Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-01
KeyserIing Urges
Tax Cut as Way 10
Boost Buying Power
Continued From First Page.)

past Democratic administrations
which he served had sometimes
been incorrect.
1888 Boost Called Error.
For example. he said the pol
Icy of raising taxes in the years
following 1888 was "the wrong
approach" and that unemploy-
ment would have been reduced
more rapidly If taxes had not
been raised.
Mr.. KeySerling, a member OF
the Truman council of economic
advisers at the time, conceded.
that Congress was right in re-
ducing taxes in l948 over admin
istration opposition. He said
that the l948 tax cut did much
to soften the effect of the eco
nomic recession tat was to fol-
low a year later.
The witness said he believed
q majority of responsible econ
omistS would not agree with the
present administrations position
that a tax cut at this time would
De inflationary.
How in the name of reason
he said, can it be inflationary
to add a billion dollars or so
to consumer incomes through
tax reductions when there is now
$50 billion of slack in the econ
omy?
"a. The tax reduction in
volved in the pending proposal
Is pointed squarely at a great
national economic need--the
stimulation of consumption, par
ticularly among lower income
families. The most rational crit
icism of this proposal would be
that it is not large enough nor
fast enough to respond adj
equately to the rising threat of
unemployment and national eco
nomic deficits"
The tax problem was the main
subject for discussion in the
Presidents conference with the
Republican congressional leaders
this morning.
Discussed at White House.
Senator Knowland said he had
not seen any suggestion for a
compromise on the tax proposal
that, in his Judgment. would be
acceptable to the administration.
He refused to say whether
Mr.. Eisenhower had indicated
whether he would veto q bill
containing the tax cut provi-
sion, remarking only that the
President does not normally"
indicate what he will do about
q bill before it reaches his desk.
The Senate minority leader
said he would expect a Treasury
recommendation for a veto, how
ever, because Secretary of the
Treasury Humphrey "feels so
strongly" that any tax cut now
would be detrimental to the Ma
tons finances.
Asked what he expected a Sem
ate-House Conference Committee
to recommend if the Senate
strikes out the House-approved
tax reduction. Senator Knowland
said "let's cross this first bridge
(the Senate vote) first and see
what the vote in the Senate is"
Possible House Course.
House Republican Leader Mar
tin suggested the possibility Of
House Republicans trying to get
a House vote to concur in the
expected Senate amendment
knocking out the tax cut pro-
vision. This would avoid send
ing the measure to conference.
If it does go to conference,
Mr.. Martin said, he cannot be-
lieve" that House Democrats on
the conference committee would
be willing to assume responsible
ity for killing the bills original
provisions for extending cor
poration and excise tax rates.
While insisting that he does
not believe the bill finally passed
by Congress will contain the tax
cut provision. Senator Knowland
said that If it does and is vetoed
by the President then there
would be another effort for leg
islation to extend the corpora
ton and excise tax rates.
Democrats Call for Rebuttal.
Democratic Senators on the
Finance Committee insisted on
the Keyserling testimony today
in rebuttal to that of Mr.. Hum
phrey.
The additional testimony,
however, was unlikely to change
any votes. Republican leaders be-
lieved their seven committee
members were solidly in support
of the position of Mr.. Humphrey
and the administration that no
tax reduction should be voted
now.
One Republican, Senator Ma