cral Reserve re-discount rate was l:;t per cent. It's now heen
raised back up to 1:;( per cent, so we're nol stiffening the
situation. We're in a process of raising il and lowering il as
the needs of the economy have required and at the moment
it's back up lo where it was at the beginning. It's been
higher and it's been lower.
Hl'KI.EIGH: Senator Bennett, tbe average person a
number of years ago—take fifteen or twenty years ago—
made less money than he's making now. Vve agree thai
he'- probably more in debt now. but doesn't be have
more today in assets, whether liquid or otherwise, lliein
he had fifteen or twenty years ago?
I think these figures might he verv interesting. Leaving the
mortgage debt out of the situation for a minute or two. the
total current personal debt, installment debt and open-credil
debt, is now thirty-two and a half billion dollars. It's come
up in a year 3.8 billion dollars.
HURLEIGH: Were our parents any better off. insofar
eis not being ill debt?
The personal debt is lower than it was in 1939. Of course,
il's much lower than il was in 1932 and 1933, when we
wen' in the slump of a depression and people were slill
carrying a burden of llieir debl of lhe twenties. It's higher
than it was at the end of World War II. because during
World War II people just couldn't go into debt. There was
nothing that they could buy. These other figures might be
interesting to you. Of fifty-four million families in the'
United States, thirty-one million have no installment debt,
and of the remaining twenty-three, only half of ihem have
installment debt lhat will require them more than one year
BAYI.KSS: Senator, why was it that the administration
decided they ought to warn bankers to watch their in-
steillnient debt situation with their depositors and borrowers.'
It was not with respect to the absolute relationship between
the amount of debt and the amount of income and assel-.
but it was in Icons of lhe trend lhat was beginning lo show
up, an increase of about 11 or 12 per cenl in ei year.
BAYLESS: You're not worried about what the constituent in Utah lias in installment debt?
There are some individuals I've one in mind right now—
who've never been out from under tbe load of installment
debt in twenty-five years. Oh. incidentally in passing, two-
thirds of this increase in installment debl i- em increase in
the automobile debt, which is an interesting comment. There
is another sel nf figures thai mighl he interesting at this
point. With the total current debl burden of thirty-two ami
a half billion dollars, the American people have two hundred
and ten billion dollars in liquid assets cash on hand, mone)
in tin- hank, saving, government bonds, etc. ami they've
got three hundred and forty billion dollars worth of life-
PRINA: Senator Bennett, the government, as we've
stated here, lias been taking steps recently to tighten
credit. Now there are two factors on tlle hori/.on that
arc going to be inflationary. I'm thinking first of the
reduction in corporate taxes that's due in April—and
I'm thinking of bow the Democrats and Republicans are
going to be falling all over each other lo give us een
income tax reduction in the presidential election year.
What i- your opinion of that'* 1 mean, should we cut
Well. I think 1 agree with you that then- will be -nine tax
cuts. I douhl thai the corporate rate will go all the wen heee k
to 47 per cent.
PRINA: Do yc
think there will be a compromis
I think if there i- emv cut in lhe corporate rale-, it will he
less than the live point, because since thi- i- an election
year, thc political pressure will he not to cut the corporate
rate but to give whatever lax reduction may be available to
the individual taxpayer.
PRINA: Do you see this as an inflationary factor?
Again there are some other figures lhal I don'l have available, hut apparently in fiscal year 1956, which began the
firsl nf July nf this year, tbe federal government's income
from taxes is going to be higher than llicy estimated it
would be because of this prosperity we've been talking about.
So. il mav he that as the prosperity continues it will produce
enough federal revenue to permit some lax reduction without any serious inflationary effect.
BAYLESS: Do you -ee a balanced budget before a reduction in taxes?
Thai'- a question dial's pretty hard In answer. I think under
the pressure lhal will develop nexl year, if we bene In face
lhal choice', we'll probably choose the reduction in taxes,
but I don't think we'll be ver) fen olT of a balanced budget.
We're not going tn make a deep slash, nr a lug addition to
the federal debt.
BAYLESS: You don't think there will have to be another extension in the debt limit from 27.', billion to 290
billion dollars next year then?
I doubt that the Finance Committee would approve it in the
face of rising revenue. Of course, all these things represent
various Facets nf a very complicated problem, and I hope
we bene- sense enough In keep the adjustments within reason I
and resist the pressure.
PltlN\: Senator Bennett, what would you consider to
be a fair reduction in income taxes?
I don't ihink the question is a question of wheit's fair or '
whal isn't fair. My presenl guess is lhal il might he in the j
area nf two to two and a half billion dollars.
PRINA: Would you take this reduction in a manner of
the Democratic program of. say. §2(1.00 a person, or
in a percentage reduction in the rates?
Personally. I ihink it would he more fair to lake it in a
percentage reduction in the rales.
One nl lln- interesting things tbat I've observed since 1
ceinie In the- Senate, is lhal llinse- who believe in so-called
progressive taxation light very hard for it when the taxes
are going on. hut when it comes lime tn lake the teixe- off.
then don't believe in progressive taxation any more. Thev
believe in taking the taxes olf mi a Hal basis.
PRINA: I see, but an- the Itepublicans going to pit'
themselves in a position where the opposition can say
that you are cutting the taxes of the man who can
afford to pay more them .on are cutting the taxes nl
the so-called little man?
Tbe Republican parly put itself in that position in 1953 wilh
a 10 per cent across-the-board lax reduction and there
weren't any ver) serious repercussions, and when the llcme,-
crats attempted ibis year in put thai $20 per head reduction through, there were enough of the conservative Demo-
e reel- whn came nver tn kill the program.
BAYLESS: Would you. then, speculate and predict llie't
the administration's program for tax reduction, if it
comes, will be in a percentage reduction of an individ-
mil'- income taxes rather than in an increase in hi"
exemptions or ;i S2(l [ier beeid reduction?
'l e-s. I lliiiik that's ei safe prediction. Nnw. nf course, it men
come in term- of further changes in lhe excise taxes. There
are a number nf other patterns in which ihe thing couM
come, hut to the extenl that ii involves income uixes. '
would expect the treasury to recommend a flat percentage
BAYLESSi Do yon see any possibility of a national
sale- tax in any tax program for next year?
PRINA: Senator Bennett, I wonder if you could give u*
your opinion on what the impact of this guarantee*'
annual wage might he on American industry eeml wheth-*
it has anv application, in your opinion, to other i-1'
dustrie- outside the automobile industry?
FAI h FORUM HEWS, Vo»ei»6er, \9A