Whatever these findings might be, it is difficult for us in the Senate to truly evaluate the Secretary's proposals without first looking at the data on which these proposals are based.

Now, you have, Mr. Secretary, up to this time, submitted no factual evidence to the committee in a formal way which would substantiate your claims and proposals. It is hoped that you will be able to submit your housing study report to us in the very near future. I think that would be tremendously helpful to us.

Now, while it is hard to evaluate your proposals without certain data before us, it is my belief that many of the concepts that you suggest are new and exciting and hopefully will lead to an increased supply of decent housing for all Americans and especially lower income families. Speedier foreclosure proceedings and reinsurance proposals are just a few of the new proposals that we have to examine. While you propose experimentation with a direct cash-payment program, I think we all eagerly await the findings that will result in the housing program that is presently being tried in a few cities. I think what is important to consider now is that we have to do something. Whatever the reasons for the moratorium and the need for housing for lower income housing, that need is still with us and it is becoming increasingly important.

So I look forward very much to hearing your testimony, and hope that you can provide the answers to our present problems and I am sure, knowing your resourcefulness and your ingenuity, that you will come up with some answers.

May I say that while I might appear to be mildly critical and, from time to time I am and will be, I do not know of any time when we have had more communication and cooperation with the Secretary of an executive department than we have had from you, Mr. Secretary, and I do not know of any time when we have had more preconsultation on an administration proposal than we have had with this current housing proposals.

So we will be listening with interest and I think with a degree of openmindedness and certainly with no air of hostility, because we feel that you have been very cooperative indeed.

The CHAIRMAN. Senator Proxmire.

Senator PROXMIRE. Mr. Secretary and Mr. Chairman, this is a sad and historic day. For the first time since the creation of HUD and its predecessors, the head of the housing program in this country has appeared before us to ask us to abandon our historic housing policy and our housing goals.

In 1949 we pledged to provide a decent home and a suitable environment for every American family. In 1968 we wrote into the law a very specific housing goal, at least 600.000 units a year for 10 years of lowand moderate-income housing. These goals have been adandoned by HUD.

Starting with a moratorium last January, the sights were lowered to 250,000 units and this year with a new housing message, that is reduced to 150,000 units, or one-quarter of the annual goal. Now, I am told the bill repeals the housing goals altogether.

This is a cruel and brutal policy. It abandons many millions of Americans to years more of living in substandard, overcrowded, and dilapidated housing in blighted neighborhoods.

We had high hopes that after the big HUD study, a firm, intelligent program to complete our housing goals would be proposed. Instead, they have been abandoned.

What we got was, first, a series of pallatives some good, some not so good-aimed at the present, immediate high-interest rate problem, forward commitments, tandem plans, extending mortgage limits, and the like. Some are good and some are bad, but they are not a housing program.

Second, the present construction programs are to be abandoned or greatly reduced. At best there is to be some construction, not clearly spelled out under section 23 which even if successful, will be a drop in the bucket with respect to our housing needs.

Third, there is a vague and feeble proposal involving housing allowances. There is no program; there is no proposal. There is no policy. Instead, we are told "Right now, our principal effort should be directed toward determining whether a policy of direct cash assistance *** can be put into practical operation."

I call that the "no-policy" policy. And when it is put into effect fully, we are told it will cost $8 to $11 billion.

Now, as the chairman of the subcommittee of the Appropriations Committee in charge of HUD funds, I think that is wholly impractical. There is no chance we are going to appropriate money in that amount. So, what are we left with?

With the present high interest rates, 60 to 70 percent of Americans cannot afford to buy their own housing. It costs too much for their income.

New public housing is, for all practical purposes, being abandoned. So, there is nothing new for the poor.

The moderate-income homeownership interest rate section 235 program is terminated, to use a familiar HUD term. It is done on the specious grounds that the program is a failure. But some of us know that where we had good management, it succeeded and where there was HUD mismanagement and corruption, it failed.

It is not the fault of the program. Where there was counseling for poor people and good management-that enabled that program to work. That is abandoned.

So there is no program for the moderate- and middle-income family who, in the past, was not poor enough to qualify for public housing but was without enough income to buy his own home.

That's not all. Now, because of high-interest rates, the middle income American family is abandoned, too. They cannot afford to buy their homes, and there is no program for them.

What we have left is the FHA program to guarantee mortgages, and in addition the conventional programs, wholly private, in which people living in $50,000 or $60,000 or $100,000 houses can deduct their interest payments and property tax payments from their income-tax

returns.

I am not against that, but that is a very valuable tax advantage and it increases in value as income increases. It is a big subsidy, and should be faced as a subsidy. One study indicated that the upper 20 percent of the income groups in the United States got 311⁄2 times in subsidies through this device than the lower 20 percent got from all public housing plus counting 25 percent of welfare payments as housing payments.

So we have virtually no program for the poor, virtually no program for lower or middle or moderate-income families, no program for the great middle American families who are priced out of the market, and the abandonment of the housing goal.

The only people who can afford housing are the very well-to-do. That is the reality of the housing message.

All of this is justified by a series of "specious arguments" to try to cover up HUD mismanagement by blaming the programs; which imply that we should not construct housing for some of the poor or moderate income housing unless we supply new construction for everybody; and which tell us that we should push the rehabilitation of existing structures after this administration abandoned the programs to upgrade existing structures last January.

If they are such good programs, and I believe they are good programs, why did HUD suspend them.

The conclusion is clear. The historic pledge of a decent home in a suitable living environment has been abandoned by the administration. This is the sad, brutal fact. That is what these hearings are all about. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. Let us insert copies of the bills being considered in the record.

[Copies of the bills may be found in the appendix at p. 379.] The CHAIRMAN. Mr. Secretary, we are very glad to have you.

STATEMENT OF JAMES T. LYNN, SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; ACCOMPANIED BY FLOYD H. HYDE, UNDER SECRETARY; MICHAEL MOSKOW, ASSISTANT SECRETARY FOR POLICY DEVELOPMENT AND RESEARCH; JAMES MITCHELL, GENERAL COUNSEL; SHELDON LUBAR, FHA COMMISSIONER; DAN KEARNEY, DEPUTY TO MR. LUBAR; H. R. CRAWFORD, ASSISTANT SECRETARY FOR HOUSING MANAGEMENT; DAVID MEEKER, ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND DEVELOPMENT; GLORIA TOOTE, ASSISTANT SECRETARY FOR EQUAL OPPORTUNITY; SOL MOSHER, ASSISTANT SECRETARY, LEGISLATIVE AFFAIRS; AND AL KLIMAN, DEPUTY DIRECTOR, OFFICE OF THE BUDGET

Secretary LYNN. Thank you, Mr. Chairman.

The CHAIRMAN. This is the time we get a chance to state our position and now we are going to invite you to state yours. I want to say that I am more optimistic than I may have sounded in my statement. I have said all along that I believe we could work out a good housing program. I realize that there will have to be a good bit of struggling around verbally, but I am hopeful that we would come up with a bill, based by the way, not only on these 3 days of hearings sometimes I think that housing just being such an important matter and being in such a bad shape, as we have explained, that 3 days of hearings would probably not be sufficient.

But these 3 days of hearings are based upon the President's, the administration's bill.

As I pointed out, we have had several weeks of hearings in the course of the year, 5 weeks altogether, I am told, and that was on housing. That includes the community development legislative hearing and the oversight hearings that I mentioned, which was in fact a review of the entire program, in the earlier part of the year.

We felt that with 3 days of hearings, based upon this present bill that has been submitted by the President, and Mr. Lynn's statement, both by him and by his aides who are with him, that we will be ready to start next Monday and I hope all of us will keep our decks clear so that we can devote full attention to the marking-up of a comprehensive housing bill, including community development.

So, I think we will have time to do that, to get the bill to the floor of the Senate, hopefully, before the end of the month.

In fact, I hope we will get it passed through the Senate by the end of the month.

Senator TOWER. Mr. Chairman, would you yield for an observation? The CHAIRMAN. Yes.

Senator TOWER. I hope we can avoid the error of falling into a narrow dogmatism that holds that when a congressionally conceived and enacted program fails, it is the fault of the administration. I think we should be reexamining our own concepts from time to time, because I think we are fully capable of making mistakes and I would hope we would not prejudge the Secretary's testimony before he has had an opportunity to give it.

The CHAIRMAN. I think that is a very good statement. In fact, in my statement I pointed out that we needed a housing bill badly, because some things have gone wrong, some have been outworn, and we are badly in need of a comprehensive housing bill, such as I hope will come out of these sessions.

Senator PROXMIRE. Mr. Chairman, I hesitate to prolong the dialog up here but I cannot resist, because I think that, possibly Senator Tower had my statement in mind when he said that.

Senator TOWER. That is all together, probable.

Senator PROXMIRE. Let me respond to Senator Tower by saying there is no question that there are things wrong with the housing programs, but my point is that we should not close down the entire program for years until 1976 while we design another model. It is like asking General Motors to go out of business for 3 years because they have something on the line that will be different 3 years from now.

I do not think there is anything wrong with the programs. I would point out that then where they are well-administered, as they were in Milwaukee, we have no complaints.

Senator TOWER. The private sector is still active, I understand. The CHAIRMAN. All right, Mr. Secretary, and for the benefit of the record, will you identify the gentlemen who accompany you?

Secretary LYNN. I would be pleased to do that. I have on my left, Mr. Hyde, my Under Secretary; next to him, Mr. Mike Moskow, who is the Assistant Secretary for Policy Development and Research and who bore the brunt of the main work on the housing study.

I have on my immediate right, Mr. James Mitchell, my general counsel, Mr. Sheldon Lubar, FHA Commissioner, and next to him we have Dan Kearney who is the Deputy to Mr. Lubar.

I have with me Mr. H. R. Crawford, Assistant Secretary for Housing Management, Mr. Meeker, Assistant Secretary for Community Plans and Development, Dr. Gloria Toote, my Assistant Secretary for Equal Opportunity, Mr. Sol Mosher, Assistant Secretary for Legislative Affairs and Mr. Kliman, Deputy Director, Office of the Budget. It is a pretty full complement, but we wanted to be as best prepared as we could.

The CHAIRMAN. Very well.

Glad to have all of you.

Secretary LYNN. You might ask who is watching the store, and that is a good question.

Senator PROXMIRE. The HUD officials are occupying the press table, so the press is standing over there. How about that? I see a distinguished reporter up against the wall.

Secretary LYNN. That is the first time you have seen a reporter up against the wall.

Mr. Chairman, and Members of the subcommittee. This is my fourth appearance this year, before your subcommittee. During each of my three previous appearances, I alluded to an extensive study of our housing programs being conducted at the Department, and in his March community development message to the Congress, the President stated that he would have policy recommendations based on this study to the Congress within 6 months.

On September 19, those policy recommendations went forward, followed in 10 days by specific legislative proposals. In addition, as the President promised, a draft bill of the Responsive Governments Act has also been sent to the Congress.

Today you have asked me to discuss S. 2182, an omnibus housing bill introduced at the chairman's request on July 14, along with S. 2507, the administration's draft bill and S. 2490, which is the Responsive Governments Act.

In addition, S. 2508, the Private Mortgage Insurance Guarantee Act of 1973, has also been introduced on behalf of the administration to provide a basis for discussing ways of allowing holders of privately insured mortgages to obtain additional protection.

Before discussing the details of similarities and differences in approaches among these bills, a few words about the study are in order. The National Housing Policy Review was conducted over approximately 6 months. It utilized the research of more than 100 people on the study teams, as well as over 100 private contractors. Very helpful assistance was received from members of Congress and congressional staff in a series of briefings and individual meetings. In addition, more than 500 responses were received from public and private groups and individuals, and the various reports prepared by contractors aggregate more than 10.000 pages.

A report of the results of the study and the contractors' reports will be available to Members of Congress and the public shortly.

In his message to the Congress, the President focused primarily on two challenges, the problems of providing adequate mortgage credit for housing and the needs of lower income families who still live in substandard, overcrowded, or dilapidated housing.