are those who are best organized, as business entities. When that happens, the business entities, with their army of lawyers and accountants, and so forth, are the ones who are able to drive an even greater wedge between the rich and the poor of the society, and that has derivatively a terrifying, terrible effect on the cities, themselves, where the older people, the very young, the poor, the black, are huddled together, and huddled, may I point out, in a situation where there is very poor transportation for them and where energy costs increase and where public transportation becomes more and more of a problem itself. So, indeed, the people of the cities, of the center cities, and of the cities, themselves, find themselves, in the Northeast, and in certain parts of the Middle West, in a terrifying huddling situation. Now, the question, then, is once we talk about changing the taxing structure, that is, attempting to deal with the tax expenditure problem and also undertaking to say to the corporations, to the great international corporations that use the funds, the pension funds of public service employees as investment tools in Third World countries, where, in effect, the banks of the cities, the bank trustees of pensions funds use their power to invest abroad moneys that are made in New York City or in Boston, or in Los Angeles, wherever it may be; that what has to be looked at is an attempt to reinvest those funds here within our own cities, especially given the fact so much of these funds are indeed public service funds, that is, they are the investments, or they are the pension funds of the public service employees. This is not to say that public service employees should not be protected in their investment, but there is something peculiar about a situation in which the banks and the very great corporations are able to take those funds, in effect, through trustees and invest them for multinational corporate enterprises that do nothing for the host countries abroad and cause even greater decay within the United States because of capital shortages within our own cities. TAX EXEMPT PROPERTY Beyond that, I would point out several other things. One is that there has to be a way of looking at how much property within the cities of this country falls in tax exempt status, and this would mean a serious consideration by the churches of whether or not certain church properties should remain tax exempt, university properties, institute properties for that matter, in order to ascertain whether at least a portion of the funds, either through the discretion of these groups or through direct governmental mandate has to go back into the development of those cities, themselves, or the sustaining of various sorts of projects and activities that will keep a certain level of decency within the cities, themselves. Now, all of this, may I add, in terms of these last points, are secondary to a more basic point, in my view, that has to be made. I don't believe that targeting is going to work, and the reason I say that is that at this point two-thirds of the United States is a target, and now when you begin to see that at least two-thirds of the United States is a target, you really are talking about a fundamental question, not a particularistic one. It requires, therefore, a comprehensive approach, and that comprehensive approach does relate, it seems to me, to the question of a balanced development and growth within the society itself. It goes to the question of-and I am not the greatest supporter in the world of planning-but it does go to the question of whether the society and the Federal Government, as a whole, is going to be able to plan a direction of balanced investment across this society, which means, in effect, that it is going to have to guide the retained earnings and begin to talk about worker community participation over major corporations in the United States in order to guide the earnings and the investment policies of those corporations. INVESTMENT POLICY There is no other way around this problem at this point except to have very heavy taxing of those corporations, on the one hand, or alternatively undertaking to develop or undertaking to guide where the investment allocations of those corporations are going to go. So, rather than move in the direction of the so-called market system, which means that the corporations will follow where the greatest profit is, and which, in effect, will doom the cities of this country, doom them-there is no question about that-we will have to undertake a very different policy which, in my view, is in the long term economically sound, but is one which says there has to be greater planning and greater direction of investment in terms of what is to be made, and in terms of where it is to be made. Now, this also suggests to me certain points that have been covered in American history before, but which we have forgotten. The fact of the matter is that, in different parts of the United States, cities have had the responsibility of, in fact, making things, so; for example, in Milwaukee there is a fertilizer business, Milorganite business, which is owned and run by the city of Milwaukee. In the Dakotas-and I assume it still exists-the grain storage tanks are owned by the States themselves. So we have to move, in effect, into a situation where the cities are more than the passive recipients of broken-spirited people; they, themselves, have to be active in terms of the development of investment, and the ownership of small businesses, the ownership partner, if you like, with neighborhoods of various sorts of small entrepreneurial activities that do develop surpluses for the cities. The question, therefore, of how this is going to occur, it seems to me, comes down to a matter of national policy. The CHAIRMAN. If the gentleman will suspend for a moment, there is a vote on the floor, and we will recess for 10 minutes. [Brief recess for members to vote.] The CHAIRMAN. The committee will resume its business. Mr. Raskin, you may proceed. Dr. RASKIN. Thank you, Mr. Chairman. The national policy that we have to look at now is really very different than the direction that Congress is now moving. The Congress and the Executive more and more move toward a principle of mean-spirited budgets and, in my view, misallocation within the budgets of where priorities should be placed. UNDERSTANDING DEFENSE BUDGET This question, it seems to me, becomes one that has to be debated at the city and local level. So, for example, it would not be the worst thing in the world to begin debating the question of the defense budget, at least to get some understanding of the defense budgets, within city councils and within mayors' offices, so that they, themselves, those responsible for the actual caring of the American people, begin to see where the funds are really going, and how that is affecting their own situation locally in the short and in the long term. HOW TO DEVELOP BENEFICIAL INVESTMENT Second, I would urge the consideration of a planning process which would bring together groups of mayors to talk about how to develop investment in such a way that it will benefit the entire country as a whole. You have pointed out today the difficulty-and so has Congressman Mineta-the difficult and regional antagonisms that occur, and which, in fact, were masked over this last generation. Historically, of course, this has always been true of what happened in Congress between the various regions struggling with each other for industrial development or agricultural development, or whatever, and indeed in the last generation this was masked as a result of a relatively high employment rate and a relatively high, decent income condition. Unless other steps are taken as quickly as possible, the regional conflicts will become much worse in American society, and what we will then see is people using the military and national security arguments as a way of solving those regional conflicts by moving abroad, that is to say, the way to get people to rally around the flag, so to speak, will be to talk about Iran as being the American problem, or what goes on abroad as being our problem, rather than attempting to deal with the regional and city conflicts that we now have directly. GOALS That is a problem that in my view will get much worse unless we set very particular goals for the society which are quite different than the ones that are now being set. In that sense, I would make the argument that equity and fairness and cooperation are linked principles that should be the purpose of government and which would, therefore, cause us to rethink where the taxes of the society should go; it would help us rethink what the defense budget should be, and how we would develop a planning process for investment and reinvestment in the society. It is interesting to note that certain people, even Felix Rohatten, who is a big city banker in New York, sees the craziness of the overkill strategy which we follow militarily and sees how indeed New York City, itself, is decaying and dying as a result of the national security strategy that is being followed and how other cities now are being put in the same position. His solutions are different, but the analysis really comes down to the same thing. So I think there is no way to avoid the question of where investment is to go by the major corporations, who is to control that investment, and the order of priorities here in the Congress which puts greater and greater emphasis on national defense and less and less emphasis on social programs. That, in my view, will turn out to be a very grievous error for society. CIVIL DISORDERS In particular terms, what we will then see is greater civil disorders, and the police question will become a secondary question, because what will happen, in my view, is that with greater civil disorders, the National Guard will be counted on more and more to control the activities of the cities, and especially what happens in the ghettos of the cities, and so there will be greater civil conflict in the society, and what we will see, therefore, is a National Guard, military policing of the cities as a matter of course, and where, in effect, the cities will become reservations which was, of course, in part predicted by the staff of the Kerner Commission in the 1960's. In my view, this is a time that is different than the 1960's, because there we had relatively high employment in the society, where people, in fact, believed in the possibility and the potentiality of this country, even though there was a terrifying and terrible war. At this point, what we see is more and more glumness, a sense that very little can be done, that an 8-percent unemployment rate is something that is accepted as a reasonable thing to have nationally, that if we were to drop the unemployment rate of black youth from 45 to 30 percent, that would be considered to be a very great reform and accomplishment. In other words, we are in a situation now of hopelessness on the one level where it comes out in spasmic disorders of the kind that we see in Miami. RECOMMENDED ALTERNATIVES So my judgment is-to get out from under this-what will be required is the kind of national leadership, national programmatic planning to suggest that there are alternatives that in fact will make a difference. At the local level here in Washington, I would suggest that certain things could indeed be thought about and which could perhaps be used as a basis for spreading elsewhere. TAXES One is that I think the people should be given their choice within limits to decide whether to pay their taxes locally or nationally, and by locally I mean here specifically in the neighborhoods and the cities, so they, in fact, have on their tax forms the possibility of choice as to where to pay their taxes, rather than waiting for a revenue-sharing formula to be worked out on the national level. I think that would cause a redirection of the funding in the society in a much more positive way. COMMUNITY DEVELOPMENT BANKS Second of all, I would see the possibility now of the establishment of community development banks. We have made a start in that direction with the National Co-op Bank, but I would suggest that more directly we should have community development banks, possibly changing the credit unions of the society from being credit unions that subsidize the consumer credit market to being credit unions that were, in fact, instrumental in rebuilding the neighborhoods of the society, themselves. That would change in effect their charter and their purpose, but it would be something that would cause a very great deal of excitement within the neighborhoods and enter into a rebuilding process, themselves. EDUCATION Third, in a city like Washington, I would see the possibility of the development of a program within the government service for teaching, where, in effect, people with great skills in the bureaucracy or in the Congress would spend several hours teaching on a released-time basis in the schools, themselves, as assistance to the schools so that you would develop a different sort of relationship in the schools to the government and to people with great expertise. This would, in my view, move toward the building of a model school system here which would bring in more and more the universities of the area for that purpose. FEDERAL PAYMENT FORMULA I would also think that the idea of a Federal payment which is settled and which is not discretionary is a good one, but the problem here is to be sure that that Federal payment is predicated on equity, not only on a numerical percentage of what is raised, but there has to be a clear statement of why there should be this Federal payment. One is that it is owed in the sense that the Federal Government uses the property, but, second, that there should be a sense of equity for the people who live here and also that becomes the principle upon which the Government, itself, begins to operate in terms of the programs that it builds, and in terms of its taxing mechanism, it is predicated on equity and fairness and caring. EMPLOYMENT PROGRAM Finally, I would make the argument that there is no reason that the District of Columbia couldn't have a full employment program which would then become a model for other places, and a full employment program which would include the development of public businesses, which is started by the city of Washington, itself, so that enough capital is there for the employment of people in these programs, and these businesses would be both worker- and community-owned. Thank you very much, Mr. Chairman. MILITARY BUDGET The CHAIRMAN. Mr. Raskin, I would like to thank you for your opening remarks and go first to your statement with respect to the increase in the military budget. We both tend to agree with respect to what the future holds if we continue to go down this particular |