S/SNSC Files: Lot 63D351: NSC 52 Series

Report to the National Security Council by the Executive Secretary (Souers)

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NSC 52

Governmental Programs in National Security and International Affairs for the Fiscal Year 1951

At a meeting in the White House on July 1, 1949, the President discussed the budgetary outlook for the fiscal year 1951 with interested officials, including all Council members, and presented the enclosed letter requesting the advice of the National Security Council on the subject.

Arrangements for the preparation of a draft response for Council consideration prior to September 1, 1949, are being made with designated representatives of the Secretaries of State, the Treasury, and Defense, the Chairman, National Security Resources Board and the Economic Cooperation Administrator, in appropriate consultation with the Director, Bureau of the Budget and the Chairman, Council of Economic Advisers.

Sidney W. Souers
[Page 350]
[Enclosure]

President Truman to the Executive Secretary of the National Security Council (Souers)

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My Dear Mr. Souers: The National Security Act places upon the National Security Council the function of advising the President with respect to domestic, foreign, and military policies relating to the national security. The Act provides that it shall be the duty of the Council—

  • “(1) to assess and appraise the objectives, commitments, and risks of the United States in relation to our actual and potential military power, in the interest of national security, for the purpose of making recommendations to the President in connection therewith; and
  • “(2) to consider policies on matters of common interest to the departments and agencies of the Government concerned with the national security, and to make recommendations to the President in connection therewith.”

The advice of the Council is being requested to assist me in arriving at recommendations to the Congress with respect to the size and nature of governmental programs in the field of national security and international affairs for the fiscal year 1951.

The Director of the Bureau of the Budget has developed for me an analysis of existing expenditure programs for the Federal Government which, in relation to estimated revenues, presents such a serious fiscal and economic problem that a complete re-evaluation of current and proposed programs is required. Large increases in expenditures in the face of declining revenues are developing. Strenuous efforts will be necessary to contain prospective deficits within a sound fiscal and economic program.

This analysis of expenditure programs clearly indicates that sizeable reductions are possible only in a few major areas, and there only by reducing or delaying programs which have heretofore been considered essential to national security or foreign policy. This condition is intensified because the currently authorized programs for the National Military Establishment show an increasing trend of expenditures in 1950 and subsequent years.

The analysis indicates that the levels contemplated for military and international aid programs in fiscal year 1950 are substantially above the levels which we can hope to maintain consistent with a sound fiscal and economic program.

The extent to which domestic programs have been held down to minimum levels and below during the war and post-war years is not generally understood. Significant reductions in this area at this time, therefore, are not feasible and we cannot ignore the possibility that [Page 351]the maintenance of a sound economy may even require some increases in this area.

At the same time we have entered upon international commitments pointed towards bringing the world back to a normal peacetime level by strengthening the economic and political conditions in many areas. We have also made substantial increases in our own military forces as indicated in the following figures:

1948 1950
Military Strength Obligational Authority (Billions) Military Strength Obligational Authority (Billions)
Army 584,623 679,397
Navy 530,608 530,654
Air Force 345,107 412,273
Total 1,460,338 $9. 9 1,622,324 $14.5*
Civilian Components (Army, Navy, Air) in drill status 374,847 949,113

A strong domestic economy is essential to the maintenance of a high level of military and international programs. With this in mind, and in the light of the prospective fiscal situation, I feel that it is necessary to re-evaluate the following national defense and international aid programs:

New Obligational Authority Which Has Been or Will Be Requested in Fiscal Year 1950
NME $14,500,000,000
AEC 792,000,000
Stockpiling of Critical and Strategic Materials 525.000.000
ECA 4,198,200,000
GARIOA 1,000,000,000
MAP 1,450,000,000
Philippine 185,000,000
Korea Recovery 150,000,000
Arab Refugee 25,000,000
Point IV 25,000,000
International Refugee Organization 70,000,000

It is my intention to establish within the near future tentative fiscal limits for the above areas which the Departments and Agencies will be asked to use for planning purposes in developing their budget programs [Page 352]for fiscal year 1951. The Director of the Bureau of the Budget will provide these limitations to the Council at the time they are established.

It is requested that the National Security Council initiate a review of the above programs with the objective of determining their relative priority and where the relative emphasis should be placed in adjusting these programs to meet the limitations established.

The Council should appraise the military and international programs under the tentative limitations in the light of current conditions so as to determine by September 1, 1949:

1.
The extent to which the proposed limits for the preparation of tentative plans will require adjustment in strategic and diplomatic planning, if any.
2.
The evaluation of the effect of these actions on our national security, and any alternative suggestions which the Council might wish to make.
3.
The character of adjustments required to obtain balance in this politico-military area within the total of the limits established.
4.
The comparative effects of a substantial governmental budgetary deficit for the indefinite future and a reduced expenditure level for national security and international programs.

I have also requested the Council of Economic Advisers to furnish me with an appraisal of the ceilings that have been established. In order that the work of the Council of Economic Advisers and the National Security Council can be best related, I believe that it would be advisable for the Chairman of the Council of Economic Advisers to be invited to the meetings of the National Security Council at which this subject is under consideration.

Sincerely yours,

Harry S. Truman
  1. Includes $279 million Navy ship construction. [Footnote in the source text.]
  2. Includes $20 million immediately available in fiscal year 1949. [Footnote in the source text.]
  3. Estimated—specific amount not yet approved by the President. [Footnote in the source text.]
  4. Estimated—specific amount not yet approved by the President. [Footnote in the source text.]