Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-01-13

gets all the breaks.
Even a sprinkling Of bad
luck would push Federal A.
nances into the red next fiscal
year or force a tax increase.
The budget for the year start
ing next July / is delicately
balanced on paper. at present
tax rates. It shows q half
billion-dollar surplus - the
margin between $73.9 billion Of
spending and $74.4 billion Of
receipts.
Two Assumptions
That slim surplus depends
on two "iffy" assumptions:
/. Business will be better this
year than last. despite the fact
that the economy now is in a
recession:
2. Congress will cut back
such vote-getting programs as
public works. although this is
an election year,
II the economy falters or
Congress balks, the Govern.
ment will spend more than 1t
earns. sinking deeper into debt.
That's what's happening this
year, contrary TO last January's
forecast of a surplus.
The President would have to
choose between a deficit and a
tax boost.
/ He maintained in today's
budget message that there are
strong grounds to support my
confidence that the expansion
of our economy will soon be
resumed, bringing higher levels
Of receipts with present tax
rates"
Raise Predicted
Specifically. the budget pre-
diets the Governments income
will rise by 81 billion next fiscal
year. led by a Sl.3 billion in
crease in individual income tax
payments. The forecast as
sumes personal income will
climb by 50 billion this calen-
dar year to 1882 billion. 1t also
counts on a substantial gain in
the gross national product.
Corporate profits and tax
payments would continue at
1857 levels. according to the
forecast presented to reporters
by Treasury Secretary Ander-
son.
The fiscal 1858 budget tipped
of balance because the defense
speedup and other factors
pushed spending almost 81 bill
lion above original estimates,
while the economic slump cut
revenues by sl.2 billion. The
predicted Sl.8 billion surplus
evaporated to a 1888 million
deficit.
Over-optimism Denied
Mr.. Anderson predicted "a
resurgence and a resumption Of
(economicl growth during the
year" Budget Director Percival
F. Brundage denied the sug-
gestion that the forecasts are
over-optimistic.
The President cited several
factors to back his forecast of
business improvement, includ-
ing increased spending by State
and local governments. tech
biological advance and demands
by a growing population for a
higher standard of living. These
forces, he implied. will perk up
economic activity by summer.
He also maintained that the
budget itself will boost the
economy. noting that increased
defense spending should pump
tliOllCg 4lllO lllOucllg.
/ Most economists expect busi-
ness to pull out of its slide some
time during the second half OF
this year They express consid-
cradle doubt on whether the
upturn will be great enough to
make 1858 a better year than
1857.
Mixed Impact Noted
The budget may have q
mixed impact on the economy.
It's bigger than this fiscal
years, and provides major IN
creaseS in spending for defense.
Such expansion normally would
encourage some revival of buSi-
ness and employment.
But the budget also trims
some civilian programs that
might spur recovery. Obviously,
the administration is not wor-
ried enough about a long or
deep recession to start printing
the pump. Instead. 1t is pro-
posing future cuts in many
flelds-ranging from housing to
farm price supports. If Con-
greSS approves. these reductions
would start saving Uncle Sam
money about two years from
now.
But key members Of Con-
greSS already have served
notice they will fight to ex-
pand some Of the programs the
President wants to cut.
Point Is Pressed
Pressed by reporters on what
he would do If Congress re-
fused to cut civilian spending
or II the economy failed to
climb. Mr.. Anderson declined
TO pin himself down
But he did indicate that the
administration would seriously
consider cutting taxes and
running a budget deficit in case
Of a severe depression. Such
action. he insisted. probably
will not he ,naracsarv