Slichter Hits Excessive Spending for Defense

"It is highly probable" that the amount of money which the Truman Administration wants to spend on national defense during the coming year is "considerably too large," according to Summer H. Slichter, Lamont University Professor and nationally-known economist.

Slichter urged that the Administration's proposal for an increase of $30,000,000,000 in expenditures during the next 12 months for national defense, including atomic energy and foreign military aid, "be subject to careful scrutiny."

As basis for his belief that the figures may be too high, he pointed out that "the output of the Russian economy is estimated at less than one-third that of this country. Russian expenditures on defense, therefore, must be far below those recommended for this country during the coming fiscal year."

"Because this country made the mistake of cutting defense expenditures before the Korean war," be continued, "it now seems to be making the opposite kind of mistake. There is great danger that the taxpayers will find themselves buying huge quantities of military equipment that will be found obsolete within a few months after its completion."

Slichter summed up his views on defense spending for the immediate future by stating that he did not believe total expenditures for security should exceed $55,000,000,000 for the coming fiscal year "unless the need for still greater outlay can be very plainly demonstrated." He feared, however, that the administration would succeed in its quest for appropriations of $65,000,000,000 or more.

Dissatisfied Over Taxes

The economist also expressed dissatisfaction with the country's present and proposed tax systems. "It is high time," he stated, "that the U.S. reconsider its ideas about the most appropriate way to finance the defense program. In view of the fact that the kind of taxes that Congress considers it expedient to levy are bad for the economy, the temporary bulge in defense expenditures that will occur during the next two or three years should be financed by non-inflationary borrowing."

The proposal to raise corporate income taxes to 52 percent, he explained, would mean that an increase of a dollar in expenses would cost a corporation only 42 cents. "There is an obvious danger," he said, "that this kind of tax will cause corporate management to relax its efforts to keep expenditures to a minimum such a result would be most unfortunate reducing the efficiency of industry and therefore, the output of industry."

Slichter feels that personal income taxes in the higher brackets are also too high. He stated that a married man with an income of $34,000 a year after deductions and with no dependents pays the government 59 cents out of every additional dollar.

"No matter how large a man's income." Slichter said, "he ought to be permitted to keep at least half of what a willing buyer pays for additional services from him

"By saddling the country with a worse tax system than it had before the present emergency," he concluded, "there is danger that the defense program will seriously weaken the economy."