Mr. Ellender. No.

Mr. Cranston. As you are one of the five men privy to this information, in fact you are the No. 1 man of the five men who would know, then who would know what happened to this money?

The fact is, not even of the five men, and you are the chief one of the five men, know the facts in the situation.

Senator McGovern introduced a bill on July 7, 1971, to require that proposed appropriations, estimated expenditures, and appropriations for the CIA shall appear in the budget as a single item. His bill would also prohibit the use of funds appropriated to other departments or agencies from being spent by the CIA. McGovern explained that a single sum in the budget would permit members of Congress to judge whether that amount was too small, too large, or fully adequate to meet the needs of intelligence gathering. It would, in short, enable Congress to do what it is supposed to do, decide priorities. Moreover, Congress and the taxpayer would know for the first time the exact amount of money going into other government programs. The current practice is to inflate certain agency and departmental budgets in order to conceal CIA money. “As a result," McGovern observed, “we are led to believe that some programs are better financed than, in fact, they are. We have no way of knowing what these programs and agencies might be."55 During a recent debate on a bill to provide funds for military intelligence, Senator Fulbright commented: "When you look at an item in this bill you wonder if it is really the amount of money for the A-14, for example, or if it is for the NSA. One cannot tell what it is."56

C. Military Assistance

On the basis of a GAO report, Senator Edward Kennedy charged that money appropriated for refugee programs, public health, agriculture, economic and technical projects, and for the "Food for Peace" program, had been diverted to pay for CIA-directed paramilitary operations in Laos. The term "refugee" was a euphemism used by the Agency for International Development to cover the development and support of these operations. Hearings in 1972 confirmed that A.I.D. funds had been used to supply Lao military and paramilitary forces with food and medical care and supplies.57 A.I.D. continues to supply these services as before, but funds are now advanced by the CIA and the Defense Department to cover the costs.

**Id. at S19,529. House supervision of the CIA does not appear to be much better. Rep. Lucien N. Nedzi, chairman of one of the two subcommittees in the House responsible for overseeing intelligence work, suggested that only the Budget Bureau and the Kremlin had a full understanding: "Perhaps they are the only ones. We simply don't have that kind of detailed information. . . . I have to be candid and tell you I don't know whether we are getting our money's worth." Washington Post, Dec. 21, 1971, at A28, col. 1.

55 S. 2231, 92d Cong., 1st Sess. (1971); 117 CONG. REC. S10,527 (daily ed. July 7, 1971).

56 117 CONG. REC. S19,526 (daily ed. Nov. 23, 1971).

87

Hearings on Problems of War Victims in Indochina (Part II: Cambodia and Laos) Before the Senate Comm. on the Judiciary, 92d Cong., 2d Sess. 38-39, 41 (1972). See Washington Post, Feb. 7, 1971, at A2, col. 8; Washington Sunday Star, Feb. 7, 1971, at A1, col. 1.

This is simply one example of how funds can be appropriated for economic and social programs and yet end up financing a secret war.

58

During hearings held in January 1971, the Joint Economic Committee discovered that nearly $700 million in Food for Peace funds had been channeled into military assistance programs over the past six years. Since 1954, in fact, when Public Law No. 480 was enacted, $1.6 billion of funds generated by Food for Peace have been allocated to military assistance." Statutory authority exists for this use,59 but few members of Congress were aware that Food for Peace was such a capacious vehicle for military assistance. Nor could they have gained that understanding by reading the budget, which describes Food for Peace in these terms: "The United States donates and sells agricultural commodities on favorable terms to friendly nations under the Agricultural Trade Development and Assistance Act (Public Law 480). This program combats hunger and malnutrition, promotes economic growth in developing nations, and develops and expands export markets for U.S. commodities.

1160

Senator Proxmire castigated this use of rhetoric to conceal the full scope of the Food for Peace program. "This seems to me," he said, “to be kind of an Orwellian perversion of the language; food for peace could be called food for war." He joined with Senators Humphrey, McGovern, and Mansfield in introducing a bill to repeal a provision which presently bars military aid to any country receiving Food for Peace surplus unless that country agrees to permit the use of U.S.-held foreign currencies for military procurement."

62

No one can determine from a present-day budget how much is spent for military assistance. The budget for fiscal 1972 estimates 1971 outlays for military assistance at $1.175 billion in Defense Department funds, plus an additional $504 million in supporting assistance.63 The total is apparently $1.679 billion. In January 1971, however, Senator Proxmire obtained from the Defense Department its estimates for the Military Assistance Program (MAP) and foreign military sales. The amount of military assistance for fiscal 1971 was as follows: (1) $3.226 billion in MAP, “military assistance service funded," and related programs; (2) $600 million in supporting assistance; (3) $7 million in additional public safety programs; (4) $143 million for Food for Peace funds for common defense purposes; and (5) $2.339 billion in military export sales. The total: $6.317 billion.*

5 Hearings on Economic Issues in Military Assistance Before the Joint Economic Comm., 92d Cong., 1st Sess. 2, 293 (1971) [hereinafter cited as Economic Issues].

* U.S. OFFICE OF MANAGEMENT AND BUDGET, THE BUDGET OF THE UNITED STATES GOVERNMENT, FISCAL YEAR 1972, HOUSE Doc. No. 15, pt. 1, 92d Cong., 1st Sess., 101 (1971) [hereinafter cited as THE BUDGET (FISCAL 1972)].

62

S. 905, 92d Cong., 1st Sess. (1971). The substance of this bill was included in the Foreign Assistance Act of 1971, enacted into law on Feb. 7, 1972, as Pub. L. No. 92-226, § 201(c), 86 Stat. 25. Enactment does not affect the basic authority to use Food for Peace funds for military purposes, but such use would be more voluntary. See note 59 supra.

63 THE BUDGET (FISCAL 1972) 86, 96.

84

** Economic Issues 203. The total is $2 million higher than the sum of its parts, since the latter are rounded off.

Prior to 1965, the scope of military assistance was essentially defined by the Military Assistance Program, which was administered by the State Department and authorized by the Foreign Relations and Foreign Affairs committees. With the - build-up in Vietnam, however, military aid to Saigon was taken out of MAP and - placed under a category called military assistance service funded (MASF). The effect was to transfer budget control to the Pentagon and place authorization decisions under the jurisdiction of the armed services committees. In 1966, military assistance to Laos and Thailand was also switched from MAP to MASF. Service-funded assistance to South Vietnam, Laos, and Thailand totaled more than $10 billion for the period from fiscal 1966 to fiscal 1971.6

65

On March 8, 1971, Senator Proxmire introduced a bill to remove from the Defense Department its present involvement in service-funded military aid. All remaining military assistance programs would be put under the Department of State. The object would be to return to the Foreign Relations and Foreign Affairs committees the responsibility for authorizing military assistance funds.66

III

TRANSFERS BETWEEN CLASSES

A. History

Specific Congressional authorization sometimes permits the President to take funds that have been appropriated for one class of items and to re-apply those funds elsewhere. This practice has been the source of dispute for almost 180 years. In 1793, Representative Giles of Virginia offered a number of resolutions that charged Hamilton with improper use of national funds. The first resolution stated that "laws making specific appropriations of money should be strictly observed by the administrator of the finances thereof." Representative Smith of South Carolina proceeded to refute Giles point by point, arguing that the Administration ought to be free to depart from Congressional appropriations whenever the public safety or credit would thereby be improved. When exercised for the public good, executive spending discretion would "always meet the approbation of the National Legislature." "67 The Giles resolutions were subsequently voted down by the House.

This appears to be a typical collision between the legislative and executive branches, but the dispute was not as much constitutional as it was partisan and personal. It was Hamilton's colleague in the Cabinet, Thomas Jefferson, who had

5 Id. at 190. See Kaufmann, Double-Talk Bookkeeping, THE NATION, Nov. 1, 1971, at 429.

66

S. 1129, 92d Cong., 1st Sess. (1971); 117 Cong. REC. S2566-71 (daily ed. Mar. 8, 1971). The Foreign Assistance Act of 1971 (not enacted until February 7, 1972) shifted Thai military assistance from the armed services committees to the Foreign Relations and Foreign Affairs committees. Pub. L. No. 92-226, § 513, 86 Stat. 25. The Foreign Assistance Act of 1972, as reported out by Foreign Relations, attempted to do the same thing for military assistance to South Vietnam and Laos. S. REP. No. 823, 92d Cong., 2d Sess., p. 10 (1972). The Senate rejected the bill by a 42-48 roll-call vote. 118 CONG. REC. S11, 672 (daily ed. July 24, 1972).

drafted the resolution for Giles. The author of Smith's effective rebuttal was none other than Hamilton himself.68

69

Jefferson's strictures against transfers were excessively narrow and failed to halt the practice. During his own Administration, one Congressman explained that it was sometimes necessary to allow expenditures to deviate from appropriations by taking funds from one account and applying them to another. Such transfers were technically illegal, but "its being the custom palliates it." Proposals to abolish transfers altogether were countered by two arguments. Secretary of the Treasury Crawford told Congress in 1817 that legislators, in receiving reports of transfers, automatically learned where appropriations had been redundant and where deficient, thus providing a convenient guide for future appropriation bills. Furthermore, removal of transfer authority would encourage executive departments to submit inflated estimates as a cushion against unexpected expenses. Crawford warned Congress: "The idea that economy will be enforced by repealing the provision will, I am confident, be found to be wholly illusory. Withdraw the power of transfer, and the Departments will increase their estimates."70

Statutes over the next few decades permitted transfers under various circumstances." Beginning in 1868, Congress repealed all previous acts authorizing transfers and stipulated that "no money appropriated for one purpose shall hereafter be used for any other purpose than that for which it is appropriated."72

Nevertheless, during periods of great emergency, Congress delegates broad transfer authority to the executive branch. The 1932 Economy Act cut federal spending so indiscriminately that Congress permitted the Administration to transfer funds from one agency to another to repair the damage.73 The Lend Lease Act of 1941 appropriated $7 billion for ordnance, aircraft, tanks, and for other categories of defense articles. The President could transfer as much as twenty per cent of the appropriations from one category to another, provided that no appropriation would be increased by more than thirty per cent. In 1943 the Budget Director was authorized to transfer ten per cent of military appropriations made available for fiscal 1944, subject to certain conditions. Appropriations in that particular act came to about $59 billion.75 Contemporary examples of this transfer authority include the Defense Department appropriation act for fiscal 1971, which permitted the Secretary 68 6 THE WRITINGS OF THOMAS JEFFERSON 168 (P. Ford ed. 1899); 2 B. MITCHELL, ALEXANDER HAMILTON 260-63 (1957).

89

II ANNALS OF CONG., 320 (1801) (remarks of Congressman Bayard).

70 30 ANNALS OF CONG. 421 (1817).

71

Act of May 1, 1820, ch. 52, § 5, 3 Stat. 568; Act of July 3, 1832, ch. 154, 4 Stat. 558; Act of June 30, 1834, ch. 171, 4 Stat. 742; Act of July 2, 1835, ch. 268, § 2, 5 Stat. 78; Act of Apr. 6, 1838, ch.

54, 5 Stat. 223; Act of Aug. 26, 1842, ch. 202, § 23, 5 Stat. 533; Act of Aug. 10, 1846, ch. 177, § 5, 9 Stat. 101; Act of Mar. 3, 1847, ch. 48, 9 Stat. 171.

72 Act of Feb. 12, 1868, ch. 8, § 2, 15 Stat. 36.

73 Act of June 30, 1932, ch. 314, § 317, 47 Stat. 411; see L. WILMERDING, supra note 1, at 180-84. 74 Act of Mar. 27, 1941, ch. 30, § 1(c), 55 Stat. 54.

75 Act of July 1, 1943, ch. 185, § 3, 57 Stat. 367.

of Defense to transfer up to $600 million.76 That authority was increased to $750 million for fiscal 1972 as a means of giving the Secretary of Defense greater flexibility in coping with Congress's $3 billion reduction in the defense budget."

B. Aid to Cambodia

Current law states that "Except as otherwise provided by law, sums appropriated for the various branches of expenditures in the public service shall be applied solely to the objects for which they are respectively made, and for no others."78 Exceptions to that general rule are fairly common, however, as evidenced by the use of transfer authority by President Nixon in extending financial assistance to Cambodia after his intervention there in the spring of 1970.

At the end of 1970 the President appealed to Congress for $255 million in military and economic assistance for Cambodia. Of that amount, $100 million was to restore funds which the President had already diverted to Cambodia from other programs. Operating under the authority of Section 610 of the Foreign Assistance Act of 1961,79 the Nixon Administration borrowed $40 million from aid programs originally scheduled for Greece, Turkey, Taiwan, and the Philippines; took another $50 million from funds that had been assigned largely to Vietnam; and diverted still other funds until a total of $108.9 million in military assistance had been given, or committed, to Cambodia.80

In the waning days of the Ninety-first Congress, legislators tried to place two restrictions on Presidential actions in Cambodia. The Special Foreign Assistance Act of 1971 barred the use of funds to finance the introduction of U.S. ground troops into Cambodia or to provide U.S. advisers to Cambodian forces in Cambodia.81 Those restrictions were blunted by the remarks of House conferees, who accepted the restrictions only on the understanding that (1) U.S. troops could be used in border sanctuary operations designed to protect the lives of American soldiers, (2) U.S. military personnel could be provided to supervise the distribution and care of U.S. military supplies and equipment deliveries to Cambodia, and (3) U.S. military advisers could train Cambodian soldiers in South Vietnam.82 Moreover, in the Administration's bombing operations in Cambodia, air power was interpreted in such broad terms as to circumvent much of the legislative restriction. When 76 Act of Jan. 11, 1971, Pub. L. No. 91-668, § 836, 84 Stat. 2036.

** Pub. L. No. 92-204, § 736, 85 Stat. 733 (Dec. 18, 1971); see 117 CONG. REC. H12,567 (daily ed. Dec. 14, 1971). Transfers made under this authority are to be submitted to the Committees on Appropriations as "reprogramming actions" (to be explained in the next section of this article) requiring prior approval; H.R. REP. No. 754, 92d Cong., 1st Sess. 16 (1971).

78 31 U.S.C. § 628 (1970).

1 22 U.S.C. § 2360 (1970). Under this section, the President may transfer up to ten per cent of the funds from one program to another, provided that the second program is not increased by more than twenty per cent.

80 Hearings on Supplemental Foreign Assistance Authorization, 1970, Before the Senate Comm. on Foreign Relations, 91st Cong., 2d Sess. 2, 78 (1970).

81 Pub. L. No. 91-652, § 7(a), 84 Stat. 1943 (Jan. 5, 1971).

82 H.R. REP. No. 1791, 91st Cong., 2d Sess. 5 (1970).