Worrying Through

There will be no increase in taxes if the next Congress imposes no increases upon the budget or other expenditure proposals which the administration will present. But for Congress to do this, the people must cooperate to effectively discourage and postpone consideration of the demands of sectional and group interests.

Such (with the customary split infinitive) was President Hoover's answer last week to the 47th deficit in U. S. fiscal history, estimated at $800,000,000 by June 30.* His statement was designed to reassure Business & Industry and to ease the prospective popular pressure on Congress at its next session for additional relief funds for this, that & the other. The President was going to rely upon short-term borrowings to keep the Government going until better times. This policy has the support of all regular Republicans who are well aware that any tax-upping next winter would do serious political damage to their 1932 presidential campaign. Even moderate Democrats last week were inclined to go along with the President on his "no-tax-increase" platform. The Treasury was left to worry through the fiscal fog the best it could.

Taxes. Last week were announced final March income tax receipts: $334,000,000 compared with last year's $559,000,000. What makes this tax decrease even more troublesome to the Treasury is the fact that the last two payments (Sept. 15 and Dec. 15) will fall within the next fiscal year, and thereby start rolling up another deficit for 1932 which may equal this year's.

Debt, Opposed by the President and Secretary Mellon was the Republican suggestion that payments into the sinking fund to amortize the Public Debt be temporarily suspended. This year's sinking fund payment is fixed by law at $440,998,200. But even its application will leave the Public Debt ($16,582,868,400) almost $400,000,000 larger than it was at the beginning of fiscal 1931. This increase in the debt represents approximately the amount of new money (as distinguished from refinancing loans) which the Treasury has had to borrow this year.

Congress v. Budget, President Hoover's statement which implied that Congress was in the habit of overstepping his budget figures stirred critical resentment at the Capitol. Good Hoover Republican though he is, Washington's Senator Jones. Appropriations Committee chairman, rushed into print with a statement defending Congress against the implicit charge of extravagance. He pointed out that it had reduced the President's own estimates of expenditures this year by $27,000,000, and last year by $23,000,000. Other Senators accused the President of being "unfamiliar with the facts" and trying to build up public sentiment against Congress, a charge often made during the sessions of the bickering 71st Congress.

The President's critics were right within the technicalities of the budget law, for during the last eight years Congress has shaved $413,000,000 off the economical estimates of the White House. Bur President Hoover, with a larger aspect of economy in mind, was really driving against initiation by Congress of new laws which create new expenses, against more farm relief, more veteran relief, more unemployment relief.

Bonus Loans. Most confusing of fiscal figures in the public mind was the part the new Bonus loan law was playing in the deficit. Last week the ex-Veterans Administration issued statistics which showed that the law has played no part so far. indicated that it was likely to continue playing no part. Each year since 1925 Congress has been putting approximately $112,000,000 into a reserve fund with which to pay the Bonus certificates. This year the fund totals $934,000,004, including a double appropriation made by the last Congress. This reserve, which has nothing to do with the Public Debt, is held by the Treasury in the form of Government securities. As the Veterans Administration has called for funds to loan to ex-soldiers, the Treasury has sold these securities for cash. The money has not come from the Government's regular till, nor is the Treasury borrowing any more than it already owes as represented by the Bonus reserve fund.

Last week Veterans Administrator Hines announced that 1,661,628 veterans had applied for $638,000,000 worth of loans during the first month of the law. They received approximately $375,000,000 in cash, of which $300,000,000 came through cashing in the reserve fund. The number of applicants declined from 985,000 the first week of the law to 90,337 in the fourth week, an average drop of 50% per week which indicated that total Bonus loans would not exceed $800,000,000. Administrator Hines, no friend of the bonus law. refused to be encouraged by the decrease in applications, clung stubbornly to his $1,000,000,000 estimate for the bonus loan total. However, not until Bonus loans exceed the $934,000,000 reserve fund, will this outlay become a part of the deficit.

Bonus Buying. One argument for the Bonus loan law was that the money borrowed by veterans would help stimulate a business recovery. So diffuse was the expenditure over the land that the Press has perceived little of the relief afforded needy veterans. Here and there, however, have been small suggestions of economic pickup. In Washington, veterans bought 250 automobiles with their loan cash, gave the trade one of its best March businesses. In Chicago private debts were being paid off more rapidly. Near the Soldiers & Sailors Home at Sandusky, Ohio, carousing increased.

*In 1791 the Treasury's first recorded fiscal year, a surplus of $149,886 was amassed. The next year, with the great Alexander Hamilton doing the best he could, the U. S. went into the Red with Deficit No. 1 amounting to $1,409,500. The record deficit of $14,297,760,000 occurred in 1919. This, of course, was the piling up of War charges under Secretary William Gibbs McAdoo.

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