A Weekly Dose of Hazlitt: It Can Be Balanced

It Can Be Balanced” is the title of Henry Hazlitt’s Newsweek column from January 10, 1955. Here, Hazlitt notes the many broken promises of presidents to balance the federal budget. Sadly, the US has fallen so far over the past few decades that presidents no longer lie about balancing the budget, rather they lie about reducing the deficit.

It is increasingly sad to follow the record of the
Eisenhower Administration on the budget.

Just before the Republican convention of 1952,
General Eisenhower expressed the opinion that the
Federal budget could be cut as much as $40 billion in
the next few years. In his first State of the Union message,
on Feb. 2, 1953, he said: “The first order of business
is the elimination of the annual deficit.” He has
since successively explained why, because of this or that
unforeseen condition, he could not balance the budget
for the 1953 fiscal year, or for the 1954 fiscal year, or
for the present 1955 fiscal year which ends on June 30.
The same dismal note was sounded once again on Dec.
6 by Treasury Secretary Humphrey, when he declared
that “we cannot balance the budget” for the fiscal year
1956. This statement was followed a week later by an
announcement that the President would ask Congress
to cancel the $3 billion in corporate and excise tax
reductions that had been scheduled for April 1.

There is, alas, nothing novel in this record. It merely
continues the record of the last quarter of a century.

In Newsweek of Nov. 2, 1953, in a column called
“In the Sweet By and By,” I presented in as full detail
as space would permit the budget record of Franklin
D. Roosevelt and Harry Truman. It was a record of
constantly promising a balanced budget—but always
for some day in the future, never now. “The plan is to
reduce the cost of current Federal government operations
by 25 percent,” said candidate Roosevelt in 1932.
“We should plan to have a definitely balanced budget
for the third year of recovery,” he was saying on Jan. 4,
1934, “and from that time on seek a continuing reduction
of the national debt.” “We approach a balance of
the national budget,” he was announcing on Jan. 3,
1936. And so it went.

Harry S. Truman, in his budget message of Jan. 12,
1948, promised not only a balanced budget but a surplus
of $4.8 billion for the fiscal year 1949. There was, alas,
actually a deficit of $1.8 billion. In his budget message
of Jan. 10, 1949, he once more deplored deficits, and
once more promised a balance. Nevertheless the deficit
for the fiscal year 1950 was $3.1 billion.

To sum the whole matter up, we have had deficits
in 22 out of the last 25 years. And now we are told we
must have still another.

It is not true. The budget can be balanced. And it
can be balanced in the next fiscal year. What stands in
the way is not, as apologists declare, either military or
economic necessities. It is false economic theories and
lack of political courage.

There is neither space nor need to go into the subject
in great detail here. In April of 1954 the Committee
on Federal Tax Policy, a private group under the leadership
of former Under Secretary of the Treasury Roswell
Magill, made a careful study and concluded that a total
of at least $8 billion could be cut from Federal budget
obligations for the fiscal year 1955 without even touching
defense items.

The budget is not to be cut by a horizontal slash of
expenditures by 10 or 20 percent all along the line. Such
proposals are hopelessly naive when they are not plainly
insincere. The chief way to cut the budget is to abandon
whole categories of expenditures that are being made
either because of naive delusions (this applies to almost
the whole of the $5 billion a year we are throwing away
on foreign aid) or because of sheer political expediency
(i.e., the farm price-support program which raises the
price of food for city workers and has created appalling
surpluses).

There is unfortunately still another leading factor
responsible for the continuance of deficits. This is the
belief, concealed or candid, that deficits are necessary
to prosperity, full employment, and re-election. It is the
doctrine of salvation through inflation.

So this is how the matter really stands. Anybody
who sincerely believes that the budget cannot be balanced
in the next fiscal year, or that the present fantastic
level of expenditures cannot be cut without danger, is a
victim of delusions.

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