Senator BROCK. I have the Director of the Budget coming 1 office right now. I have to leave. I will try to come back. If yo still here, I certainly want to talk with you.

I want to say I am always delighted when Professor Galbra here. I think he is one of the most intellectually stimulating p I have ever met. I hope it is not a surprise to him to find that w on exactly the same side on this question. I thoroughly agree his statement.

Senator SAXBE. Why not bring the Director up and put him o witness stand?

Senator BROCK. We may do that before we are through.

Senator SAXBE. What I am concerned about is passing this bil setting up this committee, and then these men, because of seniority and the committee chairmenships, and their wisdom in y would come in and say, "Here is something that transcends this, therefore, I offer this amendment," and any bill can modify any Therefore, we are blown out of the water, maybe at the first inst of this. We have had people testifying here from States who have this and they have all been advisory. In California, where they been doing this for 30 years, it has kind of a body of the law. Sure. purely advisory, but it has a certain amount of pressure on that 1 lature to keep it from irresponsibility.

What I think happened in our 1969 tax bill, especially on the of the Senate, was the worst kind of irresponsibility. In other wo everybody knew we were running at a deficit and yet we wind up a tax reduction of $6 billion.

I think the reason they won't introduce a tax reform bill this ye because they think the same thing would happen. Rather than get money to stop the deficit, we will probably put in some more exe tions and lower the taxes.

I haven't been able to put my finger on any way that we can do we are trying to do here and have any teeth in it. If it amounts to t then the next time that we have a President and a Congress of same party, it would gradually fall into misuse.

I am not as optimistic as you are about the Members of Cong who are not in positions of seniority having more responsibility might interest you to know that on this bill we are talking about, already pretty well agreed as to what is going to come out, which I very discouraging, when bringing in such witnesses as you, only to it is a fait accompli.

If this type of thing is going to be the order of the day, I can't that what we pass is going to be the weapon that we need to ach responsibility.

I would just like a general comment on that. It is a statement, a question.

Mr. GALBRAITH. Let me make one very general comment. Always all legislative matters, we are concerned with finding some advice protecting ourselves from the irresponsibility or on occasion the pidity of those who come after us. This is the oldest problem of pu administration, or university administration for that matter.

My own university runs its financial affairs on the basis that next generation of financiers will be financial cretins. We have no tection. There is no way of protecting ourselves from later and gre

of huma

m

erned, it seems to me here, Senator Saxbe, with a sensible rings the question of the expenditure of public funds and es responsibly within the purview of the Congress where

ily hope that that simple idea, with its enormous importoring the ultimate power of the Congress, which is, after r over expenditures, will sufficiently appeal to this and the on of legislators so that it will be respected. If the LegisUnited States, the Congress of the United States, is deterroy its own power, then I suppose there is nothing we can it. I am not quite that pessimistic.

XBE. The history of our Congress indicates that many of that we seek to regain were once exercised by political her words, a responsibility within the Congress to pretty all limits, and to some who bring taxation and expendie kind of reasonable relationship.

ragmentation of political parties, it resulted in weak leadms to me, because they had to represent all aspects of the erefore, they represent none.

en one of the causes, that the parties have lost this responon't mean the party nationally. I mean the party as the › Members in Congress. They have not been able to pull responsibility necessary or the discipline.

AITH. I think to some extent, Senator Saxbe, but I ke too much of a point of it. We have never had a strong arty system in the United States.

XBE. Not like parliamentary.

AITH. Not the kind of discipline that is taken for granted or example. I, for one, don't deplore it. It seems to me that f our political life-and this is a point getting far away ject at hand, but I spent a certain amount of my adult life am associated with one of the universities there is everyery opportunity, a form of self-flagellation, as far as the s is concerned.

of the U.S. Congress is so far above that of the House of so great, that there is no comparison. One of the reasons many people who are willing to speak their minds withition of whether the party will crack down on them or on a whip that forces them to vote or speak the way they ibly risk lifting their ticket so they don't have a connext time.

ot exchange our undisciplined end much higher level of xcitment on these matters for the much greater discipline

1.

XBE. In other words, the party discipline concept has nd of an illusionary thing over the years.

AITH. I have never seen any discipline in the Democratic Republicans, of course, march much better to the drums. XBE. That is historical, too. I am trying to find a handle re trying to do in this particular bill. I keep coming back roblem. It seems to me to be "all right, so we adopt this, his budget information."

!

But then any committee chairman or any strongman on the will act, too.

Maybe we have to go back to the California attitude of "W works, and, therefore, there is this pressure to do this." Maybe t the most we can hope for, that it would be an advisory body that "Here are the facts. You are going to go $20 billion over the bu this year unless, one, you cut back on expenditures, or, two, you taxes to meet it."

I think this is a very healthy thing. That is why I think these ings are good. I think your coming down here is extremely goo cause it gives encouragement to those of us who despair over wha been happening in the last half dozen years, or more than that, sp ing more money than we have to spend.

Thank you very much.

Senator HUDDLESTON. Professor, you indicated that you don't t Congress could ever develop its own budget. Does this mean that gress could not create the machinery that would enable it to devel budget, or that we are just going to continually react to what Executive presents?

Mr. GALBRAITH. I don't want to seem to be totally negative on t but I suppose when we do take one reform at a time it does seen me that the reform we are here discussing, having the budget com the Congress, having the period at the very beginning of that in congressional session when the attention is focused on the broad c gories by a committee of this sort, which needs to be supported b very good staff-the suggestions of Senator Humphrey are very portant in that regard-is the first very big step.

Senator Saxbe says it may be a larger step than the Congress is prepared to either take or subsequently respect. One should bear mind that the preparation of the budget of the United States is enormous task. Work on the new budget begins as soon as the old is finished or before.

Senator HUDDLESTON. Provisions of some of the legislation we considering deals with the question of 3- or 5-year projections. H do you feel about that?

Mr. GALBRAITH. I would agree almost completely with what M Cohn said on that. To regain authority over the budget is a mat of two dimensions, first how much you spend for a particular thi and it is also to get the control over the period of time that the e penditure requires, to have the control coincide with the period of ti of the expenditure. Otherwise you are always going to be faced wi the suggestion that there isn't anything you can do because this flects our past commitment to antimissile systems, our past comm ment to the nuclear aircraft carrier, or a new fleet of Poseidon su marines, or whatever, and, therefore, nothing can be done about it. Senator HUDDLESTON. Senator Percy.

Senator PERCY. We certainly welcome you, Dr. Galbraith. It always a pleasure to have you as a witness. You are one person I abs lutely know gives a statement without a public relations expert havin written it ahead of time. The characteristics of your writing are s identifiable and come right from your heart.

I may disagree with you on some of your conclusions, but certainl they are yours and yours alone.

standpoint of the influence that large corporations preve in Government-and I wouldn't underestimate at all e and power of large companies-when it came to price ler phase II large corporations were still controlled and e smaller companies on wage and price controls were freed. did you account for that phenomenon in an administraas been characterized as oriented toward the big business ?

RAITH. This is a complicated thing as these matters genI very much favored that action. It seems to me we are ng away from the subject of the hearings, but it seems to basic strategy of inflation control in our time is to mainh balance between expenditure and production through o a lesser extent through monetary means, and then use ere wages react on prices and where prices react on wages. ally speaking, is a phenomenon of the large centralized e economy, the 1,000 big corporations that I mentioned in nt, generally speaking, being matched, except in very few by equally strong unions.

on that controls were kept there and were let off the small s essentially to the fact that in the large corporations the of inflation come out of the wage-price spiral, whereas in retailing, small enterprise, the mechanics of inflation ally from the pull of demand you can't correct by price

-action of wages on prices and prices on wages you can ontrol. So the administration was correctly reacting to the n the economy which I really described in the statement, bjective difference.

is reacting to the fact that while the large corporations are powerful in the U.S. Government and in the Federal exy are also vulnerable. The fact that they control their s that you can have a supervening control by the Federal t. I was immediately in charge of price control in World en I finished my tour of duty-perhaps I should more acwhen the tour of duty had finished me I wrote a piece which I formulated the rule that it was relatively easy in States to fix prices that had already been fixed. Generally e large corporations having already fixed their prices, one in with Government powers and fix them.

if you had prices that were established in the market in of agricultural prices, price fixing is a much more difficult on't want to be seen as giving the administration a comn bill of health. I regard this matter about fixing meat olly irresponsible.

PERCY. As the coauthor of the Consumer Protection Agency, at vigorously by some big businesses, I do think one factor usiness in this country contribute is tremendous managerial contractors, and aid in financing and thus can provide stamall business that can't afford its own marketing operation. administered companies that do have this intimate relath thousands of subcontractors are really the reason why businesses exist and do as well as they actually do.

Mr. GALBRAITH. I am not attempting to attribute wickedne righteousness to large business or small business. I am arguing that large business has an effective access to the powerful branch o Government, which is the executive. This is equally true under publicans or Democrats, or almost equally so.

Equity as within the economy will be lost if there is a further terioration of congressional powers.

Senator PERCY. If we take into account that big corporations d some extent influence Government decisions, often favorable to t particular companies or industries, do you think by opening up records of informal and formal meetings held between industry the Government we will remove the special privilege sometimes sou and sometimes by business from regulatory agencies and various partments of Government? Is this a step in the right direction? T committee did originate a bill to require open meetings of advis committees, and this was enacted and signed last year.

Mr. GALBRAITH. Absolutely. The last time I think I was befor congressional committee it was to discuss this issue. I would go principle much beyond that. I would say that by the time a firm reached the level of General Motors or General Electric or the Te phone Company, it is essentially public business and that the old ru that separated public business from private business, and the formula which said this as a competitive enterprise in the market a right to a large area of secrecy is very largely dissolved. Both in t relations of the modern large corporation with the State, with t Government, and in its internal business, we should have a mu larger area of public knowledge than we now have.

Senator PERCY. I wouldn't want to have your remarks appear though all virtue rests in the legislature, and I am sure you don't me it that way. The Executive is not the sole branch of Government su ject to this internal pressure. We know in the appropriation proces particularly appropriation markups which have always been done secrecy, that the pressure of vested interests placed on Members of th Senate and the House is not readily apparent.

I wonder if you feel we can be trusted more in the future than in th past because we are marking up bills for the first time in the histor of the Congress in open session, where the lobbying and the log-rollin that goes on between Members of Congress and outside vested interes can be subject to the scrutiny of the press and the general public.

Possibly we are moving in the direction where we can be judge more to be working in the public interest rather than some specia interest.

Mr. GALBRAITH. I thoroughly agree with that. Again, I do not wan to seem to be ascribing virtue to the Congress and evil to the Execu tive. It does seem to me that, as a cliche and common phrase, one of protections of democratic wisdom is public scrutiny. I have said many times that I have never awakened one morning to a conclusion that I had done something extremely stupid the day before without wondering if it might be subject to security provisions and kept from being known, whether the action would be classified. That is the first reaction. Senator PERCY. In the final page of your testimony, you have gotten into the subject that is almost verboten among public officials.