Mr. LANCE. I think, sir, our response about the housing situation and the lack of it being included in the stimulus package is that there are existing programs and there are ways for us to deal with that problem, and being able to look at it from that viewpoint. And Mrs. Harris and I are in the process of having some conversations about those particular aspects.

Mr. BADILLO. Well, we've used up all the funds that are available to us. There aren't any more. And there certainly is a great need. Mr. LANCE. Yes; she has some recommendations.

Mr. BADILLO. We can expect them shortly?

Mr. LANCE. I haven't made a commitment to that point. I say she has some requests, but that we have not yet gotten together to try to deal with them. But the need for housing, I think, is very obvious. We just felt that it was an area that should not be part of the stimulus package, since it was separate and distinct, from that standpoint. And as in the defense budget and other areas of our Government, we need to be concerned about the human factors, the national security factors that are involved in that area, and not try to use it strictly for economic stimulus purposes.

Mr. BADILLO. Secretary Blumenthal, in your statement you state you expect there will be an increase of 415,000 jobs in public service under the CETA bill. I was on the subcommittee that drafted the CETA bill. One of the problems that we could not get straightened out then was the provision that there should be additional jobs. And one of the difficulties is that in cities like New York and others, additional funds for public service do not mean additional jobs, because the city is laying off people, and what happens is, people who get laid off and then come back under the public service payroll.

Do you propose to recommend a change to insure that those additional public service jobs are in fact additional jobs and not just jobs to help balance the budget?

We might need that, too, but it doesn't solve the problem of additional jobs.

Secretary BLUMENTHAL. You will recall, Mr. Badillo, that we mentioned earlier that we picked this number as the maximum number of new employees that could be absorbed. We had very much in mind this problem of displacement-the funding of jobs that would be there anyway. The number that has been selected is one that Secretary Marshall feels takes into account the problem of displacement and the mere substitution of one job for another.

Mr. BADILLO. My time has expired. Thank you.

Mr. MOORHEAD. The gentleman from New York, Mr. Pattison. Mr. PATTISON. Mr. Blumenthal, I accept the need for a stimulus, and I find myself unable to argue one way or the other about the amount. I think probably everybody is in about that circumstance. And I think that sometimes you do need aggregate policies.

But I am somewhat concerned about the amount of the balance in this package for the longer term and targeted kinds of devices. I'm particularly interested, to follow up on a question that was asked by my colleague from New York about the use of the accelerated depreciation for areas that have long-term unemployment histories, high unemployment histories. It seems to me that that kind of a device would affect those areas, particularly in the Northeast and Midwest, where production has-production facilities have left for warmer

climes, and where we need some incentive to the businessman, not the retailer, but to the producing-the manufacturer-to come back to those areas. And that seems to me to be a way that can be used that is the most useful to a businessman, because he doesn't have to get anybody's approval. You write it into the law. He doesn't have to go through that one more step in the decisionmaking process. And it also has the advantage of being turned on and off automatically.

I know you've considered that device, and I wonder if you could just talk a little bit about that. And is that in the future plans, or is that a bad idea?

Secretary BLUMENTHAL. We felt we had to select a variety of programs and put them into a package. They had to be relatively simple and straightforward and not further complicate an already complicated tax situation, and they had to be types of programs that would not take a long time to work their way into the economy.

There are many suggestions for accelerated depreciation; some apply to particular areas, others to particular types of facilities and still others to particular types of enterprises. Some would favor something for energy, or for pollution control, or for safety measures-all sorts of things. I think all these proposals have merit. However, they all have complications, as well. I would hope that in the course of our tax reform deliberations, we can look at these proposals. We are going to do that. That does not mean that we will favor all of them. Some of them might work and some might not, but we always bear in mind that we want to simplify the system and not complicate it further. Again I think such proposals ought to be looked at.

As a businessman who has been involved most of his adult life with companies and in running companies, I would have to add that one has to be a little bit careful in assuming that a simple measure of this kind would induce a business to go into an area that it otherwise would not go into. The reality is, unfortunately, somewhat more complex than that. And I think businessmen go into an area where there is a market, where there is a product to produce, and where they can maximize profits on their products. There is no quick, easy way to cause businessmen to do what they otherwise would not do. It just is not business.

Therefore, one has to be very careful about complicating the tax system to achieve a certain goal and to make sure one really accomplishes what one wishes.

Mr. PATTISON. Well, I accept all that. I know the complications, and I don't frankly think we can avoid many of the complications. But it does seem to me that the notion of targeting does have enormous appeal. You don't paint every room of your house when one room needs paint. And it seems to me that sometimes, in these broad, acrossthe-board kind of things, that we frequently will heat up parts of the economy which are already at full steam, and that's where the inflationary pressures come from. And the fact is, you're not going to heat up other parts of the economy with these kinds of measures sufficiently to do much good, and it seems to me that that calls for targeting. And I realize that's complicated, and no one wants more complications. But I think that the complications are something we are not going to avoid in our lives.

Thank you.

Mr. MOORHEAD, Mr. Hansen.

Mr. HANSEN. Secretary Blumenthal, Mr. Lance, you are successful businessmen. The President is a businessman-farmer who is successful. And I would like to explore with you for a moment the attitudinal situation with regard to big Government as opposed to business and the regulation of business.

We have been engaged, at least my office has, with several people in trying to do something to cut down on the complexity and demands of Government regulations as they handicap business. And I know the President is interested in this type of thing and has expressed it many times.

I guess I would like to talk to you in terms of cost benefits and maybe just a little philosophy for just a moment.

One is the Occupational Safety and Health Administration which you both probably have had some experience with. It seems to me there is a philosophy and a lot of people think either it's all safety or it's all not. It has nothing to do with what you're talking about today, but I think the attitudes do. And American business, I think-and our system has grown up more on incentives than punitives. And we have had insurance. We have had the idea that you had to qualify for licenses. We have had a number of devices that have kept business pretty much in line because they had to reach for something. It was an incentive-type thing. And it seems that something like OSHA is more on a punitive basis.

And I am wondering if you gentlemen can tell me what your feelings are in the regulatory field as far as inducements to business. Do you feel we ought to put a cop, for instance, on every doorstep in order to exact compliance in this country, or can we do it through incentives and this type of thing?

Mr. LANCE. I don't think there's any question that this is one of the things that has caused a real downturn in the confidence sector in the minds of the American people about Government. The President in the Cabinet meeting the other day said don't hire so many folks to write regulations. It stands to reason that if you hire folks and pay them to write regulations, that is going to be the end result; they write them.

Well, that's a very simplistic approach to the problem that we've got to deal with, but I think there is a great deal of truth to it. And I think that that's an indication of the kind of attitude that the people in the Carter administration will have about this problem of regulation, about the complexities involved, about trying to change that into something that is simple, something that is easily understandable. When he was Governor of Georgia, he made the effort and said it repeatedly, that he felt that Government ought to be easily understood, that it ought to be consistent, that it ought to be where the average citizen would know where to turn to for help when Government was supposed to provide that sort of help and assistance.

Mr. HANSEN. If I could interrupt, on this basis, then, on a cost-tobenefit situation which-we get down to money. You've been talking about money all day. And when we talk about incentives, we also have to talk about cost and benefit, that the Government has so much money to spend in order to exact programs and make them work. If you find, then, that programs are not delivering, but they are spending too

much money in one direction to effect something where the money could be better applied in another direction, you will be flexible enough to entertain suggestions in this regard, I would hope.

Mr. LANCE. Absolutely, and I might add that one of the things that I'm concerned about in the-as Director of OMB-is doing something about the excessive paperwork that we have in Government. I don't think that has been a high priority in the Office of Management and Budget; it is going to be. I have told the people in the departments that this is something that we have an obligation and responsibility to deal with, that it ought to have a position of importance and priority in our ability to do it.

We are the bad guys about a lot of other things, I understand. We might as well be the bad guys about some improvements in that sector, doing something about the excessive paperwork and all the complications of people just trying to do something on a simple basis.

I can give a personal illustration. When I went to the highway department of Georgia, it took 90 days to get a driveway permit. We changed that; it now takes 10 days to get a driveway permit, and that's still too long for something that's very simple, in my opinion. But we can make changes, and changes should be made. And I think it is important for us to realize that this is a task before all of us.

This is one reason that I again articulated the problem about reorganization, about zero-base budgeting, about looking at it in the totality of what we are trying to do.

Mr. HANSEN. With the indulgence of the Chair, may I ask if the Secretary concurs largely in what was said?

Secretary BLUMENTHAL. I concur totally in what was said, based on much personal experience in the same area.

Mr. HANSEN. Well, time, of course, is limited here, but I would like at some proper time to explore these matters with you gentlemen further, because I think we are all working for the same country, politics aside, and I think there are some things here that really bear looking into, because the people are agonizing over the controls and the complication of Government.

I thank you, Mr. Chairman.

Mr. MOORHEAD. Mr. Cavanaugh, do you have any questions?
Mr. CAVANAUGH. I pass, Mr. Chairman.

Mr. MOORHEAD. Ms. Oakar?

MS. OAKAR. Mr. Chairman, thank you.

Mr. Lance, sharing the concern of my distinguished colleague from Massachusetts, I believe that our country is in great economic straits. These are very different circumstances than the events of December amidst which your economic stimuli were devised. I find it unacceptable that you can almost divorce yourself of this reality. There are one-half million people in Ohio who are now unemployed because of these weather conditions. In Cleveland alone, 5,000 people were laid off, and they haven't told them when they will come back. It could be a permanent situation in the local Ford Motor plant. Some of the smaller factories were permanently closed, each with 300 and 400 employees.

And it seems to me that you might want to incorporate these new difficulties and needs in your stimulus package. Then, in fact, it might be a slightly different bill that we in the Congress will be dealing

with. For example, the $50 tax rebate is probably going to pay for a week's additional utility bill. You might want to amend your own proposals to keep up to the current situation.

Mr. LANCE. Well, let me respond first of all by saying that I haven't divorced myself from reality about the problem of the weather. What I was saying was—and I think I have been consistent in this regardwas that this is a totally and completely different problem than the one that we were trying to deal with in the stimulus package when we started formulating it early in December and throughout December and January.

I am not trying to get away from the fact. I am trying to give more emphasis, really, to the fact of the problem of the weather. That is something that we can't control. It may well be that we have to do something that has not been done previously with regard to dealing with the specific problem that you related to. So this is not a problem that we are not concerned about, that we're not cognizant of. It is just a question of whether it comes in the stimulus package.

I don't happen to think-I could be wrong about this; I have been wrong about a lot of things. But I don't happen to think that the stimulus package is going to solve the problems connected with the weather if they continue. I think that we have got to look at it as it relates to the problems that have come about in specific areas of our country and deal with them on a very direct basis.

MS. OAKAR. Well, the point is that, as far as Ohio is concerned, it has not been dealt with. I was somewhat dismayed that the President did not declare Ohio a disaster area along with Pennsylvania and New York, and I would love to have had the President visit Cleveland. Anytime he is up to that, I would love to have him come and see what is happening.

It seems to me, though, that this is a dramatic occurrence and is not just something that took place in January and that to rectify the situation can't be on a different plane. It has to be, in my judgment, incorporated, possibly by increasing the rebate or increasing the number of jobs for professionals. I'm not sure what it is. But you mentioned that you had not gotten around to it.

I mean, these people are out there

Mr. LANCE. I said we have not gotten the figures yet.

MS. OAKAR. Well, I can give you the figures for Ohio, that is, the number of unemployed. Moreover, I'm sure that my colleagues can give you figures for their respective States.

Mr. LANCE. In all fairness, I don't believe that I have said anything that indicates any lack of concern about the problem that I have or the Carter administration has for the problems in Ohio caused by the weather. I have said that I think there are problems that have to be dealt with on a direct basis, that simply increasing the stimulus package is not going to specifically solve the problems caused by the weather in Ohio. I don't think that's the case.

MS. OAKAR. The problems of the economy and today's energy difficulties are inextricably tied-both are far-affecting problems that will impact on every aspect of our lives. Ultimately, you will find that they are one and the same problem.

I hope you will come up with a solution on that level immediately. Mr. LANCE. I appreciate your concern.