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THE 1976 ECONOMIC REPORT OF

THE PRESIDENT

HEARINGS

BEFORE THE

2 JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-FOURTH CONGRESS

SECOND SESSION

PART 2
FEBRUARY 6, 19, 20, AND 25, 1976

Printed for the use of the Joint Economic Committee

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1976

74-796 O

JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.)

HUBERT H. HUMPHREY, Minnesota, Chairman

WRIGHT PATMAN, Texas, Vice Chairman
SENATE

HOUSE OF REPRESENTATIVES JOHN SPARKMAN, Alabama

RICHARD BOLLING, Missouri WILLIAM PROXMIRE, Wisconsin

HENRY S. REUSS, Wisconsin ABRAHAM RIBICOFF, Connecticut

WILLIAM S. MOORHEAD, Pennsylvania LLOYD M. BENTSEN, JR., Texas

LEE H. HAMILTON, Indiana EDWARD M. KENNEDY, Massachusetts GILLIS W. LONG, Louisiana JACOB K. JAVITS, New York

CLARENCE J. BROWN, Ohio CHARLES H. PERCY, Illinois

GARRY BROWN, Michigan ROBERT TAFT, JR., Ohio

MARGARET M. HECKLER, Massachusetts PAUL J. FANNIN, Arizona

JOHN H. ROUSSELOT, California
John R. STARK, Executive Director

SENIOR STAFF ECONOMISTS
JERRY J. JASINOWSKI

JOAN R. KARLIK
LOUGHLIN F. McHugh

COURTENAY M. SLATER
RICHARD F. KAUFMAN, General Counsel

ECONOMISTS
WILLIAM R. BUECHNER
WILLIAM A. Cox

LUCY A. FALCONE ROBERT D. HAMRIN SARAH JACKSON

L. DOUGLAS LEE RALPH L. SCHLOSSTEIN GEORGE R. TILER

LARRI YUSPEH

MINORITY

CHARLES H. BRADFORD (Senior Economist) GEORGE D. KRUMBHAAR, Jr. (Counsel) M. CATHERINE MILLER (Economist)

CH
JQ

CONTENTS

1976 pt. 2

280

343

WITNESSES AND STATEMENTS

FRIDAY, FEBRUARY 6, 1976
Humphrey, Hon. Hubert H., chairman of the Joint Economic Committee: Page
Opening statement.----------------------------------------------

279
Heller, Walter W., regents' professor of economics, University of Minnesota
Shiskin, Hon. Julius, Commissioner, Bureau of Labor Statistics, Depart-
ment of Labor -------

306
THURSDAY, FEBRUARY 19, 1976
Humphrey, Hon. Hubert H., chairman of the Joint Economic Committee:

Opening statement.--
Burns, Hon. Arthur F., Chairman, Board of Governors, Federal Reserve
System.---

344
FRIDAY, February 20, 1976
Reuss, Hon. Henry S., member of the Joint Economic Committee, presiding:
Opening statement.---

383 Klein, Lawrence_ R., professor of economics, The Wharton School, the

University of Pennsylvania.
de Vries, Rimmer, vice president, Morgan Guaranty Trust Co., New

York, N.Y-----
Galenson, Walter, professor of economics, Cornell University-----------

WEDNESDAY, February 25, 1976
Humphrey, Hon. Hubert H., chairman of the Joint Economic Committee:

Opening statement.-----
Carey, Hon. Hugh L., Governor, State of New York. ---
Landrieu, Hon. Moon, mayor, New Orleans, La., and president, U.S.
Conference of Mayors.----

472 Gibson, Hon. Kenneth, mayor, Newark, N.J., and vice president, U.S. Conference of Mayors.--------

480 Young, Hon. Coleman, mayor, Detroit, Mich., and chairman, Urban Economic Policy Committee, U.S. Conference of Mayors..

482 SUBMISSIONS FOR THE RECORD

384 388 416

441

444

1

1

286
289

FRIDAY, FEBRUARY 6, 1976
Heller, Walter W.:

Prepared statement.-----
Article entitled “Ford's Budget and the Economy".----

--------Shiskin, Hon. Julius:

Press release No. 76-83 entitled “The Employment Situation: Janu

ary 1976," Bureau of Labor Statistics, Department of Labor,

February 6, 1976.----------
Statistical notes on the unemployment rate by revised seasonal ad-
justment methods.-

(III)

ad

308 327

Page

354 355 376

377 379

THURSDAY, FEBRUARY 19, 1976 Burns, Hon. Arthur F.:

Letter of response to Representative Heckler's query regarding the

Federal Reserve Board's efforts to implement the Equal Credit

Opportunity Act-----
Tentative outline of an omnibus anti-inflation bill by Hendrik S.

Houthakker, professor of economics, Harvard University ---
Response to Senator Javits' query regarding the desirability of a gov-

ernment technology bank for financing new technology --
Response to additional written questions posed by Chairman Hum-

phrey ------
Response to additional written questions posed by Senator Taft-------

FRIDAY, FEBRUARY 20, 1976 de Vries, Rimmer:

Prepared statement.---------
World Financial Markets, monthly publication of the Morgan Guar-

anty Trust Co. of New York, issue of January 21, 1976-----
Galenson, Walter:
Prepared statement.---

WEDNESDAY, FEBRUARY 25, 1976 AFL-CIO, Public Employee Department:

Statement on the impact of recession upon public employes and the

President's fiscal year 1977 budget proposal.---Landrieu, Hon. Moon:

Statement on behalf of the U.S. Conference of Mayors.--------Young, Hon. Coleman:

State of the city message, city of Detroit, January 22, 1976.-----

392 397 418

504 475 484

THE 1976 ECONOMIC REPORT OF THE PRESIDENT

FRIDAY, FEBRUARY 6, 1976
CONGRESS OF THE UNITED STATES,
JOINT ECONOMIC COMMITTEE,

Washington, D.C. The committee met, pursuant to recess, at 10:10 a.m., in room 1202, Dirksen Senate Office Building, Hon. Hubert H. Humphrey (chairman of the committee) presiding.

Present: Senators Humphrey and Proxmire; and Representatives Hamilton and Long.

Also present: John R. Stark, executive director; William R. Buechner, William A. Cox, Lucy A. Falcone, Robert D. Hamrin, L. Douglas Lee, Loughlin F. McHugh, and Courtenay M. Slater, professional staff members; Michael J. Runde administrative assistant; George D. Krumbhaar, Jr., minority counsel; and M. Catherine Miller, minority economist.

OPENING STATEMENT OF CHAIRMAN HUMPHREY Chairman HUMPHREY. Today the Joint Economic Committee will hear from Mr. Walter Heller, the former Chairman of the Council of Economic Advisers to the President. We will also hear from Mr. Shiskin, Commissioner, Bureau of Labor Statistics.

I would like to say that in having Mr. Walter Heller of the University of Minnesota before us today, we have an old friend and one of the most prominent economists in our country.

Yesterday we heard from four other distinguished economists on the economic outlook, and I must say their outlook was more pessimistic than that of the administration witnesses who preceded them. They were followed yesterday afternoon by two other Cabinet members who again repeated the administration's position.

The administration's position is basically to let the economy proceed as it is going. As we heard repeatedly, the administration's principal enemy is inflation, and unemployment, while too high at present and for the years immediately ahead, must remain "second fiddle” because faster recovery would lead to another“bust."

I made it clear that I do not believe this is a responsible approach, nor is it adequate. We must get the unemployment down faster than the administration's program predicts or indicates. The unemployment rate, as indicated by the administration, will likely be in the range of 7 or 8 percent in the years ahead.

I would hope today that we will be able to get further information on the outlook for the economy in 1976. Mr. Heller, although it is very difficult to predict anything about the economy, and it surely is more

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