subsidies are now distributed, but also an investigation of the extent to which localities can be given incentives for improved management.

At present, the local housing authority is responsible for management of public housing projects while the Federal Government is responsible for project deficits, including those due to poor management, and the local authority has little incentive to improve management standards. "One of our goals," the President stated in his message, "will be to achieve a more equitable sharing of responsibility. among the Federal Government, local communities, and residents."

Third, the President requested, and I am conducting an inquiry as to whether the current level of operating subsidies, even with improved management and a more realistic approach to rents, is sufficient for continued operation, including deferred maintenance and modernization of the projects. In particular, I propose to conduct an extensive but very rapid examination of local housing authority owned projects to determine what and where their needs are. I shall report the findings of this examination to the President together with any recommendations that may be appropriate as to the adjustment of the current level of support.

On May 14, 1973, I testified before the Senate Appropriations Subcommittee as to what I considered my four major objectives for the Department. The third of these objectives was improvement of internal operations within the Department, especially with respect to departmental management. One of our most serious problems is the very long time and substantial expense involved in acquiring title under defaulted FHA mortgages. At present, the Department is subject to the variations of the laws in 50 States which result in delays as long as 2 years between the time of any abandonment to the time title is received. The consequences of these delays have become all too common. Homes and buildings which are vandalized, become fire and health hazards, and havens for criminal conduct, to say nothing of drastic decrease in value. And for the period of the delay, FHA pays debenture or mortgage interest on the insured mortgage.

Accordingly, we have included in our proposed bill a title IVa proposed Federal Mortgage Foreclosure Act. This act would provide for the foreclosure of mortgages made, owned, insured or guaranteed in whole or in part by a Department, Agency or wholly owned Corporation of the United States.

The bill would create a Federal foreclosure procedure by nonjudicial power of sale with respect to such mortgages. It would cut substantially the cost and time of mortgage foreclosure while at the same time containing proper protection for mortgagors-indeed providing for more rights than mortgagors presently have in a number of States. The bill has the support of all interested executive departments and agencies, including the Department of Justice, and I urge the subcommittee to give its provisions the most serious consideration.

In addition, the President's Message included a number of proposals covering neighborhood preservation, the relationship between housing and living environment and assuring equal opportunity, in particular. prohibiting lenders from discriminating on the basis of sex or marital status.

22-877-73-2

I will not take up the time of the subcommittee by detailing each of these proposals. However, I think I should conclude by mentioning the Responsive Governments Act.

In his March community development message, the President noted that:

For nearly 20 years the Federal Government has provided assistance to State and local governments in order to strengthen their planning and management capabilities.

The President also noted two major flaws in the comprehensive planning assistance 701 program under which the assistance has been provided. First, it has tended to stress one aspect of public administration; planning; without adequately recognizing other essential features such as budgeting, management, personnel administration, and information gathering. Second, State and local governments have also found it difficult to coordinate their planning because of the fragmented way in which 701 funds have been sent from Washington.

The Responsive Governments Act, builds upon the experience of the comprehensive planning assistance program. It is designed to sustain the achievements of the 701 program, correct its deficiencies, and introduce new features that are appropriate to the needs of America's communities in the 1970's.

Among the important characteristics of the Responsive Governments Act are:

Its emphasis on improving the overall capacity of State and local governments to plan and manage their efforts comprehensively;

Its acknowledgement that planning and management are integrally linked and that both are necessary to effective governmental decisionmaking;

Its support for planning and management at all levels-State, areawide, county, and municipal-as well as Indian reservations;

Its flexibility which allows the Secretary of Housing and Urban Development, with the advice of the Congress, to adjust the program to changing needs and conditions;

Its recognition that State and local officials are well aware that effective planning and management is a necessary governmental activity, and that the Federal Government need not rely on extensive requirements to insure that program objectives are met.

Experience has shown that an effective planning and management process in American communities provides the best insurance that Federal funds, as well as local resources, will be wisely invested there.

The Responsive Governments Act is designed to improve the processes now in place. This assistance will be even more important as States and local governments are freed from the restraints of narrow, categorical programs and assume their full role in addressing community development issues.

Thank you.

The CHAIRMAN. Thank you, Mr. Secretary. Senator Proxmire? Senator PROXMIRE. Mr. Lynn, if after reviewing all the data and after these hearings

The CHAIRMAN. May I say before we start, we will have the 10minute rule in effect.

Senator PROXMIRE. If after this, the Congress disagrees with the almost exclusive reliance on the housing allowance, and mandates the

continuation of our present programs, would you carry out these programs?

Secretary LYNN. This takes me back, Senator Proxmire, to my confirmation hearing where I believe it was Senator Hathaway who inquired as to whether or not I would carry out the laws of the United States, and of course I would carry out the laws of the United States. But in this case that requires an interpretation of what the word "mandated" meant and so on. But if the ultimate conclusion were that there is a responsibility that must be carried out under the laws, of course I would do so.

Senator PROXMIRE. So what we have to do if we want these programs continued is to make that emphatic and clear, and if it is emphatic and clear, you would carry them out, right?

Secretary LYNN. I don't know the exact manner you would do that, sir, and I don't know the constitutionality of the issue that well. So I had better refrain from specifics.

I would urge you, however, to take a hard look at the existing programs and what they do mean by way of cost per family served.

Senator PROXMIRE. I want to get into that in a minute. But I take it that the chances are we would then have to have the capacity to pass such legislation over a Presidential veto. If passed over a Presidential veto, however, you would carry it out?

Secretary LYNN. On mandating the expenditures, yes; I believe that would be the case of course, I am just speculating.

Senator PROXMIRE. Impoundment under those circumstances would end. We have on the books now a clear direction to carry the programs out. They have been ended since the middle of January this year as far as new approval is concerned, is that right?

Secretary LYNN. I believe the issue as to whether or not there is a mandate is before the courts at this time, Senator.

Senator PROXMIRE. The courts at least in a preliminary way have ordered the resumption of the programs. They have found for the Congress.

Secretary LYNN. The District Court so far as to some of the programs, and the issue is now on appeal.

Senator PROXMIRE. Why do you want to repeal the goal of 6 million units per year? Even if we accepted your housing allowance payments, you want to repeal the specific 26 million unit goal in the 1968 act. How do you explain that inconsistency?

Secretary LYNN. I believe we should look to a very high sustained production of housing in the private sector. The study shows that particularly taking into account the baby boom that occurred shortly after World War II, and with the family formations that are resulting from the baby boom, that given a good, strong, healthy economy, and the jobs for those new families, there will be a very large demand for housing construction continuing through the 1970's and into the early 1980's.

The reason why we reject the idea of the 26-million goal is that we believe the right amount of housing will be achieved in the private sector through the marketplace. I am putting aside now the kinds of efforts that have to be made on the part of lower income families.

I don't believe anyone is capable at this point in time of making even a 7-year goal, a 9-year goal, or a 10-year goal. First of all we

don't create goals for other things of this kind that I am aware of, and secondly, it seems to me that I couldn't possibly predict what this goal is.

Senator PROXMIRE. We do in the space program, we do it in highways.

Secretary LYNN. The problem is the number, Mr. Proxmire.

Even if we think there is a stated figure, there is no way to come up with a right number. Let me give you reasons why. First of all, we have no idea as to what is going to happen to our existing housing starts. Up to now the only thing that we have done on census figures and the like is take a snapshot, sort of a balance sheet, how much good housing is there, how much standard housing is there?

Senator PROXMIRE. Let me interrupt to say this, Mr. Lynn. I feel strongly about this. You see, the difficulty is, unless we have a specific numerical housing goal, we don't have any objective way of measuring the progress or lack of progress of a program.

Secretary LYNN. Yes; we do.

Senator PROXMIRE. No; we don't. You can say we are doing well and moving ahead in this way and that way, and it is not as clear and distinct. As I say, we do have it in highways and in space, where we have made great progress. We failed in the areas where we have not set goals.

Secretary LYNN. I would dare say there is quite a difference in goalsetting there and goal-setting here. No. 2, it seems to me we will have indicators of what progress we are making. We have things like vacancy rates, which became tighter and tighter from 1960 on to about 3 years ago.

They have started loosening but not uniformly across the country, but they are now going the other way.

Senator PROXMIRE. We have established goals and moved toward those goals. We made progress including progress in the Nixon administration in the first 2 or 3 years of the Nixon administration.

Secretary LYNN. I thought you were addressing yourself to the 26 million unit goal overall.

Senator PROXMIRE. That is part of it, of course.

Secretary LYNN. On that one I am saying I am at least not capable of coming up with any kind of a target figure at this point, particularly in light of the unknowns, such as, what rate of deterioration we will have with existing housing stock, the change in patterns of living that are now occurring in America, where the elderly are moving out from the adult family sooner, where younger people are moving out earlier, where more people are living alone in their middle years than ever before, where second houses are beginning to come in with their

own.

I find no way of coming up with a figure.

Senator PROXMIRE. In your proposed bill, you state:

Current housing programs are wasteful and inequitable because they concentrate on the construction of new houses for a very small number of families.

Now. I find this argument about equity difficult to understand. What you seem to be saving is because the program does not serve everyone within a specific income category it is inequitable. However, you can make the same argument about nearly every other Federal program, including your proposed housing allowance.

Secretary LYNN. I would not say that for the housing allowance. Senator PROXMIRE. You are not proposing to make all low- and moderate-income families eligible. You are talking about a phase-in period. Therefore, wouldn't your equity arguments apply equally well, and if it is possible to establish categories of eligibility in the housing program, why shouldn't those priorities be reflected in the 235 and 236 programs?

Secretary LYNN. Why couldn't the same priorities what?

Senator PROXMIRE. Why shouldn't the same priorities you are applying in the housing allowance program be applied in the programs we already have?

Secretary LYNN. The programs as we have them cannot achieve equity even if you applied all the amount of money there is to the programs, for the very simple reason that there is a growing gap between the people that can be reached by the low-income-housing programs, the public housing programs, and those that can be reached by 235 and 236.

Senator PROXMIRE. What I am saying is that there is an arbitrary selection under either system, whether you have housing allowances, or 235 and 236.

Secretary LYNN. I would say, Senator Proxmire, that although you might, at a cost that is out of sight, achieve equity as among those people you would help by using a new construction focus, at the very same time you would be creating gross inequities for the people that do not have these incomes, and for low- and moderate-income families who live in existing older housing.

So what you would have done is turn the table around with respect to middle America and low and moderate. That is one thing you would do.

Secondly, the cost of ever achieving substantial equity, horizontal or vertical, as among the people who need it, is an amount that you could not possibly afford.

Senator PROXMIRE. The reason I disagree with that is that it seems clear to me that the housing allowance program may or may not develop a greater stock of housing. It may simply build up the price of the existing stock of housing, whereas the construction programs, the 235, 236, and other programs, public housing, do increase the existing stock of housing.

Secretary LYNN. That is very hard to tell.

Senator PROXMIRE. They make it possible for more people to enjoy housing.

Secretary LYNN. On that one point, as to whether it increases the net housing stock, we can't be at all certain of that. We have many, many fully useful, safe and sanitary houses that are left by people to go into our subsidized housing and we were unable to determine what effect-we do know it has some effect-it has to accelerate deterioration of existing housing when people move to the newer units.

Therefore, I can't accept this as an assumption that the 235, 236, and other construction programs result in an increase in the net housing stock. Additionally, our study shows that up to 80 percent or so of the housing that was built and subsidized would have been built anywayalthough not for lower income families-without the subsidy. There