In 2 years, between October 1978 and October 1980, participation jumped from 15.2 million individuals to 22 million, an obvious increase of 6,800,000, a 45-percent increase. These escalating figures alone demand that painstaking scrutiny be given to the program this year, so that the truly needy are cared for, but that the program be limited to the truly needy.

One point should be made clear at the outset of these hearings: neither President Reagan, nor this chairman, nor this committee seek to eliminate nutritional assistance to the elderly, the sick, the crippled, the blind-or anyone else who lacks the ability to look after himself or herself.

Speaking for myself, I am committed to limiting this program to serve the truly needy citizens of this country who are unable to provide for themselves.

These truly needy-the elderly, blind, disabled, working families with incomes below the poverty line-have nothing to fear from either this administration, this chairman, or this committee.

Again, speaking for myself, I am equally determined to do everything I can to eliminate from receiving food stamp benefits those able-bodied citizens who refuse to work and those households whose gross incomes are above the poverty line.

This committee has a responsibility to the millions of hard-working Americans who have a right to expect that their tax dollars should assist only those who are unable to provide for themselves.

The American people are understandably concerned about the food stamp program. In fact, they are almost up in arms about it. Credible reports of abuse of the program are commonplace. The American people are legitimately resentful about the abuses which they have observed, and which they are expecting us to correct. I would remind the committee that a recent Senate Appropriations Committee investigation concluded that as much as 20 percent of the benefits issued in food stamps are issued in error-to households that should not be receiving them at all, and to households receiving more benefits than entitled. Even Food and Nutrition Service officials admit to 11 to 12 percent overissuance. I say to this committee, in this time of fiscal restraint, such expensive errors simply cannot be allowed to continue.

During the past 10 to 15 years, this program-like so many others has been expanded by the Congress to embrace many who simply do not have a genuine need. A fair case can be made that this has done great harm to the recipients themselves-by destroying their initiative and their willingness to provide for themselves. It is more obvious than ever that the Nation simply does not have the resources to continue the kind of eligibility criteria which have allowed the program to expand far beyond the intent of its original purpose-and, I might add, beyond what the American taxpayers ought to be required to bear.

It is not our personal money that has been wasted-it is the tax dollars of all dedicated, hard-working Americans. It is time they were given some consideration.

The severity of the Federal Government's budget crisis in general and the increasing costs of the food stamp program in particular now require a careful review of the existing program and its costs.

We must establish a program which will be worthy of respect and support.

The American people-recipients and taxpayers alike-deserve no less.

Insofar as this Senator is concerned, that is going to happen this year.

Senator Leahy, do you have a statement?

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR
FROM VERMONT

Senator LEAHY. Yes, Mr. Chairman.

I have sat in a number of these hearings for 6 years. I realize the concerns of the Chair and others. As ranking member on the Nutrition Subcommittee, I look at these hearings with a particular interest, as I know all Members on both sides of the aisle will.

Since it first began as a series of pilot projects in 1961, the food stamp program has responded to a need to this country, something that we should not forget about, and the need was one that was not easy for Americans to admit.

The question could be asked, Was it possible that the wealthiest nation on Earth could have men, women, and children going hungry? When we first looked at this program, there was nobody who could honestly answer that we did not have men, women and children going hungry.

As I stated in hearings that I have held around the country, I can go just about any place in the country and take somebody from there and within 20 minutes, find areas of the State or that county or that city or that town where there are people going hungry, where there is malnourishment in the wealthiest and most powerful nation of the world. So we can add, there are sections where our citizens suffer from malnutrition.

A scientific study was done by the Field Foundation. As the doctors in the foundation testified in 1976:

Wherever we went and wherever we looked, we saw children in significant numbers who were hungry and sick, children to whom food is a daily factor of life and sickness, which is an inevitability, the children were weak and their lives were being shortened.

It was such shocking evidence that moved the Congress and the American people to improve these conditions and to provide programs for the needy citizens of the wealthiest nation in the world. Contrary to often politically inspired rhetoric, these programs have worked.

In the 10-year review, the Field Foundation doctors went back to their original site. They wanted to see if the food stamps and other programs had made an impact in the lives of the needy. Their conclusions were unequivocal. The Field Foundation doctors and others believed that food stamps were making crucial differences improving the lives of many poor Americans.

The foundation's doctors found that those receiving food stamps made good nutritional decisions. The family on food stamps allocates its food dollars the same as the middle-class family but they economize and buy less expensive foods.

Mr. Chairman, we have a program here that has worked. The time of seeing children's hungry bellies is gone in many parts of

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our country, but we should see that it never returns. We should see that it gets eradicated in other places.

There is no question in my mind, not only from the bipartisan hearings I have had in my State, in other States, with other Members of both sides of the aisle, that hunger still exists in the United States and malnourishment still exists in the United States. We may not like to admit it, but it is a fact and it is really a shame on our country.

As President Reagan says, and I totally agree with him, we must provide for those truly needy in our society.

When I see the statistics of the food recipients, I know who the truly needy are. They have less gross incomes below $4,800 a year; 80 percent have gross incomes below the poverty line. Many have gross incomes of $300 a month. Most are disabled, elderly, children. In addition to providing for these needy citizens, the food stamp program contributes the demand in this country for farm products. Between having to choose between paying the rent or heat or food, many of our poor have no choice at all, so they cut down on food purchases.

I recently saw an interview on TV which made the point. An elderly woman was contemplating her food stamp allotment, and with the increasing rent and gas, she would have to take a few dollars away from food and put them into rent because she did not have any other place to go. We must keep that woman in mind as we consider revisions to the Food Stamp Act.

This program, of course, could be better run and we have taken steps, we have taken some significant steps in making it better run already. We did that last year. We have cut out a number of people in the program and in steps taken by this committee, supported by me, we have eliminated between one and a quarter and one and a half million participants in the program. We have, overall reduced the number of people eligible by 6 million. Households were made ineligible for 2 months if the head of the household quits his job or if he is found guilty of fraud for 26 months. Benefits are adjusted once a year instead of twice, and so on.

So we have already taken steps.

But I intend to remember that elderly woman, the working mother trying to get off assistance, the hungry child, as I make my own evaluation of just how many more cuts we should make. Thank you, Mr. Chairman.

The CHAIRMAN. That appears to make it unanimous. No other people except the truly needy, and I assume we all agree that the truly needy do not include that gentleman in South Carolina who bought 5 motor vehicles, 32 weapons-that is the kind of thing we have to tighten. It is a disgrace to this country.

Senator LEAHY. Let us make sure that we do not cut the Justice Department's appropriation as they go after those people. I agree with you on that.

The CHAIRMAN. We have a good friend of mine who I am always glad to see, as our first witness this morning, Hon. Carlos Romero, who is Governor of Puerto Rico, accompanied by Baltasar Corrada. We welcome you here, and you may proceed.

If you have a prepared statement that you wish to have included in the record in its entirety, that will be done, and we can just proceed from there.

STATEMENT OF HON. CARLOS ROMERO-BARCELO, GOVERNOR, PUERTO RICO, ACCOMPANIED BY BALTASAR CORRADA, RESIDENT COMMISSIONER, PUERTO RICO, U.S. HOUSE OF REPRESENTATIVES

Governor ROMERO. Thank you, Mr. Chairman, Senator Leahy. We do have a prepared statement and it has already been submitted to the committee, and it also has some material which has been included with the testimony.1

The CHAIRMAN. Very well.

Governor ROMERO. My name is Carlos Romero-Barcelo. Thank you for the opportunity to appear before your committee this morning.

As the Governor of Puerto Rico, a community of more than 3 million U.S. citizens, I come before you this morning to testify in opposition to a proposed revision of the Federal budget for fiscal year 1982. Specifically, I refer to Function 600, entitled "Income Security", and to a section appearing on page 79 of the budget revision document, submitted to the Congress by President Reagan on March 10, 1981.

This section, to which I shall refer henceforward as "the block grant plan," provides for the allocation of a single appropriation of $900 million, to replace existing Federal food and nutrition programs applicable to Puerto Rico, including the food stamp program. You will be addressing this proposal in conjunction with the 1981 farm bill.

With your permission, Mr. Chairman, I shall ask that, in addition to the testimony which I am about to give, the committee accept for the record several supporting documents which we are prepared to submit, including a letter which I sent to each member of the committee, on March 11, 1981.

The effect of the block grant plan would be to reduce by 25 percent, or $306 million, the level of Federal support for food and nutrition programs in Puerto Rico. Its implementation would flatly contradict basic administration policy in several respects, including the President's assurance to the Congress that, in his words, "the impact of spending reductions will be shared widely and fairly by different groups and the various regions of the country."

There is no fairness in the arbitrary exclusion of one jurisdiction from the protection offered by programs which will be retained under a different allocation formula everywhere else. We do not ask for special treatment. We ask only for equity.

The President's economic recovery program will accompany cuts in Federal spending by cuts in Federal taxes. Lacking as we do the right to vote in Federal elections, residents of Puerto Rico are almost exempt from Federal taxation on income earned there, in keeping with the principle of no taxation without representation. I would like to add here that, although some of you may feelwell, that sounds very good to be excluded from Federal taxation, because we do not participate fully, in all Federal programs, the

1 See p. 261 for the material submitted by Governor Romero.

cost of government in Puerto Rico is higher and therefore our local taxes have been higher than the taxes, both Federal taxes and State taxes put together.

When I started in office, back in 1977, the taxation with the highest levels of income was up to 77 percent. Taxation started at a level of $2,000 per income of family, for a family of two, which was a lower level of taxation than that of the mainland as a whole. We stand to gain nothing from cuts in Federal taxation. What is more, Federal business tax reductions will have the adverse effect of reducing the relative attractiveness of our industrial promotion program. We therefore feel entirely justified in insisting upon fairness and equity in the application of reductions in Federal spending, and in the revision of Federal programs.

I share the President's desire to eliminate waste and mismanagement from the administration of Federal programs, but that worthy goal cannot have been a factor in prompting the block grant concept for Puerto Rico.

The food stamp programs's official error rate in Puerto Rico is 9.2 percent. That is one of the lowest error rates in the midAtlantic region, a region comprised of seven States, plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. It is an error rate which falls well below the estimated national average of 12.3 percent.

This error rate has been going down considerably.

Mr. Chairman, we have made a conscious effort during the past 4 years to reduce the error rate and to reduce fraud. I think if proper analysis is made, you will find that we have been more active in bringing cases to court and discovering fraud than probably any other jurisdiction in the Nation.

I also support the overall philosophy behind the President's economic recovery program.

Upon assuming office in 1977, I myself pioneered the implementation of supply-side income tax reductions, brought our budget into balance, lowered the rate of growth in our public debt to a level less than the growth rate of our gross product, and in the process achieved goals identical to those which President Reagan hopes to achieve on the national level; namely, increased Government revenues; renewed economic growth; and substantially lower unemployment.

When I say lower unemployment, that is relatively relevant. When I started in office, unemployment was approximately 22 percent. It now is approximately 17 percent. Although we have reduced it considerably in 4 years, we still have a very, very high rate of unemployment.

Moreover, we accomplished this task within the context of an economy which lacks the abundant resources of the overall U.S. economy, for Puerto Rico exploits no mineral deposits, and depends entirely upon imported petroleum for its energy.

It is very much in the national interest that Puerto Rico's economic progress continue.

We purchase billions of dollars in goods and services each year in the mainland market, thereby sustaining hundreds of thousands of jobs for residents of the States.