193
Statement by the President on the Review of the 1947 Budget.
August 3, 1946

IN ACCORD with previous practice I present at this time a review of the Federal Budget for the fiscal year 1947, as well as actual figures for the fiscal year 1946. This revision of the January Budget estimates takes into account not only the action on appropriations which the Congress has just completed, but also other new legislation adopted since January and changes in the economic outlook. In view of the mounting inflationary threat, I have instructed Federal agencies to take drastic action to hold down expenditures and keep the expected deficit to the minimum. This Review reflects the expected results of such budgetary action.

1. Summary: Budget Trends and Budget Policy

Total budget expenditures for the fiscal year 1947 are now estimated at 41.5 billion dollars, and net receipts at 39.6 billion dollars, leaving an estimated budget deficit of 1.9 billion dollars.

When budget and trust accounts are consolidated on a strictly cash basis, the Federal Government in the current fiscal year will take in 2.8 billion dollars more in the form of taxes and similar cash receipts from the public than it will pay out to the public. In spite of a deficit in the Budget, there will thus be a net absorption of purchasing powerby the Federal Government in the fiscal year 1947.

The situation has changed materially since the January Budget was issued. Both expenditures and revenues are higher than were estimated then. The January Budget estimated a deficit of 4.5 billion dollars for the fiscal year 1947. I now expect a deficit of less than half that amount.

As I anticipated in my statement of April 11, the budget results for the fiscal year 1946 were much better than expected in January. Then a deficit of nearly 29 billion dollars was expected, about 8 billion dollars greater than actually occurred.

For the two fiscal years 1946 and 1947 combined, the budgetary improvement over the January estimate is very striking. At that time it was estimated that the deficits for the two years would total 33 billion dollars. An aggregate deficit of 22.6 billion dollars for the two years is now expected-a reduction of one-third. As a result the January estimate of a 271-billion-dollar public debt on June 30, 1947, is now reduced to 261 billion dollars, or 10 billion dollars less.

In less than two years the budget deficit has been cut from one of 53.9 billion dollars in the last full year of war to one of 1.9 billion dollars in this, the first full year after the end of fighting. This cut in the deficit reflects a substantial reduction in Government expenditures, with taxes maintained at a high level.

Federal outlays will be reduced from the 100-billion-dollar wartime peak to 41.5 billion dollars in the fiscal year 1947—an expenditure still heavily loaded with war-related outlays. Revenues are expected to decline much less than expenditures—despite the effects of the Revenue Act of 1945 from a 46.5-billion-dollar wartime peak to 39.6 billion dollars. The contraction in wartime expenditures reflects more than a 90 percent cut in munitions procurement, rapid demobilization of the armed forces and considerable curtailment in civilian Federal personnel.

The strength of the armed forces has been reduced from a wartime peak of 12.3 million to the present level of about 2.7 million; it will be further reduced by at least another million by June 30, 1947. The total number of Federal civilian employees in the continental United States has been reduced from a peak of 3 million to 2.3 million. I expect a further substantial reduction during the fiscal year 1947 despite the important increases required by the program of veterans’ services and surplus disposal activities.

This contraction in wartime budgets has been achieved through the concerted and joint effort of the Congress and the Executive agencies.

The budget recommendations which I have transmitted during this session have been based on severe scrutiny of 34.2 billion dollars of agency requests, which I reduced by 22 percent to 26.5 billion dollars. The Congress reduced them further in appropriating 24.9 billion dollars. (These figures exclude 7.8 billion dollars of indefinite appropriations for interest on the public debt, refunds, and various smaller items.)

Furthermore, the Congress has, upon my recommendation, rescinded during the last year 58 billion dollars of wartime appropriations and authorizations. In addition to the formal rescissions, we have, through budgetary processes, succeeded in securing the transfer of more than 2 billion dollars from special accounts to the Treasury surplus fund and miscellaneous receipts. These amounts otherwise would have been available for expenditure.

Many of us are not yet satisfied with the progress made. It must be recognized, however, that not only war but the aftermath ofwar and the transition to peace are very expensive.

National security and international commitments compel us to maintain a strong military establishment. Our participation in international organizations, in the occupation of enemy countries, in international finance and relief helps to build the secure peace we all desire. The most destructive war in all history demands a commensurate constructive effort to achieve real peace. The domestic aftermath of the war, which includes care of war veterans, interest payments on the huge war debt, and many other such activities, requires tremendous sums.

Expenditures for national defense, interest on the public debt, tax refunds, veterans, and international finance and relief, account for 86 percent of the budget total. The size of these programs makes it vital to exercise the utmost economy. During the years of fighting, financial considerations had to be subordinated to victory with the least sacrifice of lives. This urgency is no longer present. Today Government expenditures can and must be scrutinized minutely to obtain the maximum economy. The present inflationary situation makes it imperative that expenditures be cut to the minimum compatible with the responsibilities of Government. All deferrable programs must be postponed.

Recent legislation has added considerable amounts to Federal expenditures for the present fiscal year. I shall use all the powers available to the Executive branch for reducing expenditures which are not directly determined by legislation and which can be postponed or reduced without serious harm to national security and welfare.

These measures of budgetary control will, in the aggregate, keep expenditures in the current fiscal year at least 2.2 billion dollars below what they otherwise would have been.

I have directed the Secretaries of War and Navy to curtail military expenditures to the level contemplated in the January Budget, except for terminal leave pay, and certain additional naval programs which the Congress authorized upon my recommendation. My action requires the War and Navy Departments to offset the recent military pay increases by corresponding reductions in other areas. In addition, I have instructed the Secretaries of War and Navy to examine the feasibility of still further reducing the military programs without impairing national security and the ability to fulfill our international commitments.

In view of the rapidly mounting payments for veterans’ pensions and benefits, the Administrator of Veterans Affairs has been asked to review and tighten certain standards for such payments in order to protect both the rights of deserving veterans and the national pocketbook.

I am addressing letters to the heads of those agencies which have direct charge of public works, and also to those which have responsibility for grants-in-aid or loans, requesting them to take all measures to secure the postponement of public works at the present time so that the Government competes as little as possible for scarce labor and materials. I have also given instructions to postpone all purchases of automobiles, office equipment, and other items in short supply except in emergency cases.

Furthermore, various agencies will absorb the major part of the recently enacted pay increases.

These measures of budgetary control, achieved by searching and drastic action, reflect the maximum economies I have been able to secure by executive processes at the present time.

In view of action the Congress has taken on price controls, I must repeat—with addedemphasis—my recommendation of last January that no tax reduction be made until the inflationary situation has passed.

Budgetary policies have become a major weapon to fight the kind of "boom and bust" which followed World War I.

2. Original and Revised Expenditure Estimates

I am deeply concerned by the increase in the present estimates of expenditures over the tentative estimates which I transmitted in January. Total budget expenditures for the current fiscal year, including net outlays of Government corporations, were then estimated at 36 billion dollars. This estimate was based on then existing legislation and on legislation which I recommended in the same message.

The present estimate of total budget expenditures of 41.5 billion dollars is 5.5 billion dollars higher than the January figure. Programs which have increased are: national defense, refunds, veterans’ programs, international finance, housing, and postal service. These combined programs are now estimated to cost 7.5 billion dollars more than six months ago. The increases are attributable to new legislation, deferrals from last year, and the need to expand certain programs more than was expected. On the other hand, expenditures for all other activities of the Federal Government are now expected to decline by 2.0 billion dollars. The difference is a net increase of 5.5 billion dollars, shown in the following tabulation which is derived from Table 1:

Budget Budget
document review Change
January, August, since
Expenditure Program 1946 1946 January

Increased programs:
National defense $14. 8 $18.5 +$3.7
Refunds 1.6 1.8 +0. 2
Veterans pensions and benefits 4.4 6.2 +1. 8
International finance 2.8 4. 2 + 1. 4
Housing, excluding defense housing ...... 0. 2 +0. 2
Post Office Department (general fund) ...... 0. 2 +0. 2

Subtotal, increased programs 23. 6 31. 1 +7.5

Decreased or unchanged programs:
Interest on the public debt 5.0 5.0 ......
Aids to agriculture, including subsidies 1. 9 1. 2 —0. 7
Social security, relief, and retirement 1. 6 1. 2 —0. 4
General public works program 1. 6 0. 9 —0. 7
General government 2. 1 1-9 —0. 2
Pay increase not absorbed 0. 2 0.2 ......

Subtotal, decreased or unchanged programs 12. 4 10. 4 —2. 0

Total expenditures and net change 36. 0 41. 5 +5.5

Increases in Revised Estimates. Legislation not included in the Budget document but enacted since January or now pending accounts for 4.4 billion dollars of the 7.7.5 billion-dollar increases. This legislation will necessitate the following expenditures in the fiscal year 1947:

In billions
National defense:
Terminal leave pay $2.4
Increased pay for military personnel 0. 6
Philippine war damage and rehabilita-
tion 0. 1
International finance:
Loan to Philippine Republic 0. 1
Veterans pensions and benefits:
Increased pensions and liberalized benefits 0. 8
Housing, excluding defense housing, net of
receipts 0. 2
Post Office Department (general fund):
Pay increase 0. 2

Total increase resulting from new legislation 4.4

About 1.5 billion dollars of the increases over the January estimate are accounted for by those expenditures originally scheduled for the fiscal year 1946, which were postponed and carried forward into the present fiscal year. This category includes the payment of 950 million dollars on our subscription to the International Monetary Fund. In addition, there are deferred disbursements under the programs of the Export-Import Bank and for the United Nations Relief and Rehabilitation Administration.

Finally, expenditures for certain programs included in the January Budget document are expected to exceed the original estimates by 1.6 billion dollars.

About 350 million dollars of this 1.6-billion-dollar increase arises because Government corporation receipts from the sales of industrial raw materials and surplus plant and equipment are now estimated below those shown in the original Budget. These receipts are treated as deductions from gross expenditures for national defense. A further reduction in receipts from the sale of surplus property by agencies other than Government corporations is reflected in the estimates of miscellaneous receipts of the general and special accounts, rather than as an offset to expenditures. Estimates of tax refunds have been increased by 270 million dollars because of experience with the new types of refunds.

Many more veterans are availing themselves of educational opportunities and other benefits than was estimated in January. These veterans’ programs alone account for 1.0 billion dollars of the increase in authorized programs, and some of these programs are still expanding. I believe that tightening of standards for veterans’ programs, especially for readjustment allowances and on-the-job training, can bring considerable economies.

Decreases in Revised Estimates. The increase in certain categories of expenditures for the fiscal year 1947 is offset, to some extent, by declines from the January estimates for other categories. These reductions, amounting to 2.0 billion dollars, occur in programs for agriculture, social security, general public works, and general government. A part of these reductions is to be attributed to delays in enactment of proposed legislation and to congressional action reducing appropriations below my recommendations. For example, the total of appropriations for civil departments and agencies is 104 million dollars below the recommendations-over one-half of the decrease in estimated expenditures for this item.

The decrease of 737 million dollars in estimated expenditures for agricultural programs reflects primarily the fact that little, if any, outlay for price supports will be required in the current fiscal year in view of the present outlook for agricultural prices. Expenditures for food subsidies, also included in this category, are now estimatedat 975 million dollars, including 175 million dollars to liquidate 1946 obligations. The remaining 800 million dollars, I believe, will be needed during 1947 as a part of the food price control program. The favorable employment outlook also has permitted a considerable reduction in the estimates for social security expenditures.

Federal expenditures for public works are now expected to be less than 60 percent of the original estimates for the fiscal year 1947. Some of these programs were lagging because of material and manpower shortages, and public works of certain types were curtailed by executive as well as congressional action when the Veterans’ Emergency Housing Program was initiated. In view of the present inflationary situation, however, this policy of deferment must be extended to all categories and must be enforced as drastically as possible.

I am directing the heads of Federal agencies to curtail public works expenditures in general, and to limit expenditures for certain programs to specified amounts. Consistent with this action, I am asking agencies making grants or loans for construction work to seek cooperation of State and local groups in holding down such expenditures wherever possible. The Director of War Mobilization and Reconversion is issuing an order providing for a 60-day moratorium on all new Federal public works commitments. This directive will also require deferment of a large volume of Federal construction until the last quarter of the fiscal year 1947. Where there is legislation for new programs, expenditures in the fiscal year 1947 will be restricted to planning activities. All in all, the reduction in Federal expenditures for public works is estimated at 707 million dollars. The policy of deferment will also hold down commitments for public works in the years immediately following.

Recent trends have indicated that military and naval expenditures in the current fiscal year were likely to run considerably above the level estimated in the January Budget. This was true even excluding new legislation, such as the military pay increase and larger naval appropriations recommended and enacted since January. The Secretaries of War and Navy, at my request, will reduce projected expenditures for the Army and Navy by 1,650 million dollars to the level shown in the revised estimates of this Review. I believe that this adjustment can be accomplished without impairing the effectiveness of our military establishment. Similarly, I have requested the Chairman of the Maritime Commission to adjust the current program for new ship construction so that expenditures for this purpose will not exceed 60 million dollars in the fiscal year 1947. This action will reduce projected Maritime expenditures by 60 million dollars. These reductions do not directly appear in the tabular comparison of the original and revised estimates. These cuts prevent a corresponding increase that otherwise would have occurred.

I cannot at this time estimate what additional reductions will be feasible under the reexamination of the defense program which, as I have stated above, the Secretaries of War and Navy will undertake. For the military activities of the War and Navy Departments the balances of prior year appropriations available for expenditure, together with new appropriations for the fiscal year 1947, amount to over 22.9 billion dollars. The expenditure program for these activities in the fiscal year 1947 is 13.2 billion dollars. One-third or more of the military expenditures in the fiscal year 1947 will be made from unexpended balances of war year appropriations. After allowing an operating margin this should still leave considerableamounts of carried-over funds to be repealed or to lapse. I believe it quite likely that the reexamination of our defense program will reveal the necessity for further downward adjustments in appropriations.

3. Revised Revenue Estimates and Tax Policy

In January net receipts were estimated at 31.5 billion dollars for the fiscal year 1947. The revised estimate is 39.6 billion dollars as shown in Table 1. The upward revision by 8.1 billion dollars has been made in the expectation that the high dollar volume of economic activity will continue, with a high level of taxable individual and corporate incomes and large sales of taxable commodities.

In making the revenue estimates, it has been assumed that taxes will be maintained at their present level. It has also been assumed that the collections under the Federal Insurance Contributions Act will be continued at a 2 percent total rate through the fiscal year.

The tax reductions and adjustments made last year fully met the needs for adapting the wartime revenue system to the reconversion period. I repeat, no further tax reductions should be made until the present inflationary situation has passed. Our tax policy should be designed not only to check inflation but to prevent any particular group from profiting by it.

4. The Deficit and the National Debt

Between the January and August estimates, receipts have gone up more than expenditures by about 2.6 billion dollars. Hence, the expected deficit for the fiscal year 1947 dropped from 4.5 to 1.9 billion dollars. Without the expenditures under new legislation legislation not contemplated last January-the Budget for the fiscal year 1947 would have shown a surplus.

I shall endeavor throughout the fiscal year to reduce expenditures whenever and wherever they can be reduced without harm to our security and the general welfare. A substantial budget surplus must be our objective for the following year. The Bureau of the Budget, at my direction, has informed all Federal agencies of this goal.

The retirement of the public debt is proceeding more rapidly than previously expected. In the January Budget the Federal debt was estimated at 271 billion dollars on June 30, 1947. By the end of the fiscal year 1947 it will decline to an estimated 261 billion dollars on the basis of present estimates. Liquidation of the Treasury cash balance was somewhat less than expected in the fiscal year 1946, and this will permit correspondingly more debt retirement during the current fiscal year.

5. Payments to and Receipts from the Public

The immediate economic impact of the Budget is felt when the Federal Government either collects money from individuals and business or disburses money to individuals and business. The Budget in its traditional form does not give an adequate picture of these cash transactions between the Government as a unit and the public.

Budget expenditures include certain intragovernmental transactions, such as transfers to trust accounts. They also include, for the fiscal year 1947, substantial amounts of noncash expenditures, such as 950 million dollars in notes to be issued to the International Monetary Fund, and 2.1 billion dollars in terminal leave bonds. On the other hand, budget expenditures do not include certain cash disbursements to the public, such as payments of old-age benefits from trust accounts.

To show actual payments to and receiptsfrom the public, the transactions of the general and special accounts, of Government corporations and of trust accounts must be consolidated, and noncash transactions must be excluded. The following table summarizes such a consolidation:

1947
_______________
Budget Budget
document review
estimates estimates
1945 1946 January, August,
Description Actual Actual 1946 1946

Payments to the public $96. 4 $64.9 $37. 1 $39.9
Receipts from the public
(other than borrowing) 50. 6 48. 1 34. 7 42. 7

Excess of payments 45.8 16.8 2.4 .....
Excess of receipts ...... ...... ...... 2.8

¹ See table 4 for detail.

The table indicates that under the revised estimates the Government will receive more this year in the form of taxes, contributions and other receipts than it will pay to the public. This excess of receipts will help to mitigate inflationary trends.

6. The Government’s Budget and the Nation’s Budget

The Federal Budget has become of such vital importance that it must be viewed in its relationship with the economy as a whole.

As in former years, I present in Table 5 the most recent estimates for the Government’s Budget and the Nation’s Budget, with data for a war year, fiscal 1945, for comparison.

The comparison shows that consumer incomes in the last half of the fiscal year 1946 were at a relatively high level, in fact, not much below that of wartime. These consumer receipts include a considerable amount of income payments not received from our current production, such as mustering-out pay and veterans’ benefits. Consumers, who accumulated large reserves during wartime, are increasing their purchases, partly financed by installment credit. The current rate of net savings by consumers is greatly below the wartime rate.

During the war business accumulated more funds through depreciation reserves and undistributed profits than it spent for capital outlays. This trend has been fully reversed. Capital formation, chiefly for expanding productive capacity, inventories and exports, now exceeds the internal fund accumulation of business, and thus requires spending of accumulated funds or new financing. Increased spending by consumers, expanded outlays by business, and a still high level of expenditures by Government are causing demand to outrun production. This characterizes the current inflationary threat.

This situation requires that the Federal Government, as well as State and local governments, reduce expenditures and keep taxes at a high level. All deferrable expenditures, at all levels of government, should be postponed until the backlog of demand for goods and services is satisfied.

I said in my January message: "Today inflation is our greatest immediate domestic problem." This is as true now as it was six months ago. The traditional forces of private enterprise and self-reliance are at work in transforming a war economy into a peace economy of high production and full employment. It is our duty to prevent this transformation from degenerating into a speculative boom and subsequent collapse such as we had after the last war. Budgetary policy has a great responsibility in that respect. Its responsibility increases as direct controls are lifted.

1947
BUDGET RECEIPTS AND EXPENDITURES __________________
EXCLUDING TRUST AND Budget Budget
DEBT TRANSACTIONS document review
estimates estimates
1946 January, August,
Description Actual 1946 1946

Budget Receipts (general and special accounts, net) $43.0 $31.5 $39. 6

Budget Expenditures (general and special accounts;
and wholly owned Government corporations
and credit agencies, net):
National defense 48. 2 14.8 18.5
Interest on the public debt 4.7 5. 0 5. 0
Refunds 3. 0 1. 6 1.8
Veterans pensions and benefits 4. 2 4. 4 6.2
International finance 6 2.8 4. 2
Aids to agriculture, including subsidies 3 1.9 1. 2
Social security, relief, and retirement 1. 1 1.6 1. 2
Housing, excluding defense housing —.3 ...... .2
General public works program 4 1. 6 . 9
Post Office Department (general fund) 2 ...... .2
General government 1.3 2. 1 1.9
Pay increase not absorbed above (anticipated supplemental
appropriations) ...... .2 . 2

Total Budget expenditures 63.7 36. 0 41.5

Excess of Budget expenditures over receipts 20. 7 4.5 1. 9


TRUST RECEIPTS AND EXPENDITURES

Trust Receipts 7.6 4. 6 4.9
Trust Expenditures (excluding investments) 4.4 2.5 2. 8
Net accumulations in trust accounts 3.2 2.1 2. 1


THE PUBLIC DEBT

Public debt at beginning of year 258.7 275. 0 269.4
Excess of Budget expenditures over receipts 20. 7 4.5 1- 9
Change in Treasury cash balance —10. 5 —8.7 —10. 8
Other borrowing requirements 5 .2 .5
Public debt at end of year 269.4 271. 0 261.0

¹ For supporting details, see tables 2 and 3.

APPROPRIATIONS AND OTHER AUTHORIZATIONS 1946 1947
(General and special accounts) Enacted Recommended Enacted

Appropriations, excluding appropriations to liquidate
contract authorizations $63.9 $33.7 $32. 2
Estimates of appropriations for supplementary items
and proposed legislation ...... 1.5 ......
Reappropriations 14. 1 . 1 .1
Contract authorizations —1.7 .8 . 5
Authorizations treated as public debt transactions 8.9 ...... ......
Cancellation of notes payable to the U.S. Treasury ...... 2 1. 11

Total appropriations and other authorizations 85.2 36.3 33.9

Rescissions of appropriations and contract authorizations 58.0 ...... ......

1947 ¹
Budget Budget
document review
estimates estimates
1945 1946 January, August,
GENERAL AND SPECIAL ACCOUNTS Actual Actual 1946 1946
Description

Receipts:
Direct taxes on individuals $19, 789 $19, 008 $12, 874 $18, 367
Direct taxes on corporations 16, 399 12,906 8, 192 9, 762
Excise taxes 5, 935 6, 696 ² 6, 344 ² 7, 062
Employment taxes 1,793 1, 714 1,856 ³ 1,881
Customs 355 435 434 463
Miscellaneous receipts 3, 469 3, 480 3,239 3,384

Total receipts 47, 740 44, 239 32, 939 40, 919
Deduct net appropriation to Federal old-age
and survivors’ insurance trust fund 1, 283 1, 201 1,426 1,329

Net receipts 46, 457 43,038 31,513 39, 590


Expenditures:
National defense:
War Department 50, 339 27, 801 8, 000 ⁴ 8,060
Navy Department ⁵ 30, 047 ⁵ 15, 161 ⁵ 4, 850 ⁵ 5, 150
Terminal leave of enlisted military personnel ........ ....... ....... 2,418
U.S. Maritime Commission 3,226 694 300 290
War Shipping Administration 2,042 1, 430 859 412
Other 4, 375 3,456 1, 841 2, 648

Total national defense 90, 029 48, 542 15, 850 18, 978

See footnotes at end of table.

1947 ¹
Budget Budget
document review
estimates estimates
Description 1945 1946 January, August,
Actual Actual 1946 1946

Interest on the public debt $3,617 $4,722 $5,000 $5, 000
Refunds 1,715 3,034 1,585 1,857
Veterans pensions and benefits 2,044 4, 226 4,418 6,205
International finance ...... 833 1,754 3,093
Aids to agriculture, including subsidies 602 802 1, 251 1,346
Social security, relief, and retirement:
Social security program 476 539 1, 094 669
Work relief 5 4 7 12
Retirement funds 506 539 453 571
Housing, excluding defense housing 12 40 136 361
General public works program 291 377 1, 394 787
Post Office Department (general fund) ...... 169 ....... 241
General government:
Legislative branch 29 23 37 37
The Judiciary 13 15 17 17
Executive Office of the President 2 3 5 5
Civil departments and agencies 1, 058 1, 145 ⁵ 1, 873 ⁵ 1, 683
District of Columbia (Federal contribution) 6 6 6 8
Pay increase not absorbed above (anticipated
supplemental appropriations) ...... ...... ⁶ 245 160

Total expenditures 100, 405 65, 019 35, 125 41, 030
Excess of expenditures over receipts 53, 948 21, 981 3,612 1, 440

CHECKING ACCOUNTS OF WHOLLY OWNED
GOVERNMENT CORPORATIONS AND CREDIT AGENCIES
WITH THE TREASURER OF THE UNITED STATES

Net expenditures, excluding redemption of
obligations in the market:
National defense ^7a 154 ^a 392 ^a 1, 000 ^a 470
International finance ^a 12 ^a 211 ^a 1, 000 1, 075
Aids to agriculture, including subsidies ⁷ 761 a 473 660 a 172
Housing, excluding defense housing ^a 404 ^a 327 ^a 145 ^a 159
General public works program ^a 12 34 200 100
General government ^a 186 64 120 135

Net expenditures ^{8 a} 7 ^a 1, 305 835 509

TRUST ACCOUNTS

Receipts:
Transfers from general and special accounts 1, 646 1, 918 637 944
Net appropriations from general account receipts 1, 283 1, 201 1, 426 1, 329
Other receipts 4, 130 4,547 2,595 2, 641

Total receipts 7, 059 7, 666 4, 658 4, 914

See footnotes at end of table.

1947 ¹
________________
Budget Budget
document review
estimates estimates
1945 1946 January, August,
Description Actual Actual 1946 1946

Expenditures:
Benefits, annuities, and other expenditures ^a $484 $4,427 $2, 540 $2, 771
Investments in United States securities 5, 200 3,668 2, 291 2, 542

Total expenditures ⁸4, 715 8,095 4, 831 5,313

Excess of expenditures over receipts ...... 429 173 399
Excess of receipts over expenditures 2, 344 ....... ....... .......


EFFECT OF OPERATIONS ON THE PUBLIC DEBT

Public debt at beginning of year 201, 003 258, 682 275, 000 269, 422

Increase in public debt during year:
General and special accounts:
Excess of expenditures over receipts 53,948 21, 981 3,612 1, 440
Checking accounts of wholly owned Govern-
ment corporations and credit agencies:
Net expenditures, excluding redemption of
obligations in the market ^a 7 1, 305 835 509
Redemption of obligations in the market 1, 553 95 67 80
Trust Accounts:
Excess of expenditures over receipts —2,344 429 173 399
Change in Treasury cash balance +4, 529 —10, 460 —8, 687 —10, 850

Increase in public debt during year 57,679 10, 740 —4, 000 —8, 422

Public debt at end of year 258,682 269, 422 271, 000 261, 000

^a Excess of credits, deduct.
¹ Except for "Pay increase not absorbed above," expenditures estimates under anticipated supplemental appropriations and under proposed legislation, heretofore segregated, are now distributed by functions.
² Assumes that reduction in wartime excise tax rates which becomes effective 6 months after hostilities are declared terminated, will not take place in time to affect tax collections during fiscal year 1947.
³ Includes estimated Federal Insurance Contributions Act collections which are based on the continuation of the present tax rate of 1 percent each on employers and employees.
⁴ Includes estimated expenditures of $60 million for activities of the War Department: Civil functions and Panama Canal, classified as "National defense."
⁵ In fiscal years 1945 and 1946, actual Coast Guard expenditures are included under "National Defense: Navy Department"; in fiscal year 1947, estimated Coast Guard expenditures (January Budget Document estimate, $150 million; August Budget Review estimate, $180 million) are included under Civil Departments and agencies."
⁶ Included under proposed legislation in 1947 Budget Document.
⁷ Expenditure of the Reconstruction Finance Corporation for food subsidies, formerly shown under "National Defense", are now shown under "Aids to agriculture, including subsidies."
⁸ The checking accounts of mixed-ownership corporations and a few special deposit accounts are now included under "trust accounts".

1947
________________
1945 1946 Recom-
Description Enacted Enacted mended ¹ Enacted

Appropriations:
National defense:
War Department $15,439 $21, 510 $7, 220 $7, 275
Navy Department ² 29, 514 ² 23,479 ² 3,795 ²2 4, 149
Terminal leave for enlisted military personnel ......... ........ 2, 679 2, 431
U.S. Maritime Commission 6,766 ........ ........ ........
War Shipping Administration 530 437 ........ ........
Lend-lease 3, 572 2, 685 ....... .......
Other 1, 798 2, 948 1, 302 754

Total national defense 57, 619 51, 059 14, 996 14, 609
Interest on the public debt 3,622 4, 722 5, 000 5, 000
Refunds 1, 873 3,034 1, 857 1, 857
Veterans pensions and benefits 1, 499 4, 538 6, 135 6, 131
Aids to agriculture, including subsidies 792 547 ³ 1, 409 487
Social security, relief, and retirement:
Social security program 488 550 596 569
Retirement funds 506 539 521 521
Housing, excluding defense housing 19 453 13 8
General public works program 209 783 1, 242 1, 069
Post Office Department (general fund) ....... 160 241 241
General government:
Legislative branch 49 56 58 54
The Judiciary 14 16 17 16
Executive Office of the President 3 3 5 5
Civil departments and agencies 1, 103 1, 245 ² 1, 661 ² 1, 557
District of Columbia (Federal contribution) 6 6 6 8
Statutory public debt retirement 588 593 593 593
Total appropriations 68, 390 68,304 34,350 ⁸ 32, 725

Estimates of Additional Appropriations:
For anticipated supplemental items ....... ....... 865 .......
For programs based on proposed legislation ....... ....... 645 .......
Total estimates of appropriations for
supplemental items and proposed legislation ....... ........ 1, 510 .......

Reappropriations:
National defense:
War Department 32, 760 10,399 ...... .......
Navy Department 5 ...... ....... 36
Lend-lease 5, 391 3,574 7 6
Other 211 94 8 5
Total national defense 38,367 14, 067 15 47
Other than national defense 81 54 106 98
Total reappropriations 38,448 14,121 121 145

See footnotes at end of table.

1947
________________
1945 1946 Recom-
Description Enacted Enacted mended ¹ Enacted

Contract authorizations and appropriations to liquidate
contract authorizations:
New contract authorizations:
National defense:
Navy Department $4, 273 ^a $1, 715 $275 .......
U.S. Maritime Commission 5,700 ...... ....... .......
Other 3 ...... ....... .......

Total national defense 9,976 ^a 1, 715 275 .......
Other than national defense 506 16 500 $500

Total new contract authorizations 10, 482 ^a 1, 699 775 500

Appropriations to liquidate contract authorizations: ⁴
National defense:
Navy Department 10, 740 4, 275 300 300
U.S. Maritime Commission 6,117 ...... ....... .......
Other 81 52 22 22

Total national defense 16, 938 4, 327 322 322
Other than national defense 43 60 295 255

Total appropriations to liquidate contract
authorizations 16, 981 4, 387 617 577

Authorizations treated as public debt transactions:
Subscriptions to the International Monetary Fund ...... ⁵ 950 ...... ......
Subscriptions to the International Bank for
Reconstruction and Development ...... 3,175 ...... ......
Subscriptions to Export-Import Bank ...... 999 ...... ......
Line of credit to the United Kingdom ...... ⁶3,750 ...... ......

Total authorizations treated as public
debt transactions ...... 8, 874 ...... .......

Cancellations of notes payable to the
United States Treasury:
Commodity Credit Corporation, restoration
of capital impairment ....... ...... (7) 921
Reconstruction Finance Corporation,
reimbursement for materials transferred
to military stockpile ....... ....... 150 150

Total, cancellations of notes payable to the United
States Treasury ....... ....... 150 1, 071

See footnotes at end of table.

1947
________________
1945 1946 Recom-
Description Enacted Enacted mended ¹ Enacted

Rescissions of appropriations and contract authorizations:
Appropriations:
National defense:
War Department ....... $33,371 ...... ......
Navy Department ....... 17,734 ...... ......
Lend-lease ....... 3,357 ...... ......
U.S. Maritime Commission $3, 100 1,175 ...... ......
War Shipping Administration ....... 828 ...... ......
Other 85 408 ...... ......

Total national defense 3, 185 56,873 ...... ......
Other than national defense 7 15 ...... ......

Total rescissions of appropriations 3, 192 56,888 ...... ......

Appropriations to liquidate contract authorizations:
National defense:
Navy Department ...... 2,583 ...... ......
U.S. Maritime Commission 3, 100 1,175 ...... ......

Total rescissions of appropriations
to liquidate contract authorizations 3, 100 3,758 ...... ......

Total rescissions of appropriations available for
obligation 92 53,130 ...... ......

Contract authorizations:
National defense:
Navy Department 2, 000 3,316 ....... ......
Lend-lease ...... 600 ...... ......
U.S. Maritime Commission 4, 265 960 ...... ......
Other ...... 4 ...... ......

Total national defense 6, 265 4, 880 ...... ......
Other than national defense ...... 4 ...... ......

Total rescissions of contract authorizations 6, 265 4, 884 ...... .......


POSTAL ACCOUNTS

Appropriations:
Post Office Department, Washington 7 7 $7 $7
Postal services, field operations 1,167 1, 385 1, 291 1, 273
Anticipated supplemental appropriations (estimated) ...... ....... 162 162

Total appropriations 1, 174 1, 392 1, 460 1, 442

See footnotes at end of table

1947
GOVERNMENT CORPORTATIONS ________________
1945 1946 Recom-
Description Enacted Enacted mended ¹ Enacted

Limitations on administrative expenses:
Federal Loan Agency $12 $43 $37 $35
National Housing Agency 29 23 48 42
Department of Agriculture 15 13 13 16
Other 10 13 5 3

Total limitations on administrative expenses 66 92 103 96

TRUST ACCOUNTS

Appropriations:
Unemployment trust fund 1,507 1, 280 1, 284 1, 284
Federal old-age and survivors insurance trust fund 1, 407 1, 349 1, 490 1, 490
Veterans life insurance funds 2, 221 2, 445 920 920
Federal employees’ retirement funds 557 614 505 505
Railroad retirement account 324 312 373 373
Other trust accounts 1, 102 1, 418 344 346

Total appropriations 7, 118 7, 418 4, 916 4, 918

^a Net reduction because of adjustments in previous estimates of cost of construction under authorized tonnage of naval vessels.
¹ Covers recommendations in the January Budget Document and subsequent recommendations.
² In fiscal years 1945 and 1946 Coast Guard appropriations are included under "National defense: Navy Department"; in fiscal year 1947 under "Civil departments and agencies."
³ Includes recommendation of $921 million for "Commodity Credit Corporation, restoration capital impairment."
⁴ Included in "Appropriations" above.
⁵ Excludes $1.8 billion to be paid from Exchange Stabilization Fund.
⁶ Excludes $650 million credit to United Kingdom which provides for deferred payments to the United States Government for lend-lease and surplus property and involves no expenditure.
⁷ Recommendation included under appropriations for "Aids to agriculture, including subsidies."
⁸ Covers all action by the Congress as of July 30, 1946, including the first Supplemental Appropriation Act, 1947, as passed by the House of Representatives on that date.

1947
________________
Budget Budget
document review
estimates estimates
1945 1946 January, August,
Description Actual Actual 1946 1946

Payments to the public:
National defense $89.9 $48.2 $14. 8 ¹ $16. 4
Interest on the public debt 2.8 3.7 3.8 3.8
Refunds 8 2.9 1. 6 1. 9
Veterans pensions and benefits 9 2.9 4.3 5.8
International finance ...... . 6 3.5 4.4
Other activities ² (excluding trust accounts) 2.5 2.3 6.7 5. 0
Trust accounts ^a .5 4.3 2.4 2. 6

Total payments to the public 96. 4 64.9 37. 1 39.9

Receipts from the public:
Receipts other than borrowing:
Direct taxes on individuals 19.8 19. 0 12. 9 18. 4
Direct taxes on corporations 15.6 12. 9 8.2 9.8
Employment taxes ³ . 5 . 5 . 4 .6
Excise taxes and customs 6.3 7. 1 6. 8 7.5
Miscellaneous receipts, general
and special accounts 3.4 3.4 3.0 3. 1
Trust accounts ³5. 0 5. 2 3.4 3.3

Total receipts other than borrowing 50. 6 48. 1 34.7 42. 7

Excess of receipts other than
borrowing, over payments —45. 8 —16. 8 —2.4 2.8

Borrowing from the public (net):
Savings bonds and stamps 10. 6 2.9 ...... ......
Treasury bonds 26. 1 12.3 ...... ......
Short-term issues 14.3 ^b7.9 ...... ......
Government corporation obligations ^b 1. 5 ^b .1 ...... ......
Other obligations . 9 ^b.9 ....... .......
Total borrowing from the public (net) 50. 4 6.3 7. 0 ^b 14.8

Total receipts: from the public ⁴ 101. 0 54.4 27.7 27.9

^a Excess of credits, deduct.
^b Excess of redemptions, deduct.
¹ Excludes $2.1 billion of terminal leave bonds for enlisted military personnel.
² Including pay increase not absorbed.
³ Net appropriation to Federal old-age and survivors’ insurance trust fund is excluded from- employment taxes, but included as trust account receipt.
⁴ Difference between payments and receipts is accounted for by change in Treasury cash balance and Exchange Stabilization Fund.

Second half, fiscal 1946 ²
(In seasonally adjusted
Fiscal Year 1945 annual rates
____________________ ____________________
Expendi- Excess(+) Expendi- Excess(+)
Economic Group Receipts tures Deficit(-) Receipts tures Deficit(-)

Income after taxes $136.6 ...... ....... $132.0 ...... .......
Expenditures:
Durables ....... $7.1 ....... ....... $11.3 .......
Nondurables ....... 62.3 ....... ....... 75.6 .......
Services ....... 32.6 ....... ....... 34.3 .......

Total, consumer expenditures ....... 102.0 ....... ....... 121.2 .......
Excess of receipts, savings (+) ....... ....... +$34.6 ....... ....... +$10.8

BUSINESS
Undistributed profits and reserves 13.5 ...... ....... 11.7 ...... ......
Gross capital formation:
Domestic ....... 5.0 ...... ....... 19.0 .......
Net exports ....... —1.0 ...... ....... 3.1 .......

Total, gross capital formation ....... 4.0 ...... ....... 22.1 .......
Excess of receipts (+) or capital for-
mation (—) ....... ........ +9.5 ...... ...... —10.4

STATE AND LOCAL GOVERNMENT
Receipts from the public, other than
borrowing 10.4 ....... ....... 10.7 ....... ......
Payments to the public ....... 8.7 ....... ....... 9.4 .......
Excess of receipts (+) ....... ........ +1.7 ....... ....... +1.3

FEDERAL GOVERNMENT
Receipts from the public, other than
borrowing 50. 6 ....... ....... 50. 8 ....... .......
Payments to the public ....... 96- 4 ....... ....... 52. 5 .......
Excess of payments (—) ....... ........ —45.8 ....... ....... -1.7

ADJUSTMENT
Transfer payments to individuals by
governments 5.9 5.9 ....... 12.2 12.2 .......
Other transfer payments 3. 9 3.9 ....... 11.3 11.3 .......
Less: Government noncash expendi-
ture for goods and services 1.1 1.1 ....... 1. 1 1.1 .......

Total adjustment to be deducted 8.7 8.7 ...... 22.4 22.4 .......

TOTAL: GROSS NATIONAL PRODUCT
Receipts 202.4 ...... ...... 182.8 ....... ......
Expenditures ...... 202.4 ...... ....... 182.8 .......

Balance ....... ....... 0 ....... ....... 0

See footnotes on following page.

Footnotes for table 5.
¹ For an explanation of this table see the Budget Document for the fiscal year 1947, pp. 728-729. In the "Adjustment" category, the concept of "Transfer payments to individuals by governments" is that of the Department of Commerce. "Other transfer payments" include tax refunds, reimbursable lend-lease, certain trust account expenditures, transfers to the International Bank, sales of surplus personal property counted as business expenditures, and certain other items.
² Figures for the second half of the fiscal year 1946 are preliminary.