Our Fiscal Problem at a Glance
IN the article beginning on the next page, it is argued that the fate of the New Deal is bound up with the ability of the administration to avoid a radical rise in prices on the one hand and excessive taxation on the other.
It will be convenient to summarize here some of the basic facts which will be before the public in the coming months, during which the issue may be decided.
1.GROWTH OF THE GROSS FEDERAL DEBT
| March 31,1917 (pre-war debt) | $ 1,282,041,000 |
| Aug. 31, 1919 (war debt peak) | 26,396,701,000 |
| Dec. 31, 1930 (low point) | 16,026,086,000 |
| June 30, 1931 | 16,801,485,000 |
| June 30, 1932 | $19,487,009,000 |
| June 30, 1933 | 22,538,672,000 |
| June 30, 1934 | 27,053,141,000 |
| Nov. 1, 1934 | 27,188,021,000 |
The increase since the low post-war point as of December 31, 1930, to November 1, 1934, was, therefore, $11,161,935,000. Offsetting this increase is the acquisition of a large amount of government ‘assets’ through loans, and so forth; but there are also large ‘contingent liabilities’ through government guarantees of bonds of its agencies.
The average interest rate in the next fiscal year beginning July 1, 1935, will be about 3.1 per cent, and the total debt charge (exclusive of sinking fund) will probably approximate $961,000,000.
2.FEDERAL DEFICITS
| Fiscal Year | Receipts | Expenditures Exclusive of Sinking Fund | Deficits Exclusive of Sinking Fund |
|---|---|---|---|
| 1933 | $2,079,696,742 | $4,681,348,826 | $2,601,652,084 |
| 1934 | 3,115,554,050 | 6,745,185,992 | 3,629,631,942 |
| 1935(est.) | 3,687,000,000 | 7,966,000,000 | 4,279,000,000 |
The total deficit for the three years (1935 estimated) will be $10,510,284,026.
3.TOTAL GOVERNMENTAL DEBT
The debt of states and local government units is variously estimated at from $18,000,000,000 to $20,000,000,000. When added to the federal debt, the total governmental debt is, therefore, about $46,000,000,000. Assuming approximately 30,000,000 families in the nation, this represents an average total governmental debt per family of about $1533.
4.TAXATION
Federal taxes in recent years are generally estimated at about one third of the taxes collected for all governmental purposes. The total tax collections for all purposes (federal, state, and local) cannot be exactly stated because of incomplete data as to state and local tax collections. They are believed to have been about $9,000,000,000 in 1933. The total income of the people in that year is usually estimated at $45,000,000,000, so that the estimated tax collections absorbed about 20 per cent of the national income. The 1934 figures are believed to be approximately the same.
The total expenditures of all governmental agencies have, however, far exceeded the revenues. These expenditures are currently estimated at from $13,000,000,000 to $14,000,000,000, or about 30 per cent of the people’s income. The difference of about $4,500,000,000 (10 per cent of the assumed national income) has been raised by borrowings of the Federal Government, the states, and local units.
Assuming 30,000,000 families in the country and a national income of $45,000,000,000, the average family income of our people is $1500. Of this, on the above figures, $450 (30 per cent) is currently required to cover the cost of all government, while $300 (20 per cent) is collected in taxes. The difference of $150 (10 per cent) approximately measures the recent average annual governmental debt increase per family due to deficits.
GRENVILLE CLARK