THE PRESIDENCY: Budget Backtalk

On the February morning when President Roosevelt summoned his Congressional leaders to the White House and sprang on them the Supreme Court stunner which he was sending to Congress within the hour, they received it with the customary meekness of a well-behaved general staff listening to its chief, were promptly hustled out to make way for a press conference. Late one afternoon last week the President again called in virtually the same group, this time to tell them about the special Budget message he was sending up the Hill next day. White House attaches expected the meeting to last not more than 45 minutes. It lasted two hours, and the Congressmen emerged glowing. It had been, they declared, the “best,” the “frankest,” the “most helpful,” the “most important” conference they had ever had with the President, and they were bursting with the reason: this time they had talked back to Franklin Roosevelt, had spoken their minds with heat and firmness against the prospect of unpopular new taxes, for real economy (see p. 16). It was not yet mutiny, but it was the strongest evidence to date of the growing restlessness which close observers have discerned in the New Deal officers’ mess for weeks (TIME. April 19), indicating that the long subservience of, Legislative to Executive which began with the “Hundred Days” of 1933 was drawing to an end.

What a reassertive Congress might do to the President’s Budget estimates remained to be seen. Equally problematical remained Franklin Roosevelt’s real purposes, despite the good intentions toward economy he expressed. Cornerstone of New Deal fiscal policy has been the doctrine of spending expounded to the President in 1934 by British Economist John Maynard Keynes: When times are hard the Government should cushion depression and prime the pump of recovery by spending more than it collects in taxes; when times are good it should put a brake on inflation by collecting more than it spends. Now inflation is under way and the President, though talking economy, is still waiting for revenue to catch up to spending. On the evidence that expected 1938 revenues of $6,906,000,000 (an alltime high, 60% above pre-Depression normal) were yet expected to leave the Government with its eighth successive annual deficit, it appeared that Franklin Roosevelt had abandoned the Keynes theory by forgetting its second half.

Some observers, however, believed that the President genuinely meant to econo mize, was attempting it by a piece of characteristic Rooseveltian strategy. If he had cut his Relief figure below $1,500,000,000, Congressional spenders would have gobbled up the difference for pet projects not under direct White House control. Therefore, instead of making a forthright effort to balance the Budget by reduced appropriation or increased taxes, the President was deliberately setting up a deficit in order to scare Congressmen out of further spending. When Congress had adjourned he could set about economy by spending less than he was authorized to do. In short, a present paper deficit might make possible a future balance in fact.

¶. In the engrossed copy of the Guffey-Vinson Coal Control Bill sent to the President for signing, it was discovered last week that a nodding clerk had substituted an “are” for an “or.” Concluding that the phrase still made sense, the Bill’s Congressional handlers advised the President against sending it back to Congress for correction, urged him to sign it as was. This week he did, and nominated a seven-man National Coal Commission to administer it.