Washington Straight Talk; Brock Adams

... Brock Adams, Democratic congressman from Washington, chairman of the new committee on the budget of the House of Representatives. Tonight, on Washington's straight talk, congressman Brock Adams is interviewed by NPAC correspondent Paul Duke. Good evening. Like all institutions, congress is now changing with a battalion of new young leaders on the rise. One of those leaders is the man who is with us tonight, congressman Brock Adams. And because you are assuming a major position of responsibility in congress, Mr. Adams, we are including you in our series of special interviews of people we regard as the accountables, those who are charged with helping to get this country going again. Even Ford has recommended a budget of $350 billion with a deficit of approximately $52 billion. Is congress going to add to Mr. Ford's budget or is congress going to cut Mr. Ford's budget?

I think congress is going to try to cut Mr. Ford's budget. I don't know whether congress will be successful or not because a great part of it will depend upon how deep the recession becomes within the next year. There is approximately $17 billion worth of cuts already included in that budget from presently existing programs. And if unemployment continues to rise and federal receipts continue to drop because the recession keeps people from making money, then I don't see that the congress will cut that budget. Well, most Democrats are certainly talking about adding to the budget. On the one hand, you have the Democrats concerned about recession as you just suggested. On the other hand, Democrats are now talking about a tax increase bigger than Mr. Ford has recommended. And they're also talking about putting more money into unemployment. So isn't it rather academic, isn't congress going to increase the budget?

I think that probably they will unless we get an upturn in 1976, that's calendar 76. We see Paul about $14 billion worth of receipts are lost every time you have another percentage point of unemployment. And it costs you another $2 billion in unemployment benefits that are paid. So you get about a $16 billion swing every time one more percentage point of unemployment goes up. Now that, to me, is the only salvation for trying to reduce the budget this next time. I think we may make some reductions in defense spending and some reductions in foreign aid programs. But overall, those two factors of receipts and unemployment benefits are really beyond our control unless we want to produce considerable suffering during this recession. How much do you think Congress may reduce the defense part of the budget? Well, the proposals that I've heard are between $5 billion and $10 billion.

This represents a cut of somewhere between 8% and 10% in the various programs. We also have a problem with the defense budget in that about 55% of it now is involved in personnel. And to really begin to make substantial cuts, you have to reduce the number of people who are involved in the armed services. And their cost has been going up because we established the volunteer army and the additional benefits for being in the service and as we start to lay those people off, we exacerbate the unemployment problem. So I think what I'm really saying to you is that those of us involved in this budget process understand it's very difficult and we're willing to undertake it as a political problem and have it out with the President on where the money should be spent. But the country overall is in real trouble from what I think has been to a very great degree in induced recession, an idea that the way to combat inflation, which was evolved by the administration about three years ago, was that she sort of went into a recession

and this would stop inflation. We were saying this would stop the economy and I think that has happened. Now the administration is backing off and I kind of think both parties are entering into a new era of political debate on what they do with the budget. While they may be entering into a new era of political debate, but are they entering into a new era of political partisanship, President Ford has been talking the past few days about a partnership with Congress on foreign policy. Is it possible for Congress and the President to get together on domestic policy? Because it seems to me if there's one thing the American people don't want today, they don't want politics as usual with the enormous problems we have. I agree they don't want politics as usual and whether we can arrive at a partnership just depends, I think, on whether or not the President or his economic advisors, whoever is setting policy, will recognize the very great difference in viewpoint of what we think

is a bulk of the American people on where their federal dollars should be spent and how we should go about coming out of recession. The President's proposals are basically that if you hold federal spending and really go with what would in 1974 have been a balanced budget, leave interest rates high and try to give some help to business that this will bottom out and come out by itself. This is the old cyclical theory and it's combined with a trickle-down theory. Well, the Democratic Congress just simply does not believe that. We believe that consuming power has been badly eroded by inflation and by transfers of great amounts of purchasing power to the oil sector and to a degree into the corporate profit sector and into the whole area of food, prices and interest payments and therefore people don't have the money to buy a car or to make the economy turnover.

So we're going to have to have some recognition by the President and his advisors that we ought to have a chance to try some of our programs now to bring us out of the recession rather than continuing his which got us there. Now that is possible, but right at the moment, as you can see, he's driving with, let's continue what we've been doing and we're trying to say, no, let's shift over and do a new thing. Are you suggesting that the combination of terrific inflation and now a very bad recession is, in effect, producing a redistribution of income in this country? Yes, this is what is happening. You are taking money and it's in very simplified forms, it's something like this. The poor and the middle income people, particularly in the lower middle income groups, are having a greater and greater portion of the amount of money they get every month, which is not going up incidentally very fast.

That is being transferred into their food payments, into the payments for their housing, which is in the interest rate sector and into what they pay for oil and gas. In other words, they're heating and how they drive their automobile. By the time they have finished paying for those things, which is transferred over into the business sector, or in some cases, being transferred abroad to the Arabs, you have less money available to buy goods in the internal economy. The automobile manufacturer, he isn't suffering from a lack of productive capacity. He's suffering from a lack of market. The same thing is now shifting down through all the durable goods. We are saying that you have to build that back by giving back, say, a tax increase to these people, and to try to put a lid on some of the prices that they're being forced to pay, or else you distribute the income to a group of people who are not going to feed it back into the income stream and you start a cycle down, much like happened in the 1920s.

Well, you mentioned a lid on prices. Are you suggesting that we may need some kind of permanent wage price controls in this country? Well, I think at some point we may very well need that, particularly in the administered price sector. And by that, I mean, for example, oil pricing. Oil pricing is now being controlled by the Arab cartel, and if you do what the President suggested and take the present price control off crude oil here in the United States and deregulate natural gas, you'll get an automatic increase because the number of people who are operating in that industry are a limited number. They will simply increase their prices up to what we're paying for imported oil. Now the President and his advisors think this is a very good thing because they say, well, that'll make it attractive then to mine coal or to go to other sources because you won't have inexpensive or fairly inexpensive petroleum products available.

Well, what we're saying is if you try to pile that on the American economy right at this moment, which is the President's energy program. And it's built into his budget. What you're going to do is you're going to simply take more money out of the consuming stream and you're going to drive us further down into recession. Now, that's a basic philosophical difference with the President. It has nothing to do with partisanship. It has to do with how you think the economy in the United States runs. Well, let me throw out what many people regard as a dirty word at this point, socialism. But aren't you really bordering on, aren't you really moving in that direction? Aren't you really talking about more state planning when you mentioned administered prices, which in effect is price controls over the major industries in this country? Are you saying that the old formulas, the old programs, the old policies for dealing with the economy just can't work anymore and that we must have more state, more government planning?

Well, there are two alternatives that you can come out with on it. You can either, in effect, regulate the markets to produce a situation where they are not unfair markets, or what I call an administered price market, or the government can go in with planning. Now the reason that you've had the markets tilt so much in areas of economic concentration is for the past four or five years. You've had no major effort to try to break up concentrations of economic power, or to say, let's make it competitive. I think most of us believe in trying to make it more competitive and having all the businesses compete on an equal basis and have the laws of supply and demand and effect work. But right now, that doesn't happen. And if you have to in the short time say, well, we will put in some type of government controls a council on pricing, for example, that will report where prices have gone up and how much they've gone up and let the American public know this with a backup power in an

administration to say, well, if you've gone beyond a certain set of guidelines where then the government is going to have the right to move on, this may be necessary. Because right now you find, for example, let's take the automobile pricing. They're worried about wage and price controls. So they have left their prices up. They're capable of leaving their prices up because there's no other effective competition. And instead they offer a rebate, which is really a snapback in pricing, the moment that you want to take the rebate off, you snap back up to your original prices, if they have enormous inventories, which indicates that the demand isn't there. So what is happening in that market is that the laws of supply and demand either aren't working or are working with terribly sticky prices. And as long as that continues, people are going to be laid off in that industry because the average individual doesn't have, as I pointed out, before the money to pay those

prices. Well, the government and the people of this country have to face that problem. And so do the business people, and I think that that is the kind of program that we're trying to present to them. And I think the Congress will, through both the Senate ad hoc task force and the House ad hoc task force. And all of us that are in this committee chairman, I think, have to work into those to say, this is our alternative to what the president proposes. Let me take you back to the mid-1960s when the Democrats enacted a number of major programs designed to improve the general welfare of the lower income groups, the war on poverty, the model cities program, and so forth. I take it from everything you're saying now that government policy in this direction just has not worked and that we must have more regulation by the federal government. Well, I don't think those programs have been successful overall. I think we've had some successes within them.

But I think you're going to have to have the private sector distributing income into this area as well as the government doing it, because what has happened is that we really used the government as the sole agency to try to bring up the lower income, the very poor and the lower middle income people in the United States to a level where they could participate in society. Well, the result of this has been that our programs in that area are now becoming astronomically expensive, because we're taking a greater and greater portion of the federal tax receipts and using it in those areas, whereas if we could get the private sector more involved in carrying that, the government wouldn't be just continually borrowing money. Well, then I take it you agree with President Ford, who suggested recently that spending by government, not just the federal government, but local and state government as well, is now approaching an ominous level that we cannot afford to pour so much money into domestic

welfare programs in this country. We cannot continue the present course of just letting these programs increase. I think he is right on that. Yes, there is a fundamental decision made in the United States that we wish to tax ourselves at a greater rate in order to redistribute income throughout the society. Do most Democrats in Congress agree with you on that? Because I have the opinion that a great many Democrats still favor putting more money into social welfare programs. Well, I don't think most Democrats at this point agree with me on this. I don't think most of them have really sat down and looked at the total budget and decided where their program fits. That's the whole problem and purchase effect of the budget committee is that we will for the first time lay out to both the Democratic caucus and the Republican conference, and

then later to the full floor of the House, what each program costs and what its projection will be out five years. How much we will be taking in total receipts and how much we will be spending in each program. Every one of these programs has merit. I don't think there's a question about it or we wouldn't have passed it at that time, but we've passed them all in separate compartments, and we haven't really thought often of what the final effect would be out five, six, seven, eight years when the escalator clause kept climbing each year and the total number of people who were eligible kept climbing. And so unless the decision is made overall for a greater taxing effort to pay for these programs, we will have to continue borrowing. And what I guess I'm saying to you, Paul, is that the size of the national debt is now going to reach about $600 billion.

Now, that isn't going to break this country and we can manage it within our gross national product, but we cannot continue this indefinitely. That we begin to arrive at a point where the debt becomes so large and the amount of gross national product and federal income that we are paying in just to service the debt makes it impossible to do anything else. So we are not able to continue the programs by borrowing. Well, then what do you think Congress must do then? Well, I think Congress is going to have to, and this is going to be a three, four, five year process because we've been at this for 25 years doing the other and in particular a great deal the last 10 years, is the Congress is going to have to sit down and look at the total receipts that they can bring in and the ways it means committee chairman will make his proposition to the House and later the Finance Committee, the Senate of this is what we think we can raise that the people will stand for. And we're going to have to take that and then divide it among 16 functional categories

which we have set up now and decide, all right, this amount of money goes into each one. And if we have, for example, as we will this next year, a recession, we may decide as I think we'll have to, but we're going to have to take care of the people that are unemployed. This is going to feed money back into the consuming strain. So this year we may have to run a deficit to take care of it. But when we come out of this recession area and you come into an area where unemployment isn't say the 4% range, then you're going to have to balance that budget and perhaps run a surplus for the potentially bad years. Now that is what I think is going to come out of the discussion, but that's just my opinion. And as you mentioned, there are many other Democrats that are very much ready to put in their particular new program and haven't really focused on where it fits in the total spectrum. Well, this is the fundamental question. On the one hand, you find the Democrats saying Congress must now exercise greater budget discipline.

It must hold down spending. And then on the other hand, they're saying we must put a lot more money into some of the social welfare programs. We must help the unemployed with new programs for them. And as you well know, the customary way in Congress is the back scratching way. I support your project, you support my project, and the budget goes to hell. Now the question is, can Congress really change, can it adopt new methods, can it be more responsible? Well, we're going to find that out in the next two years. That was the whole purpose of passing the budget act, which is to in effect gather the non-interest groups on a particular program altogether with the interest groups at the same time in one concurrent budget resolution in the spring and another one in the fall. Now the way it's gone in the past, and I incidentally, I think there's only a 50-50 chance this will succeed.

But I think Congress at this point would then have to admit that it's really going to just respond to presidential budgets if it doesn't succeed. Because our theory is that if we gather everyone together, then you go down through the list of programs. We use the buzzwords national priorities, but you go down through the list and you target so much money for each one. And you try to stay within your targets. And the people who are desirous of having their program have to in effect have it out with the others who want their program and a compromise reached as to what each one gets. And then at the end, you either have to vote to raise or lower the borrowing system. Now that's going to be very hard, and it runs right into the established system. This is not going to be politics as usual. And if we don't hurtle that, then I think that the whole process will break down. Well, isn't there also a good deal of demagoguery, especially where the defense budget is

concerned? And you mentioned that earlier about the pressure to help the unemployed so you don't cut the defense budget so much. But in reality, despite the cries by so many Democrats that we can cut the defense budget as much as $10 billion, the defense budget isn't true that the defense budget really takes a much smaller share of overall spending than it did only four or five years ago. Yes, this is true. And I think that we have to avoid being demagogues on the defense budget because it's total percentage of the, both the total budget and its percentage of the whole amount of money that turns over. Again, we use buzzwords, gross national product, has gone down. And what has to be faced is that you cannot take enough out of the defense budget to satisfy all of the other programs. And once you make that fundamental decision, then you can look at each of the other programs

on its own merits and decide that this one has to stop, this one has to go. Now that's going to be hard and it's going to destroy a lot of political speeches around the country, but it's the truth. What's going to happen on Vietnam is Congress just going to deny the president, the additional 300 million in military aid he is asking. And more importantly, what about the future? Is your committee going to scale down the amount of money which it will recommend for Vietnam? Well, I think that the Congress is probably going to deny the president additional money in Vietnam. I think the general feeling of it. What about in future years? And I think in future years it's going to scale down and phase out simply because more and more people have arrived at the conclusion that the really the amount of money that we pour in there, whatever we put in will be spent and the connection or the ability of the government there to survive is not in direct proportion to our money, but in proportion

to what they are doing with their people and that our money doesn't affect it that much. I get this feeling out of it. But I don't think they're going to immediately say, well, we won't give anything more to help this country, but I don't think they're going to go with the president's program. They don't see America's self-interest involved that deeply in this country. Congressman Adams, there's a great euphoria now existing in Congress, a feeling that Congress is in a period of renaissance, that it is changing, that it is improving its ways of doing business and in the House of Representatives, a number of reforms have been adopted to make the process work better, including the establishment of your committee. Is Congress really going to do a better job now at a time when this country is in crisis and people are looking for leadership? Can they find that leadership in Congress? I think so.

I think you're going to see a lot of new leaders emerging and a greater desire and capability of facing a problem and voting it up or down. But I think, Paul, this depends to a very great degree on personnel now. We have put in all of the necessary reforms and changes to make this instrument work. Now the question becomes, can we play the instrument? In other words, do we get substantive results and can we get them rapidly enough to match the ability of the executive, which actually is one man with subordinates and can move very rapidly, that the people will get a feeling that the Congress is keeping up with the bi-play of what should be done in particular programs? This will mean very strong leadership and a very great desire on the part of the Congressman to Change Business as usual and get on with either voting a program up or down. I am very hopeful about it.

I'm not euphoric, but I'm hopeful. Well, I guess the question I have to ask is, many Democrats, when you talk to them privately, express doubts because they say that Carl Albert, Mike Mansfield, some of the older hands who've been the traditional leaders have not led as they should have in the past. Are they going to change? Are they going to give us a new brand of leadership now? Well, I think that the process is producing this. Like for example, notice what has been done by both Mike Mansfield and Carl Albert and putting together these ad hoc committees of the Committee Chairman involved and some other members on the economy and on energy and saying, come up with a program and we'll take it into our policy committees and see if we can't get it through. Maybe these entities are instruments like the policy committee and the ability to call Committee Chairman together and have them work on one program is new. Now I think they can do it. If they don't, then I think the American public is going to throw everything into the 1976

presidential election and say, well, it's whoever is president and we'll just let Congress dispose of things. And I think the leadership in Congress and the Committee Chairman and certainly the newer members are well aware that we're on trial before the American public in this two year period. Very briefly. Do you think you can make a real difference with your committee? Yes, I think we can and we'll know the answer to this by October 1, 1976. If we can get out of concurrent resolution in the spring of 1976 and another one in the fall that sets the overall spending, sets the budget limit and divides up the money, then I will consider that we have been successful. If it blows apart, then you might just as well do away with this budget committee and decide that you're going to have the executive or somebody else run it. We'll talk to you in two years then, Congressman Brock Adams. Thank you very much. Washington Straight Talk.

From Washington, N. Pact has brought you the Chairman of the House Committee on the Budget, Congressman Brock Adams, with N. Pact correspondent Paul Duke. Next week on Washington Straight Talk, Arthur Okan, economist with the Brookings Institution and Chairman of the Council of Economic Advisers in the Johnson Administration. You will be interviewed by N. Pact correspondent Jim Lehrer. Production funding provided by Public Television Stations, the Ford Foundation and the Corporation for Public Broadcasting. This has been a production of N. Pact, a division of GWETA.