Full text of Paul A. Volcker Papers : Congressman Hubbard — Mayfield, Kentucky : December 1982, Box 13, Item c221

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Collection: Paul A. Volcker Papers
Call Number: MC279

Box 13

Preferred Citation: Congressman Hubbard — Mayfield, Kentucky, 1982 December; Paul A. Volcker
Papers, Box 13; Public Policy Papers, Department of Rare Books and Special Collections, Princeton
University Library
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Itinerary -- Chairman Volcker

Thursday, December 16, 1982

Depart
and
Arrive
Depart
Arrive

National Airport on US Air #133 (with Joe Coyne
Congressman Hubbard)
Pittsburgh, Pa.
Pittsburgh on US Air #321
Louisville, Kentucky

Depart Louisville on charter plane
Arrive Paducah, KY (room at Holiday Inn - 502-443-7521)
TV Interview

6:15
7:30

'41411agiiiiiiiMEOPmmmer
Car to Mayfield, KY
Dinner at Liberty Savings Bank in Mayfield
PAV Speech - Mayfield High School Gymnasium
Return to Louisville
Reservation at Executive West (502) 367-2251)

Friday, December 17
7:55 AM
9:07 AM

Depart Louisville, Kentucky on US Air #238
Arrive National Airport

Car will meet you


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December 15, 1982

To:

Chairman Volcker

From:

Don Winn

In connection with your visit to Kentucky, attached
is some biographical information on Congressman Carroll Hubbard
and recent statements he has made in the Congressional Record
concerning deficit spending, taxes, interest rates, etc.
You may also want to be aware that Mr. Hubbard has
signed on as a cosponsor to the House bill on interest rate
targeting.

Attachment

Removal Notice
The item(s) identified below have been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.

Citation Information
Document Type: Book
Citations:

Number of Pages Removed: 5

Congressional almanacs, undated.

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August 1.9, 1982

CONGRESSIONAL RECORD — HOUSE

H 6599

pie, I am apprehensive that the masMr. MOOR.E. I thank the gentleman the Congress. This is a clear chance to
sive tax breaks won by the administra- for yielding.
Insure fairness, including minimum
tion in last year's tax bill will allow
Mr. Speaker, I simply point out that tax reform for the very wealthy in our
some corporations to accumulate tax the debate in which the gentleman society.
benefits and thus become attractive and I participated in defeating the
An opportunity to provide for exacquisition candidates.
previous question on the rule on H.R. tended unemployment benefits for
Nonetheless, I am pleased with the 2463 several weeks ago, due to the rais- those who simply are unable to find
proposals in H.R. 4961 that will tight- ing of the tax rates on the aircraft, work. Unemployment is \ta national
en the partial liquidation tax laws airline, and air pilot industry, and problem, and we in the Congress have
along the lines suggested in the Small those revenues not being spent out of a clear responsibility to lend a hand to
Business Committee's 1980 report on the trust fund in the past 10 years. those encountering hard times.
mergers. Hopefully. Congress will This bill now brings in even higher
Like many Members of the House.-I
follow up on this important first step taxes than H.R. 2463, which we never am not happy with some of the provitoward removing tax inducements that got around to considering, and the sions of this bill. In fact, I have joined
provide artificial market incentives for whole reason for the passage of this with others of our colleagues in
seekmerger and acquisition activity.
bill, we are being told, is to bring down ing a reexamination of
the withholdMr. MINETA. Mr. Speaker, I yield 2 the deficit.
ing provision. Certainly, those undesirThat confirms my worst fears: That able portions
minutes to our distinguished colof the bill need not be
league, the gentleman from Kentucky those air taxes are being collected, put there, had the nearly 2 to 1 majority
Into the trust fund, but will not be on the committee
(tAr. HUBBARD).
permitted reform of
Mr. HUB
__ B4). Mr. Speaker,11 spent for air safety, but will remain oil taxes and other, further reform
rthank t,'
, - .n of the subcommit- there as a prisoner or frozen, to help measures not affecting most Ameribalance the budget, as they have been cans. But they did
tee for yielding this time to me.
not, and we are now
Having heard my colleagues in their In years past.
faced with a package which we must
Mr. SNYDER. Mr. Speaker, I would evaluate in
recent comments, I feel compelled to
terms of the greatest good
say
to the gentleman, if this confer- Or greatest
speak about the Paducah, Ky., airport
detriment.
in my district, but there are many ence report is defeated, that a rule has
Mr. Speaker, after days of soulother problems in my district which already been adopted and we are ready searching, I believe that H.R. 4961 is a
are even greater than the problems of to take up the ADAP bill. We can bill which we should all support. Failadopt what is in this title separately
the Paducah airport.
ure to enact this measure promptly
Mr. Speaker, let me assure you that the same as it can be adopted in this will insure continued misdirection in
high interest rates and unemployment bill.
the financial markets and kill any
I would recommend to the House
across our country are two serious
chance to bring fairness to the tax
problems that we need to continue to that course of action. Mr.Speaker,I yield such time as she laws for some time to come. My conaddress ourselves to this afternoon.
stituents want to buy cars, homes, and
In my own Kentucky district, high may consume to the gentlewoman borrow capital for their amall busiInterest rates and unemployment have from Rhode Island(Mrs.SCHNSID
(Mrs. SCHNEIDER asked and was nesses. Until we can grapple with this
been devastating.
given permission to revise and extend country's economic problems and show
M
itnents want a balanced
the ability to exercise leadership on
her remarks.)
MI et
oweiLerhey_atani less Wt
the
road to economic recovery, the
.Mrs. SCHNEIDER. Mr. Speaker, I
ernment
nding And not higker
only
signal we will be sending will be
rise in support of H.R. 4961. There are
xes.
one
polarization and inability to
of
reasons to vote against this bill,
T.-sincerely believe that the tax bill many
move
any direction. This bill reprein
but in my opinion there are many
that we are voting on this afternoon is
sents
only clear shot we may have
the
more compelling reasons to vote for it.
unconstitutional. It did not originate
for
a
long
time to come.
Today's economic climate demands
in the House of Representatives as reMr.
Speaker,
many voices are .11ing
action, and this revenue bill represents
quired by our U.S. Constitution. Every
for
a
courageous
vote today. I am callone clear opportunity to reduce the
word in House bill 4961 originated in
ing
for
the
only
right vote—a vote in
deficit and show the financial markets
the Senate, and it now comes to us
favor
this
of
bilL
and the American people that we are
after conference.
Mr. SNYDER. Mr. Speaker, I yield 1
serious about addressing the problems
I repeat what the voters of this
minute
to the gentleman from Florida
of interest rate pressure due to Govcountry so loudly said in November
SHAW).
(Mr.
ernment borrowing • and fundamental
1980, a hicil IS that _the_neonle want
Mr. SHAW. I thank the gentleman
fairness in our tax laws.
less overnment en
ov
As has been said so eloquently over for yielding to me.
roent contra .and less taxes,
Mr.Speaker, I came into this debate
the past few days, this is not a time
Could it be that we today would in- for finger pointing. We
are not faced uncommitted, not knowing for sure
flict upon our people higher taxes in- with a Republican
problem or a Demo- how I was going to vote. I have been
stead of cutting back on government cratic problem, but
with an American listening attentively all afternoon.
spending? It is impossible for me to problem, and it is
I have come to the decision that the
time for us to join
vote western Kentuckialiiihe biggest together in positive
only
responsible vote on this particuaction.
tar--iffetease In histdry VIII —ry—
ne
e—
tmWhy should we vote for this bill? lar bill is a -yes" vote.
sti
-riefisi
1
-TETTEar current tax dollars There are many important reasons:
1600
going oversem. UT—foreign camtrios
A clear opportunity to reduce the
sonViirv71ilèh are not even friendly to deficit by $20.9 billion during the first
I did not vote for all of the spending
the ITnited-States.
year and an additional $78 billion over that has created historic deficits. I did
I urge my colleagues to think seri- the following 2 years;
not approve of all the spending. I just
ously before they vote. This should
Improved collection to the tune of talked to the President a few moments
not be a vote on whether or not we go $48 billion over 3 years, or nearly one- ago from my office, and I told him
along with the President, but whether half the revenue generated by the that I felt like the man who had to
we go along_lath.iliv.gre&tmloria of bill—the first place to start raising rev- feed the cow and did not get the milk.
the American people who do not want enue is to insure that we collect taxes We did not get all the milk we paid
hi-Ear taxes:---iney Wiffif-rWalancedl that are owed;
for, but I think now is the time to ante
bud
'way—br reduced Federalj Closing of loopholes in the amount up.
spIinding.
of $32 billion, or one-third of the reveI think any vote but yes is a .bad
Mr. SNYDER. Mr. Speaker,I yield 1 nue generated. This makes this legisla- vote, a vote that is not responsible and
minute to the gentleman from Louis!- tion the most comprehensive tax certainly not in the best interests of
am (Mr. Mooss).
reform measure ever undertaken by our co intry. 1 urge a "yes" vote.


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'7 7 :10filpiiet."Ir'

E 4266

I

CONGRESSIONAL RECORD — Extensions of Rem

arks

September

20, 1982
pie, the Government of the Philip- budget
de
fi
ci
t,
Furt
the
her,
comi
he
ng fiscal year, they set a target of
pines has already indicated that it urge
the
to quit playing $27.15 billion to be cut. But after they finmay request the extradition of Beni- party
politics. NqwjeliaLitke,_ tax in- ished, they didn't come close. The final
gro Aquiro, Jr., whose major offense crea
ses have been enacted I
timeja " figure was about $13.6 billion, about half of
seems to have been having the audac- cut spen
ding as well. I would like to the target.
ity to oppose President Marcos in the 'share" 7111
This tends to confirm our fear that
3F-Mitirgar
1-with my colwe
last free election there.
will never be able to pay as much In taxe
leagues, as follows:
s as
The bill also would limit the ability
Congress, even a Congress making a show
of
WE MADE A DEAL LET'S STICK TO IT
of courts to decide a case. Courts
budget cutting, can spend.Let's hope we've been wrong.
We who pay the bills, in the form not only
would be prohibited from inquiring
We—The Padu
Sun, that is. The Wall of taxes but of infla
Into allegations that a foreign country Street Journal, cah
tion and high interest
all nine
ers of Ken- rates, have a right now to
say to Congress:
is seeking extradition because of politi- tucky's congressional memb
delegation, the
We all agree at least that deficits are
cal opinions, race, religion, or national- conservative wings of both political parti
bad.
es We differ on how to reduce
them. We beity. This indicates a basic distrust in and, as polls showed, a substantial majority lieve
in cutting spending. You believe
in
the impartiality of our judicial system. of the American people—thought it was raising taxes
. We have agreed to do both.
fooli
sh
to
raise
taxes in the midst of a recesI have seen little evidence that such a
Now that the tax side of the bargain
has
measure is necessary. Our courts have sion.
been accomplished, it's up to you
President Reagan and the Cong
to make
ress
not been cavalier in their treatment of thought otherwise, so
sure that the spending side is accompli
shed,
now
have a $99 bil- too.
extradition requests. They have treat- lion tax increase. If higherwetaxe
s can fix a
President Reagan has kept his side
ed such requests very seriously.
sick economy, that should do it.
of the
.
barg
ain. Now you keep yours.
If
we'v
e
been
I also object to the provision which
right, the new taxes will not
You've raised taxes. Now cut spen
permits the detention of a person, fix the economy but burden it. The recovding.
whether a citizen of our own country ery, which is surely coming sometime, will And make it real spending cuts, not phony
be slower than it would otherwise be.
ones.•
or of another, without evidence that a
We'd be glad to be proved wrong.
criminal offense has been committed.
But maybe something positive has
been
Such a provision is contrary to the achieved which hasn't been ment
EDUCATIONAL OPPORTUNITY
ioned by
basic precepts of American jurispru- either President Reagan or the Congress.
AND EQUITY ACT OF 1982
dence. We should not arrest and Let's think about it a Moment.
On one point both sides in this deba
detain people without evidence. Furte
HON. LAWRENCE COUGHLIN
thermore, the very heart of our legal have agreed, and that agreement may be
the most important result of the
OF PENNSYLVANIA
whole
system is that the burden of proof is struggle,
more important than the disagreeIN THE HOUSE OF REPRESENTATI
on those who are bringing the charges. ments.
VES
Under this provision, a person would
That agreement is that budget deficits
Mon
day
,
Sept
embe
r
20,
198
2
not be granted bail unless the person bad things. Let's spell it out in capit are
al let- •Mr. COUGHLIN. Mr. Spea
ker,
as a
can affirmatively demonstrate that he ters and bold type; and try not to let anyone
longtime advocate of tuition tax credit
or she should be released. We should forget it:
Initiatives and a cosponsor of PresiBudget deficits are bad. When even
be adamant in making clear that a forTip
dent
O'Neill, Teddy Kennedy and the telev
Reagan's tuition tax credit proision
eign dictator cannot cause an Ameri- comm
entators can be brought to say
posa
l
for elementary and secondary
that
can citizen, or any other person, to be it's urgent to
reduce the gap between what education, I am pleased to
note that
held without bail in our country the government takes
in and what it spends, the Senate Finance Commit
tee last
unless the same standards are met
it's
a major achievement, maybe even
as
a his- week approved S. 2673, the Educationare necessary for detaining someon
toric one.
e
al Opportunity and Equity Act of
These folks have never paid any notic
under American law.
e- 1982.
able
atte
ntio
n
to
deficits before. They never
I would ask my colleagues not to
be seemed to think they were
Education has been and will continimpo
hasty in considering the provisions
t. The
of spectacle of Tip O'Neill leaving rtan
the Speak- ue to be one of the Federal Governthis bill. As it was reported out of com
- er's chair in the House rostrum to plead for ment's highest priorities and
mittee, H.R. 6046 has some seri
educaous cutting the budget deficit, to hear him warn tional alternatives are an
impo
flaws. As innocuous as it may appe
rtant
that
defic
its
keep
interest rates high—well, element in our
ar,
Nati
on's
educ
it does violence to some of the
atio
nal
very It's a moment to treasure.
system. While our public scho
He's on record. He should not be
basic principles on which our soci
ol
allowed system offers exce
ety to forget It.
llent instruction for
has been based. Our individual
libthe majority of students, I am sure no
Mr. Reagan believes he got a deal.
erties are fragile, and we should
That's
not what he told the American peop
one would deny that not all children
le the
support a measure which jeopardi
r
's
ze night. He'd hold his nose and swallowothe
educ
ational requirements can be met
the
them. A number of amendments
will tax increases if Tip's people would agree to under the same system of
instruction
be offered to correct the flaws in
this some spending cuts.
or in the same schools.
bill. I would urge my colleagues to
Mr.
Reag
an
belie
ves
he got the dea1—$284
give
Currently, 11 percent of all elemenbillion in spending cuts in exchange
careful consideration to each of
for $98 tary and seco
the billion
ndary school students are
in tax increases.
amendments..
enrolled in private institutions. The
We hope he's right and The Wall
Street
Journal is wrong. The Journal belie
ves that majority of these children come from
$284
WE MADE A DEAL; LETS STI
billion figure was obtained by some families with yearly
incomes under
CK
wishful thinking and self deceptio
TO IT
n. If you $25,000. These families are now faced
want to make a show of cutting
spending, with the double burden of payi
ng
the Journal noted, you start by
"setting a taxes to support the
HON. CARROLL HUBBARDJ1JR,P
public school
'base line,' which theoretically
represents system while payi
ng tuition expenses
what the government would be
OF KENTUCKY
spending for priv
ate education. Unfortunately,
three years from now if you simply
IN THE HOUSE OF REPR
let proESENTATIVES
increasing tuition costs, coupled
grams follow their natural tendenci
es to balwith
Monday, September 20, 1982
loon. If you project the base
line high our troubled economic situation in
enough, yon Can project some enor
• Mr. HUBBARD. Mr. Spea
mous sav- general, has made it increasingly diffiker,
would like to take this opportunity I ings."
cult for many families to exercise
to
their
Clever_ Congress projected fisca
share with my colleagues an edit
righ
l
t to choose between public and
1985
orial spending at $L1 trillion, then cut
from one of the newspapers in my
its
private education. Tuition tax
dis- billion from that. It came up with spen$284
credits
ding are one way to
trict, the Paducah Sun. Fred Pax
whic
insu
h has been cut to $881 billion in
re
that
ton is
alte
rnat
ive
fiscal educatio
president, Jack Paxton is editor,
n continues to be a viable
and 1985.
Don Pepper, the author of the Augu
That figure, the Journal notes
wryl is up option for many of these families.
22 editorial, is editorial writer for st "only 21 percent from the currenty,fisca
The President's tuition tax cred
the year."
l
it
Paducah Sun. Mr. Pepper urges
proposal, as amended by the Sena
the
te
And
when
the
appropriations committees Finance Com
Congress to take a 1.4121.u2_
mittee, provided a maxilook
.... at ths, got down to actua
lly making the cuts for mum
credit of $100 in 1983. $200 in


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I/
December 7, 1982

CONGRESSIONAL RECORD — HOUSE

H 9073

The CHAIRMAN. The time 'of the,xommittees, has not had the opportu- can ill afford to send at this delicate
California (Mr. nity to examine and review the intrica- moment in history.
gentleman from
Deterrence, and therefore peace, de,cies of closely spaced basing. The
HUNTER) has expired.
Mr./
Comand
Alabama.
of
Intelligence
Services'
upon the quality of America's
Armed
EDWARDS
pends
Mr.
- strategic forces. Because of the Sovig with the defense
?appro
);t
Chairman, I yield 3 minutes to the mittees, alo
gentleman from New York (Mr. priations
bconamittees, have yet to ets' steady modernization of their ofhold th necessary detailed hearings fensive forces, the survivability of our
KEMP).
Mr. KEMP. Mr. Chairman, one of on CSB.
land-based force is in jeopardy and our
the previous speakers talked about
When these hearings are held, in ability to protect our allies is called
arms control, and mentioned that due course, and all interested Mem- Into question. The MX missile was
ALBERT GORE has a plan to reduce the bers have had the opportunity to conceived and developed in response to
Soviet ICBM force. I just wonder, with study CSB and to make informed that threat, with the support of Conall due respect to the gentleman from judgments as to its merits, perhaps gress and four administrations.
Tennessee and the mutual desire of all 'the Congress will elect not to proceed
The MX missile represents an imof us in this great body to bring about,/ with this basing mode. Or perhaps we portant improvement to our ICBM
arms control and indeed arms reduc- will find CSB desirable and support- force. Its added throwweight and high
tion, how can it possibly be accom- able. I just do not want to prejudge accuracy will give our strategic forces
plished without the willingness and that review.
a prompt counterforce capability that
the determination of the United
I believe it would be shortsighted is an essential feature of our nuclear
States to do what is necessary to mod- and even irresponsible for us to inter- deterrent not found in any other comernize that leg of the strategic forces rupt the continuity of this program ponent of our strategic forces. If we
that is the most vulnerable?
before all the facts are in. Make no undercut the MX program now, we
I am not suggesting that we have mistake, if we deny funding today, we will be signaling our acceptance of a
wholly lost our second-strike capabili- would a priori be foreclosing our continued
in
American
decline
ty, but the window of vulnerability is option to initiate production of the strength. Is this the future we envieither open now or will be in the very system in this fiscal year. And we sion for our Nation, a world defined by
. near future if these asymmetries are would risk impairing our ability to an unchecked Soviet drive to render
not redressed.
meet the congressionally mandated the United States vulnerable and
So my question is, How can we nego- IOC of 1986.
unable to support our allies?
tiate with the Soviet Union by unilatTo repeat, our vote today is not a
Only by supporting the committee's
erally undercutting the heart of our mark can we insure full freedom of referendum on the merits of closely
deterrent forces?
Congress to review and judge the spaced basing. It is, however, a referI, too, reject the idea of MX as some merits of the President's proposal, endum on our willingness to preserve
kind of a bargaining chip. It is not a without jeopardizing the success and our options, to allow for a careful and
bargaining chip. I think it is a vital timeliness of the plan.
review
congressional
responsible
necessary program at this moment in
consonant
Congress,
during
new
the
that
out
point
to
like
I would also
the life of this Nation. We have a new
consequences of our vote today with our recognition of the urgency of
the
regime going into the Soviet Union.
extend beyond the practical require- our strategic modernization needs.
We have talks going on in Geneva; we
of preserving our options. We And it will be viewed by others as a
have theater nuclear force talks going ment
must also be aware that other govern- referendum on our determination to
on over the Soviets unprecedented deand
America's security
ments will look to our action as evi- preserve
ployment of IRBM's targeted at
the
insured
has
alone
which
strength,
dence of our national determination—
Europe. Yet the committee has elimifor
years.
peace
30
of failure of will—to respond to the
nated production funds for Pershing
Mr. EMERY. Mr. Chairman, will the
and unprecedented growth of
severe
II. How is it possible to negotiate from
yield?
gentleman
Soviet military threat to peace.
a position of unilaterally withdrawing the
Mr.
I yield to my friend, the
KEMP.
The governments of our NATO
from our negotiating team its sole
from
Maine.
gentleman
allies, for the most part, recognize the
source of leverage over the Soviets?
Chairman, I think
Mr.
Mr.
EMERY.
My other question is simply this: urgent need to modernize our defense my colleague, the gentleman from
how
exBut
are
they to
How could it be possible to leave our In Europe.
their
citizenry
why they New York (Mr. KEMP), is making an
to
plain
straa
gut
we
if
Geneva
negotiators in
land- extremely important statement. The
generation
new
a
should
support
tegic modernization effort? The Soviif we fact of the matter is that last June we
Europe
in
missile
Western
based
ets will never be serious about arms
embarked on what could be the most
control if they see that we are not seri- refuse to support a new land-based Important of all our negotiating activious about making our essential de- missile in this country?
The President, in his November 22 ties. Undermining those activities at
fense requirements. Indeed, we, as I
this point would be criminal.
suggested before, are reducing unilat- televised address, stressed the imporMr. KEMP. Mr. Chairman, Solzhenerally the leverage, the strength, and tance of our ICBM modernization prosaid that if America does not
itzyn,
the ability of this country to bring gram to the success of our arms conthe
lead
free world, the free world will
about the very arms control agree- trol efforts. Undeniably, Soviet percepBy our vote today, our
leader.
no
have
to
willingness
ment that all of us want, from Presi- tions of America's
known.
be
will
leadership
to
necessary
resources
the
commit
dent Reagan all the way to that side
The time of the
CHAIRMAN.
The
beSoviet
affect
interests
our
defend
of the political aisle; that kind of arms
York (Mr. KEMP)
New
from
gentleman
as
just
table,
negotiating
the
at
havior
control agreement that would make a
expired.
real contribution to peace and stabil- It affects Soviet willingness to take has
DICKS. Mr. Chairman, I yield 3
Mr.
world.
the
of
part
many
in
risks
ity.
This is a time of testing for the minutes to the gentleman from KenThe Congress has declared to law
that a survivable land-based ICBM United States. Just when the Soviets' tucky(Mr. HUBBARD).
system is vital to U.S. national secu- vast investment in military power is/!--(Mr. HUBBARD asked and was
. given permission to revise and extend
rity, and has time and again commit- nearing its peak return, a new regime/
has come to power in the Soviet his remarks.)
ted itself to the MX program.
Mr. Chairman, I
Today, we are asked to reaffirm that Union. Yuri Andropov's long years of
the Addabbo
'todayof
rise
have
state
police
service to the Soviet
commitment.
Defense
the
to
Departamendment
beU.S.
of
observer
skilled
a
him
are not equipped on the floor made
bill
fiscal •
for
ment's
appropriations
today
should
committee
this
If
havior.
of
today to debate the technical merits
the President's proposed basing plan deny funding for the MX, our action, year 1983.
During my 8 years in Congress, I
for the MX. In part this is so because without fail, will be interpreted as a
the Congress, in its many responsible— sign of weakness. that is a signal we have supported the appropriations re-


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Federal Reserve Bank of St. Louis

H 9074

CONGRESSIONAL RECORD — HOUSE

Dc,„

,

quests of the Department of Defense. ground, the Soviets have deployed is obvlee.,:y
.
:Jos
I want the United States to have ev- eight new missile systems.
with Meell)
.
do
erything necessary to be militarily suAs one listens to this debate one what is 1.)...5t, fu!
'
perior to any countries who would might become suspect that there are view.
attack or invade us or our allies.
those in the Chamber who do not beMy Gall
I have served in both the Army and lieve in the triad system any longer. the re:iearcl
i a
Air Force. Fort Campbell, Ky., is in There may be those who believe that for the
MX
•
my district. Fort Knox. Ky., is adja- we no longer need a land-based leg for Pack de;)loin
.,..,L
cent to my district
the Triad.
I come to that i.er,( 7,
Yesterday other Members of ConI would like to suggest, Mr. Chair- rea.,ons.
Fir.t of all
gress and I had the privilege of meet- man. should that be the case, the landto
some
the jitcc_
Lir
ing with President Reagan, Vice Presi- based leg of the triad. the ICBM, is
tai' exeaa
dent BUSH, and Secretary of Defense the most powerful deterrent missile
Caspar Weinberger at the White system that we have. It is the most ac- will not `4VOCe..
Second, what
House.
curate. It is the most easy to maintian.
cle.ploymeet.
this
_ .7
We were told by these outstanding It is the easiest to keep on alert, and
Are
we seek.:lig
e':ese •
men that the MX missile program is we are able to communicate with the
"absolutely essential" to our national land-based leg more readily than any Vii.11dOW of 1ulnerab;lity or
security.
of the other systems. Command and open a coinperable
Secretary Weinberger told us yester- control become extremely important if ability onto the Sov 4 •
If we are going to
day that "survivability is the name of we are talking about a nuclear exwhich
both of the
the game."
change or strategic situation.
vulnerab
le to a
ill
It has been suggested that the TriPresident Reagan told us yesterday:
!
"National security—this is the No. 1 dent submarine, and I support the Tri- create a halr trier sitee!'.ei
•
••
responsibility of the Federal Govern- dent submarine, but that the Trident not be good for
I would sub"•t
submarine could easily replace the
ment."
.r,
•r
It appears to me that we in America land-based system. I think all of the the disarray arel
are waging a war among ourselves re- Members in the Chamber are aware rounds this W•.:'3.;:"I'liS
r„. • • e
that it is very difficult to communicate the lark of a thoughtful.
garding our ability to wage a war.
.1 raQuestion: Should we now spend an with the submarine at the depth that tegic principal or plan ty.:•
'her
estimated $35 billion for 100 intercon- he would have to be at to protect him- America's wpns proere.eas ao , our
tinental MX missiles in underground self. It is possible that a nuclear sub- arms control effcrt_s.
We have division where .4.e
marine could have been destroyed,
silos near Cheyenne, Wyo.?
uld
As one who sincerely believes in a taken out of action, and the President have unity.
After this vote I
strong national security and an excel- or the command authority would not
lent defense system. I say no, not now even have knowledge of that for an forge a consens:is arour(1 the
iple
hour or more after that happened.
of stability and an effert
to the MX missile program.
That., of course, would not happen the fear of a reit V. -!'ee
I see our current economy—high interest rates, record level unemploy- with the land-based ICBM.
nation. Stability, Mr. Chafree
_. not
I think it is important we pay close a funetion sireply of
ment, business
bankruptcies, et
Jing
cetera—as more of a problem in De- attention to the necessity, the viabil- but of weapons
. concember 1982, than continuing to add ity, the importance of the Triad, the trol. Neither is it a fenctleil
.:j• of
to our national defense capabilities. I three-legged defensive system, and to the forces of one side
is
recognize that the land-based leg is an a function of the relationship b._ ...cen
believe our defense is adequate.
On this MX missile issue I say no to extremely important part of that.
the two forces.
I hope that we are not talking about
the Pentagon.; Our Federal budget
If this weapons system
. of a
deficit is all but totally out of control. eventually doing away with the Triad, sensible pan
hich conibLe.d ..ms
Melt or wrong, the worcrs, "Here with the land-based leg, but I get the control and weapons
to
come the Russia.ns" nowadays do not suspicious feeling that maybe we are achieve that kind of
:
..•uld
scare Kentuckians half as much as when I hear some of the debate that is support it. But in the
:_•ontaking place today.
"Here come the creditors."
ment it Is surrounded by
One of our colleagues commented on and it is said
Yesterday I said: "Our people don't
by he experts o be inwhat
kind of reaction we have had capable of
want higher taxes." I voted no to the
working as it is ac.:
around the world here in the Congress
2:cent-per-gallon •• • ifife z%
So I urge an aye vote.
and
the Soviet Union. I can tell you
`4. •Lt
leve a
encan
Mr. ADDABBO. Mr. Clidirinan, I
what one of the reactions was lust by
• .$ $•rezL.
•
v_
yield 1 minute to the gee.iri.ian from
men and....iimang_natTgata_paw reading in the newspapers. I read what Florida Mr. BENaail).
bard. And "across the board" in- Yuri Andropov has had to say about
(Mr. BENNETT asked and was given
It. You recall who he is. He is the new
s defense spending.
permiso
ion to revise
is reI urge my colleagues to vote "yes" leader of the Soviet Union. He was the marks.)
Director
of
the
KGB
for
15
years.
for the Addabbo amendmentMr. BENNUTT. Mr. Ch
, Ihe
Well. Andropov is really upset. He is
triad
is
not
the
Trinity.
The
has
really
unhappy to think we might go
0 1750
been
a
method
of
defene:i
ngc.
ahead
Ives
with building a new missile
Mr. EDWARDS of Alabama. Mr.
and for deterring nuclear :1.1. 7 tt if
Chairman, I yield 4 minutes to the system despite the fact they have we
do not have a third 3,1111 0; the
fielded,
deploye
d eight new systems
gentleman from Florida(Mr. Yotrwo).
triad
that is truly credible it ,!o. not
Mr. YOUNG of Florida. Mr. Chair- since we deployed the Minuteman.
do
any
good to spend billieee : dolAndropov does not like it and I do
man, if the United States is going to
lars
on
it
to pretend that we do.
maintain the triad system that has not blame him because it certainly is a
A
noricred
ible leg of the trl.ad
not
served us well for such a long time we deterrent to any adventurism that
a
bargain
ing
chip.
they
might
want to get active with.
are going to have to do something
I think there is too nreeh
Mr. ADDABBO. Mr. Chairman, I
at
about the land-based leg, our ICBM
ststke
yield
in this matter to
3
minutes
to
the
gentleman from
this
system.
money on such an incredible type of
We are talking about upgrading now Tennessee(Mr. GoRI).
(Mr.
defense
GORE
as involved In the Diee,e Pack.
asked
and
was
given
perthe Minuteman systems that have inmission
I
to
believe
revise
it will be useless by the time
and
extend
his
recluded technologies that were develmarks.)
it
is
in
place.
oped in the 1950's. Since we put the
Mr. GORE. Mr. Chairman, this has
Furthermore, I think the zite. ey is
Minuteman in their holes In the
been a good debate and I think there desperately needed for COLIVe...inal


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Federal Reserve Bank of St. Louis

December 3, 1982

CONGRESSIONAL RECORD — Ej ens

s of Remarks

E4881

ponent in delivering services to people
who try. And, secondly, that
can't read, namely, volunteers.
SPanisti pea 1/113
Although I don't have any hard data to
The've begun an all-out campaign to mobi- citizens have some unique needs, n; on as back me up. my personal observation
is that
potential customers in our stores,
lize B. Dalton employees, nationwide
4
p0- the quality and effectiveness of a manage, to tential employees and poten
tial p the in ment team goes up as it becom
become individual tutors and communit
es really iny
leaders for literacy in their local communi- the community at large.
volved in the community, as its members
Our
aware
ness of Hispanic cult
ties.
_ter- think more broadly about the world around
ences had been heightened, first of a 1,
At its headquarters in Minneapolis,
be- them, and about the issues of the day; and
B. cause of our on-going
commitment to be an as the corporation backs up
Dalton offers time off from work for trainthat awareness
affirmative action employer. And that coming to be tutors, and they purchase
and personal commitment with philanthe mitment includes incre
asing the number of thropic dollars.
training materials for any employee who's
Hispanic employees beyond the 5,000 we alwilling to help those who can't read.
The talents we develop, the skills we deEven though the program is only a few ready have.
velop, the special sensitivities we develop,
But our sensitivities were really raised by all carry
months old, already the response of
over to help us meet the business
B. the Dayton Hudson
Found
Dalton employees had been overwhelmi
ng. a Hispanic Leadership ation's funding of challenges that confront us every day. We
At headquarters, there's even a waiting
list gram: a quarter-of-a-mil development pro- think they certainly help us to manage
lion-dollar commit- better in this rapidly changing
for the training program.
world.
ment, over a 3-year period, to assist in devel
What's especially heartening, is that
At Dayton Hudson, we are throughly conB. oping some 500 Hispa
Dalton people at all levels have become
nic leaders in Califor- vinced that involved
ac- nia, Texas, and Michi
management is more
tively involved in the tutoring program
gan.
enlightened, that enlightened management
and
Our
involvement in that program height- is more effective,
other aspects of the literacy campain.
and that enlightened manened our awareness, but the numbers really agem
Everyone from sales clerks, to the maint
ent and enlightened giving are two
e- drove home
nance man at corporate headquarters, to
the significance of this popula- sides of the same coin.
re- tion for our
gional managers and vice presidents, all
business.
Our experiences in the community and in
the
If 1980 census trends continue throughout the
way up to the C.E.O.
business world confirm that view. Furthis
What this all adds up to is this: B. Dalto
n peopl decade, by 1990 Spanish-speaking thermore, we think it's a view that holds
has put together a comprehensive effor
e will represent 35 percent of the pop- true for
other businesses, besides retailing.
t
that includes some important elements: ulation in California, 32 percent in Texas,
Granted, retailers must be espcially sensi22 percent in Arizona, and 90 percent in
First, a well-chosen and strategic issue (in
tive to the total community and to changes
a
field where they have a special interest, con- New Mexico.
In that community. Thus, retailers have
a
Those areas are precisely where several of very
cern and expertise); second, a commitment
real business reason for keeping their
of financial resources; and third, a commit- our operating companies are already doing finger on
the public pulse.
ment of the time, talent and personal re- business, and where almost 80 percent of
But, in closing, I would also have to ask: Is
Dayton Hudson's projected capital commit- that
sources of their people.
not true for any business that depends
We think it's an excellent example of an ments for the next five years is targeted to on the
public for its franchise to do busieffective public involvement program, a pro- go.
ness? Is that not true for any business that
gram that makes sense for the business—
The result of the awareness and the plan- serves
people? When it comes right down to
ning was an intensive two-day experience in it, is
and for society.
that not true for any industry?
Incidentally, I might add that each of our which some 90 Dayton Hudson executives
Could it be that some of the problems curbusinesses has selected its own areas of con- were the "students," Hispanic leaders were rentl
y
centration—areas that make sense for their the "teachers" and the San Antonio His- major besetting some of this country's
industries (industries now suffering
business.
panic community was the "classroom."
decline)—could it be that some of these
Dayton's, our Minneapolis-based departOur people not only listened to Hispanic problems
might have been lessened, had
ment store company, sees women as its elected officials and Hispanic comm
unity their managements been more involved in
major customer, so they focus their contri- leaders, they toured schools and neigh
bor- their communities, more sensitive to
butions and involvement in programs for hoods, as well. They saw for themselves
the changes in society and more responsive to
women and girls.
unique needs and unique traits of this spe- those
changes?
Mervyn's (our California-based promo- cial population.
Could some of the unsuccessful efforts to
tional department store chain), and Target
The participants came away from the manage
change be traced to lack of atten(our "upscale" discount chain), both serve meeting with a new under
standing of how tion to broader issues, a lack of involvemen
t
young families as their primary customer. those needs impact our busin
ess, and with a In addressing the needs of society as
So issues of concern to that group are
a
the renewed commitment not only to market whole, rather than just the business?
focus of their attention.
appropriately to the Hispanic communit
Might not many of the changes have been
y,
Likewise, each of our companies strives to but to recruit from there
as
well.
more
apparent to management, and manfocus its efforts, to maximize the impact
Apparently, the experience was mutually- agement
of
better able to respond, had there
its giving and its community involvemen
t. beneficial. To illustrate, let me quote from a been more corporate involvemen
t? More voIt's an approach that makes sense to us, and letter we received
after the symposium from lunteerism, more philanthro
py, more stratewe think every business should choose its Andre Guerrero.
He is the director of Ohio's gic planning with an eye
towar
own field in which to invest its money,
time Commission of Spanish, Speaking Affairs, ing consumer, and more targe d the changting of corpoand corporate expertise.
who served as a consultant in planning
the rate resources into solving problems that
The second example I'd like to use today conference. Even
though it was a business affect the total society, and
is a very recent one: The Dayton Huds
thus business?
on conference, paid for as business expense,
Based on our experiences at Dayton
Hispanic Symposium held last month in
San Mr. Guerrero called the symposium. "a Hudson, we think
the answer to those quesAntonio, Texas.
unique gift to the Hispanic Community" be- tions is
an unqualified "yes." Our business is
From the sound of it, you might think cause of the
extensive involvement of His- healthier because
this was one of those nice image-buildi
of our efforts to be both
ng panics in the planning, and because of the responsible and
responsive.
public service conferences—sponsored, per- openness
and receptivity of our people.
And we are extremely pleased that, in
haps, by an enlightened corporate found
"As with all good gifts," he said, "the awarding
aus Columbia's first Lawrence Wien
tion and attended by people who alrea
dy giver also received from the experience. Prize in Corpo
rate Responsibility, you have
know a lot about the subject.
Dayton Hudson created a working environ- taken
note of the connection between the
Not so, in this case. This was an internal ment
with major sectors of the San Antonio two.
business conference, conceived for business comm
unity which is usually only developed
On behalf of the more than 70,000 emreasons. It was planned by a corporate-wide over
a much greater period of time. And the ployees of Dayt
on Hudson Corporation, on
task force and coordinated by the corporate good
will and trust established is something behalf of our mana
gement and our board of
development
department
at
Dayton that could not have been purchased at any directors,
thank you very much..
Hudson, which is the department
that price, however intense a public relations
heads up our on-going strategic planning camp
aign might have been."
effort.
My point is this: We gained far more than
Elq,ECTS OF INTEREST RATES
The symposium was attended by top ex- good
I
will. We gained far more than an
AT THE GRASSROOTS
ecutives from key areas in each of our eight
entree into the Hispanic community. Our
operating companies, and corporate staff
biggest
headquarters. Key people from marketing, spect gain was that we broadened the perive—we broadened the vision—of our
advertising, personnel, strategic planning
management team.
OF KENTUCKY
and community relations.
And
that,
ladie
s
and
gentl
emen,
IN
is
THE
absoHOUSE OF REPRESENTATIVES
Plans for it grew out of our recognition
of lutely crucial to effectiveness in busin
ess.
two facts: First, that the Hispanic popul
Friday, December 3, 1982
a- To me, it is the mark of a profession
al extion is growing in significance, especially
in ecutive, and the hallmark of a throughly
•Mr. HUBBARD. Mr. Speaker, one of
the strategic "Sunbelt" areas of the counprofessional organization.
my constituents, Rev. Jerry


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Federal Reserve Bank of St. Louis

HON. CARROLL HUBBARD, JR.

Hopkins,

CONGRESSIO

E 4882

the pastor or Reidland Baptist Church
in Paducah, Ky., has written me an excellent letter I. vs it he stresses the
adve
upon _persons aUjie grassroots.
everyescalating—inttrest
businesses,
their
-mcluding
ratt*home-Spportunities,and
much more for which they have
worked throughout their lives. I believe my colleagues will be interested
in Reverend Hopkins' comments. His
letter follows:
REMAND BAPTIST CHURCH,
Paducah, Ky., September 17, 1942.
Hon. CARROLL HUBBARD,
Congress of the United Slates, House of Representatives, Washington, D.0
DEAR SIR: There is a matter which I would
like to bring to your attention having noted
that you serve on the Banking, Finance and
Urban Affairs Committee. High interest
rates are very disturbing to me. Having
some knowledge as a result of my graduate
work at Eastern and the University of Kentucky of the nature of our economic system
I find it, contradictory to growth and productivity. We live in a consumer oriented
economy and when consumption declines
you have a dangerous situation. II people do
not have money, they cannot buy products.
If people cannot buy products, manufacturers are not going to employ or continue to
employ people. If people are unemployed
they will not have money with which to
buy. This is a simpnctie view of our situation, but I believe an accurate one. The
automobile and housing industries are examples of this very problem. My question—
what is being done to bring down these unreasonable rates?
I do not believe those who are financially
secure, even wealthy, understand the plight
of those at the bottom of society or near the
bottom. I find it hard to take President Reagan's words seriously when I see little "cutting" in the White House regarding extravagance. These are not bitter words, but what
I have come to feel from observation and listening to folks at the grassroots. It might be
more helpful to give the financially oppressed and neglected a forum at which to
speak. There are many sad stories of folks
who have lost everything through soaring
interest rates—businesses, homes, educational opportunities for children and much
more.
Perhaps we might be able to talk at some
point in the future about some of these
issues. The mood of our time seems to parallel that of the 1920's, let's hope and pray
that the conclusion will not be another 1929
and decade like the 1930's.
Sincerely,
JERRY Hoexnas.•

IMPACT OF NEW FEDERALISM

HON. BARBARA B. KENNELLY
OF CaNNECT1CUT
IN THE HOUSE OF REPRESENTATIVES

Friday, December 3, .1982 .
• Mrs. KENNELLY Mr. Speaker, I
rise today, to call to the attention of
my distinguished colleagues some
thoughtful testimony presented last
September at a forum in West Hartford, Conn., held to discuss the impact
of the New Federalism on the children
of our State. I was most pleased to
join my good friends Representative


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Federal Reserve Bank of St. Louis

ORD — Extensions of Remarks

R and Representative
GIBORGE
TORY Morrrrr in soliciting a variety of
views on this important issue.
State and local officials, service providers, and other interested observers
testified at this hearing. Time and
again they pointed out the vital importance of caring for this Nation's children. Several of them made another
excellent point which is well worth repeating. As we search for ways to slow
the growth of the Federal budget,
they said, we must be careful to look
not only at the bottom line cost of the
programs we authorize, but at their
structure as welL We must carefully
review existing programs to make sure
they are structured efficiently. We
must review them to make sure they
meet the goals we have set for them
and the needs of the people we intend
them to care for.
I am grateful to St. Joseph College,
host of last September's forum, and to
the many service providers who took
time out to contribute their thoughtful comments.
I include at this point in the Rscosz
several statements presented at that
forum.
07
STATEMENT OF MONA PRIEDLAND, DIturu
PROGRAM DEVELOPMENT, WINDHAM AREA
Common-try Acricra Prioartara
The Windham Area Community Action
Program, Inc. is a private, non-profit action
agency which administers three of the State
funded day care centers in Northeast Connecticut.
Day Care budgets have always been tight.
Federal funding through Title XX reimbursements to the State have enabled the
day care centers to maintain an adequate
adult-child ratio. During hiring frets,
which we have experienced several times
over the past few years, staff support has
been critically low, invariably affecting the
quality of care at the centers. Cutbacks to
this supplemental funding will force the
States to raise additional revenue or reduce
the number of day care slots available.
Either way the impact will be greatest on
those who are on the lower end of the earning scale and therefore have fewer options
available to them. .
Similarly,' cutbacks in the Child Care
Food Program in 1982 have resulted in reducing the number of meals which can be
claimed and in some cases resulted in an increase of fees to parents.
It has been shown that the CCFP helps to
keep the cost of child care down. When providers are reimbursed for the meals they
serve, they do not pass this cost on to parents, thereby keeping child care coots at a
minimum. For working poor families, particularly angle parent families, reasonably
priced day care allows them to continue to
work and to stay off welfare rolls.
Continued, adexmate funding of Federal
food programs and Title XX funding will
help to maintain quality day care in Connecticut. Please help to keep this vital service working in our communities.
STATEMENT OF ANN HORNE, EXECUTIVE DramTOR, THE SAUGATUCK DAY CARE SERVICE.
INC.
Thank you for inviting our agency to your
forum on September 8, 1982. We learned a
lot and appreciated the chance to become
more familiar with other Connecticut agencies serving children.
We strongly support Congressman Miller's
resolution to create a Select Committee on

December 3, 1982

Children, Youth and Families (H. Her. 421)
in the House of Representatives. Children
must be defended against the increasing
burden of enormous cutbacks in federal programs. The New Federalism appears to have
been brought to as courtesy of the nation's
children.
In support of your posttiona and to emphasize the need for the proposed Committee, here are some facts and figures demonstrating the impact of 1981-82 budget cuts
on people served by our organization.
We are a private, nonprofit agency serving
families in Fairfield and New Haven Counties, through three programs:
(1) Our Family Day Care Network involves fifteen local state-licensed Family
Day Care Providers, who earn their riving in
their own homes, caring for children. Providers are chosen, continuingly trained and
supervised by our staff, which enrolls children in care and offers limited financial assistance, funded by donation, to parents in
need. (Working couples and single parents
should have Federal financial help toward
Family Day Care costs.)
(2) A Child's Place is our professionally
staffed. flexible-time center serving children
eighteen months through six years of age.
The program is designed to meet, part-time
day care. socialization and cognitive needs
of young children in a setting that promotes
social, emotional, intellectual arid physical
growth,
(.3) Our Nutrition Program serves about
one hundred licensed Family Day Care Providers in our Network and in outlying towns.
The USDA Chikl Care Food Program,
through the Connecticut Department of
Education. reimburses Providers for healthful food served to children in their care. Our
agency enrolls, trains, supervises and cets
reimbursement for Providers. It is the Nutrition Program which has been hard hit by
budget cutbacks. Here are the figures.. Reimbursements are never overly generous.
For example, the average payment in 1981/12 was: 48 cents for breakfast. 94 cents for
lunch or dinner, and 22 cents for snack.
In 1981-82, two installments of cutbacks
affected our program. The first, set am
motion September 1. 1981. decreases cents
amounts spent to reimburse far each meal
or snack. Levels varied slightly through
both fiscal years, but the average reimbursement drop from one year to next per child
per feeding was: minus 5 cents for breakfast,
minus 3 cents for midmorning snack.. minus
6 cents for lunch, minus 3 cents for midafternoon snack, and minus 6 cents for
tangier.
AL a time of galloping information in food
prices, a Family Day Care Provider is expected to feed each child an 23 cents less for
a full day's food.
The second cutback was even more devastating to our children's nutrition. Beginning
January 1, 1982:
(a) Day Care Providers' own children are
no longer paid for unless eligible under the
School Lunch Income Guidelines. This cuts
off payments for food for one hundred
twenty-one children of Providers in our program, which serves about seven hundred
children each year.
(b) Providers are reimbursed for only two
meals and one snack they serve to day care
children, instead of three meals and two
snacks, the previous maximum. A child in
family day care full-time is assured of nutritious food only three-fifths of the time.
This arrangement clearly discriminates
against full-time day care children in favor
of part-time children. rt is in fact the children of working parents who are in family
day care full-time; part-time day care is

September 15, 1982

CONGRESSIONAL RECORD

passes, that evidence will be sufficient to
tend this democratic politician back into the
hands of the dictator he opposed.*

H.R. 4374—THE SHIPPING ACT OF
1982
SPEECH OF

HON. CLAUDINE SCHNEIDER
OF RHODE ISLAND

1

IN THE HOUSE OF REPRESENTATIVES
Monday, September 13, 1982
•
•Mrs. SCHNEIDER. Mr. Speaker, I
rise today in opposition to consideration of H.R. 4374, a bill to exempt the
merchant marine industry from antitrust laws, under suspension.
I supported this bill in committee
because I believe it deserves debate on
the floor. However, I think passing it
under suspension; without discussion
and possibility of amendment, is inappropriate.
My concerns are that H.R. 4374
would expressly allow the merchant
marine industry to "discuss, fix, and
regulate or prevent competition
among themselves" and where antitrust exemptions are deemed necessary, we must follow regular order. In
addition, the benefits of this bill may
go largely to the foreign carriers, since
more than 70 percent of American
import and export liner traffic is carried by foreign carriers.
I urge my colleagues, therefore, to
vote against this legislation under suspension.*
TAX INCREASES VERSU7
1 1
1
REDUCED SPENDING

HON. CARROLL HUBBARD, JR.
OF KENTUCKY

IN THE HOUSE OF REPRESENTATIVES
Wednesday, September 15, 1982
• Mr. HUBBARD. Mr. Speaker, I
have received an excellent letter from
one of my constituents, attorney
Wayne B. Youngblood of Mayfield,
Ky., in response to the tax increase
package which recently passed the
Congress and was signed into law by
the President. Mr. Youngblood strongly urges Members of Congress to
reduce Government spending and
show the citizens of this Nation that
they are fiscally responsible. Reckless
diaregara_a_thg_mer-grajk deficit
must not be tolerated. I would like to
share tin letter witn Thy colleagues.
The letter follows:
WAYNE B. YOUNGBLOOD,
Mayfield, Ky., August 19, 1982.
Hon. CARROLL HUBBARD,
Washington, D.C.
DEAR CONGRESSMAN HUBBARD: I just heard
your floor speech on the 10 P.M. news tonight concerning the "tax increase." Although I very much favored the "tax increase" bill. I was elated to hear your reason
for opposing it. I too agree that we need to
balance the budget by reducing spending;
however, everyone else seems to be saying
that that's not possible or that the Congress
will never reduce spending that much. In


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Extensions of Remarks

the past, I favored the tax cut (and I've opposed tax increases) solely because I wanted
to keep the pressure on the need to reduce
spending. However, this current year's projected deficit just seems to me to be making
our long-term goal of eliminating the national debt that much harder., With this
$100 million package, with perhaps more
spending cuts with your help, and with economic recovery; the next three years look
great to me.
It's my view that gradual economic recovery over a few years is the best we can hope
for. That slow but steady method will, in my
- view, teach us a lot of economic lessons
along the way and leave our country with a
very efficient and sound springboard for
long-term growth.
I'm thrilled that you and so many others
In Congress seem to agree that we must
reduce spending. I'd like to see another
"massive" spending reduction (I thought
the last one just whittled!), and most of the
government employees dislocated by it
could be shifted to a collection function
rather than their current "hand-out" function. I'm very much for firm enforcement of
the tax laws we do have. When our country
makes it clear to all that we'll never again
live beyond our means with deficits year
after year, I sincerely believe that we'll see
an outpouring of financial and patriotic support from our citizenry. There's millions of
patriotic Americans who realize that we're
all heirs of the greatest country in the
world; but in the past no one wanted voluntarily to throw good money in a treasury
being spent with reckless disregard. The
Congress seems to be talking fiscal responsibility now; when we make further progress
in cutting out all the nonsensical programs
in the budget, I think we'll see a degree of
cooperation unseen since WWII.
Thanks for listening, and please advise if
ever I can be of any help.
.
Sincerely.
WAYNE B. YOUNGBLOOD..

SOVIET EXPANSION

HON. DON RITTER
OF PENNSYLVANIA

IN THE HOUSE OF REPRESENTATIVES
Wednesday, September 15, 1982
•Mr. RITTER. Mr. Speaker, I would
like to insert into tt}e CONGRESSIONAL
RECORD an aticle that is well worth
the attention of my colleagues and
should be read by every Member in
this Congress. It is an excellent article
written by our colleague MICKEY EDWARDS who zeros in on the real essence
of the Soviet expansion issue.
The article follows:
SOVIET EXPANSION AND CONTROL OF THE SEA(By Mickey Edwards)
Americans felt the pinch some years back
when an Arab embargo cut down the flow of
oil to U.S. shores. Consider how much greater the impact might be if the expanding
Soviet Navy were to cut the sea-lanes which
bring oil and many other vital resources to
our shores.
Soviet expansion is a growing threat to
the unhindered use of the world's sea-lanes,
the vital threads by which nations are
linked in a web of interdependence. Anything less than global access to the world's
waterways places the United States in serious jeopardy. Let us, then, consider specific
examples of Soviet expansion and the likely
consequences for the West if it goes unchecked.

E4193

MIDDLE EAST
The 1979 invasion of Afghanistan compels
us to recognize anew the centuries-old Russian desire for warm-water ports. With the
southern border of Afghanistan 350 miles
from the Arabian Sea, Soviet aircraft based
in southern Afghanistan are now some 500
miles closer to the sea-lanes serving the Persian Gulf. At present, the Soviets are
moving to upgrade the airports at Herat,
Shindand, and Farah to the south into fullfledged advance air bases, In fact, Soviet aircraft are now closer to strategic points in
the Persian Gulf than they would be if
based in Tehran.
The ports at Gwadar in southwestern
Pakistan and Chah Bahar in southeastern
Iran beckon the Soviets enticingly. Naval
bases in this area would provide ready
access to the Gulf of Oman and the Strait
of Hormuz, which lies at the entrance to the
Persian Gulf. The strait is a vital "choke
point" through which about 60 percent of
the oil destined for Western Europe moves
everyday. About 77 ships a day (roughly one
Ship every 19 minutes) negotiate the narrow
strait. Most of them are oil tankers. Since
both the eastbound and westbound shipping
channels are located in Oman's territorial
waters, this conservative, pro-Western country is responsible for guarding the increasingly vulnerable waterway. The Omani
Navy numbers around 15 ships.
The Soviet Union could obtain a corridor
to the Arabian Sea if political instability
grows in the area adjacent to Afghanistan's
southern border. They key area is Baluchistan, a volatile and disputed territory which
straddles southeastern Iran and southwestern Pakistan and whose inhabitants spill
over into Afghanistan. Throughout the last
decade. the Baluchis have tried to form a
separate state that would be independent of
both Iran and Pakistan. The separatist
movement on the Iranian side has been
picking up steam in recent months.
An independent Baluchistan would almost
certainly need the support of an ally powerful enough to guarantee its security against
Iran and Pakistan. In such an event, the Soviets could present themselves as a logical
choice,-possibly under the guise of a legitimate Afghan Government. The southern
flank of a separate pro-Soviet Baluchistan
would contain the port towns of Gwadar,
Chah Bahar, Pasni, and perhaps Karachi.
As much as 700-800 miles of seacoast would
thus be included in the new state. Advanced
air bases in southern Afghanistan coupled
with access to ports on the Arabian Sea
would give the Soviets a double-fisted threat
to Persian Gulf oil. The Soviet Union would
also possess greatly enhanced ability to neutralize U.S. naval forces in the area.
Considerations that make a drive for
autonomy in Baluchistan more likely are beginning to receive careful attention in Western intelligence circles. A guerrilla organization among radical Baluchi nationalists has
been forming for at least a year. In addition,
there have been reports, so far unconfirmed, that the Soviets have been using
Afghan intermediaries to supply arms to
Baluchis in Iran. To the extent that the
regime of President Babrak Karma]
strengthens its control over Afghanistan, it
will be increasingly able to give attention to
exploiting separatist movements south of its
border.
When we turn our attention west of Afghanistan, the picture is just as bleak, for
that way lies Iran. Within weeks of the invasion, Soviet forces were concentrated in
western Afghanistan, along the Iranian
border. The strongholds of the anti-Soviet
Afghanistan rebel tribesmen are located in
the north and east, away from Iran. The air

September 14, 1982

CONGRESSIONAL RECORI

tensions of Remarks

E 4141

hand-held rifle at a muzzle velocity apA TRIBUTE TO JAN
recreation and wildlife areas, and aesthetic
AM
proaching 180 miles per hour. The impact
and other intangible values. All citizens
MAZZ
on a human being is the same as being hit
benefit from that national investment. And
by a 90-pound weight. Unlike its predecesconsidering our present economic problems,
HON.
JACK
F
sor, the rubber bullet, designed to be
once that capital reserve is withdrawn, it
bounced off of the pavement and merely
OF NEW YO
will not be replaced.
break a leg bone, the plastic bullet is aimed
IN THE HOUSE OF REPRESENTATIVES
Second, the health of Oregon's economy is
directly at the person to be hit. Since the inclosely
linked to the vitality of the Umber
Tuesday
,
Septem
ber
14,
1982
troduction of these weapons in 1971, 16
industry. As the time article points out,
people have been killed by their use—eight • Mr. KEMP. Mr. Speaker, I wish to large timber companies are in favor of
bring to the attention of my col- Administration's sell-off (or sell-out) the
of them children under 14.
beIn the case of Julie Livingstone, witnesses leagues and the Nation a remarkable cause they have overcut their own lands for
stated that Julie was walking home when man. Cpl. James William Mazzu was a short term profits. Now, in the name of the
they saw a British Army Saracen (armored soldier who lost his life in the Korean "free market," they want to "manage"
public lands. God help us. In the past few
car) traveling toward her at a high rate of conflict on November 30, 1950.
speed. As it passed by Julie, the witnesses
I am extremely proud to say that years, many small, locally owned mills have
reported hearing a loud pop. As the Saracen Corporal Mazzu was a member of my either folded or been taken over by large,
national companies. I am opposed to a
sped away, Julie was found lying face down district. A man of many talents,
Cor- policy of letting out of state corporations
on the pavement mortally wounded from a poral Mazzu belonged to the
2d Infan- dictate Oregon's economic decisions. Withead injury. A blood-stained plastic bullet try Division Bag Pipe
Band and was an ness, for example, the commitment of Georwas lying nearby.
intelligence map designer. Corporal gia-Pacific to Oregon. As a representative of
Last year alone, 12 civilians were killed by Mazzu was a dedicated
artist who drew this state, I ask you to make sure that our
plastic bullets in Northern Ireland, among cartoons
resources are available for Oregon lumber
for his division paper.
them a girl of 12, a girl of 14, and two boys
Corporal Mazzu had a special talent companies, not put in the hands of out of
less than 14. Mrs. Nora McCabe, 30, was
for drawing cartoons depicting the state interests,
shot and killed by a plastic bullet fired at a
Third, the Administration's plan is anrange of less than 20 feet while she-was re- Korean conflict. His colleagues appre- other example of the rich becoming richer
turning from a shopping trip. She left ciated his cartoons because they pro- at the expense of the rest of us. I ask you,
behind a husband and three small children. vided thoughtful insights into the who can afford to buy this land? I will tell
Earlier this year, Mrs. Kathleen Stewart lives of the soldiers. The cartoons are you. Neither myself, my family, nor my
of Belfast was brought to Toledo to speak at presently a valued addition to the friends have the money. Who can pay existChrist the King Parish under sponsorship Army Historical Center. I am grateful ing mortgages, let alone borrow at today's
of Clan na Gael of Toledo. She had lost her for and proud of Corporal Mazzu's interest rates? Land speculators, developers,
12-year-old son Brian to a plastic bullet in contributions to the United States, his and the wealthy. The Administration's pro1976 as he stood waiting on a corner while commendable service in the military, posal, in a nut shell, is a way for the federal
government to take land available for everyhis family was preparing to celebrate his and his cartoons that are a reflection
one's use, and put it in the control of a
birthday. Two weeks later, Mrs. Stewart's of that service..
select group of individuals: Not very demotwo younger children were stopped on their
cratic.
way home from school by a British patrol.
In conclusion, everyone agrees that the
THE SALE OF SURPLUS LAND
One of the soldiers asked them if they like
federal government must balance its budget,
the birthday present he had given their
the national debt must be reduced, and the
brother two weeks before. Laughing, he
HON. LES AuCOIN
economy started on the road to good health.
then told them he might give them the
And, there are undoubtedly truly "surplus"
OF OREGON
same present next year.
federal
lands. However, I do not trust SecreIN THE HOUSE OF REPRESENTATIVES
tary of the Interior James Watt. By using
In the last 12 years, close to 1,000 innoTuesday, September 14, 1982
executive orders without Congressional
cent civilians have been killed in Northern
Ireland by British troops or Loyalist para- •Mr. AuCOIN. Mr. Speaker, I want review, the Administration's proposal opens
militaries. In that time not one British sol- to bring to the attention of my col- the door for abuse. If the Administration
needs more money, it should
dier has been brought to trial or convicted leagues a letter I received from
military
one of spending and/or raise taxesreduce
again. At the
of any crime committed while on duty in my constituents, Mr.
Joe
Reinhart of very least. Congress should hold hearings
Ulster.
Portland, Oreg., concerning the ad- on this important national
question.
On May 13, 1982, the European Parlia- ministration's plans
to sell off our
Thank you for your time and considerament voted on a text condemning and ban- public lands.
The arguments made in tion. I eagerly await your response.
ning the use of plastic bullets. The only this
letter parallel exactly my own
Sincerely yours,
group to vote against the passage was the
misgivi
ngs
JOE REINHART..
about
secreta
ry
Watt's
Conservative Party of Margaret Thatcher
"asset
manage
ment"
plan.
and the Rev. Ian Paisley.
The concerns expressed by my conIn the U.S., Congressman Mario Biaggi
THE EFFECTS OF HIGH
stituen
ts were repeated everywhere I
(D-N.Y.) has submitted House Resolution
INTEREST RATES
356 which calls on the British government went in my district during the August
to end the use of plastic bullets in Northern recess. Oregonians are proud of their
heritage—they do not want America's
Ireland.
public
lands sold off for some shortOF KENTUCKY
As head of the Ad Hoc Committee on
IN THE HOUSE OF REPRESENTATIVES
Irish Affairs, Congressman Biaggi has been term gain.
Mr. Speaker, we would be wise to
most vocal in denouncing the violence comTuesday, September 14, 1482
heed
the advice found in Mr. Reinmitted by all sides in Northern Ireland. It
was because of his untiring efforts in the hart's letter so as not to be accom- •Mr. HUBBARD. Mr. Speaker, as
cause of justice and peace that he was nomi- plices in a terrible crime against our Americans throughout the country are
nated for the Nobel Peace Prize to be citizens. I hope my colleagues will join pleading with Congress to provide
awarded later this year.
relief from high interest rates and inme in this.
If there is ever to be a chance for peace, it
PORTLAND, OREG., August 29, 1982. flation, one of my constituents, Mrs.
DEAR CONGRESSMAN AuCOIN: I JUSL fin- Jody Walker from Princeton, Ky., has
will only come when there is a change in
policy on the Ulster problem. And that will ished reading a Time magazine article (Aug. written a thought-provoking letter to
only be when England realizes that it also 23, 1982) on the Reagan Administration's me in order to illustrate
what our Namust accept responsibility for a large por- plan to sell "surplus" federal land in order tion's present econom
ic
climate is
to
reduce
the
national debt. I oppose this
tion of the violence..
doing to small businesses. I think my
proposal for the following reasons.
First, our short term economic problems colleagues will be interested in Mrs.
should not dictate national policy regarding Walker's comments. Her letter follows:
public lands. These lands should be considJuNE 19, 1982.
ered part of our national heritage; a savings
DEAR SIR: This is not a letter of complaint
account. The interest from our capital in- but rather an attempt
to show you what the
vestment is sustained-yield forests, national present economic
climate and high interest


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I

HON. CARROLL HUBBARD, JR.

E4142

CONGRESSIONAL

CORD — Extensions of Remarks

September 14, 1982

rates are doing to small businessmen, and to cerns with
f e• misting law that they and have worked tirelessly to see that
us in particular.
felt
needed
t,
ie addressed. Agricul- It is resolved.
Ken and I bought a Dairy Queen Brazier
In Princeton. Kentucky 3 years ago. The in- tural produe rs have long labored
I am introducing the administraterest rate at that time was 9%; our month- under the uncertainty of the 1974 tion's legislation because I believe that
ly payment of $2,000.00 inchrded $1,100.00 FLCRA. In the past 10 years growers It should become law. I was involved
in
Interest; and the loan would have been paid and producers have faced extensive its development. I
believe
that
it
repoff in 10 years.
private litigation and enforcement ac- resents a positive step in the
protecIn April of this year we had to refinance tions by the Department of Labor.
tion of migrant workers and I will conthe business. The interest went to 17%; our
We have attempted to establish cer- tinue work to see that it is enacted.•
monthly payment of $2,500.00 includes
$2,350.00 interest; and the loan had to be tainty during these long negotiations.
That is also the goal of the adminisextended to pay off in 15 years.
We are a small business, grossing about tration's bill. It will answer the quesNDANK. NDANK
$280.000 per year and employing twelve. tion "Who is responsible for the proKen and I have worked without pay for 3 tections and duties available under the
years in an attempt to make the business a act?" with the answer."He or she
who
success.
OF ILLINOIS
provides the service or employs the
We had hoped to be able to open another
worker—f
arm
labor
contracto
r
or
HOUSE
THE
IN
OF REPRESENTATIVES
Dairy Queen in a nearby town this year, but
after finding out what the interest rate not—has the duty to protect the workTuesday, September 14, 1982
would be, we are not going ahead with our ers."
plans. This keeps 12 or 15 people from findCertainty will benefit all parties. Ag- •Mr. FINDLEY. Mr. Speaker. most
ing jobs and eliminates several construction ricultural employers will be relieved of Americans are unaware of the tremenJobs. It means less sales taxes to be paid and the excessive burdens of FLCRA and dous stake our country has in
a sucless income taxes to be paid. We simply are will for the first
cessful
time
conclusio
be
sure
of
n
the
their
of
efforts
of Asnot willing to pay $2,500.00 per month and
duties to migrant workers. Agricultur- sistant Secrttary of State Chester
have $2.350.00 applied to interest while we
work for nothing. When interest rates are al employees will, in turn, know who is Crocker to negotiate a settlement lead17% and 18%, the small businessman pays responsible for their protections, by ing to a free and fair election in Namilittle on principal and the entire payment is fixing the responsibility on those who bia under the truly impartial superviused to pay interest. As a result, the small ultimately benefit from their labors— sion of the United Nations Resolution
businessman is unable to reduce his debt the agricultural employer. Unions, 435.
which prevents him from improving his likewise, will be assured for the first
As a member of the Foreign Affairs
building or adding new equipment. As a time that they
will
not
fall
within
the
Committe
e of the U.S. House of Represult companies supplying the products
coverage of an ever-increasing maze of resentatives, I have watched with inand services must lay people off. The small
businessman pays little tax in that interest conflicting definitions which charac- cteasing concern the efforts of the
Is deductible. The smaLl businessman is hurt terize the current law.
Soviet empire to expand further into
and the Federal Government is hurt.
All of the problems of the migrant the southern part of Africa. Numerous
This is only one small example but when workers in this country will not disap- committees of the Congress have inyou mulitiply it by all the small businesses pear after this bill becomes law. quired into the continuin
g "resource
that must pay these high interest rates, you Today, as always,
exploitation, poor war" being conducted by Russia in its
can see it is a problem of great dimension.
housing, and abuse all too often go effort to gain control of the sources of
In our town (Princeton, Ky.) the Ford
hand-in-h
and with the backbreaking oil and strategic minerals in Africa.
Agency, a grocery store, a clothing store, a
department store and a furniture store have work performed by the agricultural Congressional studies show that 62
all closed in the last eight months. Prince- worker. As this bill is put into place, I strategic minerals are extremely imton's population is 8,500. The Federal Gov- will continue to use this subcommit- portant to the industrial base of the
ernment must get this situation under con- tee's oversight authority to investigate United States economy. Namibia has
troL I do not have the answers but I do the effect of these changes on
the many of these minerals, including the
know that if we operated our business like lives of the migrant
worker
and
to largest uranium mine ale world and
the Federal Government operates we would
look
for
ways
to
one-sixth of all tjle
insure
a
better
quality
um in the
have closed down 21/2 years ago. Something
of
life
for
these
free
workers
world. Such other important minand
their
must be done to stop the Government from
erals as copper, zinc, gold, diamonds,
competing with individual citizens for loan families
money. Also, I feel a sincere effort must be
I remain concerned about another cadmium, arsenic trioxide, germanium
made to balance the budget.
group of workers who perform the dioxide, and possibly gas and oil are
I am writing this in hopes a graphic dem- same services as those covered
by this found in Namibia.
onstration of the effects of high interest law, the temporar
y
foreign
Let us hope that Dr. Crocker is not
workers
rates will have more impact than the overall
brought
into
this
country
maneuver
under
the
ed into any kind of a cosmetstatistics.
H-2 worker program. The Judiciary ic settlement which, in effect, will
Sincerely yours,
Committee this morning will begin open the door to slow-motion dominaMrs. JODY WALKER.

HON. PAUL FINDLEY

FARM LABOR CONTRACTOR
REGISTRATION ACT

HON. GEORGE MILLER
OF CALIFORNIA
IN THE HOUSE OF REPRESENTATIVES

Tuesday, September 14, 1982
•Mr MILLER of California. Mr.
Speaker, today I am introducing, by
request, the administration's recent
proposals to replace the Farm Labor
Contractor Registration Act with the
Migrant and Seasonal Agricultural
Worker Protection Act.
The negotiations which led up to the
administration's proposals were long
and at times frustrating. Representatives from all sides had serious con-


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markup of the Simpson-Mazzoli
amendments to the Immigration and
Nationality Act. That bill, as passed by
the Senate fails to address adequately
the future of the labor protections
found in current regulations. If we do
not insure that those protections for
both the foreign and domestic workers
are retained, we will have opened up a
"guest worker" program under a different name. Congress cannot create a
new statute, on one hand, which attempts to protect workers, while on
the other hand pass another statute
that weakens labor protections for
workers doing similar work.
The parties that took part in the negotiation should be congratulated on
their efforts to work out a compromise
in a difficult area. They have recognized a problem that needed attention

tion and control of Namibia by
SWAPO or some other Soviet "proxy"
government of the kinds now controlling Angola, Mozambique, Ethiopia,
Afghanistan, and other targets of
Soviet Empire expansionism.
Any settlement which would permit
even the remotest possibility of a
future Soviet takeover by the terrorists of the South West Africa People's
Organization (SWAPO), the Soviet-financed organization which has been
conducting a guerrilla campaign
against the people of Namibia for the
last 15 years, would be totally unacceptable. The following lead editorial
from the Wall Street Journal of
August 23 states the case very well. I
hope my colleagues in Congress, as
well as other interested Americans,
will read it carefully.

97TH CONGRESS ]H,
2D SESSION

R.6967

To amend the Federal Reserve Act.

IN THE HOUSE OF REPRESENTATIVES
AUGUST 11, 1982
Mr. ST GERMAIN (for himself, Mr. WRIGHT, Mr. REUSS, Mr. FOLEY
, Mr. ALEXANDER, Mr. MURTHA, Mr. FLIPPO, Mr. COELHO, Mr. FAZIO, Mr. MINETA,
Mr. HAWKINS, Mr. RATCHFORD, Mr. FASCELL, Mr. LEHMAN, Mr. BRINKLEY, Mr. ANNUNZIO, Mr. BENJAMIN, Mr. HARKIN, Mr. SMITH Of Iowa, Mr.
GLICKMAN,,Mr. HUBBARD; Mrs. BOGGS, Mr. DYSON, Mr. DONNELLY, Mr.
MAVROULES, Mr. FORD of Michigan, Mr. WOLFE, Mr. DWYER, Mr.
FLORIO, Mr. MINISH, Mr. RODINO, Mr. ROE, Mr. ADDABBO, Mr. LUNDINE,
Mr. NOWAK, Mr. PEYSER, Mr. RANGEL, Mr. ROSENTHA
L, Mr. SOLARZ,
Mr. ZEFERETTI, Mr. HEFNER, Mr. APPLEGATE, Mr. ECKART,
Mr. LUKEN,
Mr. MOTTL, MS. OAKAR, Mr. SEIBERLING, Mr. SHAMANSK
Y, Mr. EDGAR,
Mr. FOGLIETTA, Mr. MURPHY, Mr. WALGREN, Mr. BONE
R of Tennessee,
Mr. DE LA GARZA, Mr. FROST, Mr. GONZALEZ, Mr. HANC
E, Mr. HIGHTOWER, Mr. MATTOX, Mr. BONKER, Mr. LOWRY of Washington, Mr. MOLLOHAN, Mr. WASHINGTON, Mr. DICKS, and Mr. PATMAN) introduced the
following bill; which was referred to the Committee on Banking, Finance and
Urban Affairs

A BILL
To amend the Federal Reserve Act.
1

Be it enacted by the Senate and House of Representa-

2 lives of the United States of America in Congress assembled,
3 That this Act may be cited as the "Balanced Monetary
4 Policy Act of 1982".


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2
1

SEC. 2. PURPOSES.—It is the purpose of this Act to

2 insure that monetary policy is conducted in a way which as3 sures both economic growth and stable prices. It is the fur4 ther purpose of this Act to return predictability and stability
5 to financial markets, thus providing for lower, more stable

6 real rates of interest.
7

SEC. 3. (a) Section 2A of the Federal Reserve Act is

8 amended9

(1) by inserting "(a)" after "SEC. 2A.", and

10

(2) by striking out all after the first sentence and

11

inserting in lieu thereof the following: "In furtherance

12

of these goals the Board of Governors and the Federal

13

Open Market Committee of the Federal Reserve

14

System shall establish yearly targets, consistent with

15

economic growth and stable prices, for long-term inter-

16

est rates, and for money and credit aggregates, togeth-

17

er with the range above and below such targets that

18

they deem appropriate.

19

"(b) The Board of Governors and the Federal Open

20 Market Committee shall take such actions as are necessary to
21 assure that these targets are achieved, on average, on an

22 annual basis.
23

"(c) Nothing in this section shall be interpreted to re-

24 quire that these targets be achieved if the Board of Gover25 nors and the Federal Open Market Committee determine

HR 6967 HI

3
1 they cannot or should not be achieved because of changed
2 economic conditions such as rapidly accelerating inflation or
3 high unemployment, and if within ten days of making such
4 determination, the Board transmits a written report to the
5 committees of the Congress referred to in subsection (d) ex6 plaining the reasons for any revisions to or deviations from
7 such targets and notifying the committees of the new targets
8 and of the objectives and plans for meeting those targets.
9

"(d) In addition, the Board of Governors shall transmit

10 to the Congress, not later than February 20 and July 20 of
11 each year, independent written reports setting forth
12
13

"(1) a review and analysis of recent developments
affecting economic trends in the Nation;

14

"(2) the objectives and plans of the Board of Gov-

15

ernors and the Federal Open Market Committee with

16

respect to achieving its targets;

17

"(3) the relationship of the aforesaid objectives

18

and plans to the pursuit of full employment, stable eco-

19

nomic growth, low inflation, and affordable interest

20

rates for productive sectors of the economy; and

21

"(4) the relationship of the aforesaid objectives

22

and plans to the short-term goals set forth in the most

23

recent Economic Report of the President pursuant to

24

section 3(a)(2)(A) of the Employment Act of 1946 and

25

to any short-term goals approved by the Congress. As


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HR 6967 HI

-


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4

1

a part of its report on July 20 of each year, the Board

2

of Governors shall include a statement of its objectives

3

and plans with respect to its targets for the calendar

4

year following the year in which the report is submit-

5

ted. The reports and statements required under the two

6

preceding sentences shall be transmitted to the Con-

7

gress and shall be referred in the Senate to the Corn-

8

mittee on Banking, Housing, and Urban Affairs, and in

9

the House of Representatives to the Committee on

10

Banking, Finance and Urban Affairs. The Board shall

11

consult with each such committee on the reports and

12

statements and, thereafter, each such committee shall

13

submit to its respective body a report containing its

14

views and recommendations with respect to the intend-

15

ed policies of the Board.

16

"(e) To promote order and stability in the financial mar-

17 kets and full information about economic conditions for all
18 citizens, the Board of Governors shall publicly announce
19 changes in objectives and plans at the times those changes
20 are determined.
21

"(f) The President, as to each vote on monetary policy

22 of the Board of Governors and the Federal Open Market

23 Committee of the Federal Reserve System, shall state for the
24 Federal Reserve Systems's record the administration's posi25 tion on such vote.".

HR 6967 IH


,
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5
1

(b) The amendment made by subsection (a) takes effect

2 on enactment.
0

HR 6967 HI

4,1

--••••••••••••••

KENTUCKY

Biographical

67

KENTUCKY
(Population, 1980 census, 3,661,433)
SENATORS
WALTER D. UDDLESTON, Democrat, of Elizabethtown, Ky.; born
Cumberland County, Ky., A1o1,i1 15, 1926; son of Rev. Walter F. and Lottie (Russelin
Huddle
l)
ston; educated in the POlic schools of Bowling Green, Livermore, Smith' Grove,
Monticello, and Jeffersotttown, Ky.; graduated from Jeffersontown Highs
1944; B.A. in radio arts, 11kiversity of Kentucky, 1949; honorary doctor School,
degrees from Eastern Kentucky University and Kentucky Wesleyan College of laws
; served
in the U.S. Army, 1944-46, as a tattk gunner, 9th Armor Division, Europe
an
Theate
r
of Operations; elected to Kentucky State Senate, 1965; chairman, State
Gover
nment
Committee, 1966; majority caucus chairman, 1968; majority floor leader,
1970 and
1972; program and sports director, radio Station WKCT, Bowling Green, Ky.,
194952; general manager, radio station WIEL, Elizabethtown, Ky., 1952-72;
partner and
director, radio station WLBN, Lebanon Ky., 1957-72; former president,
Broadcasters Association, Elizabethtown Rotary Club, and Elizabethtow Kentucky
of Commerce; former chairman, Elizabethtown Planning and Zoning n Chamber
sion;
twice named Outstanding Young Man of Elizabethtown; one of three Commis
Outsta
nding
Young Men in Kentucky; member, Memorial Methodist Church; marrie
d Martha
Jean Pearce of Middletown, Ky., 1947; two sons: Stephen and Philip
Dee;
the United States Senate, November 7, 1972, for the term ending Januarelected to
y 3, 1979;
reelected November 7, 1978, for term ending January 3, 1985.
WENDELL HAMPTON FORD, Democrat, of Owensboro, Ky.; botp
County, Ky., September 8, 1924; attended public schools of Daviess Countyin Daviess
ty of Kentucky; served in the U.S. Army, 1944-46, Kentucky National , UniversiGulard, 194962; was a partner in the firm of E. M. Ford and Company Insura
nce;
position of chief assistant to the Governor of Kentucky; State senato held the
r, 1965,-67;
Lieutenant Governor, 1967-71; Governor, 1971-74; president of the
Kentuc
ky arid
National Jaycees; Junior Chamber of Commerce; chairman, National
Democr
atio
Governors' Caucus, 1973-74; member of Carter-Mondale Steering
Commit
tee
and
chairman of National Democratic Campaign Committee, 1976; chairm
an,
Democr
atic Senatorial Campaign Committee; recipient of University of Louisvi
lle
Minerv
a
Award of Merit; also Boy Scouts of America Silver Antelope Award
;
Kentuc
ky
Conservation Man of Year, 1973, and Kentucky Agriculture Man
member, Democratic National Committee, 1972-76; son of late Mr. of Year, 1973
and Mrs. E. M.
Ford; holds honorary degree from Universities of Keptucky,
Morehe
ad, Eastern
Kentucky, Murray State, Kentucky Wesleyan, Untoii, Ky., and
married the former Jean Neel. 1943rti-iii children: Shirley (Mrs. Brescia College;
William Dexter)
and Steven; elected_ to-the United States Senate, November
5,
1974,
for the term
ending!January-37'1981; reelected November 4, 1980, for the term
ending January 3,
REPRESENTATIVES
FIRST DISTRICT.—CouNmes:

Ballard, Butler, Caldwell, Calloway, Carlisle, Christian,
Crittenden, Fulton,
Graves. Henderson, Hickman, Hopkins, Livingston, Logan.
Lyon, Marshall, McCracken, McLean, Muhlenberg, Todd, Trigg, Union, and Webster. OHIO Courrrr
That
part contained within the following voting
precincts: 4, 6-9, and 11-17. Population 119701, 460,754.

CARROLL HUBBARD, JR., Democrat, of Mayfield, Ky.; born in
Murray, Calloway
County, Ky., July 7, 1937; educated in the public schools of Beaver
Dam, Ashland,
and Louisville, Ky.; graduated from (Louisville) Easter
n High School, 1955; B.A.,
Georgetown College, Georgetown, Ky., 1959; J.D., University of
Louisville School of
Law, 1962; admitted to the Kentucky Bar, 1962, and comme
nced
field, Ky.; served in the Kentucky Air National Guard, 1962-6 practice in May7; Kentucky Army
National Guard, 1968-70; active duty: Lackland Air Force
Base,
Base, San Antonio, Tex.; rank, captain; position, legal officer Brooks Air Force
system; elected to Kentucky State Senate, 1967; reelected, 1971; , selective service
chairman, Judiciary
Committee, 1970; chairman, State Government Committee,
1974;
former president,
Mayfield Rotary Club, 1966; chosen one of the three outsta
nding
young men of
Kentucky in 1968 by Kentucky Jaycees; chosen in 1972 by
Kentucky Young Democrats as Outstanding Young Democrat Legislator; chosen
among "Outstanding


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Jac •

68

Congressional Directory

KENTUCKY

Award at 1971
; recipient of Outstanding Service as Outstanding
Young Men in America" in 1970
1968
g; chosen in 1966, 1967, and
, deacon,
Southeastern Kentucky Homecomin
, Ky., by Mayfield Jaycees; member
nty
Cou
ves
-Gra
ield
Mayf
of
e ExecuMan
Stat
,
Young
rch, Mayfield, Ky.; former member
and moderator of First Baptist Chuention; married to the former Joyce Lynn Hall of
tive Board, Kentucky Baptist Conv : Kelly Lynn and Krista Leigh; chairman, 94th
Metropolis, Ill., 1966; two childrenwhip, 95th, 96th, and 97th Congresses; chairman,
5, 1974;
Democratic class, 1975; associate
to the 94th Congress, November
ted
elec
;
tee
mit
com
Sub
al
Can
Panama
.
reelected to each succeeding Congress
U,Daitieas. Eonson, Grayson,
tice,
lTCDtAo
Allan, Andersen, Barren, Rrecitinei
SECOND DISTRIC7'.-Covrrrucs, , Marion, Meade, Nelson, Simpson, Spencer, Warren, and Washirigfi (1970),
and 19. Population
18,
10,
, -Hardin, Hart, Larue
5,
1-3,
ncts:
preci
g
votin
the following
twry That part contained within
459,416.

Ky.; born
of Bowling Green, Warren County,of Bowling
ILLIAM H. NATCHER, Democrat,
ols
scho
ic
1909; educated in the publ
Kentucky
in 'wling Green on September 11,
aratory Department; A.B., Western s Virginia
Prep
en
Ogd
at
ol
scho
high
d
e
Gre
., Ohio State University; married Mis
Jirles and
State S lege, Bowling Green; LL.B
June 17, 1937; two daughters: Celeste
Reardon, f Bowling Green, Ky., on , Bowling Green, since March 18, 1934; Federal
Louise Mu hy; practicing attorneyfor Western District of Kentucky; elected county
mmissioner 1936-37
Conciliation
e 4-year terms; elected Commonren County in 1937 and served threcomposed of Allen and Warren
Wb1
attorney of
cial District,
Congress;
wealth attorne of the Eighth Judi
ust 15, 1953, having been elected toa day or a
Aug
l
unti
ed
serv
d
ed
Counties, in 195
miss
r
on January 6, 1954, and neve
Young
sworn in as a Mether of Congress Mem
ber; Baptist; past president of the
a
as
in
from
y
Nav
vote since being svkorn
U.S.
ng World War II served in the
;
1953
1,
ust
Democratic Clubs of entucky; duri
Aug
on
ress
ted to the 83d Cong
e
hom
ns;
atio
October 1942 to Deceñer 1945; elec
opri
Appr
on
tee
mit
; member, Com
Street.
reelected to each succeedig Congress
en, Ky.; district office: 414 Enst 10th
Gre
ing
Bwl
n,
Mai
East
address, 638
of
Jefferson which includes the city
riN That part of the county of(1970,) 460,340
Cour•
sori
rran
.-JE
RICT
DIST
D
THIR
unincorporated areas Population
Louisville, the city of Shively, and

erson
Louisville, Ky.; born in Louisville, Jeff
Ky.;
le,
svil
ROMANO L. MAZZOLI, DemoC'eat, of
Loui
ol
Scho
h
Hig
tion at St. Xavier
;
1954
e),
laud
County, Ky., November 2, 1932; edu
cum
gna
(ma
on
rati
nist
ess admi
University of Notre Dame, B.S. in buJ.N, 1960; U.S. Army, 1954-56; admitted to the
University of Louisville Law School, h 'le Railroad Co. Law Department, 1960-62;
LouisKentucky bar 1960- Louisville and Nas
ih business law, Bellarmine College,
private practice of law, 1962-70; lecturere S,pate November 1967; named Outstandic Standville, 1963-67; elected to Kentucky Stat
named',,Best Senator from the Publ
ing Freshman Senator, 1968 session;le, Kentdcky State, and American Bar Associn; board of
point, 1970 session; member: Louisvil
ky; Notre 11214me Club of Washingto
children,
two
ations; Notre Dame Club of Kentucied
;
1959
on,
Dill
en
the formex Hel
directors, Notre Dame Alumni; marr Congress Nov)s,mber 3, 1970; reelected to each
Michael and Andrea; elected to 92d se Committee On Judiciary, House Committee
succeeding Congress; member of Hou se Permanent elect Committee on Intellion the District of Columbia, and Hou
gence.
m. CAMPBELL COUNTY: That part
e, Carroll, Gallatin, Oldham, and Tri
Newport, Fort Thomas. and
Dayt4
FOURTH DISTRICT.-CounTim: Boon
vue,
Belle
of
cities
The
g precincts:
contained within the following votin N Courcry: That part contained within t following voting precincts:
Woodlawn in their entirety. JEFFERSO 38. sixth ward of Louisville 31; sevent ward of Louisville IS; A
Second ward of Louisville 35, 36, and ct 3-7, 9, 14, 17, 19-24, 26-29, 31, 33-39, 4 \43-47, 50-53, 55, 56, 59-,
district 1-16, 18-38, and 40-81; B distri 14, 17-19, 21, 23, 24, 30, 31, 33, 34, 40, 42-470, 53-58, 60, 61, 64-66
within the following
in
62, 64-66, and 68-70; C district 6-8, 11,
94. KarrroN C,ouNTY: That part conta Hal& 1 and 2; Crescent
Villa
69, 70, 73-75, 78, 79, 81, 84, 85, 87-91, and
ley;
Brom
1-5;
ow
Ludl
ety;
entir
its
in
ort Wright 1-5;
voting precincts: The city of Covington Crestview; Lakeside Park 1-3; Fort Mitchell 1
Springs; Erlanger 3-9; Edgewood 1-3; 96.
Park Hills 1-3. Population (1970), 458,8

Ky.,
erson County, Ky., born in Louis e ools,
GENE SNYDER, Republican, of Jeff
ic
publ
the
nded
E. Snyder; atte
of
January 26, 1928; son of M. G. andh Lois
took prelaw studies at Univers
ol,
Scho
Hig
ual
Man
0;
i
graduated from duPont
Law
of
e from the Jefferson_ School
y
sun
n
Louisville, and graduated cum laud
erso
Je
-of
te
-1950 elected magistra
began practice of law in Louisville in 1961; city attorney for Jeffersontown, 1954-58;
and
1957
in
ms
ter
14,District fbr two
nt; married the
and lawyer; farming interests; Protesta
Mark; three
son,
opir0•primary occupation, realtor Robe
one
Ky.;
of Fort Thomas,
n
rtso
n
ghto
Crei
icia
Patr
mer
for
‘!:

Removal Notice
The item(s) identified below have been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.

Citation Information
Document Type: Newsletter
Citations:

Number of Pages Removed: 4

"Federal Reserve Board Chairman to Speak in Mayfield Dec. 16.," Congressman Carroll
Hubbard Reports, December 10, 1982.

Federal Reserve Bank of St. Louis


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PAUL VOLCM'S VISIT TO MAYFIELD, YINTUCYY
THURSDAY, DECEMBER 16

TIME

EVENT

4-4:30 pm

Chairman Volcker and Congressman Hubbard
arrive at Paducah's Barkley Field. Will be
met by 3 bank Presidents, State Police escort
and Fred Nesler. (Ohio Valley side of Airport)

4:30 pm

Depart Barkley Field enroute to Paducah
television station WPSD-TV

4:45 pm

Arrive Pacucah TV station.

5-5:30 pm

Interview with Tom Butler on Accent Program

5:35 pm

Depart WPSD-TV enroute to Liberty Savings
Bank, Mayfield

6:15 pm

Arrive Liberty Savings Bank' for dinner

6:15-7:10 pm

Dinner at Liberty Savings Bank, Mayfield

-:10 pr.

Depart Liberty Savings Bank enroute to
Mayfield High School gymnasium

-

Arrive gym. Met by Principal Ralph Col
Hubbard's AA Jim Yanouse and ecorteto
speaker's platform

7:50 p.n.

(Following music and invocation--) Congressman
Hubbard will introduce in sequence: William
Hi e, Reid Hearn, Frcd B2ume, Wayne Courtney,
Howard Shaw

7:40 pm

Congressman Hubbard introduces Mr. Tom
Brumley who in turn will introduce Chairman
Volcker

7:45-5:15 pm

Speech by Chairman Volcker

8:15-S:45 pm

Questions and answers - Presiding will be
Carolyn Reed and Inell Mays

8:45 pm

Congressman Hubbard introduces Bill Green,
President of the Mayfield-Graves County Chamber
of Commerce who will present Chairman Volcker
with a Kentucky country ham

8:50 pm

Congressman Hubbard will present Chairman Volcker
with a Kentucky Colonel certificate and will
conclude meeting

9:00 pm

Congressman Hubbard, Chairman Volcker, and party
proceed to Mayfield airport for flight to
Louisville. Larry Mitchell will meet party at
the Mayfield airport.

9:15 pm

Depart Mayfield for Louisville

11:15 pm

Arrive Louisville airport --Federal Reserve car
I
will meet party and escort to Executive West Hotel

Met by Tom Butler

FRIDAY, DECEMBER 17
7:55 a.m. - USAir #238, Louisville-DCA, arriving 9:07 a.m.


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and

PAUL VOLCKER'S VISIT TO MAYFIELD, KINTUCKY
THURSDAY, DECEMBER 16

TIME

EVENT

4-4:30 pm

Chairman Volcker and Congressman Hubbard
arrive at Paducah's Barkley Field. Will be
met by 3 bank Presidents, State Police esco
rt
and Fred Nesler. (Ohio Valley side of Airport)

4:30 pm

Depart Barkley Field enroute to Paducah
television station WPSD-TV

4:45 pm

Arrive Paducah TV station.

5-5:30 pm

Interview with Tom Butler on Accent Program

5:35 pm

Depart WPSD-TV enroute to Liberty Savings
Bank, Mayfield

6:15 pm

Arrive Liberty Savings Bank- for dinner

6:15-7:10 pm

Dinner at Liberty Savings Bank, Mayfield

7:]0 pm

Depart Liberty Savings Bank enroute to
Mayfield High School gymnasium

7:15 pm

Arrive gym. Met by Principal Ralph Colby and
Hubbard's AA Jim Kanouse and escorted to
speaker's platform

7:30 p.m.

(Following music and invocation--) Congressman
Hubbard will introduce in sequence: William
Hale, Red Hearn, Fred Blume, Wcync Courtney,
Howard Shaw

7:40 pm

Congressman Hubbard introduces Mr. Torn
Brumley who in turn will introduce Chairman
Volcker

7:45-8:15 pm

Speech by Chairman Volcker

8:15-8:45 pm

Questions and answers - Presiding will be
Carolyn Reed and Inell Mays

8:45 pm

Congressman Hubbard introduces Bill Green,
President of the Mayfield-Graves County Chamber
of Commerce who will present Chairman Volcker
with a. Kentucky country ham

8:50 pm

Congressman Hubbard will present Chairman Volcker
with a Kentucky Colonel certificate and will
conclude meeting

9:00 pm

Congressman Hubbard, Chairman Volcker, and party
proceed to Mayfield airport for flight to
Louisville. Larry Mitchell will meet party at
the Hayfield airport.

9:15 pm

Depart Mayfield for Louisville

11:15 pm

Arrive Louisville airport --Federal Reserve car
will meet party and escort to Executive West Hotel

Met by Tom Butler

FRIDAY, DECEMBER 17
7:55 a.m. - USAir 4238, Louisville-DCA, arri
ving 9:07 a.m.


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BOARD OF GOVERNORS

FEDERAL RESERVE SYSTEM

Office Correspondence

Date

Chairman Volcker

Subject:

To
From

December 16, 1982

Chrysler-UAW Settlement

Division of Research & Statistics
(Ms- MallinGon and Messrs. Kohn
& Gay)

On Thursday, December 9, Chrysler announced it had reached a 13month tentative labor agreement covering its U.S. and Canadian bargaining
unit employees (salaried employees will receive comparable increases).

Since

then, the Canadian workers have ratified the agreement (by a margin of nearly
10 to 1) and have returned to work, ending a 5-week strike that idled about
9,600 Canadian and 4,600 U.S. workers.UAW officials have also endorsed
the pact and ratification by the rank and file is expected by Friday, December 17.

LGB staff would like to have your vote on the proposed contract by

that date, or shortly thereafter.
The following represents our estimates of the effect of the proposed settlement on hourly labor costs:
CHRYSLER U.S. HOURLY UAW LABOR COSTS

Sept. 1982
Base wage rate
COLA1
Total straight-time rate

Proposed contract
% change
Dec. 1982 Dec. 1983 9/82-12/83

9.55
0
9.55

10.15
.15
10.30

10.15
.83
10.98

6.3
15.0

Contractual fringe benefits 2
Total contractual labor cost

9.21
18.76

9.44
19.74

9.65
20.63

4.8
10.0

Legally required payments
Total hourly labor cost

1.64
20.40

1.64
21.38

1.72
22.35

9.5

1. The $.15 December COLA is a negotiated adjustment and will be paid retroactive to September 14, when the old contract was to expire. This figure,
along with the subsequent $.68 increase is consistent to the COLA formula
assuming a 6 percent inflatin rate.
2. Benefit costs are tied to wage increases; we have assumed that no new
material benefits are included and that the proportion of the dollar increase
in wages that is rolled up into benefits remains constant.


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fer

TO:

Chairman Volcker

-2-

The increase in base wages largely reflects the "swap" of future
payments under the previously negotiated profit-sharing and wage bonus plans
in return for cash up front.
The settlement for Canadian workers provides an extra $.25 per
hour "special COLA" increase at the start of the contract in recognition of
Canada's higher inflation rate.

Canadian workers also agreed to forego the

present Employee Stock Ownership Plan in exchange for $.29 per hour up front.'
;)
As a result, the Canadian workers will have a $.40 per hour advantate in
basic wages relative to the U.S. workers, a spread which will be maintained
over the contract.2

Overall, Canadian compensation will still trail the U.S.

leve1.3
The company estimates that total cost of settlement in 1983 as follows:
TOTAL COST OF PROPOSED LABOR CONTRACT:

Base wage
increase
COLA
Other
Total

UAW

U.S.
Other

Total

UAW

38
94
1
133

17
29
11
57

55
123
12
190

4
16
(3)
17

Canada
Other

1
4
0
.3.

Total

5
20
(3)
22

1983

Savings from
elimination of
profit sharing

Total
net cost

(17)
(17)

60
143
(8)
195

We observe the following about the proposed settlement:
1) the total cost to Chrysler in 1983 falls just within the range
Chrysler had allowed for in its plans.

In its last set of business plans

1. There is, however, no offsetting saving for Chrysler, which will maintain
contributions to the ESOP at currently planned levels.
2. This comparison of Canadian and U.S. wages makes no allowance for the lowet value of the Canadian dollar. Translated into U.S. dollars at current
exchange rates, Canadian workers would be making less than U.S. workers.
3. Differences in total compensation primarily reflect a higher level of government benefits available to Canadian citizens.


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Federal Reserve Bank of St. Louis

•

TO:

Chairman Volcker

-3-

(July 1982), Chrysler included a contingency of $204 million for an increase
in labor costs; with this contiggency, Chrysler projected profits of $150 million.

After als

llowing for this "labor contingency" the Base Case V analysis

predicted that Chrysler would break even in 1983.
2) the gap in cash wages paid Chrysler workers relative to GM and
Ford will close somewhat under the contract and the advantage in hourly total
cIII- nsation costs to Chrysler will be virtually eliminated.

With respect to

wages, Chrysler workers will receive about the same COLA increases as GM and
Ford workers at the end of the current contracts, but the difference between
their wages narrows from the current $2.65/hour to around

$2.05/hour as a

result of the immediate non-COLA wage boosts given Chrysler U.S. workers.
Differences in compensation have been much narrower, primarily because relatively speaking, active Chrysler workers support more retired and laid-off
personnel.

The current difference in compensation is around $.60, which will

be eliminated by the wage boost under the contract.
3) the pact expires in January 1984.

In the recent negotiations

the desire of the Canadian workers to return to work before Christmas, and
thus get paid for the holiday down-time, apparently contributed significant
impetus to reach an agreement.

No such pressure will exist in the next round.

Treasury LGB staff also suggest that by January, 1984 the new T115 van/wagon
will be in full production in Canada and that any work-stoppage thene will
have severe consequences for Chrysler.

Because the GM and Ford pacts expire

in September 1984, Chrysler workers will have one more opportunity to narrow
the wage gap before other auto workers can negotiate new contracts.
4) the settlement does not contain a "subject to Loan Guarantee
Board approval" clause.


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Federal Reserve Bank of St. Louis

If the LGB cannot make the certifications necessary

.+1

TO:

Chairman Volcker

-4-

to approve this contract under Section 11(c) of the Act, a default under the
Act would occur.

The only recourse available to the LGB would be to call

the loans.
Overall, the terms of this pact are disappointipg, especially relative to the last rejected contract, which might even have increased the
Chrysler/GM, Ford compensation gap.

In addition to the up front payments,

some of which might have been expected, given that Chrysler workers hadn't
had a pay increase in two years.

The short-term of the contract seems to

imply that further increases relatively to GM and Ford might be expected in
early 1984.

Further, the expiration date of the new contract seems timed to

maximize the union's leverage in 1984 negotiations.
Under Section 11(c) of the Act, the Board must find that the contract
... will not reduce the ability of the Corporation to
repay the guaranteed loans as scheduled, will not conflict with the Corporation's operating plan or financing plan as required under this Act, and will not impair
the ability of the Corporation to continue as a going
concern or to meet such other tests of viability as the
Board shall prescribe."
Based on a preliminary analysis, the pact does not .SP..rto be
strictly consistent with the operating and financing plans for 1983 now in
effect after approval by the Board in early 1982, which assumed that Chrysler
wages would roughly parallel to those of GM and Ford.

However, the closing

of the wage gap implied by this contract above, probably is not sufficiently
serious to impair the viability of the Corporation to warrant a negative finding under 11(c).

We should note, however, that additional analysis of the

effect of this contract is still forthcoming.


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BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
December 9, 1982

Office Correspondence
To

Chairman Volcker

From

Joe Coyne


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Federal Reserve Bank of St. Louis

Date
Subject:

NOTES on Western Kentucky

Jim Thompson, who is professor of economics at Murray State
University in Western Kentucky and chairman of the Louisville Branch,
provides this information about that part of the state:
Unemployment has ranged roughly in line with the national
average. This area has some industrial operations. There is a chemical
concentration in Western Kentucky and General Tire operates a plant in
Mayfield itself. There is another tire plant across the state line in
Tennessee. As far as other manufacturing is concerned, Thompson said
it is miscellaneous. Foreign competition cost the area several shoe
plants some years ago.
Agriculture is also very important. Crops are corn, wheat and
soy beans primarily; very little cattle. It is basically a crop oriented
agriculture. The area is rolling hills which Thompson says are a bit too
hilly for wheat but it is grown anyway. The area is not in the mountains
and coal country is to the east of the area. There is no coal in the
Mayfield area. Lots of rivers in the area so water trang)ortation is also
important.
Thompson says general economic picture is generally in line with
the rest of the country. Things are sluggish but not panicky. Loan demand
in some banks is way off. Several years ago some banks in the area had an
80 percent loan to deposit ratio and this is now down to 45-50 percent.

December 7, 1982

To:

Neal Soss

From:

Don Winn

A

Cong. Carroll Hubbard has not had much trouble being
reelected to Congress! His district is very Democratic. Here
.Iiii.
is the
1982
1980
1978
1976
1974

Unopposed
Unopposed
Unopposed
82 percent
78 percent

To be unopposed is not exceptionally rare, but it
is not too common either. Only 25 members of the House were
unopposed in 1982. Most of them came from the South--8 in
Louisiana, 3 in Florida, 2 in Georgia, 2 in Tennessee, and
2 in Virginia.


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,514

4111.1

lif44411

L1.

The Supply-Demand Situation in Agriculture

Large crop supplies and weak demand continue to dominate the economic
situation in farming.
1.

Growing and harvesting conditions were generally favorable this past
year, and aggregate crop production is expected to be about in line
with the previous peak in 1981.

For the three major crops--wheat,

corn, and soybeans--production reached new highs in 1982, and
inventories of these crops (particularly corn) are burdensome.
-


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2.

The rapid expansion in the export demand for farm

IS

was halted

in 1981 by the combination of weak foreign demand and a strong
II llar.

More recently, farm export volume has turned down, and

prospects for 1983 are not bright.
3.

The livestock supply situation differs from that of crops.
a.

Total red meat and poultry production declined in 1982.
O

This was due mainly to a decline

nS•rk production for a

thirI year in a row; the pork industry had overexpanded in
the late 1970s.
O

Beef production in the first three quarters of 1982 was little
different, on average, from year-earlier levels.

b.

The demand for livestock products has continued to be weak this
year, but feeding costs also have fallen.

Thus, price-cost

relationships in the livestock industry are more favorable than
I ver the 1979-81 period.

Nonetheless, with demand prospects

uncertain for 1983, producers appear hesitant to expand output
although profits have improved.


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Federal Reserve Bank of St. Louis

-2-

4.

Domestic demand for food has been weak in recent years.

After rising

rapidly during the expansion of the late 1970s, constant-dollar outlays
for food and beverages have shown little net change since early
1980, probably because growth in real per capita income has
leveled off.


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Federal Reserve Bank of St. Louis

-3-

2.

Food Prices and Farm Prices

Food price inflation has slowed considerably in the past two years, and
next year's increase also is expected to be relatively moderate.
1.

The prices received by farmers fell more than 10 percent during 1981
and have edged down further in 1982.

Farm prices this past year

have been particularly weak for a number of key crops.
a.

Near the peak of the fall harvest, the price of corn fell 20
percent below its support level, as new supplies glutted the
market.

b.

Wheat prices also have been below support levels.

c.

In recent weeks, prices of both crops have risen a little from
their harvest-time lows.

2.

A deceleration of labor costs in the food-processing sector also has
contributed to the slowing of food prices at the retail level.

In

terms of value-added in food production, labor costs are more important
than farm commodities.
a.

Hourly earnings in the food industry slowed to a 5-3/4 percent
annual rate over the first three quarters of 1982, down from
a peak rate of 10 percent in 1980.

3.

The outlook is for relatively moderate food price inflation again in
1983.
a.

As renewed economic expansion gets under way, there will be a
cyclical tendency for food commodity prices to rise from their
currently depressed levels.


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Federal Reserve Bank of St. Louis

-4-

• But because of the large crop inventories that have accumulated
in the past two years, the price rebound is likely to be damped.
o

Moreover, reduced wage inflation in the food processing
industry should help keep consumer food prices in check.

b.

The USDA forecast has consumer food prices in 1983 averaging 3
to 6
percent higher than in 1982; the staff's projection is 4-3/4 percen
t
on an annual average basis (5-1/2 percent over the four quarters).


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Federal Reserve Bank of St. Louis

-5-

3.

Farm Policy Issues

In the past two years, the federal government has assumed an increasing role
in supporting farm prices and farm incomes.

Even with these programs, farm

income is quite depressed.
1.

The Commodity Credit Corporation (CCC) has boosted outlays considerably
in an effort to keep farm prices from falling below specified levels.
a.

The farm commodity inventories owned or financed by the CCC
increased by $7 billion in fiscal 1982, and another large increase
is likely in the current fiscal year.

The level of these inventories

has increased in almost every year since the mid-1970s, but the
growth in CCC financing in 1981 and 1982 was especially rapid.
2.

The government is providing direct cash payments to many crop farmers
to supplement their incomes from cash marketings.
a.

Cash payments to farmers are estimated to have totaled $4 billion
in 1982, up from $2 billion in 1981.

b.

These outlays are mainly "deficiency payments," which are triggered
whenever crop prices fall below certain specified levels.

3.

The government also is becoming more active in supply management.
a.

This past week, the administration proposed that farmers be "paid
in kind" to take additional land out of production next year.
Farmers participating in the -acreage-reduction program already in
place would be able to idle additional land out of production, and
would receive commodities from government- or farmer-owned surplus
stocks in amounts related to the foregone production of the idle
land.

This would work off some of the accumulated inventories.


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Federal Reserve Bank of St. Louis

-6--

4.

Farm income remains weak despite the current support programs.
a.

Farm proprietors' income in 1982 is likely to total around $19
billion, the third year in which income has been well below the
1979 peak of $32 billion.
a fourth poor year.

Currently, the outlook for 1983 is for


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Federal Reserve Bank of St. Louis

7-

5.

Farm Debt

Farm debt will rise by about $13 billion, or 7 percent, in 1982, reaching
$215 billion at year-end.
1.

CCC loans to farmers will rise by about 70 percent, to $13.6 billion.
The CCC increase represents two-fifths of the total rise in debt this
year.

2.

Loans held by the Farmers Home Administration will increase by only
2 percent, .a sharp contrast to the rapid expansion of FITHA loans
during the five preceding years.

The economic emergency loan program

has expired (the Administration did not use the final $600 million
in new lending authority) and there were few droughts requiring
disaster lending.
3.

Growth in loans at the cooperative Farm Credit System will have slowed
to 5 percent, the lowest percentage gain since 1953 and the first
sub-double-digit increase since 1968.
a.

Reduced farm real estate prices and sales slowed the rise in
Federal Land Bank debt.

b.

Loans at production credit associations actually fell slightly
as they lost the competitive advantage that their average-cost
method of pricing farm loans had provided when interest rates
were rising.

4.

As bank interest rates became more competitive with those of FCS,
commercial banks experienced a revival in farm lending after two
preceding years of barely positive growth in farm loans.


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Federal Reserve Bank of St. Louis

-8-

Loans outstanding will rise by about 7 percent.

Loanable funds

were ample at most rural banks in 1981 and 1982 as, in contrast
to experience at large banks, their loan/deposit ratios remained
significantly below the cyclical peak of 1979.


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Federal Reserve Bank of St. Louis

-9-Farm Asset Values

Farm asset values have been falling since about mid-1981, and the average
debt/asset ratio has thus risen sharply; however, it is still low relative
to that of nonfarm corporate business.
1.

The USDA estimates that the total value of farm assets has dropped
by 2 percent in 1982.

After remaining relatively stable at around

16.5 percent from 1968 through 1980, the debt/asset ratio of the
farming sector rose to 18.5 percent during 1981 and to 20.1 percent
during 1982.
2.

USDA estimates that farm land prices nationally may have dropped by
5 percent in 1982, which implies a total drop of perhaps 10 percent
from their mid-1981 peak.

(Knowledge of land price developments is

somewhat speculative, because the USDA survey of prices is performed
only once a year, in early spring.)
a.

Bankers surveyed by Reserve Banks in four Districts indicated that
land prices generally continued to fall during the third quarter,
and that declines in some areas have substantially exceeded the
USDA's estimated national average decline:

F.R. District and
type of farm land

Percentage change in farm real estate values

1982-Q3

Year ending
Oct. 1, 1982

From peak value
(date of peak)

Richmond, farmland

-9

-15

-15

(81-0)

Chicago, farmland

-5

-15

-15

(81-Q3)

Kansas City
nonirrigated cropland
irrigated cropland
ranchland

-3
-4
-4

-15
-13
-12

-16
-17
-13

(81-Q2)
(81-Q2)
(81-Q2)

Dallas
dryland cropland
irrigated cropland
ranchland

0
-5
2

- 1
-5
8

n.a.
n.a.
n.a.


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Federal Reserve Bank of St. Louis

-10-

7.

Profitability of Farming

Before debt service, the estimated rate of return to all farm capital
averaged 3.2 percent in 1982, compared with a longer-term average of 4
to 5 percent area.

As the average interest rate on all outstanding farm

debt rose from 8.6 percent in 1979 to about 11 percent in 1982, increased
interest payments further depressed returns.

The combined rate of return

to operator and landlord equity is estimated at 1.4 percent, and to operator
equity alone at 0.8 percent.
1.

Notably, the average rate of return is still positive, as farm operators
earned about $7 billion as a return to equity in 1982.

In contrast,

for example, operators had losses averaging $8 billion in 1930-32 (in
I.

dollars), and the rate of return to equity was negative in 13 of

the 14 years from 1920 to 1933.
2.

Zhe return to equity of individual farmers in 1982 was greatly affected
by their relative debt position.

Farmers with the average rate of

return to assets of 3.2 percent and paying the average interest rate
of 11 percent on outstanding debt have the following markedly different
returns to equity, depending on their individual debt/asset ratios:
Debt/assets
(percent)

No debt
20
40
60
80

Return to equity
(percent)

3.2
1.4
-1.6
-7.0
-20.0


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Federal Reserve Bank of St. Louis

-11-

3.

Newly-available data from the 1979 census of agriculture indicates
that about one-sixth of commercial farm operators had debt/asset
ratios over 40 percent, a level at which debt service costs would
likely result in large losses (in the 1970's, these highly leveraged
positions produced greater profits).

Among large farms, however,

the proportion approached one-third.
a.

But on two-fifths of the farms, debt/asset ratios were below 6
percent, and many of these farmers reported they were completely
free of debt.

This low-leverage group included nearly one-fourth

of the large farms and over one-half of the small farms.
4.

Recent surveys of rural bankers made by the American Bankers Association
and several Reserve Banks indicate the number of farmers forced to
liquidate assets or terminate operations because of their financial
situation has been about double the levels considered normal.
a.

Aboout 4 percent of farmers went out of business in the South,
and about 2 percent in other areas, in the year ending in mid-1982,
according to the ABA survey.

b.

For this winter and spring, bankers expect the area of greatest
financial stress to shift from the South to the Corn Belt.


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Federal Reserve Bank of St. Louis

-12-

8.

The Economic Situation in the Rubber Industry

One of the principal employers in Mayfield, Kentucky is General Tire
Company.
1.

About one-fourth of its workforce is on layoff.

The fortunes of the rubber industry, particularly tire manufacturers,
follow developments in the auto industry.
a.

Over the past three years, domestic auto sales have dropped
from 8-1/2 million units per year to about 5-1/2 million units,
and employment in the auto industry has dropped about 30 percent.

0.

Since mid-1979, tire production has dropped 20 percent, and
employment in the tire manufacturing is down 21 percent.

2.

As with auto workers, wages for rubber workers had risen sharply
relative to those received by other U.S. manufacturing workers
over the past decade, exacerbating the industry's cost problems.
In 1972, rubber workers' wages were about one-third higher than the
manufacturing average, and by this year they were wore than 50
percent higher.
a.

In April rubber workers signed a new three-year contract,
eliminating usual scheduled increases of 3 percent annually.
The COLA was retained plus some improvements in benefits were
negotiated.

b.

Workers have agreed to additional concessions at Uniroyal and
some individual plants.

Removal Notice
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Citation Information
Document Type: Newsletter
Citations:

Number of Pages Removed: 4

"Federal Reserve Board Chairman to Speak in Mayfield Dec. 16.," Congressman Carroll
Hubbard Reports, December 10, 1982.

Federal Reserve Bank of St. Louis


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Federal Reserve Bank of St. Louis

Itinerary -- Chairman Volcker

Thursday, December 16, 1982

12:15 PM
1:06
1:55
3:44

Depart
and
Arrive
Depart
Arrive

National Airport on US Air #133 (with Joe Coyne
Congressman Hubbard)
Pittsburgh, Pa.
Pittsburgh on US Air #321
Louisville, Kentucky

Depart Louisville on charter plane
21)
Arrive Paducah, KY (room at Holiday Inn - 502-443-75
TV Interview

6:15

Press Conference
Car to Mayfield, KY
Dinner at Liberty Savings Bank in Mayfield

7:30

PAV Speech - Mayfield High School Gymnasium
Return to Louisville
Reservation at Executive West (502) 367-2251)

Friday, December 17
7:55 AM
9:07 AM

Depart Louisville, Kentucky on US Air #238
Arrive National Airport

Car will meet you

•

We are reminded daily of the dislocations, the pain,

and the uncertainties in the economy today.

Far too many are

unemployed, housing has been depressed, investment is falling,
and interest rates remain by historical standards high.

those concerns are not limited to the United -States.

And

Rich

countries and poor, with few exceptions, are bedeviled by

recession, unemployment, and financial strains.

What is less often noted is that these difficulties

had been building for quite a long time.

At least for a decade,

roughly encompassing the 1970's, our economic performance had

been deteriorating in fundamental ways.

The origins for this

country can be traced back as far as the mid-1960's, when, as

a nation, we had for a while

economic success.

become infatuated with our apparent

But no sooner did we congratulate ourselves

on our presumed ability to conquer the business cycle, to achieve

virtual price stability, and to maintaingrowth that we took it

for granted.


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Federal Reserve Bank of St. Louis

-2-

That, I suppose, is one aspect of our common humanity --

and in doing so we refused to recognize what was necessary to

sustain performance.

One symptom was that we failed to accept

the budgetary consequences of spending for a war and vastly

expanded social programs at the same time.

That may have seemed

at the time "socially sensitive," but once we refused to accept

financial discipline, the inflationary process got underway and

many accepted it as a lesser evil.

And once fairly started, it

assumed a momentum of its own.

As we came to expect inflation, we built it into our

economic arrangements, and anticipated it in our business

decisions, in our financial planning, and in our shopping.

We tended to leverage our capital, to reduce our liquidity,

to divert our energies into more speculative and unproductive

activities, to take risks in ways that could not be sustained.

In the end, we found the growth we had taken for granted was

undermined; by the end of the 1970's, growth in productivity

practically disappeared.


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Federal Reserve Bank of St. Louis

-

It's worth recalling the culmination of the process

in late 1979 and early 1980 when concern about inflation, the

declining value of the dollar abroad, and the budgetary outlook

combined to bring interest rates to levels never before sustained

in this country and incited a speculative outbreak

nSmmod

and precious metals prices.

As evidence of the corrupting influence of inflation

mounted -- and not just on economic behavior but on social goals

and cohesion -- a new national policy consensus emerged.

need to reorient the economy toward greater

The

price stability,

increased investment, and improved productivity -- in short,

toward the preconditions for sustainable economic growth, for

higher real incomes, and for expanding employment opportunities --

was broadly accepted.

The Federal Reserve, by necessity, was thrust in the

position of assuming the leading edge in the effort to restore

price stability.

In a fundamental sense, that was appropriate

and inevitable because no inflation can be stopped without


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Federal Reserve Bank of St. Louis

-4

appropriate restraint on the growth of money and credit -- and

in the last analysis that is our continuing job.

But it is also

true that job has been made more difficult because complementary

approaches are weak or lacking.

deficits have risen.

Instead of declining, budget

They now absorb a bigger share of our

savings and place extra pressures on financial markets.

For

a long while, farmers, businessmen, workers, and consumers

continued to plan on, and act on, expectations of continuing

inflation in their pricing, wage, and buying decisions -- and

even now there is skepticism about whether the recent trend

toward stability is "for real."

And, as the continuing demands for money and credit,

public and private, clashed with restrained supplies, interest

rates remained very high for month after month, with strong

repercussions in the very sectors of the economy -- investment

and housing -- important to our future well being.

In the circumstances, it is hardly surprising that some

have begun to question whether it's all worthwhile -- that somehow


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Federal Reserve Bank of St. Louis

5-

-

there must be an easier "out," or that maybe inflation really

was the lesser evil.

Well, I have already implied that the

adjustment could have been eased had budgets been under better

control, had the world environment been more favorable, or had

the public been less skeptical of the prospects of restoring

price stability.

But let's not engage in wishful thinking:

In the best of circumstances, we should never have anticipated

that dealing with ingrained inflation, and rebuilding a base for

growth and productivity,would be fast and easy.

All that I would argue is that we had no real choice

then -- or now.

The longer the inflation persisted, the more

difficult it would have been to control, with even more serious

economic and financial repercussions.

In this country we have, historically, been spared

the economic and social disruption of really severe continuing

inflation.

But we had enough by the end of the 1970's to give

us a taste of the implications.

The true challenge for public

policy, it seems to me, is to restore the conditions for growth

in a way consistent with stability -- or in the end we will achieve
neither.

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Federal Reserve Bank of St. Louis

6

I would also remind you our problems and challenges in
that respect are not unique.

Governments around the world have

faced, in greater or lesser degree, inflationary, fiscal, and
productivity problems.

They are embarked on similar efforts

to cope with them, and, as they have done so, growth has been
slow or non-existent.

One result has been that recessionary

tendencies in various countries have fed back, one or another.
The difficulties in this situation are very real.
But so are the opportunities.

I am convinced that in the

end the current strains and pain will soon give way to renewed
growth and prosperity -- if we only have the wit, the wisdom,
and the persistence necessary to capitalize on the opportunities
before us.

The philiosophy that has guided monetary policy in
recent years has been grounded on those views.

As you know,

the Federal Reserve has argued consistently for a policy of
restrained growth in money and credit.

This policy means

I


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Federal Reserve Bank of St. Louis

-7-

exactly that -- restraint enought to keep up the pressure

against inflation; growth enough to support the needs of the
economy.

The policy of restrained growth in money and credit,
I must emphasize, is not the equivalent of a high interest rate
policy -- quite the contrary.

I reject entirely the simplified

view that the Federal Reserve over time can itself dictate the
level of interest rates in the marketplace.

Those interest

rates reflect the balance of savings and investment, not just
in the United States but elsewhere in the world.

They reflect

the hopes and the fears of millions as they decide where to
put their money, and how much to borrow.

In essence, lending for any period of time is an
act of faith -- faith, among other things, that interest paid
in the years ahead will yield a real return and not lag
behind rising prices.

Of course, monetary policy can

influence those decisions and thus the level of interest


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Federal Reserve Bank of St. Louis

-8-

rates.

But it does as much or more by affecting the way we

look at the future -- and most especially the prospects for

stability -- as by the technical manipulation of bank

reserves and the discount rate from day to day.

To put it bluntly, over time, achieving and main-

taining the lower level of interest rates we would all like

to see must be a reward for success in dealing with inflation;

without a sense of conviction on that score attempts to

force interest rates lower would in the end be fruitless.

Happily, I believe we can now see evidence that the

fundamentals are changing.

price stability.

We are still some distance from

But we can now fairly claim the insidious

upward momentum of inflation has been broken.

I judge that

partly by the fact that the common indices of inflation this

year have been running at a third to a half of their earlier

peak levels, and partly by the fact that growth in workers

compensation in nominal terms has declined to the 6 to 7


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Federal Reserve Bank of St. Louis

9-

-

percent area, while real wages are benefitting from the more

rapid disinflation on the price side.

I also believe we see

signs that the hardened skepticism of financial markets and
the public at large about our ability to deal with inflation --

a skepticism bred over years of disappointment and false

starts -- is beginning to yield.

One reflection is the rapid

decline in long-term interest rates in recent months --

although they are still very high historically.

And there

are hard analytic reasons to believe that progress toward
stability can be maintained during a period of recovery.

Specifically, even if I discount by half what my
business friends are telling me, recovery should be accompanied

by substantial gains in productivity.

Combined with the trend

toward more moderate wage and salary increases, the result

can only be slower growth in unit labor costs, which, I would
remind you, are two-thirds of all costs in our economy.

the time being, excess capacity and unemployment are, of

For

r


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Federal Reserve Bank of St. Louis

-10-

course, putting downward pressures on prices.

But they cannot

be the answer long-term -- we have to "build-in" the discipline
and the expectations that will keep inflation declining as

recovery takes hold.

I do not equate our progress against inflation so
far with victory -- far from it.

Concern about inflation is

not something we can affort to turn on or off -- not if we
want to see that progress continue and price stability restored.
And that concern has straightforward implications for the

broad directions of monetary policy in the period ahead,
although regrettably it does not resolve the myriad of detailed
matters that arise in the formulation and conduct of a specific
policy course.

For instance, while we know that the inflationary

process feeds on excessive growth of money and credit, we
are faced today with particularly difficult problems in

judging what is "excessive."

We know institutional changes


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Federal Reserve Bank of St. Louis

-11-

are currently distorting some of the various measures of

money that we have used as guides for our actions, and we

also know that the current period of economic uncertainty has

been accompanied by exceptional demands for liquidity.

To

hold rigidly to pre-determined targets that could not take

these factors into account would risk a significantly greater

degree of restraint than intended.

For all the problems of

communication to a worldwide audience that has become

habituated to particular statistical relationships, we cannot

afford, during this sensitive period, to substitute form for

substance in our policy-making.

But we also must be wary -- we are wary -- of

permitting liquidity to build up to the point that, with the
passage of time, inflationary forces could again get the

upper hand.

The right balance is, in the end, a matter of

judgement -- but it is a judgement that has been, and will

continue to be, tempered by the lessons of our past inflationary

record.

.


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Federal Reserve Bank of St. Louis

-12-

What is not a matter of judgement but a hard fact
is that the inflationary dangers and the interest rate outlook is greatly complicated by our national fiscal position.
In the fiscal year just ended, the Federal deficit was $111
billion, and it will probably be much more than 50 percent
higher in the current fiscal year.

In assessing the impact of that huge current deficit -around 5 percent of the GNP -- it is important to distinguish
between the "cyclical" and the "structural" components.

The

"cyclical" component, as the term implies, relates to the
effect of current business conditions on the Federal budget.
High unemployment cuts revenues and increases spending,
temporarily enlarging the deficit.

As the economy recovers,

that cyclical element will diminish.

It is tempting to suggest tha the "budget problem"
can be dealt with as a passive byproduct of recovery -- and I
am afraid some in Washington are in a mood where they may not


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Federal Reserve Bank of St. Louis

-13-

be above temptation, but it is wishful thinking.

The hard

fact is that, as things now stand, the deficit will remain

close to current levels even as the recession passes.

As

the "cyclical" portion of the deficit recedes, we will face
a growing "structural" deficit -- that is the imbalance that
would remain even when the economy is operating at'a high
level, with reduced inflation.

I know of no competent

budget analysts who comes to any different conclusion.

-1I -

Left unattended, that situation poses a strong potential

for a clash between the need to finance the deficit and the

rising financial requirements for housing, for agriculture,

and for the business investment needed to support lasting

growth in productivity.

In the end, all those needs have to

be supplied by savings -- and there simply isn't enough to go

around.

The problem can in no sense be solved by monetary policy.

The Federal Reserve can create money and liquidity, but not

savings.

Simply pumping out more money and liquidity, year

after year, to meet the needs of the government would only risk

renewed inflation.

Sooner or later -- and it's all too likely

to be sooner -- investors would be driven away from the long-

term markets once again, and savings would be diverted into

inflation hedges.

The alternative of the government bidding

away a limited supply of credit from the homebuyer or businessman

is hardly more inviting -- and would also be reflected in high

real interest rates.


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Federal Reserve Bank of St. Louis

Understandably, concern about one or the

other of those "scerios"
na
feeds back into today's markets,

tending to keep interest rates hig her than they would otherwise

be.

There was meaningful progress on this front in the pas-

sage of tax and spending legislation last summer.

Living and

working in Washington, and at one remove conscious of the pres-

sures converging on your elected representatives, I am well aware

that further progress will not come easily.

All I will argue

is that it is essential to sustained recovery.

To repeat the point, I am not so concerned about the

"cyclical" component of the deficit -- which will account for

half or more of this year's imbalance.

Indeed, analytically,

that portion might be viewed as almost benign, helping to

support economic activity and smoothing the adjustment to a

.

more stable economic path.

When private demands for credit

are relatively weak, and the economy is in recession, large

deficits can be financed.

But the underlying structural deficit

is growing; left unattended, it will retard our economic progress

in 1984, in 1985, and in the years beyond.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

No resolution in

r

-16-

the Congress about interest rates, no different targets for

monetary growth, no change in the structure of the Federal

Reserve can substitute for savings or reduce the structural
budget deficits.

If we are concerned about money for invest-

ment, the problem has to be hit head on.

I share the general view that recovery will be evident
through 1983, although at a moderate rate of speed -- probably
slower than during previous post-recession years.

I know that

unambiguous evidence that the recovery is already underway is

still absent.

But encouraging signs are evident in some rise

in housing, in the improved liquidity and wealth and reduced

debt positions of consumers, and in surveys reporting that

attitudes and orders may be stabilizing or improving, even if
from unsatisfactory levels.

The Federal deficit, while fraught

with danger for the futrue, is of course providing massive

support for incomes at present.

The rather dramatic declines

in interest rates in the latter half of this year, albeit to
levels that are still high by historical standards, are relieving


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

li
W
14

1

-17-

S

some of the financial stress and providing support for some

expanded activity.

The temptation is to pull out all the stops in an

effort to hasten the recovery process.

But -- contrary to the

impressions of some -- neither the Federal Reserve nor any

other policy body can by itself achieve that result.

And

beware of the effort to try "at all costs," oblivious to the

danger of reigniting inflation, or of undermining the progress

toward cost control and productivity.

To do so would simply

perpetuate and aggravate the pattern of the past.

What is

crucially important -- particularly in the light of the

experience of recent years -- is that we set the stage for an

expansion that can be sustained over a long period, bringing

with it strong gains in productivity and investment and lasting

improvement in employment.

I have emphasized the importance of maintaining progress

toward price stability to that outlook.

I am convinced that

with disciplined monetary and fiscal policies, we can sustain


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

that progress.

But I also know there are obstacles, present

and potential -- a perpetuation of huge deficits, a closing

of our markets to competition, a refusal to support the
efforts of other countries to adjustwould all work

against recovery.

If we turn back those temptations, as I believe we will,
then we will indeed have set the stage for turning the 1980's
into the mirror image of the 1970's -- a decade in which doubts
and uncertainties give way to renewed confidence and vigor.

Let us now turn to some of the specific questions you may have.

*

*

*

*

*

*

*

*

*


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Federal Reserve Bank of St. Louis

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PAV Draft 12/16/82
•

I read somewhere that Mayfield, Kentucky was an unusual

place for the Chairman of the Federal Reserve to go -- that maybe

it would improve my image to get out of Washington and New York

and foreign financial centers.

Well, I don't know about that.

The last time I was in

a high school gym with a band playing was 40 years ago, with a

basketball in my hand.

In those days, if you were 6'6" you

still jumped center, and weren't a small guard.

My difficulty was I couldn't jump very high.

It didn't

help my image, so I had to take up another profession.

But I'm delighted to be down here even briefly, to see

Carroll Hubbard at home in his district.

I told him I couldn't

come until after the election -- I didn't realize down here
you're either for Carroll or you're for nobody.

You know, if I believed some of the newspaper talk,

you'd think the Federal Reserve was like the lion in the jungle

of economic policy.

But when I think of Carroll and our relations

with Congress, I always try to remember the story of the lion

with too much pride.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

-2-

Kery of the Jungle Story

Gargolye

Chimpanzee

Well, we do try to remember our place in the scheme of

things when we deal with the Congress -- but at the same time we

do have some thoughts on economic policy.

I'd like to sketch some of those out -- but briefly,

because I'd much rather respond to your questions and comments.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I.

I'm told that here in Graves County economic

conditions are about average for the county --

which, of course, these days means not so good.

Unemployment too high, housing is depressed,

business investment has been falling, interest

rates seem too high, you know the story.

But the first point I would make is that all

these difficulties represent the accumulation of

problems building over a long period.

(A)

In the mid-1960's we thought we knew

the answer.

\


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

_ 3_

(B)

But took our success for granted, and

we neglected doing what was necessary

to keep it going.

(C)

Budget deficits -- easy money -- soon

inflation.
Biggest and longest in our entire history.

Got used to it.

II.

--

Financial consequences.

--

Culmination in 1979 and 1980

--

Productivity falling

--

Rising trend of unemployment.

Consensus something had to be done about it.
..

(A)

Federal Reserve front and center.

Need to restrain growth in money and
credit -- simple premise excessive money

feeds inflation.

(B)

Not an easy, magical process.

i

-4
•


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

1.

Made more difficult because

other policies remained in another

direction -- budget deficits got

bigger.

2.

Not much willingness to believe --

we had come to expect inflation.

(C)

Result -- slack in the marketplace --

restrained supply against big demand.

III.

By this time, we can see some results.

(A)

Inflation down.

(Pena story)

IV.

(B•)

Real wages up.

(C)

No victory yet -- can't turn it on and off.

Test of success will be whc;i1 we combine progress

toward price stability with recovery.

(A)

Interest rates aro important to that

S rospect.

1.

Reject entilly proposition the

Federal ReL,k..:Lve can control interest

rates.

PAV Draft 12/16/82

I read somewhere that Mayfield, Kentucky was an unusual

place for the Chairman of the Federal Reserve to go -- that maybe

it would improve my image to get out of Washington and New York
HY .
and foreign financial centers.
/;)
Well, I don't know about that. I jumped at the opportunity

7 was bluegrass roots.

to get out to the grassroots -- maybe I should say the

The last time I remember being in a high school gym with
(7 .51"JO
a band playing was 40 years ago, with a basketball in my hand.

In

l etz
frifIJ v6o P
those days, if you were 6'6" you still jumped center, and weren't

a small guard.

My difficulty was I couldn't jump very high.

That didn't

help my image, so I had to take up another profession.

But I'm delighted to be down here even briefly, to see

Carroll Hubbard at home in his district.

I told him I couldn't

come until after the election -- I didn't realize then that down

here you're either for Carroll or you're for nobody.

You know, if I believed some of the newspaper talk,

you'd think the Federal Reserve was like the lion in the jungle

of economic policy.

But when I think of Carroll and our relations

with Congress, I always try to remember the story of the lion with too

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

much pride.

A

-2,
Keriof the Jungle Story

(A,c47rc Lop e°-

Gargolye-

tl

Chimpanzee

.

r"

‘fc

yoc:".

Y/1/6117
f7

.,1

Well, we do try to remember our place in the scheme of

things when we deal with the Congress -- but at the same time we
i/41;.e. at id
do have some thoughtsonomic policy.

I'd like to sketch some of those out -- but briefly, /14

because I'd much rather respond to your questions and comments.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

I.

I'm told that here in Graves County economic

conditions are about average for the county --

which, of course, these days means not so good.

Unemployment too high, housing is depressed,

business investment has been falling, interest

rates seem too high, you know the story.

But the first point I would make is that all

these difficulties represent the accumulation of

problems building over a long period.

(A)

In the mid-19ED's we thought we knew

the answer.,

'

r


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

3-

(B)

-40014

141/1944

"1"col‘kl

But took our success for granted, and

we neglected doing what was necessary

to keep it going.

Sif
/iY‘
Iri

(C)

Budget deficits -- easy money -- soon

inflation.

Biggest and longest in our entire history.

Got used to it.

--

Financial consequences.

--

Culmination in 1979 and 1980

--

Productivity falling

--

(t. x,11,,,44evol
14,
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of
Rising trend
unemployment.•
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II.

Consensus something had to be done about it.

(A)

;7k.c/XJ01
rtiek4,

Federal Reserve front and center.
(ip 1 •

.-

›".•

Need to restrain 9rowth in money and

credit -- simple premise excessive money

feeds inflation.

(B)

Not an easy, magical process.


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

4

I_.

Made more difficult because

other policies remained in another

direction -- budget deficits got

bigger.

2

Not much willingness to believe --/eledoe
.740I 'Of 1041e$ c a144 a a oil 0 —
we had come to expect inflation.

,
47

1,1 rA-1111:1,./

(C)

Result -- slack i•n the marketplace --

restrained supply against big demand.

By this time, we can see some results.

(A)

Inflation down.
w

c Dive

•

(Pena—story)

(B)

Real wages -tip.

th mot

krei cr* 1/4 #re ',wit 4a?.641-4 67
& 641‘4`
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(C)

IV.

No victory yet

can't turn it on and off.

Test of success will be when we combine progress

toward price stability with recovery.

(A)

Interest rates are important to that

prospect.

1.

Reject entirely proposition the

Federal Reserve can control interest

rates.

•