then the alternative of regulating concentrated industries is the only other possible solution; is that correct?

Mr. McFALL. I believe that is what I said in my opening remarks. I don't pretend to be that kind of an expert on antitrust laws and how they are applied, but as I understand it, in a general way, antitrust laws would not apply to these companies. They are not in a position where they are monopolists, yet it seems proper to say that these companies are not subject to the competitive forces of the marketplaces, so that we are faced with, on the one hand, as you suggest, perhaps changing the antitrust laws to take care of them, which I am not sure would be the proper answer, or trying some kind of regulation, as is suggested by this bill.

So, really, I think we have to understand the competitive forces, noncompetitive forces, how we want to regulate them in the marketplace, as you suggested in the beginning.

That is what this legislation does. It presents to us a problem and hopefully, we will understand the problem in looking at the bill. Mr. BLANCHARD. Thank you.

Mr. ASHLEY. Mr. Schulze.

Mr. SCHULZE. Mr. Chairman, I would like to thank our distinguished colleague for his appearance and testimony this morning. Some of the past testimony we heard made reference to the coal industry when there were tremendous price increases. We also heard the coal industry is not a concentrated industry. It seems to me that some oil companies which own coal properties might be subject to this regulation and other companies, perhaps the vast majority, would not.

Would you care to comment on that?

Mr. McFALL. I heard some of the testimony earlier by some of the witnesses that preceded me. I am aware that about seven firms in the United States own the oil, the coal, and the uranium in this country. They would like to get a hold of the nuclear power that we have in this

country.

Now, I don't know whether or not this legislation would hit the coal companies. I am free to tell you that. I don't know that much about the bill and how it would hit what industry. But I think you put your finger on a problem that faces the country. That is how we control the concentration of power that will control all of our energy resources in this country. I think we first have to understand what, as you tried to point out in your question, that it is a problem, that people who own, by corporations, own coal, own oil, own uranium, somehow or another have the power to affect our economy at will. Their will. And that we ought to understand that and try to do something about it. Whether it is done with this bill or not, or some other legislation.

Mr. ASHLEY. Mr. LaFalce.

Mr. LA FALCE. Very quickly, Mr. McFall. The basic difficulty I have with this bill is that, on the one hand, we recognize the necessity for having an independent council rather than an extension of the presidency, which we in effect have now.

Mr. McFALL. Yes.

Mr. LAFALCE. On the other hand, your only suggestions for bringing that about, it seems to me, call for the appointment of individuals from different parties. I see nothing else within the bill that would create an independent board, other than the fact that appointees must

receive the consent of the Senate, which I don't think brings about independence at all.

As far as the participation of different parties, there are Republican Democrats and Democratic Republicans and so forth. It doesn't seem to me to get to the problem. Would you consider entertaining an amendment that somebody else could devise much better than you or I could think of, or perhaps an amendment I would suggest, for example, to give the President the power to appoint a number of individuals, then give the Speaker of the House and the Senate majority leader the power to appoint a number of individuals to the council, so that at least it would seem to me this would bring about more independence or the hope for more independence.

Mr. McFALL. I certainly would consider it. Really, as you can understand, mv offering this to the subcommittee, my offer of assistance in the problem of the legislative matter you have before you. I know that any bill that will come out of here will have

Mr. LAFALCE. I do think this is critical. I think, as I think you do too, that in view of its critical function, the board must be independent. I do see a reason for creating a truly independent board.

Mr. McFALL. Let me be specific. I think you are right. What we attempted to do was balance, by having an independent board appointed for specific terms, it would appear that that board would have more independence than it does now, when it is really at the whim of the President. He gets rid of them tomorrow if he wants to. He couldn't with this board. I would hope that by that action they would be more independent in their actions.

Mr. LAFALCE. Does the bill provide that once an appointment is made the appointee cannot be fired?

Mr. McFALL. As I understand the bill, they are for set terms. But I have to say I don't think this board should be completely divorced from the power of the President to operate the Government, and so there is an attempt to balance the equities here to give the board a little more independence and an ability to operate without making it some kind of an independent monster that is going to run all the prices in this country without having the President or the Congress looking over their shoulder.

Now, whether we accomplish that. Mr. LaFalce, I am not certain, but that is what we are trying to do in the proposal.

Mr. LAFALCE. Could this be effectively implemented if the President, any given president, was opposed to the very concept of it?

Mr. McFALL. Well, there have been occasions in the past where the President just didn't appoint a board. I suppose that is possible. We elect a President for a 4-year term, hoping he is going to push the country forward. We in the legislative branch. it seems to me, can help him run the country in what we think is the right wav, but if he arbitrarily determines he is not going to do it, we have some difficulty in forcing him to do it. I suppose that is right. He could refuse to appoint the board. I suppose he could veto the legislation in the first place, and we would be in a position to try to go over his will, but if he signed it, I assume he would decide that he would want to appoint that board.

Mr. PATTERSON. Thank you. Since our second bell just rung and we have to go answer the quorum, I will not ask many questions. I will

submit them later in writing. Mr. LaFalce asked most of the kind of questions I had in mind. I think his suggestion for the Speaker and the majority leader in the Senate to appoint one-third each and the President to appoint one-third has real merit.

Mr. MCFALL. We have a precedent for that in the elections board that we appointed.

Mr. PATTERSON. Is the appointment such that one cannot be terminated during the period of service?

Mr. McFALL. That is what we intend.

Mr. PATTERSON. I think that helps. After the testimony we heard the other day from the Wage and Price Council, I concluded they are not doing anything, and they are not going to do anything. They are an arm of the President and we are wasting millions of dollars financing it. This is what I don't want to create again, another board like that.

Mr. Rees, who testified, stated he was a Democrat, however, everything he uttered certainly came with the philosophy that the President had been espousing.

Mr. McFALL. It was the intention of this legislation to provide an alternative to the present situation.

Mr. ASHLEY. The subcommittee will stand in recess until 2 o'clock this afternoon.

[Whereupon, the subcommittee recessed until 2 p.m. this same day.]

AFTERNOON SESSION

Mr. BLANCHARD. The subcommittee will come to order.

This afternoon we will continue hearings from this morning and we are meeting to take further testimony on legislation dealing with the continuing problem of inflation.

Our first witness this afternoon is the distinguished gentleman from the State of Georgia, the Honorable Elliott Levitas, who is sponsor of the bill H.R. 5142.

Congressman Levitas, you may proceed in any fashion you wish. Then we will have questions.

STATEMENT OF HON. ELLIOTT H. LEVITAS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. LEVITAS. Thank you, Mr. Chairman.

First of all, let me observe that it is a welcome sight for me to see that the ranking member of this subcommittee is a freshman Member of Congress.

I think we need more of that in these halls, and I commend the committee and the chairman on this situation.

I request permission to have my prepared statement inserted in the record intact and offer additional comments.

Mr. Chairman, I would like to address myself to H.R. 5142, which is a very simple piece of legislation, in that it simply calls for the abolition of the Council of Wage and Price Stability.

In my judgment, after some careful and due consideration, I have come to the conclusion that the Council on Wage and Price Stability

is at best a joke, and at worst, a fraud on the American public. And its continued existence would constitute a travesty.

I would urge upon this subcommittee that the Council on Wage and Price Stability, as presently constituted and as presently authorized, be abolished. Purely and simply.

Your hearings are significant, because you are dealing with two matters which have become increasingly important during the past several years.

First, the issue of credibility of Government to deal with vital national problems, in this case, inflation, and second, the creation or continued existence of an ineffective bureaucracy, despite the best intentions which originally surrounded its creation.

I would like to talk just a moment about why I favor the abolition of this Council as presently constituted and as called for in H.R. 5142: For over 3 years we have witnessed the failure of mandatory wage and price controls under the Economic Stabilization Act of 1970. It was clear to everyone who observed or felt the consequences of phases 1, 2, 3, and so forth, that price and wage controls were not effective against inflation, and they resulted in distortion of prices, wages, supply and demand in the marketplace that hurt the general public, as well as business and labor.

However, after the expiration of authority under the Economic Stabilization Act of 1970, in August 1974, it was felt the public would be better served, or at least feel better, if they were told some other agency of Government was still involved in this process. Therefore, Congress, at the urging of the administration, created this Council on Wage and Price Stability. The Council was supposed to monitor prices, wages, profit, dividends, interest rates, concentration of power, and to participate in collective bargaining activities.

In short, the agency, this Council, was to have general authority to monitor the entire economy, the private sector and Government sector, with a view to doing something about inflation.

I think that the very statement of this purpose in a Council of this type should be sufficient to point out the ludicrousness of the possibilities that would follow.

Look at the facts. The Council has a staff complement of 41 persons, of which only 26 are professionals-10 for monitoring all decisions in private business and 7 for monitoring all Government activities, and 9 for other responsibilities, such as general counsel, public affairs, and the director's office.

In addition, the Council has employed the services of six outside. consultants during the past 10 months of existence.

This is the total capability of an agency that is supposed to watch over the total activities of Government and private sector operations. When one considers that 535 Members of Congress with over 3.000 staff members can't even keep up with the Government end, not to mention the private sector, who can really believe that in supposedly doing its job, the Council checks into those Government and private decisions which may be inflationary. How can they do this with such an inadequate staff?

During recent oversight hearings by the House Government Operations Subcommittee on Commerce, Consumer, and Monetary Affairs, on which I serve, representatives of the Council stated that the work

of the Council was initiated on reading newspapers, reviewing the Federal Register, and receiving letters from the public and Members of Congress, all on a haphazard and catch-as-catch-can basis.

The Council has conducted nine major studies of profit monitoring and made 17 formal comments to Federal agencies-this in the name of doing something about stopping double-digit inflation. Who is kidding whom? What about the hundreds of thousands of inflationary decisions that went unnoticed?

This Council has no enforcement power and has obviously insufficient people, although they be talented people, or procedures to do the job. Yet, we spend taxpayers' money on it and tell the public we have an agency dealing with inflation.

I submit, Mr. Chairman, it is a cosmetic agency. Or worse, it disguises the failure of the Government to do something about a serious problem. It's like disguising pain with an opiate and letting the cancer go untreated.

Yesterday, the Wall Street Journal carried an article by Timothy D. Schellhardt entitled, "The Watchdog of the Watchdogs," which dealt with some of the specific accomplishments of the Council and its overall broad responsibility. The article was, to an extent, complimentary, and I, too, commend the Council for whatever limited achievements have been made.

However, as the article itself pointed out, the Council has no real authority and reacts on a haphazard, somewhat disorderly, basis. The information gathering function of the Council can easily be handled by at least three other agencies of Government and collated for Presidential use by a White House aide. A whole agency of Government is not needed to duplicate this function.

In conclusion, Mr. Chairman, I suggest that the existence of this ineffective Council with its operational professional staff of 17 and charged with the high-sounding mission of monitoring the entire. economy for inflationary impact is nothing more than a sop to the public to make people think that Government is doing something, when, in fact, the Council is inherently incapable of any meaningful functions.

Earlier this week, in an overwhelming bipartisan vote of 400-16, the House adopted the continuing appropriations bill, H.J. Res. 499, which contained an amendment to abolish the Federal Metal and Nonmetallic Mine Safety Board of Review because the agency was unnecessary and wasteful.

The Council on Wage and Price Stability should likewise be terminated as a useless body. Let's stop kidding the public and let's begin a conscious effort to reduce the Federal bureaucracy and wasteful spending.

Mr. Chairman, I thank you for this opportunity and if the committee has any questions, I would be more than happy to respond. [The prepared statement of Hon. Elliott H. Levitas follows:]