Back to the Black

President Truman, a good hand with figures, had almost all his arithmetic down cold for his mid-year budget review. To the 35 newsmen who gathered in the White House's steamy little cinema theater one day last week, he confidently rattled off how he expected the 1948 fiscal pie to be cut (see chart). By next June 30, he estimated, there would be a whopping $4.7 billion surplus.*

Poke. The President had some happy explaining to do. In the eight months since he sent Congress a "tight, hardboiled" budget (TIME, Jan. 20), the whizzing U.S. economy had boosted anticipated Government revenues up about $4 billion to $41.7 billion. For paring expenditures, Politician Truman gave the Republican Congress scant credit. Congress, he said, had managed to trim his budget by $1.5 billion, but the actual saving was only $528 million (appropriations for Turkey and Greece, for flood control and other emergencies had cut it down). That was a direct political poke at Republican claims of having saved $3 to $7 billion.

When he came to the surplus, it was the newsmen's turn to poke a hot political question at Harry Truman. What were the chances for tax reduction? The President would not say, right out, that there could be no tax cut. But he strongly implied that any effort to reduce taxes next year would get a heavy going over by him. Treasury Secretary John Snyder, patting his round, little private surplus, nodded approval as the President explained his tax policy: cut the debt by taxing heavily in prosperous times. Added Harry Truman: "The international situation has also made it imperative that we plan for a surplus, both in view of the problem of promoting world recovery and of the need for a reserve against emergencies, whether at home or abroad."

Counter Poke. But Politician Truman would surely have another Republican tax bill on his desk in 1948. His budget review got a rough reception by Republicans. The surplus, said New Hampshire's Styles Bridges, chairman of the Senate Appropriations Committee, was proof that "the country was robbed of a tax reduction by purely political votes." Notably lacking was any Democratic cheering over the tax outlook. Said one close friend of Politician Truman: "His neck is too far out for an election year. He's got guts, that's sure, but I'm sorry he said it."

*The U.S. ended fiscal 1947 with a $700 million surplus, but it had not been foreseen in the budget. The 1930-46 period is the longest in which the U.S. ever operated in the red. The infant republic broke about even on deficits and surpluses from 1789 to 1800. Thereafter, Treasury spokesman Albert Gallatin, a strong advocate of high taxes to cut public debt, got it into the habit of trying to stay in the black. The U.S. has managed surpluses in 95 of its 158 years, but has never been entirely out of debt. Lowest point of the national debt was $37,513 (in 1835); the peak was $279.2 billion (Feb. 28, 1946). Current national debt: $258 billion.

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