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related to the problems with which the Area Redevelopment Administration must deal-structural unemployment and underemployment, structural unemployment which we in ARA are primarily concerned with, and problems of enduring recession in rural areas, primarily in the South.
The distinguishing mark of the redevelopment areas is that they have existed, recession in and recovery out. When the national economy slumps, those areas-because they are already weakened economically-feel the recession first, suffer most, and recover last, if at all.
I must say the testimony of Congressman Perkins and the figures he placed in the record illustrate this point rather dramatically for his areas of eastern and southeastern Kentucky. That is why the ARA is vitally interested in programs designed to decrease fluctuations in the economy and strengthen the Nation's growth.
It is virtually impossible to solve area employment in this country during a recession because the Nation's economic lifeblood dries up all along the line—and the problems of area redevelopment depend for their solution on the vitality of the total national economy. We must shorten the duration and minimize the depth of cyclical recessions in order to have a fighting chance to deal successfully with chronic area depression and unemployment.
As you know, the Area Redevelopment Administration has a responsibility to help redevelopment areas help themselves. Among the special tools made available under our program are public facility loans and grants to areas whose lack of such facilities is impeding the solution of their economic problems.
We are, therefore, as Under Secretary Gudeman has pointed out, in a position to play a key role, under the proposed Standby Capital Improvements Act, by accelerating the public facility grant part of our program in redevelopment areas.
The need for capital improvements is great throughout the Nationit is particularly urgent in the redevelopment areas where the continued decline in the private sector of the economy and the continued rise in long-term unemployment has forced communities to channel more and more of their revenues into public assistance, to the detriment of capital improvements.
I can think of no more graphic illustration than that of Gogebic County in the Upper Peninsula of Michigan. The mayor of Ironton was in to see me recently and pointed out that a third of the labor force is jobless and 40 percent of the total county budget was being spent for relief. Obviously he can't make up much of the backlog in public works in that county without considerable help immediately.
Now there is a tremendous backlog of unfilled public facilities needs in the redevelopment areas. One of the requirements under the Area Redevelopment Act was that designated areas should submit overall economic development programs, detail both their economic problems and proposed solutions. Repeatedly, these areas have identified an appalling need for capital improvements, and we have some information on that, perhaps for the first time, which will be most helpful to the program under consideration here.
Mr. HARVEY. Could I interrupt right there, Mr. Chairman, and ask the gentlemen here a question pertinent to this one particular point?
Don't you, under the Area Redevelopment, today have authority to give communities like this Gogebic County up here a public works project, a grant? Weren't there grants included in the legislation passed last year for that purpose ?
Mr. Batt. Our act is limited, sir, and we are limited under it, Mr. Harvey, to those public works which relate to the creation of permanent new job opportunities.
That would mean that if they had a sewer-waterline leading to a private plant which would employ people on a permanent basis, we would make that loan or grant depending on the capacity of the community to repay it. If, however, they need a sewer and waterline simply because they need a sewer and waterline and there is no visible there is no bird in the hand because of it, then this was not made under our program because we
Mr. Harvey. Well, let me say this: If a sewer and waterline would help to bring industry to a community, wouldn't that be justification under what you are saying for you to go ahead right now and start a public works project in one of these communities? My question is, Don't you have that authority right now under that act?
Mr. Batt. The interpretation that has been placed on our act in the light of congressional history, Congressman, is that our act relates primarily to public works which will help provide permanent longterm job opportunities.
Mr. HARVEY. Well, I am bothered here.
Mr. Batt. And the financing of the act is the same way. The financing is calibrated on the basis of public works which are tangential to and contributory to the creation of new plants and new industry in the areas.
Now, if I may complete my statement-
Mr. GUDEMAN. Mr. Batt answers this in full. Let him continue the statement for just about another two pages. You will see that it is answered in your copy at the bottom of page 5. Maybe he should read this far and see whether that covers the subject, and then you question him at that point.
Mr. Fallon. Well, I might suggest that we let him complete his statement, and then we go back to this point.
Mr. Batt. Fine.
The following table summarizes the numbers and types of capital improvement needs cited by redevelopment areas in the first 300 overall' economic development programs received by ARA. They are classified according to general types as follows. "This table was put into the record, I believe, by Mr. Heller simply outlining the substantial needs for water supply and flood control, tourism and recreation, sewerage and pollution control, educational, hospitals, civic buildings, roads, streets, airfields, ports, ferries, and so forth. A total of 1,132 identifiable projects in the first 300 overall economic development programs which have come to us. These are not just "shopping lists."
. They are realistic appraisals of shortcomings in the public sector that have accumulated over the years. The redevelopment areas, in trying to sell their communities to prospective businesses, find themselves in much the same boat as the homeowner trying to sell his house. The homeowner knows his chances are materially enhanced if he paints, re
pairs and redecorates; the community knows its attractiveness for industrial and commercial growth depends, in large measure, on overcoming deficits in capital improvements.
But the things these communities need to make them better places to live, to work and to invest often go beyond the authority that we have been in a position to use in the Area Redevelopment Administration. Because our act was designed specifically to contribute to the creation of permanent new jobs in private enterprise, and because the funds available under our act are limited in purpose and amount, our investment in public facilities has been confined to those that would be used by a specific newly established or expanded industrial or commercial installation.
However, with the additional funds and new public works authority that would be available under this proposed capital improvements legislation, many of these badly needed community improvements could be undertaken. As the President pointed out in his letter, these would be consistent with the areas' own economic development plans, and would make these communities better places in which to live, work and invest.
Even if the adverse national economic conditions sufficient to "trigger” the proposed program to arise, the national situation would still not be as severe as the situation is right now in redevelopment areas and labor surplus areas. This was pointed out, I think rather dramatically, in Congressman Perkins'testimony.
The 874 areas and 50 Indian reservations designated under our act have a total population of 34 million and a labor force of 13.3 million, of whom more than 1 million are unemployed. The 34 million and 13.3 million figures are 19 percent of the Nation's population and labor force, respectively. In these areas unemployment is 24 percent of the Nation's unemployment. The average unemployment in these areas is 8.2 percent, as against 5.6 percent nationally and in some areas joblessness runs as high as 20 and 30 percent.
And that's just unemployment. In addition, 182 counties were designated under our program because they have a median family income—not per capita, mind you, but family income-of less than $1,560 a year. That's only one-third the national median.
Another 129 rural counties were designated because they had a median farm family income of less than $1,170 a year-- one quarter the national median. If you're driving a 3-year-old model of one of our lower-priced automobile, you can take it around to the nearest used car lot and sell it for more cash than one out of ten American farmers earns in a whole year, and there are many others who do not earn significantly more.
As you can see, we in the Area Redevelopment Administration are dealing with localized depressions which in many instances are still as severe as the Great Depression of the 1930's and they have lasted, of course, much, much longer.
Thus, all of the reasons which would support a decision for an accelerated national public works program in times of economic crisis support the need for an immediate acceleration of public works in redevelopment areas and labor surplus areas.
These areas have a need now for a major investment in capital improvements to relieve their own private depressions, to increase
employment, to make them attractive to industry. And right now, while the rest of the economy is on the rise, is the ideal time to accelerate such projects in unison with the Area Redevelopment Administration's long-term investment in permanent job-generating projects.
A speedup in capital improvements, with the resulting employment, would have a tremendous impact on the morale of the people in the redevelopment areas, people for whom the door to the future has remained stuck closed for far too long. What's more, judicious investments in capital improvements for the redevelopment areas would aid the whole economy, for these communities could buy their lumber from North Carolina and Washington, their brick from Maryland, their tar products from Texas, their concrete from Pennsylvania, their cast iron pipe from Ohio. And the increased employment in the redevelopment areas and the labor surplus areas, themselves, and in the supplier industries everywhere would complete our recovery from the last recession.
What's more, because of the labor surplus concentrated in these areas, you could accomplish this capital improvements program with little or no inflationary effect.
To accomplish this purpose, the proposed Standby Capital Improvements Act of 1962 should be amended to authorize $600 million, as the President requested, to be channeled immediately into both the redevelopment and the labor surplus areas for the acceleration right now of public works projects and program.
Such acceleration of these projects would not be in conflict with the principles of the Area Redevelopment Act. Quite the contrary. In December 1960, before President Kennedy took office, the Task Force on Area Redevelopment headed by Senator Douglas specifically recommended a combination of short-term and long-term programs to alleviate the structural unemployment problem of these areas.
The Douglas Task Force, you will recall, listed four short-range actions—surplus foods, temporary unemployment compensation, aid to dependent children and accelerated public works projects—to be used in concert with the Area Redevelopment Act to achieve longrange solutions to our problems.
Three of these short-range actions already have been taken by the President and the Congress. It remains now to arm the administration with the fourth weapon, accelerated capital improvements authority, to help improve the economies of the areas left in the backwash of our general recovery from recession, and to help avert another national downturn.
Mr. Fallon. Thank you very much, Mr. Batt.
Mr. WHITTON. Mr. Chairman and members of the committee. It is always a pleasure for me to appear before this committee.
I am pleased to present the views and comments of the Bureau of Public Roads on pending legislation relating to an accelerated capital improvements program during periods of increased unemployment.
H.R. 10113 would create a new Federal agency to undertake planning for an accelerated public works program, while H.R. 10137 and H.R. 1037 and H.R. 10318, identical bills would place such responsibility in the various executive agencies with respect to the programs normally administered by them, and would provide for allocations and transfers of funds to be made by the President rather than by the head of the proposed new agency:
The Bureau of Public Roads would favor the enactment of H.R. 10317 or H.R. 10318, based on draft legislation submitted to the Congress by the Housing and Home Finance Agency. My comments therefore will relate to the latter proposal and its effect on the Bureau of Public Roads.
The administration's bill would authorize the President to proclaim limited "capital improvement acceleration periods,” under certain unfavorable economic conditions, and would provide for needed capital improvements projects to be initiated and accelerated through existing Federal programs and direct Federal loans and grants. No State could receive more than 12.5 percent of the grant funds available in the proposed bill and, to be eligible for assistance, capital improvements projects would have to meet an essential public need, help reduce unemployment significantly, and be capable of being started and finished quickly.
It is only logical to anticipate that the highway program would be a major program for expansion under the proposed legislation, for the Bureau of Public Roads and the States are in a position to proceed advantageously on a speeded-up basis. The Bureau of Public Roads has had considerable experience in the field of acceleration of highway projects under section 2 of the Federal-Aid Highway Act of 1953, which I shall briefly describe.
As an antirecession measure to aid the economy, relieve unemployment, and provide needed highway improvements, section 2(a) of the Federal-d Highway Act of 1958, approved April 16, 1958, authorized an additional $100 million of special Federal-aid highway funds—so-called D funds for the fiscal year 1959, to be apportioned to the States using the same formulas prescribed for primary, secondary, and urban highway funds. These funds were available on a two-thirds Federal and one-third State-matching basis, without stipulation as to the amount to be expended on either Federal-aid primary or secondary highway systems. Projects financed from these funds were required to be awarded to contract by December 1, 1958, for completion by December 1, 1959. The act also authorized $115 million as repayable advances to assist the States in meeting up to two-thirds of their requirements for State-matching funds, and provided that the amounts so used by the States were to be repaid later by deductions from subsequent fiscal year apportionments of ABC funds.
Under this special program, Federal-aid primary, secondary, and urban highway projects, involving a total cost of $618 million, were placed under contract within a period of 71, months from date of authorization of funds. This was in addition to and without delay to regular ABC and interstate highway programs. These projects resulted in 12,110 miles of highway improvements, including 2,075 miles of grading and drainage or low-type surfacing, 2,166 miles of intermediate-type surfaces, 7,824 miles of high-type surfaces,