The Distended Pouch

British Chancellors of the Exchequer used to enter the House of Commons carrying their estimates in a pouch called a bougette. When the tradition of annual forecasts of total revenues and expenditures was established in England about 200 years ago, the Chancellor's report was called a budget. Ever since then, government finance officers have been trying (sometimes with success) to hold budgets in balance. The U.S. Government, a comparative newcomer to the process, did not adopt the budget system until 1921. Since then, it has been able to strike a balance less than one-third of the time.

When he was a candidate for President in 1932, Franklin Delano Roosevelt cried across the land that the federal budget should be balanced. In his twelve years as President, he never managed to make ends meet. In 1952 Dwight Eisenhower proclaimed that a balanced budget would be one of the key aims of his Administration. This week, when he submitted his second budget to the Congress, the pouch was still painfully distended.

One Balance in Sight. But considerable progress had been made. In a 1,324-page document drafted by Budget Director Rowland Hughes, the Eisenhower Administration proposed total expenditures of $62.4 billion during fiscal 1956 (beginning next July 1), $1.1 billion less than estimated spending for this year, and $11.9 billion below Harry Truman's final year.

Against these expenditures the President, anticipating growing prosperity, foresaw Government income of $60 billion, an increase of $1 billion over this year. In between is an anticipated deficit of $2.4 billion, approximately one-fourth of the deficit in Harry Truman's last budget. The Government's "cash" budget, which treats trust-fund income, e.g., Social Security funds, as current receipts, is actually expected to show a surplus of $558 million at year's end.

Continuing to dominate the budget are expenditures for major national-security programs (defense, military aid, atomic energy, etc.). Estimated at $40.5 billion for 1956, cold-war spending would account for 65% of all the Government's outgo. The biggest part of that outlay ($34 billion) would go for defense, and would be spent to fit Dwight Eisenhower's concept of an efficient military force in a nuclear age: more air power, more fire power, less manpower. Said Old Soldier Eisenhower: "Never in our peacetime history have we been as well prepared to defend ourselves as we are now."

By services, the military budget would be divided:

P: Air Force $15.6 billion, an increase of $400 million over this year, looking toward 130 wings by July 1956 (three more than originally planned for that date).

P: Navy $9.7 billion, down $75 million from this year. While about 100 noncombatant ships would be laid up, the budget looks forward to more Navy power on the water and in the air, including a fifth supercarrier and an eventual fleet of seven atomic-powered submarines,

P: Army $8.8 billion, down $50 million. The President's statement that the Army will be organized into smaller, more powerful units, plus the Pentagon's deadpan announcement that Army unit strength "will be different at the end of the year," appears to promise a major reorganization.

Elsewhere, the budget shows other signs of the nuclear times. Funds openly earmarked for guided missiles are up substantially from this year. Spending for atomic energy, proposed at $2 billion, will be slightly under this year, largely because the atomic program has come of age, and its heavy construction costs are diminishing. For foreign aid, expenditures would be $4.7 billion, up $400 million from this year, including help for rearming West Germany and covering whatever new aid program is devised for Asia.

Two Goals to Go. After the burdensome expenditures for the cold war are added up and the budget gets to "fixed charges," past wars take a heavy toll. Pointing out that more than two out of every five adult males in the U.S. are eligible for veterans' benefits (budget item for 1956: $4.6 billion), the President announced that he is appointing a commission to study the whole problem. In other fields not directly tied to the hot wars of the past or the cold war of the present, the budget shows clear signs of the Eisenhower economy, e.g., expenditures for farm-price supports will be down because of the new farm program; development of natural resources will cost the U.S. less be cause of the policy of "partnership" with private enterprise and local governments.

When they had emptied their bougette for fiscal '56, the President and his budgetmakers decided reluctantly that they must renew their request for an increase in the national debt. Present ceiling for fiscal 1956: $275 billion. Estimated debt at the end of fiscal 1956: $276 billion.

If taxes had not been cut, President Eisenhower pointed out, the deficit-and debt-ceiling problems would have been solved. But he believed that it was "desirable to share the benefits" of reduced expenditures with the taxpayers. Said the President: "In view of the prospective deficit, we cannot afford to have any further loss of revenue this year . . . However, further tax reduction remains a firm goal . . . Our policy is directed to achieving both the savings in expenditures and the economic growth that will make such reductions possible. I hope that tax reductions will be so justified next year."

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