June 7, 1977
Page 17837
Mr. PROXMIRE. Mr. President, I yield myself such time as I may require.
Mr. President, this is not a matter of bookkeeping. It is not a matter of simply deciding what terms to use.
This is a matter of whether or not we are going to have effective housing in the future. I feel very strongly about that.
I give those who support the Muskie amendment full credit for sincerity. But I feel very strongly that if we continue this present method of calculating budget authority for housing programs that housing will be at a very serious disadvantage.
It is the committee's view that the present method for calculating budget authority, established by the Office of Management and Budget under the previous administration in 1975, is inadequate and ought to be changed.
In testimony before the Appropriations Committee earlier this year, HUD Secretary Harris put her finger on the critical weakness of the present method. She said:
The current budget accounting practice tends to exaggerate the costs of the Department's programs relative to other Federal programs, and it tends to distort the real financial impact of HUD programs on the Federal Treasury.
Later on, the Secretary of HUD, who is a good soldier, was brought in line with the rest of the administration who opposed the provision in the bill, as Senator MUSKIE made clear.
But the judgment of the Secretary as far as housing was concerned was very clear at the time she testified. She thought the present method would hurt housing.
The Committee on Banking, Housing, and Urban Affairs has been troubled by the new budget accounting practice since it was introduced 2 years ago. In April 1975 I wrote to Congressional Budget Director Rivlin that the new method for calculating budget authority was "unrealistic, inaccurate, and unfair, and I recommended that a study be undertaken to determine: First, how future expected outlays for housing assistance programs should be calculated, and second, how budget authority for all other Federal programs should be calculated in order to provide a satisfactory and equitable comparison of program expenditures."
I should say that the burden of my speech here today is that housing is discriminated against, compared to other programs that also have a run out and are not required to provide that run out when budget authority is considered by the Budget Committee and the Senate.
In the months since then, I have continued to hear from groups like the National Association of Home Builders, the AFL-CIO, the National Housing Conference, the Mortgage Bankers Association, the National Association of Housing and Redevelopment Official, the Coalition for Low Income Housing, the U.S. League of Cities and Conference of Mayors that the budget accounting guidelines under which HUD is operating are misleading and unfair. They feel it is unfair to housing and I think they are right.
Mr. President, I want to make it very clear that section 208 of the committee bill aims to provide, for housing programs, cost figures which are comparable to those used for other programs.
We do not want housing to be singled out for special consideration. We want it on the same basis as other programs.
The committee bill does not seek to duck the issue of housing costs. It seeks equal treatment for housing — not preferred treatment. The committee bill, in brief, directs HUD to prepare its budget to reflect in its request for new authority: First, all payments required to liquidate past contributions for contracts and second, all projected payments required to liquidate contracts entered into during the year ahead.
The committee intends that HUD would provide, in addition to its requests for authority to make payments, estimates of future payments that would be required under various assumptions regarding types of housing assistance provided, family income, and rent charges over appropriate time periods.
The committee believes that this method of accounting will enable the committees of the Congress most immediately involved in assessing the costs and benefits of housing programs — the Committees on Banking, Housing and Urban Affairs, Appropriations, and the Budget — to compare the short term, as well as the long term costs of providing housing assistance with the costs of providing new weapons systems, the costs of increasing benefits for veterans, the costs of building more highways and roads, the costs of providing more aid for U.S. shipping, and the costs of carrying the national debt.
Mr. President, we all know that the Federal Government will authorize this year millions and even billions of dollars for programs that will require additional appropriations next year and for years thereafter. Most Federal programs involve commitments for funding for more than 1 year, and many have operating costs in addition to the amounts authorized.
The PRESIDING OFFICER. The Senate will be in order.
Mr. PROXMIRE. Mr. President, the Chair makes a good point.
The PRESIDING OFFICER. The Senate will be in order. The Senator from Wisconsin is entitled to be heard.
Mr. PROXMIRE. Mr. President, let me repeat, most Federal programs involve commitments for funding for more than 1 year, and many have operating costs in addition to the amounts authorized.
Yet, with the exception of housing assistance, these commitments and required future obligations are ignored in the Federal budget. In contrast, under the Nixon-Ford guidelines still being used by OMB, the HUD budget shows that the administration is requesting almost $33 billion in fiscal year 1978 for housing. But the $33 billion requested by HUD this year includes estimates of what will be required to run the program 10 years, 20 years, 30 years, and even 40 years from today.
Only housing for low and moderate income persons, among Federal assistance programs, is budgeted in 1978 for costs that may be incurred in the year 2017.
As I pointed out a minute ago, if we assume that we spend about $500 billion in every budget from now on — an unrealistic assumption since it is conservative since that means no real growth in the budget for the next 90 years — that money translates into $20 trillion.
What we are doing is putting the amount we appropriate for housing into a $20 trillion context. But as the debate indicated before on the floor and in the Budget Committee and elsewhere, it is talked about constantly in terms of this year's amount, next year's amount, and the amount that is coming up in the very near future.
A proposal for $1 million in new contract authority for public housing or new State financed section 8 housing for lower income families is now required to be expressed in the budget as $40 million in budget authority. This figure takes into account payments that may be made over the next 40 years, including estimated increases in rents resulting from inflation.
Mr. President, I have asked why housing programs have been singled out for special treatment in the budget. There are those who say it is a historical carryover from the Nixon-Ford era, and there is strong evidence that this is the case. As you will remember, President Nixon shut down all of our Federal housing programs in 1973, when a moratorium was put on publicly assisted housing, despite congressional protest. His HUD Secretary at that time, James Lynn, supported the moratorium on housing and ignored his pledge to the Congress that he would carry out the programs that were authorized to achieve our national housing goals. Mr. Lynn was then appointed Director of the Office of Management and Budget.
He carried his fight against housing with him. It was he who, in 1975, ordered HUD to report budget authority as it now does. It is his directive that continues today to be followed by the OMB and by the Congressional Budget Committees. The anti-housing bias of the Nixon-Ford administration should not be continued. To eliminate this bias, the committee has adopted section 208.
It is also argued that housing's special treatment in the budget merely reflects two facts: First, that housing programs do involve multi-year commitments, and second, that housing commitments are legal contracts.
Mr. President, these two facts are correct. Housing programs do require multi-year commitments and legal contracts. This is because they operate through the voluntary actions of private lenders, home builders, construction workers, property owners, and local governments and agencies, and require a significant amount of money over a long period of time.
But these two facts do not really explain housing's unique treatment for budget purposes in the Federal or congressional budget.
Mr. President, we need to take a commonsense attitude toward this problem of outyear expenditure commitments. The purpose of highlighting 30 or 40 year housing costs in budget authority is to give visibility to spending in future years that is dependent on and required by funding this year. The argument is that we need such visibility to make sound economic decisions.
Now let us see what this same philosophy would mean if applied consistently to other parts of the budget.
Take the military for example. We funded the CVAN 71 Nimitz class aircraft carrier in 1 year — not counting long lead time items which are always a year in advance. The total cost of the carrier in terms of procurement and research and development will be about $2 billion.
Now everyone knows when they vote for approval of the carrier that it is going to be used — operated for 30 years — otherwise there is absolutely no justification for purchasing it.
We do not buy that carrier to spend $2 billion and then let it sit there and be admired. We buy it to use it, and to use that carrier costs money. It costs far more than the carrier costs.
When the U.S. Government buys that carrier, it is incurring additional costs down the road. In the case of CVAN 71 the 30-year life cycle costs will be $15.5 billion in constant dollars. Are we required to take notice of that in the budget when it comes before us? No, we are not. But we are required to do so with respect to housing. This includes research development, procurement, manpower, operation and maintenance, and the aircraft that go on board.
Why should we count these costs? Because an aircraft carrier cannot go to sea without personnel on board and it will not be effective without aircraft on board and we certainly do not intend to leave it tied up at the dock for 30 years. We are committed to these costs in future years as surely as we are to any housing program.
The B-1 bomber is another good example for it brings different issues into consideration. At some point, maybe this week or next, the President is going to decide on how many B-1's this country does or does not need. Obviously, I hope he stands by his campaign pledge and decides against any B-1's. But for the sake of argument let us assume he decides on a figure of 150 B-1's.
Congress then examines the President's request and gives the go-ahead. Due to the single year funding rule, we fully purchase a group of aircraft every year. We purchase 5 B-1's or 20 F-14's for example.
Each year when we vote on these small purchases we know that they only represent a fraction of the total program buy. The rest are included in the 5 year defense program. Yet these additional procurement costs do not show up in any budget resolution figures.
Congress may cut that projected purchase or add to it but at any one time, as with housing, the outyear program represents a future commitment of this Government. If Congress cuts back, there might be contract disputes and termination costs to be paid by the Government, as there would be with a cutback in housing contracts under some conditions. As a matter of fact, the Government is being sued for hundreds of millions of dollars, trillions of dollars, in shipping claims by shippers who claim we have to go through with a contract on a multi-year basis.
The point is we are fooling no one by only counting 1 year's cost of the B-1 in every budget. The total program will cost $24 billion in R. & D. and procurement alone. And this understates the full costs to the Government that will be incurred by operating these aircraft over their normal 20 year life. If you consider this total obligation of the Government, the B-1 will cost over $40 billion in constant, uninflated dollars. We will have to spend these dollars if the original purchase of the B-1 is to make any sense at all. Why are not these costs — to be borne by future taxpayers as sure as any housing program — also included under budget authority in the budget resolution?
If we applied the same approach to the 53 major acquisition items currently on the selected acquisition reporting system with a cost of over $144 billion, the runout costs would be astronomical — maybe $500 billion or more.
The similarity with the housing situation would then be clear. If we cut the five B-1's in this year's budget we would not be saving $2 billion in procurement but several billion more in outyear expenditures relating to these aircraft. If we cut out the aircraft carrier, we would not only show a $2 billion decrease in budget authority in 1 year but a total budget authority reduction of $15.5 billion.
The same approach applies to army ground equipment such as the new XM-1 tank. We could purchase the XM-1 tank fleet for $4.84 billion and store them in warehouses — although even that would cost money. But that is not the purpose for buying new tanks. They will be put in the field. It makes no sense to buy them and store them away. They will be used and when that happens there will be additional costs. We cannot escape that fact. The M-1 tank program will have a projected life cycle cost in constant fiscal year 1977 dollars of $11.4 billion. Yet, nowhere is that fact of life represented in the budget authority figures of the budget resolution.
Therefore, if we are going to make housing a target for cuts because a small cut in any one year carries with it a very large reduction in outyear budget authority, why should not the same hold true for the Defense Department where the commitments are every bit as solid — maybe even more so, since they represent a national security requirement? Why should it not also apply to the social security program or the turnover of the national debt or to many ongoing HEW programs or to those multi-year contracts that are funded technically on a year-by-year basis but have the same effect as a multi-year procurement?
What we object to is the fact that 40 year housing money has to compete with 1 year money for other programs in the budget ceiling.
What this means is that housing will be the first program to be cut and the last program to be restored or funded. Here is why.
Suppose new budget authority were $10 billion too high. The $10 billion could be cut in one of two ways. It could be reduced by a painful cut of $1 billion in each of 10 different programs— education, military pay, health research or job programs, for example. Or, because housing money is calculated on a 40 year basis, a cut of only $250 million in public housing funds or funds for new construction under section 8 would accomplish the same $10 billion reduction.
Given this choice, the temptation to cut housing instead of other programs will be overwhelming. Small cuts in housing outlays can mean 40 times the amount of cuts in budget authority for other programs.
And I am not talking theoretically, either, because that is precisely what happened this year on the budget resolution.
Mr. CHILES. Mr. President, will the Senator yield?
Mr. PROXMIRE. I will yield in a moment.
Housing was a sitting duck for the cuts, and a $200 million cut ended up looking like a $6.2 billion cut.
That point was made over and over by Senator DOMENICI on the floor, with great effect. I talked to a number of Senators who said "Bill, I can't go with you. Six billion dollars is a whale of a lot of money. It means we are obligated to spend that in the future."
That argument by the Senator from New Mexico was most effective and picked up votes he otherwise would not have had.
Conversely, because an increase in most housing programs must be multiplied by 40 years, housing will stand at the end of the line when the priorities are determined.
And we found that out too when we restored that money. Senator after Senator came to us and said, my God I have to vote for a $6.2 billion increase in budget authority just to restore about $150 million.
(At this point, Mr. ZORINSKY assumed the chair.)
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. PROXMIRE. I promised to yield to the Senator from Florida.
Mr. MUSKIE. Will the Senator yield?
Mr. CHILES. I yield.
Mr. MUSKIE. Mr. President, will the Senator yield for a minute?
On the other hand, may I say to the Senator, I heard the other argument
Mr. PROXMIRE. I beg the Senator's pardon, I did not hear that.
Mr. MUSKIE. I heard the other argument, "Look, it is only $50 million this year so we do not have to worry about the long term costs. It won't unbalance the budget; it is only $50 million this year."
I can just hear, if section 208 is approved, at future hearings that "You have only $50 million." which is what this $34 billion program would look like in this year's budget if section 208 were adopted. The argument would be "only $50 million this year," to justify $34 billion in long term commitments.
I think we are mature enough in this body to look at the facts. The facts are that housing does cost money; it does involve long term commitments. Why should we be afraid to look at the facts and acknowledge them rather than conceal them? Decisions of this kind ought to be made on the facts, and that is what the budget process is all about.
Mr. PROXMIRE. May I say to the Senator from Maine that I have no objection to that. The Senator from Maine makes a very powerful argument, and the Senator from Florida, too, on this issue. There is a lot of sense. All I want to do is to put housing on the same basis as everything else — on the same basis as social security, as the B-1 bomber, as the aircraft carrier. It is not now on the same basis, and the Senator knows it is not.
Mr. MUSKIE. Mr. President, if the Senator will yield, the Senator is talking about apples and oranges. I will put in the RECORD on the Senator's time this table prepared by the GAO which will inform the Senator of the programs in the budget that are treated the way housing is treated.
I ask unanimous consent that that table be included in the RECORD. There are three pages of programs that are handled the same way that housing is under the present law.
There being no objection, the schedule was ordered to be printed in the RECORD, as follows:
SCHEDULE OF ACCOUNTS THAT APPEAR TO RECORD FULL EXTENT OF COMMITMENT
The following accounts appear to provide full funding of long term commitments. This schedule was prepared primarily from discussions with agency budget offices. The accounts have not been fully studied or verified by us.
AGENCY, BUREAU, ACCOUNT/REFERENCE (FISCAL YEAR 1978 APPENDIX)
Dept. of Transportation: Coast Guard, "Acquisition, Construction, and Improvements"
(69024001406) p. 545. Comments
BA represents full amount for construction etc. for projects commenced in the year of the recorded BA.
FAA: "Facilities, Engineering, and Development" (69130301405) p. 552.
Comments
BA represents full amount for construction etc. for projects commenced in the year of the recorded BA.
Urban Mass Transportation Administration: "Urban Mass Transportation Fund," (69411903404) p. 581.
Comments
BA represents full amount for construction etc. for projects commenced in the year of the recorded BA.
Department of Justice: Bureau of Prisons, "Buildings and Facilities," (15100301753) p. 497.
Comments
Full amount of BA necessary to complete the cost of constructing a facility is requested in the budget year.
Department of State: "Acquisition, Operations, and Maintenance of Buildings Abroad," (19053501152),p. 520.
Comments
Full amount of BA necessary to complete the cost of constructing a facility is requested in the budget year (except for the new embassy in Moscow which is being funded incrementally).
Department of Commerce: Maritime Administration, "Ship Construction," (13170801406) p. 214.
Comments
Full BA necessary to pay the subsidy of an individual ship's construction is requested in the budget year.
Department of Agriculture: Soil Conservation Service, "Conservation Operations," (12100001302) p. 152. Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
Soil Conservation Service: "River Basin Surveys and Investigations,"(12106901301) p. 154.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Watershed and Flood Prevention Operation," (12107201301) p. 158.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
''Great Plains Conservation Program," (12226801302) p. 158.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Watershed Planning," (12106601301)p. 155.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Resource Conservation and Development,"(12101001302) p. 159.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
Forest Service: "Forest Protection and Utilization," (12110001302) p. 172.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Construction and Land Acquisition," (12110301302) p. 175.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Forest Roads and Trails (Liquidation of Contract Authority)," (12226201302) p. 176.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Forest Roads," (12226301302) p. 177. Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
[Cooperative Range] "Rangeland Improvements," (12520702302) p. 179.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Forest Service Permanent Appropriation", (12992202302) p. 180.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Trust Funds Cooperative Work", (12802807302) p. 183.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
Agricultural Stabilization and Conservation Service: "Water Bank Program" (12332001302)p.125.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Forestry Incentives Program", (12333601302) p. 127.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
"Agricultural Conservation Program", (12331501302) p. 124.
Comments
Multi-year contracts receive BA recordings for the full amount of the contract in the year of the contract signing.
Department of Defense:
Navy: "Shipbuilding and Conversion, Navy", (17161101051) p. 245.
Comments
Full BA for ships programmed and funded in the budget year.
Environmental Protection Agency: "Abatement and Control", (68010801304) p. 628.
Comments
Full amount of BA necessary to complete the cost of constructing a facility is requested in the budget year.
"Construction Grants", (68010301304)p. 630.
Comments
BA appears to fully fund commitments. (Proposed legislation for a 10-year program of $4.5 billion per year appears not to fully fund the proposed total Federal commitment. See EPA "Construction Grants" on page 3 of other schedule.)
Mr. PROXMIRE. Are these all comparable programs? Do they include social security, for example?
Mr. MUSKIE. This is the GAO's analysis of comparable programs. Some of the programs the Senator referred to are not comparable to housing, and I would be glad to get into a lengthy discussion on that, but this is the GAO's analysis.
Mr. PROXMIRE. The Banking Committee, of course, does not take the position that the information should be concealed in any way, shape, or form. It should be made clear that we recognize that we ought to know about these long run costs, but in a form of information not as unique numbers in the budget, so that housing is put into a different position than these other long run commitments, these uncontrollable commitments.
Mr. MUSKIE. But housing is not put in a different position.
Let me ask the Senator a question: Suppose you were chairman of the Senate Budget Committee. The chairman of the Banking, Housing, and Urban Affairs Committee came before you and asked for a $34 billion housing program. The only control you had over it was in the form of the outlays in the given year, and you decided, in disagreement with the chairman of the Banking Committee, that you cannot afford $34 billion, you can only afford $20 billion. If you cannot control it through the budget authority, which would be the case if section 208 passes, then just what does the chairman of the Budget Committee do with respect to outlays in that year to get a reduction from $34 billion to $20 billion in the housing program? There is absolutely no way of doing it. If the Senator can suggest a way for it to be done so that we can control it, then I might look at section 208 differently. But there is absolutely no way of doing it. You cannot reduce the outlays.
You cannot control the size of the program through outlays. Outlays are largely the spendout from prior year contracts. So there would be no way, absolutely no way, for you as chairman of the Budget Committee to exercise a different judgment than the chairman of the Banking, Housing, and Urban Affairs Committee with respect to what the size of the housing program ought to be
.
Mr. PROXMIRE. Well, my problem, Mr. President, is that the controllable outlays in the budget, according to the best calculation we can make, are about $112 billion; uncontrollable are about $322 billion. Housing represents $3 billion for controllable outlays or about 2.5 percent. It represents $3.6 billion of uncontrollable outlays or about 1 percent.
As I have already stated, the enormous amount we spend relative to housing and social security, the very large amount we spend in the military area, does not have the same runout treatment.
You can say it is apples and oranges, but the fact is it is a commitment, as we know. When we buy an aircraft carrier we do not just buy it and let it sit around, we use it. We have to figure out what the long term costs are.
For housing to be almost the only budget item to get the 15 or 20 or 40 year treatment — it is not done for social security, the public debt is not included — puts it in an impossible position to compete with other needs.
Let us take another example of why housing is discriminated against in the budget ceiling resolution. Take social security. In the Ford budget for fiscal year 1978, social security payments are estimated at $89 billion. Budget authority under the Carter budget for social security was $87.4 billion. But we have a law on the books on social security. Under present law, according to individuals my staff has talked to in the Social Security Administration only today, a rough ball park estimate is that the Government, under law, is obligated to pay out about $15 trillion over the next 40 years to social security recipients.
That is the law, it is on the books; it is an obligation. It will no doubt be paid. In fact, because of inflation probably a great deal more will be paid, but only this1 year figure of $89 billion is in the Ford budget, and slightly less in the Carter budget, are used for the projections of social security budget authority under income security in the budget resolution ceiling.
Now why is housing calculated at 40 years and social security at 1 year.
As the old saying goes, some programs are more equal than others.
As I say, Mr. President, the burden of my position is that we simply want to have housing treated fairly and equitably with other programs that are expensive, that cost billions of dollars. As I pointed out, housing does represent a relatively very, very limited part of the costs. It is the same situation as if you had an individual who is going to buy a house, a $35,000 house, with a 35-year mortgage at 9 percent.
The cost of the interest on that house is about $66,000. The cost of that house is $35,000. Most people, if told that they are going to have to pay $100,000 when they may have an income of $20,000 or $25,000, would, of course, say, "Impossible. No way. It cannot be done."
But because we have grown used to buying houses and because we think in terms of what we can afford in terms of monthly payments, housing is able to proceed.
What I am concerned that we are doing here is providing for that $100,000 cost in relationship to an individual with a modest income, and we are providing that that cost must be met in comparison with 1 year costs in the budget with respect to military, social security, and these other programs.
What we object to is that in the budget resolution, housing money calculated at 40 years has to compete with other money calculated at 1 year.
What we object to is that housing money is put in the budget at 40 years because there is a contractual relationship but the public debt and social security — which are also either solid contractual obligations or are required payments by law, are excluded.
Mr. President, I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. I yield 5 minutes to the Senator from Florida and more if the Senator desires it.
Mr. CHILES. Mr. President, I understand the distinguished Senator from Massachusetts was saying that the way in which we attempted to cut the housing figure in the Budget Committee was based on the fact of the high number for the housing budget authority. I have also heard that discussed. That was part of the argument that was used on the floor.
The Senator from Florida was the one who proposed reducing the numbers in the Budget Committee, and I think he had something to do with trying to argue that item unsuccessfully on the floor.
What we were talking about at all times was never the total number, Mr. President, of what that number was, but actually we were talking about units.
The logic of our argument was that there were sufficient units in the pipeline to meet the needs for the next year, and that there would be sufficient holdover units in the next year, and we argued at all times on the basis of what the building construction had been over the past year, what adding 25 percent to that, and then doubling that, would do over the next couple of years, and we always talked about units.
We always talked about units. At no time were we trying to use billions of dollars, and we did not try to approach it from that way.
It would seem that certainly the Banking and Housing Committee was successful in attacking the budget resolution and adding to that figure in the Chamber.
I listened with great interest to the argument of the distinguished Senator from Wisconsin. in regard to the fact that this is treating housing differently from anyone else. I listened to the cost of the B-1 bomber and of an aircraft carrier. But I shall take the other side of that argument. If the Senator is successful and if the Banking Committee is successful, we should understand what will happen. I wish the distinguished chairman of the Budget Committee would listen to this point. If the Banking Committee is successful in amending the Budget Act, and that is exactly what they are doing now, to say that they will reflect their numbers, they will only put in the budget outlay and the budget authority numbers for the first year that they go into a purchase downstream, and they never will have to reflect what the total cost downstream would be, then I want him to understand what is going to happen to the B-1 bomber if the Armed Services Committee says:
We should be treated the same way. Why should you treat housing different from the way you treat the B–1 bomber?
Under the logic of the Senator from Wisconsin, the Armed Services Committee could come in here now and say:
Wait a minute now. You are allowing housing. You are only talking the budget outlay and you are taking budget authority for the first year. It is unfair to put in these high figures because it is paying off all in 40 years. Why should we have to do this with the B-1 bomber? We should not be charged with the outyear numbers. We should only be charged with the budget authority and the budget outlay for the first year.
Then the B-1 bomber, which is supposed to cost for a buy of $24 billion, will only be reflected as $150 million because that is the budget authority and the budget outlay for the first year. I think the Armed Services Committee can say as the Senator from Wisconsin has now said:
We want fair treatment. We want to be treated equally. So we should not have to portray all of these outlandish numbers because that bomber is going to cost something over this long period of time. Why should we be treated that way? That is unfair to us.
It seems to me that what we are talking about in this body is trying to provide information. That is what the Budget Act is all about. And why should we be afraid of portraying information about what costs are going to be, whether it is the B-1 bomber or something else? Will the Senator agree that,. if we had such an amendment as this adopted to carry this one through for other committees to be able to amend their authorization bill — and I am surprised that a point of order does not lie — they should be entitled to it just as much as the Banking and Housing Committee?
Mr. MUSKIE. As I indicated earlier in my presentation, may I say to the Senator, there is now actively under consideration with the Department of Defense a rent-a-ship proposal.
Mr. CHILES. Yes.
Mr. MUSKIE. It could be handled exactly that way. They are built on this precedent. There is nothing to prevent it.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MUSKIE. I yield 5 more minutes to the distinguished Senator.
Mr. CHILES. I thank the Senator.
Mr. PROXMIRE. Mr. President, will the Senator yield on this point?
Mr. HOLLINGS. Mr. President, will the Senator yield?
Mr. CHILES. I yield.
Mr. HOLLINGS. I thought the Senator was asking me. I am asking him. I am trying to give a golden fleece award. May I have time to make that award?
Mr. CHILES. I yield.
Mr. PROXMIRE, I wish to make a point to the Senator. There is no place in the budget authority ceiling for the full cost of the B-1 bomber now; none. Instead, it is broken down in this way. The President makes a commitment to buy, say, 150 of these bombers. However, DOD decides that it will first buy 5 or 10 or 15 B-1 bombers. That is all that is included in the budget authority.
Furthermore, there is one other point.
Mr. CHILES. Under the logic of the Senator from Wisconsin, though, if this amendment is adopted, the Armed Services Committee will not have any problem in the future. They will simply come in and they will put in the budget authority for the first year's buy and they will put in the budget outlay for the first year's buy. Hereafter they will say, "We do not have to come back to you any more." We said everyone knows the B-1 bomber fleet is to be 224 bombers. That has all been disclosed.
Mr. PROXMIRE. They have to come back every single year to get the additional appropriation just as we have to come back every year.
Mr. CHILES. But they do not in housing. Once that contract authority goes out, that is it. They do not have to go back. So they would be free.
Mr. PROXMIRE. Take the aircraft carrier; that is a better example. Aircraft carrier cost is $2 billion, but we know that the cost of maintaining and operating that carrier is going to be $15 billion in uninflated dollars.
Mr. MUSKIE. Will the Senator yield on that point?
Mr. PROXMIRE. I yield.
Mr. MUSKIE. Public housing contracts involve procurement of the housing. If the Senator will look on page 71 of his own committee report, the operating subsidies which are comparable to the maintenance of a carrier—
Mr. CHILES. That is right.
Mr. MUSKIE (continuing) Are listed annually and controllable annually.
Mr. CHILES. They are not included.
Mr. MUSKIE. They are separate from the procurement side.
Mr. CHILES. They are not included in these numbers. Maybe we should include those in the maintenance of the aircraft carrier and the operating cost of the B-1 bomber.
Mr. PROXMIRE. I would have no objection. What we are talking about is having disclosure which we agree should be made. At no point have we said we want to conceal anything. We also said we do not want housing to be singled out to be put under the ceiling while these other programs, social security and most of the military programs are not effectively put under the ceiling in the same way.
Mr. CHILES. I think the argument that the Senator is making and the logic that one can make could be used by the Armed Services Committee right now to take out the B-1 bomber, aircraft carriers and any other downrange procurement from under any of the ceiling and control we now have. That is the danger the Budget Committee sees in this type of amendment. The Senator from Wisconsin knows this. Less than 25 percent of our budget is controllable. So in any one year if we start trying to do something to reduce the budget, we cannot do anything in any given year, because that 25 percent is mostly manpower, whether it is the military or the civilian work force.
That is about the only thing we go and cut in one year. So if we are going to get any kind of control, we have to look at the outyears. For the first time on the Budget Committee we are trying to realize and trying to educate the Senate and Congress a little bit that we do have to be concerned with an item of budget authority because that is what is influencing those outyears.
How many times has the Senator from Wisconsin heard a program passed in this body and someone said this is only going to cost $15 million this year, well knowing 5 years and 10 years down the line that program was in the billions of dollars already?
So we voted for that program without realizing or without making ourselves think of what we were doing to a process down the years.
Mr. PROXMIRE. I cannot understand what the Senator is attacking in our position. We would not conceal that information. We would disclose it. We would make it clear how much the total obligational authority would be. We simply say that this should not be put under the budget ceiling since other programs are not. I discussed not only the military programs, but it is true of the social security program as well.
Mr. MUSKIE. The Senator is so wrong in so much of what he says about what is under the ceiling and is not. It is incredible. I have, I think, about an hour left. I could not cover it all in an hour. The Senator refers to the social security as an example. Social security is an entitlement program. There is nothing to prevent Congress in any year from changing those entitlements down or up. There is no contract obligation. But once you sign these contracts to construct housing, you either meet the contracts or buy them out and Congress has no other choice.
Mr. BROOKE. Will the Senator yield at that point?
Mr. MUSKIE. The Senator from Florida has the floor.
Mr. CHILES. I yield.
Mr. BROOKE. Could we leave the B-1 bomber and come back to housing for a minute?
Would the Appropriations Committee still have to appropriate money for these 15 year to 40 year contract?
Mr. MUSKIE. The Senator is asking the question of me? Under the present law, I believe the answer is no. The appropriation is made up front before the contracts are signed.
Mr. BROOKE. So you are not certain about the appropriations process?
Mr. MUSKIE. That is correct. The Senator is asking me about the B-1 bomber?
Mr. BROOKE. No.
Mr. MUSKIE What is the Senator asking about?
Mr. BROOKE. Housing. In other words, with section 208 in the bill, the $54 million would have to be appropriated. There is no question about that. That is correct?
Mr. MUSKIE. Yes. But under the present law the entire $34 billion is counted as budget authority to reflect the true cost of the program. Neither the present law nor section 208 provides for further control after the contracts are signed.
Mr. BROOKE. But it still would require appropriations approval.
Mr. MUSKIE. To liquidate the contracts which have been signed.
Mr. CHILES. But if they did not, the Government would be sued, would they not?
Mr. MUSKIE. Once the contracts are signed, the Government has no choice, unless it wants to be sued, but to liquidate the contracts.
Mr. BROOKE. But does not the Appropriations Committee have to approve the contract before the contract is signed?
Mr. MUSKIE. Under section 208, budget authority would be only for the first year. Let me read section 208.
Mr. BROOKE. I understand the first year. I am talking about beyond that.
Mr. MUSKIE. Section 208 says:
The Secretary shall utilize estimates based on (1) the amount of payment requirements to liquidate housing contracts which were already in effect at the beginning of that year; and, (2), the amount of payment—
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MUSKIE. I yield myself an additional 5 minutes.
—the amount of payment requirements to liquidate housing assistance contracts estimated to be entered into during that year.
Mr. BROOKE. The Senator is referring to page 41 of the bill?
Mr. MUSKIE. I am.
Mr. BROOKE. That refers, again, to budget authority. I think the Senator is confusing budget authority with appropriations. It says:
The total amount of budget authority determined by the Secretary under the preceding sentence shall be final for the purpose of section 201 of the Budget and Accounting Act 1921, and the Congressional Budget Act of 1974.
My point is the Appropriations Committee still—
Mr. MUSKIE. The definition of budget authority is contained in the previous sentence of section 208.
The way this bill reads, in the first concurrent resolution for 1978 the total budget authority under the definition in section 208 would be $3.3 billion. As it is now contained in the first concurrent resolution, it is $34.0 billion. The difference is that the Senator's provision reflects liquidation of contracts only, not future contracts.
Mr. BROOKE. The point I am trying to make, and I understand what the Senator has pointed out, is that none of this money can be spent without prior approval of the contracts by the appropriations process. Is that correct?
Mr. MUSKIE. Under the present system the Appropriations Committee appropriates budget authority and approves the level of new contract authority. Now they are both controllable. Under section 208, only the contract authority would be controllable.
Mr. BROOKE. All right.
Mr. MUSKIE. And that part would not show in the budget resolution. It would completely escape control of the congressional budget process.
Mr. BROOKE. That is the point I have been trying to make. It would still be subject to the control of the appropriations process.
Mr. MUSKIE. Not to the same extent.
Mr. BROOKE. All right, not to the same extent. But they are still controlled by the Appropriations Committee. That is the point.
Mr. MUSKIE. All we will be looking at when we look at the budget resolution is what it costs to liquidate contracts that are already out of control. There will be no way in the budget resolution, if section 208 is adopted, to control the size of the housing program through the budget resolution.