Gold Clause Developments
Federal regulatory agencies seem to have been caught off guard by the passage of gold clause freedom legislation. The Securities and Exchange Commission, for example, was unaware for several days that the legislation had been passed.
Preliminary soundings indicate that the SEC will most likely not issue any guidelines for gold clause securities but await a submission for an offering containing other-than-dollar forms of payment. Any such offering would, they say, have to conform to present SEC guidelines.
The best source for detailed information remains the Institute on Money and Inflation, 314 E. Capitol St., Suite B-l, Washington, DC 20002.
Humphrey-Hawkins May Threaten
It is still a bit of a mystery whether or not the Carter administration is serious about pushing the latest "de-fanged" compromise version of the Humphrey- Hawkins Full Employment and Balanced Growth Act (H.R. 50 and S. 50). It may be that the recent flurry in the press is simply a public relations gambit to keep liberals and labor union interests from getting even more restive about the administration's commitment to their agenda.
Those who were committed to the original Humphrey-Hawkins approach have grumbled, and will probably continue to grumble, that the latest compromise has no "teeth," that there are not enough new mandatory programs and spending commitments to make the legislation any more than a set of unfulfillable promises. This approach is likely to lull potential opponents of the legislation into the belief that the bill is not as full of dangers as they had originally feared, and thus the opposition could be relaxed.
It is true that the current proposal is less laden with mandatory strictures than the original. However, the key for libertarians is the statement of policy and the institutionalization of central planning which is still present. The policy statement flatly says that the federal government is responsible for full employment, production and income, balanced growth, adequate productivity growth, proper attention to national priority needs and reasonably stable prices. It also says that every American has a right to a useful job at a fair rate of compensation. The italicized words are only the most obviously ambiguous terms which should create real trepidation in the heart of a lover of liberty.
The framework for central planning is laid in the requirement that the President submit an annual report to Congress which includes short-term and medium-term numerical goals, along with recommendations for programs to meet those goals. Too much of this is already done by government to be sure, but the requirement of an annual report full of numerical goals smacks of a five-year plan. If the bill is passed with few new mandatory programs for meeting the goals, you may be sure that subsequent years will see the addition of new mandatory programs. The implications are ominous.
The recent incredible increases in Social Security payroll taxes are being widely perceived as a stopgap measure which still won't save the system. There may be a chance to move toward fundamental reform in the next year or two. The most promising avenue, from the standpoint of potential political support, seems to be separation of the retirement savings portion of the program from the redistributive or welfare aspects, such as disability, Supplemental Security Income and Medicare. There may even be hope for a voluntary system or at least a system in which, though savings are forced, the worker has a choice about whether he will invest his forced savings in a government or private pension security plan.
I'm guessing that the reaction to the additional Social Security tax bite will be more angry and widespread than the politicians have anticipated. If this is so, there may be an opportunity to promote something constructive. Please write to your Congresspeople and let them know how outraged you are.
Several recent publications offer valuable insights into Social Security and/or proposals for reforms in the direction of more voluntarism. "Retirement Security Income" published by the Institute for Liberty and Community (Concord, VT 05824) has an interesting proposal for a semi-voluntary program. "Financial Crisis in the S.S. System" by Robert S. Kaplan (American Enterprise Institute, 1150 17th St., NW, Washington, DC 20036) is a useful analysis. And "The Crisis in Social Security," is a many-sided compendium put out by the Institute for Contemporary Studies (260 California St., #811, San Francisco, CA 94111).
At this writing, the shape of Carter's tax proposals is still uncertain. Whether or not he will seriously attempt to eliminate the "three-martini-lunch," the tax credit for home mortgage interest or special treatment of capital gains is unclear. What is clear is that there will be some sort of "reform" proposal, which should offer the opportunity to make other proposals which are more sensible during the ensuing debate.
Republicans and conservatives will probably support an across-the-board tax cut along the lines of what Rep. Jack Kemp (R-NY) has been pushing for about a year. The National Taxpayers Union will probably support this plan, along with an indexing proposal, the elimination of double taxation of corporate dividends, and elimination of taxes on capital gains which are reinvested. Libertarian Advocate, while insisting that taxes are evil per se will support a substantial tax cut along with a proposal for a flat-rate income tax and a "tax ballot" to allow taxpayers to designate the purposes for which their money can be spent.
Whatever the program you might support, please let your Congressman and Senators know about it. (US House of Representatives, Washington, DC 20515; US Senate, Washington, DC 20510).