Business roundtable; Congress and business in 1968

The following program is made possible through a grant from nation's business. This is a business roundtable a program of current comment from leading members of America's business community. Today Jack Wooldridge editor of Business and Wilbur Martin associate editor of nation's business. We'll explore the topic Congress and business in 1968 with series host of The Graduate School of Business Administration at Michigan State University. Over the years the relationship between government and business has become more important. I'm pleased at this session of the Business Roundtable to have with me as my guest two men well qualified by background and experience in the positions they occupy to discuss this subject.

On this session a business roundtable Mr. world what do you think that Congress is going to do on the tax bill that they have had before them now for some time where the administration has requested an increase surcharge tax of 10 percent on corporations and individuals while doing fairly I think that's the biggest question of the new session of Congress. Whether the. Administration will cut spending enough to convince the Congress that a tax increase is necessary. The. Two. Questions of taxes and spending are inseparable. Mr email's of the Ways and Means Committee is quite determined not to raise taxes unless the administration cut spending. Well I need ministration agreed to cut the spending considerably. It has been whether this will be enough to satisfy Mr. Miller's remains to be saying.

The point I think is that Mr. Mills has the support of such a wide constituency and the American public. Is being overwhelmed with letters praising his position and. Most of the business community as well as the public at large realizes that we can't have deficits of the size that we expect this year. They also want to say spending as much as taxes are. And Mr. Martin as Mr. Woodridge just mentioned. This is at least it seems to me is the first time that I can ever recall when a large segment of American business leaders have come out and said they were willing to have Congress pass a tax which would tax corporations and a higher rate. And yet Congress has been mentioned very reluctant to do this. Do you think that there's any chance at all that Congress is going to

increase the corporate tax the tax on individuals as a very good. Chance that there will be a tax increase but again the administration is going to have to make a much stronger case for it than it has. The whole Congress not just the Ways and Means Committee has extremely sensitive to reaction from home. And the reaction from oh men has been. Overwhelmingly. Against any tax increase unless there is a comparable cut in federal aid and why do you think this is true. Why why has there been such a response from the general mass of the people when we are running a very heavy deficit. I think it's quite simple I think people are convinced in this huge budget of ours that there is some fat. And I think that they want to see some solid evidence on the part of the government to make a sincere effort to trim it out before they are willing to go along with the Congress increase almost Which what.

What parts of the budget do you think that most of the consumers would go along with cutting. I mean where are we going to make these cuts. I think foreign aid would be one of the prime candidates. This is not a. Program that the public generally approves of. Whether it's good or bad as the side point they don't like it. They also generally don't like agricultural spending. There's a kind of out here the different types of agriculture supports. Yes and it seems that the public thinks that when you raise the price to the farmer you're raising the price to the consumer too. And they don't like that. There's some question of the space program and there are some serious reservations about some parts of the poverty program. You know it's interesting your comment on the foreign aid program because you know this is a program that well going back to the Truman administration the presidents of

both parties both Republican Democratic Party have thought was absolutely essential in terms of America's foreign policy. And yet we find Congress. Well I think particularly roughly I guess perhaps from the middle of the Eisenhower administration Nine has been rather reluctant in this area haven't they just Martin are getting more reluctant every year. I think this is a reflection again of the sentiment from the voting public. Foreign aid is something that a great many people fear you could do without. I get their take Lee true when they look at various nations that we have befriended where they money and help over the years and aren't getting anything. In a way a real solid support friendship. Well I think the great American. Bulk of the American people feel that. We've. Tried to buy friends and. They're not responding.

In other words you think the mass of the people think that these foreign aid programs have not been successful. I think a great many American people feel that a great part of the foreign aid program has not been successful I don't think that anyone will cooperate with the fact that after World War Two and for some time after that we needed these problems but I think in the last few years more and more people have come to believe that. Perhaps we have reached a limit on what we can do. And just what you mentioned is possible places where the federal budget could be cut. Foreign aid. The space program and agriculture. Could be spamming. Could these be cut enough to be significant. Certainly I think good. Agriculture could be cut by several billion I believe. I'm not an expert on agriculture. Certainly the space program can be held back.

At no great loss at the moment. Certainly the poverty programs. Could be more sensibly Argand as they work at the poverty programs and just mention poverty programs or got a variety I guess that we might say would come under this broad tent. Poverty in the sense of things we have been attempting to do what are some of these. Well there's the manpower training program this can. Be quite broad from the Job Corps to the Neighborhood Youth Corps to the perhaps more productive ones. I like the Job Corps. Has begun to straighten out more since it's been handled by. Business firms. Some of the senators are now being run by business firms which know how to run things. He's letting the sort of people. Also of course there is. The problem of housing getting jobs for people.

I know President Johnson has proposed. A great new program in his words to provide jobs for they get all unemployed. You know you're talking about six million homes in 10 years and recently in a message to the Congress. Yes that's an interesting figure science in the same sentence he admitted that the government has built only half a million in the last 10 years. It doesn't seem to indicate that government necessarily knows how to do this job. Mr. Martin what about this manpower program. Has this been going well in terms of training the hardcore unemployed which primarily are the black people in the major urban cities of the state. They've had what the president has proposed. On the manpower program to put by a hundred thousand hard core unemployed to work is an extension of various programs that have already been in effect.

They have may have had some success. I might add that industry and business have been doing the same thing on its own in a business I think it's been more than willing to cooperate the big problem is to reach these people and. Give them a little more than just training for the job I mean you've got to have some sort of political training. You've got to have be able to read and write things like that. Well I was talking to a business executive of one of America's major corporations about this subject short a few weeks ago. He mentioned that he felt that American business could actually do the technical training with itself with little government help or support but technical training I mean teaching a man to work in a production line. But what they basically needed were to teach these people as you said to read and write some arithmetic and then a great many of the people out of the ghetto areas of the bigger been cities really don't have much beyond a fifth grade education in

terms of measurement of that they may actually have gone higher in a school but when you give them the tasks in terms of national standards they're about the first fifth grade level. Is this jibe in with some of your thinking on the subject and does it matter of fact the most successful programs that have been run are. In firms that have sort of set up a buddy system in other words you put a veteran worker would this this guy he works with him on more or less of a buddy power basis and they do need this help there's no doubt there's no doubt about this partnership in a sense on this kind of a program of business and government. It's Congress favor this type program do you anticipate that there will be any problems in the Congress of appropriating the money for this. There's going to be some problems in Congress. Any time money is mentioned this current session of Congress has always been in favor of job training. And you must remember that the Congress is never known and

Congress must abolish poverty programs. The Baker got flack about there has been in the administration of these programs are great many congressman feel that they have been too many frills in these programs and that you need to get down to more basics. On a magnet on the magnitude of a program like this I expect that there's going to be quite a bit sad. Who isn't. What isn't the major domestic problem or at least one of them. Perhaps two or three of our major domestic problems today one obvious way it seems to me is the inflation problem and this is tied into a great many different considerations one of which we touched on previously but the group another domestic problem of our times is the urban problem. The urban problem primarily in our really larger cities. The hardcore unemployed Bryner merrily again minority group people. The great bulk of them are black citizens. Now.

Is Congress as you view the tenor of Congress Mr. Woodridge are they willing to appropriate the money that may be needed to do something about these problems in terms of education training in terms of housing and so forth name saying My guess would be that. Congress will appropriate every penny that's needed. But I think they will question the need a great many times. So many of these programs duplicate overlap. They seem to be based on the assumption that no one can do these things except government. And actually the business community the educators the religious leaders are all working to do these things now. And without federal money. Certainly there are some cases where it would be too expensive. It wouldn't be good business to do some of these things but generally it is good business I think for any company. To upgrade its workers to upgrade its

customers and the consumer. And I think business recognizes this. And terribly apart from the social responsibility which I'm sure a business. Does take seriously. There's a good economic reason for doing these things. I mean it is a very fundamental economic reason for doing these things and now recognizing the law. Let's take a case in point. We've got two insurance companies that have to have suffered large losses in some of the ghetto areas where they've been riots and civil disturbances and some of them are now reluctant to insure property and there is this is again an area where Mr. Martin there's a possibility of some kind of a business government partnership or cooperation to help solve this kind of problem. Well very definitely I think that everyone in Congress recognizes the problem. I have insurance and there are several bills been introduced to provide some sort of government backing for insurance

and high risk areas and it is a very good possibility that with the cooperation of the insurance companies it will be some sort of legislation and if area would just take the form of the government guaranteeing your banking a certain percentage of the losses if it occurred. Yes if some some form of that way something some government guarantee of backing. I'm not sure that all the industry would welcome this because once you become a partner with government use fighting the government is pretty largely the majority partner and they tell you how to run the business quite often. Well we have followed this principle of this basic principle in some of our investments in certain countries under a idea our agency for International Development where in high risk areas the government has underwritten the prospect of the loss of the plant due to insurrection or riot or outright confiscation by the government there. So therefore there is some policy

of the government underwriting certain possible losses. I did not mean to rule it out. I meant that sometimes you have to look at all the fine print before you sign an insurance policy. Let's look at another facet of this problem. I view the tenor of the times correctly I think the majority of the American people are very disturbed about the increased crime and the disorders primarily gained in urban centers. Again President Johnson in his State of the Union message commented on this and said that we needed to do more. What is it that the federal government can do in this area Mr. Martin and isn't this primarily a local business primarily a local problem. It is but. Andy Bell the president is proposing 100 million dollars he asked for to and. To provide training more training for

police supplement to help give them better pay attract a better type 1 and. Put in more modern crime detection. You know it is this is a local problem and the president was very careful to point out that he did not want. No one wanted a national police force. But it is of such magnitude that because. The country is disturbed I think this is one of the great issues in the country today is this rising crime and the feeling that something has got to be done whether it's in this area or in some other area. Really let's bring up the issue just as we were talking about some of the all of this stems from the poverty syndrome in a sense in the big cities. These are sort of intertwined together the crime the racial disorder the poor the lack of education and so forth that again for the long run economic good leaving aside even the social questions are

we got to do something about this halfway. And I guess probably the main issue is how do we go about what's the most effective way to get at it. I think that's frightening Staley I think we have to do something. I think on the other hand we tend to overlook the fact that a great deal is already being done and a great deal will be done by the private sector and it is not entirely the job of the public sector to go out and fewer all the countries will you think that there here is another area where there is kind of a partnership of government and business and operating in some of these areas urban problems. I think that this is entirely possible in Ghana I would say let's look at the fine print. One thing to remember that many of these things are not going to be solved overnight you're not going to build rebuild cities overnight. It's going to take time. Let's look at another and the question is before this session of Congress

recently for example a number of bills have been introduced setting up quotas on the importation of certain types of products. We've got bills now before Congress. Setting up a limit on the amount that can be brought into this country and certain chemicals meet in steam in textiles as illustrations. Martin what's the prospect for these bills. I think it's going to be a very sticky wicket. And it is going to cause a fight in Congress. You know a little bit came up at the tail end of the last session. Great segments of business are utterly opposed to this type of slang. While some individual industries are clamoring for it I get a kiss to the floor of Congress you'll have a careful fight over it. You're just going to be a close vote. Whether we impose these quotas or not. I think you'd be hard to say. Personally I can't see them quotas being in being voted and I comment on that Mr. Morris.

I think one of the things that we ought to realize here is that not all of this settlement is economic again or is it all even political. Again I think it reflects the Republic feeling to some extent the discomfort with the Vietnam War and the discomfort with General de Gaulle. You might almost say the authors of some of these are. And I know I are perilous. Because. The American people are alarmed about the international situation. And so they tend to think more in the area of protection than they would have any time and many years back I misquoted you saying you think there is a revival of the protectionist sentiment. Well I hope not. Well it's interesting to observe this question because it you know it brings up to my mind

something it seems to me has been true of American business. There is not an American business viewpoint as you pointed out Mr. Martin or certain industries or groups that are for these quota bills. There are other in Austria leaders and business firms that violently oppose these bills. And it seems to me that this is a good thing for our type of society that we do find differences of opinion and so forth so these issues get debated pretty clearly. Well let's look at another bill that's probably going to be before Congress pretty soon. The president again mentioned that they're going to submit a bill to Congress having to do with the restriction of tourists American tourists going abroad. This of course ties into our balance of payments problem that we have such a large number of people going abroad spending money money more than others from other countries coming here and spending dollars that there's been an outflow of dollars with all of the consequences this brings upon

the president didn't spell out what the newer administration is going to present. But it has been several proposals talked about one is a head tax when you leave the country of so much in others. For every day you're out of the country it's going to be a tax of so much and it just would restrict. Are people going abroad. Well if if we enact this legislation this be the first time in history this country's ever placed any kind of limitations on its citizens travel. If this bill got much of a chance in Congress do you think it's borders. I would doubt it Danes clearly but I would ask Mr. Martin who is more active in covering the Congress than I I would say definitely not. And for two main reasons the first of course is that it just goes against the grain of this country to impose any kind of travel restriction on its citizens. Again I do not think they would vote any kind of head tax on their people because I this is I hate taxes a terrible kind of nation. To a politician and to the citizen.

There's one other point you've got to keep in mind. The people who are going to Europe these days are are not the upper crust. I mean the school teacher or the student everyone in all levels of society are traveling overseas now. It is of great concern of course to our balance of payments and I think one of the things you'll see is that on a voluntary basis a good many companies who perhaps might have sales meetings scheduled and some contraries will cancel and put them back. There are some voluntary controls in this area have never worked. It seems to me when I look at what has been done in other countries on a voluntary basis I can recall when Great Britain attempted to on a voluntary basis to get their citizens not to travel abroad for the Democrat reasons that this didn't work and they did finally booked on absolute limits of the amount of money.

In the case of Great Britain that anybody leaving Great Britain could take out of the country to spend. I'm not advocating that we ought to have compulsory methods but I would question whether voluntary methods are really going to work in this area. Well let's look at another issue before Congress this year. These are the so-called consumer bills. We had what have come to be called consumer bills starting last year. We've got some hold oldish that were in Congress the last session and it appears that they're going to be some new ones introduced what ideas Mr. Aldridge. Well among among them and are the so-called truth in lending which I think needs a different label because I doubt that the label itself is truthful. Then there is there are proposals to have more federal inspection of poultry and fish. There is some

movement toward. Giving the Federal Trade Commission more power to issue injunctions on its own without going into court. Oh there are dozens of these things really and I'm going to see if I recall correctly one holdover is the gas pipeline safety bill was not from the last session. Yes that is there. This is a strange Bill I can't understand the need for this number of people who have been killed by gas pipelines is so negligible that it's completely puzzling to me why you would legislate against them. Yeah I'm one of the major areas in this field of probably going to be full scale hearings on the study of automobile insurance rates and practices in writing and cancelling of policies. The president in his State of the Union message made mention of the S

and you know consumer issues this is this is going to be a real issue in this Congress it's an emotional issue and the president said Congress had a chance to go down as to consumer conscious Congress. So I think you'll see a great deal of attention paid in this this area. Will see a great many hearings. I don't know exactly how much legislation is going to come out of it this session. Do you think by the very nature of these bills they have great emotional appeal. Definitely. Everyone in this country is a consumer and everyone in the country I think has a story to tell at one time in his life. Oh you say only one thing that I think is very important to bear in mind on these is the fact that it gives a black eye to legitimate business. Certainly there are some fear businessman who are completely. Perhaps dishonest or who take advantage of the consumer. But that's such a

tiny minority and these things become exaggerated in the big hearings they take the headlines and so on the housewife tends to think that each and every businessman is trying to defraud or most of them marked the vast majority. Isn't there also the possibility of some of these bills being passed in the sense that they don't cost anything in the sense of appropriations many of the other things we've talked about cost hundreds of millions or billions of dollars and so this is very true. These bills would not cost a great deal of money. And one thing you got to remember about this Congress. This is an election year. And Congress senses the president called it a restlessness in this in this country. Congress senses a mood in this country a questioning mood. And. I think all of this varies on this. On this question.

In other words you think that there are going to be very careful about what they do this year. I think they're going to be extremely careful about what they do. And this is especially true in when it involves money. Mr. Martin isn't it true that in that case they were all set to go Rich I'm sorry to interrupt you but we've come to the end of our time for the Business Roundtable and I thank you both for a most informative discussion of the prospects in Congress for business this year. Participating in today's Business Roundtable for Jack Wooldridge editor of nations business and Wilbur Martin associate editor of the nation's business host for the program was Alfred L. Seeley dean of the Graduate School of Business Administration and at Michigan State University. The topic for next week's Business Roundtable is science technology and society. Guest on the program will be now competing for I guess I'm.

Retired chairman of the board Bendix corporation. This program was produced by the Graduate School of Business Administration and the Broadcasting Services of Michigan State University under a grant from nation's business a publication of the Chamber of Commerce of the United States. Business Roundtable is distributed through the facilities of national educational radio. This is an E.R. the national educational radio network.