Evening star., 1935-01-08
MESSAGE FRANK
ON i. S. FINANCES
Budget Note Presents Facts
of Spending Without
PretenSe.
BY DAVID LAWRENCE.

President Roosevelts budget mes
sage is the most amazing document
of his administration. 1t Is amazing
because 1t naively presents the picture
of what the Federal Government Is
spending and lending and makes no
pretense of planning at any definite
time for a balanced budget.
1t presupposes the excellence Of the
credit of the United States for an
equally indefinite period of time.
There is no answer in 1t to all the
cries that the soundnesS of the dollar
is related directly to the future of
the American citizens life savings.
whether invested in life insurance
policies or placed in banks in the
form of deposits.
Currency imitation is not mentioned
in the message and is brushed aside
by administration officials in their
informal comment as not to be con-
sidered for the present at least.
$4,000, 100000 Nest Egg.
The s2.OO0,OOoOoO stabilization
fund is referred to as nest egg. to
be used Indefinitely to support the
Governments own operations in keep
ing up the value of Government
bonds and the value of the dollar.
Is the indefinite borrowing a dis
concerting prospect? Is 1t one that
should give cause for alarm? The
answer is a simple one-not If the
American people continue to have
faith that the emergency for which
all the lending and spending is done
will not be long-lived
The public debt, for instance, is now
officially estimated to rise to peak
of S34, 4,2000 100000 by the end of June,
1886, and the budget is to be out Of
balance close to $4,000, 900 900 in that
very year when, as a matter Of fact,
Mr.. Roosevelt year ago in his mes
sage to Congress held out hope that in
1886 he would present a balanced
budget.
How big can the Federal debt go
without shaking the credit foundations
of the country? Some officials here
think it can go up to $4,000 000, 900.
1t should not be forgotten that the
States and cities have debt of about
$4,000, 900 900, so that if the Federal
debt goes to so billions, the total gov
ernmental debt-Federal. State and
city-would amount to $4,000, ,000, 900
Speed of Repayment.
II borrowings can be continued at
an average rate of per cent, it would
cost the Nation about S2,110,000, 900 a
year for interest charges. Then the
query comes down to this: How fast
should a national debt be paid OH?
Heretofore Congress has figured on 20
years for the maturity of bonds. But
as a matter of practice governmental
debts are not paid as rule at ma
turity, but renewed by the f1otation OF
new loans, so it has been suggested
that America might do as Britain
does: Namely, float loans in the first
instance for SO or rs years. Some
British "consols" are 99-year debts
It has been assumed that what Britain
can DO. America can do.
So if the amount paid of on princ1-
pal each year is a small sum, as, lor
instance, $1O0, 900, 600 to 5000 ,00o, 600
depending on economic conditions, an
interest charge of $500 900 900, on q
s50,OOO 100000 debt would not break
down Americas credit. "
Limit Questioned.
The real problem Is whether the
Federal debt can be held at $5o.o0o,-
100000. 1t is running up fast. 1t
went I'D five and a half billions under
the four years Of the Hoover admins
tration and the country thought not
enough was being done for recovery,
SO the Roosevelt administration has
estimated its deficits for three years
at close to $4,000, 100000. That's
about seventeen and half billions
in all for the six years Of depression.
Will the deficits be ended in 1887?
Not if the recovery objectives have not
been achieved. 1t would not be sur
prising if the total deficits went up
another three or four billions beyond
the twelve, so that the Roosevelt ad-
ministration will have increased the
public debt from $4,000, 100000 to
something like $4,000, 100000.
The administration has Endorsed
plans, however, fot about three to five
billions year for natural resource
development, and estimates $105. .000,-
100000 as possible expenditure if the
Government embarks on scheme Of
control which is closely akin to State
socialism. Some such item as this
would probably break down credit, but
the conservative forces in the ad-
ministration predict that the ending
of the unemployment problem in the
next five or six years will see the end
of large spending programs. But no
body can really be sure about any
thing as long as budget balancing
isn't taken seriously enough here to
warrant an official estimate or plan.
Copyright. 1881