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Vol. 82 No. 201 USPS 045360 14 pages
College Station, Texas
Thursday, September 4, 1986
ongressional candidates debate at A&M
Barton, Geren disagree
on government priorities
Pete Geren
By Mona Palmer
Senior Staff Writer
Congressional candidate Pete Ge
ren stressed investment in education
Wednesday during his first face-to-
face debate with 6th District incum
bent Joe Barton, who maintained
that America’s number one problem
is the deficit.
The two candidates fielded ques
tions from a four-member panel be
fore an audience of about 200 in
Rudder Tower on the Texas A&M
campus.
Tne first question addressed stu
dent financial aid, asking the candi
dates if they thought it should be
maintained.
Barton said a bill came before
Congress last year that would con
tinue existing loan programs and set
up certain incentives.
He said that in one instance the
bill would have doubled the amount
of money a student could get in his
third and fourth year and would also
have set up incentives for the teach
ing profession.
But, Barton said, the appropria
tions bill was S3 billion more than
the authorization bill which called
for $15.2 billion.
“I had to vote against that because
I am a supporter of the Gramm-
Rudman bill,” he said. “Gramm-
Rudman says we have to live within
our current budget means. We can
not continue to add onto existing
programs until we get our spending
policies under control.
“If there is any group in our coun
try that has the ability to help them
selves, it is the student population. . .
Some of the senior citizens are past
the point where they can help them
selves and we have to increase fund
ing in those areas.”
Geren countered that America is
See Debate, page 14
Joe Barton
ewis: White plans
ocall 2nd session
starting Monday
(AP) — Gov. Mark
Wl ite plans to call the Legislature
b?it k for another special session on
Monday, House Speaker Gib Lewis
sid Wednesday.
■“We discussed when we will be
coining back and that will be Mon-
By,"Lewis said aftei meeting wuli
White, ft. Gov. Bill Hobbs and the
muse'and Senate budget < < unmittee
tirmen.
Today is the last day of the special
ksion that began Aug. 6, but law-
Itkers have made little progress to
ward wiping out the $3.5 billion state
:(Ifkit and Balancing t he budget.
■ The speaker’s press secretary,
Tim Conger, said White told the
leaders he would like to address a
joint House-Senate meeting on
Holiday, as he did to open the first
[ecial session.
Lewis, who has opposed a tax in-
ise during this special session,
said he would support a tax hike
only if all other key budget-balanc
ing steps are taken first and still
prove inadequate.
haven't changed in any way,”
he said. “Our first priority is to try to
cuts in state spending. And try
to bring that (final deficit) figure
down as low as we possibly can.
“If we get the opportunity to do
what we want to do in the House —
the follow-through on various bud-
jet cuts, transferability of (state)
Inds, to run state government in a
businesslike way — if that doesn’t
bridge the gap (then) sure, I'll vote
foi a tax bill. I’m not about to allow
itht state to get in bad financial
straits.''
■ However, he emphasized, “We
hmen't gotten there yet.”
■ Throughout the day, Lewis’ bud-
gei aides briefed representatives on
■e financial picture under a variety
<f possible actions — including tax
■creases next year.
fe Possible actions being analyzed in
clude delaying payments to state em-
ee retirement funds, some type
S' sales tax increase and a boost in
motor fuel tax.
[Asked if a tax increase in 1987 ap-
likely, House Speaker Pro
km Hugo Berlanga, D-Corpus
Clnisti. said, “It sure looks that way.”
But lawmakers should wait until
the 1987 session, Berlanga said, be
cause they won’t have enough infor
mation until then on how much
Ijoney should be raised and what
the state’s economy will be like.
| One possibility, Berlanga said, is
that lawmakers would “look at a ma-
JOi overhaul (of the tax system) and
a possibility of expanding the (sales
tax) base and lowering the rate.”
Lewis said that in this special ses-
|on, lawmakers may have heard too
iuch from special interests and
late agencies and not enough from
those who foot the bills.
[ "Noone has talked about the poor
Id taxpayer,’’ Lewis said. “What
bout him? Have we taken him into
ansideration yet? I think the House
trying to take him into consider-
tion.”
Not all House members agreed
at a tax increase can be avoided.
Rep. Juan Hinojosa, vice chair-
lan of the Mexican-American Leg
islative Caucus, said,“The Texas
state budget crumbles while the
House of Representatives fiddles,
refusing to face up to the need for a
tax increase.
“While
poses
the House budget pro-
more than $730 million in
cuts, the proposal jeopardizes the
state’s future in higher education,
highways and related industries and
jobs.
“Anti-tax legislators refuse to ac
cept reality, hoping instead that out
side forces such as OPEC will force
up the price of oil to help stabilize
the state's oil and gas revenue.”
Iranians detain 2 Soviet vessels
MANAMA, Bahrain (AP) —
Iran stopped two Soviet ships in
the first action against Iraq’s main
arms supplier since the Iranian
navy began searching freighters
for military cargo early last year,
shipping sources said Wednes
day.
Iranian warships chased the
Pyotr Yemtsov in the southern
Persian Gulf on Tuesday, then
forced it into the Iranian port of
Bandar Abbas to be searched.
Shipping executives, who
spoke on condition of anonymity,
said the second vessel was
stopped briefly Wednesday and
identified only as the Tutov.
The Pyotr Yemtsov, which be
longs to U.S.S.R.-Black Sea Ship
ping of Odessa, was seized during
a voyage from the Black Sea port
of Nikolayev to Kuwait and was
being unloaded Wednesday at
Bandar Abbas, according to the
reports.
In Moscow, Foreign Ministry
spokesman Gennady I. Gerasi
mov confirmed that the 11,750-
ton Pyotr Yemtsov was “de
tained” off the coast of the
United Arab Emirates but did not
mention the Tutov. Bandar Ab
bas is about 120 miles east of the
U.A.E.
Despite the Soviet role in sup
plying Iraq during the 6-year-old
Iran-lraq war. shipping sources
said weapons or other military
goods were unlikely to be shipped
on Soviet freighters through the
Persian Gulf.
An executive based in Kuwait
said, “We believe the Pyotr Yemt
sov was loaded with construction
material, but the Iranians con
sider such commodities to be an
asset for the Iraqi military effort.”
He noted that several Kuwaiti
vessels had been intercepted and
their cargoes of steel rods and
other construction materials
seized.
Scores of ships of many nation
alities are known to have been
searched since Iran began inter
cepting commercial vessels early
in 1985.
Most detained ships are al
lowed to resume their trips after
searches. Others have been taken
to Bandar Abbas, where their car
goes were unloaded and confis
cated.
The American freighter Presi
dent Taylor was stopped and
boarded outside the Strait of
Hormuz last January on a voyage
to the United Arab Emirates port
of Fujairah. In May, U.S.
warships in the Indian Ocean
prevented the interception of an
other American cargo ship, the
President McKinley.
U.S., British and French naval
vessels patrol the Persian Gulf,
the narrow Strait of Hormuz that
leads from the gulf to the Indian
Ocean and the strait’s environs in
the Gulf of Oman.
Soviet warships also cover the
area outside the Hormuz.
Shipping executives said an av
erage of two Soviet or East Euro
pean freighters a day ply the gulf
waters. They expressed surprise
that Iran would harass Soviet
ships while the Kremlin is trying
to improve relations with Ayatol
lah Ruhollah Khomeini’s funda
mentalist Shiite Moslem govern
ment.
Insiders say saving writeoffs not enough
Tax bill may hurt oil industry recovery
NEW YORK (AP) — The oil in
dustry was able to keep two of its
cherished writeoffs in the tax over
haul bill, but insiders say other as
pects of the plan will hurt efforts to
recover from the collapse of petro
leum prices.
Some estimate the proposed revi
sions could drain at least $10 billion
from industry coffers during the
next live years, further weakening
companies that already are coping
with sharply lower margins or strug
gling to ward off bankruptcy.
Others say, however, that even
that projected loss still would be far
second to the main problem: the vol
atility of oil prices, hovering at about
half what they were last November.
In any case, depletion allowances
and intangible drilling cost writeoffs
were kept in the bill for companies
already benefiting from them.
Depletion allowances are tax
breaks based on the premise that
withdrawal of oil or natural gas from
the ground, while providing a po
tential profit, also represent “losses”
of a finite source of supply.
The writeoffs have been per
mitted for all companies except the
large “integrated” companies, which
do everything from drilling oil to
marketing petroleum products.
These companies, totalling between
20 and 30, lost the depletion allow
ance writeoff in 1975.
Intangible drilling costs basically
represent costs involved in setting
up a well, aside from expenses for
equipment, land acquisition and
land improvements, such as roads.
Under the new bill, the one-year
writeoff for intangibles remains for
independent drillers. But major oil
companies would have to stretch out
30 percent of the writeoffs over five
years, instead of the present 20 per
cent over three years.
“On those things, we got off all
right,” said Brendan Quirin, senior
economist at Amoco Corp., the na
tion’s fifth largest oil company. “But
if you look at the investment tax
credit, we didn’t do so well.”
Current tax rules generally per
mit a company to charge off 10 per
cent of the cost of equipment.
This writeoff, a dollar-for-dollar
credit applied to the company’s in
come tax bill, is in addition to wri
teoffs for depreciation, which are al
lowed on 95 percent of the same
investment.
Now, Quirin said, the investment
tax credit is “a credit you don’t get. It
has gone from 100 percent to zero.
“I came up with a five-year num
ber of $5 billion to $6 billion of in
vestment tax credit lost. It clearly is a
hit on the business, if you add in the
other changes contemplated under
the bill.
“I’d estimate about $10 billion
over five years; and that’s based on
the very strong assumption that the
industry is going to be in a profitable
position.”
Charles J. DiBona, president of
the Washington-based American Pe
troleum Institute, said the trade
group agreed the tax bill could cost
the industry that amount.
He said the group especially was
worried that the bill would discour
age new exploration and increase
dependence on imported oil.
Time running out’ for deal
to discount wheat to Russia
WASHINGTON (AP) — A
month has passed since President
Reagan’s controversial decision to
offer wheat to the Soviet Union at
cut-rate prices, but Moscow 7 so far
has ignored the offer and time is
running out.
Sen. Richard Lugar, R-Ind., a
critic of the proposed sale, said
the situation is embarrassing for
the United States. He said the ad
ministration cut the price even
more last Friday, which “demeans
the process further.”
To encourage the Soviets to
buy 4 million metric tons of wheat
under a previously arranged
grain deal, the president an
nounced on Aug. 1 that he had
decided to grant a $13 per ton
subsidy, meaning that American
wheat w'ould cost less in the Soviet
Union than in the United States.
The subsidy, paid by American
taxpayers, was increased Friday
to $15 a ton. The'aim was to re
duce the price to the world level.
In justifying approval of the
deal, Reagan said the subsidy
would help hard-pressed Ameri
can wheat grow'ers sell their sur
pluses. He was encouraged to
take the action by Senate Majority
Leader Robert Dole, R-Kan.
However, senior members of
the administration, including Sec
retary of State George Shultz,
publicly criticized the deal as
making no sense.
Shultz said the Soviets must be
“chortling and scratching their
heads about a system that says
we’re going to fix it up so that
American taxpayers make it pos
sible for a Soviet housew'ife to buy
American-produced food at
prices lower than an American
housew'ife.”
Lugar, chairman of the Senate
Foreign Relations Committee,
was among law'makers who were
opposed.
The two nations are in the
third year of a five-year grain
purchase agreement. If the Sovi
ets haven’t purchased the wheat
by Sept. 30, the expiration of fis
cal 1986 in the United States bud
geting process, and the discount
sales opportunity will have passed
the Soviets by. Any Soviet pur
chases after that date would be
credited against the next budget
year — Fiscal 1987 — in which
the Soviets also have agreed to
buy 4 million metric tons.
An aide to Dole, Mark Scanlon,
said Wednesday last week’s in
crease in the subsidy did not sur
prise him because many fell the
S13 figure was too low. And he
suggested further increases
might bejustified.
Lugar said the issue dominated
his discussions with Prime Min
ister Robert Hawke and other of
ficials during a vsit to Australia
last w'eek. Australia argues that it
doesn’t subsidize its exports and
that grain trade should be subject
to free market forces.
Moss funeral to go on
despite ban in S. Africa
JOHANNESBURG, South Africa
(AP) — Anti-apartheid leaders said a
mass funeral for 20 blacks killed by
police in Soweto will be held today in
defiance of an official ban.
The government issued tough
new press restrictions Wednesday to
make sure journalists could not
cover it.
Families of some killed in the vio
lence that swept parts of Soweto on
Aug. 26-27 were called to police of
fices Wednesday and told to shun
the funeral scheduled for a stadium
near the White City neighborhood.
White City, so named because it is
the best-lighted part of the huge
black township outside Johannes
burg, suffered the worst violence.
At least 20 people were shot dead
last week by police in the Soweto out
burst and a gang of young men
hacked a black town councilor to
death.
Leaders of anti-apartheid groups
said they would go ahead with the
funeral despite a Sow'eto police or
der Tuesday forbidding mass fune
rals of people killed by security
forces. It says a service may be held
for only one person and only 200
mourners may attend.
President P.W. Botha’s govern
ment reimposed a rule prohibiting
journalists from reporting the ac
tions of security forces and added
tough new restrictions on news cov
erage.
New press restrictions, issued by
Police Commissioner Johan Coetzee,
expand a previous ban on reports of
security force actions by saying any
journalist on the scene or “within
sight” of any unrest, restricted gath
ering or security force activity must
leave immediately.
The restictions, published in the
official government gazette, replace
an order issued in conjunction with
the declaration of a nationwide state
ofemergencyjune 12.
A government lawyer conceded
two weeks ago that the order was im
properly promulgated because it was
not published in the government ga
zette. Since then, on the advice of at
torneys, journalists had treated the
order as invalid.