Full text of Budget in Brief : Fiscal Year 1952
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— 5drW »4 A THE FEDERAL BUDGET ☆ ☆ ☆ ☆ ☆ FISCAL YEAR 1952 EXECUTIVE OFFICE OF THE PRESIDENT BUREAU OF THE BUDGET I have presented a Budget to meet our country’s needs in a period of danger. We are building the military and economic strength which alone has meaning to the men who control world communism. This is the only realistic road to a world peace based on justice and individual freedom. H arry S. T rum an . The Budget Message January 15, 1951 THE FEDERAL BUDGET IN BRIEF FISCAL YEA R 1952 (July 1,1951-June 30,1952) JA N U A R Y 1951 Executive O ffic e of the President Bureau of the Budget INTRODUCTION Each January the President sends to the Congress the Budget of the United States, which contains his recommendations for the financial program of the Government in the coming year. In his Budget, the President estimates how much money will be received by the Government during the fiscal year, how much money will be needed to carry out the Government’s programs, and the resulting surplus or deficit. The estimated expenditures include the costs of new legislation which the President proposes. The Federal Budget in Brief, which was first published a year ago, sets forth in simplified form the most important facts about the Budget. It out lines the programs which make up the total Budget, indicates their cost, and reviews the recent trends in Federal receipts and expenditures. This issue summarizes the Budget which the President transmitted to the Congress on January 15, 1951, for the fiscal year 1952. That fiscal year will begin on July 1, 1951, and end on June 30, 1952. On the basis of the President’s Budget, the Congress considers and enacts appropriations and other authorizations for the fiscal year. The Budget is subject to adjustment from the time it appears in January until the close of the fiscal year 18 months later. It may be affected by additional Presidential recommendations, by Congressional action raising or lowering the authorizations requested by the President, and by the rate at which the appropriated money is actually spent by the agencies. In particular this year, estimates for military programs and for foreign military and economic aid are to be considered tentative. The detailed requests for these activities were not transmitted in the Budget, but will be sent to the Congress in the spring after the programs have been more com pletely developed. 2 CONTENTS Introduction.............................................................................................. Budget Summary........................................................................................ Budget R eceipts—Summary.................................................................... Budget Expenditures—Summary........................................................... Budget Expenditures by Function: Military services................................................................................. International security and foreign relations................................... Finance, commerce, and industry.................................................... Labor.................................................................................................... Transportation and communication................................................ Natural resources................................................................................ Agriculture and agricultural resources............................................ Housing and community development........................................... Education and general research....................................................... Social security, welfare, and health................................................. Veterans’ services and benefits......................................................... General government........................................................................... Interest................................................................................................. Budget Expenditures as a Percentage ofN ational Income......... Budget Expenditures per Capita........................................................ Appendixes.................................................................................................. A. Receipts from and Payments to thePublic................................ B. Budget Authorizations Related to Expenditures..................... H istorical T ables: Budget Receipts and Expenditures and Public Debt—Fiscal Years 1915-52................................................................................. Budget Expenditures by Function—FiscalYears 1943-52............ 3 Page 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 36 39 40 42 44 44 BUDGET S U M M A R Y The Federal Budget for the fiscal year 1952 is dominated by national defense. Total expenditures amount to 71.6 billion dollars, almost 80 percent more than the Government spent in the year ending June 30, 1950. That year ended just as the first communist attack in Korea com pelled the Nation to embark on its current program of swift expansion of the national defense. In his Budget Message, the Presi dent referred to the sharp increase in Budget expenditures as “one measure of the vast new responsibilities thrust upon the American people by the communist assaults upon freedom in Asia and the threats to freedom in other parts of the world.” Most of the rise in expenditures is to expand the Armed Forces of the United States and provide military aid to other free countries. Other increases are for the atomic energy program and for new defense pro grams—including those to expand defense production, to apply eco nomic controls, to organize civil defense against enemy attack, to pro vide housing in defense areas, and to move key Government agencies to dispersal sites outside of Washington. 4 Aside from these national security activities, the Budget shows a de crease from expenditures being made in the fiscal year 1951. Under present tax laws, Budget receipts in the fiscal year 1952 are estimated at 55.1 billion dollars. This is more than 10 billion dollars above estimated collections in 1951. It reflects record-breaking levels of production and national income, as well as the increased tax rates enacted by the last session of Con gress. Despite the very high level of Budget receipts, a deficit of 16.5 billion dollars is estimated for the fiscal year 1952 if no new tax legisla tion is enacted. The President stated that such a large deficit posed a threat to our economic stability and to the success of the defense effort. He therefore recommended that taxes be increased to bring the Budget into balance. N ote .—Several important Federal programs are operated through trust funds, with the Government acting as a trustee. The receipts of these funds consist primarily of special taxes, such as the payroll taxes for old-age and unem ployment insurance, or of premiums paid in, as in the case of the veterans’ life insurance. Neither the receipts of these funds nor the benefits or dividends paid from them are included in Budget receipts and expenditures. The major trust funds are referred to below in discussion of related programs. A financial summary including trust fund transactions is presented on page 40. BUDGET RECEIPTS AND EXPENDITURES SURPLUS OR DEFICIT Billions of D ollars F is c a I Y e a r s 75 IOO 5 BUDGET RECEIPTS SUMMARY Present tax laws are estimated to provide 55.1 billion dollars in receipts during the fiscal year 1952. Al though this is an all-time high in Budget receipts, it is still 23 percent under the estimated level of expendi tures. The President stated that at this time sound public finance and fiscal policy require that we balance the Budget, and added that he would soon recommend new revenue legis lation to the Congress. Under existing legislation, direct taxes on individuals in the fiscal year 1952 are estimated at 24.5 billion dollars, and direct taxes on corpora tions at 19.6 billion dollars. In creases in these two categories ac count for all of the increase of Budget receipts in 1952 over 1951. They result from two factors: (a) The tax legislation enacted during 6 the last 6 months is more fully re flected in receipts in 1952; (b) total personal income and corporation profits are expected to rise because of the increased employment and production required by the defense program. Excise taxes, the third largest source of budget receipts, are ex pected to provide 8.2 billion dollars of revenue in 1952. This represents 15 percent of the estimated total of 1952 budget receipts under existing legislation. In 1950, about 20 per cent of Federal receipts were derived from this source. Although collections from most excise taxes are expected to rise, some decline is anticipated in re ceipts from taxes on consumer durable goods where industrial capacity and materials are being diverted to defense production. BUDGET RECEIPTS SUMMARY W h e re the M o n e y W i l l C om e From in 7 9 5 2 5.0 Billions of D ollars 15.0 10.0 25.0 2 0 .0 ~T~ Direct Taxes on Individuals Direct Taxes or. Corporations Excise Taxes— Retailers and Miscellaneous Excise Taxes— Manufacturers Note: Receipts exclude new tax proposals and are shown after deduction of refunds. Excise Taxes— Tobacco Customs and Other Receipts Total Budget Receipts Fiscal Y e a r 1952 1951 1950 Billions CUSTOMS and OTHER RECEIPTS Est. $55.1 Est. 44.5 37.0 1949 38.2 1948 42.2 1945 44.8 -5 % Direct Taxes on IN D IV ID U A LS r ™ * ™ EXCISE TAXES 44% 5% Direct Taxes on CORPORATIONS 36% 1952 Estimate 7 BUDGET EXPENDITURES SUM M ARY In the fiscal year 1952, the military services and international programs will cost 48.9 billion dollars. These expenditures, which are entirely de voted to building our own strength and that of other free countries in the struggle against communism, repre sent 68 percent of the 1952 Budget. They exceed the total expenditures of the Government in every year since 1946. Two other large categories of Budget expenditure arise almost wholly from past wars in which the country has engaged. The first is in terest payments, which will amount to 5.9 billion dollars in the fiscal year 1952. About 80 percent of this amount is for interest on the heavy borrowing required to finance World War II. The second category is vet erans’ services and benefits, estimated to cost 4.9 billion dollars in 1952. Together, these two categories make up 15 percent of the Budget. All other programs will require 11.9 billion dollars in 1952, 17 per cent of the Budget. These programs include many activities which con tribute directly to the national secu rity. For example, the promotion of defense production and economic stabilization (classified under finance, commerce, and industry) will cost 8 1.4 billion dollars in 1952, and the development of atomic energy (in cluded under natural resources) will require 1.3 billion dollars. In addition, the remaining activi ties of the Government are being redirected to support the defense effort. For example, many of the Government’s river development projects are increasing the supply of power for atomic energy and defense plants; and the employment services will be more and more directed to servicing defense industries. Many programs which in normal times would be highly desirable are being cut back—for example, the rural electrification and telephone programs, and reclamation and flood control projects other than those which provide substantial power for defense industry. Programs to assist in providing housing in defense areas will be stepped up, but other housing programs will be sharply curtailed. The following pages discuss the varied programs of the Government classified according to the broad pur poses or functions which they serve. The estimated expenditures for these programs in 1952 include the costs of new legislation which the President proposed in his Budget. BUDGET EXPENDITURES SUMMARY W h e re the M o n e y W i l l G o in 7 9 5 2 Billions of D ollars 8% INTEREST 1952 Est. 1951 Est. 1950 1949 1948 1945 $71.6 47.2 VETERANS 7% 10% IN TE R N A TIO N A L \ 40.1 i 40.0 M ILITARY SERVICES 58% 33.8 98.7 1952 BUDGET 922972 0 -5 1 — 2 9 M IL IT A R Y SERVICES Expenditures for military services are estimated at 41.4 billion dollars during the fiscal year 1952—more than three times the level that pre vailed in the years immediately pre ceding the communist attacks in Korea. Although the military expansion program was launched at the begin ning of the fiscal year 1951, expendi tures for this year are estimated at about half the 1952 total, or 21 billion dollars. The relatively low figure in 1951 reflects the time lag between the placing of orders for airplanes, tanks, and other military equipment, and the actual payment for the de livered items. The Congress has al ready made available for military services this fiscal year a total of 44.2 billion dollars and procurement orders are being placed, but a very large part of the money will not actually be spent until the fiscal year 1952 or later. Six months ago our active mili tary strength numbered less than 1,500,000 men and women. It is now being rapidly expanded to nearly 3,500,000. As part of this current expansion, the number of active Army units will lie more than doubled, to an equivalent of about 10 24 divisions. The Navy will have an active fleet more than 50 percent larger than a year ago. Two full Marine divisions plus additional units will be maintained. The Air Force structure is being increased from 48 to 84 wings and others will be added. In addition to equipping and main taining the active forces, the military Budget also provides for buying re serves of equipment, for setting up training camps big enough to handle larger active forces if necessary, for increasing the strength and the de gree of readiness of the Reserve organizations, and for substantially expanding military research and development. In order to be better prepared for full mobilization if that becomes necessary, military orders are being spread among many suppliers, and industrial capacity is being devel oped beyond the requirements of our immediate procurement sched ules. Moreover, large quantities of scarce materials are being stockpiled for possible future need. Expendi tures for stockpiling in the fiscal years 1951 and 1952 are estimated at 900 million dollars and 1.3 billion dollars, respectively. MILITARY SERVICES E xpenditures fo r Fiscal Y ears Expenditures iscal Y e a r 1952 1951 1950 1949 1948 1947 1946 1945 E st. E st. Billions of D ollars MILITARY SERVICES Billions $41.4 21.0 12.3 11.9 11.0 14.3 45.1 84.6 % of B ucket 57.9 44.5 30.6 29.7 32.4 36.4 74.4 85.7 PERCENT OF 1952 BUDGET 11 IN T E R N A T IO N A L SECURITY A N D FOREIGN RELATIONS The Budget proposes an expanded international program to help achieve a rapid build-up of the free world’s defensive strength. This program includes large-scale military and economic assistance to friendly na tions. Total expenditures on interna tional programs are estimated at 7.5 billion dollars in the fiscal year 1952, of which more than half will be for the purpose of supplying military equipment to help arm the expand ing military forces of other free nations. The program of assistance to Eu rope will be directed primarily to ward helping our European allies en large the mutual defense forces, rather than toward the general economic expansion which has been the main objective of our aid program in recent years. Assistance provided in the fiscal year 1952 will include large quantities of modern military equip ment, and also machine tools, ma terials, and other supplies which the European nations will require to move rapidly toward defensive readi ness. As an illustration of the vital importance to us of helping to build defensive strength in Europe, the President’s Message pointed out that if the Soviet rulers conquered West ern Europe, the industrial power in their hands would be more than doubled. The President emphasized that the progress made to date under the 12 European Recovery Program now provides a firm foundation upon which the European nations can base their expanded defense effort. In order to build their defenses, the European people, like the American people, will now get along with fewer consumer goods, pay higher taxes, and serve in the armed forces in greater numbers. The Budget also provides for sup plying military equipment to certain non-European nations, especially in Asia. In addition, economic assist ance under the Point IV program will be provided to certain countries in Asia, the Middle East, Africa, and Latin America to help these countries meet their most urgent eco nomic problems and thereby increase their strength and determination as members of the free world com munity. Assistance to these nations will include technical assistance, grants, and loans. These programs will contribute substantially to ex panding the production of scarce materials needed for mutual defense. Expenditures for the Voice of America and other information and education programs of the Depart ment of State are estimated at 166 million dollars, almost three times the level of fiscal year 1951. These programs will help carry the truth about the present international situ ation to people in all parts of the world, including those behind the “iron curtain.” INTERNATIONAL SECURITY AND FOREIGN RELATIONS E xpenditures fo r F iscal Y ears Expenditures Fiscal Y e a r 1952 1951 1950 1949 1948 1947 1946 1945 Es». E st. M illio n s of D ollars 5,000 7,500 INTERNATIONAL SECURITY A ND FOREIGN RELATIONS M illio n s 57,461 4,726 4,803 6,458 4,780 6,542 1,462 677 2,5 0 0 % of Budget 10.4 10.0 12.0 16.1 14.1 16.7 2.4 .7 PERCENT OF 1952 BUDGET linr ■I ■ ' ' ** 13 FIN A N C E, COMMERCE, A N D INDUSTRY During the present emergency, the finance, commerce, and industry pro grams of the Federal Government are being directed primarily toward ex panding defense production and pre venting inflation. The Government is moving on a broad front to increase the output of existing plants and facilities as well as to expand capacity. For the most part, private business will build the plants necessary to produce equip ment for the Army, Navy, and Air Force. Where necessary, the Gov ernment is helping by making loans, entering into long-term procurement contracts, investing in Governmentowned equipment for lease to pri vate contractors, and granting special tax concessions for new defense plants. Controls over the use of some criti cal materials have already been set up to help divert these materials to military production and to make them available for sto c k p ilin g . Other materials will undoubtedly have to be covered later. 14 Controls over exports are being ex panded to prevent, the drain abroad of critical materials and to help direct the flow of exports to countries co operating in mutual defense. An organization is being built to administer price and wage controls as these become necessary. Federal rent controls still remain in effect on about 7 million rental units. The President has recommended ex tending and strengthening the rent control law, particularly because ex pansion of defense production and reopening of military installations will aggravate the housing shortage in many places. The Reconstruction Finance Cor poration is placing primary empha sis on loans to aid the defense pro gram. To limit inflationary credit expansion, loans for nondefense pur poses have been sharply curtailed. Business loans approved during the current fiscal year will be about 50 percent below last year. Other expenditures in this category include the continuing programs of the Government to promote effective, competition and to aid business. FINANCE. COMMERCE, AND INDUSTRY W h e re the M o n e y W il l G o in 7 9 5 2 Total Expenditures Fiscal Y e a r M illio n s 200 400 800 1,000 M illio ns of Dollars 1,200 FINANCE, COMMERCE, A N D INDUSTRY % of Budset 1952 E st. $1,524 2.1 1951 Est. 368 .8 1950 227 1949 120 .6 .3 1948 88 .3 1945 106 .1 600 PERCENT OF 1952 BUDGET 15 LABOR Federal labor programs assist in the recruitment and training of workers and help to prevent losses of production caused by accidents, dis putes, or poor working conditions. These activities now make up a large part of the defense manpower pro gram. The largest expenditures in the labor field are grants to pay for ad ministration of the Federal-State sys tem of public employment offices and unemployment compensation. State employment services, which filled 14,500,000 jobs last year, will have a larger task next year in recruiting workers for defense industry and for our basic civilian economy. The work of handling unemployment in surance claims, on the other hand, will continue to decrease because of higher employment. The Department of Labor pro motes two kinds of on-the-job train ing by employers—apprenticeship training for skilled craftsmen and more rapid training for production workers and supervisors. The latter program is just being' started. Reg istered apprenticeship programs en rolled 215,000 men at the end of the fiscal year 1950. The Federal Government helps 16 States to plan special industrial safety campaigns and to train safety inspectors. It also inspects coal mines for safety, and enforces laws on minimum wages, child labor, and wages and hours for Government contractors. The Federal Mediation and Con ciliation Service and the National Mediation Board (for railroads and airlines) help labor and manage ment settle disputes in interstate industries. The National Labor Re lations Board determines through elections the employees’ choice of unions to represent them and inves tigates and acts on complaints of unfair labor practices of unions or employers. The Bureau of Labor Statistics prepares and publishes information on such subjects as the cost of liv ing, employment, and productivity. This information is used in wage negotiations and in planning eco nomic stabilization and mobilization programs. N ote .—Unemployment compensation benefits are paid from the unemployment trust fund to which employers pay taxes. Transactions of this fund are not included in Budget receipts and expenditures. In the fiscal year 1952, receipts of the unemployment trust fund are estimated at 1.5 billion dollar^ and expendi tures at about half that amount. The balance in the fund at the end of the year will be 8.6 billion dollars. LABOR Mediation and Regulation of Labor Relations Labor Information, Statistics, and General Administration Total Expenditures Fiscal Y e a r M illio n s LABOR % of Budget 1952 Es». $215 1951 E st. 212 .3 .4 263 .7 1949 193 1948 183 204 .5 .5 1950 1945 .2 PERCENT OF 1952 BUDGET TR A N S PO R TA TIO N A N D C O M M U N IC A T IO N Federal programs which assist in the development of the Nation’s communication and transportation services are now being adapted to the needs of the national emergency. Federal grants help State govern ments finance the construction of improved highways. These grants are 85 percent of all Federal expendi tures for highways. In 1952 primary emphasis is being placed upon roads particularly important for defense. Besides operating navigation aids and enforcing maritime laws, the Coast Guard has recently been given responsibility for preventing sabotage on vessels and in ports. An esti mated 200 million dollars will be spent in 1952 for all Coast Guard activities. River and harbor improvements of the Corps of Engineers include some dams which provide electric power. The 1952 Budget proposes to increase expenditures for power projects which will serve defense production. Other projects have been suspended or substantially cur tailed. Expenditures in 1952 are estimated at 157 million dollars for construction, and 60 million dollars for maintenance, operation, and administration. The Budget also includes net expenditures of 8 million dollars for the Panama Canal Com pany. 18 Most of the expenditures for the merchant marine in 1952 will be for the construction of fast cargo vessels designed to meet shipping needs for national security. This emergency construction will supplement the Government’s long-range program of maintaining an active merchant marine through subsidies which are designed to offset lower foreign costs. The Civil Aeronautics Administra tion provides navigation and landing aids for safe operation of both civil and military aircraft, and controls the movement of air traffic from the standpoint of safety and the needs of air defense. It also provides grants to States and municipalities for the development of airports. The postal deficit for 1952, with existing postal rates, is estimated at 521 million dollars. This large defi cit will occur despite an increase of 10 percent since the end of World War II in the hourly output of postal employees. It reflects steady increases in wage, transportation, and other costs, without correspond ing increases in postal rates. The President has proposed that legisla tion be enacted to increase postal receipts by about 361 million dollars annually. The remaining deficit would represent those costs, such as airline subsidies and Government mail, which are appropriately paid out of general tax revenues. TRANSPORTATION AND COMMUNICATION W h e re the M o n e y W i l l G o in 1 9 5 2 200 400 M illio ns of D ollars 600 Postal Deficit (Assuming recommended postal rate increases) Regulatory and Othei Total Expenditures Fiscal Y e a r M illio n s TRANSPORTATION A ND COM M UNICATIO N % of Budget 1952 Est. $1,685 2.4 1951 Est. 1950 1,970 1,752 4.2 4.4 1949 1,622 4.0 1948 1,224 3.6 1945 3,367 3.4 PERCENT OF 1952 BUDGET 'C-' > :$ : , 19 * * N A T U R A L RESOURCES The natural resources programs of the Government are devoted to the use and conservation of our land, forest, water, mineral, electric power, and atomic energy resources. These programs are basic to the current defense expansion as they were to the military output in World War II. The atomic energy program ac counts for more than half of all expenditures in the fiscal year 1952 for natural resource development, and is mainly responsible for the increase of 402 million dollars over the total for the fiscal year 1951. The Budget provides for expanding our capacity to produce atomic mate rials and weapons. It also provides for increased production in existing plants; development of new and improved weapons; and further prog ress in developing nuclear reactors, including those for producing fission able material, for generating power, and for propelling ships and aircraft. At the same time, the industrial, medical, and other uses of atomic energy are being actively explored. In the fiscal year 1952, expendi tures for flood control and reclama 20 tion projects which will provide sub stantial power are generally being stepped up, and new projects are recommended where needed to in crease power supply for defense needs. Other projects, though de sirable for the long-range growth of the country, have been curtailed or deferred to lessen demands on mate rials and manpower, and total ex penditures for these purposes are estimated at 141 million dollars less than in the fiscal year 1951. Federal programs for discovery of new mineral deposits and for pro moting the development, conser vation, and use of existing mineral reserves are being accelerated in the fiscal year 1952 to help meet the requirements of military production. Topographic surveys and water re sources investigations, which provide basic data for planning of industrial and defense projects as well as longrange development, will also expand. Other natural resources programs provide for the use and conservation of the national forests, public domain, Indian lands, national parks, and fish and wildlife resources. NATURAL RESOURCES W h e re the M o n e y W i l l G o in 7 9 5 2 Total Expenditures M illio n s Fiscal Y e a r 1952 Est 1951 E st. 500 1,500 NATURAL RESOURCES 3.5 4.5 1950 2,117 1,554 1949 1,512 3.8 1948 1,099 3.3 1945 243 .2 M illio n s o f D ollars % of Budget $2,519 i 1,000 3.9 - .v, > A H PERCENT OF 1952 BUDGET P ,/-V 21 AGRICULTURE A N D AG RICULTU RAL RESOURCES Federal agricultural programs are designed to help farmers produce more efficiently, to conserve soil resources, to support farm prices and income, and in various other ways to improve living conditions on the farm. Farm programs are now being redirected to help obtain more of the products we need most, such as cotton, wheat, corn, and meat. Except for price supports, expendi tures for farm programs will decline in the fiscal year 1952. Expenditures to support farm prices vary greatly from year to year depending on general economic con ditions and the amount of farm pro duction. Net price support outlays by the Commodity Credit Corpora tion are estimated at 238 million dollars in the fiscal year 1952, com pared to net receipts of 296 million dollars in 1951. This year’s net receipts result mainly from sale of 3,500,000 bales of cotton acquired in earlier years. Expenditures to support farm prices and farm income are also made under the Interna tional Wheat Agreement, the Sugar Act of 1948, and the program for removal of surplus agricultural com modities from the market. The Department of Agriculture helps farmers employ sound farm 22 management practices and protect soil resources by giving them tech nical advice and assistance. The Department also makes payments for contour cultivation, terracing, appli cation of fertilizers, and other con servation measures. In addition, up stream flood-control work is under taken on both private and Federal lands. Expenditures for all of these programs will be 367 million dollars in the fiscal year 1952. The number of farms with electric service has increased from 48 percent in 1945 to over 86 percent at present. Loans for rural electrification and for the rural telephone program ini tiated last year are being cut to con serve aluminum, copper, and other materials. Through the loan programs of the Farmers Home Administration and the agricultural credit corporations supervised by the Farm Credit Ad ministration, the Department of Agriculture helps finance farm opera tions and encourages farm owner ship. The Department also aids farmers by basic research on produc tion and marketing problems, by control of insects and plant and animal diseases, and by grants to States for cooperative extension work. AGRICULTURE AND AGRICULTURAL RESOURCES W h e re the M o n e y W i l l G o in 1 9 5 2 M illio n s of D ollars 2 00 ' Total Expenditures Fiscal Y e a r M illio ns 400 600 AGRICULTURE A N D AGRICULTURAL RESOURCES % of Budget 23 H O U S IN G A N D C O M M U N IT Y DEVELOPM ENT Federal housing and community development programs primarily in volve credit assistance to private borrowers and local public agencies. Most of these programs are now being curtailed to save materials needed for defense production. This will sharply reduce new loans in 1952, while repayments of old loans are expected to increase. As a result, even with new defense pro grams, the receipts from these pro grams will exceed expenditures by 102 million dollars. The newly created Federal Civil Defense Administration will make grants to States to cover half the cost of constructing shelters and other civil defense facilities. It will also help build up reserves of medical and other supplies, and will assist States and localities in organizing and train ing civil defense workers. The President has recommended a new program to help provide suffi cient housing and adequate com munity services—such as schools and water systems—for areas which 24 have a heavy increase in defense workers or military personnel. The housing program would be accom plished by insuring loans for private housing, with emergency authority for direct Federal construction. Higher down payments and other controls on private housing credit will cut new housing construction by more than a third below last year. In the fiscal year 1952, the Federal National Mortgage Association ex pects to sell 530 million dollars more of mortgages than it buys. Most other Federal credit programs to aid private housing will also show receipts in excess of expenditures. Under the existing low-rent public housing program, local housing au thorities will start construction of 75,000 new units in 1952. Gener ally, projects will be built in defense areas and defense workers and mili tary personnel will have preference as tenants. A large share of the pre vious Federal loans will be repaid in 1952, causing a substantial excess of receipts over expenditures. HOUSING AND COMMUNITY DEVELOPMENT W h e re the M o n e y W il l G o in 7 9 5 2 600 Total Expenditures 922972 0 - 51— 4 300 0 300 M illio n s of D ollars 600 HOUSING A ND C O M M U N ITY DEVELOPMENT 25 ED U C A TIO N A N D GENERAL RESEARCH Most of the education and research activities of the Federal Government are for purposes closely related to other governmental activities and are therefore included elsewhere in this booklet. Examples are educational benefits for veterans, scholarship programs of the State and Navy Departments, the Agricultural Ex tension Service, and the research activities of the Departments of Defense and the Atomic Energy Commission. In the category of education and general research, a proposed new program of Federal grants to assist the States in improving elementary and secondary education accounts for more than half of the expenditures for the fiscal year 1952 and most of the increase over 1951. Apart from the proposed general aid for schools, the Federal Govern ment provides assistance for the construction and operation of ele mentary and secondary schools in those localities where special needs arise as a result of Federal Govern ment activities. 26 Other activities to promote educa tion include a long-established pro gram of grants to aid the States in providing vocational training to some 3,000,000 young people and adults. The President has recommended that part of the vocational education appropriation be used in the fiscal year 1952 for special programs to train workers for defense and essen tial civilian production. General libraries and museums supported by the Federal Govern ment include the Library of Con gress, the Smithsonian Institution, the National Gallery of Art, and the Botanic Gardens. Specialized librar ies and museums are operated as a part of other functions. In the field of general research, creation last year of the National Science Foundation provides the basis for achieving a better balance in research programs and assuring continued progress in basic scientific research. As work on the census of 1950 nears completion, expenditures for general-purpose research (which in cludes the census) will decrease. EDUCATION AND GENERAL RESEARCH W h e re the M o n e y W il l G o in 7 9 5 2 M illio n s of D ollars 200 I 00 ~T~ I 300 -------- 1-------: 290 General A id — Elementary and Secondary School Operating Expenses 106 A id to Schools in Special Areas ftb JS H H H H S 4 3 Other Activities Promoting Education General-purpose Research Total Expenditures Fiscal Y e a r M illio n s EDUCATION A ND GENERAL RESEARCH % of Bucket .7 1952 Est. $483 1951 Est. 143 .3 1950 114 .3 1949 .2 1948 70 63 .2 1945 150 .2 PERCENT OF 1952 BUDGET S O C IA L SECURITY, WELFARE, A N D H EA LTH Federal Budget expenditures to promote social security, welfare, and health are predominantly in the form of grants to States to help them provide public assistance, public health services, school lunches, and vocational rehabilitation services. The Federal-State public assistance program assists the needy aged, dependent children, the blind, and, since last October, the permanently and totally disabled. More than 4,000,000 people in need, most of them aged persons, are expected to receive public assistance in 1952. In the future, the number should de cline because more of the aged will qualify for benefits under the old-age and survivors insurance program, which is operated through a trust fund. This program was broadened in 1950 to cover about 10 million additional people. The Government operates a sep arate insurance system for railroad workers, providing survivorship, dis ability, and retirement benefits, and financed by payroll taxes on both employees and employers. The transfer of these collections to the special trust fund appears as a Budget expenditure. Expenditures to promote public health include grants to States for 28 such activities as hospital construc tion, maternal and child health pro grams, and control and prevention of tuberculosis, venereal disease, cancer, mental illnesses, and heart ailments. Direct Federal activities are primarily for medical research and for Public Health Service hos pitals. Expenditures for crime control and correction are mainly for the Federal Bureau of Investigation, but they include also the costs of the Federal prison and probation systems, the United States district attorneys and marshals, the Secret Service, and narcotics control activities. Federal grants help the States to provide low-priced lunches for about 7,000,000 school children. Other expenditures are principally for services to Indians and for com pensation payments to injured Gov ernment employees or the families of those killed on the job. N ote .—Payroll taxes and other receipts of the old-age and survivors insurance trust fund are expected to be 4.1 billion dollars in the fiscal year 1952, with benefits estimated at 2.1 billion dollars. The balance in the fund will be 16.4 billion dollars at the end of the fiscal year. Receipts of the railroad retirement trust fund are esti mated at 721 million dollars (including 75 million dollars of interest on investments), benefit payments at 345 million dollars, and the balance at the end of the year, 2.8 billion dollars. Receipts of and payments from these trust funds are not counted as Budget receipts or expenditures. SOCIAL SECURITY, WELFARE, AND HEALTH W h e re the M o n e y W il l G o in 7 9 5 2 M illio n s of D ollars 500 1500 IO OO 1,302 Public Assistance (Payments to States to aid the needy) 646 Railroad Retirement— Payments to Trust Account 36 0 Promotion of Public Health ggggg 106 Crime Control and Correction H 83 School Lunch Program 108 A ll Othe Total Expenditures Fiscal Y e a r M illio n s SOCIAL SECURITY, WELFARE, A ND HEALTH % oF Bucket 1952 Est. (2 ,6 2 5 1951 Est. 2,520 , 1950 2,213 1949 1,907 1945 1,046 PERCENT OF 1952 BUDGET VETERANS’ SERVICES A N D BENEFITS In the fiscal year 1952, Federal services and benefits for veterans are expected to continue their decline from postwar peaks. Expenditures will be 835 million dollars less than in 1951, mainly because of a further decline in the needs of World War II veterans for help in adjusting to civilian life through educational benefits, loan guarantees, and other aids. Estimated expenditures for vet erans’ programs take account of needs arising from the military action in Korea and the build-up of the Armed Forces. Legislation was en acted late in 1950 to meet the spe cial rehabilitation needs of veterans wounded in Korea. Compensation is being paid in cases of injury or death resulting from current military activities. New veterans are eligible for medical care in veterans’ hos pitals. On the average, 3,168,000 indi viduals or families are expected to receive veterans’ compensation or pension payments during the fiscal year 1952. This is 113,000 more than in 1951. Average enrollment for education and training in the fiscal year 1952 is 30 estimated at about 1 million students, 600,000 below the 1951 level. By the end of 1952, more than 7,500,000 veterans will have received education and training benefits. Total expen ditures will have been 13.9 billion dollars. Other readjustment bene fits in 1952 will be largely the pay ment of part of the first year’s in te re st on Government-guaran teed loans for homes, farms, and businesses. Expenditures for veterans’ hos pitals and medical care are chiefly for current expenses but include 155 million dollars for building and improving hospital facilities under the current program. Budget expenditures, as distinct from trust fund expenditures, for life insurance programs for service men and veterans are mainly the costs of administration and pay ments on account of deaths traceable to extra hazards of military service. N ote .—Veterans of the two World Wars and present servicemen continue to hold about 6,500,(XX) life insurance policies issued by the Government. Receipts of the insurance trust funds in 1952 are esti mated at 786 million dollars and expenditures at 1.1 billion dollars, with half of the expenditures representing dividends to policyholders. Balances in these funds will total 6.4 billion dollars at the end of the fiscal year. The trust fund transactions are not included in the Budget totals. VETERANS SERVICES AND BENEFITS W h e re the M o n e y W il l G o in 7 9 5 2 500 1,000 1,500 2,000 M illio n s of Dollars 2,500 2 ,2 2 3 230 Other Services and Administration Total Expenditures Fiscal Y e a r M illio ns VETERANS’ SERVICES A N D BENEFITS % of Budget 1952 E st. $4,911 1951 E st. 5,746 12.2 6,627 16.5 1949 6,668 1948 6,566 2,094 16.6 19.4 1950 1945 6.9 2.1 PERCENT OF 1952 BUDGET 31 G EN ER A L G O V E R N M E N T The general government classifi cation includes those activities which serve more than one of the major program areas into which Budget expenditures are divided. Besides the costs of certain general activities of the executive branch, this classification includes most of the costs of the legislative and judicial branches. The Bureau of Internal Revenue processes tens of millions of tax re turns annually in collecting more than a dozen types of taxes. Other financial management duties of the Treasury Department include admin istration of the public debt, collection of customs, manufacture of coins, and printing of money. Federal accounts are audited by the General Account ing Office. Approximately 1,500,000 Govern ment employees are members of a general retirement system to which both they and the Government, as the employer, contribute. The Gov ernment’s contribution in the fiscal year 1952 is estimated at 320 million d ollars, as shown on the accompany ing chart. Most new employees added during the current emergency, 32 as well as other temporary employees of the Government, are not in the civil service retirement system but instead are covered by old-age and survivors insurance under the social security system, to which individual Federal agencies pay the employers’ payroll tax. As the central property and records management agency of the Federal Government, the General Services Administration purchases and stores supplies, operates Federal Govern ment buildings, and operates the National Archives. The Govern ment Printing Office is the largest printing establishment in the world. The Civil Service Commission is the central personnel agency of the Government. To minimize disruption of the National Government headquarters in event of enemy attack, the President has recommended a pro gram for the dispersal of some of the Government offices now located in the District of Columbia. It is esti mated that 164 million dollars will be required in 1952 to provide buildings at the new sites. GENERAL GOVERNMENT W h e re the M o n e y W il l G o in 7 9 5 2 100 M illio n s of Dollars 300 200 400 427 Executive Direction, Tax Collection and Financial Management 320 Payment Toward Civilian Employees' Retirement Fund 205 Property Management and Other Central Services 164 Dispersal of Government Facilities Legislative and Judicial Functions 162 Weather Bureau, Immigration Control, and Othe Total Expenditures iscal Y e a r M illio ns GENERAL GOVERNMENT % of Budget 1952 Est . $1,351 1.9 1951 E st . 1,252 2.7 1950 1,108 2.8 1949 1,081 2.7 1948 1,440 4.3 1945 917 .9 * ''" V " PERCENT OF 1952 BUDGET 33 INTEREST Interest payments are fixed obliga tions of the Federal Government. Most of the total expenditures for interest result from the fivefold in crease in the public debt that took place in World War II. The public debt will be about 260 billion dollars on June 30, 1951. Over one-half the total interest is paid on marketable obligations, to such investors as insurance companies and banks. Interest on savings bonds amounts to more than a quarter of the total. These bonds are held by about 40 percent of all American families. For the most part, interest on savings bonds is included in Budget expendi tures as it accrues. Most of the 34 bonds now outstanding were bought during World War II, and hence are now reaching the stage at which interest accrues most rapidly. This is one major reason for the continuing increase in interest expenditures. Most of the remaining interest is paid on special obligations issued to trust funds and other Government agencies. The interest payments help to build up the reserve necessary to meet the larger future benefit pay ments. Since receipts of most of these trust funds are larger than expenditures, additional investments are made each year, with corre sponding increases in interest pay ments by the Treasury. INTEREST W H E R E the M o n e y W il l G o in 1 9 5 2 Total Expenditures 1945 3,661 1.0 2.0 Billions of D ollars 3.0 INTEREST 3.7 PERCENT OF 1952 BUDGET ^Includes approxim ately $225 million resulting from change in reporting methods. 35 BUDGET EXPENDITURES A S A PERCENTAGE O F N A T IO N A L IN C O M E Federal Budget expenditures for the fiscal year 1952 are estimated at more than one-quarter of the na tional income. This compares with slightly over one-half of the national income spent by the Government in 1945, the year of peak World War II expenditures. On the other hand, Federal spending during the fiscal year 1939 amounted to only about one-eighth of the national income. The military services, the largest single item in the 1952 Budget, will require an estimated 15 percent of the national income. Expenditures for these purposes were only about 5 per cent of the national income during each of the years 1948, 1949, and 1950. In 1945, they were almost 45 percent of the national income. In the prewar year of 1939 the compara ble figure was less than 2 percent. BUDGET EXPENDITURES PER C A PITA During the fiscal year 1952, Fed eral Government expenditures will amount to about 461 dollars for each man, woman, and child in the coun try. This is almost seven times as great as the per capita expenditure in the prewar fiscal year 1939, and more than one and one-half times as great as in 1950. On the other hand, it is 36 only two-thirds as much as was spent per person in the peak war year of 1945. The cost of the military services will be 266 dollars per capita in the fiscal year 1952. This compares to less than 9 dollars per capita in 1939, 609 dollars in 1945, and 76 dollars in 1948. BUDGET EXPENDITURES AS A PERCENTAGE OF NATIONAL INCOME P ercent BUDGET EXPENDITURES per c a p ita 37 Excise Taxes Direct Taxes on Individuals 8.2 24.5 Estimated in billions of dollars General Government 1.4 19.6 2.8 New Taxes 16.5 FEDERAL BUDGET Excludes new tax proposals R e c e ip ts $55.1* Expend itu res 71.6 D e fic it 16.5 “ lllt ff lt n j Direct Taxes Customs and on Corporations Other Taxes im y *W&ene Education, Labor Housing, E t c . 0 .8 Me mwey m il fa Finance, Commerce and Industry Agriculture m e 1.4 1.5 Transportation and Communication Natural Resources 2.5 1.7 Social Security, Welfare,and Health Veterans Programs 4.9 1 1 International 7.5 38 2.6 Military Services ------ 41. 4 — Interest 5.9 APPENDIXES Up to now, this booklet has discussed receipts and expenditures included in the Budget. To give a more complete picture of the Federal program, two other aspects of Federal financial operations are described in the appendixes which follow. Appendix A presents a summary of Federal financial transactions including not only Budget receipts and expenditures but also receipts and expenditures of funds for which the Government acts as trustee. Appendix B shows the relationship between the authorizations to spend Federal money and the expenditures for the fiscal year 1952. 39 A P P E N D IX A RECEIPTS FR O M A N D PAYM ENTS TO THE PUBLIC While most Government activities are directly reflected in the Budget, some important programs are oper ated through trust funds for which the Federal Government acts as a trustee. These funds include the unemployment trust fund, the oldage and survivors insurance trust fund, and the veterans’ life insurance funds. Payroll taxes or other re ceipts flow into these funds, and pay ments are made to beneficiaries from them. These transactions are not included in Budget receipts and ex penditures. On the other hand, Budget receipts and expenditures include a small number of transactions which do not involve an actual current inflow or outflow of money. To show the total flow of money between the public and the Federal Government, a statement of “receipts from and payments to the public” has been developed. This statement has also been called the “consoli dated cash budget” and “cash in 40 come and outgo of the United States Treasury.” For many purposes, the figures showing the total flow of money be tween the Federal Government and the public are very significant. In his Economic Report, for example, the President used the consolidated cash data, rather than the conven tional Budget data, in describing the economic impact of Federal financial transactions. Trust fund payments to the public are currently less than receipts, since the funds are building reserves for the payment of future benefits. In the fiscal year 1952, payments to the public will exceed receipts from the public under present tax laws by an estimated 12.8 billion dollars. This is about 3.7 billion dollars less than the estimated Budget deficit. The accompanying chart shows the adjustments which are made in Budget receipts and expenditures in order to arrive at total cash receipts from and payments to the public. APPENDIX A RECEIPTS FROM AND PAYMENTS TO THE PUBLIC Fiscal Y e a r 1952 Estim ated Billions o f D ollars i 55.1 B U D G E T R E C E IP T S D E D U C T In t r a g o y e r n m e n t a l T ra n s a c tio n s : Payments by Government Agencies and Trust Funds to Treasury A D D T ru s t F u n d R e c e ip ts fro m th e P u b lic : O ld Ag e Survivors Insurance Taxes Unemployment Insurance Deposits •—0.1 : + 3. e !+ I .3 1+ 0 .5 Veterans Life Insurance Premiums 11+ 0 .7 Other m TO TA L R E C E IP T S F R O M T H E P U B L IC D E D U C T I n t r a g o v e r n m e n ta l a n d N o n c a s h T ra n s a c tio n s : Transfers from Treasury to Trust Funds Interest Paid to Trust Funds Interest Accrued but Not Paid— U. S. Savings Bonds Salary Deductions— Federal Employees' Retirement II II Payments by Government Agencies to Treasury A D D T ru s t F u n d P a y m e n ts to th e P u b lic : + 2. I O ld Age Survivors Insurance Benefits + 0 .7 Withdrawals for Unemployment Benefits il +0 3 I + 0 .3 Ii + Veterans Life Insurance Refunds and Benefits Federal Employees’ Retirement Annuities Railroad Retirement Benefits * ^ ?*-■*« i .i 1+ 0 . 6 O ther :,MM> TOMKi .«««>; + 0.1 ADD: pw74.1 Redemption of Arnied Forces Leave Bonds and Similar Securities r TO TAL PAYM ENTS TO T H E P U B L IC II H I 41 A P P E N D IX B BUDGET A U T H O R IZ A T IO N S RELATED TO EXPENDITURES Federal agencies may not spend money, or incur obligations requiring the future expenditure of money, without prior authorization from the Congress. Such Congressional au thorizations are usually made in the form of appropriations. In the present period, Federal agencies are incurring obligations at a much faster rate than they are making expenditures. Under these circumstances the total amount of new obligational authority made available by the Congress is of major economic significance. The Budget Message pointed out that the large amount of new obli gational authority required for the defense program creates strong infla tionary pressure in the economy. Bidding for manpower and materials begins as soon as procurement con tracts are signed. Thus pressure on prices begins, even though Govern ment expenditures under the con tracts have not yet been made. 42 In the 1952 Budget, the President recommended enactment of 94.4 billion dollars of authority to incur new obligations, of which 57.3 billion dollars—or 60 percent—will not be spent until some time after the close of the fiscal year 1952. The manufacture and delivery of some of the goods ordered under this new authority, particularly heavy military equipment, will take many months—in some cases, years. Final payments will usually not be made until after the contracts and orders are completed. Similarly, a large part of Govern ment spending during the fiscal year 1952 will result from authorizations enacted prior to that year. Of the 71.6 billion dollars of expenditures estimated for 1952, 34.5 billion dollars—-48 percent—will come from authority enacted for 1951 or earlier years. APPENDIX B BUDGET AUTHORIZATIONS RELATED TO EXPENDITURES Billions of D ollars N e w O b lig a tio n a l A u th o r ity for 1 9 5 2 94.4 B udget E xpenditi \ 43 BU DGET R E C E IP T S AND EX PEN D ITU R ES AND PUBLIC D EBT Fiscal years 1915 through 1952 [In m illions] Fiscal year T o ta l Budget receipts T o ta l Budget expendi tures $683 762 1,100 3,630 5,085 6,649 5,567 4,021 3,849 3,853 3,598 3, 753 3,992 3,872 3, 861 4,058 3,116 1,924 2,022 $746 713 1,954 12, 662 18, 448 6, 357 5, 058 3,285 3,137 2,890 2, 881 2,888 2, 837 2,933 3,127 3, 320 3, 578 4,659 4,623 1915_____ 1916.......... 1917_____ 1918_____ 1919_____ 1920_____ 1921_____ 1922_____ 1923_____ 1924_____ 1925_____ 1926_____ 1927_____ 1928_____ 1929_____ 1930_____ 1931_____ 1932_____ 1933_____ 1 Estim ated. Surplus or deficit — $63 +48 -853 - 9 , 032 -13,363 +291 +509 +736 +713 +963 +717 +865 + 1,155 +939 +734 +738 -46 2 - 2 , 735 - 2 , 602 Public debt at end of year $1,191 1,225 2,976 12,455 25, 485 24,299 23,978 22,963 22,350 21,251 20, 516 19, 643 18, 512 17,604 16,931 16,185 16, 801 19, 487 22, 539 T o ta l Budget receipts Fiscal year 1934_____ 1935_____ 1936_____ 1937_____ 1938_____ 1939_____ 1940_____ 1941_____ 1942_____ 1943_____ 1944_____ 1945_____ 1946_____ 1947_____ 1948 ___ 1949_____ 1950_____ 1951 i____ 1952 i____ $3,065 3, 729 4,069 4, 979 5,803 5,104 5,264 7,227 12,696 22,201 43, 892 44, 762 40,027 40,043 42, 211 38, 246 37,045 44, 512 55,138 T o ta l Budget expendi tures S urplus or deficit $6, 694 6,521 8,494 7, 756 6, 979 8,966 9,183 13, 387 34,187 79,622 95,315 98, 703 60, 703 39,289 33, 791 40,057 40,156 47, 210 71, 594 -$3,630 - 2 , 791 - 4 , 425 - 2 , 777 -1 ,1 77 - 3 , 862 -3 ,9 18 -6 ,1 59 -2 1 , 490 -57,420 -5 1 , 423 -53,941 -2 0 , 676 +754 +8 , 419 -L 8 1 1 - 3 , 111 - 2 , 698 -1 6 , 456 P u b lic debt at end of year $27,053 28, 701 33, 779 36, 425 37,165 40, 440 42,968 48,961 72,422 136, 696 201,003 258, 682 269, 422 258, 286 252, 292 2 b 2 , 770 257, 357 260,300 276, 300 Does not include new tax proposals. BU D G ET EX PEN D ITU RES BY FUNCTION Fiscal years 1943 through 1952 [In m illions of dollars] F un ction 1943 1944 1945 1946 1947 M ilita rv services « ______________________ 70,267 83,766 84, 569 45,134 In ternational security and foreign rela166 244 677 1,462 264 106 Finance, commerce and in d u s try . ............ 171 30 L a b o r. ................................................................... 240 204 225 174 T ran sp ortation and com m unication____ 3, 576 4,311 3,367 789 409 243 326 247 Agriculture and agricultural resources___ 593 1, 203 1,610 749 302 H ousing and co m m u n itv developm ent . . . 308 ‘ 193 ‘ 199 Ed ucatio n and general research....... ............ 46 88 150 80 Social security, welfare, and h e a lth ___ 1.190 1,013 1,046 1,048 Veterans’ services and benefits.................... 605 744 2,094 4,414 General governm ent.. .................................... 335 652 917 880 1,825 2,623 3,661 4, 815 In terest___________ ____________________ 1948 1949 1950 1951 1952 (est.) (est.) 14,316 10,961 11,914 12,303 20,994 41, 421 6,542 102 194 548 622 1,244 348 64 1,314 7,370 1,308 5,013 4. 780 88 183 1.224 1. 099 574 82 63 1,869 6,566 1,440 5,249 6,458 120 193 1,622 1.512 2,512 282 70 1,907 6,668 1,081 5, 445 4,803 227 263 1, 752 1. 554 2, 784 261 114 2,213 6, 627 1,108 5, 817 4. 726 368 212 1.970 2,117 986 409 143 2, 520 5, 746 1,252 5, 722 45 7, 461 1, 524 215 1,685 2, 519 1,429 » 102 483 2. 625 4,911 1.351 5,897 175 Y o t a l_____________________________ 79. 819 95, 675 98, 451 59.626 38.983 34,179 39, 785 39, 826 47, 210 71,594 A d justm en t to d a ily T re a s u ry statement 330 272 -197 -36 0 252 1,077 305 -388 T o ta l Budget e x p e n d itu re s ............... 79, 622 95, 315 98,703 60,703 39,289 33, 791 40,057 40,156 47, 210 71, 594 « M ilita ry and economic aid to foreign countries, now classified under “ International security and foreign relations,” was included in “ M ilita ry services” d urin g the years 1941-47, when h ea vy expenditures for these purposes were being made under the Lend-Lease Act. O n a gross basis (that is, w ithou t deducting recip rocal aid and postwar settlem ents), aid pro vided under the Lend-Lease program totaled more than 50 billion dollars d urin g the years 1941-47, and reached a peak of about 16 billion dollars in 1944. 4 D ed uct, excess of repaym ents and collections over expenditures. U. S. G O V E R N M E N T P R I N T I N G O F F I C E : 19SI F o r sale b y the Superintendent of D ocum ents, U . S. G overnm ent P rin tin g Office W ashington 25, D . C . - Price 20 cents 44 E X E C U T I V E BR ANC H G O V E R N M E N T i— i | I TEMPORARY AGENCIES * In fKe Office of Emergency Management. January 15. 1951