Mr. LONG. Yes. Well, that is another thing that bothers me. Almost any industry will be able to show some increased cost.

Mr. REES. They are very adept at that.

Mr. LONG. They are awfully good at it. You have to be kind of ruthless about evaluating their claims.

Mr. REES. As a matter of fact I will put it even more broadly than that. I have yet to run across any group that thinks it is in any way responsible for the inflation. Everybody we talk to is a helpless victim of circumstances and always points to the other fellow.

Mr. LONG. Including Congressmen. You can't get any of them to admit any vote they cast is inflationary.

Mr. REES. We noticed the inflation impact statement that was attached to the House agriculture bill. It might be an example what you are talking about.

ABILITY TO ACCOMPLISH THE JOB

Mr. LONG. I wonder whether you feel your agency-how big is it? Mr. REES. About 40 people.

Mr. LONG. And it is a relatively modest budget. Is that large enough to accomplish what is obviously a very big job even within the restricted area of what you might call concentrated industry?

Mr. REES. I think there would be a case that could be made for having us be somewhat larger than we are. I would not like to grow too rapidly though because I think if you don't have legal enforcement powers, which we don't have and don't want, what impact you will have will come from high quality work. If you try to grow too fast, the quality of the staff and the quality of the work might deteriorate. So I would rather demonstrate we are useful and then grow slowly rather than try to grow very quickly.

AREAS NOT COVERED

Mr. LONG. What about the larger areas you are not able to touch and they go ahead and get away with the price increases, and you have to Say we can't get to them because we are so busy with the steel industry? They have done their dirty work which helps to create a situation which helps to justify these other fellows over whom you are trying to exert some sort of moral impact.

Mr. REES. There have been some areas we haven't been able to get into at all. One of them is the cost of medical care. However, again this is an area where we can call on other agencies, and there is a very able staff at the Department of Health, Education, and Welfare working on medical care costs. To some extent we draw on them when we want to report on what has been happening in medical care.

Mr. LONG. You raise an excellent example. Has anybody been able to get through to these people by moral persuasion or anything else? I would be surprised if anybody can.

Mr. REES. That is an extremely difficult problem because it is not just a problem of increases in fees but it is also the problem of rise in personnel.

Mr. LONG. And duplication of facilities.

Mr. REES. Duplication of facilities, exactly.
Mr. LONG. That is all, Mr. Chairman.

INCREASE OF $600,000

Mr. ROYBAL. I have one final question, and that is your budget for 1975 was $1 million and you are asking for $600,000 more, but you are still maintaining the same level of employment. I would like to have you in summary tell us why $600,000 is necessary at this time.

Mr. REES. Because we were not created by law until August, and we didn't begin operations until October. We have only been in operation now for 612 months. We will be operating altogether only for about three-quarters of the present fiscal year and in full strength for a much shorter period than that. So the appropriation that was requested was not enough in fiscal 1975 to maintain us at full strength for a full fiscal year. The extra $600,000 is simply to take the strength that we have now reached and project it for a full fiscal year.

Mr. ROYBAL. Thank you very much, gentlemen.

Mr. REES. Thank you, Mr. Chairman.

Mr. ROYBAL. The justifications will be inserted in the record at this point.

EXECUTIVE OFFICE OF THE PRESIDENT

Council on Wage and Price Stability

Salaries and Expenses

For expenses, including compensation for the Deputy Director at a rate not to exceed the rate for level V of the Executive Schedule, ecessary for the Council on Wage and Price Stability as authorized by the Council on Wage and Price Stability Act of 1974 (Public Law 93-387) [$1,000,000 $1,600,000 [:Provided, that transfers under this head for the current fiscal year may be made to any account as reimbursement for funds advanced or expenses incurred].

upplemental Appropriations Act 1975; additional authorizing legisation to be proposed for the fiscal year 1976.)

Justification of Fiscal Year 1976 Budget Estimates

1 Authority of the Office

The Council on Wage and Price Stability was authorized by the Congress by Public Law 93-387, August 24, 1974, in response to President Ford's request on August 12, 1974 to create a new Federal agency to monitor wage and price movements in the economy. The Council on Wage and Price Stability Act authorized an appropriation of $1 million for the operation of the Council during fiscal year 1975. The Congress appropriated $1 million for the Council's expenses as part of the Supplemental Appropriations Act which was enacted on December 27, 1974 (Public Law 93-554).

The authority granted by the Council on Wage and Price Stability Act terminates on August 15, 1975. In transmitting the Council's first quarterly report to the Congress on January 16, 1975, the President stated his intention to ask the Congress to extend the life of the Council on Wage and Price Stability to June 30, 1976. The Senate Committee on Banking, Housing, and Urban Affairs began hearings on February 5, 1975, on S.409, a bill to amend the Council on Wage and Price Stability Act to confer additional authority on

the Council with respect to the prices of commodities and services,
and for other purposes. S.409 would extend the termination date
of the Council to September 30, 1977.

II. Purpose

A major function of the Council on Wage and Price Stability is to monitor the economy as a whole with respect to such key indicators as wages, costs, productivity, profits and prices. It also has the responsibility to review and appraise the various programs, policies, and activities of the departments and agencies of the Federal Government for the purposes of determining the extent to which these programs and activities contribute to inflation.

As the President stated when he signed the authorizing legislation into law, "This new Council on Wage and Price Stability will provide us with one means of identifying and exposing some of the causes of inflation. It will bring into sharper focus the critical developments of industrial performance, wage and productivity performance, and the effect on inflation of actions taken by the Federal Government."

Nothing in the Council on Wage and Price Stability Act authorizes the continuation, imposition, or reimposition of any mandatory economic controls on prices, wages, salaries, interest, profits, or corporate dividends. The Council is to work with labor and management in the various sectors of the economy having special economic problems to encourage voluntary efforts to reduce inflationary pressures.

In fulfilling its monitoring functions, the Council is to acquire data on wages, prices, costs, productivity, sales, profits, imports and exports from other Federal agencies and from the private sector. The Council must rely on the voluntary cooperation of private groups for its data acquisition, since it does not have the power of subpoena. However, the Council does have the power to conduct hearings to provide for public scrutiny of inflationary problems in various sectors of the economy.

Also, the Council is directed to focus attention on the need to increase productivity in both the public and private sectors of the economy. The Council additionally is to recommend means for improving wage and price data bases for the various sectors of the economy to improve collective bargaining and encourage price restraint.

III. Formal Organization of the Council and Its Staff

The Council on Wage and Price Stability consists of eight members
and four adviser-members appointed by the President. The Council
has a full-time staff headed by a Director who is also appointed
by the President.

The President designated the Secretary of the Treasury to be the Chairman of the Council on Wage and Price Stability and the Assistant to the President for Economic Affairs to be its Deputy Chairman in Executive Order No. 11808, establishing the President's Economic Policy Board and for other purposes,signed on September 30, 1974. The other members and adviser-members of the Council are also senior Government officials. The full membership of the Council, as of February 28, is as follows:

One member position is vacant following Anne Armstrong's resignation from er Government positions in December 1974.

"The President has nominated Secretary Dent for the position of Special Trade Representative.

Secretary Brennan has submitted his resignation to the President to be effective in mid-March. The President has nominated John T. Dunlop to the next Secretary of Labor.

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