Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
1534922
label
1975/11/26 - Economic Policy Board
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
1534922
sourceUrl
contentType
document
title
1975/11/26 - Economic Policy Board
citationUrl
collections
James M. Cannon Files (Ford Administration)
James Cannon's Meetings Files
subjects
Grain
Legislation
Railroads
iiifBase
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
1534922
coverageEndDate
logicalDate
1975-11-30
month
11
year
1975
coverageStartDate
logicalDate
1975-11-01
month
11
year
1975
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
url
mediaId
431040d78aefb41c
ocrText
The original documents are located in Box 53, folder "1975/11/26 - Economic Policy Board"
of the James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 53 of the James M. Cannon Papers at the Gerald R. Ford Presidential Library
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON, D.C. 20506
November 24, 1975
MEMORANDUM FOR ECONOMIC POLICY BOARD - EXECUTIVE COMMITTEE
FROM:
Paul W. MacAvoy Pare may
SUBJECT: Food Deputies Report No. 33
1. Supply and Demand Situation for Grain
The November crop production estimates show an increase
over the October estimate of 1.6 million metric tons of
feed grains and 1.3 million metric tons of soybeans.
The current estimates are for a 1975-76 supply of wheat
19 percent above a year earlier, a supply of feed grains
up 17 percent, and a supply of soybeans up 21 percent.
These data are given more fully in Table 1.
At the same time, the USDA's cattle on feed report
shows a 12 percent increase over a year earlier in
inventories of cattle on feed in seven leading states
as of November 1. Increased feeding, together with
larger export sales compared to a year earlier, provide
the demand side counterpart to the crop supply increases.
The net result is a substantially larger increase in
supply than in prospective demand. Therefore, it is
expected that prices will tend to be lower in 1975-76
than in 1974-75. As of November 19, near futures
prices of wheat were down about 28 percent, corn about
25 percent, and soybeans about 38 percent from a year
earlier.
The October and November increases in estimated feed
grain supply have been influencing wholesale prices
in the past several weeks. With an elasticity of
demand for feed grains between -.25 and - -.50, these
supply increases should have reduced corn prices
5 to 10 percent since early October. In fact, the
REVOLUTION
price of Chicago corn has declined about 12 percent.
AMERICAN
BICENTENNIAL
1776-1976
-2-
Table 1. Crops in 1975/76 compared to 1974/75
(million metric tons)
Percentage
1974/75
1975/76*
change
Wheat
Supply:**
55.6
66.9
+20
Demand:
Domestic use:
18.6
19.3
+ 4
Exports:
28.3
36.8
+30
Carryover:
8.7
11.0
+26
Feed Grains
Supply:**
170.4
200.0
+17
Demand:
Domestic use:
120.6
133.2
+10
Exports:
35.5
45.3
+28
Carryover:
14.3
21.6
+51
Soybeans
Supply:**
38.3
46.5
+21
Demand:
Domestic use:
21.7
23.3
+ 7
Exports:
11.5
12.9
+12
Carryover:
5.1
10.3
+102
*USDA estimates as of November 11, 1975.
**Includes production, carry-in stocks, and imports.
-3-
The 15 to 20 percent decline in the price of wheat
since mid-October is more difficult to explain since
estimated supply has been stable. The main potentially
price-influencing event was the resumption of sales
to the Soviets. Because it was announced that 7 million
tons of additional grain could be sold in 1975-76, while
the trade was reported to be anticipating 5 to 6 million
tons, the announcement itself should not have been
bearish. However, the failure of the Soviets to make
any wheat purchases since that time, while they have
bought 2.7 million additional tons of U.S. corn, has
probably reduced anticipated foreign demand for wheat
in 1975-76.
These factors suggest that the current lower cash and
futures grain prices, as compared to early October,
may not be just a transitory dip, but reflect the
supply-demand situation most likely to prevail until
evidence begins to accumulate about 1976-77 crop
prospects.
Cash and futures prices of livestock, especially hogs,
have also declined rapidly since early October. This
probably reflects both lower expected feed prices and
accumulating evidence of increased meat supplies for
1976. Passing these through to retail prices, they
could reduce earlier estimates of food CPI change to
the 6 to 7 percent range.
2.
ICC Regulation of Grain Shipment by Rail
This fall the ICC has issued a service order concerning
the allocation of covered hopper cars for grain ship-
ment. It limits the use of cars in unit trains --
shipments of 20 or more cars from one origin to one
destination -- to 20 percent of a railroad's jumbo
covered hopper cars. Only two railroads have been
affected by the 20 percent limitation -- the Penn
Central and the Norfolk and Western -- but these two
are important grain haulers. The service order also
originally limited the repetitive use of cars in unit
trains, although this limitation has now been removed.
A related service order, requiring priority allocation
of cars to elevators where grain is on the ground, has
had, negligible effects. Only 15 elevators had taken
advantage of the order when it expired on November 14.
-4-
The intent of the limitation on use of cars in unit
trains is to make more cars available for smaller
grain shippers who cannot use unit trains. However,
this regulation causes inefficiency in grain move-
ment. Grain can be moved more quickly and at lower
cost in unit trains. Therefore, forcing a reduction
in cars used in unit trains increases the time and
cost of transporting grain. This was discussed with
the ICC representative and his response was renewed
determination to help the little fellow.
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON, D.C. 20506
November 24, 1975
MEMORANDUM FOR ECONOMIC POLICY BOARD - EXECUTIVE COMMITTEE
FROM:
Paul W. MacAvoy and Bruce Gardner
SUBJECT:
Winter Wheat Crop Prospects
USDA and private analysts (from Continental and Cook)
agree that winter wheat prospects are not currently
endangered by drought. Exceptionally good weather has
prevailed in the Northwest and East Central wheat growing
areas. Last week's blizzard, which put several inches of
snow on several dry areas, and widespread showers of 3/4
to 1 inch in parts of Texas, Oklahoma, Kansas, and Colorado,
have further enhanced prospects for 1976 winter wheat. Great
Plains wheat, Inc., attributes the 1976 wheat futures price
decline last week to this news. The only substantial remain-
ing problem areas are in Western Kansas and the Oklahoma
panhandle. The Eastern two-thirds of Kansas, which is the
main wheat growing area, has now had adequate rainfall. It
is true that fall wheat pasture prospects in the hard winter
wheat areas are much below normal, but this is not seen as
important for next year's grain yields.
The USDA has done a preliminary analysis of 1976 wheat
prospects by region. Their main projections are:
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
-2-
Acreage Planted
Yield per Harvested Acre
Production
Region
1974/75* 1975/76
1974/75
1975/76
1974/75 1975/76
(mil. acres)
(mil. bu.)
Southern Plains
(includes drought
area)
33.1
32.2
26.6
26.0
796
745
Northern Plains
21.7
21.8
28.0
28.8
582
610
Northwest
7.6
7.7
49.2
50.0
353
362
Cornbelt
8.9
9.2
39.4
40.5
335
355
Other
3.1
3.0
29.8
30.4
71
71
U.S. Total
74.4
74.0
31.0
31.4
2,138 2,144
*Year beginning July 1
-3-
Although production in the Southern Plains is now
projected to decline about 6-1/2 percent in 1975-76
compared to 1974-75, this is offset by increased pro-
jections of acreage and yields in other areas, so that
the USDA's production outlook currently is for a slightly
higher harvest in 1976. The 2.14 billion projection would
be a new record and would be up 25 percent from 1972-73
and 20 percent from 1973-74.
The USDA's first official report on U.S. winter wheat
production will be released on December 22.
OF
DEPARTMENT
DEPARTMENTION
THE SECRETARY OF TRANSPORTATION
UNITED
AMERICA
WASHINGTON, D.C. 20590
STATES
OF
November 24, 1975
MEMORANDUM FOR THE DIRECTOR OF THE
OFFICE OF MANAGEMENT AND BUDGET
SUBJECT: Omnibus Rail Legislation
The Omnibus Rail Legislation, as presently drafted in the Congress,
presents serious financial and public policy questions. While the
House bill is completely unacceptable in several respects, it is
closer to the Administration's position than is the Senate bill.
HOUSE OF REPRESENTATIVES
The Subcommittee on Transportation and Commerce of the House
Interstate and Foreign Commerce Committee adjourned on November 19
without completing action on its bill, H.R. 9802. Chairman Rooney
(D-Pa.) wanted to report the bill on the 19th but Congressman Skubitz
(R-Kan.) prevented it after two important Administration-proposed
amendments were defeated. The subcommittee will reconvene on
December 1. The present status of the bill is as follows.
Implementation of the Final System Plan. The House bill follows the
USRA and Administration proposals for the level of Federal funding
of ConRail and for the establishment and delegation of powers to a
Government Investment Committee (although the name has been
changed to Government Banking Committee). However, the bill
prohibits the payment of preferred stock in lieu of interest and
dividends when cash is not available to ConRail. Congressman
Skubitz will introduce an amendment to reduce the USRA obligational
authority in Section 210(b) of the RRR Act from $500 million to $25
million. While providing for Supplementary Transactions, the House
bill would allow ConRail to veto such a transaction. The Certificates
of Value issued to the creditors would be pegged at "Constitutional
Minimum"as set by the Special Court. Finally, deficiency protection
is accorded to all carriers who purchase rail property pursuant to
the Final System Plan.
2
Northeast Corridor. Currently, the House bill contains the Administra-
tion's proposal for the Northeast Corridor with the exception that the
Federal share of the project is $1.4 billion rather than $1.08 billion.
However, Congressman Florio (D-N.J.) is trying to delete, even
before the bill leaves subcommittee, the requirement of a State
financial share in the project. There is not as much enthusiasm for
the Corridor in the House as in the Senate, and a thorough lobbying
effort for our position might produce substantial results.
Overall Funding. In addition to the $2. 1 billion for ConRail, the House
bill provides for $2 billion in loan guarantees for the Nation's railroads,
as does the Administration program. The House bill also has an
account for Consolidation, Mergers, Supplementary Transactions,
and Improvement of Facilities containing $2.25 billion in either grants,
loans, or interest subsidies, or any combination thereof, at. the
discretion of the Secretary of Transportation. Only $400 million of
this, for Supplementary Transactions, has been approved by the
Administration. (This item could be changed substantially even
before the bill comes out of subcommittee, with the dollar level
possibly being reduced.) There is currently $180 million in the bill
for light density line subsidies in the Northeast. When the Northeast
Corridor funding is added, the total comes to $7.9 billion. The
Administration has proposed spending $5.7 billion.
DOT-USRA-Amtrak. As currently written, the House bill gives all
new planning and funding authority to the Department of Transportation.
Nevertheless, Amtrak is lobbying to be given control of the Northeast
Corridor. USRA appears to have signalled that it really doesn't
want accumulation of preferred stock or Supplementary Transactions
and that it is flexible on the issue of Certificates of Value. In
addition, Mr. Jordan, former President of USRA and now Chief
Executive Officer of ConRail, has apparently begun to lobby against
Supplementary Transactions.
Rail Service Continuation Subsidies. Because the subcommittee, just
prior to adjournment, struck Title IV of the bill, temporarily there
are no subsidy provisions to contradict those proposed by USRA.
This will surely change, however, once the House reconvenes.
There is a good possibility that there will be a 100 percent subsidy
for the first six months or year in the Northeast; there is a substantial
likelihood that there will be no subsidy for abandonments outside the
region.
3
Regulatory Reform. The House bill does contain substantial regulatory
reform. There is both upward and downward pricing flexibility and a
rate bureau provision prohibits agreement and voting on single line
rates and on any joint or interline rate in which a carrier is not a
participant. However, the bill would still allow collective action on
general rate increases. The section on nationwide abandonment of
light density lines, however, will actually weaken the present law and
frustrate the abandonment of light density lines. With regard to mergers,
the House bill currently provides for an expedited procedure through
certification by the Secretary of Transportation that a proposed merger
is in the public interest as measured by a new test which places a
premium on economic viability and efficiency. The Secretary's
certification creates a presumption in favor of the proposal, and the
ICC must render final action within two years. Organized labor,
however, is exerting great pressure to water down the merger
procedure, and it is possible that such action will take place even
before the bill leaves the subcommittee. The bill provides that the
ICC's budget must be submitted concurrently to the President and
the Congress. RSPO is continued and its powers are expanded to
allow it to assist and advise generally the ICC in the development
of an efficient regulatory policy for each mode of transportation
under the ICC's jurisdiction. The Office of Public Counsel is given
the power to become a participant in all proceedings before the
Commission involving rail transportation. It should also be noted
that Congressman Adams (D-Wash.) has tried in subcommittee to
weaken the regulatory reform in the bill and may continue his efforts
in full committee.
SENATE
The Senate Commerce Committee ordered its bill reported on
November 19. Senate floor action is scheduled to begin December 2.
Senator Pearson (R-Kan.) has agreed to offer at least some Administra-
tion amendments from the floor. The present status of the bill is
as follows.
Implementation of the Final System Plan. USRA is authorized to purchase
up to $3 billion of ConRail debentures and preferred stock and has the
power to turn the entire investment into grants. There is no Government
Investment Committee to oversee the flow of Federal funds into ConRail.
Interest and dividends on the Federal investment are noncumulative and
payable only when ConRail has retained earnings in excess of $500
million. The base value of USRA's Certificates of Value is established
at whatever Special Court decides is the "Constitutional Minimum".
Supplementary Transactions can only be effectuated within four years
4
following the effective date of the Final System Plan, rather than the
six recommended by USRA, and either the ICC or USRA can completely
block any proposed transaction. $500 million in USRA obligational
authority is retained in Section 210(b) of the RRR Act despite the
need for only $25 million to cover the single loan outstanding under
this section as well as ConRail's cash needs prior to conveyance. The
bill extends the labor protection provisions of Title V of the RRR Act
to any rail employees affected by Amtrak's takeover of rail properties.
Finally, deficiency protection is accorded to all carriers who purchase
rail property pursuant to the Final System Plan.
Northeast Corridor. The bill authorizes USRA to provide up to $3
billion in non-interest-bearing loans to Amtrak (with no specified
repayment period) to upgrade rail service in the Northeast Corridor
to achieve (within four years) the trip times specified in DOT's 1971
report. A new Northeast Corridor Improvement Corporation with its
own board of directors is established to carry out the improvement
program. This Corporation can, at its option, extend the upgrading
to include Harrisburg, Albany, and Springfield. $255 million in grants
is provided to Amtrak to acquire the Northeast Corridor properties
and other properties outside of the Northeast Corridor used in
providing intercity rail passenger service.
Overall Funding. The bill sets up a $4.4 billion "trust fund" and gives
USRA the authority to use the "trust fund" to finance ConRail (up to
$3 billion) and railroad rehabilitation throughout the country. USRA
is also authorized to forgive any or all of the $4.4 billion in Federal
financial assistance. The "trust fund" has no user charges, and is
simply fed by general revenues. In addition to the $4.4 billion in the
"trust fund", USRA is authorized to provide another $1 billion in loan
guarantee assistance to the Nation's railroads. The bill also provides
open-ended "authorizations
of such additional sums as may be
required" to the "trust fund" to allow USRA to further assist the
railroads. The bill provides for $960 million for rail service
continuation subsidies, both freight and passenger. When the Northeast
Corridor funding is added, plus the authorizations to USRA and the
Department of the Interior, the total comes to $9.7 billion. The
Administration has proposed spending $5.7 billion.
DOT-USRA-Amtrak. It appears that USRA has exerted substantial
influence in the Senate Commerce Committee; this is reflected in the
fact that the Senate bill awards Mr. Lewis, the Chairman of USRA, a
$25, 000 annual salary raise and in the fact that the Senate bill
authorizes $67 million for USRA's administrative expenses through
5
FY-77. USRA completely controls the flow of funds to both ConRail
and the railroads in the rest of the country. A Northeast Corridor
Improvement Corporation (a subsidiary of Amtrak) is given
responsibility for NEC upgrading, with the money coming from USRA.
Rail Service Continuation Subsidies. The bill extends the rail branch
line continuation subsidy program throughout the nation and authorizes
a total of $655 million in new subsidy funds through FY-83 (over and
above the $180 million now authorized in Title IV of the RRR Act).
The Federal share is increased from 70 percent to 100 percent in the
Northeast Region during the first year of the program and held at 90
percent thereafter for both the Region and the rest of the nation. The
bill also provides a new authorization to UMTA of $125 million for
operating subsidies to assist the states in the Region to maintain rail
commuter service through FY-78. The Federal share of this assistance
is 100 percent during the first 180 days after conveyance, 90 percent
through FY-77, and 50 percent through FY-78. Finally, the bill
authorizes $25 million for each of three fiscal years beginning in FY-76
to provide information on, and implementation of, conversion of
abandoned rail rights-of-way to recreational and conservational uses.
At least four-fifths of the total authorization goes to the Secretary
of the Interior.
Regulatory Reform. There is substantial reform in the regulatory
system with regard to both pricing flexibility and rate bureaus. The
bill provides substantial upward and downward pricing flexibility.
With respect to rate bureaus, discussions, agreements, and voting
on rates are prohibited for single and joint line rates. However, the
bill would still allow collective action on general rate increases. The
bill provides for a modified merger procedure that allows proposals
to take effect if the ICC has not rendered a decision within two years
of submission of an application. The Administration's restructuring
proposal which would provide a new test for approving mergers and
allow the Secretary of Transportation to condition Federal loan
guarantees upon restructuring is not included. The bill provides that
the ICC's budget request must be submitted concurrently to the
President and the Congress. RSPO (called Transportation Services
Planning Office) and the Office of Public Counsel are given powers
similar to those in the House bill.
CONCLUSION
The current status of the legislation raises the distinct possibility of
the necessity of a Presidential veto. A veto, if sustained, would have
important consequences with regard to the reorganization of the bankrupt
6
railroads in the Northeast and Midwest. The Final System Plan went
into effect on November 9. Under current law, within ninety days of
that date, USRA is required to certify to the Special Court that the
exchange of ConRail securities and other benefits for the properties
of the bankrupts is fair and equitable. Unless new legislation
containing provision for $2. 1 billion in Federal investment in ConRail
is passed, USRA will be unable to make the required certification
to the Special Court, and the Court will not order conveyance. At
the least, Congress would then have to postpone the conveyance
date and provide additional interim financial assistance to the bankrupt
railroads. At the worst, the creditors could successfully petition
the reorganization courts to allow termination of service and liquidation
of the properties on the ground that the Act is a nullity.
William T. Coleman, Jr.
THE WHITE HOUSE
WASHINGTON
November 25, 1975
FOR EPB EXECUTIVE COMMITTEE MEMBERS
The Food Deputies Report and the Policy Statement
on Grain Arrangements with Foreign Countries will
be discussed at an EPB Executive Committee meeting
during the week of December 1.
EYES ONLY
MINUTES OF THE
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
November 25, 1975
ATTENDEES: Messrs. Simon, Seidman, Greenspan, Lynn, Dunn, Baker,
Zarb, Malkiel, Gorog, Cavenaugh, Walker, Jones,
Porter, Hormats, Kasputys, Hinton, Penner, Areena
1. Review of New York City Situation
The Executive Committee briefly reviewed recent developments
in the New York City situation. The discussion focused on
probable actions by New York State, City, union, and finan-
cial community officials, and the format, timing, and sub-
stance of a Presidential announcement on New York City.
Decision
Mr. Seidman will meet with White House Legislative Liaison,
Press Office, and Speech Writing Department representatives
to get their views regarding the timing, format, and substance
of a Presidential announcement on New York.
2. State of the Union Preparation
A memorandum outlining procedures for State of the Union pre-
paration was distributed to Executive Committee members.
Any questions on the proposed procedures will be discussed
at the Wednesday, November 26 Executive Committee meeting.
3. Withholding Rate Strategy
The Executive Committee discussed an options memorandum on
withholding rate strategy.
Decision
The Executive Committee approved Option 2 recommending
Treasury issue of a press release alerting employers and
the public that unless Congress acts increased rates will
take effect January 1 and a simultaneous statement to the
public and to the Congress warning of the consequences of
inaction and reiterating the need for a spending ceiling.
The memorandum and recommendation were approved for sub-
mission to the President.
is
FORD
EYES ONLY
RBP
HALD
THE WHITE HOUSE
WASHINGTON
November 25, 1975
MEMORANDUM FOR ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEMBERS
FROM:
L. WILLIAM SEIDMAN
SUBJECT:
Railroad Legislation
The attached materials, just received from the Department of
Transportation, are a revision of the materials from Secretary
Coleman distributed earlier today.
Secretary Coleman has requested a discussion of the Senate
and House Omnibus Rail Bills at tomorrow's Executive Committee
meeting.
REFORE
&
SERALD
November 25, 1975
The attached compares the Senate Omnibus Rail Bill as reported by the Full Committee
and the House Omnibus Bill (H. R. 9802) as Amended to date by the Subcommittee.
Some provisions remain unclear because of drafting ambiguities.
All provisions of the House Bill remain open to further amendment by the Subcommittee.
1
ISSUE
SENATE
HOUSE
ADMINISTRATION
Regional Rail
Funding - USRA authorized to
Funding - USRA authorized
Funding - USRA authorized initially
Reorganization
purchase up to $3 billion in
to purchase up to $2.1
to purchase up to $1.85 billion in
Implementation
ConRail debentures and
billion in ConRail
ConRail debentures and preferred stock.
preferred stock. Amount for
debentures and preferred
An additional $250 million is provided
supplementary transactions
stock.
as a cushion.
is not clear.
Oversight of ConRail Progress--
Oversight of ConRail
Oversight of ConRail Progress--
USRA controls.
Progress--
Government Investment Committee
USRA can forgive payment of
Government Banking
consists of USRA Board Chairman
principal and interest on any
Committee consists of
and the Secretaries of DOT and
securities issued by ConRail.
USRA Board Chairman
Treasury. The GIC can waive payments
and the Secretaries of DOT
relative to ConRail securities.
and Treasury. The
Committee can waive any
payment relative to any
ConRail securities.
Interest and dividends non-
Interest and dividends non-
Interest and dividends are cumulative.
cumulative and payable only
cumulative and payable
but payable only if sufficient cash
when ConRail has retained
only out of ConRail net
is available. When cash is not available,
earnings in excess of $500
profits.
additional preferred stock is issued
million.
in lieu thereof.
Base value of certificates of
Similar to Senate bill.
Base value is net liquidation value
value hinged on Special Court's
determined by USRA
decision as to constitutional
minimum.
2
ISSUE
SENATE
HOUSE
ADMINISTRATION
Regional Rail
Supplementary Transactions
Supplementary Transactions-
Like House version, except
Reorganization
- must occur, if at all,
- six year period
$400 million is specifically
Implementation
within 4 years
authorized to be appropriated
(Continued)
- DOT's presentation of
to DOT to facilitate transactions,
- either ICC or USRA
proposal to Special Court cannot
and ConRail cannot block
can block
be blocked by either USRA or
presentation to Special Court.
the ICC. However, ConRail can block.
- Funding comes from
$2.225 billion account
in section 803.
Indemnification of Profitable
Similar to Senate bill.
Indemnification available
railroads
only if the conveyance is
of significant importance
The Federal Government
to achievement of the FSP
indemnifies all profitable
goals.
railroads which participate
in the reorganization.
3
ISSUE
SENATE
HOUSE
ADMINISTRATION
Total Funding
Establishes a $4. 4 billion
Establishes Rail Transportation
$2.1 billion to USRA for ConRail
Railroad Rehabilitation
Trust Fund within the DOT
and Improvement "Trust
Budget, containing the following
$400 million to DOT for supplementary
Fund" for purpose of
four accounts --
transactions.
providing capital to USRA and
to provide financial
1) Rail Services Continuation
$1. 08 billion to DOT for the NEC
assistance to ConRail
Subsidy Account
and to other carriers.
- (Preserves existing $180
$2 billion loan guarantee program
million for title IV of
under DOT.
In addition, a $1 billion
the RRRA)
obligation Guarantee Fund
$180 million for Rail Service
is available to USRA to
2) Consolidation, merger,
continuation subsidies.
finance improvements to
supplemental transaction, and
rail facilities throughout the
Improvement of Facilities
country.
Account.
A total of $5.7 billion.
-Authorizes appropriation
$3 billion in non-interest
of $2.225 billion thru
bearing loans for NEC.
FY 1980.
$255 million to Amtrak for
3) NEC account
NEC and other activities.
-Authorizes appropriation
of $1.4 billion thru FY 1980.
Adds $655 million to current
$180 million for rail service
4) Loan Guarantee for Rail
continuation subsidies
Improvement and Service Account
nationwide.
-$2 billion ceiling placed
on guarantees.
$125 million for commuter
service in Region.
In addition, USRA authorized to acquire
up to $2.1 billion in ConRail
$75 million (?) for conversion
securities.
of rail rights-of-way to
recreation facilities.
A total of $9.7 billion.
A total of $7.9 billion.
4
ISSUE
SENATE
HOUSE
ADMINISTRATION
Regulatory
Reform
1. Pricing Flexibility
a.
No-suspend zone
None as such, except there is
3-year no-suspend zone
permanent no-suspend zone,
no suspension of increases
of 7% each year.
phased-in (7, 12, 15% for first
if no market dominance.
(Does not apply to
3 years; 15% up, no limit down
export rates).
thereafter).
b. Minimum Rates
Rates which increase going
Rates above variable
Same as House (slightly
concern value can't be called
cost cannot be called
different from Senate).
too low (there is a presumption
too low.
that rate above variable cost
increases value).
c.
Umbrella
Rates of one mode may not
Rates of one mode may
Same as House (slightly
Ratemaking
be held up to protect another
not be held up to protect
different from Senate)
mode as long as rate
another mode.
increases going concern value.
d. "Market
Commission loses maximum
Commission loses maximum
None
Dominance"
ratemaking authority except
ratemaking authority except
where market dominance.
where "market dominance".
e. Big John
Special procedures for rates
Same.
Same as House and Senate.
involving $1 million investment.
f. Time Limit on
None
7/10 month time limit.
Same as House.
ICC hearing
5
ISSUE
SENATE
HOUSE
ADMINISTRATION
2. Rate Bureaus
a. Single and joint
No discussions, voting
No voting or agreements
Same as Senate except
line rates
or agreements on single
on single and joint line
applies immediately.
and joint line rates
rates.
after 2 years.
b. General Rate
Prohibitions do not apply
Same as Senate.
Prohibitions apply to certain general
Increase
to general rate increases.
rate increases after 3 years.
C. Rate Bureau
Rate bureaus may not
Same as Senate.
Same as House, Senate
Protests
protest rate of own mode.
except prohibition applies
to all rates regardless of mode.
3. Abandonment
a.
Procedural change
Adopts procedural change
None
More advance notice to communities
similar to Administration.
of abandonment through listing and
notice procedure.
b. Substantive change
None
Abolishes 34-car
None
rule (very vague amendment)
c. Financial Assistance
8-year subsidy program
None
None
of $835 million
6
ISSUE
SENATE
HOUSE
ADMINISTRATION
4. Merger
a. Time limit
2 year time limit
Similar to Senate
Time limit imposed; slightly
shorter than House and Senate.
b. Substantive change
in standard
None
Similar to Administration
"New standard and procedure.
provision.
The new standard weighs
The new standard weighs the efficiency
the efficiency gains against
gains against any adverse competitive
any adverse competitive
aspects to determine if it is in public
aspects to determine if merger
interest. Proposal first goes to
is in public interest. Secretary
Secretary who certifies if it is in the
certifies whether transaction
public interest. Then ICC makes final
is in public interest, and then
decision with "presumption" it is in
ICC makes final decision with
the public interest if Secretary so
"presumption" transaction is
certifies. ICC may not overrule that
in public interest if Secretary
determination unless it finds "clear
so certifies. Secretary's
and convincing evidence to the contrary".
determination is accorded less
If ICC doesn't make determination
weight in House proposal than
within time limits, it goes back to
in Administration's. Also, if
Secretary and Attorney General for
ICC doesn't make decision
final decision.
within time limit imposed, no
provision for return to Secretary,
as an Administration proposal.
7
ISSUE
SENATE
HOUSE
ADMINISTRATION
Northeast
--$3 billion in non-interest
--$1.4 billion appropriation
Generally the same as the
Corridor
bearing loans to upgrade
through FY 1980.
House bill except--
Project
service.
Implementation
--DOT receives
$1. 08 billion is appropriated
--USRA furnishes funding.
appropriations.
to DOT
--$255 million for Amtrak
--Trip times - 3 hrs.
States contribute only $120
to acquire, manage, and
Washington-New York;
million toward NEC
operate NEC properties
3 hours, 50 minutes
improvements.
and to acquire seven other
New York-Boston.
rail properties outside the
Corridor used for intercity
--DOT may deal with
passenger service.
any appropriate party
to effect improvements.
--Trip times: 2-1/2 hours
Washington-New York;
--No off-corridor lines
3 hours New York-Boston
involved.
--Establishes new NEC
Improvement Corporation
to carry out program
--Includes off-Corridor lines
--No State or local cost
--States required to
sharing required.
contribute--
-$170 million toward NEC
improvements
-$200 million toward
improving elements of stations
not essential to intercity service.
8
ISSUE
SENATE
HOUSE
ADMINISTRATION
Rail Service
Funding - $655 million added
Currently the bill makes
- 2-year program
Continuation
to current $180 million already
no changes in this area.
Subsidies
in title IV of the RRRA.
Further amendments
- 70%-30% cost sharing throughout
Program lasts for all States
may be expected.
through FY 1983.
- Program restricted to States
in the Region
Federal Cost Sharing-
100% for 1st year in Region
- Continuation of commuter
90% thereafter in the Region
service to be funded out of
90% at all times outside of
existing UMTA authorization.
the Region.
All Funds allocated under
entitlement formula based
on State rail mileage.
$125 million for continuing
rail commuter service in
Region through FY 1978
$25 million for each of FY 76,
77, and 78 for conversion of
abandoned rail rights-of-way to
recreation facilities. Interior
gets 4/5 of the funds.
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
AGENDA
8:30 a.m.
Roosevelt Room
November 26, 1975
1. Discussion of the Senate and House
Transportation
Omnibus Rail Bills
2. Proposal for Review of Employment
Malkiel
and Unemployment Statistics
3. State of the Union Preparation
Seidman
4.- New York City
SERALD