Making this ideological point bluntly in a radio speech last night, he said: "It is time to get big government off your back and out of your pocket."

He appealed in the speech and in today's budget message for public support in his struggle with Congress and "special interests" who will oppose reduction and elimination of federal programs.

Despite reductions in projected spending increases, and some outright cuts, Nixon estimated that outlays will rise from $231.9 billion last fiscal year to $249.8 billion this year and $268.7 billion next year.

In an innovation, he looked ahead to fiscal 1975 and set an expenditure ceiling of $288 billion for that year.

Budget deficits will increase from $23.2 billion last year to $24.8 billion this year, then drop to $12.7 billion next year, the President said. Administration officials predicted the 1975 budget will be close to balance if spending is held to $288 billion.

Nixon had made a campaign issue of holding this year's budget to $250 billion and he succeeded—at least on paper-but only by refusing to spend appropriations despite congressional protests.

Even with this squeeze, the projected $24.8 billion deficit would be the second biggest since World War II, exceeded only by the Johnson administration's $25.2 billion deficit in fiscal 1968.

If Nixon's projections are accurate, the cumulative deficit for his first five budgets will total $86.6 billion, compared with a net $36 billion in the five budgets presented by President Lyndon B. Johnson. The last surplus, $3.2 billion, was in Johnson's last budget.

Nixon's new budget proposed few program initiatives. He did not mention tax reform, property tax relief or the possibility of trying to revive his proposal for reforming the welfare system by establishing a family assistance plan of income maintenance.

Treasury Secretary George P. Shultz told a news conference no inferences should be drawn from these omissions. The President has not reached final decisions, Shultz said.

RENEWS PROPOSALS

The budget included small sums for health insurance starting in fiscal 1975 but no specifics were offered.

Nixon renewed his proposals for tax credits to offset a portion of tuition costs for pupils in parochial and other private schools, and for increased tax deductions for individual pension plans, at an estimated revenue cost of $300 million each next fiscal year.

He also asked Congress again to approve a reorganization plan to consolidate seven of the 11 Cabinet departments into four, but said he will proceed to accomplish many of the plan's objectives on his own if Congress balks.

The main legislative recommendation was a revised version of the President's 1972 plan for "special revenue sharing." About 70 programs of grants to state and local governments for narrow categorical purposes would be consolidated into four broad block grants.

AIMED AT "GREAT SOCIETY"

Special revenue sharing, at a cost of $6.9 billion a year, would permit state and local governments flexibility to decide how to spend federal grants in the broad areas of urban community development, $2.3 billion; education, $2.5 billion; manpower training, $1.3 billion, and law enforcement, $800 million.

This plan is a key to Nixon's effort to reduce or eliminate many of the social programs of Johnson's "Great Society."

"Most of these programs simply did not do the job," Nixon said.

Through the broad grants of special revenue sharing, he said, state and local governments can decide whether to continue the programs created by the federal government, or spend the money where they believe it would do more good.

For example, he slashed budgeted outlays for elementary and secondary education. The savings, plus amounts cut from several other education programs, were folded into revenue sharing—leaving it to state and local governments to allocate the total education grant as they determine.

1974 BUDGET OUTLAYS LISTED FOR AGENCIES

This table from President Nixon's fiscal 1974 budget message shows in summary the planned outlays of Federal agencies compared with the outlays for fiscal 1972 and the current fiscal year 1973, in millions of dollars

Note: Columns do not necessarily add to totals showing because of rounding. Minus sign with 1973 outlays of Interior Department indicates excess of income over outlays.

"ECONOMY ON UPSWING"

Only limited amounts of education grants would remain under federal control. Big budget deficits were helpful when the economy was sluggish, Nixon said, but now "the economy (is) on the upswing" so it is essential to "shift away from fiscal stimulus and toward smaller budget deficits."

Shultz predicted at a news conference that the unemployment rate will decline gradually from its December level of 5.2 percent to the "neighborhood” of 4.5 percent by the end of 1973.

Nixon has set a target of reducing the inflation rate to 2.5 percent or less by yearend, which Shultz said implies an average rate of 3 percent or slightly less for the year.

Appropriations and other legislation voted by Congress would result in expenditures totaling $261 billion in fiscal 1973, the year ending next June 30, in the absence of special efforts to hold down that $29 billion increase from 1972, Nixon said.

To slow the momentum of spending, he acted to lower potential 1973 spending from $261 billion to $249.8 billion by cutting outlays $6.5 billion and budgeting $4.7 billion of other savings.

PAYMENTS DEFERRED

Included in the $4.7 billion were $1.5 billion from deferring revenue-sharing disbursements a few days from the end of fiscal 1973 to the beginning of 1974, $500 million of other deferrals, $1.1 billion from shifting federal credit programs to outside financing, $1 billion from additional offshore oil receipts, $400 million from stockpile sales and $200 million from other measures.

Although the $4.7 billion of savings result partly from manipulating the books, administration officials said the $6.5 billion of spending cuts are genuine. Furthermore, they said, Nixon can make these cuts without new legislation. The "program reductions and terminations" that will save $6.5 billion in 1973 will save $16.9 billion in 1974 and $21.7 billion in 1975, the budget estimated. Only $3.6 billion of the 1974 and 1975 savings require legislation.

By fiscal 1975, the budget estimated, this year's cuts will reduce spending by HEW $9.1 billion below where it was headed if Nixon had not acted.

Other big reductions in 1975 included $2.7 billion for Defense Department military outlays, $2.6 billion for agriculture, $2.4 billion for the Veterans' Administration, $1.4 billion for the Department of Housing and Urban Development, $2 billion for the Environmental Protection Agency and $1 billion for the Labor Department.

Major departments getting off easiest were Justice, trimmed only $4 million in 1975, Treasury at $9 million and Commerce $107 million.

Among individual program reductions in 1973, big items included $2.5 billion cut from public assistance and other forms of "income security," $656 million from farm price supports, $365 million from farm emergency loans and $567 million from health programs.

Smaller but politically sensitive reductions were budgeted for the anti-poverty program, model cities, school milk subsidies, hospital construction, manpower training, highways and aid to "impacted" school districts with large numbers of federal employees.

This would sharpen the battle over Nixon's impoundment of funds-the refusal to spend money appropriated by Congress. Court tests of his right to impound are pending.

The budget assumed that the Vietnam war would end about when it did, officials said. That is, the peace agreement is not expected to result in any reductions of expenditures.

SOME RISES

While cutting expenditures below projected trends, the President budgeted increases for fiscal 1974 over 1973 in many programs.

In broad functional categories, crossing agency lines, he estimated for income security (including Social Security and welfare) an increase of $6.1 billion to $82 billion; national defense, $4.7 billion to $81.1 billion; health, $3.7 billion to $21.7 billion, and natural resources and environment, $2.8 billion to $3.7 billion. Sensitive to criticism that he is cutting social programs while building up defense, the President said fiscal 1974 defense outlays will be about the same as in 1968, while nondefense spending has increased by 91 percent.

NO PROGRAMS EXPANDED

Caspar W. Weinberger, outgoing director of the Office of Management and Budget, said the $4.2 billion rise in defense outlays, to $79 billion in fiscal 1974, results almost entirely from pay and price increases, not from expanded programs. (This figure excludes some expenditures by agencies outside the Pentagon, which are included in the functional category of national defense.)

Nixon did not mention his controversial action withholding allotments of funds for construction of waste treatment plants, but he said the $10.1 billion of allotments that have been made available will maintain "the forward thrust of our environmental programs."

More funds "would not speed our progress toward clean water," he said.

TENTATIVE ITEMS

Nixon said $288 billion is the limit for fiscal 1975 spending. Without ruling out shifts within the total when he submits the 1975 budget next January, he presented a tentative breakdown.

He projected outlays for HEW at $102.7 billion in fiscal 1975, up $8.9 billion from 1974; Defense Department military functions $82.2 billion, up $4 billion; Treasury (mainly interest) $33.5 billion, up $900 million; Veterans Administration $11.9 billion, up $200 million, and Agriculture Department $9.8 billion, up $200 million.

By fiscal 1978, the budget said, spending would soar to $352 billion in the absence of the cuts ordered by Nixon this year. But with these cuts, it said, spending would soar to $327 billion.

The public debt was projected at $490.7 billion at the end of fiscal 1974, up $29.7 billion from the end of fiscal 1973. The debt increase is bigger than the $12.7 billion deficit because Treasury borrowing from government trust funds does not count in the deficit.

[From the Washington Post, Feb. 12, 1973]

ALBERT RAPS NIXON CUTBACKS

(By Albert B. Crenshaw)

House Speaker Carl Albert, representing the Democratic leadership of Congress, yesterday called President Nixon's proposed cuts in federal spending for the poor and elderly "irresponsible," and said his overall Fiscal 1974 budget has "its hands in its pockets and its eyes on the ground."

"Congress will not tolerate the callous attitude of an administration that seems to have no compassion for the down-and-out citizens of this country,” the Oklahoma Democrat said in a radio speech that was his party's formal reply to the President's budget speech of Jan. 28.

The 10-minute address was carried by all four major radio networks, which gave the Democrats equal time to answer Mr. Nixon's speech.

"It is apparent," Albert charged, "that big business will not suffer from the Nixon budget cuts. The rich won't suffer either."

Instead, he said, "you, the average American taxpayer . . . will continue to pay a disproportionately large share of your income in federal taxes while getting fewer federal services in return."

Albert said that "the American people deserve far more; this nation, if it is to survive, requires far more," and he pledged that "the 93d Congress will accept its responsibility to fill the void and supply the leadership the President has failed to produce."

Albert's speech was the latest salvo in the continuing conflict between Congress and the White House over how federal money should be spent and whether Mr. Nixon has the authority to impound funds appropriated for purposes of which he does not approve.

In his budget speech, the President said that the cuts were necessary to head off inflation. He has since threatened to veto any bill that exceeds his $268.7 billion budget, and to impound the money in any bill passed over such a veto. Albert denied that "Congress is not responsible enough to control spending," citing a 40 per cent increase in presidential budget request during the Nixon administration and deficits "larger than those of Eisenhower, Kennedy and Johnson combined."

He noted that "Congress does not believe every single one of the President's budget-cutting moves is wrong," but added: "We cannot support a wholesale effort systematically to scrap worthwhile programs that have given hope and promise to so many Americans."

Noting that the proposed Fiscal 1974 budget is 10 per cent larger than 1973's, Albert said the President "in his budget speech made no mention of the critical problem of tax reform." an omission that gives "no hope to the middle- and low-income taxpayers who are forced to pay the lion's share of income taxes . . .” A budget that would "slam the door on hospital and health clinic construction, federal aid to education and libraries as well as (reduce) veteran's benefits and Medicare and scores of other programs," Albert said, “. . . does not point us toward a brighter tomorrow.

"It is a budget without a sense of affirmative . . . It is a budget of limited horizon and it is devoid of any great vision of America."

[From the New York Times, Feb. 7, 1973]

WIDE SPENDING REFORMS URGED IN CONGRESS STUDY

ANNUAL CEILING IS PROPOSED

(By Edwin L. Dale, Jr.)

WASHINGTON, Feb. 6.-A special committee of senior members of Congress agreed in principle today to a major reform in the way Congress deals with Government spending, including a ceiling every year on total spending that would apply to Congress itself.

An interim report of the special committee, which was established late last year to recommend how Congress could cope with the spending problem, was

completed today and unanimously approved. It will be published in a few days, but its main contents were disclosed by committee sources.

Several key questions were left for a later report, including how the total would be allocated among the Congressional committees whose actions affect spending, and how to assure Congressional compliance with the ceiling.

However, today's interim report already reflects a major tendency toward innovation. In the end, both houses of Congress would have to approve the procedural changes that will be recommended.

One recommendation would establish two new "budget committees," one for each house, to establish the spending ceiling and a goal for revenues early in each session. It would include, but not be limited to, members of the appropriations and tax-writing committees. Its recommendations would presumably be subject to a vote in each house, with the final result subject to conference between the two houses.

The report today recommended a procedure for reconsideration of the spending ceiling and revenue goal "in the latter part of the session"-presumably to reflect changed economic conditions or changing congressional priorities.

The proposed ceiling would apply to total outlays and to "budget authority," which is mainly appropriations. Outlays reflect both past and current appropriations and other legislation.

Furthermore, the over-all limitation would apply not only to appropriations bills but also to all other legislation that affects spending. A good example is Social Security legislation, which requires no appropriation at all but now accounts for about one-fifth of total spending, though this spending is financed by its own system of taxation.

The new over-all limitation would presumably apply to "formula bills" covering such items as veterans pensions and civil service and military retirement. While these programs technically require an appropriation, in fact, the legislative bill sets the total spending, with no possibility of alteration in the appropriations process.

The 32-member committee whose interim report was completed today was established by Congress in an amendment to the legislation last year that almost established a $250-billion spending ceiling for the current fiscal year, but in the end did not.

The committee is supposed to complete its work by Feb. 15. But today's interim report was apparently a signal that it could not meet that deadline, which was generally regarded as over-ambitious for an exercise of this scope.

The committee decided to take testimony from experts and have open hearings before preparing its final report. This was another signal that it cannot complete its work by Feb. 15. The final report will be delivered to the Speaker of the House, Representative Carl Albert, and to the President pro tem of the Senate, Senator James O. Eastland. They will decide how it is to be considered and debated by each body.

[From the New York Times, Feb. 5, 1973]

NIXON AND SPENDING: PRESIDENT SEES VICTORY

(By Clifton Daniel)

WASHINGTON, Feb. 4-At his news conference last Wednesday, President Nixon was asked, "How do you respond to criticism that your impoundment of funds abrogates power or authority that the Constitution gave to Congress?"

"The same way that Jefferson did and Jackson did and Truman did," the President replied.

That curt and categorical response reflected the advice Mr. Nixon is getting and the attitude he is taking toward Congressional demands that he spend the money Congress appropriates.

The Constitutional right of the President not to spend money if it would increase prices or raise taxes is “absolutely clear," the President asserted.

And Attorney General Richard G. Kleindienst is expected to appear soon before the Senate Judiciary Subcommittee on Separation of Powers to offer legal justification for that assertion.

At the White House they take the view that Congress has already tacitly recognized the President's right to impound appropriated funds.