• U.S.

FISCAL: Romance v. Realism

8 minute read

No best-seller is the U. S. Government Budget. Popular belief is that the Budget is not only physically (4 lbs., 10 oz.) but literarily the heaviest reading of the year.

President Roosevelt, who likes to make things interesting, has struggled hard to overcome this budgetary dullness, has consistently authored Budgets much livelier—for a variety of reasons—than those of his predecessors. With figures big and small, a Jack-be-nimble, Jack-be-quick is Franklin Roosevelt. He has a winning way of distilling complexities into simplicities. Critics have sometimes asserted that he oversimplifies.

Last week he sent to Congress his seventh annual work. To many Congressmen, it was at once Author Roosevelt’s most skillful and most irritating effort yet. In their eyes, the 1940-41 Budget was not merely too simple, it was too beautiful. It had everything, with the possible exception of a picture of Marlene Dietrich’s legs on the cover. Not only was it longer than Gone With the Wind, (1,079 pp. to 1,037 pp.), but it seemed to them even more romantic.

And most irritating to Capitol Hill critics was its Lady-or-the-Tiger ending. For, while Author Roosevelt told his exciting story well and smoothly, he left the solution of the plot to Congress—and every one of the three possible solutions is politically inexpedient.

Plot. Author Roosevelt submitted for the fiscal year 1941 (July 1, 1940 to June 30, 1941) a budget based on If’s. For the 1939-40 fiscal year, he estimated expenditures at $9,099,000,000.† For the 1940-41 fiscal year he estimated total expenditures at $8,424,000,000. Decrease: $675,000,000.

In revenues, he expected for 1939-40 $5,166,000,000; for 1940-41, $5,548,000,000. Increase: $382,000,000. (The 1940-41 fiscal year revenues do not include a Federal take of $603,000,000 in Social Security receipts, which are now bound directly into the Treasury’s old-age reserve account.)

At this point the President had a $2,876,000,000 deficit for the 1941 fiscalyear (1940 fiscal year deficit: $3,933,000,000).

He decided that $700,000,000 could be recovered from the capital structures of the Federal lending agencies without injuring their efficiency. Deducting this windfall, he lowered the deficit to $2,176,000,000.

Romance. A whopping chunk of the total proposed 1941 expenditures—$1,834,000,000 of the $8,424,000,000—is for Author Roosevelt’s national defense program. To meet the $460,000,000 wanted for extra defense expenditures, he proposed to this election-year Congress, without batting an eye, that they pass a tax bill.

To Congressional realists this modest proposal was, putting it kindly, sheer romance. They heard but they did not harken to the President’s argument: that an emergency pay-as-you-go defense tax would further slash his deficit to $1,716,000,000.

Busily they scanned the If’s in the President’s message. No. 1 If was the fact that no forecast of business conditions 18 months ahead—let alone of Treasury revenues therefrom—is worth printing on slick paper. No. 2 If was that the Author had neglected to write in any lump sum for parity payments to the farmer, and this year every legislator, to a man, is the farmer’s friend.

Parity payments, which are outright subsidies to farmers, have cost $550,000,000 in the last two years. Congress has passed no tax legislation to provide these revenues, despite Mr. Roosevelt’s mild protests. Washington wiseacres confidently expect 1940’s farmers to reap an other fat crop of Government lettuce —about $225,000,000, in fact.

No. 3 If was relief. The President, in asking $1,300,000,000 for relief in the next fiscal year, counted on WPA relief rolls averaging 1,350,000. That this expectation, too, is romantic, the President acknowledged by saying he might have to come back to Congress with supplementary estimates.

Realism. Studying these If’s, and many another, the Congress passed on to the President’s Frank Stockton ending. After ten years of deficit spending, the U. S. public debt, now hard on $42,000,000,000, is rapidlybounding along toward the statutory debt limit of $45,000,000,000, conceivablycould pass that limit in fiscal 1941.

In any other year the Congress could just r’ar back and pass a miracle, postpone thinking of taxes to make the miracle come true. But Secretary of the Treasury Henry (“Henny-Penny”) Morgenthau Jr. has vowed he won’t sign checks for one cent past the legal limit (TIME, Nov. 20). Therefore the Congress must: 1) raise taxes; 2) raise the debt limit; 3) cut expenditures still further. The first would mean lost votes; the second would give the Republicans a delicious issue, on a golden platter; the third would cause screams from every quarter.

The Critics. As a political weapon, the public debt was already neatly fitting around Republican fists like a set of brass knuckles. With the debt now $17,000,000,000 more than it was at the close of World War I, Republican bravos began to polish up their pacifiers. Phelps Adams, correspondent for the Tory New York Sun, wrote an account of the situation which was neatly headlined: “One Roosevelt Has Outspent 27 Presidents”:

“Eight peacetime years of President Roosevelt and the New Deal have cost the Federal Treasury more than twice as much money as it has spent on all the wars in which the U. S. has participated put together.” Lumping together all the New Deal spending, humanitarian and otherwise, Mr. Adams labeled it “prodigality,” noted that by 1876 18 U. S. Presidents had spent, all told, only $9,000,000,000—which is less than Mr. Roosevelt is spending this fiscal year (1940).*

Anticipating such talk, Author Roosevelt noted: 1) in the four years 1933-37 the national income rose 69%, from $42 billions to $72 billions; 2) that, while the U. S. people paid $3 billions more in taxes in 1937 than in 1933, “they had nearly ten times more than that, or 30 billion dollars to spend on other things.” He added: “This statement deserves a headline.”†

Severest Critic. First G. O. P. bravo in the field was Ohio’s toothy, dogged Senator Robert Alphonso Taft, now plodding to the fore as the U. S. public’s favorite newsreel actor, with even more box-office appeal than the annual sweepstakes winners.* Ponderous Mr. Taft, who wins friends and influences voters by his clarity of perception and his reassuring lack of charm, presented his own U. S. Budget last week. Mr. Roosevelt had sarcastically challenged a certain Republican Senator from Ohio who was also a Presidential candidate to specify how the Budget could be balanced, had offered him a “handsome prize.”

Senator Taft stuck close to previous Rooseveltian Budget-balancing messages, took his line from the 1938 message, where the President said that the Budget should and could be balanced at $7,000,000,000. To keep it there, Mr. Taft would cut relief from $1,300,000,000 to $750,000,000, would cut all the business-regulating agencies to the barest minimum, slash the farm program, halt all grants for local public works, cut subsidies to housing and industry, critically examine and if possible reduce the national defense program.

Editors. Many a Congressman thought the last suggestion made sense. Senator Pat Harrison, the Mississippi fox, had already proposed a joint Congressional Budgetary Committee to study and revise the estimates, working in conjunction generally with the Treasury on defense with military and naval committeemen of both Houses.

Housemen, jealous of their Constitutional prerogative,* were cool to this Senatorial idea, stubbornly went ahead, preparing to shoot four supply bills, preparing to take up the tax question in their own sweet time. That time began to seem a long way off—or at least until North Carolina’s Chairman Robert L. (“Old Muley”) Doughton of the Ways and Means Committee has taken a slow look at the March 15 income tax receipts.

Messrs. Doughton and Harrison, who must edit the President’s manuscript, were not heard to gurgle enthusiastically over their job. But at week’s end, after having been cajoled and petted by Mr. Roosevelt all week, they were ready to give it at least a second reading. The U. S. voters grimly awaited the final edition. They were determined that the book, in final form, must have a happy ending.

†Exclusive of $100,000,000 required by law to bespent on public debt retirement.

*In Lincoln’s Day, the headline could have read “One Lincoln Has Outspent 15 U. S. Presidents.” Lincoln found the debt $90,582,000, left it after the Civil War $2,677,929,000—almost 30 times as great. Only President who ever succeeded in expunging the debt: Andrew Jackson, who got the U. S. out of the red in 1835 and 1836.

†At week’s end no U. S. newspaper had given that statement a headline.

* The newsreels, which make most politicos, willy-nilly, into comedians, last week showed solemn Mr. Taft solemnly tearing up the Budget, then suddenly baring an artificial smile, evidently in response to a command.

*Tax bills must originate in the House—under the Founding Fathers’ theory that two-year men are closer to the people than Senators.

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