Evening star., 1939-05-28
Fact VS.. Fiction

TUSt vs.. TICtIOn
Although Secretary Of Treasury
Morgenthau does not have the final
voice in shaping this administrators
fiscal policies, it is, nevertheless, en-
couraging to read the eminently
sound statement he submitted to the
House Ways and Means Committee
yesterday. MIR. Morgenthau made
simple statement OF fact when he told
the committee that a fundamental
objective of sound finance clearly is
a balanced budget, and that If def
cits are too long continued, the de-
pressive effects of uncertainty tend to
make recovery more difficult
The clear recognition of the danger
inherent in excessive pump printing
ventures with borrowed money stands
in sharp contrast to the suggestion
earlier in the week by the President
that much of the concern over the
mounting national debt is groundless
because we owe the money to our
selves, and our children, if obliged to
pay interest, will pay it to them
selves. 1t is not too much to say that
Mr. Morgenthau dealt with a fact;
the President with what has every
appearance of being dangerous
fiction.
Very properly, Secretary Morgen-
thau based his entire presentation on
a realistic appraisal of both world
and domestic conditions, in brief an
acknowledgement that sound ma
tional credit is doubly essential at
time when international crises are
frequent, when national defense is
practical problem rather than theo-
retical one, and when our own indus
trial health is in precarious condition.
To preserve that credit, he cites the
obvious but too often neglected ne
cessity of balanced budget, and for
its attainment he suggests the in
tegration of expenditure and revenue
programs through the innovation of
cooperative action by Congressional
Appropriations and Finance Com
mittees.
AS Mr.. Morgenthau's broadest sug-
gestion OF long-range implication,
this proposal is worth much more
than cursory nodding of heads in
agreement. Lack of cooperation in
the determination of spending and
revenue policies of the Government
has long been major factor in pre-
venting the development of busi-
nesslike fiscal policy for the Govern
ment. Creation of joint committee,
to include membership of existing
Appropriation and Finance Commit
tees, and to work closely with other
agencies of the Government, should
have great value.
On the immediate problem of tax
revision at the present session, Mr..
Morgenthau divides his discussions
into three general groups, indicating
administration support for curative
action in two categories at the pres
ent session and in the third classifi-
cation at a later session.
First of these are the levies be-
lieved hindering business expansion
and investment, among the examples
cited being the restriction against
carrying net business losses into a
subsequent years tax computations
and the present schedule of conflsca-
tory surtaX rates.
Describing the second group as
"irritants," the Secretary includes
therein the corporate income tax
structure which embraces the undis-
tributed profits tax, and the capital
stock and excess profits levies. In
their harassing and erratic operation,
rather than the amount of revenue
they draw from the business struc-
ture, these taxes assuredly are cir
ritants" of a consequential nature.
While the Secretary's suggestion
for delay in handling the third cate
CORY, relating to tax equity, probably
is sound so far as it implies a
thorough rebalancing of the tax
( structure, it does not seem unrea-
sonable to ask Congress to correct at
this time the very inequitable impost
which he cites, namely, that limiting
deduction of capital losses to $4,000
more than capital gains.
In any case, Congress now has the
"green light" for program of tax
revision which should be definitely
helpful to business. With the sub
ject already pretty thoroughly de-
bated, it should not be necessary to
hold protracted hearings. Enactment
OF curative legislation should be a
matter of only few weeks if any
efforts at obstruction or delay are
summarily overriden.