I hope we can look forward, in any case, to a Congressional solution to this problem and not the resolution of the question by default.

To you and the 93rd Congress,

Best wishes,

PHIL DUNKELBARGER,

Special Assistant Economic Development.

DRAFT

A great deal has been written and said recently concerning the erosion of authority in affairs reserved under the constitution for Congress. The issue of Executive "impoundment" is an example which is likely to create significant conflict, precipitated by the recent action of the Executive relative to Water Quality Legislation. Certain members of Congress and the general public have advocated settlement of the case by the Judiciary. They speak of bringing suit to force the Executive to release monies, appropriated over an Executive veto. It is the opinion of others that the Judiciary will not hear arguments or deliver an opinion on the grounds that it is a "political" issue which must be settled between the political branches.

The ability to manage the Federal Budget will be a critical factor in determining where authority will reside. The main Executive argument is the inability of Congress, as it presently operates, to achieve the requisite overview and perspective to adequately control Federal spending. This argument is not inappropriate, although significantly inaccurate projections of revenues by the Executive have certainly contributed to poor fiscal management.

A great deal has also been written and said recently concerning the antiquated procedures with which Congress operates and the need to modernize management procedures by introducing a variety of technological and media tools.

It is the premise of this ad hoc committee, experts in economics and computer technology, that proper application of technology can permit Congress to manage the Federal Budget within the same constraints of the State of the Art which the Executive presently works. It must be noted that the quality of human judgment, Executive or Congressional, is always the determining factor in the effectiveness of the proposed system. Even if no new data were generated the instantaneous collation and dissemination could make uniform information available to all decision makers simultaneously.

As a brief, preliminary proposal the following model is advanced:

A computer system is hooked up to a series of electronic boards. The first would include a variety of values related to projected federal income generated from personal income and excise taxes, import duties, mortgages and the sale of excess property. These projections would be predicated on certain variables, including the value of the GNP, level of employment, rate of personal savings and the like.

A second board would detail expenditures differentiating between annual and long term appropriations. Those funds already committed, which make up the major portion of the budget, such as interest on the debt, social insurance programs and general long term programs like those for pollution abatement. The total would be obtained and juxtaposed to projected revenues and the balance obtained entered as available resources for new programs.

A third board would then reflect balances, expressed as "unified budget” or "NIA budget" and the impact of the resultant surplus or, more likely, deficit would be projected in terms of various critical indicators such as employment levels, cost of living and rate of inflation, etc.

As values and variables are adjusted by the performance of the economy (in the case of revenues) or by proposed Congressional or Executive programs (in the case of expenditures) the system could provide an immediate indication of the result of the adjustment (s). Various budget models could be run with the results compared to previously designed general economic policies.

The system should be operated by an upgraded General Accounting Office. GAO personnel would transmit all information by means of a closed circuit Congressional Television Network, connecting the floor desk, Washington and District offices with the proposed budgetary review boards on one channel. Other channels could be similarly used to cover various activities on the floor of the House and Senate or Committee chambers and live hearings either in Washington or elsewhere round the country.

The above outlined budget review system is entirely compatible with the objectives of the newly forming Joint Congressional Committee on Fiscal Administration under the direction of Representative Ullman of Oregon, and it seems appropriate that any recommendations of this informal and ad hoc committee should be submitted to this Committee.

If Congress is to manage affairs of State in an increasingly complex, uncertain and fast-moving world, it must be able to utilize available technology imperative for adequate control.

It must do so first so that it can be achieved, but more important, so that it is achieved by the instrument of democracy and not by a select cadre of highly paid specialists free of Congressional inquiry.

PHILIP DUNKELBARGER.

DATA RESOURCES, INC., Lexington, Mass., January 8, 1973.

Hon. MICHAEL HARRINGTON,

House of Representatives,

Washington, D.C.

DEAR CONGRESSMAN HARRINGTON: I am sending this letter at the suggestion of Philip Dunklebarger following up on a conversation we had about the proposed Federal Budgetary Information System.

Mr. Dunklebarger's background paper maintains that Congress is no longer able to exercise its share of the responsibility for the Federal Government's fiscal management. Most of us would readily agree.

I also concur with Mr. Dunklebarger in believing that an information system and forecasting scheme about the Budget from the earliest point in the legislative process through appropriations and final expenditures including all of the longterm expenditure commitments would be a powerful tool and could provide basic data required by Congress to carry out its legislative function effectively.

Developing a plan to organize and project the Budget under various policies is the most interesting and challenging aspect of this project. (The hardware and terminal needs are well within available technology.) This involves developing the data base about the Budget programs in detail. It also involves devising a technique to simulate the Budget under different conditions of the economy and different assumptions about program policies. The techniques should relate the Budget to a Macro Model of the economy and should be able to capture and reflect the interaction of Federal fiscal policy and behavior of the different players in the overall economy: consumers, labor unions, business, financial community, foreign economies, etc.

As you know many of the Federal Agencies are making rapid strides themselves towards modeling their own role in the economy, and the Executive Departments and Agencies responsible for overall fiscal management are becoming increasingly skillful at using on-line forecasts, macro economic models and data bases in formulating policy recommendations for the President. The Legislative branch deserves equal time with this technology just to maintain the balance-of-power, and common sense argues that Congress should employ modern diagnostic tools before it is allowed to prescribe Legislative medicine bearing on the economic health of the Nation.

Techniques of using models and forecasting tools for simulating alternative policies have come a long way in the last decade. Not only are many Executive Agencies taking advantage of these tools, the business and financial community has long ago become quite adept at translating the movements and forces of the general economy into specific implications for their own micro decisionmaking and planning. This is no longer a blue-sky dream or a nefarious art of witch doctors; it is standard fare of modern decisionmakers who know that quantitative analysis is here to stay. If Congress wants to restore its role in decisionmaking, it needs to do as well.

As Mr. Dunklebarger has told you, DRI's central activity is just this area. But the point of my letter is not to sell DRI—I'll try to do that when the time comes. My main concern here is to urge you to give as much support as possible to the notion of implementing an on-line data management and Budget modeling environment for use by the Congress.

I am enclosing several pieces of material which I hope will suggest some more arguments in favor of this idea. As you can see from the attached pamphlet on DRI, my colleagues and I have a lot of experience in these questions, both on Capitol Hill and at the White House. Otto Eckstein directed the Congress' in

quiry into Employment and Growth and Price Levels (1960) and was one of the members of the President's Council of Economic Advisers. Frank Ripley was a senior staff economist with the CEA and specialized in the areas of fiscal policy and Budget analysis. I was on the Joint Economic Committee's staff in the Employment, Growtn and Price Level Study and was the Special Assistant to three Chairmen of the CEA, Ackley, Okun and McCracken, where Congressional relations was among my responsibilities.

DEAR CONGRESSMAN HARRINGTON: Your legislative aid asked me to send you my comments on the proposal for developing a macro-economic capability in the GAO to serve Congress. As he knows I think that both the basic idea and the computer display techniques are within the realm of feasibility. The service that you want to provide to individual congressmen or committees is very similar to that provided by the Data Resources Co. in Lexington, Massachusetts, to individual businesses.

There is something, however, that I want to emphasize. You are really talking about setting up a Council of Economic Advisors to service Congress. The com puter is just a simple way to make their expertise available to a large number of congressmen who want different things done. The computer is not a substitute for these people. It merely reflects their talent-neither adding or subtracting To be successful this group would have to have access to people that are just as good as those that now staff the executive's Council of Economic Advisors. This means adding a group to GAO that is very different in orientation to that now in GAO. The real key to the success or failure of the idea would be getting the right person to initially head it and staff it.

Sincerely yours,

LESTER C. THUROW,

Professor of Economics and Management.

RELEASE OF ECONOMIC DEVELOPMENT ADMINISTRATION

ROCKFISH WATER SYSTEM (EDA PROJECT)

1. Project Description.—Water System Improvements: Construct a 150,000 gallon elevated tank and a new well, plus tie ins to the existing system.

2. Purpose. To provide water supply and fire protection to a new industry plus additional water supply and storage to the existing water system and to a new industrial park.

An industry that will employ a minimum of 69 people will locate in the community if water service and fire protection can be obtained. In addition, the existing public water supply system will be upgraded with the addition of a second well and adequate storage.

3. Date of EDA Application.—August 29, 1972. 4. Total Project Cost.-$145,000.

5. EDA Grant Requested.-$87,000.

6. Background.-A new industry that will employ initially approximately 70 people is now constructing a plant in the Rockfish Community. The construction is scheduled for completion by the end of April, 1973. The construction of this plant is the cumulation of over 12 months work by Rockfish Enterprises, Inc. and members of the Rockfish Water System, Inc.

Rockfish Enterprises, Inc., secured an SBA loan to construct the facilities. It turn, the industry will lease the facilities at a rate that will allow repayment of the loan.

The Rockfish Water System, Inc., is a non-profit water system which was installed with an FHA loan and grant in 1969. The water corporation has applied to EDA for a grant and to FHA for a loan that will enable the corporation to

Construct the needed improvements to supply the industry and at the same time double the reliability of the existing system and allow for future growth and development of an industrial park. The water purchase contract will insure repayment of the loan.

Continental Yarns will employ approximately 70 people and the majority of hese people will be local citizens who reside in the immediate area. Approximately 50 per cent of the employees will be from minority groups. All local minorty groups have wholeheartedly endorsed the project.

Without the EDA grant, the water system improvements will undoubtedly be delayed several months; and, consequently, the industry will be delayed by even more time in reaching full production and full employment. Also, the Farmers Home Administration loan has been tentatively allocated, subject to approval of The EDA grant.

[From Limestone, vol. 8, No. 28, summer 1971 (National Limestone Institute)]

GUEST EDITORIAL: IMPOUNDMENT OF FUNDS

(By Senator Sam J. Ervin, Jr. (D., N.C.), Chairman, Senate Judiciary Subcommittee on Separation of Powers)

One issue which has troubled many Members of the Congress during 1971 is the impoundment of appropriated funds by the Executive Branch of the Federal Government, including more than $5 billion in Federal-aid highways authoriza

tion.

The practice is not new, having been traced by one scholar as far back as Thomas Jefferson's Administration, but it created new controversy in Congress this year for two reasons.

First, there was the revelation in February that the Executive Branch had impounded approximately $12.8 billion in funds that were lawfully appropriated by Congress. These cutbacks have affected almost every Federal program, especially construction projects.

Second, there is the general agreement that the doctrine of separation of powers-as embodied in our system of checks and balances-must be reestablished in light of the vast, unbridled power now centered in the Executive. Impoundment is seen by many of us a raw assertion of this power, particularly in view of the fact that the Congress alone, under the Constitution, has the "Power of the Purse."

The Senate Judiciary Subcommittee on Separation of Powers, of which I am Chairman, has been studying the practice of Executive impoundment of appropiated funds since 1968, and in March of this year we conducted hearings on the subject.

Caspar W. Weinberger, Deputy Director of the Office of Management and Budget, testified that in the Administration's view, an appropriation by Congress is little more than an authorization-a ceiling-and that the President has wide discretion in spending the funds authorized.

While I have long advocated fiscal responsibility, a balanced Federal budget, and the elimination of wasteful spending, I also believe that the President's impoundment of $12.8 billion in appropriated funds flies in the face of the constitutional powers and prerogatives of the Congress. I say this in spite of the Administration's contention that it has cut back on Federal construction in order to fight inflation, which I would like to see stopped as much as anyone.

To my mind, the impoundment issue presents us with the question of who is to set priorities for the Nation-the Congress, the President, or a responsible interplay between the two. As direct representatives of the people, it is my firm conviction that Congress must have a strong voice in determining what course the Government takes. In fact, the Congress alone is charged with setting legislative policy.

Take our highway program, for instance. Congress created the Highway Trust Fund in order to finance our interstate program, and we set a target date for completion of the system. Impoundment of much of the Trust Fund-manifested in a reduction of funds obligated to the states-has slowed the program substantially.

F. C. Turner, Administrator of the Federal Highway Administration, testified at our hearings that the program was cut back $700 million in Fiscal Year 1967, $600 million in 1968, and that a 75 percent reduction was ordered by the President in 1969.

The immediate effect, Mr. Turner testified, is to defer approval of projects that permits states to move from the planning and engineering stages over to actual construction.

This impoundment in the highway program, which now totals about $5.5 billion has been carried out in spite of Congress having passed a statute in 1968 that says in plain language that it is the "sense of Congress" that no apportioned highway funds be impounded or withheld except as necessary to assure sufficient amounts in the Highway Trust Fund to defray expenditures.

The reestablishment of Congress to its ordained place in our Federal system will depend on Congress itself and on the people, whose lives and well-being are most directly affected. I believe that the resolution of the impoundment question will be an integral step in the attainment of this goal.