September 2, 1933 - Article - The Twin Budgets, by David Lawrence
The average citizen knows only one kind of bookkeeping. If he spends more than he takes in, he is in debt. If he expects to pay his debts out of future earnings, he may console himself with the thought that his intentions are honest - but he is still in debt. And if, perchance, he loses his job and his earnings diminish, well, he rues the day he went into debt.
Governments aren't any different from individuals. In fact, they depend for their revenues on the expectation that citizens will keep their jobs and hence be able to pay their taxes. If the millions become unemployed, government revenues drop. And there is no mysterious way by which a government may collect money from people who do not earn it.
The public's hopes were raised high as the platform plank of the Democratic National Convention a year ago announced:
We advocate an immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus and eliminating extravigance, to accomplish a saving of not less than 25% in the cost of the Federal Government....
We favor maintenance of the national credit by a Federal budget annually balanced on the basis of exact executive estimates within revenues, raised by a system of taxation levied on the principle of ability to pay.
After reading that platform pledge and listening to the campaign speeches, the average citizen had a right to expect that 25% reduction in the cost of the Federal Government meant 25% reduction in the cost of the Federal Government. He had no reason to suspect at that time that 25% reduction in the cost of the Federal Government meant an actual increase of 50% in the cost of the Federal Government. He was not suspicious either that the promise to reduce taxes was to be offset by an actual increase in taxes.
The Democratic administration proclaims, first of all, that there should be two kinds of budget - an ordinary budget and an extraordinary or an emergency budget. (pg. 23)
As we entered the new fiscal year, the prospects were that we should in the next twelve months reach an all-time high for the national debt in the United States. It may go to $27,000,000,000. (pg. 51)
For if income taxes are to be retained as a major source of revenue, then the Government must make it possible for profits to be earned upon which taxes can be collected. (pg. 52)
So, it all comes down to this: The New Deal means, according to many of its sponsors, a new social and economic order. But as yet it has not and cannot invent a new way to pay old debts. The New Deal will give us at least a $4,000,000,000 increase in one year in public debt, just as the Old Deal gave us a total increase of $5,500,000,000 in three years, or an average of $1,800,000,000 a year. [this referred to the debt created by World War I] (pg. 53)