The Sun's First Annual State of the Empire Report: Crystal Balling with Dr. Strangelove

In a few days, Gerald Ford will stand before Congress and the nation 's TV cameras to read his annual "State of the Union " and "State of the World " messages. Billed as Ford's chance to prove his muster, his speeches will unveil the programs presidential advisors have been huddling over for the past month. Recession, unemployment, Arabs, oil and how to remain popular until the '76 election are the Oval Office's problems of the day. The SUN thought Ford shouldn't have the last word on any of the above subjects, so we've put together our own message on the fate of that 20th century empire, the United States of America.

Diplomatic Globetrotter Henry Kissinger is the man to interview when the question of the fate of the world in '75 arises. When 30 million stand ready in uniform, when underdeveloped nations spend four times as much on arms as health care, and when 40% of all research supports the war effort, Newsweek and Business Week magazines seek the prophecies of the man who inspired Stanley Kubrick's Dr. Strangelove.

With another war in the mideast and the prospect of U.S. intervention on the media's mind, Dr. Kissinger was asked point blank how far the U.S. would go to support Israel. Henry very candidly revealed that if oil producing nations adopt a policy of strangling industrialized nations, military intervention in the mideast could not be ruled out. Such open discussion of an armed grab for the world's energy resources illuminates the desperate situation of the U.S. economy as we enter 1975.

U.S. unemployment is increasing at its fastest rate since the Great Depression; the construction and auto industries are at a virtual standstill; high oil prices are causing more money to leave the country than is coming in; and U.S. oil companies are facing nationalization of their holdings in Venezuela and perhaps Saudi Arabia. Internationally the U.S. is getting its greedy fingers rapped as it digs for the natural resources of other, developing nations.

As a cure for these economic woes, Ford will announce tax cuts, investment incentives and more government jobs, hoping to put cash back into the economy and avoid a depression. Fear of another oil embargo has prompted an oath to cut U.S. oil imports by a million barrels a day as a step towards self-sufficiency in the production of energy.

1975 may be known as the "Year the Chickens Came Home to Roost" for the U.S. Since World War II America has dictated economic policy for most of the "free world." Now the Organization of Petroleum States is dictating some of its own policies: the going price of oil on the world market. The policy of U.S. multi-national corporations has been to take raw materials at the lowest possible cost from underdeveloped nations, limit those countries to a one product economy, then sell them technologically advanced goods they could not produce themselves. Now most of the developing nations are throwing off colonial paternalism, determined to control the the resources, economy and culture of their own countries. Banded together, they are a formidable foe for the oil-thirsty U.S. Ironically it is the Arabs who are now buying up U.S. banks and industries with their profits.

Reduction of oil imports will hit hard at an already depressed economy. Nelson Rockefeller's brother David, chairman of the Chase Manhattan Bank (and called by many the most powerful man in the world), has given three speeches recently predicting economic chaos, depression and panic everywhere. Then in a Saturday Review article he proposed. "If sacrifices are needed...if lifestyles are to be altered, taxes raised and consumption reduced, we must make every effort to justify these steps to a public that is too often skeptical of our motives and suspicious of our good faith."

Speakers at the International Economic and Gold Symposium predicted a military take-over in the U.S. by 1978 in order to restore economic chaos. Prime time this winter is jammed with police shows, Monday night alone featuring three in a row. It makes one wonder what the U.S. public is being prepared for.

But in 1975 people are more aware than ever of the covert operations of the government as faith in its institutions is at an all-time low. The Watergate and CIA scandals have made public information that radicals were called crazy for professing only five years ago. Kissinger can talk about a possible mideastern war and the press can villainize the Arabs as much as they want, but the sour taste left by Vietnam has not been forgotten. In a recent Sindlanger poll 47.7% said they were against armed intervention to prevent the defeat of Israel in the mideast, 22.9% favored it and 6.7% said "perhaps."

Meanwhile eager beaver, reform-minded Democrats are determined to make '75 Congress into a contemporary New Deal. These newcomers, some yet unbought by corporate wealth whose influence crippled the old Congress of veterans, could bring investigatory zeal into the operations of government agencies and large corporations to make the lobbyists shudder. Civil rights and tax reform will be high on their agendas. However, the economy will come first and the executive branch will be trying to take the lead, working very closely with the leaders of the financial world. Already, big business honchos and labor union chieftans are making more frequent sorties to the White House. Ford has introduced a 95 billion dollar "defense" budget that is 13% higher than last year's. "An upward adjustment due to inflation," he said. The Dems, with visions of the '76 presidential elections floating in their heads, will be fighting the White House every step of the way.

ROCKY TAKES THE DRIVER'S SEAT

Ford is readying his schedule of world travel for '75, planning to visit Peking, India, W. Germany and Latin America, leaving Rockefeller and Kissinger to mind the store while he is away. Rocky's ascent to the Vice Presidency was a welcome relief to the beleagured Ford who joked, "The U.S. Marine Corps Band is so confused, they don't know whether to play 'Hail to the Chief or 'You've Come a Long Way, Baby'!" While Ford vacationed in Vail, Colorado, Rocky, head of the Domestic Council, and Kissinger, head of the National Security Council, conferred from a Rock-Resort in Puerto Rico. Expected to replenish the brain-trust of Watergate ravaged Washington, one of Rocky's first additions is the new Attorney-General, former president of the University of Chicago, a Rockefeller founded institution.

THE RACE FOR '76 IS ON!

We may be two years away from election day but some candidates have been off and running for the presidential nominations since September when Ford announced he would seek another term. It looks like a Ford-Rocky team for the Republicans, but Barry Goldwater, representative of arch-reactionary Republican conservatism, may feel it his patriotic duty to run, being a long-time Rockefeller critic.

On the Democratic side, George Wallace has already collected three million names, over 2 million more than the legendary grass-roots McGovern organization amassed in 1972. With no stellar presidential personality on the horizon since Teddy Kennedy officially bowed out of the race, the Democratic field is glutted with marginal candidates. The polls show Ed Muskie to be the most popular in a race against Ford, followed by Scoop Jackson and then Wallace. But Jimmy Carter from Georgia, Bentson from Texas and Udall from Arizona are all in the running, although speculation is they are seeking the Vice Presidential spot. Of course, with Wallace in the running we can't rule out a three party race.

PUBLIC ENEMY NUMBER ONE- INFLATION OR RECESSION?

Until two weeks ago inflation was the Ford Administration's Public Enemy Number One. A tax increase was in the works to take money out of the economy in an attempt to cease the spiral of skyrocketing prices. Now with the unemployment rate increasing at its fastest rate since the Great Depression, Ford's collection of economic advisors have reversed themselves in mid-decision. They've concurred that the deepening recession needs a shot of government spending, tax breaks for the consumer and investment incentive for business to get the economy moving again.

Ford has already signed a bill providing an extension of unemployment benefits and a 6.6 billion federal job program. Proposals currently being batted around include: an across-the-board personal tax cut of 1%, raising of personal exemptions from $750 to $85O, raising the low income allowance from $1300 to $2000 for singles and $2800 for married people, and an increase of the corporate investment tax credit from 7% to 10%.

The fact that industry and government could not forsee the extent of the recession should not be a surprise when you consider the auto industry carne to a virtual standstill without warning this year. Obsessed with expansion and profit, industry leaders do not realize when they have glutted a market to its saturation point. Now they predict the auto industry will recover by next September, but how that will happen when each day more people are losing their cars to loan companies, they do not say.

THE RETURN OF THE GAS LINE

The U.S. and other industrialized nations are experiencing a balance of payment deficit due to the large amounts of money paid to oil producing nations for crude. When a country is shelling out more for imports than it's receiving for export products it's in financial trouble. As of January 1 the Arabs have an excess balance of 60 billion American dollars and projections say they will have at least $200 billion by 1976.

To reduce U.S. oil imports from Arab nations by one million barrels a day, Ford is considering a gasoline tax to discourage its purchase. Instead of slapping on another tax, irritating the consumer, his advisors are suggesting a tax on oil company supplies that would be passed on to the purchaser in a camouflage operation.

A million barrel a day cut would put oil consumption at the level of last year's Arab embargo. Rationing in '75 isn't out of the question, but William Simon explained that the supply will be limited by closing gas stations two days a week. The oil companies would rather let the oil prices rise in the face of the more limited supplies, arguing this would be the most natural way to discourage purchases (and the most profitable).

Watch for a shortage of natural gas in '75. Producers say that the government controlled price is so low that it discourages the search for new gas supplies, causing shortage until 1980.

THE GREAT OIL TAX DEBATE

1975 will be the year Congress and the major oil companies grapple over ending the oil depletion allowance. Since 1928 oil companies have been getting between 22% and 28% of their income completely tax-free. Certain Congressmen are threatening to end the allowance and to tax the "windfall profits" of the oil industry. Al Ullman, successor to Wilbur Mills as Chairman of the Ways and Means Committee, where new tax bills originate, says he will push for tax cuts this year but not for "tax reform," indicating he doesn't relish a drawn out battle with the oil companies.

Texaco has already entered the battle with double page ads in Newsweek and U.S. News & World Report asking, "Should we step up the search for energy? Or slow it down?'" Maurice F. Granville, Chairman of the Board of Texaco claims that those windfall profits are righteously plowed back into searching for more oil reserves so it would be unpatriotic to reduce them in any way. He calls the proposed banishment of the depletion allowance unduly "punitive."

Since the oil companies have a monopoly on energy production it's difficult to dispute their figures. Their policies are in no way under public domain. They even control the resources for the production of nuclear energy. Look for ads that say, "ENERGY FROM URANIUM. How Exxon is putting America's newest fuel to work for you today."

THE MIDEAST-THE FUSE GROWS SHORTER

Israel, deserted by all allies except the U.S., is girding for another war. The influx of refugees has slowed. Israel's minister warns they possess atomic weaponry and settlements in Arab territory taken in the '73 war are increasing.

The Arabs spurt a $2.35 billion war chest for "front-line" nations. Syria is reportedly armed to the teeth and Egypt was expected to replenish their supplies this spring. But the Soviet Union's number one armament salesman, Leonid Brezhnev, recently cancelled his January visit to the Arab world, delaying Egypt's restoration of military might.

While the newspapers report that Israel has no intention of being caught unaware this time around, Kissinger assures us in his Newsweek interview that the Israelis will not strike first. He pledges U.S. support to do whatever is necessary to defend Israel, a statement guaranteed to further incense the Arabs. They will embargo U.S. oil supplies if it resupplies Israel during the next war. Since Israel has arms for only 21 days of fighting, the U.S. has a difficult choice to make. To speculation the U.S. will dump Israel in favor of the oil producers, Kissinger answers, "This would be an act of such extraordinary cynicism that the world would be morally mortgaged if it ever happened. But it won't."

Fighting is already under way in parts of the mideast. Oil rich and U.S.-armed Iran is invading Soviet-supported Iraq. Last week China commented that a major showdown between the U.S. and the Soviet Union is destined. The place? The mideast. Meanwhile, hope for a settlement is spurring a frenzy of secret negotiations. The U.S. is hoping to stall a renewed war, but time is running out.

The year may look dismal as people's lives will be ravaged by unemployment and fuel shortages. The U.S. is probably the most unpopular country in the world and will feel the economic sting as nation after nation first turns to nationalism and then to socialism to throw off the yoke of U.S. multinational corporations. Some of the rich will get richer in '75, the poor will get poorer and the so-called middle class will find itself also in the unemployment lines. A war in the mideast or an oil embargo will heat temperatures to a boil and Arabs will be the media villains of the year.

But history is in the making and we should remember what Fidel Castrol told Dan Rather in his CBS interview. "The United States will eventually be a socialist nation, but it will be the last nation to become one, since its people have been the primary beneficiaries of capitalism."

So get ready to line up, dial down and keep an eye on the events as they are happening.

Sources for this article are: Newsweek Magazine (Dec. 30), U.S. News and World Report (Dec. 23 and 30), Business Week Saturday Review (Fiftieth Anniversary Issue), "What Good is a Recession?" from Dollars and Sense, a monthly bulletin; Thanks to Jesse Hall from the Union of Radical Political Economists.