PROFESSOR HARRIS PREDICTS POSSIBLE DEBT OF 200 BILLION IN TWO DECADES

"The public debt, within three years of warfare, may well rise to the amount of 75 to 100 billion dollars," said Associate Professor Seymour E. Harris '20, expert on national defense economics and author of the recently published "Economics of American Defense" yesterday. He added that "a public debt of 150 to 200 billion dollars in the next ten or twenty years is not at all out of the question."

Professor Harris did not feel, however, that such an increase in debt would necessarily be dangerous. "The effects will depend in no small part on our ability to maintain a high level of income and employment in the postwar period," he observed. "A debt charge of three to five billion dollars a year would be serious with a national income of 60 billions, but with a national income of 120 billions, which is clearly obtainable in 1960, it would not be serious."

Post War Planning Needed

"The longer the war goes on," Professor Harris pointed out, "the more private investment is likely afterwards, because of limitations on spending now. Also, the more voluntary and compulsory savings now, the more purchasing power will be available after the war.

"But a rise in purchasing power isn't enough. A planned adjustment of resources will be necessary to avoid dangerous inflation." He emphasized that we must begin to plan now for the changeover from a wartime to a peacetime economy.

We have been relying too heavily on increased output for our defense resources, according to Harris, and we haven't begun to curtail capital expansion, while our consumption has been increasing too fast. Reduction of consumption by increased taxation, priorities and forced savings will be increasingly necessary, following the British practice.

"Taxation," declared Harris, "should play an increasing part to help prevent inflation." He urged that we attempt to raise the tax bill by at least five billion dollars annually, and suggested that this be apportioned 1 1/2 billions from payroll taxes, 1/2 billion from excise taxes on luxuries, 1/2 billion from corporations, and 2 1/2 billions from individual income taxes.

Payroll taxes, he explained, are really loans at interest, which are paid back after the war, and serve to cut down consumer demand now and increase it when it is needed. This is a variant of the Keynes Plan, in effect in England.

Taxation Must Cut Consumption

Harris advocated that "in general the tax program should aim to put, the greater burden on the well-to-do, but in this emergency it is important to cut down consumption of the masses." Taxation of the lower income groups is more effective in reducing consumption than taxation of the upper income class. Controlled inflation may even be necessary to bid up the prices on resources necessary for the defense effort.

Harris, known affectionately as "Ski More, gives the popular Economics 18b on war and defense.