Evening star. [volume] (Washington, D.C.) 1854-1972, 1937-10-18

a growth rather
than a diminu- MI,
ton of radical
ism as the number of unemployed is
increased.
To balance the budget at the eX
pense of the people now on relief and
who cannot get jobs would. of course,
be cruel national policy and would
not bring back that confidence which
is so often cited as the principal rea-
son for putting the fiscal condition
of the Government on a balanced
basis
Winter Situation F0reseen.
Unless the President sees the need
for doing the other things that go
along with a balancing of the budget,
situation may well arise next Win
ter in which Mr. Roosevelt will be
saying in one of his "Fireside Chats:
You see I have followed the advice
of the business men and have tried
to balance the budget and have cut
relief expenses, and here We have
worse situation than we had before
I must take care of relief, no matter
what happens to the budget"
Many business men have placed so
much emphasis on the need for bal
anced budget that they have failed to
emphasize that the psychological ben
efits of balanced budget can b, OBJ
tanned only if the whole national econ
omy is on sounder basis When Mr.
Roosevelt talks about balancing the
human budget. he is thinking of the
continued need for generosity on tire
part of the Federal Government in
handling relief. but when true liberals
who have the interest of the common
people at heart think of a balanced
human budget they mean more jobs
for all and better real wages--that is.
wages which can buy more of the
necessities of life and not less.
Money wages have gone up in the
last three years but the costs Of liv-
ing have risen so that real wages now
are going down The difficulty about
the cost Of living is in the price struc-
ture. Mr.. Roosevelt has spent money
so rapidly that he has had to jack
up the tax mechanism too rapidly
to get revenues. Today taxes have
risen more rapidly than business can
possibly absorb them.
Wall Street Knows Past.
There is, for instance, much con-
versation everywhere nowadays as to
why the stock market has declined.
The stock market usually is either
reflection of what has happened or
what Is going to happen. So far as
the future Is concerned. Wall Street
possesses no more powers of clair
voyance than the rest of the country.
but so far as the past is concerned,
Wall Street does know what earnings
have been and how orders are COM
ing in.
Last Summer the downward trend
I'm earnings began. but many bust
ness men thought it was just the
usual Summer slump. When the
Autumn came, it was apparent that
business wasn't getting any better
Little by little, the news trickled in
that prices had gone up too rapidly
for the public to absorb them. Many
observers said that labor costs had
jumped too fast. and that prices had
naturally included the new labor costs
and in that way the buyers resistance
had been manifested What was gen.
orally overlooked was another item in
the tax structure which is many times
more important than labor costs 1t
is the tax bill. This is more important
than labor costs because it applies
uniformly-in service business, in dis
tributing businesses. i'll fact. in many
lines where the actual amount of
labor is very little.
Some idea of the enormity of the
tax bill that has to be absorbed by
business may be obtained when it is
stated that the social security and
unemployment tax alone. taken from
pay rolls, but paid in large part by
the employer, amounts to more than
81 900, 100000.
Never in the history of American
taxation has such a sharp increase
in taxes been imposed on the business
mechanism of the whole country.
Can American business stand a
sudden jump of 81 900 900, 900 in taxes?
The entire income tax revenue from
business profits yielded in recent years
hardly sum that big. 1t is not the
ST 900, 100000 alone which counts,
but the many times the tax is added
to the cost of goods from producer to
consumer with a number of processing
operations in between where the tax
is added again and again. This is
customarily called "pyramiding" the
tax so that $1,000, 100000 tax may
add many times that sum to the final
cost of the goods sold.
Is the answer then to abolish the
social security and unemployment
insurance tax? Hardly. The Ameri-
can people want provision made for
old age and for unemployment hazards.
But there is way to take care OF
future requirements through smaller
annual payments out of general tax
alton without penalizing the pay rolls
OF the workers of this country. Also,
II the tax has to be levied, then
business ought to have a chance to
digest the $1,000, 100000 or more with
out being asked now to absorb an
entirely new expense such as will come
from wage and hour legislation.
If Mr.. Roosevelt wants to balance
the budget so as to prevent hardship
to those now receiving relief, he can
do it by giving business a real chance
to absorb the unemployed Adding to
employment isn't feasible unless bust
ness is not asked to digest too quickly
all the social reforms of the present
administration. MI. Roosevelt calls
this "coasting" though what it really
must be called is timing" The objec-
tives of Mr. Roosevelt may be conceded
to be beneficial and desirable, but the
method of putting them into operation
has robbed some of them of their