Equally disheartening is the Labor Department's report that the total number of workers on payrolls in February was no greater than in September 1969, nearly 11/2 years before. And many of these workers, who are fortunate enough to be employed, are compelled to work short workweeks, as a result of production cutbacks.

Even after the rebound from the effects of the auto strike, industrial production is less than it was last summer and at about the level of 1968.

Yet there is no solid evidence of a substantial pickup in sight. There is no sign that the economy is turning around-or about to turn around from recession and stagnation to a rapid upturn of sales, production, and employment.

Since industry is now operating at less than 75 percent of its productive capacity, business outlays for new plants and machines are leveling off-which means a decline in the real volume of business investment, after accounting for increased prices.

The expected large increase of consumer spending, which accounts for nearly two-thirds of total national production, has not materialized, since most families have found their buying power declining. Until employment, workers' buying power, and consumer confidence turn up, no major boost of consumer spending can be expected.

The only parts of the economy that are expanding rapidly, now, are homebuilding and the activities of State and local governments, which naturally respond to the improved availability of credit at lower interest rates. However, the combined advance of these two parts of the economy is far from enough to carry forward a trilliondollar national economy at a rapid pace. As a result, a continuing trend of high unemployment threatens workers and entrants into the labor force, including the increased numbers of returning GI's.

In the face of these developments, an immediate and substantial Government stimulus is needed, at this time of cuts in defense production and in the size of the Armed Forces, to lift sales and production enough to provide the growing number of jobs for the unemployed and the expanding labor force.

But the administration's new "game plan" is based on optimistic rhetoric and wishful thinking, rather than specific measures and programs. It seems like an administration attempt to revive the longforgotten advice of the French psychologist of the 1920's, whose remedy for troubled patients was that they should keep repeating: "Every day, in every way, I am feeling better and better.

The administration has set forth a target of a 9-percent increase in the gross national product in 1971, and a nearly 12-percent rise between the October-December quarter of 1970 and the same quarter of 1971. But it has not revealed how this forecast is to be achieved. The reality seems to be continued economic stagnation, combined with administration rhetoric about rapid expansion and actual measures of miniexpansion.

În a recent speech, the administration's former Assistant Director of the Budget Bureau, Dr. Maurice Mann, had this to say:

It is an open question as to whether the Federal budget for fiscal year 1972 is as expansive as has been suggested ***the budget is in effect essentially neutral in fiscal year 1972 ***

We are now being treated to a double-barreled "blockbox" approach-after fixing budget expenditures at full-employment revenues, all we have to do is pour enough money supply in one end of the box and somehow-in some formenough additional GNP comes out the other end.

Mr. Chairman, I believe that a growing supply of money and credit, at reasonable interest rates, is essential. But equally essential are specific measures to boost sales, production, and employment. And that is what this committee is now considering a specific measure to stimulate economic activity.

Idle men and machines should be put to useful work, adding to the public investments of Federal, State, and local governments in facilities that are urgently needed.

Let me briefly outline what we think should be contained in an immediate public works program:

1. A $2 billion program should be established to accelerate public works construction and repairs in areas of high unemployment.

2. The funds should be made available to initiate or step up direct Federal programs, as well as provide no less than 80-percent grants to State and local governments to initiate or accelerate their public works efforts.

3. Areas eligible for such assistance should be those which the Secretary of Labor determines are suffering from substantial unemployment and those which the Secretary of Commerce designates as redevelop

ment areas.

4. Only those public works programs which meet an urgent public need and which can be initiated or accelerated, within a reasonably short period of time, should be eligible.

5. Public works efforts, under this program, should represent a net increase in the total expenditures for capital improvements by the. Federal agency, State, or local government.

6. We recommend that the committee examine the feasibility of setting aside a small portion of the $2 billion for loans to State and local governments to help those that need assistance in providing the 20percent requirement for accelerated public works undertakings.

7. Work performed under this program should be paid at least the prevailing wages, under the terms of the Davis-Bacon, WalshHealey, and McNamara-O'Hara prevailing wage acts for work on Federal projects. This principle of prevailing wages is essential to assure that work for the Federal Government is not based on exploitation of workers. We certainly do not believe that the suspension of the Davis-Bacon Act, by Presidential order, is in the best interest of the American people. We hope that this committee will again endorse the principle of prevailing wages and thus inform the President that it disapproves of his action.

Such program would give tens of thousands of jobless people in unemployment-stricken areas an opportunity to go back to work, building and repairing public facilities of long-term worth. It would add to employment in industries across the country which produce and distribute building materials. It would add to consumer buying power. A $2 billion Federal program, along these lines, could result in a total increase in public works expenditures of about $2.2 billion or more, including the 20-percent additional funds from the State and local governments.

It would create about 170,000 or more badly needed jobs within the year, in onsite construction in areas of substantial unemployment and in the production and distribution of construction materials, such as steel, lumber, cement, and equipment. As the additional employee incomes and business profits are spent, there would be a multiplying boost to production and employment-with an additional job increase of about 250,000 or more. The overall impact of such measure could increase employment by as much as about 420,000 jobs.

The creation of these jobs, under such a program, would not be a boondoggle. There is not a single "leaf raking" project in this proposal. Every project helped by this program would add to the Nation's wealth.

There are rapidly multiplying needs for every kind of public investment. There are thousands of planned projects that are ready to go, as soon as funds become available-particularly at this time, after nearly 2 years of Federal efforts to hold down public investment outlays. The present backlog of such projects is huge.

It is our understanding that there were at the end of 1970, about 3,000 applications for Federal approval for waste treatent plants, 800 applications for water and sewer projects, 1,900 applications for hospitals and public health centers, in addition to hundreds of other State and local projects that have been planned and blueprinted. A large number of these projects would be eligible for accelerated public works grants and their implementation can be speeded up.

In addition, there are several billion dollars of planned and blueprinted Federal public works projects. Many of them, too, would be eligible under an accelerated public works program.

Let us not permit these planned projects to be delayed for additional months and years. Let us quickly take these plans off the shelves and put them into operation.

Such an immediate program would be a powerful weapon against the stagnation of the national economy. It would be an investment in America that would pay of itself in improved public facilities, additional jobs, increased family incomes, and reduced unemployment insurance payments.

The time for action on this measure is now. I hope that this committee and both Houses of the Congress will act without delay. Thank you.

The CHAIRMAN. Mr. Meany, thank you again for another clear-cut, factual, and hard-hitting statement.

I have just two quick comments.

You very properly recommend in your opening statement a provision in this accelerated public works bill to include Federal agency projects in the bill.

May the record show that the original Accelerated Acts bill, provided that money be given "to the heads of departments, agencies and instrumentalities of the Federal Government responsible for the construction of Federal public works projects."

We found that program to be extremely helpful. In Northeast Minnesota, we had severe unemployment back in the early and late 1960's, which particularly hurt the miners and railroad men during winter. In addition to the seasonal unemployment, our unemployment

rates ran from a high of 18 percent to as high as 24 and 26 percent in some small communities. By utilizing APW projects we were able to put over 800 to 1,000 men to work in the Spear National Forest doing badly needed work to protect, preserve and upgrade that great national resource. They needed no training for they were doing work familiar to them.

They know how to handle themselves in cold weather. Ice fishing is their hobby. They do that on weekends. They were very proud and pleased to do that work. In the summer we were able to put quite a few college and other unemployed youngsters immediately to work in that area.

The Department of the Interior likewise helped many other environmental projects, parks, roadside rest stations, scenic overlooks. These projects are of even more importance now with the emphasis and public concern centered on the environment.

I was very pleased to see that you referred to the need to help municipalities in your statement. We found out that too often the municipalities which were financially the best off, were able to gobble up most of the money. Yet, some of the very poor and hard hit muncipalities could not get money to fund their project. The most heartening and encouraging situation today is that for the first time in the history of the United States, as you point out, we have an "on the shelf” backlog of sound projects in which the design and engineering work has been completed, and where financing arrangements have already been tentatively approved for action either by the city or the village council, or whatever.

You correctly stated, and I am glad you brought this out, that there were, at the end of 1970, about 3,000 applications for Federal approval of waste treatment plants, 800 applications for water and sewage plants on file, with the Water Pollution Control Agency and Environmental Protection Agency.

These 3,000 applications total over $2.1 billion in Federal funds, and could generate almost $6 billion worth of total project costs. The 800 applications for water and sewer projects was even larger, I believe about 900, and there are applications from HUD for grants and loans which total $485 million.

Then, to go further, you mention 1,900 applications for hospitals and public health facilities. There is a crying need especially in rural, semi-rural areas, and smaller communities, for these medical facilities, nursing homes, and low-cost housing for the elderly, These 1,900 applications, total up to about $2 billion in Federal funds. If you add to that the farmers home and loan administrations, our total projects now on the shelf have come to almost $5 billion in Federal funds for good solid projects.

At least two-thirds of them will go directly for projects such as water, pollution abatement, sewer lines, water lines, street lighting, (which can make a community a safer and brighter place to live), hospital extension of a wing or new facility, nursing homes and child day care centers. All of these will not only serve human needs, but they enhance what is of great importance, the so-called quality of life.

It does something to the psychology and mentality of these small communities when they are able to do that type of thing, rather than

have them sit depressed and in the doldrums of their unemployment situation which came through no fault of their own.

So I want to stress, emphasize, and underscore the point which you were the first to raise that we do have a backlog of ready-made projects, which can be gotten underway. And that reason, you put no time limit in this bill.

We hope to be able to authorize and appropriate $2 billion so that we can proceed as soon as possible to give emergency employment. In the meantime we will be discussing possible longer range economic programs.

Mr. Edmondson.

Mr. EDMONDSON. Mr. Chairman, I share your view that the witness has made an excellent statement. There are just two points I would like to raise with him.

In the first place, Mr. Meany, you recommend a portion of this $2 billion be allocated for loans to State and local government to help those that need assistance in providing 20 percent requirement for accelerated public works undertakings.

Do you have in mind on that as a percentage of the $2 billion for that purpose?

Mr. MEANY. No. I do not have a figure. I presume that it would not be a large proportion of the money, because after all we are asking municipalities to put up 20 percent of the cost of projects that they have planned, that they want, that they are ready to go ahead with, and the assumption is that they have not gone ahead because of lack of financing, so I think it is reasonable it is reasonable to ask them to put up 20 percent.

On the other hand, if you hit a municipality or an area where they are so badly pinched financially that they cannot put up the money, I think then that the Federal Government should have some requirement under some ground rules, of course, to loan them that 20 percent, and you give them 30 percent, and you loan them 20 percent, and of course they expect to be repaid.

I think this makes sense.

Mr. EDMONDSON. The mayor of Detroit testified that his city was in a situation in which it not only could not tax any more, but they also had reached the limit of their borrowing authority. They could not legally borrow any more money. In cases of that kind, would you favor waiving the requirement for local contribution?

Mr. MEANY. I would think so. I think that that would make sense. I think it would depend on the circumstances. I said before that I think you would have to provide some ground rules. You just could not create a situation where every municipality or every county government or State government would come in and say we want the 80 percent, we want to borrow the rest. Because I feel in the final analysis that these local governments certainly must have some need for the things that are on the drawing boards, that are in blueprints, and they certainly should have some of the money at hand, or some of the money that could be raised locally.

I do not think it would be a good thing to say that the Federal Government would take all of the load. In certain circumstances.