Evening star., 1939-11-15


danger, but the liberals" as well.
They know it is true, as Mr.. Roose-
welt said in campaign speech. that
liberal governments can be wrecked
on the rocks of loose fiscal policy"
1t is because of this recognition
that Senator La Toilette, perhaps
the chief senatorial spokesman Of
those who would adopt spending for
recovery as settled governmental
policy, has long advocated, among
other tax-increase 11easures. a
broadening of the tar base to bring
in more contributors at the bottom.
Tongue in His Cheek.
Another important exponent Of
the spending policy is Mariner S.
Eccles. chairman of the Board of
Governors of the Federal Reserve
System. Early in the year Mr..
Eccles advised a congressional COM
mittee to try retrenchment. There
were some who thought that Mr..
Eccles had changed his views. He
had not. He was speaking with
tongue in cheek. What he did was
to dare the committee to cut spend.
ing to the bone and see what hap
pened.
But Mr.. Eccles, too sees the dam
ger that lies in the runaway creation
OF new debt. Speaking at St. Louis
recently, he proposed tax program
that included both base e-broadening,
through reduction of exemptions,
and higher rates on incomes from
IS 900 to $4,000.
The pressure for tax increases
from Senator La Toilette and Mr..
Eccles is evidence of the liberals"
awareness that deficit cannot be
piled on deficit without an even-
tual smash. They agree on that
score with the economizers. 1t is
over the way in which the deficit
problem should be attacked that
disagreement arises.
Disagreement Is Profound.
This disagreement is profound,
but its another story. The point
here concerns the debt and the
trouble that it is piling up not only
for this administration, but the next
and probably for still others to
| come.
The deficit for this fiscal year is
| accumulating at the rate of about
So, 1000 ,000.G00 year. That wouldn't
| be so bad. considering the new
money that is being laid out for ma
| tional defense, if the end were in
sight. But another large deficit
for the fiscal year 1901 is in pros
pect, and this will run right into
the next presidential term.
So the next President will start
hebind scratch. as Mr.. Roosevelt did,
and he will have the additional
liability. from the purely fiscal point
OF view, Of the cost of the new
social services that the Roosevelt
administration has built up It's not
going to be politically possible for
any President, Democrat or Repub-
llcan. to balance the budget by cuts
in these and the other governmental
services. Some retrenchment will
be possible. Of course, but if the
budget is balanced either in the
fiscal year 1912 or the year after
that. 1t will be balanced at a high
level OF expenditure, mot far from
the level to which the country has
become accustomed. 1t can only
be balanced, that is to say, by in.
creased revenues, and these reve.
nues. failing a business improve.
ment greater than anybody seri.
ously believes is possible, can only
be had through higher rates Of
taxation.
New Taxes Possible.
That is the music that the new
administration will have to face.
What of the immediate future?
Will an increase in taxes be voted
next year to take care in part of
the additional funds for national
defense? 1t is possible. The sub
| Ject was discussed al recent White
| House conference between the
President and administration lead
| ers in Congress. From the word
brought out by the latter it ap-
pears that if an administrations
approved tax bill is offered in the
coming session of Congress it will
strike at incomes between $4,000
| and $50,000. These middle brackets,
| since the rates at the top have been
pushed up almost if not quite to
] the stage of diminishing returns,
are the source of the richest DO
tential field.
1t remains to be seen whether
political considerations will hold the
rates as they are. Probably it Is
altogether too much to expect in
a campaign year that the exemp-
tions will be lowered so as to bring
in new taxpayers, though this is a
change with strong support in both
liberal and conservative quarters.
But whatever this administration
may do, the problem of getting more
revenue will face the next. Only
an economic miracle can save it
from having to impose new taxes.