Local participation in the administration and distribution of resources in a full employment or other jobs program must be structured in a manner that channels citizen involvement directly through existing units of local government. A genuine national commitment to a policy of full employment provides a unique opportunity for renewed interest in, and dynamic activity by, municipal governments-either individually, or through inter-local or regional cooperation. Legislation that has the effect of bypassing established channels of communication and responsibility at the local level will only diminish the effectiveness of the democratic process within our cities and towns.

A second critical aspect of any public jobs legislation is the ease with which public service employees are assimilated into the private sector as production increases and more jobs become available. It is important for public jobs of this sort to pay a "living wage" to the greatest extent possible, but it is equally important that full employment program never be placed in the position of competing with private industry for the limited resources of the labor market. Any compensation for public service employment beyond prevailing local wages based on specific qualifications and responsibilities would probably have the effect of limiting productive growth, by effectively outpricing labor for industrial expansion. This situation should be carefully averted.

The third criterion for public employment legislation concerns the "displacement effect", which is most commonly associated with General Revenue Sharing (GRS) and other lump-sum grant programs. In effect, local governments have often utilized funding from special Federal outlays to underwrite the expenses of regular city and town programs, thus freeing local finances for other projects, or more commonly for the reduction of property or other taxes. Such actions essentially defeat the original social and economic purposes of the Federal grants. In many situations, either local government workers may be designated special public service employees, or special grant monies are used for the labor cost of already-anticipated or existant local programs, thus the objective of "new" employment is not fully accomplished through the Federal expenditure. Similarly, GRS funds have in large part been used to cover the expenses of existing programs at the local level, thus circumventing the laudable objective of expanded public services.

In practice, the "impact rate" of previous lump-sum grant programs in terms of job creation has been in the range of 25 percent, or the equivalent of about 30,000 jobs per billion dollars of Federal expenditure. In light of this experience, full employment legislation should incorporate firm guidelines that will prevent the use of special public service employment funds for the expenses of existing local programs and services.

Mr. Chairman, establishing a statutory "right to work" is a very serious proposition, and requires a substantial fiscal commitment on the part of the Federal government, but the social and human costs inherent with inaction and continued high unemployment are both unnecessary and intolerable. The time has come for Congress to emphatically reject the contention that economic recovery must be achieved at the expense of compromised levels of employment. In conclusion, it is my pleasure to be able to quote the Honorable Arthur F. Burns, Chairman of the Federal Reserve Board, "I believe that the ultimate objective of labor market policies should be to eliminate all involuntary unemployment. This is not a radical or impractical goal. It rests on the simple but often neglected fact that work is far better than the dole, both for the jobless individual and for the nation." There are 8 million currently unemployed individuals that could be making substantive contributions to the vitality and economic prosperity of our country. It's time we all got to work.

Mr. HAWKINS. May we at this time reverse the procedure by having Mr. Moakley give testimony before the committee, after which we will again ask him to join the committee as an active member, as long as he cares to remain.

We certainly admire the work that Congressman Moakley is doing in Washington. It is a tribute to the people in this area that they have seen fit to send us such a highly qualified Representative.

Mr. Moakley, we are pleased to have you.

STATEMENT OF HON. JOHN JOSEPH MOAKLEY, U.S. REPRESENTATIVE, NINTH DISTRICT, MASS.

Mr. MOAKLEY. Thank you very much, Mr. Chairman. On behalf of the citizens of Boston and the Commonwealth of Massachusetts I thank you and your staff for addressing your task to the city of Boston and the commonwealth because, as you well know, we do have a very high unemployment rate. I think the Governor in his remarks covered a lot of ground that I would have covered.

I have a statement I would like to present for the record at this time. Mr. Chairman, I appreciate this opportunity to testify in support of the Full Employment Act of 1975, legislation to guarantee the right of every adult American to gainful employment.

A comprehensive Federal jobs program is long overdue. With 8 million Americans out of work we can no longer afford to stand still and wait for the economic upturn that the administration assures us is just around the corner.

Talk of a recession is pointless. If you are out of work you are in a depression. There is no such thing as a recession for a working man. The issue is jobs. H.R. 50 will create jobs by establishing a national employment planning system to meet our economic requirements. A coordinated Federal approach is necessary if we are to put Americans back on the payroll. We can't settle for anything less.

Nowhere is this legislation more needed than in the Boston area. Over the past year we have seen unemployment double. In the metropolitan region there are an estimated 162,000 people unable to find work. And in the city of Boston alone the joblessness rate stands at more than 15 percent of the labor force, nearly twice the national figure.

But the statistics are only part of the story. They don't tell us about the discouraged job-seeker who has dropped out of the labor force for lack of employment opportunities or the unskilled individual who can't gain entry for the same reason. A lot of men and women in Boston are out of work, far more men and women than the people who put together unemployment statistics would care to admit.

And the statistics can't tell us about the human anguish that is generated by unemployment. Numbers can't convey the disappointment and frustration suffered by a middle-aged electrician from Jamaica Plain who has been out of work for 6 months or a Roxbury mother who can't find a job or a young professor from South Boston who was laid off by a local community college almost a year ago.

In the words of our friend, Congressman John Conyers of Detroit, "H.R. 50 is necessary if we are to inure the right of all members of our society to lead a decent life." We need H.R. 50 for these people and the many others like them. "And it is necessary if we wish for every child to realize her or his potential as an adult."

Where would the money come from?

The current military budget is a bloated $100 billion. If it were cut substantially, 4.8 million jobs could be created, a net gain of 2.7 million jobs.

I say reduce that military budget. [Applause.]

Mr. MOAKLEY. To me "national security" means full employment. The best "line of defense” is a life filled with dignity for all persons. [Applause.]

Big business could also help pay for full employment. Over $50 billion is lost annually by the Government because of tax giveaways and subsidies. In addition taxing excessive profit would provide jobcreating revenues.

It is time big business paid us back. I say pay us back with full employment. Full employment. It can no longer be a dream. It must become a reality. We can no longer throw away money on repressive regimes overseas. We must look homeward and look after our own citizens. [Applause.]

Mr. MOAKLEY. Thank you, Mr. Chairman.

Mr. HAWKINS. Thank you, Mr. Moakley.

On page 3 of your statement you indicate that the current military budget is "a bloated $100 billion budget." There are those who feel that national defense is something that has top priority because it is something we cannot do without. I am sure you must be aware of some areas in which some expenditures for the military budget certainly are not essential for national defense.

I call to my own mind that in Los Angeles across from my district office there are three different buildings that house three of the services in their recruitment programs. The Army has to recruit separately. The Navy separately, the Air Force separately, and so forth. This is something that I assume has nothing at all to do with protecting us. We could consolidate recruitment because it is one defense unit. Some of the training could be consolidated rather than engaging in separate training facilities. Even the health facilities, certainly health is the same, whether you are in the Air Force or Navy.

I recall that some Members of Congress when they become ill are sent to Walter Reed because of their attachment to the Army. Others because of their attachment to the Navy are sent out to Bethesda. Some of us with various nonattachments make some sort of a choice.

It seems to me that all this duplication in many instances could be eliminated. It has nothing at all to do with protecting us. Are you saying that some of that type of fat should be cut out?

Mr. MOAKLEY. We want a strong defense. But we don't want a fat defense budget. When President Ford looks at cuts he looks everywhere but at the defense budget.

You and I know, Mr. Chairman, that there are places where the budget can be cut and the money converted into a program such as this.

[Applause.]

Mr. HAWKINS. Mr. Buchanan.

Mr. BUCHANAN. Thank you, Mr. Chairman.

I appreciate very much your testimony. I think we get into one of the most difficult problems of Government in attempting to do something about the military-industrial complex in the United States, against which General Eisenhower warned us many years ago.

When we had hearings in Atlanta we had testimony about reductions in the military budget. But when I raised the question of Lockheed in Atlanta, that was different. If we are going to start talking

about shipbuilding of aircraft carriers in Boston I am sure that would not be an area that folks around here would like to see cut.

I think that is illustrative of the difficulty of achieving the cuts in military spending which many desire. Without challenging your statement that we are spending too much or perhaps paying more than is required for the degree of national security that is necessary, that it has been established that we need. The highest costs are personnel costs. Yet if you reduce personnel costs that means more unemployed on the street. Many congressional districts are dependent. for their own employment on some phase of military spending or militarily related spending. I only raise this for your comment. I agree that it is enormously complex and difficult to decide where to cut without creating additional unemployment.

Mr. MOAKLEY. Many Congressmen have their own areas that are very sacred. I think it is unfortunate that much of the employment has to be built on a military-industrial complex. I think the public would be better served if it were put into a bill such as this. Some of the same people who might be displaced could work on a program such as this when it goes into effect.

Mr. BUCHANAN. Again I want to thank you for your testimony.
Mr. MOAKLEY. Thank you.

Mr. HAWKINS. Mr. Buchanan, I think, is well aware that I don't attempt to challenge statements by another member of the committee. However, I think he did raise a point that is very relevant to the discussion, just to help find a solution to a very difficult problem. That is the competition of areas and regions in a competitive sense for the defense dollar. Assuming we took the example that you mentioned about shipbuilding in this area, that is related to the military payroll, let us say.

The aircraft companies, Lockheed, in the area that I represent, it seems to me in effect the people are being told that if we don't spend the money for shipbuilding that is related to defense that you are going to be out of a job if we don't spend the money with Lockheed, that that money spent on Lockheed would be lost to the people who would be out of a job. The thrust of that position is that that is the only way that you can spend that money. But from the point of view of the individual citizen, would it make any difference to the individual citizen? Would the individual citizen just as well be satisfied to be involved in some other type of employment as in that type of employment? Why should it be that you are not going to let him have a job unless he agrees to work in shipbuilding or in the production of aircraft, a bomber, for example, rather than, let us say, a shuttle or a peacetime use of the money or instead of shipbuilding perhaps the production of some type of durable goods. The money would be spent more productively than just simply spending it under the guise of spending it on defense rather than on some socially desirable product that is certainly needed. I just didn't want to oppose what Mr. Buchanan has said. Perhaps he might respond as well as yourself, Mr. Moakley, to the idea of not cutting out the money altogether but of transferring it from one area to another, from one area of society to another.

Mr. MOAKLEY. If a transfer of funds affected military personnel, they could be placed in some other programs that would benefit this country just as well or maybe even more, Mr. Chairman.

Mr. BUCHANAN. Mr. Chairman, I was pointing out the difficulty of achieving a net decrease in unemployment. When you take money from military spending, as socially desirable as that may be, it may be that that in itself tends to create a certain degree of unemployment in some places for which we must also compensate. I was only speaking to the complexity of the problem.

Mr. MOAKLEY. I understand.

Mr. HAWKINS. With which I agree.

Mr. Benitez.

Mr. BENITEZ. Mr. Moakley, do you share the belief of the previous witness to the effect that as a matter of priorities the taxpayers would be glad not to have the $200 a year cut in their taxes if that money, which would more or less adequately take care of the situation, were used to provide full employment for every American willing to work? Mr. MOAKLEY. I think it would be much cheaper for the average taxpayer in the long run. They wouldn't have to be paying out unemployment costs. They wouldn't have to be paying out welfare costs. Mr. BENITEZ. Why can't we make that simple proposition axiomatic in the Congress?

Mr. MOAKLEY. I think that is part of the work of the subcommittee that is sitting here in Faneuil Hall today.

Mr. BENITEZ. We expect your help. Thank you.

Mr. MOAKLEY. Thank you.

Mr. HAWKINS. Thank you, Mr. Moakley. [Applause.]

Mr. HAWKINS. Hon. Thomas P. O'Neill, Jr., Representative of the Eighth District, has informed the Chair that he cannot be present this morning. He has a statement which he extends in welcome to the committee. It also elaborates on some of his views on the subject of full employment. Without objection the statement of Hon. Thomas J. O'Neill, Jr., will be entered in the record at this point.

[Prepared statement of Hon. Thomas P. O'Neill, Jr., follows:]

PREPARED STATEMENT OF THOMAS P. O'NEILL, JR.

Mr. Chairman: I want to extend a warm welcome to you and to the members of the Subcommittee on Equal Opportunities. Boston is honored that you saw fit to hold these hearings here today.

Indeed, it is uniquely appropriate that the Subcommittee should hear testimony on the Equal Opportunity and Full Employment Act here in Faneuil Hall. For two centuries ago, in words that are today every bit as moving and inspiring as they were then, many of our Founding Fathers affirmed their commitment to liberty and dignity of life in this Hall. Our nation has accomplished much since then. In this century, Presidents Roosevelt and Truman brought us to realize our obligation to assist the nation's less fortunate citizens. Presidents Kennedy and Johnson enlisted us in the belief that a war against discrimination and poverty would be as just a war as ever we could wage.

But we cannot rest on past accomplishments. We, too, must respond to the nation's needs. And there is no better way to do so, as you, Mr. Chairman, appreciate better than any other public official, than by guaranteeing useful and meaningful employment to every adult American able and willing to work.

In 1946, Congress committed the Federal Government to the promotion of "maximum feasible employment". Yet, unemployment has climbed from 4.6 percent in 1973 to 8.6 percent today. In Massachusetts, the formal unemployment rate is more than 12.5 percent. The President does not seem to be especially concerned. He tells us that putting more people to work would fuel inflation and destroy the economy.

President Ford is a captive of the doctrinaire conservative attitudes that have marked his entire political life. Actually, our federal deficits have one central