108. Memorandum From Secretary of the Treasury Blumenthal to President Carter 1
I have come to the conclusion that things have reached a point where it is essential for you to take vigorous action to halt the drift of events on energy and on the dollar. The cost of going on as we are is now dangerously high and I urge that you act now.
On energy, I do not believe that you can any longer afford to wait while Congress continues its interminable debate. Domestically, all sense of urgency about the energy problem is being lost, and your Administration will increasingly be seen to have failed in a critical area. Finally, if things continue as is, what you are likely to get in an energy tax bill (if you get one at all) will be so weak and so unlikely to save much energy, that it may well be considered a failure anyway.
Internationally, all the “swaps” in the world and all additional “bridging actions” to slow down the deteriorating position of the dollar, really will not help over any extended period. Nothing works unless the world feels that you are willing to act decisively to halt the increasing consumption and imports of energy; that you have set your goals, and that you will achieve them—if not in one way, then in another.
My recommendation is that you act decisively and do so as soon as possible, along the following lines:
My recommendations are as follows:[Page 332]
1) Arrange to sign into law those parts of the energy legislation that Congress has already agreed on.2
2) Urge Congress to continue work on natural gas deregulation and a strong and effective energy tax package that will really save energy, pledging to step up your personal involvement in this effort.3
3) Use your powers to immediately impose an oil import fee. Make it as high as you can but in any case no less than the equivalent COET tax would be.4
4) Indicate that the fee will remain in effect until a satisfactory energy tax bill is enacted.
5) Possibly, promise more steps and proposed legislation at an early date to further reduce energy imports and to promote domestic production.
You will achieve important benefits, domestically and internationally, merely by being seen to be acting decisively to achieve your policy goals. In that sense some of the details of the action are not all that important. The central ingredient would be the oil import fee and your intention to stick to it for as long as necessary.
The details of the program lend themselves to endless debate and controversy among your economic and energy advisers. I therefore hope that you will set a very short fuse deadline, holding the matter closely and enabling you to decide and act quickly.
If you move, we would of course also need a couple of days for international preparations, such as briefing the Saudis and others, as well as getting maximum leverage out of this action with the Europeans and the Japanese.
- Source: Carter Library, Records of the Office of the Staff Secretary, Presidential File, Box 74, 2/23/78. Secret. A stamped notation reads: “The President has seen,” and Carter wrote at the top of the page: “Schultze brief assessment. JC.”↩
- Carter wrote “not passed by Congress” in the margin adjacent to this paragraph.↩
- Carter wrote “ok” in the margin adjacent to this paragraph.↩
- Carter wrote “later?” in the margin adjacent to this paragraph.↩
- Blumenthal signed “Mike” above this typed signature.↩