FRIDAY, JUNE 30, 1967 TILE MICHIGAN DAILY PAGE THREE llusinessmen Support Tax Boost, Spending Cuts a NEW YORK (P)--Many business leaders say a boost in income taxes would help cool an overheated economy. But they and some con- gressional leaders add that a cut in government spending also would help. "Unless federal expenditures are cut promptly, the deficit will be very large," says Albert L. Nicker- son, chairman of Mobil Oil Corp. "Inflationary forces, a 1 re a d y strong, would accelerate as the year goes on, I believe a tax in- crease will be needed." The same views are held by other leaders queried in a nation- wide survey. In a similar survey earlier in the year, most business men were opposed to the six per cent surcharge on personal and corporate income taxes first pro- posed by President Johnson six months ago. Congressional action on the President's plan was urged anew this week by two top officials, Wil- liam McChesney Martin Jr., chair- man of the Federal Reserve Board, and Gardner Ackley, chairman of Johnson's Council of Economic ad- visers. Both Martin and Ackley said the surcharge, which in effect is a tax on income taxes, should be at least six per cent. Heavy government spending on both domestic programs and the Vietnam war is expected to in- crease the federal deficit to any- where between $13.5 billion and $29.2 billion. The war alone costs an estimated total of $20 billion a year. Supporters of the surcharge think it would serve as a revenue builder that might help offset a deficit in government financing and also lessen the Treasury's bor- rowing needs. Sen. William Proxmire (D-Wis), chairman of the Senate-House Economic Committee, said he felt Congress should be cautious about enacting an increase. He said economic developments should be watched to see whether a reduc- tion in buying power caused by higher taxes would be unduly harmful. Rep. Thomas B. Curtis (R-Mo), a member of the committee, said: "The administration should come forward with more information and with proposals as to econ- omies and exactly what tax and what effective date they want. Then Congress could discuss ra- tionally what mix of taxation, bor- rowing and sale of assets should be used to finance the deficit." And Rep. Gerald R. Ford of Michigan, House Republican lead- er, said: "They have not convinced me a tax increase is necessary. You would think the administra- tion would make an effort to cut back expenditures, but they just don't try." But Charles E. Walker, executive vice president of the American Bankers Association, said, "A sharp cut in federal spending would be economic, but politically it isn't achievable." Dr. Armand Ha'mmer, president of Occidental Petroleum, said: "I think business people would rather see a tax increase rather than tight money again. Last time money got to tight that business was paralyzed. At that time, if we'd had a modest tax increase, it wouldn't have been so bad." "In the absence of greater fiscal restraint, a tax increase may well be necessary by next year," says John V. Deaver, vice president and associate director of economic re- search of New York's Chase Man- hattan Bank. "Efforts to reduce the deficit are essential, and first priority should be given to cutting back now on such things as de- fense expenditures." A vice president of one of At- lanta's large department stores says he hopes a tax increase won't be necessary but notes: "We have to do something with the Vietnam ftar costs and social welfare needs. I suppose the pruning of expenses is the best thing to do." However, Mills B. Lane Jr., pres- ident of Citizens & Southern Na- tional Bank at Atlanta, says: "An income-tax increase is very de- finitely in order. Whether it should' be six per cent or not, I don't know, but the sooner the better. With the high degree of govern-j ment expenditures this year, to- gether with the increase in con- sumer purchases and a $20-billion deficit, inflation is going to heat the economy more." As an alternative, Lane suggests the government reduce its "spend- ing on needless programs, or in the ones that can be put off." Differing views were voiced by Walter W. Williams, board chair- man of Continental, Inc., a Seattle' mortgage company, and John Fluke, president of a Seattle manufacturing company. Williams said he felt there' should be a tax increase and that it should be over six per cent but cautioned that "too much would dampen the economy." He said he1 recommended a cut in government spending if the increase was not approved. "I don't think the increase is necessary," Fluke said. "I think we ought to watch government spending before we talk of increas- ing taxes." Leon . H. Keyserling, former chairman of the Council of Econ- omic Advisers, told a meeting in New York that he considered a surcharge "ill-timed and unwise and it would further restrain an economy which now needs a pro- gram for balanced acceleration of the rate of growth." In San Antonio, Tex., Morris Jaffee, a financier, said he felt a tax increase was needed. "We ought to have at least a six or seven per cent increase," Jaffee said. "I would like to see it im- mediately. I'd rather pay taxes and have a healthy economy. Peo- ple ought to realize we're fighting a war and you have to pay for it." In Chicago, Joseph Bock, chair- man of Inland Steel, said "that in the light of the apparently very great budget deficit, a tax increase is necessary no later than Jan. 1 to prevent further drastic inflation. The only other way is a sharp cut- back on nondefense spending." H. Frederick Hagemann Jr., president and board chairman of State Street Bank & Trust Co. in Boston, said a tax increase was "necessary under existing circum- stances," adding that "there could be inflationary pressure late this year" if the budget remained well out of balance and spending were not cut. Annexed Jerusalem Opens to Commerce In Spite of Threats- TARIFFS CUT: Johnson Gives U.S. Approval To Geneva Trade Agreement JERUSALEM (RPI-Divided for nearly two decades, Jerusalem be- came one city yesterday, and thou- sands of Jews and Arabs streamed 0 through the open gates, mingling and fraternizing in the streets. Israel, by act of Parliament Wednesday, annexed the Old City, wrested from Jordan in the Middle East war. Thus Israel ignored the warnings of the United States. Britain, the Soviet Union and 4 France and a plea from Pope Paul VI that Jerusalem be internation- alized. LUN May Call For Israeli Withdrawal UNITED NATIONS, N.Y. ()- Israel came under mounting at- or tack in the General Assembly yes- terday for annexing the Old City of Jerusalem. But Israel sought to stem the tide by declaring its ac-, tion brought peace to the once divided city and access by all faiths to the holy shrines. It appeared likely the assembly w would vote today on two rival resolutions, each calling for with- drawal of Israeli troops from Arab territory occupied in the recent war. There was no indication, how- ever, that any assembly action would shake Israel's determination to rule all of Jerusalem. The United States, Britain and Canada worked behind the scenes to produce a rival resolution call- ing for a troop withdrawal, but tying it in with a demand for an end to the state of belligerency by all sides. Peace Prospects The resolution also would call on Secretary-General U Thant to send a special representative to the Middle East to explore the prospects for a peaceful settle- ment. Both sides expressed confidence they could win the necessary two- thirds vote. Soviet publications in Moscow endorsed the nonaligned resolu- tion, thus indicating the Russians had dropped demands for con- V demnation of Israel as an aggres- sor and payment of war damages to the Arabs. The Soviet Union had requested the convening of the assembly in emergency session to press those demands. U.S. Won't Press Similarly, the United States was understood to have decided against pressing to a vote its resolution calling for direct Israeli-Arab negotiations and omitting any mention of immediate troop with- drawals All the parties were agreed on giving priority to the nonaligned resolution. The Western powers theorized that the resolution would be defeated, and the road opened for an immediate vote on their own proposal. Against this backdrop of behind- the-scenes negotiations, debate continued in the assembly, where speakers assailed the annexation move by Israel and asked for in- ternationalization of Jerusalem. Annexation Raja Aznam, the delegate from Malaysia, asserted that annexation was not acceptable to his country, but added that he considered in- ternationalization should be ap- plied only to the Old City. The UN partition plan for 1949 called for that status for the entire city. Ambassador Zenon Rossides of Israel's press backed up govern- ment declarations that Israel never would give up the Old City, but from Cairo to Baghdad. Arab press and radio assailed Israel. Some called for holy war to liberate Jerusalem, sacred to Moslems as it is to Christians and Jews. The checkpoints and barbed-wire barriers between the Jewish and Arab sectors came down after the Israel radio had announced that the gates were being thrown open for traffic in both directions. A combined Jewish and Arab police force stood by as thousands poured through gates in the 400- year-old wall surrounding the Old City. Most of the traffic was through historic Jaffa Gate. The approach road there had been cleared of rubble and the litter of war ac- cumulated since 1948-49 when in the Palestine war Jordan seized the Old City and Israel took over the new sector Israelis passed through the gates with guide books and shopping bags. Arabs came with new Israeli money they had exchanged for their Jordanian dinars at the Is- rael State Bank offices in the Old City An Arab entering the New City for the first time helped to break the ice. He opened a bottle of wine in the street and invited those nearby to "drink to peace" Sev- eral joined him in the toast In the Meah Shearim quarter of the New City, home of the severely Orthodox Hasidim Jews, an Ara- bic-speaking Israeli, black-garbed and bearded, explained to an Arab the value of the Israeli currency. Shops in both sectors did thriv- ing business. In the Old City, Is- raelis bought Arab souvenirs, cheap Oriental spices they had mised for years, pancakes of Arab bread and Old City maps bearing the imprint "Jerusalem-Jordan." Arab traders from the old sector set up stalls in the Jewish half of the city. They sold trinkets and Oriental sweets. While Arabs and Jews here for- got their mutual distrust, at least temporarily, the Arab world seeth- ed at Israel's annexation Radio Cairo said the Islamic, Council at an emergency meeting called on Moslems the world over to wage a holy war to liberate Jerusalem. A similar call came from Presi- dent Abdel Rahman Aref of Iraq. Broadcasting from Baghdad, his capital, he declared the Jews were "seeking to destroy Islam" and urged all the world's Moslems to joih in a struggle to recover Jeru- salem. -Associated Press FIRST HAT IN THE RING E. Harold Mun, associate dean of Hillsdale College won the Prohibition party nomination for the 1968 presidential race at the conclusion of the party's national convention in Detroit yesterday. Pinning a "Munn in '68" button on him is delegate Mark R. Shaw of Melrose, Mass. OTHERS DIVIDED: RhodeIs and's Gov. Chafee Campaigns for Romney in '68 WASHINGTON (P)-President Johnson ordered the U.S. repre- sentative at Geneva, Switzerland, yesterday to sign the 53-nation signing of new tariff agreements today. It would reduce U.S. duties on imports worth $7.5 billion to $8 billion a year. The cuts are balanced, the gov- ernment said, by foreign tariff reductions on an equal amount of U.S. exports. On both sides the reductions average 35 per cent, it said. A 15-page summary of the s t o r m y, three-year "Kennedy Round" of tariff talks, completed in May, was issued by the office of the President's special repre- sentative for trade negotiations, William M. Roth. It gave no details but an- nounced these highlight results: -"Import duties are being cut in half on a broad range of in- dustrial products." The recipro- cal cuts range from 35 to 50 per cent "on many more products." -European Common Market tariffs were cut on farm products with a U.S. export trade value of $200 million. But over-all tariff reductions in agriculture are "considerably more modest" than in industry. --Anantidumping code has been accepted, under which other countries will apply "fair and open" procedures similar to U.S. practices in the case of import goods unloaded at less than market value. Still not available from Roth's office are the more than 4,000 pages of new tariff rates needed to permit item-by-item, country- by - country, before - and - after comparisons of the complete tar- iff schedules. The details will be available at the office in Washington next week, the announcement said, but will not become available in published form until mid-July. Roth's deputy, W. Michael Blumenthal, was designated to sign for the United States in a ceremony this morning. Approval by Congress is not needed. The legal authority was given in advance, in the Trade Expansion Act of 1962, to the late President John F. Kennedy. The negotiations were given his name in recognition of his leadership. However, a two-thirds vote of the Senate will be needed to ratify a new world grains arrangement negotiated at Geneva. And the proposed elimination of the so-called "American selling price" system for reckoning tar- iffs on chemicals, drugs and dyes Expect North Viet Offensive Despite U.S. Bombing Raids -which produces higher duty than other pricing methods- must be approved by Congress before European countries will make the full cuts contemplated in their own chemical tariffs. And controversy looms over the antidumping code. Some members of Congress contend that congressional ap- proval is needed for the new rules to regulate cut-price dumping- rules under which this country would shorten the periods in which foreign goods are barred from sale during price investiga- tions. JACKSON, Wyo. (A') - Rhode Island Gov. John H. Chafee em- barked yesterday on a campaign of "missionary work" for the pres- idential cause of Michigan's Gov. George W. Romney. But a New England colleague rejected the idea of an early lineup behind any White House contender. Gov. John A. Volpe of Massa- chusetts said he might seek to become New England's favorite son in the 1968 Republican race. That could pose a problem for Romney in the crucial season- opening New Hampshire presiden- tial primary next March. Joins Chafee New York Gov. Nelson A. Rock- efeller, insisting he will not run for the White House, Joined Chaf- ee in seeking to convince his col- leagues at the Republican Gov- ernors Conference that they should line up behind Romney. And the absent Romney wired assurance of his determination to fashion "a vitally necessary na- tional Republican victory in 1968." Presidential politics overshad- owed the formal, closed-door con- ferences on highways, federal- state relations and medical care programs as 21 Republican gover- nors convened at this Grand Te- ton National Park resort. New Mexico Gov. David F. Car- go pressed his quest for a guber- natorial outline of the kind of candidate the party should nomi- nate for the White House. Cargo said moderate and liber- al GOP governors were making progress in that direction. But he acknowledged that their pri- vate caucuses have foundered in debate about some of the men who now loom in the presidential running-Romney, former Vice- President Richard M. Nixon and California Gov. Ronald Reagan. "They were pretty well agreed that Reagan was cutting the feet out from under Nixon," Rockefel- ler said. Romney, Reagan Absent Like Romney, Reagan was ab- sent, both reporting that the press of state business kept them at home. Chafee and Rockefeller joined in an effort to revive the appar- ently faltering Romney campaign. Chafee said he had eight or more allies among the Republican governors in the effort to assist Romney. But he acknowledged: "I don't think that you are going to get 25 governors out backing any- body at this early state of the game." However, Chafee said, Romney ndu has more support among the gov- ernors than any other potential nominee. He said some governors are cautious about an endorsement because of uncertain prospects at home. Chafee said he hopes to build a New England coalition for Rom- ney and, in the process, help the Michigan governor prepare for the crucial New Hampshire primary. While moderate Republican gov- ernors such as Oregon's Tom Mc- Call still talk of Rockefeller as a presidential contender, Chafee said of the New Yorker: "He's not a candidate so I don't spend my time thinking about that." SAIGON ()'-Communist mil- itary ranks are thinning, and re- pair of bomb damage is slowing, but North Vietnam is expected to mount another major offensive in South Vietnam this summer, a U.S. spokesman said yesterday. The spokesman told newsmen the crossover point - the time when the enemy's troop losses be- come greater than his gains-was reached some time ago, probably last March. The expectation, nevertheless, is that Red regiments will hit again within a few weeks at allied hold- ings just below the border demil- itarized zone and in the central highlands, w h e r e Communist thrusts were turned back with heavy fighting in the spring. U.S. Casualties Climb The U.S. command disclosed American combat casualties had climbed sharply last week. Con- tributing to these losses was the heavy mauling of two rifle com- panies, one in a Mekong River delta fight and the other in the central highlands. The American toll was more than double the losses among the armed forces of South Vietnam and the other allies. The American spokesman in Saigon, in touching on broad as- pects of the war, defended the air offensive against North Viet- nam. Speaking 24 hours after Sen. John Stennis (D-Miss) disclosed in Washington his subcommittee of the Senate Armed Services Committee was investigating the effectiveness of the bombing, the spokesman said if it were not for the bombing, the North Vietnam- ese capability to wage war in South Vietnam would be many times greater than at present. Along the same line, Rear Adm. Roger W. Mehle, who directs Navy air attacks on North Vietnam told correspondents that "the war would be a lot more difficult for our ground forces" if the bombing stopped. "You would be giving North Vietnam the ability to introduce far greater amounts of material and far greater numbers of men into the south than they can do now," Mehle said. Cited at the Saigon briefing was a lag in the "construction capabil- ity" of the North Vietnamese in the face of bomb damage. The spokesman said wrecked bridges once were repaired in 24 hours but that American fliers now report some are still in ruins 48 hours after they have been knocked out. The air strikes, aimed to impede the movement of troops and war supplies, also have taken a tre- mendous toll of North Vietnam's trucks and railroad cars, he said.