May 6, 1975
Page 13224
INCREASED AUTHORIZATION FOR THE COUNCIL ON WAGE AND PRICE STABILITY
THE PRESIDING OFFICER. Under the previous order, the Senate will now resume consideration of the pending business, S. 409, which the clerk will state.
The assistant legislative clerk read as follows:
A bill (S. 409) to amend the Council on Wage and Price Stability Act to confer additional authority on the Council with respect to the prices of commodities and services, and for other purposes.
Mr. TOWER. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. PROXMIRE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. PROXMIRE. I ask unanimous consent that the following members of the staff of the Committee on Banking, Housing and Urban Development be allowed the privilege of the floor during the debate and rollcalls on this matter, if we have any rollcalls: Ken McLean, Bob Weintraub, Steve Paradise, Tony Cluff, Jerry Buckley, John Bennison, Tommy Brooks, and Dan Wall.
Mr. KENNEDY. Mr. President, will the Senator also include Mr. Carey Parker?
Mr. PROXMIRE. And Mr. Carey Parker, of Senator Kennedy's staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, Senate consideration today of S. 409, an extension of the Council on Wage and Price Stability, gives us the opportunity to reexamine the adequacy of the Council's present authority. The question of a Federal institutional response to inflation has divided the Senate for many months.
I hope we can resolve the issue today in favor of a monitoring agency with the authority and capability to forecast potential economic problem areas and help plan long-term policy to guard against inflation.
I think a short review of Senate action on inflation monitoriny would be useful.
My colleagues will recall that in April of last year, just before the expiration of the Economic Stabilization Act, the Democratic Caucus accepted a proposal by Senators STEVENSON, JOHNSTON and I and 18 others to establish an agency to continue authority to monitor and enforce decontrol commitments and to monitor inflation generally. Indeed, the Caucus expanded our proposal to include standby control authority.
On the floor, our proposal was divided, and the portion which provided standby control authority was tabled. The provision to continue inflation and decontrol commitment monitoring authority of the Cost of Living Council was tentatively adopted by the Senate, but was effectively killed a week later.
It was extremely unfortunate that an irresistible momentum toward complete and abrupt decontrol of the economy built up as a result of the dislocations which developed under the Nixon administration's helter-skelter imposition of phases and freezes. In the months which followed the expiration of the Economic Stabilization Act, double-digit inflation continued unchecked. The Consumer Price Index increased at an annual rate of 12.6 percent over those months. The annual rate of increase in the Wholesale Price Index was 44 percent in July, and more than 55 percent at a compound annual rate, promising more consumer price inflation ahead.
Finally, President Nixon did ask last summer for authority to monitor wage and price increases. His proposal called for the establishment of a new agency to address the lack of an institutional focus in the Federal Government's fight against inflation. But the agency to be established by the proposal was viewed by many as inadequate to deal with our complex inflation problems.
So, Senators STEVENSON, JOHNSTON, JAVITS, PROXMIRE, and I proposed a substitute. Our proposal would have granted sufficient authority and resources to the new agency to enable it to make its efforts effective and useful for alerting us to short-term inflation and shortage problems, and help us evaluate longterm inflationary trends and their causes in order to fashion long-term anti-inflation policies. Further, our proposal would have vested the agency with authority to delay for 45 days price-and-wage increases with "significant inflationary impact" and to extend the delay for an additional 45 days to avoid "significant injury to the economy as a whole."
That proposal was tabled by the Senate, partly because some Senators feared it was a first step toward the reimposition of controls, and partly because there was significant pressure to accommodate President Ford with a bill he had endorsed in his first speech to the Congress as President. Therefore, the Congress enacted, without substantial change, the administration proposal for a Council on Wage and Price Stability without the authority or the resources to adequately perform the functions for which it was established.
Having twice fought unsuccessfully last year to maintain some more meaningful Federal response to inflation than the Council on Wage and Price Stability has been able to provide, I have followed the introduction and consideration of S. 409 with interest.
As originally introduced by Senators PROXMIRE and STEVENSON, the bill would have granted new authorities to the Council, similar to those which I proposed with Senators STEVENSON, JOHNSTON, and many others when we considered legislation creating the Council last August. The major differences between our earlier proposal and S. 409 as originally introduced were that S. 409 proposed more limited information-gathering power and would have granted the Council authority to control the price of "new" and "old" domestic oil.
The committee conducted 2 days of hearings, and heard from industry, labor, and consumer groups. Industry and labor opposed the bill, fearing a return to wage-and-price controls.
Consumer groups, on the other hand, such as the National Retired Teachers Association and the American Association of Retired Persons, gave qualified support to the bill.
As I understand it, the committee was unable to agree on additional authorities for the Council, and it chose simply to extend the existing authorities and to grant an administration budget request for a modest increase in funding.
Our experience with the Council as currently structured gives us empirical evidence on which to judge its effectiveness. Mr. President, I think most of us here would agree that the Council has been a useful Federal response to the problem of inflation, but the Council has been handicapped by minimal information-gathering powers and resources too scanty to provide the in-depth analysis of inflation we should have to intelligently respond to the problems of inflation and its causes.
The Director of the Council, Dr. Rees, has conceded that he needs subpoena power, and the administration's fiscal year 1976 budget recognizes the need for increased resources, though it does not go as far as I would like. The Council on Wage and Price Stability, because of its limited authority and resources, has been able to do little more than collect data and issue periodic reports on what has happened in the past. It is essential that it perform the more useful function of forecasting price and wage policy decisions to come, in both the public and private sectors. To do this, the Council must have additional information-gathering authority, as well as increased funding to more adequately fulfill its role as watchdog against inflation.
Mr. President, the basic purpose of the Council on Wage and Price Stability is to provide a distinct institutional focus for Federal action on inflation.
This agency must collect and analyze economic data so that it can forecast inflationary and shortage problems. 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 Cost of Living Council was there 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. Only with the expansion of the Council will the Federal Government have the capacity to perform this important data collection and analysis function.
Mr. President, an anti-inflation agency with teeth is needed to take positive action, short of wage-and-price controls, to avoid inflation and shortages in specific economic sectors. No other conventional agency now performs these kinds of functions, such as: Establishing communications among government, management, and labor in particular sectors; calling attention, publicly and privately, to the need for voluntary restraints in selected instances; and the promotion of planning to avoid shortages which might have a ripple effect on the rest of the economy.
None of these functions are now the mission of any other agency. The only other 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 – is far too small to allow it to assume this mission.
Only by providing the Council with the tools and resources necessary to do a meaningful job can we have sufficient warning of special short-term inflation and shortage problems we might face in the months ahead, and assurance that there will be an adequate study of the long-term inflation problems our Nation faces.
Finally, Mr. President, I would like to point out that the psychology of having a monitoring agency, even though it has no standby control authority, is at least marginally helpful to the economy. A watchdog on inflation is better than providing no attention at all. And no one will ask for higher wages, and higher prices, merely because this agency exists. But its activities could help promote a responsible attitude toward inflation on the part of business, labor, the administration, and the public at large.
By giving the Council authority and funds to better meet its broad mandate, the Senate would be taking a positive step to meet the inflationary dangers of the months ahead.
Therefore, I was disappointed that the Banking Committee could agree to no more than a simple extension of authorities, and a modest increase in funding to the Council. Naturally, however, I am gratified that most of the amendments which will be offered to this bill parallel portions of the proposals which I have sponsored previously, and I will support such efforts.