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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (Sept. 17, 1975)
Pulling through recession THE BATTALION Page 7 WEDNESDAY, SEPTEMBER 17, 1975 US still faces grim future Associated Press WASHINGTON — The United States is pulling out of the worst recession since the 1930s, but Americans face unemployment and high prices for years to come, the Congressional Budget Office said Tuesday. The budget office. Congress’ counterpart to the president’s Of fice ol Management and Budget, of fered two possible strategies. One would speed up economic activity to provide more jobs. The other woidd he aimed at trying to hold down in flation. Forbidden to make recommenda tions, it advocated neither, but pro jected the expected consequences of both. The nation’s recent surge in prices is particularly alarming be cause it has been largely concen trated on necessities, said Alice Riv- lin, an economist who heads the budget office. She told a news con ference the surge could endanger the still-young recovery. “When inflation is concentrated on food and fuel, consumers have to buy them anyway,” she said. “There is little money left over for other purchases, and the economy suf fers.’’ A second danger, Mrs. Rivlin said, is that continued price in creases will trigger another round of large wage increases, spinning the inflationary spiral even higher. “Some of the present favorable factors may be temporary,” she de clared. The budget office forecasts sub stantial economic recovery until at Kissinger warns against oil hike Associated Press VIENNA — The economic commission of the Organization of Petroleum Exporting Countries began preparations Tuesday for a ministerial gathering that could boost the price of oil. U.S. Secretary of State Henry A. Kissinger issued a strong warning against such an increase. The average OPEC oil price is now $10.46 a barrel. Commission members, mostly high officials of economics and finance ministries of the 13 OPEC governments and the group’s Vienna headquarters, were tight-lipped about their deliberations. However, Kissinger told the Southern Governors Conference in Orlando, Fla., that the oil exporting nations are moving in the direc tion of another price jump. He warned that it could seriously jeopar dize U.S. relations with the oil producers and endanger efforts to stabilize the global economy. The economic commission will prepare recommendations for the Sept. 24 meeting of OPEC oil ministers, who will decide whether to continue the present oil price freeze, which expires Sept. 30, or raise prices. OPEC members account for 80 per cent of world oil trade. Although the commission is expected to conclude that a price boost for crude oil is in order to offset the effect of Western inflation on the revenues of oil exporting countries, it was considered anybody’s guess if the ministers would follow such a recommendation. The ministers have rejected the commission’s recommendations for price boosts on at least two previous occasions. The ministerial session is expected to become a clash between “price hawks ’ and “price doves, with forecasts ranging from no price increase at this time to one of 35 per cent. Saudi Arabia, the No. 1 producer among OPEC members, is on record as saying that it is in the interest of all concerned to delay a price increase. 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We agree this is a bit of a long story, but it is difficult to stop talking about our tasty sandwiches. Open Sunday 11:00 A.M. - 1:30 P.M. for regular meal only. “QUALITY FIRST” least mid-1976, but added that Americans will continue to be plagued with the nation’s unpre cedented combination of high un employment and high prices at least through 1977. By the end of 1976, its report said, the unemployment rate which has remained over 8 per cent this year should be down to the range of 6.9 to 7.6 per cent. This still would mean 7 million Americans without jobs. During the remainder of this year, the report said, prices are likely to continue increasing at an annual rate of 6 to 8 per cent. A surge of increases, especially in food and fuel prices, brought the rate up to 12 percent in June and July 1975, the report said, but the rate has since subsided — though not to the levels of early 1975. A speedup in economic activity, the report said, would require con tinuing the temporary tax cuts in effect for this year, reducing taxes an additional $15 billion and in creasing federal spending by $10 billion, all effective in 1976. Additionally, the Federal Re serve would be expected to allow the money supply to grow enough to hold down interest rate increases. The opposite strategy would be to end the temporary tax reductions by Jan. 1, 1976, cut spending $5 billion and keep monetary growth at a rela tively low rate. The expansionary strategy, the budget office said, would lower un employment by 1.1 per cent at the end of two years— meaning about 1 million more jobs — but would raise the rate of inflation for some years ahead by a maximum of five-tenths to seven-tenths of one per cent. It would increase the federal de ficit, although the budget office re port said much of the tax and spend ing cost would be offset by higher revenues and lower unemploy ment. The restrictive strategy, the re port said, would raise the un employment rate by nine-tenths of Arab price hike termed ‘dangerous’ Associated Press ORLANDO — Secretary of State Henry A. Kissinger said Tuesday that an anticipated price hike by Arab oil producers “would seriously jeopardize U.S. relations with those nations and have serious re percussions throughout the world economy. Kissinger declared in an address to the Southern Governors Confer ence that all countries, particularly the poorer ones, “have an interest to avoid this.” And the secretary said it is essen tial that the United States and its industrial allies get together on an over-all energy policy before another Arab price increase is an nounced. Kissinger, who later headed for Cincinnati and another public ap pearance Tuesday night, did not es timate what the new oil price might be. But he pointed out that the cost of Arab petroleum has climbed 500 per cent in the last five years. The Secretary spoke sternly — although indirectly — concerning the next expected jump. “The United States cannot en trust its economic and political de stiny to decisions made elsewhere,” Kissinger said. In other matters, Kissinger told the 13 governors that the Ford Ad ministration’s request for aid to Is rael this year “will be below $2.5 billion, in the range of $2.2 or $2.3 billion. He did not give a figure for aid to Egypt, previously estimated by offi cials at between $600 million and $800 million. However, be de fended aid to Egypt as important in cementing American influence in Cairo and in stabilizing the Middle East situation generally. one per cent at the end of two years ( and lower the inflation rate for sev eral years, with a maximum reduc- jtion of three-tenths to four-tenths of jone per cent. It would lower the deficit, but not by the total amount involved in the spending and tax moves, the report. The economic recovery, Mrs. Riv lin said, can be credited largely to declining inventories, causing businesses to begin to think about replenishing them. She said it also can be credited to consumer spend ing spurred by the temporary tax cut and increased Social Security payments. “To sustain the recovery some thing else has to happen,” she said, “more housing, more automobiles sales, more spending on capital goods. We don’t see that yet —- we just don’t see the future clearly after mid-1976.” Immediate decontrol of domestic oil prices “would add nearly 2 p e r cent to the general price level and could retard or even abort recov ery,’ the congressional report warned. Authority to control prices has lapsed and Congress and President Ford are still at odds on a long-range C0URTEA HAIR DESIGNERS SHAG CUT A FULL SERVICE SHOP DISCmMINATING MAN RADIAL CUTS SEBRING STYLE PROMPTER WE USE & RECOMMEND ALL RK ACID BALANCED PRODUCTS LAYER CUT DORTHY DUNN Owner CALL FOR APPOINTMENT 823-7217 energy policy. So far, however, oil companies have not generally raised prices. Decontrol phased over a substan tial period, such as the 39 months under discussion, would have little immediate effect on the economy, Mrs. Rivlin said. But she said there would be an appreciable effect by late 1977 and that this effect was not taken into account in preparing pro jections for the report. In any case, U.S. motorists can expected to be paying at least 2 cents a gallon more at the filling sta tions soon, the report said, because the Organization of Petroleum Ex porting Countries plans oil price in creases. 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