Herbert Hoover: 1932 Special Message to Congress Proposing Balanced Budget
In his State of the Union in December of 1931, US President Hoover maintained that the problems in Europe were to blame for America’s continued depression. He felt that America’s “matchless strength and resources, would have enabled us to recover” were it not for the events in Europe following Credit Anstalt in 1931:
Although some of the causes of our depression are due to speculation, inflation of securities and real estate, unsound foreign investments, and mismanagement of financial institutions, yet our self-contained national economy, with its matchless strength and resources, would have enabled us to recover long since but for the continued dislocations, shocks, and setbacks from abroad.
Despite the economic problems, it is clear that President Hoover believed fervently in budget discipline. He felt that the government’s budget still needed to be balanced and implored Congress here in April 1932 to work with him in order to cut spending to meet this objective. As the executive, he wrote that he needed greater authority to make additional cuts:
A clear indication that the limit of executive authority to bring about economies has about been reached, is shown by the fact that the total expenditures estimated in the budget of $4,112,000,000 (including Post Office deficit after deduction of receipts) presented to the Congress, except for increased payments to veterans and expenditure on construction work in aid of employment, was the lowest in over five years.
Congress did not establish the joint committee that the President proposed. The deficit went from 0.6% in fiscal year 1931 to 4.0% of GDP in fiscal year 1932 as receipts plummeted to $1.9 billion from $3.1 billion and outlays spiked to $4.7 billion from $3.6 billion as the depression deepened.
To the Senate and House of Representatives:
I have in various messages to the Congress over the past three years referred to the necessity of organized effort to effect far-reaching reduction of governmental expenditures.
To balance the budget for the year beginning July 1st next, the Revenue Bill passed by the House of Representatives on April 1st necessitates that there shall be a further reduction of expenditures for the next year of about $200,000,000 in addition to the reduction of $369,000,000 in expenditures already made in the budget recommendations which I transmitted to the Congress on December 9th.
It is essential in the interest of the taxpayer and the country that it should be done. It is my belief that still more drastic economy than this additional $200,000,000 can be accomplished. Such a sum can only be obtained, however, by a definite national legislative program of economy which will authorize the consolidation of governmental bureaus and independent establishments; and beyond this, which will permit the removal of long established methods which lead to waste; the elimination of the less necessary functions, and the suspension of activities and commitments of the government not essential to the public interest in these times.
Therefore, I recommend to the Congress that in order to secure this unity of effort and prompt action, and thus insure the relief of the taxpayer and a balanced budget, at the same time protecting vital service of the government, that representatives be delegated by the two Houses, who, together with representatives of the Executive, should be authorized to frame for action by the present Congress a complete national program of economy and to recommend the legislation necessary to make it possible and effective. Such a course would expedite rather than delay the passage of appropriations bills.
I am convinced that only by such unified, non-partisan effort, and by a willingness on the part of all to share the difficulties and problems of this essential task can we attain the success so manifestly necessary in public interest.
The White House,
April 4, 1932.
- Herbert Hoover, Special Message to the Congress Proposing a National Economy Program, April 4, 1932 – The American Presidency Project, UCSB
- Herbert Hoover, Historical Federal Budget – Findthe Best.com