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August 11, 1978 - Image 1

Resource type:
Michigan Daily, 1978-08-11

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Vol. LXXXVIII, No. 63-S
Friday, August 11, 1978
Sixteen Pages
Ann Arbor, Michigan Ten Cents
House OKs lower tax cut

'U' economists warn of slump

Two University economists
predict that the nation's slowing
economic growth rate, combined
with failure to pass a major
federal tax cut, could produce a
recession next year.
Harold Shapiro, economics
professor, University vice-
president for academic affairs and
the person most responsible for the
University's budget, together with
Prof. Saul Hymans, chairman of
the economics department,
released Wednesday an updated
study of their economic forecast
originally made last November at
the University's 25th annual Con-

ference of the Economic Outlook.
THE ECONOMISTS state a tax
cut of $25-$30 billion would be
necessary to offset a 1979
recession. They compare this with
the $16.3 and $18.1 billion cuts.
recently debated in the House, the
former of which was passed
yesterday (see related story). The
Univesity professors considered
the effects of the smaller tax cut in
their control forecast.
Although the smaller tax cut im-
plies an expectation of no 1979
recession, it leaves the economy
vulnerable to unexpected forces
See 'U', Page 13



yesterday passed a $16.3 billion tax cut
bill after rejecting a version backed by
President Carter and one on. which the
Republicans have made a campaign
The bill was sent by a 362-49 vote to
the Senate, where prospects are that
the tax reduction will be enlarged.
AS APPROVED by the House, it
would reduce the taxes of an average
single taxpayer with $10,000 income
next year by $15, one earning $15,000 by
$71 and one earning $20,000 by $105.
For a family of four in the same in-
come brackets, the savings.would be
$62, $77 and $146.
The House moved swiftly to pass the
measure after rejecting by a vote of
240-177 a last-minute Republican drive
to substitute the GOP plan.
pushed by Rep. Jack Kemp (R-N.Y.)
and Sen. William Roth Jr. (R-Del.).
Opponents, headed by Democratic
Leader James Wright of Texas, termed
the measure irresponsible, citing
estimates that when fully effective it
would add $100 billion to the deficit.
Congressional specialistacalculated
it would reduce taxes by $31.9 billion in
1979, $69.8 billion in 1980 and $120.7
billion in 1981. Kemp and other suppor-
ters, however, said the stimulus to in-
vestment and employment would make
up the lost revenue.
Shapiro and Saul Hymans stated this
week that a $25-$30 billion cut would be
required to offset a 1979 economic
slump (see related story).
Earlier, the House rejected President
Carter's preferred version of a tax cut.
After the succession of votes the sur-
viving bill was the one recommended to
the House by its Ways and Means
While none of the bills remaining
before the House came close to Carter's
original recommendations, the ad-
See HOUSE, Page 7


U.S.-French car linkup
By AP and UPI per cent of the world's car market. It would also make the
DETROIT-Chrysler Corp. said yesterday it will sell its French automaker one of the five largest car companies in
in European operations to French automaker Peugeot, a the world-bigger than Chrysler.
ve that will provide money for cash-strppped Chrysler According to figures compiled by the French Association
d make Peugeot the biggest car company in Europe. of Motor Manufacturers, the sale would put Peugeot behind
Financial analysts saw the sale as a retreat by Chrysler to General Motors, Ford and Toyota and on par with Japan's
rth American shores and predicted the company's Nissan.
stralian operations are next to go as the No. 3 U.S. Chrysler and Peugeot said they had reached final
omaker looks for ways to cut its losses. agreement. But a top official of the Britist government,
CHRYSLER BECOMES the second U.S. automaker to which must approve the deal because of its financial link with
k up with a French automaker. But the proposed joint Chrysler, voiced surprise.
ration of American Motors Corp. and Renault appeared INDUSTRY SECRETARY Eric Varley said in London his
narrower in scope. staff "will meet to consider very carefully the implications of
Chrysler Chairman John Riccardo said he expects this development." He said he just learned of the deal Mon-
rysler to receive "several major benefits" from the day.
reement. A spokesman for Varley's ministry said that in particular
"Our participation in Europe's largest automobile com- "he will have to examine possible advantages and disadvan-
ny will give us a strengthened position in one of the world's tages for the security and prosperity of Chrysler's United
gest markets," Riccardo said. "The combined group will Kingdom (U.K.) plants as well as the implications for the
er the broadest range of product offerings through the U.K. motor industry as a whole."
st extensive dealer today in Europe."
THE SALE WOULD give PSA Peugeot-Citroen about s See U.S., Page 11

lilt' OC1LL TTVVLL 6iTTw 1 .7n a cu jc:vw'vawi va aa RF~Viiw iV

NEW YORK (AP) - Half of the
American people do not want President
Carter to run for re-election in 1980,
compared with four out'of 10 who want
him in the race, an Associated Press-
NBC News poll shows.
This substantial opposition to the
White House incumbent has been built
as Americans' rating of Carter
remained at the lowest levels of his
administration, the poll found.
CARTER'S RATING has dipped so
far in the last six months that it is below
that which the public now gives
Richard Nixon in looking back on his
years in the Oval Office. .
More than a third of those who voted
for Carter in 1976 say they do not want
him to run again in two years, the poll
There was at least one bright spot for

's popularity slips below Nixon's
That upward move continues a trend
which began earlier this summer after
15 months of decline.
THE LATEST poll was taken Monday
and Tuesday. The majority of the 1,600
telephone interviews were completed4.
before it was announced that Carter
would meet with Israeli Prime Minister
Menachem Begin and Egyptian _______
President Anwar Sadat at Camp David '
next month to try to restart the stalled ,
Middle East peace talks.
Fifty per cent of those questionedP7
said they do not want Carter to run for
re-election in 1980. Thirty-eight per cent
said they would like to see him run.
Twelve per cent were undecided.'Not
The nation's Democrats were split on -
a Carter re-election bid. Half of the .._ ~ :_=--
members of his own party said they
want Carter to run for re-election. The
remaining half were not so sure: 39 peri


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