Evening Star Newspaper, January 8, 1937, Page 15

<+ O THE Congress of the United I States: | Pursuant to provisions of law | I transmit herewith the budget | of the United States Government for | the fiscal year ending June 30, 1938, to- | gether with this message, which is & part thereof. The estimates have | been developed after careful analysis ' of the revenues, obligations, and reasonable needs of the Government, and I recommend appropriations for the purposes specifically detailed herein. Part 1 The programs inaugurated during | the last four years to combat the de- | pression and to initiate many needed | reforms have cost large sums of money, but the benefits obtained from them are far outweighing all their costs. We shall soon be reaping the | full benefits of those programs and | #hall have at the same time a balanced budget that will also include provision | for reduction of the public debt. I The fiscal plans of the Federal | Government for these four years have been formulated with two objectives | in mind. Our first was to restore & suecessful economic life to the coun- | trv. by providing greater employment | and purchasing power for the people, | by stimulating & more balanced use of our productive capacity, and by in-| creasing the national income and dis- tributing it on a wider base of pros- perity. Our second was to gain new | advantages of permanent value for the American people. Both of these objectives can be accomplished under | » sound financial policy. Gains Bring Cuts Tn 1938 Expenditures, Business conditions have shown each year since 1933 a marked im- | provement over the preceding year.! Fmployment in private industry is in- creasing. Industrial production, fac- tory pay rolis, and farm prices have steadily risen. ‘These gains make it possible to re- duce for the fiscal vear 1938 many expenditures of the Federal Govern- | ment which the general depression made necessary. Although we must continue to spend substantial sums to provide work for those whom industry has not yet absorbed, the 1938 budget is in balance: and, except for debt reduction of $401,515,000, it will re- | main in balance even if later on there are included additional expenditures of as much as $1,537.123,000 for re- | covery and relief. We expect, more- over, if improvement in economic conditions continues at the present | rate, to be able to attain in 1939 a | completely balanced budget, with full | provision for meeting the statutory | requirements for debt reduction. i In carrving out this policy the American people are obtaining lasting benefits. Economic protection of the aged and physically handicapped is being secured through the operations of the social security act. Ability of the farmer to obtain a more constant livelihood has been enhanced by the enactment of legisiation especially designed for that purpose. The home owner has been benefited through the GE TO CONGRESS ON THE BUDG Summary of Federal Estimates sl 1. Legislative, Judicial and Executive 1. Legislative establishment . 2. Judiciary 3. Executive Office Total, legislative, judicial and executive . o IL. Civil Departments and Agencies: £ 1. Department of Agriculture. Department of Commerce. Department of the Interior. Department of Justice (except th Judiciary, 1, 2, above) . Department of Labor. . Department of State_ ‘Treasury Department (except debt retirement, interest, social security and refunds, VIII, IX and X be- . Wa pa: Panama Canal . Railroad Retirement Board. Rural Electrification Administra- States Maritime Com- mission . Other independent offices and establishments == . Retirement funds, civil, Canal Zone, Alaska Railroad and For- eign Service (Government share) . Post Office Department, defi- ciency (from annexed budget) tsee analysis following this sched= ule) - . District of (from annexed budget) Unclassified items Adjustment disbursing officer’s checks outstanding To'al, civil departments and agencies III. General Public Works Program: 1. Tennessee Valley Authority 2. Veterans' Administration _ 3. Department of Agriculture. timated. fissal year 1937, $23.300,100 17,608,500 435,700 $41,344,300 $124,881,200 38,556,400 12,944,600 20,210,000 17.123,000 16,519,800 150,411,300 34,828,200 10,387,900 27,223,000 21,475,000 26,000,000 43,807,300 73.255,000 30,769,478 $49,000,000 10,000,000 152,900,000 timated, fseal h’"’.‘l‘f 1936, $23,673,450 17,206,000 511,100 $41,300,550 $119,691,285 35,301,950 14,495,762 19,880,000 16,065,220 17,520,700 151,654,100 41,444,100 11,281,000 8,162,500 970,000 8,188,000 42,835,600 46.735.300 50,203,181 $48,000,000 8,000,000 95,000,000 | 4. Department of Commerce 6. Department of Justice. 7. Department of State._ 8. Treasury Department - 9. War Department . i Total, General Public 1 Program { . National Defense: | 5. Department of the Interior. | 1. Navy Department ... 2. War Department .__ Total. national defense___.__ = 1,000,000 58,052,000 600,000 4,250,000 45,306,963 1,000.000 45,930,000 2,200,000 3,460,000 ‘Works $451.108.963 !31! 59(»1."0(!“ $587,302.600 $510,280,080 393460400 377.601.000 $980.763.000 $887.881.080 STAR, WASHINGTON, C., -FRIDAY, . | taxes which will not only make up the | loss in revenue due to the Supreme Court decisions invalidating the taxes I)ev|ed under the agricultural adjust- | ment and the bituminous coal acts, | but will produce additional income of | approximately $174,000,000. | Since the revenue act of 1936 mate- rially changes the tax structure, the individual items of revenue as con- tained in the original 1937 budget will not be exactly comparable with the individual items in the 1937 budget as | revised in this message. Income Taxes Expected To Rise $946,325,000. Income taxes are expected to yield | $2,372,900,000, or $946,325000 more than was received from this source | | last year: miscellaneous internal rev- | | enue, $2.274,968,000, an increase of $265,389,000; customs duties, $446,« 1800,000, an increase of $59,988.000; and realization upon assets, $31,830,~ | 000, an increase of $26.362,000. In ad- | | dition, it is expected that the new tax | | on unjust enrichment provided by the revenue act of 1936 will amount to | 882,000,000 and that the tax on car- | riers and their employes will be $134,- | 552,000, including $33,000.000 deferred | from the previous fiscal year. The col- | lection of taxes levied under the social | security act will begin in the last half of the fiscal year 1937, and it is ex- | pected that these taxes will produce additional revenue in the amount of | $324.600,000. | The only item of revenue showing | | any decrease is that of miscellaneous receipts, in the amount of $50,325,000, | | which is due to reductions in interest | payments made to the Treasury by the | Reconstruction Finance Corp. f‘ Expenditures—From present indi- | cations expenditures for the fiscal vear | 1937 (exclusive of expenditures from postal revenues) will amount to $8.480.804,000. Exclusive of statutory | debt retirement and adjusted compen- sation payments, the total expendi- | tures will amount to $7,512,779,000, an | .| increase over comparable expenditures for 1936 of $709,714,000. | This amount is made up of increases | of $371,192,000 on account of the social } Miscelianeous ARY 8, 1937, ET Actual and estimated expenditures of the Government for the flacal years 1932-38. gency funds.) (In Millions Estimated 1938 Regular operating expenditures: Le; ve. judicial and establishments National = defense Veterans' pensions and mefits = Interest on the public debt 1937 (Classifications include erpenditures from both general and emer- of Dellars.) 1936 Actual 1934 19435 5977 B728 7099 540.3 807.1 B56.9 8209 756.8 Total Public works Unemployment relef: Direct relief York rellet (W.'P. A Civilian Conservation 13.0 106.7 *.2 1.400 715.8 350.7 8051 __ 3319 591.7 1.914.1 512644 113 D T4RE3 43556 Corps (1) Total _ Loans(net) Subseriptions to stock Agricultural adjustment pro- “eram an24 gram Less revenues .. Net Social_security _ 18.0 Debt_retirement so01s Supplemental items __ 4500 9.6 4045 20 | ¢ e et # 735090 4616 4126 X e wal > 750.0 - S = p Grand total *To be increased by yellet for the fiscal i wiil not exceed $1.547. | Punds for coni “supplemental items ** PP Excess of credits deduct 11 Excess of revenues, deduct. 1001 ion’ of the Civil Receipts.—Treasury receipts in the fiscal year 1938 are expected to reach a total of $7.293,607.000, an increase of $1.465,456.000 over similar receipts for 1937 and $3,177.650,000 over 1936. This gain is largely due to an increase in income taxes as a result of im- | proved business conditions and the | operation of the revenue act of 1936. The amount expected to be collected in 1938 from income taxes is $3,365,- 300,000, & gain of $992,400,000 over the fiscal year 1937. internal revenue will produce $2,508,- 332,000, or $233,364,000 more than is expected from this source for 1937. | The tax on unjust enrichment and the taxes on carriers and their em- | ployes from which $82,000.000 nnd; | $134,552,000, respectively, will be de';rephcpmcnt b il rived in 1937, will produce no revenue in 1938, since under existing law these security act, $85,603,000 on account of | interest on the public debt, $194.161.000 for the general public works program, | $123,442,000 for national defense and | $221,914.000 for other purposes; and decreases of $93321,000 for the Vet- ! erans’ Administration, £74.996.000 for the agricultural adjustment program and $118,281,000 for the Civilian Con- taxes expire during 1937. The first ! full year of tax coliections under the social security act will result in reve- nue of $774,800,000 in 1938, which sum is $450,200,000 greater than the an- {Llclpfiud revenue in 1837, when col- | lections will be for only six months. It is believed that customs revenues will rise from $446,800,000 during the 1580 8.480.8 8,803.1 6.854.4 ny amount appropriated b As indiczted In the mes Miscellaneous | . Veterans' Pensions and Benefits: 1. Veterans' Administration __-__ 3. Adjusted compensation payment $577,524.000 $580.771.465 | servation Corps. Current Estimates Show Big Deficit. | present fiscal year to $463.000.000 in 1938, a gain of $16.200.000. Miscel- | laneous receipts, however, will de- Total, veterans’ pensions and benefits . Agricultural Adiustment Administration Refunds of processing taxes..__ $577.524.000 "7.7]0’.2771‘.665 $482,400,000 $445,110,000 22,500,000 Total, Agricultural Adjustment Civilian Conservation Corps. Social Security: 1. Administrative expenses . 2. Grants 3. Old-age reserve account. Total, Social Security. . . Debt Charges: 1. Interest _.._ 2. Retirements . —e---- $482.400.000 7‘!6' 610.00_0 2 $23,749,000 272,225,000 153,760,000 540,000.000 225,000,000 $835.974.000 $399.637.500 368,000,000 $20.887,500 $860,000,000 $835,000,000 401,515,000 404.525,000 Total, debt charges _.__.......$1.261,515.000 $1.239,525.000 financing of mortgages at reasonable | ;ijonqly co-operation of the Congress rates of interest. Investors in se- curities are being given a larger meas- ure of protection by the securities | and exchange act. The market for | corporate securities has been restored and industry has been able to finance its long-term requirements on a fav- | orable basis. The rights of labor are being materially advanced through operation of the national labor re- lations act. and the Executive. Of this co-opera- tion I am confident. Part 11 RECOMMENDATIONS | Temporary Miscellaneous Internal | Revenue Tares—1 recommend that | minous coal act. Had it not been for the invalidation of these taxes, the total fiscal year 1936 would have exceeded the revenue estimates of a year ago by | $162,000.000. The collection of taxes on carriers and their emploves, estimated at $33.- | 000.000. has been deferred to the fiscal vear 1937 because of pending litiga- tion. The receipts from income taxes were about $7.500,000 less than last revenues received during the The amount of the recovery and re- | lief expenditures has been estimated at $2.166.157,000, but there is included in the supplemental expenditure ftems | $650,000,000 from an appropriation of $790,000,000 to be requested of Con- gress for the purpose of carrying the Works Progress Administration and related programs from February 1 to June 30, 1937. This will increase the estimated expenditures for recovery | and relief to $2,816,157,000, an in- crease of $39,361.000 over 1936. The expenditures in the current fiscal year will include, however, the sum of about | $165,000,000 for assistance given to in- dividuals and communities directly or indirectly affected by the widespread drought conditions prevailing during the past Summer. 1If this drought had | Dot occurred, the net cost of recovery | and relief for the current fiscal year | would have been about $125.000,000 ' | below the cost for the previous fiscal | year. | rent estimates for the fiscal year 1937 | i show a gross deficit of $2,652,654,000. | | Deducting public debt retirements, the net deficit will be $2,248.129.000. | The increase in the public debt on Account of the deficit, however, will be only $1.348,000,000 since it is an- { ticipated that $900,000,000 of the defi- cit will be financed from cash on | Deficit and public debt.—The cur- | crease $8.950.000, the 1938 collections being estimated at $151.550,000, as compargd with $160.500.000 during 1937. From realization upon assets $30.625,000 will be received, while in 1937 receipts from this source will amount to $31,830,000. 1938 Expenditures Cut $2,323,000,000. Ezpenditures—The expenditures for 1 1938 contemplated under this budget (exclusive of those from postal reve- nues) will total $6,157,999,000. or approximately $2,323,000,000 less than is now estimated for 1937. General expenditures for regular activities amount to $5.841.968,000, as compared with $5,664.647.000 in 1937. an increase of $177,321.000. The 1937 estimate, however, contains an amount of $563,500,000 for completion of ad- justed compensation payments to vet. erans, so that the comparable increase over 1937 is $740.821,000. For re- covery and relief there is included in the expenditures for 1938 the amount of $316,031.000, which, of course, is not the full amount that will be re- quired for relief during that year. As previously indicated, it is our pres- ent hope that the additional amount to be requested for this purpose will not exceed $1,537,123,000. Thus the total expenditure for recovery and 6.752.0 5.143.0 5153.6 ‘ongress for recovery and ge, it 1s hoped the amount ian Conservation Corps are included under | ‘The general expenditures include | $860,000,000 for interest on the public debt, an increase of $25,000,000 over | the amount for the present fiscal yesr, and $401,515,000 for statutory debt re- | tirements, a decrease of $3,010,000. Ex- clusive of the service on the public the corps from March 31, 1937, to the end of the current fiscal year, and I strongly recommend that Congress en- act during the present session the | necessary legislation to establish the corps as s permanent agency of the Government.” Although the estimates for 1938 sub- mitted today do not mention the C. C. C., funds for the corps, probably amounting to $300,000,000 to be used in 1938 are included in the item en- | titled “supplemental items” of $450,- No new money is included in the estimates for 1938 for the Public Works Administration. However, an | | estimate of $10,000,000 or $16,000,000 | Jess than the amount provided for | 1937 is asked for the administration of the P. W. A. The amount allowed | provides for a liquidation program | starting July 1, 1937. Unless there | should be some statutory measure en- | acted extending the life of the P. W. A. that emergency agency seems bound to fade out of the picture. There are about $200,000,000 of & $300,000,000 | fund appropriated by Congress at its | last session from which money may | 8till be allocated for P. W. A. projects. The President, however, is trying not |to allocate P. W. A. money except where it may be used to take men off relief rolls. The President in hix 1938 estimates | Included $812,225.000 for social secur- |1ty grants and for the Government’s | contribution to the old-age reserve | account. more than double the ex- | penditures for these purposes in 1937. | debt and the payment of adjusted | compensation to veterans, there is a net increase of $718,831,000 in expen ditures for regular activities as com pared with 1937. This increase is ac- | counted for as follows: For increased requirements under the social security act, $436,337,000; for additional ex- penditures under the general public works program, $132,519,000; for na- | tional defense to provide for the in- creased strength of the Army as di- rected by Congress and to provide for cordance with existing authorizations, | $92,882,000; for the necessary funds for the activities of the Railroad Re- tirement Board and for rural electrifi- cation, $39.566.000, and for increased needs of other activities, $17,527,000. Hopes 1938 Surplus | Will Cover Relief. | Surplus and Public Debt —The sur- | plus for the fiscal year 1938, as pre- sented in this budget, is $1,135,608,000, after providing for debt retirement. Excluding provisions for debt retire- ment, the surplus will amount to $1,537,123,000. As I have previously stated, it is hoped the additional needs for relief during the fiscal year 1938 will not require expenditure of more than this latter amount. On this basis the estimated gross public debt, on June 30, 1938, will be about the | same amount as at the close of the | fiséal year 1937. This does not take into account any change which may | occur as a result of the Treasury policy | in holaing as “inactive” future ac- | quisitions of gold. Appropriations—The total apgro- | priations recommended in this budget aggregate $6,839.000.000. those for the Postal Service, District of Columbia, and probable supplemen~ tal items, while the appropriations al- | ready made and prospective supple: | mental items for the fiscal year 1937, exclusive of requirements for recovery kll’ld relief, total $6,261.000.000, an in- crease of $578,000,000 for 1938. increase is due to additional appropri- ations amounting $309,000,000 on account of the social security act; $80.- 000,000 required under the generai public works program, and $189.000.- 1000 on account of departmental re- ! quirements, including the national de- fense. The appropriations made and contemplated for recovery and relief for 1937 total $2,215,000,000, whereas including | This | For several years still further increases |in these requirements will develop. These expenditures, however, will be offset to a large extent by the increas- ing revenues under the social security act. These revenues during 1938, the first full year of tax eollections, under the social security act will result in revenue of $774,800,000, which is $450,- 200,000 greater than the anticipated revenue in 1937, when collections will | be for only six months. Pay-as-You-Go Plan. While no mention of it was made in the budget message. it is the pur- pose of the administration to amend | the social security act so that it will operate to a greater degree on a pay- | as-vou-go plan without the necessity of building up a forty or fifty billion | doliar reserve. The President included in his budget message not only his estimates of re- ceipts and expenditures for the fiscal year 1938, but @lso a review of the fiscal years 1936 and 1937. The huge deficit at the end of the fiscal yvear 1936, amounting to more than $760.000,000, was due to the fact that the Supreme Court, in hoid- ing the A. A. A. and the Guffey Coal Acts unconstitutional, lost to the Gov- ernment $457,000,000 in revenue, and the payment of the soldiers’ bonus. amounting to $1,673,493,000 had not been estimated for. ‘The income of the Federal Govern- ment during the fiscal year 1937 will increase sharply over 1936. This will amount to $1.712,194,000 over the act- ual receipts for the fiscal year 1936, and at the same time will be an in- crease of $173933,000 over the esti- mates contained in the 1937 budget submitted a year ago. The amounts for recovery and re- Hef expenditures will run consider- bly higher than the original esti- mates. About $165.000,000 was used for assistance to individuals and com- munities directly or indirectly affected by the wide-spread drought conditions prevailing during the past Summer. The gross public debt at the end | of the current fiscal. year is esti- | mated at $35,026.000,000, an increase ! over 1938 of $1248,000,600. The esti- mated debt at the end of the fiscal | year is based on contemplated ex- | penditures set out in the budget and | does not take into account any change B 1T6727 GAIN N NAVY BUDGET $563,996,359 Total Pro- vides More Officers, Men and Planes. The Navy is given generous treal- ment in the 1938 budget estimates, representing a net increaze of $34.- 176,727 over the current fiscal year. This will provide additional officer and enlisted personnel for the ex- | panding Navy, as the service is grad- |ually built up to the strength laid | down in the Washington and London | naval treaties—a strength to be reached in 1942, under Secretary Swanson’s oft-repeated statement. The 1938 estimates total $563,996.359. Expanded reserve activities, the growing list of retired officers and en- listed men. an increased number of airplanes, the added cost of labor and materials, alterations and improve- ments required to keep the units in a high state of efficiency and “the ne- cessity of providing a larger reserve of arms, armament. ammunition and | other supplies” will all be cared for in the extra expenditures recommended {to Congress. A jump of $9.800,000 is | due to more ships coming into com- | mission. | “In order to replenish the stock | under the naval supply account fund | so that it may better and more eco- | nomically supply the needs of the | Navy, it is proposed that the eapital fund be increased by $6.000.000." &aid the President’s budget message to the Congress. ! Treaty Status Emphasized. ‘The message made it clear that “the naval estimates for 1938 have been prepared on the basis of our naval needs as covered by plans evolved un- !der conditions obtaining under the Washington and London treaties.” emphasizing that “they involve nn expansion whatever over what had been planned before it was known that these treaties were not gning to be renewed.” “The increase under ‘aviation’ ap- proximates $10,910.000." the message explains. “Of this sum, $6.410.000 represents the difference between the amounts due on prior-year contracts in 1937 and the amount due on prior« year contracts in 1938. The remainder, $4.500.000, is due to the increase in the program for procurement of planes and also to the additional amounts required for operation and maintenance of a larger number and larger types of airplanes, together with the increased cost of upkeep and maintenance of the air stations used !for training personnel and those serve ing as auxiliary to the fleet, | New Construction Lowered. “The estimate for public works g $2,863,000 over the amount appropriat- ed for 1937. The amount proposed for appropriations under this head is re< quired to carry forward work on projs ects under way and uncompleted on { June 30, 1937, and to provide tha | commencement of certain additional | projects during 1938. ; “The amount recommended for eon< struction of naval vessels is $11.500.00a | less than the appropriation for thiy | purpose in 1937. Due to strikes and other causes, the ship-building pro- 'gram has been delayed. This delay | will result in a large unexpended bal« {ance being carried forward from the | fiscal year 1937 for expenditure in 11938. Although the estimates for ship [comtrur'non for 1938 are less than the appropriations for 1937, no curtail« the Congress take steps by suitable leg- | hand. | relief during 1938 would be $1,853.- | it is hoped that corresponding appro- | which may occur as a result of the | Fstimates on Relief To Come Later. I plan to submit at a later date an estimate of appropriation for add tional relief for the fiscal year 1938, which T hope will not exceed the amount of $1537,123,000, previously mentioned. This hope is based on the assumption that industry will co-ope- rate in employing men and women from the relief rolls in larger numbers than during the past year. Many of those in charge of industrial manage- ment, recognizing their obligation to the Nation, have furnished to the large measure of employment to the job- less. Today, while it is true that in rome sections of the country certain types of skilled workers are still seek- ing employment, it is nevertheless A fact that the great majority of those now receiving relief belong to the unskilled group. It is my con- vietion that if every employer or potential employer will undertake during the next six months to give employment to persons now receiving ‘Government help, the national budget can thereafter be kept definltely in balance. Without such co-operation on the part of employers, the question of & balanced budget for 1938 must of necessity remain an open one, for the very good reason that this Govern- ment does not propose next year, any mgre than during the past four years, to allow American families to starve. To continue the gains we are mak- ing and to accomplish in the 1939 budget & complete balance between receipts and expenditures, including debt reduction, we must now lay the groundwork of our future fiscal policy. Inereased Costs Show Normal U. S. Growth. While rellet expenditures should decline with greater re-employment, | the normal growth of the country | naturally reflects itself in increased | eosts of Government. Many of the old functions and duties of Govern- ment naturally cost more as the in- dustrial and agricultural activities to which they are related expand in Yolume. The cost of new funetions and duties can be substantially re- duced only by curtailing the functions or the duty. I propose shortly to sub- mit to the Congress a broad plan for placing the executive branch of the ‘Government on a sounder and more responsible basis of management. The carrying out of such & plan will un- doubtedly result in some saving in expenditures; but it must be remem- bered that what is generally known as overhead represents only a small frac- tion of total expenditures in any large busineas, Government or private. nditures must be planned with L] to the national needs; and no e sion of Government activities shquld be authorized unless the nec- y for such expansion has been or jthe creation of new activities, it bedomes a matter of sound policy sinfultaneously to provide new revenue lu,tdont to meet the additional cost. ‘The success of such a pelicy can be assured only through the full and - : islation to extend the miscellaneous jnrernal-revenue taxes which under existing law will expire next June and July, and also to maintain the cur- rent rates of those taxes which would otherwise be reduced next June. I consider that the revenue from such ! taxes or its equivalent is necessary for | the financing of the budget for 1938. | Postal Receipts.—The estimates of appropriations for the postal service included in the 1938 budget are pre- | dicted upon the continuance during | that fiscal year of the 3-cent postage | rate for first-class mail other than for iocal delivery. While the Government | | makes a profit on first-class mail, the | | ppstal service is not self-supporting because it carries other classes of mail | | a$ & considerable loss, as shown in the | tabular footnote on page xxiii. It | shouwld be the definite policy of the Government to operate the postal service out of postal receipts, and & continuation of the 3-cent rate will be s necessary step toward the ac- complishing of this purpose. Supplemental Estimate Due for the C. C. C. Civilian Comservation Corps.—The ! Civilian Conservation Corps has dem- | onstrated its usefulness and has met with general public approval. It should be continued. I intend shortly to submit a supplemental estimate of appropriation to carry the Corps from March 31, 1937, to the end of the | current fiscal year; and I strongly recommend that Congress enact dur- | ing its preesnt session the necessary legislation to establish the Corps as a permanent agency of the Government. E. ses of Emergency Agencies.— ‘There are included in the 1938 Budget, pursuant to the direction of Congress at its last session, estimates of appro- priations for the sdministrative ex- Ppenses of certain emergency agencies | and corporations. Such of the emer- | gency agencies and corporations as may be continued by Congress should have all of their expendithre require- ments made subject to the same scru- tiny that is given by the Bureau of the Budget to the expenditure require- ments of the regular departments and establishments; and I recom- mend that s provision to that effect be included in any future legisiation for the continusnce of any such agency or corporation. | Review of the Fiscal Years 1936 and 1937, and the Fiscal Program for 1938, ‘This review concerns itself with the cash actually received and paid out by the Treasury in the fiscal year 1936, with the estimates of receipts and ex- penditures for the fiscal year 1937, and With the fiscal program for 1938. * Fiscal Year 1936. *Receipts.—Treasury receipts for the year ended June 30, 1936, amounted to $4,115,956,615, about $295,000,000 less than estimated & year ago. As a result of Supreme Court decisions, the Gov- ernment lost about $457,000,000 in reve enue from taxes levied under the agri- cultural sdjustment act and the bitu- f year's estimate. On the other hand, miscellaneous | internal revenue taxes produced $136.- | 488000 more than was anticipated: customs revenue, $33.621,000 more: miscellaneous receipts, $32,053,000 more, and realization upon assets, $1,483,000 more. Ezxpenditures—The total expendi- tures for the fiscal year ended June 30, 1936 (exclusive of expenditures from postal revenues), amounted to $8,879,798,258, as compared with the estimate of $7,645301,338 shown in | the budget submitted a year ago. This | Iatter amount did not, however, in- clude $1,673,493,000 for adjusted com- pensation payments to veterans. The expenditures for the year, exeluding these payments, were, therefore, about $439.000,000 less than the estimate, Recovery and Relief Under $2,8 9,068,187, The total expenditures for recovery and relief were $2,776,796,469 against an estimate of $2,869,068,187. For the operation and maintenance of the regular departments and establish- ments of the Government the expen- ditures amounted to $3,276,872,306 as compared with estimates of $3,482- 208,151, For statutory debt retirement there was expended $403,240,150, and for interest on the public debt $749,- 396,802, the amounts budgeted for these items being $552,025,000 and $472,000,000, respectively. Deficit and public dedbt.—The gross deficit for the fiscal year 1936 smounted to $4,763,841,642. Exclud- ing $403,240,150 for statutory debt re- tirement, there was & net deficit of $4,360,601,492. The estimated net deficit'as contained in the budget sub- | mitted a year ago was $2.682482,392, previously indicated, the original esti- mate has been affected to the extent of $457,000,000 as & result of the in- validation of taxes levied under the agricultural adjustment and bitumi- nous coal acts and by the additional expenditure of $1,673,493,000 under the adjusted compensation act, If it had not been for the increase in the deficit due to these causes, the net deficit for the fiscal year 1936 would have been about $452,000,000 less than that originally estimated. The increase in the gross public debt during the year amounted to $5,077,650,869, but this sum included an increase of the balance in the gen- eral fund of the Treasury of $840,164,- 664. The gross public debt on June 30, 1936, was $33,778,543,404. Imcome for 1937 Will Increase Sharply. Fiscal Year 1937. Receipts —The income of the Fed- eral Government during the fiscal year 1937 will increase sharply over that of 1936. It is expected that the total revenue from all sources (ex- clusive of postal revenues) will smount to $5,828,151,000. This represents an increase of $1,712,194,000 over the actual receipts for the fiscal year 1936 and an increase of $173,933,000 over the estimates contained in the 1937 budget as submitted a year ago. The general improvement in busi- ness conditions and the enactment of the revenue act of 1936 have re- sulted in additional mum: from { The working balance will be further reduced by net expenditures | of about $42,000,000. for trust accounts | | and $100,000,000 for the retirement of | national bank notes now a part of the public debt. This will reduce the working balance from $2,225.000,000 on June 30. 1936, to $1,183,000,000 on June 30, 1937. The gross public debt at the end of the current fiscal year |13 estimated at $35,026.000,000, an in- crease over 1936 of $1,248,000,000. Gold Acquisitions Not Accounted For. The estimated debt at the end of | the fiscal year is based on contem- plated expenditures set out in this | budget and does not take into account | any “change which may occur as a | result of the Treasury policy in hold- ing as “inactive” future acquisitions of gold. Fiscal Program fjor 1938. ‘The expected increase in revenue | and decrease in expenditures for relief | both reflect the general improvement | which has taken place in the economic | | nue act of 1936, which was designed | for the purpose of replacing revenue | lost through the invalidation of processing taxes, of providing suffi- | clent revenue to amortize the cost of ithe adjusted compensation payments, | and of equalizing tax burdens, gives | every indication of satisfactorily ac- | complishing those purposes. I should | like, at this point, to emphasize the importance of maintaining the pro- | ductiveness of the present tax struc- | ture, s0 that we may properly provide | for the fulfillment of our fiscal pro- gram. Under legislation enacted during the last session of Congress, which | created authorizations for future ap- | propriations aggregating more than | $1,500,000,000, there is included about $130.000,000 in the estimates of ap- propriations contained in this budget. Such authorizations are contained in the new Federal highway act, the rivers and harbors and the flood con- tm‘l acts, and the rural electrification act. There is also included $812,225,000 for social security grants and for the Government’s.contribution to the old- age reserve account, more than double the expenditures for these purposes in 1937, and there will be for several years still further increases in these requirements. It should be pointed out that these expenditures will be offset to a large extent by th in- creasing revenues under the social security act. C. C. C. Still Depends On Congress’ Action. No estimate of appropriation is pre- sented for the needs of the Civilian Conservation Corps, since its extension beyond March 31 of this year is de- pendent on the action of Congress. In furtherance of my recommendation for the enactment of legisiation to continue it as & permanent agency of the Government, there is included in the “supplemental items” an amount sufficient to meet the expenditure re- quirements for the fiscal year 1938. The following -table shows the dis- tribution, on a functional basis, of the expenditure figures contained in this budget and compares them with sim- llar figures for previous years. » | conditions of the country. The reve- | | 154,000, or $963,003.000 less than the amount estimated for 1937. Again I emphasize the contribution which em- ployers can make to this attainment. priations for 1938 will not exceed | $1,537,123,000. FRANKLIN D. ROOSEVELT. January 5, 1937. ‘ U. S. Budget (Continued From Hrsti‘l’lp') crease during the fiscal year 1938 will bring it down by only $25.000,000. In the fiscal year 1939, the decrease should be much greater. At any rate, it will not be long before the United | States begins to pay its way out of | debt. estimate for a supplemental expendi- ture of $790,000.000 to be requested of Congress immediately, of which $650,- 000,000 is for the purpose of carrying the Works Progress Administration and related programs (the Resettle- ment Administration) from February |1 to June 30, 1937. Just exactly how | much of this money is to be used for | the W.P. A. seems not to have been determined, but will depend upon the need and the allocations made by the President. No New Tax Demands. No demands for new Federal taxes | are made by the President. He rec- ommended, however, that the excise | taxes, sometimes called “nuisance taxes,” which are due to expire in June and July, be continued by act of Congress, and also that the current rates of those taxes be maintained. “T consider,” said-the President, “that the revenue from such taxes (esti- mated in the neighborhood of $500,~ 000,000) or its equivalent is necessary for the financing of the budget for 1938." . ‘The President also recommended that the 3-cent postage rate for first- class mail other than local delivery be retained. The estimates for the postal service for the year 1938 are based on the continuance of this rate. Buried in the estimates for national defense, which in 1938 reach the huge total of $980,763,000 or about $93.- 000,000 more than in the current fiscal year, are some $20,000,000 for begin- ning construction of two new battle- ships. This may be considered abroad as a signal that the United States is going into & race with the other naval powers, However, it is explained, these battleships are to replace clder ships. Had the naval limitation treaties not been allowed to expire, the United States might not have gone ahead with their construction. At the outset of his budget message the President declared that the fiscal plans of the Pederal Government, for the last four years have been formu- lated with two objectives in :aind; to restore a successful economic life to the country and to gain new advan- tages of permanent value for the American people. ¢ He insisted that the benefits ob- tained from the expenditures made for these purposes “are far outweighing all their costs”—which have been large. N will begin to decrease, though the de- | the need of larger employment of | men and women now on relief rolls | by private industry if the Federal ap- | propriations for relief are to be kept | | down. While industry has employed more and more men and women dur- ing the past year, many of them were | not on relief, and so the relief rolis | have not been diminished to the | extent they might otherwise have | been. The President pointed out that the great mass of unemployed on | reliet rolls are unskilled labor. | “It is my conviction,” the President The Prestdent’s budget carries an sajg “that if every employer or poten- | budget message declared that he | tial employer will undertake during | the next six months to give empioy- | ment to persons now receiving Gov- | ernment help, the budget can there- after be kept definitely in balance. Without such co-operation on the | part of employers, the question of a | balanced budget for 1938 must of necessity remain an open one, for the | very good. reason that this Govern- | ment does not propose next year, any | more than during the past four years, to allow American families to starve.” The estimate of receipts during the | fiscal year 1938, totaling $7,293,607,- 000, are based on an expectancy of a | continuing improvement in economic conditions throughout the country. The total represents an increase of $1,465,456,000 over similar receipts for the fiscal year 1937, and of $3,177,- 650,000 over those for 1936. The estimates of expenditures, totaling $6,157,999,254 . (minus the estimates for recovery and relief which are to be submitied to Con- gress later by the President), com- pare with 1937 and 1936 as follows: 1937, total estimated expenditures, $8,480,804,493; 1936, actual expendi- tures, $8,879,798,257. The deficits in these years are: 1937 (estimated), $2,652,853,774; 1936 (actual), $4,- 763,841,642.48. The estimated receipts for 1938 are divided as follows: Internal revenue, of which the larger amount comes from income taxes, $6,648 432,000; cus- toms, $463,000,000; miscellaneous reve- nues, $151,650,529, and realization upon assets, $30,624,668. 1938 Expenditures. ‘The items of expenditures for 1938 are as follows: Legislative, judicial and executive, $41,344,300; civil depart- ments and agencies, $708, ,178; gen- eral public works program, $451,108,- 963; national defense, $980,763,000; veterans’ pension and benefits, $577,- 524,000; agricultural adjustment pro- gram, $482,400,000; social security, $205,974,000, and along with that, old- age reserve account, $540,000,000; debt charges, interest, $860,000,000; retire- ments, $401,515,000; refunds, $52,94 000; recovery and reliet, $316,030,! supplemental items, $450,000,000. The President in his message said that the Civilian Conservation Corps had demonstrated its usefulness and had met with general public approval. “It should be continued,” he said. “T intend shortly to submit & supplemen- ment of the program of constructing Treasury policy in holding as "in-| .1 coment veasels. as authorized by active” future acquisitions of gold. | the Vinson-Trammell act of 1934, i5 A year ago the President mud.c mplated.” as a general policy that the Federal | Government should expend about $500,000.000 & year in public works. | During the present fiscal year, about $300,000,000 will have been used for this purpose, and in the next fiscal year. it is estimated that approxi- | mately $450,000,000 will be so used. f Highway System Large. | One of the largest items in the | Public Works Program is for high- | ways. Rivers and harbors improve- | ments is another item. | As in his message to Congress on | the state of the Union delivered | Wednesday, the President in his | would submit a plan for the reor- | ganization of the executive branch of the Government. “I propose shortly,” he said in his | budget message. “to submit' to the Congress & broad plan for placing the | executive branch of the Government |on & sounder and more responsible basis of management. The carrying | out of such a plan will undoubtedly | result in some saving of expenditures: but it must be remembered that what is generally known as overhead rep- resents only a small fraction of total expenditures in any large business, government, or private.” In this connection the President | need, and no expansion of government | activities should be authorized unless | the necessity has been definitely de- | termined and funds are available. He added that if new legislation imposes any substantial incresse in expendi- | tures either in expansion of existing, or the creation of new activities, it becomes a matter of sound policy | simultaneously to prowide new revenue suMcient to meet the additional cost. A recapitulation of funds appro- priated and allocated for recovery and rellef up to October 31, 1936, during | the Roosevelt administration is car- ried in the budget. It shows that up to that date a total of $19,212,188.- 614.39 was appropriated and allocated for those purposes. However, the total expenditures made for recovery and' relief up to that date were $14,036,- 016,101.73, leaving unexpended $5.176,- 512.66, of the amount appropriated and allocated. SRR At LUKE LEA’S NEWSPAPERS SOLD TO PAUL M. DAVIS By the Associated Press. NASHVILLE, Tenn., January 8.— The Nashville Tennessean and its afterncon edition, the Evening Ten- nessean, formerly owned by Luke Lea, were so0ld at suction yesterday to Paul M. Davis, Nashville banker and brother of President Roosevelt's roving four years, for $850,000, subject to said that all expenditures must be | | planned with a view to the national | AIRWAYS SAFETY BUDGET INCREASED 'Gain of More Than $4,000.00¢ Answers Criticism of Fatal Crashes. Apparently in response to charges | that outworn and inadequate aids to | air navigation are responsible for part | of the death toll in air transportation, | the Budget Bureau has allowed an | #n increase of more than $4,000,000 to the Bureau of Air Commerce for modernization of its aids along the PFederal airways. Charges that failure of the aids has been responsible for fatal accidents have been under investigation for nearly a year by & special Senate committee. Although Congress appropriated only $882,920 during the current fiscal year for altering and modernizing the aids to air navigation, the Budget Bureau has allowed $3,000,000 for this | purpose during the coming fiscal year and, in addition, has authorized the Secretary of Commerce to enter into contracts prior to July 1, 1938, for not. | to exceed $2,000,000 extra for the same purpose. The total appropriation for the Bu- reau of Air Commerce was increased more than $2.600,000. Current ap- propriations total $6,850,000. For next year the Budget Bureau has allowed $9.460,000, not including the $2,000.- | 000 against which the Secretary may award new contracts. The Senate committee also has in- vestigated charges that for economy and reasons of political expediency the Bureau of Air Commerce has cut: down its pay roll by discharging able and qualified employes. Large per- sonnel increases are authorized by the Budget Bureau. which has in- creased departmental salaries for the Bureau of Air Commerce in Washing- ton from $390.000 for the current year to an estimate of $500,000 for | next year. The item for investigation and ex- perimental work in connection with aids to safety and air navigation has been increased from $50,000 to $165.- 000. For maintenance of aids to air navigation the Budget Bureau in- cluded $4,980,000. as compared with the current $4,844,000. $31,669 FOR U. S. Farley Reveals Sum Realized From Undelivered Chain Letters. Chain letters which credulous thou- sands mailed in 1934 poured $31,669 into Uncle Sam’s cash till during the fiscal year 1936. In his annusl report yesterday, Post- master General Farley said undelive approval by United States District The President laid grest stress on Nmuwpm mma.ozo. ered chain letters, opened after lapse of a year, $31,660.43.