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in almost 20 years new Federal buildings which are necessary will be constructed and utilized by the Federal Government on, generally speaking, the same type of theory-time payments.

Here you have a suggestion that I have not acquainted myself with. It does seem to me that this committee ought to pay particular attention to the recommendations of the Clay committee with respect to raising moneys, because it might be that we would find that right now is the time to expend more moneys than what the pending level of Federal revenues would permit, and that is my particular interest, Mr. Chairman, in the several recommendations of the report.

Meanwhile, the chairman has introduced a bill that is well worthy of consideration : of continuing the present formula of allocation. But I do feel that before we write any legislation this year on this problem, we ought to pass judgment on the basis of testimony here on the recommendation of the committee with respect to the sale of bonds.

Since my good friend, the Senator from Oklahoma has returned, I listened to some of his comments on the fiscal situation. He may be right. I do not know. He expressed an opinion that on the revenues and expenditures of the Federal Government, which other people would disagree from.

I would be interested in exploring that with the Senator because I have not heard that we had a series of 7 years where we spent less than we took in.

Senator Kerr. I said the overall for the 7 years. During those 7 years some of them had deficits, some had surpluses. But the overall was a surplus.

Senator KUCHEL. That is an interesting statistic which I had not heard stated before, and if we are going to get into this question of how much money can be spent, if that is part of the responsibility of this committee, it seems to me we ought to spell out pretty carefully just exactly what could be expended this year, or what could be authorized this year in highway legislation.

Thank you, sir.

Mr. Riley. Mr. Chairman, may I interpolate here and say that it is pretty well known that we do not run up here to get our taxes cut or deny ourselves the proper defense facilities of this Nation. We feel this Nation should be properly defended. We think that highways are part of that defense in the long run, the same as the railroads are.

If taxes are ever cut, I am sure that we would like to see them cut equitably. But we are not the first to dash up here and ask that it be done. We feel that in a dynamic economy that everything has to go up because if it stays down, if it stays stationary, it is static.

We expect to get our share out of the national product with which to meet our personal obligations, and we know that the Federal Government will know how to get the money with which to operate and to provide the things that its people need through taxation.

So we are not going to be coming up here to complain to you about how much taxes cost us, as long as we think it is for a tremendously important purpose such as this, national defense, school construction, and the other things that this generation and future generations have got to have.

If they are not provided locally, we think it is the obligation of the Federal Government to step in.

Senator Gore. Do you have any questions, Senator Kerr?

Senator KERR. No.

Senator GORE. Thank you, Mr. Riley. You have made a fine contribution and you are an excellent witness.

Mr. Riley. Thank you. I appreciate it.

Senator GORE. One other witness to appear this morning is Mr. Halvorson of the National Grange.

STATEMENT OF LLOYD C. HALVORSON, ECONOMIST,

THE NATIONAL GRANGE

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Mr. Halvorson. I am representing the National Grange here today. I have a brief written statement which I would like to read.

Senator GORE. You may proceed.

In view of the shortness of time and of the statement I respectfully suggest to the committee that we permit him to read his statement and then submit him to questions.

Mr. Halvorson. The National Grange has cited many of the deficiencies of our present road system in its reports. The deficiencies are costly in loss of life and limb, in waste of time, and in wear and tear of equipment. There also results an overall loss in commerce and national economic growth. Adequate highways are also becoming essential to national defense, especially civilian defense. I should have said becoming more essential.

The annual session of the National Grange was held last November. This was prior to the release of the Clay committee report on a national highway program. About all we knew concerning the Presi

. dent's program at the time was that he called for a $100 billion road program over a 10-year period. This, we knew, was a doubling of the present rate of highway construction. Some methods of financing, such as a bond issue based on Federal gasoline taxes, had been mentioned but nothing was definite.

In this setting our delegate body took the following action : We recommend that the National Grange should support President Eisenhower's highway program in principle. We make the following observations and recommendations regarding certain features of the program which are emerging from official places :

1. Less emphasis should be placed on dollar needs of the program and years to complete it. It will take time to get a $10 billion annual construction program under way. Construction dollar values and costs change rapidly. In our zeal to get the job done quickly, we must not fan the fires of inflation. Otherwise, we might end up with fewer miles of roads built per dollar expended than anticipated because of increased road equipment, material, and labor costs.

2. Federal contributions in the program should be doubled for farm-to-market roads, main rural roads and arterial streets on the Federal-aid system, exclusive of the Interstate System. These contributions should continue to be matched on a 50-50 basis in the States.

3. The Federal Government should assume the entire cost of rebuilding the 40,000-mile Interstate System because of its importance in national defense, interstate commerce, delivery of the mail, and general welfare. Responsibility for design, construction, and cost of maintenance, operation, and policing of the system should be assumed by the States. This plan of financing would relieve the States of the high construction costs required on this system. It would make available to them more money to be spent on State primary highways, secondary roads, and urban areas.

4. Creation of a Federal highway authority empowered to use long-term fi. nancing is favored to supplement today's tax revenues. Loans from this authority should be available to States, counties, municipalities, and communities.

5. Since the President's highway proposal will benefit the entire citizenry, all should share in its cost.

That is the end of the action by the delegates.

From this it is evident that we are in accord with the provisions of S. 1048 in increasing the Federal aid for the primary, secondary, and urban system. We differ on the financing of the Interstate System, which we consider to be a Federal responsibility for reasons stated above.

Total road and street mileage in the United States is 3,348,000 miles of which 3,012,500 is rural mileage. In this rural mileage there is 234,407 miles of the Federal-aid primary system and 482,972 miles of Federal-aid secondary system. County and township governments have control over 2,322,012 miles of rural road.

The Clay committee estimated the 10-year construction needs on the Federal-aid secondary system at $15 billion and on other rural secondary roads at $17 billion, making a total of $32 billion. Under the provisions of S. 1048 the Federal Government would appropriat $3.25 billion in aid over a 10-year period, assuming it would be done in 10 years. This is only about 10 percent of the cost of making rural roads adequate

Our delegate body has set our rural road goal as "an all-weather road to every farm worth farming." While many rural roads are traveled lightly, the traffic they carry is frequently of such general importance that it must move day in and day out. About 4 million children ride to school daily over the secondary and feeder roads of our Nation. Some farm products must be marketed daily, such as milk. Medical care for farm people is at times impeded by bad roads.

The last paragraph is in regard to the automotive excise taxes. We agree with the American Farm Bureau Federation that if that tax is not repealed, that the farmers will need to ask for refunds, should get refunds.

Senator GORE. I wonder if it is a fair interpretation that the National Grange endorses parts of both S. 1048 and S. 1160?

Mr. HALVORSON. Yes; I would say that is very true.

Senator GORE. It may very well be that the committee may find something good in both.

I noticed on the bottom of page 1 your resolution advocates the doubling of the Federal appropriation remaining on the 50-50 basis for the farm-to-market, secondary, and primary roads. You are aware of the fact that S. 1160 provides no increase in funds available for secondary, primary, farm-to-market, or urban roads, but rather proposes all of the increase on the Interstate System which handles one-seventh of our traffic.

Mr. HALVORSON. Yes, we are familiar with that very fact.

Senator GORE. You have already expressed your statement in the written statement?

Mr. HALVORSON. Yes. On the Clay proposal some of our people have said even if this program goes through there will be more money in the States for the farm-to-market roads. Our people when they voted on this took no chance. They thought that they should get a fair share of the Federal aid for roads and not rely entirely on the States increasing their appropriations sufficiently to make the rural roads adequate.

Senator GORE. Would you look with some apprehension on a program which would earmark all the increased revenues from gasoline

and oil taxes for the interstate roads, thereby prejudicing the possibility of increased expenditures for the other category roads?

Mr. HALVORSON. Our organization has had a historical position in favor of abolishing automotive excise taxes. We have felt that that is one source of revenue which the States should have, and that the Federal contribution should come from all the taxpayers in view of the fact that the Interstate System-not the Interstate System in particular, but all the roads are of value and benefit to all citizens whether they have automobiles or not.

We have that position. They have, however, now said that if this tax is not repealed, this automotive excise tax, that we will at least need to have refunds on the gasoline use in farm-tractor engines.

Senator GORE. Are you aware that S. 1048 increases the Federal funds for secondary roads from $210 million per annum to $325 million?

Mr. HALVORSON. Yes.

Senator GORE. And for the primary from $315 million to $500 million?

Mr. Halvorson. Yes; that is right. That is where we disagree with your bill. We feel that the Interstate System is of such importance in this day and age that it should be completed. I do not know, I am not an expert on highway needs, but from other figures we have had it seems as if your bill would not provide enough money to complete the Interstate System up to adequate standards.

Senator GORE. What I was questioning at that particular point was the increase which S. 1048 provides for the primary, secondary, and urban systems. With respect to those systems of roads you would find S. 1048 more agreeable than S. 1160!

Mr. Halvorsox. That is right.

Senator GORE. But you do not think that S. 1048 provides a sufficient amount for the Interstate System?

Mr. Halvorson. That is the way I interpret the Grange policies. It is certainly clear in this statement where we say that the Federal Government should assume the entire cost of rebuilding the 40,000mile Interstate System.

Senator GORE. In taking that position you are aware of the fact that S. 1018 would increase Federal funds for the Interstate System from $175 million per annum to $500 million?

Mr. HALVORSON. That is right.

Senator GORE. And you are aware that S. 1048 would approximately double the highway-construction program in its entirety for the next 5 years over the present program?

Mr. HALVORSON. That is the Federal-aid program. Yes; that is right.

Senator GORE. The reason I am asking that question is that we come up against the proposition of the availability of construction facilities and materials, particularly during the next 1, 2, and 3 years. think I agree with you that this amount of $500 million per annum on the Interstate System would be inadequate. In arriving at that figure I gave some thought, however, to the availability, particularly during the next 2 years, of construction facilities and building materials.

Mr. HALVORSON. That could be to start with that this would be sufficient. As I say, if we are going to have this program on a 10

a

year basis and bring the roads up to adequate standards it probably would not be enough. You may have in mind to increase this in future years as the construction facilities expand and therefore make it possible to build roads on all these systems to bring them up to standard.

Senator Gore. Then your overall recommendation to the committee is that they take the best out of the two and write the best bill possible for the country?

Mr. HALVORSON. That is exactly it.
Senator GORE. Senator McNamara ?

Senator MCNAMARA. I have no questions of the witness, but I was interested in your remark that it is a question of availability of material and equipment. Do you have in mind cement, or do we have in mind any evidence that there is not available enough equipment and material? Has that been presented in my absence?

Senator GORE. That has not been presented, and it is a question which I think the committee will want to examine. I have noticed some newspaper stories about how the debentures of the cement companies have been going up by leaps and bounds, so maybe an expansion is underway. That has not been inquired into by the committee, Senator. I think you have made a pertinent suggestion. It is something that we will want to hear about.

There is scheduled to testify before the committee on February 28 Mr. George Koss, of the Associated General Contractors. I dare say he will be able to bring us some information with respect to construction facilities.

Senator McNAMARA. I think there might be some real question about the availability of cement for this program. I think it would be well to get some of those cement people in and tell us about it, what the prospects are in that industry.

Senator GORE. The clerk will take notice of that.
Senator Case?

Senator CASE. I have in my hand an "Evaluation of the ability and readiness of the engineering profession and the highway industry to plan, design and execute a program to eliminate the $101 billion deficiency in the Nation's highways in a period of 10 years," prepared by the American Road Builders Association of Washington. It is marked “Final draft, December 29, 1954.” It is a report made by task force No. 1 on planning and design, presented at the American Road Builders Convention in New Orleans on the 13th of January.

Senator GORE. That organization is likewise scheduled to testify before the committee.

Senator Case. They will undoubtedly present that.

Senator KERR. Will the Senator tell us what the conclusion generally was, as set forth in the paper? Did it not indicate that they were fully prepared to meet this situation and the needs of this proposal?

Senator Case. There is a short paragraph of conclusion on page 25 of this report which says:

After careful study and deliberation, task force No. 1 on planning and design concludes that the engineering profession, with certain adjustments and expansions discussed herein, is fully capable of satisfactorily handling the proposed program. Plans are now in readiness or in preparation for $16 billion of highway work. These plans should be completed as soon as possible and additional planning should be undertaken immediately. In addition, action to

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