Federal Spending


In the past decade, the Federal budget has been growing at an average rate of over 10% every year. President Ford has repeatedly asserted his intention to halt this trend. It is one of his primary goals to make the Federal government fiscally responsible:

. . . To put it simply, we must decide whether we shall continue in the direction of recent years -- the path toward bigger Government, higher taxes, and higher inflation -- or whether we shall now take a new direction -- bringing to a halt the momentous growth of Government, restoring our prosperity, and allowing each of you a greater voice in your own future.

To accomplish this, the President believes that (1) the Federal government must make a substantial and permanent cut in Federal taxes, and (2) make a substantial reduction in the growth of Federal spending. President Ford called upon the Congress to join him in restraining Federal spending by placing a $395 billion limit on FY 77 expenditures -- some $28 billion below projected spending for that year. Specific actions that he has taken include:

In his speech to the nation on October 6, 1975, President Ford said:

. . . If we cut only taxes but do not cut the growth of Government spending, budget deficits will continue to climb, the Federal Government will continue to borrow too much money from the private sector, we will have more inflation, and ultimately we will have more unemployment . . . In 1962, the Federal budget for the first time in our history ran over $100 billion. In only 8 years, the budget doubled in size. In the coming fiscal year, unless we act, it doubles again to over $400 billion . . . (M)uch of the increase in each year's budget is required by programs already on the statute books . . . If we don't slow it down, Federal spending could easily jump to more than $420 billion -- without a single new Federal program.

The President has pointed to the financial experience of our biggest and richest city -- New York -- as a profound lesson to all Americans about the dangers of living beyond our means:

". . . Though we are . . . the richest Nation in the world, there is a practical limit to our public bounty, just as there is to New York City's . . . If we go on spending more than we have, providing more benefits and more services than we can pay for, then a day of reckoning will come to Washington and the whole country just as it has to New York City . . . When that day of reckoning comes, who will bail out the United States of America?"

President Ford means what he says when he talks about fiscal responsibility -- his speeches about cutting the budget and saving money are not just rhetoric. His views on holding down Federal spending are simple: for every dollar saved in cutting the growth in the Federal budget, there can be another dollar saved by the taxpayer in tax reductions. The budget he has submitted for FY 1977 cuts the rate of growth of Federal spending in half, for the first time in a decade of increasing federal budgets. President Ford's budget for FY 77 -$394.2 billion -- was even less than he had promised. By holding down the growth in Federal spending, the President has been able to ask for additional tax cuts -- nearly $10 billion more than the Congress agreed to in December. This means a total tax cut of $28 billion for the American taxpayer, because of President Ford's fiscal restraint.


"We all know from recent experience what runaway inflation does to ruin every other worthy purpose. We are slowing it; we must stop it cold . . .

The way to a healthy non-inflationary economy has become increasingly apparent; the government must stop spending so much and borrowing so much of our money; more money must remain in private hands where it will do the most good. To hold down the cost of living, we must hold down the cost of government . . . "

President Gerald R. Ford

The Federal budget is an important step toward reversing the long-term trend in Federal spending. President Ford proposes to cut the rate of growth of Federal spending, year to year, to 5.5% -- less than half the average rate experienced over the last ten years.

At the same time, President Ford has proposed further, permanent income tax reductions so that individuals and business can spend and invest these dollars instead of having the Federal Government collect and spend them.

In proposing his budget, the President was determined to achieve fairness and balance:

President Ford's budget recommended $394.2 billion in Federal outlays for FY 1977, a reduction of nearly $29 billion in the projected growth of Federal Government spending.

As a result of this spending restraint, the Federal deficit would be reduced from an estimated $76 billion in FY 1976 to $43 billion in FY 1977. By continuing to check the growth in Federal spending, the budget can be balanced in FY 79. Significant spending restraint coupled with tax cuts will foster sustained economic growth without inflation.

The combination of tax and spending changes that he has proposed will set the nation on a course that not only leads to a balanced budget within three years, but also improves the prospects for the economy to stay on a growth path that can be sustained.

"...This is not a policy of the quick fix; it does not hold out the hollow promise that we can wipe out inflation and unemployment overnight. Instead, it is an honest, realistic policy -- a policy that says we can steadily reduce inflation and unemployment if we maintain a prudent, balanced approach . . . "

(Budget Message of the President,

Jan. 21, 1976)

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