Evening star., 1937-04-25
Failure of Administration
to Face Budget Problem
Clouds Outlook.
SHARP CONTRAST SEEN
WITH BRITISH PLANS
Congress Demands Larger Funds.
Roosevelt Relief Proposal
Also Gives Clue.
BY CHARLES F. SPEARE,
Special Dispatch to The Star.

NEW YORK, April 24-The unwill-
ingness of the Roosevelt administra-
ton to face the fact Of 4 dangerous
budget prospect and deal with 1t
boldly, and the realistic attitude OF
the British government, in the same
sort Of predicament, were in sharp
contrast this week
1t Is only fair to say that q nation
threatened by, or fearing the threat
Of foreign invasion, as is Great Britain,
will submit to taxation and accommo-
date itself to huge new debts which
one remote from political disturbance
will not accept.
However, it is essential that a coun-
try like the United States, which has
built up tremendous debt in the past
seven years and for nearly two years
has witnessed expanding trade, in
creasing profits from trade, greater
employment and higher individual in
comes, should have plan looking to-
ward an early reduction in this debt,
either by cutting down on expenditures
or raising income through taxation.
The most discouraging aspect of
This situation is that there appears to
be no such program and that the same
degree OF Federal outlays is now pro-
posed as was legitimate when indus.
try was depressed. agriculture needed
nursing and unemployment was at
twice its current level.
Another Deficit Due.
Until there Is more evidence of re-
ducing Government expenditures it Is
inaccurate to speak of an administra-
ton economy program" The ma
jority in Congress is demanding larger
appropriations for relief and for the
pet projects Of its members: not econ
omy. The $1,000 100000 relief item
proposed this week by President
Roosevelt gives a clue to the size OF
other grants when these are voted on
later In the year Undoubtedly many
OF them will be pared down from their
original proportions. But no plan
now under consideration can prevent
another substantial deficit for the IL
months ending June 80 or for that 4
year hence.
However, Secretary Morgenthau says
he is highly pleased over the Govern
ment's financial position. He is the
one man in the United States who
should be worried over the outlook
and frankly question his ability to
cope with it.
Other Dangers Seen.
In the case of both the United States
and Great Britain, spending of an ex-
traordinary character is not the only
danger. Here there is the permanent
upkeep of public works and the annual
servicing of debts contracted since
1881. On a $4,000 income, an indi-
vidual in 1929 might have felt justi-
fed in building a $4,000 house and
placing a 5000 mortgage on it. The
depression quite commonly cut such
incomes in two. 1t did not, however,
reduce the charges for interest or the
yearly sum Of taxes. That Is the do
mestic situation.
With a present debt of $38, 900 ,0O0,-
600 and prospective debt Of S45, ,OOO,-
100000, and the will to pay as she
goes, England will be compelled for
years to tax single persons $25 on the
first $1,000, where our people are ex-
empt, and $3.50 for couple with an
income of s2,5oO, the exemption in this
class for Americans, and so on up to Is
per cent on $4,000 income.
Furthermore. there is no exemption
racket" in England. The chancellor of
the exchequer, Neville Chamberlain,
announced that he had taken steps to
block tax evasion as practiced by one
man companies formed by ducal land
lords and other millionaires." It might
be profitable for the American Govern
ment to spend some time in a similar
project. And to give much Of its time
to revising the personal income tax
schedules to fairer basis.
Federal Issues Decline.
With our budget situation 80 con-
fsing, 1t Is not surprising that prices
OF Government bonds this week should
have again become soft. The az and
24 per cent issues are below par,
which makes impossible the sale Of new
long term bonds, now considered for
June financing, on less than a 3 per
cent coupon.
The new series of discount bills Of
fered this week was taken at a higher
cost to the borrower than other similar
paper in the past.
While the Treasury obligations were
soft, recovery was taking place in cor
poration and municipal issues of the
best grades. Financing by Argentina
and by several railroads was satisfac-
torily effected, though at better returns
to the lender than at any time this
year.
The chief feature in a subdued stock
market this week was the heaviness in
public utility shares.
In this group the sentimental effect
Of Federal competition, expressed &C.
lively by the T.. v. A., Offset the in
fluence Of favorable current earnings
and cheerful forecasts by power and
light managements.
(CopyriRht, 1887. by the North American