Nation: Hitting the Target

Just as hard as he was waging peace around the world, President Johnson seemed to be fighting for frugality in Government. Last week he heard some good news about the performance of the U.S. economy last year, put out word that next year's budget would total $100 billion, and that he, personally, was reviewing every cent of expenditure. Such tidings were aimed to please—and they have certainly had that effect on the U.S. business community, which has warmed to Johnson in rare fashion.

To the banks of the Pedernales River from Washington went Dr. Walter Heller, chairman of the President's Council of Economic Advisers, to tell Johnson that during 1963 the U.S. economy had set impressive records. Among them: the gross national product (the combined total of all U.S. goods and services) rose $30 billion, to over $600 billion; per capita personal income reached $2,500, up $300 in three years; U.S. corporate profits totaled more than $50 billion ($25 billion after taxes), and civilian employment went above 70 million for the first time. Heller also was the bearer of not-so-glad tidings: unemployment last year remained in excess of 4,000,000 persons—a persistent 5% to 6% of the labor force. This, Heller told the President, was his Administration's "principal challenge."

Without Missing the Moon. Later Johnson met with Defense Secretary Robert McNamara and the Joint Chiefs of Staff. Afterward, McNamara said the Defense Department's budget would be trimmed by about $1 billion next year—to around $51 billion. The savings would come mainly from a cost-reduction program instituted by President Kennedy and from a letup in heavy expenditures for the now well-stocked nuclear arsenal (see box). McNamara declared that U.S. forces would be "superior to those in any other time in our peacetime history."

More economies were in the offing as the week went by. Postmaster General John Gronouski emerged from a ranch-house session to announce that his department's budget request had been cut back by $200 million, and that measures were afoot to whack $100 million off the Post Office's chronic deficit next year, thus effecting an equivalent $100 million saving in the federal budget. Johnson himself disclosed that several hundred million dollars each had been pared off next year's budgets for the Agriculture Department, Atomic Energy Commission and National Aeronautics and Space Administration. The cut in expenditures on space programs would be made, he said, "without abandoning our goal of a man on the moon by 1970."

Even if Johnson's widely hailed drive to economize in Government spending does result in a budget near $100 billion, instead of the $103 billion he predicted shortly after he took office, it will still be the largest budget in the nation's history. Still left would be a deficit in the neighborhood of $10 billion. Johnson is expected to tell Congress in his budget message later this month that the forecast of $90 billion in revenues for fiscal '65 is partly dependent on early enactment of the $11 billion tax-cut bill. One trouble John Kennedy had in drumming up support for the bill was critics' complaints that he had not reduced federal spending. Lyndon Johnson has worked hard to still that argument, and with some success.