Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-07-07

ptDin0 ms reasons Jor UetOl
TO THE SENATE OF THE
UNITED STATES;
I am returning herewith,
without my approval, s, 81, IAN
Act to extend and amend laws
relating to the provision and
improvement Of housing and
the renewal Of urban commun-
tiles. and for other purposes.
For many months I have
been looking forward to ap-
proving a sound and conStruc-
tive housing bill. New homes
are now being built at near
record rates. I had hoped to
receive from the Congress leg
islation that would further adj
vance the cause of better hous-
ing for Americans within the
limits of fiscal responsibility.
To my disappointment, the
Congress has instead presented
me with a bill so excessive in
the spending 1t proposes, and
so defective In other respects,
that it would do far more dam
age than good.
First, the bill is extravagent
and much of the spending 1t
authorizes is unnecessary Its
spending authorizations total
a minimum of $2.2 billion-all
of which would be available for
commitment without further
Congressional or Presidential
action. The comparable budget
recommendations Of the Ad-
ministration totaled 1910 mil
lion.
Excessive Provisions
It's authorizations of 5000
million for urban renewal
telescoped into two years-are
excessive.
Even though we have over
100000 previously authorized
public housing units as yet un-
built, the bill would authorize
10000 more.
\ new program of direct
Federal lending is authorized
for housing for elderly persons
when needs in this area can be
adequately met by private
funds invested under the pro-
lection of Federal insurance.
The college housing loan pro-
gram would be continued with
increased authorizations at in
terest rates below the cost OF
money to the Treasury and a
new program for college class
rooms and related academic ia
cilities at the same subsidy in
terest rates would be started.
Although the amounts initially
authorized for the latter pro-
gram would be relatively small,
the eventual demand for these
loans would reach staggering
proportions. To the extent that
these and other programs
merely displace private flnanc-
ing they lead to Federal spend
ing that is entirely unneces-
sary.
Second, the bill is imitation
airy. The spending authorize
tions of S. 81, taken together
with other seriously objection
able provisions, would be infla-
tionary and therefore an OBJ
stacle to constructive progress
toward better housing for
Americans. One of the most
damaging effects of imitation
is that it dries up the sources
of long-term credit. There is
perhaps no industry in the
Nation more heavily dependent
for its operations on long term
funds borrowed at reasonable
rates of interest than the
housing industry. We have
made good progress in the
fight against imitation but we
cannot win that fight if we
add one spending program to
another, without thought OF
how they are going to be paid
for, and invite deficits in times
Of general prosperity. No one
can gain from a fiscal policy
of this inflationary type-least
Of all, the housing industry
Would Hurt Credit
Third, the bill would tend tt
substitute Federal spending fol
private investment. Many pro-
visions Of the bill, instead Of
stimulating private investment
would drive private credit from
areas where it is urgently
needed.
The requirement that thu
Federal National Mortgage AS
ISOLATION buy mortgages at pal
under its special assistance
program. regardless of tn
price that these mortgage
command in the open market
would have this effect.
So also would the provision
of the bill limiting the fees tina
FNMA may charge when pur
chasing mortgages.
The provisions authoriZinI
college housing and colleg
classroom loans at subsidies
interest rates, additional Fed
eral purchases of cooperative
housing mortgages and a nev
program of short-term loans b,
the Federal Government on tn
security Of mortgages woult
similarly substitute public TO
private financing.
Fourth, the bill places need
less limitations on the FIJI
program and contains provi
sions that would impair FHA'
soundness Instead of removin
the wholly unnecessary limit o.
the amount of the mortgage in
surance authority of the Fed
eral Housing Administration
the bill would continue thes