The Washington times., 1931-09-04
DEFICIT LOOMS
AS HANDICAP
To c. O.P.
Shortage of Billion Expected
BY July |; Public Opinion
Sought; War Debt Specter
By WILLIAM C. MURPHY, JR.

SOugnt; war UeDt opeCleT
BY WILLIAM C. MURPHY, JR.
The nightmare prospect of con.
Quoting a presidential campaign
on a record including billion-dol-
lar deficits in two successive fis.
cal years already is disturbing
the slumbers of Administration
leaders.
Recent Treasury figures show
ing a 1896, 900, 900 deficit for the
first two months of the present
fiscal year give grim evidence
that this prospect is fast ap-
preaching reality.
Treasury officials were quick to
explain that the deficit for the
first two months does not furnish
a fair basis upon which to calcu-
late the deficit for the entire
year. That is to say. it should
not be assumed the deficit for the
year will be six times 6,OOO,-
900, or S2,376,OOO,OOO.
Billion Deficit Seen
However, barring something like
a miraculous swing back to pros
perity, it is believed that the per"
centage of increase shown for the
first two months is likely to hold
approximately true throughout the
year. This increase amounted to
about SO per cent. which would
mean that a deficit Of something
in excess of $1,200,000,000 may BE-
anticipated next July l.
That is, admittedly, a most dis
cOuraging outlook in a campaign
year for a party which rode into
power on promises to abolish the
pOOrhOuSeS, put a chicken in every
pot and two cars in every garage.
Contemplation of this prospect
is believed to be the reason back
Of recent administration pronun-
ciamentoes in favor of more rigid
governmental economy.
Chairman Will R. Wood R0.
Indiana, of the House Appropria.
tions Committee, illustrated this
tendency by his recent declara'
tion on the White House steps in
favor of curtailing expenditures
for the Army and Navy.
Storm is Expected
With the Army already pared
to the dimensions of a Graustar.
khan military establishment and
the Navy far below the strength
set by the London Conference
Treaty, this proposal is expected
to arouse a considerable storm in
Congress. However, it illustrates
the plight of the Administration
leaders.
Another fiscal Specter is what
to do when President HOover's
war debtS-reparations moratorium
expires next July lin all prOba.
bility just a few days after MIR.
Hoover will have been renOmf.
mated for the Presidency.
In that political situation, ques.
tions may be anticipated as to
what the nation has gained by
foregoing the $250,OOO,000 in war
debt payments waived during the
present fiscal year.
Even more fraught with poten-
tial political embarrassment Is
the likelihood that payments will
not be resumed when the mora
torium expires. thus raising the
issue of partial or total cancella-
tion.
Public Opinion Sought
Already the currents of public
opinion are being tested by Off
cial kites labeled with such
phrases as willingness to consider
an adjustment of the interna.
tional obligations. To a large
body of informed opinion such
phrases are mere euphemisms for
cancellation.
A marked Improvement in the
world economic situation, it is
believed, might bring a feasible
solution of the war debts-repa-
rations question.
Fiscal authorities point out,
however, that even a tremendous
business revival could hardly pre.
vent a domestic deficit next July
larger than that for the last fis.
cal year.
Nothing short of a drastic up.
ward revision of the tax rates or
new revenue sources could do
that, it is said.
The great bulk of the Federal
Governments revenues come
from individual income and cor.
poration taxes and that which
will flow into the Treasury dur.
ing the balance of this fiscal year
will be based on earnings during
the calendar years 1880 and
1881.
In other words the business
revival would have to be retro.
active to head off the impending