National Affairs: Second Biggest

President Truman took a long, not so happy look at the budget last week, and reported that the deficit would be a huge $5.5 billion, instead of the mere $873 million he had predicted in January. It was the second biggest in U.S. peacetime history (the biggest: 1940-41’s $6 billion).

A lot of the deficit, Truman said, could be blamed on the summer slump, which had decreased tax receipts by $3 billion. Expenditures had increased by $1.6 billion. Cuts in the defense budget and international aid were more than offset by $1.3 billion extra paid out for veterans’ benefits, $800 million extra needed to bolster sagging farm prices. Another big item was the unexpectedly high burden of underwriting the mortgage market for veterans and rental housing projects. It had been budgeted at a modest $200 million; it was costing a whopping $1.3 billion—an increase of 550%.