Word: surtaxes
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...theory, the surtax is a fiscal mechanism, a key weapon in the fight against inflation. In practice-as two Presidents have discovered to their chagrin-Congress has found it a handy lever for forcing its fiscal views on the Chief Executive. Last year a House coalition compelled Lyndon Johnson to accept stringent budget cuts before they would pass the tax. This year liberals in the Senate are demanding as their price for extending the surcharge a major overhaul of the entire tax structure...
Playing the Snake. Liberal Democrats argued that unless they tied the surtax, which Nixon wants badly, to reform, which he does not want quite so badly, reform would remain what it has been for years: something to be done tomorrow. Though the Administration did, in fact, attach a few reforms of its own to the surtax bill as a sweetener, it did not go nearly far enough to satisfy the liberals. While Nixon pledged himself to submit a more comprehensive tax-reform package to Congress this year, he has been less than specific about its contents-perhaps partly because...
...opposite. Extension of the tax surcharge has become the symbol of the Government's determination to fight inflation; if it is not extended, the Federal Reserve will have to make money even tighter, and 12% interest rates could become the rule. But Senate Democrats are holding the surtax as hostage, vowing that they will not vote for it unless it is combined with long-overdue tax reforms. They sense a taxpayers' revolt and know that reform has become politically popular. Tax reform is necessary, said Chairman Russell Long of the Senate Finance Committee. But extension of the surtax...
Secretary Kennedy's threat of controls-his second in little more than a month-was intended to push the Senate into moving on the surtax. Instead, it only strengthened a growing impression in the Administration, the Congress and the financial markets that he is a welterweight in the Nixon Cabinet. One of Kennedy's aides stated flatly: "I don't think anyone at Treasury has thought much about controls...
...Council of Economic Advisers. Another former CEA chief, Walter Heller, adds: "Trying to substitute Government omniscience for the brilliant cybernetics of the private market system would invite too many distortions, too many evasions." The public, however, is so fed up with inflation and so sick of the surtax that it favors wageprice controls-by a 47%-to-41% margin, according to the latest Gallup Poll. It has apparently forgotten the black markets and the gray markets that controls produced during World War II and the Korean...