A Ceiling on Spending

January 21, 1952

The most promising approach in a long time to the Federal budget problem is the resolution introduced by Rep. Frederic R. Coudert, Jr., Republican of New York, to limit total expenditures in the coming fiscal year to revenues from present taxes.

If this resolution were passed and adhered to, it would end deficit spending and the inflation that flows from it. It would put a maximum ceiling on overall expenditure for the 1953 fiscal year of, say, the $70,000,000,000 now estimated as the probable tax receipts under existing tax laws; and if the President asked for a total of $85,000,000,000, Congress would send his budget back and require him to submit a new one with $15,000,000,000 slashed from it.

This should not be treated as a partisan proposal. It has already had the endorsement of Lewis W. Douglas, onetime Director of the Budget under Franklin D. Roosevelt and our former Ambassador to Great Britain. It is an essential first step if Congress is to reclaim the reality of its power of the purse under the Constitution.

But passage of the Coudert resolution, or one essentially like it, would be a first step only. To make it most effective it would need to be supplemented along the lines indicated in this column (Newsweek, Dec. 24, 1951). Not only should Congress limit the President each year to a total overall maximum expenditure, but it should continue, as in the past, to require him to get separate authorization for each special purpose. And the President should not be allowed to spend the whole of these separate authorizations if their total exceeded the overall maximum Congress had previously fixed. He would have to make his own specific cuts (but be permitted no specific increases) to bring the sum of the special authorizations within the authorized overall total. In other words, he could spend only whichever sum was lower.

This double limit would permit Congress to say in effect: “If we are to avert further inflation our government, like everyone else, must live within its income, X billions of dollars is the largest tax burden that can safely be laid on the American economy at this time without destroying incentives and disrupting production. Our government must keep its total expenditures within that sum. We in Congress are seldom in a position to know precisely what specific sum is necessary for each specific purpose or what precise amount can safely be cut from each specific request. We are therefore often compelled to give the President the benefit of the doubt on specific authorizations. But we do know that the American economy cannot stand more than the overall ceiling we have fixed. It is up to the President to make his own detailed cuts; but he must cut his suits to fit his available cloth.”

Congress could not use this plan to evade its own clear budget responsibilities. If it first fixed an overall expenditure ceiling of, say, $70,000,000,000, and then went on to authorize a series of special appropriations totaling $80,000,000,000, including pet projects of its own not asked for by the President, it could not reasonably complain if the revised budget presented by the President cut out all the projects or increases added by Congress or (what might be even more serious) included all the authorized pork-barrel or inessential expenditures but applied the whole required cut to some essential activity with the straight-faced argument that the overall total permitted by Congress did not allow enough funds for it.

The double-limit plan, in short, though it would put more specific responsibility on the President, would fail if Congress tried to use it to evade its own legitimate responsibilities.

But what is immediately essential, regardless of the procedure used, is that total expenditures for the new fiscal year be kept at least within the revenues that would be raised by existing taxes. The only alternative is a further wave of inflation whose fateful consequences cannot be foretold. By every calculation of possible yields from still higher income-tax rates, by every test of a tolerable burden, the tax ceiling has already been reached.