget up, you said that it would be very, very difficult, you thought, for Congress to cut it, in fact you practically dared them to cut it. Would you say the same thing about this budget?

THE PRESIDENT. I have never made a budget yet that I didn't think was correct. The figures in this budget can be supported by evidence that I think is incontrovertible. The Congress did not try to cut the budget in detail, they made an across the board percentage proposition, which is entirely contrary to the Constitution. When I send the budget to the Congress, they are supposed to take it item by item, and decide whether that is right or wrong. When they work that out on a percentage cut, why it's all wrong.

[24.] Q. Mr. President, can you tell us, please, what level of national income was assumed in arriving at the figure of $71 billion in receipts in fiscal 1953?

THE PRESIDENT. 274?

Secretary Snyder: 256.

THE PRESIDENT. 256?

Secretary Snyder: 265--I beg your pardon, 265.

THE PRESIDENT. John, I thought it was 274?

Secretary Snyder: Personal income, 265.

THE PRESIDENT. 265, that's right.

Secretary Snyder: This year's was on 251.

Q. Would that be the national income figure that would relate to that?

Director Lawton: About 220 billion-higher--around 285.

THE PRESIDENT. 280--285. But the national product is a thing you have to consider.

Secretary Snyder: That is still higher.

THE PRESIDENT. 330 billion, if I remember correctly.

Q. You are assuming 330 in fiscal '53?

Secretary Snyder: We bottom our revenue estimate on the average income paid to individuals and on corporate earnings; that is, 265 is the estimated average income to individuals, and 46 on income to corporations. Those were the figures that we used as the base. Now, for this present year 1952, we use 250 and 45.

THE PRESIDENT. That's right.

[25.] Q. Mr. President, going back to that atomic energy obligational authority, does that mean that instead of 84.2 billion of new obligational authority, it will be something like 90 billion?

THE PRESIDENT. No. We won't go into that in detail. This atomic business is a very touchy subject. I wish you would get off it as much as you can. I have given you all the facts possible in this little statement I have made here, and details you can't go into at this time. When it comes time so I can put out the details, you will have them all.

Q. I wasn't thinking of details, Mr. President. I was just wondering where it fits into it--in other words, a request for obligational authority that will add on to the total.--

THE PRESIDENT. No, it will not be. Not this year.

[26.] Q. On M64 (p. 105), in the social security economic report, and again here, you suggest an increase in the taxable wage base of $3,600. What figure do you have in mind--

THE PRESIDENT. I don't understand the question?

Q. On M64 (p. 105)--social security-what taxable wage base would you propose above $3,600--how high do you want to go above that?

THE PRESIDENT. I haven't given it much thought. I think it ought to go up to 6,000, probably.

[27.] Q. Mr. President, you have always been an advocate of the St. Lawrence Seaway.

THE PRESIDENT. That's right.

Q. You indicate in here now that Canada is seriously considering building that on her own.

THE PRESIDENT. Canada is going to build it on her own, if we don't go into partnership with her--they have assured me of that--and then we are going to have to pay taxes to Canada.

Q. I just wonder how that would penalize the United States if we do not build--

THE PRESIDENT. Canada then will get all the fees that go with the operation of the Canadian--of the St. Lawrence Seaway, and we will pay toll on it because we have got to use it. Otherwise we would be in partnership and split the thing 50-50.

[28.] Q. Mr. President, I don't find any--there may be an item in here on national health insurance. Are you waiting for your commission to report, before you--

THE PRESIDENT. I think I have covered that in the Message on the State of the Union, and as soon as the health commission reports I will have--

Q. Your previous budget did contain an item--

THE PRESIDENT. My mind hasn't changed on it.

Q. There is no item in here. I am asking is there any item?

THE PRESIDENT. No, there isn't any item, because we are waiting to get more information on the subject.

[29.] Q. Mr. President, I want--I don't want to keep harping on this atomic energy thing, either, but I wonder if you would clarify--would the 5 or 6 billion be a request for contract authorization, not new obligational authority?

THE PRESIDENT. When the time comes to ask for it, why of course it will be contract authority.

Q. But no request for funds?

THE PRESIDENT. It will be--

Director Lawton: It will be obligational authority. Whether it is in that full amount immediately, or whether it will be necessary between now and the next 2 fiscal years will be the question. As to whether it goes up to this first amount, it may be something less than the first request, but some more to come in a subsequent request--but that is the total. It will be at this session of Congress.

THE PRESIDENT. The request will be made at this session, won't it? I wasn't sure whether we had to make this request this session, or wait; because we can t do anything about it for some time to come.

The Budget Director tells me there is a lot of machinery that has to be ordered far in advance--takes 2 or 3 years to get.

[30.] Q. Mr. President, there is nothing in the budget on the Brannan farm plan. Have you changed your mind on that?

THE PRESIDENT. No, I have not. I think I covered that in the Message on the State of the Union--also the Economic Message.

[31.] Q. Mr. President, the aircraft figure of 18 billion, 9--the Air force boys are always talking of 20--did they holier on this one?

THE PRESIDENT. Oh, yes. They always holler. What's the use of giving something they can't use? When it comes time, we always meet the necessities.

Q. It's on the strategic materials that is holding that back?

THE. PRESIDENT. That's correct.

[32.] Q. Mr. President, on page 581 of the big book--[laughter].--

THE PRESIDENT. Go ahead, it's all right.

Q. Relating to war risk insurance revolving fund under Marine Activity, it refers to title 12 of the Merchant Marine Act of 1936 as amended. Does that mean the bill was enacted by Congress last year which authorized the standby program on marine war risk insurance?

THE PRESIDENT. I am not sure about that. Is that a fact?

Director Lawton: It includes all amendments to that effect--the act as it stands today--the authorities as it stands today.

Q. I was wondering whether that act last year was the amendment to the 1936 act or whether that was a separate act?

THE PRESIDENT. It must have been an amendment. It must have been an amendment.

Director Lawton: An amendment to the act, title 12.

[33.] Q. Mr. President, do you approve a proposal in the Congress to change that $50 a month earning limit on social security pensions, since so many people on pensions are pinched these days?

THE PRESIDENT. I asked for an average raise of $5 a month on it in the message here.

Q. I mean on their earnings outside the pension. They are limited to $50 a month.

THE PRESIDENT. I don't know anything about the details. I never was in social security except as employment director of Missouri, one time.

[34.] Q. Mr. President, on the question that Pete ⁴ asked about the Air force hollering about the cutbacks that they didn't get or they wanted, isn't it also a factor that we don't want a larger deficit in the economy of the country at this time?

THE PRESIDENT. Well, you know, I will answer that question in a kind of a round about way. When people come up to the President with a request they always ask for plenty, and they know they are not going to get it. So the Budget Director holds hearings on it, and he has all the facts before him, and then he and I sit down and decide how much they are entitled to, and that is what they get. And sometimes they go down to Congress and increase it, and sometimes they go down there and get their heads cut off.

⁴ Raymond P. Brandt of the St. Louis Post-Dispatch.

Q. Mr. President, is it on that theory that you are asking Congress for more taxes? [Laughter]

THE PRESIDENT. No. You know better than that. What I am trying to get is a pay-as-you-go program, just like I wanted when we started out, and we can afford it. That's the reason I asked for the taxes. I would like to reduce that national debt if I could, just as I did in the first place. And that is what the request is for. It has nothing to do with these people who are asking for money. Everybody asks the Government for all the money they think they can get, but sometimes they don't get it--not if I can help it.

[35.] Q. M61 (p. 103)--scholarship program--how and by whom would the recipients be chosen?

THE PRESIDENT. In the same manner that they are chosen now. We have had them all the time. Hardly a month goes by that I don't address some organization of people who are going to school in this country, or address some people who are going to school in other countries. It will be handled in exactly the same way as it is now. It is handled in the State Department.

Reporter: Thank you, Mr. President.