Evening star., 1942-01-19
High Spending
Expected After War
Writer ExpIoins Necessity
For Huge Government Budget
Following Winning Of Peace
By Prof. Kenyon E. Poole.

Following Winning OF Peace
By Prof. Kenyon E. Poole.
PROVIDENCE, r. l., Jan. 1s.-Even
after the war is over and ASTRONOMICAL
military appropriations are thing Of
the past, we may expect q larger body of
permanent Government expenditures in
the United States. as well as temporary
expenditures, which doubtless will en-
dure for longer period than was the
case after the last world conflict.
1t Is not too early to begin considering
the kind of world we will live In after
the armistice of the future, and after
the menace of Hitler and his miscon-
ceived ideas have been brushed into
eternal oblivion Obviously we cannot
foretell all that the postwar years may
bring. but there are certain trends which
it seems we will follow.
The situation at the close Of the pres
ent war promises to be quite different
from that which faced the economy of
the country after World War l. when
there were serious dislocations in our
economic pattern. One way to look at
the future is through the eyes Of fiscal
policy and the effects 1t Is likely to
produce.
First among the permanent expendi-
lures which the Governments fiscal
policy doubtless will require will be
those scheduled for the maintenance of
the greatly expanded military and naval
establishments.
The wartime methods of financing
these military expenditures, however,
must be altered If we are to get the
maximum investment and employment
effects. Consumption and investment
must be encouraged by reducing the
excise and business taxes, and possibly
the income taxes which were desirable
during the war.
The second type Of expenditure likely
to continue Indefinitely after the war
is that made by the Federal Government
on highways, bridges, dams, national
parks low-cost housing etc. The public
has undergone definite change of atti-
tude in favor Of the view that the Gov
eminent ought to undertake a larger
amount of expenditure beneficial to the
Nation as whole.
Together these furnish q core Of In.
vestment. production. consumption and
employment which are not subject to
the usual cyclical fluctuations and are
to be added to the military expenditures
as providing a cushion of investment
after the war.
Still another permanent type OF Gov
eminent expenditure is the cost Of social
security food stamps. agricultural aid
and other measures designed to spread
purchasing power into the lower-income
groups. This means a better distribu-
ton Of purchasing powsr, which will
increase aggregate consumption.
A fourth type Of Federal expenditure
likely to remain at a high level, and
possibly increase during the postwar
period Is the ordinary" expenditure of
Government. A larger standing Army
and a permanently higher level Of Gov
ernment investment require further ex-
penditures on the the regular Govern
ment services.
A quantitatively less important type of
investment will eventuate in the post
war period il the Federal Government
undertakes to subsidize export industries
or otherwise encourage foreign trade.
Although this can be an important
source Of employment, there must be set
against it the reduction In investment
and the decline in living standards likely
to occur when trade policies are ma
tionalistic.
Finally, note should be taken Of the
effect of payment of interest on a ma
tional debt which exceeds a hundred
billion dollars If Government bonds
are paid off slowly, and to the extent
that they are held by lower-income
groups, long-term source of purchasing
power, with its attendant stimulus to
production. Will be set up. 1t seems clear
that the Government should define the
terms Of the repayment during the war
IN order to insure the release of these
sums when postwar decline in spend
ing takes effect.
Added to these permanent expendi-
lures are those Of potentially great
quantitative Importance which, al
though operating for varying lengths OF
time, are temporary in nature. They
will have the advantage of providing
an addition to the permanent expendi-
lures at time when they are most
needed, and Of disappearing more or
less gradually when private investment
is no longer suffering from the impact
OF immediate postwar structural
changes.
The most important Of the temporary
postwar expenditures are those which
the United States is likely to make for
the reconstruction of Europe and for
the reconstituting of world trade. The
actual magnitude will depend upon our
attitude toward the reconstruction of
Europe and the amount Of rehabilitating
required, as well as its relation to q re-
vived world trade.
Coupled with other expenditures, this
temporary Government outlay may leave
the United States in a position where
its problem is to avoid price imitation
arising out Of volume of public plus
private investment which produces scar
cities. There is some reason to think,
therefore that oalr nxoblem in the sew.