Reserve Board is the one that has caused us all this trouble by having a rediscount rate of 6 percent, they are the ones that ought to roll it back. If you are going to control credit in the private sector, you have got to control prices as well as credit, and you didn't give the President the right to control prices. You just give him the right to go in and control credit, a one-sided affair as I see it.

Chaiman PATMAN. Well, please pardon me, sir, but the prime rate does not follow the rediscount rate. I don't think the records will disclose that. I am sure they will not.

Mr. JOHNSON. It does according to the Federal Reserve Bulletin, that just as fast as you raise the rediscount rate, the prime rate goes up.

I believe my time is up.

Chairman PATMAN. Let us see, Mr. Moorhead.

We will stay here as long as we can and keep asking questions if the mayor will be patient with us and bear with us.

Mr. MOORHEAD. I would like to welcome a fellow member of the 86th Congress Club to this committee.

Mr. Mayor, do I understand your testimony to be something like this, that you are satisfied with the housing programs as reported by this legislative committee but that you are not satisfied with the appropriations for those programs as reported by the Appropriations Committee?

Mr. LINDSAY. The levels of funding are not sufficient. Levels of funding have to go right up to the authorization, otherwise we will be in worse trouble than we are in. We are in bad enough trouble as it is, but the levels of funding are absolutely essential.

My associate tells me that HUD has just released this morning its budget requests for the 1971 fiscal year, and I obviously will have to examine it and make a careful comment on it later from New York. But just one example: In urban renewal, out of an authorization of $2.3 billion, the administration has requested appropriation for only $1 billion, which is totally insufficient.

Mr. MOORHEAD. Mr. Mayor, it is my understanding that pension funds for the employees of the city of New York have assets totaling nearly $5.5 billion but that only $210 million of this total is invested in real estate loans and mortgages and that a great deal of this is for commercial property outside the community.

Mr. LINDSAY. Three point eight percent.

Mr. MOORHEAD. Don't you think a greater portion of these funds could be devoted and should be devoted to housing for low- and moderate-income families within the city?

Mr. LINDSAY. That is correct. That is very true. It should be. There are a lot of historic reasons for this partially the tenderness and fears that the trustees of those funds have in investments of this kind. They are worried about defaults. We think, and hope, this is beginning to change.

Mr. MOORHEAD. Do you think this would be at least a partial solution for cities across the country?

Mr. LINDSAY. Partial, very partial.

Mr. WALSH. But we do think, also, that in order to encourage such investment there has to be some kind of instrument to make it reason

Mr. WIDNALL. Mr. Mayor, would you pull the mike a little closer to you?

Mr. LINDSAY. Yes, sir.

Mr. WIDNALL. Thank you.

Mr. LINDSAY. Time moves on, Bill.

Mr. WIDNALL. That is right.

Mr. LINDSAY. What I mainly wanted to mention today and put on the record is something about the impact of the country's current economic conditions on our housing policy particularly as it affects my city of New York. I think it is a fair statement to say that what I say today is probably applicable to the major cities of the country.

More than 20 years ago the Congress declared that a safe and decent home and a suitable living environment is the right of every American. And I don't think that the distinguished members of this committee need any reminding that that right is being threatened now, as never before, and the chief cause, or the chief route of that threat is rampant inflation.

We think, however, that the housing goal is also threatened both directly and indirectly, and rather dangerously so, by the monetary policies that are now being implemented in order to curb inflation. If something is not done to change these directions and policies, then the fight against inflation is going to have a very tragic consequence, specifically, the repudiation of our belief in the right of Americans to live in decent housing.

I believe that there are only a relatively small number of people who really realize the extent of the housing dilemma. It's been called a crisis for some years and we are dulled now to what that word even means and its impact.

Let me just briefly tell you what it means in New York City. It means nearly half a million apartments which are in one way or another uninhabitable with peeling plaster which can cause braindamaging lead poisoning, with filth, with children left at night to the mercy of the cold weather, with exposed wire and dangerous gas heaters and rotted wood which can burst into flames. It means that the people who live in these apartments have a pervasive sense of despair, so great that it offers not only suffering but hopelessness.

Now, that is what it means if you are poor. But even if you have a decent income, housing is now rapidly being priced out of your reach. In 1966, a moderate income family could buy a $16.300 home with a hundred-dollar-a-month mortgage payment. Today rising costs have made that home cost $18,500, but interest costs mean that a $100 monthly payment would buy a $12,000 home, and in the New York area such homes do not even exist.

Thus, in our city we are faced with a situation where 20 percent of the rental units are substandard, where almost half of the housing is over 40 years old, where 26,000 people in 1 week of a bitter winter complained of inadequate heat, where three children burned to death in a fire started by an oven turned on to provide some heat, and where there is no money to build new housing for low- and moderate-income families.

There are a raft of programs in New York to build housing-State. Federal, and city programs. And despite the worst budget squeeze in

in rural America. We find that where you in your urban community have inadequate water and sewer facilities, in the rural communities it is not inadequate water and sewer facilities-it is none. And that, of course, makes it attractive for people to leave those communities. I speak from this standpoint, that my district is half urban and half rural as far as the population is concerned. So I am not trying to favor one over the other. But, I hope that when you meet with the mayors of the large communities you do emphasize that part of your problems can be corrected by their support of rural housing programs.

Mr. LINDSAY. I agree with you, Congressman Stephens. As the country gets older and the population grows and that massive suburbia in between cities turns into one big, huge-what is the wordmegalopolis, increasingly we are all in the same boat, and there is no longer any upstate-downstate gaps and there are no rural versus city issues.

Mr. STEPHENS. It is all one problem.

Mr. LINDSAY. It is all one problem now.

Mr. STEPHENS. Thank you.

Chairman PATMAN. Mr. Mayor, we have one member who will interrogate you; is it all right, if some of us have questions that we are not permitted to ask because of the time not available, to submit those questions to you before you look over your transcript, and would you answer them when you look over your transcript?

Mr. LINDSAY. Yes; of course. I would be delighted. Incidentally, Mr. Chairman, I might-Congresswoman Sullivan asked the question on debt service dollar costs. The record should have-I have the figure now. The total debt service for fiscal 1970-71 is $752 million, and the total interest payment burden for fiscal 1970-71 is $260 million, New York City's budget.

Chairman PATMAN. And you may expand on your remarks if you desire to do so when you look them over. All right, Mr. Williams.

Mr. WILLIAMS. Yes, thank you, Mr. Chairman. And thank you for coming here, Mr. Mayor.

I don't think high interest rates should be a surprise to anybody when we consider that during this decade the Federal Government has spent over $57 billion more than it has taken in. And actually what we have today is a situation where the Treasury Department is refinancing Federal obligations that are maturing at four and a quarter percent, that was the interest rate, and we are refinancing them at interest rates of over 7.5 percent. We have some Government-related agencies who are paying over 8.5 percent interest rates and actually paying 90, 91 cents on each dollar loaned. But to get back to some questions about the city of New York, what is your real estate or property tax per thousand dollars of real value?

Mr. LINDSAY. That is $60 a thousand.

Mr. WILLIAMS. Sixty dollars a thousand. What percentage of your assessed valuation in New York is nonresidential?

Mr. LINDSAY. What percentage is nonresidential? I will have to get you that figure; I can't give you that figure off the top of my head. Mr. WILLIAMS. I would appreciate having that because the more of your assessed valuation that is nonresidential, the more tax revenues you have coming from sources that don't send children to school. You

Fourth and most critical, lack of Federal funding. Section 236 provides subsidies on interest rates to encourage housing construction. This program is essential. It is the only program in our city to house our middle income families; but this program in the abstract is meaningless. It is the level of funding which will make or break our attempt to build housing that people can afford. In New York City alone we need for the current fiscal year some $22 million in section 236 money. Again, I emphasize that it is not designed to replace city money or initiative. It is designed to let our money do the job of building housing. Yet indications are that only $6 to $10 million, less than half of what we need, will be available for city projects. Future projections indicate an even wider gap between need and funding.

What does this mean for the average American? It means that the goals that this Congress set 2 years ago, the goal of building 26 million housing units in the next 10 years, is simply a joke. It means that the poor man, the working man, the middle income family, all of them will continue to be without the housing we promised them. The New York story is being repeated in every city of the Nation.

Of course, it is important to fight inflation. That effort is important especially to the people on the lower end of the economic scale. But it should be fought by cutting military waste, slowing down our space program, reduced environmentally dangerous highway building, and if necessary by careful control in the wage and price area. But we cannot fight inflation at the expense of desperately needed housing and other social needs. Indeed if we ignore the need for housing using inflation as our excuse, we will accomplish nothing except to make those least able to afford it bear the intolerable burden of inflation by denying them the help they must have to find decent housing. Further, we will watch helplessly as the housing stock of our cities and smaller communities decays, the victim not of natural disasters but of official indifference. I don't believe that that is an acceptable policy for the country to follow.

What can be done? Several steps in my judgment could make a difference. First, Congress should appropriate immediately the unused authorization of $45 million for section 236 programs to help local money build housing at reasonable rates. Second, we require a supplemental appropriation of the already authorized $600 million for urban renewal and NDP programs to help us get more sites for housing and to lower housing costs by permitting land writedowns.

Third, we must build flexible limits into mortgage and construction costs for public housing and for FHA moderate income programs. There is no time to be lost on this; we are going to bump up against the new cost limitations in a matter of months given present inflationary trends. We cannot pretend that inflation does not affect these projects. We must build this housing even as we seek to stop the root causes of inflation, because a one-sided tight money policy in appropriations as well as in monetary policy simply ignores our housing needs.

Finally, we must find new sources of mortgage money. Congress and the administration must search for these sources in areas such as pension funds and Federal trust funds. Developing these sources is critical and it should be a first order of priority.

York City, the millions of people who visit the city and the international body that lives there at the current level of services.

Our tax system including the local income tax produces an increase normally of somewheres between 5 and 7 percent. That is because real estate taxes are rather fixed. This means that each year we are talking about operating budget gaps in the area of $500 million. Our projected budget gap just to pay for the school system and the police and the firemen and the nurses and the hospitals, we run 20 municipal hospitals in New York City, for the fiscal year that begins June 1 of this year is in excess of $750 million. And at this moment we have no idea where it is going to come from.

Mr. WILLIAMS. Well, I just go back to the same point, the source of your taxables are your cities and your suburbs, whether the cities levy the tax or the State does it or the Federal Government. That is where the bulk of the money has to come from.

I do have some other questions relative to your statement in which you state that more housing units in New York are becoming uninhabitable each year than your new housing starts, but I will ask those questions for the record.

Chairman PATMAN. Thank you, sir.

Thank you very much, Mayor Lindsay. We appreciate your time. You have been very helpful to us.

Mr. LINDSAY. Thank you, Mr. Chairman.

(Whereupon, at 12: 15 p.m., the committee recessed, to reconvene at 10 a.m., Tuesday, February 3, 1970.)