Evening star., 1939-05-24

to how expenses s'''
are to be cut David Lawrence.
He not only is right about that, but
1t is an incontrovertible fact that
neither the Republican nor Demo-
cratic leadership in either house
Of Congress has ever put before
the public a program for a bal
anced budget. So when the PreSi-
dent says businessmen hesitate to
offer concrete program of budget
balancing, it is for the very good
reason that pressure groups deriv-
ing big subsidies from the Govern
ment have been encouraged Suffi-
ciently to expect Federal funds and
the Congress, fearing political re-
prisals, will not do any material cut
ting.
Mr.. Roosevelt can ask his busi-
nessman visitors whether they would
cut this or that item and usually,
because the items have become po-
Gtical, the tendency is not to incur
political antagonisms by insisting
that this or that group be deprived
of its particular subsidy. Even busi-
ness gets subsidies in various forms
and this makes the whole question
of mutual sacrifice or concession
something rather theoretical here
abouts.
AS to taxes, the President says
he wants to see certain revenues
made up if certain taxes are re-
duced, and he refers to the unbal-
anced budget as the reason, but
the logic of the situation in reply
Is that if incentives to business will
increase the total volume of trans
actions and hence the tax receipts,
then reducing tax rates is exactly
in line with what the President
talks about when he urges Federal
investment or expenditure as
means of raising the total national
income.
Vulnerable to Some.
The Presidents discussion of the
problem of tax revision is vulner-
able from the standpoint of those
who feel that indirect taxes are being
imbedded in consumer prices. In
other words, enough evidence has
been adduced by experts in taxation
to prove that the presence of GER
tain types of taxes on business re-
suits in burden on the poor people
who have to buy articles which are
higher in price than they would be
If the tax levies were lessened.
Mr.. Roosevelt made no mention of
the many forms of taxation that
prevent business from increasing
the national income and especially
of the deterrentS which relate to
business reorganization and the
process of re-creating capital. But
the President was defending his
administration against such attacks
as National Debt Week" and he
was not offering legislative pro-
gram.
The principal point which the
President reiterated, namely, that
he would not take a chance on re-
ducing Federal spending on the
mere "hunch" that business would
get better, is one on which most
members of Congress concur. They
believe until substitutes for public
spending are in sight there will be
little chance politically for men,
bers to be reelected during a de-
hationary period of budget cutting.
Reputation Question.
When Mr.. Roosevelt says that
there is no need to worry about
future generations paying the in
terest on the national debt because
they will be paying it to themselves,
he gives some sanction to a doc
trine made famous by repudiation
advocates and inf1ationists for CEN
turies. There is considerable
school of thought in America which
says why pay any interest at all
on Government debt?" In Germany
internal debt was repudiated on the
theory that it was owed by the gov
eminent to the people and by the
people to the government
What is overlooked is that the
whole debt structure of the Nation,
private and public, is interviewer,
and that if interest on Government
debt is going to be permitted to grow
on the theory that a government can
always collect enough to paw it.
there will be little regard given to
the sanctity of debt contracts in
volving the government, because in
the end confiscation will be neces-
sary in order to get enough taxes to
pay debt.
BY the time future generations
are up against the problem of paying
the debt incurred today it may not
be a case of paying the interest,
but OF repudiating it as we'll as the
principal on the ground that the
burden is too great to be borne.
Outright reputation, however, does
not need to happen. Political gov
erenmentS have in past centuries
found 1t easier to devalue the none
tary unit and then the purchasing
power of their currency.
Change in Price Level.
Thus if it be accepted that the
national budget cannot be cut and
maybe business men would be stra-
teglcally in better position in the
DEBATE II they conceded it, the ques-
ton then arises whether it can ever
be balanced with the present price
level.
If dollars become worth 60 cents
In purchasing power through the in
crease in the cost of living due either |
to lack of confidence in the dollar
or the tremendous increase in taxa