Extraordinary Budgeting of Federal Finances

Report Outline
Federal Finannces and the Restoration of Confidence
Proposals for an Extraordinay Budget
Present Partial Use of Extraordinary Budget Principle
Opposition to an Extraordinary Budget
Foreign Experience with Extraordinary Budgets
Special Focus

Federal Finannces and the Restoration of Confidence

Hoover-Mills Pleas for Balancing the Federal Budget

President hoover has stressed the importance of a balanced budget in all of his recent public statements and messages to Congress dealing with government finances. He has held a balanced budget to be the first essential to restored confidence and to business recovery. Likewise, the Secretary of the Treasury has reiterated in a series of public addresses, radio speeches, and newspaper articles that a balanced budget is vital to the whole problem of economic rehabilitation.

To effect a balance of current expenditures with current revenues, many economists are advocating a system of government accounting which would segregate items of capital investment in an extraordinary budget and treat these items on the basis of corporation accounting. This proposal was endorsed in substance by the American Federation of Labor in the January issue of its Monthly Survey of Business. It said:

The budget can be balanced by keeping current operating expense in line with current income. Outlays for emergency needs or capital expenditures are not part of current operating expense and no business undertaking could expect to furnish them from current income. Such outlays are always furnished by long-term borrowing. The federal budget confuses these two different types of financing. The government can well afford to borrow large sums to meet this emergency.