Show BUSIES t STOCK I MARKET by S r SPORTS r BUSINESS ANTI ANn THE CONGRESS Management Is eager to see what comes next month when the bumper crop of freshman lawmakers take their seats scats Inthe in inthe inthe the Sena Senate te and the I louse Most of the newcomers are committed to revamping federal Lax tax laws establishing a national health Insurance plan and stepping up trust anti action Legislation in these areas will create problems for placing heavy upward pressure on costs But the liberal Democrats coming into greater power on Capitol Hill are not all anti anti- business per perse se Many are quite realistic and convinced that if their party is to capture the White While House in 1976 It must help small business So next years year's tax code changes will favor the smalls Democrats will try to win points by pushing a proposal making the basic 22 percent tax on the first of oC annual corporate earnings apply to the first or perhaps even A surtax of 26 percent on earnings above this cutoff would apply Cost Factor Disturbing Such a tax change would be welcomed by management although any benefits derived could be whittled down or even wiped out by new spending programs and other legislation whose net effect would be to hike business costs Already costs are climbing at a dizzying pace and to the consumer are meeting increasingly stiff resistance as business flags and unemployment increases Half of the nations nation's jobs and 40 10 percent of oC the Gross National Product are produced by individual individual individual in in- businessmen part- part and small corporations How these fare over the next two years will have an important bearing on the 1976 campaign all of oC which will depend on cost factors shaped by legislation that is yet to come Recession Versus Inflation Economists are sharply divided over how best to deal with a recession accompanied by inflation tion President Ford and his advisers feel that flat business for the next six months would help more than it would hurt in the long run They are resisting Democratic proposals to prime the economy with expensive government pro pro- grams But neither Republicans nor Democrats are leveling fully with the American people Part of oC the blame for inflation lies lits with public officials themselves In their desire to maintain their popularity they tend to give assent to pleas covering a multitude of worthy purposes extending government government govern govern- ment services far in excess of what we can afford Even with 12 percent inflation they still seek to temporize Fiscal and monetary restraint is alien to the political animal he succumbs too easily to the pressures of conflicting groups One Bright Spot The next six months will surely be rough for business but in the end it could emerge from the of recession much stronger than before One bright spot is continued wide skepticism regarding wage- wage price controls High now even labor seems convinced that another round of these would push the economy into deeper distress Business and the nation need needa a boost in productivity to end shortages and create new jobs That boost would only be further deferred if we were to resort once again to mandatory controls The Research Department of oe Babson's Reports and the stall staff of Babson's Washington Forecast Letter feel that President Ford strongly backed by public opinion can head hlad off the attempt that will surely be made in Congress to controls While Whine classic liberal liberal- conservative divisions ions in national politics are becoming steadily more blurred this does doo not necessarily mean that conservation and moderate power in Washington is on the verge of oC being totally eclipsed eclipsed- The old coalition of Southern Democrats and conservative Republicans may seem to be washed up owing to attrition but the nucleus is there and could be rallied once again by moderates of both parties |