Date: 1981-02-17
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. in a few short weeks we have moved from the most extravagant Presidential Inaugural to the most extravagant budgct cuts In the history of the Nation. Numbers have filled the Washington air like so much confetti. A billion here. a billion thereevery edition of the newspapers brings news of bigger and better cuts. At times. we had to question whether we were running a giant butcher shop or a government. Vice President BUSHin his Sunday night speech In New Yorkidentifies the administrations budgetcutting weapon as a "scalpel" and "not the butchers cleaver." All I can say. is thank God. Mr. BUSH decided to become a politician and not a surgeon. The numbersand the competition for bigger and bigger headlineshave submerged the programs themselves. My suspicion Is that we are at the mercy of some giant computer in the basement at the Office of Management and Budget. pouring forth endless printouts designed to reach some preconceived notion of what looks good as a multibilliondollar prime cut. Budgets and economic reports have been great public relations and political tools of PresidentsDemocrats and Republicans alike. President .Reagan and his administration certainly have the right to play the same game. The Congress. the public. and the press. however. have the distinct responsibilIty to question the quality and rationality of the cuts. the glories of IBM wizardry notwithstanding. Mr. Speaker. I have said many times since the November election that It Is mny intention to cooperate with the new administration and to support its initiatives when possible. Democrats and Republicans share concern over the state of the economy. and I applaud any effort to cut waste. unworkable programs. and extravagance from the Federal budget. I have been at the foref ront of iiiany of these efforts In past Congresses and I would add. parenthetically. that I have found Republican bureaucrats as difficult as Democratic bureaucrats when their programs are under fire. Nonetheless. Mr. Speaker. we must face the fact that we do have a Federal Government. that we do have a highly complex. interdependent economy. and that we do have the poor. the disadvantaged. and those struggling up from the lower rungs to the great American dream. Let not the wild swings of the Carry Nations of the budget process suggest that suddenlyEurekawe can dismantle the Federal Government and all programs that make It work for not only the banks and big business. but for the less fortunate. It Is Important that the grab for budgetcutting headlines not lead to unthinking and unworkable cuts which will render programs Impossible to manage. create greater Inefficiency In the Government bureaucracy. Lets make certain that the necessary cuts are meaningful and that they are aimed at unworkable and wasteful areas and that they not rip the heart out of the programs that do work and that do aid people and that do Increase productivity. Although many of the cuts being mentioned come from programs authorized by this committee. It is significant that the Democratic leadership of the Banking. Finance and Urban Affairs Committee has not been consulted or informed in any manner by the admidnistration. We have been forced to depend on leaks from something called the black book and the news stories developed by the members of the Washington press corps. I think many members of this committeeRepublicans and Democrats alikewho worked on these programs would be interested in hearing. not from the OMB. but from the people who will actually operate the programsthose who will be required to reorder the priorities In their agencies. Only then. will the jumble of numbers pouring forth from theadministration make sense: only then will we know how this administration plans to deliver necessary services. To accomplish this. Mr. Speaker. I have asked my subcommittee chairmen on the Banking Committee to call the various Cabinet and agency heads before their subcommittees for a firsthand analysis on just how these programs will continue to operate after the budget ax has landed. I think this Is very Important if we are to properly Judge the budget cuts and if we are to. plan committee agendas.* I trust and hope. Mr. Speaker. that these program peoplethe bureaucrats on the linehave been kept fully Informed and have helped develop the details of the proposed cuts and that they will be able to give us this early reading on the workability of the new budget. Judging from the numbers leaked for the headlines. we can at this point assume that the Reagan budget will be heavily tilted against programs designed to lift the poor. to reach our Inner cities. to feed. house. and clothe those least able to do so for themselves. Food stamps are an example. Here the black book tells us the Reagan administration has decided to make major cuts over the next 4 years. This has a substantial Impact on humans. but what real Impact does It have on a multibilliondollar budget? I trust the administration Is aware that the last Congress did Institute reforms in this program and I hope the results of these changes will be looked at before wholesale cuts are attempted. Such cuts gain brief headlines and months of substandard existence for Individuals. The saddest thing Is that these cutslike other slasheshave little real impact on the fight against Inflation. Arguments against massive slashes are made powerfully by Nobel Prizewinning Dr. Kenneth Arrow. who notes thatIt is not so much a question of a high level (of government spending) or a low level. but a stable level. We shouldnt have a big increase In spending one year and deep cuts the next. And It is not only the size of spendIng by the Government that economists consider relatively unimportant. but the size of d~ficits. As Paul Samuelson has notedWhen it comes to the U.S. budget. the Issue of whether the budget Is one pfennig out of balance or two pfennigs In balance Is an ideological and a symbolic one. It has no economic significance. The difference betwecen small surplus or small deficilt In a $2.5 trillion economy Is symbolic as an Indication of societys ... humaneness to Individuals. Mr. Speaker. we should make no mistake about the relative size of the deficit we are talking of here. The Federal debt. as a percent of total GNP has declined steadily for the last 20 years. from nearly 60 percent of GNP In 1960 to Just over 30 percent of GNP In 1980. This is why wisdom dictates that we approach the budget hysteria with caution. Let us cut where it makes commonsense. linproves efficiency. and eliminates wvaste. But. let us not enter the budgetslashing exercise on the false belief that suddenly we have found the magic formula. the panacea. for our economic troubles. Faced with the economic realities. I must question the administrations apparent plan to cut such programs as the unemployment Insurance extended benefits. medicaid. and disability Insurance for Injured workers under the social security system. If we are to believe the black book leaks. the administration wishes to couple unemployment benefit reductions with reductions In medical andi disability benefits that have provided a modicum of peace of mind to those injured on the Job. or those who fall victim to prolonged illnesses. These tire benefits that the Nations workers have paid for through their taxes. as they have paid for the unemployment extended benefits. I question these cuts as a matter of equity or good social policy and. most of ali. I question Just how much this means to the grand economic plan. In the field of energy. the Stbckman black book would cut funding. or terminate programs designed to promote alternative energy source development. and to aid lowincome persons to. weatherize their homes. Three energy source programs are targeted in Sto.~kmans 1plans: Syn~uels. alcohol/biomass and hydropower. While the argument is made that these cuts would save $498 million this year. the true costs of these slashes far outweigh the savings. Alcohol/biomass and hydropower offer renewable energy resources which this country cannot afford to overlook. Synfuels. on the other hand. offer not oniy massive new fuel sources. but are potentially crucial to our Nations defense as a domestic source for petroleum for our Armed Forces. Topping off this energy carnage Is the end of subsidized loans for lowIncome families to weatherize their homes. With the administration removing price controls on heating oil. and planning to remove them from natural gas it seems Incredible that they would deny the poor one possible source of relief from skyrocketing energy prices. and our country will not save $1 in outlays this year. and $287 million in 1982. Again. If we are to believe all the background leaks. the administration justifies Its slashing of energy conservation programs with an almost total reliance on conservation by price. Decontrol. the theory goes. will raise prices to a point where conservation Is certain to follow. The administration Is right on at least half of that equation. Decontrol will raise prices. My constituents in Rhode Island can testify to that. But. what. I would like to ask the authors of the black book. happens to the low- and moderateincome family. the elderly on social security when conservation Is solely on the basis of price? Perhaps we could string banners across the main streets of our communities: "Conserve or Freeze to Death." A much more effectiveand a more humaneway would be to continue. to enhance and streamline our conservation efforts. I am not satisfied with the disjointed manner in which our energy policies have been put together and I would like to see a more effective and coordinated effort put together. But. that is far short of a "payorelse" edict approach to conservation. In the area of housing the administration has targeted four programs which are aimed at the redevelopment of lowincome neighborhoodscuts to-. taling $270 million according to the black book. These programs. which the administration plans to terminate. cover aid to Individuals in rehabilitating their houses and to communities in Improving their private and public lands which can rescue neighborhoods from the longterm neglect that has led to urban wastelands like the South Bronx." It was candidate Reagan who told a group of South Bronx residents this past fall. "I cant do a damn thing for you If I dont get elected." And it was candidate Reagan who told the National Urban League that same day not to consider him "a caricature conservative" who would be "antipoor. antiblack and antidisadvantaged." The neighborhood selfhelp development program provides grants and technical assistance to neighborhood agencies to preserve and revitalize activities In lowincome areas. This program costs $3.2 million a year. yet allows local communities to band together to work together to save their neighborhoods. There is some further help coming to such agencies from the planning assistance grants. at a cost to the Government of $1.5 million. Without this assistance. redevelopment programs would have a much harder time availing themselves of professional assistance and advice In making the best use of the money and facilities at their disposal In redevelopment programs * 0.another case where budget cuts can be inefficient. adding rather than reducing costs. Finally. there are the rehabilitation loan fund and section 108 loan guarantees. The first program Is aimed at helping individuals in lowincome areas convert their own homes. while the second program is aimed at helping community organizatons acquire. and rehabilitate publicly owned land for the use of their citizens. I would strongly suggest that our new administration take a hard looktalk to the program peoplebefore using these cuts as part of their budget window dressing. Even more importantly. I hope the wiser heads In the administration will insist on a closer look at the black books death warrant for the urban development action grant program. UDAG is a muchbeleagured program. and has been singled out for criticism by the new administration. yet accordIng to reports. in its 3 years. UDAG has stimulated $11.5 billion of private investment. which has led to 463.218 new Jobs. and added hundreds of millions of dollars to city. State. and Federal revenueson an expenditure of $1.9 billion. Should be abandon programs which generate $6 of private Investment for every dollar spent? The savings in unemployment and aid to dependent children alone as a result of the UDAG program are enormous. not to mention the lowering of tension and the raising of hopes In our inner cities. While UDAG concentrates on Innercity Investments that are the key to lowering our disgracefully high unemployment rates In those areas. the ExportImport Bank helps us save Jobs through the country. and in all economic sectors. Since Its creation in the midthirties. the Bank has made a substantial commitment to the export of U.S.-produced goods and services and In the process has helped to create and maintain thousands of jobs. Specifically. since the creation of the ExportImport Bank. more than $100 billion in loan guarantees and direct loan authority have helped to create or sustain millions of jobs. The ExportImport Bank. In addition. is one of the few Government agencies which actually makes a profit. having returned over $1 billion to the Treasury. Mr. Speaker. I think the efforts of the ExportImport Bank can be improved and I would like to see this administration insist on more help for the smaller companies that would like to enter the export markets. I stand ready to support a sane approach to make this Bank work -for a broader sector of our economy. At the same time. our exports are essential. I am not willing to take a great slash at the ExportImport Bank for some misguided public relations purpose while we continue to struggle tokeep our balance of payments on an even keel. We must face the fact that other nations subsidize. many of their exports and I do not want some overnight computer run to suddenly create more problems with our efforts to compete In world markets.. Some of the black books black magic seems designed to satisfy philosophical hangups of a few with little or no concern about economic Impact. For example. cooperativesselfhelp organizations formed by local peopleapparently have a real enemy somewhere among the black book authors. The little National Consumer Cooperative Bank is to be cut. we hearcut to the bone and eliminated with no loan authority left. This comes at a time wvhen the Bankwvhich began Its life in this committeeis about to enter the market for Its funds. It simply needs the additional capital already authorized by Congress. but the anticoop bias of the administration apparently will order an immediate execution. This is wasteful. wiping out gains already made by the Bank. t saves only a miniscule amount in the current budget and such an immediate closing of the Bankif successfulwould in the long run actually prevent the bank from recovering the capital it has already invested. The capital in the Bank Is repayable by the borrowers. and it Is being repaid. But the Reagan administration. if the rumors are correct. would cut these repayments off. Strange economics in an administration ostensibly dedicated to economy. The CoOp Bank. of course. Is a selfhelp program base d on the bedrock of fully repayable loans. It is not welfare. It Is not handouts. It Is not Government bureaucracy. Quite the opposite. It is local control. local initiative. local people. Of course. this program is modeled after the highly successful Farm Credit System whose entities. included the Bank for Cooperatives. have become selfsufficient operations that have brought great benefits to rural and farm areas. If the Reagan administration finds this model unacceptable for consumer cooperatives. what will be its attitude toward the Farm Credit System Itself?. We do know that rural cooperatives which provide light and power for farms and small communitiesand help lower the cost of.-food productionare under attack in the black book. And rumors are coming forth that the credit cooperativescredit unionswill have their newly created Central Liquidity Fund hamstrung In the Reagan proposals. So. for those people who believe in selfhelp. In starting their own local organizations and maintaining control through a cooperative structurethe Reagan administration apparently has you in their sights. The budget cuts. Mr. Speaker. are. for the most part. slashes aimed at many. whofor various reasonsneed a temporary helping hand. government of people: not a government of computers. Cuts of this magnitude would be questionaple in any event. but the seriousness is magnified by the administrations emerging new tax policy which appears certain to skew the benefits for business and upper Income taxpayers. These tax cuts which are weighted In favor of the rich and the budget cuts aimed at the poor seem certain to make some fundamental changes In the distribution of incomea redistribution of the hopes and desires of millions of Americans. Mr. Speaker. once again I sincerely hope that this administrationwhen the newness of the computer runs fadeswill approach both buidget and tax cuts with a calmer view. I think President Reagan and his adnilnistration will find many of us willing to cooperate if we can be assured that there are Indeed scalpels. and not meat axes. In the medicine closet. And most importantly. If we can be assured that there are qualified surgeons on the Job that truly want the patient to live.*