Date: 1981-05-04
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Chairman. the Latta substitute. like the Presidents budget proposals. goes beyond the worthy goal of trimming waste. and cuts deep into the heart of programs .that are vital to the American people. Programs under the jurisdiction of the Banking Committee take severe cuts under the Latta substitute. totalIng almost $13 billion In budget authority for fiscal year 1982. $15 billion for fiscal year 1983. and $17.7 billion for fiscal year 1984. Although I can indicate the general magnitude of harmn these cuts engender. It Is hard to know exactly what the Latta substitute will mean for the people of this country. The authors of this amendment as of this morning have neglected to tell this committee and the House anything about how they arrived at their numbers. Before we can be expected to even consider the Latta proposal we must demand that their underlying economic assumptions be made clear. For instance. what level of inflation does the latta substitute presuppose. how many unemployed people do they predict will result from their proposal. will the economy experience any real growth In GNP? Without knowing these predictions. and how they were determined. we cannot have the slightest idea whether the proposal will lead us toward full employment and low inflation. or further away from those goals. than we now are. Thus. expecting us to vote for the Latta proposal Is expecting us to buy a pig in a poke. This wc cannot do. The destiny of our country and the economic wellbeing of our people are too important to be left to guesses and fond wishes. More specifically. the Latta substitute does not give us any hint of how the authorizing committees are expected to reach the desired levels of cuts. Authorizing committees are not simply black boxes into which preconceived numbers are thrown. and out of which good public policy is supposed to come. Real pepl are affected by each choice we make here. This House must demand to knowv how the sponsors of the Latta substitute expect us to make those cuts. The Latta substitute represents a significant departure from thle current budget process. The ramifications of this change must be made clear from thle outset. By including programs other than entitlement or quasientitiement programs in its reconciliation measure. the Latta substitute would do serious damage to the role of the authorizing committees as they have developed their programs over time. and as envisioned by the Congress In dcvclopi .ug the 1974 Budget Control and Impoundment Act. As originally conceived. reconciliation was designed to provide a meaps to bring already enacted spending legislation in line with the second concurrent budget resolution. The Latta substitute in its reconciliation measure directs committees to enact legislation that effects. savings for years beyond the current legislative year. The Latta substitute goes far beyond the proper function of reconciliation. Further. thle Latta substitute would prevent committees which have developed an expertise in complex policy areas from being able to exercise the necessary oversight required to respond In a timely manner to changing economic. social. and other conditions. In order to achieve the level of savings required for fiscal 1983 and 1984 under the Latta substitute. programs which the Congress currently authorizes on an annual basis. such as subsidized housing. would need to be authorized on a multiyear basis. Yet. throughout the history of subsidized housing programs. the Congress has determined that It can only effectively respond to the volatile nature of the housing market and to changing local needs If it reauthorizes these programs on an aninual basis. For example. the mix between newvly constructed and existing housing units. which is a critical element of that funding decision for subsidized housing. must be determined on an annual basis if the Congress is to adequately respond to changing rental - vacancy rates and neighborhood conditions within local communities. Decisions concerning the level of funding and the number of units assisted are predicated on the availability and type of financing which the marketplace can provide. It would be impossible to predict this over a multiyear period. given the volatility of interest rates. and the sensitivity of credit availability to the changing economy. Although the Latta substitute sponsors fall to provide committees with any reasonable breakdown of how cuts within committee Jurisdiction should be made. the House Banking Committee has assumed that they would resemble the cuts proposed In some detail by the Senate Budget Committee. and it is on that basis that our responseC is made. I will. for the sake of time. address only the largest cuts from this committee. specifically. those from subsidized housing. the ExportImport Bank. and the community and economic development and energy conservation programs. The reductions in subsidized housing contained in the Latta substitute would have a tremendously adverse Impact on the poor and the elderly. It could result In a 40percent reduction of subsidized housing units funded through fiscal year 1984. That would be as many as 300.000 fewer units. Currently. subsidized housing Is available for fewer than onefifth of the eligible poor and elderly. Waiting lists for public housing in some areas are as long as 8 years. The effect of the Latta substitute would mean hundreds of thousands of the poor and elderly could not be assisted. The Latta substitute wvould also lead to further deterioration of the existing subsidized housing stock. Last year. Congress provided for comprehensive modernization of the existing public housing units. These units represent over $00 billion in Federal investment. Many are sliding Into decay and deteioration.- The Latta substitute. by forcing a reduction in funds Intended by Congress to deal with this problem. would thwart efforts to preserve our existing resources. Falling to address needed Improvements to public housing now will lead to far more costly expenditures In the future. In the areas of community and economic development and energy conservation. the Latta substitute would mean that the community development block grant and urban development action grant programs. as well as other categorical programs. could be reduced by as much as 30 percent over the next 3 years. These are programs which benefit small and large. rural and urban communities. They have enabled our communities to reclaim neighborhoods. restore housing. attract and retain jobs. and reduce the energy costs of the poor and the elderly. The Latta substitute would eliminate completely the $200 million weatherization grant programa program that has been so helpful to the elderly and others suffering from astronomically high energy costs. Under the urban development action grant program alone. an average of 6 private dollars are leveraged for every Federal dollar expended. Reductions of the magnitudes proposed by the Latta substitute In these programs will dramatically slow the progress that has been achieved In reclaiming declining cities and towns. and in enabling growing communities to continuie to expand: Turning now to the substantial cuts in the ExportImport Banks direct lending authority. the Senate Budget Committee recommended that the Banks budget authority be cut by $2.5 billion in fiscal year 1982. by nearly $4 billion In fiscal year 1983. and by $5.3 billion in fiscal year 1984. Frankly. this is about the worst time to cut back on Eximbank programs. This country Is in the midst of negotiations with other countries aimed at cutting back on export subsidies. The most effective clout we can have in pursuing these talks to proper conclusion Is to pursue an aggressive export promotion policy of our own. Anything less amounts to -unilateral disarmament. As we reported to thle Budget Conimittee on March 20. 1981: This reduction could liave a significant detrimental Impact. on U.S. exports. and oil U.S. exporting industries which compete with foreign exporters benefiting from highly subsidized export credit provided by their governments. Without comparable Eximbank assistance. some U.S. exporters. in particular those producing high .technology and large capital goods. will lose export sales. for want of competitive financing Em. ployment In those Industries will suffer. In addition to the immediate direct loss In Jobs we must consider the many small subcontractors which would lose business. Aside from the question of whether these cuts are wise. there is the question of whether it Is appropriate to instruct the Banking Committee to approve legislation to make them effective. Under current law the committee sets an overall ceiling on the amounts of loans. guarantees and insurance that can be outstanding at any one time. The Appropriations Committee. then. sets ceilings on the amount of new commitments that can be made In any 1 year. There is no appropriations of budget. authority and outlays since these figures are a function of the Banks cash flow. loan disbursements. and repayments. If the Latta substitute is adopted the Banking Committee would have to enact. for each of 3 fiscal years. ceilings on newv Eximbank activity and predict what effect those ceilings would have on the Banks actual cash flow..This may be impossible. and If not. it would simply duplicate the work now done annually by the Appropriations Committee. I have picked out the largest cuts from which our country and citizens will suffer under the Senate budget resolution. and presumably under the proposed Latta substitute. It would be easy to continue down the list of unwise cuts. from the national consumer cooperative bank through the solar bank and on to the strategic petroleum reserve. but we do not have the time to *discuss each in detail at this moment. The President. the Congress. and the Nation. however. should know that the House Banking. Finance and Urban Affairs Committee intends to Investigate the ramifications of all budget cuts suggested to it In a timely but thorough manner. The people deserve no less. We ask that the sponsors of the Latta bill make clear to us. and the Nation. the assumptions and predicted effects of their substitute bill. S0 1400.