Still in the Hole

While the Senate Finance Committee was sweating over the 1932 Revenue Act to up taxes and balance the Budget, the House of Representatives last week worked itself into a lather of revolt on legislation to cut government costs for the same purpose.

In the process of rewriting the House tax bill the Senate committee decided, among other things, to:

1) Increase the normal tax rate, now 4%, 3% and 5%, to 3%, 6% and 9%,

2) Up the corporation tax, now 12%, to 14%.

3) Omit all tariff schedules including those on coal, oil and copper.

4) Eliminate a 5% tax on candy.

5) Exempt dividends (as now) from the normal tax.

6) Tax all bank checks for $5 or more 2-c-

No Balance? To balance the Budget the tax bill will have to raise well over a billion dollars in new revenue. Last week Washington began to fear that the present measure, for all its pricks and thorns, would not accomplish that purpose. Frank Kent, able observer for the Baltimore Sim, reported a "realization, growing stronger every day, that the tax bill, as passed by the House, falls so far short of balancing the Budget that even an approximate balance can't be claimed. . . . The bill will not pull the Treasury more than halfway to the top of the hole--much less out of it."*

"Damndest Rule' To cut costs the House was presented last week with an omnibus bill into which a special committee had dumped a quarter-billion dollars worth of proposed chips and shavings from the government's lumber yard. Many of its items were approved by President Hoover as part of his "national economy program." As a non-partisan measure it was offered as a "rider" to the legislative appropriation bill.

Because economy in any form is a bitter draft to the average Congressman, he and a majority of his fellows were determined to make legislative hash out of this measure. A special rule ("the damndest rule we ever got," according to Chairman Pou of the Rules Committee) was introduced to limit debate and amendments and thus hold the rider intact. But the House swept the "gag rule" aside and in a state of revolt reminiscent of the Sales Tax fight, plunged headlong into the redrafting of the economy bill on the floor. There was no predominant leader of this latest insurrection against authority. Neither was there any leader strong enough to stop it. Different blocs kept coalescing to undo the work of the economy committee. In four confused, hysterical days the House rejected proposals for $125,000,000 in savings, accepted a scant $34.000,000.

Boost & Beneficiaries, Free to pick and claw as it chose, the House consented to a general 11 % cut in the Federal payroll but only after boosting the minimum wage exemption from $1,000 to $2,500.* Packed in the galleries were the embattled beneficiaries of this increased exemption, Government clerks who clapped and cheered with delight. President Hoover's alternative plan of enforced furloughs staggered through the year was summarily rejected by the House. All salaries of the Federal Reserve Board, the Interstate Commerce Commission, the Farm Board, the Reconstruction Finance Corp., Veterans' Administration and Tariff Commission were reduced to an arbitrary $10,000 maximum.

Nepotism, Nerves. The House next declined to suspend Saturday half-holidays for Government workers (savings lost: $9,000,000), to abolish the Army & Navy transport service (savings lost: $2,000,000), to withdraw Federal aid from State vocational training schools (savings lost: $8,500,000). When a political idealist named Mouser from Ohio proposed that Congressmen strike their idle relatives from the clerk hire payroll, he was howled down (8840-40) by a membership addicted to nepotism. So excited became the sessions that members loudly complained of "ragged nerves," begged for a recess.

A prime Democratic item in the economy bill was a consolidation of the Army & Navy into a Department of National Defense which was supposed to save at least $50,000,000 per year. By a vote of 153-to-135 the House rejected such a merger, much to the satisfaction of President Hoover and Secretaries Hurley and Adams. Other things the House did pleasing to the President were to provide for consolidation of public works activities and to authorize the White House to merge overlapping departmental agencies.

Feet to Fire. With the House politically set against all serious economy, its leaders feared that the tattered omnibus bill would, in the end, produce savings of only $50,000,000, far short of the amount required to balance the Budget even with a realistic tax bill. Greatly provoked was Speaker Garner at the Democratic runaway from the recommendations of his economy committee. He vowed that roll call votes would later be taken on all important changes "to put the members' feet to the fire in the matter of economy."

*When some of his estimates were called in question, worried Secretary Mills last week went to the Capitol, made reluctant admissions, revised downwards his tax anticipations for 1933.

*President Hoover will take a pay cut from $75,000 to $67,025. Cabinet salaries will drop from $15,000 to $13,625. Senators and Congressmen will have $825 deducted from their $10,000.

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