Evening star., 1949-07-14
Truman Seen Usinq
Economic Report as
Campaign Speech
Statements in Attack
On 80th Congress Are
Called Misleading
Bv David Laurence

in order presumably to give an
economic report to the country,
but he used the occasion in large
part to make a political campaign
speech lambasting the 80thk Con-
gress which was controlled BY the
Republican Party.
Mr.. Truman made several mis-
leading statements. The principal
one was his repetition of claim
which he first gave to a press
conference last May and which
has been contradicted again and
again since. In the radio speech
just delivered. Mr.. Truman said:
when we had an excess OF re-
ceipts over expenditures, we ap-
piled it to reduce the national
tebt. We have already paid off
more of the debt than the total
Size of the national debt after the
First World War"
Claim without Foundation.
This claim is without founda-
ton. Just after World War II
ended there was left on hand the
proceeds of a victory loan which
were not needed because hostili-
ties were terminated sooner than
expected. This amounted to $20.-
00o.000,000.
The only amount of debt retire
ment that can be called an "ex-
cess of receipts over expenditures"
in the sense in which such a
phrase should be used is $7,000.-
100000, and tina t was accom-
plished in the early part OF 1948
when the 80th Congress had kept
the expenses Of Government down
to a minimum.
The debt that remained after
World War I was approximately
s27 1000, 100000, so when Mr.. Tru-
man contends that his admins
tration has reduced the public
debt by more than the total size
of the national debt after the
First World War and that this has
been accomplished by an "excess
of receipts over expenditures" he
has certainly given misleading
impression of what really has
happened.
Mr.. Truman has "ghost writ
ers" who help to prepare his
speeches, and doubtless this in
accuracy was due to the careless
ness of the ghost writers, though
it is a puzzle why they should
have made the same error now
that was made last May.
Another error in the Presidents
speech relates to the tax cut
made by the 80th Congress. He1
said:
THE leaders Of the 80th Con-
gress thought they could wish the
facts away. They insisted on pass
ing a tax reduction against my
advice and over my veto. warned
that this tax cut of five billion
dollars was almost certain to pre-
duce a deficit. 1t did produce a
deficit. For the year ending July
/, 1949, the deficit was $l,S00,-
100000.
The economy was running at
a high level when this untimely
tax cut was made. People then
could pay the taxes necessary to
balance the budget and to pro-
vide surplus for debt reduction.
Today, because profits and in
comes have fallen, taxes bring in
less money
What He Didn't Tell.
What the President didn't tell
the people over the radio was
that the deficit of $1,800,000, 900
in the fiscal year ending June 80,
1949, was largely because of re-
funds of about $1,000, 100000 paid
to taxpayers because they over
paid their income taxes for the
calendar year 1948 due to the de-
lay in passing the tax cut till al
most the middle of the year.
There was more than enough sur
plus in 1948 to take care OF the
tax cut, provided expenses had
not been increased in 1948.
What the President also failed
to note was that if the tax bill
had not been passed over his veto,
the high rates in effect until mid
1948 would have brought in far
less tax money this year. For the
national income started to drop
in the latter part Of 1948. and
hence during this calendar year
the individual income payments
of the Nation are estimated to be
only at the rate of about $207 bill
lion as compared with $219 bill
lion in the calendar year 1948.
Certainly keeping the high tax
rates in effect as Of January. 1949,
might have merely started the re-
cession sooner. For it is signifi-
cant that the tax cut last year
did not increase purchasing pow
er to the point of augmenting IN
flation. The deflationary trend
started anyway in the autumn OF
1948.
Mr.. Truman failed to tell the
people that the Nation got along
with a $38-billion budget two
years ago and now he has in
creased it to $42 billion at time
when receipts have come down
from a peak of $44 billion to $37
billion.
If the 1850 budget had been
trimmed to the level of fiscal year
l948, there would be no deficit
ahead.
q The whole theme of the Tru-
man speech was that an unbal-
anced budget of several billions is
needed. He opposes the idea of
pruning expenses as tax receipts
fall off. This doctrine can pro-
duce a return of initiation and a
lack of confidence in the intes-
rity of the dollar.
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