The Press THURSDAY, JANUARY 22, 1959. United States Budget

Press, Volume XCVIII, Issue 28800, 22 January 1959, Page 10

The Press THURSDAY, JANUARY 22, 1959. United States Budget

The emphasis placed on defence expenditure in President Eisenhower’s Budget message was, no doubt, intended to answer the mounting criticism of those Americans who believe the United States has fallen too far behind Russia in the rocket race. Whether the United States is yet spending enough on defence, in the interests of the democratic world as much as in its own, is a question that cannot be answered at this distance. The proposed expenditure on science and weapons is huge in amount and substantial as a proportion of the total spending, but the seeming neglect of other fields should be kept in perspective. 'Defence and foreign policy are the primary responsibilities of the Federal Government. Most other government activities are the preserves of the 49 States and the vast complex of American local government. Law and order, education, roading, social welfare and many other branches of community effort are the preserve of local authorities. The Federal Government can and does help; but its greatest influence over domestic affairs is through, the general impact of its policies in economic affairs. The test of the Budget is not whether it devotes sufficient to social capital, but whether the fiscal demands and restraints meet the basic need of the times—a problem not confined to the United States. How can Government policy, burdened by defence spending, both encourage economic growth

and check inflation? The question is a significant one for the allies of the United States, too, because the soundness of the American dollar is a measure cf American strength and probity everywhere. • In balancing the Budget, Mr Eisenhower, is trying to balance the big sums the United States must spend to keep up With Russian armament technology with a reluctance to increase taxation sufficiently to meet the bills. Many Americans are now coming to share the opinion of Joseph Alsop that the Eisenhower Administration is trying to achieve this feat by pretending that its expenditure is adequate when it is not. The way to catch up some of Russia’s lead while preserving the dollar is not to pay “ hardware ” accounts by inflating the currency but by convincing the taxpayers that they have to pay. This, of course, is easier to say than to do. Taxes are to be raised; but the scale does not seem very impressive in New Zealand, which has had experience of tough budgets. Mr Eisenhower’s Budget does not seem to answer fully the criticism that his Administration is hard on the outside (in its dealings with the

Communist nations) and soft on the inside (in telling the American people how much it costs to be a great Power). That, however, is a criticism that had better be left to Americans, because they are already doing most in defence of democratic institutions.