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When you can get Senator Cranston and Senator Harry Byrd on the same bill together with Charles Percy, it is either awfully good or awfully bad. I hope in this case it is awfully good. We are all after the same thing, to find an orderly process in which Congress can reassert itself, but in a way that would be welcomed by the executive branch of the Government.

To my friends in business who have joined the executive branch of Government, I would like to say, because I have the feeling that some of the executive branch might have representation here this morning to hear the testimony, I was confronted by a businessman who recently joined the administration and he said if I could just operate down here the way I do with my board of directors back in business, I would have no trouble, and I had to remind him, in my judgment, though, there is a whale of a lot of difference. You don't have the autocracy that you have in business. · All the authorization goes to one man who can be thrown out in midyear or midmonth if he does not perform. You don't do that in Government.

We can't look to the Congress to be a board of directors, to be dealt with like a board of directors. I have served on them; fellows jet in, I have done the same thing, for four, five meetings a year.

They arrive at 10 in the morning. They want to leave at noon. They want everything presented in capsule form and the annual budget submitted by management is rarely changed. It is changed when the red ink at the bottom persists and when you get too many cries from stockholders, but for the most part the board of directors of a company can't be compared to the Congress of the United States.

Many Members as they sit and have heard testimony through the years from so many different Secretaries, so many different department heads, they begin to think that these men are the phasing part of government that comes in and goes out, but the Congress persists and stays here, and I think the Congress has a tremendous knowledge and a tremendous expertise that if properly marshaled can contribute to this whole budget process.

So the bill that I have introduced—we introduced it last year with Senator Cranston and myself and this year Senator Harry Byrd joined us. We have formed it to conform to what we saw in the recommendations.

This would establish a congressional budget process that I think would work. It sets up a Joint Committee on the Budget of 28 members, seven from each of the four committees, the House and Senate Appropriations, the House Ways and Means, and the Senate Finance. Four members to represent the majority, three the minority.

They meet at the beginning of the session of Congress and after considering the overall budget situation, the state of the economy, taking into account the President's annual economic report and budget recommendations and the annual economic review of the Joint Economic Committee, the joint committee would make a report to each House of Congress by March 30.

The report would contain a recommendation for the maximum amount to be appropriated or authorized for outlays in the coming fiscal year. This recommendation would be based on an estimate of expected buget receipts during the coming fiscal year, and on this basis the joint committee would also make recommendations regarding any necessary increase in the national debt or in Federal income taxes.

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The report would be accompanied by a joint resolution which would be introduced in each House or Congress. The joint resolution would fix an amount for all outlays and budget authority for the coming fiscal year. If the recommended outlay total were to exceed the estimated receipts, the joint resolution would authorize an increase in the public debt.

The joint resolution would also provide for a division of the total amount of outlays among the subcommittees of the Appropriations Committee and all other committees have the authority to authorize outlays.

This provision is intended to implement the important recommendation of the Joint Study Committee on Budget Control that the appropriations process should be coordinated with the authorizations process.

It also deals with another important problem stemming from the fact that there are several committees of the Congress other than the Appropriations Committees which have the authority to create new spending.

In brief, this bill would attempt to solve two problems that have been very troublesome for some time. One is that appropriations are made by a number of committees in addition to the Appropriations Committees.

The second is that the authorizing committees often authorize amounts for programs in current and future fiscal years that have little relationship to the real funding needs of such programs, or to the ability of the Nation to afford them in any given fiscal year.

By assigning to the new Joint Budget Committee the authority to determine amounts both for budget outlays and for authorizations, the bill would provide for the first time a congressional system of assigning priorities among programs.

We would be creating a new discipline on our budget and authorizations processes and we would be linking planned expenditures to available revenues.

The joint committee would not, however, have the ability to create such priorities in a vacuum.

Then I go on to outline—and I won't take the time now because it will be incorporated in the record—the reasons why I believe that this procedure we have outlined would adequately fill the bill and implement the work that this committee has carried out.

Chairman WHITTEN. We appreciate very much your attitude and your statement and the fact that you have made arrangements so that this may be the matter of highest priority in your committee.

I was intrigued by your statement of experience on boards of directors, that they quit promptly at 12 noon. I don't know that the public realizes you and I are here at 12:30 p.m. with another committee meeting at 1 p.m., and we have to eat sometime in between. [The full statement follows:]

STATEMENT OF SENATOR CHARLES H. PERCY Mr. Chairman, first I would like to commend you and the co-chairman and members of this Committee for proceeding with dispatch to design a new budget system for the Congress.

As you may know, Senator Cranston and I introduced a legislative budget provision as an amendment to the debt ceiling bill last year. Senator Cranston, Senator Byrd of Virginia and I revised and reintroduced the proposal as S. 846 on February 8.

Our purpose was to design a bill that would implement, to a substantial extent, the tentative recommendations that the Joint Budget Committee issued on February 6.

The bill would esablish a Congressional budget process that would work as follows:

A Joint Committee on the Budget would be created consisting of 28 Members, seven from each of four committees—the House and Senate Appropriations Com mittees, the House Ways and Means Committee and the Senate Finance Committee. Four Members from each committee would represent the majority, and three the minority. This joint committee would meet at the beginning of each regular session of Congress. After considering the overall budget situation and the state of the economy, and taking into account the President's annual economic report and budget recommendations and the annual economic review of the Joint Economic Committee, the Joint Committee would make a report to each House of Congress by March 30. The report would contain a recommendation for the maximum amount to be appropriated or authorized for outlays in the coming fiscal year. This recommendation would be based on an estimate of expected budget receipts during the coming fiscal year, and on this basis the Joint Committee would also make recommendations regarding any necessary increase in the national debt or in Federal income taxes.

The report would be accompanied by a joint resolution which would be introduced in each House or Congress. The joint resolution would fix an amount for all outlays and budget authority for the coming fiscal year. If the recommended outlay total were to exceed the estimated receipts, the joint resolution would authorize an increase in the public debt.

The joint resolution would also provide for a division of the total amount of outlays among the subcommittees of the Appropriations Committees and all other committees having the authority to authorize outlays.

This provision is intended to implement the important recommendation of the Joint Study Committee on Budget Control that the appropriations process should be coordinated with the authorizations process. It also deals with another important problem stemming from the fact that there are several committees of the Congress other than the Appropriations Committees which have the authority to create new spending.

In brief, this bill would attempt to solve two problems that have been very troublesome for some time. One is that appropriations are made by a number of committees in addition to the Appropriations Committees. The second is that the authorizing committees often authorize amounts for programs in current and future fiscal years that have little relationship to the real funding needs of such programs, or to the ability of the Nation to afford them in any given fiscal year.

By assigning to the new Joint Budget Committee the authority to determine amounts both for budget outlays and for authorizations, the bill would provide for the first time a Congressional system of assigning priorities among programs. We would be creating a new discipline on our budget and authorizations processes and we would be linking planned expenditures to available revenues.

The joint committee would not, however, have the ability to create such priorities in a vacuum,

The joint resolution embodying its decisions would be reported by the Joint Budget Committee after it had received the views of many experts and organizations, including the authorizing committees. More importantly, the joint resolution would be subject to approval by a record vote of both Houses. At this point, early in in each session of Congress, the Members of both Houses would have the opportunity to debate and decide on the budget priorities for the coming year. These would not be decisions on line-by-line, or item-by-item programs. Rather, they would be decisions about broad program categories, defined by the number of appropriations subcommittees--and the categories or programs over which they have jurisdiction--and other committees with the ability to appropriate, such as Ways and Means and Finance. Parenthetically, I would note that the subcommittees of the House and Senate Appropriations Committees are not similar in number or subject matter. The two committees would probably have to agree on a new, similar structure of subcommittees and jurisdictional areas.

During this process the Members of both Houses would have the opportunity to amend the joint resolution, so that they could change the priorities established by the Joint Budget Committee, and even change the recommended outlay ceiling. Differences in the House- and Senate-passed resolutions would be reconciled in conference according to standard procedures.

However, until this process had been completed, and the joint resolution

adopted, no bill appropriating money or otherwise authorizing budget outlays for the ensuing fiscal year could be passed by either House. Neither could any committee report a bill authorizing budget outlays or authorities in excess of the limits provided in the joint resolution. And each bill would contain a limit on outlays under that bill for the coming fiscal year.

The bill realistically contemplates a situation in which changes would have to be made in the initial joint resolution. An appropriations subcommittee or other committee might find that it urgently needs more money for some existing program or for some unforeseen need. A natural disaster, such as Hurricane Agnes, or a need to create an international famine relief program are good examples. In such cases the bill would provide a procedure whereby the joint committee would meet again and agree to assign additional amounts of money for such outlays in the current fiscal year. It would do so by recommending an increase in the total amount for outlays in the current fiscal year, or by recommending a reduction in the budgeted amounts for other subcommittees or committees. Its recommendation would be embodied in another joint resolution which would be submitted to a vote in both Houses.

Finally, the bill authorizes the creation of a new joint committee staff, which would include the staff and the functions of the present Joint Committee on the Reduction of Federal Expenditures. At present, the principal function of this Joint Committee is to issue scorekeeping reports on receipts and authorized and appropriated expenditures during the year. The new Joint Budget Committee staff would continue this function. In addition it would be directed to make projections of the effect on future expenditures of existing and proposed legislation, to analyze the budget, to become expert in estimating budget receipts and in problems of debt management and fiscal policy, and in all respects to be come a major, highly professional joint budget staff for the Congress.

CONCLUSION Gentlemen, I believe that this proposal, and other legislative budget proposals you are studying, are the key to the solution of our conflicts with the Executive Branch over impoundments. Were we to establish a rational, orderly new budget process in which Congressional outlays are related to available expenditures, we would not have the undisciplined budget deficits that the Administration has used as the main justification for its impoundment of appropriated funds.

There has been some criticism of S. 846, and I am sure other proposals, on the ground that Congress somehow lacks the necessary intellectual resources to create a budget for the Federal Government.

I suggest that the particular art of budget-making does not reside solely in the Executive Branch. All of us have created budgets- either personal household budgets, business budgets, or budgets for operation of our committees. The skills are essentially judgmental ones—the ability to make judgments about the relative importance and merits of different, perhaps competing programs.

We have left the budget job to the President, and over the years he has developed and become entrenched in that role. If we provide the necessary institutional framework and support it with skilled staff, there is every reason to expect our spending decisions will be as good, and perhaps better, for the country than his.

This Congressional process would certainly not operate in a vacuum. We would have the President's economic and budget recommendations and all the advice and information his officers may wish to supply. But we would rely on our own system, and our own experts, to weigh and decide for the Nation, as the Constitution intends, the amounts and priorities for the Nation's spending.

For some time now we have ceded the powers and prerogatives of the Congress to the Executive Branch, until today we are faced with the very real prospect of becoming increasingly irrelevant to the Federal budget process. Today we are told that a President may refuse to spend funds the Congress appropriates. At some future date we may be told the President has the power to shift funds arbitrarily from one program to another. From there it is but a step to asserting that the President also has the authority to raise the revenues to support the programs he deems worthy. That is why reforming the budgetary process in Congress is more than responsible or desirable. It is absolutely imperative.

Chairman WHITTEN. We are adjourned until 10 o'clock tomorrow morning.

[Whereupon, at 12:30 p.m., the committee was adjourned, to be reconvened at 10 a.m., Thursday, March 8, 1973.]

IMPROVING CONGRESSIONAL BUDGET CONTROL

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reprekroyhille committee have also

THURSDAY, MARCH 8, 1973

U.S. CONGRESS,
JOINT Sruny COMMITTEE ON BUDGET CONTROL

Washington, D.C. The Joint Committee met, pursuant to notice, at 10 a.m., in room 1114, the Dirksen Building, Hon. Al Ullman, presiding.

Present: Representatives Ullman (presiding), Schneebeli, Davis, Griffiths, James Broyhill, and Senator Bennett.

Chairman ULLMAN. The committee will please be in order.

We are privileged this morning to have as our first witness. Robert P. Mayo, President of the Federal Reserve Bank of Chicago, who is better known to most of us on the Hill as the Director of the Budget for a considerable period of time. He is very experienced in coping with fiscal problems and has had great experience working with the Congress on the budget. We certainly look forward to your testimony.

If you wouldn't mind, Paul, are you in somewhat of a hurry? Would it take a great deal of time to present your testimony?

Mr. FINDLEY. My only problem is about 11. My part would perhaps take 15 minutes, something like that.

Chairman ULLMAN. Perhaps we could hear Mr. Mayo and then hear you before we get into questioning. Then we would get you out of here before 11. Your testimony would be probably not more than half an hour, would it?

Mr. Mayo. It will be less than that.
Chairman ULLMAN. Why don't you go ahead and proceed.
Then we will hear Mr. Findley and come back to questioning.

STATEMENT OF ROBERT P. MAYO, PRESIDENT OF THE FEDERAL

RESERVE BANK OF CHICAGO Mr. Myo. Thank you, Mr. Chairman.

I appreciate the opportunity to appear before you today to add a few words of further encouragement as you undertake the difficult task of finding the most appropriate way for the Congress to reorganize the structure of its Federal Government fiscal policy responsibilities.

My appearance before you today is in the role of a concerned citizen, growing largely out of my experience as a Treasury official, as staff director of President Johnson's (Commission on Budget Concepts, and as President Nixon's first director of the Bureau of the Budget.

My views do not express any official position of the Federal Reserve System. Nevertheless, as a Federal Reserve official, it is appropriate for me to note that whatever success the Federal Reserve may be able

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