February 28, 1975

NYS Health Dept rules on Feb 27 that Bernard Bergman wrongly inflated remodeling costs of Park Crescent Nursing Home by at least $1,977,806; dept economists are determining how much Park Crescent has been overpaid since it opened in '71 and will then move to recover money; dept is also preparing for test of legality of Bergman's license to operate home; home's records were subpoenaed by Sen Subcom on Long‐Term Care; excerpts from Cong audit were included in written questions put to Bergman at recent Sen hearing; hearing revd; dept in Jan asked Park Crescent to submit income‐tax returns for last 3 yrs; Bergman lawyer Steven H Thai obtained delay to consider request; new deadline is Feb 28; US HEW Dept urges states to inspect Medicaid facilities without advance notice; Peter Franklin, special asst to Sec Weinberger, alleges some homes treat patient better during inspections (M)

FCC on Feb 27 repts it will approve $365‐million annual rate increase for interstate service by AT&T and indicates it will consider another increase later; amount granted is about 1/2 money co asked for; comm told AT&T to submit proposed rate changes in line with increase; AT&T originally sought approval for sweeping revision of interstate phone rates that would have increased charges for long‐distance calls an avg of 7.2%, effective March 4 (M)

HR, 317 to 97, passes $21.3‐billion antirecession tax‐cut bill; votes, 248 to 163, to repeal oil depletion allowance; tax‐cut bill reduces taxes of individuals by $16.2‐billion, reduces business taxes by increasing investment tax allowance to 10% from present 7%, and by increasing to $50,000 from present $25,000 point at which full corp tax rate of 48% is imposed; current rate is 22% below $25,000 level of profits; proposal to retain oil depletion allowance for smaller cos, sponsored by Repr Charles Wilson, defeated 197 to 216; HR bill exempts some natural gas producers from depletion allowance repeal, retroactive to Jan 1, and for period not to exceed 18 mos, if they are tied up in long‐term contracts and Fed price regulation; depletion repeal as passed by HR would add some $2.5‐billion in Fed tax collections in '75, and $3.8‐billion in '76; about half of tax cuts for individuals would take form of rebates on '74 taxes to be paid in May, and remainder in form of reforms that would be reflected in smaller withholding taxes on '75 income, also beginning in May; HR bill also contains 1st step toward negative income tax; provides rebates to those who owe no Fed income tax or whose tax is smaller than new schedule of tax credits aimed at helping poor; some 28.6‐million individuals and couples would get some benefits under this provision (L)

NYS Labor Dept repts unemployment rate in NYC rose to 10.6% in Jan, higher than any other big city in country except Detroit; huge jump of 2.1% in 1 mo is seen indication that city is sliding deeper and faster into recession that is showing no local signs of bottoming out; analysts assert that city econ, weakened by loss of 350,000 jobs over last 5 yrs, never pulled completely out of '69‐70 recession and is showing itself particularly vulnerable to this one; a major reason is that industries that are important in city—dressmaking, printing, stock trading, construction and retail trade—are among those feeling natl econ downturn most acutely; another reason is that typical NYC business is small one—87% of 170,000 enterprises in city have fewer than 20 employes—and many small businesses do not have deep reserves needed to survive recession; chart shows employment trends in city (M)

Peter Lorenz, Christian Dem candidate for Mayor of W Berlin, is kidnapped on Feb 27 by at least 3 persons, just 3 days before election; Lorenz and his captors vanish despite wide search by police and US and Brit military; officials suspect kidnappers are connected with Ger leftist radical groups but say they have no proof; are prepared to deal with ransom demands; offer reward of $44,000 for information; Mayor Klaus Schuetz, Lorenz's opponent, says election will take place as scheduled, but all campaigning is called off; Schuetz is reptdly discussing with Willy Brandt, Foreign Min Hans‐Dietrich Genscher and Helmut Kohl, chmn of Christian Denis, ways of meeting any ransom demands; Lorenz por (M)