Near-record budget sent to Congress (1-8-41)

The Pittsburgh Press (January 8, 1941)

British aid to boost $17 billion request – more taxes ahead

By Sandor S. Klein, United Press staff writer

Washington, Jan. 8 –
President Roosevelt today laid before Congress a $17,485,528,049 budget “for the total defense of our democracy.”

He served notice that he will soon ask still more billions to provide munitions for Britain and other countries battling the Axis.

Informed legislators talked in terms of $3-10 billion dollars for helping Britain over a long period. Any such sum would push the budget far past $20 billion.

But today’s budget was all for America – an America in which the President said “democracy as a way of life is at stake.”

Tax Recommendation Lacking

It is going to cost the taxpayer a lot more to defend this stake than he is paying now and there will have to be many more taxpayers, but Mr. Roosevelt made no specific recommendations for new taxes.

The when and how of the payoff will have to be worked out at conferences between Treasury and Congressional experts and Mr. Roosevelt said that he hopes that the result will be a completely revised and improved tax system. His broad recommendations seemed to rule out such restrictive taxes as sales levies in favor of higher assessments on incomes, particularly those fattened by the defense program.

62% For Defense

The figures he presented for the fiscal year, beginning July 1, shattered precedents in almost every category.

Projected spending hit within a billion dollars of the 1918-19 all-time high when the nation was at war.

Cash outlay for Army, Navy and other strictly defense items jumped $4,347,390,700 to $10,811,314,600 – 62¢ out of every dollar proposed to be spent next year.

The Army gets $5,956,600,000; the Navy, $3,447,394,000.

In addition, requested contract authorizations for defense totaled $1,263,931,089, to be paid out of 1943 appropriations.

Income at All-time High

The new defense items bring the total defense program initiated since June 1940 to $28,480,000,000, Mr. Roosevelt said.

Government income was placed at $8,275,435,000 – an all-time record.

Despite the huge revenue, the deficit will be $9,210,093,049. It is the 12th consecutive deficit and the largest in peacetime history.

And the national debt will reach $58,367,065,056 by June 30, 1942, Mr. Roosevelt estimated. He indicated he felt all statutory limits on the debt should be removed. The present limit of $49 billion will be passed this June.


Washington, Jan. 8 (UP) –
Getting the budget down to the minute: The government will be spending money at the rate of $33,267.75 every minute in 1942 to account for the total estimated expenditures of $17,485,528,049.

Every American, Mr. Roosevelt said, regretted the necessity for loading the budget with armament expenditures.

He said in the message which clerks read to the House and Senate:

A wry turn of fate places this burden of defense on the backs of a peace-loving people.

We can meet the demands armament because we are a people with the will to defend and the means to defend. The boundaries of our productive capacity have never been set.

The whole program set forth in this budget has been prepared at a time when no man could see all the signposts ahead. One marker alone stands out all down the road. That marker carries not so much an admonition as a command to defend our democratic way of life.

Aid to Britain Next

The message contained little more than passing references to plans for aiding the foes of the Axis powers. He told reporters in a special budget press conference that those recommendations will go to Congress in a supplemental message.

But his message placed Congress on notice that it would be expected to do something to help the democracies.

In addition to, but essentially and rightly as a complement to this program, the time has come for immediate consideration of assuring the continuation of the flow of vitally necessary munitions to those nations which are defending themselves against attack and against the imposition of new forms of government upon them.

‘More Than Weapons’

Such a complimentary program would call for appropriations and contract authorizations over and above this budget. The sum of all these defense efforts should be geared to the productive capacity of this nation, expanded to literally its utmost efforts.

The budget, he said, is a “reflection of a world at war.” And the whole $17 billion – not merely the $10 billion for military items – are in furtherance of the program for “the total defense of our democracy.”

Total defense means more than weapons… it means people of health and stamina… it means an economic and social system functioning smoothly and geared to high-speed performance. The defense budget, therefore, must go beyond the needs of the Army and Navy.

Broader Security Sought

For that reason, he deemed it vital to retain existing Social Security programs and to recommend that workers not now covered should be included in the old-age insurance and unemployment compensation systems.

Projected spending for both defense and non-defense purposes next year exceeds estimated expenditures for this year by $4,283,157,079.

Of the total proposed, 62% is for national defense. The remaining 38% is for general activities of the federal government.

67% Defense Rise

The President’s estimate of $6,674,213,449 for non-defense spending represented some reduction from the current year. He explained that increased military expenditures will permit a $400 million cut in work relief. But the mounting fixed charges against the government – such as interest on the public debt and pension and Social Security payments, wiped out the savings in other categories.

The new requests for defense are 67% higher than for this year. The President’s message and the budget discussed the proposed 1942 defense outlay only in general terms. They failed to reveal the exact number of planes, guns, ships or tanks that must be paid for in that year. This was the kind of information Mr. Roosevelt had told Congress could not be discussed publicly.

Army Gets Lion’s Share

The War Department was awaited the lion’s share of the proposed cash outlay for defense – $5,956,600,600. In addition, Congress was asked to give it contractual authority for another $1,075,258,195.

Mr. Roosevelt asked $3,447,394,000 cash for the Navy in addition to contractual authority totaling $188,672,894.

He explained that the Army funds provide for the training and maintenance of a force of men increasing from 250,000 last June to 1,400,000 in 1942 – equipped with modern devices of motorized and mechanical warfare – and for expanding munitions plant capacity to eventually equip an army of four million men.

Warship Funds Doubled

The Navy estimates, he said, continue the construction of the two-ocean navy and contemplate doubling of naval personnel.

For the Army Air Corps alone, Mr. Roosevelt sought $1,641,041,000. Most of the remainder of the War Department’s cash will be spent for development of ordnance production facilities; increasing the Army through recruiting and the Selective Service program; mobilization of the National Guard and reserves and improving coastal defenses.

Almost half of the funds budgeted for the Navy – $1,515,000,000 – will be applied toward the 276 warships now being built for the two-ocean fleet. This is almost double the amount estimated to be spent on the program in the current year.

Requests ‘Blank Check’

Also for defense, the President requested another “blank check” of $225 million for himself so that he might have ready cash handy to meet “unforeseen emergencies.”

Anticipated government income next year will exceed estimates for the current year by $1,262,505,000. More than half of the total was expected to be obtained from income taxes. They were estimated at $4,509,500,000, an increase of $1,454,500,000 over this year’s expectations.

Mr. Roosevelt made no specific recommendation for new taxes, but said the existing laws were not adequate to carry out the government’s policy that no one should make any “abnormal net profit” out of national defense.

‘Pay-As-You-Go’ Opposed

Elaborating on that passage from his budget message, Mr. Roosevelt told his special budget press conference that he knew of a lot of cases where people were getting rich out of the defense program and that the present excess profits tax system didn’t seem to be filling the bill.

The President, in his message, opposed a “pay-as-you-go” basis for financing defense because it would require “very drastic and restrictive taxation” that would curtail consumption.

I see many ways in which our tax system can be improved without resort to restrictive tax levies. By adjustments in the existing tax laws the present rates of progressive taxation could be made fully effective, as I believe the Congress intended.

Interest Big Item

He said the nation must face the fact that continued maintenance of a powerful armed force and the interest on the expanding national debt will call for large federal expenditures in the years ahead.

Tax Reform Suggested

Our tax system must be made ready to meet these requirements. I am as much concerned about our long-run need for an improved tax system as I am about the immediate necessity of financing the defense program.

In this connection, he continued, no truly satisfactory tax reform can be achieved without re-adjusting the federal-states-local fiscal relationship. He urged a thorough investigation of the possibilities of an all-embracing tax reform.

In spite of the need for revision of the tax laws, Mr. Roosevelt indicated, prospects were bright for even higher revenues than forecast.

Urges Lifting of Debt Limit

The President told his press conference that the outlook for fiscal 1942 was for a national income of between $86-87 billion in that period. The boom year 1929 established the record high national income of over $82 billion.

Mr. Roosevelt’s suggestion that Congress remove the statutory limit on the public debt would leave the Treasury with a free hand for the first time in more than two decades to finance expenditures by borrowing, when necessary. The President questioned the significance of a statutory ceiling on indebtedness, pointing out that Congress managed to control its spending without a debt limit for the first 130 years of the nation’s existence.

The primary worth of a debt limit, he said, is as a stop-look-and-listen signal o keep mounting expenditures before the public eye.

Discusses Public Debt

A considerable option of Mr. Roosevelt’s message was devoted to a discussion of the public debt. He said he understood the concern of those who are disturbed by the growth of the federal debt. The big fiscal problem, he observed, was not so much the rise of the debt as the increase of debt charges. But, he added, even an increase in interest charges can “scarcely present a serious fiscal problem so long as a high level of national income can be maintained.”

The national debt of almost all nations would be far lower today if competitive armaments had not existed during the past quarter of a century. If this war should be followed, as I hope it will, by peace in a world of good neighbors, then the complete elimination of competitive armaments will become possible. Only in such a world can economic stability be restored.


Total Spending
$17,485,528,049 – the highest in history except for the war year 1918-19.

Defense Spending
$10,811,314,600 for U.S. alone, up $4,347,000,000. Billions more for Britain to be asked soon.

Non-defense Spending
$6,674,213,449, a little less than this year.

$8,275,435,000, an all-time high.

$9,210,093,049, second highest on record.

More will be needed, says President.

Public Debt
Will pass $49,000,000,000 limit by June 30 this year and reach $58,367,065,056 by June 30, 1942; President suggests removal of debt limit.

Farm Program
$1,175,905,000, to maintain agricultural aid at present level.

$995,000,000, a drop of $400,000,000 from this year.

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By the United Press

Washington, Jan. 8 –
The course of federal government expenditures and revenues, together with surpluses or deficits, over the past years, including World War I, is shown in the following figures.

Year ending June 30 Expenditures Revenues Surplus/deficit
1917 $ 1,977,681,751 $ 1,124,324,795 $ -853,356,956
1918 $ 12,697,836,705 $ 3,664,582,865 $ -9,033,253,840
1919 $ 18,522,894,705 $ 5,152,257,136 $-13,370,637,569
1920 $ 6,482,090,191 $ 6,694,565,389 $ 212,475,198
1925 $ 3,529,643,446 $ 3,780,148,685 $ 250,505,239
1929 $ 3,848,463,190 $ 4,033,250,225 $ 184,787,035
1930 $ 3,994,152,487 $ 4,177,941,702 $ 183,789,215
1931 $ 4,219,950,339 $ 3,317,233,494 $ -902,716,845
1932 $ 5,274,325,513 $ 2,121,228,006 $ -3,153,097,507
1933 $ 5,306,623,054 $ 2,238,536,180 $ -3,068,086,874
1934 $ 7,243,725,625 $ 3,277,733,940 $ -3,965,991,685
1935 $ 7,375,825,165 $ 3,800,467,201 $ -3,575,357,964
1936 $ 8,879,798,257 $ 4,115,956,615 $ -4,763,841,642
1937 $ 8,001,187,347 $ 5,293,840,236 $ -2,707,347,111
1938 $ 7,625,822,158 $ 6,241,661,226 $ -1,384,160,932
1939 $ 8,707,091,580 $ 5,667,823,625 $ -3,039,267,955
1940 $ 8,998,189,706 $ 5,924,836,402 $ -3,073,353,304
1941 (est.) $ 13,202,370,970 $ 7,652,210,000 $ -5,550,160,970
1942 (est.) $ 17,485,528,049 $ 8,971,735,000 $ -8,513,793,049
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