Evening star., 1947-01-21
Spending Psychology
Still CIings in CopitoI
Congress Must Become Realistic
Or Hardship Will Ensue
By David Laurence


By Dapid Laurence
Almost every day since the Republi-
cans have come into power in Congress.
dispatches have gone forth saying At
first that there would be tax reduce
ton and then saying that the prospect
was fading" 1t is but another way
of saying that the budget cannot be
cut and implying that the Republicans
should have known better than to have
even suggested such thing.
This is the result of a strange psy-
chology of spending which has prevailed
in the National Capital for nearly is
years.
So accustomed is official Washington
to the idea of spending the peoples
money that any one who suggests re-
versing the tide seems like an intruder
in a game reserved wholly for those
who have confused liberalism" with
"hberality.'
two years by July next. when the
new fiscal year starts, and yet the
Democratic administration is deter
mined to spend s37, 500 ,ooo, 900 year.
Nine Billion Prewar Top.
The largest prewar budget was $9,000,-
000, 1000, and this was considered tre-
mendous. so. allowing for the fact that
prices have risen and costs have SCARED,
a Federal budget of even $4,000, ,O00, 900
would seem to be out of line for peace,
time.
Yet when it is suggested that the Re-
publicans might reduce the budget to
about $4,000 900 900. the cry goes UP
that the Government is about to be
wrecked" and that the task Is impos-
sible.
No budget-cutting. public or private.
was ever accomplished without roper
cussions of protest and dissent But the
cutting of the Federal budget is at
tended also with cries of pain because
vested interests have grown up In
bureaucracy which insist on spending
for such expenditures has passed,
The Republican Congress members
who first started the movement for
20 per cent reduction in taxes ought
to be given the thanks of their country
men and encouraged to continue to
press for that objective. For even If
it were decided not to return a single
dime of that sum eventually to the
taxpayers and all of it were given over
to retirement of public debt, it would
be a worthwhile achievement to have
been instrumental in some way in re-
versing the spending psychology and in
Producing saving psychology at last.
Ease of Collection.
There is more public pressure, of
course. behind tax reduction than be-
hind debt retirement. So for all practt-
cal purposes it is we'll that there l.
some pressure, because unless a start
is made now toward eliminating waste
and useless expenditures, the Nations
credit standing will be impaired and .
long-range imitation set up that will
bring severe hardship to all the people.
One reason for the spending is the
ease with which taxes are collected. The
deduction of taxes on payrolls is
relatively inexpensive way of collecting
billions. But, as this correspondent
said when the payroll tax was adopted,
. it is perhaps the most expensive in the
long run to the Nations economy. For
what has happened is that the worker
has looked only at his take-home pay
and has insisted on getting higher
and higher sum from the employer in
the hope of getting the latter really
to absorb the tax. Despite the fact that
employers indicate on the pay envelope
the amount deducted for taxes, the EN-
ploye has been restless to recover the
lost earnings. The rise In wage costs
which the Nations economy is today
compelled to endure and the drop in
purchasing power of the dollar, which
means reduction in real incomes to
workers. are largely due to the impos
ton of the payroll tax
Payroll Tax Cut Urged.
economic structure would be to cut the
Federal budget sufficiently so as to
eliminate a substantial part of the
payroll tax altogether. If the withhold
ing tax could be reduced to five or even
ten per cent of the workers income.
it would not be such a steep cut into his
pay envelope as today when about 20 per
cent is Topped of before he takes his
pay home. But as long as the Demo-
cratic administration and a substantial
number of Democrats in Congress resist
the cutting of Federal expenses and in
sist that Federal budgets around s37,-
600, 600 900 are sacrosanct and can't be
touched, there will be little relief for
the worker.
What the Nation needs is to remove
the governmental temptation to extrav-
agant spending. This can be done If the
legislators begin thinking in terms OF
a $25, 900, ,000, 900 budget for the next
couple years and begin to aim at .
$40 900 900 900 maximum thereafter.
This would, to be sure, cut of some
veterans benefits, but the public treas
ury cannot stand handouts to able
bodied men indefinitely. The sooner
Congress gets realistic on the matter of
veterans benefits the sooner the
Nation will begin to sleep comfortably at
night without thought of "recessions"
and job insecurity which the present
condition of the Federal budget invites.
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