Ford and Congress Reach a Compromise

The economy was the crisis that most worried Americans as Gerald Ford held his tenth press conference as President last week. He opened, however, with an emotional plea for Congress to approve additional military aid to tottering Cambodia. Said Ford: "We want an end to the killing and a negotiated settlement. But there is no hope of success unless the Congress acts quickly to provide the necessary means for Cambodia to survive." But Ford let it be known that he might be willing to settle for less than his original request for $222 million in aid (see THE WORLD).

Ford also decided last week to compromise with Congress on another matter. To avoid what he called "a time-wasting test of strength," the President made a deal with the Democrats in which they agreed not to try to override his veto of legislation that would have postponed for 90 days his three-stage, $3-per-bbl. hike in the tariff on imported oil. In exchange, Ford postponed for 60 days two-thirds of the increase--halting the $1 that took effect on March 1 and putting off the $1 scheduled for April 1. Still in effect is the $1 that has cost oil importers an estimated $ 160 million since Feb. 1. The agreement thus gives Ford and the Democrats about two months to come up with a long-range program to reduce U.S. dependence on imported oil, which now accounts for 37% of the nation's fuel consumption.

At the same time, Ford wrung a promise from Democratic leaders to try to persuade rank-and-file congressional Democrats to separate a controversial provision repealing the oil depletion allowance from a $21.3 billion tax-reduction bill intended to stimulate the economy and help bring the recession to an end. Liberal Democrats in the House had insisted on tying the two measures together, even though their leaders had warned that the debate over depletion repeal might delay swift passage of the tax cut.

Tax Refunds. Thus Ford and the Democrats agreed that, as the President put it in his message accompanying the tariff-postponement veto, "the most important business before us--after 50 days of debate--is still the economic stimulant that could be provided by income tax refunds." That judgment was reinforced when the Labor Department reported that an additional 540,000 workers, most of them in manufacturing industries, were out of jobs in February (see ECONOMY & BUSINESS). To help ease the jobless situation, Ford urged Congress last week to appropriate slightly more than $2 billion for 760,000 additional summer jobs for youths and a six-months extension of some 310,000 public service jobs. On the other hand, Ford roundly criticized Congress for appropriating more funds than he has recommended to stimulate the economy. And, White House spokesmen suggested to reporters that the 1975 budget deficit may be closer to $80 billion than Ford's original projection of $52 billion.

Ford's compromise with Congress on energy allowed him to argue, with considerable justification, that he had provoked the Democrats into coming up with alternatives to his energy program. Even so, the reaction of some G.O.P. leaders in Congress ranged from frigid to tepid. They told Ford that they were cautiously optimistic that the veto would be sustained in the Senate and that they were gaining ground in the House.

Ford's advisers, moreover, were sharply critical of the Democratic leaders' original energy proposals, which were contained in a set of mild guidelines drafted two weeks ago by a group headed by Senator John Pastore of Rhode Island and Representative James Wright of Texas (TIME, March 10). Interior Secretary Rogers Morton called it "a fuzzy press release." Federal Energy Administrator Frank Zarb warned that the Wright-Pastore approach would fall far short of Ford's proclaimed goal of near independence in energy by 1985. But some G.O.P. moderates argued that a defeat might cause a psychological loss of momentum on energy.

Returning to Washington on Sunday evening from Camp David, Ford had still not made up his mind. But one reason for his reluctance was eased when House Ways and Means Committee Chairman Al Ullman disclosed more details of an energy program that was backed by Democratic members of his committee. Their proposals were tauter and far more detailed than the Wright-Pastore guidelines. After meeting with Republican leaders to consider the alternatives once again, Ford decided to lower partisan temperatures by seeking a compromise.

An agreement will require some tough haggling in the weeks ahead, even though Ford and the Democrats already accept in principle that an energy program will require: 1) a national effort to conserve fossil fuels; 2) a limit on oil imports; 3) higher prices for petroleum products; and 4) Government measures to hasten the development of alternative energy sources. The hard bargaining will be over how those goals are to be achieved, how quickly and at what cost. The Democrats' position will initially be the Ullman program, which differs in several important respects from Ford's plan. Among the most important:

IMPORTS. Ford wants to reduce oil imports by 1 million bbl. a day this year and by 2 million bbl. a day in 1977; by 1985, he wants the U.S. to import no more than 4.7 million bbl. a day, which would amount to 20% of estimated consumption. Ullman proposes that a more realistic goal would be to cut imports by 500,000 bbl. a day next year; within five or six years, he would have the U.S. reduce imports to 25% of national consumption.

TARIFFS v. QUOTAS. Ford would lower imports through higher tariffs, which he assumes would increase prices and thus reduce consumption. Ullman would gradually impose oil import quotas as the economy recovers from the recession and set up a federal purchasing agency to buy all oil imported into the U.S. through sealed bids in hopes of encouraging secret price cutting by oil producers. At a Ways and Means Committee hearing last week attended by Treasury Secretary William Simon, Zarb, Council of Economic Advisers Chairman Alan Greenspan and Interior Secretary Morton, Simon derided quotas as requiring "a major bureaucracy" and eventually rationing.

AUTOMOBILES. To conserve gasoline further, Ford would relax clean-air standards on automobiles in exchange for an industry promise to boost fuel efficiency 40% by 1980. Ullman would put a 400-per-gal. tax by 1979 on gasoline purchased in excess of 9 gal. a week per vehicle, pay rebates to purchasers of fuel-efficient automobiles and stiffly tax those who buy gas guzzlers.

Both programs would contribute to inflation. The Administration claims that Ford's program would amount to a one-time 2% increase in prices. But the Democrats and many economists believe that his plan would create a ripple effect that would go on for years, adding more than 2%. In contrast, Harvard Economist Otto Eckstein, a member of TIME'S Board of Economists, estimates that the Ullman plan would add only .6% to prices by the end of 1976 and 2.1% by 1980. Still, for all of their differences on energy, there is enough common ground to allow Ford and Congress to work out a settlement by the President's deadline.

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