[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.