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.
[Enclosure]
President Truman to
the Executive Secretary of the National Security Council
(Souers)
secret
Washington, July 1,
1949.
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,
