Page 4-ThursdayOctober 26, 1978-The Michigan Daily
How Carter's plan would work
420 Maynard St., Ann Arbor, MI 48109
Eighty-Nine Years of Editorial Freedom.
Vol. LIX, No. 43
News Phone: 764-0552
Edited and managed by students at the University of Michigan
F ied Newspaper Syndicate, 1978
WASHINGTON - President Carter's new
program to combat inflation promises some
cost-of-living insurance for workers who
comply with the 7 per cent wage guideline, if
The insurance would make up the
difference in lost purchasing power between a
7 per cent wage hike and inflation above that
If the program succeeds in its goal of
holding inflation to the 6 per cent to 6.5 per
cent rate next year, then the insurance would
bot be used. However, it's there to protect
workers who agree to the program from
losing ground to those who do not.
Here, in a question and answer form, is an
explanation of how the so-called real wage
insurance program and other features of
Carter's new program to combat inflation
Q-How do Iobtain the insurance?
A-If you are a member of a group of
workers whose average wages, including
fringe benefits, increase by 7 per cent or less
next year, your employer should report to the
Internal Revenue Service that your group is
in compliance with Carter's new program.
Then it is automatically available to you.
Q-How much would I receive, and who
would pay me?
A-The IRS would pay ' you with
government funds at the end of the year. The
amount would depend on how much, if any,
the government's inflation-measuring
consumer price index rises above 7 per cent.
For example, a worker with an annual
income of $10,000 who agreed to a wage
increase of 7 per cent next year would receive
$700 in additional pay from hir or her
employer. If inflation, however, was 8 per
cent, then the worker would be entitled to an
additional one per cent in wage insurance, or
$100. If inflation was 10 per cent, the extra
amount would be $300.
Q-What if my union negotiated an 8 per
cent wage increase and inflation turned out to
be 10 per cent?.
A--You wouldn't receive anything over the
8 per cent increase negotiated by the union
because you were in violation of the
administration's wage guideline. Also, if you
received a wage hike of only 5 per cent, you
By R. Gregory Nokes
still would get only the difference betwen the 7
per cent standand and whatever inflation
turned out to be.
Q-Won't such a program be costly?
A-The administration doesn't think so. It
says the more workers who agree to the 7 per
cent wage standard the less the possibility
that inflation will exceed that level. However,
the administration says the program would
only be for one year so if it has miscalculated
it wouldn't be stuck with the program
In addition, the administration admits a lot
of details still need to be worked out beween
now and January when the plan is scheduled
to be presented to Congress for its approval.
Q-What is so important about these
guidelines of 7 per cent for wages and 5.75 per
cent for prices. Why those numbers?
A-The administration says they would be
sufficient to reduce the overall rate of
inflation to between 6 per cent and 6.5 per cent
next year, down from 8 per cent this year, and
that's the best they can hope for right now.
Q-Is there anypenalty for someone who
exceeds the wage and price guidelines?
A-For wages, none, other than what's
already been mentioned. The government
also doesn't have the authority to force 'a
nusiness to roll back excessive price
increases, but it is putting some teeth behind
the price guidelines by giving corporations
notice that they could lose government
business if they don't comply.
Q-Is the price guideline of 5.75 per cent a
firm one for all rices?
A-No, it's the average. Actually,
businesses are supposed to increase prices
about 0.5 per cent less next year than their
average increases in the 1976-77 period, and if
they do that, then the over-all increases in
prices would be 5.75 per cent.
Prices of some goods produced by a single
company could go up more, some could go up
less, and it would be all right as long as the
average fit the guideline. Some companies
might be able to justify increases exceeding
the guidelines, and the government would not
object in those cases.
Q-Does the wage guideline apply to all
workers and isn't there a danger a company
could increase the wages of its officers
substantially and its other workers less, and
still be within the wage guidelines?
A-Workers with hourly earnings of less
than $4 an hour would be exempted from the
wage guidelines, about 26 per cent of the full-
time labor force. A company would have to
average its pay increases for three categories
- management employees, employees
covered by union contracts, and all other
employees, and each category would be
considered as a separate group for
Q-Will the guidelines apply to food prices
which have been the biggest problem for most
consumers in the past year?
A-The government will not apply the
guidelines to food coming off the farm,
because farm prices are so volatile because o
the influence of such unpredictable factors a
the weather. But the guidelines will apply to
food processors and to supermarkets, where
the profit margin rather than the actual price
will be the factor determining compliance. -
Q-How about rents, dividends, medical
costs and the like?
A-Landlords will be asked to keep rent
hikes below the overage increases for the
1976-77 period, and medical costs and doctor's
fees will also be covered. Dividends will not,
but officials say if the program works as its
upposed to, it would keep dividends in check.
Q-But since there aren't any specific
penalties for increases in rents or prices
above the guidelines, doesn't that remove any
incentive for compliance?
A-It's true there are no penalties for the
landlord or neightborhood grocer or doctor.
But the administration is hopeful that public
pressures will help win compliance, and the
government will closely monitor the price
actions of the largest 400 corporations to
make sure they comply. If not, it will do what
it can to penalize them by denying
government business and also by denouncing
"' c W I
pf t t p
'I thought this act was usually performed with a bow and arrow!'
Nokes is an Associated
arter, the tax chameleon
W HEN THE DAILY endorsed
President Carter's candidacy in
1976 we felt one of his strongest
attributes was his condemnation of the
nation's tax.system. Candidate Carter
promised swift, effective tax reform
that would decrease the burden on low
and .middle income taxpayers while
making the rich pay their fair share.
Last year, and for a good part of this
year, the presidential rhetoric on the
subject of tax reform continued. The
President appeared to be a man intent
on keeping a promise.
But Mr. Carter has backed down. In
the face of a tax cut bill, passed by
Congress just before it adjourned, and
his own failing efforts to control
inflation, he has decided to renege on
his tax reform promise.
in his television address to the nation
or Tuesday night, Mr. Carter hinted he
would sign the $18.6 million tax cut
passed by Congress last week.
Administration officials admitted
Tuesday the President will sign the
bill. But the bill is not at all similar to
the tax package Carter presented to
Congress at the beginning of the
session. The President should veto the
legislation because it is inflationary
and does nothing to reform the tax
The bill passed by the 95th Congress
was a compromise reached after long
dObate over several tax proposals.
Ironically, the legislation would
provide the most tax relief for those
with incomes over $50,000. In fact,
those individuals whose income
exceeds $50,000 will benefit from a net
tax deduction of $2.1 billion while 80
per cent of the tax payers would
actually suffer a tax increase once
their pay hikes offset negligible tax
cuts Congress saw fit to give them.
Under the bill, according to United
Press International, a four member
family earning $10,000 a, year will
receive a $136 tax cut in 1979 while a
four member family earning $25,000
will get a $249 tax cut and so on.
The. legislation clearly contradicts
Mr. Carter's promiise to reform the tax
structure. It also runs against his
program to curb inflation. The
President tried to appear serious on
television about his new anti-inflation
program, but if his actions as the chief
executive do not back up his rhetoric,
no union leader or businessman will
honor the President's 'voluntary
inflation fighting program.
Any responsible union leader will
realize the tax cut proposal is a rip-off
of the union rank and file, a slap in the
face for the average American worker,
who has sought to force his own reform
by signing up on the Proposition 13
Even more distressing is the fact
that the President said in his Tuesday
night speech he opposes "any further
reduction in federal income taxes until
we have convincing prospects that
inflation will be controlled." In other
words the tax cut passed by Congress
is the last tax cut the American people
are likely to see for some time.
The President must veto the tax cut
bill now before him. It runs contrary to
his tax reform promises and his
voluntary plan to control inflation.
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j ournalst victimized
LONDON - A British state
security trial that has become a
national soap opera is now.
confirming original suspicions
that U.S. journalist Mark
Hosenball was expelled from
England simply as a warning to
other would-be investigative
Hosenball was deported
mysteriously in February 1977, at
the same time as Philip Agee, the
ex-CIA agent who turned
whistleblower. Both Hosenball
and Agee were denied open court
hearings. They were merely
informed that their continued
presence was not deemed
conducive to the public good. But
they were never told the official
MOST OBSERVERS accepted
that Agee's eviction was a favor
to American intelligence chiefs
who were sensitive to Agee's
printing exposes of secret CIA
field operations ir* Latin
America. But finding even a half-
plausible explanation for
Hosenball's deportation proved
difficult. The current security
trial, involving two of Hosenball's
former British colleagues,
however, has shed new light not
only on the reasons for
Hosenball's deportation, but also
on some quirks of the British
system of justice that would
make most Americans run to the
Hosenball was 24 at the time,
with a reputation as a good
investigative reporter. He had
worked for the London weekly
magazine Time Out and later for
the liberal establishment city
paper, the London Evening
His most politically sensitive
work, that least likely to endear
By Richard Grant
controversial Official secrets
. ACCORDING TO Hosenball's
co-author, Duncan Campbell,
who testified in his behalf, details
of how the article was compiled
was the one thing that interested
the secret session tribunal that
heard the Hosenball-Agee
Campbell, who is one of the
defendants in the current state
security trial, testified that 90 per
cent of the offending article had
come from his research. A
physics graduate from
Cambridge, an inventor of
equipment and, at 25, a
university course advisor,
Campbell had deduced the
outline of a supposedly secret
Composite Signals Organization,
an electronic spy network,
simply through telephone
directory listings and the
government and postal maps
showing radio installations.
But Campbell's shouldering
responsibility for the article
failed to save Hosenball from
deportation. Instead, one week
later, Campbell was also
It happened as he was leaving a
London apartment with fellow
journalist Crispin Aubrey where
they had been interviewing ex-
soldier John Berry. Berry was
seven years out of the signals
service, the equivalent of the U.S.
National Security Agency, and
felt he hadinformation that might
help Hosenball and A gee'
Aubrey, Berry and Campbell,
who together became known as
"ABC," were all charged under
Britain's main counter-espionage
be useful to another state.
The security service behavior
incensed many supporters of the
British Labor government.
Christopher Price, a member of
Parliament, complained, "There.
are some people in the security
service who are obviously
paranoid. They genuinely believe
that some radical journalists are
a threat to national security."
And as the case progressed it
has been that theory that has best
survived the test of time. All
along, the prosecution has sought
to mystify the case, refusing to
identify their witnesses,
demanding that they be known
merely as "Colonel A" and
newspapers. identified "Col. B"
as Col. Hugh Johnstone through
the service number he gave in
court. His name was printed on
balloons, written in 10-foot letters
outside a London hotel and
mentioned in the British House of
As the defense attorney, Lord
Gifford, said, "I cannot for the
life of me see how the question,
'What is your name?' cannot but
be relevant . . . Are we ,soon to
have voices giving evidence from
behind a screen?"
Both the ABC defense
committee and the British
national union of journalists
complained that security
measures were dlesigned to
exclude all but police-approved
reporters from the trial.
Similarly, the prosecution had all
82 potential jurors security-
screened, an unusual move in
regard to British judiciary
Befnre the trial nened the
went beyond the ordinary
inquisitiveness of the job." He
was "thoroughly subversive
because he wanted to publish
secret information," the
But what was secret
information? The prosecution
case has been that anything
is secret if it is covered by the
Official secrets Act-even if it is
clearly not a secret.
For instance, among the
documentstfound in Campbell's
flat were three photographs of
the London Post Office tower, a
popular tourist landmark. But
because it is also government
property it is also an official
secret, and Campbell was duly
charged with possession of a
secret. The defense quickly noted
that there are thousands of
postcards of the Post Office tower
sent home by tourists each year.
Repeatedly, Campbell and his
co-defendants have been accused
of receiving or passing classified
information that already has
been published in defense
department magazines and
general circulation daily
CAMPBELL'S CRIME - and
the one that Hosenball
apparently would have been
charged with had he not been
deported - is of having actually
fitted some of this information
into a coherent picutre. For that,
one was expelled and the other
was denied access to his files and
the right to travel for 18 months.
The ABC case is nov waiting
re-trial after it was revealed that
the jury foreman was a former
military s py who lobbied his fellow
jurors for a conviction during the
opening phase of the trial. Three (
other jurors had also signed the :
Official secrets Act in their work.
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