Date: 1981-10-06
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the housing industry has long been regarded as a bellwether of this Nations general economic health. A major downturn In housing Strains the entire ezonomny. The housing industry employs a wide range of skilled and unskilled labor. and many small businessmen throughout the country earn their livelihood through the Industry. Housing investments tend to have a multiplier effect as people purchase appliances and f urnture. and make improvementes In their property. Two years ago. on October 8. 1979. the Federal Reserve Board began a new policy of tight money. The Fed said that It would permidt a relatively modest and constant growth In the money supply. and let interest rates go wherever demand for money would push them. At that time. I warned against a period of sustained high Interest rates. and of the waste of human potential and economic capacity that they bring. We are now seeing exactly how bitter the medicine has become. as we reexamine the Feds policy of tightening credit and raising interest rates. and the destruction it has fostered. We are now In our 34th month of decline In housing starts and it appears clear that 1981 may be the worst year for housing since 1948when 1.023.000 housing units were started. Housing starts in August fell to a seasonally adjusted annual rate of 937.000 units. This Is Only the third time since World War 11 that housing starts have fallen so drastically. Moreover. the August rate was supported by federally subsidized section 8 housing starts. As the budget cuts begin. federally subsidized activity will also plunge In the upcoming months. The Feds action to tighten credit has reduced both the demand for and the supply of mortgage money. It Is estimated that unemployment In the construction industry alone could climb for 17 to 21 Percent of the construction workforce. or more than amillion workers. The Chairman Of the Federal Home Loan Bank Board. Richard Pratt. has stated that 80 Pircent of the countrys savings and loan associations are experiencing operating losses undqp present economic conditions. Real Interest rates are at their highest levels since World War II. The Federal Reserve Board appears unwilling to back away. even a few steps. fromits policy of tight money. In fact. this year monetAry expansion targets were lowered. and are being lowered again for 1982. Since the housing Industry Is among the largest industries in the country. a severe collapse would shock the economy. The housing industry cannot be left alone. without aid. to bear the brunt of what the Fed contends are our only real antiinflationary Policies. Before the crisis worsens. the administration must insure that adequate credit is made available to the industry. This means further reexamination of the Federal Reserve Boards tight money policy. it means close scrutiny of adninstration Proposals to cut Federal loan guarantee authority for housing. Americans continue to need new and affordable housing. and the Congress must work to see that this need Is met. Mr. President. 1. too. have an order which was entered on yesterday for 15 minutes. I ask unanimous consent that I may combine the two time periods under my control and that I may utilize my entire time later this morning.