Our Irresponsible Budget

February 6, 1950

Whatever may be thought of the President’s tax message to Congress as a 1950 campaign document, there is only one possible judgment of it as a statement of fiscal policy. It is irresponsible.

In his budget message, for peacetime, for a year expected to record one of the three highest national incomes of our history, Mr. Truman planned a deficit of $5,100,000,000. He now joins the popular clamor for reducing excise taxes. He asks Congress to impose compensating taxes, most of which would be even more harmful than the taxes he asks it to reduce. In order to “reduce taxes which burden consumption” he proposes to increase taxes which burden production. But even if all his proposals were carried out, and if the resulting yields came up to his expectations, he would still be recommending a deficit of more than $4,000,000,000.

If there is any fiscal responsibility in Congress itself, its course is clear. It should return his proposed 1951 budget to Mr. Truman without approval, and request him to submit a responsible, balanced budget, with provision for a minimum debt reduction of $600,000,000.

If it agrees that it is desirable to cut excise taxes by, say, $700,000,000, and to allow not less than $600,000,000 for debt reduction, and if it agrees that other taxes are already at if not far beyond the highest levels that our economy can tolerate, Congress should become even more explicit. It should point out to the President that his present proposed expenditures of $42,440,000,000 for 1951 must be slashed by a minimum of $6,440,000,000 to make a responsible, balanced budget possible. The total expenditures under such a responsible budget, in other words, could not exceed $36,000,000,000.

A responsible Congress would further inform the President that he ought not to place upon it the impossible burden of trying to find where all the wastes, inefficiencies, and non-essential items in his budget are; and that if he wishes to avoid what he calls “foolish budget slashes” it is his job to make the cuts himself. Congress should tell the President, in other words, that he will have to learn to get along on a mere $36,000,000,000 in the next fiscal year, even if this is only four or five times the rate at which the Roosevelt Administration spent in peacetime and nine times the rate of spending under the Hoover Administration.

A responsible Congress would go on to demand executive responsibility. The proposals in the President’s tax message are extremely vague. Congress should insist that the Administration spell these out in detail; tell exactly what excise rates it wants on what; exactly what new corporate rates it wants; and exactly what new provisions for oil and mine depletion. Congress should ask the Administration, in brief, to draft and submit the complete text of its proposed tax-law changes. Congress is under no obligation to adopt these Administration proposals; but Congress and the country should insist on knowing precisely what they are. That is the only way to get executive responsibility.

Mr. Truman’s tax message is honeycombed with contradictions. He persists in declaring, for instance, that the deficit of more than $4,000,000,000 which he plans for the fiscal year 1951 “will be due largely to the shortsighted tax reduction enacted by the 80th Congress.” If Mr. Truman really believes what he says, his only consistent course is to recommend immediate restoration of the higher tax rates prevailing before the cut. He actually declares, on the contrary, that “nothing could be more foolhardy than to attempt to bring about a balanced budget in 1951” by “drastic increases in tax rates” or “drastic cuts in essential expenditures.” So he denounces the 80th Congress for bringing about a deficit that he insists upon maintaining.

The country is in grave financial peril unless the Administration can be brought to end this political double talk and recognize its responsibilities.