Masonry Magazine February 1986 Page. 36
WASHINGTON WIRE
continued
The pressure will be great to act responsibly so as to avoid automatic cuts. The President should feel it, too, because Gramm-Rudman will crimp defense. It is still much too early to say if resort to the mechanism is inevitable.
YOU'LL HEAR A LOT OF TALK of tax increases before Congress gives up on the deficit and lets the cutting of spending pass over to the President. Reagan will still say no way... but he has yielded to the inevitable before. So, he may "let" Congress vote hikes to keep the defense build-up rolling. Tax increases are still a less-than-even bet-but are no longer unthinkable. What kind? Smaller reductions in the income-bracket rates under tax reform.
There is also talk of a "value-added" tax, now widely used in Europe. It is a disguised sales tax on every stage of production and distribution. It can raise vast revenues.
YOU SIMPLY CAN'T KISS OFF TAX REFORM at this early date, despite the thumping that previous versions have taken over the past year, Reagan won't quit. He sees tax reform as the showpiece of his second term. The Democrats view it as an issue that will generate enormous voter appeal. If passage hangs on changing the Ways and Means draft, changes can be made.
BUT THE TWO SIDES HAVE ADOPTED apparently irreconcilable positions. And the President promised House Republicans in writing to veto any bill that doesn't contain broad changes in the House-passed Democratic version. That would reduce income-tax bracket rates to a top of 35% instead of 38%, raise the standard deduction to $2,000, and soften the bite on corporations. The House Democrats will not cave in easily... not on all points. certainly. So tax reform could die. Compromise is still possible, but hard to see now.
THE WHITE HOUSE IS PLANNING some further cuts in costs of Medicare. It hopes to slice $6 to $8 billion from the $110 billion looming for 1987. The hospitals would get hal half the rise in inflation as added reimbursement, with only 5%-7% on top of that allowed for new construction and equipment. Physicians' care, which now costs a retiree $15.50 a month, could increase by as much as 50% over the next five years under the Administration's plan. And he'd have to pay the first $100 of bills, plus inflation up from $75.
THE KEY PROPOSAL IN THE HOUSING AREA that Reagan once hoped to submit this year-selling off the Federal Housing Administration-has been dumped. Congress won't let it go private after 50 years of aid to 51 million buyers. Reagan may have somewhat greater luck with his other housing initiatives-requiring localities to pay half of the overhead costs of rent subsidies... elim. inating the inflation adjustments given federally-subsidized housing... and selling to private investors housing loans insured and owned by the U.S.
THE OUTLOOK FOR SOME OTHER PROGRAMS: Bills to cut the period banks can hold checks without credit and expand the authority of the Chairman of the Joint Chiefs of Staff will probably pass. Proposals to relax the anti-trust laws and to curb political action committees won't make it into law.
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36 MASONRY-JANUARY/FEBRUARY, 1986