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1 The Federal Budget for Fiscal 1965 [1] (1964)

handle is hein.tera/eradgetcal0001 and id is 1 raw text is: The Federal Budget . 1961 for Fiscal 1965 The Unexpected-Spending Down, Deficit Reduced No. 1 in a series of Bludget Briefs Seldom has a Federal budget received so much advance attention as did President Johnson's budget for the 1965 fiscal year. Reports late in calendar 1963 referred to built-in increases and forecasts of spending as high as $103 billion; other reports featured the Administration's struggle to hold expenditure requests to $100 billion. Then the President announced in his State-of-the-Union address that the 1965 spending total would be $97.9 billion, actually half a billion dollars below the current-year figure. Moreover, the estimated deficit would be only half of that for 1964. Officials and citizens alike were surprised. After all, the increase in spending in the last six budgets had averaged $4.5 billion a year. Could a decline for 1965 be a real one? Table I sets forth the principal budget totals. In the budget message the President emphasized that efforts for increased governmental efficiency and economy would continue. He forecast a slight drop in Federal civilian employment. The new budget, he said, reaffirmed a fiscal policy for economic growth which stresses ex- pansion of the private sector rather than the public sector, seeking to provide ample assurance of the Administra- tion's determination to keep costs under tight control and to work for speedy action on tax reduction. The reduction in administrative budget expenditures is relatively modest-one-half of one percent below the cur- rent year. Its realization depends upon the degree to which the Administration is successful in achieving actual spend- ing reductions in some areas in order to offset proposed increases in others. What are the prospects? Questions Raised by the Budget The budget message says, among other things: that the $97.9 billion spending program represents an austere budget; that there has been vigorous pruning of old pro- grams and procedures; that this budget carries us a giant step toward the achievement of a balanced budget while at the same time providing more funds than ever before in our history for health, welfare, education, and similar programs; that the urgent and necessary program increases included in the budget will be financed from savings made possible by strict economy measures. Do the facts support such statements? Other questions arise. Are the revenue forecasts real- istic? Are the reductions in spending likely to be achieved in fact? To what extent do they represent strict economy measures? Have certain expenditures been moved ahead into the current fiscal year to reduce spending in 1965? To what extent does the much publicized cutback in Federal civilian employment contribute to the reduction in spend- ing? And finally, the key issue: Is the one-half of one per- cent cut in expenditures the first step toward further reductions? Or does it represent a level which may be held for several years? Or is it merely a strategic pause before another upward trend, or surge, of Federal spending? These and other questions will be examined in this and subsequent bulletins. Revenue Prospects The administrative budget estimates receipts of $93.0 billion in fiscal 1965. If the estimate proves to be accurate, Federal revenue will be at an all-time high, and after the largest tax cut in history. The 1965 estimates, as shown in Table II, reflect increases from all revenue sources over the forecasts for the current year and-except for miscel- laneous receipts-over actual collections in 1963. The total would be one sixth, $15.2 billion, over that of 1960. The 1965 revenue estimates are based in large part on the optimistic assumption that the gross national product will rise to a $623 billion level in calendar 1964, an in- crease of $38 billion or about 6.5 percent over 1963. A further rise in calendar 1965 is also apparently assumed. Personal income in 1964 is estimated to total $492 billion -$29 billion higher than in 1963 and $50 billion above the actual 1962 total. Corporate profits before tax are projected at $55.6 billion in calendar 1964-$4.3 billion (8.4 per- % ,t FOUNDATION, INC. 50 ROCKEFELLER PLAZA. NEW YORK, N. Y. 10020 (Copyright 1964)

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