Evening star., 1947-11-26
5inkingFundprovision
In World War Il Debt
Is Yet 10 Be Made
Democrats Moneuvered
COP Into Position to
Kill Tax Cut Moves
Rv David Laurence

Most people would not lend money
10 q business or to an individual
who could not say when 1t would be
paid back. Yet billions Of dollars
have been loaned to the United
States Government without any pro-
vision being made for an annual
payment on the public debt.
Congress provided a sinking fund
that Is q fixed annual installment
OF repayment-on the debt growing
out Of World War I, but strangely
enough, with the so-called Sound
money" party in control of Congress,
there has been no action taken to-
ward providing for fixed payments
annually on the debt growing out
OF World War II.
AS a matter of fact, the whole
problem OF how much money shall
be available for debt repayment is
directly related to the surplus that
will be available for tax reduction
Yet the Republicans have allowed
themselves to be maneuvered into
a position where, whenever the
Democrats want to kill tax reduc-
ton, they merely announce that they
want to apply all the surplus to debt
repayment.
Excuse for Control Seen.
II sounds good, Of course, to talk
about wanting to pay off the ma
tional debt, but this happens to be
merely an excuse to cloak more
far-reaching effort to control the
economy.
Thus, many Of the New Deal
economists who want to deal a body
blow to the middle class by denying
tax reduction insist that a fixed
sinking fund payment system Is all
wrong. They contend that the
amount to be applied each year
should be left to the discretion OF
the Government so that debt repay
ment, or postponement of it, may be
used as a means of manipulating the
inhationary or defationary instru-
ments.
Actually there is no reason why
payment to q sinking fund cannot
be deferred by the simple process OF
borrowing from the public, II neces-
sary, to pay it. This was done in
the sos and no articulate public
dissent was registered. This is be-
cause in time OF depression the debt
repayment is not expected anyhow
The argument that in good years
therefore, more than the fixed
amount should be applied to debt
repayment falls to the ground be-
cause there is nothing to prevent
each Congress from applying more
than the minimum amount If the
surplus Of receipts is adequate.
' Device to Set Trends.
In some respects debt repayment
can be q device to bring about infia-
tionary or deflationary trends, but
the most important thing for the
Congress to establish is q fixed
amount for annual installments on
the debt 20 that O. long g-range pro-
gram of debt repayment may be
thoroughly understood by the lend
ing public.
The public debt today is nearly
$3.50, 600, 900 900 and II fixed sink
tng-fund payment Of two billions a
year were stipulated by law 1t would
mean repayment of about one hum
dred billion dollars in fifty years
This Is not too rapid a rate of re-
payment nor is 1t too slow. There
are some experts who will make a
reasonable argument for billion
donsr-a-year payment. They argue
that it Is bad for the national econ
omy to pay of the national debt too
rapidly.
When q man buys q house nova
days he arranges for annual INSTALL
ments that will pay of the mort
gage In either fifteen or twenty
years. Few people want to pinch
their current incomes to the point
of paying off more of the mortgage
In fewer years, though there are
some who do not like debt and
prefer an earlier repayment.
From the standpoint of corpora
ton finance where huge sums are
borrowed for twenty to fifty years
1t often happens that upon the ma
turity date of the mortgage or the
bonds, about third OF the principal
remains unpaid but another loan il
then made. If at the end of nifty
years about 40 per cent of the ma
tional debt has been paid OF, the
record would be regarded as extra
ordinarily good in the history OF
modern governments.
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