Birthday Party

One afternoon last week while citizens throughout the land were preparing to spend the evening dancing for Franklin Roosevelt and other poliomyelitis sufferers, the President in his office held another kind of money-raising birthday party. The guests were Secretary of the Treasury Morgenthau, Attorney General Cummings, Secretary of Agriculture Wallace and Budget Director Bell.

Assuming that all the 75,000,000 adult inhabitants of the U. S. could be induced to buy admission to a birthday ball, tickets would have to be priced at $10 a head to raise the $550,000,000 required to pay for the New Deal's AAA substitute and the $200,000,000 in processing taxes ordered refunded by the Supreme Court. To raise the $2,250,000,000 required to pay the Bonus, there would have to be another birthday ball with tickets at $30 a head. The gentlemen in the President's office had, however, come to talk not of balls but of taxes. Although it was less than a month since the President told Congress that no new taxes would be needed this year, he had two reasons for changing his mind: 1) the Bonus had been passed over his veto; 2) the Supreme Court had found AAA's processing taxes unconstitutional. One boosted the Treasury's outgo; the other cut the Treasury's income. The result of the President's office birthday party reached the Press in driblets from three sources. Attorney General Cummings said a new tax bill would be ready within a few days. Secretary Morgenthau said the Treasury was ready, whenever asked, to recommend new taxes to the House Ways & Means Committee. President Roosevelt in press conference explained that there would be a new tax bill but not new taxes--only substitute taxes--to pay for substitute AAA, that the question of taxes to pay the Bonus was still under study. Not a little disgusted was Chairman Doughton of the Ways & Means Committee, where all tax bills are supposed to be born. Said this aged North Carolina Democrat: "It seems strange the President does not tell us before he tells the Press. . . . It would be better to postpone a tax bill to next year if they can wait that long. . . . We can do better when our minds are not occupied with something else." No move did he make to call Secretary Morgenthau for suggestions. Best reason for the President's not taking Congress into his confidence was that everybody was occupied with "something else": Nov. 3, 1936. Unless new taxes are imposed, fiscal 1937 is likely to show a deficit of upwards of $5,000,000.000, largest in any year of Depression or Recovery --a very poor election argument for the New Deal. Since processing taxes re-enacted under the name of excises can be called substitutes rather than new taxes, they will not prevent the President from keeping his promise of "no new taxes." The same might be said of "retro-active exactions," of dubious constitutionality, which New Dealers hoped to impose to recover $200,000,000 of processing taxes from those to whom they were refunded by Supreme Court order. Taxes to pay for the Bonus were another matter. Whatever amount of taxes the President might ask to meet the Bonus cost over a period of years, the request would invite a fight with the inflation bloc which demands the issuance of new money rather than the imposition of new taxes.

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