"Administration Program"

"Administration Program"

When Secretary of the Treasury Andrew W. Mellon suddenly proposed a cut of $323,000,000 in taxes, mainly income taxes (TIME, Nov. 19), he gained more applause than John Barrymore in Hamlet. It was a tremendous surprise to the professional politician. Mr. Mellon was supposed to be an amateur in national politics. But he was able to frame a taxation proposal that received almost unanimous support from the business men of the country. The politicians held their ears to the ground, and then, since the roar of applause was unmistakable, their hands began to clap.

The Politics. The disconcerting part of Mr. Mellon's proposal was that politicians had generally come to the conclusion that a soldier bonus was the most popular thing that could be offered the country in a "Presidential" year. Many of them had pledged themselves irretrievably to the bonus, and it was an open secret that several had done so disapproving the bonus but regarding it as a political necessity.

Then Mr. Mellon asked the country : " Which will you have--tax cut or bonus ? " " Tax cut! " shouted the business man. " Bonus! " shouted the American Legion in a voice that was large before but now seemed small by comparison. It behooved politicians to about face. The maneuver was delicate.

As a result there are now four classes of Republicans: 1) the few who were opposed to the bonus or uncommitted--they shouted: " Vive Mellon! "2) Those who were promised to the bonus but would like to change their allegiance--they exclaimed : " Lesser taxes, yes, but a bonus, too!" 3) Those progressives and radicals who were both sworn to the bonus and opposed to lowering the income taxes of the rich-- they cried: " A bas Mellon! Bonus! Bonus! Bonus! " 4) The tacticians who feared to oppose the third group (progressives and radicals) for fear they might attempt legislative sabotage.

The Democrats were for the most part non-committal--deeming it unwise to oppose the apparently popular Mellon proposal, considering it unprofitable to approve of anything Republican.

Of the four classes of Republicans it is noteworthy that only one, the progressive-radical group, is obstinately opposed to the Mellon plan. As the Mellon plan's popularity became evident, the cautious tacticians began to offer it more support. At the same time, Calvin Coolidge, feeling the public pulse at the White House, decided that the tax cut and no bonus was the best program for the Administration. Senator Henry Cabot Lodge, Republican floor leader of the Senate, lunched at the White House, and it was given out that the President was unalterably opposed to a bonus.

This announcement materially strengthened the chances of the Mellon plan. In spite of declarations to the contrary, Congressmen in general know pretty well that a tax cut and bonus are incompatible. Accordingly those legislators who are committed to the bonus can now vote for it with assurance that it will be blocked by a Presidential veto. In short, they can redeem their bonus promises by a vote, and get the credit for an actual tax reduction.

The Probable Outcome. Senators and Congressmen began at once to calculate the chances that the Administration's program--it has now changed from "Mr. Mellon's proposal" to the "Administration program"--has of success. The probable course of events is considered to be:

1) Passage of a bonus bill, since there is still a clear bonus majority in Congress.

2) Veto of the bonus bill.

3) Failure to repass the bill over the President's veto. This will probably take place in the Senate, where the bonus advocates claimed a bare two-thirds vote. Two Senators were reported to have abandoned the bonus cause, following the publication of the tax reduction plan.

4) Consideration of the Administration tax bill. There are clear indications that the " regular" Republicans will back the plan and make it the basis of their campaign in 1924. Representative William R. Green, Chairman of the Ways and Means Committee, and Senator Reed Smoot, Chairman of the Finance Committee, will nurse the bill in their committees. The great problem for the Administration will be on the floors of both Houses. In the Senate the Republicans hold 51 out of 96 seats. In the House the Republicans have 225 out of 435 seats. But seven Republican Senators are La Follette insurgents and about 30 Representatives are the same. So the regular Republicans have no working majority.

In brief, if the tax reduction bill is to pass, the support of conservative Democrats, about nine Senators and 23 Representatives must be won. Or the bill must be so modified as to suit the La Follette group. The latter course means that high surtaxes would have to remain on large incomes, and that perhaps an excess profits tax might be imposed.

The situation is not yet crystallized, however, and definite alignments cannot be predicted.