The Presidential Veto: 1974 to 1976
Background
One main principle of the U.S. Constitution is the separation of powers. Each branch of Government, Executive, Legislative, and Judicial, can serve as a check on the other, preventing excessive power in any one branch. The Presidential Veto is an example of separation of powers. The President must sign laws passed by Congress. If the President vetoes the bill (does not sign it into law), it takes a two-thirds (67%) vote in the House and Senate to override the President and pass the bill.
Democratic Congress / Republican President
Vice President Gerald Ford became President in August 1974 upon Richard Nixon’s resignation as a result of Watergate allegations. In the aftermath of that affair, the Democrats made significant gains in the 1974 mid-term elections. They picked up 49 seats in the House, giving them a two-thirds majority: 291 seats for the Democrats versus 144 seats for the Republicans. Democrats also increased their Senate majority, holding 61 seats.
You would expect the Democratic Party to pass bills opposed by the Republican President leading to vetoes and veto overrides. In his two years in office, Ford vetoed 66 bills, a higher rate per year than most other Presidents. And Congress overrode 12 of those vetoes, a total only exceeded by President Andrew Johnson in the aftermath of the Civil War.
Government Spending
Ford inherited an economy with both inflation and budget deficits increasing. He attempted to address both issues by vetoing what he considered to be excessive spending bills. His veto messages were consistent: the need to control government expenditures to manage the deficit and inflation.
Spending bills he vetoed included:
Vocational rehabilitation, educational, and training allowances for veterans (Veto Overridden)
Departments of Labor and Health, Education, and Welfare Appropriation Act 1975 (Spending on a variety of programs - Veto Overridden)
Revenue Adjustment Act (Tax cut, without spending cuts)
National School Lunch and Child Nutrition Act (Veto sustained)
Public Health Service Act (Veto overridden)
Education Division and Related Agencies Appropriation Act (Veto Overridden)
Department of Labor and Health, Education, and Welfare Appropriation Act 1976 (Veto Overridden)
Public Works and Economic Development Act (Veto Overridden)
Local public works capital Development and investment programs (Veto sustained)
Ford generally did not oppose the purpose of these programs, but felt the expenditures were too high in light of economic conditions.
For example, when he vetoed bills in 1974, Ford stated, “…[I]have asked the Congress on previous occasions to join with me to hold down Federal spending and help whip inflation. In two important instances, the Federal pay deferral plan and the Railroad Retirement bill, the Congress refused to join with me, and the result has added an additional one billion dollars to the Federal taxpayers burden.” At the time, the budget deficit exceeded $50 billion. An interesting contrast with today where trillion-dollar deficits seem to be routine.
Referring to a bill to provide child nutrition, Ford felt benefits should be limited only to those in need. Commenting on inflation, he said, “As Congress keeps adding to the deficit, Congress adds to inflationary pressures which could push us back into recession.” In 1975, inflation ran almost 7% and then peaked under the Carter administration in double digits.
Discussing Congressional spending, Ford said, “The real issue is whether we are going to impose fiscal discipline on ourselves or whether we are going to spend ourselves into fiscal insolvency.” Good question, still under discussion today.
Not that Congress would ever play politics with the budget, but in the lead up to the 1976 Presidential election, Ford vetoed several spending measures. “This…major Federal appropriation bill… is a perfect example of the triumph of election-year politics over fiscal restraint and responsibility to the hard-pressed American taxpayer.” Ford’s comment explains the challenge faced by politicians when trying to control spending: “The partisan political purpose of this bill is …to present me with the choice of vetoing these inflationary increases and appearing heedless of the human needs which these Federal programs were intended to meet, or to sign the measure and demonstrate inconsistency with my previous anti-inflationary vetoes on behalf of the American taxpayer.”
President Ford’s Inflation Button
Electric Cars
During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. support of Israel. Gasoline prices nearly doubled to almost 60 cents per gallon while shortages of supply led to rationing. In response, the government passed Corporate Average Fuel economy (CAFÉ) standards requiring the doubling of average fuel economy to 27.5 miles per gallon.
Congress also passed a law entitled the “Electric Vehicle Research, Development, and Demonstration Act.” This law supported various research efforts supporting the development of electric cars and batteries. Ford vetoed the bill stating: “It must be recognized that private industry already has substantial experience and interest in the development of practical electric vehicle transportation. I am not prepared to commit the Federal government to this type of a massive spending program which I believe private industry is best able to undertake.”
Almost 25 years later, In 2000, the first mass-produced hybrid, the Toyota Prius, went on sale in the United States. (GM’s earlier EV1 vehicle released in the mid 1990’s sold under 2,000 units). Tesla’s first sales occurred in 2010. Neither manufacturer benefited from this 1976 law, although Tesla did take advantage of a separate 2008 Federal loan program to support fuel economy improvements.
Ford’s veto raised the issue of governmental involvement in new technology development. Should it be involved and, if so, in what manner. Options included R & D support,, ax credits, and loans. Toyota and Tesla developed their vehicles without government support, although their vehicles did qualify for government consumer tax credits. An interesting question, still under discussion today. For example, President Biden’s ‘Build back Better’ proposal includes a goal of increasing electric vehicle sales from under 3% market share to 40-50% market share by the year 2030.
The Election of 1976
President Ford faced Jimmy Carter in the 1976 Presidential election. Initially behind by over 20 points in the polls, Ford closed the gap and narrowly lost to Carter. Inflation and government spending would continue as issues during Carter’s term.