SPENDING CEILING

Title II of the Senate bill contains a ceiling of $268 billion for Federal expenditures during the 1974 fiscal year, and it establishes procedures by which the President can cut programs proportionately in order to keep within the ceiling.

This title is a very important addition to the bill, and I think that it strengthens it very much. It signals to the Nation that the Congress is not spendthrift, and that when we control the practice of impounding funds, we do not advocate runaway spending by the Government.

The provisions of title II allow the President to make proportional cuts in functional and, to the extent practicable, subfunctional programs (as set out in the Budget in Brief). If the Comptroller General determines that the cuts were made in strict compliance with the proportional provision, then congressional action on those cuts will be precluded. However, if the Comptroller General determines that the cuts are not proportional, then the provisions of the bill governing ordinary impoundments will apply, and the 60-day period will commence to run.

CONCLUSION

In conclusion, I think that the enactment of an impoundment bill incorporating the basic features of the measure passed by the Senate will establish for the first time in the history of this Nation an orderly procedure whereby the President of the United States can call to the attention of the Congress, without restoring to the veto, corrections which he thinks ought to be made in appropriations and in programs. It also will provide that the Congress shall retain the power of the purse. It will give an orderly procedure whereby the President can apply to the Congress for a modification of the laws to conform to the ideas of the Executive.

It establishes a spending ceiling which would indicate that Congress is prepared to do all it can to set the financial house of the Federal Government in order, which is a consummation devoutly to be wished for.

Mr. Chairman, I submit for inclusion in the record a copy of Amendment No. 77 to S. 929, which is identical to the text of S. 373 as reported by the Senate Government Operations Committee. Also, I submit a section-by-section analysis of that amendment, and three newspaper accounts of the Senate's action in approving this legislation yesterday afternoon.

I thank you for the opportunity to testify on this very important issue, and I strongly urge the passage of a strong impoundment control bill.

[From the New York Times, Apr. 5, 1973]

SENATE APPROVES A SPENDING LIMIT UNDER NIXON GOAL

(By James M. Naughton)

Its ceiling of $268 billion is $700 million less than figure President seeks; curb on cuts is voted; and measure bids White House get backing on Congress before impounding fund.

WASHINGTON, April 4-The Senate voted today to set a $268-billion spending limit in the next budget year and to insist that President Nixon adhere to the spending priorities set by Congress.

By a roll-call vote of 70 to 24, the Senate demanded that the President obtain Congresssional approval each time that he attempted to cut back on a Federal spending program.

At the same time, in an effort to demonstrate awareness of the need for spending restraint, the Senate agreed, 88 to 6, to adopt a spending ceiling-$700-million below the amount asked by the President-for the fiscal year beginning July 1.

DEVALUATION BILL AMENDED

The spending ceiling, proposed by Senator Edmund S. Muskie, Democrat of Maine, and the curb on Presidential cuts in spending programs, offered by Sena

tor Sam J. Ervin Jr., Democrat of North Carolina, were attached to a bill that would give Congressional approval to the Feb. 12 devaluation of the dollar.

The amendments face an uncertain fate in the House, which is considering spending legislation of its own, and the likelihood a Presidential veto if the House passes them.

But the amendments represented the Senate's effort to reclaim Congressional control over the spending process.

A 'RUBBER CEILING'

Senator Walter F. Mondale, Democrat of Minnesota, said during the long debate:

"If the President wants to meet us half way, if the President wants to resolve what I regard as the most profound domestic constitutional crisis in the history of this nation, this is the way it should be done."

Administration supporters, led by Senator John G. Tower, Republican of Texas, charged that the limitations on the President's ability to abolish spending programs were unconstitutional, and that the spending limit hastily drawn up by the Senate Government Operations Committee was a "rubber ceiling" that would soon be breeched.

But Senator Ervin rallied conservative Democrats and liberal Republicans— along with Senators facing political problems because Mr. Nixon has refused to spend more than $8-billion that Congress appropriated-into a coalition that approved the following:

¶ Spending in the fiscal year ¶ 1974 would be $268-billion, which is $700-million below the ceiling urged by President Nixon.

¶ To remain under the ceiling, the President could cut back spending, but only by reducing each budget subfunction—such as "military personnel" or "law enforcement"-by the same proportion.

¶ For any other effort to impound, or withhold, appropriated funds, the President would have to obtain approval of both houses of Congress within 60 days. If the resolution approving the impoundment was not enacted within 60 days, the President would be compelled, under the legislation, to spend the money.

¶ Congress could also adopt a concurrent resolution any time during the 60 days to refuse approval and thus order the money released immediately.

KEY VOTE CITED

The key vote came on the Senate's rejection, 61 to 36, of a bid by Senator William V. Roth Jr., Republican of Delaware, to turn the procedure for impoundment around. Mr. Roth sought to substitute language that would have permitted the impoundment to stay in effect unless Congress adopted a resolution—which Senator Ervin said could be vetoed-disapproving the impoundment.

Mr. Roth's proposal mirrored the one that is nearing approval by the House Rules Committee with the support of House Speaker Carl Albert and Representative George H. Mahon, the Texas Democrat who chairs the Appropriations Committee.

But Senator Ervin, whose Government Operations Committee concluded a twoyear study of the impoundment issue by adopting his proposal yesterday, denounced the House's approach.

The 76-year-old North Carolinian shouted in a hoarse voice that Mr. Roth's proposal would give one-third (plus one vote) of either house the power to nullify the spending decisions of Congress.

"Does the Senate of the United States want to nullify the power of the Congress to that degree?" he asked.

Senator Tower, calling the spending limitation a "rubber ceiling," said that the legislation would make it too "Let no one be misled," he said. "This [measure] is a mandate to spend."

But Senator William Proxmire, Democrat of Wisconsin, said that the fact was the limitation was lower than that urged by Mr. Nixon.

FISCAL RESPONSIBILITY

"This means," he contended, "that the Senate of the United States is going to go on record, at long last, as more fiscally responsible, more economy minded, more anti-tax increase-any way you want to put it-than the President."

The Senate's action offered some encouragement to the Democratic majority that it might recover from its inability yesterday to gain the override Mr. Nixon's veto of a measure authorizing funds for aid to the physically handicapped.

Meanwhile, the House risked yet another veto by approving a measure to restore a low-interest rural electrification loan program that was ended by the Administraton in late December.

The bill cleared the House 317 to 92, after rejection of an Administrationbacked substitute had failed by a vote of 244 to 162. The final version differed somewhat from a similar bill adopted earlier in the Senate. The two bills must be reconciled before the measure can go to the President.

Mike Mansfield, the Senate majority leader, conceded to newsmen that it "looks difficult" for Congress to win the spending dispute.

"I'm just trying to be realistic," he said, adding in a wistful tone, "Of course, there's always the courts if we're not successful with legislation.

[From the Wall Street Journal, Apr. 5, 1973]

BUDGET BILLS ADVANCE AS DEMOCRATS ATTEMPT TO UNFREEZE FUNDS, BUT SUCCESS IS UNLIKELY

Washington-Both Senate and House Democrats uncorked new schemes to free money frozen by President Nixon, but they don't much threaten the administration yet.

Unusually united Senate Democrats won rather easy approval of a plan that would make it difficult for President Nixon to cancel entire federal programs, as he has done, just by sitting on old appropriations by Congress. To protect their political flank, the Senators overwhelmingly combined this action with a companion amendment limiting federal spending to $268 billion in the coming fiscal year, $700 million less than Mr. Nixon proposed.

Acting on a narrower budget issue, House Democrats pushed through a bill designed to force the Rural Electrification Administration to undertake a new program of low-rate loans to rural electric and telephone cooperatives. President Nixon killed a long-established REA loan program last December in his broad budget-cutting effort.

Neither action seemed likely to result in law, however. The Senate measure dealing with impounded funds was attached to a bill approving the recent dollar devaluation, and a conference committee is generally expected to drop the rider. The House REA measure may win final congressional approval, but the President will certainly veto it, according to House Republican leaders who are confident they have the votes to sustain a veto.

The Senate curb on presidential impoundment of funds, approved 70 to 24, is mostly the handiwork of Sen. Sam Ervin (D.,N.C.). If the President froze all or part of a specific program's appropriation, the money would have to be released after 60 days unless a majority of both houses of Congress ratified the freeze. Republicans supporting the White House tried unsuccessfully to push an alternative plan giving Congress 60 days to pass legislation canceling an impoundment.

The distinction is important. The tactical burden is always greater on lawmakers trying to pass bills, but it's relatively easy to delay them. Under Sen. Ervin's plan, members wanting impounded funds released could just block action for 60 days and it would happen automatically. The lopsided approval was due in part to strong backing from most of Sen. Ervin's conservative Southern Democratic colleagues, who've been particularly affected by Mr. Nixon's cancellation of some rural programs.

While the President would have difficulty abolishing entire programs, the Senate's proposed new companion ceiling on spending would still let him withhold some appropriations to stay within it. However, he would be obliged to follow congressional spending priorities by applying the cuts in equal proportions throughout the government. If the General Accounting Office, a congressional fact-finding agency, decided the equal-proportion rule had been met, further congressional action wouldn't be needed to institute the cuts.

The spending ceiling was the more popular part of the plan, winning on a separate vote of 88 to 6 as Democrats sought to avoid the "big spender" tag the President has been putting on them. But because the entire Senate budget

package was attached to a pending bill ratifying the recent 10 percent dollar devaluation, its chances for enactment are considered dim. The House traditionally resists such grab-bag legislation. Yesterday's Senate voting, however, clearly demonstrated strong majority support for Sen. Ervin's package, and it's sure to be pushed later in a different legislative format.

The Senate has yet to pass the devalution bill itself, because yet another extraneous amendment is being proposed that could stir lengthly debate. Sen. Harry Byrd (Ind., Va.) wants to insert a prohibition against any U.S. aid to North Vietnam, which almost surely would carry if put to an early vote. Republican supporters of the administration would like to delay a decision, arguing that the aid question is premature in the absence of a specific presidential proposal.

The House action on the REA bill showed the administration isn't willing, at least so far, to give much ground on budget freezes of some long-established and popular programs. It spurned a bill, labeled a "compromise" by House Democrats, that would seek to require the REA to resume low-rate loans through a new financial mechanism.

The Democratic bill would establish a new revolving fund for federally subsidized loans to rural electric and telephone cooperatives and allow many of them to borrow at the tranditional 2% rate. In contrast, the Senate earlier passed a bill seeking to require the REA to resume direct loans at 2% and to make available all of the $595 million appropriated for that purpose in the fiscal year ending June 30. This was the program the President killed last December.

The House Democrats' plan would have a softer budget impact, but the administration still wouldn't buy it. House Republicans, responding to administration signals, proposed a substitute bill that would have given the administration wide latitude in setting total loan levels while sharply limiting the number of cooperatives eligible for the 2% interest rate.

The Republican proposal was defeated 244 to 162, but the tally indicated the GOP could muster the votes to sustain a veto. A two-thirds vote of both houses is required to override a veto.

After this key vote, the Democratic bill was passed 317 to 92, with many Republicans switching. It goes to a conference that will decide whether to propose final passage of the Senate REA measure posing the most direct softer House plan. In either case, House Republican Leader Gerald Ford of Michigan said he was certain of a veto and that House Republicans could sustain the President.

SENATE VOTES IMPOUNDING, BUDGET CURBS

[From the Washington Post, Apr. 5, 1973]
(By Spencer Rich)

The Senate voted yesterday to impose a $268 billion ceiling on federal spending for fiscal 1974 and to curb the President's power to impound funds voted by Congress.

Smarting under presidential charges of budget busting, the Senate added the spending ceiling to the dollar devaluation bill by a roll call vote of 88 to 6. The tough anti-impoundment provision-forbidding the President to hold back appropriated funds unless he goes to Congress for approval-was added to the same bill by a 70-to-24 vote.

Although both provisions may well be dropped in conference because of House germaneness rules, Democratic sponsors added them to the dollar devaluation bill at this time to demonstrate that Congress shares the President's concern over inflation and excessive federal spending, and as a gesture in support of the campaign to reassert Congress's power of the purse.

If dropped from the current bill, the two provisions will be added to the debt ceiling bill later on, or considered on their own.

The $268 billion ceiling, sponsored by Sen. Edmund S. Muskie (D-Maine), and the anti-impoundment language, sponsored by Sen. Sam J. Ervin Jr. (D-N.C.), are actually parts of a single bill approved 13 to 3 Tuesday by Ervin's Government Operations Committee. On the Senate floor yesterday, separate votes were taken when the two parts were offered as a floor amendment to the dollar devaluation bill.

In the only other amendment adopted yesterday, the Senate approved, 68 to 23, a proposal by Sen. James McClure (R-Idaho) to allow private ownership of gold starting Dec. 31. This has been forbidden since 1934, except for artistic and industrial purposes, but McClure argued that since dollars are no longer convertible into gold, private ownership should be allowed.

Westerners said lifting the gold ownership ban would stimulate mining. But the administration opposes the change, saying it would have an unsettling effect on international monetary policies. Pending at day's end was an amendment by Sen. Harry F. Byrd Jr. (Ind.-Va.) forbidding U.S. aid to North Vietnam, despite administration pledges to seek some aid for Hanoi as part of the peace settlement. The Nixon administration opposed both the Muskie $268 billion ceiling and the Ervin anti-impoundment language.

Although the President himself has asked for a $268.7 billion ceiling, he wants complete freedom to determine what programs to cut if necessary to meet the ceiling. The Muskie language denies him this freedom.

It forbids cuts in veterans' and Social Security benefits, Medicare, Medicaid, welfare, food stamps, judges' salaries, interest on the national debt or military retirement pay. In cutting other programs if necessary to meet the $268 billion ceiling, the President must reduce them on a roughly across-the-board, proportional basis and not by chopping one program completely without making any cuts in another.

Put forward at this time to counter presidential charges that excessive congressional appropriations are fueling inflation, the Muskie ceiling was carefully set at $700 million below the President's $268.7 billion spending proposals-a demonstration, in the words of Sen. William Proxmire (D-Wis.), that the Senate is even "more fiscally responsible" than Mr. Nixon.

Unlike the Muskie ceiling, which applies only to fiscal 1974 to begin July 1, the Ervin anti-impoundment bill (which had 53 co-sponsors) is permanent legislation. It forbids the President from holding up the spending of congressionally appropriated funds for more than 60 days, unless he goes to Congress and obtains approval of the proposed impoundment by a majority vote in each chamber. A resolution of approval would be a privileged matter and would go to a vote automatically after 10 hours of debate.

The Ervin bill is a response to presidential assertions of power to withhold the spending of any appropriated funds. Under this doctrine, the President this year has cancelled several major programs, partly to hold down spending, partly because he disapproves of the programs. Hundreds of millions of dollars appropriated by Congress are unspent.

Ervin claims this usurps the congressional power of the purse. Others charge it would make the President the sole judge of which programs to fund, letting him cut social programs and pump more money into defense and business aid. In yesterday's voting, both Virginia Senators opposed the impoundment provision while both Maryland Senators backed it; all four backed the spending ceiling.

Early in the day Sens. Henry Bellmon (R-Okla.) and Robert Taft Jr. (R-Ohio) put aside a ceiling and impoundment proposal of their own and joined in backing the Ervin-Muskie proposals.