The Forgotten Taxpayer

January 23, 1950

“This financial program,” insisted President Truman in presenting his annual budget, “provides a sound basis on which to proceed.” He thought his spending policy one of “prudence and restraint.” “It provides for essential activities,” he said, “on a minimum basis and no more.” He spoke of it as if it were an abstemious, almost a niggardly budget. He had denied “request after request for additional funds.” In fact, he declared at one point: “The major question in my mind is not whether we are doing too much [spending] but. . . too little.”

This budget that Mr. Truman considers to be so sound, prudent, restrained, a minimum and perhaps too little, happens to be in simple fact a continuation of the largest peacetime expenditure ever proposed by the head of this or any other government in the history of the world.

The requested 1951 expenditures of $42,440,000,000 would be greater than our total estimated national income in 1932. They would be more than five times the annual rate of spending in the peacetime years of the Roosevelt Administrations. They would be more than ten times the annual rate of spending in the Hoover Administration.

This colossal rate of spending, Mr. Truman argues, is necessary to meet the “demands which the foreign and domestic situations put upon” the people. It contributes “to the welfare of our people.” It “encourages prosperity.” It “maintains high employment.” It promotes an “expanding economy.”

The real truth is the exact opposite. Mr. Truman’s bouquet of fallacies stems from looking solely at what the expenditures do or appear to do for those to whom they are given. He forgets that a government cannot give anything to Paul without taking it from Peter. In brief, he completely forgets the American taxpayer.

Mr. Truman really does assume that we can eat our cake and have it too. He forgets that the government cannot fill a single “need” without making it impossible for the individual taxpayers to satisfy other needs. He declares that “many Federal expenditures constitute direct supports for important sectors of our economy.” But he forgets that the taxes taken to make these expenditures must constitute at least equal direct depressants on other important sectors of our economy. He sincerely believes that he can pass economic miracles by seizing more and more from the American taxpayer and handing it over to someone else.

Yet you do not help the people to meet their needs by taking away from them the earnings on which they depend to meet those needs. You do not maintain high employment by putting further tax burdens on the industries that provide employment. You do not encourage production by burdening the productive to subsidize the unproductive. You do not create an expanding economy by killing incentives and draining industry of the very capital by which productivity is increased and an economy expanded.

Even with the present unparalleled burden of peacetime taxes the government stands to raise only $37,300,000,000 in revenues. This means that it plans a deficit in the 1951 fiscal year of more than $5,000,000,000. This deficit alone would be greater than the entire expenditures of the Federal government in any year in the Hoover Administration. It would come on top of an estimated deficit of $5,500,000,000 in the current fiscal year, on top of eighteen deficits in the twenty preceding fiscal years, and on top of a national debt of about $259,000,000,000.

What is most ominous is that the President no longer seems to consider deficits anything to worry about. He expects the country to be satisfied with the vague assurance that we are “moving toward budgetary balance in the next few years.” Mr. Truman and his advisers seem to believe that they can keep a perpetual boom going by perpetual deficit financing and perpetual inflation. And that belief, as experience shows, has always ended in disillusion and disaster.