Notes

In carrying out the purposes of the Budget system so wisely prescribed by the Congress in June, 1921, the executive branch and the legislative branch of the Government have been colaborers. It has been a great demonstration of cooperation made possible by our form of government. The results of this united effort have gone directly to
the people of this Nation. The real object back of this united effort has been to make the greatest possible return
to the people of the money which was taken from them to finance the World War. And this has been accomplished
not to the detriment of the Federal service, not by the withholding of funds for necessary and worthy purposes, but
to the advantage of that service and of the business of the people. It has required us to put our house in order and
to provide for its management in a scientific business way, not alone for its current operations, but also for its future
requirements.

complexity:
-We have come to the point, therefore, where we will have to rely for the future entirely upon current taxes

-is particularly true with respect to Federal taxes, since the necessity of imposing additional taxes would arise from
a decline in prosperity which would decrease governmental revenue below governmental expenditures, a decline
which must also affect all taxpayers. Increased taxes to meet Government requirements would come at a time not
of prosperity but of depression, and would aggravate the depression. For these reasons I do not advise the present
session of Congress to reduce permanently our tax rates or abolish any particular tax. Each of the three reductions
in taxes which have been enacted by the Congress since the fiscal year 1921 have been predicated on an assurance
that our financial condition warranted it.

--a surplus can
be no embarrassment, since it can be applied without difficulty to the reduction of the interest-bearing obligations of the Government and thus effect a saving in interest costs. Interest is the largest single item of
Government expenditure, and its decrease offers the most fruitful subject for permanent reduction of governmental
expenditure.

--But surplus is a
factor in debt reduction in addition to the items I have just mentioned. In considering the question of a lessening
of the surplus for the current fiscal year it is necessary to weigh the desirability in the present of temporary relief to
the American taxpayer against desirability in the future of greater debt reduction now. Should Congress be of the
opinion that the surplus estimated for the current fiscal year based upon receipts expected to be received under the
existing law is too large, then I suggest a temporary tax reduction measure which will cut down this expected surplus
by leaving the excess in the pockets of the American taxpayers