Government Spending

Report Outline
Federal Deficits and Budget Demands
Reform of Appropriations Procedures
Congress vs. Executive in Economy Moves

Federal Deficits and Budget Demands

Large 1950 Deficit and Prospect of more Deficits

New Budget estimates on Nov. 1, boosting the anticipated deficit in the current fiscal year to $5.5 billion, served as a sharp reminder that the federal government, despite general business prosperity and large tax collections, is continuing to live beyond its income. Intimations from President Truman that he would seek higher taxes to overcome the deficit met a cool reception on Capitol Hill. Democratic and Republican spokesmen alike held out little hope that Congress would accede to such a request. There was wide agreement, on the contrary, that the problem of balancing the budget must be approached, not by the route of increases in taxes, but by that of decreases in government spending.

Criticism of the administration's spending policies from members of the opposite political party has been growing as the mid-term election year of 1950 draws near. But the political implications in the budget situation were made doubly apparent, Nov. 21, when so prominent a member of the President's own party as former Secretary of State Byrnes joined the critics of government spending. In an address that day Byrnes said:

Our real trouble is debt and taxes. We cannot cure it by more debt and more taxes. We should devote to cutting expenditures some of the thought we are devoting to taxing and borrowing. But cutting expenditures is not seriously considered in the executive departments, and new taxes will not be seriously considered in Congress. So deficit spending will continue.