IT'S TIME FOR SOME PLAIN TALK ON THE MATTER OF GOV'T SPENDING

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-424-3-2-5
• Release Decision: RIFLIM
• Original Classification: K
• Document Page Count: 13
• Document Creation Date: January 11, 2017
• Document Release Date: September 16, 2010
• Sequence Number: 2
• Publication Date: January 2, 1976
• Content Type: LETTER

No Objection to Declassification in Full 2010/09/16: LOC-HAK-424-3-2-5
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No Objection to Declassification in Full 2010/09/16
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THE KIPLINGEP WASHINGTON LETTER
Circulated weekly to business /Iten~! since 1923-Vol. 53, No. I
THE iLINaGERRSHI~MT6 DITORS
1729 H St.,N.W., Washington,D.C. 20006 el: 202-298-6400
Cable A1ff1&l6;.f91 lfriR rWashiinggtonDC
OU0GET
Dear Client: Washington, Jan. 2, 1976.
It's time for some plain talk on the matter of govt spending:
The promises to cut spending are bunk...whether Ford makes them
or the members of Congress. They mislead people and raise false hopes.
Spending is going to RISE. Not by any piddling amount either,
but by at least 20 billions. Even Ford's upcoming budget will make room
for an increase in gov't spending of that amount over the current level.
And when Congress gets through, the increase might even be double that.
You may want to keep this in mind when Congress returns soon
and all the hoopla begins about budget cuts. Remember these figures:
Spending is now running at 375 billions...for this fiscal year.
In just the past two years, that represents a FORTY percent increase.
Ford's new budget will be 395 billions, up a cool 20 billions
for the fiscal year beginning next Oct. 1. (it's Oct. 1, not July 1.)
So when you hear about cutting spending, don't be bamboozled.
Translated, it means a continued RISE in spending but at a slower pace.
And listen for the howls to go up in Congress when it finds out
where Ford proposes to curb the spending... which programs to curtail.
This will be the forerunner of a fight that will last through elections.
Extension of the tax cuts is involved, those recently extended
through the end of June. Ford will ask that they be made even larger,
but that spending be "reduced" by the same amount. Dollar for dollar.'
A nice trap for the Democrats, since the voters are strongly in.favor
of both tax cuts and spending cuts. Will the Democrats dare to refuse?
Probable outcome: Taxes kept where they are until next Jan. 1.
The budget held somewhat in check, but not at the Ford level...
spending much higher than he is proposing, well above 400-billion mark.
r e `Jn eeper tan now, esp to t e to of austerity.r
all the monkey business over the budget? Just politics?
Partly, yes. Ford fully realizes that this budget squabblids
with a Democratic Congress will be a principal issue. in the campaign,
and will be going on before-during-&-after the political conventions:
So he sees a chance to keep Democrats on the defensive the whole time.
But partly, it's Ford's own polic^y...to keep inflation at bay
as much as possible during the business recovery. His economic aides
regard the policy as central to preventing runaway inflation... in '77-'78.
This issue will run through nearly all legislation in Congress.
Ford will veto the big railroad bill because of its huge cost...
over 6 billions for Conrail, regional freight system. And to improve
some passenger travel. The veto will come soon after Congress returns
and probably will not be overridden". Hence, an immediate confrontation
on govt spending, the first of dozens between now and the elections.
COPYRIGHT 1978 THE KIPLINGER WASHINGTON EDITORS. INC.
QUOTATION NOT PERMITTED. MATERIAL MAY NOT 9E REPRODUCED IN WHOLE OR IN PART,IP ANC.. ORM.WNATSOEYE-W.
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Prospects for bills next session...in answer to many queries
at the close of the last session. Note how many directly affect you:
Checking accounts in savings & loans have a chance of passing,
and then both the S&Ls and banks will be able to pay interest on them.
Senate has approved. The House may...if the lenders don't fall out.
Truth-in-leasing will pass, requiring full disclosure of terms
for leasing of autos, trucks, big appliances. Details about payments.
No-fault auto insurance looks doubtful again. No consensus on
whether it's needed, how it should work. And Ford is cool to the idea.
Same for a new govt consumer agency...odds are now against it.
Really TOUGH bill on consumer frauds is coming...fines and jail
for deliberately luring people on bait-&-switch ads, phony comparisons
with competitors' products, false endorsements, refusal to make refunds.
Manufacturers, retailers and ad agencies better keep their eye on this.
- -,Arid- the core`Sumer crer3-t?=wiY3 ire ?etred--ezr tt~r-e
no one is denied credit because of age, race, color, welfare status, etc.
The maximum awards in class-action suits will be hiked for major lenders.
A big public works bill for states & localities...5 billions
for construction, repair, improvements...will pass. And then hit a veto.
Essentially a make-work plan to sop up unemployment. Plus pork barrel.
Very tempting in election year, so overriding Ford is a fair possibility.
"Tax reform" is likely to get fouled up later in the session.
Wide disagreement on this & that provision...very complex, cumbersome.
But Democrats in Congress are committed to tax reforms in this session,
so some sort of compromise seems likely, tied to the tax cut extension.
National health insurance is unlikely...on any major scale.
Much too expensive. Perhaps an agreement to expand medicare and cover
catastrophic illnesses. Not just for aged, for everyone. Slim chance.
Jobless pay: Taxable wage base will be raised to about $6000,
and the tax rate to 3.4%. Law may also fix a floor on jobless benefits.
Job-injury Ray: No federal standards. States are upgrading.
Minimum wage raise to $3: Probably not, despite union support.
Advice to employers on lob safety: May get stymied in Senate.
Bill lets firms request on-site consultation without fear of citation.
But _ iizions w'l -fight- i,esti small co7npan sei get comp ete `ekeiript on.
On energy bills, these show promise: Electric autos...new funds
from gov't to keep research going. And an extension of govt insurance
for accidents related to nuclear power...needed to prod new development.
These will have trouble: Tighter rules on strip mining of coal.
Permission to let private firms enrich nuclear fuel. Slurry pipelines
for moving coal. (Coal-hauling railroads are trying to derail the bill.)
Deregulation of natural gas prices is bogging down in the House.
Fear is that it would zoom up prices too fast. Even limited decontrol
will have tough sledding... natural gas supplies not as short as expected.
Oil companies won't be broken up. No stomach for it in Congress.
Clean air deadlines will be eased for autos...and maybe plants.
Strikes by postal workers won't be allowed, or ANY govt workers.
The old copyright law will be updated... giving longer protection.
Write us about other bills you're interested in. Glad to check for you.
No Objection to Declassification in Full 2010/09/16: LOC-HAK-424-3-2-5
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January sales: The pickings will be slimmer than in past.years.
Most stores were fairly cleaned out by Christmas, beyond expectations,
so don't have much inventory to sell off in traditional clearance sales.
True bargains hard to find, for most price cuts will be limited.
Chances are best in fashion clothing, some appliances and housewares.
Note this about white sales and other winter price promotions:
Much of the stuff is "special purchase" merchandise, bought specificially
for the sales. Check the quality to see if it meets the usual standards.
Insurance is being eyed by the trustbusters. There's a suspicion
that the industry's antitrust exemption may be choking off competition.
Main focus is on rate-making ...how companies decide their rates.
Justice Dep't thinks maybe the process for setting charges for policies
ought to be opened up somehow so they'll be brought down by competition.
But if Justice decides to go ahead, Congress will have to OK any change.
is being trumpeted by gov't as a way to induce competition, lower fees.
Lawyers may move first...gov't is pushing Bar Assn. to bless it.
Physicians? Much vocal opposition...long court battle likely.
Architects, engineers, veterinarians, accountants are up next.
Gov't aims to have their professional organizations drop bans on ads.
Take a hint, whatever professional group you may be a member of:
Check out its code of ethics. Fee-fixing violates the antitrust laws,
and the gov't claims that restrictions on competition are also illegal.
Note: Professionals can't be FORCED to advertise. Many won't.
Corrective ads: Fed. Trade is being taken to court on its order
telling a firm to run ads confessing to misleading claims in the past.
First court test of such FTC orders. Up to now, companies bowed to gov't.
Improvement in rail freight service: Sad to say, further delay
for bankrupt NE and Midwest lines because of rail bill veto (see p. 1).
Now certain that Conrail will not take over the bankrupts on schedule.
Operations may gum up because executives won't know who's running what.
Truck freight rates will frump in spring. Labor contract runs out
end of March... teamsters driving for fat wage boosts in three-year pact.
So count on rates increasing at least as much in 1976 as last year ...7%.
Recreational vehicles: sales were bombed by the embargo on oil
are ow on e c -m . Maters o0 for , rise is yea .:. .
Budgeting business travel costs: Figure 10% higher room rates
and 10% more for meals on the road this year. First-class travel is up,
as companies relax recession's travel hold-down...a bit more freehanded.
On trips to Europe, scheduled flights are being trimmed back.
In their place, more One-Stop Tour Charters at considerably lower fares.
Businessmen may have to plan ahead earlier to get on scheduled flights.
On withholding of taxes, use the current tax tables through June.
On the package of forms sent by IRS, check to see if everything
you need is included. Some taxpayers will have to order forms direct...
housing credit, moving expenses, dependent care, casualty losses, etc.
As for taxes generally, remember two freebies put out by the IRS
that can save you time and some money, maybe. You can get single copies
of "Your Federal Income Tax" and the "Tax Guide for Small Business"
from local IRS offices. Available MID-January, earlier in some offices.
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lout note: Tumble was in ownership of over-the-counter stocks,
se that are generally floated by smalls and mediums for expansion.
Watch for the gov't to step up its jawboning on wages and prices,
via the Council on Wage and Price Stability. Spotlighting and chastising
industries and unions that "ignore the public interest" in their actions.
Some lines will get special surveillance: Steel, aluminum, lead,
zinc. Chemicals. Food processors. Farm machinery. Auto parts. Others.
And these unions...teamsters, rubber workers, electrical workers,
and especially auto workers. All will be negotiating new wage contracts.
Aim is to create an ATMOSPHERE of restraint with a ripple effect
on wage and price decisions throughout the economy. Gov't has no power
to set ceilings or reverse increases. But by citing "horrible examples,"
it hopes to induce second thoughts on pricing policies, labor demands.
Jawboning hasn't worked in the past, and it probably won't now.
But Ford's people are willing to grasp any straw to'give the appearance
of action, and thereby mollify voter ire over rising prices. Weak reed.
A small country, torn by internal strife, hence there for the picking.
The Russians already are at work in other areas. Among these:
Thailand. Malaysia. The former Trucial States along the Persian Gulf...
a key water route for Mideast oil. Lebanon... weapons for the Moslems.
Not Russian troops, but arms, supplies, military advisers, etc.
The list will grow, Ford and his advisers are convinced of this.
Unless the U.S. takes a stand, stops the advance in its tracks.
They see further mischief in other African nations, in South America,
perhaps Indonesia. The weaker our response, more emboldened the Reds.
"._.......'""_
Angola: It's just one part of the Russian worldwide strategy.
is worth less after conversion. Weigh this in your investment plans.
And the strong dollar means that what is earned in foreign currencies
Stocks in multinational companies: Profits of foreign branches
are going to be hit by the limping economies in most parts of the world.
Thus a check on the kind of vigorous growth basic to a strong upturn.
ay mean that this source of venture capital is in danger of drying up.
lh -effect, _194iie is is -clear U.S. poky. Which is not true o`1-Rusa a
-- j
Back to Congress. It is set to assume a bigger role in govt.
To this end, a number of planning and advisory groups will be set up.
An agency on supply shortages is operating now...the kickoff.
Think tank of outside experts is coming to advise on big issues.
A long-range planning agency is being talked, to look far ahead
at the impact of current legislative proposals... costs v. the benefits.
And, of course new budget controls to put a rein on spending.
It will take time, but future Congresses will have much more say
on gov't policies. The rubber stamp days are over ...under any President.
Jan. 2, 1976 THE KIPLINGER WASHVI'GTGN EWIORS
SUBSCRIPTION RATES. 936-ONE YEAR. 100-TWO YEARS, $S0-THREE YEARS. $140-FIVE YEARS
SECOND-CLASS POSTAGE PAID AT WASHINGTON. O.C. .
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THREE PRINCIPAL OBJECTIVES
Dramatic demonstration of the reassertion of
Presidential responsibility and leadership .
in the. intelligence field.
Assuring the public that their rights and.;
privacy are protected through adequate
supervision.
Assuring the public that national security is
protected by an effective intelligence community..
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 No Objection to Declassification in Full 2010/09/16: LOC-HAK-424-3-2-5
PROGRAM A - COMPREHENSIVE ACTION THROUGH LEGISLATION
Organization and Management
Legislative initiatives
Create a new intelligence agency, headed
by a Director of Intelligence, with
resource and.line control. over all national
programs, military and civilian.
Further option: separate covert action
and possibly clandestine collection
from new intelligence agency.
Oversight and Restrictions
Legislative initiatives
. Statutory restrictions on FBI and foreign.
intelligence community.
Give CIA intelligence role, domestic and
foreign; limit FBI to investigation for
prosecution only.
Create a community-wide Inspector-Genera
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 No Objection to Declassification in Full 2010/09/16: LOC-HAK-424-3-2-5
PROGRAM B - INTERMEDIATE-RANGE ACTION THROUGH LEGISLATION
Create a Director General of Intelligence
with control over allocation of resources,
but without line control.
Organization and management
Legislative initiatives
Further option: Separate production from
collection by creating.a new national
analytic capability.
. Combination of statutory and administrative
restrictions on FBI and foreign intelligence
agencies.
Oversight and Restrictions
Legislative initiatives
..Create a community-wide Inspector General.
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PROGRAM C - COMPREHENSIVE REORGANIZATION BY ACTION OF
THE PRESIDENT
Organization and Management
Non-legislative initiatives
One of the following:
Creation of Director of Foreign Intelligence
(in White House),separated from operations,
who would coordinate intelligence activities
but have no voice in allocation; or
Give OMB authority to act as bridge between.
producers and consumers of intelligence; or
Strengthen authority of NSC over allocation
of resources; or
Strengthen authority of DCI over allocation
of resources.
Strengthen analytic and production capability of
each agency in community..
intelligence agencies, except FBI.
Oversight and Restrictions
Non-legislative initiatives
Issue Executive Order restricting foreign
Delegate oversight authority for intelligence
community to Attorney General.
. Issue Executive Order restricting FBI..
Upgrade (or create) Inspector General in
each agency.
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PROGRAM D - COMPREHENSIVE CONTROL THROUGH ACTION AY
THE PRESIDENT
Organization and Management
Non--legislative initiative
Create a second Deputy Director of Intelligence,
to handle-management and administration :of..,the:
CIA.
Oversight and Restrictions
Non-legislative initiatives
Issue Executive Order restricting'domestic
activities of foreign intelligence agencies.:
. Presidential announcement of CIA Commission
recommendations already implemented by.DCI.
.'Issue Executive Order authorizing PFIAB:to
act as Executive Branch oversight body.
. Announce new membership of PFIAB.
.`Direct Attorney General to issue regulations.
restricting FBI.
Presidential call for a joint select Intelligence
Committee of Congress to assure secrecy and
continuity,:" particularly with respect to covert
actions.
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