Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-04-18
81 Billion Seen
.s'56 Surplus
But Committee
Burs Tax Cuts

! A So billion surplus of Govern
ment receipts over expenditures
was predicted today for the
fiscal year ending June 80.
At the same time, the staff OF
the Joint Senate House Economic
Committee = which made the
Iforecast-warned against cutting
taxes. 1t cited inflationary pres
Isures as a compelling reason fol
leaving taxes where they are fol
the present.
The revised estimate of 50 bill
lion was nearly $l.8 billion above
President Eisenhower's budget
estimate of last January.
Tax Cut Opposed
The report, submitted to the
Joint committee by Grover w
Ensley, executive director of the
staff. said in part:
although long run projec-
tionS indicate the possibilities of
tax reductions, the emergence at
this time of a surplus, either an
ticipated or greater than origi-
nally anticipated, is not persua-
Sive as to the wisdom of tax re-
auction in the face of a booming
economy already pressing the
limit of immediate resources and
famed by variety of upward
drafts. The fact is that the
emerging Federal surplus of it.
self is but another indication OF
the strength of the booming
forces present in the economy
The staff actually predicted
that receipts by June will be
about So billion over the January
budget estimate. The report also
said expenditures may run about
ST. billion higher than the Janu-
airy estimate, due to financing
Commodity Credit Corp. pay
mentS out of the budget rather
than by sale of notes to COM
'mercial banks.
Larger Surplus Seen
"For the fiscal year 1857" the
report continued, "the surplus
: will probably be larger than esti-
mated in the January budget
, unless-(a) business conditions
ldeteriorate, or (b) legislation
! increases expenditures signifl-
Icantly more than estimated.
In January the White House
estimated it would finish this
year on June 80 with a surplu,
of $3.50 million.
For the fiscal year ending JUNE
80, 1857, the administration esti.
mated income at $66.3 billion
and expenditures at $3.50 billion
which would leave a surplus o.
only $400 million. Even thi,
small balance was based on ar
assumption this session of Con.
gress would raise postal rates BY
$3.50 million, which it has moi
yet done.
On March l the Joint Eco.
Inomic Committee recommended
against a Federal tax cut a
this time, and the staff repor
said that continues to represent
the best policy despite the i'm,
proved outlook.
The new report is likely how.
ever, to spur those members O.
Congress who would like to vott
some tax reduction in this cleo
ton year.
Restrictive Policy
The report pointed out tina
the Federal Reserve System ha,
been pursuing monetary policy
consistent with this restrictive
fiscal policy.
The Federal Reserve BoarC
last week recently ordered an,
other increase in the rediscoun
interest rate to member banks
The staff recognized that Their,
are some hazards in this re.
strictive policy and that it re.
quires continual alertness. Ther
the staff concluded:
1T is clear that the costs O.
a monetary policy sufficient,
restrictive to maintain stability
IN the face of a tax cut now
would be too great to risk. Wher
infiationary forces slacken, {
policy Of progressive credit cas-,
can be. and should be, initiated
with changes in fiscal policy re.
serve until more persistent de.