August 1, 1979
Page 21719
Mr. MUSKIE. Mr. President, the bill before us, S. 914, represents a significant rewrite and extension of the Economic Development Act of 1965. I strongly support this bill, and I would like to express my admiration for the excellent work and long hours put in on this legislation by all the members of both the Environment and Public Works Committee and the Banking Committee.
SECTION 402 (A) WAIVER
Mr. President, because S. 914 authorizes appropriations for fiscal year 1980, but was reported after May 15, 1979, it required a waiver under section 402(a) of the Budget Act in order to be taken up in the Senate.
The Budget Committee favorably reported Senate Resolution 212 and recommended that the waiver be granted. It took this position for several reasons. First, without passage of the legislation, EDA's legislative authority will expire at the end of fiscal year 1979. Second, funding at the level authorized in S. 914 could be accommodated within the function 450 targets of the first budget resolution. Third, the legislation was not submitted by the President until April, leaving the committees inadequate time before the May 15 deadline to resolve questions of jurisdiction and to consider and issue their recommendations on major new initiatives.
BUDGETARY IMPACT
Mr. President, full funding of S. 914, as reported, could be expected to be accommodated within the fiscal year 1980 targets of the first budget resolution. However, I feel I must alert my colleagues to the fact that full funding of just the counterpart EDA provisions in companion House legislation, H.R. 2063, could cause the targets to be exceeded by $0.8 billion in budget authority and $0.2 billion in outlays. Further, the House bill also provides up to $2 billion for standby local public works projects, an authorization which could boost the fiscal 1980 budget overages of the bill to as much as $2.8 billion in budget authority and $0.6 billion in outlays.
Mr. President, I urge the Senate conferees on this legislation to vigorously oppose the House's local public works provision. The administration opposes it, and — as I have just indicated — there obviously is no allowance for it in the first budget resolution.
But it is not simply on budgetary grounds alone that I believe the Congress must reject the local public works initiative. We passed a similar program just 3 years ago, and our experience with that one should prove to us that the program simply does not work as advertised. It was intended to help solve our economic problems, and instead it worsened them. It was intended to be countercyclical, and instead it contributed to an overheated economy. The principal problem was that the spend-out was so slow that the intended countercyclical effect was defeated, and in fact a significant portion of the spending served only to stimulate the economy during a period when fiscal restraint was needed. Further, the program increased demand in tight labor markets, thereby contributing to the horrendous inflationary problem that now confronts us.
NEED FOR EDA
Mr. President, this bill, S. 914, is important to the well-being of America's urban and rural areas.
First, most of the money authorized in the bill is intended for the revitalization of the economies of depressed areas, through the provision of direct loans, loan guarantees, and interest subsidies to businesses, and through public works grants, supplementary grants and other economic adjustment assistance to public bodies. The legislation gives EDA a comprehensive set of tools, to use in close cooperation with local officials, to design and implement economic development programs that will attract jobs and investment to areas that are experiencing difficulty maintaining healthy economies.
Second, under part B of title I of the bill, EDA is authorized to carry out the important function of providing readjustment assistance. Specifically, EDA is authorized to provide assistance in communities that "have experienced, or that may reasonably be foreseen to be about to experience, a special need to meet an expected rise in unemployment, or other economic adjustment problems, including those caused by any action or decision of the Federal Government." I should like to give an example of how important, and how crucial, this readjustment assistance can be, by citing an example that has occurred in my State just recently.
It involves Loring Air Force Base, a SAC base in the northern part of Maine, the military value of which has never been challenged by the Air Force.
Loring is the closest SAC airbase to the Soviet Union. Virtually every plane that flies to Europe flies over this base. The Air Force is now seeking to convert Loring to a forward operating base at a cost of an 85-percent reduction in personnel that would be expected to raise the unemployment rate in the local area — Aroostook County, which covers an area about the size of the State of Massachusetts — from 12 percent to 23 percent almost immediately.
Mr. President, I was a member of the Maine legislature in 1946 when it was announced that the Loring base was to be built. The manager of the town nearest to where the base was to be located was also a member of the legislature. He begged us to help him keep the base out of the country, because he foresaw what would happen. He foresaw that the new base would establish an infrastructure, that the private economy would develop around it, and that some day in the future, when the base was reduced in size or closed, those people who had invested their money, their energy, and their lives in the area would be left with the economic dregs.
And that is exactly what has happened. Already the airline that flies into the county, and makes a profit on its flights, has applied for elimination of this route in anticipation of the closing of the base.
To add further to the decline of the area's economy, the potato growing industry .has been in a difficult period, compounded by the possibility of lower tariffs on potatoes because of a trade agreement that will make it possible for the few potato processing plants we have to lose even more money.
Every decision the Federal Government has made over a period of many years — there was an earlier military closing in the county as well — has driven these people further and further into the dirt. The Defense Department counts the cost of closing these bases only in terms of its budget.
But I want the people of this country to understand that there is another and perhaps more serious cost, one that must be measured in human terms. And because of this cost, we have to create programs like the EDA readjustment assistance program to enable local communities to survive in the face of abrupt Federal policy changes.
In the case of northern Maine, the Economic Development Administration moved quickly to provide to the area, not only their financial resources, but also their planning and technical assistance. And, in just a period of a few weeks, EDA has succeeded in changing the attitude of the citizens of northern Maine from one of depression to one of hope and opportunity. Clearly, the past successes of EDA programs established in Maine contributed tremendously to reestablishing confidence in the ability of local people to improve their economic health.
Although the Air Force decision to reduce Loring may be reversed because of the clear strategic value of the facility, the attention given to the area by the EDA and the immediate success that has arisen, only convince me further of the important role of this agency.
I believe that when the Government moves into any area in any State, transforms its economic base to serve a national purpose, and then disappears, that the Government has the responsibility to help that area to remain economically viable.
TARGETING
Another important feature of the EDA bill, Mr. President, is how well it is targeted upon the communities and areas it is supposed to benefit. This program emerged as a successor to the Area Redevelopment Administration that Senator Paul Douglas supported for so many years, with its central policy objective of investing in depressed areas, to help them get on their feet.
In the years since the basic EDA legislation was passed in 1965, this underlying targeting concept has frequently been challenged. The result is that provisions have been enacted that allow an area to remain eligible for EDA assistance even when it no longer meets the criteria for declaring it eligible in the first place.
Under these provisions, after EDA has come in and done its job and the community is back on its feet once again, no matter how healthy that community becomes, it remains eligible for the grants and low-interest loans that taxpayers originally agreed to finance on the understanding that they would go to communities in need. As a result, 85 percent of the U.S. population now lives in areas eligible for EDA assistance.
I am pleased to be able to say that S. 914 adopts new eligibility criteria, proposed by the President, which over a 2-year phaseout period would reduce the eligible percentage of the population to 68 percent. I must point out to the Senate, however, that the companion House bill, H.R. 2063, simply adds the new eligibility criteria to what is already in existing law, thereby increasing the population percentage to 90 percent.
In my estimation this is an irresponsible course of action and makes a mockeryof efforts to target this program efficiently on those whom it was intended to help. However attractive it may be politically to scatter EDA assistance into virtually every city and town in the country, as the House bill does, there are important economic and budgetary results from doing so that must be understood.
First, in order to provide the necessary amount of assistance to distressed areas where it is most needed, more dollars would have to be appropriated. If they were not, and appropriations instead remained the same, the neediest areas simply would receive less assistance.
Second, the basic underlying concept of EDA's programs are that they are to provide a small incremental amount of assistance to distressed areas, above what is available to everyone else, to give them a little push down the road to economic self-sufficiency. But if virtually every community in the country receives EDA dollars on the same basis, that incremental assistance disappears, and the basic conceptual underpinning of EDA assistance disappears along with it.
Third, to the extent that EDA is spread across the entire country, it becomes a general subsidy for development anywhere and everywhere, and there simply is no rationale for that kind of Federal assistance.
I urge the Senate conferees to stand fast to the Senate position and not adopt the House bill's new eligibility criteria. I also repeat, Mr. President, my hope that they will also vigorously oppose the House's ill-advised, local public works provision: Federal public works projects do much that is good for the country, but there is sufficient evidence now available to tell us clearly that public works spending should not be used as a part of fiscal policy to influence economic conditions. There simply is too little control over the timing of its expenditures.
Finally, I would reiterate that I strongly support this bill as reported, and I again congratulate the two authorizing committees which have drafted it for an excellent job well done., I urge my colleagues to join me in voting for its passage.