Developing Manpower Legislation A Personal Chronicle (1978) / Chapter Skim
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EMBARGO, INFLATION, AND RECESSION
EMBARGO, INFLATION, AND RECESSION
Pages 45-66
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From page 45... ...
The unemployment rate rose again by 0.2 percent to 4.9 percent, and an estimated l00,000 workers lost their jobs because of the oil embargo. The 0.4-percent increase in unemployment in January l974, to 5.2 percent, underlined the spreading unemployment effects; an additional l50,000 people lost their jobs because of the energy crisis.
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From page 46... ...
The six months to two years duration of benefits went well beyond anything available under regular unemployment insurance, thus providing special benefits for this group of "energy crisis unemployed." Also, while the regular unemployment insurance program was financed by specific employer taxes, thus providing a built-in policing mechanism, this program would be paid for by the general revenues of the federal government, with no incentives to the states for the tight administration of the program. In retrospect, one provision of the amendment had an unexpected but permanent and major impact on federal unemployment insurance policy.
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From page 47... ...
Our work had progressed to the point at which the President's energy message the week of January 24 contained general words that indicated that the administration would be shortly submitting a proposal for a "special payments" system that would make general supplemental unemployment insurance payments available in areas of high unemployment because of "a number of energy-related factors." During this period the energy bill was stalled in the Conference Committee, and we were beginning to have some influence on the Committee to alter the amendment. Early in February the Committee redrafted the amendment to cut the duration of eligibility from two years to one year and expanded the eligibility definition to cover unemployment due to "fuel allocations, fuel pricing or consumer buying decisions clearly influenced by the energy crisis." These alterations were clearly an improvement, but the basic "causality" problems still remained, and we continued to press for deletion of the amendment.
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From page 48... ...
"The correct answer to the problem of those who become temporarily unemployed for any reason, energy or otherwise, is to strengthen our regular unemployment insurance program, extend it to workers not now covered, and provide additional benefits to those who lose jobs in areas where high unemployment rates show that other jobs will be hard to find." Senator Jackson tried to iron out the differences between Congress and the administration that had led to the
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From page 49... ...
The oil embargo ended in April, and unemployment due to the energy- crisis began to diminish, although general unemployment levels continued at previous levels. The ending of the embargo signaled a gradual loss of congressional interest in energy legislation, and the administration's alternative unemployment insurance bill never got beyond the hearing stage previously described.
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From page 50... ...
Burns suggested "an early return to a balanced budget" as "essential to assure the country that your administration is really serious in its fight against inflation." The employment program Dr. Burns suggested called for an expenditure of an additional $4 billion, if the unemployment rate exceeded 6 percent, to provide 650,000 public service jobs.
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From page 51... ...
He had been requested by Secretary William Simon to lead a small group from OMB and the Council of Economic Advisers (CEA) in examining the possibility of increasing the public service employment program.
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From page 52... ...
3. If the national unemployment rate reached 6 percent, an additional $l billion for manpower programs would be triggered in -- public service employment and "selfimprovement employment"; this would sustain more than 200,000 PSE jobs for one year (at an average of $5,000 per job)
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From page 53... ...
Burns once again reiterated his idea for a $4 billion PSE program and the Joint Economic Committee of the Congress released a report recommending an additional 650,000 PSE jobs, when the unemployment rate reached 6 percent. The importance of Dr.
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From page 54... ...
The centerpiece of the President's manpower proposal was to be the unemployment insurance proposal we had developed in response to the Jackson amendment. Paul O'Neill and Alan Greenspan had been strong proponents of emphasizing the unemployment insurance piece of a manpower package, rather than the public service employment and related elements.
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From page 55... ...
We had had such a difficult time getting the Tax Committees even interested in holding hearings on the UI proposals, including our alternative to the Jackson amendment, that I thought it would be wise strategy to get the entire emergency bill referred to the more sympathetic Labor Committees. After deciding to name the package the "National Employment Assistance Act," we began to prepare the final legislation before the President's address to Congress on Tuesday evening, October 8, l974.
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From page 56... ...
The PSE bills authored by various members of the Committees authorized much larger sums of money; were not targeted to areas of high unemployment but generally provided funds to all prime sponsors; authorized salaries of $l0,000-$l2,000 rather than the $7,000 we were proposing; were not for limited-time projects but for general continuing activities; and were not targeted to those who had exhausted UI benefits but were open to all unemployed. Clearly, our PSE bill was very different from those that the committee members had prepared.
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From page 57... ...
When Congress recessed in September, the unemployment rate stood at 5.8 percent, up 0.4 percentage points from August. Developing a Game Plan As Congress recessed, we took stock of the legislative situation and began to develop our plans to achieve passage of the legislation in the short post-election session.
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From page 58... ...
; therefore, we must make known that the President expected action on his temporary PSE program, was against adding more funds to the existing permanent PSE program, and was likely to veto a supplemental appropriation.
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From page 59... ...
We surmised -- correctly -- that Woodcock and the UAW would give us strong support on the UI part of the bill. On November l the unemployment rate had hit 6 percent, a rise from 5.8 percent the preceding month and up from 4.6 percent a year earlier.
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From page 60... ...
(Esch did, in fact, issue a press release on the day of the Subcommittee markup that indicated that he had written to a number of congressional and labor leaders urging them to "join in a bipartisan push for passage before the Christmas adjournment of legislation to provide a two-pronged attack on unemployment." He also said that he did not "care whether the Ways and Means Committee or the Labor Committee moves on increased unemployment compensation, but action certainly must come before Christmas. If Chairman Mills of the Ways and Means Committee is not going to push for this...program then our Labor Committee must assume the task.
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From page 61... ...
There was no controversy over using the CETA prime sponsor system to administer any new PSE program, but the "project" concept had no support. It was clear almost from the beginning of negotiations that Congress would have no part of triggers; neither to make more funds available as national unemployment levels increased nor to trigger on PSE funds in local areas of 6.5 percent unemployment.
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From page 62... ...
On the other hand, there was general receptivity to a new and separately authorized PSE program to be run by CETA prime sponsors, at a total cost recommended in the administration's proposal. As the balance of this paper portrays, these early indications, on both strategy and substance, were quite accurate and very consistent with the final outcome.
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From page 63... ...
Not only had the unemployment rate reached 6.5 percent, but it had jumped 0.5 percent in one month. It was the highest rate in l3 years, with 6,000,000 people out of work, and the November figures did not reflect the layoffs in the auto industry.
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From page 64... ...
The Congress had accomplished the seemingly impossible: completing action on a $4-billion appropriation in four days! Conclusion On January 3, l975, the December unemployment rate rose to 7.2 percent, 0.7 percentage points above the November level of 6.5 percent.
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From page 65... ...
unemployment rate nationally or in individual states, rather than on a national trigger of 6 percent or local triggers of 6.5 percent as we had proposed. Up to 26 weeks of benefits were made available for those not covered, providing universal coverage, precisely as we had proposed.
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From page 66... ...
66 emergency measures to help the victims of the recession by the time the full effects of the recession were being felt. The whole experience left me impressed with the resilience of our governmental system in responding to emergency situations; I believe it also constitutes a telling argument for having such emergency measures available in a standby state so that they can automatically be implemented when needed.
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