July 13, 1979
Page 18519
Mr. MELCHER. Mr. President, will the Senator yield to me for only a minute on that point?
Mr. PROXMIRE. I yield very briefly, but the Senator from Maine has been waiting.
Mr. MELCHER. Yes. I will only take 30 seconds.
Mr. PROXMIRE. All right.
Mr. MELCHER. I will say that if it is essential that we readjust our evaluation as the economy disintegrates, then it must also be essential that we take the action now to protect this modest authorization so that we can later on follow up not only a correction in our budget estimate, but a correction in the appropriations process, and one follows the other. Would not the Senator agree?
Mr. PROXMIRE. I would not agree with this particular case. Of course, it is my amendment, and I am convinced that the housing that we authorize in this bill will do nothing to fight the recession we confront now.
I am happy to yield to the Senator from Maine whatever time he requires.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Mr. MUSKIE. I thank the Senator from Wisconsin.
Mr. President, S. 1149, the Housing and Community Development Amendments of 1979, provides authorizations for a number of important housing and urban development programs. I wish to commend the distinguished Senator from New Jersey (Mr. WILLIAMS) and
the distinguished Senator from Utah (Mr. GARN) for the effort they have put forth to bring this large and complex bill to the floor.
This bill authorizes many programs which I have been proud to support through the years, and which I continue to support today: Section 202 elderly housing, public housing, section 8 housing, urban development action grants, section 312 rehabilitation loans, and others. Because these programs serve large numbers of people, because many are targeted upon the poor or the elderly, and because many have as their goal the revitalization of our Nation's cities, we are understandably eager to enact generous authorization levels for them.
Certainly all of us are in favor of helping the poor and the elderly, and of rebuilding America's cities. Yet the hard fact is that when we make fiscal decisions on programs like these, we must remember that we are now living in a time that forces us to make hard choices as to how we use limited resources.
My task here today is to assess whether S. 1149, as reported, is responsive to the need to make those hard choices. In general, I believe it is. However, as I will point out, in the one area of low income housing assistance I believe an amendment to reduce the level of the proposed authorizations is appropriate.
Mr. President, S. 1149 provides 1-year, fiscal year 1980 authorizations for a number of housing and community development programs, plus 3-year authorizations for the section 202 Housing for the elderly and handicapped program. I ask unanimous consent to insert in the RECORD a table showing the authorizations in S. 1149, along with the President's budget request.
[Table omitted]
As the table shows, the authorizations in S. 1149 affect three budget categories: Function 370 (Commerce and housing credit), Function 450 (Community and regional development), and Function 600 (Income security). I will discuss S. 1149 by considering the authorizations falling under each of these functional categories.
FUNCTION 370, COMMERCE AND HOUSING CREDIT
In Function 370, the bill authorizes additional borrowing authority for the housing for the elderly and handicapped program of $520 million in fiscal year 1980, $950 million in fiscal year 1981 and $975 million in fiscal year 1982. The bill also extends HUD's basic mortgage insurance programs for 1 year. These authorizations appear to be consistent both with the President's request and with the congressional budget targets for Function 370.
FUNCTION 450, COMMUNITY AND REGIONAL DEVELOPMENT
Turning now to the Function 450 authorizations, for the urban development action grant program, S. 1149 provides a new fiscal year 1980 authorization of $275 million. This is exactly equal to the President's request, and would provide the program, which assists major public-private urban revitalization projects, with a 69-percent increase over the existing fiscal year 1980 authorization of $400 million.
S. 1149 also includes a $130 million authorization for the section 312 rehabilitation loan program, which provides 3 percent Federal loans to bring homes and commercial property in designated areas up to code standard. And finally, for section 701 comprehensive planning grants, HUD research programs, the Neighborhood Reinvestment Corporation, and other small programs, S. 1149 authorizes a total of $95 million. These authorizations also are similar to amounts requested by the President.
Mr. President, there is a great deal of legislative activity this year which deals with community and regional development programs falling within Function 450. In addition to S. 1149, now before us, major program expansions are being proposed for the Economic Development Administration in S. 1145 and S. 1150, for the Appalachian regional development program and the regional action planning commissions in S. 835, and for the SBA disaster loan program in S. 918, which is now in conference.
As a result of this flood of authorizing bills, all proposing sizable funding increases, the Function 450 targets of the first budget resolution are under a great deal of pressure. In fact, the Budget Committee staff has calculated that if all legislation affecting Function 450 that is currently pending in the Senate were fully funded, without corresponding reductions in other community and regional development programs, the functional targets would be exceeded by $0.6 billion in budget authority and $0.4 billion in outlays. Further, if pending House legislation were fully funded, the targets would be exceeded by $3.4 billion in budget authority and $1.1 billion in outlays.
Mr. President, I do not intend by this accounting of potential budget overages to suggest that those comparatively small Function 450 programs included in S. 1149 are authorized at excessive levels. My personal opinion is that they are not. However, I would hope that this list of potential problems will serve to alert the Senate that a large portion of the authorizations now being proposed for Function 450 program cannot be funded.
FUNCTION 600, INCOME SECURITY
Within Function 600, the Federal Government helps low income people afford decent housing primarily through two major programs: The conventional public housing program, under which HUD contracts to pay debt service charges and operating subsidies, and the "section 8" leased housing program, under which HUD contracts with local housing agencies and private developers to pay the difference between a "fair market rent" and 25 percent of a tenant's adjusted income.
S. 1149 authorizes for these two low income housing assistance programs, annual contract authority of $1.3 billion, an amount expected to translate into fiscal year 1980 budget authority of $30.7 billion. Funding of this amount could assist an estimated 300,000 additional dwelling units per year. By way of comparison, the President has requested annual contract authority of $1.1 billion, which translates into budget authority of only $26.5 billion, $4.2 billion less than would be authorized by S. 1149.
S. 1149 also authorizes $742 million for public housing operating subsidies, and $82 million for subsidies for financially troubled privately owned housing projects. These amounts are generally consistent with the President's request.
Because of its sizable low income housing assistance authorization, full funding of the bill would be expected to cause the fiscal year 1980 first resolution budget authority target for Function 600 to be exceeded. Depending upon the size of the appropriation, and the extent of and offsetting reductions in other Function 600 programs, the size of the budget authority overage could be as much as $4.9 billion.
Mr. President, a potential budget overage of this size cannot be ignored. I understand perfectly the desire to increase the authorization for these programs.
One of the first committees to which I was assigned was the Committee on Banking and Currency 20 years ago, and I have a stake in many of the programs that are on the books, most of which I supported, many of which I had a role in writing, and so I am sympathetic to our housing problems in this country and our housing goals. Yet, the decision has been made, Mr. President, in adopting the first budget resolution that the battle against inflation and the need to balance the budget are also of the utmost importance.
Mr. President, we are in the midst of hearings in the Budget Committee on the second budget resolution, and all this week we have been listening to economists from the private sector representing the spectrum of thought in the economic sector in this country. We have heard from Dr. Rivlin of the Congressional Budget Office, from Mr. Maclntyre of OMB, from the Secretary of the Treasury, from the Council of Economic Advisors, and from non-governmental economists.
All of them tell us two things:
One, that comes as no surprise, notwithstanding the comments of the distinguished Senator from Montana, is that the first budget resolution was based on the assumption that the economy would moderate and slow down this year and that that was important in the fight against inflation.
It is true that the economy has slowed down this year more than was projected in January, February, and March, but at this point the unemployment rate still has not risen. It is lower than it was in January, the first of the year.
What we are being asked to do, therefore, before there has been a reduction in the unemployment rate, is to shift sharply our budget direction from a fight against inflation to a fight against unemployment, using an instrument which is not necessarily appropriate to that challenge, as the Senator from Wisconsin has pointed out.
Our number one problem, according to every economist who has come before us, is still inflation.
Mr. President, it is my conviction that only a steady course, a steady fiscal course by Congress, has any possibility of influencing the country to believe that we are serious about inflation and that we are going to use fiscal policy in a way to fight inflation. We have ample flexibility in the process to deal with a deep recession if one comes. No economist has predicted yet this week a deep recession. They predict a moderation and a greater slowing down of the economy than we predicted in January.
But the focus still must be on inflation.
Of course, if the Senate chooses to reach a different judgment on the basis of whatever instincts or information or advice Senators receive, that is the Senate's prerogative under the budget process.
But I am constantly amused by the indignation generated in the Chamber when someone outside this body describes the economy in a way that is inconsistent with some Member's idea of what we should do about some program. I mean the whole purpose of the budget process is that CBO gives us its honest judgment about where we are economically and what we should do about it or what the options are. If others disagree with CBO, we undertake to bring those disagreements to the Chamber. We should get all the information we can. There is no easy macroeconomic answer to this tough dilemma which we face as between inflation as a high priority problem and unemployment as a possibly intensifying problem in the next 6 months.
We are literally between a rock and a hard place on it, but it is the emerging consensus, I believe, of the Senate Budget Committee that we should hold to a steady course, going forward on the basis of the assumptions made in the first concurrent resolution. We can always come back with a third concurrent resolution if the economy worsens to a greater degree than any economist has told us to expect this week. We have to keep our options open, and we will.
But to turn our policy around now on the basis of one program, and use as justification a sharp shift in macroeconomic requirements makes no sense. I mean our economic circumstances in this country are not such that there is always an unmistakable problem and an unmistakable answer.
The choices are hard.
Mr. President, we have been following a moderate course now last year and this year. We have reduced the budget. Unemployment has gone down, and inflation has risen for three reasons as to which every economist who has come before agrees: Food prices, energy prices, and mortgage interest rates. Those are the three principal reasons that account for the rising inflation from 9 to 13 percent since the first of the year.
Now, given that analysis, it seems to me common sense dictates that we hold to the fiscal policy that we laid down in the first budget resolution. If we break that policy today in the name of housing — and housing is a very big problem in this country, and I share the concerns of the sponsors of this provision in the bill about it — there are other reasons why some people in this body think we ought to be applying more resources to other programs. If we breach the budget in order to deal with this one, how do we say "no" to the next one that holds some prospect for greater employment? How do we say "no" to the next one? We have breached the dike. So that if macroeconomic policy requires that we change fiscal policy, then we ought to do it in the second budget resolution on the basis of the overall requirements of the economy, and we ought not to do it as a justification for enlarging a single program. We make the macroeconomic decision first, and we will make it before September 15. We make that decision first, and if we decide the condition of the economy requires that we adopt a stimulus policy then we consider what programs to use to implement it. Housing would take its place in the line, I am sure, of objectives that can serve a useful purpose macroeconomically.
Well, this is my job, Mr. President, andI do not find it — I never find it — pleasant to say "no," to be discouraging to my colleagues who have such constructive public interests in mind as they present their positions.
But what I want to say to you right now is that this provision in this bill will breach the budget we adopted in the spring, no question about it. Second, it would send out a signal to our colleagues that we are shifting macroeconomic policy in the direction of anti-unemployment instead of anti-inflation, and, boy, I can see them jumping to that signal.
Third, I urge my colleagues to hold the steady course which we laid down in the spring, and I think if we do we will not regret it. That is not to say, Mr. President, that my crystal ball is any better than the crystal ball of the Senator from Montana, but I happen to be in position where I am supposed to offer a judgment from the vantage point of an institution created by Congress to advise on just such questions.