Masonry Magazine January 1973 Page. 25
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BIG CONFLICTS OVER PHILOSOPHY WILL KEEP CONGRESS at odds with the President this session. Nixon is turning more conservative, de-emphasizing social programs. He wants to keep the Budget under control and avoid a tax increase. But Democrats, still in control of Congress, will push their own measures. So the 93rd Congress will enact few major new programs in 1973. But some pieces of legislation held over from last year could win approval.
Congressional leaders can point to worthwhile accomplishments in 1972. They voted laws granting revenue-sharing, raising Social Security benefits-and taxes-funding water pollution efforts, and policing safety standards for consumer products.
But last year Congress wasn't as productive as it might have been. Nixon's relations with Congress were strained in 1972.
CONGRESS AND NIXON WILL PRODUCE A BIGGER FEDERAL BUDGET for fiscal 1974, the government accounting year that will be starting next July 1. Even with few new legislative initiatives, the cost of government will rise. The real question is: How much more in outlay over the current fiscal year? This is where the collision with Congressional Democrats will be sharpest.
Nixon will call for spending less than $270 billion in the new Budget-$20 billion more than during this fiscal year.
Here's how some components of his new Budget are shaping up:
* Defense outlays will increase again, to over $80 billion.
* Existing programs will be allowed to expand some, as planned earlier unemployment compensation, farm price supports, etc.
* Uncontrolled items Social Security costs, etc. will rise.
HE WILL PROJECT HIGHER REVENUES, TOO-though not enough to avoid a deficit. To be sure, there will be a thumping jump in tax collections. With the economy growing at a fast pace, revenues could near $260 billion. Therefore, the new Budget's deficit could fall below $10 billion next year. That will be far less than the estimate of $23 billion for this fiscal year. More important, the new Budget should be less stimulative than this year's.
Nixon wants next year's outlays held to full-employment revenues the taxes the economy would be generating if unemployment were only 4%. If spending stays below this theoretical point, it can't be inflationary. This year, spending will top full employment revenue by $8 billion.
CONGRESS WILL HAVE ITS OWN IDEAS ABOUT THE BUDGET this year. The Democratic leaders intend to propose their own ceiling on Federal spending. Such a ceiling would allow Congress to decide where money will be spent a sharp contrast from Nixon's plan that gave him the final say on spending.
Democratic spending priorities will again differ widely from Nixon's. The President is expected to impound still more of the funds Congress has appropriated for welfare and social programs, just as he has refused to spend all the money the lawmakers voted for controlling water pollution. So there are likely to be numerous confrontations during the session.
TAX REFORM PROMISES TO BE A MAJOR ACTIVITY of the Congress next year. The House Ways and Means Committee may start long hearings early in February. Chairman Mills intends to review every important provision of the tax laws. The President will be sending his own proposals to Congress for tax changes, but they won't be as sweeping as the reforms to be pressed in the Congress. He'll probably propose gift and estate tax changes, pension plan revisions, taxable municipal bond subsidies, property tax relief and a simplified code.
NIXON AND CONGRESS MAY CLASH OVER POSSIBLE REPEAL of tax incentives the 7% investment tax credit and liberalized depreciation voted during 1971. The investment tax credit appears safe now, despite substantial criticism; most of the lawmakers feel the tax credit is still required to create jobs. The more generous depreciation rules may well be restricted by the Congress, despite the efforts of the Administration. Even Mills favors a narrowing.
The Asset Depreciation Range system allows firms to speed up depreciation by 20%. Mills favors a speed up of only 10%.
The outlook for some other tax reform provisions:
* Capital gains: There is support in Congress for taxing them harder. Mills favors lengthening the holding period to qualify for such treatment. And he would like to see a graduated scale for taxing the asset-the longer it's held, the lower the tax.
* Oil and mineral depletion: The allowance won't be changed. The serious energy crisis argues against lowering allowances.
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