Evening star., 1949-07-11
Truman Abandons
Tax Boost in New
Economic Program
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and growing economy
Going step further, he advo-
Gated price cuts to sustain buying
volume, even at the cost OF
temporarily reduced profits" but
declared that such reductions
should not be at the cost of
lowered wages. otherwise buying
power would suffer.
Employment Figures Cited.
In describing the moderate
downward trend of most phases
of business activity in the first
six months of this year. the Presi-
dent said employment averaged
58,O00000 with the June figure
59.600,000. as compared to 6l,-
300 900 in June. 1948.
Unemployment averaged $780,
900. or about 100000 over the
l948 total.
Production of all goods and
services was about II per cent
under the last half of 1913 and
the rapid decline in industrial
production had dropped the June
level about 13 per cent below last
falls peak.
Prices generally decreased, ere
f1ecting the shift from sellers
to a buyers market" but the fall
ing off. the President explained,
was for the most part moderate
and orderly, with no indication OF
a spiraling downward Whole
sale prices by midyear had de-
clined 9 per cent. and consumers
prices 3 per cent, from the high
of last August.
Real Earnings Maintained.
Wages increased in some indus
tries. but these advances were off,
set-at least in manufacturing
he said. by reduced overtime and
shorter work weeks. However.
President Truman amplifled. real
earnings generally were main
tained," because Of the CORE
spending drop in living costs.
Corporate profits before taxes
and inventory valuation adjust
ment in the first half of this year
were 13 per cent below the corre-
spending period of 1948. and the
figures for unincorporated enter
prises were off 7 per cent.
Farm income was off about 8
per cent.
Total liquid assets of individ-
uals and business firms now are
about S235, 100000, Mr.. Tru-
man told Congress, but nearly 30
per cent of American families
have no liquid assets.
The 1948 output of goods and
services approximated S252,000,-
100000 and in January the ad-
ministration set a goal some $l0,-
000.000.000 higher than that this
year. with employment around
81 900, 100000. These levels are not
to be realized now, Mr.. Truman
said, but he declared the country
can build up a 100000, 200. 900
output.
The President also reported
credit requirements by
business, and said business invest
ment in the second quarter this
year was 26 per cent under the
last quarter of 1948, chiefly as the
result of reductions in inventories.
Housing starts have been NOV
ing towards last years levels. and
personal income Of consumers
after taxes, decreased only about
one per cent from the level of the
last six months of 1948.
Government fiscal transactions
we're a source of support against
other factors making for a decline
in the economy.
In dropping his tax proposals,
which were advanced to combat
imitation. balance the budget and
cut the public debt, Mr.. Truman
went along with the Economic
Council which said that higher
taxes now. when inf1ationary
factors have disappeared. would
only increase the troubles of
business and consumers, and added
the appearance of a Government
deficit will have to be accepted"
Deficit Was 1.8 Billion.
The Government ended the
fiscal year on June 80, in the hole
to the extent of $1.811 100000.
Mr.. Truman had recommended
that corporations and middle and
upper income earners contribute
the biggest share of his proposed
increase, with some coming also
from revised estate and gift taxes.
Only this last item remains from
the original tax program, which
encountered stiff opposition from
Democrats as we'll as Republicans
in Congress.
The changes in tax structure
he now is recommending, his
message said, will be favorable
to the expansion of business ac-
tivity. without causing signifi-
can't net loss in total receipts"
But despite agitation for elimi-
nation of wartime excise taxes,
Mr.. Truman said only the 3 per
cent tax on freight hauling could
be dropped justifiably.
In discussing the Governments
fiscal affairs, the President re-
iterated his intention of adjusting
the outgo to income as soon as
feasible, but pointed out that the
high level of expenditures is due
principally to the extraordinary
costs of national defense and in
ternational activities, and, added
that it was "out of the question"
to cut in this area now.
Fears Long Range Deficits.
IF we tried to avoid a budget
deficit by cutting essential ex-
penditures, we would contribute
to lower national output and lower
employment. Federal receipts
would fall further and the bur-
den upon Federal expenditures
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