of the merits of a standby public works program with the planning that goes into such a program. I think that the only questions that have genuinely come up in the minds of any of the members is whether Congress ought to delegate this power to the President or not. In your testimony before the Senate hearing, as I read it last year, I understood you to say you were in favor of this program being triggered at a 4-percent figure of unemployment. Is that correct? Mr. MEANY. That was the figure at that time on the standby program.

Mr. HARVEY. In your statement here you have gone over to the Blatnik proposal. Have you changed your thinking in that regard? Mr. MEANY. One percent.

Mr. HARVEY. Is that of your own volition, or is that because of other reasons?

Mr. MEANY. No, I think

Mr. HARVEY. Have circumstances changed since that time?

Mr. MEANY. Yes, yes. They have gotten worse since that time. We have had this period-the period is that much older now and that much longer without recovery.

Mr. HARVEY. Let me ask you this other question. Have you and the organization you represent given thought to the inflationary aspects of the program insofar as the construction industry is concerned? Let me preface that by saying that Mr. Heller appeared the other day as Chairman of the President's Council of Economic Advisers and he in his testimony stated that there was no question but that the construction industry had experienced considerable inflation over the last years. Have you given consideration to that aspect in this particular recommendation here?

Mr. MEANY. Yes, we have considered that and we feel that is a risk you have to take in this sort of thing. Actually, the construction industry, as far as wages in the construction industry is concerned, if we could get everybody working at full employment it would not be a great problem because in every construction wage rate there is written a form of insurance against the seasonal type of unemployment. Not only seasonal but intermittent.

Mr. HARVEY. Excuse me. I ask that question because in yesterday's Wall Street Journal there appeared an article which set forth a report of the Dodge Corp. which makes estimates on the amount of construction awards, and so forth. They pointed out in that article the construction awards in the month of February had reached an alltime high. We are at that figure now and planning the impact of the purchasing of this cement and building materials, and so forth, and the effect it will have. I wonder if your recommendation here is not flying right into the teeth of that. If the Government gets into that program with public-works projects aren't we increasing the demand for cement, lumber, and all the things that go into building materials?

Mr. MEANY. I don't know what the Dodge report applies to. don't think it applied to the entire construction industry. I know that housing starts have dropped way down.

Mr. McVEY. Will the gentleman yield back a minute?

Mr. HARVEY. I will, if I can ask the chairman and if I can get an answer to this request.

Mr. MEANY. I would like to take the unemployment rates for the Nation as a whole and compare them with the construction rates, and you will find that there are more construction people out of work now.

Mr. HARVEY. I do not quarrel with that figure, and Mr. Heller and Mr. Bell both gave that to us, but Mr. Heller also pointed out while there is greater unemployment there was also greater inflation, as the record will show. I hope I can have unanimous consent to insert that article in the record at this point and the editorial from the Washington Post.

Mr. BLATNIK. What article?

Mr. HARVEY. The article from the Wall Street Journal that I just described. Both articles.

Mr. BLATNIK. Without objection they will be made a part of the record at this point.

(The documents referred to are as follows:)

[From the Washington Post, Mar. 29, 1962]

A NEW WPA?

The President's recommendation for a $600 million public works program correctly diagnoses the need for a stimulus to speed the lagging recovery. His therapy is far more dubious.

The high estimates of gross national product in 1962 put out by the administration have been questionable from the beginning. Events since January have made them more questionable, and the administration seems about to recognize this. Hence the President proposes to spend a total of $600 million, of which $25 million would go out in fiscal year 1962, if the Congress acts promptly, $350 million in fiscal 1963, $225 million early in fiscal 1964. The money is to be spent on capital projects that can be quickly initiated or accelerated and that can be completed within 12 months after startup. It is to be spent in 958 areas comprising 38 percent of the population.

A program of this sort has the earmarks of economic ineffectiveness and political mischief. The immediate stimulation in any case would be smallwitness that only $25 million would be spent in the next 3 months in the uncertain case that the Congress acts promptly. The money would be spread very widely, over 38 percent of the population, which works out at an average of $8.60 per head in those areas. It will not be concentrated on the real trouble spots. To select projects by the criterion that they can be terminated within 12 months means to rule out from the start any new major construction and many other high priority projects. What this comes down to is a new WPA, with priority on getting out the money and only secondary regard for what is produced by it.

The political overtones of the proposal are plainly audible. A wide range of localities, far beyond the areas of greatest need, is made eligible because that is the way to bring on board the necessary number of legislators. This means also that the administrator, whoever he may be, will have wide latitude in selecting locations. Much money will be wasted doing low priority things to get done a few with high priority. Projects based on such criteria of "need," moreover, give little hope of ever coming to a logical end. Permanent pork barrel for the administration is the most likely end of the story.

The economy needs stimulation, but not so desperately that time could not be spared to look for a better way of applying it. Activity continues to go up. after all, and is expected to keep going up. The Nation can afford to do this in a way to get the most for its money. In fact, given the urgent need to raise productivity, it cannot afford to do it any other way. The administration can justify a tax cut that would enlarge the now badly mutilated investment tax credit for new equipment. It can justify public works expenditures for well selected public investment that will increase output in later years. Compared with these alternatives, the WPA approach is the least attractive. Almost 30 years after the invention of that institution, the administration should be able to think of something better.

[From the Wall Street Journal, Mar. 28, 1962]

BUILDING AWARDS LAST MONTH SET FEBRUARY RECORD-TOTAL UP 23 PERCENT FROM 1961 PACE; ALL CATEGORIES HAD GAINS, PARTICULARLY RESIDENTIALDODGE BOOSTS 1962 FORECAST

(By a Wall Street Journal staff reporter)

NEW YORK.-February building contract awards spurted 23 percent above a year earlier to a record for the month, F. W. Dodge Corp. said.

The construction statistical concern also predicted construction contracts this year will exceed the 1961 level by an even greater amount than forecast earlier. The sharp rise in February contracts to $2,748,750,000 from $2,235,367,000 a year earlier and $2,657,618,000 in January reflected sizable gains in all major construction categories, particularly residential buildings, Dodge said. Awards for new housing soared 37 percent from a year ago. Total awards in January had scored a 7-percent gain from 1961.

Construction contract awards for the first 2 months were 14 percent ahead of the early 1961 pace.

REVISED PREDICTION FOR YEAR

Dodge economists currently figure total awards this year will reach a record $40,832 million, up 19 percent from last year's $37,135 million. Last November when Dodge announced its original 1962 forecast, it predicted that contract awards this year would total about $39,961 million, up 7 percent from the 1961 total.

"The gain in contract awards over 1961, both in dollar volume and in percentage terms, is likely to be the greatest since 1955," Gordon W. McKinley, vice president and chief economist for Dodge, said in a prepared statement issued at a press conference. Dodge has scaled upward its predicted gain this year for every major construction type, with the biggest boost of 13 percent forecast for residential construction contracts.

The faster pace of contract awarding promises a higher rate of spending on construction and building materials this year than had been expected, Mr. McKinley remarked. "Our forecast implies" an annual rate of construction spending this year "as high as $61 billion," which is higher than the Government's estimate of $60 billion and the seasonally adjusted annual rate in February of $58.7 billion, he said. "Any increase of this nature should have a significant impact" on the sales of building materials, especially later in the year as contracts are translated into construction starts, he added.

He said that the pace of contract awards so far this year is "above expectations * * * even after allowance for the fact that 1961 awards were held down by the recession early last year." The economist observed that the recent high level of contract awards has been reflected in orders for structural steel with the January figure the highest for that month since 1957, and new orders for construction machinery up "substantially" in January.

BUSINESS SPENDING

Another factor bolstering the construction outlook, he said, is the recent Department of Commerce finding that businesses plan to spend 8 percent more this year than last on new plants and equipment. "Because in the past such estimates have been progressively raised during the period of business recovery," he said "the final figures are likely to show even greater increases."

Dodge broke down its February figures and revised forecast for the year this way:

Residential: A continued surge in contracts for new apartment houses, up 114 percent in February from a year earlier, pushed up total residential contracts awarded last month to $1,192,345,000 from $869,892,000 in February 1961. Singlefamily home awards were up 16 percent.

Dodge estimated that residential awards for the year will total $18,219 million up from $16,123 million in 1961. Dr. McKinley said that "unusually" poor weather and quirks in the Commerce Department's seasonal-adjustment may be the reason why Government housing figures have slipped on a month-to

month basis for the last 4 months, to the lowest point in February in 14 months. Dodge is sticking to its earlier forecast of 1,400,000 home starts this year, expects a pickup in the seasonally adjusted annual rate in March from 1,126,000 in February and believes that the rate in April and May could reach 1,400,000. the economist said.

"At least 28 percent of this year's starts will be apartments," Mr. McKinley predicted, up from 25 percent or 26 percent last year. In the first 2 months when residential contracts rose 29 percent apartment awards were up 95 percent and accounted for about a third of all the residential contracts.

Nonresidential: Awards last month rose 11 percent to $892,747,000 from $804,427,000, and Dodge expects the trend to continue, although at a slower rate of gain. Contracts awarded this year are expected to total $13,023 million, up 7 percent from last year's $12,115 million. Earlier, it predicted a 4-percent gain. Heavy engineering: Helped by a gain in contracts for public works projects, heavy engineering awards rose 18 percent last month to $663,658,000 from $561,048,000 a year earlier.

Dodge predicted the rise for the year would be 8 percent to $9,580 million from $8,897 million in 1961. Earlier it forecast a 6-percent rise.

The rise on contracts last month was reflected in Dodge's construction contract index, which is adjusted for seasonal fluctuations. It reached 119 in February, up from 95 a year earlier and 115 in January. The February level, a record for the month, was the second highest reading for any month. The record for all months, 120, was set in December 1960. The average for 1957-59 is 100.

Dodge scaled up its estimate of the reading for all of 1962 to 118 from 108 in 1961.

Mr. HARVEY. And I yield back to my colleague.

Mr. MCVEY. Mr. Meany, you are asking here for continued deficit spending. Do you feel we will solve the economic problems of this country by continuing to go into debt when we are already head over

heels in debt?

Mr. MEANY. I know we have been in debt a long time and we have raised the debt burden. Frankly I am not scared by that. This question of unemployment to me runs to the question of the Nation's security. This is just as important in the cold war as anything else we do. I don't know what you mean by "deficit spending." When you are in trouble you have to engage in this. I think this is pretty much a good old American custom, to do things on credit, as it were.

Mr. McVey. But don't we have some other things running here that go to this problem? For instance, the matter of foreign imports coming into this country in competition to the products produced here at home; the matter of some people advocating lowering tariff's which actually protect the wages that your workers get in the plants here. For instance, you are talking about the fact that unemployment has stepped up from one recession to another. Is it not also true that since the war the market has become saturated with products as we produce these things and as people have bought them and bought the appliances and automobiles, and so on? Don't we have other problems that tie into this picture?

Mr. MEANY. I suppose all of the economic facets tie into the unemployment picture, but insofar as American competition with foreign products is concerned we don't suffer under that. We are able to compete. The record shows that we are competing in all of these areas, even though there is a wage differential. But the wage differential does not tell the whole story in this case.

Mr. MCVEY. And you don't feel the foreign competition because

of these products being imported is any substantial factor, then? Mr. MEANY. No.

Mr. McVEY. You failed to mention one great segment of our population here today; that is, John Q. Taxpayer. How do you propose that we raise this $2 billion?

Mr. MEANY. By taxes, the way you raise any revenue. I happen to represent a lot of people who pay it, too. I speak for John Q. Taxpayer to the extent of several millions of them. We pay for this the way we pay for anything else.

Mr. McVEY. But by raising the taxes you are going to cut into the wages these people get, aren't you? You are going to leave less money for the taxpayer.

Mr. MEANY. You are getting back into the tax business.

Mr. BLATNIK. The chairman would like to make a comment on that point. We discussed it very thoroughly in 1953 and 1954 and back in 1957-58, first with the then Secretary of the Treasury, Douglas Dillon, a very competent, conscientious, and great American, and at that point it was my contention that we cannot avoid the expenditure. All we have is a choice of determining how to expend it. As it turned out, after the 1957-58 recession we turned up with high unemployment compensation expenditures and high relief rolls expenditures on the local level and ended up with an alltime high peacetime deficit of about $12 billion in 1958. I know in the past 18 months we have spent about $5 billion on Federal unemployment compensation, which is a justifiable program. We are hoping to use some of that, if feasible, to help people when they are out of work and to put them to work if they want to work, and at the same time to build up facilities that will provide the country with needed services for many years

to come.

So, I don't think, as a member of the committee now, that we should keep expenses down in deference to relief or unemployment compensation when we can use it for a constructive and positive program like

this.

Mr. McVEY. I would like to say I certainly agree and I would like to see people spend to reduce unemployment more than anything else.

Mr. BLATNIK. Mr. Meany, we are grateful to you. You have made a great statement. Obviously, you did a tremendous amount of research and gave a lot of thought and time in review and evaluation in preparation of your program, and you made a most splendid and most helpful statement to the committee. Thank you very much. We will have a 10-minute recess. We express our regrets to the Governors who are here and who will of necessity have to wait. We did not know that the House would be going into session at 11 o'clock, 1 hour earlier than is customary. The Members are on the floor now answering a quorum call and will be back here in 10 minutes. So we will have a 10-minute recess at this time.

(Whereupon a recess was had.)

(The appendixes to Mr. Meany's statement are as follows:)