rrently, new units are being provided, at best, at only half the annual rate eded to meet this goal. Home mortgage interest rates are at all-time highs d not only our low- and moderate-income people, but also middle-income people Innot afford to acquire a home. But yet the cost of living-inflation-conues rampantly on. Our Nation cannot suffer through another recession without doing extreme mage to the goals which we have set for ourselves over the coming years. We nnot allow productivity to be stifled by willfully promulgating economic licies at the national level to increase unemployment, reduce productivity, and rtail the full use of all of our productive capacities. Historic fact and economic analysis clearly indicate that once price and wages e brought under control, interest rates can be drastically reduced. Currently, e high level of interest rates include a large percentage for expected inflation. here is no question that interest rates themselves are inflationary in nature. hen one looks at the level of interest rates now being demanded and obtained the market of 10 percent or more, perhaps percent of that can be accounted ›r by expected increases in prices during the coming year. Those members of your committee who argued against this title during comittee hearings and voted against this title during the executive sessions, argued at legislation providing for wage and price freezes should be mandated by e Congress if the Congress desires this authority, and not left up to the deretion of the President. The majority of your committee argued that this an obvious ploy to detract attention from the fact that this responsibility ust reside with the President and within the executive branch. The Congress self is neither constituted or organized to take on this function. It is not a egislative function, both in terms of appropriate timing in instituting the conrols and removing them, since only the Executive can determine the appropriate ime for instituting the controls and removing them, and only the Executive is quipped to determine and establish the necessary rules and regulations to carry ut the law once imposed. The majority of your committee who voted for title II of H.R. 17880 deemed t highly improper for the Congress to mandate such authority. In supporting his proposal it was argued that one could easily envision the possibility that, ›nce having imposed wage-price-salary-rent freezes, a few months hence it would e necessary to remove them in whole or in part. But if the Congress had manlated such action through to the termination date of February 28, 1971, as set forth in the bill, it would well be days or weeks before such action would De rescinded by the Congress if needed and, indeed, the Congress itself may not be in session when it would be appropriate to remove such controls. For these reasons, the majority of your committee feels that such standby authority must be left to the discretion of the President and not mandated. In summary, our economy has been and is now faced with the most anomalous situation of recession in some quarters with high unemployment rates, lack of productive activity in the homebuilding and other essential industries, and, at the same time, substantial inflation in terms of continued rapidly increasing prices and all-time high interest rates. This anomalous situation can be corrected by giving the President the appropriate tools to correct the situation. These legislative tools include the selective credit controls given to the President in Public Law 91-151, enacted last year, and the proposed wage-price-salary-rent discretionary authority proposed in this legislation. With these tools the President will have a full opportunity to bring the economy under control and put an end to the twin economic evils of inflation and recession which has plagued the country in recent months. MINORITY VIEWS H.R. 17880 as reported is a better bill than the bill which was introduced. It has received our support because without it the Defense Production Act of 1950 would expire. However, we cannot concur with the majority views on title II-Cost of Living Stabilization. Title II bears the innocuous title "Cost of Living Stabilization" but actually conveys authority on the President to freeze prices, rents, wages, and salaries at levels not less than those prevailing on May 25, 1970 until February 28, 1971, slightly after the upcoming election. Considering that titles of bills should relate to the subject matter following in a manner that identifies it correctly we might better have entitled this unwanted and unneeded title as the "Election Year Squeezeplay" or "Devious Democratic Demagogery." The fact of the matter is that the only real need for this authority is the majority's need for some means of screening the root causes of current economic problems from the electorate. Attacks on the President for not using this authority, which he has announced in advance he will not use, will be the device for creating the screen. The action of the majority in pushing this proviso through the committee on a straight party line vote parallels its action last December in enacting standby credit controls. The only note of gratification is that these new authorities will be less useful as a political gimmick because despite all criticisms irresponsible congressional spending and the heritage of huge war expenditures. the President's program to control inflation is now paying off. There is really no doubt that responsible fiscal and monetary policies are a more effective and economical means of controlling inflation than administered controls over prices. wages, and credit. It is interesting to note that during World War II over a quarter million people were involved in administering the price stabilization effort. During the Korean war a much smaller and less ambitious control effort employed more than 17,000 people and cost over $137 million. It is totally unrealistic to enact control authority for a 7-month period such as this bill would do. Is there any one so foolish to to think that the bureaucracy to administer the controls could even be assembled in this time? The case against wage and price controls is no better summarized than in the 1969 report of President Johnson's Council of Economic Advisers, which stated: Mandatory price and wage controls *** freeze the market mechanism which guides the economy in responding to the changing pattern and volume of demand; they distort decisions on production and employment, they require a huge and cumbersome bureaucracy; they impose a heavy and costly burden on business; they perpetrate inevitable injustices. They are incompatible with a free enterprise economy and must be regarded as a last resort appropriate only in an extreme emergency such as all-out war. WILLIAM B. WIDNALL. ALBERT W. JOHNSON. J. WILLIAM STANTON. CHESTER L. MIZE. BENJAMIN B. BLACKBURN. GARRY BROWN. LAWRENCE G. WILLIAMS. CHALMERS P. WYLIE. MARGARET M. HECKLER. WILLIAM O. COWGER. ADDITIONAL VIEWS ON H.R. 17880 H.R. 17880 has as its primary purpose, the extension of the Defense Production Act of 1950 from June 30, 1970, to June 30, 1972. With this purpose, no one on the Banking and Currency Committee disagrees. With respect to the extraneous provisions which have been added to this "vehicle," there is much disagreement of varying severity. This disagreement occurs on the question of adoption of cost-accounting standards and by whom such standards shall be developed; and, on the issue of enact. ment of standby authority in the President for imposition of wage and price controls. WAGE AND PRICE CONTROLS At the outset, let me say that my constituency on the only two occasions in the last 3 years when I have asked the question on my legislative questionnaire, has by a wide plurality, voted for the imposition of wage and price controls. When I let my irritation over inflation prevail over my judgment, I often say myself, "Yes, let's invoke them." But even as a rather mediocre student of conomics, I know that wage and price controls are not the answer to the type f economic destabilization we are now suffering. Yet, I am willing, if are my colleagues, to bite the bullet and put the machinery f controls into being. But, I refuse to aline myself with my spineless colleagues ho would pass the buck to the President as many of them did in similarly road language in the Gulf of Tonkin standby authority. The total insincerity of title II, the wage and price control provisions, of this ill is pointed out in the minority views in this report. The almost unlimited grant of authority to the President to impose and implenent wage and price controls provided for in title II would be considered udicrous were it not so serious. At a time when the electorate and some Members of Congress are vehemently riticizing the failure of the Congress to assume greater authority and responsiility in the warmaking power the President is exercising in international ffairs, it is almost unbelievable that anyone would suggest the Congress totally bdicate its responsibility and retain no authority with respect to the power of he President to wage war on the economy. It has been suggested that the wage and price control provisions of title II ire similar to those previously enacted by the Congress. This is pure hogwash. Any examination of economic controls enacted in the past would establish that on those occasions when legislation of this nature was enacted, section after section of guidelines, standards, limitations, and directions for implementation were included. To hear the chairman of the Banking and Currency Committee unabashedly praise this legislation when he spoke on the House floor the other day, was insulting to the intelligence of the membership of this body. How he could keep a straight face while performing such a rank political ploy defies explanation. As I have previously indicated, I have serious doubts about the wisdom of imposing wage and price controls because I believe they would be counterproductive in our effort to stem inflation. I, therefore, believe title II of this legislation should be stricken. If title II is not stricken, then it is imperative that the amendment I will offer be adopted. Briefly stated, my amendment provides the standby authority necessary for the invoking of wage and price controls. But there is a significant difference between my amendment and the provisions of title II. My amendment retains authority in the Congress to invoke a wage and price freeze and then grants to the President the authority to make adjustments in wages and prices necessary for the stabilization of the economy and prevention or elimination of inequities within our wage and price structure. To permit timely action, my proposal delegates to a joint committee consisting of the Joint Economic Committee, the Speaker and minority leader of the House, and the majority leader and minority leader of the Senate, the authority to determine when and if the wage and price control provisions shall be activated. There are those who may argue that this delegation of authority to a joint committee of the Congress is improper or even unlawful. Such an argument is clearly without merit. Not only is our statute law full of examples of such delegation of authority but, in addition, the theory has become an axiom that any authority of this nature which may be delegated to the executive branch may be retained by the Congress and may be exercised to a statutorily designated committee or body of the Congress. In essence, my amendment puts the issue of standby authority for wage and price controls in an absolutely clear context. If such standby authority is to be enacted, responsible Members of Congress will support my amendment and those who only wish to play politics will oppose it. We concur in these additional views. GARRY BROWN, (Michigan). LAWRENCE G. WILLIAMS. NAM SURVEY [From NAM (National Association of Manufacturers) Reports, Vol. 18, No. 40, Oct. 1, 1973] FIRMS URGED TO COMMENT ON IMPACT OF CONTROLS An NAM task force will soon be meeting with top executives from the Cost of Living Council to discuss modifications in current Phase IV regulations as wel as to urge the council to proceed rapidly with its plans for decontrol. Prior this meeting, the NAM will develop data from members on problems companies have experienced as a result of price and wage controls. NAM urges all member firms to respond as quickly as possible to the following questions: • What products, if any, is your firm no longer producing due to the influence of controls? • What materials, if any, has your firm found to be in short supply, and how extensive are these shortages? • To what extent, if any, has your firm increased exports (percentage in crease) within the last year? • To what extent have the normal business practices of your firm bee: interrupted as a result of controls? • Briefly describe any highly significant problems caused your firm as result of controls-Have you got a horror story to tell us? Based upon the data received the NAM will attempt to statistically demonstrate the extent to which harm has been caused as a result of controls. Re sponses should be addressed to Jeffrey P. Eves, director of economic stabiliz tion, at the NAM Washington office and be received no later than Oct. 10. All company names and information submitted will be treated in a conf dential manner. |