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Treas.
HJ
10
.A13P4
v. 217
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U. S. [Treasury. Se^fc
Press Releases;]
. . .
..1
LIBRARY
MARl3f 980
H O C M 5. •>•}•<
Department of lb"TREA$URY
TELEPHONE 566-2041
&HINGTON, D.C. 20220
September 18, 1978
FOR IMMEDIATE RELEASE
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $ 2,200 million of 13-week Treasury bills and for $3,400 million
of 26-week Treasury bills, both series to be issued on September 21, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
13-week bills
maturing December 21, 1978
Price
Discount
Rate
98.014 a/
98.002
98.007
7.857%
7.904%
7.884%
Investment
Rate 1/
8.13%
8.18%
8.16%
26-week bills
maturing March 22. 1979
Price
Discount
Rate
95.971b/ 7.969%
95.962
7.987%
95.966
7.979%
Investment
Rate 1/
8.42%
8.44%
8.43%
a./ Excepting 1 tender of $10,000
b/ Excepting 1 tender of $10,000
Tenders at the low price for the 13-week bills were allotted
Tenders at the low price for the 26-week bills were allotted 50%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTS AND TREASURY:
Location
Received
Boston
$
23,525,000
New York
3,347,880,000
Philadelphia
15,670,000
Cleveland
27,890,000
Richmond
25,190,000
Atlanta
24,290,000
Chicago
166,915,000
St. Louis
34,105,000
Minneapolis
4,795,000
Kansas City
37,970,000
Dallas
14,375,000
San Francisco
166,905,000
Treasury
TOTALS
5,040,000
$3,894,550,000
Accepted
$
22,525,000
1,858,560,000
15,670,000
27,890,000
25,190,000
24,290,000
71,915,000
20,105,000
4,795,000
37,970,000
14,375,000
71,705,000
5,040,000
Received
Accepted
$
25,700,000
5,365,380,000
7,990,000
99,145,000
24,420,000
14,680,000
316,300,000
27,240,000
54,620,000
33,760,000
6,890,000
205,145,000
$
7,875,000
$2,200,030,000 c/: $6,189,145,000
£/Includes $335,520,000 noncompetitive tenders from the public.
fL'Includes $186,925,000 noncompetitive tenders from the public.
1/Equivalent coupon-issue yield.
R-1170
10,540,000
3,059,520,000
7,490,000
13,025,000
12,420,000
13,180,000
186,300,000
11,240,000
27,620,000
16,080,000
4,890,000
30,145,000
7,875,000
$3,400,325,000d/
UNDER SECRETARY OF THE TREASURY
BEFORE THE
f
SIXTH ANNUAL CONFERENCE
NATIONAL ASSOCIATION OF FOREIGN-TRADE ZONES
HONOLULU, HAWAII
SEPTEMBER 18, 1978
Governor Ariyoshi, Mr. Maxey, ladies and gentlemen:
>
t
One needs no special reason to be happy in Hawaii. However,
I am particularly pleased to be here with you today. I know how
deeply Senator Inouye regrets being unable to join you, and I am
grateful to him for asking me to speak in his place.
Hawaii and the U.S. Treasury Department's Customs Service,
which I have the honor to represent today, have something in
common. About the time that Customs was establishing America's
first source of revenue, King Ka-may-a-maya the First was welding
this magnificent chain of islands into a single, viable political
unit. And one of his first acts, after proclaiming the Kingdom
of Hawaii in 1795, was to decree that duties be imposed on all
shipping and on all goods landing here. His Customs Service, I
am told, was somewhat less formal than ours. His collectors were
paddled out to incoming ships in out-rigger canoes. Customs
duties were determined by the collector's mood at the moment.
Nevertheless, Customs revenues helped to finance Hawaii, just as
they did the mainland I
Today's Hawaii seems a most appropriate setting for this
sixth annual conference of the NAFTZ, and not just because of its
scenic splendor.
Foreign Trade Zone Nine at Honolulu, and its sub-zone at
Ewa, provide the largest volume of merchandise movement in the
United States. During Fiscal 1977, Zone Nine received a total of
4,702 short tons valued at $13,549,233, and forwarded a total of
4,153 short tons valued at $12,152,015. The zone handled 204
different commodities from 36 countries of origin. It served
some 206 business firms, of which 97 occupied zone facilities on
a continuous basis. Sponsored by the state's Department of
Planning and Economic Development, the Honolulu zone consists of
more than 235,000 square feet of terminal space for warehousing,
exhibition, and processing. Its subzone is a petroleum refinery.
I understand the State of Hawaii, as grantee, is proceeding with
plans to move the zone to the Diamond Head Terminal at Pier Two,
Honolulu Harbor, before the end of 1980.
The development and progress of the Hawaiian Foreign-Trade
Zone is consistent with the progress of these comprehensive
special U.S. Customs Service facilities at ports of entry
throughout the United States.
-2I would like to talk with you today about Treasury's role in
the FTZ concept.
In doing so, I feel rather like the survivor of the
Johnstown flood who made his mark in life lecturing about that
1889 debacle.
When he passed through the pearly gates, he asked St. Peter
if he might contribute his expertise to the occupants of heaven.
Obligingly, St. Peter prepared the celestial lecture hall, and
informed the speaker that he had a packed house. "However," St.
Peter Cautioned, just seconds before the speech was to begin, "I
think you ought to know that Noah is in the audience."
I am certain we have many Noahs in the audience today!
During the fiscal year 1977, FTZ activity involving 900
firms rose by 30 percent over the previous fiscal year. Existing
zones reported a total of $663 million in goods received,
compared with $507 million in fiscal 1976. Merchandise shipped
from FTZs amounted in value to $598 million, compared with $468
million in the previous fiscal year. Obviously, the advantages
of FTZs, including the prestige they lend to an industrial
development area, are apparent to you all.
For those of you who may not be familiar with the Customs
Service's role regarding FTZs, allow me to explain. Foreigntrade zones are enclosed areas which are considered to lie
outside U.S. Customs territory. You might say they are the
domestic versions of what are known internationally as free-trade
zones.
As a matter of fact, they owe their origin to the free ports
that existed in Northern Europe in the medieval days of the
Hanseatic League. Cities participating in that historical
trading union had special status that placed them outside the
customs jurisdictions of their national governments. When these
privileges were later withdrawn, sites known as "free-trade
zones" were established within port areas. But it wasn't until
1934 that the United States Congress authorized similar areas
within this country. It chose to call them "foreign-trade
zones."
Our FTZs are located in or near U.S. Customs ports of entry,
and are operated as public utilities by qualified corporations
under Customs supervision. Authority for establishing these
rapidly proliferating facilities is granted by the Foreign-Trade
Zones Board, with Customs approval, under the Foreign-Trade Zone
Act of 1934. The board has its headquarters within the U.S.
Department of Commerce in Washington, D.C.
The advantage of foreign-trade zones are many. Chief among
them is the fact that foreign goods may enter their areas dutyand quota-free for an unlimited period of time. These goods may
-3-
be stored, assembled, combined with domestic or other foreign
materials, used in manufacturing processes, or exhibited.
Domestic merchandise moved into FTZs for export are considered to
be already exported for purposes of excise tax rebates and
drawback.
^^ ^
Thus, FTZs encourage international commerce while providing
jobs for American labor.
Allow me to repeat — formal U.S. Customs entry procedures
and payment of duties on imported merchandise are not required
unless and until that merchandise enters U.S. Customs territory
for domestic consumption.
When that is the case, the importer has the choice of paying
duties either on the original foreign materials — in which case
he must file a request with Customs for "privileged" treatment —
or on the end product — in which case the components or
materials used are "nonprivileged."
Most often, importers request privileged treatment, since
the Customs duty on the end product is higher than on its
components. Important exceptions include motorcycles,
typewriters, computers, and automobiles.
With more and more foreign firms electing to manufacture or
assemble their products in U.S. FTZs for American consumption,
these exceptions have raised an issue that the U.S. Customs
Service is now examining.
When these end products are produced, the present
appraisement practice requires that labor and overhead costs
incurred, and profit realized, be allocated between the
privileged and nonprivileged components according to their
relative values. These allocated costs are then included in the
dutiable value of the article when it enters U.S. Customs
territory.
In response to a rulemaking petition from the National
Association of Foreign-Trade Zones, the U.S. Customs Service will
issue, in the near future, an advance notice of proposed
rulemaking soliciting comments regarding the advisability of
continuing the appraisement practice.
Fiscal 1977 saw nine more communities added to the evergrowing list of foreign-trade zones. At the year's end, there
were foreign-trade zones at 28 U.S. ports in 22 states. Today,
so port communities have active zones.
rh nA?4.C2StS °f locatin9 assembly and industrial operations in
tne united States become increasingly favorable for firms engaged
n ? ^ f r n a t l 0 n a l t r a d e ' exports from U.S. FTZs are expected to
grow at an even greater rate.
-4-
World trade has multiplied almost ten-fold since the postWorld War II period. Figures for 1951 were around $76 billion.
By 1976 they were $800 billion. Probably the greatest
stimulation to international trade came from the Truman Doctrine,
the Four Point Program, the Marshall Plan, and the aid the United
States gave to Europe and the world in general following that
war. Here at home, United States trade has increased from $35
billion in 1960 to $270 billion in 1977. Estimates are that it
will increase to $300 billion by 1980.
Trade is no longer a matter of transferring raw materials
and basic commodities. Today it involves transnational shipments
of sophisticated and complex products and components. Where
slightly more than a decade ago U.S. Customs was collecting $1.5
billion in revenues annually, it now collects more than $7
billion.
Despite this tremendous growth in volume, Customs has, for
many years, had to cope with antiquated laws which impede its
modernization and delay the introduction of automated procedures
designed to speed up commercial transactions.
The last major piece of legislation dealing with Customs
administrative reform was enacted more than twenty years ago.
Since that time the value of imports and the amount of duty
collected have increased five-fold. Entries have tripled, from
1-1 million in 1956 to 3.4 million in 1976. Entries processed
now average more than 2,600 per Customs import specialist per
year — an increase of 94 percent over the past twenty years.
But today finds us at the threshold of a new and more
progressive era. The Customs Procedural Reform Bill — the most
comprehensive overhaul of U.S. Customs laws in a generation —
has cleared a conference committee of the Senate and House of
Representatives, and is expected to win final Congressional
approval any day now.
For the FTZ user who imports foreign goods into the United
States, the bill, when enacted into law, presents many attractive
facets.
For instance, it will permit Customs to release goods to
importers immediately upon presentation of appropriate entry
documents. It will enable Customs to adopt a long-planned
automatic merchandise-processing and revenue-collecting system
that will speed up delivery of merchandise to importers, reduce
paperwork, cut the number of financial transactions, and provide
faster and more accurate statistical data.
Section 592 of the Tariff Act of 1930 will be amended to
remove the harsh initial penalty assessments now levied on
importers for negligence, gross or simple, and to bar any penalty
for non-negligent clerical errors or mistakes of fact. It will
also place on the Government the burden of proof in fraud cases,
and give the courts a greater role in penalty rulings.
-5-
Those of you who import, or who deal with importers, will
know that the importing community — including major U.S.
corporations — have long protested the exorbitant penalties —
some of them in the millions — imposed for relatively minor
entry errors, and the fact that normal judicial redress has been
denied those penalized.
Under the bill shortly to be enacted into law, the
Government will have to show proof of fraud through a
preponderance of the evidence, rather than through so-called,
"clear and convincing" evidence, as is now the case.
One of the major obstacles to Customs adoption of modern
merchandise-processing methods has been the requirement that each
importation be represented by a separate entry document
accompanied by payment of the estimated duties owed on the
merchandise when it comes into Customs territory. Each entry
must then be processed separately and a separate bill for
additional duties or refund checks for overpayment has to be
prepared and mailed to the importer. Obviously, this results in
an avalanche of paperwork, plus substantial administrative costs
and burdens on Customs, the importers, and the importers' agents,
the customhouse brokers.
The new Customs law will alleviate this situation by
permitting the separation of the entry and reporting process
from the duty-collection process. Importers could take delivery
of their importations by providing Customs with necessary
documents. Within a specified time, the importer will be
required to supply details of the importation and pay the duties.
The practical effect of this new procedure will be to compress
the many individual duty payments into single, weekly payments,
provide immediate delivery of imported goods, and improve the
quality of import statistics.
The new Customs law would also enable Customs to introduce
full-scale implementation of its Automated Merchandise Processing
System, commonly referred to as AMPS. This computerized entry
filing system monitors information on entries, liquidations, and
duty collections. It produces data used for control of warehouse
inventory, in-bond shipments, importers' accounts, and
merchandise quotas, thus simplifying importers' and Customs'
bookkeeping, and providing more accurate and reliable data to the
Bureau of the Census.
Many other facets of the Customs Procedural Reform Bill will
benefit importers using foreign-trade zone facilities. In fact,
the bill itself represents the culmination of cooperative efforts
of the Customs Service, the importing community, and Congress.
I might add that other provisions of the bill will delight
those of you who combine business with pleasure on your trips
abroad. The duty-free allowance on articles bought overseas will
-6-
increase with passage of the Customs Procedural Reform law to
$300 from foreign countries and $600 from insular possessions of
the United States.
The Customs Procedural Reform bill, when passed, will
further accelerate Customs' current efforts to establish
increased rapport between the Service and the importing
community.
One result of this intensified dialogue has been the
improved and streamlined procedures introduced by Customs for
handling "hot" quota entries. These are now moved through the
various Customhouse work stations at greater speeds than ever
before, allowing brokers more rapid and reliable feedback as to
the status of these important items.
Another vital subject under discussion at meetings between
Customs and the trading community is improved cash flow for
brokers, importers, and the Service itself.
Meetings between Customs officials and importers have led to
a new procedure for expediting the release of containerized
cargo. Containers are now examined at ground level and released
before the arrival of the importer's conveyance. Thus, demurrage
costs and handling expenses are reduced and the importers are
able to obtain their merchandise more quickly.
With advanced technology and modern management concepts, the
189-year-old U.S. Customs Service is rapidly becoming a
computerized and cost-effective organization.
During Fiscal 1977, Customs processed $150 billion worth of
imported merchandise at a cost to the taxpayer of only $6 for
every $100 collected.
Clearly, the Treasury Department is keeping abreast with the
momentum of modern business. We want, as well, to keep in close
contact with the progress, and the problems, of the individuals
involved in commerce and trade.
That is why we welcome opportunities such as this to meet
with representatives of trade associations.
I know I have profited from being with you today, and I hope
I have added something worthile to your meeting. It certainly
has been a great pleasure for me to be here, and I thank you so
much.
oOOo
FOR RELEASE ON DELIVERY
EXPECTED AT 9:30 A.M.
September 19, 1978
TESTIMONY OF THE HONORABLE ROGER C. ALTMAN
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE ON ENERGY AND
POWER OF THE HOUSE INTERSTATE AND
FOREIGN COMMERCE COMMITTEE
Mr. Chairman and Members of the Subcommittee:
I am pleased to present the views of the Treasury Department
on H.R.*13931, the "Pacific Northwest Electric Power Planning
and Conservation Act."
The Administration's general position on H.R. 13931 is
set forth in the testimony this morning of the representative
of the Department of Energy. I will comment in more detail
on the financial structure of the bill. Specifically, my
comments will be confined to the debt financing and tax
provisions of sections 6, 8, and 9 of H.R. 13931.
The Treasury's major concern with sections 6, 8, and 9
is that they would result in Federal guarantees of tax-exempt
obligations issued by state or local governments. That is,
—Section 6(b) would authorize the Bonneville Power
Administration (BPA) to contract to purchase electric
power resources from non-Federal entities, which
would include state and local governments. Thus,
private holders of state and local bonds issued
to construct electric power facilities could be
guaranteed that the Federal government would
provide the funds to pay off"the bonds.
B-1172
- 2—Section 6(f) would authorize BPA to enter into
agreements with such entities "to fund or secure
debt incurred in the investigation and initial
development of such resources."
—Section 8 would amend section 13 of the Federal
Columbia River Transmission System Act (which
currently contains limited authority for BPA
to borrow from Treasury to finance the construction
of the BPA transmission system) to authorize
unlimited authority for BPA to borrow from
Treasury to finance contracts and agreements
entered into under sections 6(b) and 6(f). Thus,
private holders of bonds secured by such
contracts and agreements could be assured that
Treasury funds would be available to the extent
required to make timely payment of principal and
interest on the bonds.
—Section 9(e) would confer on the BPA Administrator
authority to exempt from Federal income taxes
the interest on obligations issued by state or
local governments to finance construction of
facilities for production of electric power
for purchase by BPA. Thus, the Federal guarantees
provided under sections 6 and 8 could be extended
to tax-exempt debt.
The Administrator is authorized under section 9(e) to
designate tax-exempt status if he determines that the electrical
energy acquired from the facility "will not be utilized over
the life of the project in whole or in major part by a person
who is not an exempt person." The term "exempt person" is
defined by the Internal Revenue Code to mean generally a
state or local governmental unit or a tax-exempt organization.
The effect of section 9(e) is to amend the Internal
Revenue Code indirectly by permitting tax-exempt financing
of municipal electric utilities which construct generating
facilities to supply power to BPA. In the absence of this
section, if H.R. 13931 were to become law, the revised
structure of BPA financing would deny availability of such
tax-exempt financing.
- 3This denial arises because the Federal tax laws
providing and interpreting tax-exempt interest generally
preclude the grant of tax-exempt interest coupled with
the backing of Federal credit. BPA is a Federal agency,
and under H.R. 13931 BPA would support bonds issued by
municipal electric utilities selling to BPA under an
arrangement where BPA agreement to purchase the power
supported the credit behind the bonds. Under current
tax rules, this arrangement would preclude the grant of
tax-exempt status to those bonds.
It is important to understand why tax exemption and
Federal backing should not be granted to the same obligations.
The prohibition against Federal backing of tax-exempt
obligations is a longstanding policy of great importance.
Placing the credit of the United States behind an obligation
that is exempt from Federal taxation creates a security
that is superior to direct obligations issued by the
U.S. Treasury. Thus, the existence of Federally-backed
tax-exempt obligations could create serious Federal debt
management problems. In addition, Federal guarantee of
tax-exempt obligations creates a security that is superior
to all other tax-exempt securities issued by state and
local governments. This adds to pressures on tax-exempt
markets and consequently tends to increase the borrowing
costs of schools, roads, hospitals, and other essential
public facilities.
It is generally recognized that tax exemption of
municipal bonds is an inefficient means of public financing,
because the revenue loss to the Federal Treasury greatly
exceeds the interest savings to the municipal borrower.
Consequently, it is much more efficient to finance Federal
programs with taxable bonds. Accordingly, the Public Debt
Act of 19 41 prohibits the exemption of interest on Treasury
or Federal agency debt from Federal income taxes. Consistent
with the spirit of that Act, Congress has generally determined
in recent years that Federal guarantees should not be used
to finance Federal programs indirectly with tax-exempt bonds.
Attached to my statement is a list of 15 statutes enacted
since 1970 which prohibit Federal guarantees of tax-exempt
obligations.
- 4Recently, Congress rejected this double benefit — both
the tax exemption and the Federal guarantee — in the case
of the New York City Financial Assistance Act. The Congress
determined that it was inappropriate to provide New York City
with this double benefit, even in connection with a program
necessary to insure the City's financial survival.
It should also be noted that this is not the first time
that an issue involving BPA has arisen in connection with
the rules of tax-exempt interest that relate to Federal
guarantees. In 1972, a Treasury regulation interpreting
the provision in question was issued with generous grandfathering rules specifically protecting BPA's plans at
that time. Special consideration was given to BPA since
it had relied on a proposed regulation that would have taken
the opposite position. The principle enunciated in the
Treasury regulation represents sound policy, and should not
be overruled.
We would also like to direct your attention to other
more technical problems raised by section 9(e). As previously
mentioned-, this section would permit the Administrator of
BPA to designate which bonds are to be accorded tax-exempt
status. We would much prefer to rely on more traditional
means for determining tax-exempt status of debt instruments.
Ordinarily, rules for determining tax-exempt status are
specified by statute and regulations. It is compliance
with such rules, and not the designation of any particular
individual, that determines tax exemption. This allows the
Federal tax laws to be administered in a uniform manner
by the Internal Revenue Service.
We would also note that section 9(e), should it become
law, would be a highly technical provision upon which great
reliance will be placed for guidance. Therefore, considerable
attention must be devoted to minimizing ambiguity and
uncertainty. For example, it is unclear whose "debt
obligations" are meant to be covered, in what manner
obligations are not to be "affected", what "resources"
are included and how they are "constructed", and so on.
Precise statutory language is extremely important to
provide guidance to bond issuers and to allow for ease of
administration.
- 5I would like to turn now to the interest rate provisions
of section 8 of H.R. 13931.
Under section 13 of the Federal Columbia River Transmission
System Act of 1974, BPA borrowings from Treasury are to bear
interest rates comparable to rates prevailing in the market
for "similar bonds". The Treasury has determined under the
1974 Act that the interest rate on BPA!s long-term borrowings
from the Treasury will be based on current market rates on the
highest quality (triple-A) utility bonds.
Section 8 of the bill would amend section 13 of the Act
to put a ceiling on the interest rate on BPA borrowings
from the Secretary of the Treasury equal to the rate that
would be charged if BPA borrowed from the Federal Financing
Bank (FFB). The FFB is an agency established within the
Treasury by the Federal Financing Bank Act of 1973. Currently
the FFB lends to other Federal agencies at an interest rate
one-eighth of one percent above the Treasury's own market
borrowing rate.
Consequently the FFB rate is generally somewhat lower than
the triple-A utility bond rate, and section 8 of the bill
would result in some reduction in BPA's cost of borrowing.
For example, if BPA had borrowed from the Treasury last
week the interest rate, would have been about 8-5/8 percent
on the basis of triple-A utility bond rates and about 8-1/2
percent based on the FFB rate. This spread of 1/8 of one
percent between the triple-A rate and the FFB rate is somewhat
smaller than normal at this time in part because of the
current relatively light volume of corporate bond issues.
A more normal spread might be about 1/4 of one percent or
slightly more.
The Administration is opposed to section 8 of H.R. 139 31
and supports the concept in the 19 74 Act that BPA financing
should be on a basis comparable to the private utility
industry. However, to avoid confusion as to the interpretation of the 1974 Act the Administration has recommended
that section 13 of the Act be amended to tie the interest
charged BPA to market yields for triple-A rated nonGovernment utility bonds. This would be consistent
with our current practice, and the Treasury Department
urges adoption of this recommendation.
- 6 I should also note that the interest rate language
proposed in section 8 of H.R. 13931 is unclear.' While
setting the FFB rate as a ceiling, it would require the
Treasury "to provide for a rate comparable to the rates
prevailing in the market for similar bonds issued by
Government corporations...". The bill does not indicate
which Government corporations1 bonds should be used for
comparison. Also, trading is thin and price quotations are
often unreliable in the securities market on marketable bonds
that were issued by Federal agencies prior to the establishment of the FFB. In any event, those rates would be likely
to be higher than the FFB rate. In addition, BPA bonds
would be unique in that the legislation would also require
the Secretary of the Treasury to take into account "financing
practices of the utility industry" when setting the terms
and conditions on the BPA loans. Utility industry practices
include setting the redemption value of the bonds on
specified call dates when the lo^an is made rather than
pricing them at market value on the redemption date, which
is the FFB's usual requirement.
Finally, in keeping with the provisions of the
Congressional Budget Act of 1974, the Administration
believes that the authorization of unlimited authority
for BPA to borrow from the Treasury under section 8 of
the bill should be amended to authorize borrowing in
such amounts as may be provided from time to time in
appropriation acts.
In summary, Mr. Chairman, the provisions of sections 6,
8, and 9 of H.R. 13931 as presently drafted would result
in very inefficient financing, and the Treasury Department
recommends against the enactment
of those provisions.
OoO
I would be happy to try to answer any questions.
Statutes which preclude Federal guarantees of
tax-exempt obligations
Loans for modernization and construction of hospitals and other medical
facilities; P.L. 91-296, June 30, 1970, 42 U.S.C. 291j-7(e). 1/2/1/
New Community debentures; P.L. 91-609, December 31, 1970, 42 U.S.C.
4514. 2/3/
Water and waste facility loans sold out of the Agricultural Credit
Insurance Fund; P.L. 91-617, December 31, 1970, 7 U.S.C. 1926(a)(1).
2/3/
Farm Credit Administration member institution guarantees; P.L. 92-181,
December 10, 1971, 12 U.S.C. 2204.
Academic facilities loan insurance, P.L. 92-318, June 23, 1972,
20 U.S.C. 1132c-5.
Washington Metropolitan Area Transit Authority obligations; P.L. 92-349
July 13, 1972, D.C. Code 1-1441 note. 2/3/
:
Loans sold out of the Rural Development Insurance Fund; P.L. 92-419,
August 30, 1972, 7 U.S.C. 1929a(h). 2/
Vocational rehabilitation facilities mortgages; P.L. 93-112,
September 26, 1973, 29 U.S.C. 773(c).
National Railroad Passenger Corporation guaranteed obligations;
P.L. 93-146, November 3, 1973, 45 U.S.C. 602(g).
Loan guarantees for initial operating costs of health maintenance
organizations; P.L. 93-222, December 29, 1973, 42 U.S.C. 300e- (c) (3).2/
Loan guarantees to assist the economic development of Indians and
Indian organizations; P.L. 93-262, April 12, 1974, 25 U.S.C. 1451.
State housing finance and State development agency obligations;
section 802 of P.L. 93-383, August 22, 1974, 42 U.S.C. 1440. 2/3/
Guarantees of obligations issued by coastal State and local governments
to finance projects associated with the development of Outer.
Continental Shelf energy resources; section 7 of P.L. 94-370,
July 26, 1976, 16 U.S.C. 1456a. 2/2/
Guarantees of Virgin Islands Bonds; P.L. 94-392, August 19, 1976,
48 U.S.C. 1574(a). 2/
Loan guarantee program for acquisition of property (urban renewal);
section 108 of P.L. 93-383 as'amended by P.L/95-128, October 12, 1977,
42 U.S.C. 5308. 2/3/
Superceded by P.L. 93-641, January 4, 1975, 42 U.S.C. 300q.
Statutes which authorize guarantees of taxable municipal obligations.
Statutes which authorize interest subsidies on guaranteed taxable
municipals.
FOR RELEASE AT 4:00 P.M.
September 19, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,700 million, to be issued September 28, 1978.
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $5,709 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
June 29, 1978,
and to mature December 28, 1978 (CUSIP No.
912793 V2 9), originally issued in the amount of $3,403 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $3,400 million to be dated
September 28, 1978, and to mature March 29, 1979
(CUSIP No.
912793 X6 8 ) .
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing September 28, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,532
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Daylight Saving time,
Monday, September 25, 1978. F^rm PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
records of the Department of the Treasury.
B-U73
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New Ydrk their positions in and
borrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury. A
cash adjustment will be made on all accepted tenders for the
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on September 28, 1978, in cash or
other immediately available funJs or in Treasury bills maturing
September 28, 1978. Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
FOR IMMEDIATE RELEASE
September 19, 1978
Contact: Alvin Hattal
Phone: (202) 566-8381
TREASURY DEPARTMENT ANNOUNCES
FINAL COUNTERVAILING DUTY
DETERMINATION ON ELECTRICAL
SOUND EQUIPMENT AND ELECTRONIC
MUSICAL INSTRUMENTS FROM JAPAN
The Treasury Department today announced its final
determination that exports of electrical sound equipment
and electronic musical instruments do not receive benefits
from the Government of Japan that constitute bounties or
grants under the Countervailing Duty Law.
The Countervailing Duty Law requires the Secretary of
the Treasury to collect an additional duty equal to any
"bounty or grant" (subsidy) paid on merchandise exported to
the United States.
The only program alleged to be a subsidy relates to
the forgiveness of the Japanese commodity tax on exports.
Treasury has held consistently that the non-excessive
rebate or remission of such indirect taxes, which are
directly related to an exported product, does not constitute
a bounty or grant. Treasury's position was recently
sustained by the Supreme Court in the Zenith case.
Evidence developed during the investigation showed no
indication that the forgiveness of the Japanese commodity
tax upon export was excessive or otherwise operated in such
a way as to be considered a subsidy.
Notice of this determination appears in the Federal
Register on September 19, 1978.
Imports of this merchandise from Japan were valued at
approximately $100 million during the first half of 1977.
*
B-1174
*
*
*
*
kpartmentoftheTREASURY
ft
IASHINGTON, D.C. 20220
TELEPHONE 566-2041
September 19, 1978
FOR RELEASE AT 4:00 P.M.
TREASURY TO AUCTION $1,500 MILLION OF 15-YEAR 1-MONTH BONDS
The Department of the Treasury will auction $1,500
million of 15-year 1-month bonds to raise new cash.
Additional amounts of the bonds may be issued to Federal
Reserve Banks as agents of foreign and international
monetary authorities at the average price of accepted
competitive tenders.
Details about the new security are given in the
attached highlights of the offering and in the official
offering circular.
oOo
Attachment
B-1175
(over)
HIGHLIGHTS OF TREASURY
OFFERING TO THE PUBLIC
OF 15-YEAR 1-MONTH BONDS
TO BE ISSUED OCTOBER 10, 1978
September 19, 1978
Amount Offered:
To the public
Description of Security:
Term and type of security..
Series and CUSIP designation
$1,500 million
15-year 1-month bonds
Bonds of 1993
(CUSIP No. 912810 CD 8)
Maturity date November 15, 1993
Call date
Interest coupon rate
No provision
To be determined based on
the average of accepted bids
Investment yield To be determined at auction
Premium or discount
To be determined after auction
Interest payment dates May 15 and November 15
(first payment on May 15, 1979)|
Minimum denomination available $1,000
Terms of Sale:
Method of sale
Accrued interest payable by
investor.
Preferred allotment
Deposit requirement 5% of face amount
Deposit guarantee by designated
institutions
Key Dates:
Deadline for receipt of tenders
Yield auction
None
Noncompetitive bid for
$1,000,000 or less
Acceptable
Wednesday, September 27, 1978,
by 1:30 p.m., EDST
Settlement date (final payment due)
a) cash or Federal funds
Tuesday, October 10, 1978
b) check drawn on bank
within FRB district where
submitted
Thursday, October 5, 1978
c) check drawn on bank outside
FRB district where
submitted
Wednesday, October 4, 1978
Delivery date for coupon securities. Tuesday, October 10, 1978
FOR RELEASE UPON DELIVERY
EXPECTED AT 9:30 A.M.
THURSDAY, SEPTEMBER 21, 1978
STATEMENT OF THE HONORABLE DANIEL H. BRILL
ASSISTANT SECRETARY OF THE TREASURY FOR ECONOMIC POLICY
BEFORE THE
SUBCOMMITTEE ON COMMERCE, CONSUMER, AND MONETARY AFFAIRS
OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS
Mr. Chairman and Members of this distinguished Committee:
It is a pleasure for me to testify today regarding
the survey of foreign portfolio investment the Department
of the-Treasury will be conducting under the International
Investment Survey Act of 197 6. We welcome your interest
in this survey and hope we can respond adequately to the
thoughtful questions you have raised.
BACKGROUND
On October 11, 197 6, the President signed into law
the International Investment Survey Act of 1976 (the Act),
which requires the collection and analyses of data relating
to international investment and its effect upon the national
security, commerce, employment, inflation, general welfare,
and foreign policy of the United States. In Section 2 of
Executive Order 11961 dated January 19, 1977, the President
B-1176
-2designated the Secretary of the Treasury as the federal
executive responsible for collecting the required data
on portfolio investment.
The Act requires a benchmark
survey of foreign portfolio investment in the United
States be conducted at least once every five years.
(The last such survey was conducted in 1975, and the
results submitted to the Congress in 1976.)
In addition,
a survey of United States portfolio investment abroad is
required to be completed not later than five years after
the date of enactment of the Act—October 1981.
The Department of the Treasury has for some time
been engaged in consultation with the two Congressional
committees which have legislative jurisdiction over the
Act—the Senate Committee on Commerce, Science and Transportation, and the House Committee on International Relations.
These consultations, covering Treasury's data collection and
analysis programs mandated by the Act, were initiated by
the previous administration and are being continued by this
Administration.
I cannot discuss or comment on the substance of these
Congressional consultations as regards the previous
administration, since I have only seen copies of certain
correspondence which occurred during that time.
However,
-3shortly after my arrival I became aware of, and
concerned with, Treasury's obligations under the Act
and began discussions with the appropriate committee
members and staff to insure that our Congressional mandate would be carried out in a responsible manner.
As a result of these discussions, we agreed that
the first order of business was to get underway on a
survey of foreign portfolio investment in the United
States. Taking into account several factors, such as
the specific time of the year when respondents are able
to provide the information requested, the length of time
it takes to develop questionnaires and to process and
analyze the data, and the requirement to complete the
entire process within a five-year period, it was agreed
that our planning would be directed at conducting the
"inward" survey, i.e., the survey of investment in the U.S.
by year-end 1978.
This agreement has dominated our planning and preparation this year. Our objective has been to have the
questionnaire in respondents' hands early in the autumn of
this year in order to permit them to prepare their data
assembly procedures before the reporting date. It is the
experience of all who have participated in large surveys
-4such as this that ex post recreation of the required
data is an expensive and faulty approach. Our intent
has been to afford respondents a minimum of two months
before the "as of" date to insure that their planning
will permit full and accurate reporting in all the
necessary detail.
It is important that the data to be collected refer
to an accepted balance sheet reporting date, specifically
to a year-end date. This will enable respondents to
gather the most complete detail, and it will provide data
that can be compared to other economic information of
similar timing. If we should miss the year-end 1978 date,
therefore, it is likely that the survey would be delayed
by a full year, and raises serious question as to the
likelihood of conforming to the other reporting requirements
under the Act.
In addition to the planning for the "inward" survey,
we have agreed to conduct an extensive study of alternatives
for conducting the required survey of United States portfolio investment abroad, i.e., the "outward" survey. It is
some 3 5 years since the last full survey of U.S. portfolio
investment abroad, and in conducting such a survey now we
are entering relatively uncharted waters. Before embarking
-5on a full-scale venture, we have recommended—and the
relevant Congressional committees have concurred—that
we conduct feasibility studies using alternative
approaches to determine the most efficient ways of
collecting the desired information. We have scheduled
this exploratory work for 1979, when the staff working
on the "inward" survey will have completed the bulk of
the preliminary work on that survey and would be free to
turn to the design of collection alternatives for the
outward survey. We will report to the Congress on the
results of this pilot work and on the feasibility of
pursuing the problem on a full scale. This scheduling
will reduce the cost to the government and still permit
adhering to the overall time schedule imposed by the Act.
The analysis of our experimental efforts will be presented
to both Congressional committees before year-end 1979.
THE 1978 SURVEY
The Act defines portfolio investment to be any international investment which is not direct [§3.(11)]. The Act
also requires the President to conduct a comprehensive
benchmark survey of foreign portfolio investment in the
United States at least once every five years and which shall
(among other things and to the extent he determines necessary
-6and feasible), determine the magnitude and aggregate
value of foreign portfolio investment, form of investments, types of investors, nationality of investors and
recorded residence of foreign private holders, diversification of holdings by economic sector, and holders of
record [§4(c) (1)] .
The A.ct also states that it is the intent of the
Congress that information collected from the public under
the Act be obtained with a minimum of burden on business
and other respondents and with no unnecessary duplication
of effort, consistent with the national interest in
obtaining comprehensive and reliable information on international investment [12(b)].
It further goes on to state
that in collecting information under this Act, the President
shall give due regard to the costs incurred by persons
supplying information, as well as the costs incurred by
the government, and shall insure that the information
collected is only in such detail as is necessary to fulfill
the stated purposes for which the information is being
collected [14(b)].
It is very clear this legislation requires that a
balance between costs, burden to the public, and the need
for information must be fully considered in any data
-7collection program carried out pursuant to the Act.
We consider this to be a sound principle, with which
we are in complete agreement, and we submit that our
survey design appropriately takes into account these
considerations.
Coverage
We basically considered three approaches to coverage
of the survey implied by three variant definitions of
"portfolio investment". These definitions are (1) the
market definition, essentially stocks and bonds; (2) the
balance of payments definition, which covers other longterm debt in addition to stocks and bonds (essentially
the coverage of the 1974 survey of foreign portfolio
investment); and (3) the definition contained in the Act,
which added short-term items such as bank loans and deposits,
short-term corporate claims and liabilities, and Treasury
bills and certificates.
The monthly and quarterly data collected by the
Treasury International Capital (TIC) surveys provide information on levels outstanding for all financial instruments
except stocks and bonds and certain obscure financial items.
The TIC reports give us generally good figures on the levels
of foreign portfolio investment, except for securities. This
-8conclusion is based on the 1974 survey results and
is discussed in chapter seven of that report, "Adequacy
of Current Statistical Reporting Requirements". In the
case of securities, we have monthly reports on transaction
flows, but not on levels of foreign investment.
We took great care in obtaining advice and comments
from a wide variety of persons who are knowledgeable on
the subject matter, the needs for specific data, and the
costs of collecting these data. The persons consulted
included representatives of academia, labor, and business,
in addition to the Congress, Federal executive user agencies,
and the prospective respondents.
Based on comments received from all sources consulted,
we elected to collect in this survey only information on
levels of foreigners' securities market holdings—stocks
and bonds—and to supplement these reports with data on
ownership of other financial instruments collected in the
existing monthly and quarterly TIC surveys. We believe
this approach meets the analytic requirements of most
potential users of the data, and at the same time results
on a minimum burden to the public and a significant cost
savings to the Federal Government.
mm9mm
Consultations and clearance
I would like to review our consultations outside of
Treasury both before and during the clearance process for
this survey.
Congressional. I mentioned earlier in this testimony
that we have extensive contact with the two Congressional
committees having legislative jurisdiction over the programs under the Act.
For the record, I would like to have included at this point
in my testimony the following items: (1) a copy of my August 15,
1977 letter to Senator Inouye, Chairman of the Merchant
Marine and Tourism Subcommittee of the Senate Commitee on
Commerce, Science and Transportation; (2) a copy of
Senator Inouye's September 7, 1977 letter to me; (3) a copy
of my September 20, 1977 letter to Senator Inouye; (4) a
copy of Senator Inouye's October 14, 1977 letter to me;
(5) my November 15, 1977 letter to Senator Inouye; (6) a
copy of my February 7, 1978 letter to Representative
Bingham, Chairman of the Subcommittee on International
Economic Policy and Trade of the House Committee on International Relations; (7) a copy of Deputy Assistant Secretary
Karlik's April 19, 1978 testimony before Senator Inouye's
subcommittee; and (8) a copy of Deputy Assistant Secretary
Karlik's April 25, 1978 testimony before Representative
-10Bingham's subcommittee.
These documents serve as a
summary of our discussions and resulting agreements
with these two committees.
Academia, labor and business. Treasury requested
the advice and assistance, on an informal basis, from
fourteen distinguished individuals who have an interest
in portfolio investment and the survey results. For the
record, I wish to have included at this point in my testimony a list of these individuals.
These international investment experts were consulted
during the survey design phase and two meetings were held;
one January 23, 1978 and another May 8, 1978. This subcommittee has received copies of agenda and minutes of
these meetings.
Respective respondents. Following OMB's revised
guidelines for the clearance of statistical surveys, a
notice of proposed forms and instructions was published
in the Federal Register on June 13, 1978. The notice invited
public comments on the proposed regulations, instructions,
and forms to be received by Treasury on or before July 14,
1978, In addition to the notice published in the Federal
Register, 91 business firms and organizations were directly
contacted by the survey staff soliciting their comments.
-11These firms were sent copies of the proposed regulations,
forms, and instructions on June 9, 1978. Also, a public
hearing was held by Treasury on July 10, 1978. Copies
of all documents and written comments developed during
this process have also been made available to this subcommittee.
Executive agencies. The survey was reviewed, in
detail, by the Interagency Committee on International
Investment Statistics, a special ad hoc Treasury review
task force, and the Commerce Department's Office of
Federal Statistical Policy and Standards. In addition the
survey was submitted for review and clearance to the Office
of Management and Budget (OMB). OMB granted approval for
conducting the survey on August 9, 1978.
Draft copies of the survey forms and instructions were
sent to members of the Interagency Committee on International
Investment Statistics on May 1, 1978, and were discussed at
a meeting of members on May 11, 1978. Several comments,
suggestions, and recommendations were received during that
meeting and.incorporated into the proposed draft published
in the Federal Register for public comment. Members of the
committee were sent a revised draft, together with a
memorandum outlining the changes, and inviting further
-12comment on June 5, 1978. All comments and recommendations
received were given serious consideration and, in fact,
actually resulted in seven redrafts of the forms and
instructions during the period from March 31, 1978 to
July 20, 1978. _
We feel that the resulting product—a survey limited
to foreign portfolio investment in securities—is consistent
with the spirit of the Act, satisfies most users of the
statistical data, limits the cost to the Federal Government,
and avoids an unreasonable burden on the reporting public.
We also went beyond the minimum requirements for obtaining
the clearance of a statistical survey through contacting at
an early stage numerous experts and prospective respondents,
covering a broad spectrum of interests, and fully considering their needs, burden, advice, and opinions.
Survey schedule
The survey forms and instructions are ready to be
printed. In accordance with this subcommittee's request,
we have delayed printing of the form. But this delay cannot
extend for more than a few days without jeopardizing our
commitment to the aforementioned Congressional committees to
deliver a completed report on foreign portfolio investment
in the United States before the end of 1980.
-13In order to process and analyze the survey data,
integrate and analyze the TIC data, and prepare a
meaningful report, the survey reports must be mailed to
potential respondents prior to the reporting date. This
point was repeatedly made to us during and after the
comment period. On the basis of our experience with the
previous survey in 1974, checking the reports filed by
respondents for internal consistency, correcting errors,
and compiling the data will take about a year. The current
schedule calls for: (1) October 15, 1978—mailout of forms;
(2) December 31, 1978—survey as of date; (3) March 31,
1979—due date for reports to be filed; (4) March 31,
1980—completion of data base; (5) April - November 1980—
analysis of survey data and integration of TIC data; and
(6) November 1980—final report to Congress.
-14-
SPECIFIC QUESTIONS RAISED BY THIS SUBCOMMITTEE
In accordance with the request of this subcommittee that
my prepared statement reply to the questions raised in your
August 18 letter of invitation, I offer the following answers.
Your letter categorized the questions into six groupings: (1)
survey coverage; (2) the use of TIC data; (3) survey design
and implementation; (4) public comments; (5) the Commerce
Department request for an additional follow-up survey; and
(6) survey management. Our answers (A) to the questions (Q)
are grouped accordingly.
Survey coverage
1. (Q) In the past, two of the three sensitive investments
having possible major national interest implications, which
were considered by the Committee on Foreign Investment in the
United States, involved foreign investment in the energy
sector. It will be difficult, if not impossible, to develop
a policy regarding any foreign investment in the energy sector
without knowing the extent of fractional interests in energy
resources, including coal.
Particularly controversial and in need of analysis are
foreign investment in other limited resources such as timber
and land. Yet the survey specifically exempts real estate
and limited and general partnership interests.
-±o-
On what basis are these exclusions made?
(A)
These exclusions (from the 1974 basis) were made by
adhering to the basic philosophy previously detailed—that
if the costs of collection were high, the survey should not
gather information which could not be fully justified on the
basis of its usefulness.
In the 1974 survey, conducted only four years ago, the
inclusion of these items and others accounted for approximately
$285 million, or 1 percent, of the nearly $25 billion of total
foreign holdings in U. S. equity issues, and about 4 tenths
of 1 percent of the total long-term portfolio investment of
$67 billion.
The 1974 survey provided about 12 percent more
data than it would have if that survey had been limited to
current coverage, at an estimated additional cost to the
Government of 15 to 25 percent and untold costs to the survey
respondents.
The inclusion of these items helped contribute
to the heavy burden of reporting by respondents, as was
indicated to us during our comment period two months ago.
Also, since all but $285 million of the 12 percent gain
reflected in 1974 is currently collected quarterly by the TIC
system, collecting this additional amount of data certainly
should require a clear justification of need on behalf of
Federal user agencies.
We feel the clearance process provided
that opportunity, and to the best of our knowledge there are
n<"\
H I ! Hm&4--h-ym.'3
1-9+*m
, . _ _ — _ _
1
3
J
.!___
-lO"
Not only would these data be expensive to collect, but
they would appear to be of scant policy interests because
the management control would remain with the U. S. residents
holding the majority interests.
2.(Q) How much portfolio equity investment (in dollars)
will likely not be covered because of these exclusions?
(A) Based on all the above mentioned considerations,
consultations with outside experts, and the lack of evidence
to the contrary, we estimate the relative importance of these
investments have not increased significantly during the past
four years.
It is not possible to estimate the expected dollar
value as of December 31, 1978.
3.(Q) Who supported or favored these exclusions and for
what reasons?
(A) Generally speaking, all of those contacted during
the consultation phase of the survey previously mentioned—
Congressional subcommittees, Federal user agencies, survey
reporters, Interagency Committee on International Investment,
Office of Federal Statistical Policy and Standards, and,
ultimately, the Office of Management and Budget. The reason
was essentially that the prospective utility of additional
data did not justify the cost to the Government and to
respondents of collecting it.
4. (Q) Were any discussions with persons involved with
foreign investment in the real estate area to determine the
extent of portfolio investment therein, such as mortgages,
limited partnerships, syndications, etc? And if so, when
did these occur, who was involved, and what was said and
transpired?
(A) No discussions were held dealing specifically
with the items in your questions.
We are aware of the increased interest in foreign
investment in real estate. However, foreign investment in
real estate is not primarily a portfolio investment issue.
These investments are probably more important in magnitude
and from a policy standpoint, as direct investment, where the
foreigner has control over the real estate assets. For
example, a foreigner may acquire real estate holdings through
shares in a United States corporation. If this corporation
is owned to the extent of 10 percent or more by the foreigner,
the real estate holdings would be direct investment. The
Commerce Department monitors direct investment in real estate.
The Agriculture Department has responsibility under s4(d) of
the Act to study the feasibility of establishing data collection
systems to monitor foreign investment in agricultural, rural,
and urban real property, including the feasibility of
establishing a nationwide multipurpose land data system.
-18-
5.(Q) How much would it cost to process the survey to
include the proposed exclusions?
(A) As stated above, the cost to both the Government
and survey respondents would be very high.
We estimate to survey portfolio investment as
broadly defined in the Act (both inward and outward surveys)
would increase the actual costs to the Government by almost
$2.5 million over the next 3 years or a 43% increase.
6.(Q) While it may be true that portfolio investment in
certain types of equity interests in non-corporate business
entities may be minor compared to the total of other equity
investments, it still may be significant, especially at the
present.
(A) We have no evidence that the items to which you
refer to have become more significant in relative terms since
1974, as regards foreign portfolio investment. As I mentioned
above, the total amount of these investments in 1974 was $285
million.
Furthermore, of that figure, $217 million, or 76%,
was held by United States citizens residing abroad.
In 1974, their inclusion was justified since it
had been 33 years since the last survey.
At present, the
prospective benefits do not seem to justify the additional
cost.
-19Use of TIC data
7.(Q) How will the TIC data be integrated into the final
results?
(A) The final report to Congress will contain statistical
data derived from both the survey and the TIC reporting system,
as well as analyses of foreign portfolio investment in the United
States using the broad definition contained in the Act.
The
TIC data will be integrated with the survey results in order
to have comprehensive information and resulting analysis of
total foreign portfolio investment by country of investor, type
of investment, type of foreign holder, etc.
8.(Q) At what point in time will data be used from the TIC
forms?
(A) TIC data, as of December 31, 1978, will be integrated
into the final report to Congress.
9.(Q) How will the linkage between the TIC reports and
survey reporters be handled?
(A) The existing TIC data base and the survey data base
will be linked by reporter name and identification numbers by
computer.
The design of the survey data base is taking this
consideration into account.
10.(Q) Since the definitions of "securities" in the B and
C forms and the proposed survey are somewhat different, how
-20will the possibility of over-reporting be handled?
Will the
B and C forms contain special instructions to advise of this
possibility or what other steps will be taken?
(A) The instructions to the TIC B and C reporters
(current and proposed) specifically exclude the reporting
of long-term securities, i.e., those having no contractual
maturity (stock, for example) or a maturity of more than one
year from the date of issuance.
Therefore, the possibility
does not exist of over-reporting of securities among the B
and C forms and the proposed survey.
11.(Q) How will the same possibility with respect to the
S form be handled?
(A) There is no substantive difference between the
definition of securities in TIC Form S and the proposed
survey definition.
12. (Q) Which specific information on the TIC forms will
be integrated into the final report on the benchmark survey?
(A) All data collected on the TIC forms will be
integrated into the final report on foreign portfolio
investment as of December 31, 1978.
The particular tabular
designs used for presenting these data, as well as for the
survey, are currently being analyzed.
The final decisions
on actual presentation of these data is scheduled to be made
in a few months.
-2113.(Q) What revisions are being made on the C forms and
how do these relate to the problems discussed by the informal
advisory panel in its January 23, 1978 meeting by Dirck Keyser
in his March 31, 1978 memo to Deputy Assistant Secretary Karlik?
(A) Several major problems exist in the current nonbanking
forms.
For one, Form C-l/2 contains no detail on types of
liabilities, and the asset side shows separate detail only on
foreign currency deposits.
Consequently, while the data can be
used for calculation of gross capital movements, the forms provide
no clue as to what kinds of items are contained in the figures.
At the same time, Form C-l/2 contains some detail that is no
longer needed, such as a breakdown of every country line between
short- and long-term items on the basis of their original
maturity, and a breakdown of all short-term items between
those payable in dollars and those payable in foreign currencies.
Form C-3 requires the reporting of dollar and foreign currency
deposits and investments in a number of foreign countries in
a degree of detail which is not presently needed.
The principal features of the proposed new Treasury
nonbanking forms are:
1) Separation of the financial liabilities and
claims of reporting firms from their commercial
liabilities and claims.
-22-
2) Adoption of time remaining to maturity as the
basis of the maturity analysis of claims and
liabilities, instead of the present original
maturity basis.
3) Simplification of the monthly form to require
only a single figure.
4) Reduction of the reporting burden by:
a)
raising the level of the reporting
exemption of the monthly form from
$2 million to $10 million and
allowing the application of the
current $2 million exemption level
on the quarterly form to financial
and commercial items separately;
b)
elimination of geographical detail
on the monthly form;
c)
substantial reduction in maturity
analysis detail by requiring a
maturity breakdown of grand totals
only rather than country by country
as presently required.
The changes in the structure of the forms - particularly
the separate information on different types of liabilities and
claims - will greatly improve the value of the reports for
analysis of internationl financial developments and the data
-23-
will relate more usefully to information reported by banks in
the United States on other TIC forms.
14.(Q) Have the C forms reporters been matched with a
list of exporters, as suggested by Dr. Bryant?
(A) This is being investigated. A list of exporters
has been obtained. Our preliminary findings indicate that
this may be impracticable.
15. (Q) How will borrowing by an American entity from a
foreign entity be reported? Under the TIC forms (and, if so,
where) ? Answer this question both as to American affiliates
of foreign parent and American entities with no foreign
affiliation?
(A) Borrowing by an American entity from a foreign
entity will be covered in the survey if the U. S. company
issued long-term securities. Of course, borrowings by a
U- S. company from its foreign parent, and/or the affiliated
foreign group, is considered direct investment and reported
to the Commerce Department. Foreign portfolio borrowings,
other than through the issuance of long-term securities are
reported on the TIC Forms B and C as follows:
a. B-Forms. U. S. banks (including agencies, branches
and banking subsidiaries of foreign-based institutions) who
borrow U. S. dollars from a foreign entity report such amounts
on monthly Form BL-1 in either column 3, 6, 7, or 10 depending
upon the type of foreign creditor; i.e., foreign official
-24-
institution, foreign unaffiliated bank, own foreign office,
or private nonbank forei'gns.
If denominated in a currency other than U. S. dollars,
foreign borrowings from U. S. banks are reportable on quarterly
Form BQ-2, column 1 "Banks' Own Liabilities to Foreigners."
b. C-Forms.
1.
Form C-l/2: Currently U. S. nonbanking concerns
(including U. S. affiliates of foreign-based firms report
their borrowings from unaffiliated foreign residents in
either column 1, 2, or 4, depending on the short- or long-term
nature of the indebtedness, and whether the loan is payable
in U. S. dollars or a foreign currency.
2.
Proposed Form CQ-1.
U. S. nonbanks will report
their borrowings from unaffiliated foreigners as a financial
liability on quarterly Form CQ-1, column 1, if payable in
U. S. dollars, or in column 2, if payable in a foreign currency.
U. S. nonbanks' borrowings from affiliated foreigners
are direct investment liabilities and are not reportable on
TIC C-Series forms.
They are, however, reported on the
Department of Commerce's direct investment forms, BE-605 or
BE-606.
-25Survey design and implementation
16-(Q) Is there any possibility of duplicative reporting
of the very same securities by more than two holders of record
or a holder of record and an issuer? If so, what steps are
being taken to prevent that?
(A) No. Two or more U.S. holders of record may
report foreign ownership of the same security issue, and
possibly even by the same foreign owner, but this will only
occur because two or more of their foreign accounts contained
investments in the same security or because a given foreign
owner could have an account with two or more U.S. holders
of record. But this is not a duplication of the same data.
Also, because of changes in the FPI-1 design from that
used in 1974 (i.e., accounting for all shares outstanding,
accounting for the number of shares held by direct investors,
and other clarifying items) , it is very unlikely that a U.S.
issuer would report the same investment data that will properly
be reported by a U.S. holder of record. However, if it
does occur, the data processing edit checks will recognize
the report as being out of balance. In such cases, the
discrepancies will be resolved.
17. (Q) How is the mailing list being developed?
(A) A mailing list of names and addresses is being
-26compiled utilizing data from the Internal .Revenue Service
based on the survey thresholds, and is being supplemented
with other source material such as, the 1974 respondent file,
the Nominee List published by the American Society of
Corporate Secretaries, lists of companies traded on major
stock exchanges, etc.
18. (Q) Will the Treasury Department be able to cover
the entire universe?
(A) Yes.
If not how much will be missed?
A report, Form FPI-1, is required to
be filed by every U.S. issuer of securities which, as of
the latest available closing date of its accounting records,
had total consolidated assets of more than $50 million
unless it is a bank.
A bank is required to file if its total
consolidated assets exceeded $100 million.
In addition,
any firm falling below these exemption levels will be required
to file if it had knowledge of foreign-ownership, or is
contacted by Treasury informing it there was foreign ownership,
in its securities and its total consolidated assets were
$2 million or more.
Any firm with less than $2 million of
assets is exempt from filing.
A report, FPI-2, is also required from every United States
person acting as a holder of record of domestic securities
on behalf of foreign persons.
Any U.S. holder of record
-27will be exempt from filing a report if the combined market
value of investments in domestic securities for all its
foreign customers were $50 thousand or less as of December 31,
1978.
This, effectively, will give the universe of foreign
portfolio investment in domestic securities as of December 31,
1978. The $2 million issuer and $50 thousand holder of
record are insignificant, statistically speaking, and their
exclusion is certainly prudent and proper.
19. (Q) What steps have been taken to make potential
reporters aware of the duty to file a survey form?
(A) In addition to mailing forms and instructions
to all companies on the mailing list (approximately 10,000)
the following publicity actions will be carried out to
inform potential respondents: (1) press release; (2) publication in Federal Register; (3) special mailings to trade
association (i.e., American Bankers Association); and
(4) special mailings to professional groups for publication
in their journals (i.e., American Institute of Certified
Public Accountants).
20. (Q) How were the thresholds of $50 million (for
non-bank businesses) and $100 million (for bank businesses)
arrived at? How may business enterprises, who would
-28otherwise be reporters, will be excluded because of these
thresholds? What is the estimated total amount of such
excluded investment? What industries and sectors of the
economy, what types of investment, and what nationalities
of investors are involved?
(A) The $50 million and $100 million thresholds
were arrived at through analysis of 1974 survey results and
consultation with both the Treasury ad hoc survey task force
and the Interagency Committee on International Investment
Statistics. Let me explain what these thresholds mean with
regard to the reporting requirements of the survey.
In 1974 the similar thresholds were $20 million and
$50 million, respectively. However, 72 percent of all
foreign investment in voting stock was accounted for by
businesses with $1 billion of assets and 97 percent by
businesses with assets of $50 million or more. Only 3 percent
of the value of foreign investment in voting stock was
accounted for by businesses with assets between $1 million
(the exemption level) and $49 million. Similar results occurred
when we tested the distribution of foreign investment in debt.
Given inflation since 1974, we decided upon a $2 million
exemption level. But we could not justify a requirement
that every issuer with assets of $2 million or more should
file regardless of evidence of foreign investment. Therefore,
-29we elected to require every issuer who had $50 million (if
a non-bank) and $100 million (if a bank) regardless of
evidence of foreign ownership to file; and businesses with
assets below these thresholds, but over $2 million, to file
only if (1) they had evidence of foreign-ownership, or
(2) they are contacted by Treasury informing them of foreign
ownership in their securities. This is consistent with our
goal to keep down the cost of the survey to both business
and Government while maintaining the quality and timeliness
of data collected in the survey.
No respondent who would otherwise be required to report
in the survey will be excluded by the $50 million and
$100 million thresholds.
21. (Q) The survey expressly excludes reporting of
assets in U.S. trusts created by foreign individuals. The
reason given is that this information is not contained on
the TIC-S form. This reason seems completely irrelevant.
Indicate the dollar amount of securities which will be
omitted by this, the probable types of securities, the
industries or sectors of the economy which will be unrepresented, and other facts which you considered in this exclusion.
(A) First, I would like to point out that the trusts
created by foreign governments or corporations will be included.
-30These we believe to constitute the bulk of foreign trusts
with significant holdings in domestic securities.
Second, we feel that using this survey to obtain an
investment position for the items we currently only collect
flow data - TIC Forms - in order to check and calibrate
these data is relevant.
The issue of the treatment of United States trusts in
the survey was discussed informally with individuals from
Federal user agencies and others during the design stage
of the survey.
For the May 11, 1978 meeting with members
of the Interagency Committee on International Investment
Statistics, we placed the item on the agenda for particular
attention.
The consensus was to treat trusts exactly the
way they are handled in the TIC S Form.
After the May 11, 1978 meeting, the survey forms and
instructions were re-drafted to take into account this
consensus decision.
In our May 24, 1978 transmittal of the
forms and instructions to the committee, we noted that as
a result of the May 11 meeting the survey now treated trusts
using the Form S approach.
We have not received any further
comments regarding this issue.
We do not know the dollar amount of securities, the
probable types, or the industries or sectors of the economy
which will be omitted.
-31Public comments
22. (Q) Why are reports being required of business
entities falling above the threshold amounts when they have
no evidence of foreign owners (after a verification of
addresses)? What purposes are served by this?
(A) We certainly are not after verification of
addresses.
This requirement is based on available evidence (the
1974 survey results) and general knowledge that the largest
United States corporations are more apt to have foreign
portfolio investment in their securities than are small
corporations. Also, these corporations may not have evidence
of foreign ownership in their securities as such; investment
may be held by United States holders of record on behalf
of foreigners.
Certain information (asset size, industry, market value,
etc.) can only be reported by issuers, and these data are
needed for all companies which have foreign investment,
irrespective of whether they are aware of said investment.
Therefore, the alternative would be to have U.S. issuers
file only if foreigners directly owned their securities.
Then, if a U.S. holder of record reported security issues
it held in an "exempted" U.S. issuer on behalf of foreigners,
-32the U.S.. issuer would be informed by Treasury that, in fact,
foreign ownership was present and a report must be filed.
(This is the approach we will use for companies with assets
greater than $2 million but less than $50 million).
The problem with using this approach for all United States
issuers, given the high probability of having to request
filing by most large companies, is that it would drag out
the completion date, since all FPI-2 reports would have to
be filed and processed before certain large U.S. issuers
could be informed that they owe a report to Treasury. The
more timely the final data, the more useful it is for
analysis and policy making.
23. (Q) Regarding the reporting distinction between
U.S. citizens residing abroad and foreign citizens residing
abroad. What will the Treasury Department require of
reporters in the way of reasonable efforts?
(A) Part I, DEFINITIONS, of the survey instructions
contains the following definitions:
"Foreign, when used in a geographic sense, means
that which is situated outside the United States or which
belongs to or is characteristic of a country other than
the United States."
"Person, means any individual, branch, partnership,
associated groups, association, estate, trust, corporation,
-33or other organization (whether or not organized under the
laws of any State), and any government (including a foreign .
government, the United States Government, a State or local
government, and any agency, corporation, financial institution, or other entity or instrumentality thereof, including
a government-sponsored agency)."
"Foreign person, means any person resident outside
the United States or subject to the jurisdiction of a
country other than the United States."
Therefore, it is clear that an individual United States
citizen permanently residing abroad is a foreign person
for purposes of this survey.
In addition, Part IV of the survey instructions,
CLARIFICATION OF COVERAGE AND SPECIFIC SITUATIONS, states
in Section C, NATIONALITY OF FOREIGN INDIVIDUALS, that
Schedules A and B of Form FPI-1 and Schedule C of Form FPI-2
require a breakdown of individual holders of securities
residing abroad to indicate whether the individuals are
United States citizens residing abroad or foreign nationals
residing abroad. This section further states that "all
reasonable efforts should be made by reporters to determine
whether or not the individual foreign resident is a United
States national. In the absence of any contrary information,
the reporter can estimate whether or not the individual is a
-34United States national by determining whether the individual
holds a United States Social Security number."
We certainly recognize that the mere fact an individual
has such a number assigned to him does not guarantee he is
a United States citizen.
We also realize that stockholder
records of certain issuers of securities may contain a more
precise indication of United States citizenship.
In those
cases, we want the reporter to use that information to break
down holdings by foreign individuals.
But, in order not
to require an undue burden on the reporter, and fully
considering the analytical requirements placed on this
breakdown of the data, we feel the Social Security Number
test is sufficient and readily available.
We feel "a reasonable effort" may vary in certain
reporting situations.
Any reporter who has difficulty
applying these specific guidelines, as spelled-out in the
instructions, will receive adequate guidance from the survey
staff.
24. (Q) Will a mailing address check or a "residence"
check be sufficient?
kept?
If not, what records will have to be
If an address check is sufficient, should that not
be clarified?
And, more importantly, is an address check
the best way to handle this?
-35(A) No, a mailing address check is not sufficient.
Since all "foreign individuals residing abroad" will have
foreign addresses, these checks could not be considered
reasonable estimates of United States citizenship.
25. (Q) Should reporters be required to maintain
information in their records about nationality?
(A) As stated in our answer to question 23, the
concept of foreigners used in the survey, and in the balance
of payments, is one of residency rather than citizenship.
It may be of interest analytically, to know how many of
the individuals are U.S. citizens and in which foreign
countries they reside. But beyond that—for example, to
know how many French citizen investors reside in Italy—
we can see little value in collecting such data, especially
if it requires special record keeping by United States
businesses through the issuance of regulations.
26. (Q) Is there duplication of effort as regards the
SEC monitoring, by way of its 13d and 13g forms, recently
revised under the Domestic and Foreign Investment Disclosure
Act of 1977, for disclosure of both future and past acquisitions by foreign investors? Would it be possible to exempt
issuers from filing information on issues of securities
where the foreign ownership was more than 5 percent by
-36any one individual or association of individuals and instead
obtain this information from the SEC?
(A) No.
The SEC requires, by way of its 13d and 13g forms,
disclosure of beneficial ownership (both domestic and
foreign) whenever a person (natural or corporate) acquires
5 percent or more of the voting equity securities of a
business subject to SEC regulations.
Such businesses must
have its securities listed on a major exchange, have more
than 500 shareholders, and $1 million in assets.
These
reports collect very little statistical data since that
was not their intended purpose.
13d asks for name of issuer; name of person filing
report; title of class of security; CUSIP number; address
and telephone number, and the date of event which required
the form to be filed.
The proposed 13g will collect name and address of issuer;
name, address, and citizenship of person filing report; CUSIP
number of security; breaks down into eight categories the type
of holder (broker-dealer, bank, investment advisory, employee
benefit plan, parent holding company, insurance company, investment
company, and group) ; the number of shares owned; the percent owned;
the number of shares in which the owner (1) has sole voting power,
-37(2) shared voting power, (3) sole power to dispose of
securities, and (4) shared power to dispose of securities;
and other qualitative information.
According to our analysis, only a limited number of
items appear to be collected by the SEC which we also will
be collecting for those companies required to complete
forms under both regulations. These items are: name and
address; CUSIP number of voting security; number of shares
owned; and possibly one cell on Schedule A of Form FPI-1.
For those cases where a listed company with over 500
shareholders is required to file both forms we could exempt
them from filing the one cell on Schedule A of Form FPI-1,
but we would still need the name and address and the CUSIP
number.
27. (Q) What information does the SEC not obtain
which the survey would obtain and vice versa?
(A) The information the SEC does not obtain which
the survey does obtain is every item on Form FPI-1 except
name and address, the appropriate number of shares entered
in one cell of one column of Part II of Form FPI-1, and
possibly one cell in Schedule A of Form FPI-1. All other
data items collected in the survey are not collected by
SEC.
-38The information the SEC obtains which the survey does
not is information on past criminal proceedings, citizenship
of investor, source of funds, purpose of transactions, and
other items of a similar nature.
28. (Q) What would be the extent of duplication if
the SEC data is not used? (Make your best estimate.)
(A) In those limited cases where a survey reporter
must also file a SEC Form 13d or 13g, we estimate the extent
of duplication, expressed in terms of reporter burden, not
to exceed 10 minutes.
29. (Q) Were any of the public comments included in the
final survey? If so, which changes were made as a result of
comments?
(A) Yes, all comments were given full and careful
consideration, and were incorporated into the forms and
instructions wherever justified and whenever possible.
Most of the public comments received pertained
to concerns about burden, proposed due date, and clarifying
the instructions and report forms for conducting the survey.
Several comments requested changes in definitions contained
in the Act which could not be considered. Also, certain
comments were received requesting special treatment for
specific reporting situations, which will be more efficiently
-39handled on a case-by-case basis during the survey through
administrative action rather than by further complicating
the survey regulations, forms, or instructions!
For
example, grouping of certain like securities which may be
difficult to report separately under specific conditions.
Major substantive changes made to the forms and
instructions as a result of public comment were:
1. The instruction that a report is required from
every U.S. issuer whose assets exceed $2 million and who
has evidence of foreign ownership was changed to read "and
who has knowledge of foreign ownership of its securities or
who is informed by Treasury that there is foreign ownership
of its securities."
2. The proposed March 1, 1979 due date was changed to
March 31, 1979.
3. The term "foreign direct investor" was changed, for
purposes of this survey, to "foreign parent" in order to
avoid apparent confusion as evidenced by many comments,
4. The fact that we do not require a breakdown by type
and country of foreign holder for bearer securities was reinforced in both instructions and forms design.
5. Common and comingled trust fund interests were added
to exclusions of equity interest required to be reported.
-40-
6. Limited the requirement for holders of record
to enter issue codes on Schedule C of Form FPI-2 to only
those issues of private securities for which there is no
CUSIP number and all public securities, irrespective of
CUSIP numbers,
7, Modified the method for reporting business activity
of the respondent to just a single code and percent of
activity if the primary code accounts for at least 50 percent. If the primary code accounts for less than 50 percent
a secondary code and percent is required.
8. Added two voluntary questions concerning reporter
burden, expressed in terms of manhours and direct dollar
costs expended by respondent in order to complete this mandatory survey.
Commerce Department request for follow-up survey
30. (Q) Apparently, there are some serious discrepancies
in balance of payments data, and such a* follow-up survey
might help detect problems with the coverage of the TIC-Form S,
The portfolio project office thought that the costs of a
follow-up would be prohibitive. What would the specific cost
be if there were a limited sample, presumably sampling the
fewest number of reporters necessary for such a follow-up?
(A) I am not sure what the apparent serious discrepancies in balance of payments data are that a follow-up survey
would help correct. BEA's memorandum of May 25, 1978 states
-41that the change between investment position in 1974 and
1978 will be caused by portfolio turnover.
In order to
better assess the S Form coverage, they feel four years
is too long a time span to be able to accurately identify
and isolate the effect of portfolio turnover.
It was the opinion of the Interagency Committee on
International Investment Statistics that this issue had no
bearing on the review of the 1978 survey.
The issue stated
in BEA's memorandum needs to be further developed and discussed within the committee to determine expected benefits,
estimated costs, statistical plans for using these data to
evaluate :S Form coverage, and a full explanation as to why
the five-year span between surveys, as provided for in the
Act, is not frequent enough.
Our present option is that conducting a second survey
in 1979 as BEA suggestedf would produce only minor benefits
in comparison with the costs incurred.
31.(Q) Would the costs depend on when the follow-up
occurred?
(A) Yes.
Survey management
32. (Q) it appears the survey is confronted with severe
managerial problems.
Office space has not been provided and
although employees were to be hired the first of October in
-42order (1) for the survey to be sent out in mid-October,
(2) for programming to begin at that time, and (3) for
processing to start after the first of the year, it appears
that this will not be done.
Would you explain during your
testimony why these problems have not been resolved and
what steps have been taken in the interim to resolve them?
(A) Anytime a large project is started, especially
one requiring office space, furniture, telephones, personnel,
and all other administrative support items not already in
place, an unusual amount of effort must be expended in
getting these matters resolved soon enough so as to not
interfere with the project objectives and deadlines.
This
project is no exception.
The memoranda from Mr. Maley pointing out possible
delays in completing initial administrative matters according
to schedules and the possible implications to the survey if
these delays do in fact occur, are not unusual or unexpected.
Mr. Maley's memoranda requesting assistance in assuring these
matters would indeed not slide past the scheduled dates and
jeopardize the project's objectives were quite proper.
In
fact, he would have been remiss if he had not alerted me to
these potential problems.
As of today, every project deadline has been met.
office space problem has been resolved.
The
Also, the hiring of
-43personnel is moving along and if it does not occur on
October 1, as originally planned, it will be happening
shortly thereafter; at least soon enough so as not to
jeopardize the project's original objectives.
Closing statement
I hope I have provided the subcommittee with the
information needed to properly assess our plans for data
collection and analysis to fulfill our responsibilities.
I hope all of your substantive questions regarding the
1978 survey have been answered satisfactorily. While we
delayed printing of the survey forms pending these hearings
as you requested, we now plan to proceed with our original
survey schedule. Any further delays would make it impossible
for us to fulfill our commitments to the Congress.
FOR IMMEDIATE RELEASE
September 19, 197a
Contact:
Robert E. Nipp
202/566-5328
TREASURY ANNOUNCES RESULTS
OF GOLD AUCTION
The Department of the Treasury announced that 300,000
ounces of fine gold were sold today to 6 successful bidders
at prices from $212.56 to $213.21 per ounce, yielding an
average price of $212.76 per ounce.
Gross proceeds from this sale were $63.8 million. Of
the proceeds, $12.7 million will be used to retire Gold
Certificates held by Federal Reserve banks. The remaining
$51.1 million will be deposited into the Treasury as a
miscellaneous receipt.
These sales were made as the fifth in a series of
monthly auctions being conducted by the General Services
Administration on behalf of the Department of the Treasury.
The next auction, at which another 300,000 ounces will be
offered, will be held on October 17.
A total of 59 bids were submitted by 15 bidders for a
total amount of 771,600 ounces at prices ranging from
$205.00 to $213.21 per ounce.
The General Services Administration will release
additional information, including the list of successful
bidders and the amount^ of gold awarded to each, after those
bidders have been notified that their bids have been accepted.
*
B-1177
*
*
*
FOR IMMEDIATE RELEASE
September 20, 1978
RESULTS OF AUCTION OF 2-YEAR NOTES
The Department of the Treasury has accepted $2,685 million of
$5,125 million of tenders received from the public for the 2-year
notes, Series T-1980, auctioned today.
The range of accepted competitive bids was as follows:
Lowest yield 8.59%!/
Highest yield
Average yield
8.66%
8.65%
The interest rate on the notes will be 8-5/8%. At the 8-5/8% rate,
the above yields result in the following prices:
Low-yield price 100.063
High-yield price
Average-yield price
99.937
99.955
>
The $2,685 million of accepted tenders includes $595 million of
noncompetitive tenders and $1,865 million of competitive tenders from
private investors, including 32% of the amount of notes bid for at
the high yield. It also includes $ 225 million of tenders at the
average price from Federal Reserve Banks as agents for foreign and
international monetary authorities in exchange for maturing securities.
In addition to the $2,685 million of tenders accepted in the
auction process, $511 million of tenders were accepted at the average
price from Government accounts and Federal Reserve Banks for their own
account in exchange for securities maturing September 30, 1978, and $670
million of tenders were accepted at the average price from Federal
Reserve Banks as agents for foreign and international monetary authorities
for new cash.
1/ Excepting 7 tenders totaling $170,000
B-1178
FOR IMMEDIATE RELEASE
September 20, 1978
CORRECTION OF TREASURY'S WEEKLY
BILL OFFERING OF SEPTEMBER 19, 1978
The weekly bill offering of September 19 reported
that Federal Reserve Banks, for themselves and as agents
of foreign and international monetary authorities hold
$3,532 million of bills, which are eligible in exchange
for the bills to be auctioned Monday, September 25.
The correct amount held by those accounts is $2,980 million.
oOo
B-1179
prtmentoftheTREASURY
MGT0N,O.C.2022Q
TELEPHONE 566-2041
FOR RELEASE ON DELIVERY
EXPECTED AT 10:00 A.M.
SEPTEMBER 21, 1978
STATEMENT OF THE HONORABLE ROBERT H. MUNDHEIM
GENERAL COUNSEL OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON TRADE
HOUSE WAYS & MEANS COMMITTEE
Mr. Chairman, Commissioner Chasen and I welcome this
opportunity to appear before this committee to discuss the
Treasury Department experience with the assessment of duties
pursuant to findings of dumping under the Antidumping Act.
Both of us have now had a year of experience with the assessment procedures, and believe we have gained some insight into
the strengths and weaknesses of the process. We would like
to share some of that experience with you, focusing on the
procedures through which the Act is now being administered
and the implications that general trends in U.S. international
trade and other factors may have for the future.
The major purpose of the Antidumping Act is to stop
dumping by depriving those who dump of the competitive
advantages that they are seeking. The most common of those
competitive advantages are relatively short-run phenomena.
A manufacturer may be attempting to establish or expand its
share of a U.S. market, or it may be attempting to minimize
short-run losses by selling products in the U.S. market
below their full costs of production. A credible antidumping
program must accordingly promise a relatively swift and sure
neutralization of such efforts. The Antidumping Act accomplishei
that goal by raising the importer's cost back to what it would
have been without the dumping by imposing a special duty on the
B-1180
- 2 If the Antidumping Act is administered quickly and effectively,
foreign manufacturers will see the futility of continued dumping and
adjust their prices to eliminate margins. As a result, the amount
of dumping duty assessed will be minimal.
Of course this relatively undramatic result takes some of the
luster from an agency's enforcement effort. It is natural to measure
success by the duties collected, rather than by the unknown amount of
dumping deterred. If unresisted, such pressures lead an administrate)]
to shift enforcement dollars toward those types of activities that
yield more visible results and a measurable monetary return on
expenditures.
On the other hand, if the antidumping duties are not collected
promptly, the foreign manufacturer may believe that it can achieve
the short-run objectives I have described. While it may have to
contend with disgruntled importers at some later date when antidumping duties are assessed, that may seem a cheap price to pay for
the substantial short-term advantages. Worse, if assessment and
collection of duties continue to be long delayed, foreign manufacturers and importers may begin to entertain serious doubts about
whether any duties will be collected at all.
While I do not think that our enforcement system has lost its
creditability, I am compelled to report that we have much work to
do to restore it to a high level. As this committee well knows,
in one major case, involving television receivers from Japan, we
are more than five years behind in assessing dumping duties, and
more than six years in collecting them.
The problem is more severe than a review of individual case
backlogs will reveal. The antidumping program is growing, and
growing at an increasing rate. When the Trade Act of 1974 became
effective, early in 1975, Customs was investigating, administering/
or monitoring, approximately 75 cases. By July of 1978, that
number was up to.129, an increase of 72 percent. The rate at
which new cases are being filed has almost tripled since 1976,
to over 40 per year (see annex). Customs is currently charged
with maintaining ongoing lists of dumping duties on numerous
grades, types, and models of products of each of 450 manufacturers.
Every model revision and price change must be reflected on those
lists.
Moreover, our assessment of the future of the Nation's international trade patterns leads us to believe that Customs' antidumping
responsibilities are going to become more complex and demanding at a
far faster rate than the growth of its case load indicates. For one
- 3thing, U.S. imports are shifting toward finished consumer products
and technologically complex manufactured goods. Computation of
dumping duties on such goods requires much more time and resources
than did the calculation of dumping duties on the simpler goods
that they are displacing. Consumer goods such as television receivers,
commonly have myriad minor differences aimed at exploiting taste
preferences within a particular market. Similarly, sophisticated
equipment like large power transformers commonly differ in many
respects simply because they are custom built from extremely complex
arrangements of parts. At present, Customs adjusts for each of these
cost and marketing differences, often down to the penny.
A second factor relates to the increasing importance of multinational business complexes in U.S. trade. Some increased workload
results because these organizations engage in production techniques
which include shipping unfinished goods among affiliates in different
countries for further work. But the far more significant difficulty
that the multi-national business complex presents stems from the
frequent export of goods to the United States through one or more
related U.S. importers. This requires that we accumulate and verify
data through the more complicated procedures that must be used to
avoid relying on prices that are not the result of arms'-length
bargaining.
U.S. trade is also beginning to include products from
countries with state-controlled economies. Under the provisions
of section 205(c) (1) of the Antidumping Act, we are required to
substitute data from companies in a free market country, which
may have no interest in the matter, for the sales and cost information that we would normally obtain from the exporter.
A fourth factor in complicating Customs' task relates to the
increasing reliance in dumping petitions on allegations that foreign
manufacturers have been selling products below their costs of production. Under the provisions of section 205(b) of the Trade Act
of 1974, we are required to exclude such sales from our determination
of home market prices. The theoretical and computational problems
involved in making "cost of production" determinations can be enormous.
Customs is asked to accomplish this task across cultural barriers, for
commodities such as carbon steel plate which comes in at least twelve
gauges and sizes and is but one of-a thousand varieties of steel
produced by a manufacturer, which happens to produce many other
products besides steel. I need not belabor the difficulty of finding
the full cost of one such product, particularly when some of the manufacturers with which we deal do business in economies that lack the
recordkeeping sophistication that we and a handful of our trading
partners have developed.
- 4 In short, Customs' dumping duty assessment program is now
beset with large and growing backlogs; faces an accelerating
expansion in numbers of new cases; and faces larger and more
complex problems within each case as a result of shifts in our
trade patterns. In the light of that background, you will
understand why elimination of the backlog and bringing the
assessment program to a current status cannot be accomplished
easily or quickly.
We have tried to find ways to deal with these problems.
We responded to the allegations of massive dumping of steel
in the United States by instituting a trigger price mechanism
under the Antidumping Act. When we concluded that incomplete
and unreliable data was delaying the Japanese television case,
we moved toward alternative sources for the necessary information.
But in taking these innovative steps, we have discovered
that we must take account of another increased burden: the
virtual certainty that we will be forced to defend each new
approach in litigation. You know that we were successful in
defending the trigger price mechanism in the District Court.
However, Court tests of our ideas divert substantial resources
to battles that do not increase the number of master lists prepared or decrease the backlogs that we face.
I would now like to share with you a number of ideas that
we are considering for improving our efforts. We have identified
three important systemic problems in our current administration
of the Act's provisions on assessment of duties, and we are moving
to develop techniques for eliminating or controlling them.
First, our procedures are not well designed to motivate
importers — and, through them, foreign manufacturers — to
move promptly to comply with our requests for complete, reliable,
and responsive information.
Second, we need to improve our methods for handling the
increasing amounts of data that we are required to process as
imports become individually more sophisticated and collectively
more varied.
Third, we need to develop special duty assessment procedures
to take realistic account of the fact that antidumping cases differ
from the ordinary Customs' process. Our need for comparative
economic data effectively injects the manufacturer as an additional
participant in the antidumping assessment process, despite the fact
that the interests of the manufacturer and the importer are generally
- 5 aligned. The result, at the moment, is that these parties obtain
two, redundant opportunities to submit evidence during the administrative process, and then a third opportunity when the importer
exercises its right to a trial de novo in the Customs Court.
We have the authority to take a number of important steps
toward correction of these problems. I would like to describe
what we are doing, or planning to do, in each of those areas.
1. Securing the Full Cooperation of the Importer and the Foreign
Mahuf ac ture r
The first problem that I mentioned is the importers' and
manufacturers' lack of incentive to move promptly to provide
Customs with complete, reliable, and responsive information.
We are now considering action on two fronts to revise our procedures so that those parties will perceive that it is in their
own interest to cooperate fully.
First, it appears that a significant disincentive to prompt,
willing cooperation today is the importer's ability to retain and
make interest-free use of the potential duties during the pendency
of the assessment process. Delay in assessment and collection
reduces the effective cost for which the importer is ultimately
liable.
We believe that we have the authority to remedy this situation,
by requiring that the importer deposit estimated dumping duties on
its merchandise at the time of entry. We are now preparing proposed
regulations for public comment that would require that estimated
dumping duties be deposited beginning when a finding of dumping is
published. While we will not propose to require such deposits prior
to that formal publication, or to foreclose equitable relief when
exigent circumstances can be shown, the proposed regulations will
otherwise cover all entering merchandise subject to a dumping
finding.
This approach should reverse present incentives. Importers
and manufacturers will want to submit information speedily. They
will want to provide it in a format which facilitates Customs'
analysis of it. In that way, they-will speed the day when any
overpayment of the duties can be returned.
The other way in which we propose to alter the current procedures to eliminate the incentives to delay is to establish and
publicize a uniform administrative practice of resorting to the
best available information" when an importer or exporter fails
- 6 to respond to our requests for data in a timely and complete
fashion. That policy is currently articulated in our regulations,
but is not enforced in practice with sufficient vigor to produce
convincing results. Much of the difficulty involved in the television case, for example, related to late, incomplete, and defective
submissions of information by the manufacturers.
We believe that this approach is fully justified, so long as
fair response periods are set^and Customs' questionnaires are
reasonably clear and precise. The Commissioner intends to ensure
that those standards are met.
Together, these revisions in our current practices should go
some way to alleviate our problems with the manufacturers' and
importers' responsiveness. We, in turn, plan to take measures,
including staff realignment, to enable us to process that information promptly upon its receipt, determine the dumping duties
owed, and make any necessary refunds or supplemental collections.
2. Improving Information Processing Techniques
The second problem that I identified relates to the growing
amount of data that Customs is receiving as a result of changes
in merchandise, and changes in marketing practices. In order to
cope with these changes, we are evaluating whether we can improve
our ability to use data selectively in two respects.
First, we are considering the feasibility of revising our
practice of making dumping findings on a country-by-country basis,
and then performing detailed dumping margin calculations on the
merchandise of every manufacturer within that political unit. We
have the authority to be more flexible, and we believe that dumping
may be more efficiently attacked by a judicious exercise of that
flexibility.
One way in which we can use that flexibility is to focus our
resources on fewer manufacturers. This type of selectivity might
be useful, for example, in the case of roller chain from Japan,
in which Customs is maintaining master dumping duty lists on
approximately 93 manufacturers and exporters, despite the fact
that during the less-than-fair-value investigation, Customs
determined that over 80 percent of the imports into the U.S.
originated with only five of those companies.
There are several ways in which we could proceed with this
approach. We already limit our investigation at the less-thanfair-value stage to the larger manufacturers (with the limitation
that we cover manufacturers accounting for at least 60 percent of
the exports to the U.S.). We might also narrow the scope of the
dumping finding, focusing on those manufacturers that export the
largest volumes of merchandise to the United States.
- 7On the other hand, that approach has limitations that we
will have to consider rather carefully. Evasion, through resale
in the home market, is one difficulty, because adding a company
to the dumping finding would require completion of an entirely
new investigation by both Treasury and the ITC. A similar problem
would arise if an excluded manufacturer began to expand its U.S.
market for other reasons.
These problems suggest the advisability of exploring another
alternative: the development of a more sophisticated way of making
and modifying our dumping findings. We may, for example, consider
whether, in addition to modifying or revoking a finding to exclude
a manufacturer, as our regulations now provide, we might conditionally
suspend application of it to relatively insignificant exporters. That
type of revision might provide us both the ability to concentrate our
enforcement efforts where the problems lie, and the flexibility to
monitor the rest of the manufacturers subject to a finding and move
promptly to correct any problems.
The other way in which we are considering attempting to deal
with the profusion of data that we are encountering relates to the
calculation process itself. The direct consequence of increases
in the complexity of both a product and the marketing system through
which it moves is an increase in the number of adjustments we are
asked to make. The report of the General Accounting Office that
you have recently received documents some of the complexity and
detail of the adjustments that Customs makes.
I am persuaded that the Antidumping Act will be far more
effective if we can develop methods for fairly avoiding expenditure
of resources on the numerous minute claims that are presented.
This is a difficult area, however, because whether an adjustment
is of significant size depends in large part on whether Customs
requires that the manufacturer subdivide its claims and justify
them in more detail.
One approach that we have been considering would involve the
establishment of broad categories of adjustments, into which
individual claims would be presumptively placed. Then, unless
the claims within a general category reached some threshhold size,
we might disallow them.
Another approach would involve increased reliance upon techniques
of sampling and averaging to avoid processing all of certain classes
of data. Customs does some of that now when it allocates advertising
or warranty costs among products subject to a dumping finding. (There
is no reason that a manufacturer's efforts to differentiate its
products from others in order to appeal to consumer preferences
should inexorably require further investigation and computation
by the Customs Service.)
- 8 3. Eliminating Redundant Proceedings
The third problem that I mentioned relates to the uniquenature of the duty assessment process in the dumping area.
Unlike the ordinary assessment, the amount of a dumping assessment depends on information about the home market activities of
the manufacturer of the product — information that is known in
detail only within that company. Before it can assess dumping
duties, Customs must either obtain that information or develop
appropriate substitute data.
The result of this process is that the manufacturer and the
importer, who have both an identity of interest on the question
of the amount of dumping duty owed and only a single source of
relevant information between them, are now getting three separate
chances to make their case on assessment. That is, they have
three completely separate opportunities not only to argue the
merits of their case, but also three opportunities to submit
evidence. The first occurs when we ask the manufacturer for
data and, perhaps inevitably, become involved in the process
of defining our terms and arguing about relevance. The second
occurs when the importer protests the assessment, and submits
supporting evidence. The third occurs when the importer goes
to the Customs Court to challenge our denial of its protest
and submits evidence, in a trial de novo.
We think that sensible administration counsels that we move
as far as we can toward the concept of a single administrative
proceeding, in which, absent persuasive evidence of excusable
neglect or surprise, there is only one opportunity to submit
evidence. Such a process would not only eliminate duplication
of effort, it would also preclude tactical manipulation of the
process through such actions as holding evidence in reserve in
the hope that the resulting ambiguity may be resolved favorably
to the importer.
We believe that the sensible way to move toward such a
unitary system at this time is to press to have the information
presented fully and completely at the first opportunity — when
the information is being gathered for purposes of assessment.
In support of this approach we may 'be able to move toward more
systemmatic efforts to include the importer at that stage, coupled
with tighter restrictions on what may be added to that body of
information during the subsequent protest process.
Our suggestion relates to elimination of redundancies in
the administrative process, and does not address the question
of duplication of effort between the administrative system and
the Customs Court. We would like to gather some experience with
that approach before addressing the appropriate jurisdiction of
the Customs Court.
ANNEX TO TESTIMONY
OF ROBERT H. MUNDHEIM
Number of Dumping Cases Initiated
Yearly
34
32
23
21
17
21
17
n
1965
1966
1967
1968
13
M
1969
1970 |97J
191ft 1939 49#4
1975 1976
Number of Findings in Effect
7*
70T
*5
m<
60 •
5«
50-
40-
20-
10-
J
1965
1966
1967
1968 1969
1970
1971
I
1972
I
1973
L
1974 1975
J
1976
L
1977
1978
6
Stages of Master List Production
and Dumping Duty Assessments
FINDING BASED ON 60Z OF EXPORTS (INVESTIGATION flAY INVOLVE 1 - 5 MANUFACTURERS),
SEND QUESTIONNAIRES TO A H MANUFACTURERS
FOR UPDATED INFORMATION (MAY INVOLVE 90
OR MORE).
ANALYSIS OF RESPONSE (1 - 80 HRS.).
ADDITIONAL INFORMATION MAY HAVE TO BE
REQUESTED (MAY TAKE 1 - 4 WEEKS).
CALCULATION OF PURCHASE PRICE, EXPORTERS
SALES PRICE, FOREIGN MARKET VALUE (3 120 HRS.).
COMPARISONS, DETERMINATION OF DUMPING
MARGINS, IF ANY (1 -24 HRS.).
DRAFT MASTER LIST AND SUBMIT TO TYPING
(1 - 24 HRS.)
TYPING AND REVIEW. SEND TO CUSTOMS
INFORMATION EXCHANGE FOR ISSUANCE
(1 - 24 HRS.).
C L E . ISSUES MASTER LIST TO FIELD
OFFICES (2 WEEKS).
FIELD OFFICERS APPLY MASTER LIST
VALUES TO ENTRIES WITHHELD FOR
PERIOD COVERED ( 1 - 3 MCNThS).
»
FIELD OFFICER NOTIFIES HEADQUARTERS
OF ITEMS CONTAINED IN ENTRIES i!OT
COVERED BY flASTER LIST.
ADDITIONAL INFORMATION REQUESTED
AND PROCESS REPEATED.
TIME ELAPSED BETWEEN REQUEST FOR
INFORMATION AND ACTUAL APPRAISEMENT:
DAD
3* - 10% f'ONTHS.
FOR IMMEDIATE RELEASE
September 22, 1978
Contact:
George G. Ross
202/566-2356
UNITED STATES/UNITED KINGDOM TAX OFFICIALS
MEET TO RESUME TREATY DISCUSSIONS
The Treasury Department today announced that tax
officials of the United States Treasury and the
United Kingdom Inland Revenue met in London on
September 18-20, 1978, to resume discussions on
the US/UK income tax treaty. Results of the discussions will be reported to the respective
governments.
o 0 o
B-1181
FOR IMMEDIATE RELEASE
September 21, 1978
Contact:
Alvin M. Hattal
202/566-8381
STATEMENT OF THE HONORABLE ROBERT H. MUNDHEIM
GENERAL COUNSEL OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON TRADE
HOUSE WAYS & MEANS COMMITTEE
ON
ANTIDUMPING PROCEEDING INVOLVING COLOR AND
MONOCHROME TELEVISION RECEIVERS FROM JAPAN
Mr. Chairman, and Members of the Committee:
I know that this Committee has a particular interest in
the progress of our assessment of duties in the Japanese television dumping case. I would like to take an opportunity now
to report our progress to you.
On March 31st of this year Treasury announced the assessment of antidumping duties on all Japanese television receivers
imported prior to June 30, 197 3. The Customs Service resorted
to the "best evidence available" in conducting that liquidation
because the information that had been submitted to it by the
Japanese manufacturers was incomplete and unreliable. The substitute evidence that Customs used included information generated
in connection with the administration of the Japanese Commodity
Tax. Because resort to best available evidence was unusual, we
wanted to evaluate the propriety of our approach in the concrete
context of the March 31st liquidation before making a decision
on the treatment of the rest of the backlog in that case.
The Customs Service has now conducted that evaluation, and
prepared recommendations. As part of that effort, Customs has
obtained evidence and opinions from the Japanese manufacturers,
the U.S. importers, the U.S. television industry, the Government
of Japan, and independent experts.
Customs has made a number of recommendations on how it
proposes to proceed. Treasury concurs in those recommendations.
They are:
(1) the Customs Service will move promptly to assess
another portion of the backlog, including all televisions
imported up to January 197 5;
B-1182
(MORE)
•
i
- 2 (2) the Customs Service will thereafter assess the
remainder of the backlog as rapidly as its ability to process
the full case permits;
(3) the Customs Service will continue to rely on alternative
sources of evidence, including information derived from the administration of the Commodity Tax, to compute the dumping duties due
on the television receivers of any manufacturer that has failed to
submit complete and reliable information to Customs on a timely
basis;
(4) the Customs Service has determined that/ for the
period July 1973 to January 19 75, only one manufacturer has
submitted complete and reliable information to Customs on a
timely basis;
(5) in using alternative sources of evidence, the Customs
Service will further refine the approach that it used in the
March 31, 19 78, liquidation, by incorporating Commodity Tax
information actually reported by the manufacturer to the Japanese
Government whenever that information has been made available to
the Customs Service on a timely basis in response to its requests;
(6) the Customs Service has concluded that the claims for
adjustments for differences in costs of production and circumstances of sale submitted by the manufacturers during the
July 1973 to January 19 75 period are not reliable and should
not be allowed in computing the dumping duties;
(7) the Customs Service will inform in writing the importers
that are assessed dumping duties on the basis of alternative
evidence in this case of that fact, the Customs Service's basis
for this treatment, and the Customs Service's willingness to
consider, in conjunction with the filing of protests, claims
for adjustments if, but only if, those claims are supported
by more persuasive evidence than the manufacturers previously
submitted to the Customs Service;
(8) the Customs Service will consider evidence of adjustment
claims as sufficiently persuasive only if that evidence is prepared with express references to manufacturers' documentation
and is accompanied by a suitable undertaking promptly to supply
consistent supporting documentation from purchasers and suppliers
of the manufacturer where Customs so requests, and only if all
documentation is subject to satisfactory field verification.
(MORE)
- 3-
(9) the Customs Service will promptly notify the importers
that were assessed dumping duties on the basis of alternative
evidence on March 31 that they may have the same opportunity to
submit more persuasive evidence promptly in support of their
previously filed protests.
(10) the Customs Service will begin collection procedures
for each assessment immediately after it occurs, and is
reinstituting collection procedures on the March 31 assessment
now.
o
0
o
FOR RELEASE ON DELIVERY
EXPECTED 12:00 NOON CDT
SEPTEMBER 22, 1978
REMARKS BY THE HONORABLE
BETTE B. ANDERSON
UNDER SECRETARY OF THE TREASURY
BEFORE THE
INDUSTRIAL DEVELOPMENT COMMISSION
OF CLAY COUNTY
KANSAS CITY, MISSOURI
SEPTEMBER 22, 1978
I was .del ighted when I received the invitation to address
you today, since greater Kansas City, with its wonderful
combination of metropolitan sophistication and internationally
famous commercial and industrial know-how, is always an
attraction to the traveler.
But I had to bone up on my Clay County history to realize
how much at home I would feel here.
Ifm told this "Northland" — north of Jackson County, that
is, was once a southern stronghold and is still, today, proud of
its heritage. For a daughter of Savannah, Georgia, and a Carter
Administration appointee, that spells hospitality!
I also understand that native son Jessie James was buried
just 15 miles from where we stand, and that Harry Truman woke up
one morning at the Elm Hotel in Excelsior Springs to find himself
President of the United States. I'll say Clay County doesn't
lack for folk heroes!
But be you Democrat or Republican, northerner or southerner,
you cannot fail to sense the spirit of pride and of progress in
this area.
X
4.am truly happy to be here today and to share with you some
thoughts and facts about Foreign-Trade Zones, another area in
which Clay County is attracting the attention of the world.
In doing so, I feel rather like the survivor of the
iooaSl";°^n f l o o d w h o m £ d e h i s m a rk in life lecturing about that
lo39 debacle.
B-URT;
-2-
When he passed through the pearly gates, he asked St. Peter
if he might contribute his expertise to the occupants of heaven.
Obligingly, St. Peter prepared the celestial lecture hall, and
informed the speaker that he had a packed house. "However," St.
Peter cautioned, just seconds before the speech was to begin, "I
think you ought to know that Noah is in the audience."
I am certain we have many Noahs in the audience today!
Your massive, multi-site Foreign-Trade Zones were the first
inland FTZs to become operational in this country. During their
initial three years, they have grown in volume of business from
$27 million to $91 million. The unique underground facility here
in Missouri is world famous. I understand this site alone
generates a payroll of $1.5 million annually, and its financial
impact on this community is considered to be three times that
figure.
During the fiscal year 1977, overall U.S. FTZ activity
involving 900 firms rose by 30 percent over the previous fiscal
year. Existing zones reported a total of $653 million in goods
received, compared with $507 million in fiscal 1976. Merchandise
shipped from FTZs amounted in value to $598 million, compared
with $458 million in the previous fiscal year. Obviously, the
advantages of FTZs, including the prestige they lend to an
industrial development area, are apparent to you all.
For those of you who may not be familiar with the Customs
Service's role regarding FTZs, allow me to explain. Foreigntrade zones are enclosed areas which are considered to lie
outside U.S. Customs territory. You might say they are the
domestic versions of what are known internationally as free-trade
zones.
As a matter of fact, they owe their origin to the free ports
that existed in Northern Europe in the medieval days of the
Hanseatic League. Cities participating in that historical
trading union had special status that placed them outside the
customs jurisdictions of their national governments. When these
privileges were later withdrawn, sites known as "free-trade
zones" were established within port areas. But it wasn't until
1934 that the United States Congress authorized similar areas
within this country. It chose to call them "foreign-trade
zones ."
Our FTZs are located in or near U.S. Customs ports of entry,
and are operated as public utilities by qualified corporations
under Customs supervision. Authority for establishing these
rapidly proliferating facilities is granted by the Foreign-Trade
Zones Board,rated as public utilities by qualified corporations
under Customs supervision. Authority for establishing these
^pidly proliferating facilities is granted by the Foreign-Trade
Zones Board, with Customs approval, under the Foreign-Trade Zone
-3Act of 1934. The board has its headquarters within the U.S.
Department of Commerce in Washington, D.C.
The advantage of foreign-trade zones are many. Chief among
them is the fact that foreign goods may enter their areas dutyand quota-free for an unlimited period of time. These goods may
be stored, assembled, combined with domestic or other foreign
materials, used in manufacturing processes, or exhibited.
Domestic merchandise moved into FTZs for export are considered to
be already exported for purposes of excise tax rebates and
drawback.
Thus, FTZs encourage international commerce while providing
jobs for American labor.
Allow me to repeat — formal U.S. Customs entry procedures
and payment of duties on imported merchandise are not required
unless and until that merchandise enters U.S. Customs territory
for domestic consumption.
When that is the case, the importer has the choice of paying
duties either on the original foreign materials -- in which case
he must file a request with Customs for "privileged" treatment -or on the end product -- in which case the components or
materials used are "nonprivileged."
Most often, importers request privileged treatment, since
the Customs duty on the end product is higher than on its
components. Important exceptions include motorcycles,
typewriters, computers, and automobiles.
With more and more foreign firms electing to manufacture or
assemble their products in U.S. FTZs for American consumption,
these exceptions have raised an issue that the U.S. Customs
Service is now examining.
When these end products are produced, the present
appraisement practice requires that labor and overhead costs
incurred, and profit realized, be allocated between the
privileged and nonprivileged components according to their
relative values. These costs — labor and overhead, plus the
profit allocated to the nonpr ivileged components -- are then
included in the dutiable value of the article when it enters U.S.
Customs territory.
In response to a rulemaking petition from the National
Association of Foreign-Trade Zones, the U.S. Customs Service
will issue, in the near future, an advance notice of proposed
rulemaking soliciting comments regarding the advisability of
continuing the appraisement practice.
Fiscal 1977 saw nine more communities added to the evergrowing list of foreign-trade zones. At the year's end, there
were foreign-trade zones at 28 U.S. ports in 22 states. Today,
-435 port communities have active zones.
As costs of locating assembly and industrial operations in
the United States become increasingly favorable for firms engaged
in international trade, exports from U.S. FTZs are expected to
grow at an even greater rate.
World trade has multiplied almost ten-fold since the postWorld War II period. Figures for 1951 were around $76 billion.
By 1976 they were $800 billion. Probably the greatest
stimulation to international trade came from the Truman Doctrine,
the Four Point Program, the Marshall Plan, and the aid the United
States gave to Europe and the world in general following that
war. Here at home, United States trade has increased from $35
billion in 1960 to $270 billion in 1977. Estimates are that it
will increase to $300 billion by 1980.
Trade is no longer a matter of transferring raw materials
and basic commodities. Today it involves transnational shipments
of sophisticated and complex products and components. Where
slightly more than a decade ago U.S. Customs was collecting $1.5
billion in revenues annually, it now collects more than $7
bill ion.
Despite this tremendous growth in volume, Customs has, for
many years, had to cope with antiquated laws which impede its
modernization and delay the introduction of automated procedures
designed to speed up commercial transactions.
The last major piece of legislation dealing with Customs
administrative reform was enacted more than twenty years ago.
Since that time the value of imports and the amount of duty
collected have increased five-fold. Entries have tripled, from
1.1 million in 1956 to 3.4 million in 1976. Entries processed
now average more than 2,500 per Customs import specialist per
year — an increase of 94 percent over the past twenty years.
But today finds us at the threshold of a new and more
progressive era. Congress has just passed the Customs Procedural
Reform Bill, the most comprehensive overhaul of U.S. Customs laws
in a generation.
For the FTZ user who imports foreign goods into the United
States, the bill, when enacted into law, presents many attractive
facets.
For instance, it will permit Customs to release goods to
importers immediately upon presentation of appropriate entry
documents. It will enable Customs to adopt a long-planned
automatic merchandise-processing and revenue-collecting system
tnat will speed up delivery of merchandise to importers, reduce
paperwork, cut the number of financial transactions, and provide
taster and more accurate statistical data.
-5Section 592 of the Tariff Act of 1930 will be amended to
remove the harsh initial penalty assessments now levied on
importers for negligence, gross or simple, and to bar any penalty*
for non-negligent clerical errors or mistakes of fact. It will
also place on the Government the burden of proof in fraud cases,
and give the courts a greater role in penalty rulings.
Those of you who import, or who deal with importers, will
know that the importing community -- including major U.S.
corporations -- have long protested the exorbitant penalties —
some of them in the millions — imposed for relatively minor
entry errors, and the fact that normal judicial redress has been
denied those penalized.
Under the bill shortly to be enacted into law, the
Government will have to show proof of fraud through a
preponderance of the evidence, rather than through so-called,
"clear and convincing" evidence, as is now the case.
One of the major obstacles to Customs adoption of modern
merchandise-processing methods has been the requirement that each
importation be represented by a separate entry document
accompanied by payment of the estimated duties owed on the
merchandise* when it comes into Customs territory. Each entry
must then be processed separately and a separate bill for
additional duties or refund checks for overpayment has to be
prepared and mailed to the importer. Obviously, this results in
an avalanche of paperwork, plus substantial administrative costs
and burdens on Customs, the importers, and the importers' agents,
the customhouse brokers.
The new Customs law will alleviate this situation by
permitting the separation of the entry and reporting process from
the duty-collection process. Importers could take delivery of
their importations by providing Customs with necessary documents.
Within a specified time, the importer will be required to supply
details of the importation and pay the duties. The practical
effect of this new procedure will be to compress the many
individual duty payments into single, weekly payments, provide
immediate delivery of imported goods, and improve the quality of
import statistics.
The new Customs law would also enable Customs to introduce
full-scale implementation of its Automated Merchandise Processing
System, commonly referred to as AMPS. This computerized entry
filing system monitors information on entries, liquidations, and
duty collections. it produces data used for control of warehouse
inventory, in-bond shipments, importers" accounts, and
merchandise quotas, thus simplifying importers' and Customs1
bookkeeping, and providing more accurate and reliable data to the
Bureau of the Census.
Many other facets of the Customs Procedural Reform Bill will
benefit importers using foreign-trade zone facilities. In fact,
:he bill itself represents the culmination of cooperative efforts
>f the Customs Service, the importing community, and Congress.
I might add that other provisions of the bill will delight
:hose of you who combine business with pleasure on your trips
abroad. The duty-free allowance on articles bought overseas will
increase with passage of the Customs Procedural Refrom law to
5300 from foreign countries and $500 from insular possessions of
the United States.
The Customs Procedural Reform bill, when passed, will
further accelerate Customs1 current efforts to establish
increased rapport between the Service and the importing
community.
One result of this intensified dialogue has been the
improved and streamlined procedures introduced by Customs for
handling "hot" quota entries. These are now moved through the
various Customhouse work stations at greater speeds than ever
before, allowing brokers more rapid and reliable feedback as to
the status of these important items.
Another vital subject under discussion at meetings between
Customs and: the trading community is improved cash flow for
brokers, importers, and the Service itself.
Meetings between Customs officials and importers have led to
a new procedure for expediting the release of containerized
cargo. Containers are now examined at ground level and released
before the arrival of the importer's conveyance. Thus, demurrage
costs and handling expenses are reduced and the importers are
able to obtain their merchandise more quickly.
With advanced technology and modern management concepts, the
189-year-old U.S. Customs Service is rapidly becoming a
computerized and cost-effective organization.
During Fiscal 1977, Customs processed $150 billion worth of
imported merchandise at a cost to the taxpayer of only $6 for
every $100 collected.
Clearly, the Treasury Department is keeping abreast with the
momentum of modern business. We want, as well, to keep in close
contact with the progress, and the problems, of the individuals
involved in commerce and trade.
That is why we welcome opportunities to meet with
organizations dedicated to industrial development and foreign
trade. I feel that this meeting is especially significant.
After all, international trade and Kansas City, Missouri,
have been synonymous since 1823 when Francis Chouteau set up a
fU
^" t r a ^ i n g P ° S t o n G r a n d Avenue. He bought pelts from French
2nd Indian trappers and shipped them by barge down the
-7Mississippi to New Orleans and, from there, to France. A U.S.
Customs port of entry was established in Kansas City as early as
1383, and today is among the busiest in the country.
I have thoroughly enjoyed my visit with you and I hope to
have another opportunity to meet with you in the future.
0OO0
department of theTREASURY
WASHINGTON, D.C. 20220
TELEPHONE 566-2041
FOR IMMEDIATE RELEASE
Ijf
N
September 25, 1978
DONALD HAIDER APPOINTED DEPUTY ASSISTANT
SECRETARY FOR STATE AND LOCAL FINANCE
Secretary of the Treasury W. Michael Blumenthal announced
today the appointment of Donald H. Haider, 36, associate
professor of Northwestern University's Graduate School of
Management and faculty associate of the University's Urban
Affairs Center, as Deputy Assistant Secretary for State
and Local Finance.
As part of the Office of the Assistant Secretary for Domestic
Finance, Mr. Haider will have supervisory responsibilities for
functions relating to (1) Treasury's involvement in the National
Development Bank legislation; (2) New York City financing under
the Loan Guarantee Act; (3) evaluation of state and local government access to capital markets, and (4) the impact of certain
federal programs on the financial condition of state and local
governments.
As a White House Fellow in 1976-77, Mr. Haider was a special
assistant in the Office of Management and Budget. He has been
at Northwestern since 1973. Earlier he had been on the faculty
of Columbia University where he earned an M.A. and Ph.D. degrees
in political science. He recieved a B.A. degree at Stanford.
While at Columbia he was a Harriman Fellow, an International
Fellow, and an American Political Science Association Congressional
Fellow in which capacity he spent 1967-68 working in the U.S.
Senate. In 1968-69, as a Brookings Institution Guest Scholar, he
conducted research leading to publication of a book "When
Governments Come to Washington," a study of the impact of federal
expenditures and programs upon state and local governments and
their lobbying activities.
In 1977 he served as a member of the Cook County Assessor's
Property Tax Commission, and in 1975-76 was a consultant to the
Mayor's Committee for Economic Development of Chicago. Other
consulting work included New York State's Charter Revision
Commission for New York City; New York City's Experiment in
Neighborhood Decentralization of City Services; Federal Regional
B-1184
(over)
- 2 Council Vs Resource Allocation Task Force; Chicago United's
Economic Redevelopment Task Force; the Temporary Commission
on New York City Finances; and the U.S. Department of Housing
and Urban Development.
He and his wife, the former Jean Campbell Wright, and their
three children live in the District of Columbia and retain a
residence in Evanston, Illinois.
0O0
)epartmentoftheTREA$URY
TELEPHONE 566-2041
NGTON, DX. 20220
September 25, 1978
FOR IMMEDIATE RELEASE
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,301 million of 13-week Treasury bills and for $3,400 million
of 26-week Treasury bills, both series to be issued on September 28, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
13-week bills
maturing December 28, 1978
Price
Discount
Rate
Investment
Rate 1/
97.953
97.949
97.951
8.098%
8.114%
8.106%
8.38%
8.40%
8.39%
26-week bills
maturing March 29, 1979
Discount Investment
Price
Rate
Rate 1/
95.824
95.811
95.816
8.260%
8.286%
8.276%
8.74%
8.77%
8.7.6%
Tenders at the low price for the 13-week bills were allotted 58%.
Tenders at the low price for the 26-week bills were allotted 99%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTS AND TREASURY:
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
$
Received
Accepted
67,085,000
4 ,351,145,000
19,110,000
32,925,000
15,145,000
32,375,000
260,710,000
37,425,000
15,605,000
30,030,000
12,925,000
304,245,000
$
22,085,000
1,937,960,000
19,025,000
21,925,000
14,515,000
24,775,000
113,220,000
19,125,000
6,605,000
16,265,000
12,925,000
86,895,000
6,105,000
$5,•184,830,000
: Received
75,530,000
:'$
,. 4,763,700,000
28,315,000
•
23,660,000
,
12,020,000
:
19,245,000
:
375,025,000
;
29,045,000
;
4,830,000
;
18,495,000
.
5,810,000
.
200,760,000
.
$
»
70,520,000
2.,916,165,000
23,315,000
13,660,000
12,020,000
18,245,000
223,505,000
11,045,000
4,830,000
18,495,000
5,810,000
73,660,000
8,810,000
8,810,00.0
$2,301,425,000a/. $5 ,565,245,000
$3 ,400,080,000
6,105,000 .
i/Includes $339,205,000 noncompetitive tenders from the public
I Includes $205,560,000 noncompetitive tenders from the public
i/equivalent coupon-issue yield.
B-1185
Accepted
FOR IMMEDIATE RELEASE
September 26, 1978
STATEMENT BY W. MICHAEL BLUMENTHAL
SECRETARY OF THE TREASURY
BEFORE THE BOARDS OF GOVERNORS OF
THE INTERNATIONAL MONETARY FUND AND
THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
Mr. Chairman, Mr. deLarosiere, Mr. McNamara, Governors
of the Fund and Bank, distinguished guests:
We meet at a time when the public perception of the
world economy is one of uncertainty and worry:
about the
persistence of high inflation; about the world's unemployed
and how to put them to work; about international payments
imbalances and how they can be managed so as to avoid undue
strain- on the international monetary and trading systems.
And worry also about the outlook for the economy of the
United States.
The message I wish to leave with you today is that
we must not allow these concerns to distort our vision.
To be sure, unacceptably high rates of inflation and
unemployment remain a serious problem in a number of countrie
And in some, including our own, external imbalances, both
B-1186
- 2 on the surplus and deficit side, are too large.
These are
serious problems that must be resolved, and that is not
an easy task.
But we must not lose sight of the fact that
crisis points have been passed, that progress has been made,
and that further improvement is underway.
The progress
that the nations represented in this room have collectively
and individually made is significant and must not be overlooked.
For it shows how far we have come, that difficult
problems are not insoluble, and hence that further progress
can be made.
The Record of World Economic Recovery
Three years ago, the world faced what looked like an
intractable problem —
stagnating world production, rising
unemployment, and surging double digit inflation.
It was
feared that the greatly swollen payments imbalances could
not be financed, and that industrial as well as developing
countries would be forced into severe financial restraint
and contagious protectionism.
That has not happened.
Progress has been much greater
than generally acknowledged.
In 1974, inflation averaged 15 percent worldwide, and 13 percent in the 0ECD.
Today the
global rate is under 10 percent, and the OECD
rate is under 8 percent.
-3-
—
In 1975, econanic output in QECD fell 1 percent.
This year it will shew a respectable average grewth
of 3-1/2 percent.
—
In 1974, the OPEC payments surplus was $70 billion.
This year it will be about $16 billion.
—
In 1975, the developing countries1 aggregate
current account deficit was $30 billion.
In
1978 it will be about $16 billion, and borrowing
countries generally are in a stronger position
to attract capital. In fact, the developing
nations as a group have increased their official
reserves by same $30 billion over the past 2-1/2
years.
—
Most of the industrial countries facing major
payments deficits in 1974 and 1975 have been able
to cut those deficits substantially, in seme
cases to move into surplus.
Obviously the world economy has not fully recovered the
health and vigor we seek. But it has cone a long way and we
knew what still needs to be dene.
In the IMF Interim Carmittee, in the OECD, and in the
Bonn meeting of the seven largest industrial countries, there
has been agreanent en a basic strategy for achieving further
progress in the reduction of unemployment, inflation and
payments imbalances. That strategy is being put into effect.
- 4 The Government of Japan has announced a broad series of
measures to assure the achievement of its domestic growth
targets and to speed up the reduction in its current account
surplus. The Government of the Federal Republic of Germany
has presented to its Parliament a series of measures to
assure more rapid economic growth. And elsewhere in the
industrial and developing world, a stronger foundation now
exists to resume trend rates of economic growth.
It is against this background that I would like to
report to you on the United States economy. Our economy
has performed remarkably well and today is at a more advanced
stage of recovery than most other industrial countries.
Since the trough of recession in 1975, we have added 10
million persons to our employment rolls. We have increased
total employment by 12 percent. Unemployment has come down
from more than 9 percent to below 6 percent. Industrial
production has increased 31 percent. It is now 10 percent
higher than the pre-recession peak, a far stronger expansion
than in any other industrial country. We achieved 5.7 percent growth in 1976 and 4.9 percent growth in 1977. Our
real gross national product increased almost 18 percent
since 1975. This has been a substantial accomplishment
in the aftermath of the shocks and strains of the early
1970's. The U.S. economy is now approaching optimum
utilization of productive capacity.
- 5 We now expect a tempering of growth to a rate more
consistent with the underlying rate of increase in the
productive potential of our economy. We will pursue this
growth path while reducing 'the federal budget deficit, the
rate of inflation and the current account deficit.
In 1976 the federal budget deficit exceeded $66 billion.
For the fiscal year ending next week, the first budget
submitted by the Carter Administration will result in a
deficit of around $50 billion or less — a $16 billion reduction.
For the next fiscal year, we expect to cut the deficit by
at least another $10 billion, and in Fiscal Year 1980 it is
the President's intent to make a further major cut in the
deficit. This increasingly tight fiscal policy is essential
to achieving domestic goals of reduced inflation and to
reinforcing the movement towards external balance reflected
in the strategy recommended by the IMF.
With regard to the U.S. balance of payments, a number
of key factors making for improvement are coming into place.
We are at long last making progress on energy. The
Congressional Committees have already agreed on several
measures that will promote conservation and improve the
efficiency of energy use. Final passage of these measures
is expected soon.
- 6 I am heartened by the decision to put the Natural Gas
Bill to a vote in the Senate this week.
Passage of this
Bill alone will result, as early as 1979, in a reduction
of oil imports of as much as 500,000 barrels per day from
levels that would otherwise obtain —
of more than $2 billion.
an annual import savings
The Congress recognizes the great
importance that the world community attaches to this issue
because of its implications for our balance of payments and
the stability of the dollar.
I am confident that the Senate
vote will reflect this recognition.
While dependence on oil imports is being reduced,
efforts are being made to expand U.S. exports.
The President
will announce this afternoon the first elements of a national
export policy which will encourage our manufacturers and
our farmers to take advantage of the export opportunities
which are now available to them.
It is not an instant
solution to our laggard perfromance.
But it will begin giving
export markets the priority they require if we are to
eliminate our current account deficit.
I am confident that these efforts, combined with the
slowing of the U.S. economy and more satisfactory growth
worldwide, will substantially reduce our current account
deficit —
by perhaps as much as 30 percent to 40 percent
from current levels.
If at the same time there is a major
reduction in Japan's current account surplus, and further
- 7 reductions in the surpluses of Germany and the OPEC nations,
we can expect a world payments pattern which will be more
conducive to orderly foreign exchange markets.
Critical to the achievement of this goal is the
reduction of inflation in the United States. In the first
half of the year the cost of living rose at an annual rate
of over 10 percent partly as a result of adverse weather
and its impact on food prices. For the second half of the
year we expect a considerable moderation in this rate of
inflation as clearly reflected in the July and August
figures. Nevertheless, it is clear that these levels are
still too high and that further action must be taken.
As said yesterday, the President views this as the
most urgent priority of his Administration. He will shortly
announce an intensification of our effort designed to achieve
further steady progress in bringing inflation down.
This intensified anti-inflation effort will not be
a one-shot affair. It will dovetail with the monetary
policy currently being pursued by the Federal Reserve — a
policy designed to reduce the rate of inflation while
permitting our economy to gorw at a rate consistent with
its underlying potential. It will dovetail also with the
tax proposals that the President has put before the Congress.
These proposals are aimed at encouraging a higher rate of
capital formation and expansion of our industrial capacity.
This facet of our economic program is critical both to the
maintenance of non-inflationary growth and to the international competitiveness of our industry.
- 8 In sum, the world's economic and financial system is
a great deal stronger and more resilient than is commonly
perceived.
severe.
The strains of the past few years have been
But the system has weathered the storm.
The private
markets have responded to unprecedented demands for financing.
Governments have complemented private lending with increased
concessional aid.
The World Bank and the regional development
banks have expanded their development lending.
The
International Monetary Fund has effectively financed the
official balance of payments needs of its members.
The
system has demonstrated its capacity to adapt to rapidly
changing world economic conditions.
International Monetary Fund
The International Monetary Fund is the institutional
centerpiece of our international monetary system.
Since
our last meeting, comprehensive changes in the Fund's Articles
and an agreed increase in quotas have been put into effect.
These actions culminate years of negotiations on the future
shape of the system.
Our efforts must now be directed to
implementation of the new provisions, to supporting the
Fund in its expanded role in surveillance over the monetary
system, and in responding to the balance-of-payments financing
needs of a growing world economy.
I am pleased to report that the Congress is in the
final stages of approving U.S. participation in the Supplementary Financing Facility.
I am.confident that work will
- 9 be completed shortly to enable us to participate in this
cooperative effort to strengthen the international monetary
system in the period ahead.
At the same time, we must lay plans for the longer
term.
We must assure that the permanent resources of the
Fund-remain adequate, that it is in a position to fulfill
its ^responsibility for providing balance of payments
financing and fostering stabilization and adjustment in the
years ahead.
The Interim Committee has now reached a
consensus on measures to strengthen the Fund's position.
The United States believes that a quota increase of 50 percent,
to coyer a period of 5 years, is reasonable and necessary.
A prime IMF responsibility is to provide official financing
subject to the conditionality requirements that have been
so central to the Fund's record of success.
The quota
increase, on which the final decision will be made by the
end of the year, will assure that the Fund has the capability
to continue that essential work.
- We also support an annual 4 billion SDR allocation over
the next 3 years.
It is consistent with the liquidity needs
of?an expanding world economy and with the need to maintain
the SDR as a viable and important reserve instrument.
We
know that today*s inflationary problem dictates moderation
in any official decision to expand world reserves.
The
allocation recommended by the Interim Committee represents
- 10 a prudent compromise, and will in no way weaken our efforts
to control inflation.
The Interim Committee has also agreed
on significant new steps to increase the usability -and
usefulness of SDRs.
We welcome this important progress in
the development of that reserve asset.
The Fund has begun to implement new policies and
procedures in surveillance over exchange arrangements and
the international monetary system more generally.
We believe
that development of the Fund's role in surveillance is
critical to our future management of the international monetary
system.' We will give our full support, and we are confident
that others will do likewise.
We note with great interest the actions being undertaken
by members of the European Economic Community to move toward
their goal of economic and monetary integration, a goal the
United States has long supported.
It is of key importance
that the monetary arrangements developed by the European
Community contribute to the strengthening and stability of
the global monetary system and to the central role of the
IMF within that system.
I am confident that this will be
the case.
The Developing Countries and the World Bank
I turn now to the second half of our agenda —
the problems
of the developing nations and the actions needed to support
the World Bank Group in carrying out its major responsibilities.
- 11 I am greatly encouraged by the economic progress the
developing countries continue to make.
Economic growth has
remained strong in the face of the deep economic disturbances
of a few years ago.
The developing nations' trade has been
robust, and their foreign exchange reserves have been greatly
strengthened.
Thus the flexibility, strength and dynamic character of
the world economic system have effectively served the interests
of developing as well as industrial countries.
All this is promising, but it is far from enough.
President McNamara yesterday painted a broad, balanced and
vivid canvas for all of us to ponder.
The Bank's World
Development Report also gives us an invaluable guide to
the tasks ahead.
We confront a somber situation.
Even if the present
encouraging trends continue, there will still be 600 million
people in the world facing absolute poverty by the end of
the century.
If the economic pace should falter, or if
family planning programs do not expand, that number could be
one billion.
A tolerable world for the next generation
requires that the developing economies grow faster, and that
the benefits of that growth be distributed more widely.
This
outcome will depend on greater efforts in a number of areas
by both industrial and developing countries, and closer
cooperation among them.
- 12 First, the developing countries must have the opportunity
to earn their own way through trade.
The United States will do
its share, along with other industrial countries, to maintain
an open world trade system.
In the GATT negotiations, the
United States supports a 40 percent across-the-board
reduction in present tariffs using the principle of normalization to reduce higher tariffs by larger amounts.
easing of non-tariff restrictions.
It supports
It will resist pressures
for safeguards to limit the market access of developing
countries.
For"their part, the developing countries —
particularly
those whose trading interests are already strong —
must
participate as partners in this endeavor, providing reciprocal
concessions and doing their share to support the rules that
make an open trading system possible.
Otherwise, the prospects
for trade liberalization will be diminished.
Second, the developing countries must have access to
a growing flow of non-concessional capital from abroad.
is particularly needed by the middle-income countries.
again mutual obligations exist.
This
Here
The industrial countries must
make sure that capital markets remain open and that mechanisms
are in place that will enable them to operate smoothly.
To
sustain this flow, the borrowing countries must demonstrate
that they can use this capital productively, and that they
can maintain an encouraging investment climate.
- 13 Third, concessional capital flows must increase in real
terms, must go predominantly to the poorer countries, and
must produce tangible benefits and enlarged economic
opportunities for the poorest people in those countries.
The
United States proposes to increase its concessional aid in
the future and expects to appropriate $6.8 billion for such
aid in fiscal year 1979.
Fourth, the objectives we seek to achieve will require
greater policy emphasis on efforts to alleviate rural and
urban poverty, to increase the productivity and employment
opportunities of the poor, and to increase food production.
Energy is another high priority area.
The high cost
of oil greatly increases the need to develop new sources
of primary energy fuels in the developing countries.
The
United States strongly supports World Bank initiatives in
this area and stands ready to help with technical and other
assistance for energy development.
The World Bank stands at the center of this exercise
in economic cooperation.
It is the largest single source
of development capital and a catalyst for the mobilization
of private foreign capital.
Bank projects are increasingly
concentrated on improving the productivity of the poor and
on fostering a wider distribution of the benefits of economic
growth.
Because of its sustained and wide experience in
- 14 development, the Bank is in a position to provide sound
advice to borrowing governments, and because of its
financial structure, the Bank ensures a fair system of
burden sharing for lenders and donors.
For these reasons, the United States will continue
to provide firm support for the World Bank Group along
with the regional development banks.
This year the United States expects to appropriate
$2.6 billion for its share in financing the
multilateral development banks.
At the Bonn Summit Meeting the United States
joined other nations in pledging to support an
increase in IDA lending in real terms.
I can
assure you that my government will play an active,
constructive role when IDA VI negotiations begin
this year.
--
The United States believes that the World Bank
lending should increase by roughly 5 percent a
year over the medium term and supports a
substantial increase in the capital of the
World Bank to make this possible.
I hope that
discussions on a general capital increase can
resume this Fall and that agreement in principle
will be reached soon.
- 15 In sum, my government supports an expansion in the
operations of the World Bank and the redirection of its
effort in the fight against poverty.
This is an essential
underpinning to a healthy international economic and
political order.
*
*
*
*
*
*
Mr. Chairman, in addressing this meeting I find
myself following the convention of commenting separately
on the activities of the Fund and the Bank.
convention, but somewhat artificial.
This is a useful
Those who participated
at Bretton Woods were keenly aware of the interrelationships
in the work of the twin institutions they founded in a
world recovering from war.
Recent events have once again
demonstrated that the course of world inflation, international payments, international trade and economic development
are inextricably linked.
The progress that nations have made on all these fronts
since the world recession has been considerable.
must be done.
But more
My government will do its part to promote
this progress, by supporting an open world economy, by
continuing to assure the free flow of goods and capital,
by increasing aid flows, and by working to strengthen its
own policies at home.
0OO0
FOR RELEASE AT 4:00 P.M.
September 26, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,700 million, to be issued October 5, 1978.
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $ 5,710 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
July 6, 1978,
and to mature January 4, 1979
(CUSIP No.
912793 W2 8), originally issued in the amount of $3,403 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $ 3,400 million to be dated
October 5, 1978,
and to mature April 5, 1979
(CUSIP No.
912793 X7 6) .
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing October 5, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,557
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Daylight Saving time,
Monday, October 2, 1978 .
Form PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
records of the Department of the Treasury.
B-1187
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
borrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied forb
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury.^A
cash adjustment will be made on all accepted tenders for the,~
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banJcs
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on October 5, 1978,
in cash or
other immediately available funds or in Treasury bills maturing
October 5, 1978.
Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
9r
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
wrm
FOR IMMEDIATE RELEASE
September 26, 1978
Contact:
Alvin M. Hattal
202/566-8381
TREASURY DEPARTMENT SAYS MARINE FENDERS
FROM JAPAN ARE NOT BEING "DUMPED"
The Treasury Department today announced its
final determination that pneumatic marine fenders
from Japan are not being sold in the United States
at less than fair value.
"Sales at less than fair value" generally
occur when merchandise is sold in the United States
for less than in the home market or third countries.
Marine fenders are energy-absorbing devices
used to absorb the kinetic energy of ships and other
vessels during berthing or while moored to a dock,
quay, or another vessel.
Notice of this action will appear in the Federal
Register of September 29, 19 78.
Imports of pneumatic marine fenders from Japan
were valued at approximately $683,000 during calendar
year 19 77.
o
B-1188
0
o
September 27, 1978
FOR IMMEDIATE RELEASE
RESULTS OF AUCTION OF 15-YEAR 1-MONTH TREASURY BONDS
The Department of the Treasury has accepted $1,504 million of
$2,480 million of tenders received from the public for the 15-year
1-month bonds auctioned today.
The range of accepted competitive bids was as follows:
Lowest yield 8.60% 1/
Highest yield
Average yield
8.65%
8.64%
The interest rate on the bonds will be 8-5/8%. At the 8-5/8% rate,
the above yields result in the following prices:
Low-yield price 100.175
High-yield price
Average-yield price
99.757
99.840
The $ 1,504 million of accepted tenders includes $152 million of
noncompetitive tenders and $1,352 million of competitive tenders from
private investors, including 65 % of the amount of bonds bid for at the
high yield.
1/ Excepting 2 tenders totaling $51,000
B-1189
For Release Upon Delivery
Expected at 10:00 a.m.
STATEMENT OF
DANIEL I. HALPERIN
DEPUTY ASSISTANT SECRETARY (Tax Legislation)
DEPARTMENT OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON MISCELLANEOUS REVENUE MEASURES
OF THE
COMMITTEE ON WAYS AND MEANS
September 29, 1978
Mr. Chairman and Members of the Subcommittee:
I am pleased to have the opportunity to appear this
morning to discuss the tax aspects of product liability. As
the long roster of witnesses suggests, this subject has
sparked a great deal of public interest. The two current
approaches to this issue are reflected in a variety of
measures* that would permit deductions for contributions to
product liability self-insurance trusts; and S. 3489, introduced by Senator Culver and supported by the Administration,
which would extend from three to ten years the carryback
period for net operating losses attributable to product
liability.
As you may be aware, Mr. Chairman, the Treasury testified
last month on product liability before the Subcommittee on
Taxation and Debt Management of the Senate Finance Committee.
In my testimony before that Subcommittee, I discussed at
length the chronology and reasoning that led to the Administrations conclusion, announced by Commerce Secretary Kreps on
July 20, 1978, that it should not endorse the various setaside proposals and to recommend instead the enactment of a
special ten-year net operating loss carryback now embodied
* These bills include H.R. 10272, H.R. 12429, H.R. 7711 and
H.R. 8064, together with some 25 identical bills.
B-1190
- 2 in S. 3489. I have attached to my testimony today a copy of
my testimony before the Senate Subcommittee and I ask that
it be made a part of the record of these hearings.
I will summarize briefly the reasons underlying the
Administration's conclusions. First, the superficially
appealing notion that the tax law discriminates in favor of
commercial insurance and against self-insurance is based on
a misconception. We concluded that existing law, with
modification of the treatment of loss carryovers, would
provide virtually the same tax benefits as commercial
insurance. On the other hand, existing proposals for current
deductibility of contributions to self-insurance trusts
provide an opportunity for tax deferral and thereby would
operate to subsidize self-insurance. Even if a subsidy were
justified, the benefit to business from proposals providing
current deductibility for contributions to a self-insurance
trust cannot justify the administrative complexity involved.
I believe that at the heart of the debate over product
liability tax proposals there is confusion over whether, or
to what extent, it is possible to self-insure under current
tax law and obtain benefits similar to those that would be
provided by the set-aside proposals. Much of the discussion
we have heard in support of such proposals is premised on
the assumption that, without allowing deductions for contributions to a self-insurance trust, it is not possible, or is
too costly, to "self-insure." I would like to explore with
the Subcommittee the reasons why we have concluded that this
is not so.
To be specific, it can be demonstrated under current
law, as under the set-aside proposals, a portion of all
product liability losses will be provided through tax
savings as long as the business has earned enough taxable
income to cover the loss. If there were no net income,
neither provision will provide a benefit. It is true that
current law, with or without S. 3489, would not provide all
the same benefits as the set-aside proposals. After I have
described the reasons for the identity, I will also describe
the nature and significance of the difference.
The essential starting point for the analysis is to
recognize that product liability claims are currently
deductible in the year paid or incurred. Section 165 of the
Internal Revenue Code permits a taxpayer, in computing
taxable income, to deduct any business loss that is "not
compensated for by insurance or otherwise." (There are
- 3 occasions when I think that proponents of set-aside proposals
lose sight of this fact.)
To take a simple example, if a corporation, which we'll
assume to be in the 50 percent bracket, incurred a $100 loss
for this year, that loss would be deductible, its taxable
income would be reduced by $100, and its tax liability would
be reduced by $50. Through the deductibility of losses the
government, in effect, pays a share of the loss according to
the marginal income tax rate applicable to the taxpayer. In
this example, the next cost of the loss is reduced by the
$50 tax saving. Put another way, through the tax system the
government is essentially a co-insurer of any loss—including
any product liability loss—incurred.
Now, what is it that a set-aside proposal would do?
The essence of this proposal is not to create a new deduction,
but rather to alter the timing oFThe deduction under Section
165. Most of these bills specifically provide that, to the
extent a product liability loss or a related expense is paid
for out of a self-insurance trust, the deduction otherwise
allowable under Section 165 would be denied. Thus, the
essence of this measure is to permit a business utilizing a
self-insurance trust to obtain an earlier deduction for a
contribution to that trust in exchange for which it must
forego a later deduction on account of an actual loss.
What do the intended beneficiaries expect to gain by
securing an earlier deduction? As we see it, there may be
two advantages, aside from tax deferral* to permitting
advance deductions for contributions to a product liability
self-insurance trust (assuming that the trust assets ultimately
will be expended to pay product liability expenses that
would in any event be deductible under Section 165). One is
that in the year in which a loss is actually incurred the
taxpayer may not have sufficient taxable income against
which to deduct the loss. By permitting contributions to be
deducted over a period of years, the tax savings from deducting
theI loss
are
more
to be my
realized.
Theofsecond
possible
would
like
toapt
postpone
discussion
tax deferral.
benefit
that by
up a fund
a period
of time
For
that is
reason,
in building
the discussion
thatover
follows,
I will
ignore
a
taxpayer
can
"salt
away"
funds
on
a
periodic
basis
for
the fact that the assets in these trusts would be earning
that day
notwithstanding
all its
efforts that
to manufacture
income
andwhen,
ignore
also the question
of whether
income
safe
products,
it
is
faced
with
a
product
liability
should be taxable or exempt. These issues are at theclaim.
heart of
the Administration's objections and I will deal with them in
due course.
- 4 The points in response that I would like to make are
that, first, under current law, particularly as modified by
a measure such as S. 3489, a taxpayer can be assured that
the deduction to which it is entitled by reason of a product
liability claim can effectively be utilized. As to the
second argument, a business is not precluded from establishing
a reserve fund merely because it is not allowed a tax deduction
for the contribution. Such a taxpayer can put aside a
smaller sum in tax-paid dollars which, together with the tax
benefits of deducting loss when incurred, will put it in
virtually as good a position to defray the loss as if it had
set aside larger amounts year by year under a set-aside
proposal.
To illustrate the first point, suppose that in 1977 our
corporation earned income of $1,000 and, again assuming it
paid tax at a rate of 50 percent, its tax bill came to $500.
Suppose further that in 1978, the year in which it incurred
a $100 product liability loss, its taxable income, computed
without regard for that loss, was zero. This is just one of
those situations for which the set-aside proposals are
designed. Considering the current taxable year alone, the
corporation obviously can realize no tax benefit from being
able to deduct that loss: even without the deduction it had
no taxable income and therefore has no tax to pay. All the
$100 product liability loss would do would be to create a
$100 "net operating loss".
However, the Internal Revenue Code currently contains a
means by which to average income earned and losses incurred
in discrete taxable years. The mechanism is provided in the
net operating loss carryover provision of Section 172 of the
Code. Section 172, in general, permits a net operating loss
to be carried back and applied against taxable income
earned during each of the three years preceding the year in
*
In general,
taxpayer
isif
inthe
a better
if a three
net
which
the lossaarose;
and,
incomeposition
during those
operating
loss can be applied
against
and absorbed
years is insufficient
to absorb
the loss,
to carry by
it taxable
income
prior it
year,
that taxable
is, by aincome
net operating
loss
forwardfor
anda apply
against
earned during
carryback.
of succeeding
a carryback
gives rise to an immediate tax
any of the Use
seven
years.*
refund. In contrast, where a net operating loss must be
carried forward to a subsequent taxable year, the taxpayer
must await the carryforward year before realizing the benefits
of the net operating loss. For that reason, S.3489, by
extending the carryback for net operating losses attributable
to product liability from three years to 10, will increase
substantially the extent to which a tax refund from a net
operating loss due to product liability would be obtained
promptly.
- 5 Under existing law, the taxpayer in our example can,
therefore,, carry back its $100 net operating loss from 1978
(in this case due to product liability, but it could be due
to anything else! and apply it against the $1,000 of taxable
income it earned in 1977. Its taxable income would be
reduced from $1,000 to $900, and its tax bill (at a 50
percent rate) from $500 to $450. Since it had already paid
$500 in tax for 1977, it would be entitled to a refund of
$50. Thus, the net cost of the product liability loss, the
gross amount of which was $100, is reduced to $50, and the
taxpayer is in precisely the same position as if it had been
able to apply the loss against taxable income earned this
year. (It is also in essentially the same position as if,
last year, it had set aside and deducted a $100 contribution
to a self-insurance trust.)
The availability of a net operating loss carryover
tends to reduce the likelihood that if, because of inadequate
taxable income, a taxpayer is unable to realize the benefits
of deducting a loss in the year the loss is incurred, the
benefit of the deduction will be lost. Instead, the deduction
is effectively spread over a longer period, which tends to
insure the realization of those benefits. Under current
law, the general carryback period is limited to the three
preceding years; for losses attributable to product liability
S. 3489 would extend it to 10. Apart from deferral, this is
the same as allowing a set-aside for a ten-year period
limited only by the taxable income during those ten years.
Put another way, the ten-year carryback provides the same
ability to obtain the benefits of deducting a loss as would
an unlimited ten-year set-aside. Of course, a taxpayer
which did not have income in the preceeding 10 years would
not benefit from the carryback but neither would that taxpayer
obtain any advantage from the deduction allowed by a setaside.
Let's turn then to the second perceived advantage of the
set-aside proposals, namely that they would permit taxpayers
to salt away some money for the day when a product liability
claim arises.
- 6 In each of the preceding examples, the taxpayer incurred
a $100 product liability claim from which it realized tax
benefits of $50. The other $50 of the claim it had to pay
itself. In the example where the corporation had no taxable
income in the year the loss was incurred, some may ask what
the source of the payment will be.
But is there any reason, despite the absence of a setaside deduction, why it could not have set funds aside
specifically to cover such a contingency? Mr. Chairman, the
crucial point is that it could have put money aside to pay a
product liability claim, even though it had paid tax on the
money. When it actually incurred the loss the tax benefits
would fall automatically into place.
Let's look at year one, the year when the taxpayer
earned $1,000 in taxable income, paid tax of $500 and had
$500 left over in cash. Let's assume the taxpayer concluded
that, despite its diligent efforts at making safe products,
it was fortunate not to have incurred any product liability
claims and might not be as lucky next year. Consequently,
it concludes it should put something aside to make sure that
if such a claim should arise, it will have cash to cover it.
How much should be put aside for this purpose, assuming
the taxpayer believes that the loss (If it occurs) will
amount to approximately $100? We know that if a $100 loss
is incurred the government will pay for $50. This comes
about, as we have already seen, by virtue of the ability to
deduct that loss. Moreover, the taxpayer will be entitled
to the tax benefit of deducting that $100 loss whether it
has $1 million of taxable income next year or zero.
Consequently, to provide for a $100 product liability claim,
the taxpayer surely should not put aside $100. The appropriate
amount is the estimate of the loss ($100) less the estimated
tax savings ($50) that will accrue to the taxpayer by virtue
of the deduction under section 165. In essence the trust
contains the equivalent of $100, $50 in cash and $50 in a
potential tax refund.
The point of all these examples, Mr. Chairman, is that,
under current tax law, a business is quite able to set aside
money to cover a self-insured risk even though it gets no
deduction for, and thus must pay tax on, the money that is
set aside for that purpose.
- 7 -
Up to now, we have tried to point out why businesses
can obtain the protection they seek without a current deduction
for a contribution to a reserve. Let me now turn to our
objections to the proposal. The set-aside proposals advance
the timing of deductions for contributions to self-insurance
trust and exempts from taxation the earnings on that trust.
In contrast, if a taxpayer were to self-insure with tax-paid
dollars, he would be Earning interest on a somewhat smaller
amount and the earnings on that amount would be taxable.
The combined benefits of current deductibility and tax
exemption amount to tax deferral, to which the Administration
obj ects.
But, it is argued, a taxpayer which purchases commercial
insurance obtains a current deduction. Why is it reasonable
to deny what seems to be a similar benefit to those who
self-insure? There are several reasons for doing so.
First, under current law, no deduction is permitted for
losses that are compensated by insurance. It follows from
this fact that an insured is no better off by deducting :premiums at an earlier date than by deducting an uninsured
loss when incurred. Moreover, casualty insurers are taxable
on their income both from premiums and investment of those
premiums. Finally, unlike commercial insurance premiums,
which are lost forever to the insured, money placed in a
self-insurance trtistftiayvery well revert to the selfinsured. Taken together, these considerations lead to the
conclusion that a self-insured might be better off with a
self-insurance set-aside proposal than through commercial
insurance.
Furthermore, the deferral benefits to a taxpayer from
a set-aside measure must be weighed against the burden
imposed on the tax system. First, there is no assurance that
amounts set aside in an exempt self-insurance trust will
ever be expended to pay product liability claims. Ultimately,
they may revert to the business. For example, a business in
all good faith could over ten years put several hundred
thousand dollars in a self-insurance trust and never be
obliged to pay one cent of product liability expense.
Suppose that, at the end of that ten years, the taxpayer
were to conclude in light of fortunate experience that it no
longer needed the trust. Under most of these set-aside measures,
the taxpayer would apply to the Commissioner for consent to
terminate the trust and, if the circumstances seemed appropriate,
consent would be forthcoming. The bill then provides that
all amounts in the trust would be taken into income on
termination. While the mathematics are complex, it can be
- 8 demonstrated to a certainty that, .even taxing all amounts in
the trust when it was terminated and its assets distributed,
the taxpayer would be in a far better position than if he
had never established the trust. We do not think that the
sponsors of this proposal intend that businesses should be
money ahead simply by establishing a product liability selfinsurance trust and terminating it at some later date.
This possibility is especially objectionable in the
context of measures like the set-aside proposals under which
contributions need bear no relationship whatever to any
particular taxpayer's likely level of product, liability
claims. For some businesses, the amounts set aside will be
insufficient to cover all their product liability expenses.
For others, the amounts set aside may well exceed by a
substantial amount what they will need to pay for product
liability. For the latter taxpayers— those with least
need of the trust — there will be greater benefits from
deferral and those benefits will be augmented the longer the
period for which their money is tied up. We regard this
to be an inappropriate result.
It is all the more inappropriate because it is needless.
As I have already pointed out, all the benefits other than
deferral could be obtained under current law, especially as
modified by S. 3489. Under such an approach, in contrast
with the set-aside approach, the benefits of deducting
losses under section 165 would accrue only to those who
actually incur such losses. It would not provide any
windfall subsidy to those who set up a trust only to terminate
it and receive back the assets in the trust after it had
been in existence for a period of years.
For these reasons, Mr. Chairman, we urge the Subcommittee
not to report H.R. 12429oand,
0 o instead, to act favorably on
the principle embodied in S. 3489.
CEXCERPT)
TESTIMONY OF
DANIEL I. HALPERIN
ACTING DEPUTY ASSISTANT SECRETARY (TAX LEGISLATION)
OFFICE OF TAX POLICY, DEPARTMENT OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON TAXATION AND DEBT MANAGEMENT OF THE
SENATE FINANCE COMMITTEE
August 28, 1978
Mr. Chairman and Members of this Subcommittee:
Product Liability (S. 1611, S. 3049)
Mr. Chairman, I would now like to turn to S. 1611
and S. 3049, both of which are measures designed to facilitate
self-insurance of product liability risks. With the Chair's
consent, I would also like to consider with the Subcommittee
an Administration-sponsored alternative to the approach
taken by S. 1611 and S. 3049, both of which the Administration
opposes.
Both S. 3049 and S. 1611 would amend Section 165 of the
Code to provide current deductions for contributions to
product liability self-insurance accounts. In both instances,
annual contributions would be limited to a percentage of
gross revenues subject to a dollar maximum, and the aggregate
funding of the trust would similarly be subject to both
percentage and dollar limitations. S. 3049, which constitutes the more comprehensive treatment, provides separate
limitations for taxpayers in general and for those having a
"severe product liability problem." Contributions are
required to be made to an independently trusteed, segregated
account, the assets of which may be invested only in Federal,
State or local debt securities or instruments of deposit in
a financial institution, and which may not be used for any
purpose other than satisfying product liability losses. To
the extent a product liability loss is paid out of the
proceeds of the account, no further deduction under Section
165 is allowed, and penalty taxes are imposed to insure that
proceeds of the account are not used for an inappropriate
purpose. Special rules are provided for groups of affiliated
companies and for contributions to a wholly-owned (or
"captive") insurance company.
- 2-
The tax treatment of product- HaK.su *.
,„.
y self
is a subject that not only hS Seen X « *
Insurance
UrC
public and Congressional debate b S t h L °
? °f lively
thoroughgoing review Sy the AaSinistratJon606^6? a m ° S t
this subject will constitute an Effort £« \ M y ^stimony
on
Subcommittee the reasons that £avf K d S a ' S S n T i ? ? "
oppose S. 1611 and S 304Q *r>* ?I
I
Administration to
Proposal that wSld extend S ten y ^ ^ t h * " * 1 ^ ^ ^ 6
for net operating losses a t t J i b u ^ r f o ' p r o d ^ l S i K t y ! "
has been thoroughly sSSed^an ?^dUCt ^^Y Problam
headed by the ofpartmen?"? Smmerce
Tl?
?asV°~e
the Task Force outlined a au£b£ oTsteps iLiuS* 1 R 6 P ° r t '
Insura^^e^^e^h«^^
the Task P o r c e ^ S s u g g e ^ £ a f ^
S ^ ? ^ .
- 3 provided through the tax system. The relief considered in
the report would have been to permit deductions within
certain limits for contributions to self-insurance trusts.
This proposal was recognized by the Task Force as being of
an admittedly short-term nature, and to constitute no
substitute for longer term revisions to local tort law and
insurance ratemaking practices needed to deal with the root
causes of the product liability problem. Moreover, the
short-term tax recommendation was based principally on the
perception that by permitting deductions for casualty insurance
premiums but not for contributions to self-insurance funds,
the tax law discriminated against self-insurance. The Task
Force Report cautioned, however, that any such proposal
should not be advanced without a more thorough study of its
merits.
That follow-up study now has been completed. The
Administration's conclusions and proposal were announced by
Commerce Secretary Kreps on July 20, 1978. The reasons that
led the Administration not to endorse a deduction for
contributions to product liability self-insurance reserves
are essentially three. First, the superficially appealing
notion that the tax law discriminates in favor of commercial
insurance and against self-insurance is in fact based on a
misapprehension. Second, the existing proposals for current
deductibility of contributions to self-insurance trusts
provide an opportunity for deferral of taxes and thereby
would operate to subsidize self-insurance. Because selfinsurance is inherently inefficient by contrast with commercial
insurance, and because of technical difficulties stemming
from the inability to estimate future product liability
losses, we concluded that extending such a subsidy would not
be appropriate. Finally, we concluded that existing law,
with some modification, would provide virtually the same tax
benefits, other than deferral, as proposals providing
current deductibility for contributions to a self-insurance
trust, and with far less administrative complexity. The
necessary modification, as I have already noted, would be to
amend current law to provide a special 10-year net operating
loss carryback, in contrast to the three-year net operating
loss carryback generally available under current law, for
losses attributable to product liability. Let me now explore
each of these reasons in somewhat greater detail.
It is a misconception to believe that, because commercial insurance premiums paid in the ordinary course of a
trade or business are deductible and contributions to a
self-insurance trust are not, the tax law discriminates
against self-insurance. Product liability losses
incurred in a trade or business are, of course,
deductible when incurred under section 165 of the Code.
The deduction under 165 is disallowed, however, for
any loss to the extent such loss is "compensated for
by insurance or otherwise." Thus, the enterprise
paying premiums for commercial product liability
insurance may only deduct those premiums when paid
or incurred. To the extent the loss is reimbursed
by the insurer, however, no further deduction is
permitted. Consequently, the tax treatment of selfinsured and commercially insured losses is essentially
symmetrical. There is no discrimination to be cured.
In view of the fact that the tax law does not
discriminate against self-insurance, some other rationale for permitting current deductions to selfinsurance trusts must be found. And, in considering
the possibilities, one must recognize that conferring
current deductions for contributions to self-insurance
trusts, where such trusts are tax exempt, invariably
gives rise to tax deferral.* That deferral constitutes
a subsidy to self-insurance. Consequently, the
pivotal question is whether any subsidy, and if so
whether a subsidy in the form of deferral, is warranted.
Taking the second question first, the Administration concluded that if a subsidy for product liability
self-insurance was appropriate, deferral was not the
appropriate mechanism by which to deliver it. The
benefits of deferral vary with the marginal rate of
the taxpayer and with the period of time for which
taxes are deferred. Thus, while a good many corporate
taxpayers are in the top 48 percent bracket, those in
lower brackets would benefit less. Similarly, the
greatest benefits would accrue to those whose
* The earnings of the trust are in effect taxed at
the time of the loss since no further deduction is
allowed even though the loss exceeds the original
contribution.
. 5 -
funds remained on deposit the longest, who well might be
those with less in the way of product liability losses.
Finally, because a subsidy in the form of deferral is offbudget, it is subject to less rigorous scrutiny than a
subsidy required to be appropriated.
The Administration also concluded that the case for
subsidizing self-insurance of product liability losses
generally was not strong. The principal basis for this
conclusion was that self-insurance very well may be the
least efficient form of insurance. By "least efficient", I
mean simply that, to self-insure, the insured party is
required to put up $1 of capital for every dollar of risk
insured. Because, in contrast, commercial insurance involves
the pooling of covered risks, the amount of capital required
per dollar of coverage is significantly smaller. Consider,
for example, the case of four business enterprises each of
which is reasonably certain that it will incur a $100 loss
at some time during the next four years. None is certain
when its loss will occur but probability tells us that if
each of the participants has a one-in-four chance of incurring a loss during each of the next four years, it is
likely that one of the four will incur a loss each year.
For each firm to self-insure would require each to place
roughly $100 in a self-insurance trust. If the four were,
instead, to engage in a pooling arrangement similar to
mutual'insurance, each would have to tie up only roughly $25
each year. The $100 ($25 from each participant) would be
pooled in the participants' mutual insurance company and
would be used to pay the likely claim of the one participant
who incurred a loss each year. By sharing their risks, each
participant would thus be able to spread its contribution to
the shared risks over a four-year period, rather than having
to self-insure for nearly the full $100 for the entire
period. Because of such economies in a risk-sharing arrangement, commercial insurance is inherently more efficient than
self-insurance.
The problems with self-insurance are compounded where,
as in the case of product liability, it is next to impossible
to predict the magnitude of future risks. This difficulty
is reflected by the fact that both S. 1611 and S. 3049
provide for deductions limited, not by a taxpayer's anticipated
experience, but by a percentage of sales subject to ceilings
on annual contributions and maximum funding of the product
liability loss reserve account. Because such contributions
are not limited, and indeed in practice could not be limited,
- 6 to amounts that bear some relationship to a taxpayer's
actual experience, the contributions to such accounts well
might be excessive for some taxpayers, wholly inadequate for
others, and in only random instances would bear any relationship to the need of particular taxpayers. Because of this
randomness, the amount of subsidy afforded by these proposals
would also be random.*
* Indeed, the amounts for which S. 3049 and S. 1611 would
permit tax deductibility would not be properly accruable for
financial accounting purposes. A reserve for self-insurance
of possible future losses is in the nature of a general
contingency reserve, the contingency in the case of S. 3049
and S. 1611 being possible future product liability loss.
Statement number 5 of the Financial Accounting Standards
Board ("FASB") provides that, before liability for a loss
contingency may be recognized, (1) information available
must indicate that it is probable that an asset has been
impaired or a liability has been incurred at the date of the
financial statement, and (2) the amount of the loss must be
reasonably estimated. Under these provisions, contingency
reserves constitute liabilities for which no accrual is
permitted and FASB Statement number 5 specifically so provides. A potential liability of this type need not be
disclosed in supplemental information unless there is a
reasonable possibility that a loss has been incurred. This
treatment is required by generally accepted accounting
principles even though the reserve is funded through a
segregated trust or through the use of a captive insurer.
It is also worth noting that amounts for which a
deduction would be permitted by S. 3049 or S. 1611 would not
have been deductible under the general rules, once promulgated
by Congress, that would have conformed tax accounting to
general accepted accounting principles. As originally
enacted, the Internal Revenue Code of 1954 contained two
sections—Sections 452 and 462—which would have allowed for
the deferral of prepaid income and deductibility of additions
to reserves for estimated expenses. These provisions were
repealed retroactively in 1954. It is noteworthy that the
regulations promulgated under Section 462 provided that
allowable reserves for estimated expenses did not include
reserves for general, undetermined contingencies for indefinite
possible future losses. See Regulations Section 1.462-5(b)(4),
T.D. 6134. Thus, even under the liberal standards of former
Section 462, no deduction would have been allowed for
additions to reserves for product liability losses.
- 7 -
Finally, the existence of exempt, self-insurance trusts
would require complex administrative controls. For one
thing, the Internal Revenue Service would be required to
insure that such trusts were not overfunded and that their
investments were limited in the manner required by, for
example, S. 3049. Moreover, extremely complex accounting
would be required to define the .appropriate tax treatment to
be applied on nonqualifying distributions from, or liquidations of, such product liability loss reserve accounts.
Presumably, the sponsors of such provisions would wish to
provide that, if an enterprise established a product liability
loss reserve account and, after a number of years, decided
that it no longer needed the account, the taxpayer should
reap no benefits by virtue of having established and maintained
the account. In order to give effect to this result, extremely
complex accounting provisions would be required to bring the
taxpayer back to square one. It would, I should note, not
be sufficient simply to provide that all amounts distributed
from the account be subjected to tax.
For all these reasons — the fact that self-insurance
is inherently inefficient, the fact that contributions to
such accounts would bear no relationship to a taxpayer's
actual experience, and the administrative complexity that
these proposals would entail — we do not think the Congress
should endorse a provision that would subsidize such selfinsurance through the tax system.
Having concluded that the Administration should not
endorse proposals to subsidize through the tax system selfinsurance of product liability risks, did not stop there.
Apart from its deferral aspect, a proposal to allow a
current deduction for contributions to a self-insurance
trust can be regarded as a method of averaging product
liability losses over a period of several years. For example,
a taxpayer who put a thousand dollars in a product liability
loss reserve account for each of 10 years, and who at the
end of that 10 years incurred a $10,000 product liability
loss, would effectively have spread the burden of that loss
over a 10-year period. Thus, we asked whether there were
any revisions to current law that might accomplish this
result but that would not entail deferral. Under current
law, the method by which taxpayers are permitted to average
losses over a longer period than the year in which the loss
is incurred is in the net operating loss carryover provisions
of Section 172 of the Code. In general, a net operating
loss may be carried back and applied against taxable income
earned during the three years perceding, and carried forward
- 8 -
and applied against income in the seven years following, the
year in which the loss was incurred. Where a net operating
loss is carried back to a prior taxable year, it is applied
against income earned during that year and gives rise to an
immediate claim for refund of taxes paid on that income. In
view of the fact that product liability may give rise to
sporadic but extraordinary losses, we were prompted to
inquire whether the three year carryback period of current
law was adequate. In this connection, we noted that in some
instances, for example financial institutions, the Congress
had already concluded that a net operating loss carryback
period of longer than three years would be appropriate, and
we asked whether a similar proposal might not be adopted for
net operating losses attributable to product liability. We
have concluded, Mr. Chairman, that it would. Consequently,
as you know, on August 1, 1978, the Administration forwarded
to Chairman Long, Chairman Ullman and other interested
members of the Congress a proposal to modify Section 172 to
provide a ten-year net operating loss carryback for losses
attributable to product liability.
Mr. Chairman, we believe that this net operating loss
carryback proposal constitutes an appropriate tax response
to the product liability problem and should be endorsed by
this Subcommittee in lieu of proposals such as S. 3049 and
S. 1611. As modified by this proposal, we believe that
current law will provide nearly all the benefits to taxpayers-mother than deferral of taxes—that they would obtain
from being permitted to deduct contributions to a product
liability self-insurance trust. In this connection, I would
like to consider two arguments that have been raised in
support of the contention that allowing a deduction for
product liability set-asides would be preferable to current
law, even as modified by the ten-year net operating loss
carryback that the Administration has proposed.
First, it is said that by encouraging businesses to
establish self-insurance reserves for product liability,
measures such as S. 3049 would facilitate retention of
product liability risks and put pressure on the insurance
industry to reduce rates for commercial product liability
coverage. The answer, we believe, is that nothing in
current law precludes a firm from self-insuring by setting
aside some reserves—in tax paid rather than pre-tax dollars—
to provide for product liability risks. Indeed, a firm that
desired to obtain under current law the equivalent in selfinsurance through contributions to a self-insurance trust
would be required to put up roughly half the amount in tax
- 9 paid dollars as would be required for a reserve funded with
pre-tax dollars. This difference arises because, when a
reserve is funded with after-tax dollars, the loss against
which the reserve is maintained remains fully deductible and
the deduction gives rise to a corresponding decrease in
Federal income tax liability. Businesses will, therefore,
remain free to self-insure a portion of their risk with
after-tax dollars, knowing that, through their ability to
deduct the loss, they are essentially "insured with the
government" for the amount of the tax benefit of the deduction.
Moreover, if the ten-year net operating loss carryback
proposal is adopted, as we believe it should be, such businesses
will have the assurance that the government will defray a
portion of their loss even if they have no taxable income in
the year the loss is incurred.
Second, it has been suggested that when a firm establishes
a self-insurance reserve, the knowledge that its own money
is "at stake" should a product liability loss be incurred
will encourage it to show greater concern for the safety of
its products. We believe that, under current law, and as
modified by the Administration proposal, the incentive to
make safe products will be every bit as great. The firm
that self-insures without providing segregated self-insurance
reserves—the firm that "goes bare"—has perhaps the greatest
incentive to make safe products since, absent commercial
coverage or a reserve, the equity in its business is at
stake. This incentive would not be reduced by extending the
net operating loss carryback for product liability losses.
While the availability of that carryback would tend to
insure that each taxpayer will realize immediately the tax
benefits of being able to deduct the loss, even for a taxpayer
in the 48 percent tax bracket, the government only pays 48
cents on each dollar of loss. To the extent of the other 52
percent, the taxpayer's reserve (if it has one), or its
equity in its business (if it does not), remains at risk for
the loss. Consequently, we do not think current law as
modified by the ten-year net operating loss carryback, will
diminish at all the incentives that exist to produce safe
products.
In sum, Mr. Chairman, we believe that current law, as
modified by a ten-year net operating loss carryback, provides
an appropriate response to those who desire to encourage
self-insurance of product liability risks. We think it
would be far more equitable than either S. 3049 or S. 1611,
since it would not involve tax deferral. We think it is far
more efficient, since it neither requires nor forecloses
- 10 -
businesses from setting up self-insurance reserves—with
tax- paid dollars—at the level they consider to be appropriate.
And we think it would be far more simple to administer,
since the loss carryback would come into play only to the
extent it was necessary, and would not require cumbersome
administrative machinery to police the use of self-insurance
trusts. For these reasons, the Administration urges the
Subcommittee to give favorable consideration to the ten-year
net operating loss carryback proposal. It would oppose
adoption of either S. 3049 or S. 1611.
FOR IMMEDIATE RELEASE
EXPECTED AT 10:00 A.M. EDT
THURSDAY, SEPTEMBER 28, 1978
STATEMENT BY THE HONORABLE C. FRED BERGSTEN
ASSISTANT SECRETARY OF THE TREASURY
FOR INTERNATIONAL AFFAIRS
BEFORE THE
SENATE COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE
The Framework for a New Export Polic
In 1977, the United States incurred the largest current
account deficit in its history — $15 billion. The trade
deficit has remained large during the first seven months
of 1978. Underlying trends in trade flows suggest that the
1/
deficit has been diminishing since February.
As a result
of faster growth abroad, somewhat slower growth in the United
States, and the increased price competitiveness of U.S.
goods, the current account deficit should continue to decline
during the next several quarters.
But we cannot simply rely on a forecast of better times.
1/ Monthly trade figures (Census Basis) showed a sharp drop in
the deficit in August 1978 ($1.62 billion) following a sharp
rise in July 1978 ($2.99 billion) which in turn came after a
sharp drop in June 1978 ($1.60 billion). Month-to-month
figures are often erratic, but the underlying trend clearly
seems to indicate a declining deficit.
tf-llil
- 2 A large deficit undermines the strength of the dollar which
in turn fuels inflation and leads nations around the world
to question our ability to successfully manage our own economy.
We must take visible policy steps to turn the adverse current
account figures around.
Correction of the deficit will take time. But the
clear message, both from the exchange markets and from our
trading partners, is that we must act now in a forceful
and decisive fashion to reduce the deficit. The export policy
announced by the President on Tuesday is an important part of
the Adminstration's response to the deficit, and to the
position of the dollar in the exchange markets. The other
central elements of that response include the new anti-inflation
program which the President will announce shortly, the energy
program now nearing passage by the Congress, tightening of
monetary policy by the Federal Reserve, gold sales by Treasury
and other "bridging" actions. The direct effort to expand
U.S. exports is an integral part of the overall package.
The Export Problem
The U.S. export problem, and the new export policy,
go beyond our immediate concern for the dollar and our
current account deficit. The United States has simply never
had to emphasize exports as have other countries. U.S.
manufacturers have been content with supplying the large
U.S. market and have never really focused on exports.
- 3 Our growing economic dependence on the rest of the world now
dictates that we become more attuned to exports — just
as we must learn to use energy more efficiently and just
as some of our major trading partners, notably Japan, must
become more attuned to imports. The measures announced by
the President on Tuesday do not offer a quick fix, for the
simple reason that we must address a long-term structural
problem.
Over the past two decades, U.S. exports have grown at
only half the rate of other industrial nations. The U.S.
share of total manufactured exports by 15 industrial countries
hit its low point of 19.2 percent in 1972, and then rose to
21.1 percent in 1975. Since then, our export share has
retreated to its 1972 level. In the first quarter of 1978 it
fell further to 18.9, the lowest since mid-1972.
Our competitors, by contrast, have managed a real
export growth rate (even excluding their exports to the United
States) of nearly 4 percent per year since 1974 despite slow
worldwide economic growth.
There are several reasons for these developments. Our
major markets, such as Canada and Latin America, have grown
more slowly than the major markets of some of our competitors.
A number of advanced developing countries (ADCs), primarily
in East Asia, have seized a significant market share from
all industrialized countries. The appreciation of the dollar
- 4 in 1975 hampered our price competitiveness in the recent
past and has affected our export performance. In addition,
exchange rate changes of late 1977 - early 1978 are distorting short-run trade shares which are calculated
in value terms expressed in dollars. But our deep-seated
national indifference to exports — both in the private
sector and in the U.S. Government — has clearly played
a role. Such indifference is now simply too costly.
Increasing U.S. Exports
A better export performance by the United States would
spur growth in our economy and create jobs. Stronger
exports would help stem the decline in the value of the
dollar and thus fight inflation. But increasing our exports
presents a major challenge to business, to labor and to
the U.S. Government. It requires attention to many factors
— including productivity, price competitiveness, industrial
innovation and initiative, and Government policies.
A key determinant of U.S. competitiveness abroad is
the productivity of our domestic economy. Productivity
largely depends on new investment. In the last five years,
productive capital per worker has been virtually stagnant
— resulting in a sharp reduction in productivity growth.
The Administration's tax recommendations sent to the Congress
this year are designed to stimulate capital formation and
national productivity.
- 5 Another determinant of U.S. competitiveness abroad is
the rate of inflation.
Excessive inflation here, particularly
by comparison with Germany and Japan, has eroded our international competitiveness.
The President's anti-inflation
program will consist of a broad set of measures designed
to bring down the U.S. inflation rate.
As those measures
take effect, our trade position will improve.
The United States has traditionally enjoyed a comparative
advantage in high technology exports.
To assure that this
advantage is maintained, we have established a task force
to examine both public and private research and development
efforts.
The task force will concentrate on regulatory
policies that stifle U.S. inventiveness.
Its proposals
will further strengthen our economy at home, and its ability
to meet competition from abroad.
We are also taking important international initiatives
to improve U.S. export performance.
Trade restrictions
imposed by other countries inhibit our ability to export.
Tarifff and especially non-tariff, barriers restrict our
ability to develop new foreign markets and expand existing
ones.
We have been aggressively attacking these barriers
through the Multilateral Trade Negotiations in Geneva.
We are encouraged by the progress to date; the intensity
of the negotiations is increasing as we approach the
December 15 deadline.
- 6 Foreign governments have increased the financial credits
and subsidies offered to their own exporters, sometimes to
the disadvantage of U.S. exporters. We have addressed
this problem in three ways. First, we have negotiated an
International Arrangement governing the use of government
financing of exports. Second, in the Multilateral Trade
Negotiations, we are negotiating an international code
to restrict the use of government subsidies for exports —
to assure that U.S. exporters do not face unfair competition.
Third, if foreign government competition in the area of
export financing cannot be restrained, we will meet it by
appropriate matching programs.
U.S. Government regulations have also had a negative
impact on U.S. export performance. In order to achieve
a varied range of foreign policy objectives, the U.S.
Government has restricted the sales of certain items to
particular countries. Not only have these policies
directly reduced sales, they have had a chilling effect
on other potential sales of unrestricted items. The
United States is gaining an image of an unreliable supplier.
Foreign purchasers, even though not currently restricted,
may decide to buy elsewhere for fear that they may be cut
off in the future. The new export policy seeks to confine
the negative export impact of other policies to those
few cases where vital national interests are at stake.
- 7 The Outlook for the Future
All these efforts are important elements in our attempt
to increase our export growth. But they are not sufficient
in themselves. Our export priorities must be changed.
In the course of Government policy-making, export consequences are frequently outweighed by other national objectives.
Business, as well, too often places insufficient priority on
exporting. Too many companies do not believe that exporting
is worth the effort.
International economic changes over the past year have
altered the fundamental conditions. U.S. businessmen need
to take a new look at these changed conditions.
First, changes in the value of the dollar in relation
to the currencies of some of our major trading partners have
dramatically enhanced the price competitiveness of U.S. goods.
U.S. manufacturers who may not have been competitive a year
ago may now find they can compete quite successfully. A U.S.
manufactured item selling for $100 in June -1977 cost 235
German marks or 27,200 Japanese yen. That same $100 manufactured item today costs only 196 German marks or 13,800
Japanese yen, declines of 16.6 percent and 30.9 percent
respectively. Thus U.S. products are significantly more
competitive in Germany and Japan as well as against products
of those countries in third markets.
Second, the wage gap between U.S. workers and workers
- 3 in other countries has been closing.
No longer is it
cheaper to manufacture many products abroad and import
them into the United States. In Japan wage rates have
jumped from 53 percent of the U.S. wage in 1977 to 72
percent in August 1978. Wages in Germany are now equal
to or higher than in the United States for several industries.
This is a significant factor that both U.S. and foreign
firms take into account when they consider whether to locate
a new plant in the United States or abroad.
Third, we are doing something right. The share of
exports in our GNP has increased significantly in recent
years — rising from 4.1 percent in 1971 to 6.4 percent
in 1977. But this share needs to rise even further: every
percentage point will add over $20 billion of export sales,
enough to completely eliminate our current account deficit.
In conclusion, it is clear that the U.S. current account
deficit is too large. Recent exchange rate adjustments
have helped, but additional public and private measures
are also needed. Those measures should be targeted directly
at our trade problems — be they oil imports, excessive
inflation in the United States, or inadequate export growth.
The new export policy is a critical element in our overall
strategy.
FOR IMMEDIATE RELEASE
EXPECTED AT 10:00 A.M. EDT
FRIDAY, SEPTEMBER 29, 1978
STATEMENT BY THE HONORABLE C. FRED BERGSTEN
ASSISTANT SECRETARY OF THE TREASURY
FOR INTERNATIONAL AFFAIRS
BEFORE THE
JOINT ECONOMIC COMMITTEE
SUBCOMMITTEE ON INTERNATIONAL ECONOMICS
The Need for a New Export Policy
President Carter announced a new export policy for
the United States on September 26 for two basic reasons.
First, improved export performance is an integral component
of our overall effort to strengthen and stabilize the dollar in
the foreign exchange markets. The President has personally and
repeatedly expressed his concern about the dollar, most recently
before the Annual Meeting of the International Monetary Fund and
World Bank on September 25. A major cause of weakness in
the dollar has been the large and growing deficit in our trade
balance and current account. The most constructive
way to deal with those deficits is to expand U.S. exports.
It is important to note that recent trends in the trade
balance, and the outlook, are encouraging. In each of the
last two three-month oeriods, the average monthly trade
deficit declined by half a billion dollars from the previous
B-l l <*9
- 2 three-month period: from $3.1 billion in December 1977February 1978 to $2.6 billion in March-May 1978 to $2.1
billion in June-August 1978.
For next year, the current account deficit should
continue to decline as a result of faster growth abroad,
somewhat slower growth in the United States, and the
increased price competitiveness of U.S. goods. We believe
the deficit could decline by 30-40 percent in 1979.
Other observers — such as the IMF, OECD and Morgan Guaranty
— foresee an even greater reduction in the deficit, ranging
between 50-67 percent.
Nevertheless, the United States needs to take new
export initiatives. We need to assure that recent trends
are continued. We need progress beyond even the most
optimistic numbers envisiged for 1979. And we must realize
that, whatever the outcome in the short run, U.S. export
performance must improve significantly for long-run
reasons.
This is the second basic reason for our new export
policy. The external economic position of the United
States is undergoing an important long-run, structural
change. The sharp increase in our dependence on imported
oil and, to a lesser extent, other products, means that the
share of imports in our GNP has risen sharply. There must
- 3 -
therefore be a concomitant rise in the share of exports in
our GNP — where each single percentage point now means over
$20 billion, enough to completely eliminate our current
account deficit even at this year's record level.
The trade deficit was a long time in the making.
Correction of the deficit will take time. But the clear
message, both from the exchange markets and from our
trading partners, is that we must act in a forceful
and decisive fashion to do so. The new export policy
is an important part of the Administration's responsef
The Export Problem
The United States has simply never had to emphasize
exports as much as other countries. Most U.S. manufacturers
have been content with supplying the large U.S. market and
have never really focused on exports. Our growing economic
dependence on the rest of the world now dictates that we
become more attuned to exports — just as we must learn
to use energy more efficiently and just as some of our major
trading partners, notably Japan, must become more attuned
to imports. The measures announced by the President on Tuesday
do not offer a quick fix, for the simple reason that they
address a long-term structural problem.
Over the past two decades, U.S. exports have grown at
only half the rate of other industrial nations. The U.S.
- 4 hit a low point of 19.2 percent in 1972, and then rose to
21.1 percent in 1975. Since then, our export share fell
again to 18.9 percent the lowest since mid-1972.
Our competitors, by contrast, have managed a real
export growth rate (even excluding their exports to the United
States) of nearly 4 percent per year since 1974 despite slow
worldwide economic growth.
There are several reasons for these developments. Our
major markets, such as Canada and Latin America, have grown
more slowly than the major markets of some of our competitors,
differential growth rates have cost our trade balance about
$10-15 billion. The substantial appreciation of the dollar
in 1975, at a time when our inflation rate was higher than
that of other countries, hampered our price competitiveness
in the recent past; it probably cost the trade balance about
$5-10 billion. A number of advanced developing countries
(ADCs), primarily in East Asia, have seized a significant
market share from all industrialized countries. And the
exchange rate changes of late 1977 - early 1978 are distorting short-run trade shares which are calculated
in value terms expressed in dollars. But our deep-seated
national indifference to exports — both in the private
sector and in the U.S. Government — has clearly played
a role. Such indifference is now simply too costly.
- 5 -
Increasing U.S. Exoorts
A better export performance by the United States would
spur growth in our economy and create jobs. Stronger
exports would help stem the decline in the value pf the
dollar and thus fight inflation. But increasing our exports
presents a major challenge to business, to labor and to
the U.S. Government. It requires attention to many factors
— including productivity, price competitiveness, industrial
innovation and initiative, and Government policies.
A key determinant of U.S. competitiveness abroad is
the productivity of our domestic economy. Productivity
largely depends on new investment. In the last five years,
productive capital per worker has been virtually stagnant
— resulting in a sharp reduction in productivity growth.
The Administration's tax recommendations sent to the Congress
this year are designed to stimulate capital formation and
national productivity.
Another determinant of U.S. competitiveness abroad is
the
IgJ-g-Pf inflation. Excessive inflation here, particularly
by comparison with Germany and Japan, has eroded our international competitiveness. The President's anti-inflation
program will consist of a broad set of measures designed
to bring down the U.S. inflation rate. As those measures
take effect, our trade position will improve.
- 6 -
The United States has traditionally enjoyed a comparative
advantage in high technology exports. To assure that this
advantage is maintained, we have established a task force
to examine both public and private research and development
efforts. The task force will concentrate inter alia
on regulatory policies that stifle U.S. inventiveness.
Its proposals will further strengthen our economy at
home, and our ability to meet competition from abroad.
We are also taking important international initiatives
to improve U.S. export performance. Trade restrictions
imposed by other countries inhibit our ability to export.
Tariff, and especially non-tariff, barriers restrict our
ability to develop, new foreign markets and expand existing
ones. We have been aggressively attacking these barriers
through the Multi-lateral Trade Neqotiations in Geneva.
We are encouraged by the progress to date; the intensity
of the negotiations will increase as we approach the
December 15 deadline.
Foreign governments have increased the financial credits
and subsidies offered to their own exporters, sometimes to
the disadvantage of U.S. exporters. We have addressed
this problem in three ways. First, we have negotiated an
International Arrangement governing the use of government
financing of exports. Second, in the Multilateral Trade
- 7 Negotiations, we are negotiating an international code
to restrict the use of government subsidies for exports -to assure that U.S. exporters do not face unfair competition.
Third, if foreign government competition in the area of
export financing cannot be restrained, we will match it as
needed.
U.S. Government regulations have also had a negative
impact on U.S. export performance.
In order to achieve
a varied range of foreign policy objectives, the U.S.
Government has restricted the sales of certain items to
particular countries.
These policies have not only
reduced sales directly.
They have also had a chilling effect
on other potential sales of unrestricted items.
The United States is gaining an image of being an unreliable
supplier.
Foreign purchasers, even though not currently
restricted, may decide to buy elsewhere for fear that
they may be cut off in the future.
The new export policy
seeks to confine the negative export impact of other
policies to those few cases where vital national interests
are at stake.
The Outlook for the Future
All these efforts are important elements in our attempt
to increase U.S. exports.
in themselves.
But they are not sufficient
America's export priorities must be changed.
- 8 In the course of Government policy-making, export consequences are frequently outweighed by other national objective
Business, as well, too often places insufficient priority on
exporting. Too many companies do not believe that exporting
is worth the effort.
International economic changes over the past year have
altered the fundamental conditions. U.S. businessmen need
to take a new look at these changed conditions.
First, changes in the value of the dollar in relation
to the currencies of some of our major trading partners have
dramatically enhanced the price competitiveness of U.S. goods.
U.S. manufacturers who may not have been competitive a year
ago may now find they can compete quite successfully. A U.S.
manufactured item selling for $100 in June 1977 cost 235
German marks or 27,200 Japanese yen. That same $100 manufactured item today costs only 196 German marks or 18,800
Japanese yen, declines of 16.6 percent and 30.9 percent
respectively. Thus U.S. products are significantly more
competitive in Germany and Japan as well as against products
of those countries in third markets.
Second, the wage gap between U.S. workers and workers
in other countries has been closing. No longer is it
cheaper to manufacture many products abroad and import
them into the United States. In Japan wage rates have
jumped from 53 percent of the U.S. wage in 1977 to 72
percent in August 1978. Wages in Germany are now equal
- 9 to or higher than in the United States for several industries.
This is a significant factor that both U.S. and foreign
firms take into account when they consider whether to locate
a new plant in the United States or abroad.
Third, we are doing something right. A hundred or so
U.S. firms have made major inroads in world markets.
The share of exports in our GNP has increased significantly
in recent years — rising from 4.1 percent in 1971 to
6.4 percent in 1977. But this share needs to rise even
further; every percentage point will add over $20 billion
of export sales, enough to completely eliminate our
current account deficit evern at the peak levels of 1977
and early 1978.
It is clear that the U.S. current account
deficit is too large. Recent exchange rate adjustments
have helped, but additional public and private measures
are needed. Those measures should be targeted directly
at our trade problems — be they oil imports, excessive
inflation in the United States, or inadequate export growth.
The new export policy is a critical element in this overall
strategy.
FOR RELEASE AT 4:00 P.M.
September 29, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,700 million, to be issued October 12, 1978.
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $5,708 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
July 13, 1978,
and to mature January 11, 1979
(CUSIP No.
912793 W3 6 ) , originally issued in the amount of $3,406 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $3,400 million to be dated
October 12, 1978,
and to mature April 12, 1979
(CUSIP No.
912793 X8 4 ) .
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing October 12, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,215
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Daylight Saving time,
Friday, October 6, 1978.
Form PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to
submit tenders for bills to be maintained on the book-entry
B-1193
records of the Department of the Treasury.
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
borrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury.
A cash adjustment will be made on all accepted tenders for
the difference between the par payment submitted and the
actual issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or
for bills issued in bearer form, where authorized- A deposit
of 2 percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive
bids for the respective issues.
Settlement for accepted tenders for bills to be maintained
on the book-entry records of Federal Reserve Banks and
Branches, and bills issued in bearer form must be made or
completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on October 12, 1978, in cash or other
immediately available funds or in Treasury bills maturing
October 12, 1978. However, since the Baltimore Federal Reserve
Branch will be closed on the settlement date, investors
purchasing bills through that Branch are given the following
payment options:
-31.
Payment with cash, Federal funds, other immediate
credit items, or check in collected form, by
Wednesday, October 11;
2. Payment with matured bills by Friday, October 13;
3. Payment with cash, Federal funds or other immediate
credit items by Friday, October 13, plus one day's
accrued interest.
Cash adjustments will be made for differences between the
par value of the maturing bills accepted in exchange and the
issue price of the new bills.
Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of
these bills (other than life insurance companies) must include
in his or her Federal income tax return, as ordinary gain or
loss, the difference between the price paid for the bills,
whether on original issue or on subsequent purchase, and the
amount actually received either upon sale or redemption at
maturity during the taxable year for which the return is
made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
FOR IMMEDIATE RELEASE
EXPECTED AT 10:00 A.M.
MONDAY, OCTOBER 2, 1978
STATEMENT BY HELEN B. JUNZ
BEFORE THE
EUROPEAN-AMERICAN COMMODITIES CONFERENCE
LONDON, ENGLAND
Intervention in World Commodity
Markets: Appropriate or Not?
The pricing of raw materials has been a policy concern
for many years. Abrupt changes in demand, cyclical shifts
in business activity and exogenous factors affecting supply,
such as weather conditions or natural disasters, can lead
to large price swings. These, in turn, can have adverse
effects on consumers and producers alike.
Traditionally, the problem of instability in commodity
markets has been left to producers to resolve. However,
during the past couple of decades, the mutuality of concerns
of consuming and producing nations has come into sharper
focus, with the increasing recognition that boom-bust commodity cycles are detrimental to both. They fuel inflationary
tendencies in the consuming countries, and to the extent that
these price pressures become embedded in wage structures,
they are in turn transmitted to the producing countries via
import prices. For developing countries heavily dependent
B-1194
- 2 on the production and export of commodities, excessive price
volatility can severely frustrate long-term development
planning and create distortions in development patterns
through large shifts in domestic savings, tax revenues and
foreign exchange earnings, leading to alternating surges in
inflation and periods of recession and unemployment. Thus,
both sides have recognized the desirability of finding ways
and means to bring about greater stability of commodity prices.
In recent years, however, the concern for greater price
stability has given way to a much broader range of issues.
On the side of the developing countries (LDCs), the main
underlying goal has been to obtain a sufficient and stable
flow of financial resources to meet domestic economic and
political objectives. This, and a rising determination in the
developing countries to right the injustices of a colonial
past, have sharpened their desire to obtain transfers of resources
as a matter of right rather than at the discretion of donors.
Thus, the LDCs have sought ways to increase their access to
additional resources on an automatic and unconditional basis.
These efforts intensified following the supply shortages
of 1973 - 74 and the success of the cartel action of the Organization of Oil Producing Countries (OPEC). As a consequence,
political demands recently have concentrated on changes
in international economic arrangements that would give
developing countries a greater voice in decisionmaking, provide
greater access to international financial resources on an
unconditional basis, and establish price strengthening commodity agreements (ICAs) to assist in increasing export earnings.
- 3 In pursuing these aims, the LDC, caucus known as the group
of 77 (G-77), has established a surprising degree of political
cohesion which has enabled the LDCs to formulate and maintain
joint positions throughout a full schedule of international
conferences. Consequently, considerable momentum was generated
for positive consideration of a number of their demands. But,
actual translation of these demands into action has been complicated because maintenance of political cohension has also
meant inflexibility in negotiations. This inflexibility derives
from the fact that any negotiation must seek to accommodate
the interests of each and every grouping among the LDCs.
The Producer Initiative
The momentum created by the joining together of the LDCs
led to the adoption by the international community of the
Integrated Program for Commodities (IP), initiated by the
developing countries, at UNCTAD IV in 1976. But the IP also
demonstrates the need to include their whole range of
interests. The objectives of the IP included:
reduction of excessive price fluctuations in raw materials of production
and export interest to LDCsi';
1/
The commodities include a core of ten -- cocoa, coffee
copper, cotton, hard fibers, jute, natural rubber,
sugar, tea, and tin — for which buffer stocking were
claimed feasible. Eight others for which other types of
international measures were called for, included:
bananas, bauxite, iron ore, manganese, meat, phosphates,
tropical timber and vegetable oils.
- 4 expansion of processing of primary
commodities and diversification of
productive capacity in LDCs;
improved access to developed country markets
for processed forms of raw materials;
improved and sustained real income for
developing countries through increased and
stabilized export earnings; and
improved competitiveness of natural products
vis-a-vis synthetics.
The developing countries felt that these objectives should
be achieved by considerable and far reaching intervention in
and regulation of commodity markets. The mechanisms proposed included:
— buffer stock arrangements for at least ten "core"
commodities;
development type measures for all eighteen commodities in the IP.
The LDCs envisaged that talks between producer and
consumer countries would result in agreement on specific
measures for each of the eighteen commodities. The range
of possible measures would include 1) price stabilizing
mechanisms such as international buffer stocks and national
stocks, 2) price raising devices such as production controls
- 5 and price indexation, and 3) a variety of development measures
including product diversification, market promotion, R&D,
and processing.
The producers proposal for a natural rubber agreement,
for example, contains all three types of measures. Producers
have pressed for a 300,000 to 400,000 metric ton buffer
stock to stabilize prices, an export and production control
system, a price revision mechanism based on changes in production costs and the prices of synthetics, and a large,
consumer financed fund for a wide range of non-buffer stock
measures.
The principal integrating element, pulling together
the diverse objectives and measures under the IP, has been
a Common Fund (CF) that would finance the entire range of commodity measures. Financing for the CF would come from
several sources: first, from producing and consuming countries
participating in ICAs; second, from contributions from members
of the CF at large, with the major share coming from the developed countries; and third, from loans raised on private
capital markets. Funding was initially put at $6 billion. The
CF would lend ICAs the necessary resources to acquire physical
stocks in the market, with repayment required when the stock
is sold. Financing of non-buffer stock measures would include
a significant grant element. In the management of the CF
- 6 the developing countries would have "decisive" control
on the basis of the one-country one-vote principle.
U.S. Policy Response
The basic approach of the United States to the IP has
been to look positively but discriminatingly at those mechanisms
that can provide substantial benefits to both consumers and
producers of primary commodities. In doing so, we have, as
have many other industrialized countries, supported measures
designed to achieve greater price stability. To promote the
increase of productive capacity and other measures appropriate
to development policy, we have supported action through those
mechanisms designed to transfer resources for such purposes.
We have rejected measures that would transfer resources through
price raising mechanisms, because these would act to destabilize
demand and supply over the longer term and disrupt markets to
the detriment of both producers and consumers.
Commodity Agreements
U.S. participation in ICAs is conditional upon certain
basic principles. ICAs:
must be designed to stabilize prices around underlying market trends, not to raise prices above those
trends;
must balance the interests of producers and consumers,
in terms of responsibilities and benefits; and
must provide wide latitude for the operation of
market forces.
- 7 -
We have concluded that these principles are best served by
buffer stock arrangements. Under a pure buffer stock regime,
the benefits of price stabilization to producers and consumers
balance out over the longer term. Buffer stock arrangements
help to maintain prices during periods of excess supply to the
benefit of producers, and lower prices during periods of
shortages to the benefit of consumers. By reducing commercial
risk, increases in investment, production and consumption take
place at lower costs, to the benefit of all market participants. Such commodity agreements complement rather than impede
the operation of market forces.
Commodity agreements that rely on production and/or
export controls impede the operation of market forces, create
market inefficiencies and eventually lead to a misallocation
of resources. Production controls force low cost and high
cost producers to cut back output equally, thereby locking
industry into inefficient patterns of production. In
addition, agreements that rely on supply controls tend to
freeze existing market patterns as they bar entry of new, and
possibly more efficient, producers.
The free play of the pricing mechanism is essential for
efficient buffer stock operations. Market prices trigger
stock purchases and sales in the short run and allocate
resources efficiently in the long run. For this reason,
- 8 buffer stock arrangements should provide for price ranges
that are easily adjustable to market trends and are sufficiently wide to allow prices to play their allocative role.
The U.S. proposal for a natural rubber agreement provides
a clear statement of how the basic objective of price
stabilization can be met without disrupting market operations
or restricting supply. Our analysis indicates that a buffer
stock of around 700,000 metric tons, some twenty percent of
annual consumption, would be adequate to stabilize prices
within a +20 percent range around their medium term trend. With
an adequately sized buffer stock and appropriate arrangements
for adjusting price ranges when necessary, no back-up supply
mechanisms should be needed.
Although we generally oppose supply controls as a price
stabilizing mechanism, there may be a case for export quota/
national stocking schemes for commodities which are unsuitable
for an internationally held buffer stock. This applies
particularly to commodities for which storage costs in a
central location are high, which may have a very high supply
variability or where other technical factors make pure
buffer stock arrangements uneconomic. However, under such
circumstances, frequent reallocation of quotas should assure
continuing responsiveness to changes in supply capabilities. Such
reallocation allows for easy entry of new producers and for the
shifting of market shares from inefficient to efficient producers
- 9 Furthermore, coupling quota arrangements with national
stocking schemes assures that productive capacity is not
artificially limited and helps ensure that supplies will be
available to protect consumers in the event of price surges.
Examples of export quota/national stocking arrangements are
the recently negotiated coffee and sugar agreements.
For a number of other commodities such as bananas and
tea, a viable stocking scheme is simply not feasible. Moreover, for these and a number of other commodities listed in
the Integrated Program, price volatility is not the basic
problem. Where commodities are faced with competition from
substitutes and longer-run declining demand—like jute and
hard fibers—development of new end-uses, promotion of
consumption, productivity improvement and related measures
provide the best solutions. By contrast, price stabilization schemes can do nothing to remedy such situations and
price raising arrangements, such as proposed by some producers,
would only worsen them.
The Common Fund
Commodity agreements of the type we seek must be adequately financed to enable them to build buffer stocks of
sufficient magnitude to stabilize prices effectively. We
believe that by consolidating the assets of individual ICAs
in an appropriately structured CF, actual budgetary
drains on participating member countries could be reduced
significantly. Furthermore, implicit in our proposal for
- 10 a CF is a contingent commitment to share in the financing of
buffer stock arrangements, thereby reducing the financial
burden on producers.
According to our proposal, ICAs would deposit a predetermined portion of their maximum financial requirement
(MFR) in the CF and thereby be entitled to a credit line for
the balance of their MFR.
The credits would be backed by
negotiable warehouse receipts (stock warrants) of each ICA
as stock is acquired and by capital on call from ICA member
countries.
The presumption is that, barring exceptional
circumstances, capital would not have to be called.
Under
normal circumstances, the CF would lend from unused deposits
from ICAs in a selling phase to those in a buying phase. In
addition, the CF, when the need arises, could borrow in the
financial markets on the basis of the stock warrants and the
callable capital pledged to it by the ICAs.
Differences between the G-77 version of a CF and ours—
like the divergence of views on ICAs—reflect to a large
extent differences in objectives.
The G-77 look to commodity
institutions to regulate markets largely so as to raise prices
and effect transfers of resources from consumers to producers.
Accordingly, endowing the CF with its own resources and
putting financing in place before individual commodity
agreements are negotiated would tend to diminish the chances
- 11 that ICAs could effectively balance the interests of consumers
and producers and adhere to the principles I laid out earlier.
Principal-source and up-front financing in the Common Fund:
would mobilize financial resources that need
not bear any relation to the requirements of
ICAs eventually negotiated;
could allow the Common Fund to infringe upon the
autonomy of ICAs by virtue of its central funding
role;
allow governments who are not members of ICAs
and who have no direct interest in the commodity
concerned to gain leverage over the activities
of ICAs;
allow financial resources of governments to be
used for the financing of ICAs which the particular
government has decided do not meet its requirements
for membership; and
provide producers with the incentive to set unrealistic price ranges and/or negotiate other price
raising features; this would lead to a tendency for
ICAs to maximize drawings from the CF at an early
stage and reduce the financial viability of the
CF.
- 12 All these contingencies create the danger that ICAs, at best,
might be less effective than otherwise, and at worst, might
actually operate in a restrictive way. Thus, the history of
failure of commodity agreements could well be repeated.
While we see the possibility for a positive role for the
CF in the area of non-buffer stock measures, we believe that
the G-77 proposal for the financing of a broad range of
such measures is likely to prove to be a liability to the
CF when borrowing in capital markets on behalf of the
buffer stock activities of ICAs. Furthermore, it is likely
to be wasteful of resources as it does not appear to take
into account the considerable support existing institutions
already give to such activities.
For example, during fiscal year 1978, the multilateral
development banks lent over $1.1 billion for projects related
to the 18 IP commodities. This represents a two-fold increase
over 1977. For the five year period 1975 - 79, the development
banks have budgeted more than $4 billion for the production,
development and processing of those same commodities. In
addition, the banks have played a major and rapidly increasing role in their lending for productivity improvement and
downstream facilities. In fact, between 1975 and 1978 the
emphasis in lending by the development banks for projects
- 13 related to the IP commodities shifted markedly from m product
expansion to R & D, productivity improvement and processing,
with the first falling from 80 percent of the total of such
loans in 1975 to about 26 percent in 1978. This shift is
helping commodity producers to diversify their productive
capabilities in sectors threatened by global overproduction,
or longer-run declines in demand.
This does not mean that consumer/producer agreements
and the CF could not play a constructive role in improving the marketing, production and trading environment for
commodities. There remains considerable scope for work in
the areas of R & D, the development of new end-uses and
other activities which would not duplicate the efforts of
existing international agencies.
Finally, in defining the activities of commodity
organizations, there is not just the problem of assuring
efficient use of financial resources by avoiding duplicative
efforts, but also that of comparative advantage. Thus, the
development banks and national entities are better placed
to decide on overall development objectives and priorities
than can sector-oriented agencies, such as commodity
organizations.
- 14 The Role of Markets
The effectiveness of realistic and adequately financed
commodity agreements depends upon the existence of well
functioning markets, and particularly upon broad-based spot
and futures markets.
In a certain sense, futures markets
and international buffer stocks are complementary in that
they offer protection to sellers and buyers from the effects
of unpredictable price fluctuations.
However, buffer stock
arrangements are designed to protect market participants from
relatively extreme price fluctuations.
For instance, the
U.S. proposal for an international rubber agreement provides
for a +20 percent adjustable price range. Most hedging
operations, on the other hand, would seek protection from
considerably smaller price fluctuations.
Furthermore, we believe that appropriate hedging by
marketing organizations of producing countries in the futures
markets could materially reduce their short-term price risks.
Thus, the market can help to reduce short-term risk, while
commodity agreements would help to reduce longer term risks.
Together, the effect would be greater stability in the overall market.
This in turn could increase supply and demand and
thereby expand market activities.
Nevertheless, as in
negotiated agreements, there is need to guard against manipulative activities that would distort market operations to the
benefit of few and to the detriment of others.
- 15 Indeed, it is the fear of such manipulative activities
that has kept a number of potential participants from taking
advantage of the risk-reducing opportunities provided by
these markets. In the United States, the Commodities Future
Trading Commission is charged with minimizing the risk of
manipulation. But, the ability of the market to exercise its
proper and constructive function in the last instance remains
in the hands of the participants.
Conclusion
The structure of commodity markets and the lessons that
can be drawn from history suggest that restrictive commodity
agreements and financing arrangements that curtail the play
of market forces are unlikely to be successful for more than
a few years. As such agreements begin to fail, they would
create just the divisive issues between producing and consuming
nations that participants are seeking to avoid. Therefore,
the guiding principles of our commodity policy continue to
provide for a wide latitude for the operation of market forces.
This implies that intervention in the market by ICAs be confined
to the smoothing of price peaks and troughs and that a CF,
acting as a financial intermediary for ICAs neither regulate
nor otherwise intervene in commodity markets.
The benefits to be derived from well-structured price
stabilization agreements and the financial and budgetary
savings associated with an appropriately structured CF could
be significant.
- 16 Even if consumers and producers, developed and developing countries, can agree on mutually beneficial objectives
in the area of commodity agreements, the effectiveness of
such agreements depends to a considerable degree on domestic
policies in consuming and producing countries. Producing
countries would need to assure an investment climate that does
not work at cross purposes with stabilization objectives.
Thus, tax, financial and general investment policies must
allow the transmission of demand stimuli to producing sectors
so as to achieve appropriate and timely supply responses.
And in consuming countries, trade policies must allow demand
to become fully effective and to be transmitted to the most
efficient producers.
Finally, it must be remembered that international
commodity arrangements are neither a panacea for solving the
economic problems of the developing world nor can they offer
more than a partial solution to international commodity
problems.
EMBARGOED FOR RELEASE UPON DELIVERY
EXPECTED AT 3:00 p.m., EDT
~~ ~
REMARKS BY THE HONORABLE
ANTHONY M. SOLOMON
UNDER SECRETARY FOR MONETARY AFFAIRS
DEPARTMENT OF THE TREASURY
BEFORE
THE INTERNATIONAL IRON AND STEEL INSTITUTE
COLORADO SPRINGS, COLORADO
OCTOBER 2, 1978
There has been an increasing tendency in recent years
for governments to intervene in domestic markets to help
ailing industries, particularly those experiencing serious
difficulties due to import competition. Generally this
intervention has been concentrated on large basic industries
which are significant employers and sources of income.
The roster of assisted industries reads like a "who's
who" of current sectoral problems: steel, data-processing,
aircraft, autos, shipbuilding, textiles, shoes, machine tools,
electronic components. The aids spread rapidly from country
to country in a vain attempt to gain a competitive edge in
both domestic and foreign markets, and at a considerable
cost to national treasuries.
Government action to aid these industries is not
surprising. Their importance to national economies generates
very strong political and economic pressures for government
•^protection and assistance. Such assistance is usually
introduced in the name of laudable domestic economic goals:
increased employment, greater industrial efficiency, and
B-1195
- 2 longer term research and development efforts.
However, in
in many cases it has become a means of avoiding structural
adjustment and represents one of the most troublesome areas
in our trade relations, threatening to lead to serious trade
conflicts.
The continued growing resort to government subsidies
which distort trade are of particular concern to the U.S.,
and I am sure to other nations as well.
During the present
period of generalized slow growth and high unemployment,
there has developed a tendency throughout the world to subsidize production at inefficient plants to maintain domestic
employment. While we recognize there may be a strong case
for the use of temporary selective measures to maintain
existing employment in emergency conditions —
or to amel-
iorate the effects of closing down obsolete plants —
subsi-
dies should not be made to support or promote industries
that cannot in the long run compete effectively on their own
in world markets. And they should not be used as a device to
transfer the burden of adjustment to other countries. The
effects of such policies on trade flows can be immediate
and highly disruptive in certain already-sensitive sectors,
and are a major source of current as well as potential trade
conflict.
None of us in truth has been immune to the infectious
spread of industrial subsidies, import restraints, and export
aids.
The high visibility and expense of such measures
-3 in some nations have made them appear more flagrant, however , while others have masked government intervention
behind restrictive pricing requirements and similar nonbudget devices.
,
o
»«
All of us can agree, however, that something must be
done to curb the continued use of these policies.
For our
part we prefer of course to maintain international cooperation in this area to avoid future conflicts.
The United
States also places a high priority on the negotiation of
meaningful codes on non-tariff measures in the Multilateral
Trade Negotiations.
We believe in particular that the nego-
tiation of a subsidy countervail code is a sine qua non
for adherence to an eventual package of agreements in the
current Multilateral Trade Negotiations.
However if agreement on these codes is not possible and
if foreign governments employ subsidies and related policies
which distort trade we cannot and will not stand by.
We
have an obligation to enforce our laws and we are prepared
to move actively to counter such measures.
Steel Measures
The steel industry is probably the most visible example
of an industry with extensive government intervention —
and
one which demonstrates the extreme difficulty of achieving a
cooperative approach in a sensitive industrial sector.
Steel
is a basic industry for all of the industrialized nations,
- 4 and an increasingly important industry in a number of
advanced developing nations as well.
Governments naturally
try to maintain production and employment in this crucial
sector for both political and economic reasons rather than
permit the free functioning of the market.
The most recent cyclical decline in steel demand has
been protracted over time and global in scope and has led
to substantial worldwide excess capacity and increasingly
destructive unfair competition complicating efforts to maintain a liberal trading environment in this sector. Virtually
all steel industries are experiencing serious difficulties,
and the steel industries of some producing countries are
encountering particular difficulty in attempting to deal
with their problems of unemployment and excess capacity.
Governments have adopted various measures, ranging
from simple monitoring systems, such as that imposed by
Sweden, to broad-based industry plans such as the EC's
Davignon Plan to cope with these adverse conditions.
In
the U.S. we adopted the comprehensive program developed
by the President's Special Task Force,- which I chaired.
To the extent that these plans promote a positive
adjustment they are compatible with the principles I have out
lined on government intervention. Rationalization and modernization are as they should be the major guiding principles,
- 5 rather than simply protection or attempts to shift the
burden of adjustment to others.
However, to the extent
that these plans include the continued reliance by the
industry on measures which go beyond transitional assistance, they violate these principles —
and they increase
the potential for future trade problems in this sector.
We understand that most plans do emphasize adjustment.
Thus it appears that governments do recognize that this is
not solely a national problem confined to their respective
steel industry.
The problem is global.
All major steel
producing industries, including the U.S., are experiencing
similar problems.
While we are aware that these adjustments
are difficult and will necessarily take some time they must
be made —
not —
and made within a reasonable time.
If they are
if we attempt to avoid this adjustment through the
various measures I cited earlier we will simply compound our
current difficulties and create the conditions for an even
more serious confrontation in our trade in the future.
USG Approach
Basically, the steel industry is confronted with two
types of problems —
short-term problems associated with
cyclical swings in demand —
and longer-term problems occa-
sioned by the changing structure and competitiveness of the
industry, including the emergence of a number of advanced
developing countries (ADC's) as competitive steel producers.
- 6 The comprehensive program which was adopted by the United
States Government in December 1977 is designed to provide
the U.S. steel industry with an environment which will allow
it to adjust to both kinds of problems.
The Trigger Price Mechanism (TPM) focuses on unfairly
priced or dumped imports and provides a means of assuring
that prompt investigation will be undertaken if dumping
appears to be occurring.
Other measures emphasize moderni-
zation and cost savings that are achievable through nondiscriminatory actions which do not distort trade.
The
proposed reduction in the depreciable guideline life and the
loan guarantee program are aimed at improving the industry's
cash flow and providing capital to smaller firms for modernization of competitive plants.
Our review of environmental
policies and procedures seeks to achieve our basic environmental goals at less cost.
The results of this review will
apply to all industries alike, not only to the steel industry.
We believe that these measures are positive answers to
the present problems of the steel industry.
They are also
consistent with overall U.S. trade and.domestic policies,
and with the principles I have outlined on government intervention in general.
—
The U.S. comprehensive steel program does not
restrict the free flow of fair trade.
We specifically
avoided a system of quantitative restrictions or rigid
- 7 minimum prices because we recognized they would lead to a
distortion of trade, creating serious problems for our
trading partners as well as domestic inflationary problems.
—
The loan guarantee program does not offer a carte
blanche for the industry.
Its use is restricted exclusively
to smaller firms which have no access to private capital,
but which have economic modernization plans which would
increase their competitiveness and alleviate potential serious community and unemployment problems.
Firms qualifying
for loan guarantees will not receive preferential interest
rates; they will pay commercial interest rates. Therefore
marginal facilities would not stand to benefit from the
program.
We are not relaxing our environmental regulations
or providing differential treatment for the steel industry
as compared to other industries.
And we are not offering government guidance or surveillance of the steel industry, because we are convinced
that governments should stay out of private business and
intervene along carefully restrained lines only where critical to the national interest.
—
The program is temporary in nature.
It is not
conceived as a permanent element of our trade landscape.
And while we are not considering dismantling the Trigger
Price Mechanism or other elements of the program in the
- 8 near future, we will continue to review the conditions of
the industry to determine whether the system is still
needed.
The TPM has functioned satisfactorily thus far to
prevent the recurrrence of the destructive, unfair price
cutting competition which we experienced last year.
The
relatively high levels of imports in July and August are
disturbing and cause us concern.
And although many experts
abroad and at home believe these levels will not persist,
we will monitor future conditions carefully and respond
appropriately.
Adjustment
We do expect, however, that given this opportunity
the U.S. steel industry will take advantage of our program
to become more competitive and to make the necessary positive adjustments.
We must remember we are operating in
an interdependent world.
Long term shifts in comparative
advantage are part of the dynamics of the world trading
system, and in the long run it is in our interest to adjust
to those changes.
The industrialized countries have a
responsibility to lead the way in making these changes.
We cannot bar the emerging advanced developing countries1
steel producers from competing fairly in our markets, no
mfm
matter how sensitive the sector.
- 9 However, competition must be fair and the adjustment
must be orderly.
The newly emerging steel producers should
be subject to the same rules as the industrialized nations
—
in particular, they should not be allowed to dump their
steel on our markets.
Where we must adjust, the adjustment
should be an orderly adjustment at a reasonable rate.
It
should not be similar to the sudden and massive dislocations
we experienced in 1977.
Rather the steel industry should be
in a position to make an orderly and gradual transition.
Conclusion
The United States Government hopes that we can achieve
continued cooperation in this area. Our recent experience
has highlighted the magnitude of the problem and the strong
interdependencies which link U.S. and foreign steel industries.
It also has revealed in part the extent of potential future
problems.
We have made significant progress in reaching a cooperative international approach to these problems in our
bilateral and multilateral discussions.
We recently agreed
at the OECD to establish a standing steel committee to act
as a monitoring and consultative body which will serve to
alleviate future problems in steel trade.
This committee
will track trends in steel trade, production, capacity and
other industry characteristics in the OECD countries and
other participating countries.
This should permit us to
detect potential problem areas and will provide us with a
- 10 multilateral forum in which these emerging problems can be
discussed before they become crises.
Let's use this
multilateral body to the fullest extent and avoid a retreat
to the bilateral protectionist measures which aggravated
steel problems in the past.
Within the broader context, we are as I mentioned
earlier actively pursuing the negotiation of a meaningful
international code on subsidies and other government measures
which adversely affect trade as a matter of high priority
in the current Multilateral Trade Negotiations.
We hope
that our success in these efforts will provide a more satisfactory environment for trade and a sounder basis for efficient, competitive production with a minimum of government
intervention in all industries, including steel.
)tpartmentoftheTREASURY
JJBHINGTON, D.C. 20220
October 2, 1978
FOR IMMEDIATE RELEASE
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,300 million of 13-week Treasury bills and for $3,402 million
of 26-week Treasury bills, both series to be issued on October 5, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
13-week bills
maturing January 4, 1979
Price
High
Low
Average
Discount
Rate
97.942 a/8.142%
8.169%
97.935
8.161%
97.937
26-week bills
maturing April 5, 1979
Investment
Rate 1/
Price
8.43%
8.46%
8.45%
95.775b/ 8.357%
95.763
8.381%
95.765
8.377%
Discount
Rate
Investment
Rate 1/
8.85%
8.87%
8.87%
a/ Excepting 1 tender of $10,000
b/ Excepting 2 tenders totaling $515,000
Tenders at the low price for the 13-week bills were allotted 44%.
Tenders at the low price for the 26-week bills were allotted 76%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTS AND TREASURY:
Location
Received
$
26,540,000
Boston
3,928,820,000
New York
40,245,000
Philadelphia
39,160,000
Cleveland
126,370,000
Richmond
38,895,000
Atlanta
181,395,000
Chicago
30,140,000
St. Louis
69,935,000
Minneapolis
29,610,000
Kansas City
16,595,000
Dallas
189,125,000
San Francisco
Treasury
TOTALS
9,030,000
$4,725,860,000
Accepted
$
25,165,000
1,888 ,250,000
23 ,235,000
32 ,445,000
112 ,885,000
34 ,320,000
47 ,740,000
15 ,040,000
5 ,935,000
29 ,070,000
16 ,595,000
60 ,525,000
9,030,000
$2,300,235,00Qc/
Received
Accepted
$
16,075,000
4,783,175,000
52,055,000
100,490,000
33,795,000
50,320,000
411,940,000
26,295,000
26,070,000
23,960,000
10,250,000
215,600,000
$
16,075,000
2,954,455,000
30,735,000
58,890,000
26,790,000
23,260,000
111,440,000
12,295,000
23,110,000
22,460,000
10,130,000
100,700,000
11,410,000
11,410,COO
$5,761,435,000
$3,401,750,000^/
£ ncludes $405,765,000 noncompetitive tenders from the public.
ncludes $238,805,000 noncompetitive tenders from the public.
£/Equivalent coupon-issue yield.
B-1196
FOR IMMEDIATE RELEASE
October 3, 1978
Contact:
Alvin M. Hattal
202/566-8381
TREASURY ENDS ANTIDUMPING INVESTIGATION
OF AUTOMOTIVE AND MOTORCYCLE REPAIR
MANUALS FROM UNITED KINGDOM
The Treasury Department today said it has terminated
the antidumping investigation of imported automotive and
motorcycle repair manuals from the United Kingdom.
This inquiry followed a summary investigation by the
U. S. Customs Service after receipt of a petition filed by
counsel on behalf of Clymer Publications alleging that the
manuals in question were being sold in the United States
at less than fair value. (Sales at "less than fair value"
generally occur when imported merchandise is sold in the
United States for less than in the home market.)
After the start of this investigation, a question was
raised as to whether dumping duties on this merchandise are
precluded by the "Florence Agreement," the Agreement on the
Importation of Education, Scientific, and Cultural Material
of 1959. The Agreement provides that certain specified
articles, including books such as manuals to which the proceedings related, shall be free of "any customs duties or
other changes." The quoted phrase has been held to include
dumping duties; therefore, this investigation has been terminated.
Notice of this action will appear in the Federal Register
of October 4, 1978.
o
B-1197
0
o
FOR IMMEDIATE RELEASE
EXPECTED AT 10:00 A.M. EDT
THURSDAY, OCTOBER 5, 1978
STATEMENT BY THE HONORABLE C. FRED BERGSTEN
ASSISTANT SECRETARY OF THE TREASURY
FOR INTERNATIONAL AFFAIRS
BEFORE THE WESTERN HEMISPHERE SUBCOMMITTEE
SENATE FOREIGN RELATIONS COMMITTEE
ECONOMIC RELATIONS BETWEEN THE UNITED STATES AND LATIN AMERICA
Latin America has become a central actor in the world
economy. Its dramatic development during the past two
decades, while leaving many problems unsolved, has thrust
it into the forefront of the entire developing world. This
new status for the southern half of the hemisphere underlies
today's economic relations between the United States and
Latin America.
As a result of this development, several Latin American
countries — particularly Brazil, Mexico and Venezuela —
now play a major and creative role in international trade
and finance. Accordingly, economic relations are crucial
to overall U.S. policy toward the region — and the region
figures crucially in the overall international economic
policy of the United States.
B-1198
- 2 Hence the United States does not have a "Latin
American economic policy."
Rather, our global economic
policies seek to take fully into account the needs and
concerns of Latin America —
and to consult fully with them
on the whole range of international economic issues.
After reviewing the impressive breadth and depth of Latin
America development, and what it means for the United States,
I will describe these current policies and add some thoughts
on possible further directions for the relationship as further
changes occur in the region's status and the global economic
environment.
Latin American Development
Latin America has outpaced all other developing
regions in its rate of economic progress:
—
Between 1965 and 1977, the gross domestic product
of the region more than doubled in real terms
to nearly $400 billion.
This represents an
annual growth rate of 6.1 percent —
compared
with 5.1 percent for all developing countries,
and about 3.9 percent for the developed countries.
—
During 1973-1977, the region grew at an average
annual rate of nearly 5 percent compared with
only 2 percent for the OECD countries.
It even
maintained impressive growth through the world
recession, cushioning the impact of the recession
on the industrialized countries —
the United States.
particularly
- 3 — Real per capita GNP in the region has increased
by more than half since 1965. It now stands at
$1100, as compared with a per capita GNP of $450
for the rest of the developing countries.
This rapid economic growth, and relatively high
level of development, make Latin America truly a part of
a new "international middle class" together with a few
other countries in the Far East and Middle East. Latin
America is by no means fully developed, indeed, huge pockets
of poverty remain, even within the most advanced countries
of the hemisphere. And we clearly recognize and respect the
diversity and individuality of the nations in the region.
But the region as a whole enjoys living standards far higher
than those of developing Africa and Asia, and has become a
major factor in key trading and financial markets throughout
the world.
The region's progress has blurred, if not obliterated,
the traditional distinction between developed and less
developed countries. Indeed, we have coined a new term —
ADCs, or Advanced Developing Countries — to characterize
these (and a few other) emerging economic powers. As a
consequence of its progress, we see Latin America as the
"cutting edge" for new modes of international cooperation —
providing meaningful progress in "North-South relations"
- 4 rather than reckless rhetoric, with real benefits for all
participants whether they come from above or below the
Rio Grande.
The International Economic Policy of the United States
The international economic policy of the United
States has two cardinal elements:
support for our national
economic objectives, such as full employment and price
stability, and maintenance of an effective international
economic system.
the other —
Neither can prosper in isolation from
and neither can prosper without full engage-
ment by the ADCs.
Thus we support full participation by all countries,
including the ADCs, in decisions that affect both them and
the functioning of the world economic system.
Such partici-
pation of course requires an acceptance of responsibility
by each country commensurate with its state of development.
These two elements are inseparable.
As countries
accept greater responsibilities in the international
economic system, their voice in the system —
ability to influence its development —
ingly increase.
and their
should correspond-
The ADCs themselves will of course benefit
greatly from this increased role, by being able to assure
that their interests are properly incorporated in developing
the international economic system and in helping assure a
strengthening of that system itself, which is so crucial
to their national needs.
- 5 I would like to describe briefly how our policies
carry out these principles in the major arenas of our
economic interaction with the region —
trade, development
finance and international monetary issues.
I will not
address such other important issues as commodity, energy
and investment policy today in order to focus on those
which best illustrate our evolving pattern of relations
within the Hemisphere.
Trade
Trade is probably the most important area of U.S.
economic interaction with Latin America, because the rapidly
industrializing countries of the region need access to the
markets of the developed countries more than anything else.
Our focus here is twofold:
rejection of the many proposals
to restrict current U.S. imports from Latin America, and
the Multilateral Trade Negotiations (MTN) where we are
working actively to significantly reduce tariff and
non-tariff barriers to trade on the part of all nations
and to improve the rules governing international trade
flows.
Our own offers in the tariff area, in particular,
reflect our commitment to improve access for Latin American
products in the U.S. market.
We also expect these nations to do their part in
helping to improve the global trading system, consistent
with their own trade and development situation.
This
means an increasing acceptance by ADCs of at least partial
- 6 reciprocity in the Multilateral Trade Negotiations:
for example, an improved commitment to limit government
procurement practices which discriminate against foreign
suppliers or adherence to the International Arrangement
on Export Credits. In general, it means a phasing out
of .special treatment as development proceeds so that
more needy countries can benefit more fully from such
preferences.
The acceptance of greater responsibility in trade
relations is especially important in the use of
government subsidies. One of our most important objectives in the MTN is to reach an agreement on subsidies
and countervailing duties:
t.
— We need to put a lid on the growing use of
subsidies to spur export-led growth at the
expense of other trading nations.
— We need to broaden and deepen the commitment
previously accepted by most industrial nations
not to use export subsidies.
— We need new international discipline to guard
against the disguised protection of domestic
markets through internal or production subsidies.
— We need to strengthen the present GATT provisions
on dispute settlement to ensure that these rules
are enforced effectively.
- 7 Subsidies can of course play an important role in
national economic policy, and flexibility in the rules is
needed for countries on different rungs of the development
ladder.
Fully developed countries should subscribe to all
provisions of the agreement immediately, whereas developing
countries should be accorded special and differential
treatment.
However, the code should provide for increased
acceptance of its obligations by the ADCs as their industries
become internationally competitive, as well as acceptance
from the outset of the principle that their subsidies should
not hurt other countries.
We fully recognize the evolutionary
nature of this process, and hence accept that these obligations
can be phased in over time rather than instituted all at once.
We have been working extremely closely with the developing
nations —
expecially Brazil —
on this problem.
Indeed,
Brazil deserves much of the credit for working out provisions
through which the code can apply to developing countries in
ways which both defend their legitimate national interests
and strengthen the global trading system.
Its leadership and
creativity have played a central role in the MTN already,
and will doubtlessly continue to do so.
Another example
of mutual benefit is an agreement reached with Uruguay,
which provides for a U.S. waiver of countervailing duties on
footwear and leather products and Uruguayan agreement
to completely phase out its substantial export subsidies —
leather products by the beginning of 1979, and on all other
products by 1983.
on
- 8 Our authority to waive the application of countervailing
duties is now scheduled to expire on January 3, 1979.
Loss
of the waiver authority, and the imposition of duties against
exports of several of our major negotiating partners, could
very well disrupt the entire MTN.
It would jeopardize the
remarkable progress already achieved with several Latin American
countries toward a definitive resolution of the problem of
their export subsidies, along with the more highly publicized
progress we have made with the European Community.
Extension
of the waiver authority, contingent upon the conclusion of a
satisfactory package of MTN agreements by January 2, 1979
including a subsidy/countervailing duty code —
—
is thus
critical, not only in terms of overall U.S. economic interests
but also our relations with Latin American and continued
effective hemispheric collaboration in trade matters.
Of course, a large volume of our trade with Latin America
already enters the United States duty-free under the existing
tariff schedule and generalized system of preferences (GSP).
The total value of GSP duty-free imports from Latin America
in the first six months of 1978 was $716 million, of a
total of $2.4 billion for developing nations as a whole.
GSP duty-free imports from all LDCs rose an impressive
31 percent in January-June 1978 over the same period
in 1977.
In Latin America, particularly strong gains
were made by Argentina (up 91 percent) and Brazil
(up 56 percent).
- 9 Here, too, our policy applies the principle of graduation.
When a particular product from a country eligible for GSP
becomes competitive in the U.S. market, that product reverts
to normal tariff treatment on the grounds that special help
is no longer needed —
and that its continuance would
unfairly hamper less competitive countries from getting an
opportunity to enter the market.
One hundred and twenty-two
products qualified for such graduation in 1978, 79 from Brazil
and Mexico alone.
Development Finance
Our global policy in the area of development finance
is to assure that poor countries are provided with adequate
resources, on appropriate terms, that will assist them
in their efforts to reduce extreme poverty and achieve
self-sustaining growth.
The application of this global policy
to Latin America means that the region should, because of
its development progress, be moving gradually but deliberately
(1) from concessional assistance as provided by AID and the
soft-loan windows of the multilateral development banks (MDBs)
to (2) the non-concessional windows of the latter institutions
and private capital markets and (3) into positions where they
can assist their poor neighbors through various bilateral
and multilateral assistance channels.
Much of this shift has taken place already in Latin
America.
Only six small countries in the region are
currently eligible for loans from IDA, the World Bank's
- 10 soft-loan affiliate.
Over the past few years, the
United States has made decisions to terminate AID programs
in Argentina, Brazil, Colombia, Chile, Ecuador, Uruguay
and Venezuela; the level of AID grant and loan assistance
to the region fell from an average of* more than $600
million per year during the mid-1960's to less than $250
million during the last fiscal year, as the emphasis of our
bilateral aid shifts toward the much poorer regions of Africa
and South Asia.
Venezuela and Trinidad-Tobago no longer
borrow at all from the IBRD.
The more advanced countries have
gained extensive access to private capital markets.
A few
countries in the region have begun to mount their own
foreign assistance efforts to help the poorer LDCs.
Our approach to the Inter-American Development Bank
perhaps best encapsulates these principles.
Our role in the
Bank, and that of the Latin American countries, has been
gradually evolving in response to the development progress of
the region.
We have encouraged the advanced countries in the
region to provide concessional resources to their less fortunate
neighbors, first by refraining from borrowing from the IDB's
soft-loan window (the Fund for Special Operations)
and then by increasing the amount of convertible resources
which they contribute to the FSO.
In the last replenishment,
Argentina, Brazil and Mexico renounced use of FSO convertible
resources and contributed one-quarter of their share of the
FSO replenishment in convertible currency.
- 11 We are now negotiating the fifth replenishment of the
IDB, to cover Bank operations for 1979-82.
We are confident
that the results will further our objectives in several ways,
and provide one more indication of the maturing of the region
and our relationship to it:
—
Agreement to relinquish access to the FSO by
several additional countries who no longer need
concessional aid at all;
—
A smaller FSO in total, as befits the development
of the region in general;
—
An increased share of the contribution of the major
regional countries to the FSO in convertible
currency, indicating their growing financial and
economic strength;
—
Agreement to concentrate the bulk of concessional
financing in the poorest countries, and to channel
an increased share of all IDB resources into
projects aimed at reaching the poor; and
—
A leveling off of use of IDB capital resources by
the hemisphere's ADCs, making available a greater
share for needier countries without as much access
to the private capital markets.
The extent of lending
to ADCs will be determined in large measure by our
contribution to the Bank's capital, which will turn
heavily on the willingness of these ADCs to provide
additional resources themselves to assist the poorer
countries of the region.
- 12 Monetary Issues
The international monetary policy of the United States
has been directed at ensuring the continued effective
functioning of an open system of world trade and payments
from which all countries —
America —
benefit.
notably including those in Latin
A number of specific measures are being
taken toward this end in the International Monetary Fund (IMF),
which should contribute both directly and indirectly to the
achievement of the economic goals of Latin America.
Within the past two weeks, a consensus has been reached
on major new steps to strengthen the IMF.
One is a 50
percent increase in IMF quotas, on which a final decision will
be taken later this year.
Such an increase would boost
the permanent resources of the IMF by approximately $25 billion
with a roughly equivalent percentage increase in the access
of all IMF members, including those in Latin America, to
IMF financing.
The quota increase will ensure that the IMF is capable
of continuing to meet the need in the international economy
for "conditional" balance of payments financing —
i.e., financing
provided subject to the requirement that the borrowing country
implement appropriate policy measures designed to overcome
its payments problems.
The provision of such conditional financing
by the IMF has been important over the years in helping
many Latin American countries to correct their temporary
payments problems.
A large number of Latin American countries
- 13 have borrowed from the IMF in recent years and experienced
subsequent improvements in their economic situations, and the
IMF is presently working closely with a number of other Latin
American nations to assist them in overcoming their payments
problems.
A second consensus, also to be finalized later this year,
is that the IMF should make allocations of Special Drawing
Rights (SDRs) of SDR 4 billion (approximately $5 billion)
per year over the next three years.
Such allocations —
which
would involve distribution of newly created SDRs to members
according to their quotas —
have long been sought by the
Latin American members of the IMF.
They would help meet the
long-term global need to supplement existing reserve assets
in a manner which would contribute to the stability of the
monetary system.
Third, the imminently prospective establishment of
the Supplementary Financing Facility —
Facility" —
the so-called "Witteveen
will significantly strengthen the IMF's ability
to assist members experiencing particularly serious balance
of payments problems.
This $10.8 billion Facility will temporar
supplement the resources of the IMF during a period of
severe strain on the monetary system.
It will be available
to all members which meet the criteria for drawings, including
developing countries —
as opposed to the OECD Support Fund
proposed by the previous Administration, which would have been
available only to industrialized borrowers.
I am most
pleased that authorizing legislation for U.S. participation
- 14 in the Facility has been approved by the Congress, and hope
that the needed appropriation will be approved shortly.
The consensus which has been reached to expand IMF
resources has been achieved with the full participation of
the developing countries, including the Latin American
nations.
Consistent with our policy of supporting participation
with responsibility, the Latin Americans play an important
role in IMF decision-making.
Three of the twenty members of
both the Interim Committee and the IMF Executive Board are from
Latin America.
The quota shares and voting shares of
a number of Latin American members, including Venezuela, Brazil,
and Mexico, were increased earlier this year.
Venezuela
and Guatemala have made commitments to provide SDR 500 million
(approximately $640 million) and SDR 30 million (approximately
$38 million), respectively, to the Supplementary Financing
Facility.
Here, too, we work increasingly with Latin America
as partners in global economic management.
Future Directions
As the development process in Latin America continues
to move forward, as we believe it will, we can think of further
evolution in U.S.-Latin American relations.
We believe the region should be moving toward an even
more open system in its trade and financial relations
with the rest of the world.
There are hopeful trends in
this direction, but there are also dangers that some countries
may resist such an opening.
Policy interdependence becomes
- 15 crucial at this point: the United States must keep its markets
open to Latin American goods and borrowing if we are to expect
them to open their economies — and vice versa.
To the extent that both North and South America continue
to seek to liberalize their economic relations with the rest
of the world, additional forms of cooperation will become
both necessary and desirable:
— In the critically important trade field, full
participation and membership in the General Agreement
on Tariffs and Trade (GATT) seem the most important
goals. We believe all Latin American countries
should join the GATT, and participate as fully as
possible in the MTN.
— The trade liberalization this will imply should
further increase the interdependence between Latin
America and the rest of the world economy. This in
turn will increase the need for consultation and
information exchange about near-term trends in the
world economy. We will have to give some thought
to how best to carry out this process.
— We believe possibilities in the investment field
are particularly interesting. As the old ideologies
that have resulted in widely differing views of
foreign investment erode, we see considerably greater
opportunities for cooperation. The advanced countries
of the region fully understand the benefits to both
home and host country in assuring that multinational
- 16 corporations play a constructive role in the world
economy, and are quite able to negotiate effectively
with these firms in pursuit of their own national
objectives.
This new situation may enable us to
move toward agreement on "rules of the game" for
international investment.
—
In the aid area, we look toward increasing
collaboration with the ADCs in the management of the
multilateral lending institutions and other resource
transfer mechanisms.
The Congress of course plays a crucial role in every
one of these issues:
trade, development finance, monetary
issues, investment, commodities and all the rest.
We thus
greatly welcome these hearings, and hope that we can
continue to work closely with the Congress in working out and
implementing these several aspects of U.S. economic policy
toward Latin America.
Conclusion
The role of the Latin American countries, particularly
the ADCs, cuts across the entire spectrum of U.S. international
economic relationships:
—
As intermediate and rapidly growing economic
powers, we believe that they must assume greater
responsibilities.
—
As they reap greater benefits from world trade,
their trade practices should increasingly conform
to the rules applying to major world economic players.
- 17 —
They should depend less upon bilateral and
multilateral concessional assistance, so that
increased resources can be made available to their
less fortunate neighbors.
—
In sum, they should work more closely with the
industrialized countries to provide world economic
leadership.
This increased responsibility will bring great benefits
to the region.
Greater involvement in management of the
international economic system by the countries of the region
will assure them of a larger voice in its future development,
making them less dependent on decisions taken by others
and more capable of determining the future of their economic
relations with the rest of the world.
In essence, full Latin American participation serves
to prevent other countries from making decisions that do
not fully take account of Latin American interests.
And
because of the joint gains to Latin America and to us of
a free, liberal international economic system, both
parties stand to benefit from the process of shared
participation and responsibility.
0O0
THE SECRETARY OF THE TREASURY
WASHINGTON- 2 0 2 2 0
October 3, 1978
Dear Senator:
The Finance Committee has reported H.R. 13511, the
Revenue Act of 19 78, to the full Senate for debate. In
some respects, the bill marks an improvement over the
House version. However, the Administration has major
objections to the Committee bill.
First, the tax reductions in the bill are excessive
and inflationary. The Finance Committee bill exceeds the
Administration's proposed net tax reductions by $5.4
billion in calendar 1979, by $5.3 billion in FY 1980,
and by $6.7 billion in FY 1981. These excessive outyear
costs would prejudice our efforts to reduce the budget
deficit and bring inflation under control. The inflation
rate, which has begun to decline from the double digit pace
of the first half of this year, must remain our number
one concern and must be steadily reduced through the
remainder of this decade. The budget deficit in FY 19 79
will be about $40 billion. We must reduce that deficit
as quickly as possible, and this requires discipline
not only on spending but on the size of this tax cut,
and not solely for FY 1979 but also for FY 1980, 1981
and beyond. The Finance Committee bill does not reflect
an adequate anti-inflationary discipline in the outyears. It would seriously compromise the outyear budget
flexibility and discretion of both the Congress and the
Administration.
Second, the bill's tax relief is unbalanced. While
the distribution of the individuals' tax cuts is better
than in the House version, it is still not satisfactory.
The tax cuts for middle income families barely offset the
19 79 Social Security tax increase and one year's inflation,
while the relief afforded very high income taxpayers offsets these factors many times over. The individual relief
should be redistributed in favor of middle income taxpayers.
Third, the bill is deficient in that its alternate
minimum tax permits very high income taxpayers to shelter
more of their income from tax than does present law. I'm
sure you agree that every taxpayer should contribute a
reasonable amount to the costs of government.
-2The Senate Finance Committee bill does not accomplish this
objective. Accordingly, the alternative minimum tax in the
bill needs strengthening.
Fourth, the bill ignores most of the proposals for
structural reform advanced by the Administration and instead
would clutter the tax law with a collection of new and
inequitable preferences, loopholes, and special interest
tax breaks. For example: tax forgiveness for those inheriting
appreciated property; reopening a loophole for bond issues
engineered by one securities firm; revival of expired investment credits to benefit a single company; a special exception
to reporting requirements for charge account tips; preferential
tax postponement for executives of trade associations; and
special accounting rules for a few large corporate farms.
A major source of the first three problems — excessive
outyear costs, unbalanced distribution of relief, and excessive
tax sheltering — lies in the Committee's additions to the
House bill in the area of capital income taxation. The House
bill cut capital gains taxes by about $1.7 billion on an
annual basis, reducing the maximum tax rate on capital gains
to 35 percent. The Senate Finance Committee supplemented
this very generous relief with another $1.4 billion in revenue
losses, further reducing the maximum tax rate on capital gains
to only 21 percent (versus 70 percent on ordinary income).
Facing stringent budget constraints, the bill's relief for
capital gains should be more reasonable in amount and should,
as noted, be accompanied by a genuinely effective alternative
minimum tax.
The budget constraints also make inadvisable the Committee's
liberalization of depreciation rules, another addition to the
House bill. The revenue cost of this provision, $1.9 billion,
hits hardest in the outyears. These costs cannot be responsibly
undertaken until competing budget needs for those outyears are
assessed by future Congresses.
Taken together, these added features have made the bill
too large from the point of fiscal prudence and have skewed
its relief inequitably toward the very highest income brackets.
I urge you to help improve the bill on the Senate floor.
While the FY 19 79 fiscal impact of the bill is about right,
the outyear revenue losses are clearly excessive. The American
economy needs a tax cut which allows progressive reduction in
-3the budget deficit, and the American people deserve a cut
that is more balanced and equitable.
It is especially important that the Senate refrain from
further enlarging the revenue losses.
In this regard, I wish to re-emphasize our opposition
to indexing the tax system to inflation. This dangerous and
unworkable experiment would mark a surrender by the Congress
in the fight against inflation.
I am enclosing a detailed description of H.R. 13511,
together with revenue estimates and a summary of the Treasury's
position on each provision.
I am also enclosing two tables. The first compares, for
fiscal and calendar years 19 79, 1980, and 1981, the size of
the net tax reductions under the Administration's proposals
(including urban initiatives), H.R. 13511 as passed by the
House, and H.R. 13511 as reported by the Finance Committee.
This table illustrates the excessive current and outyear costs
associated with the Finance Committee bill.
The second table shows the distribution of the tax changes
attributable to the capital gains provisions of the Finance
Committee bill. Of the $3.1 billion in tax relief provided
by these provisions, the table demonstrates that about 30
percent of the benefits go to those with expanded incomes of
$200,000 and more. Over two-thirds of the benefits go to
those earning more than $50,000 annually.
I look forward to working with you to make H.R. 13511
comport with budgetary constraints and basic principles of
tax equity.
Sincerely,
W. Michael Blumenthal
Table 1
Revenue Effects of the Administration's Tax Proposals and H.R. 13511
as Passed by the House and by the Senate Finance Committee
Calendar Year Liabilities and Fiscal Year Receipts, 1979-1981
($ billions)
Fiscal Years
Calendar Years
1979
; 1980
; 1981
1979
:
1380
•
Administrations proposals 1/ ...
-33.5
-39.4
-48.1
-22.5
:
1981
*
-36.7
-43.3
House bill 2/ -31.6 -35.9 -45.5 -18.3 -33.5 -40.2
Senate Finance Committee bill 2/. -38.9 -44.5 -55.8 -20.6 -42.1 -50.1
Office of the Secretary of the Treasury
Office of Tax Analysis
October 2, 1978
1/ Includes the urban initiatives proposals in the Midsession Review of the budget
and the extension of temporary tax reductions as estimated by the Joint Committee
on Taxation.
2/ Includes offsetting revenues from induced capital gains and the extension of
temporary tax reductions as estimated by the Joint Committee on Taxation.
Table 2
Distribution of Tax Changes from Capital Gains Provisions
of the Senate Finance Bill
(1978 Levels of Income)
Expanded
income
class
($000)
Capital Gains Provisions
As Reported
Tax change
$ millions
Less than 5
) (
Percentage
distribution
percent
$ -6
0.2%
5 -
10
-25
0.8
10 -
15
-64
2.1
15 -
20
-119
3.9
20 -
30
-292
9.6
30 - 50
-509
16.7
50 - 100
-716
23.5
100 - 200
-425
13.9
200 and over
-894
29.3
$-3,051
100.0%
Total
Office of the Secretary of the Treasury
Office of Tax Analysis
Note: Details may not add to totals due to rounding.
October 2, 1978
department of
^TREASURY
HWJMMHttWMMUH
jASHINGTON.D.C. 20220
TELEPHON
For Release Upon Delivery
Expected at 10:30 a.m. EST
STATEMENT OF
DANIEL I. HALPERIN
DEPUTY ASSISTANT SECRETARY FOR TAX POLICY
DEPARTMENT OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
COMMITTEE ON WAYS AND MEANS
October 5, 1978
Mr. Chairman and Members of the Subcommittee:
We have attached hereto a copy of a bill report which
we are submitting today to the Ways and Means Committee
concerning H.R. 12561. As you know, the Committee on
Finance has attached a provision to the Revenue Act of 1978
which is derived from this proposal.
The Treasury Department believes this approach has
substantial merit as a solution to the so-called LERA problem
which has been a concern of this Subcommittee. We also note
that the Finance Committee amended the provision in two
respects in response to our comments.
There may, however, be other difficulties. For example,
the Labor Department has expressed problems with channelling
employee IRA contributions through the employer. Thus, we
may want to consider other means of assuring non-discrimination
in IRA contributions. Further, we believe that revenue
constraints may dictate deferring enactment of this provision
until a later time.
B-119Q
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C 20220
ASSISTANT SECRETARY
Dear Mr. Chairman:
This is in response to your letter of May 17, 1978,
requesting a report on H.R. 12561, entitled "A BILL To amend
the Internal Revenue Code of 1954 to allow a retirement
savings deduction for persons covered by certain pension
plans". You have recently asked that we expedite this
report.
Problems Created Under Present Law
An individual who is entitled to make deductible
contributions to an individual retirement account or annuity
(IRA) may generally make a contribution up to the lesser of
$1,500 or 15 percent of compensation for the year. However,
an individual may not make a deductible contribution for a
taxable year to an IRA if he or she is an active participant
during any part of the taxable year in a qualified plan, a
tax-deferred annuity maintained by a tax-exempt institution,
or a governmental plan (whether or not qualified). As a
result, an active participant in such a plan may not make a
deductible contribution, even though the employer's contribution to the plan on his or her behalf might be quite small
or the individual might never vest in a retirement benefit
because of frequent changes in jobs.
There is no easy answer to this dilemma once the
decision to create IRAs has been made. A solution to the
problem which remains within the parameters of the IRA
statute is necessarily complex. Because of this, one is
tempted to argue that the inequity, if amy, must be accepted
without further solution. Moreover, although allowing IRAs
to individuals who participate in modest retirement plans
may mitigate employee objections to establishment of such
plans, it is possible that those employees who establish
IRAs will resist plan improvements. Therefore, although
pressure against the establishment of qualified plans might
- 2 be reduced, attempts to meld qualified plans with partial
IRA deductions within the framework of the current IRA rules
could still have an adverse effect on qualified plains. We
discussed these concerns at greater length in testimony
before the Subcommittee on Oversight of the House Ways and
Means Committee on February 16, 1978. A copy of that testimony
is attached.
The broader problem is the question of the tax treatment of employee contributions to tax-favored employee
benefit plans. The law is currently in a state of some
disarray on this point due to the variety of types of
employee benefit plans in existence and the varying approaches
to the treatment of employee contributions to them. These
plans include traditional types of qualified retirement
plans, so-called "cash and deferred" profit sharing plans,
unfunded salary reduction arrangements maintained by State
and local governments, and a number of others. A number of
these areas were addressed by the Committee in H.R. 11351
which in part accepted the approach recommended by Treasury
under which amounts set" aside at the employee's election are
deductible or excludable if the arrangements are nondiscriminatory with respect to both coverage of employees
and benefits (or contributions) actually provided. We
believe non-discrimination in the enjoyment of tax benefits
to be essential.
Solutions Contained in the Bill
H.R. 12561 addresses both problems described above.
Under the bill, an employee who is an active participant in
a qualified plan may make a deductible contribution either
to that plan or to an IRA. The deductible contribution is
limited to the lesser of 10 percent of compensation for the
taxable year, or $1,000. Such deductible contributions may
not be made by self-employed individuals or by participants
in government plans.
This alleviates the narrow problem described above
relating to those who feel that circumstances unfairly deny
them deductions for IRA contributions. Contributions up to
two-thirds of the amount otherwise allowable to an IRA will
be permitted for those who participate in qualified plans.
By itself this provision is objectionable because the
likely result is that highly compensated employees will make
maximum deductible contributions of $1,000 each to IRAs
-3whereas lower paid employees will make very small contributions,
or no contributions at all, to IRAs. This effectively results
in a discriminatory utilization of the tax benefits associated
with the combination of the employer's plan and the IRAs.
- As indicated above, the Treasury Department has indicated
willingness to support exclusion from income or deductions for
what are in effect employee contributions to certain tax favored
compensation arrangements only if actual participation and the
enjoyment of the tax benefit is non-discriminatory. H.R. 12561
is in accord with this approach with respect to amounts contributed by an employee to the employer's plan since such amounts
will be.treated as an employer contribution for purposes of
measuring discrimination under the plan. Amounts contributed to
an IRA should be similarly treated. In the absence of further
rules, however, the employer would be unable to determine which
employees make IRA contributions and the amount of those contributions. However, this problem could be resolved by requiring
that deductions for contributions be available only where those
contributions are paid by the employer directly to an IRA, at
the direction of the employee. At the option of an employer,
the employee could be limited to a choice of one or a few IRAs,
or the employee might be allowed to choose whatever IRA he or
she wishes.
If this modification were made, we believe there is
substantial merit to H.R. 12561 in the context of an overall
approach to salary reduction plans and employee contributions.
Not only would it mitigate the IRA problem, it also would be an
incentive for the establishment of qualified plans by some employers
who now do not feel financially capable of providing retirement
benefits. As such, the overall retirement protection for the
workforce would be increased.
However, we are unable to support the enactment of H.R. 12561
at this point. First, it is not clear that channeling employee
contributions through the employer is feasible in the context of
employees participating in a multi-employer plan. Moreover, the
Labor Department has expressed concern about the application of
fiduciary rules to amounts withheld by the employer prior to the
transfer to an IRA. Second, we are concerned about the revenue
impact of the bill (approximately $875 million) and urge careful
consideration of whether that revenue cost can be responsibly borne
at this time. This revenue impact is of significant concern because
the largest portion (approximately $500 million) is derived from
allowing deductions for employee contributions which are presently
being made on a non-deductible basis. This entails a large revenue
loss without a corresponding increase in savings.
-4Third, we are troubled by the potential loss of retirement
security for low-income workers. We are particularly concerned
that H.R. 12561 may encourage the establishment or retention of
plans which require employee contributions in order to share in
the benefits provided by employer contributions. Such plans
ordinarily have lower participation among low paid employees.
They may also have the effect of undercutting the vesting
requirements to the extent that for younger participants in
defined benefit plans, mandatory employee contributions actually
pay for all or most of the benefit.
In summary, provided that the potential for discrimination
through the use of IRAs is eliminated, the approach of H.R.
12561 carries out ideas which we have suggested to the Congress
earlier this year. It is worthy of consideration in the context
of an overall solution to the salary reduction plan. However, it
raises serious problems which deserve further study.
Further, revenue constraints may dictate deferring enactment
until a later date. However, if Congress does wish to proceed,
it may be preferable to introduce this approach in several steps.
For example, an appropriate first step might be its application
only to plans to which employee contributions are completely
voluntary. This would alleviate many of the most serious problems
and would entail a lesser revenue cost of $200 million in 1979
and $250 million in 1981 and thereafter.
The Office of Management and Budget has advised the Treasury
Department that there is no objection from the standpoint of the
Administration's program to the presentation of this report.
Sincerely,
Donald C. Lubick
Assistant Secretary
for Tax Policy
The Honorable
Al Ullman, Chairman
Committee on Ways and Means
House of Representatives
Washington, D. C. 20515
Enclosure
ADMINISTRATION'S POSITION
ON
THE REVENUE ACT OF 1978 (H.R. 13511)
AS REPORTED BY THE SENATE FINANCE COMMITTEE
TABLE OF CONTENTS
PERSONAL TAX CHANGES
GENERAL TAX CUTS
(1) Personal Exemptions
(2) Zero Bracket Amount (Standard Deduction)
(3) New Rate Schedule
(4) Earned Income Credit
SIMPLIFICATION OF ITEMIZED DEDUCTIONS
(1) Repeal of Deduction for State and Local
Gasoline Taxes
(2) Medical Expenses
(3) Political Contributions
UNEMPLOYMENT COMPENSATION
Phase Out of Exclusion for Unemployment
Compensation
TAX SHELTERS AND TAX ENFORCEMENT
(1) At Risk Provisions
(2) Partnership Audits
(3) Tax Treatment of Independent Contractors
(4) Reporting of Tips
PENSIONS, DEFERRED COMPENSATION AND OTHER
EMPLYOEE PLANS
(1) Employer Contributions to Individual Retirement Accounts
(2) Employee Contributions to Retirement Plans
11
(3)
Limitation on Pension Benefits
(4) Deferred Compensation Under A Salary
Reduction Plan
(5) Deferral Election Under Salary Reduction
Plans
(6) Cafeteria Plans
(7) Cash or Deferred Profit-Sharing Plans
(8) Deferred Compensation Plans for Independent
Contractors
(9) Life Insurance Funding for Public Employee
Plans
(10) Benefits for Employees of Charitable
Organi z ations
(11) Non-discrimination Requirement for Medical
Plans
MISCELLANEOUS TAX MEASURES
(1) Tax Credit for the Elderly
(2) Personal Exemption for Disabled Individuals
(3) Estate Tax Treatment of Jointly-Owned
Businesses
(4) General Stock Ownership Plans
(5) Educational Assistance Plans for Employees
(6) Exclusion from Income for Certain Government
"Scholarships"
(7) Forgiveness of Student Loan Obligations
(8) Surtax for Excess Government Spending
(9) Older Americans Tax Counseling Assistance
(10) Studies by the Treasury Department
Ill
BUSINESS TAX CHANGES
. CORPORATE RATE CUTS
. INVESTMENT TAX CREDIT CHANGES
(1) General Changes in Investment Credit
(2) Investment Credit for Rehabilitation of
Structures
(3) Employee Stock Ownership Plans (ESOPs)
(4) Investment Credit for Breeding and Draft
Horses
(5) Investment Credit for Certain Single-Purpose
Structures
(6) Investment Credit for Agriculture Cooperatives
(7) Investment Credit for Certain Lessors of
Railroad Cars
(8) Extension of Investment Credit Carryforwards
(9) Investment Credit for Pollution Control
Facilities
EMPLOYMENT-RELATED TAX CREDITS
(1) Targeted Jobs Tax Credit
(2) WIN and Welfare Recipient Employment Tax
Credits
DEPRECIATION
SMALL BUSINESS PROVISIONS
(1) Small Business Depreciation
(2) Subchapter S Provisions
(3) Small Business Corporation Stock
iv
VI. DEDUCTIBILITY OF ENTERTAINMENT EXPENDITURES
VII. MUNICIPAL FINANCING AND INDUSTRIAL DEVELOPMENT
BONDS
(1) Bondholder Taxable Option
(2) Small Issue Exemption for Industrial
Development Bonds
(3) Tax-Exempt Bonds for Water Projects
(4) Advanced Refunding of Industrial Development
Bonds
(5) Tax-Exempt Bonds for Certain Public Facilities
(6) Disposition of Profits Arising From Certain
Advance Refundings
(7) Judicial Review of Private Letter Rulings
on Tax-Exempt Bonds
VIII. MISCELLANEOUS TAX MEASURES
(1) Accounting Requirement for Large Farming
Corporations
(2) Accrual Accounting Exception for Large Sod
Farms
(3) Contributions in Aid of Construction
(4) Excise Tax on Investment Income of Private
Foundations
(5) Excise Tax on Coin-Operated Devices
(6) Real Estate Investment Trusts
(7) Deficiency Dividend Procedure for Small
Business Investment Companies
(8) Interest on Deposits in Puerto Rican Branches
of U.S. Savings and Loan Associations
(9) Net Operating Loss Carryovers
V
(10)
Recognition of Gain Upon Incorporation
(11) Extension of 5-year Amortization for Lowincome Residential Housing
(12) Provisions Relating to ConRail
(13) Treasury Studies
CAPITAL GAINS, MINIMUM TAX AND MAXIMUM TAX CHANGES
I.
CAPITAL GAINS OF INDIVIDUALS
(1) Expansion of Capital Gains Exclusion
(2) Carryover Basis
(3) Home Sales
II. CAPITAL GAINS OF CORPORATIONS
Alternative Tax on Capital Gains
III. MINIMUM TAX (AND MAXIMUM TAX) PROVISIONS
(1) New Alternative Minimum Tax
(2) Changes in Items of Tax Preference for
Minimum Tax and Maximum Tax Purposes
(3) Treatment of Certain "Personal Service
Income" for Maximum Tax Purposes
CROSS-REFERENCE TO SECTIONS
OF THE FINANCE COMMITTEE BILL
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
LOCATION IN
ATTACHED
MEMORANDUM
TITLE I—PROVISIONS PRIMARILY AFFECTING INDIVIDUAL
INCOME TAX
Subtitle A—Tax Reductions and Extensions
Sec. 101. Widening of brackets; rate cuts in certain
brackets; increase in zero bracket amounts....
pp. 1-3
Sec. 102. Personal exemptions increased to $1,000
pp. 1, 16
Sec. 103. Earned Income credit made permanent
pp. 3-4
Sec. 104. Increase in and simplification of the earned
income tax credit
pp. 3-4
Sec. 105. Advance payment of earned income credit
pp. 3-4
Sec. 106. Application of certain changes in the case
of fiscal year taxpayers
Subtitle B—Itemized Deductions
Sec. 111. Repeal of deduction for State and local taxes
on gasoline and other motor fuels
p. 4
Subtitle C—Credit for Political Contributions
and the Elderly
Sec. 121. Credit for political contributions
p. 5
Sec. 122. Credit for the elderly •
pp. 15-16
Subtitle D—Deferred" Compensation; Employee Stock
Ownership Plans
Part 1—Deferred compensation provisions
Sec. 131. Deferred compensation plans with respect to
service for State and local governments
pp. 10-12
Sec. 132. Certain private deferred compensation plans..
pp. 10-11
Sec. 133. Clarification of deductibility of payments of
deferred compensation, etc., to independent
contractors
p. 13
vii
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
LOCATION IN
ATTACHED
MEMORANDUM
Sec. 134. Tax treatment of cafeteria plans
p. 12
Sec. 135. Administration of 1954 Code in the case of
certain cash or deferred arrangements
pp. 12-13
Part 2—Employee Stock Ownership Plans
Sec. 141. Credit for establishing employee stock ownership
plans
pp. 23-24
Subtitle E—Retirement Plans
Sec. 151. Retirement savings deduction for certain
persons covered by pension plans
pp. 9-10
Sec. 152. Simplified individual retirement accounts p. 9
Sec. 153• Defined benefit pension plan limits p. 10
Sec. 154. Tax-sheltered annuities in mutual funds p. 14
Sec. 155 • Pension plan reserves • pp. 13-14
Subtitle F—Other Individual Items
Sec. 161. Certain government health profession scholarship
programs
pp. 18-19
Sec. 162. Cancellation of student loans p • 19
Sec. 163. Exclusion of value of certain educational
assistance programs
Sec. 164. Tax counseling for the elderly. • p. 20
Sec. 165. Study of simplification of tax returns p. 20
Subtitle G—Partnerships
Sec. 171. Penalty for failure to file partnership return p. 7
TITLE II—GENERAL STOCK OWNERSHIP PLANS
Sec. 201. General stock ownership plans pp. 17-18
p. 18
•• •
Vlll
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
LOCATION IN
ATTACHED
MEMORANDUM
TITLE HI—PROVISIONS PRIMARILY AFFECTING
BUSINESS INCOME TAX
Subtitle A—Corporate Rate Reductions
Sec. 301. Corporate rate reductions p. 21
Subtitle B—Investment Tax Credit Amendments
Sec. 311. 10-percent investment tax credit and $100,000
limitation on used property made permanent
p. 22
Sec. 312. Increase in limitation on invesmtent credit
to 90 percent of tax liability
p. 22
Sec. 313. Investment credit for pollution control
facilities
pp. 27-28
Sec. 314. Investment credit for greenhouses, hog and
chicken structures
p. 25
Sec. 315. Investment credit for agricultural cooperatives pp. 25-26
Sec. 316. Investment credit for breeding and draft horses p. 24
Sec. 317. Additional carryover year for unused credit p. 26
Sec. 318. Investment credit for lessors of railroad
equipment. • •
Sec. 319. Transfers to Conrail not treated as disposition
for purposes of the investment tax credit
p. 26
p. 45
Subtitle C—Targeted Jobs Credit; Work Incentive
Program Credit
Sec. 321. Targeted jobs credit pp. 28-29
Sec. 322. Work incentive program credit p. 29
Subtitle D—Tax-Exempt Bonds
Part 1—Industrial development bonds
Sec. 331. Increase in limit on small issues of industrial
development bonds
PP • 35-36
Sec. 332. Advanced refunding of industrial development
bonds
pp. 36-37
ix
LOCATION IN
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
ATTACHED
MEMORANDUM
Sec. 333. Private use of industrial development bonds p. 37
Sec. 334. Industrial development bonds for water projects p. 36
Part 2—Other, tax-exempt bond provisions
Sec. 336 • Individual bond option credit pp. 34-35
Sec. 337. Declaratory judgment for arbitrage bonds p. 38
Sec. 338. Charitable distribution of certain proceeds
from advanced refunding of bonds
pp. 37-38
Subtitle E—Small Business Provisions
Part 1—Provisions Relating to Subchapter S
Sec. 341. Subchapter S corporations allowed 15
shareholders •
p • 32
Sec. 342. Permitted shareholders of subchapter S
corporations
p • 32
Sec. 343. Extension of period for making subchapter S
elections
P • 32
Sec. 344. Effective date
Part 2—Other Small Business Provisons
Sec. 346. Small business corporation stock pp. 32-33
Subtitle F—Accounting Provisions
Sec. 351. Treatment of certain farms for purpose of
rule required accrual accounting
pp • 38-40
Sec. 352. Accounting for growing crops pp. 38-39
Subtitle G—Provisions Relating to Depreciation
Sec. 361. Increase in class life system variance;
salvage value rule
P • 30
Sec. 362. Study relating to depreciation of certain
government required improvements
p. 45
X
LOCATION IN
ATTACHED
MEMORANDUM
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
Subtitle H—Other Business Provisions
Sec. 371. Disallowance of deduction for certain
entertainment facilities
pp. 33-34
Sec. 372. Deficiency dividend procedures for regulated
investment companies
p. 42
Sec. 373. Real estate investment trust provisions pp. 41-42
Sec. 374. Contribution in aid of construction p. 40
Sec. 375. Certain liabilities of controlled corporations pp. 43-44
Sec. 376. Medical expense reimbursement plans pp. 14-15
Sec. 377. 3-year extension of provision for 60-month
depreciation of expenditures to rehabilitate
low-income rental housing
p. 44
Sec. 378. Delay in application of new net operating loss
rules
p. 43
TITLE IV—CAPITAL. GAINS; MINIMUM TAX; MAXIMUM TAX
Subtitle* A—Capital Gains
Sec. 401. Repeal of alternative tax on capital gains of
individuals
pp • 46-48
Sec. 402. Increase in capital gains exclusion percentage pp. 46-48
Sec. 403. Removal of capital gains from items of tax
preference for purposes of minimum and
maximum taxes
••
Sec. 404. Reduction of alternative capital gains tax
for corporations
pp • 46-48
•••
P• 51
Sec. 405. Exclusion of gain from sale of principal
residence
PP. 50-51
Sec. 406. Nonrecognition of gain from sale of principal
residence
PP • 50-51
xi
LOCATION IN
ATTACHED
MEMORANDUM
TABLE OF CONTENTS FOR THE FINANCE COMMUTE BILL
Subtitle B—Minimum Tax Provisions
Sec. 421. Alternative minimum tax pp. 52-53
Sec. 422. Treatment of intangible drilling cost for
purposes of minimum tax
pp - 53-54
Sec. 423. Treatment of charitable lead trust for
purposes of minimum tax
pp. 53-54
Subtitle C—Maximum Tax Provisions
Sec. 441. Treatment of capital gains for purposes of
maximum tax
Sec. 442. Determination of personal service income from
nonsalaried trade or business activities....
••
PP • 46-48
pp. 54-55
TITLE V—OTHER TAX PROVISIONS
Sec. 501. Determination of who is an independent
contractor for purposes of employment taxes
pp. 7-8
Sec. 502. Reporting of tip income P • 8
Sec. 503. Deferral of carryover basis rules pp. 48-49
Sec. 504. Attribution of basis in jointly-owned farms
and businesses
•••
P • 17
Sec. 505. Deposits and certain branches of Puerto Rican
savings and loan associations
PP • 42-43
Sec. 506. Reduction of administration tax on private
foundations
PP- 40-41
Sec. 507. Excise tax on certain gaming devices p. 41
Sec. 508. Study of taxation of nonresident alien real
estate transactions in the United States
Sec. 509. Excessive government spending surtax p. 19
p. 20
PERSONAL TAX CHANGES
I.
GENERAL TAX CUTS
(1) Personal Exemptions. The Finance Committee accepted
a House provision that would raise the $750 personal exemption
to $1,000 for each taxpayer and dependent. The increased
exemption would replace the existing personal tax credit,
which is equal to the greater of $35 per exemption or 2
percent of the first $9,000 of taxable income. (An added
exemption for disabled individuals is discussed below under
"Miscellaneous Tax Measures.")
Revenue Estimate 1/.
FY 79
CY 79
FY 83
CY 83
-799
-1,291
-1,691
-1,730
Administration Position: To promote tax simplification,
it is important that there no
longer be a combination of
exemptions and personal credits.
We would have preferred that
this existing combination be
replaced by a simple $240
credit rather than a $1,000
exemption; a credit would have
the virtue of providing an
equal tax differential for
various family sizes regardless
of income level. The $1,000
exemption is acceptable only
if the total package of individual
tax cuts provides equitable
relief for low and middleincome taxpayers.
(2) Zero Bracket Amount (Standard Deduction). The
zero bracket amount (formerly known as the standard deduction)
would be increased from $2,200 to $2,300 for single taxpayers
and from $3,200 to $3,400 for couples; these changes are
also contained in the House bill. In a departure from the
House bill, the Finance Committee would raise the zero
FY 79
CY 79
FY 83
CY 83
Revenue Estimate:
bracket amount for heads of households from $2,200 to
$3,000.
-933 -1,862 -2,209 -2,263
1/ All figures for revenue estimates are in millions of dollars.
Estimates refer to provisions in the Finance Committee bill,
unless otherwise indicated.
- 2 Administration Position: Support the changes for single
taxpayers and joint returns;
opposed to the increased zero
bracket amount for heads of
households.
The increased zero bracket
amount for singles and married
couples is one means of
providing tax relief to persons
in lower income levels. This
change has the additional
advantage of enabling many
taxpayers to avoid the complications caused by itemizing
deductions.
However, a $3,000 zero bracket
amount for heads of households
would have the effect of
increasing the "marriage
penalty." In the case of taxpayers with dependent children,
the discrepancy between the
zero bracket amount available
to two single individuals and
the one available to a married
couple would be expanded from
$1,200 to $1,900 (or even
$2,600).
(3) New Rate Schedule. Like the House bill, the
Finance Committee version would retain a range of individual
tax rates from 14 percent to 70 percent, with the top rate
being applied to taxable income over $215,400 on a joint
return (compared with $203,200 under current law). Instead
of following the House procedure of widening each bracket by
about 6 percent, the Finance Committee rate schedule would
contain fewer and wider brackets.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-7,101 -11,377 -22,093 -23,592
- 3 -
Administration Position: We have no objection to the
concept of bracket widening as
an alternative to reducing
rates within existing brackets.
But we are concerned about the
overall distribution of the
Finance Committee bill.
Because of the excessive
capital gains cuts benefiting
high-income taxpayers, persons
in the middle-income ranges do
not receive an adequate share
of the total tax savings.
The Senate should consider
modifications that improve the
overall progressivity of the
bill by scaling down the capital
gains cuts.
(4.) Earned Income Credit. Currently, a taxpayer with
a dependent qualifies for a credit equal to 10 percent of
the first $4,000 of earned income, with the credit being
phased out at income levels between $4,000 and $8,000. The
Finance Committee bill would increase the credit to 12
percent of the first $5,000 of earned income (for a maximum
credit of $600); the credit would be reduced by $1.20 for
every $10 of income above $6,000, with a complete phase out
at $11,000 of income. Residents of Alaska and Hawaii would
be permitted higher credits based on cost-of-living differentials;
for example Alaska residents would be eligible for a maximum
credit of $750 rather than $600. Other changes would permit
the credit to be reflected in withholding, treat the credit
as earned income for welfare benefit purposes, and simplify
credit computations.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-110 -1,725 -1,513 -1,465
- 4 -
Administration Position: Support, except for cost-of-living
differentials.
This provision would provide
work incentives for low-income
taxpayers by helping to offset
the disproportionately large
social security tax burdens
borne by these individuals.
II. SIMPLIFICATION OF ITEMIZED DEDUCTIONS
(1) Repeal of Deduction for State and Local Gasoline
Taxes. The Finance Committee would retain a provision in
the House bill that repeals the itemized deduction for State
and local gasoline taxes.
Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
+459
+1,147
+2,020
+2,224
Administration Position: Support.
The amendment would simplify
tax return preparation and
promote energy conservation.
The 69 percent of taxpayers
who do not itemize deductions
receive no benefit from a
gasoline tax deduction;
therefore, it essentially
subsidizes the personal automobile use of higher-income
taxpayers.
(2) Medical Expenses. The House bill would repeal the
separate deduction for one-half of insurance premiums (up to
$150) as well as the separate deductibility floor (equal to
1 percent of adjusted gross income) for drug expenditures;
the effect would be to place all medical expenditures under
one 3 percent floor. The Finance Committee bill does not
include this provision.
Revenue Estimate:
FY 79
15
CY 79
FY 83
+ 37
+52
CY 83
+55
(House
provision)
- 5 -
Administration Position: At a minimum, the House provision should be restored.
The common 3 percent floor for
all medical expenditures would
substantially streamline the
itemized deduction schedule.
(3) Political Contributions. A taxpayer may now
choose either to claim political contributions as an itemized
deduction or to claim a credit for one-half of his contributions. The Finance Committee voted to double the maximum
political contributions credit, from $50 to $100 (on a joint
return) . The Committee would retain the existing deduction
of up to $200 (on a joint return). Under the House bill,
the current credit would be retained and the deduction
eliminated.
FY 79
CY 79
FY 83
CY 83
Revenue Estimate:
-16
-16
-16
Administration Position: Opposed to the Finance
Committee provision.
III.
The current scheme of an
alternative deduction or
credit is confusing and should
be eliminated. Retaining only
the credit, as in the House
bill, would provide an equal
tax incentive regardless of
tax bracket. However, the
cost effectiveness of a tax
incentive for political contributions has not been proven
sufficiently to justify any
increase in amount, such as
provided in the Finance Committee
UNEMPLOYMENT COMPENSATION
bill.
Phase Out of Exclusion for Unemployment Compensation.
Following the Administration's recommendation, the House
would phase out the tax exclusion for unemployment benefits
received by single persons with incomes over $20,000 and
couples making more than $25,000. This proposal was rejected
by the Finance Committee.
- 6 -
Revenue Estimate:
FY 79
CY 79
FY 83
+251
+263
CY 83
+268
(House
provision)
Administration Position: The House provision should be
restored.
Unemployment compensation is a
substitute for wages. At
higher income levels, there is
no reason to provide a tax
benefit for this form of
income as compared to the
receipt of wages. This special
tax preference serves as a
positive incentive not to work.
IV. TAX SHELTERS AND TAX ENFORCEMENT
(1) At Risk Provisions. In 1976, Congress enacted
rules that limit the extent to which certain taxpayers can
deduct tax shelter losses attributable to investment indebtedness for which they have no personal liability. As
recommended by the Administration, the House bill would
extend these "at risk" limitations to all investment activities
(except real estate) and to all taxpayers except widely-held
corporations. The Finance Committee rejected this provision.
Revenue Estimate:
FY 79
+2
CY 79
+ 14
FY 83
+5
CY 83
+6
(House
provision)
Administration Position: House provision should be
restored.
Tax shelter promoters have
devised new schemes that are
claimed to fall outside of the
specific at risk provisions
enacted in 1976. Expanding
the statutory at risk provisions,
as in the House bill, would
help to curtail some of the
most abusive tax shelter
gimmicks.
- 7 (2) Partnership Audits. In January, the Administration
presented a detailed proposal that would provide the Internal
Revenue Service with auditing procedures better equipped
to ensure tax compliance by shelter partnerships. Basically,
these provisions would permit a determination -of partnership
issues at the partnership level, rather than requiring a
separate determination with respect to each individual
partner. The House adopted a small portion of the Administration's proposals: a civil penalty could be imposed
against the partnership for failure to file a return, and
the time limitation for additional assessment would be
extended from 3 years to 4 years for tax returns attributable
to federally-registered partnerships. The Finance Committee
adopted only the civil penalty provision.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* 2/ * * *
Administration Position: The House time limitation
provision should be expanded
to cover all syndicated investment partnerships, and additional
portions of the Administration's
January recommendation should
be adopted.
Substantive rules to curtail
tax shelter abuse's are ineffective
in the absence of adequate
enforcement mechanisms.
Unless the IRS is provided
better tools for auditing
shelter partnerships, largescale tax avoidance will be
prevalent.
(3) Tax Treatment of Independent Contractors. To aid
enforcement of tax laws, employers are required to withhold
employment taxes (income, social security and unemployment
insurance) from wages paid employees. A business hiring
independent contractors need not withhold. Under the
Finance Committee bill, the IRS would be prohibited from
adopting any position inconsistent with a general audit
position in effect prior to January 1, 1976 or inconsistent
with a regulation or ruling in effect on that date. Also,
the IRS would be prevented from reclassifying an individual
as an employee if the business, in good faith, had consistently
treated such individual as an independent contractor.
- 8 Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
Administration Position: Opposed.
The Administration is working.
with Congress in 'order to
devise a more satisfactory
rule for determining when a
business is required to withhold income, social security,
and unemployment insurance
taxes. Freezing IRS practices,
without a resolution of the
substantive issue, ignores the
fundamental problem. It also
creates a serious inequity by
prohibiting the IRS from
enforcing the law even in
those instances where the
existing rules clearly require
withholding.
(4) Reporting of Tips. Internal Revenue Service
rulings, issued in 1975 and 1976, require an employer to
report to the IRS any charge account tips that are paid by
the employer to the employee. The Finance Committee voted
to overturn these rulings and to exempt restaurants and
CY 79
FY 83 respect
CY 83to
Revenue
Estimate:
FY 79 reporting
related
businesses
from information
with
charge account tips paid to their employees.
-50
-8
-68
-72
Administration Position: Opposed.
This is an issue of tax evasion.
The IRS rulings, overturned by
the Committee bill, would not
require any additional recordkeeping by employers. This
special exception for restaurants
from the general information
reporting requirements applicable
to all businesses will further
reduce tax compliance by a
group of employee-taxpayers
that now severely underreports
income.
\
- 9 V.
PENSIONS, DEFERRED COMPENSATION AND OTHER
EMPLOYEE PLANS
(1) Employer Contributions to Individual Retirement
Accounts. Under current law, individuals who do not participate
in employer-sponsored pension plans can establish individual
retirement accounts (IRAs); an employee can make annual
deductible contribution to an IRA in an amount not exceeding
the lesser of $1,500 or 15 percent of compensation. Under
the Finance Committee bill, employers could establish a
simplified pension plan under which contributions on a
nondiscriminatory basis could be made to IRAs established by
plan participants. Employer contributions would be limited
to the lesser of $7,500 or 15 percent of an employee's
compensation. If employer contributions were less than the
normal IRA limits (lesser of $1,500 or 15 percent of compensation) , the employee could make up the difference with
deductible contributions.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-6 -15 -49 -55
Administration Position: Support.
This provision would encourage
employer funding of retirement
benefits for employees without
many of the recordkeeping
problems and technical requirements associated with conventional
pension plans.
(2) Employee Contributions to Retirement Plans. If
an employee does not participate in a "qualified" pension
plan sponsored by his employer, the employee can deduct
contributions to an individual retirement account (IRA) as
long as those contributions do not exceed the lesser of
$1,500 or 15 percent of compensation. An employee cannot
deduct contributions to a "qualified" retirement plan established by the employer. The Finance Committee bill would
provide the employee a deduction for amounts contributed by
him to a qualified plan or by the employer on his behalf to
an IRA, provided that overall participation by employees is
on an nondiscriminatory basis; deductibility limits would be
the lesser of $1,000 for voluntary contributions ($100 for
mandatory contributions) or 10 percent of compensation.
- 10 Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
-144
-320
-536
-564
Administration Position: This provision would provide
employee-participants in
employer-sponsored plans a tax
treatment for contributions
similar to those available
under'the IRA provisions.
However, revenue constraints
may dictate deferring enactment
of this provision until a later
time.
(3) Limitation on Pension Benefits. Currently, benefits
under tax-qualified defined benefit pension plans (i.e.,
plans that provide a specified benefit level) cannot generally
exceed 100 percent of an employee's average pay for his
three highest years. The Committee bill would waive this
limitation for certain collectively bargained plans covering
at least 100 participants and not basing benefits on pay; in
such instances, the "100 percent of average pay" rule would
not apply as long as the employee's pay for any 3 of the 10
yearsRevenue
prior to
his retirement FY
did 79
not CY
exceed
average
for
Estimate:
79 the
FY 83
CY 83
all plan participants.
Administration Position: No objection.
With the qualifications
provided in this amendment, it
avoids the taint of a plan
being used by high-income
individuals to defer income
beyond what is needed to
replace their current earnings
level.
(4) Deferred Compensation Under A Salary Reduction Plan
Under a "salary reduction" arrangement, employees can elect
to defer receipt of compensation until later taxable years.
The House bill would provide that employees (and independent
contractors) of State and local governments, tax-exempt
rural electric cooperatives, and taxable employers would not
- 11 be taxed on deferred amounts until payment is actually
received. In the case of governments and cooperatives,
deferral would be limited to the lesser of 33-1/3 percent of
nondeferred pay or $7,500. The Finance Committee approved
the House measure and added a further deferral privilege for
employees of other non-governmental tax-exempt organizations,
who would be treated under the rules applicable to employees
of taxable entities.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-86 -150 -212 -220
Administration Position: Opposed.
The House provision relating
to governments should be
amended to eliminate benefits
for independent contractors,
to limit exclusion to 25
percent of net pay and tc
require coverage of rank-andfile employees in order to
obtain preferential tax treatment.
Because of other provisions of
law, the only employees of
non-governmental tax-exempt
organizations who can benefit
from the Finance Committee bill
are highly paid executives.
Allowing unlimited deferral
for these persons is unjustified — particularly in
light of the reasonable
restrictions on broadly based
government plans.
(5) Deferral Election Under Salary Reduction Plans.
The Finance Committee bill would permit a participant in a
State or local government salary reduction plan to elect to
defer compensation on a monthly basis rather than requiring
that the election be made prior to the year of deferral.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
- 12 Administration Position: No objection.
If salary reduction plans are
to be granted tax-preferred
status, we have no objection
to permitting a monthly election.
(6) Cafeteria Plans. A "cafeteria plan" is an arrangement under which a participating employee elects the type of
fringe benefits to which employer contributions will be
applied on his or her behalf. Some of these benefits may be
taxable, and others may be nontaxable. Under the House
bill, employer contributions to a cafeteria plan would
generally not be included in an employee's taxable income
to the extent he elected "nontaxable benefits." However,
contributions to discriminatory cafeteria plans would be
taxable to highly-compensated employees to the extent they
could have elected to receive "taxable benefits." The
Finance Committee agreed to this provision.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: Support.
This provision is substantially
similar to a proposal originally
made by the Administration in
January. It accords with a
sound rule of tax policy that
preferred status be granted to
employee benefits only if
there is broad employee
participation.
(7) Cash or Deferred Profit-Sharing Plans. A "cash or
deferred profit-sharing plan" is a plan that permits an
employee to elect whether to receive a current salary payment
or to have that amount contributed on his behalf to a profitsharing plan. The Finance Committee, in a modification of
the House bill, would permit tax qualification only if nondiscrimination standards were met.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
- 13 Administration Position: Support the Finance Committee
change.
As in the case of cafeteria
plans, these employee plans
should be granted tax-favored
status only if there is no
discrimination against rankand-file employees.
*
(8) Deferred Compensation Plans for Independent
Contractors. Currently, an employer is not entitled to
deduct deferred compensation provided under a nonqualified
deferred compensation plan until the employee-participant
includes that compensation in income. On the other hand,
amounts deferred by an independent contractor can nevertheless be deducted immediately by the business paying the
compensation. The House bill would deny the business a
deduction until the deferred compensation is included in
income by the independent contractor. The Finance Committee
adopted this same provision.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: Support.
A deduction for compensation
paid should be matched with
the inclusion of compensation
received for both employees
and independent contractors.
(9) Life Insurance Funding for Public Employee Plans.
A life insurance company is not now taxed on income derived
from reserves applicable to tax-qualified retirement plans.
However, since many public employee retirement plans have
not been "qualified" under the Internal Revenue Code,
insurance companies are generally unable to sell annuity
contracts to such plans without incurring tax liability.
Under the Finance Committee bill, annuity contracts would
be treated as if sold to a "qualified" plan in the event
those contracts are sold either to funded public employee
retirement plans or to nonqualified, unfunded deferred
compensation programs.
- 14 Revenue Estimate:
FY 79
CY. 79
FY 83
CY 83
* * * *
Administration Position: Support.
This provision would make
another funding medium, the
annuity contract, available to
more retirement plans of
public employees.
(10) Benefits for Employees of Charitable Organizations.
An employee of a charitable organization is not currently
taxed on amounts contributed by his employer to purchase
retirement annuities or stock in a mutual fund. However, a
purchase of mutual fund shares may be less desirable since
distributions prior to age 65 are generally prohibited. The
amendment allows more flexibility for distributions of mutual
fund shares to employees, while retaining the concept that
these shares are to be purchased primarily for retirement.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: No objection.
This provision would reduce a
disincentive to invest iri
mutual fund stock. It would
be appropriate to eliminate
the disincentive entirely by
subjecting retirement annuities
to the distribution limitations
applicable to mutual fund
stock.
(11) Non-discrimination Requirement for Medical Plans.
Some employers reimburse employees for medical and accident
expenses covered under a self-insured medical and accident
reimbursement plan. An employer can receive a deduction for
amounts paid to employees under such a plan while the
employees incur no tax liability on amounts received. The
Finance Committee bill would terminate such tax-free treatment
for executives to the extent the reimbursement plan discriminates
against rank-and-file employees.
- 15 Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
* * * *
Administration Position: Support.
Most persons cannot deduct
medical expenses unless those
expenses exceed 3 percent of
the taxpayer's adjusted gross
income, and persons using the
standard deduction receive no
medical deduction at all.
There is no reason to permit
some highly-compensated
employees to use nontaxable
dollars for all medical
expenditures, through the
medical reimbursement device.
VI. MISCELLANEOUS TAX MEASURES
(1) Tax Credit for the Elderly. In the Tax Reform Act
of 1976, the tax credit for persons age 65 or over was
increased. The elderly credit is currently 15 percent of
$3,750 (for joint returns with both spouses age 65) or
$2,500 (for single taxpayers or couples with one spouse
under age 65). However, the credit base is now reduced by
one-half of adjusted gross income exceeding $10,000 (in the
case of joint returns) or $7,500 (in the case of single
taxpayers) and by the amount of tax-free social security or
railroad retirement income received.
Under the Finance Committee bill, the maximum credit
base would be increased from $3,750 to $4,500 (for joint
returns with both spouses age 65) and from $2,500 to $3,000
(for single taxpayers or couples with one spouse under 65).
The Committee would also increase the respective phase-down
levels for adjusted gross income from $10,000 to $17,500
(joint returns) and from $7,500 to $15,000 (singles).
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-104 -278 -278 -278
Administration Position: Opposed.
- 16 * Given budgetary constraints,
extreme care must be exercised
in allocating tax relief.
This provision is a costly tax
benefit that would not help
most senior citizens. The
proposed increase in the
elderly credit would provide
no benefit whatsoever to the 18
million elderly Americans with
incomes so low that they have
no tax liability.
(2) Personal Exemption for Disabled Individuals. A
personal exemption, available now for the blind, would be
extended by the Finance Committee for individuals or spouses
who are totally or permanently disabled. By 1981, such
persons could claim a full $1,000 exemption; the exemption
would be limited to $500 in the interim. Excluded from
coverage would be persons receiving benefits as disabled
veterans, or disabled civil service employees, or individuals
obtaining
disability
benefits FY
under
Security
Revenue
Estimate:
79 the
CYSocial
79
FY
83
CYAct
83
or other Government programs.
-121
-242
-546
-559
Administration Position: Opposed.
This provision is not responsive
to the needs of the handicapped.
Expenses attributable to
disability are generally
deductible as medical expenses.
Consequently, the basic unmet
need of the handicapped is not
the lack of income adjustments
to reflect increased expenses.
The fundamental problem is a
lack of income — a problem
that cannot be addressed
effectively through the tax
system. The proposed $1,000
exemption would provide $700
of relief to the most affluent
taxpayers, $140 of relief to
persons in the lowest tax
bracket, and no relief to the
poorest individuals not subject
to taxation.
- 17 (3) Estate Tax Treatment of Jointly-Owned Businesses.
For the purpose of the estate tax, a Finance Committee
amendment would exclude from the decedent's estate a portion
of a farm or closely-held business owned jointly by the
decedent and his spouse. The spouse who did not contribute
the original capital to acquire the farm or business would
be treated as "earning" his or her share at the rate of 2
percent per year (up to a maximum of 50 percent of the value
of the business).
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-37 -43 -46
Administration Position: Support.
A married couple with adequate
tax advice can already secure
the estate tax advantages that
would be provided by this
amendment. The amendment
would merely extend the same
advantages to taxpayers who
lack the resources to obtain
tax counsel.
(4) General Stock Ownership Plans. Corporations,
unlike partnerships, are generally treated as taxable
entities distinct from corporate shareholders. An exception
is now provided in the case of "subchapter S" corporations,
mutual funds and real estate investment trusts where corporate
income is generally taxed directly at the shareholder level.
The Finance Committee bill would extend similar treatment,
under limited circumstances, to State-chartered corporations
where all residents of a State are allocated a stock interest
in the corporation. Activities of the corporation and
ownership of its stock would be subject to numerous limitations.
Revenue Estimate: Negligible revenue loss in
first few years; long-run cost
could be substantial.
Administration Position: With the carefully prescribed
restrictions in the Committee
amendment, this limited extension
of a "subchapter S" concept
complies with present tax
principles. A 5-year trial
- 18 period will provide Congress
and the Administration with
information to determine
whether this concept should be
expanded further or eliminated.
(5) Educational Assistance Plans for Employees. An
employee whose educational expenses are paid, directly or
indirectly, by his employer must generally include those
payments in income without an offsetting deduction. An
offsetting deduction is usually permitted only if the
employee is developing skills required for his current
position, as opposed to skills required to qualify for a new
position. The Finance Committee would provide a tax exclusion
for amounts paid by an employer pursuant to an educational
assistance program that does not discriminate against rankand-file employees and that meets certain other requirements.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-18 -26 -37 -40
Administration Position: In view of the nondiscriminatory requirement and other
restrictions to prevent abuse,
this provision is an acceptable
extension of the current rules
for excluding educational
expenses paid by employers.
(6) Exclusion from Income for Certain Government
"Scholarships." Although students are generally permitted
to receive scholarships on a tax-free basis, the tax exclusion
is denied in most instances where the student agrees to
perform services in exchange for the educational grant. A
special exception to this rule is provided for participants
in the Armed Forces Health Professions Scholarship Program
and the Public Health Service/National Health Service Corporation Scholarship Program; the current exclusion will not
apply to persons entering these programs after December 31,
1978. The Finance Committee would extend the exclusion to
persons entering the programs in 1979 in order to permit the
Joint Committee on Taxation to complete a study of this
issue.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
- 19 Administration Position: No objection.
We do not object to a limited
extension of this special
provision. Upon completion of
the Congressional study, we
hope that appropriate tax
treatment can be provided on a
permanent basis.
(7) Forgiveness of Student Loan Obligations. The
Internal Revenue Service has ruled that a taxpayer, whose
student loan obligation is forgiven upon the rendering of
services, must report that loan forgiveness as taxable
income. The Tax Reform Act of 1976 declared a moratorium on
the taxation of such loan cancellations through December 31,
1978, and the Finance Committee would extend this moratorium
through 1982.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
Administration Position: No objection.
We do not object to a limited
extension of the moratorium.
(8) Surtax for Excess Government Spending. Under the
Committee bill, a surtax would be imposed on individuals and
corporations in the event that Federal expenditures exceeded
certain prescribed levels (adjusted for inflation). The
surtax would not apply in the event the unemployment rate
was in excess of 7 percent for 3 consecutive months, or in
the event of war.
Administration Position: Opposed.
The growth in Federal spending
must be curtailed and the
budget deficit reduced. The
Administration is committed to
these objectives. However, we
cannot support the mechanistic
approach outlined in the
Committee amendment.
- 20 -
(9) Older Americans Tax Counseling Assistance. The
Finance Committee would expand the current volunteer income
tax assistance program. The IRS would be authorized to
contract with nonprofit agencies to prepare tax counseling
assistance for elderly individuals.
Administration Position: Expansion of the volunteer
income tax assistance program
is desirable.
(10) Studies by the Treasury Department. The Finance
Committee agreed to direct the Treasury Department to study
the appropriate tax treatment of foreign owners of U.S. real
estate interests and also to study methods of simplifying
the filing of individual tax returns.
Administration Position: No objection.
- 21 BUSINESS TAX CHANGES
I. CORPORATE RATE CUTS
The Senate Finance .Committee adopted a House provision
that provides a corporate rate schedule more graduated than
that under current law. The corporate rate would be reduced
from 20 percent to 17 percent on the first $25,000 of corporate
income, from 22 percent to 20 percent on income between
$25,000 and $50,000, from 48 percent to 30 percent on income
between $50,000 and $75,000, from 48 percent to 40 percent
on income between $75,000 and $100,000, and from 48 percent
to 46 percent on income over $100,000.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-2,265 -5,033 -6,773 -7,089
Administration Position: We agree that the top corporate
rate should be reduced at this
time to 46 percent. However,
we believe that the top rate
should continue to apply to
corporate income in excess of
$50,000.
A steeply graduated corporate
rate structure raises troubling
questions of tax equity. It
should be borne in mind that
individuals are the ultimate
taxpayers; therefore, the tax
policy goal of progressivity
has meaning only as it relates
to the impact of the system on
individuals. In this regard,
we fear that the rate schedule
in the bill would induce many
high-income individuals to use
a corporation as a tax shelter —
avoiding the higher tax rates
that would be applicable if
that same income were taxed
directly to them.
- 22 II. INVESTMENT TAX CREDIT CHANGES
(1) General Changes in Investment Credit. A taxpayer
may now claim an investment tax credit generally equal to 10
percent of the cost of qualifying business assets. The
credit can be used to offset all of the first $25,000 of tax
liability and 50 percent of tax liability in excess of
$25,000. In 1981, the investment credit is scheduled to
revert to a 7 percent rate, and the maximum qualifying amount
of used property is scheduled to be reduced from $100,000 to
$50,000.
The Finance Committee agreed to two basic changes
contained in the House bill: (a) Making the 10 percent rate
and $100,000 used property limitation permanent, and (b)
increasing from 50 percent to 90 percent the amount of tax
liability in excess of $25,000 that could be offset by the
credit, with this increased ceiling phased-in at an additional
10 percent per year.
Revenue Estimate: 3/ FY 79 CY 79 FY 83 CY 83
-129 -287 -782 -728
Administration Position: Generally support.
These modifications are generally
in line with the recommendations
submitted by the President in
January. We believe that the
permanent 10 percent credit
and a liberalization of the
tax liability limitation will
increase the potency of this
incentive for business investment in productive equipment.
However, to prevent a taxpayer
from offsetting all tax
liability with the investment
credit, we recommend that the
first $25,000 of tax liability
also be subject to the 90
percent ceiling.
3 / E x c l u d e s cost of extension.
- 23 (2) Investment Credit for Rehabilitation of Structures.
The present investment credit is generally limited to
purchases of machinery and equipment, as opposed to acquisitions
of buildings and other real property. The House bill would
extend the credit to expenditures incurred in connection
with the rehabilitation of industrial and commercial buildings.
The Finance Committee did not agree to this provision.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-84 -237 -340 -355 (House
provision
Administration Position: House provision should be
restored.
Government policy should
promote the revitalization of
urban areas. One means of
encouraging urban development
is to provide an investment
credit for rehabilitating
existing structures. Since
the credit is not available
with respect to new construction
of structures, businesses
would be encouraged to rebuild
in inner-city areas.
(3) Employee Stock Ownership Plans (ESOPs). An employee
stock ownership plan (ESOP) is a plan under which a trust
acquires employer stock to be held for the benefit of
employee-participants in the plan. In the Tax Reduction Act
of 1975, an employer was granted an additional percentage
point of investment tax credit (bringing the credit to 11
percent) if amounts equivalent to the additional credit
were contributed to an ESOP. (A plan eligible for this
special investment credit treatment has become known as a
"TRASOP.") In 1976, an additional one-half percentage point
investment credit (bringing the credit to 11-1/2 percent)
was granted if an employer and its employees both contributed
amounts equal to that additional one-half percentage point
credit. These special investment credit provisions are now
scheduled to expire after 1980.
- 24 The Finance Committee bill would make the additional
investment credit provisions for TRASOP's permanent and
would also provide numerous modifications of the requirements
for tax-qualification of ESOPs and TRASOP's.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-545 -591
Administration Position: In general, we are not opposed
to the extension of these
temporary investment credit
provisions. However, we do
believe that the investment
credit base for TRASOP's
should be converted to a
partial credit based upon
wages. Also, the proposed
changes in qualification
requirements for ESOP's and
TRASOP1s should be revised —
especially to provide participants with more adequate
disclosure of matters affecting
them as shareholders.
(4) Investment Credit for Breeding and Draft Horses.
Although most livestock is eligible for the investment tax
credit, horses are now excluded. The Committee bill would
extend credit eligibility to breeding and draft horses, but
not to horses held for sporting purposes.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-6 -15 -21 -22
Administration Position: No objection.
There appears to be no sound
reason for permitting an
investment credit with respect
to breeding cattle, while
denying an investment credit
with respect to breeding and
draft horses.
- 25 (5) Investment Credit for Certain Single-Purpose
Structures. Structures are not generally eligible for the
investment tax credit. However, under the Finance Committee
bill, the credit would be allowed with respect to structures
used for single-purpose food or plant production (including
such structures as pig pens and chicken coops). This change
would be made effective retroactively to August 15, 1971.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-53 -22 -26 -27
Administration Position: Opposed.
The eligibility rules for the
investment credit need
reexamination in order to
provide clearer, more rational
distinctions. But the investment credit should not be
extended to structures on a
piecemeal basis.
(6) Investment Credit for Agriculture Cooperatives.
Agriculture cooperatives are subject to a tax treatment
similar to that accorded mutual funds and real estate
investment trusts. In computing its taxable income, a
cooperative can deduct certain dividends distributed to its
patrons. However, the cooperative's investment credit is
proportionately reduced to the extent patronage dividends
offset taxable income. The Finance Committee agreed that
patronage dividends would no longer have the effect of
reducing a cooperative's investment credit. In addition,
an investment credit not utilized by the cooperative could
be "flowed through" for use by the patrons.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-46 . -33 -39 -40
Administration Position: Generally, no objection.
We do not object to this provision insofar as it makes the
investment credit more fully
available to cooperatives.
- 26 However, we are concerned
about possible complications
resulting from the "flow
through" of the credit to
patrons.
(7) Investment Credit for Certain Lessors of Railroad
Cars. Under current law, railroads and airlines have a more
generous tax liability limitation for the investment credit
than do most taxpayers. The House bill would provide that,
as the tax liability ceiling for most taxpayers is being
phased-in to 90 percent, taxpayers investing in railroad or
airline assets would still be permitted to use the special
limitations for those industries if such limitations are
more liberal. The Finance Committee would extend these
investment credit rules in the House bill to corporate
manufacturers who lease railroad cars to others.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-4 -8 +2 +2
Administration Position: No objection.
There is no reason to deny the
benefits of the House provision
to corporate manufacturerlessors.
(8) Extension of Investment Credit Carryforwards. In
the event investment credits cannot be used currently due to
tax liability limitations, present law generally permits the
taxpayer to carry the excess credits to 3 prior taxable
years or to 7 succeeding taxable years. The Finance Committee
bill would provide one additional carryforward year for
credits that would otherwise expire in 1977. This is a
one-time extension of the carryforward period and would
not apply to credits expiring in 1978 or later years.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
Administration Position: Opposed.
We object to changing the
rules retroactively to confer
a benefit on a few companies
for whom the existing carryforward
period expired last year.
- 27 (9) Investment Credit for Pollution Control Facilities.*
Under current law, a taxpayer can elect special 5-year
amortization with respect to certain pollution control
facilities used in connection with plants in existence
before 1976. However, if this rapid amortization is claimed,
a taxpayer is entitled to one-half of the normal investment
credit (for a credit generally equal to 5 percent of the
investment). The House bill would permit the full 10 percent credit to be combined with rapid amortization, except
to the extent the pollution facility has been financed with
tax-exempt industrial development bonds. Under the Finance
Committee version, the House provision would be retained
Revenue
Estimate:
CY
79
FY 83 financing.
CY 83
FY 79
without
the credit
reduction relating
to tax-exempt
-10
-14
-211
-228
Administration Position: Opposed.
In the President's January tax
message, he recommended a
full 10 percent credit for
pollution control facilities
even if those facilities are
being amortized over a 5-year
period. However, that proposal
was advanced only in connection
with the elimination of taxexempt status for pollution
control bonds. By combining
these two proposals, the
Administration's program would
have provided tax relief for
businesses retrofitting existing
buildings to meet anti-pollution
requirements while, at the
same time, easing the pressure
on municipal finance that now
results from a proliferation
of pollution control bonds.
We oppose a liberalization of
the investment credit for
pollution control facilities
as long as tax-exempt financing
remains available. If Congress
does not accept this basic
- 28 Administration position, we
would urge retention of at
least the House provision that
would limit the extent to
which a taxpayer could combine
5-year amortization, a full 10
percent credit, and tax-exempt
financing. The Finance Committee
approach is unduly generous.
III. EMPLOYMENT-RELATED TAX CREDITS
(1) Targeted Jobs Tax Credit. The Finance Committee
would replace the current general jobs tax credit, which
expires at the end of 1978, with a targeted jobs credit. To
encourage employment of disadvantaged individuals, an
employer would receive a credit of up to $3,000 for the
first year of employment of certain individuals, up to
$2,000 for the second year, and up to $1,500 for the third
year of employment. Eligible employees under the Finance
Committee bill include: economically disadvantaged Vietnamera veterans, economically disadvantaged youth (age 18 to 24),
persons receiving disability benefits under the Supplemental
Security Income program (SSI); handicapped persons referred
from vocational rehabilitation programs; persons who have
been receiving general assistance payments from State or
local governments for a period of at least 30 days; and
economically disadvantaged ex-convicts. The Finance Committee f s
targeted jobs credit modifies a similar provision in the
House bill; the Senate proposal would apply for 1979, 1980
and 1981.
Revenue Estimate: FY 79 CY 79 FY 81 CY 81
-115 -330 -77 -89
Administration Position: Support.
A targeted jobs credit was
proposed by the President as
part of his urban program.
This provision is necessary in
order to provide meaningful
work experience for persons
who have not been reached by
general incentives for investment and job creation. The
- 29 Finance Committee provision is
along the lines of the President's
recommendation, and we support
this constructive effort to
combat structural unemployment.
(2) WIN and Welfare Recipient Employment Tax Credits.
Currently, an employer can receive a tax credit equal to 20
percent of the wages paid during the first 12 months of
employment to individuals who have received AFDC payments
for at least 90 days or who are placed in employment under
the WIN program. The amount of credit claimed by any employer
cannot now exceed the first $50,000 of tax liability plus
one-half of tax liability exceeding $50,000.
The Finance Committee agreed generally to increase
these credits to 75 percent of the first $6,000 in wages
paid in the first year of employment, 65 percent of the
first $6,000 in wages for the second year, and 55 percent of
the first $6,000 in wages paid the third year. These
percentages would be applied against the first $7,000 of
wages beginning in 1981. An employer's wage deduction would
be reduced by the amount of credit claimed — a rule similar
to that applicable to the targeted jobs credit. The current
limitation on the amount of credit available against tax
liability would be removed.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-63 -161 -427 -455
Administration Position: Generally, no objection.
Tax incentives are needed to
encourage the employment of
those persons most in need of
work opportunities.
However, these credits should
not relieve taxpayers of all
tax liability. The WIN and
welfare recipient employment
credits, as well as the
investment credit and targeted
jobs credit, should be limited
to 90 percent of tax liability.
- 30 IV.
DEPRECIATION
In computing depreciation allowances, taxpayers are
permitted to elect to apply the asset depreciation range
(ADR) system. Under ADR, the Treasury Department establishes
useful lives of assets based on industry-wide experience.
An electing taxpayer can then select any depreciable life
ranging from 20 percent below to 20 percent above the
prescribed class life for the industry. The shorter useful
lives, permitted by the 20 percent range, provide taxpayers
with a substantial benefit in the form of increased depreciation
deductions.
The Finance Committee bill would expand the asset
depreciation range from 20 percent to 30 percent. In addition,
the ADR system would be simplified by the elimination of
certain reporting requirements and the disregarding of
salvage
valueEstimate:
in computing depreciation
Revenue
FY 79
CYallowances.
79
FY 83
CY 83
-231
-513
-2,812
-3,040
Administration Position: Opposed.
In view of budgetary concerns,
there is a limited amount of
revenue available to provide
increased incentives for
business investment. The
Administration believes that
incentives can be provided
most efficiently and fairly in
the form of rate reductions
rather than increased depreciation
allowances. The economy certainly
cannot afford the current
Finance Committee package that
combines large corporate rate
cuts, a substantial increase
in depreciation allowances,
and a huge tax cut for capital
gains. We urge elimination of
the 30 percent ADR provision
and a curtailment of the
capital gains cut.
The Administration is studying
the entire area of capital cost
allowances and will report its
findings next year.
- 31 V.
SMALL BUSINESS PROVISIONS
(1) Small Business Depreciation. The substantial tax
savings provided under the ADR system, whether applied with
a 20 percent or 30 percent range, will be unavailable to
many small businesses. For small businessmen, the tax
savings under ADR are often outweighed by the perceived
complexities in meeting the recordkeeping and bookkeeping
requirements. Even with the simplifications proposed by the
Finance Committee, the remaining ADR requirements will
undoubtedly intimidate many taxpayers who lack access to
costly legal and accounting expertise.
Therefore, the Administration has proposed- that small
businesses be granted tax relief similar to that*offered by
ADR — but under a vastly simplified system designed specifically
for small businesses.
(a) Rather than using a complicated accelerated method
of depreciation (such as the double-declining balance method),
a small business would use straight-line depreciation;
accordingly, an equal percentage of an asset's cost would
simply be written-off each year.
(b) To compensate for the loss of tax savings that
would otherwise be available under an accelerated depreciation
method, a small business would be permitted to combine straightline depreciation with depreciable lives shorter than those
permitted for large businesses under the ADR system.
(c) The special small business depreciation system
would have fewer than 20 asset categories, as opposed to
about 150 under ADR.
Businesses with $250,000 or less in adjusted basis of
eligible assets would qualify for the special small business
system. We estimate that about 90 percent of vall businesses
meet this eligibility requirement.
Revenue Estimate: 4/ FY 79 CY 79 FY 83 CY 83
-5 -19 -422 -542
Administration Position: We believe that adding our
proposal would provide genuine
small business relief in a
streamlined format.
4/ Assumes a 20 percent ADR range.
- 32 (2) Subchapter S Provisions. The subchapter S rules
permit certain small corporations to be treated essentially
like partnerships. The income and losses of a subchapter S
corporation are generally passed through the corporation to
the shareholders, who then reflect such income or loss on
their individual tax returns. A corporation generally may
not elect subchapter S status unless it has 10 or fewer
shareholders; however, after having subchapter S status for
5 years, the permissible number of shareholders is increased
from 10 to 15.
The Finance Committee bill would: (a) Increase the
number of permissible shareholders from 10 to 15, without
regard to the current 5-year limitation; (b) treat spouses
as one shareholder for purposes of applying the 15-shareholder
rule; (c) permit as shareholders those trusts required to
distribute all income currently, with each trust beneficiary
being counted in applying the 15-shareholder rule; and (d)
liberalize the election rules by permitting a corporation to
elect subchapter S at any time during the first 75 days of
the current taxable year or at any time during the preceding
taxable year.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: Support.
These subchapter S provisions
are substantially the same as
those recommended by the
Administation in January. The
new rules would provide more
flexibility and fewer complications for small businesses.
(3) Small Business Corporation Stock. Following
another recommendation of the Administration, the Finance
Committee bill would double (from $500,000 to $1 billion)
the amount of a small corporation's stock that can qualify
for special ordinary loss treatment, and would also double
(from $25,000 to $50,000) the amount of losses that can be
claimed by any taxpayer with respect to such stock. Moreover,
there would no longer be a requirement that this stock be
issued pursuant to a plan.
- 33 Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
Administration Position: Support.
These provisions, proposed by •
the Administration, would
encourage risk-taking in small
business enterprises.
VI. DEDUCTIBILITY OF ENTERTAINMENT EXPENDITURES,
Most taxpayers must pay for entertainment activities
with dollars that have already been subject to tax. However,
some persons are now permitted to spend before-tax dollars
to purchase entertainment. This tax advantage is achieved
through a deduction for certain entertainment expenditures
that are claimed to be business related.
The Finance Committee agreed to deny entertainment
deductions for some of the most abusive situations. A
deduction would no longer be permitted for the acquisition
or maintenance of entertainment facilities such as hunting
lodges and yachts, or for dues paid to most athletic, sporting,
country, and social clubs.
CY 79
FY 83
CY 83
Revenue Estimate:
FY 79
+51
+113
+151
+158
Administration Position: Support.
Allowing entertainment expenses
to be deducted, without taxing
related personal benefits to
the recipient, offends fundamental
principles of tax policy
because it seriously distorts
income measurement. The
effect is a large loss of
Federal revenue and, more
importantly, the disillusionment of average taxpayers
denied such tax advantages.
At a minimum, the Finance
Committee's proposal relating
- 34 to entertainment facilities
should be adopted. Extension
of deductibility limitations
to other entertainment expenditures, in line with the
President's January tax message,
is also justified and long
overdue.
VII. MUNICIPAL FINANCING AND INDUSTRIAL DEVELOPMENT BONDS
(1) Bondholder Taxable Option. Interest on debt
obligations issued by State and local governments is exempt
from Federal income tax. This current provision creates two
problems. First, the present system is a very inefficient
means of providing a Federal subsidy to State and local
governments; less than three-fourths of the revenue lost to
the Federal Treasury actually accrues to State and local
governments through lower borrowing costs. Second, the
exemption is a major source of tax avoidance by wealthy
individuals, who retain for themselves the portion of the
Federal revenue loss not accruing to State and local governments.
A Finance Committee amendment would help to alleviate
these problems. Under the Committee bill, a taxpayer would
still be given the option of exempting all municipal bond
interest from income. As an alternative, the taxpayer could
elect to include 167 percent of the bond interest in income
and to claim a tax credit for 67 percent of that interest.
Revenue Estimate: FY 79 CY IS FY 83 CY 83
* -38 -467 -607 (include
outlays
Administration Position: Support.
This provision would not
mean any increased Federal
involvement in State and local
financing. But it would help
State and local governments by
making their bonds moire
attractive to persons in
income brackets that are not
high enough to justify investment in tax-exempt issues.
- 35 This provision would improve
municipal financing prospects
and would also enhance the
equity of the income tax
system.
(2) Small Issue Exemption for Industrial Development
Bonds. Generally, there is no tax exemption for "industrial
development bonds" issued by State and local governments for
the benefit of private industry. However, some bond issues
that provide funds for manufacturing plants and other private
businesses do qualify for the tax exemption. One of the
current exemptions is for "small issues" of industrial
development bonds where the amount of the bonds sold does
not exceed $1 million or the total capital expenditures of
the facility being financed do not exceed $5 million over a
6-year period. The Finance Committee would raise the $1
million limitation to $2 million, and would raise the $5
Revenue
Estimate:
FY 79
CY 79
FY 83
CY 83
million
limitation
to $12 million.
-3
-39
-45
Administration Position: Opposed.
By simply increasing the small
issue exemption in general, this
provision would not improve
the competitive position of
those depressed localities
most in need of investment
funds; the provision would
serve only to increase the
supply of tax-exempt bonds
backed by the credit of private
industry.
This provision would result in
some of the largest industrial
corporations competing for
funds in the tax-exempt market
with conventional borrowings
by State and local governments
to finance schools, fire stations
and other traditional projects.
This competition would lead to
higher interest rates for State
- 36 and local borrowings which, in
many cases, will be translated
into higher local property
taxes.
The Administration recommends
that the financial assistance
be targeted by retaining the
small issue exemption only for
economically distressed areas;
and, with respect to those
areas, we recommend that the
$5 million ceiling be raised
to $20 million.
(3) Tax-Exempt Bonds for Water Projects. The Finance
Committee agreed to permit the issuance of tax-exempt bonds
to finance facilities for furnishing water if they are
operated by a governmental unit and make water available to
the general public, including electric utility, industrial,
agricultural or other commercial users. The current exemption
is limited to water facilities, if the water is available
"on reasonable demand" to the general public.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* -4 -65 -79
Administration Position: No objection.
(4) Advanced Refunding of Industrial Development Bonds.
The Internal Revenue Code generally denied tax exemption to
interest on industrial development bonds issued after April 30,
1968. The tax law can be circumvented if tax-exempt status
also applies to a "refunding" that extends the maturity of
the outstanding bonds; an extension of the maturity of those
outstanding bonds is in all respects the equivalent of new
tax-exempt financing.
On November 4, 1977, the Treasury Department issued a
press release announcing that new regulations imposing
substantial restrictions on such refundings would be proposed
and would be applicable to refunding bonds issued after that
date. The regulations were in fact proposed on December 1,
1977.
/
- 37 The Finance Committee adopted an amendment that would
provide tax-exempt status to certain refundings occurring
after the November 4 cutoff date, as long as certain actions
had been taken prior to that time.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* -7 -9 -9
Administration Position: Opposed.
This provision benefits one
security firm and only a
handful of major industrial
corporations. It enables
these corporations to benefit
from tax-exempt financing and
provides no benefit whatsoever
to any State or local government.
(5) Tax-Exempt Bonds for Certain Public Facilities.
The Finance Committee adopted an amendment which would
permit advance refunding of obligations of a governmental
unit substantially all the proceeds of which are used to
provide public airports, docks, wharves, mass commuting
facilities or parking, storage or training facilities
directly related to any of the foregoing, and public convention
and trade show facilities.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: No objection.
(6) Disposition of Profits Arising From Certain Advance
Refundings. Under the Committee bill, certain issuers of
tax-exempt bonds would be permitted to distribute to charities
the arbitrage profits arising from the advance refunding of
State and local debt obligations; these refundings are those
that took place before the publication of a Treasury news
release on September 24, 197 6 prohibiting such distributions.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
- 38 Administration Position: No objection.
We have no objection to this
limited rule for distribution
of arbitrage profits to
charities.
(7) Judicial Review of Private Letter Rulings on TaxExempt Bonds. The Finance Committee agreed to provide a
procedure for judicial review of IRS rulings regarding
the tax-exempt status of a proposed bond issue.
Administration Position: Opposed.
We generally support the
principle of judicial review of
IRS rulings requested by bond
issuers. However, the Finance
Committee proposal is unworkable
and therefore highly undesirable.
It encourages forum shopping,
will not present courts with a
real case or controversy, and
will not provide guidance either
to bonds issuers or the IRS.
VIII. MISCELLANEOUS TAX MEASURES
(1) Accounting Requirement for Large Farming Corporations.
The Tax Reform Act of 197 6 generally requires farming corporations to use the accrual method of accounting in order
to match properly the taxpayer's farming expenses and farming
income. That Act contains exceptions from the accrual
accounting requirement for certain corporations. One of the
exceptions is for corporate farms with annual gross receipts
of $1 million or less; another exception is for farms
controlled by one family, without regard to size or the
extent of public ownership.
The Finance Committee bill adopts two changes contained
in the House bill. One amendment would provide an additional
exception to the accrual accounting rules for certain farm
corporations owned by two or three families. Another amendment
would permit certain farmers, nurserymen, and florists to
use the accrual accounting method without inventorying growing
crops.
Revenue Estimate: FY 79 CY 7 9 FY 8 3 CY 83
* * * *
- 39 Administration Position: Opposed.
The provision in the bill is
apparently designed to avoid
competitive advantages for-onefamily corporations now
permitted to use cash accounting.
However, we feel that the
appropriate means of eliminating
the competitive imbalances is
to repeal the one-family
corporation exception. Small
farms would still be able to
use cash accounting. But
there is no reason to permit
multi-million dollar corporations
to utilize a cash accounting
privilege designed for unsophisticated taxpayers.
The provision relating to the
intentorying of growing crops
is unnecessary. On July 28,
1978, the IRS issued Revenue
Procedure 78-22, which allows
any eligible farmer, nurseryman,
or florist on the accrual
method of accounting to change
to the cash method. This
revenue procedure should
eliminate any undue hardship
for the taxpayers covered by
the Finance Committee amendment.
The House provision is not
needed to provide relief.
(2) ^ Accrual Accounting Exception for Large Sod Farms.
In addition to the exceptions for 1-family farms and farms
with annual receipts of less than $1 million, there is an
exception from the accrual accounting requirements for
taxpayers engaged in the business of operating a nursery.
For the purpose of this rule, a nursery does not now include
the operation of a sod farm. The Finance Committee bill
would amend the rule to treat sod farms as nurseries,
thereby exempting large corporate sod farms from the accrual
method of accounting.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
- 40 -
Administration Position: Opposed.
The current exception for
nurseries is based, in part,
on the fact that there is a
long growing period for young
trees being raised by nurseries.
This rationale does not apply
in the case of sod growers.
(3) Contributions in Aid of Construction. In the Tax
Reform Act of 1976, Congress provided that nonshareholder
contributions in aid of construction by a water or sewage
disposal utility were to be treated as nontaxable contributions to the capital of the utility. The Senate rejected
an amendment in 1976 to expand that rule to include contributions
in aid of construction to regulated public gas and electric
utilities. The Finance Committee bill now contains this
amendment.
Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
-96
-100
-107
Administration Position: Opposed.
The 1976 amendments relating
to water and sewage disposal
utilities are unsatisfactory.
In effect, those provisions
provide the equivalent of
current deductibility of
capital expenditures that
should normally be recovered
through depreciation. This
area requires major study.
Adding gas and electric
utilities to the current
provision would only serve to
compound the difficulties.
(4) Excise Tax on Investment Income of Private
Foundations^ Currently, an excise tax of 4 percent is
imposed on the net investment income of private foundations.
The stated purpose of this excise tax, enacted in 1969, is
to defray the Government's cost in auditing private foundation
activities. Under the Finance Committee bill, the excise
tax would be reduced from 4 percent to 2 percent for taxable
years beginning after September 30, 1977.
- 41 Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
-40 -40 -40 -40
Administration Position: No objection.
Experience has shown that the
4 percent excise tax raises
more revenue than is needed to
cover private foundation
auditing expenses. We do not
object to a decrease in the
excise tax to 2 percent.
(5) Excise Tax on Coin-Operated Devices. There is an
excise tax, generally equal to $250 per year, imposed on
"slot" machines and certain other coin-operated gaming
devices.. State taxes paid on such devices are permitted to
be offset against the Federal excise tax, but there is now a
credit ceiling equal to 80 percent of Federal tax. Under
the Finance Committee bill, the credit would be increased to
95 percent for 1979 and 1980. After 1980, the Federal
excise tax would be repealed.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-5 -4 -7 -7
Administration Position: No objection.
(6) Real Estate Investment Trusts. Currently, a real
estate investment trust ("REIT") is subject to a 100 percent
tax on income from property held primarily for sale in the
ordinary course of business. The purpose of this tax is to
promote the REIT objective of investing in real estate
rather than acting as a real estate dealer. A Committee
amendment would provide that property would not be considered
to be "held primarily for sale" by a REIT where certain "safe
harbor" tests have been met. For example, the property
would generally have to be held by the REIT for rent during
a period of at least 4 years.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: No objection.
- 42 The amendment provides reasonable
standards that will provide
more certainty in applying the
"primarily held for sale"
rule.
(7) Deficiency Dividend Procedure for Small Business
Investment Companies I A small business investment company,
which meets the standards of a "Regulated Investment Company,"
can avoid tax at the corporate level as long as 90 percent
of income is paid out to shareholders. A similar rule
applies to Real Estate Investment Trusts (REITs). If the
recomputation of a REITs income upon audit would cause the
90 percent test to be failed, the REIT is now permitted to
declare a "deficiency dividend" to meet the test. The
Committee bill would extend this deficiency dividend procedure
to small business investment companies and other regulated
investment companies.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: Support.
There is no reason to deny
small business investment
companies a deficiency dividend
procedure now available to
REITs.
(8) Interest on Deposits in Puerto Rican Branches of
U.S. Savings and Loan Associations. Individuals resident in
Puerto Rico are exempt from U.S. tax on income derived from
within Puerto Rico, and U.S. corporations are generally entitled
to a possessions credit against any U.S. tax on the foreign
source income of their Puerto Rican business and on certain
investment income from Puerto Rican sources. Currently,
interest on amounts deposited with a Puerto Rican branch of
a U.S. commercial bank qualifies for the two types of special
possessions treatment under a "branch source" rule. However,
this rule does not extend to branches of U.S. savings and
loan associations. Under a Committee amendment, the special
branch source rule available to commercial banks would be
extended to branches of U.S. savings and loan associations.
- 43 Revenue Estimate:
FY 79
CY 79 • FY 83
*
*
*
CY 83
*
Administration Position: No objection.
This provision would end a
discrimination against savings
and loan associations in
comparison to commercial bank
branches in Puerto Rico.
(9) Net Operating Loss Carryovers. In the Tax Reform
Act of 197 6, there was an extensive modification of the
rules relating to the carryover of net operating losses as a
result of a corporate acquisition or reorganization. In
order to provide time for the clarification of the new rules
through appropriate statutory amendments, the Finance Committee
would delay the effective date of the 1976 Act changes until
January 1, 1980 (with respect to plans of reorganization
adopted on or after that date) or until June 30, 1980 (with
respect to sales or exchanges in taxable years beginning
after that date). The Committee bill would also permit
taxpayers to elect to apply the new rules in the interim
under certain circumstances.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: Support.
This amendment would permit the
development of more adequate
statutory guidance to taxpayers
with respect to loss carryovers.
(10) Recognition of Gain Upon Incorporation. Generally,
a taxpayer does not recognize g a m or loss upon the transfer
of property to a controlled corporation. However, gain is
recognized to the extent that liabilities assumed by the
corporation, or liabilities attaching to the transferred
property, exceed the transfered property's adjusted basis.
Under a Committee amendment, items that would have been
deductible by a cash-basis taxpayer would not generally be
considered liabilites of that taxpayer for purposes of
determining whether the transfer results in recognition of
gain.
- 44 -
Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
Administration Position: No objection.
(11) Extension of 5-vear Amortization for Low-income
Residential Housing.Special 5-year amortization is n o w —
provided with respect to expenditures incurred to rehabilitate
certain low-income rental housing. This provision is now
scheduled to expire at the end of 1978. The Committee would
extend the rapid amortization rule through 1981.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-1 -1 -24 -26
Administration Position: No objection.
This provision, along with
several tax incentives for
multi-family housing, need a
careful examination to determine
the most effective means of
promoting the construction and
rehabilitation of such structures.
Such a study should examine
whether direct expenditures
would be more appropriate than
tax subsidies; and, if tax
subsidies are needed, the
study could provide guidance
regarding constructive changes
in the current system.
Treasury and the Department of
Housing and Urban Development
are now engaged in such a
study. Pending completion of
that examination, we have no
objections to a temporary
extension of the current rapid
amortization provision for
rehabilitation of low-income
rental housing.
- 45 (12) Provisions Relating to ConRail. In 1976, 11
insolvent railroads transferred their assets to the Consolidated
Rail Corporation (ConRail). Congress mandated this transfer
and also directed that the transferor railroads receive
ConRail stock and "certificates of value" issued by the
United States Railway Association, a nonprofit Government
corporation formed to oversee the ConRail reorganization.
The Finance Committee bill would adopt two tax provisions
relating to ConRail:
(a) 1976 legislation provided that the transfers to
ConRail were generally to be treated as reorganizations for
purposes of the tax law. However, the 1976 legislation did
not grant to the transferor railroads an exemption from
investment credit recapture — an exemption that generally
applies where assets are transferred in a tax-free reorganization.
The Committee bill would add an exception to the investment
credit recapture rules so that a transferor railroad would
not be subject to additional tax on its transfer of rail
properties to ConRail.
(b) The 1976 legislation permits a transferor railroad's
net operating losses to be carried forward beyond the normal
expiration date, but only for use by the transferor against
future income arising from court awards or the redemption of
certificates of value. The Finance Committee bill would
permit net operating loss carryovers to be used to offset
income of a corporation where a certificate of value was
originally issued to another member of an affiliated group
of corporations. This amendment would facilitate a proposed
reorganization of transferor corporations.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
* * * *
Administration Position: No objection.
(13) Treasury Studies. The Finance Committee agreed
to instruct the Treasury Department to study the tax treatment
of pollution control facilities and expenditures mandated by
OSHA or the Mining Safety and Health Administration.
Administration Position: No objection.
- 46 CAPITAL GAINS, MINIMUM TAX AND MAXIMUM TAX CHANGES
I. CAPITAL GAINS OF INDIVIDUALS
(1) Expansion of Capital Gains Exclusion. Under
current law, income from certain transactions (including
stock sales, timber sales, receipt of mineral royalties, and
real estate sales) is eligible for preferential tax treatment.
Fifty percent of capital gain can now be excluded from
income before applying the regular tax rates. The excluded
half is considered an item of tax preference subject to the
current add-on minimum tax and offsetting the amount of
earned income eligible for the 50 percent maximum tax
ceiling.
The Finance Committee bill would effect two basic
changes in the capital gains rules:
(a) The 50 percent exclusion would be increased to 70
percent (so that only 30 percent of an individual's capital
gains would be subject to tax). As a result, the top tax
rate on capital gains (for persons not subject to the proposed
alternative minimum tax) would be 21 percent. A few individuals are currently taxed at rates of about 35 or 40
percent.
(b) An add-on minimum tax would no longer be applied to
the excluded portion of capital gain, nor would the capital
gain exclusion serve to offset the amount of income eligible
for the 50 percent rate ceiling on earned income. Instead,
the Committee would apply a new alternative minimum tax to
the capital gains and other preferences of certain taxpayers
who avoid regular taxation on most of their income. (See
discussion under "Minimum Tax".) The top capital gains rate
for persons subject to the alternative minimum tax would be
25 percent.
Revenue Estimate: 5/ FY 79 CY 79 FY 83 CY 83
-295 -3,337 -4,166 -4,486
Administration Position: Opposed.
5/ These revenue estimates include the net effect of repeal
of the current add-on minimum tax, adoption of the new
alternative minimum tax with modified preference items,
and all individual capital gains changes except the
exclusion for residences and the postponement of
carryover basis.
- 47 The Committee's capital gains
relief would involve an annual
revenue loss of about $4
billion over current law
(using customary revenue
estimating procedures). Even
if one assumes that these
changes would induce more
sales of capital assets and
thereby generate some offsetting
revenue, the net revenue loss
would still be about $3 billion
after "feedback."
These huge capital gains cuts
would have a serious impact on
the progressivity of the tax
system. About one-third of the
capital gains savings would go
to persons with incomes over
$200,000, and persons over
$50,000 would receive two-thirds
of the savings.
Due in large
part to the proposed capital
g a m s cuts, the Finance Committee
has reported a bill that provides"
an inadequate share of the
total tax savings to middleincome wage earners.
The proposed 70 percent exclusion
would be provided not only to
stock sales, but also to such
items as profits from the sale
of jewelry, antiques, commodity
contracts and real estate
purchased for speculation.
Persons receiving income from
wages, interest, and inventory
profits would still be taxed
at full rates. By widening
the gap between capital gains
and ordinary income, there
would be increased discrimination
among different forms of
income and increased pressure
- 48 for sophisticated tax planning
to meet the technical Code
definition of "capital gains."
Although the Finance Committee
action has sometimes been
compared to Administration
proposals in 1963, the Committee
bill is noticably lacking the
capital gains reforms proposed
at that time — the elimination
of capital gain treatment for
a number of transactions
(e.g., timber sales and
receipt of mineral royalties)
not involving true investment
gain and the taxation of
unrealized appreciation at the
time of death.
(2) Carryover Basis. Prior to passage of the Tax
Reform Act of 1976, the tax law provided for the complete
forgiveness of any income tax on appreciated property held
until death. A decedent's heirs were granted a step-up in
basis of inherited property. The effect of this rule was to
measure taxable gain on a subsequent sale only with respect
to appreciation occurring after the decedent's death.
The rule for a step-up in basis at time of death was
justifiably criticized as one of the most outrageous loopholes
in the Internal Revenue Code. It discriminated among
different forms of wealth. If an individual accumulated
savings from the proceeds of asset sales or from wages, that
wealth was subject to both income and estate taxation. On
the other hand, only an estate tax was imposed on those
persons who could afford to invest in assets and retain
those assets until death (perhaps using the appreciated
value to secure loans through the years). The 1963 Administration program proposed that this loophole be closed by
taxing unrealized appreciation at death.
As a counterpart to substantial estate tax relief, the
Tax Reform Act of 1976 adopted a compromise position between
the 1963 proposal for taxing capital gains at death and the
step-up basis rule. The 1976 Act would generally require an
heir to use the same asset basis as used by the decedent
(with certain adjustments to account for death taxes paid).
- 49 Transition rules were provided so that the new "carryover
basis" rules would apply only to appreciation occurring
after 1976.
The provisions in the 1976 Act have been properly
criticized as being too complex. Senator Hathaway has
worked with the Administration and with representatives of
the legal and accounting professions to devise amendments to
"clean up" the carryover basis rules. These revisions would
eliminate substantially all the technical difficulties of
the present statutory structure.
The Finance Committee voted to postpone the effective
date of the carryover basis provisions until 1980. The
Committee declined to adopt the "clean up" bill proposed by
Senator Hathaway.
Revenue Estimate:
FY 79
CY 79
FY 83
CY 83
-36
-93
-190
-200
Administration Position: Opposed.
In view of the remedial changes
that would be effected by the
Hathaway bill, postponement of
carryover basis is unnecessary.
The Finance Committee bill
would promote uncertainty.
Taxpayers would be unable to
plan adequately for the future.
Even if carryover basis is
postponed, it is critical that
the clean up amendments be
adopted. The public deserves
to see what will go into
effect at the end of the
deferral period. The failure
to enact the Hathaway bill
along with postponement is an
effort to undermine the carryover basis provisions and to
create pressure for restoring
the step-up basis loophole.
- 50 (3) Home Sales. In addition to special capital gains
treatment, individuals who sell a residence are eligible for
other tax preferences. Gain realized from the sale of a
principal residence is not recognized if the taxpayer invests
the sale proceeds in another residence within an 18-month
period (a so-called "rollover" provision). Also, persons
who have attained age 65 can exclude that portion of gain
attributable to $35,000 of sale price.
The House bill would have converted the current exclusion
for the elderly into a once-in-a lifetime exclusion of
$100,000 of gain on a home sale, regardless of the seller's
age. Under the Finance Committee bill, the treatment of
home sales would be as follows:
(a) The special exclusion, which now applies only to
the elderly, would be extended to all taxpayers. In addition,
the exclusion would be expanded to cover gain attributable
to $50,000 (rather than $35,000) of sale price. Persons
under age 65 would have to choose between the use of this
special exclusion provision or the current "rollover"
provision.
(b) To qualify for the special exclusion, a taxpayer
must have owned and used the property as his principal
residence for 2 out of the 3 years preceding the sale; the
current rule requires use for 5 of the 8 preceding years.
Moreover, upon an involuntary conversion of a new principal
residence, the holding period of the old residence could be
added for the purpose of this rule.
(c) The special exclusion rule could be used for any
sale where the holding period requirement is met. Under
current law, the exclusion for the elderly can be used only
once in a lifetime.
(d) Gain on home sales would not be subject to the
minimum tax, nor would it be considered as a preference
offset for maximum tax purposes.
(e) An individual would be permitted to utilize the
"rollover" provision with respect to gain on more than one
principal residence where that individual relocates for
employment purposes more than once within an 18-month period
following the sale of the first residence.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
-141
-301
-398
-435
- 51 -
Administration Position: Support.
II.
We believe that the Finance
Committee has adopted reasonable
liberalizations of the current
rules for homeowners. The
Committee's approach is more
equitable and less costly than
the House proposal.
CAPITAL GAINS OF CORPORATIONS
Alternative Tax on Capital Gains. The capital gains
preference for corporations is computed differently from the
individual preference. A corporation may elect tc have its
capital gains taxed at a 30 percent alternative rate in lieu
of rates under the normal corporate schedule. A fraction of
the capital gain (18/48ths) is then subject to a minimum tax
of 15 percent (after allowing certain deductions). The
maximum effective rate on corporate capital gains, including
both the regular tax and minimum tax, is 31.125 percent.
The Finance Committee voted to reduce the alternative
capital gains tax for corporations from 30 percent to 28
percent. Corporate capital gains would remain subject to
the existing minimum tax. Accordingly, the maximum effective
corporate capital gains rate would be CY
29.67
79 percent.
FY 83
CY 83
FY 79
Revenue Estimate:
-53
-117
-170
-177
Administration Position: Opposed.
The current preference for
corporate capital gains should
not be expanded. Much of the
preference applies to items
that should be taxed at ordinary
rates. For example, perhaps
one-third of the total tax
savings under this proposal
would go to timber companies
whose income is already preferred
over that of other businesses
realizing profits from the
sale of inventory items.
- 52 III.
MINIMUM TAX (AND MAXIMUM TAX) PROVISIONS
(1) New Alternative Minimum Tax. Currently, there is
an "add-on" minimum tax that is imposed at a 15 percent rate
on several tax preference items. Included among the preferences
are the excluded portion of capital gains, accelerated
depreciation on real estate, certain intang'ible drilling
costs, percentage depletion, and 6 other items. The minimum
tax was adopted in 1969 in the face of the revelation that
many high-income individuals were avoiding all or most tax
liability.
Recent criticism of the minimum tax has focused on two
points. First, an "add-on" minimum tax can affect persons
already bearing a substantial tax liability; some persons
have objected to the resulting impact on capital gains
taxation. Second, since it does affect persons with significant regular tax liability, the minimum tax has been
kept at a low rate (15 percent) that permits some sheltered
high-income individuals to be taxed at about the same
overall rate as the poorest wage earner.
The Finance Committee would repeal the current "add-on"
minimum tax on individuals. In its place would be a new
alternative minimum tax payable if it exceeded regular tax
liability (as reduced by all nonrefundable tax credits
except the foreign tax credit). This alternative minimum
tax would be computed by adding to taxable income all
designated tax preference items (including the excluded
portion of capital gains). The alternative minimum tax base
would then be subject to rates of 10 percent on amounts
between $20,000 and $60,000, 20 percent on amounts between
$60,000 and $100,000, and 25 percent on amounts in excess of
$100,000 (with the foreign tax credit offsetting the minimum
tax to the same extent it offsets regular tax).
Revenue Estimate: See estimates for individual
capital gains changes.
Administration Position: The alternative minimum tax in
the Finance Committee bill has
several weaknesses.
By removing preferences other
than capital gains from an
add-on minimum tax, the provision would weaken the current
- 53 limitations on many tax
sheltered individuals. Thousands
of taxpayers, who are now
deterred from sheltering by
the add-on minimum tax, would
find no restrictions imposed
by the Committee's provision.
It would raise less than onehalf of the revenue of the
current add-on minimum tax (if
the existing minimum tax were
applied to a 70 percent exclusion)
and would cover less than 20
percent as many taxpayers.
An alternative minimum tax,
whether covering only capital
gains or all preferences,
should be designed as a matter
of basic tax equity to ensure
that individuals pay tax on at
least one-half of their
economic income. In order to
accomplish this result, the
maximum alternative tax rate
would have to be raised from
25 percent to 35 percent.
Under the current Finance
Committee provision, individuals could still shelter
about
two-thirds
ofMinimum
their Tax
(2) Changes in Items of Tax
Preference
for
income andthe
notcurrent
be subject
to
and Maximum Tax Purposes"! In computing
minimum"
the minimum
tax.
tax and the offset to earned income
eligible
for the 50
percent "maximum tax" ceiling, there are several designated
items of tax preference. For individuals, the list of
preferences now includes: accelerated depreciation on real
property, accelerated depreciation on leased personal property,
rapid amortization of pollution control facilities, rapid
amortization of railroad rolling stock, the bargain element
of stock options, percentage depletion, the excluded portion
of capital gains, rapid amortization of child care facilities,
certain intangible drilling costs, and excess itemized
deduct irmc
- 54 For purposes of the new alternative minimum tax and
the maximum tax, the Finance Committee bill would make three
changes in the list of individual preferences (in addition
to those discussed in connection with capital gains):
(a) Itemized deductions are currently treated as a
preference to the extent they exceed 60 percent of the
taxpayer's adjusted gross income, with medical expenses and
casualty losses not counted as itemized deductions for this
purpose. Under the Finance Committee bill, deductions for
medical expenses, casualty losses and State and local- taxes
would not be counted as itemized deductions in computing the
preference; and those items would also be subtracted from
adjusted gross income in applying the 60 percent rule.
(b) Charitable contributions attributable to transfers
to a charitable lead trust before 1977 would not' be included
in computing the preference for excess itemized deductions.
Such charitable transfers are currently exempted through
1975.
(c) Intangible drilling costs would be considered an
item of tax preference only to the extent those costs (over
the amount amortizable on the basis of a 10-year life or
under cost depletion) exceed the taxpayer's income from oil
and gas properties. This provision would make permanent an
exception that was applicable for 1977.
Revenue Estimate: See estimates for individual
capital gains changes.
Administration Position: Generally support.
We generally support these
modifications in the list of
tax preference items.
(3) Treatment of Certain "Personal Service Income" for
Maximum Tax Purposes. An individual is eligible for a
maximum rate of 50 percent (as opposed to the normal maximum
rate of 70 percent) with respect to "personal service income."
In general, "personal service income" includes such items as
wages, salaries and professional fees. In the case of a
noncorporate business in which capital is a material incomeproducing factor, an individual's personal service income
cannot exceed the lesser of 30 percent of his share of the
net business profits or a "reasonable allowance as compensation."
- 55 -
The Finance Committee would eliminate the 30 percent
limitation. As a consequence, an individual would be permitted
to apply the 50 percent maximum tax ceiling to income as
long as it constituted a reasonable allowance as compensation
for services actually rendered to the business.
Revenue Estimate: FY 79 CY 79 FY 83 CY 83
9mWmmmmmmm
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-21 -56 -91 -99
Administration Position: No objection.
Under current law, the "reasonable
compensation" test is used in
determining the amount of
payments deductible by an
employer as salaries paid to
executives. We have no objection
to extending this test for the
purposes of applying the
maximum tax provisions.
FOR RELEASE AT 4:00 P.M.
October 5, 1978
TREASURY'S 52-WEEK BILL OFFERING
The Department of the Treasury, by this public notice, invites tenders for
$3,162 million, or thereabouts, of 364-day Treasury bills to be dated
October 17, 1978,
and to mature October 16, 1979
(CUSIP No. 912793 Z7 4 ) .
The bills, with a limited exception, will be available in book-entry form only,
and will be issued for cash and in exchange for Treasury bills maturing
October 17, 1978.
This issue will not provide new money for the Treasury as the maturing
issue is outstanding in the amount of $3,162 million, of which $1,797 million is
held by the public and $1,365 million is held by Government accounts and the
Federal Reserve Banks for themselves and as agents of foreign and international
monetary authorities.
Additional amounts of the bills may be issued to Federal
Reserve Banks as agents of foreign and international monetary authorities.
Tenders
from Government accounts and the Federal Reserve Banks for themselves and as
agents of foreign and international monetary authorities will be accepted at the
average price of accepted tenders.
The bills will be issued on a discount basis under competitive and noncompetitive bidding, and at maturity their par amount will be payable without interest.
Except for definitive bills in the $100,000 denomination, which will be available
only to investors who are able to show that they are required by law or regulation
to hold securities in physical form, this series of bills will be issued entirely
in book-entry form on the records either of the Federal Reserve Banks and Branches,
or of the Department of the Treasury.
Tenders will be received at Federal Reserve Banks and Branches and at the
Bureau of the Public Debt, Washington, D. C. 20226, up to 1:30 p.m., Eastern
Daylight Saving time, Thursday, October 12, 1978. Form PD 4632-1 should be used to
submit tenders for bills to be maintained on the book-entry records of the
Department of the Treasury.
Each tender must be for a minimum of $10,000.
be in multiples of $5,000.
Tenders over $10,000 must
In the case of competitive tenders, the price
offered must be expressed on the basis of 100, with not more than three decimals,
c
-g-, 99.925.
Fractions may not be used.
(OVER)
B-l700
-2Banking institutions and dealers who make primary markets in Government
securities and report daily to the Federal Reserve Bank of New York their positions
with respect to Government securities and borrowings thereon may submit tenders
for account of customers, provided the names of the customers are set forth in
such tenders.
Others will not be permitted to submit tenders except for their
own account.
Payment for the full par amount of the bills applied for must accompany all
tenders submitted for bills to be maintained on the book-entry records of the
Department of the Treasury.
A cash adjustment will be made for the difference
between the par payment submitted and the actual issue price as determined in
the auction.
No deposit need accompany tenders from incorporated banks and trust companies
and from responsible and recognized dealers in investment securities, for bills
to be maintained on the book-entry records of Federal Reserve Banks and Branches,
or for definitive bills, where authorized.
A deposit of 2 percent of the par
o
amount of the bills applied for must accompany tenders for such bills from others,
unless an express guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the Treasury of the
amount and price range of accepted bids.
Those submitting competitive tenders
will be advised of the acceptance or rejection thereof.
The Secretary of the
Treasury expressly reserves the right to accept or reject any or all tenders, in
whole or in part, and his action in any such respect shall be final.
Subject to
these reservations, noncompetitive tenders for $500,000 or less without stated
price from any one bidder will be accepted in full at the average price (in
three decimals) of accepted competitive bids.
Settlement for accepted tenders for bills to be maintained on the records
of Federal Reserve Banks and Branches must be made or completed at the Federal
Reserve Bank or Branch on October 17, 1978,
in cash or other immediately avail-
able funds or in Treasury bills maturing October 17, 1978.
Cash adjustments
will be made for differences between the par value of maturing bills accepted
in exchange and the issue price of the new bills.
Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954
the amount of discount at which bills issued hereunder are sold is considered
to accrue when the bills are sold, redeemed or otherwise disposed of, and the
bills are excluded from consideration as capital assets.
Accordingly, the
owner of bills (other than life insurance companies) issued hereunder must
-3include in his Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on original issue or
on a subsequent purchase, and the amount actually received either upon sale or
redemption at maturity during the taxable year for which the return is made.
Department of the Treasury Circulars, Public Debt Series - Nos. 26-76 and
27-76, and this notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue.
Copies of the circulars and tender forms may be
obtained from any Federal Reserve Bank or Branch, or from the Bureau of the
Public Debt.
FOR RELEASE UPON DELIVERY
EXPECTED AT 10:00 A.M.
FRIDAY, OCTOBER 6, 197 8
STATEMENT OF DAVID J. SHAKOW
ATTORNEY-ADVISOR, OFFICE OF TAX LEGISLATIVE COUNSEL
DEPARTMENT OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON MISCELLANEOUS REVENUE MEASURES
COMMITTEE ON WAYS AND MEANS
Mr. Chairman and members of the Subcommittee:
I am pleased to have the opportunity to present the
views of the Treasury Department on the two bills under
current consideration by the Subcommittee. The Treasury
Department position on each of these bills is summarized
in Exhibit A to this statement.
H.R. 14035 (de minimus rule for estimated taxes)
This bill relaxes the requirement for filing declarations of estimated tax. Under current law, no declaration
of estimated tax is required if a taxpayer reasonably expects
that the amount of taxes which would be owed with the taxpayer's return, over and above amounts withheld from wages
and other tax credits, would be less than $100. The bill
would apply this de minimus exception in any case where
estimated taxes are expected to be less than $500. In addition,
no penalty would be imposed on individuals for failure to pay
estimated income tax if the tax reported on the individual's
return is less than $500.
The rules for estimated tax payments place taxpayers
who receive income on which there is no withholding on a
pay-as-you-go system similar to the system applied to wage
earners. The pay-as-you-go system is beneficial for the
B-1201
- 2 Government, which receives taxes throughout the year, and
for the taxpayer, who is not faced with paying a large amount
of tax when filing a tax return on April 15. However,
because taxpayers may have difficulty determining their
actual tax liability before they make out their tax return
for the full taxable year, safe harbor rules are provided
before any penalty tax is imposed for failure to pay estimated
taxes. These safe harbor rules generally allow taxpayers to
pay as much tax as they paid the year before and thus satisfy
the estimated tax requirement, or to pay 80 or 90 percent of
the current year's tax liability (based on facts known on
the quarterly due date of the estimated tax return) and thus
satisfy the requirement. As noted before, there is an overriding exception where the taxpayer does not expect to owe
more than $100 with the year's tax return.
Because of the exceptions based on prior year's liability,
a taxpayer with a large increase in income might owe significant amounts at the end of the year and not be subject to
penalties for failure to pay estimated taxes. Also, because
of the percentage tests, a taxpayer with a high income tax
liability might underpay taxes by a few thousand dollars and
still not be subject to a penalty for failure to pay estimated
tax. In contrast, though, a relatively low-income taxpayer
with steady income might fail the safe harbor tests in the
Code even if the taxpayer's underpayment of tax is a relatively
small amount. We believe it is appropriate to increase the
overriding safe harbor rules for filing declarations of
estimated taxes from its present $100 level so that a taxpayer
who does not expect to pay a substantial amount to the
Government with his or her return will be permitted to avoid
the paperwork involved in making estimated tax payments.
However, we believe that it would be unwise to raise the
safe harbor figure to $500 at this time. As indicated above,
the estimated tax rules are not solely for the benefit of
the Government. They also benefit individuals who would
otherwise be faced with a large tax bill on April 15. The
$100 figure was incorporated in the Code in 1972. Before
then, the safe harbor rule was applied with a $40 figure.
We believe it would now be appropriate to raise the limit
to $200.
- 3 H.R. 13913 (safe harbor rules for real estate investment trusts)
This bill relaxes certain technical rules applied to
real estate investment trusts ("REITs"). Prior to 1974, a
REIT lost its special tax status if it held any property
primarily for sale to customers. In 19 74, Congress liberalized
this rule and allowed REITs to sell property obtained through
foreclosure. In 1976, Congress liberalized the rule further
by removing the absolute restriction on REITs holding property
primarily for sale to customers. Instead, a 100-percent tax
was imposed on gain derived by a REIT from the sale or other
disposition of such property.
Under the bill, the rules which restrict sales by REITs
are further relaxed. The 100-percent tax will not apply
where the following conditions are met.
(1) The property has been held by the REIT
for at least four years;
(2) The total expenditures made by the REIT
during the four-year period prior to sale do not
exceed 20 percent of the net selling price of the
property;
(3) The REIT does not sell more than five
properties during the taxable year; and
(4) If the property is land or improvements
not acquired through foreclosure, the property is
held by the REIT for production of rental income
for a period of at least four years.
In addition, the bill would increase the additional
period that the IRS may grant to a REIT to hold foreclosure
property from two years to four years (for a total of six
years that foreclosure property may be held).
It has been recognized in the past that the rules preventing the sale of property by a REIT may be unduly restrictive.
On the other hand, it would be inappropriate to allow a REIT,
which is intended to be a passive entity, to engage in substantial selling activities. We believe that sales allowed by
- 4 the proposed safe harbor rules are consistent with the
purposes of the REIT provisions. In this regard we note
particularly the fourth restriction, under which property
must have been held by the REIT for the production of rental
income for four years before it is sold. We understand that
this restriction would not be fulfilled if the property were
held for rent at a rate substantially below the market rate,
or for a use which indicates that the REIT is not looking for
a substantial return on its investment from the rental of
the property. This bill is identical to section 373 of
H.R. 13511, the tax bill which is being considered at present
by the Senate, and the Senate Finance Committee's report
accompanying the bill makes a similar point in connection
with this rental provision. The Treasury Department does
not oppose this bill.
I would be pleased to answer any questions you may
have at this time.
o
0
o
EXHIBIT A
H.R. 14035
—
Do not oppose, if a $200 figure is
used as a safe harbor rather than
$500.
H.R. 13913
—
Do not oppose.
I
department theTREASURY
TELEPHONE 566*2041
WASHINGTON, D.C/20220
FOR IMMEDIATE RELEASE
October 6, 1978
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,301 million of 13-week Treasury bills and for $3,401 million
of 26-week Treasury bills, both series to be Issued on October 12, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
13-week bills
maturing January 11, 1979
Price
Discount
Rate
97.919
97.911
97.913
8.233%
8.264%
8.256%
26-week bills
maturing April 12, 1979
Investment
Rate 1/
Price
Discount
Rate
95.753 8.401%
8.446%
95.730
8.422%
95.742
8.
8.
8.
Investment
Rate 1/
8.90%
8.95%
8.92%
Tenders at the low price for the 13-week bills were allotted 19%.
Tenders at the low price for the 26-week bills were allotted 6%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTSAND TREASURY:
Location
Received
Boston
$
21,835,000
New York
3,598,870,000
15,445,000
Philadelphia
38,075,000
Cleveland
28,165,000
Richmond
28,945,000
Atlanta
233,260,000
Chicago
St. Louis
37,580,000
20,250,000
Minneapolis
46,155,000
Kansas City
15,240,000
Dallas
218,730,000
San Francisco
Treasury
TOTALS
13,015,000
$4,315,565,000
: Received
Accepted
$
.
.
,
.
.
.
11,160,000
4,692,490,000
15,060,000
52,005,000
20,255,000
18,245,000
231,755,000
29,560,000
37,905,000
36,465,000
11,190,000
170,500,000
13,015,000 .
13,615,000
21,835,000
1 ,858,650,000
14,390,000
38,075,000
25,165,000
28,945,000
117,130,000
23,280,000
11,200,000
39,125,000
15,240,000
94,630,000
!$
:
.
:
r
$2,,300,680,000 a2 $5 ,340,205,000
a/Includes $390,545,000 noncompetitive tenders from the public.
b/Includes $217,255,000 noncompetitive tenders from the public.
i/Equivalent coupon-issue yield.
B-1202
Accepted
$
11,160,000
3 ,000,390,000
15,060,000
47,005,000
13,255,000
17,575,000
159,255,000
17,560,000
17,905,000
22,585,000
11,190,000
54,500,000
13,615,000
$3 ,401,055,000 b/
CONTACT:
ROBERT W. CHILDERS
(202) 634-5248
FOR IMMEDIATE RELEASE October 6, 1978
REVENUE SHARING FUNDS DISTRIBUTED
The Department of Treasury's Office of Revenue Sharing
(ORS) distributed more than $1.89 billion in general revenue
sharing payments today to more than 37,000 State and local
governments.
Current legislation authorizes the Office of Revenue
Sharing to provide quarterly revenue sharing payments to
State and local governments through the end of Federal
fiscal year 1980.
Antirecession Fiscal Assistance (ARFA) payments which
have usually been paid at the same time as general revenue
sharing are no longer being distributed nationally, pending
action by the Congress to extend the program. The last
regular ARFA payments were made in July of this year in
advance for the three months ending September 30, 1978.
- 30 B-1203
Department of iheJREASllRY
TELEPHONE 566-2041
\$W
FOR IMMEDIATE RELEASE
October 6, 1978
Contact:
George G. Ross
202/566-2356
TREASURY ANNOUNCES PUBLIC MEETING TO DISCUSS
USA/DENMARK TAX TREATY ISSUES, ON NOVEMBER 6, 1978
The Treasury Department today announced that it will
hold a public meeting on November 6, 1978, to solicit the
views of interested persons regarding issues being considered during negotiations to develop a new income tax treaty
between the United States and Denmark.
The public meeting will be held at the Treasury Department, at 2:00 p.m., in room 4121. Persons interested in
attending are requested to give notice in writing by
November 1, 1978, of their intention to attend. Notices
should be addressed to H. David Rosenbloom, International
Tax Counsel, Department of the Treasury, Washington, D. C.
Today's announcement of the November public meeting follows the recent conclusion of a further round of negotiations
between representatives of the United States and Denmark to
develop a new income tax treaty for the avoidance of double
taxation and the prevention of tax evasion. The income tax
treaty presently in effect dates from 1948.
In the course of the recent negotiations, many subjects
ot mutual concern were identified and discussed. Among the
issues being considered are: taxation of dividends, including
tne treatment of Denmark's imputation system; taxation of
independent personal services, artists and athletes, and
feeS; taxation
nh^?^
of insurance companies; taxation of
cniid support payments; relief from double taxation for U. S.
cirizens resident in Denmark; inclusion of the Virgin Islands
n rreaty coverage; and treatment of contributions to pension
plans.
^
The Treasury seeks the views of interested persons in
egard to these issues, as well as other matters that may have
Untrue 6
ln t h e c o n t e x t o f
6 S and Denmark
an income tax treaty between the
bei
v, i f
- The November 6 public meeting is
t0 provide an
as WPII
opportunity for an exchange of views,
a
f r the
ur
s
DOCHT^ °
P P° e of discussing the United States
p virion in regard to the issues presented in the negotiations
Wedn*2^S ^^cement will appear in the Federal Register of
Wednesday, October 11, 1978.
o
0
o
B-1204
FOR IMMEDIATE RELEASE
October 16, 1$78
Contact:
Robert E. Nipp
202/566-5328
ARMCO INC. WITHDRAWAL OF
ANTIDUMPING PETITION
The U.S. Treasury Department today announced that
ARMCO Inc. has withdrawn its antidumping petition concerning
carbon steel bars, carbon steel strip, carbon steel plates,
and certain structural carbon steel shapes imported from the
United Kingdom.
The petitions were filed on December 5, 1977, and
formal antidumping proceedings were initiated by the Treasury
Department on January 23, 1978.
Subsequent to the initiation of the investigations, a
steel "trigger price mechanism" recommended by an Interagency
Task Force chaired by Treasury Under Secretary Anthony Solomon
became effective February 21, 1978, to monitor imports of steel
products, including those covered by the ARMCO petition. Under
the TPM, the Treasury should be able to identify cases of
dumping quickly and to expedite antidumping proceedings.
On October 4, 1978, Robert H. Mundheim, General Counsel
of the Treasury received a letter from ARMCO, dated September 29,
1978, stating in part:
"Subsequent to the submission of Armco's
petition, the President approved the report and
recommendations of the Under Secretary of The
Treasury for Monetary Affairs, the Honorable
Anthony M. Solomon, for the establishment of a
Trigger Price Mechanism to enable the Treasury
to monitor imports of steel mill products as a
constructive measure to eliminate the then widespread practice of foreign suppliers of selling
such products in the United States at less than
their fair value. In the ensuing months, all
factors in the steel market have cooperated with
The Department of The Treasury in its commendable
efforts to establish the Trigger Price Mechanism,
to update it, and to make it an effective instrumentality to accomplish its intended purpose.
»"1205
- 2 "The Department's cognizant spokesmen have
repeatedly warned of the consequences to this
innovative program should its limited resources
of technically qualified manpower, required for
the administration of the TPM, be diverted to the
mandatory deadlines attaching to major antidumping
investigations of steel mill products. Responsive
to these warnings, other complainants in antidumping
proceedings involving steel mill products from
Japan, the U.K., and other E.E.C. countries,
initiated prior to Armco's case, have withdrawn
their several complaints, the most recent being
the action of National Steel Corporation on
August 14, 1978.
"Armco's consideration of similar action has
been prolonged by the surge of imports of steel mill
products in July and August, 1978, and by the anxiety
which is felt throughout the domestic steel mill
products industry that the structural characteristics
of the TPM may make it an ineffective instrument
for achievement of the President's purposes, and
those of The Department. We are reassured by the
President's public statements this week and by our
understanding of the intention of the Under Secretary
and yourself to continue The Department's efforts to
update and improve the TPM and its administration
more effectively to achieve its intended purpose.
"Armco does not desire to handicap these constructive efforts. It appears that the continued
pendency of the Antidumping Investigations concerning
steel mill products from the United Kingdom, initiated
upon Armco's petition of December 2, 1977, may indeed
have this unintended, and unfortunate effect.
Accordingly, with the hope and expectation that the
TPM (demonstrably inadequate in 1978) will be revised
so that it will effectively and promptly reduce the
unprecedented volume of steel imports into the U.S.,
Armco hereby withdraws its petition of December 2, 1977."
^ »J^ te™ination is without prejudice to the reinstitution
of antidumping proceedings on these products by ARMCO.
wi-\f?rmal notice terminating the investigations is beina
a l R e i s0t
APMrof ^ ^ / ^ f 6 d e r o
^
^ - CopiefofSafnolice" g
ARMCO's withdrawal letter and General Counsel Mundheim's
response are attached.
nunaneim s
DEPARTMENT OF THE TREASURY
OFFICE OF THE SECRETARY
CARBON STEEL BARS, CARBON STEEL STRIP,
CARBON STEEL PLATES, AND CERTAIN STRUCTURAL
CARBON STEEL SHAPES FROM THE UNITED KINGDOM
Termination of Antidumping Investigations
AGENCY: U.S. Treasury Department
ACTION: Termination of Antidumping Investigations.
SUMMARY:
This notice is to advise the public that the antidumping
investigations concerning carbon steel bars, carbon steel
strip, carbon steel plates, and certain structural carbon
steel shapes from the United Kingdom are being terminated.
The terminations are based on the withdrawal of the original
antidumping petitions, as detailed in the body of this notice
and the appendix hereto.
EFFECTIVE DATE: (Date of Publication in the Federal Register).
FOR FURTHER INFORMATION CONTACT:
Linda F. Potts, Assistant to the Director, Office of
Tariff Affairs, U. S. Treasury Department, 15th and Pennsylvania
Avenue, N.W., Washinqton, D. C. 20220, telephone 202/566-2951.
SUPPLEMENTARY INFORMATION:
On December 5, 1977, information was received in proper
form pursuant to §§ 153.26 and 153.27, Customs Regulations
(19 CFR 153.26, 153.27) from Counsel on behalf of Armco Steel
Corp. (now Armco, Inc.) alleging that certain steel products
from the United Kingdom are being, or are likely to be, sold
at less than fair value within the meaning of the Antidumping
Act, 1921, as amended (19 U.S.C. 160 et seq.).
This information was the subject of four "Antidumping
Proceeding Notices" involving carbon steel bars, carbon steel
strip, carbon steel plates, and certain structural carbon steel
shapes from the United Kingdom, which were published in the
FEDERAL REGISTER of January 23, 1978, (43 FR 3231-33.) A
notice extending the antidumping investigatory period for the
four investigations was published in the FEDERAL REGISTER on
July 26, 1978 (43 FR 32343).
- 2 -
Armco, Inc. submitted a letter dated September 29, 1978,
formally withdrawing its petition. This letter is reproduced
as an appendix to this notice.
Treasury has been monitoring and will continue carefully
to monitor entries of carbon steel bars, carbon steel strip,
carbon steel plates, and certain structural carbon steel
shapes under the triqqer price mechanism and to take appropriate action to insure the effective enforcement of the
Antidumping Act with respect to these products. In this
connection, it should be noted, as indicated in the notice
of proposed rulemaking regarding the special summary steel
invoice (42 FR 65214), that Treasury views its authority to
withhold appraisement retroactively in appropriate cases as
an important tool for providing effective enforcement of the
Antidumping Act.
Accordingly, I hereby conclude that based upon the withdrawal of the antidumping petition and in view of the fact
that the carbon steel products described above are subject
to the "trigger price mechanism" administered by this
Department, it is appropriate to terminate these investigations.
These terminations are without prejudice to the filing of one •
or more subsequent antidumping petitions concerning the same
products.
/s/
Robert H. Mundheim
General Counsel of
the Treasury
(October 6, 1978)
A R M C O INC.
GENERAL OFFICES • M I DDLETOWN, OH IO 45043
C. WILLIAM VERITY. JR. ARMCO
CHAIRMAN
^ ^
September 29, 1978
Robert H. Mundheim, Esq.
General Counsel
The Department of The Treasury
Room 3000 Main Treasury Building
Washington, D. C. 20220
Dear Mr. Mundheim:
Re: Armco Inc. Antidumping Complaint Covering Basic
Steel Mill Products From The United Kingdom
On December 2, 1977, Armco Steel Corporation (now Armco Inc.) submitted
to the Commissioner of Customs a petition for the institution of antidumping proceedings in regard to the following categories of carbon
steel mill products imported into the United States from the United
Kingdom: plates, structural shapes, cold rolled sheets and coils,
wire rods and hot rolled bars and bar shapes. The petition included
information which tended to establish that these steel mill products
were being sold in the United States at less than their fair value
within the meaning of Sec. 201 of the Antidumping Act, 1921, as
amended.
Subsequent to the submission of Armco's petition, the President approved
the report and recommendations of the Under Secretary of The Treasury
for Monetary Affairs, the Honorable Anthony M. Solomon, for the establishment of a Trigger Price Mechanism to enable the Treasury to monitor imports
of steel mill products as a constructive measure to eliminate the then
widespread practice of foreign suppliers of selling such products in the
United States at less than their fair value. In the ensuing months, all
factors in the steel market have cooperated with The Department of The
Treasury in its commendable efforts to establish the Trigger Price Mechanism,
to update it, and to make it an effective instrumentality to accomplish its
intended purpose.
ARi.'.CO
V
Robert H. Mundheim, Esq.
Page 2
September 29, 1978
The Department's cognizant spokesmen have repeatedly warned of the
consequences to this innovative program should its limited resources
of technically qualified manpower, required for the administration of
the TPM, be diverted to the mandatory deadlines attaching to major
antidumping investigations of steel mill products. Responsive to
these warnings, other complainants in antidumping proceedings involving
steel mill products from Japan, the U.K., and other E.E.C. countries,
initiated prior to Armco's case, have withdrawn their several complaints,
the most recent being the action of National Steel Corporation on
August Ik9 1978.
Armco's consideration of similar action has been prolonged by the surge
of imports of steel mill products in July and August, 1978, and by the
anxiety which is felt throughout the domestic steel mill products industry
that the structural characteristics of the TPM may make it an ineffective
instrument for achievement of the President's purposes, and those of The
Department. We are reassured by the President's public statements this
week and by our understanding of the intention of the Under Secretary
and yourself to continue The Department's efforts to update and improve
the TFM and its administration more effectively to achieve its intended
purpose.
Armco does not desire to handicap these constructive efforts. It appears
that the continued pendency of the Antidumping Investigations concerning
steel mill products from the United Kingdom, initiated upon Armco's
petition of December 2, 1977, may indeed have this unintended, and
unfortunate effect. Accordingly, with the hope and expectation that the
TPM (demonstrably inadequate in 1978) will be revised so that it will
effectively and promptly reduce the unprecedented volume of steel imports
into the U.S., Armco hereby withdraws its petition of December 2, 1977.
If in the future it appears that the TPM as modified from time to time,
and its administration, are unequal to the achievement of the declared
purpose of the President and the Under Secretary, Armco will be forced
to reconsider its position, and possibly to resubmit antidumping petitions
against what may then appear to be the more grievous dumping practices
of foreign suppliers of steel mill products to the United States market.
With assurances of our respect and esteem for your personal efforts,
as well as those of the Under Secretary, and with appreciation for
the President's interest in this problem and his support of the TFM,
I am
Very sincerely yours,
THE GENERAL COUNSEL OP THE TREASURY
WASHINGTON. D.C. 20220
OCT 6 1978
Dear Mr. Verity:
Thank you for your letter of September 29, 1978,
in which Armco withdraws its antidumping petition
involving carbon steel bars, carbon steel strip, carbon
steel plates, and certain structural carbon steel shapes
from the United Kingdom.
Pursuant to your request we have terminated our
investigation with respect to the above-named products
without prejudice. Enclosed is a copy of a termination
notice which will be published in the Federal Register.
Mr. William C. Verity, Jr., Chairman
Armco, Inc.
Middletown, OH
45043
Enclosure
II
kpartmentoftheTREASURY U
ASHINGT0N.,D.C. 20220
TELEPHONE 566-2041
FOR RELEASE AT 4:00 P.M.
U
October 10, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,700 million, to be issued October 19, 1 9 7 8 .
This offering will not provide new cash for the Treasury as"the
maturing bills are outstanding in the amount of $5,705 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
ii
in' r e P r e s e n t i n 9 a n additional amount of bills dated
aiL.TT/?!8'
. . a n d t o m a t u r e January 18, 1979 (CUSIP N o .
912793 W4 4 ) , originally issued in the amount of $3,404 million,
the additional and original bills to be freely interchangeable.
n 4- K182~id<fy iHf1^18 for aPProxiroately $3,400 million to be dated
912793X9 2
*"* t 0 m a t u r e A P r i l 1 9 ' 19 79
(CUSIP No.
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing October 19, 1978
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3 278
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
c f n ^ n n 1 ! w i t h o u t interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
KrieK,-?r4.P9?n *V632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
y
records of the Department of the Treasury
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
borrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury. A
cash adjustment will be made on all accepted tenders for the
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on October 19, 1978,
in cash or
other immediately available funds or in Treasury bills maturing
October 19, 1978.
Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
Final Monthly Treasury Statement of
Receipts and Outlays of the United States Government
for period from October 1,1977 through September 30,1978
T A B L E l - T O T A L S O F B U D G E T R E S U L T S A N D F I N A N C I N G (In millions)
Budget Receipts and Outlays
Net
Receipts
Period
Comparative data:
Actual 1977 (twelve months)
Estimated 1978 2
M e a n s of Financing
Budget
Surplus (+)
or
Deficit (-)
Net
Outlays
B y Reduction
of Cash
and Monetary
Assets
Increase (-)
By
Borrowing
from the
Public
$42,591
401,997
$38,935
450,758
+$3,655
-48,761
$2,821
59,106
-$9,731
-3,023
357,762
401,207
448,163
402,802
452,329
496,646
-45,040
-51,122
-48,483
53,516
54,929
62,099
-2,238
5,000
Total
Budget
Financing
By
Other
Means
-7,323
-f3,655
48,761
-6,238
-8,807
-13,616
45,040
51,122
48,483
T A B L E I I - - S U M M A R Y O F B U D G E T R E C E I P T S A N D O U T L A Y S (In millions)
Actual
This Month
Classification
Actual
This Fiscal
Year to Date
Actual
Comparable Period
Prior Fiscal Year
Budget
Estimates
Full Fiscal Y e a r 2
N E T RECEIPTS
$20,883
9,753
$180,988
59,952
$157,626
54,892
$182,041
58,955
7,854
162
499
1,637
445
610
747
42,591
103,893
13,850
5,668
18,376
5,285
6,573
7,413
401,997
92,210
11,312
5,167
17,548
7,327
5,150
6,531
357,762
104,234
13,620
5,722
18,239
5,200
6,101
7,095
401,207
Legislative Branch
86
The Judiciary
,
57
Executive Office of the President
,
6
Funds Appropriated to the President:
-263
International security assistance
,
134
International development assistance
254
Other
1,865
Department of Agriculture
507
Department of C o m m e r c e
8,811
Department of Defense - Military
343
Department of Defense - Civil
892
Department of Energy
14,402
Department of Health, Education, and Welfare
543
Department of Housing and Urban Development
670
Department of the Interior
186
Department of Justice
1,728
Department of Labor
74
Department of State
'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.
1,332
Department of Transportation
3,628
Department of the Treasury:
Interest on the public debt
-43
Antirecession financial assistance fund
431
General revenue sharing
92
Other
344
Environmental Protection Agency!......................
1,440
General Services Administration
2,507
National Aeronautics and Space Administration
-847
veterans Administration
-145
Other independent agencies
.'.......'.
-97
Undistributed offsetting receipts:
Federal employer contributions to retirement funds
38,935
interest on certain Government accounts
Rents and royalties on the Outer Continental Shelf lands.
+3,655
Total
Surplus (+) or deficit (-)
See footnotes on page 3.
1,049
435
75
976
392
73
1,049
459
78
2,020
1,523
932
20,368
5,252
103,124
2,553
6,430
162,809
7,761
3,678
2,397
22,902
1,252
13,452
48,695
1,329
6,823
-538
4,071
117
3,980
18,962
25,079
-4,863
-8,651
-2,259
450,758
396
1,636
454
16,738
2,606
95,650
2,280
5,252
147,455
5,838
3,152
2,350
22,374
1,076
12,514
41,900
1,699
6,760
102
4,365
-31
3,944
18,019
19,884
-4,548
-8,131
-2,374
402,802
2,560
1,575
1,107
21,620
5,154
102,000
2,531
6,647
163,318
8,032
3,919
2,466
22,905
1,255
13,456
48,600
1,329
6,827
-462
4,540
83
3,980
18,753
24,639
-5,018
-8,622
-2,450
452,329
-48,761
-45,040
-51,122
Individual income tares
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
Unemployment insurance
Contributions for other insurance and retirement
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total ,
,
,
NET OUTLAYS
Source: Bureau of Government Financial Operations, Department of the Treasury.
IN)
TABLE III--BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
Current Fiscal Year to Date
This Month
Classification of
Receipts
Individual income taxes:
Withheld
Presidential Election Campaign Fund
Other
Gross
Receipts
P r e m i u m s collected for uninsured individuals
Railroad retirement accounts:
Total—Employment taxes and contributions
Unemployment insurance:
Unemployment trust fund:
Railroad Unemployment Ins. Act contributions ....
Contributions for other insurance and retirement:
Federal supplementary medical ins. trust fund:
Federal employees retirement contributions:
Civil service retirement and disability fund
Foreign service retirement and disability fund . J
Total—Federal employees retirement
See footnotes on page 3.
Gross
Receipts
Net
Receipts
Refunds
(Deduct)
Gross
Receipts
Refunds
(Deduct)
Net
Receipts
A* '\ ^ - s-S&NS
$14,843,192
137
3
6,354,220
\ *< ?%%
21,197,548
$314,054 $20,883,495
$165,215,153
39,077
47,803,913
i^» \ ^ ?*»
$144,820,107
36,640
42,062,356
i ^ *
213,058,144 $32,070,370
$180,987,774
186,919,104
$29,293,040
$157,626,064
9,752,978
65,380,145
5,428,280
59,951,866
60,056,566
5,164,202
54,892,364
5,236,043
3
275,675
4
-755,257
5,236,043
275,675
-755,257
62,366,140
3,302,166
7,859,698
387,225
61,978,915
3,302,166
7,859,698
57,511,704
3,143,019
7,676,046
298,960
57,212,744
3,143,019
7,676,046
4,756,460
4,756,460
73,528,004
387,225
73,140,779
68,330,769
298,960
68,031,809
883,245
3
48,461
334,844
883,245
48,461
334,844
10,517,122
471,623
1,312,550
50,900
10,466,222
471,623
1,312,550
7,605,909
413,693
805,160
39,260
7,566,649
413,693
805,160
1,266,550
1,266,550
12,301,296
50,900
12,250,396
8,824,762
39,260
8,785,502
1,185,549
3
44,712
1,185,549
44,712
79,600
61,920
11,740,578
456,885
432,053
-585
1,661,729
1,661,729
79,600
14,134,088
493,668
196,506
1,843,511
12,094
16,679,867
11,802,498
456,885
432,053
5
-585
14,213,688
493,668
196,506
1,843,511
12,094
16,759,467
13,545,962
61,920
13,484,042
400,449
3
Federal disability insurance trust fund:
Federal hospital insurance trust fund:
Net
Receipts
3
10,153,428
Social insurance taxes and contributions:
Employment taxes and contributions:
Federal old-age and survivors ins. trust fund:
Refunds
(Deduct)
Comparable Period Prior Fiscal Year
3
3
1,276,073
10,506
1,276,073
10,506
168,852
-1
168,853
1,822,725
719
1,822,006
1,908,718
224
1,908,494
7,853,591
-1
7,853,592
104,411,493
518,444
103,893,049
92,610,211
400,364
92,209,847
105,783
9,993
48,661
2,111
105,783
7,882
48,661
11,031,805
2,642,000
217,883
42,090
11,031,805
2,599,910
217,883
9,252,205
1,910,447
184,583
35,729
9,252,205
1,874,718
184,583
164,437
2,111
162,326
13,891,687
42,090
13,849,598
11,347,235
35,729
11,311,506
191,611
25,247
191,611
25,247
2,186,489
244,644
2,186,489
244,644
1,986,937
205,966
1,986,937
205,966
216,859
216,859
2,431,133
2,431,133
2,192,903
2,192,903
272,551
2,416
291
272,551
2,416
291
3,153,352
19,311
1,600
3,153,352
19,311
1,600
2,895,221
18,538
1,343
2,895,22J
18,538
1,343
275,258
275,258
3,174,263
3,174,263
2,915,102
2,915,102
T A B L E III--BUDGET R E C E I P T S A N D OUTLAYS-Contlnued (In thousands)
Current Fiscal Year to Date
This Month
Classification of
Receipts—Continued
Gross
Receipts
Social insurance taxes and contributions—Continued
Contributions for other insurance and retirementContinued
Other retirement contributions:
Civil service retirement and disability fund ...
Total--Contributions for other insurance and
retirement
Total—Social insurance taxes and contributions .
Excise taxes:
Miscellaneous excise taxes
Airport and airway trust fund
Highway trust fund
Black lung disability trust fund 6
Total—Excise taxes
Refunds
(Deduct)
Net
Receipts
Refunds
(Deduct)
Net
Receipts
Gross
Receipts
Refunds
(Deduct)
Net
Receipts
$6,763
$62,324
$62,324
$58,923
$58,9a3
$6,763
498,880
5,667,720
5,667,720
5,166,929
5,166,929
498,880
$2,110
8,514,798
123,970,900
$560,534
123,410,366
109,124,375
$436,093
108,688,282
8,516,908
908,650
125,520
595,900
18,000
10,928
897,722
125,520
595,900
18,000
10,202,959
1,328,058
7,041,882
92,050
149,309
2,008
137,447
10,053,649
1,326,050
6,904,434
92,050
9,795,722
1,193,005
6,844,358
148,174
2,068
135,128
9,647,548
1,190,936
6,709,231
10,928
1,637,142
18,664,949
288,765
18,376,184
17,833,085
285,370
17,547,715
1,648,070
6,536
445,377
5,381,499
96,097
5,285,402
7,425,325
98,448
7,326,877
451,913
609,553
6,728,612
155,894
6,572,718
5,287,479
5,150,151
13,086
137,328
622,639
6,641,092
772,598
622
6,641,092
771,976
5,908,214
640,879
18,334
5,908,214
622,546
7,413,690
622
7,413,068
6,549,093
18,334
6,530,760
35.432.815
357,762,213
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve Banks...
All other
673,332
73,960
-99
673,332
74,059
Total—Miscellaneous receipts
747,291
-99
747,390
Total--Budget receipts
Gross
Receipts
Comparable Period Prior Fiscal Year
43,337,797
747,064
42,590,733
440,597,938
38,600,561
401,997,377
393.195,028
GENERAL NOTES
Throughout this statement, details may not add to totals due to rounding.
Effective with the August 31, 1977 Statement, certain portions of Tables I and II have been modified. The modified format for Table I includes the addition of a new line presenting current month
budgetary and means of financing data. Table II has been revised to present actual current month
and comparable period prior fiscal year data. Table II has also been modified to show all activity
rounded in millions of dollars.
.
Effective with the June 30, 1978 Statement, earned income credit payments in excess of an individual's tax liability was reclassified from an income tax refund to a budget outlay by the Internal
Revenue Service. This change represents a revision to the budgetary treatment applied prior to
June 1977. Budget estimates have also been revised in accordance with this reclassification.
FOOTNOTES
The Department includes all functions of the former Energy Research and
Development Administration, Federal Energy Administration, Federal Power
Commission, and certain functions from the Department of C o m m e r c e , Defense, Interior, (Bonneville Power Administration and other power administrations) and the Interstate C o m m e r c e Commission.
8
Effective October 1, 1977, the "housing for the elderly or handicapped
^afnt^cor dance with the provisions of the Social Security Act, as amended,
fund" was reclassified from an off-budget to a budgetary account.
"Individual Income Taxes Withheld" has been increased and "Federal Insurance
9
This activity was formerly included in the Mining Enforcement and Safety
Contributions Act Taxes" correspondingly decreased by $510,163 thousand to
Administration, Department of the Interior.
correct estimates for the quarter ended December 31 1977. "bidividual In10
In accordance with Reorganization Plan No. 2 of 1977, the functions exc o m e Taxes Other" has been decreased and "Self Employment Contributions
ercised by the United States Information Agency and the Department of State's
A c ™ Taxes" correspondingly increased in the amount of $23,847 thousand to
Bureau of Educational and Cultural Affairs were consolidated to form the
correct estimates for the calendar year 1976 and prior.
International Communication Agency.
^Includes $334,844 thousand distributed to the Federal Disability Insurance
1]
On April 1, 1978, the second amendments to the I M F Articles of AgreeTrust Fund and $432,057 thousand distributed to the Federal Hospital Insurance
ment
entered into force. In accordance with Public Law 94-564, the United
Trust Fund.
5
States has increased its Quota equivalent to SDR 1,705,000 thousand.
Includes prior month adjustment.
• Less than $500.00
6 T h e Black Lung Disability Trust Fund was formally created on April 1,
**Less than $500,000.00
1978 pursuant to the "Black Lung Benefits Revenue Act of 1977" (Public Law
1
This Statement contains the final figures showing budget results for the
fiscal year ending September 30, 1978.
2
These budget estimates are based on figures released in the Mid-bession Review" of the 1979 Budget on July 6, 1978, by the Office of Management
95
""he Department of Energy was formally created on October 1 1977 pursuant to "The Department of Energy Organization Act" (Public Law 95-91).
(A)
TABLE lll-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
This Month
Classification of
OUTLAYS
Applicable
Receipts
Outlays
Legislative Branch:
Senate
House of Representatives
..[
Joint Items
'.'..'.
Congressional Budget Office
Architect of the Capitol
...'.
Library of Congress
'.'.'.'.'.'.'.'.
Government Printing Office:
Revolving Fund (net)
General fund appropriations
General Accounting Office
United States Tax Court
,,[
Other Legislative Branch Agencies
'.'.'.
Proprietary receipts from the public
Intrabudgetary transactions
Total--Legislative Branch
The Judiciary:
Supreme Court of the United States
,
Courts of Appeals, District Courts, and other
Judicial Services
,
Other
\
Proprietary receipts from the public
Intrabudgetary transactions
Total--The Judiciary
Executive Office of the President:
Compensation of the President
The White House Office
Office of Management and Budget
Other
Total—Executive Office of the President
Funds Appropriated to the President:
Appalachian Regional Development Programs
Disaster Relief
Foreign Assistance:
International Security Assistance:
Military assistance
Foreign military credit sales
Security supporting assistance
Advances, foreign military sales
Other
Proprietary receipts from the public:
Advances, foreign military sales
Other
Total--International Security Assistance
International Development Assistance:
Multilateral Assistance:
International financial institutions
International organizations and programs ...
See footnotes on page 3.
$13,613
25,302
506
632
6,841
12,068
8,486
6,847
15,904
492
1,440
6,517
92,126
Net
Outlays
Outlays
6,522
$13,613
25,297
506
632
6,841
12,068
8,486
6,847
15,904
492
1,440
-6,517
-3
85,604
1,067,442
942
942
8,964
52,574
4,108
392
52,574
4,108
-392
401,157
57,647
57,233
436,668
21
1,343
2,062
2,207
5,633
250
16,572
29,299
28,446
74,567
31,734
124,297
261,729
470,291
57,624
392
21
1,343
2,062
2,207
5,633
31,771
124,297
37
11,258
158,023
194,163
296,830
5,141
918,851
9,076
665,415
31,189
37,435
Comparable Period Prior Fiscal Year
Current Fiscal Year
927,927
11,258158,023
194,163
296,830
5,141
-918,851
-9,076
-262,512
31,189
37,435
$158,209
289,318
54,184
9,835
100,256
146,380
1,912
115,469
169,507
8,759
14,000
-388
Applicable
Receipts
$73
18,592
18,666
$158,209
289,245
54,184
9,835
100,256
146,380
1,912
115,469
169,507
8,759
14,000
-18,592
-388
1,048,776
$138,515
267,080
69,477
8,814
88,807
133,301
-24,346
139,337
154,639
8,564
10,109
-448
8,964
8,319
993,847
Applicable
Receipts
$10
65
17,280
17,355
Net
Outlays
$138,505
267,015
69,477
8,814
88,807
133,301
-24,346
139,337
154,639
8,564
10,109
-17,280
-448
976,492
8,319
401,157
57,647
-1,543
-31,100
1,543
435,125
395,307
250
16,572
29,299
28,446
74,567
250
17,236
26,536
29,364
73,386
250
17,236
26,536
29,364
73,386
261,675
470,291
248,874
294,016
248,868
294,016
169,259
569,549
1,907,872
8,104,016
22,511
-8,445,172
-308,370
2,019,666
209,280
570,486
1,061,880
8,209,640
25,982
10,077,267
209,280
570,486
1,061,755
8,209,640
25,982
-9,368,676
-312,074
396,392
858,217
229,823
874,615
250,310
54
169,259
569,549
1,907,872
8,104,016
22,511
8,445,172
308,370
858,217
229,823
Outlays
1,543
-31,100
10,773,207
Net
Outlays
8,753,542
3,468
354,946
32,042
-3,468
3,468
391,839
32,042
125
9,368,676
312,074
9,680,875
874,615
250,310
T A B L E III — B U D G E T R E C E I P T S A N D O U T L A Y S - C o n t l n u e d (In thousands)
Current Fiscal Year to Date
This Month
Classification of
OUTLAYS—Continued
Funds Appropriated to the President—Continued
Bilateral Assistance:
Public enterprise funds:
Development loans-revolving fund
Overseas Private Investment Corporation
Inter-American Foundation
Other
Intragovernmental funds
Functional development assistance program
Payment to Foreign Service retirement and
disability fund
American schools and hospitals abroad
International disaster assistance
Operating expenses of the Agency for
International Development
Total—Bilateral Assistance
Other
Proprietary receipts from the public
Total—International Development Assistance
International Narcotics Control Assistance
President's foreign assistance contingency fund,
Total--Foreign Assistance
Petroleum Reserves:
Energy supply
Emergency energy preparedness
Proprietary receipts from the public.
Other
Total—Funds Appropriated to the President
Department of Agriculture:
Departmental Administration
Office of the Inspector General
Agricultural Research Service
Cooperative State Research Service
Extension Service
Statistical Reporting Service
Economic Research Service
Foreign Agricultural Service
Foreign Assistance Programs
Agricultural Stabilization and Conservation Service:
Salaries and expenses
Agricultural conservation program
Other
Federal Crop Insurance Corporation
Commodity Credit Corporation:
Price support and related programs
Total--Commodity funds
Credit Corporation
Intragovernmental
National Wool Act program
Rural Electrification Administration (salaries and
expenses)
Applicable
Receipts
Outlays
$7,064
490
296
369
3,126
67,293
2,770
2,647
3,080
17,204
-4,979
Net
Outlays
Applicable
Receipts
Outlays
30,654
$5,804
-1,661
249
95
3,126
67,293
2,770
2,647
3,080
17,204
-4,979
-30,654
$66,400
1,891
6,911
9,469
3,334
614,269
24,220
12,822
46,716
206,620
54,897
99,360
34,386
64,974
167,984
34,386
$1,260
2,151
47
275
6,994
184
962,313
840,576
2,825
5
-87,974
50
999,520
5,969
2,296
24,969
13,484
23,076
4,799
1,887
2,905
318,587
33,293
57,594
3,425
4,827
735,756
-114,646
448
621,558
1,638
874,376
7,757
500,560
50,000
550,560
$6,041
67,286
400
4,988
Comparable Period Prior Fiscal Year
Net
Outlays
Outlays
Applicable
Receipts
533,861
$60,359
-65,395
6,511
4,481
3,334
614,269
24,220
12,822
46,716
206,620
54,897
-533,861
$151,171
51,748
5,543
5,472
-193
512,263
21,250
13,799
64,741
195,189
44,182
1,047,549
612,577
434,972
1,065,166
554,078
133,598
2,135,589
612,577
1,523,012
2,190,091
554,078
6,994
184
34,987
3,627
34,987
3,627
31,404
467
-121,737
12,947,410
9,366,118
3,581,292
12,299,229
2,825
109,383
245,063
192,813
109,383
245,063
-192,813
201
107,224
122,004
4,475,091
13,101,220
5,664
28,921
318,402
134,727
254,006
39,587
32,455
44,120
922,885
215,124
264,949
42,351
57,436
5,623,347
-114,646
33,037
450
25,907
294,581
120,572
240,167
34,715
32,950
36,915
1,169,255
160,393
182,994
57,275
160,799
6,639,691
-269,025
10,427
5,541,739
6,381,093
23,429
21,709
87,974
50
201
125,144
14,034,077
5,969
2,296
24,969
13,484
23,076
4,799
1,887
2,905
318,587
33,293
57,594
3,425
-2,930
235,196
-164,646
448
5,664
28,921
318,402
134,727
254,006
39,587
32,455
44,120
922,885
215,124
264,949
42,351
138,600
12,172,787
-64,646
33,037
70,999
12,141,179
1,638
23,429
9,558,986
81,164
6,549,440
50,000
6,599,440
$3,215
62,924
18
4,393
483,528
10,234,953
379,385
29,874
10,614,344
69,831
2,830,535
50,000
2,880,535
01
TABLE lll-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
This Month
Classification of
O U T L A Y S - - Continued
Outlays
Department of Agriculture--Continued
Farmers H o m e Administration:
Public enterprise funds:
$377,449
Rural housing insurance fund
227,890
Agricultural credit insurance fund
'.',
66,810
Rural development insurance fund ...
2,204
Other
'.'.'.'.'.
25,519
Rural development grant programs '..'..'.'.'.'.'.'..
12,088
Salaries and expenses
2,832
Other
'.'.'.'.'.'.'.'..
714,792
Total--Farmers Home Administration
Soil Conservation Service:
15,391
Conservation operations
20,783
Watershed and flood prevention operations .'.'.'.
8,348
Other
15,740
Animal and Plant Health Inspection Service......
1,301
Federal Grain Inspection Service
'.
4,102
Agricultural Marketing Service
Food Safety and Quality Service:
17,876
Funds for strengthening markets, income, and
25,320
supply
Other
4,555
Food and Nutrition Service477,669
Food program administration
3,703
Food stamp program
201,941
Special milk program
37,534
Child nutrition programs
8,420
Special supplemental food programs
733,822
Other
Total—Food and Nutrition Service
-2,235
Forest Service:
57,849
Intragovernmental funds
6,271
Forest protection and utilization
34,091
Youth Conservation Corps
3,994
Forest roads and trails
9,392
Forest Service permanent appropriations
8,882
Cooperative work
118,245
Other
Total—Forest Service
2,337
Other
-6,365
Proprietary receipts from the public
Intrabudgetary transactions
2,792,000
Total—Department of Agriculture ,
Department of Commerce:
1,521
General Administration
,
13,399
Bureau of the Census
,
1,000
Economic and Statistical Analysis
See footnotes on page 3.
Applicable
Receipts
$221,095
172,599
19,372
70
413,136
2,000
-46,662
926,791
Current Fiscal Year to Date
Net
Outlays
Outlays
Applicable
Receipts
0)
Comparable Period Prior Fiscal Year
Net
Outlays
Outlays
$449,087
653,451
136,620
-1,363
189,938
188,037
22,051
1,637,821
$5,097,888
3,213,819
1,019,509
-735
122,488
172,656
19,192
9,644,818
242,465
174,628
82,393
200,779
11,273
46,157
215,145
177,258
80,441
337,120
10,268
106,906
Applicable
Receipts
Net
Outlays
$156,354
55,291
47,438
2,135
25,519
12,088
2,832
301,656
$6,761,435
6,472,529
1,300,595
-764
189,938
188,037
22,051
14,933,820
15,391
20,783
8,348
15,740
1,301
2,102
242,465
174,628
82,393
200,779
11,273
70,066
17,876
25,320
272,910
308,103
272,910
308,103
41,921
95,772
41,921
95,772
4,555
477,669
3,703
201,941
37,534
8,420
733,822
66,851
5,498,775
138,596
2,526,732
370,569
51,686
8,653,210
66,851
5,498,775
138,596
2,526,732
370,569
51,686
8,653,210
5,398,795
157,034
2,635,039
245,356
49,228
8,485,453
5,398,795
157,034
2,635,039
245,356
49,228
8,485,453
-2,235
57,849
6,271
34,091
3,994
9,392
8,882
118,245
2,008
780,835
63,099
211,269
323,135
77,261
51,859
1,509,467
2,008
780,835
63,099
211,269
323,135
77,261
51,859
1,509,467
-8,365
724,843
48,058
201,652
93,152
70,426
33,699
1,163,465
-8,365
724,843
48,058
201,652
93,152
70,426
33,699
1,163,465
2,337
46,662
-6,365
25,803
25,803
-687,198
-35,203
23,958
-35,263
1,865,209
41,056,112
20,368,401
29,293,178
1,521
13,399
1,000
24,096
121,472
14,269
24,096
121,472
14,269
19,930
89,242
12,304
16,312,348
5,819,078
1,163,975
598
13,295,999
(*)
23,909
687,198
20,687,711
$5,009,085
2,820,384
851,957
185
8,681,612
894
23,569
$88,803
393,435
167,552
-920
122,488
172,656
19,192
963,205
215,145
177,258
80,441
337,120
9,374
83,337
899,007
23,958
-899,007
-9,121
12,555,448
16,737,730
-9,121
19,930
89,242
12,304
T A B L E lit—BUDGET RECEIPTS A N D OUTLAYS-Contlnued (In thousands)
OUTLAYS—Continued
Outlays
Department of Commerce--Continued
Economic Development Assistance:
Economic Development Administration:
Economic development revolving fund
Other
$27
22,407
319,108
4,518
3,238
5,210
354,507
Applicable
Receipts
$4,464
4,464
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Net
Outlays
Outlays
-$4,436
22,407
319,108
4,518
3,238
5,210
350,044
$25,854
329,856
3,057,363
132,594
41,215
103,149
3,690,031
5,617
4,027
860
72,287
54,542
13,734
Applicable
Receipts
$58,863
58,863
Net
Outlays
Outlays
-$33,009
329,856
3,057,363
132,594
41,215
103,149
3,631,168
$29,240
297,091
585,264
14,903
126,636
106,940
1,160,073
72,287
54,542
13,734
68,699
54,258
14,364
Applicable
Receipts
Net
Outlays
$48,892
-$19,652
297,091
585,264
14,903
126,636
106,940
48,892
1,111,181
Promotion of Industry and C o m m e r c e :
5,617
4,027
860
Science and Technology:
National Oceanic and Atmospheric Administration
National Fire Prevention and Control Administration ..
National Telecommunications and Information
68,699
54,258
14,364
64,689
317
6,848
10,196
694
75
64,614
317
6,848
10,196
694
683,871
13,370
91,763
96,027
4,005
1,755
682,116
13,370
91,763
96,027
4,005
552,186
14,865
87,409
87,324
1,298
550,888
14,865
87,409
87,324
82,744
75
82,669
889,036
1,755
887,281
741,784
1,298
740,486
901
12,092
40,040
5,142
-2,236
2,001
108,607
156,657
303,194
72,554
-46,179
42,734
40,196
31 195
219,425
343 876
61,404
-54,837
-42,685
12,609
5,474,303
65,874
156,657
303,194
72,554
-118,791
-46,179
5,252,159
9,002
219,425
343,876
61,404
-42,685
519,615
-1,101
12,092
40,040
5,142
-6,069
-2,236
507,006
2,751,674
145,224
892,569
767,540
673,621
892,569
767,540
673,621
10,450,163
8,688,661
7,936,523
10,450,163
8,688,661
7,936,523
9,887,558
8,182,033
7,645,344
9,887,558
8,182,033
7,645,344
2,333,730
2,333,730
27,075,347
27,075,347
25,714,935
25,714,935
821,219
821,219
9,171,474
9,171,474
8,216,429
8,216,429
925,065
1,063,188
893,456
293,276
3,174,984
925,065
1,063,188
893,456
293,276
3,174,984
9,616,754
11,266,342
9,757,321
2,937,554
33,577,971
9,616,754
11,266,342
9,757,321
2,937,554
33,577,971
8,636,709
9,894,980
9,173,072
2,882,680
30,587,441
8,636,709
9,894,980
9,173,072
2,882,680
30,587,441
124,036
738,979
648,679
22,683
1,534,377
124,036
738,979
648,679
22,683
1,534,377
3,223,817
9,197,137
7,334,942
219,657
19,975,554
3,223,817
9,197,137
7,334,942
219,657
19,975,554
2,622,065
8,484,345
6,921,894
149,925
18,178,230
2,622,065
8,484,345
6,921,894
149,925
18,178,230
Maritime Administration:
Other
Department of Defense—Military:
Military Personnel:
Operation and Maintenance:
Procurement:
6,069
118,791
222,143
54,837
2,606,450
TABLE II -BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
This Month
Classification of
OUTLAYS—Continued
Applicable
Receipts
Outlays
Department of Defense--Military—Continued
Research, Development, Test, and Evaluation:
Department of the A r m y
Department of the Navy
Department of the Air Force
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
Net
Outlays
Outlays
Applicable
Receipts
CD
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$212,114
320,954
315,374
61,128
$212,114
320,954
315,374
61,128
$2,342,208
3,824,871
3,626,026
714,859
$2,342,208
3,824,871
3,626,026
714,859
$2,069,189
3,480,513
3,618,473
626,991
$2,069,189
3,480,513
3,618,473
626,991
909,570
909,570
10,507,964
10,507,964
9,795,166
9,795,166
62,669
60,383
62,106
2,439
187,597
62,669
60,383
62,106
2,439
187,597
737,194
634,045
537,152
23,113
1,931,504
737,194
634,045
537,152
23 113
1,931,504
754,774
691,929
443,555
23 547
1,913,804
137,506
7,629
4
1,407,960
81,786
2,355
$3,187
1,404,773
81,786
2,355
1,360,566
92,728
2,856
$2,700
2,216
-593
1,563
2,110
2,216
-180,858
-61,302
69,718
-255,584
-428,619
15,336
98,262
165,511
-253,079
27,594
-16,054
-149,118
-11,050
123,422
103,123,887
96,004,080
-6,634
96,145
1,428,768
757,278
230,341
105,727
-57,827
2,553,798
-68,460
69,818
1,320,708
638,826
260,930
88,309
47,207
88,309
-47 207
2,310,130
47,207
2,262,923
65,494
281,430
21,569
-17,771
48,474
282,416
276
2,481
2,660,852
380,854
17,020
-986
21,293
-2,481
-17,771
2,279,998
Total—Research, Development, Test, and
Military Construction:
Department of the A r m y
Department of the Navy
Department of the Air Force
Total--Military Construction
Special Foreign Currency Program
Public enterprise funds
Intragovernmental funds:
Department of the A r m y
Department of the Navy
Department of the Air Force
Total—Revolving and Management Funds
137,503
7,629
4
-$3
184
137
47
1,622
137
-91,016
-89,825
12,368
-157,172
-325,598
-180,858
-61,302
69,718
-255,584
-426,403
2,374
44,936
-17,395
147,377
-11,050
8,810,934
103,441,838
-52,956
14,081
224,720
105,085
37,398
13,374
-3,098
338,604
-6,634
96,145
1,428,768
757,278
230,341
105,727
57,827
2,611,625
57,827
71,155
301,273
22,212
-20,431
46,372
324,887
276
3,275
2,985,835
432,637
-91,016
-89,825
12,368
-157,172
-325,461
11,730
Proprietary receipts from the public
-17,395
Total--Department of Defense--Military
8,775,487
9,356
-44,936
-35,447
163,431
149,118
317,951
-9,092
754,774
691,929
443,555
OQ KAH
1,913,804
1,357,866
92,728
2,856
-547
15,336
98,262
165,511
-253,079
2,110
25,484
175,647
173,471
-52,224
-173,471
-9,092
95,650,152
353,928
Department of Defense--Civil:
Corps of Engineers:
The P a n a m a Canal:
Canal Zone Government
-52,956
14,081
224,720
105,085
37,398
13,374
3,098
341,702
3,098
11,073
23,743
1,865
-3,113
3,950
25,056
29
295
375,270
32,427
7,123
-1,313
1,836
-295
-3,113
342,843
24,784
-23,613
21,935
-3,275
-20,431
2,553,198
-68,460
69,818
1,320,708
638,826
260,930
T A B L E III—BUDGET R E C E I P T S A N D OUTLAYS-Contlnued (In thousands)
Department of Energy: 7
Departmental Operations:
Atomic energy defense activities
General science and research
Energy activities
Other
Power Marketing Administrations
Proprietary receipts from the public
Total--Department of Energy
Department of Health, Education, and Welfare:
Public Health Service:
Food and Drug Administration
,
Health Services Administration:
Health services
,
Indian health services and facilities
,
Emergency health
,
Center for Disease Control
,
National Institutes of Health:
Intragovernmental funds
,
Cancer Research
,
Heart, Lung, and Blood Research
,
Arthritis, Metabolism, and Digestive Diseases .
Neurological and Communicative Disorders and
Stroke
Allergy and Infectious Diseases
General Medical Sciences
Child Health and H u m a n Development
,
Other research institutes
,
Research resources
Other
Total--National Institutes of Health
Alcohol, Drug Abuse, and Mental Health
Administration
,
Health Resources Administration:
Public enterprise funds
Health resources
Office of Assistant Secretary for Health
Total--Public Health Service
Health Care Financing Administration:
Intragovernmental funds
Grants to States for Medicaid
Payments to health care trust funds
Quality care management, research, and
administration
Other
Federal hospital insurance trust fund:
Benefit payments
Administrative expenses and construction
,
Total--FHI trust fund
Federal supplementary medical ins. trust fund:
Benefit payments
Administrative expenses and construction
Total- -FSMI trust fund
Total--Health Care Financing Administration
See footnotes on page 3,
Outlays
Applicable
Receipts
$204,655
42,008
765,630
3,724
64,524
$17,994
170,814
1,080,542
18,687
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
OUTLAYS—Continued
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$2,070,294
355,276
4,267,057
11,821
410,882
$245,198
440,387
188,808
$204,655
42,008
765,630
3,724
46,529
-170,814
891,733
7,115,331
685,585
$2,070,294
355,276
4,267,057
11,821
165,684
-440,387
6,429,746
549
18,139
283,407
7,439
84,908
44,083
-2
10,062
11,590
66,053
29,951
3,728
15,727
13,745
21,126
27,982
23,221
10,792
3,393
227,308
84,908
44,083
-2
10,062
11,590
66,053
29,951
3,728
15,727
13,745
21,126
27,982
23,221
10,792
3,393
227,308
1,078,694
467,232
-9
187,982
-517
880,517
393,993
223,029
175,092
158,379
215,225
166,715
225,734
129,883
107,653
2,675,703
74,984
74,984
1,006,067
3,036
56,113
4,074
522,705
53,353
918,467
116,181
6,787,077
200
810,650
449,322
3,373
-16,222
200
810,650
449,322
3,373
-16,222
1,390,602
54,784
Outlays
Applicable
Receipts
$1,712,003
168,873
3,430,050
1,382
310,047
$298,859
71,941
5,622,354
370,800
275,968
251,973
6,958
1,078,694
467,232
-9
187,982
-517
880,517
393,993
223,029
175,092
158,379
215,225
166,715
225,734
129,883
107,653
2,675,703
1,028,970
395,321
8
244,647
1,890
798,558
350,357
186,751
147,305
132,636
163,153
129,841
161,161
113,618
67,772
2,253,040
Net
Outlays
$1,712,003
168,873
3,430,050
1,382
11,188
-71,941
5,251,555
245,015
1,028,970
395,321
8
244,647
1,890
798,558
350,357
186,751
147,305
132,636
163,153
129,841
161,161
113,618
67,772
2,253,040
1,006,067
854,056
31,241
918,467
116,181
6,757,527
66,504
1,238,856
62,453
6,395,829
695
10,679,881
7,242,941
58,544
-6,899
695
10,679,881
7,242,941
58,544
-6,899
-465
9,875,829
-465
9,875,829
63,840
63,840
1,390,602
54,784
17,415,132
446,545
17,415,132
446,545
14,912,370
294,779
14,912,370
294,779
1,445,386
1,445,386
17,861,676
17,861,676
15,207,149
15,207,149
610,202
49,017
610,202
49,017
6,852,252
504,240
6,852,252
504,240
5,866,922
474,744
5,866,922
474,744
659,219
659,219
7,356,491
7,356,491
6,341,666
6,341,666
3,351,927
3,351,927
43,193,329
43,193,329
31,488,019
31,488,019
3,710
56,113
4,074
523,928
674
1,223
22,111
29,551
854,056
38,127
45,085
28,377
1,238,856
62,453
6,350,744
(0
O
T A B L E II l-BUDGET RECEIPTS A N D OUTLAYS-Continued (In thousands]
Outlays
Department of Health, Education, and Welfare--Continuec
Education Division:
Office of Education:
Public enterprise funds:
Higher education facilities loan and insurance
School assistance in federally affected areas
Occupational, vocational, and adult education
Student assistance, higher and continued
Applicable
Receipts
Net
Outlays
Applicable
Receipts
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$3,152
$45,558
$577,838
$32,141
$545,697
$164,111
$21,500
$142,611
22,443
277,014
4,961
26,480
14,582
31,515
41,860
361,558
13,488
8,423
20,993
872,026
834
21,609
277,014
4,961
26,480
14,582
31,515
41,860
361,558
13,488
8,423
20,993
868,041
55,540
2,814,994
58,697
766,349
231,699
327,032
692,967
2,809,694
208,989
129,513
59,638
8,732,950
26,467
29,074
2,814,994
58,697
766,349
231,699
327,032
692,967
2,809,694
208,989
129,513
59,638
8,674,343
11,707
2,352,472
48,090
764,628
241,117
248,688
692,933
2,877,324
169,378
117,960
49,006
7,737,415
24,454
-12,747
2,352,472
48,090
764,628
241,117
248,688
692,933
5,704
2,843
64,293
24,983
64,293
24,983
63,992
28,027
876,588
8,822,226
8,763,619
7,829,433
740,930
982,230
5,854,560
6,639,462
142,861
24
78,524,092
1,086,238
1,588,664
6,461
81,205,455
740,930
982,230
5,854,560
6,639,462
142,861
24
78,524,092
1,086,238
1,588,664
6,461
81,205,455
6,713,859
956,025
5,297,173
6,350,596
172,379
6,713,859
956,025
5,297,173
6,350,596
172,379
71,270,510
992,743
1,207,841
7,502
73,478,596
71,270,510
992,743
1,207,841
7,502
12,213,895
327,254
29,797
84,339
12,655,285
11,135,231
377,673
-318
77,144
11,589,730
11,135,231
377,673
-318
77,144
880,573
3,985
3,985
Social Security Administration:
58,608
58,608
2,877,324
169,378
117,960
49,006
45,954
7,691,461
63,992
28,027
45,954
7,783,479
80,826
879,487
570,309
30,799
80,826
879,487
570,309
30,799
6,914,826
83,632
6,914,826
83,632
1,158
1,158
6,999,616
6,999,616
1,076,304
8,326
1,076,304
8,326
12,843
12,843
1,097,474
1,097,474
12,213,895
327,254
29,797
84,339
12,655,285
9,658,510
9,658,510
108,220,807
108,220,807
104,558,358
104,558,358
291
1,309
3,325
10,366
15,291
291
1,309
3,325
10,366
15,291
3,498
14,783
35,852
97,659
151,791
3,498
14,783
35,852
97,659
151,791
2,986
12,671
36,893
101,936
154,487
2,986
12,671
36,893
101,936
Federal old-age and survivors insurance trust fund:
Special Institutions:
Outlays
$48,710
5,704
2,843
Federal disability insurance trust fund:
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
O U T L A Y S - -Continued
73,478,596
11,589,730
154,487
TABLE III-BUDGET RECEIPTS A N D OUTLAYS-Contlnued (In thousands)
Classification of
O U T L A Y S --Continued
Department of Health, Education and Welfare—Continued
H u m a n Development Services:
to states for services
social services
HGrants
u m a n development
Research and training activities overseas
Departmental Management:
Intragovernmental funds
General departmental management
Office for Civil Rights
Proprietary receipts from the public
Intrabudgetary transactions:
Payments for health insurance for the aged:
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Payments for military service credits and special
benefits for the aged:
This Month
Outlays
Applicable
Receipts
Current Fiscal Year to Date
Net
Outlays
Payments for operation of low income housing
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$231,647
176,847
32,129
85
440,708
$2,808,723
2,077,621
364,099
1,821
5,252,264
$2,808,723
2,077,621
364,099
1,821
5,252,264
$2,550,684
1,868,832
360,537
3,458
4,783,511
$2,550,684
1,868,832
360,537
3,458
4,783,511
2,768
2,417
5,894
2,987
2,768
2,417
5,894
2,987
-6,271
6,045
80,752
36,494
50,913
6,045
80,752
36,494
50,913
-35,073
148,241
102,366
24,153
22,786
148,241
102,366
24,153
22,786
-32,024
-716,941
-6,385,503
-716,941
-6,385,503
-803,000
-5,052,944
-803,000
-5,052,944
-612,927
-128,003
-142,997
-1,618,461
. -612,927
-128,003
-142,997
-1,618,461
-613,902
-103,000
-141,000
-1,207,523
-613,902
-103,000
-141,000
-1,207,523
1,794
-2,098
88
217
-64,205
162,809,430
3,224
2,267
-1,041
-4,451
-7,318
147,578,499
3,224
2,267
-1,041
-4,451
-7,318
147,455,436
356,764
176,366
-61,259
7,830
-33,717
2,920,223
691,329
4,057,536
1,903,500
26,815
101,226
331,667
36,928
2,442,883
505,768
5,348,788
1,933,789
3,415,000
-54,629
359,778
-42,638
-41,393
-20,529
200,588
1,452,181
2,481,375
-1,029,193
70,148
17,962
-5,134
1,535,159
105,711
39,516
-35,562
-21,553
-5,134
-1,091,442
$6,271
-449,322
-449,322
14,413,356
11,479
14,401,877
1,794
-2,098
88
217
-64,205
162,932,662
128,391
36,898
3,349
17,002
-98,261
222,700
69,912
379,990
135,234
2,151
7,872
29,123
-6,843
34,747
-4,523
-12,121
-98,261
222,700
69,912
205,610
1,728,780
200,144
104,836
250,634
-33,717
2,920,223
691,329
5,862,228
-15,159
113,109
-4,387
-3,180
-10,231
80,152
734,249
1,118,271
72,077
58,323
-20,529
1,962,389
-22,325
Total—Department of Health, Educ. & Welfare ......
Applicable
Receipts
$231,647
176,847
32,129
85
440,708
Federal disability insurance trust fund
Federal hospital insurance trust fund
Receipts transferred to railroad retirement account..
Interest on reimbursement of administrative and
vocational rehabilitation expenses:
Federal old-age and survivors insurance trust fund..
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Department of Housing and Urban Development:
Housing Programs:
Public enterprise funds:
Housing for the elderly or handicapped fund 8
Outlays
Comparable Period Prior Fiscal Year
-22,325
174,380
$35,073
123,232
1,372,015
23,778
166,094
242,804
1,804,691
$32,024
123,064
1,411,116
21,687
165,992
334,994
492,384
5,128
-64,766
-3,326
36,928
2,442,883
505,768
Government National Mortgage Association:
Total—Government National Mortgage Association .
See footnotes on page 3.
13,119
140,413
5,429
418
-10,231
149,148
28,278
27,304
9,816
3,598
68,996
788,877
758,493
114,715
99,716
1,761,802
2,626,601
10
TABLE lll-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
Outlays
Department of Housing and Urban Development--Continued
Community Planning and Development:
Public enterprise funds:
Rehabilitation loan fund
Urban renewal programs
,
Community development grants
,
Comprehensive planning grants
,
Other
,
Total--Community Planning and Development.. .„ . ,.
New Communities Administration ,
Federal Insurance Administration
,
Neighborhoods, Voluntary Associations, and Consumer
Protection
•.
,
Policy Development and Research
Management and Administration
,
Proprietary receipts from the public
Total--Department of Housing and Urban Development,
Department of the Interior:
Land and Water Resources:
Bureau of Land Management:
Management of lands and resources
Payments in lieu of taxes
Payments to states from receipts under Mineral
Leasing Act
— .
Other
Bureau of Reclamation:
Colorado River projects
Construction and rehabilitation
Operation and maintenance
Other
Office of Water Research and Technology
Total--Land and Water Resources
Fish and Wildlife and Parks:
Heritage Conservation and Recreation Service.
United States Fish and Wildlife Service:
Resource management
Recreational resources
Other
National Park Service:
Operation of the national park system
Construction
Other
Total—Fish and Wildlife and Parks
Energy and Minerals:
Geological Survey
<
Office of surface Mining Reclamation and Enforcement.
Mining Enforcement and Safety Administration
Bureau of Mines
Total- -Energy and Minerals
Applicable
Receipts
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
OUTLAYS—Continued
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlavs
Outlays
Applicable
Receipts
Net
Outlays
$70,273
1,119,371
2,088,813
76,914
18,684
3,374,055
$29,241
269,100
205,266
$47,176
375,678
2,464,267
67,083
10,750
2,964,954
298,341
$41,032
850,271
2,088,813
76,914
18,684
3,075,714
8,221
110,775
98,477
164,134
89,229
113,833
395
14,155
88,834
99,678
5,118
50,834
222,956
-3,653
7,760,944
382
62,593
188,303
10,712,342
274,808
97,608
274,808
97,608
302,935
99,983
302,935
99,983
10,517
175,133
192,314
175,133
192,314
105,130
95,962
105,130
95,962
20,896
36,687
9,043
15,793
1,818
220,202
196,974
323,735
79,266
137,250
17,620
1,494,710
128,344
323,735
79,266
137,250
17,620
1,426,079
165,353
468,166
141,818
154,163
14,332
1,547,843
236,845
236,845
656,968
656,968
350,397
350,397
12,479
6,095
3,506
31,009
9,339
3,271
302,545
12,479
6,095
3,506
31,009
9,339
3,271
302,545
167,251
87,584
60,769
331,454
94,561
32,539
1,431,125
167,251
87,584
60,769
331,454
94,561
32,539
1,431,125
134,758
82,644
35,137
289,947
66,322
51,633
1,010,837
134,758
82,644
35,137
289,947
66,322
51,633
1,010,837
36,495
1,733
-1
12,849
51,077
36,495
1,733
-1
10,752
48,979
501,795
5,412
48,488
135,463
691,157
501,795
5,412
48,488
121,412
677,107
302,400
(*)
98,088
160,663
561,151
302,400
(*)
98,088
150,258
550,746
$84,187
543,933
2,464,267
67,083
10,750
3,170,220
$37,011
168,255
32,644
$5,849
25,544
206,889
4,686
917
243,885
495
10,184
254
17,506
106,698
274,909
637
1,983
-6,531
-228
543,268
5,118
50,834
222,956
11,655,352
27,894
97,554
27,894
97,554
10,517
$9,243
54,793
206,889
4,686
917
276,528
$3,394
29,249
749
27,689
637
1,983
-6,531
830,194
31,157
36,687
9,043
15,793
1,818
230,463
228
286,927
10,261
10,261
2,097
2,097
3,653
3,894,408
68,631
68,631
14,051
14,051
1,503
4,874,785
51,265
51,265
10,405
10,405
382
62,593
188,303
-1,503
5,837,557
114,088
468,166
141,818
154,163
14,332
1,496,578
T A B L E III—BUDGET R E C E I P T S A N D O U T L A Y S - C o n t l n u e d (In thousands)
Current Fiscal Year to Date
This Month
Classification of
O U T L A Y S - - Continued
Department of the Interior--Continued
Bureau of Indian Affairs:
Public enterprise funds
Operation of Indian programs
Construction
Indian tribal funds
Other
Total—Bureau of Indian Affairs ,
Office of Territorial Affairs
Office of the Solicitor and Office of the Secretary
Proprietary receipts from the public
Intrabudgetary transactions
Total--Department of the Interior
Outlays
,
,
,
[Department of Justice:
General Administration
Legal Activities
Federal Bureau of Investigation
Immigration and Naturalization Service
Drug Enforcement Administration
Federal Prison System
L a w Enforcement Assistance Administration
Proprietary receipts from the public
Total--Department of Justice
Department of Labor:
Employment and Training Administration:
Program administration
Employment and training assistance
Community service employment for older Americans.
Temporary employment assistance
Federal unemployment benefits and allowances
Grants to States for unemployment insurance and
employment services
Advances to the unemployment trust fund and other
funds
Other
Unemployment trust fund:
Federal--State unemployment insurance:
State unemployment benefits
Grants to States for unemployment insurance and
employment services
Federal administrative expenses
Interest on refunds of taxes
Railroad--unemployment insurance:
Railroad unemployment benefits
Administrative expenses
Payment of interest on advances from railroad
retirement account
Total--Unemployment trust fund
Total--Employment and Training Administration
$760
60,750
6,818
63,292
2,937
134,557
32,107
225
Applicable
Receipts
669
31,517
-36,351
714,622
44,545
1,239
24,696
38,935
21,426
15,302
27,839
57,998
"95
187,434
1,076
Net
Outlays
60,750
6,818
63,292
2,937
133,887
32,107
225
-31,517
-36,351
670,077
Outlays
$13,092
643,943
165,843
255,826
63,120
1,141,825
176,808
38,738
Applicable
Receipts
$6,442
Outlays
$6,650
643,943
165,843
255,826
63,120
1,135,383
$12,967
629,574
103,982
252,243
70,479
1,069,245
148,883
45,218
1,227,148
176,808
38,738
-1,138,024
-69,610
3,677,606
12,088
7
7,074
19,169
23,444
340,344
552,001
274,681
177,883
312,025
724,068
-7,074
2,397,372
2,365,652
6,442
1,138,024
-69,610
4,904,754
Net
Outlays
Comparable Period Prior Fiscal Year
4,321,269
2,416,541
8,880
451,991
13,824
351,752
91,258
-41,195
8,880
451,991
13,824
351,752
91,258
-41,195
89,299
4,763,671
134,333
4,769,404
1,165,356
46,356
89,299
4,763,671
134,333
4,769,404
1,165,356
46,356
76,881
3,290,860
72,102
2,340,409
833,089
53,034
239,907
2,682
239,907
2,682
1,109,907
-980
1,109,907
-980
4,338,118
10,605
516,638
516,638
9,368,307
9,368,307
12,338,972
169,076
3,003
84
20,033
1,290
169,076
3,003
84
20,033
1,290
1,521,606
67,306
1,061
197,370
10,710
1,521,606
67,306
1,061
197,370
10,710
1,514,841
55,827
919
179,691
9,320
1,689
1,689
2,767
2,767
3,388
711,811
711,811
11,169,128
11,169,128
14,102,958
1,830,910
1,830,910
23,246,473
23,246,473
25,118,056
981
$4,933
4,933
1,102,518
-61,908
1,239
24,696
38,935
21,426
15,302
26,859
57,998
-95
186,358
23,444
340,344
552,001
274,681
177,883
324,113
724,075
Applicable
Receipts
20,808
316,946
520,218
242,714
166,839
252,386
845,740
1,169,121
10,633
"5," 292
15,926
CO
TABLE lll-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
Classification of
OUTLAYS—Continued
Department of Labor--Continued
Labor-Management Services Administration
Employment Standards Administration:
Salaries and expenses
Special benefits
!!!!!!!!!!
Special workers compensation expenses....'.'
Black Lung disability trust fund:«
Benefit payments
Administrative expenses
Other
'.'.'.'.'.'.'.'.'.'.'.
Total--Black Lung disability trust fund
Occupational Safety and Health Administration
Mine Safety and Health Administration 9
\
Bureau of Labor Statistics
'.'.'..'.
Departmental Management
,['.[
Proprietary receipts from the public
Intrabudgetary transactions
Total—Department of Labor
Department of State:
Administration of Foreign Affairs:
Salaries and expenses
Acquisition, operation and maintenance of buildings
abroad
Payment to Foreign Service retirement and disability
fund
Foreign Service retirement and disability fund
Other
Total—Administration of Foreign Affairs
International Organizations and Conferences
International Commissions
Other
Proprietary receipts from the public
Intrabudgetary transactions:
Foreign Service retirement and disability fund:
Receipts transferred to Civil Service retirement
and disability fund
General fund contributions
Other
Total--Department of State
Department of Transportation:
Office of the Secretary
Coast Guard:
Intragovernmental funds
Operating expenses
Acquisition, construction, and improvements
Retired pay
Other
Total—Coast Guard
See footnotes on page 3.
This Month
Outlays
Applicable
Receipts
Current Fiscal Year to Date
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
Comparable Period Prior Fiscal Year
Outlays
Applicable
Receipts
Net
Outlays
$4,880
$4,880
$54,392
$54,392
$47,207
$47,207
4,633
40,871
351
3,398
8,261
102,124
113,783
4,633
40,871
351
3,398
8,261
102,124
113,783
107,226
191,469
4,998
3,014
8,261
100,868
112,143
107,226
191,469
4,998
3,014
8,261
100,868
112,143
97,937
297,695
3,581
97,937
297,695
3,581
14,870
9,580
5,858
9,621
-308,258
14,870
9,580
5,858
9,621
987
1,728,084
-308,258
147,380
60,688
79,809
57,934
-1,153,258
127,400
127,400
75,843
48,845
-3,442,095
$414
22,909,253
147,380
60,688
79,809
57,934
-7,210
-1,153,258
22,902,044
22,374,470
414
75,843
48,845
-414
-3,442,095
22,374,056
55,112
55,112
655,217
655,217
543,353
543,353
4,375
4,375
57,283
57,283
39,471
39,471
80,808
8,547
-1,101
147,741
80,808
8,547
-1,101
147,741
107,407
93,683
4,473
918,063
107,407
93,683
4,473
918,063
93,649
83,843
4,672
764,988
93,649
83,843
4,672
764,988
4,382
2,650
8,114
4,382
2,650
8,114
-5,489
381,670
21,274
77,154
381,670
21,274
77,154
-14,026
367,698
16,005
61,110
367,698
16,005
61,110
-18,165
-20
-83,578
-86
73,713
-453
-131,627
-519
1,265,562
-453
-131,627
-519
1,251,536
-248
-114,899
-519
1,094,135
6,269
6,269
41,855
41,855
62,393
62,393
323
75,704
6,385
14,219
9,448
106,080
323
75,704
6,385
14,219
9,110
105,741
15,699
897,803
131,650
156,465
87,111
1,288,728
15,699
897,803
131,650
156,465
82,444
1,284,062
-20,048
827,675
131,581
139,516
85,152
1,163,876
-20,048
827,675
131,581
139,516
80,065
1,158,788
1,727,097
-20
-83,578
-86
79,202
-$987
-987
5,489
5,489
338
338
$7,210
7,210
14,026
14,026
4,666
4,666
18,165
18,165
5,087
5,087
-248
-114,899
-519
1,075,969
T A B L E III—BUDGET RECEIPTS A N D OUTLAYS-Contlnued (In thousands)
OUTLAYS--Continued
Department of Transportation--Continued
Federal Aviation Administration:
Aviation war risk insurance revolving fund
Outlays
Applicable
Receipts
Net
Outlays
Outlays
$2
39,351
3,847
-$1,144
1,622,319
41,422
61,757
19,112
4,004
61,757
19,112
4,004
137,305
137,305
562,156
211,002
67,127
35
275,041
222,177
222,177
1,115,361
$4
39,351
3,847
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
11
Applicable
Receipts
$16
Net
Outlays
-$1,160
1,622,319
41,422
-$891
1,475,819
41,325
562,156
211,002
67,127
35
275,041
334,823
197,109
70,487
15
250,230
Airport and airway trust fund:
Total—Federal Aviation Administration
Federal Highway Administration:
Highway trust fund:
Federal-aid highways
Other
1
16
Outlays
1,115,361
852,664
2,777,941
2,368,918
Applicable
Receipts
$6
Net
Outlays
-$897
1,475,819
41,325
334,823
197,109
70,487
15
250,230
852,664
6
2,368,912
265,379
2,777,957
674,489
-10,484
4,263
6,123
12,064
674,489
-10,484
4,263
6,123
12,064
5,876,289
-16,884
43,286
82,262
90,945
5,876,289
-16,884
43,286
82,262
90,945
5,972,946
9,176
38,315
58,056
66,550
5,972,946
9,176
38,315
58,056
66,550
686,455
686,455
6,075,898
6,075,898
6,145,043
6,145,043
4,855
4,855
12,135
12,135
61,552
143,700
5,101
61,552
143,700
5,101
42,256
124,900
1,403
42,256
124,900
1,403
10,840
5,877
4,398
20,029
51,500
6,407
4,309
10,840
5,877
4,398
20,029
51,500
2,098
66,247
62,381
-4,601
203,830
716,000
74,698
43,071
66,247
62,381
-4,601
203,830
716,000
31,627
12,044
57,274
29,402
82,492
730,062
80,339
50,662
12,044
57,274
29,402
82,492
730,062
29,677
99,050
4,309
94,741
1,118,556
43,071
1,075,485
991,612
50,662
940,950
1,569
2,144
157,623
689
-2,144
2,027,529
8,888
10,727
39,493
2,027,529
-1,838
-39,493
1,712,091
7,418
3,181
8,332
38,656
1,708,910
-914
-38,656
8,362
1,331,742
13,549,765
97,973
13,451,792
12,619,909
105,925
12,513,984
1,514
1,514
26,278
264
26,013
36,174
210
35,964
678
28
305
1,789
678
28
305
1,789
6,802
1,329,476
6,822,957
17,451
6,802
1,329,476
6,822,957
17,451
4,200
1,698,824
6,760,092
15,021
10,783
395
16,217
2,166
10,783
395
16,217
2,166
141,051
1,617
198,306
11,689
141,051
1,617
198,306
11,689
144,664
1,025,626
153,278
12,043
29,562
29,562
352,664
352,664
1,335,611
265,380
National Highway Traffic Safety Administration:
Federal Railroad Administration:
Railroad rehabilitation and improvement financing
Grants to National Railroad Passenger Corporation .
157,623
2,258
1,340,104
Department of the Treasury:
Office of Revenue Sharing:
4,200
1,698,824
6,760,092
15,021
Bureau of Government Financial Operations:
1,025,000
144,664
626
153,278
12,043
Total--Bureau of Government Financial
1,025,000
310,611
01
TABLE MI-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
This Month
OUTLAYS--Continued
Department of the Treasury—Continued
Bureau of Alcohol, Tobacco and Firearms
Bureau of Engraving and Printing
Internal Revenue Service:
Federal tax lien revolving fund
Accounts, collection and taxpayer service
Payment where credit exceeds liability for tax
Interest on refund of taxes
Internal revenue collections for Puerto Rico
Total--Internal Revenue Service
United States Secret Service
Outlays
Current Fiscal Year to Date
Applicable
Receipts
$10,898
54,908
3,916
4,961
14,249
Net
Outlays
Outlays
Applicable
Receipts
$10,898
54,908
3,916
4,961
14,249
$128,110
634,379
-3,361
42,466
121,508
-86
4,082
58,314
71,095
4,717
27,449
12,208
1,316
54,310
904,115
981,878
880,890
316,937
187,568
$1,248
0>
Comparable Period Prior Fiscal Year
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$128,110
634,379
-3,361
42,466
121,508
$117,391
596,446
-3,735
41,765
108,808
68
54,310
904,115
981,878
880,890
316,937
187,568
647
48,930
857,207
883,872
900,882
318,048
157,089
$609
1,248
3,325,767
3,166,674
609
3,166,064
94,699
129,100
-4,426
123,358
82,067
86,249
123,358
-4,182
$117,391
596,446
-3,735
41,765
108,808
25
4,082
58,314
71,095
4,717
27,449
12,208
$111
177,891
111
177,781
3,327,014
167
10,516
7,005
129,100
90,273
3,510,712
116,963
3,510,712
116,963
39,199,117
9,495,738
39,199,117
9,495,738
33,264,604
8,635,115
33,264,604
8,635,115
3,627,675
3,627,675
48,694,856
48,694,856
41,899,720
41,899,720
-84,849
-269,773
-6,596
-1,649,915
-897,031
-2,767,670
-1,649,915
-1,681,212
3,584,567
60,070,058
3,760,913
56,309,145
54,301,203
10,516
7,171
37
48,930
857,207
883,872
900,882
318,048
157,089
Interest on the public debt:
Proprietary receipts from the public
Receipts from off-budget Federal agencies
84,849
269,773
-6,596
Total—Department of the Treasury
3,939,466
354,899
897,031
2,767,670
486,886
2,241,185
-486,886
-2,241,185
-1,681,212
3,840,139
50,461,064
Environmental Protection Agency:
2,741
2,741
71,089
71,089
72,675
72,675
20,858
1,030
40,840
1,969
362,405
957
91
44
20,858
1,030
40,840
1,969
362,405
866
-44
250,514
31,400
459,614
64,842
3,186,825
8,132
435
509
250,514
31,400
459,614
64,842
3,186,825
7,697
-509
172,314
86,752
435,884
53,527
3,529,577
14,982
586
317
172,314
86,752
435,884
53,527
3,529,577
14,396
-317
135
430,666
4,072,416
944
4,071,472
4,365,711
903
4,364,808
106,899
-20,112
4,160
3,060
8,102
7,208
-160,741
196,531
79,105
34,464
99,804
14,740
-160,741
196,531
72,684
34,464
99,052
14,740
-122,485
102,613
70,258
17,171
84,313
13,021
4,485
11
789
-122,485
102,613
65,773
17,161
83,525
13,021
-89,811
-48,038
-1,839
-999
117,043
163,892
Research and development:
Other
430,801
General Services Administration:
Proprietary receipts from the public:
106,899
-20,112
4,759
3,060
8,108
7,208
599
6
15,956
759
-209
Total--General Services Administration
109,713
17,320
-15,956
-759
-209
-1,839
92,393
262,064
6,421
752
89,811
48,038
145,021
148,413
41,295
-148,413
-41,295
-999
194,992
-31,100
T A B L E III—BUDGET R E C E I P T S A N D OUTLAYS-Contlnued (In thousands)
Classification of
O U T L A Y S - -Continued
National Aeronautics and Space Administration:
Research and development
Construction of facilities
Research and program management
Other
Proprietary receipts from the public
,
TotalT-National Aeronautics and Space
Administration
Veterans Administration:
Public enterprise funds:
Loan guaranty revolving fund
Direct loan revolving fund
Veterans reopened insurance fund
Education loan fund
Other
Compensation and pensions
Readjustment benefits
Medical care
Medical and prosthetic research
General operating expenses
Construction projects
Insurance funds:
National service life
Government life
Veterans special life
Other
Proprietary receipts from the public:
National service life
Government life
Other
Intrabudgetary transactions
Total--Veterans Administration
Independent Agencies:
Action
A r m s Control and Disarmament Agency
Board for International Broadcasting
Civil Aeronautics Board
Civil Service Commission:
Civil service retirement and disability fund
Payment to civil service retirement and disability
fund
Salaries and expenses
Government payment for annuitants, employees
health benefits
Employees health benefits fund
Employees life insurance fund
Retired employees health benefits fund
Other
Proprietary receipts from the public
Intrabudgetary transactions:
Civil service retirement and disability fund:
Receipts transferred to Foreign Service
retirement and disability fund
General fund contributions
Other
Total--Civil Service Commission
Current Fiscal Year to Date
This Month
Outlays
Applicable
Receipts
$249,038
9,968
84,431
12
-$143
343,449
36,326
7,234
2,466
624
17,120
790,256
169,844
388,872
9,109
39,580
15,467
48,047
3,707
2,615
5,507
-156
1,536,618
Applicable
Receipts
Applicable
Receipts
Net
Outlays
Outlays
$2,988,697
124,258
870,164
558
-3,655
$2,980,863
104,970
859,678
1,357
$2,850
2,850
$2,988,697
124,258
870,164
558
$3,855
-143
343,592
3,983,677
3,655
3,980,022
3,946,667
20,778
10,800
1,731
38
19,476
15,548
-3,567
735
586
-2,357
790,256
169,844
388,872
9,109
39,580
15,467
48,047
3,707
-1,128
5,507
-36,990
-86
-2,943
1,440,032
-156
525,860
99,408
23,021
34,868
273,806
9,572,817
3,361,716
4,809,318
111,747
558,082
243,262
667,762
66,973
32,229
98,142
445,624
138,398
51,645
275
275,101
543,610
126,367
22,261
13,402
266,983
8,999,596
3,700,004
4,290,617
104,460
513,472
233,841
697,602
71,105
30,269
93,537
20,476,537
1,514,384
80,236
-38,990
-26,624
34,593
-1,295
9,572,817
3,361,716
4,809,318
111,747
558,082
243,262
667,762
66,973
-55,015
98,142
-476,850
-4,382
-34,866
18,962,152
-2,472
19,704,976
1,685,623
14,643
1,731
5,657
8,509
946,106
203,329
13,990
65,616
101,471
10,907,627
166
203,164
13,990
65,452
101,360
10,907,627
186,218
11,863
57,837
102,830
9,563,523
-78
7,432,801
3,821
7,433,828
119,610
7,433,828
119,610
7,298,393
100,429
89,713
-78,861
-24,768
703
3,972
132
506,617
2,958,770
429,094
14,405
21,999
506,617
-84,978
-485,209
5,599
21,999
-1,605
437,034
2,624,145
436,530
13,813
12,313
-949
-7,432,801
-1,249
938,622
-8,544
-7,433,828
-18,458
14,931,120
-8,544
-7,433,828
-18,458
10,962,658
-13,612
-7,298,393
-13,187
13,160,987
3,743
36,990
86
2,943
96,586
7,432,801
3,821
-949
-7,432,801
-1,249
1,316,616
Outlays
$249,038
9,968
84,431
12
143
14,652
1,731
5,657
8,512
946,106
89,713
237,503
36,337
1,361
3,972
Net
Outlays
Comparable Period Prior Fiscal Year
316,364
61,104
657
-132
377,994
-2,472
87,244
476,850
4,382
34,866
164
111
3,043,748
914,303
8,806
il605
3,968,461
-2,148
265,091
49,488
81
267,389
76,285
478,053
5,608
679
123
2,696,080
834,247
9,311
l*23i
3,540,868
H
TABLE MI-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
Current Fiscal Year to Date
This Month
Classification of
OUTLAYS—Continued
Independent Agencies--Continued
Commission on Civil Rights
Commodity Futures Trading Commission
Community Services Administration
Consumer Product Safety Commission
Corporation for Public Broadcasting
District of Columbia:
Federal payment
Loans and repayable advances
Equal Employment Opportunity Commission
Export-Import Bank of the United States
Federal Communications Commission
Federal Deposit Insurance Corporation
Federal H o m e Loan Bank Board:
Public enterprise funds:
Federal H o m e Loan Bank Board revolving fund ..
Federal Savings and Loan Insurance Corp. fund..
Interest adjustment payments
Federal Mediation and Conciliation Service
Federal Trade Commission
Historical and Memorial Agencies
Intergovernmental Agencies:
Washington Metropolitan Area Transit Authority ...
Other
Intelligence Community Staff
International Communication Agency 1 0
International Trade Commission
Interstate C o m m e r c e Commission
Legal Services Corporation
National Credit Union Administration
National Foundation on the Arts and Humanities:
National Endowment for the Arts
National Endowment for the Humanities
National Labor Relations Board
,
National Science Foundation
,
Nuclear Regulatory Commission
Postal Service (payment to the Postal Service fund)...,
Railroad Retirement Board:
Payments to Railroad Retirement Trust Fund
,
Regional rail transportation protective account
Railroad retirement accounts:
Benefit payments and claims
Advances to the railroad retirement account from
the F O A S I trust fund
,
Advances to the railroad retirement account from
the FDI trust fund
Disbursements for the payment of FOASI benefits ,
Disbursements for the payment of FDI benefits...,
Administrative
expenses
See footnotes
on page 3.
Interest on refunds of taxes
Proprietary receipts from the public
Intrabudgetary transactions:
Railroad retirement account:
Payment to railroad retirement trust funds
Interest transferred to federal hospital
insurance trust fund
Total--Railroad Retirement Board
Applicable
Receipts
Outlays
Net
Outlays
Outlays
465
-403,723
213
21,960
58,815
17
149,337
3,910
8,501
352,117
11,781
64,900
157,429
-13,463
121,452
125,810
90,414
802,783
270,862
250,000
1,778,240
80,077
126,717
137,520
1,071
19,571
51,536
2,194
289,804
5,172
4,017
327,866
10,806
60,651
125,000
35,813
192,755
3,952,463
3,952,463
3,768,376
-195,818
-195,818
-80,700
-27,933
195,326
27,672
30,918
121
-27,933
195,326
27,672
30,918
121
-1
-12,900
81,024
12,614
31,200
8
$769
919
43,696
2,762
12,050
15,000
5,358
162,138
5,866
103,320
26,000
3
97,963
2
123,894
-11,000
5,355
64,175
5,864
-20,574
$10,465
14,311
768,216
40,063
119,200
304,116
110,832
74,214
1,993,483
64,084
2,135,878
4,856
4,692
3
1,098
4,829
2
21,000
617
734
6,646
934
6,610
14,889
2,910
8,812
12,424
6,673
93,756
23,203
82,700
4,505
4,119
19,514
738
-14,821
3
1,098
4,525
2
21,000
479
734
6,542
934
6,594
14,889
299
8,807
12,424
6,657
93,709
23,202
82,700
4,505
60,342
182,174
213
21,961
59,446
17
149,337
5,610
8,501
353,410
11,781
65,080
157,429
53,003
121,466
125,810
90,615
803,182
270,876
250,000
1,778,240
80,077
351,278
351,278
-19,045
-19,045
-3,002
17,235
2,459
2,837
-3,002
17,235
2,459
2,837
(*)
'i64
15
'2,'612
5
16
47
1
(*)
-1,689
354,578
(*)
(*)
(*)
Outlays
$9,476
13,489
639,565
39,872
103,000
279,357
120,832
71,763
2,538,701
55,791
1,231,627
$1
3
-3
138
Net
Outlays
Comparable Period Prior Fiscal Year
$10,465
14,305
767,919
40,059
119,200
304,116
66,852
74,161
-105,904
64,065
-566,611
920
43,699
2,759
12,050
(*)
304
Applicable
Receipts
OD
298
5
43,979
54
2,099,387
19
2,702,489
59,878
585,897
2
631
1,700
'i,*294
180
*66,'466
14
201
398
14
861727
752,869
230,559
2,267,449
250,000
59,983
-250,000
-250,000
-250,000
-1,689
11,732
11,732
-757
354,578
4,074,557
4,074,556
3,858,849
Applicable
Receipts
84,472
34
2,198,724
15
2,083,272
1,617,632
561,030
1
-167
8
1,573
"*468
55,095
1
182
834
12
TABLE III—BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
Independent Agencies--Continued
Securities and Exchange Commission
Small Business Administration:
Public enterprise funds:
Business loan and investment fund
Disaster loan fund
Surety bond guarantees revolving fund
Other
Salaries and expenses
Proprietary receipts from the public
Total--Small Business Administration
Smithsonian Institution
Temporary Study Commissions
Tennessee Valley Authority
United States Railway Association:
Administrative expenses
Purchase of Conrail securities
Other independent agencies
Total- -Independent Agencies
Outlays
,
Undistributed offsetting receipts:
Federal employer contributions to retirement and
social insurance funds:
Legislative Branch:
United States Tax Court:
Tax court judges survivors annuity fund
The Judiciary:
Judicial survivors annuity fund
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust
fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Department of State:
Foreign Service retirement and disability fund..
Independent Agencies:
Civil Service Commission:
Civil Service retirement and disability fund ..
Receipts from off-budget Federal agencies:
Independent Agencies:
Civil Service Commission:
Civil Service retirement and disability fund
Subtotal
See footnotes on page 3.
Applicable
Receipts
Comparable Period Prior Fiscal Year
Current Fiscal Year to Date
This Month
Classification of
O U T L A Y S - - Continued
Net
Outlays
Applicable
Receipts
Outlays
Net
Outlays
Outlays
Applicable
Receipts
Net
Outlays
$4,743
-$1
$4,743
$61,328
$25
$61,303
$53,659
$24
$53,635
110,682
483,540
3,674
18
12,459
39,941
23,003
1,521
89
890,775
2,342,138
37,430
4,092
173,285
432,888
237,629
10,057
1,099
424,066
200,378
7,847
734
64,556
3,447,720
681,692
457,887
2,104,509
27,373
2,993
173,285
-19
2,766,028
887,600
384,578
27,354
4,539
28,942
610,374
70,741
460,537
2,153
-72
12,459
-1
545,818
1,333,013
633,040
463,534
184,200
19,507
3,806
28,942
-15
699,974
13,206
386
368,773
3
(*)
205,461
13,204
386
163,312
125,298
9,260
3,726,106
58
600
2,313,878
125,240
8,660
1,412,228
115,041
15,792
3,086,147
52
645
1,986,588
114,988
15,147
1,099,559
1,557
2,660
69,000
9,546
2,506,942
19,025
734,700
153,441
37,620,319
13,536
19,025
734,700
139,905
25,078,716
12,320
723,180
143,859
32,687,164
38,156
12,320
723,180
105,703
19,884,305
-129
-129
-1,380
-77,000
-13,000
-17,000
-2,329
-77,000
-13,000
-17,000
-2,329
-906,000
-154,000
-206,000
-19,256
-191,649
-191,649
-2,427,197
-545,610
-545,610
-846,717
-846,717
2,660
69,000
11,103
3,431,260
924,318
19
12,541,603
-30
-30
15
12,802,859
-30
-30
-1,197
-1,197
-863,000
-114,000
-175,000
-16,879
-863,000
-114,000
-175,000
-16,879
-2,427,197
-2,191,994
-2,191,994
-1,149,236
-1,149,236
-1,185,973
-1,185,973
-4,863,099
-4,863,099
-4,548,073
-4,548,073
-1,380
-906,000
-154,000
-206,000
-19,256
(0
TABLE lll-BUDGET RECEIPTS AND OUTLAYS-Contlnued (In thousands)
This Month
Classification of
OUTLAYS--Continued
Outlays
Undistributed offsetting receipts--Continued
Interest on certain Government accounts:
Interest credited to certain Government accountsThe Judiciary:
Judicial survivors annuity fund
Department of Defense:
Civil:
Soldiers' and Airmen's H o m e permanent fund.
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust
fund
Federal disability insurance trust fund..........
Federal hospital insurance trust fund
Federal supplementary medical insurance trust
fund
Department of Labor:
Unemployment trust fund
Black Lung Disability Trust Fund .....'.'.'.'.'.'.'..'.'
Department of State:
Foreign Service retirement and disability fund ...
Department of Transportation:
Airport and airway trust fund
Highway trust fund
.'//,
Veterans Administration:
Government life insurance fund
National service life insurance fund
Independent Agencies:
Civil Service Commission:
Civil Service retirement and disability fund
Railroad Retirement Board:
Railroad retirement account
Other
'
Subtotal
Rents and royalties on the outer continental shelf lands .
Total--Undistributed offsetting receipts
Total—Budget outlays
TOTAL BUDGET
Receipts
Outlays (-)
Budget surplus (+) or deficit (-)
Applicable
Receipts
Current Fiscal Year to Date
Net
Outlays
Outlays
Applicable
Receipts
10
O
Comparable Period Prior Fiscal Year
Net
Outlays
-$1,493
-$1,493
-$3,411
-$3,411
-1,590
-1,590
-6,233
-6,233
-31,366
-4,930
-3,111
-31,366
-4,930
-3,111
-2,153,058
-249,190
-780,058
-1,830
-1,830
-11,403
-1,192
Outlays
Applicable
Receipts
-$1,908
Net
Outlays
-$1,908
-6,350
-6,350
-2,153,058
-249,190
-780,058
-2,274,603
-373,906
-769,925
-2,274,603
-373,906
-769,925
-229,065
-229,065
-132,259
-132,259
-11,403
-1,192
-266,286
-1,192
-266,286
-1,192
-232,371
-232,371
-42
-42
-19,965
-19,965
-3,547
-9,990
-3,547
-9,990
-219,207
-662,155
-43
-127
-43
-127
-69,427
-4,954
-318
-145,364
-13,487
-13,487
-219,207
-662,155
-193,540
-593,048
-193,540
-593,048
-31,730
-460,453
-31,730
-460,453
-31,761
-432,654
-31,761
-432,654
-69,427
-3,356,406
-3,356,406
-2,840,794
-2,840,794
-4,954
-318
-208,555
-3,618
-208,555
-3,618
-230,270
-4,519
-230,270
-4,519
-145,364
-8,650,582
-8,650,582
-8,131,395
-8,131,395
$97,315
-97,315
-992,080
97,315
-1,089,396
42,789,053
3,853,800
38,935,253
$2,258,546
-2,258,546
-13,513,681
2,258,546
-15,772,226
-12,679,469
2,373,747
-15,053,215
508,291,450
57,533,451
450,757,999
454,452,319
51,649,933
402,802,386
"W
-2,373,747
(Net Totals)
(Net Totals)
(Net Totals)
42,590,733
401,997,377
357,762,213
•38,935,253
-450,757,999
-402,802,386
+3,655,480
-48,760,622
-45,040,173
BSfSBS&^gSS
>X>...J**.&' *L
$2,373,747
MEMORANDUM
Receipts offset against outlays (In thousands)
Current
Fiscal Year
to Date
Proprietary receipts
Receipts from off-budget Federal agencies
Intrabudgetary transactions
Total receipts offset against outlays ..
$15,905,271
2,767,670
40,898,776
59,571,718
Comparable Period
Prior Fiscal Year
$16,689,931
2,241,185
38,564,631
57,495,747
TABLE IV--MEANS OF FINANCING (1n thousands)
Classification
(Assets and Liabilities
Directly Related to the Budget)
Net Transactions
(-) denotes net reduction of either
liability or assets accounts
This Month
Fiscal Year to Date
This Year
Prior Year
21
Account Balances
Current Fiscal Year
Beginning of
This Year
This Month
Close of
This Month
LIABILITY A C C O U N T S
Borrowing from the public:
Public debt securities, issued under general financing
authorities:
Obligations of the United States, issued by:
$7,098,736
$72,704,561 $64,138,743 $698,839,908 $764,445,733
10
-10
-55
20
$771,544,469
7,098,736
72,704,551
64,138,688
698,839,928
764,445,743
771,544,479
-13,194
-1,417,194
-1,379,886
10,297,825
8,893,825
8,880,631
7,085,542
71,287,357
62,758,803
709,137,753
773,339,568
780,425,110
4,264,894
12,181,491
9,242,952
157,295,161
165,211,758
169,476,652
2,820,648
59,105,866
53,515,851
551,842,592 608,127,810
610,948,458
1,989,457
2,020,988
257,038
4,712,426
4,743,957
6,733,414
23,543
205,255
269,623
78,442
14,787
229,884
2,669,132
3,289,835
2,915,212
3,163,022
2,938,754
3,368,277
2,693,731
212,056
2,240,920
7,900,510
5,418,835
8,112,566
7,732,634
61,686,974
56,258,480
570,414,495 624,368,836
632,101,470
9,365,437
3,339,999
1,689,554
19,103,773
13,078,334
22,443,772
56,607
452,409
-100,000
132,642
-400,000
2,489,275
-1,200,000
2,885,077
-1,300,000
2,941,684
-1,300,000
56,607
352,409
-267,358
1,289,275
1,585,077
1,641,684
86,260
-71,000
2,110,156
861,556
-3,262,408
43,189
81,438
6,700,000
1,095,701
-3,659,852
8,810,156
1,870,998
-6,851,259
8,810,156
1,957,257
-6,922,259
-58,024
-303,789
7,454
-4,899
-250,664
-308,688
-42,764
-594,485
132,081
4,130,951
3,579,230
3,536,466
5,658
346,144
36,928
-112,405
669,376
14,230
669,376
3,729,546
700,645
3,270,997
706,304
3,617,141
9,731,083
3,022,446
2,237,882
28,922,921
22,214,284
31,945,367
940,068
335,594
738,275
4,292,186
10,671,150
3,358,040
2,976,157
33,215,106
10
Agency securities, issued under special financing
authorities (See Schedule B. For other agency
Deduct:
Federal securities held as investments of
Deposit funds:
Miscellaneous liability accounts (Includes checks
A S S E T A C C O U N T S (Deduct)
Cash and monetary assets:
Special drawing rights:
Gold tranche drawing rights:
U. S. subscription to International Monetary Fund:
Direct quota payments11
•
Maintenance of value adjustments
Other demand liabilities issued to I M F
Receivable/Payable (-)Tor U.S. currency valuation
Loans to International Monetary Fund
Other cash and monetary assets
Total cash and monetary assets
Miscellaneous asset accounts
Excess of liabilities (+) or assets (-)
Transactions not applied to current year's surplus or deficit
(See Schedule A for details)
3,687,712 1
4,627,780
25,901,996 ', 36,573,147
-2,938,517 +58,328,934 +53,282,323 +537,199,389 +598,466,840 j +595,528,323
]
-716,963
-9,568,312
-8,242,150
-8,851,349
-9,568,312
-3,655,480 +48,760,622 +45,040,173
+537,199,389 +589,615,491
+585,960,011
Total budget financing [Financing of deficit (+) or
See footnotes on page 3.
22
TABLE IV-SCHEDULE A-ANALYSIS OF CHANGE IN EXCESS OF LIABILITIES (In thousands)
Fiscal Year to Date
Classification
This
Month
This Year
Excess of liabilities beginning of period:
Based on composition of unified budget in preceding period
Adjustments during current fiscal year for changes in
Budget surplus (-) or deficit:
Based on composition of unified budget in prior fiscal year
Changes in composition of unified budget:
Housing for the elderly or the handicapped reclassified
Prior Year
$598,466,840 $537,199,389 $483,917,066
598,466,840
537,199,389
483,917,066
-3,690,227
48,584,256
45,035,045
34,747
176,366
5,128
-3,655,480
48,760,622
45,040,173
-36,928
-28,236
-367,156
-702
-368,515
-2,232
-407,023
-1,973
-27,081
1,357
164,977
-144,203
6,971
753,025
-31,760
-496,433
61,924
112,710
10,660,478
-15,593
-173,141
393,615
58,580
8,414,766
716,963
9,568,312
8,242,150
595,528,323
595,528,323
537,199,389
Transactions not applied to current year's surplus or deficit:
Off-budget Federal Agencies:
Total—transactions not applied to current year's surplus
See footnotes on page 3.
TABLE IV-SCHEDULE B-AGENCY SECURITIES, ISSUED UNDER SPECIAL
FINANCING AUTHORITIES (In thousands)
Net Transactions
(-) denotes net reduction of
liability accounts
Account Balances
Current Fiscal Year
Classification
Fiscal Year to Date
Beginning of
Close of
This Month
This Month
This Year
Agency securities, issued under special financing authorities:
Obligations of the United States, issued by:
Export-Import Bank
Obligations guaranteed by the United States, issued by:
Department of Defense:
Prior Year
This Year
This Month
$2,142,057
$2,140,605
1,013,591
905,229
896,001
600,638
-$1,452
-$717,569
-$732,990
$2,858,174
-9,227
-117,589
-120,195
Department of Housing and Urban Development:
Department of Transportation:
Coast Guard:
Family Housing Mortgages
Obligations not guaranteed by the United States, issued by:
Department of Defense:
Homeowners Assistance Mortgages
Department of Housing and Urban Development:
Government National Mortgage Association
Independent Agencies:
-2,497
21,508
1,011
579,129
603,135
-18
-206
-197
1,844
1,656
1,638
-1,338
-514
2,086
749
749
-602,000
-377,000
3,768,000
3,166,000
3,166,000
-150,000
250,000
1,825,000
250,000
1,825,000
250,000
1,825,000
-1,379,886
10,297,825
8,893,825
8,880,631
Tennessee Valley Authority
-13,194
-1,417,194
23
TABLE IV-SCHEDULE C (MEMORANDUM)-AGENCY BORROWING FINANCED THROUGH
ISSUE OF PUBLIC DEBT SECURITIES (In thousands)
Account Balances
Current Fiscal Year
Transactions
Classification
Fiscal Year to Date
Beginning of
This Month
Borrowing from the Treasury:
Commodity Credit Corporation
D. C. Commissioners: Stadium sinking fund, A r m o r y
Board, D. C
Export-Import Bank of United States
Federal Financing Bank
Federal H o m e Loan Bank Board
Federal Housing Administration:
General insurance
Special risk insurance
General Services Administration:
Pennsylvania Avenue Development Corporation
Government National Mortgage Association:
Emergency home purchase assistance fund
Management and liquidating functions
Special assistance functions
International Communication Agency
Rural Electrification Administration
Rural Telephone Bank
Saint Lawrence Seaway Development Corporation
Secretary of Agriculture, Farmers H o m e Administration:
Rural housing insurance fund
Agricultural credit insurance fund
Rural development insurance fund
Secretary of Energy
Secretary of Housing and Urban Development
Department:
College housing loans
Housing for the Elderly and Handicapped
National flood insurance fund
New communities guaranty:
Title IV
Title V H
Urban renewal fund
Secretary of the Interior:
Bureau of Mines, helium fund
Secretary of Transportation:
Rail Service Assistance
Regional Rail Reorganization
Smithsonian Institution:
John F. Kennedy Center parking facilities
Tennessee Valley Authority
Veterans Administration:
Veterans direct loan program
Total Borrowing from the Treasury
Borrowing from the Federal Financing Bank:
$546,658
This Year
Comparable
Prior Year
$5,132,850
$2,572,465
832
-327,700
1,409,483
-3,324
12,659,220
75,000
245,000
195,000
-69,701
9,533,958
-1,490,683
-935,613
-413,834
This Year
This Month
$6,128,458
$10,714,650
832
3,324
35,418,282
1,664
R
327,900
46,668,019
1,911,655
1,617,166
2,081,655
1,812,166
2,156,655
1,812,166
R
17,212
113,120
*-7*6i6
-173,861
8,318
359,793
-15,000
-4,905
-224,300
-8,190
-767,025
85,648
-1,000
455,634
32,889
-2,000
25,000
150,000
100,000
40,000
175,000
40,000
100,000
160,000
175,000
28,645
4,714
45,170
82,915
129
97,929
302
30,000
125,000
$11,261,308
1,664
"48,'677,*502
17,212
17,212
716,316
50,000
4,141,502
22,114
7,864,742
233,622
116,476
855,718
676,000
390,000
125,000
R
962,989
35,000
4,143,607
22,114
8,038,603
310,952
115,476
855,718
676,000
400,000
125,000
1,076,109
35,000
4,136,597
22,114
7,864,742
319,270
115,476
1,005,718
776,000
440,000
300,000
2,811,000
2,811,000
16,525
225,652
3,487
211,007
800,000
2,811,000
45,170
230,366
3,487
211,007
800,000
251,650
251,650
251,650
52,479
2,402
2,826
2,402
2,826
2,704
20,400
150,000
20,400
150,000
20,400
150,000
1,730,078
1,730,078
83,533,752
85.676,221
R
27,608
*147,*45i
1,224
85,913
3,358
113,078
800,000
-49,653
302
Close of
This Month
1,730,078
R
2.142.669
19.323,118
8.979,225
66,353,103
436,000
-0210,000
644,800
-67,000
1,340,000
1,155,336
-1,067,000
1,145,000
5,923,486
2,181,000
3,880,000
6,132,287
2,114,000
5,010,000
6,568,287
2,114,000
5,220,000
646.000
1.917.800
1,233.336
11,984,486
13.256,287
13.902,287
R
R
2,788,669 21,240,918
10,212,561
78,337,586
96,790,036
99,578,508
Export-Import Bank of the United States
Postal Service
Note:
Includes
only Authority
amounts loaned to Federal Agencies in lieu of Agency Debt issuance and excludes Federal Financing Bank purchase of loans
Tennessee
Valley
Total Borrowing
from the Federal
Financing
Bank
made or guaranteed
by Federal
Agencies.
The Federal Financing Bank borrows from Treasury and issues its own securities and in turn
Total Agency
financed
through
may loanBorrowing
these funds
to Agencies
in lieu of Agencies borrowing directly through Treasury or issuing their own securities.
issues
of Public Debt Securities
R-Revised
TABLE IV-SCHEDULE D-INVESTMENTS OF GOVERNMENT ACCOUNTS
IN FEDERAL SECURITIES (In thousands)
24
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
Classification
Fiscal Year to Date
Beginning of
This Month
This Year
Federal Funds:
Department of Agriculture:
Agency securities
Department of Commerce
Department of Energy
Department of Housing and Urban Development:
Federal Housing Administration:
Federal housing administration fund:
Public debt securities
Agency securities
Government National Mortgage Association:
Emergency mortgage purchase assistance:
Special assistance function fund:
Agency securities
Management and liquidating functions fund:
Agency securities
Guarantees of Mortgage-Backed Securities:
Public debt securities
Agency securities
Participation sales fund:
Public debt securities
Agency securities
Housing Management:
Community disposal operations fund:
Agency securities
Federal Insurance Administration:
National insurance development fund
Department of Transportation
Department of the Treasury
Veterans Administration:
Veterans reopened insurance fund
Independent Agencies:
Emergency Loan Guarantee Board
Export-Import Bank of the United States
Federal Savings and Loan Insurance Corporation:
Public debt securities
Agency securities
National Credit Union Administration
Other
Total public debt securities
Total agency securities
Total Federal funds
Trust Funds:
Legislative Branch:
United States Tax Court
,
Library of Congress
The Judiciary:
Judicial Survivors Annuity Fund
Department of Agriculture
Department of Commerce ,
Department of Defense
,
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust fund:
Public debt securities
,
Agency securities
,
Federal disability insurance trust fund
Federal hospital insurance trust fund:
Public debt securities
Agency securities
Federal supplementary medical insurance trust fund
Other
Prior Year
This Year
This Month
Close of
This Month
-$6,000
-$6,000
$29,215
$23,215
$23,215
$1,215
-65,344
32,240
-39,345
138,710
72,151
73,366
5,769
-16
100,452
-30
190,531
-183
1,742,417
191,020
1,837,099
191,006
1,842,868
190,990
-787
-1,298
-904
108,179
107,669
106,881
-248
-2,598
-3,657
35,799
33,450
33,201
2,470
939
11,874
29,106
18,329
3,184
57,578
6,376
66,982
34,542
69,452
35,482
38,520
-238,468
-74,365
-95,274
1,509,734
86,745
1,232,746
12,380
1,271,266
12,380
388
388
388
-36,195
-3,465
88,232
52,037
52,037
740
-36,271
1,930
-286,556
940
520,228
15,355
2,049,565
16,545
1,799,280
17,285
1,763,009
-726
28,151
28,163
381,806
410,683
409,957
7,700
-31,510
-4,900
5,580
12,600
31,510
12,600
39,639
-113
449,913
-46,190
12,980
58,950
1,277
-101,374
433,323
-9,812
19,559
49,760
1,173,169
-17,371
4,536,160
132,165
89,284
312,515
10,965,466
589,886
4,971,251
85,975
103,494
364,835
10,927,103
488,624
4,986,073
85,975
102,264
371,465
10,966,742
488,511
39,527
-100,098
1,155,798
11,555,351
11,415,726
11,455,253
42
175
34
599
1,340
641
1,515
641
1,515
774
-55
2,943
30,548
1,833
41,469
2,375
43,638
1,550
44,412
1,495
-45
15
414
10
1,485
45
2,593
105
2,981
60
3,007
-2,086,212
-4,443,012
-1,645,020
34,854,827
555,000
4,241,910
10,923,740
50,000
2,232,078
1,186
14,822
-1,230
6,630
184,578
110,391
-2*2HJ337
203,702
783,566
-35,742
30,689
200
1,788,614
550
988,133
999
7,700
32,498,027
555,000
4,167,723
11,503,604
50,000
3,990,003
1,536
30,411,815
555,000
4,352,301
11,707,306
50,000
4,020,692
1,736
TABLE IV-SCHEDULE D-INVESTMENTS OF GOVERNMENT ACCOUNTS
25
IN FEDERAL SECURITIES (In thousands)-Continued
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
Classification
Fiscal Year to Date
Beginning of
This Month
This Year
Trust Fnnds—ComUnned
Department of the Interior.
Department of Labor:
Unemployment trust fond
Otter.
Department of State:
Foreign service retirement and disability fund.
Otter.
Department of Transportation:
Airport and airway trust fond
Highway trust fond
Otter.
Department of the Treasury ....
General Services Administration
Veterans Administration:
Government life insurance fond
National service life insurance fond:
Public debt securities
Agency securities
Veterans special life insurance fond .
General Post Fond National H o m e s ..
Independent Agencies:
Civil Service Commission:
Civil service retirement and disability fond:
Public debt securities
Agency securities
Employees health benefits fond
Employees life insurance fond
Retired employees health benefits fond
Federal Deposit Insurance Corporation
Japan-United States Friendship Commission
Harry S. Truman Memorial Scholarship Foundation
Railroad Retirement Board:
Public
debt securities
Total public
debt securities.
Agency
securities
Total agency
securities
Total trust funds
OS-budget Federal agencies:
Federal Financing Bank
Postal Service:
Public debt securities
Rural electrification and telephone revolving fond
Pension Benefit Guaranty Corporation
Total public debt securities
Total Off-budget Federal agencies.
Grand TotaL
Prior Year
This Year
This Month
$3,440
$5,531
-*7,675
$6,595
$8,686
-669,131
-75,595
3,530,142
-46
1,073,062
-665
5,987,166
4,707
10,186,438
80,256
78,498
200
103,916
500
92,340
265
267,948
480
293,366
780
-89,741
-73,109
440,556
1,499,395
10
4,450
533,780
1,126,811
3,245,981
10,078,687
10
52,870
3,776,278
11,651,191
20
63,920
4,215
-6,600
4,410
-125
260
-155
3,830
-3,954
-30,230
-34,207
525,872
-16,865
367,752
-100,000
55,011
890
294,097
-75,000
46,124
332
7,250,289
235,000
528,389
1,475
7,634,906
135,000
582,300
2,365
6,663,472
-100,000
89,154
486,686
-5,600
569,310
-454
1,816
-104,220
6,931,474
*"*i*i66
7,515,026
4,919,512
11,921,119
-200,000
"102,248
397,855
-4,052
855,375
240
21,115
-121,013
-50,000
8,442,704
-125,000
4,919,512
11,721,119
8,317,704
77,720
25,105
20,881
-177
398
-201,215
49,221,368
375,000
424,162
2,529,802
13,229
7,462,458
19,125
31,163
3,182,108
48,369,814
275,000
435,596
2,991,383
7,629
8,010,887
18,848
32,582
3,279,103
143,139,874
1,215,000
150,141,480
1,015,000
144,354,874
151,156,480
8,755
78,690
-85,920
-701,500
-694,145
449,900
-55
31,935
560,470
-160,000
-335
15,704
-230,551
1,271,200
4,066
71,465
1,384,936
2,422,600
4,011
104,800
2,639,551
-694,145
569,470
-230,551
1,384,936
2,639,551
4,264,894 j 12,181,491
9,242,952
157,295,161
165,211,758
'""-MOO
Hole: Investments are in public debt securities unless
otherwise noted.
MEMORANDUM
hwestments in securities of privately owned Governmentynsored enterprises:
Milk market orders assessment fund
-200
TotaL
-200
38,205
108,140
TABLE V-COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND OUTLAYS
BY MONTHS OF CURRENT FISCAL YEAR
26
(Figures are rounded in millions of dollars and m a y not add to totals)
Classification
Oct.
Nov.
Dec.
Jan.
March
Feb.
April
May
June
July
Aug.
Sept.
Comparable
Period ,
Prior ,
F. Y.
Fiscal
Year
To
Date
-
N E T RECEIPTS
$13,278 $13,173
920
1,445
$13,941
9,212
$20,217 $10,747
1,013
1,991
$5,612 $19,036 $14,423
8,850
1,183
8,023
$20,301 $14,590 $14,784 $20,883 $180,988
14,655
1,785
1,122
9,753 59,952
Social insurance taxes and
contributions:
Employment taxes and
Unemployment insurance ....
Contributions for other
insurance and retirement...
5,542
541
8,750
1,216
6,037
123
7,157
403
10,745
1,192
7,938
144
9,987
1,393
11,084
4,499
8,648
169
7,960
1,094
12,191
2,912
466
1,529
410
406
512
438
1,615
439
459
587
486
1,463
482
501
549
437
1,492
447
494
563
490
1,259
434
441
602
478
1,395
462
603
577
448
1,368
296
545
622
508
1,670
512
584
629
470
1,651
436
653
674
464
1,707
407
596
590
484
1,591
515
681
760
24,130 27,598
32,794
33,201 26,922 25,233
42,546
35,091
47,657
29,194 35,040 42,591 401,997
21,018 25,698
29,471
29,977 24,343 25,155 40,017
43.114
24,967 29,683 36,647
7,854 103,893
162
13,850
499
1,637
445
610
747
5,668
18,376
5,285
6,573
7,413
J
i
•157.6K
54,8P
ffl,ai«
11,3?
5,1?
17,5$
7,8*
% 5,1?
8,5J
—j
Total--receipts this
Total—receipts prior year ..
27,672
357,76'
88
1
91
45
69
29
87
29
80
51
89
27
80
37
114
46
78
29
94
32
94
52
86
57
1,049
435
il
I
9T>
39?
9
4
4
7
6
4
7
8
12
2
5
6
75
7?
NET OUTLAYS
Executive Office of the
i
Funds Appropriated to the
President:
International security
i
]
114
212
183
-105
-104
118
704
-105
780
-221
705
-263
2,020
39t
80
25
175
40
123
44
53
43
153
33
245
175
92
-7
90
8
99
167
174
151
105
-1
134
254
1,523
932
1,63(
994
779
277
1,213
1,627
329
1,715
1,303
341
1,442
1,248
380
123
816
358
144
1,734
453
99
682
445
-46
1,275
512
-21
840
604
109
1,227
502
303
898
544
390
1,476
507
6,465
13,904
5,252
4,6711
12,061
2,601
2,120
2,556
2,302
1,016
-2
2,350
2,745
2,464
1,155
6
2,030
2,600
2,311
1,261
4
2,143
2,581
2,186
1,205
9
2,169
2,645
2,270
1,134
8
1,909
3,237
2,705
1,307
9
2,035
2,697
2,428
1,147
8
2,518
2,888
2,288
1,167
9
1,915
2,980
2,692
1,259
9
2,208
2,700
2,141
1,230
5
2,452
3,027
2,831
1,233
9
2,170
2,867
2,599
1,167
8
26,020
33,524
29,217
14,282
81
23,919
30,775
27,915
12,946
93
7,992
8,721
8,206
8,123
8,226
9,168
8,315
8,870
8,854
8,284
9,552
8,811
103,124
95,650
226
396
230
479
226
499
159
415
144
513
169
386
166
439
201
619
178
507
250
545
262
740
343
892
2,553
6,430
2.28C
5,252
387
390
402
434
446
471
453
453
427
455
494
441
5,252
2,233
878
879
843
883
958
879
760
910
902
969
1,008
811
10,680
18,777
1,388
1,419
1,618
1,317
1,268
1,611
1,469
1,573
1,608
1,437
1,707
1,445
17,862
15,201
518
55
486
1,130
574
913
522
383
694
580
645
1,307
601
584
652
430
667
472
601
502
736
502
659
437
7,358
7,293
6,34!
6(
535
535
520
643
500
578
558
695
578
533
396
570
6,639
6,386
6,555
6,448
6,560
6,524
6,610
6,563
6,563
8,112
6,917
6,970
7,000
81,206
73,471
1,012
526
1,089
1,045
549
312
1,049
1,282
-470
1,023
520
840
1,027
530
849
1,045
1,042
198
1,016
40
712
1,042
551
956
1,070
1,065
-759
1,111
58
539
1,116
566
922
1,097
991
951
12,656
7,721
6,143
11,58
13,131
6,62
International development
Other
Department of Agriculture:
Foreign assistance, special
export programs and
Commodity Credit
Other
Department of Defense:
Military:
Department of the A r m y . . .
Department of the Navy....
Department of Air Force ..
Civil
Department of Health,
Education, and Welfare:
H u m a n Development
Health Care Financing
Administration:
Grants to states for
Federal hospital insurance
Federal supplementary
medical insurance trust
Social Security Adm.:
Assis. Pmts. Program ...
Federal old-age and
survivors insurance trust
Federal disability insurOther
Other
454
27
TABLE V-COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND OUTLAYS
BY MONTHS OF CURRENT FISCAL YEAR (In millions)--Continued
Classification
Oct.
Nov.
Dec.
Jan.
Feb.
March
April
May
June
July
Aug.
Sept.
Fiscal
Year
To
Date
Comparable
Period
Prior
F. Y.
NET OUTLAYS—Continued
Department of Housing
and Urban D e v e l o p m e n t
Department of the Interior
Department of Justice
Department of Labor:
Unemployment trust fund
Other
Department of State
Department of Transportation:
Highway trust fund
Other
Department of the T r e a s u r y :
Interest on the public debt ...
Interest on refunds, etc
Antirecession financial
assistance fund
General revenue sharing
Other
Environmental Protection
Agency
General Services
Administration
National Aeronautics and
Space Administration
Veterans Administration:
Compensation and pensions ..
National service life
Government service life
Other
•.
Independent Agencies:
Civil Service C o m m i s s i o n ...
Postal Service
Small Business
Administration
Tennessee Valley Authority..
Other ind. agencies
Undistributed offsetting
receipts:
Federal employer contributions to retirement fund
Interest credited to certain
accounts
Total outlays--this y e a r .
Rents and Royalties o n Outer
Continental
Shelf L a nyear
ds
Total outlays—prior
Surplus (+) or deficit (-) this
year
$582
319
205
$689
373
208
$767
281
193
$661
258
195
$430
233
189
$465
208
191
$526
222
213
$557
378
230
$940
286
202
$858
202
194
$742
248
190
$543
670
186
$7,761
3,678
2,397
$5,838
3,152
2,350
904
672
148
853
670
40
1,010
835
111
1,184
854
90
1,113
950
136
1,260
1,087
102
936
946
159
880
1,180
76
777
1,112
100
731
1,033
129
810
1,378
86
712
1,016
74
11,169
11,733
1,252
14,103
8,271
1,076
611
697
640
522
510
613
403
742
288
509
357
625
309
718
443
636
560
641
516
650
597
533
668
663
5,903
7,549
6,020
6,494
3,083
26
3,320
30
6,794 3,282
31
21
3,450
25
3,403
21
3,493
24
3,670
26
7,166
32
3,538
22
3,868
32
3,628
27
48,695
317
41,900
318
424
1,708
146
2
(**)
306
1,705
323
(**)
(**)
189
1,705
-275
(**) (**)
1,329
6,823
-855
1,699
6,760
-216
306
408
1,700
-329
(**)
(**)
-480
370
314
343
261
341
286
344
353
326
396
431
4,071
4,365
-140
111
105
-226
86
81
-188
110
104
-111
92
92
117
-31
310
339
320
315
342
370
316
361
320
324
320
344
3,980
3,944
752
787
-7
3
814
1,534
15
6
1,049
137
23
5
519
797
19
5
693
1,541
24
6
1,106
54
796
28
8
919
1,529
13
4
885
54
803
31
6
688
790
11
4
635
9,573
191
63
9,136
9,000
220
65
8,735
874
931
905
864
892
968
872
967
966
905
939
83
10,963
1,778
9,620
2,267
(**)
4
818
880
1,696
-292
55
135
1,221
439
140
493
55
115
682
43
54
800
-350
-328
-381
-343
-111
-214
-3,584
-63
-479
-98
38,793
36,866
33,998
33,085
14,663
-9,269
Surplus <+) or deficit (-) prior year. -12,980
See footnotes on page 3.
(**)
-7,383
4
249
316
16
5
482
91
-360
17
7
529
-173
-71
780
62
602
-37
129
906
339
184
535
-46
154
818
37
140
772
459
134
480
546
163
776
2,766
1,412
8,160
700
1,100
6,197
-385
-382
-346
-415
-373
-351
-362
-847
-4,863
-4,548
-71
-202
-60
-115
-152
-3,714
-12
-270
-145
-8,651
-8,131
-61
-90
-138
-242
-717
-138
-39
-96
-97
-2,259
-2,374
37,647 36,918
33,914 40,358 35,927
36,800
38,602
36,426 39,572 38,935 450,758
31,890
32,640
30,880
34,646
35,548
33.714
32,920
33,645
34,730
35,106
-4,852
-3,717
-6,992 -15,125
+6,618
-1,709
+9,055
-7,232
-4,532
+3,655
-6,042
+10,190
-8,678
-5,047
+1,541
-2,418 -2,663
-6.537
-9,491
+4,469
402,802
-48,761
•45,040
TABLE V--COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND OUTLAYS
BY MONTHS OF CURRENT FISCAL YEAR
26
(Figures are rounded in millions of dollars and m a y not add to totals)
Classification
March April
Feb.
Jan.
Dec.
Nov.
Oct.
June
May
Fiscal
Sept. Year
To
Date
Aug.
July
Comparable
Period
Prior
F. Y. 1
N E T RECEIPTS
$19,036 $14,423 $20,301 $14,590 $14,784 $20,883 $180,988
$13,278 $13,173 $13,941 $20,217 $10,747 $5,612
1,785
1,122 9,753 59,952
14,655
1,183
1,991 1,013 8,023 8,850
9,212
920
1,445
Social insurance taxes and
contributions:
Employment taxes and
Unemployment insurance ....
Contributions for other
insurance and retirement...
Estate and gift taxes
$157,626
54,892:
I
5,542
541
8,750
1,216
6,037
123
7,157 10,745
403 1,192
7,938
144
9,987
1,393
11,084
4,499
8,648
169
7,960 12,191
1,094 2,912
7,854 103,893
162 13,850
466
1,529
410
406
512
438
1,615
439
459
587
486
1,463
482
501
549
437
1,492
447
494
563
490
1,259
434
441
602
478
1,395
462
603
577
448
1,368
296
545
622
508
1,670
512
584
629
470
1,651
436
653
674
464
1,707
407
596
590
499
1,637
445
610
747
24,130 27,598
32,794
33,201 26,922 25,233 42,546
35,091
47,657
29,194 35,040 42,591 401,997
25,698
29,471
29,977
24,343
25,155
40,017
27,672
43.114
24,967
29,683
36,647
88
1
91
45
69
29
87
29
80
51
89
27
80
37
114
46
78
29
94
32
94
52
86
57
1,049
435
9
4
4
7
6
4
7
8
12
2
5
6
75
114
212
183
-105
-104
118
704
-105
780
-221
705
-263
2,020
80
25
175
40
123
44
53
43
153
33
245
175
92
-7
90
8
99
167
174
151
105
-1
134
254
1,523
932
1,636
454
994
779
277
1,213
1,627
329
1,715
1,303
341
1,442
1,248
380
123
816
358
144
1,734
453
99
682
445
-46
1,275
512
-21
840
604
109
1,227
502
303
898
544
390
1,476
507
6,465
13,904
5,252
4,670
12,068
2,606
2,120
2,556
2,302
1,016
-2
7,992
2,350
2,745
2,464
1,155
6
8,721
2,030
2,600
2,311
1,261
4
8,206
2,143
2,581
2,186
1,205
9
8,123
2,169
2,645
2,270
1,134
8
8,226
1,909
3,237
2,705
1,307
9
9,168
2,035
2,697
2,428
1,147
8
8,315
2,518
2,888
2,288
1,167
9
8,870
1,915
2,980
2,692
1,259
9
8,854
2,208
2,700
2,141
1,230
5
8,284
2,452
3,027
2,831
1,233
9
9,552
2,170 26,020
2,867 33,524
2,599 29,217
1,167 14,282
81
8
8,811 103,124
23,919
30,775
27,915
12,948
226
396
230
479
226
499
159
415
144
513
169
386
166
439
201
619
178
507
250
545
262
740
343
892
2,553
6,430
2,280
5,252
387
390
402
434
446
471
453
453
427
455
494
441
5,252
2,233
878
879
843
883
958
879
760
910
902
969
1,008
811
10,680
18,777
1,388
1,419
1,618
1,317
1,268
1,611
1,469
1,573
1,608
1,437
1,707
1,445
17,862
15,207
6,345
Total—receipts this
Total—receipts prior year .. 21,018
484
1,591
515
681
760
5,668
18,376
5,285
6,573
7,413
92,210:
11,312:
1
5,167^
17,548:
7,327
5,150
6,531
357,762
NET OUTLAYS
Legislative Branch
Executive Office of the
Funds Appropriated to the
President:
International security
International development
Department of Agriculture:
Foreign assistance, special
export programs and
Commodity Credit
Department of Commerce
Department of Defense
Military:
Department of the Army...
Department of the Navy
Department of Air Force ..
Defense
agencies
Civil defense
Total Military
Civil
Department of Energy....
Department of Health,
Education, and Welfare:
Human Development
Services
Health
Care Financing
Administration:
Grants to states for
Federal hospital insurance
Federal supplementary
medical insurance trust
Other
Social Security Adm.:
Assis. Pmts. Program ...
Federal old-age and
survivors insurance trust
Federal disability insurance trust fund ...
Other
Other
518
55
486
1,130
574
913
522
383
694
580
645
1,307
601
584
652
430
535
667
472
736
502
659
437
7,358
7,293
535
601
502
520
643
500
578
558
695
578
533
396
570
6,639
976
392
73
396
93
95,650
66
6,386
6,555
6,448
6,560
6,524
6,610
6,563
6,563
8,112
6,917
6,970
7,000
81,206
73,478
1,012
526
1,089
1,045
549
312
1,049
1,282
-470
1,023
520
840
1,027
530
849
1,045
1,042
198
1,016
40
712
1,042
551
956
1,070
1,065
-759
1,111
58
539
1,116
566
922
1,097
991
951
12,656
7,721
6,143
13,139
6,626'
TABLE V-COMPARATIVE STATEMENT OF BUDGET RECEIPTS AND OUTLAYS
27
BY MONTHS OF CURRENT FISCAL YEAR (In millions)-Continued
Classification
Oct.
Nov.
Dec.
Jan.
Feb.
Fiscal
Year
To
Date
Comparable
Period
Prior
F. Y.
March
April
$465
208
191
$526
222
213
$557
378
230
$940
286
202
$858
202
194
$742
248
190
$543
670
186
$7,761
3,678
2,397
$5,838
3,152
2,350
1,113 1,260 936
950 1,087
946
136
102
159
288
357
309
509
625
718
880
1,180
76
777
1,112
100
731
1,033
129
810
1,378
712
1,016
74
443
636
560
641
516
650
597
533
668
663
11,169
11,733
1,252
5,903
7,549
14,103
8,271
1,076
6,020
6,494
3,450 3,403
25
21
3,493
24
3,670
26
7,166
32
3,538
22
3,868 3,628 48,695
32
27
317
41,900
318
(**)
1,329
6,823
-855
May
June
July
Aug.
Sept.
N E T OUTLAYS-Contlnued
Department of Housing
and Urban Development
Department of the Interior
Department of Justice
Department of Labor:
Unemployment trust fund
Other
Department of State
Department of Transportation:
Highway trust fund
Other
Department of the Treasury:
Interest on the public debt ...
Interest on refunds, etc
Antirecession financial
assistance fund
General revenue sharing
Other
Environmental Protection
Agency
General Services
Administration
National Aeronautics and
Space Administration
Veterans Administration:
Compensation and pensions ..
National service life
Government service life
Other
•.
Independent Agencies:
Civil Service Commission ...
Postal Service
Small Business
Administration
Tennessee Valley Authority ..
Other ind. agencies
Undistributed offsetting
receipts:
Federal employer contributions to retirement fund ....
Interest credited to certain
accounts
Rents and Royalties on Outer
Continental Shelf Lands
Total outlays—this year...
878
208
904
672
148
853
670
40
1,010 1,184
835
854
111
90
611
697
640
522
510
613
3,083
26
3,320
30
6,794 3,282
31
21
424
1,708
146
2
(**)
-292
(**)
-480
408
1,700
-329
306
370
314
-140
111
310
$767
281
193
$661
258
195
403
742
233
189
(**)
316
306
1,705
323
(**)
91
(**)
343
4
249
261
341
286
344
353
189
1,705
-275
326
105
-226
86
81
-188
110
104
339
320
315
342
370
316
361
752
(**)
4
818
880
1,696
787
-7
3
814
874
1,534 137
15
23
6
5
1,049
519
931
905
797
19
5
693
864
1,541 54
24
16
6
5
1,106
482
892
968
796
28
8
919
872
55
135
1,221
439
140
493
55
115
682
43
54
800
-350
-328
-381
-343
-385
-111
-214 -3,584
-71
-202
-479
-61
-90
-63
38,793
36,866
37,647 36,918
33,998
33,085
31.890
-14,663
-9,269
-4,852 -3,717
-12.980
-7,383
32,640
780
62
602
396
431
4,071
1,699
6,760
-216
4,365
-111
92
92
117
-31
320
324
320
344
3,980
3,944
1,529
13
4
885
967
54
17
7
529
966
803
31
6
688
905
790
11
4
635
939
83
9,573
191
63
9,136
10,963
1,778
9,000
220
65
8,735
9,620
2,267
546
163
776
2,766
1,412
8,160
700
1,100
6,197
-360
(**) (**)
-173
-71
-37
129
906
339
184
535
-46
154
818
37
140
772
459
134
480
-382
-346
-415
-373
-351
-362
-847
-4,863
-4,548
-60
-115
-152 -3,714
-12
-270
-145 -8,651
-8,131
-138
-242
-717 -138
-39
-96
-97
-2,374
-2,259
33,914 40,358 35,927
36,800
38,602
36,426 39,572 38,935 450,758
35,548
33.714
32.920
33,645
34.730
-6,992 -15,125 +6,618
-1,709
+9,055
-7,232
-4,532 +3,655 -48,761
-6.042
+10,190
-8,678
30,880
34,646
35.106
402,802
=)
Total outlays—prior year
Surplus (+) or deficit (-) this
year
Surplus (+) or deficit (-) prior year
See footnotes on page 3.
$582
319
205
-2,418
-2,663
-6,537
-9,491
+4,469
-5.047
+1,541
-45,040
28
TABLE VI-TRUST FUND IMPACT O N BUDGET RESULTS A N D INVESTMENT HOLDINGS (In millions)
Securities held as Investment
Current Fiscal Year
Fiscal Year to Date
Current Month
Classification
Beginning of
Receipts
Outlays
Excess
Receipts Outlays
Excess
This Year This Month
Trust receipts, outlays, and investments held:
Federal old-age and survivors
insurance
$4,757
1,266
1,662
$6,891
1,080
1,426
-$2,134
187
236
$73,141
12,250
16,680
$77,535
12,122
15,999
128
681
$35,410
4,242
10,974
$33,053
4,168
11,554
$30,967
4,352
11,757
217
282
208
-7,375
9
7,657
2,431
3,237
742
-3,535
1,689
6,772
2,232
49,864
3,990
48,938
4,021
56,532
125
-103
-21
218
103
21
-93
3,435
8,011
3,776
3,537
8,032
3,687
-63
622
-178
-320
-13
-110
10,079
11,651
11,578
1,822
13,850
565
567
430
32
1,520
341
-97
4,010
296
154
2,967
7,462
3,246
658
-622
347
482
13
131
-565
-567
896
6,823
5,384
-341
1,919
9,839
-296
-23
3,182
5,987
8,540
170
3,279
10,186
8,852
262
3,078
9,517
8,832
186
3,334
5,922
138,627
125,933
12,693
144,355
151,156
Federal supplementary medical
Federal employees life and health
benefits
Federal Deposit Insurance Corp
Airport and airway
General Revenue Sharing
Military assistance advances
Railroad retirement
Unemployment
Veterans life insurance
All other trust
Trust fund receipts and outlays
on the basis of Table HI and
investments held from
Table IV-D
Interfund receipts offset against
trust fund outlays
595
169
163
21
9,257
1,326
6,855
6,904
131
156,076
',gT^^pr
9,219
9,219
18,476
12,553
33,334
35,601
14
14
33,348
35,615
Total interfund receipts and outlays...
-9,233
Net budget receipts and outlays
42,591
-0-
32,190
32,190
-0-
5,922
170,817
158,123
12,693
-2,267
270,226
331,680
-61,454
169
169
-2,267
270,395
331,849
-61,454
-9,233
-0-
-39,214
-39,214
-0-
38,935
3,655
401,997
450,758
Total trust fund receipts and
Federal fund receipts and outlays on
the basis of Table m
Interfund receipts offset against
Federal fund outlays
Close of
This Month
-0-
• *i
-0-
Total Federal fund receipts and
-48,761 j
Note: Interfund receipts and outlays are transactions between Federal funds and trust funds, such as, Federal payments and contributions,
Federal employer contributions, and interest and profits on investments in Federal securities. They have no net effect on overall budget
receipts and outlays since the receipt side of such transactions is offset against budget outlays. In this table, interfund receipts are
shown as an adjustment to arrive at total receipts and outlays of trust funds and Federal funds respectively. Included in total interfund
receipts and outlays are $6,855 million in Federal funds transferred to trust funds for general revenue sharing
29
TABLE VII-SUMMARY OF RECEIPTS BY SOURCE AND OUTLAYS BY FUNCTION (In thousands)
Budget Receipts and Outlays
Classification
This Month
Fiscal Year
T o Date
Comparable Period
Prior Fiscal Year
N E T RECEIPTS
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
,
Unemployment insurance
Contributions for other insurance and retirement .,
Excise taxes
Estate and gift taxes
iCustoms duties
t Miscellaneous receipts
Total
NET OUTLAYS
National defense
International affairs
General science, space, and technology
,
Energy
•
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
,
Education, training, employment and social services.
Health
Income security
Veterans benefits and services
,
Administration of justice
<
General government
,
General purpose fiscal assistance
,
Interest
Undistributed offsetting receipts
Total
883,495
752,978
$180,987,774
59,951,866
$157,626,064
54,892,364
853,592
162,326
498,880
637,142
445,377
609,553
747,390
42,590,733
103,893,049
13,849,598
5,667,720
18,376,184
5,285,402
6,572,718
7,413,068
401,997,377
92,209,847
11,311,506
5,166,929
17,547,715
7,326,877
5,150,151
6,530,760
357,762,213
9,006,276
386,810
403,393
933,082
1,390,502
282,574
466,685
1,571,611
1,434,506
2,263,216
3,595,397
12,755,611
1,442,206
323,828
335,415
127,367
38,935,253
3,306,171
-1,089,396
105,191,764
6,083,384
4,721,239
6,045,171
11,022,467
7,617,820
3,340,366
15,461,498
11,254,854
25,888,708
44,529,221
145,639,611
18,987,495
3,786,230
3,543,845
9,376,959
450,757,999
44,039,594
-15,772,226
97,277,505
5,149,536
4,677,224
4,659,088
9,981,798
5,354,326
-50,255
14,632,994
6,564,690
20,213,096
38,838,386
138,050,451
18,044,762
3,589,073
3,330,794
9,450,107
402,802,386
38,092,026
-15,053,215
For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington, D. C. 20402
Subscription price $62.20 per year (domestic), $15. 55 per year additional (foreign mailing), includes all issues of Daily Treasury Statement,
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ftpanmentoftheTREASURY
TELEPHONE 566-2041
WASHINGTON, D.C. 20220
FOR IMMEDIATE RELEASE
October 10, 1978
Press Contact:
Non-Press Contact:
Robert E. Nipp
(202) 566-5328
(202) 566-8235
566-8651
566-5286
TREASURY PUBLISHES THIRD AND
FOURTH QUARTER TRIGGER PRICE MANUAL
The Treasury Department published a Third and Fourth Quarter
Trigger Price Manual which consolidates in one publication all
trigger prices and adjustments that have been announced to date.
Because of the number of pages involved, the entire manual
is not being published in the Federal Register but will automatically be distributed by the Department of the Treasury to
all persons on the Department's steel mailing list.
£-joi ( ^
DEPARTMENT OF THE TREASURY
OFFICE OF THE SECRETARY
NOTICE
Publication of Third and Fourth Quarter TPM Manual
The Treasury Department hereby announces the publication
of a Trigger Price Manual which incorporates in one volume all
trigger prices announced to date. The Manual is being used
during the Third and Fourth Quarters of 1978 by U.S. Customs
officials at ports of entry. The Manual is being distributed
automatically by the Department of the Treasury to all persons
on the Department's steel mailing list.
Since January 3, 1978, when trigger prices were first
announced on basic steel mill products, numerous additions,
adjustments and corrections have been made. Among other changes,
trigger price levels have been adjusted to reflect changes in
Japanese costs of production and dollar-yen exchange rates.
This handbook consolidates all previously published corrections,
adjustments and changes that have been generated by, or have
come to the attention of, the Treasury Department and Customs
Service Headquarters officials involved in administering the
Trigger Price Mechanism.
As previously announced, the applicable trigger price for
a given imported steel mill product consists of the base trigger
price for that product plus appropriate extras, as well as
ocean freight, insurance, interest and handling costs. Each
of these components is contained in this handbook.
Ocean freight and related costs are differentiated for
each of the four major importing regions — the Atlantic Coast,
Gulf Coast, West Coast, and Great Lakes.
The base prices herein are stated in U.S. dollars per
metric ton and consist of the Japanese cost of production (including overhead and profit) estimated from Japanese-supplied
information and other available evidence. The "extras" lists
set forth the prices associated with the additional costs for
different specifications, such as width, thickness, chemistry,
and surface preparation.
-2-
Three types of circumstances commonly arise with respect
to extras, and will be treated as follows:
(1) If a product embodies extras which are not listed in
the handbook, the product does not become exempt from trigger
price scrutiny. Instead, in that circumstance the base trigger
price plus whatever applicable extras are listed in the handbook
will apply.
(2) If a particular product measurement specification
falls between two measurement specifications for which an extra
is listed, the higher dollar value extra will be utilized, unless otherwise noted.
(3) If a measurement specification falls above or below
the range of measurement specifications for which extras are
listed, the product is usually not intended to be covered by
trigger prices because it is not commonly made in or imported
into the United States.
The trigger prices are published in the sequence of the 32
categories of basic steel mill products defined by the American
Iron and Steel Institute. The categories for which there is
trigger price coverage may be found in the Table of Contents.
TSUSA numbers and duty rates are listed for the most commonly
imported items in each of these categories. It should be noted,
however, that these TSUSA numbers do not include all the products
covered by trigger prices when the various extras are applied.
In addition to consolidating all published trigger prices
in one publication, this Manual also makes changes to correct
misprints in previous publications or to revise individual
trigger prices based on most recent cost information. Below are
listed certain changes of significance:
AISI
Cat.
Product Description
Description of Action
2
Spheroidized Annealed
Wire Rod, 4037, 9254,
52100
Thermal Treatment extras
changed to read:
Regular Anneal Only
-$21/MT
No Heat Treatment
-$63/MT
6
Heavy Steel Rails
Extras changed to read:
Heat Treating
End Hardening
$70/MT
$ 3/Rail
-3Quantity Extras under 200
thru 100 MT $4.00 under 100
thru 50 MT $5.00 (Previous
publications gave these as
a percentage.)
11
Hot Rolled AISI 8620 Bar
Thermal Treatment extras changed
to read:
Spheroidized Anneal
$ 63/MT
Quench and Temper
$116/MT
14
Continuous Buttweld Pipe
Trigger Price for extra strong
wall thickness revised to
reflect most recent Japanese
cost data.
Pipe and Tube Products
Freight Rates Table expanded
to include sizes up to 48"
15
Seamless Carbon Steel
Pressure Tubing
Added Random Length Deductions
16
Cold Finished Spheroidized Annealed Wire 4037,
9254
Thermal Treatment Extras changed
to read:
Regular Anneal Only
-$21/MT
No Heat Treatment
-$63/MT
23
Electrolytic Tin Plate
32
Tin-Free Steel
Published revised extras tables
for Fourth Quarter extras. The
13.77% increase for Fourth
Quarter double-reduced extra
applies only to double-reduced
base weight and coating extras.
The 2.39% Fourth Quarter increase
for cut length, width and quality
applies to both single-reduced
and double-reduced ETP.
Published revised extras tables
for Fourth Quarter extras. The
14.02% increase for Fourth
Quarter double-reduced extra
applies only to double-reduced
base weight extra. The 1.15%
Fourth Quarter increase for
cut length, width and quality
applies to both single-reduced
and double-reduced TFS.
14 & 15
-4All the adjustments to trigger prices being announced here
will be used by the Customs Service to collect information at
the time of entry on all shipments of the products covered
which are exported after the date of publication of this notice
Due to the number of pages involved, only the Table of
Contents and the substantive changes are published as a part
of this Notice.
Robert H. Mundheim
General Counsel
Dated:
Third and Fourth Quarter
Trigger Price Handbook
Table of Contents
Category
Title
Pages
2
Wire Rods
2-1 to 2-16
3
Structural Shapes
3-1 to 3-12
4
Sheet Piling
4-1 to 4-2
Plates
5-1 to 5-11
6
Rail and Track Accessories
6-1 to 6-5
8
Concrete Reinforcing Bars
8-1 to 8-2
9
Bars under 3"
9-1 to 9-2
•5
10
Carbon Bars
10-1 to 10-8
11
Alloy Bars
11-1 to 11-7
12
Cold Finished Bars
12-1 to 12-4
14
Welded Pipe and Tubing
14-1 to 14-23
15
Other Pipe and Tubing
15-1 to 15-53
16
Round and Shaped Wire
16-1 to 16-19
20
Wire Nails
20-1 to 20-19
21
Barbed Wire
21-1
22
Black Plate
22-1 to 22-2
23
Tin Plate
23-1 to 23-14
25
Hot Rolled Sheets
25-1 to 25-12
26
Cold Rolled and Electrical Steel Sheets
26-1 to 26-9
27
Coated Sheets (including galvanized)
27-1 to 27-7
29
Hot Rolled Strip
29-1 to 29-4
32
Tin-Free Steel
32-1 to 32-11
2-1
Rev. Angnst 1Q7ft
WIRE RODS-COMMERCIAL QUALITY-AISI 1008 5.5 mm
Category AISI
2
Tariff Schedule Number (s) 608.7100-0.250/lb. 608.7500-0.3750/1
3rd Quarter
$280
Base Price per Metric Ton
Charges to CIF
Oce
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Freight
$25
26
31
43
4th Quarter
$294
Handling
$ 7
5
4
4
Insurance 1% of base price + extras + ocean freight
Extras 3rd Quarter 4th Quarter
Heat Treatment
Regular Anneal $42/M.T. $44/M.T
Spheroidized Anneal $63/M.T. 66/M.T
Size and Grade Extra
Sizes 7/32" thru 35/64 NIL NIL
Grade (AISI Number)
1005-1006 $5 $5
1008-1020 NIL NIL
Killed $13 $14
Interest
$ 6
7
8
10
2-2
Rev. August 1978
WIRE RODS-WELDING QUALITY-AISI 1008
Category AISI
2
Tariff Schedule Number (s) 608.7100-0.250/lb. 608.7500-0.3750/lb
3rd Quarter
Base Price per Metric Ton
4 th Quarter
$281
Charges to CIF
n Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$25
26
31
43
$295
Handling
Interst
$ 7
5
4
4
$ 6
7
8
10
Insurance 1% of base price + extras + ocean freight
Extras
Heat Treatment
3rd Quarter
4th Quarter
Regular Anneal-$42/M.T.
$44/M.T
Spheroidized Anneal-$63/M.T.
$66/M.T
Size Extra NIL
NIL
Grade Extra NIL
NIL
2-3
WIRE RODS-HIGH CARBON-AISI
Category AISI
Rev. August 1978
1065 5.5 mm
2
Tariff Schedule Number (s) 608.7100-0.250/lb. 608.7500-0.3750/lb
3rd Quarter 4th Quarter
Base Price per Metric Ton $326 $342
Charges to CIF Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$25
26
31
43
Handli ng
Interest
$ 7
5
4
4
$ 7
9
9
11
Insurance 1% of base price + extras + Ocean freight
Extras
Heat Treatment
3rd Quarter
Regular Anneal-$42/M.T. $44/M.T.
Spheroidized Anneal-$63/M.T. 66/M.T.
4th Quarter
2-4
Rev. August 1978
WIRE RODS - HIGH CARBON QUALITY
Extras Per Metric Ton
Sizes
7/32"
Thru 35/64"
NIL
Grade
AISI NUMBER
1044, 1059, 1064,
1069, 1074, 1075,
1078, 1086. 1095,
1029,
1037,
1040,
1045,
1049,
1055,
1065,
1084,
1030,
1038,
1042,
1046,
1050,
1060,
1070,
1085,
3rd Quarter
Extras
Minus
$ 3
4th Quarter
Extras
Minus $ 3
1035,
1039,
1043,
1053,
1061,
1080,
1090,
1048, 1051, 1066,
Base
Base
$ 3
$ 3
1027, 1036, 1041,
1047, 1052.
$ 9
$ 9
Tire Cord Quality
$32
$34
1072,
2-5
Rev. August 1978
WIRE RODS-COLD HEADING QUALITY-AISI 1038 12.7 mm
Category AISI
2
Tariff Schedule Number (s) 608.7100-0.250/lb. 608.7500.0.3750/lb
3rd Quarter
4th Quarter
Base Price per Metric Ton $337
$353
Charges to CIF
n Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$25
26
31
43
Handling
$ 7
5
4
4
Interest
$ 7
9
9
11
Insurance 1% of base price + extras + ocean freight
Extras
3rd Quarter
4th Quarter
Heat Treatment
Regular Anneal $42/M.T.
$44/M.T.
Spheroidized Anneal $63/M.T.
$66/M.T.
Note: All extras on p. 2-6 are to be increased 4.86% for all
wire rods exported to the United States on or after
October 1, 1978.
Rev. August 1978
WIRE RODS - COLD HEADING QUALITY
Extra (Sizes/Grade) Per Metric Ton
GRADE
(AISI NUMBER)
1005, 1006, 1008
1010, 1011, 1012
1013
(Rimmed Steel)
1015, 1016, 1017
1018, 1919, 1020
1021, 1022, 1023,
1025, 1026
(Rimmed Steel)
1005, 1006, 1008
1010, 1011, 1012,
1013
(Killed Steel)
1015,
1018,
1021,
1025,
1016, 1017
1019, 1020
1022, 1023
1026
1029, 1030, 1035
1037, 1038, 1039
1040, 1042, 1043
7/32" thru
35/64
SIZES
over 35/64"
to under 39/64"
39/64" to
under 3/4"
3/4"
and over
Minus $23
$31
$17
NIL
Minus $23
$42
$30
$ 8
Minus $ 7
$43
$30
$ 9
Minus $6
$55
$42
$21
$43
$31
$ 9
77
81
65
64
69
51
41
45
31
NIL
10B18 10B21
10B22. 10B23
10B30
20
24
21
1110
Minus 5
43
30
9
1522
1524
1541
NIL
12
9
69
53
55
40
33
19
15B41
32
75
62
40
Tolerance Extra
If bar tolerances are specified or required for over 35/64" to
under 3/4" ...
Plus $11/M.T.
Note: All above extras are to be increased 4.86% on all wire
rods exported to the United States on or after 10-l"s.
2-7
Rev. August, 1978
WIRE RODS - COLD FINISHED BAR QUALITY
Category AISI
2
Tariff Schedule Number (s) 608.7100 -0.250/lb. 608.7500-0750/lb
3rd Quarter
4th Quarter
$353
Base Price per Metric Ton $ 337
Charges to CIF
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes after
$25
26
31
43
Handling
Interest
$ 7
5
4
4
$ 7
9
9
11
Insurance 1% of base price + extras +0cean freight
Extras
3rd Quarter
4th Quarter
Regular Anneal $42/M.T.
$44/M.T.
Spheroidized Anneal $63/M.T.
$66/M.T.
Note:
All size and grade extras on p. 2-8 are to be increased
4.86% on all wire rods shipped to the United States on or
after 10-1-78.
WIRE RODS-COLD FINISHED BAR QUALITY
Extras (Sizes / Grade) Per Metric Ton
SIZES
GRADE
(AISI NUMBER)
1015,
1018,
1021,
1025,
1016, 1017
1019, 1020,
1022, 1023
1026
1029,
1037,
1040,
1044,
1049
1030,
1038,
1042,
1045,
1050
7/32" Thru
35/64"
Over 35/64" to
to Under 39/64"
39/64" To
Under 3/4"
3/4" and
Over
Minus $36
$22
$ 9
Minus $11
Minus $19
$23
$ 9
Mimiq $ Q
1117
1141
1144
1151
Minus $ 5
2
2
4
$51
38
43
45
$38
25
30
32
$17
5
9
12
1212, 1213, 1215
Minus $ 2
$43
$30
$ 9
10L18
10L38, 10145
Minus $16
NIL
$52
43
$39
30
$18
9
11L17
11L37
$22
15
$81
57
$69
44
$45
23
12L14, 12L15
$15
$60
$47
$25
1035
1039
1043
1046
Tolerance Extra
If Bar Tolerances ar specified or required for over 35/64" to
unde'r 3/4" — plus $11 per metric ton.
Note: all above extras are to be increased by 4.86% for wire
rods shipped to the U.S. on or after 10-1-78.
2-9
Rev Aug ,
1978
Spheroidized Annealed, Mo Alloy Steel Wire Rod AISI 40 37, 5.5mm to]
13mm 1
Category AISI
2
Tariff Schedule Number (.) 608.7880 0.375* per lb. + 4% + additional
duties (see Headnote 4, TSUS)
3rd Quarter 4th Quarter
Base Price per-Metric-Torr $492 $516
Charges to CIF Ocean Freight- Handling Interest
West Coast $58 $7 $10
Gulf Coast
Atlantic CoastGreat Lakes
**
72
\
^
14
1?
Insurance I* of base prtce 4-extras-^ocean fieight •
•xtras
1.
2.
3.
4.
5.
6.
Note:
Grade Extras
Size Extras
Thermal Treatment Extras
Aircraft Quality Extra
Bearing Quality Extra
Vacuum Degassed Extra
H- , n n n ?-10 are to be increased by 4.86%
All above extras on p 2 10 are T;o
all rods exported to the U.b. on
1 for
n_l -79,
0)
0)
-P
2-10
Rev.August 1978
a
-P
w
T>
o
-P.
SPHEROI.DIZED ANNEALED, MO ALLOY STEEL WIRE ROD, AISI 4037, 5.5 mm
to 13 irun
•H
c
D
0)
JC
-P
0
-P
TJ
CD
1.
1
Grade Extras (per MT)
AISI, SAE
Extra.
Aisr, SAT
Extra
NUMBER
($/MT)
Number
($/MT)
4820
185
5046
Minus
51
4J
i
U
O
w
o
5H
H
1330, 1335, 1340, Minus
1345
42
1
i
o
M-l
dP
ID
OC
'd
0)
to
fO
0)
M
O
4C24, 4028
4012, 4023, 4027
4032, 4042, 4047
4
NIL
5140
4118, 4130
NIL
c
>
•H
0)
XI
O
Q) 00
U r^
rH
5115, 5120, 5130,
5132, 5135
4135, 4137, 4140,
4142, 4145, 4147,
4150
Minus
39
Minus
41
6118
4
8115
22
8615, 8617
37
8620
21
8622, 8625, 8627
21
2
fd J-l rH
-P
a) a;
xi
a)o
> -P
ou
Xl o
«J
u
4161
4320
3
94
t-H Q)
rH
0)-P
O
4J
O C
55 O
4340
93
^
2-11
Rev. August 1978
4422, 4427
27
4615, 4617
91
4620
4626
; 4718
4720
8630, 8637, 8640,
'8642, 8645, 8650,
8655, 8660
8720*
8740
25
8822
41
94B15, 94B17
42
4815, 4817
Boron Extra (if specified) $21/MT
Note: All above extras are to be increased by 4.86% for all rods
exported to the United States on or after October 1, 197 8.
2-12
Rev. August 1978
3rd Quarter
4th Quarter
Extra ($/MT)
Extra ($/MT
Over 13 mm but less than
19 mm
1 inch & over
Minus 26
Minus 27
Minus 37
Minus 39
Thermal Treatment Extras
Extra ($/MT)
Extra ($/MT)
Regular Anneal Only
Minus $21/MT
Minus $22/MT
No heat treatment
Minus $63/MT
Minus $66/MT
Aircraft Quality Extra
$26/MT
$27/MT
Bearing Quality Extra
$26/MT
$27/MT
Size Extras
Size
$13/MT
$12/MT
Vacuum Degassed Extra
(This extra does not apply when requirements are subject to
extra for aircraftand/or bearing quality.)
2-13
ReVc
A
^g '
1978
Spheroidized Annealed, Si-Mn-Cr High Carbon Steel Wire Rod,
AISI 9254, 5.5mm to 13mm
Category AISI
2
Tariff Schedule Number (s) 608.7880 0.375$ per lb. + 4% + additional
duties (see Headnote 4, TSUS)
3rd Quarter 4th Quarter
Base Price per-Metrfc Ton- $471
$494
Charges to CIF Ocean Freight Handling Interest
West Coast
Gu.lt Coast
Atlantic Coast"
Great Lakes
$58
69
72
$7
5
4
$10
13
13
Insurance \i of base price 4-extras 4*ocean freight
Extras
1.
2.
3.
4.
Grade Extras
Size Extras
Thermal Treatment Extras
Vacuum Degassed Extra
2-14
Rev. August 1978
SPKEROIDIZED ANNEALED, Si-Mn-Cr H1GF CAKBON STEEL WIRE ROD,
AISI 9254. 5.5 mm to 13 mm
1.
3rd Quarter
Grade Extras (per MT)
AISI NUMBER
9260:
5150r. 5155, :
5160
6150
4th Quarter
Extra IS/MT)
Minus 20
Minus 56
Minus- 19::,Minusr 5 3
10
10
Boron Extra (if specified) S21/MT
2.
Size Extras
Size
Over 13 mm but less than
19 mm
19 mm & over
Extra C$/MT)
Minus 26
Extra ($/MT)
Minus $2/
Minus 37
Minus $39
Extra ($/MT)
Extra ($/MT)
Regular Anneal Only
No heat treatment
Minus $21/MT
Minus $22/MT
Minus $63/MT
4. Vacuum Degassed Extra
$12/MT
Minus $66/toT
$13/MT
J>.
Thermal Treatment Extras
^
2-15
REV. Aug , 1978
^
Spheroidized Annealed, High Carbon Cr Steel
wire Rod AISi
52100, \
5.5mm to 13mm |
Category AISI
2
3rd Quarter 4th Quarter
$567
Base Price per^Metrfe Torr $541
Charges to CIF
West Coast $58 $7 $11
Gu.lt Coast
Atlantic Gdasrr*
Great Lakes
Ocean Freight
69
72
Handling
5
^
y
Insurance-K of base- pKce-^extra^4-cceen-frerght-
Extras
1.
2.
3.
Grade Extras
Size Extras
Thermal Treatment Extras
Interest
15
18
2-16
Rev. August 1978
Grade Extras (per MT)
AISI NUMBER
3rd Quarter
4th Quarte
Extra ($/MT)
E50100, E51100
NIL
NIL
Size Extras
Extra($/MT)
Extra ($/MT)
Over 13 mm but less
than 19 mm
Minus 26
Minus 27
19 mm & Over
Minus 27
Minus 28
Size
Thermal Treatment Extras
Regular Anneal Only
No heat treatment
Minus $21/MT
Minus $63/MT
Minus $22/MT
Minus $66/MT
3-1
Rev.,Aus >
1978
WIDE FLANGE BEAMS AND BEARING PILING-ASTM A36 12" x 12"
Category AISI
Tariff Schedule Number (s) 609.8005
609.8015
609.8200
Base Price oer Metric Ton
0.1c per lb.
0.1c per lb.
O.lC per lb. +2% + additional
duties (see Headnote 4, TSUS)3rd Quarter
4th Quarter
$273
$286
C harges to CIF Ocean Fre I girt Hand 11 ng I nterest
West Coast $27 $7 $5
Gulf Coast
Atlantic CoastGreat Lakes
30
34
47
5
4
4
7
7
9
Insurance \% of base price 4- extras 4- ocean* freightxtras
1. Size Extras
2. Grade Extras
3. Cut Length Extras
4. Splitting Extras
Note;
All extras om pages 3-2 through 3-5 are to be increased by
4.86% for all beams exported to the U.S. on or after
10-1-78.
Wide Flange Beams
1.
Size
Series
4
5
6
6
6
6
8
8
8
8
8
10
10
10
10
10
12
12
12
12
12
12
14
14
14
14
14
14
14
14
14
14
14
14
Extras
lbs/foot
x 4
13
x5
16-18.5
x 4
8.5
x 4
12,16
x6
15.5
x6
20,25
x 4
10
x 4
13,15
17.20
x S %
x 6 )£
24.28
x8
31.67
x 4
11.5
x 4
15-19
x 5 3/4 21-29
x 8.
33-45
x 10
49-112
x 4
14
x 4
16.5-22
x 6 V2 27-36
x 8
40-50
x 10
53,58.
x 12
65-190
x 5
22.26
x 6 3/4 30.38
x 8
43-53
x 10
61.74
x 12
78,84
x 14 ^
87-136
x 16
142-426
x 16
455
x 16
500
x 16
550
x 16
665
x 16
730
2.
3-2
Rev. August, 1978
Extra $/MT
40
37
54
42
27
19
44
32
22
16
12
38
33
19
12
5
41
33
14
7
5
NIL
19
10
5
NIL
NIL
NIL
NIL
76
80
81
84
88
Series
16
16
16
16
18
18
18
18
21
21
21
21
24
24
24
24
27
27
30
33
33
36
36
x: 5 yz
x 7
x 8 y2
x lV/2
x 6
x 7 %
x 8 3/4
x 11 3/4
x 6 y2
x 8 %
x 9
x 13
x 7
x 9
x 12
x 14
x 10
x 14
x 15
x 11 y2
x 15 3A
x 12
x 16 %
lbs/Foot
Extra $/MT
26,31
36-50
58-78
88-96
35,40
45-60
64-85
96-114
44.49
55-73
82.96
112-142
55.61
68-94
100-120
130-160
84-114
145-177
172-210
118-152
200-240
135-194
230-300
14
6
NIL
NIL
15
5
NIL
NIL
10
NIL
NIL
NIL
10
NIL
NIL
11
NIL
11
17
12
18
12
18
Grade Extras ($/M.T.)
ASTM
A242
A588
A441
G42
G50
G60
A36.
A690
Note:
Web Thickness In Inches
Over 1-7/8 Thru 2-3/8
Thru 1-7/8
117
129
117
94
52
Over 2--3/8
129
94
44
90
90
52
94
70
34
0
34
81
All above extras are to be increased by 4.86% for all
beams exported to the United States on or after
October 1, 1978.
3-3
Rev. Aug , 1978
WIDE FLANGE BEAMS
(3) Cut Length Extras
Leneth
From 10 Up to 20 Feet
From 20 Up to 30 Feet
From 30 Up to 40 Feet
40 Feet
Over 40 Up to 50 Feet
50 Feet
Over 50 Up to 60 Feet
60 Feet
Over 60 Thru 70 Feet
$/M.T.
11
7
•5
Nil
4
Nil
5
Nil
5
(4) Splitting Extras
Lbs./Foot
Over Thru
8
12
12
15
15
22
22
45
45
100
100
150
150
200
SALT.
38
33
30
19
15
12
10
Bearing Piling (H Piles)
Size Extra
Series
Lb/Ft
8x8
36
42.57
53.74
73-117
10x10
12x12
14x14*5
$/MT
Extra
12
5
Nil or Base
Nil
Grade Extra: See Wide Flange grade extras
for l-7/8M Web Thickness
Cut Length Extra: Same as Wide Flange
Note: All above extras are to be increased by 4.86% for all beams
'exported to the U.S. on or after 10-1-78.
3-4
Rev. August, 1978
SIZE EXTRAS JUNIOR BEAMS
Series
lbs;/ft
Extra
6"
4. 5#
54
8"
10"
10"
12"
6. 5#
8#
9#
40
38
38
10..8#
35
12"
11..8#
35
Note: All above extras are to be increased by 4.86% for all beams
exported to the United States on or after October 1, 1978.
Rev.
A
3-5
19 78
ug
STANDARD CARBON STEEL CHANNELS, ASTM A36
Category AISI
3,9
Tariff Schedule Number (s)
609.8041
609.8070
0.1 C/lb.
0.1 C/lb.
4th Quarter
$251
3rd Quarter
Base Price per Metric Ton $239
narges to CIF
West Coast
Gulf .Coast
Atl arrric Coast
Great Lakes
Ocean Fre fght$23
26
29
35
Handling-
Interest
$7
$4
5
4
4
Insurance \i of base price 4- extras 4* ocean freight
Extras
Size Extra
5
5
7
3-6
Rev, Aug , 1978
SIZE EXTRAS
($/MT)
SIZE
3rd Ourjrt.Rr
EXTRA
4th Quarter
Extra
CI
11.
12
C3
BASE
Base
C4
BASE
Base
C6
11.
12
C8
17.
18
CIO
17.
18
C12
23.
24
C15
23.
24
Rev. Aug . 1978
^
m
m
y
m
m
t
m
m
*
UNEQUAL LEG CARBON STEEL ANGLES ASTM A-36
Category AISI
3,9
0. 1 C/lb.
Tariff Schedule Number (s) 609.8035
609.8050
0. 1 C/lb.
3rd Quarter
Base Price per Metric Ton
Charger 1tr CI F
West Coast
Gulf Coast
Atlantic Goas*r
Great Lakes
4th Quarter
$252
$264
uceen rroignT
Hand 11 ng
interest
$23
26
29
35
$7
5
4
4
$4
5
5
7
Insurance IS of base price 4- extras 4- ocean freight
extras
Size Extra
3- 8
Rev. A u g
, 1978
SIZE EXTRAS
($/MT)
3rd Quarter
SIZE
EXTRAS
4th Quarter
Extras
3" x 2"
11.
12
3-l/2M x 3M
11.
12
4 M x 3"
BASE
Base
5" x 3M
BASE
Base
6" x 3-1/2"
11.
12
6" x 4 n
11.
12
8" x 4 M
11.
12
3- 9
Rev.
Aug , 1978
«BM*
EQUAL LEG CARBON STEEL
Category AISI
ANGLES
ASTM A36
3,9
Tariff Schedule Number (s) 609.8035 0.1 C/lb.
609.8050 0.1 C/lb.
3rd Quarter
Base Price per Metric Ton $22 7
4th Quarter
$238
Charges to CIF
Ocean Freight
Hand IIng
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$23
$7
$4
26
29
35
5
4
4
Insurance \t of base price +-extras + ocean freight
Extras
Size Extra
5
5
6
3-10
Rev. Aug , 1978
SIZE EXTRAS
($/MT)
3rd Quarter
SIZE
1" x 1" 17 . 18
1-1/2" x 1-1/2" 8 . 8
2" x 2" BASE Base
3" x 3" BASE Base
4" x 4" BASE Base
5" x 5" 17 .00 18
6" x 6" 28 .00 29
8" x «" 28 .oo 29
EXTRA
4th Quarter
3-1 1
1978
Rev.Aug
STANDARD CARBON STEEL " I " BEAMS ASTM A36
Category AISI
3,9
Tariff Schedule Number (s) 609.8045
609.8090
0.1 C/lb.
0.1 C/lb.
4th Quarter
$290
3rd Quarter
Base Price per Metric Ton
$277
Charges to CIF
Ocean Freight
Hand 11 ng
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$23
$7
$4
26
29
35
5
5
4
Insurance \t of base price 4- extras + ocean freight-
Extras
1. Size Extra
6
6
7
3-1 2
Rev. Aug, 1978
SIZE EXTRAS
($/MT)
3rd Quarter
SIZE
EXTRA Extra
S12 x 31.8 lb./ft
Base
S8 x 18.4 lb./ft
Base Base
S6 x 12.5 lb./ft
11. 12
S4 x 7.7 lb./ft
11. 12
4th Qtr.
Base
4-1
Rev. August 1978
SHEET PILING -ASTM A 328 ARCH WEB PDA-27
Category AISI
Tariff Schedule Number (s)
609.9600
609.9800
0.10 per lb.
0.10 per lb.
+ 2% Ad Val + additional
duties (See Headnote 4)
3rd Quarter
4th Quarter
Base Price per Metric Ton $308
Charges to CIF
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$27
30
34
47
$323
Handling
$7
5
4
4
Interest
$ 6
7
8
10
Insurance 1% of base price + extras + ocean freight
Extras
1. Quality Extras
2. Shape Extras
3. Length Extras
Note:
All extras on page 4-2 are to be increased by 4.86% for
sheet piling exported to the United States on or after
October 1, 1978.
4-2
Rev. August 1978
EXTRA FOR SHEET PILING
$/MT
1. QUALITY
SY 30
(EQUIVALENT TO ASTM A-328)
SY36
BASE
+ 11
SY40
+ 21
A690/MARINE TYPE
+ 90
STRAIGHT WEB
F, FA
+ 11
ARCH WEB
1A,U5,5,5L,6L
+ 11
BASE
ZEE
OTHERS
(EQUIVALENT TO PDA-27)
Z14,Z25,Z32,Z38,Z45
2. SHAPE
3.
+ 11
FABRICATED CONNECTIONS
SUBJECT TO NEGOTIATION
H TYPE
+ 32
LENGTH
3M UNDER
SUBJECT TO NEGOTIATION
3M TO UNDER 6M
+ 11
6M & OVER
BASE
4.
SURFACE TREATMENT
(PROTECTIVE COATING)
SUBJECT TO NEGOTIATION
5.
HANDLING HOLES
SUBJECT TO NEGOTIATION
6.
QUANTITY
NONE
Note:
All above extras to be increased by 4.86% for sheet piling
exported to the United States on or after October 1, 1978.
REV. Arg. 19735-1
Category AISI 5
608.8415 7 1/2%
608.8525 9 1/2% + ADDITIONAL DUTIES (SEE HEADNOTE 4
608.8720 8%
TSUS)
608.8825 10% + ADDITIONAL DUTIES (SEE HEADNOTE 4 TSUS)
3rd Quarter
Base Price per Metric Ton
4tnQuarter
$295
$281
Tariff Schedule Number (s)
Charges to CIF
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$25
25
31
31
Handling
Interest
$7
$ 6
5
4
4
8
8
10
Insurance 1% of base price + extras + ocean freight
Extras
1. Width/Thickness Extra
2. Specification Extra
3. Other Extras
Killed
Fine grain
Charpy
Normalize
Quench & Temper
Normalize & Temper
UST A435, A578 LI
A578 L2
Checker
Pickled & Oiled
Others
Note: All extras on pages 5-2 through 5-10 are to be increased by
4.86% for all plates exported on or after October 1, 1978.
5-2
Rev. August 1978
1. WIDTH/THICKNESS EXTRAS
(S/MT)
OVER
\THICK-
3/16"
to
under
1/4"
1/4"
to
under
5/16"
5/16"
to
under
3/8"
3/8"
to
under
1/2"
OVER 36"
thru 48"
28
23
17
13
OVER 48"
thru 60"
24
18
14
OVER 60
thru *0
22
15
OVER 80"
thru 90"
25
OVER 90"
thru 100"
1-1/2"
thru
3"
3"
thru
6"
6"
thru
12"
1-3/16"
thru
1-3/8"
1-3/8"
thru
1-1/2"
10
13
15
19
40
9
6
3
11
15
33
37
40
12
5
Nil
*
6
11
24
2S
31
16
10
6
2
6
10
14
24
28
31
31
21
14
11
5
11
14
17
27
31
33
OVER 100"
thru H O "
36
21
19
15
10
15
18
21
28
32
35
OVER H O "
thru 120"
46
30
24
19
15
18
22
24
32
36
39
OVER 120"
thru 130"
57
40
28
23
18
21
26
31
37
41
42
OVER 130"
thru 140"
63
51
39
30
25
26
31
35
44
46
49
61
51
37
31
31
35
39
51
54
57
109
102
39
39
89
89
30
MESS
WIDTH\
OVER 140"
thru 150"
OVER 150"
thru 170"
Note:
Note:
1/2"
to
under
1"
1"
thru
1-3/16"
\
42
44
(1) Extra for length: NIL
All above extras are to be increased by 4.86% for all
plates exported to the United States on or after October 1, 1978.
5-3
Rev. August 1978
1 - WIDTH/THICKNESS EXTRAS
OVER
THICK- 3/16"
NESS to
under
WIDTH\ 1/4"
\
\
OVER 170"
thru 180"
5/16"
to
under
3/8"
3/8"
to
under
1/2"
1/2"
to
under
1"
111
1"
thru
1-3/16"
1-3/16"
thru
1-3/8"
1-3/8"
thru
1-1/2"
103
103
103
103
OVER 180"
thru 185"
109
109
109
109
OVER 185"
thru 200"
112
112
112
112
Note:
Note:
1/4"
to
under
5/16"
(1) Extra for length:
1-1/2"
thru
3"
3"
thru
6"
NIL
All above extras are to be increased by 4.86% for all
plates exported to the United States on or after
October 1, 1978.
6"
thru
12"
REV. August 1978
2 - SPECIFICATION EXTRA
$/MT
Thickness
Specification Extra
ASTM & ASME
A36
1-1/2" or less
over 1-1/2"
Nil
21
A283 Gr. A, B, C, D
1-1/2" or less
over 1-1/2"
Nil
21
A 285 Gr. A, B, C,
1-1/2" or less
over 1-1/2"
18
21
A515
Gr.
Gr.
Gr.
Gr.
55, 60, 65, 70
55, 60, 65
70
55
1-1/2" or less
over 1-1/2" up to 2"
over 2" up to 8"
over 2" up to 8"
over 8" up to 12"
39
42
43
45
43
A516
Gr.
Gr.
Gr.
Gr.
Gr.
55, 60
65, 70
55, 60, 65, 70
55, 60, 65, 70
55
1/2"
1/2"
over
over
over
45
47
47
51
52
A455
TYPE 1
TYPE 2
A537, Class 1
or less
or less
1/2" up to 1-1/2"
1-1/2" up to 8"
8"
26
47
-
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 1 1/2"
over 1-1/2" up to 3"
over 3" up to 4"
179
168
156
154
162
160
_. . .. .....
Note:
All above extras are to be increased by 4.86% for all
plates exported to the United States on or after
October 1, 1978.
5-5
Rev. August 1978
Specification
Thickness
$/MT
244
219
211
209
217
215
A537, Class 2
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 1-1/2"
over 1-1/2" up to 3"
over 3" up to 4"
A612 (M128B)
3/4" or less
over 3/4" up to 1"
A242
1-1/2" or less
100
A588
1-1/2" or less
over 1-1/2"
100
102
A441
1-1/2
over 1-1/2"
51
74
A440
1-1/2" or less
over 1-1/2"
51
74
1-1/2" or less
over 1-1/2"
1-1/2" or less
over 1-1/2"
1-1/2" or less
over 1-1/2"
1-1/2" or less
1-1/2" or less
1-1/2" or less
25
49
36
59
40
63
44
64
75
A572
Gr. 42
Gr. 45
Gr. 50
Gr. 55
Gr. 60
Gr. 65
A633
Gr. A
5/16" or less
over 5/16" UD to 1/2"
over 1/2" up to 1"
over 1" up to 1-1/2"
over 1-1/2" up to 3"
72
77
166
152
142
142
142
-
Note:
All above extras are to be increased by 4.86% for all plates
exported to the United States on or after October 1, 1978.
5-6
Rev. August 1978
Specification
A633
Gr. C
Gr. E
Thickness
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 1 1/2"
over 1-1/2" up to 3"
over 3" up to 8"
184
170
160
158
160
187
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 1/2"
over 1-1/2"up to 3"
over 3" up to 8"
204
200
180
178
180
207
65
AR
AR300, 350
(Q & T Extra included)
A202
Gr. A
Gr. B
237
All Thickness
All Thickness
137
116
2" or less
over 2" up to 4"
over 4" up to 6"
216
222
211
Gr. B
2" or less
over 2" up to 6"
216
211
Gr. D
Gr. E
4" or less
4" or less
301
295
2" or less to 6"
over 2" up
142
132
1" or less
over 1" up to 6"
142
A203
Gr. A
A204
Gr. A
Gr. B
Note:
$/MT
All above extras are to be increased by 4.86% for all plates
exported to the United States on or after October 1, 1978.
5-7
Rev. August 1978
Specification
Thickness
$/MT
A387
Gr.
Gr.
Gr.
Gr.
Gr.
2
11
12
21
22
All
All
All
All
All
Thickness
Thickness
Thickness
Thickness
Thickness
174
211
179
396
364
A533
Gr.
Gr.
Gr.
Gr.
A
B
C
D
All
All
All
All
Thickness
Thickness
Thickness
Thickness
142
179
195
164
A553
Type 1
Type 2
All Thickness
All Thickness
781
686
AR360 (Q & T Extra included)
1-1/2" or less
248
Type B
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 1-1/4"
322
285
280
274
Type F
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 3"
over 3" up to 4"
438
401
396
390
395
Type H
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 2"
369
332
322
A514 (Q & T Extra included)
Note:
All above extras are to be increased by 4.86%
for all steel
plates exported to the United States on or after Oct. 1, 1978.
5-8
Rev. August 1978
Specification
Thickness
$/MT
A517 (Q & T Extra included)
Gr. B
5/6" or less
over 5/16" up to 1/2"
over 1/2" up to 1-1/4"
338
306
295
Gr. F
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 3"
over 3" up to 4"
over 4" up to 8"
5/16" or less
over 5/16" up to 1/2"
over 1/2" up to 1"
over 1" up to 2"
353
422
417
411
417
438
385
353
343
338
4" or less
121
1" or less
over 1" up to 4"
1" or less
over 1" up to 2"
148
137
158
142
Gr. H
A225
Gr. A, B
A302
Gr. A
Gr. B
AB5 & A131
Gr. A
1/2" or less
over 1/2" up to 1-1/2"
4
11
Gr. B
Gr. CS (Normalized)
1" or less
1/2" or less
over 1/2" up to 2"
11
116
100
Gr. D (Normalized)
1/2" or less
over 1/2" up to 2"
116
106
Note:
All above extras are to be increased by 4.86% for all plates
exported to the United States on or after October 1, 197 8.
5-9
Rev. August 1978
Specification
AB5 & A131 (Cont'd)
Gr. E (Normalized)
Thickness
$/MT
1/2" or less
over 1/2" up to 2"
137
127
Gr. DS (as Rolled
Normalized)
1-3/8" or less
over 1-3/8" up to 2"
42
100
Gr. AH32
1/2" or less
over 1/2" up to 1-1/2"
over 1-1/2" up to 2"
38
59
61
Gr. A-H36
1/2" or less
over 1/2" up to 1-1/2"
over 1-1/2" up to 2"
46
68
70
Gr. DH32 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
137
127
Gr. DB36 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
137
127
Gr. EH32 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
158
137
Gr. EH36 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
158
137
SAE
1345
4130
4140
4150
4340
5150
5160
6150
-
74
111
116
116
227
79
79
132
•
Note:
All above extras are to be increased by 4.86% for all plates
exported to the United States on or after October 1, 1978.
5-10
Rev. August 1978
Specification
Thickness
$/MT
SAE (Cont'd)
8615
158
8617
158
8620
142
9260
111
Other Specification Extra
Note:
-
To be specified on SSSI
All above extras are to be increased by 4.86% for all plates
exported to the United States on or after October 1, 1978.
5-11
Rev. August 1978
3 - OTHER EXTRAS
Description
Killed
$/MT
21
6
Fine Grain
Charpy
+40°F & up
L
T
16
21
L & T
26
under +40°F
L
T
L & T
21
26
32
Normalize
74
Quench & Temper
127
Normalize & Temper
127
U.S.T.
A578 L2,
A435, A578 LI
(9" or higher grid)
(over 1/2")
(over 3/4")
16
(under 9" grid or 100%
scanning)
(over 3/4")
26
Checker
42
21
Pickled & Oiled
Up to 0.172" Thickness
Over 0.172" Thickness
21
14
Others
To be specified on
Note: All above extras are to be increased by 4.86%
SSSI
for all plates exported to the United States
on or after October 1, 1978.
6-1
Rev. August 1978
Heavy Carbon Steel Rails
Category AISI
A.R.E.A. 115, 132 or 136
e
Tariff Schedule Number(s) 610.2010 o.05jz< per lb.
3rd Quarter
Base Price per Metric Ton
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
4th Quarter
$329
$314
Ocean Freight
50f
60*
40'
$26
$30
$33
27
30
33
35
38
41
47
50
Handling
Interest
$8
$6
5
4
4
Insurance 1% of base price + extras + ocean freight
Extras
Quality, Length, Quantity
8
8
10
6-2
REV. Aug. 1978
General Extras for Heavy Rails
3rd Quarter
4th Quarter
Extra $/M.T.
Quality
Carbon
base
Heat Treating (Equivalent to head hardening) 70
End Hardening
3 per rail
base
73
° per
rail
Length
Standard Length with Shorts (up to 11%)
base
base
inquire
inquire
200 M.T. and over
base
base
under 200 thru 100 M.T.
4
under 100 thru 50 M.T.
5
under 50
inquire
Length varying by 1M from 25M to 70M.
Standard Length without Shorts
Length varying by l1 from 82' to 25*
Quantity
4
inquire
Rev. August 1978
60 lbs./yd.
Light Rails
Category AISI
6
Tariff Schedule Number(s) 610.2020 0.05^ per lb.
3rd Quarter
Base Price per Metric Ton
4th Quarter
$323
$308
Charges to CIF
Ocean Freight
Handling
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$33
$9
$6
35
38
44
9
9
9
Insurance 1% of base price + extras + ocean freight
Extras
Size
8
8
10
6-3
Rev. August 1978
6-4
LIGHT RAIL EXTRAS
/•w / A\ i of Rase Price Extra
Size (lbs/yd)
60
45
40
30
25
20
£0.0%
2.0%
3.9%
3.9%
5.9%
5.9%
Rev. August 1978
Tie Plates
Category AISI
6
Tariff Schedule Number(s) 610.2500 0.125^ per lb.
4th Quarter
$330
3rd Quarter
Base Price per Metric Ton $315
Charges to CIF
Ocean Freight
Handling
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$39
$8
$6
39
49
54
1
8
8
Insurance 1% of base price + extras + ocsan freight
Extras
None
8
9
11
6-5
Rev. Aucuist 197?
1
PLAIN AND DEFORMED CARBON STEEL CONCRETE REINFORCING BARS ASTM A615
Category AISI
8
Tariff Schedule Number(s)
608.4000 7 1/2%
608.4100 7 1/2%
3rd Quarter
Base Price per Metric Ton $223
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
$23
26
29
35
4th Quarter
$234
Handling
Interest
$7
5
4
4
$4
5
5
6
Insurance 1% of base price + extras + ocean freight
Extras
1. Size Extras
2. Grade Extras
8-1
8-2
Rev. August 1978
SIZE AND GRADE EXTRAS
3rd Quarter
4th Quarter
GRADE 40
EXTRA
Extra
#3
14
#4
15
8
8
#6 THROUGH #10
BASE
#11 THROUGH #12
14
BASE
15
GRADE 60
#3
28
29
#4
23
24
#5 THROUGH #10
15
16
#11 THROUGH #12
28
29
9-1
Rev. August 1978
HOT ROLLED CARBON STEEL BAR SIZE CHANNEL ASTM A36
J
Category AISI
9
Tariff Schedule Number (s) 608.8070 - 0.1$ per lb.
3rd Quarter
$334
Base Price per Metric Ton
4th Quarter
$350
Charges to C1F
Ocean Freight
Hand Iing
Interest
West Coast
Gulf Coast
Atlantic Goas"t
Great Lakes
$23
$7
$6
26
29
35
5
4
4
nsurance \% of base price •-extras--•-ocean* frefgfrr-
Extras
1. Size Extras
7
7
9
9-2
Rev. Augrst 1978
SIZE EXTRA
($/MT)
3rd Quarter 4th Quarter
SIZE EXTRA
1" x
1/2" x 1/8"
57
60
1-1/4" x 1/2" x 1/8" 34
36
1-1/2" x 1/2" x 1/8" 34
36
2" x 1" x 1/8" 11
12
2" x 1" x 3/16" BASE
BASE
10-1
Rev. Aucust 19 78
ROLLED CARBON BARS:
Category AISI
SPECIAL QUALITY-AISI 1045
40 mm round x 4 meters
10
Tariff Schedule Number (s) 608.4640-7%
3rd^ Quarter
4th Quarter
Base Price per Metric Ton $359
$376
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
Hand 11ng
Interest
$24
$7
$ 7
10
10
12
26
29
35
5
4
4
Insurance \% of base price + extras • ocean freight
Extras
Size Extras
Note:
All extras on page 10-2 are to be increased by 4.86% for
all bars exported on or after October 1, 197P.
10-2
Rev. August 1978
HOT ROLLED CARBON STEEL BARS (CUT LENGTH 4-12
METERS SPECIAL QUALITY)
Extra (Sizes/Grade)
($/MT)
SIZES
GRADE
(AISI NUMBER)
1015, 1016, 1017
1018, 1019, 1020
1021, 1022, 1023
RIMMED STEEL)
Over
35/64"
To Under
39/64"
39/64" 3/4"
Thru
To
Under 1 1/2"
3/4"
Over
3"
1 1/2" Thru
To Under 4 3/8"
3"
Over
4 3/8'
13
NIL
NIL
NIL
NIL
NIL
1015, 1016, 1017
1018, 1019, 1020
1021, 1022, 1023
1025, 1026, 1029
1030, 1035, 1037
1042, 1043, 1044
1045, 1046, 1049
1050
KILLED STEEL
14
NIL
NIL
NIL
NIL
NIL
1527, 1541
24
11
13
10
11
13
15B37
15B41
1117
1137
47
53
42
30
34
40
30
16
36
41
30
18
33
39
27
15
34
40
28
16
36
41
31
18
1212
1213, 1215
10L30
10L45
23
34
44
34
10
21
31
21
12
22
33
22
8
20
30
20
10
20
31
20
12
22
33
22
12L14, 12L15
15L22
51
71
38
47
40
49
37
45
38
46
40
49
i
Tolerance Extra
If Bar tolerances are specified or required for over 35/64"
to under 3/4"
plus $11 per metric ton
Note: All above extras are to be increased by 4.86% for all
bars exported on or after October 1, 1978.
Rev. Aug.
4ERCHANT QUALITY HOT ROLLED CARBON STEEL SQUARES AND ROUND
CORNERED SQUARES ASTM A 36 or AISI 1020
Category AISI
10
Tariff Schedule Number (s) 608.4660 TU
4 th Quarter
$291
3rd Quarter
Base Price per Metric Ton
Charges to CIF
West Coast
Gulf Coast
Atlantic CoastGreat Lakes
$2 78
Ocean Freight
Hand 11ng
1 nteresi"
$23
26
29
35
$7
5
4
4
$5
6
6
8
Insurance \t of base price + extras • ocean freight-
Extras
1.
Size Extra
10-3
19 78
10-4
Rev. Aug.
1978
SIZE EXTRAS
($/MT)
3rd Quarter
4th Quarter
3/8"
34
36
7/16"
23
24
1/2"
17
18
5/8"
6
6
BASE
3/4" to 1-3/4"
BASE
2"
12
13
2-1/4" to 3"
23
24
10-5
Rev. Aua.
MERCHANT QUALITY HOT ROLLED CARBON STEEL ROUND BAR ASTM A36 or
AISI 1020 1
Category AISI
10
Tariff Schedule Number (s) 608.4640 1%
3rd Quarter
4th Quarter
Base Price per Metric Ton $2 78
$291
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
Hand Ii ng
nterest
$2 3
$7
$5
26
29
35
5
4
4
Insurance \% of base price + extras + ocean freight
extras
1. Size Extra
6
6
8
19 78
10-6
Rev. Aug. 1978
SIZE EXTRA
($/MT)
3rd Quarter 4th Quarter
DIAMETER EXTRA
36
7/16"
34
1/2"
11
12
5/8" to 1"
BASE
BASE
1-1/3" to 2"
11
12
2-1/4" to 3"
21
22
10-7
Rev. Aug.
h^KCHANT QUALITY CARBON STEEL FLAT BARS ASTM A36 OR AISI 1020
J
Category AISI
10
Tariff Schedule Number (s) 608.4620 7%
3rd Quarter
4th Quarter
Base Price per Metric Ton $253
$265
:harges to CIF
Ocean Freight
Hand I i ng
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$23
$7
$4
26
29
35
5
4
4
6
6
7
Insurance l< of base price + extras + ocean freight
Extras
1. Size Extra
Note:
All extras on page 10-8 are to be increased by 4.84-% for
all bars exported to the United States on or after
October 1, 1978.
19
Market Cost of Flat Bar (Size Extra Charts)
of Japanese Main Electric Furnance Steel Mills
(1)
H a t Bar
(U.S. $ per Metric Ton)
1/2"
5/8"
3/4"
1"
3/16"
46
34
29
17
14
14
1/4"
40
29
23
11
5
3/8"
*
*
23
11
1/2"
*
*
*
5/8"
*
*
3/4"
*
7/8"
V/idth/
Thickness
1 1/4"
2"
2 1/2"
14
14
14
5
5
B
B
B
B
5
5
5
B
B
B
11
5
5
5
B
B
*
23
11
11
11
5
*
*
23
11
11
11
*
*
*
*
*
*
ft
*
*
*
23
1 1/8"
*
*
*
*
1 1/4"
*
*
A
1 1/2"
*
*
*
1 1/2"
1-3/4"
3"
4"
5"
6"
*
*
*
B
B
11
*
B
B
B
B
14
B
B
B
B
B
14
5
5
5
5
5
5
14
5
5
5
5
5
5
5
14
*
5
5
5
5
5
5
5
14
23
23
5
5
5
5
5
5
5
14
*
*
*
*
*
0
9
9
9
9
18
*
*
*
*
*
,*
14
14
14
14
14
23
*
*
*
*
*
*
- 18
18
18
18
18
27
3 1/2"
7"
8"
—
1"
*
*
*
B: Base
*: Not available
Note: All above extras are to be increased by 4.84% for all bars exportedx
to the United States on or after October 1,1978. >
<B
C
CO
rt
vo
00
I l-l
Rev. Aug, 1978
Hot Rolled, Ni-Cr-Mo Alloy Steel Round BarAISI 8620
Category AISI
i
, 40mm
II
Tariff Schedule Number (s) 608.5240 10 1/2? + additional duties (see Headnot
4, TSUS)
3rd Quarter
4th Quarter
Base Price per Metric Ton $413 $433
Charges to CIF Ocean Freight Handling Interest
$ 7 $West
9 Coast
Gulf Coast
Atlantic Coast
Great Lakes
$49
51
63
79
5
4
4
12
12
15
nsurance \% of base price + extras + ocean freight
Extras
I. Grade Extras
2. Size Extras
3. Thermal Treatment Extra
4. Qua Iity Extras
5. Spring Steel Flat Bars
Note:
All above prices on pgs. 11-2 through 11-5
are to be increased 4.86% for all bars exported
to the United States on or after 10-1-78.
11-2
Rev. Aug. 1978
Grade Extra- per MT
AISI, SA£
NUMBER-'
330, 1335,1340,
345
4012, 4023, 4027
4024, 4028
S/MT
AISI, SA£
NUMBER
S/MT
5046
Minus 72
5115, 5120, 5130,
5132, 5135
Minus 60
5140
Minus 62
6118
Minus 17
Minus 63
Minus 21
Minus 17
•
4032, 4037, 4042,
4047
Minus 21
Minus 33
6150
4118, 4130
4135, 4137, 4140
4142, 4145, 4147,
4150
Minus 2T
81 15
1
8615, 8617
16
Minus 19
8622, 8625, 8627
!
NIL
i
i
416
4320
te:
Minus IS
73 :
8630, 8637, 8640
8642, 8645, 8650
8655, 8660
Minus 4
4340
72
All above e x t r a s are to bje i n c r e a s e d b y 4 . 8 6 % for all b a r s
exported to the U n i t e d S t a t e s on or a f t e r 1 0 - 1 - 7 8 .
11-3:
Rev. Aug. 1978
4422,4427
8720
4615,. 4617
70
4620
68;
8740-
4626
4718
85
4720
52
4815, 4817
66
4820
64
8822
20
94815, 94817
21
4
Boron Extra (if specified) S2I/MT
Note:
All above extras are to be increased by 4.86% for all
bars exported to the United States on or after 10-1-78
Size. Extra
(mm)
Extra ($MT)
Round.
Ertrai Cf/MIX
Round Corner: Square
13-15
16
N/A
16-24
1L
N/A
25-100
NIL.
N/A
101-250
5
Mlnuac39--
Thermal Treatment Extras
Thermal Treatment
|
4.
Regular Anneal
Sphereidize Anneal
Normalize
Quench & Temper
Normalize & Stress Relieve
Quench, Temper & "Stress
Relieve
Extra ($•/ MT' )
42
63
53
116
116
169
Quality Extras
Quality
Aircraft
Bearing
Vacuum Degassed
(This extra is
not charged when
requirements are
subject to extra
for aircraft.
and/ or bearing) .
Note:
Extra ($ / KT)
26
26
12
All above extras are to be increased by. 4.86%
for all bars exported to the United States
on or after 10-1-78.
ir-r
Rev. Aug. 1978
5..
Spring: Steel. Flat, Bars
5-1 Grade Extras per- MT"
AISI,. SAE NUMBER
Extra- ($ / MT'
9260
5160
Minus* 102
Minn* 10Z
5-2* Size-Extras
Width
(Inches)
Extra ($/ MT)
up to 1 3/4"
over 1 3/4" to 4"
over 4"
11
NIL
11
Note;
All above extras are to be increased 4.86% for all
bars exported to the United States on or after 10-1-78
11-6
REV Aug , 1978
Spheroidize Annealed, High Carbon Cr Steel Round Bar AISI 52100, 40mm to 100mm (
I
i_
Category AISI
••
Tariff Schedule Number (s) 608.5225 10 1/2* + additional duties (see^Headno
3rd Quarter 4th Quarter
$483
Base Price per Metric Ton
$461
Charges to CIF Ocean Freight Handling Interest
West Coast $49 $ 7 $10
Gulf Coast
Atlantic Coast
Great Lakes
51
63
79
5
4
4
Insurance \% of base price + extras + ocean freighr
Extras
I. Grade Extras
2. Size Extras
3. Thermal Treatment Extras.
13
13
17
11-7
Rev. Aug. 1978
Grade Extras*
Grade?
E511&QV
E50100-
Extra($ /MT)
NIL
Size- Extras*
Size
(mm)
13-15
16 - 24
25 - 38
40 - 100
101- 250
Extra
($ / MT)
16
11
5
NIL
5
Thermal Treatment Extra
Thermal Treatment
Without
spheroidize anneal
Note:
Extra ($ / MT)
i
i
Minus 63
All above extras are to be increased by 4.86%
for all bars exported to the United States
on or after 10-1-78.
REVe
12-1
A u g , 1978
Cold Finished Carbon Steel Round Bar
AIS 1008 through 1029, 19.05 inn (3/4")
Category AISI
12
Tariff Schedule Number (s) 608.5015 8 1/2?
3rd Quarter 4th Quarter
$381
$460
Base Price per Metric Ton
Charges to CIF Ocean Freight Handling Interest
$ 7 $ West
8
Coast
Gulf Coast
Atlantic Coast
Great Lakes
$30
35
40
58
5
4
4
Insurance \% of base price + extras + ocean freight
extras
Size, See Table p. 12-4*
Note: All prices, on pl2-4 are to be increased by 4.86%
for all bars exported to the United States on or after
October 1, 1978.
10
10
13
12-2
REV. A u g , 1978
Cold Finished Round Steel Bar (Free Cutting Steel-Sulfur)
,
,
,. -.^-.r
19.05mm (3/4")
ATQT 191? Hir-nngh 1 21 S
Category AISI
,
J
12
608.5005 8 1/2%
3rd Quarter
$430
Tariff Schedule Number (s)
4th Quarter
$521
Base Price per Metric Ton
Ocean Freight
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$30
35
40
58
Hand Ii ng
Interest
$ 7
$ 9
5
4
4
I I
12
15
Insurance \% of base price + extras + ocean freight
£xtras
Size, See Table p. 12-4
Note:
All prices on p 12-4 are to be increased by 4.86%
for all bars exported to the United States on or
after October 1, 1978.
12-3
REV. Aug , 1978
Cold
Finished Round Steel Bar (Free Cutting Steel-Lead)
AISI 12L14 and 12L15
19.05 nm (3/4")
Category AISI
12
Tariff Schedule Number (s) 608.5005
8 1/2%
4th
3rd Quarter
$452
Base Price per Metric Ton
Charges to CIF
Ocean Freight
:
est Coast
Gulf Coast
Atlantic Coast
Great Lakes
$30
35
40
58
Hand 1 i ng
Quarter
$544
1nterest
$ 7
$ 9
5
4
4
12
12
15
Insurance \% of base price + extras* ocean freight-
extras
Size, See Table p. 12-4'
Note:
All prices on p 12-4 are to be increased by 4.86%
for all bars exported to the United States on or
after October 1, 1978.
12-4
REV- Aug, 1978
Size Extras for Cold Finished Steel Bars ($ Extra/M.T.)
Shape
Round
Size
Hexagon
Up to 3/16" inclusive
66
162
3/16" thru 5/16"
44
88
5/16"
"
7/16
35
53
7/16
"
5/8"
18
35
7/8"
Base
8
5/8"
7/8"
" 1-7/16"
8
18
1-7/16"
" 1-3/4"
14
31
1-3/4"
" 2-11/16"
18
44
2-1 1/16'
it
26
—
35
—
3"
3-3/4
Note:
3
n
" 3-3/4"
4"
44
All prices are to be increased by 4.86% for all
bars exported to the United States on or after
October 1, 1978.
14-1
Rev. Aug. 1978
Electric Resistance Welded Carbon Steel Pressure Tubing
For Use In Boilers, Heat Exchangers, Condensers, Etc.
Category
AISI
14
Tariff Schedule Number(s)
610.32
0.30 per lb.
3rd Qtr.
4th Qtr.
$461
Charges to CIF
West Coast
Gulf Coast
Ocean Freight
See Freight Table
Atlantic Coast
Great Lakes
$483
Handling
Interest
$7
5
$9
11
4
4
12
15
Insurance 1% of base price + extras + ocean freight
Extras
A.
Outside Diameter and Wall Thickness
B.
Other Extras
(1) Specifications
(2) Steel Requirements
(3) Special Dimensional Tolerance
Note:
All prices on pg. 14-3 are to be increased by 4.86% for
tubing exported on or after Oct. 1, 1978.
14-2
FREIGHT CHARGES ON PIPE AND TUBE PRODUCTS
($/MT - Applies to all products in category 14 and 15)
Freight Pacific Gulf Atlantic Great Lakes
Pipe (up to 40')
Outside diameter
up to:
4"
5"
6"
8"
10"
12"
14"
16"
18"
20"
22"
24"
26"
28"
30"
32"
34"
36"
38"
40"
42"
44"
46"
48"
$27
29
31
32
33
34
35
35
36
37
38
39
40
42
43
45
46
48
51
53
56
59
63
66
$35
35
36
37
38
39
41
42
43
45
46
47
48
49
50
51
52
54
57
61
64
66
70
73
$37
37
37
39
39
41
41
44
44
47
50
50
53
53
53
55
55
57
60
64
66
69
73
76
$50
50
52
54
56
58
60
61
63
65
66
68
70
72
74
76
78
80
83
87
91
95
99
103
14-3
REV. Aug. 1978
BASE PRICE INCLUDING OD/WT EXTRAS ($/MT)
ELECTRIC RESISTANCE WELDED CARBON STEEL PRESSURE TUBING
AISI 14 TSUSA 610.32
NOTES
OD/
WT
.049
.065
.083
.095
.105
.109
.120
.125
.134
.135
.148
.150
.165
.180
.200
.203
.220
.238
. 259
284
• C \J "
.300
3/4
783
760
668
668
645
645
645
1
IX
714
645
645
598
576
576
576
576
576
576
668
645
598
598
553
530
530
530
530
530
530
553
553
553
IX
598
553
530
506
483
461
461
461
461
461
483
483
506
530
530
530
1 3/4
598
530
506
483
461
461
461
461
461
461
461
461
461
461
483
483
506
553
2
2 1/8
506
483
483
461
461
461
461
461
461
461
461
461
461
483
483
506
553
506
483
483
461
461
461
461
461
461
461
461
461
461
461
483
506
553
2%
506
483
461
461
461
438
438
438
438
438
461
461
461
461
461
483
506
2 3/8
483
483
461
461
461
438
438
438
438
438
438
438
461
461
461
483
483
2/2
483
461
461
461
438
438
438
438
438
438
438
438
438
438
438
461
461
2 3/4
3
483
461
461
461
438
438
438
438
438
438
438
438
438
438
438
461
461
483
461
461
438
438
438
438
438
438
438
438
415
415
415
438
438
461
3%
3V2
4
461
461
461
438
438
438
438
438
438
438
438
415
415
415
438
438
461
483
461
461
438
438
438
438
438
438
438
438
415
415
415
438
438:
438
461
483
483
461
461
438
438
438
438
415
415
415
415
438
438
438
461
Intermediate wall thickness will be priced on the next heavier wall shown.
Note: All prices are to be increased by 4.86% for tubing exported
on or after Oct. 1, 1978.
*V/z
530
483
483
461
461
461
438
415
415
415
415
438
^38
438
461
ELECTRIC RESISTANCE WELD PRESSURE TUBING
SPECIFICATIONS .AND SPECIAL DIMENSIONAL
TOLERANCES EXTRAS
Specifications
ASIM
ASTM
ASTM
ASIM
ASTM
A-178 Grade A
A-178 Grade C
A-214
A-334 Grade 1
A-423
per cent
Base
5 %
Base
10 %
25 %
Steel Requirements
ver cent
Low carbon 25% mean
or under (But not under
101 mean)
For closer than 10 point
range but not closer
than 5 points
For carbon over 25% mean
thru 55% mean
For carbon steel containing
,20% to 40% copper
Special Dimensional Tolerance
Base
5 %
5 %
5 %
If the outside diameter tolerance
is specified closer than standard
ASTM or ASME specification tolerance
but not less than 60% of standard
ASIM or ASME specification
tolerance
7%%
14-5
FJfVISED ^_,n
"August, 1978
ELECTRIC RESISTANCE WELD PRESSURE TUBING EXTRAS
(Continued)
Cut Length Extra
Cut Lengths (Feet)
Extra (oer cent)
Under 10
10
36
40
44
48
To be announced
Ease
0 to 5
7.5
10
To be announced
to 36
to 40
to 44
to 43
and over
Quantity Extra
Weight (pounds)
Extra (per cent)
10,000 or more
5,000 to 9,999
Under 5,000
Ease
20
To be announced
Testing Extra
Non-Destructive or Hydrostatic Testing
to ASTM A-450
Ease
Non-Destructive and Hydrostatic Testing
to ASTM A-450
3%
Packaging Extra
Weight per bundle
under 1 metric ton
1 thru 5 metric ton
Over 5 metric ton
To be announced
Base
To be announced
14-6
| REV. JULY, 1978
Continuous Butt Welded Standard Pipe
Category AISI
14
Tariff Schedule Number(s) 610.32 0.3$/3b.
3rd Quarter
4th Quarter
307
Base Price per Metric Tan $293
Oiarges to CIF Ocean Freight Handling Interest
West Coast See Freight Table $^ $6
Gulf Coast
Atlantic Coast
Great Lakes
^
*
8
10
Insurance 1% of base price + extras + ocean freight
Extras
A.
Outside Diameter/Wall Thickness, ii^lnding Black or Galvanized,
Threaded and Coupled or Plain End.
B. Other
1)
2)
3)
4)
5)
6)
Extras - Available on Request
Grcoving
Pickling%
Caustic Washing
Drifting
Drying
Cut Length
NOTE: All prices on pg. 14-7 are to be increased by 4.86% for pipe
exported to the United States on or after Oct.l 1978.
Rev. Aug, 1978
14-7
BASE PRICE, INCLUDING O.D./WT., GALVANIZING, THREADED AND COUPLED EXTRAS
CONTINUOUS BUTT WELDED PIPE
DESCRIPTION
AISI 14 TSUSA 610.32
NOM. (INCHES)
P.P. (INCHES)
1/2
3/4
1
1%
IX
2 3/8
2 7/8
3%
STD WEIGHT, BLK, PLAIN END
317
308
302
300
300
293
293
293
300
300
EX STRONG, BLK, PLAIN END
317
317
310
307
307
302
302
302
307
307
STD WEIGHT, GALV, PLAIN END
408
394
383
377
377
377
372
372
377
377
EX STRONG, GALV, PLAIN END
420
405
395
387
387
383
383
383
387
387
STD WEIGHT, BLK T AND C
354
342
329
326
326
320
320
320
331
331
EX STRONG, BLK T AND C
364
351
339
33B
335
329
329
329
342
342
STD WEIGHT, GALV, T AND C
446
427
410
403
403
399
399
399
409
409
EX STRONG, GALV, T AND C
459
440
422
416
416
410
410
410
421
421
Note:
All above prices are to be increased by 4.86% for tubing
exported on or after October 1, 1978.
4
4y2
14-8
I
REV. A u g , 1978
ELECTRIC RESISTANCE WELDED PIPE, EXCLDDING OIL WELL CASING, WITHCOT COUPLING
Category AISI
14
Tariff Schedule Number(s)
2C/lh.
610.32
4th Quarter
344
3rd QuarterBase Price per Metric Ton $328
Qiarges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
Ses
**«*•**
Handling
Table
Interest
$7
5
4
4
$ 6
8
9
11
Insurance 1% of base price + extras * ocean freight
Extras
A.
Outside Diameter/Wall Thickness by Grade
3.
Galvanizing/ Threading & Coupling
C.
Other - Available on Request
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
Grooving
Caustic Washing
Pickling
Drifting
Dry (BUc. Pipe Only)
Weight Tolerance
Straightness
Hydrostatic Tests
Quantity Extras
Cut Length Extras
NOTE: All prices on pgs. 14- through 14-9 are to be increased by 4.86%
for pipe exported to the United States on or after Oct. \$ 1978.
Rev. Aug.
1978
14-9
BASE PRICES INCLUDING OD/WT AND GRADE EXTRAS ($/M.T.)
ELECTRIC RESISTANCE WELD PIPE, EXCLUDING OIL WELL CASING, WITHOU
COUPLING
X42
API
X46
5LX
X52
367
377
378
387
388
399
400
410
410
421
422
433
.203
.276
357
376
367
378
378
388
389
400
400
410
410
422
3%
.216
.300
347
357
358
367
368
378
379
389
389
400
400
410
4
.226
.318
347
357
358
367
368
378
379
389
389
400
400
410
4%
.125
.141
.156
.172
.188
.203
.219
.237
.337
351
347
347
347
347
347
347
347
357
367
358
358
358
358
358
358
358
367
379
368
368
368
368
368
368
368
378
389
379
379
379
379
379
379
379
369
400
389
389
389
389
389
389
389
400
410
400
400
400
400
400
400
400
410
5 9/16
.156
.188
.219
.258
.375
343
343
343
343
352
352
352
352
352
363
363
363
363
363
373
373
373
373
373
384
383
383
383
383
395
394
394
394
394
405
6 5/8
.125
.141
.156
.172
.188
.203
.219
.250
.280
.375
.432
353
352
343
343
343
343
343
343
343
343
352
363
363
352
352
352
352
352
352
352
352
363
373
373
363
363
363
363
363
363
363
363
373
384
384
373
373
373
373
373
373
373
373
384
395
395
383
383
383
383
383
383
333
383
395
405
405
3 94
3 94
394
394
394
394
394
394
405
O.D.
W.T.
2 3/8
.154
.218
2 7/8
A53 & API
GRADES A & B
Note:
GRADES
X56
X60
All above prices are to be increased by 4.86%
for tubing exported on or after October 1, 1978.
REV. August, 1978
14-10
BASE PRICES INCLUDING OD/WT AND GRADE EXTRAS ($/M.T.)
ELECTRIC RESISTANCE WELD PIPE, EXCLUDING OIL WELL CASING, WITHOUT
COUPLING
A53 & API
API
5LX
Grades
W.T.
GRADES A & B
X42
X46
X52
X56
X60
/8
.125
.156
.172
.188
.203
.219
.258
.277
.312
.322
.344
.375
.500
/4 .156
.172
.188
.203
.219
.250
.279
.307
.344
.365
.500
/4 .172
.188
.203
.219
.250
.281
.312
.330
.344
.375
.406
.500
.188
.203 Note:
338
338
338
328
328
328
328
328
328
328
328
328
338
347
347
347
338
338
338
338
338
338
338
338
338
347
358
358
358
347
347
347
347
347
347
347
347
347
358
368
368
363
358
358
358
358
358
358
358
358
358
368
378
378
378
367
367
367
367
367
367
367
367
367
378
388
388
388
377
377
377
377
377
377
377
377
377
388
338
338
338
328
328
328
328
328
328
328
338
347
347
347
338
338
338
338
338
338
338
347
358
358
358
347
347
347
347
347
347
347
358
368
368
368
358
358
358
358
358
358
358
368
378
378
378
367
367
367
367
367
367
367
378
388
388
388
377
377
377
377
377
377
377
368
338
338
328
328
328
328
328
328
328
328
328
338
347
347
338
338
338
338
338
338
338
338
338
347
358
358
347
347
347
347
347
347
347
347
347
358
368
368
358
358
358
358
358
358
358
358
358
368
378
378
367
367
367
367
367
367
367
367
367
378
368
368
377
377
377
377
377
377
377
377
. 377
368
338
338
347
347
358
358
368
368
378
378
368
368
All above prices are to be increased by 4.86%
for tubing exported on or after October 1, 1978.
Rev. Aug. 1978
14-11
BASE PRICES INCLUDING OD/WT AND GRADE EXTRAS ($/M.T.)
ELECTRIC RESISTANCE WELD PIPE, EXCLUDING OIL WELL CASING, WITHOUT
COUPLING
W.T.
A53 & API
Grades A & B
X42
API
X46
&LX
X52
Grades
X56
X60
.219
.250
.281
.312
.344
.375
.438
.500
328
328
328
328
328
328
328
338
338
338
338
338
338
338
338
347
347
347
347
347
347
347
347
358
358
358
358
358
358
358
358
368
367
367
367
367
367
367
367
378
377
377
377
377
377
377
377
388
.188
.203
.219
.250
.281
.312
.344
.375
.438
.500
338
338
328
328
328
328
328
328
328
338
347
347
338
338
338
338
338
338
338
347
358
358
347
347
347
347
347
347
347
358
367
367
357
357
357
357
357
357
357
367
378
378
367
367
367
367
367
367
367
378
388
388
377
377
377
377
377
377
377
388
Note:
All above prices are to be increased by 4.86%
for tubing exported on or after October 1, 1978.
Rev.
August 1978
14-12
ELECTRIC RESISTANCE WELDED PIPE, EXCLUDING OIL WELL
CASING, W/O COUPLING
AISI 14 TSUSA 610.32
GALVANIZING EXTRA; 25% of base price for specific OD/WT.
THREADING & COUPLING: 20% of base price for specific OD/WT.
GALVANIZING PLUS THREADING & COUPLING: 45% of base price for
specific OD/WT.
14-13
REV. Aug , 1978
SUBMERGED ARC WELDED PIPE
Category AISI
1%
Tariff Schedule Number(s) 610.32 .3 t/lb.
3rd Quarter 4th Quarter
417
Base Price per Metric Ton $398
Charges to QF Ocean Freight Handling Interest
West Coast See Freight $7 $8
Table
Gulf Coast
Atlantic Coast
Great Lakes
?
4
A
]£
10
13
Insurance 1% of base price + extras -+ ocean freight
Extras
A. Outside Diameter and Grade Extra
B. Galvanizing
C. Other - Available on Request
(1) Caustic Washing
(2) Pickling
(3) Drifting
(4) Dry
(5) Quantity Extras
(6) Cut Length Extras.
NOTE: All prices on pg. 14-14 are to be increased b> 4.86% for pipe
exported to the united States on or after Oct 1, 1978.
Rev. August J.
1978
14-14
BASE PRICES INCLUDING OD AND GRADE EXTRAS ($/MT)
Submerged Arc Welded Pipe
AISI 14 TSUSA 610.32
OD
Note:
$/MT.
16"
18"-24"
26n-48"
422
409
398
16"
18"-24"
26"-48"
16"
18"-24"
26"-48"
432
422
409
445
432
422
16"
18"-24"
26"-48"
461
445
432
16"
18"-24"
26"-48"
474
461
445
16"
18n-24"
26"-48"
485
474
461
16"
18"-24"
26"-48"
497
485
474
All above are to be increased by 4.86%
for tubing exported on or after October 1, 1978.
SUBMERGED ARC WELDED PIPE
(% OF BASE PRICE EXTRA)
GALVANIZING EXTRA: 1.8 to 2.0 02 Coating
.312
.344
.375
.406
.438
.469
.500
.562
.625
.656
4.1
4.2
4.2
4.2
4.2
4.2
4.2
4.1
4.2
4.2
4.2
4.2
4.2
4.2
4.1
4.2
4.2
4.2
4.2
4.2
4.2
4.1
4.1
4.0
4.2
4.2
4.3
4.3
4.3
4.3
4.3
4.2
4.1
4.1
4.2
4.2
4.2
4.3
4.3
4.3
4.3
4.2
4.1
4.1
4.1
4.2
4.2
4.2
4.2
4.2
4.2
4.1
4.1
4.0
3.9
3.9
4.0
4.0
3.9
3.9
4.0
4.0
4.0
4.0
4.0
3.9
3.9
3.8
3,
3.9
3.9
4.0
4.0
4.0
4.0
3.9
3.8
3.8
3,
3.9
3.9
3.9
3.9
3.9
3.9
3.9
3.8
3.8
3,
3.9
3.9
3.9
3.9
3.9
3.8
3.8
3.8
3.
4.0
14-16
REVISED
Aug., 1978
ELECTRIC RESISTANCE WELDED STRUCTURAL TUBING
TO ASTM A 500 GRADES A, B & C
Category. PxZSl
14
Tarzlf Schedule Number(s)
Base Price per Metric Ton
61©.32
0.3 0 per lb.
3rd Quarter
4th Quarter
360
S343
Charges to CIF Ocean Freight Handling Interest
West Coast See Freight Table S7 S 6
Gulf Coast
Atlantic Coast
Great Lakes
5
&
4
Insurance 1% of base price * extras «*• ocean freight
Extras
A. Outside Diameter and Wall Thickness
3. Other Extras
(1) Pickling
(2) Cold Strip Extra
(3) ROPS Extra
Note:
All prices on pages 14-17 through 14-18
are to be increased by 4.86% for tube
exported to the Unites States on or
after October 1, 1978.
8
8
11
14 - 17
Revised Au^. 1978
BASE PRICE INCLUDING OUTSIDE DIAMETER (OD) / WALL THICKNESS (WT) EXTRAS ($/MT)
ELECTRIC RESISTANCE WELDED STRUCTURAL TUBING TO ASTM A 500 GRADE A B & 'C
AISI 14
SQUARE WT/OT .047
384
1/2
307
b/3
375
3/4
375
7/8
375
1
1 1/4 375
1 1/2 375
1 3/4
2
2%
TSUSA
610.32
.056
.063
.072
.078
.083
.095
.109
384
387
375
375
375
375
375
387
365
353
353
353
353
353
353
353
387
365
353
353
353
353
353
353
353
353
353
353
353
353
353
353
353
353
353
343
353
353
353
353
353
343
343
343
343
353
353
353
353
353
343
343
343
343
1
3 1/2
4
5
6
7
8
10
12
Note:
.120
.125.134
353
353
353
353
353
353
343
343
343
All above prices are to be increased by 4.86% for tube
exported to the United States on or after October 1, 1978.
353
343
343
343
34 3
14 - 18
Revised Aug., 1978
SQUARE
1/2
5/8
3/4
7/8
1
1 1/4
1 1/2
1 3/4
2
2%
3
3X
4
6
7
8
10
12
BASE PRICE INCLUDING OUTSIDE DIAMTER (OD) / WALL THICKNESS (WT) EXTRAS '($/MT)
Electric resistance welded Structural tubing to ASTM A 500 Grade A B & C
AISI M
TSUSA
610 .32
WT/OT
'
.155 .180&.1875 .250
.313
.375
.500
353
343
343
343
343
343
343
343
353
343
343
343
343
343
343
343
343
Note:
353
343
343
343
343
343
343
343
343
343
343
356
356
356
356
356
356
365
356
356
356
356
356
356
365
365
365
365
365
375
All above prices are to increased by 4.86% for
tube exported to the United States on or after Octber 1, 1978.
14- 19
Revised Aug., 1978
Base Price Including Outside Diameter (O.D.I) Wall Thickness (W.T.) Extras
Electric Resistance Welded Structural Tubing to ASTM A 500 Grade A B & C
($/MT)
AISI 14 TSUSA 610.3 2
Rectangular WT/OD .047 .056 .063 .072 .078. .083 ,095 .109 .120 &
.125
1x1 1/2
1 1/2x3/4
11/2x1
2x1
2x1 1/2
2 1 / 2 x 1 1/2
3x1
3x1 1/2
3x2
4x2
4x3
5x2
5x3
6x2
6x3
6x4
7x4
7x5
8x4
8x6
9x7
10x6
12x8
14x6
16x8
375
375
375
375
375
375
375
375
375
375
353
353
353
353
353
353
353
343
353
353
353
353
353
353
353
343
353
353
353
353
353
353
343
353
353
353
353
353
353
343
343
353
353
353
353
353
353
343
343
343
343
343
343
343
353
353
343
343
343
343
343
343
343
343
343
343
353
353
353
353
353
343
343
343
343
343
343
343
All above prices are to be increased by 4.86% for tube exported to the
United States on or after October 1, 1978.
14-20
Revised Aug., 107
Base Price Including Outside Diameter (O.D.I/ Wall Thickness (W.T.) Extras ($/MT)
Electric Resistance Welded Structural Tubing to ASTM A 500 Grade A B & C
AISI 14 TSUSA 610.39 610.49
Rectangular WT/OD .134 .156 .180 & .250 .313 .375 .500
.1875
1 x 1/2
1 1/2 x 3/4
11/2x1
2x1
2 x 1 1/2
2 1 / 2 x 1 1/2
3 x 1 1/2
3x2
4x2
4x3
5x2
5x3
6x2
6x3
6x4
7x4
7x5
8x4
8x6
9x7
10x6
12x 8
14x6
Note:
16x 8
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
343
353
393
353
356
356
356
356
356
356
356
356
356
356
365
365
365
336'
356
356
356
356
356
356
356
365
365
365
37 5
375
375
375
375
375
375
375
All above prices to be increased by 4.86% for tube
exported to the United States -— or after October 1, 1978.
14-21
Rev. August, 1978
OTHER EXTRAS
ELECTRIC RESISTANCE WELDED STRUCTURAL TUBING
TO ASTM A 500 GRADE A, B, & C
3rd Quarter 4th Quarter
Pickling Extra:
$13 per Metric Ton
Irrespective of
OD/WT
$14 per metric ton
Irrespective of
OD/WT
Cold Strip Extra:
$44 per Metric Ton
Irrespective of OD/WT
$46 per metric ton.
Irrespective of
OD/WT
ROPS Extra:
$58 per Metric Ton,
Irrespective of OD/WT
$61 per metric
ton. Irrespect. of
OD/WT.
14-22
Revised Aug., 1978
ELECTRIC RESISTANCE WELDED STANDARD PIPE
ASTM A 120 (A-53)
Category AISI
14.
Tariff Schedule Number(s)
610.32
Base Price per Metric Ton
3rd Quarter
S317
Charges to CIF
Ocean Freight
0.3£ per Lb.
Handling
4th Quarter
$332
Interest
See Freight Rate
West Coast
5 6
S 7
Gulf Coast
8
5
m\
Atlantic Coast
8
Great Lakes
10
Insurance 1% of Base Price + Extras + Ocean Freight
Extras
A. Outside Diameter and Wall Thickness
3. Galvanizing
C. Threading and Coupling
Note:
All above prices
on page 23 are to be increased
4.86% for tube exported to the United States on or after
October 1, 1978.
Base Price Including Outside Diameter (OD)/Wall Thickness (WT)
Threaded and Coupled Extras ($/MT)
Electric Resistance Welded Pipe to ASTM A 120
(Standard Weight)
Norn (Inches)
Blk. P.E.
B1K. T*0 C,
Galv,, p.Ef
Galv. T.& C,
OD (inches)
J
3/4
1
lj
U
342
303
440
461
332
371
425
462
320
354
323
352
408
437
323
352
408
437
415
443
2 7/8
317
317
317
323
323
345
345
345
357
357
401
401
401
408
408
430
430
430
443
443
Note: All above prices are to be increased by 4.86% for tube
exported to the United States on or after October 1, 1978.
3j
<i
2 3/8
4
>
a
Q
•
v.
H»
VO
^J
CO
prji — »
ra -i>
^
i
M N>
C/5 00
M
a
15.1
REV. Aug, 1978
SEAMLESS CARBON STEEL OIL WELL CASING, NOT THREAOED, UP TO SEVEN INCHES
IN OUTSIDE DIAMETER
AISI CATEGORY:
15
Tariff Schedule Number (s)
610.39
0.1 i/lb
3rd Quarter
4th Quarter
$407
Base Price per Metric Ton $388
Charges to CIF
Ocean Freight
Handling
West Coast
See Freight
$7
Gulf Coast
Table
5
Atlantic Coast
4
Great Lakes
4
Insurance 1% of base price + extras + ocean freight
Interest
$'7
10
10
12
Extras
A. Outside Diameter/,tell Thickness
B. Grade Extras
NOTE: All prices on pg. 15-2 are to be increased by 4,86%for oil well
casing exported to the United States on or after October l, 1978.
15-2
REV. Aug, 1978
Base Prices Including OD/WT Extras (S/MT)
SEAMLESS CARBON STEEL OIL CASING NOT THREADED, UP TO SEVEN INCHES IN
OUTSIDE DIAMETER
AISI 15 TSUSA 610.39
OQ BI $/MT
.224
.250
422
414
r>crt
.296
405
400
'.244
.275
.304
572
395
388
Intermediate WT will be priced on the nearest WT shown.
jJote:
All above prices are to be increased 4.86% for
oil well casing exported to the United States on
or after October 1, 1978.
15-3
Rev.•Aug.1978
Seamless Carbon Steel Well Casing, Not Threaded, up to 7 Inches in Outside
Diameter
Grade Extras
Grade
H.J.K
N,C,L
C-95.P
Extra
Base
+ 217,
+ 397,
15-4
REV. Aug., 1978
SEAMLESS CARBON STEEL OIL WELL CASING, NOT THREADED, SEVEN INCHES AND
OVER IN OUTSIDE DIAMETER
CATEGORY AISI
15
Tariff Schedule Number (s)
610.39
_
Base Price per Metric Ton
Charges to CIF
0.1 «t/lb.
3rd Quarter
4th Quarter
$403
$334
Ocean Freight
Handling
Interest
n
$7
See Freight
West Coast
Table
Gulf Coast
Atlantic Coast
4
Great Lakes
4
Insurance 1% of base price + extras + ocean freight
10
10
12
Extras
A. Outside Diameter/Wall Thickness
B. Grade Extras
N3TE: All prices on pg. 15-5 are to be increased by 4-86% f
casing exported to the United States on or after October
n
1
1978
15-5
Rev. Aug. 1978
Base Prices Including OD/WT Extras
($/MT)
SEAMLESS CARBON STEEL OIL WELL CASING, NOT THREADED, SEVEN
INCHES & OVER IN OUTSIDE DIAMETER
AISI
OD
i
7'
15
TSUSA
WT
610.39
$/M1
.272
.317
.264
.352
395
385
401
484
9 5/8
.352
.395
484
484
0 3/4
.350
.400
.450
383
484
383
11 3/4"
.375
.435
.489
385
484
382
13 3/8
.380
.430
.480
397
396
395
161
.438
.495
.656
423
419
419
20"
.438
.500
.635
.812
447
447
447
447
8 5/8
ed on the nearest WT shown.
Note:
All above prices are to be increased 4.86% for oil well
casing exported to the United States on or after
October 1, 1978.
Rev. Aug..
15-6
197
Seamless Carbon Steel Oil Ifell Casing, Not Threaded, 7 Inches and over in
Outside Diameter
Grade Extras
Grade
H,J,K
N,C,L
C-95, P
Extra
Base
+ 21%
+ 397
15-7
f
REV. Aug., 1978
Seamless Carbon Steel Oil Well Casing, Threaded, and Coupled, Seven Inches and
Over in Outside Diameter
Category AISI 15
Tariff Schedule Number(s) 610-42 7**%
3rd Quarter
4th Quarter
$457
Base Price per Metric Tan $436
Charges to OF Ocean Freight Handling Interest
West Coast See Freight Table $7 $ 9
Gulf Coast
Atlantic Coast
Great Lakes
I
A
4
^
^t
-3
Insurance 1% of base price + extras * ocean freight
Extras
A. Outside Diamstsr/Wall Thickness
B. Grade Extras
C. Threading 5c Couplings Extras
NOTE: All prices on pg. 15*-8 are to be increased by 4. 86% for oil
well casing exported to the United States on or after Oct. l 1978.
15-8
REV. Aug. 1978
BASE PRICES INCLUDING OD/WT EXTRAS (S/MT)
SEBMLSSS CAF3CN STEEL OIL EL CASING, TE3EaEZD> AID COUPLED, 7 INCHES & OVER
TSUSA
AISI 15
CD
wr
610.42
$/MT
7" .272
.317
448
442
.352
456
437
.395
436
436
.400
.450
436
436
435
.435
.489
438
436
435
.430
.480
452
449
448
8 5/8" .264
9 5/3" .352
10 3/4" .350
11 3/4" .375
13 3/8" .380
Intermediate WT will be priced in the nearest WT shown.
Note:
All above prices to be increased 4.86% for oil well
casing exported to the United States on or after Oct. 1, 3978.
15-9
Rev. Aug.
1978
Seamless Carbon Steel Oil IJell Casing, Threaded and Coupled, 7 inches or
more in Outside Diameter.
Grade Extras
Grade
Extra
H,J,K
N,C,L
C-95,T
Base
+ 217
+ 397
Threading and Coupling Extras
Threading &
Coupling
SIC
LTC
BTC
Threading but
without coupling
Extra
Base
+ 57
+127
-2.57
15-10
REV. Aug. 1978
SEAMLESS CARBON STEEL OIL WELL CASING,
THREADED , "AND COUPLED, UP TO 7 INCHES IN
OUTSIDE DIAMETER
Category AISI
15
Tariff Schedule Number(s)
610.42
7 1/2
3rd Quarter
4th Quarter
$462
Base Price per Metric Ton $441
Charges to CIF
Ocean Freight
Handling
Interest
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
-See Freight
Table
$7
$9
5
4
4
12
12
15
Insurance 1% of base price •*• extras * ocean freight
Extras
A. Outside Diameter/Well Thickness
B. Grade Extras
NOTE: All prices on pg.is-llare to be increased by 4.86% ^
oil well casings exported to the United States on or after October
1, 1978.
I 3-11
REV. Aug. 1978
BASE PRICES INCLUDING OD/WT EXTRAS
(S/MT)
Seamless Carbon Steel Oil Well Casing,Threaded,, and Coupled Tb
to Seven Inches
AISI
15
TSUSA
610.42
OD
WT
$/MT
4 1/2"
.224
.250
480
471
5"
.253
.296
461
453
5 1/2"
.244
.275
.304
457
659
441
Intermediate WT will be priced on the nearest \JT shewn.
Note:
All above prices to be increased by 4.86% for oil
well casing-exported to the United States on or
after October 1, 1978.
15-12
Rev. Aug., 1978
Seamless Carbon Steel Oil Well Casing, Threaded and Coupled, 7 inches in
Outside Diameter
Grade Extras
Grade
Extra
K,J,K
N.C.L
C-95,P
Base
+ 217
+ 397o
Threading and Coupling Extras
Threading 6c
Couoling
STC
LTC
BTC
Threading but
without coupling
Extra
Base
+ 57,
+127.
-2.57
Rev. August:, 197 8
15-13
99*
ELECTRIC RESISTANCE WELDED CARBON STEEL
OIL WELL CASING, NOT THREADED
Category AISI
is
Tariff Schedule Number(s) 510.39 0.1 <t/1b.
3rd Quarter 4th Quarter
Base Price per Metric Tan
$ 346
$363
darges to CIF Ocean Freight Handling InterestWest Coast: See Freight $7 $7
Gulf Coast
Table
5
Atlantic Coast
4
Great Lakes
4
Insurance \% of base price +• extras * ccean freight
9
9
11
Extras
A. Outside Diameter/Wall Thickness
Note All prices on pg. 15-14 are to be increased by
4.86 percent for oil well casing exported to the
United States on/or after Oct. 1, 19 78.
15-14
BASE PRICES INCLUDING OD/WT EXTRAS ($/MT)a
Electric Resistance Welded Carbon Steel Oil Well Casing
Not Threaded.
OD WT $/MT
4 1/2" .205 367
.224
.250
367
367
.253
.296
367
367
.275
.304
361
36i
6 5/8"
.288
.352
7"
.272
.317
361
361
361
361
5" .220 367
5 1/2" .244 361
8 5/8" .264
346
9 5/8"
.304
.352
.400
.312
.352
.395
346
34.6
346
346
346
346
10 3/4" .279 346
13 3/8"
Note:
.350
.400
.450
.330
.380
-.430
.480
346
346
346
16"
.375
.438
.495
346
346
346
346
346
346
346
20"
.438
.500
346
346
a. Grade J-55 Base, G^ade H-40 deduct 5%
All above prices to be increased 4.86% for oil well casing
exported to the United States on or after October 1, 1978.
15-15
Rev. August 1978
ELECTRIC RESISTANCE WELDED CARBON STEEL
OIL WELL CASING, THREADED
Category AISI
J
15
Tariff Schedule Number(s) 610.42 7 1/2*
3rd Quarter
4th Quarter
Base Price per Metric Tan $40 8
Charges to GIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
See Freight
Table
$428
Handling
$7
5
4
4
Interest
$8
11
n
14
Extras
A. Outside Diameter/Wall Thickness
Note: All prices on pg. 15-16 are to be increased by 4*86percent
for oil well casing exported to the United States
on/or after Oct. l, 1978.
Rev. August 1978
15-116
BASE PRICES INCLUDING OD/WT EXTRAS ($/MT)a
Electric Resistance Welded Carbon Steel Oil Well Casing, Threade
OD WT $/MT
4 1/2" .205 433
•224
.250
5" .220
433
433
.244
.275
.304
433
433
433
424
424
424
6 5/8" .288 424
.352
424
.253
.296
5 1/2"
7" .272 424
8 5/8"
.317
.264
.304
.352
.400
.279
350
.400
.450
424
408
408
408
408
408
408
408
408
408
408
408
.380
.430
.480
408
408
408
.438
.495
408
408
.500
408
408
9 5/8" .312
.352
.395
10 3/4"
3 3/8" .330 408
16" .375 408
20" -438
Note:
a. Grade J-55 Base, Grade H-40 deduct 5%.
All above prices are to be increased by 4.86% for oil well
casing exported to the United States on or after Oct. 1, 1978
15-17
r
Rev. Aug., 19 78
SEAMLESS CARBON STEEL PRESSURE TUBING, SUITABLE FOR USE IN BOILERS,
SUPERHEATERS, HEAT EXCHANGERS, CONDENSERS, REFINING FURNACES,
FEED WATER HEATERS , COLD FINISH
Category AISI
15
Tariff Schedule Number (s) 610.49 - 10%%
4th Quarter
$777
3rd Quarter
Base Price per Metric Ton $741
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
See Freight Table
Handling
Interest
$7
5
4
4
$15
19
19
24
Insurance 1% of base price + extras + ocean freight
Extras
A. Outside Diameter/Wall Thiclaiess
B. Hot Finished and Quantity Extras
C. Random Length Deductions on page 15-42 apply.
Note: All prices on pg. 15-18 through 15-40 are to be
increased by 4.8(^percent per tubing exported to the
United States on/or after October 1, 1978.
15-18
BASE PRICES INCLUDING OD/WT
EXTRAS ($MT) SEAMLESS CARBON STEEL PRESSURE
TUBING, COLD FINISH
TSUSA
AISI 15
OD Inches/
Wall Thickness
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.180
.188
.203
.220
.240
.250
Note:
1/2
4046
3590
3590
3305
3077
2907
2907
3001
2394
2280
2165
2108
1937
1937
1937
9/16
5/8
3704
3303
3303
3020
2793
2736
3001
2337
2108
1994
1880
1823
1709
1652
1652
3362
3134
3134
2850
3001
2451
2394
2136
1937
1823
1709
1652
1510
1481
1481
11/16
3134
3020
2850
3001
2451
2280
2165
1937
1766
1652
1538
1538
1424
1367
1310
1310
610.49
3/4
2907
2793
3001
2394
2280
2165
2108
1880
1709
1595
1481
1453
1310
1253
1253
1253
1253
1196
1196
13/16
2793
3001
2565
2337
2165
2051
1994
1766
1595
1481
1367
1339
1225
1168
1139
1139
1139
1139
1139
1139
7/8
15/1
2736
2451
2451
2223
2051
1937
1880
1652
1538
1424
1310
1310
1168
1139
1082
1082
1082
1082
1082
1082
1082
2679
2337
2337
2165
1994
1880
1766
1595
1481
1367
1253
1253
1139
1082
1025
1025
1025
1025
1025
1025
1082
1082
All above prices to be increased 4.86% for pressure tubing
exported to the United States on or after October 1, 1978.
Seamless Carbon Steel Pressure Tubing, Cold Finish
15-19
OD Inches/
Wall Thickness
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.180
.188
.203
.220
.240
.250
1-1/16
3001
2223
2223
2051
1880
1823
1709
1538
1424
1310
1253
1253
1139
1082
1025
1025
1025
1025
1025
1025
1025
1025
1025
2058
2165
2165
1994
1880
1766
1652
1481
1367
1253
1196
1196
1082
1025
1025
1025
1025
968
968
968
968
968
968
1-1/8
2451
2108
2108
1937
1880
1766
1652
1481
1367
1253
1168
1139
1025
1025
1025
1025
1025
968
968
968
968
968
968
1-3/16 1-1/4
2394
2108
2108
1937
1880
1766
1652
1481
1367
1225
1139
1111
1025
968
968
968
968
968
968
968
968
968
968
2394
2108
2108
1937
1880
1766
1652
1481
1367
1225
1139
1111
977
968
968
968
968
968
968
940
916
916
916
1-5/16
2394
2108
2108
1937
1823
1709
1595
1424
1310
1168
1082
1082
968
968
968
968
968
968
968
916
916
916
916
Note: All above prices are to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
1-3/8 l-7/]6
2394
2051
2051
1880
1766
1652
1538
1367
1253
1139
1082
1082
968
968
968
968
968
968
968
916
916
916
916
2394
2051
1994
1823
1709
1652
1538
1367
1253
1139
1082
1082
968
968
968
968
968
968
968
916
916
916
916
15-20
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.260
.284
.300
.313
.320
.340
.360
.375
.400
.420
,.438
.460
.500
.531
.563
.594
.625
.688
750
.813
.875
.938
1.000
x
1
_1/16
i_i/ 8
968
968
1-3/16
968
916
916
916
1-1/4
916
883
855
855
916
916
916
916
Note: All above prices are to be increased 4.86% for
the United States on or after October 1, 1978.
1-5/16
916
855
855
855
855
855
855
855
1-3/8
916
855
855
855
855
855
855
855
916
968
968
1-7/16
916
855
855
855
855
855
855
855
916
968
968
aihl tubing exported to
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
1-1/2
1-5/8
1-3/4
1-7/8
2
2-1/8
2-1/4
2-3/
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.180
.188
"•OS
-20
^ 1 A
.240
.250
2337
1994
1994
1823
1709
1595
1481
1310
1253
1139
1082
1082
968
968
968
968
968
968
968
916
916
916
916
2337
1994
1994
1823
1709
1595
1481
1310
1196
1082
1025
1025
916
916
916
916
916
916
916
855
855
855
855
2337
1994
1994
1823
1709
1595
1481
1310
1168
1082
1025
1025
916
916
916
916
916
855
855
855
798
798
798
2337
1994
1997
1823
1709
1595
1481
1310
1168
1082
1025
1025
916
916
916
916
916
855
855
855
798
798
798
2280
1937
1937
1766
1652
1538
1424
1253
1139
1025
968
1025
916
916
916
916
916
855
855
855
798
798
798
2280
1937
1937
1766
1652
1538i
1424
1253
1139
1025
968
968
916
916
855
855
855
855
855
855
798
798
798
2280
1937
1937
1766
1652
1538
1424
1253
1139
1025
968
968
916
916
855
855
855
855
855
855
798
798
798
2280
1937
1937
1766
1652
1538
1424
1253
1139
1025
968
968
916
916
855
855
855
855
826
826
798
798
798
Note:
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-22
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.260
.284
.300
.313
.320
.340
.360
.375
.400
.420
.438
.460
.480
.500
.531
.563
.594
.625
.688
.750
.813
.875
.938
1.000
Note:
1-1/2
1-5/8
1-3/4
1-7/8
916
855
855
855
855
855
855
855
916
968
968
968
968
968
855
798
798
798
798
798
798
798
855
855
916
916
916
916
798
798
798
798
798
798
798
798
855
855
855
855
855
855
916
916
798
798
798
798
798
798
798
798
798
798
798
855
855
855
855
855
2
798
741
741
741
741
741
741
741
741
741
741
798
798
798
798
798
798
798
2-1/8
2-1/4
2-3/8
798
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
798
798
798
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
798
798
798
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
798
798
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-23
Seamless Carbon Steel Pressure Tubing, Cold
OD Inches/
Wall Thickness
2-1/2
2-5/8
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.180
.188
.203
.220
.240
.250
2337
1994
1880
1709
1595
1481
1367
1196
1082
1025
968
968
916
883
855
855
855
826
798
798
769
769
769
2394
2051
1937
1766
1538
1411
1367
1196
1082
1025
968
968
883
855
826
826
826
798
769
769
741
741
741
Note:
2-3/4
. 2451
2051
1937
1766
1538
1411
1367
1196
1082
1025
968
968
883
826
798
798
798
798
769
741
741
741
741
2-7/8
2451
2051
1937
1766
1538
1411
1367
1196
1082
1025
968
940
855
798
798
798
798
798
769
741
741
741
741
3
2058
2108
1994
1766
1595
1411
1424
1253
1139
1025
940
916
826
798
798
798
798
798
769
741
741
741
741
3-1/8
3-1/4
3-3/8
2565
2165
2051
1766
1595
1411
1424
1253
1139
1025
940
916
826
798
798
798
798
798
769
741
741
741
741
2565
2165
2051
1766
1595
1424
1424
1253
1139
1025
940
916
826
798
798
798
798
798
769
741
741
741
741
2565
2165
2051
1766
1595
1424
1424
1253
1139
1025
940
916
826
798
798
798
798
798
769
.741
741
741
741
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-24
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.260
.284
.300
.313
.320
.340
.360
.375
.400
.420
.438
460
.480
.500
.531
.563
.594
.625
.688
.750
.813
.875
.938
1.000
1.125
Note:
2-1/2
2-3/8 2-3/4 2-7/8
769
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
798
798
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
798
798
798
798
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
712
712
741
741
798
798
798
798
798
798
741
712
712
712
712
712
712
712
712
712
712
712
712
712
712
684
684
741
741
769
769
769
798
798
798
3
741
712
684
684
684
684
684
684
684
684
684
684
684
684
-684
684
684
712
712
741
741
741
798
798
798
3-1/8 3-1/4
741
712
684
684
684
684,
684
684
684
684
684
684
684
684
684
684
684
684
684
741
741
741 %
769 *
798
798
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
741
741
741
798
798
3-3/8
741
684
684
684
684
v>84
684
684
684
684
684
684
684
684
684
684
684
684
684
712
712
712
712
769
769
741
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-25
Seamless Carbon Steel Pressure Tubing, Cold Finish
00 Inci-.es/
Wall Thickness
.055
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.ISO
..1S8
.203
.220
.240
.250
3-1/2
3-5/8
5-5/4
1538
1481
1310
1538
1411
1282
1139
1025
940
916
855
798
798
798
798
798
769
741
741
741
741
1411
1282
1139
1025
940
916
855
798
798
798
798
798
769
741
741
741
741
1168
1054
968
940
855
798
798
798
798
798
769
741
741
741
741
5-7/8
1411
1282
1139
1025
940
916
855
855
798
798
798
798
769
741
741
741
741
4
4-1/8 4-1/4
1310
1168
1054
940
916
855
855
798
798
798
798
769
741
741
741
741
1481
1310
1196
1111
1082
940
916
855
826
798
798
769
741
741
741
741
1481
1310
1196
1111
1082
940
916
855
826
798
798
798
798
798
741
741
4-3/
1709
1481
1310
1168
1082
940
916
855
826
798
798
798
798
798
769
741
Note: All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.260
284
.300
.313
.320
.340
.360
.375
.400
.420
.438
.460
.480
.500
.531
.563
.594
.625
.688
.750
.833
.875
.938
1.000
• 9ml \J^
Note:
3-1/2
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
741
3-5/8
3-3/4 3-7/8 4 4-1/8 4-1/4 4-5/8
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
741
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
741
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978
15-27
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
3-1/2
3-5/8 3-3/4
3-7/8
1.125
1.25
1.375
712
712
684
684
Note:
684
4
684
684
4-1/8 4-1/4
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
4-3/8
684
684
684
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
•180
.188
.203
.220
.240
.250
Note:
4-1/2
1481
1310
1168
1082
940
916
855
855
855
855
826
798
798
798
769
4-5/8 4-3/4
1481
1310
1168
1082
940
916
855
855
855
855
826
798
798
798
769
1481
1310
H68
1082
940
916
855
855
855
§55
826
798
798
798
769
4-7/8
1481
1310
1196
1139
1025
940
883
855
855
8.S5
826
798
798
798
769
5
5-1/8
1481
1310
1196
1139
1025
1481
1310
1196
1139
1025
940
916
916
883
855
826
798
798
798
769
940
916
916
883
855
826
798
798
798
769
5-1/4
5-5/8
1481
1310
1196
1139
1025
1339
1196
1139
1025
940
916
916
883
855
826
798
798
798
769
940
916
916
883
855
826
798
798
798
769
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978
15-29
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.260
.284
.300
.313
.320
.340
.360
.375
.400
.420
.438
.460
.480
.500
.531
.563
.594
.625
.688
.750
.813
.875
.938
1.000
Note:
4-1/2
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
5-1/8 5-1/4 5-3/8
4-5/8 4-3/4 4-7/8 5
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
769
741
712
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United STates on or after October 1, 1978.
769
741
712
712
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
15-30
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
4-1/2
4-5/8 4-3/4
4-7/8
1.125
I 250
l'.375
l'.S00
684
684
684
684
684
684
684
684
684
684
684
684
Note:
684
684
684
684
5
684
684
684
684
5-1/8 5-1/4
684
684
684
684
684
684
684
684
5-3/8
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
1
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
5-1/26-1/2 6-5/8 6-3/4 7
5-5/4 6 6-1/4
Wall Thickness
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.188
.180
.203
.220
.240
.250
.260
.284
Note:
1310
1196
1196
1082
1025
968
968
940
883
9
16
855
855
798
769
7
6
74
1196
1196
1082
1025
1310
1253
1111
1054
1310
1253
1111
1054
1253
1111
1054
1253
1111
1054
1253
1111
1054
968
968
940
916
883
855
855
798
769
968
968
940
916
883
855
855
798
769
769
712
968
968
940
916
883
855
855
798
769
769
712
968
968
940
916
883
855
855
798
769
769
712
968
968
968
916
916
855
855
798
769
769
712
968
968
968
916
916
855
855
798
769
769
712
m
1253
1196
1082
1082
1025
968
968
916
855
798
769
769
712
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
1
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
5-1/2
5-3/4
6
.300
.313
.320
.340
.360
.375
.400
.420
.438
.460
.480
.500
.531
.563
.594
.625
.688
•~7 r* r\
.750
.813
.875
.938
1.000
712
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
Note:
6-1/4
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
%%i
6-1/2
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
6-5/8
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
6-3/4
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
7
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-33
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
5-1/2
1.125
1.250
1.375
1.500
1.625
1.750
1.875
2.000
684
684
684
684
684
5-3/4
684
684
684
684
684
6
684
684
684
684
684
684
684
684
6-1/4
6-1/2
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
6-5/8
684
684
684
684
684
684
684
684
6-3/4
684
684
684
684
684
684
684
684
7
684
684
684
684
684
684
684
684
Rev. August 1978
15-34
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.035
.042
.045
.050
.055
.060
.065
.075
.085
.095
.105
.110
.125
.135
.150
.156
.165
.180
.188
.203
.220
.240
.250
.260
Note:
7-1/4
7-1/2
1253
1139
1110
1082
997
968
912
855
798
769
769
1310
1168
1134
1082
997
968
912
855
798
769
769
7-5/8
1162
1134
1082
997
968
912
855
798
769
769
7-3/4
1162
1134
1082
997
968
912
855
798
769
769
8
8-1/4
8-1/2
968
912
855
798
769
769
997
940
883
826
798
798
997
940
883
826
798
798
8-5/8
997
940
883
826
798
798
All above prices to be increased 4.86% for all tubing
exported to the United States on or after
October 1, 1978.
15-35
Rev. August 1978
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
.284
.300
.313
.320
.340
.360
.375
.400
.420
.438
.460
.480
.500
.531
.563
.594
.625
.688
.750
.813
.875
.938
1.000
Note:
7-1/4
7-1/2
7-5/S
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
t
m
7-3/4
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
i
684
684
684
684
8
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
WW\
684
684
684
684
8-1/4
8-1/2
8-5/8
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
684
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
684
737
737
737
737
737
737
737
709
684
684
684
684
684
684
684
684
684
684
684
684
684
All above prices to be increased 4.86% for all tubing
exported to the United States on or after
October 1, 1978.
15
Rev. 7-iUcust
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Th:ickness
1.125
1.25
1.375
1.500
1.625
1.750
1.875
2.000
Note:
7-1/4
7-1/2
7-5/8
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
7-3/4
684
684
684
684
684
684
684
684
8
8-1/4
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
684
8-1/2
684
684
684
684
684
684
684
684
All above prices to be increased 4.86% for a n tubing
exported to the United States on or after
October 1, 1978.
Rev. August 1978
15
Seamless Carbon Steel Pressure Tubing, Cold Finish
0D Inches/
Wall Thickness
0.125
.135
.150
.156
.ISO
.203
.220
.240
.250
.260
.284
.300
.515
.520
.540
.560
.575
.400
.420
.458
.460
.480
.500
Note:
8-5/4
1054
940
883
826
741
741
741
741
741
741
741
741
741
741
741
741
741
9
1111
997
940
883
798
798
798
798
798
798
798
798
798
798
798
798
769
9-1/4
9-1/2
1139
1025
968
912
798
798
798
798
798
798
798
798
798
798
798
798
769
1196
1054
997
912
798
798
798
798
798
798
798
798
798
798
798
798
769
9-3/4 10 10-1/4 10-1/2
1253
1139
1025
968
855
798
798
798
798
798
798
798
798
798
798
798
769
1282
1310
1253
1196
1054
940
883
883
883
883
883
883
883
883
883
883
883
1510
1367
1310
1253
1139
997
940
940
940
940
883
883
883
883
883
883
883
1823
1624
1510
1282
1282
1196
1139
1054
997
968
940
940
940
940
940
940
912
All above prices are to be increased 4.86% for all i.ALng
exported to the United States on or after
October 1, 1978.
15-38
Rev. August 197P
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
m
m m m m
741
741
741
741
741
10
88}
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
10-1/4
10-1/2
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
883
All above prices to be incre sed 4.86% for all tubing
exported to the Unite States on or after
October 1, 1978.
coco
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
9-5/4
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
741
9-1/2
0000
Note:
9-1/4
OOCO
COCO
• mJ \J*J
9
roro
coco
.531
563
.594
.625
.688
.750
.813
.875
.938
1.000
1.125
1.2S0
1.375
1.500
1.625
1.750
1.875
2.000
8-3/4
coco
OD Inches/
Wall Thickness
Tubing, Cold Finish
0000
OOCO
Seamless Carbon Steel Pres
15-39
Rev. August 1978
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
'
.125
.135
.150
.156
.165
.180
.188
.203
.220
.240
.250
.260
.284
.300
.315
.520
.540
.560
.575
.400
.420
.458
.460
.480
.500
.551
Note:
10-5/4
1823
1624
1510
1453
1282
1196
1139
1139
1054
1025
997
940
940
940
940
940
912
883
All above prices to be increased 4.86% for all tubing
exported to the United States on or after October 1, 1978.
15-40
Rev. August 1978
Seamless Carbon Steel Pressure Tubing, Cold Finish
OD Inches/
Wall Thickness
10-5/4
883
883
883
883
883
883
883
883
883
883
883
883
826
826
826
826
826
.565
.594
.625
.688
.750
.815
.875
.958
1.000
1.125
1.250
1.575
1.500
1.625
1.750
1.875
2.000
Note:
All above prices to be increased 4.86% for all tubing
exported to the United States on or after
October 1, 1978.
Rev. August 1978
15-41
HOT FINISHED TUBES
20% deduction
QUANTITY EXTRAS
The total quantity of one size (OD and wall thickness) of one
analysis, one shape, one grade of hot finishing or of cold
finishing, identically packaged and identically shipped determines the quantity extras.
Quantity Brackets Extras
Under 150 lbs. or 150 ft. +210%
150 to 299 lbs. or feet inclusive
300 to 59S
'
"
600 to 1,999 lbs. or feet inclusive
2,000 to 4,999 lbs. or feet inclusive
5,000 to 9,999 "
"
"
"
10,000 to 19,999 lbs. or feet inclusive
20,000 to 29,999 "
"
"
"
30,000 to 39,999 "
"
"
"
40,000 lbs. or feet or over
+135%
+ 95%
+ 75%
+ 45%
+ 30%
+ 20%
+ 10%
+ 5%
base
Rev. August 1978
15-42
Random Length Deductions
Random mill lengths of 5' and longer or with an average
length within the range of lengths (10' through 30')
with a selection range of not less than 7'
- 5%
Selected random lengths with a spread of 6' to under
7•
- 4%
Selected random lengths with a spread of 4 * to under
6'
- 3%
Selected random lenths with a spread of 2• to under
4•
- 2%
15-43
Rev. August 1978
SEAMLESS CARBON STEEL OIL WELL TUBING EUE WITH THREADING AND
COUPLING
Category AISI
15
Tariff Schedule Number(s) 610.49 10 1/2%
3rd Quarter
4th Quarter
$608
Base Price Der Metric Ton $580
Qiarges to CIF
Ocean Freight
Handling
Interest
$12
West Coast
See Freight
$7
15
Gulf Coast
Table
15
Atlantic Coast
19
Great Lakes
Insurance 1% cf base m i c e + extras * ocean freight
Extras
A. Outside Diameter/Wall Thickness and Grade Extras
Notes:
1.) All prices on pg. 15-44 are to be increased by
4.86 percent for oil well tubing exported to the
United States on/or after October 1, 1978.
15-W
Rev. Aug. 1978
BASE PRICES INCLUDING OD, GRADE EXTRAS
(S/MT)
Seamless Carbon Steel Oil Well Tubing, E U E with
Threading and Coupling
AISI
15
TSUSA 610.49
H40
J55
K55
N80
C75
L80
L90
Others
80-85
PI 05
Others
90
and up
Outside Diameter
(inches)
2 3/8" and under
638
812
981
2 7/8"-4"
580
737
888
Note:
All above prices are to be increased 4.86% on all oil
well' tubing exported to the United States on or after
October 1, 1978.
15-45 ,
Rev. Aug. 1978
SEAMLESS CARBON STEEL LINE PIPE
Category AISI
15
Tariff Schedule Number(s) 610.49 - 10 1/2%
3rd Quarter
Base Price per Metric Tan $395
Charges to Q F
Ocean Freight
4th Quarter
$414
Handling
See Freight
$7
West Coast
Table
Gulf Coast
Atlantic Coast
Great Lakes
Insurance 1% of base price + extras +
Interest
$8
5
n
4
n
4
14
ocean freight
Extras
A. Outside Diameter/Wall Thickness
B. Grade, Threaded and Coupled, Galvanized
Note: All prices on pgs. 15-46 & 15-47 are to be increased by
4.86 percent for pipe exported to the United States on/or
after Oct. 1, 19 78.
Rev. Aug. 1978
15-46
BASE PRICES INCLUDING OD/WT EXTRAS
Seamless Carbon Steel Line Pipe
ASTM A 53 Grades A and B, Black, Plain End
(AISI 15; TSUSA 610.49)
Dimensions
Outside
Wall
Diameter
Thickness
(inches)
(inches)
($/KT)
2 3/8
2 3/8
2 3/8
0.154
0.218
0.436
531
488
517
2 7/8 '
2 7/8 i
2 7/8 i
0.203
0.276
0.552
449
458
488
3 1/2
3 1/2
3 1/2
0.216
0.300
0.600
437
446
477
4
4
4
0.226
0.318
0.636
445
450
492
4 1/2
4 1/2
4 1/2
0.237
0.337
0.674
436
441
480
5 9/16
5 9/16
5 9/16
0.258
0.375
0.750
471
459
488
6 5/8
6 5/8
6 5/8
0.280
0.432
0.864
416
426
462
Note:
Dimensions
Outside
Wall
Diameter
Thickness
(inches)
(inches)
($/MT)
8
8
8
8
5/8
5/8
5/8
5/8
0.277
0.322
0.500
0.875
413
407
420
461
10
10
10
10
3/4
3/4
3/4
3/4
0.279
0.307
0.365
0.500
409
407
400
410
12 3/4
12 3/4
12 3/4
0.330
0.375
0.500
414
406
416
All above prices are to be increased 4.86% for all line pipe
exported to the United States on or after October 1, 1978.
15-47
Rev. August, 1978
SEAMLESS CARBON STEEL LINE PIPE
Grade:
Grades A and B
Base
ASTM A106
API 5LX
X42
X46
X52
+ 5%
+ $ 3/MT
+ $ 5/MT
+ $16/MT
Threaded and Coupled:
NB y2" - 3/4"
1"
2"
8"
- 1%"
- 6"
- 14"
$ 127/MT
$ 84/MT
$ 63/MT
58/MT
Galvanized:
NB X" -3/4"
1" -1 %"
2" -6"
8" -14'
Note:
$ 190/MT
135/MT
58/MT
53/MT
All above dollar value extras are to be increased by
4.86% for all line pipe exported to the United States
on or after October 1, 1978.
15-48
Rev. Aug., 19 78
Hot Rolled, High Carbon CR Steel Tube, Suitable for Use in Manufacture of
Ball or Roller Bearings AISI 52100, 60mm to 100mm
Category AISI
15
Tariff Schedule Number (s) 610.4600 13% + additional duties (see Headnote
4, TSUS)
3rd Quarter 4th Quarter
Base Price Der Metric Ton $563 $590
Charges to CIF Ocean Freight Handling Interest
$7 $|2west Coast
Gulf Coast
Atlantic Coast
Great Lakes
$63
69
85
94
5
4
4
nsurance \% of base price + extras + ocean freight
Extras
None
16
16
21
15-49
Rev. A u g . , 19 78
Cold Rolled, High Carbon Cr Steel Tube, Suitable for Use in Manufacture of
Ball or Roller Bearings AISI 52100, 60mm to 100mm
Category AISI
15
Tariff Schedule Number (s) 610.4600 13$ + additional duties (see Headnote
•z ^. n 4«
TSUS)
3rd Q u a r t e r
Base Price oer Metric Ton $836
es to CIF
West Coast
Gu1f Coast
Atlantic Coast
Great Lakes
4th Quarter
$877
Ocean Fre ght
$63
69
85
94
u
and1"ng
!nreres
$7
5
4
4
nsurance \% of base price +• extras + ocean freight
Extras
None
$18
23
23
29
15- 50
Rev. Aug.. , 1978
Seamless Stainless Steel Round Ornamental Tube
Category A IS!
AISI TP 304, I 1/4 x 0.049"
15
Tariff Schedule Number (s) 610.5235 \3% * additional duties (see Headnote
4, TSUS)
3rd Quarter
4th Quarter
Base Price oer Metric Ton
Charcss to CiF
west Coast
Gu i f Coast
Atlantic Coast
Great Lakes
$1897
Ocean Freight
$59
86
86
86
$1989
id I i n g
1nterest
$7
5
4
$39
50
50
4
62
nsur^nce IS of base price +- extras + ocean freight
ExTras
A. Size
3. Grade
Note: All dollar value extras on page 15-51 are to be increased
4.86 percent for tube exported to the United States on/or
after October 1, 1978.
Rev. August 1978
15-51
Size Extras for Seamless Stainless Steel Round Tube (TSUSA 610.5235)
Size (Inches)
00 WT % of Base Price Extra
I 1/4 0.049 Rase
I 0.049 0.9%
3/4 0.049 4.4%
Grade $ Fxtra/MT
AISI 304 Rase
AISI 410 ~440
AISI 430 _528
Note:
Above dollar value extras are to be increased
4.86% for all tube exported to the United States on
or after October 1, 1978.
Rev. Aug. 1978
15-52
Seamless Stainless Steel Square Ornamental Tube
AISI TP 304, 1 1/2 x 1 1/2 x 0.065"
Category AISI 15
Tariff Schedule Number (s) 610.5235 13% + additional
duties (see Headnote 4, TSUS)
3rd Quarter 4th Quarter
Base Price per Metric Ton $2067 $2167
Charges to OIF
West Coast $59
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
86
86
86
Handli ng
$7
5
4
4
Interest
$42
55
55
68
Insurance 1% of base price + extras + ocean
freight
Extras
A. Size
B. Grade
Note:
All dollar value extras on page 15-53 are to be
increased 4.86 percent for tube exported to the
United States on/or after October 1, 1978.
15-53
Size Extras for Seamless Stainless Steel Souare Ornamental Tuhe
Size
% of Rase Price Extra
I 1/2" x I 1/2" x 0.065"
Rase
I 1/4" x I 1/4" x 0.065"
2.6%'
I 1/4" x I 1/4 x 0.049"
3.2%
I 1/3" x I 1/8 x 0.065
2.7%
I x I x 0.065"
2.8%
I x I x 0.049"
3.5%
5/8 x 5/8 x 0.049"
8.0%
Grade
$ Extra/M.T.
AISI 304
Rase
AISI 410
AISI 430
Note:
-440
-528
Above dollar value extras are to be increased by
4.86% for all tubes exported to the United States
on or after October 1, 1978.
1C-1
Rev. Auoust 1978
Cold Heading
Category
AISI
Round Wire
Killed, 0.192"
AISI 1018,
16
Tariff Schedule Numbers
609.4105
609.4125
609.4305
609.4315
0.3jzf per lb.
0.3jz5 per lb.
8 1/2 %
8 1/2 %
Base Price per Metric Ton
3rd Quarter
4th Quarter
(See table below for base prices of various processes).
Charges to CIF
Ocean Freight
Handling
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$41
$7
Insurance
44
46
60
Interest
A
$8
10
10
13
5
4
4
B
$ 9
12
12
15
C
$10
13
13
16
1% of base price + extras + ocean freight.
Base Prices for various processing:
Base Price per Metric Ton
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Process
Hard drawn
Drawn from annealed rods
Drawn from spheroidized
annealed rods
Anneal in process
Spherodize Anneal in process
Anneal in process and drawn
from annealed rods
Spherodize anneal in process
and drawn from annealed rods
Anneal at finish size
Spherodize anneal in process
Anneal at finished size & drawn
from annealed rods
Spheroidize anneal at finished
size and drawn frcm annealed rods
Extras
See "Extras" pg. 16-2 and 16-3
3rd Quarter
Interest
Charge
A
B
$422
480
4th Quarter
$443
503
490
494
503
514
518
527
B
B
B
532
558
C
541
480
490
567
503
514
C
B
B
517
542
C
528
554
C
16-2
Rev. Aug , 1978
GRADE
rXTRAS FOR COLO HEAP INC WIRE
$ Extra /M.T.
Grade
AISI 1006 KiI led
through 1022 K?I led Steel
3rd Quarter 4th Quarter
brfse base
AISI 1010 Rimmed Steel
-13 -14
AISI 1038 KiI led Steel
+17 +18
AISI I0R2I KiI led Steel
+21 +22
16-3
Rev. Aug , 1978
3rd Quarter
SIZF EXTRAS FQR COLO HEADING WIRE (S FXTRA/M-T.)
Processing Numhrr a?
(4) thru (7)
(2) and (3)
<J!lJhru_(JJ.).
Size (Inches)
(I)
0.437 thru 0.999
12 12
0
0.192 thru 0.436
base base
base
base
0.135 thru 0.191
8 8
15
15
15 15
31
31
0.050 thru 0.104
26 26
65
43
0.062 thru 0.079
35 35
110
70
O.IOSJ
thru 0. 134
4th Quarter Size Extras for Cold Heading Wire
Size (inches)
0.437
0.192
0.135
0.105
0.080
0.062
thru
thru
thru
thru
thru
thru
(1)
0-999 13
0.436 base
0.191
8
0.134 16
0.104 27
0.079 38
n
($Extra/MT)
a)
Processing Number
(2) and (3)
(4) thru (7) (8) thru (11)
13
base
8
16
27
38
0
base
16
33
68
115
O
base
16
33
45
73
a) Processing numbers and descriptions:
(1) Hard Drawn
(2) Drawn from Annealed Rods
(3) Drawn from Spheroidized Annealed Rods
(4) Anneal in Process
(5) Spheroidized Anneal in Process
(6) Ahneal.i in Process & Drawn from Annealed Rods
(7) Spheroidize Anneal in Process & Drawn from Annealed Rods
(8) Anneal at Finished Size
(9) Spheroidize Anneal- at Finished Size
(10) Anneal at Finished Size & drawn from Annealed Rods
(11)
Spheroidize Anneal at Finished Size and Drawn from Annealed Rods
16-4
Rev.Aug , 1978
I
Bright Basic Round Wire, AISI 1008,
#8 gauge
Rimmed
Category AISI 16
Tariff Schedule Number (s) 609.4010 8 1/2%
609.4105
0.3C per lb.
609.4125
0.3c per lb.
3rd Quarter
Bass Price per Metric Torr
$347
\F
Hand 11resr
ngtarI Cnterest$7 $ 6 West Coast
Gwlf .Coast"
A+l a r r H e Goasrt
Great Lakes
4th Quarter
$364
Ocean Freight
$40
42
45
60
5
4
4"
Insurance M of base price + extras* +• ocean- freightEx trs 5
See "Extras" Tables pg. 16- 6 and pg. 16- 7.
8
8
11
16-5
Rev. Au&
i^«y«MMB
r
Galvanized Iron Round Wire, AISI
Category AISI
16
Tariff Schedule Number (s)
609.4040 8 1/2%
609.4165 0.3C per lb.
Base Price per Metric Ton
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Type I Coating, #8 gauge
4th Quarter
$458
3rd Quarter
$437
Ocean Freight
Hand Iing
Interest
$40
$7
$ 8
41
45
60
Insurance \t of base price + extras +
5
4
4
ocean freight
Extras
See "Extras" Tables pg. 16- 6 and pg. 16- 7
11
11
13
19 78
16-6
Rev. Aug.1978
Size Extras For Bright Basic Wire
And Galvanized Iron Wire
$ Extra/M.T.
Gauge
Bright Basic Wire
Galv. Iron Wr.
3rd Quarter 4th Quarter 3rd Qt
8
base
9
6
10
4th Qt.
base
base
6
13
14
8
8
17
18
11
11
12
23
24
12
13
14
33
35
13
17
18
41
43
14
21
22
50
52
15
31
33
63
66
16
39
41
76
80
17
47
49
94
99
18
57
60
112
117
19
68
71
134
141
20
81
85
155
163
base
16-7
Rev. August, 1978
PACKING EXTRAS FOR BRIGHT BASIC WIRE
AND GALVANIZED IRON WIRE
3rd Quarter
Packing Description
$ Extra/M.T
4th Quarter
$ Extra/M.T
Bare Coil
Base
Base
Paper Wrapping
13
14
Polypropylane-backed
Paper Wrapping
21
22
Paper and Hessian
Wrapping
31
33
Rev. Aug,
19 78
Round Baling Wire, 14.50
J
Category AISI
16
Tariff Schedule Number (s) 609.4120 0.3C per lb.
3rd Quarter
4th Quarter
$508
Base Price per Metric Ton $484
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
Hand IIng
Interest
$40
$7
$ 9
41
45
60
5
4
4
Insurance \% of base price + extras • ocean freight
Extras
None
12
12
15
16-9
REV. A u g .
1978
Bright Annealed Cold Drawn Stainless Steel Wire, AISI 304, 0.080"
Category AISI
'6
Tariff Schedule Number (s) 609.4540 10 1/2* + additional duties (see
Headnote 4, T.S.U.S)
Pase Price oer Metric Ton
Charaes to GIF
3rd Quarter
$2302
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$ 93
109
109
142
4th
Handling
nteres'
$7
5
4
4
nsurance \% of base orice + extras + ocean freight
Extras
See "Extras" Table pg.
16-10
$44
57
57
71
Quarter
$2414
16- I/O
REV. A u g .
1978
SIZE EXTRAS FOR COLD DRAWN. BRIGHT ANNFALED
(or ANNEALED AND PICKLED) STAINLESS STEEL WIRE
3rd
Size (Inches)
Quarter
$ Fxtra/v»,.T.
4th Quarter
$Extra/M.T.
n.200
-150
-157
0.131
- 83
- 87
0.080
Base
Base
0.040
123
129
0.032
219
230
0.020
668
700
0.016
791
829
0.012
1126
1181
0.008
1587
1664
16-11
REV. A u g .
Spring Hard Temper, Nickel Copper and Plastic Coat, Cold Drawn Stainless
Steel Wire, AISI 302, 0.040"
Category AISI
,6
Tariff Schedule Number (s) 609.4510 10 1/22 + additional duties (see Headnote 4, T.S.U.S.)
3rd Quarter 4th Quarter
Rase Price oer Metric Ton $2896
$3037
Charges to CIF
Ocean Freight
d 1 i ng
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$ 93
$7
5
109
109
142
4
4
Insurance I* of base price + extras + ocean freight
Extras
Non»
Interes
S55
72
72
89
1978
16-12
REV. A u g .
Cold Heading Cua I ity,Copoer and Molybdenum Coat, f*old Drawn Stainless Steel
Wire, ASTM 493A,XM-7, 0.131"
Category AISI
,6
Tariff Schedule Number (s) 609.4540 10 1/22 + additional duties (see Headnote 4, T.S.U.S.)
3rd Quarter
4th
Quarter
Base price oer Metric Ton $2482 $2603
Charses to CIF Oce
West Coast
•~ulf Coast
-r!antic Toast
Great Lakes
c
rei ght
$ 93
109
109
142
Hand 1i ng
$7
5
4
4
insurance It of base orice + extras + ocean freight
tixrras
None
Interest
S47
62
62
77
1978
REV. Aug. 1978
16-13
r
Cold Heading Quality, Copper and Molybdenum Coat, Cold Orawn Stainless Steel
Wire, AISI 305, 0.131"
Category AISI
16
Tariff Schedule Number (s) 609.4540 10 1/22 + additional duties (see
Headnote 4, T.S.U.S.)
3 rd Quarter 4th Quarter
Base Price oer Metric Ton $2549
$2673
Charges to CIF Ocean Freight Handling Interest
$7 $48
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$ 93
109
109
142
5
4
4
nsurance \% of base price + extras + ocean freight
Extras
None
63
63
7«
REV. A u g . 1978
16-14
Cold Heading Quality, Copoer and Molybdenum Coat, Cold Drawn Stainless Steel
Wire, AISI 410, 0.131"
Category AISI
16
Tariff Schedule Number (s)
609.4540 10 1/22 + additional Duties (s*e
Headnote 4, T.S.U.S.)
3rd
Quarter
Base Price oer Metric Ton
Charces to GIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$164 8
Ocean Freinht
$ 93
109
109
142
4th
Quarter
$1728
Hand! inq
$7
5
4
4
Interest
$31
41
41
51
!nsurance l« of base or ice * extras + ocean *rei<-:ht
Extras
None
REV. A u g . 1978
16-35
Cold Heading Quality, Copper and Molybdenum Coat,Cold Drawn Stainless Steel
Wire, AISI 430, 0.131"
Category AISI
|g
Tariff Schedule Number (s) 609.4540 10 1/22 + additional duties (see
Headnote 4, T.S.U.S.)
3rd Quarter 4th Quarter
Base Price oer Metric Ton
$1690
$1772
Charges toCIF Ocean Freight Handling Interest
$7
$32
West Coast
Gu1f Coast
Atlantic Coast
Great Lakes
$ °3
109
n9
142
'' 5
4
4
Insurance 12 of base price + extras + ocean freight
Extras
None
42
42
=>2
16-16
Revised Aug. 1978
Cold Finished, Spheroidized Annealed,
SI-MN-CR High Carbon Steel Wire
AISI 9254, 5.5mm to 13mm
Category AISI 16
Tariff Schedule Number(s) 609.4560 10.5% ad val. + additional duties
(see headnote 4, TSUS)
3rd Quarter 4th Quarter
Base Price Per Metric Ton $471
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
$58
69
72
79
^494
Handling
$7
5
4
4
Interest
$10
13
13
16
Insurance 1% of base price + extras + ocean freight
Extras:
(1) Grade Extras
(2) Size Extras
(3) Thermal Treament
(4) Vacuum Degassed Extra
(5) Cold Finish Extra
16-17
Rev. Aug, 1978
Spheroidized Annealed, SI-MN-CR High Carbon Steel Wire
(Continued)
Grade Extras
(per MT)
AISI Number
3rd Quarter
Extra ($/MT)
4th Quarter
Extra ($/MT)
9260
5150, 5155, 5160
6150
Minus 19
Minus 53
10
Minus 20
Minus 56
10
Boron Extra (if specified)
$21/MT
Size Extras
Size
3rd Quarter
Extra ($/MT)
4th Quarter
Extra ($/MT)
Over 13mm but less than 19mm
19mm and over
Minus 26
Minus 37
Minus 27
Minus 39
Thermal Treatment Extras
Regular Anneal only
No* heat'treatment
Vacuum Degassed Extra
Extra $/MT
Minus 21
Minus 63
Minus 22
Minus 66
$12
$13
$137
137
148
148
148
179
179
179
222
253
295
338
390
144
144
155
155
155
188
188
188
233
265
309
354
409
Cold Finish Extra
Size (Inches)
0.812- •0.999
0.688- •0.811
0.625- -0.687
0.562- •0.624
0.500- •0.561
0.438- -0.499
0.375- -0.437
0.312- •0.374
0.250- •0.311
0.188- •0.249
0.125- •0.187
0.094- •0.124
0.062- •0.093
16-18
Rev. Aug. 1978
Cold Finished Spheroidized Annealed
MO ALLOY STEEL WIRE
AISI 4037, 5.5mm to 13mm
Category 16
Tariff Schedule Number(s)
609.4560 10.5% ad val
+ additional duties (see headnote 4, TSUS)
3rd Quarter
Base Price per Metric Ton $492
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight
$58
69
72
79
Handling
$7
5
4
4
4th Quarter
$516
Interest
$10
13
14
17
Insurance 1% of base price + extras1 + ocean Freight
ras
(1) Grade Extras
(2) Size Extras
(3) Thermal Treatment Extras
(4) Aircraft Quality Extra
(5) Bearing Quality Extra
(6) Vacuum Degassed Extra
(7) Cold Finished Extra
16-19
Rev. Aug
1978
Cold Finished Spheroidized Annealed
MO ALLOY STEEL WIRE
(Continued)
Grade Extra - see grade extras table, pp 2-10. 2-11
4th Quarter
Size Extras 3rd Quarter
Size
over 13mm but less than 19mm
19 mm and over
Thermal Treatment Extras
Regular Annealonly
No heat treatment
Extra ($MT)
Extra($MT)
Minus 26
Minus 37
Minus 27
Minus 39
Extra ($/MT)
Minus 21
Minus 63
Minus 22
Minus 66
Aircraft Quality Extra
$26
27
Bearing Quality Extra
$26
27
Vacuum Degassed Extra
$12
(This extra is not charged when requirements are subject
to extra aircraft and/or bearing quality)
13
Cold Finished Extra
Size
o.812- -0.999
0.688- -0.811
0.625- -0.687
0.562- -0.624
0.500- -0.561
0.438- -0.499
0.375- •0.437
0.312- -0.374
0.250- •0.311
0.188- •0.249
0.125- •0.187
0.094- •0.124
0.062- •0.93
3rd Quarter
Extra ($/MT)
$137
137
148
148
148
179
179
179
222
253
295
338
390
4th Quarter
Extra ($/MT)
$144
144
155
155
155
188
188
188
233
265
309
354
409
20-1
Rev. August, 1978
20d # 6 x 13/32 x 4 M
WIRE NAILS
BRIGHT COMMON
Category AISI
20
Tariff Schedule Number (s)
646.2500
646.2622
through
646.2648
0.50 per lb
0.10 per lb
3rd Quarter
4th Quarter
$404
$424
Base Price, per Metric Ton
Charges to CIF
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$42
50
60
68
Handling
$7
5
4
4
Interest
$11
14
14
18
Insurance 1% of base price + extras + ocean freight
Extras
1.
General Extras - see Table 1, pg. 20-2.
2.
Regular and Semi-Regular Wire Nails - see Table 2, pg.
20-3 thru pg. 29-9.
Smooth Shank Specialty Wire Nails - see pg. 20-10 - pg
20-13. Special Order Size Extras, see pg. 20-14.
4.
Note:
Ring, Screw and Fluted Shank Specialty Wire Nails, see
20-15. Special Order Size Extras, see pg. 20-19.
All Extras on pgs 20-2 through pgs 20-19 are to be
increased 4.86% for all nails exported to the United
States after October 1, 1978.
20-2
REV. JULY, 1978
Table I.
General Extras
I.
MACHINE USE QUALITY
per 50 lbs.
$.84
II. PACKING STANDARD 50 lbs. Carton (loose)
base
100 lbs. Carton
SO
I lb. x 50
14.22
5 lbs. x 10
$2.95
III. PALLETIZING
per 50 lbs. $0.42
IV. QUANTITY EXTRA
Less than 2,400 lbs. per
Size
Order
Marking
Destination
ShIpment
$0.32 per 50. lbs.
20-3
REV. JULY, 1978
Regular arid Semi - Regular
TYPE/SIZE
ail Extras ( $ Extra / 50 lbs.)
TOTAL EXTRA
SIZE EXTRA
(I) Bright Common Nails
ASWG 2#d15 x 11/64" x I"
3d
0 14 x 13/64" x 1-1/4"
4d
0 12-1/2 x 1/4" x 1-1/2"
5d
I 12-1/2 x 1/4 x 1-3/4"
6d
0 I 1-1/2 x 17/64" x 2"
7d
0 H-l/2 x 17/64" x 2-1/4"
8d
0 10-1/4 x 9/32" x 2-1/2"
9d
0 10-1/4 x 9/32" x 2-3/4"
10 d
0 9 x 5/16" x 3"
12 d
0 9 x 5/16" x 3-1/4"
16 d
# 8 x 1 1 / 3 2 " x 3-1/2"
20 d
0 6 x 13/32" x 4"
30 d
0 5 x 7/16" x 4-1/2"
40 d
0 4 x 15/32" x 5"
50 d
60 d
0 3 x 1/2" x 5-1/2"
0 2 x 17/32" x 6"
(2) Bright Smooth Box Nails
$2.37
1.95
1.58
1.27
0.84
0.79
0.63
0.63
0.53
0.53
0.42
Base
0.79
0.79
0.79
1.00
($2.37)
( 1.95)
( 1.58)
( 1.27)
( 0.84)
( 0.79)
( 0.63)
( 0.63)
( 0.53)
( 0.53)
( 0.42)
( Base)
( 0.79)
( 0.79)
( 0.79)
( 1.00)
2 d ASWG 0 15-1/2 x 3/16" x I"
3d
0 14-1/2 x 7/32" x 1-1/4"
4 d
0 14 x 7/32" x 1-1/2"
5 d
0 14 x 7/32" x 1-3/4"
6 d
0 12-1/2 x 17/64" x 2"
7 d
0 12-1/2 x 17/64" x 2-1/4"
8 d
0 11-1/2 x 19/64" x 2-1/2"
9 d
# I 1-1/2 x 19/64" x 2-3/4"
10 d
# 10-1/2 x 5/16" x 3"
12 d
0 10-1/2 x 5/16" x 3-1/4"
16 d
I 10 x 11/32" x 3-1/2"
20 d
0 9 x 3/8" x 4"
30 d
0 9 x 3/8" x 4-1/2
40 d
0 8 x 13/32" x 5"
$2.95
2.32
1.90
1.48
1.16
I.II
1.00
1.00
0.79
0.79
0.74
0.63
1.16
1.16
($2.95)
( 2.32)
.90)
.48)
.16)
.11)
.00)
.00)
( 0.79)
( 0.79)
( 0.74)
( 0.63)
( 1.16)
( 1.16)
E/G EXTRA
20-4
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
SIZE EXTRA
E/G EXTRA
(3) Bright Finishing Nails Cupped Head
2 d ASWG
3
4
5
6
8
9
10
12
16
20
0 16-1/2 x 13-1/2 x 1"
0 15-1/2 x 12-1/2 x 1-1/4"
# 1 5 x 12 x 1-1/2"
0 15 x 12 x 1-3/4"
0 13 x 10 x 2" "
0 12-1/2 x 9-1/2 x 2-1/2"
0 12-1/2 x 9-1/2 x 2-3/4"
0 11-1/2 x 8-1/2 x 3"
0 1 1-1/2 x 8-1/2 x 3-1/4."
0 II x 8 x 3-1/2"
0 10x7x4"
$3.75
3.06
2.43
2.22
1.53
1.48
1.42
1.42
1.32
1.27
1. 16
$3.75)
3.06)
2.43)
2.22)
1.53)
1.48)
1.42)
1.42)
1.32)
1.27)
1.16)
$3.27
2.64
2.00
1.79
1.32
1.27
1.16
1.16
l.ll
$3.27)
2.64)
2.00)
1.79)
1.32)
1.27)
1.16)
1.16)
l.ll)
l.ll)
1.00)
(4) Bright Casing Na?Is
0
0
0
0
0
0
0
0
0
0
0
15-1/2 x 12-1/2 x 1"
14-1/2 x 11-1/2 x 1-1/4"
14 x 11 x 1-1/2"
14 x II x 1-3/4"
12-1/2 x 9-1/2 x 2"
12-1/2 x 9-1/2 x 2-1/4"
1 i -1/2 x 8-1/2 x 2-1/2"
1 1-1/2 x 8-1/2 x 2-3/4"
10-1/2 x 7-1/2 x 3"
10-1/2 x 7-1/2 x 3-1/4"
10 x 7 x 3-1/3"
I.I 1
1.00
(5) E/G (Electric Galvanized) Common Nails
3
4
5
6
7
8
9
10
12
16
20
30
40
50
60
# 1 5 x 1 1 / 6 4 " x 1"
# 14 x 13/64" x 1-1/4"
# 12-1/2 x 1/4" x 1-1/2"
# 12-1/2 x 1/4" x 1-3/4"
# 11-1/2 x 17/64" x 2"
# 11-1/2 x 17/64" x 2-1/4"
0 10-1/4 x 9/32" x 2-1/2"
# 10-1/4 x 9/32" x 2-3/4"
# 9 x 5/16" x 3"
# 9 x 5/16" x 3-1/4"
# 8 x 11/32" x 3-1/2"
# 6 x 13/32" x 4"
# 5 x 7/16" x 4-1/2"
# 4 x 15/32" x 5"
# 3 x 1/2" x 5-1/2"
# 2 x 17/32" x 6"
$5.12
4.69
4.32
4.01
3.17
3.11
2.95
2.95
2.85
2.85
2.74
2.32
3.11
3.11
3.11
3.32
($2.37)
( 1.95)
( 1.58)
( 1.27)
( 0,84)
( 0.79)
( 0.63)
( 0.63)
( 0.53)
( 0.53)
( 0.42)
(
(
(
(
(
- )
0.79)
0.79)
0.79)
1.00)
($2.74)
( 2.74)
( 2.74)
( 2.74)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
(
(
(
(
(
(
(
(
2.32)
2.32)
2.32)
2.32)
2.32)
2.32)
2.32)
2.32)
TYPE/SIZE
TOTAL EXTRA
20-5
REV. JULY, 1978
SIZE EXTRA
E/G EXTRA
(6) E/G Smooth Box NalIs
2
3
4
5
6
7
8
9
d
d
d
d
d
d
d
d
ASWG
Id d
12 d
16 d
20 d
30 d
40 d
(7) E/G
2d
3d
4d
5d
6 d
8d
9 d
10 d
12 d
16 d
20 d
(8)
0
0
0
0
0
0
0
0
0
0
0
15-1/2 x 3/16" x 1"
14-1/2 x 7/32" x 1-1/4"
14 x 7/32" x 1-1/2"
14 x 7/32" x 1-3/4"
12-1/2 x 17/64" x 2"
12-1/2 x 17/64" x 2-1/4"
11-1/2 x 19/64" x 2-1/2"
11-1/2 x 19/64" x 2-3/4"
10-1/2 x 5/16" x 3"
10-1/2 x 5/16" x 3-1/4"
10 x 11/32" x 3-1/2"
# 9 x 3/8" x 4"
# 9 x 3/8" x 4-1/2"
# 8 x 13/32" x 5"
$5.70
5.06
4.64
4.22
3.48
3.43
3.32
3.32
3.11
3.11
3.06
2.95
3.48
3.48
($2.95)
( 2.32)
( 1.90)
( 1.48)
( 1.16)
( 1.10)
( 1.00)
( 1.00)
( 0.79)
( 0.79)
( 0.74)
( 0.63)
( 1.16)
( 1.16)
$6.49
5.80
5.17
4.96
3.85
3.80
3.75
3.75
3.64
3.59
3.48
($3.74)
( 3.06)
( 2.431
( 2.23)
( 1.53)
( 1.48)
( 1.42)
<{ 1.42)
<[ 1.32)
1[ 1.27)
( 1.16)
($2.74)
( 2.74)
( 2.74)
( 2.74)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
$6.01
5.38
4.75
4.54
3.64
3.58
3.48
3.48
3.43
3.43
3.32
(:$3.27)
( 2.64)
( 2.00)
( 1.79)
( 1.32)
( 1.27)
( 1.16)
( 1.16)
( l.ll)
< l.ll)
( 1.00)
($2.74)
( 2.74)
( 2.74)
( 2.74)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
($2.74)
( 2.74)
( 2.74)
( 2.74)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
( 2.32)
Finish ing NaiIs Cuoped Head
ASWG
0
0
0
0
0
0
0
0
0
0
0
16-1/2 x 13-1/2 x 1"
15-1/2 x 12-1/2 x 1-1/4"
15 x 12 x 1-1/2"
15 x 12 x 1-3/4"
13 x 10 x 2"
12-1/2 x 9-1/2 x 2-1/2"
12-1/2 x 9-1/2 x 2-3/4"
1 1-1/2 x 8-1/2 x 3"
11-1/2 x 8-1/2 x 3-1/4"
11 x 8 x 3-1/2"
10 x 7 x 4"
E/G Casing Na ils
2d
3 d
4d
5d
6 d
7d
8d
9 d
10 d
12 d
16 d
ASWG
# 15-1/2 x 12-1/2 x 1"
0
0
0
0
0
0
0
0
0
0
14-1/2 x 11-1/2 x 1-1/4"
14 x II x 1-1/2"
14 x II x 1-3/4"
12-1/2 x 9-1/2 x 2"
12-1/2 x 9-1/2 x 2-1/4"
11-1/2 x 8-1/2 x 2-1/2"
11-1/2 x 8-1/2 x 2-3/4"
10-1/2 x 7-1/2 x 3"
10-1/2 x 7-1/2 x 3-1/4"
10 x 7x3-1/3"
20-6
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
SIZE EXTRA
H/D Extra
(9) H/D (Hot Dip Galvanized) Common Nails
2
3
4
5
6
7
8
9
10
12
16
20
30
40
50
60
ASWG
0
0
0
#
#
#
#
#
#
15 x I 1/64" x I"
14 x 13/64" x 1-1/4"
12-1/2 x 1/4" x 1-1/2"
12-1/2 x 1/4" x 1-3/4"
I 1-1/2 x 17/64" x 2"
I 1-1/2 x 17/64" x 2-1/4"
10-1/4 x 9/32" x 2-1/2"
10-1/4 x 9/32" x 2-3/4"
9 x 5/16" x 3"
5/16" x 3-1/4"
I 1/32" x 3-1/2"
13/32" x 4"
7/16" x 4-1/2"
15/32" x 5"
1/2" x 5-1/2"
17/32" x 6"
$8.91
8.49
8.12
7.81
6.96
6.91
6.75
6.75
6.65
6.65
6.54
6.12
6.91
6.91
6.91
7.12
($2.37)
( 1.95)
( 1.58)
( 1.27)
( 0.84)
( 0.79)
( 0.63)
( 0.63)
( 0.53)
( 0.53)
( 0.42)
( Base)
( 0.79)
( 0i79)
( 0.79)
( 1.00)
(10) H/D Smooth Box NaiIs
d
3
4
5
6
7
8
9
10
12
16
20
30
40
ASWG
# 15-1/2 x 3/16" x I"
# 14-1/2 x 7/32" x 1-1/4"
# 14 x 7/32" x 1-1/2"
# 14 x 7/32" x 1-3/4"
# 12-1/2 x 17/64" x 2"
# 12-1/2 x 17/64" x 2-1/4"
# I 1-1/2 x 19/64" x 2-1/2"
# I 1-1/2 x 19/64" x 2-3/4"
# 10-1/2 x 5/16" x 3"
# 10-1/2 x 5/16" x 3-1/4"
# 1 0 x 1 1 / 3 2 " x 3-1/2"
# 9 x 3/8 x 4"
# 9 x 3/8" x 4-1/2"
# 8 x 13/32" x 5"
H/D Extra
$9.50
8.86
8.44
8.02
7.28
7.23
7.12
7.12
6.91
6.91
6.86
6.75
7.28
7.28
($2.95)
( 2.32)
( 1.90)
( 1.48)
( 1.16)
( l.ll)
( 1.00)
( 1.00)
( 0.79)
( 0.79)
( 0.74)
( 0.63)
( 1.16)
( 1.16)
(II) H/D Finishing Nails Cupped Head
2 d ASWG # 16-1/2 x 13-1/2 x I"
# 15-1/2 x 12-1/2 x 1-1/4"
3
4
# 15 x 12 x 1-1/2"
# 15 x 12 x 1-3/4"
5
6
# 13 x 10 x 2"
8
# 12-1/2 x 9-1/2 x 2-1/2"
# 12-1/2 x 9-1/2 x 2-3/4"
9
•>
# I IH/2 x 8-1/2 x 3"
# I 1-1/2 x 8-1/2 x 3-1/4"
# I I x 8 x 3-1/2"
16
#10x7x4"
20
($6.54)
( 6.54)
( 6.54)
( 6.54)
( '6.72)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
($6.54)
( 6.54)
( 6.54)
( 6.54)
( 6.12)
( 6.12)
( 6.12)
( 6112)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
H/D Extra
$10.29
9.60
8.97
8.76
7.65
7.96
7.54
7.54
7.44
7.39
7.28
($3.75)
( 3.06)
( 2.43)
( 2.23)
( 1.53)
( 1.48)
( 1.42)
( 1.42)
( 1.32)
( 1.27)
( 1.16)
($6.54)
( 6.54)
( 6.54)
( 6.54)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
20-7
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
SIZE EXTRA
(12) H/D Casing NaiIs
2 d ASWG 0 15-1/2 x 12-1/2 x I"
0 14-1/2 x 11-1/2 x 1-1/4"
0 14 x II x 1-1/2"
0 14 x II x 1-3/4"
0 12-1/2 x 9-1/2 x 2"
0 12-1/2 x 9-1/2 x 2-1/4"
0 I 1-1/2 x 8-1/2 x 2-1/2"
8. a
# I 1-1/2 x 8-1/2 x 2-3/4"
9 d
# IO-i/2 x 7-1/2 x 3"
10 d
# 10-1/2 x 7-1/2 x 3-1/4"
2d
# 10 x 7 x 3-1/3"
16 d
H/D Extra
$9.81
9.18
8.55
8.33
7.44
7.39
7.28
7.28
7.23
7.23
7.12
$3.27)
2.64)
2.00)
1.79)
1.32)
1.27)
1.16)
1.16)
I.I I)
l.ll)
1.00)
$4.06
3.43
3.06
3.06
2.53
2.16
2.11
1.90
1.90
1.74
($4.06)
( 3.43)
( 3.06)
( 3.06)
( 2.53)
( 2.16)
( 2.11)
( 1.90)
( 1.90)
( 1.74)
$3.80
3.17
2.43
2.16
1.90
1.79
1.64
1.64
1.53
1.48
1.42
1.27
1.64
1.64
1.64
1.90
I[$3.80)
i[ 3.17)
[ 2.43)
1t 2.16)
<[ 1.90)
<[ 1.79)
{r 1.64)
( 1.64)
1[ 1.53)
I[ 1.48)
(' 1.42)
( 1.27)
(' 1.64)
< 1.64)
1: 1.64)
( 1.90)
(13) Cement Coated Box Na11s
2 d ASWG 0 16-1/2 x 11/64" x I
3d
# I 6 x 3/16" x 1-1/8"
4d
5 x 13/64" x 1-3/8"
4-1/2
5 x 7/32!l x 1-1/2
5d
5 x 7/32" x 1-5/8"
d
# I 3-1/2 x 1/4" x 1-7/8"
d
# I 3-1/2 x 1/4" x 2-1/8"
d
0 I2-1/2 x 17/64" x 2-3/8"
d
0 I 2-1/2 x 17/64" x 2-5/8"
d
1-1/2 x 19/64" x 2-7/8"
(14) Cement Coated Corkers Nails
2
3
4
5
6
7
8
9
10
12
16
20
30
40
50
60
ASWG
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
16 x 5/32" x {."
15 x 3/16" x 1-1/4"
13-1/2 x 7/32" x 1-1/2"
13-1/2 x 7/32" x 1-5/8"
12-1/2 x 1/4" x 1-7/8"
12-1/2 x 1/4" x 2-1/8"
11 x 9/32" x 2-3/8"
11 x 9/32" x 2-5/8"
10 x 5/16" x 2-7/8"
10 x 5/16" x 3-1/8"
9 x 11/32" x 3-3/8"
7 x 3/8" x 3-7/8"
6 x 13/32" x 4-3/8"
5 x 7/16" x 4-7/8"
4 x 15/32" x 5-3/8"
3 x 1/2" x 5-7/8"
($6.54)
( 6.54)
( 6.54)
( 6.54)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
( 6.12)
20-8
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
SIZE EXTRA
(15) Cement Coated Coolers Nails
2 d
3 d
4 d
ASWG
8 d
9 d
10 d
0
#
#
#
#
#
#
#
#
16 x 11/64" x I"
15-1/2 x 3/16" x 1-1/8"
14 x 7/32" x 1-3/8
13-1/2 x 15/64" x 1-5/8"
13 x 1/4" x 1-7/8"
12-1/2 x 17/64" x 2-1/8"
I 1-1/2 x 9/32" x 2-3/8"
I 1-1/2 x 9/32" x 2-5/8"
II x 19/64" x 2-7/8"
$3.80
3.17
2.43
2.16
1.90
1.79
1.64
1.64
1.53
($3.80)
( 3.17)
( 2.43)
( 2.16)
( 1.90)
( 1.79)
( 1.64)
( 1.64)
( 1.53)
(16) Cenent Coated or Vinyl Coaled Sinkers Nails
3 d
4
5
6
7
8
10
12
'6
.0
30
40
60
ASWG
# 15-1/2 x 11/64" x 1-1/8"
# 14 x 13/64" x 1-3/8"
# 13-1/2 x 7/32" x 1-5/8"
x 15/64" x 1-7/8"
1/2 x 1/4" x 2-1/8"
1/2 x 17/64" x 2-3/8"
x 9/32" x 2-7/8"
x 5/16" x 3-1/8"
x 11/32" x 3-1/4"
x 3/8" x 3-3/4"
x 13/32" x 4-1/4"
x 7/16" x 4-3/4"
x 1/2" x 5-3/4"
$3.17
2.43
2.16
1.90
1.79
1.64
1.53
1.48
1.42
1.27
1.64
1.64
1.90
$3.17)
2.43)
2.16)
1.90)
1.79)
1.64)
1.53)
1.48)
1.42)
1.27)
1.64)
1.64)
1.90)
$2.53
2.53
($2.40)
( 2.40)
$3.06
($3.06)
$3.06
($3.06)
$3.43
($3,43)
(17) Cement Coated Apple Box Nails
5 d ASWG # 14 x 15/64" x 1-5/8"
5-1/2 d
# 14 x 15/64" x 1-3/8"
(18) Cement Coated Fruit Box Nails
4 d ASWG # 15 x 7/32" x 1-3/8"
(19) Cement Coated Orange Box Nails
4 d ASWG # 15 x 7/32" x 1-1/4"
(20) Cement Coated Egg Case Nails
3 d
ASWG
# 15 x 7/32" x 1-1/8"
E/G EXTRA
TOTAL EXTRA
TYPE/SIZE
20-9
REV. JULY. 1978
SIZE EXTRA
E/d EXTRA
(21) Bright Barbed Roofing Nails
ASWG 0 II x 7/16" x 1/2"
x 5/8"
X 3/4"
X 7/8"
12 x 3/8"
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1"
1-1/4"
1-1/2"
1-3/4"
2"
1/2"
5/8"
3/4"
7/8"
1"
1-1/4"
1-1/2"
1-3/4"
2"
$7.33
5.33
4.33
3.69
3.27
2.80
2.53
2.32
1.90
7.65
5;96
4.96
4.33
3.80
3.43
3.17
2.95
2.53
($7.33)
( 5.33)
( 4.33)
( 3.69)
( 3.27)
( 2.80)
( 2.53)
( 2.32)
( 1.90)
( 7.65)
( 5.96)
( 4.96)
( 4.33)
( 3.80)
( 3.43)
( 3.17)
( 2.95)
( 2.53)
$8.23
6.54
5.49
4.85
4.33
4.00
3.69
3.53
3.06
8.86
7.17
6.12
5.49
4.96
4.64
4.33
4.17
3.69
($8.23)
( 6.54)
( 5.49)
( 4.85)
( 4.33)
( 4.00)
( 3.69)
( 3.53)
( 3.06)
( 8.86)
( 7.17)
( 6.12)
( 5.49)
( 4.96)
( 4.64
( 4.33)
(22) E/G (Electric Galvanized) Barbed Roofing Nails
ASWG 0 II x 7/16" x 1/2"
x 5/8"
X 3/4"
X 7/8"
X 1"
X 1-1/4"
X 1-1/2"
X 1-3/4
X 2"
ASWG # 12 x 3/8"
X 1/2"
X 5/8"
X 3/4"
X 7/8"
X 1"
X 1-1/4"
X 1-1/2"
X 1-3/4"
X 2«
\ HI]
20-10
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
(23) Bright Duplex Head Nails Size Extra Head Extra
6d ASWG #11-1/2 x 17/61*" x 1-3A" *3.1T ($2.1*8) f*°-£jj>
8d
#10-1/1* x 9/32" x 2-1/1*"
3.01
lOd
#9 x 5/16" x 2-3/V
3.01
l6d
#8 x 11/32" x 3"
3.01
2.32
2.32
( 2.32)
0.68
0.68
( 0.68)
(21*) Bright Smooth Joist Hanger Nails
ASWG #11 x 9/32" x 1-1/U" $2.61* ($2.61*)
#10-1/1* x 9/32" x 1-1/2"
# 9 x 5/16" x 1-1/2"
2.4 3
'
2 k3
(
2.4 3
'
2 k3)
(25) Tempered Hardene.d/Stee.1 .'Concrete1 Steel. Nails
ASWG # 9 x Vl6" x VI*» $6.75 ($2.71*) ($l*.0l)
ASWG # 9 x ./lb x 3/4
* t wo" 6.1*1* ( 2.1*3) ( U.01)
_1/2
xX 12"
ft 12 x 3/16" x 3/1*"
6>65
6.33
T.1T
( 2^k)
( 2.32)
( 3.17)
(
kmQl)
( U.01)
( fc-01)
(26) Bright Smooth Shank Dryvall Nails
SWG # 12-1/2 x 19/61*" x 1-1/8" $2.71* ($2.71*)
x 1-3/8"
x. 1-1/2"
2.7U
2.58
2.7*
( 2.58)
2.61*
2.53
2.85
2.32
( 2.22)
( 2.53)
0.32
( 0.32
( 0.32)
$2.95
2.7^
.
2.71*
($2.61*)
(2.1*3
.
( 2.1*3)
\*°-\\\
(
. n0.32
00 ,
( 0.32)
(27) 3right Barbed Shank Plyvood Nails
ASWG # 9 x 5/16" x 2" $2.61* ($2.32) \*°'li\
x 2-1/8"
x 2.1/2"
# 10-1/1* x 9/32" x 1-1/1*"
(28) 3right Barbed Shank Joist Hanger Nails
# II xx 1-1/1*"
9/32" x 1-1/1*"
# IIASWG
x 9/32"
# 10-1/1* x 9/32" x 1-1/2"
# 9 x 5/16" x 1-1/2"
(29) Bright Barbed Shank Truss Nails
ASWG'# 11.x 9/32" x 1-1/2" $2.80 ($2.1*8) ($0.32)
Si Shank Specialty Nail Extras ($Extra/50 lbs.)
20-11
REV. JULY, 1978
TYPE/SIZE
TOTAL EXTRA
Size Extra
(30) C.C. (Cement Coated) Plaster Board Wails
ASWG t 13 x 19/64" x 1"
x
x
I 13 A 11/32" x
x
# 13 x 3/8"
x
x
1-3/8"
1-1/2"
1-1/2"
1-3/4"
1-1/2"
1-3/4"
$3.48
48
32
4.22
4.22
4.22
4.22
(31) C.C. Smooth Shank Drywall Nails
ASWG H 12-1/2 x 19/64" x 1-3/8"
x 1-1/2"
H 12-1/2 x 1/4"
x 1-3/8"
x 1-1/2"
H 12-1/2 x 11/32" x 1-1/2"
($2.85)
( 2.85)
2.69)
2.69)
2.69)
2.69)
2.69)
Size Extra
$3. 38
3, 22
3. 38
3. 22
4, 11
(32) C.C. Barbed Shank Truss Nails
($2.74)
( 2.58)
( 2.74)
( 2.58)
( 2.58)
Size Extra
C.C. Extra
($0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
C.C. Extra
Head Extra
($0.90)
( 0.90)
( 0.90)
( 0.90)
Head Extra
($0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
($0.90)
C.C. Extra
Barbed Extra
ASWG * 11 x 9/32" x 1-1/2"
$3.43
(33) C.C. (or Vlnyle Coated) Barbed Dryuall Nails
Size Extra
C.C. Extra
Barbed Extra
ASWG H 14 x 1/4 x 1-1/4"
13 x 19/64" x 1-1/8"
12-1/2 x 19/64" x 1-1/2"
$4.22 ($3.27)
3.80
( 2.85)
3.53
( 2.58)
($0.63)
( 0.63)
( 0.63)
($0.32)
( 0.32)
( 0.32)
(34) Phosphate Coated Drywall Nails (Flat Head)
ASWG H 14 x 1/4" x 1-1/4"
13 x 19/64" x 1-5/8"
($2.48)
Size Extra
$5. 06
4.48
(35) Phosphate Coated Drywall Nails (Full Cup Head)
($3.27)
( 2.69)
Size Extra
ASWG H 14 x 1/4" x 1-1/4"
I 13 x 9/32 x 1-3/8"
t 13-1/2 x 19/64" x 1-5/8"
$5.75
5. 33
5.17
( iL) 11/D Galv. Smooth SidihK Nails
7d ASWG H 11-1/2 x 7/32 x 2-1/4"
il.1
x 2-1 A'"
$8.44
8.23
($0.63)
($0.32)
Phosphate Extra
($1.79)
( 1.79)
Phosphate Extra
($3.27)
( 2.85)
( 2.69)
($1.79)
( 1-79)
( 1.79)
Size Extra
($2.32)
( 2.11)
H/D Extra
($5.59)
( 6.12)
Full Cup
Extra
($0.69)
( 0.69)
( 0.69)
20-12
Rev. July, 19
TOTAL EXTRA
TYPE/SIZE
Size Extra
(37) Sterilized Blued Plaster Board Nails
ASWG # 13 x 19/64" x 1"
ASWG # 13 x 3/8"
x 1-1/8"
x 1-1/2"
x 1"
$1*.85
4.85
4.69
5.75
Size Extra
(38) Sterilized Blued Lath Nails
2d ASWG # 16-1/2 x 9/61*" x 1"
3d
# 15 x 11/64" x 1-1/8"
$5.59
5.59
$5.59
5.59
($3.59)
( 3.59)
Size Extra
(40) E/G Smooth Siding Nails
5d ASWG # 14 x 1-3/1*"
6d
# 12-1/2 x 2"
7d
# 12-1/2 x 2-1/4"
8d
# 11-1/2 x 2-1/2"
($3.59)
( 3.59)
Size Extra
(39) Sterilized Blued Shingle Nails
ASWG # 15 x 7/32" x 1-1/1*"
# 16 x 5/32" x 1-1/8"
($2.85)
( 2.85)
( 2.69)
( 2.85)
$5.80
1*.75
1*.75
4.51*
($3.06)
( 2.43)
( 2.43)
( 2.21)
Size Extra
(4l) E/G Shingle Nails
3d ASWG # 14 x 1/4" x 1-1/4"
4d
# 13 x 1/4" x 1-1/2"
$6.01
5.1*3
Size Extra
(42) E/G Plaster Board Nails
ASWG # 13 x 19/64" x 1"
x 1-1/4"
x 1-1/2"
(43) E/G Smooth Joist Hanger Nails
ASWG # 9 x 5/16" x l-l/i*"
x 1-1/2"
10-1/4 x 9/32" x 1-1/4"
($3.27)
( 2.69)
Blued Extra
($2.00)
( 2.00)
( 2.00)
( 2.00)
Blued Extra
($2.00)
( 2.00)
Blued Extra
($2.00)
( 2.00)
Blued Extra
($2.71*)
( 2.32)
( 2.32)
( 2.32)
g/G Extra
($2.71*)
( 2.7U)
E/G Extra
$5.59
5.59
5.1*3
($2.85)
( 2.85)
( 2.69)
($2.?!*)
( 2.7U)
( 2.7M
$5.28
1*.75
5.28
Size Extra
($2.53)
( 2.43)
( 2.53)
E/G Extra
($2.74)
( 2.32)
( 2.71*)
Head Size Extra
($0.90)
20-13
Rev. July, 1978
TYPE/SIZE
TOTAL EXTRA
(41*) E/G Barbed Shank Joist Hanger Nails
ASWG # 8 x
#
#
#
11/32" x 2"
9 x 5/16" x 1-1/2"
10-1/4 x 9/32" x 1-1/2"
11 x 19/64" x 1-1/4"
Size Extra
$5.06
5.06
5.06
5.69
(45) E/G Barbed Shank Plywood Nails
ASWG # 10-1/4 x 7/16" x 1-7/8"
Size Extra
$5.06
(h6) E/G Barbed Shank Truss Nails
ASWG # 11 x 9/32" x 1-1/2"
$5.12
$6.12
5.75
$10.12
9.50
9.31+
9.28
9.18
8.65
(49) E/G Barbed Shank Painted Siding Nails
ASWG # 12-1/2 x 3/16" x 2"
x 2-1/2"
# 13 x 3/16" x 1-1/1*"
x 1-1/2"
x 2"
($2.48)
Size Extra
(1*8) E/G Tempered Hardened Steel Concrete Stub Nails
ASWG # 9 x 5/16 x 1/2"
x 3/4"
x 7/8"
x 1"
x 1-1/2"
x 2"
($2.43)
Size Extra
(1*7) E/G Barbed Shank Siding Nails
ASWG # 14 x 3/16" x 1-3/1*"
# 13-1/2 x 1/32" x 1-1/2"
($2.43)
( 2.43)
( 2.43)
( 2.64)
($3.06)
( 2.69)
Size Extra
($3.38)
( 2.7M
( 2.64)
( 2.53)
( 2.43)
( 2.32)
Size Extra
$9.60
9.31*
10.44
10.29
$.71
($2.43)
( 2.22)
( 2.85)
( 2.69)
( 2.53)
E/G Extra
Barbed Extra
($2.32) ($0.32)
( 2.32)
( 0.32)
( 2.32)
( 0.32)
( 2.71*)
( 0.32)
E/G Extra
($2.32)
E/G Extra
($2.32)
E/G Extra
($2.71+)
( 2.71*)
E/G Extra
Barbed Extra
($0.32)
Barbed Extra
($0.32)
Barbed Extra
($0.32)
( 0.32)
T. H.
E»tr» .
($2.71+) ($4.01)
( 2.71*)
( l*.0l)
( 2.71*)
( 4.01)
( 2.71*)
( l».0l)
( 2.71*)
( l*.0l)
( 2.32)
( 4.01)
G Extra
Paint
Extra
($2.32)
( 2.32)
( 2.71*)
( 2.71*)
( 2.32)
(*l».5l»)
( 1+.51*)
Barbed
Extra
($0.32)
( 0.32)
( l*.5l») ( 0.32)
( k.5k) ( 0.32)
( U.5U) ( 0.32)
20-14
Rev. July, 1978
Special Order Size Extras For Smooth Shank Specialty Nails ($ Extra/50 lbs)
Shank-gauge
length
4-6-1/2
7-8-1/2
9-10-1/2
11-11-1/2
12-12-lA
13-13-1/2
14-14-1/2
15-16-1/2
17-18
1/2"
-
-
3.38
-
-
-
-
-
-
•;/«
-
-
2.95
-
-
-
3.80
4.11
4.59
3/4
-
-
2.74
-
3.17
3-22
3.59
3-96
4.43
7/8
-
-
2.64
-
2.95
3.06
3.43
3.80
4.22
1-1-3/8
-
-
2.53
2.64
2.74
2.85
3.27
3.59
-
1-1/2-.1-7/8
-
-
2.43
2.48
2.58
2.69
3.06
3.43
-
2-2-3/8
-
2.43
2.32
2.32
2.43
2.53
2.90
-
-
2-1/2-3
-
2.32
2.23
2.11
2.11
2.32
-
-
-
3-1/8-4
2.23
2.23
2.00
-
-
-
-
-
-
2.11
1.79
-
-
-
-
-
-
-
-
-
-
4-1/8-5 2.11
2.00
5-1/0 - up
2.00
-
-
Size extras determined from this table apply only to ite-
"'-49.
20-15
Rev. July, 1978
TYPE/SIZE
TOTAL EXTRA
(50) Bright Annular Threaded Drywall Nails
ASWG # 12-1/2 x 19/64" x 1-3/8"
x 1-1/2"
x 1-5/8"
# 12-1/2 x 1/4"
x 1"
x 1-1/4"
Size Extra
$5.06
4.85
4.85
5.06
5.06
(51") Bright Ring Shank Underlay Nails
ASWG # 13 x 3/16" x 1"
#
#
#
#
x 1-1/4"
x 1-3/1*"
12-1/2 x 3/16" x 1-1/4"
x 1-3/8"
12-1/2 x 7/32" x 1"
x 1-1/4"
x 1-1/2"
12-1/2 x 1/4" x 1-1/4"
x 1-3/8"
x 2"
14 x 3/16" x 3/1*"
x 1"
Size Extra
$6.51*
6.51*
6.07
5.06
5.06
5.06
5.06
4.85
5.06
5.06
4.64
10.81
9.44
(52) E/G Annular Threaded Dryvall Nails
ASWG # 12-1/2 x 19/64" x 1-1/4"
x 1-3/8"
x 1-1/2"
x 1-5/8"
# 13 x 19/64" x 1"
x 1-5/8"
-r.g, Screwed and Fluted Shank Nail Extras ($ Extra/50
$6.5M
6.5M
6.07)
5.06)
5.06)
5.06)
5.06)
1*.85)
5.06)
5.06)
4.64)
10.81)
9.1*1*)
Size Extra
$7.81
7.8l
7.60
7.60
9.28
8.81
($5-06)
( 5.06)
( 1*.85)
( 1».85)
( 6.5I*)
( 6.07)
Size Extra
(53) E/G Annular Threaded Shake Nails
ASWG # 13 x 3/16" x 1-1/2"
x 1-3A"
x 2"
($5.06)
1*.85)
J4.85)
5.06)
5-06)
$8.81
8.81
7.70
lbs.)
($6.07)
( 6.07)
( 5.38)
E/G
Extra
$27Tl+)
2. 71*)
2.7V
2. Ik)
2.1k)
2.7k)
E/G
Extra
($2.71*)
( 2.71*)
( 2.32)
20
Rev. July
I'lPE/SIZE
TOTAL EXTRA
Size Extra
ASWG 0 12-1/2 x 19/64" x 1-1/4"
x 1-3/8"
x 1-1/2"
x 1-5/8"
$7.07
7.07
6.86
6.86
(55) Blued Annular Threaded Underlay Nails
ASWG # 14-1/2 x 3/16" x 3/4"
x 1"
# 11* x 3/16" x 3/4"
x 1"
x 1-1/4"
# 13 x 3/16" x 1"
x 1-3/1*"
# 12-1/2 x 7/32" x 1-1/4"
x 1-1/2"
(56) C.C. Annular Threaded Drywall Nails
ASWG # 12-1/2 x 19/61*" x 1-1/4"
x 1-3/8"
x 1-1/2"
x 1-5/8"
# 13 x 19/64" x 1"
x 1-1/1*"
$12.81
11.45
12.81
11.45
11.45
8.5I*
8.39
7.07
6.86
$5.70
5.70
5.1*9
5.1+9
7.17
7.17
(57) Hot Dip Galv. Annular Threaded Shake Nails
ASWG # 14 x 5/32" x 1-3/8"
x 1-3/1*"
# 13 x 5/32" x 2"
# 12-1/2 x 13/64" x 2-1/2"
8
($5.06)
( 5.06)
( 1*.85)
( 1*.85)
Blued Extra
($2.00)
( 2.00)
( 2.00)
( 2.00)
Size Extra
Blued Extra
($10.81)
( 9.1*M
( 10.81)
( 9.1*1*)
( 9vl*U)
( 6.51*)
( 6.07)
( 5.06)
( 1*.85)
($2.00)
( 2.00)
( 2.00)
( 2.00)
(2.00)
( 2.00)
( 2.00)
( 2.00)
( 2.00)
Size Extra
C.C. Extra
($5.06)
( 5.06)
( l».85)
( U.85)
( 6.5I*)
( 6.5I*)
($0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
Size Extra
H/D Galv. Extra
$15.98
15.51
11.50
10.60
($9.1*1*)
( 8.97)
( 5.38)
( 1*.48)
( 6.12)
( 6.12)
(58) Tempered Hardened Steel Ring Shank Pole Barn Nails
ASWG # 7 x 3/8" x 4"
~
$8.49
x 5"
9.39
Size Extra
($4.48)
( 5.38)
T.H. Extra
($4.01)
( l*.0l)
($6.51*)
( 6.5M
2^-17
Rev. July,
TOTAL EXTRA
TYPE/SIZE
Size Extra
(59) Bright Drive Screw Nails (Regular Steel ^-1023)
ASWG # 12 x 1/4" x 1-1/2"
x 2"
# 11-1/2 x 9/32" x 2-1/1*"
# 11 x 9/32" x 2-1/4"
# 11 x 9/32" x 2-1/2"
# 10 x 5/l6" x 3"
$1*.85
4.64
4.64
4.64
4U8
4.48
(60) Bright Drive Screw Nails (Stiff Stock ^-1030)
ASWG # 11-1/2 x 9/32" x 2"
x 2-1/4"
# 11 x 9/32" x 2-1/2"
$5.U3
5-1*3
5.28
(6l) Bright Drive Screw Nails (Stiff Stock /6-1040)
ASWG # 11-1/2 x 9/32" x 2"
x 2-1/4"
# 11 x 9/32" x 2-1/2"
$5.64
5.64
5.1*9
(62) C.C. Drive Screw Nails (Regular Steel ^-1023)
ASWG # 12 x 1/1*" x 1-1/2"
# 11-1/2 x 9/32" x 2"
x 2-1/4"
# 11 x 9/32" x 2-1/2"
# 10 x 5/16" x 3"
# 9 x 5/16" x 3-1/2"
$5.1*9
5.28
5.28
5.12
5.12
5.12
(63) Tempered Hardened Steel Drive Screw Nails
ASWG 0 11-1/2 x 9/32" x 2-1/4"
# 11 x 9/32" x 2-1/2"
$8.65
8.49
(64) Tempered Hard Steel Drive Screw Flooring Nails
6d # 11-1/2 x 13/64" x 2"
7d # H-l/2 x 13/64" x 2-1/4"
8d # H-l/2 x 13/64" x 2-1/2"
$8.65
8.65
8.49
($1*.85)
( 4.64)
( 4.64)
( 4.64)
( 4.48)
( 4.48)
Size Extra
Grade Extra
($4.61*)
( 4.64)
( 4.48)
($0.79)
( 0.79)
( 0.79)
Size Extra
Grade Extra
($4.64)
( 4.64)
( 4.48)
($1,00)
( 1.00)
( 1.00)
Size Extra
C.C. Extra
C$4.05)
( 4.64)
( 4.64)
( 4.48)
( 4.1*8)
( 4.48)
($0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
( 0.63)
Size Extra
T.H. Extra
($4.64)
( 4.48)
($l*.0l)
( i*.oi)
Size Extra
T.H. Extra
($4.6U)
( k.ok)
( 1*.1»8)
($4.01)
( U.01)
( i*.oi)
20-18
Rev. July, 1978
TYPE/SIZE
TOTAL EXTRA
(65) bright Annular Threaded Truss Nails
ASWG Mix 9/32" x 1-1/2"
Size Extra
$4.75
(66) Tempered Hardened Steel Ring Shank Punel Board Nails
ASWG H 16-1/2 x 1"
x 1-1/4"
x 1-5/8"
$14.35
14.35
13.67
(67) Tempered Hardened Steel Ring Shank E/G Color Painted
Panel Board Nails
ASWG H 16-1/2 x 1"
x 1-1/4"
x 1-5/8"
$21.63
21.63
20.94
(68) Tempered Hardened Steel E/G Screw Siding Nails
7d ASWG U 11-1/2 x 7/32" x 2-1/4"
8d
U 11-1/2 x 7/32" x 2-1/2"
$10.97
10.81
$10.29
9.86
9.39
9.39
9.18
8.97
8.49
(70) Tempered Hardened Steel H/D Galv. Screw Siding Nails
7d ASWG II 11-1/2 x 7/32" x 2-1/4"
8d
H 11-1/2 x 7/32" x 2-1/2"
Size Extra
T.H. Extra
($10.34)
( 10.34)
( 9.65)
($4.01)
( 4.01)
( 4.01)
Size Extra
EG
T.H. Extra Extra
($10.34)
( 10.34)
( 9.65)
Size Extra
(69) Tempered Hardened Steel Fluted Masonry Nails
ASWG H 9 x 5/l6" x 3/4"
x 7/8"
x 1"
x 1-1/4"
x 1-1/2"
x 2"
x 2-1/2"
($4.75)
$14.77
14.61
($4.64)
( 4.48)
($4.01) ($2.74) ($4.54)
( 4.01) ( ^.74) ( 4.54)
( 4.01) ( 2.74) ( 4.54)
T.H. Extra
($4.01)
( 4.01)
Size Extra
T.H. Extra
($6.28)
( 5.86)
( 5.38)
( 5.38)
( 5-17)
( 4.96)
( 4.48)
($4.01)
( 4.01)
( 4.01)
( 4.01)
( 4.01)
( 4.01)
( 4.01)
Size Extra
T.H. Extra
($4.64)
( 4.48)
Paint
Extra
($4.01)
( 4.01)
E/G Extra
($2.32)
($^.32)
H/D Extra
($6.12)
( 6.12)
20-19
Rev. July, 1978
Special Order Size Extras for Ring, Screwed and Fluted Shank Specialty Nails ($ Extra/50 lbs.)
"^^Shank^^^gauge
length^***"^^
4-6-1/2
7-8-1/2
9-10-1/2
11-11-1/2
12-12-1/2
13-13-1/2
-
3/1*"
-
-
6.28
-
-
7/8
-
-
5.85
-
-
1-1-3/8
-
-
5v38
4.96
1-1/2-1-7/8
-
-
5.17
2-2-3/8
-
-
2-1/2-3
-
1/4-14-1/2
15-16-1/2
10.81
-
7.1*1*
10.31*
11.23
5.06
6.51*
9.1*1*
10.31+
4.75
4.85
6.07
8.97
9.65
4.96
1*.64
k.6k
5.38
8.12
4.1*8
14.48
4.48
4.1*8
1*.96
4.48
3-1/8-1*
5.61*
4.1*8
4-1/2-Up
6.07
5.38
-
-
-
Size extras determined from this table apply only to items 50-70.
-
-
-
-
-
-
-
-
-
-
21-1
Rev. August, 1978
BARBED WIRE 2 ply Iowa Type
12.50
Category AISI 21
Tariff Schedule Number
642,0200 Free
4th Quarter
3rd Quarter
Base Price per Metric Ton
$578
$ 551
Charges to CIF
Ocean Freight
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$42
50
55
60
Handl ing
$7
5
4
4
Interest
$ 9
12
12
14
Insurance 1% of base price +extras +ocean freight
Extras
None
22-1
REV. Aug., 1978
BUCK PLATE- ASTM A625-76
Category AISI
0.0083" x 34" x COIL
22
Tariff Schedule Number (s) 608.8100 9%
608.8200 8%
3rd Quarter 4th Quarter
Base Price per Metric Ton
$394
$380
Charges to CIF Ocean Freight Handling Interest
$7 $ 8West Coast
Gulf .Coast
Atlantic Coast
Great Lakes
$23
23
27
35
5
A
4
10
11
13
Insurance I? of base price + extras +• ocean freight-
ExTras
1. Width Extras
2. Thickness Extras
3. Length Extras
Note: To compute 4th Quarter Extras (i.e. for Black PLate
exported to the United States on or after October 1,
1978, multiply extras listed on p2-2 by a factor of
.9645.
BUCK PLATE
Wimii/TTIICKNESS EXTRAS
wiunv
Over 20"
lllICKNliSS
LBS.
Thru 23"
75
80
85
90
95
100
103
107
112
118
123
128
0.0083"
0.0088"
0.0094"
0.0099"
0.0105"
0.0110"
0.0113"
0.0118"
0.0123"
0.0130"
0.0135"
O.OMI"
N
N
N
N
N
N
N
N
N
N
N
N
Over 23"
Thru 27.5"
44
35
24
17
10
4
2
99 1
— 5
-10
—12
—15
(U.S. $/M • T.)
{
Over 27.5"
Thru 29"
31
21
12
5
— 1
— 6
— 8
--12
—15
-18
-21
-23
Over 29"
Thru 30.5"
Over 30.5"
8
0
— 7
-14
-19
-23
— 24
• 27
-31
• 33
— 35
— 36
j
Base
— 7
• 16
-21
—2b'
— 29
— 31
— 33
-36
— 38
—39
— 41
—
LliNGlH 11XIRA - US$ 21/M.T.
Oil 1ER EXTRAS = N
Key:
N - Subject to negotiation
- (Minus sign) - Deduction from Rase Price
Note: To compute Black Plate 4th Quarter Extras multiply above
extras by a factor of .9645.
3
<
>
C
OQ
-J I
OO.NJ
23-1
REV. Aug, 1978
r
\
ELECTROLYTIC TIN PLATE - SR-25/25
Category AISI
75L x 34" x C
23
Tariff Schedule Number (s) 608.9100 8%
608.9200
3rd Quarter 4thQuarter
Base Price per Metric Ton
0.8c per lb.
^503
515
Charges to CIF Ocean Freight Handling Interest
West Coast $26 $7 $10
Gulf Coast
Atlantic Coast
Great Lakes
27
34
37
5
4
4
Insurance \% of base price + extras +• ocearr freight-
Extras
A. Coating Extra
(1) Single Reduced ETP
(2) Double Reduced ETP
B.
Cut Length Extra
(1) Single Reduced ETP
(2)) Double Reduced ETP
C. Width Extra
(1) Single Reduced ETP
(2) Double Reduced ETP
D.
Quality Extras-ETP
(1) Type D
Single Reduced and Double Reduced
(2) Type K,A, or J
Single Reduced and Double Reduced
Note:
3rd quarter extras are on pp 23-2 to 23-7
4th quarter extras are on pp 23-8 to 23-14
13
13
16
23-2
Rev. Aug., 1978
3rd Quarter Extras Electrolytic Tinplate ($/MT)
A:
Coating extra & Base Weight Extra
(1) Single Reduced ETP
^\Coating
Base Weight.
#10
#20
#25
#35
#50
#75
#100
70
73
75
78
80
83
85
88
90
93
95
100
103
10 7
112
118
123
128
135
-5
-19
-28
-36
-41
-46
-52
-57
-61
-65
-69
-74
-78
-81
-85
-91
-95
-97
-99
16
0
-10
-18
-22
-30
-35
-41
-44
-50
-54
-60
-64
-68
-73
-79
-83
-85
-89
25
10
BASE
-8
-14
-21
-26
-33
-37
-42
-46
-53
-57
-61
-66
-73
-77
-80
-83
45
28
19
10
4
-4
-20
-17
-21
-27
-32
-39
-43
-49
-54
-61
-65
-70
-73
71
54
43
33
26
18
12
3
-1
-7
-13
-21
-26
-32
-38
-45
-52
-55
-60
116
96
84
73
65
45
49
39
34
26
20
11
4
-2
-10
-19
-25
-31
-37
169
147
134
120
112
99
92
81
74
65
59
47
40
32
23
12
4
-2
-10
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
#50/25
53
36
26
17
11
2
-3
-11
-16
-21
-26
-34
-38
-43
-50
-57
-61
-65
-70
l
#75/25
76
58
47
37
31
21
15
7
2
-4
-10
-18
-23
-28
-35
-43
-49
-53
-58
#100/25
104
85
74
62
55
45
38
30
24
17
12
2
-3
-10
-18
-26
-33
-37
-43
#100/50
12 7
10 7
95
82
75
64
57
47
41
34
27
18
12
5
-3
-13
-20
-25
-32
#135/25
141
121
109
96
88
77
70
59
54
45
39
28
22
15
6
-4
-12
-17
-23
3rd Quarter Extr
($/MT)
23-3
Rev. Aug.,
1978
Electrolytic Tin Plate
(2) Double Reduced ETP
^^^Coating
Base Weign^t
#10
#20
#25
#35
#50
#75
#100
#50/25
#75/25
#100/25
#100/50
#135/25
50 lbs
-14
15
28
57
93
155
229
68
99
139
170
191
5 3 lbs
-30
-3
10
37
73
130
198
46
76
114
143
162
55 lbs
-41
-15
-2
24
56
114
180
34
62
98
127
146
60 lbs
-55
-31
-19
5
35
87
148
14
40
73
99
117
65 lbs
-65
-43
-33
-11
17
65
121
-3
21
52
76
92
70 lbs
-75
-54
-44
-24
1
46
99
-17
6
35
57
72
75 lbs
-81
-61
-53
-34
-10
32
81
-26
-5
21
41
56
80 lbs
-87
-69
-60
-42
-20
19
65
-36
-16
8
28
41
85 lbs
-92
-75
-66
-50
-28
8
51
-43
•25
-2
17
30
90 lbs
-96
-79
-72
-56
-36
-1
39
-51
• 33
-11
6
19
95 lbs
-102
-88
-80
-65
-46
-14
25
-60
• 43
-22
-6
5
100 lbs
-106
-92
-84
-71
-53
-21
16
-65
• 50
• 30
• 14
-3
3rd
D:
Quarter
Cut Length Extra.
( 1 )_^nglo_J^2<lU£PtJl
($/MT)
(2 ). Double Reduced
1
ETP
ETP
Bnao Weight
Base Weight
701 bs
25
501bs
35
73lb 3
24
531bs
33
75lbs
23
551bs
32
78lbs
22
60) bs
30
801bs
22
651bs
26
83lbs
21
701bs
25
20
751 bs
23
881bs
20
80ibs
22
90lb 3
19
851bs
20
931bs
901bs
951bs
19
18
951bs
19
18
1001b 9
17
1001b 6
17
103lb3
17
1071bs
16
112lbs
16
U81bs
15
14
851bs
1231bs
128lbs
13*lbs
14
13
23-5
Rev. Aug., 1978
3rd Quarter
2l Width Extra ( $ /MT )
( 1 ) Sin/rlo Reduced
Undor 26 inch
Baso Weight
ETP
Ovor 26 inch
thru. 27-1/2 inch
74
Over 27-1/2 inch
Ovor 30-t/2 inch
Ovor 29 inch
thru. 29 inch
thru. 30-1/2 inch
ETP
47
ETP
ETP
33
8
71
45
31
8
751ba
70
4.4
31
781 bs
66
42
28
80) bs
64
41
28
631bs
62
40
27
05lb3
61
39
26
881 bs
59
38
25
6
901b a
58
37
25
6
931bs
56
36
24
6
951bs
55
35
23
6
lOOlbs
52
33
22
5
I03lbs
51
32
22
5
107lbs
49
31
21
5
1l2lbs
46
30
Il81b3
44
27
123lbs
42
26
20
19
18
5
5
4
128lbs
40
I351bs
38
25
24
18
17
4
4
ETP
•
70lbs
731bs
Base
.—-
,
23-6
Rev. Aug., 1978
3rd Quarter
C: Width Extra C$./*MT)
( 2 ) Doublo Reducod
•
-
•
-
•
-
•
Undor 26 inch
Ovor 26 inch
Ovor 27-1/2 inch
thru. 27-1/2 inc 1
Baso Weight
fcTP
50lbs
ETP
lliru. 29 inch
ETP
>
Over 29inch
than. 30-1/2 inch
ETP
104
98
66
62
45
43
12
12
60
55
41
601b 3
95
87
38
11
10
651bs
80
51
35
8
701 bs
74
47
33
8
75ibs
001 ba
70
64
44
41
31
28
7
7
85ibs
61
39
26
7
901bs
58
37
25
6
951ba
55
35
23
6
tOOlba
52
33
22
5
531bs
55lbs
1
.....
Over 30-1/2 inch
ETCP
Basio
*
4
..
23-7
Rev. A u g . , 1978
Third Quarter
D
: Quality Extras
( 2 ) Type
) Singlo Reduced
Baso
ETP
2 ) Dpublo Reducod
Base
Weight
K
. A or J
2 ) Double Reduced
ETP
Base
Weight
ETP
.Weight
•
36
34
501bs
50
501bs
33
531bs
46
531D3
31
33
55ib3
45
551bs
30
78lbs
32
601bs
41
601bs
27
8011)3
651bs
38
65lbs
25
831bs
31
30
70ib3
701bs
23
851bs
30
751b3
751 bs
22
881 bs
801 bs
601bs
901 bs
28
27
36
34
32
851bs
30
851ba
20
19
931bs
26
901bs
27
901 bs
18
95ibs
951bs
26
24
951bs
17
lOOlbs
26
24
lOOlbs
16
I031bs
24
I071ba
1l8lbs
23
22
21
1231bs
20
128lba
19
18
70lbs
731bs
75lbs
112H)3
I351bs
i
i
lOOlbs
1. Single Reduced ETP
.Coating
#10
#20
Base Weight*
-5
70 lbs.
16
0
73 lbs.
-19
-29
-10
75 lbs.
-18
-37
78 lbs.
-23
-42
80 lbs.
-31
-47
83 lbs.
-36
-53
85 lbs.
-58
-42
88 lbs.
-45
-62
90 lbs.
-51
-67
-71
-55
93 lbs.
-61
-76
95 lbs.
-80
-66
100 lbs.
-83
-70
103 lbs.
-75
-87
107 lbs.
-81
-93
112 lbs.
-85
-97
118 lbs.
-87
-99
123 lbs.
-101 -91
128 lbs.
135 lbs.
23-8
Rev. Aug.
4th Quarter Extras
Electrolytic Tin Plate
Coating Extra and Base Weight Extra ($/MT)
#25
26
10
#35
-14
-22
46
29
19
10
4
-4
-27
-20
-34
-17
-22
-28
-33
Base
-8
-38
-43
-47
-54
-58
-62
-68
-75
-79
-82
-91
-40
-44
-50
-55
-62
-67
-72
-85
#50
#75
73
55
44
34
27
18
12
3
-1
-7
-13
-22
-27
-33
-39
-46
-53
-56
-61
119
98
86
75
67
46
50
40
35
27
20
11
4
-2
-10
-19
-26
-32
-38
#100
173
151
137
123
115
101
94
83
76
67
60
48
41
33
24
12
4
-2
-10
#50/25
54
37
27
17
11
2
-3
-11
-16
-22
-27
-35
-39
-44
-51
-58
-62
-67
-72
#75/25
78
59
48
38
32
22
15
7
2
-4
-10
-18
-24
-29
-36
-44
-50
-54
-59
1978
4th Quarter Extras
Electrolytic Tin Plate
Coating Extra and Base Weight Extra
A
1. Single Reduced ETP
Coating
#100/25
#100/50
#135/25
e We>ight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
106
87
76
63
56
46
39
31
25
17
12
2
-3
-10
-18
-27
-34
-38
-44
130
110
97
84
77
66
58
48
42
35
28
18
12
5
-3
-13
-20
-26
-33
144
124
112
98
90
79
72
60
55
46
40
29
22
15
6
-4
-12
-17
-24
23-9
Rev. Aud., 1978
($/MT)
23-10
Rev. Aug., 1978
4th Quarter Extras
•Electrolytic Tin PLate
2. Double Reduced ETP
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
#10
41
23
11
-5
-17
-28
-35
-42
-47
-52
-59
-63
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
#100/50
251
220
202
170
144
122
104
89
77
64
54
41
.
50
53
55
60
65
70
75
80
85
90
95
100
#20
74
54
40
22
8.
-20
-12
-21
-28
-33
-43
-47
/^/MT^.
$25
89
69
55
36
20
7
-3
-11
-18
-25
-34
-38
#135/25
275
242
223
190
162
139
121
104
91
79
63
54
#35
122
99
85
63
45
30
19
9
0
-6
-13
-18
#50
163
140
121
97
77
58
46
35
25
16
5
-3
#75
234
205
187
156
131
110
94
79
66
56
41
33
#100
319
283
262
226
195
170
149
131
115
102
86
75
#50/25
135
110
96
73
54
38
28
16
8
-1
-11
-17
#75/25
170
144
128
103
81
64
52
42
29
20
8
0
#100/25
215
187
169
140
116
97
81
66
55
45
32
23
23-11
Rev. Aug. 1978
4th Quarter Electrolytic Tin PLate
B Cut Length Extra ($/MT)
1. Single Reduced
Base Weight
$/MT
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
26
25
24
23
23
22
20
20
19
19
18
17
17
16
16
15
14
14
13
2. Double Reduced
Base Weight
$/MT
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
36
34
33
31
27
26
24
23
20
19
18
17
23 -12
Rev. Aug.,
ETP
Under 26"
4th Quarter
C. Width Extra ($/MT)
1. Single Reduced
ETP
ETP
Over 26"
Over 27^"
thru 273£"
thru 29"
ETP
Over 29"
thru 30^"
Base Weight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
76
73
72
68
66
63
62
60
59
57
56
53
52
50
47
45
43
41
39
48
46
45
43
42
41
40
39
38
37
36
34
33
32
31
28
27
26
25
34
32
32
29
29
28
27
26
26
25
24
23
23
22
20
19
18
18
17
8
8
7
7
7
7
7
6
6
6
6
5
5
5
5
5
4
4
4
1978
ETP
Over 30/£"
23 - 13
Rev. aug., 1978
Width Extra ($/MT)
2. Double Reduced
ETP ETP ETP ETP ETP
Under 26"
Over 26"
thru 273£"
Over 27^"
thru 29"
Over 29"
thru 30^"
e Weight
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
106
100
97
89
82
76
72
66
62
59
56
53
68
63
61
56
52
48
45
42
40
38
36
34
46
44
42
39
36
34
32
29
27
26
24
23
12
12
11
10
8
8
7
7
7
6
6
55
Over 303£"
23-14
Rev. Aug., 1978
4th Quarter
D. ETP Quality Extra
1. Type D
a) Single R<educed
ase Weight
$/MT
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
37
35
34
33
32
31
31
29
28
27
27
25
25
24
23
22
20
19
18
b) Double Reduced
Base W e i g h t $ / M T
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
51
47
46
42
39
37
35
33
31
38
27
25
2. Type K. A or
a) Single Reduced
Base Weight $/MT
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs*
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
24
23
23
22
20
20
19
19
18
18
17
16
16
15
15
14
13
13
12
b) Double Reduced
Base Weight
$/MT
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
34
32
31
28
26
24
23
20
19
18
17
16
25-1
REV. Aug i 1 9 7 8
HOT ROLLED STEEL SHEETS - ASTM A569 0.121" x 48" x COIL
Category AISI
25
Tariff Schedule Number (3)
608.8440 - 7 1/2%
608.8565 - 9 1/2% + ADDITIONAL DUTIES (SEE
HEADNOTE 4 TSUS)
608.8742 - 8%
Base Price per Metric Ton 3r<j Quarter 4th Quarter
$244
$262
Charges toCIF Ocean Freight Handling Interest
West Coast $23 $7 $5
Gulf Coast
Atlantic Coast
Great Lakes
23
27
31
5
4
4
7
7
9
Insurance \% of base price + extras + ocean freight
Extras
1. Width Thickness Extra
2. Cut Length Extra
3. Specification Extra
4. Other Extras
Note: All Extras on pp 25-3 through pg 25-12 are to be increased
7.38% for all sheets shipped to the United States on or
after October 1, 1978.
25-2
Rev. Aug 1978
Hot Rolled Steel Band - ASTM 569
0.121" x 48 M x coil
Category AISI 25
tariff schedule Number
Base Price Per Metric Ton
608.8440 - 73^%
3rd Quarter
$238
4th Quarter
$250
Interest
Ocean FreightHandling
Charges to CIF
$5
$7
$23
West Coast
7
5
23
Gulf Coast
7
4
27
Atlantic Coast
9
4
31
Great Lakes
Insurance 1% of base price + extras + ocean freight
Extras
1. Width thickness extra
2. Specification extra
3. Other extra
Note:
T.P. on this product based on actual weight - theoretical
weight does not apply. Material not edge trimmed.
Extras for hot rolled sheets will apply until revised
extras are available.
These extras, on pp 25-3 through pp 25-12 are to be
increased 7.38% for all bands shipped to the United
States on or after October 1, 1978.
Hot Rolled Sheets + Band
Width Thickness Extra ($/MT)
Width/thickness
over
from
from
from
from
from
from
from
from
from
from
over 12"
up to 24"
0.5
0,312 thru 0.5 li
0.251 thru 0.3119
0.230 thru 0.2509
0.180 thru 0.2299
0.121 thru 0.1799
0.081 thru 0.1209
0.071 thru 0.0809
0.061 thru 0.0709
0.0568 thru 0.0509
0.0509 thru 0.0507
Note:
26
26
17
17
17
17
25
38
41
41
From 24"
thru 36"
12 + N
12
12
0
0
0
13
19
28
32
+ N 32+N
Over 36"
thru 48"
Over 48"
thru 72"
12 + N
12
12
0
0
0
7
14
21
21. 31
31 + N
12 + N
12
12
0
0
0
0
14
21 21
21 + N
+ N
All above extras are to be increased by 7.38%
for all sheet and band exported to the United States
on or after October , 1978.
25-3
Rev. Aug. 1978
Over 72"
thru 76"
12 + N
12
12
7
6
11
11 + 11
N
Over 76"
thru 84"
+ N
15
13
13
12
12 +
N
25-4
Rev. Aug, 1978
B-P/O Extra on Pickled
$/M.T.
Thickness
0.172" & up
under 0. 172"
N=Subject to Negotiation
21
14
C-Other Extras
1.
Quality-Drawing Q-Rimmed
Killed
2. Structural-A570 D/E
$/?M.T
11
24
16
3. Chemistry (Carbon Range)
0.26% to 0.34%
0.35% & up
24
24+N
4. High Strength Carbon Steel
YP 45,000 to 50,000 P.S.I
YP 50,000 P.S.I. & up
11
11+N
5. High Strength Low Alloy Steel
D-A60 7-G45
50
55
D-COR-TEN A
6.
TMW Extra (Hot Rolled Sheets)
Note:
24
27
42
63
11
All above extras are to be increased by 7.38% for all
sheet and band shipped to the U.S. on or after
October 1, 1978.
Rev. A u S-
19 78
CUT LENGTH EXTRA-FOR HOT ROLLED SHEETS CUT TO LENGTH-
Description
$/MT
To be added to the price of coils
Under 3/16" in thickness and thru
72" inL width
(D
0.0 70" & thinner
24" to under 36" long
28
36" to under 48" long
22
48" thru 240" long
20
over 240" long
23
(2) 0.0 71"
Note:
& thicker
24" to under 36" long
25
36" to under 48" long
18
48" thru 240" long
17
over 240" long
20
All above extras are to be increased by 7.38%
for all sheet exported to the United States
on or after October 1, 1978.
3-Si-xiCxrlCATION EXxKA
25-6
Rev. Aug
Specification
Thickness
-
1978
$/MT
A5 70
D
16
E
D-A60 7-G45
16
24
50
27
D-CORTEN A
63
ASTM & ASME
A36
1-1/2" or less
A283 Gr. A,B,C, D
1-1/2" or less
Nil
A285 Gr. A,B,C
1-1/2" or less
18
A515
1-1/2" or less
39
1/2" or less
1/2" or less
45
47
I
26
47
179
176
Nil
Gr. 55, 60. 65, 70
A516
Gr. 55, 60
Gr. 65, 70
A455
Type 1
Type 2
A537, Class 1
5/16" or less
over 5/16" up to 1/2"
Note : All above extrs
is are to be increased by 7.83%
for all sheet and banc
shipped to the U.S. on or af ber
October 1, 1978
T3
0)
25-7
4J
VI
A633
O
CX
0)
Gr. C
5/16" or less
184
over 5/16" up to 1/2"
170
5/16" or less
204
over 5/16" up to 1/2"
200
c
OJ
.a
C
05
-P
(U
Gr.
o
E
O
<H 00
CO rH
00
9.
AR
IN rH
>> ^4
& CO
rQ
AR300, 350
(Q&T Extra included)
Vo
CO
CQ
CO
CD
^
O
C
CD
•H
4J
CJ
O
A202
Gr. A
Gr. B
*4
<D
4J
m
0
-p
All Thickness
All Thickness
137
116
2" or less
216
A203
Gr. A
OS CD
-P
W aj
cd -P
SH W
Gr. B
CD CD
-P
•H
CD C
237
.i ...
CD
•P
65
216
211
Gr. D
> D
0
,Q CD
05 £
-p
H
H O
CD
-P
0
Gr. E
4" or less
295
Gr. A
2" or less
142
Gr. B
1" or less
142
Gr. C
4" or le ss
132
A204
25-8
Rev. Aug.
Specification
\
Thickness
$/MT
r
A387
Gr.
Gr.
Gr.
Gr,
19 78
\
2
11
12
21
Gr. 22
Thickness
Thickness
Thickness
Thickness
j
i
174
211
179
396
i All Thickness
|
364
All
All
j All
S All
A533
i
Gr. A
Gr. B
Gr. C
All Thickness
All Thickness
All Thickness
Gr. D
All Thickness
Type 1
Type 2
A360 (Q&T Extra Included)
!
All Thickness
!
!
|
164
i
i
'
j
J
i
A553
142
179
195
All Thickness
1-1/2" or less
j
i
781
686
248
A514 (Q&T Extra Included)
322
5/16" or less
over 5/16" up to 1/2'
285
Type F
5/16" or less
over 5/16" up to 1/2"
438
401
Type H
5/16" or less
369
over 5/16" up to 1/2'
332
Type B
Note: All above extras are to be increased by 7 .$&%
for sll sheet and band shipped to the United States
on or after October 1, 1978.
25-9
Specification
A517 (Q&T Extra included)
338
306
5/16" or less
35 3
over 5/16" up to 1/2"
422
5/16" or less
385
over 5/16" up to 1/2"
353
4" or less
121
Gr. A
1" or less
148
Gr. B
1" or less
158
C
05
C
05
$/MT
5/16" or less
over 5/16" up to 1/2"
Gr. B
T3
Thickness
Gr. F
-P
CD
0
co
05 •;
<Hi
O SH!
<H o;
^ o
00 -P.
Gr. H
co o|
•Oi
IN
'
SH!
>> CD!
<HJ
T3 05I
CD j
01 SH1
05 O'
CD
C
C
•H OJ;
A225
Gr. A, B
£ ^ A302
-p:
O
W
CD CD!
SH -Pi
05 -H:
05 ;
SH <D|
-P £ 1
X -Pi
..__
..... .„..
l°\ ABS & A13-1
> I
o -a; Gr. A
1/2" or less
.Q CD I
03 CX<
CXI
rH -H (
rH £
Gr. B
< col
-p
Gr. CS (Normalized)
1/2" or less
116
Gr. D
1/2" or less
116
o
(Normalized)
25-10
Rev. July, 19 78
i-^tjci lie at i on
CiUKJ
v / • •'
ABS & A131 (Cont'd)
1/2" or less
over 1/2" up to 2"
137
127
1-3/8" or less
42
over 1-3/8" up to 2"
100
Gr. AH32
1/2" or less
over 1/2" up to 1-1/2"
over 1-1/2" up to 2"
38
59
61
Gr. AH36
1/2" or less
over 1/2" up to 1-1/2"
over 1-1/2" up to 2"
46
68
70
Gr. DH32 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
137
12 7
Gr. DH36 (Killed
Normalized)
1/2" or less
over 1/2" up to 2"
137
12 7
Gr. EH32 (Killed
Normalized)
Gr. EH36 (Killed
Normalized)
1/2"
over
1/2"
over
15 8
137
158
137
Gr. E (Normalized)
Gr. DS (as Rolled
Normalized)
or less
1/2" up to 2"
or less
1/2" up to 2"
SAE
1345
74
4130
111
4140
116
4150
116
4340
227
5150
79
5160
79
6150
132
25-11
REV. JULY, 19 78
Specification
Thickness
$/MT
SAE (Cont'd)
8615
-
15 8
8617
158
8620
142
9260
111
Other Specification Extra
To be specified on SSSI
25-12
Rev. July, 19 78
3-OTHER EXTRAS
$/MT
Description
21
Killed
6
Fine Grain
Charpy
+40 °F & up
L
16
T
21
L & T
26
under +40°F
L
21
T
26
L & T
32
Normalize
74
Quench. & Temper
12 7
Normalize & Temper
12 7
Checker
Pickled & Oiled
Up to 0.172" Thickness
Over 0.172" Thickness
Others
14
20
To be specified
on SSSI
REV. A u g
ELECTRICAL STEEL SHEETS - GRAIN ORIENTED -* M-4
Category AISI
0.012" x 33" x C
26
Tariff Schedule Number (s) 608.8845 - 10%
3rd Quarter
Base Price per Metric Ton
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
4th Quarter
$1,055
$1106
Ocean Freight
Hand Iing
$26
$7
27
33
37
5
4
4
Interest
$17
21
22
27
Insurance I? of base price + extras +• ocean freight
Extras
1.
2.
3.
4.
Grade Extra
Surface Insulation Extras
Packing Extra
Size Extra
Note:
Size extras on pg 26-2 are to be increased by 4.86%
on all sheet shipped to the United States on or after
October 1, 1978.
26-1
, 1978
26-2
REV. Aug, 1978
EXTRA FOR ELECTRICAL STEEL
Grain Oriented Electrical Steel
(1) Grade Extra
(M-4 « 100.0)
(Grade)
(Grade extra including base)
(Thickness)
M-2H
M-3H
M-4H
1.03
1.015
1.00 (Base)
1.00 (base)
0-964
0.909
(0.012")
(0.012" and 0.014")
(0.012" and 0.014")
(0.011")
(0.012" and 0.014")
(0.014")
M-4
M-5
H-6
(2) Surface Insulation Extras
Coating Extras are included in a base price.
(3) Packing Extra
Nil
(4) Size Extra (Unit-US$/M.T.)
Width/
Grade
M-2H
M-3H
M-4H
M-4
M-5
M-6
Note:
Over 1"
Thru 2"
Over 2"
Thru 6"
Over 6"
Thru 17"
Over 17"
Up to 31"
31", 33",
or 34"
79
78
77
77
74
71
55
54
54
54
52
51
51
51
50
50
49
48
64
63
62
62
60
59
Nil
Nil
Nil
Nil
Nil
Nil
All above size extras are to be increased by 4.86% on all
sheets shipped to the U.S. on or after 10-1-78.
26-3
REV. Aug, 1978
r
ELECTRICAL STEEL SHEETS - NON ORIENTED - M-45
Category AISI
0.018" x 36" x C
26
Tariff Schedule Number (s) 608.8845 - 10%
3rd Quarter
4th Quarter
$596
Base Price per Metric Ton $568
Charges to CIF Ocean Freight t*
nd1i ng
West Coast $26
Gulf Coast
Atlantic Coast
Great Lakes
$7
5
4
4
27
33
37
1n+erest
$17
21
22
27
Insurance \% of base price • extras + ocean freight-
Extras
1.
2.
3.
4.
Grade Extra
Surface Insulation Extras
Packing Extra
Size Extra
Note:
Size extras on pg 26-4 are to be increased by 4.86%
on all sheet shipped to the US on or after
10-1-78.
26-4
REV.
A u g >
1978
NCN-CRIENTED ELECTRICAL STEEL
(1) Grade Extra
(M-45
(Grade Extra
Including base)
00.0)
Fully- Processed
multiply base b y :
M-47
M-45
M-43
M-36
M-27
M-22
M-19
M-1S
(2) Surface Insulation Extras
***
Semi-Processed
.947
Base
1.053
1.18
1.235
1.287
_
Base
1.052
1.177
1.23
1.282
1.331
1.396
Coating Extras are included in a base price.
(3) Packing Extra
Nil
(4) Size Extra (Unit-US$/M.T.)
width/
Gage*
(Thicfcness)
Over 2"
> Thru 6"
6"
Thru 18"
Over 18"
Thru 24"
Over 24"
Thru 28"
Over 28"
Thru 36"
OWT
Over 36"
Thru 40"
22,23, 4 24
(.0310"-.0250")
33
27
42
8
Nil
37
25 4 26
(0220"-.018S")
48
42
57
23
15
33
27
65
i
»
74
41
33
50
(.0170")
Note:
Allabove size' extras are to be inreased by 4.86% on all sheet
shipped to the US on or after 10-1-78.
26-5
REV. Aug , 1978
f
COLD ROLLED SHEETS - ASTM A366
Category AISI
1 .Ora/m x 48" x C
26
Tarfff Schedule Number (s) 608.8744 8%
3rd Quarter 4th Qtr
Base Price per Metric Ton
$313
$328
Charges to CIF Ocean Freight Handling Interest
West Coast $23 $7 $ 7
Gulf Coast
Atlantic Coast
Great Lakes
23
27
31
5
4
A
8
9
11
Insurance \% of base price + extras • ocean freight"
cixrras
1. Width & Thickness
2. Cut Length
3. Coil Weight
4. Finish
5. Surface Treatment
6. Quality
7. Chemistry
8. Quantity Extra
9. Restricted Tolerance
10. Theoretical Minimum Weighing
11. Others
Note:
All extras on p 26-6 through 26-9 are to be increased
by 4.86% for all sheet shipped to the U.S. on or softer
10-1-78.
26-6
REV. Aug , 1978
EXTRAS FOR COLD ROLLED STEEL SHEET
Note:
All below extras are to be increased by 4 . 8 6 % on all sheet
exported to the U . S , on or after 10-1-78.
* WIDTH & THICKNESS
UNIT:
Thickness,
Inches
US$/MT
Width, Inches
24jC W ^ 3 6
36 C. W <L 45 45 i W < 60
60 < W ^ 68
68 < W < 72
0.097 < T <> 0.126
25
19
11
19
25
0.083 < T < 0.097
25
19
8
17
25
0.064 ± T <- 0.083
21
19
4
13
21
0.054 ^ T < 0.064
21
15
0
8
21
0.028 t: T < 0.054
23
15
0
15
27
0.023 *z T < 0.028
38
30
17
21
34
0.019 £ T < 0.023
55
50
41
47
50
73
69
60
62
—
014 t T
<0.019
1
* Widths under 24", - Inquire
* CUT LENGTH
Length, Inches
Width,
Inches
24 < L < 42
42 < L < 60
60^. L^. 144
24 £ W _£ 72
23
22
20
22
0.028 £ T mt 0.064 24 £ W zr 72
T <- 0.02824 ± W £. 72
21
24
20
23
18
21
20
23
Thickness,
Inches
0.064 * T
*
*
144^ L
COIL WEIGHT
GROSS MAX 10,000 lbs & OVER
GROSS MAX 10,000 lbs UNDER
NONE
2.00
DULL
NONE
FINISH
COMMERCIAL BRIGHT 15.00
EMBOSSED N0N GEOMETRIC 37.00
GEOMETRIC ^7«0°
Note:
All below extras are to be increased by 4.86% for all sheets
shipped to the U.S. on or after 10-1-78.
26-7
REV. Aug » 1978
*
SURFACE TREATMENT
GREASED EDGES
SPECIAL CLEANLINESS REQUIREMENT
Thickness,
Inches
0.0215T
Width, Inches
W <3t
8
T ^0.020
36 aXV
8
8
* QUALITY
COMMERCIAL. .
NONE
DRAWING 11
DEEP DRAWING 27
FULL HARD (ROCKWELL HARDNESS B-84 MIN) NONE
1/4 HARD 13
1/2 HARD 13
STRUCTURAL (PHYSICAL) - CARBON STEEL 16
TWO PRIME SIDES 16
CLASS II DISCOUNT
10
* CHEMISTRY
COPPER BEARING 11
RESTRICTED CHEMISTRY N
* QUANTITY EXTRA
10 S/T < Q < 10 S/T 7
* RESTRICTED TOLERANCE N
* THEORETICAL MINIMUM WEIGHING 11
* OTHERS
N
26-8
REV. Aug, 1978
Cold Rolled, Full Hard Coiled Sheet Feedstock for
Continuous Hot Dip Galvanizing
No trigger Price
This is a semi-finished product half-way between
hot rolled pickled and cold rolled.
26-9
Rev. Aug, 1978
COLD ROLLED SHEETS
Extra for cold rolled sheet motor laminations as compared with cold rolled sheet
$15
Dimension extras for motor laminations are to be
applied with following table:
Width thickness:
Normal Thickness
(Inches)
Width (Inches )
24" to 36" under
36" thru 48"
0.063" thru 0.035"
$17
0.034" thru 0.028"
21
10
0.027" thru 0.022"
36
25
0.021" thru 0.014"
44
34
/MT
$ 6
Note: all above extras are to be increased by
4.86% on all sheet exported to the U.S.
on or after 10-1-78.
/MT
27-1
REV. Aug , 1978
ELECTRO GALVANIZED SHEETS - EGC-I0g/M2
Category AISI
I.Om/m x 48" x C
27
Tarfff Schedule Number (s)
608.9430
608.9530
- 9%
- 0.1* per lb. + Q%
3rd Quarter
Base Price per Metric Ton $352
Charges to CIF
West Coast
Gulf Coast
Atlantic Gcast
Great Lakes
4th Quarter
$388
Ocean Freight
Hand 11ng
Interest
$24
$7
$ 8
23
27
36
5
4
4
9
10
12
Insurance \% of base price + extras +• ocean freight-
Extras
I.
2.
3.
4.
5.
6.
7.
Thickness/Width
Length
Coating
Chemical Treatment
Quality
Packing
Others
NOt6:
^alXtraS
?, n £ g S * 2 7 " 2 a n d 2 7 ~ 3 a r e t o b e ^ c r e a s e d by
7.18% for all sheets shipped to the US on or after
10-1-78.
27-2
REV .Aug , 1978
EXTRAS FOR ELECTRO GALVANIZED SHEET
Note: All below extras are to be increased by 7.18% for all sheet
shipped to the U.S. on or after 10-1-78.
1. PRICE BASE
QUALITY; COMMERCIAL
SIZE ; MSG 19 (.044" - .039") x 36" - 48*' x COIL
COATING; 0.03 01/VY2 (or 10 g/M2) CN EACH SIDE
CHEMICAL TREATMENT: PHOSPHATED
WEIGHING: ACTUAL
2. EXTRAS FOR OTHER THAN PRICE BASE PRODUCTS (UNIT: US$PERM/T)
(1) THICKNESS/WIDTH
THICKNESS
(INCHES)
WIDTH (INCHES')
28^ W <30
30£W<36
36<«^48
48< VK 60
.037 and Thicker
S
1
- 3
4
.056 - .031
6
2
- 2
S
.050 - -045
7
3
- 1
6
.044 - .039
8
4
Base
7
.038 - .034
10
5
1
8
.033 - .031 .
14
10
5
12
.030 - .02 8
17
13
8
16
.027 - .025
20
16
12
19
.024 - .022
25
21
»7
24
.021 - .019
31
26
22
.013 - .017
41
37
33
.016 - .015
46
42
38
27-3
All below extras are to be increased by 7.18% REV. Aug , 1978
for all sheets shipped to the U.S. on or after 10-1-78.
(2)
(3)
LENGTH
60"4 I <163"
16
L C 60"
18
COATING
0.06 0Z/FT
(4)
+4
on each side
0.03
w
Ease
0,01
rt
-2
Chemical TrearmenT
Phosphated
sase
Chromated
-2
Oi led
-2
(3)
Quality
Commercia
Orawing
Crawing, Special <iI led
Physical (TS, YP, HRS, etc.)
(6)
Sase
Subject to Negotiation
ft
12
Packing
Coi I 4ST UN0E3
Subject to Negotiation
Sheet 3ST UMC£R
(7)
TMW extra
II
CS)
Others
Subject to Negor'aticn
REV. Aug,
GALVANIZED SHEET - ASTM A525G90
Category AISI
27-4
1978
0.8m/m x 48" x C
27
Tariff Schedule Number (s)
Base Price per Metric Ton
Charges to CIF
West Coast
Gulf Coast
Atlantic Coast
Great Lakes
608.9430
608.9530
- 9%
- 0.1* per lb. + Q%
4th Quarter
3rd Quarter
$364
$390
Ocean Freight
Handling
$24
$7
23
27
36
5
4
4
Interest
$ 8
9
10
12
Insurance \% of base price • extras +• ocean freight
Extras
I.
2.
3.
4.
5.
6.
7.
Th i ckness/W i dth/Coat i ng
Length
Packing
Finish
Quality
Quantity
Others
Note:
All extras on pg 27-5 through 27-7 are to be increased
by 7.14% for all sheets shipped to the U.S. on or after
10-1-78.
Note:
All below extras are to be increased by 7.14% for all sheets exported
to the U.S. on or after 10-1-78.
27-5
REV. Aug, 1978
EXTRAS FOR GALVANIZED STEEL SHEET
1.
PRICE BASE
QUALITY: COMMERCIAL
SIZE : GSG23 (UNDER .032" THROUGH .029") * OVER 42" THRCUCH 48" x COIL
COATING: G90
WEIGHING: ACTUAL
2.
EXTRAS FOR OTHER THAN PRICE BASE PRODUCTS
(UNIT:
US$ PER M/T)
. CU THICKNESS/WIDTH/COATING
j
TKICENcSS
(INCHES)
1
WIDTH
24<W<30
30£W<36
1
(IMCHES)
1
48<w<60 JO.6
36pK42- 42C*W£48
COATING
ozfrt *G50
1
1
1 .130 ar.d Thicker
'•29 - .116
.15 - .101
•" .100 - .086
| .055 - .075
.074 - .067
i .066 - .061
! .060 - .05S
1 .054 - .049
| .048 - .043
-042 - .038
.037 - .055
.054 - .032
UKDER .052 THROUGH.029
-02S - .026
.025 - .023
.022 - .021
.020 - .019
.018 - .017
.016
.015
014
U
-71
-58
-55
-51
-39
-37
-35
-25
-23
-19
-15
- 4
- 1
2
4
17
23
34
41
53
63
11
88
- 71
- 58
- 55
-. 51
- 39
. 37
. 35
- 25
. 23
-' 19
_ 15
- 4
- 1
2
4
17
23
34
41
53
63
73
83
-7t
-58
-55
-54
-41
-39
-37
-27
-25
-21
-17
- 6
- 3
0
.*.
23
34
41
62
76
78
83
-71
-58
.55
-54
-4.
j
-.39
-37
-27
-25
-21
-17.
- 6
- 3
EASE
3
19
26
43
56
72
85
89.
93
- II
- 13
- 16
-1.6
-17
- 17
- 19
- 19
- 20
- 20
- 21
- 21
- 23
_ 23
-56
-53
-51
-39
-37
-35
-25
-23
-f9
-15
- 3
0
4
10
2635
-
1
WIDTH UNDER 24" --
_ o
_ 2
m»
SUBJECT TO NEGOTIATION
_ 2
7
- $
3
J
i
- e.
- 5
„ c
- 6 i
i - 6 !
i
- 7
| - 7
j -10
j -10
|-13
.13
-15
.15
j .17
1 - 17
!
27-6
^V.Aug , 1978
C2) LENGTH
LENGTH CINCHES)
THICKNESS
CINCHES).
42£L<60
60£l.£16S
168<L<198
19S<L
15
. 029 ajid Thicker
II
7
12
.023 - .017
'3
7
14
.016 - .013
i
is
7
(3). PACKING
! V<2.5ST
C4)
{ 2.SST£*tf£4ST
COIL
- 1 *
SHEET
S
1
4ST<W
EASE
BASE
FINISH.
REGULAR SPANGLE
EASE
MINIMUM SPANGLE
NO>£
EXTRA SMOOTH
COIL
17
SHEET
3 4
Note:
All above extras are to be increased by 7.14% for all sheets
shipped to the U.S. on or after 10-1-78.
(5)
QUALITY
27-7
REV. A u g , 1978
COMMERCIAL
BASE
LOCK FORMING
NONE
DRAWING
II
DRAWING SPECIAL KILLED
27
STRUCTURAL
GRADE A
C6)
"
B and C
11
D and E
S
II
QUANTITY
20ST£K
C7)
3
BASE
iSST^tf <20ST
1
lOST^ W<1SST
3
THEORETICAL KIHI)*JH WEIGHING
16
CS) OTHERS
SUBJECT TO NEGOTIATION .
(9) Corrugating....$19
3. REMARKS
Above extra price shall bs changed according to the fluctuation
of zinc price.
Note:
All above extras are to be increased by 7.14% for all
sheets shipped to the U.S. on or after 10-1-78.
29-1
Rev. Aug . 19 78
HOT ROLLED CARBON STEEL STRIP, PRODUCED ON BAR MILLS, CUT
LENGTHS
J~.
Category MSI
29
Tariff Schedule Nur*bo! (3) 609.0220 6%
609.0320 8 1/2%
609.0420 9 1/2%
3rd Quarter
Dasf! Price por Metric Ton $282
4th Quarter
$296
Charges to CIF Ocean Freight Handling Interest
$7 $5West Coast
Gulf Coast
Atlantic Coast
Great Lakes
$23
26
29
35
5
4
4
Insurance M of base price •»• extras + ocean freight
Extras
1. Thickness/Width
7
7
8
29-2
Rev. Aug , 1978
WIDTH AND THICKNESS EXTRAS
($/MT)
3rd Qtr
Thickness
Width
Extra
4th Qtr
|
ijxtra
0.125 Inches
0.50 Inches
0.125 Inches
0.625 Inches
0.125 Inches
0.750 Inches
Base
Base
0.125 Inches
1.000 Inches
Base
Base
0.125 Inches
1.250 Inches
Base
Base
0.125 Inches
1.500 Inches
Base
Base
0.125 Inches
1.750 Inches
Base
Base
0.125 Inches
2.000 Inches
base
Base
23
5
24
5
29-3
Rev. Aug / 19 78
HOT ROLLED CARBON STEEL STRIP PRODUCED ON SHEET MILLS, COILS ONLY
Category A IS!
29
Tariff Schedule Number (s) 609.0220 6%
609.0320 8 1/2%
609.0420 9 1/2%
Base Price per Metric Ton (HOT ROLLED SHEET BASE)
3rd Qtr.
4th Qtr.
Charges to CIF
West Coast $23 $7 $5
Gulf Coast
Atlantic Coast
Great Lakes
Ocean Freight 244
Handling
26
29
35
$256
5
4
4
Interest
7
7
8
Insurance \% of base price + extras + ocean freight
Extras
1.
2.
Width/Thickness
Other Extras as per Hot rolled Sheets
Motel: All extras on pg 29-4 are to be increased by 4.86%
for all strip shipped to the U.S. on or after 10-1-78
Note2: Treasury July 26, 1978 trigger price release incorrectly
calculated '4th Quarter trigger price at $262.
29-4
Rev. Aug , 1978
WIDTH/THICKNESS EXTRAS
($/MT)
Width/
Thickness
(Inches)
Over 2 Inches
up to
4 Inches
Over 4 Inches
up to
6 Inches
Over 6 Inches
up to
12 Inches
19
From 0.251 thru 0.3119
N.A
21
From 0.230 thru 0.2509
21
21
19
From 0.180 thru 0.2299
25
21
19
From 0.121 thru 0.1799
25
21
19
From 0.081 thru 0.1209
25
21
19
From0.071 thru 0.0809
35
33
27
From 0.061 thru 0.0709
35
33
27
From 0.0568 thru 0.0609
40
40
31
From 0.0509 thru 0.0567
40
40
31
Note:
All above extras are to be increased by 4.86%
for all strip shipped to the United States on or
after 10-1-78.
32Rev. Aug. 19
mtmrnmrmmmmmmmmm. mm. il • i-«iM'k.* IWIII.
wi
TIN FREE STEEL SHEETS-SR 75L x 34" x C
Category AIS!
32
Tariff Schedule Number (s) 609.1700 - 9.5%
3rd Quarter 4th Quarter
Base Price per Metric Ton $436
Handllng
Charges toInterest
CIF
$7 $ West
9
Ccest
Gulf Qor-siAtlantic CC3St
Great Lakes
$441
Ocean Freight
$2$
27
34
37
5
4
4
Insurance \% of base orice + extras • ocean freight
Fxtras
A. Base Weight Extra
(3) Single Reduced TFS
(4) Double Reduced TFS
B. Cut Length Extra
(1) Single Reduced TFS
(2) Double Reduced TFS
C. Width Extra
(1) Single Reduced TFS
J2) Double Reduced TFS
D. Quality Extras-TFS
(1) Type D-Single Reduced and Double Reduced.
Note:
3rd Quarter Extras are on pp.32-2 to 32-6
4th Quarter Extras are on pp. 32-7 to 32-11
12
12
15
32-2
3rd Quarter A:
(1) Single Reduced TFS
Base Weight
70
1
1
lbs
73 lbs
Base Weight Extras ($/MT)
(2) Double Reduced TFS
Base Weight
19
50 lbs
19
7
5 3 lbs
5
75 lbs
BASE
55 lbs
78 lbs
-6
60 lbs
80 lbs
-10
65 lbs
j
-23
83 lbs
-15
70 lbs
|
-31
85 lbs
-18
75 lbs
|
-35
j
-3
-15
j
88 lbs
-22
80 lbs
j
-40
90 lbs
-25
85 lbs
j
-43
93 lbs
-30
90 lbs
1
-46
95 lbs
-32
95 lbs
|
-52
i
100 lbs
-36
10 3 lbs
-38
10 7 lbs
-41
112 lbs
-44
118 lbs
-47
123 lbs
128 lbs
|135 lbs
-50
-52
-53
100 lbs
-55
Rev. Aug. , 19 78
32-3
Rev. Aug., 19 7 8
3rd Quarter
B: Cut Length Extra ($/MT)
(1) Single Reduced
(2) Double Reduced
TFS
1
70 lbs
7 3 lbs
75 lbs
78 lbs
80 lbs
S3- lbs
85 lbs
88 lbs
9 0 lbs
9 3 lbs
9 5 lbs
(
100 lbs
10 3 lbs
: 10 7 lbs
. 112 lbs
". 118 lbs
; 12 3 lbs
128 lbs
! 135 lbs
—
—
•
—
•
—
—
—
—
22
21
21
20
19
19
18
18
17
17
16
15
15
15
14
13
13
12
12
—
—
—
—
TFS
Base Weight
< Base Weight
i
r
"'i
t
—
—
50 lbs
53 lbs
55 lbs
60 lbs
65 lbs
70 lbs
75 lbs
80 lbs
85 lbs
90 lbs
9 5 lbs
ICO lbs
31
30
23
26
24
22
21
19
18
17
16
15
i
3rd Quarter
C:
Width Extra
Rev. Aug., 1978
($1MT)
(1) Single Reduced
r
Under 26 inch
ise V,7eight
1 TFS
70 lbs
7 3 lbs
75 lbs
78 lbs
80 lbs
8 3 lbs
35 lbs
8 8 lbs
90 lbs
93 lbs
9 5 lbs
100 lbs
10 3 lbs
10 7 lbs
112 lbs
118 lbs
123 lbs
128 lbs
135 lbs
65
63
61
59
58
56
54
53
52
50
49
46
44
43
41
39
37
36
34
[_
Over 2 6 inch
Over 2""-1/2 inch Over 2 9 inch
Over 30-1/2 inch
thru. 27-1/2 inch
thru. 29 inch
ETP
TFS
TFS
42
40
39
38
37
35
35
34
33
32
31
30
28
27
26
24
23
23
21
28
27
26
25
25
24
23
23
22
21
21
20
19
19
18
17
16
16
15
,.
thru. 30-1/2 inch
TFS
TFS
7
7
7
6
6
6
6
6
5
5
5
5
5
4
d
4
4
4
3
Base
Base
32-5
3rd Quarter
Rev.Aug. ,
19 7
C Width Extra ($/MT)
(2) Double Reduced
Under 26 inch
Base Weight
TFS
50
53
55
60
65
70
75
80
85
90
95
100
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
lbs
93
88
84
77
71
65
61
58
54
52
49
46
f
Over 26 inch
Over 2 7-1/2 inch
Over 29 inch
thru. 2 7-1/2 inch
thru. 29 inch
thru. 30-1/2 inch
TFS
TFS
TFS
59
56
54
50
45
42
39
37
35
31
30
40
38
37
34
31
23
26
25
23
22
21
20
Over 30-1/2
inch
TFS
11
10
10
o
8
-7
/
6
6
5
5
5
Base
3rd Quarter
D: Quality Extras ($/MT)
(1) Type D
!
1) Single Reduced
Base
2) Double Reduced
TFS
Base
Weight
TFS
Weight j
i
\
70 lbs
73 lbs
75 lbs
78 lbs
80 lbs
8 3 lbs
85 lbs
8 8 lbs
9 0 lbs
9 3 lbs
9 5 lbs
10 0 lbs
10 3 lbs
10 7 lbs
112 lbs
118 lbs
±2 3 lbs
12 8 lbs
135 lbs
32
31
30
28
27
26
25
25
24
23
23
22
21
20
19
18
18
17
16
_[_
•
50 lbs|
5 3 lbs
55 lbsj
60 lbs
65 lbs
70 lbs
75 lbs
80 lbs
85 lbs
90 lbs
95 lbs
100 lbs
_.
44
41
40
37
34
32
30
27
25
24
23
22
New Page
4th Quarter A:
Single Reduced TFS
Base Weight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
19
7
BASE
-6
-10
-15
-18
-22
-25
-30
-32
-36
-38
-41
-44
-48
-51
-53
-54
32-7
August 1978
Base Weight Extra ($/MT)
Double Reduced TFS
Base Weight
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
78
62
53
39
30
21
16
11
7
4
-3
-7
32-8
New Page August 1978
4th Quarter
B: Cut Length Extra
1. Single Reduced
2.
Base Weight
Base Weight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs. *
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
22
21
21
20
19
19
18
18
17
17
16
15
15
15
14
13
13
12
12
Double Reduced
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
31
30
28
26
24
22
21
19
18
17
16
15
32-9
New Page August 197 8
4th Quarter
C Width Extra ($/MT)
1.
Base Weight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
Single Reduced
Under 26"
Over 26"
through
27 1/2"
Over 27 1/2"
through
29"
Over 29"
through
30 1/2"
66
42
28
7
64
62
60
59
•57
55
54
53
51
50
47
45
43
41
39
37
36
34
40
39
38
37
35
35
34
33
32
31
30
28
27
26
24
23
23
21
27
26
25
25
24
23
23
22
21
21
20
19
19
18
17
16
16
15
7
7
6
6
6
6
6
5
5
5
5
5
4
4
4
4
4
3
Over 30 1/2"
BASE
32-10
New Page August 1978
4th Quarter
C Width Extra ($/MT)
Double Reduced
6"
Over 26"i
through
27 1/2"
Ove r 27 1/2"
through
29"
Over 29"
through
30 1/2"
60
57
55
51
46
42
39
37
35
33
31
30
40
38
37
34
31
28
26
25
23
22
21
20
11
10
10
8
8
7
7
6
6
5
5
5
Over 30 1/2"
BASE
New Page
32-11
August 1978
4th Quarter
D Quality Extras ($/MT)
1. Single Reduced
se Weight
70
73
75
78
80
83
85
88
90
93
95
100
103
107
112
118
123
128
135
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
32
31
30
28
27
26
25
25
24
23
23
22
21
20
19
18
18
17
16
2. Double Reduced
se Weight
50
53
55
60
65
70
75
80
85
90
95
100
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
lbs.
$/MT
45
41
40
37
34
32
30
27
25
24
23
22
* U. S. GOVERNMENT PRINTING OFFICE : 1978—274-759
department of theTREASURY
•ASHINGTON, D.C. 20220
TELEPHONE 566-2041
LIBRARY
FOR IMMEDIATE RELEASE
October 11, 1978
CONTACT: Robert E. Nipp
566-5328
TREASURY ANNOUNCES PROPOSED REVISIONS IN CUS*
INVOICE REQUIREMENTS FOR TRIGGER PRICE MECHANISM
The Treasury Department announced today a proposed rulemaking to amend the regulations for the Special Summary Steel
Invoice (SSSI) used by the Customs Service to collect information on steel mill product imports under the trigger price
mechanism (TPM). The amendments are necessary to obtain certain
information to improve the effectiveness of the TPM and to
clarify certain existing requirements which have not always been
clearly understood.
The new regulations would require those exporters unrelated
to their suppliers to state on the SSSI the ex-mill price and
the price paid by each subsequent purchaser. This
additional information would enable the Treasury to determine
whether it should initiate an antidumping investigation based
upon the ex-mill price because a U.S. purchaser is using foreign
buying subsidiaries to evade the purpose of the trigger price
mechanism. As a general rule, the Department would not initiate
an investigation if the ex-mill price is in line with the trigger
price, adjusted to take account of actual importation costs.
The proposed changes are intended to respond to complaints
that U.S. steel users can exploit a loophole in the TPM through
the use of foreign buying subsidiaries. If such abuses are
identified, the Department will be able to take prompt effective
action.
Other changes in the SSSI form and instructions will clarify
certain information requirements with respect to commissions
paid or allowed on exportation and inland freight charges within
the United States.
The proposed rulemaking will be published in the Federal
Register October 16 and interested parties are invited to provide
their comments in writing to the U.S. Customs Service during the
30 day period after publication. Written comments should be
addressed to the Commissioner of Customs, Attention: Regulations
and Legal Publications Division, U.S. Customs Service, 1301
Constitution Avenue, N.W., Room 2335, Washington, D. D. 20229.
For further information contact Peter Ehrenhaft (202-566-2806).
oOo
B-1207
DEPARTMENT OF THE TREASURY
UNITED STATES CUSTOMS SERVICE
(19 CFR Part 141)
PROPOSED AMENDMENT TO THE CUSTOMS REGULATIONS RELATING TO DOCUMENTS
AND INFORMATION REQUIRED AT THE TIME OF IMPORTATION OF CERTAIN
ARTICLES OF STEEL
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Proposed rule.
SUMMARY: It is proposed to amend the Customs Regulations regarding the
Special Summary Steel Invoice ("SSSI") which must be presented to Customs
for each shipment of certain articles of steel having an aggregate price
over $2,500. The proposed amendment would modify the SSSI to require
the name of the producer and the price paid for the articles covered by
the invoice by the initial and each subsequent purchaser in every case.
It also is proposed to modify the existing instructions for
preparation of the SSSI to reflect this amendment and to clarify existing
instructions relating to freight charges incurred after importation of
the merchandise into the United States and to the submission of information concerning commissions. The additional information provided
will be used in connection with the administration of the "trigger
price mechanism" ("TPM") under the Antidumping Act, 1921, as amended.
DATE: Comments must be received on or before: (30 days from date of
publication in the FEDERAL REGISTER).
ADDRESS: Written comments should be addressed to the Commissioner of
Customs, Attention: Regulations and Legal Publications Division, U.S.
Customs Service, 1301 Constitution Avenue, N.W., Room 2335, Washington,
D.C, 20229.
2
FOR FURTHER INFORMATION CONTACT:
Peter D. Ehrenhaft, Deputy Assistant Secretary and Special
Counsel (Tariff Affairs), Department of the Treasury, Washington, D.C. 20220 (202-566-2806).
SUPPLEMENTARY INFORMATION:
BACKGROUND
On February 13, 1978, a final rule published in the FEDERAL •
REGISTER (43 FR 6065) amended the Customs Regulations to require
that a Special Summary Steel Invoice ("SSSI") be presented to
Customs for each shipment of certain articles of steel having an
aggregate purchase price over $2,500. The information provided by
the SSSI is used in the administration of the Antidumping Act, 1921,
as amended.
In addition, the notice of proposed rulemaking on this matter,
published in the FEDERAL REGISTER on December 30, 1977 (42 FR 65214),
announced that the Secretary of the Treasury would implement a "trigger
price mechanism" ("TPM"), as recommended to and approved by the President,
as a part of the program to monitor steel imports. The notice also stated
that "trigger prices" established for certain steel mill products would
provide the basis upon which imports of such products would be monitored
for the purpose of determining whether investigations under the Antidumping
Act, 1921, as amended, would be appropriate.
Sections 141.86 and 141.89, Customs Regulations (19 CFR 141.86,
141.89), set forth the invoicing requirements for the Special Summary
Steel Invoice, Customs Form 5520. The instructions for preparation of
3
the SSSI implement the regulatory requirements. They were published as
part of the final rule in the FEDERAL REGISTER on February 13, 1978
(43 FR 6065).
Since implementation of the TPM and adoption of the SSSI, a number
of problems have arisen in administering the program which indicate that
some information presently required is not being provided and certain
information not presently required is needed to administer the program
effectively. The three specific areas in which enhanced data is needed
concern foreign affiliations of producers and importers, freight charges
incurred after the merchandise is imported into the United States, and
buying commissions.
PRODUCER INFORMATION
From the SSSI's received during the past six months, it appears
that steel is occasionaltysold to exporters unrelated to the producer
of the steel rather than directly to a U.S. buyer. Some of
these exporters are or may be controlled by a U.S. buyer.
This situation has given rise to allegations that a U.S.
buyer can evade the trigger price monitoring system through the use
of foreign buying agents. Although no specific cases of such evasion
have been identified, it has been argued that a U.S. importer or
purchaser of steel can buy steel below the trigger price through a
foreign buying agent and then have that agent export it to the United
States at or above the trigger price. However, it is argued that such
4
a transaction should not be considered to be at or above the trigger
price as interpreted under the Antidumping Act, because the relevant
price for comparison with the "trigger price" is the price at which
the steel is purchased by the foreign agent.
To assure collection of the data needed to prevent evasion of the
trigger price mechanism, it is proposed to modify the SSSI by adding
a new section la, titled "Producer If Other Than Seller (Name, Address,
and Relationship to Seller)". Present section 19 would be redesignated
section 19b, and a new section 19a, titled "Mill Price", would be added.
In order to provide for this modification to the SSSI, it is
proposed to amend section 141.89, Customs Regulations (19 CFR 141.89),
by adding a new subparagraph (E) which would require that the name of
the producer, plus the price paid by the initial and each subsequent
purchaser of the steel, be included on the SSSI in every case.
This information will enable the Treasury Department to determine
whether it is appropriate to initiate an antidumping proceeding under
the trigger price mechanism. Generally the policy of the Department is
not to self-initiate an investigation if the ex-mill price is equal to,
or more than, the trigger price minus the actual importation charges
if included in the price.
COMMISSIONS AND FREIGHT CHARGES
Although sections 9 and 26 of the SSSI specifically require information relating to commissions, information concerning buying commissions
is not always provided. Accordingly, it is proposed to modify section
12, the "Declaration of the Seller/Shipper, or Agent" and the instructions
5
for that section to require the identification of any commissions
paid or allowed on exportation as buying or selling commissions, and
an itemization of all such payments. This information will be used to
make appropriate adjustments in the invoice price before a comparison
is made to the trigger prices if it is determined that a U.S. consumer
of steel has an interest directly or indirectly through a foreign
subsidiary in the export sales transaction.
Similarly, although section 26 of the SSSI requires all charges
and fees, including freight charges, to be identified separately by
name and amount, charges for freight in the United States paid by the
exporter are not always identified specifically. To facilitate the
necessary adjustment in the invoice price to take account of such
charges before a comparison is made to the trigger price, it is
proposed to add a new section 26a, titled "Freight from U.S. Point
of Importation."
EDITORIAL CHANGES
Because the title to section 23, "Domestic Freight Charges"
apparently has not been understood, and because of the addition of
new section 26a, it is proposed to change the title of section 23 to
"Transportation Costs to Point of Exportation". It also is proposed
to modify section 24 to read "Ocean, Air, or International Freight".
The Department has been requested to modify the format of the
SSSI by placing sections 10 through 12 and 22 through 26 below sections
6
13 through 21. It was suggested that this change would expedite
preparation and conform the document to the format of other
international trade documents, including the Special Customs
Invoice, Customs Form 5515. It is proposed to modify the format
as outlined.
The instructions for completing present section 19 (redesignated
section 19b), "Home Market" unit price, also are being changed %o clarify
the intent of this section.
PROPOSED MODIFIED SSSI
The proposed modified SSSI and instructions are set forth below:
DEPARTMENT
F O R M /VPPROVEO
OF THE T R E A S U H Y
SPECIAL S U M M A R Y S T E E L INVOICE
1. SELLER
(Trepan- in Duplicate)
? n O C H M ( MT Nil.
_^JL^°J^rL*!^i''
AOO'l'l JONAL S P A C E F O W E X T R A S SHOWI
IN B O X II.
3. INVOICE MR. A N O RATE
1 Ml m i i N c r s
la. P R O O U C E H IF O T H E R T H A N SELLER (NMIO, Artdiess. and Relationship
lo Seller.)
6. U U Y E R (if athvr Hunt < o.is»>.*'>< <•)
5. CONSIGNEE
7. ORIGIN OF G O O D S
88. D A T E PRICE T E R M S A O R E E O 8b. C U R R E N C Y USED/fc XCM. RATE
(if fixvtl or oiticfil)
13.
M A R K S ANO.
NUMBERS
14.
AISI
Category
15.
DESCRIPTION Or G O O D S
(INCLUDE SPECIFICATIONS)
9. 1 C R M S OI- SAI C. I'A Y M E N I S A N D DISCOUNTS
1 ;.
18. E X T R A S
IIASE PRICE
OTHER*
b. L E N G T H c. C O D E rt. %
16.
QUANTITY
a. W I D T H
IIH'llls.
, _ r~111 Ihe production ot these goods Involved furnishing goods or services lo the sellui c< it . assist* tuvh us ttics.
,0
| lenglnc'rlng work) and the value Is not Includnd In Ihe Involco price, diet k b o x <l<».) and uxpl.«in a b o v e
tttitls
I 1. C O D E F O R O T H E R E X T R A S '
12. DECLARATION OF SLl.LER/SlllPPI.R (OR AOI Nl) \
I declarer
If there are any commission, robales, drawbacks
(A)f lor bounties allowed u p o n the exportation ul
' — g o o d s . I have checkod b o w (A) and Itoml/ed
separately above.
(H)|
II any unrelated Inienllvos or relmhuiscnionls ul dumping
|«lull'!S, or oilier IIMIIM cmunts not leMoclcd In this Invoice
hav«> liritn, oi will ho, paid oi ar.titled, I ti.tvo checked R o w
IJ and explained .thovo.
e. Edging
f. Chemistry
g. Quality (commercial deep
Ui awing)
h. Heal treating
I. Coating
|. Inspection and testing
K. Surface treatments
1. Other (specify)
:
I further declare that there If n o other Invoice differing
from this o n e (unless otherwise described bolow) and
UNIT PRICE
20.
19a. MILL 19b. H O M E
M A R K E T INVOICE
PRICE
?3. TRANSPORTATION
COSTS TO l»OlNT OF
EXPORTATION
24. OCEAN. AIR, O R
INTERNATIONAL
FREIGHT
25. INSURANCE
COSTS
26 OTHER COSTS
(Specify Attuuu,
( C ) S K J N A I U R F OI Sr.LLCR/SHIPI'LIt (Oil A G I N T ) :
?2. PACKING
26a. FREIGHT FROM
U.S. POINT O F
i. «r>i->r»-r r\ r i r \ M
21.
INVOICE
TOTALS
8
U.S. CUSTOMS SERVICE
INSTRUCTIONS FOR PREPARATION OF SPECIAL
SUWARY STEEL INVOICE
(Required for all shipments of steel over $2,500)
Note: Where this summary invoice covers several types of merchandise
priced in different ways, each should be shown separately. Prepare
in duplicate.
Sections 1, 2-7, 8b, 9, 10, 13, 16, 20-22, and 24-26 may be completed
in the same manner as the equivalent sections on Special Customs Invoice,
Customs Form 5515.
Section la.
Producer if Other Than Seller: Show here the producer's
name, address, and relationship to seller. If producer
is the same as seller, so indicate in this section.
Section 8a.
Date Price Terms Agreed: Show here the date on which
the final sales price for this shipment was agreed.
Section 11.
Codes for Extras: This section refers to the additional
price charged for extras (other than width and length,
which are provided for in 18a and 18b). The code(s)
for the extras shown should be reflected in section 18c,
and the amount for each extra should be shown in 18d.
The extras listed are expressed in terms as now understood in the U.S. market.
Section 12.
Declaration of Seller/Shipper: Complete and explain if
any buying or selling commission, payment or other element of value, other than shown on this invoice, has been
or will be made or granted.
Section 14.
AISI Category: This column should be completed with the
appropriate category number from the following list.
Section 15.
Description of Goods: In addition to the full description
of goods as usually required on the Special Customs Invoice,
steel specifications which this merchandise meets must be
shown.
Section 17.
Base Price: Show here for each steel category the price
per unit, exclusive of extras, on which the total sales
price was based.
9
Section 18.
Extras: Show here the charge for each category of
any extra added to the base price. Use appropriate
codes from section 11 where appropriate.
Section 19a.
Mill Price: In all cases where the exporter is other
than the producer, show here the unit price paid by
the initial and each subsequent purchaser. If the
producer is selling directly to the U.S. buyer, this
section need not be completed.
Section 19b.
Home Market Unit Price: State the unit price in home
market currency at which such or similar goods were
sold or offered for sale and consumption in the home
market at the date nearest to the date shown in section
8a.
Section 23.
Transportation Costs to Point of Exportation: Show
here the cost of transporting the goods from the mill
or factory to the point of exportation, that is, the
foreign inland freight charge.
Section 26a.
Freight from U.S. Point of Importation: Show here the
cost of transporting the goods from the point of importation in the U.S. if these costs are borne by the
exporter or a party related to the exporter. If these
costs cannot be determined prior to entry, provide the
contract terms stating the exporter's liability.
Category No. and Products
Ingots, blooms, billets, slabs, etc.
Wire rods.
Structural shapes - plain 3 inches and over.
Sheet piling.
Plates.
Rail and track accessories.
Wheels and axles.
Concrete reinforcing bars.
Bar shapes under 3 inches.
Bars - hot rolled - carbon.
Bars - hot rolled - alloy.
Bars - cold finished.
Hollow drill steel.
Welded pipe and tubing.
Other pipe and tubing.
Round and shaped wire.
Flat wire.
Bale ties.
Galvanized wire fencing.
Wire nails.
Barbed wire.
Black plate.
Tin plate.
Terne plate.
Sheets - hot rolled.
26. - Sheets - cold rolled.
27. - Sheets - coated (including galvanized).
28. - Sheets - coated - alloy.
29. - Strip - hot rolled.
30. - Strip - cold rolled.
31. - Strip - hot and cold rolled - alloy.
32. - Sheets other - electric coated.
11
AUTHORITY
The authority for the proposed amendments is R.S. 251, as amended
(19 U.S.C. 66), section 407, 42 Stat. 18 (19 U.S.C. 173), sections 481,
484, 624, 46 Stat. 719, 722, as amended, 759 (19 U.S.C. 1481, 1484,
1624), 77A Stat. 14, Tariff Schedules of the United States (19 U.S.C.
1202, General Headnote 11).
COMMENTS
The Customs Service invites written comments, preferably in triplicate,
on the proposed amendments from all interested parties. Comments submitted
will be available for public inspection in accordance with section 103.8(b)
of the Customs Regulations (19 CFR 103.8(b)) during regular business hours
at the Regulations and Legal Publications Division, Headquarters, U.S.
Customs Service, 1301 Constitution Avenue, N.W., Room 2335, Washington,
D.C. 20229.
DRAFTING INFORMATION
The principal author of this document was John E. Elkins, Regulations
and Legal Publications Division, U.S. Customs Service. However, other
personnel in the Customs Service and the Department of the Treasury assisted
in its development.
PROPOSED AMENDMENT
1,
It is proposed to amend section 141.89(b)(1), Customs Regulations,
(19 CFR 141.89(b)(1)), by adding a new subparagraph (E) to read as follows:
141.89
*
Additional information for certain classes of merchandise
*
*
*
(b) Special summary steel invoice.
(1) *
*
*
*
12
(E) The name of the producer and the price paid by the
initial and each subsequent purchaser. One or more continuation
sheets may be used to supply this information, if necessary.
iff i/f.tcv&A
Commissioner of Customs
Approved:"^ OQJ 10,1978
^as
General Counsel
/
<£&C>^
REMARKS BY JOHN R. KARLIK, DEPUTY ASSISTANT SECRETARY
OF THE TREASURY FOR INTERNATIONAL ECONOMIC ANALYSIS
BEFORE THE
THE NATIONAL ECONOMISTS CLUB, WASHINGTON, D . C ,
OCTOBER 12, 1978
EXCHANGE RATE CHANGES, BALANCE OF PAYMENTS ADJUSTMENT,
AND INFLATION
In testimony before the Senate Banking Committee on
February 6, 1978, Treasury Under Secretary Solomon asserted
that for each percentage point that the dollar depreciated
with respect to the other OECD currencies, he expected that
the consumer price index would rise by about .02 of a percentage point as a direct consequence of dollar depreciation. On
September 13 Federal Reserve Board Chairman Miller said,
"the decline in the value of the dollar has added one percent
to the nation's inflation rate during the past twelve months."
Putting these two official statements together, and doing
a quick — but incorrect — mental calculation, one might
deduce that over the past year the dollar had depreciated by
some 50 percent with respect to foreign currencies. The dollar
has depreciated, but not by that much.
Investigation would reveal that Under Secretary Solomon
was speaking only of the direct effects of dollar depreciation,
while Chairman Miller was adopting a broader perspective and
including indirect consequences as well. Nevertheless, I think
B-1216
-2this example is a good illustration of the morass of complexities that one can easily slip into when thinking about dollar
depreciation and its consequences without at first addressing
with grinding, excrutiating specificity a number of complex
questions. What I propose to do is to review briefly some of
the research that the Treasury is presently engaged in on the
phenomenon of exchange rate changes and their consequences.
For international economists employed by any of the executive
departments or the Federal Reserve, I will say little that is
new, since our research activities are generally well known.
The Amount of Exchange Rate Change
Not the least of the problems that one encounters immediately when considering these questions is measuring the
direction and amount of the exchange rate change that has
occurred.
You are aware that there have been dramatic shifts
with respect to individual currencies.
For example, from the
beginning of 1978 through October 11, the dollar value of the
Japanese yen and the Swiss franc have each increased 29 percent,
the dollar value of the German mark has risen 12 percent, but
the U.S. dollar value of the Canadian dollar has declined by
7 percent.
To get a broad measure of the net change in the
foreign exchange value of the U.S. dollar during any given
period, it is necessary to calculate an average, and that's where
the trouble begins.
There's a list of choices to be made.
Namely, which
-3countries to include in the group on which the average is
based?
In calculating the average, should the weights used be
trade between the United States and each of the individual
countries in the group, on the proportionate share of each
country in global trade, or on price elasticities as well as
trade volume?
Should the type of trade that is included be
exports, imports, or both?
Trade during what base period
should be employed to construct the weights?
In making these
calculations, should arithmetic or geometric averaging be used?
Finally, since we are dealing with ratios, what do you put in
the numerator and what in the denominator —
should you focus
on the dollar value of foreign currencies, or on the foreign
currency value of the dollar?
These questions may seem to be so technical as to dissipate into triviality.
Indeed, during my many years as a
staff economist for the Joint Economic Committee, during which
I witnessed the exchange rate changes occurring in the early
and mid-1970,s, I hardly concerned myself with these issues.
Now having changed my perspective, the world looks considerably
different.
Let me give some practical examples of how different
answers to these questions can lead to quite diverse results.
The Federal Reserve Board recently revised its index of exchange
rate changes.
It now includes the G-10 countries and Switzerland
in its group and uses global trade during 1972-76 and geometrical
-4averaging for its weighting scheme.
According to the revised
Fed index, the dollar depreciated 2.1 percent in 1977 and 8.3
percent during the first six months of this year.
The Treasury
calculates an index with respect to two groups of countries
—
the OECD and a list of 46 nations with which the United States
conducts well over 90 percent of its total trade.
The Treasury
index is actually an average of an import-weighted index of
the change in the dollar value of foreign currencies and an
export-weighted index of the change in the foreign currency value
of the dollar.
1972 bilateral trade weights and arithmetic
averaging are used.
With respect to the OECD countries, the
Treasury index shows that the value of the dollar declined
4.8 percent in 1977 and another 3.9 percent during the first
half of this year.
In contrast, with respect to a larger group
of 46 countries, the Treasury index
showed no change during
1977, and a depreciation of only 1.6 percent during the first
six months of 1978.
The International Monetary Fund (IMF) uses its multilateral
exchange rate model to calculate the impact on a given country's
trade balance of a one percent change
nineteen other currencies.
in the price of each of
These normalized reactions, which
take account of both price elasticities and trade volumes,
are used to construct an index of effective exchange rate
change. According to the IMF index, the dollar depreciated
3.7 percent in 1977 and 5.5 percent in the first half of 1978.
-5There is a large menu of averages from which one can choose.
In addition to those mentioned above, the Morgan Guaranty
Trust Company also issues a widely publicized measure.
three points are worth noting.
Two or
First, even for a limited group
of countries, the particular nations in the group, the base
period, and the weighting scheme can make a significant difference.
For example, during 1977, the Treasury OECD index shows a dollar
depreciation twice as large as the Fed's G-10 plus Switzerland
calculation, and curiously enough, for the first six months
of 1978 the relative magnitudes are reversed.
Moreover,
because the group of 46 countries used in the Treasury index
includes many that peg to the dollar, as well as developing
nations whose currencies have depreciated significantly with
respect to the dollar, the depreciation of the U.S. currency
according to this index is either nil or much less than the other
indicators show.
What these considerations indicate is that no measure of
dollar depreciation may be taken at face value, and that some
are superior to others for certain purposes.
Consequently,
care and thoughtfulness must be employed when using exchange
rate indices to
estimate the impact of the changes in rates
we have seen during the last year and to derive policy conclusions.
-6The Impact of Dollar Depreciation on the U.S. Trade Balance
If one were to look at the small dollar depreciation that
has occurred with respect to the group of 46 countries with
which the United States conducts the overwhelming bulk of its
trade, one might pessimistically —
but again incorrectly
~
conclude that exchange rate changes in 1977 were offsetting and
would do virtually nothing to reduce the U.S. trade deficit.
Such a conclusion would be incorrect because U.S. exports to
many of the developing countries included in the larger group
arenot particularly sensitive to price changes, while sales
to most of the OECD countries are price elastic. Therefore,
in appraising the impact of dollar depreciation on the trade
balance, we focus primarily on the industrialized countries.
Since I am emphasizing the problems of measuring exchange
rate changes, I will overlook the disputes during recent
years about the size of price and income elasticities affecting
international trade and describe current Treasury methodology.
We have found that the price elasticity of imports into the
United States is virtually unity.
Therefore, the reduction
of the trade deficit that we expect, to the extent that it is
the consequence of price changes, will be the result more of
export expansion than import reduction.
Japanese and Canadian
demand for U.S. exports is fairly price sensitive; European
demand is less so.
In estimating the impact of price changes
on U.S. exports, Treasury uses as an independent vatiable the
ratio
of foreign wholesale prices adjusted for exchange
-7rate changes over the U.S. non-agricultural export deflator.
We do not simply take the Treasury weighted index of exchange
rate changes
elasticity.
or its export component and multiply that by an
Nevertheless the combined responses of various
countries to exchange rate changes lead
to a rough rule of
thumb such that a percentage point dollar depreciation with
respect to the OECD currencies leads to about a $1 billion
reduction in our trade deficit.
During the recent IMF meeting Secretary Blumenthal indicated that we expect a reduction in the current account deficit
during 1979 of $6 or $7 billion.
The bulk of this decline
would result from a drop in the trade deficit.
This change
will partly result from an expected slowdown of growth in the
United States and acceleration abroad, but the exchange rate
changes that have occurred to-date will also have a significant
impact.
Some of the signs of strengthening are already
evident. After remaining stagnant through 1977, from January
through July a three-month moving average of non-agricultural
exports shows a growth rate slightly exceeding 30 percent.
Similarly, the trend of non-petroleum import growth has sharply
dropped and as of July, the three-month moving average was
only slightly above the previous peak in March.
Indeed, real
non-petroleum imports have been dropping since the beginning
of the year, and the cost of petroleum and product imports
has been declining since late 1977.
-8The Impact of Dollar Depreciation on Domestic Inflation
Both
international and domestic research within Treasury
are now engaged in a cooperative effort to re-estimate in a
more detailed fashion the domestic inflationary consequences
of exchange rate changes.
This is an extremely difficult task
to accomplish with any precision.
Our work has not yet
progressed sufficiently to be able to report specific results.
I can only outline some of the considerations we are attempting
to take into account in order to achieve greater accuracy.
Dollar depreciation raises the cost to American manufacturers and consumers of imported raw materials, intermediate
components, and final goods. Thus, import rather than combined trade weights should be used in calculating the
inflationary impact.
In industries operating at full capa-
city, export demand might also raise dollar prices of
goods purchased in additional amounts by foreigners, but this
phenomenon can be essentially ignored under today's circumstances .
Because in this case we're concerned about the cost
of imports, exchange rate changes should be expressed in
terms of the dollar cost of obtaining a fixed amount of
foreign currency rather than vice versa.
-9How
exchange rates are expressed, i.e., which currency
goes in the numerator and which in the denominator is a trivial
consideration for marginal changes. However, when exchange rate
movements of the magnitude we have seen this year occur, the
difference is no longer trivial.
For example, the dollar value
of the Japanese yen has increased 29 percent this year, while
the amount of yen that can be purchased with the dollar has
decreased 23 percent.
The direct inflationary impact of dollar depreciation is
simply the increase in the cost of imports to American manufacturers and consumers.
This is determined by the magnitude
of the exchange rate changes and the extent to which foreign
producers decide to pass through the effect of those exchange
rate changes by not cutting profit margins to absorb part of
the change.
Sympathetic price increases in the U.S. domestic
economy occur when producers of import-competing goods raise
their prices because the cost of imports has increased.
These
direct and sympathetic price changes then are fed through the
economy via feedback loops, including wage increases and shifts
in consumer demand.
While we may be able to measure the direct
consequences of dollar depreciation with a fair degree of
accuracy, it is very difficult to catch all of the sympathetic
price increases and to measure precisely the type and extent
of feedbacks that occur.
As with the impact of dollar depreciation on the trade
balance, it is not satisfactory, other than as a rough rule
-10of thumb, to simply take a weighted average exchange rate
change and multiply it by a coefficient to get an estimate of
the impact on domestic inflation.
As a minimum, one should have
data on actual increases in the dollar cost of imports by
various classes and the relative weights of these goods in
compiling the consumer price index.
persion in
Because of the large dis-
exchange rate changes among important trading
partners of the United States, it may be desirable to collect
data separately on price increases of major imports from principal suppliers.
For example, the price of autos imported
from Canada has moved very differently from the price of cars
imported from Germany, which is still different from the cost
of Japanese auto imports. Or to cite another instance, for
the past year there has been no increase in oil prices, but a
given rise in the cost of imports including a significant oil
price increase
would have a quite different impact on domestic
inflation from the same total rise in the cost of imports
without an oil price rise. Again, we are presently working
on these refinements but have reached no conclusions.
Implications for Policy
The considerations I have expressed lead me to conclude
that while dollar depreciation has significant effects in
reducing the U.S. trade deficit, the decline induced solely
by price changes will be far from dramatic and at a cost that
is hardly trivial in terms of additional domestic inflation.
We certainly need to rely upon the price mechanism to shift
-11labor and real capital in this country from the production of
non-traded goods into production for export and for competition with imports. But we also desire to minimize the inflationary consequences of dollar depreciation. To achieve this
objective, we need, first, to keep the U.S. economy open to
import competition, second, to encourage exports also through
non-price inducements, such as the program announced last month
by the President, and third, maintain a rate of growth and
relative price stability sufficient to attract financial and real
investment from abroad. Financial investment helps finance our
current account deficit and minimize dollar depreciation and
its inflationary consequences. Real investment in the form
of technology and managerial expertise raises productivity
and helps maintain our standard of living.
FEDERAL FINANCING BANK
September 1978 Activity
Page 2
BORROWER
:
DATE ;
AMOUNT
OF ADVANCE
Rural Electrification Administration
Florence Telephone Co. #40
Arkansas Electric Coop. #97
Cooperative Power Assn. #70
Tri-State Gen. 5 Trans. #37
San Miguel Electric Coop. #110
Wabash Valley Power #104
United Power Assn. #122
Allegheny Elect. Coop. #93
Colorado-Ute Elect. Assn. #78
Wolverine Elect. Coop. #100
Northern Michigan Elect. Coop. #101
Indiana Rural Elect. Coop. #107
United Power Assn. #86
Continental Tele, of Texas #119
Big River Elect. Corp. #58
Big River Elect. Corp. #65
Big River Elect. Corp. #91
San Miguel Elect. Coop. #110
Sierra Telephone Co. #59
So. Mississippi Elect. Pwr. #3
So. Mississippi Elect. Pwr. #90
Arizona Elect. Pwr. Coop. #60
Arizona Elect. Pwr. Coop. #103
Continental Tele, of Minnesota #56
Continental Tele, of Minnesota #57
Southern Illinois Power #38
Oglethorpe Elect. Membership #74
Basin Electric Power #88
Tri-State Gen. § Trans. #89
Allegheny Elect. Coop. #93
Wabash Valley Power #104
Central Iowa Power #51
Certificate of Beneficial
Ownership
Small Business Investment Companies
Brentwood Associates, Inc.
Northwest Business Investment Corp.
Capital Marketing Corp.
Capital Resource Co. of Conn.
First Capital Corp.
Rand Loan
SBIC,Marketing
Inc.
Student
Association
#160
#161
#162
#163
9/1
9/1
9/5
9/6
9/6
9/8
9/8
9/11
9/14
9/15
9/15
9/15
9/18
9/20
9/20
9/20
9/20
9/22
9/25
9/26
9/26
9/26
9/26
9/28
9/28
9/29
9/29
9/29
9/29
9/29
9/29
9/29
618,000.00
5,559,000.00
11,000,000.00
300,000.00
5,600,000.00
2,466,000.00
7,500,000.00
3,092,000.00
960,000.00
58,736,000.00
75,063,000.00
43,000,000.00
1,200,000.00
5,400,000.00
3,827,000.00
12,000.00
1,829,000.00
8,000,000.00
120,000.00
5,000.00
495,000.00
4,233,000.00
3,670,000.00
1,074,000.00
1,517,000.00
2,015,000.00
12,520,000.00
105,000.00
9,135,000.00
2,248,000.00
940,000.00
725,000.00
12/31/12
12/31/12
12/31/12
12/31/80
9/6/80
12/31/12
9/8/80
12/31/12
12/31/12
9/15/80
9/15/80
9/15/81
12/31/12
9/20/80
9/20/80
9/20/80
9/20/80
9/22/80
12/31/12
9/29/80
9/29/80
12/31/12
12/31/12
12/31/12
12/31/12
9/29/80
10/15/80
9/29/80
12/31/80
12/31/12
12/31/12
12/31/12
8.619%
8.619%
8.615%
8.615%
8.635%
8.574%
8.615%
8.568%
8.535%
8.625%
8.625%
8.515%
8.567%
8.715%
8.715%
8.715%
8.715%
8.865%
8.766%
8.925%
8.925%
8.766%
8.766%
8.777%
8.777%
8.895%
8.885%
8.895%
8.845%
8.778%
8.778%
8.778%
9/30
187,000,000.00
9/30/08
8.785%
9/20
9/20
9/20
9/20
9/20
9/20
1,000,000.00
150,000.00
3,000,000.00
500,000.00
75,000.00
200,000.00
9/1/81
9/1/83
9/1/88
9/1/88
9/1/88
9/1/88
8.555%
8.595%
8.545%
8.545%
8.545%
8.545%
9/12
9/19
9/26
50,000,000.00
70,000,000.00
55,000,000.00
70,000,000.00
12/5/78
12/12/78
12/19/78
12/26/78
8.044%
8.081%
8.281%
8.515%
9/18
9/29
70,000,000.00
555,000,000.00
12/29/78
12/29/78
8.078%
8.203%
3/1/89
8.583%
8.767% annually
10/1/89
8.595%
8.78% annually
9/5
$
:
:INTEREST:
INTEREST
: MATURITY : RATE :
RATE
(other than s/a)
8.528% quarterly
ti
8.528%
M
8.524%
II
8.524%
it
8.544%
M
8.484%
•i
8.524%
II
8.478%
II
8.446%
ti
8.534%
it
8.534%
II
8.426%
•i
8.477%
it
8.622%
II
8.622%
n
8.622%
it
8.622%
tt
8.769%
it
8.672%
it
8.828%
it
8.828%
ti
8.672%
it
8.672%
it
8.683%
tt
8.683%
it
8.798%
II
8.788%
•t
8.798%
it
8.749%
ti
8.684%
it
8.684%
tt
8.684%
Tennessee Valley Authority
Note #82
Note #83
Department of Transportation - Sec. 511 Loans
Chicago $ North Western Trans. 9/1 1,583,165.00
Western Union Space Communications
[NS5A1
9/20
9,000,000.00
FEDERAL FINANCING BANK
September 1978 Activity
BORROWER
AMOUNT
OF ADVANCE
DATE
:
:INTEREST: INTEREST
: MATURITY : RATE :
RATE
(other than s/a)
Department of Defense
Korea #8
Thailand #2
Thailand #3
Colombia #2
Liberia #2
Ecuador #2
Turkey #6
Korea #8
Peru #2
Colombia #1
Israel #6
Cameroon #1
China #3
Ecuador #2
China #2
Honduras #2
Korea #8
Thailand #2
Thailand #3
Turkey #2
Turkey #4
Turkey #5
China #3
Ecuador #2
Honduras #2
Jordan #2
Tunisia #3
Tunisia #4
Korea #8
Israel #6
Korea #8
Jordan #3
Panama #2
Export-Import Bank
Jordan #2
NoteTurkey
#16 #4
Morocco
Note #17 #3
8.591%
8.586%
8.591%
8.595%
8.567%
8.551%
8.529%
8.539%
8.531%
8.550%
8.556%
8.607%
8.619%
8.605%
8.554%
8.659%
8.604%
8.645%
8.627%
8.612%
8.606%
8.604%
8.673%
8.656%
8.681%
8.653%
8.659%
8.656%
8.689%
8.767%
8.704%
8.741%
8.746%
8.722%
8.72%
8.714%
9/11
9/12
9/14
9/18
9/19
9/19
9/19
9/20
9/20
9/20
9/20
9/20
9/20
9/20
9/20
9/21
9/21
9/21
9/21
9/21
9/21
9/22
9/25
9/25
9/26
9/27
9/28
9/28
9/29
400,143.00
567,176.43
73,672.00
154,634.00
9,696.00
42,055.60
459,389.00
73,857.36
282,223.50
1,104,937.15
2,400,000.00
268,083.00
1,700,000.00
26,913.68
1,034,586.56
151,800.00
117,456,946.18
935,020.63
330,984.00
8,659,383.85
11,798,254.50
30,000,000.00
3,792,577.70
198,900.00
23,682.00
59,182.58
5,406,481.38
7,952,358.78
16,431,674.00
45,002,033.37
708,183.25
430,024.00
23,406.25
68,845.00
2,935,721.42
14,756,281.00
12/31/86
6/30/83
9/20/84
9/20/84
6/30/83
8/25/84
6/3/88
12/31/86
4/1/84
6/30/83
1/12/08
5/10/84
12/31/82
8/25/84
12/31/82
10/7/82
12/31/86
6/30/83
9/20/84
10/1/86
10/1/87
12/15/87
12/31/82
8/25/84
10/7/82
11/26/85
10/1/84
10/1/85
12/31/86
1/12/08
12/31/86
12/31/86
3/31/83
11/26/85
10/1/87
9/10/85
9/1
9/1
218,000,000.00
218,000,000.00
3/1/80
9/1/88
1,606,173.38
7/31/03
11/15/04
8.557%
8.522%
6,987,596.60
7/1/99
8.476%
4,000,000.00
5,000,000.00
11,100,000.00
10/1/78
10/1/78
10/1/78
7.925%
8.35%
8.203%
9/1
9/1
9/1
9/5
9/6
9/7
9/8
$
8.654% 8.562% quarterly
8.586% 8.496% quarterly
General Services Administration
Series M-037 9/8 5,402,524.53
Series L-046
9/15
Health Maintenance Organization (HEW)
Block #3 9/15
National Railroad Passenger Corp. (Amtrak)
Note #15
Note #15
Note #15
9/1
9/25
9/29
FEDERAL FINANCING BANK HOLDINGS
(in millions of dollars)
September 1978
Program
•SpptPmher 30
r
1978 August 31. 1978
Net Change
(8/31/78-9/30/78)
Net Change-FY 1978
(10/1/78-9/30/78)
On-Budget Agency Debt
Tennessee Valley Authority
Export-Import Bank
210.0
436.0
$ 1,340.0
644.8
2,114.0
356.8
-0-0-
67.0
46.4
22,275.0
57.0
163.7
-040.1
637.7
112.2
22,275.0
. 50.0
163.7
-040.1
450.7
114.1
-07.0
-0-0-0187.0
-2.0
7,660.0
27.2
11.5
1,157.2
-4.3
284.0
-20.9
17.5
35.8
3,977.9
270.2
36.0
38.5
534.4
236.0
4,191.6
250.6
745.0
21.8
177.0
$48,077.5'
17.5
34.2
3,719.2
263.2
36.0
38.5
536.3
227.6
3,918.6
246,5
725.0
21.8
177.0
$46,668.0*
$
220.0
568.3
$ 5,010.0
6,132.3
114.0
356.8
$
Off-Budget Agency Debt
U.S. Postal Service
U.S. Railway Association
Agency Assets
Farmers Home Administration
DHEW-Health Maintenance Org. Loans
DHEW-Medical Facility Loans
Treasury-New York City
Overseas Private Investment Corp.
Rural Electrification Admin.-CBO
Small Business Administration
Government Guaranteed Loans
DOT-Emergency Rail Services Act
DOT-Title V, RRRR Act
DOD-Foreign Military Sales
General Services Administration
Guam
DHUD-New Communities Admin.
Nat'l. Railroad Passenger Corp.
(AMTRAK)
NASA
Rural Electrification Administration
Small Business Investment Companies
Student Loan Marketing Association
Virgin Islands
WiATA
TOTALS
Federal Financing Bank
-01.6
258.7
7.0
-0-0-1.9
9.0
273.0
4.1
20.0
-0-0$1,409.5
2.9
31.4
1,462.1
128.1
-0-4.0
-24.0
180.1
1,809.2
74.7
235.0
-.2
-0$12,659.6*
October 16, 1978
- 3Agency Issuers
The Tennessee Valley Authority sold to FFB a $70 million
note on September 18, and a $555 million note on September 29,
Both notes mature December 29, 1978, and carry rates of 8.0781
and 8.203%, respectively.
On September 30, FFB purchased a $187 million Certificate
of Beneficial Ownership from the Rural Electrification Administration. This CBO will mature on September 30, 2008, and
carries an interest rate of 8.7851.
In its weekly short-term FFB borrowings, the Student Loan
Marketing Association, a Federally-chartered private corporation
which borrows under a Department of Health, Education and
Welfare guarantee, raised $20 million in new cash, and refunded
$225 million in maturing securities. FFB holdings of SLMA
notes now total $745 million.
FFB Holdings
As of September 30, 1978, FFB holdings totalled $48.1
billion. FFB Holdings increased by a total of $12.7 billion
during FY-78 (October 1, 1977 through September 30, 1978).
FFB Holdings and Activity Tables are attached.
# 0#
- 2 On September 20, FFB purchased a total of $4,925,000
in debentures issued by 6 small business investment companies.
The debentures are guaranteed by tho Small Business Administration and mature in 3, 5, and 10 years, with interest rates
of 8.5551, 8.5951, and 8.545%, respectively.
FFB purchased the following General Services Administration Purchase Contract Participation Certificates:
Interest
Series
Date
Amount
Maturity
M-037 9/8 $5,402,524.53 7/31/03 8.557%
L-046
9/15
1,606,173.38
11/15/04
Rate
8.522%
On September 20, FFB provided Western Union Space Communications, Inc., with $9,000,000 at an annual interest rate of
8.78%. This advance is part of FFB's $687 million financing
of a satellite tracking system to be constructed by Western
Union and used by the National Aeronautics and Space Administration (NASA). Repayment of these advances is guaranteed
by NASA.
Department of Transportation (DOT) Guaranteed Lending
On September 21, FFB entered into a Guarantee Agreement
with the Federal Railroad Administration to lend $33,519,000
to the Trustee of the Chicago, Rock Island and Pacific Railroad (CRI). Repayment of these funds is guaranteed by DOT
under Section 511 of the Railroad Revitalization and Regulatory
Reform Act (RRRR Act), with final repayment due FFB on
December 10, 1993.
This is FFB's second loan with CRI. On June 21, 1976,
the Trustee of CRI issued a Certificate to FFB covering up to
$17,500,000 in advances to be repaid on June 21, 1991. The
full amount of this loan has been drawn by CRI. Repayment
of principal and interest under this agreement is guaranteed
by the Department of Transportation under the Emergency Rail
Services Act.
On September 1, FFB advanced $1,583,165.00 to the Chicago
and North Western Transportation Company. This advance, which
is guaranteed by DOT under Section 511 of the RRRR Act, will
mature on March 1, 1989, and bears an interest rate of 8.767%,
on an annual basis.
Under Note #15, which matures October 1, 1978, FFB lent
the following to Amtrak:
Interest
Date
Amount
Rate
9/1
$ 4,000,000
7.925
9/25
5,000,000
8.35 %
9/29
11,100,000
8.203 %
</> in
M
ieaeraiWASHINGTON,
nnancing
oanK
D.C. 20220
FOR IMMEDIATE RELEASE
St
0- *
October 17, 1978
FEDERAL FINANCING BANK ACTIVITY
September 1-September 30, 1978
Roland H. Cook, Secretary, Federal Financing Bank,
announced the following activity for September, 1978.
Guaranteed Lending Programs
During the month of September, the Federal Financing
Bank (FFB) entered into a series of loan agreements with the
following foreign governments:
Government
Amount
China
23,500 ,000
25,000 ,000
Colombia
2,000 ,000
Gabon
500,,000
Haiti
2,500,,000
Honduras
40,000 ,000
Indonesia
71,000 ,000
12,000 ,000
Jordan
500 ,000
Kenya
16,500 ,000
Liberia
43,000 ,000
Malaysia
8,000.,000
Morocco
18,500,,000
120,000 ,000
Peru
29,500 ,000
Philippines
Spainof advances made under these loan agreements
Repayment
Thailand
are guaranteed
by the Department of Defense under the Arms
Export Control Act. Also during the month of September, FFB
made 36 advances totalling $275,719,107.17 to 15 governments
under existing DOD-guaranteed loan agreements.
Under notes guaranteed by the Rural Electrification
Administration, FFB advanced a total of $272,964,000.00
to 23 rural electric and telephone systems. Details of
individual advances are included in the attached table.
B-1215
FOR IMMEDIATE RELEASE
October 12, 1978
RESULTS OF TREASURY'S 52-WEEK BILL AUCTION
Tenders for $3,163 million of 52-week Treasury bills to be dated
October 17, 1978, and to mature October 16, 1979, were accepted at the
Federal Reserve Banks and Treasury today. The details are as follows:
RANGE OF ACCEPTED COMPETITIVE BIDS: (Excepting 3 tenders totaling $3,000,000)
Investment Rate
Price
High -
Discount Rate
(Equivalent Coupon-Issue Yield)
91-653 8#255% Q93%
Low
~
Average -
91.628
9i.636
8.280%
%.212%
8.96%
8.95%
Tenders at the low price were allotted 31%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTS AND TREASURY:
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Received
Accepted
$
22,460,000
4,788,980,000
111,275,000
50,470,000
31,965,000
24,615,000
352,625,000
31,520,000
54,510,000
8,575,000
2,585,000
246,860,000
$
8,080,000
2,810,640,000
31,250,000
12,520,000
11,275,000
11,615,000
178,605,000
7,520,000
24,510,000
8,575,000
2,585,000
49,410,000
Treasury
6,065,000
6,065,000
TOTAL
$5,732,505,000
$3,162,650,000
The $3,163 million of accepted tenders includes $ 92 million of
noncompetitive tenders from the public and $1,196 million of tenders from
Federal Reserve Banks for themselves and as agents of foreign and
international monetary authorities accepted at the average price.
An additional $306 million of the bills will be issued to Federal
Reserve Banks as agents of foreign and international monetary authorities
for new cash.
B-1208
Department of the
WASHINGTON, D.C. 20220
TELEPHONE
566-2041
Contact: Charles Arnold
566-2041
Immediate Release
October 12, 1978
TREASURY TAX AND LOAN INVESTMENT
PROGRAM BECOMES EFFECTIVE ON NOVEMBER 2
The Treasury Department announced today that the Treasury
Tax and Loan Investment Program will become effective
November 2, 1978.
Under the Program, the Treasury will earn interest by
investing its excess operating cash balances. At the same
time, the Treasury will begin paying fees to financial
institutions for their services in maintaining Treasury tax
and loan accounts, accepting Federal tax deposits, and issuing
U.S. Savings Bonds. Also the fees which have been paid for
redeeming savings bonds are being revised. The gain to the
Treasury from interest earnings, net of payments for services,
will amount to an estimated $50 to $100 million annually.
The new program was made possible by legislation enacted
in October, 1977. Although the Treasury Department issued
implementing regulations on May 2, 1978, the new program could
not be established until Congress appropriated the funds needed
for the payment of service fees. These funds were provided in
the recently enacted Treasury appropriations bill for Fiscal
Year 1979.
Notice of the establishment of the Program will be published
in the Federal Register.
*
B-1209
* *
FOR IMMEDIATE RELEASE
October 12, 1978
Contact:
Alvin M. Hattal
202/566-8381
TREASURY DEPARTMENT ANNOUNCES CHANGES
IN PROCEDURES CONCERNING FIREARMS
The Treasury Department and the Bureau of Alcohol,
Tobacco and Firearms today announced changes in procedures
governing routine compliance inspections, of firearms, licensees, and investigations of gun shows.
Richard J. Davis, Assistant Secretary of the Treasury
for Enforcement and Operations, and John G. Krogman, Acting
Director of BATF, said that, except in a small number of
situations, BATF employees will no longer make unannounced
inspections of licensees. In most cases, licensees will
be phoned the day before to notify them of the proposed
inspection.
Inspections without prior notification will generally
be limited to instances where there is reason to suspect
violations basedona licensee's prior conduct or on specific
information indicating that a licensee may not be in compliance.
There will also be a small number of random surprise
inspections for purposes of compliance analyses to assess
the impact of prenotification. According to Actinq Director
Kroqman, "This policy will provide us with the flexibility
to deal in as fair a manner as possible with the overwhelming number of dealers who honestly seek to obey the law,
while still enabling us to move against those who may be
sources of firearms for the criminal."
In another chanqe, the BATF is limiting its investigations of gun shows and flea markets to those instances
where there are specific allegations that significant
violations have occurred or will occur and where there is
reliable information that guns sold at the specific show
or flea market have shown up in crimes of violence with
some degree of regularity. "While serious violations of
the law cannot be ignored," Davis said, "we believe that
(MORE)
B-1210
- 2 -
BATF must continue its efforts to concentrate its resources on those areas where illegal activity will have
the most impact. This means that, except for exceptional
cases, criminal enforcement personnel will not be involved
in these kinds of shows. We do hope, however, that operators of these shows and markets will work with BATF's
regulatory inspectors so that questions about procedures
can be amicably resolved."
Davis said the Treasury Department and BATF intend
to review the Bureau's operating procedures continually in
an effort to improve its record of achievement and to
ensure that it carries out its mission with the highest
degree of professionalism possible.
o
0
o
DATE: October 16, 1978
13-WEEK
TODAY:
/^P? 2
26-WEEK
% >&/
%
i.ST WEEK:
HIGHEST SI^CE:
iHM
LOV;SST
SINCE
#, <7iV '<&
VmrtmintoltheTREASURY
WASHINGTON, D.C. 202;
EUEPH
FOR IMMEDIATE RELEASE
October 16, 1978
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,301 million of 13-week Treasury bills and for $3,401 million
of 26-week Treasury bills, both series to be issued on October 19, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
13-week bills
maturing January 18, 1979
Price
High
Low
Average
a/
Discount
Rate
97.928a/ 8.197%
97.923
8.217%
97.925
8.209%
26-week bills
maturing April 19, 1979
Investment
Rate 1/
Price
8.49%
8.51%
8.50%
95.694
95.658
95.672
Discount
Rate
8.517%
8.589%
8.561%
Investment
Rate 1/
9.02%
9.10%
9.07%
Excepting 1 tender of $180,000
Tenders at the low price for the 13-week bills were allotted 89%
Tenders at the low price for the 26-week bills were allotted 1%
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTSAND TREASURY:
Location
Received
Boston
$
42,475,000
New York
3,775,960,000
23,040,000
Philadelphia
Cleveland
73,565,000
Richmond
32,005,000
Atlanta
28,995,000
Chicago
208,470,000
St. Louis
32,890,000
Minneapolis
31,805,000
Kansas City
36,510,000
Dallas
17,000,000
San Francisco
256,050,000
Treasury
TOTALS
11,540,000
$4,570,305,000
Accepted
. Received
$
26,975,000
1,912,475,000
22,840,000
42,130,000
27,005,000
27,680,000
83,375,000
16,890,000
4,805,000
31,060,000
17,000,000
77,235,000
40,060,000
« $
4,438,335,000
16,700,000
:
44,365,000
20,455,000
:
21,495,000
207,535,000
36,680,000
59,865,000
55,020,000
7,965,000
190,645,000
11,540,000
12,435,000
$2,301,010,000b/
$5,151,555,000
bAncludes $466,335,000 noncompetitive tenders from the public.
concludes $ 285,690,000 noncompetitive tenders from the public.
i'Equivalent coupon-i.ssue yield.
B-1211
Accepted
$
40,060,000
2,849,935,000
16,700,000
44,365,000
20,455,000
21,495,000
122,685,000
25,680,000
59,865,000
49,020,000
7,965,000
130,645,000
12,435,000
$3,401,305,000c/
Removal Notice
The item identified below has been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.
Citation Information
Document Type: Transcript
Number of Pages Removed: 24
Author(s):
Title:
Statement of Dr. C. Fred Bergsten, Assistant Secretary, International Affairs
Date:
1978-10-13
Journal:
Volume:
Page(s):
URL:
Federal Reserve Bank of St. Louis
https://fraser.stlouisfed.org
4810-22
DEPARTMENT OF THE TREASURE
OFFICE OF IHE SECRETARY
CERTAIN CARBON STEEL PLATES
FROM VARIOUS COUNTRIES
ANTIDUMPING PROCEEDING NOTICE
AGENCY: U.S. Treasury Department
ACTION:
Initiation of Antidumping Investigation
SUMMARY:
This notice is to advise the public that, pursuant to information
developed under the "Trigger Price Mechanism" for certain steel mill
products, an antidumping investigation is being initiated for the purpose
of determining whether imports of carbon steel plates from various countries
are being, or are likely to be, sold at less than fair value within the
meaning of the Antidumping Act, 1921, as amended.
Sales at less than fair
value generally occur when the prices of the merchandise sold for exportation to the United States are less than the prices in the home market.
EFFECTIVE DATE:
(Date of publication in the FEDERAL REGISTER).
FOR FURTHER INFORMATION CONTACT:
Donald W. Eiss, U.S. Treasury Department, Office of Tariff Affairs,
15th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20220
(202-566-8256).
SUPPLEMENTARY INFORMATION:
On December 6, 1977, the President approved implementation by the
Treasury Department of a "Trigger Price Mechanism" ("TPM") applicable to
-2inportations of certain steel mill products. As stated in the FEDERAL
REGISTER of December 30, 1977 (42 F.R. 65214), the TPM consists of four
major parts:
(1) the establishment of trigger prices for steel mill
products iirported into the United States; (2) the use of a Special Summary
Steel Invoice ("SSSI") applicable to imports of all steel mill products;
(3) the continuous collection and analysis of data concerning (a) the
cost of production and prices of steel mill products exported to the
United States, and (b) the condition of the domestic steel industry; and
(4) where appropriate, the expedited initiation and disposition of proceedings under the Antidumping Act of 1921 with respect to imports below the
Trigger Prices.
The Trigger Price Mechanism is a monitoring device established by
the Treasury Department to determine if basic steel mill products may be
sold to the United States at less than fair value. Actual C.I.F. transaction prices on sales to the United States are compared to trigger prices
established by the Treasury Department. Prices below the trigger prices are
considered to represent potential sales at less than fair value since
trigger prices reflect the estimated cost of production of the world's
most efficient steel industry.
Information has been developed from analysis of the SSSI's submitted, indicating that imports of certain carbon steel plates, sold
fcy the companies listed below, have been entering the United States at
prices below the applicable "Trigger Prices". Such information indicates
the possibility that the subject carbon steel plates are being, or are
likely to be, sold at less than fair value within the meaning of the
Antidumping Act of 1921, as amended (19 U.S.C. 160 et seq.), by the
-3following producers and/or sellers of this merchandise, and in those
instances where the seller did not also produce the exported product,
the manufacturers supplying the firms listed below:
Empresa Nacional Siderurgica, S.A.
Velasquez, 134
Madrid-6, Spain
"Stahlexport" Przedsiebiorstwoa
Handlu Zagrenicznego
Katowice, Plebiscytowa 36
Poland
China Steel Corp.
(Taiwan)
The addresses listed above are for identification purposes only
and do not necessarily reflect the countries from which those companies
have made sales at less than "trigger prices". For purposes of this
investigation, sales by those companies controlling, controlled by,
or under the common ownership of each listed company in the same
country, will be subject to any Finding of Dumping ultimately issued.
Customs' information indicates margins of dumping up to 48.5%
based upon: the comparison of export prices to the U.S. with prices
to third countries, as reflected by prices applicable to imports of
this merchandise into the member states of the European Communities,
for exports from Spain; and the comparison of export prices to the
U.S. with the foreign market value, as reflected by prices applicable
to this merchandise sold for export to the European Community by
Spanish producers and set by the Commission of the European Communities
for such imports, with respect to this merchandise imported from
Poland. For this latter comparison of relevant pricing, Spain
-4-
is considered to constitute a country at a comparable level of economic
development within the meaning of section 153.7, Customs Regulations (19
CFR 153.7) as amended by 43 F.R. 35262, pertaining to merchandise from
state-coritrolled-economy countries.
With respect to goods exported from the Republic of China, export
prices to the united States were compared to the data developed under the
Trigger Price Mechanism (TEW) for carbon steel plates contained in AISI
category 5. Data regarding "trigger prices" for this product were u]tilized
due to the lack of readily available data regarding Taiwanese home market
prices, prices at which this product is sold to third countries by companies
in Taiwan or the cost of producing carbon steel plate in Taiwan.
In establishing and administering the TPM, substantial evidence has
been developed concerning injury and likelihood of injury to -the United States
steel industry from sales of foreign steel at less than its fair value.
The sector of carbon steel plate seems particularly vulnerable. Domestic
consumption
increased in 1977 compared to 1976 by 10.3%, and in
the first eight months of 1978 by 21.5% compared to the same period in 1977.
Based on U.S. Census statistics during those same time frames, imports
have increased, respectively, 32.6% and 75.9%. IXiring the first eight months
of 1978, total imports of carbon steel plate accounted for 24% of total U.S.
domestic consumption.
Evidence available indicates that imports from the
three countries in which the above-named companies are situated, have increased
their shares of this market in both absolute terms and in terms of market
penetration.
Imports from these companies, occurring at prices less than
the relevant trigger prices have been significant, accounting for roughly
25% of total imports of this product
from these three countries during
the period May-August 1978. Accordingly, it has been determined that a
-5-
preliminary referral to the International Trade Oommission pursuant to
section 201 (c) (2) of the Antidumping Act is not required.
Having conducted a summary investigation pursuant to section 153.29
of the Customs Regulations (19 CFR 153.29) and having determined as a
result thereof that there are grounds for so doing, the United States
Customs Service is instituting an inquiry to verify information and to
obtain the facts necessary to enable the Secretary of the Treasury to
reach a determination as to the fact or likelihood of sales at less than
fair value. The inquiry will be conducted on an expedited basis.
Standard questionnaires will be promptly presented by the Customs
Service to all appropriate parties. Responses to those sections of the
questionnaire relating primarily to price data (sections A-C) must be
received by the Customs Service within 21 days from the date of presentation but in no case more than 26 days after the date of publication of
this notice in the FEDERAL REGISTER. Where appropriate, responses to that
section of the questionnaire relating primarily to cost of production
data (section D) must be received by the Customs Service within 35 days
from the date of presentation but in no case more than 41 days after the
date of publication in the FEDERAL REGISTER. Any responses received after
the above^cited deadlines will not be considered fcy the Secretary in making
the Tentative Determination and may not be used in making the Fianl Determination.
All information submitted during this investigation for which confidential treatment is requested must be accompanied (unless section 153.22(a)(2)
of the Customs Regulations is applicable) by a full and descriptive nonconfidential summary in accordance with section 153.22 of the Customs
Regulations (19 CFR 153.22). All information or portions of confidential
-6sufcmissions which are not adequately summarized will not be considered
by the Secretary in determining the question of sales at less than fairvalue.
This notice is published pursuant to section 153.30 of the Customs
Regulations (19 CFR 153.30).
^
^y/2^d^^^
iunsel of the Treasury
" OCT 2 0 1978
Robert H. Mundheim
FOR IMMEDIATE RELEASE
October 16, 1978
Contact:
George G. Ross
202/566-2356
Note to Correspondents:
Attached are tables made available today by the
Treasury Department which show Treasury estimates of
the revenue, distributional and tax burden effects of
"The Revenue Act of 1978," passed by the Congress yesterday but not yet acted upon by the President.
B-1212
Revenue Effects of H.R. 13511
The Revenue Act of 1978
Fiscal Year Receipts, 1979-84
($ millions)
:
1979
:
1980
:
Fiscal Years
1981
;
1982
:
1983
:
1984
Tax Reductions and Revisions:
JtaH
-24,588
-26,452
Business taxes -2,859 -7,026 -8,475 -9,325
-9,529
-10,246
Capital gains taxes and minimum tax -433 -2,914 -3,234 -3,530
-3,829
-4,155
Personal taxes 77.
Tax increase from additional capital gains
realizations
Total, tax reductions and revisions
-8,345
-14,552
-16,644
-19,351
71
889
900
825
597
184
-11,566
-23,603
-27,453
-31,381
-37,349
-40,669
Extension of existing temporary tax provisions .. -7,489 -13,865 -16,678 -20,545 -22,461 -24,077
Total, Conference Committee bill
Office of the Secretary of the Treasury
Office of Tax Analysis
1/ Includes earned income credit outlays.
-19,055
-37,468
-44,131
-51,926
-59,810
-64,746
October 16, 1978
Revenue Effects of H.R. 13511 ~Ls
The Revenue Act of 1978
Calendar Year Liabilities, 1979-84
($ millions)
"1979
:
1980
:
Calendar Years
1981
:
1982
:
1983
:
1984
Tax Reductions and Revisions:
-23,704
-27,802
Business taxes -6,406 -7,721 -9,382 -9,203
-9,931
-10,610
Capital gains taxes and minimum tax -2,906 -3,230 -3,523 -3,822
-4,149
-4,503
Personal taxes -12,940 -14,992 -17;395 -20,275
Tax increase from additional capital gains
realizations
Total, tax reductions and revisions
889
900
825
597
184
200
-21^63
-25,043
-29,475
-32,703
r37,600
-42,715
Extension of existing temporary tax provisions .. -13,469 -14,160 -19,583 -21,598 -23,248 -24.774
Total, Conference Committee bill -347832 -39^03 -49^58 -54,301 -60,848 -67,489
Office of the Secretary of the Treasury
Office of Tax Analysis
1/ Includes earned Income credit outlays.
October 15, 1978
Tax Proposals
Conference- Committee Personal
($ millions)
—
J
year
;
ax rate reductions -8,690
ncreaae standard deduction to $2,300 single,
$3,400 Joint, $2,300 head-of-households
epeai general credit
ncreaae exemption from $750 to $1,000
epeal deduction for gasoline tax
olitlcal
evlaiono
echnlcal
utension
uallfied
RA pension plans ~5
lp Income reporting
ndependent contractors
ax unemployment compensation
'ersonal service Income
hlld care credit
latlonnl Research Service awards
echnlcal changes ln IRA* s
Total, personal income taxes
>fflce of the Secretary of the Treasury
Office of Tax Analysis
'Less than $5 million.
-1,054
-17
*
*
5
2
^&
~7*
"34
"
12
-11,216
:
1980
S
1981
•
:
1982
•
:
1983 \ 1984
i
:
•
-6,501
-11,728
-14,074
-16,889
-22,267
-24,317
-955
7,100
-7,983
-1,445
10,798
-12,166
1,183
-1,518
11,419
-12,896
1,396
-1,594
12,090
-13,669
1,647
-1,673
12,812
-14,489
1,944
-1,757
13,593
-15,359
2,294
-20
-36
-20
-20
-20
-1,210
-960
-921
-885
-850
-16
-16
-15
-14
-14
*
*
*
*
*
*
*
*
-18
-54
-30
-60
-41
-67
-49
-68
-59
-75
•
*
*
*
*
-21
-5
-52
-25
251
-59
-38
-18
-12
261
-69
-39
-10
-12
259
-79
-40
263
-91
-39
*
—
—
-12
-12
-12
-8,345
-14 ,552
-16 ,644
-19,351
189
..
-^
•
1979
1978
-1,331
9,846
-11,025
974
contributions "20
in the earned Income credit 1/
changes to earned Income credit 1/
for the exclusion of certain scholarships ....
pension plan — limitation on benefits
Fiscal Years
Full
-82
_—
*
*
-2
-8
*
...
268
-104
-40
-24,588 -26,452
October 16, 1978
Conference Conaltta* Dutln.is Proposal*
(4 millions)
Full
year
1978
Reduce corporate rates to 17 percent of flrat
$25,000, 20 percent of next $25,000, 30 parcant
of next $25,000, 40 parcant of next $25,000,
46 parcant above $100,000
Inveatment credit changes:
90 parcant limit for invaatnant credit
10 percent investment credit for pollution
control facilities
Investment credit for farm co-ops
Investment credit for certain farm structures 2/ .
Investment credit for railway freight cars
Investment credit for rehabilitation of structures
ESOP extension
Change ln rules for ESOPs and TRASOPs
Investment credit recapture on property
tranafars to conrall
Job credits:
Targeted unemployment credit
VIM credit
Amendments affecting tax-exempt financing:
IDB limit Is Increased to $1 million and
$10 million
IDB' a for water projects
IDB1a for facilities involving urban grants ....
IDB'a for facilities furnishing electric energy
Flucal Yearn
1979
1980
1981
1982
1983
1984
-4,493
-2,265
-5,259
•5,748
-6,236
-6,773
-7,346
-201
129
•441
•872
1,015
-782
-687
-120
-6
-20
-53
-4
-67
—
*
-18
-33
-33
-5
-42
-35
-22
*
-76
-37
-24
2
-104
-105
-39
-26
2
-39
-26
2
-181
-205
-178
-222
-447
-238
-545
-259
•633
*
*
*
*
-483
-136
-651
-197
-426
-234
-264
-3
-7
*
-3
-13
-31
-I
-10
-22
-59
-4
-18
-32
-21
*
-164
-427
•
—
*
*
-144
-8
-17
-3
-6
141
-39
•
*
•
*
-86
-30
-78
-7
-23
• 86
-323
-36
-104
-10
-37
Conference Committee Bualnese Proposals
($ millions)
Full
year
1978
1983
1984
*
1/
*
*
3/
*
*
*
3/
*
-4
13
29
-7
*
-11
9
31
-8
*
-19
7
34
-9
*
-24
5
38
-9
*
-27
6
41
*
*
-86
*
—
*
-50
-159
*
-108
*
-100
-175
*
-21
*
-100
-192
*
-22
*
-100
-212
*
-23
*
-100
-233
*
-24
*
*
*
-23
*
*
*
-18
*
*
*
-29
*
*
*
-32
*
*
*
-36
*
*
*
-37
*
*
*
-40
*
-47
*
*
-39
*
-45
*
*
-46
*
*
-41
*
-47
*
*
-40
*
-47
*
*
-46
*
-47
*
*
-48
*
-47
*
*
-50
1980
•
*
3/
*
2/
*
3/
*
-9
*
11
26
*
*
-1
2
13
*
-94
-136
*
-10
Cash basis tranafera
Medical and accident reimbursement plana
Relief for PBB poisoning
Employee education assistance
Increase number of ahareholdera ln Sub-S
corporation
Postponement of net operating loss rules
Mlscellaneoua excise taxea 6/
Certain mutual funda treated as tax shelter annuity
Interest income on deposits ln Puerto Rico
Estate tax treatment of Jointly held property
Accrual accounting for farm corporations
GSOPs
Stats and local government compensation
Ten-year produce liability loss carryback
Product liability reserves
Extend rapid write-off for low-income housing
Tightening tax shelter provisions
Disallow deduction for entertainment facilities ...
Regulated investment companies
Utility construction funds 4/
Deferred compensation plans
Cafeteria plana
Discount coupons, etc. 5/
Fiacal Years
1981
1982
1979
*
•
*
-1
*
2/
- 3 Conference Consult tee Buelnese Proposal*
($ millions) .
Full
year
1978
REIT — Treatment of property held for sale
Treatment of aod farms as a nursery
Exclusion of federal coat-sharing payments .
Small business corporate stock
Total, bualneaa Income taxes
Office of the Secretary of the Treasury
Office of Tax Analyela
F
lflCBl YfifirQ
1979
-46
6,003
1980
-28
-2,859
-7,026
1981
1982
1983
1984
-77
*
*
-78
*
*
-79
*
*
-74
-8.475
-9.325
-?7529
-10.246
October 16. 1978
- 4 -
Footnotes
1/ Includes outlays.
2/ Retroactive to August 15, 1971.
3/ Proposal will result in a negligible revenue loss in the first few years.
The long-run cost could be substantial.
4/ Retroactive to February I, 1976.
5/ Retroactive to 1972. Assumes Internal Revenue Service position upheld.
6/ Reduced tax on foundations effective October 1977. Excise tax on
coin-operated gaming devices phased out beginning July 1, 1978.
Conference Committee Minimum Tax and Capital Gains Proposals
($ millions)
Fiscal Years
1979
1980
1981
1982
1983
1984
20
-6
133
-52
1,274
1,763
143
-57
1,401
1,895
154
-63
1,541
2,037
166
-69
1,695
•2,190
178
-76
1,865
2,354
-73
-80
-88
-97
-107
-118
745
820
901
992
1,091
1,200
-415
-4
-93
-61
-456
-5
-162
-73
-502
-5
-185
-84
-552
-6
-190
-97
-607
-6
-200
-111
-10
-3,659
-13
-3,972
Individual minimum tax and capital gains:
Repeal alternate tax 124
Delete gains from maximum tax
Delete gains from minimum tax
60 percent capital gains exclusion
Take excess itemized deductions out of
minimum and maximum tax
Alternate tax on capital gains and
excess itemized deductions only
$100,000 residence exclusion (ratio
method) age 55 and over
18-month rollover rule
Delay carryover of basis
Repeal minimum tax on IDC1 s
Exemption from minimum tax for certain
charitable transfers
Total Individual
Corporate minimum tax and capital gains:
Reduce rate from 30 percent to 28 percent
Total corporate
Total individual and corporate -2,585
Office of the Secretary of the Treasury
Office of Tax Analysis
-47
-1,158
-1,640
-131
-51
165
-3
-36
-51
-5
-2,486
-8
380
-2,789
-3,093
-7
-3,375
"21
"99
-53
-53
-125
-125
-141
-141
-155
-155
-170
-170
-183
-183
-433
-2,914
-3,234
-3,530
-3,829
-4,155
-377
-4
October 15, 1978
Conference' Committee Personal Income Tax Proposals
($ millions)
Calendar Years
Tax rate reductions
Increase standard deduction to $2,300 single,
$3,400 Joint, $2,300 head-of-households
Repeal general credit
Increase exemption from $750 to $1,000
Repeal deduction for gasoline tax
Political
Revisions
Technical
Extension
Qualified
contributions -20
in the earned Income credit 1/
changes to earned income credit 1/
for the exclusion of certain scholarships ....
pension plan — limitation on benefits
IRA pension plans -5
Tip income reporting
Independent contractors
Tex unemployment compensation
Ptruonai service Income
Child care credit
National Research Service awards
Technical changes ln IRA* s
Total, personal Income taxes -11,216
Office of the Secretary of the Treasury
Office of Tax Analysis
*Leas than $5 million.
1979
1980
1981
1982
1983
1984
-8,690
-10,428
-12,514
-15,016
-18,020
-21,624
-25,943
-1,331
9,846
-11,025
974
-1,398
10,395
•11,687
1,149
-1,467
10,985
-12,388
1,356
-1,541
11,621
-13,131
1,600
-1,618
12,307
-13,919
1,888
-1,699
13,047
-14,754
2,228
-1,784
13,847
-15,639
2,629
-20
-36
-20
-20
-20
-36
-1,054
-17
*
*
-1,012
-971
-933
-895
-859
-825
-16
-16
-15
-14
-14
-13
•
*
*
*
*
*
*
*
*
*
*
•
-15
-50
-25
-54
-35
-60
-45
-66
-55
-72
-65
-80
*
*
*
•
•
*
251
-56
-35
-18
261
-65
-36
-10
-12
259
-75
-37
263
-86
-38
268
-99
-39
•
—
--
—-
-12
-12
-12
-12
-14,992
-17,395
-20,275
-23,704
-27,802
-45
*
246
-49
-34
•
-12
——
-12,940
273
-113
-41
October 15, 1978
Conference Committee Bualnees Propoeala
(-$ millions)
Full
:__
year
1979
1978
:
Reduce corporate ratea to 17 percent of first
$25,000, 20 percent of next $25,000, 30 percent
of next $25,000, 40 percent of next $25,000,
46 percent above $100,000
Investment credit changes:
90 percent limit for investment credit
10 percent investment credit for pollution
control facilities
Invaatnant credit for farm co-ops
Investment credit for certain farm structures 2/ .
Investment credit for railway freight cars
investment credit for rehabilitation of structures
ES0P extension
Change ln rules for ESOPs and TRASOPs
Investment credit recspture on property
transfers to conrall
Job credits:
Targeted unemployment credit
WIN credit
Amendments affecting tax-exempt financing:
IDI1 limit Is Increased to $1 million and
$10 million
IDB's for water projecta
IDB'a for facilities involving urban granta
IDB'a for facilities furnishing electric energy ..
*Leo0 than $5 million.
Calendar Years
1980
1981
:
1982
1983
1984
-A,493
•5,033
5,536
-6,008
-6,514
-7.089
-7,§59
-201
•287
•629
-1,169
-826
-728
-636
-120
-8
-33
-22
-8
-25
-34
-22
-2
-53
-36
-23
2
-91
-38
-25
2
-112
-107
-40
-27
2
-42
-29
2
-166
-193
—
*
-210
-396
-229
-508
-249
-591
-269
-684
*
__
*
*
*
*
*
-388
-106
-608
-177
-705
-216
-86
-86
-43
-144
-248
-296
-335
-8
17
-3
-6
-2
-5
*
-2
-10
-24
-1
-8
-18
-46
-3
-14
-26
-68
-5
-21
-34
-95
-9
-26
-32
-21
*
-164
-427
-43
-122
-12
-28
- 2 Conference Committee Buaineae Proposals
($ millions)
Full
year
1978
Accrual accounting for farm corporations
CSOPa
State and local government compenaation
Ten-year produce liability loaa carryback
Product liability reserves
Extend rapid write-off for low-income housing
Tightening tax ahelter provisions
Disallow deduction for entertainment facilities ...
Regulated investment companies
Utility construction funds 4/
Deferred compensation plans""
Cafeteria plans
Discount coupons, etc. 5/
*
3/
-9
*
11
26
*
Calendar Years
1979
1981
*
*
*
3/
*
3/
*
•k
-2
*
-1
13
28
-10
*
-7
9
30
-10
*
-15
7
33
1982
1983
*
*
1/
*
3/
*
-9
*
-22
5
36
-9
*
-26
6
40
*
•
*
*
*
-94
136
*
-96
-150
*
-98
-165
*
-101
-182
*
-103
-200
*
-107
-220
*
-10
-10
-21
-22
-23
-24
*
*
*
*
-29
*
*
*
-32
*
*
*
-36
*
*
*
-40
*
-46
*
*
-43
*
-47
*
*
-46
*
-47
*
*
-47
*
*
-50
Cssh bssls tranafera
Medical and accident reimbursement plans
Relief for PBB poisoning
Employee education assistance
Increase number of shareholders ln Sub-S
corporation
*
-23
*
*
*
-26
Postponement of net operating loaa rules
Mlscellaneoua exclae taxea 6/
Certain mutual funds treated as tax shelter annuity
Interest income on deposits ln Puerto Rico
Estate tax treatment of Jointly held property
*
-47
*
*
-39
*
-44
*
*
-41
*Less than $5 million.
1980
•
•
-48
- 3 Conference Committee Bualneas Proposals
($ millions) ___
Full
year
1978
REIT — Treatment of property held for aale
Treatment of aod farms as a nursery
Exclusion of federsl cost-sharing payments .
Small business corporate stock
.
Total, business income taxes
Office of the Secretary of the Treasury
Office of Tax Analysis
M-eas than $5 million.
*
-46
-6.003
Calendar Years
1979
1980
-17
*
*
*
-72
*
-6,406
-7,721
1981
1982
*
-72
-73
-9,382
-9.203
•
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U
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Conference Committee Minimum Tax and Capital Gains Proposals
($ millions)
Long
run
1978
Calendar Years
1978
1979
1980
1981
1982
1983
1984
20
-6
133
-52
143
-57
154
-63
166
-69
178
-76
191
-83
31
-1,274
-1,763
-1,401
-1,895
-1,541
-2,037
-1,695
-2,190
-1,865
-2,354
-2,051
-2,531
"73
-80
-88
-97
-107
-118
-129
745
820
901
992
1,091
1,200
1,320
-415
-456
-502
-552
-607
-668
-4
-93
-61
-5
-5
-6
-6
-7
-162
-185
-190
-73
-84
-97
-200
-111
-210
-127
-16
Individual minimum tax and capital gains:
Repeal alternate tax 124
Delete gains from maximum tax
Delete gains from minimum tax
60 percent capital gains exclusion
Take excess itemized deductions out of
minimum and maximum tax
Alternate tax on capital gains and
excess itemized deductions only
$100,000 residence exclusion (ratio
method) age 55 and over
18-raonth rollover rule
Delay carryover of basis
Repeal minimum tax on IDC's
Exemption from minimum tax for certain
charitable transfers
Total individual
Corporate minimum tax and capital gains:
Reduce rate from 30 percent to 28 percent
Total corporate
Total individual and corporate
Office of the Secretary of the Treasury
Office of Tax Analysis
-47
-1,158
-1,640
-51
165
-3
-36
-51
"5
-2,486
372
-377
-4
*
-99
-99
-2,585
-372
*
*
-2,789
-3,093
-7
-3,375
-10
-3,659
-13
-3,972
-4,511
-117
-117
-137
-137
-148
-148
-163
-163
-177
-177
-192
-192
-2,906
-3,230
-3,523
-3,822
-4,149
-4,503
October 15, 1978
Conference Tax Bill
Individual Income Tax Provisions
(1978 Levels of Income)
Present Lav
Conference Bill 1/
Tax liability
Tax change
Percentage
Tax
.
: Percen
Percentage
liability distribution Amount
Amount
Percentage
distribution
distribution1 °* p r "
tfysi. v>cub/ vy aui.y \
UlAX.y V
p » W C U L / \ y UIJ.4../ v
C:U Llav
• • •ta
•
v?
Expanded
income
class
\y\J\J\J)
Less than 5
-137
-0.17.
-359
-0.2%
-222
1.6Z
162.0
5 -
10
8,248
4.5
6,671
3.9
-1,577
11.5
-19.1
10 -
15
17,067
9.3
15,984
9.4
-1,083
7.9
-6.3
15 -
20
24,054
13.1
22,466
13.2
-1,588
11.6
-6.6
20 -
30
44,773
24.3
41,636
24.4
-3,137
22.9
-7.C
30 -
50
39,258
21.3
36,530
21.4
-2,728
19.9
-6.S
50 - 100
24,009
13.0
22,359
13.1
-1,650
12.1
-6.S
100 - 200
13,130
7.1
12,473
7.3
-657
4.8
-5.C
200 & over
13,742
7.5
12,703
7.5
-1,039
7.6
-7.6
100.07.
-7.1
Tot*il
$184,145
100. LV. $-170,462
100.07.
Office of the Secretary of the Treasury
Office of Tax Analysis
1/ Excludes IRA provisions.
Note: Details may not add to totals due to rounding.
$-13,683
October 15, IS
Capital Gains, Minimum Tax Change, and All Other Tax Changes
Individual Income Tax Provisions of the Conference Bill
(1978 Levels of Income)
Expanded
income
class
($000)
Capital gains and
minimum tax changes
All other
Total tax changes
tax changes 1/
Amount : P e r c e n t a 8 e
Amount : P e r c e n t a S
:distribution.
:distribution•
idistributi
($ mil.) ( percent ) ($ mil.) ( percent ) ($ mil.) ( percent
ess than 5
-7
5-10
-17
1.3
-1,560
13.9
-1,577
11.5
10-15
-50
2.9
-1,033
9.2
-1,083
7.9
15 - 20
-85
5.5
-1,503
13.4
-1,588
11.6
20 - 30
-237
9.7
-2,900
25.9
-3,137
22.9
30 - 50
-388
11.5
-2,340
20.9
-2,728
19.9
50 - 100
-488
19.7
-1,162
10.4
-1,650
12.1
100 - 200
-309
12.5
-348
3.1
-657
4.8
00 and over
-897
36.2
-142
1.3
-1,039
7.6
Total
-2,481
0.85.
100.07.
-215
$-11,202
Office of the Secretary of the Treasury
Office of Tax Analysis
1/ Excludes IRA provisions.
Note: Details may not add to totals due to rounding.
1.97.
100.07.
-222
$-13,683
1.67.
100.07,
October 15, 1978
Distribution of Individual Income Tax Proposals ln Conference Tarn Bill
(1978 Levels of Income)
($ millions)
Expanded
income
class
($000)
Min
' Repeal
tax and :
gaa
capital
tax
galna :. . „.
•
, deduct 1<
proposals:
Leas than 5
I
-7
•"-{I ».ooo ; •*•»»'
Political
contribu- general
'
,
$3,400
tions
tax ••P*"™-1 Standard
credit^^'^deductlon
-I
211
-226
-66
Tax *
: Grandunemploy-: Tax : Total
Personal :parenting;
Tip
ment
: rata :individual
aervlce:of child : income
: Technical
Expanded
reporting compenea-:change:changes y
income : care
chanRe
tlon
;
;
: credit
Tax :Outlay: Tax :Outlay;
Earned Income credit
—
-110
-1
-9
-3
-4
-I
*
-14
-222
-6
*
-489 -1,577
-7
-8
6
-1,185 -1,083
-271
-8
-9
8
-1,462 -1,588
2,374 -2,944
-270
-11
-12
105
-2,461 -3,137
-4
1,070 -1,831
-75
-3
-7
103
-1,868 -2,728
80
*
260 -637
-12
-I
-2
17
-865 -1,650
-309
17
1
52 -151
-I
-10
*
6
-261 -657
200 and over
-897
5
I
13 -40
.*
-38
*
1
-84 -1,039
Total
-27481
974
-20
9,846 -11,025
•45
246
-8,690 -13,683
5-10
-17
26
-2
1.584 -1,400
-321
-295 -645
10 - 15
-50
90
-4
2,202 -1,808
-314
* -4
15 - 20
-85
150
-4
2,081 -1,988
20 - 30
-237
327
-7
30 - 50
-388
276
50 - 100
-488
100 - 200
-1,331
-I
-295 -759
-4
-13
•ffice of the Secretary of the Treaaury
Office of Tax Analysis
/ Includes earned income credit outlays. Excludes technical changes in IRA's and IRA penalon plan changes.
lote: DetaDa may not add to totala due to rounding.
-4
^49
-34
October 15, 1978
JCT Huts eJ33 -- TaPLlCONPffltKCE u o o o E * E >
c-ff iei«T«
Z*A NATES III EIC
TAX BCHEOLLtO •••* 1
78PLIC0*FCNENCE S1000 E»EM JBA RATES III fIC
SCHEDULE I,
(A) SINGLE TAXPAYERS *HC 00 NCT QUALIFY PCR R A T E S
IP THE
AMOUNT
OF CF
IF 1*1
AMCUNT
TAXABLE INCOME IB
OVER** BUI NOT OVER-
IN SCHEOLLEO II AND
HI
THf* A8 T A X
THEN AS TAX
BEFORE CREDIT
ENTER
"•**
TAXABLE INOCHI II
CF EXCESS OVER*- •
OVER—
BUT NCT OVlR«»
BlRCM CREOIT
CF EXCESS OVER*.
ENTER
1969. FLOS .14,0 PCT • 8 10200.
23900.....S
S l«iOO.
28600
S M 6 7 . PLUI .1«.0 FCT • • aU500,
S 21900,
•14100
1 7414, PLUS 44,0 FCT •• S 2SS00.
S 20000.
4744, PLUS 44.0 PcT • 8.14100,
-1900.,...8
S .14100.
95300.••••! U H 2 . PLUO 99.0 FCT • 0 JlJOO.
S 41900.
S1800.....S 10002. PLUS 4>!.0 FCT • • 1*100.
S 99.100. •
1106100.....I
17477. PLUS 4S.0 FCT • B 81600.
8l0&]00............«t«*sl
S 01100.
99447. Fl'UI 70.0 PCT • 010*100.
SCHEDULE II.
(A) MARRIED TAXPAYERS FILING JOINT RETURNS* (B) CERTAIN hiDOa6 AND MIDC*IR0* AND <ci F A R R I E O FlRBONS
FILING SEPEPATE RETURNS (APPLIED AT 1/2 THE I NTfRVHS).
a
THEN AS TAM
THEN Afl TAX
IF T H E A M O U N T O F
IF T»-t AMOUNT OF
•IFCRE
CREDIT
BEFORE CREOIT
TAXABLE I N C O E it
TAXABLE INOCPE H
•CF EXCESS OVERENTER
BUT NCT ove*««
OVER —
CF EXCESS OVER-OVEN— BUT NOT OVER—
ENTER
2300,
3400,
4*i00.
6500,
8500.
10800,
12900.
15000.
•
•
•
•
•
1^00
f
4«00
t
4500.,...8
6500.....S
10600
t
12900
S
19000
S
16200
1
3«00.
5900
S
5500,
7600
1
7600.
11400
S
11900.
16000.....I
UOOO.
20200
1
20200.
20600.....I
2«b00.
S 29900.....S
19200
1
2*400,
SCHEDULE Ul. UNMARRIED (C*
IF THE AMCUNT OF
TAXABLE INCOME lO
OVER-- BUT NOT OVER—
2100.
4400.
6500.
0700,
11eoo.
15000,
!fi<»00.
23500,
4400
S
6900.....I
6700...•.6
11600
S
19000
*
16200.....I
23500
*
26800
S
0.
194.
314.
642.
1072.
1555.
2099,
2605.
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
1*,0
U.O
18.0
19.0
21.0
24,0
26.0
,10.0
PCT
PCT
PCT
PCT
PCT
PCT
PCT
PCT
•
•
•
•
•
•
-
S
S
S
S
S
S
S
S
2100.
.1400,
4400.
6900,
6900.
10800.
12900.
19000.
S .19200. • S' 49600.....8 6162.
S .1400.
S 49000. • S 40000.....I 12720.
S 9900.
S 40000. • B 85.00.....8 14*78.
S 7600.
8 11502.
S 69600. • 810*400
S 11900.
6104400, - •1*2.00.....S 47944.
S 16000.
•2t5«00....tl 814*4.
S162400. •
S 20200.
S219400...,
S 24600.
S
S 29900.
LEGALLY SEPARATED) TAXPAYERS NHC CLALIFV AS HEAD OF H O U S E H C L D ,
a
IF THE AMOUNT CF
THEN AS TAX
BEFORE CREDIT
TAX ABLE INOCMI IS
0.
244,
610.
140«.
2269.
1271.
4909.
6201.
FLUB
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
ENTER
0.
2*4.
610.
1026.
1708.
2476.
3306.
4951.
PLUS
PLL8
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
14.0
16.0
16.0
21.0
24.0
26.0
12.0
37.0
PCT
FCT
PCT
PCT
FCT
PCT
PCT
PCT •
CF EXCESS O V E R —
14.0
16.0
14.0
22.0
24.0
26.0
.31.0
36.0
PCT
PCT
PCT
PCT
FCT
PCT
RCT
PCT
2300.
4400.
6500.
8700,
11800.
15000.
16200.
23900.
CVEJM
• 0.
26001
10.
14101
10.
4470(
)0.
60601
10.
61601
)0.
1106*01.
S161300
S
BUT NCT O V E R 8,14100....eO
S 44700
S
s 40600
o
S 61600.....I
4106300....••
11*1100
S
.'...«•••••
FLLI
P|.UI
PLUS
PLUS
PLUS
PLUS
FCT
PCT
FCT
PCT
PCT
FCT
FCT
• 19200.
• 01000,
• 00000.
B 01600.
0100400.
0102400.
0219400.
T>E* AS TAX
SfPCRl CMDlT
EATER
4659.
0009.
i.i46i.
22547.
19099,
91790.
07700*
•1.0
44,0
94.0
94.0
44.0
40.0
70.0
FLUS
PLUS
PLUS
PLUS
PLUS
PLUS
PLUS
•CF EXCESS O V E R —
62.0 PCT
44.6 FCT
54.0 P C T
10.0 PCT
61.0 FCT
40.0 PCT
70.0 PCT
20000.
14100.
44700.
40600.
01000.
100100,
141300,
.10
Distribution of Conference Committee Minimum Tax and Capital Gains Proposals Affecting Individuals
Expanded
Income
class
(SClflfW
Repeal
alternate
tax
(
(1978 Levels of Income)
Delete : AlternaTotal
Personal
ltemized :
tlve
tax change 1/
residences
Delete Delete
Repeal
60 percent deduction: tax on
$100,000
gains
gains
preference: capital
minimum
capital
ratiofrom
from
from
gains
I8-month tax on
gains
Distributype
maximum minimum
minimum
and excess
rollover IDC's Amount
exclusion
tion
and
itemized exclusion
tax
tax
rule
age 55
maximum
deducor older
taxes
tions
) (percent)
--
-6
-*
-1
2
-2
-*
-*
-7
—
—
-*
-11
-.*
*
-6
.*
_*
-17
0.7
15
—
—
-*
-25
-*
*
-25
-*
.*
-50
2.0
15 -
20
--
—
-3
-47
-*
*
-35
.*
.*
-85
3.4
20 -
30
—
—
-14
-99
.*
2
-124
-2
.*
-237
9.6
30 -
50
*
—
-66
-184
-2
13
-147
-2
.*
-388
15.6
:>o - 100
14
-2
-225
-296
-4
50
-25
-*
-*
-488
19.7
100 - 200
55
-14
-208
-249
-11
134
-9
-*
-7
-309
12.5
200 and over
55
-32
-636
-727
-53
543
-4
-*
-43
-897
36.2
$124
$-47
$-1,158
$-1,640
$-73
$745
$-377
$-4
0 -
5
5 -
10
10 -
Total
Office of the Secretary of the Treasury
Office of Tax Analysis
*Less than $500,000.
Note: Details may not add to totals due to rounding.
1/ Exemption from minimum tax for certain charitable transfers is not included.
$-51 $-2,481
0.3%
100.07.
October 15, 1978
Income Tax Burdens under Present Law and Conference Committee Bill for Various Family Sizes 1/
(dollars)
Married Couple with No Dependent!
Single Person
WageIncome
Present
lew
tax
Conference
Committee
bill
Change
in
tax
Present
law
tax
Conference
Committee
bill
Change
ln
tax
Married Couple with Two Dependents
Present
lew
tax
Conference
Committee
bill
Change
ln
tax
5,000
278
250
-28
0
0
0
-300
-500
-200
10,000
1,199
1,177
-22
761
702
-59
446
374
-72
15,000
2,126
2,047
-79
1,651
1,624
-26
1,330
1,233
-97
20,000
3,231
3,115
-116
2,555
2,457
-98
2,180
2,013
-167
25,000
4,510
4,364
-146
3,570
3,399
-171
3,150
2,901
-249
30,000
5,950
5,718
-232
4,712
4,477
-235
4,232
3,917
•315
40,000
9,232
8,886
-346
7,427
7,052
-375
6,848
6,312
-536
50,000
12,985
12,559
-426
10,610
10,183
-427
9,950
9,323
-627
100,000
32,235
31,792
-443
29,630
28,878
-752
28,880
27,878
-1,002
ftfflr* of ttie Secretaryr of
the Treasurv
Office of Tax Analysis
1/ Calculations assume deductible expenses equal to 23 percent of Income.
Octob er 15, 1978
FOR RELEASE AT 4:00 P.M.
October 17, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $ 5,700 million, to be issued October 26, 1978.
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $5,710 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
July 27, 1978,
and to mature January 25, 1979
(CUSIP No.
912793 W5 1 ) , originally issued in the amount of $3,503 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $3,400 million to be dated
October 26, 1978,
and to mature April 26, 1979
(CUSIP No.
912793 Y2 6 ).
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing October 26, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,023
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Daylight Saving time,
Monday, October 23, 1978.
Form PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
records of the Department of the Treasury. ^
B-1214
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
borrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury. A
cash adjustment will be made on all accepted tenders for the
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on October 26, 1978,
in cash or
other immediately available funds or in Treasury bills maturing
October 26, 1978.
Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, arid this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
dtpartmentoftheTREASURY
WASHINGTON, D.C. 20220
October 17, 1978
FOR RELEASE AT 4:00 P.M.
TREASURY TO AUCTION $3,250 MILLION OF 2-YEAR NOTES
The Department of the Treasury will auction $3,250
million of 2-year notes to refund $2,718 million of notes
maturing October 31, 1978, and to raise $532 million new
cash. The $2,718 million of maturing notes are those held
by the public, including $705 million currently held by
Federal Reserve Banks as agents for foreign and
international monetary authorities.
In addition to the public holdings, Government accounts
and Federal Reserve Banks, for their own accounts, hold
$203 million of the maturing securities that may be refunded
by issuing additional amounts of the new notes at the
average price of accepted competitive tenders. Additional
amounts of the new securities may also be issued at the
average price, for new cash only, to Federal Reserve Banks
as agents for foreign and international monetary authorities
Details about the new security are given in the
attached highlights of the offering and in the official
offering circular.
oOo
Attachment
B-1217
fc-rx\u v&
i ^ ff
\ A)
i
(over)
HIGHLIGHTS OF TREASURY
OFFERING TO THE PUBLIC
OF 2-YEAR NOTES
TO BE ISSUED OCTOBER 31, 1978
October 17, 1978
Amount Offered:
To the public
Description of Security:
Term and type of security
Series and CUSIP designation
Maturity date. October 31, 1980
Call date
Interest coupon rate
$3,250 million
2-year notes
Series U-1980
(CUSIP No. 912827 JC 7)
No provision
To be determined based on
the average of accepted bids
Investment yield To be determined at auction
Premium or discount
To be determined after auctio
Interest payment dates
April 30 and October 31
Minimum denomination available
$5,000
Terms of Sale:
Method of sale
Yield auction
Accrued interest payable by
investor
None
Preferred allotment
Noncompetitive bid for
$1,000,000 or less
Deposit requirement 5% of face amount
Deposit guarantee by designated
institutions
Acceptable
Key Dates:
Deadline for receipt of tenders
Settlement date (final payment due)
a) cash or Federal funds
b) check drawn on bank
within FRB district where
submitted
c) check drawn on bank outside
FRB district where
submitted
Delivery date for coupon securities.
Tuesday, October 24, 1978,
by 1:30 p.m., EDST
Tuesday, October 31, 1978
Friday, October 27, 1978
Thursday, October 26, 1978
Friday, November 3, 1978
topartmentoftheTREASURY
IHINGTON, D.C. 20220
TELEPHONE 566-2041
FOR IMMEDIATE RELEASE
October 17, 1978
Contact
Robert E. Nipp
202/566-5328
TREASURY ANNOUNCES RESULTS
OF GOLD AUCTION
The Department of the Treasury announced that 300,000
ounces of fine gold were sold today to 9 successful bidders
at prices from $228.11 to $229.25 per ounce, yielding an
average price of $228.39 per ounce.
Gross proceeds from this sale were $68.5 million. Of
the proceeds, $12.7 million will be used to retire Gold
Certificates held by Federal Reserve banks. The remaining
$55.8 million will be deposited into the Treasury as a
miscellaneous receipt.
-•&""'
These sales were made as the sixth in a series of
monthly auctions being conducted by the General Services
Administration on behalf of the Department of the Treasury.
The next auction, at which 750,000 ounces will be offered,
will be neld on November 21,
A total of 62 bids were submitted by 16 bidders for a
total amount of 818,800 ounces at prices ranging from
$162.50 to $229.25 per ounce.
The General Services Administration will release
additional information, including the list of successful
bidders and the amounts of gold awarded to eacn, after those
bidders have been notified that their bids have been
accepted.
B-1218
RELEASE ON DELIVERY
Expected at n a.m.
October 18, 1978
REMARKS BY IHE HONORABLE
BETTE B. ANDERSON
UNDER SECRETARY OF THE TREASURY
TO THE
NATIONAL BANKERS ASSOCIATION
51st ANNUfcL CONVENTION
CENTURY PLAZA HOTEL
LOS ANGELES, CALIFORNIA
Mr. President, Members of the NBV Board, Ladies and Gentlemen:
Thank you for asking me to participate in your annual convention. I was
j very honored and pleased to accept the invitation to speak at your opening
' session because there are a number of things I would like to talk with you
about. I know you have questions to ask me.
First, may I say that your President, Bob Janes, has been very successful
in bringing your interests to the attention of this Administration. His
diligent leadership over the past year has assured that your problems and
concerns have penetrated to the highest levels of our government. I have
known Bob for many years. We are both from Savannah. I have always known him
I to be a conscientious and forward-looking individual. He and I have
j conmunicated many times over the past year about the Minority Bank Deposit
Program and the Federal effort on behalf of minority banks. He has
I represented you well in Washington.
We are looking forward to establishing a close working relationship with
your President-elect, George Brokemond, and with your Executive Director,
i Tomny Goines. Secretary Blunenthal and I will be meeting with your leadership
[ at the Treasury during the first week of November. We had hoped to meet with
| Bob and George last week, but unfortunately the final blows over the tax bill
consumed the Secretary's time.
I am glad to be here because the Carter Administration heartily endorses
All of us will
( and strongly supports the minority bank deposit program.
continue to work hard to make this program more meaningful for you and for our
country, it is an important part of our broader effort to foster the full
Participation of all Americans in our free enterprise system. Trie Executive
0r
der on which the minority bank program is based rightly states that full
Participation by "socially and economically disadvantaged persons is essential
tf we are to obtain social and economic justice . . . and improve the
functioning of our national economy."
Let me assure you that a good deal of groundwork has been laid this year
B-1213
-2for increasing the level of Federal deposits in minority banks and for
assisting you in the areas of management, training and capitalization. I will
review for you some of the work that Treasury has been doing on your behalf.
Tne President, as you know, met with members of the minority banking
community in the White House in April, 1977, and reiterated his support of the
Federal effort to aid minority business enterprise. He reaffirmed a goal of
$100 million in Federal deposits in minority banks by the end of 1977. On
December 31, 1977, approximately $127 million of Federally-controlled funds
was on deposit with minority banks. Trie level of deposits and the nimber of
banks participating in the program have continued to grow. In that respect,
we believe the program has demonstrated some success. As of June 30, 1978,
the level of deposits had reached approximately $145 million. Trie nimber of
banks has grown from 31 in 1970 to 97.
Now when I speak of "level of deposits, " I refer to those Federal monies
which remain in minority banks for more than 24 hours. Some of that $145
million — about 19 percent — represents investment funds. The remainder is
composed of grant, contract and Federally controlled time and demand accounts.
Treasury tax and loan account balances amounted, as of June 30, 1978 to an
additional $145 million average daily balance. Flowing through Treasury
general account are deposits, such as those of the IRS and Customs, which
provide approximately $500 million on a monthly basis in minority banks. As
you can recognize, then, there is more than $145 million Federal money flowing
through minority banks on a daily basis.
Most of you know that Secretary Blumenthal established a Treasury Policy
Review Committee on Minority Banks. That Committee received recommendations
last Fall from NBA and held a number of meetings with various Federal
agencies. One of tne issues before that Committee was the effect of the cash
management guidelines upon the minority bank deposit program.
As taxpayers, I know you all favor reducing the cost of government.
That, of course, involves adherence to good cash management principles.
Treasury, nevertheless, has been seeking creative ways to assure that your
banks will continue to receive ever-increasing levels of Federal deposits. As
you probably know, both 0MB and the General Accounting Office, an arm of the
Congress, scrutinize very carefully the costs of all services to the
government — including banking costs.
Under Fiscal Assistant Secretary Paul Taylor's guidance, the Treasury
Banking Staff works daily to alleviate some of the problems you have
experienced in handling Federal deposits, particularly problems related to
deposits which flow through Treasury general accounts. Despite what may appear
to be obstacles raised by the cash management principles, Treasury has worked
out methods whereby, as of June 30, thirty-three minority banks were servicing
Treasury General Accounts and several more have been added since. Arrangements
nave been worked out whereby correspondent bank relationships are utilized to
the maximum in order to permit minority banks to handle Treasury deposits they
would not otherwise be able to manage.
I believe we should continue to stretch our imaginations to help you deal
with problems even before they arise.
After the Policy Review Committee submitted its recommendations to
Secretary Blumenthal, and he approved them, Treasury forwarded those
recommendations to the Interagency Council for implementation by all the
agencies. As you know, the bank deposit program is not a Treasury program, but
-3-
an Administration program, carried out government-wide by all agencies and
monitored by Treasury for the Interagency Council and the Commerce Department.
One of the recommendations was that all agencies set goals for minority
bank deposits. I speak in terms of "goals," not "quotas." Tne President,
after the Bakke decision which struck down quota-setting as unconstitutional,
called upon Federal agencies to concentrate more effort on affirmative action
programs. Tne minority bank deposit program is an affirmative action program,
and Treasury intends to follow the President's mandate to make every effort to
make the program more effective.
Treasury, meanwhile., has already begun to see the reults of implementing
the Policy Review Committee recommendations. One recommendation which has been
carried out with much success was that Secretary Blumenthal write to Fortune
1300 to urge those large companies to wire-transfer their tax deposits to
minority banks as opposed to depositing checks drawn on non-minority banks.
The Secretary noted in his letter to the companies that the bank-wire method of
transferring funds greatly enhances the benefits derived from tax payments for
the minority banks. Of the responses received thus far, 75 percent of the firms
indicated that they are currently using minority banks and either are, or will
consider, wire-transferring their tax deposits.
We hope that all agency heads will follow this recommendation and contact
individually the private sector firms with which their agencies deal. The
private sector will respond. Just recently I referred a call from a large
insurance company to NBA. Tne company wanted the names of some minority banks
in which to deposit funds.
We are prepared to help you in marketing your services to Federal
agencies. Many of you are already familiar with the booklets entitled
"Information on Federal Agencies and Grantees by Geographic Area" which
Treasury prepared for your use. These booklets identified Federal monies
flowing into each bank's service area by agency and by grant recipient.
Contact sources and marketing information on each of 24 Federal agencies were
also included. Tnese booklets were discussed and distributed to you at last
year's convention in Houston. Mr. Gordon Studebaker, who prepared the booklets
for Treasury, then visited a sampling of banks to determine if the booklets
were being used.
Although some of the information may need to be updated by now, I do
believe they contain a wealth of information that would be very valuable if you
could take the time to study them. Tne booklets contain over 25,000 marketing
leads in an amount close to $70 billion. I am sure that the Interagency
Council staff, as well as the Treasury Banking staff, would be happy to discuss
the booklets with you. Rita Howard, of Treasury's Banking Staff, is here
today. She has worked closely with many of you, and I am sure she would very
much appreciate any comments you may have about the utility of the marketing
booklets. We need your feedback so we may be of help to you.
Treasury has also worked out a plan to soften the impact of the
implementation of Public Law 95-147, which authorized the Treasury to invest
its operating cash in obligations of depositaries maintaining Treasury tax and
loan accounts. We have received Congressional approval to place a special
demand deposit with each bank participating in the Government's minority bank
deposit program. We intend to place these balances at approximately the same
time the investment authority is implemented — November 2. Most of you are
aware that tne implementation date was delayed because Treasury did not receive
tne necessary appropriation to pay the fees until the end of September. It is
-4estimated that at least $36.2 million will be placed with the minority banks
during tne first year.
Most of you have already received notification from the Treasury of how
t"ne demand deposits will work. If you have any questions, I am sure that the
members of the Banking Staff here at the convention will be happy to answer
them.
In addition to the activity going on in Main Treasury on your behalf, the
Comptroller of the Currency, John Heimann, with Secretary Blumenthalfs
concurrence, nas been working closely with the Interagency Council staff at
Commerce on a Minority- Bank Development Program. Mr. Heimann's special
assistants, Roberta Brooks and George Cincotta, and other members of his staff,
have worked for many montths, touching base with many of you, to devise a
program to be funded by Commerce and the three Federal bank regulatory
agencies.
Mr. Heimann will tell you much more about the program when he speaks. I
believe you will find the concepts exciting, and I hope you will give the
Comptroller the benefit of your thoughts as he outlines what is planned
regarding capital support, management and training assistance. We all
recognize that these three elements are at the core of any effort to make
minority banks stable and competitive.
Wnile we are pleased with the progress that I have just outlined — and I
hope you are — we are not totally satisfied and do not plan to rest on our
laurals. One of Treasury's recommendations forwarded to the IAC was that OMB
be requested to include on forms already required of grantees a question about
their utilization of minority banks. Tnis information would be invaluable in
targeting your solicitation of business. Tne IAC staff is working with OMB now
on that proposal. We continue to work closely with IAC and OMB to follow
through on this recommendation.
Tne Secretary and the White House receive status reports on the program.
They are monitoring it carefully. Some agencies are now in the process of
working out methods which will fit their particular needs and which will allow
them to utilize minority banks more readily. I know that some of you read
about the placement of CETA funds by the Labor Department into minority banks.
HEW is also working on plans to place more Medicare funds in minority banks.
In the long run, however, there is only so much that Treasury and the
Federal government can do. Government funds are volatile, at best. Investment
deposits and long-term deposit relationships are better sought in the private
sector. That is wny the Secretary has been encouraging large companies to
seek out minority banks. Tnat is why Johnny Heimann has been working on a plan
that is private-sector oriented.
I know and understand your frustrations. I share some of them. I was a
banker for 27 years, and I am accustomed to making things move. With the help
of all of you, and with the assistance of the newly formed IAC staff under the
capable leadership of Bob Kemp at Commerce, with the support of Mr. Louis
Martin at tne Wnite House, I believe we can come up with some solutions that
can be measured not just in deposit levels, but in stability and prosperity
for you, your banks and your community.
We need your feedback and suggestions, as I nave said before. While we
are eager to help you with your specific problems, we must rely upon you to
e
ll us in practical ways what would help you most. We also need for you to
-5have a realistic understanding of just what is involved in handling government
funds as opposed to private-sector funds. I am looking forward to building
upon the groundwork already laid. It is a good foundation for real progress.
We need your cooperation to make that progress.
Tnank you again for the opportunity to be here. I will be happy to answer
any questions you may have.
0OO0
FOR IMMEDIATE RELEASE
October 19, 1978
~
Expected at 9;00 A.M.
REMARKS BY THE HONORABLE ANTHONY M. SOLOMON
UNDER SECRETARY OF THE TREASURY FOR MONETARY AFFAIRS
BEFORE THE
PUBLIC SECURITIES ASSOCIATION
MARCO ISLAND, FLORIDA
I am pleased to have this opportunity to talk with you
about the management of the public debt. I will also
comment on the Treasury's concerns with futures contracts
based on Treasury securities. Then, I would like to share
some thoughts with you on recent international developments.
Debt Management
It is certainly obvious to all of you that Treasury
financing demands have had a major impact on the credit markets
in recent years. In the fiscal years 1977 and 1978 alone the
net borrowing requirement of the Treasury amounted to about
$113 billion. Of that amount, the Treasury raised about
$84 billion of new cash through financing in the credit markets.
The bulk of this financing was conducted in a period of rising
interest rates.
In managing such a large financing task, this Administration
has benefitted greatly from the debt management policies which
evolved in recent years, and we have tried to adhere to three
basic principles in our debt management decisions :
First, to raise the money required to meet the Government's
financing requirements in the most efficient manner possible.
Second, to conduct our borrowing in a way that fosters,
rather than inhibits, economic stability and sustained growth
of the economy.
B-1219
- 2 Third, to work toward a balanced maturity structure, in
order to facilitate the orderly managing of the debt in future
years.
Consistent with these principles, we have financed our
requirement over the past two years primarily by regular auctions
of coupon securities and a gradual shift toward longer-term
financing.
The regularized offering cycles of notes and bonds have
made a vital contribution to the successful efforts of the
Treasury in meeting our large financing needs. These cycles
provided the Treasury with regular access to the various maturity
sectors of the market, and allowed investors to plan on these
predictable offerings for their investment needs. We think
that regularization has encouraged broader investor participation
in the Government securities market and has contributed to price
stability through a reduction of market uncertainty concerning
our financing plans. We anticipate that the cycle offering
approach will continue as an integral part of our debt
management strategy.
Another marketing device that has facilitated the
efficient issuance of Treasury coupon securities has been the
auction technique. By allowing investors and speculators to
determine the price of regular, moderately-sized issues of
Treasury securities at competitive auction, we have minimized
financing costs and reduced the underwriting pressures on
primary dealer organizations.
Under this Administration, the Treasury has emphasized
debt extension as a primary objective of debt management, a
policy which we believe to be fundamentally sound. During the
last two fiscal years, Treasury's market borrowing via coupon
securities totaled $84.8 billion, while, at the same time, there
was a slight paydown in Treasury bills. Thus, we have avoided
adding to the liquidity of the economy at a time when excessive
liquidity is being transmitted into increasing prices.
This policy of debt extension has also caused a significant
increase in the average maturity of the debt, reversing a prolonged
slide which extended over more than 10 years. In mid-1965, the
average maturity of the privately-held marketable debt was
5 years, 9 months. By January 1976, it had declined to 2 years,
5 months, because huge amounts of new cash were raised in the
bill market and in short-term coupon securities. Since that
time, despite the continuing large needs for cash of the
Federal Government, Treasury has succeeded in lengthening
the debt to 3 years, 3 months currently.
- 3 Debt extension has been accomplished primarily through
continued and enlarged offerings of long-term bonds in our
mid-quarterly refundings. In this Administrations's first
refunding, in February 1977, Treasury offered $750 million of
30-year bonds. In our most recent mid-quarterly financing,
Treasury offered $1.5 billion of 30 year bonds. The market's
acceptance of Treasury bonds had developed rapidly; and the
importance of the longer maturity area has been recognized by
Congress by providing additional bond authority, which should
be sufficient until next spring.
We have also used this new bond authority in the 15-year
area, beginning in June 1977 when the Treasury offered $1.5 billion
of 15-year bonds. This offering was substituted for a 5-year
cycle note and thus represented an interruption in the pattern
of 5-year note offerings which was initiated in January 1976.
From June 1977 to June of this year, we alternated between
15-year and 5-year offerings on a quarterly basis.
In September, the Treasury offered $1.5 billion of
15-year bonds at a time when market participants might have
expected an offering of 5-year notes. In addition to the
fundamental objective of accomplishing further debt extension,
there were two immediate reasons for this decision. First, our
very large cash balance rendered unnecessary the additional
cash-raising potential of the 5-year note. Second, market
conditions at the time of the decision were particularly
favorable for a 15-year bond issue. There had been a significant decline in long-term rates in the several weeks prior
to the offering announcement, which reflected strong investor
demand coupled with an absence of a meaningful supply of
longer-dated securities.
It perhaps would be premature to conclude that the recent
15-year bond offering necessarily indicates a shift to a
quarterly cycle with this maturity. As our market borrowing
needs subside, however, as we continue to move toward smaller
budget deficits, the likelihood of such a quarterly cycle is
greatly enhanced.
As I mentioned earlier, we are aiming at a more balanced
maturity structure in order to facilitate efficient debt
management in the future. In this regard, we are aware of
a tendency toward some unevenness in our maturity structure for
coupon issues. In 1979, for example, the total amount of
privately-held coupon obligations maturing in the second
quarter is $9.1 billion, as compared to $19.3 billion maturing
in the fourth quarter. This imbalance has arisen partly because
- 4 of the seasonality of tax receipts combined with our policy
of regularized coupon offering cycles. On the one hand, tax
collection dates in April and June have reduced Treasury's
borrowing requirements or even permitted us to pay down
marketable debt in the second quarter. Our coupon issues
maturing in that quarter, therefore, have merely been rolled
over. On the other hand, our borrowing requirement in other
quarters has caused enlarged coupon offerings in those periods.
This situation suggests an increasing use of longerdated cash management bills. The sale of cash management bills
in the fourth and first quarters, respectively, with maturities
in the second calendar quarter would remove some of the burden
on coupon offerings during the earlier quarters. This
temporary financing could then be replaced by permanent
financing through additions to coupon offerings in the second
calendar quarter. This approach, which has often been used
by Treasury in the past, acknowledges the large difference
in the quarterly flow of tax receipts and represents an effort
to distribute the maturity structure more evenly.
Let me conclude this part of my remarks by mentioning
that on November 2, 1978, the Treasury will implement the
Treasury Tax and Loan Investment Program. In May, the
Department issued the regulations setting forth the provisions
of the Program.
With the implementation of the Program, the Treasury will
return to a cash management strategy aimed at maintaining a
fairly constant balance at Federal Reserve Banks. This had
been our practice prior to the fall of 1974. At that time,
the constant Fed balance was being targeted at approximately
$2 billion, and the swings in the total cash balances were
absorbed by the tax and loan balances. An average of about
207o of the Treasury's operating cash was held in Federal
Reserve Banks and an average of about 807o was held in the
tax and loan accounts. Since 1974, that proportion has just
about reversed. During the initial stages of the new Program,
we will move gradually toward reducing our balances at Federal
Reserve Banks and increasing our investments in obligations
of depositaries.
A significant market effect of the Program is that it will
reduce the sudden large changes in Treasury balances with
the Federal Reserve Banks, and there will be a corresponding
reduction in the need for offsetting open market operations
by the Fed.
- 5 Futures Market
I would like to turn now to a number of concerns that
the Treasury has with respect to futures markets which are
based on Treasury securities.
I am sure you are all familiar with the explosive growth
in these markets over the past two years.
Futures trading based on Treasury securities began ,
in January 1976 with futures contracts for 13-week Treasury
bills on the International Monetary Market (IMM) of the Chicago
Mercantile Exchange. Then, trading in Treasury bond futures
began in August 1977 on the Chicago Board of Trade. More
recently, in September 1978, futures trading began in 1-year
Treasury bills on the IMM. Also, a number of new proposals
are now being considered by the Commodity Futures Trading
Commission for additional futures contracts based on Treasury
debt instruments.
I think it is fair to say that the volume of trading in
the Treasury bill futures market and the proliferation of
new futures contract proposals based on Treasury securities
are much greater than anyone anticipated when Congress first
authorized futures trading based on financial instruments in
an amendment to the Commodity Exchange Act in 1974.
Current Congressional concern about this explosion in
financial futures is expressed in Public Law 95-405, which
amended the Commodity Exchange Act and was signed by
President Carter on September 30, 1978. This new law requires
the CFTC to submit to the Treasury Department any applications
from a board of trade for designation as a contract market
involving transactions for future delivery of any security
issued or guaranteed by the United States or any agency thereof.
The Act also requires the CFTC to consider the impact that such
contract market designations might have on the "debt financing
requirements of the United States Government and the continued
efficiency and integrity of the underlying market for
government securities."
The Treasury's concerns with futures contracts based
on United States Government securities were discussed at
length in connection with the Congressional hearings earlier
this year on the bill just signed by the President. Today,
I will just comment briefly on some of our concerns from the
standpoint of Federal debt management policy.
- 6The Treasury has not opposed the designation of contract
markets involving Treasury bills. We have carefully monitored
developments in the bill futures market since its establishment
in 1976, and we have not seen any evidence that this market
has benefitted the Treasury. However, we have not found
sufficient cause to recommend suspension of trading in existing
contracts or disapproval of new contract designations.
We have expressed a number of concerns, however, with
respect to contract market designations involving Treasury
coupon securities. Unlike Treasury bills, which are highly
liquid short-term instruments and are actively traded throughout
their lives, Treasury notes and bonds are longer-term securities
which are typically put away in portfolio by permanent investors.
Treasury relies on these investors to finance the major portion
of the public debt. As these coupon securities are placed with
them, there is a diminution of secondary market trading and in
the availability of securities for delivery. We are concerned,
therefore, that market prices on outstanding Treasury coupon
securities, and thus prices on Treasury new issues, could be
adversely affected by a large volume of trading in any futures
contracts based on Treasury coupon securities.
Also, it is essential that the Treasury maintain the
flexibility to finance the public debt at the lowest possible
cost consistent with the fiscal requirements of the Government
and the needs of the economy. In this regard, Treasury's
flexibility could be reduced by the establishment of a futures
market which is heavily dependent upon an expected new issue
by the Treasury. Clearly, in establishing new markets for
futures contracts in Treasury notes, it should not be assumed
that the regular issuance of Treasury cycle notes will continue
in its present pattern. As I mentioned earlier, just last
month the Treasury substituted a 15-year bond issue for the
usual 5-year cycle note. While many market participants had
expected a 5-year note issue, we did not have to deal with an
established futures market in 5-year notes, and we were able
to accomplish this change on short notice with minimum market
impact.
Treasury debt management flexibility could also be reduced
by the existence of futures markets dependent upon the ready
availability of outstanding Treasury coupon securities.
For example, the Treasury has at times engaged in advance
refundings of outstanding Treasury issues, and the Treasury
also gave serious consideration recently to purchasing certain
outstanding issues to relieve congestion in certain maturity
areas of the market. Such debt management operations by the
- 7 Treasury could result in the unexpected withdrawal from the
market of certain securities, or groups of securities, which
constituted part or all of the anticipated deliverable supply
in the futures market.
The Treasury would certainly welcome the establishment
of futures markets in coupon securities if we felt that
these markets would benefit Treasury financing. We are
concerned, however, that these markets may do more harm
than good from the standpoint of the efficient financing
of the public debt.
I raise these concerns with the hope of encouraging
your expert consideration of them. I know that many of you
are active participants in the Treasury futures market and
in the Treasury cash market as well. We would welcome any
thoughts that you might have.
- 8Recent International Developments
I would like now to comment on international economic
and financial developments which have an important bearing
on the public securities markets in the United States.
The principal developments in the international financial area in the past two years have been the very substantial reduction in the OPEC current account surplus, and the
emergence of major payments imbalances among the industrial
countries leading to strong exchange market pressures as the
foremost problem facing the international monetary system.
My expectation is that the OPEC surplus will continue to
decline and that it will not be a major disruptive factor
next year. I also expect that we will see signficant
improvement in payments relationships among the industrial
countries and increased monetary stability next year. Both
of these developments would imply a reduction in foreign
official purchases of U.S. Government securities in 1979.
The OPEC countries accummulated investible surpluses
amounting to nearly $180 billion during 1974 - 1977, an
average of $45 billion per year. This year, it is likely to
be less than half the $34 billion recorded in 1977, and may
decline by as much as $10 billion more next year in the
absence of an oil price increase. As the OPEC surplus
declines, management of OPEC's investment portfolio is
becoming increasingly constrained by decisions and commitments made in earlier years, including bilateral and
multilateral aid, and commitments to balance of payments
financing through IMF arrangements such as the Supplementary
Financing Facility which will take effect shortly. Such
constraints have required a curtailment of OPEC's discretionary investments elsewhere, including the United States,
which has traditionally accounted for some 20 - 30 percent
of total OPEC placements. There was no significant increase
in OPEC investment in the United States during the first
half of 1978. In fact, there was a small decline in OPEC
holdings of Treasury securities, although there were increases in other forms of U.S. assets. Preliminary evidence
for the second quarter suggests no increase in OPEC's
financial assets worldwide; there is no evidence of a
shift by OPEC from dollar investments.
If our projections are in the right range, new OPEC
discretionary investments in the United States -- or any
other market -- are likely to be quite small.
- 9The emergence in 1977 of a very large U.S. current
account deficit, with attendant downward pressures on
the dollar, and foreign intervention in an attempt to
temper appreciation of certain currencies, has tended
at times to create very large flows of foreign official
capital into the U.S. Government securities market.
In the first quarter of this year, the dollar
remained under heavy pressure in the foreign exchange
market as the trade deficit mushroomed to an annual
rate of $45 billion, and as concern mounted about our
ability to achieve a better balance in the face of
rising inflation, extended Congressional debate on an
energy program and continued divergence of growth rates
here and abroad. Foreign exchange market intervention
during the quarter led to further increases in foreign
holdings of Treasury securities of some $15 billion.
The situation changed sharply in the second
quarter. With the trade and current deficits beginning to
improve and the dollar showing signs of strength in the
exchange markets, the direction of intervention was
reversed and foreign holdings of Treasuries fell by some
$5 billion. We do not yet have a complete picture of
the third quarter, but it appears that there was no
appreciable change in foreign holdings of Treasury
securities.
What are the prospects for the coming year? We
have just gone through an intensive round of discussions
at the IMF/IBRD annual meetings. There is quite clearly
a convergence of views in the official financial
community that a significant improvement in the international payments situtation -- and particularly that
of the United States -- is in prospect. This outlook
is based in part on expectations about future policy
moves here and abroad. But it is also based in
substantial part on steps that have already been taken,
and which are now beginning to yield concrete results.
First, we can anticipate a shift in the relative rates
of growth of the United States and its major trading
partners. Our growth rate next year should be at rates
compatible with the expansion of productive activity.
At the same time, growth rates in Europe and Japan will
pick up somewhat under the impact of domestic stimulus
measures. Whereas the U.S. growth rate has been well
above the average growth of our major trading partners,
in 1979 Europe and Japan should show more rapid growth
than the U.S. for the first time since the 1975 global
recession.
- 10 -
Second, the U.S. competitive position has improved
sharply in terms of our major competitors as a consequence
of exchange rate changes over the past 18 months. On a trade
weighted, price adjusted basis, the U.S. competitive position has improved by some 5 - 1 0 percentage points since
early last year in terms of our major trading partners.
These changes in growth rates and exchange rates are
now beginning to affect trade flows, though the real effects
continue to be obscured by the immediate price effects of
exchange rate changes. Following a solid year of very
rapid expansion, the volume of U.S. non-petroleum imports
has been slightly down since February. And since about
the beginning of the year, U.S. exports -- particularly
non-agricultural but also agricultural exports -- have
been moving up sharply.
The major effects of these changes in growth and
exchange rates are still ahead of us. Thus, we expect
further improvement in the U.S. trade position and a substantial reduction -- perhaps on the order of 30 - 40
percent --in our current account deficit next year. This
obviously is a welcome development, and will represent a
major contribution to greater international financial
stability. But as I mentioned earlier, part of the relatively positive outlook of the Finance Ministers at the
IMF was based on expectations about future policy moves.
And at this particular point, that largely means moves by
the United States.
It is recognized abroad that a major part of the U.S.
trade problem lies in the energy sector, and it is accepted
that we are at last moving to deal with this problem. It is
also recognized that the United States needs to exploit
export opportunities more vigorously. Here too, we are
embarking on a program to improve our performance.
But what is stressed uniformly is the critical need for
the United States to come to grips with its inflation
problem and -- more than any other factors I have mentioned -our policies and performance in this area will determine the
outlook for the international financial situation and the
dollar.
- 11 The President will shortly announce a comprehensive new
anti-inflationary program to supplement -- not substitute
for -- broad fiscal and monetary restraint with direct
measures in the wage and price area. As we have unequivocally indicated on many occasions, we have no intention of
imposing wage-price controls. But we do need more rigorous
and quantitative standards of behavior in the wage-price
area, and the application of those standards will be very
broad, with a minimum of exclusions. The wage-price standards are just one of a number of initiatives intended to
bring more responsible management to Government in order to
deal more effectively with the fundamental underpinnings of
inflation.
Without dwelling on the program, I would emphasize that
the Administration is determined to pursue a tight and
effective fiscal policy. I am sure that you will agree that
our efforts are being channeled in the right direction.
In fiscal year 1976, the budget deficit was $66 billion.
Last year -- under the first budget proposed by President
Carter -- the deficit was reduced by $16 billion. For
this fiscal year, we intend to cut the deficit by at least
another $10 billion. And it is the President's intent
to make a further major cut in fiscal year 1980. Our
budget policy is designed to reduce Government competition
with the private sector for real and financial resources.
This policy can only be accomplished by holding Federal
expenditures to very little real growth during the next two
years. We recognize that, among our anti-inflation efforts,
we will be judged most importantly by our critics on this
Administration's commitment to fiscal prudence.
On the basis of the policy measures in prospect and the
already partly visible results of policies undertaken to
date here and abroad, I believe there is a good prospect for
a significant improvement in the international payments and
financial situtation -- and in the U.S. external position.
In this framework, I would anticipate more stable patterns
of private capital flows into the United States and, with
greater exchange market order, less foreign official acquisitions of dollars in the exchange markets. Combined with
o
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o
very limited amounts of investible funds in OPEC hands, the
prospect is, therefore, for substantially less foreign
official interest in U.S. Government securities in the
coming year.
FOR IMMEDIATE RELEASE
October 19, 1978
Contact: Alvin M. Hattal
202/566-8381
TREASURY ANNOUNCES START OF ANTIDUMPING
INVESTIGATION ON CERTAIN VEGETABLES FROM MEXICO
The Treasury Department said today that it will begin an
antidumping investigation of imports of certain fresh water
vegetables from Mexico.
Treasury's announcement followed a summary investigation
conducted by the U. S. Customs Service after receipt of a
petition on behalf of the Southwest Florida Winter Vegetable
Growers Association, the Palm Beach-Broward Farmers Committee
for Legislative Action, Inc., and the South Florida Tomato
and Vegetable Growers, Inc., alleging that fresh cucumbers,
eggplant, peppers, squash and tomatoes (except cherry tomatoes)
are being "dumped" in the United States. The investigation
will be limited to the foregoing fresh vegetables shipped during the winter vegetable season.
The petition indicates that imports of those vegetables
are being sold in the United States at "less than fair value."
Because petitioners allege that there are not sufficient sales
of that produce in Mexico to constitute a viable home market,
prices of vegetables sold to a third country (Canada) were
used as the basis of "fair value." In certain instances, sales
to Canada were shown to be at prices below the cost of producing the same vegetables in Mexico; therefore, "fair value" was
constructed by using available information on the cost of
production in Mexico.
If sales at less than fair value are determined by Treasury,
the U. S. International Trade Commission will subsequently
decide whether there is injury, or the likelihood of injury, to
a domestic industry. Both "sales at less than fair value" and
"injury" must be determined before a dumping finding is reached.
Notice of the start of this investigation will appear in
the Federal Register of October 19, 1978.
Imports of this merchandise from Mexico amount to approximately $200 million annually, of which tomatoes account for
55-60 percent.
B-1220
o
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o
FOR IMMEDIATE RELEASE
October 19, 1978
Contact:
George G. Ross
202/566-2356
TREASURY ANNOUNCES PUBLIC MEETING TO DISCUSS
USA-CANADA TAX TREATY ISSUES, ON December 13, 1978
The Treasury Department today announced that it will
hold a public meeting on December 13, 1978, to solicit the
views of interested
persons regarding
issues being
considered during negotiations to develop a new income tax
treaty between the United States and Canada.
The public meeting will be held at the Treasury
Department, at 2:00 p.m.
Persons interested in attending
are requested to give notice in writing by December 4, 1978,
of their intention to attend. The room in which the meeting
will be held will be announced after that date.
Notices
should be addressed to H. David Rosenbloom, International
Tax Counsel, Department of the Treasury, Washington, D.C.
20220.
Today's announcement of the December public meeting
follows the recent conclusion of a further round of
negotiations between representatives of the United States
and Canada to develop a new income tax treaty for the
avoidance of double taxation and the prevention of tax
evasion. The new treaty would replace the income tax treaty
presently in effect, which was signed in 1942.
In the course of the recent negotiations, many subjects
of mutual concern were identified and discussed. Among the
major issues being considered are: the taxation of business
income and income from personal services; the taxation of
dividends, interest and royalties; the taxation of income
from various forms of transportation; the taxation of
capital gains, pensions, annuities, and income from the
performance of government services; the treatment of the
income of exempt organizations and contributions thereto;
the allowance of foreign tax credits, particularly with
respect
to U.S. citizens
resident
in Canada;
and
nondiscrimination.
B-1221
-2The Treasury seeks the views of interested persons in
regard to these issues, as well as other matters that may
have relevance in the context of an income tax treaty
between the United States and Canada.
The December 13
public meeting is being held to provide an opportunity for
an exchange of views, as well as for the purpose of
discussing the United States position in regard to the
issues presented in the negotiations.
This announcement will appear in the Federal Register of
Tuesday, October 24, 19 78.
o
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o
THE SECRETARY OF THE TREASURY
WASHINGTON' 2 0 2 2 0
October 19, 1978
Dear Mr. Chairman:
I am pleased to respond to the requests of August 28
and September 11, 1978, from your office for the views of
the Treasury Department with respect to the six applications for contract market designations by the Commodity
Futures Trading Commission (the "Commission") listed in
the appendix to this letter.
For the reasons stated below, the Treasury strongly
recommends that the Commission not designate contract
markets as requested by these applications, or any subsequent applications, based on United States Government
securities, pending the outcome of a study to be conducted
jointly by the Board of Governors of the Federal Reserve
System and the Treasury Department, in cooperation with you.
The Treasury's concerns with futures contracts based
on Government securities were discussed at length in
Deputy Secretary Carswell's letters of April 13, 1978,
to the Chairman of the Senate Subcommittee on Agricultural
Research and General Legislation and to the Chairman of
the House Subcommittee on Conservation and Credit and in
Under Secretary Solomon's letter to you of August 10, 1978.
As you know, these concerns were recognized in Public
Law 95-405 which requires the Commission to consider the
effect of contract market designations concerning Government securities on the "debt financing requirements of
the United States Government and the continued efficiency
and integrity of the underlying market for government
securities."
The Treasury did not oppose the original designations of contract markets involving Treasury bills, nor
has it opposed continued trading in these markets. There
are potential problems, however, arising from the proposal
to permit simultaneous trading on different exchanges of
- 2 13-week bill contracts based on the same Treasury bill
auction. Trading on more than one exchange would create a
potential for manipulation and other abuses which would
appear to require, at a minimum, that the Commission provide
for coordinated surveillance and regulation and consolidated
reporting at the outset.
As you know, we have expressed a number of concerns
with respect to contract market designations involving
Treasury coupon securities. Unlike Treasury bills, which
are highly liquid short-term instruments and are actively
traded throughout their lives, the longer term Treasury
notes and bonds are typically held by permanent investors.
The Treasury relies on these investors to finance the major
portion of the public debt. As these coupon securities are
placed with them, secondary market trading and the availability of securities for delivery are significantly reduced.
We have been concerned, therefore, that market prices on
outstanding Treasury coupon securities, and thus prices on
Treasury new issues, could be adversely affected by a large
volume of trading in any futures contracts based on Treasury
coupon securities.
It is essential that the Treasury maintain the flexibility to finance the public debt at the lowest possible
cost consistent with the fiscal requirements of the Government and the needs of the economy. We have concluded,
however, that in a very practical sense, Treasury's flexibility would be reduced by the establishment of a futures
market which is heavily dependent upon an expected new issue
by the Treasury. It should not be assumed that the regular
issuance of Treasury cycle notes will continue in its
present pattern. These note cycles were established beginning in 1974 to deal with the financing of the extraordinary
budget deficits of recent years. As we continue toward the
President's objective of reducing and eliminating budget
deficits, the maturities of Treasury new issues may well
change substantially. Just last month, in the face of
declining financing requirements, the Treasury substituted a
15-year bond issue for the usual 5-year cycle note. While
many market participants had expected a 5-year note issue,
we did not have to deal with an established futures market
in 5-year notes and we were able to accomplish this change
on short notice with minimum market impact. Once a futures
market dependent on issuance of certain Government securities ,cpmes into existence, Treasury could be influenced, as
a practical matter, by the potential disappointment of the
expectations (even though not strictly warranted) of participants in this market.
- 3 Treasury debt management flexibility would also be
reduced by the existence of futures markets dependent
upon the availability of outstanding Treasury coupon
securities. For example, the Treasury has at times
engaged in advance refundings of outstanding Treasury
issues, and the Treasury recently gave serious consideration to actually purchasing certain outstanding issues to
relieve congestion in certain maturity areas of the market.
Such debt management operations by the Treasury could
result in the unexpected withdrawal from the market of
certain securities, or groups of securities, which constituted part or all of the anticipated deliverable supply
in the futures market. Thus, it may not be possible to
deliver the security specified in the futures contract.
Even if the contract were based on a "basket of securities,"
as has been suggested, thpre is no assurance that the predetermined group of securities will be readily available
in sufficient supply at the delivery date.
We are deeply concerned with the current proposals
for futures trading based on 2-year notes, 4-year notes,
and 4 to 6 year notes. Based on the limited information
available to us now, it is our judgment that such trading could have an adverse impact on the debt financing
requirements of the United States Government. The overriding purpose of the Government securities market is to
finance the public debt, and any development that may
detract from that purpose must clearly be viewed as contrary to the public interest until such time as it is
proven not to do so. In view of this conclusion, we do
not believe that the simple assertion of a board of trade
to the contrary would permit the Commission to find that
the board had "demonstrate(d) that transactions for future
delivery in the (Government securities) for which designation as a contract market is sought will not be contrary
to the public interest" as required by the Commodity
Exchange Act.
I assure you that we did not come to this conclusion
lightly. I am deeply committed to the philosophy that our
economy functions best if free markets are permitted to
flourish. Yet, after careful consideration of the special
role of the Government securities market and the requirements' of the Commodity Exchange Act, as amended, I have
- 4 concluded that U.S. Treasury notes and bonds should not be
used as a basis for trading in the futures market until more
information concerning the market is available to us.
In addition to the practical consequences for debt
management, we are also concerned by the lack of adequate
information about the relationship between the futures
market and the cash market for Government securities. Under
Secretary Solomon's August 10 letter raised serious questions
concerning the adequacy of information about the cash market
supplied to the Commission in connection with its consideration of the four-year note proposal of the Chicago Mercantile
Exchange. This information gap has not yet been satisfactorily closed.
There is also a need for coordinated reporting of
positions in the underwriting of Government securities in
the spot market with positions in the futures market. In
this regard, the Treasury and the Federal Reserve are
expanding the primary dealer reporting system to include
disclosure of futures trading activity. The New York
Federal Reserve Bank would require separate daily dealer
reporting forms which will include volume of trading activity
as well as positions in futures contracts based on U.S.
Government securities. When the expanded system becomes
operative, we can conduct the essential studies of possible
benefits and detriments of futures activity on the cash
market for Government securities.
In view of the current proliferation of new proposals
for futures contracts based on Treasury securities and the
lack of information available to us, we cannot be assured
that these markets will not develop in a manner inconsistent
with the public interest. Thus, I believe that at this time
no further contract designations based on Treasury bills or
coupon securities should be approved. Although I realize
that the Commission has the power to withdraw contract
designations in the appropriate circumstances, it is unquestionably more difficult to exercise that authority than
to delay approval of new contract designations where important information about their impact is lacking. We realize
that no study can supply definitive answers to all the
questions a new contract may raise. However, we believe
that the Federal Reserve an'3 the Treasury, with the Commission's cooperation, can conduct the necessary studies of the
likely impact of these futures markets on the cash market
for Treasury securities. Because of the unique importance to
the public of the cost of Treasury financing, this information should be available before an extensive market in
permitted
futures contracts
to develop.
based on U.S. Government securities is
- 5 We have discussed preparation of such studies with
the Federal Reserve Board which is expected to consider
the matter in the near future. We are prepared to proceed immediately. We look forward to coordinating with
you and discussing how that can best be done.
Sincerely,
W. Michael Blumenthal
The Honorable
William T. Bagley
Chairman
Commodity Futures Trading Commission
Washington, D.C. 20581
APPENDIX
FUTURES CONTRACT APPLICATIONS
Contract Designation
Board of Trade
Date of Application
4-Year Notes
Chicago Mercantile Exchange (IMM)July 13, 1977
(Resubmission 9-5-78)
4- to 6-Year Notes
Chicago Board of Trade
July 26, 1978
13-Week Treasury Bills
Amex Commodities Exchange
August 1, 1978
13-Week Treasury Bills
Commodity Exchange Inc.
July 31, 1978
1-Year Treasury Bills
Commodity Exchange Inc.
July 31, 1978
2-Year Treasury Notes
Commodity Exchange Inc.
July 31, 1978
October 18, 1978
FOR IMMEDIATE RELEASE
Friday, October 20, 1978
Contact:
Robert E. Nipp
202/566-5328
ANTIDUMPING INVESTIGATION UNDER
STEEL TRIGGER PRICE MECHANISM
The Treasury Department announced today its first formal
"fast-track" antidumping investigation based on information
collected through the Trigger Price Mechanism (TPM) to monitor
imports of steel mill products.
The case is brought against three foreign companies based
on evidence that they are selling significant quantities of
carbon steel plate to the United States at prices less than
the applicable trigger prices, and, according to information
developed in administering the TPM, apparently at less than
"fair value".
The three companies are:
1. Empresa Nacional Siderurgica, S.A. of Spain
2. "Stahlexport" Przedsiebiorstwoa of Poland
3. China Steel Corp. of Taiwan
Information developed by the Custom Service indicates
dumping margins of up to 48.5 percent on sales to the United
States by these companies.
Key features of the case include the following:
—The Department will investigate the imports of particular
companies rather than countrywide as is normally the case, so
as to focus on only those companies for which the accumulated
evidence warrants proceeding with a full investigation at this
time.
—A 21-day time limit is set for company responses
regarding price information, and a 35-day limit will apply for
cost-of-production information. If timely responses are not
B-1222
- 2
—
received, the Treasury Department will use the best available
evidence to calculate "fair' value" and dumping margins.
The Treasury Department also indicated that it is making
a number of other preliminary inquiries regarding imports of
carbon steel plate to see if commencement of further cases
against individual companies is warranted.
A copy of the Federal Register Notice is attached.
o 0 o
OepartmentoftheTREASURY
TELEPHONE 566-2041
JHINGTON, D.C. 20220
FOR IMMEDIATE RELEASE
October 23, 1978
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,300 million of 13-week Treasury bills and for $3,400 million
of 26-week Treasury bills, both series to be issued on October 26, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
13-week bills
maturing January 25, 1979
26-week bills
maturing April 26, 1979
Price
Discount
Rate
Investment
Rate 1/
Discount Investment
Price
Rate
Rate 1/
98.010
98.001
98.003
7.873%
7.908%
7.900%
8.14%
8.18%
8.17%
95.659a/ 8.587% 9.10%
95.642
8.620%
9.14%
95.646
8.612%
9.13%
a/ Excepting 2 tenders totaling $7,455,000
Tenders at the low price for the 13-week bills were allotted 60%.
Tenders at the low price for the 26-week bills were allotted 74%.
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTS AND TREASURY:
Location
Received
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
$
Treasury
11,450,000
11,450,000
$4,156,455,000
$2,300,135,000b/: $5,198,625,000
TOTALS
35,695,000
3,543,070,000
23,330,000
28,760,000
17,475,000
32,605,000
211,845,000
38,715,000
19,100,000
27,900,000
14,825,000
151,685,000
Accepted
$
27,695,000
2,026,140,000
20,555,000
26,760,000
17,475,000
30,735,000
35,040,000
19,215,000
16,500,000
27,860,000
14,825,000
25,885,000
Received
$
18,935,000
4,468,260,000
30,905,000
61,140,000
42,335,000
71,360,000
178,375,000
47,840,000
18,090,000
48,435,000
10,040,000
191,660,000
11,250,000
bAncludes $385,705,000 noncompetitive tenders from the public.
^/Includes $262,900,000 noncompetitive tenders from the public.
i'Equivalent coupon-issue yield.
B-1223
Accepted
$
18,935,000
2,937,335,000
20,905,000
31,140,000
37,335,000
71,360,000
70,875,000
33,840,000
17,050,000
31,455,000
10,040,000
108,950,000
11,235,000
$3,400,455,000c/
FOR IMMEDIATE RELEASE
October 23, 1978
Contact: Alvin M. Hattal
202/566-8381
TREASURY RELAXES FOREIGN BANK ACCOUNT REPORTING
Under Secretary of the Treasury Bette B. Anderson
today said that, effective in 1979, persons who own or
control foreign financial accounts with an aggregate
value of $1,000 or less will no longer have to file
Treasury Form 90-22.1.
Form 90-22.1 (Report of Foreign Bank and Financial
Accounts) is filed with the Department before July 1 of
each calendar year. It is required under the provisions
of the (Foreign) Bank Secrecy Act and is intended to
deter the use of foreign financial facilities to violate U. S. laws.
This relaxation of the reporting requirement should
reduce unnecessary paperwork without materially affecting the usefulness of the reports, Mrs. Anderson said.
The text of the notice will appear in the Federal
Register on October 25.
o
B-1224
0
o
RELEASE ON DELIVERY
Expected 9 A.K. Hawaii Time
Konday, October 23, 1978
PREPARED REMARKS CF
THE HONORABLE W. MICHAEL ELltfENTHAL
SECRETARY OF THE TRFASURY
EEFORE THE
AMERICAN BANKERS ASSOCIATION CONVENTION
HONOLULU, HAWAII
Looking at tne economic situation in botn its international and domestic
dimensions, tnere is clear evidence of tne considerable progress made over tne
last few years.
In 1975, economic output ir. tne industrial world fell 1 percent. Tnis
year it will snow a respectable average growtn of 3-1/2 percent.
In 1974, tne CFEC payments surplus was $70 billion. Tnis year it will be
about C16 billion.
In 1975, tne developing countries' aggregate current account deficit was
$3C billion and tne source of great concern. Tnis year it will be about £1*
billion, and borrowing countries are generally in a stronger position to
attract capital.
Most of tne industrial countries facing major payments deficits in 197^
and 1975 nave been able to cut tneir deficits substantially, in sore cases to
rr.ove into surplus.
Cn tne domestic front, tne U.S. economy nas performed remarkably well in
tnese past tnree years. Since tne 1975 recession trougn, we nave added 1C
trillion persons to our employment rolls. We nave increased total err.ployment
by 12 percent. Unemployment nas corre down from more tnan c percent to below 6
percent. Industrial production nas increased 31 percent — it is now 1C
percent nigner tnan tne pre-recession peak.
We nave acnieved 5.7 percent growtn in 1976 arid 4.9 percent grov.tr in
1977. Cur real gross national product nas increased almost 1? percent since
1975.
Tnese nave been substantial accomplisnrr.ents. Eut now we are confronted
witn a serious inflation wnicn, togetner witn tne weakness of tne dollar, nas
become tne cnief economic problem of tne Carter Administration. Tr.e two
issues are, of course, intimately related. If we fail to rein in inflation,
confidence will continue to erode and tne dollar will continue to suffer.
B-1225
-2But the damage that inflation inflicts is not limited to international
considerations alone. It is far more pervasive.
In terms of social welfare inflation reduces the living standards of the
poor, the unemployed, the retired — the groups that can least afford it.
In terms of the overall econpmy, inflation distorts, reduces, delays and
prevents needed capital formation; stultifies long-term business planning; and
generates unproductive forms of purely speculative activity.
In terms of allocation of resources, inflation disrupts the essential
role of relative changes in prices, and in costs, as guides to efficient
production and distribution.
In terms of tne international position of the United States, inflation
impairs tne competitiveness of our exports, increases our balance of payment
deficit, erodes our purchasing power, and undermines our leadership in world
affairs.
Our Current Predicament
Tnere is clear evidence tnat inflation is affecting tne vitality of our
economy.
— consumer prices have risen at a annual rate of 9-1/2 percent this
year. Wholesale prices have gone up at an 8.7 percent rate.
— tne rate of inflation in consumer prices fell back to a 6.9 percent
annual rate in July and August when food prices were relatively flat.
Producer prices of finisned goods actually fell slightly in August.
But producer prices shot back up by 0.9 percent in September (a
double-digit annual rate) as food and raw materials prices rose
strongly.
— even wnen such volatile elements as food, housing, and energy costs
are removed from the consumer price index, inflation has increased
from an average annual rate of 6 percent in 1976-77 to an annual rate
of over 7 percent this year.
Similar trends nave occurred on the wage side:
— nourly earnings are up 8.1 percent from a year earlier.
— total employee compensation nas been at a 9 percent rate, up from 8
percent last year. In conjunction witn very slow growth in
productivity, this nas resulted in over an 8 percent advance in unit
labor costs, substantially above the 6 percent average increase for
1976-77.
— with prices rising as fast, or faster, tnan wages, there has been
very little increase in real income. Average hourly earnings in real
terms nave gained less than one percentage point over the past 12
months. Actual take-home pay adjusted for inflation has declined
slightly.
-3Wnat we are facing at the moment is primarily a wheel-spinning, tailchasing process in which no major economic group has achieved any substantial
gains. In tne face of relatively nigh rates of unemployment and unutilized
productive capacity inflation during the past years has developed a momentum
of its own, and is producing a general climate of further inflationary
expectations.
Now tnere are some early warning signs that the economy is moving closer
to tne zone wnere demand factors will begin to aggravate the inflation
problem. Tne total unemployment rate is still near 6 percent but a gradual
tigntening in labor markets is beginning to be felt. The data snow that
employment — both absolutely and as a percentage of the population — has
recently been at nistoric higns. The unemployment rate for married men of 2.7
percent in .September was tne same as averaged in 1955, 1964, and 1972 when the
economy was gathering steam. The index of help wanted advertising reached an
all-time peak in August, 20 percent above the 1973 level. And nonunion wages
are beginning to rise more rapidly than union wages as a consequence of the
strengtn of market forces.
Tnere is still a margin of unutilized industrial capacity but in some
cases demand pressures are being felt. A notable example is construction
materials, particularly tnose used in single-family nomes, where tight supply
conditions and strong demand have contributed to a sharp acceleration in
wnolesale prices. Scattered snortages of concrete are being reported. Nonelectrical macninery operations are running at a higher rate of utilization
tnan ever attained during tne 1973-74 capital goods boom. And there are other
examples.
To some' extent tnese situations are a legacy of the sluggish pace of
investment activity earlier in the expansion. Too much capital spending has
been going into off-tne-shelf items such as computers and trucks, too little
into tne expansion and modernization of basic productive capacity. And, from
a strictly economic point of view, tne neavy investment requirements for
pollution abatement nave not added mucn, if anything, to our current ability
to produce.
On a fundamental plane, our problem is more than a classic case of too
mucn demand chasing too scarce a supply of goods. I've been reading Teddy
Wnite's autobiograpny. He is not an economist (lucky soul!) but ne is a wise
and thougntful man. He summed it up precisely when he wrote: "inflation is
tne nidden tnreat that disorganized government holds over those who try to
plan, wno try to be prudent."
Our problem is tnat we are living witn tne heritage of neglect and
inappropriate treatment of the economy by the Federal Government. Previous
administrations and Congresses nave allowed inflation to become a way of life;
it nas been built into tne price and cost decisions of all sectors of the
economy, producing a vicious circle of inflationary reactions. Tnis process
nas been building over tne past decade. From 1957 to 1967 we averaged 1.7
percent inflation. Inflation tnen rose to average 4.6 percent during the
period 1968 to 1972 and 7.7 percent between 1972 and 1977. Even after a
severe recession, inflation nas tended to build up rather than wind down,
despite tne moderate, well-paced economic expansion we nave been experiencing.
-4Tne responsibility for exorcising the evils of inflation from our
economic system falls squarely on the government. And President Carter is
determined to exercise the leadership needed to mobilize the resources for
doing so. Tomorrow he will present his program to the nation. I cannot, of
course, tell you what the specific components of his program will be. But I
can tell you that they will be based on the following principles:
— The policy must support and be consistent with the monetary policy of
tne Federal Reserve — a policy designed to reduce the rate of
inflation wnile permitting our economy to grow at a rate consistent
witn its underlying potential. Monetary policy has become
increasingly more difficult to manage. Tne new "money market
certificates" that savings institutions have been permitted to issue
since June nave changed the cnaracter of our financial markets,
tnougn it is not yet clear to what extent. The same may be true for
tne authorization of automatic transfers between checking and savings
accounts. Innovations like tnese alter the relationship between
increases in interest rates and tne supply of credit. Tney have made
it more important for tne Fed to remain vigilant and not to let down
its guard in the fight against inflation.
— The policy must be rooted in a very tight and effective fiscal
policy. In its first year in office the Carter Administration
reduced the budget deficit by $16 billion from the bloated $66
billion imbalance it inherited. In this fiscal year, we will cut the
deficit by another $10 billion. I nave no doubt that the President
will seek anotner sizeable cut in FY 1980. When President Carter
came into office, tnere were not many who were convinced that he was
serious in nis resolution to bring tne Federal budget into balance by
the end of nis first term. Given the reductions in Fiscal Year '79
and planned for '80, it is now becoming clear tnat tne President is
indeed serious in his determination to follow sound budgeting
policies. We intend to assure that tne economy continues to grow at
its long term sustainable rate of 3 to 3-1/2 percent. And we intend
to continue squeezing waste out of our budget. The two goals are not
mutually inconsistent.
— The policy must come to grips with tne problems posed by regulatory
excess, in order to re-invigorate the functioning of the market
system and improve tne two-way flexibility of costs and prices. Tnis
nas been and will continue to be our goal to search for ways to hold
down costs of new regulations — costs whicn in some cases have
resulted in a virtual collapse in the rate of growth of productivity
in some industries. You may be shocked to learn — as I was — that
no administration nas ever before kept tab of the number of
regulations in force or pending, let alone of the capital costs they
impose on the economy. Tnere is much scope for the kind of costbenefit analysis discipline tnat led tne Administration to deregulate
tne airline industry to the benefit of the industry and of consumers.
Tnis scope will be utilized. We mean to bring the regulatory process
under control.
-5—
The policy must be buttressed by continued Administration resistance
to increased import restraints, inflationary price guarantees, and
tne subsidization of domestic industries.
— The policy must seek the voluntary assistance of the private sector.
If I may parapnrase Edmund Burke, all that is necessary for inflation
to triumph is for good men to do nothing. It is no secret that a
strong anti-inflation program requires the cooperation of the
business and labor communities. This Administration is opposed to
wage and price controls. But it is an inescapable fact that business
and labor- can and must voluntarily tighten their belts if we are to
succeed in tne inflation fignt.
— . Finally, tne policy will coincide witn a steady improvement in the
balance of external payments. I spoke at the IMF/World Eank meeting
two weeks ago and in that speecn I predicted a substantial reduction
in our current account deficit of perhaps as much as 30-40 percent
tnis coming year. Apparently, I presented a less optimistic picture
tnan Morgan Guaranty which envisions a 40 percent reduction and the
IMF staff wnich forecasts 50 percent. To the extent this real
accomplisnment aids tne dollar — as it snould — it will greatly
assist our anti-inflation efforts. A falling dollar has cost us 1/2
to 1 percentage point on tne CPI as a result of higher import and
import-substitution costs. It is to reverse tnis influence that the
President recently announced the first elements of a national export
policy — a policy wnicn will begin giving export markets the
priority they require if we are to eliminate our current account
deficit.
My point is tnat to lick inflation and to revive the dollar, we need a
coordinated and concerted set of policies pursued witn persistence over a
period of time. Tne President's policies will aim in that direction. He is
seeking to eliminate tne viscious circle of expectations that continued or
advancing inflation will bail out spenders and borrowers and those who sell
dollars snort. Tnis is the patnology of inflation. And we are initiating a
program tnat intends to put an end to it.
In tne longer term we cannot succeed unless we can increase productivity
and output. Curtailing demand pressures will break tne momentum of inflation
in tne snort-run, but in the long run, the most positive approach to fighting
inflation is to increase the supply of tne factors of production and tne
efficiency and productivity with wnicn tney are utilized. I'd like to dwell
on tnis for just a minute.
Many factors determine tne rate of growtn of labor productivity. Tne
most important are tne age and training of the work force, the quality and
quantity of tne capital, and the rate of technical progress. Developments
over tne past ten years in each of tnese areas nave been unfavorable. Some of
tnese unfavorable developments will reverse tnemselves in tne years anead —
partly as a result of demograpnic changes in the composition of the labor
force, partly because of programs we nave implemented. But, frankly, these
developments will be of limited use if we fail to equip our growing work force
witn a modern, expanded capital stock. Tne stock of productive capital per
worker increased every year in tne post-war period up to 1974. Since tnen,
nowever, tne process of capital accumulation nas come to a complete halt.
-6There are many reasons for this: declining real profit margins,
uncertainties about energy costs and availabilities, the necessity to utilize
investment funds to meet legislative standards for environmental, health and
safety purposes, etc. If these road blocks to investment are not removed,
tnere is little nope for reducing costs, slowing inflation, increasing exports
or improving our balance of trade.
We first have to gain a better understanding of the process of industrial
innovation—not just tne invention of new products and processes, but bringing
tnese indentions into the production process more rapidly. To this end, a
special^Presidential study will result in specific policy recommendations in
tnis area next year.
We need to equip our labor force witn better training, to avoid the labor
bottlenecks wnich may emerge in the early 1980*s as the demographics change.
Tnus we nave put in place major training programs for youth and minorities,
programs wnich make maximum use of private sector talents and initiative.
We must budget carefully and cost effectively the share of output we can
devote in any one year in improving the environment and the safety of work.
We must complete tne revision of our tax laws to insure that we are
providing tne most effective and equitable range of incentives to promote
capital formation.
Most importantly, we must limit.and continue to reduce the Federal
government's preemption of resources. The government's share of national
output is declining; real Federal outlays have declined from 21.4 percent of
GNP to 20.8 percent in 1978. Our budgetary policy will result in further
declines in the years anead, leaving more real resources for private capital
formation to spawn the productive, non-inflationary growth that is so
critically important to tne nealth of our economy and our money.
* In closing, let me say that the anti-inflation fight is not a one-shot
affair. Just as it took time for inflation to so seriously infiltrate our
economy and our national psyche, so too it will take time to defeat it.
President Carter knows tnis and is undaunted. He is absolutely determined to
succeed.
oOOo
FOR IMMEDIATE RET .EASE
October 24, 1978
Contact:
Charles Arnold
202/566-2041
TREASURY OPPOSES APPROVAL OF FUTURES (XNTRACTS, PENDING STUDY
Secretary of the Treasury W. Michael Blumenthal has strongly
recommended that the Gsmmodity Futures Trading Commission not
approve six futures contracts based on U.S. Government securities
until the Treasury and Federal Reserve Board can study the effects
of the proposed trading on Federal debt financing and the market for
Government securities.
Secretary Blumenthal's request was made in a letter delivered
on Monday, October 23 to Commission Chairman William T. Bagley. A
copy of the letter is attached.
o 0 o
B-1226
FOR RELEASE AT 4:00 P.M.
October 24, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,800 million, to be issued November 2, 1978.
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $5,807 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
August 3, 1978,
and to mature February 1, 1979
(CUSIP No.
912793 W6 9), originally issued in the amount of $3,503 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $3,500 million to be dated
November 2, 1978,
and to mature May 3, 1979
(CUSIP No.
912793 Y3 4).
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing November 2, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,346
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Standard time, Monday,
October 30, 1978.
Form PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
records of the Department of the Treasury.
B-1227
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
oorrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury. A
cash adjustment will be made on all accepted tenders for the
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on November 2, 1978,
in cash or
other immediately available funds or in Treasury bills maturing
November 2, 1978.
Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
0"
0
'-
TREASURY NOTES OF SERIES
U-1980
\
f
1
.
/
DATE October 24, 1978
-j'* i
f.//
KIGr.ZST ; SINC1i-' u-<^~ /J^<^>
-C,-*<r<"Yy*s
--cryy^n"^
.OKEST SINCE:
LAST ISSUE :
-/ /
y- s/x *?
f .
/°
TODAY:
* f /c -. ..;. /
FOR IMMEDIATE RELEASE
October 24, 1978
RESULTS OF AUCTION OF 2-YEAR NOTES
The Department of the Treasury has accepted $3,252 million of
$4,512 million of tenders received from the public for the 2-year
notes, Series U-1980, auctioned today.
The range of accepted competitive bids was as follows:
Lowest yield 8.90% —
Highest yield
Average yield
8.98%
8.94%
The interest rate on the notes will be 8-7/8%. At the 8-7/8% rate,
the above yields result in the following prices:
Low-yield price 99.955
High-yield price
Average-yield price
99.812
99.$8-3
The $3,252 million of accepted tenders includes $526 million of
noncompetitive tenders and $2,526 million of competition/extenders from
private investors, including 22% of the amount of notes bid for at
the high yield. It also includes $ 200 million of tenders at the
average price from Federal Reserve Banks as agents for foreign and
international monetary authorities in exchange for maturing securities.
In addition to the $3,252 million of tenders accepted in the
auction process, $ 203 million of tenders were accepted at the average
price from Government accounts and Federal Reserve Banks for their own
account in exchange for securities maturing October 31, 1978, and $300
million of tenders were accepted at the average price from Federal
Reserve Banks as agents for foreign and international monetary authorities
for new cash.
1/
Excepting 6 tenders totaling $390,000
B-1228
IN6T0N, D.C. 20220
TELEPHONE 566-2041
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE October 25, 1978
TREASURY NOVEMBER QUARTERLY FINANCING
The Treasury will raise about $2,200 million of new
cash and refund $4,584 million of securities maturing
November 15, 1978, by issuing $2,500 million of 3-1/2-year
notes, $2,500 million of 10-year notes, and $1,750 million
of 30-year bonds.
The $4,584 million of maturing securities are those
held by the public, including $732 million held, as of today,
by Federal Reserve Banks as agents for foreign and international monetary authorities. In addition to the public
holdings, Government accounts and Federal Reserve Banks, for
their own accounts, hold $3,623 million of the maturing.
securities that may be refunded by issuing additional
amounts of new securities. Additional amounts of the new
securities may also be issued, for new cash only, to Federal
Reserve Banks as agents for foreign and international
monetary authorities.
Details about each of the new securities are given in
the attached "highlights" of the offering and in the
official offering circulars.
oOo
Attachment
B-1230
(over)
HIGHLIGHTS OF TREASURY
OFFERINGS TO THE PUBLIC
NOVEMBER 1978 FINANCING
TO BE ISSUED NOVEMBER 15, 1978
[Amount Offered:
To the public
'Description of Security;
Term and type of security
Series and CUSIP designation
Maturity date
Call date
Interest coupon rate
Investment yield
Premium or discount
Interest payment dates
Minimum denomination available
Terms of Sale:
Method of sale
Accrued interest payable by
investor
Preferred allotment
Deposit requirement
Deposit guarantee by designated
institutions
Key Dates:
Deadline for receipt of tenders
October 25, 1971
$2,500 million
$1,750 million
3-1/2-year notes
Series K-1982
(CUSIP No. 912827 JD 5)
May 15, 1982
No provision
To be determined based on
the average of accepted bids
To be determined at auction
To be determined after auction
May 15 and November 15
$5,000
10-year notes
Series B-1988
(CUSIP No. 912827 JE 3)
November 15, 1988
No provision
To be determined based on
the average of accepted bids
To be determined at auction
To be determined after auction
May 15 and November 15
$1,000
Yield Auction
30-year bonds
Bonds of 2003-2008
(CUSIP No. 912810 CE 6)
November 15, 2008
November 15, 2003
To be determined based on the
average of accepted bids
To be determined at auction
To be determined after auctior.
May 15 and November 15
$1,000
Yield Auction
Yield Auction
None
Noncompetitive bid for
$1,000,000 or less
5% of face amount
Acceptable
None
Noncompetitive bid for
$1,000,000 or less
5% of face amount
Acceptable
Wednesday, November 1, 1978
by 1:30 p.m., EST
Thursday, November 2, 1978,
by 1:30 p.m., EST
Wednesday, November 15, 197i
Wednesday, November 15, 1978
Thursday, November 9, 1978
Thursday, November 9, 1978
Wednesday, November 8, 1978
Wednesday, November 8, 1978
Wednesday, November 15, 1978
Monday, November 20, 1978
$2,500
million
None
Noncompetitive bid for
$1,000,000 or less
5% of face amount
Acceptable
Tuesday, October 31, 1978,
by 1:30 p.m., EST
Settlement date (final payment due)
a) cash or Federal funds
Wednesday, November 15, 1978
b) check drawn on bank within
FRB district where submitted....Thursday, November 9, 1978
Delivery
date
for on
coupon
November 15, 1978
c) check
drawn
bank securities...Wednesday,
outside
FRB district where submitted....Wednesday, November 8, 1978
FOR IMMEDIATE RELEASE
October 26, 1978
Contact:
Robert E. Nipp
(202) 566-5328
TREASURY ANNOUNCES REVOCATION OF
COUNTERVAILING DUTY DETERMINATION
REGARDING STEEL PLATE FROM MEXICO
The Treasury Department today announced that the
countervailing duty determination regarding carbon steel
plate and high strength steel plate from Mexico is being
revoked.
On January 6, 1976, the Final -Countervailing Duty
Determination in this case was published in the Federal
Register.
A waiver was concurrently granted.
Treasury has learned that the bounty leading to the
countervailing duty finding has been eliminated.
Accord
ingly, the Final Determination is being revoked.
Notice of this action will appear in the Federal
Register of October 27, 1978.
*
B-1231
*
*
FOR RELEASE UPON DELIVERY
EXPECTED AT 10:00 A.M.
OCTOBER 26, 1978
REMARKS BY THE HONORABLE DANIEL H. BRILL
ASSISTANT SECRETARY OF THE TREASURY FOR ECONOMIC POLICY
19TH ANNUAL BUSINESS CONFERENCE
ST. JOHN'S UNIVERSITY
NEW YORK, NEW YORK
Your speakers this morning have worked out a fairly
neat division of labor—neat at least from my point of
view. Bill Freund is going to take the more hazardous
chore—the near-term economic outlook. You'll know
whether he is right or wrong in short order. I've got the
safer job—the longer-term outlook. It's safer in that
few, if any of you, will remember a decade from now if
what I say today turns out to be wrong. Of course, if I'm
right, I'll remind you. Otherwise, my talk will sink into
the oblivion most^economic forecasts deserve.
Moreover, I'm not going to attempt even a conventional
forecast of the 1980's. Given economists' poor track record
in forecasting, short- or long-term, I would not want to
dignify these musings on longer-term prospects with the
specious accuracy of point estimates for GNP growth, for
inflation, or for unemployment. Rather, I would like to
focus on a few of the major economic forces that will be
conditioning the economic environment of the 1980's. Will
they be working for or against us in achieving our objectives
of a prosperous, noninflationary future?
B-1232
-2Since I am by disposition, a Pollyanna rather
than a Casandra, I will lead off and spend most of my
time considering one of the forces that should be helping us support noninflationary growth—the demographic
changes we can expect in the 1980's. But I will try to
be evenhanded and discuss other elements in the future
economic environment that may be less supportive of our
F-v-
objectives; It is as important to know the difficulties
we will be facing as it is to know the favorable trends
that will assist us in meeting our objectives.
There is no doubt that the maturing of the persons
born during the baby boom of the late 1950's will exert
a substantial influence on the economic outlook for the
mid-1980's. The population bulge associated with the
baby boom has now proceeded through the teenage years and
'is entering the 20 to 24 year age group. By 1985 most of
this group will be over 25 years of age. Thus, we are on
the threshold of an increase in the number and proportion
of people in the 25 to 55 age bracket—the bracket frequently
referred to as the "prime labor force" group—and almost at
the end of the experience of getting those young people
through their "difficult" age.
The past explosion in the absolute numbers of young
people in the labor force—an increase between 1970 and 1977,
-3for example, of 6 million persons—resulted in
unemployment rates for these workers which were not
only high, but which were growing relative to the unemployment rates of prime age males. The connection
between this growth in the number of young people and
their higher unemployment rates is not difficult to
explain. Some government policies, for example, have
inhibited wage adjustments that would have helped to
absorb younger workers. Minimum wage requirements have
not only kept pace with average wage rates, but coverage
has been extended to many areas in which younger workers
are concentrated. In addition, welfare payments and unemployment compensation benefits have increased relative to
after-tax earnings levels.
Companies were also faced with other difficulties in
absorbing a more youthful work force. In many cases younger
workers, lacking experience, are simply not good substitues
for older, more experienced workers. Quite aside from the
fact that companies find it difficult to adjust their wage
structures because of either public policies or labor contracts, they simply cannot easily reorganize themselves to
provide a higher proportion of entry-level jobs. But these
are precisely the kinds of jobs needed to absorb an exceedingly youthful labor force. Even if such entry-level jobs
-4could have been provided, many companies feared that
they would simply have to change back after the decade
or so it has taken for the boom to pass and the work
force to mature.
The extent of the recent problem and the relief we
will realize over the course of the next several years
are evident from a few simple statistics. In 1960, workers
aged 16 to 24 constituted 16.6 percent of the labor force.
In 1978, they constituted 24.5 percent. By 1985, this
proportion will drop to between 21 and 22 percent of the
labor force. Of course, this forecast like any other is
subject to a margin of error. The proportion can deviate
somewhat depending upon what assumptions are made about
trends in the participation rates for various population
groups, particularly for women.
But no matter what assumptions one uses, several
major changes stand out: (1) women will constitute a significantly larger proportion of the labor force, increasing
from their present proportion of 41 to 44 percent by 1985;
(2) the ratio of the "prime age" workers to the total
labor-force is going to increase signficantly; and (3) the
proportion of the labor force accounted for by young people
and new entrants is going to decline significantly.
-5These expected demographic changes in the labor
force composition should have beneficial consequences
for our objectives of noninflationary growth. The
beneficial effects will operate primarily through two
channels: (1) by lowering the "noninflationary" full
employment-unemployment rate; and (2) by increasing the
rate of growth in labor productivity.
Young workers, and other new entrants into
the labor force, have little job-specific
training or expertise.
Young workers are still searching among potential
careers.
Young people tend to have poorer continuous
working records because of intermittent schooling and in the case of females a desire to stop
working in order to raise families.
The consequences of these facts are that women and youthful
employees tend to have high turnover rates, higher unemployment rates, lower wages and generally work in low productivi
employment.
The resultant higher unemployment rates have an additional danger in that they invite governmental policies
designed to fight the unemployment, but which may have
-6inflationary side effects, e.g., efforts to stimulate
aggregate growth at too rapid a pace.
Some of the
policies involve costly training and public service
employment programs.
However, by 1985, the favorable demographic changes
which have been outlined are expected to reduce the "noninflationary unemployment rate" back down to its early
post-war level of about 4.0 to 4.5 percent.
The noninfla-
tionary rate, that is, the lowest level of unemployment
which can be achieved consistent with relative price
stability, is estimated to have peaked at about 5.5 percent
in the 1975-1976 period.
The other major factor associated with demographic
changes that will reduce inflationary pressures relates to
productivity.
I am sure most of you in the audience are aware of
the recent dismal productivity performance of the U.S.
economy, but perhaps you are not aware of the full extent
of the deterioration in this vital economic statistic.
During the first 20 years of our post-war history, 1948-1968,
output per hour in the private economy increased at an
annual rate of 3.2 percent.
During the most recent decade,
1968-1978, productivity growth dropped in half, averaging
only 1.6 percent per year.
-7Many factors determine the rate of growth of
labor productivity. Among the most important are the
age, experience and training of the work force—what
is frequently referred to as "labor quality". Although
it is difficult to develop precise quantification of
this component of the growth picture, probably one-fourth
of the productivity slowdown during the past 10 years is
attributable to the deterioration in labor quality, as
both the absolute numbers and relative importance of new
entrants into the labor increased. The influence of this
factor on productivity should abate in the future as the
demographics change.
Moreover, the negative productivity aspects associated
with increased labor-force participation by women should
also diminish. For as women become more firmly attached
to the labor force and as social barriers are overcome,
they can be expected to move into higher productivity, semiskilled, skilled, and professional occupations.
There is also a possibility that the reduction in
the number of teenagers and young adults will have a significant favorable effect on crime, and this would improve
productivity by minimizing the loss of output and the
resources which must be devoted to crime prevention.
-8Another major cause of the decline in productivity
growth has been the failure of growth in the productive
capital stock to keep pace with the growth of the
labor force. During the first two decades after World
War II, the U.S. gross capital stock grew at an average
annual rate of 3.6 percent. During the next 10 year
period, 1968-1978, it also grew at a 3.6 percent rate.
However, some of the growth resulted from investment in
pollution abatement facilities rather than from investment
in new plant and machinery designed to increase capacity
and worker productivity. When allowance is made for this
fact, growth of the "productive" capital stock during the
last decade slowed somewhat as compared to the earlier
period, from a 3.6 percent annual rate to a rate of 3.4 percent.
At first blush, this relatively small slowdown hardly
seems worth mentioning. But if one remembers that over the
very same time frame the annual rate of growth of the labor
force accelerated sharply, from 1,3 percent to 2.5 percent,
the implications become clearer.
As a consequence of these disparate growth rates,
the process of capital deepening slowed markedly. The
rate of increase in the capital/labor ratio dropped from
2.2 percent during the 1948-1968 period to 0.9 percent
-9during the 1968-1978 period.
Of course, some of this
slowing is a legacy of the 1973-1975 recession, which
severely depressed business investment. But some of
it is due to more basic underlying economic factors
that hinder business investment. The slowing of labor
force growth in the future, and the increased recognition in public policy development of the need to encourage
business investment, should enable capital formation per
employee to improve and thus provide the needed capital
to make labor more productive. Such prospective improvement will restore at least part of the recent sizeable
loss in labor productivity and will have beneficial implications for slowing the rise in labor costs and prices.
I wish I could end my talk with this somewhat
optimistic prognosis for future trends in inflation but, as
•I warned at the outset, I must examine both sides of the coin.
For, basically, underlying price trends depend upon two
elements—labor costs and raw material or natural resource
costs. Unfortunately, the outlook for raw materials availability and costs is not as encouraging.
In the current debate about the long-term availability
of raw material resources, there are a variety of views.
On the pessimistic side, is the simplistic view, often
-10attributed to the Club of Rome, that growth is
exponential while reserves of materials are finite.
It is then a simple arithmetic calculation to show
that exhaustion and complete world collapse is inevitable.
Twentieth century malthusiasm! I've held to the view for
a long time that this is the kind of nonsense one gets
by letting computer system engineers muck around in
economics.
A less pessimistic and, in my judgment, more realistic
view, recognizes that there are various economic feedback
mechanisms that link consumption to scarcity. Such a view
generally relies upon the efficiency of the market
mechanism. It holds that shortages, or even impending
shortages, will generate rising prices, and that rising
prices will act as a danger signal discouraging use of the
scarce resource and stimulating technology to come up with
alternatives.
It is frequently pointed out that the abundance of
minerals in the continental crust of the earth is many
times—often millions of times—greater than known reserves.
Moreover, the law of conservation of mass insures that
metals once extracted from the earth can be used over and
over again.
-11Man has had success, historically, in dealing
with lower quality, less easily accesible resources.
Additional productive land can be created by swamp
drainage, irrigation, forest clearing, etc., and yields
per acre can be increased. Similarly, additional mineral
resources can be discovered by investment in exploration,
and by technological change which allows the mining of
ores not previously usable. In short, technology can add
to supplies of "fixed" resources.
While it must be recognized that the supply of
natural resources is not "fixed", it must also be recognized
that expanding this supply can be costly. There will always
be enough materials and energy to satisfy demand, but at a
price. The difficulty is that the price could be great
enough to impair economic welfare.
Certainly, we're beginning as a nation to appreciate
it in the area of energy. This is probably the best example
of the process, the problem, the difficulties, the time and
the cost of any solution. The post-war economic and social
structure, as it has evolved in this country, has depended
heavily on the ready availability and low cost of convenient
sources of energy. The delights of our standard of living—
suburbia, shopping malls, a plethora of motorized gadgets—are
a function of cheap energy.
-12We are now learning the kinds of adjustments we
will have to make to learn to live in an era of expensive energy. Whether the source of energy in
the future remains oil, or whether we are successful in
switching a significant share of our energy utilization
to coal or some other alternative source is important
for many economic and political reasons. But it is not
critical to the issue of cost, for the capital investment
involved in such a conversion is expensive and has to be
funded.
I have a blind faith that the interaction of economic
necessity and the advance in scientific knowledge will
produce solutions. The questions are when, and at what
cost. Until the answers are clearer, our adjustment has
to put emphasis on conservation—moderating the growth in
demand while we permit the economic and scientific forces
to work.
We are already seeing some progress. High prices and
legislation enacted since 1973 have begun to yield substantial dividends. U.S. energy consumption has declined
relative to real GNP. In 1973, 60.4 thousand BTU were
required per dollar of real GNP. This ratio dropped to
56.8 thousand in 1977, a 6 percent decline. Some of the
causes of the decline are:
-13, More efficient autos: Legislation enacted in
1975 has required that autos become more
efficient. As a result
—Gasoline consumption is at least 5 percent
below levels which might otherwise have
occurred,
—Gasoline consumption should decline absolutely after 1980 or 1981,
More efficient use of energy in manufacturing:
Calculations by Professor Jorgenson at Harvard
indicate that industrial users have cut their
use of energy by 16 percent since 1973, This
is corroborated by
—Fragmentary reports on the improvement in
the chemical and petroleum industry.
—Numerous reports by the Department of Commerce
and DOE that industry has improved efficiency,
, The growth in electricity consumption has been
below trend.
—Historically, electricity consumption increased
at an average annual rate of 7,3 percent, about
3 percent faster than real GNP. However, this
historical trend has broken since 1972.
-14-
I have dwelt on this one increasingly scarce
resource at some length because it serves as a
concentrated example of the problem and the solution.
What is important for the subject of my dissertation
this morning—the economic environment of the 1980's—
is that the solution for problems such as these does
involve higher prices. Thus, the urgency for improving
productivity as an offset to other, unavoidable cost
increases is clear—and we are addressing this issue—not
only in the near-term by our review of government regulations and paper-work requirements which increase costs and
decrease efficiency, but also in the longer-term with our
emphasis on incentives to capital formation.
0O0
Apartment of theTREASURY
5HINGT0N, D.C. 20220
Contact:
TELEPHONE 566-2041
Charles Arnold (566-2041)
Robert W. Dietsch (395-4747)
FOR IMMEDIATE RELEASE
October 27, 1978
Joint Statement of
W. MICHAEL BLUMENTHAL, Secretary of the Treasury
and
JAMES T. McINTYRE, Jr., Director
Office of Management and Budget
ON BUDGET RESULTS FOR FISCAL YEAR 1978 AND
REVISED ESTIMATES FOR 1979
SUMMARY
The Treasury Department is today releasing the
September Monthly Statement of Receipts and Outlays of the
United States Government, which shows the actual
budget
totals for the fiscal year that ended on September 30, 1978.
In
addition, the Office of Management
and Budget is
releasing revised estimates for 1979. The new totals are as
follows:
Deficit.—The 1978 actual deficit was $48.7
billion and the 1979 deficit is now expected to be
$38.9 billion. In comparison to the estimates in
the budget issued last January, the deficits for
the two years combined have decreased
by $35
billion.
Receipts.—Receipts were $402.0 billion in 1978
and are now estimated
to be $452.7 billion in
1979.
Actual receipts
in 1978 were within $1
billion of the January estimate.
The current
estimate for 1979 is $12 billion above the January
estimate.
Outlays.—Federal spending totaled $450.7
billion
in 1978 and is now estimated at $491.6 billion in
1979.
Spending in 1978 was $12-1/2 billion
below
the January estimate and the current estimate for
1979 is $9-1/2 billion below the January budget.
B-IZZH,
2
Table 1.—BUDGET TOTALS 1/
(in billions of dollars)
Receipts
1977 Actual
Outlays
Surplus or
Deficit (-)
357.8
402.8
-45.0
401.3
401.2
402.0
463.1
452.3
450.7
-61.8
-51.1
-48.7
440.5
448.2
452.7
501.0
496.6
491.6
-6 0.5
-48.5
-38 .9
1978 Estimates and actual:
Actual
1979 Estimates:
Cur rent
,
1/ The 1977 data and the January estimates for 1978
and 1979 have been adjusted in two ways: (1) earned income
credit payments in excess of tax liability, previously
reported as income tax refunds, are now treated as outlays;
(2) the administrative expenses and interest receipts of the
Exchange Stabilization Fund, which previously were excluded
from the budget, are now included. Because of the latter
change these 1977 and 1978 figures differ slightly from
those in the Monthly Treasury statement.
1978
Receipts.—Receipts in 1978 were $402.0 billion,
roughly $0.7 billion above both the January and ^id-Session
estimates.
About
half of this increase was due to
congressional action on a variety of tax legislation.
In
relation to January, congressional action resulted in a
small revenue gain — with higher individual and corporation
income taxes partly offset by lower excise taxes.
In
addition, receipts under existing law were slightly above
the January estimate.
Outlays.—Outlays in 1978 were $12.4 billion below the
January
budget.
Only a few agencies —
notably the
Department of Commerce, the Small Business Administration,
and the Community Services Administration — spent more than
anticipated in the January budget. Outlays for virtually
3
all other agencies were below — in many cases substantially
below -- the January budget estimate.
A decision to pay certain retroactive social services
claims in 1979 rather than in 1978 and nonenactment of the
energy rebates reduced outlays by almost $1
billion.
However, in most cases, the reductions reflect overestimates
in the January budget. Table 2 compares actual spending and
the January estimates by agency.
Much of this shortfall in Federal spending was
anticipated in the revised budget estimates issued in March
and July.
Actual spending in 1978 was only $1.7 billion
below the July estimates.
Some agencies, notably the
Department of Defense and the Small Business Administration,
spent more than had been anticipated in the July estimates.
Some agencies, including the Departments of Agriculture and
Health, Education and Welfare (HEW), and the Environmental
Protection Agency (EPA) and the military sales trust fund
fell short of the July levels. Total spending by several
departments,
including
Labor,
State,
Treasury,
Transportation, and NASA, was virtually identical to their
July estimate.
1979
Economic assumptions.—The current estimates for 1979
are based on the assumption that real GNP will increase
about 3-3/4% over the four quarters of calendar 1978 and 3
to 3-1/2% during 1979.
With these rates of economic
expansion, the unemployment rate is projected to remain in
the neighborhood of 6%. During the first three quarters of
this year, the annual rate of inflation, as measured by the
GNP deflator, was 8.4%. It is expected to measure about 8%
for the four quarters of 1978.
Next year, the rate of
inflation is expected to decline to a range of 5 to 6-1/2%
as a result of the new anti-inflation program and a more
moderate rise of food prices.
Receipts.—The current estimate of 1979 receipts —
$452.7 billion — is $12.2 billion above the January budget.
This increase is due to smaller income tax cuts, partly
offset by the revenue loss associated with the Energy ^ct.
The current estimate of receipts is also $4.5 billion above
the Mid-Session Review estimates issued in July. Changes in
legislation
(net) add $1.2 billion and reestimates and
revised economic assumptions add $3.3 billion.
4
The current estimates include the impact of two major
pieces of legislation that the Congress passed earlier this
month:
The Revenue Act of 1978, if signed by the
President, as assumed here, would reduce calendar
year 1979 tax liabilities by $21 billion.
In
fiscal year 1979, the Act is estimated to reduce
receipts by $11.5 billion.
However, the bill
increases 1979 receipts in relation to the January
budget ($13.5 billion) and the Mid-Session Review
estimates ($2.8 billion).
The Energy Tax Act of 1978, which will reduce
receipts by $1.0 billion in 1979. The January
budget proposals would have increased receipts by
$1.1 billion and the Mid-Session estimates assumed
a revenue gain of $0.1 billion.
Outlays.—The current estimate of 1979 outlays is
$491.6 billion, $9.4 billion below the January budget.
The
July Mid-Session Review reduced the January estimates by $41/2 billion. Relative to January, the Mid-Session estimates
included an increase of $2 billion for various policy
changes, such as the farm bill, and a decrease of $6-1/2
billion for reestimates in a variety of areas. The current
estimates decrease outlays by another $5 billion.
The major changes since July reflect the following
policy and estimating differences:
Rejection of the energy rebates reduces the July
totals by $1.4 billion.
The current estimates
include no outlays for such rebates.
Nonenactment of parts of the urban initiative and
countercyclical or supplementary fiscal assistance
decreases outlays by $1.4 billion. The current
estimates include no outlays for supplementary or
countercyclical fiscal assistance and $0.2 billion
in outlays for other urban initiatives.
Higher interest rates and other changes in
economic assumptions increase outlays by $3.5
billion.
Much of this increase is for
net
interest, which is currently estimated at $42.2
billion, $2.3 billion above the July estimate.
The
remainder
reflects higher cost-of-living
5
increases for indexed benefit payments and
outlays for unemployment benefits.
higher
Other changes, largely reestimates, decrease
outlays by about $6-1/2 billion.
The current
estimates reflect further revisions in many areas,
including energy, EPA sewage construction grants,
military trust fund sales, and programs of HEW.
The current estimates also include congressional
increases for HEW and veterans programs, partly
offset by by decreases in funds for employment and
training.
Relation to the Budget Resolution.—The current
Administration estimate of the deficit is virtually the same
as the $38.8 billion deficit in the Second Budget Resolution
for 1979.
However the Administration estimates for both
receipts and outlays are $4 billion above the totals in the
Resolution.
The Budget Resolution for 1979 sets a floor of
$448.7 billion on receipts, and a ceiling of $487.5 billion
on outlays applicable to actions of the Congress.
The economic assumptions incorporated in the current
Administration
estimates
and
technical
estimating
differences account for much of the difference in both
receipts and outlays.
In addition, the Administration
receipts estimates reflect recent congressional action on a
variety of tax bills, which, in total, reduced receipts
somewhat less than anticipated in the resolution. While
there are many estimating and some policy differences
between the current Administration and resolution outlay
estimates, the largest single difference is the estimate for
net interest. The current Administration estimate for net
interest is $3.4 billion above the amount assumed in the
resolution.
Table 2.
1978 BUDGET RECEIPTS BY SOURCE AMD OUTLAYS BY
AGENCY — CHANGE FROM JANUARY 1/
(fiscal years; in millions of dollars)
1977
Actual
January
Budget
estimate
1978
Actual
Change from
January
estimate
157,626
54,892
179,775
58,949
180,988
59,952
1,213
1,003
92,210
11,312
103,986
14,420
103,893
13,850
-93
-571
5,716
5,668
-48
Receipts by Source
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
Unemployment insurance
Contributions for other insurance and
ret ir erne nt
Subtotal, Social insurance
taxes and contributions
Excise taxes....1.
Estate and gift taxes
Customs
Miscellaneous
Total, Receipts
Outlays by Major Agency
Legislative branch and the Judiciary
Executive Office of the President
Funds appropriated to the President:
Disaster relief
Military assistance programs
Foreign economic assistance
Other
Subtotal, Funds appropriated to
the President
5,167
:
108,688
17,548
7,327
5,150
6,531
124,122
20,150
5,618
5,792
6,928. ,
123,410
18,376
5,285
6,573
7,413
-711
-1,774
-333
781
485
357,762
401,334
401,997
663
1,368
73
1 ,515
78
1 ,484
75
-32
-3
294
-665
2,730
129
375
257
3 ,515
. 769
470
112
3 ,469
424
95
-145
-46
-345
2,487
4,916
4,475
-440
- 2 Table 2. 1978 Budget Receipts by Source and Outlays by
Agency — Change from January
(Continued)
(fiscal years; in millions of dollars)
1977
Actual
Agriculture:
Commodity Credit Corporation, foreign
assistance, and special export....
Farmers Home Administration
Food and Nutrition Service
Other
Subtotal, Agriculture
Commerce:
Local public works program
Other
Subtotal, Commerce
Defense-Mili tary:
Procurement
Other
Subtotal, Defense-Military...
Defense-Civi1
Energy
Health, Education and Welfare:
Social security (OASDI net)
Medicare and medicaid
Education Division
Other
Subtotal, HEW
January
Budget
estimate
1978
Actual
Change from
January
estimate
4,670
963
8,485
2,619
8,451
1,262
8,942
3,971
6,465
1,638
8,653
3,613
-1,986
376
-288
-358
16,738
22,625
20,368
-2,257
585
2,020
2,304
2,221
3,057
2,195
754
-26
2,606
4,524
5,252
728
18 ,178
77,472
21,552
83,748
19,976
83,148
-1,575
-600
95,650
2,280
5,217
105,300
2,536
8,152
103,124
2,553
6,430
-2,176
17
-1,722
83,861
31,425
•7,783
24,387
93,048
36,417
8 ,945
26,185
92,242
35,898
8,764
25,905
-806
-519
-181
-280
147,455
164,595
162,809
-1,786
- 3 Table 2. 1978 Budget Receipts by Soujce and Outlays by
Agency —''Change from January
(Continued)
(fiscal years; in millions of dollars)
1977
Actual
Housing and Urban Development:
Urban Renewal programs
Other
Subtotal, HUD
Interior
Justice
Labor:
Unemployment trust fund
Other
Subtotal, Labor
State
Transportation:
Federal Highway Administration....
Other
Subtotal, Transportation..
Treasury:
Interest on the public debt
Antirecession financial assistance
fund
Proposed legislation for social
services and fuel efficiency...
Other
Subtotal, Treasury
January
Budget
estimate
Change from
January
estimate
1978
Actual
850
4,987
600
7,811
376
7,385
-224
-425
5,838
3,194
2,350
8,411
3,904
2,527
7,761
3,678
2,397
-650
-227
-129
14,103
8,271
11,800
11,942
11,169
11,733
-631
-209
22,374
1,076
23,742
1,247
22,902
1,252
-840
5
6,145
6,369
6,915
6 ,076
7,376
-839
-105
12,514
14,395
13,452
-943
41,900
48 ,600
48,695
95
1,699
1,573
1,329
-243
_
-860
6,871
860
__6,5 24
6,183
_ ...JI341
50,470
57,557
56,208
-1,349
_ _. —
- 4 Table 2. 1978 Budget Receipts by Source and Outlays by
Agency — Change from January
(Continued)
(fiscal years; in millions of dollars)
1977
Actual
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Civil Service Commission
Community Service Administration
Export-Import Bank
Federal Deposit Insurance Corporation.
Federal Home Loan Bank Board
Postal Service payment
Railroad Retirement Board
Small Business Administration
,
Other
4,365
January
Budget
estimate
1978
Actual
Change from
January
estimate
5,063
28 9
4,071
-31
3,944
18,019
9,620
3,982
18,898
10,949
3,980
18,962
10,963
639
340
666
196
768
-852
-1,913
2,267
3,859
5,217
-379
-360
1,787
4,160
1,742
5,706
-106
-557
-403
1,778
4,075
2,766
5,805
-4,548
-8,131
-5,024
-8,595
-4,863
-8,651
161
-55
-2,374
-2,000
-2,259
-259
Total, Outlays
402,811
463,103
450,656
-12,447
Budget deficit (-)
-45,049
-61,769
-48,659
13,110
Undistributed offsetting receipts:
Federal employer contributions to
retirement funds
,
Interest received by trust funds.....
Rents and royalties on the Outer Continental Shelf
700
117
-991
-171
-2
64
14
102
-302
-188
-43
-9
-85
1,024
99
- 5 Table 2. 1978 Budget Receipts by Source and Outlays by
Agency -- Change from January
(Continued)
1/ The 1977 data and the January estimates for 1978 and 1979 have been adjusted in two
ways:
(1) earned income credit payments in excess of tax liability, previously reported
as income tax refunds, are now treated as outlays; (2) the administrative expenses and
interest receipts of the Exchange Stabilization Fund, which previously were excluded from
the budget, are now included. Because of the latter change these 1977 and 1973 figures
differ slightly from those in the Monthly Treasury Statement.
NOTE: Detail may not add to totals due to rounding.
Table 3.—BUDGET RECEIPTS BY MAJOR SOURCE, 1977-1979 1/
(in billions of dollars)
1977
Actual
Individual income taxes
Corporation income taxes
Social insurance taxes and
contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total budget receipts.. 357.8
January
Estimate
1978
July
Estimate
Actual
January
Estimate
1979
July
Estimate
Current
Estimate
157.6
54.9
179.8
58.9
182.0
59.0
181.0
60.0
191.0
62.5
200.1
60.8
202.7
68.0
108.7
108.7
17.5
7.3
5.2
6.5
124.1
20.2
5.6
5.8
6.9
123.6
18.2
5.2
6.1
7.1
123.4
18.4
5.3
6.6
7.4
141.9
25.5
6.1
6.4
7.2
142.3
24.6
5.7
6.7
8.0
142.3
18.2
5.7
7.2
8.6
401.3
401.2
402.0
440.5
448.2
452.7
1/ The 1977 data and the January estimates for 1978 and 1979 have been adjusted to reflect an
accounting change relating to earned income credit payments in excess of tax liability.
Table 4.—BUDGET OUTLAYS BY AGENCY, 1977-1979 1/
(in billions of dollars)
•1977
Actual
Legislative branch
The Judiciary
Executive Office of the President...
Funds appropriated to the President
Agriculture
Commerce
Defense-Military 2/
Defense-Civi1
Energy
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Environmental Protection Agency
General Services Administration
National Aeronautics and Space
Administration
Veterans Administration
Other independent agencies
Allowances 3/
Undistributed offsetting receipts...
Total budget outlays
January
Est.
1978
July
Est._
Actual
January
Est.
1979
July
Est.
Current
Es_t.___
1.0
0.4
0.1
2.5
1.1
0.5
0.1
4.9
1.0
0.5
0.1
5.2
1.0
0.4
0.1
4.5
1.2
0.5
0.1
5.1
1.2
0.5
0.1
5.4
1.2
0.5
0.1
4.3
16.7
22.6
21.6
20.4
17.7
18.0
18.5
2.6
4.5
5.2
5.3
4.4
4.6
4.3
95.7
105.3
102.0
103.1
115.2
112.0
112.0
2.3
5.2
2.5
8.2
2.5
6.6
2.6
6.4
2.6
9.1
147.5
164.6
163.3
5.8
3.2
2.3
8.4
3.9
2.5
22.4
2.5
2.6
162.8
10.1
181.3
10.2
181.3
181.0
8.0
3.9
2.5
7.8
3.7
2.4
9.5
4.0
2.5
9.4
4.0
2.7
9.1
4.0
2.5
23.7
22.9
22.9
25.1
24.7
24.2
1.1
1.2
1.3
1.3
1.4
1.4
1.4
12.5
50.5
14.4
57.6
13.5
56.3
13.5
56.2
15.8
63.4
15.4
63.4
15.1
64.0
4.4
5.1
0.3
4.5
0.1
4.1
0.1
5.7
0.3
5.0
0.2
4.2
0.2
4.3
20.4
25.7
_*
3.9
4.0
4.0
4.0
4.3
4.3
18.0
19.9
18.9
24.5
18.8
24.6
19.0
25.1
19.2
24.9
19.8
26.0
2.8
1.1
0.9
-15.1
-15.6
-16.1
-15.8
-16.0
-16.6
-18.2
402.8
463.1
452.3
450.7
501.0
496.6
491.6
1/ See footnote 1, Table 1.
2/ Includes allowances for civilian and military pay raises for the Department of Defense.
3/ Includes allowances for civilian agency pay raises and contingencies.
$50 million or less.
Table 5.—BUDGET OUTLAYS BY FUNCTION, 1977-1979 1/
(in billions of dollars)
1977
Act_ual
January
Est.
_197_8_
July
E_st.
Actual"
January
Est._
107.6
6.6
104.2
6.5
105.2
5.9
117.8
7.6
14.6
7.4
114 5
6 3
4.8
4.8
6.3
11.5
8.7
3.4
15.4
10.5
4.7
5
9
12
5
3
17
8
5.1
10.4
11.8
5.6
3
17
9
1
5
7.8
12.1
9
3
15
9
27.5
44.3
148.6
18.9
4.0
4.1
9.9
43.8
26.6
43.8
146.9
13.8
4.0
3.8
9.6
43.8
26.6
43.7
146.2
19.0
3.8
3.8
9.6
43.9
30
49
160
19
4
4
9
49.0
2.8
31.4
49.8
159.6
19.8
4.4
4.2
9.5
49.0
1.1
30.4
49.5
159.6
20
4
4
8
52
0.9
-5.0
-8.6
-5.0
-8.6
-4.9
-8.7
-5.2
-9.1
-5.1
-9.2
-5.3
-9.9
-2.3
-3.0
496.6
491.6
_1_97_9_
July
_Est^_
Current
Est.
&
National defense 3/ 97.5
International affairs
General science, space and
technology
Energy
Natural resources and environment....
Agriculture
Commerce and housing credit
Transportation
Community and regional development...
Education, training, employment and
social services
Health
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance....
Interest
Allowances 4/
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds...
Rents and royalties on the Outer
Continental Shelf
Total budget outlays 402.8
4.8
4.7
4.2
10.0
5.5
-*
14.6
6.3
21.0
38.8
137.9
18.0
3.6
3.4
9.5
38 .1
-4.5
-8.1
6.1
10.9
7.2
3.4
15.4
10.9
-2.0
-2.4
-2.3
-1.8
463.1
452.3
450.7
501.0
8 6
10.9
5.8
2.8
17.0
8.9
-2.4
1/ See footnote 1, Table 1.
2/ Preliminary estimates by OMB, subject to later correction. These estimates differ in some
respects from those shown in Table VII of the Monthly Treasury Statement. The final figures
showing the distribution by function will be published in the 1980 Budget.
3/ Includes allowances for civilian and military pay raises for the Department of Defense.
4/ Includes allowances for civilian agency pay raises and contingencies.
"* $50 million or less.
Bm\9&9m9mW9mjN*^*Vy9^m
•MllJ1WKIW**«M^—WWII!•.J^UtM^y^^^frflegrf 1T -- WrMlllHVliTMlTI
^•Jcdjj^
FOR RELEASE ON DELIVERY
October 30, 1978 — 9:30 a.m. EDST
REMARKS OF THE HONORABLE RICHARD J. DAVIS
ASSISTANT SECRETARY OF THE TREASURY
BEFORE THE
NEW CONCEPTS SYMPOSIUM AND WORKSHOP ON THE
DETECTION AND IDENTIFICATION OF EXPLOSIVES
October 30, 31, AND November 1, 1978
RESTON, VIRGINIA
I want to add my welcome to that of Mr. Peterson
and to say that I appreciate being asked to address
this symposium and workshop on new concepts in the
detection and identification of explosives. As an
attorney and former Federal prosecutor, my primary
experience has involved dealing with how to investigate and prosecute crimes after they have been
committed. But my responsibilities for the protective
as well as the investigative enforcement activities
of the Treasury Department, demand a perspective which
gives at least equal weight to the ability of government to prevent criminal activities, especially those
employing violence.
Consequently, the Treasury Department has been
following closely the developments, through ATF, of
capabilities for the introduction of both identification and detection taggants into explosives. What
we have found has been enlightening and offers to all
law enforcement and security authorities an opportunity
to use science and technology not only to solve more
bombing crimes, but also to prevent their occurrence.
Bombing is a particularly vicious and indiscriminate crime: it is a clearly deliberate act of violence. One does not, in a moment of intense anger,
grab his bomb from a closet and blow-up his spouse or
B-1233
- 2 neighbor. The bomber actively has to acquire the
knowledge of how to make a bomb; he has to fabricate
the explosive device; and he has to plant it. This
is a calculated, planned and indisputably intentional
process. At the same time the consequences of the
bomber's .action are severe: death, injury and the
destruction of property. For these reasons we believe
that we should do all that we legitimately can to meet
this problem. The explosives tagging program is one
Of those things. It is a program that can only add
to the public safety.
Because of the rapid achievements in developing
practical tagging capabilities, the Treasury Department and ATF devoted considerable effort during the
95th Congress to the passage of legislation which
would provide us with the necessary authority to require that all non-military explosives manufactured
or imported in the United States carry taggants.
While that legislation did not reach a vote in the
waning days of the session, its importance has not
diminished and the Treasury Department will continue
to press for its passage during the 96th Congress.
We will continue to urge the adoption of a legislative requirement for explosives tagging because
it will provide us with critical tools in the battle
against terrorists and others who use explosives
illegally. Tagging will help us apprehend the bomber
and it will help save lives and preserve property
by preventing explosions from taking place.
To achieve passage in Congress and to realize
the potential benefits to the public safety which
science and technology offer us, we must not only
laud the achievements of science but we must also
concentrate our energies on assuring — to ourselves,
Congress, the public, and those few interests that
oppose tagging — that this is a program which has
proved and will continue to prove itself under the
most rigorous and objective standards of research,
development and testing. What we have developed
must not only work, it must work exceptionally well.
- 3 And it must be safe. No one wants a program which
would insert into explosive materials something which
would make them less stable, less efficient or less
effective. Fortunately, the technology developed is
meeting this challenge. It is all our job, however,
to.be certain and to demonstrate that we have accomplished these objectives, so that even the most
skeptical will be satisfied.
One measure of precaution that we recommended
was incorporated in some of the legislative proposals in the last Congress. That standard of
caution remains. We would explicitly require that
the insertion of taggants in any type of explosive
be deferred until we found that the type of tagged
explosives had all-around safety, that the taggants
would not affect the performance of an explosive or
of a weapon using an explosive powder, that they
would not foul or damage a weapon using them, and
that they would be available in sufficient quantities to avoid any interruption in the ordinary
course of producing explosives.
We also do not seek to tag those types of explosives seldom found in any bombings. We have no
desire to impose burdens on commercial enterprises
that do not have a clear and overriding public
benefit.
For example, in testimony before Congress in
its recently concluded session we stated that we
were not seeking to require the tagging of those
smokeless powders inserted in commercially manufactured, fixed ammunition. Only powders for sale in
bulk quantities should be tagged. We took this
position because there is no measurable public benefit to achieve by tagging individual rounds of
ammunition. Nevertheless, because tagged smokeless powder sold in bulk form will be used by
shooters to hand-load their own ammunition, our
stringent safety and compatibility requirements
will still demand that the tagged powder remain completely safe for use in individual bullets. We are
thus insuring the public safety while avoiding an
undue burden.
- 4 From Treasury's perspective, the other vital
issue for tagging has been whether the crimes solved
and the deterrence established are worth the effort
and costs of requiring the taggants. In order to
assess this as objectively as possible, Management
Science Associates was asked to study this question.
While acknowledging the difficulty in assessing the
impact of any program before it begins, the study
concluded, and we believe, that the value and cost
effectiveness of identification tagging is clear.
With detection taggants added to explosive
materials and with the use of detection devices, we
can go beyond solving bombing crimes only after the
destruction has happened and begin, through predetonation discovery, to prevent bombings from occurring. The MSA study suggested that the cost-benefit
of this form of tagging is less certain than that
for identification tagging. Its analysis makes
clear, however, that if one considers just the high
risk, potential targets — airports, planes, public
buildings — then the benefits are indisputable.
In addition, when one considers what detection tagging can do — save life and limb — the essentiality of going forward with this program becomes
clearer.
The possible price increases in explosives as
a result of tagging for identification were estimated
at merely one-and-quarter cents per pound of explosive; and while research on detection tagging is
still continuing, we believe it may well be less.
Ultimately, when identification and detection taggants are combined into one micro-unit, there should
be more cost reduction.
By reminding you of the importance of the cost
factors involved in explosives tagging I am merely
restating what must be clearly recognized by the
researchers, the developers and the eventual users
of the tagging systems. They must be cost effective: from conception, through development, to detection at an airport or to field identification
of a residue.
- 5 This goal has been achieved so far, and I importune you to continue to guide your efforts to a
system which is completely safe and affordable.
Without achieving those vital conditions precedent
and demonstrating that they are established, the
very significant contribution that you are making
to law enforcement and the public safety may not
be realized.
Ladies and gentlemen, we believe the benefits
of tagging are clear. It will not, of course, provide a panacea, instantly solving the problem of explosives crime. Identification tagging will help
solve some bombings, not all. Detection tagging does
not mean that all bombs will immediately be detected.
Together, however, they will meaningfully advance our
ability to deal with the bombing problem, and deter
some from using this deadly instrument. Those would
be major life saving advances.
And if in your work you.can improve upon what
is now developed, or if you should develop a more
beneficial alternative to tagging, — one that is
safer, cheaper, and ready to be used — then that
will be an even greater public good.
In your discussions during these next three days
and in your continued work, I wish you every success.
0O0
FACE THE NATION
as broadcast
over the
CBS Television Network
and the
CBS Radio Network
Sunday, October 29, 1978 -
11:30 AM - 12:00 Noon,-*ST
Origination: Washington, D. C.
GUEST: MICHAEL•BLUMENTHAL
Secretary of the Treasury
r
REPORTERS:
George Herman, CBS News
Bill Neikirk, The Chicago Tribune
Ray Brady, C3S News
Producer:
Mary 0. Yates
Associate Producer:
Joan Barone
1
HERMAN:
Secretary Blumenthal, you M i d that the early drop of
the dollar was the result of insufficient study and appreciation of
the President's anti-inflation program.
At the end of this week, the
dollar is still dropping, the stock market was still dropping, the
gold market and the commodity market all looked bad.
Why is the ad-
ministration's optimism being so badly outvoted so long, so many days
after its announcement?
SEC. BLUMENTHAL:
slight exaggeration.
Well, Mr. Herman, I think so many days is a
We've had three days of bad stock market and bad
currency markets, and no one can really explain why that is. The
President's program is a program that is intended to impact the economy
over the longer run; it deals with the fundamentals; it is a tough
program, and I think it will do that, and I have no doubt that the
markets will reflect that in coming weeks and months.
ANNOUNCER:
From CBS News, Washington, a spontaneous and un-
rehearsed news interview on FACE THE NATION, with the Secretary of
the Treasury, Michael Blumenthal.
Secretary Blumenthal will be ques-
tioned by CBS News Business Correspondent Ray Brady; by Bill Neikirk,
Economic Correspondent for The Chicago Tribune; and by CBS News Correspondent George Herman.
HERMAN:
Secretary Blumenthal, I didn't want to exaggerate the
three days into too long a period, but you did say last Wednesday that
you thought the first drop in the dollar, and the first drop in the
stock market, was the result of shallow and insufficient study of the
President's proposals.
By Friday, they'd certainly had something more
than shallow and insufficient study, and yet they were still—those
gold prices were still going up; dollar price,^dollar value, was still
2
going down. Are you still arguing that it's because they don't understand what's in the President's program?
SEC. BLUMENTHAL:
I am, essentially.
I think these programs take
a while to analyze and to understand; moreover, exchange markets certainly are heavily influenced, as is the stock market, by kind of psychological factors, sometimes the herd instinct, even. •£ think the
key thing is to recognize that the fundamental policies of the administration that are in place are all moving in the right direction.
The
current account deficit is dropping substantially for the United
States; our trade balance is improving; the President's energy program
has been passed; a tough, new anti-inflation program has been put into
place. All of these things together, with a declining budget deficit,
clearly mean that the United States, with continuing growth of three
or three and a half percent of the GNP, is moving in the right direction, and I think in coming weeks and months, the markets will reflect
that.
NEIKIRK:
Mr. Secretary, depending on how you count it, this is
the second, third or fourth anti-inflation program announced by the
President.
Will this—will these guidelines be about as temporary as
those previous programs?
Are we looking for a long haul, say several
years of voluntary guidelines?
SEC. BLUMENTHAL:
I think this program is going to have to remair
in effect for as long as the inflationary pressures in the economy
continue.
This is not a six months or a one-year program.
As the
President said, inflation has been building in this country for a
decade*
To get it out of our system, to get that curve turning down,
is going to take quite a while; and I would expect that this kind of
3
program—the budget restraint, *the kinds of domestic spending limitations, and the guidelines—will have to remain in effect until it is
clear that we have turned the corner, and that vill be some time.
BRADY:
Guidelines and controls have never really worked that
well, Mr. Secretary.
What do you think is in this program that will
make this set of guidelines work better than previous ones?
SEC. BLUMENTHAL:
In the first place, I think it's very important
to recognize the distinction between controls and the kind of integrate
concerted program that the President has announced.
the American economy into a strait jacket.
T7e are not put tine
We are not impeding the free
market mechanism in which our economy operates.
It's an integrated
program, and that's what's different about it.
The President has an-
nounced very tough approach to fiscal policy, real restraints on spend
ing, reductions in federal employment, a concerted effort to coordinat
this so that monetary policy is responsible and fits in with this, and
a voluntary effort on wages and prices, with his ability to use the re
sources at his disposal now to encourage labor and private business tc
collaborate with it.
I really think that that integrated approach is
what makes it different, and that that is what will have an impact ove
the longer run.
BRADY:
How far are you prepared to go on monetary policy, thoug}
The way interest rates are shooting up through the ceiling, you could
be bringing on a major business slowdown.
SEC. BLUMENTHAL:
Well, in the first place, monetary policy is t:
responsibility of the Federal Reserve, and they make their own decisions.
In the second place, it is our estimate that at the present
time, with the present level of interest rates, and the kind of fisca
4
restraint -that the President has announced, ve will -continue -to grow in
this economy at around three to three and a half percent -in real terms.
That means that unemployment will not rise, certainly -not *o -any significant degree, and clearly the Federal Reserve is ^oing to,have to
watch developments in the economy—demand and supply for credit, and
so forth.
HERMAN:
Mr. Secretary, last Wednesday at your news conference, in
your opening statement you referred twice to coordinated policy with
the Federal Reserve Board.
In a speech that night, Chairman Miller of
the Federal Reserve Board echoed the idea of coordinated policy.
Yet
when I asked you at the news conference what kind of understandings or
agreements you had with the Fed, you said there was nothing specific.
Can you give us some kind of ceiling for how this, quote, responsibly
coordinated policy is, in fact, coordinated?
SEC. BLUMENTHAL:
It is coordinated, Mr. Herman, by means of con-
tinuous contact that—
HERMAN:
I understand that, but is there some kind of a game plan
or idea of what you're all doing together?
SEC. BLUMENTHAL:
Well, the game plan, of course, is based on a
clear discussion between us as to what we're trying to accomplish, that
we're trying to get the rate of inflation down substantially next year
that the President will have a deficit at 30 billion or below in Fisca
Year 19^0^that there will be cuts in government employment, federal
emoloyment, and that^ we're trying to keep the economy growing at about
three percent-pr so a year.
And that kind of approach, understood by
the Federal Reserve, then allows them to plan their monetary policy ii
the light of their knowledge that this is what the President intends
5
to do.
But—
HERTiAN: So that they can slow monetary growth because of the lack
of demand from the federal deficit without pushing up interest ratesis that the general idea?
SEC. BLUMENTHAL:
They—they can slow it down, speed it up, de-
pending on the circumstances in the market.
I really can't go beyond
that, because that's their responsibility.
HERMAN:
ordinated.
You see,, my problem a little bit is with the word coIt just doesn't sound really as though they're doing any
coordinating with you.
SEC. BLUMENTHAL:
What we're trying to say is that we're not work-
ing at cross-purposes with each other.
NEIKIRK:
May I ask a follow-up question on that, Mr. Secretary?
The President himself, just a few weeks ago, was criticizing the Federal Reserve for high interest rates. Now you've backed off. *Jhat
accounted for this sudden change in policy?
SEC. BLUMENTHAL:
I don't really believe that the President was
criticizing the Federal Reserve. What the President was saying—and,
of course, we all feel that way—that as the anti-inflation policy
works, as inflation abates, we would all, of course, like to see lower
interest rates, but that can only happen when indeed the rate of inflation is coming down.
It's not that anyone is in favor of high in-
terest rates per se; it is understandable that in a period of inflationary pressures, interest rates are going to be high.
I think that'
the point he was trying to make.
NEIKIRK:
The point you're also making is, you said earlier that
these controls will have to be—guidelines—will have to be in effect
6
for a long time, isn't 4t-also true that high Interest rates are
going to be with us for several years now?
SEC. BLUMENTHAL:
I-Xhink that really depends -on conditions in
the ^credit markets, -on the demand and supply t>f credit^ron ^the rate of
business activity, and on the speed with which inflation is coming
down.
If, indeed, we are successful in getting wage increases moderated
next year—and price increases moderated—if we can grow at the moderate
rate of around three percent or so,a year, there is no inevitability
about very high interest rates for an indefinite period of time.
BRADY:
But you're saying, in effect, that you're going to fine
tune the economy, really, with this three and a half percent growth,
and history has kind of shown you can't fine tune an economy this
complex.
SEC. BLUMENTHAL:
I don't know, Mr. Brady, what you mean by fine
tuning—
BRADY:
Three and a half percent.
SEC. BLUMENTHAL:
Well, we say three to three and a half percent.
Nobody can be sure that there isn't going to be a particular quarter
when the economy may grow at a lesser rate or at a faster rate.
a general target zone that we are shooting for.
tuning.
It is
That's not fine
Clearly, you have to have some vision of the future, some
government planning, some knowledge of where you'd like the economy tc
go, and that's what this kind of—set of statistics really means.
HERMAN:
Supposing it heads for two percent, or one and a half
percent—then what happens to your plan?
negative growth?
Supposing it heads for
Supposing it shrinks?
SEC. BLUMENTHAL:
Well, certainly, if it—we have negative grov/t1
7
and we have that for two quarters, we have what the economists define
as a recession, lie see nothing in the statistics for as far ahead as
we can see—that is, for this year and for 1979—that indicates that
we are headed in that direction.
There's no unusual inventory accumu-
lation, no distortions in the economy that—sales are holding up,
housing sales, automobile sales—nothing in the works that indicates
that.
HERMAN:
Humor me with my hypothetical question.
If it does go to
two percent, or if it goes to zero or negative, what happens to your
anti-inflation program?
SEC. BLUMENTHAL:
Well, if it goes to negative growth, presumably
there'd be a lot of easing of the pressures in the economy, and inflation would substantially abate.
I think we will have to, as we always
do, examine the circumstances in the light of that situation.
BRADY:
On the guidelines, Mr. Secretary, suppose you have a situ-
ation like the railroads, who're asking for higher rates, and clearly
if they don't get those higher rates they could go into bankruptcy,
even more of them.
How do you handle a situation like this?
SEC. BLUMENTHAL:
I think one of the great advantages of the kind
of standards program the President has decided upon is that it provides
<flexibility.
It's not a straitjacket.
It does indicate targets of re-
duction of at least a half a percent a year in prices; it provides certain other measures, namely, the—a test of profit margins. It takes
into account what happens in an industry or a firm that during the base
period actually has had no profits at all; it has some lower and upper
limits.
Obviously, we would look at each individual case. That's Mr.
Kahn's job in assessing that and in seeing whatsis appropriate to that
8
HERMAN:
Are you contemplating any change in Social Security taxes
or benefits, in order to help the inflationary push?
SEC. BLUMENTHAL:
As the President indicated in his speech to the
nation last week, he will be sending a set of legislative proposals
to the Congress next year, and we have not
yet
recommended to him
what these might be. And these legislative proposals will all be
directed
with
—
toward the problem of inflation.
I can't tell
*you what they will contain. Clearly, we need to look at the Social
Security situation, and at those taxes, in—that whole problem in
their totality, and it's possible that there will be something in
that area, but that's not certain at this time.
NEIKIRK:
Are you looking at the payroll tax, specifically, in
connection with the Social Security—whether that can be reduced, and
have some sort of alternative form of financing the system?
SEC. BLU'lENTHAL:
be proposed.
I can't tell you that that is, indeed, what will
What I am saying is, that that is one of the areas that,
I'm sure will be looked at, as we survey the situation.
Because clearly, increasing payroll taxes do add some inflationary
pressures.
I should also add that they increase the benefits, so it
isn't all lost to the individual paying them.
Because by raising the
base on which they are assessed, they also provide more social security payments to people, when they retire.
HERMAN:
Let me —
ness, let me try a few
since I'm in the hypothetical question busiothers on you.
The President's program of
sanctions to obtain agreement to these, quote, voluntary, unquote,
guidelines, includes government purchasing.
Mr. Winpisinger, of the
International Machinists and Aerospace Workers,-has indicated that he
9
may not go along.
If he wins, for example, a twelve or thirteen per-
cent increase for his workers, and American aerospace manufacturers
have to increase their prices, is it conceivable that the United
States could possibly stop buying war planes from American manufacturers? That's just not conceivable, is it?
SEC. BLUMENTHAL:
The U.S. government is a very large purchaser
of a great many products.
Some of them are products that are needed
for the national defense; some of them come from a single supplier.
Others are of a different kind.
They come from a range of suppliers.
Clearly, there are circumstances in which that particular measure
would not make sense. But let me say, Mr. Herman, I really don't believe that the—that American labor leaders, and the average union
member, the average worker, is not going to cooperate,
for the
simple reason that it's—it is really in the interest of everybody.
The polls show that everyone—union members included—consider
inflation the number one problem.
If there can be assurance that
everyone will cooperate—it's like that analogy the President made
about the football stadium—if we all sit down, we'll all see better.
If we all cooperate, we'll all have a lower rate of inflation.
I
really think that with this wage insurance thing, that we're contemplating, that will be proposed to the Congress, there's every incentive of—for everyone, including the Machinists, to cooperate.
BRADY:^ What about those estimates, fir. Secretary, that if
that wage insurance could throw the budget even more into deficit
by, I think it's $9 billion, if we have one percent more inflation;
eighteen billion dollars, if we have two percent.
istration handle those?
How can the admin-
10
SEC. BLUMENTHAL:
at this point.
These estimates make no sense, at all,
In the first place, we have not yet fully elaborated
what that scheme would be like.
That will be proposed in January—
we're still working on it.
You may have noted that it has been said that there will have
to be appropriate limits, with regard to that.
Third it is also clear that if everyone collaborates, then by
definition, we will reach our targets, and there will be no costs
attached to it.
.If there really is a very substantial rate of inflation, and a
lot of workers—or all workers have, in fact, signed up for the 7%
guideline, that means it has to be some extraordinary rate of inflation in the country, and unfortunately, in that situation, tax
receipts will also be going up, because it pushes people into higher
tax brackets.
So, there are all kinds of safeguards in this, and
we will have to await an elaboration of the detailed formula, and I
think you will see that the risk is not very great.
BRADY:
In the latest figures, Mr. Secretary, the thrust of in-
flation now is coming from housing.
Mr. Carter mentioned it the
other night, in his program, that you had to do something about this.
But isn't it going to be very difficult?
I mean,you're sort of
putting yourself in the position of telling a person what he can
charge 'for his house, if he sells it.
SEC. BLUMENTHAL:" No, I don't—there is nothing in the standards
that would put a limitation on—on what a person selling a house can
charge for that.
What we are saying, that there has to be in all
industries the kind of price restraint that the President has
11
talked about—and that applies to housing, just like to every other
sector. Actually, housing has held up very well—it's over two million housing starts a year—which is quite remarkable, given, the rate
of interest.
BRADY:
I was talking about the cost of the housing, now.
SEC. BLUMENTHAL:
Well, the cost of the housing, again, is
a
function of labor going up, of various kinds of materials going up,
and it's a product like any other.
NEIKIRK:
Mr. Secretary, the Teamsters—a very important contract
next year. What kind of club in the closet do you have for the Teamsters? Are you going to hold up trucking de-regulation for that industry as a —
SEC. BLUMENTHAL: Mr. Neikirk, I am not in a position to lay out
for each individual industry, or each individual union, a series of
clubs that is in the President's closet, that he will pull out in
order to use
in that instance.
Moreover, that is not the way in which the program is going to
work.
NEIKIRK:
That's the way I understood it, when he announced it the
other—
SEC. BLUMENTHAL:
and we are quite sure
The program is based on voluntary compliance,
that
labor,
just
want to collaborate with this program.
like private industry,
If there are individual in-
stances where prices rise faster, that must mean that there are pressures that need to be relieved—and there are a variety of tools, I
can't tell you in each individual instance what they will be, that the
President will use, and they include everything from easing import re-
12
strictions to taking a look
at
subsidies that are available to
that industry, to all kinds of other things that are available.
NEIKIRK:
Well, let me put it like this—has it occurred to any-
one in the administration that holding off on trucking deregulation
might be a way to convince the Teamsters to agree to a responsible
figure?
SEC. BLUMENTHAL:
NEIKIRK:
I would—
Just a comment—
SEC. BLUMENTHAL:
I would think it's safe to say, Mr. Neikirk,
that there are a lot of intelligent people in the government
the various possibilities for an individual industry
HERMAN:
on whom
are not lost.
Let me take you in another direction, not necessarily a
club across the back of the administration.
But in almost all his
previous speeches, the President listed four necessities of life that
had to be specially dealt with, in this struggle against inflation,
and they were
food and housing, and medical costs and energy.
All of
a sudden in this speech, energy disappeared from his list of necessities that had to be dealt with—and this is immediately after an energy
bill which the President wanted
is pushing up energy prices.
Isn't
it a necessity any more, that needs special consideration?
SEC. BLUMENTHAL:
Well certainly, energy is—we can't run an econ-
omy like the United States without major inputs of energy, and I don't
think there's any significance to the absence of energy to that not
being mentioned.
f£
I think we. do have a situation on our hands where we've been importing too much energy into this country.
anced our trade accounts.
That has further imbal-
That has weakened the dollar.
A weakened
13
dollar increases Inflation, if *re can get.
energy
Imports down;
if we can produce more in -this country; if we can consume less in this
country, then, clearly, we can counteract inflation.
Therefore, some
price increases, which may be coming along as a result of the energy
bill, and which are unavoidable, but which help our national security,
which strengthen the dollar, vhich thereby decrease inflation, are an
offset in this situation—and while you have higher prices, you also
have a stronger dollar, and that will help.
BRADY:
though?
Isn't that energy going to make for a problem next year,
I mean, you're trying to get the inflation rate down, but
you've got natural gas that's going to double by 1985 in price.
tainly
Cer-
itJs under a different set of guidelines than the rest of us.
You've also got—meat prices, for example, probably are going to
go through the ceiling next year.
So, I mean, energy and meat and
food, right away, are going to make for problems in this.
SEC: BLUMENTHAL:
Well, certainly, there are going to be problems.
And it is true that there may be some price increases; that's why we
have to work very*hard in other areas to offset that.
There just sim-
ply is no simple way out, and in a complex economy, there are inconsistencies, and there are policies that have to be followed, which
tend to raise some prices.
But, overall, we think we have a chance
to get the total level of prices down, if people stick to the 7% on
the wage side; and if on the price side we can get at least that half
a
percentage point or less, in deceleration of prices over the aver-
age of '76 and- '77.
HERMAN:
sidered.
Let me try on you a problem that you may not have con-
This past week, Julius Shisken, the Commissioner of Labor
14
Statistics, died.
He was one of the most trusted economists and pub-
lic servants in Washington.
Now you have to, in the Administration,
appoint a new Commissioner of Labor Statistics, at a time when the
measurement of unemployment, and the measurement of inflation, is
going to be extremely important.
Is it going to be a problem finding
somebody who has the kind of trust in his statistics—in his figures—
on which everything is judged, as the public and the Congress had for
Julius Shisken?
SEC. BLUMENTHAL:
Mr. Herman.
I don't think that that's going to be a problem,
I think that what we—one of the great strengths we have in
this country is that we do have a set of statistics, and a statistical
competence, that is above reproach, and totally
relied on by every-
body.
No one, including the President
or any administration, would
tolerate fiddling with the statistics.
people around
There are a lot of competent
who can do this job. Mr. Shisken had a marvelous re-
putation, and he will be sorely missed, but I am sure that there are
others with like capabilities, and like integrity, and I'm sure the
President will insist on such a person holding that job.
HERMAN:
In the very short time we have left, one loose end—you
talked about these guidelines having to stay on for a long time. Can
you name a number of years—is it four years; five years?
SEC. BLUMENTHAL:
I don't think it's that long. We really don't
know, but it's certainly going to have to be more than just a single
year, Mr. Herman.
HERMAN:
Thank you very much.
Last Sunday, in a question on this broadcast, it was stated that
15
former CIA Director, Richard Helms, was a registered agent of the
Iranian government.
That statement was incorrect.
a registered agent for Iran.
ANNOUNCER:
Mr. Helms is not
Good day.
Today on FACE THE NATION, Secretary of the Treasury
Michael Blumenthal
was interviewed by CBS News Business Correspon-
dent Ray Brady; by Bill Neikirk, Economic Correspondent for the
Chicago Tribune; and by CBS News Correspondent George Herman.
Next week, another prominent figure in the news will FACE THE
NATION.
^rtmentoftheTREASURY
TELEPHONE 566-2041
(N6T0N, D.C. 20220
FOR IMMEDIATE RELEASE
October 30, 1978
RESULTS OF TREASURY'S WEEKLY BILL AUCTIONS
Tenders for $2,300 million of 13-week Treasury bills and for $ 3,501 million
of 26-week Treasury bills, both series to be issued on November 2, 1978,
were accepted at the Federal Reserve Banks and Treasury today. The details are,
as follows:
RANGE OF ACCEPTED
COMPETITIVE BIDS:
High
Low
Average
13-week bills
maturing February 1. 1979
26-week bills
maturing May 3. 1979
Price
Discount
Rate
Investment
Rate 1/
Price
97.901
97.852
97.863
8.304%
8.498%
8.454%
8.60%
8.80%
8.76%
;a/ 8.871%
95.515^
95.425
9.049%
95.459
8.982%
Discount
Rate
Investment
Rate 1/
9.42%
9.62%
9.54%
a/ Excepting 1 tender of $10,000
Tenders at the low price for the 13-week bills were allotted 95%
Tenders at the low price for the 26-week bills were allotted 64%
TOTAL TENDERS RECEIVED AND ACCEPTED
BY FEDERAL RESERVE DISTRICTSAND TREASURY:
Location
Received
Accepted
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury \
$
17,550,000
3,697,690,000
42,365,000
32,480,000
21,690,000
29,465,000
294,320,000
35,815,000
3,820,000
26,400,000
14,275,000
235,210,000
9,235,000
$4,460,315,000
$
17,550,000
$
23,770,000
1,895,755,000
4,620,435,000
42,065,000
39,100,000
32,480,000
11,610,000
21,690,000
15,140,000
26,755,000
26,090,000
134,320,000
216,945,000
25,815,000
33,210,000
3,820,000
9,015,000
26,400,000
19,975,000
14,275,000
9,745,000
50,210,000
237,670,000
9,235,000
13,535,000
$2,300, 370,000 b/: $5,276,240,000
TOTALS
Received
^Includes $349,355,000 noncompetitive tenders from the public.
£/lncludes $223,050,000 noncompetitive tenders from the public.
I/Equivalent coupon-issue yield.
B-1234
Accepted
$
23,770,000
2,931,635,000
39,100,000
11,610,000
15,140,000
26,090,000
166,945,000
25,210,000
9,015,000
19,975,000
9,745,000
209,070,000
13,535,000 '
$3,500,840,000c
Lilt j | f J
TREA3L;, I :EPA.!TM!:pJT
FOR IMMEDIATE RELEASE
REMARKS BY
THE HONORABLE ROBERT CARSWELL
DEPUTY SECRETARY OF THE TREASURY
AT THE
NEW YORK LAW JOURNAL SEMINAR ON
"LEGAL PROBLEMS OF BANK REGULATION"
SAN FRANCISCO
OCTOBER 30, 1978 — 9:40 A.M.
I am delighted to be here and to have this opportunity
to talk with you about recent and pending developments in
the area of bank regulation. In recent years advances in
technology and vigorous competitive conditions have produced
widespread changes in the banking business. This has led
to multiple proposals from all sectors of the financial
world for legislative intiatives and to reexamination by
the bank regulatory agencies of many of the traditional
constraints that have been imposed on the banking environment.
After years of inconclusive skirmishing, Congress
(with help from the bank regulators and the executive branch)
has addressed some of the outstanding issues, and I would
like to talk to you this morning about that process and the
new state of the law. In August Congress passed and the
President later signed the International Banking Act, which
B-1235
- 2 for the first time gives the federal government a
comprehensive role in the regulation of foreign bank
operations in this country.
Then, barely a fortnight
ago, Congress passed an omnibus bank reform bill.
The
bill, known as The Financial Institutions Regulatory and
Interest Rate Control Act of 1978, is a broad ranging
affair.
To take its measure you must move from areas as
diverse as insider lending, privacy and EFT to NOW accounts
and change in bank control.
As the first major reform
legislation in eight years, the bill provides an apt
starting point for any discussion of bank regulatory
legal problems.
The bill has not yet been signed into law by the
President and it is always possible that he might decide
not to do so.
But I would suggest that it is not too early
for you to begin to assess what this bill will mean for
your clients if it does become law.
Hence, what I propose
to do today is highlight some of the provisions of this
bill that may be of special significance for you as a
lawyer or banker.
Before turning to the substance of the bill, I would
like to say a word or two about the background of the bill.
From some of the newspaper accounts one might suppose
that it was slipped by two chambers of weary Congressmen
anxious to get home for elections.
In fact, the passage
of the bill culminated several years of intense work
- 3 by the Senate and House banking committees and extensive
debate within the banking community. In the process many
voices were heard and heeded. The bill that finally emerged
is the product of what sometimes seemed endless deliberation
and compromise.
On the Senate side, the history began as early as
September 1975 when a bill to upgrade the supervisory and
enforcement powers of the three federal bank regulatory
agencies was introduced at the request of these agencies.
The Senate Committee on Banking, Housing and Urban Affairs
held hearings in 1976 and again in 1977 on this and other
regulatory proposals. In August of. 1977 the Senate passed
a regulatory package which it sent to the House.
r.
In the House, Representative St Germain introduced
his own bill, known as the Safe Banking Act. Extensive
hearings — at which the bank regulators appeared along with
representatives from the industry and the public — were
held on this bill in September and October. I testified
on behalf of the Administration at those hearings and later
at hearings on the Senate side.
The hearings revealed that there were substantial
differences of opinion on the provisions in the proposed
Safe Banking Act. As the months went on, these were bridged
in intricate negotiations involving the Congress, industry
representatives, the bank regulators and the Administration.
- 4 The consensus that emerged was generally confirmed when
in July of this year the House Banking Committee reported
out the bill, renamed "The Financial Institutions Regulation
Act of 1978." In the closing days of the session the Senate
and House Banking Committees worked together to assure that
the core provisions in the bill would come to the floor for
a vote. A carefully balanced package reached the floor of
the House and Senate on the last day of the session. It
passed overwhelmingly, and does credit to the sagacity of
Senator Proxmire and Congressmen Reuss and St Germain who
were primarily responsible for the legislation.
Supervisory Proyisions
One of the basic themes in this legislation is the prevention of unsafe and unsound banking practices. To this end
the Congress has given the regulators new supervisory and
enforcement powers. First, the regulatory agencies are now
clearly authorized to issue cease and desist orders directly
against individuals—directors, officers, employees, agents
or other persons participating in the conduct of the affairs
of the institution.
Second, the regulators have been given authority to
impose civil money penalties on individuals and institutions
alike for violations of various provisions of the banking laws.
In the case of most of these provisions, the regulator is
authorized to impose a penalty of not more than $1,000 per day
per violation.
- 5 Third, the regulators' authority to remove officers and
directors of financial institutions has been expanded to
include not only cases involving personal dishonesty, but
also cases involving willful or continuing disregard for the
safety of the bank.
Fourth, the Federal Reserve Board is empowered to require
divestiture by a bank holding company of a non-bank subsidiary
if that subsidiary presents a serious risk to the safety of
any bank subsidiary of the holding company.
This is an impressive battery of new supervisory powers
for the bank regulators.
I am confident that we can rely on
the regulatory agencies to use these new powers judiciously.
Indeed, in recommending these powers, Chairman Burns expressed
the view that these powers would only have to be used infrequently.
As the regulators firmly recognize, the primary
benefit of these powers lies in their value as a deterrent.
The bill deals with another supervisory issue that in
the past has suffered from a lack of clear guidelines and
rules.
That issue is insider lending. Insider lending is
of course not a new problem, but its role in a number of
prominent bank failures in recent years has forced a harder
look at ways of preventing abusive situations. The bill
basically adopts the approach that was recommended by the
regulators themselves in 1975.
First, the bill provides a new aggregation rule and,
in the case of federally insured state banks, a new lending
- 6 limit for insider loans.
Under the bill loans to executive
officers or significant shareholders of banks must be
aggregated with loans to companies or campaign committees
controlled by them.
The bill further provides that insider lending at
federally insured state chartered banks will be governed
by the lending limit in the National Bank Act. In effect
we now have a uniform lending limit and aggregation rule
for insider lending.
aggregation rules.
Let me emphasize one point on the
Unlike certain other provisions of
this bill dealing with insider transactions, the aggregation rules do not apply to outside directors or their
controlled companies.
The bill also requires that any lending in excess
of $25,000 to insiders or their controlled companies or
compaign committees be approved in advance by the board
of directors.
This salutary approach is designed to
place principal responsibility for monitoring insider lending
where it belongs—in the hands of the board of directors.
Both the aggregation and the board approval rules are new
and you will want to assure that your clients establish
the necessary internal procedures to meet them.
The third element of the insider provisions of the
bill establishes a rule that loans to insiders may not be
made on preferential terms.
In this respect I trust that
- 7 the bill is merely codifying adherence to elementary fiduciary
principles that are already the rule in most of our banks.
Correspondent Accounts and Disclosure
Another significant area addressed in this bill is
the provision dealing with insider borrowing between
correspondent banks. The Congress has chosen to provide a
direct rule for these transactions as well. It is the same
rule of nonpreferentiality that applies to an insider's
borrowing from his own bank.
As a monitoring device, the the bill requires that
executive officers and significant stockholders of a bank
make an annual written report to their bank of any loans
that they or their controlled companies have outstanding at
correspondent banks. The fact that such reports had been
filed and the aggregate amount of the loans made to
these officers and stockholders and their controlled
companies, as a group, would be public information. The
bill adopts a similar approach to public disclosure of
loans made by a bank to its own insiders. These provisions
reflect the Congressional belief that even limited public
disclosure of insider dealings may serve to deter abuses
in this area.
Management Interlocks
The bill has fundamentally changed the rules in another
area that may be of interest to you. That is area of management
- 8 interlocks between depository institutions. Title II of
the bill establishes a new regime that expands upon the
present bank interlock provisions in the Clayton Act. The new
rules apply not only to interlocks between banks, but also
to interlocks between banks and other depository institutions.
In substance, the bill prohibits management interlocks
between depository institutions or depository holding companies
where one of the institutions has total assets of more than
one billion dollars and the other has total assets of more
than five hundred million dollars. This prohibition reflects
the realization that large financial institutions are
increasingly in competition with each other regardless of
their geographic location. The other prohibition in the bill
relies on geographic considerations. It prohibits most
management interlocks between institutions with offices in
the same standard metropolitan statistical areas or in the
same or contiguous cities, towns or villages.
The bill carries over a number of the exemptions contained in the Clayton Act and adds a few of its own. In addition, it provides a generous grandfathering period of ten
years for existing interlocks.
I should mention one peculiarity in the interlock title.
For reasons of Congressional committee jurisdiction, the
House Banking Committee chose not to repeal the interlock
provisions of section 8 of the Clayton Act. Accordingly,
- 9 in the future you may have to review two statutes to determine
whether a bank interlock is permissible.
Change of Control
I would now like to turn to a new and important
addition to the federal regulatory framework. As you know,
since the time of the 1970 amendments to the Bank Holding
Company Act, no bank in this country could be acquired by a
corporation, partnership or similar organization without the
approval of the Federal Reserve Board. This is now a
centerpiece of our nation's bank regulatory scheme. There
is a gap in the scheme, however. The federal regulatory
authorities have no authority to review acquisitions or
changes in the control of banks by individuals. Congress
has now chosen to fill this gap.
This bill provides that an individual seeking to
acquire control of an insured bank must give the
appropriate federal regulator prior notice and an
opportunity to reject the acquisition. If the regulator does not act within the specified period, the
acquisition can go forward. These provisions reflect an
effort to provide the federal regulators with necessary
review power while minimizing the effects of the process
on the private market.
- 10 This is not new ground being broken. A number of states
have already charted the way with statutes of their own.
What the Congress has done is merely to provide the federal
regulator with the opportunity to stop unsafe or unsound
acquisitions before the fact. This provision may take on
additional significance where the acquiring person is a
foreigner. As you know, an acquisition by a foreigner
raises difficult, and to some degree unresolved, bank
supervisory questions. The new section will provide a
focus for the resolution of such questions.
Financial Privacy
Up to this point, I have discussed matters that
relate principally to the management officials and
owners of banks. Let me shift the focus now to bank
customers and their relations. The bill contains two
provisions of far-reaching significance for the regulation of the customer-bank relationship. The first
provision relates to privacy; the second to electronic
funds transfers. Both topics are scheduled for further
discussion in this program. But this bill changes the
rules in these areas so fundamentally that I would
like briefly to anticipate the program discussion.
One of the singular accomplishments of this bill is
its creation of a comprehensive'regime to govern access
by federal officials to the banks records of individuals.
The development of this regime is part of a much broader
- 11 effort on the part of this Administration to address
generally the privacy concerns in our society.
Financial records have long been at the center of
these privacy concerns. The Supreme Court's decision in
U.S. v. Miller in 1976 reinforced these concerns. As you
may recall, in Miller the Supreme Court held that a bank
customer had no constitutionally protected expectation of
privacy in the records of his transactions with his bank.
In this bill Congress has in effect reversed the
Miller decision. The bill establishes exclusive procedures
by which federal officials may seek access to customer
records held by banks and other financial institutions.
The bill prohibits a federal official from obtaining, and a
financial institution from disclosing to such an official,
customer records except in accordance with these procedures.
As a general matter the bill requires that customers
be given prior notice and an opportunity to challenge
requests by federal officials for access to their bank
records. There are a number of exceptions from the
general rules and some special procedures for agencies
like the Secret Service which have no administrative
subpoena or summons powers.
The provisions of the privacy title are detailed and
you will have to assure that your clients are in position
- 12 to comply with them. This task should be made easier by
the knowledge of two points that will surely be of interest
to your clients. First, the bill provides that the government will reimburse banks for their costs in responding to
information requests. Second, the bill specifically protects
banks from civil liability to their customers when the banks
respond in good faith to government requests.
The provisions of this bill represent a major development in the law of privacy. Congress has tried to balance
the concern for individual privacy with the legitimate needs
of law enforcement and the interests of the third-party
recordkeeper -- an ambitious but necessary undertaking.
EFT
The Congress has addressed another major consumer
issue in this legislation—electronic funds transfers. In
this bill the Congress has established a framework to define
the rights and liabilities of the various participants in
EFT transactions. The bill sets basic rules governing such
matters as disclosure, written documentation and periodic
accounting. In the more contentious areas of error resolution and customer liability, the bill attempts to weave a
compromise that protects the interests of the customer and
the institution alike.
The Congress has addressed a range of difficult questions
in these EFT provisions. In doing so, it has helped to shape
the course of development of these important new services.
- 13 Industry Structure
I have touched on two themes that run through this
bill: regulation of management and insider relations and
regulation of consumer interests in privacy and EFT. There
is yet a third theme in this legislation. It is that
of industry structure and competitive relationships. I
use this term loosely to describe a miscellany of provisions
in the bill. The first of these provisions grants a federal
chartering option to mutual savings banks. It is a
provision that has long been sought by the savings banks.
It is also a provision that had been attended by some
controversy. Part of the controversy stemmed from a
concern that federally chartered savings banks would
enjoy a competitive advantage over commercial banks
because they would not be restricted by state branching
laws.
The compromise ultimately settled upon by the Congress
appears to be a felicitous one. Congress has provided that
any state chartered savings bank converting to a federal
charter would remain bound by the state branching law
with two exceptions. First, the converting savings bank
would be exempt from any numerical limitation of state law
on branch offices or other facilities. Second, the converting savings bank would be permitted to establish branch
- 14 offices and other facilities intrastate in its own SMSA, in
its own county or within 35 miles of its home office. The
second exception is a particularly interesting one. It may
contain the seeds of an approach to other branching problems
as, for example, in the area of terminal deployment.
In this legislation the Congress has also taken a major
step in expanding the NOW account statute which is presently
limited in application to the New England states. This bill
extends NOW account powers to New York State. It is a move
with tactical import. The extension of NOW accounts to a
market as important as New York — particularly when combined
with the new Federal Reserve rules on automatic transfer
services — will surely add momentum to the drive to make
NOW accounts available nationwide.
Congress has also taken this occasion to revise the
contours of Reg Q. Besides extending Reg Q for two years,
Congress has decided to remove the differential on all savings
deposits or accounts from which automatic transfers may be
made. This approach is consistent with that taken by the
Congress in the NOW account statute. Underlying this
provision is the Congressional determination that institutions
offering substantially similar services should be permitted
to compete on substantially similar terms. The trend toward
greater competition among depository institutions continues
and Congress appears ready to assist such competition as
appropriate.
- 15 Conclusion
Time has permitted me to mention only the most prominent
provisions in this new banking bill. There are other provisions in the bill that may well be of interest to many of you.
These I leave to your own exploration.
Congress has taken action through the bill to resolve
a number of lingering regulatory issues. In the process,
it has both confirmed old principles and provided new directions. In all, it has done its work well.
FOR IMMEDIATE RELEASE
October 30, 1978
Contact: Alvin M. Hattal
202/566-8381
TREASURY ANNOUNCES START OF ANTIDUMPING INVESTIGATION
OF TITANIUM DIOXIDE FROM BELGIUM, THE FEDERAL REPUBLIC
OF GERMANY, FRANCE, AND THE UNITED KINGDOM
The Treasury Department today said it will begin an
antidumping investigation of titanium dioxide from Belgium,
the Federal Republic of Germany, France, and the United
Kingdom.
Treasury's announcement followed a summary investigation
conducted by the U. S. Customs Service after receipt of a
petition filed by counsel on behalf of SCM Corporation alleging
that this merchandise is being sold in the United States at
"less than fair value."
Sales at "less than fair value" generally occur when imported merchandise is sold in the United States for less than
in the home market.
This case is being referred sumultaneously to the U. 3.
International Trade Commission. Should the Commission find,
within 30 days, that there is no reasonable indication of injury or likelihood of injury to a domestic industry, the
investigation will be terminated; otherwise, the Treasury
Department will continue its investigation. A tentative
determination would then be made by March 18, 1979.
Dumping occurs when there are both sales at less than fair
value and injury to a U. S. industry. If dumping is found, a
special antidumping duty is imposed generally equal to the
difference between the price of the merchandise at home and the
price in the United States.
Notice of this action will appear in the Federal Register
of October 31, 1978.
Imports of titanium dioxide from Belgium, the Federal
Republic of Germany, France and the United Kingdom during 1977
were estimated to be valued at $8,830,000, $34,747,000, $3,543,000,
and $10,861,000, respectively.
o
B-1236
0
o
FOR RELEASE AT 4:00 P.M.
October 31, 1978
TREASURY'S WEEKLY BILL OFFERING
The Department of the Treasury, by this public notice,
invites tenders for two series of Treasury bills totaling
approximately $5,700 million, to be issued November 9, 1978.*
This offering will not provide new cash for the Treasury as the
maturing bills are outstanding in the amount of $5,711 million.
The two series offered are as follows:
91-day bills (to maturity date) for approximately $2,300
million, representing an additional amount of bills dated
August 10, 1978,
and to mature, February 8, 1979
(CUSIP No.
912793 W7 7), originally issued in the amount of $3,504 million,
the additional and original bills to be freely interchangeable.
182-day bills for approximately $ 3,400 million to be dated
November 9, 1978,
and to mature
May 10, 1979
(CUSIP No.
912793 Y4 2).
Both series of bills will be issued for cash and in
exchange for Treasury bills maturing November 9, 1978.
Federal Reserve Banks, for themselves and as agents of foreign
and international monetary authorities, presently hold $3,090
million of the maturing bills. These accounts may exchange bills
they hold for the bills now being offered at the weighted average
prices of accepted competitive tenders.
The bills will be issued on a discount basis under competitive
and noncompetitive bidding, and at maturity their par amount will
be payable without interest. Except for definitive bills in the
$100,000 denomination, which will be available only to investors
who are able to show that they are required by law or regulation
to hold securities in physical form, both series of bills will be
issued entirely in book-entry form in a minimum amount of $10,000
and in any higher $5,000 multiple, on the records either of the
Federal Reserve Banks and Branches, or of the Department of the
Treasury.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington,
D. C. 20226, up to 1:30 p.m., Eastern Standard time,
Monday, November 6, 1978.
Form PD 4632-2 (for 26-week
series) or Form PD 4632-3 (for 13-week series) should be used
to submit tenders for bills to be maintained on the book-entry
records of the Department of t^ie Treasury.
B-1237
-2Each tender must be for a minimum of $10,000. Tenders
over $10,000 must be in multiples of $5,000. In the case of
competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e.g.,
99.925. Fractions may not be used.
Banking institutions and dealers who make primary
markets in Government securities and report daily to the
Federal Reserve Bank of New York their positions in and
oorrowings on such securities may submit tenders for account
of customers, if the names of the customers and the amount
for each customer are furnished. Others are only permitted
to submit tenders for their own account.
Payment for the full par amount of the bills applied for
must accompany all tenders submitted for bills to be maintained
on the book-entry records of the Department of the Treasury. A
cash adjustment will be made on all accepted tenders for the
difference between the par payment submitted and the actual
issue price as determined in the auction.
No deposit need accompany tenders from incorporated banks
and trust companies and from responsible and recognized dealers
in investment securities for bills to be maintained on the
book-entry records of Federal Reserve Banks and Branches, or for
bills issued in bearer form, where authorized. A deposit of 2
percent of the par amount of the bills applied for must
accompany tenders for such bills from others, unless an express
guaranty of payment by an incorporated bank or trust company
accompanies the tenders.
Public announcement will be made by the Department of the
Treasury of the amount and price range of accepted bids.
Competitive bidders will be advised of the acceptance or
rejection of their tenders. The Secretary of the Treasury
expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary's action
shall be final. Subject to these reservations, noncompetitive
tenders for each issue for $500,000 or less without stated price
from any one bidder will be accepted in full at the weighted
average price (in three decimals) of accepted competitive bids
for the respective issues.
Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks
and Branches, and bills issued in bearer form must be made
or completed at the Federal Reserve Bank or Branch or at the
Bureau of the Public Debt on November 9, 1978,
in cash or
other immediately available funds or in Treasury bills maturing
November 9, 1978.
Cash adjustments will be made for
differences between the par value of the maturing bills
accepted in exchange and the issue price of the new bills.
-3Under Sections 454(b) and 1221(5) of the Internal Revenue
Code of 1954 the amount of discount at which these bills are
sold is considered to accrue when the bills are sold, redeemed
or otherwise disposed of, and the bills are excluded from
consideration as capital assets. Accordingly, the owner of these
bills (other than life insurance companies) must include in his
or her Federal income tax return, as ordinary gain or loss, the
difference between the price paid for the bills, whether on
original issue or on subsequent purchase, and the amount actually
received either upon sale or redemption at maturity during the
taxable year for which the return is made.
Department of the Treasury Circulars, No. 418 (current
revision), Public Debt Series - Nos. 26-76 and 27-76, and this
notice, prescribe the terms of these Treasury bills and govern
the conditions of their issue. Copies of the circulars and
tender forms may be obtained from any Federal Reserve Bank or
Branch, or from the Bureau of the Public Debt.
, D.C. 20220
TELEPHONE 566-2041
FOR IMMEDIATE RELEASE
'
October 31, 1978
RESULTS OF AUCTION OF 3-1/2-YEAR NOTES
The Department of the Treasury has accepted $2,512 million of
$7,032 million of tenders received from the public for the 3-1/2-year
notes, Series K-1982, auctioned today.
The range of accepted competitive bids was as follows:
Lowest yield 9.33%!/
Highest yield
Average yield
9.37%
9.36%
The interest rate on the notes will be 9-1/4%. At the 9-1/4% rate,
the above yields result in the following prices:
Low-yield price 99.766
High-yield price
Average-yield price
99.649
99.678
The $2,512 million of accepted tenders includes $1,099 million of
noncompetitive tenders and $1,113 million of competitive tenders from
private investors, including 29% of the amount of notes bid for at
the high yield. It also includes $ 300 million of tenders at the
average price from Federal Reserve Banks as agents for foreign and
international monetary authorities in exchange for maturing securities.
In addition to the $2,512 million of tenders accepted in the
auction process, $978 million of tenders were accepted at the average
price from Government accounts and Federal Reserve Banks for their own
account in exchange for -securities maturing November 15, 1978.
1/ Excepting 11 tenders totaling $1,435,000
B-1238
rTreas.
HJ
U.S. Dept. of the Treasury.
10
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Treas.
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