CHEMICAL & ENGINEERING
NEWS VOLUME
40, NUMBER 4
T h e Chemical W o r l d T h i s W e e k
JANUARY
22, 1962
President Seeks Record Peacetime Spending R&D spending is slated to rise 20% under the precariously balanced budget the Kennedy Administration sends Congress Congress this week is busily studying ng details of the first federal budget prerepared from scratch by the Kennedy dy Administration. The $92.5 billion the he President asks for to run the Govern•nment in fiscal 1963 sets a new high gh for peacetime spending. It represents its a tremendous boost from the $80.9 ).9 billion budget for fiscal 1962 sent to to Congress by former President Eisen;nhower during his last days in office. :e. But it is only $3.4 billion higher than an the Kennedy Administration's final re"eworking of the Eisenhower proposal. On paper, the budget is balanced; it shows a modest surplus of $500 milillion. But the surplus is contingent on 3n two things: continued recovery from m. last year's recession and Congressional ial approval of revenue-boosting measisures. If Congress reacts to Presidenn-
tial pleas for new revenue raising measures as it has in the past, the final version of the budget probably will be considerably out of balance, More Revenues? One proposal—to increase postal rates—seems likely to win Congressional approval. But other proposals, such as reduced spending for agricultural support programs, increased patent fees, revised tax treatment of foreign subsidiaries of U.S. firms, and elimination of tax advantages for cooperatives, seem to stand little chance in Congress. One innovation is sure to draw fire from the chemical industry: a proposal to place user charges on inland and coastal waterways for the first time. The President plans to ask Congress to slap a tax of 2 cents a gallon on all fuels used in transportation on these water-
ways, to be effective on Jan. 1, 1963. Most of the increase in the 1963 budget is caused by higher spending for defense, international, and space programs. To keep total spending down, domestic functions of the Government have been held virtually unchanged from fiscal 1962. However, some increases are ticketed for domestic programs. The Food and Drug Administration has been allotted $28.4 million, up from $22.8 million this year. FDA plans to use the money to increase its staff by 2 5 % and put more emphasis on health hazards resulting from the use of pesticides on food crops. The helium conservation program is moving ahead so rapidly that the President will ask Congress to boost the ceiling on the Department of the Interior's
Federal Budget for R&D Continues to Climb Fiscal Year 1961
Defense Atomic Energy Space Health, Education, and Welfare Agriculture National Science Foundation Other agencies Total
Fiscal Fiscal Year Year 1962 1963 (Millions of Dollars)
$5,810 1,100
$6,417 1,049
$ 7,027 1,121
770 397 140 103 342
1,146
2,115
$8,672
$9,618
522 150 166 178
624 161 240 198 $11,476 President Kennedy More for defense, space, basic research JAN.
22, 196 2 C & E N
25
borrowing authority to purchase recovered helium to $80 million a year from the present level of $47.5 million. The budget includes $300 million for a five-year program of loans to colleges and universities to build academic facilities. Also included is $120 million to improve the quality of elementary and secondary education by strengthening teacher education and promoting better instruction. Record R&D Budget. The allocation of $11.5 billion for research and development sets an all-time high for federal spending for R&D. This is 20% higher than last year's $9.6 billion, the previous record high. Spending for basic research will hit $1.6 billion in fiscal 1963, a boost of about $600 million. The National Science Foundation will get $240 million for basic research grants, up from $166 million. NSF also has earmarked $108 million for graduate fellowships and to improve science education. Biggest spender of federal research and development funds is still the Defense Department. The $7 billion allotted to Defense is a little more than 9% higher than the previous year's budget. In second place is the National Aeronautics and Space Administration, with $2.1 billion. This is twice as much as was earmarked for NASA last year and more than three times as much as the year before. The Atomic Energy Commission plans to spend $1.1 billion for research and development, an increase of about $100 million. AEC will increase spending significantly for research programs in high- and low-energy physics, metallurgy, and chemistry. For chemical research AEC has earmarked $48 million, up from $40 million. Research spending in the Department of Health, Education, and Welfare will amount to $624 million. Most of this money will be allocated to research on specific diseases at the National Institutes of Health. For the first year of the new expanded program in saline water research, Interior's Office of Saline Water will get $7.7 million. This is a sizable increase over the previous year's allotment of $3.6 million. OSW plans to devote a good share of its R&D funds to basic research. The National Bureau of Standards will spend $30 million for research, up from $23.5 million. In addition, NBS has been allotted $35 million to complete its new headquarters building at Gaithersburg, Md. 26
C & E N J A N . 22, 1962
Kennedy Unveils His Legislative Plans Calls for sweeping tariff cuts, tax revisions, improved food and drug laws, and mass immunization A new liberal trade policy. Investment tax credit. Stiffer government control on food and drugs. New laws to combat air pollution. Federal funds for a mass immunization program. These and other measures of concern to the chemical industry were included in President Kennedy's legislative proposals, served up to Congress in his State of the Union message. Some proposals are new. Others, such as the investment tax credit, aid to education, and medical care for the aged, are leftovers from last session. Most—particularly Mr. Kennedy's bid for unprecedented power to cut tariffs and for stand-by authority to lower income taxes—face tough sledding on Capitol Hill. Tariffs. The President's trade program promises to be the hottest issue. Mr. Kennedy told Congress that he would submit shortly a new far-reaching five-year trade expansion act. The President wants authority to gradually eliminate tariffs between U.S. and the European Common Market on "those items in which we together supply 80% of the world's trade." On other goods, the bill would allow a gradual reduction of present duties, up to 50c/c. It would permit bargaining by major categories—the U.S. could make tariff concessions on one product group in exchange for reductions by the Common Market on others. This bargaining would be for broad product categories, not productby-product, as is now the case. Companies and workers hurt by imports would get federal aid during the adjustment period, Mr. Kennedy told Congress. "We are not neglecting the safeguards provided by peril points, an escape clause, or the National Security Amendment. Nor are we abandoning our non-European friends or our traditional 'most-favored nation principle,'" he adds. Just what all this means to the U.S. chemical industry is difficult to judge at this point. Administration officials hedge in discussing the basis they will use to calculate world trade percentages. Such questions as whether intra-Common Market trading will be figured in total world trade are still up in the air, they claim. One ad-
ministration official says, "There's no official list as yet, and even if there were one, it wouldn't have much meaning because these figures change from year to year. Even if Congress passes the measure, it will probably be 1964 at the earliest before we can sit down to actual negotiations." But with protectionist sentiment running strong on Capitol Hill, President Kennedy will have to be specific on the commodities involved in his proposal. And by any criteria, most synthetic organic chemicals and many inorganics would become duty free under provisions of the measure. Informed sources feel that Congress will give the President limited new power to negotiate tariff reductions, but will stop short of granting him sweeping authority. Aid to Education. The President again pleaded strongly for federal aid for public school construction and teachers' salaries. This measure was hopelessly mired in the House last year over the religious issue. Chances for passage do not seem to have improved. The President also called for measures to provide federal loans for college construction and for federally financed scholarships. Congressional leaders have agreed to put the President's request for tax revision ahead of the trade issue. The Administration will push first for legislation to plug tax loopholes, an 8% tax credit on capital investment in machinery and equipment, and tax withholding on income from dividends and interest. The investment credit proposal is also a holdover from 1961. The President also called for improvements in food and drug l a w s strengthening inspection and standards, halting unsafe and worthless products, preventing misleading labels, and cracking down on the illicit sale of habit-forming drugs. One poser is the President's remark on a mass immunization p r o g r a m maimed at the virtual elimination of such ancient enemies of our children as polio, diphtheria, whooping cough, and tetanus." But that's as far as he went on this subject. And apparently no one else in the Administration wants to go into it any further at this time.
