In the Cabinet Room, a few days before his televised energy speech, President Carter and his advisers found themselves in a debate over just how hard to come down on the big oil companies.
It was a debate of sorts.
They already knew he would be sounding a hard line.
They thought then that it was good politics, since he was going to be decontrolling oil prices.
And they have since come to think that this hard line is the best thing he has going for him in domestic politics today.
But on that day in the Cabinet Room, the advisers were looking at more than just a windfall profits tax on oil companies and more than the hard-line rhetoric that the president has been making a standard part of his every public utterance in days since.
They were looking at an even tougher club to use on big oil: a prohibition on mergers.
Carter's domestic policy chief, Stuart Eisenstat, had presented Carter and his five advisers with some suggestions for a conglomerate merger provision that would apply only to oil companies. It would prevent them from merging with businesses unrelated to the oil industry. (he also discussed the possibility of requiring what is called horizontal divestiture, requiring oil companies to dispose of businesses they own that are unrelated to the oil industry.)
They were just a few men sitting around the large mahogany table that usually accomodates many more. And as the discussion went around the table, it became clear that they were divided.
Charles Schultze, chairman of the president's Council of Economic Advisers, and Eizenstat favored the merger prohibition, according to an informed source. James Mcintyre, director of the Office of Management and Budget was sympathetic to the idea, but not quite as enthusiastic. Energy Secretary James R. Schlesinger Jr. and Treasury Secretary W. Michael Blumenthal expressed questions and reservations.
Carter listened in silence.
In the end, he decided to take no action for the present on the merger prohibition, but to talk about it a lot. Publicly.
"Evan with the windfall profits tax in place, our oil producers will get substantial new income [the administration estimates it as $6 billion in the next three years]. I will demand that they use their new income to develop energy for America, and not to buy department stores and hotels, as some have done in the past."
President Carter in his energy speech,
April 5, 1979.
I would certainly favor either laws or administrative actions to put constraints so that they would plow back that [profit] into production. . . . For them to take that money and use it to buy circuses or to buy timberlands or to buy motels or tobuy department stores, I think contravenes the need of our country and it contravenes the purpose that I and the Congress have in mind when we give them that additional income."
President Carter at his press conference last Tuesday
So it is that Carter has taken to his own brand of jawboning, a form of that art of persuasion that falls somewhere between the technique as it is written up in economics textbooks and the technique as is was practiced by Samson.
As things stand, the administration has no regulation in effect that will force the oil companies to use for exploration and production the huge profits that come their way from the decontrol of oil prices that Carter has just decreed. Nor is it asking Congress to pass one.
Instead, according to one top level Carter official, the administration will "monitor how the oil companies use their revenues."
He says this can be done because the companies are required to notify the Justice Department in advance of any merger plans. But of course this will not help the administration watch over any oil company investments short of merger.
So Carter jawbones. And his top-level official cautions, "We will act on these mergers if the oil companies force us to."
It is all part of what the Carter White House sees, more and more each day, as one of the best bits of domestic politicking that has come its way since inauguration day.
Carter has decontrolled oil prices, and that means prices will rise. But Carter has also pulled out his old campaign speeches, the ones he figures got him elected in the first place, and he has dusted off a few favorite populist phrases and put them back into circulation. (Example: "ripoff" found its way into his blast on oil companies last weekend in Richmond.) And they apparently are back to stay.
"It is important to keep pressing on this," says Jody Powell, presidential press secretary. "The president wants to let people know that we are going to press this fight at every opportunity."
Powell has been leaning back, feet on his desk. But now he leans forward and confides, like a handicapper who is real sincere, that the president and his advisers think they finally have a winning horse.
They are placing heavy political money on Windfall, an old horse wearing new colors, born out of decontrolled prices and political reality. And they intend to ride this populist chestnut for all it is worth.
The fight will be over how the money in Carter's energy security fund is spent, the White House figures. Carter has proposed a mix that would spend for low-income families facing energy price increases, for mass transit and for energy reseach.
But the White House strategists say they believe that at last they have an issue that is publicly identifiable and, more important, winnable.
In the past, in contrast, the Carter officials feel they saddled themselves with programs that got lost in the dust or faded in the stretch or went for the feedbag on the far turn. They cite energy plan number one and tax return reform as two that were so complex that the public could not even decipher, where their representatives in Congress stood, due to the complexities of the voting.
But in case all of that doesn't work-in case the oil companies go out and try to buy a department store chain (as Mobil did) or a circus (as Gulf sought to do)-the Carter officials stand ready with their anti-merger plan. Said one official: "It's in the closet."
EPILOGUE: Many of the president's top officials were too bleary-eyed to focus on their television sets when Carter gave his energy speech a week ago last Thursday. They had been working at a marathon meeting on the final fact sheet details. It began at 5 p.m. Wednesday and ended at 5:30 a.m. Thursday, with intervals only for brief runs for fried chicken and cookies and junk food.
"It was like cramming for a college midterm," one participant recalled. But by then, virtually all of the decisions, policy and political, had already been made. Carter had checked off the options, sometimes with pen, sometimes with pencil, in a thick memo in a black looseleaf binder.
Among them was the option for tax credits for "residential wood stoves." The memo, from his domestic staff, reminded him that this would be especially popular in New Hampshire-that New Hampshirre was the first primary election-and that including it in the package would likely reduce any opposition his program might encounter from Sen. John A. Durkin (D-N-H).
Carter checked off his approval.