It is important to remember that, aside from the fact that the national average unemployment is much too high even though declining, there are areas of the country that still have double-digit unemploy

ment rates.

A federal government lending program designed to facilitate the construction of low income housing while providing jobs in the building industry.

In this area, it has been pointed out that the tax expendituresthrough tax deductions and tax incentives to the more affluent-are more than five times the amount spent directly on low- and middleincome housing.

The Budget should also provide funds to establish an agency, similar to the old Reconstruction Finance Corporation, which could play a major role in the guaranteeing and loaning funds to firms in financial straits, especially those located in areas of high unemployment.

In evaluating requests for financing, some basic safeguards, such as decent levels of wages and economic viability, should obviously be observed. However, we would expect this agency to give priority to assisting those firms which would not be helped through the ordinary workings of the capital market, either because they entail too much risk or because they are breaking new ground. This type of assistance would arrest further job losses and create new jobs-especially among hard pressed small businesses, and in the housing industry.

4. The Health Security Program embodied in the Kennedy-Corman bill must be enacted.

The present health insurance system is costly and wasteful. In spite of the fact that we are spending 8.3 percent of our entire Gross National Product for health care, the U.S. trails most of the other industrialized nations in international indices of health. Too many health care dollars are going to enrich health care providers rather than to assure better health.

The American people know they are being shortchanged. According to reputable pollsters, the development of a health care system is the overriding issue among Americans, with nearly 80 percent of them in favor of some kind of federal system.

5. Social Security taxes must be the subject of comprehensive reform.

First priority is an increase in the wage-contribution base to an amount that would include the full wages of the same proportion of workers as were covered when Social Security began. In 1937, the full wages of 97 percent of the workers contributing to Social Security were covered; today, the comparable percentage is 85 percent. It is estimated that increasing the wage-contribution base to about $25,000 on January 1, 1977 would not only restore this original relationship, but would provide the necessary revenues to maintain the fiscal soundness of the system until the early 1980s.

The general revenue financing should be gradually introduced. Initially, the amount of this contribution would be tailored to offset the social subsidies that are built into the system and allow for the reduction in the Social Security tax rate for lower-income families. The income derived from general revenues would thereafter be gradually increased over time toward the goal of financing one-third of

the program's cost, while workers and employers would each contribute one-third.

6. The unemployment compensation system must be federalized. We need a federal benefit standard that will replace 66% percent of a jobless worker's full-time weekly wage up to an amount equal to the state-wide average weekly wage.

There should be a qualifying minimum of not more than 10 weeks of employment (covered or uncovered) in the worker's base year, and no waiting period for benefits to begin. The UAW strongly opposes triggering devices for benefit duration based on unemployment rates. (An unemployed worker is just as unemployed when there are 3 million others in the same situation as when there are 5 million.)

A 52-week duration of benefits is needed at all times, with supplementary benefits during emergencies.

7. The UAW urges that Congress, as the representatives of the people, exercise more influence over monetary policies by creating a mechanism for congressional involvement in such decisions. The Federal Reserve Board should be made to become more responsive to the economic policies of the Congress and the President, and indeed directed to provide adequate money supply growth.

In recent years, we have been victims of monetary policies which have both fueled inflation and thrown the country into the worst and longest of the postwar recessions. Although there is some merit to the concept of separating monetary policy from everyday political happenings, we have come to a point where these policies have been affecting our lives to a dramatic extent without regard to the goals established by our elected representatives.

In its assessment of the outlook for 1976, the Report asks, "Will Money Supply Growth Be Adequate?" We must move quickly so that the statement is not a question but an assertion.

PLANNING FOR THE FUTURE

The single most important longer term action which must be taken is to adopt a national policy of full employment to be achieved through democratic national planning. Full employment would be defined as the availability of a job at a fair wage for everyone able and willing to work, backed up by a guarantee of public service employment, with the same pay standards-or an alternative income maintenance program until a job can be found or created-for those unable to find work in the private sector. This is a realistic goal. As shown below, low rates of unemployment have been achieved in a number of countries for sustained periods of time. Countries like Sweden and West Germany, for example, have managed to achieve relatively full employment because they plan for it.

Source: U.S. Department of Labor, Bureau of Labor Statistics.

Some form of national economic planning in our country is crucial in our struggle towards full employment. The need is even more basic-it is unlikely that in the long run, our mixed economy can survive without a reliable mechanism to anticipate and prevent supply bottlenecks and uncoordinated undesirable interactions among its many sectors.

While the UAW has no point-by-point blueprint for this mechanism, some items clearly must be included in any national economic planning procedure. We must, through the democratic process, arrive at both short and long term goals of a general nature after we have improved the amount and accuracy of the economic data at our disposal. (It is outrageous, for example, that we must turn to the American Petroleum Institute, for our energy data.) Those short and long term goals would be general goals needed to achieve and maintain full employment-such as an expansion of the economic growth rate to 6 percent or a reduction in the inflation rate to 4 percent. As part of this goal-setting procedure, a variety of alternative plans would be developed, aimed at achieving them. Such plans would involve a mix of programs and policies such as credit availability, tax policy, urban rehabilitation, agricultural policy, housing programs, mass transit, etc. There should be ample opportunity for interest groups-consumers, farmers, labor, businessmen and many others to propose and argue for the specific mix of the various alternative plans. There must be full national debate at every level-local, state, regional and national-with ultimate approval of an overall set of economic programs and policies by the Congress and the President.

Changing circumstances and developments should be met through periodic review and revision of the national economic planning process, in an environment of voluntarism, freedom and democracy. We need planning to get at the heart of our problems-the scarcity of decent low-income housing, the paucity of public transportation, the ruinous state of our railroad system, the unavailability of decent medical care at reasonable prices. In all of these cases, we are experiencing shortages of supply when on the other hand a vast segment of our manpower and capital goes unutilized.

We need planning, too, for a national energy policy-to mobilize the country towards improved domestic energy production. Coal production should be expanded in the deep mines of the East and Midwest with improved desulfurization techniques, rather than in the farmland of the West with its fragile water balance. We must explore more rapidly the potential for other energy sources, such as geothermal and tidal energy production as well as developing solar and wind power where feasible and appropriate. The current artificial distinction between interstate and intrastate natural gas prices should be abandoned and a single, federally regulated market for natural gas should be developed. A National Energy Production Board is needed to plan and execute a vigorous program to develop our energy resources quickly and responsibly.

Much needs to be done to get America moving again—and planning can be an effective vehicle. But we know it is not a panacea. Whether planning serves us well as not will ultimately depend on the quality of leadership in the White House and in Congress.

The President's Budget message states that his proposal is a "step toward reversing the long-term trend" in the direction of a more significant role for government. Thus, his Bicentennial Budget would head us back toward 1776.

That is not what the country needs. Congress must try even harder than it has, so that it can overcome Presidential vetoes and provide the leadership to get us moving toward the 21st Century.

We have adequate resources to solve our problems. We have unemployed workers who could help achieve that.

Congress must put America back to work, and establish the planning procedure needed to keep us working.

UNITED STATES LEAGUE OF SAVINGS ASSOCIATIONS

(By Norman Strunk*)

Thank you for your letter of February 11. I am glad to comment on the Economic Report of the President, especially in relationship to the thrift institutions and housing.

We agree that economic conditions have improved greatly in recent months and that the outlook for the Bicentennial Year is quite good, barring some breakdown in international relations. Historically, election years have often been good business years, and it now appears that 1976 will not be an exception.

We agree with the Economic Report's indication of the need for a durable recovery with further reduction in inflationary pressures. We are encouraged by the rise in the number of people employed, by the high levels of savings over the past year and the channeling of a large volume of savings into the thrift institutions. The insurance of savings accounts up to $10,000 that was voted by Congress undoubtedly contributed to this performance.

The decline of shorter term interest rates has begun to affect long term rates and mortgage interest rates in many local housing markets are easing. These trends should lead to somewhat more active housing markets this year relative to 1975.

It is interesting to note that despite historically high rates in mortgage markets over the past year, Americans continued to buy homes. This indicates the high priority which our people continue to place on home ownership.

In 1975 savings and loan associations made more residential mortgage loans than in any year in our history. In 1975 savings associations provided more than 88 per cent of all the funds invested by depository institutions-savings associations, mutual savings banks, commercial banks-in home mortgages. If you include life insurance companies, then we still provided about 75 per cent of the money from the private sector for home buyers during the past year. Savings and loan associations loaned about $55 billion in 1975, which was a record high in the history of the business; this was $15 billion higher than in 1974 and about $4 billion more than the previous record of 1972.

Our research people estimate that our institutions financed a million existing single family units and 222,000 apartments in 1975; we financed 230,000 single family new houses and 100,000 new apartments. These figures demonstrate there was a strong demand for loans on existing houses and we supplied that demand. There was not, however, an equivalent demand from builders or many people seeking to buy new houses.

• Executive vice president, United States League of Savings Associations.