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August/September 1991, Page 11 A Washington Report Special Report
Israel's Request for Loan Guarantees: How That $2 Billion Could Help US Cities
By George MosesWhen Congress returns from its August recess on Sept. 10, it will be faced with a request from the government of Israel for $10 billion in loan guarantees to be made available at $2 billion per year. The stated purpose of these loans is to provide housing in Israel which is needed as a result of Soviet immigration. Granting this request, however, is not expected to diminish either current or future Israeli requests for additional grants of US military and economic assistance. For fiscal 1992, which begins Oct. 1, these will range from an initial request for $3.65 billion up to $5.6 billion, the amount of direct US taxpayer assistance received by Israel during fiscal year 1991. The question before Congress will be, quite simply, one of priorities. Below is a list of American needs which will not be funded in the coming 1992 fiscal year as a result of budget constraints. Although they are in alphabetical order by state, unfunded needs are otherwise chosen largely at random from data provided by the National Association of State Budget Officers and public news media. What all have in common is that none costs as much as $2 billion. The money in question could cure many of the deficiencies cited.
In Addition To, Not Instead OfThe loan guarantees which Israel wants represent an additional $2 billion in financial capacity over and above the "normal" economic and military grants that Israel expects the US government to provide in 1992. The reasons for the additional loan guarantee request is solely to lower Israel's cost of borrowing the extra $2 billion it expects to spend each year on immigrant absorption. The government of Israel could, if it chose, borrow the money without a US guarantee. These loan guarantees involve the full faith and credit of the US government. As a result, they will probably carry a lower interest rate than bonds sold by American state and local governments. Israel will have a place in American capital markets superior to that of American states and cities. As a result of the US government-provided preference, Israel will pay one to two percent less for its loans than will American states and municipalities. The money will be used to finance the generous subsidies paid by the Israeli housing program to Israeli Jewish citizens. According to the Hebrew press, the value of these subsidies per apartment in the West Bank and Gaza (Palestinian areas not part of Israel, but under Israeli military occupation) is about $35,000. To compare this subsidy with the effort Americans must make to house themselves, we have compiled a listing of fair market rental rates for a two-bedroom apartment in each American state, as established by the US Department of Housing and Urban Development (HUD) in Washington, DC.
The government of Israel could, if it chose, borrow the money without a US guarantee.We then calculated how long an American family in each state could pay its rent if it were given a $35,000 subsidy in cash and invested it at 10 percent interest. That result is listed in each section with the title "Years free rent with Israeli subsidy. " A comparison of these statistics for all of the states is shown on the accompanying chart. One other calculation was made in the course of preparing this article. We first derived the mean apartment rental for the US, and then calculated how many apartments could be rented each year for families currently in substandard housing, or without housing at all, for $2 billion. The number of apartments was 338,200, meaning that that number of American families could be provided decent housing in the US each year with the money the US government is making available to the state of Israel. According to the Child Welfare League of America, 100,000 American children go to sleep homeless every night. All, along with all other members of their families, could be provided decent housing for far less money than the $2 billion to be sent abroad annually. The questions raised here should prompt state and local officials to ask whether federal priorities are what they ought to be. Major American cities declare bankruptcy, and federal representatives say there is no money to meet local housing, education, health and other needs. How is it that members of Congress will be able to find $7.65 billion this year to ship to one country overseas with a population of fewer than 5 million? The word is that the money will be found because the skids are greased. This loan guarantee program will be rammed though Congress in September in order to avoid the budgetary accountability such loan guarantees will be required by law to carry after Oct.1. Before that happens, Americans may wish to consider the unmet priorities listed below. They may add to them the ones in their own communities that they know about. They might also compare the Israeli housing program with the housing programs available in their own communities. These are subjects that should be discussed by Americans with their mayors, city councils, school board members, county supervisors and state legislators to see if their priorities are the same as those of their constituents. If they are, shouldn't all Americans discuss this matter of housing priorities for Israelis or for Americans with their representatives in Congress? Alabama $90 million budget cuts in FY '91; across-the-board reductions in state spending. Fair market rent: $370 Years free rent with Israeli subsidy: 15.3 Alaska $110 million proposed budget cuts for FY '92; eliminated 600 state jobs; reduced school spending by $50.2 million; cut local aid by $5 million. Fair market rent: $580 Years free rent with Israeli subsidy: 7 Arizona $108 million in budget cuts in FY'91; state hiring and travel freeze; no inflationary increases for education; community colleges cut $7.4 million; reduced spending on public safety by $4 million. Fair market rent: $550 Years free rent with Israeli subsidy: 7.5 Arkansas $155.8 million proposed tax increase for FY '92. Fair market rent: $390 Years free rent with Israeli subsidy: 13.7 California $500 million in budget cuts for FY '91; across-the-board cuts; eliminated AFDC homeless assistance-$38 million; reduced research at UC-$125 million; reduced renter's credit-$21 0 million; delayed spending; state hiring freeze; $755 million proposed tax increase for FY '92.
Fair market rent: $690 Years free rent with Israeli subsidy: 5.5 Colorado $43 million in budget cuts in FY'91; delayed some state spending. Fair market rent: $490 Years free rent with Israeli subsidy: 9 Connecticut $56 million budget cut in FY '91; employee layoffs; state services disrupted; state hiring and travel freeze; Bridgeport files bankruptcy, bond rating plummets; $876.4 million proposed tax increase in FY'92. Fair market rent: $620 Years free rent with Israeli subsidy: 6.3 Delaware $43.9 million budget cuts in FY'91; state employment reduced by 500 jobs; delayed state spending. Fair market rent: $540 Years free rent with Israeli subsidy: 7.8 Florida $749.9 million budget cuts in FY '91; $288.8 million tax increase.
Fair market rent: $480 Years free rent with Israeli subsidy: 9.3 Georgia $359 million budget cuts in FY '91; across-the-board cuts; reduced pension funding; hiring/travel freeze.
Fair market rent: $470 Years free rent with Israeli subsidy: 9.7 Hawaii Eliminating 300 state jobs. Fair market rent: $620 Years free rent with Israeli subsidy: 6.3 Idaho $64 million proposed tax increase FY '92. Fair market rent: $510 Years free rent with Israeli subsidy: 8.4 Illinois $53.9 million budget cuts in FY '91; reduced aid to poor; shifted costs to local government; delayed prison construction; laid off 1,400 state workers; reduced Medicaid reimbursement; $500 million proposed budget cuts for FY '92. Fair market rent: $560 Years free rent with Israeli subsidy: 7.3 Indiana $91.9 million budget cuts in FY '91; hiring/travel freeze. Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Iowa $47.5 million budget cuts in FY '91; across-the-board budget cuts; $62.3 million proposed tax increase FY '92; curtail property tax relief; cap state aid to schools. Fair market rent: $450 Years free rent with Israeli subsidy: 10.4 Kansas $483 million proposed tax increase FY '92. Fair market rent: $440 Years free rent with Israeli subsidy: 10.83 Kentucky Fair market rent: $390 Years free rent with Israeli subsidy: 13.7 Louisiana $283 million proposed budget cuts in FY '92; $310 million proposed tax increase FY '92. Fair market rent: $460 Years free rent with Israeli subsidy: 10 Maine $160 million budget cuts in FY '91; $64 million proposed tax increase FY '92; freeze state aid to local education at 1991 levels; furlough state employees. Fair market rent: $540 Years free rent with Israeli subsidy: 7.8 Maryland $179.8 million budget cuts in FY'91; hiring/travel freeze; extended state employee workweek; eliminated 1,600 state jobs; FY'92 tax increase.
Fair market rent: $560 Years free rent with Israeli subsidy: 7.3 Massachusetts $850 million budget cuts in FY '91; reduce Medicaid; sell land and water rights; sell state assets; delay public employee pension plan contributions; reduce local aid; state employee layoffs; hiring/travel freeze. Fair market rent: $710 Years free rent with Israeli subsidy: 5.3 Michigan $750 million budget cuts in FY'91; across-the-board cuts; state employee layoffs; hiring freeze; drastically reduced state police hours; 98,000 recipients experienced stoppage of welfare payments; 9.2 percent reduction in state arts budget; $88 million reduction in Dept. of Mental Health; $101 million proposed tax increase FY'92.
Fair market rent: $480 Years free rent with Israeli subsidy: 9.3 Minnesota $197 million budget cuts in FY'91; hiring/travel freeze; $130 million tax increase FY '92. Fair market rent: $510 Years free rent with Israeli subsidy: 8.4 Mississippi $105 million state budget cuts, across-the-board cuts; hiring/travel freeze. Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Missouri $136.9 million budget cuts in FY'91; across-the-board cuts; hiring/travel freeze; postpone selected spending; proposed FY '92 budget cuts include elimination of 467 state jobs; $100 million cut in state agency budgets, including Medicaid; no pay raises for state employees; no state aid to higher education. Fair market rent: $430 Years free rent with Israeli subsidy: 11.3 Montana $5.6 million proposed tax increase FY'92; eliminate 467 state jobs. Fair market rent: $450 Years free rent with Israeli subsidy: 10.4 Nebraska 1 percent reduction inmost state aid programs FY'91; 2 percent across-the-board cut in budgets of state agencies FY '92. Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Nevada $260.4 million proposed tax increase FY '92. Fair market rent: $640 Years free rent with Israeli subsidy: 6.1 New Hampshire $50 million budget cuts in FY '91; furloughed state workers; reduced appropriations to judicial and legislative branches; $9 million proposed tax increase FY'92. Fair market rent: $600 Years free rent with Israeli subsidy: 6.7 New Jersey $600 million budget cuts in FY'91; across-the-board cuts; layoffs of state workers; hiring/travel freeze; FY '92 proposed budget cuts include 8 percent across-the board cut for almost all state departments. Fair market rent: $590 Years free rent with Israeli subsidy: 6.8 New Mexico $35 million proposed tax increase FY'92; $14 million cut in road construction budget.
Fair market rent: $480 Years free rent with Israeli subsidy: 9.3 New York $816 million budget cuts in FY'91; layoffs of state workers; delayed state spending; delayed contributions to state employees retirement fund; hiring/travel freeze; $1.5 billion proposed tax increase FY '92; $4.5 billion proposed spending cuts FY'92; reduce state/local revenue sharing; freeze state wages; eliminate 18,000 state jobs; reduce aid to school districts; cut state Medicaid program; reduce aid to education; increase tuition for higher education; cut social services/ miscellaneous. Fair market rent: $560 Years free rent with Israeli subsidy: 7.3 North Carolina $222.2 million budget cuts in FY '91; across-the-board cuts; delayed contributions to state employees retirement fund; hiring/travel freeze. Fair market rent: $400 Years free rent with Israeli subsidy: 12.9 North Dakota Fair market rent: $420 Years free rent with Israeli subsidy: 11.8 Ohio $220.6 million budget cuts in FY '91; across-the-board cuts; layoffs of state workers; delayed contributions to state employees retirement fund; hiring/travel freeze; $98 million proposed new taxes FY'92. Fair market rent: $400 Years free rent with Israeli subsidy: 12.9 Oklahoma $40 million proposed budget cuts in FY '92; eliminate 1,600 state jobs. Fair market rent: $450 Years free rent with Israeli subsidy: 10.4 Oregon $71 million proposed tax increase. Fair market rent: $480 Years free rent with Israeli subsidy: 9.3 Pennsylvania $358 million spending cuts in FY '91; across-the-board cuts; layoff state employees; furlough state workers; delay state spending; hiring/travel freeze. Philadelphia eliminated 1,700 jobs and cut its homeless programs; $1.6 million proposed new taxes FY '92. Fair market rent: $470 Years free rent with Israeli subsidy: 9.7 Rhode Island $155 million spending cuts FY '91; $36.8 million tax increase FY'91; eliminated 1,000 state jobs; delayed payments to local school districts; reduced pension fund payments for state employees and teachers; hiring/travel freeze. $127.4 proposed tax increase FY '92. Fair market rent: $550 Years free rent with Israeli subsidy: 7.5 South Carolina $132.6 million budget cuts FY '91; $19.9 proposed budget cuts FY '92; reduce state merit pay increases; $5.3 million cut in health and human services; $5 million cut in education; $3.6 million cut in Dept. of Mental Health. Fair market rent: $390 Years free rent with Israeli subsidy: 13.67 South Dakota Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Tennessee $201 million budget cuts in FY'91; across-the-board cuts; delayed state spending; hiring/travel freeze. Nashville cut 80 police and fire jobs and 40 hospital beds. $703 million proposed budget cuts FY'92. Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Texas $500 million proposed tax increase FY '92. Fair market rent: $410 Years free rent with Israeli subsidy: 12.3 Utah Fair market rent: $450 Years free rent with Israeli subsidy: 10.4 Vermont $42 million budget cuts in FY '91; across-the-board cuts; layoffs of state employees; $78.2 million proposed tax increases FY '92; "level funding" for education and government services; layoffs of state workers. Fair market rent: $580 Years free rent with Israeli subsidy: 7 Virginia $1,804.1 million budget cuts in FY '90-'92 biennium; 900 employee layoffs; $1,285 million in agency reductions; $323 million cut in aid to localities; includes $208 million in education cuts; 2 percent salary increase for state employees deferred; employee layoffs.
Fair market rent: $530 Years free rent with Israeli subsidy: 8 Washington $900 million deficit FY '91-'93 biennium; $102 million cut in K-12educ $83 million cut in higher education; $54 million cut in block grants to schools; $53 million cut in medical assistance budget; $20 million cut for nursing homes. Fair market rent: $470 Years free rent with Israeli subsidy: 9.7 West Virginia Fair market rent: $430 Years free rent with Israeli subsidy: 11.3 Wisconsin $30.5 million proposed new taxes in FY'911 -'93 biennium; 27 of 50 state agencies absorb budget cuts. Fair market rent: $440 Years free rent with Israeli subsidy: 10.8 Wyoming Fair market rent: $560 Years free rent with Israeli subsidy: 7.3,
Years of Free Rent in Two-Bedroom Apartments $35,000 Would Fund if US Financial Aid Went to Americans Instead of IsraelisAlabama …15.33 Alaska…7.00 Arizona…7.50 Arkansas…13.67 California…5.50 Colorado…9.00 Connecticut…6.33 Delaware…7.75 Florida…9.33 Georgia…9.67 Hawaii…6.33 Idaho…8.42 Illinois…7.33 Indiana…12.33 Iowa…10.42 Kansas…10.83 Kentucky…13.67 Louisiana…10 Maine…7.75 Maryland…7.33 Massachusetts…5.33 Michigan…9.33 Minnesota…8.42 Mississippi…12.33 Missouri…11.25 Montana…10.42 Nebraska…12.33 Nevada…6.08 New Hampshire…6.67 New Jersey…6.83 New Mexico…9.33 New York…7.33 North Carolina…12.92 North Dakota…11.75 Ohio…12.92 Oklahoma…10.42 Oregon…9.33 Pennsylvania…9.67 Rhode Island…7.50 South Carolina…13.67 South Dakota…12.33 Tennessee…12.33 Texas…12.33 Utah…10.42 Vermont…7.00 Virginia…8.00 Washington…9.67 West Virginia…11.25 Wisconsin…10.83 Wyoming…7.83 George Moses, a former president of the National Association of Arab Americans, is a legislative and economic consultant based in Washington, DC. The following members of the Budget Priorities Project contributed research to this article: John Mansour, Imad Abi-Saleh, Rebecca Criss, Fedah Dahdul, Mohammed Deeb, Dennis Denno Natasha Ghoneim, Ashraf Khalil, Jamal Kheiry: Abe Osta, Mamdi Rifai, Gregory Shadid. This article is extracted from a larger study to be published by the author in August. For a copy of the larger study, send $5.00 to: Budget Priorities Project, American Educational Trust, PO Box 53062, Washington, DC 20009. |