The Michigan Daily-Wednesday, July 12, 1978-Page5
GOP tax cut won't stall inflation
WASHINGTON (AP) - Inflation is
worse than expected and economic
growth is disappointing, but there is no
basis for Republican contentions that a
one-third cut in income tax rates would
improve the situation, the House
Budget Committee was told yesterday.
The GOP proposal for such a tax cut,
spread over three 'years, has been
adopted by national Republican leaders
as a major campaign issue.
PRESIDENT Carter and Democratic
leaders in Congress favor a smaller tax
reduction, but there have been signs
that they fear defections among
Democrats who must soon campaign
for re-election against- the GOP
Meanwhile, Carter's effort to bring a
tax cut bill to the House floor without a
reduction in the tax on capital gains,
appeared close to failure. Rep. Al
Ullman (D-Ore.), said he intends to
reconvene the House Ways and Means
Committee, which he heads, to work on
taxes next week. Ulman said a
measure involving some easing of the
capital gains tax will be before the
The House Budget Committee,
opening hearings yesterday as it
prepared to draft spending ceilings and
,Contnued from Page 3)
Bank credit and- U.S. bank loans to
South Africa 'which are a major form
of support for the South African gover-
The report also suggested "using the
good offices of the NAACP to encourage
stockholders of companies doing
business in South Africa to introduce in-
to stockholder meetings and seek sup-
port for resolutions calling for with-
drawal of investment and operations in
The University, which has more than
$73 million invested in corporations
operating in South Africa, adopted the
policy last March of using its stock
holdings in those companies to work for
"progressive" change in that country.
This was also the position of the
NAACP before the Task Force reported
its findings, based on interviews with
black Africans on the continent and in
Three members of the University
Regents and President Robben
Fleming are members of the NAACP.
Robert Nederlander (D-Birmingham)
is the only Regent who could be reached
for comment on the NAACP recom-
mendation. But Nederlander, a life-
time member of the NAACP, declined
comment until he could read the entire
tonight and every
revenue floors for the year starting Oct.
1, heard assessments that inflation con-
tinues to be worse than expected and
that economic growth is slow. But
committee members were told the
country does not seem likely to slide in-
ALICE RIVLIN, director of the
Congressional Budget Office, and Rep.
Richard Bolling (D-Mo.), chairman of
the Joint Economic Committee, both
testified they know of no solid economic
evidence to support Republican claims
that a one-third tax cut would pay for it-
self by boosting the economy and
The sponsors of the big tax cut are
Rep. Jack Kemp (R-N.Y.) and Sen.
William Roth Jr., (R-Del.).
Bolling said testimony given his
committee comparisons with the
growth that followed a big tax cut in the
1960s are misleading because con-
ditions have changed and "the evidence
of history does not support the
argument that t. xes have reduced
economic incentive to the point that
growth is inhibited."
RIVLIN SAID evidence available to
the Congressional Budget Office tends
to support the conventional view that
the Kemp-Roth proposal would greatly
increase the federal deficit and be
highly inflationary, without producing
enough additional revenue to be self-
Bolling said he would not object to a
tax reduction for one year equivalent to
the first stage of the Kemp-Roth plan,
which he said would fall within the $15
billion-$25 billion range Carter and
congressional tax writers have been
But he said Congress should not bind
the government to further reductions in
future years too remote for accurate
RIVLIN TOLD the Budget Commit-
tee that her office expects a moderate
growth rate of 3.5 per cent during 1978,
slowing next year by 0.5 per cent. But
she said inflation of 6.8 per cen1 to 7.8
per cent for 1978 also is expected, with
continued price rises in 1979. But she
said the conditions for a true recession
do not appear to be present, assuming
monetary policy is not too tight.
Meanwhile, Ullman was quoted as
saying the Carter administration has
made no progress in producing a com-
promise that would break the stalemate
on tax legislation in his committee.
A major controversy in the commit-
tee has been over capital gains. Carter
wants such taxes increased. Ullman
was quoted by participants at a private
breakfast session with reporters as
saying he would urge Carter to back off
from absolute opposition to any easing
of capital gains taxation.
WASHINGTON (AP) - Senior Pentagon officials believe
the United States could temporarily hide many of its long-
range missiles by shuffling them from silo to silo in a ''shell
game" that would keep the Russians from knowing exactly
where to aim an attack.
The "shell game" would be an interim measure designed
to protect land-based Minuteman III missiles during the
early 1980s and until the United States can develop a bigger,
more powerful missile in the 1986-1987 period.
THE INTERIM SYSTEM might cost about $10 billion, of-
ficials calculate. This would be about half the price of
developing and producing a full new advanced force of
Sources said the interim concept of shuffling the
Minuteman III missiles from silo to silo would not upset
strategic nuclear stability between the United States and
Russia and, instead, would add to factors discouraging any
Soviet surprise attack.
Sources said defense officials favor moving the current 550
Minuteman III missiles, each armed with three nuclear
warheads, from their present fixed positions in launch silos
and placing them on trucks that would shuttle the weapons
among clusters of holes, possibly 10 holes per missile.
THIS CONCEPT HAS been called a "shell game" because
the Russians would have to guess where the missiles were
hidden in order'to be able to destroy them in a surprise first
According to current thinking, the United States might dig
as many as 5,000 additional concrete-lined holes, or shelters,
and space them perhaps a mile or two apart in wide areas of
North Dakota, Wyoming and Montana where Minuteman III
'shell game' use
launch bases are now located. Apparently, 450 single-
warhead Minuteman missiles would be left where they are.
Officials believe they could complete about 1,000 of the new
holes by the early 1980s, roughly the time many U.S. experts
believe the Russians will achieve the technology to seriously
threaten the Minuteman force as it is now deployed.
MINUTEMAN III missiles will be armed with a new triple
warhead, about twice as powerful as the present model. That
would enhance U.S. ability to destroy Soviet command and
control centers, but the warheads would not be capable of
what is called a "disarming first strike" against Soviet land-
Meanwhile, unless the United States and the Soviet Union
reach agreement banning moveable intercontinental
missiles for the future, U.S. defense scientists are con-
sidering a more formidable and sophisticated mobile missile.
They are currently leaning toward an advanced land-based
version of the Navy's Trident submarine-launched missile. It
would be compatible with holes dug for the Minuteman III.
The Trident II, with a range of about 6,500 miles, would
carry about six nuclear warheads and would be about as ac-
curate as the Minuteman III. That system might cost about
$20 bilion, sources said, counting the $10 billion for the
This would seem to put the MX, the Air Force's candidate
for the mobile land-based missile of the future, behind the
Trident II in the competition. The MX would hurl about 10
huge warheads, and opponents in Congress might consider it
a dangerous spur to the arms race. It also would cost more
than the Trident II, officials said.
EPA delays new sewage plant
oPage1Officials will also look into the The EPA now requires plants to use
the EPA would approve the ap- possibility of mixing the sludge with tertiary treatment, the third step in the
plications. By then the construction dirt and depositing it in a clay-lined treatment process, but the aging Ann
season will have passed, postponing the portion of the Ann Arbor landfill. Any Arbor facility cannot even treat the
work even longer and subjecting con- plans they make must receive approval present load with the first two steps.
struction costs to greater inflation. from the DNR and the EPA for en- Belcher blames the EPA with im-
At yesterday's meeting, Gene Mit- vironmental safety and economic peding the plant expansion process by
chell of Barton Malow said his firm will feasibility. dwelling on trivial points and wasting
file suit to prevent Spence Bros. from Belcher said if it was not for EPA ac- taxpayers' money. He said the
receiving the contract award. tions the Huron River could have been bureaucratic giant has become "insen-
Barton Malow representatives cleaned up by next year. sitive to communities" and keeps get-
charged Spence Bros. with a delinquent DURING THE LAST couple of ting "hung up on technical aspects."
bid extension, because the document decades, pitfalls in plant expansion Belcher continued, "They've forgotten
was received after the bid expired have arisen in several forms. They what they're in business for - the EPA
Friday, but before the EPA completed ranged from the struggle against the is supposed to protect the environment
their ruling. Public Works officials "super sewer," that was going to serve and they look at it like a New York
pointed to the EPA's requirement of the whole region's treatment needs, to Madison Avenue law firm."
"good cause" for rejecting Spence chemically contaminated sludge
Brothers' bid and did not seem to think disposal. he EPA has repeatedly ex-
the late letter constituted that. tended Ann Arbor's deadline for com- PART TIME WORK, ON CAMPUS
plying with federal effluent standards. STUDENTS NEEDED . .
PUBLIC works officials are going to, However, a court ruling citing Ann Ar- TOPOST ADVERTISINGMATERIALSON THE But-
look into the sludge disposal recom- bor's extensive and continuous pollution LETIN BOARD5 OF THIS AND/o dneby compar
mendations made in the Spence of the Huron River resulted in a new .up to I15 hours p. we.k, payb s.d upon amoun
Brothers bid. They will ask Augusta construction ban. The consti-uction '- - * e' dgv*rdge. rp 'rns4'6s/h6'u
Township officials to reconsider their moratorium was eventuay y'lifted'"a Z h tS . t tY* A ("9+
past decision barring the sludge from ease the housing shortage, but the :; ? 'i::-'
being deposited in their landfill. - sewage treatment problem remains.