Evening Star Newspaper, January 17, 1933, Page 13

¢ THE EVENING Text of Secretary Mills’ Address on Budget TREASURY HEAD STRESSES NEED OF BALANCING REVENUE AND EXPENDITURES IN FORUM TALK. full text of Secretary Mills’ address last night in the Na- tional Radio Forum, arranged| The Star and broadcast by, National Broadcasting Co., follows* I have been asked to speak to you | ghis evening on the subject of Federal finances, This sounds formidable. As 8 matter of fact, however, our fiscal problems can be simply stated and readily understood. Were it not for the political factors, even their solution would be comparatively simple. They become complicated only when dealt with in terms of accounting verbiage, or if we lose ourselves in a maze of unnecessary details. While the carry- ing out of determined policies does re- quire technical skill and detailed appli- cation, a few essential facts and a broad outline of our present financial situation are all that are necessary in order to enable us to grasp the char- ter of the problem that confronts us and to make the necessary decisions. Our total expenditures for this flscal year which ends June 30, next, will aggregate $3,771,000,000, exclusive of public debt retirements. These ex- ditures will be devoted to the fol- | lowing -purposes: Six hundred and Tinety-five million dollars are required for interest on the public debt, $134,- 000,000 represent excess of postal ex- penditures over receipts, $87,000,000 customs drawbacks and internal revenue refunds, $21,000,000 payments to the civil service retirement fund and $157,- 000,000 on trust fund account, such as the Government life insurance fund, trust funds for the benefit of Indian tribes, expenditures of the District of Columbia government, etc., or a total of $1,094,000,000 of unavoidable obliga- tions. We shall expend about $630,- 000,000 for national defense—an amount which, until greater progress is made in international disarmament, cannot be safely reduced; about $920,000,000 on | SECRETARY MILLS. —Star Staff Photo. our veterans (both exclusive of con- | STAR, WASHINGTON, D. C. TUESDAY, JANUARY 17, 1933. COLORED YOUTH HELD AS SUSPECTED BANDIT Lost Arm as Result of Defense Made by Grocer, Claims He Was Not One of Robbers. Accused of assaulting a grocerymsn with intent to rob, Willlam C. Hill, colored, 22, was remanded to the grand | fury on $2,000 bond followipg a hear- | Regardless of how the passengers feel, ing in Police Court. Felice D. Caprino, operator of a groc- ery in the 1200 block of Ninth street, testified Hill was one of a group of men who entered his store several weeks ago and attempted to hold him up. One of the men had a gun. In- H stead of submitting to the hold-up, Caprino said he drew a knife and chased them out of his place. Hill re- ceived a_severe cut on his left arm, which, when taken to the hospital, re- sulted in amputation of the limb. ‘The colored youth pleaded he was not involved in the hold-up, and merely happened to enter the place at the time the other men were there. Train Speeding Is Banned. SUNBURY, Pa, January 17 (P.— Commissioner Harvey E. Miller says| this speeding of railroad trains has got to stop. If it doesn't, he warned, the | crews will be arrested. Even freight | | trains are offenders. he said, adding {that one of the latter recently was | clocked passing & given point in 25 | | seconds. NAL PAPER RACK THEFTS - | COST 120-DAY TERM Judge Schuldt Sentences Colored Youth Said to Have Taken Cash. ¢ Accused of stealing money from newspaper honor system racks, Robert ‘Williams, colored, 18, of the 1300 block of U street, was sentenced to 120 days in jail by Judge Gus A. Schuldt in Po- lice Court yesterday. » Williams was arrested after Earl| Perkins, circulation man for a local | newspaper, said he saw him ogen sev- eral boxes and remove the contents. | The youth sald to have 54 cents in | S prenundion, Tori ¢ the time et e | GOES BACK TO OCCOQUAN., He pleaded for Jeminey, saying, his mother was a month and & Man" ng in her rent, and that he took the money Aochtia ot Qlirpidy YRR in an effort to stave off her eviction. Made at District Workhouse. Charged with carrying a deadly wea- o i pon, a large knife which he said was JACK PICKFORD BURIED made at Occoguan ¢uring a recent visit; Honorary Pallbearers Include Many ' William N. Robey, 49, wa$ sent bagk Filin Notables. to the workhouse for 360 days by Po~ liee Court Judge Gus A. Schuldt yes- GLENDALE, Calif,, January 17 (#)— | terday. N Funeral services were held here yester- | In addition, Robey was aécused of day for Jack Pickford, former screen | > mmert arbee Satngaoy ot e actor, who died recently in Paris, drunkenness and disorderly conduct, and Prance. | was given 40 additional days in jail. Honorary pallbearers included many| Questioned by Assistant United States film notables, all close friends of the| Attorney Milford Schwartz ad to whers actor, who was & brother of Mary and | he obtained the knife, Robey said: “It's Lottie Pickford. Occoquan kni! struction items) and about $600,000,000 on public works in completion of_the program already embarked on, making | a total for these purposes of $2,- 150,000,000. Bureaucracy Picture Misleading. ‘This leaves about $500,000,000 for the erdinary running expenses of the Gov- ernment, including the legislative and Judicial branches; fiscal administration and control of banking and currency, foreign relations, conservation, educa- tion, promotion 'of the public health, Indian affairs, aids to agriculture, labor, aviation and industry. In other words, | it we exclude the unavoidable obliga- tions, such as public debt expenditures, and exclude the Army, Navy and vet- | erans, the ordinary expenses of the Fed- | eral Government are npproxmmyi $500,000,000. I stress this point be- cause of the misleading picture that has been painted of an immense and | costly bureaucracy and of the vast sav- ings to be effected through a re-| organization’ of the Federal Govern- ment. Such reorganization is desirable | in the interest of greater efficiency and | greater economy, but substantial ‘relief | the taxpayer must be sought else- | ‘where. The President in his budget message has indicated how and where economies €an be effected. The 1934 budget, as supplemented, oontemplates expenditures, exclusive of public debt requirements, of $3,233,000,- 000 for the fiscal year 1934 after all de- | ductions proposed by the President, as | compared with $3,771,000,000 for the | present fiscal year, or a saving of $538,- | 000,000. This would be accomplished | in the main by curtailing expenditures for public works by about $260,000,000; | by amending veterans’ legislation to do | away with certain unjustifiable pay- | ments resulting in a reduction of $127,- | 000,000; by the application of the | strictest economy in the various de- partments and bureaus of the Govern. ment, and a further reduction in sala: rles of $57,000,000. Reduction Real Achievement. | Reducing the cost of Government by | over half a billion dollars, following the substantial savings already effected | this year, would constitute a real and | fruitful achievement. It is the first es-, sential step toward bringing the budget into balance and laying a foundation for ultimate relief to the taxpayer. 1 know of no reason why the country should not get the benefit of these re- ductions in expenditures. I am not talking of & vague and theoretical pro- gram. Every one of the economies that go to make up this saving of over | half a billion dollars is set out in detail | in the budget message. It requires but | the affirmative vote of the Congress to make these economies effective, and both parties are pledged to drastic economies and to a balanced budget. The time to make good these pledges is now. The need is obvious. The plan is there. There is no excuse for further delay. Bui this s only part of the story. Even if current expeditures are reduced to $3,233,000,000, the budget will not be in balance. The total receipts, exclu- sive of foreign debt payments which recent events have made a highly un- certain item, are estimated at $2.620,- 000,000, leaving & gap of $613,000,000 which will have to be bridged by in- creased taxation. Assuming that we shall collect something on foreign debt sccount, we need, roughly speaking, a half billion dollars of additional re- ceipts. The situation thus may be summa- rized by saying that, exclusive of public debt items, our Federal budget may be brought into balance in the next fiscal year by reducing expenditures half a billion dollars and by providing half ‘a billion dollars of new money. But this does not afford provision for sinking fund obligations, and it presupposes that no new obligations of any kind will be incurred. Message Details Savings. appears preferable to a great variety of | ize Improvements of this character. But discriminatory sales taxes, which are|there is this great difference between Just as much consumption taxes as a | business corporations and the (overn- manufacturers’ excise tax. It would be levied at a low rate and imposed on | such a broad base as not to be truly | burdensome to any class of taxpayers., It is not & novel form of taxation, but | one which has given satisfaction in| iCanada, where conditions are not fundamentally different from ours, and in Australia. theoretical rather than practical. It is the most promising source of new reve- nue that we can turn to at this time to assure the safeguarding of the pub- lc credit. But, as far as I am con- cerned, I would be glad to consider with an open mind any other forms of tax- ation that might be suggested to bring our budget into balance. ‘That the budget should be balanced is not open to dispute. No matter how good its credit, no government can afford to go on living beyond its means | year after year. It is demoralizing. Such a practice runs counter to the Tundamental principles that should govern the management of the public business, It is dangegpus for public servants to acquire the it of spend- ing more than is curfently available, for it is a habit easily acquired, and once acquired, not easily gotten rid of short of disaster. Reserve Is Exhausted. But June 30, next, we will have closed three successive fiscal years with very laj deficits. We will have more than exhausted the reserve which we set up in the days of plenty through the retirement of public debt from surplus funds. No one can claim that | we have been hasty in imposing new iaxes in a period of depression. In fact, during the course of the cam- | paign the Treasury was severely criti- cised for not resorting to additional taxes at the very beginning of the ce- I do not agree with that | omies and to make available the nec- essary revenues to put the Govern- ment's finances in order and the Gov- ernment credit- on an unassailable basis I believ that such a step would have a most wholesome effect on our national economy, and that the retirement of the Federal Government from the money market as a constant seeker for new funds would bave a stimulating effect on the capital market, to which we must look for the initial impulse toward recovery. ‘The example of the Federal Govern- ment cutting expenses and living with- The objections to it are | ment. Capital improvements by busi- ness corporations are productive in character and are intended to produce enough revenue to pay for the indebt- edness over a given period of years. Generally speaking, this is not true of capital improvements made by the Gov- ernment. With very few exceptions these new Government buildings repre- sent liabilitles rather than assets. They | require additional funds for repairs and upkeep. The claim that has been 8o frequently made that the savings in rental would -be enough to cover fixed | charges, running expenses, repairs and depreciation will not bear examination. Under the present building program, of | the buildings completed up to-January 1, last, replacing leased quarters, we are spending on running expenses alone $1,130,000, as compared with the rental for accommodations previously leased of $475,000. Cites Typical Example. Let me illustrate. In the town of X, let us say, we are paying $2,400 to rent the necessary accommodations for a | post office. The Government erects & | $100,000 building. Without figuring the cost of land and intérest on the in- vestment, the maintenance cost of that buiiding amounts, together with depreciation, to $6300 per annum. In other words, whatever the other charges may be in dollars and | cents, the new post office in this particular town costs the United States Government $3,900 more a year than the rented quarters did. To say that we should capitalize this new lia- bility and issue bonds against it because it is analogous to what a manufactur- ing corporation does when it erects a new building, or a railroad when it builds a new connecting link, which are expected to pay for themselves, is, to say the least, {llogical. Moreover, it should be pointed out that in budgeting for Federal construc- tion expenditures, we are dealing pri- {marily with relatively continuous op- erations and not with isolated and non- | recurring expenditures. This is more |than a question of mere accounting. | Inevitably it has an important bearing |upon the effective control of expendi- | tures, which clearly is one of the most | pressing issues in the fleld of public finance today. Ever since the war practically every State, every municipality, every county, | every' school district, and every other | political subdivision’ in the United in its income would set a standard for | States has listened to the alluring plea governmental units all over this coun- |that they were justified in capitalizing try struggling with the inevitable conse- | so-called permanent improvements, with quences of a decade of excessive bor- | @ result that with a few shining exam- Towing and extravagant expenditures. | From the standpoint of the Treasury, | a balanced budget should permit large saving In Interest charges, not only through the prevention of a further | increase in the public debt, but because | it would enable the refunding on favor- | able terms of bonds’ bearing a high | rate of interest, and which by October, | 1933, will be callable in an amount not |far from $7,000,000,000 A lower interest charge on such a large volume of Government securities would affect | long-time interest rates. Lower rates and increased bond-prices would stime- | late the capital market and create one | of the conditions essential to business | recovery. The goal is so definitely possible of attainment and the results | will be so beneficial in many directions | that one cannot help but be impatient at the difficulties and delays; and even | more impatient at the uncertainty. Sinking Fund Disregarded. May I add one more word. I have | been discussing a budget balanced in the sense that current revenues will be adequate to cover current expenditures. Even so, the budget would not be bal anced in the strict sense of the word, | since no provision would have been | lmnde for the $440,000,000 due the sink- {ing fund. This is unsatisfactory, but | must be tolerated under present condi- The savings, as I have said, are !etitlons. It would be intolerable, how- out in_detail in the budget message.|ever, if on top of our failure to meet When I appeared before the Ways and | Means Cgmmxttke on December 14 ‘when the so-called beer bill was under | consideration, I pointed out that the beer bill alone, yeilding. say, $1,25,000,- | 000, or even coupled with the gasoline | tax, yielding another $137,000.000, could | not be expected to produce the neces- | sary revenue—in fact. they would only | roduce about one-half—but that com- Elnr'd with a general manufacturers’ excise tax they would furnish a base of | taxation sufficiently broad to give ade- quate assurance of a balanced budget Without the manufacturers’ excise tax| it will be extremely difficult to balance the budget, sine the field of new taxes | has ben pretty wel exhausted by the revenue act of 1932. | It should not be forgotten that we| adopted income tax rates that run as high as 63 per cent, which is an ex- traordinarily high peacetime rate, andan inheritance tax law with rates running as high s 45 per cent; that we have imposed sales taxes on a great Variety | of articles, including lubricating oils, | brewers’ wort. automobiles, trucks, parts | and accessories, tires, gasoline, candy. chewing gum, soft drinks. jewelry, toilet preparations, furs, electricity, radios, mechanical refrigerators, sporting goods | and cameras, and that, in addition, new | and increased stamp taxes were im-| sec; taxes on admissions were ex- | nded: a tax on telephone, telegraph. | i cable and radio messages, checks, safety depasit boxes, transportation of oil by | pipe line and the use of boats were || adopted. Many of these taxes are diffi- | cult of administration and not particu- larly productive. Some are inequitable and unjustifiable in their present form. The adoption of a general manufac- turers’ excise tax at a ocomparatively Jow rate would permit the elimination of a number of them, Normal Sources Inadequate. ‘There was & time when I did not fa- vor & manufacturers’ excise tax. But at & time when our normal sources of revenue from excise and customs, sup- lemjented by income end inheritance &xs imposed at wartime rates on not more than two and & half million peo- e ut of & Nation of 120,000,000, are gutqune to supply the necessary Tevenue, the object! ordinerily ur; our ' sinking fund requirements we should resort to such a bookkeeping de- vice as withdrawing certain items of expenditure from the ordinary budget and setting them up in the form of a special budget to be covered by bor- rowings. Such program has been dis- cussed. It has been suggested that pub- lic building expenditures, for instance, should be paid for not frem current revenue, but by borrowing, on the theory that they constitute more or less permanent_improvements that can be amortized over a period of years. It is said that business corporations capital- | ples of wise financial management such |as are aTorded by the States of Mas- | sachusetts and Connecticut, for in- stance, our States and municipalities | have piled up a mountain of additional | debt in the course of the iast 12 years | amounting to nearly 10 billion dollars,’| under which the unfortunate ,taxpayer is struggling today, and which in mary | cases has brought the communities te the verge of bankruptcy. In the face of that record the Federal Government is now being urged to abandon the pol- icy which it has follogyed ever since the birth of our Government,.and instead of doing what we have always done in the past—reduce in peace-time the debt piled up by the wars in which we have been compelled to engage—to adopt the practice of superimposing an unjusti- fiable peace-time debt on an enormous war debt; to remove all of the safe- guards against extravagance which the ‘pay-as-you-go” policy affords, and to avoid our plain duty and the dictates of common sense by resorting to a ricky accounting decise, the ruinous onsequences of which are visible throughout the United States today. BACKS MRS. ROSS Susan B. Anthony Group Urges Former Governor for Cabinet Post. Mrs. Nellie Tayloe Ross, former Gov- ernor of Wyoming, has been recom- mended for a place in President-elect Roosevelt’s cabinet by the Susan B. Anthony Associations. In a letter directed to the President- elect yesterday, Mrs. Virginia Peters- Parkhurst of Berywn, Md., president of the associations, said “we women, rep- resenting as we do. half of the electo- rate, feel strongly the urge for a wom- an in the cabinet. I have followed the career of former Gov. Ross very closely and feel that she is ably qualified to hold such a position.” ADVERTISENENTS B o f RECEIVED HERE O’Donnell’s Drug Store— 3rd & Pa. Ave. S.E. Is An Authorized Star Branch Office HESE Branch Offices have been located in practically every neighborhood in and around Washington to facilitate the prompt insertion of Classified Advertisements in The Star. Just leave copy where you see the above sign displayed and it will be promptly forwarded to the Main Office for insertion in the first available issue. There are no fees in connection with Branch Of- fice service; only regular rates arg charged. 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