Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-09-14
Hewing Too Close to Line OF
Revenue May Force Raise
Later. He Fears.
CANCELLATION DECLARED
BAR TO SIMMONS HOPES
President Said to See No Political
Significance to Trip Through
Wadsworth Territory.
BY j. RUSSELL YOUNG.
staff Correspondent of The Star.

tember 14.-President Coolidge S
spokesman today answered the Demo-
cratic claims for debt cancellation and
tax reduction, giving in considerable
detail Mr.. Coolidge's reasoning in op-
posing both suggestions.
In reference TO Senator F. NJ. Sim
mons suggestion for a tax reduction
of $56000O,000, it is Mr. Coolidge's s
opinion, his spokesman asserted. that
any one can reduce taxes if there is an
Executive who will keep expenses
down, and his fear is that if Con
gress hews too close to the tine in
times of prosperity it may be neces-
sary, when a business depression
comes, to increase taxes.
Nothing, the President believes,
would be more detrimental to d re
covery than an increase of the Fed
eral levy upon individuals and husi-
ness. In a word, answering Senator
Simmons, Democratic ranking mem
ber of the finance committee, Mr.
Coolidge believes that the present con
dition of the T Tr-asury does not war
rant the reduct n of more than half
a billion dollars which the Senator
proposes shall be made next Winter.
unless it is to be done at the expense
of debt service. If that were done, Sc
rlous complications might result.
Effect of Cancellation.
On the other hand, if the views
of the cancellationists were carried
out there could be. no tax reduction,
even at the expense of debt service.
Sn 10 l3% 1Af
tempting to impose their views upon
the country the Democrats might do
very we'll if they first agreed among
themselves what their aims are and
how they should be carried out
The President, it was made clear,
favors tax reduction just as quickly
as 1t safely can be done. On the other
hand, he also favors reducing the ma.
tlonal debt, on which the annual In
terest now exceeds $S00.0e0 900, as
one method of the wisest and most
farreaching economy.
Part of the additional revenue com
ing into the Treasury at present is
due to tax reform. accOmpa MED by tax
reduction, but it also results from in
creased business. The President
doesn't know how much of the in
crease is to be attributed to reform
or prosperity, and thinks that it will
he well to wait before making
change in the present law until the
statute has been given a longer trial.
Until that has been done Mr. Coolidge
is not ready to reach a final conclu-
sion.
Impressed by Borrowing.
The Pre- esident has been greatly i'm
pressed with the fact that in Septem.
ber the Treasury again had to resort
to temporary borrowing in order to
meet current fiscal needs. In June,
for the first time in many years,
current income was sufficient to tide
over the Treasury and much was
made of the fact as being indicative
of the condition not only of the
Treasury. but of the country. The
country was benefited twofold. because
funds that had been accumulated
to offer the Treasury promptly were
diverted to productive channels.
If the income of the Treas sury were
cut to such a point by further tax
reduction that the Government con-
stantly would have to borrow money
to meet it's obligations, it would be
paying inerest on much of the CAPT
tai it needed in it's business, accord
ing to the President, who dosen't see
any wisdom in that. On the other
hand, he can't see how the Simmons
plan can be carried out without a re.
ARA ngement of the debt service.
Without minute study of the funds
now applied to that purpose Mr.. Cool
idge isn't prepared to state what can
or cannot be done, but he does see
danger ahead if it is necessary to in
terfere with the sinking fund sched-
ules which have been set up to re.
deem bonds being paid off. The Gov
srnment must keep faith with the lend.
ers Of the funds. To do otherwise. the
spokesman said. would be a gross vio-
lation of faith and injurious to the
public credit.
Expects Faith to Be Kept.
While putting this forward as one
answer to the Democratic claims.
which now have superseded the tariff
as main argument for the 1926 cam
paign, Mr.. Coolidge really does not feel
that any one in public life seriously
would propose anything Of that sort.
Mr.. Coolidge also feels that the Gov
eminent has a surplus. whether it be
large or small, in theory only. because,
while income may be greater than out
go for current expenditures. when debt
service is contemplated the United
States has no margin at all between
receipts and its obligations.
Mr.. Coolidge wants it understood
that he not only has been working
for tax reduction but for tax reform
as we'll. Under tax reform he looks
for a larger revenue. at reduced
rates, by reason of the greater husi-
ness reform rates will produce. 1t is
too early for him to say whether the
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