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Economic Policy Board (3)
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
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President (1974-1977 : Ford). Economic Policy Board. 9/30/1974-1/20/1977
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The original documents are located in Box 11, folder "Economic Policy Board (3)" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 11 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
TO EPB EXECUTIVE COMMITTEE MEMBERS
The attached paper (s) will be discussed
at a forthcoming Executive Committee
meeting.
CONFIDENTIAL
THE SPECIAL REPRESENTATIVE FOR
17 MAR 1976
TRADE NEGOTIATIONS
WASHINGTON
MEMORANDUM FOR: The Economic Policy Board
FROM
: Frederick B. Dent
SUBJECT
: Trade Policy -- Six Months Projection
Overview
Over the next six months the Administration will be
required to make decisions on petitions by some key U.S.
industries for remedial trade action under the escape clause,
countervailing duty, antidumping, and unfair trade practices
provisions of U.S. law. Most of these cases are the result
of efforts by U.S. private sector interests to test provisions
of the Trade Act of 1974 relating to potential remedial actions.
These potential U.S. actions come at a sensitive time,
from both domestic and international points of view. Domesti-
cally, the U.S. will be concerned over unemployment, which is
expected to remain relatively high despite the modest recovery
of the U.S. economy which has been forecast. At the same time,
as the U.S. economy proceeds in its gradual recovery, the U.S.
trade balance is expected to decline, going from a $3.8 billion
surplus on a CIF basis last year to a possible deficit this
year.
The current political and economic situation is even more
delicate abroad. The recovery of the major foreign economies
is expected to lag behind that of the U.S. economy and this can
be expected to make them quite defensive in their reactions to
what they perceive as a shift to a protectionist trend in the
U.S. This attitude is likely to be reinforced by exchange rate
instability of some major currencies.
The convergence of a series of potential U.S. trade actions
under U.S. domestic laws and heightened foreign sensitivity is
likely to strain international cooperative efforts such as the
multilateral trade negotiations in the GATT and the pledge of
OECD countries to avoid trade restrictive actions. At the same
time, it will be more necessary than ever to achieve positive
results in these efforts as an effective demonstration that
the world is not going protectionist.
DECLASSIFIED
E.O. 12356, Sec. 3.4.
CONFIDENTIAL
MR
92-23,
nsc
th.
6/24/93
By 143H NARA, Date 7/29/93
CONFIDENTIAL
- 2 -
Trade Act Remedies
The most pressing of our problems during the next six
months will be in the area of managing bilateral trade problems
addressed under the relief provisions of the Trade Act.
Automobile Dumping Case. By far the largest single case
that is pending is the antidumping complaint against all major
foreign producers of automobiles, involving $7.5 billion in U.S.
imports. The tentative decision of the Secretary of the Treasury
due May 11 is whether foreign producers have sold automobiles in
the United States at less than fair value. Before any dumping
duties are imposed, the ITC would have to find injury (at the
latest by November 11). While any public determinations on
May 11 will thus not be final, appraisement will be withheld,
and the decisions will have a sizeable effect on our trading
relations. This issue is complicated by the existence of a
massive backlog of customs entries which could get caught by
an eventual dumping finding, with extremely grave consequences
for some manufacturers, however Customs is working an this problem.
Import Relief - Shoes, The President must decide by April 20
whether to impose restrictions on $1.1 billion of shoe imports,
the largest escape clause case that has been brought. The USITC
was unanimous in its finding of injury. The EC is the largest
supplier (by value, Taiwan is the largest by volume), with $380
million in exports to us in 1975. Depending on what kind of
relief is given, the impact would fall unevenly on Italy, Spain,
Brazil, Taiwan, and South Korea. It has the potential of being
a major irritant in our relations with any or all of those
countries, not to mention smaller suppliers.
Import Relief -- Specialty Steel. At the same time, we will
be attempting to negotiate orderly marketing agreements with the
major suppliers of specialty steel, to avoid the imposition of
cuotas no later than June 14 for three years on $200 million of
trade (primarily from Japan, the EC, Sweden and Canada).
Import Relief -- Other. On February 28, the ITC found
affirmatively on an escape clause petition by domestic producers
of stainless steel flatware. The President must decide by
April 30 whether to provide relief. Imports of $52 million
(1975) are involved. The major suppliers are Japan, Taiwan, and
South Korea. On March 17 the ITC is believed likely to find that
imports are causing injury to domestic producers of mushrooms (1975
imports $41 million). The President must, by May 15, make his
CONFIDENTIAL
GERALE FORD LIBRARY
CONFIDENTIAL
- 3 -
decision as to appropriate action. The next large cases which are
coming up are shrimp (1975 imports $346 million; USITC decision
due May 17) and stainless steel wire (1975 imports $39 million;
USITC decision due June 12). Major suppliers of shrimp are Mexico,
Panama, India and Equador, and of stainless steel wire are Japan,
Sweden, West Germany, and France.
Section 301 Cases. The Trade Act also provides for a new
complaint procedure under which U.S. exporters can seek remedial
action against unfair foreign trade practices. Cases filed with
STR are now pending against many EC agricultural practices, in-
cluding subsidization into foreign markets in which the U.S. and
EC compete, minimum import prices, and other EC agricultural
restrictions. It is likely that a case will be filed against
the EC's nonfat drymilk mixing regulations that have just been
put into effect and are estimated to cause a loss to U.S. soy-
bean exports of approximately $90 million per year. The EC has
so far refused to discuss section 301 cases, rejecting the
legitimacy of this process. These cases can be particularly
acrimonious due to the very fact that there is Presidential
discretion as to how and when to exercise this authority.
Countervailing Duty Law. The implementation of our counter-
vailing duty law, which now has a time limit on Treasury action,
is for the first time fully responsive to legitimate domestic
complaints against foreign subsidization. It also provides us
with a major irritant in our relations with other countries,
particularly as we do not require an injury finding as a pre-
requisite.
There has been a court challenge to a negative Treasury
determination in connection with border tax remissions on steel
imports from the EC. The broad question of indirect tax rebates
is involved. There is also likely to be an appeal to the courts
from a negative determination with respect to exports of approxi-
mately $1 billion of electronic products from Japan. There is
also a challenge to the Treasury's decisions on the extent to
which regional development schemes should be countervailable.
Each of these issues are potentially explosive. While court
decisions will not be reached for some time, the cases will be
a source of continuing concern to our major trading partners.
Another serious problem is a number of countervailing duty
decisions (footwear, leather handbags and castor oil) and petitions
pending (scissors and shears and cotton yarn) against Brazil.
Other petitions may follow. This is the most significant issue
CONFIDENTIAL
GETAL FORD LIBRARY
CONFIDENTIAL
- 4 -
in U.S.-Brazil trade. A major question in the coming months
will be whether the countervailing duty waiver provision will
be exercised in some or all of these cases.
International Cooperative Efforts
Multilateral Trade Negotiations. The MTN is in an early
stage of the negotiating process, and really hard decisions will
generally not have to be made until early 1977. Early decisions
will be required, however, with respect to Tropical Products and
a general Tariff Cutting Formula.
-- Tropical Products. On March 1, the U.S. offered to cut
tariffs on $1 billion of tropical products imported into the
United States, in exchange for appropriate trade commitments by
the developing countries. Decisions on a final tropical products
agreement will be required in the course of the summer, though
the agreement is not expected to be implemented until later.
-- Tariffs. On March 23, the U.S. will table an initial
U.S. proposal for an across-the-board tariff cutting formula.
Our goal is to achieve international agreement on such a
formula within a six month period.
OECD Trade Pledge. During the last two years, the U.S.
and other OECD countries agreed to avoid trade restrictive
actions to deal with disruptions caused by large oil price
increases and world recession. The current OECD trade pledge
will expire in May, and a decision will be required on whether
or not it should be renewed. Mr. Van Lennep, the head of the
OECD, has suggested that restrictive U.S. trade actions are
likely to lead to foreign resistance to a renewal of the pledge.
Other Trade Issues
FORD
DISC. On March 16, there was the first meeting of a
GATT Panel to review a complaint by the EC on the DISC
WALD
(alleging a violation of GATT rules governing subsidies)
LIBRARY
and a counter-complaint by the United States against similar
tax practices of France, Holland and Belgium. The work
program of the GATT Panel will likely involve three or four
Panel sessions over the next few months and possibly a finding
(to be referred to the Contracting Parties) by the fall.
Given domestic industry interest in the DISC, the GATT review
will generate considerable interest. If the panel finds that
the DISC violates the GATT, there will be a serious inconsis-
tency between U.S. practice and the international rules.
CONFIDENTIAL
CONFIDENTIAL
- 5 -
Jackson Vanik Waiver. The key Trade Act issue with
respect to nonmarket economies during the next six months
will be the renewal of the waiver provision of the Jackson/
Vanik amendment, which expires on July 4. In the absence
of the renewal, it is possible MFN would have to be revoked
from Romania, and there would be little possibility under the
Trade Act to extend MFN to other communist countries. The
President must request renewal of the waiver no later than
June 4. This should be given early consideration by the East-
West Trade Board, with a recommendation sent to the President
by early May. While the extension may be non-controversial, it
may also develop into a major political fight affecting our
relations with Eastern Europe.
Textiles. The Multifiber Arrangement (MFA) expires on
December 31, 1977. Extension of the MFA is strongly supported
by the U.S. textile industry and the Administration has decided
in favor of seeking renewal. Efforts to build international
support for extension of the MFA must begin shortly.
The Peoples Republic of China has a growing export trade
in textiles to the United States, particulary in cotton (it is
the second largest supplier). This has been a matter of increas-
ing concern to the U.S. domestic industry, the Congress, and to
the Administration. At its February 4 meeting the Textile Trade
Policy Group agreed that Ambassador Dent should raise the matter
with Secretary Kissinger with a view to finding a solution
satisfying our domestic interests, our bilateral trade relations
with the PRC, and our equity obligations with third countries
under the MFA. I have raised the matter by memorandum to
Secretary Kissinger and the problem is now under consideration.
Generalized System of Preferences. GSP is now in effect,
covering some $2.5 billion of LDC exports to the United States.
The granting or denial can be the subject of public petition,
but we are not experiencing any exceptional problems in requests
for review of individual items for duty free treatment. An
issue that may become significant is whether the Trade Act will
be amended to allow the OPEC non-embargoers (primarily Venezuela
and Equador) to receive GSP.
Palm Oil Imports. Increasing shipments of palm oil to the
U.S. has caused concern among U.S. producers and processors of
oilseeds, as well as strong Congressional concern. Imported palm
oil now accounts for about 8 percent of the U.S. market for edible
oils. However, there already exists productive capacity in Malaysia
CONFIDENTIAL
CONFIDENTIAL
- 6 -
and Indonesia, the major producing countries, to double ship-
ments by 1980. Much of this productive capacity has been
financed by the international lending institutions, which have
derived major financial support from the United States.
Japan: Citrus Fungicide Regulations. Japanese health and
sanitary regulations currently prohibit the use of fungicides
(TBZ and OPP) which have been utilized on shipments of U.S.
citrus to Japan. These fungicides are necessary to inhibit
deterioration of the fruit shipped to Japan, and are
accepted for use by CODEX. Results from a testing program
on the fungicides now underway in Japan are due in May or
June. If the GOJ does not approve these fungicides for
use at that time, the industry will likely request retaliatory
action under Section 301 of the Trade Act of 1974. The U.S.
market for fresh citrus in Japan is currently about $80
million.
EC: Cognac - Poultry. If negotiations with the EC to
improve access for U.S. turkey and turkey parts are not
completed by June 30, the U.S. will take action to restore
the penalty tariff rates on imported cognac. This action,
which will require a Presidential proclamation, will exacerbate
already tender US/EC relations in the trade area.
Tariff Items 806.30 and 807.00. Under these items, U.S.
goods are shipped abroad for further processing or assembling,
and the U.S. components are exempted from duty upon re-importation.
U.S. labor strongly supports repeal of these provisions. On next
Wednesday, March 24, the Administration will be testifying before
the Green Subcommittee on items 807.00 and 806.30. On March 17,
the Trade Policy Staff Committee agreed on a policy statement
supporting retention of these items and opposing the numerous
bills which have been introduced to abolish or amend them. The
ground for this position is that elimination or amendment of
these items will result in a net economic loss for the United
States particularly in regard to the number of jobs affected.
U.S. Meat Imports. The U.S. is currently attempting to nego-
tiate voluntary restraint agreements to limit shipments of beef
to the U.S. market in 1976. The VRA approach is designed to
prevent beef imports from exceeding the trigger level set by the
Meat Import Act of 1964. A number of the countries concerned,
particularly Australia and the Centeral American countries have
objected to the size of their export allocations, and it is not
clear at this time whether negotiation of agreements will be
possible. Imposition of quotas under the Meat Import Act would
place us in violation of our GATT obligations and have an adverse
effect on our efforts to resist protectionism and expand trade
through the MTN.
CONFIDENTIAL
CONFIDENTIAL
- 7 -
Relations With Developing Countries. Over the next six
months, our relations with LDCs can be expected to be
characterized by their increased frustration with what they
regard as the rigidities of the international trading import
system. The system does not allow the special and differential
treatment that they feel is their due. Our longer run solution
is to negotiate in the MTN limited special and differential
treatment in exchange for the more advanced developing countries
accepting increased obligations in the trading system. The
increased economic opportunities and the reduction of pressure
for import barriers resulting from the expected upturn in the
economy may ameliorate, but will not eliminate, this problem.
Conclusion
Despite favorable economic recovery in the United States
which is being followed in other economies abroad, the next
six months will present a series of persistent trade problems
which must be dealt with carefully in order to avoid serious
repercussions.
Expanding U.S. imports, and the desire of foreign nations
to continue to take advantage of our market as an aid to their
economic recovery, should assist us in managing these trade
problems.
Monetary conditions will have a strong influence on trade
flows and public attitudes toward trade.
In what promises to be a trying period of bilateral trade
problems, it is important that the United States continue its
strong world leadership for continuing an open and free market
oriented trade policy.
Attachment
CONFIDENTIAL
- 1 -
Appendix
PENDING ESCAPE CLAUSE ACTIONS
Due Date For Trade Value
Final USITC Presidential (Millions of
Product
Report Due
Decision
Dollars, CY1974)
Slide fasteners and parts**
2/18/76
4/19/76
12
Footwear, non-rubber
2/20/76
4/20/76
990
Certain stainless steel
flatware
2/28/76
4/30/76
53
Mushrooms
3/17/76
31
Blue pigments
4/2/76
3
Shrimp
5/17/76
387
Round stainless steel wire
6/12/76
47
Certain ceramic tableware
3/31/76
4/31/76*
67 (CY73)
*
This is an administrative deadline which would give the
president one month in which to decide whether to con-
tinue existing escape clause rates.
** Involves adjustment assistance.
- 2 -
PENDING ANTIDUMPING CASES
Secretary of Import Value
Treasury Final (Millions of
Product
Action Date
Dollars, CY1974)
Butadiene acrylonitrile
rubber
3/27/76
.7
Water circulating pumps
5/26/76
.08
Polymethyl methacrylate
6/18/76
2.7*
Acrylic sheet
7/21/76
2.0
Ski bindings
7/23/76
3.0
Bricks
7/23/76
1.8
Automobiles
8/6/76
7,485.5
Knitting machines
8/15/76
2.25
A.C. adapters
10/7/76
5.6
Tantalum capacitors
10/17/76
3.0
Portland cement
11/21/76
3.5
Industrial vehicle tires
12/19/76
.5
Melamine
12/19/76
1.0
* Import value for the period January 1974 to June 1975.
- 3 -
PENDING SECTION 301 CASES
Administrative
Product or Service
Due Date *
Shipping Services
1/1/76
Egg Albumen
10/6/75
Canned Fruits, Juices and
Vegetables
11/1/75
Malt
1/12/76
Wheat Flour
1/30/76
*
There is no legislatively prescribed time limit for
processing 301 cases, however STR has administratively
set six months as the due date to be consistent with
mandated time placed on other types of trade-related
complaints.
- 4 -
PENDING COUNTERVAILING DUTY ACTIONS
Due Date of Due Date For
Import Value
Tentative
For Final
(Millions of
Product
Decision
Decision
Dollars, CY 1974)
Screws
2/17/76
8/17/76
1.9
Glass beads
3/2/76
9/2/76
0.3
Vitamin K
6/26/76
12/26/76
.015
Scissors & shears
*
1.2 (CY75)
Cotton yarn
*
4.7 (CY75)
*Investigation not formally initiated but complaint
received.
- 5 -
UNFAIR COMPETITIVE PRACTICES IN IMPORT TRADE
(Section 337)
Due Date For
Final USITC
Presidential
Product
Report Due
Decision*
Convertible game tables
and components thereof
4/2/76
Expanded, unsintered poly-
tetrafluoroethylene in
tape form
4/3/76
Chain door locks
4/3/76
Eye testing instruments
incorporating refractive
principles **
4/3/76
Certain electronic audio and
related equipment
4/3/76
Certain hydraulic tappets,
II **
4/3/76
Certain ultra-microtome
freezing attachments
4/3/76
Liquid propane heaters **
4/3/76
Certain high fidelity
audio and related
equipment **
4/3/76
Overlapping digital movements** 4/3/76
Certain angolan robusta coffeê * 4/3/76
Mc.olithic catalytic converters7/24/76
Glass fiber optic devices
and instruments equipped
with glass fiber optic
devices **
8/27/76
Record palyers incorporating
straight line tracking
systems **
9/24/76
*
The President has 60 days from the date of recipt of the
USITC determination to review and act upon such determination.
** Termination of case expected action.
- 6 -
PRINCIPAL SUPPLIER AFFECTED BY PENDING TRADE ACTIONS
Pending Escape Clause Actions
Principal Supplier
EC JAP CAN KOREA BRAZIL SPAIN OTHER
Footwear, non-rubber
X
X
X
X
Certain stainless steel
flatware
X
Mushrooms
X
X
Blue pigments
X
X
Shrimp
X
Round stainless steel wire
X
X
X
Certain ceramic tableware
X
X
Pending Section 301 Cases
Shipping services
X
Egg albumen
X
Canned fruits, juices and
vegetables
X
Malt
X
Wheat flour
X
Pending Antidumping Cases
Butadiene acrylonitrile rubber
X
Water circulating pumps
X
Polymethyl methacrylate
X
Acrylic sheet
X
Ski bindings
X
X
Bricks
X
Automobiles
X
X
X
X
Knitting machines
X
A.C. adaptors
X
Tantalum capacitors
X
Portland cement
X
Inustrial vehicle tires
X
Melamine
X
Unfair Competitive Practices in Import Trade
Convertible game tables and
components thereof
X
Expanded, unsintered polytetra-
fluoroethylene- in tape form X
X
Chain door locks
X
X
Eye testing instruments incor-
porating refractive principles
X
Certain electronic audio and
related equipment
X
Certain hydraulic tappets, II
X
- 7 -
EC JAP CAN KOREA BRAZIL SPAIN OTHER
Unfair Competitive Practices in
Import Trade Cont'd
x
Certain ultra-microtome freezing
attachments
X
Liquid propane heaters
X
Certain high fidelity audio
and related equipment
X
Certain angolan robusta
coffee
X
Monolithic catalytic
converters
*
Glass fiber optic devices and
instruments equipped with
glass fiber optic devices
X
Record players incorporating
straight line tracking
systems
X
Pending Countervailing Duty Actions
Screws
X
Class beads
X
Vitamin K
X
Scissors and shears
X
Cotton yarn
X
FORD LIBRAS
OF
DEPARTMENT THE TREASURY
THE
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220
1789
DEPUTY ASSISTANT SECRETARY
March 17, 1976
MEMORANDUM FOR THE EXECUTIVE COMMITTEE
ECONOMIC POLICY BOARD
SUBJECT:
Up-Date on New York City
I.
March 15 Monthly Report
The March 15 monthly report, covering the period
ending January 31, shows continued steady budget
reductions roughly in accordance with the financial
plan for fiscal 1976. It should be noted that the
plan still calls for annualized expenditure reductions
of only $200 million in fiscal 1976, notwithstanding
the $300 million increase in the deficit estimates.
What remains of most concern is the fact that no
concrete plans have yet been announced to cover the
$400-$500 million reductions required in each of the
next two fiscal years.
II. Other New York City Matters
The transit workers' contract expires on March 31
and negotiations are currently underway. The Union is
demanding a substantial wage and benefit increase and
is taking the position that since the Transit Authority
is technically a State agency, its employees are not
covered by the city employee wage freeze. Needless to
say, whether or not this position is factually correct,
as a practical matter a substantial wage and/or benefit
increase will make it extremely difficult to hold the
line on other city contracts which will be negotiated
this spring.
Last week, Governor Carey announced the removal
of Herbert Elish as Executive Director of the Emergency
Financial Control Board, and appointed Stephen Berger,
currently State Welfare Commissioner, to the position.
Berger is extremely familiar with the finances of
New York City since he served as Executive Director of
the Rockefeller-created Scott Commission which raised
some key warning signals in 1973 and 1974. Berger has
a reputation as an honest and tough, if somewhat
abrasive, administrator. If, notwithstanding the
Governor's public pronouncements regarding stretching
-2-
out the financial plan and similar comments by
Felix Rohatyn, the Control Board is committed to
carrying out the plan, Berger can be an effective
force.
In April, New York City will return to the
front burner in Congress. Proxmire will hold
oversight hearings beginning on April 1. Secretary
Simon will be the lead-off witness; Mayor Beame,
other City and State officials, and GAO representa-
tives will also testify. On April 6, both the
Senate and House Appropriations Subcommittees will
hold hearings on the issue in connection with our
fiscal 1977 administrative expenses appropriation.
Congressman Ashley's Subcommittee of House Banking
is expected to hold oversight hearings on or about
April 20 (the date the first loan repayment is due).
III. New York State
There is room for optimism with respect to the
financing requirements of New York State. The
$2.6 billion State Agency financing package appears
to be firmly in place.
With respect to the State's own financing
requirements, considerable progress has been made.
The legislature is expected to adopt a conservatively
balanced FY-77 budget sometime this week. The
New York clearing house banks have agreed to provide
approximately $1 billion of the $2.75 billion to be
raised from the private sector. The principal question
mark is the $700 million scheduled to be provided by
commercial banks outside of New York State. No formal
approaches have been made to these institutions,
pending adoption of the budget and the issuance of a
State prospectus regarding the offering. An informal
contact with the institution expected to take the
largest share provides basis for hope, but it is still
too early to tell.
Robert 2AR A. Gerard
Deputy Assistant Secretary
Financial Resources Policy Coordination
[April 1976]
THE WHITE HOUSE
WASHINGTON
TO EPB EXECUTIVE COMMITTEE MEMBERS
The attached paper (s) will be discussed
at a forthcoming Executive Committee
meeting.
and
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
MEMORANDUM FOR THE ECONOMIC POLICY BOARD
FROM:
JAMES T. LYNN
MICHAEL MOSKOW
SUBJECT:
Inflation Impact Statement Evaluation
Attached is a first year evaluation of the Inflation Impact Statement
process. The purpose of this interim report is to evaluate the
implementation of the President's policy that agencies consider the
economic impact of their actions on consumers, businesses, and govern-
ments. Recommendations are proposed to improve second year operations
and analytical quality. Major policy and procedural questions have
been deferred until December 1976 when the current executive order
expires. Postponement of any major modifications will permit agencies
to concentrate on the execution of current requirements and will also
provide a wider data base of operating experiences from which decisions
regarding future efforts can be made.
OMB and CWPS are developing a working plan to guide IIS activity during
the second year and to prepare for the evaluation at the end of the year
which will lead to recommendations concerning the future of the inflation
impact requirement. The working plan articulates CWPS' and OMB's
responsibilities for the remainder of this year.
The interim evaluation recommends that CWPS and OMB work with individual
agencies to review their procedures for complying with E.O. 11821 and
improving the quality of their analyses. To strengthen the monitoring
and control function, we also recommend that agencies be required to:
(a) certify in the Federal Register for regulations or in correspondence
to OMB for legislation that proposed actions which do not exceed their
criteria have been reviewed and that a full analysis is not required;
(b) upon request from CWPS, justify briefly why a proposed action is
not major; and (c) submit copies of Inflation Impact Statements (rather
than summaries thereof) to CWPS whenever major rules and regulations
are proposed.
Background of Inflation Impact Statement Initiative
The intention to create an Inflation Impact Statement
requirement was outlined by the President in a speech to
the Congress on the economy delivered on October 8, 1974.
The President indicated that he would have all the
executive branch agencies analyze the external cost
implications of their major actions as a step toward
removing inflationary pressures induced by the Federal
government.
To execute this policy, the President issued Executive
Order 11821 on November 27, 1974. The option to implement
the policy with an Executive order was chosen because it
could be done quickly and it was believed that it would
avoid the problems of litigation associated with legislation
(as is the case with Environmental Impact Statements) Also,
an Executive order would mandate that the executive branch
agencies carry out the policy and would thus carry greater
weight than other less formal communications, such as
a letter.
The intent of the Executive order was to improve the
agencies' consideration of cost impacts in decisionmaking
and not to develop a new paperwork and compliance system
which would generate perfunctory performance. The specific
objectives were to: 1) improve agencies' decisionmaking by
having them include indirect cost effects of their actions
in the analytical process; 2) reduce Federal government
induced cost pressures on the economy; and 3) provide OMB
and the Council on Wage and Price Stability with a better
tool to review the indirect, off-budget cost effects of
proposed rules, regulations and legislation.
The management concept behind the Executive order
was to decentralize to the department and agency heads,
the responsibility for developing and implementing the
effort. This allowed each agency to adopt procedures
that would match the nature of their mission and organiza-
tion and not saddle them with unrealistic or overlapping
requirements. Decentralization was also intended to focus
responsibility and attention for the implementation of
the President's policy on the agencies rather than the
Executive Office of the President.
The Executive order delegated responsibility for
insuring implementation of the President's policy to the
Director of OMB who issued Circular A-107 on January 28, 1975.
2
The circular provides guidance to the agencies for developing
procedures and criteria to analyze the economic impacts of
proposed major legislation, rules, or regulations. The
decentralization approach was continued in the circular
which placed the primary responsibility for implementation
largely in the agencies, with OMB and the Council on Wage
and Price Stability maintaining a monitoring role. In
addition, OMB had responsibility for approving the
criteria which the agencies would use in determining
whether an action was major and required an IIS. Neither
the circular nor the executive order provided any specific
mechanisms to assure compliance or a standard level of
quality analysis. However, the circular did go beyond
the executive order in dealing with compliance by requiring
agencies to: (1) certify, whenever the proposal is published or
issued, that an analysis had been performed for major actions;
(2) submit brief summaries of analyses of proposed rules and
regulations to CWPS; and (3) supply OMB with data when requested
to determine the adequacy of criteria, procedures, or analyses.
Against this setting, OMB and CWPS staffs devoted most
of their available time and effort from February until
September 1975 working with the agencies to develop final
criteria or exempting those agencies whose regulatory
and legislative proposals would clearly not have major
economic effects. This required explaining the intent
of the initiative to agencies, reviewing and approving
proposed criteria, commenting on procedures and reviewing
various issues which developed such as public disclosure
of analyses.
During this period of establishing criteria, the decisions
made on these issues led to a gradual standardization of
the process. The most significant effect was the develop-
ment of consistent government-wide criteria. Agencies in
their original drafts had submitted a wide range of criteria.
However, OMB and CWPS established minimum benchmark levels
for each criterion to assure that any impacts exceeding
these levels would be fully analyzed. Agencies in their
final submission were permitted to vary from the benchmarks
but only if they could provide adequate justification. The
result was that most agencies adopted the benchmarks or
something very similar. Thus, the implementation of these
standards led to almost all agencies adopting common
criteria.
3
As of December, 1975, all 26 participating agencies,
with the exception of FEA, had approved criteria. In the
first year, 10 of these agencies have performed a total
of 91 IIS analyses of which 66 were for proposed rules or
regulations. The majority of OMB, CWPS, and the agencies
attention during this period was focused on establishing
the process with less effort directed at compliance or
the quality of the analysis. As a result most agencies
have had limited experience operating with final approved
criteria. Many IIS analyses were performed under interim
procedures.
A workshop was held on November 7, 1975 in order to
reinforce the importance of this Presidential initiative
and to review policy and analytical issues involved
with the Inflation Impact Statement initiative.
Several examples of IIS analysis were presented. Officials
from OMB and CWPS discussed the intent of the Executive
Order. All participating agencies as well as representa-
tives from the various independent regulatory agencies
were invited.
Given this background, an interim evaluation of the
effort has been completed. Prior to the expiration of the
Executive order on December 31, 1976, a full evaluation
will be performed to determine if the Inflation Impact
Statement requirements should be extended, and if so, how.
This interim evaluation is not intended to and will not
address the issue of whether or not to continue the
effort. Instead this evaluation focuses on the adequacy
of general procedures, the impact the effort has had to
date on getting agencies to focus on the economic effect
of their decisionmaking, the costs to comply with the
effort, and the problems of assuring compliance and high
quality analysis. We also consider changes to improve
the effort in the next year.
This interim evaluation was performed on the basis
of data and information collected through the review of
various agency submissions, a written questionnaire sent
to agencies on October 23, 1975, direct interviews with
key agency staff, and the experiences of OMB and CWPS
staff in overseeing the process. While many different
issues and areas of concern were raised during the
evaluation this report will focus on the 7 main issues
identified during the review.
4
Criteria
The Circular provided for six areas to be considered
in developing criteria: cost impacts and effects on
productivity, competition, supplies of important materials,
employment, and energy. Benchmark levels to identify
major proposals were developed for each criterion. There
has been significant time and attention given to the
development of criteria as agencies went through the learning
process of determining the types of economic effects their
operations have and the relationship of these effects tothe
criteria.
There have been several problems in the effective
use of the criteria and their appropriate benchmark
levels, including:
1. The almost exclusive use of the cost criterion.
This suggests that some of the other criteria may be
unnecessary as screening thresholds for analysis. A
few of the other criteria, for example, employee producti-
vity and energy supply and demand, are reducible to cost
levels.
2. Government-wide benchmark levels that are too
high, resulting in very few complete analyses in most
agencies. For example, many proposed rules, regulations
and legislation are not considered major and hence do
not trigger an economic analysis because their cost
impacts are less than $100 million on the national economy.
As a result only a few agencies have done more than one or
two analyses. There were some agencies, however, that
thought the proposed levels were too low and advocated
raising the benchmarks. For these agencies, (e.g. FEA
and EPA), the inflation impact process has generated many
analyses.
3. Benchmark levels for evaluating cost impacts
on the national economy and on its component sectors and
industries that are not in proportion. The benchmark
level for evaluating cost impacts on economic sectors,
industries, and government is proportionately far higher
than the standard used for evaluating cost impacts on the
national economy.
5
4. Difficulty in the practical application of the
benchmark levels for evaluating employment impacts below
the national level. It is not clear how an agency would
accomplish the apparently endless iterations, e.g.,
at the state or local government level, necessary to
determine the employment impact of a particular proposal
with the current criteria benchmarks. Using a standard
of 10,000 workers to evaluate the employment impacts upon
industries, governments, and sectors of variable size
results in biased, inequitable analyses. For example,
using the threshold of 10,000 workers at the local govern-
ment level effectively eliminates many local governments
whose total employment levels are frequently far below
the criteria.
Staff Recommendations:
We do not recommend major changes to the criteria
at this time. Specifically, we suggest:
1. Retaining all six criteria since major
structural changes in the IIS program at this stage would impede
agency analyses. Retention of all criteria will not create
any substantial problems since it seems that most agencies
place their major emphasis on the cost criterion. Considera-
tions to change criteria can be made during the evaluation
for the December 1976 decision.
Agree
Disagree
If this recommendation is agreed to, no changes
will be required.
2. Retaining present national benchmark levels.
Establishing the criteria benchmarks and procedures for
implementing the IIS program have consumed much of the
past year and, hence, have shortened the time in which
agencies have participated in the actual analysis process.
Agencies have spent a lot of effort and time in reaching
agreements on current levels. Continuation of the current
national benchmark standards through the next year will
provide a more reliable indication of agencies' experiences.
Lowering the national benchmarks at this point in the program
would be premature.
Agree
Disagree
If this recommendation is agreed to, no changes
will be required.
6
3. Working with individual agencies where
appropriate to alter the cost and employment benchmarks
for impacts below the national level. However, we do not
suggest making government-wide mandated changes at this
time for reasons stated above. Although revising the cost
and employment sector benchmarks might improve their appli-
cability and thus their use in screening proposals, a
policy change at this time probably would divert agency
attention away from implementation and back to procedures.
However, where these two sector criteria present problems
for specific agencies, they can be modified.
Agree
Disagree
If this recommendation is agreed to, no
specific action will be required at this time.
Under the Procedures Issue section, there is
a discussion of a proposed joint CWPS/OMB
activity to work with each agency to improve
procedures. This effort will include a
review of the applicability of these two
sector benchmarks in each agency.
7
Agency Procedures
Although OMB and CWPS do not review and approve agency
procedures for complying with the IIS requirements,
effective agency practices are essential to success. There-
fore, the evaluation staff reviewed this issue and found
that procedures for initially screening all proposals
and performing the economic analyses for major proposals
have been established by all agencies. Policy level
personnel have usually been assigned responsibility for
final certification of inflation impact statements and
review of the analyses accompanying major proposals. Perhaps
the only exception is the Department of the Interior where
final certification occurs at the bureau level. In this
case, the agency's monitoring efforts appear to be weaken
and perhaps ineffective.
Although the procedures for program implementation
are in place, it is difficult to evaluate how thoroughly
most of the agencies review and substantiate the economic
effects of non-major proposals since the IIS only
accompanies major proposals. There has been an uneven level
of agency activity in the inflation impact statement (IIS)
process. A recent review of 26 agencies shows that 16agencies
(4 cabinet) have completed no IIS's while the remaining
10 agencies have completed 91 analyses. Even among these
10 the activity is very skewed with EPA having completed
40, or almost half of all analyses. Thus there is in most
cases no or insufficient data to judge the procedures.
While positive judgments can be made about EPA's procedures,
they must be tempered by the fact that they were required
by statute to do economic analyses before E.O. 11821
and that 20 of the 40 would have been done without an IIS
requirement.
Initial concern that instituting the IIS process
would produce costs in excess of benefits appears, thus
far, unfounded. There have been no significant workload
increases. The only agencies reporting more than 10 major
analyses were EPA (40), USDA (15), and FEA (14). Staff
costs are expected to be relatively minor. Additional
consultant costs are anticipated to be under $10 million.
The final step in procedural implementation should
include submission of the analyses to CWPS and/or OMB.
Although the agencies are required by A-107 to notify CWPS
and OMB of all major analyses, some have been very slow in
doing SO. In the case of proposed regulations, the agencies
are further required by A-107 to submit summaries of their
analyses to CWPS. There have been further delays in the
submission of these. This has created problems for the CWPS/OMB
staffs in adequately reviewing the analyses and submitting
comments during the review period preceding implementation
of agency rules, regulations and legislation.
8
Some serious problems for CWPS have resulted also
from inadequate agency public disclosure procedures.
Generally, there are no procedures to systematically
disclose inflation impact statement analyses to the public
or to respond to third party requests for disclosure. Most
agencies have not considered the issue and are responding
on a case-by-case basis. Thus, the benefits of third party
review and comment are not being consistently and fully
realized.
The thrust of the entire IIS process has been to
inject in the decisionmaking process a more thorough
consideration of the economic effects of proposed regula-
tions and legislation. It is difficult to know the
decisionmaking impact because of the limited experience
in performing analyses. However, it appears that the
process, thus far, is not mature enough to have had a
significant impact, although it is still too early to
evaluate. It is also possible that there will be little
evidence of decisionmaking impact if proposals are changed
in the planning stage as a result of IIS.
Staff Recommendations:
1. We recommend that the agencies be directed to send
their analyses to CWPS at the time a proposed regulation is
published, rather than only summaries thereof. This would avoid
the delays that result from the current procedure requiring CWPS
to ask for the analyses after it has received summaries.
Further, this would prevent the additional staff work entailed
in preparing a summary of an analysis.
Agree
Disagree
If agreed, paragraph 5d of the OMB Circular would
be amended to require that analyses, rather than
summaries, be sent to CWPS at the time that the
agency first certifies that it has made an inflation
impact analysis.
a. We believe there is no need at this time to seek
other major changes in agency procedure, apart from those
outlined on page 14. However, we do recommend that CWPS and
OMB, under CWPS' leadership, undertake an exploratory effort,
directed toward a small sample of agencies, to review and
evaluate the specific IIS procedures which these agencies have
implemented. One outcome might be CWPS/OMB recommendations to
FORD is LIBRARY GERALD
9
the heads of these agencies for procedural improvements.
Another outcome might be CWPS/OMB sponsored seminars with the
agency staffs to develop improved analytical techniques for
making inflation impact analyses. Such individual agency
evaluations are contemplated for the Department of Labor, the
Environmental Protection Agency, the Federal Energy Administration,
the Department of Agriculture and the Department of Health,
Education and Welfare.
We do not have sufficient evidence at this time to
draw any other conclusions about the effectiveness of agency
procedures. As agencies gain experience and CWPS and OMB
review their efforts, there may emerge patterns that need to
be altered. Currently, we believe our primary attention should
focus on the CWPS/OMB monitoring and control functions.
Agree
Disagree
If agreed, the Director of OMB and the Director
of CWPS will identify appropriate members of OMB and
CWPS staffs to take on the responsibility for
organizing and conducting the individual agency
reviews.
10
Legislated Inflation Impact Statements
There has been increasing discussion that inflation
impact or similar type (e.g., cost, economic) analyses
should be legislated. Even prior to the President's
Executive order issued on November 27, 1975, there were
two bills introduced in the Senate which required that the
economic impacts of proposed legislation, rules or regulations
be evaluated. Neither Senator Dole's bill (S.4032 - Septem-
ber 7, 1974) nor Senator Humphrey's bill (S.4195 - November
26, 1974) were acted upon in the 93rd Congress. There have
been about 25 bills introduced during the 94th Congress
requiring some type of economic evaluation of regulatory
impacts.
There have been several specific cost or cost related
impact requirments included in several authorization bills
which have been signed into law. The recently enacted
Energy Policy and Conservation Act requires that the CAB,
ICC, FMC, FPC, and FAA state the probable impact of "major
regulatory action on energy efficiency and energy conservation."
The Defense Production Act Amendments of 1975, requires
consideration of cost impacts compared to probable benefits
of actions taken under the act. The Consumer Product Safety
Commission is required by their authorizing statute to perform
benefit cost studies of proposed regulations, and several of
EPA's statutes require specific economic analysis (e.g.,
Effluent Guidelines Limitation and New Source Performance
Standards for Air).
In light of all of the discussion surrounding legislated
statements, it was suggested that the executive branch propose
legislation requiring economic impact statements. By proposing
a bill, the President could suggest the language and coverage
of the bill and, hopefully, not create a new paperwork
requirement. Attention would also be given to the problems
of disclosure and litigation. Most important, the bill
would reach independent regulatory agencies which the current
Executive order approach does not.
Staff Recommendation:
FORD i LIBRARY GERALD
Given the limited experience the executive branch
has had to date with the IIS under Executive Order 11821,
we recommend that no legislation be proposed at this time.
As the agencies and the Executive Office of the President gain
experience, better judgments can be made about the effort,
and if need be, how to best draft a proposed bill. While
legislation may put more weight behind issues of disclosure
of analysis and procedural requirements, it will also open
up the litigation problem (see Litigation Issue). If language
11
is included in the bill to remove it from judicial review, the
proposed legislation would do little more than the current
Executive order except to reach the independent regulatory
agencies. A bill designed by the Executive specifically to
reach these agencies could appear as an attempt by the
Executive to limit their independence. If the bill does not
include the independents it might do little more than give
the impression that the President cannot manage his own
Departments.
The staff suggests that legislation should be a key
issue in the evaluation prepared for the December 1976
decision on the Executive order. The agencies will have
had over a full year of actual operating experience to
evaluate. The independent regulatories will have been given
ample time to demonstrate their willingness and ability to
analyze the indirect cost affects of their actions, as the
President requested. With this type of data, if it is decided
to extend the IIS effort, a much more informed decision can
be reached about legislation and the specifics of a proposed
bill.
In 'summary, nothing is lost and much can be gained.
by waiting until about October 1976 to make a decision on
this issue.
Agree
Disagree
If this recommendation is accepted, no changes or
activities will be necessary at this time.
FORD LIBRARY &
12
Litigation
There has been a great deal of concern about the potential
of third party suits brought against agencies for failing
to comply with Executive Order 11821. It was believed that
the Inflation Impact Statement could generate the same
legal problems as the Environmental Impact Statement and
that some agency activities could be halted by legal actions.
This threat had led some agencies to take very legalistic
positions regarding IIS. Their responses to the effort
were aimed at protecting themselves from court action rather
than fulfilling the intent of good economic analyses. The
concern was heightened by actual suits brought against
the USDA and HEW.
It appeared, based on the Omaha, Nebraska District Court
opinion in the suit against the Department of Agriculture
(Meatpackers Case), that the courts would review an agency's
compliance with IIS as a basis for stopping the agency's
regulatory action. However, the Eighth Circuit Court of
Appeals has rejected the lower court's findings and has
argued that an agency's compliance with Executive Order
11821 is not subject to judicial review.
It is the opinion of the OMB Office of General Counsel
that the threat of future litigation has probably been miti-
gated by the Appeals Court decision. They do point out that
this opinion must be adopted by the other circuit courts and
is still subject to an appeal to the Supreme Court. However,
they believe the Eighth Circuit Court of Appeals' decision
will be upheld.
Staff Recommendation:
It appears that the threat of litigation has been
removed and that no specific action is needed at this time.
The White House Counsel had suggested that one partial step
to correct the litigation problem was to change the name of
the Executive order from "Inflation Impact Statement" to
eliminate the possible connection, in the opinion of the
courts, with the legislated "Environmental Impact Statement. "
While the staff believes there is reason to change
the name in order to better reflect the indirect costs
analysis intent of the effort, this is not the time to do SO.
Without litigation problems at this time a name change will
probably result in confusion, offsetting any benefits derived
from the change. The time to consider the name change is in
December 1976 when the decision to continue the effort must
be made.
Agree
Disagree
If this recommendation is agreed to no changes are
necessary at this time.
13
Monitoring and Control
The monitoring and control function for the IIS process
is divided between the Council on Wage and Price Stability
and OMB. Agencies are supposed to notify CWPS of all rules
and regulations which have major impacts at the time they are
proposed and submit a summary of the analysis to them.
CWPS can then review the analysis and make direct comments
to the agencies, and if necessary, file as a third party
intervener to the rulemaking.
Proposed legislation is to be initially screened by
OMB's Legislative Reference Division and then by the
appropriate program staff. If a proposed bill has major
impacts it should have an IIS certification. If there are
questions about the IIS analysis, agencies are supposed to
submit detailed analysis. Agencies can be requested to
modify proposed legislation if necessary under the standard
procedures of A-19.
Since about 75% of all IIS's to date have been for
regulations, the major responsibility for monitoring and
control falls on CWPS. The problems that currently have
been identified are due largely to the fact that agencies
do not have to make negative or non-major impact certifi-
cations (i.e., that the impact is not major and has not been
analyzed), that CWPS is not notified of all proposed rules
and regulations, and that there is a large volume of rules
and regulations proposed. Thus, if any agency submits
a major impact regulation late or fails to submit it at all,
CWPS has no way of knowing about it other than wading
through the Federal Register (or other sources such as
trade journals) and questioning each new proposed rule or
regulation that does not have an IIS certification.
OMB, in reviewing proposed legislation, has had problems.
When a proposed bill carries no certification, staff must
make a judgment as to whether the bill has major impacts
and the agency failed to analyze them. In order to assist in
reducing this problem, agency heads were requested in a
letter on June 3, 1975 from the Director to provide negative
certifications on non-major bills. However, LRD reports that
very few bills have carried this certification.
The problems of monitoring and control are further
compounded by the limited agency experience with IIS. Since
many agencies have done only a few or no analyses, there has
not been an opportunity to review their efforts and provide
feedback. Without the negative certifications, it is
difficult to determine how carefully they are screening
proposals since OMB and CWPS do not know if the agency is
doing anything at all.
FORD & LIBRARY
14
The lack of opportunities for feedback has limited CWPS'
and OMB's ability to provide comments on quality and to
give specific guidance for improvements. Many of the IIS's
that have been seen have been long narratives that discuss
the proposal but provide little actual cost analysis. But
when an agency has done only one IIS, there is no evidence
that they understand what is expected.
The split in lead responsibility has generated other
problems in monitoring and control. CWPS is not always made
aware of major legislative proposals that create regulatory
authority.
Staff Recommendation:
We believe that major effort in the next year
should be to monitor carefully the agencies' activities and
work with individual agencies where problems exist. While
there are no explicit control mechanisms, the Directors of
OMB and CWPS should be made aware of all significant
compliance problems immediately in order that they can take
appropriate actions to enforce the Executive order. To
facilitate this we recommend the following steps be
implemented:
1. Agencies should be required to certify
to CWPS and, through the Federal Register, to the public,
that the impacts of proposed rules and regulations
which do not exceed the benchmark criteria have
been reviewed and a full inflation impact analysis is not
required. This will also flag to the policy officer the
need for meeting an IIS requirement.
Agree
Disagree
2. To obtain better information on the agencies'
screening efforts, assure that large costs which are below
agency criteria benchmarks are adequately reviewed, and
provide a better indication of what those costs are, agencies
should be required to provide on request from CWPS, a
brief statement as to why a particular action did not meet
the agency criteria and, therefore, did not require a full
analysis. This is not a requirement for analysis, and given
current workload and costs, should not create any significant
burden on the agencies.
Agree
Disagree
15
If either one or both recommendations are
accepted, it will be necessary to revise
OMB Circular A-107 to:
a. require, for recommendation #1,
that agencies certify that a full
analysis is not required for each
proposed rule or regulation
whose impact does not exceed agency
criteria; and
b. require, for recommendation #2,
that agencies justify, when requested by
CWPS, the decision that a proposal
did not require a full analysis.
FORD & LIBRARY GERALD
16
CWPS' Role in Legislative Review
Part of CWPS' legislative charter is to examine govern-
ment actions that are contributing to inflation and to
comment on them publicly. Presently, OMB, through its
legislative review process, has been responsible for
evaluating IIS's for major legislative proposals, which
account for about one-fourth of IIS activity. The other
three-fourths of IIS activity during the past year has
resulted from rules and regulations and, therefore, has
been under the operational responsibility of CWPS. It
would appear to make sense that CWPS should also play
a principal role in reviewing legislative proposals
in which an IIS has been prepared since this would be a
normal adjunct of their mission and well-integrated with
their oversight responsibilities with respect to inflationary
problems. This could be done by requiring that LRD obtain
views from CWPS on all legislative proposals for which an
IIS is required.
Staff Recommendation
We recommend that OMB, specifically LRD, obtain
the views of CWPS on all legislative proposals which
require an IIS.
Agree
Disagree
If this recommendation is agreed to, the Director
of OMB will instruct LRD to obtain CWPS' views
on all legislation requiring an IIS.
Attachment
BRIEF SUMMARY OF RESPONSES* TO EVALUATION
AGRICULTURE: Analysis Completed to Date: Total 15;
Legislative 3; Rules/Regulation 12
- component agencies prepare IIS
- some previous analysis, but not much
- 45 man-weeks involved
- cost impact most important - materials least
important.
COMMERCE:
Analysis Completed to Date: Total 1;
Legislative 1; Rules/Regulation 0
- responsibility at Assistant Secretary level
- workload projected at 6 man-months.
DOD:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- responsibility at the Services and division
head level, reviewed by Office of Secretary
of Defense Comptroller
- internal directives not issued yet, but should
be issued shortly pending final approval
- do not anticipate any real activity.
HEW:
Analysis Completed to Date: Total 1;
Legislative 0; Rules/Regulation 1
- review at secretarial level
- 1 IIS under preparation (shellfish not major)
- no workload impact
- cost criteria most important
- some analysis prior to IIS.
*These responses were obtained from the agencies' written
comments to the October 21, 1975 questionnaire which was
followed up by direct verbal communications with 17 of the
agencies. They are not intended to reflect substantive
evaluations of agency efforts, but rather are to illustrate
the activities in each agency.
FORD LIBRARY is GERALD
2
HUD:
Analysis Completed to Date: Total 2;
Legislative 1; Rules/Regulation 1
- IIS procedures in place; Asst. Sec. for Policy
Dev. & Res. certifies each analysis as to
procedures followed
- fairly good communication of IIS process;
Under Secretary briefed; have had workshop;
will issue directive within 10 days on process
of identifying as major and accompanying analysis
- limited decisionmaking impact
- resource cost approximately 1-2 GS-13 staff
years, but no new staff required yet; will
possibly use consultants in future; economists
in most offices affected; otherwise Office of
Economic Affairs is resource point.
INTERIOR:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- responsibility at bureau level with no higher
approval or review within department
- no analysis on major impact done but claim
significant analysis done to screen non-majors
- can't forecast future resource needs, but expect
no real increase if no change to A-107 and
criteria
- don't expect any substantive analysis.
JUSTICE:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- procedures in place; Office of Policy & Planning
certifies analysis
- good communication of procedural requirements
- public notification good
- may possibly have one IIS analysis coming up
in connection with LEAA to reexamine criminal
justice information systems; cost & competition
most significant criteria; they don't expect
to use others
- staff resource needs grossly estimated to
include approximately 20% of 1 senior official
in addition to 1 planner under him; will
probably hire 1 economist in near future.
FORD is LIBRARY 079839
3
LABOR:
Analysis Completed to Date: Total 6;
Legislative 2; Rules/Regulation 4
- review by Assistant Secretary for Policy
Evaluation and Research
- IIS analysis under study
- no evaluation prior to IIS
- 6 persons needed, $4 million in contracts.
STATE:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- responsibility at Assistant Secretary level
with review at Deputy Under Secretary - manage-
ment level
- no "major" analysis expected under current
criteria--have screened several non-major
actions
- initiative has been fully communicated
- no additional resources needed.
TRANSPORTATION: Analysis Completed to Date: Total 6;
Legislative 1; Rules/Regulation 5
- responsibility at modal administration level
with review at Office of Secretary
- due to prior economic/cost analysis by several
administrations do not expect increase in
resources; however, litigation and potential
litigation may cause real need for increased
resources
- effort has been thoroughly communicated throughout
department
- report growing interest throughout department
in IIS.
TREASURY:
Analysis Completed to Date: Total 4;
FORD & LIBRARY GERALD
Legislative 4; Rules/Regulation 0
- responsibility at Assistant Secretary/bureau
head level with review by Office of Secretary
- cost criteria triggered all 4 analyses
- initiative communicated but formal directive
held up by an IRS procedures problem which was
being resolved
- estimate increasedresources of less than 2
staff years if litigation problem avoided and
IRS rulings continue to be exempted.
4
CIVIL SERVICE:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- originating bureau does analysis, review at
top level
- no IIS as yet, no workload impact
- no prior analyses done
- cost threshold is only operative one.
ERDA:
Analysis Completed to Date: Total 2;
Legislative 2; Rules/Regulation 0
- procedures in place; analysis reviewed by Asst.
Administrator--the intent of E.O. is understood
although implementation may be difficult;
(they are concerned with secondary impacts and
not just primary - this large view presents
difficulty in implementation) - communication
very limited
- 2 legislation IIS completed; analysis triggered
by cost, although they think all criteria should
be relevant
- no decisionmaking impacthas been determined
- no additional resource needs; want to use
consultants for econometric modeling but have
no funds; no litigation lodged with respect to
IIS
- will make analyses available to public on demand.
EPA:
Analysis Completed to Date: Total 40;
Legislative 0; Rules/Regulation 40
- claims half of proposed regulations changed
due to IIS analysis
- 60 man years needed - 40 prior to E.O. 11821
- cost criteria paramount, materials least.
FEA:
Analysis Completed to Date: Total 14;
Legislative 11; Rules/Regulation 3
FORD is LIBRARY 068410
- no approved final criteria
- claim to have performed analysis on 37 proposals
that were non-major
- good procedures in place to screen and perform
analysis.
5
GSA:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- responsibility at Service level, reviewed by
Assistant Administrator
- no activity to date and don't expect any.
SBA:
Analysis Completed to Date: Total 0;
Legislative 0; Rules/Regulation 0
- procedures in place - notification of OMB/CWPS
specifically stated; communication of IIS
process seems limited to General Counsel's
office
- don't expect any criteria to be a problem,
especially since they don't see any IIS work
forthcoming
- no additional resource needs
- will probably make analyses available to public
but have not yet confronted this problem.
6
OTHER AGENCIES PARTICIPATING UNDER E.O. 11821
The following agencies have approved criteria in place. Most
responded to the written questionnaire indicating no IIS
activity with little or no expectation of any. None reported
doing any IIS analysis.
Equal Employment Opportunity Commission
Export-Import Bank of the United States
International Trade Commission
National Aeronautics and Space Administration
Panama Canal Company
Renegotiation Board
Tennessee Valley Authority
Veterans Administration
Water Resources Council
FORD VIBRARY
Paul /
THE WHITE HOUSE
74 /
WASHINGTON
April 1, 1976
In
MEMORANDUM FOR THE ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE
FROM:
L. WILLIAM SEIDMAN PWS
SUBJECT:
Establishment of an EPB Task Force
on Small Business
On February 12, 1976, the President designated Michael Kobelinski,
the new Administrator of the Small Business Administration, as a
member of the Economic Policy Board. At that time he expressed his
desire that this appointment would "help ensure small business partici-
pation in the formulation of our economic policies.¹ On January 26,
1976, the EPB Executive Committee requested the Department of
Commerce to develop a set of possible initiatives that could be taken to
assist small businesses within the current budgetary restraints. The
Department of Commerce and the Small Business Administration have
prepared the memorandum attached at Tab A in response to that request.
The broad range of potential initiatives identified by the Department of
Commerce and the Small Business Administration suggests the useful-
ness in creating an interagency task force to evaluate and further refine
these possible initiatives for consideration by the EPB Executive
Committee.
There is also a need for an interagency mechanism to more closely
monitor for the EPB Executive Committee developments and trends in
the small business community.
Recommendation:
In order to monitor small business activities on a regular basis and to
evaluate and further refine potential policy initiatives to assist small
businesses, I recommend that the EPB Executive Committee establish
a Task Force on Small Business.
2
The Task Force would be chaired by the Administrator of the Small
Business Administration and would include representatives, at the
Assistant Secretary level or higher, from the Departments of Treasury
and Commerce, the Office of Management and Budget, the Council of
Economic Advisers, the Domestic Council, and the office of the
Assistant to the President for Economic Affairs.
The Task Force would be directed to undertake as its first principal
assignment a thorough evaluation of the initiatives outlined in the
attached memorandum and to prepare a paper on their findings for
consideration by the EPB Executive Committee the week of May 3.
LIBRORY FORD is GIVE
ECONOMIC REPORT
Juice and Coffee and the GNP
The Men Who Meet in the Morning
Under the leadership of Simon and Seidman, the Economic Policy Board has
evolved into possibly the most important Administration coordinating body.
BY DANIEL J. BALZ
White House, edging over now and
tion from another Administration econ-
then onto the turf of the Office of Man-
omist. Most of the others around the
It's 8:35 on a Wednesday morning and
agement and Budget, eclipsing some of
table sit quietly. Simon asks most of the
in the Roosevelt Room in the West
the functions of the Domestic Council,
questions, and many of his comments
Wing of the White House, William E.
pulling into its fold some of the re-
show that his commitment to the mar-
Simon, the Secretary of the Treasury,
sponsibilities of the National Security
ket economy is as firm within the con-
has just been given a tall glass of iced
Council.
fines of the White House as it is when
orange juice. He sits at the head of a
Its members have been faced with
he acts as the Administration's chief
long. polished table. From the room's
some of the severest problems the coun-
economic spokesman.
south wall, three portraits of the Roose-
try has experienced in decades the
Seidman is more reserved than Si-
velts-two of Teddy and one of FDR
worst economic slump in 40 years, dou-
mon, but he carries a kind of quiet
stare down at the men around the table.
ble-digit inflation, 9 per cent unemploy-
clout with him during the sessions. It
On Simon's right sits L. William
ment, the virtual collapse of the na-
is Seidman more than anyone else there
Seidman. the assistant to the President
tion's largest city, a growing shortage of
who brings "the President" into the dis-
for economic affairs. On Simon's left
energy resources, the threat of starva-
cussions. The President would like to
is Sidney L. Jones, the assistant secre-
tion in parts of the world. These are the
know this, the President would like to
tary of the Treasury for economic pol-
kinds of problems that these men (there
know that. We should get this put to-
icy. Along the sides of the table sit
are no women on the executive commit-
gether for our meeting with the Presi-
senior officials from the Departments
tee) have wrestled with day in and day
dent, Seidman says.
of State, Labor and Commerce, the Of-
out. Seidman, the board's executive di-
Greenspan shows a sense of humor
fice of Management and Budget, the
rector, said the group has been "un-
during the sessions, but more than that,
Council of Economic Advisers and the
usually active, at the eye of the storm,"
demonstrates why his reputation as a
Council on International Economic
which is not quite an apt metaphor.
careful, thoughtful economist has been
Policy. The southwest door of the room
Only recently has there been relative
enhanced by his time in Washington.
opens and Alan Greenspan, the chair-
calm.
He is to the point when he speaks, and
man of the Council of Economic Advis-
The Economic Policy Board is a crea-
while not everyone understands his ex-
ers, walks in. He hesitates momentarily,
ture of the Ford presidency, established
planations, they all listen.
looking for a chair near Simon, then
to help him make orderly economic
Regular contact: Seidman, in an inter-
takes up a position at the opposite end
policy. "People find that it is an effec-
view, said that one ingredient that has
of the table, directly below the cream-
tive way to have their views presented,"
been important to the success of the
colored fireplace mantle. The meeting
Seidman said. "And it is the way the
group "is that it is a regular, high-level
is under way.
President wants to have things present-
forum." The daily meetings help to es-
On almost any weekday morning. the
ed." The board has mastered the coor-
tablish working relationships among
scene is the same. This is the executive
dinating function. Papers move effi-
Cabinet officials, allow representatives
committee of the Economic Policy
ciently from the agencies through the
of one agency to hear the boss of
Board, and it is part of the daily rou-
board to the President. Whether eco-
another agency explain his or her own
tine in the White House. Anyone who
nomic policy is sounder because of the
views of a problem. The social inter-
wants to influence economic policy in
board is something even its members
course, the daily half hour when offi-
the Ford Administration wants to be in
cannot answer.
cials know they will find their counter-
this room at 8:30 every morning.
The meeting: Even when he is just lis-
parts from other agencies, helps grease
Dominance: The Economic Policy
tening and dragging on a cigarette, Si-
the wheel of policy making.
Board is only 18 months old, but in that
mon is in charge of the meetings. "Bill
But morning meetings of White
time it has become a dominant part of
Simon runs a good meeting," an Ad-
House economists are not new; they
the White House decision-making
ministration staff member said. "Any
stretch back into the Administration of
process. perhaps the most important
meeting he chairs has pace and a sense
President Nixon. What Simon and
coordinating body in the Ford Adminis-
of humor."
Seidman have done with the Economic
tration. It cuts a wide swath in the
Simon is now listening to a presenta-
Policy Board is to institutionalize those
426 NATIONAL JOURNAL 4/3/1976
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
EYES ONLY
MINUTES OF THE
ECONOMIC POLICY BOARD
Shows
EXECUTIVE COMMITTEE MEETING
April 30, 1976
Attendees: Messrs. Seidman, Lynn, Greenspan, Richardson, Baker,
Scowcroft, Cannon, Zarb, Tyler, Schmults, Dixon, Parsky,
Gorog, Porter, MacAvoy, Katz
1. Arab Boycott
The Executive Committee reviewed the Arab boycott issue. The
discussion focused on the status of pending congressional legisla-
tion, the current public position of the Administration, the sub-
Teach
stantive and psychological impact of additional legislation, and the
alternative courses of action available to the President.
Decision
The Executive Committee agreed that a paper should be prepared
on the Arab boycott issue for review with the President. NSC will
prepare a draft options paper for the President for review by
Executive Committee members next Monday.
2.
Task Forces to Reduce Waste and Inefficiency in Government
Regulation
FORD LIBRARY Y GERALD
The Executive Committee reviewed a memorandum from Messrs.
Cannon and Seidman on "Task Forces to Reduce Waste and Ineffi-
Jeach
ciency in Government Regulation. " The discussion focused on the
ad hoc nature of the proposed task forces, the objectives of the
task forces in producing results within the next six months in
classifying and speeding up the regulatory process in Executive
departments and agencies, and the particular areas of the Execu-
tive Branch that the task forces would initially concentrate on.
Decision
The Executive Committee approved the recommendation to estab-
lish a number of short-term task forces to reduce waste and
inefficiency in agency operations in the next six months. The
memorandum on this issue will be submitted to the President.
EYES ONLY
EYES ONLY
2
3.
Review of Maritime Policy
The Executive Committee agreed to consider the paper reviewing
maritime policy at a later Executive Committee meeting.
EYES ONLY
RBP