Evening star., 1940-09-06
BY OLIVER MCKEE.

pOSfuW utu ucSCT tUtny HOU ~
DiH apply to business.
BY OLIVER MCKEE.
For the calendar year 1910 the
House Ways and Means Committee
estimated that the excess profits tax
will yield s3O5 100000 in gross rev.
enue.
When the defense program moves
Into high gear and expenditures for
ornaments reach their peak level
the proposed legislation, the COM
mittee predicted, will bring into the
Treasury s7O00O0,OOO additional rev.
enue annually.
Though welcome supplement to
the Governments income, the re-
turns from the excess profits tax will
fall far short of balancing the Fed
eral budget. For the Treasury this
year faces a deficit of nearly $6,-
000000,0OO.
The yield from the profits tax
will depend on many factors. The
costs of manufacturing war mate
rails year hence cannot be pre-
dicted in advance with any accuracy.
The costs of labor and supplies may
increase over their present levels
The profits of a defense industry
will largely be determined by the
amount of money it receives from
the Government, in any one year,
under contract authorizations al
ready approved. Future orders by
Great Britain and other foreign gov
ernments are another unknown ele-
ment in the equation. Returns from
the profits tax, which apply to the
earnings of all corporations, whether
or not engaged in the production of
war materials, will depend, in large
measure, on the extent of general
business recovery. Here, again, ac-
curate forecasts are impossible.
Morgenthau's Testimony.
In appearing before the House
Ways and Means Committee re-
Gently, Secretary Morgenthau esti-
mated a net deficit for the current
fiscal year of about $500, 100000
Receipts for the 12-month period,
he said, will amount to about $685.
100000, with expenditures topping
the $12,000,000 600 mark. The jan
uary budget placed the gross deficit
ut a shade less than three billions.
AS of August 5, appropriations
and contract authorizations, made
and pending for national defense,
totaled $14,7O2, 100000. Of this to-
tai, at least 5000, 900 900 will actu-
ally be spent on national defense
during the balance of the present
fiscal year. If the defense program
Is speeded up, and every effort is
currently being made to this end,
the expenditures on the Army and
Navy may run well over this figure.
Congress already has passed one
revenue bill this year. This meas
ure, approved on June 25, provided
for an increase of $4,000 100000 in
the authorized public debt and ad-
ditional tax revenues of about ST.
600 900 900 annually over flve-year
period. The revised budget esti-
mates have taken into account the
revenues which the Treasury will
obtain from this measure during
the balance Of the current fiscal
year.
Guard Costs Additional.
Since Secretary Morgenthau made
his appearance before the House
WAYS and Means Committee, the
President, by authority Of Congress,
has called out part of the National
Guard for a years training, and
orders for the mobilization of the
remainder of the guard are ex-
pected in the near future. The
Government must pay, feed, clothe
and house National Guardsmen.
The mobilization of guard there
fore will increase still further ex-
penditures on national defense dur
ing the balance of the fiscal year.
: Enactment of the CONSUMPTION
bill also will swell the total of de-
fense spending. Though the cost OF
training those called to the colors
will, in part, be met out of the
budget for the fiscal year beginning
2 July next, large expenditures will
be required for pay, equipment, food
and shelter during the present fiscal
year.
In a message to Congress on Tues
day, President Roosevelt announced
an agreement with Great Britain to
swap over-age destroyers for air and
naval bases in eight British possess
sions in the Western Hemisphere.
Assuming that the United States
Immediately takes steps to con-
struct defense facilities in these
sites, the expenditure of substantial
sums will be necessary.
Until Congress adjourns, the
Budget Bureau will be unable to
make a final and authentic tabula-
ton Of probable Government ex-
penditures during the balance of the
fiscal year. The budget estimates
have been revised upward several
times since January and they may
be revised again in the same direc-
ton. That the deficit will be even
greater than the estimate made by
Secretary Morgenthau last month
seems likely.
Cuts in Prospect for Others.
In preparing the estimates for the
fiscal year which begins on July !
next, the Budget Bureau will insist,
wherever possible, on reductions in
non-defense items. Government de-
partments will present their requests
for funds to the Budget Bureau
later this month. To draw clear
cut line between defense and non
defense items is not always easy.
With sizable cuts in Government
spending not directly related to re-
armament, considerable economies
can be effected and the margin be-
tween expenditures and receipts
narrowed.
In view of the large and increas-
ing expenditures under the national
defense program, it may be neces-
sary for Congress at the next ses-
sion to raise the statutory debt