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Page 77
In view of the emphasis on using the federal budget as a balance wheel, it is ironic that the most unstable component of national income in the postwar period is federal expenditure, and the instability has not at all been in a direction to offset movements of other expenditure components. Far from being a balance wheel offsetting other forces making for fluctuations, the federal budget has if anything been itself a major source of disturbance and instability.
Because its expenditures are now so large a part of the total for the economy as a whole, the federal government cannot avoid having significant effects on the economy. The first requisite is therefore that the government mend its own fences, that it adopt procedures that will lead to reasonable stability in its own flow of expenditures. If it would do that, it would make a clear contribution to reducing the adjustments required in the rest of the economy. Until it does that, it is farcical for government officials to adopt the self-righteous tones of the schoolmaster keeping unruly pupils in line. Of course, their doing so is not surprising. Passing the buck and blaming others for one's own deficiencies are not vices of which governmental officials have a monopoly.
Even if one were to accept the view that the federal budget should be and can be used as a balance wheela view I shall consider in more detail belowthere is no necessity to use the expenditure side of the budget for this purpose. The tax side is equally available. A decline in national income automatically reduces the tax revenue of the federal government in greater proportion and thus shifts the budget in the direction of a deficit, and conversely during a boom. If it is desired to do more, taxes can be lowered during recessions and raised during expansions. Of course, politics might well enforce an asymmetry here too, making the declines politically more palatable than the rises.
If the balance-wheel theory has in practice been applied on the expenditure side, it has been because of the existence of other forces making for increased governmental expenditures; in particular, the widespread acceptance by intellectuals of the belief that government should play a larger role in economic and private affairs; the triumph, that is, of the philosophy of

 
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