What we are arguing about is not that he spend every propriated. He has taken the position of denying any fu number of programs.

All throughout history there have been cases of Presi spending every nickle, but they had some excuse for it. J not a precedent. There was a change in circumstances be time the money was appropriated for the gun boats and ti the Louisiana purchase. Where the President violates th office, is where he says I am not going to spend the mond Head Start program or whatever, because I do not believe Start program serves our purposes, period.

If he was operating the Head Start program, and he sa can save some money by consolidating some programs ov would not object to that. I think that is his duty.

Mr. PEPPER. You will notice the able Senator mentioned gress itself authorized the President in some of these ca this. I would think the proper way to do it, would be one or Either Congress could give the President a certain discr Mr. WHITTEN. I hate to interrupt, but we must move alon this has been enlightening. I would call attention to the all of us being lawyers have decided opinions in this area an they are very firm. I think this has been appropriate to th ings as illustrative of what happens if we do not retain t of the purse or adopt some kind of budgetary control bey we have.

I would call attention again to the fact this is a Joint Stu mittee for regaining budgetary control. I think if this comm ceeded in finding a means and method to do that, we might and avoid some of these confrontations. If we have a conf between three equals, the country loses and that we cannot

What we have said today has been appropriate to it, bu not the prime purpose of the study we have here. This is il of the needs for this committee to get on with its business. Mr. PEPPER. I know this committee will do a good job, M man and I commend you for your diligence.

Mr. WHITTEN. Thank you very much. We turn now to Euge executive director, Council of State Chambers of Commerce Mr. Rinta.

STATEMENT OF EUGENE RINTA, EXECUTIVE DIRECTOR, OF STATE CHAMBERS OF COMMERCE

Mr. RINTA. Thank you. Mr. Chairman.

My name is Eugene F. Rinta and I am employed as exec rector and research director of the Council of State Char Commerce.

I am pleased to have this opportunity to present to your and suggestions for improving congressional control of the budgets. It is on the basis of having analyzed and reported on fiscal issues over the last two decades that I feel I may ha contribution to make toward the objective of Congress r better control of the purse.

I understand that this hearing is being held with particular refernce to the tentative recommendations in your committee's Interim Report of February 7, 1973. But before commenting specifically on hese tentative recommendations, I believe a few general observations nay be in order.

While the thoughts I present here are my own and do not necessarily epresent the views of my employer-organization, I do not hesitate o state that my organization wholeheartedly supports the purpose and objective of your study.

I personally believe that there is no more important business before the Congress today than the difficult task your committee is underaking. In my view the need for Congress to develop procedures for exercising disciplined and effective control of the budget is now urgent for both the economic and political health of the Nation.

That the Congress has relatively little annual control over expenditures through its normal procedures for considering the President's budgets is not a new development. It is only that this lack of control has become much more serious in recent years.

As far back as 1954 I wrote an article on controlling Federal spending in which I noted that only 38 percent of the $65.6 billion budget proposed for 1955 was subject to reduction through the congressional appropriations process.

In the last few years the controllable portion has fallen to about 30 percent of far larger budgets, and in the 1974 budgets it is only 27 percent. This means that $202 billion budgeted outlays for 1974 will not be affected by increases or decreases which the Congress may effect in the 1974 appropriations bills. The portion of 1974 outlays that could be affected by normal congressional budget actions is only $75 billion. Any reductions that the Congress might want to make in the $202 billion relatively uncontrollable outlays budgeted for 1974 would require either changes in the basic authorizing legislation or legislated ceilings on these outlays in the overall total or by specific programs. Actually, however, a relatively small part of the $202 billion total would be subject to legislated ceilings as a practical matter unless the ceiling were accompanied by appropriate change in the enabling legislation. This applies to all of the social insurance trust funds with estimated 1974 outlays of $80.4 billion. It also applies to interest, $27.7 billion, and in substantial degree to public assistance, medicaid and food stamps. $17 billion and to housing subsidy payments, $2 billion. All of these program outlays on which legislated ceilings would be impractical without accompanying changes in the laws authorizing them total $138 billion. This leaves $14.6 billion of open-ended programs on which legislated ceilings would be practical without formula changes. Of these programs, the largest is revenue sharing with $6 billion budgeted outlays in 1974.

An estimated $45.5 billion in relatively uncontrollable 1974 outlays relate to prior year contracts and obligations. The Executive can control these outlays somewhat by adjustments in timing of delivery of goods and services. Likewise, the Congress could exert similar control over these outlays by legislating ceilings on them.

The remaining $75.2 billion of estimated 1974 outlays is largely subject to congressional control through its normal procedures. Of this

$75.2 billion total. $52.3 billion is for national defense a lion is for civilian programs.

These facts point up the limitations under which Congre ates in dealing with the annual Federal budgets. Clearl ments in control procedures and practices are necessary if to adequately discharge its constitutional responsibility fo the Federal budget.

I shall now turn to the tentative recommendations in Report. My comments and suggestions follow the numb recommendations in the report.

One, the first of the tentative recommendations is, of cou to the whole series of recommendations. I fully agree th gress needs a mechanism for determining the proper level tures for each budget year, for providing an overall ceiling tures and on budget authority for each year, and for deter aggregate revenue and debt levels to be associated with the e and budget authority limits. I also agree that the mechanis purposes should be accompanied by a system for making d budget priorities within the ceilings for budget auth expenditures.

I have advocated legislated budget ceilings from time to since 1953. In testimony which my organization present August 1967 hearings of the House Ways and Means Co President Johnson's income tax surcharge proposal, we no ommend an expenditure ceiling, but we also urged establi means for congressional determination of budget prioritie ingly, I believe the direction in which your committee is mov first and major recommendation is essential if Congress is realistic control of the purse.

But I would suggest one other spending control in addit ceilings on expenditures and budget authority. This would b on obligations incurred, which is the spending action be provision of appropriations or other budget authority and expenditure of funds. The budget estimates, by agency, for o to be incurred in 1974, as well as amounts for 1972 and 197 in table 8, page 334 of the 1974 budget.

While budget authority is the basis on which spending a taken, it is not the best measure of the expenditures that pected to be incurred in the few years ahead. One reason is grants of budget authority such as for loan guarantees and i are contingency and reserve authorizations which may not h used in significant amounts for years, and in some cases, never Another reason is that budget authority for several ma funds, such as social security. is automatically created, receipts of the trust funds providing new budget authority. The incurring of obligations, on the other hand, leads direc penditures unless action is taken to deobligate funds previo mited to expenditure. Ceilings on obligations incurred woul opinion, contribute significantly to congressional control of th budget beyond the year immediately ahead and also to det spending priorities within the budget.

Such ceilings would provide control over the commitmen obligated balances from prior year spending authority as well

new budget authority. Also, they would give added direction to the Executive with respect to spending priorities. While they would add to the annual responsibility of the proposed legislative budget committees in determining ceilings, I believe the improved spending control would warrant it.

Two, it is proposed in this recommendation, the limitations on expenditures and new budget authority certainly should apply to mandatory and backdoor spending as well as to funding through the annual appropriations process.

If the committee decides to recommend ceilings on obligations incurred, as I have proposed, they should also apply to mandatory and backdoor spending.

Three, in the final action of the session on the budget ceilings, provision should be made for some flexibility with respect to such major relatively uncontrollable items as social security and interest. The flexibility should apply specifically to such items and not on an overall budget basis.

If, for example, social security and interest expenditures exceeded their latest budget estimates and caused total budget expenditures to exceed the overall ceiling, the budget ceiling would not be considered as having been violated so long as the increases in those uncontrollable items were within the flexibility granted for them. I would suggest that such flexibility be limited to a very few major uncontrollable programs in which an implied contract between the Government and payees exists.

As I see it, the proposal for allocating portions of the budget ceilings to the various committees according to their jurisdiction over spending legislation, and subdividing these amounts on a broad program basis, presents the most difficult procedural problem of any of the tentative recommendations.

I believe a satisfactory procedure, as suggested by Representative Reuss would be to set proposed ceilings for the appropriations committees and their subcommittees on funding through the annual appropriation bills and to set proposed ceilings for the respective legislative committees on mandatory or backdoor spending over which they have jurisdiction.

Item five, obviously, procedures to assure compliance with budget ceilings will be needed, and they should apply to both the Congress and the Executive.

Six, if Congress is to maintain effective budget control, its decisions must be based on consideration of their effects on the budgets several years ahead as well as on the budget under current consideration. The projection of the budget impact of existing and proposed spending programs up to 3- to 5-years ahead, as suggested in this recommendation, surely would help to provide for effective budget control on a continuing basis.

Seven and eight, the establishment of a permanent legislative committee on the budget in each House, with adequate representation from the appropriations and tax committees appears highly desirable if not absolutely essential to accomplish the objectives of budget control and determination of budget priorities.

In the past I had thought of this overall budget control responsibility as properly being assigned to a joint committee on the budget,

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the memberslip of will I would primarily in la le rankia appropriations and tax committees. It may very wel

for van. Ho se toa e is own colamittee.

It mettent wring that the proposed legislative bodị tees sold Late the assistance of a morledgeable staf. I be stad to serve the committers in both Houses would be di separate staffe, not only for the purpose of economy in us personnel but also to better maintain the nonpartisan. Į caracter of the stati proposed in recommendation S.

Itenis 9. 10, and 11. I have no comments on itens 9 an tentative recommendations.

As for item 16, it would certainly expedite consideration propriation bills if authorizations bills had to be enacted at in advance.

Tais proposal could be made to apply to authorizations o grams with little difficulty. But for the ongoing activities Congress has increasingly in recent years been enacting aut legislation as well as appropriations, the problem worl difficult.

In the year of transition to this system the budget would elude 2-year budget authority proposals for the programs quire both authorizations and appropriations. This would 2-year total for each item or separate amounts for the budge the succeeding year.

This completes my comments relating to the tentative re tions in the Interim Report. But before concluding. I offer t tions bearing on the questions of budget control and detern budget procedures.

First, it would be desirable to develop procedures for p reviewing existing programs to determine if the current be their continuance warrant their current cost in light of othe on Federal revenues.

Such review, with a report to the Congress, might be requ 4 or 5 years, of the various legislative committees having j over existing programs. What I have in mind for such revi example, the numerous programs providing grants, loans, su special services to State and local governments, individuals a interest groups.

Second, I believe it would be fruitful for Congress to nually the large balances of unexpended appropriations p prior years, especially in defense and foreign aid, to determin the purposes for which they were originally provided are st relation to present technical knowledge and international Any of these unexpended appropriations which could not b justified and were not committed beyond recall would be Thank you for this opportunity to present my views on t important subject of improving congressional control of t Mr. WHITTEN. Mr. Rinta. we appreciate very much your the benefit of your statement, which is backed up by man study. I wish to compliment you for the soundness of your v pressed here. I would say for the record that one of the m lems we have, as you can appreciate, is finding something t get the Congress to enact. We certainly will profit from vo