‘Power to Lay Duties’

January 29, 1962

In his State of the Union Message the President asked Congress for two major delegations of power. One concerned its constitutional power “to levy and collect taxes,” the other its power to lay “duties.”

“We need, first,” he declared, “Presidential standby authority subject to congressional veto to adjust personal income-tax rates downward within a specified range and time.” There are weighty reasons, both constitutional and economic, why Congress should refuse to delegate this power. Congress has already, through delegation or default, lost too many powers to the Presidency. The peacetime power of that office is already swollen beyond parallel.

The chief economic assumption behind the President’s request for stand-by powers over income- tax rates—that they must be quickly lowered “to slow down an economic decline before it has dragged us all down”—is fashionable but false. This assumes that the sure cure for recession or unemployment is a budget deficit. A budget deficit is sure to bring on inflation, but whether it slows down a decline or reduces unemployment will depend upon what happens to wage rates and a score of other factors. If inflation through bigger deficits were a remedy for recession, there would always be time for the President to send an urgent message to Congress or to call a special session. If Congress is to be asked to delegate powers on the assumption that it is incapable of acting in time, it could more logically be asked to delegate to the President its constitutional power to declare war.

FOR A NEW SAFEGUARD

Constitutional objections to the transfer of taxing power apply just as much in principle to transfer of power over tariffs. Economically, however, the President is here on firmer ground. Even constitutionally there are important mitigating considerations. Congress has already been delegating such powers, under successive reciprocal-trade acts, for 28 years. There are practical reasons for this. The setting of tariff rates, item by item, involves infinite detail. Before the era of reciprocal-trade acts the final set of schedules was the result of unconscionable logrolling among congressmen, each haggling for the industries in his district. Congress is of course utterly unequipped to bargain separately with each foreign country or trading unit.

There are strong precedents and practical reasons, therefore, why Congress should continue to grant the President discretionary reciprocal trading powers. But because the President’s request goes much beyond the powers granted in the past, Congress would be justified in surrounding such a delegation of power with additional safeguards. The most important of these was suggested by the President himself in his request for discretionary power over income tax rates. Delegation of tariff bargaining powers should be “subject to Congressional veto.”

‘RECIPROCITY’

How would this be practically possible? Congress could provide that every trade agreement the Executive power negotiated should be submitted to it before going into effect. It could agree in the new law to accept or reject such an agreement in toto, without trying to amend it in detail. (Though if it returned an agreement unratified it might indicate what changes would make it acceptable.) And it could provide further that, if it failed to take any action either way within 30 or 60 days, the agreement would automatically go into effect. Thus Congress, without obstructive delays, could force the American bargainers to keep constantly in mind the overall acceptability to Congress of each agreement.

It remains to be said that the method of reciprocal- tariff bargaining, though we have followed it for the last 28 years, is dubious in principle. It rests at bottom on the protectionist assumption by each party to the bargaining that though exports are good for a country, imports are bad for it. Barriers to imports are therefore lowered only as a “concession” in return for a reciprocal “concession.” Hence there is an incentive to each country to boost its tariffs high in the first place so that it may have more to concede.