Federal Expenditure and Revenue Policies: Hearing Before the Joint Committee on the Economic Report, Congress of the United States, Eighty-first Congress, First Session, Pursuant to Sec. 5 (A) of Public Law 304, 79th Congress. Sept. 23, 1949 |
Other editions - View all
Common terms and phrases
achieved American Economic Association automatic flexibility balanced budget board of trustees boom budgetary business activity cash budget Chairman Christian Sonne Congress Congressman Buchanan contribute to economic countercyclical credit policies decrease deficit deflationary document dollar economic judgment ECONOMIC REPORT economic stability effect Employment Act expansionary EXPENDITURE AND REVENUE expenditure programs fiscal policy forecast formula flexibility FRANK BUCHANAN going Government expenditures Government's impact inflation JOINT COMMITTEE Keynesian legislation LELAND let us say measures ment monetary money and credit national debt National Planning Association needed nomic percent periods of depression periods of prosperity personal opinion planned economies political present principle private business private economy problem professor of economics purchasing power question recession result savings secular Senator DOUGLAS Senator FLANDERS Simeon E SMITHIES statement stimulate subcommittee tax rates tax reductions taxation thing unanimously unbalanced UNITED STATES SENATE University upward swing WRIGHT PATMAN
Popular passages
Page 7 - Thus, in conditions of continued prosperity, a modified version of the balancedbudget rule could be used as a guide: Taxes should grow or shrink corresponding to desired changes in expenditures. Thus, proposed increases in expenditures would be exposed to the traditional test of whether they are worth their cost in terms of taxes. However, if recent events and the...
Page 7 - ... a, sign of weak government and comes from eagerness to spend without a willingness to tax. Accordingly, other general principles, other habits of thought and of action must be set forward to insure the standards of judgment and the selfdiscipline of Government's activities and to do better what the principle of annual budget policy attempted — though imperfectly — to accomplish. Experience shows that business activity has its ups and downs. There is thus a strong case for countercyclical...
Page 17 - ... of uncertainties, part of the planning process should be preparation for quick adaptation of fiscal operation to changing circumstances. Certain automatic devices for bringing remedial forces quickly into play are in a stage where they deserve consideration. GUIDES TO FISCAL POLICY IN NORMAL TIMES When the economy is prosperous and stable and there is no clear-cut reason to expect a change in any particular direction, the objective of policy should be to adapt the budget to changes in the Government's...
Page 7 - Certain automatic devices for bringing remedial forces quickly into play are in a stage where they deserve consideration. Guides to -fiscal policy in normal times When the economy is prosperous and stable and there is no clear-cut reason to expect a change in any particular direction, the objective of policy should be to adapt the budget to changes in the Government's requirements but to leave its economic impact on total employment and purchasing power unchanged. This could be approximately achieved...
Page 9 - We feel strongly that the existing automatic flexibility makes an important contribution to economic stability, which should not be frittered away, as it would be, for instance, by rigid application of the annual-balanced-budget rule. But we do not believe it prudent for policy to regard automatic flexibility as more than a first line of defense; more must be done to cope with serious economic fluctuations.
Page 7 - ... set up as to that? Dr. SMITHIES. Could I touch on that, Mr. Chairman? Senator DOUGLAS. Yes. Dr. SMITHIES. That, of course, is the essential and difficult problem from the point of view of the Congress and we struggled with that in our statement, and we have three possible cases. The first one is: When the economy is prosperous and stable and there is no clear-cut reason to expect a change in any particular direction, the objective of policy should be to adapt the budget to changes in the Government's...
Page 6 - ... abundant. This, of course, would aggravate the fluctuations in private business. The problem of controlling Government expenditures Annual budget balancing is, thus, both difficult in practice and unsound in principle. But one great merit it does have : it provides a yardstick by which legislators and the people can scrutinize each activity of Government, testing it both for efficiency of operation and for its worth-whileness in terms of cost. Every Government program undertaken has to be paid...
Page 8 - Guiding principles in time of acute recession or boom Where there is a definite expectation, justified by events, of serious recession or inflation, more strenuous fiscal measures would be called for, and the policies described above should be supplemented by emergency fiscal action. In the event of severe recession, it is not only politically...
Page 9 - ... Automatic -flexibility Automatic flexibility is exemplified by the unemployment compensation system. If unemployment increases, employers' contributions at once decline, while the unemployed begin almost immediately to draw more in benefits. Thus the Government finds itself automatically taking less money out of the public's pockets and putting more in. There are now many such flexible elements in Federal taxes and revenues; and they have greatly increased in importance with the growth of the...
Page 11 - Ellis, professor of economics of the University of California, and now president of the American Economic Association. Dr. J. Kenneth Galbraith, department of economics, Harvard University. Dr. James K. Hall, professor ojf economics, University of Washington, Seattle.