Evening star., 1931-12-27

President consulted party leaders on
October 8. He received from them
vague pledges of support, but he did not
give IN detail his program at that time.
He merely said that reconstruction
finance corporation would be recon-
mended If it was necessary. Mr.. Hoover
has been disinclined to enlarge upon
his reasons for thinking that such a
corporation is necessary, believing that
1t is obvious that some sort of an emer-
gency corporation is essential in order
to improve the credit situation.
The Democrats have agreed in prin-
ciple to the idea of reconstruction
finance corporation, but they are not al
together of one mind as to what form
1t should take. They are anxious to
have part in its management so that
II there Is any credit for the perform
ance by the corporation 1t will not be-
come a party matter with the Repub-
licans.
Again we see the Democrats leaning
toward cooperation. but at the same
time unwilling to play into the hands Of
their Republican opponents.
Political Situation Simple.
The national political situation is rel
atively simple. If business is better
during the latter part of 1892 when
election time comes Mr.. Hoover's
chances of reelection will be better
than ever. II, however, there is not
much change in the situation and it is
dragging along about the same as at
present, it seems to be universally
agreed that the Democrats will win the
national election. There are some OBJ
servers here who feel that If the elec-
hold Nr
would not get 100 electoral votes.
There are, however, SO many change
able factors in the business situation
that political predictions are always
coupled with the statement that it all
depends on what the business outlook is
on election day and what the business
evolution Of the year has been when the
American people 60 to the polls in No.
vember.
Everybody is hoping that business will
be better, but when politicians meet
they naturally remember the political
possibilities involved in anything that
may be done. For this reason it is quite
possible that Congress will do enough
to keep matters from growing any worse
and perhaps even contribute to some
improvement. But it is difficult to fore
see the present Congress going out of
its way to use artificial measures onxhe
eve of presidential campaign. although
the country may fully understand the
credit for such performance is given to
those who are sponsoring the particular
measures that are passed.
Many of the bills presented by the
administration. therefore, will be re-
written and will come out under Dem
ocratic authorship, so that the DEM
ocratS will be able to argue that Dem
ocratic leadership is responsible for
such business improvement as does oc-
cur.
Looking back over the year, it is
questionable now whether the President
acted wisely in keeping Congress from
meeting in extra session. Certainty
many of the members who went back
home did not get the same impression
of the business problems Of the coun-
try as they are getting now that they
are back in Washington. If Congress
had been called here to meet November
l, 1t would have given an opportunity
for organization and the presentation
Of emergency programs. As 1t Is, Con-
gress has done practically nothing since
it met early this month and it rarely
ever does anything in December be-
cause of the approach OF the holidays
which come just after both Houses
complete their organization and as
signment of committees.
May Speed Up in January.
Congress can work rapidly when it
SO desires and it is not ct all unlikely
that the first week in January will see
a speeding up of legislation relating to
reconstruction. The biggest question
then will be what tax program will be
adopted. The Republicans have Of
fered plan based on the 1924 tax law.
but the Democrats have announced
that they will present their own fiscal
program. 1t is foregone conclusion
| that the Democrats will not vote for
any bill which makes the taxes retro
active upon incomes of 1881. They
| think that the amount of additional
taxes that would be collected on 1881
| incomes is negligible, and that busi-
ness needs the incentive and that the
individual needs the temporary relief
! to be afforded by not making the new
March 1893. AS for the indirect taxes,
| these probably will go into effect at
once.
One of the most significant events Of
the year has been the way income tax
receipts have dropped off. Instead of
collecting the usual amount from IN
come taxes, the Government has lost
heavily on account of the depression.
The deficit for the current fiscal year
is estimated at about two billions Of
dollars. but inasmuch as Uncle Sam
paid back the war debt more rapidly
than was scheduled, there is DISPOSE
of anywhere from two to five billions
as still within the original payment
plan contemplated when the war debt
was incurred.
Whatever tax law is adopted. it is
clear that the rates will be kept in
effect for at least two or three years
so that when business conditions are
better the Government may be able to
pile up enough surplus to retire some
of the borrowings of the depression
period.
The drive for economy, nevertheless
will be made by both political parties
because there is a popular sentiment
in favor Of reduction of Government
mates recognize this Fact, because there
are few increases and most of the
items are decreased in comparison with
last year.
Because of the fixed commitments
1t is not possible for the Federal budget
to be materially cut during the present
fiscal year or the next. Also there is
a constant effort to increase the
amount of money spent for public
building in order to aid unemployment
AS a consequence the Federal budget
for the next few years will not afford
the taxpayer much relief.
Climax Of the Depression.
While nobody here is able to chart
the course of business Government in.
formation would seem to indicate that
the climax of the present depression
will be reached during 1882 and that
the convalescent period of the sick in.
6ustries will have definitely begun this
Winter.
Looking at the whole country from
the viewpoint of members Of Congress:
and the reports that come in from
every section, it is apparent that the
depression has been felt everywhere
yet the reserves of the country are st
great that any sort of real financia
disaster is regarded as unlikely In.