When queried about this $8 billion potential contract cost the Housing Administrator stated that there was "some exaggeration" in the figures. He referred to it as a $200 million contract authorization program. But, turn to page 235 of the hearings. Note the table submitted by the Housing Administrator showing the estimated cost of the rent supplement program for a 100 unit project. Here we find his estimate is that the aggregate rent supplements for this 100 unit project over 40 years will amount to $944,000. That is $9,440 per unit. Since this is supposed to be a 500,000 unit program, the cost of this program alone, based on these figures, is $4.72 billion. We leave it to the reader to decide for himself which of the two cost estimates of the Administrator more accurately reflect the probable cost of the program. Assuming appropriation and contracting of the full amounts requested ($200 million multiplied by 40 years) there can be no question that the potential cost of the program is $8 billion. With this program dressed up in a $200 million outfit, Congress is confronted with an $8 billion Trojan Horse. THE MEANS TEST Additionally, we are puzzled that those who for years have objected to the means test on any and all social programs administered by Federal, State, and local governments have now reversed themselves by embracing the means test explicit in the rent supplement program. Heretofore, means tests have been administered by various levels of government in an effort to insure that those with higher incomes and readily available assets would be ineligible for programs aimed at assisting those who couldn't afford the minimum requirements of food, shelter, and medical services. Although many charged that such tests were socially obnoxious, nevertheless they were aimed at maintaining a degree of equity for the indigent and low-income individuals and families in the total allocation of resources by the taxpaying public. In short, the means test has been restricted to indigents and those with low incomes in order equitably to carry out various social programs of public assistance. Under the Administration's rent supplement proposal, however, we find means tests applying to those with incomes reaching far up into the moderate income levels. If such a test were condemned as socially obnoxious before, consistency requires that they be similarly treated with regard to implementation of a rent supplement program. Under this proposal, however, the means test does not have in its defense a proper allocation of public assistance funds aimed at the most needy among our citizens. To those who doubt that such means tests will be employed by HHFA in connection with rent supplements, we direct your attention to the Housing Administrator's colloquy with Congressman Fino, found on page 263 of the hearings, with regard to a hypothetical situation involving an investigation. Mr. FINO. All right. How would I be in difficulty if you do not police it or investigate it, supervise it and watch me? Mr. WEAVER. You will be in difficulty because there will be spot checks, as there always are on these activities, and if this were found, you would be in difficulty for having made a false statement. I think you would be subject to Mr. FINO. My time is up. Mr. WEAVER. And there is one other check, too, which I hate to say. Mr. FINO. What is that? Mr. WEAVER. But your friends and neighbors would be very much concerned about this. They are the best investigators that you have in these projects. [Emphasis supplied.] Upon request, the Housing Administrator supplied for the record the estimated man-hours needed to investigate a prospective list of 100 approved applications for rent supplements. According to the Administrator, in just 77 areas of the country where there are FHA field offices, these investigations would be performed by employees of the HHFA. In all other areas, such investigations would be contracted for with employees and representatives of non-Federal organizations which could be either public or private. It was conceded by proponents in committee that Pinkerton's National Detective Agency could be such an eligible "private" agency. The following comprise just a few of the tests that would be required, as submitted by the administrator: 1. Check of incomes for 100 approved cases: Check W-2 forms presented, or if no W-2 forms telephone or send form letter to employer to determine if applicant is within the income limit for the area. 2. Check of assets on 100 approved cases: Check to see that the form and certification as to assets is complete and assets are within prescribed limit. There can be no doubt that rent supplements would direct a means test at middle-income families, in support of a highly questionable social goal, while employing "friends and neighbors" in the very unfriendly and unneighborly role of informers. BIRTH OF NATIONAL RENTAL STANDARDS Nowhere in the hearings has the Administration shown evidence that it has studied the impact rent supplements would have on the prevailing patterns of rental rates. With the formula for virtually open-end subsidies, what would hold back limited-dividend and nonprofit organizations from building far more expensive multiunit apartment dwellings than those anticipated by the Administration, with the consequent adverse impact on nonsubsidized rents? Indeed, under the language of section 101, the greatest rewards would derive to those organizations and tenants who build and occupy the most costly units. Moreover, section 101 states that a family must first pay 25 percent of its income for rent before receiving any assistance from the Federal Government in the form of rent supplements. If this section were enacted, every landlord in the Nation could demand of his tenants that they pay 25 percent of their total family income for rent. Their justification for such a demand? The national standards set by the Federal Government. Anyone paying less, it could be claimed, would be paying less than he should. Such a standard rule of thumb would put enormous pressure on millions of tenants, many of whom voluntarily devote far less than 25 percent of their income for rent. The rent gougers and absentee slum landlords in urban areas would waste little time taking advantage of this. That this could have a profound economic and social impact can bẹ seen by the Administration's testimony on page 218, where it is stated that the median gross monthly rent for families in the United States, according to the 1960 census was $71. The median national family income for that same year was $6,249. From this, the typical American family paid 13.6 percent of its income for rent-a little more than half of that proposed as the "norm" in the bill. The precedent for widespread landlord checks on tenants' income conveniently would be found in the proposed means test to be employed in administering rent supplements. On page 262 of the hearings, the Housing Administrator states that Federal Income Tax Form W-2 would be checked in order to determine a tenants' income eligibility for rent supplements. In most cases, these forms would be surrendered to non-Government employees. Where this is impossible, "telephone or send form letter to employer to determine if applicant is within the income limit." Can even the most cautious analyst deny the opportunities this opens to unscrupulous landlords? WHO IS HOODWINKING WHOM? From the outset of the hearings, it was apparent that section 101, rent supplements, was in deep trouble. Throughout the hearings, even those witnesses who normally support broader housing legislation were unrelenting in their criticism. In a last-minute attempt to bail out the floundering rent supplement program, the committee eliminated the income floor for those eligible to receive Federal rent payments. That this change is illusory and an attempt to hoodwink Congress can be seen by the Housing Administrator's answer to a question by Senator Douglas during the Senate hearings, "Is there any reason why rent subsidies could not work for poor families, if the committee should decide to lower the income floor below $3,000?" Mr. WEAVER. In the first place it goes back to something you said earlier and that is while we do have a volume of both limited dividend and nonprofit corporations which are ready and able to carry out the rent supplementation in the middleincome fields, it is my strong feeling that first many of these groups, certainly the limited-dividend groups are out, and many of the well-motivated nonprofit groups are really not in a position to take on all the management problems that are indigenous to this particular area of low-income management. As if to underline this, in answer to a similar question from Senator Proxmire, "Why wouldn't they (low-income families) be the ones to get rent subsidies?" the Housing Administrator answered: You are not going to get the limited dividend companies building and adequately managing houses in the low-income segment. From these candid admissions by the Housing Administrator during the Senate hearings, we leave it to the reader of this report to decide for himself the extent to which the most needy families would benefit by the committee action in eliminating the income floor from the original Administration bill. As we have pointed out, while the open-end formula in the amended bill would permit flagrant abuses within both the lower and upper income brackets, the basic socio-economic inequities remain. CONCLUSION On page 178 of the hearings the Housing Administrator, speaking of the rent supplement program, states: This program has received the greatest attention among the President's housing recommendations. It is a vital part of the proposed Administration bill. In our opinion the President has been sold a bill of goods. We cannot believe that he would "buy" such an incredibly wide open subsidy proposal had he been fully advised as to the potential evils of the program. This is a system of making the rent dollar of the beneficiary worth up to double or more the rent dollar of the unassisted taxpayer. It is unequal opportunity in housing by government fiat. It is legislated discrimination against the self-sufficient citizen. We are certain the American public will not "buy" such nonsense as is contained in this proposal. We hope that the Congress, alerted to the pitfalls of the proposal, will reject it. Section 101, the rent supplement proposal, should be stricken from the bill. PAUL A. FINO. ALBERT W. JOHNSON. INDIVIDUAL VIEWS OF REPRESENTATIVE FLORENCE P. DWYER Since, in so many ways, the Housing bill reported by our committee is a model of progressive bipartisan cooperation, it is cause for particular regret that the bill is seriously marred by retention of the administration's rent supplement plan for middle-income families. The bill reflects, among other things, the impressive contribution made by the minority of the Housing subcommittee through the introduction of a Republican alternative housing bill by Representative Widnall, our ranking member, Representative Fino, Representative Harvey, and myself. We helped remove the "new towns" program under which the Government would supervise and subsidize the building of entire new communities. We incorporated our own rent certificate plan as a less expensive substitute for a portion of the conventional public housing program. We supported improvements in the housing for the elderly, college housing, FHA, and FNMA programs. We initiated a new FHA low downpayment program for veterans. We helped provide greater assistance and more equitable compensation for families and small businesses forced to relocate because of housing or urban renewal projects. We tightened up the urban renewal program, encouraged rehabilitation rather than destruction of existing houses, stimulated better use of building and zoning codes as a means of preventing slums, and supported assistance to communities in handling their water supply and sewerage disposal problems. The big flaw in the bill, however, remains the rent supplement plan under which the Government would subsidize the rental payments of tenants. Although we succeeded in lowering the income limits so that truly low-income families might be eligible, the proposed program continues essentially to be a subsidy for middle-income families including those well above median income level. It is a program without effective standards and qualifications; it was sharply criticized by supporters of housing legislation during the subcommittee's hearings; and, if enacted, it will invite endless inequities. The statement of minority views in this report thoroughly catalogs what is wrong with the rent supplement program. But what disturbs me most about this administration proposal is the total absence of any scale of values or sense of priorities. While the Government has just determined that family incomes of $3,300 or less represent the level of poverty, and the census of 1960 revealed that the median family income in the United States is $6,250, the administration nevertheless recommends subsidizing rents for families well above the median income level and two or three times the poverty level. At a time when we have begun a mammoth war against poverty, when millions of American families lag tragically far behind the general prosperity of the country, such a proposal as the rent supplement plan not only lacks any justification but represents an affront to 185 |