Evening star., 1939-12-29
STAR WASHINGTON D. c. FRIDAY DECEMBER
Administration HOPES
1940 Business Rise
Will Cut Deficit
Economists Believe
Year Will Be Best
Since 1929
Ry the Associated Press.

Py the Associated Press.
The administration is looking to
the new year for better business in
the hope that 1t may bring not only
political success but more revenue
to cut down the Federal deficit.
Government economists, though
they specify reservations a mile
long, believe that 1910 will be gen.
orally q pretty good business year
not so good as 1929 but better than
any year since then.
Right now factories are shown by
available statistics to be turning out
about as much goods as they did at
the height of 1929, so that most OF
the economists doubts arise, not
from the production outlook, but
from phases of consumption. Cur
rently, goods are not being bought
as fast as they are being produced.
Income About $4,000, ,000, 900.
President Roosevelt himself has
tied the business outlook into his
fiscal problem, predicting that the
budget could be balanced without
increasing taxes whenever there is
an $4,000, 100000 national income
This figure, which approximates the
national production of wealth IN
1929, is about $4,000, 100000 more
than Secretary of Commerce Hop
kins has estimated was achieved
this year.
During the first 81 weeks of cal
endar year 1889 (the Treasury keeps
books on fiscal years ending June
30, but its figures have been ad-
iusted for this article) the Treasury
spent se.328,6 ,698.048 and took in
$5,437 860,4l4, creating a deficit Of
S3,89O,S ,634. Last year. in 81
weeks, the Treasury spent $780,
950.233 and took in s5,937 1863 SIT,
making a deficit of s2,372 ,580,7l6.
The administration explains the
bigger deficit this year, in spite of
better business, as caused by inten-
tionally heavier spending to turn
business upward. Barring another
recession, such as the one in 1887, the
administration theory calls for 1910
and future years to reap the benefits
of higher tax collections resulting
from business created by this year S
expenditures.
Message Due Next Week.
The President is expected to pre-
dict deficit of about $4,000, 900 600
when he sends to Congress next
week his message on the budget for
the fiscal year beginning next July l.
One of the items the President
may trim in his budget is relief
possibly to $1,000 ZOO, 900, compared
with $1.76O, ,730,776 spent so far this
year and $i,938, ,563 ,483 last year.
Other cuts are expected by officials
in funds for farm benefits, public
works and administrative expenses.
The revenue picture is the one
most gratifying to administration
officials, who expect collections to
pass $4,000 100000 by a good margin.
They explain that, because of the
graduated scale of tax rates, reve-
nues can increase much faster than
business statistics indicate. The in
dividual income tax has surtaxes
ranging from 4 per cent to IS per
cent, and thus, when man earns
more money he not only pays taxes
on an increased income but pays the
higher percentage tax.
Production Rate at 124.
Current factory production is
measured by the Federal Reserve
Board at about the same as Novem-
ber, when it was rated at 124 per
cent of the 1923-l925 average. At
the peak of 1929, this index reached
only 1875.
But manufacturers are known to
have put some of their new prod
ucts in warehouses because demand
was not quite up to the output, and
Government economists figure the
index might slip back to 10 points
in the spring.
The chance of domestic consump-
ton to catch up with the factory
pace has been ascribed by the econ
omists to the fact that the Nation S
purchasing power has increased
through considerable re-employ-
ment and that some industrials,
particularly the railroads, have
bought new equipment and other
wise improved their facilities.