Evening star., 1953-07-09
The Political Mill
Eisenhower Victory
Holds Down Deficit
Excess Profits Outcome
Saves Deeper Tox Cuts
By Gould Lincoln

By Gould Lincoln
President Eisenhower's tax program,
which calls for economy in Government
expenditure before there are material
reductions in taxes, moved forward an
important step when the Ways and
Means Committee Of the House voted.
Is to 8, to report out the bill to extend
the excess profits tax six months. The
President, in special message to Con-
gress, declared that Government econ
omy and taxes are interdependent.
"We must look forward to reducing
tax revenues as Government expendi-
lures are curtailed.' he said.
The action of the Ways and Means
Committee, taken over the strenuous
resistance of Chairman Reed, New
York Republican, is expected to be fol-
lowed by prompt passage by both houses
of the bill to extend the excess profits
tax until January l. The measure will
have bipartisan SUPPORTS it did in
the Ways and Means Committee.
Although majority of the Repub-
hcan members of the committee voted
for reporting out the bill, six Repub-
licans lined up with three Democrats
in opposition.
Had all the Democrats voted against
the bill, it could not have been reported
out. To that extent the Democrats can
claim they bailed the Republican Presi-
dent out Of rather deep hole. And they
will claim 1t, in the days of the con-
gresSional campaign to come. Their
argument: If you want to uphold the
hands of the popular President Eisen-
hover, the way to do it is to elect more
Democrats to Congress. This. by o. the
way, is not the only instance in which
Democrats in Congress have come to
the aid Of President Eisenhowers pro-
gram when 1t was jeopardized by Re.
publican recalcitrance.
Would Open Gates.
Had the President lost in his effort
to have the excess profits tax extended.
it might have been much more hurtful
than the mere loss of $500 milhon-the
expected revenue from the continuance
of the tax for a half year. There was
the chance that, having tasted blood,
the supporters of immediate lower
taxation might have been able to force
to the floor of the House the Reed bill,
which provided not only for the expira-
ton of the excess profits tax as Of
July l, but also for the death of the
IL per cent, across-the- board special
income tax on individuals.
Certainly, as matter of politics. 1t
would have been all wrong to permit
the big corporations to pay less taxes,
while continuing to collect the IL per
cent special tax on all the individual
taxpayers. The ii per cent special
income tax on individuals is due to
expire on January /. President Eisen-
hover has, up to the present, been
willing to go along with the law killing
the tax on that date. To have killed
the tax on July l, as proposed by
Chairman Reed, would have lost the
Government some So billion in revenue.
1t looks today as though the battle
over taxes at the winter session Of
Congress will be hot. The President
has asked that repeal of per cent
reduction in the regular corporation
income tax be cancelled. This reduc-
ton is scheduled to become effective
April /. 1t involves some 81 billion.
which the corporations would like to be
relieved of paying in taxes. if the tax
was continued for a year.
Further, the President, has recon-
mended that the reduction in excise
taxes, due to take place under existing
law, April l, 1854, be postponed. The
President modified and softened this
demand by explaining that the post
ponement is only to give time for the
development of better system Of
excise taxation"
Business, however, may wish for
more immediate relief-both in the mat
ter of reduced corporation taxes and
reduced excise taxes. At least it is
promised tax reduction early next year.
as the law now stands.
Chilling Deficit.
The recent disclosure that the Federal
deficit at the close of fiscal year 1853
last June 30-had reached nearly $9.4
billion, and that the task of bringing
the Federal budget in balance at the
close of fiscal year 1854 seems more
difficult than ever, has thrown q cold
chill down the spines of those who have
been hoping for quick tax reduction
under Republican rule.
The President and some Of the Re-
publican leaders have not abandoned
the fight for an early balance Of the
budget. They believe that strict econ
omy, from now on, in Government ex-
penditureS will pay off.
In the meantime, the President is
sticking to his determination not to have
tax reduction now. If he should change
his mind later about the II per cent
special tax on individual incomes, and
seek to have that tax extended to
next January, there would be howl
of rage from the American taxpayers.
Indeed. it would take rare political
courage to demand retention and ex-:
tension of that tax.