July 15, 1965
PAGE 16919
DEBATE ON S.2213, THE HOUSING AND URBAN DEVELOPMENT ACT OF 1965
The Senate resumed the consideration of the bill (S. 2213) to assist in the provision of housing for low- and moderate income families, to promote orderly urban development, to improve living environment in urban areas, and to extend and amend laws relating to housing, urban renewal, urban mass transportation, and community facilities.
Mr. BENNETT. Mr. President, I suggest the absence of a quorum. I ask unanimous consent that the time for the quorum call be charged equally to both sides.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. BENNETT. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I yield myself as much time as I may need to engage in a colloquy with the Senator from Alaska.
Mr. BARTLETT. Mr. President, earlier in the day, it was stated that families having incomes of more than $10,000 a year would be eligible for rent supplements, as proposed in the bill. Can the Senator from Maine inform me as to that?
Mr. MUSKIE. That figure is not based upon the experience under the public housing program, to my knowledge. If I am in error, I feel certain that I shall be corrected.
Mr. BARTLETT. Perhaps it was the Senator from Utah who made the statement.
Mr. BENNETT. It is my understanding that in New York City the public housing limit is above $10,000.
Mr. BARTLETT. I ask the Senator from Utah if it would be correct to say that this situation already exists and that rent supplements would not alter it.
Mr. BENNETT. Under the bill, the limits for rent supplements for incomes under which persons can qualify for such supplements are exactly the same as the official limits for public housing. As to public housing, local authorities have the right to set limits below the top; and in the case of rent supplements, the Administrator, I suppose would have the right to set rates below that figure. But under the bill, the rates for the two systems would be the same. The limits on the rates of the two would be the same.
Mr. BARTLETT. Then, this would be no new venture, no great new experiment seeking to reach a level not called for under the public housing law?
Mr. MUSKIE. The Senator is correct. Income ceilings vary from community to community, depending wholly upon the amount of private housing that is available in the private market.
Mr. BARTLETT. Surveys are to be made by the Housing and Home Finance Agency.
Mr. MUSKIE. Yes. In setting income ceilings, surveys are to be made of the availability of substantial housing, housing which is decent, safe and sanitary. When the low limits are ascertained by such surveys, they will form the basis for the income ceilings which will then be fixed.
With the exception of special groups, which I shall identify in a moment, the ceilings will be set at a point 20 percent below the lowest figure at which rental is available in the private housing market for the family involved.
Mr. BARTLETT. Why is that proposed to be done?
Mr. MUSKIE. The 20-percent gap so called, which now obtains in public housing is established to insure that there will be no competition between public housing and private housing in the private market. The 20-percent gap represents a leaning over backward to avoid competition with private housing. There have been exceptions to the 20-percent gap for the elderly, the physically handicapped, and the victims of disaster. Other than that, the 20-percent gap applies.
So really, when we are talking about income levels, we are talking about income levels which are lower than they ought to be to take care of groups who cannot find decent, safe, sanitary housing in the private market. This is true with respect to public housing under the present law and the rent proposal in the bill.
Mr. BARTLETT. We ought not to judge this program entirely or perhaps not too importantly upon the basis of income, but upon the basis of the situation the Senator has described.
Mr. MUSKIE. The income ceilings are important. It was for that reason that I offered in committee the amendment that is now part of the bill. It limits the program to those who are eligible for public housing. But on the question of rent subsidy, as I said earlier this morning, public housing is a rent subsidy. The bill relates to private housing which is decent, safe, and sanitary for persons in the groups I have described who cannot obtain housing in the private market which meets the best standards and this will be done in the form of a subsidy. So when we are tempted to raise the question of subsidy, we ought to understood that the debate concerns the forms of subsidy that ought to be used and the forms that will be most effective and most economical.
Mr. BARTLETT. Is public housing now available to all those who desire it and presumably would be entitled to it?
Mr. MUSKIE. Mr. President, unfortunately, public housing has not met the problem. For example, on page 7 of the committee report, there is a table which identifies the number of people in various cities who live in substandard housing now.
In spite of the fact that public housing has been available since 1937, for example in Chicago there are 51,780 families with incomes of less than $2,000 a year.
Mr. BARTLETT. Families or individuals?
Mr. MUSKIE. Families. There are 51,780 families in Chicago with incomes of less than $2 000 a year who live in substandard housing in that city.
Mr. BARTLETT. I should think that they would be living in substandard housing with that kind of income.
Mr. MUSKIE, Those people cannot purchase on the present market housing that is decent and sanitary.
In Chicago there are 17,942 families with incomes between $3000 and $4,000 who live in substandard housing. There are 19,174 families in Chicago with incomes of between $2,000 and S3,000 a year who live in substandard housing, despite the fact that there are 28,371 public housing units in the city of Chicago today.
Public housing, although it has solved the problem for 28,000 families in the city of Chicago, has left unsolved the problem for 88,000 other families.
The existence of this need drove the late Senator Taft to support public housing against his will. It was not because he thought it was a perfect answer. It was because he saw that there was a problem that needed to be met and that public housing was the most immediate and feasible answer available.
The rent subsidy program contained in the pending measure would be another answer. It would certainly be one of smaller magnitude in terms of cost to deal with the same problem than public housing.
In New York, there are 156,250 families with incomes of less than $4000 who live in substandard housing today. That is in spite of the fact that New York has not only a Federal program, but a State program of Federal housing. Therefore, the need still exists.
Mr. BARTLETT. Mr. President, is it the feeling of the downtown experts in housing, in the Housing Home Finance Agency, that public housing, together with the proposal which is now made would take care of the situation or substantially so?
Mr. MUSKIE. I do not believe that anyone has any assurance that the problem can be solved by public housing, or by public housing plus the rent subsidy. However, the officials downtown believe that rent subsidies can help and are worth trying.
Mr. BARTLETT. Mr. President, I believe that the Senator stated first people who are victims of a natural disaster would be eligible for the program. Would that be because of the amendment offered by the Senator from Wisconsin?
Mr. MUSKIE. Yes. The Senator from Wisconsin [Mr. Proxmire] offered an amendment to make eligible those who meet the income requirement in the bill and who have been victims of natural disaster.
I should think that would be to the interest of the Senator from Alaska and Senators from Midwestern States, since such States have suffered disasters.
Mr. BARTLETT. It would be highly desirable. I commend the Senator from Wisconsin for offering the amendment. This would apply not only to people from the Midwestern States, but also to almost every other section of the country. Many parts of the Nation have been hit in the past 2 or 3 years by natural disasters such as earthquakes, tornadoes, floods, and other sorts of disasters. I believe that those victims should be included.
Mr. MUSKIE. Mr. President, I believe that it should be clearly understood that the rent subsidy program is directed net only to people in the low-income group, but also to special groups of people. Not all people who qualify under the public housing income ceiling would be eligible under the rent supplement program.
The following special groups would qualify for this assistance. They must be members of five special groups, each of whom, for one reason or another, is unable to provide decent housing for himself and his family out of his income. There would be those who, by governmental action, are forced out of their existing housing and who fall under the income ceiling. There would be the elderly who are unable to provide decent housing. I have statistics to show that many of this group live in substandard housing. They are unable to buy decent housing out of their resources. There would be the physically handicapped, those who occupy slums, and disaster victims.
These are the very special groups whose private resources are inadequate and would benefit from the rent subsidy program. I repeat that even those would be restricted by the income ceiling.
Mr. BARTLETT. I was rather astonished to hear that the program would cost $8 billion over a 40-year period, although in the debate this morning, I believe that the Housing and Home Finance Administration suggested a figure of $5.8 billion. It would seem a rather large sum, indeed.
Mr. MUSKIE. On a figure of that kind, for example, if we project the current national gross product and view it as the accumulated national gross product at the current level over a 40-year period, it would be $28,000 billion. That is an interesting figure. However, what relevancy would it have in the year 1965 in dealing with the current problem?
Mr. BARTLETT. I believe that is an important point. The $8 billion for a 40-year period, if $8 billion should be the correct figure, would mean $200 million a year. Certainly that would not be beyond the capacity of the people to take care of a special group in such circumstances.
I heard the figure of $8 billion mentioned. It occurred to me that a young couple might start married life and be required to pay $150 a month for groceries. I do not know the exact figure, it might be more than that. However, instead of relating it in that way, if someone were to tell them that over a 40-year period they would have paid a grocery bill of $72,000, they would be inclined to give up. The problem cannot be approached in that way. We cannot relate it to what we pay out month after month and year after year.
Mr. MUSKIE. If you were to go outside and ask a taxi driver how much it would cost to retain his services for a year, you would not retain those services. However, if you were to hire that cab driver to go downtown for 60 cents, or for the prevailing rate for taxicabs, you could afford it. However, you could not afford it for a year.
Mr. BARTLETT. Precisely. I believe that point is important.
I thank the Senator from Maine for educating me on this subject. I badly needed the education.
Mr. MUSKIE. Mr. President, I have listened to the debate, which I think has been conducted in a very restrained way. Not once this morning have I heard the opponents of the measure argue that the housing needs of the people who would be covered by the rent subsidy program are not the responsibility of the Government. I have not heard that argued once as a reason for opposing rent subsidy.
So far as I know, many of those who oppose rent subsidies support public housing because they recognize that this is a need that tugs at the conscience of the Nation. They recognize that this is a need which must be met and cannot be ignored. Whatever answer we use to deal with the problem will be costly.
For example, the 40-year figure for the equivalent of our public housing would range from $15 to $20 billion, as compared with the figures that have been used to make a 40-year comparison on rent subsidies.
Mr. BENNETT. Mr. President, will the Senator yield?
Mr. MUSKIE. I yield.
Mr. BENNETT. Mr. President, this bill would provide an additional $7.5 billion for additional public housing for 40 years.
Mr. MUSKIE. I understand. I assume that program may be subject to some debate. However, we are not now talking about what a total answer ought to be, but whether this answer is as good an answer, a better answer, or a worse answer than public housing to the problem of the needs of the people.
I believe that this measure is worth testing. The Senator from Utah does not believe that it is worth testing.
I believe that the action we ought to use, if any, to deal with the problems of disadvantaged groups is not merely public housing. I believe that we ought to try something new, especially something that would undertake to utilize and monopolize the resources of the private sector of the economy to deal with the problem.
Mr. BENNETT. The Senator from Utah believes that the project is worth testing. However, the Senator from Utah believes that we are trying to start in on a full scale rather than on a pilot scale.
Mr. MUSKIE. Mr. President, do I understand that the Senator supports the amendment of the Senator from Texas?
Mr. BENNETT. The Senator from Utah will support the pending amendment of the Senator from Texas.
Mr. MUSKIE. That would undertake to wipe out the program completely.
Mr. BENNETT. If that amendment is rejected, another amendment will probably be offered to set up the program on an experimental basis.
Mr. MUSKIE. The Senator from Utah clearly prefers to eliminate the program rather than to reduce the program.
Mr. BENNETT. I would prefer to reduce it. However, I am not at the present time in control of the manner in which the amendments will be offered.
Mr. MUSKIE. It would be possible to offer an amendment to reduce the program rather than to eliminate it. I invite the Senator from Utah to follow that course of action.
Mr. BARTLETT. Let me ask one further question. If this program turns out to be such that admittedly it is a dismal failure, or that it does not work at all, or that it is not working well enough to warrant continuing it, surely Congress would not continue to spend the $8 billion provided in the program because in 1965 it had decided to do so?
Mr. MUSKIE. The Senator is correct. I believe the figure of $8 billion, irrelevant as that is, is also inaccurate, for reasons which have been pointed out. In the first place, it is based on the assumption that every contract will be a 40-year contract. The agency does not think it will. It does not have any idea as to what the proportion will be, but it knows that, many contracts will be for 20 years rather than for 40 years.
Mr. PROXMIRE. Mr. President, if the Senator will yield on the point raised by the Senator from Alaska, the Senator from Alaska and I are members of the Appropriations Committee, and if it turns out that this program is not working properly, the Appropriations Committee as well as the Banking and Currency Committee will have jurisdiction. The Appropriations Committee will have an opportunity to look at it and review it, and the Senator from Alaska as a member of the committee will have a ringside seat at that review.
Mr. BARTLETT. The Senator is correct. We know, as members of the Appropriations Committee, that that committee looks at all these items with care.
Mr. MUSKIE. The Senator from Wisconsin and I are also members of the Banking and Currency Committee, and we know that the committee looks at these programs very closely. We do not give any blank checks for as long as 2 years, even though authorizations cover longer periods. We always retain control and are free to act or control such programs as experience dictates.
Mr. BARTLETT. The Senator is correct when he states that the figure of $8 billion should not be used. Since they will not all be 40-year contracts, perhaps the figure may be closer to $5 billion.
Also, perhaps we should emphasize what was said earlier by the Senator from Illinois [Mr. DOUGLAS], that we hope and believe the economy of the country will improve year by year and that there are many people who require help now who will not require it later.
Mr. MUSKIE. That is one of the advantages of the rent supplement program, because it requires that these contracts must be renegotiated on a periodic basis to take into account income standards which affect those who are benefitting from such subsidy program. As the income goes up, the subsidy comes down. If income rises to the point where a subsidy is no longer justified, those people can continue to reside in the buildings. This is a desirable feature.
Mr. BARTLETT. A person could stay in that residence for 40 years, or as long as he wanted to.
Mr. MUSKIE. Yes. One of the alleged abuses is that when people in public housing no longer come under the income ceiling, certain undesirable results take place, and there are people who should not be in there who continue to stay there, wholly because they have become established there as residents. To remain there would be in violation of the law. Even though their circumstances have improved, they still find it difficult to find rental in the public market and they would prefer to linger on there.
Under this program the right of the tenant to remain is established, because it is private housing. In other words, the tenants will include some who receive supplement rents and others who do not.
Mr. BARTLETT. I thank the Senator.
Mr. BENNETT. Will the Senator yield on my time, before the Senator from Alaska departs? The reason for the 40-year contract, or 20-years, or whatever the length of the mortgage is, is that the organization which constructs the building must have assurance of what it is going to get and it must contract that a certain percentage of its apartments will be filled with rent supplement tenants. It must contract to rent a certain percentage of the apartments to people who are going to receive rent supplements. The Government has to be prepared to supply both the type of tenants and the money required; otherwise the man who accepts the responsibility and executes the mortgage will not have any assurance of mortgage repayment.
I am reading from a letter written by Milton P. Semer, for Robert C. Weaver, Administrator:
It will be necessary to have such 40-year contracts to lend assurance of that mortgage repayment capability and because the approval of projects containing units under such rent supplement contracts will be contingent upon serving an unmet need among low and moderate income persons and families.
This obligation, once it is accepted by the sponsoring organization, includes an obligation of the United States to continue to provide rent supplement tenants for whatever percentage of the units of the apartment are reserved for rent subsidized tenants.
Mr. BARTLETT. I am no expert in this field, but let us assume that one of these units was built in a fairly small community, and only one, because there was no need for any more, and the 40-year contract was entered into, but at the end of 10 years there was no one in that community who any longer needed the supplement program. Would it be possible, under the bill we are now considering, for the owner of that unit to rent the entire structure to renters who would not be aided by the Government?
Mr. BENNETT. It would be possible, but, at the same time, the owner is under an obligation to maintain a certain percentage of his apartments to serve such people as long as any such people existed.
Mr. BARTLETT. Yes, but not when there are no such people left to occupy it. Is that correct?
Mr. BENNETT. I believe that follows logically. When there is no demand for a service, the service ends, of course.
Mr. BARTLETT. And the organization that has put up the building actually will not care, under the bill, whether there are rent supplements, so long as his building is occupied?
Mr. BENNETT. Does the Senator know of any apartment where there is 100-percent occupancy?
Mr. BARTLETT. No; but I know of some where it is pretty close to it.
Mr. BENNETT. In my own State of Utah there have been so many apartments built in Salt Lake City, for example, under the liberal terms that have been available, that some of the newer apartments are in serious trouble.
This is one of the great unknowns of the situation. If the man about whom we are talking has a vacancy in the apartment, he has a right to go to the Government and say, "I have contracted to reserve a part of my apartment for rent supplement tenants. I need some. I have vacancies because you are responsible for it. I have reserved a certain percentage of my apartment units for such people."
Mr. MUSKIE. There is nothing in the bill that assures a project owner that all units will be occupied.
The $8 billion figure is based on three assumptions that are erroneous:
First, all contracts will be for 40 years. I agree that whatever terms are made will have to be honored, but we are assured by the agency that the contracts will range from 20 to 40 years.
The second assumption which is erroneous is that all these units will be filled for 40 years. The Senator from Utah himself has admitted that will not be so, because there are vacancies.
The third basis of the erroneous assumption is that all tenants will be occupying the percentage set aside from them for all 40 years. That also has been found to be erroneous.
These three basic assumptions which underlie the $8 billion figure are erroneous.
However, let us take a look at the relevancy of the $8 billion figure.
I obtained the following figures for my own use:
The Nation's 40-year bill for tobacco and tobacco products will be $292 billion.
The Nation's 40-year bill for cosmetics and hair care will be $125 billion.
The Nation's 40-year bill for alcoholic beverages will be $250 billion.
The Nation's 40-year bill for automobiles will be $2,228 billion.
The Nation's 40-year bill for clothing will be $1,665 billion.
If that $8 billion figure has any relevancy, let us compare it with these figures I have just cited. Let us also take the 40-year gross national product of $30,000 billion and compare it with the $8 billion figure.
What we are talking about is our ability from year to year to deal with pressing national problems.
I repeat, not once have I heard an opponent of the bill argue that the needs of the elderly, the displaced, and the handicapped are not a Government responsibility.
If, then, that responsibility is conceded, what we are concerned with is the means for dealing with it. The only means we have at present is through public housing. Over a 40-year period, it will cost $19 billion. I will accept even the $8 billion figure as a basis for or comparison with that one. Therefore, if we accept the responsibility and recognize the need, let us get to the heart of the issue.
Is it not reasonable to try rent supplements as another way -- and perhaps a more economical and effective way to deal with the problems of exactly the same people who are dealt with in public housing?
Mr. DOUGLAS. Mr. President, will the Senator from Maine yield?
Mr. MUSKIE. I am happy to yield to the Senator from Illinois.
Mr. DOUGLAS. The Senator from Maine has made an excellent statement about the 40-year cost of many items in the social and national budget.
I should like to speak about the $80 billion subsidy over 40 years we now give to homeowners, which I believe our friends on the other side of the aisle do not wish to remove.
THE $80 BILLION HIDDEN HOUSING SUBSIDY
Mr. President, the opponents of the rent supplement program cry that any subsidy will corrupt the poor -- that it will destroy their incentive and sap their moral fiber. This tender solicitude for the welfare of the poor is indeed touching. In fact, such concern has long been part of our history.
The moral fiber of the poor has long been protected by self-appointed guardians who profess to see an ominous danger in any major piece of legislation which might somehow benefit the poor.
But these warnings sound a little hollow; especially when they are made from the comforts of an FHA insured and tax subsidized home.
Let us examine these tax subsidies for middle class homeowners.
It is conservatively estimated that American homeowners pay approximately $10 billion a year in interest on their home mortgages. This only includes interest payments on 1 to 4 family nonfarm dwellings. If farm homes were added in the figure would be larger. It does not cover interest payments on apartment buildings which are normally rented to occupants.
As we all know, the interest and the taxes on most home mortgages can be deducted from current income, and therefore are not taxable income and diminishes the amount of taxes which will be paid by the rate of tax on the $10 billion deductible.
Assuming an average tax bracket of 20 percent, this means that homeowners can deduct $2 billion a year in interest payments from their income tax. In other words, the Federal Government is indirectly subsidizing middle-class homeowners to the tune of $2 billion a year. Moreover, since the opponents of rent supplements seem to prefer a statement of cost computed over 40 years, let me oblige them with a simple computation. Two billion dollars per year times 40 years equals $80 billion. Think of it: $80 billion for the well-to-do middle class. Not $80 million, but $80 billion.
Compare this gigantic subsidy for relatively prosperous homeowners with the modest amount of subsidies proposed for impoverished slum dwellers. The $80-billion hidden housing subsidy for the middle-income families and the rich is 10 times the maximum cost of the rent supplement program and 20 times its probable cost. Let me also point out that this comparison does not take into account the other tax benefits accorded homeowners such as the ability to deduct local property taxes from Federal income tax payments. The $80 billion estimate also does not project any increase in the number of middle-class homeowners or the probable increase in the value of their property. Thus, if anything, the estimate of an $80 billion hidden housing subsidy for the middle class is conservative. It could be much higher.
Let me emphasize that I have nothing against homeowners. I am one myself. I am delighted that the Federal Government has helped millions of Americans to own their own homes.
All I am suggesting is that some Federal benefits also be extended to the poor. Tax subsidies for homeowners are of no benefit to the poor who are forced to rent a slum apartment in or near the core of the city.
Why is the cry of socialism or regimentation always raised whenever we propose to extend middle class benefits to low-income groups? Can it be that the rich cannot bear to see the poor given an equal opportunity? Can it be that only the middle class have moral fibers sufficiently strong to avoid being corrupted by subsidies? Can it be that only the rich know how to avoid regimentation?
Like matches for children, are subsidies too dangerous for the poor? Are we saying $80 billion for the rich but not 1 cent for the poor?
Why is it that when we tax the poor to pay the rich it is called by some free enterprise, but when we propose to tax the rich to help provide for the poor it is called by some socialism? Perhaps these terms are merely self-serving pronouncements intended to justify our existing policies. As the Russians seem to say at every International Conference, "What is mine is mine; what is yours is negotiable."
But we are deciding much more than who gets what subsidy. We are not attempting to re-slice a static economic pie. We are talking about the future of America. We are talking about providing every family in America with a decent home, so that it can go on to make its full contribution to American life. The poor have a contribution to make as well as the rich. The requirements of our modern and complex society are such that we can no longer afford to maintain a permanent generation of ill-housed, ill-educated, and under motivated slum dwellers. In fact, so long as we are comparing subsidies, the poor are a much better investment than the rich. In economic language, the marginal returns are greater.
One thousand dollars made available to the poor will be of more benefit than $1,000 made available to the well to do.
For every poor family we assist to a better way of life, we are creating a productive, taxpaying individual who will more than return the original investment.
Accordingly, Mr. President, I believe that the Government must extend a helping hand to every American -- rich and poor alike -- to attain a decent, living environment. If we can afford $80 billion over a 40-year period to invest in homes for the well to do, surely we can afford to invest $4 to $8 billion over a 40-year period for the poor.
Mr. PROXMIRE. Mr. President, will the Senator from Illinois yield?
Mr. DOUGLAS. I am glad to yield.
Mr. PROXMIRE. Along the lines of the remarks just made by the Senator from Illinois, the point concerning productive investment, is it not true that a rent supplement of $50 million a year, aggregating $200 million for a period of 4 years, would result in a remarkable stimulus to the economy, because the amount of construction would not be a matter of a few hundred million dollars, but would be a matter literally of billions of dollars? Is it not also true that in terms of a stimulus to the economy, the particular investment of rent supplements would probably also be more stimulating than almost anything the Government can do?
I ask the Senator from Illinois that question as a past president of the American Economic Association and as the vice chairman -- soon to be the chairman, next session -- of the Congressional Joint Economic Committee.
Mr. DOUGLAS. Yes. The Senator from Wisconsin is entirely correct. Under section 221 (D) (3) of the bill, this will be in a sense an ingredient. The average cost per family housing unit is $12,500.
This would amount to a total construction cost of $6 billion to $8 billion spread over 4 years, and will be a very fine stimulus. However, I do not believe we should make our case exclusively or even primarily on this basis, because this tends to regard the poor and the children only as people to be taken care of because they will stimulate industry.
I prefer also to think of this program as an investment in human life. It is the best investment we can make. The Senator is correct.
Mr. PROXMIRE. I agree with the Senator's statement wholeheartedly. However, at the same time, if we consider the cost of $10,000 for each job, the $6.25 billion construction will result in possibly as many as 625,000 jobs. In view of the fact that several million people are still out of work, we have the serious and nagging problem of unemployment. Would not this particular program provide a most welcome and desirable improvement?
Mr. DOUGLAS. The Senator is absolutely correct. If there is an excess of savings over the amount now invested, and an accumulation of idle funds in savings institutions, which for one reason or another is not flowing out into actual investments, this program offers an opportunity to tap the idle funds.
Mr. PROXMIRE. For every dollar invested in the program, with the $200 million resulting in $6.25 billion construction, there would be a multiplier factor of twenty-five fold, which is a most remarkable multiplier.
Mr. DOUGLAS. Of course there is the modification that the $200 million represents the annual charge. The $6.25 billion will be the initial cost. It is not certain that the $6.25 billion will be self perpetuating.
Mr. PROXMIRE. A family which has $75 or $80 now available for the payment of rent each month, without using an excessive proportion of their income, would, with rent supplements, be in a position to pay $100 a month in rent; and the little marginal addition would enable them to live in a home which otherwise would not be constructed. In this way a relatively modest investment by the Federal Government can result in great impetus for the construction industry.
Mr. DOUGLAS The Senator has made a very subtle and profound point when he points out that a slight addition to income produces a great difference in the quality of housing.
This is precisely what we are trying to effect. The Senator has put his finger on one of the vital economic facts which are often neglected.
When we were dealing with school lunches -- and this is an ironic observation -- we never could get the school lunch program through with the argument that it was good for hungry and starving children. However, when we made the point that this would furnish a program for milk and butter from cows, bread from wheatfields, and meat from hogs and cattle, Congress and the country were in favor of it. This in a sense gave moral justification for taking care of hungry children. I believe this argument may convince some doubting Thomases, who may be impervious to the idea of decent housing, because it will be a fine thing for the building industry and the contractors. It will be a fine thing for them and for investors, but it will also be a fine thing for 500,000 American families who are now living in squalor, and who will have a chance to live a decent life.
Mr. TOWER. Mr. President, I yield time to the Senator from Utah.
Mr. BENNETT. Mr. President, I have thoroughly enjoyed the peroration of my friend from Illinois about the $80 billion subsidy. What he did not tell us is that the interest costs of individuals who invest in rental housing are also deductible from their income tax base. In general, these individuals have higher incomes and with our progressive income tax structure are in higher brackets. This means that the interest costs reduce the tax payments by a greater amount per dollar of interest than for those purchasing homes.
The lowering of taxes lowers the rent that must be charged tenants in order to make a profit. Rental tenants thus actually gain an equal or greater benefit from the tax deductibility used as the basis of the $2 billion figure fabricated by the Senator from Illinois.
The $2 billion a year figure or blown-up figure of $80 billion in 40 years that the Senator from Illinois claims is a subsidy to home buyers is merely a phantom figure that fades into nothing when brought into the light.
Mr. President, I believe the Senate should understand this and not act on the basis of incorrect subsidy claims.
If the Senator were to propose to the Committee on Finance that no one who occupies a home or has residential property for rent may deduct interest costs in computing his income tax, we would still be on the same basis.
This discussion is particularly interesting also because the conditions under which the rent subsidy program will operate are those of being essentially income tax free.
Mr. MUSKIE. Mr. President, I yield myself 5 minutes.
Earlier I made the point that we ought not to forget that we are dealing, in public housing and in the rent supplement program, with exactly the same problem and exactly the same people, with one exception; namely, that the group we are dealing with in the rent supplement program is a smaller group than the group we are dealing with in the public housing program.
It would be helpful and useful to identify the nature of these groups and to tell something of their problems, so that they will not be overlooked as we become involved in rhetoric in this debate. What we are dealing with is a very difficult and human problem, to which the great Senator Taft was able to find no other answer but a public housing program, which he accepted reluctantly, but which he ardently supported because it was, not the perfect answer, but the best answer for a problem which in his judgment the Nation could use. That is the same group we are talking about. Who are they?
They are the elderly. There are 2.8 million householders, living in deficient housing, in which the head is 65 years of age or older.
This is housing that is not safe, decent, and sanitary. Of these, 81 percent have incomes of less than $3,000 a year.
There are 2 million families in which persons 65 years of age and older have to live with younger relatives, imposing a burden on them -- which I am sure they willingly accept -- because of low income or poor health.
In addition, there are 6½ million elderly householders living in housing that is considered standard but is unsuitable because it is too large, too difficult to manage, or unsafe. Of these, 54 percent have incomes of less than $3,000 a year.
Of the approximately 70,000 families displaced from their homes each year by some kind of public action, Federal, State, or local, it is estimated that more than 20 percent are elderly.
This is one of the groups which prompted Senator Taft, reluctantly, and at the same time willingly, to support public housing, because he was moved by the human needs. This is one of the groups that we who sponsor the rent supplement program in its present form in the bill, have included.
There is a second group with which we are involved -- displaced families. Between 70,000 and 80,000 families are displaced each year by some type of public action -- highway construction, urban renewal, public buildings, and so on.
Through December 31, 1964, the total displacements resulting from urban renewal action were 185,000 families. Of those, approximately 80 percent, or roughly 150,000, came from substandard housing.
Put in another way, 80 percent of those who have been displaced from their housing to serve a general public interest, whether it is the result of highway construction, schools, or any other purpose; 80 percent of them are people who are least able to bear the burden of dislocation. Most of those who do not come from substandard housing come from units which, while not substandard, are overcrowded, or located in severely blighted neighborhoods.
Among families displaced by urban renewal alone, 40 percent had incomes of less than $3,000.
That is another group whose problems troubled Senator Taft. That is another group whose problems trouble those of us who support the rent supplement program in the form in which it is found in the present bill.
Then there are the handicapped. There are about 4.8 million people with disabling handicaps. That includes those suffering from some degree of paralysis, loss of limbs, the blind, and others severely afflicted. There is a heavy concentration of disabled persons among the low-income groups. Roughly two-thirds of the disabled had incomes of less than $4,000 a year.
An additional percentage, not immediately ascertainable, would fall within the income group that would be served by the rent supplement program, which would undertake to provide housing to meet the needs of those people. And it should be noted that handicap and poverty frequently go hand in hand.
For example, more than half of the disabled are 65 years of age or older, and of those older disabled persons, 72 percent have incomes of less than $4,000 a year. Those are the groups whose problems, since 1937, have been an accepted responsibility of government, at least in part. Those are the groups whose problems tugged at the conscience and the heart of Senator Taft, so that he was able to support a program of whose merits he was not entirely convinced, because it was designed to deal with the problems of these people.
These are the people whose problems tug at the hearts and consciences of those who are willing to try another route, one which conceivably might prove successful, without some of the difficulties which we have experienced in the public housing program. A program of rent supplements would bring into the handling of the problems of those people the resources of the private sector of our economy, including the ideas, the imagination, the stimulus, the efforts, and the hands and hearts of many people working outside of governmental circles. They would apply themselves to the problems of certain groups which have been an accepted responsibility recognized in the laws of our country since 1937.
In terms of those who are interested not only in humanitarian considerations, but considerations of dollars and cents: there, too, the program of rent supplements should have an appeal, because we are dealing with a program which, by the worst estimates thus far advanced by the opposition, would be still cheaper and more economical than the alternative of public housing. The figures that have been given to me by the Agency are as follows:
The per unit cost per month of rent supplements would be $40;
The per unit cost per month of public housing is $58 in direct subsidy;
The per unit cost in terms of tax advantages, legal, and Federal, of public housing are $17 a month, making a total of $75 a month, which public housing is now costing the public sector to supply.
The difference is $35 a month by those figures. Projected over the 40-year period, which seems to be so popular with the opposition to the program, we are talking about a 40-year figure, representing the cost of public housing, which approaches $15 to $20 billion, compared with the $8 billion figure used by the opposition and the $5.8 billion figure which the agency assures us is a more realistic evaluation of the 40-year cost, irrelevant as that figure might be, of the program of rent supplements.
Mr. President, I come to the position that I am occupying at the present moment not as a supporter of the President's supplement program as originally advanced. I opposed it at that time. If it were before us now, I would oppose it now. If it were before us in the form which it took after the first amendment in the committee was added, which included both low- and middle-income groups, I would be opposed to that now, because it would bring into the program groups which I do not believe the Nation is prepared to put on the public rolls of assistance in that way.
But in its present form, as an alternative to public housing, for exactly the same people whose problems have been troubling us since 1937, I say it is time for us to come forward with another answer which brings into the fray the private sector of our economy, which promises to be effective, which may very well be more economical, and which may indeed be more humanitarian.
For those reasons I support the present plan as it exists in the bill. It makes sense. I believe it is conservative. I believe it is sound. It is humanitarian. It is controllable and, by all reasonable standards and experiment, worth keeping.