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Blaming Dow Skid on Tax Plan 'Balderdash': Wright

October 19, 1987|Associated Press

WASHINGTON — House Speaker Jim Wright today dismissed as "balderdash" the Reagan Administration assertion that the work of Democrats on a tax-increase package pushed the stock market into a tailspin.

Treasury Secretary James A. Baker III, in a television interview on Sunday, said tax increase bills approved by House and Senate committees last week helped fuel the market fall last week in which the Dow Jones industrial average suffered its largest weekly decline since World War II.

"I think that the writing of these tax packages had a major effect in what's happened to the stock market over the course of the past three or four days," Baker said on NBC-TV's "Meet the Press." (Story, Part IV, Page 2.)

The Dow dropped 108.36 points on Friday, marking the first time the blue-chip index has lost more than 100 points in a single session. The total Dow drop last week was 235.48 points.

As the market continued to fall today Wright said blaming the tax bills was the Administration's way of pinning the blame elsewhere.

"I think that that's balderdash, utterly ridiculous," Wright (D-Tex.) told reporters. He said the market reacts favorably to evidence that Congress is trying to control the deficits that have added $1.3 trillion to the national debt since President Reagan took office.

Rep. William H. Gray III (D-Pa.) said the key to assuring the markets is substantial progress on reducing the deficit. But with Reagan unwilling to compromise with Congress, "the marketplace is lacking confidence that that is going to happen," he said.

Sen. Lloyd Bentsen (D-Tex.), chairman of the tax-writing Senate Finance Committee, blamed the market fall on the nation's trade and budget deficits and the Reagan Administration's failure to respond to the growing debts.

"The immediate cause of last week's stock market drop was the sharp jump in the prime rate. Interest rates shot up because of our persistent trade deficit and budget deficit and this Administration's refusal to develop policies to reduce them," Bentsen said.

"Anyone who says otherwise is out of touch with reality, living in a dream world," he added.

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