What I term the "long
distance" problem involves an examination of the whole scale upon which
our future outlay is conditioned for us.
The limit of further economies on the lines of the "Geddes' cut" that
can become effective in 1923, would seem to be some 50 or 60 millions,
because every 10 per cent. in economy represents a much more drastic and
difficult task than the preceding, and it cuts more deeply into your
essential national services. On the other side of the account one sees
the probable revenue diminish to an almost similar extent, having regard
to the effect of reductions in the rate of tax and the depression in
trade, with a lower scale of profits, brought about by a lower price
level, entering into the income-tax average. It looks as though 1923 may
just pay its way, but if so, then, like the current year, it will make
no contribution towards the reduction of the debt. So much for the
"short period." Our worst difficulties are really going to be
deep-seated ones.
THE TWO PARTS OF A BUDGET
Now a national budget may consist of two parts, one of which I will call
the "responsive" and the other the "non-responsive" portion.
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