Secretary BUTZ. I do. I have been in university administration a good share of my life.

Senator MUSKIE. A university is not the Government of the United States nor is a business.

Secretary BUTZ. Okay. But you still get an appropriation from a State legislature. But I am saying if you have to restrict your programs, the easy way out for the administration-the cowardly way is 5 percent across the board, and you are reducing that sum in the situation that should not be reduced, you are giving others more than they ought to have, and I think the difficult way, the sensible way, is to approach it item-by-item for every governmental item somewhere on the priority scale just as it is with my personal expenditures or your personal expenditures. If the time comes when you and I have to reduce our personal budget, we do not make a 5-percent cut across the board, we eliminate things. I think identically the same logic applies to the Government.

Senator MUSKIE. It does not.

I understand. Having a Congress with constitutional powers can be an inconvenient and uncomfortable proposition, but I remind you that this is a system of three co-equal departments. We have the appropriation process and power under the Constitution. Obviously for these three departments of Government to work in harmony, a lot of these powers must be shared. But when the executive undertakes to infringe upon Congress's constitutional powers in a way, a nonselective way that puts the decisions beyond the reach of the Congress, you may have done it sensibly, you may have done it on the things you regard as inefficient in your family budget, but you have done something that does violence to the separation of powers.

Secretary BUTZ. Senator, I am a little amazed that that question has not arisen in the same form before. I am looking at the percentage of funds held in reserve at June 30 in certain fiscal years heretofore. I will go back to the previous Democratic administration, for example. On June 30, 1968, 5.5 percent of appropriations——

Senator MUSKIE. Those funds were subsequently released.

Secretary BUTZ. This was June 30 funds held in reserve, 5.5 percent. Senator MUSKIE. Mr. Secretary, I have heard those figures, I have read

Secretary BUTZ. I am a little amazed right now.

Senator MUSKIE. I have heard. But it is very clear to me after all of these days of hearings that the precedents with which we are quite familiar, we have heard the figures, do not represent the kind of assertion of authority about which we are concerned.

Let me tell you something, Mr. Secretary. In the water pollution bill last year, we built in some flexibility for the President. We recognized that putting together the contracts, designing the plants, and all this took time, that Congress was not in a position to predict the pace at which that might be done. And so, in addition to the commitment to the amount of money we said had to be invested in this program, we built in flexibility for the Executive to measure the pace at which it could be done, and that flexibility, if you interpret it by this administration, to authorize that we rewrite the legislation, cutting the authorization in half, so that it can be used even by the Executive in any judgment without new legislation.

This is what I mean by using small precedents to build big houses. What you have done on the face of it has a precedent, impoundment has been used, Congress has not always resisted to the degree that I think it should have, and so we have these precedents that we argue about, but what we see emerging in this administration is not simply a repetition of precedent, but I think an expansion of it to a degree which threatens the appropriation powers of the Congress.

I am sorry you and I simply disagree on that. But I think the evidence of this hearing is cumulative for this thesis.

Secretary BUTZ. May I comment briefly on the water bill? The President is withholding half of this. This is out of my area of operation. The magnitude of the appropriation in the water bill was such, I understand, that the facilities simply were not here to spend that much money.

Senator MUSKIE. That simply is not true.

Secretary BUTZ. To attempt to do it efficiently would have inflated the cost.

Senator MUSKIE. What is the evidence to support that statement. It is a statement that was not made by the administration in the Senate hearings on the bill. It is a statement that was no documented in the hearings in either House, although it was asserted in a statement submitted for the record in the House after the bill had passed the Senate.

It is a statement now that is emerging, ex post facto, as the justification for an action taken last December, but I put in evidence yesterday in this hearing indicating that the waste water equipment industry was operating at 50 percent of capacity. November 30, just a couple of weeks before the President's action cutting the allocation. And I am sure that when we get additional evidence, we can refute the rest of it. I simply do not buy this argument that the administration took no effort, made no effort to document the hearings, as a justification for undercutting the legislation of last year. It is another evidence, in my judgment, of the tendency of this administration to ignore the Congress, to ignore the forums and the opportunities made available to it to shape its policies and the policies of this Government in congressional hearings, in congressional forums and in legislation. You prefer to do it after the fact.

Secretary BUTZ. May I ask the Senator, if the administration had gone ahead and spent all of these moneys, would he have been willing to vote for the additional taxes necessary to finance them?

Senator MUSKIE. I have offered this year something the administration promised last year and has failed to do anything about, a tax reform package that would produce $18.5 billion by the year 1975. So I suggest to the administration that you submit a tax program. You say here in your statement

Secretary BUTZ. Senator, you are talking about the administration usurping the powers of the Congress; the Congress is under the control of your own party. You might initiate this legislation yourself to raise the $18.5

Senator MUSKIE. I have done it. I know you are not accustomed to reading the proceedings of the Congress, but I did this 2 weeks ago. Secretary BUTZ. I want the record to show you would be willing to vote for increased taxes to pay for the cost.

Senator MUSKIE. I am willing to vote for this tax package I introduced. I am not for a general tax increase until we make the taxes fair. Secretary BUTZ. Your proposal would in fact increase taxes by $18.5 billion.

Senator MUSKIE. That is right, and I propose that.

Secretary BUTZ. Let the record show

Senator MUSKIE. My record is clear, the administration is not.
Secretary BUTZ. The administration record-

Senator MUSKIE. The administration talks about keeping expenditures under the debt ceiling. Is the administration's 1974 budget in balance?

Secretary BUTZ. It is in balance on a full employment basis.

Senator MUSKIE. Mr. Secretary, debt ceiling does not reflect Keynesian philosophies.

Secretary BUTZ. It moves halfway toward a full balanced budget and the President has said we can do this without an increase in taxes and you just said you support an increase of $18.5 billion in taxes. Senator MUSKIE. Do not twist my words, Mr. Secretary. I have said I am not for an across-the-board increase in taxes.

Secretary BUTZ. You said you introduced legislation.

Senator MUSKIE, Because the system is not fair. I said I propose a tax reform package and invite your support, because I support it. Secretary BUTZ. The tax reform package does in fact increases taxes 18 and

Senator MUSKIE. It increases taxes for those who do not bear their fair share of the load.

Secretary BUTZ. The total is $18.5 billion.

Senator MUSKIE. That is right. I do propose that. And I do support it. Let me say to you

Secretary BUTZ. This is the chief difference between you and the President.

Senator MUSKIE. The chief difference between me and the President is more than one. There is more than one chief difference, I may say. There is a whole host of differences. But let me point out to

you

Secretary BUTZ. My general counsel just said a difference of several million votes.

Senator MUSKIE. I would like to try that some time, Mr. General Counsel. I really would.

Maybe I would like to have the general counsel testify some time. But with respect to the ceiling which you pay in terms of the dollars. the debt ceiling does not fluctuate with somebody's interpretation of the Keynesian impact, in terms of dollars the President's 1974 budget is out of balance by almost $13 billion, if my recollection is correct. That will bring it up closer to the debt ceiling. I do not know how close. And you will have to ask for legislation raising the debt ceiling before this administration is out of office and that you know.

Would you promise me now in the next 4 years the President will not request an increase in the debt ceiling?

Secretary BUTZ. If this Congress passes the budget the President proposes for fiscal 1974, as you say, the $12-billion increase or $13billion increase in the deficit would bring us to within $4 billion, I believe you said, of the ceiling.

Senator MUSKIE. What do you do with the next which he has projected?

Secretary BUTZ. The President proposes in fiscal 1975 to have an actual balance in the budget in current dollars.

Senator MUSKIE. In current?

Secretary BUTz. Yes, sir.

Senator MUSKIE. It will be interesting to see that.

The point is, the President has a deficit in 1974.

Secretary BUTZ. Yes, sir; he is moving halfway toward actual balance in the budget. He could move all the way next year except for the mandatory increase in the spending written in by the last Congress, like the 20-percent increase in social security when he asked for five.

Senator MUSKIE. Why did not the President denounce that in the election campaign last year? Why did he not?

Secretary BUTZ. Why was it tied in with the extension of the increase in debt limit?

Senator MUSKIE. The President wrote a letter to every social security recipient saying how delighted he was to sign that legislation, and are you now retracting that expression of approval? Are you? Secretary BUTZ. Apparently he must have been delighted.

Senator MUSKIE. Well, do not give me that as an argument to support your position.

Secretary BUTZ. But that is one reason why we cannot move all the way toward a balanced budget now.

Senator MUSKIE. Mr. Butz, the simple point is that what is involved is not the question of whether the budget is going to be in deficit in 1974 or in 1973; the question is whether or not the Executive is going to have all of the prerogatives in determining the pace at which we move toward it, the means we use to implement whatever goals we have, the share that the Congress will have in setting our budget goals, our debt goals, or all the rest of it.

You have just arrogated to the Executive a bigger and bigger piece of the authority to do.

Secretary BUTZ. The question goes further than that. Who is going to be responsible for a massive increase in taxes on our people or are we going to have a massive increase in taxes on our people? That is part of the question.

Senator MUSKIE. What the President seeks to do politically is to conceal his part in that role by shifting it all to the backs of the Congress, and what we are undertaking to do is pinpoint a joint responsibility. That is the difference between the President and us.

Senator CHILES. Mr. Secretary, I know that you say in your prepared statement that you are going to mention only briefly certain of these programs that we may assist the administration's judgment in selecting these particular programs for withholding.

Mr. Secretary, who passes the farm programs?

Secretary BUTZ. Farm programs are passed by the Congress. Senator CHILES. Then REAP and all of the other programs that you administer are programs that are passed by the Congress?

Secretary BUTZ. The Congress does not specify the specific practices in REAP, those have been developed administratively through the

years.

Senator CHILES. But the program itself, the REAP program was passed by Congress?

Secretary BUTZ. Yes, sir.

Senator CHILES. And the housing program?

Secretary BUTZ. That is right.

Senator CHILES. The Farmers Home? All of those were passed by the Congress?

Secretary BUTZ. Yes, sir.

Senator CHILES. So when you say you are assessing the administration's judgment in regard to these programs, do you think Congress has any judgment in regard to those programs?

Secretary BUTZ. Yes, sir; they no doubt did have to start with. The position of the administration, as I understand, and again I speak from a nonlegal background, is that the President spends the money appropriated under those programs if in his judgment it is wise to do so.

Senator CHILES. You sound a little different in your language now than you did when you came before the Senate Agriculture Committee, of which I was then a member, at the time you were seeking confirmation of this job, I asked this specific question. I said if Congress appropriates the money for specific agricultural programs, if you are not convinced that it should be spent, would you be for withholding the funds. And your answer, as I recall it is that, "We will try our best to execute the program as directed by the Congress. If we can do it with less money than authorized, we will certainly do it in the interest of the economy."

Secretary BUTZ. Well, I think the action we have taken is not inconsistent with that testimony.

Senator CHILES. Do you think what you have done to REAP is not inconsistent with that testimony?

Secretary BUTZ. I said if we can do it with less. We face this situation, as I said a moment ago, with a debt ceiling, with a budget that exceeded the debt ceiling, we would have to come back to extend the debt ceiling or break it, which would be wrong.

Senator CHILES. What about your language that we will execute the program directed by the Congress as best we can? Did you seek any direction of the Congress in making this administration judgment that you made?

Secretary BUTZ. No.

Senator CHILES. Did you ask Senator Talmadge?

Secretary BUTZ. I think it is consistent that we are doing it as best

we can.

Senator CHILES. Do you think it is consistent with Senator Talmadge and his feelings, or Congressman Poage? They are just the channel of the respective agricultural committees.

Secretary BUTZ. Well, Congressman Poage, of course, has his bill that is being voted on this afternoon over in the House of Representatives' side to make mandatory the restoration of this REAP program. and I know that Congressman feels very strongly about it.

Senator CHILES. Well, then, you did not seek any advice or any direction there?

Secretary BUTZ. That is correct.