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and avoids the large overflow into other industrial development program is the fact Let there be no mistake: The tax bill this brackets that would accompany the increased that as a percentage of total civilian per Nation needs and when you eliminate the exemption approach that is sometimes pró- sonal income from productive activity-in capital gains reductions the bill this Naposed.
The income-averaging provision come from manufacturing in Arkansas rose tion now has before it, is not a bill to make would remove the present inequitable tax by 2 percent from 1957 to 1962, while for the the rich richer. It is a bill to make this treatment of bunched income. New deduc- Nation as a whole, such income declined by 2 Nation richer, stronger, and more productive tions for moving expenses would improve percent during the same period.
in jobs, in investment, and in Government the mobility of labor and thus ease the prob Figures such as these demonstrate how revenues. It is a bill that has the support of lem of structural unemployment. The re successful you have been in making Arkansas the AFL-CIO as well as the chamber of peal of the dividend credit, as well as the an extraordinary attractive magnet for new commerce, of academic economists as well tighter rules governing the tax treatment of and greater industrial investment. A num as business economists. It is a bill that stock options, depreciable real property, the ber of other investors from various parts has the support of citizens in all occupations aggregation of unrelated oil and gas prop of the Nation have made known their inten throughout the land. erties for depletion purposes, multiple surtax tion to expand into Arkansas when the time One great concern of many citizensma exemptions and others, would help rectify is propitious. That time will come when concern fully shared by the President and existing inequities, broaden the tax base, or the removal of repressive wartime tax rate by the Congress--is that tax reduction be offset what would otherwise be excessive tax opens the way to more buoyant and sus accompanied by strict and careful control reduction for privileged groups.
tained economic growth and sharply in over Federal expenditures. There is neither The tax bill, therefore, represents a good creases the incentives for expanded invest time nor need to cite the wealth of evidence start toward greater simplicity and equity ment in plant and equipment. These major that the administration and the Congress in our tax structure-toward the kind of re increases in the incentive to invest at home, are not only committed to a firm program of form that Chairman Mills and I would like rather than abroad, are also, of course, an expenditure control, but that such a program to achieve. If it is not all we would like, essential and highly important part of our is already well underway. Let me simply emthat is because the economic urgency of program to achieve balance in our inter phasize a few major points: immediate tax reduction must override our national payments.
First, the President, Chairman MILLS, and desire for thoroughgoing revision of our tax Expanded investment will flow not only the House of Representatives, in endorsing structure.
from the large direct tax stimulus to busi their views, have all made it unmistakably Nothing should delude us into thinking ness that I have just described, but also clear that, by adopting the tax bill, the that tax cuts are no longer as important as from the substantial boost in consumer de Nation will be choosing, in Chairman MILLS' they were 6 or 9 months ago. True, we are mand that will result from the individual words, "tax reduction instead of deliberate now enjoying moderately pleasant economic tax reductions. Nearly $9 billion of the over deficits as the principal means of boosting weather, and the current upturn demon all tax reduction will go to individuals. our economy,” that they consider these strates that there are basic strengths in our Well over 90 percent of that money will be courses mutually exclusive, that, in short, economy. But we cannot be so blinded by spent, setting in motion the familiar eco the tax bill represents a firm decision to rely the bright spots around us that we fail to nomic process in which money circulates upon greater private spending rather than see the pitfalls that lie ahead.
throughout the economy and ultimately in upon greater Government spending as the The fact is that this year's upturn, as well creases consumer spending by several times prime factor in our economic growth. as the entire recovery since 1961, have failed the amount of the initial tax cut. That Second, the fiscal 1963 deficit dropped to make adequate inroads into the persistent strong and sustained rise in consumer de from an estimated $8.8 billion to an actual and serious problems that have plagued us mand-and thus in markets for industry $6.2 billion, and two-thirds of that decline ever since 1957—long-range problems that will further bolster the direct tax incentives resulted from lower expenditures. The largthe tax cut is designed to alleviate. For the to investment.
est single factor in those lower expenditures past 6 years our unemployment rate has been Without this kind of balanced stimulus was the administration's policy of substitutmuch too high. We have been unable to to both consumer demand and investment ing private for public credit, a policy the adreduce it at all over the past 12 months, a incentives, we will not have the expansion ministration intends to continue in the period in which gross national product grew in all sectors of our economy that we must future. Fiscal 1964 expenditures are curby $32 billion or 534 percent. If we do not have if our overall growth is to be both rently estimated at $1 billion below last greatly improve our performance, and soon, strong and durable. Those who suggest that January's estimate. Partly responsible for then the sharp increase in our labor force the tax reductions are too heavily weighted that decline is the fact that, as Chairman over the next few years will result in more in favor of either consumer demand or in CLARENCE CANNON of the House Appropriaand more unemployment, followed closely by vestment, simply do not understand that tions Committee, has pointed out, this year's irresistible pressures for ever greater Govern fact. Similarly, those who suggest that the appropriations are being held below last ment spending. This is just one of the crit individual tax reductions favor the upper year's, the first time that has been done ical problems that brings into bold relief income groups forget that, by the very nature since the end of the Korean war. Also rethe undiminished urgency of the tax bill as of our steeply progressive tax rate structure, sponsible is the extremely prudent managea balanced stimulus to more rapid and more equivalent percentage rate reductions in the ment of Government personnel instituted durable economic growth.
lower and upper brackets inevitably mean at the President's direction. This program In addition to its rate reductions, the tax much greater increases in after-tax income has enabled the Federal Government, during bill would improve 1962's investment credit in the upper brackets—particularly if the the past 12 months, to meet the needs of our by restoring the provisions originally ap reductions in the upper brackets are not expanding population while at the same time proved last year in the House of Representa somewhat offset by basebroadening reforms. actually reducing the number of its regular tives. It would eliminate the requirement To achieve equal percentage increases in civilian employees. that the depreciation basis of new invest after-tax income would simply require total Third, the President has said that in the ment must be reduced by the amount of the abandonment of any thought of reducing absence of any unforeseen crisis, he intends investment credit-thus removing the dif our current excessively high rates.
to submit a fiscal 1965 budget with a smaller ficult accounting complexities that flow from The fallacy in the after-tax income ap deficit than the $9.2 billion originally forethe current statute. In addition, repeal of proach as a measurement of tax reduction is cast for this year before any allowance for that requirement would almost double the clearly shown by the following extreme ex tax reduction, despite the fact that during present incentive of the credit and would ample: Suppose we reduce the present bot fiscal 1965, tax revenues must absorb more give substantial additional encouragement tom rate of 20 percent all the way down to than $7 billion of the tax cut. to more rapid modernization and expansion zero. That would increase a taxpayer's after Fourth, more than 70 percent of our budgof plant and equipment.
tax income from $80 to $100, or 25 percent. etary increase from fiscal 1961 through fiscal The 48-percent corporate tax rate, when Now look at our highest bracket, 91 percent, 1964 occurred in the area of defense, space, added to last year's investment credit and with 9 percent left after tax: An increase of and interest on the national debt. Excludrevised depreciation guidelines, would re 25 percent in after-tax income at this level
ing these items, the overall record in all duce corporate tax liabilities by a total of would be 294 percent, or a total after-tax other areas of Government over the past 3 $4.5 billion annually. An when you add to income of 1114 percent, giving a top tax years has been markedly better than that of this the proposed liberalization of the in rate of 8834 percent. Thus almost any re the preceding administration. Our expendivestment credit, the after-tax profitability duction in our top individual tax rates is ture increase has been some $1.2 billion, or of new investment would be increased by bound to give a greater percentage increase
nearly 25 percent, lower than the $5 billion more than one-third. in after-tax income to today's 91-percent
increase in those very same items over the I do not have to emphasize to you here in taxpayer than to the present 20 percent-taxArkansas how vital such tax incentives are
3 preceding years, fiscal 1958 through fiscal payer. to greater industrial growth and expansion. Under the current bill, when you consider
1961. And as Budget Director Kermit GorFew States are more intensely concerned with the total effect of rate changes and struc
don pointed out last week in testifying beindustrial progress than Arkansas. Few can tural reforms, nearly 60 percent of the over
fore the Senate Finance Committee, the need match your recent achievements. From 1957 all individual tax reduction goes to those in
for continuing expenditure increases for deto 1962, for example, Arkansas per capita in- the under-$10,000 income group, with their fense has just about ended and will soon come grew by 31 percent, or by almost double share of the total income tax load being
begin to taper off on space programs. the 16-percent ügure for the Nation as a slightly reduced from 50 percent to 48 Why is it, then, that one still encounters whole. Even more revealing in terms of your percent.
doubt and confusion in many quarters? The
answer, it seems to me, is failure to under increasingly enlarge the role of the private companied by a reduction in spending, by a stand how our Government in Washington economy in meeting our economic needs. balanced budget, or by tax cut reforms which actually works. In effect, we have two budg. No one knows for certain what our imme aim solely at redistributing, rather than reets: One, familiar to all, records expendi- diate future holds. What is certain is that ducing, the total tax burden on the econtures as we meet our bills. The other and far we cannot afford to be so shortsighted-or omy.” more important budget is probably known to so forgetful of our postwar economic his This quotation comes from page 17 of the only 1 out of every 1,000 Americans. This is tory—as to assume that because we are do first report of the Consumer Advisory Counthe budget of new appropriations from which ing relatively well today, we are doing any cil appointed by President Kennedy in midall spending flows.
where near well enough to simply let mat 1962, published October 1963, and just made In our private lives, the proper way to ters proceed as they are into the future. available to the public October 8. cut spending is not to refuse to pay our old Outside of the prospect of a prompt tax cut, The report was made to Dr. Walter Heller, bills, but to stop incurring new ones. It is starting next January 1, there is nothing in Chairman of the President's Council of Ecojust the same in government. Once the our present economic situation or in our nomic Advisers, which he transmitted to the Congress appropriates funds for previously past history that permits us to expect that President on October 1, 1963. The quotation authorized purposes, the President, with one we can ride out 1964 on a continuing up I have just read is a clear expression of the important exception-permitting him, swing. By next April 1, it will have been 37
economic-political philosophy of the PresiCommander in Chief, to refuse to undertake months since the end of the last recession.
dent's Council of Economic Advisers and is defense expenditures for purposes which he If we are still in an upturn, it will be the the basic theory which underlies President deems to be unnecessary or unwise—has no longest peacetime recovery in this century, Kennedy's message to the Congress urging clear authority to refuse to spend those with the single exception of the 1933–37 the Congress to reduce Federal income taxes. funds. pullout from the great depression. And a
This is the economic-political theory that While Government agencies are responsible downturn, even of the relatively mild
led President Kennedy in his Yale speech to for the prudent management of their oper magnitude of our last two recessions, could refer to balanced budgets and an abhorrence ations, the power to arbitrarily eliminate easily cost us between $5 and $10 billion in
of Government debt as worn out, useless and congressionally approved programs is simply Federal revenue. It would also bring soar
dangerous shibboleths. It is this economic - not available. Only if he were clothed with ing unemployment, which in turn would
philosophy that lay behind Dr. Heller's statesuch power could a President carry out sig- inevitably lead to greater Government
ment in his testimony before the Joint Econificant reductions in congressionally apspending. The result would be a deficit that
nomic Committee that we needed to educate proved programs outside the area of defense. could range as high as $15 or $20 billion-a
the public away from its Puritan ethic. This would require that Congress entrust deficit accompanied by unnecessary suffer
President Kennedy in his nationwide telethe President with the right of the item ing and privation, and far larger than any
vision and radio appeal to the people to veto—a right that Congress, in defense of its we foresee with tax reduction.
support the proposed Revenue Act of 1963, own prerogatives as a coordinate branch of The more we delay on the tax cut, the
then pending in the House Rules Committee, government, has consistently refused to turn more we risk losing the opportunity now
stated that this proposal was probably the over to the executive branch. before us of choosing, decisively and firmly,
most important measure to face the Congress Thus, once the appropriation budget has to expand the role of the private sector in
in the past 15 years. The President stated been adopted, expenditures are sure to fol achieving economic growth and in meeting
that without this tax reduction bill we low-but only on a delayed basis. Since
national needs. We risk, as well, foregoing might face a serious recession. Both he and many of the dollars in appropriation bills into the far future the single best hope for
Secretary of Treasury Douglas Dillon have go for such things as public works and comending our chronic budgetary deficits, and
referred to this tax reduction bill as the plex defense or space hardware, the bills for reinvigorating the incentives for in
answer to the unemployment problem, the often do not come due for several years. For creased effort and investment.
balance-of-payments problem, the problem instance, only about half the money we will
We could not be in a better position to
of economic growth, and the problem of oppay out this year, fiscal 1964, will come from adopt the tax bill than we are today. We
erating on balanced budgets. this year's appropriation bills. The rest will know that our economy is still on the way
In his earlier Yale speech President Kencome from moneys appropriated in earlier up. We also know that beyond the first few
nedy had asked that there be a nationwide years. months of next year, its course is uncertain.
debate on the subject of fiscal and economic Now, just what does all this mean when we We can pass the tax bill this year, and let
policy so that the public would understand look at expenditure control in the context the current upturn serve as a springboard
its backwardness in failing to grasp modern of today's situation? It means simply that toward the more rapid and sustained eco
economics, we should pay continuing and close attennomic growth that we can and must achieve.
Some of us in the Congress who are in tion to new appropriations instead of merely Or we can fail to pass it and cast our entire
basic disagreement with the President and watching the current level of expenditures. economic future into doubt. I do not see I venture to say that there are few among how our choice could be clearer or more
with Dr. Heller on this theory which we think
is not new, but old, have sought to conduct you who realize that during the fiscal year important.
such a debate. We say this is the old disthat ended last June, a total of $101.5 bil
credited economic theory that cheap money lion in appropriations was approved—$9 bil
brings prosperity, dressed up in the new solion more than was spent. That is why ex The State of the Union: Congress phisticated language of the neo-Keynesian penditures during the current fiscal year will
Contribution rise by about $5 billion from last year's level
economists who promote it. May I say that
those who asked for the debate have run of $92.6. And even if we succeed, as Con
away from it, including the President? gressman CANNON hopes and expects, in hold
EXTENSION OF REMARKS
In order to overcome the opposition of ing this year's appropriations to last year's
many of the Democratic Members of the $1011/2 billion level, fiscal year 1965 expendi
House of Representatives of a tax reduction tures, which include the costs of many pro HON. THOMAS B. CURTIS bill in the context of massive Federal debt grams and projects approved in previous
and continued deficit financing which would
OF MISSOURI years, can be expected to rise somewhat above
create further debt, the President abandoned the 1964 level as a natural response to the IN THE HOUSE OF REPRESENTATIVES a basic part of this novel planned deficit lingering effects of earlier appropriation
Monday, November 4, 1963
financing theory, at least in words. In his budgets.
radio and television speech on nationwide However, to the extent we level off appro Mr. CURTIS. Mr. Speaker, I do not hookup, he stated that we would impose priations, our future bills—and hence our often put in the RECORD speeches I have even tighter controls on Federal spending. future expenditures—will also level off, but made. However, because of its timely
Query: Have the controls that have been imonly after the usual and necessary time lag subject matter, and because I was forced
posed in the past on Federal expenditures of about 2 years. To those who say that we should not cut taxes and increase expendi
by President Kennedy been tight controls? to give it by telephone due to the legislatures at the same time, I say simply this:
The record shows expenditure increases have tive business before the House that day,
jumped from the $1.3 billion per year averLook at the record being written today in I am including it in the RECORD at this
age of the Eisenhower administrationnew appropriations instead of merely con point:
which was bad enough-to over $6 billion centrating on the level of expenditures re
THE STATE OF THE UNION: CONGRESS increase a year under President Kennedy. quired to meet old bills. When you look at
In other expressions since then, the Presithis year's appropriations and compare them
dent has sought to convey to the Congress with last year's, you will see a clear example (Remarks of the Honorable THOMAS B. CUR
and the people that he agrees with his opof firm expenditure control-a record that
TIS, Republican, of St. Louis County, Mo.,
position, that in order for tax reduction to will show up in the spending level of future
at the annual meeting of the Associated
be economically beneficial it must be ac
of Missouri, Statler-Hilton
companied by Federal expenditure reform. Therefore, there is simply no reason for
Hotel, St. Louis, Mo., Wednesday, October
Furthermore, the President agreed to the undue delay on the tax bill. It will not 30, 1963)
last minute amendment to the tax bill to only give us expanding economy that will "It must be made clear to the public that save it, stating that it was the sense of Congenerate the greater Federal revenues we much, if not all, of the stimulating effect of gress that there should be Federal expendineed to balance our budget, but it will also a tax cut might be nullified if it were ac tures control. The President has made no
effort to disassociate his thinking from the In spite of this fact, the Kennedy admin- 1964, and go through November 1964, a very arguments advanced by Congressman MILLS istration has continued to push its economic crucial period for those who are thinking of and the other Democratic Congressmen who and fiscal policies based upon this discredited reelection. But surely an expenditure rate spoke during House debate against the Re theory.
of $98 billion, which is $17 billion more than publican proposal to establish specific ex The gap theory presumes, rather than
the expenditure rate of the 1960 election penditure figures for the 2 fiscal years covered establishes as a fact, that the economic
year, should not be objectionable to anyone These arguments accepted growth rate has been inadequate since-well,
who plans to exercise-I quote: "Even tighter the premise that expenditure reform was really since President Eisenhower took office.
expenditure control." essential if the tax bill were to have a bene It is argued if we had full employment and ficial economic effect, but alleged (1) it was full plant utilization during those years the
I was quite unhappy with the amendment
to tie expenditures to a $97 billion figure wrong not to trust the President's state growth rate would have been 5 percent inments that he was going to cut back on stead of 3 percent. Furthermore, if we had
in fiscal year 1964 and a $98 billion figure expenditures, and (2) that anyway Congress had the economic growth we should have
in fiscal year 1965. In my judgment, this is
entirely too high for the kind of expenditure should assume the responsibility by cutting had, the gross national product would then have been sufficient to produce the Federal
reform needed to make a tax cut of $11 billion the appropriation requests and not pass the buck to the President, revenues necessary to pay for the expendi
economically helpful to our economy, overtures of Government. Not a person supported the economic phi
In other words, we
burdened as it is with both high taxes and losophy of planned deficit advanced by Dr. would have had a balanced budget. Ergo, high debt. The minority views of the ReHeller and President Kennedy during the these theorists argue, plot out a course for publicans on the Joint Economic Committee, House debate.
the future based upon attaining a growth published in early February this year, recomI stated in my remarks during the debate, rate of 5 percent and we will have full em mended holding expenditures to $94 billion "How are we to conduct a national debate on ployment. The fact that from 1860 to 1960, a for both 1964 and 1965, to justify a tax cut. whether we should abandon the Puritan period of more rapid growth than probably The study of the Tax Foundation commitethic if those who advocate this course run any society has experienced in history, we
tee, just published, recommends holding exaway everytime we meet in a common grew at a rate of 2.9 percent a year, not 5
penditures to $95 billion for these 2 fiscal forum?" percent, doesn't seem to phase these theor
years if the tax cut is not to cause damage Although the administration will not en ists at all. Like King Canute's courtiers
to our economy. gage in straightforward public debate on they would whip the seas if the tide con
Before going further I must point out some this subject, let us not be misled. It has tinued to ebb and flow.
congressional fiscal procedural facts that are not abandoned its efforts to push through In order to have this growth rate the Ken
all too little known by the public and, if I its tax program minus expenditure reform. nedy administration argues we must increase Regrettably, the tactical defeat the neo total purchasing power in the society. Dr. may say so, by Congressmen themselves.
Congress has never established the machinKeynesian economists and politicians have Heller says he prefers to stimulate private
ery necessary to produce a legislative budgexperienced in the congressional and other purchasing power first rather than govern
et. The only true budget we have is the public forms where equal time and honest ment expenditure to do this job. But he
Executive budget, prepared by the President debate can be conducted has only resulted warns (and this is echoed in the President's
with the help of the Bureau of the Budget, in increased efforts in the use of indirect state of the Union message to the Congress
as required by the Budget and Accounting methods. this January) if the private sector does not
Act. The only authority Congress has reIt is one thing to abandon a basic theory respond to the governmental prodding, or tained for itself in the field of Federal exand course of action deliberately after full the Congress fails to follow his wise advice
penditures is over the President's request for public debate. It is quite another thing to to prod the private sector (through tax re
new obligational authority to spend. abandon it without debate on a false assur duction) then Government will have to move
the grant of new obligational authority to ance that it is not being abandoned. in by massive Federal spending, This is a
spend that we refer to as an appropriation The Kennedy administration states in threat none of us who believes in the private
bill. words that it believes in a balanced Federal enterprise system should ignore,
For fiscal 1964, for example, the President budget, but its deeds belie the statement. Hence, it is basic to the Kennedy-Heller
requested additional new obligational auIt seeks to go beyond the acceptable economic theory that Government expenditures not be
thority to spend of $108 billion. Only about theory that the budget need not be balanced cut at the same time we cut taxes to increase
40 percent of this amount is scheduled to on a yearly basis, to argue that it no longer private spending because total purchasing
be spent in that fiscal year; the bulk of the need be or should be balanced upon the basis power-Government plus private-will be
authority is scheduled for expenditure in the of a business cycle. According to the new dampened.
ensuing fiscal years. theory, the budget should be balanced only This is the only logical explanation for the
As of July 1, 1963, the beginning of fiscal when unemployment reaches a certain per President's refusal to accept the very modest
1964, the President's budget presented in centage of the labor force. The percentage proposal of the Republicans that specific January estimated there would be a carryselected is 4 percent-which in itself should dollar expenditure amounts be set out in the over balance of unexpended previous obligabe the subject of far-reaching study and tax bill in lieu of general expressions of in
tional authority to spend amounting to $87 discussion.
tent, such as "tight controls" and "expend billion. Inasmuch as the expenditure rate It is argued that when the economy has iture reform."
for 1963 set forth in this budget was lowered full employment (not more than 4 percent The President's budget, submitted in Jan from $94.6 to $92.6, there should theoretically unemployed) the gross national product will uary this year, calls for an expenditure rate be another $2 billion authority to spend increase to a point which will provide the for fiscal 1964, which begins July 1, 1963, added to this $87 billion. So the total autax base necessary to produce the revenues of $98.8 billion. Secretary Dillon testified thority the President would have to spend, if to cover the governmental expenditures and, just a week before the tax bill was debated the Congress granted to him his full request hence, produce a balanced budget.
on the House floor that the President had of $108 billion, would be $197 billion. This syllogism presupposes that our em cut back this expenditure rate to $98.2 bil It is from this pool of $197 billion auployment and unemployment statistics are lion. The Republican proposal was to cut thority to spend the President has said he sufficiently accurate to enable the policy de this rate back to $97 billion.
would spend only $98.8 in fiscal 1964 (poscisions and the judgments necessary to be
Let's get these expenditure figures into sibly revised to the $98.2 billion Douglas Dilmade intelligently. I know of no student of context. The revised expenditure rate for lon told the Ways and Means Committee). economic statistics who claims such a refine fiscal 1963, which ended June 30, 1963, sub The Congress has retained little or no conment for our economic statistics.
mitted in the January 1963 budget state trol over the yearly expenditure rate. The The base of this sophisticated economic ment (containing the proposed budget for
President can freeze programs, accelerate theory goes back a few years to the model on fiscal 1964) was $94.6 billion. Actually, the
them, decelerate them; do just about what economic growth prepared by Dr. Otto Eckexpenditure rate turned out to be $92.6.
he pleases within the limits of the basic stein, of Harvard, for the Democratic memThe expenditure rate for fiscal 1962 was $87.8
legislation. bers on the House-Senate Joint Economic billion. For fiscal 1961 it was $81.5. So you
This is where the tax debate lies. The Committee. This model propounded the
Congress seeks to limit the President's total novel theory of an economic gap between the increasing rapidly, over 20 percent in just see we are talking about rates that have been
expenditure levels for the next 2 ensuing potential growth in our economy and its
fiscal years to a figure that in congressional actual growth which, along with the missile 3 years.
judgment would reduce the amount of Fedgap, became the base of Senator Kennedy's
Now, why would the President quibble
eral bonds that would have to be sold to campaign for President in 1960. The validity over a less than 2-percent cut in expendi
make up for the revenue loss resulting from of this economic model of Dr. Eckstein was ture when he said he was going to apply
a tax cut to a size that would not destroy challenged as soon as it was enunciated in ever "stricter expenditure controls”? Let's
the economic gains that a tax cut would the very document, the Joint Economic Com
look at the second part of the Republican otherwise produce. The President doesn't mittee report, in which it was first presented, motion. It limited the expenditure rate for
want his power to fix the level of expendiby the Republican members of the com fiscal 1965 to $98 billion. Many of us think
tures each fiscal year controlled by the mittee.
the President had, and still has in mind, an Congress. Since that time the gap theory has been expenditure rate for fiscal 1965 of around And now, a word about the increase in demolished time and again by many notable $105 billion, so this would be a 7-percent cut. the debt ceiling the President has again economists, among them Dr. Arthur Burns. Furthermore, this cut would begin June 30, asked the Congress to grant to him. This
so-called debt ceiling is merely the Liberty all this? Is this the year we should choose ful 33d world travel congress sponsored Loan Act of 1917 as amended from time to for establishing our optimum ratio of the by the American Society of Travel time. It limits the total amounts of bonds Federal debt to GNP or to State, local, and Agents which completed its week of dethe Federal Government may have outstand- private debt? Hardly so. Far from the ing: $309 billion is the the present ceiling. optimum year, it is the worst year we could liberations in Mexico City, October 26. It is insufficient with our insufficient tax possibly pick. It is the year immediately
The American Society of Travel revenues to provide the cash to enable us following the greatest period of Federal Agents, familiarly known as ASTA with to pay the expenditures to which we already deficit financing in our history-deficit its more than 6,000 members, is the have committed the full faith and credit financing we indulged in to win World War world's largest
world's largest body of professional of the United States. Regardless of the fact II. But surely we expected to pay off on travel counsellors and representatives of that the Congress will probably cut around that debt and get back to a more economi
all facets of the gigantic industry, which $5 billion from the President's $108 billion cally beneficial peacetime ratio as soon as
in 1962 recorded a total of almost $3 bilrequest for new obligational authority, this we could. Our optimum peacetime ratio is insufficient to even come close to a bal should be below 30 percent. We are still at lion in foreign travel alone. ASTA is anced budget. We are operating close to $1 54 percent 17 years after the war is over and working closely with the U.S. Travel billion in the red each month and the tax 70 percent of this decline was the result of Service in energetically promoting the cut, without expenditure reform, would push the damaging post-World War II inflation, stimulation of tourism to the United us over the $1 billion a month rate of deficit. hardly an economic and fiscal course to States from abroad and its contribu
Once the Congress gives the President the boast about or to emulate. The peacetime tion to this program will be reflected in authority to spend, and he does spend, the ratio of Federal debt to local and State debt the reverse dollar flow. Congress must authorize the sale of bonds should be well below 50 percent. It is still to get the money to pay the bills if our tax over 70 percent.
The importance of the 33d world conrevenues are insufficient to meet them. Our Private debt, both business and personal, gress, with its theme “Promise of the tax revenues are still insufficient to meet our is related to capital assets and earning Future,” is best indicated by the fact bills.
power. So is most State and local debt. that it was opened by His Excellency, However, the President has been warned However, the reverse is true of the Federal Adolfo Lopez Mateos, President of the by the Congress in the previous bills increas- debt. The Federal Government spends priRepublic of Mexico, who personally ading the debt ceiling that if he does not cut marily and overwhelmingly for national dressed the delegates. Messages from back on his spending plans in an orderly defense. Defense spending, whether for
the President of the United States and fashion and present to the Congress a sched- tanks, missiles, aircraft carriers, or whatever,
the Prime Minister of Canada were deule revising the expenditures downward, does not produce capital or earning assets. Congress will force him to do so by not giving It must go on the books at $1. We sell, each livered by their respective Ambassadors. him authority to sell more bonds. This is year, about $8 billion of surplus military Of particular significance, because of strong medicine and, like castor oil, it may property and realize only about 4 cents on its pertinency and its grasp of the prob
the Nation mighty uncomfortable for the dollar. Very little of the Federal debt is lems of world tourism, was the eloquent awhile.
related to economic assets and where it is, address at the opening session by our However, the President can still get around as in TVA and Ccc, here lies a good bit of colleague, the Honorable WARREN G. Congress' attempt to use the debt ceiling to the national debate of our day as to whether
MAGNUSON, chairman of the Senate Comimpose expenditure reform by selling off these are proper or efficient functions of the capital assets and using the proceeds to pay Federal Government in the first place.
mittee on Commerce. bills, instead of selling more Government Finally, we do not owe the Federal debt to
Senator MAGNUSON'S exposition coybonds. This is exactly what he did this ourselves. Seventeen billion dollars of the ered the complex problems involved in year.
Federal debt is owed to foreigners. Eighteen the extension of freedom to travel with Congress could stop this if Congress would. billion dollars is allocated for retirement benminimal restrictions as a major contribHowever, for the time being I am reconciled efits under the social security system, about utory factor in achieving peace through to have the Federal Government get out of $80 billion for other private pensions, insur
understanding among peoples. some of the investments it has, rather than ance, and retirement programs. Billions are to tax more or print and sell more bonds. set aside in savings to build homes or pro
He gave special emphasis to the need However, we are reaching a point where a vide education or to expand a business to
for legislation recommended by the good bit of the readily marketable capital provide more jobs for our people.
American Society of Travel Agents, now assets have been sold. Pretty soon the only This last argument demonstrates the full under committee and agency study, course open to the President will be to exer extent to which the mischief inherent in the which would curb the unconscionable accise real expenditure reform.
theory of deficit financing would lead us tivities of "blue sky” travel promoters. How like the profligate son who inherited it is the destruction of the private enterprise These fringe operators, by taking advast wealth from his parents this situation system, based as it is, upon the ownership vantage of laxities in the regulations, deis. He does everything he can think of to of private property. avoid cutting his high style of living, even In only one sense has President Kennedy fraud the public through fraudulent ofto the extent of cashing in a part of his understated his case and that is when he fers of cheap charter transportation and patrimony. Selling off capital assets of said the tax bill was the most important then leave the unsuspecting travelers course, brings the day of reckoning closer, measure to come before the Congress in 15 stranded far from home. but the brunt still may be borne by his chil years. The tax bill serving as a camouflage Senator MAGNUSON pointed out to the dren, rather than by himself.
for the discredited theory of prosperity ASTA congress that it is “the primary And how like the profligate son the admin- through cheap money, if it were enacted duty of the U.S. Congress and of the istration spokesmen have become. They an without amendment requiring expenditure Committee on Commerce to protect the swer criticism by arguing that debt isn't reform, would radically change the basic fisreally bad, that
this high spending is really cal policy this country has followed since the public against such malpractices through a good thing. Don't worry about debt, they disastrous experience with the Continental punitive legislation.” say.
Congress and the Articles of Confederation. A major accomplishment of the Mexi1. It is a less ratio of GNP than it was Now is the time for the people to come to co City congress was the decision to in 1946.
the aid of their Congress and back it in its sponsor a conference of national orga2. It hasn't gone up as much since 1946 defense of the Puritan ethic.
nizations of travel agents to create a as State and local debt, or as much as private debt (if I am bad, Johnny is worse).
greatly needed world body of travel 3. Federal debt is an investment in the
agents. future like
ASTA's decision to take this impor14. We owe the debt to ourselves, so it Hartke Cites Importance of World Travel tant step followed an address by the doesn't make any difference.
Honorable Milton A. Marks of Dayton, The errors and downright chicanery of
Ohio, president of the American Society these four arguments need to be hit hard and often. Why are these arguments ad.
EXTENSION OF REMARKS
of Travel Agents. vanced, if it is not to allay the legitimate
Mr. Marks described the worldwide defears our people have about excessive debts,
mand for the creation of an international so that these politicians can continue to
HON. VANCE HARTKE
body to solve the urgent needs for order spend and build a bigger Federal debt?
and cooperation created by the conthese people really believed in a balanced budget at any time, why do they take the IN THE SENATE OF THE UNITED STATES stantly increasing complexities of a con
stantly expanding international tourism trouble to attack those who oppose deficit
Monday, November 4, 1963
in which our own Nation has become an financing with such vigor? What are the flaws in these arguments that
Mr. HARTKE. Mr. President, I am important participant. debt is really not bad? What has the year in receipt of glowing reports concerning Among the basic tasks confronting 1946 they pick as a bench mark to do with the very significant and highly success- such a world body of travel agents is a
solution to the existing chaotic conditions ASTA likewise has given strong support to of this amount $395 million or more than created by conflicting national rules my bill, S. 1540, which would give U.S. au
my bill, S. 1540, which would give U.S. au. 20 percent was spent here in Mexico, and I and regulations impeding the orderly international fares for flights to and from the to grow as those of us who visit this
beauti; thorities certain controls over the level of predict that this percentage will continue flow of travel and the adoption of a code of ethics to which all reputable and pro-ably by the Commerce Committee and is curUnited States. This bill was reported favor- ful country return to praise its manifold
charms. fessional travel agents shall not only rently on the Senate Calendar.
For the world as a whole, in 1962, travel subscribe but adhere.
There is perhaps no group more aware of was the largest single item in international Mr. Marks reported that ASTA re the tremendous importance of international trade, representing expenditures totaling $7.5
billion. peatedly has been designated as the logi- tourism than those of you assembled here cal instrument to assume the formidable today.
The United States, as you know, has been a
You and the world travel congresses responsibility of serving as the catalytic
very late country in promoting what I would agent in the creation of such a world a major role in the great expansion in inter
call reciprocal tourism, that is the mutual which have been held in the past have had
exchange of travelers between other counbody.
national tourism which has taken place dur tries and our own. I am sure that all of us wish ASTA ing the last decade and which, in turn, has Our Government began its formal effort in success in this essential enterprise.
made and is making a substantial contribu this field only 2 years ago when the U.S. Because of the unquestioned economic tion to world peace and understanding. Travel Service was established. Funds for importance of tourism and its vital con Of equal or greater importance, it has the operation of this agency are not extentribution to international understanding
been a factor in stabilizing the economies of sive. The 1962 budget for the Travel Servand thus to the cause of world peace, ments. a substantial number of friendly govern ice was $3.35 million, while the tourist of
fices of foreign governments in the United I ask unanimous consent that the com
Nations which encourage citizens of other States are expending over $30 million anplete texts of these two important ad- lands to visit their countries and to travel nually to encourage U.S. tourists to visit their dresses be printed in the RECORD.
widely within their countries, who receive countries or areas abroad. There being no objection, the addresses such visitors with hospitality and good will, The $3.35 million that our Travel Service were ordered to be printed in the RECORD, invariably benefit both economically and in spent, combined with the efforts of our nonas follows:
their international relations. It is good for Government travel agents and offices, helped REMARKS OF SENATOR WARREN G. MAGNUSON,
the host country and it is good for the earn more than 10 times that amount for our visitor.
country. CHAIRMAN, SENATE COMMITTEE ON COM
I think you will agree with me that those During 1962, in my home State of WashMERCE, AT 33D ANNUAL WORLD TRAVEL countries which discourage travel, or which ington, we had, thanks to you who are asCONGRESS OF THE AMERICAN SOCIETY OF
restrict travel within their borders are usu sembled here from all parts of the world, a TRAVEL AGENTS, INC., AT MEXICO CITY, Oc
ally at or near the bottom of the economic most successful Seattle World's Fair. This TOBER 21, 1963 escalator.
fair attracted more than 9 million visitors The impressive attendance of more than Fortunately, the number of such countries from all across the United States and from 2,000 delegates from approximately 60 na is decreasing. Even those behind the Iron many areas throughout the world. tions at this 33d World Travel Congress is in- Curtain are beginning to show increased In April of next year, as you all know, deed a tribute to the American Society of interest in the tourist dollar, pound or peso, the New York Fair is scheduled to open, with Travel Agents, and to the ever-increasing im- although I doubt that the general tourist the expectation that 20 million will attend it. portance of the travel agency industry. will find as much freedom of movement in Many of you—I hope all of you—will visit It is gratifying also that you have chosen those countries as he would like.
this fair, and encourage your clientele to do to hold this Congress in the beautiful capital But the time will come, I am convinced, so also. Your cooperation will assure its of our great neighbor to the south, Mexico although it may be far distant, when free success, as it did the World's Fair in Seattle. City. dom of travel will be universal.
From the standpoint of travel time the I have heard Mexico City described as the Only then will there be a complete absence world is constantly growing smaller, and as "Paris of the West” which I am sure was in- of international tensions. Only then will it becomes smaller the greater becomes the tended as a compliment, but to me its archi- we arrive at an era of worldwide tolerance, facility and ease of travel between nations tecture, its culture, its vision and vitality good will, and a full realization of the broth and continents. are distinctively American. erhood of man.
Within the lifetime of many of us the This does not mean that in any way I This era, as I stated, is still far distant, airplane has twice shrunk the oceans, first am detracting from the famous European but at some distant day, when the futility of with prop planes and then again with jets. city on the Seine. Everyone who can do so prejudice and the poverty that accompanies In a few years from now supersonic air should visit both Paris and Mexico City, insular seclusion is apparent to everyone, carriers which will transport twice as many Rome, and Washington, London, and of worldwide freedom of travel will be achieved passengers three to five times more swiftly course Seattle, particularly Seattle and the and the entire human family will gain there will again shrink the oceans. other great cities of the Pacific Northwest. by and prosper.
A question that intrigues me, as I know The American Society of Travel Agents All of the Western Hemisphere—with one it does you, is whether international air means a very great deal to the Pacific North- unfortunate exception-is travelminded. fares will be scaled to improve efficiency and west in all seasons of the year, as it did to One reason for this is that the ancestral economy of operation or will be arbitrarily my home city of Seattle during its World's roots of most of us are in the Old World. set at amounts which impede transocean air Fair last year.
Much of our culture springs from the old travel instead of encouraging it. Your society also has meant much to me World and we are drawn to the early home The subject of international air fares has personally and in the success of some of my lands of our ancestors and to its monuments, just been discussed by the International Air legislation in the Congress of the United art, and historic landmarks.
Transport Association in Salzburg, Austria. States.
But there are amazing cultures in the New It behooves all of us to watch these conI am especially grateful for the support World too, both ancient and modern, mag- ferences with great interest. which you gave me and the Senate Com nificent works of art, unparalleled scenic at I know that I am interested, the Commerce Committee in furthering the Interna- tractions, and dynamic cities. All of these mittee on Commerce is interested, Congress tional Travel Act of 1961 and the establish are combined here in Mexico City, and in is interested, and I feel that the traveling ment of the U.S. Travel Service.
many other cities in the Americas, North, public of my country is equally interested And I am happy that ASTA, through par- South, and Central.
in what is done at this conference with reticipation in the Advisory Committee of the The enlightened traveler will not be con- lation to international air fares which has U.S. Travel Service, is maintaining a sound tent until he has visited both hemispheres, been the major
issue at Salzburg. and continuing effort to stimulate tourism and I look for the day when tourist traffic On May 8, 1963, on the floor of the U.S. to the United States.
from the old World to the New will equal Senate, in discussing this problem, I stated: As chairman of the Senate Committee on that from the New World to the Old.
“Our carriers operate efficiently and profitCommerce, I was gratified also to receive Then both our financial and cultural ex
ably at current fares. If foreign carriers ASTA's support of my position in the con changes will be in balance, an accomplish- cannot compete at these levels perhaps some troversy a few months ago concerning trans ment the travel agents of the world may well soul searching as to the need for their conatlantic air fares. be proud of.
tinued existence would be in order. In any The policy of ASTA, as expressed in the The travel deficit which disturbs the event, American citizens are not to be telegram from its President Milton Marks to United States and many other Western na denied choice of lower fares which our carme on May 15, when our committee was hold. tions will disappear. The U.S. deficit is still riers are willing and able to provide.” ing hearings on this issue, called for a broad running between $1 and $1.4 billion a year. As a matter of fact, it is my opinion that ened base of international travel through re In 1962, U.S. citizens spent $2.9 billion on most of the air carriers of nations other than duction of airline rates based on air carrier foreign travel, of which $990 million was for the United States can substantially reduce efficiency.
transportation and the remainder for other their international fares, as can the carriers This position coincides precisely with my purposes overseas or in other nations of of the United States, and that they can do own on this important question. this hemisphere.
so with profit, shuttling back and forth