THE BUDGET: Bumping the Ceiling

When Congress sheathed the Battle-of-the-Budget economy knives arid went home, the Administration’s budget woe’s were far from over—in fact, they had scarcely begun. At his press conference last week, Dwight Eisenhower spoke of budget problems in the harried tone of a head of household who finds himself, soon after payday, with $365 in overdue bills and $165 in the family checking account. Said Ike, when asked what cuttable spots he might find in next year’s budget: “If you could tell me that, I would have one of my hardest problems solved, because every single department of Government, most of them pleading the responsibilities placed upon them by law. want more money. They quote rising prices . . .”

Political Flimflam. The problem pressing upon the Administration is not how to shrink total spending, but how to keep it from ballooning. Reported Treasury Secretary Robert B. Anderson and Budget Director Percival F. Brundage in a joint statement last week: With fiscal 1958 only three months old, the Administration’s spending estimate has edged up from $71.8 billion to $72 billion since the President submitted his budget to Congress last January. With the Government’s income estimate for the year down $100 million (principally because of lower business profits), the 1958 surplus shapes up as $1.5 billion instead of the $1.8 billion the Administration had hoped for. Prospects for 1958 tax cuts: increasingly doubtful.

What then was the clamorous Battle of the Budget all about? Were Capitol Hill’s cuts mere political flimflam? Well, not exactly, said Anderson-Brundage. Congress and the Administration, between them, did in fact cut $2 billion out of the original budget. But the trimmings were more than offset by “a few upward revisions” partly due to inflation, partly due to ballooning programs that only Congress can change. Items: ¶ Bumper crops on the farms bumped up the cost of price supports by $739 million (total outlay for agriculture programs in the revised budget: $5 billion, or more than the combined spending of the Justice, Interior, Commerce, Labor, and Health, Education and Welfare departments).

¶ A Post Office deficit (Congress balked at the postal-rate increases the Administration asked for) that will top the January budget estimate by $600 million. ¶ Rising interest rates that could up the cost of carrying the national debt by $500 million.

In order to keep the 1958 spending total from running past the new $72 billion estimate, the Administration is squeezing to hold defense spending down to $38 billion. And the high cost of technological complexity in the jet-missile-atom era makes that ceiling uncomfortably low. In the past few months. Defense Secretary Charles Erwin Wilson ordered uniformed-manpower cuts totaling 200,000 men (TIME, Sept. 30). And in the week when the Soviet Union launched history’s first man-made earth satellite, the U.S. was nibbling again at its own defenses. Item: the Strategic Air Command announced that a reconnaissance wing would be deactivated in early November. Item: Secretary Wilson ordered severe cutbacks in Air Force payments to major contractors—meaning that the contractors will probably have to slow down delivery schedules. Item: the Defense Department directed “an immediate, continuing and sharp curtailment” in defense-contract overtime.

Hard-Boiled Look. Clearly, with overall Government spending at $72 billion a year, the nation cannot spend more for defense and keep up all its nondefense federal programs, too. without either 1) raising already painful taxes or 2) falling back into serious inflationary deficit spending. Badly needed next step: a hard-boiled new look at federal nondefense spending.

Only so much can be wrung out of executive departments. Instead, as the President said at his press conference, Congress has to cut out some of the programs that it has passed into law. As an example, Ike pointed to water-pollution control and vocational-training programs; they should, he said, be handed over to state and local governments. Possibly a time of high national prosperity is the right time to start closing out many of the federal subsidies to farmers, veterans, states, cities. Somewhere along the budgetary line, something will have to give—and, as the satellite news made clear, it cannot be defense.