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What we are arguing about is not that he spend every nickle appropriated. He has taken the position of denying any funds for a number of programs.
All throughout history there have been cases of Presidents not spending every nickle, but they had some excuse for it. Jefferson is not a precedent. There was a change in circumstances between the time the money was appropriated for the gun boats and the time of the Louisiana purchase. Where the President violates the oath of office, is where he says I am not going to spend the money for the Head Start program or whatever, because I do not believe the Head Start program serves our purposes, period.
If he was operating the Head Start program, and he said look I can save some money by consolidating some programs over here, I would not object to that. I think that is his duty.
Mr. PEPPER. You will notice the able Senator mentioned the Congress itself authorized the President in some of these cases to do this. I would think the proper way to do it, would be one or two ways.
Either Congress could give the President a certain discretionMr. WHITTEN, I hate to interrupt, but we must move along. I think this has been enlightening. I would call attention to the fact that all of us being lawyers have decided opinions in this area and I think they are very firm. I think this has been appropriate to these hearings as illustrative of what happens if we do not retain the power of the purse or adopt some kind of budgetary control beyond what we have.
I would call attention again to the fact this is a Joint Study Committee for regaining budgetary control. I think if this committee succeeded in finding a means and method to do that, we might forestall and avoid some of these confrontations. If we have a confrontation between three equals, the country loses and that we cannot afford.
What we have said today has been appropriate to it, but that is not the prime purpose of the study we have here. This is illustrative of the needs for this committee to get on with its business.
Mr. PEPPER. I know this committee will do a good job, Mr. Chairman and I commend you for your diligence.
Mr. WHITTEN. Thank you very much. We turn now to Eugene Rinta, executive director, Council of State Chambers of Commerce.
STATEMENT OF EUGENE RINTA, EXECUTIVE DIRECTOR, COUNCIL
OF STATE CHAMBERS OF COMMERCE
Mr. Rinta. Thank you, Mr. Chairman.
My name is Eugene F. Rinta and I am employed as executive director and research director of the Council of State Chambers of Commerce.
I am pleased to have this opportunity to present to you my views and suggestions for improving congressional control of the annual budgets. It is on the basis of having analyzed and reported on Federal fiscal issues over the last two decades that I feel I may have some contribution to make toward the objective of Congress regaining better control of the purse.
I understand that this hearing is being held with particular reference to the tentative recommendations in your committee's Interim Report of February 7, 1973. But before commenting specifically on these tentative recommendations, I believe a few general observations may be in order.
While the thoughts I present here are my own and do not necessarily represent the views of my employer-organization, I do not hesitate to 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 undertaking. 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 relativelv 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 outlavs in 1974.
An estimated $15.5 billion in relatively uncontrollable 1974 outlays relate to prior year contracts and obligations. The Executive can control these outla ys 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, $523 billion is for national defense and 9929 billion is for civilian programs.
These facts point up the limitations under which Congress now operates in dealing with the annual Federal budgets. Clearly, improvements in control procedures and practices are necessary if Congress is to adequately discharge its constitutional responsibility for control of the Federal budget.
I shall now turn to the tentative recommendations in the Interim Report. My comments and suggestions follow the numbering of the recommendations in the report.
One, the first of the tentative recommendations is, of course, central to the whole series of recommendations. I fully agree that the Congress needs a mechanism for determining the proper level of expenditures for each budget vear, for providing an overall ceiling on expenditures and on budget authority for each year, and for determining the aggregate revenue and debt levels to be associated with the expenditure and budget authority limits. I also agree that the mechanism for these purposes should be accompanied by a system for making decisions on budget priorities within the ceilings for budget authority and expenditures.
I have advocated legislated budget ceilings from time to time ever since 1953. In testimony which my organization presented for the August 1967 hearings of the House Ways and Means Committee on President Johnson's income tax surcharge proposal, we not only recommend an expenditure ceiling, but we also urged establishment of means for congressional determination of budget priorities. Accordingly, I believe the direction in which your committee is moving in this first and major recommendation is essential if Congress is to regain realistic control of the purse.
But I would suggest one other spending control in addition to the ceilings on expenditures and budget authority. This would be a ceiling on obligations incurred, which is the spending action between the provision of appropriations or other budget authority and the actual expenditure of funds. The budget estimates, by agency, for obligations to be incurred in 1974, as well as amounts for 1972 and 1973, appear in table 8, page 334 of the 1974 budget.
While budget authority is the basis on which spending actions are taken, it is not the best measure of the expenditures that can be expected to be incurred in the few years ahead. One reason is that some grants of budget authority such as for loan guarantees and insurance, are contingency and reserve authorizations which may not have to be used in significant amounts for years, and in some cases, never.
Another reason is that budget authority for several major trust funds, such as social security, is automatically created, with the receipts of the trust funds providing new budget authority.
The incurring of obligations, on the other hand, leads directly to expenditures unless action is taken to deobligate funds previously commited to expenditure. Ceilings on obligations incurred would, in my opinion, contribute significantly to congressional control of the overall budget beyond the year immediately ahead and also to determining spending priorities within the budget.
Such ceilings would provide control over the commitment of unobligated balances from prior year spending authority as well as from
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,
the membership of which would primarily include ranking members of the appropriations and tax committees. It may very well be preferable for each House to have its own coinmittee.
It goes without saying that the proposed legislative budget committees should have the assistance of a knowledgeable staff. I believe a joint staff to serve the committees in both Houses would be preferable to separate staffs, not only for the purpose of economy in use of skilled personnel but also to better maintain the nonpartisan, professional character of the staff proposed in recommendation 8.
Items 9, 10, and 11. I have no comments on items 9 and 11 of the tentative recommendations.
As for item 10, it would certainly expedite consideration of the appropriation bills if authorizations bills had to be enacted at least 1 year in advance.
This proposal could be made to apply to authorizations of new programs with little difficulty. But for the ongoing activities for which Congress has increasingly in recent years been enacting authorization legislation as well as appropriations, the problem would be more difficult.
In the year of transition to this system the budget would have to include 2-year budget authority proposals for the programs which require both authorizations and appropriations. This would mean one 2-year total for each item or separate amounts for the budget year and the succeeding year.
This completes my comments relating to the tentative recommendations in the Interim Report. But before concluding, I offer two suggestions bearing on the questions of budget control and determination of budget procedures.
First, it would be desirable to develop procedures for periodically reviewing existing programs to determine if the current benefits from their continuance warrant their current cost in light of other demands on Federal revenues.
Such review, with a report to the Congress, might be required every 4 or 5 years, of the various legislative committees having jurisdiction over existing programs. What I have in mind for such review are, for example, the numerous programs providing grants, loans, subsidies, or special services to State and local governments, individuals and special interest groups.
Second, I believe it would be fruitful for Congress to review annually the large balances of unexpended appropriations provided in prior years, especially in defense and foreign aid, to determine whether the purposes for which they were originally provided are still valid in relation to present technical knowledge and international conditions. Any of these unexpended appropriations which could not be currently justified and were not committed beyond recall would be rescinded.
Thank you for this opportunity to present my views on this highly important subject of improving congressional control of the budget.
Mr. WHITTEN. Mr. Rinta, we appreciate very much your giving us the benefit of your statement, which is backed up by many years of study. I wish to compliment you for the soundness of your views as expressed here. I would say for the record that one of the major problems we have, as you can anpreciate, is finding something that we can get the Congress to enact. We certainly will profit from your views in trying to come up with a practical solution.