The Michigan Daily-Wednesday, July 12, 1978-Page5 GOP tax cut won't stall inflation Experts: 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 proposal. I 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 panel. The House Budget Committee, opening hearings yesterday as it prepared to draft spending ceilings and NAA CP urges withdrawal ,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- nment." 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 South Africa." 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 the U.S. 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 report. MIXED LEAGUE BOWLING tonight and every WEDNESDAY NIGHT 7:30 pmn at UNION LANES= 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- to recession. 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 federal revenues. 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- financing. 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 discussing. But he said Congress should not bind the government to further reductions in future years too remote for accurate economic forecasting. 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. O*Isficiala 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 mobile missiles. 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 strike. 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- based missiles. 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 shelter holes. 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.