Two in a Row?

This week President Eisenhower made a report to Congress that he has been yearning to make since the day he was inaugurated. In the current fiscal year, ending next June 30, the Federal Government expects to be in the black by $200 million after spending $64.3 billion and collecting $64.5 billion. In fiscal 1957, beginning next July, the Government plans to spend $65.9 billion (up $1.6 billion) and collect $66.3 billion (up $1.8 billion). If everything goes as planned, Dwight Eisenhower will ring up the first two-in-a-row balanced budgets since 1947 and 1948.

Even on paper, the achievement will be considerable. Ike's budgetmakers have worked hard for three years to cut unnecessary expenses, introduce modern management methods and get more return for every dollar spent (see below). But Ike was the first to point out that the all-important final weights in the balance came on the revenue side of the fulcrum; the tax yield from the prosperous second half of calendar 1956 will be unexpectedly good, and the Administration believes that 1957 will bring an even higher level of income.

Long-Range Promise. What Ike calls "protection" expenses will take 64% of the 1957 budget. In addition to the $35.5 billion for the armed services, the President asks for $1.9 billion for the Atomic Energy Commission, some $230 million more than this year. And he again asked Congress to authorize his favorite atomic project, the nuclear-powered "peace ship," which "will carry the message of Atoms-for-Peace to the ports of the world." On direct military aid to the allies, Ike plans to hold steady at the spending rate of $2.5 billion. Economic aid will hover near $1.7 billion, but the President wants Congress also to appropriate $1.8 billion to apply against long-range foreign-aid commitments--a project that already has drawn the ire of Georgia's Walter George, chairman of the Senate Foreign Relations Committee, and of California's Bill Knowland, Senate minority leader.

Because of increased revenues, said Ike, "we can now propose the expansion of certain domestic programs." And with that muted trumpet blast, the Administration turned away from three years of stern domestic budget-trimming to heed the clamor for some home-front expansion. The State Department, Ike said, needs an $89 million raise "to strengthen" its staff, to build a new wing on its main building in Washington and new embassies and consulates abroad. The new federal school-construction program (see EDUCATION) requires a substantial down payment on the $2 billion to be spent over the next five years, and the National Science Foundation needs a 156% raise (to $41 million) to finance basic research and bolster the nation's supply of trained scientists.

Two years ago the budget proposed private financing of new power plants for TVA; the 1957 budget asks for funds to get going on some new Government-built steam plants pending congressional approval of a revenue bond program. The fixed Government charges roll on relentlessly: interest on the Government debt is budgeted at $7 billion, and total veterans' benefits at $4.9 billion, up $86 million. By the end of the century, the President noted, veterans' compensation and pension payments may be twice the present $3 billion unless some changes are made in the system.

Running Businessmen. To support this $65.9 billion program with a balanced budget, the President asked Congress to continue all present taxes and promised that a "modest" payment would be made on the $274 billion national debt. Treasury Secretary Humphrey, answering reporters' questions, added that the Administration would not consider a tax cut unless it turned up a surplus of more than $2.5 billion at tax-collecting time next April, instead of the anticipated $200 million.

Where would the increased income come from in fiscal 1957? From an increase in U.S. personal income from $302.5 billion in 1955 to $312.5 in 1956, said Humphrey. But he expects corporate profits to stand steady at $43 billion this year, because businessmen, even with a higher volume, will run into higher costs and stiffer competition. Said a reporter: "I see a picture in my mind of businessmen running around being a lot more active but not making much more money. Is that what you mean?" Humphrey: "That's possible, but they'd still be doing pretty well."

The true sign of the times, however, is that the 1957 budget, although higher than Ike's 1956 budget, will still divert a smaller percentage of total national production to Government use. In fiscal 1953 federal spending was 20.6% of the Gross National Product, in fiscal 1955 it was 17.3%, in 1956 it is estimated at 16.6%, and in 1957 is figured to be only 16.4% of a G.N.P. waxing to an unprecedented $400 billion. Nonetheless, by raising its 1957 request for new obligational authority to an Eisenhower high of $66 billion (which will come due in subsequent budget years), the Administration seemed to accept the fact that Federal Government is not going to get any smaller in the near future.

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