OCR Text |
Show i 1 1 YOUR TAXES by Uarlet L. Lltz Professor of Public Finance Princeton University Operation Budget Balance After Andrew Jackson paid off the national debt and the country started from scratch, it took a whole century including one world war to work up a per capita debt of much over $250. Now only ten years later we are face to face with almost $2000 apiece in federal debt. That took the inception of a "give and yet give" government policy and the completion of another world war. The latter has come to a halt, but there are still two schools of thought on the former. One of these is represented by those who are paving, the way for the welfare state by sponsoring bigger and better bills for subsidies, grants-in-aid and various forms of greater government benefits. The other comprises a nucleus of pioneers in the current fiscal forest who advocate clearing a path toward debt reduction and national solvency. To this end the axe must first fall on deficit spending. The ' budget must be balanced, and kept balanced. This requires flexible management of expenditures and revenues under varying economic , conditions. The coat must be cut to fit the cloth. Federal expenditures must be held within the ability and willingness of the economy to pay as it goes. The level at which expenditures can be financed will naturally alter with the diversity of business conditions, but the best way to insure against missing the mark is to set the sights on the more difficult target, that is according to the needs and revenue resources of hard rather than easy times. - Adjustment of the expenditures side of the ledger in depression years would, of course, require a shift of emphasis in spending in order to carry the relief load. But maintaining a balanced budget in a depression is not the equivalent of saying "abandon hope, all ye who enter here." It does not mean leaving the unemployed to their fate. It means only that as relief needs rise, less essential services should be curtailed or eliminated. It is not necessary to have "government "gov-ernment as usual," with relief as an added load to be financed by deficits. On the revenue side of the ledger there is an equivalent need for flexibility. The integrity of the budget will require diversity of revenues. A narrow tax base will not support even the necessary minimum of expenditures under all economic conditions. There must be a readiness to shift the emphasis from net income taxes to excise and sales taxes when revenue requirements and the economic situation situa-tion indicate. An adaptable tax system and prudence in current spending will permit rapid progress in debt reduction during fat years and will assure as-sure a budget level that can more readily be held to in lean years. Estimates for the normal postwar budget run from $12 to over $35 billion, but it is quite possible to perform the essential federal functions func-tions for $15 billion and any amount spent over $20 billion would involve padding rivalled only by the new design for hip-lines. |