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FEDERAL
BUDGET
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Kaiarnaioo Public Library
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Bureau of the
Executive

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J A N 2 3 ! Pj!

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Budget

Office of 'the

President

The Federal Budget in Brief
for the fiscal year 1961
The plans presented in the 1961 budget meet the Nation's immediate needs
and will support continuing sound economic growth in the future. The
achievement of these plans, however, will in the last analysis depend on
the people themselves.
I believe our people have the determination to hold expenditures in check,
to pay their own way without borrowing from their children, to choose
wisely among priorities, and to match sound public policy with private
initiative. It is that determination which is the key to continued progress
and sound growth with security. It is that determination which reinforces
the recommendations I have made.
DWIGHT D.
JANUARY

18,

EISENHOWER.

I960.




1

Introduction
The budget of the U.S. Government affects all Americans. In it the
President sets forth his proposals for meeting our national objectives, indicating the money needed to carry them out and how the money will be
raised. The Federal Budget in Brief is prepared each year to make available to the public in summary form the major facts about the budget.
The 1961 budget, which President Eisenhower sent to the Congress on
January 18, 1960, presents his financial plan for the year which runs from
July 1, 1960, to June 30, 1961. In the next few months the national issues
which are reflected in this budget will be discussed and debated in the
Congress. Important decisions affecting all Americans, now and in the
years to come, will be made.
It is our hope that this booklet will contribute to a greater understanding
of the Federal Government's activities, and to a more widespread public
participation in the processes by which its affairs are guided.

Director, Bureau of the Budget.

2



Contents
Page

Fart 1.

E X C E R P T S F R O M THE P R E S I D E N T ' S

BUDGET MESSAGE

Part 2. B U D G E T I N F O R M A T I O N BY F U N C T I O N
Major national security
Interest
International affairs and finance
Commerce and housing
Agriculture and agricultural resources
Natural resources
Labor and welfare
Veterans services and benefits
General government

5
17

18
21
22
24
26
28
30
32
34

Part 3. S U P P L E M E N T A R Y A N D H I S T O R I C A L I N F O R M A T I O N
Trust funds
Receipts from and payments to the public
Federal civilian employment
Historical information:
Budget receipts, 1952-61
Budget expenditures, 1952-61
Unexpended balances, 1953-61
Budget expenditures by function, 1954-61
Budget totals and public debt

43
43
43
44
46

Part 4.

47

37

38
40
41

F E D E R A L BUDGET PROCEDURES AND T E R M I N O L O G Y

Illustrations:
The tax dollar
1961 expenditures by function
Expenditures and new obligational authority by agency
Federal budget expenditures and Federal payments to the public
as percentages of national income

4
16
36
42

Note.—Detail in the tables and charts of this booklet may not add to the totals because of rounding.




3

The Tax Dollar

Where it comes from . . .

52/

Individual Income Taxes

28/

Corporation Income Taxes
Excise Taxes

9 /

A l l Other Receipts

Where it goes . . .

54/

Major National Security

11 /

Interest

1/

Agriculture

7/

Veterans

\6/
5/

Other
Debt Retirement




Fiscal Year 1961 Estimate




Part 1 of this booklet presents
excerpts from the opening section
of the President's budget message
for 1961. It outlines the major
policies and recommendations in the
budget and summarizes the budget
figures.
Thus, it provides an overall view
of the President's program for the
year ahead. More details on this
program are presented in part 2.

From the President's 1961 Budget
To the Congress of the United
States:
With this message, transmitting the Budget of the
United States for the fiscal
year 1961, I invite the Congress to join with me in a
determined effort to achieve
a substantial surplus. This
will make possible a reduction in the national debt.
The proposals in this budget
demonstrate that this objective can be attained while at
the same time maintaining
required military strength
and enhancing the national
welfare.
This budget attests to the
strength of America's economy. At the same time, the
budget is a test of our resolve,
as a nation, to allocate our
resources prudently, to maintain the Nation's security,
and to extend economic
growth into the future without inflation.
In highlight, this budget
proposes:
1. Revenues of $84 billion
and expenditures of $79.8 billion, leaving a surplus of $4.2
billion. This surplus should
be applied to debt reduction,
which I believe to be a prime
element in sound fiscal policy
for the Nation at this time.
6



Message

2. New appropriations for
the military functions of the
D e p a r t m e n t of D e f e n s e
amounting to $40.6 billion,
and expenditures of $41 billion . These expenditures,
which will be slightly higher
than the I960 level, will provide the strong and versatile
defense which we require
under p r e v a i l i n g w o r l d
conditions.
3. Increased appropriations
(including substantial restoration of congressional reductions in the I960 budget),
and a virtual doubling of expenditures, for nonmilitary
space projects under the National Aeronautics and Space
Administration. This furt h e r s our p l a n s to k e e p
moving ahead vigorously and
systematically with our intensive program of scientific
exploration and with the development of the large boosters essential to the conquest
of outer space.
4. Nearly $4.2 billion in
new appropriations for mutual security programs, an
increase of about $950 million
above appropriations for the
current year, with an increase
of $100 million in expenditures. This increase in program is needed to accelerate

BUDGET TOTALS
[Fiscal years.

In billions]

1959
actual

Budget receipts
Budget expenditures

Budget deficit
Budget surplus (applied to debt
retirement) . . .
New obligational authority
Public debt at end of year . . .

economic and technical assistance, chiefly through the
Development Loan Fund, and
to strengthen free world
forces, in particular the forces
of the North Atlantic Treaty
Organization, with advanced
weapons and equipment.
5. A record total of expenditures, $1.2 billion, for
water resources projects under
the Corps of Engineers and
the Bureau of Reclamation.
In addition to funds for going
work, this amount provides
for the initiation of 42 new
high-priority projects, which
will require $38 million in
new appropriations for 1961,
and will cost a total of $496
million over a period of years.
6. Substantially higher ex


1961
estimate

$78.6
78.4

$84.0
79.8

.2

4.2

81.4

79.7

79.4

284.7

284.5

280.0

$68.3
80.7

...

I960
estimate

12.4

penditures in a number of
categories which under present laws are relatively uncontrollable, p a r t i c u l a r l y
$9.6 billion for interest; $3.9
billion to help support farm
prices and income; $3-8 billion for veterans compensation and pensions; and $2.4
billion in aid to State and
local governments for public
assistance and employment
security activities. The aggregate increase in these
relatively uncontrollable expenditures is more than $1
billion over I960.
7. Research and development expenditures of $8.4
billion—well over one-half
of the entire Nation's expenditures, public and pri7

vate, for these purposes—in
order to assure a continuing
strong and modern defense
and to stimulate basic research and technological
progress.
8. Recommendations
for
prompt legislative action to
increase taxes on highway
and aviation fuels, and to
raise postal rates. These
measures are needed to place
on the users a proper share
of the rising costs of the
Federal airways and postal
service, and to support the
highway program at an increased level.
9. Recommendations to
extend for another year present corporation income and
excise tax rates.
10. A constructive legislative program to achieve improvements in existing laws
relating to governmental activities and to initiate needed
actions to improve and safe-

guard the interests of our
people.
In short, this budget and
the proposals it makes for
legislative action provide for
significant advances in many
aspects of national security
and welfare. The budget
presents a balanced program
which recognizes the priorities appropriate within an
aggregate of Federal expenditures that we can soundly
support.
I believe that the American
people have made their
wishes clear: The Federal
Government should conduct
its financial affairs with a
high sense of responsibility,
vigorously meeting the Nation's needs and opportunities within its proper sphere
while at the same time exercising a prudent discipline in
matters of borrowing and
spending, and in incurring
liabilities for the future.

BUDGET TOTALS

During the present fiscal
year we have made encouraging progress in achieving
sound fiscal policy objectives.
The deficit of $12.4 billion in
fiscal 1959, which was largely
caused by the recession, is
expected to be followed by a
8



surplus of $217 million in the
current year. To safeguard
this small surplus, I am directing all Government departments and agencies to
exercise strict controls over
the expenditure of Federal
funds. Even so, the slender

margin of surplus can be
attained only if economic
growth is not interrupted.
For the fiscal year 1961,
I am proposing a budget
surplus of $4.2 billion to be
applied to debt retirement.
In my judgment this is the
only sound course. Unless
some amounts are applied to
the reduction of debt in prosperous periods, we can expect
an ever larger public debt if
future emergencies or recessions again produce deficits.
In times of prosperity, such
as we anticipate in the coming year, sound fiscal and
economic policy requires a
budget surplus to help counteract inflationary pressures,
to ease conditions in capital
and credit markets, and to
increase the supply of savings
available for the productive

Budget

Expenditures
$ Billions

Agriculture

5.6
Veterans

Major
N a t i o n a l Security

5.5

45.6

Other

13.5

Fiscal Y e a r 1961 Estimate

534303 O—60




2

investment so essential to
continued economic growth.
The budget recommendations for 1961 lay the groundwork for a sound and flexible
fiscal policy in the years
ahead. A continuance of economic prosperity in 1962 and
later years can be expected
to bring with it further increases in Federal revenues.
If expenditures are held to
the levels I am proposing for
1961 and reasonable restraint
is exercised in the future,
higher revenues in later years
will give the next administration and the next Congress
the choice they should
rightly have in deciding
between reductions in the
public debt and lightening of
the tax burden, or both.
Soundly conceived tax revision can then be approached
on a comprehensive and orderly basis, rather than by
haphazard piecemeal changes,
and can be accomplished
within a setting of economic
and fiscal stability.
Budget expenditures in
1961 are estimated at $79.8
billion, which is $1.4 billion more than the I960 level.
The total increase is attributable to (1) an increase of
more than $1 billion in relatively uncontrollable expend9

itures for farm price supports
fixed by law, interest on the
public debt, veterans compensation and pensions, and
public assistance grants, and
(2) an increase of about $500
million in expenditures because of commitments made
in prior years for Federal
housing programs, for civil
public works projects and
other construction, for loans
under the mutual security
p r o g r a m , and for other
programs.
New activities and expansion of certain other programs
have been included on a selective basis of need. These increases are offset by reductions in other existing programs, including the proposed
elimination of the postal
deficit.
New obligational authority recommended for the fiscal
year 1961 totals $79-4 billion.

This is $306 million less than
the amounts already enacted
and recommended for I960,
and $401 million less than estimated expenditures in 1961.
Budget receipts under existing and proposed legislation
are expected to rise substantially to $84 billion in 1961.
This compares with the revised estimate of $78.6 billion
for I960 and actual receipts of
$68.3 billion in 1959.

Budget

Receipts
$ Billions

Fiscal Y e a r 196f Estimate

MANAGEMENT OF THE PUBLIC DEBT

Achievement of the proposed budget surplus will
provide an opportunity to
offset part of the deficits incurred in the fiscal years 1958
and 1959 largely because of
the recession.
The corresponding reduction of the
public debt will reduce Gov10



ernment competition with
private industry, individuals,
and State and local governments for investment funds
and will help ease the pressure on interest rates. Along
with the recommended removal of the interest rate
ceiling on long-term Federal

Management of the Public Debt:
LEGISLATIVE PROPOSALS
1. Remove interest ceiling on Treasury bonds.
2. Provide temporary increase in debt limit.

debt, this will help hold
down budget expenditures for
interest, which now amount
to almost one-eighth of the
whole budget.
Statutory

debt

limit—

It

is

estimated that the public
debt, which stood at $284.7
billion on June 30, 1959, will
be $284.5 billion on June 30,
I960, and will decline to
$280 billion at the end of
fiscal 1961. Thus, the budget
surplus estimated for fiscal
1961 will permit the Government to end the year with
desirable operating leeway
within the permanent debt
limit of $285 billion. However, the fluctuating seasonal
pattern in receipts will again
require a temporary increase
in the debt limit during the
fiscal year 1961, since the
present temporary limit of
$295 billion expires on June
30, 1960. It is expected that
the request for a new temporary limit will be for less than



the present $295 billion if the
Congress accepts my budgetary proposals.
Interest

ceiling.—Effective

management of a debt of this
size requires a reasonable
distribution among securities
maturing at different times.
Three-fourths of all marketable Treasury securities outstanding today come due in
less than five years, of which
$80 billion will mature in
less than a year. As long as
the rate that would have to
be paid on newly issued bonds
exceeds the present statutory
ceiling of 4/4%, it is impossible to issue and sell any
marketable securities of over
five years' maturity.
Exclusive reliance on borrowing in a limited sector
of the market is an expensive and inefficient way to
manage the debt. Inflationary pressures increase as the
volume of short-term and
hence highly liquid securities
11

mounts, especially if these
securities are acquired by
commercial banks. Further,
effective monetary policy becomes more difficult when
the Treasury has to refinance
often. To make possible
prudent and flexible management of the public debt,
to permit sale of a modest
amount of intermediate and

longer term bonds when
market conditions warrant
such action, and to keep
the average maturity of the
debt from constantly shortening, it is imperative that
the Congress immediately act
to remove the 42-year-old
4/4% limitation on interest
rates on Government securities maturing after five years.

BUDGET RECEIPTS

Estimated budget receipts
of $84 billion in the fiscal
year 1961 assume a high and
rising level of economic activity in calendar year I960.
Specifically, this revenue
estimate is consistent with
an increase in the gross
national product from about
$480 billion for calendar 1959
to about $510 billion for
calendar I960. Personal incomes and corporate profits
are expected to rise considerably beyond last year's
levels, which were depressed
somewhat by the long duration of the steel strike. The
accompanying table shows
the sources of Government
receipts for the fiscal years
1959, I960, and 1961.
The estimates for 1961 assume (1) extension of present
tax rates and (2) the adoption of modifications recom12



mended last year for certain
tax laws. These are summarized in the following
paragraphs.
Extension

of

present

tax

rates.—In order to maintain

Federal revenues, it is necessary that the present tax
rates on corporation profits
and certain excises be extended for another year beyond their scheduled expiration date of June 30, I960.
The scheduled reductions in
the excise tax rates on transportation of persons and the
scheduled repeal of the tax on
local telephone service, which
were enacted in the last session of the Congress, should
be similarly postponed.
Improvement

of the

tax

sys-

tem.—The recent tax revision
hearings of the Ways and
Means Committee have pro-

Budget

Receipts:
LEGISLATIVE PROPOSALS

l.
2.
3.
4.
5.
6.
7.

Extend corporate and excise tax rates scheduled for expiration or reduction June 30, I960.
Provide equitable taxation of cooperatives.
Prevent excessive depletion allowances on mineral products
(issue now before Supreme Court).
Revise tax on gains from sales of depreciable personal
property.
Adopt clarifying technical amendments to income tax laws.
Increase aviation fuel taxes and credit them to general fund.
Establish adequate fees and charges for special services
or benefits.

vided valuable information
bearing on changes in the
tax laws. The Treasury will
continue to work in cooperation with the committees of
the Congress in developing
sound and attainable proposals for long-range improvement of the tax laws.
As the development of a
comprehensive tax revision
program will take time, the
BUDGET
[Fiscal years.
Source

Individual income taxes
Corporation income taxes
Excise taxes

....

A l l other receipts .
Total




Congress should consider this
year certain changes in the
tax laws to correct inequities.
These include amendments of
the laws on taxation of cooperatives, now before the
Congress, and a number of
technical changes on which
the Treasury Department has
been working with committees of Congress. There is
also before the Congress an
RECEIPTS
In billions]
1959
actual

I960
estimate

1961
estimate

$36.7

$40.3
22.2

$43.7

17.3
8.5
5.8

9.1
7-0

68.3

78.6

23.5
9.5
7.3
84.0

13

HIGHLIGHTS OF LEGISLATIVE PROGRAM
( I n addition to proposals on public debt and budget receipts, and extensions of
existing programs)

AUTHORIZE:

1.
2.
3.
4.
5.
6.
7.
8.

Financial incentives for local school construction.
Financial assistance for construction of college facilities.
Loans and grants to assist areas with chronic unemployment.
Negotiations with Mexico for joint construction of Amistad
(Diablo) Dam.
Payment of certain Philippine war damage claims.
Acquisition of three undeveloped shore areas for public use.
Long-range policy for financing civil service retirement.
Additional Federal judgeships.

PROVIDE:

9. Effective civil rights legislation.
10. Home rule for District of Columbia.
11. Reimbursement to citizens for certain World War II property
damage.
12. Effective conservation of helium.
13. Additional highway trust fund revenues.
14. Increased postal rates.
15. Revised interest rates for rural electric and telephone loans.
BROADEN:

16. Coverage of unemployment compensation system.
17. Protection of Fair Labor Standards Act.
18. "Food for peace" program.
REVISE AND IMPROVE:

19. Agricultural price support programs, and extend with revisions the conservation reserve program.
20. Cost sharing on flood protection projects.
21. Welfare and Pension Plan Disclosure Act.
22. Immigration and nationality laws.
23. Organization and management of outer space programs.
REPEAL:

24. Reservation with respect to jurisdiction of World Court.

amendment to prevent unintended and excessive depletion deductions resulting
14



from the computation of percentage depletion allowances
on the selling price of fin-

ished clay, cement products,
and mineral products generally; unless the problem is
satisfactorily resolved in a
case now pending before the
Supreme Court, the need for
corrective legislation in this
area will continue.
Aviation fuel taxes.—To help
defray the cost of the Federal
airways system, the effective
excise tax rate on aviation
gasoline should be promptly
increased from 2 to 4X cents
per gallon and an equivalent
excise tax should be imposed
on jet fuels, which now
are untaxed. The conversion
from piston engines to jets is
resulting in serious revenue
losses to the Government.
These losses will increase unless the tax on jet fuels is
promptly enacted.
Changes

in fees and

charges.—

The cost of other Federal pro-




grams which provide measurable special benefits to identifiable groups or individuals
should be recovered through
charges paid by beneficiaries
rather than by taxes on the
general public. Whenever
feasible, fees or charges
should be established so that
the beneficiaries will pay the
full cost of the special services they receive. To help
accomplish this purpose, I
have directed that further
work be done by the departments and agencies on a carefully defined inventory of
Federal services which convey such special benefits. In
the meantime, the Congress
is requested to act favorably
on the postal rate proposals
described in this message and
on a number of other specific
proposals now pending before
it or planned to be submitted
this year for increased fees or
charges for special services.

15

1961 Expenditures by Function
45.6

9.6

Interest

5.6

Agriculture

5.5

Veterans

4.6

L a b o r and W e l f a r e

2.7

Commerce and Housing

2.2

Billion

16



International

1.9

N a t u r a l Resources

1.9

G e n e r a l Government

.2

Total $ 7 9 . 8

M a j o r N a t i o n a l Security

A l l o w a n c e for Contingencies

Most of the President's budget
message following the excerpts already presented consists of a discussion of policies and proposals for
each of nine major functions of
Government. The discussion is summarized in this section of the booklet.
The charts in this section show
the 1961 estimates of expenditures
for programs within each major
function. Data on budget expenditures for these same programs since
1954 can be found on pages 44 and
45, and most references made here to
increases and decreases from I960 to
1961 are to amounts cited on those
pages.

534303 O—60-




17

Major National
$45,568 million

.

Security
.

.

5 7 . 1 % of 1961 budget expenditures

The budget proposals for major
national security programs are designed to strengthen the defensive
power of the United States and its
allies. They reflect the conviction
that the free world must remain
strong while striving to achieve a
safeguarded disarmament.
Expenditures for the military
functions of the Department of Defense, estimated at $41 billion in
1961, emphasize the modernization
of our Armed Forces. This task is
greatly complicated by the recent
tremendous advances in military
technology, which have necessitated a continuous review of the
defense program in order to apply
resources to the newer and more
important weapons systems. The
high cost of developing a major
weapon system requires that great
care be taken in selecting new systems for development, in determining their rate of development, and
in deciding when to produce or
abandon them.
The 1961 budget recognizes that
the military forces must be capable
of contending successfully with all
types of warfare, from limited emergencies to all-out nuclear general
war.
The forces to be supported include
an Army of 14 divisions, a Navy of
817 active ships, a Marine Corps of
3 divisions and 3 air wings, and an
Air Force of 91 combat wings.
Military procurement expenditures will be $13,602 million in
1961. While aircraft procurement
will decline, expenditures for the
18



four main strategic missiles—Atlas,
Titan, Minuteman, and Polaris—
will be further increased, and a
wide variety of other missiles will
be procured for the air defense, sea
control, and tactical ground forces.
The 1961 shipbuilding program includes a conventionally powered
aircraft carrier, 3 new Polaris submarines, and 16 other new ships.
Modernization of 14 destroyers is
also planned. About 18,000 tactical vehicles will be procured in
1961, along with an increased quantity of rifles, machineguns, and
other equipment.
Personnel costs are expected to be
$12,146 million in 1961, which is
$187 million over 1960. The budget provides for a strength of 2,489,000 in the Active Forces on June 30,
1961, the same as planned for June
30, 1960. Expenditures for active
duty personnel will rise, however,
because of increases in longevity
and proficiency pay, more dependents, and higher social security
taxes required of the Government
as employer.
[In millions]

Fiscal year

1961 estimate. .
I960 estimate.
1959
1958
1957
1956
1955
1954

Budget
expenditures

New obligational
authority

$45, 568
45, 650
46, 426
44, 142

$45, 282
44, 749

43, 270
40, 641
40, 626

40, 234

46, 904

45, 517
40, 448
35, 903
33, 656
38, 901

Major National Security
Estimated. Budget

Expenditures

DEPARTMENT O F

in 1961

DEFENSE-MILITARY

$

MILLIONS

M i l i t a r y Function!
/ •
13,602
Purchase of Aircraft, Missiles, Ships, and Other M i l i t a r y Equipment
12,146
Regular, Reserve, and Retired M i l i t a r y Personnel
10,321
O p e r a t i o n and Maintenance of Equipment a n d Facilities
| 3,917
Research, Development, Test, and Evaluation of M i l i t a r y Equipment

- J H i'°°9
M i l i t a r y Construction and Other

*

M u t u a l Security Program
M i l i t a r y Assistance

ATOMIC

ENERGY
2,689

S T O C K P I L I N G A N D DEFENSE P R O D U C T I O N
1134
* A f t e r deducting $ 3 5 0 million net receipts of revolving funds

Expenditures of $10,321 million
in 1961 for operation and maintenance are estimated at $184 million
over I960, largely because of the
growing complexity of weapons
and equipment. For example, the
operating costs for a nuclear-powered submarine are over three times
as high as for a conventionally
powered submarine. A large increase is estimated for operating
additional communications systems
related to air defense. The Strategic Air Command has been authorized to begin to acquire a standby
airborne alert capability, which
would permit a portion of the
heavy bomber force to be on continuous airborne alert if the need




should arise. Among other factors
increasing costs is the civilian employee health insurance program
enacted last year. In total, the increases outweigh savings from declining programs and economy
measures.
Expenditures for research, development, test, and evaluation of
weapons and equipment are estimated to rise by $237 million to
$3,917 million in 1961. The largest
amount of funds will be for work
on missiles and related equipment,
including the Polaris missile and a
full scale testing of the Nike-Zeus
antimissile system under realistic
field conditions. Other research
and development efforts include
19

tactical aircraft, antisubmarine warfare, and satellite systems for early
warning.
Military construction expenditures are estimated to decline in
1961. Construction of air defense
installations and Strategic Air Command bases is moving toward completion. Increasing emphasis is being placed on missile installations
and on electronic facilities for air
defense.
Military assistance expenditures
under the mutual security program
are estimated to be $1,750 million
in 1961, which is $50 million less
than in 1960. The total forces of
the countries receiving equipment
or training under this program include about 5 million Army troops,
2,200 combatant ships, and over
25,000 aircraft, about half of which
are jet powered. A substantial increase in new obligational authority is recommended for 1961 for this
program in order to provide the
training and materiel required for
support of these forces. Many of
the countries in NATO have now
assumed the responsibility for producing or purchasing conventional
arms and equipment, but still require help to meet the pressing
need for new and costly advanced
weapons. In other countries, bordering on aggressive regimes or
confronted with strong internal
subversive elements, the strengthening of conventional forces is emphasized in keeping with the nature
of the threat in each area. Many
of these nations have joined in
mutual defense organizations or
have bilateral defense agreements
with the United States.
20



Expenditures in 1961 for atomic
energy activities will be $2,689
million, about the same as in I960.
Substantial increases for research
and development activities will be
offset by reductions in procurement
of uranium ore concentrates. Development and production of nuclear weapons will remain at high
levels. Funds are provided for the
development of nuclear powerplants
for naval ships, nuclear ramjet engines for missiles, nuclear aircraft
engines, and nuclear electric powerplants for use at remote military
bases.
The atomic energy program for
1961 includes expenditures of $250
million for development of civilian
electric power. Part of this amount
is for assistance to private and
public power groups in developing
and building demonstration nuclear
p o w e r p l a n t s . Increased expenditures are estimated for research in
the physical and life sciences, and
development work will continue
on nuclear-powered rockets in support of the civilian space program,
on thermonuclear power, and on
applications of nuclear explosives
to civilian uses.
Most of the objectives for the
stockpile of strategic and critical
materials have been met. Fewer
materials will be received under
contracts to promote expansion of
defense production as the number
of such contracts still in effect
declines. Therefore, expenditures
for stockpiling and defense production are estimated to decline from
$230 million in 1960 to $134 million
in 1961.

Interest
$9,585 million
Estimated

Budget

.

.

Expenditures

.

1 2 % of 1 9 6 1 budget expenditures

in 1961
MILLIONS

INTEREST O N THE PUBLIC DEBT

|6,500
Marketable Obligations

1,600
Savings Bonds

Fiscal y e a r
1,200

[In millions]

S p e c i a l Issues

I

1961 e s t .

200

O t h e r N o n m a r k e t a b l e Issues

INTEREST O N REFUNDS A N D UNINVESTED FUNDS
I

85

Interest payments are estimated
to be $200 million more in 1961
than in I960. These payments are
almost entirely for interest on the
public debt. A relatively minor
proportion is required for interest
on refunds of taxes and for interest
on uninvested funds held by the
Treasury.
For a year and a half now, market
rates of interest have been increasing, reflecting inflationary pressures, the high level of investment
demands in our economy, and heavy
Federal borrowing required by the
1958 and 1959 budget deficits. The
rise in market rates requires the
Treasury to pay higher interest on




Budget
expenditures

£9,585

1960 e s t ,

9,385

1959.. . .

7,671

1958.. .

7,689

1957.. .

7,308

1956.. .

6,846

1955.• .

6,438

1954...

6,470

securities issued to refinance the
heavy volume of maturing obligations, which were issued when interest rates were lower.
The Congress is again being asked
to lift the present legal ceiling of
4 o n interest rates on Government bonds with maturities of five
years or more. Since market rates
of interest now exceed this limit, it
is impossible to issue and sell new
long-term Treasury bonds in the
market. Restricting the Treasury
to short-term borrowing not only
interferes seriously with the effective management of the public debt,
but also serves to increase interest
costs.

21

International Affairs and Finance
$2,242 million

.

.

.

2 . 8 % of 1961 budget expenditures

The United States is continuing
to support programs to improve
economic conditions throughout
the free world. In this effort,
emphasis is being placed on multilateral programs, in which we are
being joined in larger measure by
other free world countries. Expenditures for international programs are estimated to rise by $177
million in 1961, mainly because of
larger disbursements by the Development Loan Fund.
Defense support assists less-developed countries participating in the
common defense. To help maintain
political and economic stability and
prevent the cost of necessary defensive forces from unduly hindering
economic development, the United
States provides economic aid principally by supplying commodities
for consumption and raw materials
and machinery for industrial production.
The Development Loan Fund
provides capital to less-developed
countries on terms more favorable
than are available from other
sources, including the option to
repay in the borrower's own currency. Over three-fourths of the
projects the Fund is financing are
for roads, railroads, electric power
generation, and industry.
Through technical cooperation,
American experts are sent abroad
to teach the skills required in a
modern economy and foreign technicians are brought to the United
States for training. The budget
also provides for our contributions
22



to the United Nations technical
assistance programs.
Mutual security programs also
include (1) special assistance to
promote economic and political
stability in various countries not
covercd by other aid programs;
(2) assistance to refugees and escapees, grants of atomic research
equipment for the Atoms for Peace
program, and the U.S. contribution
to the United Nations Children's
Fund; and ( 3 ) provision for
contingencies.
Other economic assistance includes emergency famine relief
abroad, and programs to promote
trade and to increase the flow of
private capital to less-developed
countries.
The first installment of the U.S.
investment in the new Inter-American Development Bank is expected
to be paid in I960. In addition,
legislation will be requested when
appropriate for U.S. participation
in the proposed International Development Association, which
would be connected with the International Bank for Reconstruction
[In millions]
Fiscal year
1961 estimate .

Budget
expenditures
$2, 242

1960 e s t i m a t e . . . .

2,066

1959
1958

3, 780
2, 231

1957
1956

1, 973

1955
1954

New obligational
authority
$2, 715
2,697
6, 982
3, 979
2, 238

1, 843
2,181

2,120

1,732

1, 838

2, 304

International Affairs and Finance
Estimated

Budget

Expenditures

in 1961
I

M U T U A L SECURITY

MILLIONS

PROGRAM-Economic

' "Vt, I 730
Defense

Support
300

D e v e l o p m e n t Loan Fund

670
Technical C o o p e r a t i o n a n d O t h e r

Programs

OTHER E C O N O M I C ASSISTANCE

|§||§§|fj 124
CONDUCT OF FOREIGN AFFAIRS

250
FOREIGN I N F O R M A T I O N A N D E X C H A N G E ACTIVITIES

169

and Development and would make
loans on more flexible terms than
the Bank can now offer.
The Export-Import Bank, the
oldest Federal agency specializing
in foreign lending, will devote more
of its program in 1961 to transactions which support economic
development abroad. By encouraging more private participation
in its loan program and by using
funds obtained from loan repayments, the Bank does not expect to
incur net budgetary expenditures
in 1961.
Special studies have been made of
ways to increase private investment
abroad. Tax treaties with investment incentive clauses are being



negotiated. The budget proposes
that taxation of income earned on
American investments in only the
less-developed countries be deferred
until repatriated.
In the conduct of foreign affairs,
the Department of State plans to
expand its language training programs, to open several new posts,
and to increase its disarmament
staff. Legislation is requested for
payment of certain war claims of
the Philippine Government.
Exchanges of leaders and teachers
with about 80 countries will be increased. The United States Information Agency plans to expand
its programs in Africa and Latin
America.
23

Commerce and Housing
$2,709 million

.

.

.

3 . 4 % of 1961 budget expenditures

Although expenditures for a
number of programs will increase
substantially in 1961, total/expenditures for commerce and housing
will be $293 million less than in
I960, primarily because proposed
increases in postal rates w i l l sharply
reduce the net expenditures of the
Post Office.
Expenditures of the Federal Aviation Agency are estimated to increase by $114 million for operating
and modernizing the Federal airways with improved equipment and
related facilities necessary to handle
growing air traffic safely and efficiently. Proposed increases in aviation fuel taxes will help meet these
rising airway costs. Subsidy payments to local service airlines will
also increase in 1961.
The National Aeronautics and
Space Administration will about
double its I960 expenditures in
1961 in carrying forward its present
programs and those related to the
development of very high thrust
space booster vehicles which are
becoming its responsibility in 1961.
It is expected that manned space
flights will be attempted within
the next two years, and that in the
not too distant future we will be
able to launch the large space
vehicles with which to extend the
conquest of space.
Expenditures for water transportation will be sharply higher in
1960 and 1961 than in 1959, because
of past commitments for ship operating and construction subsidies.
With Federal aid, over the past
24



decade urban renewal planning has
been started on 647 projects in 385
communities. Over 90 projects will
be completed by the end of 1961
and 510 others will be under way.
Under the public housing program,
about 500,000 units will be occupied by the end of 1961 and 125,000
more units will be under contract.
The budget places major emphasis
on accelerating progress on urban
renewal and public housing projects
already authorized. Legislation is
requested to authorize continued
loans to small communities for
needed public facilities.
Additional funds are requested for
mortgage purchases by the Federal
National Mortgage Association
to be used chiefly for housing in
urban renewal areas, housing for
the relocation of displaced families,
and housing for the elderly. Legislation is proposed to extend the authority of the Federal Housing Administration for insuring loans on
home improvements, which would
otherwise expire on October 1,
1960. The direct housing loan
[In millions]

Fiscal year

Budget
expenditures

New obligational
authority

1961 estimate

$2, 709

$3, 204

1960 estimate

3, 002

1959
1958

3, 421
2,109

3, 789
2,929

1957
1956

1,455
2,030

1955
1954

1,504
817

5, 863
3, 855
4, 528
2,817
2,376

Commerce and Housing
Estimated

Budget

Expenditures

in 1961
t

MILLIONS
750

600
Space E x p l o r a t i o n a n d F l i g h t

Technology
559

W a t e r Transportation
430
Housing and Community

Development
242

Promotion and Regulation of

Business

49
Postal Service ( N e t a f t e r Rate Increases t o be Proposed)
| 80
Civil Defense a n d

Other

program for veterans terminates
July 25, 1960. The college housing
program should also be terminated
and replaced with the broader college facility program discussed on
page 31.
Increased aid to small business
will be provided by the Small Business Administration, directly and
through assistance to privately
owned small business investment
companies. Legislation is proposed to encourage formation of
additional investment companies to
help small businesses obtain capital. Expenditures of the regulatory agencies will also increase in
1961. Legislation is again recom-

534303 O—60




4

mended to increase aid to areas
which have persistent high unemployment.
The Postal Policy Act of 1958
established the principle that postal
rates should be adequate to cover
all postal expenses, except for the
cost of certain public services. Accordingly, legislation is proposed
to increase first-class and airmail
rates by 1 cent and to raise other
rates by enough to cover a prospective $554 million deficit.
The budget includes increased
funds for civil defense activities,
mainly for grants to States and
cities to strengthen their civil
defense organizations.
25

Agriculture and Agricultural
$5,623 million

.

.

•

7% of 1961 budget expenditures

Over 70% of the total expenditures estimated for agriculture and
agricultural resources in 1961 will
be for price supports and other
programs to stabilize farm prices
and farm income. Increases for
these programs account for most
of the estimated rise of $510 million
over 1960.
The President is requesting that
the Congress consider appropriate
modifications in the price support
laws in order to encourage adjustments in production needed to
permit relaxation of Government
controls over farm operations. The
need for realistic price supports for
wheat is particularly urgent. By
July 1, 1960, wheat stocks are expected to equal two years' normal
domestic consumption.
Under the "food for peace" program, surplus commodities ( 1 ) are
sold for foreign currencies which
are used to finance U.S. programs or
economic development and common defense in other countries and
(2) are shipped abroad for relief.
Legislative changes are again recommended to make this surplus
disposal program more effective.
Expenditures in 1961 to conserve
agricultural land and water resources include mainly $394 million
for the conservation reserve program, under which farmers receive
payments from the Government for
retiring cropland from production,
and $233 million for cost-sharing
assistance under the agricultural
conservation program.
Under legislation recommended
26



Resources

to extend and expand the conservation reserve program for three
years, it is expected that about
9 million additional acres will be
brought into the program during
the 1961 crop year, making the
total about 37 million acres. Expansion of the program should be
contingent upon enactment of
needed price support legislation
for wheat.
An advance authorization of $100
million is recommended for the
agricultural conservation program
for the 1961 crop year, a reduction
of $150 million from the I960 level.
This program should be made more
consistent with the objectives of
the conservation reserve program
by eliminating payments for practices which increase capacity to
produce farm commodities already
in surplus supply. Cost-sharing
assistance should be concentrated
on measures which foster shifts to
less intensive uses of cropland.
Other programs to conserve agricultural resources include technical
assistance for conservation practices, the Great Plains conserva[In millions]

Fiscal year
1961 estimate
1960 estimate. . . . .
1959
1958
1957
1956
1955
1954

Budget
expenditures

New obligational
authority

$5, 623
5,113
6,529
4, 389

$4, 570

4, 525
4, 867
4, 388

5, 275
3, 309
2,672

2,557

4,009

5, 099
5, 421
6,256

Agriculture and Agricultural
Estimated

Budget Expenditures

Resources

in 1961
f

MILLIONS
3,950

O w n e r s h i p and O p e r a t i o n Loans

Research a n d O t h e r A g r i c u l t u r a l Services

tion program, and the watershed
protection program for which $5
million is recommended for starting
new projects in 1961.
Under present law, the Rural Electrification Administration, which
makes electric and telephone loans,
borrows from the Treasury at an
interest rate of 2% and relends at
the same rate. Legislation is proposed under which the REA would
( a ) borrow at a rate not to exceed
the average rate payable by the
Treasury on recently issued longterm marketable obligations and
(b) make future loans at the same
rate plus one-fifth of 1% to cover
administrative expenses and estimated losses. Under a longer range




plan, legislation should be developed to enable borrowers to
obtain funds from a mutually
owned financing institution.
The Farmers Home Administration makes loans to help finance
farm ownership and farm operations. In 1961, new loans and administrative expenses of the Administration are proposed in an
amount equal to estimated collections on outstanding loans.
The 1961 budget provides increased support for the research
programs on pesticide residues and
on industrial uses of farm commodities, and for the rural development program to promote economic
improvement in rural areas.
27

Natural Resources
$1,938 million

.

.

.

2 . 4 % of 1961 budget expenditures

In 1961, expenditures for natural
resources programs are estimated
to be higher than in any previous
year. The increase of $152 million
over 1960 is predominantly for
water resource development.
Development of land and water
resources will account for about
three-fourths of the budget expenditures for natural resources.
An estimated $1.2 billion will be
spent by the Corps of Engineers and
the Bureau of Reclamation for the
construction, maintenance, and
operation of flood control, navigation, irrigation, power, and related
projects. Of this total, $18 million
represents the first-year expenditures for 42 proposed new projects
and for a number of smaller new
projects. The new projects will
cost $496 million over a period of
years.
Three new construction starts for
power and navigation are planned
by the Tennessee Valley Authority.
Under legislation enacted in 1959,
the TVA will issue $115 million in
revenue bonds in 1961 to help finance construction of power generating facilities. Legislation is
recommended to authorize an agreement with Mexico for construction
of the Amistad (Diablo) Dam to
carry forward the joint development of the waters of the Rio
Grande. An estimated $1.5 million is recommended in 1961 for
construction of two new demonstration plants as part of research work
f o r c o n v e r t i n g sea w a t e r and
brackish water into fresh water.
28



At present Federal agencies operate under inconsistent standards
for sharing of the costs of flood protection projects with local beneficiaries. Legislation previously recommended should be enacted to
require identifiable non-Federal interests receiving flood protection
benefits from such projects to bear
at least 30% of the costs of flood
protection.
Expenditures for conserving and
developing the resources of Indian
and public domain lands will be
about the same in 1961 as in I960.
The Bureau of Land Management
administers 475 million acres of
public domain lands for the purpose
of conserving the resources on these
lands. To obtain a more adequate
return for use of federally-owned
resources, legislation is again recommended to increase the fees for
noncompetitive oil and gas leases on
the public domain.
Expenditures for forest resources
in 1961 will provide some additional facilities and services in the
national forests for campers and
picnickers.
[In millions]
Budget
expenditures

Fiscal year
1961 estimate
1960 estimate

$1, 938
1,785
1,669
1,544

1959
1958
1957 .
1956
1955.
1954

•• •

New obligational
authority
$1, 836
2,538
1,742

1,297

1,456
1,356

1,105
1,202

1,213
1,070

1,316

1, 398

Natural Resources
Estimated, Budget Expenditures

in 1961

Each year more of our citizens
enjoy the national parks. Estimated expenditures in 1961 will
provide for additional facilities and
services for visitors, for maintenance and operation of facilities, and
for selective acquisition of lands.
Legislation is again recommended
to authorize the selection and acquisition for the national park system
of three shore areas of national
significance because of their outstanding natural and scenic features,
recreational advantages, and other
public values.




The Fish and Wildlife Service
will operate and maintain 92 fish
cultural stations and administer 17
million acres in wildlife refuges in
1961. The estimated 1961 expenditures for fish and wildlife resources
include an increase for the acquisition of lands for additional wildlife
areas to be financed from fees
charged to hunters of migratory
birds.
Legislation is again recommended
to carry out a long-range plan for
the conservation of the Nation's
vital helium resources.

29

Labor and Welfare
$4,569 million

.

.

.

5 . 7 % of 1961 budget expenditures

Budget expenditures for labor
and welfare activities in 1961 are
expected to be $128 million higher
than in I960. The largest increase
is for promotion of public health,
mainly through research and hospital construction grants. About
three-fourths of the total will be
for grants to States and localities.
Federal grants for public assistance will rise in 1961. These grants
will finance about 58% of the total
Federal-State-local expenditures in
the four federally-aided categories
—assistance to the aged, dependent
children, the blind, and the permanently and totally disabled.
Public assistance has long been
recognized as primarily a responsibility of State and local governments.
The increasing Federal
share in this program tends to
weaken their sense of responsibility.
Expenditures for public health
programs in 1961 are expected to be
$53 million more than in I960,
largely because of increased appropriations in previous years. A
large part of the increase is in research grants and activities by the
National Institutes of Health, estimated at $390 million in 1961. Expenditures for hospital construction grants will increase to $161
million in 1961. Increases are also
recommended for control of air and
water pollution, for radiological
health activities, and for activities
of the Food and Drug Administration.
Expenditures for the promotion
of education will also rise in 1961.
30



Outlays under the National Defense
Education Act of 1958 are estimated
to increase by $36 million to $170
million. The largest part of this
increase is for advances to student
loan funds. The National Science
Foundation will also increase its expenditures for science education.
Federal grants for schools in
federally-affected areas are proposed
at $207 million, which is a decrease
of $26 million from I960. Legislation is again being proposed to revise such aid to take account of the
fact that in many aided areas Federal employees live on taxable private property and pay local taxes as
do other parents in the community.
To help meet pressing needs for
new school facilities, legislation is
recommended for Federal payments
to school districts of up to half of
the principal and interest on $3 billion of bonds to be issued in the
next five years for public elementary
and secondary school construction.
A program is also proposed to assist
higher educational institutions in
acquiring needed facilities through
lln millions]
Budget
expenditures

Fiscal year
1961 estimate

$4, 569

1960 estimate

4, 441
4, 421

1959...
1958
1957
1956...
1955
1954

•

••

3, 447
....

3, 022
2,821
2, 575
2, 485

New obligational
authority
$4, 538
4, 543
4, 182
4,161
3, 212
2, 860
2, 614
2, 429

Labor and Welfare Estimated

Budget Expenditures

in 1961

Science, Research, Libraries, a n d Museums

358
S c h o o l Lunch, V o c a t i o n a l R e h a b i l i t a t i o n , a n d O t h e r

Federal guarantees of $1 billion in
bonds and through Federal grants,
payable over 20 years, equal to 25%
of the principal of $2 billion of
bonds. The present college housing loan program would be terminated.
Most labor and manpower expenditures are for grants to States
for administering the Federal-State
system of unemployment compensation and job placement services.
Legislation is proposed to finance
these grants from the unemployment trust fund, and to extend the
coverage of this system. Increased
funds are provided for 1961 to




administer the new law aimed
mainly at curbing certain union
abuses. Legislation is again proposed to strengthen the Welfare
and Pension Plan Disclosure Act,
to broaden the minimum wage and
8-hour laws, and to assure equal
pay for equal work.
Basic research activities by the
National Science Foundation and
the Bureau of Standards, and oceanographic research, will be accelerated in 1961. Census Bureau expenditures will decline as the I960
decennial census nears completion,
but some other statistical activities
will be expanded in 1961.

31

Veterans Services and Benefits
$5,471 million

.

.

.

6 . 9 % of 1961 budget expenditures

Expenditures for veterans programs arc estimated to rise by $314
million in 1961, chiefly because of
additional pension cases and higher
pension rates authorized by the
Veterans' Pension Act of 1959.
The increase for pensions will be
partly offset by a decrease for
readjustment benefits.
In the future, total expenditures
for veterans programs as presently
authorized will continue to increase as our veterans advance in
age. Veterans and their dependents and survivors now total 81
million people, a considerable proportion of whom are potential recipients of one or more types of
benefits. In addition to the special
veterans programs, a great majority
of veterans participate in the general social security, health, and
welfare programs financed wholly
or in part by the Federal Government.
Compensation of $2,066 million
for service-connected disabilities
and deaths will be paid for an estimated 2.4 million cases during 1961.
A reduction in the number of World
War I and II veterans on the rolls
will be offset somewhat by the
addition of veterans of the Korean
conflict and peacetime ex-servicemen, so that payments will show
only a minor change in total in
1961.
Expenditures for non-service-connected pensions and for burial and
other allowances are estimated to
be $1,774 million in 1961. This
represents an increase of $438 mil32




lion over 1960, entirely for pensions. The net impact of the new
veterans pension law is to add
several hundred thousand new cases
to the rolls at an estimated added
cost of $284 million in 1961 and a
cumulative cost of $9 billion during
the next 40 years. The growing
number of World War I veterans
reaching age 65 is also contributing
to raising pension expenditures in
1961. In all, 1.9 million veterans
and families of deceased veterans
are expected to receive pensions
in 1961, which is 26% more than
in 1960.
Expenditures for hospitals and
medical care, including construction, are estimated to rise by $25
million in 1961. Hospital and
domiciliary care will be provided
for an average of 141,250 beneficiaries per day, and a total of
2,300,000 veterans will receive medical or dental care for serviceconnected disabilities in outpatient
clinics. In 1961, an orderly 12year hospital modernization and
replacement program is being
[In millions]
Budget
expenditures

Fiscal year

1961 e s t i m a t e .

.

I960 estimate . . .

.

New obligational
authority

$5, 471

$5, 476

5,157

5, 1 7 6

1959

5,174

5,125

1958

5, 0 2 6

5, 0 7 1

1957

4, 7 9 3

4,870

1956

4, 7 5 6

4 , 823

1955

4,457

4, 369

1954

4, 2 5 6

4,272

Veterans Services and Benefits
Estimated

Budget Expenditures

in 1961
$

MILLIONS

2,066
Compensation

Pensions, Burial and O t h e r

Allowances
^

^

^

^

990

H o s p i t a l s and M e d i c a l Care
316
Readjustment B e n e f i t s — E d u c a t i o n and Training
124
Readjustment

Benefits—Loan Guarantee and

Other

31
Insurance a n d Indemnities
169
O t h e r Services a n d A d m i n i s t r a t i o n

started. Expenditures for construction are estimated at $63 million.
The average number of veterans
receiving education and training
benefits is expected to decline from
325,000 in 1960 to 225,000 in 1961,
as fewer veterans of the Korean
conflict participate. Thus, expenditures are expected to decline from
$445 million in 1960 to $316 million in 1961. The special unemployment compensation program
for veterans of the Korean conflict
ends in 1961. Expenditures under
the loan guarantee program are
expected to increase somewhat,
however. The President is recom-




mending a program of vocational
rehabilitation for peacetime exs e r v i c e m e n w i t h substantial
service-connected
disabilities.
However, he is opposing the establishment of special educational and
loan guarantee programs for peacetime ex-servicemen.
The general operating expenses of
the Veterans Administration are
expected to decline in 1961, reflecting the decreased workload in loan
and educational programs, improved administrative procedures,
and the use of modern electronic
equipment in recording and paying
veterans benefits.

33

General Government
$ 1 , 9 1 1 million

.

.

.

2 . 4 % of 1961 budget expenditures

Expenditures for general government activities are mainly for central administrative and construction
costs not allocated among the other
major expenditure categories. Expenditures for these activities are
estimated to increase by $200 million in 1961 primarily due to increased construction of Government
buildings and a new appropriation
for retirement benefits for civilian
Government employees.
Financial management is centered
in the Treasury Department, which
collects taxes and other revenues,
manages the public debt, and writes
checks to pay the bills of most civil
Government a g e n c i e s . During
1961, the Internal Revenue Service,
which will handle 97 million tax
returns from individuals and corporations, plans to strengthen its
enforcement programs through additional personnel and by introducing the use of electronic equipment.
The General Services Administration is the central management
agency for Government property
and records. It provides general
office space and purchasing services
for most Federal agencies, and
maintains Government records and
archives. Expenditures for construction will rise in 1961 as outlays
for proposed new office buildings
are added to those for construction
started in prior years. A new program has been developed to facilitate use of excess personal property
by Federal agencies, and to achieve
faster, more efficient disposal of
surplus property.
34



Expenditures for central personnel management are expected to
rise in 1961, mainly as a result of
a requested appropriation to the
civil service retirement fund to
continue beyond July 1, I960, benefits enacted in 1958 for certain
widows or widowers of former
Federal employees and for certain
retired employees. The President
is requesting the adoption of a longrange policy on financing the civil
service retirement system including
establishment of a definite basis for
meeting the Government's share of
the costs consistent with the principle that its full faith and credit
support the authorized benefits.
Other central personnel programs
include accident compensation, and
unemployment compensation for
Federal employees and peacetime
ex-servicemen.
Staff increases are proposed for
the Federal Bureau of Investigation
and the Immigration and Naturalization Service to meet rising workloads. The President is requesting
[In millions]
Budget
expenditures

Fiscal year

1961 estimate. .
1960estimate.
1959
1958
1957
1956
1955
1954

..

New obligational
authority

. .

$1, 911

$1, 910

.

1,711
1,606

1,645
1,795
1,421

1, 359
1, 790
1, 630
1,199
1, 235

1, 833
1, 596
1, 136
1,071

General Government Estimated

Budget

Expenditures

in 1961

591
Financial

Management
432

P r o p e r t y a n d Records

Management
251

C e n t r a l Personnel Costs
229
FBI, A l i e n C o n t r o l , a n d R e l a t e d

Programs

199
L e g i s l a t i v e a n d Judicial

Functions

126
D i s t r i c t o f C o l u m b i a , Territories, a n d

Weather

84
Bureau a n d

Possessions

Other

l e g i s l a t i o n to strengthen laws
against organized crime and amendments to the immigration and nationality laws, including modification of the quota system.
The expenditure estimate for
legislative and judicial functions
includes increased outlays for a new
office building for the House of
Representatives.
Changes in legislation will be
proposed as needed to bring Hawaii
under the same general laws, rules,
and policies as are applicable to the
other 49 States. The President is




again supporting home rule for the
District of Columbia.
The expenditures of the Weather
Bureau are expected to increase in
1961 for expanded research, observation, and forecasting services
needed to keep pace with advances
in air traffic controls.
Other recommendations for legislation include civil rights proposals, creation of additional
judgeships, authorization of civilian achievement awards, and reimbursement to Americans for certain
World War II property damage
overseas.

35

Expenditures and New Obligational Authority by
Agency
[Fiscal year 1961 estimate. In millions)
Description

Legislative branch
The judiciary
Executive Office of the President
Funds appropriated to the President:
Mutual security—economic
Other

Gross
expenditures

Receipts
from operations 1

Budget
expenditures
$162

$162
52

52

79

79

1, 7 4 1

$41

1,700

157

43

114

3

2, 6 8 9

Independent offices:
A t o m i c Energy Commission
Export-Import Bank
Federal A v i a t i o n Agency
N a t i o n a l Aeronautics and Space Administration
N a t i o n a l Science Foundation
Small Business Administration
Tennessee V a l l e y A u t h o r i t y
United States Information A g e n c y . . .
Veterans Administration
Other
General Services Administration
Housing and Home Finance A g e n c y . . .
Department of Agriculture
Department of Commerce
Department of Defense—Military:
M i l i t a r y functions
M u t u a l security—military assistance
Department of Defense—Civil
Department of H e a l t h , Education, and
Welfare
Department of the Interior
Department of Justice
Department of Labor
Post Office Department
Department of State
Treasury Department
District of Columbia
Allowance for contingencies
Total

2, 692
722
681

729

- 1
681

600

600

160

160
280

160

368

295

73

129

5

124

5, 6 6 3

217

5, 4 4 6

406

295

460

111
2

2, 3 9 2

1, 8 9 2

500

9,169

2,969

6,201

483

10

473

41, 0 5 8

63

40, 9 9 5

107

3,521

868

458

1, 7 5 0

1, 7 5 0
1,079

120

972

3, 5 1 7
59

809

545

5

540

4,147

4,098

271

271

49

292

292

10, 4 6 1

10,452

48

48

200

200

90, 638

10, 822

79, 8 1 6

1 Include only amounts available by law for use by the agencies and exclude substantial amounts
paid directly into the Treasury as miscellaneous receipts.

36






Part 3 of this booklet presents current information on funds held in
trust by the Federal Government,
and on the Government's total receipts from and payments to the
public including the transactions of
the trust funds. These aspects of
the Federal financial system are
described in part 4.
In addition, this section includes
material on Federal civilian employment, and historical data on the
national debt and on budget receipts
and expenditures.

Trust Funds
Trust fund collections are estimated at $22.5 billion and expenditures at $21.3 billion in 1961.
Transactions of these funds, which
are not included in the budget
totals, are described on page 51.
Expenditures of the old-age and
survivors insurance and disabilitytrust funds are expected to rise by
$517 million in 1961. By the end
of the fiscal year 1961, over 14
million people will be receiving
monthly benefits under old-age and
survivors insurance and 592,000
people under disability insurance.
The expenditures of the old-age
and survivors insurance fund exceeded receipts in 1958 and 1959
and are expected to do so again in
1960. The increase from 2l/2% to
3% in the tax rate paid by both
employers and employees, effective
January 1, 1960, should enable the
fund to resume building up reserves
in 1961.
Receipts of the unemployment
trust fund are expected to be $311
million greater than expenditures
in 1961, reflecting lower levels of
insured unemployment.
Highway trust fund receipts are
estimated to rise by $322 million
in 1961, reflecting primarily the
temporary increase of 1 cent per
gallon in the motor fuel tax effective October 1, 1959. Last year
the President requested an increase
of V/i cents to be effective July 1,
1959. As a result of the lower rate
and the later effective date, the road

38



building program has been slowed
below a desirable rate of progress.
The President is recommending
another one-half cent rise in the
motor fuel tax, making a total of
4% cents per gallon, until June 30,
1964. This would permit construction of the Interstate System
to proceed at a higher level. He
is also requesting the repeal of the
diversion of excise taxes from the
general fund to the trust fund enacted last year for the period from
July 1, 1961 to June 30, 1964.
The civil service and foreign
service retirement systems are expected to pay monthly benefits to
over 583,000 individuals at the end
of 1961.
Railroad retirement benefits are
estimated to be paid to 827,000
persons at the end of 1961. In
May 1959, legislation was enacted
increasing these benefits and raising
the tax rate paid by both employers
and employees from 6%% to 6%%.
This tax increase plus future scheduled increases will largely eliminate
the actuarial deficit under which
the system has been operating.
The excess of expenditures over
receipts in the category " a l l other
trust funds" is mainly due to the
secondary market operations of the
Federal National Mortgage Association. In these operations in
1961, the Association expects to
spend $800 million more for mortgage purchases and expenses than
it receives from repayments, sales,
and other income.

Trust Funds
Fiscal

Year 1961

RECEIPTS AND EXPENDITURES

Estimated
% MILLIONS

11,721

Expenditures

11,652

O l d - A g e and Survivors Insurance

Social Security

,

Programs

^

2,284
1,973
Unemployment Insurance

1,098
4
Disability insurance

Federal-aid
Highways

Federal Employees

1,770

Trust

Retirement

Funds
[In millions]

Fiscal year

Railroad
Retirement

Veterans
Life insurance

A l l Other
Trust Funds




Total
Total
receipts expenditures

1961 est.... 322,547

$21,278

1960 est

20,696

21,510

1959.

17,084

18,597

1958

16,329

16,069

1957

14,369

12,961

1956

11,685

9,434

1955..,

9,536

8,546

1954.

9,155

7,204

1,555

39

Receipts From and Payments to the Public
[Fiscal years.

In millions]

Description

1959
actual

I960
estimate

1961
estimate

Receipts from the public:
Budget receipts
Trust fund r e c e i p t s . . . .
Deduct—
Intragovernmental transactions
Seigniorage on silver
Total

$68, 2 7 0

$78, 600

$84, 000

17, 0 8 4

20, 696

22, 5 4 7

3, 6 5 0

4, 4 6 0

4, 3 2 1

44

40

48

81, 6 6 0

94, 7 9 6

102, 178

80, 6 9 7

7 8 , 383

79, 8 1 6

18, 597

21, 5 1 0

21, 2 7 8

1, 2 9 0

627

—297

3, 6 5 0

4, 4 6 0

4, 3 2 1

2,131

722

219

94, 8 0 4

95, 338

96, 257

13,144

542

Payments to the public:
Budget expenditures
Trust fund expenditures
Government-sponsored enterprise expenditures, net
Deduct—
Intragovernmental transactions
Excess of interest accruals over payments, etc
Total .

.

Excess of payments over receipts.
Excess of receipts over payments.

Federal receipts from the public
are estimated to exceed payments to
the public by $5.9 billion in 1961,
as contrasted with an excess of $0.5
billion of payments over receipts in
1960. Receipts are expected to rise
to $102.2 billion, which is $7.4 billion higher than the current year.
Payments are estimated at $96.3
billion, an increase of $0.9 billion
from 1960. (For a description of
Federal receipts from and payments
to the public, see page 51.)
The change from an excess of payments in 1960 to an excess of receipts in 1961 is explained by the
much larger budget surplus expected in 1961, and by the excess of
40



5, 9 2 1

trust fund receipts expected in 1961
compared to an excess of trust expenditures in 1960.
The excess of receipts estimated
for 1961 will be used to repay cash
the Government has previously borrowed from the public. Repayment
of such debt owed to the public
will be greater than the amount of
public debt retired, because the
Government trust funds are expected to add to their holdings of
public debt securities to the extent
that trust fund receipts exceed trust
fund expenditures. This will reduce the debt held by the public
in like amount by shifting ownership to the trust funds.

Federal Civilian

Employment

In 1961, over 40% of all Federal
civilian employees of the executive
branch will be employed by the Department of Defense. When employees of the Post Office Department and the Veterans Administration are added to this total, about
three-quarters of total Federal employment is accounted for. Other
large employing agencies are the
Departments of Agriculture, with
102,000 employees estimated at the
close of the fiscal year 1961; Treasury, with an estimated 80,000; and
Health, Education, and Welfare,
with an estimated 64,000.
Total employment is expected to
increase by about 31,000, slightly
over 1%, from June 30, 1960, to
June 30, 1961. Major increases are
22,000 in the Post Office Department (to handle increased mail
volume and provide more delivery
points), 6,000 in the National Aeronautics and Space Administration
(to step up its program), 5,000 in
the Federal Aviation Agency (to
construct and operate modernized
airway facilities), and 3,000 in the

Treasury Department (mainly for
improved tax law enforcement).
These increases and some in other
agencies will be offset in part by an
estimated decline in civilian employment in the Department of
Defense.
Total personal service costs are
expected to be $12.7 billion in 1961,
which is $163 million more than in
1960. Personal service costs include, in addition to salaries and
wages, living and quarters allowances; salary differentials for service
abroad and hazardous duty; overtime and other premium pay; but do
not include retirement benefits.
1048

Federal Civilian Employment
End of Fiscal Y e a r 1961 Estimate
Thousands

Defense

Post O f f i c e

Veterans
Administration

A l l Other

FEDERAL CIVILIAN EMPLOYMENT, EXECUTIVE BRANCH
[In thousands]

End of fiscal year

Total

Department Post Office
of Defense Department

Veterans
Administration

1961 e s t i m a t e

2,415

1,048

586

172

1960 e s t i m a t e

2,384

1,061

564

174

1959

2,355

1,078

550

171

1958

2,355

1,097

538

172

1957

2, 3 8 9

1, 1 6 1

521

174

1956

2, 3 7 2

1,180

509

177

1955

2,371

1,187

512

178

1954

2, 3 8 2

1,209

507

179

1953

2, 5 3 2

1,332

507

178




41

Federal Budget

Expenditures

as a Percentage of National Income
53%

Peak W a r Y e a ^

Ifllllll

13%

Fiscal 1 9 3 9
Years

19%

19%

1956

1957

2 0

%

1958

2 , %

19%

1959

I960
1961
— Estimate —

J 8 %

Federal Payments to the Public
as a Percentage of National Income
51%

Peak W a r Year A

2 4 %

2 3 %

21%

22%

23%

2 5 %

23%

1954

1955

1956

1957

1958

1959

I960
1961
— Estimate —

2 ) %

14%

Fiscal 1 9 3 9
Years

42



Historical

Information
BUDGET RECEIPTS, 1952-1961
[Fiscal y e a r s .

In m i l l i o n s of d o l l a r s ]
Estimate

Actual
Source
1952

1953

2 7 , 9 1 3 30, 108
21,225 21,238
8, 851 9, 868
3, 402 3 , 6 1 0

Individual income taxes
Corporation income taxes
Excise taxes
- „ __ _
All other receipts

1954

29, 542
21, 101
9,945
4, 0 6 7

1955

28,
17,
9,
4,

747
861
131
650

1956

1957

1958

32, 1 8 8 35, 6 2 0 34, 7 2 4
20, 8 8 0 21, 1 6 7 20, 0 7 4
9, 9 2 9 9, 0 5 5 8 , 6 1 2
5, 1 6 9 5, 1 8 7 5, 708

1959

1960

1961

36, 7 1 9 40, 306 43, 706
17, 309 22, 200 23, 500
8, 504 9, 100 9, 523
5, 738 6, 994 7, 271

61, 391 64, 825 64, 655 60, 390 68, 165 7 1 , 0 2 9 69, 1 1 7 68, 270 78, 6 0 0 84, 0 0 0

Total

BUDGET EXPENDITURES, 1952-1961
[Fiscal y e a r s .

In m i l l i o n s of d o l l a r s ]
Actual

Estimate

Function
1952

M a j o r national security
Interest
International affairs and finance
Commerce and housing
Agriculture and agricultural
sources

43,
5,
2,
2,

1953

1954

1955

1956

1957

1958

1959

1960

1961

9 7 6 5 0 , 3 6 3 4 6 , 9 0 4 40, 6 2 6 40, 6 4 1 43, 2 7 0 44, 142 46, 4 2 6 4 5 , 6 5 0 45, 568
934 6, 583 6, 4 7 0 6 , 4 3 8 6 , 8 4 6 7, 3 0 8 7, 6 8 9 7, 671 9, 385 9, 585
826 2 , 2 1 6 1, 732 2, 181 1, 843 1 , 9 7 3 2 , 2 3 1 3, 780 2 , 0 6 6 2, 242
624 2, 504
8 1 7 1, 504 2 , 0 3 0 1 , 4 5 5 2, 109 3 , 4 2 1 3 , 0 0 2 2, 709

re-

Natural resources
Labor and welfare
Veterans services and benefits
General government
A l l o w a n c e for contingencies
A d j u s t m e n t to daily Treasury statement basis

1,
1,
2,
4,
1,

045 2, 9 3 6 2 , 5 5 7 4, 388 4, 8 6 7 4, 525 4, 389 6 , 5 2 9
366 1 , 4 7 7 1 , 3 1 6 1 , 2 0 2 1, 105 1, 2 9 7 1, 544 1 , 6 6 9
168 2, 4 2 6 2, 485 2, 575 2, 821 3 , 0 2 2 3, 4 4 7 4, 421
863 4, 298 4, 2 5 6 4, 4 5 7 4, 756 4, 793 5 , 0 2 6 5, 174
4 6 3 1 , 4 7 2 1 , 2 3 5 1, 1 9 9 1 , 6 3 0 1, 7 9 0 1, 359 1 , 6 0 6

5, 1 1 3
1, 785
4, 441
5, 157
1,711
75

5, 623
1,938
4, 569
5, 4 7 1
1,911
200

—857
65, 4 0 8 74, 274 67, 772 64, 570 66, 540 69, 4 3 3 7 1 , 9 3 6 80, 6 9 7 78, 383 79, 8 1 6

Total

UNEXPENDED BALANCES OF AUTHORITY CARRIED FORWARD
AT END OF YEAR
[Fiscal y e a r s .

I n billions of d o l l a r s ]
Actual

Estimate

Description

F r o m appropriations.
F r o m other authorizations:
Authorizations to spend f r o m debt receipts.
C o n t r a c t authorizations
R e v o l v i n g and management funds
Total




1953

1954

1955

1956

1957

1958

1959

1960

78.4

67.8

52. 1

46.0

43. 9

40. 1

38.8

39.7

39.5

20.2
2.5
1.7

21.1

19.5
2.6
5.4

18.9
4.0
4. 1

20.2
1. 1
3. 7

25. 2
1.5
5.3

25.1

2.5
2.9

1.5
6. 3

24. 5
1.7
5.9

23.4
1. 7
6.2

102.8

94.2

79.6

73.0

68.9

72. 1

71.6

71.8

70.8

1961

43

BUDGET EXPENDITURES BY FUNCTION
[Fiscal y e a r s .

In m i l l i o n s of dollars]
Actual

Description
1954

Major national

1955

1956

Estimate

1957

1958

1959

1960

14,410

13, 9 4 3

13, 6 0 2

11, 8 0 1

11,959

12, 146

10, 384

10, 137

10, 321

2, 859
1, 779

3, 6 8 0
1, 2 2 6

3,917
1,009

1961

security:

D e p a r t m e n t of Defense—-Military:
M i l i t a r y functions: 1
Purchase of aircraft, missiles, ships,
and o t h e r military equipment
Regular, reserve, and retired milit a r y personnel
Operation
and maintenance of
equipment and facilities
Research, development, test, and
e v a l u a t i o n of military e q u i p m e n t .
M i l i t a r y construction and other
S u b t o t a l , m i l i t a r y functions
40, 336
Mutual security p r o g r a m — m i l i t a r y
assistance..
3,629
Atomic energy
1,895
Stockpiling and defense p r o d u c t i o n , , . . 1 , 0 4 5
Total, m a j o r national security

46, 904

35, 532

35, 791

38, 439

39, 0 6 2

41,233

40, 945

40, 995

2, 292
1,857
944

2,611
1,651
588

2, 352

2, 187
2, 268
625

2, 340
2, 5 4 1
312

1, 800
2, 675
230

1, 7 5 0
2, 6 8 9
134

46, 4 2 6 45, 6 5 0

45, 5 6 8

40, 6 2 6 40, 6 4 1

1, 990
490

43, 270 44, 142

Interest:
Interest on the public debt:
M a r k e t a b l e obligations
Savings bonds
Special issues
Other n o n m a r k e t a b l e issues
Interest on refunds and uninvested
funds
T o t a l , interest

International

a f f a i r s and

Technical cooperation and o t h e r programs
Other economic assistance.
Conduct of foreign affairs
Foreign information and exchange ac_

Total, international
finance

Commerce

and

3, 127
1,656
1, 1 1 5
473

3, 6 5 9
1,635
1, 138
354

4, 103
1,582
1,241
319

4,582
1, 526
1,223
275

4, 6 2 1
1,528

6, 300
1,600

1, 197
246

1, 2 0 0
200

88

67

60

63

82

79

85

85

6,470

6, 4 3 8

6, 8 4 6

7, 308

7, 6 8 9

7, 6 7 1

9, 385

9,585

967

1,463

1, 1 8 4

1, 143

874
2

881
66

740
175

730
300

286
257
130

464
34
121

406
22
120

456
84
157

551
482
173

577
1,879
237

635
164

670
124

210

250

91

100

111

133

149

139

141

169

1, 732

2, 181

1, 843

1,973

2,231

3, 780

2, 0 6 6

2, 242

186
90
370
-506
-285
312
650

179
74
349
211
-366
356
704

180
71
420
54
-42
463
884

219
76
365
49
104
518
126

315
89
392
357
164
674
118

494
145
436
1,291
197
774
83

627
325
537
590
207
604
110

750
600
559
430
242
2 49
80

817

1,504

2,030

1, 455

2, 109

3,421

3,002

2, 7 0 9

6, 500
1,600
1, 200
200

finance:

M u t u a l security program—economic:
Defense support
Development Loan Fund

tivities

3, 101
1,667
1,128
487

affairs

and

housing:

Aviation
Space exploration and flight t e c h n o l o g y .
W a t e r transportation
Housing and c o m m u n i t y d e v e l o p m e n t . _
Promotion and regulation of business
Postal service_
Civil defense and o t h e r 3
Total, commerce and housing

1 B r e a k d o w n n o t a v a i l a b l e o n a c o m p a r a b l e basis p r i o r to 1959.
2 N e t a f t e r p r o p o s e d postal r a t e increases.
3 F r o m 1954-56, i n c l u d e s F e d e r a l - a i d
h i g h w a y e x p e n d i t u r e s ; since 1957, these e x p e n d i t u r e s h a v e
made through a trust fund.

44



been

BUDGET EXPENDITURES BY FUNCTION—Continued
[Fiscal years.

In millions of dollars]

Agriculture
sources:

and

agricultural

F a r m price support and related
grams

Total, agriculture and agricultural
resources
.

General resource surveys and o t h e r . . .
Total, natural resources

1957

1958

1959

1960

1,689
252

3, 486
290

3,900
305

3, 430
374

3, 151
448

5, 126
547

3, 499
740

3, 950
765

217
256
142

204
236
173

217
231
215

267
227
227

297
239
255

315
250
291

334
241
298

355
229
325

2,557

4, 388

4, 867

4,525

4, 389

6,529

5, 113

5, 623

1,056
117
33
38
37
35

935
119
35
43
37
34

803
139
44
45
38
35

925
163
59
51
62
38

1,138
174
69
60
59
43

1, 183
201
86
68
71
60

1,288
223
87
70
66
53

1,440
222
87
71
64
53

1,316

1, 202

1, 105

1, 297

1, 544

1,669

1, 785

1,938

1,439
290
274
277

1,428
275
325
328

1,457
351
281
475

1,558
469
292
400

1, 797
546
319
458

1,969
704
468
844

2,056
850
549
415

2,087
904
565
435

33

53

56

71

72

119

221

220

1961

welfare:

Public assistance (payments to States
to aid needy persons)
Public health
. ..
Education..
_
Labor and manpower services
Science, research, libraries, and museums
School lunch, vocational
rehabilitation, and other
T o t a l , labor and welfare

Veterans services

and

172

164

200

233

255

318

350

358

2, 485

2, 575

2, 821

3,022

3, 447

4, 421

4, 441

4, 569

1,731
751
782

1,830
851
727

1, 864
934
788

1,875
995
801

2, 024
1,080
856

2,070
1,205
921

2,071
1, 336
966

2, 066
1,774
990

546

664

767

774

699

574

445

316

158
100
188

150
57
178

123
105
176

126
47
175

168
43
156

177
35
193

123
36
180

124
31
169

4,256

4,457

4, 756

4, 793

5, 026

5, 174

5, 157

5, 471

449
155
93
160
78

431
164
115
157
91

475
164
334
188
115

476
194
627
187
130

502
239
140
199
132

566
291
205
216
149

560
384
198
218
170

591
432
251
229
199

53
247

67
174

72
281

77
98

75
69

89
88

96
85

126
84

1,235

1, 199

1,630

1, 790

1, 359

1,606

1,711

1,911

75

200

67, 772 64, 570 66, 540 69, 433 71,936 80, 697 78, 383

79, 816

benefits:

Compensation
Pensions, burial and other a l l o w a n c e s . . .
Hospitals and medical care
R e a d j u s t m e n t benefits—education and
training.
. _
R e a d j u s t m e n t benefits—loan guarantee
and o t h e r . .
Insurance and indemnities.
__
Other services and administration
Total, veterans services and benefits..

government:

Financial m a n a g e m e n t . .
P r o p e r t y and records m a n a g e m e n t . _ _
Central personnel costs__
F B I , alien control, and related programs.
Legislative and judicial functions
District of Columbia, territories, and
possessions
—
W e a t h e r Bureau and other
Total, general government

Allowance

1956

resources:

Land and w a t e r resources
Forests
„
National parks
Fish and w i l d l i f e . . _.
Minerals.

General

1955

pro-

Research and other agricultural services.

Labor and

1954

re-

Agricultural land and water r e s o u r c e s . . .
Rural electrification and rural telephone
loans
F a r m ownership and operation loans

Natural

Estimate

Actual

Description

for contingencies

Total budget expenditures




45

BUDGET TOTALS AND PUBLIC DEBT
[In millions of dollars!
Budget
Budget expendreceipts itures

Surplus
(+) or
deficit
(-)

Public
debt at
end of
year

1,160
13,895

1,090
14,932

+70
-1,037

63
1,437

567
588
562
562
541

521
525
485
517
584

+46
+63
+77
+45
-43

1,263
1,222
1,178
1,159
1, 136

544
595
666
602
604

567
570
579
659
694

-23
+25
+87
-57
-89

1,132
1,143
1, 147
1,178
1, 148

676
702
693
714
725

694
691
690
715
725

-18

1,147
1, 154
1, 194
1, 193
1, 188

683
762

746
713
1,954

+3
-0)
-0)

1, 191
1,225
2, 976
12, 455
25, 485

3,630
5,085

12, 662

18,448

-63
+48
-853
-9,032
- 1 3 , 363

6, 649
5, 567
4,021
3, 849
3,853

6, 357
5,058
3,285
3, 137
2, 890

+291
+509
+736
+713
+963

24, 299
23,977
22, 963
22, 350
21,251

2, 881

+717
+865
+ 1, 155
+939
+734

20, 516
19, 643
18,512
17, 604
16, 931

1, 100

3,
3,
3,
3,
3,
1

+11

598
753
992
872
861

2, 8 8 8

2,837
2, 933
3, 127

Fiscal year

Budget
Budget expendreceipts itures

Surplus
(+) or
deficit
(-)

Public
debt at
end of
year

1930
1931
1932..
1933...
1934

4, 058
3,116
1,924
2, 021
3,064

3, 320
3,577
4, 659
4, 623
6, 694

+738
-462
- 2 , 735
- 2 , 602
- 3 , 630

16,185
16, 801
19, 487
22, 539
27,053

1935

3, 730
4, 069
4, 979
5,615
4, 996

6, 521
8,493
7, 756
6, 792
8, 858

- 2 , 791
- 4 , 425
-2,777
- 1 , 177
- 3 , 862

28, 701
33, 779
36, 425
37,165
40,440

1936
1937
1938
1939.
1940
1941
1942...
1943
1944

5,144
7,103
12,555
21,987
43,635

9,
13,
34,
79,
95,

062
262
046
407
059

-3,918
- 6 , 159
-21,490
- 5 7 , 420
-51,423

42,968
48, 961
72, 422
136, 696
201,003

1945
1946
1947
1948
1949

44, 475
39, 771
39, 786
41,488
37, 696

98,416
60, 448
39,032
33,069
39, 507

- 5 3 , 941
- 2 0 , 676
+754
+8,419
- 1 , 811

258, 682
269, 422
258,286
252, 292
252, 770

1950
1951
1952
1953
1954

36, 495
; 47, 568
61, 391
64, 825
64,655

39,617
44,058
65, 408
74, 274
67, 772

- 3 , 122
+ 3,510
-4,017
- 9 , 449
- 3 , 117

257, 357
255, 222
259,105
266,071
271,260

1955
1956
1957
1958
1959

60, 390
68, 165
71,029
69, 117
68, 270

64, 570
66, 540
69,433
71,936
80, 697

- 4 , 180
+ 1,626
+ 1,596
- 2 , 819
12, 427

274,
272,
270,
276,
284,

1960 est
1961 est

78, 600
84, 000

78, 383
79, 816

+217
+ 4 , 184

284, 500
280, 000

374
751
527
343
706

Less than one-half million dollars.

NOTES.—Refunds of receipts are excluded from budget receipts and budget expenditures starting in 1913;
comparable data are not available for prior yeEirs.
The change in the public debt from year to year is not necessarily the same as the budget surplus or deficit,
as explained on page 52.

46






Part 4 of this booklet summarizes
Federal budget procedures and concepts—for example, the relationship
of expenditures to the new obligational authority proposed in the
budget or actually provided by the
Congress.
It also defines certain key budget
terms in order to aid understanding
of the other parts of this booklet.

Federal Budget Procedures and Terminology
Each January the President presents to the Congress a budget
representing his judgment as to the
kind and size of Government programs required to meet our national
needs during the coming fiscal year
(which runs from July 1 to the
following June 30, and is designated by the year in which it ends).
The budget contains estimates of
the expenditures to be made to
carry out these programs and the
revenues to be collected. By the
time the fiscal year ends, nearly 18
months after the budget is presented,
many figures w i l l inevitably have
changed. International and domestic conditions may vary from
the assumptions on which the
budget was made. The President
may amend some of his proposals
as circumstances change, and the
Congress may modify the President's requests or add new proposals
of its own. All these factors affect
the budget results for the year.
The basis for budget control:
obligational
authority.—Since

New
no

Federal funds can be spent without
specific authority from the Congress, the budget presents the
President's recommendations as to
the amounts of budget authorizations (new obligational authority)
nccessary to carry out the planned
programs. The Congress then considers and acts on these requests for
new obligational authority.
New obligational authority is
composed of three kinds of authorizations to incur obligations for the
payment of money. Appropria48



tions are the most common form
of new obligational authority; they
authorize the agencies not only to
order goods and services but also
to draw funds from the Treasury
and make expenditures to pay for
the goods and services w h e n
delivered. Occasionally agencies
are given contract authorizations
which allow them to contract for
the delivery of goods and services
but not to make expenditures to
pay for them. An appropriation
must later be enacted by the Congress before money may actually be
spent to pay the bills incurred
under a contract authorization.
Under the third form of new obligational authority, authorizations
to expend from debt receipts,
agencies may be authorized to borrow money (usually through the
Treasury) and to spend it.
In most cases, new obligational
authority becomes available only
as the Congress votes it each year.
In some cases, however, the Congress has voted permanent authority under which additional
sums become available annually
without further congressional action. The chief example is the
permanent appropriation to pay
interest on the public debt.
Obligations.—Obligations
are
commitments made to pay out
money. They include current commitments for salaries and benefit
payments, the approval of loan
agreements, and the entering into
of contracts for equipment or cons t r u c t i o n . They are c h a r g e d

Five Steps in Spending

T H E P R E S I D E N T proposes a budget
T H E C O N G R E S S appropriates (new authority
to incur obligations)
FEDERAL AGENCIES

SUPPLIERS

make contracts and incur
other financial obligations

produce goods and services,
people apply for benefits

T H E T R E A S U R Y collects taxes and pays the bills

against the obligational authority
granted by the Congress and precede expenditures.
Budget
expenditures.—B u d g e t
expenditures generally consist of
checks issued and cash payments
made from budget accounts for
any purpose except retirement of
debt. Funds held in trust are not
part of the budget accounts and
disbursements of such funds are
t h u s not b u d g e t expenditures.
Budget expenditures ordinarily are
on a net basis in that the receipts
of Government agencies (such as
the Post Office) which carry on
business-type operations with the
public are deducted from the disbursements of such agencies to
arrive at the amount included in
the budget totals. When receipts
exceed disbursements, the result is
shown as a negative expenditure.
Although budget expenditures
are normally reported as such when




the payment is made, a major exception is interest on the public
debt, which is reported as an expenditure when the interest becomes due rather than when it is
paid.
Relationship
between new
obligational authority and
expenditures.—
Not all of the obligational authority enacted for a fiscal year is spent
in the same year. Appropriations
to pay salaries or pensions are usually spent almost entirely in the
year for which they are enacted.
On the other hand, appropriations
to buy guided missiles or to construct an airfield may not be fully
spent for two or three or more years
because of the time required to prepare designs, arrange contracts,
complete production or construction, and finally pay the bills.
Therefore, when the Congress
changes the new obligational authority requested by the President
49

for a given year, it does not necessarily change the budget expenditures of that year by the amount of
the increase or decrease. Such a
change may spread its total effect
on expenditures over a period of
several years. The relationship between new obligational authority
and expenditures estimated for the
coming fiscal year is illustrated in
the accompanying chart.
Unexpended
balances.—The
amounts of enacted obligational
authority that have not yet been
spent and are still available for
expenditure at the end of a fiscal
year are called unexpended balances. These balances do not represent cash on hand, but only

authority to draw on the Treasury
in order to pay bills. Most of the
unexpended balances are obligated;
that is, the amounts are committed
to pay bills which will come due
upon the completion of contracts
already signed, or bills for services
or goods recently received.
For many agencies, any authority
which is not obligated by the time
the year closes is no longer available; that is, the authority for obligating expires. In some cases, such
as programs for construction of public works, the unobligated part of
the unexpended balances continues
available from year to year because
the Congress has made the appropriation available until expended.
In a few cases, such as the authori-

1961 Expenditures Related to Authorisations by Congress
$ Billions

Total Authorizations Available--15 J . 2

50



zation for the Treasury to lend
money to the Federal Deposit Insurance Corporation, the balances
carried forward represent standby
authority for possible emergencies—
authority which the Government
does not anticipate having to use
in the foreseeable future.
Budget receipts.—Budget

receipts

represent amounts received by the
Treasury from taxes and customs
(less refunds of overpayments) and
from miscellaneous sources such as
collections on certain loans, rents,
fines, fees, and sales. Budget receipts exclude funds received in
trust and money obtained from
borrowing.
The Congress establishes tax rates
and customs duties and sets forth
policies which govern the collection of other receipts. The largest
source of budget receipts is income
taxes paid by individuals and corporations. Excise taxes also yield
substantial revenues.
Budget

surplus or

deficit—The

budget surplus or deficit is determined by the difference between
budget expenditures and budget
receipts. A budget surplus results
when budget receipts exceed budget
expenditures; a budget deficit results
when budget expenditures exceed
budget receipts. The term "balanced budget" is commonly used to
describe a budget with receipts equal
to, or in excess of, expenditures.
The surplus and deficit are always
determined without taking account
of borrowing or the repayment of
borrowing.
A budget surplus is usually used
to retire part of the Government's




debt. A budget deficit is normally
financed by borrowing.
Trust

funds.—A

substantial

amount of money is collected by the
Federal Government each year
which, by law, is not available for
general purposes of government but
must be held in trust for later payment to individuals or to State and
local governments. Such payments
must be made only for the purposes
specified in the law. These trust
funds are not included in budget
receipts and expenditures, and their
transactions do not affect the budget
surplus or deficit.
The largest trust funds are those
for social security and retirement
purposes, and for Federal-aid highways. The social security and retirement trust funds are financed
mainly from payroll taxes paid by
employers and employees; payments from these funds are primarily for benefits to the unemployed, the retired, the disabled,
or the survivors of insured persons.
Receipts of the highway trust fund
come almost entirely from excise
taxes paid by highway users; expenditures of the fund are primarily
grants to States to assist in building
the Federal-aid highway systems.
The portion of tax collections of
the major trust funds not immediately needed for expenditure is invested in securities of the Federal
Government and earns interest.
Receipts from and payments to the

public.—Since trust fund and certain other transactions are not included in the budget totals, a consolidation of these and budget
accounts is necessary to show the
51

flow of money between the Government and the public. Receipts
from and payments to the public
provide one measure of the impact
of all Government activities on the
economy.
In the consolidation, receipts
paid into trust funds are added to
budget receipts, and trust fund
expenditures to budget expenditures. In addition, the net expenditures of five Governmentsponsored enterprises are included
in the total of payments to the
public. These are the Federal Deposit Insurance Corporation, the
Federal home loan banks, the
Federal land banks, the banks for
cooperatives, and the Federal intermediate credit banks.
Financial transactions within the
Government as a whole, which are
recorded as expenditures in one
account and receipts in another,
are eliminated in this consolidation
since they involve no flow of cash
between the Government and the
public. Certain other transactions
which are recorded as budget receipts or expenditures but do not
involve a cash flow are also eliminated. For example, the interest
due but not yet paid on savings
bonds is counted as a budget expenditure, but it is included in payments to the public only when the
cash is paid.

UNITED

federal

public

debt

— M o n e y

which has been borrowed by the
Treasury and not yet repaid is
called the public debt. Most borrowing is from the public, but the
Treasury also borrows from the
larger trust funds which have authority to invest in Government
securities.
A few Government enterprises
borrow directly from the public.
These borrowings are not part of
the public debt. Certain of these
securities are guaranteed by the
Government; others are not.
A debt limit, established by
statute, controls all but a minor
part of the public debt and all of
the Government-guaranteed debt
of Government enterprises. It is
a control over the total debt that
can be outstanding at any one time.
The principal factor which determines the amount by which the
public debt increases or decreases
from year to year is the budget
surplus or deficit. However, other
factors may also affect the debt:
the drawing down or building up
of the Government's cash on hand
and its bank balances (together
with the change in checks outstanding and deposits in transit),
and the use of corporate debt and
investment transactions by the
Government's public enterprise
funds.

STATES

GOVERNMENT PRINTING

OFFICE

W A S H I N G T O N : I960

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Washington 25, D.C. - Price 25 cents

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