TREASURY DEPARTMENT Annual appropriations for Treasury Department for 1956 and estimated requirements for 1957 [Millions of dollars] Secretary HUMPHREY. Now, with your kind permission, Mr. Chairman, I would like to attempt to answer such general questions as you and members of the committee may have. As I have some things waiting for me and, if it is agreeable to you, when you have finished with me, I would like to ask that I be excused, and that Mr. Burgess take the matter up from there and go into the details of each of the bureaus. Mr. GARY. Off the record. BALANCED BUDGET Mr. GARY. Mr. Secretary, I notice you state in your opening state ment: The best evidence that effective emphasis has been placed on economy of operation of the Government in the last 3 years is in the record of budgetary results. In these 3 years costs of the Government have been reduced more than $10 billion, and we now estimate that the budget will be in balance during the present and next fiscal year. I was examining the budget just before I came to this meeting, and it appears to me that the budget has been balanced by estimating an increase of the receipts. Last year at this time the estimated expenditures for the current fiscal year ending next June 30 were $62,400 million, and the estimated receipts were $60 billion. The revised estimates for this current fiscal year which the President submitted on yesterday in his budget message were $64,300 million in expenditures, an increase of approximately $2 billion, whereas the estimated receipts have been revised upward to $64.5 billion, an increase of $4.5 billion. The estimated expenditures for 1957 are $65.9 billion, an increase of $1.3 billion over 1956; and the estimated receipts at the same time go up to $66.3 billion, an increase of $1.8 billion for 1957. Are those figures correct? Secretary HUMPHREY. I think that is right. Those are the correct figures. You see, you have to have in mind, Mr. Chairman, that we are in a growing economy, we are in a growing country, and there are a good many things in a growing economy and a growing country and growing business where your totals will increase, but as it happens our revenues have increased faster than our expenditures. Our expenditures were very substantially reduced from what they were sometime ago. They have now in some cases moved back for special services and security, but the budget is balanced because the revenues have increased faster than our expenditures. Mr. GARY. And because the revenues are estimated on the basis of the boom conditions that now exist? Secretary HUMPHREY. That is what our income comes from; yes. That is why we are able to estimate a balanced budget. As long as this uneasy peace exists, I think we are going to have very high expenditures. I do not know that two-thirds of our money which we spend for security will have to remain as high as it is now and will stabilize at those levels are not. I hope not. I hope that as we go along two things will happen: First, that we will be able in balancing our forces and developing our preparedness to get more effective defense for somewhat less money just through efficiency and realinement and redivision of forces. The biggest and greatest improvement I hope for, and that I think we all must hope for, is that at some point in our relations with the rest of the world we will have a balance of some sort arrived at in some way that will permit a reduction of these terrific expenditures for armament now going on all over the world. The world is spending too much for armament and it is too much of a burden that comes out of the ordinary man's scale of living. These tremendous expenditures in no way contribute to your happiness and well-being except to secure your way of life; that is all. Then expenditures are too high all over the world and somewhere we must find a way to reduce them. That is the No. 1 objective of the President of the United States. There is nobody in the world who is as well situated as he is to accomplish that purpose. It is his No. 1 objective and he is working and has worked with the talents he alone in this world has and the position he alone in this world has to forward the cause of a more lasting and enduring and just peace. And somehow or other I think we will make progress in that way I do not think the road is clear or the direction is clear, but it will happen, and when it does we and others in the world—and we particularly because we have the largest stake in the world-will be able to make some reduction in those expenditures. As to the general operations of the Government, the general services, the things that serve the people, such as the number of divisions of the Treasury Department, as this country grows and as our population increases that workload goes up and, in spite of all of the advantages that we can get, which we ought to continue with and will continue with, as that workload goes up our expenditures will probably increase. In other words, if you look ahead 20 years and think of the tremendous increase in population and services required of some of the departments of the Treasury, it is clear we will have to have more people, and we will have to increase our expenditures in spite of all the efficiency we can put in. We can offset some of the increase in our expenditures by efficiency, but not entirely. So this is just part of a growing country and a growing service. What we conceive our job to be and the job of efficient good management to be is to get the greatest productivity per hour out of the people we have rendering the services and reduce our expenditures as much as we can through greater productivity. INCREASE IN FEDERAL EXPENDITURES Mr. GARY. Mr. Secretary, I am delighted to see a balanced budget even though it rests on the shaky foundation of an estimated increase in receipts, but I must confess I am tremendously disappointed to see the expenditures go up again. I had the privilege, I think in 1952, of visiting Europe with the so-called Richards committee. We had representatives from various committees of Congress in the group. We went over to talk to the President, then General Eisenhower, who was in charge of all the European forces, to look over the work of the SHEAF armies and to find out what were the needs. I remember very well that General Eisenhower at that time urged us not to cut expenditures on the foreign-aid program because, he said, they were just beginning to build up those armies. We saw Italian, Belgian and French troops in operation, all of them using entirely United States equipment that had been furnished them under the foreign aid program. General Eisenhower explained to us that it was necessary to give them this equipment because they had no money with which to buy it and they had no way to manufacture it. I remember distinctly one of the members of our party said: "General, the people of the United States are getting tired of these expenditures. When do you anticipate they will end?" He said, that it was impossible to foretell when the program would end, but that he thought we could begin gradually to decrease the expenditures by the end of 1954. He said by then most of the capital outlay should be over and the expenditures should begin to recede from that point until we finally get out of the picture altogether." Here it is in 1957. The expenditures have been reducing somewhat in that program during the last 2 or 3 years, but this year we have a request for nearly twice as much as was appropriated last year. We are going backward, it seems to me, to the old idea of increased expenditures, and I just do not see how we can keep our economy going on that basis. I am frankly very alarmed about the situation. Secretary HUMPHREY. Well, you are no more concerned about it than I am, and I have spent a great many days and hours in the past 6 months on the items for this particular budget. But there are a couple of things I would like to call your attention to. In the first place, a great deal of that material that you saw when you were in Europe at that time is absolutely worthless today. It served a purpose at that time. That purpose is practically over. That was 4 years ago you were talking about. In that period of time there has come about in this world one of the greatest changes that has ever come about in any period in the world's history. We have developed atomic resources to the point no one ever dreamed of before; and Russia has made strides that nobody 4 years ago had the slightest idea would develop so rapidly. The methods of waging war that you saw are as obsolete as the bow and arrow today. You have a whole new system of things, a whole new system of doing things. That is one of the terribly wasteful things I spoke of a moment ago. As long as the world is spending those tremendous amounts of money for things that are bound to become obsolete in a short time, you are throwing a part of every man's scale of living down the sewer and contributing nothing to his happiness and well-being except you are trying to preserve his way of life by so doing. That does not advance our scale of living, it does not advance anything except to protect us, and I know of no way to provide that protection except by armaments, and not old armaments but new armaments, and that is extremely wasteful. As long as we have this situation in the world, Mr. Chairman, and we are unable to do anything about it, make no more progress than we have—although, very frankly, this new method of warfare is less expensive for us and very much more effective, because there is no way in the world we can match in manpower the resources of the Communists. We cannot match them. They have 10 men to our 1 and may have many more than that. So when it comes to the kind of warfare that is now on the boards, we have an advantage. We must keep that advantage. Mr. GARY. I agree with you it is probably more effective, but I cannot agree it is less expensive. I went over the Forrestal from top to bottom the other day and I asked how much it cost to build that ship, my guide said about $160 million. He said of course with the equipment and everything it would cost about $250 million. I said: “We are making great strides in atomic propulsion. I am looking very soon to see all our ships changed to atomic propulsion." I then asked: "In the event that occurs, can you convert this ship to an atomic-propelled ship?" He said: "We probably could do it, but it probably would be cheaper to build a new ship." Secretary HUMPHREY. That is right. That is this terrible obsolescence I spoke of. But if you estimate what it would cost to build up and maintain 100 divisions, you would find we have far more people at home working for the benefit of Americans than if we were trying to maintain forces of that size, and it is costing less money. I am not saying it is not expensive. I said it would be less expensive. We must keep that advantage until we have some way of stabilizing this thing. That is the biggest job in the world today, to get it stabilized, and until we do I do not think we have anything but relatively minor opportunities to save expenses. Mr. GARY. On the other hand, it would be almost impossible for a bankrupt country to defend itself, so we must be careful not to bankrupt ourselves. Secretary HUMPHREY. I agree with that 100 percent, and that is why I think it is so desirable to balance our income with our outgo as we have this year. As long as we can balance our income with our outgo we will not go bankrupt. There is nobody more interested in reducing expenditures and in reducing taxes than I am, because I think the difference between a free society and a slave state depends on the incentive of the individual. We have a money incentive. That is what our free society is based on, a money incentive for free individuals, and I think we have seriously curtailed that incentive by our present system and I think our taxes should be reduced as rapidly as possible to reinstate that. Mr. GARY. I am very much in hope that your estimates of receipts will prove correct for fiscal year 1957 and that the Congress will find some means of reducing the expenditures without weakening our national defense. Secretary HUMPHREY. That would be wonderful if you could do it, and I certainly would support it in every way. There is no Treasurer who is not 100 percent in support of that if it can be done. I feel like the fellow who woke up and found a burglar shining an electric torch in his face, and the burglar said: "I hear there is $500 here and I want to find it." The fellow said: "Wait a minute. I want to get up and help you look." If there is any way you can cut the expenses, let me help you look. USE OF ELECTRONIC EQUIPMENT Mr. GARY. You referred in your remarks to electronic equipment which will save your department approximately $134 million annually. What is being done in a general way, or what study is being made by the Government, to see where electronic equipment can be used to advantage and to effect a saving throughout the entire governmental operation? Secretary HUMPHREY. I do not know that there is any completely coordinated study, because that is difficult. I think progress will be made best by continuing it the way we are doing it, along the lines of |