Balance It Now

September 26, 1955

The budget has become a political football. The leaders of both parties, with a few honorable exceptions, are competing with each other in demagogy rather than responsibility.

On Aug. 25 George M. Humphrey, Secretary of the Treasury, announced that the deficit for the current fiscal year (ending next June 30), which was estimated in January at $2.4 billion, is now estimated at only $1.7 billion. He went farther. “Barring some unforeseen development we think that we should, and that we can, balance the budget this year.”

This made cheerful headlines. But a closer look was less reassuring. The reason for the reduction in the estimated deficit lay wholly in an increased estimate of Federal receipts since January, owing to the present boom. Treasury receipts are estimated at $2.1 billion more than in January. But expenditures also are now estimated at $1.4 billion more than in January.

It is disturbing to notice the items on which spending estimates are now increased. The largest increase is $1.1 billion for farm-price support. Another increase is $272 million for foreign economic aid. Here are two items on which drastic spending cuts, rather than increases, would be more justified. Even more disturbing are comparisons of proposed expenditures for nondefense items as a whole. In the current fiscal year the Treasury will pay out $25.1 billion for nondefense items, compared with $22 billion forecast seven months ago, and with only $21.3 billion actually spent in the year ended June 30, 1954. This year’s budget would already be indicating a substantial surplus instead of a deficit, in brief, had nondefense spending been held to the fiscal 1954 level.

The Democratic majority has not come forward with any specific suggestion as to where the President might cut nondefense spending. Adlai Stevenson, in fact, indicates that he doesn’t think enough of the taxpayers’ money is being thrown away in piling up farm surpluses. But when it was given out on Sept. 6 that the Defense Department was aiming at an expenditure of only $33 billion for the current fiscal year instead of the $34 billion in its estimate two weeks earlier, one Democratic senator immediately shouted that this was “putting dollars ahead of defense,” and another was sure it would mean “a sacrifice of national security.” Obviously neither had any means of knowing whether his charge was true. To say that a budget made up of hundreds of thousands of heterogeneous items is “safe” at $34 billion and “dangerous” at $33 billion is to talk obvious claptrap.

Harry S. Truman (the man who advocated a $9.9 billion deficit for the fiscal year 1954) rose to new heights of comic inconsistency. He declared that this is no time to reduce taxes because Mr. Eisenhower must balance the budget! A few days later he called the proposed military expenditure cut a “politically inspired plan to balance the budget!”

Secretary Humphrey rightly declared: “If there ever is a time when our budget should be balanced, it is now.” But he added that once a balanced budget was achieved, “still further progress would justify lower tax rates.” Immediately, Democratic Senator George and Republican Senator Millikin said they would favor tax reductions next year even if government spending and income were not completely balanced.

Amid this bipartisan competition in demagogy one or two voices have been courageously raised on both the Republican and Democratic sides in favor of economic sense. Congressman Daniel A. Reed, chief Republican spokesman on taxes in the House, has branded talk of substantial tax relief next year as “premature.” Clear, firm, and emphatic, as usual, has been Sen. Harry F. Byrd: “It would be foolhardy to balance the budget and then unbalance it by a premature reduction in taxes. I strongly favor tax reduction made possible by retrenchment in spending.”

But if we judge by the level of political humbug to which both parties have now descended, these isolated voices of sense and courage do not seem likely to prevail.