Evening star., 1949-12-12
Honest Deal Forecast
As Slogan Of Foes Of
Unbalanced BUDGET
Public Held Able to Proc
Reluctant Congress Into
Ending Deficit Spending
By David Laurence


torate In Britain as well as In the
United States.
Democracies cannot spend their
way out of trouble. Sooner or later
they have to realize that there is
no such word as cant" when re-
duction of expenses becomes i'm
perative. The slogan of the future
is not going to be the New Deal
or the "Fair Deal" but one that
will make its appearance soon
the Honest Deal"
This means that the person who
puts a dollar in the bank should
be able to get back somewhere
near a dollar in purchasing power
in future years when he draws 1t
out or when the life insurance
policies he now Is paying for are
paid to his benef1ciaries.
The Nation may look prosperous
but, as Devereux P. Josephs, presi-
dent of the New York Life Insur-
ance Co., testified before the Joint
Senate and House Committee on
Economic Affairs last week. 1t is
the future which everybody fears
the future of the dollar.
Criticized by O'Mahoney.
Senator O'Mahoney, Democrat,
of Wyoming, who heads the COM
mittee, took Mr.. Josephs to task
not personally, but the school Of
thought which he representation
insisting that the budget could be
balanced by cutting expenditures.
II am frank to say to you" said
Senator O'Mahoney, that this Is
arrant nonsense from my point of
view-the talk about cutting Gov
ernment expenditures unless we
are willing to say we shall not
defend ourselves. we shall let the
international problem catch UP
with u.s. '''
II feel I ought to make q public
record of the thing-that most
Of this talk about Government
waste Is based upon ignorance Of
the facts and not upon q realiza-
ton Of what your Government has
to do.
II am happy 10 note that you
did recommend that we could
also balance the budget by rats
ing tais2s. But personally ! be-
lieve that the political realities are
such that we carnc' 40 that. ''
Our problem. II u ,lis 20 me. Ia o
problem = finaias 'ays of reform
ing the tax Law 20 as 10 produce
more bIsirsss, md because Of
more business. more revenue"
Byrd ProposAl Cited.
Now 10 no happens that almost
at the same time that Senator
O'Mahoney was expressing these
sentiments. another Democratic
Senator-Hsrry Byrd Of Virginia
was publicly pointing out that the
budget could be balanced. that It
could be done by Topping ,ff sew
eral billion dollars of expenses,
and that q surplus of $2,500,
600. 900 could be achieved.
The truth is that the political
realities" Of the moment cause
members of Congress to approve
spending and to shut their eyes to
economies that can be made. It
hardly can be argued that the
Hoover Commissions proposals for
cutting expenses by ELIMINATING
waste were all "arrant nonsense. ~
Likewise the old alibi that rs
per cent of the expenses are un-
touchable because they are con-
nected with past or future wars
is not acceptable either. There
are ways by which a better de-
fense-a balanced defense-can
be obtained by cutting the de-
tense budget materially. The
realities" there are that Con-
gress hesitates to touch its own
vested interests.
Pressure by Public Needed.
Public opinion can do what
hesitant and reluctant Congress
men are unwilling to dot can
force a balanced budget. It had
better do 1t soon. If it wants an
Honest Deal. The most pointed
comment on this comes from w,
Randolph Burgess, vice chairman
OF the National City Bank, who
used to be the head Of the Fed
eral Reserve Bank in New York
and Is about the best posted econ
omist on the meaning Of an un-
balanced budget. He said re-
Gently in an address to the Amer
tcan Bankers Association:
The great political conflict
which We, along with most other
countries, are facing today 10 the
conflict between the so-calle6
welfare state and sound money
When a country makes the vel
fare state its objective. it almost
always starts spending govern
ment money faster than the pro-
duction Of the country justifies
This means an unbalanced
budget. credit expansion. unsound
wage and price policies, and In
the long run q slowing down Of
production because people are
trying to get something for moth
ing instead Of working for 1t.
When this happens the well
fare state may be an enemy OF
human welfare, for there can be
no lasting human welfare when
money Is unstable. Simply calling
a state q welfare state does moi
make it one. Someone has said
recently that what we need is 9
state Of welfare, not a welfare
state, and to have welfare there
must be sound money. Sounc
money cannot long survive larg.
budget deficits"
Rsproduetion Rights Reservsd.)