Masonry Magazine September 1973 Page. 26
Washington Wire
(Continued from page 25)
But it's in manufactured goods where the improvement is most remarkable. U.S. construction-equipment makers are beating European prices by 10%. Foreign prices for U.S. computers are dropping sharply. U.S. contractors have under-bid the competition, particularly from Japan, to build steel plants. Auto companies are boosting sales of American cars abroad.
ECONOMISTS ARE BEGINNING TO SEE AN END
OF THE RISE in interest rates that has persisted for the past year. They don't see rates slumping sharply in the period just ahead. But they do look for an easing in the record-shattering spurt of recent months. These analysts believe that the Federal Reserve will relax its tight-money, high interest rate policy to make sure that its restraint does not bring on a severe slump in business activity.
The dollar's growing strength in foreign exchange markets also takes some heat off the Federal Reserve. High interest rates are always a help when a currency is weak, because they tend to attract funds to offset outflows resulting from trade deficits. The need to attract such rate-sensitive funds is ebbing, though, at this time as the dollar recovers.
SHARPLY RISING FOOD PRICES COULD HAVE
A SUBSTANTIAL IMPACT on the economy later this year-most of it on the depressing side. Soaring bills at the supermarket could alter spending patterns for non-food items and services. Business analysts are beginning to worry that there simply won't be enough purchasing power
INTERNAL REVENUE HAS RETREATED ON A
ISSUE important to small firms, those having profits taxed directly to shareholders instead of the company. A company must limit itself to one class of stock to use this tax option. But the stockholders will often advance additional capital to the company. IRS has tried to argue that such money represents a second class of stock, thus disqualifying the business from receiving this special tax treatment.
The IRS position has been that all equity contributions beyond the company's original capitalization amount to this forbidden class. But two Federal appeals courts have ruled this is not necessarily the case. Now IRS plans to change its policy and won't continue to litigate the issue.
SWEEPING REVISION OF THE BANKRUPTCY
LAWS WILL BE STUDIED by Congress. The Judiciary Committees may hold hearings this fall on new recommendations. A new agency would be established to handle administration of bankruptcies. Federal bankruptcy courts would be created to handle the judicial aspects. This would replace the present system, often contentious and very confusing, of having the Federal district courts name referees to oversee proceedings.
ALSO PROPOSED IS A MERGING OF CHAPTERS
10 AND 11 of the existing law. Under Chapter 10, the company tries for a complete financial reorganization. In Chapter 11, the firm continues to operate while working out debt payment. Many companies become confused about which Chapter applies to the situation. These mix-ups often lead to higher legal costs and less money for creditors.
Priorities for payments of debt would also be changed very dramatically. Available funds would be used first for past due wages and pension benefits. Unpaid Federal taxes, now one of the first obligations to be met, would be downgraded.
FOREIGN POLICY MAY BE THE ONE AREA
WITH HOPE for constructive action. Henry Kissinger, the new Secretary of State, has called on the Congress to join the Administration in a "nonpartisan" partnership in this key area. Many legislators are willing. But it should be noted that the recent phase of secret Presidential diplomacy with Moscow and Peking was ending anyway. Legislation is now needed on trade, etc. to make further progress abroad.
BUT THE TRADE REFORM BILL APPEARS TO
BE FACING SOME DELAY on the Hill, despite Rep. Mills' optimism. Hearings have now been wound up in the House. But the mark-up sessions are going slowly in the Ways and Means Committee. It may be next year before the President gets his tariff-cutting authority.
Tax-reform legislation is a big question-mark as far as this year goes. Ways and Means has completed hearings on some complicated reform proposals. But the