Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-03-16

those same economists were De-
mid-April--are not as encourag-
ing as expected, then the admins
tration will put a tax cut plan,
now ready, before Congress.
Mr.. Eisenhower has good reason
to be cautious about cutting taxes,
since he bears the responsibility
for keeping the budget in balance.
A tax reduction sufficiently large
to halt the recession would also
be large enough-along with the
other adversities a balanced
budget faces = to put the 1869
budget perhaps as much as $40
billion in the red. Also. Mr.. Eisen-
hover equated a balanced budget
with fiscal integrity" in his cleo
ton campaigns.
The administration in recent
weeks has accepted the need for
a step-up in spending for mill
tary and civilian projects, and
1886 million of the latter which
were shelved by last years econ
omy drive have been reactivated.
Mr.. Eisenhower also wants an
amendment to the Highway Act
that will apportion $2.2 billion
more Of Federal funds to the
States. Democrats, however, can
claim credit for first suggesting
these actions.
But arguments for immediate
tax reductions persist. Some
Democrats-not the party's lead
ership in Congress, but enough
to establish a record for their
party-are betting that expanded
public works projects won't be
enough to halt the recession. They
claim further that this step takes
too long. They are supported by
the AFL-CIO, whose leaders
spent much of last week trying
to convince the administration to
change its position.
Democratic Senator Douglas,
the former economics professor
from Illinois, tried to get the
Senate to approve a proposal to
reduce the rate on the first $1,000
of individual taxable income and
repeal or reduce excise taxes. His
plan was defeated Thursday at
a night session of the Senate.
The vote was II to 14-12 of the
IA being Democrats.
But the dozen Democrats who
voted for the Douglas plan do
not necessarily represent the
whole body of Senate Democratic
opinion favoring a tax cut. Sem
ator Douglas tried to tack his
proposal in amendment form onto
a House bill dealing with insur-
ance company taxes.
Virginia's Senator Byrd. who
himself opposes a tax cut now, may
have expressed the opinion of
many Democrats who felt tax re-
duction is necessary now when
he argued that the Douglas pro-
posal seemed Every unwise."
I'VE should all recognize the
fact that tax measures must
originate in the House of Repre-
sentatives," the Virginian said. st
have a feeling that the Commit
tee on Ways and Means of the
House will resent the action
The theory behind the tax cut
cure is that it is a quick way to
put more money into the hands
of consumers, thereby setting off
a chain reaction of increased buy
ing, reduced inventories and re-
newed demand for the manu-
featured goods to be made by
workers now unemployed.
In the two most recent re-
cessions-in 1949 and 1954-tax
relief was given early. The 1949
reduction lover President Tru-
mans veto) was credited with in
creaSing the gross national prod
uct by $21 billion in six months.
In 1854 the high rates of the Ko-
rean War level were cut back at
the same time credit was loosened,
and the recovery was immediate.
In both cases. the Treasury's tax
revenues increased, despite the
lower rates, because of the i'm