Sunday, August 25, 2013

How to Reduce the Budget

The most important thing about the budget for 1948 is its overall dimensions. It calls for expenditures, in the second full year of peace, of $37,500,000,000. This is more than was spent in four whole years just before the war or in twelve whole years around the ’20s. It permits no reduction whatever in the present wartime level of tax rates. And it provides a balanced budget only on the most optimistic assumptions.

A regular technique has now been established for disposing of those who express concern about a peacetime budget of these dimensions. It is to ask tauntingly: “Where would you cut?”—as if no answer could be given except something like “I’d refuse to pay the interest on the national debt,” or “I’d cut out national defense.” Sensible budget economies, of course, can never be made by offhand amateur efforts to throw out arbitrarily whole categories of expenditures. But it is absurd to conclude that substantial budget economies therefore cannot be made at all.

What is mainly wrong with the rhetorical “Where would you cut?” is its implicit assumption that the burden of proof is on those who wish to cut. The burden of proof, on the contrary, must be on those who wish to make the expenditures. Any dollar of expenditure that they cannot affirmatively justify ought not to be made. It is the duty of Congress, acting on behalf of the American people who are asked to pay the bill, to  scrutinize every dollar of these proposed expenditures with the utmost care.
The duty of scrutinizing requests for funds falls upon the Congressional appropriations committees. They need to do a far less perfunctory job than they have done in the last sixteen years. They need expert investigators. They need examiners who know what questions to ask and what evidence to require. Such a procedure would squeeze down present estimates, with few exceptions, all along the line.

The biggest items, of course, would profitably repay the closest scrutiny. Perhaps we do need to spend more than $11,000,000,000 for national defense in 1948. But the question is not closed by mere rhetorical insistence that “We cannot imperil our national defense.” This sum for one peacetime year is more than we spent on defense in the whole fourteen years from 1926 through 1939, in the latter half of which the Nazi and Japanese aggressions were yearly mounting.

It may be replied that we were starving our armed forces at that time. Yet it is still appropriate for Congress to ask first, whether we now need to spend more than $11,000,000,000 a year on defense, and second whether, if so, the armed forces are proposing to spend all the money in so effective a way that we shall actually be getting $11,000,000,000 worth of defense.

The same type of scrutiny might be made regarding expenditures for veterans’ benefits. For 1948 these are set down at $7,343,000,000. This is the estimate of the President a year ago for veterans’ benefits even in the current fiscal year. It exceeds our entire Federal expenditures for all purposes whatsoever in the fiscal year 1938. It will bear examination. If the President’s estimates for national defense and veterans’ benefits, as well as other major items in our national expenditure, are to be considered sacred and untouchable, we shall never get economy.

A final fact must be borne in mind when the budget is discussed. There are few Federal expenditures for which some plausible defense cannot be found. People tell us that we “must” keep this or that item in the budget because it does this or that good. What is forgotten is that every dollar of budget expenditure means the removal of a dollar from somewhere else by taxes. It is money that the taxpayers could and would otherwise use to buy things that they need themselves. Where the taxpayers are corporations, it is money that would probably be used for expanding plant, increasing production, providing employment and higher wages out of increased productivity.

The unparalleled burden of taxation on this country today discourages and retards increased production and industry growth at a thousand points. It is hurting our strength for either war or peace. This above all is what should be constantly kept in mind.

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