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EXCERPT FBOi: THE PR£bIDI2iTTL> BUDGET MBS& Or JANUARY : , 1929. • "A year Ago I recommended an increase In work relief, public works, and other related expenditures to check the dowsw&nl spiral of business. The program undertaken at that time has contributed materially, I believe, to the existing upward isovenent of business and fpinj—nt; and I feel that the business men and farmers and workers of the country, no less than the unemployed, are entitled > to an assurance that tfcll • -r will not be curtailed arbitrarily or violently. "The actual cost of work relief ana similar expenditures goes &OMI after joba are found by the worfcsrfi on these rolls. A violent contraction, before the natural expansion of private industry is ready to take up the slack, would mean, not only hu&an misery, but a disrupt!Ye withdrawal frOB ^iiericsn industry of a volune of purchasing power vMe& bu . : at this time. The neceaaity of Incr—fflttg j'^de.ral expert! itures a jeur ago to check a recession is a well-fcn.0" u CAOt-. Aay decision to decrease tho^e expenditures no-!f that recoTery has just started woold constitute a new policy ^hich ought not to be ado; ithout full understanding of ' ' a may be .ht the result." "I believe I as expressing the thought of the most far-sighted students of our economic system in sayin:° that, it " r u d be unwise ?ol either to curtail expenditures sharply or to impose drastic new taxes at this stage of recovery* But in vieve of the addition to our public expenditures Involved in the proposed enlarged national defense program and the program for agricultural parity payments, for T?hich no revenue provision has yet been made, I think v:e might oafely consider moderate tax increases which ?rould approximately meet the increased expenditures on these accounts• It should be added, how«rera that it Is r y firm conviction that suzh ne1- taxes as may be imposed should a be most carefully selected from the standpoint of avoiding repressive effects upon purchasing power. "Sound progress toward a budget that is formally balanced is not to be made by heavily slashing expenditures or drastically increasing taxes. On the contrary, it is to be sought by employing every effective device we may have at our command for promoting a steady recovery, which means steady progress toward the goal of full utilization of our resources. T e can contribute very materially to* ward that end by a 'vise tax program* -8"I a® I tin—mifllim the reenactaent of the excise taxes which will expire in June and July of this yei:-, not bacat&ft I regard them as ideal components of car tax structure, but because their collection has been perfected, our economy is adjusted to th«B, and we cannot afford at this time to sacrifice the revenue they represent. If the Coogr^as should at this cession adopx- tarn taxes rdore scientificelly planned to ears for the defense and agricultural programs, it is quite possible that the existence oi" the^e new taxes will enable us in a latsr year to give conaideration to abolishing some of the present excise levies,"