Evening star., 1941-02-12
u. 5. Debt May Pass
IS Billion in 1943,
Subcommittee Told
Underseeretory Warns
Present Limit Problem
Moy Be Faced Again
BY BLAIR BOLLES.

by bLAln DOLLESs
Congress may be confronted
with the problem" of raising the ma
tional debt limit beyond the $685.
900 900 900 which the administration
now seeks, Undersecretary of the
Treasury Bell told a subcommittee
of the Senate Finance Committee
today
The subcommittee opened hear
ings on the debt limit problem two
days after the House voted ap.
proval of the s65, 900 ,00O, 900 top.
Mr.. Bell stressed that the problem
of another limit increase would not
arise until the fiscal year OF 1943,
beginning one year from this coming
July l. The present limit is s49,-
OO,0OOOOO.
Senator Clark, Democrat, of Mis-
souri,, wonders whether American
expenditures under the British aid
bill would not make it necessary to
set the "sky" as the debt limit.
Mr. Bell replied:
I'VE feel that the S65 900, 900 900
limit will cover any expenditures
that can be made under that bill"
Byrd Wants Spending Estimate.
Later Senator Byrd, Democrat, OF
Virginia, pressed Secretary Morgen-
thau for an estimate of the amount
of money to be expended under the
British-aid program.
Il can't give any direct answer to
that" Mr.. Morgenthau said.
Mr.. Byrd: Five billion?"
Mr.. Morgenthau: II would rather
not guess. What I think will happen
is that the Army and the Navy
officials will appear before the Ap-
preparations Committee and submit
an estimate of the British aid at
that time"
Senator Byrd stated a national
debt of 100000, 100000 to 100000 =
100000 would be reached within two
years from now and a debt OF
$40 900 900 900 by July 1. 1912.
How high can the debt go?" he
asked. When do we reach the
danger point?"
I'VE don't see any insurmountable
hurdles" said the Secretary
Argument Over Responsibility.
Mr.. Morgenthau and Mr.. Byrd
engaged in a long clash over the
distance ahead the Treasury is look
ing on the subject of financing.
The issue between them boiled down
to this:
Last summer the outlook for de-
fense expenditures was $4,000, ,00O,-
600. Now it is $4,000, 100000. Was
the increase the work principally
OF Congress or the administration?
The Senator held that the outlay
was recommended by the adminis-
tration and the Secretary said it was
the responsibility of Congress.
Mr.. Byrd asked Mr.. Morgenthau
If he could approve the passage of
resolution aimed at a Joint con-
gresSional- Treasury study of the
reduction of non-defense expendi-
lures. The Secretary said it would
be agreeable with him, but he
thought it was chiefly a matter for
the director of the budget.
Mr.. Byrd stated that present esti-
mate of non-defense spending is
for an outlay of only s64,000 900 less
than last year.
Bailey Would Name Danger Point.
Senator Bailey, Democrat. of
North Carolina suggested that Con-
greSS and the President unite in
the issuance of a statement as to
the point where the size of the
public debt becomes dangerous, but
Mr.. Morgenthau. assuring him that
that point is yet far out of sight,
refused to concur in Mr.. Bailey's
views.
II can see" said Mr. Bailey, that
If the Secretary of the Treasury
issued such statement, he might
destroy the credit of the Govern
ment sooner than it will be de-
stroyed"
At various times during the morn
ing. these Senators attended the
hearing-Brown of Michigan, Byrd,
Bailey. Clark, Democrats; Taft and
Capper, Republicans, and La Fol-
lette, Progressive.
Mr.. Brown suggested a Federal
sales tax, but Mr.. Morgenthau
would express no view on that.
The hearing opened with the read
ing of a general statement by Mr..
Morgenthau on the various aims of
the bill, which includes the debt
limit provisions. H. R. 1859.
Measures Other Purposes.
It's other purposes are:
l. To eliminate the present par
tition in the debt limit
2. To provide greater flexibility in
Federal financing operations.
3. To tax the income from all fu-
ture issues of Federal securities, both
direct and indirect.
Speedy action on the financial bill
by Congress is urgent. Mr.. Morgen-
thau told the subcommittee in re-
sponse to a question from Chairman
Brown, in order to make possible two
Treasury financing operations in
March.
The operations include. the Secre-
tary said, a refunding operation of
$1,000, 100000 and an operation to
raise from 100000, 600 to $1,000 ,O00,-
900 in cash. Mr.. Morgenthau indi-
Gated the administration wished to
finance these steps by issuance of
taxable long-term securities, which
it will have no authority to issue
until the bill under discussion be-