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Panetta wants defense savings brought home.

House Budget Committee Chairman Leon Panetta (D-Calif.) urged his colleagues to "seize the opportunity" and reinvest more than $68 billion in defense savings into America's communities to ensure economic security and opportunity over the next five years in presenting a proposed 1993 federal budget last week.

Under the Panetta plan, the federal government would cut defense spending by $114 billion over the next five years, reinvesting 60 percent of the savings in public and human infrastructure in the nation's cities and towns, and 40 percent in long term deficit reduction. The plan closely resembles the resolution adopted unanimously by NLC delegates at the Congress of Cities last December, except that the Congressional plan would provide for much higher levels of defense spending.

Implementation of Panetta's plan depends upon action by the House this week to pass Rep. John Conyers' NLC-supported bill, HR 3732, to amend the 1990 budge agreement and permit defense savings to be used for reinvest in the nation's cities and towns.

NLC President Glenda E. Hood praised Panetta for his leadership and urged all community leaders to contact their Representatives and Senators immediately in support of the Conyers bill and a companion version introduced by Senators Jim Sasser (D-Tenn.) and Paul Sarbanes (D-Md.):

"Chairman Panetta has offered us a blueprint to help redefine national security and to increase our nation's economic strength and domestic stability. He has proposed a plan to invest more in American than foreign communities to help us secure a better future for our children.

"I hope every community leader will call his or her Representative and Senators to urge a strong commitment for the Conyers bill, HR 3732 and co-sponsorship of S 2250. They mark the first step in nearly a decade in setting forward an urban agenda and partnership with the nation's cities and towns."

House action

The House Budget Committee late last Thursday evening responded by reporting out an unusual dual option budget to guide the federal government next year. Both options reject severe cuts in priority municipal programs proposed by the administration (see chart on p.6). Both propose to cut defense spending by $114 billion over the next 5 years from current levels--more than double the amount proposed by the White House.

The first version would reinvest more than $7 billion in America's communities next year from the cuts in defense spending and provide an additional $1 billion in defense spending to be dedicated to assisting communities severely impacted by defense economic conversion.

Many of those savings would be reinvested in priority municipal programs, including;

[section] community development block grants;

[section] highways and public transportation;

[section] rural housing and development;

[section] EDA;

[section] job training;

[section] Head Start and education; and

[section] low income housing and homeless programs.

That version assumes the nation's municipal leaders will be successful in working with Congress to change the 1990 budget agreement through enactment of legislation, HR 3732 and S 2250, to remove the firewall preventing defense savings from being reinvested in domestic discretionary programs.

The other version assumes that President Bush will veto any effort to reinvest defense savings in American communities. If that happens, as the White House has threatened, then it is unclear whether Congress could override such a veto. Therefore, the second version assumes significant disinvestment or a net overall reduction in domestic discretionary spending next year of some $6.4 billion next year in order to comply with the 1990 budget agreement, but rejects many of the severe cuts in city and town programs sought by the administration.

Setting priorities

The House Budget Committee's late night action came the same day as a House Banking subcommittee rejected a request by the administration to borrow and spend $55 billion more this year for the savings and loan bailout--or a level more than twice as high as the administration's total proposed spending for all local governments in the country.

The action came as the subcomittee approved, 25-11, HR 4241 to increase the S&L federal bailout spending by $25 billion and extend federal authority to finance the bailout for another year.

With the Senate Budget Committee preparing to mark up its own version of the FY 1993 budget within the next two weeks, Senate Budget Committee Chairman Jim Sasser and Joint Economic Committee Chairman Paul Sarbanes--who will serve as a keynote speaker on a special budget priorities session at NLC's Congressional City Conference next Monday--introduced a Senate version of the Conyers' bill, S 2250, with over 30 co-sponsors, including Senate Majority Leader George Mitchell (D-Maine), Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), and Senate Appropriations Committee Chairman Robert Byrd (D-W.V.).

Like the Conyers bill, the Sasser-Sarbanes bill would tear down the firewalls between defense, foreign aid, and domestic discretionary spending on October 1 of this year, one year before their scheduled self-destruction under the law.

Passage of the legislation is critical to enable Senate consideration of what Sarbanes has called their "Marshall plan" to reinvest a much greater peace dividend in America's communities than Panetta has proposed.
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Title Annotation:includes related information on municipal program financing; Congressman Leon Panetta
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Mar 2, 1992
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