Toward a Surplus

"I believe our people have the determination to hold expenditures in check, to pay their own way without borrowing from their children," wrote President Eisenhower this week as he sent the U.S. budget to Congress. For fiscal year 1961 (beginning next July 1), the President set federal expenditures at $79.8 billion (up $1.4 billion from 1960 spending), estimated revenues at $84 billion (up $5.4 billion)--and thereby envisioned a surplus of $4.2 billion.

Even more meaningful than the overall figures was the fact that Dwight Eisenhower, refusing to bow to the political temptation of tax cutting in an election year, urged that the surplus be applied to the staggering national debt of $284.5 billion. Behind that decision lay the governing philosophy of the Eisenhower Administration: the conviction that a strong domestic economy, based on a sound dollar, is vital to the future of the U.S. and the free world.

In its massed columns of figures the 1961 budget reflects U.S. confidence in the present and hopes for the months ahead. The whopping revenue estimates were based on Treasury Department forecasts that, in calendar year 1960, the U.S.'s gross national product will soar for the first time in history above the $500 billion mark--and by at least $10 billion. Even so, President Eisenhower was able to say happily at his news conference last week: "We are accused of being too conservative."

But in the interests of achieving a budget surplus, not even the prospects of a vastly prosperous year were such that the President could recommend tax cuts. Instead, he called for the extension of some expiring taxes and for increases in others. He asked that the 52% tax on corporate income, scheduled to drop to 47% after June 30, be maintained at present levels for another year. He also requested that the 10% excise on local telephone calls and transportation be continued, that the federal gasoline tax be raised from 4-c- to 4 1/2-c-, that taxes on standard aviation fuel (now 2-c-) and jet fuels (now exempt) be put at 4 1/2-c-, and that the rate on first-class letters go up from 4-c- to 5-c-.

On the spending side of the ledger, national defense, to which $41 billion (almost the same as in fiscal 1960) was allotted, would as always claim the hugest chunk of federal money--and again, as always, was likely to be the most hotly debated part of the budget (see below).

In other spending areas there were few startling changes. Explained Budget Director Maurice Stans: "Most major areas got some minor increases, and there were no serious cuts." Items:

Mutual Security: A total of $4.1 billion was requested for military and economic aid. In 1960 the Administration's $3.9 billion request was cut by Congress to $3.2 billion.

Space: Under heavy criticism for the U.S. space lag, the President asked that the National Aeronautics and Space Administration be raised from $325 million to $600 million for nonmilitary space work. The President ordered NASA to step up the U.S. drive in "the developing of large space vehicle systems essential to the exploration of space."

Agriculture: The 1961 budget calls for $5.6 billion, up 10% from 1960 spending. Continued high spending, said the budget message, is required "primarily because of continued high agricultural production and the past unwillingness of the Congress to make appropriate modifications in the long-established price support laws." Seeking to retire more land from production, the budget adheres to Agriculture Secretary Ezra Taft Benson's plan to boost soil bank outlays by $150 million a year, cut payments for conservation practices by the same amount. No matter what Congress does about the Eisenhower recommendations, the U.S. farm program is certain to remain the most shameful item in the federal budget.

Debt Interest: The U.S. must pay $9.5 billion in interest on its national debt--up by $200 million and comprising 12% of all federal expenditures.

In fighting his budget through the Congress, President Eisenhower is likely to run into the troubles predictable in any election year. But he is armed with his immense national prestige and his veto power, and most predictions are that the budget will remain much as he presented it.

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