Sen. William Proxmire (D-Wis.) said yesterday he was incorrect in claiming that recent price decisions by oil exporting countries would have the same impact as an $11 billion tax increase.
Proxmire said that the worldwide impact of the two-tiered increase voted by the Organization of Petroleum Exporting Countries (OPEC), would actually be about $6 billion. Of that, the United States share would probably be between a $2.5 billion and $3 billion, he said.
At a hearing on Wednesday, Proxmire had declared that the recent price increase - Saudi Arabia stuck to a 5 per cent boost while most other OPEC nations announced a two-stage 15 per cent increase in oil prices - would be the same as an $11 billion tax increase for Americans.
"I was dead wrong," Proxmire told a Senate Banking Committee hearing yesterday.
At Wednesday's session, Julius L. Katz, assistant secretary of state for economic and business affairs, had echoed Proxmire's assessment, agreeing that the OPEC price actions were equivalent to an $11 billion tax increase.
Katz later said that he did not mean to agree with the $11 billion figure that Promxmire had placed on the OPEC action, but had meant to stress that the oil price increase could be viewed as tantamount to a tax boost for U.S. consumers in the form of a new excise tax.
Meanwhile, Assistant Treasury Secretary Gerald L. Parsky said yesterday that by 1980, the American economy will have had a half-trillion-dollar squeeze put on it by the Arab oil decisions of the past three years.
At the Senate Banking Committee hearing Parsky said, "The oil embargo, plus the 400 per cent OPEC price increases, probably will cost the U.S. economy a cumulative loss in real output of about $500 billion over the period 1974-1980. He called it a blow "of major proportions."