A public office is, indeed, a public trust. None of its aspects is more
demanding than the proper management of the public finances. I refer now
not only to the indispensable virtues of plain honesty and trustworthiness
but also to the prudent, effective and conscientious use of tax money. I
refer also to the attitude of mind that makes efficient and economical
service to the people a watchword in our government.
Over the long term, a balanced budget is a sure index to thrifty
management--in a home, in a business or in the Federal Government. When
achievement of a balanced budget is for long put off in a business or home,
bankruptcy is the result. But in similar circumstances a government resorts
to inflation of the money supply. This inevitably results in depreciation
of the value of the money, and an increase in the cost of living. Every
investment in personal security is threatened by this process of inflation,
and the real values of the people's savings, whether in the form of
insurance, bonds, pension and retirement funds or savings accounts are
thereby shriveled.
We have made long strides these past three years in bringing our Federal
finances under control. The deficit for fiscal year 1953 was almost 9-1/2
billion dollars. Larger deficits seemed certain--deficits which would have
depreciated the value of the dollar and pushed the cost of living still
higher. But government waste and extravagance were searched out.
Nonessential activities were dropped. Government expenses were carefully
scrutinized. Total spending was cut by 14 billion dollars below the amount
planned by the previous Administration for the fiscal year 1954.
This made possible--and it was appropriate in the existing circumstances of
transition to a peacetime economy--the largest tax cut in any year in our
history. Almost 7-1/2 billion dollars were released and every taxpayer in
the country benefited. Almost two-thirds of the savings went directly to
individuals. This tax cut also helped to build up the economy, to make jobs
in industry and to increase the production .of the many things desired to
improve the scale of living for the great majority of Americans.
The strong expansion of the economy, coupled with a constant care for
efficiency in government operations and an alert guard against waste and
duplication, has brought us to a prospective balance between income and
expenditure. This is being done while we continue to strengthen our
military security.
I expect the budget to be in balance during the fiscal year ending June 30,
1956.
I shall propose a balanced budget for the next fiscal year ending June 30,
1957.
But the balance we are seeking cannot be accomplished without the
continuing every-day effort of the Executive and Legislative Branches to
keep expenditures under control. It will also be necessary to continue all
of the present excise taxes without any reduction and the corporation
income taxes at their present rates for another year beyond next April
1st.
It is unquestionably true that our present tax level is very burdensome
and, in the interest of long term and continuous economic growth, should be
reduced when we prudently can. It is essential, in the sound management of
the Government's finances, that we be mindful of our enormous national debt
and of the obligation we have toward future Americans to reduce that debt
whenever we can appropriately do so. Under conditions of high peacetime
prosperity, such as now exist, we can never justify going further into debt
to give ourselves a tax cut at the expense of our children. So, in the
present state of our financial affairs, I earnestly believe that a tax cut
can be deemed justifiable only when it will not unbalance the budget, a
budget which makes provision for some reduction, even though modest, in our
national debt. In this way we can best maintain fiscal integrity.
A fourth aim of our program is: