The Price Is Wrong

For nearly eight weeks, Arkansas Democrat Wilbur Mills and his House Ways and Means Committee have listened to testimony about President Kennedy's tax program. With the hearings due to end this week, the committee is about to get down to the actual work of drawing up a tax bill.

During the hearings, the committee received information and advice from some 200 witnesses. Arguing for the Administration program were such officials as Treasury Secretary Douglas Dillon. Budget Director Kermit Gordon, and Labor Secretary Willard Wirtz. The A.F.L.-C.I.O. also spoke up, along with the National Association of Manufacturers, the U.S. Chamber of Commerce, Americans for Democratic Action, the Girl Scouts and, in the person of Ralph Bellamy, Actors Equity.

There was remarkable agreement on one point: everyone, it seemed, would love a tax cut. But how big? Or how soon? Or what taxpaying bracket should receive the biggest benefits? Or, most important, should taxes be slashed even while the Kennedy Administration is requesting $98.8 billion for fiscal 1964--with a projected $11.9 billion deficit?

On that last question, Roger Fleming, secretary-treasurer of the American Farm Bureau Federation, lodged perhaps the most persuasive objection. Said Fleming to the Ways and Means Committee:

"Tax policy cannot be--or, at least, should not be--divorced from spending policy. Government spending must be paid for, either through taxes or inflation . . . While taxes are undesirably high, our past record of fiscal management has not earned us a tax cut. The fact is that in recent years we have consistently 'borrowed from the future' through deficit financing. The Federal Government has spent more than its revenue in 26 of the past 32 years . . . If the Federal Government's expenditures are increased, a tax cut means more deficit financing, an increased national debt, the threat of inflation and a loss of confidence in the soundness of the economy, which would discourage investment and prevent sound economic growth."

What bothered Fleming, among many others, was the apparent shift in the Administration's argument about what the economy needs. At first, the reasoning was that the tax cut itself would stimu late business incentive and release plenty of private spending to put new pep into the economy. Now, the Administration says that tax reduction is not enough: the prescription must include Government spending at the price of a massive, planned deficit.

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