The Icy Grip Tightens

Never before in this century had the nation been so much at the mercy of its weather. Man, animal and machine in many parts of the country were immobilized under a heavy blanket of snow and ice. A dire shortage of natural gas --long predicted and long ignored --forced the closing of hundreds of schools and businesses and drove tens of thousands of people out of their unheated homes.

Economists estimate that millions have been laid off--in some cases only briefly--because of plant shutdowns. Just on the verge of recovering from its sustained pause, the economy has also been buffeted. The growth rate for the first quarter of 1977 has been scaled down half a percentage point, to 5%, because of the bad weather. President Carter's economic package of $31.2 billion, to be spread out over 20 months, has been jeopardized: a large chunk of the tax rebates will be eaten up by an extra $7 billion to $8 billion in fuel bills. On top of this, food costs are soaring as the cold blights Florida fruits and vegetables and farmers have to buy additional livestock feed. Some economists figure that the inflation rate for the first quarter could reach 9%, compared with 4.2% in the final quarter of 1976.

If there is too much winter in some sections of the country, there is, strangely enough, too little elsewhere. With far less snowfall than usual, the West is suffering from a prolonged drought. A shortage of water is imperiling winter wheat and other crops; fears are growing that hydroelectric power will decrease in the spring. Water is already being rationed in parts of California (see following story). In Oregon, forest fires have broken out. "Some say the world will end in fire," wrote Robert Frost, "some say in ice." Last week Americans had their choice of disasters. If that is not enough, they soon may undergo trial by water. When the massive snowdrifts melt in the warming weather, torrential floods are expected to sweep many parts of the country.

As a Southerner, Jimmy Carter has experienced mostly mild winters. Moving north to the White House, he has been confronted, ironically enough, with fierce cold as his first crisis. He has responded with the activism he pledged.

"If there hadn't been an energy crisis," says an aide, "we probably would have had to create one." That seems a high price to pay for a demonstration of presidential leadership, but there was no disputing the fact that Carter was moving fast and forcefully. He dramatized the crisis--and the presidential role in it --by hastily convening a Cabinet meeting, then taking a quick trip to frozen Pittsburgh. He declared eleven states disaster areas because of snow or drought, thus making them eligible for some form of federal assistance.

Cooperating with the new President, Congress quickly passed Carter's plan to ease the natural gas crisis, and he signed it into law--his first. The measure gives the Federal Government the authority to transfer natural gas supplies from areas with a surplus to those where there is a shortage. Just twelve hours after the ink was dry on the bill, the first gas started flowing from the Pacific Northwest through a series of connections to Texas and then on to the energy-starved Northeast.

Sitting by a hearth in the White House library, the President delivered his first fireside chat (see story, page 18), calling upon both consumers and producers to join in an effort to deal with the energy crisis. "We must face the fact that the energy shortage is permanent," he said. "There is no way we can solve it quickly. But if we all cooperate and make modest sacrifices, if we learn to live thriftily and remember the importance of helping our neighbors, then we can find ways to adjust and to make our society more efficient and our own lives more enjoyable and productive."

New Aid. The President enlisted his Cabinet as working partners in the crisis. Straw-bossing the operation was Energy Chief James Schlesinger, who helped draft the natural gas bill and cut red tape to get gas supplies moving. When Carter left his Cabinet meeting, he put Schlesinger in charge of a "more thorough discussion." Says a White House aide: "Schlesinger has been a sort of battlefield commander. He's been in the middle of the fray, not in a tower in the White House." An early riser, Schlesinger has been calling his aides at 7a.m. "Jim has imparted a sense of urgency," says an aide who does not mind being awakened.

Other Cabinet officers have taken the initiative that Carter urged on them. To shift fuel faster to the Eastern part of the country, Treasury Secretary Michael Blumenthal waived the law requiring domestic ships to carry cargo between U.S. ports. Interior Secretary Cecil Andrus urged the Governors of twelve states battered by the winter to ask his department for help. Housing and Urban Development announced an emergency policy of aid to low-income-housing residents who are threatened with eviction or loss of utilities.

Carter's most pressing problem is what to do about the economy. Figures released last week showed a January unemployment rate of 7.3%, down from 7.9% in December. But the rates do not take into account the layoffs during the last ten-day period of the month, when the freeze was on. Economists figure that current real unemployment might be 9%, matching the highest point reached during the recession.

A task force composed of experts from various federal departments is now monitoring the day-by-day impact of the weather on the economy. They are trying to determine whether to add to the rebates in Carter's stimulus plan that now total $11.4 billion. Commerce Secretary Juanita Kreps thinks that an increase is inevitable. "What the weather tells you," she says, "is that you really have to have a bigger package." The additional amount could range from $2 billion to $5 billion.

Not everyone agrees that the package should be enlarged. Last week Federal Reserve Chairman Arthur Burns broke his silence to tell the House Banking Committee he thinks that even the present Carter stimulus is not needed. Said he: "As far as I can judge, the economy is improving on its own." Since the U.S. Treasury has to borrow the money to pay the rebates, Burns contended, the plan is not an "efficient way to stimulate the economy." Increased borrowing would put pressure on the Federal Reserve to increase the money supply and thus encourage inflation.

Removing Ceilings. The Carter program has been getting some flak from another quarter: opposition appears to be growing among both parties in Congress. Last week the House Budget Committee voted to increase the $1.7 billion for jobs programs in fiscal 1977 to $3.5 billion, and under intense debate were Carter's proposed business tax changes, which offer an option of a 12% investment tax credit or a credit equal to 4% of Social Security taxes. Al Ullman, chairman of the House Ways and Means Committee, prefers a tax credit equal to 25% of the wages of new employees, up to $4,200 per worker. Presumably this would induce businesses to hire more people, but it would not encourage capital spending, which continues to lag. "We're all in favor of getting unemployment down," says Beryl Spnnkel, executive vice president of Harris Trust & Savings Bank in Chicago and a member of the TIME Board of Economists. "But the question is: Are we going to get it down in the long run by encouraging investment in new plant and equipment or by gimmicks?"

Within a short time, the whole question of stimulus could turn out to be less crucial. Even if the unusual cold spell continues through February, as forecast, life should be getting back to normal in the spring. Plants will gradually reopen, people will return to work, and production in the last three quarters might go a long way toward making up for losses in the first. "Let's put it this way," says a top aide of the Council of Economic Advisers, "without the cold, we would have been in a lot better shape early in the year, but it shouldn't damage the economy over the long haul."

The energy problem will take longer to solve. The nation is at present burning twice as much natural gas as it is finding. Reserves have dwindled from 293 trillion cu. ft. in 1967 to 228 trillion in 1975. The U.S. still has ample gas, but it now has to be drilled at greater depth at higher cost. There will be no incentive to develop these supplies, the industry argues, until price controls are lifted from gas that is piped interstate; the price is presently held at $1.44 per 1,000 cu. ft. Carter's gas bill takes a small step toward decontrol by allowing the gas that is being reallocated to the East to rise to a price of $2.25 per 1,000 cu. ft., an increase that will be in effect until July 31. Whether Carter will move toward further deregulation after that is uncertain. Such a move would be opposed by liberal Democrats on the Hill, who argue that removing the ceilings increases the prices paid by consumers.

The President's main emphasis is on stricter conservation of energy. In his fireside chat, he pointed out that the amount of energy now being wasted is greater than the total amount that is imported (in 1977 the U.S. is expected to import $41 billion more in petroleum products than it exports). Carter also called for more development of coal in "an environmentally sound way" and further research on solar energy. On atomic energy, he was cautious. He asked for "strict safeguards on necessary atomic energy production." Later in February, he pledged, he will ask Congress for help in combining the some 50 federal agencies involved in energy. "Utility companies," he concluded, "must promote conservation and not consumption. Oil and natural gas companies must be honest with all of us about their reserves and profits. We will find out the difference between real shortages and artificial ones. We will ask private companies to sacrifice, just as private citizens must do."

Chastened Mood. Evidence is mounting that both citizens and companies are indeed responding to the crisis--in some cases perhaps too much so. No one is ahead of New Jersey Governor Brendan Byrne in enforcing Churchillian measures in a state that is heavily dependent on natural gas for residential as well as industrial heating. Byrne invoked World War II emergency powers allowing him to order home thermostats to be set at no more than 65DEG. Businesses were given the option of operating at 65DEG for 40 hours a week or for unlimited hours at 50DEG. Byrne promised to send police to check up and arrest malefactors, and cops patrolled with bullhorns, bellowing out the Governor's stern message.

To date only one arrest has been made: a restaurant owner who refused to limit his hours or turn down his thermostat. Cops cannot barge into any homes without a warrant, but Byrne's plan seems to be working. Says Sergeant Charles Clayton of the Bridgeton police: "These people lead real easy."

The ways of coping are as varied as the crisis. With so many cars marooned in the snow, like beasts stricken in their tracks, people ply the icy city streets in snowmobiles. Railroad engineers thaw out frozen whistles with flares and blowtorches. A Burger King in Camden County, N.J., is the envy of the competition. It serves customers twelve hours every day at 70DEG because it is heated by solar power. In Pittsburgh, a discotheque called Reflections has a sign on the door: THIS ESTABLISHMENT is WARMED BY BODY HEAT.

Every crisis produces its heroes. In Fayette County, Pa., County Commissioner Fred Lebder has become a one-man fuel expediter for the needy. Working out of an old school building, he has established a hot line to distant families who are isolated on impassable rural roads or on unreachable hilltops. He scrounges oil and kerosene from places as distant as Kansas City, then commandeers county vehicles and tank trucks to carry the fuel to destitute homes. Occasionally, he pays for the fuel by personal check.

Some utility companies, which are often portrayed as conspirators deliberately withholding fuel, have done their best to relieve the crisis. The Rochester (N.Y.) Gas & Electric Co., for example, promised to reduce gas bills by $10 for each of its 153,600 customers. Explained Chairman Francis Drake: "We've had tremendous cooperation from our customers, and they are entitled to some consideration."

When winter ends, the temporary energy crisis will abate. But the savage weather and the current shortage have now demonstrated that business and consumption as usual cannot continue. Musing on events, Energy Chief Schlesinger anticipated a new, chastened mood in America. "We'll have to make adjustments," he told TIME Correspondent Don Sider. "The American people need to be assured of two things: why they are being challenged, and that all parties are making sacrifices equitably. If they have confidence on both grounds, there's no doubt they will respond."

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