Evening star., 1949-10-22
Why We Are in the Red

VUy we are III Cne NeQ
In saying that he has no liking for un-
balanced budgets, President Truman has
blamed the present heavy Federal deficit
on the "rich mans" tax bill enacted last
year with the help of many Democrats)
by the Republican controlled 80th Con-
gress. At the same time he has suggested
that he intends to fight for higher taxes
when the Senate and House return in
January AS he has put it, he wishes some
body would tell him just how else the
Government can be expected to stop oper-
ating in the red
All this, of course, opens up wide
area of controversy. To begin with, as
an Incidental matter, it is difficult in the
extreme to comprehend the President
when he describes as a rich mans" bill
measure that has removed some 100000
low-income Americans from the tax
paying rolls and granted tax cuts ranging
from 1875 per cent for millions in the
lowest brackets to per cent for the small
minority in the highest. In other words,
proportionately speaking, the wealthy
under this legislation have received less
relief than the unwealthy.
AS for the relationship of current Fed
eral finances to the 1948 tax reduction
amounting to roughly s5,O00,OOO, ,0O0), the
President can make good case for MS
view that if there had been no such cut,
the Nation would not now be facing
deficit that may add up to more than
$1,000 100000 by the end Of this fiscal
year. But neither Mr.. Truman nor any
body else can be sure whether he Is right
or not. After all, it can be argued with
considerable force that If the taxation
level had not been lowered, the recession
might have been much worse, with the
result that Government revenues today
would have been considerably less than
they are.
Apart from this might-have-been ques-
tion-which cannot be answered with
certainty one way az the other-the
President has raised challenge OF sorts
in asking how the budget can be balanced
without tax increase and In indicating
that he will press for such an increase
at the next session of Congress. Senate
and House authorities on the subject have
been quick to respond. composite OF
their views may be summed up as follows:
Cd The way to get out of the red Is to
start making real economies, and (2) in
stead of boosting taxes, 1t may be wise
to lower them some more In order to
create investment and other free-enter-
prise incentives aimed at adding another
$100, 900, 100000 to the national income,
which would automatically increase Fed
eral revenues.
Sound as these suggestions may be,
however, the fact remains that Congress
as whole, including both parties, has
shown no disposition to follow them.
Leaving aside tremendous defense outlays
and other items that are either impossible
to reduce or too vital for sharp slashes
neither the Senate nor House has been
in a mood to do an economizing job on
the reducibles, such as farm-price sup
ports. Moreover there has been consid-
erable reluctance to permit truly sweep
ing Federal administrative reorganization
which former President Hoover believes
capable of saving $3,00O,000,000.
In the circumstances, Mr.. Truman-Who
has set the pace for congressional dedica-
tion to social welfare and other types of
spending-would seem to have good reason
to ask for higher taxes. For If the spend
ing is to continue without letup, then we
must have either the higher taxes or end
less deficits leading US into fiscal wilder
ness But, of course, what with nearly
everybody up for reelection next fall, one
must hasten to add that it is about as
certain as anything can be that the Senate
and House will not only avoid drastic
economies but will also reject any presi-
Dental request for big boost in taxation.
What the whole thing boils down to is
that everybody in politics is extremely
anxious to please the voting public, whose
gimme" pressures- coming from every
direction-are primarily responsible for
the red ink. In fact, If we are frank with
ourselves, We must acknowledge that we
will keep on drifting toward fiscal chaos
until we ourselves-the American people
as wnole-make up our minds either to
stop seeking more and more Federal
largesse or to start paying for 1t in higher
and higher taxes till 1t really hurts.