<--PREV Doc #278  |  Memorial Commission Home Page  |  First Term Table of Contents  |  Presidential Papers Home Page  |  Doc#  |  NEXT--> Doc #280 Document #279; June 29, 1953 To Joseph William Martin, Jr. Series: EM, AWF, Administration Series The Papers of Dwight David Eisenhower, Volume XIV - The Presidency: The Middle Way Part II: Settling into "the long pull"; May 1953 to August 1953 Chapter 4: Striving for Unity   Dear Mr. Speaker: I understand that the House of Representatives has before it the matter of the extension of the excess profits tax until December 31st of this year.1 You in Congress and we in the Executive branch have promised the American people to work for a strong, secure America. An essential part of this program is to get Federal expenditures under control so that taxes can be reduced.2 That requires continuous and dedicated efforts to curtail expenses faster than our income is reduced. The Executive and the Congress are working hard to fulfill their joint obligation in this regard. Already, in cooperation with one another, we have cut almost in half the estimated budget deficit for the fiscal year 1954. But despite the progress that has so far been made, as of this moment we still face a prospective deficit of over 6-1/2 billion dollars. By unremitting work in the months ahead, we are determined to approach our goal of a balanced budget, but additional cuts in spending cannot be made on an arbitrary or haphazard basis. To do that would be to gamble, at long odds, with the Nation's security. We must move toward a balanced budget in a deliberate and orderly manner.3 In our efforts to achieve this objective, we will be severely hampered if we give up at the very beginning of the fiscal year six months' excess profits tax revenues. We need this revenue. With it and the further savings in expenses that we are determined to make in the months ahead, we believe that an income tax reduction for all the people can be made next January 1st, when the extended excess profits tax would expire.4 It would be most unfair to grant tax relief to one group when we cannot yet afford to grant it to all. I earnestly hope that the House of Representatives will promptly take action that will lead to the extension of the excess profits tax through the balance of 1953.5 Sincerely 1 The excess-profits tax of 1950 taxed profits in excess of a company's historical "average" at 85 percent, compared with the statutory rate of 52 percent. Enacted on January 3, 1951, and amended the following October, the act was scheduled to expire on June 30, 1953 (see U.S. Statutes at Large, vols. 64, pp. 1137-38, and 65, p. 541; and New York Times, Oct. 20, 1951). Speaker Martin had been instrumental in bypassing the Ways and Means Committee and bringing the measure to the House floor for a vote (New York Times, June 29, 1953). 2 Eisenhower had inherited $81 billion worth of future-spending authorization from the Truman Administration, prompting him to describe the fiscal policies of his predecessor as "rather like buying C.O.D." (see Public Papers of the Presidents: Eisenhower, 1953, p. 309). 3 During the 1952 campaign Eisenhower had promised both a balanced budget and a tax reduction, but he had made it clear that the tax cut had to follow the balanced budget. In his October 1, 1952, letter to running mate Richard Nixon, Eisenhower said, "I am, of course, committed, first, to the reduction of useless expenditures in order to get rid of the deficit and its inflationary effect on our economy. Next, I am committed to the reduction of taxes after we have eliminated the deficit" (see Galambos, NATO and the Campaign of 1952, no. 946). 4 In a May 19 radio address Eisenhower had proposed a six-month extension of the excess-profits tax as one of five measures aimed at reducing the deficit (see Public Papers of the Presidents: Eisenhower, 1953, p. 314). Eisenhower received strong support from some prominent corporate leaders (see Harry Bullis, chairman of General Mills, to Eisenhower, June 5, 1953 [AWF/N]; Eisenhower, Mandate for Change, p. 202; and no. 357). 5 For Martin's account of his efforts to support this bill see his memoir, My First Fifty Years in Politics, as told to Robert J. Donovan (New York, 1960), pp. 230-31; see also no. 265. The measure to extend the excess-profits tax would be passed by the Senate and the House and signed into law on July 16 (see U.S. Statutes at Large, vol. 67, pt. 1, p. 175). By December 18, belt-tightening measures had yielded sufficient results for Eisenhower to announce: "Because of reduction in expenditures already made and presently planned, it was agreed that the way was cleared for January tax reductions in personal income taxes and excess profits taxes" (see Public Papers of the Presidents: Eisenhower, 1953, p. 853). In January 1954 the excess-profits tax would "expire" (see Eisenhower, Mandate for Change, p. 297). Between fiscal years 1953 and 1954 the federal deficit would be cut by two-thirds (from $9.4 billion to $3.1 billion). In 1956 the Administration would at last achieve its goal: the federal government would run a surplus that fiscal year (see U.S. Bureau of the Census, Statistical History of the United States [Stamford, Conn., 1965], p. 711). Bibliographic reference to this document: Eisenhower, Dwight D. To Joseph William Martin, Jr., 29 June 1953. In The Papers of Dwight David Eisenhower, ed. L. Galambos and D. van Ee, doc. 279. World Wide Web facsimile by The Dwight D. Eisenhower Memorial Commission of the print edition; Baltimore, MD: The Johns Hopkins University Press, 1996, http://www.eisenhowermemorial.org/presidential-papers/first-term/documents/279.cfm <--PREV Doc #278  |  Memorial Commission Home Page  |  First Term Table of Contents  |  Presidential Papers Home Page  |  Doc#  |  NEXT--> Doc #280

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