TO CONSIDER AN ALTERNATIVE TO TITLE I OF S. 575 AS PASSED BY THE HOUSE OF REPRESENTATIVES

WEDNESDAY, MAY 12, 1971

U.S. SENATE,

COMMITTEE ON PUBLIC WORKS,

Washington, D.C.

The committee met, pursuant to notice, at 9:40 a.m., in room 318, New Senate Office Building, Senator Jennings Randolph (chairman of the committee) presiding.

Present: Senators Randolph, Muskie, Montoya, Tunney, Bentsen, Cooper, Baker, Buckley, Weicker, and Dole.

Also present: Richard B. Royce, chief clerk and staff director; M. Barry Meyer, counsel; Philip T. Cummings and John W. Yago, professional staff members; Bailey Guard, minority staff director; Richard E. Herod and Judy Parente, professional staff members, minority.

The CHAIRMAN. Good morning, ladies and gentlemen.

The Committee on Public Works is conducting this hearing under unusual circumstances.

The legislative proposal under consideration is not a bill that was introduced and referred to this committee. It is, instead, a response being considered by the committee for presentation in a Senate-Ĥouse conference on S. 575.

Title I of S. 575 as passed by the House of Representatives contains authority to reactivate the Public Works Acceleration Act of 1962. When considered in the Senate, S. 575 was primarily a continuation of the Appalachian Regional Development Act of 1965. We amended the bill on the floor to provide for a 1-year extension of the Public Works and Economic Development Act of 1965 which is due to expire on June 30 of this year.

We did this to permit the orderly preparation of legislation for a comprehensive new economic development program for the entire United States, not just an area like Appalachia, and so it could be considered free from the pressures that would be inherent in the June 30 expiration date.

The Public Works Acceleration Act was added to the Senate bill in the House. It represents a subject area that we have not yet considered in our committee. We felt this title addressed itself to problems for which solutions would be sought through new legislation that we hope to develop.

We have therefore drafted a more comprehensive proposal which we will ask the House conference to accept in lieu of title I.

(1)

Our committee would have preferred not to hold a hearing on this alternate proposal. The fact is that such important legislation and our consideration of it on a separate basis in the Senate made it something we were reluctant to bring into focus but we had to proceed as we are today within our committee structure to public discussion. This proposal would permit the President, at the request of the Governor, to designate economic disaster areas where there has been a sudden rise in unemployment, like in Seattle, where unemployment has reached a specified level. The President would then appoint a Federal coordinating officer for each designated area and that officer would coordinate the activities of all Federal agencies involved.

In consultation with State and local officials, that officer would determine which projects would be funded, decisions to be based on the number of jobs that the projects would provide.

Under the proposal communities could receive grants for the construction of public facilities if those facilities provided jobs necessary to support economic recovery. Federal funds would be available up to 80 percent of the cost of the project or 100 percent in communities where the local resources had been exhausted.

Grants or loans would be available to private nonprofit organizations for job creating or maintenance activities. Loan guarantees would be available to profitmaking groups. The proposal would provide assistance to continue unemployment compensation for those not otherwise available for payments or those who exhausted their eligibility.

Rent or mortgage payments would be provided for up to 1 year for unemployed individuals facing eviction or dispossesion of their property. In lieu of these two types of aid, unemployed persons could obtain loans up to 80 percent of their previous income of $1,000 a month for up to a year. A repayment schedule would be similar to that for National Defense Education Act loans...

These are the major provisions of the committee's proposal and I hope they will receive very careful consideration. The witnesses who will testify have had considerable experience with economic disasters and the existing mechanisms with which we cope with them. Included is a very able U.S. Senator who was a member of our committee, Senator Spong, who is with us today. There also is to be given the thinking of an independent economist and we have others that by statement will include their thinking.

These presentations will be helpful to all of us who are attempting in our committee to be constructive and to proceed with what we hope is not a delaying action but a desire to do a complete and thorough job. We are gratified to have Senators Magnuson and Jackson with us today. Following their introduction of the Governor and before he testifies, we are going to give Senator Spong the opportunity to present his testimony. I know, Senator Magnuson and Senator Jackson, you have commitments and we want to accommodate you with the presentation of your Governor. We appreciate his understanding of the situation.

Senator Jackson.

Senator JACKSON. Mr. Chairman, could the record be broken so that Senator Spong's testimony is first and then we follow.

The CHAIRMAN. It will appear following the testimony of the Governor. Thank you.

Senator Magnuson.

STATEMENT OF HON. WARREN G. MAGNUSON, A U.S. SENATOR FROM THE STATE OF WASHINGTON

Senator MAGNUSON. Mr. Chairman, we appreciate the opportunity to appear again and to present to the committee Governor Evans of our State. He testified at the Seattle hearings and he has probably a great deal more to say about the opportunity to use public works as a means to help the unemployment situation. I was very pleased, and I am sure all three of us were, that the committee has recognized the extremely serious economic conditions facing our State and has again asked the Governor to appear.

As the Chairman knows, and the committee, Senator Jackson and I introduced legislation-S. 1779-on May 5, 1971, to establish an emergency Federal economic assistance program, to authorize the President to declare areas of the Nation with serious economic and employment problems to be economic disaster areas. The bill, S. 1779, if enacted, would also establish a $2 billion Federal economic recovery fund to provide direct recovery assistance. This fund will be administered by the Office of Economic Aid to depressed areas, a new office created by S. 1779 in the Executive Office of the President. The chairman made reference to this bill.

Senator Jackson and I wrote a letter to you, Mr. Chairman, on May 6, 1971, which indicates our desire to have our measure considered as separate legislation and not as a substitute for title I of the Housepassed Public Works Acceleration Act-H.R. 5376.

I personally believe that the Senate should pass both H.R. 5376 and S. 1779 because of the serious economic problems facing the Nation. The economic difficulties facing Washington State requires both an accelerated public works program and legislation that provides special assistance to areas of the Nation suffering from the severest economic problems.

Governor Evans wrote in a letter to Senator Montoya, chairman of the Economic Development Subcommittee, recommending that we have both an accelerated public works program allocating funds to the States with the severest economic problems and also an economic disaster program. Our State needs both programs as the Governor will so testify and we should not sacrifice one for the other. I think they should proceed on a parallel path.

I understand that the committee is considering the possibility of a substitute for title I of the House-passed bill. The Public Works Committee is trying to find the best possible combination of economic programs to answer the Nation's needs. I am very sensitive to this need as is Senator Jackson and the Governor because our State unemployment rate is nearing 15 percent-the highest in the lower 48 States. Alaska now has the dubious distinction of being the highest and we are very concerned about that problem.

Every day I read constituent letters and newspaper stories indicating the extent of the human suffering that is being experienced in Washington State. We think Congress must act now to reverse the

results of the economic policies that call for higher unemployment as an answer to inflation. I disclaim that theory. These policies and the recent termination of the SST program have made Washington State the hardest hit and most depressed area in the Nation. The citizens of my State are waiting to see what action Congress will take to reduce the level of unemployment, decrease the number of bankruptcies and home foreclosures, and most importantly to lead this Nation toward economic recovery.

So I am pleased that the committee has asked the Governor to relate the need for additional legislation and he certainly has been in a position to see the extent of this need in the State.

I would like to place in the record the introductory remarks I made on S. 1779 when that measure was introduced by Senator Jackson and myself.

The Chairman. Yes, that will be done.

Senator MAGNUSON. Thank you.

(Senator Magnuson's remarks follow :)

[From the Congressional Record, May 5, 1971]

STATEMENT OF SENATOR MAGNUSON

Mr. President, today I join my colleague from Washington in sponsoring the Economic Disaster Area Relief Act of 1971. This measure answers the dire need in certain areas of the country for special aid and assistance when economic conditions create the severest kinds of human dislocation.

This measure also recognizes the blunt fact that federal decision making can and does randomly, harshly, and unfairly affect certain communities in the United States. The Seattle/King County area in Washington State is experiencing additional economic hardships because of the recent decision to cancel the SST program. This decision, compiled with the general downturn in the economy, has placed this area at the very top of the Nation's unemployment statistics with an adjusted rate of 13.1% unemployed. These figures are all based on "insured unemployment" and do not indicate how many others in this area are not covered by unemployment compensation or have given up their search for new employment. These figures, also, do not reflect "underemployment" which is an economic fact of life in Seattle/King County area. Engineers, scientists and skilled aerospace workers are taking whatever job is available in order to support their families. This certainly is a tragic waste of educational capability, scientific background and actual work experience.

This measure creates in the Office of the President a special office which will give leadership and hope to communities suffering severe economic dislocation; this legislation also provides a 2 billion dollar pool of funds from which the President can draw in order to finance emergency federal assistance to communities with disastrous economic problems.

Mr. President, the Senate Public Works Committee recently held hearings in Seattle and other parts of the nation in order to get a better understanding of the existing situation and to see if legislative action is needed. I have been informed that the committee is considering emergency legislation similar to that which is being introduced today by Senator Jackson and myself. I applaud this effort and pledge my wholehearted support to the Public Works Committee in seeking a legislative solution to this great problem. This bill being introduced today, is, in my judgment, timely, and presents the Committee with a potential amendment to the Accelerated Public Works legislation (H.R. 5376) recently passed by the House which is now pending before the Senate Public Works Committee.

Mr. President, my statement before the Senate Public Works Committee in Seattle, follows.

The CHAIRMAN. Senator Jackson.