Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-02-27
Deficit Dilemma

become momentous words.
To some, deficits are bad and
even immoral. To others, def
icits are tools to manipulate
the economy. And still to
others. deficits are shrugged
away because they are looked
upon only e. something the
people owe to themselves.
Emotions rather than ra-
tionalizations are general at
titudes towards Government
deficits.
The Government operates
by obtaining revenues to
meet expenses. The expenses
may exceed or may be less
than the revenue received.
When the expenditures ex-
coed revenue q deficit Is en-
countered. The deficit can be
met by the Government ell
ther by borrowings or by
setting the printing presses
to make inflated paper cur
rency. A responsible govern
ment would. Of course, use
its credit to borrow the nee
essary funds. That Is the
simple essence Of q deficit.
The purpose for which .
deficit Is encountered should
be the criterion for its justifi-
cation. Deficits are in them
selves neither good nor bad.
They are merely Q financial
situation In which the Gov
eminent finds itself.
The Government IN the
course Of its operations serves
two ends: ID to govern and
provide for the general well
fare Of the living genera
tons; and "a to make pro-
visions for future genera
tons. To meet these two dis
tinct ends, the Government
expends funds. Deficits
should. therefore, be treated
with these ends in view.
When o deficit is encoun-
tered wherein the existing
generations are the primary
beneficiaries Of expenditures, =
the borrowings necessitated
should be repaid from reve-
nue. obtainable in the visible
future. But when deficits are
encountered from expendi-
lures that win accrue essen
tally to the benefits of fu-
ture generations. then the
future generations should
carry the burden for that
which has been passed to
them. Cases In point for the
first instance would be def
cts encountered by expendi-
lures for Government pay
rolls or expenditures for such
activities as agricultural
price supports. II people want
the services or supports pro-
vided by these excess expen-
ditures, the people should pay
for these out Of current rev.
enue or from revenue obtain
able over . rational period.
The present generations
should not pass on these bur-
dens TO future generations.
Cases In point where deficits
encountered by current ex-
penditures that viii accrue to
the benefits Of future genera
tons would be for lasting
unitarian projects as Boul-
der Dams or for carrying on
fundamental research in the
sciences and In medical tech
nology.
The responsibility OF those
who plan definite Govern
ment deficits to. stimulate
the economy should not rest
with the creation Of such
deficits. The purposeful def
cts should be tied into O
specific program to ulti-
mately repay these deficits
from future Government sur
plus even TO the extent of
incorporating o tax increase.
II necessary, after the econ
omy has been stimulated"
It Is recognized that O sep
aration Of expenditures as TO
which generations benefit
would not always be q sim
pie matter. However, the
principle should be estab-
lished TO identify expendi-
lures with the generations TO
be benefited. BY so doing
deficits encountered In Gov
eminent operations could
take on some justification,
especially where there Is q
tie-in Of programs for re-
payment Of debts due TO the
deficits.
At Tounkln-