IN DEBATE: U.S. SENATE CANDIDATES FROM ILLINOIS

Both candidates agreed in June to debate each other in Illinois Issues and submitted their answers on September 3 to Illinois Issues' questions. Answers are unedited. Each candidate was limited to 250 words per question. Editor.

DIXON v. O'NEAL

DIXON: During the past year the President and Congress have made some noble attempts to balance the national budget. I applaud their efforts and would work diligently in the United States Senate to achieve that goal. I would not favor an amendment to the United States Constitution drafted by a Constitutional Convention, but I would consider an amendment developed by Congress taking into account national emergencies such as war or depression during which exception to the balanced budget might be made.

O'NEAL: I favor such an amendment. It should contain the provision that allows for the suspension of a balanced budget when two-thirds of both houses of Congress approve. This balanced budget policy is essential for economic health, whether applied to a family unit, a business enterprise, a governmental subdivision, or a nation. This is so obvious and irrefutable that I am amazed there are still some who would debate the subject.

There are occasions when unusual circumstances make a deviation or exception desirable. However, these exceptions ought to be infrequent and years apart if a strong economy is to be maintained.

DIXON: I favor a tax cut to help bring our nation's economy out of its present recessional condition, though tax cuts do not always make good economic policy. However, in the present circumstances many of our most respected economists agree that industry and individuals must have some relief from the accumulated burden of taxes at a time when productivity is low and inflation is high. We must use a limited tax cut to help get our national economy moving again.

I favor some form of tax indexing to protect the taxpayer from being moved into higher tax brackets without any accompanying improvement in the standard of living.

O'NEAL: For many years, our workers were the most productive in the world. This is no longer the case. By taking more and more money from our paychecks, the government removes the desire to work. We must take steps to restore individual incentive.

1.  Government alone benefits from inflation. When someone receives a cost-of-living increase, he or she is pushed into a higher bracket. Often they actually lose money in the end. The tax brackets should be "indexed" to prevent this.
2. An across the board cut.
3.  Divide income into two brackets — earned and unearned. Earned income is salaries, tips, etc., "personal services." Unearned income is dividends and interest. The tax rate for both should range from 14%-50%. Currently, "personal services" income has a ceiling of 50% while unearned income has a 70% ceiling. A limit on eligibility is imposed for upper income taxpayers with more than $100,000 in tax sheltered income.
4. Creation of special savings accounts that allow an individual (or couple) to earn $1000 in interest (at 5%) per year tax free provided the money in the account is earmarked for the down payment of a home. A family may only have one account at any time.

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DIXON: Many of the problems that beset farmers could be relieved through a more vigorous agricultural export policy. In the present situation farmers are hurt by decreasing prices at a time of general inflation. Their costs continue to soar while their profits disappear. As discussed in the next question, the federal government should vigorously support increasing agricultural exports.

O'NEAL: No. A healthy agricultural economy today faces grave challenges which are more often aggravated than alleviated by ceaseless government interference.

If farmers cannot earn an acceptable income, they will be forced to leave the farm in growing numbers, endangering food production. If energy is priced beyond the farmer's grasp, bumper crops will shrivel. If there is no economical way to transport the crops from field to consumer, there is little incentive for the farmer to produce them.

Among the issues which must be immediately addressed is federal taxation. Government price supports and target prices should be set at levels consistent with the growth of a healthy agriculture market. In seeking to help farmers adjust to market fluctuations, the government has increased their dependency on government.

Except in times of severe crisis, the best repository of America's food supply is on the farm, not in a government grain bin. Government expansion into the market place ultimately results in long-term market uncertainties which hurt both farmer and consumer. The recent grain embargo has hurt only American farmers and has eroded years of growth in foreign trade.

These problems do have solutions, and the government must act quickly or the family farm will disappear.

DIXON: The export of farm products by the United States is essential to the future economic well-being of this country and a very necessary component of our foreign policy.

Consequently, it is imperative that we seek new and expanded markets: both among our industrialized competitors and in the new nations of the Third World. I must emphasize that there can be no substitute for a vigorous export policy. Our national economy would be far better served by increasing our access to foreign markets for our agricultural products than to idle farmland and purchase and store American grain. Storage and idling programs must ultimately be paid for out of tax revenues which keep the full burden on the American economy.

As the nation's leading state in export of agricultural products, Illinois can and should play a significant role in changing our balance of trade position. A shift toward a more favorable balance of trade can only occur, however, through an aggressive policy of promoting America's products abroad.

In other areas, we must increase the production of gasohol with particular emphasis on Illinois agricultural products for the process. Not only will this allow our farmers to increase production and sales, but it will also help the nation meet its energy needs and reduce reliance on foreign petroleum. Illinois can lead the way.

Regarding the Soviet grain embargo, at a time of crisis I believe we must support the President. I was concerned at the time that the grain embargo would do us more harm than the Soviets; that the price would be paid by Illinois farmers. The facts have shown this to be so. In the future I would support legislation giving Congress the authority to impose an embargo. Only in dire emergencies such as a state of war would I vote for it. It is vital that we remain a consistent merchant in offering our products for sale around the world.

O'NEAL: First, we must admit that farm profits are not a significant factor in rising food prices. Steps that will increase productivity and lower government interference are the best insurance that we will continue to have abundant food supplies.

1.  Family farmers should be able to transfer property to their families. The estate tax credit must be significantly increased.
2.  The valuation of farm property must be based on its current use, with an extension for the time of payment of estate taxes.
3.  Price supports have become pure ceilings. Also, they have forced farmers to plan on the basis of history rather than current market forces. The government should encourage a free market.
4. Target prices should not be set so high that they distort the market and encourage production with a consequent plummet in prices.
5.    Set-aside programs should be reduced. Too often, government-held reserves have been dumped on the market at the hint of a price rise.
6. The Department of Agriculture should be an advocate agency for the farmer and not a consumerist special interest organization.
7.  The use of embargoes, unless they encompass all aspects of the economy during a time of national emergency, should be discouraged. They do not work.
8. The categorization and grading of prime farm land is an important step in preventing the uncalled for loss of productive land.

DIXON: I believe that we must invest in America's enormous inventive capability. It is regrettable that only 3.5% of all federal R&D funds go to small business. This should change since traditionally the small business sector has produced by far the largest share of inventions. Most federal R&D money should go to the private sector where the incentives for efficiency and cost-effectiveness are greatest.

O'NEAL: Research and development is the crucial key to America maintaining its edge in technology. One of the reasons that our productivity is declining, relative to the world, is that we no longer are providing the necessary incentives in this area.

The decision as to whether the government should direct its money to the public or private sector should depend on the particular industry involved. No single formula or rigid ideology designed to determine which sector will best advance research and

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development will suffice. Different industries have different dynamics. This should be taken into account by the government.

For instance, the electronics industry develops a good many of its engineers at institutions of higher learning, colleges and universities. Many of these are public. Hence government dollars are best spent by being directed at a public institution.

Within this same industry, a great deal of basic research that has resulted in many useful inventions for the entire population has occurred — the transistor, solid circuitry, etc. This should be encouraged. So, government dollars would go to private companies.

Giving tax credits to companies that train professionals for technology-intensive jobs is desirable. Again, this means that government money goes to private institutions.

The vital thing to address is the fact we are losing our edge in this area, and we must not let this drift continue.

DIXON: We must use Illinois' huge supply of coal to help relieve the energy crisis. I am aware of the "acid rain" problem and believe that we must reach a happy medium between meeting our energy needs and limiting environmental damage. I strongly favor tax incentives that would encourage large investment by the utility companies in more advanced technology in the area of scrubbers for coal-burning plants. West Germany has found a way. We can meet this challenge also.

O'NEAL: The fact of the matter is that we now burn less coal than when Jimmy Carter took office. This means that despite all the rhetoric about the need to use more coal, we are not doing it.

We do need to temporarily lower emission standards where the atmospheric conditions will allow. There should be a sunset provision that insures this lowering of standards does not become a permanent condition.

The use of more coal will help ease the pressure of the Middle Eastern oil countries can bring to bear on the United States. We can lower the need to import their costly crude oil.

The decision to sacrifice all emission standards is one that we need not make. However, if we don't allow ourselves to use our most abundant resource, then we have no one to blame but ourselves for the predicament we face.

These are, of course, short-term measures, and with the technological advances through tax credits given the private sector that I support, this problem will be alleviated in a short time.

DIXON: I am opposed to the peace-time draft. I believe that we should support the President's decision on registration. In principle I believe that we can solve our manpower problems in the military by making incentives in the Armed Forces competitive with private industry.

I support the recent 11 % pay increase for military personnel as a step in the right direction.

O'NEAL: I think we should give the volunteer army every opportunity to succeed. The original thinking was that we had high turnover and low benefits. We then increased the benefits, but we still have a high turnover. There are changes that can be made.

We can increase the time of an enlistment. If it were five years, the likelihood the person entering the service would consider the military for a career would be higher. Second, if we will increase the basic scale of pay, more people would be attracted. Third, we should work to see that those in high technology jobs or jobs that entail high risk receive more pay than other positions.

A return to the draft should be a last resort. Registration, which gives us this option, is a good idea. However, no one should be drafted until the volunteer army has been given a fair test.

DIXON: That step would be to bring inflation under control by means I have described above in the first six questions.

O'NEAL: The first, and most important step the government could take to improve the economy would be to decide to treat the causes of inflation rather than its symptoms. Today, we are the victims of a boom and bust economy brought about by the habits of Washington. First, they take our money with excessive taxes. Then they spend that money to satisfy their special interest constituencies. Finally, when they discover they have spent more than they have, they print money to cover their deficits. All of this means that the dollars we work so hard to earn are lowered in value — inflation.

Measures I support to treat causes:

1.  Constitutional Amendment to balance the budget.
2. Tax cut to help offset the more than $70 billion of new taxes

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added by Carter.
3.  Provide tax credits to companies that hire and train the unemployed.
4.  Create "enterprise zones" in the inner city that encourage business to train and hire hardcore unemployed by giving tax credits.
5.  Slow the rate of increase in federal spending.
6. Slow the rate of expansion in the money supply (to deter the creation of deficits).
7.  "Index" cost of living pay increases so that people are not pushed into a higher tax bracket.

DIXON: I am very concerned about the proliferation of nuclear weapons and, if peaceful circumstances are restored, I would vote for ratification of SALT II. I would do so even though it does not acomplish nearly enough in the limitation of nuclear weapons. I am concerned about verification of the 308 Soviet heavy missiles and the intercontinental range of the Backfire bomber. However, SALT is the chief mechanism for dialogue between the super powers on the most crucial issue of our time.

When circumstances permit I would like to see us advance quickly toward a SALT III agreement with significant reductions on both sides.

We must also look closely at the enormous costs to our weakened economy of an unrestrained arms race. The Pentagon has plans to spend an additional $69 billion to compensate for gaps in strategic armaments which would result if SALT II is not passed.

O'NEAL: I favor arms limitation. However, I am opposed to the SALT II treaty. It is a bad treaty for the United States. It makes us count certain of our weapons as offensive and allows the Russians to avoid doing the same. Another question is verification. Since the Russians have violated every treaty in which they have entered since Potsdam in 1945, it is important to insure verification. Most importantly, this treaty does not contribute to arms limitation. The treaty merely ratifies a Soviet advantage for certain weapons systems.

No one is more committed to peace than me. However, you do not achieve peace through weakness. History provides enough examples of nations losing their freedom because they did not take their military responsibilities seriously enough.

I think we should instruct the State Department to renegotiate the SALT II treaty in such a manner that America does not allow the Soviets to gain a permanent advantage. Some would have us sign SALT II so we could negotiate SALT III. This is wrong. If we sign SALT II, the Soviets will have little reason to negotiate again.

DIXON: I believe that the private enterprise system contains the incentives to limit waste and maintain high quality management. In health care, as in everything else, we should encourage the private sector to give the people what they want and need.

In the matter of hospitalization costs, I favor voluntary cost controls. Here in Illinois we have had noteworthy success in voluntary attempts to hold the line on health care costs.

O'NEAL: History has proven arbitrary controls do not work. Containment can best be accomplished by reforming certain insurance practices, obtaining industry pressure to control spending, government revision in the payment of medicare and medicaid cases, better cost-efficient measures in hospitals, and an increase in health maintenance organizations as an alternative to our traditional medical system. We must do more to increase preventive medicine, rather than continue to allow a crisis care approach to dominate.

These are the reforms that will lower the cost of health care to our citizens. To argue for increased involvement on the part of the government is to turn our backs on the record government has accumulated in the areas of health care in which they currently participate.

The biggest fear most of us have is that a long-term illness will eliminate our savings and that our insurance will not cover these costs. I do favor a privately run, federally backed catastrophic insurance program. This would protect us from the costliest form of health care.

DIXON: I believe the federal government could assist Chicago most in helping to alleviate its unemployment rate which is currently running at over 9%.

O'NEAL: I am not confident any single problem could be totally solved by the use of federal money, but unemployment is an area where government could help by creating "enterprise zones" to encourage small business. We need to:

1.  Encourage job creation in the inner city by reducing Social Security payroll taxes on employers and employees by 90% for workers under 21, 50% for workers over 21.
2.  Encourage small business investment and job creation by reducing the capital gains tax by 50% (on the sale of residential property, the tax reduction applies only when the seller has his or her principal residence in the Zone).
3. Encourage business expansion and retain existing enterprises, reduce business tax rates 15% across-the-board for any business located in and employing at least half of its employees in one or more Zones.
4. Increase small business incentives by (a) allowing three-year, straight-line depreciation on the first $500,000 of assets purchased

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each year, (b) allowing the use of cash rather than accrual accounting methods for firms with gross sales below $1 million, and (c) extend the loss carryforward provision to ten years.

DIXON: Whenever possible I believe that the private sector operating in a free market is best equipped to deal with most of our national problems. I would support legislation that creates tax incentives to encourage the expansion of investments in plants and facilities.

O'NEAL: The emphasis on job creation should be outside of government. This will help increase the number of taxpayers and decrease the number of tax users. The public sector can only offer permanent employment by putting more bureaucrats in place and doing so by increasing the amount of taxes paid by those who do not work for the government.

This does not mean there are not any areas that direct grants should be awarded. Nor does it mean that under no circumstances ought we spend federal dollars for training. It does mean the emphasis should be to increase the number of men and women receiving paychecks from private employers.

DIXON: On the basis of my 30 years in government I believe that improvements can be made. I am convinced that many programs can be made more efficient, saving taxpayers dollars. National programs that are federally funded should have national/federal administration.

O'NEAL: I favor the maximum use of local and state government as the administration unit for government programs. Also, I favor giving these units the maximum flexibility in implementing programs. For these reasons, I would not like to see the federal government take on added responsibilities in the welfare area. Instead, I favor increasing the ability of local and state units to fund the needed programs by lessening the tax burden the federal government imposes to administer costly, inefficient programs.

I do not want to see a meat ax taken to the federal programs. I do think there are many programs such as aid to dependent children that local units better administer. The increased use of block grants (like revenue sharing) would give local authorities more flexibility, and I encourage this approach.

DIXON: In principle I would support legislation that promotes fair international commerce without discriminatory restrictions. Having said that, I must point out that I am strongly opposed to the practice of "dumping," by which foreign producers seek an unfair price advantage in competition with American products by subsidizing manufacturing costs. Where this practice occurs, I would support legislation to prevent it. We should simultaneously pursue international enforceable agreements to eliminate discriminatory trade practices and to promote American goods in foreign markets.

O'NEAL: America has historically been the most productive country in the world. We opposed tariffs because they interfered with free trade. Today, because the government imposes such high taxes and regulates every aspect of production, our companies are at a disadvantage in the world market.

The first step we need to take is to lower the tax burden and the excessive regulations on our producers. This will help our companies to produce at more competitive prices. In those instances where we can determine a foreign competitor offers a product at a lower cost because their government subsidizes the production, then we should impose a countervailing duty, a tariff. Otherwise, we should allow the market to determine the prices.

DIXON: Without attributing fault to any one individual, our foreign policy has appeared to be indecisive. A strong military and strong economic ties to as many nations of the world as possible will ensure an effective foreign policy.

O'NEAL: Under Jimmy Carter, the biggest problem has been inconsistency. Neither our friends nor our enemies know what to expect next from Carter. When he first took office, Carter told us that we should not view the Russians with undue fear. Now, he tells us that they are our historical foe.

Early in his Administration, Carter favored the neutron bomb. He pressured our NATO allies to support us. Their leaders did so at great political cost. Then, at the very last minute, Carter withdrew his support.

After the Russians invaded Afghanistan, Carter sent his National Security Advisor to one country and his Secretary of Defense to another. Then, these two disagreed in public as to our policy.

After assuring the NATO countries we would not invade Iran, he did so. The list goes on and on.

Until we have a single, clear foreign policy we will continue to meander from crisis to crisis. When you have a vacillating foreign policy, it not only baffles your friends, but it also encourages your enemies to test your resolve. This causes a bigger threat of war than anything else.

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