The Birmingham age-herald., 1923-12-20
SOLDIERS BONUS AGAIN SET BACK
Ways And Means Committee Refuses To Give It The
 Right Of Way

| legislation received a setback today l with the refusal of the House ways and means committee to give it right | of way over administrative pro- visions of the treasury's tax bill. The | committee declined, however to side track 1t until a decision Is reached as to what changes should be made to the tax rates.
 The bonus was given another jolt by Secretary Mellon, who declared in letter to Representative An drews that If the compensation measure vetoed by President Harding were re-enacted the total would cost S5,400, ,526,444, and would average S225,000,000 for the first four years MT. Melons letter In which he reiterated that passage of the bonus bill probably would prevent "any re- auction of federal taxes upon a comprehensive plan In this genera tion," was in reply to an inquiry from MT. Andrew as to whether previous estimates of treasury ex- perts of the probable costs were accurate.
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 Under program adopted at two | hour session of the ways and means committee which must approve revenue legislation before 1t can be taken up by the House. several weeks will be devoted to commit tee consideration of the tax bills tion of whether a bonus bill is to be reported in order, consideration l of tax rates to follow.
 Bonus proponents in the commit | tee mado several unsuccessful ef- forts to have that Legislation given priority. At the immediate outset 1 Representative Frear. republican in- cI1- N y{CO refy, hot the committee proceed to considera- ton of the bonus bill. After his motion had been rejected, Represen- tative Oldfield, democrat, Arkansas suggested that 1t be taken up by the committee either on January 4 or 15, while Representative Carew New York, proposed that considera- l tion should begin by January 10. All l three resolutions were voted down l and the committee rejected a motion | by Representative Dickinson, dem- oorat, Missouri, that 8 bonus bill should be reported to rne house by l February l.
 The motion to defer action on the bonus until after all provisions Of the tax bill had been considered was i offered by Representative Tilsen republican, Connecticut, but a major ity preferred the plan to pass first on the administrative features and then to reach a decision as to bonus and finally to determine what reductions should be made in tax schedules.
 In the voting on resolutions to 1 give the bonus priority the repub- lican committee members with the execution of Mir. Frear, voted in the negative. They had the support of two ts-Representatives Gar | ner of Texas, ranking minority mem Der of the committee. and Collier of l Mississippi This lineup resulted In l the rejection of the. various motions 1 by a 15 to s vote.
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 Andrew Comments.
 After receiving MT. Melons letter MT. Andrew, who formerly was as sistant secretary of the treasury, de- l elared in a statement the secretary: l estimates of the cost of adjusted compensation are greatly in excess of the previous estimates of his owI l actuary which were published by l Senate committee a year and hal ago and which was not questioned 1 heretofore.
 "They remind me" continued MT | Andrew, "of the estimated deficit O 1 $650, o00,00O which motivated Presi dent Harding's veto of the adjusted compensation bill and which proved 1 after the veto to be one billion dol lars in error, as the deficit wa transformed into an actual surplus 0 more than sS00,000,000.
 According to the estimates of tn, 1 government actuary. the treasury of | ficial who is charged with such cal culations, the adjusted compensation bill will not cost more than $S1,000, 900 yearly for the next three years or less than a quarter of the secre tarys' proposed reduction in taxes.
 'It will allow the whole proposet reduction of 20 per cent in the tal on earned incomes, the whole reduc tion In the normal income tax, tn repeal of all admission taxes, the re peal of all telegraph ard telephon taxes and some readjustment of sur tax rates. although not all that tn 1 secretary proposed"
 In his letter MT. &ellon declared: MeIIon's Contention.
 "It must be obvious to any impar tial mind that a new obligation o the United States made in time o peace to pay over five billion dollars of which one billion dollars comes Il the first four years, and an averag drain on the treasury for 20 years o S211, 100000 Q year. which Is one fifth of the total pre-war cost o government, cannot be undertake without serious economic conse quences. If such & commitment 1 made, any reduction of federal taxe upon a comprehensive plan will prob ably not be seen in this generation.
 "The bonus bill vetoed by Presi dent Harding gives the right for tn first three years to borrow iron banks of the country, and that thi right would Be exercised by tn great majority of certificate holder none deny. The consequent demani for credit would raise the interes rate which the government as wei as the general public will have t. pay on borrowed money. At the sam time the mere passage of the bil would depress the price of govern ment bonds and increase their basi of return.
 'FIn such a money market the gov ernment would have to take care o the sS,0o0.000 of it's securities whicl mature within the next five years and to do so would, of course. hay to meet the higher rate of interest The continuing cost of an increase, interest rate on such a volume 0 refunding would be very large. Tn government. like every other persol | in the United States, would also hay to conduct it's business at greatly in | creased expense, due to the highe price levels generally which woui, inevitably follow the credit expan sion and decreased production | brought on by the bonus law. | O O O
 Additional Tax Bogy.
 I "Soon the disturbance to bushes by this and other factors would re duce the income of the people an, thus the governments revenue, s, that any estimated surplus would n' longer exist and recourse would hav to be had to additional taxes.
 Tt has been the policy Of tn United States to make preparation |, meet large principal payments com ing duo at a period in the future b, use of sinking fund and no othe