Whittled, Hacked & Squeezed

The U.S. budget is a jigsaw puzzle that only the President and a few others see whole before it is presented to the nation. Lyndon Johnson has made a practice of keeping the puzzle puzzling right up to the last minute: in past years, Administration aides leaked inflated budget totals in advance so that the final budget, even if a record, would look modest by comparison. Last week the White House announced that the budget for fiscal 1967 will probably be somewhere between $110 billion and $115 billion, a breach of the magic $100 billion figure and a much greater rise over this year's announced $99.7 billion than most people had expected. This time there seems little chance that the figure can be changed substantially.

Since November, when federal departments and agencies submitted requests totaling $125 billion, Johnson and Budget Director Charles Schultze have whittled, hacked, cut and squeezed to remove all the fat, and even some of the lean. Their efforts, said White House Press Secretary Bill Moyers, have resulted in reducing the budget to "very slightly under $115 billion. I have seen figures of $110 billion and $115 billion. I have a hunch the final figure will be somewhere between them." Moyers added meaningfully that the budget would be "harder to get close to $110 billion than to $115 billion."

Built-in Boost. A principal reason for the $15 billion-odd increase over this year's initial figure is, of course, the rising cost of the war in Viet Nam. That alone is expected to account for some $6 billion or $7 billion of the increase, swelling the Defense Department's expenditures next year to about $60 billion compared with this year's $53 billion to $54 billion. (In addition, Johnson will ask Congress for a $12.5 billion supplemental appropriation for the Viet Nam war, none of which will be counted in the new budget; he intends to spend $5 billion of the sum this year and spread the remaining $7.5 billion over several years.) Even with the expected increase, the remarkable thing about the Pentagon's budget is that it has risen at a much slower rate than the overall budget (see chart), indicating that on balance the U.S. taxpayer is paying little more for defense today than he did a decade ago.

Another $7 billion will be tacked on through built-in and legislated increases. Among them: a $700 million to $800 million rise in interest paid on the national debt, a $640 million automatic pay raise for military personnel and civil servants, and a $900 million tab for the Great Society's new medicare program.

A Tax Increase? On the income side of the ledger, said the White House, federal revenues might reach as high as $104 billion to $106 billion in fiscal 1967, possibly even higher. This year the Government underestimated its tax revenues by some $8 billion; it hopes that a greater-than-expected revenue take in 1967 may help to cut the deficit of roughly $9 billion. If tax revenues do not meet expectations, the Government may have to turn to a tax increase --a move that up to now the Administration has insisted it is not seriously considering. Come what may, the budget that President Johnson finally sends to Congress on Jan. 25 will be the largest in history, a fact that no amount of budgetmanship or legerdemain will be able to disguise.

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