ING CONGRESSIONAL CONTROL OF THE BUDGET MONDAY, APRIL 2, 1973 U.S. SENATE, MMITTEE ON BUDGETING, MANAGEMENT, AND URES, COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. mittee met at 9:30 a.m., pursuant to call, in room 3302, Building, Hon. Lee Metcalf (chairman of the subcoming. nators Metcalf, Nunn, and Roth. ers present: Vic Reinemer, staff director; E. Winslow counsel; Harrison W. Fox, professional staff member nd Jeanne A. McNaughton, assistant chief clerk. TCALF. The subcommittee will be in order. riate that the first hearings of the new Subcommittee on anagement, and Expenditures-and, indeed, the first onsideration by its members-concerns legislation to essional control over the Federal budget. lready nine bills before us. All have the basic objectives che machinery, staffing, and information to enable Conits own legislative budget, set a ceiling on expenditures revenues and the national debt, set the people's priorities ling, and take charge of fiscal policy in general. any problems and priorities before us. These include loss rough our own action, spending control, such as back, obligational authority, enactment of programs which deral Government to uncontrolled levels of expenditure. 1st have information necessary to exert the power of the full knowledge of the consequences of all these actions. open these hearings this morning with some of our Congress, most of whom have introduced bills. nally intended to conduct morning and afternoon hearwill be necessary to shorten the hearings today in order lated matters within the full Government Operations at meeting is scheduled to begin at 11:30. So we will de this morning's hearings by that time. he balance of my statement into the record. pers of the committee who desire will have the oppord their remarks in the record. he bills before the committee will be put into the record Metcalf's opening statement and the bills referred to (1) OPENING STATEMENT OF CHAIRMAN METCALF It is appropriate that the first hearings of the new Subcommittee on Budgeting, Management and Expenditures-and indeed the first priority of consideration by its members concern legislation to improve congressional control over the Federal budget. There are already nine bills before us. All have the basic objectives of providing the machinery, staffing, and information to enable Congress to frame its own legislative budget, set a ceiling on expenditures in relation to revenues and the national debt, set the people's priorities under that ceiling, and take charge of fiscal policy in general. Also before the subcommittee are the recommendations of the Joint Study Committee on Budget Control, which are contained in the committee's interim report, issued on February 7. Thus, we have a wide spectrum of ideas with which to work, and we have the legislative language. Our task now is to extract the best in these bills, and to expedite action on the legislation while Congress is in a mood for asserting its constitutional responsibilities. On reflection, it seems almost incredible that we are still using tools developed over 50 years ago-by the Budget and Accounting Act of 1921 to arrive at a national budget, particularly when Federal expenditures today are 100 times greater than they were in the 1920's. The Employment Act of 1946 commits the Federal Government to relate its fiscal and monetary actions to the overall needs of the national economy-to avoid high unemployment and slack production on the one hand and excessive inflation on the other. To have a beneficial effect on the economy we must devise a legislative method for relating spending to revenues. Large budget deficits are harmful in a period of demand inflation because the Government would be adding to demand by pumping into the economy much more than it takes out. On the other hand, severe budget cuts will hinder the recovery of an economy marked by high unemployment. Thus, spending must be controlled, but it is the relationship of spending to revenues that must be considered here. Spending and tax policies must be related. We face the difficulty of approving funds for a future fiscal year which will not be completed for 12 to 18 months into the future. Broad economic changes can occur within that time period, which may warrant changes in expenditure levels to meet the overall needs of the economy. Further compounding this situation is the leadtime necessary to vary expenditure levels. For example, a decision to cut expenditures now may require 9 to 12 months to become fully effective. An increase in expenditures requires more time, because of the necessity of legislating, appropriating, planning, and implementing new or expanded activities. The problems we face also include loss of spending control through our own actions such as "Backdoor spending" which commits the Government to making funds available without being reviewed in the annual appropriations process; Obligational authority permitting expenditures far into the future; and The enactment of programs which commit the Federal Government to uncontrolled levels of expenditure. 1, Congress must have the information necessary to exert the purse with full knowledge of the consequences of its ar policy is that of approving a program, we need to know money is needed to carry out the policy at levels we ecognize that creating the tools necessary for us to do the be easy. But it must be done. Otherwise, we shall relinquish ts of our responsibilities to the executive branch of the -a course repugnant to the Constitution and to all Memress as well. this consideration of methods to improve congressional significantly-at the end of a long and expensive war. vs us that it is the time immediately after wars when taken major actions to improve its fiscal responsibilities. Civil War, we created the two appropriations committees. War I, we enacted the Budget and Accounting Act of close of World War II, we passed the Congressional Reorct of 1946 and the Employment Act. Now, after Vietnam, pting to reform our control of vital fiscal matters, as the nplexity of the Federal budget has assumed gigantic r concern is the need for reform in order to preserve our uthority from encroachment by the Chief Executive. But nscends this particular issue. The plain facts are that who exercises authority, the budget is in danger of going 1. In the face of persistent inflation, huge budget deficits, ficits in our balance of payments and the declining value abroad, action is imperative. 1 93D CONGRESS 18T SESSION S. 40 IN THE SENATE OF THE UNITED STATES JANUARY 4, 1973 Mr. BAKER (for Mr. BROCK) introduced the following bill; which was read twice and referred to the Committee on Government Operations A BILL To improve and implement procedures for fiscal controls in the United States Government, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That (a) this Act may be cited as the "Federal Act to Con4 trol Expenditures and Upgrade Priorities". 5 (b) The Congress declares that because it is imperative 6 to establish national goals and priorities for the maximum 7 allocation of Federal expenditures, and because it is impera8 tive to regain effective control over the budgetary process 9 so Congress may determine those priorities, therefore it is 10 deemed necessary 2 (1) to establish a congressional budgeting system which facilitates establishment of national goals and priorities to meet the needs of a modern society and economy, (2) to create a joint committee with responsibility to oversee and establish fiscal guidelines for the proper implementation of national goals and priorities, and (3) to develop a means for a constant and system atic review of existing programs to be certain that they are achieving the national objectives for which they were created. TITLE I-LEGISLATIVE BUDGET SEC. 101. (a) There is established a joint committee of Congress which shall be known as the Joint Committee the Budget (hereinafter referred to as the "joint commit"'). The joint committee shall be composed of eighteen mbers as follows: (1) nine Members of the House of Representatives, to be appointed by the Speaker of the House of Representatives, three of whom shall be members of the Committee on Ways and Means and three of whom shall be members of the Committee on Appropriations; and (2) nine Members of the Senate, to be appointed by the President of the Senate, three of whom shall be members of the Committee on Finance and three of |