Evening star., 1951-08-13
Economists Urqe
Taxes in Excess
OF Billion
House Level Called
inadequate to Meet
Bio Defense Needs
By J. A. O'LeorY

Chairman O'Mahoney of the
Congressional Economic Commit
tee said today his House e-Senate
group appears to be in general
agreement that expenditures
must be kept to a minimum and
taxes increased"
He made the statement to
after the committee
studied report by its research
staff that taxes will have to go
higher than the $7.2 billion ap-
proved by the House if the big
defense program is to be kept on
a pay-aS-you-go basis.
Senator OMahoney explained
that in the absence of a commit
tee quorum the report was not
adopted today. but among mem
bers present, he said. there was
no criticism of the report and no
objections.
Imitation Serious Threat.
There was general agreement"
the chairman reported, that in
flation is the most serious threat
to the position that this country
is taking in the world. The Amer
ican economy is the principal bull
Wark of the free world
The research staff warned that
excessive inventories of civilian
goods now available to the business
world do not mean imitation is
at an end. 1t predicts that later
in the fiscal year, which runs to
next June, the inf1ationary forces
of rising costs of raw materials
and labor "as we'll as excess money
demand may be expected to take
hold" Inf1ationary pressures again
will appear unless Government
fiscal, credit and Wage-price con-
trolls are strengthened, says the
Alternative solutions would be
to cut defense spending or in
crease personal savings. but the
say these steps are not
likely to be taken.
Senate Reduction Forecast.
The report also suggested that
the additional revenue to boost the
tax bill to the administrations
total of $40 billion would
have to come largely from indi-
viduals in the $4,000 to $4,000
income brackets.
There seems to be no other
source left from which to get the
volume of revenue
needed to maintain a pay-as-you-
go policy" said the staff report.
1t pointed out that the wage earn
ers below $4,000, who comprise
tWo-fifths of all spending units.
have already been hit hardest by
the imitation of the past year.
The Treasury plan calls for
boosting each bracket by per-
centage points. For example, the
lowest rate of 20 per cent would
go up to "a per cent.
Even as the report was being
filed, however, reliable sources we're
the Senate Finance
Committee is more likely to reduce
than to raise the S7.2 billion House
tax bill. The Joint Economic Com
mittee studies long-range policies,
but will have no jurisdiction over
the tax bill, on which the Finance
Committee began to deliberate to-
day.
Senator O'Mahoney told report
ers he still favors the pay-as-you-
go policy. He pointed out that the
Russians are not precipitating an
other world war at this time, but
are hoping that the cost of pre-
paredness will bring economic col
lapse to the free nations.
Therefore" he added, 1--WE
must see to it that there is no
collapse"
Weakened Defenses Feared.
AS defense production gets into
full swing, Senator O'Mahoney
warned, Congress and the country
will have to decide either to
a formal pay-as-we-go
policy or temporize with a weak
ened defense program.
Other developments on the tax
bill were:
The Twentieth Century Fund
went far beyond the administra-
ton by calling for SIG billion
year in new taxes to head off an
other spiral of initiation when the
defense program gets into full
swing.
Senator Humphrey, Democrat.
of Minnesota, urged the Senate
(See TAXES, Page A-6)