Taxes: The Sour Plum

One of the most tempting plums in the Republican election year grab-bag was tax reduction. Eisenhower promised progressive cuts in income taxes, natural death of the excess profits tax, and a balanced budget to boot. The money for this financial revamping was to come mainly from a reduction in the out-sized military budget.

Unfortunately for the Administration, the Republican Chairman of the House Ways and Means Committee, Daniel A. Reed, matched Eisenhower's vigorous words with equally vigorous action. The bill he recently introduced calls for an eleven percent personal income tax reduction on June 30--the same day the excess profits tax expires. Should the two levies pass out together, the cost to the government would be six billion dollars. The planned reduction in excise taxes would raise this to eight and one half billions.

With this prospective revenue drain, the plum looked rather biliously green to the Administration. Faced with a growing national debt that was already scraping the 275 million dollar limit, and Truman's parting prediction of a ten billion dollar deficit, Eisenhower made an abrupt about face. "A reduction in taxes," he said in his State of the Union message, "should come only as we can succeed in bringing the budget under control.

The President's modified program was, of course, the only possible one. With military and civilian budgets suddenly looking more muscular than corpulent, the most optimistic budget slicer began to wonder how Eisenhower could cut more than three billions now. Even this cut, by no means filling in the tax hole, would drain needed funds from foreign aid, the metals stockpiling program, and public works.

But Representative Reed is apparently willing to slough off the dangers of a deepening deficit to promote a popular bill. He continues to push it through Committee in the face of warnings from Eisenhower's Budget Director, Joseph N. Dodge, that a June tax reduction will scotch any hopes for a balanced budget this year. The Administration has renounced the pleasant myth that pared waste can end deficit spending. Now the House should take Eisenhower's new lead and reject in forceful terms Reed's cavalier financing.