Masonry Magazine April 1967 Page. 27
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THE ODDS ARE NOW AGAINST ENACTMENT OF THE 6% SURTAX this year. The President is not ready to accept this publicly. He would like to keep all his options open until the very last. But sentiment in Congress is strongly opposed to raising taxes at a time when the business news is soggy. And it is hard to see how the economic climate can change quickly enough to alter the outlook before it is too late for Congress to process a hike into law.
The arguments for raising taxes keep shifting as time goes on. You no longer hear so much talk about a need to combat inflation later on in the year. The weak business news has torpedoed this reason. Now the argument is that the higher taxes are needed to keep the Budget deficit from zooming.
If a tax increase is voted, the deficit for the fiscal year 1968-beginning July 1-would already total $8.1 billion. But if Congress balks, as its leaders say it will, then the red ink will go $13 billion more, if Viet Nam escalates. This would set a peace-time peak above the mark set in 1959 under Eisenhower. President Johnson wants to avoid this.
What's more, there is fear that inflation will be a threat next year. But that will be an election year. Politics will call the tune. It will be almost impossible to get the President to ask for tax increases or to get vote-conscious Congressmen to move to go along. So, it is now or never.
ANY TAX INCREASE CONGRESS DOES VOTE WOULD BE MILDER than President Johnson has requested-assuming that business activity strengthens enough to change present Congressional views. The size of the hike might be cut perhaps from 6% to 4%. This would hurt less but show fiscal responsibility. Also, the effective date could be postponed to October or even January 1.
Actually, though, large deficits do not appear to worry a majority of Congressmen. They could face $20 billion, if the alternative was less red ink but a business recession.
MASONRY April, 1967
THERE IS STILL A STRONG CASE TO BE MADE FOR A PICK-UP in business later in the year. Johnson's advisers insist that this is the most plausible prospect they see. They have not been shaken by the sluggish business figures they have been viewing. Most of these were expected by the experts. But there have been some offsetting factors that deserve fuller recognition, too.
For example, once the current inventory shake-out comes to an end, orders and production will rebound. Reinstatement of the 7% investment credit should spur spending for plant and equipment. Housing is improving, and the increase in Social Security benefits that's likely will lift spending.
The nature of the late-year bounce-back may be different, though, from early expectations. For one thing, it could take longer to appear-fall instead of summer. For another, it could be less vigorous and not as inflationary, either. But it will get the economy's growth rate up to the desired 4% a year in time and keep unemployment from jumping.
THE JOHNSON ADMINISTRATION IS LEAVING LITTLE TO CHANCE in its effort to get business activity on a recovery track as soon as possible. Officials do not want to be tagged with the responsibility for any more sluggishness in sales, jobs, and profits than they can possibly help. So the Number One economic objective these days is to lean on the side of doing too much, rather than too little. The President and his advisers would rather risk a little extra boom and inflation than see the slowdown drag on a bit longer.
Thus, the government is taking numerous steps to stimulate business activity. Besides easing money and restoring the tax credit, more than $1 billion has been released for road and home-building. More such help is on the way. And all the efforts to hold down Federal spending will be dropped. And officials are also talking up the bright spots in the outlook every chance they can. They stress such pluses as home-building, government spend-