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THURSDAY, MARCH 15, 1973
Profs. David J. and Attiat F. Ott, Clark University ---
A, L. Bolton, Jr., National Association of Manufacturers.
Senator Lloyd Bentsen, Texas.--
Senator Lawton Chiles, Florida------

SUBMISSIONS FOR THE RECORD
Congressman Jack Brooks, Texas..
Senator Jacob K. Javits, New York...
Congressman Bill Alexander, Arkansas -
Congressman J. J. Pickle, Texas---
Congressman H. John Heinz III, Pennsylvania.
Congressman Marvin L. Esch, Michigan.---
Congressman Tom Railsback, Illinois ------
Murray L. Weidenbaum, professor, Washington University --
Dr. Carl H. Madden, U.S. Chamber of Commerce-----
Lawrence D. Pratt, executive director, American Conser

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CONGRESSIONAL CONTROL OVER BUDGETARY

OUTLAY AND RECEIPT TOTALS

THURSDAY, JANUARY 18, 1973

CONGRESS OF THE UNITED STATES,
JOINT STUDY COMMITTEE ON BUDGET CONTROL,

Washington, D.C.
EXECUTIVE SESSION

The Joint Committee met at 10 a.m., pursuant to notice, in room E-F 100, the Capitol, Representatives Al Ullman and Jamie L. Whitten (cochairmen) presiding.

Present: Representatives Ullman, Whitten, Mahon, Burke, Griffiths, Sikes, Cederberg, and Rhodes.

Present: Senators Fulbright, Fannin, Pastore, Young, Hruska, Hartke, and Roth.

Representative ULLMAN. Ladies and gentlemen, in accordance with the instructions given to Jamie and myself at the last meeting, we have invited Mr. Charles L. Schultze, senior fellow at Brookings, who of course was the former Director of the Bureau of the Budget, to appear before our committee, and who has appeared before your committee, George and Jamie, many times. He has an intimate knowledge of the whole budgetary context, more than anyone I know, and he is specializing in the field now at Brookings.

Charley, we have brought you up here to pick your brains and we need all of the help we can get.

We have a tough challenge and a real assignment as you well know. At this point, I would like to introduce my distinguished colleague and Co-Chairman, Jamie Whitten, for a few words.

Mr. WHITTEN. As Co-Chairman, I just want to welcome you also Charley and express my appreciation for your appearance here today. We all thought that this leadoff working session of the committee should involve a briefing on how the budget is formulated, the various relationships between Congress and the administration in the budget process, and the different types of funding devices that must be considered in developing any mechanism of budgetary control. Because of your recognized ability and the extensive practical experience you have had in budgeting administration, I know we will all profit from your presentation.

Mr. ULLMAN. With no further ado I will introduce Charley Schultze except for this one proviso—as you know this is a working session of the committee and remarks here are strictly speaking off the record; however, Mr. Schultze has kindly consented to have his remarks included in our published testimony. As a result Charley's

(1)

remarks will appear for the record as a continuing presentation without interruption, although we here today will be interrupting him at essential points to seek additional information as he goes along. STATEMENT OF CHARLES L SCHULTZE, FORMER DIRECTOR OF

THE BUREAU OF THE BUDGET

Jr. SCHILTZE. I have no prepared testimony. I do have some notes on sereral points, and I passed around some rather amateurishly drawn charts, and they are amateurishly drawn because I drew them myself. These might help us a little bit in getting through some of the technical problems.

[Two charts follow:]

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Mr. SCHULTZE. The fiscal situation of the Federal Government is such that it is absolutely vital for the Congress to get its hands around its own budget, not just because it is very important in a substantive sense for the good of the country in the short run, but because in the long run unless the Congress gets its hands around its own budget in the aggregate, then, Republican or Democrat, it will gradually lose its power to the White House and the power of the purse will become less and less and less important.

So I think this is a very critical committee and a very critical assignment.

But let me start. If I may, I would like to make three points today. First, to talk a little bit about the very complex set of relationships which exist between congressional actions, on the one hand, and budget expenditures and revenues, on the other. It is a very complex set of relationships, and we will talk about those.

The second point I would like to cover is some of the problems which you will encounter in trying to set a budget ceiling. I will first talk about the complexity of the problems and then some of the problems you will run into in trying to get up a mechanism to set up a budget ceiling.

Finally, a little bit gratuitously. I would like to offer just for thought a couple of alternatire possibilities of how one sets up a mechanism to do this. And I offer those humbly and only as a couple of ideas.

Let me start with the complexity problem. It is dry as dust and it is complex, but I think it is essential.

Let us look at the process by which expenditures actually get made. A lot of this, I know, is duck soup to you, but I would like to put it all together.

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