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.

Thank you for this opportunity to express my views.

Mr. BLANCHARD. Thank you very much. Your testimony is very refreshing. I think it makes a lot of points, all of us in government hate to admit to be true.

I am curious, though, when we look at law enforcement and crime on the streets, the fact we can't catch everybody, is not a very good argument for nonenforcement. The fact that there may be anticompetitive practices, or manipulative practices which cause unjustified price increases, and it goes on, leaves the people in government with at least some feeling for responsibility.

What you seem to be saying, since you can't make a dent, we shouldn't even try; is that correct?

Mr. LEVITAS. I would not want to leave that impression with the subcommittee, Mr. Chairman. I think there is a very definite need to deal with the problem of inflation, and anticompetitive activities of business, and some of the absurdities of inflationary impact that the Federal bureaucracy develops from time-to-time, but this agency is clearly incapable of dealing with that.

If the Justice Department and the Federal Trade Commission with their years of experience and staffs and expertise are incapable of coping with anticompetitive practices, then I honestly think we are blowing smoke in the face of the public to tell them that an agency that's got 17 professionals, is capable of doing so.

So, what I am suggesting to you, is that this agency is not the appropriate means for dealing with what is a serious problem.

I am not suggesting that the Government do nothing. I am just suggesting that this Council is incapable of doing anything, and it is a cosmetic, which is deceiving the public, Mr. Chairman.

Mr. BLANCHARD. I think a number of the people on the subcommittee would agree with you, as it stands now, the Agency is nothing but a press release and a hoax on the public and a hoax on our Treasury.

The question is, Should we abolish it, as you have suggested, or do we beef it up, giving it tougher powers, knowing all the while, at best, it can only take selective measures against selective industries which we all know could work to be unfair or might be helpful?

I take it you prefer if we have a course to follow, that we beef up the Antitrust Division of the Justice Department, to take care of concentration of industries and anticompetitive practices that way?

Mr. LEVITAS. Yes: I very definitely do. I recognize the chairman of this subcommittee, Mr. Ashley, has a bill which proposes broader powers for an agency of this type.

The problem with that, it seems to me, is that the predecessor of this agency, in effect, had those powers and was demonstrably unsuccessful. I think there are established agencies in our Federal Establishment that do have the expertise to collate information, to deal with anticompetitive practices, and in the case of the bureaucracy, if the Congress would not abandon its own responsibilities, the Congress certainly has the ability to deal with the excesses of the bureaucracy. These are the agencies I would address my concerns to, the Congress, the existing agencies of Government, rather than saying to the public, "There is a Council on Wage and Price Stability," when you know there are very few people in this room who really think that this Council is capable of being effective.

Mr. BLANCHARD. Thank you.

Mr. McKinney?

Mr. MCKINNEY. It is a pleasure to welcome my neighbor from the penthouse, the Cannon Office Building.

You brought up a very interesting question on which we had some discussion with the majority whip this morning on the discussion of Federal agencies.

Can you think of one that is doing its job adequately?

Silence is an answer, I guess.

If you have to think too hard

Mr. LEVITAS. No. I can't. The National Parks seems to be doing a pretty good job.

Mr. MCKINNEY. It is very interesting that constitutionally, Congress has the regulatory power which is very seldom understood. We seem to have created these things back in the past and let them lie. Would you suggest Congress take a long, hard look at reorganizing all the regulatory agencies?

Mr. LEVITAS. Yes; I do. In fact, as you know, because you and I are consponsoring a bill on the subject, I have a very definite feeling that Congress has abdicated its responsibilities.

When we have the constitutional responsibility to legislate and regulate in this Nation to the extent it is needed, and we turn this over without any safeguards or checks to people who are not elected by, or responsible to the public, we get into the type of morass we find ourselves in.

I think that Congress has some ability and needs a greater ability to influence the regulatory decisions of existing agencies, such as the Federal Trade Commission and Justice Department. I think we have that responsibility, and we ought not to perpetuate what I consider to be a hoax, as the chairman said, that the Wage and Price Stability Council appears to be.

Mr. MCKINNEY. Since you are a freshman, you obviously can take no blame, and since I am a member of the minority party, I, obviously, can take no blame.

Something very interesting is going on in this subcommittee. We have been talking about the Reorganization Board, an agency that takes back about 66 million-this year-I think this year we estimate they will take back about 3 million. It is interesting that it is a creture the Congress set up at the pleasure of the President. Here we have a board that is meant to help with the economy and the Congress sets up pleasures for the President.

True, the President is the Executive; do you begin to get a feeling, as I do, that the old Congress, perhaps not the new one, that Congress really doesn't want a dead dog in its backyard?

Mr. LEVITAS. I think that is part of the problem. I think that is the type of tough discussion that this subcommittee needs to face. I don't see any reason-you know, we have some precedent, recent precedent, if people simply said, "you made a mistake," they wouldn't find themselves in the job they are in, or they are out of. I think Congress should say the way to cure it is to change it right now.

Let's make a bold decision. This is not the way to do it.

Mr. MCKINNEY. What about an independent agency with stipulated terms of job holding, and so on and so forth?

Mr. LEVITAS. Well, the problem I have got there is this-and I am really not competent to speak to Mr. Ashley's proposals or Mr. McFall's proposal on this point-I will just give you my own biases right now. I have not seen any recent evidence that any bureaucracy is capable of making the types of decisions that need to be made soundly in regulating wages and prices. We just don't seem to do a good job of this. While I think there is a need for jawboning and monitoring activities of this type with triggering devices, countercyclical systems built into our legislative process, I don't think an administrative board setting prices or setting wages is competent to do this job, Mr. McKinney. And whether it is an independent agency of the type, unless we are prepared to go to a completely controlled economy, without any exceptions, whether they be interest, dividends, wages, rents, prices, unless we are prepared to go to that system, I think we, as I say in my prepared statement, we create distortions in the economy that ill-serve the public.

Mr. MCKINNEY. I want to thank you for coming. If it is any consolation, I have been sitting on the committee for 5 years, and they have yet to tell me they know how the economy starts. We go on the economy of issue theory, so we hire the economist that we agree with and, therefore, it is very comfortable.

Thank you.

Mr. LEVITAS. Thank you very much.

Mr. BLANCHARD. Mr. Schulze.

Mr. SCHULZE. Other than to thank our colleague, I have no questions.

Mr. BLANCHARD. Mr. Gradison?

Mr. GRADISON. I would like to thank our able colleague from Georgia for his testimony. This morning, in questioning some witnesses, I raised the question as to whether this whole thing wasn't window dressing that was put on the books in the first place so that Congress could say it was concerned.

We now have enough evidence from operating experience to indicate that the suggestion that it is window dressing may have been demonstrated.

Mr. LEVITAS. I think very clearly, and it is important, I think, Mr. Gradison, to make the point that this Council has some very able, talented, qualified people working for it, but for anybody to think for a minute that 17 professionals are capable of monitoring the total private separate, the Federal Government, I really feel any of my three children would be able to conclude that it is incapable of doing that. I think it is very important to establish the credibility of our Government for groups such as our subcommittee to make that same conclusion.

You know, we are not kidding the public. I think we are kidding ourselves. We really would do ourselves and the public a great disservice, based on what we have been able to do up to this point and what they are capable of doing in the future. They just aren't going to be able to do it.

Mr. GRADISON. Thank you.

Mr. BLANCHARD. Thank you, Mr. Levitas. Our next witness is Hon. John H. Rousselot, distinguished Congressman from the State of California.

STATEMENT OF HON. JOHN H. ROUSSELOT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. ROUSSELOT. Mr. Chairman, my colleagues, I appreciate the chance to appear before your subcommittee. As my colleague from Connecticut knows, we struggled through this issue in 1971. Well, really starting in 1970, as to whether we would have wage and price controls. I am appreciative that this subcommittee is taking time to allow those who participated in that effort to also have a chance to comment on the pending legislation.

I ask unanimous consent to include all my remarks in the record at this point. And I will just briefly summarize them.

Mr. BLANCHARD. So ordered.

Mr. ROUSSELOT. My point of view is well known to many of my colleagues. I oppose setting up any administrative procedure to try to attempt to impose the concepts of wage and price controls. I think as my colleague from Georgia has just stated, very articulately, there is no way we could get a group of people together who could be smart enough or decisive enough to try to oversee the whole spectrum of wages and prices in our extremely complicated free market system that still exists to some degree. So my recommendation is obviously to terminate the present Council on Wage and Price Stability that we have and return to the concepts that existed before the time that we tried wage and price controls in a much harsher manner, when President Nixon as a result of our legislation imposed these controls in August 1971.

I just don't think in this time and place there is any justification, on the basis of the record, for continuing that activity and would therefore urge you to seriously consider just letting it expire or terminating it. I have today introduced again a bill, H.R. 8043, to bring it to a conclusion and repeal it.

Now, I want to comment briefly on the subject of inflation, because as I see it, as a person who has served both in the private market system in my own business and consulted with others on the subject and then had a chance to, of course, sit on this subcommittee. It is my judgment that a rapidly increased money supply caused inflation, and that inflation is not necessarily created by citizens making their daily economic decisions. As a matter of fact, many times they are much more frugal in the decisions they make than our Government bureaucracy. And my belief is that inflation has its genesis very much right here in Congress.

Therefore, any action to control inflation must come from some form of meaningful control over the part that we play in inflation. So for instance, obviously, Federal deficits and the measures taken to finance debts and financing, which I have always contended and I think those deficits, history has shown, do in fact contribute to inflation.

When the financing of large deficits threatens to drive up interest rates, Members of Congress put pressure on the Federal Reserve Board to increase the money supply, and many times our Members have done that, including various chairmen of this committee. I therefore believe that to try to set up machinery to control all the people in the marketplace whose decisions supposedly contribute to inflation when we ourselves are not controlling what we do, in con

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