curbs

Beijing says it will not back down in the face of threats, urging the US to resolve differences through negotiations.

China has called United States President Donald Trump’s new tariffs on Chinese goods hypocritical as it defended its curbs on exports of rare earth elements and equipment, while stopping short of imposing additional duties on US imports.

In a lengthy statement on Sunday, China’s Ministry of Commerce said its export controls on rare earths, which Trump had labelled “surprising” and “very hostile”, were introduced in response to a series of US measures since their trade talks held in Madrid, Spain, last month.

“China’s stance is consistent,” the ministry said in a statement posted online. “We do not want a tariff war but we are not afraid of one.”

Trump on Friday retaliated to the Chinese curbs on rare earth exports by announcing a 100 percent tariff on Chinese exports to the US and new export controls on critical software, effective from November 1.

Beijing cited Washington’s decision to blacklist Chinese firms and impose port fees on China-linked ships as examples of what it called “provocative and damaging” actions, calling Trump’s tariff threat a “typical example of double standards”.

“These actions have severely harmed China’s interests and undermined the atmosphere for bilateral economic and trade talks. China firmly opposes them,” the ministry said.

Unlike earlier rounds of tit-for-tat tariffs, China has not yet announced any countermeasures.

Rare earths have been a major sticking point in recent trade negotiations between the two superpowers. They are critical to manufacturing everything from smartphones and electric vehicles to military hardware and renewable energy technology.

China dominates the global production and processing of these materials. On Thursday, it announced new controls on the export of technologies used for the mining and processing of critical minerals.

The renewed trade tensions between the world’s two largest economies also risk derailing a potential summit between Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea later this month. It would have been their first face-to-face encounter since Trump returned to power in January.

The dispute has also rattled global markets, dragging down major tech stocks and worrying companies reliant on China’s dominance in rare earth processing.

WASHINGTON — Sen. Jim Sasser (D-Tenn.), saying “the United States and this Administration have no trade policy,” Saturday called on the White House to impose restraints on shoe imports to help the suffering domestic footwear industry.

“It is time we got beyond simplistic catchwords that have immobilized us for so long,” he said in the Democratic response to President Reagan’s weekly radio address. “Free trade does not really exist in the modern market.”

“The U.S. shoe industry is literally withering on the vine due to a surge in footwear imports that reached 75% of the U.S. market in 1985,” Sasser said. In the senator’s home state, Tennessee, once the fifth-largest shoe-producing state in the country, 12 shoe factories have closed in the last 18 months.

Disarming in Trade War

“Far more is at stake here than the fate of a single industry. Frankly, we’re dealing with the credibility of our entire system of trade law,” Sasser said. “If the President fails to act here, where the evidence of import damage is truly extraordinary, we will be declaring unilateral disarmament in the intensifying battle for world trade.”

The President is required under law to act by next Sunday on a recommendation made by the International Trade Commission in June that he impose a novel shoe import quota system, in which the government would auction the right to import certain amounts of shoes.

“The International Trade Commission found that the shoe industry deserves and needs temporary relief, but the continued vacillation of the White House . . . only affirms what some of us have suspected for some time: that the United States and this Administration have no trade policy,” Sasser said.

“The belief that there is no middle ground between absolute free trade and absolute protectionism is largely responsible for the trade crisis we face today,” he added.

Trade Deficit Zooms

He said that the scope of that crisis is indicated by the growth of the nation’s trade deficit from $28 billion in 1981 to “the very real prospect of trade deficits that will have increased fivefold, to $150 billion” in 1985.

“For the first time in this century, the United States is now a debtor nation and our main export right now is American jobs,” Sasser said.

The problem, he said, is not with Japan or Canada or any other foreign nation. “The problem is ours and it’s a matter of gross inaction,” he said.

“The protectionist label is a red herring when virtually every government in the world seeks to assist its domestic industries with subsidies, with currency manipulation or with quotas,” he said.

WASHINGTON — White House officials announced Friday they have found evidence that Mark Middleton, a former presidential aide, abused his White House access to impress business clients. He has been barred from entering the executive mansion without high-level approval, they said.

The decision came in response to indications that Middleton, a former aide to presidential advisor Thomas F. “Mack” McLarty, had flaunted his White House connections in an effort to become an international deal-maker.

Among other things, he is accused of using his White House business cards and keeping a voice-mail message on the White House telephone system long after he had left his job there. He also is accused of taking business clients to the White House dining room without authorization and portraying himself as someone with influence among President Clinton’s inner circle.

The announcement also reflected an effort on the part of the president to take affirmative steps in response to the burgeoning controversy over illegal and questionable fund-raising for the Democratic Party. While Middleton may prove to be little more than a bit player in the fund-raising saga, revelation of his actions caused the White House considerable embarrassment at a time when it is trying to fend off the scandal.

Before Middleton left the White House in February 1995, he was the chief aide to McLarty, who served initially as White House chief of staff and later as a senior presidential advisor. McLarty chose Middleton as his deputy after watching the young man work as a fund-raiser for Clinton in Arkansas in 1992.

Middleton, 32, a former Little Rock lawyer, also was a friend of Democratic fund-raiser John Huang, who was responsible for raising millions of dollars from Asian American sources–some of which has been returned by the Democratic Party because it was from illegal or questionable sources.

According to a political consultant in Taiwan, Middleton discussed the possibility of accepting an illegal $15-million contribution for the Democratic campaign from an official of the ruling Kuomintang, or Nationalist Party, in Taipei. Both he and Kuomintang officials have denied the allegation.

Middleton issued a statement Friday acknowledging that “questions have been raised about whether I misused access to the White House for personal gain. I categorically deny any implication that I acted improperly.”

Aides Raise Questions

Many of the questions about Middleton were raised by presidential aides who have spent the last week charting the former employee’s comings and goings at the White House in the nearly two years since he resigned.

The record they uncovered shows that Middleton entered the White House complex 65 times between February 1995 and last September and often roamed the premises and dined in the White House mess.

White House Press Secretary Mike McCurry said the record suggests that Middleton abused his access, even though his business activities apparently were not in violation of ethics rules restricting what former presidential appointees can do.

“If you’re a visitor to the White House, you’re not supposed to be roaming the building [and] you’re not supposed to go to the White House mess, except with a White House employee,” a White House official explained.

Approval Condition

McCurry said that White House employees have been told that Middleton will not be allowed to enter unless he has the approval of the chief of staff. Until now, Middleton, like any other former employee, has been able to enter the complex at the invitation of anyone who works at the executive mansion.

“The White House looks askance at anyone misrepresenting themselves as a representative of the White House,” McCurry emphasized.

According to White House records, Middleton saw the president on six of his visits to the White House since February 1995. On one occasion, he accompanied James Riady, scion of a wealthy Indonesian family and a close friend of the president. They engaged Clinton in a discussion of U.S. trade policy with China.

Before joining the administration as a Commerce Department official, Huang was employed by the Riadys’ Lippo Bank. Middleton apparently made the acquaintance of both Riady and Huang in Little Rock, where they worked for Worthen Bank in the mid-1980s.

On another occasion after leaving his government post, officials said, Middleton attended a presidential reception at the White House accompanied by Siti Hediati Harijadi, the daughter of President Suharto of Indonesia. According to Middleton’s lawyer, Robert Luskin, Middleton is trying to broker a business deal for Suharto’s daughter.

Records show that eight of Middleton’s post-employment visits were authorized by McLarty. But White House officials said that McLarty remembers only one such visit, on March 20, 1995, when Middleton brought his new employer, Steven Green, then-owner of Samsonite and other companies, to the White House.

But most of Middleton’s visits to the executive mansion were authorized by lower-level employees who were Middleton’s friends. It was on these visits that White House officials suspect he took advantage of his access to escort potential clients, such as Suharto’s daughter, through the hallways and to the dining room.

For his part, Middleton claims that most of his visits were personal. “I visited the White House often because that is where my friends worked,” he said in his statement.

Visits Explained

But he acknowledged that he was occasionally accompanied by business associates.

“On a few occasions–probably less than 10 in total–I also had breakfast or lunch in the White House mess, sometimes with persons who were friends or business associates of mine,” he said. “I took them there as a courtesy and as an act of friendship. I never discussed business, raised money or arranged meetings with any White House official in connection with any of these visits.

“I never implied in any fashion that I still held a position in the White House or that I had any special influence there; I do not believe that anyone ever understood my efforts to arrange a lunch or a tour as anything other than as the modest gestures that they were.”

McCurry said that Middleton’s voice-mail message recently was erased from the White House telephone system. Officials are trying to decide whether to establish a policy governing how long such messages can be retained after an employee leaves.

“There was no good reason for his voice mail to be active for more than a year,” McCurry said.

As McLarty’s deputy, Middleton was often present during his boss’s meetings with U.S. and foreign business executives, such as the Riadys. At Enron, a Houston-based energy company, for example, executives recalled that they often talked to Middleton when McLarty was unavailable and developed a friendship with him.

Luskin, Middleton’s lawyer, said that his client received an “ethics briefing” shortly after he resigned. He was reminded that federal law prohibits him from lobbying the government on any issue in which he had been “personally or substantially involved.”

Different Standard

But Middleton was not asked to adhere to the much tougher standard imposed on those designated “senior employees.” That standard would have barred him from lobbying the White House on any issue, officials said.

Middleton maintained his relationship with the Riadys and corporate executives, such as those at Enron, after leaving the White House.

Not long after he had left, Middleton established his own company, CommerceCorp International, with an office on Pennsylvania Avenue near the White House. He traveled abroad, looking for business opportunities.

“I am going to Asia, the Middle East and beyond,” Middleton told an Arkansas business publication in February 1995 as he embarked on an overseas tour. “I’m going out to meet people I have built relationships with.”

Middleton called on one of Riady’s business partners, Hashim Ning, in June 1995, while the elderly Indonesian was recovering from surgery. He brought with him a personal get-well letter from Clinton. After Ning died, his relatives contributed $450,000 last year to the Democratic Party.

On Friday, Middleton said that he was “not responsible in any way” for the contribution made by Ning’s relatives.

Middleton also went to Taiwan on Aug. 1, 1995. While there, according to a Taiwanese political consultant who said he was present, the former White House aide met with the chief financial officer of the Kuomintang and discussed a $15-million contribution–a discussion denied by both Middleton and the Kuomintang official. Such foreign contributions to U.S. campaigns are illegal.

Middleton’s accuser, C.P. Chen, said that Middleton also encouraged Kuomintang to hire him as its Washington lobbyist to provide a “direct channel” to Clinton. Middleton has denied making any such solicitations.

Amy Weiss Tobe, spokeswoman for the Democratic National Committee, said that Middleton was not authorized to raise funds for the Democrats.

However, White House officials confirmed that Middleton had been involved in raising money for the Clinton Birthplace Foundation, a group that intends to make a historic site out of the president’s childhood home in Hope, Ark.

In Taiwan, a businessman who also met with Middleton recalls that the young man was looking for a foreign business partner for Wal-Mart Stores Inc. and other U.S. firms. The businessman, who declined to be identified, said that he admonished Middleton about trying to use his official contacts to make deals.

As this businessman recalled their conversation: “I told him, ‘Mark, this is not the way to do business. You are too young. You’re using your position for business. But really you’re being used by others.’ ”

Luskin said that Middleton was not employed by the Riadys or the governments of Indonesia or Taiwan, even though he maintained close contact with them. Luskin declined to name any of Middleton’s business clients.

Times staff writers Maggie Farley in Taiwan and Richard Serrano in Little Rock, Ark., contributed to this story.

Canberra says restrictions will be lifted following a ‘rigorous science and risk-based assessment’.

Australia has announced that it will lift tough restrictions on beef imports from the United States, removing measures singled out for criticism by US President Donald Trump.

Agriculture Minister Julie Collins said the government would remove the biosecurity restrictions after a “rigorous science and risk-based assessment” found the risks were being managed on the US side.

“Australia stands for open and fair trade – our cattle industry has significantly benefitted from this,” Collins said in a statement.

Australia, which has some of the world’s toughest biosecurity measures, has until now not accepted beef from cattle raised in Canada and Mexico but slaughtered in the US.

Canberra lifted a ban on beef from cows raised and slaughtered in the US, introduced in response to an outbreak of mad cow disease, in 2019.

The move comes after Trump called out Australia’s restrictions on US beef in his April 2 “Liberation Day” announcement of sweeping tariffs on dozens of countries.

“Australia bans – and they’re wonderful people and wonderful everything – but they ban American beef,” Trump said.

“They won’t take any of our beef,” Trump added.

“They don’t want it because they don’t want it to affect their farmers and you know, I don’t blame them but we’re doing the same thing right now starting at midnight tonight, I would say.”

Australia, which exports about 70 percent of its beef, is among the main suppliers of red meat to the US, but consumes little US beef.

Australia exported about 26,000 tonnes of beef and veal to the US in the first three weeks of July, according to government statistics.

Meat & Livestock Australia, a producer-owned company that supports the local beef industry, said the changes would have a minimal effect on the market.

“The potential for US beef to be imported into Australia in large volumes is minimal, given the high demand for beef in the US, the low US cattle herd, the strength of the Australian dollar, our competitive domestic supply, and most importantly Australians’ strong preference for high-quality, tasty and nutritious Australian beef,” the company said.

“In fact, demand for Australian beef in the US continues to grow. In June 2025, exports to the US rose 24 percent year-on-year, despite a 10 percent tariff introduced in April.”

WASHINGTON — The Trump administration directed immigration officers to pause arrests at farms, restaurants and hotels after the president expressed alarm about the impact of his aggressive enforcement, an official said Saturday.

The move marks a remarkable turnabout in Trump’s immigration crackdown since he took office in January. It follows weeks of increased enforcement since Stephen Miller, White House deputy chief of staff and main architect of Trump’s immigration policies, said U.S. Immigration and Customs Enforcement officers would target at least 3,000 arrests a day, up from about 650 a day during the first five months of Trump’s second term.

Tatum King, an official with ICE’s Homeland Security Investigations unit, wrote regional leaders on Thursday to halt investigations of the agricultural industry, including meatpackers, restaurants and hotels, according to the New York Times.

A U.S. official who was not authorized to comment publicly and spoke on condition of anonymity confirmed to the Associated Press the contents of the directive. The Homeland Security Department did not dispute it.

“We will follow the president’s direction and continue to work to get the worst of the worst criminal illegal aliens off of America’s streets,” Tricia McLaughlin, a Homeland Security spokesperson, said when asked to confirm the directive.

The shift suggests Trump’s promise of mass deportations has limits if it threatens industries that rely on workers in the country illegally. Trump posted on his Truth Social site Thursday that he disapproved of how farmers and hotels were being affected.

“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” he wrote. “In many cases the Criminals allowed into our Country by the VERY Stupid Biden Open Borders Policy are applying for those jobs. This is not good. We must protect our Farmers, but get the CRIMINALS OUT OF THE USA. Changes are coming!”

While ICE’s presence in Los Angeles has captured public attention and prompted Trump to deploy the California National Guard and Marines, immigration authorities have also been a growing presence at farms and factories across the country.

Farm bureaus in California say raids at packinghouses and fields are threatening businesses that supply much of the country’s food. Dozens of farmworkers were arrested after uniformed agents fanned out on farms northwest of Los Angeles in Ventura County, which is known for growing strawberries, lemons and avocados. Others are skipping work as fear spreads.

ICE made more than 70 arrests Tuesday at a food packaging company in Omaha. The owner of Glenn Valley Foods said the company was enrolled in a voluntary program to verify workers’ immigration status and that it was operating at 30% capacity as it scrambled to find replacements.

Tom Homan, the White House border advisor, has repeatedly said ICE will send officers into communities and workplaces, particularly in “sanctuary” jurisdictions that limit the agency’s access to local jails.

Sanctuary cities “will get exactly what they don’t want, more officers in the communities and more officers at the work sites,” Homan said Monday on Fox News Channel. “We can’t arrest them in the jail, we’ll arrest them in the community. If we can’t arrest them in the community, we’re going to increase work-site enforcement operation. We’re going to flood the zone.”

Madhani and Spagat write for the Associated Press.

The council chairman of a popular UK tourist destination has said that introducing a new car park was “not plausible” as the village continues to struggle with overtourism

Plans for a new car and coach park in one of England’s most idyllic villages have been withdrawn to deter more tourists from visiting. While some destinations clamour to intrigue travellers, this holiday hotspot in Gloucestershire says “enough people” are already visiting.

Bibury – often called the ‘Capital of the Cotswolds’ – sees thousands of tourists visit from across the world annually. But the fairytale-esque village is considered a victim of its own beauty, as hordes of tourists have been causing significant traffic and chaos in the area.

As reported by the BBC, Craig Chapman from Bibury Parish Council said that a potential proposal for a car park would have been rejected by planners had it made it to the council. While the proposal was eventually dropped, Chapman said there are “enough people coming into the village”.

READ MORE: Insanely beautiful UK village is so magical you won’t ever want to leave

He continued: “the thought of having an out of village car park with 130 cars and 10 coaches – at least 500 people shuttling down to the village or walking the narrow pavement was not plausible.”

Bibury has garnered a reputation as the ‘most beautiful village in England’ as once described by 19th century writer William Morris. Today, it is home to a few hundred residents but welcomes thousands of visitors daily, with up to 50 coach buses coming into the village a day.

Locals have grown increasingly unnerved by the massive tourist crowds descending on the area. To address the problem of overtourism, residents have formed a working group that includes councillors and police. Gloucestershire County Council has also announced plans to tackle overtourism in the village.

Early this year, reports emerged that coaches could soon be banned from stopping and parking in the village. However, less drastic measures will be implemented sooner.

Over the next few months, the layout of parking bays will be updated to prevent coaches from parking or idling in the layby on the B4425. This is next to the Swan Bridge in the centre of the village.

The second phase of plans will see the potential introduction of restrictions on coach access to the centre of Bibury. In order to move forward with this, a legal consultation process would be needed and is set to start in early summer.

Longer-term recommendations from the working group also include improving signs to direct coaches away from the village’s narrow lanes. In addition, the group wants to explore alternative parking options outside the village.

Finally, the local working group wants to encourage tourists to use other modes of transport to visit the village, including walking, cycling or using public transport. There is no direct train into Bibury, however many travellers take a direct train to Kemble from London and then get a 24-minute taxi to Bibury.

All said, there are still plenty of other villages in the Cotswolds to explore and which deserve traveller attention. Despite being slightly less popular than Bibury, Broadway is considered to be the ‘jewel of the Cotswolds’.

Located in the north of the region, the village is known for its manicured lawns, art galleries and classic tea shops. Broadway is a particular gem for art and antique lovers and collectors.

SACRAMENTO — After nearly seven years of hibernation, a ballot initiative overwhelmingly approved by the voters is emerging from its slumber to challenge the way California governments spend the taxpayers’ money.

Designed by tax crusader Paul Gann to limit public spending, Proposition 4 was largely forgotten after it won passage in 1979. But now the measure’s spending curbs are on the verge of taking hold–offering the prospect of a tax rebate and the threat of deep program cuts.

When the new fiscal year begins July 1, the state will be within sneezing distance of the measure’s spending limit–just $95 million below the lid in a budget of nearly $37 billion. State analysts expect the limit to take effect by 1987, preventing the state from spending an estimated $900 million it will collect.

Possible Tax Refund

The awakening of the initiative has prompted Gov. George Deukmejian to suggest the possibility of a tax refund.

But others fear that the measure will ultimately put the brakes on economic growth in California by handicapping government’s ability to provide highways, schools and other necessary services.

Major business organizations, the education establishment and lobbyists for local governments have already begun searching for ways to divert money that would otherwise be returned to the taxpayers.

Three business groups that originally helped draft the initiative–the state Chamber of Commerce, the California Assn. of Realtors and the California Taxpayers Assn.–are leading a drive to alter Proposition 4 and free highway construction from the spending restriction.

And many of the state’s leading politicians, including state Supt. of Public Instruction Bill Honig, Los Angeles Mayor Tom Bradley and Assembly Speaker Willie Brown (D-San Francisco) have quietly come to the conclusion that the limit must be modified or repealed.

“Eventually, I think you’re going to have to repeal it because it’s a death sentence for the schools,” Honig said. “It will put the state in such a straitjacket that you’ll end up with a second-rate state–and I don’t think the people will stand for it.”

Proposition 4 began with a simple idea: Put a specific limit on the rate of growth in government spending.

Gann’s measure followed on the heels of Proposition 13, the 1978 property tax-cutting initiative and was dubbed “the spirit of 13” by its backers. The constitutional amendment drew a broad range of supporters that included then-Gov. Edmund G. Brown Jr.

Overwhelming Approval

Voters, outraged by high taxes, double-digit inflation and dollar-a-gallon gasoline, approved the initiative with an amazing 74% of the vote.

Now, all levels of government–the state, counties, cities, school districts and special districts–can increase spending at a pace governed by a formula based on population growth and either the national inflation rate or the increase in per-capita income–whichever is lower.

The rate of inflation is calculated by using the U.S. Consumer Price Index.

Revenues collected above the limit must be returned to the taxpayers within two years, unless voters agree to raise the lid for a four-year period.

The measure is aimed primarily at government’s ongoing operations, including such programs as education, health, transportation, welfare, prisons, parks and road and school construction.

A variety of exceptions were built into the initiative that provide some protection for long-term capital improvements and programs that directly pay for themselves. Some sources of income are not subject to the restraint, including bonds, tidelands oil revenues, user fees collected to pay for a particular service and proceeds from the sale of land. Certain state expenditures also are exempt, including unrestricted payments to local governments, interest payments on loans and spending required by the federal government or a court.

In 1979, state analysts believed it would be many years before the state ever reached its spending restriction. But during the last several years, California has enjoyed both low inflation and economic growth, a combination that has pushed state revenues to the limit.

Lack of Flexibility Cited

“Over a period of four to five years, the limit will rise at a rate well below the growth of the state’s economy,” said former Legislative Analyst William G. Hamm. “The state would be put in the position of having to reduce services. Ultimately, the limit is just not flexible enough to stand up over a long period of time.”

Since Proposition 4 was approved, public resentment toward state taxes appears to have cooled off somewhat. A Los Angeles Times Poll in 1983 found that 71% of those surveyed said they were either satisfied or neutral about the level of California taxes they were paying.

During the last several years, 10 cities and counties have reached their own spending constraints and asked the voters to raise their limits. In all but one case, the voters agreed, local government officials report.

In a 1984 election in Santa Monica, for example, a measure to hike the spending lid by $4 million to pay for more police won 74% of the vote while a second measure to raise the cap by $3.5 million for public works won 69%.

Paradoxically, the initiative spawned during former Gov. Brown’s “era of limits” may make his successor, George Deukmejian, its biggest beneficiary.

Should the Republican governor win election to a second term in November, Proposition 4 offers him a golden opportunity to preside over a politically popular tax refund.

The governor hinted at that prospect earlier this year.

Speaks of Refund

“That might be a good possibility of happening,” he told reporters. “If we got more revenue in than we could legally spend, it would have to be returned. . . . You’re not going to be able to expand and have a mushrooming bureaucracy.”

Deukmejian, who has enlarged the state budget each year of his first term, could accomplish his longtime goal of cutting back the size of government. Armed with the Gann limit, he would have a powerful tool at his disposal to block legislative spending proposals and reduce social programs popular among Democrats.

At the same time, the limit would create a sizable surplus that could not be spent. This would allow the governor to propose a rebate without incurring criticism from the Legislature that he was hoarding funds needed for programs and services.

“We would enjoy the people’s will being carried out,” said Steven A. Merskamer, Deukmejian’s chief of staff.

Lt. Gov. Leo McCarthy, who was a leading advocate of Proposition 4, worries now that the state could cut services and give money back to the taxpayers at the same time that it is unable to make up for large reductions in federal aid resulting from the Gramm-Rudman deficit-cutting measure.

A tax rebate could take many forms–especially since there is no requirement that the people who paid the taxes are the same ones who would receive a refund.

Selected Tax Breaks

The governor and lawmakers could use the opportunity to give tax breaks to selected groups, such as the multinational corporations that have long been seeking elimination of the unitary tax, one legislative staff member suggested.

Legislators have also begun looking at the possibility of developing creative methods of financing to make up for cuts in some state programs. For example, the state could offer tax credits to developers who carry out projects deemed desirable, such as construction of schools or low-income housing.

Already, business leaders, educators and local officials are angling for ways to divert money from a possible refund by taking advantage of loopholes in Proposition 4.

The proposal that has advanced the furthest is a constitutional amendment authored by Sen. John Foran (D-San Francisco) that would remove road and highway construction expenditures from the limit by declaring that the gasoline tax is a user fee, not a tax. The measure, which would be placed before the voters in November, cleared the Senate and is pending in the Assembly.

Deukmejian, in a rare break with the business community, opposes the measure.

“I strongly supported Proposition 4,” Deukmejian said in a speech last week. “I believe its limit on government growth is very reasonable, and I don’t agree with those who say we should do away with it so taxes can be raised.”

Gann said he also is against the Foran bill “simply because it kicks a hole in 4.”

Key Supporters

Among the bill’s backers are three people who helped Gann draft Proposition 4 in 1979: Dugald Gillies, lobbyist for the California Assn. of Realtors; James P. Kennedy, vice president of the California Chamber of Commerce, and Kirk West, then executive vice president of the California Taxpayers Assn. and now president of the Chamber of Commerce.

“Everything is made to be altered,” Gillies explained. “Even the 10 commandments are altered by interpretation. The Constitution is altered by interpretation. Gann was meant to be dealt with in the same context. The flexibility was built right into it.”

Gillies argued that the Gann limit will not restrict growth in California because voters have the option of raising the spending lid. But he said the spending restraint should be altered to exclude highways because of a tremendous need for new roads around the state.

Education has become another rallying point for opposition to the spending restrictions.

Honig predicts that unless the Proposition 4 limit is altered, California’s drive to improve education will eventually come to a standstill. Although school districts may not reach their limits for at least a year, Honig said, the spending lid would eventually halt efforts to reduce class size and institute other reforms.

“It is very shortsighted to limit the growth of schools by an arbitrary limit of inflation plus growth,” Honig said. “If Gann cuts in, we’ll never catch up with other industrial states. That’s going to put us at a competitive disadvantage.”

Bradley, Deukmejian’s Democratic rival in the gubernatorial race, also cites the need for more spending on education as the primary reason to alter Proposition 4.

Popular Vote

“The problem we face particularly in the field of education indicates to me there is a need for either repeal or modification that must be put before the people,” the Democratic candidate said in an interview.

One suggestion that is gaining popularity among opponents of the limit is to leave the concept of the spending restriction intact while changing the formula for calculating the spending cap.

Instead of a formula that would use either the Consumer Price Index or per-capita income in calculating the spending limit, the idea is to use only California’s per-capita income. Advocates of this change say personal income is a better indicator of the state’s economic growth.

Among those calling for modification of Proposition 4 are the Capitol lobbyists for city and county government.

“This has the potential of being a hell of a lot more destructive for public services than Proposition 13,” said Larry Naake, executive director of the County Supervisors Assn. of California. “At the same time that we’re talking about not letting the state appropriate money, we’ve got counties that are going under.”

Naake and other local government officials have begun lobbying to get a share of the money that the state would be prohibited from spending on its own programs. Such transfers–allowed under Proposition 4 as long as lawmakers do not place restrictions on the way the money can be used–would then count against the limits of the jurisdictions that spent the money.

Limits Will Be Reached

But even with that money, most cities and counties will reach their own limits sooner or later. When that happens, some officials predict, they will be unable to provide basic services as well as those needed for economic development at the local level.

“It certainly does inhibit our ability to finance growth in certain situations,” said Kenneth J. Emanuels, lobbyist for the League of California Cities. “It’s anti-growth in terms of business development. It certainly is not the situation that was envisioned.”

Despite the widespread perception of problems with Proposition 4, most advocates of altering the measure expect that the spending limits will have to take hold before the public will be willing to make major modifications.

Many politicians are reluctant to predict the worst–recalling how wrong they were in making dire predictions of financial disaster if Proposition 13 passed.

“I think it’s hard to change something like Proposition 4 before the problem is at our doorstep,” Emanuels said. “In the past, we haven’t been persuasive when we predicted problems. We’re going to have to experience some of this before there’s a consensus.”