Speeding Toward Destruction
A NATIONAL SPENDING SPREE THAT MEANS RUIN
By WESLEY E. DISNEY, Congressman from Oklahoma, Member, House Ways and Means Committee
Delivered before the Tax Foundation, Waldorf-Astoria Hotel, New York, June 3, 1941
Vital Speeches of the Day, Vol. VII, pp. 527-531
MANY of you have read the story told by Kipling in his Jungle Book about the little boy Mowgli who was raised in the wolf family. When all the members of the jungle decided to leave upon the invasion of the wild dogs, whose prowess was due to their travelling in packs of from 200 to 500 per pack, Mowgli decided to stay and defeat them. Those of you who have read the story know that he did not use an elephant, a lion, or a tiger for this purpose; they had already fled. He used the little stinging people—bees, wasps and hornets—no one of which could have had any affect whatsoever alone, but through the cooperation of several million of these tiny creatures the great scourge of the jungle was put to flight.
Our nation has brought to the average man the greatest luxuries and comforts known in the history of the world. If you wish to save this established form of government fromthe destruction of unlimited inflation, socialism or dictatorship, it cannot be done by calling upon the elephant, lion, or tiger, such as our industrial giants, financial leaders, or great statesmen. No one of these great powers alone can save our system of commerce, industry and living. Like Mowgli, we must call upon the millions of little people, each one of whom will be powerless alone, and must get them behind the great needs of today. I know of no organization better equipped to educate, influence, and arouse the millions of little people to the necessity of their taking part in these great problems—not the least of which is eliminating $2,000,000,000 of unnecessary governmental expense—than the organization which I have had the honor of addressing tonight.
When Secretary of the Treasury Morgenthau appeared before the Ways and Means Committee to open the hearings on this year's tax bill, he recommended to the Committee that the Congress raise an additional 3 1/2 billion dollars in taxes. The enormous size of this tax bill so impressed the Secretary that he recommended very definite savings in non-defense expenditures to the extent of a billion dollars. His language was that of genuine statesmanship. He said:
"We are now awake to the need . . . to make this Country safe and strong. We have not, however, kept pace with events in our thinking about defense and non-relief spending. We have remained curiously static in our conceptions of what to spend on those things not directly connected with defense. Ordinary traffic must now get to one side to let planes and tanks and guns have the right-of-way. Other traffic can be permitted only if it does not obstruct the national purpose."
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"We have not re-examined all of those expenditures that have been sort of grafted onto the government during the last ten years. We go on just the same."
Obviously, the Secretary of the Treasury was alarmed, because we had before us the 1942 budget, amounting to 19 billion dollars. He hoped that by current taxes—an additional tax bill—we could raise two-thirds of this amount and borrow the other third. Since that date the President has recommended to the Congress, budget estimates which will run the 1942 budget figure up to $22,169,000,000—nearly 5 billion dollars more than the estimate in his January 3rd message to Congress. Now Mr. Morgenthau wonders if we don't need a still bigger tax bill!
Secretary of Commerce, Jesse Jones has stated that our National debt, as a result of the War, will climb to 90 billion dollars. Some think that it will be more, even exceeding 100 billion dollars. Our National debt is at present $47,600,000,000 with additional deficit debits of $12,800,000,000; and the State and municipal debt is approximately 20 billion dollars.
It has been stated on good authority that our 1942 fiscal deficit will exceed 10 billion dollars.
In the face of these enormous figures, the Treasury Secretary suggested saving a billion dollars. I later suggested means of cutting nearly 2 billions from the current budget. Both seemed a mere bagatelle when compared with a year's expense of 22 billions.
Defense is mandatory. Its expense must be met. Many non-defense items can wait, if they are ordinarily necessary.
It will be well to take a view of our fiscal history in order to correctly approach the subject. In the last 40 years extravagance in Government has been tolerated by the people! It has constantly grown in volume. The responsibility for such expenditures, great or small, rests primarily on theadministrators of Government, but ultimately on the whole people of the Nation.
Governmental expenditures fall, roughly, into two groups. The first includes payments for Government per se; that is, the protection of life and property. This represents the cost of primary or fundamental functions of Government. The second group is mainly for the support of social welfare activities of Government. Roughly we might state that the first group of expenditures represents 25 per cent and the second group 75 per cent, of what we spend on Government. Unusual expenditures in Government have grown steadily the past two or three generations. For instance, expenditures of State Government increased 437% from 1903 to 1922. The passage of the Sixteenth Amendment to the Constitution of the United States, the Income Tax Amendment, marks the beginning of the epoch of increased expenditures for Government of all types and kinds, and of easy acquisition of money by the Government from the taxpayer. Its enactment really marks the date of the great spending era in America. You will remember that Governor, now retiring Chief Justice, Hughes, vetoed the resolution in the N. Y. Legislature, ratifying the 16th Amendment, because he was afraid the rates might reach as high as 10%.
The 16th Amendment took the lid off spending, so far as the Congress is concerned, and the Federal Government began to spend heavily. The state and local governments followed suit, so that we find that while in 1916 total Federal expenditures were $1,034,000,000, at least one department spent more than that much money annually in the budgets of recent years.
Within 10 years after that, during the era from 1923 to 1932, the annual Federal budgets ran between 3 and 4 billion dollars.
A Federal budget of $1,034,000,000 in 1916! In 1940 it reached almost 9 billion dollars, exclusive of the emergency defense budget. If the last quarter of a Century has produced such results, what may we expect in the next twenty-five years? That is, if we expect to continue to think of money with relation to our fiscal policies!
The exact figures are available for the year 1938 for Federal, State and Local expenditures. They run like this: The grand total was $18,300,000,000, divided as follows: Federal, $7,691,000,000; State, $4,358,000,000; and Municipal, $6,150,000,000. In that year our total National income was 64 billion dollars. A quick calculation based upon these figures shows that almost a third of the people's money went—to Government: and that in times of peace.
Remember that three-fourths of this money spent, went not for the primary purposes of Government, for the protection of life and property, but for social welfare. This vast fiscal growth of the Federal system is largely accountable to the growth of administrative or bureaucratic public administration. The growth of boards, bureaus, commissions and departments has necessarily been attended by the vast expenditure of tax money.
For illustration, in 1916, as I have said, the total Federal budget was $1,034,000,000, yet since 1937 the budget of the Department of Agriculture has vastly exceeded the whole Federal budget for 1916.
In 1928, the Congress spent $845,000 for the franking privilege at Government expense. The executive departments spent 6 millions. Ten years later the Congress spent $737,000, but the taxpayer paid for the franking of free mail by the Executive Department the staggering sum of $39,000,000. The publicity departments, and each division has one, must have spent much money in preparing the material to frank out.
These are but illustrative of the general trend. It might interest you to know that the fiscal year 1940 saw the traveling expenses of the Government reach 99 million dollars plus. Our National symbol, Uncle Sam, rode high, wide and handsome that year, but the fiscal year 1941 will see him spending $150,000,000 for traveling expenses. The first four months of this fiscal year showed a Federal travel bill of $47,000,000.
We, in the Federal system, cannot retrench as against the defense program. Even the waste and extravagance necessarily attendant on a large and speedy program such as we are embarking on will be tolerated by the people. So our only recourse is to attack those expenditures which are nor related to or attendant on defense.
There are no signs that the States and municipalities intend to cut their budgets in behalf of the taxpayers who are to be burdened with this fearful national defense program.
The old slogan, "Soak the Rich," is ceasing to be realistic even for the purpose of demagoguery. If the Government took every dime of all individual net incomes in the United States over $50,000 in 1938 it would have collected only $1,056,222,000. If the Government had taken all the net incomes above $5,000 in 1938, the yield would have been $6,702,582,000—less than that year's annual current budget. If we "soaked" both the rich and the middle class taxpayers and took all their net income, the Government would raise just about enough money to pay the current annual expenses.
Remember, again, that only one-fourth of this money spent goes for the primary objectives of Government—the protection of life and property. A colloquy at the hearing before my Committee between a Member of the committee and the college president I have referred to, brought the suggestion from the Member that the economies the college man was calling for could not be accomplished unless the local interests should cease putting pressure upon the Congressman. The college president very promptly replied in substance, "During the spending psychology of the recent years, each community assumed that the government has already planned to spend several billion each year for the purpose of creating prosperity, and therefore reasoned that it was up to them to get as much as they could of the federal largess for themselves. Now that we are in a different era, where economy and saving is paramount, I believe that if Congress will take the initiative, not only state that reduction of unnecessary non-defense expenditures is imperative, but actually use the knife and pare these expenses to the bone, the communities will probably say 'Congress is right in taking this step during the emergency, and we must do all that we can to assist in this economy wave and must refrain from embarrassing our Congressmen by requests for expenditures'."
Returning now to the prime object of this address—the curtailing of non-defense appropriations. A curious phenomenon is arising: every bureau and department of the Government whose existence or whose appropriations are threatened by the demand to go "all out" for defense, and to trim non-defense items, has evolved some type of scheme or system to prove their necessity or worthiness as defense projects. The N.Y.A., due for a cut of about 92 millions if Secretary Morgenthau's advice were followed, secured a "defense budget" of about $157,000,000.
It will not do to say that these non-defense agencies can he transformed into defense agencies. They cannot by a wave of the hand be given attributes and functions they lack. They are subject to all manner of local, state and federal political influences. Their administrators can not say no—as a practical matter. The Army can, and by thevery compulsion that is involved in the Army organization prevent any type of logrolling that is necessarily involved in the relief agencies. The Army can and does enforce the $21.00 a month wage upon the draftees. Actual defense projects necessarily imply Army organization and compulsion. It would be playing with defense to permit these relief agencies to pretend to be defense agencies.
There is hardly a single function of Government at present that cannot be colored with some defense characteristics. But real money needs to be spend on real defense, unless this whole thing is simply a great, good-natured drama, with an overwhelming desire to please the audience.
The Secretary of the Treasury was specific in his suggestions. He did not mince words nor dodge the issue. He suggested that N.Y.A., C.C.C. and W.P.A. appropriations could probably be trimmed or disposed of and for Agriculture could be drastically reduced, and he recommended a careful study of other functions of Government with a view to saving the money spent on them, and the use of it for defense. Immediately all the forces of departmental propaganda went into action. Defeatism and futility were the chief weapons. "It just can't be done"—was the principal argument. The Secretary's suggestions were made to the Ways and Means Committee, which under the rules of the House of Representatives has no jurisdiction over appropriations. Immediately it was said that the Ways and Means Committee was helpless, although it claims to be the most powerful policy committee in the House. That atmosphere has pretty well settled down over Congress—that nothing can be done about it. But every individual member admits that something ought to be done.
W.P.A., C.C.C., N.Y.A. were all organized for relief. Yet now they are claiming to be defense projects. They are creatures with overlapping functions and conflicting jurisdictions. Three great overheads are maintained for these institutions; all relief departments. But for illustration, the President of a little college in Arkansas solemnly told the Ways and Means Committee that the average income of the individual in Arkansas was $255 and of an average family in Arkansas $969. He emphatically stated and proved to the Committee that for the cost of one boy in a C.C.C. camp he could give four boys in his college a year's education. How failure to economize can be justified, cannot be explained to an American taxpayer. It is insolence to attempt it.
These bureaus, boards, commissions, departments, and divisions grow and grow like the Rose of Sharon. Each head of a subdivision is working industriously to justify his division's existence, to be promoted in salary, and to enlarge the jurisdiction, scope and appropriation of his division, be it big or little. It is easy to say that Congress "Just ought to cut them out." I wouldn't be personal for the world, but you businessmen know the difficulty involved in disposing of a department in your corporation, or even of firing a deserving stenographer, or maybe one not so deserving! During the depression an oil company's board of directors decided to retrench. The board concluded that the retrenchment was mandatory and that a certain department must go. A resolution was passed dispensing with the geological department, disposing of the employees, and eliminating their salaries. One hard-headed director said this didn't do the job. The other members inquired why. He replied "We've got to sell all the desks, typewriters, rugs, lamps, cuspidors and get them clear out of the building. If we don't, in three months some of us will see those offices filled up again with employees."
If it is this difficult in a private business, do you not realize how much more difficult it is in government, underpolitical pressure, with Uncle Sam a sort of magic Santa Claus paying the bill?
To pass a $3,500,000,000 tax bill and cut no expenditures will come home squarely to the taxpayer with the $2,500 salary, who has been paying $11.00 taxes, if and when this amount jumps to $72.00; to the $5,000 taxpayer, now paying $110.00, if when his taxes jump to $506.00; to the $10,000 taxpayer (as for instance a Congressman), if when his annual federal tax jumps from $528.00 to $1,628.00.
Especially will this come home since these taxes are retroactive to January 1, 1941, and most especially when excise taxes to the amount of nearly $1 billion are being raised on many of the necessities of life these taxpayers buy. These are the Treasury's proposals in the present tax bill. We may have to adopt these proposals. Then there are the so-called "hidden taxes" which the Twentieth Century Fund says run to large amounts annually for the individual.
The 1942 fiscal year budget totals $6,675,000,000 of non-defense items. Of that sum, fixed charges, like interest on the public debt, pensions, and so forth, amount to $2,716,000,000. The balance of $3,959,000,000 could be reduced in part and eliminated in part. For instance, various aids to agriculture are budgeted for $1,061,600,000. I would cut that to $500,000,000, especially since agriculture should do well under the defense spending program, and agriculture will get much indirectly from the Lend-Lease appropriation.
W.P.A. is budgeted for $1,034,000,000. The President has recommended a cut of $109,000,000. I would reduce it to $500,000,000.
General public works should be reduced to $250,000,000 from the $502,900,000 budgeted. Aids to youth, represented by C.C.C. and N.Y.A., should be eliminated, saving $362,600,000. These two relief agencies, even though we retain the W.P.A., should be eliminated, because they do not represent defense and do not represent any type of relief that could not be taken care of by the $500,000,000 for W.P.A. which I have suggested.
The magnitude of the defense program in its general aspects staggers the imagination. As I have stated, our National annual income in 1938 was sixty-four billion dollars. If, in the near future, as Secretary Jesse Jones says, we are to have a National debt of 90, and maybe 100 billion, and a state and local existing debt of twenty billion dollars, the disbalance baffles any fiscal student, even any prophet. We might ask "Whither are we going?"
Remember that the Congressman nowadays is the errand boy of the Frankenstein called the Executive Department. His ability as statesman is gauged by his prowess in procuring Federal largess—Federal Projects.
One of the most vocal advocates of economy of government has been the United States Chamber of Commerce. It has been heretofore militant on all occasions on this subject and has drawn the fire of the spenders. However, you members of that great organization or of local Chambers of Commerce, know that it is composed of Chambers of Commerce all over the nation. We have heard much about minority groups—I think pressure groups, if you please. It can hardly be contradicted that during the era of spending that has gone on in the last few years, local Chambers of Commerce have been among the heaviest contributors to pressure upon their congressmen. Pressure to get things from the government for the locality and pressure to keep them after they are gotten. Yesterday the President suggested $125,000,000 for defense roads. Probably tens of thousands of letters will flow to the Congress from local Chambers of Commerce showing definitely that these roads ought to be located in their vicinities, and the feeder-roadsheaded in the direction of the local Chamber of Commerce should be added! Nobody ought to fool himself about this pressure weighing heavily with the Congressmen.
This is not intended to be mere ranting about the cost of Government, nor the learned display of tax-payers' figures. It is rather intended as an approach to the consequences of the outline detailed. Several observations may be made about these fiscal circumstances.
First, the thoughtful student of government should be impressed with the tremendous growth of power in the Executive Department in recent generations, as evidenced by the figures adduced. It amounts to turning over the purse to the Executive Branch of government, and the necessarily attendant obsolescence of the Legislative Department. Then too, the immense influence of a highly financed Executive Department gives it all power over every activity of the citizen, as well as decisive control over the Judicial system and the final direction of the Legislative Department It will not do to say that America is going the way of all the Republics, and to let it go at that. America has the brains and should have the will to re-evaluate its three branches of Government. Modern history clinches the argument for this necessary step.
Another important consideration is the welfare of the Nation after this emergency is over. It is not unreasonable to suppose that a cessation of defense activities after the emergency, will slump our national income as much as ten to 25 billions of dollars. With the return of soldiers to civilian pursuits, and the loss of defense employment to others, we can visualize vast unemployment. Then, for the first time in the history of our country, we will come into a depression with a monumental public debt staring us in the face. I may emphasize its possibility when I tell you that Leon Henderson said before the Ways and Means Committee the other day, that by May, 1942, we would be spending two billion dollars per month for defense.
If we do have a debt of 90 billion dollars, as Secretary Jones has said, the interest on that debt would range around three billion dollars a year. From 1923 to 1932, our total national expenses had a range of about that same figure. In those equally serious days to come, where will we turn for financial relief, if we are not wise enough to economize now to the extent of one or two billion dollars per year on altogether non-defense items? De we not have the wisdom to look that far ahead? Will not the thinking people of America awaken?
With the necessity of vast sums then for relief, where will the money come from? In what shape will the Government's credit be? Will not some string-band statesman suggest the devaluation of the gold content of the dollar, holding out to the people as a prize the 22 billions of gold we have stored, and convince them that by proper manipulation it could be made to represent 80 or 100 billion dollars in Government credit and spending power? When he has succeeded in those blandishments, what will be the value of the savings of the people, their investments in things of value, their years of thrift in accumulating life insurance?
The press says that England looks forward to a "social readjustment" after the war. We have seen all values wiped out in Germany, France, Italy and Russia—or at least reduced to a fraction of their original value. France devaluated the franc, and Germany the mark. They all moved into some form of socialism, where individual initiative, private ownership, the stirring of ambition through financial incentive went down the road of modern barbarism in those countries. Those inflationary movements in our sister nations were preceded by, or accompanied with, various forms of socialism.
I hope and trust that through Government control, we will be able to prevent a destructive inflation, but is the hope realistic when we see a system of priorities that will so scarcen the peoples' goods that consumer demand will outrun production; when we observe that every strike is settled on the basis of increased wages, with no apparent though of its ultimate effect; when we see scarcity and increased prices in all manner of manufactured and raw materials arising on every hand; when we see production held down by penalty under a Wage-Hour system, and when we see the possibility that individuals and corporations may follow the "business as usual" attitude of the Government, instead of thrift, economy and the paring to the bone of non-essentials. If we do have such inflation, the inevitable drift is toward the socialism England so complacently contemplates, the socialism that made the people, in their sweat of agony in France, in Germany, in Russia and in Italy, turn away from their legally constituted authorities, yearn for and finally demand a dictatorship which ultimately took charge of them, their families, their religion, their private fortunes, and their very future hopes and aspirations. Are not the seeds we are sowing those of home-grown fascism and nazism, which we so much fear and despise?
The ancient civilizations of the world in turn flourished, gradually declined, and disintegrated. If there is one thing that history teaches in unmistakable terms, it is that nations, like individuals, prosper according to their right thinking, and that the idolatrous exaltation of a material sense of power and intelligence inevitably leads to decay and downfall. Dictatorship is that idolatrous exaltation of the material sense of power.
This day will pass. Moral might is stronger than all the guns and ships fashioned by the hand of man.
Disappointed with all his worldly achievements, Napoleon in his solitude, in deep contemplation, said, "Alexander, Caesar, Charlemagne and myself have founded empires.
But upon what did we rest the creation of our genius? Upon force! Jesus Christ alone founded His empire upon love; and at this moment millions of men would die for Him." Pitted against an alert, free, active world-public-opinion, the rampage of the present-day forces of evil cannot endure. Their predecessors failed upon the rock of the unseen spiritual forces asserted by mankind.
Democracy is the highest spiritual idea of mankind as related to Government. True democracy is alert, active and awake. True democracy rests in the bosom of the individual citizen. He is king in his own right if he but assert it. From his activity comes the strength of his Government, the symbol of his concept of democracy.
In the insane asylums, it is an accepted scientific fact that one of the first signs of returning sanity on the part of an inmate is his expressed ability to cooperate with other inmates and attendants. Those that are completely insane think only of their personal welfare, and do not cooperate. In our own country there has been too much of each community looking out for its own interest, in making its demands upon the Federal Government. This is because the individuals who compose the communities have each thought only of their own interest. The individuals and the communities seemed to have had a slogan "Every other community is getting what it can, so let's make certain we get ours." This is exactly the attitude of the inmates of the asylum who are completely insane, having no thought for anything but themselves. If the various individuals and communities that comprise this great Nation can be educated and influenced to cooperate for the common good, which would of course include economy in government, would it not be a welcome sign of returning sanity? Marshal Petain, after the French debacle, said, "After our victory in 1918 we became a comfortable, pleasure seeking nation. We asked for more than we were willing to give. We refused to accept responsibility. Now we are in distress."