Evening star., 1936-11-29
Budget Balancing
Now in Prospect
BY OWEN L. SCOTT.

Just after election, while elated over
the victory, President Roosevelt told his
Hyde Park neighbors that he was going
back to Washington to balance the Fed
eral budget.
Few persons at the time regarded the
statement as anything more than a cas-
ual reference to the fact that Govern
ment finances would occupy his attention
prior to sailing for South America.
Yet today enough is known of budget
plans to make 1t appear highly probable
that President Roosevelt will be able to
tell Congress in January that cash outgo
and cash income can actually balance
in the fiscal year beginning next July l..
He expects to be able to say that no
new borrowing will be necessary after
the present fiscal year. At its peak-be-
fore turning down-the national debt,
according to present estimates, will be
under $34,750 000. 900.
In other words, Mr.. Roosevelt meant
what he said at Hyde Park.
\ y
How can present prospects Of bal
anced Federal Government budget be
reconciled with the persistent assertions
Of the Presidents opponents that moth
ing but continued deficits and eventual
financial ruin could be seen ahead?
The answer is found largely in rapidly
increasing revenue, with prospect Of
even greater increases flowing from the
direct and indirect effects Of the new tax
on the part Of corporation earnings not
paid out in dividends. But 1t Is found
partly in the prospect Of decreased spend
ing due to lower relief costs and to cur
tailment Of much emergency lending and
spending.
Daniel Bell, acting budget director. Is
doing an expert Job Of expenditure trim
ming. to judge by the anguish Of some
leading spenders. He is operating under
orders from the President that give him
full opportunity to exercise a technical
skill that exceeds that Of previous di-
rectors Of the budget.
When the President and Dan Bell get
through. what are the people likely to
find?
Principally. that the cash outgo and
the cash income Of the Federal Govern
ment will probably reach a balance on a
temporary basis Of about $500 ,000, 900.
AS the social security program speeds
up that figure will rise rather rapidly.
1t contrasts with outgo Of about $780,
100000 and income Of about $500. 900 900
In the present fiscal year.
The prospective shift from deficit Of
about $4,000, ,000,0 900 to a budget balance
is accounted for by $500, 900 900 soldiers
bonus item in this years expenditure,
along with another S500,0 900 for
drought relief and other relief that can
be eliminated with the end of the drought
emergency and a pickup in industry
Pay roll taxes and income taxes account
for the probable larger revenue.
Those oflcials who have shaped New
Deal recovery policies say that when an
end comes to Federal Government bor-
rowing there will occur a real test Of
the underlying theory Of stimulated
recovery.
President Roosevelt set out deliberately
to borrow huge amounts Of money and
to spend that borrowed money In q way
that would be reflected quickly in the
channels of trade. w. P. A. during the
past months has been as much an agency
Of getting money into the hands of those
who would spend it rapidly as it has
been an agency for relief.
All signs point to the fact that spend
ing has taken hold. Nearly all business
has had sensational advance. Expand
ing consumption is being reflected
throughout industry. The next step calls
for the Government to put out from
under by balancing its budget while pri-
vate business takes over the load of
continued revival.
II this transition works as scheduled,
then New Dealers will insist that their
theory Of stimulated recovery has been
borne out in actual practice.
Then what?
Once business Is on It's way and Gov
ernment finance is in order the idea is
to build permanent machinery into the
structure Of the Federal Government
designed to guide the future distribution
Of national income. This second stage
calls for new use Of Federal power.
In this stage. there is scheduled to be
reduction of the national debt as that
debt is held by private citizens, an
exercise of control over credit and cur
rency, use of taxing power to prevent
further concentration of income into
the hands of the wealthy. a building of
several devices to spread the national
income more evenly among those in
the lower income brackets.
The new tax on the part of corporation
income not paid out in the form of divi-
dends plays an important part in the
new planning.
That tax forces distribution of income
either through payments to individuals
who will be inclined to spend the money,
thereby keeping it in the stream of pur-
chasing power. or through payments to
the Government, where it may be re-
distributed to farmers, or unemployed, or
aged people or other potential spenders.
Regardless of reports to the contrary,
this tax is expected by the Treasury to
yield very large amount of revenue
as much as 81, ,0O0. 600, 900 in the next full
year. Thus 1t is regarded both as q
revenue raiser and reform measure.
Then there are w. p. A. and P. w. A.
Both figure in plans for permanent Fed
eral economic controls.
w. P. A. is scheduled to have a place
as an agency that will expand and
contract with the volume of unemploy-
ment. It can serve to insure a flow of
purchasing power to individuals who
might otherwise be lost to business as
consumers owing to lack of jobs in
private industry.
p. w. A. is to become more of an
agency for planning and financing large
scale public works. with its activity
speeded up in periods when private con-
struction lags.
At the same time, the Agricultural Ad-