Federal Spending in the Emergency

DEPRESSION ACTIVITIES NO LONGER NEEDED

By WILLIAM B. MUNRO, Professor of History and Government, California Institute of Technology

Delivered at the Spring Meeting of the California Taxpayers Association, Los Angeles, California, March 25, 1942

Vital Speeches of the Day, Vol. VII, pp. 403-405.

A LITTLE while ago I was looking through a book that I have owned since my school days—a book that was written in Rome nearly two thousand years ago—when my eye fell upon this sentence: "Fellow Romans! It is not now a question of taxes; our liberties and our lives are in danger." (¹)

Naturally the thought came to me that if you only substitute "Fellow Americans" for "Fellow Romans," this warning is as timely today as it was twenty centuries ago. When the preservation of our national existence is at stake it is no time to quibble much about the financial sacrifices which we have to make. The people of the United States are readyand willing to pay whatever it may cost to ensure that our common heritage shall not be destroyed.

(¹)Non nunc agitur de vectigalibus; libertas et anima nostra in dubio est. Sallust, Cataline, 52.

But we should remember this—that wars are never won by wasting money. They are not won by spending on needless projects the money that is urgently required for the main purpose, which is the achievement of victory. People are apt to forget that a government, of itself, earns no money. Every dollar that it spends must come from the earnings or the savings of its citizens. Every dollar that it borrows must come from the same source. When governmental expenditures double in a single year, as they are doing now, it stands to reason that the drain on the pocketbooks of the people has got to be nation-wide, with nobody escaping it. Whether the small income-earner realizes it or not he willhave to bear a portion of the public burden, for the cost of this war will be far too large to be borne by any one class of the people. Sooner or later it will distribute itself on all of them.

Have you a realization of what I mean when I say that the cost of this war is going to be stupendous? Well, let me predict that it will probably require more money from the treasury of the United States than the national government spent in all the years of its history from the first inauguration of Washington down to the assault on Pearl Harbor. Surely I do not need to argue the point that in order to finance this enormous outlay we shall have to deny ourselves many things that we have been accustomed to enjoy, and our governmental authorities should set the example by lopping off every expensive activity that is not directly or indirectly related to its one supreme task. In order that the war program shall have a 1-A-1 priority all things else must be pushed aside.

This applies to public expenditures in all branches of government. State and local budgets should be scrutinized with greater care than ever before. No better service can be rendered by state and local governments to the cause of national defense than by lessening their own burdens on the citizen so that he may more easily respond to the calls which the national government is making on him. Chairman Doughton of the Ways and Means Committee cogently expressed the idea when he said, not long ago: "The national government helped the states and municipalities with their relief, roads and a lot of other projects at a time of depression when they needed it. Now they should turn around and assist the federal government by helping to clear the decks for its financial program."

Still the amount which can be saved by economies in state and local administration will not be relatively great. The states, counties, cities and other municipalities—all of them put together—spend only a small fraction of what the federal government is spending. It is in Washington that the pruning knife must be used, and used with energy, if we are to accomplish reductions on any large scale.

Unhappily the layman who talks about saving billions in non-defense expenditures does not always appreciate the inherent difficulties of the problem. Of course there should be, and cap be, large reductions in what is now being spent by the federal government for non-defense purposes, but they will not be made by merely hoping for them. Governmental economies require study and planning; they also require the force of a vigorous public opinion behind them. In this respect the recommendations which have already been submitted by well-informed committees and organizations may well serve as a basis for congressional action.

The joint congressional committee of which Senator Byrd is chairman and the Brookings Institution of Washington have already made thoroughgoing studies of non-defense expenditures and have recommended numerous economies, some of which are certain to be followed, in part at least. But with the brunt of war costs bearing more heavily upon us month by month, the need for a much more considerable reduction in non-defense expenditures is bound to become increasingly great. All classes of the people will demand it.

In trying to reduce these non-defense outlays, however, two major difficulties are being encountered: First, there is the problem of differentiating between purely defense expenditures and those that are partly or indirectly for defense. Second, there is the inevitable difficulty of overcoming the political pressure which is always exerted by existing governmental agencies against any curtailment of their appropriations.

The line between defense and non-defense expenditures is not so clear as many people think. And in any event it is bound to change from time to time as the war takes new turns. Activities which appear to be non-defense today may be urgent war requirements tomorrow. In a war of production and transport, such as this one is, the situation can change with great rapidity. We have learned that from the world events of the past two years. Just take the upkeep of public highways as an example. Roads that are merely scenic drives today may easily become major lines of supply to the armed forces before the war is over. There is no simple formula by which we can clearly separate defense from non-defense expenditures. There is a twilight zone in which it is hard to tell whether some governmental activities are not worth preserving in war time despite the fact that on the surface they do not appear to be defense activities. In a total war one has to consider the morale of the whole people and not merely the upkeep of the armed forces.

But that is not the greatest difficulty. More formidable is the fact that powerful groups have acquired a vested interest in all sorts of civil expenditures during the past ten years. And there is nothing more tenacious than a pressure group once it has got its hooks into a public treasury. Efforts to curtail federal expenditures, even for activities which are clearly non-defense, will meet with opposition from such sources.

Two examples will illustrate what I mean: The Civilian Conservation Corps was set up to serve a useful purpose at a time when it was urgently needed. Young men and boys who could not find work were taken off the streets, sent to CCC camps, and given training which enabled many of them to become self-supporting. But today any robust young man who wants a job can find one, so that the original need for CCC camps has virtually disappeared. This does not mean that the pressure for continuing them has disappeared. On the contrary, rather obvious attempts have been made to keep this project going despite the fact that CCC boys have been flocking out of the camps into the Army or into profitable jobs. m mm

Another example of a depression activity which struggles to keep itself going is the National Youth Administration. At a time when jobs were scarce it served a meritorious purpose. It helped to keep thousands of our youth in school and college when there was nowhere else to go. But is there any sound reason for spending nearly a hundred million dollars on this enterprise in 1942 when jobs are hunting for men, not men for jobs?

Then there is our old friend, the W.PA. Over a million-and-a-half persons were employed on various federal work projects during 1941, at a cost of well over a billion dollars. A considerable part of these W.P.A, projects can be regarded as contributing directly to national defense, especially in connection with the construction of roads, airports and some public buildings. But the major portion of the outlay has been going for parks and other recreation facilities, sewers and sanitation, as well as for various things that are classified under the general heading of "conservation of natural resources." By deferring these latter projects until labor and materials are more readily available a saving of several hundred million dollars would result.

The same is true of various other expensive federal outlays such as those for theater, music and art projects, as well as for research in local history and the like. They were devised to make work when work was scarce and they served that purpose; but is it sound policy to continue them when the conditions which brought them into being are past and gone?

The men and women who have been administering these enterprises will struggle to keep their own places on the public payroll. That is to be expected. And regardless of need the projects are likely to be kept going unless an active and aggressive public opinion insists that it is time for them to make a graceful exit. The primary justification of all these so-called cultural activities, financed by federal funds, was that they were essential for the relief of the "white-collar" unemployed in the days of economic depression. Employees of this type are now in urgent demand and the only white-collar workers now unemployed are the ones who are virtually unemployable.

Finally, there would seem to be considerable opportunity for federal economies through the curtailing of government publications. Who is there among us that does not get, in every morning's mail, a printed or mimeographed effusion from some government department, bureau, board or office? Many of these serve no useful purpose; they represent a sheer waste of good paper and ink. Every federal office nowadays seems to have a publicity or public relations man whose job is to turn out reams of this material which nobody reads and which most sensible people would not believe if they did. If this output were reduced to fifty per cent of its present proportions, or even more, we would all be just as well off, or better.

No country ever spent so much in all history as the United States will be spending on war activities during the next yearor two. We are told on high authority that taxes will take at least a third of the national income and that in addition the national debt will have to be doubled or trebled. We have grown so accustomed to having astronomical figures hurled at us that most people fail to realize the far-reaching significance of all this. The national wealth, which has been accumulated by five generations, is being dissipated at a rate which only a few years ago nobody would have thought possible. Surely this is no time to let dollars go out of the federal treasury for things that are not connected with the emergency. . . . .

In the last analysis public opinion rules the United States. Congress will vote money when the country is content to have it done, and will reject any appropriation that is clearly opposed by the rank and file of the citizenship. See how quickly an aroused and resentful public opinion forced a repeal of the pension measure a few weeks ago. If it exerts itself with similar strength on the necessity of rigid governmental economy, whether in national, state or local budgets, it will achieve the same success. But public opinion is not a spontaneous emanation from the minds of the multitude. It requires leadership. To be effective it must be based on sound information. That being the case, there was never a time when taxpayers' associations and other such bodies have been more urgently needed in mobilizing public sentiment against every form of needless public expenditure. We can finance this war all right, but only by devoting all our available resources to it.