Evening star., 1937-05-04

SENAlO Oh JA n
bonds, II you knew the Government
owed s35,000,000, 1000 and proposed to
spend each year more than its income,
or would you buy the tax-free bonds
Of a State, county or city which was
living within its income and reducing
it's debt? 1t Is not safe to rely upon
some other man making an invest
ment you would not be willing to
make.
If the time comes when banks and
investors fail to purchase the bonds
Of the United States Government,
where will the Government secure the
funds with which to operate? When
there are less purchasers, will that
cause a decrease in the price of our
bonds? II so, what effect will that
decrease have upon the banks of the
Nation? As more than SIT 1000, 100000
of bonds are held by banks, de-
crease Of points would mean a loss
to the banks Of s850,oOo,000. Bank
deposits are insured, but the Federal
Deposit Insurance Corp. which in
sures the deposits, has It's funds in
vested in Government bonds and
notes.
Says Alarm Unnecessary.
Today there is no excuse for any
alarm. With the increased wealth of
the Nation and the increased tax
paying capacity of the people. the
credit of the United States Govern
ment is beyond question. But the
credit of the Government must be
maintained. The only certain way to
maintain it is to balance the budget.
1t can be balanced in one of two
ways-by increasing taxes or reducing
expenditures.
We have increased taxes on the
larger incomes and on estates and We
now find falling of in the revenue
expected from these sources. We must
conclude that we have gone the limit
If not too far. 1t IS proposed that
additional revenue be secured by
either lowering the income tax ex-
emptions or levying sales tax. II
I had to choose, would lower the
exemption. But am opposed to both
proposals. The budget should be
balanced by reducing expenditures,
not by levying more taxes.
Today when an effort IS made to
reduce any appropriation for the regu-
lar departments of the Government,
or to prevent an appropriation for
some new activity, the argument is
made that even though the activity
sential, that as long as we are spend
ing money for everything else, and
particularly for relief" We might
as we'll vote for the increased appro-
priation. But there IS a general rec
ognition that we cannot 60 on forever
spending more than our income and
there is willingness to stand for q
reduction If 1t is applied to all &C.
tivities, and will result in balancing
our income and expenditures.
Urges Appropriations Shsh.
When the appropriation bills have
been passed by Congress they will to-
tai $1,000 100000. urge that the
Congress, by an amendment to the
last appropriation bill considered At
this session, provide for = reduction
Of 10 per cent in the appropriations
for each department with the pro-
vision that the 10 per cent cut should
not apply to the so-called fixed
charges. Those fixed charges should
be specified by the Congress. This
would exempt from the cut such items
as the interest on the public debt,
pensions for veterans, the permanent
annual appropriations and other items
which cannot be reduced. The head
of department should be given the
power to transfer from one bureau
to another within the department,
funds not in excess Of 10 per cent. He
knows the relative importance Of ac-
tivities in his department. II some
bureau or service cannot stand a re-
duction, he can take = percentage
from some activity not so essential
and apply it to the more essential ac-
tivity. I would require only that he
keep the expenditures for his depart
ment within the appropriation fixed
by the Congress, which would be 10
per cent less than what he expected
to receive for the next fiscal year.
There is not a successful business ex-
ecutive who, faced with the necessity
Of balancing his budget in order to
maintain his credit, could not absorb
cut Of 10 per cent out Of an expendi-
ture of several billion dollars.
The fixed charges, which must be
exempted from the cut, would prob
ably amount to one-han Of the total
appropriations, leaving approximately
three and oAe-half billion dollars to
which the cut would be applied and
making possible q saving Of $3.50, ,000,-
900. It would not require reduction
In compensation of employees. It
would require dispensing with the
services Of some unnecessary employees
1t would require deferring the con-
struction Of some buildings and the
purchase Of some land. It would in
convenience some officials and disap-
point some persons interested in ap-
propriations, but it would help the
Government and help the people.
The budget would not be balanced
by reduction of $3.50 1000, 900, or ever
Sab, 100000, the deficit estimated by
the President. During the year de.
ficiencies will occur. which will in.
crease this amount and the total def
cit will depend entirely upon the
amount Of these deficiencies.
Asks Live Within Income.
The Congress, however, can make
certain that the Government during
the next fiscal year will at least live
within its income II 1t cannot reduce