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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 Find it online: http://findingaids.princeton.edu/collections/MC279/c221 and https://fraser.sdouisfed.org/archival/5297 The digitization ofthis collection was made possible by the Federal Reserve Bank of St. Louis. From the collections of the Seeley G. Mudd Manuscript Library, Princeton, NJ These documents can only be used for educational and research purposes ("fair use") as per United States copyright law. By accessing this file, all users agree that their use falls within fair use as defined by the copyright law of the United States. 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Mudd Manuscript Library 65 Olden Street Princeton, NJ 08540 609-258-6345 609-258-3385 (fax) email@example.com https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis '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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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- https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 moan"https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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". https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis HR 6967 HI - https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 , https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM December 9, 1982 Office Correspondence To Chairman Volcker From Joe Coyne https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ,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. - https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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). https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 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 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. . https://fraser.stlouisfed.org 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 https://fraser.stlouisfed.org 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. https://fraser.stlouisfed.org 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. * * * * * * * * * https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis - 1607 71,el zo'14(c ••• 7 01,4,1 • :"•-(' /6 - k https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis be, / • , , , itA0424 oii)1 I , E tie iftwAA'(4 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • ma, •ri 11 te_ rA 'I'S — 0# ve ; • 2444 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ;f ---- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ) ••••• • • -7 / c trAteNots4A, tit-14=-77-4 ( - ft LIAL2 A- 4:4-tett 4:z ttA dip Wi https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • de"-(dve . , _ •-• • _ 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, ',,i4_( ( t;i:fiee of Rising trend unemployment.• , ... ,,410c ,•. T% :: .:., ‘..<, 4. ; ,'‘..0: e;.# ‘ ; id..'44(',Y, /1 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` " (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. •