Mathematics of Peace

On his yacht Williamsburg three weeks ago, President Truman looked at long strings of figures supplied by Budget Director Harold D. Smith. There in neatly rounded numbers was the billion-dollar mathematics of what it would cost for the U.S. Government to stay in business after having run in the red for 16 years and built up a $275,000,000,000 debt.

The totals told Harry Truman that he could (if he wanted to do some wishful thinking about the future) make the headlines say that he had pulled off the almost forgotten trick of balancing the budget. The figures also told him, and so did some of his advisers, that he might easily take the ever-popular step of recommending tax cuts.

To any public official responsible to his electorate, these would be strong temptations. Harry Truman put temptation behind him. This week, presenting his 1947 budget to Congress, he candidly set forth what fancier bookkeepers might have hidden: the budget for the year ending June 30, 1947 was still out of balance by $4,347,000,000. To hold 1947's deficit even to this figure, he said, the nation would have to pay the same kind of taxes it was paying right now.

First Since '30. The only good news in the budget, for old-fashioned citizens who still wonder where the astronomical figures of Government finance are leading, was the fact that it will not increase the public debt. The war's sudden ending, said Harry Truman, had left a $26 billion cash balance of tax receipts and borrowed money in the Treasury. Some of this could be used to pay for 1947's deficit. Another $4 billion of the cash could be used to reduce the debt--for the first time since 1930.

At the end of the coming fiscal year, said the President, the debt would be down to $271 billion. (But interest on the debt would still cost about $5 billion a year.)

For fiscal '47, the President proposed to spend $35,860,000,000. This was far below 1945's wartime peak of $100 billion, well below 1946's $67 billion. But it was still far above anything dreamed of in prewar years.

The President estimated the Treasury's 1947 income, chiefly from taxes, at $31,500,000,000. This was based on assumptions that the U.S. will be booming along at the rate of a $140 billion national income.

"Aftermath of War." In the spending Harry Truman proposes, the expenses of occupation, demobilization, Army & Navy and liquidation of war plants accounts for 42-c- of the Government dollar ($15,000,000,000 in all). "Aftermath-of-war" expenses account for another 30-c- ($10,793,000,000 in all). Chief item in this category: care of veterans (hospitalization, pensions, unemployment and education benefits), $4,208,000,000. The rest of the Government dollar will go for what have come to be considered the routine domestic expenses of Government (some $10,000,000,000 in all).

In its estimate of expenditures, Harry Truman's budget was meticulously frank. For the first time in history, the budget contained items for expenditures ($4,254,000,000) which have not yet been authorized by Congress but will likely come up in fiscal '47.

The only point of secrecy: the cost of atomic research. The White House conceded that atomic development was in the budget somewhere, but it was not apparent to the eye.

What of the Future? For fiscal 1947, a transition year from war to peace, the President's nearly balanced budget looked like a good try. For the future, his budget message was not so hopeful.

Government expenditures, said Harry Truman, "can hardly be expected to be reduced to less than $25 billion in subsequent years." At about such a figure, he hoped to balance the budget in '48. But at $25 billion Government costs would be about three times the prewar level and more than six times the predepression level. In the gravity-proof stratosphere of Government costs and taxes, nothing ever comes down as far as it goes up.

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