Mr. GIBBONS. I want to thank you for personally bringing this matter to our attention and for what you have done, not only for your constituents, but really to help make what can be a workable. program a little more workable. It is going to take a lot more work on all of our parts I am afraid though, before we can move some of the people off dead center on this.

Mr. Pike, do you have any questions?

Mr. PIKE. No questions, Mr. Chairman.
Mr. GIBBONS. Mr. Jones?

Mr. JONES. I have no questions.

Mr. GIBBONS. Mr. Jenkins.

Mr. JENKINS. I have no questions.

Mr. GIBBONS. Mr. Steiger had to go to the phone. I was going to enlighten him on the orange industry. I was going to tell him, yes, thank God, a lot of oranges are imported into Florida. We do not import them as oranges. We import them as orange concentrate, and we use that to blend with other Florida fruit juice, Mr. Steiger, so that when the Florida crop is too sweet, we can get some sour juice from other countries to keep the concentrate all at a level. We get it from Brazil and places like that. We do import other things, and we do import oranges.

Mr. STEIGER. I appreciate the jazzy clarification of that.

First of all, I want to thank Phil Sharp not only for his statement but for giving us this imported key chain that the UAW was passing out. It is the first gift I have ever gotten from CAP. Ordinarily, they give it to my opponent, not to me. I am ever so grateful for that.

Mr. SHARP. I appreciate your gratitude, but I am not responsible for that.

Mr. STEIGER. I assumed you had brought gifts as well in an effort to entice us into supporting this bill.

How did we get to this cost of $40 to $53 million?

Mr. SHARP. The Department of Labor has made that estimate. Frankly, their estimate last fall in their testimony was 70 million. We challenged them at that point on where they came up with that figure, and what they have done, as I understand it, is to take what has been the average experience under the program.

They know how many individuals were excluded because of the 1-year eligibility. That, frankly, comes out to something like 11,000 workers. That would be substantially less than the $43 million.

As I understand it, they estimate or guess that there well may be others who did not file petitions on time and who could become eligible if they learn about the change in the 1-year eligibility or even aware that they are eligible at all. They say this could be an additional 15,000 workers.

Certainly less than half of that $40 to $53 million is certain to be a cost under the program. The other half is much less definite. They now estimate an average of 30 to 40 weeks of drawing payment even though technically an individual may be eligible for 52. That has not been the experience of the program.

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Mr. GIBBONS. Mr. Sharp, we are going to use you for Mr. Steiger and myself to carry on a dialog here. Or maybe it won't involve you. Please bear with us.

Have you-in looking at that branch of the State employment service that services your area-I know when I used to be on the Education and Labor Committee, Mr. Steiger, we looked at those things. We found those employees had the best of all worlds. If a State officer walked in and said, "What are you doing and how are you carrying out your job?", they always could say, "Oh, well, we are paid by the Federal Government. We are under Federal regulation. We would like to do that for you, sir, but we cannot do that." When somebody from the Federal Government walked in, they said, "Oh, we are State employees. We have our State laws and the regulations of our industrial commission," or whoever it is that handles it. So they sort of proceed along using their own best judgment as to how things ought to be done. Sometimes it is pretty good. Sometimes it is not so good.

I wondered whether or not this program is suffering from the fact that it has to be administered through that kind of agency. Did you run into any of that in your investigation?

Mr. SHARP. Well, certainly that was the initial response that we heard from our workers, that a lot of the problem lay at the local unemployment office which, as you know, administers several complicated kinds of programs.

I can somewhat sympathize with the need of those employees to understand the complex rules of everything they must administer, and many of these individual applications came at a time when the work had been heightened at the unemployment office anyway by the recession.

While I have some sympathy for those workers, I think we need to work harder to simplify rules and regulations on their behalf, I also suspect there is not as much discipline in those organizations of the Government as there ought to be to carry this specific program out.

Mr. Chairman, if I might go back one more time to the cost of the program, the maximum estimate I believe is $53 million. Most of this would be a one-time cost, we believe, to correct past inequities. It is possible there would be a slight increase in the cost of the program over the next few years as a result of this amendment. Because we assume that information about the program is now becoming much more available, there would be fewer people, fewer organizations, and fewer individuals missing the 1-year deadline. So making it 2 years instead of 1 year therefore, will not add substantially to the cost.

Really what we are talking about is the true cost of the program, not an additional cost, even though, of course, it is in additional dollars to the budget, because everybody agrees these workers should have been eligible under the program as originally written, but the 1-year deadline has been a problem.

Mr. STEIGER. If the chairman will yield, I have a meeting this afternoon-this noon actually-with the Interstate Conference on

Employment Security Administrators, because I have a bill coming in that will propose that we eliminate this problem of dual administration for the employment service. I think we have reached the point of maturity where administration can be State rather than Federal. You are right. The employment service has a problem because they have for so long been able to say to both the Feds and the State, "No, we don't belong to you," and therefore avoid some of these kinds of decisions.

But I think it is more fundamental than that. We have imposed upon the employment service not only a host of programs, but then we also put them in the compliance business. So at the very point in time at which they are supposed to be serving people and employers, they also become policemen.

That is, in my judgment, an unwarranted role for that organization, but I will be happy to spend some time with you talking about where I think we ought to go with this, given your own interest and your own background. I think it is necessary for us to deal with it. I hope we will.

The Budget Committee, Phil, as you know, cut out the money that the subcommittee had recommended. That worries me a little bit in terms of where we go and what we do. I understand one of the reasons they did was they perceived, felt, or assumed that most of the people had, in fact, already come back into the workstream. Of your own experience in the Muncie situation, it is clear they have not been able to do that, is that right?

Mr. SHARP. We have three different instances in my district, three different factories involved. In the case of one, it is our estimate they are all back to work. In the case of Warner Gear, the largest number of individuals involved, that clearly is not the case. There are still people unemployed.

My testimony has part of a letter that cites a very tragic example of what has happened to some of these individuals.

I might also add that, while obviously we would like for the benefits to apply at the time they are most helpful, at the time the person is out of work, I think we are also dealing with a question of serious loss of income to these individuals. Also, we are not violating the basic assumption of the program, unlike, I believe, the Budget Committee interpreted, because under the present program your petition has to establish your eligibility within 1 year, but as an individual you still have 2 more years in which to apply for the benefits.

So the original assumption of the program was that you had to obtain the benefits within a 3-year period. If this bill should pass within the next few weeks, for example, these workers would still be able to apply within that 3-year range, and still have met the basic assumption of the program.

While we all believe it would be better to provide benefits immediately, I don't think that we are violating the basic thrust of the program. I am afraid that was a misunderstanding in some of the discussion or the written papers before the Budget Committee.

We, in fact, last night delivered letters to all members of the Budget Committee, as well as the chairman, trying to argue that perhaps there was another view on this.

Mr. STEIGER. Thank you, Mr. Chairman.

Mr. GIBBONS. Let me say in defense of the Budget Committee they have an impossible task. They cannot really line-item all of these things. They really deal in maximum figures, in large economic concepts, rather than line items. So they would be the first to tell us, those who had some experience over there anyway, that theirs is merely a guideline as to what we do.

Now, when the Congress finally passes that Second Budget Resolution, then we are kind of hemmed in. Up until we pass that Second Budget Resolution in September, we can do anything within

reason.

This is such a small item that it gets lost. Over $40 million, I am sure, there would be no particular serious objection from the Budget Committee. In fact, that is not even their role, as I see it and understand it.

So I think we can proceed without any real problem.

Are there any further questions or observations before we allow Mr. Sharp to retire here?

[No response.]

Mr. GIBBONS. Thank you, sir.

Mr. SHARP. Thank you, Mr. Chairman.

Mr. GIBBONS. You have done a good job.

Our next witness is our distinguished colleague and friend, a personal friend of mine, Congressman James A. Burke of Massachusetts.

STATEMENT OF HON. JAMES A. BURKE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. GIBBONS. Congressman Burke is a man who has long taken an interest in this matter and I am sure will give us plenty of good information.

Mr. Burke, we welcome you.

Mr. BURKE. Thank you very much, Mr. Chairman.

I am very grateful for the opportunity to appear before you and the other distinguished members of the Trade Subcommittee. I want to thank the committee for its initiative in holding hearings on the TAA program. It is a program with many problems, conceptual and administrative.

I recommend that we take clear focus on these problems and begin overhauling the program at once.

First of all, I want to state that the program bears little or no resemblance to that originally contemplated by Congress. If you will recall back during our discussions of the 1974 Trade Act, there was a great deal of promise made by those who were supporting provisions of TAA that this was going to be the great relief for the people who lost their jobs and for the domestic footwear industry.

I assailed it as a cruel joke and a hoax. That is exactly the way it has worked out. It has proved to be completely unworkable, bogged down with all kinds of bureaucratic redtape, loan rates which hover almost 2 percentage points above the market rates, all

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manner and number of governmental compliance regulations, delays. There is no technical assistance whatsoever-and cumbersome and inscrutable application forms.

The GAO study commissioned by me concerning the footwear industry's experience with TAA documents there was substantial uncertainty involved in interpreting what information is required in the petition process, how much information is adequate, whether all procedures have been complied with, and how and if at all assistance can be obtained in the preproposal steps.

A firm must show compliance with EPA regulations, file what amounts to be a 14-point environmental impact statement, show evidence of an affirmative action plan, sign a civil rights statement indicating it will not discriminate on the basis of sex, religion, or race; submit financial records, tax returns for the past 5 years, undergo a FBI check on financial officers and stockholders, and document in full that imports have been a major cause of steadily declining financial conditions and prospects.

All this amounts to time and money, two sorely lacking commodities in a business about to go under. It is a classic Catch 22 situation.

The adjustment assistance provisions of the law are not practical. There is no way they can be worked out. It is unlikely that there is any way they can be worked out.

This Nation of ours is facing real problems as far as the American footwear industry is concerned.

I recall back in 1965 when I first became alarmed at the situation in the footwear industry. At that time imports had 20 percent penetration of the domestic market. You could see it climbing every year. You could see the shoe factories closing all over the country. in New England we have had 115 shoe factories close since 1965. They estimate 70,000 jobs have been lost in the industry.

Actually there are 150,000 jobs that have been lost in the shoe industry and the related industries.

New York City's collapse can be traced to imports. Imports eliminated jobs for the minorities and made it impossible for them. to get work elsewhere. Imports wiped out 450,000 jobs in New York City in the footwear industry, garment industry, the handbag industry, the hat industry, the pocketbook industry and the umbrella industry. Those jobs were all wiped out, and 450,000 people lost their jobs. They exhausted their unemployment compensation; they went on welfare; and New York is down here to the Federal Government trying to get relief.

The northeast part of our country is facing the same problems today. I say, unless we do something within 24 months States like Rhode Island, Massachusetts, Maine, and a few other States will be down here looking for the same type of assistance.

I think somebody believes that we are fairy godmothers, and that we can continue to allow the United States to be the dumping ground for all the goods of the world.

This unemployment situation that we have today-and we have passed three tax cuts that have just caused a little ripple-is related to our trade policies. This is where the root of the problem is, right