727/ Impact of New York City's Economic Crisis on the National Economy
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727/ IMPACT OF NEW YORK CITY'S ECONOMIC CRISIS ON THE NATIONAL ECONOMY HEARING BEFORE THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-FOURTH CONGRESS FIRST SESSION THIRTIETH ANNIVERSARY SERIES NOVEMBER 10, 1975 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 70 -OS WASHINGTON: 1976 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 211402- Price $2.30 JOINT ECONOMIC COMMITTEE (Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.) HUBERT H. HUMPHREY, Minnesota, Chairman WRIGHT PATMAN, Texas, Vice Chairman SENATE HOUSE OF REPRESENTATIVES JOHN SPARKMAN, Alabama RICHARD BOLLING, Missouri WILLIAM PROXMIRE, Wisconsin HENRY S. REUSS, Wisconsin ABRAHAM RIBICOFF, Connecticut WILLIAM S. MOORHEAD, Pennsylvania LLOYD M. BENTSEN, JR., Texas LEE H. HAMILTON, Indiana EDWARD M. KENNEDY, Massachusetts GILLIS W. LONG, Louisiana JACOB K. JAVITS, New York CLARENCE J. BROWN, Ohio CHARLES H. PERCY, Illinois GARRY BROWN, Michigan ROBERT TAFT, JR., Ohio MARGARET M. HECKLER, Massachusetts PAUL J. FANNIN, Arizona JOHN H. ROUSSELOT, California JOHN R. STARK, Executive Director SENIOR STAFF ECONOMISTS JERRY J. JAsINowsKI JOHN R. KARLIK LOUGHLIN F. McHUGn COURTENAY M. SLATER RICHARD F. KAUFMAN, General Counsel ECONOMISTS WILLIAM R. BUECHNER WILLIAM A. Cox LUCY A. FALCONE ROBERT D. HAMRIN SARAH JACKSON L. DOUGLAS LEE RALPH L. SCHLOSSTnIN GEOaGE R. TYLER LARRY YusPEH MINORITY GEORGE D. KRUHBHAAR, Jr. (Counsel) M. CATHERINE MILLER (II) CONTENTS WITNESSES AND STATEMENTS MONDAY, NOVEMBER 10, 1975 Humphrey, Hon. Hubert H., chairman of the Joint Economic Committee: Page Opening statement- 1 Javits, Hon. Jacob K., member of the Joint Economic Committee: Opening statement- 4 Moorhead, Hon. William S., member of the Joint Economic Committee: Opening-statement 5 Carey, Hon. Hugh L., Governor of the State of New York- 6 Beame, Hon. Abraham D., mayor of the city of New York -43 Dillon, C. Douglas, chairman of the board, U.S. & Foreign Securities Corp ----------------------------------- 63 Finley, Murray H., president, Amalgamated Clothing Workers of America. 64 Shanker, Albert, president, United Federation of Teachers - 68 Lekachman, Robert, distinguished professor of economics, Lehman College, City University of New York-71 Norton, Eleanor Holmes, chairman, New York City Commission on Human Rights -74 Platten, Donald C., first vice president, Chemical Bank, New York, N.Y-. 100 AFTERNOON SESSION Gotbaum, Victor, executive director, American Federation of State, County, and Municipal Employees, AFL-CIO - 110 Harrington, Michael, national chairman, Democratic Socialist Organizing Committee - 117 Gross, Bertram M., distinguished professor of urban affairs, Hunter College, and professor of political science, City University of New York 126 Torregrosa, Rafael, national director, Migration Division, Department of Labor, Commonwealth of Puerto Rico -131 Roblin, Daniel A., Jr., chairman of the board, Roblin Industries, Inc., Buffalo, N.Y -_- 135 Riessman, Frank, professor of education, Queens College -151 Ginsberg, Mitchell I., and Joseph M. Sullivan, Community Council of Greater New York -154 Bloom, Hon. Jeremiah B., member, New York State Senate -160 Harris, Elizabeth, president, Women's Business -170 Hughes, Dorothy Pitman, director, West Side Community Alliance, Inc 171 Margolies, Abraham, assistant State director, National Retired Teachers Association, New York- _172 Gablo, Judy, labor secretary, New York State Communist Party - 179 Zoakos, Criton, director of intelligence, U.S. Labor Party -181 Markey, Ray, Socialist Workers Party - 217 SUBMISSIONS FOR THE RECORD MONDAY, NOVEMBER 10, 1975 Carey, Hon. Hugh L.: Prepared statement -13 Press release of the- New York State Department of Labor, October 30, 1975 16 Municipal Finance Officers Association, November 7, 1975, with an attachment -17 Finley, Murray H.: Prepared statement -66 (in) IV Humphrey, Hon. Hubert H.: Tables: Comparison of number of full-time equivalent local government employees per 10,000 residents for all local governments serving Page central county of 24 largest cities, 1974 -57 Expenditure cuts in the controllable portion of New York City's fiscal year 1978 budget -70 Lekachman, Robert: - Prepared statement -- 72 Norton, Eleanor Holmes: Study entitled "Alternatives to Layoffs," by Edith F. Lynton -- 78 Taft, Hon. Robert, Jr.: Editorials: "No Rescue for New York," from the Cleveland Plain Dealer, October 30, 1975 - -60 "Ford on New York," from the Cleveland Press and News, October 30, 1975 61 AFTERNOON SESSION Bloom, Hon. Jeremiah B.: Prepared statement, with an attachment - - 162 Ginsberg, Mitchell I., and Joseph M. Sullivan: Prepared statement -- 157 Gotbaum, Victor: Prepared statement -- 112 Article entitled "The Heavy Cost of Layoffs," from the Public. Em- ployee Press, May 23, 1975, by Dan Persons - -116 Gross, Bertram M.: Prepared statement -- 129 Harrington, Michael: Prepared statement 120 Margolies, Abraham: Prepared statement -- 174 Markey, Ray: Press release entitled "Socialist Workers Partv-Joint Economic Committee Hears Socialist Proposal To Combat Economic Crisis".. 218 Prepared statement 218 Nass, Samuel: Letter to Hon. Robert A. Gerard, Deputy Assistant Secretary for Financial Reserves, Department of the Treasury, from Mr. Nass, dated November 12, 1975, with enclosures, expounding upon New York City's financial crisis and suggesting the creation of a Federal Municipal Bond Insurance Corporation 220 Riessman, Frank, and Elinor Bowles: Prepared statement - 151 Roblin, Daniel A., Jr.: Prepared statement, with an attachment - -136 Zoako,, Criton: Prepared statement, with an attachment - -183 APPENDIX Statement of- Bahr, Morton, vice president, Communications Workers of America, AFL-CIO -225 Daniel, Amelia D., program director, Sobriety Unlimited, Harlem, N.Y-228 Johnson, W. Frances, executive director, HARYOU-ACT, with an enclosure -229 Meyer, John R., president, National Bureau of Economic Research, Inc., Cambridge, Mass ------------------- 232 Phillipoff, Robert, economist and associate research director, Labor Research Association, on behalf of the New York Coalition To Fight Inflation and Unemployment - ----- --- 236 Rangel, Hon. Charles B., a U.S. Representative from the 19th Con- gressional District of the State of New York -237 Regional Plan Association, New York, N.Y 239 Sansone, Mary C., executive director, Congress of Italian-American Organizations, Inc 241 Youngerman, Eleanor, with an attachment -242 IMPACT OF NEW YORK CITY'S ECONOMIC CRISIS ON THE NATIONAL ECONOMY MONDAY, NOVEMBER 10, 1975 CONGRESS OF THE UNITED STATES, JOINT EcONOMIC CoMmI=rEE, Was8hingto'n, D.C. The committee met, pursuant to notice, at 9 :15 a.m., in room 305, 26 Federal Plaza, New York, N.Y., Hon. Hubert H. Humphrey (chairman of the committee) presiding. Present: Senators Humphrey, Javits, and Taft; and Representa- tive Moorhead. Also present: Lucy A. Falcone, Jerry J. Jasinowski, and Ralph L. Schlosstein, professional staff members; Michael J. Runde, ad- ministrative assistant; and George D. Krumbhaar, Jr., minority counsel. OPENING STATEMENT OF CRARIMAN-r HumrlPH-IREY Chairman HuJiiPi-iRiy. We understand of course that there have been some electrical problems this morning just to add to our other problems. But we are pleased that our friends of the media now have remedied the situation and we are prepared to open the meet- ing today. Governor Carey, there will be brief statements by those of us here of the committee, then we shall look forward to hearing your statement. Permit me to open this hearing of the Joint Economic Committee of the U.S. Congress. The Joint Economic Committee is holding hearings throughout the country. We are doing this to determine whv the mechanism or the engine of our economy, in the Midwest, the South, the East, the Far West, indeed across the country, is not working as it should. Why do we seem to sputter along year after year with 8 to 10 mil- lion of our people unemployed, with a very large number of our people underemployed, with over 24 million of our fellow citizens living in proverty, and with inflation in recent months ranging at 9) to 10 percent a year and our factories-and this is the most shock- ing figure of all-our factories only producing at approximately 70 percent of capacity? Why is this Nation adrift economically. wasting vast resources and capital resources? The central focus in all of the committee's regional hearings, as I have indicated, will cover all parts of the Nation, and (1) 2 is to seek an answer to this question or these questions and to develop new economic policies that can put America back to work. Because it is only in putting this nation back to work, under the standards established by the Employment Act of 1946, of maximum employment, maximum income, and maximum production, that we can halt both inflation and recession. Here in New York City the committee must also examine the pos- sibility of financial default and the impact of such a catastrophic development on the regional and national economy. And I emphasize that the problems of New York City are not parochial or limited to the boundaries of this city. They have a direct impact upon the entire economy and possibly upon the international economy. I would emphasize also the committee's fundamental concern with full employment nationally, and New York City's current economic problems are closely tied, as the various sectors and regions of the economy are threads of the same fabric. New