Masonry Magazine June 1989 Page. 30
GLASS BLOCK VENTILATOR
TREND 1200 SERIES
ALUMINUM
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TREND 1600 SERIES
VINYL
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30 MASONRY-MAY/JUNE, 1989
WASHINGTON WIRE
continued from page 29
Price indexes are braking the expansion. Over time, a softer economy will relieve pressures on available resources. Sometime in 1990, these analysts would expect to see inflation drift lower.
THIS OUTLOOK DOESN'T OFFER SCOPE FOR AN EARLY FALL IN interest rates. The Federal Reserve is not going to ease monetary restraint in a big hurry. Lower interest rates would aggravate the reawakened inflationary pressures, especially in key markets where skilled manpower is clearly in short supply. What's more, lower rates would risk a reacceleration in business activity, particularly in the interest-rate sensitive sectors, such as home-building.
On the other hand, interest rates might not have to increase further. The Fed could conclude that it has put sufficient monetary restraint into place, assuming that the slowing in business persists in the months ahead. If it does, the long increase in interest rates would come to a very welcome end.
A NAGGING THREAT, THOUGH, IS THAT RATES MAY YET HAVE TO CLIMB higher. If inflation were to build up a strong head of steam, the Fed would tighten. The policy-makers won't stand idly by and allow the price indexes to surge. That would risk a return to the double-digit inflation of the early 1980s. For the time being, however, a slower economy allows the Fed to stand pat.
THE BUSH-DEMOCRAT BUDGET-CUTTING PLAN IS ONLY A MODEST STEP forward. The bipartisan compromise aims to hold the 1990 deficit below $100 billion, but the deal only puts off many tough tax and spending issues to the future. It is totally lacking in credible revenue increases or spending reductions. The blueprint calls for some $27 billion in reductions from levels that may be reached if current programs continue. And the scheme involves gimmickry: For one thing, the plan assumes a much stronger economy than appears likely: that, in turn, boosts the estimates for the amount of tax revenue taken in. More realistic economic forecasts make it harder to cut the budget deficit.
Some accounting gimmicks are as blatant as the revenue estimates. The postal deficit is wiped out by taking the Postal Service out of the budget. Farm-subsidy outlays are lowered by juggling the timing of the payments. Neither of these actions saves a dime, but the budget deficit will be made to appear that much smaller.
To be sure, there are some positive aspects in this agreement. The understanding was reached ahead of schedule, not dealt with in a crisis. The confrontations that typified the period under Reagan have been avoided. But difficult decisions lie ahead.
BUSINESS COULD GET SOME RELIEF FROM CONGRESS on IRS Code Section 89, which compels a firm to give comparable health benefits to all its workers. If a company discriminates against low-paid people, deductions are denied. Management complains that the tests required are very complex and costly-particularly when the results prove that the firm is in compliance, anyway. One group estimates the tests would cost its 125 members some $186 million, only to prove that their benefits don't favor high-compensation executives.
House Ways and Means Chairman Rostenkowski is willing to make changes, easing the complicated set continued on page 32