Foreign Relations of the United States, 1949, National Security Affairs, Foreign Economic Policy, Volume I
S/S–NSC Files: Lot 63D351: NSC 52 Series
Report to the National Security Council by the Acting Executive Secretary (Lay)
Governmental Programs in National Security and International Affairs for the Fiscal Year 1951
The President, in his letter requesting the advice of the National Security Council on the subject, which was circulated as NSC 52,1 [Page 353]stated that he would establish tentative fiscal limits for planning purposes in developing budget programs for the Fiscal Year 1951, which would be provided to the Council by the Director of the Bureau of the Budget.
A summary tabulation of these planning limits (Enclosure A), as provided by the Director of the Bureau of the Budget, is circulated herewith for the information of the National Security Council and referred to the special staff committee designated to draft a Council response to the President’s letter.
Also enclosed, for reference purposes (Enclosure B), are pertinent extracts from the letters by the Director of the Bureau of the Budget to the respective Departments and Agencies responsible for preparing budget estimates for each of these programs.
Summary Tabulation of New Obligational Authority, Provided by the Director of the Bureau of the Budget (Pace)
|Requested or to be Requested in Fiscal Year 1950||Planning Limits for Fiscal Year 1951|
|Stockpiling of Critical and Strategic Materials||525,000,000||500,000,000|
|International Children’s Emergency Fund||15,000,000|
|International Refugee Organization||70,000,000|
|Institute of Inter-American Affairs||4,751,000|
|Total||$22, 939, 951, 000||$17, 770, 000, 000|
Extracts From Letters Prepared by the Director of the Bureau of the Budget (Pace)
1. General Policies and Assumptions.
The price assumptions to be used in preparing budget estimates are: (a) prices will be at approximately the July 1949 level, (b) construction costs on new contracts will decline about 5 percent from the July 1949 level. (Agencies should be prepared to discuss at the time of their budget hearings the effect of any price or cost trends which are contrary to these assumptions and which will affect their estimates.)
Estimates for 1951 should plan for operations at or below the 1950 appropriation level unless exceptional circumstances clearly make this impossible. Wherever possible, reductions should be made below the 1950 level, even where some reduction in service or increase in backlog is involved.
Expansion of existing activities or initiation of new activities should not be included, unless required by law or to meet urgent public needs. Estimates for existing activities should omit work of low priority and provide for the most efficient performance of necessary work.
As a general policy, estimates for civil public construction and improvement projects already under way should allow only for the minimum rate of progress with due regard to logical order and timing of the work. Projects involving the production and transmission of power in critical shortage areas should be planned at an economical rate which will meet the demand at the earliest possible date. New authorized projects should be started only where the public need for them is so urgent that it is not in the national interest to postpone them. Sufficient allowances should be made for advance planning of public works to provide for the future progress of public works on a sound basis.
2. National Military Establishment.
After a careful review of the probable fiscal resources and requirements of the Government, the President has approved the ceiling set forth below for the National Military Establishment. This ceiling represents the maximum amount, consistent with the President’s over-all fiscal policy, upon which the National Military Establishment may at this time base its budgetary plans for the fiscal year 1951. It is expected that its estimates will be submitted within this ceiling and will reflect the best balanced program possible within this amount.[Page 355]
New obligational authority . . . . . . . . $13, 000, 000, 000
This ceiling: limitation for new obligational authority shall be allotted so as to make provision for the following:
- The regular appropriations of the Army, Navy, Air Force, and the Office of the Secretary of Defense, including special accounts for which limitations may be specified in the appropriation bill.
- Supplemental and deficiencies for fiscal year 1950 and prior year appropriations, except for requirements based on authorizing legislation enacted after submission to the Congress of the 1950 Budget.
- Appropriations and contract authorizations required in fiscal year 1951 for all proposed and pending legislation.
- Ship construction:
- (a) Obligational authority for any 1951 shipbuilding program, and
- (b) Amounts of program increases in obligational authority for shipbuilding programs for 1950 and prior years which are approved, or to be approved, during fiscal year 1950 or which will be proposed for approval in fiscal 1951.
- Obligational authority, if desirable, for the repair of military auxiliaries of the Reserve Fleet of the Maritime Commission.
The tentative ceiling limitation of $13 billion will exclude cash appropriations required to liquidate prior year contract authorizations, and the permanent appropriations of the National Military Establishment.
In view of the desire of the President to reflect in the 1951 Budget every effort for the development of an efficient, economic, integrated and unified military establishment, it is requested that the budget submission include statements as to the policies and programs which will be pursued to accomplish these aims.
3. Atomic Energy Commission.
In view of the national security aspects of the program of the Atomic Energy Commission, the National Security Council has been requested to include this program in the scope of its considerations. For this purpose, the President has established a tentative planning figure of $720, 000, 000 of new obligational authority within which the Commission should develop its budgetary requirements for fiscal year 1951.
This planning figure is based upon the existing budget structure of the Commission and does not at this time provide for a possible amendment to the statutory determination made by the President last April.
4. Stockpiling of Critical and Strategic Materials.
After a careful review of the probable fiscal resources and requirements of the Government, the President has approved the ceilings set [Page 356]forth below for your budget estimate for the stockpiling program. These ceilings represent the maximum amounts, consistent with the President’s over-all fiscal policy, upon which budgetary plans for the fiscal year 1951 for stockpiling of strategic and critical materials, may, at this time, be based. It is expected that your estimates will be submitted within these ceilings and will reflect the best balanced program possible within these amounts.
The ceilings are as follows:
|Appropriations for new obligation||$200,000,000|
|Total net new program||$500,000,000|
These ceilings include total procurement, administrative, handling, storage, and other costs for stockpiling strategic and critical materials under Public Law 520, 79th Congress.2
It is requested that July 1949 prices be used in preparing the estimates. The effect of any price or cost trends which are contrary to this basis and which will affect the estimates may be discussed at the time of the budget hearings.
In developing these ceiling determinations, it has been assumed that:
- The present stockpile list and objectives will be reappraised as a basis for budget recommendations, and the revision for that purpose will represent a minimum feasible goal consistent with the over-all national security program.
- Programmed acquisitions of materials will be limited to supplies in excess of current industrial demand, except in cases of unusual urgency.
- The rate of acquisition of materials will be adjusted to achieve maximum balance and continuity within the existing and proposed budget authorizations.
5. European Recovery Program.
A budget ceiling has not been established for the European Recovery Program for 1951. However, the President is requesting the Security Council and the Bureau of the Budget to use approximately $3 billion in any planning in which the 1951 costs of the European Recovery Program must be taken into account. That figure is to include, in addition to the present European Recovery Program base, the United States costs of prevention of disease and unrest in occupied Germany and any dollar costs for increased European military production arising under the proposed program of foreign military assistance.[Page 357]
In addition, and without prejudice to the use of $3 billion as a planning figure for 1951, it is the President’s wish that you undertake a complete reappraisal of the European Recovery Program outlook for 1951 and to advise me by September 1, 1949, whether program adjustments can be made which would make it possible to support the European Recovery Program with a lesser amount for 1951. This appraisal should take into account such factors as the effect of present trends in our own economy on the recovery goals, particularly on European export prospects; the relative importance of continuing aid to countries whose dollar trade position is in or near balance; possible changes in the political status of participating countries or their dependent overseas territories; and any other considerations which you consider of major importance. Any conclusions you may reach on these points should, of course, be reflected in your advice to the National Security Council as well as in your report to me.
6. Government and Relief in Occupied Areas.
A formal budget ceiling for GARIOA has not been established. However, in firming up the program to be reflected in the 1951 budget, the President has asked the National Security Council for advice upon a number of important matters affecting our national security. For this purpose a tentative planning amount of $350 million has been established for GARIOA, excluding Germany.
7. Other Foreign Programs.
The President desires that you give special attention to the relationships and aggregate requirements in 1951 for the following programs, not included in the budget ceiling of the Department of State, for which the Department is directly responsible or serves as the focal point of responsibility to the Government: Foreign Military Assistance; Aid to Korea; Aid to Arab Refugees; International Refugee Organization; International Children’s Emergency Fund; Point IV; and the Institute of Inter-American Affairs.
No 1951 budget ceilings have been set for these programs, either individually or in total. The President is, however, asking you and the Security Council to use for planning purposes a figure of approximately $200 million to cover total obligational authority required in 1951 for the programs named above, and for any similar foreign aid or assistance programs which may be contemplated for 1951. For this purpose, no distinction need be made between programs presently authorized and those for which authorizing legislation is yet to be secured.