Evening star., 1941-05-02
|Non-Defense
Budget Cut Now
Asked atCapito
Royburn Promises
To Take BiIIion-D Dollar
Plea to President
b. the Associated Press.

B! the Associated Press.
Speaker Rayburn said today he
planned to transmit to President
Roosevelt "at the first opportunity"
requests of some members of Con-
gress that action be taken now on
Secretary of the Treasury Morgen-
thau's suggestion that non-defense
expenditures be trimmed by ST. 000,-
900 1000.
These men say that it would
make their task much easier if
something along that line were
DONE" Mr.. Rayburn said. Il told
the fellows that at the first oppor-
tunity available I would discuss
this matter with the President"
Speaker Rayburn said there has
been talk" that appropriations for
relief, the National Youth Admin
istration, the Civilian Conservation
Corps and the Agriculture Depart
ment might be reduced.
Flexible Income Tax Asked.
Meanwhile the American Farm
Bureau Federation urged today that
Congress, in raising $4,000 900, 900
additional revenue, cut present in
come tax exemptions about in half
and adopt a flexible income tax sys-
TEN designed to Offset potential in
f1ationary effects of the defense
spending program.
Edward A. ONeal, federation
president, presented its views to the
House Ways and Means Committee,
and said the recommendation were
based on a study prepared by the
economics staff Of Iowa State Col
lege.
The major features of that study
were outlined to the committee yes
terday by DR.. Albert G. Hart of the
colleges faculty, who said they bore
the Endorsement of more than l70
economists.
In preparing broadened tax base,
Mr.. O'Neal voiced the federations
complete opposition to use of gen.
eral sales tax or other excise taxes
to raise additional revenue at this
time.
Meanwhile, it was predicted today
that defense production is increasing
so swiftly Federal expenditures
would reach S2,000,000,0O0 a month
in the fiscal year beginning next
July l.
In comparison, the Government
spent approximately $1,000, 900, 900
last month-about S750000,000 for
defense and s55O,00000 for other
purposes.
The estimate of spending at the
rate of $4,000 ,000,0 900 a year was re-
ported authoritatively to have been
prepared by Stacy May, statistician
of the Office of Production Manage
ment, for presentation to the Senate
committee investigating the defense
program.
Over the year, this figure Is
IS 900, 100000 above the estimate
made by Secretary of the Treasury
Morgenthau in testifying on tax
increases before congressional COM
mittees last week, and is S6.500.000,-
900 larger than the budget President
Roosevelt submitted to Congress in
January.
Doubles Tax Plan.
Under Mr.. Morgenthau's theory
that two-thirds of the Governments
overall spending during the defense
emergency should be covered by tax
revenue, the new figure would re-
quire doubling of the Treasury's plan
to add $500, 100000 of new taxes to
the 1928, 900 900 revenue expected
from existing levies.
No such revision of the tax pro-
gram was anticipated by officials,
however, because of the new taxes
already advocated are so steep and
because Mr. Mays estimate does
not bear Budget Bureau approval.
Harold D. Smith, budget director,
was understood to be calculating
expenditures somewhere between
Mr.. Morgenthau's $19,00o,00o 900
and Mr.. Mays $24,000,0000 900.
Either of these figures would
make the next fiscal year the most
costly in American history. At the
peak of World War spending, the
most expensive year was s18,522,-
900 900.
Mr.. Mays estimate interested of
AANAoAo AAltAAAoSAg OCAdIoC bllC dkIudA
size of spending will be determined
almost solely by how fast the fac
tories can turn out the airplanes
and other defense materials which
have been ordered. Orders and ap-
preparations exceed any of the es-
Inmates.
House Hears Economists.
Meanwhile the House Ways and
Means Committee, considering plans
for raising the necessary revenue.
studied the recommendations Of
the ITO economists who urged that
Congress use its taxing power to
prevent a defense-born currency in
f1ation.
Two Spokesmen for the group, DR..
Hart and DR.. S. z. Harris of Harvard
(See SPENDING, Page A-3D
H. n l.