Veto of the Area Redevelopment Bill

To the Senate of the United States:

I return herewith, without my approval, S. 722, the Area Redevelopment Bill.

For five consecutive years I have urged the Congress to enact sound area assistance legislation. On repeated occasions I have clearly outlined standards for the kind of program that is needed and that I would gladly approve.

In 1958 I vetoed a bill because it departed greatly from those standards. In 1959, despite my renewed urging, no area assistance bill was passed by the Congress.

Now in 1960, another election year, a new bill is before me that contains certain features which I find even more objectionable than those I found unacceptable in the 1958 bill.

The people of the relatively few communities of chronic unemployment-who want to share in the general prosperity--are, after five years, properly becoming increasingly impatient and are rightfully desirous of constructive action. The need is for truly sound and helpful legislation on which the Congress and the Executive can agree. There is still time and I willingly pledge once again my wholehearted cooperation in obtaining such a law.

S. 722 is seriously defective in six major respects which are summarized immediately below and discussed in detail thereafter.

1. S. 722 would squander the federal taxpayers' money where there is only temporary economic difficulty, curable without the special federal assistance provided in the bill. In consequence, communities in genuine need would receive less federal help for industrial development projects than under the Administration's proposal.

2. Essential local, State and private initiative would be materially inhibited by the excessive federal participation that S. 729 would authorize.

3. Federal financing of plant machinery and equipment is unwise and unnecessary and therefore wasteful of money that otherwise could be of real help.

4. The federal loan assistance which S. 722 would provide for the construction of sewers, water mains, access roads and other public facilities is unnecessary because such assistance is already available under an existing Government program. Outright grants for such a purpose, a provision of S. 722, are wholly inappropriate.

5. The provisions for federal loans for the construction of industrial buildings in rural areas are incongruous and unnecessary.

6. The creation of a new federal agency is not needed and would actually delay initiation of the new program for many months.

I.

The most striking defect of S. 722 is that it would make eligible for federal assistance areas that don't need it--thus providing less help for communities in genuine need than would the Administration's proposal. S. 722, as opposed to the Administration bill, would more than double the number of eligible communities competing for federal participation in loans for the construction or refurbishing of plants for industrial use-the main objective of both bills. Communities experiencing only temporary economic difficulty would accordingly be made eligible under S. 722 and the dissipation of federal help among them would deprive communities afflicted with truly chronic unemployment of the full measure of assistance they so desperately desire and which the Administration bill would give them.

II.

Lasting solutions to the problems of chronic unemployment can only be forthcoming if local citizens--the people most immediately concerned-take the lead in planning and financing them. The principal objective is to develop new industry. The Federal Government can and should help, but the major role in the undertaking must be the local community's. Neither money alone, nor the Federal Government alone, can do the job. The States also must help, and many are, but in many instances and in many ways they could do much more.

Under S. 722, however, financing of industrial development projects by the Federal Government--limited to 35% under the Administration's proposal--could go as high as 65%, local community participation could be as low as 10% and private financing as little as 5%. Furthermore, although S. 722 conditions this assistance on approval by a local economic development organization, if no such organization exists one can be appointed from Washington.

III.

S. 722 would authorize federal loans for the acquisition of machinery and equipment to manufacturers locating in eligible areas. Loans for machinery and equipment are unnecessary, unwise and costly. Much more money would be required and unnecessarily spent, much less money would find its way into truly helpful projects, and manufacturers would be subsidized unnecessarily vis-a-vis their competitors.

IV.

S. 722 would authorize further unnecessary spending by providing both loans and grants--up to 100% of the cost--for the construction of access roads, sewers, water mains and other local public facilities.

Grants for local public facilities far exceed any appropriate federal responsibility. Even though relatively modest at the start, they would set predictably expensive and discriminatory precedents.

With regard to loans for such purposes, exemption from federal income taxes makes it possible today for local communities in almost every case to borrow on reasonable terms from private sources. Whenever such financing is difficult to obtain, the need can be filled by the existing Public Facility Loan Program of the Housing and Home Finance Agency--a program which S. 722 would needlessly duplicate and for which an additional $100 million authorization has already been requested.

V.

S. 722 would make a minimum of 600 rural counties eligible for federal loans for the construction of industrial buildings in such areas. The Rural Development Program and the Small Business Administration are already contributing greatly to the economic improvement of low income rural areas. Increasing the impact of these two activities, particularly the Rural Development Program, is a preferable course.

VI.

Finally, S. 722 would also create a new federal agency and would, in consequence, mean many unnecessary additions to the federal payroll and a considerable delay in the program before the new agency could be staffed and functioning effectively. None of this is necessary, for all that needs to be done can be done--much better and immediately--by the existing Department of Commerce.

Again, I strongly urge the Congress to enact new legislation at this session--but without those features of S. 722 that I find objectionable. I would, however, accept the eligibility criteria set forth in the bill that first passed the Senate even though these criteria are broader than those contained in the Administration bill.

Moreover, during the process of developing a new bill, I would hope that in other areas of past differences solutions could be found satisfactory to both the Congress and the Executive.

My profound hope is that sound, new legislation will be promptly enacted. If it is, our communities of chronic unemployment will be only the immediate beneficiaries. A tone will have been set that would hold forth, for the remainder of the session, the hope of sound and rewarding legislation in other vital areas--mutual security, wheat, sugar, minimum wage, interest rates, revenue measures, medical care for the aged and aid to education to mention but a few.

Only this result can truly serve the finest and best interests of all our people.

DWIGHT D. EISENHOWER