istrations to use the construction industry as a measure to cool off or -heat up the economy. And the reason for this, and I think the reason why it is singled out in this manner is if you take money out of a construction program, let's take the highway program as an example, we are told by the Department of Transportation if you cut back on a highway program that will show up in the payrolls in the month, in other words, decline, or if you add money they tell me also if you do that, say, the space program it doesn't show up in the payrolls for 18 months either way. It is quick action remedy but also an expedient one and one that has been used too often to heat up and cool off the economy. Mr. MILLER. This is my final question. Do you have any position on Senator Ervin's bill which he has introduced, this is S. 373, have you had a chance to study it?

Mr. SPROUSE. Yes sir.

Mr. TEER. I have a copy of it with me and we have read the bill and support it, and would like to do all we can to see that it is successfully enacted.

Senator ERVIN. I might make one more observation about the impoundment of highway funds contribute to a phoney budget and a phoney understanding of the finance of the country by the American people. The highway funds are derived from a special tax that goes into the trust funds just like unemployment insurance compensation is paid out of a special tax, and when you impound highway funds you have what they called a unified budget. To the extent you impound the highway funds it appears that the Federal Government is not spending as much money for its operating expenses as it actually is. Now, we used to have two budgets. One was the general fund budget that showed all of the dealings, the financial dealings, of the Federal Government in respect to the general operating expenses of the Federal Government, and the trust fund budget. But some of these people who are not above trying to deceive the American people about the financial state of the Federal Government, came up with the bright idea of consolidating the two budgets and adding receipts for the trust funds to the receipts for the general fund, and since the trust funds have a surplus in them and the general fund has always had a deficit, that makes it appear that the Federal Government is taking less money out of the pockets of the American people than it really is, because it actually has to pay back all of the trust funds. This is illustrated by a story I am fond of telling about an old mountaineer in my county who bought groceries in the grocery store on credit and decided it was about time to go in and pay his bill. The storekeeper told him the amount of the bill, and it was more than the old mountaineer thought it ought to be. He complained about it and the bookkeeper got his account book out and said, "Here are the figures and figures don't lie," to which the old mountaineer replied, "I know figures don't lie but liars sure do figure."

Mr. TEER. May I make a comment of endorsement on what you were saying. One of the bad features of the impoundment of highway trust funds has led many people to believe there is a surplus in the highway trust fund. There is no real surplus. There is a greater need than the highway trust fund can provide for. People think these are funds and they are not needed for anything else, why don't we blow them on the first thing that comes down the road.

Mr. SPROUSE. One brief comment to support what you said. This year's budget is only for all highways $200 million less than last year's budget. It remains to be seen how much of that will be impounded and how much will actually be allowed to be used.

Senator ERVIN. Well, I was just handed something taken off the news bulletin. President Nixon declared today that the Congress has not been responsible in fiscal matters and he will continue to impound funds if it would mean increasing taxes. He maintains that is a Presidential right made perfectly clear under the Constitution.

The President was educated in an institution in Durham, N.C., where you reside, Mr. Teer, Duke University Law School, but I challenge him to show me a single syllable anywhere in the Constitution that gives him power to impound funds.

Mr. MILLER. You are going to have the dean of the Duke University Law School testify. Of course he is a Deputy Attorney General also. Senator ERVIN. Thank you very much.

Mr. EDMISTEN. Is Congressman Pickle in the room?

I understand that he will be coming in a moment so we will stand in recess until Congressman Pickle comes.

(A short recess was taken.)

Senator CHILES. (presiding). Congressman Pickle, we are delighted to have you appear before us today to testify on this subject and we would like to hear from you.

STATEMENT OF HON. J. J. PICKLE, A REPRESENTATIVE IN CONGRESS FROM THE 10TH DISTRICT OF THE STATE OF TEXAS

Mr. PICKLE. Senator Chiles, I appreciate the invitation to appear before the committee and it is always a privilege to be with you and Senator Ervin as a member of the committee.

I have with me my legislative assistant Mr. Michael Keedy, and if I may, Mr. Chairman, I would like to proceed with my statement. I have a printed statement but it might be better if I followed the script. Is that satisfactory?

Senator CHILES. Very good.

Mr. PICKLE. I am pleased to have this opportunity to speak to you today on legislation to deal with executive impoundment of lawfully appropriated funds.

In my mind, the subject of these hearings unquestionably is the highest priority of the Congress this year. For unless we restore balance or curtail the practice of executive impoundment, everything else we do in the Congress may well be for naught.

Just 5 months ago, I stood before the House of Representatives and in a special order presented the problem of executive impoundment before that body. I include a copy of that discussion here for the benefit of this committee. It contains a more complete exposition of my views than I can present here today. I would ask consent to include this.

Senator CHILES. Without objection we will be delighted to include that in the record.

(The special order follows:)

REMARKS OF REPRESENTATIVE J. J. PICKLE IN THE HOUSE OF REPRESENTATIVES, WEDNESDAY, JULY 26, 1972

SPECIAL ORDER

OFFICE OF MANAGEMENT AND BUDGET: "SOUND FISCAL MANAGEMENT" OR FROZEN FUND FIASCO?

Mr. PICKLE. Mr. Speaker, nearly 200 years ago, the Constitution established the basic framework of our government. Today, we face a set of circumstances and events that lead me to believe one agency in the executive branch of our government is tampering with the rights and obligations of the Congress.

The Office of Management and Budget, or the OMB, apparently claims to have accumulated sufficient knowledge and experience to be intimately familiar with the general welfare programs of this nation, of their potentials and their shortcomings. On the basis of this supposed intimacy, the agency seems to believe itself able to legislative, to monitor, and to administer the bulk of national objectives alone and without the counsel of the elected representatives of the people of this land.

The OMB has shown widespread fascination to assume a multi-jurisdictional stance over the nation's problems. Their tools are selectively to impound appropriations that the Congress lawfully has approved and occasionally to dictate the manner in which monies released shall be expended.

Quite frankly, I think Article I of the Constitution of the United States gives the Congress more than theoretical authority to provide for the general welfare. I feel strongly that the OMB has shown an increased tendency to encroach upon, if not abrogate, Congressional action and intent through the impoundment of funds we have appropriated for various programs and projects.

It is my intention to review the elements that have fashioned this economic super government and to suggest that we must somehow unclog this machinery. That question we look at today is whether the will of the people, as expressed through legislation passed by Congress and signed into law by the President, is to be followed in the manner outlined in the Constitution-or whether the President, acting largely through the OMB, can ignore the Congress and the Constitution.

No member would be so cavalier, it seems to me, as to disapprove of the OMB solely because that agency closed the petcock and prevented funding of a particular federal project in his own District. But combined together, the individual experiences of each of us in this House point to major problems in the management of federal tax monies and to major violence being done to the delicate separation of powers in the U.S. Government.

May I stress I am not here to complain about the OMB's director, the capable and conscientious Mr. Casper ("Cap") Weinberger, or his able and well-meaning staff. To a great extent, they do useful essential work.

Moreover, I am aware that it is popular to invoke the Constitution and predict the downfall of the Republic every time a problem arises, and I will be the first to admit that the future of the Nation does not hinge altogether on our activities today. But I do not think I am exaggerating when I say the impoundment of funds, particularly as it is being practiced today, raises extremely important Constitutional questions and threatens the most fundamental powers of the Congress.

There are those who excuse the practice of freezing funds, or try to minimize the problem, by pointing out that it has taken place both in Democratic and in Republican administrations and say therefore there is no problem.

There are those who say that impoundment has killed programs they didn't like as often as programs they did favor, and therefore somehow it is justified. And, of course. most of us have not been concerned with the actions of the OMB until they hurt us in our own Districts and then we were concerned solely with that specific project.

Although I am extremely concerned about the nature and extent to which the present Administration is using impoundment, I acknowledge that the "freezing"

of expenditures is nothing new. It has happened to all political parties. It has curtailed the actions of many philosophies.

My distinguished friend, former President Lyndon Johnson, said this about the impoundment of funds many years ago when he was in the United States Senate:

"Do we have a centralized control in this country? Do we no longer have a coequal branch of government? I had the thought that we had a constitutional responsibility to raise an army; I had the thought that we had a responsibility to appropriate funds. I had the thought that once the Congress passed the appropriation bill and the President approved it and signed and said to the country that this has my approval' that the money would be used instead of sacked up and put down in the basement somewhere."

That Mr. Johnson later impounded funds as a President does not detract from the validity of the questions he asked as a Senator. Instead, it illustrates that the problem is not one of Democrat versus Republican, of liberal versus conservative. The problem is a constitutional one: the legislative powers of the Congress versus the power of the executive to ignore the mandate of Congress.

Increasingly, the Congress has been coming out on the short end.

We must not be lulled into accepting increasing executive control over our Constitutional powers because there is no sense of urgency about it all. Fundamental changes in institutions or societies seldom are sudden, seldom come about by a single event. Such changes evolve slowly-but this does not make the change less important. If we allow the Constitution and our own powers to be usurped by the OMB, it will make little difference that the deed took place over 10 or 20 years rather than 2 or 3.

My concerns and conclusions are shared now by many legal scholars. It appears executive prerogative over the constitutional powers of the Congress is more than a crack in the door. It appears the door is closing fast on the ability of the Congress to effect any meaningful legislation at all.

I submit we are going to be forced to deal with this frozen fund fiasco-or the results of it-before too long if Congress wants to exercise its responsibilities. Many of us consider "case work" one of the greatest services we render in the Congress. Helping a constituent or constituent group when they run afoul of the bureaucracy occupies at least half and sometimes more of our time. It is easy to immerse ourselves in such activity and ignore the broad, complicated problems we are talking about today.

But increasingly, this is becoming more difficult to do. First our constituent problems often relate directly to the freezing of funds. Second-how effective do you think we will be in solving any problem if we continue to let slide our power over appropriations and programs of the federal government?

How many of us, for example, have been able to get a satisfactory answer-get any answer-out of the Postal Service since Congress relinquished its power over this agency? We long ago began to forsake our share of responsibility for military and foreign affairs.

We are in the process of giving up additional powers in the revenue sharing bill.

If we continue to give up our Constitutional responsibility for appropriations, little is left. And a powerless Congressman is of little use to his constituents even before the most insignificant agency.

We are going to be forced to face our problems with the OMB and frozen funds.

I suggest we begin now. Later it will be even more difficult. And our successors will look back and say what a weak and short-sighted bunch we were.

STATUTORY AUTHORITY TO IMPOUND FUNDS*

Basic statutory authority for impoundment derives from the Anti-Deficiency Acts of 1905 and 1906. These Acts sought to prevent, and I quote, "undue expenditures in one portion of the year that may require deficiency or additional appropriations to complete the service of the fiscal year." These Acts further provided that apportionments could be waived or modified in the event of "some extraordi

For additional exposition of the legal and constitutional issues involved see (1) "Impoundment by the Executive Department of Funds which Congress has authorized it to spend or Obligate". Congressional Research Service of the Library of Congress, and (2) Hearings, U.S. Senate Subcommittee on Separation of Powers, March 1971.

nary emergency or unusual circumstances which could not be anticipated at the time of making such apportionment."

The Anti-Deficiency Act was amended in 1950, giving the then-Bureau of the Budget somewhat more discretion. But even these amendments do not give the Executive total authority over the direction of expenditures by the federal government.

The Office of Management and Budget was created by the President under Reorganization Plan Number 2 of 1970.

In essence, the functions vested by law in the Bureau of the Budget were transferred by the President to the Director of the OMB.

By Executive Order the functions of OMB were defined, and I include this order to show that preparation of the budget as such was no longer to be the dominant overriding concern of the new agency.

I include this order also to show that in no part does it direct the OMB or give the OMB power to alter or override prerogatives and priorities set in Congressional legislation.

"STATEMENT OF FUNCTIONS.-By Executive Order 11541 of July 1, 1970, all functions transferred to the President of the United States by part I of Reorganization Plan 2 of 1970 were delegated to the Director of the Office of Managemnet and Budget. Such functions are to be carried out by the Director under the direction of the President. The Office's functions include the following:

"1. To aid the President to bring about more efficient and economical conduct of Government and service.

"2. To assist in developing efficient coordinating mechanisms to implement Government activities and to expand interagency cooperation.

"3. To assist the President in the preparation of the budget and the formulation of the fiscal program of the Government.

"4. To supervise and control the administration of the budget.

"5. To conduct research and promote the development of improved plans of administrative management, and to advise the executive departments and agencies of the Governmnet with respect to improved administrative organization and practice.

"6. To assist the President by clearing and coordinating departmental advice on proposed legislation and by making recommendations as to Presidential action on legislative enactments, in accordance with past practice.

"7. To assist in the consideration and clearance and, where necessary, in the preparation of proposed Executive orders and proclamations.

"8. To plan and promote the improvement, development, and coordination of Federal and other statistical services.

"9. To plan and develop information systems to provide the President with program performance data.

"10. To plan, conduct, and promote evaluation efforts to assist the President in the assessment of program objectives, performance, and efficiency.

“11. To plan and develop programs to recruit, train, motivate, deploy, and evaluate career personnel.

"12. To keep the President informed of the progress of activities by agencies of the Government with respect to work proposed, work actually initiated, and work completed, together with the relative timing of work between the several agencies of the Government all to the end that the work programs of the several agencies of the executive branch of the Government may be coordinated and that the moneys appropriated by the Congress may be expended in the most economical manner with the least possible overlapping and duplication of effort." The following statement from the Congressional Research Service of the Library of Congress sums up the OMB's present statutory authority to impound funds:

"Even as amended it is hard to see how the language of this section can be interpreted to give the Bureau of the Budget unlimited discretion to apportion reserves. The establishment of reserves is authorized to provide for contingencies, or to effect savings whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which such appropriation was made available.' This seems to preclude the establishment of reserves simply because of a disagreement of policy between the Executive and Legislative Departments on the basis of the facts existing at the time the appropriation was made."

90-538 - 73-14