health and social services. If you can follow that model I just described.

I am saying everybody can do this. But again, our particular organization, the name "special" is very appropriate, more than ever today, in that by "special," we mean we have to do the thing that is special if it is to pioneer in this area. We have to pioneer and try to see if we can meet the current challenge of cutbacks and the direction that, if you want to call it, the country is moving in.

Not that we agree with it. But it is a fact that is happening. We have to first of all survive. But I say survival is not adequate or good enough. You have to survive, but you also have to grow and continue to grow.

And only if you have survival and growth will you be successful. Ms. WRIGHT. Thank you. That's all my questions.

Mr. DYMALLY. Mr. Frazer?

Mr. FRAZER. Mr. Nishinaka, you quoted the Kerner report and you said racism was the basis of the problems of America. By "racism," did you mean racism among the various ethnic groups versus the majority of the population, or the majority of the population, basically whites, against ethnic groups as a block?

Mr. NISHINAKA. Actually institutional racism that has built up over many, many years. It has become institutionalized. Sometimes very-what is the word-perhaps there was design in it, I don't know. I tend to believe maybe there was no design. But regardless, because of the fact that the in and out were not together, little by little, things begin to build, and you have then an institutionalized racism operating.

You still don't understand. I will give you an example, perhaps, one I am familiar with.

Interestingly, in the Federal Government, you submit proposals for funding. But from way, way back, for instance, like research proposals, and you found this in many instances, you have what they call peer review.

Now, the peer review, because it has been going on for a long time, you can imagine the kind of composition of that peer review group.

It does not have any minority representation, ethnic minority. It is nonminority ethnic representation on the peer panel. Then technical things come up like, well, we cannot fund research proposals if they don't have what you call a track record.

And yet, the new immigrant group, or the minority in great measure, do not have that track record, they just arrived on the scene. It doesn't mean they don't have the research knowledge or the contribution to make. But those proposals going into those committees, it is not too surprising that hardly any proposal submitted by minorities ever get funded.

And that was going on for years and years and years until really very recently. There has been a lot of surfacing of this issue that I speak of, challenging the people who pull these committees together-their understanding and actually acceptance or concurrence of this phenomenon that occurs.

You begin to see this committee with minority representatives. And for the first time, you are beginning to get ethnic minority proposals getting funded and so forth.

So when you say how does racism operate, or how does institutionalized racism operate, it is a phenomenon.

I wish I could tell you it started from Mr. Joe Dokes. But it doesn't go that way. It operates because of the fact that the nonminority, perhaps even by number, but by definition-I am using the word "minority" actually-it is the people with the short end of the deal, they are discriminated against, et cetera, et cetera.

Those are the minority I am speaking about. But in number, overall minority, and also they have not been the first ones here and consequently, whoever laid down those rules and how it works, it gets institutionalized in favor of the nonethnic minorities. Can you now understand what I was trying to say?

Mr. FRAZER. Yes, sir.

Mr. DYMALLY. Thank you very much, Mr. Nishinaka.

Our next witness is Mr. William Robertson, executive secretary of the Los Angeles County Federation of Labor.

Bill, would you identify yourself for the record? We will enter your written statement into the record. You can summarize your statement.

STATEMENT OF WILLIAM ROBERTSON, EXECUTIVE SECRETARYTREASURER, LOS ANGELES COUNTY FEDERATION OF LABOR, LOS ANGELES, CALIF.

Mr. ROBERTSON. My name is Bill Robertson. I am the executive secretary-treasurer, Los Angeles County Federation of Labor, AFLCIO: I am pleased to be here this morning.

The AFL-CIO has long advocated revitalizing the urban centers. If I may, Congressman, I would like to read my statement.

There is little doubt that the urban areas of our Nation are facing serious-almost insurmountable-problems. These problems are rapidly worsening and, from our standpoint in the AFL-CIO, they will not be solved by the Reagan administration which seems to be committed to a program of further aggravating the difficulty by gutting programs which are important to the cities.

In fact, it is our belief that programs provided for the poor and for working people, closely linked to the cities and local government in general, have been destroyed in recent budget cuts so the Reagan administration can spend what it wants on defense.

We are not opposed to defense spending, but not at the expense of the people of this Nation.

We believe there are three major areas in which the Federal Government can concentrate to relieve many of the urban problems that our cities must face. We must be committed to housing, transportation, and jobs.

These areas are the three-legged stool on which Government can build a significant program to save our urban areas. If the Government doesn't, I believe that we will face insurmountable problems of poverty and blight and it may be possible, once again, that we will see the urban violence that plagued the sixties.

America needs economic policies that deal effectively and equitably with the causes of inflation and the weaknesses that prolong unemployment. Such policies may base any sharing of austerity in

the fight against inflation on the ability to sacrifice, and not demand even more sacrifice from those who know only austerity. They also must include adequate resources to provide needed investment in specific industrial and geographical sectors within an overall employment program.

Based on these key principles, the AFL-CIO supports economic policies that reduce interest rates, reduce unemployment and use an effective combination of targeted taxing and expenditure programs to reverse the damage caused by inflation and unemployment.

These are the major troublemakers in an urban environmentinflation and unemployment-and the Federal Government cannot turn its back on these problems.

In the area of housing, it is important for Government to be involved in expanding the supply of low- and middle-income housing to alleviate the housing shortage that is driving up prices and rents.

We must reduce mortgage interest rates that provide belowmarket interest rate mortgages for low- and middle-income buyers. We must encourage home mortgage financing by union pension funds invested in long-term, fixed-payment mortgages guaranteed by the Government.

We must discourage the conversion of rental housing structures to condominiums in tight housing markets.

This should be the major thrust of Government, to make sure that housing is made available to those in the low- and middleincome brackets and to insure that they get that housing with a fair interest rate, giving them the immediate ability to pay for adequate shelter.

In the areas of transportation, we face serious problems in Los Angeles because there will come a time that we will not be able to deal with the high cost of gasoline.

It is uneconomical for a working man or woman to operate a motor vehicle here at this time and, if gasoline should go to $2 or $3 a gallon, it will be almost impossible to use a car.

What we should have been doing for years is developing an adequate transportation system, probably of the fixed-rail variety. During the Carter administration, there was a commitment to developing this kind of system and the start was going to be the downtown people mover.

This project, since the advent of the Reagan administration, has been scrapped. This is of major significance to us because the downtown people mover was going to be the cornerstone of a mass transportation system in this city, starting with a rail line out the Wilshire corridor through Hollywood to the San Fernando Valley.

These programs are no longer viable because of the restraint on the Federal budget. Los Angeles is now caught in the trap of relying on the automobile almost exclusively for its transportation needs. This is not an enviable position for any city in this country. Once again, it is the Government's job to insure that we have the ability to construct adequate transportation systems. The ability to move around often determines one's ability to get a job. Hundreds don't have adequate transportation and this means-at least for

Los Angeles-the creation of a transportation system that is not in existence now.

Reducing unemployment and rebuilding the economy are probably the two prime goals that should be set by Government to avoid the urban problems that we have been talking about. Business, labor and the Government should participate in a reindustrialization board as a first step to bring about this reindustrialization process.

Under this reindustrialization board, a reconstruction finance corporation would invest public and private funds in necessary reindustrialization projects.

The allowances, investment tax credits, or other business tax changes targeted to where they are most urgently needed.

The RFC should be alloted an additional $5 billion to encourage new industries that have difficulty obtaining necessary financing; and assist older industries with special capital needs for modernization, expansion and restoration of their competitive position.

Once again, transportation is important for the job picture. The Nation's transportation network needs to be upgraded for people and goods to move more efficiently.

Railroads, highways, port facilities, and airports are in desperate need of rehabilitation.

Urban mass transit systems need to be extended and modernized as stated before.

The urban infrastructure of sewers, water systems, streets and bridges needs to be renewed. Public investment of this nature would greatly improve economic efficiency and potential output of goods and services.

There should be a thorough review and analysis of existing investment tax incentives in the light of reindustrialization goals. The capital gains exclusion, rapid depreciation, oil depletion allowances, and investment tax credits have all been enacted as tax incentives to investment.

Tens of billions of Federal dollars are lost through these provisions, and it is time to restudy their value to the economy.

The unemployed men and women who cannot find jobs in the private sector should be put to work on the various public service and public works projects that expand the services and facilities needed for a healthy economy.

The skills and abilities of the unemployed must be put to productive purposes and not go wasted. These programs can be targeted to increase supply and economic efficiencies in key areas which creates the dual goal of decreasing unemployment while helping the blighted cities.

There should be expanded training programs for adult workers and youth in the urban areas. These training programs should provide new job skills and lead to advanced employment opportunities. We believe, however, given the nature of the Reagan administration, that the suggestions that we have made today have a good chance of falling on deaf ears.

These are solutions to the urban dilemma but they are not being heard in Washington. Instead, we have seen an unprecedented budget slashing which will cost the country more than 1 million jobs.

We are confronted with an unequal tax cut which will surely be inflationary.

The President's program, at best, is a high risk gamble with the future of America and America's cities. Workers and the poor, the major population of urban areas, are asked to take the lion's share of the risk.

The only sure winners, under Reagan's concept, are the wealthy, whether they are individuals or corporations.

It is a gamble that has not paid off in the past and one the Nation cannot afford to take. We in the labor movement have joined with other concerned citizens to advance an economic program that will meet the Nation's needs fairly and equitably and with true equality of sacrifice.

Thank you.

[The prepared statement of William R. Robertson follows:]

PREPARED Statement of WILLIAM R. ROBERTSON

There is little doubt that the urban areas of our nation are facing serious-almost insurmountable-problems. These problems are rapidly worsening and, from our standpoint in the AFL-CIO, they will not be solved by the Reagan Administration which seems to be committed to a program of further aggrevating the difficulty by gutting programs which are important to the cities. In fact, it is our belief that programs provided for the poor and for working people, closely linked to the cities and local government in general, have been destroyed in recent budget cuts so the Reagan Administration can spend what it wants on defense. We are not opposed to defense spending but not at the expense of the people of this nation.

We believe there are three major areas in which the Federal government can concentrate to relieve many of the urban problems that our cities must face. We must be committed to housing, transportation and jobs. These areas are the three-legged stool on which government can build a significant program to save our urban areas. If the government doesn't, I believe that we will face insurmountable problems of poverty and blight and it may be possible, once again, that we will see the urban violence that plagued the 1960s.

America needs economic policies that deal effectively and equitably with the causes of inflation and the weaknesses that prolong unemployment. Such policies may base any sharing of austerity in the fight against inflation on the ability to sacrifice, and not demand even more sacrifice from those who know only austerity. They also must include adequate resources to provide needed investment in specific industrial and geographical sectors within an overall employment program.

Based on these key principles, the AFL-CIO supports economic policies that reduce interest rates, reduce unemployment and use an effective combination of targeted taxing and expenditure programs to reverse the damage caused by inflation and unemployment. These are the major troublemakers in an urban environmentinflation and unemployment-and the Federal government cannot turn its back on these problems.

In the area of housing, it is important for government to be involved in expanding the supply of low- and middle-income housing to alleviate the housing shortage that is driving up prices and rents.

We must reduce mortgage interest rates that provide below-market interest rate mortgages for low- and middle-income buyers.

We must encourage home mortgage financing by union pension funds invested in long-term, fixed-payment mortgages guaranteed by the government.

We must discourage the conversion of rental housing structures to condominiums in tight housing markets.

This should be the major thrust of government, to make sure that housing is made available to those in the low- and middle-income brackets and to insure that they get that housing with a fair interest rate, giving them the immediate ability to pay for adequate shelter.

In the areas of transportation, we face serious problems in Los Angeles because there will come a time that we will not be able to deal with the high cost of gasoline. It is uneconomical for a working man or woman to operate a motor vehicle here at this time and, if gasoline should go to $2 or $3 a gallon, it will be almost impossible to use a car. What we should have been doing for years is developing an