August 15, 1974
Page 28484
By Mr. MUSKIE (for himself, Mr. STEVENSON, Mr. JOHNSON, and Mr. MANSFIELD)
S. 3918. A bill entitled "The Cost of Living Act of 1974." Referred to the Committee on Banking, Housing and Urban Affairs.
Mr. MUSKIE. Mr. President, today I introduce, with the cosponsorship of Senators STEVENSON, JOHNSTON, and MANSFIELD, the Cost of Living Act of 1974. We believe this bill will provide a firm foundation for the economic monitoring function we all agree is so essential to combat current inflation. It will not solve inflation – but it will create an institutional focus to monitor and analyze the severe problems of domestic inflation and shortages, and help fashion policies to begin solving them.
I was gratified when President Ford earlier this week called for Congress to reactivate the Cost of Living Council, which was allowed to expire last April. But reestablishing such an economic monitoring agency could be mere window dressing unless that agency has adequate authority, and resources, to do its job thoroughly.
Earlier this year Senators STEVENSON, JOHNSTON, and I felt strongly enough about this need for continuation of an economic monitoring agency to propose to the Senate S. 3352, introduced on April 11, 1974, an earlier version of this Cost of Living Act, with the cosponsorship of the Democratic leadership and 11 other Senators. The Banking Committees of both Houses had already acted at that time to disapprove the continuation of any authority, including monitoring authority, under the Economic Stabilization Act; and although at that time I favored the retention of standby control authority, I drafted S. 3352 to continue only monitoring authority, to avoid the objections of those who opposed control authority of any sort.
When I presented the economic monitoring agency proposal contained in S. 3352 to the Democratic conference, many of my colleagues agreed with me that its provisions, as well as standby wage and price controls, were justified. Senators STEVENSON, JOHNSTON, and I jointly drafted such a measure, and introduced it, on April 29, as amendment No. 1229 to S. 2986, the appropriations bill for the Council on International Economic Policy. In debate in the Senate in the succeeding days, the standby control provision of this legislation was disapproved, and the authority for economic monitoring was so diluted on the Senate floor to be meaningless. The result was that the entire proposal was laid aside.
In the months since we last took this issue to the Senate floor, double-digit inflation has continued unchecked. In one of his last acts before leaving office, President Nixon on August 2 proposed to the Congress that a skeleton economic monitoring agency be reestablished. And in one of his first acts after taking office, President Ford again called on Congress to reactivate an economic monitoring agency. Congress is now complying with his request with prompt action.
But we must be certain, in our prompt response to the President's request, that the legislation we pass is strong enough to deal with the problems it addresses. I believe, Mr. President, that the proposal we introduce today meets that test.
Our bill grants that authority directly to the President, and allows him to delegate it to a Cost of Living Task Force, a staff agency in the Executive Office of the President. That authority in the bill includes power to delay wage or price increases for 45 days, and extend the delay for an additional 45 days, upon a specific finding by the President.
The job set out for a new cost of living agency is immense. The inflationary problems facing America can easily be expressed in the dramatic numbers – like the 12.6-percent annual rate of increase in the Consumer Price Index over the last 6 months, or the 44-percent annual rate of increase in the Wholesale Price Index last month. But the components and causes of inflation are in fact more complicated: inflation in food prices has quite different causes than gasoline price increases, for instance, and the impact of wage or price increases in some sectors of the economy may be less severe than in others. Our economic activities interrelate: foreign policy decisions, labor relations, research and development, government activity, employment trends – all affect our economy. To analyze the impact of each of these factors, and their interrelationships, requires a Federal effort of the most comprehensive nature.
For instance, an effective economic monitoring agency must be able to collect and analyze economic data adequate to forecast special inflationary and shortage problems in special industries. Conventional economic data, such as that collected by the Bureau of Labor Statistics, and the Commerce Department, are most often historical by nature, telling us what kinds of inflation and shortages we have experienced in the recent past, but not what we can expect in the future. Only under the now-defunct Cost of Living Council was there a Federal agency preparing adequate "forecasting-type" data, such as: wage rates by locality in the construction industry; fertilizer prices, production capacity, import and export data: projected demand data on health; and data on the ability to substitute one raw material for another. Adequate collection and preparation of this data requires clear and comprehensive authority, including subpoena power, which our bill contains, to acquire economic information.
In addition, effective economic monitoring authority must include evaluation of the effect of a variety of Federal decisions on prices and availability of domestic products. For instance, the Agriculture Department, the Treasury Department, the Commerce Department, the Council on International Economic Policy, the President's special trade representatives, the Federal Energy office – all make decisions that have an impact on our import and export policy. The Interior Department, the Federal Energy Office, the Agriculture Department, the Department of Housing and Urban Development – all make decisions affecting the production of important resources. The Labor Department has responsibility for labor relations. Dozens of kinds of regulatory decisions – made by the Department of Transportation, the ICC, the FTC, the Environmental Protection Agency, and other agencies – have important effects on domestic prices and supply. And the many Federal budgetary decisions, made by the Office of Management and Budget and specific agencies, can also have important effects on prices and supplies of specific commodities and products.
Third, Mr. President, an effective monitoring agency must have authority to take positive action, short of wage and price controls, to avoid inflation and shortages in specific economic sectors.
The most important such authority contained in our bill is the power to delay wage and price increases for 45 days, and to extend the delay for an additional 45 days. The initial delay authority may only be used, however, when the President makes a specific finding that a price or wage increase "is likely to have a serious inflationary impact." The delay may be extended for an additional 45 days only if the President makes a subsequent specific finding that "significant injury to the economy as a whole would otherwise result." This flexible delay authority, based on the proposal of Arthur Burns, Chairman of the Federal Reserve Board, would provide the economic monitoring agency, and the President, with effective reserve authority to dampen rampant inflationary price increases.
This delay authority, held in reserve, would supplement the important positive action in controlling inflation which the monitoring agency could take, such as: Working with Government, management, and labor in particular sectors; calling attention, publicly and privately to the need for voluntary restraints in selected instances; reviewing economic concentration as it affects inflation; and conducting hearings on inflationary problems.
None of these functions are now the mission of any other agency. The only executive branch body with the potential economic overview to perform these functions is the Council of Economic Advisers – and its permanent staff of 46 – including both professional and clerical positions – which is far too small to allow it to assume this mission.
Only by approving strong monitoring authority, as contained in this bill, can we have some hope of warning of special short-term inflation and shortage problems we might face in the months ahead, assurance that there will be a continuing attention to the long-term inflation problems our Nation faces, and the confidence that the executive branch will have authority necessary to take the firm anti-inflationary action we need.
Mr. President, I ask unanimous consent that the bill be printed in the RECORD.
There being no objection, the bill was ordered to be printed in the RECORD, as follows:
S.3918
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, this Act may be cited as the Cost of Living Act of 1974.
FINDINGS AND PURPOSES
SEC. 2. It is hereby determined that inflation is a threat to the economic well-being of the nation and its people. The purpose of this Act is to provide the President with a means of focusing attention on the causes of inflation, and encouraging steps necessary to restrain inflation.
PRESIDENTIAL AUTHORITY
SEC. 3. To carry out the purposes of this Act, the President shall–
(a) focus public attention on causes of inflation;
(b) monitor the economy as a whole, including such matters as wages, cost, productivity, prices, sales, profits, imports, exports, and industrial capacity;
(c) work with labor, management, and governmental agencies to encourage price and wage restraint and increase productivity;
(d) improve wage and price data bases for the various sectors of the economy to improve collective bargaining and encourage price restraint;
(e) conduct public hearings as appropriate to provide public scrutiny of inflationary problems;
(f) review the activities of the federal government and the private sector which may have adverse effects on supply or cause inflationary price increases, and make recommendations for such changes as will increase supply and restrain prices;
(g) conduct a continuing review of the effect of economic concentration and anticompetitive practices on inflation and recommend legislation and take other appropriate action to reduce the inflationary impact of such concentration or practices;
(h) evaluate the reasonableness of wage and price increases which may have a material effect on inflation, taking into consideration cost of living, costs of production, productivity, and the resource needs of any sector of the economy; and
(i) delay the implementation, for up to 45 days, of any price or wage increase which the President finds is likely to have a serious inflationary impact, and extend such delay for up to an additional 45 days if the President finds that significant injury to the economy as a whole would otherwise result.
COST OF LIVING TASK FORCE
SEC. 4. (a) The President is authorized to establish, within the Executive Office of the President, a Cost of Living Task Force (hereinafter referred to as the Task Force) to which he may delegate his authority under this Act.
(b) There shall be a Director of the Task Force who shall be appointed by the President by and with the advice and consent of the Senate. The Director shall be compensated at the rate prescribed for level III of the Executive Schedule by Section 5314 of Title 5 of the United States Code. There shall be a Deputy Director of the Task Force who shall be appointed by the President and be compensated at the rate prescribed for level IV of the Executive Schedule by Section 5315 of Title 5 of the United States Code. There shall be two Assistant Directors of the Task Force who shall be appointed by the President and be compensated at the rate prescribed for level V of of the Executive Schedule by Section 5316 of Title 5 of the United States Code. The Director of the Task Force shall be the Chief Executive officer of the Task Force and shall perform such functions as the President may prescribe. The Deputy Director and Assistant Directors shall perform such functions as the Director may prescribe.
(c) The Director shall appoint, employ, and fix the compensation of such officers and employees, including attorneys, as are necessary to perform the functions of the Task Force and to prescribe their duties. In addition to the number of positions which may be placed in GS-16, 17, and 18 under existing law, the Director may, without regard to the provisions of Title 5 of the United States Code relating to appointments in the competitive service, place not to exceed 10 positions in GS-16, 17, and 18 to carry out the functions of the Task Force.
(d) The Director of the Task Force may employ experts, expert witnesses, and consultants in accordance with the provisions of Section 3109 of Title 5 of the United States Code, and compensate them at rates not in excess of the maximum daily rate prescribed for GS-18 by Section 5332 of Title 5 of the United States Code.
(e) The Director of the Task Force may, with their consent, utilize the services, personnel, equipment, and facilities of Federal, State, regional, and local public agencies and instrumentalities, with or without reimbursement therefor, and may transfer funds made available pursuant to this Act to Federal, State, regional, and local public agencies and instrumentalities as reimbursement for utilization of such services, personnel, equipment, and facilities.
(f) Under such regulations as the President may prescribe, officers and employees of the Government who are appointed, without a break of service of one or more workdays, to any position for carrying out functions under this Act are entitled, upon separation from such position, to re-employment in the position occupied at the time of appointment or in a position of comparable grade and salary.
ACQUISITION, CONFIDENTIALITY, AND DISCLOSURE OF INFORMATION
SEC. 5. (a) For purposes of carrying out this Act, the President may by regulation, order, or otherwise obtain such information from, require such reports and the keeping of such records by, make such inspections of the books, records and other writings, premises, or property of, and take the sworn testimony of, and administer oaths and affirmations to, any person as may be necessary or appropriate. The authority to obtain information under this subsection or section of this Act does not extend to copies of disclosures to departments or agencies of the United States excepted from disclosure under subsection (b) of this section.
(b) The authority under this section shall be subject to the provisions of the Freedom of Information Act.
SUBPOENA POWER
SEC. 6. The Director of the Task Force, or his duly authorized agent, shall have authority, for any purpose related to this Act, to sign and issue subpoenas for the attendance and testimony of witnesses and the production of relevant books, papers, and other documents, and to administer oaths. Witnesses summoned under the provisions of this section shall be paid the same fees and mileage as are paid to witnesses in the courts of the United States. In case of refusal to obey a subpoena served upon any person under the provisions of this section, the Director, or his delegate, may request the Attorney General to seek the aid of the United States district court for any district in which such person is found to compel that person, after notice, to appear and give testimony, or to appear and produce documents before the agency.
REPORTS
SEC. 7. In transmitting the Economic Report required under Section 3(a) of the Employment of 1946 (15 U.S.C. 1022), the President shall include a section describing the actions taken under this Act during the preceding year and giving his assessment of the progress attained in achieving the purposes of this Act. The President shall also transmit quarterly reports to the Congress not later than thirty days after the close of each calendar quarter describing the actions taken under this Act during the preceding quarter and giving his assessment of the progress attained in achieving the purpose of this Act.
FUNDING
SEC. 8. There is hereby authorized to be appropriated $5 million for fiscal year 1975 to carry out the purposes of this Act.
EXPIRATION
SEC. 9. The authority under this Act expires at midnight, October 1, 1975.
Mr. STEVENSON. Mr. President, last March I introduced with Senator MUSKIE a bill to bring an orderly end to wage and price controls. At the time, I predicted that abandonment of economic stabilization authority with no provision for an orderly transition to a decontrolled economy would produce a rush to increase prices, a new surge of inflation, and a clamor to reestablish a Federal inflation control agency.
It is sad, but true, that these predictions have come true. In April, the last month of the economic stabilization program, wholesale prices were rising at an annual rate of 8.4 percent. As soon as economic stabilization authority ended, they shot upward to an annual rate of over 15 percent. Now they are rising at the astonishing rate of over 44 percent a year.
Just before the end of the economic stabilization program, consumer prices were rising at an annual rate of 7.2 percent. Today they are rising at an annual rate of 12 percent.
Now, as expected, the public is clamoring for action. But the bill which has been offered, S. 3894, is seriously deficient.
It adds nothing to the President's powers to fight inflation. It makes no mention of the need to review the effects of economic concentration and anti-competitive practices on inflation. It makes no mention of the need to evaluate the reasonableness of wage and price increases which may have a material effect on inflation.
It conveys no power to delay price or wage increases which are likely to have a serious inflationary impact. Nor does it convey the power to acquire the information necessary to determine whether business and labor are behaving reasonably.
It establishes a cost of living task force, but does not give it the resources necessary to do the job.
It calls for a task force director, but his rank would be downgraded from that which Dr. Dunlop enjoyed when he directed the Cost of Living Council. And it permits him to be appointed by the President without the advice and consent of the Senate.
S. 3894, in short, is not a serious effort to deal with the problem of inflation. It is little more than window dressing. If that is all we get for the $1 million which the bill would authorize, we would be better off with nothing and saving the taxpayers' money.
The bill which Senator MUSKIE and I are introducing today would give the taxpayer something for his money. It would give the President essential tools for an effective inflation fighting effort.
It would permit him to acquire the information he needs – with appropriate protections for unwarranted public disclosure of confidential information – to pinpoint activities which are responsible for inflation. It would give the task force which he would establish the stature and staff necessary to do the job. It would insure that a qualified person heads the effort by requiring Senate confirmation. And it would convey the power to delay inflationary wage and price increases for up to 90 days if necessary.
Delay authority is essential, a point recognized by Dr. Arthur Burns, the Chairman of the Federal Reserve Board in his recent testimony before the Joint Economic Committee. Without some means of halting inflationary price and wage increases at least temporarily, the President will be powerless to secure restraint. Without a stick in the closet, sectors of the economy bent on pursuing their own advantage at the expense of others will have a license to continue. The inflationary spiral will continue and the call for a freeze and more controls will be heard throughout the country again.
I do not want controls. One way to prevent the imposition of controls is to give the President the authority to delay wage and price increases. Otherwise, high prices will beget high prices – which will beget high wages – and more high prices.
Inflation today is far more serious than it was during the entire period when the old Cost of Living Council was in existence. It would be ironic to attack the problem now with only a fraction of the resources and power the Government had then. Our bill stops far short of wage and price controls. Indeed, it is not intended to be used for, and contains no authority for, such controls. And if its authority is fully and effectively utilized, it may forestall any need to consider wage and price controls again.