Word: surtaxes
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Without a surtax, Washington maintains that it will be forced to borrow as much as $22 billion in the bond market next year to finance the federal deficit. And economists in and out of the Government agree that there will be too little money to meet the demands of private borrowers as well. While the Federal Government and the country's bigger corporations will snare what they need, bond experts figure that housing, auto finance, small businesses and state and local governments will be starved for funds. This year, the Federal Reserve Board's policy of monetary ease...
...Chairman Wilbur Mills impatiently twirled his cigarette holder and fired off barbed questions, seven leading economists trooped before the House Ways and Means Committee last week to support the Administration's call for a 10% surtax on personal and corporate incomes. Well over 300 academic economists mobilized by Walter W. Heller, former chairman of the President's Council of Economic Advisers, added their written endorsement. Then came businessmen declaring themselves fit to be tithed and a covey of Administration officials pleading for higher taxes...
They differed on details but demonstrated a remarkable consensus: prompt imposition of a surtax is vital to curb inflation in an overheating economy, reduce a Government deficit that may hit $29 billion this fiscal year and head off a repetition of the credit squeeze that rocked business...
Chaos & Catastrophe. "The economy is moving on a course of rapid expansion," said William McChesney Martin, chairman of the Federal Reserve Board and the man who most of all persuaded the President to seek the surtax. Listing rises in retail sales, personal incomes, housing construction and industrial production, an increase in inventories and order backlogs and a drop in unemployment, Martin found "clear and compelling evidence" of inflation. "An environment of rampant inflation," warned former Treasury Under Secretary Robert V. Roosa, "will afford little opportunity for the considered development of any national policy, domestic or foreign." Roosa forecast economic dislocation...
...skeptical of economic prognosticators and-despite the almost-unanimous verdict of his witnesses-far from persuaded by their predictions of an inflationary spiral. On the contrary, Mills fears that added taxes may have the opposite effect of stifling growth. And he is unconvinced that $6 billion raised by the surtax can make a real dent in the deficit or make it easier to manage...