Evening star., 1948-08-16
Deficits Ahead?

Even If Representative Taber can prove
his highly debatable claim that the Re
publicans have effected economies total
ing over 6,000,0O0,000 in 1947 and 1948,
It Is much to be doubted that they have
been very good book balancerS for fiscal
1949. For President Truman's midyear
budget review, as if written more in sor-
row than in anger, sadly warns that a
period of deficit financing looms ahead
largely because of their ''ill-timed tax re-
duction of last SPRING
AS summed up by the President, the
prospect is this: Cd Expenditures for the
year have jumped to an estimated $42,-
200,OOO0OO because of increases in defense
outlays, veterans benefits and tax re-
funds; (2) receipts are expected to be
down to $40, 700 100000 - substantially
lower than the January estimates because
of the Republican-sponsored $4,000, 900, 900
slash in taxes enacted by Congress in
April, and 60 an operating deficit of
$500 900, 900 thus is anticipated.
AS the President explains, however, the
prospective deficit, if it materializes, will
be a peculiar one because Congress, when
1t adopted the Economic Cooperation Act
for European recovery ordered that part
of the 1949 expenditures under that act
be paid for by the transfer of $4,000, 100000
of the record breaking 1943 surplus. AS
a result of this technical bookkeeping
transaction, an operating deficit of 81 1500,-
100000 at the end of this fiscal year will
still leave what the President calls a
paper" surplus of ST 500, 900. But the
figure, as he sees it, will mean nothing in
terms of reducing the national debt or
staying out of the red.
Indeed" in the Presidents words, "as
long as the present fiscal outlook prevails,
we may face an expanding debt-even in
a period of high national income when
financial prudence clearly would dictate
continuing debt retirement" His con-
trast between this year and last-when
we had a surplus of $8,4O0 100000 and
reduced the public debt by $4,000, ,00O, ,000-
is undeniably depressing, and he seems to
be on sound ground in attributing it
primarily to the congressional tax slash.
Both from the standpoint of easing infla-
tionary pressures and coping with the
extraordinary security demands of tense
postwar world, the wisdom and realism
of that slash are certainly open to serious
question.
But it is doubtful that Mr.. Truman can
make much political capital out of that
fact. Unless human nature has changed
votes cannot be won by attacking some
body for cutting taxes; besides, in this
instance, the Democrats in Congress have
been pretty much as one with the Repub-
licans. 1t is true, moreover, that the
deficit prediction, as of today, is based
chiefly on an educated guess Its accuracy
is not certain. Although it seems i'm
probable, events between now and June
30-the end of the fiscal year con-
ceivably may make the outlook much
brighter. At any rate, COP leaders like
Senators Millikin and Bridges scoff at
the Truman warning and foresee another
surplus possibly one of $4,000, 100000.
Nevertheless however challengeable, the
Presidents words on the subject are
SOLDERING and to the point. Until we
have peace in which we can safely
ldisarm and in which our tremendously
costly responsibilities will diminish we
cannot have balanced budgets, surpluses
and debt reduction without having ade-