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Frank Demby

Congress Throws Burden of War Billions on Labor

(July 1941)

From Labor Action, Vol. 5 No. 29, 21 July 1941, pp. 1 & 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

As the July 1 deadline to begin the new fiscal year approached, the duly elected representatives of the people put on their annually astonishing burst of speed and voted the largest federal budget in the history of the United States. Almost 70 per cent of the 1942 fiscal budget will go for war preparations. What has been happening to the federal budget can readily be seen from the table:

(Expenditures in millions of dollars)





% Budget
for War

Fiscal year 1940 (actual)





Fiscal year 1941 (actual)





Fiscal year 1943 (planned)





* Expenditures for war (exclusive of debt retirements) include only those directly listed by the Treasury under “National Defense.” However, many hundreds of millions of dollars appropriated for other agencies will directly and indirectly aid in war preparations.

More money will be spent for war preparations from July 1, 1941, to June 30, 1942, than was spent for all purposes during the past fiscal year. The total expenditures for the coming year are expected to exceed the previous record, during 1938–1939. by almost four billion dollars. Moreover, this total will undoubtedly be exceeded as the drive toward entry into a “shooting war” accelerates, requiring the passage of huge deficiency appropriations. From 1940 to 1941, direct appropriations for war increased about 400 per cent. From 1941 to 1942 they will increase at least 250 per cent more.

These figures simply mean that the United States has truly entered upon a long period of war economy. Representatives of the government and the boss press have been thundering at us for the past several months what this will mean to the working population of the country – gasless Sundays, reduction in the use of electricity for the home, no more aluminum pots and pans, etc. But it will mean much more than a few inconveniences in our normal habits of consumption. The burden of the war economy will be thrown onto the backs of those who toil and sweat for a living – that is the real meaning of this war budget. One of the first direct indications of this was the cutting down of the total relief appropriation to $910,905,000. This means a reduction of more than $457,000,000 from last year’s relief appropriation. Translated into human terms, it means that 700,000 of the 1,700,000 persons now on WPA will have to be dropped immediately.

The New York Times, in its report of this step, says: “In both Houses, the majority contended that in the coming year defense industries will absorb many of those dropped from the rolls, but at the same time, Congress was told by WPA officials that 5,500,000 persons will be unemployed during the next twelve months and that because of the uneven distribution of defense contracts many thousands were bound to suffer because of the relief cuts.” (Emphasis mine – F.D.) We can be not exaggerating the number of unemployed. Labor sources indicate a much higher figure. Moreover, dislocations in the war economy produced by the shifting of many factories from the production of peacetime consumer goods to war-time producer goods and the inability to procure some necessary raw materials for war production will undoubtedly throw many additional thousands of workers into the ranks of the unemployed.

This, however, is only the beginning of the story of how the developing war economy will mean a catastrophic decline in the living standards of the masses. War costs money. World War I cost the United States, according to the late President Coolidge, $100,000,000,000. The tremendous increase in man’s capacity for destruction in the intervening quarter of a century means that World War II will cost the United States a much greater sum.

It is expected that revenues for the 1942 fiscal year will total about $12,000,000,000, about five billion dollars more than the past year, but still ten billion dollars short of what is to be spent. The deficit, of course, will be covered by government borrowing. This will raise the national debt by June 30, 1942, to an expected $57,500,000,000. It probably will be much larger coming close to the present statutory limit of 65 billion dollars on the federal debt. Interest payments on the national debt during the past year amounted to $1,111,000,000. The overwhelming majority of these payments went to the banks and insurance companies. This year these companies will receive even more.

A rising national debt, particularly one based on a war economy, greatly increases the danger of inflation. Already Leon Henderson, federal price control administrator, speaks of the price situation as “very serious.” He believes that the cost of living is bound to go up and that far-reaching controls will be needed, particularly over wage rates. The cost of living has already gone up almost 5 per cent during the past year, more than nullifying most of the wage increases that some sections of the working class have won through strike action or the threat of strikes. An indication of what is in store for the workers is shown by the wholesale commodity index of the U.S. Bureau of Labor Statistics, which has risen almost 50 per cent since the outbreak of World War II. Retail prices always follow wholesale prices, as a rule, even though they lag behind somewhat. In other words prices, especially prices of necessities, will continue to rise during the next year – meaning a further and really substantial decline in the standard of living of the American workers and masses.

Nor is this the whole story of what the war budget means. The increased revenues will be covered only in small part by increased yields from existing taxes. The House Ways and Means Committee has not yet reported out the new tax bill. When it does I shall analyze it in detail. In will be raised through new excise taxes, which will be passed on to the consumer in the form of higher prices. Practically all of these will bear most heavily on the workers and those in the low income brackets. In addition, the bulk of the increased revenue from income taxes will come from the middle classes. The most damning indictment of the proposed that it proposes a mere 10 per cent increase in the rates for the excess profits tax. This is a drop in a bucket and still leaves the excess profits tax as a pure swindle.

The opposition of the Workers Party to the war budget flows from our opposition to the imperialist war toward which Roosevelt is heading us. All sections of the working class should therefore oppose this war budget. The workers, especially the organized workers through their trade unions, must oppose this war budget because it means death and strangulation for them. It means a tremendous decline in their standard of living at the same time that the big capitalists are raking in fantastically high profits. It means a steady undermining of the hard-won rights and civil liberties of the workers as the capitalists try to solve the budgetary crisis by a more and more open drive to institute a rigid totalitarian regime in this country. We are not in the habit of giving run their government. But we have the right and the duty to point out to the workers that there is absolutely no reason why the main burden of the war should be shouldered by the workers and masses. There is no rational reason why people should be unemployed and starving in this country of wonderfully abundant resources and highly developed technical skills. There is no reason why prices should go up, why indirect taxes, which fall most heavily on those who can least afford to pay them, should increase. In short, there is no reason why the standard of living of the working population should go down while a few build up huge fortunes, except that this is the way the capitalist system functions, particularly in war-time.

Let the capitalists pay for their war! They can afford it! Let the government levy a 100 per cent excess profits tax. Take all the profits out of war. Nationalize the war industries and place them under control of the workers. Place a capital levy on the accumulated fortunes of big business men, wrung from the sweat and blood of the workers, and there can be a steadily rising standard of living and the preservation of democratic rights!

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