Cuts Ahead

From Denver last week, President Eisenhower sternly ordered agency heads in Washington to "take every possible step" to pare expenditures during fiscal 1954. As news dispatches told it, the directive was aimed at avoiding a special session of Congress to lift the $275 billion debt ceiling which Congress refused to raise three weeks ago. Actually, Eisenhower was looking farther ahead: "You will be expected to make substantial reductions in your requests ... for the fiscal year 1955-"

The debt-limit squeeze between now and January, when first-quarter tax collections will temporarily ease the strain, is a minor headache compared to the big squeeze that lies beyond, in the fiscal year 1955 (which actually begins July 1, 1954). Despite economies of $13.3 billion in the 1954 budget, the Administration expects to run at least $4 billion in the red. On top of that, tax cuts loom ahead. On Jan. 1, as the laws now stand, excess profits taxes expire and personal income taxes drop 11%; a clutch of excise taxes will end April 1. Estimated revenue loss: more than $8 billion a year. If the Administration is going to come anywhere near balancing the budget, it will have to do some drastic economizing.

Eisenhower's strong right arm for the coming big squeeze is Budget Director Joseph Dodge. Last week the Wall Street Journal got hold of Dodge's confidential "statement of assumptions" regarding the 1955 budget. Some of Dodge's muscular recommendations:

P: Don't hide behind laws to justify big budgets; recommend repeal of statutes which stand in the way of economy.

P: Increase fees for Government services "of special direct benefit to limited groups."

P: Avoid new construction projects, and slow works in progress to "minimum economic rates."

P: Don't count on supplemental appropriations to carry a department if it runs out of money.

To make the new budget a reality, wrote Dodge, it is necessary to make "a new determination of what the Federal Government should be doing and should not be doing . . . The 1955 budget will reflect the continued withdrawal of the Federal Government from activities that can be more appropriately carried out in some other way . . . Government employment, operations and construction will continue to decline in 1955 as they will in 1954-"

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