from a U. S. correspondent
The certainty of rising expenditure on the Vietnam war and the lack of cer tainty about the economic outlook at home have caused the U.S. Administration to increase the official estimate of next years Budget deficit from $8,000 m. to $14,000m. ‘This was formally admitted on lay 15 by Mr. Henry Fowler, Secretary of the Treasury, and ir. Charles Schulze, director of the Budget Bureau, in evidence before the House of Representatives Ways and Means Committee on behalf of a more liberal statutory limit on the national debt. The $3,000m. increase is accounted for by an estimated increase of $1,500m. in Vietnam costs (bringing them to $23,900m* in the 1967-68 fiscal year) an estimated decrease in corporation tax revenues of $500m., and a full year's effect of restoring the investment tax credit. The estimate is based on two propositions, one dubious and one probable. It is assumed there will be no escalation of the Vietnam war from its present level. Mr, Fowler's comment here was: "I must say frankly that a margin of underestimate or overestimate - but more likely the first - is always a possibility". And Mr. Schulze was careful to state that "if military requirements dictate a, significant increase in troop strength or the level of combat operations assumed in the Budget, additional appropriations will clearly be required," These figures are considerably lower than those produced by the economists of the American Business Council at its semi-annual meeting in Hot Springs, Virginia, last week, There it had been assumed that defence expenditure would rise by $5,000m,, even without escalation in Vietnam while the most conservative estimate of the overall deficit was said to be $15,000m,
The gloomy conclusion drawn from this at the meeting seems to have been that the present sluggishness of the economy, particularly in consumer spending, was likely to continue as a result of the uncertainties created by the war, but that by the autumn it would be combined with a renewed threat of serious inflation caused by big increases in defence expenditure and by the summer's wage demands,
*£165,400,000 a week,