I shall submit the detailed financial position of the Government with
recommendations in the usual Budget message. I will at this time, however,
mention that the Budget estimates of receipts and expenditures for the
current year were formulated by the Treasury and the Budget Bureau at a
time when it was impossible to forecast the severity of the business
depression and have been most seriously affected by it. At that time a
surplus of about $123,000,000 was estimated for this fiscal year and tax
reduction which affected the fiscal year to the extent of $75,000,000 was
authorized by the Congress, thus reducing the estimated surplus to about
$48,000,000. Closely revised estimates now made by the Treasury and the
Bureau of the Budget of the tax, postal, and other receipts for the current
fiscal year indicate a decrease of about $430,000,000 from the estimate of
a year ago, of which about $75,000,000 is due to tax reduction, leaving
about $355,000,000 due to the depression. Moreover, legislation enacted by
Congress subsequent to the submission of the Budget enlarging Federal
construction work to expand employment and for increase in veterans'
services and other items, have increased expenditures during the current
fiscal year by about $225,000,000.
Thus the decrease of $430,000,000 in revenue and the increase of
$225,000,000 in expenditure adversely change the original Budget situation
by about $655,000,000. This large sum is offset by the original estimated
surplus a year ago of about $123,000,000, by the application of
$185,000,000 of interest payments upon the foreign debt to current
expenditures, by arrangements of the Farm Board through repayments, etc.,
in consequence of which they reduced their net cash demands upon the
Treasury by $100,000,000 in this period, and by about $67,000,000 economies
and deferments brought about in the Government, thus reducing the practical
effect of the change in the situation to an estimated deficit of about
$180,000,000 for the present fiscal year. I shall make suggestions for
handling the present-year deficit in the Budget message, but I do not favor
encroachment upon the statutory reduction of the public debt.
While it will be necessary in public interest to further increase
expenditures during the current fiscal year in aid to unemployment by
speeding up construction work and aid to the farmers affected by the
drought, I can not emphasize too strongly the absolute necessity to defer
any other plans for increase of Government expenditures. The Budget for
1932 fiscal year indicates estimated expenditure of about $4,054,000,000,
including postal deficit. The receipts are estimated at about
$4,085,000,000 if the temporary tax reduction of last year be discontinued,
leaving a surplus of only about $30,000,000. Most rigid economy is
therefore necessary to avoid increase in taxes.