Bottom of the Tax Barrel

With the House off on a three-week holiday, Senators bent their backs to a grueling double chore. One was the job of cutting expenditures, in which President Truman, continually suggesting ways to spend money, gave little help. The other was to squeeze out of the taxpayers, without squeezing them dry, enough new funds to meet the huge Government outlays.

In one committee room the combined Foreign Relations and Armed Services Committees took up the Administration's request for $8.5 billion for foreign military and economic aid, from which the House had cut $1 billion (some $700 million from economic aid, $300 million from the military). The Senate committees pretty much agreed with that reduction. Administration spokesmen protested, but Georgia's George expressed the sentiments of a large part of the Senate: "We ought to cut out economic aid in Europe . . . Those countries already are up to about 144% of their prewar production capacity. If they can't stand on their own feet now, there is no use kidding ourselves into thinking they will do it later."

George, for his part, turned his Finance Committee to the painful problem of new taxes. Last year the Federal Government gobbled up $50 billion of the nation's total $263 billion income. Harry Truman had asked for $10 billion more this year. The House had passed a bill calculated to give him something less than that--$7.2 billion.

The Senators were not certain that the country could stand as much as the House had voted. The committee tentatively voted a maximum 11% increase in personal-income taxes (compared to the House's flat 12.5% increase). The Senate's 11% would be downgraded for taxpayers in the highest brackets, who already pay up to 91% of their incomes. The Senate also loosened some of the screws that the House would put on corporations; e.g., the Senate removed a 12.5% increase in capital-gains taxes.

Said Colorado's Republican Eugene Millikin: "It's the most troublesome bill we've ever had. We are really scraping the bottom of the barrel." Would even scraping bring up enough funds to meet Government expenditures? Said Millikin: "I wish I could answer yes. We simply don't know."

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