Evening star., 1940-06-12
Morgenthau
0pposesCut
In u. 5. Pay
Senators Told Clerks
Will beur Share
In Defense Tuxes
BY ]. A. O'LEARY.


Secretary of the Treasury Nor
genthau came out today against re-
duction of Government employees
salaries, although favoring some re-
duction in normal spending along
with the raising of $l,004, 900, 900 in
new defense taxes.
At the opening of the Senate
hearings this morning on the big
revenue measure, which passed the
House last night, 396 to 6, Secretary
Morgenthau urged Congress not to
place "a disproportionate part of the
cost of our national defense pro-
gram upon Federal employees by re-
ducing their salaries"
Along with the rest of the people
of this country they will make an
increased tax contribution in ac-
cordance with their ability to pay
Mr.. Morgenthau continued The
new taxes will apply equally to
them as to other individuals. Many
Government employees, too, are al
ready making extra contributions in
the form of added hours of work
without pay"
Ready for Tax Revision.
Calling the 0O.0O0,OO0 tax bill
"mere chicken feed" Senator Byrd,
Democrat, of Virginia told the
Treasury Secretary, I'VE ought to
stay here and raise $2,000000, 900 OF
$1,000, 100000 in view of the Gov
ernment's fiscal condition.
I'll stay in the game as long
as you will" Mr. Morgenthau re-
piled. A moment before he had
said now is the time for a general
tax revision "if you gentlemen want
to stay here"
Senator Connally, Democrat, OF
Texas asked Mr. Morgenthau if the
Treasury has the data ready for a
more general revision of the tax
structure if Congress is willing tc
60 ahead now,
Eyes, sir" was the reply.
May Go to Senate Monday.
Before recessing at noon until to-
morrow morning, the Finance Com
mittee decided to close the hearings
by noon Friday, if possible, and have
the tax bill ready for Senate con-
sideration Monday.
Just before the recess Mr.. Nor
genthau read statement favoring
the taxation of interest on Govern
ment securities hereafter issued, but
opposing the lifting of the tax ex-
emption on interest from past issues
Earlier, Senator Byrd, who expects
approval of his amendment calling
for 10 per cent saving on the nor
NAL 194l budget, said budget officials
have advised him this can be done
without reducing basic salaries, by
not filling vacancies, although some
furlough periods might become nee
essary near the end Of the fiscal
year.
Favors Higher Debt Limit.
In his testimony, Secretary Nor
genthau said:
The financing of the increase of
Federal expenditures for national
preparedness requires provision for
additional taxes, or decrease in
other expenditures, or an increase in
the national debt beyond the pres
ent statutory limit. In my judgment
all three steps are required.
This bill provides for raising ad-
ditional revenue of S729 100000 for
the fiecal year 1941 and approx
mately $1,000 100000 yearly there
after. The public is willing and
ready to accept the additional bur-
dens necessary to support adequate
national defense.
1T is important not only to in
crease revenue with which to help
finance our preparedness program,
but also to cut expenditures wher-
ever feasible. However, I disapprove
of random reductions in appropria-
tions which are likely to enforce
premature curtailment of expendi-
lures for relief, retardation of the
necessary execution of public works
or impairment of essential admin
tstrative services.
THE enlarged preparedness pro-
gram will increase employment, but
its effect will not be immediate
There will inevitably be lag oi
some months. To force men of
work relief rolls before the pre-
paredness program has its effect or
employment would hamper rather
than help our purpose of mobilizine
a great national effort 70 strengthen
Our defenses."
Byrd Sees Two Deficits.
Senate Majority Leader Barkley
pointed out the House bill raises
the debt limit by $4,00O,0OO 900 fol
national defense. making the tota
debt s49,0000 100000, and inquired
''Why not make it 100000, ,0O0?'
Daniel W. Bell, Undersecretary o1
the Treasury, replied that this is
for Congress to determine, but added
that by setting aside the new $4,-
000,000000 of borrowing authority
for national defense, the Treasury
can get by with the present $45,.
000,000000 limit on the normal deb
for the coming year. He admitted
however, that another deficit in 1874.
would require a further increase ir
the debt limit.
The six House members who votee
against the revenue measure art
Representatives Wolcott, Michigan
Alexander, Minnesota; Crawford
Michigan; Thill, Wisconsin, anc
Thorkelson, Montana, all Republi
cans. and Marcantonio, American
Labor, of New York.
MI. Walcott, veteran of tn,
World War, described the House
action as war hysteria."
Proposed Tax Schedules.
Here, briefly. is what the bill does
Raises all corporation tax rates
per cent. the new schedule rangin,
from 1872 10 10 per cent; create'
1000 600 new individual income tax
payers by lowering personal eXemp
tions for married persons TO $1,000
and for single persons to $500. which
also has the fleet Of increasing tn,