[No response.] Representative HAMILTON. Gentlemen, thank you very much for an excellent hearing. The committee stands adjourned. [Whereupon, at 11:48 a.m., the committee adjourned, subject to the call of the Chair.] ECONOMIC ADJUSTMENT AFTER THE COLD WAR TUESDAY, MARCH 20, 1990 CONGRESS OF THE UNITED STATES, Washington, DC. The committee met, pursuant to notice, at 10 a.m., in room B352, Rayburn House Office Building, Hon. Lee H. Hamilton (chairman of the committee) presiding. Present: Representatives Hamilton and Scheuer. OPENING STATEMENT OF REPRESENTATIVE HAMILTON, CHAIRMAN Representative HAMILTON. The Joint Economic Committee will come to order. In December, this committee began hearings on the economic consequences of substantial reductions in defense spending. It became clear after 2 days of testimony that most economists believe the overall economy will be able to adjust to defense cutbacks without going into a recession. It's also clear that there will be serious adjustment problems for specific firms, work forces, and communities. A small comfort for those who are directly affected by base closings or plant shutdowns to know that the national economy is doing well or at least is doing no worse. If you lose your business or your job, it's a tragedy for you. To discuss these and other problems we have before us today a very interesting group of experts who have given a great deal of thought to these questions. They come from different walks of life and bring to Congress the kind of perspectives we need in order to reach intelligent decisions. John Tepper Marlin is codirector of a MacArthur Foundation Productive Peace Project of defense conversion being conducted at the Council of Economic Priorities, and the author of several books on urban economics, the most recent of which is "Cities of Opportunity" published last year. Richard Greenwood is special assistant to the international president of the International Association of Machinists and Aerospace Workers, one of the largest of the defense industry unions. Gregory Frisby is the chief executive officer of Frisby Airborne Hydraulics, a manufacturer of hydraulic systems which does both defense and commercial work located in Long Island, NY. Gentlemen, I am delighted to see you here. You each submitted very excellent prepared statements which I look forward to reviewing. And, of course, I look forward to your testimony. The procedure will be for each one of you to spend a few minutes in oral summary of your views. The balance of the time will be used in a question and answer period. Your entire prepared statement, of course, will be printed in the record of these proceedings, with any supplemental material you choose to submit. I might say to you that I have a problem. I have a meeting at 11 o'clock this morning, and unless we have another member come in who can preside, we'll have to conclude. I hope we'll be able to keep going beyond that time, but I do have another appointment that arose just a few hours ago and we'll have to see if we can work it out. Before proceeding with the testimony, I'd like to insert in the record at this point a letter, together with an attachment, provided to me by the office of Maryland Governor William D. Schaefer. The letter addressed to the House and Senate leadership is signed by the Governors of 12 States. It relates to the matter we're interested in this morning. Without objection, the material will be placed in the record at this point. [The letter, together with an attachment, follows:] WILLIAM DONALD SCHAEFER GOVERNOR STATE OF MARYLAND EXECUTIVE DEPARTMENT WASHINGTON OFFICE 444 NORTH CAPITOL ST NW 3:5 WASHINGTON, D. C. 20001 This letter was also sent to Foley, Gephardt, Dole, and Michel February 25, 1990 The Honorable George J. Mitchell Senate Majority Leader United States Senate Dear Senator Mitchell: We are writing to ask you to work with us to ensure that any cuts in defense spending will produce economic opportunities rather than economic hardships. Today we are sending you a proposal that we believe can help accomplish that objective. Our proposal consists of a four part plan on how the federal government can help the states and localities respond to any economic dislocations that may result from cuts in defense spending. The historic changes that swept Eastern Europe last year have set the stage for the new decade. These changes will not only transform international relations during the 1990s, but they will also have a profound impact on the daily lives of people right here at home. The various proposals to close military facilities and other cutbacks in defense spending already reflect these changes. We face a difficult challenge. Cuts in defense spending pose the risk of As the Administration and the Congress shape our military establishment to meet America's changing defense requirements, we as Governors, believe there is a responsibility to prepare for the consequences of whatever cuts are made. Workers in the defense sector have been working for our national security and we have a national obligation to ensure that their futures are secure. Communities that have provided the support network for our defense related facilities should not be devastated by these closures. And the national investment in defense industries should not be squandered by allowing hightechnology infrastructure to go unutilized. It is difficult to predict which workers, communities, businesses and states will be hardest hit by defense cuts, but we all agree that a portion of any savings should be used to help those people and communities who will be most adversely affected. We are offering a plan to turn the danger of economic hardship into the promise of economic growth. We understand the serious budget constraints under which you operate. They are not dissimilar to the constraints we face in our own states. The cost of our proposed program will vary directly with the potential economic hardship caused by defense cutbacks. We believe that a modest portion of the savings from defense cutbacks should be adequate to help workers, communities, and businesses adjust to the economic impact of those cuts. Our proposal is set forth in the attached documents. We recognize that the Congress is also working on proposals to address these issues. We look forward to working with you and other members of the Congress to develop a comprehensive program to turn the potential of economic hardship into the reality of economic opportunity. |