Evening star., 1947-01-10
Truman Budget Seen
As Challenge to COP.
Administration Still Carrying On
New Deal Spending Policies

Administration Still Carrying On
New Deal Spending Policies
By David Laurence
The Truman administration stii Is
carrying on the policies Of the New Deal
to which it apparently feels committed.
and one Of these is to spend public funds
in vast amounts irrespective Of the effect
of such expenditures on the tax struc.
ture.
The assumption is made that what
ever money the Federal bureaucracy
wants will be supplied and that tax rates
will be kept high or even raised when I
ever receipts are inadequate to meet the
New Deal budgets,
B The Nation is being asked to 60 back to
I the spending policies that began in 1888
and continued unabated until 1910, when
total war began in Europe. Again and
again the impression created by the ad-
ministration today is that certain items
Of expenditure are sacrosanct.
The talk has been ofsa Truman budget
Of 81 billions and Republican budget Of
80 billions. The administration is natu-
rally under pressure from the vested in.
terests in Government which benefit
from such large budget and is reluctant
to do any drastic cutting But the Repub-
licans have no such inhibitions.
Realistic Debate Ahead.
This means that the American people
are in for debate on economy that will
be realistic. For the public will applaud
the majority in Congress for insisting
on a re-examination of every item
on the expense side no matter how
much political combat the administra-
ton may seek to engender as a conse-
quence. The belief is that the Truman
budget represents kind of challenge to
the Republicans with cut-it-if-you-
dare attitude behind the presentation.
The President made a serious mistake
when he announced that there couldn't
be any tax reduction. Not only did he
thus defend the amounts that are to be
spent but he completely overlooked the
fact that expenses will never be cut un-
less the pressure of public opinion de-
n1ands economy.
Mr.. Truman would have been wiser to
say that he, too, believed tax reduction is
possible but only after economies had
been made which could be applied with
out injuring vital governmental func.
tions. The drive to bring economy would
then have been continued with the full
force of presidential approval and, if the
amount saved in the end did not permit
Of as big tax reduction as the Republi-
cans promised, Mr.. Truman would still
have been consistent In his position.
When President OF the United States
says there can't be any tax reduction
he is really saying there can't be any
reduction of expenses beyond those he
has outlined.
Lesson After World War I.
After World War I, the public debt was
about $4,000, 100000 and the Republican
Party, which was then in power, cut that
down in 10 years to about $1,000, ,000,-
600. and it did all this largely by reduce
Ing tax rates. What was discovered then
was that the lower the tax rates, the
greater the incentive to business expan-
sion. AS the volume Of transactions in
creased, the tax revenues were. materially
augmented. The tax rates were no bar
rier to business expansion at that time.
If Mr.. Truman were to study the his
tory of the Treasury in those years, he
would find that tax revenues jumped
every time the tax rates went down. The
theory Is the same as in the matter
OF prices where goods for consumer
use are involved. AS prices come
down, volume usually goes up. As
volume of sales increases, the profits
increase and individual incomes grow.
Thus national economy is developed
which assures q larger and larger flow
OF tax receipts. But economy must be
practiced on the expenditure side. The
Republicans managed to hold expenses
| down.
There are dozens of items for which
| public funds are often appropriated
which are by no means wasteful. But
the question is whether they are nec-
essary, especially at a time when the
Nation Is carrying q $3.50, 600, 900 900
public debt. What were necessities
before become luxuries now under o
different set Of circumstances But
such realism hasn't struck the Federal
bureaucracy as yet, and the Truman
attitude is a reflection Of the spending
mood Of the New Deal.
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