Evening star., 1942-01-07
Text Requesting Largest BudgetnU History

Selective excise taxes are frequent
ly useful for curtailing the demand
for consumers goods, especially
luxuries and semiluxuries. They
should be utilized when manufacture
of the products competes with the
war effort.
Expanded Social Security
Helps to Fight Imitation.
Pay roll tares and the social Sc
curity progrdm-I oppose the Use
of payroll taxes as measure of
war finance unless the worker is
given his full moneys worth in in
creased social security. From the
inception of the social security pro-
gram in 1885 it has been planned to
increase the number of persons
covered and to provide protection
against hazards not initially in
cluded. BY expanding the program
now, We advance the organic de-
velopment of our social security sys-
tenn and at the same time contribute
to the anti-inflationary program.
I recommend an increase in the
coverage of old-age and survivors
insurance. addition of permanent
and temporary disability payments
and disqualification payments beyond
the present benefit programs, and
| liberalization and expansion OF un-
employment compensation in a uni
| form national system. l suggest
that collection of additional contri-
| buttons be started as soon as posi-
BILE. to be followed one year later by
the operation of the new benefit
plans.
Additinal employer and employe
| contributions will cover increased
disbursements over long period of
time. Increased contributions would
result in reserves of several billion
dollars for postwar contingencies
The present accumulation of these
contributions would absorb excess
purchasing power. Investment of
the additional reserves in bonds of
| the United States Government
would assist in financing the war.
The existing administrative ma
chinery for collecting payroll taxes
can function Immediately. For this
reason congressional consideration
might be given to immediate enact
ment of this proposal. while other
necessary measures are being per-
fected.
I estimate that the social security
trust funds would be increased
through the proposed legislation by
$4,000 100000 during the fiscal year
1943.
Our fiscal situation makes i'm
perative the greatest possible flexi-
bility in our tax system. The Con-
gress should consider the desirability
of tax legislation which makes pos
sible quick adjustment in the timing
of tax rates and collections during
an emergency period.
Discusses Borrowing
And Menace Of Imitation.
The war program requires not only
substantially increased taxes but also
greatly increased borrowing. After
adjusting for additional tax collec-
tions and additional accumulation In
social security trust funds. borrow
ing from the public in the current
and the next fiscal year would be
nearly 19 billion dollars and "a bill
lion dollars. respectively. The ad-
justments are indicated in the pre-
ceding table t-....
Much smaller deficits during the
fiscal year 1941 were associated with
a considerable increase in prices.
Part OF this increase was a recovery
from depression lows. A moderate
price rise, accompanied by an ad-
justment of wage rates. probably
facilitated the increase in production
and the defense effort. Another
part of the price rise, however, was
undesirable and must be attributed
to the delays in ehacting adequate
measures of price control
With expenditures and deficits
multiplied. the threat of imitation
will apparently be much greater
There is. however. a significant diff.
ference between conditions as they
were in the fiscal year 1e4l and those
prevailing under full war program
Last year defense expenditures SC
stimulated private capital OUTLAWS
that intensified use of private fund:
and private credit added to the in.
f1ationary pressure created by public
spending.
Under a full war program. how.
ever, most of the increase in expendi.
lures will replace private capital out.
lays rather than add to them. Allo.
cations and prioritieS, necessitatec
by shortages of material, are now ir
operation; they curtail private out.
lays for consumers durable goods
private and public construction, ex.
pansion and even requirements ir
non-defense plant and equipment
These drastic curtailments of non.
defense expenditures add, therefore
to the private funds available fol
non-inf1ationary financing of the
Government deficit.
This factor will contribute sub
stantially to financing the tremen
dous war effort without disruptiv,
price rises and without necessitatin,
departure from our low interes
rate policy. The remaining infla
tlonary pressure will be large bu
manageable. 1t will be within ou
power to control it if we adopt ,
comprehensive program of addi
tional anti-inf1ationary measures.
Must Forego Many Luxuries
And Conveniences.
A great variety Of measures 4
necessary in order to shift labor
; materials and facilities from tn
! production of civilian articles to tn,
, production of weapons and othe
war supplies. Taxes can aid in speed
ing these shifts by cutting non
essential civilian spending. our re
, sources are such that even with tn,
projected huge war expenditures W,
, can maintain standard of livin,
more than adequate to support tn.
health and productivity of our peo
| p1e Rut We mist forepo noopv co,,