The Waterbury Democrat., 1938-12-30

Surplus Commodities Corporation; Treasury guarantee of Federal Housing Administration debentures; authority of Federal Reserve Banks to issue notes against direct U. s. government obligations; nuisance taxes, including 3-cent postage, and the Public Works Administration.
 Tax Changes Likely
 There must be a tax bill to deal with the nuisance, or manufactur- CTS excise taxes, a series of levies enacted temporarily during the Hoover administration to raise anti-depression funds. Whether other rates will be materially changed is not known, but the prospect of increasing national de- fense spending and lack of assur- ance that MT. Roosevelt will econ- omize on relief suggest that new taxes must be rasied if a start is to be made toward balancing the budget. Tax rates might be hiked on incomes from around $10,O00 to $50,000 or Congress might consider the La Toilette plan to widen the income tax base by lowering ex- emptions.
 With these and other issues pressing at home and abroad, the nation is spinning now into an 18- month contest for control of the Democratic party. It is to deter mine whether the Democrats shall ask 1940 voters to endorse a con- tinuation of the New Deal by re- electing MT. Roosevelt or some hke-minded candidate, or put up more conservative presidential ticket.
 G: O. P. House Gain Substantial
 For purposes of that contest and for politicians generally, the new year begins on Jan. 3 when the 76th Congress convenes. Election of the new Congress last Novem- Der was the outstanding political event of the second Roosevelt ad- ministration, although it was far from an unqualified repudiation of the New Deal. But the Republican party increased its house strength by 90 per cent and its senate strength by 35 per cent. The vot- ing demonstrated, as in Wisconsin and Connecticut, that when New Deal-DemocratS and radical third parties fall out, Republicans are likely to win elections.
 Party Is Split
 The New Deal-Democratic party has lost its two-thirds majority in the house but retains 1t in the sen- ate. That two-thirds margin in the senate is strictly nominal. The fact is that the party is split wide open and MT. Roosevelt now must compromise or fight. Conservative Democrats, largely from the South but with other important repre- sentation, began to bolt MT. Roose-> welt in 1887 when he proposed re- organization of the Supreme Court. That bolt has been getting bigger ever since.
 Conservatives complain that the President takes most of his advice from impractical politicians who seek to reform and reorganize the nation to their own pattern. Brain Trusters Thomas G. Corcoran and Benjamin Cohen, Works Progress Administrator Harry Hopkins and Secretary of Labor Frances Per- kins are in paticular disfavor with anti New Deal Democrats, and Secretary of Interior Harold L. Ickes might be added to the group
 Hopkins and Corcoran are charged specifically with selling MT. Roosevelt on the celebrated purge which started out to prevent renomination of nine Democratic senators and Chairman O'Connor of the House Rules committee and ended in considerable embarass- ment for the White House. The prescribed senators came through primaries or nominating conven- tions in triumph. Only O'Connor fell under the New Deal barrage. It. backfired on the burgers to in flict wounds which were serious and may yet prove to be fatal. There is movement among con- servative Democrats to persuade MT. Roosevelt to return Corcoran and Cohen to private life. but it is not getting far.
 Third Term Expression Likely
 First test of die-hard anti-New 1 Deal sentiment may come on a senate resolution reaffirming op- position to third term. But more | significant tests of the real divi- sion in the Democratic party will | come on confirmation Of Donald | Wakfield Smith for another term as member of the National Labor Relations Board, on proposals to amend the National Labor Rela-