GSA building program-leaseback guarantee-not under del ceiling.

OPIC-Anaconda and Kennecot losses repaid by notes guarantee by OPIC.

Economic Development Administration.

Defense Department-occasionally guarantee foreign governmer borrowing in United States to finance foreign military purchases. Nurse training program.

SBA guarantees.

FHA several billion per year.

This list is incomplete and had to be extracted from testimony be fore the Ways and Means Committee on September 28. The adminis tration testimony is confusing, incomplete and misleading. For thi reason, I urge your committee to obtain a full and complete list o agencies with borrowing and guaranteeing authority in and out of the public debt with a tabulation of loan and guarantee authority origi nally provided.

EXCLUSION OF FEDERAL LOAN INSURANCE FROM THE BUDGET IS DECEPTIVE AND POLITICALLY MOTIVATED

Government loans, loan insurance and loans of federally sponsored agencies have a significant impact on our economy and, for that reason. are an important aspect of fiscal policy and the purposes of the budget. These programs either distribute Federal financial resources directly to the private sector or they influence the allocation of private revenue to some specific Federal priority. But in both cases they represent a major involvement of the Federal Government and should both be clearly delineated in the budget.

But at present this is not the case. Since loan insurance represents contingent liabilities rather than actual liabilities, they are presented "below the line." (Since loan insurance programs do not require the use of Government funds unless the insured loan goes into default.) This has the effect of exiling into limbo important economic factors that, for the most part, are disregarded in discussion on the Federal budget, its priorities, and its effects on the economy. In disregarding these figures which are estimated to be $190 billion in guaranteed loans outstanding by 1974, the budget gives an incomplete picture of Federal policy and a deceptive indication of the extent of Federal involvement in the economy.

How can such a budget fairly describe any administration's priorities?

By excluding loan insurance from budget totals, an incentive is created to shift from direct to insured loans-reducing the budget and shielding programs from congressional scrutiny. The political advantages of such deception would be apparent to any administration-but the public is the clear loser.

At present, faceless bureaucrats who have no conception or need for accountability, freely hand out guaranteed loans to many special interests.

The following chart from special analysis E of the budget for fiscal year 1974 illustrates the problem. From 1963 through 1974, direct loan levels have remained almost stationary while guaranteed and Governent-sponsored enterprise loans are close to tripling.

mmend that guaranteed loans be included, with qualification, of a new total budget figure reflecting the impact of this and ntingent liabilities on the economy.

A NEED FOR A CEILING ON THE CONTINGENT LIABILITIES

contingent obligations of the Federal Government approximate tial trillion dollars of debt including:

ent guarantees, insuring private lenders against losses, (FHA, tc.)----

Billions

licated claims (Corps of Engineers, HEW, IRS)-
cional commitments (International Bank, Inter-American, Asian
etc.)-----

ce commitments, (overseas private investment corporation ince, etc.) Price-Anderson Act-

$135, 157

773, 589 3, 623

7,258

13, 506

ontingencies not included above (Export, Import, SBA, Rural

ng)

otal

933, 135

ough a considerable portion of this trillion dollar liability is not to become debt, it is reasonable to expect that liability may result east 5 percent of this debt, or $50 billion.

recent years, the contingent liability in "high risk" programs rs to be growing much too rapidly. The Price-Anderson Act s a potential liability of $10 billion while the rest of the Atomic

Energy program provides a potential liability of $90 billion more At the present time, there are 20 commercial nuclear powerplants in operation. The liability on each plant in case of a nuclear incident i $560 million. Although there is a small insurance payment by utilities a contingent liability of tremendous dimension is shifted to the public The Overseas Private Investment Corporation is another case ir point. In fiscal year 1971, $9.847 billion in insurance was issued to American companies to encourage them to invest in high risk areas abroad. The cost of this insurance to the companies amounted to $33 million in fiscal year 1971. In 1971, $16.5 million was paid to these companies in claims by OPIC. In recent expropriations, OPIC has done something new. Claims were paid on losses by financial institutions on negotiable instruments guaranteed by OPIC. If American investments are taken over by other countries in the future. the investors would have a direct claim on the taxpayers. The Export Import Bank is another agency which has a contingent guaranteed loan obligation of $1,395,000,000.

It is probable to expect that the new expansion of East-West trade will soon bring American business giants to seek insurance guarantees from the American public for their investments in Russia and China. I support East-West trade, but such a drastic expansion of the contingent liabilities of our Nation in such high risk developments gives U.S. business a blank check for which the taxpayers may soon pay dearly.

The vested claims of military personnel not yet retired runs into the scores of billions. The civil service retirement and disability fund places a liability on the general taxpayer which will soon rise to $1 billion a year.

In view of the sharp escalation in the contingent debt in recent years, it is incumbent upon the Congress to fix a ceiling on the contingent debt as well as the cash debt. We must control the manner in which many types of contingent liabilities have a way of moving into the actual debt.

A ceiling should be established for the contingent debt by Congress annually so that bureaucratic potential commitments of the taxpayer's money are examined to see that proper premiums are paid for such protection-and that such protection is proportionate to the risk "imposed on the taxpayer."

EXCLUSION OF THE EXPORT-IMPORT BANK FROM THE BUDGET IS FRAUDULENT ADVERTISING

The Export-Import Bank is a wholly federally owned operation with a purpose of vigorously promoting U.S. exports. The bank lends directly to exporters and importers to stimulate their enterprises, and insures and guarantees loans extended by private lenders. By the end of this year the Bank will have outstanding more than $8 billion in direct loans, and more than $2.5 billion in insured loans.

The Export Expansion Act of 1971 excluded the activities of the Export-Import Bank from the budget. The principle reason for the exclusion was that disbursements of the Bank exceed repayments and therefore it appears that the Bank is operating at a loss. But actually the Bank is operating at a very comfortable profit.

nistration argued that since the unified budget only takes eration disbursements and receipts, it gave a misleading of the true condition of the Bank. But the more important -n was that the exclusion of the Bank from the budget budget deficit substantially.

s bill was debated on the floor, I opposed the exclusion ort-Import Bank from the budget. I offered an amendat effect, but it was defeated on the floor. At that time I

sion (exclusion of the bank from the budget) in the bill flaunts E the General Accounting Office. It flaunts the advice of the Presiisan commission on budget concepts of 1967, and that advice was validity. That advice was that we express in the debt everything by the Federal Government.

udulent advertising to permit the American people to beomehow or other we repaid about $4 billion of the Federal was an erroneous impression that we should not have ministration's argument was based on an inaccurate underf the purpose of the budget. The budget is not a financial guide on each of the Government's enterprises and proe purpose of the budget is to show how funds are being along different programs and agencies; what the fiscal policy ernment is; and how deeply involved the Government is in ny. Exclusion of the Export-Import Bank from the budget ed all three of these intended purposes of the budget. mend that we eliminate all past exclusions from the budget future that we include every Federal dollar and commitment vet. We should "tell it like it is."

PIPELINE RESOURCES

eresting to note at this point that not only is there inadequate onal control over current expenditures, but that there are past tions which have been provided to the Executive by the which have never been spent. These dollars remain in what the pipeline. Money in the pipeline now amounts to $298 more than the entire fiscal year 1974 budget. Now most of this committed: it is in reserve for social security payments or ice retirement payments which will be made during the next -. But an enormous amount of this money, over $100 billion epartment of Defense alone-is available to be used by the e with a great deal of discretion. In other words, even if the had voted to cut off funds for the war in Southeast Asia, it is sible that the President could have used unexpended "pipeneys to continue the war. I might add here that the Constitues that the Congress shall make no expenditure for the Army -iod of more than 2 years. This was an effort by our Founding zo prevent the establishment of too large and powerful a Miliablishment. But as a result of "pipeline" funds, we have unely but effectively end-run that provision.

imperative that to reassert the Congress' control over the e, that pipeline funds be canceled. It is time that we enact

legislation saying that any funds not expended at the end of a 1- or year period will be canceled and new congressional action and revi required before further funding is provided.

CONCLUSION

The Congress has been overwhelmed by the executive budget in cent years. We are overwhelmed by manpower, by computers, and technicalities and the public will suffer greatly.

The accountability of the Congress is the only direct input t citizenry has in bureaucratic programs. The present situation places t Congress on an iceberg in isolation drifting away from the people a its responsibilities.

The obvious initial step is the establishment of ceilings for all pr grams and expenditures no matter what their design or their source. This annual examination will provide the opportunity for cutbac in outdated programs and needed cutback in the evergrowing del This will also provide an opportunity for Congress to establish n tional priorities through budgetary examination.

I also recommend a thorough study of the technical manipulation machinations, and exclusions of the budgetary process, with accor panying recommendations for corrections which are essential for th Congress to undertake. Before the Congress can control the budget, v first must understand it. The bureaucrats and technocrats have tak over under the guidance of the Executive-deceiving the Congres We have a duty and responsibility to take corrective action or the pe ple will hold the Congress responsible.

Chairman ULLMAN. Thank you very much, Charley. This is a excellent statement. You have brought out a number of points that w have been very much concerned with.

Certainly if we do get to the budget we will have to recapture th pipeline, there isn't any question about it. That will have to come bac under the annual ceiling and the natural corollary is that we wi project our budget up to 5 years ahead of time, something we hav never done before.

But you raised the issue of the unofficial debt that doesn't com under the ceiling. You have done this in committee time and time again It is certainly a valid consideration and I have already asked the sta and I commend them again to take a look at this overall problem and see whether there isn't a better mechanism for recapturing the contro over this kind of debt, which is as real as any other kind of debt wher you look at the overall economy of this country.

Mr. VANIK. I would appreciate if your committee could ferret ou the facts as to what the total existing authority is. I am confused. can't find it. What is the total borrowing authority both within and without the debt and the authority that remains in each agency not used up and still remaining?

Chairman ULLMAN. We have a measure before the Ways and Means Committee for a Federal funding operation where we can fund a lot of these nonpublic debt items through the Treasury so there can be a coordinated borrowing which can be of some assistance, but which doesn't go to your overall problem and that is getting those items included under the whole blanket of Federal obligations.