View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102