BUDGET CHANGE.

Star (Christchurch), Volume LXVI, Issue 20540, 15 February 1935, Page 1

BUDGET CHANGE.

National Accounts Twice ! Y early. (By PAUL MALLON.) WASHINGTON, January 12. It can now be related that backstage preparation of President Roosevelt’s new budget was not a very peaceful affair. Certain bulges may still be noticed in the Treasury and White House roofs, caused by the concussion of conflicting opinions among Mr Roosevelt's budget scientists. The main conflict was over the £800,000,000 lump sum relief appropriation. The budget advisers are supposed to have opposed a lump sum. They thought that some general indication of its proposed use should be given. The only reason why one was not offered was because the emergency relief agencies declined to submit estimates to the budget bureau. Some agencies (the A.A.A. particular! 3') replied that they could not tell their spendings in advance. Others professed ignorance as to what Mr Roosevelt was going to do about their operations next year. There was nothing left to do except to take a rough lump sum at a guess and it will have to stand until Mr Roosevelt decides exactly what he is going to do about each emergency bureau. The fault of the lump sum system is not the political one which Congress is howling about. Budgeteers did not even consider the possibility that Congress might call Mr Roosevelt a dictator for trying to get all that money without strings on it. Getting Away With It. What perturbed them was the fact that the emergency agencies have been getting away with budget murder from the start. These agencies have been subject to no control except review by Comptroller M’Carl, who is so overloaded with work that he may be months catching up. Callers at the Comptroller’s office have noticed piles of expenditure records on the floor occasionally, there being no room for them on the desks. By the time M’Carl catches up slips made by the emergency agencies, the money has long since been spent. The President started to control this loose sj'stem last spring. He issued an executive order requiring emergency agencies to get M'Carl's approval for expenditures in advance. You may recall that the order was rescinded a few days later when Interior Secretary Ickes yelled about it. These deficiencies may be partially offset by an unnoticed promise in the , budget message. Mr Roosevelt said that in June, after Congress adjourns, he will make public the actual budget for the coming year. The one he offered last week was only an estimated budget. Congress now will consider the estimates and make appropriations, eliminating some and adding others. The real budget will come just before the next fiscal year starts on July 1- . ~1 You can see what result this will bring. Hereafter, the New Deal will have budget accounting every six months instead of yearly. There will then be no reason, and no excuse, for lump summing in June. Each item will have to be specified. Also, public attention will again be centred on spending and agitation for curtailment will be accelerated. Bigger Regular Estimates. Impartial budget authorities here agree among themselves that, they never heard of a budget like this one. It was obviously devised to conform to a peculiar expenditure situation. They believe that it is franker than the last one, except as to the lump sum, and the confusing system of mixing red and black inks together. But they can see clearly what Mr Roosevelt is I, P to. He is going to continue to move reci items (emergency expenses) into the black column (ordinary Government costs) during the course of the next few years. In the end he will have a regular budget of about £1,200,000,000. That total is half-way between the old £800,000,000 budgets and the £1,600,000,000 ones we have had lately. It will take him three or four more years to accomplish the gradual transformation w’hich he has already started. That means that taxes will be roughly a third higher in the end than they were before the depression. The only unexpected thing about the budget reaction was the way Wall Street took it. The money boys were apathetic; apparently they did not know what it meant. There are indications that they do not know yet. The inflationary possibilities, or probabilities, were completely ignored, although the budget last year sent the boys off on an inflation spree with much less cause. The opinion seems to be growing on the inside that the New Deal can run the public debt up indefinitely dur-

ing the next three or four year* without inflationary trouble. Apparently Wall Street believes it, but England cannot understand such American optimism. The London reaction to the budget message was one of wonder. Britain now is balanced except for the omission of her war debt to us, and certain money from her Exchange Stabilisation Fund. Mr Roosevelt has not used all his budget tricks yet. He has one ace in reserve and you will see it whenever the Treasury going gets rough. It may be denied now, but arrangements were made, during the preparation of the current budget, for including £562,200,000 bookkeeping profit which the Treasury has accumulated out of dollar devaluation. It would have made the budget look much rosier if the debt had been reduced by that amount. After an inside row it was decided to leave the theoretical gold profit out this year, but it was evident to all who participated in the discussions that its ultimate use would not long be delayed. Incidentally, Mr Roosevelt customarily refers to the gold profit as “ the kitty.” Any poker player knows what that means.