Evening star., 1937-10-19

100000. And last April this was re-
vised to an expected deficit of s4l8,-
100000 And now, in October, the
deficit is revised still further, indi-
eating around S700000000 as the ex-
pected result by the end of next June.
Either analysis is logical, but what
the country doesn't know about these
figures is that next March there will
have to be further revision of the
estimated deficit, to take into account
the certain falling off in tax receipts
due to bad business in the third and
fourth quarters of 1887, and also to
the probable additions to Federal ex-
penses Whit. will have been made by
the special and regular sessions of
Congress.
Hope for Billion Deficit.
But if the deficit finally winds up
at 81 100000 900 next June, this would
be quite an improvement over the
S2.700, ,oO0,0 900 deficit of the fiscal year
which ended last June. and many OBJ
servers would be gratified because the
trend would be substantially down.
ward.
What the public little realizes, how
ever, is that the method of cutting the
deficit is most unhealthy one. EX-
penses aren't being reduced at all. In
fact the Presidents latest figures SHOW
they are very much higher for the
current fiscal year than he thought
last January or last April that they
would be b. now.
These increases in expense are dam
cerous, fscally speaking, because the
Federal Government cannot hope 10
continue to collect such big tax re-
ceipts as it is now gathering. The
American people, for instance, Will be
contributing during this fiscal year
more than ST .000, 100000 in social Sc
curity taxes on pay rolls. Theoreu-
callv this money goes into a trust
fund. but the Government is obliged
by act of Congress to invest the tundS
in its own bonds bearing per cent
interest. So in effect the Government
issues bonds to a trust fund set up
bv the Treasury bookkeepers here ana
taxes the proceeds from the sale OF
these bonds-the social security cash
and puts it into the general receipts
of the Government as revenue re-
ceived.
So social security money acts Ike
anv other general tax receipt TO swell
the intake inasmuch as all the budget
balances are figured out on a simple
basis of outgo and income.
1t is assumed. of course, that When
the Government has to pay out social
security expenses and awards, the out
go will be classified as an expense.
Nevertheless, the Federal Government
does have the use for several years OF
resrve funds which will not be needed
for outgo right away.
Erratic Calculating.
The interesting thing about the
Presidents figures is the confession
that actual tax receipts are S256,O0O,-
600 behind the estimates. This is due
to the erratic calculating done by the
oyerenthusiastic New Dealers in the
Treasury who let their arithmetic get
awav with them when they estimated
the undistributed surplus tax and sold
Mr.. Roosevelt the worst gold brick he
has ever had handed him.
Little by little the truth comes out
as to why such big errors in calcula-
ton are made, but unfortunately 1t
takes a year or so to make the correc-
tions in order to get other receipts as
a substitute for the miscalculated
items.
The dangerous aspect OF the whole
situation is that Federal expenses are
not going down, that the tax burden
on the whole economic structure is
being imposed in such rapid fashion
as to throw the price system out of
balance and finally that there is an
impression created of lack of control
by the New Deal of the fiscal problem.
II the President can wind up with
only s1,0O0,000,000 deficit by next
June, he will earn the praise of his
fellow citizens hereabouts because that
would be real progress, relatively
speaking, but the unpleasant truth is
that few experts here think he can
keep it down even to that figure.
(Copyright. 1879