Federal Austerity

IN THE LAST several weeks legislation has been introduced into Congress that, if passed, will severely threaten Harvard's economic security. We oppose the general thrust of a national program that simultaneously deprives colleges and universities of previously taken-for-granted Federal aid and destroys the tax incentive of private donors to replace the lost funding.

Federal tax reform is always necessary and overdue. But reforming the treatment of tax-deductible gifts currently cannot proceed without careful attention to its effect on large-scale giving to higher education. Because of Nixon's blighting budgetary restrictions, the consequences of discouraging private aid would be extraordinarily severe at this time.

Perhaps tax reform and the 1974 budget appear to be two separate problems. But they come together and reinforce each other when we examine their consequences for educational institutions. Private gifts, called into question by proposed tax reform, and Federal aid, curtailed in the new budget, together have provided somewhere over two-thirds of the annual income of institutions like Harvard and MIT. The effects of simultaneous cuts into universities' income from both of these sources will be immediate and bad.

The force of Nixonian reform, if it has any, is peculiarly directed against those elements in society which are already threatened. The tenor of the suggested changes in the tax code and of the proposed budget has demonstrated that the end has come to Federal favor for education. The end of tax loopholes and excesses of Federal aid is an end to be questioned rather than welcomed, if it can come only at the price of ending necessary Federal aid and chilling private contributions to notoriously unprofitable institutions like universities.