by Ira Shapiro
ON MAY 3, ABE RIBICOFF jolted the Senate by announcing that he would not seek reelection in 1980. Ribicoff was sixty-nine but in excellent health and at the peak of his power and influence. But in a short statement that left his staff as stunned as his colleagues, Ribicoff observed that “a man who has held power needs to know how to step aside and open up the political process.” In recent years, Ribicoff had confided to friends and colleagues that the Senate had begun to change in ways that he did not like: “there were few real statesmen left.” But he made it clear that he had actually decided not to seek a fourth term in 1974, just after being reelected for his third. “No one should feel indispensable,” Ribicoff added.
Jack Javits was shocked by his friend’s announcement. “He must really be sick of the place,” Javits said to Alan Bennett of his staff. “He’s younger than I am.” Javits had not announced his intention to retire at the end of his term but continued to plan on it.
Ed Muskie, too, was stunned by Ribicoff ’s announcement. Muskie had just completed twenty years in the Senate. He was tiring of the Senate, feeling like he often stood alone in the battles for fiscal responsibility while fighting to preserve important government programs. The disappointment of not reaching the presidency had taken some toll. Muskie had begun to consider what life after the Senate might be like, but the private sector held little appeal for him. Leon Billings, his administrative assistant who had sparked Muskie’s environmental accomplishments, had become close friends with Frank Moore, Carter’s congressional liaison and a member of the Georgian inner circle. Billings asked Moore what he thought of the idea of Muskie becoming Secretary of State in Carter’s second term. Moore liked the idea quite a bit, and promised to check it out.
Any seeds that Moore could plant would fall on potentially fertile ground. Muskie had become an indispensable ally for a president increasingly beset on all sides. As Carter tried to control the budget in a futile effort to curb inflation, Muskie was a tower of strength. Working closely with Henry Bellmon of Oklahoma, the ranking Republican on the Budget Committee, Muskie took on Senate liberals trying to restore cuts that Carter proposed in urban and social programs and then wheeled to take on Bill Proxmire and others who were trying to balance the budget, warning that they would throw the economy into recession with their proposed draconian cuts. No one enjoyed fighting the popular and powerful Warren Magnuson, but Muskie insisted that Maggie’s Appropriations Committee come up with the cuts that Budget Committee required for reconciliation. “We don’t need fiscal handcuffs to wipe the deficit out,” Muskie said. “We need fiscal discipline.”
On April 26, Carter expressed his gratitude: “The Senate did a superb job yesterday in protecting our budget. I thanked Ed Muskie, who has become perhaps the foremost statesman in the Senate.” Carter reached that judgment despite the fact that Muskie had recently ripped Carter’s environmental regulatory council, calling them “anti-regulators” and the “principal threat to the environment as we close the environmental decade of the 1970’s.”
THE ENERGY BATTLE CONTINUED to rage. Russell Long had done about as much for Jimmy Carter as he could in 1978, standing with him on the Panama Canal treaty and the Labor Law Reform bill, while not blocking a natural gas compromise that he hated. Long had already signaled that Carter could not count on as much support from him again. On May 7, at a Senate Finance Subcommittee hearing, he ripped into the Carter administration officials. “Under your program,” Long thundered, “industry can raise enough money to stay at the mercy of the Arabs as long as you remain in government . . . which may not be that long.”
Arguing that the current oil shortage required that the energy industry should be more profitable than any other industry, in order to expand production, Long asked whether the administration realized it was “flirting with the survival of freedom in this nation and on this planet?” Other senators from oil-producing states agreed. Mike Gravel, the subcommittee chairman, said he saw “really no need for a windfall tax.” Emil Stanley, the deputy assistant secretary of Treasury, coolly responded to Long’s tirade, telling him that Carter’s plan essentially did what Long wanted by decontrolling oil prices, but that the windfall tax was “the price of entry.”
Just as in 1977, the House moved forward rapidly on Carter’s energy proposals and was far more sympathetic to the consumer interests, working to increase the windfall profits tax. The Senate, characteristically, worked on a slower track. Long refused to commit to the House approach of handling the windfall profits tax before taking up other elements of the package. He said he would explore the possibility of a filibuster to prevent all elements of the bill being combined but kept his options open.
Carter simultaneously faced a changing political atmosphere. Kennedy’s intensified rhetoric, ripping Carter’s proposal as a giveaway to the oil industry, caused Washington Democrats to reconsider the possibility that he would challenge the president. One Hill Democrat said: “I used to think there was no way Kennedy was going to try to run against Carter in 1980—until I heard what he had to say about Carter’s energy plan. Now I don’t know what to think.” Tip O’Neill told Kennedy that he would make a lot of his friends look foolish if he decided to run for president after saying for so long that he would back Carter. Kennedy responded that he still expected Carter to be nominated and planned to support him. O’Neill responded: “Well, you’re sure picking a funny way to do it.” Kennedy replied: “Well, I think the liberals need a voice—and besides, I’m enjoying it.”
On June 22, the Americans for Democratic Action (ADA), a leading liberal group, committed to creating “an irresistible national mandate” to make Kennedy a candidate in 1980. The ADA political commission issued a statement saying: “Carter has given us conservative domestic policies and Republican party economic programs. Jimmy Carter is a one-way ticket to defeat and a trip to a party bankrupt of principles and devoid of officeholders in 1980.”
By late June, anger and frustration had gripped the country, as the gasoline shortages produced long lines at the gas station. The American Automobile Association reported that 58 percent of the nation’s gas stations were closed due to lack of supply. Returning from an economic summit in Tokyo, Carter, on the advice of his aides, requested television time for a July 5 speech on energy. On July 3, however, the White House abruptly notified the networks that the time would not be needed. Carter, on the advice of pollster and political adviser Pat Caddell, whose memos described a crisis of the American spirit, had decided to retreat to Camp David to reflect on the nation’s problems more broadly. For eleven days, the president stayed at Camp David, meeting with a broad range of visitors invited to express their views about the state of the nation. Rumors swirled about the president’s lengthy and unexpected absence, further eroding public confidence that had already frayed.
Walter Mondale had served Carter superbly, virtually reinventing the vice presidency to become the president’s principal adviser on domestic and foreign policy issues and his most valuable liaison with Congress. Caddell’s psycho-babble was too much for him to take. Mondale told Carter that people’s problems weren’t in their heads—their problems were real, felt everyday. People’s paychecks were getting smaller; they couldn’t feed their families or pay for gasoline. He warned Carter not to blame the American people for the problems. It was the only time in the four years that he exploded at Carter, who described him as “distraught.”
On July 15, Carter returned from Camp David to deliver one of the most unusual presidential speeches ever given. While his speech contained still more new energy proposals, it focused mainly on Carter’s view that the nation faced “a crisis of confidence” concerning “the meaning of our own lives” that was “striking at the heart and soul and spirit of our American will.” He focused on fundamental moral and spiritual issues, such as the country’s soulless materialism and the growing disrespect for schools, churches, and other institutions.
It was an astonishing speech, remarkable for its cando
r and anguish. It would always be remembered as the “malaise” speech, even though Carter never used the word. The polls indicated that the American people reacted positively to it. But not for long—to politicians, pundits, and ultimately the public, even as Carter worked to provide leadership on a full range of issues, he seemed to be abdicating responsibility, blaming the American people for their current problems. And Carter followed the speech by firing or accepting the resignations of five cabinet officials: Treasury Secretary Michael Blumenthal, HEW Secretary Joseph Califano, Attorney General Griffin Bell, Transportation Secretary Brock Adams, and the long-suffering Secretary of Energy, James Schlesinger. The public seemed stunned by the mass exit. According to one poll, approval of Carter soon plunged to 23 percent.
As Carter reeled, Howard Baker refused to pile on. Speaking to the National Association of Counties, on July 17, Baker said that Carter deserved strong, bipartisan support for his energy programs and that “this is not a time to nickel and dime these programs to death.” Still, despite Baker’s support, Carter found Congress newly skeptical about his energy proposals and his political viability.
For Kennedy, Carter’s malaise speech and the cabinet firings were the last straw; it was the moment when he decided to challenge Carter for the Democratic nomination.
It was the last straw for Jackson as well. On July 29, in an extraordinary press conference, Jackson gave lip service to praising Carter for being a persuasive, one-on-one communicator and then blasted him for running a failed administration that had created the crisis of confidence across America. Jackson also said that Kennedy would only enter the race if Carter stepped aside and then predicted that Kennedy would enter the race, and win. Two days later, George McGovern, another constant thorn in Carter’s side, gave a speech to a group of Hill interns at the Library of Congress. Unlike Jackson, McGovern did not even pretend to find anything positive to say about the president. Saying Kennedy was “the most logical candidate” for 1980, McGovern accused Carter of “moral posturing, public manipulation, and political ineptitude.”
“We can recover from our present malaise by setting the stage now for a presidential election in 1980 that is equal to the ideals and hopes of a great nation,” McGovern told the interns. “We do not know whether Senator Kennedy will respond to the public opinion polls indicating that he is the popular Democratic choice for the presidency in 1980,” McGovern continued. “I agree with Senator Jackson that our Massachusetts colleague is the most logical candidate for our party. If he decides to run, I believe that he can be nominated and elected and would be an inspiring president. If he declines to run, the Democrats must field a strong alternative.”
Other prominent Democrats, in Washington and around the nation, began clamoring for Kennedy to run. Despite the strong action by the Carter administration to rescue New York City the previous year, Senator Daniel Patrick Moynihan and Governor Hugh Carey told Kennedy that they would support him.
MEANWHILE, CARTER’S ENERGY PROPOSALS continued to move forward, in stutter steps. On July 26, the Senate Energy Committee, led by Jackson, voted 14–1 to approve the general structure of the Energy Mobilization Board that Carter had proposed, without defining its scope or power. The lopsided vote was misleading, however. The Energy Committee quickly made it clear that it planned to move more slowly on both creating the EMB and providing aid for synthetic fuels. The committee gave general approval to Carter’s goal of producing 2.5 million barrels of synthetic fuel a day but pushed the deadline out to 1995, instead of Carter’s goal of 1990.
The committee staff proposed a two-stage solution. The first would involve the government helping create at least one “synfuel” plant for each major process, including extracting oil from shale and converting coal to oil or gas. After congressional review of the first stage, the second stage would ramp up spending to Carter’s proposed $88 billion. Paul Tsongas said it made no sense for government to pay to build more than one of each prototype plant until the processes had proved feasible. Jackson agreed, saying “we shouldn’t go off the deep end.” Turning to the EMB, the committee rejected a proposal to allow the federal government to override state and local laws after congressional and presidential review. Instead, the committee voted in favor of having the EMB negotiate with state and local governments to fix deadlines for projects. If agreement could not be reached, the EMB could set a deadline that would need approval from both Houses of Congress.
Even that cautious approach went too far for Gary Hart, who chaired the “Synfuels” task force within Muskie’s Budget Committee. Hart was hearing testimony from several synfuels consultants questioning whether Carter’s plan was flexible enough for later plants to learn from earlier plants’ mistakes to improve the chances of commercial viability. One of the consultants expressed doubt that we would get much production, even ten years from now, with a crash program. Initially, Hart took the view that investing in prototype plants made sense and estimated that the operating cost of each plant would be about $2 billion. The more Hart studied the issue, the more skeptical he became.
Senate Finance Committee members, heavily lobbied by the oil industry, said that they hoped to widen the categories of exempted oil to include all new discoveries and all Alaska oil. Senate sources said that if the Finance Committee approved all the amendments before it, it would wipe out nearly all the expected $142 billion in new revenue that the tax would bring in by 1990. Carter charged that the Finance Committee was seeking to “gut” his windfall profits tax.
Baker’s support for Carter’s energy proposals carried no weight with his Republican colleagues and proved to be short-lived. A week after his positive statement, the Senate Republicans announced plans to try to tack a general tax cut on to the windfall profits tax when it reached the Senate floor. The Republicans had unveiled a massive “Economic Program for the Decade,” calling for phased, across-the-board income tax reductions, a limit on federal spending, and new tax incentives. The Republican senators charged that Carter “seems to lack either the ability or the will or both” to address America’s worsening economic problems. It had become a familiar scenario: the Democrats, with the responsibility to govern, battled among themselves about the issue at hand, while the Republicans, luxuriating in being in the minority, played a separate, longer game.
Rising oil prices raised the economic stakes and added to the political pressure. When Carter first proposed the windfall profits tax, estimates said that it would raise $20 billion by 1990. But oil prices had risen 25 percent since April, and the likely revenues from a windfall profits tax were now projected to be $146 billion. This was real money, sparking a fierce battle between conservatives, liberals, and energy interests about how the revenues should be spent and what new finds of oil should be exempt. Initially, when the bite of the tax had seemed relatively small, the oil industry had not been vocal. Now it was fighting back fiercely, and gaining surprisingly strong support within the Finance Committee.
Carter had hoped that the windfall profits tax would be passed before the August recess. Long had told him not to expect action before October, and Long, as usual, had been more accurate, since the chairman held most of the trump cards. As the Senate prepared to recess, Vice President Mondale chided Congress for its failure to complete action. “As the gas lines have receded and the inevitable interest group pressure has mounted,” Mondale observed, “Congress has failed to make adequate progress on the president’s proposals.” The endless Senate consideration of energy legislation during the previous two years remained sharply etched in everyone’s memories.
WHEN THE SENATE RETURNED in September, the dealing began in earnest. Carter had hoped to use $88 billion in revenue from the windfall profits tax to invest in synthetic fuels production, ideally reducing foreign oil consumption by three million barrels a day by 1990. Bennett Johnston, a supporter of “synfuels,” thought the administration was wildly unrealistic about the amount of revenue it would receive from the windfall profits tax as well as the p
ace that synfuels production would come on line. Johnston also objected to making the synfuels program dependent on the windfall tax, which he opposed.
Facing the realities of the Senate, the administration began to give ground, lowering its expectations to production of about 1.75 million barrels of synfuels production per day, more likely by 1995. Carter also told state and local officials that he would not insist that the EMB be allowed to override state and local regulations. But Carter still envisioned a $20–30 billion first phase to build a dozen plants, and then a course correction, and a second phase leading to 80–90 plants. It was an uncommonly grandiose vision for Carter, who prided himself on his engineering background and his realism.
On September 18, Senate Finance unanimously approved a proposal by John Danforth to provide synfuels producers a tax credit of $3 per barrel of the equivalent amount of oil, adjusted by inflation. The next day, the Finance Committee voted unanimously to double the existing tax credit for installation of residential solar energy equipment and to extend it to cover adjoining buildings and residential homes. This was just one of a string of proposals approved by the Finance Committee as part of the windfall profits tax, even though it had not yet decided on how high the new tax would be. The day after, the committee tripled the tax credits for installing home insulation, storm windows, and weather stripping and provided new breaks for replacing furnaces and buying wood-burning stoves.
The measures were approved “in principle only,” because committee members realized that they were promising credits without having addressed the revenue source to fund them. Long warned the members that they would have soon given away all the new revenue they were considering, even before they decided on the level of the tax. Some observers concluded that Long appeared to be using tax credits to prod committee members to vote for the windfall profits tax. It was also possible, given Long’s dislike of the windfall profits tax, that he was just waiting for the whole scheme to sink of its own weight.
