THE MICHIGAN DAILY
Tuesday, August 17, 1971
QUESTIONS AND ANSWERS
Effect of price freeze recounted
WASHINGTON (R') - How can
a consumer know whether a
storekeeper is cheating on
President Nixon's price freeze?
Because every one in the busi-
ness of selling goods or services
must "maintain for public in-
spection a record of the highest
prices or rents charged for such
or similar commodities or serv-
ices during the 30-day period
ending Aug. 14, 1971."
That requirement, unmention-
ed until the text of Sunday's
presidential order became pub-
lic Monday, answered one of the
thousands of questions pouring
into Washington on the impact
and operation of the 90-day
Following are some of the most
frequently asked questions, with
answers provided by government
Q. What is covered by the
A. Wages, salaries, prices and
Q. Not dividend payments or
A. Nixtn has asked the na-
tion's bankers to hold the line
on interest. Lacking authority to
control dividends, he is asking
corporations voluntarily not to
raise their dividend payments.
Q. What about profit margins?
A. Not covered. The ban on
price increases is expected to
hold profits down.
Q. What is the ceiling level?
A. Until Nov. 12, no price or
wage may exceed the level that
prevailed in the month ended
Aug. 14, 1971. A lower price may
be charged, but not a higher.
Q. Does this apply to state, lo-
cal and federal governments as
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well as private sellers and em-
A. It does. Even though some
states - including Texas - have
scheduled pay increases to take
effect Sept. 1 for rank-and-file
workers and even the governor,
the presidential order calls for
postponement of the increase un-
til the freeze ends.
Q. Can state universities raise
tuitions to take effect in Septem-
ber? Can state public utility
commissions grant rate in-
A. In both cases. the rates can
be raised, but the increases can-
not take effect until expiration of
Q. What is the official expira-
A. Nov. 12, 1971.
Q. Can Nixon extend the freeze
without new legislation?
A. Yes, present law permits
him to extend it to April 30, 1972.
Q. Can importers add the new
10 per cent import tax which
they now must pay to the cost of
the imported goods, even though
this means raising the price?
A. Although Secretary of the
Treasury John B. Connally indi-
cated in his televised news con-
ference Monday that the t0 per
cent surcharge tax would have
to be absorbed, a Treasury
spokesman said officials now be-
lieve that relief will have to be
provided for some importers. A
new Treasury ruling is expected
Q. What about school teachers
who have signed higher pay con-
tracts that take effect with the
opening of school in September?
A. The official answer, at this
moment, is that the pay increase
must be postponed. But here
again, a Treasury statement is
reported to be in the works
which may modify or clarify the
Q. Can recently announced
price increases on steel pro-
ducts take effect on schedule?
A. Those not yet in effect must
be deferred until the freeze ends.
Q. Suppose a company last
year granted a wage increase ef-
fective in two steps, with the
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second step taking effect on Sept.
A. The pay boost must be post-
Q. What about a cost-of-living
increase due workers in Septem-
her because of rise in the con-
sumer price index which already
has taken place?
A. This too must wait until
Q. Should wage negotiations
now in progress be halted?
A. No. The government would
prefer that they be negotiated to
a settlement to avoid the risk of
shutdowns. But any pay increase
which is agreed on should be
made effective as of Nov. 12.
Q. The President has asked
that the 7 per cent excise tax on
new cars be repealed by Con-
gress. But he has just imposed
a 10 per cent tax on all dutiable
imports including foreign-made
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cars. Does this mean that foreign
cars would take a net 3 per cent
A. It does. But the repeal of the
automobile excise tax must be
approved by Congress; this may
Q. If it does happen, will the
savings of around $200 per car
be passed on to automobile
A. Nixon says he will insist
that the tax saving be passed on.
This would mean a 10Uper cent
drop in the price of U.S. cars,
while prices on foreign-made
cars would rise 3 per cent be-
cause of the new import tax.
Q. What about such imports
as French cognac and Scotch
whisky; will the importer have
to absorb the 10 per cent sur-
charge so that he can stay under
his required ceiling? Is he
caught in a squeeze?
A. As of this moment he is in
a squeeze. The anticipated Treas-
ury ruling may ease his plight.
Q. If a scheduled pay increase
is deferred because of the freeze,
can the workers get the increase
retroactively when the freeze
A. There is no provision for
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