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Congress could then specifically limit the rate at which funds are to be obligated. That would be one possibility.

I do know that you cannot have everything on a year-to-year basis.

Mr. Roth. I agree with you on that. But I would assume that many of these funds in that pipeline go back many years. Even if you had your so-called total obligational approach, funds, there would be no automatic funds entering

Mr. Staats. This gets back to the same question Mr. Broyhill and I were discussing. I would favor an automatic expiration of programs at the end of some point in time. Beyond that if you are talking about a public works project or weapons system, you are talking about something that has a terminal point in any event.

Mr. Roth. It seems to me one of the primary objectives of budgetary controls is the fiscal discipline. One of the things that concerns me, and I recognize that there is considerable merit to what you are saying, but if we only set tentative budget targets in the beginning, do you really think any fiscal restraint would be shown in the latter part of the year, particularly during an election year?

I am concerned that if you set up a budget target in January and you review that throughout the year and do not have some pretty tough controls involved, that when you get close to an election, it is going to be very difficult to expect the Congress to say, well, we are going to cut back on this program or that program or we are going to make it up by increasing tax revenues.

I fear it will in effect continue our present practice of saying well, just up the ceiling and we will permit the deficit to expand.

For that reason I have a serious question whether we should delay too long setting a ceiling and then putting some pretty tough curbs on what Congress could do.

Mr. STAATS. I think the ceiling would have to be arrived at very early after the Congress convened. By very early I am thinking within about 30 days or 45 days, something of that nature.

As I have emphasized here, that figure cannot be completely binding at that point. The legislative committees have to review those programs. The Appropriations Committees have to review the request before them. This total could be reviewed at a later point in time, but in any event, there probably would have to be some relooking at the total before the session ended.

It might not be necessary, but it would seem to me quite possible that it would have to be reviewed, depending on how tight it is. If it is real tight chances are you would have to take a look at it.

Mr. Roth. By taking another look do you mean the Congress by a simple majority vote could push it upward ?

Mr. STAATS. I liked Congressman Davis' idea of the two-thirds vote.

Mr. Roth. What role do you think the President should have in this budgetary process? He, of course, submits his budget to you. Should the legislative budget be created independent of the President or should this be in the form that it require the approval of the President so that you have an agreement between the two branches of Government?

Mr. Staats. I do not think a formal agreement would be necessary. I think there would be lots of opportunities for informal consultation through meetings of the leaders.

It seems to me that would be the preferable way to proceed with it. The other point, though, that you may have in mind here, is that there needs to be considered, it seems to me, anew, the question of the item veto, the question of use by the President on his side of what might be called rescission legislation which has been used from time to time in the past, where the President specifically proposes legislation to reduce appropriations during the course of the year.

The third area, it seems to me, that might be examined further, is the possibility that as Congressman Mahon was referring to, that Congress in enacting the law would specifically give the President some discretion as to the level of spending within that law.

It seems to me there are many possibilities here that need to be looked at from the point of view of the give and take between the legislative and executive branches, of levels of spending without getting into the basic issue of confrontation as to whether the President does or does not have authority to impound money.

Mr. Roth. I want to thank you for your valuable assistance. Thank you, Mr. Chairman.

Chairman WHITTEN. Mr. Staats, we wish to thank you for your appearance here. I realize the committee has kept you quite a while and, at the inconvenience of some of our colleagues who are waiting to testify. But in view of your long service in the executive branch and in the position you now hold I do not know of anybody in a better position to give us the benefit of experience in these areas. I do hope and trust, and I know we can count on it, that people on your staff will be able to work with our staff in analyzing the vast proposals.

We will be glad to hear from you at this time Senator Stevenson and we welcome your presentation. STATEMENT OF HON. ADLAI E. STEVENSON, A U.S. SENATOR FROM

THE STATE OF ILLINOIS Senator STEVENSON. Thank you, Mr. Chairman, for the opportunity to be here this morning.

Every member of the Congress is concerned about the need to control Federal spending and to order the Federal Government's fiscal priorities in a rational way and preserve the rightful powers of the Congress.

Like every other member, I am therefore grateful to you and to this committee and I want to commend you all for your industry and the very encouraging progress which you are making.

On February 19 I introduced with Senator Mathias, Ervin, MeGovern, Biden, Javits, and Stafford a bill which is consistent with most of the broad tentative recommendations of your committee.

I thought I would just to describe it briefly and touch upon a few areas of difference between this bill and the committee's tentative recommendations.

Then if I might submit for your record a more detailed explanation of the bill

Chairman WHITTEN. I will be glad to receive that. Without objection, it is so ordered.

Senator STEVENSON. Thank you.

In broad terms, under this proposal, as under the tentative recommendations of the Joint Committee, Congress would be required to set an absolute ceiling on spending, budget outlays, at the beginning of each year.

The ceiling would be based on the President's budget, the condition of the economy and projected revenues. Congress would then be prohibited from passing any measures which breached the ceiling.

Since there would be an absolute ceiling on the amount of Federal outlays, it would not be possible to provide funds without regard to their overall fiscal impact.

However, this proposal for a mechanism to set an annual budget outlay differs somewhat from the tentative recommendations of the Joint Committee. The Joint Committee recommends that "an organization to implement the control procedures outlined above probably should encompass the formation of permanent legislative committees on the budget. The appropriations and tax committees in the case of each House should be adequately represented in the membership of the budget committee."

My proposal does not call for quite so drastic a change in the present committee structure, nor does it call for another new committee. Rather, it would make the present existing system work better by assigning consideration of an outlay ceiling to the present Appropriations Committees which after all, are the committees charged with providing the budget authority that results in outlays.

I might add that the membership of the Appropriations Committee, at least in the Senate, of which I, of course, am most familiar, has become increasingly well balanced in terms of seniority, regional represntation and philosophy.

The Joint Committee's tentative recommendations also stress the necessity of devising a new and workable congressional system of deciding priorities.

The Joint Committee perceptively observed that “the present institutional arrangements in many cases appear to make it impossible to decide between competing priorities with the result spending is made available for many programs where the preference might have been to make choices and also spending reductions."

This proposal, S. 905, approaches this problem through the mechanism of an omnibus or consolidated appropriations bill.

Each Appropriations Committee would be required to report out only one appropriations bill containing all appropriations. The bill would not only specify the amount to be appropriated, but the permissible outlay during the fiscal year for each activity.

The present procedure of reporting out and considering individually more than 10 separate appropriations bills makes it difficult for Congress to rationally set priorities. Under the procedure which I propose, Congress would be compelled to weigh the cost and benefits of one program against those of another.

The omnibus appropriations bill could be amended on the floor of the House or Senate, but any amendment which increased appropriations for one federal program would have to provide for cuts in other

programs at least equal to the increase. The proposal includes provisions to insure enough flexibility to take account of unforeseen emergencies and sudden changes in the economy.

Congress, Mr. Chairman, has already had a favorable experience with an omnibus appropriations bill. In 1950 both the Senate and the House passed one omnibus bill. The House passed the bill on May 10, the Senate passed it on August 4, and the President signed it into law on September 6—2 months earlier than the final general appropriations bill had been enacted the previous year.

The omnibus bill cut the President's original budget request by $2.3 billion. After its passage, Senator Harry Byrd, Sr., the original proponent of an omnibus approach in the Senate commented

The enactment of the single appropriation bill this year required less time, promoted fuller participation in debate, and resulted in savings rather than increases.

Representative Cannon, Chairman of the House Appropriations Committee, concluded that,

The single appropriations bill offers the most practical and efficient method of handling the annual budget and the national fiscal program. Judged by our experience, there is no legitimate reason which can be advanced against it.

Since the state of the economy may change, emergencies may occur, or projections of outlays for uncontrollable expenditures may increase, it is necessary to build a degree of flexibility into the spending ceiling and priority-setting process.

My bill allows Congress, either on its own initiative or in response to a Presidential request, to consider amendments changing the binding outlay ceiling and the composition of spending within that ceiling. In the case of a Presidential request, Congress would be required to act within 30 days or the President's proposal would become law.

Finally, under S. 905, the President would be prohibited from impounding funds for any other than technical fiscal management reasons. Under no circumstances could he impound funds if it meant that, as a result of the impoundment, the activities for which appropriations had been granted would not be fully carried out.

In short, the bill would establish a firm and carefully calculated ceiling on spending. It would then establish a process by which the Congress could rationally determine the Nation's fiscal priorities within that ceiling. And it would prohibit Presidential frustration of responsible congressional action.

I do not claim that this is a perfect bill, or the only possible means of reforming the congressional budgetary process. I commend it to you only as a beginning, as one possibility and with the belief that, if enacted, it would go a long way toward claiming for the Congress its rightful powers and assuring that they are exercised well.

Thank you.

Chairman WHITTEN. Thank you, Senator. We appreciate your presentation. It will certainly have the study of the committee. As you sav, it is a beginning.

[The full statement follows:]

STATEMENT OF HON. ADLAI E. STEVENSON OF ILLINOIS

Prior to receipt of the President's budget, the Joint Committee on Internal Revenue Taxation (a joint committee consisting of members of the Senate Finance and House Ways and Means Committees) would hold hearings and

make estimates of tax revenues available for the coming fiscal year. The estimates would be based on the best available economic projections and advice.

Then, no later than 10 days after receiving the President's budget, the Joint Economic Committee would hold hearings on the President's budget, and, using the revenue projections prepared by the Joint Committee on Internal Revenue Taxation, make recommendations concerning the Federal budget surplus or defiicit, if any, appropriate for economic growth and stability .

No later than 10 days after receiving the recommendations of the Joint Economic Committee, the Appropriations Committee in each House would consider the JEC's recommendations, hold hearings and report out a bill establishing the total permissible outlays for the Federal government during the next fiscal year,

The setting of the outlay ceiling would represent an act of great importance for the economy and a significant assumption of responsibility by Congress. At the present time, Congress considers the macroeconomic impact of the Federal budget only through non-legislative hearings of the Joint Economic Committee.

Clearly, the Committee responsible for considering and reporting out an outlay ceiling will assume a vitally important function. Many have suggested a joint committee consisting of selected members of the Appropriations Committees, Ways and Means, and Finance. I have rejected this proposal for two reasons. First, such a mechanism was attempted during the abortive legislative budget effort in 1948 and found unwieldy and unworkable. Second, I do not believe Congress should delegate such an important function of all members to a body which would essentially be a committee of only the most senior members of the most powerful committees.

It would be more reasonable and consistent with present, workable Congressional procedures to consider an outlay ceiling through the present Appropriations Committees which, after all, are the committees charged with providing the budget authority which results in outlays. The membership of these Com

representation and philosophy.

Under this proposal procedures are set forth to prevent delay in the Appropriations Committee and extended consideration on the floor. In each House, floor debate, including amendments, is allowed for five calendar days during

within 45 days of receiving the President's budget message, the sum total of budget outlays set forth in the President's budget would become the legally binding spending ceiling.

The legislation specifies that the ceiling be on total outlays with no exceptions. It would require that all legislation considered by Congress contain estimates of projected outlays during the current and four succeeding fiscal years. The rules of Congress would be changed to specifically prohibit each House from passing legislation which would result in exceeding the outlay ceiling. However, to maintain needed flexibility a mechanism would be set up to allow for periodic Congressional reexamination and, if necessary, revision of the outlay ceiling. I will describe this mechanism later.

Setting the outlay ceiling ensures that spending will be kept under control. But it does not necessarily mean that Federal funds will be spent wisely. To do that, the present process by which Congress attempts to set priorities must be restructured.

At present, Congress faces at least two severe problems in its efforts to rationally set priorities. First, the Appropriations Committee in each House currently reports out 10 or more appropriations bills, at least one from each Appropriations Subcommittee. Each of these bills is considered separately in Committee and separately on the floor of Congress. This process makes it difficult to rationally set priorities.

Since the very essence of setting priorities is to compare the benefits of an extra dollar spent for purpose A (say a public works project) with spending that dollar for purpose B (say a health program), it is impossible to make this decision rationally if program A (public works) and program B (health) are not considered together and at the same time. Instead, the tendency is to spend more

the cost and benefits of one program against those of another. This proposal would allow such comparisons to be made by requiring that all appropriations be considered in a single appropriations bill-an omnibus appropriations bill.

Second, the Appropriations Committee now can exert effective control over less than one-third of budget outlays in any one fiscal year. This is because the appropriations process does not directly affect budget outlays. Instead, it controls budget or obligational authority, and only one type of budget authority at that

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