Vol. LXXXI, No. 53-S Ann Arbor, Michigan-Saturday, July 24, 1971 Ten Cents Twelve Pages
President Nixon discusses the money crisis yesterday with (from left) Casper Weinberger, deputy
director in the Office of Management and Budget; Paul McCracken, chairman of the Council of Eco-
nomic Advisors; Secretary of the Treasury John Connally; George Shultz, director of the Office of Man-
agement and Budget; and Henry Kissinger, presidential assistant for foreign affairs.
COMMITTEE REPORTS BILL:
une inflation
worst since
March, 1970
WASHINGTON Ui-Rising grocery prices nicked nearly
a penny from the value of every dollar Americans spent on
food in June and paced the sharpest rise in living costs in
15 months, the government said yesterday.
Top White House spokesmen said the figures showed
the Republican administration still making long-run pro-
gress against inflation, while Democratic National Chair-
man Laurence O'Brien called the June living cost rise of
six-tenths of one per cent "devastating."
The increase pushed the gov-
ernment's Consumer Price Index
up to 121.5, meaning it took $12.15 B
last month for every $10 worth of
typical family purchases in the
1967 base period.on " t
Grocery prices shot up nine- Un 1-iXOn1I
tenths of one per cent for the
month, transportation costs rose
seven - tenths, medical catre four- h l ~ i~ to
tenths and recreation three-
tenths. The only bright note was WASHINGTON (A") - Chairman
a one-tenth of one per cent drop Arthur Burns of the Federal Re-
in clothing prices in line with the serve Board said Friday the
usual seasonal pattern. Nixon administration should take
The bureau also reported that stronger steps to tackle an "un-
some 45 million rank - and - file acceptable and dangerous" rate
workers gained $1.74 in average of inflation.
weekly paychecks; to $12715, a Unless the nation makes pro-
60-cent per week gain after fed- gress against the rising spiral of
eral taxes and allowance for wages and prices, Burns said, he
price hikes. is pessimistic of any substantial
On an overall seasonal basis, scaling down of interest rates.
the Bureau figured the June liv- Taking a gloomier-than-usual
tug cost rise at a slightly smaller view of the nation's economy, the
five-tenths of one per cent, still head of the nation's independent
the second largest on that basis central bank also decried the
in seven months. United States' worsening trade
"h picture and spelled out several
"The battle against inflatioo countermeasuires.
certainly has not been won but cB ur es -
the headway cannot be ignored E Burns told the Senate-Hoste
said Secretary of Labor J. D Economic Committee the time
Hsso after a White House has come for President Nixon to
meeting of President Nixon and establish a national wage and
hiseetnomicadvores . n price review board to investigate
his economic advisors inflationary movements in the
Hodgson said the 4 per cent economy. It is an idea Nixon has
annual rate of inflation the past rejected.
six months compared with 4.9 per Nixon has made some good
cent the previous six months and moves in the right direction,
6 per cent the first half of 1970. Burns said, but "in the board's
But the figures also showed that judgment, these efforts need to
the annual rate of inflation step- be carried further - perhaps
ped up to 5.3 per cent in the sec- much further."
ond quarter of this year, nearly Burns has made the same pro-
double the 2.7 per cent yearly posal for a wage-price review
See COST, Page 10 See U.S., Page 10
Senate to act on
By ALAN LENHOFF
A bill now pending in the State
Legislature would guarantee the
University only $324,252 in state
funds for use in building con-
struction for the current fiscal
year.
The proposal, part of the larg-
er state Capital Outlay bill was
sent to the Senate floor yester-
day by the Senate appropriations
Committee.
The University's funds would
be specifically earmarked for use
in completing the University's
new Modern Language Building.
A spokesman in the state Leg-
islative Fiscal Agency, however,
said that the current bill was de-
signed only to provide funds for
the completion of current projects
in the state. Funds to start new
projects, he predicted, will be
Mich. House passes
income tax rate boosi
LANSING (P) - The Michigan House yesterday approved a 50
per cent increase in the personal income tax, boosting the state's tax
rate from 2.6 per cent to 3.9 per cent on Aug. 1.
The bill, passed 58-44 and returned-to the Senate, also would restore
full property tax credits against the income tax. Those credits had been
limited to $15 last year.
Backers said the extra three-tenths of a per cent was added to the
Senate-approved 3.6 per cent rate in order to make up for the credit
restoration.
The Senate passed the higher tax bill, calling for a 1 per cent in-
crease, July 1. But that version of the bill retained the $15 limit on both
property tax and city income tax credits.
The House bill also would hike the corporate income tax rate from
5.6 per cent to 7.8 per cent and the 7 per cent financial institutions tax
to 9.7 per cent.
The Senate bill specified the same corporate rate but called for a
10 per cent tax on financial institutions.
Some thought the Senate would balk at increasing the personal
rate beyond the 1 per centage point, which amounts to a 3 per cent tax
boost.
But- House Speaker William Ryan, (D-Detroit), said it would be
best for the Senate to accept the House version and avoid throwing the
bill into a time-consuming conference committee.
The passing vote on the controversial bill came only after the House
first defeated the measure by a resounding 32-71 vote.
For hours after that vote, Ryan and House Minority Leader Clifford
Smart, (R-Walled Lake), tried to round up the extra votes needed.
They roamed the House aisles cajoling colleagues as other mem-
bers debated the bill.
Under the bill- finally approved, the increased tax would expire
Aug. 1, 1972, unless the legislature submits to voters this fall or next
a proposed constitutional amendment dealing with property tax re-
lief or a graduated income tax, or both.
The Senate Appropriations Committee, meanwhile, finally released
a major proportion of the upper house's share of budget bills and floor
action was planned Monday.
Finishing touches were being put on the higher education spending
bill, pegged at $385.9 million in Milliken's recommendations; and the
Mental Health Department budget as well as junior college capital'
outlay. The only major budget bill remaining in committee was that
doling out funds for school aid payments.
bldg. fund
made available "some time in
the fall."
Speculation is high, however,
that increased revenue problems
plaguing the state may greatly
curtail the amount of funds made
available for new capital outlay.
Last night, University officials
were largely unaware of the new
proposal in the Senate.
Allan Smith, vice-president for
academic affairs, said that the
languages building is the only
University building currently un-
der construction that needs funds
for completion.
He said, however, that the Uni-
versity would like to begin new
building projects to increase fa-
cilities for the engineering col-
lege and the School of Architec-
ture and Design.
"All we can do is wait and
see," said Fedele Fauri, vice-
president for state relations and
planning. "In some ways it may
be advantageous to have some
delay in the appropriation - per-
haps until state tax levels are
finally set.
The S e n a t e Appropriations
Committee has yet to report out
the state Higher Education Bill,
which includes the University's
general fund allocation.
The bill is expected to be fi-
nalized by the committee early
next week.
It is uncertain at this time
whether funds gained from the
recently passed House bill in-
creasing the state personal in-
come-tax will be used to in-
crease funds to the state-sup-
ported Universities.
At the present time, the Uni-
versity is in grave financial
trouble. Funds usually ear-
marked at this time have not
been provided and the Univer-
sity cannot go ahead with its
plans until it has some indica-
tion from the State on the
amount of funds it will receive.
In addition, the Legislature has
not yet set the budget level for
the state for fiscal 1971-72. This
has caused both the state and
the University to pass emergency
spending bills to enable them to
operate at last year's funding
levels until the new budget is
set-hopefully within two weeks.
At the University, the most
marked effects of the rate bud-
get have been delays in both the
institution of new programs and
the granting of annual staff pay
increases.
Suspended Sentence
Rabbi Meir Kahane, leader of the Jewish Defense League yes-
terday is carried on the shoulders of supporters after he was given-
a suspended sentence, put on five years probation and fined $5,000
for conspiring to make explosives. Kahane pleaded guilty to the
charge two weeks ago.