Garn would yank reins on federal housing subsidies

Pruning shears will be used in the new Republican Senate to snip one of the fastest growing of US welfare programs -- subsidized housing. "Local housing officials and the states can decide their own needs on housing ," says Sen. Jake Garn, the Utah Republican who takes over in January as chairman of the Senate Committee on Banking, Housing, and Urban Affairs.

Senator Garn plans to push a GOP-backed move to have fewer low-income Americans eligible for aid in paying for shelter. And he wants to remove many of the federal strings that control what type of housing must be built in communities. The former mayor of Salt Lake City says he resents many Eastern remedies imposed on Western cities, such as questions of whether to rehabilitate old housing or build new units.

"We need to slow the increase in federal housing aid," said Garn in an interview.

Reducing the growth of the $31 billion federal housing subsidy program would be done by raising the level of income a person must pay for rent from the current 25 percent to 30 percent, before Uncle Sam chips in the difference. And those eligible would be determined by a bill that would require new tenants in subsidized apartments to earn less than 65 percent of the local median wages, rather than the present 80 percent threshold -- a bill that almost passed in 1979.

Garn's plans call for doling out US housing dollars with as few imposing rules from the Department of Housing and Urban Development as possible, opting instead for block grants to states and communities.

In all areas under his committee's control, Garn can be expected to seek federal protection for local interests. He opposes moves to allow national banking, fearing a British-style concentration into fewer and larger banks. But he may allow regional, or multi-state, branch banking. He plans to control the money market funds, which sap potential deposits from local savings institutions.

Garn can be expected to oppose new requests for federal aid to New York City, which come this summer.

Too many banking laws have been passed in recent years, he says, with not enough oversight by Congress to ensure that regulators keep government rules over business simple, inexpensive, and a benefit to consumer.

Garn also favors a 50 percent increase in government loan guarantees to private exporting firms. He hopes to match several other nations' high "subsidy" of their exporters.