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.