Wrong, As Usual

The U.S. closed its books for the fiscal year last week. The balance sheet was substantially better than the administration's usual gloomy prediction. As it often has in the past eleven years, the Administration has erred again on the pessimistic side.

The national debt, swelled by War Loan V, finally sailed over the breath-taking $200,000,000,000 mark. But President Roosevelt had estimated the deficit for the year at $55,000,000,000--some $5,000,000,000 bigger than it turned out to be. Treasury Secretary Morgenthau had underestimated by some $2,963,000,000 the actual Treasury receipts of $44,149,000,000. He had overestimated by some $2,207,000,000 actual expenditures of $93,744,000,000. Further, the Treasury ended up the year with an ostrich-sized nest egg of $19,406,000,000--enough to run the war for two and a half months.

Some of the Morgenthauful error was due to the failure of the armed forces to take into account the increasing efficiency of U.S. industry, which trimmed the prices of materiel. Examples: Consolidated Liberators, which once cost $238,000 each, now cost $137,000.

But most of Mr. Morgenthau's error lay in the habit of overestimating the magnitude, enormous though it is, of the Treasury's problem. All last year he pleaded with Congress to pass at least a $10,500,000,000 tax bill. President Roosevelt urged the same thing; and Wendell Willkie topped them both with a demand for a $16,000,000,000 tax bill. In arguing for heavier taxes, they were all on the side of the angels, in that they were trying to sop up inflationary spending. But Mr. Morgenthau torpedoed his own argument by garbling the fiscal facts. In arguing that the U.S. must pay for 50% of the war out of current taxes, he plainly implied that unless he got his big tax bill the U.S. would fall far short of this goal. Congress ignored him and passed a mere $2.1 billion tax bill.

Last week's Treasury receipts looked a lot more like Congress' estimates than like those of Secretary Morgenthau. For they showed that the U.S. is now actually paying for 47% of the war. (In World War I the U.S. paid only 32% of current expenses.) With receipts still rising and expenditures expected to drop, the U.S. may end up by exceeding the 52% which the British are paying.

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