[COMMITTEE PRINT]

77TH CONGRESS                 SENATE              REPORT
   1st Session                                   No. _____

                  AN AUTOMATICALLY BALANCED BUDGET

                 APRIL ___.___ Ordered to be printed

   Mr. TYDINGS, from the Special Committee to Find Ways and Means
    for an Automatically Balanced Budget, submitted the following

                               REPORT

                      [Pursuant to S. Res. 22]

                       FIRST COMMITTEE REPORT

     The Special Senate Committee to Find Ways and Means for an 
Automatically Balanced Budget (Mr. Tydings Mr. Thomas of Utah, and 
Mr. Holman) has directed the chairman (Mr. Tydings) to introduce in 
the Senate three proposals for an automatically balanced Federal 
Budget in times of peace.

     The methods to accomplish this are two, one being an act of 
Congress and the other by a constitutional amendment.

     There has been introduced a proposed law to accomplish an 
automatically balanced Budget and two constitutional amendments to 
accomplish the same purpose.

     These proposals will be submitted to outstanding person in the 
field of budgetary matters, and in the future it is not unlikely that 
hearings will be held, in order to develop criticism of defects and 
weaknesses in the proposals outlined, to the end that they may be 
perfected and the desired objective attained.

     The proposals introduced are outlines only and no doubt will 
need considerable improvement, in the light of further examination. 
The proposed law comprehends the following:

     (1) It is suggested that the average annual cost of the National 
Government for the period from July 1, 1930, to July 1, 1940, be 
definitely ascertained and that this figure be known as the "annual 
normal Federal Expense."

     (2) The amount of money which the Congress annually appropriates 
automatically determines the amount of taxes to be levied by the 
National Government in order to meet the appropriations.

     (3) Consequently, it will be necessary to Congress to adopt and 
have in being various schedules of taxation. Schedule A, for example, 
would raise sufficient money to provide for the "annual normal 
Federal expense." Schedules B, C, D, etc., would provide for 
additional expenditures over and above "annual normal Federal 
expense," in such years when Congress appropriated greater sums.

     (4) Once the total annual appropriations is known, the schedule 
automatically goes into effect which will raise sufficient money to 
take care of said appropriations.

     (5) If because of a dull business year, or for any other reason, 
the schedule in effect does not raise sufficient money to provide for 
the year's appropriations, then the deficit thus created must be the 
first charge on the following year's revenue and be considered in 
adopting the automatic schedule of revenues for the following year.

     (6) In the event that the schedule in effect raises more money 
than in necessary to take care of the year's total appropriations, 
the excess is automatically applied to the liquidation of the 
national debt.

     (7) In years of great depression or extraordinary peacetime 
preparedness expenditures or any other abnormal governmental 
financial outlay, Congress can escape providing for such extra 
financial burden currently; it can provide for the payment of the 
extra burden over a period of not more than 20 years for the gradual 
liquidation of the deficit for any year. It may even provide that a 
hiatus of 2, 3, 4, or 5 years may run before taxes to liquidate the 
deficit created by the extra burden shall begin to be collected so as 
to liquidate it entirely in not more than 20 years from the date of 
its creation.

     An illustration of some of the differences between the schedules 
might be comprehended as follows: Schedule A would provide for an 
income-tax exemption for married people with no children of $2,400. 
Schedule B might provide for the exemption to begin at $2,300, and 
schedule C for it to being at $2,200. Thus, in the drafting of a law 
the schedules themselves could not very well be included, but there 
would have to be enough of a description of the schedules so that the 
law would clearly show what is intended by the various schedules and 
to have the one that goes into effect any year take care of that 
year's appropriations.

                      CONSTITUTIONAL AMENDMENTS

     The constitutional amendments are in two forms -- one, a short 
amendment, the other, a long amendment.

     The short amendment simply provides that the public debt of the 
United States shall not be ever greater than what is the amount of 
the national public debt at the time the constitutional amendment is 
adopted, unless additional taxes to take care of such addition in the 
national debt are provided, which will liquidate said debt within a 
period of 20 years from the date of its creation.

     The long constitutional amendment follows the same general 
philosophy and speaks for itself.

     In addition to the plans herewith submitted, the committee will 
entertain suggestion of other plans which are intended to accomplish 
the same result.

                                   M.E. TYDINGS, Chairman

           Committee on Territories and Insular Affairs.