Big Oil, a Fig Leaf and Baloney

Kennedy's attack widens his rift with the President

The rivalry between Jimmy Carter and Edward Kennedy broke out again last week in a flurry of sharp words over the President's decontrol of oil prices and his proposed windfall profits tax. The Massachusetts Senator opposed the first decision and ridiculed the second. Carter struck back by calling Kennedy's charges "just a lot of baloney. " TIME Washington Bureau Chief Robert Ajemian, who has closely followed the touchy relationship between the country's top two Democrats, reports on the combat:

Walking across the street toward his Tuesday press conference, Jimmy Carter listened intently as Jody Powell confirmed the taunting charges Ted Kennedy had made only a few hours earlier in New York City. Powell had just called Kennedy's office himself to check the exact words. Yes, the press secretary told the President, Kennedy had said the oil lobby intimidated Carter into "throwing in the towel" on decontrol without even "entering the ring." Yes, Kennedy had accused Carter of submitting a token windfall profits tax that was no more than a "transparent fig leaf over vast new corporate profits.

Carter was steaming. Kennedy's criticisms were usually much more carefully phrased. The President looked at Powell and brusquely said that was a lot of baloney. A few minutes later, to Powell's surprise, Carter repeated the same comment to the press corps. Thus began the great fig leaf and baloney war.

The Georgians closest to Carter were delighted by the President's outburst. "Jimmy's had a bellyful of Ted Kennedy," said one of them. But the next day the President had cooled off and had second thoughts. He told congressional leaders that he had overreacted to Kennedy and he regretted having done so. But by then the issue had caught fire. Kennedy's own switchboard was alight with calls from all over the country, many from older people with fixed incomes who wanted to praise his stand against higher energy costs. The White House was bombarded, too, with most of the calls positive. One person wanted to tell the President he sounded exactly like Harry Truman.

The flare-up really began a month ago, when Carter first decided to decontrol oil prices. Kennedy for his part had urged the Administration not to abandon the threat of continued controls until a windfall tax was assured. But Carter had tried that approach last year and been clobbered by the Congress. This time the President figured to decontrol first and throw the responsibility for the tax onto Congress.

That decision, of course, meant an increase in gasoline and heating-oil prices, as well as in the overall rate of inflation. It also meant huge new profits for the oil companies. To counteract that, Carter proposed a profits tax that would leave the companies 29-c- out of every dollar gained from decontrol; he urged that the profits be spent on additional exploration and production. Kennedy angrily challenged the figure, asserting the oil companies would end up with far more. By week's end it was unclear whose figures were more accurate. But the Kennedy intervention emboldened House Speaker Tip O'Neill to call publicly for a bigger windfall tax.

Until now the relationship between Carter and Kennedy has been mostly under control, always wary but never ugly. The Senator has consistently voted with the Administration on most major issues. "But now," said one of the President's senior advisers last week, "we see real differences coming up." Kennedy's repeated oratory about rising health and energy costs points up Carter's unsuccessful efforts in those fields and is beginning to get under his skin. The President has become especially sensitive about Kennedy's high standing among blacks and Jews, two groups that have soured on Carter.

The problem of Ted Kennedy does not burn in the President's mind, however. Carter, according to his closest aides, is convinced Kennedy is not going to run for President. Says one aide: "This Kennedy game of pretending to run doesn't scare Jimmy. He doesn't believe it."* Unlike Lyndon Johnson, who agonized over the presidential ambitions of Robert Kennedy, Carter has no deep dislike for his political rival. But from time to time a natural resentment about Kennedy's popularity shows itself in Carter. During the 1976 campaign he burst forth that he did not have to "kiss Ted Kennedy's ass" to get nominated. The President complains to associates about how easily Kennedy "manipulates" the press, compared with the hard time Carter has with reporters and commentators.

Kennedy does not dislike Carter either. He seldom sees the President. He considers him book-smart but feels, according to one Kennedy intimate, that Carter runs an amateurish political operation. "Kennedy sees Carter throw out an idea and then back away from it," says the aide. So Kennedy more and more goads the President to hold to what the Senator refers to as Democratic Party ideals. His strongest complaint is that the President has not galvanized the public on domestic issues like the wage and price guidelines, which Kennedy supports. Says one of Kennedy's top staffers: "Can you imagine how L.B.J. would whiplash those unions and companies?"

In the public mind, as the country has moved to the right in the past few years, Ted Kennedy remains fixed on the left. He is regarded by most as a big-spending, Big Government man. A recent poll once more listed him as the most liberal Senator in Congress. This raises questions: Are Kennedy's views out of step, out of date? If so, how does he retain his enormous personal popularity? What does he stand for today?

The fact is that Kennedy, like most other politicians, has done considerable adjusting of his own philosophy, much of it unnoticed. "There are two sides to Kennedy," says one veteran Democrat. "People tend to focus on his liberal votes. But there is another side that pushes hard for an open, competitive market."

There is evidence to support this view. Kennedy has led the attack for several years on excessive Government regulation, always a conservative cause. He carefully chose his first target, the Civil Aeronautics Board and the airlines, largely because there were no powerful unions involved; Kennedy has rarely taken a bold stand against Big Labor. The long struggle resulted in the only bill in years--one for airline deregulation--that significantly limited the Government role.

Now Kennedy is pushing for trucking deregulation, a decision that pits him against the 2.2 million-member Teamsters Union. The objective once again is to reduce the role of the agencies, in this case the Interstate Commerce Commission, and open the industry to smaller operators. The opposition is heavy; both the companies and the union have joined forces against the legislation, claiming it would bring reduced efficiency, if not chaos. Kennedy has drawn support for his bill from groups that usually consider him a political adversary: both the National Association of Manufacturers and the American Conservative Union are backing him.

So Kennedy's zeal for an activist Big Government, which has long been his mark, has gradually become more selective. His stiff antitrust legislation, his endless hearings against increasing conglomerate mergers, have put him on the side of opening the way for smaller companies to compete against the biggest corporations.

Kennedy has revised his strategies in other areas. "Proposition 13 was a watershed for us too," said one of his aides. Despite the big hoots he made every other week against Jimmy Carter's budget cuts, Kennedy accepted the President's overall spending totals, including the $29 billion deficit. He saw the political realities and the appeal of reduced spending, like everybody else. But like that of no one else in U.S. politics, Kennedy's appeal transcends ideology and so his new fiscal posture has caused little change in his superliberal reputation. His disagreements with Carter over federal spending were not on total amounts but on priorities within the budget; cuts in social programs vs. defense. He supports the President's 3% increase in NATO defense spending, but he opposed any across-the-board hike.

On national health insurance, for years his principal issue, Kennedy has dramatically revamped his tactics. His initial proposal called for expenditures of $130 billion; the new cost figure is all the way down to $29 billion and now heavily engages the private sector instead of passing the funds through Social Security.

Nowhere has the shift in Kennedy's political approach been more marked than in his bill to revise the federal criminal code. The legislation, which was stalled for twelve years because it was so controversial, authorizes sharply defined sentencing guidelines, and completely phases out the federal parole system. The American Civil Liberties Union has stiffly attacked Kennedy for certain parts of the bill and even some Republicans have described it as too authoritarian.

Thus Kennedy views himself as standing for Big Government--where health and safety are involved, for example--but also for a freer marketplace. Some of his Republican counterparts view Kennedy in much the same mixed way. Says Nevada Senator Paul Laxalt, a conservative who often needles Kennedy about his forays to the right: "Ted has no experience or confidence in local government. He still thinks all the competency is in Washington." G.O.P. Congressman Barber Conable also casts Kennedy as a centrist, a Big Government man but one who has stayed well within the mainstream of his own party. "Kennedy is a pragmatist, not an ideologue," says Conable.

Despite all predictions about Kennedy's future--the latest Gallup poll showed him beating Carter 58% to 31% among Democrats--he still remains enigmatic. As draft-Kennedy groups have started forming in Iowa and New Hampshire, and Cleveland Democrats last week called on him to enter the race, the Senator has made personal telephone calls to reassert his unavailability. And yet at the same time he repeatedly offers coy hints and insinuations that he might still become a candidate. A couple of months ago, the Senator told a favorite columnist in Boston that he would go after the nomination if Carter did not seek reelection, and the writer published it just that way. When one of Kennedy's staffers rushed in to tell him about the story and asked about releasing a denial, Kennedy waved him off. "I said it," conceded the Senator, "so let it stand."

So Kennedy the pragmatist holds to his political course, always positioning himself to the left of Jimmy Carter, but closer to the party's emotional center of gravity. At the same time, with his immense personal popularity, he continues to challenge the President, keeping him off balance. Carter may find that he gets increasingly tired of Kennedy's sniping and that in spite of his instinct for restraint, a little dose of retaliation may jostle the Senator off his back.

* Despite that view, Carter enlivened the White House correspondents' dinner by remarking: "Amy says Senator Kennedy isn't a candidate--don't laugh at her; she's only a child."

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