Date: 1981-03-26
Speaker: WILLIAM J. COYNE (democrat)
Chamber: H

Mr. Speaker. the administration promises. in essence. that tax reductions of 30 percent spread over a 3year period. combined with Federal spending cuts leading to a balanced budget in 1985. will so stimulate the private economy that inflation will be curbed. industrial strength restored. and joblessness reduced. providing. in the Presidents words. "A brighter future for all of our citizens." But will this occur? Even the conservative Business Week magazine feared the tax cuts would "touch off an inflationary explosion." Yet something must be done. Chronic inflation hovers at about 13 percent a year. Unemployment by latest count was running at 8 percent with 8 million Americans out of work. U.S. manufacturers are losing markets abroad and facing tough competition with foreign products at home. The productivity growth rate in the past decade fell to half of what it had been for the previous 20 years. These economic woes are serious. Not only the President and the Congress. but also the local governments. labor. and management must pull together to reverse these disturbing statisticsand the human distress behind the statistics. If the Pittsburgh area I represent is typical. the administrations strategy is beginning to confront the American people and the Congresseven those of us who support the goal of reduced Federal spendingwith agonizing decisions. As specific details of the reductions strike home. visiting delegations complain of false economies. heavy burdens thrown on already troubled local governments. and cuts that impose disproportionate shares of the sacrifice on "our program." Take the Presidents proposal to require tenants of subsidized housing to pay increased rents. going up to 30 percent of their income by 1985. From serving on Pittsburghs Public Housing Authority Board. I know that tenants are hard pressed to meet current rents at 25 percent of their Income. Moreover. as the administration seeks to cut back subsidized housing by $4.6 billion in 1981 and another $8.7 billion in 1982. I cannot help but visualize the long waiting lists of needy families hoping for assisted housing in our community. Corporations doing business overseas. meanwhile. are alarmed. over proposed reduction in ExportImport Bank funding: Direct loans would be slased $800 million in 1981. $600 million in 1982. loan guarantees would be cut $1 billion this year. $1.2 billion the next. The President Jutifles this by asserting that "restoration of general economic health in the U.S. economy will be a more powerfil stimulant to export expansion than costly subsidized loans." Foreign firms. however. typically get big subsidies from their governments. Corporate and union leaders fear that reduced Eximbank loans. which help keep U.S. firms on an equal footing. will hurt our trade balance and put Americans out of work. During Eximbank hearings before the International Trade. Investment and Monetary Policy Subcommittee on which I serve. we heard testimony that "each billion dollars in exports creates 40.000 U.S. jobs." Gordon C. Hurlbert. president of the Power Systems Co. of Westinghouse. said large facilities with thousands of employees. including an east Pittsburgh plant. will be seriously threatened if Eximbank contraction causes the loss of Far East sales. And if large American companies lose their competitive edge in foreign trade the ripple effect will spread to the many small suppliers and subcontractors engaged by these international corporations. During 1980. Allegheny County controller. Frank J. Lucchino reports. Federal assistance to the county amounted to approximately $177 million. The city of Pittsburgh. according to deputy city controller. Raymond E. Johnson. Jr.. received $75 million in Federal assistance. Without being narrowly parochial. I believe most of my constituents expect me to examine the proposed reduction of these funds to make sure they do not do more harm than good. Prime Minister Margaret Thatcher. several years ago. using similar rhetoric about restoring the enterprise system. sharply reduced funding for British social programs as the Reagan administration now proposed to do. The soaring unemployment rates and high bankruptcies that followed. caution us against accepting promised results on faith. I am not convinced. for example. that it makes sense to eliminate CETAComprehensive Employment Training Actjobs. Throwing lowskilled employees back on welfare would not even be cost effective. and it seems to contradict the workfare. not welfare theme of Mr. Reagan. If some CETA programs are poorly managed. and if some fail to train participants so they can successfully enter the private job market when their public Jobs end. I would favor the most rigorous efforts to correct these weaknesses. But why throw out a program that reduces the human and economic waste of unemployment? The proposed elimination of $1 billion in Federal assistance for the operating cost of local mass transit systems would translate into a $16 millionayear loss to the Pittsburgh Port Authority. County officials tell me that. if this Federal funding is withdrawn. they have three choicesto raise bus fares from 75 cents to an estimated $1.05. to seek further subsidies from local taxpayers. or to shrink services. The latter. of course. would hit hardest those who depend on public transit to get to work. It would also.leave the community without an alterantive to reliance on autos if the Nation has to experience long drawnout gasoline crises. Managers of our local school lunch programs say they would accept reductions more in line with the average Reagan cuts of about 7 percent. but they object to reductions of over 40 percent. Allegheny County schools would lose about $6.6 million a year. The administration says it only wants to halt subsidized lunches to people who can afford them. But because of the way the aid is leveraged. some fear the feeding programs will be wiped out entirely in many schools. Pittsburgh has long been a leader in urban revitalization. with a big emphasis on selfhelp. Our urban redevelopment authority is continuing this tradition with UDAGurban development action grants. Local officials say UDAG programs are stimulating over $100 million in private investment in response to $23 million in Federal aid. with a spinoff of 2.460 new jobs and nearly $2 million a year in new local tax revenues. Before my Committee on Banking. Finance and Urban Affairs. in response to concern over the future of UDAG. David A. Stockman. Director of the Office of Management and Budget. said: Our plan is to continue the UDAG function * . But our question is how can we incorporate that function into a basic community development program and not have to maintain the existing program structure. For 1981 we are proposing no change. For 1982 we are proposing to make UDAGtype obligations through a new legislative proposal that we will be sending to your committee shortly. This supposed clarification still leaves me puzzled about what is contemplated for UDAG. Constituents who suggest that the Democrats are holding back on approval of the Republican blueprint need to understand that many parts of that blueprint remain sketchy or nonexistent. Despite this. the House Democratic leadership is moving ahead on a very tight schedule to complete action on a new budget by midyear. Pennsylvania taxpayers have been getting back only 92 cents for every dollar its taxpayers send to Washingtoncompared with $1.07 by taxpayers in the West and $1.12 by those in the South. One of my tasks in reviewing the budget is to seek to correct this imbalance which amounts to subsidizing the drift of people. jobs. and industries from our area to the Sunbelt. It wastes energy and contributes to the instability of our great cities. The barge operators inform me of another difficulty with the administrations proposals. Increased waterway user taxes and a program to recover the costs of the U.S. Coast Guard are of particular interest to Pittsburgh which handles more barge tonnage than any other inland port in the Nation. At a time of energy problems. the fuel efficiency of barges should be encouraged. not discouraged. According to the American Waterways Operators. a gallon of fuel can move a ton of freight 59 miles by truck. 202 miles by rail. but 514 miles by barge. Since coal and oil are major barge cargoes. the energy implications are multiplied. The question in my mind is not whether barge traffic should continue to pay for maintenance of the waterways. It should. But we need to make certain that this mode of transportation is being treated equitably with rail. highway. and air transportation. I do not hesitate to give the President high marks on several counts. He correctly targets inflation as a major problem. He properly calls for reduced Federal spending. His initiatives create an atmosphere in which whole categories of Federal activities that were previously off limits to economizers and reformers have been opened up for review. It is in this spirit that I am seeking alternative methods of achieving the costcutting goals. Let me give two examples. First. it is not widely recognized that the Treasury gives up more revenue each year-$19.8 billionthrough income tax deductions for mortgage interest than it provides to poor people through all housing subsidies combined. These deductions serve the useful purpose of stimulating homeownership. However. no limit is set on the amount a taxpayer may deduct for this purpose. Owners of mansions and vacation homes deduct all their mortgage interest payments. out of all proportion to need. I strongly favor consideration of a $5.000 ceiling on these deductions so the bulk of taxpayers do not have to pick up the tab for the wealthy. A Congressional Budget Office analysis indicates that the $5.000 ceiling would yield about $3.68 billion a year in additional Federal revenue. It would affect only 5 percent of all taxpayers. and even they could deduct all but the excess over $5.000. If this modest reform were adopted. half of the administrations proposed 1982 budget cuts could be restored in the following programs: Food stamps. aid to families with dependent children. CETA jobs. elementary and secondary education. basic education (Pell) grants for college students. legal services for the poor. small business assistance. housing and rehabilitation loans. urban development action grants. and support of the arts and humanities. Unlimited mortage Interest deduction is but one example of a whole array of tax breaks or loopholes for the affluent that require serious attention before the needy should be deprived of basic help for food. medicine. shelter. and jobs. Second. everybody wants America to be strong. with adequate. wellequipped forces that can be deployed rapidly wherever they are needed and with a nuclear potential that is too powerful to challenge. However. I believe each addition to the defense budget should be treated with as much care as each cut from the nondefense budget. As responsible a person as outgoing Comptroller General Elmer B. Staats pointed to several billion dollars a year in Pentagon waste and mismanagement. In a 23page letter to Secretary of Defense Caspar W. Weinberger. Staats itemized such costreduction opportunities as consolidating adjacent military bases. joint supply purchases. improved management of weapons systems. and multiyear contracting that would save an "absolute minimum of $4 billion a year by 1985." Mr. Speaker. opinion polls indicate considerable support for the Presidents budget goals. Most of the mail which I receive in my office is written by individuals in general support of the Presidents goals. I should point out. however. that a good number of the letters contain a similarity in phraseology that may be more than coincidental. Be that as it is. some of these individuals indicate in their letters that if I did not support the President I would be regarded as an obstructionist. Further. I was also reminded. in no uncertain terms. that these individuals would remember me in a not too favorable light at the next election. James Wilson makes a point that each of the great powers. executive. legislative and judicial "should be independent as well as distinct."-"Lectures on Law". The Works of James Wilson. The division of the powers of the National Government was established for a purpose and that was to avoid a concentration of power in any one branch. I think the citizens of this country would be illserved if this body were to adopt the course of action recommended by some and that is simply to trust the President and approve his program without the needed scrutiny. Edmund Burke. in his speech to the electors of Bristol. stated that: "Your representative owes you. not his industry only. but his judgment. and he betrays. instead of serving you. if he sacrifices it to your opinion." The course of action advoctated by this administration. Mr. Speaker. deserves very careful examination because we are not simply considering a request for a reduction in Federal expenditures. We are considering a reordering of priorities. the effect of which. if adopted will be felt by many low- and moderateincome individuals. The programs which we are considering reducing are ones which meet the needs of those most in need of assistance. We should examine these proposals very closely. The Economist in its latest issue states thatAlthough the Reagan budget * attacks nearly 300 programmes. including some dear to the hearts of even Mr. Reagans supporters. its main effect will be felt. negatively. on the poor. and positively. on the defense industry. Social justice should not be sacrificed on the altar of an untested economic theory. And that. it seems to me. is what we are about to do if we adopt without careful examination this administrations still unclear proposals. I am not advocating delay. Mr. Speaker. for the sake of delay. That would be obstructionism. I am advocating. however. delay for the sake of thoughtful reflection upon. and detailed analysis of. the recommendations that are before this body.