July 19, 1978
Page 21616
Mr. MUSKIE. Mr. President, will the Senator yield for a unanimous consent request?
Mr. CHILES. I yield.
Mr. MUSKIE. Mr. President, I request unanimous consent that the following members of the Budget Committee staff be granted floor privileges during Senate consideration of S. 3084, the housing and community development amendments of 1978:
Karen Williams, Don Campbell, Liz Tankersley, Jill Scheu, John McEvoy, and Rick Brandon; also Peter Connolly of Senator NELSON's staff, Thomas Downey of Senator HATHAWAY's staff, Tony Arroyo of Senator DOMENICI's staff, and Dick Freeman of Senator BROOKE's staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CHILES. Mr. President, I ask unanimous consent that the name of the Senator from Mississippi (Mr. STENNIS) be added as a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CHILES. Mr. President, a package amendment adopted by the Banking Committee on an 8-to-7 vote increased the 1979 authorization levels for a variety of housing assistance programs by $8 billion over that recommended by the President and passed by the House of Representatives. The message we are hearing from the American people is that the Federal budget is already too large and we ought to be cutting it back, not making it larger.
We are not attempting to cut back on current housing programs. The $31.9 billion of nonspending commitments proposed by the President and assumed in the Congressional budget resolution would allow about 375,000 additional households to receive assistance, in addition to the 2.8 million being assisted this year. Over $30 billion of that budget authority requested by the President will be used to enter new obligations; currently assisted households and projects will be paid from budget authority appropriated in prior years.
Annual outlays for housing assistance would increase from less than $5 billion to about $8 billion by 1983, even if we entered no new commitments. Our amendment therefore poses no threat to current recipients of housing assistance, nor does it reduce the rate at which recipients can be added. Rather, it maintains a steady rate of growth for housing programs. We believe that the last thing either public or private sector housing markets need right now is the instability which would result from a sudden increase of funding.
Mr. President, I ask unanimous consent that a table comparing the funding levels in S. 3084 as reported and those implied by our amendment be printed in the RECORD at this point.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
TABLE I.— Impact of the Chiles Amendment to S. 3084
The Chiles amendment would conform the S. 3084 authorizations for assisted housing programs to the FY 1979 First Budget Resolution targets and the President's budget. S. 3084, as reported from committee, would authorize $0.5 billion more annual contract authority for those programs than requested by the President. Because most housing contracts obligate the Federal Government to outlays for many years, that increase in contract authority produces an $8.0 billion increase in budget authority.
The following table compares the Assisted Housing contract authority and budget authority required for full funding of S. 3084 with level required if the Chiles amendment is adopted:
[Table omitted]
Mr. CHILES. Mr. President, I think it is important to state for the RECORD why we chose to reduce these programs and not some other programs which the committee increased above the level requested by the President. These housing assistance programs all support the income security function of the budget, while the other program increases appear in community development and commerce and housing credit. The budget authority increases for those functions are very small and do not pose a significant threat to the functional targets. An $8 billion breach of the target, however, is far too large to ignore.
It might be argued that this spending in excess of the budget resolution would not be inflationary because there would be little actual outlay in 1979. However, the economic impact of housing assistance is felt as soon as the commitments are made; money is borrowed to finance construction and workers are hired in advance of the actual Federal outlay. Moreover, inflationary pressures will probably get worse over the next 2 or 3 years. With interest rates beginning to soar, and Federal borrowing still high with a $50 billion deficit, any further inducement to spending will be inflationary.
The biggest dollar difference is clearly in the section 8 rent subsidy program, where the committee increased annual contract authority by $340 million over the President's budget. The Congressional Budget Office estimates that this will produce budget authority $7.9 billion in excess of the first budget resolution. The section 8 program has been accelerated and stopped several times since its inception. Every time political pressure builds for a speedup, it is followed by a slow-down. The result has been an inability for local housing authorities to develop and implement long-range plans. We do not even know how fast the private sector is willing to expand in response to Federal funding.
The last administration put on a big push and obtained reservations for a large number of units, very few of which have actually been built. I have been impressed by the commitment of the new administration to implement housing programs, but it will be a year from now until we begin to see how much of last year's budget increase actually produces new units. The committee bill reflects the administration's proposal of a major shift of emphasis to rehabilitation. I think this makes a lot of sense, both as a strategy for neighborhood preservation and as the most cost-effective approach. However, we have never seen a large scale Federal rehabilitation program, and the President's budget would double the number of units rehabilitated. We therefore believe that this is as fast as the program can be expanded in 1 year:
Mr. President, it is important to discuss why we have entirely eliminated a new program of supplementary rent subsidies which was added in at a $75 million authorization level. This program would be purely an income maintenance program. It would entitle any low income person living in an FHA-insured unit to cash payment sufficient to reduce his rent payment to 25 percent of his income. No new housing would result. The program would create more inequities than it would eliminate, because it would pick out one class of low-income individuals for assistance, purely on the basis of living in an FHA-insured unit.
A whole new bureaucracy would have to be created to mail checks to a new group of recipients, without regard to what they are receiving under other programs. Nobody has even produced an estimate of how many low-income people are living in such units, far less any statistics on how much rent they pay. Any authorization would be simply a foot in the door for future expansion.
Creating a new categorical program of this type would be the opposite of welfare reform. We believe this is just the sort of narrowly conceived program which the American people are complaining about. It has not been studied, has not been debated, and no one knows what it could ultimately cost.
Mr. President, there are many valuable program improvements in this bill, of which the Banking Committee can be justifiably proud. Our amendment does not do any violence to meeting the vital missions of improving housing and community development. Our amendment does hold the level of spending down to the responsible level already assumed by the Congress in our first budget resolution for fiscal year 1979. We believe our credibility of showing the American people that we can hold down spending and not add to the pressure of inflation depends on holding to the budget resolution totals. I, therefore, urge my colleagues to join in support of this amendment.
(Mr. LEAHY assumed the chair.)
Mr. PROXMIRE. Will the Senator yield?
Mr. CHILES. I yield.
Mr. PROXMIRE. I commend the Senator on his amendment. It is an essential amendment if we are going to avoid the inflationary effect of going far over the budget. The Chiles amendment would correct that. The Chiles amendment would move us back in several significant areas to the budget requested by the President. I might point out, incidentally, that our calculations are a little different than those of the Senator from Florida. I have taken that $8 billion, too, but my staff people tell me it is $10.6 billion. Whether it is $8 billion or $10.6 billion over what the President requested it is a whale of a lot of money.
Of course, that is way out in time. It is about $620 million a year, but the contract will have to be paid for over a long period, depending on the particular contract 20, 30, or 40 years. In any event, the Committee bill makes a long-term commitment of a whale of a lot of money at a time when inflation has become a more serious problem.
What the Senator is asking is that we maintain the present level of 375,000 housing starts requested by the administration and not go to another 100,000 starts in an inflationary period. It makes all the economic sense in the world to me.
As the Senator has pointed out. the victims of inflation are not fat cats who can take care of themselves; the victims of inflation are the low-income, moderate-income people, who, theoretically, would be benefitted by the committee proposal of building and assisting 475,-000 units now.
I think what the Senator is doing is logical and reasonable. It is in keeping with both the request by the President and the budget resolution which the Senate adopted only a few weeks ago. It seems to me that for us to go way over the budget resolution, as we would in the committee bill, would likely break discipline and make it extremely hard for us to comply with the budget resolution in other respects. I realize this is not an appropriation bill. I realize the Appropriations Committee might come under this. In the past, the Appropriations Committee, as the Senator knows, has very closely matched the authorization in this particular bill.
I think it is especially important here that we recognize what the Senator has pointed out, that the President has requested a reasonable level, that the Senate has provided a substantial amount for housing, and let us stick to that level and not go over it.
Mr. CHILES. I thank my distinguished colleague. I believe he is absolutely right in what he says. We now have the administration committed to a substantial increase in the housing program to be done on a level, steady growth formula. That is really what the housing industry needs. One of the worst problems that we have had is that we have had this acceleration and then completely pulled back. What happens is there has to be higher cost housing. It causes shortages. Right now we are seeing tremendous starts in the housing market. It is not a time of having the economy needed to be stimulated more, because we are seeing this tremendous interest rate and the shortage of materials starting to develop. Now is the time that we want to have some kind of a level commitment. I think that is what HUD has come up with, and I think that is what the administration has come up with. That is what the Budget Committee bought.
I at one time argued with the Budget Committee, "What are you doing coming in with these new units?" They said, "We think there needs to be an acceleration of this program, a commitment that we are going to do it on a steady basis." I have to say the administration has been following that plan. I think that to follow on their budget is to allow that to happen.
Mr. MUSKIE. Will the Senator yield?
Mr. CHILES. I yield such time as the Senator may desire.
Mr. MUSKIE. Mr. President, I congratulate the distinguished Senator from Florida, who is a member of the Appropriations Committee and of the Budget Committee. I would like to emphasize what has already been emphasized by the floor manager of the bill (Mr. PROXMIRE) and Mr. CHILES, that this amendment would simply reduce the authorization of funding for assisted housing programs from the very high levels now included in the bill to levels that were requested in the President's budget which can be accommodated by the first budget resolution of the Congress.
I have in my hand, Mr. President, a letter from Secretary Harris reaffirming her support for the levels in the President's budget as against the levels found in the pending legislation.
I ask unanimous consent that the letter from Secretary Harris be printed in the RECORD at this point.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
SECRETARY OF HOUSING AND URBAN DEVELOPMENT,
Washington, D.C.,
July 19, 1978.
Hon. EDMUND S. MUSKIE,
Chairman, Committee on Budget,
U.S. Senate,
Washington, D.C.
DEAR MR. CHAIRMAN: In response to your request, I am pleased to take this opportunity to reaffirm my support for the Administration's fiscal year 1979 budget authority request for Annual Contributions for Assisted Housing. As you know, HUD's 1979 budget proposes the enactment of $24,650,950,000 of new budget authority for the Section 8 and Public Housing programs.
I believe that the budget requests submitted on behalf of this Department are sound and fully justified, in light of the balance which must be struck between competing national priorities and the Nation's housing needs. I have frequently stated that I shall oppose with equal vigor any efforts to disrupt that balance, either by adding to or reducing the level of funding we have requested. That continues to be my position.
Sincerely yours,
PATRICIA ROBERTS HARRIS.
Mr. MUSKIE. This amendment, Mr. President, deals only with those elements of the bill that pose significant threats to the budget.
I would like to add at this point my congratulations to Senator PROXMIRE and to Senator BROOKE for the overall quality of this bill. What we have tried to do is to bring into line those elements of the bill which pose a threat to the budget.
So, Mr. President, I am convinced that the Chiles amendment is responsible, that it is necessary, and, thirdly, that it is in the best interests of national housing policy and the people that policy is intended to serve.
Let me say why the amendment is responsible, Mr. President.
Let me describe the relationship of S. 3085 to the fiscal 1979 first budget resolution.
If the reported bill were fully funded, budget authority targets for the housing assistance mission of function 600 would,according to our figures, be breached by $8 billion, even after funds available from prior year balances are taken into account. Moreover, if the assisted housing program levels that would be authorized by this bill were to be maintained through 1983, budget authority over the next 5 years would total $220.7 billion, and outlays would total $31.4 billion. This would exceed the first resolution 5-year mission targets by more than $45 billion in budget authority and more than $1 billion in outlays.
It is important to remember how the Congress arrived at those first budget resolution targets. They reflect a very broad consensus, Mr. President, about the proper level of housing assistance.
In the January budget, the President included $25.6 billion in budget authority and $4.4 billion in outlays for assisted housing programs. According to CBO estimates, this level of budget authority would be sufficient to provide housing assistance to an additional 375,000 households, or about the level of activity HUD has maintained over the past 2 years.
After considering all the other demands on the Federal budget, the Senate Budget Committee recommended budget authority and outlay targets to the Senate that would accommodate the full amount of the President's request for assisted housing programs, and that recommendation was accepted by the Senate. No amendment was offered on the floor to increase or decrease the targets for that mission when the first budget resolution was debated on the floor.
The President's request, Mr. President, was also accepted in the House version of the first budget resolution for fiscal year 1979. In fact, there was such broad agreement on the funding levels appropriate for assisted housing that this was one of the rare conferences in which assisted housing was not an issue of disagreement between the Senate and the House during the budget conference.
Mr. President, the Chiles amendment, therefore, would simply reduce the authorization levels for assisted housing to make them consistent with the President's request and the first budget resolution targets.
Second, Mr. President, the amendment is necessary for reasons which Senator PROXMIRE has outlined. Whatever we put in this bill will tend to drive appropriations. The HUD-independent agency subcommittee has not yet completed markup on its appropriation bill. If this authorization is approved by the Senate as it comes out of committee it will undoubtedly tend to drive appropriations upward.
The third point I would make, Mr. President, needs additional emphasis. That is that this amendment is also in the best interests of a consistent, strong and effective national housing policy.
I think this is a particularly important point to make. The system for delivering housing services is extremely delicate, complex, and sensitive. The link between our votes in this Chamber and the improvement of a family's housing is a long chain of events. If Federal housing assistance is to be delivered efficiently, not only must many offices in HUD operate smoothly, but also the efforts of a host of State and local agencies, banks, developers, and other organizations must be coordinated.
If that system is to operate effectively, all of the participants need to have confidence that the Federal commitment is assured and that Federal policy will be relatively constant for some time to come. That system cannot tolerate a roller-coaster ride of big spending followed by spending cuts. Mr. President, did we not learn that costly lesson when the crash housing programs of 1970 through 1972 created conditions that allowed the enemies of housing assistance to shut down the Federal housing programs in 1973? The signals going out from this Chamber should increase confidence in the Federal commitment to housing, not undermine it.
Mr. President, Federal housing programs are still recovering from the shock of the 1973 moratorium. We should give these programs a chance to work. We should give the appropriate committees of the Congress, the administration and others the chance to solve the many problems that remain with these programs.
HUD has demonstrated that it can commit budget authority at a level of about 380,000 units per year. Much progress has been made. But housing starts under section 8 are still lagging. Private financing is still not flowing to these projects as had been expected. The programs still are not responding fully to the needs of large, low-income families. The planning of State and local governments for housing is still not adequate. The attention of everyone should be directed to those problems, and should not be distracted by the problems of trying to process big increases in spending. Frankly, Mr. President, I do not believe the funding levels authorized by the reported bill could be maintained in the Federal budget in future years. As you know, the Federal housing programs are designed so that a constant level of funding does not mean that a constant number of families receive assistance. It means that a constant number of new families are added to an ever-growing base of families that are receiving assistance. CBO estimates that at current activity levels — that is, at annual funding levels that permit about 375,000 additional families to receive housing assistance each year — outlays for assisted housing would rise from $3.8 billion in 1978 to $7.9 billion in 1983.
Mr. President, I submit that is a substantial commitment which the first budget resolution continues, underlines, and supports.
The percentage of the total Federal budget devoted to assisted housing would rise over those years from 0.8 percent to 1.2 percent. That is an increase of 50 percent under the first budget resolution targets. In fact, at relatively constant levels of funding, outlays for assisted housing would continue to climb absolutely and as a percentage of the total Federal budget until they reached a level between $30 and $40 billion two or three decades from now.
Those are the perspectives, Mr. President, that we should bring to these proposals for increases in budgets in future years. The implications of those numbers will become very clear to future Congresses and to the taxpayers who will bear those future costs. Grandiose gestures to drive up budget authority this year can only set the stage for equally striking slashes in budget authority in future years. The funding levels proposed in this bill would undermine Federal housing programs and would not well serve the families those programs are meant to help.
It is reassuring to note that the amendment in committee that led to this large increase in authorization passed by only one vote. I understand that the distinguished chairman and a number of other Banking Committee members strongly opposed the high authorization levels that were reported from the committee.
The amendment now before us enables the full Senate to improve the bill. The amendment is responsible. It is necessary. And it is in the best interests of national housing policy and the people that policy is intended to serve.
It is for these reasons, Mr. President, that I support the amendment of the Senator from Florida.