Evening star. [volume] (Washington, D.C.) 1854-1972, 1953-08-09
By Frank O'Brien
Associoted Press Staff Writer

Is the Government going broke
in the next few months because
Congress went home without
raising the legal debt limit?
It is not. A set of figures given
to Congress by Treasury Secre-
tary Humphrey during the debt
limit battle showed:
The Treasury planned borrow
ing that would have raised the
debt to $277 billion by December,
but would have had a cash bal
ance at the same time of $5.5 to
$6 billion. Thus, it is evident
that by using cash in the till in
stead of borrowing during De-
cember and January, the debt
can be kept under the limit of
$275 billion. But cash in hand
will sink to So to So billion.
However, if present estimates
are correct, the Government will
finish the present fiscal year next
June 80 with a debt of $273 bill
lion and temporary borrowing
needs of SIS to $40 billion in the
next eight months. That would
indicate a new debt limit crisis.
Long Series off Bumps.
Whether or not the admins
tration has to appeal again to
Congress for higher debt CELL
ing, the present narrow escape
points up a long series of finan-
cial bumps the Eisenhower Gov
eminent has taken since last
January.
1t took Office amid talk of
sounder money, longer term Dor
rowing, reduced spending and tax
cuts. Since then it has:
l. Turned to short-term Dor
rowing, which it condemns as in
fationary.
2. Waged a bitter battle in
Congress for a six months eX-
tension of the excess profits tax
on corporations, the tax new adj
ministration officials hated worst
of all while they were business
men.
3. Accepted, as a friendly and
needed gesture, action by the
Federal Reserve System to I'M
freeze a large amount of bank
lending power. This was an easy
money" move with inf1ationary
possibilities.
4. Announced that although
economics have been made the
Government will again run heav-
lily in the red in the fiscal year
that ends next June.
5. Asked Congress to raise the
limit on the national debt by
SIS billion.
Much Ground Given.
Has the Eisenhower admin
Istration forsaken the stony
anti-inf1ation, hard money road
for the primrose path of inf1a-
ton? Or does it still have its
OdIludIy OOJCCGiNC:
The new administration has
had to give a lot of ground be-
fore the hard facts of running
the biggest government in the
world, with half the world hang
ing to its coattails and the other
half pointing gun at its breast.
But the men who are Gen.
Eisenhower's chief financial and
monetary advisers - Secretary
Humphrey, Deputy Secretary w.
Randolph Burgess. Undersecre-
tary Marion Folsom and Fed
eral Reserve Board Chairman
William McChesney Martin
believe as firmly today as last
January that unless all policies
are aimed at ending imitation
and producing a stable dollar,
the country is headed to eco
nomic perdition.
If there is any radical change
in their outlook, it appears to be
that they now regard getting
control of the budget through
reduced spending as consider
ably more difficult than they
once believed.
Tax receipts this spring proved
to be disappointing. so the Treas
ury turned up with a $3.50 ,000-
900 deficit, adding $3.5 billion to
the borrowing load.
Money Policies LOOSened.
The Federal Reserve began
loosening up its money policies
Through April and May it bought
Treasury 91-day bills, thereby
supplying money to banks and
easing interest rates, which had
climbed to a 20-year high.
After the size of the June &c
deficit became known, and it was
evident the Government would
have to borrow much more than
had been anticipated, the reserve
board lowered the amount of re-
serves it's member banks must
keep stashed away, unloaned and
uninvested. That put nearly Sc
billion new money or potential
credit on the market. 1t prob
ably kept interest rates from
turning up again. And it would
probably be inf1ationary, admin
iStration officials said.
The treaSury's extra borrow