A more detailed discussion of the legislative history leading up to the enactment of the Anti-Deficiency Act is included as an attachment to this statement.

We think this is quite an important history in terms of the President's discretion which is now given to the President by the Congress. In spite of the limitations established in the Anti-Deficiency Act, funds have been impounded by Presidents in the past. For example: In 1942, President Roosevelt directed the Secretary of War, in cooperation with the Director of the Bureau of the Budget, "to establish reserves in the amount that can be set aside at this time by the deferment of construction projects not essential to the war effort."

President Truman, in 1949, impounded funds appropriated for a 70-group Air Force. It is of interest to note in this case that he acted as Commander in Chief as well as President because doubts were raised as to his authority to otherwise impound the funds.

In 1950, the aircraft carrier Forrestal was canceled by the DOD after funds had been appropriated.

In 1956, the DOD refused to spend an appropriation of the Congress "earmarked for the construction of 20 superfort bombers."

In 1959, the administration impounded funds appropriated for the initial procurements of Nike-Zeus hardware.

In 1966, the administration reduced the obligations available under the highway trust fund and sizable cutbacks were made in programs for Housing and Urban Development; Health, Education, and Welfare; Agriculture; Interior.

In 1972, the administration impounded moneys from the highway trust fund. This impoundment has resulted in a lawsuit which is still in litigation.

It can be argued that these actions differ in substantial degree from the recent decision taken by the administration to withhold large sums in order to keep fiscal year 1973 expenditures at the level of approximately $250 billion.

The issue of the President's legal authority is clouded to some degree by the fact, as some have argued, that actions to withhold funds can be justified in carrying out general statutes such as the Economic Stabilization Act of 1970, or to remain within the debt ceiling enacted by the Congress. The counter to this argument is that there is nothing explicit in those laws which authorize the President to go beyond the Anti-Deficiency Act in accomplishing the objectives of these acts.

Even though the Anti-Deficiency Act places rather specific limits on the President's discretion in impounding funds, the wording of the legislation nevertheless frequently could be read to support the thesis that appropriations represent authority to spend rather than mandates to spend by the executive branch.

The wording of authorization and appropriation legislation is generally cast in terms of authorizations to spend rather than directing that certain program or expenditure levels be maintained. There have been exceptions, of course, which have established mandatory levels.

In one case which I recall, the Congress specified a quarterly level for small business loans; in another case, the minimum strength of the Marine Corps was specified. Clearly, the road is open to the Congress to be more explicit as to its intention with respect to program levels. It could specify the rate of the amount of the expenditure; it could

authorize impoundments not to exceed a certain percentage; or it could provide the executive with discretion to shift funds from one activity to a related activity based on changing circumstances and the executive branch's assessment of program priorities.

An example of the granting by the Congress of discretion was the authority given to President Truman following the outbreak of the Korean war. That was the $550 million level that Senator Humphrey mentioned this morning, to impound funds up to a specified level for programs which the President determined to be in competition with the defense effort.

I well remember this one, Mr. Chairman, because I had a part in helping to carry out the provision.

The President has another course of action open to him which is authorized by the Anti-Deficiency Act. That act specifies that when funds are reserved under the act, the responsible office "shall recommend the recision of such amount in the manner provided in the Budget and Accounting Act, 1921, for estimates of appropriations.

Aside from savings made under the Anti-Deficiency Act, the President obviously could submit recommended legislation for funds which he considers of lower priority or otherwise, in his judgment, excessive for any reason. Past Presidents have submitted such recommendations from time to time.

The Congress has open to it the option of withholding funds for programs desired by the executive branch when impoundments have been made in programs which the Congress judges to be of high priority. For example, Public Law 92-226 of February 7, 1972, specified that appropriations made pursuant to the Foreign Assistance Act of 1971 and the Foreign Military Sales Act for military assistance would not be available for obligation after April 30, 1972, unless the Comptroller General certified to the Congress that all funds previously appropriated and thereafter impounded during fiscal year 1971 for programs and activities administered by or under the direction of the Department of Agriculture, HUD, and HEW, had been released for obligation and expenditure. The provision did specify that the section did not apply to "funds being withheld in accordance with specific requirements or law."

While the purport of this qualification is perhaps debatable, I guess I should say we debated it at great length with the Office of Management and Budget, we construed the provision to apply only to funds which were impounded under the limited provisions of the AntiDeficiency Act.

As you know, the funds were released and we were able to certify to the Congress that the funds had been released.

It has been suggested by some that the granting of an item veto authority to the President, along the lines of practice in a majority of the States, might allay executive desire or authority to impound funds. It is true that the grant of such power would succinctly define the President's power to change or ignore the appropriation acts of the Congress.

The majority view is that a constitutional amendment would be required to grant the President an item veto authority. Thus with a constitutional grant of item veto authority, there would be a strong legal and constitutional position that the President's power over the

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use or nonuse of appropriations does not extend beyond items vetoed under such authority. Of course, even with the item veto there would be no guarantee that future impoundments would be avoided. I am including an attachment discussing the item veto at greater length.

Senator CHILES. I think that presently, one of the concerns would be that if you gave up the item veto, you might give up that and also still be facing the impoundment question.

I think it might be a reasonable way out of the dilemma. I personally think so, to have the item veto, because then at least the President would have to specify why he is vetoing the fund when Congress has a right to override.

Mr. STAATS. As you probably are aware, almost every President in recent history has recommended the item veto. To the best of my knowledge, President Nixon has not, but

Senator CHILES. He does not need it.

Mr. STAATS. All under whom I have served have recommended this, but it has never been accepted by the Congress.

Senator METCALF. It would have to be a constitutional amendment. Mr. STAATS. We think it is fairly clear it would have to be a constitutional amendment because the only provision in the Constitution today is that the President vetoes the entire enactment or he approves it and the Congress and the President negotiate on those terms. We do not think it could be construed to mean that he could veto a part of the bill and leave the rest of it intact.

So we do think it would require a constitutional amendment.

Even so, an item veto, if accompanied by provision making it possible for the Congress to override such a veto by majority vote, would be preferable to the present arrangement where questions continue to be raised as to whether an appropriation should be construed as a mandate to spend at the program levels specified in the Appropriation Act, or whether it merely represents a ceiling with the executive branch being free to make the judgment as to a possibly lower program level.

So what we have tried to do here, Mr. Chairman, is to outline some alternatives. We feel that if S. 373 is to be favorably considered, it might well be amended to strengthen it; but we also see, even without S. 373, that Congress could be much more explicit in enacting appropriations as to whether or not it intended that certain program levels be maintained instead of, we think a fairly logical conclusion in some cases that given a legislative history, that the Congress is quite willing perhaps to see the Executive exercise discretion as to program levels. But we do think it would be possible for Congress to be more explicit. The other side of the coin is that we think the President today could, if he feels that too much money has been appropriated, he could send up a rescission, and many Presidents have done this. That would mean, of course, it would go through the regular appropriation process. It would have to be referred to the authorizing or Appropriations Committee and receive consideration and go through exactly the same process as the original enactment. But this has not been done as much as we think it could be done if there was a genuine willingness to face up to the fact that he thinks certain programs are too high.

Congress has the option of setting the range of discretion for the President in areas where this could be acceptable to the Congress. We think that there are some precedents here for this as well.

Senator CHILES. Would it be your recommendation that the Congress in its appropriation bills should be more specific and directive in their language?

Mr. STAATS. To the extent that savings could be made, of course, under the Anti-Deficiency Act, as we construe the Anti-Deficiency Act, we see no problem from Congress point of view or anybody else's. These are true savings that do not affect the program levels which are being sought by both the Congress and the Executive. But we do think beyond that that the Congress could and should be more explicit instead of simply saying it is hereby authorized to be expended or such sums as may be necessary and so forth. The Congress could specify certain minimum program levels or it could specify that the President could not impound more then a certain percentage. Then the law would be clear and you could hold somebody accountable in the executive branch, whereas today I think it is very difficult to do that. Senator CHILES. Thank you.

(The prepared statement of Mr. Staats, with attachments, follows:) PREPARED STATEMENT OF HON. ELMER B. STAATS, COMPTROLLER GENERAL OF THE UNITED STATES

Mr. Chairman and Members of the Subcommittee, At your request I appear before you today to discuss Presidential impoundments of appropriated funds and S. 373, 93d Congress, a bill designed to curb such impoundments. This bill, which has been characterized as the impoundment control bill, seeks: (1) to require the President to notify the Congress whenever he impounds or terminates or authorizes the impoundment or terminations of a Federal program, and, (2) to require the President to cease such impounding at the expiration of sixty calendar days unless the Congress approves the President's action by concurrent resolution. Executive impounding of funds has a number of factual and legal facets and it may occur at various levels within the Executive Branch. It is a problem that has reached significance over the past thirty years and involves problems of statutory and constitutional construction as well as policy considerations.

The complex issues that are involved in impoundment include:

Are appropriations made by the Congress to be considered a mandate to spend or are they a ceiling on amounts to be expended?

Is a deferral or postponement of expenditure for a project or activity a frustration by the Executive Branch of the action of Congress?

What are the limits on the Executive Branch in exercising the authority in the "Antideficiency Act"? Under this act the President, acting through the Office of Management and Budget, in making apportionments is authorized to establish reserves to provide for contingencies and for savings when made possible by changes in requirements, greater efficiency of operations, or "other developments" subsequent to the date appropriations are made available. Does the constitutional responsibility of the President to see that all laws are faithfully executed carry with it any implied authority to impound funds, if, in the President's opinion, such impoundments are necessary to comply with other statutory provisions such as expenditure limitations or limitations on the public debt?

These are difficult problems and can only be judged by the considerations, both factual and legal, in the individual case.

The General Accounting Office is not structured to resolve these issues because our enforcement power is that of disallowance of expenditures. We have no power to direct an expenditure except in the limited area of settlement of claims against the Government.

The General Accounting Office was established by the Budget and Accounting Act, 1921, to examine the manner in which Government agencies discharge their responsibilities with regard to public funds appropriated or otherwise made available to them by the Congress, and to make recommendations looking to greater economy and efficiency in public expenditures.

Our present audit authority with respect to the Government as a whole is derived from several statutes beginning with the Budget and Accounting Act,

1921. Section 321 of that act provides in part "*** The Comptroller General shall investigate, at the seat of Government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds." Section 206 of the Legislative Reorganization Act of 1946 authorizes the Comptroller General to make expenditure analyses of executive agencies to determine whether public funds have been economically and efficiently administered and expended. Section 111 (d) of the Accounting and Auditing Act of 1950 provides, “*** The auditing for the Government, conducted by the Comptroller General of the United States, an agent of the Congress, be directed at determining the extent to which accounting and related financial reporting fulfill the purposes specified, financial transactions have been consummated in accordance with laws, regulations, or other legal requirements, and adequate internal financial control over operations is exercised and afford an effective basis for the settlement of accounts of accountable officers."

In carrying out our work with respect to an agency activity, or program, the following matters are examined:

Whether the agency is carrying out only those activities or programs authorized by the Congress and is conducting them in the manner contemplated, and to an increasing degree, whether they are accomplishing the objectives intended.

Whether the programs and activities are conducted and expenditures are made in an efficient and economical manner and in compliance with the requirements of applicable laws and regulations.

Whether the resources of the agency, including funds, property, and personnel, are adequately controlled and utilized in an effective, efficient and economical manner.

Whether all revenues and receipts arising from the operations are collected and properly accounted for.

Whether reports by the agency to the Congress and to the central control agencies disclose properly the information required for the purposes of the reports.

In summary, the thrust of our audits and reviews relates to the legality of activities and programs; the efficiency and effectiveness with which they are carried out; and whether the funds utilized have been properly accounted for. We have issued numerous reports to the Congress on these matters, but our audits and reviews have not examined whether agencies should have expended fully the funds that were made available for their use, nor, except one recent law to be discussed later, have we challenged actions by the Executive Branch with respect to impounding or withholding of appropriations. It may be that in particular cases we have reported that a program or activity was not completely carried out as a result of fund reservation.

Senator Church, in an article in the Stanford Law Review entitled "Impounding of Appropriated Funds: The Decline of Congressional Control Over Executive Discretion," 22 Stan. L. Rev. 1240-1253 (1970), suggested as one possible solution to the problems of executive impounding of appropriated funds that "The duties of the General Accounting Office, an arm of the legislative branch, might be augmented to include supervision of expenditures in order to identify when impounding has occurred." Direct reporting to the Congress by the Office of Management and Budget whenever funds are reserved, also suggested by Senator Church, would seem to be a more effective means for Congress to obtain the information it requires. GAO could, however, examine into any specific situation at the request of a Committee or Member of Congress.

Currently, the Budget and Accounting Procedures Act of 1950, as amended by section 402 of the Federal Impoundment and Information Act enacted last year, requires that funds partially or completely impounded be reported to the Congress and to the Comptroller General. There has not been any reporting of impoundments under this law. In this regard Pub. L. 93-1 signed by the President on January 19 gives the President until February 10, 1973, to transmit to the Congress his first report on impoundments.

If S. 373 is to be considered favorably it is suggested that section 3 be amended to make it clear that the impoundments cover contracting authority as well as appropriations. Section 2 of the Budget and Accounting Act, 1921, 31 U.S.C. 2 defines appropriations as including, in appropriate context, funds and authorizations to create obligations by contract in advance of appropriations. It is suggested that section 3 be amended by the addition of a sentence along the following lines to carry out this suggestion: