July 21, 1976
Page 23086
The PRESIDING OFFICER. Who yields time?
Mr. RANDOLPH. I inquire of the Presiding Officer the time which has been consumed.
The PRESIDING OFFICER. The Senator from West Virginia has utilized 19 minutes. He has 11 minutes remaining on his time. The Senator from Tennessee has used 10 minutes and has 20 minutes remaining on his time.
Mr. RANDOLPH. I thank the Presiding Officer. I yield 4 minutes to the able Senator from Maine (Mr. MUSKIE).
Mr. MUSKIE. I thank my good friend from West Virginia, the chairman of the Public Works Committee. I am not sure that there is anything left to be said about this measure, considering the number of times we debated it on the floor, either in legislative form from the committee or in conference report, but I would like to make just a few points, if I may.
Mr. President, the vote this afternoon to override the veto of S. 3201 marks the sixth time that the Senate has been asked to consider essentially the same anti-recession package.
On four of the previous votes, this package has passed the Senate by a healthy majority. On the fifth occasion, the bill was passed by a voice vote.
Aside from these specific votes the Senate has given its tacit approval to this anti-recession package by approving its inclusion in the second concurrent budget resolution for fiscal year 1976 and in the first resolution for fiscal year 1977.
Now, I suggest to my colleagues that this record demonstrates a solid and continuing commitment by this body to this legislative concept.
But, the President is doing his best to frustrate this congressional commitment. He vetoed one bill — H.R. 5247 — because it was too expensive. We took that bill and cut its cost substantially, in a gesture of compromise and in recognition of the fact that the economy has improved, even though we still have a long way to go.
Unfortunately, the President did not respond in the same vein.
During the year and a half debate on this legislation, there have been a number of arguments raised against it that I would like to respond to briefly here this afternoon.
The first argument is that it is too expensive.
I say that that argument is utter nonsense.
The total cost of this legislation is about $3.9 billion. That is a drop in the bucket compared to what unemployment is already costing us. The experts say that it costs the U.S. Treasury about $17 billion for every increase of one percentage point in unemployment above the full employment level. That means that the current unemployment level of 7.5 percent is costing us a cool $50 billion a year in lost revenues and increased recession related costs.
Those who argue against this bill because they want a balanced budget are talking through their hats. As long as unemployment remains so high, there will be no balanced budget, and they know it.
Another argument raised against this bill is that it will only create make-work jobs that we are better off without.
I say that that argument too is nonsense.
Title I of this bill will provide Federal funds for local capital construction projects on which all preliminary work has been done and where construction can be begun within 90 days.
Throughout my State of Maine — and I suspect throughout the Nation — cities and towns are ready to go on projects which they deemed important enough to start work on but which they have had to defer because of pressures the recession has placed on their budgets. A shot in the arm for the construction industry — the industry most hurt by this recession — is hardly my idea of a make-work program.
Title II of this bill would provide emergency budget assistance to State and local governments where unemployment is the highest and where the pressures of recession have been most severe. Enabling the city of Detroit to retain its police force at full strength or the city of Philadelphia to keep its public hospital open is hardly my idea of a make-work program.
The same people who say this kind of legislation will only create make-work jobs are also the first to attack putting able-bodied people on the public dole. Well, I ask them, which way do they want it? They cannot have it both ways.
This bill will take a great many people off the unemployment rolls and put them back to work. From virtually every aspect of public policy consideration, that is a goal we ought to be working for, not against. I can only conclude that those people who argue against this bill on these grounds would rather continue paying unemployed Americans for doing nothing rather than for doing a useful day's work.
Finally, Mr. President, there is the argument that this bill will contribute to a rekindling of inflation — something we all want to avoid.
My response to this argument is that inflation results when we have an overheated economy or shortages in certain critical segments of the economy.
Clearly, we do not have the former. The latest figures on GNP growth released just yesterday indicate a significant slowdown in the rate of GNP growth, and thus a significant slowdown in the rate of economic recovery from this recession.
And in the construction industry, the only shortages I am aware of is a shortage of jobs.
Furthermore, Mr. President, this bill is a modest short term remedy. Title II is authorized for five quarters only, and will last an even shorter period of time should national unemployment drop below 6 percent. Funds provided under title II will go directly into State and local government general budget accounts — "not a part of the economy likely to generate bottleneck inflation," in the words of economist Charles Schultze. And to the extent that this budget assistance eases the pressure for higher State and local excise taxes, title II money could actually alleviate some inflationary pressures.
Title I will provide money for local construction projects which are ready to go within 90 days, so that its impact on the construction industry can begin almost immediately.
Mr. President, this bill will help speed our economic recovery. It has but one simple purpose — to create jobs. And create jobs it will — 300,000 of them — according to the Congressional Budget Office's analysis of anti-recession measures.
Unemployment today is not just high — it is very high. And the jump in unemployment last month is just another indication that we have long passed the time we can sit back and wait for recovery to come around the corner.
Let us get on with the business of putting America back to work.
Mr. President, I ask unanimous consent to have printed in the RECORD some editorials on the vetoed bill.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[From the New York Times]
UNWISE VETO
Though urged by Republican mayors around the country to sign it, President Ford has vetoed the $3.95 billion public works employment bill and denounced it as an effort by the Democratic majority in Congress to enact "empty promises and giveaway programs." The bill would lead, Mr. Ford asserts, to "larger deficits, higher taxes, higher inflation and, ultimately, higher unemployment."
This is a heavy load of denunciation to be laid on this legislation aimed at creating more jobs, when the unemployment rate has gone back up to 7.5 percent, with more than seven million Americans out of work. The bill is not a massive boondoggle; it represents less than 1 percent of the total Federal budget and less than one-fourth of one percent of anticipated gross national product in 1977.
Mr. Ford says the bill's scaled down size from the $6 billion public works job bill he vetoed in February is irrelevant, contending that "bad policy is bad whether the inflation price tag is $4 billion or $6 billion."
Obviously — indeed, simplistically — any appropriation can be denounced as inflationary, including the $101 billion defense outlay (an $8 billion increase over fiscal 1976) that the President has proposed for the current fiscal year. The real question, however, is whether the budget as a whole, in terms of outlays, taxes and deficit, is inflationary — or insufficiently stimulative — and whether particular outlays represent a constructive use of the public's money.
Congress has not acted irresponsibly on the budget as a whole or on this particular public works employment bill. The proposed $4 billion public works bill falls within the Congressional budget resolution of $413 billion for fiscal 1977. That spending total, given anticipated revenues of $363 billion, would result in a $50 billion budget deficit. This is a more realistic budget than President Ford has proposed and would bring down unemployment sooner without worsening inflation.
The President wants to limit outlays to $394 billion — a figure that would involve real slashes in virtually every social program, while only defense and energy outlays would rise. Such a budget ceiling would in fact be deflationary or depressive; Mr. Ford has sought to ward off that danger by proposing a further $10 billion tax cut. He still recommends a $43 billion budget deficit, with higher Social Security and unemployment taxes making up some of the difference.
The President has thus sought to further his right wing philosophy — and his campaign not only against the Democrats but against Governor Reagan — by this unwise veto.
The $4 billion public works bill would help the hard-pressed cities. It would create jobs for the unemployed; even if the President were right and Congress wrong in predicting that the bill would create only 160,000 rather than 300,000 jobs, these would help absorb many laid off construction workers, and the countercyclical revenue sharing to cities and states would save the threatened jobs of many policemen, firemen and other municipal workers. The bill would also provide needed funds for facilities to prevent water pollution.
The targeting of public expenditures to help the cities, the construction industry and the unemployed makes sense during this period of slow recovery from the serious 1973-75 recession. Congress ought to pass the public works jobs bill over the President's veto.
[From the Washington Post]
THE JOBS BILL
President Ford is a nice man, but he's got a terrible sense of timing. Last week he vetoed the jobs bill, an effort by the Democrats to create jobs by pouring $3.95 billion into good works, mainly construction. Just four days earlier the Labor Department had announced that the unemployment rate had risen from 7.3 per cent in May to '7.5 per cent in June, a disquieting reversal of a slow but steady decline. Two days before that, the fiscal year had ended with both federal spending and the budget deficit substantially lower than the administration had expected.
Why did Mr. Ford veto the bill? As he explained it, he was trying to save the country from another great surge of reckless congressional spending and inflation.
"Congress is moving full speed down the road to bigger and bigger giveaway programs," he said in the fervent statement published by the White House. The interesting thing is, of course, that nothing remotely like that is going on.
The Democratic majority in Congress has been proceeding with extreme caution on every matter that involves money. The new congressional budget procedure has turned out so far to be an unexpectedly powerful deterrent to the occasional spendthrift impulses of the committees. Last fall Congress voted not to let the deficit exceed $74 billion, and until recently both Congress and the administration expected it to come out just under that number. But for reasons that no one has yet quite explained, spending in the final weeks of the fiscal year was a good deal lower than anticipated. It now appears that, when all the accounts are totalled, the actual deficit may turn out to be as low as $68 billion. No wild rush of congressional spending is building up. Quite the contrary.
There is a faintly comic paradox here. The present consensus on federal fiscal policy — which means taxing and spending — is a good deal closer than either the President or Congress really likes to admit. The President understands perfectly well that the present huge deficit is mainly the effect of the recession, and any premature attempt to cut that deficit threatens to pitch the national economy back into even deeper stagnation. Nobody wants to be responsible for that. On the other hand, most of the Democrats in Congress have perceived that a great wave of new spending will lead to inflation, which in turn will lead to higher unemployment. Circumstance has pressed the debaters embarrassingly close together. The surprising thing is not that they are arguing about spending, but rather that the amounts in this argument are — in comparison with the federal budget — remarkably small.
A jobs bill authorizing $3.95 billion is just about the right size to keep the quarrel percolating through the coming election campaign season. The amount is large enough to command attention, but it is not big enough to make a serious difference in a federal budget that will be, after all, at least 100 times bigger. That $3.95 billion is less, as it turns out, than the margin of error in the forecasts of this year's deficit.
The bill would devote most of this money to public works. It is quite true that public works appropriations are on the whole a rather inefficient way to pull down the unemployment rate. But it is better than nothing and, at a time when the unemployment rate in the construction industry is 17 per cent, it is absurd to call this modest program inflationary. Some of this money would go
into waste water treatment plants; they can easily be justified on their own terms, quite aside from any contribution that their construction might make to the jobs market. The most valuable part of this bill would provide a modest increase in federal aid to state and local governments, in response to the recession. It is recognition that high unemployment brings greater demands on local public services, at a time when receipts from sales taxes decline. The veto has brought down on Mr. Ford the anger of a long list of mayors and governors, not all of them Democrats. To them, the veto is further evidence of Mr. Ford's failure to comprehend the fierce pressures on the big cities.
This bill hardly constitutes a sweeping solution to the present confusion of American economic policy, or a fundamental remedy to the prospect of continued high unemployment. At even the most generous estimate — which is to say, the Democrats' — it will reduce the unemployment rate by perhaps three-tenths of one percentage point. But if Congress can create two or three hundred thousand jobs quickly, with little penalty in inflation, the opportunity is not one to be missed. There appear to be enough votes, in both houses of Congress, to override the veto. When Congress reconvenes next week, that piece of business deserves to have the first priority.
[From the Chicago Sun-Times]
CITIES NEED MORE FEDERAL HELP
Mayor Daley and the resolutions committee of the U.S. Conference of Mayors hit the bull's eye over the weekend when they called on President Ford to get his priorities in order — to pay more attention to the crisis of the nation's cities and less to defense spending.
"If we're not going to be strong at home, how can we be strong abroad?" the mayor asked in a speech at the meeting in Milwaukee of some 350 American mayors who are considering a resolution that would call for a federal spending shift away from defense and into an attack on city problems.
That shift is long overdue. There was a time when the cities produced excess wealth. Federal tax policies were set then that drained some of that excess away, channeling it to the poorer rural areas of the country. But those policies have long since been in need of reexamination. Neal R. Peirce, a specialist on state and local government, reported in The Sunday Sun-Times that federal spending and tax policies each year drain $30 billion from the Midwest and Northeast states that are highly urbanized and give the money to the South, Southwest, Rocky Mountain and Pacific Coast states. The Great Lakes states, where cities such as Chicago, Detroit and Cleveland have monumental problems resulting in large part from declining tax bases, pay to the federal government $18.6 billion more each year than they get back. California, though, receives from the federal government $7 billion more than it pays.
If there were no inner city unemployment problem, no deterioration of housing, no excessive crime, no urban poverty creating huge welfare rolls, no mass transit shortage, no public education deterioration, no need for large urban health care programs, no racial turmoil, that policy might make sense.
But Chicago and all the other older American cities have all of those problems and each year the financial wherewithal to combat them grows smaller as residents, business and industry, despairing of fighting, flee to suburban communities or those areas of the country benefiting from federal largesse.
It is time for the federal government to change its policies. The mayors called on Ford not to veto a $4 billion public works bill that would help the cities. He should listen to them. Unemployment among youth in Chicago is officially estimated at 38.5 per cent. Unofficial estimates go as high as 50 per cent. The situation is not improving as the national economy improves. Chicago's share of federal manpower training funds is actually decreasing when it should be increasing.
Even if Ford were to sign the public works bill, however, that would be only a short term fix. Continuing sources of new funds would still be necessary, perhaps through a revision of the general revenue sharing formula to channel more federal money to cities.
The mayors said the cities face "financial trauma." They're right. Cities such as Chicago, New York, Detroit and Cleveland cannot be allowed to rot away much longer without the entire nation suffering dangerously.