Banner Graphic, Volume 21, Number 52, Greencastle, Putnam County, 2 November 1990 — Page 3

House report calls former HUD chief dishonest, points finger at Congress

WASHINGTON (AP) A congressional investigative report that accuses former Housing Secretary Samuel Pierce of being less than honest in the HUD scandals also points a finger at Congress itself. The report by the House Government Operations Committee, ending a 16-month investigation of the Department of Housing and Urban Development by its housing subcommittee, said Congress as well as the administration should end practices that bring political influence to federal housing decisions. “THERE IS A NEED to take politics and discretion out of housing programs,” the report said. “This applies equally to the executive and legislative branches.” Congress allotted some S3O million for 40 housing projects favored by House and Senate members in the supplemental appropriations bill for fiscal 1990, which ended Sept. 30. Similar projects were funded in appropriations for the current fiscal year as well. “Just as it was wrong for HUD under Secretary Pierce to dole out housing units and grants to former HUD officials and the politically well-connected, ... so too Congress should not earmark funding for housing projects,” the report said. “This practice by Congress, which circumvents objective criteria,

Leading indicators drop 0.8 percent in Sept.

WASHINGTON (AP) The government’s chief economic forecasting gauge dropped 0.8 percent in September, the government said today, for its second straight monthly drop. The September drop followed a 1.2 percent plunge in August, the steepest since a 1.4 percent fall a month after the October 1987 stock market crash. The index was unchanged in July. THREE CONSECUTIVE declines in the Commerce Department’s Index of Leading Economic Indicators are viewed as a fairly reliable although not infallible sign that a recession is imminent. There has not been a recession since World War II without the index turning down for at least three

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SAMUEL PIERCE Did he mislead or lie? competition and merit, should be ended,” it said. THE BULK OF THE report was approved unanimously by Democratic and Republican members of the panel. That section supported the position of current HUD Secretary Jack Kemp, who unsuccessfully opposed congressional earmarking of specific housing projects. The focus of the panel’s final report was Pierce, HUD secretary for all eight years of the Reagan administration, who is under inves-

consecutive months. However, the index was negative for six months in 1984 and for five months in 1987-88 and, both times, the economy escaped a recession. Many economists who believe the nation’s economy is in a recession arc now debating how long it will last and how severe it will be. EVEN THOSE analysts who say the economy still can skirt a recession generally agree the current quarter is in a contraction. A recession generally is defined as two straight quarters of negative growth. The GNP is the nation’s total output of goods and services and its broadest measure of economic activity. Nine of the forward-looking indicators pulled the index down in

tigation by court-appointed special prosecutor Arlin Adams. The report left unanswered whether Pierce broke any federal laws or committed perjury in his sworn testimony to the subcommittee last year, saying that was a question for Adams to pursue. BUT IT SAID there was evidence that Pierce and other HUD officials misled Congress and concealed the full nature and extent of abuses at the department as well as their own involvement. “At best, Secretary Pierce was less than honest and misled the subcommittee about his involvement in abuses and favoritism in HUD funding decisions,” the report said. “At worst, Secretary Pierce knowingly lied and committed perjury during his testimony.’ Pierce’s attorney, Paul Perito, blasted the “spurious allegations” of the report. “IT SOUNDS LIKE the last gasp of a politically oriented and motivated investigation that failed to uncover one piece of evidence supporting their suggested conclusion that Secretary Pierce benefited directly or indirectly,” Perito said. “They may disagree with him on the way HUD was managed. That is not a violation of federal law.” Pierce appeared before the investigative subcommittee in May 1989, but later invoked his Fifth

September. They were lower stock prices, a decrease in orders for consumer goods, an increase in weekly unemployment claims, a decline in building permits, a drop in an index measuring consumer confidence, a decrease in unfilled orders, a lower money supply, faster business delivery times and a decline in the price of raw materials. THE ONLY positive contributor was an increase in orders for new plants and equipment. The various changes left the index at 143.3 percent of its 1982 base of 100 and down 1.1 percent from its level a year ago. Many analysts who contend a recession will be avoided still express concern the economy may have weakened during the current

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Amendment right against self-in-crimination in refusing to submit to further questioning. SUBCOMMITTEE Chairman Tom Lantos, D-Calif., said Pierce tried to distance himself from abuses and political favoritism at HUD before the panel. “He staled that he ‘never told these people to fund anything,’” Lantos said. “However, sworn testimony from other witnesses and a paper trail of documents suggest that he was directly and intimately involved in the abuses and favoritism in HUD funding decisions.” The report said the Section 8 Moderate Rehabilitation Program, which provided grants to private developers to renovate housing for the poor, “became a cash cow which was milked by former HUD officials and the politically wellconnected.” AMONG THE consultants who collected fees for helping obtain grants for developers was former Interior Secretary James Watt. Abuses in that program alone could cost the government $413 million in overpayments, the report said, while other HUD problems will cost taxpayers more than $1 billion.

quarter. Michael Boskin, chairman of President Bush’s Council of Economic Advisers, said earlier this week that “we are concerned about a sluggish fourth quarter and the early part of 1991.” STEPHEN S. ROACH, senior economist at Morgan Stanley & Co. of New York, believes the economy will avoid a recession although he projects a decline in growth during the cunent quarter. However, he added, “We arc not projecting two consecutive quarters of declining GNP” the generally accepted definition of a recession.

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Developer decides not to submit plans for race track

INDIANAPOLIS (AP) A development group that has proposed the largest horse racing track project in the state has put off submitting an application for racing dates. However, the president of the Sagamore Park Group said the developers plan to submit an application to the Indiana Horse Racing Commission, probably early next year. THE COMMISSION’S deadline for the first round of applications passed Thursday. “I regret very much that we have not been able to accomplish all that is necessary to complete our application by the initial deadline and will, therefore, not be filing an application this year,” wrote Carmel developer Paul E. Estridge, president of the Sagamore group, in a letter to the commission. “I want to emphasize that while we cannot file at this time, we are continuing our develop-

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November 2,1990 THE BANNERGRAPHIC

ment efforts,” the letter said. ESTRIDGE ALSO wrote that the group felt no urgency in applying because there was no way its facility could be completed in 1991. The Sagamore group has proposed building a $45 million multi-use track in central Indiana. However, the group also has said it doesn’t want to start the project until the current law is changed to lower the tax rate on tracks, expand rights to simulcast races from other tracks and grant limited authority for off-track betting. Those changes in the law couldn’t be made until the 1991 session of the General Assembly. JOSEPH GORAJEC, executive director of the racing commission, said the Sagamore group probably could apply at any time and still be considered. However, he said the two applications already received from other developers will get first consideration.

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