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 Government 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 approximately 240,000 in the civilian work force during the past 4 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 realistically 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

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 estimates include my proposals for new legislation as well as present

programs.

For both new obligational authority and expenditures, about seventenths 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.

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 considered 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.

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 temporary increase in the legal limit of 275 billion dollars to cover seasonal borrowing during the coming fiscal year.

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 inflationary 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 disability insurance, are the excess of current receipts over current payments. 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.

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 the 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.