Economic Stabilization Act of 1970 - Administrative History

Administrative History

By late 1970 it was clear that this act was having little to no effect on the economy. Under a provision in the Economic Stabilization Act of 1970, the Cost of Living Council was established as an independent agency. The purpose of this council was to stabilize the prices, rent, wages and salaries higher than the prices on or before May 25, 1970 and execute phases II-IV of the Economic Stabilization Program. These phases were set in place to ensure the success of this program. Phase I was the 90-day price and wage freeze that was authorized by President Nixon who delegated power to the Office of Emergency Preparedness which acted as the fiduciary agency that monitored business practices. Phase II required that the Cost of Living Council engage in wage and price controls. Phase III of this program required this council to enforce another price freeze to balance out economy. The IV and final phase consisted of a "voluntary compliance and gradual decontrol", this council had to ease off of these businesses and relinquish some control. By April 30, 1974 this council was "abolished".

Having the responsibility of chairman of first the Office of Economic Opportunity then the Cost of Living Council imposed on him Donald Rumsfeld was initially unhappy with his position as chairman of the council and the council's "success" and for a while opposed the idea of the council. He soon realized that his presence there would "be best" for his influence in both domestic and international commerce and appeared satisfied with the council prior to it being abolished in 1974. President Nixon reported that "public support and cooperation" was there for the council when they were making the tough decisions. President Nixon also ensured the American People that the Cost of Living Council always "kept the public interest in mind".

The President in his quarterly statements usually announced the Rumsfeld and his council were doing a great job,"providing encouraging evidence that the nation continues to make progress in the battle against inflation". Nixon continued to say in his report that "The national economy is now expanding significantly. This makes the success of the stabilization program more important than ever". In 1971 Nixon announced that he amended the Economic Stabilization Act, by signing "into law the Revenue Act of 1971 -- providing tax cuts of some $15 billion over the next 3 years to stimulate the economy and provide hundreds of thousands of new jobs". This program was allowed to expire in 1974 and was viewed as a success by the President and the American people.