The estimated expenditures for the fiscal year 1936, as shown in the General Budget Summary, total in round figures $8,520,000,000, including statutory debt retirements. Of this amount, $3,938,000,000 are for regular purposes, and the remainder for recovery and relief. The regular expenditures consist of $1,622,000,000 for the operation and maintenance of the regular departments and establishments of the Government, which includes $200,000,000 to be expended from an annual appropriation of $300,000,000 for public works, as requested in the Budget and as explained below. The other items of regular expenditures are $740,000,000 for veterans' pensions and benefits, $875,000,000 for interest on the national debt, $636,000,000 for statutory debt retirements, and $65,000,000 for tax refunds (excluding processing tax refunds).

Some of the principal increases in the major expenditure items for 1936 may be cited. The restoration of the final 5 percent of the 15percent salary reduction amounts to about $40,000,000 for the regular departments and establishments, exclusive of the Postal Service. The latter service requires an additional sum of $25,000,000 for this purpose. Provision has been made in 1936 for an increase in the civil-service retirement and disability fund of $20,000,000 over 1935, making a total annual contribution to this fund of $40,000,000. This increase will enable the Government to meet more nearly its annual obligation with respect to this fund. It has been estimated that this obligation amounts to $52,000,000, but such estimate has not been sufficiently established to justify its inclusion in the Budget. An effort will be made during the coming year, however, definitely to establish the Government's annual liability, the amount of which will be included in the 1937 Budget. Likewise, an increase of $50,000,000 is recommended in the veterans' adjusted-service certificate fund, thus bringing the total annual contribution to this fund up to $100,000,000. The actuarial requirement of the fund for 1936 has been estimated at $155,000,000. An effort will also be made during the coming year to establish this fund on a more definite basis consistent with the Government's actual liability under existing law. The expenditures for national defense have been increased for 1936 over 1935 by $180,000,000. This increase is due to the current policy of the Congress and the Executive to make up for the delay by the United States in meeting the provisions of the naval treaties of 1922 and 1930, and to provide replacement and improved equipment for the Army. Veterans' pensions and other requirements have also been increased by about $130,000,000, after adding to the 1935 figure the estimated supplemental amount previously mentioned, which is due to the application of new laws and revised rules pertaining to service-connected disabilities.

Another increase in the estimated expenditures is $200,000,000 from an appropriation of $300,000,000 which I am requesting for public works. This appropriation is intended to take care of the normal public-works requirements of the Government usually included in the annual supply bills, such as Federal highways, river and harbor improvements, and general public works, including the construction program of the Tennessee Valley Authority. This requested appropriation may therefore be regarded as regular instead of emergency. The debt charges for interest and retirements have increased considerably due to the growth of the national debt, but the decrease in the average annual interest rate has served to keep these charges down.

The estimated expenditures for recovery and relief during 1936 are placed at $4,110,000,000, excluding $472,000,000 for the Agricultural Adjustment Administration. I recommend that $4,000,000,000 be appropriated by the Congress in one sum, subject to allocation by the Executive principally for giving work to those unemployed on the relief rolls. An estimate of expenditure covering this amount is included in the Budget.

The total receipts for the fiscal year 1936 are estimated at approximately $3,992,000,000. When $570,000,000 of estimated processing taxes are deducted from this amount, there will remain for general purposes, $3,422,000,000.

The detailed estimates of revenues and receipts for 1936, shown in Statement No. 1, indicate a gain of $137,000,000 in the collections from income tax over those for 1935. This gain is due to anticipated improvement in business and to the upward revision of rates in the Revenue Act of 1934. The miscellaneous internal-revenue taxes for 1936 are estimated to increase some $143,000,000 over the collections for 1935. This increase is predicated on the assumption that the taxes terminating on June 30 and July 31, 1935, will be extended by the Congress, and also that the tax rates which would be reduced. on June 30, 1935, will be continued. Otherwise there will be a reduction in the total estimate of miscellaneous internal-revenue taxes of $378,000,000, thus bringing the total estimate down to $1,308,000,000, excluding processing taxes. Customs are estimated to yield $298,000,000 for 1936, representing a small increase of $11,000,000 over 1935. Miscellaneous revenues and other receipts are estimated to produce $250,000,000, a gain of about $23,000,000 over 1935.

While I do not consider it advisable at this time to propose any new or additional taxes for the fiscal year 1936, I do recommend that the Congress take steps by suitable legislation to extend the miscellaneous internal-revenue taxes which under existing law will expire next June or July, and also to maintain the current rates of these

taxes which will be reduced next June. I consider that such taxes are necessary to the financing of the Budget for 1936.

In this connection, may I say, too, that the postal revenues, as estimated in detail in the annexed budget of the Post Office Department, are based on the continuation of the 3-cent postage rate for nonlocal first-class mail. Unless this rate is continued, the postal expenses for 1936, which include steamship and aircraft subsidies and free carriage of Government mail, will be increased by about $75,000,000, all of which will become an added burden on the general revenues of the Treasury. I, therefore, recommend the extension of the 3-cent

rate.

If the estimates submitted in this Budget are approved, and if the expenditures for which authorization is asked are made in full, the deficit, including statutory debt retirements, will amount to $4,528,000,000 for the fiscal year 1936. The national debt will be increased during this year by approximately $3,152,000,000, thus bringing the total debt up to $34,239,000,000. But this increase, as I have pointed out, will be due solely to continued relief of unemployment.

CONTINUATION OF EMERGENCY AGENCIES

A number of the emergency agencies now authorized by law will terminate during the present fiscal year. Most of these agencies fill important present needs and should be continued. As rapidly as seems practicable, I am bringing the administrative expenses of these agencies under the supervision of the Director of the Budget.

ECONOMY LEGISLATION

Many of the estimates of appropriations contained in the Budget are based upon the continuation of certain legislative provisions with reference to economy which are now in force. They are appended hereto and should be reenacted if the estimates are to be sustained. Among those continued is the provision for certain special salary reductions, the suspension of the reenlistment bonus to men of the military and naval services, the reduction in travel allowances of certain postal employees, permitting temporary reassignment of duties of certain postal employees, reduction in fees of jurors and witnesses, permitting transfers between appropriations, and the involuntary retirement of Federal employees having 30 years' service. Specific provision is also made for service credits to certain personnel affected by the suspension of increases in pay during the fiscal years 1933 to 1935, in the determination of compensation accruing subsequent to June 30, 1935, but without authorizing the payment of the amount that would have been paid during these years. Among the economy provisions which now obtain and

which it is not proposed to continue is the 5-percent reduction in compensation of Government employees after July 1, 1935. I see no reason, however, for the restoration of this reduction prior to that date. The index figure of the cost of living, on the basis of which salary restorations are provided by section 3, title II of the Economy Act of 1933, now indicates that such restorations in all probability would not even be justified on next July 1, or for some time thereafter.

IMPROVEMENTS IN THE FORM OF THE BUDGET

Several important changes have been made in the form of the Budget document for 1936. The purpose of these changes has been twofold: (1) To improve the usefulness of the document from the citizens' standpoint, and (2) to provide more adequate treatment of the financial requirements of certain governmental units, such as the Post Office Department and the District of Columbia.

The General Budget Summary, following this message, is designed to present on one page a comprehensive picture of the financial requirements of the Government. It exhibits the anticipated receipts from all sources and the estimated expenditures for all purposes. It also shows the deficit and indicates the proposed means of financing this deficit. Since the figures presented in the summary are necessarily in aggregate amounts, the details of these amounts are shown in six supporting schedules. Both in the summary and in these schedules appropriate columns are carried to provide direct comparisons between the Budget figures for 1936 and the estimated and actual figures for 1935 and 1934.

The revenue estimates are emphasized in this Budget for the first time. These estimates are set forth in Statement No. 1 in sufficient detail to show all the principal sources from which the Government gets its income. Accompanying this statement is a supporting text, which analyzes and gives the reasons for the 1936 estimates, and compares them with those for 1935 and with the actual collections for 1934.

Annexed budgets are set up for the major self-supporting or selfcontained units of the Government, namely, the Post Office Department, the Reconstruction Finance Corporation, the Tennessee Valley Authority, and the District of Columbia. The use of such budgets permits the receipts and expenditures of each of these units to be clearly and completely presented in gross figures and in balanced form, as has not hitherto been done. By following this method, the net figures for each unit, which may be either appropriation needs or surplus receipts, are calculated and then carried to the General Budget Summary. Thus the financial requirements of these units

are definitely tied into the general budgetary plan. The annexed budgets are therefore not in any sense independent or multiple budgets but simply integral parts of the Government's general Budget.

BETTER METHODS OF FISCAL CONTROL

In order to promote more satisfactory methods of budgetary control in the Government, I propose this year to inaugurate the policy of having a Summation of the Budget prepared for publication immediately after the Congress has acted on all financial matters. This summation will be ready on or before July 1, unless the Congress is still in session. It will be presented along the lines of the General Budget Summary and supporting schedules, including Statements Nos. 1 and 2, as shown in this Budget. It will exhibit the revenue estimates, so revised by the Treasury, as to reflect any changes in the economic situation during the preceding 6 or 7 months and also any revisions made by the Congress in the tax laws. It will provide a complete summary of all appropriations and expenditure authorizations made by the Congress and related estimates of expenditures. Lastly, it will indicate the need for executive or administrative measures in controlling the execution of the Budget during the fiscal year 1936.

A substantial reduction in the number of appropriation items would facilitate the exercise of budgetary control over expenditures and at the same time make for departmental economy. I, therefore, recommend that the Congress establish a special joint committee to make a detailed study of the appropriation items in each regular appropriation bill with a view to greatly reducing the number of them, consistent with proper budgetary and accounting requirements.

It is my belief that substantial adherence to the general recommendations and total figures presented in this Budget will accomplish three major objectives: (1) The normal functions of the United States Government can be carried on with economy and a high standard of efficiency, (2) the broad obligation of the Government to use all proper efforts to prevent destitution can be maintained under more practical methods than we are using at present, and (3) the excellent credit of the Government will be maintained for the common good.

I believe that the Congress will sustain these objectives. FRANKLIN D. ROOSEVELT.

JANUARY 3, 1935.