A Pretty Penny

The Atlanta Journal's Washington correspondent, Ralph Smith, is a quiet, iron-grey, genial Southern gentleman who manages to cover the news without ever seeming to hurry. Newsman Smith, uniformly good-humored (unless someone clapper-claws his idol, Georgia's Senator Walter George), is not given to hysteria. But last week House clerks told him that the Seventy-Seventh Congress, in its first 100 days, had voted appropriations totaling $16,091,543,000. For his readers' benefit, he spelled it out: "sixteen billion, ninety-one million, five hundred and forty-three thousand dollars." Newshawk Smith then went off in a small spray of words like "staggering . . . stupendous . . . unrivaled since the dawn of creation." Carefully he added: "I am in some doubt whether the half has been told."

Two days later Treasury Secretary Henry Morgenthau told the U.S. the other half. Mr. Morgenthau corralled the Congressional leaders, laid before them a stack of indigestible truths, told them to swallow hard. That afternoon he announced com plete non-partisan agreement on a tax program increasing present taxes one-third, to raise $3,444,000,000 in new revenue. He described the tax program as possibly the largest in world history, estimated that it will produce $12,667,000,000 -- two-thirds of the total estimated 1942 expenditure of $19,000,000,000.

The problem then passed to Congress, to the great horny hands of Representative Robert L. Doughton of North Carolina, House Ways and Means Committee chief. Mr. Doughton, hoary expert at turnip-bleeding, said curtly that he thought the turnips could take it. To Mr. Doughton this week, from Henry Morgenthau, came the Treasury's recommendations. They included a hike in the basic income-tax rate of 2.2 to 6.6 per cent, lower exemptions, surtaxes on all incomes over $3,000.

But there was still one big indigestible truth which neither Mr. Morgenthau nor the Congressmen were ready to chew: the fact that the Government, while ready to ask citizens for sacrifices, was not yet ready to make any sacrifices of its own. The budget of many a department for 1942 had been ostentatiously pared --about as deeply as a man is apt to pare his fingernails. Although labor shortages have begun to appear in many an industry, the Administration had made no commitments to reduce relief expenditures, is still spending for relief at the rate of about $100,000,000 a month ($375,000,000 for March, April, May and June). Although farm prices in general are already back to 1929 levels, the Congress is expected to pass a $1,340,000,000 farm bill, including $450,000,000 for parity payments -- with only the feeblest Administration opposition.

But the possibility of reducing the enormous gap of perhaps $20,000,000,000 between expected revenues and expected expenditures by cutting unnecessary though popular expenditures was only lightly explored at budget-time and has since been forgotten. Most agencies of the Government had done their best to conceal the existence of such expenditures. This year practically every expense, for whatever purpose, is labeled "for defense." Wrote Newshawk Smith wisely: "Cupidity is the handmaiden of national defense, or vice versa."*

-Nearly all Government bureaus have now been classified as "defense agencies," including even Fish and Wildlife, National Park, Grazing Services. Last week St. Elizabeth's Hospital, Washington's' famed insane asylum, was officially made a defense agency.

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