Evening star. [volume] (Washington, D.C.) 1854-1972, 1957-02-26
Finding Of GAO
Study Reported
To House Unit
BY GEORGE BEvERIDGE


eral buildings can be constructed
far cheaper through direct ap-
preparations from Congress than
through the lease-purchase pro-
gram were produced today by the
General Accounting Office.
The studies, submitted to a
House Public Works subcommit-
tee, indicated that the compare
tive costs. under various condi-
tons, could range far in excess
OF SO per cent higher in the case
of lease-purchase.
Subcommittee Chairman Jones.
Democrat of Alabama, requested
the studies at the start of hear
lngs on the failure of the ambi-
tious lease-purchase program.
Some members. however, con-
tended that the GAO figure in
dictated lease-purchase was more
costly than it need be.
Lid Put on Purchases
Administration leaders two
weeks ago clamped a lid on any
further lease-purchase construc-
ton. They cited as one factor
a desire not to aggravate infia-
tionary pressures in the con-
Struction industry.
Mr. Jones has introduced a
bill to repeal lease-purchase
everywhere except in Washing
ton. 1t would substitute a SIS
billion program to put up public
buildings through direct APP
preparation in the rest of the
country.
Mr. Jones feels Washington
is the one place where lease
purchase might work, because
of the investment attraction of
eight projects totalling 5000 mil
lion that are planned here.
Today's hearing did not touch
the failure of lease-purchase to
work, but centered entirely on
the cost comparisons.
Based on lac Projects
The GAO studies all were
based on LAG projects Congress
already has approved TO go
ahead under lease-purchase.
In the first study, GAO said
the lac projects would cost Sl.3
billion under lease-purchase and
only STA million under direct
appropriations from Congress.
This study assumed that the
Federal Government could pro-
duce all the appropriations
needed out of direct revenues
and would not have to borrow.
1t also assumed the lease
purchase contracts would give
private builders a per cent
return on their investments.
The second study assumed
that the Government would have
to borrow money at an interest
rate of 3 per cent to finance
either the total cost of build
ines through direct appropria-
ton or to make its annual pay
ments under lease-purchase.
Under these conditions. GAO
said the lac buildings would
cost ST billion under direct APP
preparation and SIG billion un-
der lease purchase.
Points to Tax Payments
Representative Scudder. Re-
publican of California. COM
planned that $273 million of all
the lease-purchase costs cited
for the l46 projects represent
real estate tax payments that
would be made to cities and
counties. No such tax payments
are made when Congress appro-
PIRATES money directly for the
total cost of new Government
buildings.
Mi Scudder said the cost
difference, therefore, would be
reduced if lease-purchase build
ings provided no such tax pay
ments. He suggested the sub
committee consider amending
lease-purchase legislation to &C
complish this.
Several members also chal-
lenged the value of GAO studies
which assumed that the Govern
ment could appropriate money
for a big building program with
out borrowing.
( Representative McGregor, Re-
publican of Ohio. noted that one
reason for passing lease-purchase
legislation was Congress hope of
holding down further debt.