Evening star., 1946-01-23
Public Seen Viewing
InfIution With Fear
Nation Must Tighten Belt in
Coming Years, Says Writer
BY David Laurence

Looming Tears, Says Writer
BY David Laurence
The American people are talking
about imitation with sense of fear
and misgiving. What most folks do not
realize, because they have not read the
history OF countries that have suffered
severely from imitation, is that the root
OF the evil Is either an unwillingness
or inability on the part of govern
ment to balance the budget.
Runaway prices and unlimited rises
In wages can produce an imitation panic,
but fundamentally this can be con-
trolled or regulated after brief recess
sions when a nation comes to its
senses. But there is little that can be
done to stave off bankruptcy-which in
nation really is-when a people either
refuse to force the fiscal affairs of their
government to be adjusted or when the
basic conditions render such a task alb
solutely impossible without a repudia-
ton OF debt and reorganization Of
finances.
Can the United States Government
pay of its 27l billion dollar debt, and
how soon?
This is the real question, and the
nrst piece of important news bearing
on that subject is to be found in Presi-
dent Truman's message to Congress this
week. Although omitting any long
range plan, Mr.. Truman does give some
facts upon which long-range plans could
be predicated, and it is not too soon for
the public to begin thinking about
them.
Prewar Budget Recalled.
The President says that in the fiscal
year ending June 80, 1s47, the Govern
ment will have used some Of its sur
plus cash to retire the debt from its
present level of 27s billions down to 271
billions. He then mentions the present
Government expenses as approximately
So billions year and says significantly
that they can hardly be expected to
be reduced to less than Is billion dol
lars in subsequent years"
But the prewar budgets 1t will be
recalled, were around 8 and 10 bill
lion dollars In the New Deal years of
spending, so isn't Is billions rather ex-
travagant? The answer is that interest
on debt and veterans payments and
what is called the aftermath of war"
takes nearly II billion dollars Of the
budget. The armament items for the
fiscal year ending in 1947 amount to
Is billions, and 1t is a question how
much OF this can be reduced in subse-
quent years. Perhaps 1t can be cut in
half, which would leave about six and
a half billions for the regular and ex-
traordinary expenses of the Govern
ment
If the budget is to be stabilized at Is
billions. what revenues from taxes can
be counted on? The President says
present tax rates will yield about q
billion dollars but this does not take
into consideration the higher revenues
which can come from what Mr. Truman
refers to as generally favorable business
conditions" or the expected rise in ma
tional income rejecting full employ
ment and the high productivity that We
hope to achieve" The President then
predicts:
I'm future years the present tax sys-
tenn in conjunction with full employ
ment level Of national income could
be expected to yield more than 30
billion dollars, which is substantially
above the anticipated peacetime level
Of expenditures"
Time for Belt Tightening.
What Mr. Truman is really saving Is
that We can have a surplus annually
of five billion dollars if we hold the
expenses to 25 billions and collect 80
billions. Assuming that the American
people adopted such program and
stuck to it every year regardless of
political demands, it would take 81
years to wipe out 27o billions of national
debt.
Any one can answer for himself, there
fore, whether the American Government
will balance its budget, keep down ex-
penses, tax intelligently and demon
strate at least in the next 10 years that
the national debt can be raid off, If
one came to the conclusion that this
would not be done and if no appreciable
reduction actually was made in the
debt, then it would be only question
of time before the public as whole
made that same discovery and lost con-
f1dence in the Government and its bonds
If, on the other hand, the people insist
on having in Washington an admins
tration and Congress that will make
serious effort to adopt genuine pro-
gram of debt reduction, Americans can
look forward to stabilized economy as
soon as all elements begin to realize that
prices and wages must have some re-
lationship to one another and that it is
time for belt-tightening instead of
reaching for the moon either in profits
or wages or prices or in Government
grants and outlays.