Evening star., 1936-01-19
Wondering About
Federal Credit
By O,cen L. Scott.

States Treasury really is beginning to
wonder about the adequacy of Federal
credit.
Always, since 1888, at least, the Ma
tional Government has found it easy to
give I. o. us in return for the dollars
needed to replenish its huge checking
account. Lenders, unable to find ready
market for their money among private
borrowers, have been eager to allow Uncle
Sam to use their money at small cost.
Thus far, the experience of living on
borrowed money is proving pleasant for
everybody concerned.
Mr.. Roosevelt is able to provide jobs
for the unemployed on work projects.
Those unemployed maintain themselves
by cashing checks written against bor-
roWed money. Business men find these
borrowed dollars just as good as other
dollars in sustaining trade. Taxpayers,
while complaining, enjoy q respite from
the sort of taxation that would hurt
badly if called on to take the place OF
borrowed money. Bankers and other
lenders are glad to employ money that
otherwise might lie idle.
But all of the time, inside the Treas
ury, the men who must find the money
to spend are wondering how long this
entertaining and pleasant pastime can
continue without seriously affecting the
value of the borrowed dollars that are
used with such profusion.
The task of locating billion new
dollars every month or SO Is routine for
the Secretary Of the Treasury. Henry
Morgenthau, jr., who has that money
raising job, waged struggle over recent
months to bring a better balance between
the outgo and the income Of the Federal
Government. He set out to chase the
rainbow of a balanced budget. At the
end was to be the pot of gold that could
be used to help cancel out part Of the
/. o. us and end finance problem
that grows increasingly complex.
Yet today that chase is farther from
its goal than ever. The rainbows end
actually recedes faster than the Secre-
tary Of the Treasury can approach 1t.
What, definitely. is the trouble?
Simply that President Roosevelt and
his aides appear unable to find any
effective way to check the flow of money
out of the Treasury. Income is rising,
but outgo keeps rising faster.
Just ahead lies a prodigious flow of
money. Nothing like it has been seen
in the Nations history outside OF one
war year.
The result is that, as he faces the last
stages of his first term in Office. Mr..
Roosevelt is certain to be much further
away from balanced budget than when
he started back in 1888.
The President did not plan it that
way. He worked for many weeks to
figure out spending plan that would
show to the country some progress to-
ward balance between Federal spend
ing and Federal income. That plan
went to Congress at noon on January 6.
Almost Immediately it all was meaning
less
Why? Principally for three reasons,
which are:
/. Mr.. Roosevelt made no estimate of
the cost of relief of the unemployed for
the year beginning July /. 1886. Now
word leaks out that this is two-billion-
dollar omission.
2. Congress has ideas for spending
money not included in the Presidents
estimates. It's biggest idea is for $2000,-
100000 to pay the remainder of the face
value of adjusted service certificates, or
soldiers bonus.
3. The Supreme Court put at least a
billion dollar crimp in estimates of reve-
nues and expenditures, making even the
Presidents part of the budget look like
glorified question mark. 1t knocked out
processing taxes, counted on to yield at
least $750,000,000 over the next 18 months,
and raised grave doubts about $547,-
100000 in new-fangled pay roll taxes
which the President included on the in
come side of his budget.
When all of this was taken into con-
sideration, what had looked like $685.
100000 of expenditures for the year be-
ginning next July became 10.752 900 900
if the bonus is thrown over into the
next fiscal year.
And what was set down as 1854 ,000,-
900 in revenue to offset the expenditures
quickly shrank to about five billions, with
half billion of that very much in
question.
Even prospective new five-billion-
dollar excess of outgo over income does
not give the full picture. No considera-
ton in that calculation is given to about
two hundred millions in processing
taxes which the Government counted on
receiving and is not to receive unless
Congress enacts retroactive tax law.
Neither is consideration given to nearly
quarter of a billion of payments that
Congress will be asked to make to
farmers.
In other words, today's picture of
Federal finances is one of confusion con-
founded.
Mr.. Morgenthau, who had visions of
an early check to repeated requests for
newly borrowed money, now has told
Senators that he is going to need to
find more than eleven billions of dollars
in the next II months of which more
than five will be new money.
Mr.. Roosevelt, who had visions of a
Federal balance sheet that would make
good reading for the conservative inter-
ests of the country, now finds that those
visions are shattered by developments
outside his responsibility.
He may think back to March 10, 1888,
when, in message to Congress, he said:
For three long years the Federal Gov
ernment has been on the road toward
bankruptcy d"
Upon the unimpaired credit of the
United States Government rest the
safety of deposits, the security of insur-
ance policies. the activity of industrial
enterprises, the value of our agricultural
products. and the availability of employ
ment. The credit of the United States
Government definitely affects these
fundamental human values. It, there
fore, becomes our first concern to make