Evening star., 1934-01-07
HUCEDEBT GIVES CONGRESS
COMPLEX TAX PROBLEMS
Tremendous Social Significance Seen in
Moves to Match Income With
Carrying Cost of Loans.

clearance, reforestation and the like,
for which, at the risk Of some unpopu-
larity, I earnestly pleaded considerably
more than a year ago.
Makes Budget Distinction.
In the broader sense all these peace
outlays are not only as legitimate as
those Of war, but perhaps less diSad-
vantageous because in large measure
susceptible of being credited to capital
account. 1t Is hence not Illicit 10 erect
for such outlays an extraordinary bud
get. But it is Of signal Importance that
In the ordinarT budget. the balancing of
which is the corner stone of national
prosperity, there be included the in
terest and amortization of the new
loans.
Thus the extent of the fresh borrow
ing is automatically limited by the
feasibility Of increased but still endur-
able taxes, and, while there is evident
the recklessness Of the demands for
boundleSS outlays to be financed from
loans. Public credit is not the mex
haustible and self-flling pitcher Of
tabled fame.
Fortunately the repeal of prohibition,
with large revenue from liquor taxes,
will not only provide the interest and
amortization on many billions in loans.
but will permit a gradual reduction Of
existing burdens and even afford lee
way for strengthening the recovery pro-
gram.
Speedy Recovery Aim.
1t must not be forgotten that the pri-
mary objective is speedy emergence
from the slough of depression. Under
ordinary circumstances high or low
prices are immaterial; the business man
and the consumer soon adjust them
selves to either. It is rising or falling
prices which are Of Importance.
Falling prices are good for bondhold-
ers and other recipients Of fixed in
comes; rising prices are good for the
employer and the wage Garner. In the
aftermath of a great crisis. Nhowever.
coined because they Lift a heavy bur.
den from the great section Of the COM
munity who are on balance to be put
in the debtor class The task confront
ing Congress is to envisage the eco
nomic situation as a whole. To this
larger end both the monetary and the
| fiscal programs must be subordinated.
Asks Budgets DovetaiL
Our conclusions may be put as fol-
lows:
l. We need, in addition to the or
dinary budget, an extraordinary budget
dealing with emergency and capital
outlays. In balancing one We must in
clude the interest and amortization of
/ the other.
g. The revenue problems should be
considered as whole. 1t is high time
Congress should attack the co-ordina-
ton of local, State and Federal levies
8. Taxation must be regarded from
the social as well as the fiscal point of
view. While the fiscal aspect Is priIn-
AIRY, the social and political objectives
are always important, and in emer-
gencies like the present, may be para
mount.
L. In formulating . fiscal program
Congress should be prepared TO supple
uent the heavy direct taxes on In
comes and inheritances by q substan-
tial amount Of indirect leNes on
| liquors tobacco and imports But great
care should be taken 10 tighten the
burden on production, exchange and
consumption.
| S. Amid the welter of conflicting
| class interests-debtor and creditor,
agriculture and industry, the West and
the East, the producer and the con-
sumer, the present and the future-the
outstanding duty Of the statesman is
to observe the Greek precept Of the
middle way and the golden mean.
(Copyrisht. 1934J