Masonry Magazine December 1984 Page. 14
Beneficial Center
Peapak, New Jersey
Sure Klean 101 Lime Solvent
WASHINGTON WIRE
continued
The dollar may not decline sharply, in response to the rate slippage, though it originally began its steady climb because rates were rising here. The reason: Rates abroad are down, too, and still leave the U.S. the place to invest; the American economy is the strongest, safest and most rewarding. The Japanese, for example, have no better outlet for the dollars they earn.
Some day, of course, the dollar may slump. Nothing stays up forever. At some point, foreigners will find greener fields for their liquid assets. Or they may just come to think they have all the dollars that it is safe to hold.
A DECLINING DOLLAR would tend to push interest rates upward again. Foreigners would absorb less Treasury debt, leaving it to domestic markets to soak up that much more; they'll do so only if yields are more tempting. Further, imports would shrink, putting more demands on domestic producers; if that brought more rapid price increases, the Fed would move to tighten.
WASHINGTON THINKS IT KNOWS what we won't see in tax hikes next year, even if it can't, at this time, say what is likely to be imposed in the end. There won't be a Value-Added Tax... a national sales levy that's not visible; the Administration toyed with the idea for a while, but has now dropped it. As for a flat-rate tax plan, some put the odds against it passing at 2 to 1.
Why won't a flat-tax be voted, when key legislators of both parties support it so ardently? Because the Congress would be forced to abolish a raft of existing deductions strongly cherished and defended by so many taxpayers. Many backers will lose enthusiasm when they learn their tax bills would be raised even with a flat tax, to get the deficit down.
FEARS FOR THE HEALTH of the nation's banking system are fading now, even though many institutions do remain on the regulators' problem lists. The foreign-debt crisis has abated; lower U.S. interest rates will help more. Loan-loss reserves have been increased to cushion the impact of bad debts. Bank capital is currently being increased to strengthen financial positions. A recession could revive anxiety, but... as noted... one isn't expected now.
THE UP-CREEP in local telephone-service charges is far from over. Some time next year, the long-pending access charges for residential users-originally authorized by the Federal Communications Commission but blocked by Congress-will finally be imposed... in a pared-down, stretched-out form. But many of the local companies are asking for big new rounds of rate hikes from local regulators as well-and getting much of what they are requesting. Pacific Bell, for example, has just filed for $517 million-a 10% increase.
MOST INDIVIDUALS WILL END UP paying more in taxes next year under the combination of Tax Code changes that takes effect on January 1. To be sure, they will benefit by the indexing provision designed to neutralize "bracket creep," by which inflation pushes people into higher brackets for the same real income. Savings will reach $146 a year on $100,000 incomes. But the scheduled rise in Social Security payroll taxes-from 6.70% to 7.05% will wipe out the savings and more-for those earning up to, say, $50,000.