FISCAL CONDITION

Our main problems are domestic problems.  Financial stability is the first requisite of sound government.  We can not escape the effect of world conditions.  We can not avoid the inevitable results of the economic disorders which have reached all nations.  But we shall diminish their harm to us in proportion as we continue to restore our Government finances to a secure and endurable position.  This we can and must do.  Upon that firm foundation rests the only hope of progress and prosperity.  From that source must come relief for the people.

This is being, accomplished by a drastic but orderly retrenchment, which is bringing our expenses within our means.  The origin of this has been the determination of the American people, the main support has been the courage of those in authority, and the effective method has been the Budget System.  The result has involved real sacrifice by department heads, but it has been made without flinching.  This system is a law of the Congress.  It represents your will.  It must be maintained, and ought to be strengthened by the example of your observance.  Without a Budget System there can be no fixed responsibility and no constructive scientific economy.

This great concentration of effort by the administration and Congress has brought the expenditures, exclusive of the self-supporting Post.  Office Department, down to three billion dollars.  It is possible, in consequence, to make a large reduction in the taxes of the people, which is the sole object of all curtailment.  This is treated at greater length in the Budget message, and a proposed plan has been presented in detail in a statement by the Secretary of the Treasury which has my unqualified approval.  I especially commend a decrease on earned incomes, and further abolition of admission, message, and nuisance taxes.  The amusement and educational value of moving pictures ought not to be taxed.  Diminishing charges against moderate incomes from investment will afford immense relief, while a revision of the surtaxes will not only provide additional money for capital investment, thus stimulating industry and employing more but will not greatly reduce the revenue from that source, and may in the future actually increase it.

Being opposed to war taxes in time of peace, I am not in favor of excess-profits taxes.  A very great service could be rendered through immediate enactment of legislation relieving the people of some of the burden of taxation.  To reduce war taxes is to give every home a better chance.