[Congressional Record Volume 140, Number 62 (Wednesday, May 18, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 18, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                        THE STATE OF THE ECONOMY

  The Speaker pro tempore. Under a previous order of the House, the 
gentleman from California [Mr. Lehman] was recognized for 5 minutes.
   Mr. LEHMAN. Mr. Speaker, I rise to address the faulty and damaging 
policies which are being pursued by the Federal Reserve Board. Under 
the guise of fighting inflation, the Fed is adding hurdles to economic 
recovery throughout the United States.
  Earlier this year, the Fed raised interest rates based on solid 
economic growth in the 4th quarter of last year, even though companies 
were still laying off thousands of workers and key States such as 
California did not share in the economic activity.
  A few weeks later, based on mixed signals from the economy, the Fed 
again jolted key productive sectors of the economy with another rate 
hike.
  And yesterday, despite similar mixed indicators, the Fed again 
completed its mystical calculations and decided on yet another half-
percentage-point increase in interest rates.
  Who are these people and what planet do they live on? To a reasonable 
person, mixed forecasts and uneven growth would indicate a need for 
further review to avoid causing damage. To the Fed, this information 
apparently indicates a need to remain sequestered in their temple on 
Constitution Avenue and take immediate action to exorcise the demons of 
inflation.
  Let me describe the situation that is faced by real people in 
California. Unemployment in California is 2\1/2\ points higher than in 
the United States as a whole; in 4 counties in the Central Valley, 
unemployment ranges from nearly 12 percent to just under 20 percent. 
Statewide, defense-related and other durable-goods manufacturing are 
still losing jobs, the total effects of military base closures have not 
been felt, and construction is still weak.
  I want to focus on the housing situation because of its ripple 
effects throughout the economy. Higher interest rates make homes less 
affordable, especially for first time home buyers and those who are 
trading up. These increased interest rates can add hundreds of dollars 
to a homeowner's mortgage. This increase can make the difference 
between renting and buying, it can mean the difference between moving 
to a nicer and safer neighborhood, it can mean the difference between 
getting by and achieving the American dream.
  Apparently these bureaucrats at the Fed don't understand these simple 
facts of American life. What they should understand is that we lack a 
sustained recovery, capacity is still slack, prices for raw materials 
remain low, and we have the lowest budget deficit in 6 years. In 
addition, productivity is improving drastically, capital investment is 
much more effective, and international trade continues to expand, 
leading to low inflation, not high inflation.
  The result of this policy may be praised on Wall Street, but it is 
being damned on Main Street.

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