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Total new authority to incur obligations requested for agriculture and agricultural resources in 1961 is $4.6 billion. This amount includes $1.3 billion to restore, to the extent necessary, the capital impairment of the Commodity Credit Corporation resulting from previous price-support losses and $1.4 billion to reimburse the Corporation for estimated costs and losses through the fiscal year 1960 of other programs financed through that agency.

Stabilization of farm prices and farm income: Most of the recent year-to-year variations in expenditures for agriculture and agricultural resources reflect changes in expenditures for price supports and other programs to stabilize farm prices and farm income. During the 5 fiscal years, 1955-59, Federal spending for these programs has accounted for 70 to 80 percent of the total for all agricultural programs. In the fiscal year 1961, these programs are estimated to cost $3.9 billion, an increase of $450 million over 1960, but a decrease of $1.2 billion from 1959.

Under present laws, price-support expenditures for agricultural commodities cannot be controlled through regular budgetary processes. They are the result, mainly, of the loans and commodity purchases that the Commodity Credit Corporation is required to make, and the other price- and income-supporting programs that the Corporation is required to finance, under existing laws. These expenditures reflect the volume of production, consumption, and exports of price-supported commodities, which, in turn, are influenced by such uncertain factors as the weather and domestic and foreign economic conditions.

The budget estimate for 1961 reflects the residual effect of the large 1958 and 1959 crops and assumes that yields on price-supported crops for the 1960 crop year will be in line with recent averages; also exports of farm commodities in the fiscal year 1961 may be down somewhat from the high level expected in 1960.

The Sugar Act expires on December 31, 1960. To give sugar producers maximum time for production planning, action should be taken early in the present session of the Congress to continue this program.

We are continuing to use our surplus agricultural production in many ways for constructive purposes overseas through the "food for peace" program. Under the Agricultural Trade Development and Assistance Act of 1954 (Public Law 480), surplus wheat, cotton, corn, rice and other commodities are being sold abroad for foreign currencies. These currencies are used principally as loans or grants for the economic development and common defense in foreign countries, and to a lesser extent to finance various U.S. progrmas abroad. Surplus commodities are also being given to foreign governments for emergency relief needs and to private relief organizations in support of their programs abroad; over 60 million needy people benefited this past year from these dona

tion programs. Last year the executive branch proposed certain amendments which, if enacted, would have made this surplus disposal program more effective. It is recommended that the Congress again consider these amendments.

Rural electrification and telephones: About 96 percent of our farms now have central station electric service, as compared with 11 percent in 1935. The expanding use of power in the areas served by electric cooperatives financed by the Rural Electrification Administration continues to require substantial amounts of new capital every year to provide additional generating capacity and heavier transmission and distribution facilities. More than one-half of the total power sales by the REA system are made to rural industrial, recreational, and other nonfarm customers. The nonfarm users now comprise over 80 percent of the new customers being added.

The Rural Electrification Administration currently finances the capital needs of the cooperatives by borrowing from the Treasury at the statutory interest rate of 2 percent and relending at the same rate. Legislation is proposed under which REA would (a) borrow from the Treasury at not to exceed the average rate of interest payable by the Treasury on recently issued long-term marketable obligations, and (b) make future electric and telephone loans at the same rate plus one-fifth of 1 percent to cover administrative expenses and estimated losses. Legislation now before the Congress to place the operations of this agency on a revolving fund basis should also be enacted.

It is vital, looking ahead, that legislation be developed to enable telephone as well as electric borrowers to obtain funds from a mutually owned financing institution to meet the needs for the future growth of these borrowers. Under this longer range plan, loans would also be available from the Rural Electrification Administration to meet special circumstances. The Secretary of Agriculture will work with REA cooperatives and other interested parties in developing such a proposal.

Farm ownership and operation: In 1961, new direct loans and administrative expenses of the Farmers Home Administration are proposed in an amount equal to estimated collections on outstanding loans. Loans are made to borrowers who are unable to obtain credit from other sources at interest rates currently prevailing in their communities in order to finance farm ownership and enlargement, farm operations, and soil and water conservation. Direct loans for farm ownership and soil and water conservation are supplemented with private loans insured by the Federal Government.

The present authority of the Secretary of Agriculture to make loans to farmers and ranchers is the cumulative result of the enactment of many separate laws over a long period of years. The legislation now before the Congress to simplify, consolidate, and improve the au

thority of the Secretary of Agriculture to make these types of loans should be enacted. Also, the pending legislation to require the States to share a greater part of the costs of farm disaster relief assistance should be enacted.

Conservation of agricultural resources: Expenditures under the conservation reserve program are expected to be $394 million in the fiscal year 1961. Of this amount $362 million will be needed to fulfill commitments incurred in the crop years 1956 through 1960 under existing authority, and $32 million will be used for conservation practice payments and additional operating expenses under proposed legislation to extend this program for 3 years. Under the proposed legislation it is planned to add about 9 million additional acres to the program during the 1961 crop year, bringing the total at the end of that crop year to about 37 million acres. Increases in expenditures required for the 1961 crop year program will occur mainly in 1962 and later fiscal years.

In both the 1959 and 1960 appropriation acts, the Congress maintained the agricultural conservation program at levels which far exceeded my recommendations. As a result, expenditures of the Agricultural Conservation Program Service are estimated to be $244 million in 1960 and $233 million in 1961. The advance authorization for the 1961 agricultural conservation program, which will affect primarily fiscal year 1962 expenditures, should be limited to $100 million. The lower program mended, together with other public aids for soil and water conservation, will meet the Nation's high-priority conservation needs.


Federal policy on cost-sharing assistance in the future should be concentrated on conservation measures which will foster needed shifts to less intensive uses of cropland, and assistance should be eliminated for practices which increase capacity to produce agricultural commodities already in surplus supply. Continuation of cost sharing for outputincreasing practices would directly conflict with the recommended expansion of the conservation reserve program under which cropland is removed from production.

New obligational authority of $43 million is recommended for the upstream watershed programs, including $28 million for projects under the Watershed Protection and Flood Prevention Act. Of this amount, $5 million is provided to initiate construction on projects involving an estimated total Federal cost of $29 million.

New obligational authority of $10 million is requested for the Great Plains conservation program, the same as for 1960. Under this program conducted in designated counties of the 10 Great Plains States, the Federal Government provides cost-sharing and technical assistance to farmers who enter into longterm contracts to make needed adjustments of land use on their farms.

Research and other agricultural services.-Expenditures for research, educa


tion, and other agricultural services, exclusive of programs financed with foreign currencies, will be about $8 million higher in the fiscal year 1961 than in 1960. This amount will provide increased support for the research programs on pesticide residues and on industrial uses of farm commodities. will also provide increased support for the rural development program which is making an important contribution to the solution of the economic problems of rural areas arising out of technological changes in agriculture and inadequate employment opportunities.

In addition, it is estimated that $19 million will be spent in 1961 for the purchase of foreign currencies, obtained from the sale of surplus farm commodities, to be used for research and market development work abroad. This compares with approximately $12 million in foreign currencies to be used for this purpose in 1960.


The recommendations in this budget for Federal natural resource programs take into account their great importance to the Nation's economic growth and security.

The estimated total of $1.9 billion to be spent in the fiscal year 1961 for natural resources is more than has been spent for this purpose in any previous year. The increase of $152 million over 1960 is predominantly for water resources programs.

Water resources: The Corps of Engineers and the Bureau of Reclamation will spend an estimated $1.2 billion in the fiscal year 1961 to construct, maintain, and operate flood control, navigation, irrigation, power, and related projects. This record total includes, in addition to operating costs, $965 million to continue construction on projects started in 1960 or prior years, $12 million for advance planning, and $18 million for the first-year expenditures on 42 proposed new starts. These new projects, as well as three new construction starts by the Tennessee Valley Authority and one by the International Boundary and Water Commission, are recommended in this budget in the interest of balanced development of water resources.

For the Corps of Engineers, appropriations (as distinct from the expenditures previously discussed) of $21 million are required for starting 31 new projects and for an additional number of smaller projects costing less than $400,000 each. The estimated commitments for these new projects total $301 million. Appropriations of $6 million for 1961 are recommended for the Bureau of Reclamation to begin construction on six projects with total estimated commitments of $184 million, and $11 million for loans which will be used by local groups to start work on five small reclamation projects.

I again recommend that the Congress authorize the Fryingpan-Arkansas project in Colorado.

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1 Compares with new obligational authority of $1.742 million enacted for 1959 and $2,538 million (including $32 million of anticipated supplemental appropriations) estimated for 1960.

To carry forward the joint development of the waters of the Rio Grande, construction should be started on the Amistad (Diablo) Dam, in accordance with the treaty of February 3, 1944, between the United States and Mexico. I urge the Congress to enact promptly the legislation now needed to authorize negotiation of an agreement for this construction. Funds will be requested for the U.S. share of the first-year cost of this project following enactment of the legislation. Provisions is made in this budget to begin modification of the lower Rio Grande levee system.

Under legislation enacted during the past session, the Tennessee Valley Authority plans to issue an estimated $115 million of revenue bonds in 1961. These funds will be used to help finance construction of a second unit in the Paradise steam powerplant and of other units underway, including new generating capacity in the eastern part of the TVA area. The Authority will start construction of the Melton Hill project for navigation and power. In accordance with this administration's policy, and as authorized under the Tennessee Valley Authority Act as amended by the recently enacted revenue bond legislation, the power facilities portion of this project will be financed from net power proceeds and revenue bonds, and the remaining portion will be financed from appropriations. With the completion of the Wilson lock, the present lock at Wheeler Dam will be a bottleneck for shipping on the Tennessee River. Appropriations are therefore recommended for 1961 to begin construction of a new lock at Wheeler Dam.

Research for converting sea water and brackish water into fresh water, carried on cooperatively by the Department of the Interior and non-Federal groups has progressed to the point where some processes are in the development stage. Construction will begin in 1960 at Freeport, Tex., on a demonstration plant for conversion of sea water, and $1.5 million is recommended in the 1961 budget for the Federal cost of building the first brackish water plant as well as a second sea water plant. Advance planning will be completed in 1961 on two additional demonstration plants.

Cost-sharing on flood protection projects: It is essential that legislation be promptly enacted to establish a consistent basis for cost-sharing on projects which provide flood protection benefits. At the present time, the various Federal agencies responsible for flood protection operate under different and confusing cost-sharing standards. The non-Federal contributions vary from zero to over 60%. This intolerable situation should be corrected. Legislation now before the Congress would require generally that identifiable non-Federal interests receiving flood protection benefits bear at least 30% of the costs of flood protection. The value of lands, easements, and rights-of-way contributed locally would be included as part of this nonFederal share. The cost of operation and maintenance would also be a State or local responsibility.

Mineral resources: Amendments to the Helium Act were recommended last year to carry out a long-range plan for conserving helium. This lightweight nonflammable gas is important to the Nation's atomic energy and missile programs, and known deposits of it are extremely limited. Under the legislation proposed, private industry would be encouraged to finance, build, and operate plants which would make helium available for conservation by the Department of the Interior. Prompt enactment is needed to check the waste of this essential gas.

The Bureau of Mines will continue its research on improved methods of production and utilization of coal and other minerals. Legislation is again recommended to grant authority to the Secretary of the Interior to contract for coal research, thus allowing the Secretary to use outside scientific resources to assist the coal industry.

Other resource programs: In the fiscal year 1961, programs for conserving and developing the resources of the public domain and Indian lands will be carried on at about the 1960 levels. Although total expenditures for forest resources are estimated at about the same level in 1961 as in 1960, some increases are provided in 1961 to carry forward the long-range program of the Forest Service for conservation and development. including added facilities and services to accommodate campers and picnickers. It is expected that these increased expenditures will be offset by a decrease in

the unusually large 1960 outlays for fighting forest fires.

Receipts from the timber, grazing, and mineral resources on these public lands are estimated to increase to a total of over $400 million in 1961, including revenues from mineral leases on the Outer Continental Shelf. To obtain a more adequate return for use of federallyowned resources, legislation is again recommended to revise the fee schedule for noncompetitive oil and gas leases on public domain lands.

In the interest of improving efficiency and providing convenience for the nonFederal parties concerned, certain functions with respect to land and timber exchanges should be transfered from the Secretary of the Interior to the Secretary of Agriculture by legislation embodying the basic provisions of Reorganization Plan No. 1 of 1959, which was disapproved by the Congress. In these exchanges, the Government obtains nonFederal lands in exchange for national forest lands administered by the Secretary of Agriculture or for timber on such lands. This legislation is need to simplify the work relating to these land exchanges.

Each year more of our citizens use and enjoy the national parks. Expenditures of $86 million estimated for the National Park Service in 1961 for recreational resources will provide for additional urgently needed facilities and services for visitors, for maintenance and operation of the present facilities, and for selective acquisition of lands to add to existing park areas.

Before it is too late we should take steps to preserve, for public benefit, part of the remaining undeveloped shore areas. I hope, therefore, that the Congress will enact during this session the legislation proposed in the last session to permit the Secretary of the Interior to select and acquire for the national park system three areas which would be of national significance because of their outstanding natural and scenic features, recreational advantages, and other public values.

Contract authority is available to finance planned construction of parkways, roads, and trails in the national parks and forests and on Indian lands during 1961. Beginning in 1962, this construction should be financed by direct appropriations, and the budget so

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are estimated to be $128 million more than for the current year. The largest increase is for promotion of public health, mainly for research and hospital construction, as a result of much larger appropriations by the Congress in previous years. Significant increases are also estimated for the support of basic research provided by the National Science Foundation and for the defense education and public assistance programs of the Department of Health, Education, and Welfare.

Budget expenditures for labor and welfare programs will be more than double the amount a decade ago. During the same period, trust funds expenditures for these programs, including social security and unemployment compensation, will have quintupled to an estimated $16.2 billion in 1961. Labor and welfare [Fiscal years. In millions]

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1 Compares with new obligational authority of $4,182 million enacted for 1959 and $4,543 million (including $22 million in anticipated supplemental appropriations) estimated for 1960.

New obligational authority recommended for 1961 totals $4.5 billion, about

the same as for 1960 but $356 million more than for 1959. Reductions from 1960 are recommended in the grant-inaid programs for assistance to schools in federally affected areas for hospital construction, and for waste treatment works construction. Larger appropriations are proposed for other presently authorized activities in the fields of science, vocational rehabilitation, education, welfare, and health. In addition, a number of new programs are recommended to meet important national needs, particularly in the education and labor fields.

In the last several years great strides forward have been made in the social security, welfare, and health fields. The Secretary of Health, Education, and Welfare is continually reviewing the various programs in these fields for the purpose of determining where improvement should be made. As needs for improvement are found, appropriate recommendations will be made.

Education and research: Our Nation seeks to foster a climate of freedom and creativity in which education, the arts, and fundamental science can flourish. The Federal Government helps in the attainment of these objectives through programs for support of basic research, aid to educational institutions, and training assistance to individuals in various fields important to the national interest. In this budget, I recommend increased appropriations for high-priority education and research programs and enactment of new legislation to authorize additional aids to education.

I am recommending repeal of the provision of the National Defense Education Act that prohibits payments or loans from being made to any individual unless he executes an affidavit that he does not believe in or belong to any organization that teaches the illegal overthrow of the Government. This affidavit requirement is unwarranted and justifiably resented by a large part of our educational community which feels that it is being singled out for this requirement.

Education: Expenditures for the education-aid programs authorized by the National Defense Education Act of 1958 will increase sharply in 1961. During the current school year more than 100,000 students from 1,368 colleges, about 4 times the number of students last year, are expected to borrow from college loan funds to which the Government makes repayable advances. A supplemental appropriation of nearly $10 million is proposed to enlarge this loan program for 1960. A small increase in appropriations is recommended for 1961, pending further experience on the rate at which lcans will be made to students. Increases are also proposed for fellowships for prospective college teachers; for grants to States for science, mathematics, and foreign language teaching equipment; for research in the educational use of television and other media; for contracts with universities for training of counselors and for foreign language training; and for grants to States for vocational training in occupations requiring scientific skills.

Appropriations of $70 million are re- and universities from 1960 to 1975 brings quested for aids to science education programs administered by the National Science Foundation, an increase of $3 million over the amount provided in 1960.

The budget includes the same aggregate amount for vocational education programs as was appropriated this year, but with shift in emphasis. The need for Federal assistance in the vocational education programs begun in 1917 for the purpose of stimulating training in agriculture, home economics, industrial trades, and distributive occupations is not as great as for promotion of training in new science-age skills. Thus as increased funds for training needs in new skills are provided under the National Defense Education Act, Federal assistance for the older programs is being reduced by a corresponding amount.

Appropriations recommended for 1961 to assist school districts whose enrollment comes partially from children whose parents work or reside on Federal property are $54 million below those enacted for 1960 and are in line with requirements under legislation proposed by the administration last year. The appropriation recommended for these programs is the maximum which I believe should be provided. The substantial increase in Federal employment during World War II, which led to the enactment of this legislation in 1950, has been superseded by a relatively stable Federal establishment. In many cases, the presence of Federal installations in the communities adds to rather than detracts from the revenue base for the support of schools. This is particularly true where parents employed by the Government live on private property which is subject to State and local taxation even though they earn their income on nontaxable Federal property. The proposed legislation would discharge more equitably the Federal responsibility in these districts, and its prompt enactment by the Congress is recommended.

The pressing need now is not for aid to federally affected districts on the basis initiated in 1950 but for general aid to help localities with limited resources to build public schools. Despite encouraging progress in the rate of school construction, many school districts are still finding it difficult to avoid overcrowding and double sessions as enrollments continue to mount. Moreover, increasing secondary school enrollments require facities which are much more costly than elementary school classrooms. Last year the administration recommended legislation authorizing annual Federal advances to local school districts to pay up to half the debt service (principal and interest) on $3 billion of bonds to be issued in the next 5 years for school construction. This legislation is designed to stimulate, not supplant, additional State and local effort. Affirmative action should be taken this year on that proposal.

Congressional approval of the administration's proposals for aid to higher educational institutions is also essential. The enrollment growth facing colleges

a need for additional academic, housing, and related educational facilities. To help colleges finance the construction required, the administration's proposal would authorize Federal guarantees of $1 billion in bonds with interest subject to Federal taxation, and would provide Federal grants, payable over 20 years, equal to 25 percent of the principal of $2 billion of bonds. This program would provide aid on a much broader basis, and result in the construction of much larger total amounts of college facilities per dollar of Federal expenditures, than the present more limited college housing loan program which should be allowed to expire.

Basic research: To provide a strong foundation of fundamental scientific knowledge for the Nation's future advancement, this budget provides, in various functional categories including major national security, expenditures totaling more than $600 million for support of basic research in 1961.

Appropriations of $122 million are recommended for support of basic research by the National Science Foundation, an increase of $34 million over 1960. The total includes $79 million for basic research projects and $15 million for grants to universities for modernization of graduate level laboratories under a program initiated in 1960. Increased support is also provided for scientific work of the Bureau of Standards, including funds for two new laboratories, as a first step in the construction of completely new facilities for the agency.

Oceanography: Federal support of oceanography and related marine sciences is being substantially augmented by several agencies under a long-range program developed by the Federal Council on Science and Technology to strengthen the Nation's effort in this field. This program stems from a study undertaken by the National Academy of Sciences at the request of several agencies. The expansion of oceanographic research will be undertaken by the Navy, the Departments of Commerce and the Interior, and the National Science Foundation. Funds are provided for the construction of new vessels and the replacement of obsolete vessels, and for increased support for research by private institutions.

Government statistical services: Adequate and timely national statistical information is essential for recording and appraising the performance of the Nation's economy, and for formulating public and private policies. Activities planned in various agencies for the fiscal year 1961 will help close significant gaps in our statistical information and make improvements in current data. Obligations for these purposes in the various functional categories of the budget are estimated at $62 million, including $20 million for the decennial census and other periodic statistical programs.

This budget includes funds for tabulating and processing basic economic and demographic data collected through

the Eighteenth Decennial Census, and for the final publication of the results

of the 1958 censuses of business, manufactures, and mineral industries. Other recommendations include the initiation of a new series on the service trades and the improvement of data on retail trade, on consumer prices, on health, on crop and livestock production, and on State and local government finances.

Labor and manpower: Last year the administration recommended and the Congress enacted much-needed legislation designed to protect workers and the public from racketeering, corruption, and abuse of democratic processes which had been disclosd in the affairs of a few labor unions. To assure effective and efficient administration of this new law, the budget recommends supplemental appropriations in 1960 for the National Labor Relations Board and the newly established Bureau of Labor-Management Reports in the Department of Labor. Increased appropriations proposed for both agencies for 1961. Additional funds needed by the Department of Justice will be requested later when requirements can be better determined.



Appropriations of $326 million are requested in the fiscal year 1961 for grants to the States to administer the FederalState employment security system with its network of 1,800 offices throughout the country. These grants are now financed from an earmarked Federal tax and the transactions involved increase both budget receipts and expenditures, even though these funds cannot be used for general Government purposes. islation proposed by the administration last year for financing this program through the unemployment trust fund should be enacted. Amounts equal to the proceeds from this tax could then be placed directly in the trust fund from which the necessary grants could be appropriated and an adequate balance could be maintained as a reserve for employment security purposes. The administration of the program would then be financed in essentially the same way as other major social insurance programs.

The job placement services and unemployment compensation payments provided through the State employment security offices are important for a smoothly operating free labor market in a growing economy. These services and payments provide also for security against economic hardship for the work force covered by the system. I again urge the enactment of legislation to extend unemployment compensation to some 3 million workers, primarily those employed in small enterprises. Some States have recently made encouraging progress in increasing the duration and level of benefits, but more needs to be done and additional States should take these steps.

Action is needed to strengthen the financial position of the unemployment compensation system. Although the reserves of most States proved adequate in the past recession, a few were and still are in a precarious condition. Moreover, reserve funds in most States have fallen behind the growth in pay

rolls during the last decade, and in certain States could be inadequate in the event of future economic distress. I have asked the Secretary of Labor to make a study of this problem and to report to me his conclusions.

Previously proposed amendments to strengthen the basic authority in the Welfare and Pension Plan Disclosure Act should be enacted, and the protection of the Fair Labor Standards Act should be extended to several million additional workers in accordance with previous recommendations. Legislation is likewise again proposed to assure equal pay for equal work, and to strengthen and improve laws governing hours of work and overtime pay on direct Federal and certain federally aided construction projects.

Public health: Advances in medical technology and the spread of private health insurance have played important roles in raising the level of health services for our rapidly growing population. At the same time, the growing demand for better health care has contributed to shortages of facilities, medical and scientific manpower, and supporting health workers, as well as to the rising cost of medical and hospital services.

In order to deal effectively with these developments, the Federal Government has expanded its public health programs and is actively seeking solutions to the Nation's health problems. Expenditures in the fiscal year 1961 are estimated to total $904 million, which is $53 million more than in 1960 and nearly three times the level five years earlier. The largest part of the increase is for medical research and training of research workers through programs of the National Institutes of Health, for which the estimated expenditures of $390 million in 1961 will be four times as great as five years ago. Expenditures for hospital construction grants are estimated at $161 million in 1961, a threefold increase during the same period.

The Department of Health, Education, and Welfare will insist on maintaining high standards in determining the acceptability of medical research projects for Federal support. As I indicated last August in approving the 1960 appropriations for the Department, it is essential that Federal grants for these projects be so administered that medical manpower is not unduly diverted from other pressing needs and that Federal funds are not substituted for funds from private sources. The 1960 appropriation of $400 million for the National Institutes of Health will not be entirely committed this year even with advanced funding of certain training programs. I am recommending that 1961 appropriations to the National Institutes of Health continue at the high level of 1960.

The recommended appropriation for the Hill-Burton hospital construction program for 1961 is consistent with the levels achieved by this program before the 1958 recession. It will assure that sufficient new general hospitals can be financed to keep pace with population growth, cover current obsolescence rates, and provide for 6.000 new beds to reduce the backlog of needs. The remainder of

this program, covering diagnostic and other special facilities, would approximate the 1959 and 1960 levels.

The 1961 appropriation proposed for construction of waste treatment facilities is the same as that requested for 1960. It represents the maximum amount which I believe is warranted for a construction program which is and should remain primarily a State and local responsibility.

Larger appropriations are proposed for other health programs where present or impending needs create urgent priorities. Emerging health problems of increasing seriousness to our population arise from the complexities of the environment in which we live. To cope with the far-reaching problems of environmental health on a more systematic and intensive basis, this budget provides substantial increases to the Public Health Service for air pollution, water pollution, and radiological health control activities. These increases for radiological health, together with the stepped-up activity by the Atomic Energy Commission and other agencies, will permit a greatly intensified effort by the Federal Government in this field. In order to provide for more effective Federal air and water pollution control activities, the Secretary of Health, Education, and Welfare will make legislative recommendations to strengthen the enforcement provisions of the Water Pollution Control Act and to authorize greater Federal leadership in combating air pollution.

Rapid technological developments in the production, processing, and marketing of foods, drugs, and other products likewise underline the necessity for more research and action for the protection of the consumer. To meet this need, the budget continues to emphasize an orderly expansion of the Food and Drug Administration, expenditures for which will be more than double those five years ago.

Social insurance and other welfare: The social security insurance system now provides basic protection against loss of income from death, disability, and retirement to about 85% of our labor force. Another 8% are covered under the railroad retirement system and other public retirement systems.

Social security and public assistance: At the present time 10 million of the 16 million people aged 65 and over are receiving monthly old-age or survivors insurance benefits. This vast insurance system, which will pay $11.7 billion in old-age, survivors, and disability benefits to 14.6 million people of all ages in 1961, is administered at a cost of about 2% of the social security taxes.

Our social insurance and public retirement systems provide basic protection to the worker and his family. For those who have no such protection and whose incomes are insufficient to meet basic needs, the Federal Government shares, through grants to the States, in providing four categories of public assistance payments. These are (1) oldage assistance, (2) aid to the blind, (3) aid to dependent children, and (4) aid to the permanently and totally disabled.

In 1961, the Federal share for payments, made to an estimated monthly average of 5.9 million beneficiaries, will total an estimated $2.1 billion, or about 58% of the total Federal-State-local public assistance expenditures. This contrasts with Federal expenditures of $1.1 billion, representing a Federal share of 52 percent, for payments to 4.9 million individuals in 1950.

Public assistance has long been recognized as primarily a responsibility of the State and local governments, because need for these payments in individual cases can best be determined at the local level. I am particularly concerned about the growing Federal share, especially because it tends to weaken this sense of State and local responsibility.

While we are spending hundreds of millions for aid to the needy, there are large gaps in our knowledge of the causes of dependency and of the best ways to alleviate or prevent it. I believe that appropriations to initiate a program of research and demonstration projects designed to identify and alleviate these causes are highly necessary and I have so recommended in this budget.

Military service credits: It has long been recognized that military service should be counted toward the rights of employees under the various public retirement programs. Likewise, where employees are not required to make payroll contributions during military service, the trust funds from which benefits based on such service are paid should be reimbursed by the Government. However, the Federal Government should not, as required under the Railroad Retirement Act, pay more than the true cost of such benefits or pay to both the railroad retirement account and to the old-age, survivors, and disability insurance trust funds for the same military service benefits.

Accordingly, I repeat my earlier recommendation that the Federal Government should reimburse the railroad retirement account only for the actual added cost of benefits resulting from military service. Pending action on legislation dealing with substantial overpayments found by the Comptroller General, no provision is made in this budget for further Federal military service payments to either the railroad retirement account or the old-age, survivors, and disability insurance trust funds.

Other welfare services: This budget includes recommended appropriations for vocational rehabilitation totaling $72 million for the fiscal year 1961, primarily for grants to help the State agencies rehabilitate an estimated 93,000 individuals, about 6 percent more than in 1960.

Grants to all school systems in the States through the school lunch and special milk programs of the Department of Agriculture are estimated at $234 million in 1961, approximately the same as in 1960. These programs will provide improved diets for 11.8 million children, on the average, in 1961. The 1961 amount is in addition to the commodities which are distributed to the schools through the disposal programs classi

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