Masonry Magazine October 1966 Page. 23
Washington Wire
(Continued from page 18)
Expanding too rapidly to allow prices to stabilize. We are too near capacity. It does not take so much more in the way of demand to overload the productive machine. Building more new plants will help, of course... in time. Now, it only adds to the strains.
Officials do not regard present policies as strong enough to slow the boom. Suspension of the investment credit won't begin to curb new plant outlay until well into 1967. Even then, many companies will decide that it pays to go ahead. Credit can't be tightened any more without risk of a panic. This leaves increased taxes as the best brake. It is the remedy of the New Economics, to which Johnson is committed.
THE THREAT OF A DEFICIT-THIS YEAR AND NEXT-reinforces the case for higher taxes. Deficits balloon the money supply and are inflationary. A big one would extinguish all hope of regaining price-wage stability soon. Johnson is extremely proud of his record of reducing red ink, year by year.
Spending for this fiscal year... ending next June 30... will exceed the $113 billion that was seen back in January, in spite of the President's current tough effort to cut. Viet Nam and other cost hikes suggest as much as $124 billion.
Revenues will top estimates, too. They could total $117 billion, instead of $111 billion, so the deficit may hit $7 billion... much higher than Johnson's $1.8 billion. And the next fiscal year could see even more potential red ink.
WHAT KIND OF TAX INCREASE is President Johnson likely to recommend? Officials are working on two approaches for submission to the White House. One is an "add-on" of a flat percentage to the tax paid under present law. Both corporations and individuals would be hit; 5% could raise $5 billion. The other is an increase in every bracket rate in the schedule now in force; 1% on individuals promises $3 billion...2% on corporations, $1-3/4 billion. The final percentage figures will be set when the spending needs are known.
WOULD CONGRESS GO ALONG WITH REQUESTS FOR TAX HIKES? Probably yes. That is the view of most observers on Capitol Hill. There'd be grumbling. But in the end the Johnson proposal would carry. This is, after all, war. If a tax request is linked to one for more money it would be hard to reject. Congress would make some changes to soften the blow on taxpayers and try to sweeten up the pill. But, in the end, the new tax bite would still hurt.
MASONRY October, 1966
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