Evening star., 1948-01-13
Colossal u. 5. BUDGET
Nearing Danger Point
OF National Economy

40 Billions in Ioxes
Termed Heovy Droin
Thut Portends Trouble
By David Laurence
What's 40 billion dollarsI The
Federal budget Of expenses proposed
by President Truman for that
amount Is just about eight times
what the Government collected in
1899.
It Is more than twice all the
profits made by American industry
In the year 1947.
It isis billion dollars more than
the entire Federal public debt at the
close Of World War I.
It Is more than the entire national
income in the year 1888.
It 10 more than four times the
Federal budget In 1899.
It Is nearly eight billions more
than the 1912 budget which included
the first year Of the war.
The colossal sums in the Presi-
dents recommendation are intended
to be spent in the fiscal year be-
ginning July /, 1948. and ending
June 80, 1949. This means that four
years after the close Of World War
II the Government Of the United
States Is spending at a higher rate
than at any time in its peacetime
history.
Dangerous Drain on People.
Much more important than the
sums to be expended is the size OF
the tax collections. Approximately
IS billions are to be taken out Of the
national income In taxes and other
receipts. This is such a substantial
part Of the money earned by the
people that it constitutes a drain of
dangerous proportions.
It is considered by many econo-
mists to, be hazardous when the
Government extracts as much as 20
per cent of the national income
for taxes. Assuming national in
come Of 100000, ,000, 900 the Federal
Government will be drawing out of
the stream Of national income more
than 20 per cent.
What is most disconcerting about
the Presidents budget, however, is
that it exceeds the 1948 budget by
$4,000, 100000. How long can the
Federal Government go on increas-
ing its expenses at that rate. per
annum?
The risk Is that the Federal
budget may increase fears of a mall
adjustment in the whole economic
situation. There is tendency to
lose confidence in a government
which keeps on spending and spend
Ing and taxing and taxing. Ger
tainly the system of private initia-
tive gives way to State socialism
and Government programs of ma
tionalization when taxes become so
burdensome as to make 1t impossible
for individuals to save for invest
ment purposes.
Unless market for risk capital
is provided, many enterprises in
business will be compelled to restrict
their operations and start laying off
employees.
The most depressing aspect of the
whole problem is that the Federal
Government shows no signs of put
ting its house In order. This Is q
sign of approaching trouble in any
government. It Is true that for the
fiscal year 1948 surplus Of $7,000,-
900, 1000 Is indicated and for 1919
about $4,000, 900, 900. But the fact
that the administration has made
no provision for tax reductions and
wants to use these surpluses to re-
tire debt without relief to individual
taxpayers in the investor class will
mean def1ation in the midst of in
f1ation.
Will Tend to Cut Credit.
Unfortunately it will tend to re-
strict credit at the banks and dis
courage business from getting money
in the capital markets generally.
The def1ation may set off a spiral
Of curtailment sometime in 1943
which may not be Offset by the huge
amount of tax-reduction bonuses de-
signed by Mr.. Truman for distribu-
ton among those in the low-income
groups.
The announcement of the Federal
budget will send a wave of discour-
agement throughout the business
and industrial sections of America
and intensity the drive to get Con-
gress to cut the budget by several
billion dollars.
1t is true that a billion dollars to-
day buys much less than it did in
1899, SO that in terms of prewar
dollars the budget would probably
be around SIS, ,0OO, ,000, 900 but even
this is a big expenditure for the
Federal Government to be making
as against $12,77O. 600, 900 in 1941.
The Presidents huge budget will,
Of course, become q political issue
in the campaign. It would seem that
Mr.. Truman might at least have
tried to present a budget Of expenses
less than last year. His willingness
to raise 1t by $4,000. .o00, 900 must
mean that he Is confident the Amer
lean people don't care how high the
expenses Of the Federal Government
do 60.
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