September 9, 1975
Page 28206
Mr. PERCY. The Senator from Illinois was not leaving the floor because of his disinterest in the subject. It is a subject of great interest. But I have a constituent from Illinois who wants to talk about this subject.
I have just finished a meeting with one of the largest airlines in the world, all of whom, if they get an increase in fuel prices, will have great difficulty. But they simply feel that the present program is not working. They support the President's program and hope we will sustain the veto.
I told them the position I already had taken on the floor of the Senate, and they were very gratified about that. When we look at the surveys and see that better than half the public say that if decontrol would increase production, they would favor it. I think the American people, as a whole are pretty sophisticated about how this market works. I feel that they do not think that the continued control, regulation by Congress in the marketplace, month after month, year after year, is the right way to run our market, the right way to run our economy, the right way to run our country. Although I have not taken a referendum on it, I think that when I cast my vote, the people of Illinois, for the most part, will understand.
When I proposed a gasoline tax and mandatory regulations on heavy, gas-guzzling dinosaurs, this was not the most popular thing to do. I could not get a single cosponsor of the proposed legislation which would provide a 30-cent gasoline tax. But I happen to think it is right, and there was very little criticism in my State of Illinois. People want to see us do something about this energy crisis.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. HOLLINGS. I yield.
Mr. MUSKIE. If the Senator is looking for people who would criticize that position, I invite him to come to my State.
The Senator speaks of holding the Democratic Party's feet to the fire, but he is really asking us to put the feet of the consumers in my State and his State to the fire and then blow the fire out for many. If the Senator does not believe that to be true, I suggest that he come to my State. I will take him into homes which are so cold in the winter that one would think there had been no fire for days and weeks on end.
Mr. PERCY. If the Senator will yield for clarification on that point, I point out that that is why the Senator from Illinois put the tax right on gasoline, so that it would not be spread across the board and go on hitting fuel and petrochemicals and other things that would be spread into the cost of living. Gasoline is a flexible item, and demand for gasoline will vary with the price.
Mr. MUSKIE. The Senator is going to support a position tomorrow — he said he is — that is going to increase the price of petroleum products across the board — gasoline, heating fuel, industrial fuels. On three counts, the Senator would be hard put to find an approving voice in my part of the country. I have not been in Illinois recently. He would not find an approving voice in my part of the country.
The second point I make in response to the Senator is this: The reason he is supporting the President's veto is to put our feet to the fire. For what purpose? To rescue the President? When the President vetoes — and he has done it — what he has done is to culminate the fruition of the program he asked us to endorse early this year. What does he need to be rescued from — his own program?
He said he was going to impose three $1 increments of the import fee on oil imports. He asked Congress, in addition, to impose a $2 excise tax, and he announced that he was going to decontrol, fully decontrol, not over 39 months, not by the end of this year, but by April 1 of this year, the price of old oil.
So, by vetoing, he has achieved what he wanted. What does he have to be rescued from? Was the policy wrong when he announced it early this year? Is it wrong to veto and bring on the consequences from which he now wants to be rescued? The President has what he wanted. Congress has resisted him for all these months.
The question now is whether the congressional position or the President's position can be sustained tomorrow. The President wants the headlines tomorrow to say, "President Ford Wins Victory." Then, what is wrong with giving him the victory that he asked for in his State of the Union message in January — complete decontrol — and letting him take the consequences?
There is evidence that he is beginning to feel a little uneasy about these consequences.
Mr. PERCY. Mr. President, will the Senator yield on that point?
Mr. MUSKIE. I will yield in a moment.
There is evidence that he is beginning to feel uneasy about those consequences. He wants to be rescued. He is asking us to rescue him. Why else would he offer to give us 45 days to think the matter out? If he was so certain that decontrol was the right answer in January and in February, is he shaky about it now? You can bet your boots he is.
His economists cannot be telling him that much different from what economists are telling the Budget Committee about the economic consequences of decontrol. His economists cannot be giving him conclusions that are that much different from those of the Congressional Budget Office, whose analysis I put in the RECORD yesterday.
The vote tomorrow involves not just energy crisis but also inflation and jobs. It is as simple as that.
The President is beginning to understand that, with unemployment very slow to recover, with his own budget projection of 3 to 4 years, the 7 percent and more unemployment, with a resurgence or apparent resurgence of inflation, perhaps he was wrong to recommend decontrol in January and February. I think he is wrong.
Senator HOLLINGS has done an excellent job, as he has been doing right along, putting his finger on the elements of this issue. We have had price increases in energy, the highest over a similar period of time over the history of our use of oil in this country, so high that people in my State are keeping their thermostats — not at 68; they are lucky if they can get them up to 60. It was estimated in a recent story in my State that the cost of energy, if all of these proposals for decontrol and higher OPEC prices and everything go through, will amount to 30 percent of the gross income, on the average, of Maine citizens.
If the Senators think that is an invitation to wasteful uses of energy, if they think that is an invitation to wasteful consumption, they should come up to my State and try it; come up to my State and look at the consequences with respect to inflation.
I will tell them something: I have spent a lot of time in my State this year, because I am running for reelection next year. I want to know what the people are saying. I have spent 1 out of 3 days up there. We are being criticized, we in Congress, because we do nothing effective to stop the President's energy policy.We are not being criticized because we do not have a policy. We are being criticized because we have not done anything to stop his.
The people fully understand. The Senator from Illinois speaks about the sophistication of the voter. The people in my State fully understand what the President wants to do to them. As a matter of fact, he came up on Labor Day weekend and told them. He expressed sympathy, but did not change his policy an iota.
As I traveled over the State, I had people say to me, "Look, you have a Democratic majority. Why can't you override those vetoes? The President is raising energy prices and he says he is going to veto the bill. Why can't you override it?"
If the Senators are under the mistaken idea that in my part of the country, at least, criticism of Congress on energy implies approval of what the President is trying to do, they had better take another look at public opinion, especially if this veto is sustained and the consequences follow.
I will tell the gentlemen, I would not want to be in the shoes of the gentlemen who are going to support the President tomorrow if I planned to run for reelection at any time. If they support the President tomorrow and if his policy — and that is his policy, decontrol — is allowed to go full force into the future, they are the gentlemen who will be held accountable in my part of the country.
I do not intend to be held accountable in my part of the country.
With respect to decontrol of old oil, the issue is very clear. Old oil is the one means available to us to ease the transition into the future of higher energy prices that is surely coming, to buy us time to adjust, to impose the pressure of time on OPEC countries, to buy us time to develop alternative sources of energy. And the President and the gentlemen who support him want to throw that time away. They want to throw it away.
They want to say to these people who are barely eking out a marginal living, "You cannot have the time to adjust your incomes to a high-energy-cost economy. You cannot have that time."
They are saying to those who are unemployed and who are waiting for recovery and are looking for jobs, "You cannot have those jobs until we have raised the price of oil, raised the price of energy. You have to wait, continue to stand in the unemployment lines a little longer, and at the same time pay higher prices for the necessities of life. You cannot have that time."
That is what the President said today to those who are finding rising prices intolerable — and they are rising again. They are saying, "Sorry, brother, eat it. Eat it. Because we are going to unleash another wave of inflation on you."
What were the CBO figures yesterday? Let me repeat them. The CBO projects the following economic costs of the President's decontrol plan by the end of 1977: a loss of 600,000 jobs; a 4-percent increase in prices; and a 20-percent reduction in the growth of GNP.
These figures are bad enough, but they are based upon two extremely optimistic assumptions about the future price of oil: one, the removal of the $2 per barrel tariff on imported oil; and, two, a limitation on OPEC price increases of $1.50 per barrel over the next 2 years. If those two optimistic assumptions are borne out by our experience, then the losses I spelled out are pretty reasonably measured.
Six hundred thousand more unemployed. What will that do to the budget, I ask Senator HOLLINGS? The distinguished Senator from Illinois has been one of the leaders in support of the new budget process. He knows as well as I do that the budget deficit is attributable, directly attributable, to recession, unemployment, the consequent loss of Federal revenues, and the consequent costs of unemployment. The effect of the President's veto will be to deepen the recession, increase unemployment, increase the impact to the President's budget, and force it into a higher deficit, not just this year, but next year and through 1977 and 1978. That is what the President's policy is inviting.
I hope my good friends on the other side of the aisle, and any other Senator who is contemplating supporting the President's veto message tomorrow, bear in mind these consequences. They are not phantom. They are very real. Every economist who has come before the Committee on the Budget — and we do not restrict our witnesses to those who have one particular economic philosophy — is in agreement that these kinds of consequences are going to flow. If we want to accept them, we must expect to be held accountable, because we will be.
I say thank you to my good friend fromSouth Carolina who is emerging, I think, as one of the most articulate, eloquent, and informed spokesmen in this field of energy. I cannot understand why the press has not gotten the message. He certainly has made it very clear — to me, at least. It may be that the two of us are wearing blinders. But I do not really think so. I think we have put the finger on the heart of this issue this afternoon. I hope that, somehow, two-thirds of the Senators in attendance and voting tomorrow will vote to override what is, I think, a grossly mistaken veto.
Mr. HOLLINGS. Mr. President, the Senate should not have the idea that we have not been or at least attempted to be objective in this whole battle against inflation. When the Senator from Illinois came upon the floor, I interrupted my comments relative to those contributing factors. I said, like Pogo, we have seen the enemy and it was partly us, and I outlined in detail how congressional and congressionally approved spending by the President had accelerated into a soaring spiral upward, but that we had finally taken hold of ourselves, Mr. President, on that score, with the Committee on the Budget, under the leadership of our capable friend from Maine.
He has hurt some feelings, I am positive, around this Senate body. Nobody in the "club" likes to offend anyone. Certainly no one likes to call on another man's pocketbook or his vote with respect to what priorities economically he thinks should be given first order.
But the Senator from Maine has stood foursquare in a comprehensive set of hearings on every facet of the economy, and then stood foursquare on the floor opposing not only the military procurement bill because it was in excess of the agreed to budget figures by the Senate but also the school lunch conference report which exceeded the figures agreed to by the Senate.
I think he stands again this afternoon in the same stead as the keeper of the conscience on congressional spending or certainly on policies approved by Congress that would cause additional spending, additional inflation, more recession, more unemployment, and further economic chaos in this country.
So he is not speaking, as he has referred just a moment ago, as views having been well-taken in visits around his own State but as views taken from a comprehensive vantage point of having listened to all of the economists, bankers, business leaders, chambers of commerce, labor leaders, retail merchants, politicians, and the like. He has singled this out in a very cogent way, pointing up what is the real issue.
The Congress is beginning to bring into focus its program and in the interest of time since — I see other colleagues want to address the Chair — I ask unanimous consent that an article "Taking Stock" be included in the RECORD at this particular time.
There being no objection, the articlewas ordered to be printed in the RECORD, as follows:
TAKING STOCK
Now that the President and Congress are both in recess, this is a good time to take stock: the President's program on energy — and the Congress' program.
The President opted for the price approach: i.e., allow prices to increase on oil and gas. This would cause America to use less, less would be imported, and profits would encourage domestic production. On January 20, the President announced a $3 excise tax on each barrel of imported oil to be applied in $1 increments, and he declared that price controls on old oil would go off April 30, 1975. The President has applied two of the three dollars excise tax and has extended the April date to August 31, 1975 for decontrol. When Congress tried to remove the authority to impose an excise tax, the President vetoed it. Trying to turn from a short supply of oil and gas to a plentiful supply of coal, the Congress passed a Strip Mining Bill, but the President vetoed it. A bill by Congress requiring better insulation in construction was vetoed by the President.
Two-thirds of the natural gas burned under industrial boilers is wasted. A bill to convert these boilers from gas to coal, thereby increasing the supply of natural gas for this winter, was vetoed by the President. The extension of controls over old oil with a price rollback on the cost of new oil was vetoed by the President. The President has been steadfast in his insistence upon raising the price and hoping for conservation. This is the indirect approach. You continue to raise prices, and continue to hope. Gasoline has gone from 35 cents a gallon in October of 1973 to 62 cents. What are the results? Instead of conserving, Americans are using more gasoline than before.
Instead of increasing domestic production, refinery output is down 500,000 barrels of oil a day.
Instead of decreasing foreign imports, imports are up 500,000 barrels a day. Obviously, the marketplace cannot distinguish between the President's increases and the OPEC cartel increases. Instead of conservation, the President and OPEC are putting us on the road to further inflation, further recession and further unemployment.
The Congressional alternative has been to apply the discipline of realistic regulation. The Congress has passed through either House — and in some cases both Houses — regulations to gradually change the American way of life. The change is from oil and gas to coal. The change is from the gas-guzzling auto to the gas saver. The change is from wasteful industrial and home construction to proper insulation. The change is to mandatory conservation, such as the 55 mile-an-hour speed limit and other requirements that directly conserve. You don't have to sit and hope under the Automobile Fuel Economy bill that passed the Senate. Applying this regulation to the 1977 model, 270,000 barrels of oil per day would be saved — equal to the output of our Elk Hills Reserve. By 1980, this same measure conserves 880,000 barrels a day; by 1985 we will conserve two million barrels a day, or the output of the Alaska Pipeline. The following are the measures acted upon in whole or in part by the Congress in the Spring and Summer of this year:
1. Disapproval of the excise tax — H.R. 1767 — vetoed, March 4.
2. Repeal of the oil depletion allowance — H.R. 2166 enacted into law — $3 billion gain for the taxpayers.
3. Strip Mining Act — H.R. 25 — vetoed.
4. Standby Energy Authorities Act — S. 622 — in conference.
5. Six month extension of price control authority — in S. 1849 — passed the Senate and House. Earlier extension with price rollback to Jan. 1, 1975 — H.R. 4035 — vetoed.
6. Strategic Reserves Act — H.R. 49 — in conference.
7. Naval Petroleum Reserves Development Act — H.R. 49 — in conference.
8. Coal Conversion Act Extension — vetoed earlier in H.R. 4035 and now in S. 1849 — passed the Senate and the House.
9. Automobile Fuel Economy Act — passed the Senate as S. 1883 and contained in H.R. 7014 on the House floor.
10. Coastal Zone Act Amendments for Energy Facilities Siting — S. 586 — passed the Senate.
11. Offshore Drilling Amendment — S. 521 — passed the Senate.
12. Appliance Labeling Act — passed the Senate as S. 349 and also contained in H.R. 7014 — on the House floor.
13. Natural Gas Act Amendments — S. 692 — on the Senate calendar.
14. ERDA Authorization — S. 598 — passed the House and the Senate — provides $3.2 billion for the next year for development of coal gasification, solar energy, geo-thermal energy, nuclear energy, etc.
15. Railroad Rehabilitation Act — S. 1730 — passed the Senate.
16. Energy Production Mobilization Board S. 704 — to be reported to the Senate in September.
17. Industrial Conservation Act — S. 1908 — to be reported to the Senate in September.
18. Energy Policy Council — S. 580 — passed the Senate three times.
19. Omnibus Energy Bill — H.R. 7014 — contains many of the previously cited Senate-passed measures plus a provision for revised oil pricing — likely to pass the House in September.
S. 1849, which has passed Congress by over a two-thirds majority in both Houses, extends the President's price control authority. If he vetoes this and the law expires August 31, the Library of Congress Economic Survey indicates that fuel costs will be increased some $40 billion annually. This will cause the Consumer Price Index to go up between one and three percent and unemployment to increase over 500,000 jobs. The entire welfare bill costs $30 billion. And here the Administration is contending for a $40 billion annual impact.
We're in economic war with the Arabs. Instead of fighting back with increased costs for our food, weaponry and technology, instead of holding the line on inflation with controls, the President asks us to join the enemy, with total decontrol. No one has ever asked for decontrol of old gas — just new gas. Why the big rush to decontrol old oil? There is more than enough incentive with new oil at $13.50 a barrel. We have plenty of gasoline.The economy is beginning to turn around. America has an energy problem, yes, but we don't have an energy crisis. Only the President's threat of decontrol makes it a crisis.
Now let's suppose the President signs the bill extending controls. Then Congress can complete the program with a natural gas bill in September and the institution of an Energy Production Board. As in World War II when Governor. James F. Byrnes was a war mobilizer, we can now, in this economic war, institute an Energy Production Board.
The Board would correlate and coordinate the various initiatives by industry to produce and distribute supplies fairly to cope with shortages, and would generally: equalize the burden of mandatory conservation for all America. Last year this time the President and the Congress were in step with his WIN program. This stood for "Whip Inflation Now." It was voluntary. The trouble was that it didn't work on a voluntary basis. Now it must be required. This is what the Congress is attempting to do. It isn't easy. In addition to the opposition of the White House, we have many oil state Senators and Congressmen who oppose us at every turn. But if the President will come back home and work with the Congress instead of the OPEC cartel we can keep this economy turned around and start working to cut the deficit.
Mr. HOLLINGS. That points out the 19 different initiatives taken by the U.S. Senate thus far.
Now, having taken hold of ourselves in the budget processes and restrictions, Mr. President, how do we get our hands on the other facet of this enemy, on the real enemy now; namely, the OPEC cartel, the big oil company, and the President of the United States? They have joined hands in reelecting the President, on the one side, keeping OPEC going as strongly as ever, on the other side, and, generally, making the most grandiose profits that could possibly be imagined by big oil, on the third side. That is exactly what we are trying to confront.
Mr. PERCY. Mr. President, will the Senator yield?
Mr. HOLLINGS. Wait a moment. If the Secretary of State had come back and said: "In this economic war we have kept our eye on the target and rather than going up $2 a barrel we have gotten along with the Arabs and the cartel and they recognize it is wrecking the economy of Britain and France, the West German mark is down, Italy is hanging on by a loan and we are in a dickens of a fix, and we expect to put it down $2 a barrel, instead of getting $13.50, we will take $11.50 or $9.50."
If he had come back with that and the Secretary of State had said, "Now we are all talking, we are in this economic war, we have done some good," that would have been all right.
In contrast, what has the poor fellow done? He has paid off everybody and irritated the principal enemy, the OPEC cartel. The Arabs and all are now complaining. Saudi Arabia, Syria, Iran, and all the rest are saying they bought a split in the Arab bloc. They are complaining and he has agitated them, he has annoyed them. So now I think they will go ahead on September 24 and increase a barrel of oil by $2.
I will be glad to yield to the Senator from Illinois.