Evening star., 1936-08-23
Day of Predepression
Budget Is Gone.
BY OVEN L. SCOTT.

BY OWEN L. SCOTT.
The chief problem confronting the
next President: To adjust this Nation to
permanent Federal Government budget
Of between seven and eight billion dol
lars.
Anything less is out of the picture If
platform promises and acts of Congress
are to be applied. An even larger per-
manent budget is in the picture unless
unemployed.
The day of the pre-depression $4,000,-
100000 national budget is gone.
How so? Because: First, operation
of the old-line Government establish
ments, along with veterans expenses and
interest on the public debt, amount to
more than $4,000. 900, 900. The trend Of
these expenses is and has been consist
emily upward, except for brief furries,
such as the economy act Of 1888.
Second. both President Roosevelt and
Gov. Landon are pledged to permanent
subsidies for agriculture-the Republic
can nominee Is down as favoring two
such subsidies in place Of the present
one-involving at least half billion
dollars q year.
= Third. both parties and both candi-
dates are pledged to a system Of per-
manent public works, which means, ac-
cording to the Presidents interpreta-
ton, another half billion dollars year.
Fourth, each candidate favors unem-
ployment insurance and old-age PEN
sions. Under the plan now on the statute
books the cost Of these new programs
will start at around a billion dollars for
the first full year, rising gradually to
three billions. Gov. Landon would sim
plify and scale down the national old
age insurance plan, but, even 50. a
minimum future cost for social security
is set at billion dollars.
sion Federal Government budget amount
ing to a minimum of 5000, ,000, 900. And
then:
Fifth, both major parties are on record
as favoring Federally- supported relief
for the unemployed. President Roosevelt
favors work relief, twice as expensive
as the dole. Whether Gov. Landon
favors work relief or direct relief is not
minimum estimates for the next year
or two call for $1,000 900 900 on dole
basis; $4,000 ,000,000 on a work relief
basis.
The result totals up to between seven
and eight billion dollars.
II relief needs persist. and II social
security costs should rise according to
the plan now law, then an 5000 900 900
h,,dnat in, ho f,tft " t,,ry ~ ho
a small budget.
How can any such program as that be
supported?
Henry Morgenthau. jr, Secretary of
the Treasury. told President Roosevelt a
few days ago that existing taxes would
turn the trick. He said that no new
taxes and no increases in present taxes
would be required.
Technically speaking, the Secretary of
the Treasury might be right about new
taxes. but practically, from the point Of
view of the average citizen, he was far
from right. The reason is that two
highly important taxes have not yet
been applied.
One is the tax on pay rolls-really a
new species of income tax that will reach
all workers. This tax will start next
January at the rate of ! per cent on
the wages of all workers, with its revenue
to support an old-age insurance plan.
and at the rate OF per cent on pay
rolls Of employers. to support old-age in
surance and unemployment insurance.
The tax rises gradually to total Of
per cent, expected to yield $1,000 900. 900.
The second is the new graduated tax
on the part of corporation earnings that
are not paid out in dividends and the
new tax on dividends in the hands of
individuals.
With those two new taxeS-one Of
which will start to be collected next
January 81 and the other next March
15-the Treasury thinks that the Federal
budget picture for the 1887 fiscal year.
which started July l, will look about
like this:
Income, s6,2oO,ooO 900; outgo, $780,
100000: deficit $4,000. .000,0 ,000
That still leaves big gap between in
come and outgo. How will 1t be closed?
The theory stated by Secretary Nor
genthau is that, as recovery proceeds,
revenue will increase greatly, while the
need for spending, particularly for relief,
will decline.
But recovery already has proceeded to
fairly advanced point and what do the
official figures disclose?
They show that the Federal Govern
ment is not lending as much money as
it lent in previous years, but that it Is
spending money on a much bigger scale
than year ago. In fact, for the first
six weeks of the new fiscal year. the
Treasury paid out, through w. P. A.,
P. w. A., &C. c., F. E. r. A., A. A. A.
and other recovery outlets not specifical-
ly listed, total of about $430 0000, 900.
During the same period year ago, the
same agencies paid out about $280,0O0.-
900.
Chiefly responsible for this difference
is the cost Of work relief-amounting to
more than $3.50 .000. 900 for this period
as compared with less than $l20, 900
for this old direct relief.
i y
In other words, actual expenditures Of
money through projects that promise no
repayment to the Treasury are running
heavier than ever.
But these expeditures are covered up In
the official Treasury statement by the
system Of accounting which credits re-
payments of loans as an Offset to pay
ments from the Treasury. Thus: The
r. r. C.. in the first six weeks Of the
new fiscal year, paid back about $780,
100000, and the Commodity Credit
Corn. Maid back nearly $40 600 OOO more