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EXECUTIVE OFFICE OF TH E PRESIDENT E XECUTIVE BU REAU O F TH E BU D G ET W A S H IN G T O N , D .C . OFFIC E O F T H E D IRECTOR - 7/ */ -f6r //-> 20503 January 24, 1966 \ MEMORANDUM FOR THE PRESIDENT \ Joe Califano told me that you wanted an analysis of what programs we would have had to cut to take another $2 billion of expenditures out of the budget. That analysis is attached. Since we have so many fixed commitments, and since the Government is faced with growing workloads in a number of regular old-line acti vities, much of the cut would have to come out of the newer, high priority programs. Charles L. Schultze Director Attachment Impact of an Additional $2 billion Budget Expenditure Reduction A very large part of Federal Government expenditures in 1967 are already determined by fixed commitments: - interest on the public debt Veterans' compensation and pensions price supports public assistance grants outlays on contracts already let loan agreements signed previously new general revenue contribution to Medicare Consequently a further expenditure reduction of $2 billion in the budget would have to fall very heavily on a number of important programs which happen to be susceptible to budget adjustments. The following programs are the ones which, most likely, would have to be reduced or eliminated to make a $2 billion expendi ture reduction possible: 1) Cut back the Poverty program $100 million Would require reducing the number of jobs for young men and women by 70 thousand, cutting 50,000 youngsters from the Headstart program, etc. 2) Cut back continuing construction in the Corps of Engineers, Bureau of Reclamation, TVA, and Bonneville. Examples of the effects of this decision: $100 million postponing a number of flood control projects past another flood season postponing the Cross-Florida barge canal another year reducing the Westlands project sharply cutting $16 million out of the Arkansas project and delaying it a year 2 3) Resurrecting the discredited “no new starts'* construction policy of a previous administration, eliminating among other projects: - $170 million Garrison Auburn Folsom Third powerhouse at Grand Coulee (see attached table for list of new starts) 4) Instead of increasing the National Institutes of Health by §58 million, reduce it by $30 million. Some consequences: $ 88 million cut back the new heart, cancer and stroke program eliminate increased funds for new regional medical program cut new research grants and fellowships in half 5) Cancel work on the supersonic transport. This decision would: $150 million \ waste the $200 million already invested 4 relegate the U.S. to second class status in civilian aviation during the 1970*s— the British-French Concorde would go forward unchallenged. 6) Hold Food Stamp program to the 1966 level. $ 33 million 7) Cut Labor Departments manpower training program. Would eliminate 15,000 trainees. $ 25 million 8) Hold Law Enforcement Assistance program to 1966 level. $ 9) In the Post Office, eliminate Saturday window service and six-day parcel post delivery. $ 16 million 6 million 3 10) 11) 12) 13) In the new Department of Housing and Urban Development. cut out grants for basic water and sewer facilities. $ 50 million Eliminate the new initiatives in international health, education and food which AID has incorporated into its budget (the appropriation cut would be much larger, but expenditures lag behind). $ 60 million In space, defer the manned lunar landing into the 1970's and eliminate follow-on programs. $300 million Abandon the historic effort we have begun to upgrade the education of our children. This would involve: Cutting by 2/3rds the entitlement of school districts under the new Elementary and Secondary Education Act of 1965 $600 million Abandoning the Higher Education Act of 1965 $228 million Stopping immediately loans for college facilities and public library construction $126 million
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