The Washington herald., 1921-03-11
HOUSTON'S POLICY
ON FLOATING DEBT
MAY Be DROPPED
Republican Leaders in
Congress Seek to Les
sen Tax Burden.
eSPLIT ON METHODS
Majority Members Disagree
As to Proposals for Re-
funding Issues.

ADandonment OF attempts 10 wipe
out the floating debt Of the govern
ment by payments from current
revenues will be the simplest way
to insure a reduction in the aggre-
gate tax burden
Republican leaders in Congress
are generally agreed that too
heavy a load upon taxpayers would
be caused by continuing former
Secretary Houston's policy of ap-
plying about s1,0oo.ooo.ooo year
toward the reduction of the floating
debt. which on March 1 amounted
to s2,4s4.o32.ooo.
With revenues aggregating s5,-
350.000.00 in prospect during the
fiscal year 1929 on the basis of pres
ent laws and with expenditures of
approximately $4,000. 100000 in
prospect. 1t would appear to be pos
sible to repeal the excess profits
Stax and other Questionable taxes
representing total revenue Of ST.
| 900. 100000 without burdensome ad-
ditional taxes II no attempts were
to be made to keep $1,000. .00o, 900
of surplus revenues available to-
ward the reduction Of the floating
debt.
surplus of ssss,0o0,ooo.
1t has been estimated by the
Treasury that the surplus avail
able during the present fiscal year
ending June 30. 1921. which will be
applied toward the reduction of the
floating debt. will amount to $685.
100000. Even before reductions
Were made in. appropriations. the
Treasury estimated at least $685.
100000 would be available for this
purpose during the fiscal year 1922
on the basis of present laws.
IL Mr.. Houston's policies were
followed 1t thus would be possible
by July 1, 1922. to reduce the float
ing debt so that not much more
than $500, 900, 900 in Treasury tax
and loan certificates would remain.
This floating debt would be en-
tirely wiped out by January 1,
1913. when the government will be
confronted with the necessity of
gigantic refunding operations in
yolving the maturing funded debt.
~ Under the Houston program the
Victory loan would be reduced by
July 1. 1922, by at least s500.oo0, 900
as a result of the az per cent
sinking fund law. which provides
permanent annual appropriation
of approximately $3.50. 000. 900 for
the retirement of the funded debt.
The sinking fund operations. which
were begun on July 1. 1920. would
reduce the Victory loan. which now
totals s4,150.000. 900. to somewhat
less than s3,75o,000.000 by that date.
Cut Of 5000 yooo. 900.
By the time the Victory notes
mature in May, 1929, II was antici-
pated by the Treasury experts that
the total could be reduced to about
$4,000. 100000. This would be done
through further sinking fund op-
erations. and also by making pro-
vision for the acceptance of Victory
notes during the fiscal year 1923
before maturity In payment of
taxes.
: War savings securities maturing
January. 1923. and totaling less than
ssoO.00o.oOO. would be taken care of
under the Houston program by new
issues of war savings certificates.
Under the Houston program, thus,
the floating debt of s2.500, ,00O, 900
would be entirely wiped out and
/ Victory notes to the extent of ST.
2s0. loot. 900 would be retired by May,
1923. when the funded war obIiga-
tions begin to mature. Even this
program would contemplate the re-
funding Of $4,000. 100000 Victory
notes over a longer period in May.
1923. The four Liberty loans, aR-
gregating s15,2s2.19S,10o and ma
turing at intervals during the sub
sequent twenty four years, would
still be outstanding.
Question Of Methods.
Congress must consider whether
the floating debt should be funded
into long term obligations or wheth-
er the policy of retiring the Treas
ury certificates out of current
revenue. but more gradually than
q present contemplated. should be
continued
The Republicans who agree that
the present policy of reducing the
floating debt by $1,000. 200, 900 a year
out of current revenues should be
abandoned are not q unit on the
proposition of refunding the float
ing debt into long term securities.
Those who favor refunding the
floating debt into long term Sc
curities argue that the debt was
created in exactly the same man.
ner as was that represented by
funded obligations. and that there
Is no reason why the two should be
kept separate.
Those objecting to this policy
hold that as a matter of business
practice. the floating debt should
be cared for from current revenues