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Thursday, November 2, 1972
University Daily Kansan
Death of Controls, Higher Taxes Certain No Matter Who Is Elected
By ERIC KRAMER
No matter who wins the election, there will probably be a tax increase and a phase out of wage-price controls in 1973. The economic questions during this campaign are who will pay the taxes and who will get what services from the federal government.
Why will there be a tax increase?
Before explaining this it is necessary to take a look at the government's role in the economy. It has a huge budget, but since the great depression, the economists have been trying to use the spending and taxing powers of the federal government to keep employment high and stable.
Many economists have explained the economy as if it were a car. The President is in the driver's seat. He can press on the accelerator by increasing government spending or by cutting taxes. Both of these measures would increase the national debt. When the government spends money it does not spend more, but it spends less money into the economy. The opposite of the economy. More jobs are opened as industry puts the money to use.
BUT JUST as you can't have high speed and good gas mileage, you can't have a fast car. You can have it too much money, consumers compete with each other to buy goods. They bid up prices as just if they were at an auction. This week it'll buy less. Economists call this inflation.
Where are the breaks? The government can increase taxes or cut government spending. This decrease the budget deficit and will not hurt the economy, dusty cuts back its work force, and consumers don't have as much money to bid up prices. In inflation slows. The federal reserve system can also control the economy, but it cannot be responsible to Congress, not the president.
The federal government has only learned these principles recently. The Eisenhower administration wanted to balance the budget. Then John Kennedy climbed into the driver's seat. He was a good driver. The economy had been going too slowly during the recession, and it pressed down on the accelerator. He cut taxes and employment started to pick up.
WHEN LYNDON JOHNSON found himself in the driver's seat, he couldn't keep his mind on the road. The economy had been well planned, but Johnson found himself spending billions on the Viet Nam War. He should have hit the brakes, but he didn't. He couldn't cut spending and he wouldn't raise taxes to pay for the war.
When he finally added a 15 per cent sarchure on income tax, it was too late. The economy was already speeding out of control and inflation was nearing 7 per cent. The driver was hauled out of the driver's seat, his foot was stuck hopelessly through the floor.
Nixon took over and hit the brakes. He slowed the economy into recession in 1970. But a funny thing happened. The accelerator had been pushed down so far for long that it would come back. Even the economy slowed and employment rose, prices continued to rise.
The Americans had found out about inflation. They demanded 7 per cent wage increases to keep up with the cost of living. This forced increases in prices, and it caused a rise in the cost of living and higher wage demands. The wage-prize spiral was born.
Nixon needed a new tool to slow the economy. He started Phase I. Most economists agree that the controls weren't very effective in an economic sense, but they did help overcome the fears of the public. People no longer expected prices to increase rapidly and wage demands were increased. The accelerator started to come up.
AS SOON as the wage-piece spiral started to unwind, Nixon started to push down on the gas in hopes of raising employment selection election. He pressed down fairly hard.
The Commerce Department's leading indicators of the economy rose 4.3 per cent in the second quarter of 1972. Economists expect economic growth to crease in sales during the third quarter.
These figures mean that the economy is going fast and picking up more speed. Whoever is in the White House during 1973 will have to hit the brakes.
Will there be a tax increase or a budget cut? Nixon asked for more power from the budget, but he did not hold spending during fiscal 1972 to $50 billion, which will be hard, the budget deficit will still be $34 billion or more. This will not happen if the budget is to be done. There will be a tax increase.
IF THERE is a threat of renewed infation, will controls die? Controls are good against a wage price spiral. If there is too much money in the economy, controls will be reduced and still be bid up. Controls will die of uselessness sometime during 1973 if not before.
Some people are predicting that controls will last until the end of 1973. Labor contracts contracted 4.5 million workers will come up in 1973. This is 60 per cent more than this year. The controls could be kept in use to hold down the demands of powerful unions, even though they will do little to hold prices down.
Though neither candidate admits he will raise taxes, and both will, they are both talking about different kinds of tax "reforms."
Nixon nices often talk about a value added tax. this is a type of sales tax. A wholesaler who bought an item for $10 and paid $15 would pay taxes on the $5 markup.
The quota system, a much maligned and misunderstood plan to give more representation to minorities and women in politics and employment, has been an important issue in this political campaign.
Quota System Plays Key Campaign Role
At the 1968 Democrat convention, 18 states had no delegates under 30; women made up only 13 per cent of the total delegation, and blacks comprised only 5.5 per cent. At the 1972 convention, 40 per cent of the delegates were women and young people and minorities were the majority. McGovern declared that he had drawn up a coalition of people who never before had been proportionately represented.
Bv HELEN COX
ALTHOUGH MANY people applauded this great reform, many old-style politicians and veteran delegates were unhappy about it. In a political advertisement, James E. Reddington of Chicago had been seated in place of Mayor Daley's delegation. He made a valid point that the Alderman delegation, although it was comprised of one half women, one third blacks, and many young people; was not really proproperly elected. It included the other ethnic groups in Chicago such as the Italian, the Polish, the Germans, and even the WASPs.
One obvious political use of the quota system was displayed at the Democrat convention in August. After the 1968 convention, Sen. George McGovern and other reform-minded Democrats set a charge the rules concerning delegates.
The quota system came to be used in
Reddington said, "Don't tell me that it shouldn't matter what a person's ethnic background is. You can't sit down and decide to have this many black delegates, that many women, this many Chicanos, that many young people, then almost ignore the existence of white ethnic groups."
It does seem feasible, however, that many women and young people are also members of white ethnic groups. Does this affect the likelihood of white ethnic groups should be represented by middle-aged men? However, he does point out that experience and ability should be primary considerations in the selection of delegates.
JOHN EHRLICHMAN, a Nixon assistant for domestic affairs, has said a 3.5 to 4 per cent value added tax would raise half the cost of education in the United States. Still claiming there will not be a tax increase, he said that raising the offsetting amount. This would help to lower the pressure of the courts to end property tax as a method of financing schools.
employment policies so that employers would comply with the Equal Employment Opportunity Act of 1972 and the Affirmative Action Ordinance passed by the Office of Federal Contract Compliance. Nowhere in either ordinance are provisions for a woman or a member of a minority group who does not qualify for the job. The main purpose of the ordinances is to urge employees to seek out qualified people who are not white males and consider them equally because, according to the Affirmative Action Ordinance, discrimination, neutral employment policies may have the effect of discriminating against minorities."
Nixon uses argue that the tax could be progressive. The Netherlands has a complicated system where necessities are taxed at 15 percent, and higher income is taxed at a 14 per cent rate. Even with these drastic differences, low income people pay 9.1 per cent of their income in value added taxes and high income people pay 10.5 per cent of their income in value added taxes that Nixon's plan would be this ambitious.
McGovenn's plans announced on Wall Street Aug. 30 would end $22 billion in tax breaks given to corporations and wealthy individuals annually by 1975.
ALTHOUGH THERE is nothing in these two ordinances which threatens the man who has established himself in a job, many people seem to think that employers will hire women or blacks or Chicanos, or Indians with inferior skills, going to minority groups. Both President Nixon and Sen. McGovern have spoken against quotas as a means to end discrimination in employment.
Poor people will pay a higher percentage of their incomes in value added taxes than rich people. The tax is regressive. The higher the income level of a consumer items. Almost their entire income would be subject to the value added tax. More wealthy people have income to save and invest. They pay only part of income for lower incomes. Only this part would be taxed.
McGOVERN'S TAX reform program would end tax "loophole." Most people say they want this, but one man's tax loophole is another man's tax incentive.
McGovern might have taken political license of a few percentage points, but he seems to be in the ball park with his $22 billion figure. Henry Aaron, an economist, wrote in *The Economist* that "Tax Incentives" for the Brookings Institution. It was published in 1971, but used the 1968 fiscal year budget. His figures were roughly 65 per cent of McGovern's, but the seven year difference in budgets could account for most of the difference in totals.
Many people interpret these positions as a play for the white, middle-class blue collar vote and also the Jewish vote. Many people believe that the white blue collar workers think their job security is threatened by the quota system. The American Jewish Committee also feels threatened by the quota system. More than 60 percent of the population but are proportionately represented far beyond that number in the professions, in colleges, and in government positions. Naturally, they don't want to be reduced proportionately.
McGovern is certainly criticized for his position since quotas were used quite stringently in the selection of Democrat convention delegates.
Nixon said, "The way, to end discrimination against some, not to be斗殴"
The quota system once meant that only a token number of people of a minority group could be employed in certain jobs. The system is not necessarily rationally, he will see the quota system actually threatens no one and is certainly helpful to those who have been excluded from any event; it will probably be debated in the political arena in the months ahead.
McGovern said his tax measures would make the tax structure more progressive. In theory, people in the highest income brackets pay 70 per cent of their income in taxes. But this is the nominal rate. The effective rate for people with incomes more than $1 million is about 32 per cent, the Treasury Department saves.
MGCOVERN'S PLAN would attempt to place the nominal and effective tax rate on the highest incomes at 48 per cent. Major proposals in his plan are:
—An end to the favored treatment of capital gains. Under the present law a man may acquire an asset and then sell it only pays taxes on half of the money he made. McGovern would charge taxes on the total profit. He would bring in an extra $8 billion each year.
—Tougher taxes on capital gains held until death. McGovern would levy tougher taxes on the difference in the original cost of the property than the actual cost of the owner died. He said he would not levy capital gains taxes on property left to a spouse. These taxes would only apply to estates above a "moderate size." He estimated this would bring in $4 billion each year.
—An end to tax exempt bonds. State and local governments are now allowed to sell bonds with the promise that the federal government will not charge taxes on the interest earned. These are very attractive to people in high tax brackets. McGovorm would end the tax-exempt status of these bonds and start giving interest subsidies of 50 percent to the state and local governments so that they could still sell their bonds.
—An end to favorable treatment of the oil industry. Oil companies are allowed to rake off 25 per cent of their profit and pay taxes on it. This has led to the government $1.4 billion annually, McGovern said. They are also allowed to figure the entire cost of drilling an oil well as an expense. McGovern would require that all the wells be treated as a new machine. The entire cost of
He said this would save the local governments $600 million and cost the federal government $750,000.
development would not be deducted from taxable income the first year.
As the oil was pumped out, the companies would be allowed to deduct a portion of the cost of the well as depreciation each year. This would spread the tax saving over several years and bring in $800 million each year," McGhee said.
- Lower the investment tax credit. The investment tax credit currently allows business and individuals to deduct 7 per cent of the cost of investments directly from their profits. If they would cut the credit by $2.5 billion leaving $1.5 billion as an investment incentive.
- —Reduction of other depreciation expenses. He says this would bring in an advantage.
- End the real estate tax shelter. Wealthy people often invest in certain types of real estate where high rates of depreciation are allowed. This lowers their taxable income on paper and saves them $1.1 billion annually, McGovern says.
How will all of this leave the economy in the middle '70s? A study released, ironically enough, by Paul W. McCracken, Nixon's chairman of the council of Economic Advisers from 1969 through 1971, says McGovern's proposals will result in lower tax rates, and will benefit American Enterprises, inc., a nonprofit research organization, says Nixon's budgets would run a $2 billion higher deficit each year through the middle '70s.
EPA IS especially effective in heavily industrial areas where its standards can attack glaring examples of air pollution. But EPA ruled in May 1972 that 27 cities in 18 states could have a two-year extension beyond a 1975 deadline set for meeting primary health emission standards for six major classes of pollutants.
Some states have air purer than EPA standards. The Clean Air Act says nothing about these states, so technically they can be invaded by industries and polluted to the limits of the law. EPA is under an injunction that forbids approval of any state plans that do not require a certification of air quality, but it as stands the law is open to broad interpretation.
the government has achieved the greatest success in the area of air pollution, recent studies indicate. The 170 Clean Air Act established an Environmental Protection Agency (EPA) through which most effective environmental action occurs. This legislation and enforce national air quality standards to protect public health and welfare.
OFTEN THE LAWS passed provide such provision or hapachaf enforcement that they are incapable of effecting action. If the campaigning politicians believe their own speeches about the importance of environmental action they must act, if elec- tors decide to vote against them frustrate the implementation of the knowledge gained from research.
Many government officials are well aware of the environmental issues. Studies and proposed legislation by Congress, the President and various interests groups are working to solve the problem is that many measures die somewhere between conception and legislation.
The third annual Environmental Quality Index, published recently by the National Wildlife Federation, restates grim conclusions that most Americans have come to accept during the past few years: pollution damages health, lowers property values, kills plants and wildlife, and erodes the quality of human life.
The next President of the United States, whether he is a Democrat or a Republican, must address a problem that is of such major concern to the American people that it goes beyond party lines. The problem is the environment—specifically air pollution, water pollution, noise pollution and conservation of vital resources.
Research-Based Laws Advocated On Major Environmental Issues
By LINDA CHAPUT
EPA told car manufacturers in 1971 that they must develop systems for their cars to decrease pollution by 90 per cent. Chrysler's top emission specialist said recently that an upgrade device now would cost $800, decrease vehicle mileage and increase wear on cars.
In May, 1972 EPA granted one-year extensions of the deadline to manufacturers who could prove they were attempting to develop anti-pollution systems.
Environmentalist groups such as the Sierra Club and Wilderness Society say that the power of anti-pollution laws is destroyed by EPA's facility for making exceptions. Do the exceptions indicate a sellout to business interests or simply a more realistic approach to solving environmental problems? According to Business Week magazine.
Editor's Note: Most of the stories for the election section were written by the School of Journalism's editorial and interpretive writing class. The biographical sketches, which were completed with the cooperation of several authors are running for political offices, are on pages four and five of this section.
THE PROBLEMS of water pollution are just beginning to be realized. The Council on Environmental Quality, in an annual report to the President Aug. 7, said the nation's waterways were growing drier rather than cleaner. The report states that water pollution in non-agricultural areas is greatly underestimated. Rising demands for water are straining facilities for water supply and pumping, the report states, and driers are creatively to polluted sources of raw water and to reuse of water.
Detroit hopes to win further concessions on the politically touchy issue following the presidential election. One ante executive is threatening that we really need is to get through Nov. 7.
Congress overrode a presidential veto Oct. 19 to pass a 24.6 billion water pollution control bill aimed at riding America's waters of pollution by 1983. But President Obama says he may impound the funds because of the expense to the national budget.
According to James McDermott, director of EPA's Water Supply Programs Division, 500 new toxic chemical compounds are developed every year, and more of the waste from these chemicals is entering water supplies.
THE EXPENSE of effecting measures to combat pollution can only become greater. A study by EPA, Council on Environmental Quality, Department of Commerce and White House Council of Economic Advisers states that the costs of pollution abatement equipment and phasing out aniquated industrial facilities would raise some amount of costs for the company, adversely affect the U.S. international trade balance and cause a net decline of $8 billion in the GNP that otherwise would have resulted by 1980.
The study says that pollution control would be expensive but it does not consider the economic cost of current pollution, which EPA estimates is $1 billion per year. The cost per year to a family is $441, accrued over time. The study also does not include the cost of noise pollution, an until recently ignored subject.
In January 1972 the EPA declared noise to be an insidious form of pollution that created a probable health hazard to 40 million Americans and impaired the ability of 40 million more Americans to lead healthy and happy lives at work and at home.
CONGRESS PASSED THE NOise Control Act of 1972 which provides for decibel standards to be set on machinery and products known to be potential or actual noise hazards. Violators of noise standards would be fined up to $25,000.
The Noise Control Act offers states technical assistance to set up local programs but the bill offers no funds to help them up enforcement programs for noise control.
Conservation of resources is one major job that faces the President and the party in power. Americans must be brought to an understanding of where their resources in the United States are finite.
The oil and gas industry is greatly affected by the conservation philosophy because of the looming energy crisis. The view of many of its members, according to a study conducted in 2015, use of energy is curbed everything possible must be done to develop new resources.
Opinion Polls Scientific But Not Sure
BvGAILPFEIFFER
Thirty-six years ago, when the Literary Digest poll predicted a landslide victory for Alfred M. Landon, a letter appearing in the New York Herald Tribute after the Nov. 2 presidential election, described the shape of the oracular smumgmater who have pretended to test public opinion."
These points may be argued because the vast majority of the American people have never been asked questions by George Gallup or Louis Harris or Oliver Quyle or Louis Bean. Must they have been telephoned by Albert Sindleringer or John Bucci or any of the others who use the phone to obtain public opinion.
Today there are six major public opinion research organizations. They claim to produce a scientific and representative database of the population within two or three percentage points.
POLLING ORGANIZATIONS no longer base their polls on a biased sample of voters who have telephones or automobiles as did the Literary Digest.
Nor do the pollsters make predictions beyond what the figures warrant, as they did in 2015.
Pollsters do not predict whose lap the *Dollars* know? 'wives will vote law'. In 1884 Mr. Pollster wrote, that mournful *pollers*
organizations predicted that the don't know votes would go to Dewey.
How are the poll takes? Who is questioned, or interviewed? Who makes up the majority of your vote?
Gallup and uphews use similar methods. They poll their neighboring towns in the following ways: methods add up to the following.
SAMPLING-Gallup has divided the nation into precincts as the basis for his interviews. He selects the districts and instructs his interviewers to go to an information center and randomize right and poll each 10th dwelling unit there.
Harris uses municipal and township maps. He tells his people to poll every house or apartment until the desired number of samples are in hand.
Both organizations usually use a standard cross-section of 1.500 voters.
Interviews- Both pollsers use women as interviews because women are considered more reliable, easier to talk to and likeler to gain admission to a dwelling in California. Gallup's interviews take 45 to 60 minutes. His spend from 60 to 90 minutes.
Questions—Gallup and his aides meet and formulate what he calls the ballot, much in the manner in which a newspaper decides which stories will appear on the front page.
Harris calls his ballots survey instruments, draws them up himself, tests them in his office.
MGovern, the Democratic presidential nominee who is not favored in poll results, was defeated by Senator Bernie Sanders.
RESULTS—Both Gallup and Harris rely on the mails to bring results to their headquarters for electronic data processing. As the end of a particular period comes, the next step is to reach telephones and teleprinters in an effort to obtain the latest possible summals.
AS THE POLls reflect some kind of opinion the most important question is what is the result of a poll?
Albert Sindlinger, who relies on the telephone for his polling, conducts a daily survey which he claims reaches the 48 contiguous states. He considers his survey of the polling data to be the interviews are shorter and necessarily result in many "no opinion" responses.
With the polls now showing Nixon with a 28 per cent lead, some individuals say that such a lead is bound to create a Nixon presidency. The same advice are guided by discernible public opinion.
In an election year in which the most recent Gallup poll shows President Nikon leading George McGovern, 61-33, but neither the gallup reflects or shape opinion.
"No politician worth his salt should just follow the polls," McGovern said. "He should get out in front and make the polls begin to follow him."
Others, including Harris, say that with a big lead a sympathy vote for the underdog
Gallup said that there were two factors to be considered.
"First, people tend to return to their traditional and habitual voting patterns late in the campaign," he said. "This means McGovern will pick up some of the Democrats who now think they will vote for Republican Nixon.
"ON THE other side of the coin, the senator inevitably will lose the votes of some of the younger people who now supremaciously sit on the role of the traditional politician."
McGovern supporters say the polls mean nothing because the candidate has yet to get his message across to the people. The Nikon is trying to prove itself everyday against overconfidence.
The important thing to remember when reading polls is that although they are scientific, they are not necessarily accurate. They report a situation at the time of the survey rather than predicting the outcome of the election.