THE PRESIDENT'S BUDGET MESSAGE FOR 1958

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00268R000100010041-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 69
• Document Creation Date: December 27, 2016
• Document Release Date: March 19, 2013
• Sequence Number: 41
• Publication Date: January 1, 1958
• Content Type: REPORT

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THE PRESIDENT'S BUDGET MESSAGE
FOR 1958
U. S. GOVERNMENT PRINTING OFFICE :1957
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RgSUME OF THE BUDGET
[Fiscal years. In billions]
,
1953
actual
1954
actual
1955
actual
1956
actual
1957
estimate I
1958
estimate I
New obligational authority:
Under existing legislation__
Under proposed legislation
Total
$80. 3
$62. 8
$57. 1
$63. 2
$69. 7
0. 8
$64. 7
8. 6
80. 3
62. 8
57. 1
63. 2
70. 5
73. 3
Budget receipts:
Under existing legislation
Under proposed legislation_
Total
Budget expenditures:
Under existing legislation
Under proposed legislation
Total
Budget surplus (+) or deficit (-)_
64. 8
64. 7
60. 4
68. 1
70. 4
0. 2
71. 3
2. 3
64. 8
64. 7
60. 4
68. 1
70. 6
73. 6
74. 3
67. 8
64. 6
66. 5
68. 6
0. 3
70. 1
1. 7
74. 3
67. 8
64. 6
66. 5
68. 9
71. 8
-9.4
-3.1
-4.2
+1.6
+1.7
+1.8
Public debt at close of year
266. 1
271. 3
274. 4
272. 8
270. 6
269. 2
Balances of appropriations car-
ried forward at end of year..
78. 4
67. 8
52. 1
46. 0
46. 3
47. 3
'In this and other tables in this budget, tax receipts, expenditures, and new obligational authority under the new pay-
as-you-build highway program are excluded from the estimates of budget receipts and expenditures for 1957 and 1958.
As a result, the estimates for these two years are not entirely comparable to the figures for prior years. The financial trans-
actions relating to the new highway program are carried as trust fund transactions, in accordance with the legislation
enacted during the past session of the Congress, and are so shown in part III of this budget document.
M4
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BUDGET MESSAGE OF THE PRESIDENT
o the Congress of the United States:
I am presenting with this message my recommended budget for the
United States Government for the fiscal year 1958, which begins next
July 1.
This is the fourth budget which I have transmitted to the Congress.
In my first budget message?that for the fiscal year 1955?I empha-
sized the administration's determination to chart a course toward
two important fiscal goals?balanced budgets and tax reductions.
Reductions in spending evidenced in the 1955 budget made possible
a large tax reduction and tax reform program.
The 1956 budget was balanced.
The 1957 budget will be balanced.
A balanced budget is proposed for 1958.
I believe this policy of fiscal integrity has contributed significantly
to the soundness of our Nation's economic growth and that it will
continue to do so during the coming fiscal year.
BUDGET TOTALS
[Fiscal years. In billions]
1956 actual
1957 estimate'
1958 estimate'
Budget receipts
$68.
1
$70.
6
$73. 6
Budget expenditures
66.
5
68.
9
71. 8
Budget surplus
1.
6
1.
7
1. 8
See footnote to table on preceding page. Includes proposed legislation.
This budget is for the first fiscal year of my second term in office.
In making plans for the coming year, I have been guided by the
following national objectives:
1. Peace, justice, and freedom for our own and other peoples;
2. Powerful armed forces to deter and, if need be, to defeat aggres-
sion;
3. A healthy and growing economy with prosperity widely shared;
4. Enhancement of individual opportunity and the well-being of
all our people;
5. Wise conservation, development, and use of our great natural
resources;
6. Fiscal integrity;
7. A well-balanced choice of programs at home and abroad; and
8. Increasing international trade and investment essential to the
growth of the economies of the United States and the rest of the free
world.
We have made considerable progress toward these goals. We
will continue this progress in the years ahead.
M5
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MESSAGE OF THE PRESIDENT
BUDGET POLICY
Today, almost 12 years after World War II, the United States has
demonstrated that it is possible to sustain a high employment economy
independent of war and continually unbalanced Federal budgets. Ad-
justments to changing economic circumstances have been and are
being made successfully. Productivity and living conditions have
improved. With sound public and private policies, the prospect for
continued economic growth is bright.
Attainment of that goal is possible only with prudent management
of the Government's fiscal affairs. Our Federal budget must contrib-
ute to the Nation's financial stability and to the preservation of the
?
purchasing power of the dollar. Maintaining a sound dollar requires
of us both self-discipline and courage. At a time like the present
when the economy is operating at a very high rate and is subject to
inflationary pressures, Government clearly should seek to alleviate
rather than aggravate those pressures. Government can do its part.
But business and labor leadership must earnestly cooperate?or what
Government can do in a free society at a time like this will not pre-
vent inflation.
For the Government to do its part in the coming year, taxes must
be retained at the present rates so that receipts will exceed budget
expenditures and the public debt can be further reduced. The pro-
spective budget surplus in the fiscal year 1958 will reinforce the restrain-
ing effect of present credit and monetary policies. The present situa-
tion also requires that less pressing expenditure programs must be
held back and some meritorious proposals postponed.
Expenditure and appropriation policy.?While taking present eco-
nomic conditions into consideration, the budget must also reflect the
general responsibilities of a Government which will be serving 172
million people in the fiscal year 1958. In the face of continuing threats
to world peace, our collective security must be strengthened through
alert international policies and a strong defense. Progress toward
greater equality of opportunity for all of our people as well as toward a
balanced development and conservation of our national resources
must go forward. Emphasis must continue upon promoting, through
private enterprise, the development and productivity of our economy.
We must move forward in some areas of investment while we hold
back in others. For example, the needs for schools, highways, and
homes are so urgent that I am proposing to move ahead with programs
to help our States, cities, and people undertake such construction at a
prudent rate. However, in view of the present active competition for
labor, materials, and equipment, I am not recommending some other
desirable construction projects, and I have asked the head of eacb
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MESSAGE OF THE PRESIDENT
Federal agency to watch closely the timing of construction and to
postpone work which can be appropriately put off until a later date.
It is also important to hold to a minimum any increase in Govern-
ment personnel in the coming period. I have directed the heads of
the Federal agencies to give renewed emphasis to their efforts in this
regard?efforts which have resulted in a net reduction of approxi-
mately 240,000 in the civilian work force during the past /1._ years.
Vacant positions are to be filled by new employment only if careful
review by each agency has demonstrated that the positions cannot
be abolished or filled by transfer. All proposals which might produce
higher Federal payrolls in the future will be critically examined and
evaluated.
Continuation of balanced budgets into the future requires that the
total of new authority to incur obligations, as well as the budget
expenditures for the year, should be less than the total of realisti-
cally anticipated budget receipts. This policy of controlling budget
authorizations, which has been followed since the beginning of this
administration, has helped us move from a budget deficit of 9.4 billion
dollars in the fiscal year 1953 to balanced budgets in 1956,
1957, and 1958.
In this budget the total of new authority proposed for 1958 is 73.3
billion dollars, 279 million dollars less than estimated budget receipts.
Of the total recommended new authority, specific action by this
session of the Congress will be necessary for 65.3 billion dollars.
Other new authority, such as that for paying interest on the public
NEW AUTHORITY TO INCUR OBLIGA.TIONS 1
[Fiscal years. In billions]
1956
1957
1958
Proposed for enactment in this session:
Recommended at this time
$56. 7
Proposed for later transmission:
Under existing legislation
$0.
8
(2)
Under proposed legislation
0.
8
8. 6
Total
1.
6
65. 3
Enacted prior to this session:
Current authorizations
$53.
3
60.
7
Permanent authorizations
9.
9
8.
2
8. 0
Total
63.
2
70.
5
73. 3
1 For details see table 5 in part I of this budget documertt
2 Less than 50 million dollars.
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MESSAGE OF THE PRESIDENT
debt, will become available under previously enacted permanent
authorizations.
The total amount of new obligational authority recommended
for the fiscal year 1958 is 2.8 billion dollars greater than the present
estimates for 1957. Budget expenditures are estimated to increase
by 2.9 billion dollars to a total of 71.8 billion dollars in 1958. These
estimaes include my proposals for new legislation as well as present
programs.
For both new obligational authority and expenditures, about seven-
tenths of the estimated increase between 1957 and 1958 is for the
military functions of the Department of Defense, reflecting the higher
costs of producing, operating, and maintaining the complex new
weapons and equipment being delivered in growing quantities to our
defense establishment. Other major increases are for the Department
of Health, Education, and Welfare, including my proposal for aiding
school construction, and for the Atomic Energy Commission.
The figures contained in this budget for the fiscal years 1957 and
1958 are not precisely comparable to the actual figures for prior years.
Under the provisions of legislation enacted last year, the financial
transactions for the greatly expanded Federal-aid highway program
are included in a self-liquidating trust fund and are not in the budget
totals.
Revenue policy.?It is my firm belief that tax rates are still too high
and that we should look forward to further tax reductions as soon as
SOURCE OF BUDGET RECEIPTS
Fiscal Year 1958 Estimate
04,=of Ref.'s)
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MESSAGE OF THE PRESIDENT
they can be accomplished within a sound budget policy. Reductions
in tax rates would give relief to taxpayers and would also release funds
for the activity and investment necessary for sustained economic
growth through private initiative. However, the reduction of tax
rates must give way under present circumstances to the cost of meeting
our urgent national responsibilities.
For the present, therefore, I ask for continuation for another year
of the existing excise tax rates on tobacco, liquor, and automobiles,
which, under present law, would be reduced next April 1. I must
also recommend that the present corporate tax rates be continued for
another year. It would be neither fair nor appropriate to allow
excise and corporate tax reductions to be made at a time when a
general tax reduction cannot be undertaken.
In the area of taxation, I am especially interested in the problems
of small business. Last August the Cabinet Committee on Small
Business made a series of carefully considered recommendations in this
field. Some relief in the tax burden affecting small business, as
recommended by that Committee, which will give help with a minimum
loss of revenue should have early consideration by the Congress.
Any changes involving substantial loss of revenue should be consid-
ered at a later time when a general tax reduction is possible.
The present estimates of budget receipts for 1958 are based on the
assumption that the Nation will continue to have a high level of
business activity with increasing national income, and that the present
tax rates will be continued. They are the best estimates we can make
at this time, but, since they relate to a period 6 to 18 months away,
significant changes may take place before the fiscal year 1958 is ended.
BUDGET RECEIPTS'
[Fiscal years. In billions]
1956 actual
1957 estimate
1958 estimate
Individual income taxes
$35. 3
$38. 5
$41. 0
Corporation income taxes
21. 3
21. 4
22. 0
Excise taxes 2
10. 0
9. 2
8. 9
Other taxes 2
2. 2
2. 5
2. 6
Miscellaneous receipts
3. 0
3. 0
3. 3
Refunds of receipts (?)
?3. 7
?3. 9
?4. 2
Total
68. 1
70.6
73. 6
For details, see special analysis B in part INT of this budget document.
'Net of transfers to trust funds.
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MESSAGE OF THE PRESIDENT
CHANGE IN PUBLIC DEBT
$ Billions- Fiscal Years increase
7 INEMEMBEINIIIIIMEM
5.2 ENIEMINIEn
3.l_____
1956
Estimate 1957
Estimate 1958
Decrease
1.6
1.4
2.2
Debt policy.?The budget surplus for the fiscal year 1956 of 1.6
billion dollars was used to reduce the public debt. This budget
provides for further reductions in the public debt for the current
fiscal year and for the fiscal year 1958.
The successive reductions in the debt from 1956 through 1958 are
modest in relation to its total size. Nevertheless, I hope that these
reductions, plus the collection of corporation tax payments on a more
nearly current basis (as provided by the Internal Revenue Code of
1954), will make it unnecessary to ask the Congress again for a tem-
porary increase in the legal limit of 275 billion dollars to cover
seasonal borrowing during the coming fiscal year.
PUBLIC DEBT I
[Fiscal years. In billions]
1956 actual
1957 estimate
1958 estimate
Public debt at start of year
$274. 4
$272. 8
$270. 6
Change due to budget surplus (?)
?1.6
?1.7
?1.8
Change due to other factors 1
(2)
?. 5
-F. 4
Public debt at close of year
272. 8
270. 6
269. 2
'For details, see table 4 in part I of this budget document.
Less than 50 million dollars.
The reduction in the public debt in the fiscal year 1957 is estimated
to be larger than the budget surplus for that year, mainly because
it is anticipated that some expenditures during the year can be
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MESSAGE OF THE PRESIDENT M
financed by drawing down the amount of cash the Government has
on hand.
For the fiscal year 1958, the reduction in the public debt will not be
as much as the budget surplus. This situation results primarily from
the fact that, in the aggregate, the trust funds are expected to draw
down the amount of uninvested cash held for them by the Treasury.
Receipts from and payments to the public.?The restraint on inflation-
ary pressures which will be exerted by the budget surplus in the fiscal
year 1958 will be reinforced by net accumulations in the trust funds
which the Government administers. These trust fund accumulations,
such as those for highways and for old-age and survivors and disa-
bility insurance, are the excess of current receipts over current pay-
ments. They constitute reserves for future use which are invested
in Government securities.
When the Government's budget transactions are consolidated with
trust fund and other transactions to give a picture of the flow of
money between the public and the Government as a whole, the receipts
from the public are estimated to exceed payments to the public by
3 billion dollars in the fiscal year 1958.
FEDERAL GOVERNMENT RECEIPTS FROM AND PAYMENTS TO THE PUBLIC I
[Fiscal years. In billions!
1956 actual
1957 estimate
1958 estimate
Receipts from the public
$77.
1
$81.
7
$85. 9
Payments to the public
72.
6
78.
2
82. 9
Excess of receipts from the public
4.
5
3.
5
3. 0
I For details, see special analysis A In part IV of this budget document.
The decline between the fiscal years 1956 and 1957 in the excess of
receipts from the public results mainly from the estimated withdrawal
of cash from the Treasury by the International Monetary Fund in
1957. The cash payments are made as the Treasury redeems the
notes which were part of the United States subscription to thd Fund.
This subscription was made in the fiscal year 1947 and is therefore
not part of current budget expenditures.
The excess of receipts from the public is estimated to be still lower
in 1958 mainly because of higher net payments from trust funds.
400000-57?PR 2
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M12
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MESSAGE OF THE PRESIDENT
PURPOSE OF BUDGET EXPENDITURES
. .
Civil Benefits
Interest
43%
Civil Operations
Administration/ etc.
Fiscal Year 1958 Estimate
BUDGET PROGRAMS AND PERFORMANCE
By far the largest part of the budget for the coming fiscal year, 63
percent, will be devoted to maintaining and improving our own de-
fenses and to strengthening the defenses and economies of other
nations in the interest of collective security and world peace. Civil
benefits will account for 24 percent of budget expenditures; interest, 10
percent; and all other operations, administration, and contingencies,
3 percent.
BUDGET EXPENDITURES BY PURPOSE
[Fiscal years. In billions)
1956 actual
1957 estimate
1958 estimate
Protection, including collective security
842.
4
$42.
7
$45. 3
Civil benefits
15.
3
16.
5
16. 9
Interest
6.
8
7.
3
7. 4
Civil operations and administration
2.
0
2.
3
1. 8
Allowance for contingencies
.
2
. 4
Total
66.
5
68.
9
71. 8
I For details, see special analysis E in part IV of this budget document.
Protection, including collective security.?As a simple matter of self-
preservation, we must maintain our own strength and promote world
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MESSAGE OF THE PRESIDENT m13
stability by helping to build up the strength of friendly nations. At
the same time, we must actively advance our other efforts for lasting
peace and inform the world in all appropriate ways of our peaceful
aims.
The new and more powerful weapons which are being delivered
to our Armed Forces in increasing quantities and varieties are much
more costly to produce, operate, and maintain than the weapons
they are replacing. Furthermore, we are now engaged in the develop-
ment of a whole new family of even snore advanced weapons for all
the services. Large expenditures will be required to bring these
weapons into use. During the transition, we must continue to
purchase enough of the current types to preserve our readiness until
the effectiveness of the advanced weapons is demonstrated in tests.
Despite these upward pressures on expenditures, future defense costs
must be held to tolerable levels. Effective action must be taken to
improve efficiency and to maintain a proper balance between expendi-
tures for future military strength and expenditures for current
readiness.
EXPENDITURES FOR PROTECTION, INCLUDING COLLECTIVE SECURITY
[Fiscal years. In billionsi ,
1956 actual
1957 estimate
1958 estimate
Major national security programs:
Department of Defense?military func-
tions
$35. 8
$36. 0
$38. 0
Mutual security program?military
2. 6
2. 6
2. 6
Atomic Energy Commission
1. 7
1. 9
2. 3
' Stockpiling and defense production ex-
pansion
.6
.4
.4
Subtotal
40. 6
41. 0
43. 3
Related programs:
Mutual security program?economic,
technical, and other
1. 6
1. 5
1. 8
United States Information Agency
. 1
. 1
. 1
Federal Civil Defense Administration
. 1
. 1
. 1
Selective Service System
(I)
(1)
(I)
Subtotal
1. 8
1. 7
2. 0
Total
42. 4
42. 7
45. 3
I Less than 50 million dollars.
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M14 MESSAGE OF THE PRESIDENT
The introduction of new equipment and weapons with vastly greater
combat capability is also having a powerful impact on concepts of
military strategy, tactics, and organization. The combat power of
our divisions, wings, and warships has increased to such an extent that
it is no longer valid to measure military power in terms of the number
of such units.
I have given careful consideration to the many complex factors
which enter into the development of a well-balanced military structure.
I am convinced that the defense programs and funds for their support
as recommended in this budget provide a wise and reasonable degree
of protection for the Nation.
Our nuclear weapons and our ability to employ them constitute
the most effective deterrent to an attack on the free nations. We
shall continue to expand our nuclear arsenal until an agreement
has been reached for reduction and regulation of armaments under
safeguarded inspection guaranties.
At the same time, we are increasing the portion of the production
of fissionable materials allocated to peaceful uses at home and abroad
and we look forward to the day when all production may be used for
peaceful purposes. This budget provides for increased effort on power
reactor development and on new uses of atomic energy in biology,
medicine, agriculture, and industry. It will also make possible
greater sharing of our peaceful atomic energy developments with
other nations through the atoms-for-peace program.
World events continue to demonstrate the value of our programs of
mutual assistance. Continued assistance, both military and economic,
to friendly nations will provide the essential margin beyond their own
resources needed to support and strengthen their defenses and their
economies. The intensified worldwide conflict of ideas also requires a
further increase in our programs of international information.
Civil benefits.?During the past 4 years, the Government has acted
affirmatively to advance the everyday well-being of our people by
EXPENDITURES FOR CIVIL BENEFITS
[Fiscal years. In billions]
1956 actual
1957 estimate
1958 estimate
Additions to Federal assets
$3.
5
$3.
0
$3. 4
Long-range development
2.
0
1.
8
2. 3
Current expense items
9.
7
11.
7
11. 1
Total
15.
3
16.
5
16. 9
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MESSAGE OF THE PRESIDENT
helping to improve their economic opportunities, helping to provide
safeguards against economic and physical hazards, and helping to
build needed public assets. The Government's leadership in as-
sisting the people to satisfy their own needs has been so exercised
that steady progress has taken place without paternalistic interference.
In the fiscal year 1958 we shall continue to move forward with many
civil benefit programs already established by law.
To aid agriculture in its adjustments to new technologies and
to changed world production and consumption patterns, the soil
bank program will help reduce the production of surplus crops.
Additional marketing research and service activities will develop
new markets and new uses for our farm products. Watershed
protection, aid to low-income farmers, and assistance in overcoming
the problems of drought, wind erosion, and floods will be expanded.
The Federal Government is assisting the States and private enter-
prise to make major advances in our transportation system. Traffic
control on our airways is being continually improved as new equip-
ment is developed and becomes available. Orderly replacement by
private shipping lines of the merchant ships built during World War
II is underway. Through grants paid from the highway trust fund,
the States, in partnership with the Federal Government, are begin-
ning a 13-year program to complete construction of the Interstate
Highway System.
Under the urban renewal program, which combines Federal,
local, and private efforts, 41 urban renewal projects will have been
completed by the close of the fiscal year 1958, and 531 more will be
in various stages of planning or construction. Private financing of
housing for military families, elderly families, cooperatives, and other
groups having special difficulties in obtaining homes will be encouraged
by special mortgage insurance and mortgage purchase programs.
Over the 3-year period, 1955 through 1957, nearly 400 new water-
resource projects for flood control, navigation, irrigation, power, and
water supply will have been started and about one-half of these
projects will still be under construction in 1958. Because of the
need for continued and orderly development of our resources, I
recommend that construction be started at a modest rate in 1958 on
some new projects for which planning is well advanced. Funds for
initiating immediately the planning of new public works projects
which the Congress is expected to authorize are also included in
this budget.
Increased expenditures will be made for sound programs of health
research and grants for hospitals, clinics, and diagnostic and rehabili-
tation centers.
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MESSAGE OF THE PRESIDENT
Legislative recommendations for new civil benefits involving major
expenditures are being confined to needs of the highest priority and
will be discussed later in this message.
Interest.?Expenditures for interest are estimated to rise 100 million
dollars to 7.4 billion dollars 'in the fiscal year 1958, despite reductions
in the public debt in 1956, 1957, and 1958. The increase in interest
charges is due to refinancing securities maturing during the coming
year at the higher rates of interest which reflect the heavy demand
for credit and capital throughout our prosperous economy.
Civil operations and administration.?Expenditures for the remain-
ing operations of the Government are estimated to be 1.8 billion dollars
in the fiscal year 1958, an amount 425 million dollars less than in 1957
and 185 million dollars less than in 1956. The decreases occur pri-
marily because certain payments heretofore made by the Civil Service
Commission and the Treasury Department will be charged to the
appropriations of the several agencies in accordance with legislation
enacted last year. These are the payments which the Government,
as employer, makes to the civil service retirement fund and those
which it makes for certified bills presented too late for payment in the
regular way. This improved accounting procedure shows with greater
accuracy the total cost of various agency programs and is responsible
for part of the increase shown in the expenditures for protection and
civil benefits.
Allowance for contingencies.?Sound budgeting requires that some
general provision be made for contingencies which may arise in the
coming period. This is especially important today, in view of uncer-
tain world conditions. The Congress is not being asked to appropriate
for purposes not known. This item makes allowance in the budget
totals for probable future requests, including those to cover the cost
of some legislative proposals for which the timing of expenditures is
uncertain. As the needs arise, and as new legislation is passed, a
specific request for funds will be made in each case. The amount
allowed for expenditures is 400 million dollars, slightly over one-half
of 1 percent of total budget expenditures estimated for 1958.
Management improvement.?The administration is constantly striv-
ing to improve the management of Government. Vigorous measures
to increase efficiency have shown results in many Government
operations.
In the Veterans Administration, for example, the staff in nonmedical
activities has been reduced by 10,000 in the past 4 years. Some of
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MESSAGE OF THE PRESIDENT m17
this reduction was made possible because of smaller numbers of
insurance and readjustment payments, but most of the reduction in
staff reflects better procedures, including extensive mechanization
of operations.
In the overseas supply activities of the Department of Defense,
new procedures employing faster communications and better trans-
portation service have been established. These improved methods
of supplying overseas units substantially reduce inventory require-
ments and thus save both capital investment and costs of handling.
In the Post Office Department, despite an 11 percent rise in the
volume of mail in the 4 fiscal years 1954 through 1957, the average
employment will have increased only a little more than 3 percent.
This is concrete evidence of the value of new methods, organization,
and equipment.
After intensive reviews of their real property holdings, Government
agencies over the past 3 fiscal years have transferred excess property
costing over 131 million dollars to other agencies, thus reducing the
volume of purchases needed by those agencies to meet new require-
ments. In addition, surplus real property worth 366 million dollars,
including almost all of the Government-owned synthetic rubber plants,
has been sold, thus putting most of this property on the tax rolls.
In accordance with the recommendations of the second Hoover
Commission, an Office of Accounting has been established in the
Bureau of the Budget to help the Federal agencies to improve further
their financial management and, in that connection, to put into effect
the principles of accrual accounting and cost-based budgeting approved
in legislation enacted last year. Modern accrual accounting will
make possible better management through improved information
needed to control costs.
LEGISLATIVE PROGRAM
This year I discussed only a few of the administration's legislative
recommendations in the State of the Union message. Therefore, this
part of the budget message is devoted to a discussion of other major
proposals for legislation on which I recommend that the Congress
take action during the present session. The legislative program is
one on which the Congress and the executive agencies should be able
to work together successfully.
In the course of the next few months the administration will recom-
mend to the Congress a number of important legislative proposals.
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MESSAGE OF THE PRESIDENT
In the immediate future, I shall forward a message emphasizing the
urgency of enactment of an adequate program of Federal aid for school
construction, and a message on my proposals for amendment of our
immigration laws. In connection with the administration's proposals
on education, this budget provides for the start of a 4-year program
of aid for school construction.
Two areas need earnest and prompt attention with a view to
determining whether new national policies should be adopted in the
light of reports and recommendations now pending in the Congress.
These are numerous detailed recommendations of the second Hoover
Commission which the committees were unable to consider prior to
adjournment of the 84th Congress and the proposals made by the
Advisory Committee on Transport Policy and Organization. Legisla-
tion to carry out the recommendations of the Committee was the
subject of hearings during the last Congress. Because of the impor-
tance of strengthening our transportation system, these hearings
should be completed in the present session. Proposals for legislation
will again be submitted by the Secretary of Commerce.
Substantial budget increases are recommended for existing activities
which will improve the health of the American people. The Congress
is also urged to enact legislation under which the Federal Government
can help the medical and dental schools to build more and better
teaching, as well as research, facilities to prevent the already acute
shortage of trained medical manpower from becoming critical. It is
also time to enact the necessary statutory basis for expansion and
improvement of voluntary health insurance plans under which smaller
insurance companies and nonprofit associations could pool their
resources and experience.
In the welfare field, additional funds are likewise provided in the
budget, and the Congress is urged to enact a new program of grants to
the States to help fight juvenile delinquency.
In recent years, a succession of legislative enactments has moved a
long way toward the goal of universal social security coverage, but
there are a number of collateral steps which will add much to the
meaning of our social security system as a whole. In part, these
steps can be taken by budgetary action, for example, by giving particu-
lar attention to the needs of the rapidly increasing number of older
persons in our society. Other steps will require legislation. First,
the unemployment insurance system should be extended and im-
proved. Similarly, congressional action is recommended to extend
the Fair Labor Standards Act to additional workers. The Secretary
of Labor will make recommendations on this act when hearings are
held by the committees of the Congress. The Federal 8-hour laws
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MESSAGE OF THE PRESIDENT
should be revised and brought up to date and legislation should be
enacted to assure equal pay for equal work. A modest program of
grants under which the States can increase their efforts to improve
occupational safety should be initiated. Likewise, legislation should
be enacted to require the registration of employee pension and welfare
funds to protect the interests of beneficiaries.
Of particular importance are recommendations to protect and
foster the initiative of the small businessman. The Small Business
Act should be extended. In order that small business may have
better opportunity to secure adequate financing, issues of securities
up to 500 thousand dollars should be exempted from the regular
registration provisions of the Securities Act of 1933. Similarly, the
Congress should enact legislation providing for notification to the
Federal Government of proposed business mergers, and should amend
the procedural provisions of the antitrust laws to facilitate their
enforcement. Wage reporting for income tax and social security
purposes should be consolidated and simplified. Other means of
assisting small business will be discussed in the Economic Report.
I repeat my recommendation of last year for the prompt enactment
of appropriate authority under which communities can be assisted in
solving basic problems of persistent unemployment.
At the present time, I do not contemplate proposing an extensive
program of personnel legislation comparable to the numerous construc-
tive measures enacted in the last several years. Certain needed
improvements in central personnel management are discussed in the
general government section of my budget analysis. All of these
measures deserve early attention and enactment by the Congress.
In addition, the Secretary of Defense is now studying recommenda-
tions of his Advisory Committee on Professional and Technical
Compensation. Any legislative recommendations growing out of
the work of this committee respecting personnel policies and com-
pensation systems of the military services will be presented at a
later time.
We should not let another year go by without taking the necessary
action to place the Post Office on a pay-as-you-go fiscal basis. The
case for adjusting postal rates needs no further justification. It is
supported by a vast majority of the general public as well as by most
of the business community. The administration has demonstrated
its capacity for improving the postal service, installing new and
more efficient methods and equipment, and cutting costs in accord-
ance with good business practice. The Congress should take the
further action needed to reduce the huge postal deficit. Then the
400000-57?ra 3
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M20 MESSAGE OF THE PRESIDENT
further improvements needed in equipment and facilities can be
made so that the American people may receive the mail service they
deserve and have the right to expect.
Various agencies are being asked to review with the Congress the
interest rates charged by the Government in connection with different
kinds of loans, several of which have a fixed statutory maximum
established when interest costs were much lower than today. It is
desirable that there be more consistency and that more discretion be
allowed in determining what going rates should be, dependent on
the period of the loans and their conditions.
Recommendations concerned with proposed legislative changes in
our housing laws will be found in the section of my budget analysis
carrying the heading "Commerce and housing."
With respect to farm legislation, certain changes are being recom-
mended in the corn program. Farmers who use all the wheat grown
on their own farms for seed, feed, or food should be exempt from
marketing quotas and penalties. The basic authority for disposal of
surplus farm commodities for foreign currencies, title I of Public Law
480 of the 83d Congress, should be extended for 1 year and an addi-
tional 1 billion dollars of authorization for losses under this title
should be provided. Legislation should also be enacted authorizing
the barter of nonstrategic Government-owned agricultural surpluses
to the nations of Eastern Europe.
The program of the administration in the field of natural resources
is fully set forth in that section of the budget analysis. It will not
be repeated here, except to indicate my continuing firm support of
the necessary legislative action to enable Federal agencies to par-
ticipate more fully with States, local governments, and private groups
in the development of partnership resources projects. I urge once
again the prompt enactment of legislation which will enable the
Fryingpan-Arkansas multiple-purpose project to get underway in the
fiscal year 1958.
I also recommend prompt action by the Congress to decide how the
Niagara power project can best be developed.
In returning the Harris-Fulbright natural gas bill to the 84th
Congress without my approval, I stated that legislation conforming to
the basic objectives of that bill was needed. I am still of that opinion.
It is essential that consumers of natural gas be protected. We must
endeavor to make sure that there will be continued exploration and
development of adequate field supplies of gas, and that producers'
sales prices are arrived at fairly and competitively. In this way, and
with authority vested in the Federal Power Commission to regulate
interstate pipelines as to the price at which gas may be charged as an
item of cost in fixing their rates, the price to the public will be fair.
Legislation freeing gas producers from public utility-type regulation
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MESSAGE OF THE PRESIDENT m21
is essential if the incentives to find and develop new supplies of gas
are to be preserved and sales of gas to interstate markets are not to
be discouraged to the detriment of both consumers and producers,
as well as the national interest.
The Congress is urged to carry out the proposals of the Judicial Con-
ference for additional Federal judges. Also, when a district or
circuit court judge who is the senior judge of the district or circuit
becomes 70 and chooses not to retire, he should be relieved of his
administrative duties. Furthermore, whenever a district court
judge reaches 70 and chooses not to retire, the Congress should pro-
vide that upon certification by the Judicial Conference of the need
therefor, the President would be authorized to appoint an additional
judge. When the judge who had reached 70 dies or retires, the
vacancy thus created would not be filled.
Although it is not within my province to make any recommenda-
tion, I am deeply interested in the suggestion which has been made that
the Congress should consider inviting the Chief Justice of the United
States to address the Congress annually on the work of the judiciary
and to present the recommendations of the Judicial Conference.
I recommend again that the Congress enact suitable legislation pro-
viding for home rule in the District of Columbia. Under any such
system the citizens of the District should be authorized to elect local
officials, to vote in Federal elections, and to have a delegate in the
House of Representatives.
I also recommend the enactment of legislation admitting Hawaii
into the Union as a State, and that, subject to area limitations and
other safeguards for the conduct of defense activities so vitally neces-
sary to our national security, statehood also be conferred upon Alaska.
The platforms of both major parties have advocated an amend-
ment of the Constitution to insure equal rights for women. I believe
that the Congress should make certain that women are not denied
equal rights with men. Similarly, I believe that the Congress should
propose a constitutional amendment lowering the voting age in
Federal elections.
As has already been indicated in the State of the Union message,
continuation of military and economic assistance to the free nations
of the world is a keystone of the administration's efforts to promote
peace, collective security, and well-being for all peoples. Essential
complements of these assistance programs are steps to increase inter-
national trade and investment. Both can be materially advanced by
taking the actions necessary to avoid unfair tax duplications on busi-
ness conducted overseas and by the prompt enactment of legislation
approving United States membership in the proposed Organization
for Trade Cooperation. This administrative agency will greatly aid
the orderly operation of existing arrangements governing multilateral
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MESSAGE OF THE PRESIDENT
trade to help prevent discrimination and restrictions against our
foreign commerce.
Although necessity forces us to keep ever in mind the destructive
power of nuclear weapons, it is equally essential that we keep in
mind the firm determination of the United States to share the fruits of
its efforts to develop the peaceful uses for atomic energy. Seventy-
two nations have now signed the charter of the International Atomic
Energy Agency, which was established under the auspices of the United
Nations. Prompt action by the Congress is needed to authorize full
participation by the United States in the work of this Agency. The
United States has offered for distribution through this Agency 5,000
kilograms of fissionable uranium 235 out of the 20,000 kilograms pre-
viously offered for atomic research and power uses in other nations,
as part of our atoms-for-peace program.
The analysis of the budget discusses present programs for veterans.
A special message recommending changes needed in these programs
will be transmitted to the Congress.
The remaining items to which special attention should be directed
are (1) authorization to the President to make awards for distin-
guished civilian achievement, (2) establishment of a Federal Advisory
Commission on the Arts, (3) acquisition and maintenance of an official
residence for the Vice President, and (4) amendment of the Govern-
ment Corporation Control Act to provide for budget and audit con-
trol over Government corporations which are authorized, directly or
indirectly, to obtain or utilize Federal funds. It is also recommended
that the Congress give further consideration to legislation which
would place Government appropriations on an accrued expenditure
basis.
The other proposals which are parts of the administration's legis-
lative program are discussed in my analysis of the budget. The fact
that they are not included in this summary presentation in no way
detracts from their importance or the strength of my recommenda-
tion that they be considered and enacted by the Congress in its
present session.
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MESSAGE OF THE PRESIDENT
ANALYSIS OF THE BUDGET
I am presenting my budgetary recommendations in greater detail
under nine major program headings in the analysis of the budget
which follows this message. The Economic Report will contain a
further discussion of some of these proposals.
It is always difficult to make plans and forecast expenditures a year
or more in advance. This is particularly true when historic events
are taking place in Eastern Europe, when United Nations forces are
deployed in the Middle East, when uncertainties abound in other
parts of the world, and when in our own land economic change is
continuous. This budget has taken into account present conditions
and developments which today appear most likely at home and abroad.
It provides funds for all necessary Government activities on a reason-
able scale, and efforts will continue to be made by every executive
department and agency to improve efficiency and to maintain expendi-
tures well within the budget estimates. It is a carefully balanced
budget?balanced in its receipts and expenditures, balanced in its
choice of programs. I consider it well adapted to the needs of the
present and the future.
DWIGHT D. EISENHOWER.
JANUARY 16, 1957.
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M24
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MESSAGE OF THE PRESIDENT
SUMMARY OF NEW OBLIGATIONAL AUTHORITY
BY FUNCTION AND AGENCY
Based on existing and proposed legislation
(Fiscal years. In millions]
Description
1956 enacted
1957 estimate
1958 estimate
Enacted
Proposed
for later
transmission
Total
Recommended
in this
document
Proposed
for later
transmisSion
Total
BY FUNCTION
Major national security
$35, 903
$40, 166
$200
$40, 366
$38, 772
$4, 828
$43, 600
International affairs and finance
2, 123
2, 231
2
2, 233
510
1, 950
2, 460
Veterans' services and benefits
4, 823
4, 807
82
4, 890
4, 942
100
5, 042
Labor and welfare
2, 860
2, 913
283
3, 196
3, 818
481
3, 799
Agriculture and agricultural resources
3, 310
5, 069
27
5, 096
4, 767
25
4, 792
Natural resources
1, 213
1, 351
40
1, 391
1, 476
83
1, 559
Commerce and housing
4, 526
3, 329
662
3, 992
2, 165
626
2, 791
General government
1,595
1,826
1,851
1,430
8
1,438
Interest
6, 846
7, 260
?25
7, 260
7, 360
7, 360
Allowance for contingencies
250
250
500
500
Total new obligational authority
63, 198
68, 952
1, 572
70, 524
64, 741
8, 600
73, 341
BY AGENCY
Legislative branch
199
90
90
95
95
The judiciary
37
39
(0
40
45
45
Executive Office of the President
10
11
11
12
12
Funds appropriated to the President:
Mutual security
2, 703
3, 804
3, 804
4, 400
4, 400
Other
50
26
26
35
_,
35
Independent offices: .
Atomic Energy Commission
1, 179
1, 961
1, 961
2, 400
120
2, 520
Veterans Administration
4, 800
4, 878
82
4, 960
4, 890
100
4, 990
Other
768
1, 148
51
1, 198
651
192
844
General Services Administration
709
236
24
259
447
447
Housing and Home Finance Agency
888
1, 116
551
1, 666
164
1, 030
1, 194
Department of Agriculture
3, 598
5, 853
33
5, 886
5, 133
25
5, 158
Department of Commerce
2, 736
703
61
764
891
53
944
Department of Defense-Military Functions
33, 187
36, 187
200
36, 387
36, 242
2, 258
38, 500
Department of Defense-Civil Functions
666
664
1
665
685
19
703
Department of Health, Education, and Welfare
2, 107
2, 224
282
2, 506
2, 593
478
3, 071
Department of the Interior
516
623
34
657
711
7
718
Department of Justice
211
216
(1)
216
235
235
Department of Labor
470
' 431
(9
431
435
3
438
Post Office Department
470
483
483
651
2 584
67
Department of State ,
149
224
2
226
230
230
Treasury Department
7, 716
8, 003
1
8, 003
8, 154
8, 154
District of Columbia
30
33
33
42
42
Allowance for contingencies
250
250
500
500
Total new obligational authority
63, 198
68, 952
1, 572
70, 524
64, 741
8, 600
73, 341
Less than one-half million dollars.
3 Deduct, made up of 654 million dollars proposed postal rate adjustment offset in part by a 70-million-dollar supplemental appropriation for capital outlay.
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MESSAGE OF THE PRESIDENT
SUMMARY OF BUDGET EXPENDITURES
BY FUNCTION AND AGENCY
Based on existing and proposed legislation
(Fiscal years. In millions]
M25
Description
1956 actual
1957 estimate
1958 estimate
Gross ex-
penditures
Applicable
receipts 1
Net ex-
penditures
Gross ex-
penditures
Applicable
receipts 1
Net ex-
penditures
Gross ex-
penditures
Applicable
receipts 1
Net ex-
penditures
BY FUNCTION
Vlajor national security
$40,
845
$204
$40,
641
$41, 303
$338
$40,
965
$43,
621
$286
$43,
335
:nternational affairs and finance
veterans' services and benefits
2,
4,
151
804
305
48
1,
4,
846
756
2, 767
4, 906
384
55
2,
4,
382
851
2,
5,
878
085
434
57
2.
5,
444
027
Labor and welfare
griculture and agricultural resources_ _
2,
9,
778
060
2
4, 146
2,
4,
776
913
3, 035
9, 560
3
4, 859
3,
4,
032
701
3,
8,
542
123
4
3, 159
3,
4,
538
965
N'atural resources
1,
361
257
1,
104
1, 649
278
1,
371
1,
836
298
1,
538
Dommerce and housing
5,
958
3, 931
2,
028
6, 574
4, 305
2,
269
6,
904
5, 156
1,
748
3eneral government
1,
633
4
1,
629
1, 873
3
1,
870
1,
455
3
1,
451
:nterest
illowance for contingencies
6,
846
6,
846
7, 260
200
7,
260
200
7,
360
400
7,
360
400
Total budget expenditures
75,
436
8, 896
66,
540
79, 127
10, 227
68,
900
81,
203
9, 396
71,
807
BY AGENCY
Legislative branch
85
85
109
109
122
122
The judiciary
37
37
40
40
44
44
Executive Office of the President
10
10
11
11
12
12
Funds appropriated to the President:
Mutual security
4,
204
3
4,
201
4, 107
5
4,
102
4,
363
6
4,
356
Other
475
203
272
369
334
35
344
255
89
[ndependent offices:
Atomic Energy Commission
1,
651
(2)
1,
651
1, 940
(2)
1,
940
2,
340
(2)
2,
340
Veterans Administration
4,
828
98
4,
731
4, 965
108
4,
857
5,
186
118
5,
068
Other
3,
147
2, 547
601
3, 323
1, 867
1,
456
1,
708
822
886
General Services Administration
529
5
523
692
2
690
657
3
654
[-lousing and Home Finance Agency_
1,
043
1, 004
39
2, 087
1,368
719
1,
937
1, 546
391
Department of Agriculture
7,
376
2, 199
5,
177
8, 865
3, 714
5,
152
8,
481
3, 151
5,
330
Department of Commerce
1,
321
28
1,
293
,672
28
644
801
29
772
Department of D e f ens e-Military
Functions
35,
791
(2)
35,
791
36, 005
5
36,
000
38,
031
31
38,
000
Department of Defense-Civil Func-
tions
672
99
573
742
93
649
784
85
700
Department of Health, Education, and
Welfare
2,
073
2
2,
071
2, 364
2
2,
361
2,
834
3
2,
831
Department of the Interior
546
35
512
681
29
652
737
32
709
Department of Justice
216
216
214
214
226
22E
Department of Labor
414
2
412
412
3
409
422
4
41E
Post Office Department
2,
913
2, 450
463
3, 015
2, 556
459
3,
354
3, 296
5E
Department of State
142
142
184
184
230
23(
Treasury Department
7,
941
221
7,
719
8, 102
110
7,
992
8,
149
16
8,
13`2.
District of Columbia
22
22
27
27
43
4:,'
Allowance for contingencies
200
200
400
40(
Total budget expenditures
75,
436
8, 896
66,
540
79, 127
10, 227
68,
900
81,
203
9, 396
71,
801
1 Receipts of certain Government corporations, the postal service, and other revolving funds the receipts of which come primarily from outside the Government. These funds
are listed in the respective chapters of part II as "Public enterprise funds."
Less than one-half million dollars.
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MESSAGE OF THE PRESIDENT
THE PRESIDENT'S ANALYSIS OF THE
BUDGET
The budget recommendations for the fiscal year 1958 are accom-
panied by revised estimates for the current fiscal year, 1957, and by
reports on the results of Government operations for the year ended
June 30, 1956.
The final results for the fiscal year 1956 show a budget surplus of
1,626 million dollars, a net decrease of 128 million dollars from the
preliminary figures reported in August in the midyear review of the
budget. The decline is due to the inclusion of transactions which
were not fully reported by August.
The current estimate of budget receipts for the fiscal year 1957
exceeds the estimate of 69.8 billion dollars made last August by 828
million dollars. This increase is due mainly to greater indicated
receipts from the individual income tax.
Budget expenditures for 1957 are now estimated to be 193 million
dollars less than the 69.1 billion dollars anticipated in the midyear
review. The principal changes in the estimated expenditures are:
(1) A downward revision of 1 billion dollars for the Department
of Agriculture, mainly because of reduced estimates of price sup-
port disbursements and higher estimates of commodity sales.
(2) A decline of 248 million dollars for the economic portion
of the mutual security program, partly because certain country
programs have been revised to place greater emphasis on long-
range development projects.
(3) An increase of 586 million dollars for the Housing and
Home Finance Agency, mainly for advances to the Federal
National Mortgage Association for its secondary market opera-
tions.
(4) An increase of 497 million dollars in the estimated net
expenditures of the Export-Import Bank, due to a larger volume
of loans and to lowered estimates of private participation in the
Bank's loans.
Discussion of each of the major programs of the Government follows,
with emphasis on recommendations for the fiscal year 1958.
MAJOR NATIONAL SECURITY
Events in recent months have dramatized the need for strong collec-
tive security. The military strength of the United States is a bul-
wark for world peace and freedom. A large share of the budget must
go to maintain the Nation's military forces in their present high state
of readiness and to introduce new weapons. Also, effective support
must be given to the defense forces of other nations. Advances in
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MESSAGE OF THE PRESIDENT m27
nuclear technology must be applied to improving national defense and,
in increasing degree, to peacetime uses in the United States and the
rest of the free world.
MAJOR NATIONAL SECURITY
[Ficcal years. In millions)
Program or agency
New obligational authority
Expenditures
1956
actual
1957
estimate
1958
estimate
1956
actual
1957
estimate
1958
estimate
Gross budget expenditures:
Department of Defenso?military
functions:
Direction and coordination of
defense
$13
$15
$17
$14
$14
$17
Air Force defense
15, 517
17, 690
16, 481
16, 749
16,890
17, 472
Army defense
7,354
7, 645
8,535
8, 702
8. 581
9, 131
Navy defense
9, 648
10, 200
10,517
9, 745
9, 732
10,349
Other central defense activities_
654
637
688
582
637
714
Proposed for later transmission
200
2, 258
150
347
Total, Department of Defense__
33, 187
36,387
38, 500
35,791
36,005
38,031
Development and control of atomic
energy:
Present program
1, 179
1,961
2,400
1,651
1,940
2,310
Proposed legislation_
120
30
Stockpiling and defense production
expansion
. 521
130
791
759
650
Mutual security program?military:
Present program
1,016
2,018
2,611
2,690
2, 100
Proposed legislation
2,450
500
Total
38,903
40,366
43, 600
40,845
41, 303
43, 621
Deduct applicable receipts:
Department of Defense?military
functions
(I)
5
31
Defense production expansion
203
334
255
Net budget expenditures
40, 641
40,965
43,335
I Less than one-half million dollars.
Department of Defense, military functions.?The defense program
involves four basic military missions in which each of the military
services has an active role. New and vastly superior weapons have
a profound impact on each mission and on the size and composition?
of the military budget. The budget recommendations for the fiscal
year 1958 reflect adjustments that have been made in the contribu-
tions of the individual military departments to the four basic military
missions.
One mission is to maintain ready nuclear-air-retaliatory forces so
strong that they will deter a potential aggressor from initiating an
attack. Procurement in the fiscal year 1958 will provide for equipping
the heavy bomber wings of the Strategic Air Command with 45 all-jet
B-52 aircraft in place of the present smaller number of 30 I3-36's.
400000-57-1M 4
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MESSAGE OF THE PRESIDENT
The gradual elimination of strategic fighter wings, which are no longer
considered necessary, will be completed. The striking power of the
Navy will be enhanced by the addition of new and modernized attack
carriers, jet aircraft capable of higher speeds and higher altitudes,
atomic submarines, and guided missile ships.
A second mission is to build a defense system which will minimize
the chances of a successful attack on this continent. The Continental
Air Defense Command has been assigned operational control over all
forces and weapons made available for the air defense mission.
The Command's radar warning network, extending from the central
Pacific around the northern perimeter of North America and across
the Atlantic approaches, will be largely in operation during the fiscal
year 1958. The interceptor squadrons of the Air Force will be further
' strengthened with the delivery of still better aircraft, and the anti-
aircraft missile capabilities of the Army will be expanded. The
Navy's antisubmarine warfare capability is being improved to meet
the threat of missiles launched from submarines.
A third mission is to maintain mobile and versatile forces suitably
deployed and ready for immediate action in case of aggression. Army
divisions are being reorganized into more flexible units supported with
the latest atomic weapons and with aviation units. In addition, the
Army will increase the number of atomic support commands which
are particularly suitable as back-up for the ground forces of allied
countries. Taking advantage of the greater firepower and mobility
gained from the new units and equipment, the number of Army
divisions will be reduced by one during the fiscal year 1958. The
greater mobility and effectiveness of tactical aircraft coupled with
the growing guided missile capabilities of the Army, permit a reduc-
tion in the number of Air Force tactical wings. The three Marine
divisions and air wings are now equipped with a variety of atomic
weapons and are continually improving their capability for am-
phibious assault operations.
A fourth mission, to maintain control of the essential sea areas and
lines of communication in case of war, is primarily the task of the
Navy, although the Air Force and elements of the other services have
an important part. The modern ships, aircraft, and weapons being
added to the Armed Forces are improving capabilities for performing
this mission as well as the first three missions. As new ships are
added to the fleet, older ships will be retired and the number of active
ships in the fiscal year 1958 will remain about the same.
The means of accomplishing these basic military missions constantly
change as new weapons are introduced. The Secretary of Defense
recently issued a clarification of the basic roles and missions of the
military services. It covered the use of aircraft by the Army; the
adequacy of airlift; the development, procurement, and operation of
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MESSAGE OF THE PRESIDENT
surface-to-air guided missiles; the operational deployment of inter-
mediate range ballistic missiles; and the tactical air support of the
Army.
New authority to incur obligations totaling 38.5 billion dollars for
the fiscal year 1958 is recommended for the military functions of the
Department of Defense. Expenditures are estimated to increase from
36 billion dollars in 1957 to 38 billion dollars in 1958.
DEPARTMENT OF DEFENSE?MILITARY FUNCTIONS COSTS BY MAJOR CATEGORIES
(Based on existing and proposed legislation)
[Fiscal years. In millions]
Cost category
Budget expend'tures
It ecom-
m ended new
obligat tonal
authority
for 1958
1956
actual
1957
estimate
19'18
estimate
Military personnel:
Active forces
$10,666
$10,321
$10, $24
$10, 664
Retired pay
477
515
543
555
Operation and maintenance
8510
9,100
9,598
9 847
Major procurement and production
(12, 204)
(11, 731)
(12, 273)
(12, 030)
Aircraft
7, 146
6, 786
6, 737
6,232
Ships
917
928
1,040
1,555
Guided missiles
1, 168
1, 506
2,030
2, 646
Other
2,973
2,311
2,457
1,597
Military public works
2,008
1,073
2, 242
2,122
Reserve components
854
1,055
1,237
1,237
Research and development
1, 495
1, 540
1, 580
1.651
Establishmentwide activities
211
354
401
394
Working capital (revolving) funds
?643
?589
?398
Total
35, 791
36,000
38, 000
38, 500
I Compares with new obligational authority of 33,187 million dollars in 1956 and 36,387 million dollars in
1957.
This budget provides for an average active duty military personnel
strength for the fiscal year 1958 of approximately 2.8 million. The
Army, Navy, and Marine Corps will hold to about their current
numbers while the Air Force will be increased by several thousand men.
Operation and maintenance costs will rise in the fiscal year 1958.
The larger number of bases and other installations and the growing
complexity of new weapons systems, particularly guided missiles and
aircraft, are the primary reasons for this increase.
Major procurement and production expenditures in the fiscal year
1958 are estimated to be 542 million dollars more than in the current
year. Expenditures for guided missiles will be up 35 percent; for ship
construction, up about 12 percent; and for aircraft procurement will
remain at about the same level. Expenditures for all other types of
major procurement are estimated to be about 2 percent less than in
the current fiscalgear.
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MESSAGE OF THE PRESIDENT
EXPENDITURES FOR DEPARTMENT OF DEFENSE?MILITARY
Military Personnel
Procurement
and Production
? 29%
`?
Operation and
Maintenance
25% ?
0,6%!
Military Public Works
Other
Fiscal Year 1958 Estimate
The new obligational authority needed for the Air Force procure-
ment program for the fiscal year 1958 is less than it otherwise would
have been because of the additional appropriations for this purpose
voted by the Congress last year. Together, these appropriations will
provide sufficient funds for Air Force aircraft and related procure-
ment in the current year and in the fiscal year 1958.
Expenditures for military public works in the United States and
overseas will be about 14 percent above the current year. This
budget provides for proposed legislation to authorize new bases
and facilities for continental air defense, for further work on dispers-
ing and improving heavy bomber bases, and for essential facilities for
naval operating forces.
Research and development will continue at the same high level as
in the current fiscal year. When the portions of appropriations for
procurement, military personnel, and public works which contribute
to research and development, testing and evaluation are also con-
sidered, the total devoted to these purposes will be somewhat more
than the 5.2 billion dollars programed for the current fiscal year. A
steady military research and development effort must be maintained
over the years to assure a constant flow of new and more effective
weapons for the future.
Expenditures for the reserve components will increase in the fiscal
year 1958. Major emphasis will be placed on improving the quality
and combat readiness of the Reserve Forces through modernization
of equipment and better selection and training of reserve personnel.
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MESSAGE OF THE PRESIDENT
The overall quality and readiness of the Reserve Forces, already
higher than ever before in the peacetime history of the Nation, will
be even more effective by the end of the coming fiscal year.
Civil defense.?All levels of government have made encouraging
progress in preparing for civil defense since the Federal Civil Defense
Act was approved in 1951. These gains have been partly offset by
the increasingly destructive capabilities of nuclear weapons. In the
light of these developments, the administration will transmit to
the Congress recommendations for amendment of the Federal Civil
Defense Act which will enable the Federal Government better to
meet its responsibilities. To achieve maximum results, civil defense
must continue to be a cooperative effort with State and local govern-
ments. Individual and local initiative and resourcefulness must be
our ultimate reliance during an initial recovery period.
This budget provides under existing legislation for extending civil
defense programs for public education, information, and training, and
for a larger Federal staff to give assistance to the States and cities.
Appropriations are included for an attack warning system which
will quickly transmit warnings from the Air Force to certain key
areas. Stockpiling of emergency hospital equipment and radiological
detection equipment will be continued; and a substantial program
of research on radiological defense, on shelter design, and on bomb-
damage assessment will be carried forward.
Funds for civil defense activities are included in the commerce and
housing section of this analysis.
Development and control of atomic energy.?Until an agreement for
limitation of armaments is negotiated and an effective inspection sys-
tem is functioning, this Nation will continue to increase the number
and variety of nuclear weapons. In the fiscal year 1958, emphasis
will be placed on weapons for tactical purposes and weapons with
reduced radioactive fallout. The substantial present effort to develop
military propulsion reactors will be continued.
Efforts to develop the peaceful uses of atomic energy will be greatly
increased, particularly the development of reactors to produce atomic
power at competitive prices.
This budget provides for increased effort by the Atomic Energy
Commission to explore new power reactor concepts, to fabricate and
operate reactor experiments, and to develop the basic reactor tech-
nology essential to the Nation's progress and leadership in the field.
Increased support will also be given to the growing activities by private
industry and public power bodies in power reactor development.
In the belief that basic responsibility for construction of large-scale
commercial power reactors should not have to be assumed by the
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M32 MESSAGE OF THE PRESIDENT
Federal Government, no funds for construction of new large-scale
reactors are proposed in this budget. A number of new proposals
from non-Federal interests are now being developed. However, if
acceptable proposals for non-Federal construction of promising reactor
types do not materialize within a reasonable time, a request will be
made to the Congress for funds for direct construction by the Federal
Government.
As a further and necessary step to facilitate industry's investment
in atomic powerplants, legislation will again be proposed to authorize
the Government to supplement commercially available insurance
against liability arising from possible nuclear accidents.
More resources will be applied to the longer term effort to develop
thermonuclear power reactors. Increased research is planned for
1958 on the problems arising from the numerous and extensive appli-
cations of atomic energy, such as reactor safety, radioactive waste
disposal, and the biological effects of radiation. At the same time,
support of research in nuclear physics and in new uses of atomic
energy in biology, medicine, agriculture, and industry will be strength-
ened. Also, the budget provides for increases in equipment grants
and in teacher training to improve education in nuclear technology
and to help alleviate the shortage of nuclear scientists and engineers.
In order to help other nations develop their own atomic energy
programs, the 1958 budget provides for training centers in the United
States and abroad, equipment grants, and other technical assistance
from appropriations for the Atomic Energy Commission and the
mutual security program. Four nations have already accepted and
many others are expected to accept the United States offer to share the
costs of building research reactors. A number of nations have indi-
cated interest in procuring power reactors in this country, and the
Export-Import Bank will consider applications for loans to finance
such procurement. The budget also includes funds for United States
participation in a second world conference on the peaceful uses of
atomic energy to be held in calendar year 1958.
Stockpiling and defense production.?By the end of the current fiscal
year, the stockpile of strategic and critical materials, such as rubber,
aluminum, copper, and nickel, will have reached a value greater than 6
billion dollars. Further acquisitions toward the stockpile objectives
will be limited in most instances to (1) materials for which contracts
have already been made; (2) materials which can be procured at
favorable prices and which will serve to maintain the mobilization
base; and (3) materials obtained in exchange for surplus agricultural
products.
Mutual security program, military.?The armed forces of 38 coun-
tries receive military equipment and training through the military
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MESSAGE OF THE PRESIDENT m33
assistance portion of the mutual security program. This assistance
bolsters the military forces of countries faced with a threat of external
aggression or internal subversion.
Military assistance plans for the fiscal year 1958 have been related
to the plans for this Nation's military establishment. As in the case
of United States forces, a large part of the funds will be used for new
types of weapons for air defense.
In the fiscal years 1957 and 1958, an increasing amount of military
assistance equipment is to be furnished on a reimbursable rather than
a grant basis. Changes in legislation will be recommended to facilitate
these sales.
The level of unexpended balances for military assistance will have
been reduced for 5 successive years. The Department of Defense
has made significant improvements in the operation of this program
in this fiscal year, especially in the timing of orders and the utiliza-
tion of funds.
The new obligational authority of 2,450 million dollars recommended
in this budget for military assistance has been included as an appro-
priation to the President, as in previous years. Consideration is
being given as to what pattern of appropriations will best serve the
aims of the Government in providing military assistance.
MUTUAL SECURITY PROGRAM
[Fiscal years. In millions]
Budget expenditures
Recom-
mended new
obligational
authority
for 1958
1956
actual
1957
estimate
1958
estimate
Present program
$2,611
$2,600
$2,100
Proposed legislation
500
$2, 450
Economic, technical, and other: 2
Present program
1,587
1,500
1,150
Proposed legislation
600
1,950
Total
4, 198
4, 100
4, 350
s 4, 400
Budget expenditures for military assistance do not reflect proceeds from sa e of military equipment
previously procured with military assistance funds, since these proceeds go directly into miscellaneous
receipts of the Treasury.
2 Discussed in the international affairs and finance section of this analysis. Excludes investment guaranty
program.
Compares with new obligational authority of 2,703 million dollars in 1956 and 3,767 million dollars in 1957,
excluding investment guaranty program.
INTERNATIONAL AFFAIRS AND FINANCE
The United States can work toward its goal of lasting peace by
continuing to help its friends overseas protect their freedom from
foreign domination and better their economic conditions. This
budget is designed to do that. It also provides funds to promote
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M34 MESSAGE OF THE PRESIDENT
international understanding through a wider exchange of ideas and
persons, and to extend a helping hand to refugees from tyranny and
victims of famine.
In the conduct of our international affairs it is necessary to allow
for appropriate flexibility in choosing the proper channel to meet each
particular situation. In many instances the most effective way to
achieve United States objectives, particularly in the political area, is
to work through the United Nations. In other instances it may be
more effective to utilize regional organizations such as the North
Atlantic Treaty Organization and the Organization of American States.
The Government will, of course, continue to conduct a major part of
its economic and military assistance bilaterally, by dealing directly
with other governments through conventional channels, including the
Export-Import Bank. In addition, the International Bank for Re-
construction and Development and the International Monetary Fund
will undoubtedly continue their active and sound programs of lending
for economic development and of strengthening the exchange systems
of their members, relying in part on the capital subscriptions and
guaranties of the United States Government. The United States
Government will also work through the many private welfare organi-
zations operating abroad.
INTERNATIONAL AFFAIRS AND FINANCE
[Fiscal years. In millions]
Program or agency
Budget expenditures
Recom-
mended new
obligational
authority
for 1958
1956
actual
1957
estimate
1958
estimate
Gross budget expenditures:
Economic and technical development:
Mutual security program?economic, technical,
and other:
Present program
$1,587
$1,500
$1, 150
Proposed legislation
600
$1, 950
Investment guaranty program
6
7
13
Export-Import Bank
212
776
670
Emergency commodity assistance (Department of
Agriculture)
94
127
45
94
Other
22
69
32
27
Foreign information and exchange activities:
United States Information Agency
86
103
128
144
Department of State
20
21
29
35
President's Special International Program
5
9
18
20
Conduct of foreign affairs (Department of State and
other)
120
155
194
189
Total
2, 151
2, 767
2,878
1 2, 460
Deduct applicable receipts:
Investment guaranty program
3
5
6
Export-Import Bank
302
379
427
Net budget expenditures
1, 846
2,382
2,444
Compares with new obligations] authority of 2,123 million dollars in 1956 and 2,233 million dollars in
1957.
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MESSAGE OF THE PRESIDENT
The Government's varied overseas activities have been, and are
being, regularly reviewed. For example, recommendations to improve
our mutual security operations are being developed by the President's
Citizen Advisers on the Mutual Security Program. Special studies
are also being conducted by the Senate Foreign Relations and House
Foreign Affairs Committees. A special message on the mutual secu-
rity program will be sent to the Congress after due consideration has
been given to the recommendations and studies that have been
completed.
Mutual security program, economic, technical, and other.?In order
that the United States may continue to help cooperating countries to
develop their economies and to meet the burdens of maintaining mili-
tary strength, the budget provides for an appropriation of 1,950
million dollars for the fiscal year 1958 for the nonmilitary portion of
the mutual security program. The military assistance portion of the
mutual security program was discussed in the major national security
section of this analysis. Total appropriations recommended for the
two portions together in 1958 are 4,400 million dollars, compared
with 3,804 million dollars enacted for 1957 and 4,860 million dollars
recommended for 1957 one year ago in the 1957 budget.
Expenditures for economic assistance are estimated at a moderately
higher level in the fiscal year 1958 than in the current fiscal year,
carrying on our help in the development of the economic potential
of less developed countries. Many of these countries have recently
won their independence. Such development should add to the
stability of their institutions, and tend to remove long-run causes of
international friction. A significant part of the expenditures for
economic development will be in the form of loans.
When the special message on mutual security is presented to the
Congress, the mutual security appropriations recommended in this
budget will be identified with specific activities, insofar as the kinds
and amounts of assistance can be reasonably forecast. However,
there are many changing situations in the world today and it is
necessary to be able to meet these situations quickly and flexibly.
The amount recommended for the economic portion of the Mutual
Security Program includes certain funds to be appropriated on this
basis.
Middle East.?An important example of this type of changing
situation was discussed in the recent message on the Middle East.
The message emphasized the importance of that area of the world
and recommended policies designed to strengthen the countries of
that area. Currently available funds can be used to meet 1957
requirements. The recommended 1958 appropriations of 4,400 million
4 00000-57--,--PR 5
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MESSAGE OF THE PRESIDENT
dollars for the total mutual security program include 200 million
dollars to be available for discretionary use in the Middle East, in
addition to the specific country programs for the area. In order
to make most effective use of these funds, especially in relation to
solving some of the current problems, it is essential that adequate
flexibility be permitted in their use.
International investments and loans.?Loans by the Export-Import
Bank for development projects and for assisting the export of United
States goods are expected to continue at a high level in the coming
fiscal year.
The estimated increase since 1956 in expenditures of the Bank
results both from the current rate of loans and from reduced esti-
mates of private participation in the Bank's loans because of attrac-
tive alternative private investment opportunities in the United States.
Despite rising collections of the Export-Import Bank from loan
repayments, the increase in expenditures is estimated to result in a
change from net receipts of 90 million dollars in the fiscal year 1956
to net expenditures of 243 million dollars in 1958. While this budget
proposes no increase in the Bank's presently available borrowing
authority, it may later become necessary to request some increase in
borrowing authority to meet future needs.
The International Monetary Fund will be the major source of funds
to strengthen the reserve position of the United Kingdom at the pres-
ent time. The Fund is an international organization to which the
United States has made substantial amounts of capital available in
the past. Therefore, a drawing on these funds does not appear as
an expenditure in the budget now.
The Export-Import Bank recently announced a line of credit
against securities to the United Kingdom for the purchase of United
States products.
The Government of the United Kingdom has also sought a waiver
of the 81 million dollar interest payment that was due last month
under the terms of the Anglo-American Financial Agreement of 1945
and the related lend-lease and surplus property settlement. The
exact applicability of the waiver provisions is now not clear. Since
there have been changes in the conditions envisaged at the time the
agreement was signed, recommendations will shortly be made to the
Congress for appropriate modification of the present language of
the Agreement so as to carry out the spirit of the original intention.
This interest payment has been excluded from the estimates of
receipts for the fiscal year 1957.
Foreign information and exchange activities.?The intensified world-
wide ideological conflict emphasizes the importance of the role of
both the Government and private organizations in exchanging infor-
mation, persons, and ideas abroad. Overseaa information services
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MESSAGE OF THE PRESIDENT
EXPENDITURES FOR FOREIGN INFORMATION AND EXCHANGE
77-? ' " '
. I
1953 1954
Fista I Years
and cultural exchanges are designed to facilitate sympathetic under-
standing of American life, culture, and institutions by other peoples.
Another major role of these programs is to demonstrate to the people
of other nations the way in which American policies and objectives
are in keeping with their own aspirations.
This budget recommends that expenditures in the fiscal year 1958
for the entire range of foreign information and exchange activities?
including exchanges under the Fulbright and Smith-Mundt legislation,
and cultural and trade fair programs abroad?be increased by 42
million dollars over the 1957 estimate. This will permit extension of
this work within the free world, especially in Asia and Africa, as well
as providing more information to those peoples not yet free. Em-
phasis will be placed on person-to-person contacts on both official and
unofficial levels.
Conduct of foreign affairs.?The tasks of the Department of State
have been steadily extended, both in Washington and in a growing
number of overseas posts. The budget recommendations continue
to strengthen the staff and facilities of the Department. Estimated
expenditures in 1958 for the conduct of foreign affairs, including
buildings, are 194 million dollars, 40 million dollars more than in
1957.
COMMERCE AND HOUSING
The capital investment in several Federal programs for commerce
and housing plays an important role in the continued growth of our
economy. In the fiscal year 1958, the Government will (1) carry
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MESSAGE OF THE PRESIDENT
forward improvements in transportation services, (2) acquire facilities
and equipment essential to provide better and more economical
postal service, and (3) assist local communities to complete an in-
creasing number of projects to foster orderly community develop-
ment and to remove slums. At the same time, the Government is
taking steps to aid buyers of homes obtain a reasonable share of the
savings which help to supply the credit necessary to maintain a
satisfactory level of private housing construction.
Budget expenditures for commerce and housing programs, in the
aggregate, are expected to decline from 2.3 billion dollars in the fiscal
year 1957 to 1.7 billion dollars in 1958. Principal changes include
the proposed adjustments in postal rates and other legislation
designed to reduce the postal deficit and the anticipated reductions
in temporary Government loans to finance mortgage purchases.
Other expenditures will rise to help meet the demands of a growing
economy for transportation facilities, housing aids, and community
development.
Promotion of aviation.?Civil and military use of the Federal
airways system continues to grow rapidly. The increasing number of
commercial, private, and military aircraft must be able to fly safely
and on schedule. The military jet aircraft already in use and the jet
airliners that will be operating by 1960 create a whole new range of
problems. The capacity of the air traffic control system must keep
pace.
The comprehensive appraisal of emerging needs for aviation facilities
announced in the budget message last year will be completed soon.
This will set the broad outline for the Federal airways system of the
future. In the meantime, we must install now the best available
traffic control equipment and techniques to keep abreast of the
growing demand.
The 413 million dollars of new obligational authority recommended
for the Civil Aeronautics Administration for 1958 include 150 million
dollars to procure and install airways facilities. These include radar
installations, better communications, and airport approach lights.
In addition, a supplemental appropriation of 26 million dollars will be
requested in 1957 to cover the initial cost of integrating two existing
short-range air navigational systems into a single system capable of
meeting the navigational needs of all users of the airspace.
The recommended 1958 appropriations for the Civil Aeronautics
Administration include 195 million dollars to operate the Federal
airways system and to maintain high safety standards in aircraft
design and operation. The 1958 estimate is about 40 percent above
the 1957 amount.
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MESSAGE OF THE PRESIDENT
COMMERCE AND HOUSING
[Fiscal years. In millions]
Program or agency
Gross budget
expenditures
Net budget
expenditures
Recom-
mended
new ob-
ligational
authority
for 1958
1956
actual
1957
esti-
mate
1958
esti-
mate
1956
actual
1957
esti-
mate
1958
esti-
mate
Promotion of aviation:
Civil Aeronautics Administration
$148
$225
$333
$148
$225
$333
$413
Civil Aeronautics Board
33
39
45
33
39
45
52
National Advisory Committee for
Aeronautics
71
75
86
71
75
86
118
Provision of highways 1
783
44
42
783
44
42
32
Promotion of water transportation:
Department of Commerce
247
232
222
219
204
194
259
Treasury Department
189
213
222
189
213
222
230
Panama Canal Company
105
89
83
12
2
5
Postal Service:
Present program
2,913
3,015
3,284
463
459
642
651
Proposed legislation
70
1 ?584
1 ?584
Community development and facilities:
Urban Renewal Administration:
Present program
35
86
118
17
49
47
2
Proposed legislation
250
Other
15
17
33
?13
14
29
12
Public housing programs
347
590
474
31
71
64
112
Other aids to housing:
Federal Housing Administration
165
145
131
?25
?43
?83
36
Federal National Mortgage Associa-
tion:
Present program
452
1, 052
968
?20
437
140
Proposed legislation
100
100
600
College housing:
Present program
37
91
157
32
85
147
Proposed legislation
175
Veterans Administration
103
127
152
54
73
91
Department of Agriculture
1
28
43
1
28
43
Other
11
13
17
?22
?29
?30
10
Other aids to business:
Small Business Administration:
Present program_ ___________ _ ._ ...
36
84
10
26
68
?8
Proposed legislation
24
87
19
65
66
Area redevelopment (proposed legis-
lation)
10
10
53
Other
119
112
79
?109
?21
38
47
Regulation of commerce and finance
43
47
55
41
45
52
52
Disaster insurance, loans, and relief:
Present program
48
48
72
43
39
63
14
Proposed legislation
2
11
1
10
12
Civil defense:
Present program
57
76
91
56
71
85
130
Proposed legislation
10
10
50
Total
5,958
6, 674
6,904
2,028
2, 269
1,748
3 2, 791
1 In 1957 and 1958, Federal-aid highway expenditures are carried as trust fund transactions.
3 Reflects proposed postal rate adjustment of 654 million dollars offset in part by 70-million-dollar supple-
mental appropriation for capital outlay.
s Compares with new obligational authority of 4,526 million dollars in 1956 and 3,992 million dollars in 1957.
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MESSAGE OF THE PRESIDENT
Grants to communities for airport construction and improvement
will increase. To meet the need for an additional airport for the
District of Columbia, a supplemental appropriation of 35 million
dollars will be requested for the fiscal year 1?57. Although the Con-
gress has been studying alternative solutions, the proposal for a new
airport at the Burke, Virginia, site still appears to be the best long-
term solution to Washington's airport needs.
The success of this country in military and civil aeronautics depends
heavily on the research and development programs of the National
Advisory Committee for Aeronautics. The recommended appropri-
ations of 118 million dollars will enable the Committee to give further
emphasis to basic research upon which the development of the aircraft
of the future must depend. This amount will also permit the acqui-
sition of new, highly specialized facilities for investigation of problems
encountered under widely varying conditions of flight.
Estimated budget expenditures in the fiscal year 1958 for all Fed-
eral aids to aviation, including the continuing subsidy payments by the
Civil Aeronautics Board to certain airlines, will total 464 million
dollars, 85 percent more than the amount spent in 1956.
Government aids to aviation confer substantial special benefits
upon the users of the airspace. As the cost of providing these bene-
fits rises, it becomes increasingly appropriate for the users to share
with the general taxpayers in paying for them.
Highways.?Legislation enacted last year authorized the largest
roadbuilding program in history. In accordance with this legisla-
tion, expenditures for the Federal-aid highway programs of the
Department of Commerce in 1957 and later years will be made from a
separately financed highway trust fund. The receipts and expendi-
tures of the trust fund are discussed later in this section.
Budget expenditures for highways are bow limited to forest high-
ways and other direct Federal construction. They are estimated at
42 million dollars in the fiscal year 1958.
Promotion of water transportation.?The worldwide shortage of
modern oceangoing ships emphasizes the importance of the ship
replacement program begun 2 years ago by the Department of Com-
merce. Most of the United States merchant fleet was built during
World War II and should be replaced over the next 15 to 20 years. In
order that construction may be scheduled on an orderly basis, the
Department is entering into long-term contracts with subsidized ship
operators for the replacement of their ships. It is also guaranteeing
ship mortgages and using other incentives which do not require
substantial expenditures of Federal funds to encourage construction
of other new ships.
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MESSAGE OF THE PRESIDENT k41
As the next installment in the replacement program, the budget
includes 120 million dollars in 1958 appropriations for ship construc-
tion and for maritime research. The 1958 program would permit
construction of a new sister ship for the superliner United States
and several smaller ships. Construction will be well underway in
1958 on the nuclear-powered merchant ship being built jointly by the
Department of Commerce and the Atomic Energy Commission under
previous appropriations.
Expenditures for ship construction will not increase substantially
until the fiscal year 1959, primarily because of the long period required
to get work underway. Other expenditures for water transportation
are primarily for the Coast Guard and for ship operating subsidies.
Postal service.?Over the past few years the Post Office Department
has introduced major economies in the processing and handling of
mail. These economies, however, have only partially offset the rising
costs resulting from a larger mail volume, higher salaries, increased
prices for supplies and equipment, and especially the extension of city
delivery service to unprecedented numbers of new suburban residential
developments. As a result, if present postal rates are not adjusted
to cover costs, net expenditures of 642 million dollars will be required
in the fiscal year 1958 to make up for insufficient postal receipts.
The adjustments in rates recommended in this budget are designed
to increase postal revenues by 654 million dollars in the fiscal year
1958. If this recommendation is approved by the Congress, a supple-
mental appropriation, tentatively estimated at 70 million dollars,
will be proposed to permit investment in equipment and facilities
necessary for more efficient handling of the ever-increasing volume of
mail. The budget figures reflect these recommendations. Also, the
Post Office Department should be specifically reimbursed for the
cost?estimated at 28 million dollars in 1958?of services it is required
by law or international agreement to perform free or at reduced rates
for nonprofit associations and other special groups.
Community development and facilities.?The first slum clearance
project under legislation enacted in 1949 was brought to a close last
spring, and an estimated 40 more projects will be completed by the
end of 1958. More important, by that time 285 projects will be in
process of actual clearance and redevelopment, and plans will be under-
way for 246 more?many of these in smaller cities. In addition to the
extensive private investment in redeveloped areas, these 572 projects
will ultimately involve total costs of more than 2.5 billion dollars, of
which Federal capital grants will provide an estimated 1.2 billion
dollars.
To underwrite the Federal share of the cost of this program, legis-
lation is recommended to provide new obligational authority of 250
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M42 MESSAGE OF THE PRESIDENT
million dollars a year for 2 years. Budget expenditures in 1958 are
estimated at 47 million dollars and will gradually increase in later
years.
Public housing programs.?The Housing Act of 1956 authorized the
Public Housing Administration to contract with local public agencies
for construction and operation of 70,000 additional units of low-rent
public housing, at the rate of 35,000 new units a year. These units
will be particularly helpful in meeting the needs of low-income
families displaced as more urban renewal sites are cleared.
Many small communities which need low-rent public housing units
have unnecessary difficulty in qualifying for Federal aid because of the
requirement for a workable program to eliminate or prevent slum
conditions in their areas. Since the benefits to be obtained in small
communities from this requirement do not justify the burdens and
expense involved, such communities should be exempted from it.
By the end of the fiscal year 1958, the Public Housing Administra-
tion expects to dispose of all remaining war and emergency housing
units from an inventory that originally exceeded 900,000 such units.
In addition, a substantial start will have been made in sales of housing
units and commercial properties in the Government-owned com-
munities of Oak Ridge, Tennessee, and Richland, Washington.
College housing.?Rising college enrollments, plus the attractiveness
of a very low statutory interest rate on Federal loans, have caused
sharp increases in applications for loans for college dormitories and
related facilities. To continue the present commitment level of 250
million dollars a year, additional borrowing authority of 175 million
dollars is requested for the fiscal year 1958. Also, a more realistic
formula for interest rates on these loans should be provided in
legislation. This formula should be based on current Treasury
borrowing costs for comparable maturities.
Aids to private housing.?The Government encourages private hous-
ing primarily through insurance of mortgages by the Federal Housing
Administration and guaranties of loans by the Veterans Administra-
tion. Increased demands for credit for other purposes last year made
these insured and guaranteed mortgages unattractive to many private
lenders at the maximum interest rates then permitted. As a result,
many potential buyers were unable to borrow for the purchase of
homes, and as the demand fell off, builders curtailed the number of
new homes begun. To bring interest rates on insured mortgages into
line with market rates of interest, the Federal Housing Administration
has permitted adjustments in all rates which were not already at their
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MESSAGE OF THE PRESIDENT
statutory ceilings. Legislation is recommended to permit similar
interest rates on loans guaranteed by the Veterans Administration,
so that more veterans may obtain these loans.
Private lenders cooperating with the Housing and Home Finance
Agency under the voluntary home mortgage credit program have
provided insured or guaranteed loans for many veterans and other
home buyers living in remote areas as well as for members of minority
groups otherwise unable to obtain private credit. This program
should be extended for 3 years beyond the present expiration date of
June 30, 1957.
The Veterans Administration makes direct housing loans to veterans
in areas where credit is hard to obtain. Adjustment of interest rates
on guaranteed loans and extension of the voluntary home mortgage
credit program should make the funds now available adequate for the
direct loan program. Legislation is also proposed to adjust the
interest rate on direct loans so as to keep it the same as on guaranteed
loans, in conformity with past practice.
The direct loan program for all veterans and the guaranty program
for World War II veterans expire in July 1958. To help make ade-
quate mortgage funds available at that time, additional authority
may be needed to permit the Federal Housing Administration to
liberalize the terms under which it insures mortgages for veterans and
nonveterans alike.
Federal National Mortgage Association.?Under its secondary market
functions, the Federal National Mortgage Association purchases both
insured and guaranteed mortgages at prevailing market prices.
Adjustments in interest rates on these mortgages should encourage
private lenders to reenter this market, thus reducing the volume of
mortgages offered to the Association. However, as a result of the
substantial purchases made over the past several months, the effective
borrowing authority of the Association will be fully committed before
the close of the fiscal year 1957.
To enable the Association to continue making available a reasonable
minimum of mortgage funds, new obligational authority in two forms
should be provided by legislation early in the present session of the
Congress. First, the Government should be authorized to buy an
additional 100 million dollars of preferred stock of the Association.
This will allow the Association to obtain up to an additional 1 billion
dollars privately, through the sale of nonguaranteed debentures to pri-
vate investors. Second, the Association should be authorized to
borrow an additional 700 million dollars from the Treasury. 'One-half
of this borrowing authority should be made available in the fiscal year
1957, and the remaining half in 1958. If the Congress provides ade-
quate authority to draw temporarily on the Treasury when necessary,
it should be possible to finance privately the bulk of the secondary
400000-7?ril 6
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MESSAGE OF THE PRESIDENT
market operations in 1958. Budget expenditures for such temporary
Treasury loans are estimated at 203 million dollars in the fiscal year
1958.
In other operations of the Association, substantial commitments are
anticipated in both 1957 and 1958 to purchase mortgages insured under
the urban renewal, military family, elderly family, and other specially
designated housing programs. Additional legislation to authorize new
purchases amounting to 250 million dollars, including 50 million dollars
for cooperative housing, is recommended for the fiscal year 1958.
Other aids to business.?The Small Business Administration has
been providing effective assistance to help small concerns obtain
adequate financing and a fair share of Government contracts. Because
of the difficulties many small businesses encounter in obtaining ade-
quate bank credit in a money market subject to heavy competing
demands, applications for loans have been increasing. Available funds
will shortly be exhausted, and additional appropriations of 45 million
dollars in 1957 and 66 million dollars in 1958 are requested. These
figures assume extension of the basic legislation for the Small Business
Administration which expires on June 30, 1957.
The fees of the Patent Office in the Department of Commerce
should be adjusted to make the Office more nearly self-supporting.
Under an 8-year program initiated last year, substantial progress is
now being made to reduce the backlog of pending patent applications.
Area redevelopment?proposed legislation.?Despite continuing high
levels of employment and income, pockets of unemployment persist
in several areas. Legislation is again recommended to authorize the
Secretary of Commerce, with the assistance of other appropriate
agencies, to provide loans and other aids to communities which seem
to be in chronic economic distress. This aid will help those com-
munities in attempting to solve their basic problems.
Disaster insurance, loans, and relief?The experimental program for
Federal insurance against flood losses, which was recommended and
enacted last year, will soon be underway. A supplemental appro-
priation of 100 million dollars is recommended for this fiscal year to
finance initial operations. An additional appropriation of 4 million
dollars for administrative expenses is recommended for 1958.
The 1958 recommendations also include 12 million dollars under
proposed legislation for disaster loans by the Small Business Admin-
istration.
Civil defense.?For budget classification purposes, expenditures for
civil defense are grouped with those for peacetime disasters. The
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MESSAGE OF THE PRESIDENT
civil defense program was discussed, however, in the major national
security section of this analysis.
Highway and housing trust funds.?Under legislation enacted last
year, the Federal share of the new highway program will be financed
from proceeds of certain excises on motor fuels, tires, and vehicles.
These receipts are deposited in a highway trust fund.
The legislation authorized Federal grants averaging about 2 billion
dollars a year for a 13-year period to cover 90 percent of the cost of
completing the Interstate Highway System?an integrated network
of efficient and safe roads linking major centers of population and
industry. Increased grants amounting to 875 million dollars for the
fiscal year 1958 were also provided for primary, secondary, and urban
highways not in the Interstate Highway System. Prudent planning
is continuing in cooperation with the States in order to assure maxi-
mum value for each dollar spent.
FEDERAL-AID HIGHWAY PROGRAM
Expenditures from the trust fund in the fiscal year 1958 for
Federal-aid highways are estimated at 1.7 billion dollars and are
expected to rise gradually in later years to nearly 3 billion dollars
annually. The excess of receipts over expenditures in the early years
will accumulate in the trust fund for later use. Balances in the fund
are expected to reach 770 million dollars by the close of the fiscal
year 1958.
The privately financed mortgage purchases under the secondary
market functions of the Federal National Mortgage Association are
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MESSAGE OP THE PRESIDENT
trust rather than budget expenditures. They are estimated at 500
million dollars in 1958. Temporary borrowing from the Treasury
and preferred stock investment by the Treasury, amounting together
to 705 million dollars in 1957 and 203 million dollars in 1958, are
included in budget expenditures.
COMMERCE AND HOUSING TRUST FUNDS
(Under existing and proposed legislation)
{Fiscal years. In millions]
Fund and item
1956
actual
1057
estimate
105,
estimate
Highway trust fund:
Balance in fund at start of year
$390
Receipts:
Excise taxes transferred from general receipts
$1, 539
2, 173
Interest
2
12
Payments (?):
Grants, including administration
?1, 150
?1, 690
Refunds of taxes
?116
Net accumulation
390
379
Balance in fund at close of year
390
770
Federal National Mortgage Association (secondary market opera-
tions):
Treasury loans and preferred stock purchases, net
$94
705
203
Sales of common stock
7
. 14
10
Net operating income and other
4
14
13
Net purchases of mortgages (?)
?217
?1,005
?726
Net trust expenditures (?)
?112
?272
?500
AGRICULTURE AND AGRICULTURAL RESOURCES
Agriculture is confronted with serious adjustment problems that
stem from international as well as domestic agricultural developments.
Technological advances in agriculture by other nations are resulting
in increased production which in many instances has restricted United
States export markets. These problems are further complicated by
our own improved capacity to produce as well as by the large agri-
cultural inventories held by the Commodity Credit Corporation.
The agricultural programs of the Federal Government are designed
to meet these problems and to foster long-run improvements and
adjustments in the Nation's farm economy. The soil bank legislation
enacted last year is helping to curtail crop production and support
farm income; it also facilitates the shifting of cropland to uses more
consistent with long-term conservation objectives. Other Federal
programs are helping to move large quantities of food and other farm
products into consumption at home and abroad. Research programs
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MESSAGE OF THE PRESIDENT
have been enlarged to find ways to reduce marketing and production
costs and to develop new industrial uses and other permanent market
outlets for our farm products. Educational and credit services have
been expanded to help farmers take advantage of the results of re-
search, and special attention is being given in the rural development
program to low-income farmers.
AGRICULTURE AND AGRICULTURAL RESOURCES
[Fiscal years. In millions]
Program or agency
Gross budget
expenditures
Net budget
expenditures
Recom-
mended
new obli-
gational -
authority
for 1958
1956
actual
1957
esti-
mate
1958
esti-
mate
1956
actual
1957
esti-
mate
1958
esti-
mate
Stabilization of farm prices and farm
income:
Price support, supply and purchase
programs (CCC)
$5, 639
$5, 482
$4, 961
$3, 554
$1, 889
$1, 950
$1, 877
Soil bank (excluding conservation
practice payments)
4
1,012
1,023
4
1,012
1,023
984
International Wheat Agreement
92
100
111
92
100
111
93
National Wool Act
2
66
95
2
64
60
35
Removal of surplus agricultural
commodities
179
245
245
179
245
245
219
Federal crop insurance
33
39
36
10
14
7
7
Sugar Act
65
67
74
65
67
74
72
Acreage allotments and marketing
quotas
39
41
43
39
41
43
43
Financing rural electrification and rural
telephones I
217
234
265
217
234
265
249
Financing farm ownership and operation:
Farm Credit Administration
1, 991
1, 101
3
43
?45
?5
2
Farmers' Home Administration: 1
Present program
188
263
282
185
260
278
275
Proposed legislation
16
16
25
Disaster loans and emergency feed___
90
91
55
3
(2)
?18
Conservation of agricultural land and
water resources:
Agricultural conservation and Great
Plains programs
222
250
254
222
250
254
257
Soil bank (conservation practice pay-
ments)
236
270
236
270
270
Soil Conservation Service, water-
shed protection, and other
83
93
111
83
93
111
113
Research and other agricultural services.
215
241
280
215
241
280
270
" Total
9, 060
9, 560
8, 123
4,913
4, 701
4,965
8 4, 792
1 Net expenditures for the Farmers' Home Administration and or rural electrification and telephone
loans do not reflect loan collections, since these collections go directly into miscellaneous receipts of the
Treasury. In 1958 these collections are estimated at 157 million dollars and 95 million dollars respectively.
2 Less than one-half million dollars.
8 Compares with new obligational authority of 3,310 million dollars in 1956 and 5,096 million dollars in
1957.
Stabilization of farm prices and farm income.?Net price support
expenditures of the Commodity Credit Corporation are expected to be
about the same in the fiscal year 1958 as in the current year but sub-
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MESSAGE OF THE PRESIDENT
stantially below the amount spent in 1956. However, the decrease
from 1956 is more than offset by increases in expenditures for the soil
bank and other agricultural programs.
In the fiscal year 1956, retirement of all outstanding certificates of
interest used in financing previous price support loans, and curtailed
purchases of United States cotton by foreign buyers in anticipation
of more favorable prices, contributed to the high net price support
expenditures in that year.
In the fiscal year 1957, no funds will be required for the redemption
of certificates of interest. In addition, increased sales of farm com-
modities abroad, particularly cotton, are expected to decrease net
budget expenditures for price supports still further.
In the fiscal year 1958, exports of price supported commodities are
expected to be less than in 1957. This factor, which tends to in-
crease net price support expenditures, will be partially offset by the
initial effects of crop acreage reductions under the soil bank. The
full effects of the soil bank on price support expenditures will come in
later years.
Under the acreage reserve program of the soil bank, farmers are
compensated for loss of net income resulting from their voluntary
withdrawal of land from crop production. Under the conservation
reserve program of the soil bank, they receive rent for other cropland
placed in cover crops and reforestation and also receive payments to
cover part of the cost of carrying out certain conservation practices.
Expenditures for both programs are estimated to total 1.3 billion
dollars in 1958, somewhat more than in 1957.
NET EXPENDITURES FOR AGRICULTURAL PROGRAMS
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MESSAGE OF THE PRESIDENT
Under title I of the Agricultural Trade Development and Assistance
Act of 1954 (P. L. 480), substantial quantities of farm products have
been disposed of abroad in return for foreign currencies. This title
expires on June 30, 1957. It should be extended for 1 year and the
present legal limit of 3 billion dollars on the permissible loss under this
program should be increased by 1 billion dollars. Extension for
a 1-year period will enable the Congress to consider alternative meas-
ures that will contribute to a continued development of normal export
markets.
The new obligational authority recommended for the fiscal year
1958 for price support, supply, and purchase programs of the Com-
modity Credit Corporation is made up of (1) 1,240 million dollars to
restore the capital impairment of the Corporation experienced in 1956,
mainly from price-support losses, and (2) 637 million dollars to reim-
burse the Corporation for costs and losses incurred in 1956 under title
I of the Agricultural Trade Development and Assistance Act.
Rural electrification, rural telephones, and farm credit.?This budget
continues strong support for the rural electrification and rural tele-
phone programs. It provides for new electrification loans totaling
185 million dollars and new telephone loans totaling 80 million dollars
in the fiscal year 1958, the same amount of loan approvals as antici-
pated in 1957. Disbursements on loans and administrative expenses
are expected to result in budget expenditures of 265 million dollars in
1958, which is 31 million dollars more than in 1957 and 48 million
dollars more than in 1956.
Budget expenditures for the credit programs of the Farmers'
Home Administration, exclusive of farm housing loans which are
included in the commerce and housing section of this analysis of the
budget, are estimated at 294 million dollars in the fiscal year 1958.
The substantial rise of 109 million dollars in estimated annual expendi-
tures since 1956 reflects in part the legislation enacted last year
expanding the scope of this agency's authority to refinance farm debts
and to make loans to farmers whose farms are smaller than family size.
The increase results also from the operating loans estimated to be
made in designated counties as a part of the rural development
program and from the additional credit needs of farmers suffering from
continued drought and other economic disasters.
In connection with the loan program of the Farmers' Home Ad-
ministration, legislation will be proposed to modify the present for-
mula for the distribution of loan funds among States and Territories.
The budget also provides for some increase in the authority to appro-
priate for loans under title I of the Bankhead-Jones Farm Tenant Act.
In accordance with the proposals of the Hoover Commission, legis-
lation will be recommended to liquidate the Agricultural Marketing
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MESSAGE OF THE PRESIDENT
Act revolving fund by transferring its assets to the Treasury. As of
June 30, 1956, this fund had assets of 186 million dollars, consisting
of 150 million dollars of the capital stock of the central and regional
banks for cooperatives and 36 million dollars of balances with the
Treasury.
Agricultural land and water resources.?A substantial increase in
budget expenditures for the conservation and development of land
and water resources is provided for in this budget. Cost-sharing
payments for conservation practices under the soil bank, which were
begun in the current fiscal year, are a major addition to the previous
level of conservation expenditures.
Under the Great Plains conservation program, which was author-
ized by legislation enacted last year, long-term contracts will be
entered into with farmers whereby they agree to carry out specified
soil management and land-use practices. The budget provides for
20 million dollars of new obligational authority for the Great Plains
conservation program in 1958.
Spending under the program authorized by the Watershed Protec-
tion and Flood Prevention Act is estimated to increase in 1958.
Funds are provided in the budget for the continuing cost of some 83
projects underway in 1957 and for the Federal share of first-year costs
on approximately 80 additional projects expected to be started by local
groups in 1958.
Research and other agricultural services.?The expansion of research
and educational programs of the Department of Agriculture, which
was undertaken at the beginning of this administration, will be con-
tinued under this budget. Efficiency in agricultural production,
development of new industrial uses for farm products, and expansion
of markets for farm commodities will continue to be emphasized in
order to advance the long-run interests of both farmers and consumers.
As a part of the rural development program, specialized research,
technical assistance, and credit will be provided to assist State and local
groups to develop and improve economic opportunities in rural areas
with low average family income. The Federal Government and
States and local groups are now working jointly in designated pilot
counties.
Federal intermediate credit banks trust fund.?In accordance with the
Farm Credit Act of 1956, the production credit corporations were
merged into the Federal intermediate credit banks as of January 1,
1957, and provision was made for the retirement of the Government's
capital in the banks and for their eventual ownership by the produc-
tion credit associations. Because of this change in financial struc-
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MESSAGE OF THE PRESIDENT M51
ture, the transactions of the banks are being carried as trust fund
expenditures starting January 1, 1957.
In the fiscal year 1958, the total loans and other outlays of these
banks are estimated at 2,201 million dollars; total collections, prin-
cipally from loan repayments, at 2,159 million dollars; the resulting
net outlay of the trust fund is an estimated 42 million dollars.
At the time the Farm Credit Act of 1956 was approved last year,
the lack of adequate protection of the Government's interest in the
surplus of the intermediate credit banks was pointed out. The
Government's interest should be protected, even though the prospect
of dissolution or liquidation of any bank is remote.
NATURAL RESOURCES
The development and conservation of the resources of America are
vital to the present and future strength of the Nation. They must be
a concern not only of the Federal Government, but of everyone.
Individual enterprise and State and local participation are essential
to effective development of the Nation's soils and forests, water,
minerals, fuels, and fisheries.
Federal budget expenditures for natural resources in the fiscal year
1958 are estimated at 1.5 billion dollars, 167 million dollars more
than in 1957. In addition to their general economic value, many of
the resource development programs produce substantial revenues for
the Government.
? The policies enunciated in the budget message with respect to the
present active competition for labor, materials, and equipment in the
construction industry and to the rate of Federal construction expendi-
tures are especially applicable to natural resource programs.
Land and water resources.?The Presidential Advisory Committee
on Water Resources Policy has recommended national policies and
improved administrative organization to bring about the best use of
water resources. This budget provides for certain of these recom-
mendations which can be achieved by budgetary action. Important
among these is expansion of the collection of basic data needed for
planning water resource developments. Legislative proposals to carry
out other recommendations of the Committee will be transmitted to
the Congress as developed.
The Corps of Engineers and the Bureau of Reclamation will con-
tinue construction on 299 going projects for flood control, navigation,
irrigation, water supply, and power. Construction of 38 of these
projects will be completed in 1958.
This budget provides for starting construction on certain new
projects which are now authorized. It is recommended that the
Bureau of Reclamation start 6 irrigation and water-supply projects,
400000-*57.---Pit 7
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ivi52 MESSAGE OF THE PRESIDE NT
and the Corps of Engineers start 7 navigation projects, 13 flood-
protection projects, 3 flood-control reservoirs, and a powerplant at
an existing installation, as well as some small projects to be selected
by the Secretary of the Army. Advance planning on these new
projects has reached the stage where the design and scope of the
major structure have been clearly determined and a sound estimate
of cost has been prepared. First-year expenditures for these new
starts are estimated at 12 million dollars. The total estimated cost
to complete these projects is 300 million dollars.
NATURAL RESOURCES
[Fiscal years. In millions]
Budget expenditures
Recom-
mended new
obligational
authority
for 1958
Program or agency
1956
actual
1957
estimate
1958
estimate
?
Gross budget expenditures:
Land and water resources: .
Corps of Engineers, civil functions:
Present program
$534
$600
$654
$647
Proposed legislation:
Partnership projects
5
10
Advance planning
1
1
Department of the Interior:
Bureau of Reclamation:
Present program
163
176
202
203
Proposed legislation:
Fryingpan-Arkansas project
,
1
2
Small reclamation projects
"4
5
Power marketing agencies
42
42
44
49
Indian lands resources
43
47
52
55
Public domain (Bureau of Land Management)
and other
20
26
29
31
St. Lawrence Seaway Development Corporation:
Present program
9
48
49
Proposed legislation "
35
Tennessee Valley Authority:
Present program
236
262
307
15
Proposed legislation
3
30
Department of State
3
7
5
4
Federal Power Commission
5
5
6
6
Forest resources
138
163
186
186
Fish and wildlife resources
45
65
63
62
Recreational resources
44
76
76
80
Mineral resources ?
43
94
104
89
General resource surveys and other
35
39
47
49
Total
1,361
1,649
1,836
'1,659
Deduct applicable, receipts:
.
'Land and water resources:
' Department of the Interior
5
4
5
?
? St. Lawrence Seaway Development Corporation_ ___
1
9
3
.
Tennessee Valley Authority
246
258
' 282
Fish and wildlife resources
?
()
2
Mineral resources
6
6
6
. .
Net budget expenditures ?
1, 104
1,371
1,538
3 Compares with new obligational authority of 1,213 million dollars in 1956 and 1,391 million dollars in 1957.
Less than one-half million dollars.
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MESSAGE OF THE PRESIDENT M53
Recommendations for related watershed and flood prevention
activities of the Department of Agriculture were discussed in the
section on agriculture and agricultural resources.
Work is underway on the comprehensive Upper Colorado River
Basin development which the Congress authorized during the past
session. Legislation is still needed, however, to permit the Frying-
pan-Arkansas multiple-purpose project to proceed. Appropriations
which will enable the, Bureau of Reclamation to initiate this construc-
tion are included under proposed legislation for 1958.
This budget also includes 10 million dollars under proposed legisla-
tion to enable the Corps of Engineers to participate in 1958 with States,
local governments, and private groups in the development of partner-
ship water resources projects, such as the Bruces Eddy Reservoir in
Idaho and the Oroville Reservoir in California, neither of which has
yet been authorized. Also, where feasible and in the public interest,
non-Federal interests will be encouraged to participate with the Fed-
eral Government in certain previously authorized projects now in
various stages of planning or construction. Similar partnership ar-
rangements are being considered by the Bureau of Reclamation.
In previous years this administration has recommended legislation
to provide that the Federal Government make payments to owners
of non-Federal water resources projects when Federal hydroelectric
power developments benefit from these projects. In simple equity,
the Government should pay for such benefits in the same way that
licensees must pay for the benefits they derive from Federal or other
projects. The Federal Power Act should be amended during this
session to provide for such Federal payments.
The Small Reclamation Projects Act of 1956 is a step forward in
Federal, State, and local cooperation. Appropriations to permit the
Bureau of Reclamation to proceed with the program will be requested
as soon as the basic legislation is amended to correct deficiencies with
respect to the responsibility for approval of project proposals by the
executive branch, which were pointed out at the time the legislation
was approved.
To assure efficient use of resources and to safeguard the public
investment, the 1958 budget includes funds for the Bureau of Reclama-
tion and the Corps of Engineers to make general investigations and to
prepare project designs that are needed prior to construction of water
resources projects. Also, an appropriation of 1 million dollars is in-
cluded under proposed legislation to permit immediate initiation of
planning of the most urgently needed projects expected to be author-
ized in river and harbor and flood-control legislation early in this
session of the Congress. Presidential approval of the measure enacted
during the last session was withheld primarily because many of the
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MESSAGE OF THE PRESIDENT
projects included had not been reviewed in accordance with estab-
lished procedures.
As a further step in coping with the growing water scarcity, increased
appropriations are recommended in the fiscal year 1958 for research
and pilot-plant operations for converting saline water to fresh water
for municipal, industrial, and agricultural uses. This research is
undertaken by the Department of the Interior in cooperation with
other public and private groups. ?
Construction of the St. Lawrence Seaway will go forward in the
fiscal year 1958. To meet increased construction costs and provide for
additional dredging work not originally contemplated, 35 million dol-
lars of additional borrowing authority is recommended for 1958 under
proposed legislation.
The Tennessee Valley Authority will continue construction in the
fiscal year 1958 of the Wilson Lock started in 1957. Work on 7
steam-electric generating units at present plants was started in the
fiscal years 1956 and 1957 with proceeds from the sale of power, as
approved by the last Congress, and will be continued in 1958. Based
on the best information now available, it appears that additional
generating capacity will be needed to meet TVA power requirements
by the end of the calendar year 1960. Legislation is recommended to
authorize the TVA, subject to regular budgetary review, to finance
new generating facilities by the sale of revenue bonds. After the
Congress has acted upon this legislative proposal, the power require-
ments of the TVA will be reexamined. Pending this re-examination,
an authorization of 30 million dollars for construction of a new unit of
about 180,000 kilowatts at an existing steam plant is included in the
budget under proposed revenue-bond legislation to meet power needs
of the area.
Forest, fish and wildlife, and recreational resources.--This budget
provides funds to increase soil-conservation work on the lands in the
national forests, in the public domain under the Bureau of Land
Management, in the national parks and wildlife refuges, and on Indian
lands held in trust by the Government. The budget also provides
for forestry research and reforestation, for leasing of mineral and
grazing lands, and for necessary construction of schools for Indians.
Consistent with the needs for expanded timber sales, provision is
made for access roads.
Provision is made for carrying forward the 10-year development and
improvement program of the National Park Service. This program is
designed to provide the necessary facilities and personnel to accom-
modate an estimated 80 million visitors to the national parks in 1966.
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MESSAGE OF THE PRESIDENT
NATIONAL PARK SERVICE PROGRAM
!Appropriations
$ Millions
National forests also offer recreational opportunities for many mil-
lions of our citizens. The 1958 budget provides for an enlarged pro-
gram to develop and improve campgrounds, picnic areas, and sanitation
and other facilities to accommodate the recreational users of these
forests.
A reorganization of the Federal programs for fish and wildlife
resources has been effected in accordance with legislation enacted by
the last Congress. To assist commercial fisheries in improving their
competitive position, expenditures for fishery research will be in-
creased in the fiscal years 1957 and 1958. It is estimated that loans
of 12 million dollars over the 2-year period will be made from the
newly established fisheries loan fund, and a program of vocational
education grants for training fishery technicians will be inaugurated
in 1958.
Our sport fishery and wildlife resources make a substantial contri-
bution to meeting the recreational needs of our citizens. A study is
underway to determine future needs for fish and wildlife programs.
Mineral resources.?The Secretary of the Interior is developing a
minerals program to meet the long-range needs of the Nation, now
that the defense minerals programs are nearing completion. In the
meantime, a program authorized in the past session of the Congress
will provide 91 million dollars of assistance to segments of the mining
industry in adjusting from defense needs to normal market conditions.
The Geological Survey and the Bureau of Mines will also continue
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MESSAGE OF THE PRESIDENT
their activities in support of exploration for new deposits, development
of improved mining techniques, and effective utilization of mineral
resources.
LABOR AND WELFARE
The objective of the Government's labor and welfare programs is to
further the well-being of the people by increasing individual oppor-
tunity, fostering self-reliance, and providing safeguards against
economic hazards. These programs aid education and science, im-
prove health, facilitate employment and increase labor productivity,
while aiding the aged, disabled, and dependent to enjoy life free from
want for its necessities.
Budget expenditures in the fiscal year 1958 for labor and welfare
programs are estimated at 3.5 billion dollars. In addition, estimated
benefit payments of more than 10 billion dollars will be paid by the
Federal social insurance and retirement trust funds.
Primary reliance has been placed upon the States and local com-
munities to organize and operate labor and welfare services, while the
Federal Government has furnished financial and technical support.
Four-fifths of the 3.5 billion dollars of estimated budget expenditures
for labor and welfare services in 1958 is for grants-in-aid to State and
local governments.
? As science lengthens the span of life and the average age of the
population increases, the problems of older people?there are now
15 million past the age of 65?assume increasing significance. The
EXPENDITURES FOR LABOR AND WELFARE
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MESSAGE OF THE PRESIDENT
Federal Government's participation in activities that benefit older
citizens is extensive. Payments for old-age and railroad retirement
benefits (paid from trust funds and not included in budget expendi-
tures), and veterans' pensions and public assistance grants for the
aged are estimated to total more than 8 billion dollars in 1958. In
addition, other special activities in health research, employment
assistance, housing, and veterans' services benefit our aged citizens.
Last March a Federal Council on Aging was established to coordi-
nate Federal activities, to improve working relationships with the
States in this field, and to devise better means for meeting the needs
of the aged. In this coming year the Federal Government will pro-
vide leadership in a cooperative effort with business, private organiza-
tions, and State and local governments to enlarge the employment
opportunities which many of our older citizens need and want. The
Department of Labor will continue its program to remove barriers to
employment of older workers, and State employment security agencies
will give increased attention to employment opportunities for such
workers. This budget also provides greater emphasis on health
services to older persons.
The President's Council on Youth Fitness, of which the Vice Presi-
dent is chairman, was established in July to promote and coordinate
the numerous Federal activities in the field of physical and general
youth fitness and to work with State, local, and private groups in this
field.
Promotion of education.?Since the White House Conference on
Education was held a year ago, the States and communities have made
greater efforts to overcome their educational problems. Sixty-nine
-thousand classrooms, 10 percent more than last year, are expected
to be built in the school year 1956-57. The number of teachers and
their average salaries have also been increasing. Despite these gains,
growing enrollments are straining the financial capacities of school
'districts in many areas of the country. Today, 31.5 million children
crowd the public schools beyond their normal capacity and enroll-
ments are increasing by well over 1 million per year.
Legislation is recommended to complete in-4 years the general school
construction assistance program which was proposed as a 5-year
program last Year. This budget includes new obligational_authority
of 451 million dollars for the first year under this proposed legislation.
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M57
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MESSAGE OF THE PRESIDENT
LABOR AND WELFARE
[Fiscal years. In millions]
Program or agency
Budget expenditurest
Recom-
mended new
obligational
authority
for 1958
1956
actual
1957
estimate
1958
estimate
Promotion of education:
' Office of Education:
School construction?general aid (proposed legisla-
tion)
$185
$451
Assistance for school construction in federally af-
fected areas
$95
$68
105
42
Assistance for maintenance and operation of schools
in federally affected areas
86
? 106
,
125 .
127
Vocational education
33
39
41
41
Other:
, Present program
9
11
12
13
Proposed legislation
2
2
Department of the Interior and other
52
58
63
64
Labor and manpower:
Unemployment compensation and employment serv-
ice:
Grants to States (Department of Labor)
231
238
257
270
Payment to unemployment trust fund (Treasury
Department)
168
62
53
53
Other:
Present program
76
81
88
88
Proposed legislation
3
3
Promotion of public health:
? National Institutes of Health
99
173
211
220
Hospital construction grants
56
83
100
121
Grants for construction of waste treatment facilities
7
62
50
Other:
Present program
197
238
231
227
Proposed legislation
3
15
General-purpose research, libraries, and museums:
National Science Foundation:
- Regular program
15
36
60
65
International Geophysical Year
5
21
10
Department of Commerce (Census Bureau and Bureau
? of Standards)
27
23
28
29
Libraries and museums
13
18
22
21
Correctional and penal institutions
31
33
35
? 42
Other welfare services:
School lunch program
83
100
100
100
,
Vocational rehabilitation
36
44
51
? 51
' Other:
Present program12
?11
Proposed legislation for health, education, and
welfare
5
9
Public assistance
1,457
-1,584
? 1,684-1,684
Total ?2,776
3,032
3,538
53,799
After deducting applicable receipts?primarily Mexican arm labor supply fund (part of other labor and
manpower programs) of 2 million dollars in 1956, 3 million dollars in 1957, and 4 million dollars in 1958.
Compares with new obligational authority of 2,860 million dollars in 1956 and 3,196 million dollars in
1957.
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MESSAGE OF THE PRESIDENT
Last April the President's Committee on Education Beyond the
High School was appointed to consider problems created by the
record enrollments in colleges and universities. The budget antici-
pates a supplemental appropriation for the fiscal year 1957 to finance
the State and regional conferences which the Committee plans to hold
before it prepares its final report. It also provides in 1958 for assist-
ance under proposed new legislation to encourage States to undertake
specific planning action to meet their needs in higher education.
Expenditures for other activities of the Office of Education are
primarily to carry out the 2-year extension of assistance to areas
where school enrollments are seriously affected by Federal activities
and to provide for educational research and for grants for vocational
education.
The budget recommendations for the Department of the Interior
include funds for the education of Indian children and for a recently
enacted program for vocational education of adult Indians.
Labor and manpower.?The budget provides grants to the States
for the administrative costs of providing employment service and
unemployment compensation, and for the employment security work
of the Department of Labor. The recommended grants include
funds for job placement of older and handicapped workers. Better
methods of scheduling placement will continue to assure longer and
steadier work for domestic migrant farm workers. The budget for
other labor and manpower programs continues enforcement and pro-
motional work to insure greater compliance with labor legislation,
and provides for enforcement of labor standards in the use of Mexican
nationals who work on farms. Further improvements are recom-
mended in labor statistics.
Rapid scientific and technological developments are creating new
industries which are faced with shortages of skilled workers and
technicians. The Department of Labor has recently undertaken
training programs in a broader range of occupations. Support is
provided for these programs in 1958 through the newly reorganized
Bureau of Apprenticeship and Training.
In addition to the new legislation to improve the Government's
labor programs which was recommended earlier in the budget mes-
sage, legislation is also recommended to (1) increase, as part of the
proposed area redevelopment program, assistance in labor services to
local areas where there has been persistent and chronic unemploy-
ment and (2) provide insurance benefits to workers in the District of
Columbia who are temporarily disabled because of nonoccupational
accidents or illness and improve the District of Columbia unemploy-
ment insurance law.
400000-57?rs 8
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MESSAGE OF THE PRESIDENT
Promotion of public liealth,.?Expenditures for promotion of health
during the fiscal year 1958 are estimated to be 607 million dollars, 106
million dollars more than in the current year.
The budget recommendations for the National Institutes of Health
for the fiscal year 1958 provide for more research, while keeping in
proper balance support of individual projects, training of additional
technicians, and new laboratories and other facilities. This balance
is necessary to safeguard the quality of research because of the high
utilization of the present technical resources. An increase of 38
million dollars in expenditures is estimated, primarily for the new
grants to assist in the construction of medical research facilities and to
provide the non-Federal institutions receiving grants with more
equitable payments for the indirect costs of these programs.
Expenditures for Federal aid to hospital construction are estimated
at 100 million dollars hi the fiscal year 1958. The increase of 17
million dollars over the 1957 estimate includes the provision of nursing
homes, rehabilitation facilities, and chronic disease hospitals which are
especially important to older people and to others suffering from
long-term illness or disability. The budget also includes 62 million
dollars in 1958 for the recently started program for grants to com-
munities to stimulate construction of waste treatment facilities where
Federal aid is appropriate.
To meet other health needs, this budget includes increased ex-
penditures for community health services to the aged and those with
chronic diseases, for research in combating air and water pollution,
for accident prevention, and for health services to children and
Indians. Grants for poliomyelitis vaccine will no longer be needed.
Enforcement of the food and drug laws will be strengthened.
To help meet the critical need for more medical research scientists
and other health personnel, the recently enacted legislation for con-
struction grants for medical and dental research facilities should be
amended to include teaching facilities. New obligational authority
of 15 million dollars is recommended for this purpose. First-year
expenditures are estimated at 3 million dollars.
.National Science Foundation.?An increase of 25 million dollars in
the appropriations for the regular program of the National Science
Foundation is recommended for the fiscal year 1958. This will enable
the Foundation to deal more effectively with two problems of national
importance in the field of science. First, only a very small proportion
of the billions of private and public funds devoted to research and
development is for the basic research on which progress in the
applied scientific fields of health, industrial technology, and weapons
development depends. The Foundation will increase its grants for
basic research projects and for special research facilities. Second,
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MESSAGE OF THE PRESIDENT
to help overcome the acute shortage of skilled scientists and engineers,
the Foundation will make a major effort to improve training in
science, particularly by increasing the number of qualified teachers,
by interesting a larger number of able students to enter scientific
careers, and by granting fellowships to graduate and post-doctoral
students.
Although expenditures for the International Geophysical Year
program will decline, most of the actual scientific operations all over
the world will be carried out during the fiscal year 1958.
Other welfare services.?The appropriation for the school lunch pro-
gram, mainly for cash grants to the States, is recommended at 100
million dollars for 1958, the same as for 1957. The Federal Govern-
ment will also contribute to the school lunch program in 1958 by
(1) making donations of surplus agricultural commodities estimated
to have a value of approximately 130 million dollars, and (2) spending
70 million dollars through the Commodity Credit Corporation for the
school milk program.
For the past 3 years the Federal Government has increased its
financial aid and technical assistance to States and communities for
rehabilitating the disabled. The number of persons rehabilitated
each year has reached a record level. This budget reflects a further
expansion in this program.
Legislation is recommended to (1) authorize construction of sanita-
tion facilities for Indians, (2) transfer Freedmen's Hospital to Howard
University, with provision for construction of a new teaching hospital,
(3) authorize special grants for training of teachers for mentally
retarded children, and (4) assist States in combating juvenile delin-
quency more effectively. The budget anticipates expenditures of
5 million dollars in the fiscal year 1958 for these new programs.
Provision is made in the budget to promote the principle of self-
help and self-care through research into causes of dependency and
through training grants for welfare personnel as authorized by the
1956 social security amendments.
Public assistance.?The social security amendments enacted in 1956
raised Federal matching funds for State public assistance to people
whose needs are not met by social security insurance, and provided
new grants for medical care. Largely as a result of the 1956 amend-
ments, Federal grants for public assistance are estimated to increase
100 million dollars to a total of 1.7 billion dollars in the fiscal year
1958. Benefits will be paid by State agencies to an average of 5 mil-
lion persons in 1958, including 2.5 million on the old-age assistance
rolls which are declining as social insurance benefits cover more people.
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M62 MESSAGE OF THE PRESIDENT
Social insurance and retirement trust funds.?Expenditures for social
insurance programs and for the payment of Federal civilian employees'
retirement benefits do not appear in the total of budget expenditures
because they are financed separately through trust funds. The total
disbursements from these funds for 1958 will exceed 10.5 billion dollars,
mainly for benefits under the various insurance programs. Reserves
for future payments, which are invested in Government bonds, will
increase to approximately 46 billion dollars at the end of the fiscal
year 1958.
Benefits will be paid in 1958 from the old-age, survivors, and dis-
ability insurance trust funds to some 9,100,000 retired persons,
380,000 disabled workers, and 1,800,000 mothers and children. These
numbers include women between the ages of 62 and 65 and disabled
workers between the ages of 50 and 65, who will receive benefits for the
first time under the social security amendments enacted in 1956.
Legislation is recommended to improve coordination between old-
age insurance tax and income tax reporting procedures.
The Federal Government is responsible under law for payments
under the social security and railroad retirement funds for credits
toward benefits which are accorded for time spent in military service.
In the case of the railroad retirement account, the Comptroller Gen-
eral of the United States has informed the Congress that payments
already made to the fund by the Federal Government under existing
law exceed the estimated actual cost of future benefits for time spent
in military service prior to July 1948 by more than 300 million dollars.
In order to avoid further overpayments, it is recommended that legis-
lation be enacted to change the basis for appropriations so that the
Government henceforth will reimburse the fund for the actual cost of
military service benefits as they are paid.
With respect to the employer and employee contributions to the
railroad retirement system, provision should be made for adequate
long-term financing of the system on a self-supporting basis. The
congressional committees concerned reported they would take action,
and the need for a sounder financial basis was pointed out in the
statement issued last summer when new legislation raising benefits
was signed.
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MESSAGE OF THE PRESIDENT
SOCIAL INSURANCE AND RETIREMENT TRUST FUNDS
(Based on existing legislation)
[Fiscal years. In millions]
Fund
1956
actual
1957
estimate
1958
estimate
Federal old-age and survivors insurance trust fund:
Balance in fund at start of year
$21, 141
$22, 593
$23, 437
Receipts:
Payroll tax transferred from general receipts
6,537
6,445
6, 609
Deposits by States
172
305
320
Interest and other
495
563
576
Payments of benefits, construction and administrative expenses,
and tax refunds
?5, 551
?6,469
?7,366
Net accumulation
+1,452
+844
+139
Balance in fund at close of year
22, 593
23,437
23,576
Federal disability insurance trust fund:
Balance in fund at start of year
327
Receipts:
Payroll tax transferred from general receipts
335
826
Deposits by States
10
40
Interest and other
1
15
Payments of benefits and administrative expenses
?19
?313
Net accumulation
+327
+568
Balance in fund at close of year
327
895
Railroad retirement account:
Balance in fund at start of year
3, 534
3, 659
3,736
Receipts:
Payroll tax transferred from general receipts
631
660
665
Interest and other
105
109
110
Payments of benefits and administrative expenses
?611
?692
?739
Net accumulation.
+125
+77
+37
Balance in fund at close of year
3,659
3,736
3,772
Federal employees' retirement funds (Civil Service and Foreign
Service):
Balance in funds at start of year
6, 210
6,720
7, 504
Receipts:
Employee contributions
574
585
588
Interest
213
226
234
Government contributions and other
238
530
671
Payment of annuities and refunds
?507
?566
?598
Net accumulation.
+518
+775
+795
Balance in funds at close of year
6,728
7,504
8,299
Unemployment trust fund:
Balance in fund at start of year
8,484
8,790
9,090
Receipts:
Deposits by States and railroad unemployment insurance
1,561
1, 519
1, 580
Interest
199
223
253
Transfer from general fund /
168
62
53
Payments: State and railroad withdrawals for benefits
?1,363
?1, 504
?1,534
Net accumulation (+) or withdrawal (?)
+335
+300
+351
Balance in fund at close of year
8,790
9,090
9,441
I Excess of Federal unemployment tax collections over Federal expenditures for unemployment com-
pensation and employment service administration.
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MESSAGE OF THE PRESIDENT
VETERANS' BENEFITS AND SERVICES
The Nation's obligation to provide for the special needs of war
veterans and their dependents is being met by a wide range of special
services and benefits, which account for nearly one-fifth of all budget
expenditures other than those for major national security programs.
Expenditures for veterans programs will continue to increase in the
fiscal year 1958, largely because of the rising number of veterans and
their survivors who receive non-service-connected pensions.
Veterans programs generally have served their purpose well. How-
ever, the problems which face veterans change as economic and social
conditions change and as the Government's general health and eco-
nomic security programs expand in scope and adequacy.
Against this background, executive review is being made of agency
comments on the comprehensive report of the President's Commis-
sion on Veterans' Pensions, headed by General of the Army Omar
N. Bradley. A special message will be transmitted to the Congress
outlining legislative proposals in this field. This budget includes
100 million dollars to cover the estimated cost in 1958 of these
proposals.
VETERANS' SERVICES AND BENEFITS
[Fiscal years. In millions)
Program or agency
Budget expenditures
Recom-
mended new
obligational
authority
for 1958
1956
actual
1957
estimate
1958'
estimate
Gross budget expenditures:
Readjustment benefits:
Education and training
$767
$791
$758
$758
?Loan guaranty and other benefits
54
65
72
72
Unemployment compensation
68
56
38
42
Compensation and pensions:
Present program
2, 798
2, 896
3, 003
2, 990
Proposed legislation
100
100
Hospital and medical care
758
768
797
803
Hospital construction
29
49
38
54
Insurance and servicemen's indemnities
121
72
67
46
Other services and administration (Veterans Admin-
istration and others)
208
209
211
177
Total
4,804
4,906
5,688
I 5,042
Deduct applicable receipts:
Insurance Program
16
23
25
Other services and administration
32
32
33
Net budget expenditures
4,756
4,851
5,027
I Compares with new obligational authority of 4,823 million dollars in 1956 and 4,890 million dollars in
1957.
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MESSAGE OF THE PRESIDENT
Readjustment benefits.?The education and training program now
applies principally to veterans of the Korean conflict. Average enroll-
ment of this group is expected to reach a peak in the fiscal year 1957
and then drop about 4 percent to 569,000 in 1958. As a result, expend-
itures are estimated to drop by 33 million dollars in 1958, even though
they include the cost of education and training for some 9,000
children under the War Orphans' Educational Assistance Act which
was enacted in 1956. This latter cost is not a readjustment benefit
but is financed from the same appropriation.
The Veterans Administration is expected to guarantee home,
farm, and business loans to about 540,000 veterans of World War II
and the Korean conffict in the fiscal year 1958. Budget expenditures
of 61 million dollars are estimated to result from veterans' defaults
on guaranteed loans, but a large part of these expenditures will be
offset by recoveries from the sale of properties which are deposited in
the Treasury as miscellaneous receipts.
Most World War II veterans have had over 10 yeaj)o use their
loan guaranty benefits, which were intended to assist their adjustment
from military to civilian life. As a group, they have successfully
reestablished themselves in civilian pursuits with the aid of a wide
range of readjustment benefits. New applications under the World
War II loan program, which was extended by the last Congress to
permit orderly termination, should therefore end as now scheduled in
July 1958. Loan guaranty benefits for veterans of the Korean
conffict will continue, under current legislation, until 1965, and
mortgage insurance benefits remain available to all home buyers,
including veterans, through the Federal Housing Administration.
EXPENDITURES FOR VETERANS' SERVICES AND BENEFITS
Readjustment Benefits,
kMeclical, and All Other
Arr Compensation and Pensions
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MESSAGE OF THE PRESIDENT
As pointed out in the section on commerce and housing, the statutory
maximum interest rate on veterans guaranteed loans should be
increased to bring it more nearly into line with current market condi-
tions. Such action is essential to encourage provision of more adequate
mortgage funds from private sources for the veterans guaranty pro-
gram. That section also indicates there may be need to permit
liberalization of the terms of loans insured by the Federal Housing
Administration when the Veterans Administration programs for World
War II veterans expire.
Compensation and pensions.?Compensation benefits are paid for
disabilities or deaths resulting from service; pensions are for needs not
connected with service. Compensation rolls, which have been in-
creasing since World War II, are expected to stabilize in 1958, with
payments of 1.9 billion dollars to 2.1 million veterans and to 395,000
families of deceased veterans. Total compensation payments are
expected to start declining slowly within a few years, as World War I
and World War II veterans and dependents leave the rolls more
rapidly than veterans of more recent service and their dependents
become eligible.
The budget provides for pension payments in the fiscal year 1958
of over 1 billion dollars to an estimated 762,000 veterans and 488,000
families of veterans. Because many of the non-service-connected
ailments accepted as establishing eligibility for pensions are normally
associated with advancing age, the pension rolls will continue to grow
until near the end of this century as veterans grow older and as more
survivors become eligible.
Medical care and hospital construction.?Although the number of
veterans receiving hospital and medical services will be about the
same as in the fiscal year 1957, expenditures for hospital and medical
care are expected to increase in 1958, primarily because they will
include the allocable share of the Government payment to the civil
service retirement fund. The budget provides for the operation of
122,500 beds in Veterans Administration hospitals. Expenditures for
outpatient dental care are expected to decline in 1958.
Enactment of 54 million dollars of new authority to incur obligations
is recommended to cover the replacement of 2 general hospitals, the
preparation of plans for replacing a third, and the modernization of
other existing facilities.
Insurance and servicemen's indemnities.?Issuance of new insurance
policies to ex-servicemen without disabilities and the award of indemni-
ties to survivors of deceased servicemen were terminated effective
January 1, 1957, by the Servicemen's and Veterans' Survivor Benefits
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MESSAGE OF THE PRESIDENT
Act. This act provided substitute benefits in the form of new depend-
ency and indemnity compensation benefits and of coverage in the
old-age and survivors insurance system. Indemnity and insurance
payments, however, will continue to be made on existing cases and to
reimburse the veterans' insurance funds for claims resulting from the
extra hazards of military service.
Trust funds.?The life insurance programs for veterans of the two
world wars are financed through trust funds, whose operations are
segregated from the regular budget transactions. About 5 2 million,
or one-fourth, of the eligible veterans have retained insurance policies.
Because issuance of new policies under these funds was ended in 1951,
the insurance in force will continue to decline.
In the fiscal year 1957, dividend rates have been increased by
approximately 12 percent, and about one-half of the total premium
collections during the year will be returned to policyholders. These
generous dividends have been made possible largely by the favorable
mortality experience of insured veterans. The increased dividend
payments will reduce the rate at which reserves are accumulated, but
will not impair the soundness of the funds.
VETERANS' LIFE INSURANCE TRUST FUNDS
(Fiscal year. In millional
Item
Balance in funds at start of year
Receipts:
Transfers from general and special accounts
Interest on investments
Premiums and other
Total_,
Payments:
? Dividends to policyholders
Benefits and other
Total
Net accumulation
Valance In funds at close of year
1956
actual
1957
estimate
1958
estimate
$6, 587
$6, 709
$8,777
78
21
14
203
205
206
441
450
456
722
676
676
212
228
250
388
381
376
599
608
626
123
68
50
6,709
6,777
6,827
INTEREST
Interest payments are estimated to rise to 7.4 billion dollars in the
fiscal year 1958. These payments, almost entirely for interest on the
public debt, represent 10 percent of budget expenditures.
400000-57?ra 9
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MESSAGE OF THE PRESIDENT
INTEREST
[Fiscal years. In millions]
Item
Budget expenditures
1958 new
obligational
authority
1956
actual
1957
estimate
1958
estimate
Interest on public debt
$6, 787
$7, 200
$7, 300
$7,300
Interest on refunds of receipts
54
54
54
54
Interest on uninvested funds
6
6
6
6
Total
6,846
7, 260
7,360
7,360
The public debt was reduced in the fiscal year 1956 and further
modest reductions are planned for 1957 and 1958. By repaying
debt, the Federal Government is enlarging the supply of funds avail-
able for private financing of other activities. However, the heavy
demand for private capital funds and for State and local govern-
ment financing which accompanies the present record prosperity has
increased the interest rates which the Treasury has to pay on securi-
ties issued to refinance the large volume of obligations maturing each
year. As a result, the average rate the Treasury pays on the? out-
standing interest-bearing public debt has risen in the, past 12 months
from 2.49 percent to 2.67 percent.
Substantial reductions- in interest rates cannot-be expected- until
there is a better balance between the present pressure of heavy credit
demands and the supply of savings.
GENERAL GOVERNMENT
About 2 percent of budget expenditures will be required for general
government, mainly for law enforcement and for central management
costs which under present accounting practices are not allocated to
other major Government functions. The estimated expenditures of
1.5 billion dollars for this category in 1958 are 419 million dollars
below 1957 expenditures because of a reallocation of costs. Starting
in 1958, each Government program will bear its share of the Govern-
ment's payment to the civil service retirement fund, and individual
appropriations throughout this budget include amounts for this pur-
pose. The payment was previously made from a single appropriation
to the Civil Service Commission.
The Commission on Intergovernmental Relations recommended, as
a matter of equity, that the Federal Government make payments in
lieu of taxes to local governments in those areas where recent Federal
acquisition of industrial and commercial type properties has created
undue fiscal difficulties. Legislation containing this principle was
introduced in the last session of the Congress and is again recom-
mended.
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MESSAGE OF THE PRESIDENT
? GENERAL GOVERNMENT
[Fiscal years. In millions]
Program or agency
Budget expenditures I
Recom-
mended new
obligational
authority
for 1958
1956
actual
1957
estimate
1958
estimate
Legislative functions
$77
$95
$107
$80
Judicial functions
38
41
45
45
Executive direction
12
13
18
18
Federal financial management:
Tax collection
304
305
331
332
Customs collection, debt management, and other _____
__
171
173
189
187
General property and records management:
General Services Administration
164
245
303
317
Central Intelligence Agency building
(2)
4
4
Central personnel management and employment costs:
Civil Service Commission:
Payments for employee retirement
235
527
2
. 2
Other
18
18
20
20
Labor Department:
Unemployment compensation for Federal
ployees
em-
30
29
29
32
Accident compensation for Federal employees
51
52
53
53
Civilian weather services
34
39
40
41
Protective services and alien control:
. Federal Bureau of Investigation
97
97
' 101
101
? Immigration and Naturalization Service
49
47
50
50
Other
42
41
45
45
District of Columbia and territories and possessions:
Disfrict of Columbia
22
27
43
42
Other (including proposed legislation)
47
51
60
62
Other general government:
Claims and relief acts
230
60
9
7
Other
8
6
4
4
Total
1,629
1,870
1,451
5 1, 438
'After deducting applicable receipts of 4 million dollars in 1956 and 3 million dollars in 1957 and 1958,
mainly for Virgin Islands Corporation.
Less than one-half million dollars.
5 Compares with new obligational authority of 1,595 million dollars in 1956 and 1,851 million dollars in 1957.
General property management.?As part of the continuing endeavor
to increase efficiency of Government services and to better the working
conditions of Federal employees, additional improvements of Govern-
ment buildings are planned. An important improvement will be the
air conditioning of buildings in areas where temperature and humidity
interfere unduly with efficient operations. Because of continuing
deterioration in many Government buildings in recent years, more
renovation and repairs have also become necessary. Additional space
will be needed to avoid overcrowding in certain agencies.
Central personnel management and employment costs.?The Civil
Service Retirement Act Amendments of 1956 require that in the
fiscal year 1958 all agencies of the Government begin to pay to the
retirement trust fund amounts equal to the contributions of their
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MESSAGE OF THE PRESIDENT
employees. Total agency payments are estimated at 566 million
dollars in 1958. Additional expenditures of 2 million dollars will be
made by the Civil Service Commission for payments to annuitants
under special statutes.
The Department of Labor will transfer more of the processing of
accident compensation claims for Federal employees to regional offices
in 1958 in order to bring administration closer to employees and to
speed up payment. Legislation should be enacted to provide for each
employing agency to bear its share of the cost of these benefits and to
encourage still further precautionary safety measures by the agencies.
Substantial increases in benefits for civilian employees of the Gov-
ernment have been adopted in the last two Congresses, and the costs
are generally reflected in budget requests for the employing agencies.
One of these new benefits, unemployment compensation for separated
civilian employees, is financed by an appropriation to the Department
of Labor. An increase is recommended in this appropriation in 1958
to provide the amount estimated to be needed because of higher
average benefit rates, which are based on State statutes.
Legislation is recommended to establish a system of voluntary
health and medical insurance for civilian employees and their depend-
ents. Legislation is also recommended to authorize the training of
Government employees outside as well as within the employing agency.
District of Columbia and territories and possessions.?Appropriations
are recommended for the full amount of the increased Federal payment
to the District of Columbia authorized by the last session of the
Congress. Federal expenditures for the District are estimated to
rise to 43 million dollars in the fiscal year 1958, including 17 million
dollars in loans for construction of public works under the long-term
program authorized in 1954.
Legislation will be proposed again to carry out the treaty and
agreement made in 1955 with the Republic of Panama. The Canal
Zone Government will replace schools and other facilities transferred
to the Republic under the treaty, and the Panama Canal Company
will replace employee quarters and other facilities in the Canal Zone.
Claims and relief acts.?Payments for miscellaneous claims and
relief acts are estimated at 9 million dollars in the fiscal year 1958,
compared to 60 million dollars in 1957 and 230 million dollars in
1956. Most of the decrease in this item results from legislation
enacted last year, under which each agency now pays bills presented
after the appropriation involved has lapsed. Such bills were previously
paid out of a single Treasury Department account.
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MESSAGE OF THE PRESIDENT
CONCLUSION
This concludes the analysis of the 1958 budget. The budget docu-
ment itself contains a great deal of additional budgetary information.
In part I of the budget document there are seven tables presenting
summary data on budget receipts, expenditures, public debt, new
obligational authority, and balances. Detailed information, esti-
mates, and schedules for each agency and each appropriation, including
stfitements of program and performance, appear in part II. Part III
of the budget document contains both summary tables and detailed
appropriation and agency information for trust funds. Part IV
consists of 12 "special analyses" which present additional details,
classifications, and historical data.
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