Evening star., 1961-01-20
Top Priority Tax Reform

I0p PIOfIty I0X KSTOTm
It is noteworthy that at the moment
Of transfer Of executive power in the
agreement between outgoing and in
coming administrations lies in the field
of domestic economics.
To the last, the Eisenhower admins
tration has declined to view the busi-
ness decline as recession, and has
referred instead to "a leveling out of
economic activity" Both In his final
news conference and in his final pres
entation to Congress, the annual
Economic Report. President Eisenhower
spoke confidently Of an imminent
business upturn and cited factors sup
porting his optimism. His final budget,
for fiscal 1862, provided no special anti
recession spending because, according
to Budget Director StanS, it was not
considered needed. In fact, Mr.. Eisen-
hover went considerably beyond this
explanation in his news conference by
taking strong position against great
expansion Of Federal spending on public
works OF related programs as an anti
recession remedy.
BY contrast, as long ago as the
Democratic convention and the presi-
Dental campaign, spokesmen Of that
party have complained Of the. current
rate Of economic growth, have described
the economy as sluggish, tired and In a
recession, and have at hand a variety
of recommendations for treatment
through greater Federal outlays.
In this connection, Mr.. Eisenhower's
views on anti-recession spending as
such draw some support from the
statistical record Of unemployment for
the past thirty years and efforts by the
Federal Government to flnd q cure to
the problem. Department Of Labor
records, for example, show that serious
unemployment Of the great depression
period Of the l930s began in that frst
year with 81 per cent of the labor force
out Of jobs. This percentage reached its
peak Of 24.9 per cent in 1888, the be-
ginning Of the New Deal era and its
vast anti-depression programs For the
rest Of the decade, however, the per-
centage was brought as low as 14.3 in
only one year (l937) and 1t was not until
1912, after our entry into World War II,
that 1t came down to AZ per cent.
During that war, In the following period
OF meeting q large pent-up demand for
consumer goods, and during the Korean
war unemployment was relatively low.
Since 1854, 1t has f1uctuated between
"a: and 6.8 per cent, the latter being
the jobless Level Of last month.
But If pump printing is not really
the answer, as the evidence Of the New
Deal period indicates particularly, what
is? It is time, We think, to give greater
attention to steps that might stimulate
the private sector OF the economy to
make greater capital investments in
plant and equipment. In free economy
with free labor force, 1t is obvious
that the bulk Of employment is found
in this sector. But the capital investment
that could increase Jobs must also have
the incentive Of reasonable .oppor-
tunity for profit. There Is wealth Of
qualified opinion that one of the most
urgent essentials at this time Is q re-
vision Of tax laws by which this incentive
could be provided, or restored. Mr..
Eisenhower recommended 1t last year
and again in his ANAL budget message.
Actually, Mr.. Kennedy himself in
his campaign Endorsed the principle of
a liberalization of tax depreciation
allowances to stimulate productive in
vestment. Whatever else he proposes
on behalf of the national economic
health, this is one step that should have
immediate and high priority.