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US curb on Soviet trade will cost American taxpayer

Americans as a whole -- and the federal budget -- will pay a financial price for President Carter's stringent curtailment of trade with the Soviet Union. Budget deficits will grow. So will the nation's foreign trade shortfall. And pressure will increase to trim government spending elsewhere.

An income-tax cut this year was unlikely in any case, but appears even less so now, because it would add to budgetary red ink.

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These conclusions emerge, as White House officials scramble to bring their economic projections up to date, in the wake of Mr. Carter's suspension of grain and high-technology sales to Moscow.

"About $2 billion to $2.5 billion will be added to the current [fiscal 1980] budget deficit," a top White House official says. "Hopefully, the deficit still will come in under $40 billion."

These costs derive from the government's purchase from grain exporters of about $2.25 billion worth of corn, wheat, and soybeans that was to have been sold to the Soviets.

The government also will increase its loans to farmers to store surplus grain , and it may raise the target price at which that stored grain may be released to the market.

Inflation, which pushes up the cost of government programs as it does the price of goods and services families buy, already had ballooned the 1980 deficit far above the $30 billion mark originally expected.

Generally, since Mr. Carter took office, budget deficits have shrunk -- from 1978, and $27.7 billion in fiscal 1979, which ended last Sept. 30.

The President had hoped -- in vain, as it turns out -- to present a balanced 1981 budget to Congress Jan. 28. A $15 billion to $16 billion shortfall now appears likely, due to inflation, increased defense spending, and Mr. Carter's hope of expanding at least some social spending.

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(Fiscal 1980 began Oct. 1, 1979, and ends Sept. 30 of this year, when fiscal 1981 begins.)

"impact of the President's actions on the fiscal 1981 budget is much tougher to forsee," a senior White House official says."But it should not be large," especially if the government sometime this year or next sells some grain back into the market.

Loss of grain sales to Russia strikes a blow at US foreign trade, adding perhaps $2.5 billion to the anticipated 1980 trade shortfall, according to White House sources.

This comes at a time when oil imports by the US -- which cost about $56 billion in 1979 -- may balloon as high as $75 billion to $80 billion, based on the latest price hikes by foreign oil suppliers.

In 1979, a Department of Commerce official says, the US suffered a $23 billion to $24 billion trade deficit (December figures are not yet in), down from $28.45 billion in 1978.

The improved trade performance last year -- despite sharply higher costs for foreign oil -- stemmed from growth in Ameican exports of manufactured and farm products.

Farm exports, for example, a government official says, grew from $24.2 billion in 1977 to $29.8 billion in 1978, and totaled $31.5 billion from January through November 1979.

Until it is known what kinds of technology will be denied to the Soviet Union , officials hesitate to estimate the trade loss stemming from this aspect of Mr. Carter's anti-Soviet moves.

Meanwhile, the US economy still appears to be shrugging off recession, according to Courtenay Slater, chief econimist of the Department of Commerce.

Contrary to expectations, she says, the economy appears to have grown at a 2 to 3 percent annual rate during the last quarter of 1979, due largely to expanded consumer buying.

This buying splurge, experts agree, exacts a price from families' economic well-being, for many Americans appear to have dipped into savings to make their purchases.

In 1980, Mrs. Slater says, the economy still is expected to dip into recession, although the downturn should be mild and relatively short.


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