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3 The Tax Review 1 (1942)

handle is hein.tera/tafoutaxt0005 and id is 1 raw text is: JANUARY 1942 THE TAX REVIEW Copyright, 1942, by Tax Foundation, New York, N. Y. A Fiscal Problem-Nonessential Expenditures The ever-increasing amounts being expended for war purposes have raised pertinent questions as to what should be the role of nonessential federal ex- penditures in relation to the general fiscal picture. Several recent reports emanating from within govern- mental circles have reflected this current interest. The most prominent of these reports was that released by the Joint Committee on Reduction of Nonessential Federal Expenditures. In essence, this report indicated that because of the CONSIDERABLE interest has currently been displayed in the problem of curtailing or eliminating certain nonessential expenditures in the federal budget. This interest is predicated upon a wide-spread belief that the vital necessity for war expenditures and the improved economic situation necessitate positive action in regard to the reduc- tion of federal nonessential expenditures. The necessary expenditure of billions of dollars for war purposes seems to have raised a definite question as to the advisability of continuing certain agencies, services and functions of gov- ernment. If nothing else, the present scope of these activities should be questioned. At the same time the impact of these vast war expen- ditures upon the whole economy has generally resulted in substantially improved economic conditions. This is substantiated by the fact that national income for the 1942 calendar year is expected to approximate $105 billion.' This compares with a national income of $82 billion in 1929. It is logically maintained, therefore, that in view of this improved economic situation, certain economic and social aid programs can readily be reduced or eliminated. Cognizance of this apparent need for nonessential expendi- ture reductions, finally resulted in the release, by a Joint Congressional Committee, of a plan whereby $1,300 million could be saved in nonessential expenditures. Shortly there- after, the President - in his 1943 budget message to Con- 'Preliminary Report of Joini Committee on Reduction of Nonesential Pederal Expenditures. Washington, D. C., December 26, 1941, p. 3. vital need for war expenditures, and because of im- proved economic conditions, certain nonessential ex- penditure reductions were imperative. Prior to this report the Bureau of the Budget had submitted a report indicadng where nondefense expenditure re- ductions of $1 billion, $1.5 billion and $2 billion respectively, could be effected in relation to the esti- mated 1942 expenditures. And on January 7, 1942, the President - in his annual budget message - revealed that substantial reductions in certain non- essential expenditures would be forthcoming. gress - suggested specific nonessential reductions of $1,055 million. GENERAL BACKGROUND A brief examination of the inception and progress of this movement to reduce nonessential expenditures will serve to clarify the entire picture. For a considerable length of time such agitation had been quite prevalent among individuals and organizations outside of government circles. Some months ago, however, the Treasury suggested that a billion-dollar reduction might be effected in nonessential expenditures, but passed on to Congress the responsibility of determining where the precise reductions might occur in the respective budget items. On August 28, therefore, the Senate Finance Committee adopted a resolution requesting the Director of the Bureau of the Budget to prepare a report indicating where non- defense expenditure reductions of $1 billion, $1.5 billion and $2 billion respectively, could be made in relation to the estimated 1942 expenditures. In conformance with the resolution, the Bureau of the Budget submitted its report on October 15, 1941. While this report showed how such nondefense expenditure reductions could be made, it em- phatically pointed out that these allocations were not to be construed as recommendations of the Budget Bureau. Collateral to the above resolution was an amendment to the 1941 Revenue Act providing for the creation of the Joint Committee on Reduction of Nonessential Federal I SERIES C

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