employees, may delegate duties to other agencies and nonprofit groups even further removed from governmental scrutiny. Under the act, each local CAA is not subject to the same restrictions on activities including political activism-that apply to Federal employees (because CAA's are defined as private, nonprofit State, and local groups); and CAA delegate agencies and nonprofit corporations are even further removed from such rules and scrutiny under this act. They are, thereby, even less accountable to the public. (Sec. 113.)

(8) Legal prohibitions on CAA-sponsored advocacy on the part of the poor apply only to picketing, protest, and other forms of direct action which are "in violation of the law." Otherwise, such activities, funded by the CAA, are permissible and tacitly approved. Since laws against such forms of "advocacy" are virtually nonexistent, this is an ineffective provision and, in essence, condones such action-which amounts to little more than direct political action funded with Federal dollars. (Sec. 114.)

(9) Each local CAA is called upon to "encourage the establishment of housing development and services organizations" to promote nonprofit, cooperative, and public housing groups in their efforts to secure more Federal funds for housing-all in competition with private housing industry efforts. (Sec. 115.)

(10) Each CAA is given authority (and the leverage to exercise that authority by use of Federal funds) over a wide and diverse number of aspects of the personal lives of the poor, including: family planning; housing; making better use of their income; providing a suitable living environment; education; obtaining loans. for personal needs; making more frequent and effective use of other Federal poverty programs-even to a mandate to "remove obstacles and solve personal and family problems." (Sec. 121.)

(11) Under section 122 entitled "Special Programs and Assistance," rural housing development and rehabilitation program is set up. Under the provisions of this section, all funds are provided to a nonprofit rural housing development cooperative or corporation, which, in turn, dispenses funds to local low-income rural families to aid in home repairs, construction, et cetera. Loans given under this section can be used to supplement existing Federal loan programs. (Sec. 12.)

(12) The Director shall make grants, et cetera, to aid in consumer advocacy; promote consumer action activities and cooperative programs; and aid in developing means of enforcing consumer rights, developing consumer grievance procedures, and presenting consumer grievances. (Sec. 128.)

A number of already existing Federal agencies and programs deal with these areas. The setting up of additional bureaucracies to handle consumer problems, as this provision envisions, is un

necessary.

(13) In section 133, the act gives the Director a virtual free hand, a carte blanche, to fund anything he wants. His power is to

provide assistance to any public or private nonprofit agency designed to serve groups of "low-income individuals who are not being effectively served by other programs under this title." (Sec. 133.) I have already discussed the numerous charges and proved instances of mismanagement of funds and outright fraud that existed in past poverty programs. This nebulous and vague grant of authority is an open invitation for more of the same.

(14) In carrying out the provisions of the act, the Director of the CAA is required to submit to the Governor of each State for his approval all CAA programs affecting his State or any locality therein. If, however, the Governor rejects the plan, the Director of CAA still can implement it upon finding on reconsideration by him that the program "is fully consistent with the provisions and in furtherance with the purposes" of the act. What sort of "federalism" feature is this? (Sec. 142.)

(15) The term "financial assistance" is defined to include funds to provide a "reasonable allowance" for attendance at local CAA board meetings, et cetera. This provision was needed, it seems, because attendance at such meetings is constantly low-and a source of anti-CAA criticism. (Sec. 144.)

(16) Under the same section, while family planning is supported as a positive goal, no money is to be used for "medical assistance and supplies" in cases of abortion, though nothing is said about the use of CAA funds for abortion referral services. (Sec. 144.) A strong mandate against the use of CAA funds for all activities incidental to the performance of an abortion is needed if the bill is to be true to the obvious intent of this section.

(17) Also in section 144 is a provision that, at first glance, seems to be a welcome one indeed. Here, the act provides that no more than 15 percent of the funds expended can be used for administrative costs (though the Director can waive this provision also). What is not laid out here is the provision, found later on in the act, that in determining administrative costs, salaries of employees shall not be included. Since one of the crucial arguments against extension of the EOA of 1964 is that nearly 80 percent of the money expended by OEO goes for salaries, this legislative sleight of hand was necessary to assuage critics who were too superficial in their analysis of the bill to understand the subterfuge perpetrated on them.

(18) In the area of "Special Programs to Combat Rural Poverty.” (Sec. 212) the Director is authorized to make loans having a maximum maturity of 15 years in an amount not to exceed $3,500 per family-but only if the family cannot receive Federal assistance anywhere else. The potential for political use and bureaucratic abuse in a program of this nature, is, to say the least, evident. And the risk involved of loaning any amount of money to a family whose income is so low that it cannot qualify for other Federal loan programs is great. (Sec. 212.)

(19) Further, in section 213, the Director of CAA is authorized to make loans to rural cooperative associations, thereby promoting this

form of processing, purchasing, and marketing of goods and services to the exclusion of other forms.

(20) Not only does the act deal with HEW and Labor Department approaches to the "war on poverty," but also in sections 302, 304, and 307, it extends the "war" to the Small Business Administration, where the Administrator is authorized to give 15-year $50,000 loans to, among others, small businesses whose sole criterion for obtaining such a loan is the fact that it is owned by "low income individuals;" or is in an area with a high proportion of unemployed or low-income individuals. Furthermore, the Administrator of SBA is empowered and directed to help insure that small businesses so funded are given preferential help in obtaining lucrative Government contracts.

(21) The Director is empowered to set up as many demonstration projects as he feels are necessary, to hire as many advisory committees (at $138 per person per day) as he feels he needs, and to use R. & D. projects of OEO as he sees fit. Recently fired OEO Director Alvin Arnett said in testimony before the House Subcommittee on Equal Opportunities that he envisioned the poverty program as a prod to assure poverty focus in other Federal programs; and further, that he saw R. & D. work of CAA as essential to the "advocacy role" of the Federal poverty program. It is this advocacy role that I have objected to already in this testimony.

In conclusion, Mr. Chairman, I see little which can improve this legislation, because its basic concept is awry, and is prejudicial to the best interests of the poor. If any of the individual community service projects are doing an outstanding job, and are thoroughly integrated into the local political structure and local decisionmaking then those programs should continue. But if they are doing such a good job for the community, then the community should support those programs.

What I recommend therefore, is an orderly transfer to support by local resources. The only bill which should be reported out of this subcommittee, or full committee, is one authorizing a modest program of transition grants, lasting no more than 6 to 8 months. This will allow time for communities to select the local programs which are good programs, and integrate them into local finances. The marginal programs should be dropped. With the economy in its present condition, and the continuing fiscal crisis of the Federal budget, this is no time to go into a program which will cost $2 billion or $3 billion a year. We ought to be cutting down, not increasing spending. And the best judges of the local projects are those who are in close proximity. Transition grants will allow for the orderly transfer of the best programs.

Senator JAVITS. Our next witness this morning is Kenneth Young, assistant legislative director, AFL-CIO.

Mr. Young, would you please identify the gentlemen with you, and it would be appreciated if you could confine your opening

statement to 10 minutes.

STATEMENT OF KENNETH YOUNG, ASSISTANT LEGISLATIVE DIRECTOR, AFL-CIO, ACCOMPANIED BY ROBERT MCGLOTTEN, LEGISLATIVE REPRESENTATIVE, AFL-CIO

Mr. YOUNG. Thank you, Mr. Chairman.

Mr. Chairman, I would like to put the full statement in the record. and then I will just try to summarize.

Senator JAVITS. The statement will be received for the record. The witness may summarize it.

Mr. YOUNG. Mr. Chairman, my name is Kenneth Young. I am assistant director, Department of Legislation, for the American Federation of Labor and Congress of Industrial Organizations. Accompanying me is Robert McGlotten, AFL-CIO legislative representative.

On behalf of the AFL-CIO I wish to present to your committee our views on the proposed Community Services and Headstart Act of 1974 which will provide for the extension of Headstart and other programs under the Economic Opportunity Act of 1964.

The AFL-CIO has supported the OEO from its inception as an important weapon in the war against poverty.

We, in organized labor, have had strong empathy for the fight against poverty growing out of our own long history of struggle to raise the standards of work and life for the working people of America.

At our most recent AFL-CIO Constitutional Convention, October 1973, we stated:

Poverty is not a community, state or regional problem; it is a national problem. While it is concentrated in some areas more than others, it permeates all corners of this country.

Therefore, the only response, the only commitment equal to the task of reducing or eliminating poverty is a national one. Only the federal government can establish the policies necessary to assure that all who seek employment, education, housing, health services and other assistance will have the opportunity to obtain what they need and desire.

The AFL-CIO urges Congress not to depend on general or special revenue sharing to respond to the needs of the poor. Congress should authorize and appropriate sufficient funds to be used specifically to maintain existing or encourage new programs to help the poor out of poverty.

In addition to the aforementioned section of our statement, Mr. Chairman, the AFL-CIO went on to say that it recognizes the need for the poor to have an advocate within the Federal administration and an institution at the local level to see that their legitimate concerns are heard and responded to.

Therefore, we urge Congress to adamantly reject the effort of the administration to dismantle OEO and to remove Federal funding earmarked for community action agencies and other essential OEO functions. To permit the committee to peruse the entire resolution I have attached to this statement the AFL-CIO resolution on the antipoverty program.

As I indicated, Mr. Chairman, that statement was made in October of 1973 and this is August 1974. The AFL-CIO believes in

working in the real world. We recognize that OEO's history over the last few years has been a bitter struggle for survival.

If the President has made one thing "perfectly clear," it has been his determination to eliminate OEO, destroy community action programs, and spinoff the few remaining antipoverty programs to other agencies and departments.

First, the courts refused to permit the administration to destroy OEO by administrative fiat. The Congress blocked the next administration effort by approving appropriations for the agency despite a proposed zero budget. This year, the administration again has proposed no new appropriations in the fiscal 1975 budget.

At this point, Mr. Chairman, our testimony discusses the AFLCIO position in regard to the controversy over whether to transfer community action to HEW with adequate safeguards or to create an independent agency.

We believe that the dramatic events of this week require some new thinking about this commitment. There is a strong possibility there will be a new administration in the near future. Such a new administration, hopefully, will carefully examine its position on the nature of OEO.

The AFL-CIO would suggest therefore that this committee take another look at the pending legislation and not mandate any transfer of community action. Perhaps, instead, the committee might draft legislation permitting a mechanism for transfer but subjecting such a possible transfer to the normal reorganization plan procedure.

Such legislation would continue community action within OEO for the immediate future, giving a new administration time to determine its policy and provide Congress with the ultimate authority over a transfer-if one is requested.

Your bill, Mr. Chairman, also maintains community action, local initiative, rural housing development and rehabilitations; youth recreation and sports programs. Headstart, rural loan program, and many other services for the poor people of the country. We, of course, continue our support for these worthwhile programs.

Mr. Chairman, the bill presently before you is particularly appealing to the AFL-CIO in that it preserves the 80 to 20 match formula. We consider this to be a major improvement over the House provision. States, cities, and counties are confronted with severe financial problems which make it almost impossible for them to greatly increase their share of community action funding.

Particularly, Mr. Chairman, the 80 to 20 match must be maintained for many of our poor rural areas that simply cannot meet financial requirements over and beyond the 20 percent required in your bill.

Mr. Chairman, your bill does not set a specific authorization level. It authorizes such sums as may be necessary. We urge the committee, in making cost estimates in its report, to recognize the inflationary increases which have plagued all programs, be they