Mr. SLINDEE. That was in connection with the Secretary's testimony. Mr. FUNK. I remember that you asked for it in connection with our hearings, but I am pretty sure Mr. Johnson had that put in. Mr. GARY. I do not care where it goes in. I would just like to have a similar table. Would you prepare that table? Would that be in your Department? Mr. JOHNSON. No; but we will take care of it, Mr. Chairman. Mr. CANFIELD. And it looks good on the paper currency of the United States. I, too, Mrs. Clark, am glad to greet you as the new Treasurer of the United States. I wonder if perchance we will have to reform a part of your statement of the justifications, in which you say that— The Treasurer of the United States is the official custodian of the public funds. All public moneys are required to be deposited to the credit of his account in Federal Reserve banks and other designated Government depositories. Mr. SLINDEE. We stand corrected on that. Mr. CANFIELD. Your predecessor, as the chairman has said, was a most interesting witness before our committee. However, he always indulged in a little salty language. While we do not expect that of you, we do hope that you will have one pet aversion that he had. That was the enormous public debt. Will you tell us now, Mrs. Clark, what the latest figure is on the public debt of the United States? Mrs. CLARK. About $257,000,000,000. Mr. CANFIELD. Mr. Julian had been in countries abroad. He had seen countries suffering from great inflation. He had seen them go down and he was always one to express the hope that we would be able to pull our debt down sometime and retain the integrity and solvency of the country. Mrs. CLARK. That has always been my feeling. Mr. CANFIELD. Your predecessor, incidentally, was placed in nomination several times for the Presidency of the United States. Mrs. CLARK. Yes. Mr. CANFIELD. That is a precedent? Mrs. CLARK. Not for me. Mr. COUDERT. I just hope, Mrs. Clark, that you will not feel badly at the unpopularity which will be yours among your colleagues after this committee has followed your example and reduced every appropriation by the same percentage as that with which you come in here. You really tempt us. CONTINGENT EXPENSES, PUBLIC MONEYS Obligations by activities Collecting, safekeeping, transferring, and disbursing public moneys of Mr. GARY. You requested $475,000 for that appropriation for 1950. The Congress appropriated $450,000, and you are now asking for $500,000. What is the basis of that increase? Mr. SLINDEE. That is due entirely to increased postal rates. Mr. SLINDEE. About 90 percent of it is for transportation of currency and coin between the Treasury and Federal Reserve banks, and the mint and Federal Reserve banks. Mr. GARY. And how much have you obligated so far this year? Mr. GARY. And that is up until what time? Mr. FUNK. December 30. Mr. GARY. You are asking that this be made a continuing appropriation? Mr. FUNK. A permanent indefinite appropriation. Mr. SLINDEE. It would seem appropriate for us to do that. In looking back over the record we find that since 1940 the committee has had to consider nine supplemental appropriations-that is, nine deficiency appropriations which does not seem to us to be good administration, because it costs something to put deficiency estimates through the mill. We have no administrative control over the volume of currency or coin required in commerce, nor do we have any administrative control over the transportation rates charged by the Post Office or commercial carriers. We do everything in our power to hold the volume to the minimum necessary to meet actual requirements and to effect shipments by the most economical means of transportation. Mr. GARY. Who supervises this transportation? Mr. SLINDEE. We do. But we have to furnish the Federal Reserve bank, for distribution to their member banks, the currency that is required for use in commerce. After the currency is no longer fit for circulation, the Federal Reserve banks send it in, and we are required to reimburse them for the cost of transportation thereon. So, most of this is just out of one Government pocket and into the other. We are paying the Post Office Department for performing this work of transporting new currency out, new coin out, and old currency back. Mr. GARY. Most of it is transported through the mail? Mr. SLINDEE. Oh, yes; all the paper currency and most of the coin. Mr. CANFIELD. Mrs. Clark, before you go, I would like to say this. I happen to be one of those who are delighted to see more women in high public office. Mrs. CLARK. Thank you. Mr. CANFIELD. And I do not know whether you know the story of the girl that is up on top of our Nation's Capitol, up on the dome. I like to refer to her in speeches I make now and then. Some of our illustrious predecessors back in 1863 exalted womanhood when they hoisted her up there, and we all salute her, be we civilians, the military brass, or what not, because her name is Freedom. I am sure that you and your colleagues in the Treasury can do a lot to maintain her there. Mrs. CLARK. Thank you. Mr. CANFIELD. That is all, Mr. Chairman. Mr. GARY. We are very much obliged to you. Mrs. CLARK. Thank you very much for your consideration. TUESDAY, JANUARY 10, 1950. BUREAU OF INTERNAL REVENUE WITNESSES GEORGE J. SCHOENEMAN, COMMISSIONER DANIEL A. BOLICH, ASSISTANT COMMISSIONER T. C. ATKESON, ASSISTANT TO THE COMMISSIONER FREDERICK I. EVANS, BUDGET OFFICER JOE N. McCOLLUM, ASSISTANT BUDGET OFFICER A. H. CROSS, DEPUTY COMMISSIONER, ACCOUNTS AND COLLECTIONS UNIT E. I. McLARNEY, DEPUTY COMMISSIONER, INCOME TAX UNIT MARIUS FARIOLETTI, TAX ADVISER, MANAGEMENT STAFF, OFFICE OF ASSISTANT TO COMMISSIONER JULIAN WILLIAMS, SUPERVISOR OF ACCOUNTS AND COLLECTIONS Mr. GARY. We will take up this morning the budget request of the Bureau of Internal Revenue. We are very glad to have you with us, Mr. Schoeneman. Would you like to make a general statement at this time? Mr. SCHOENEMAN. I would, Mr. Chairman. GENERAL STATEMENT Mr. SCHOENEMAN. The estimates before you have been prepared under the new "activity" or "program" method of presentation. This method provides all of us with a better basis for analyzing our operations and expenditures by objectives and by programs. In one sense, the Bureau of Internal Revenue has but one objective and one program; namely, the administration of the internal revenue laws. For the fiscal year 1951, this objective means the collection of about $40,000,000,000. The figure that appeared in yesterday's paper in connection with the President's budget was $40,440,900,000. This figure is the gross internal-revenue receipts before refunds. Mr. GARY. The refunds amount to approximately how much? TAX LAWS Mr. SCHOENEMAN. This sum is to be derived from the administration of the 79 separately classified taxes which are now on the statute books. In the accomplishment of this objective and the execution of this program, good administration requires uniform and equitable enforcement of each of the 79 levies among all geographical areas and among all income and economic segments upon which imposed. In the administration of these taxes, there are five primary "activities"; namely, (1) interpretative and ruling work incident to the administration of the taxing statutes; (2) front-line enforcement; (3) technical enforcement behind the front line, such as review, hearing, of taxpayer appeals and legal work incident thereto, and enforcement of the special technical provisions of the code; (4) processing and control of all payments, tax returns, papers and records; and (5) executive direction of the entire program of administration, which is defined to cover the persons attached to the Office of the Commissioner who are working on top-policy problems. The purpose of preparing budget estimates according to "activities" is to permit each activity to be analyzed from the standpoint of relative importance and essentiality in the light of the over-all Government program. This same purpose underlies the classification of our estimates as among the primary "activities" of internal-revenue administration. NUMBER OF EMPLOYEES DISTRIBUTED BY ACTIVITIES For the fiscal year 1951 the distribution of the employees and the percentage of the total among the primary activities will be as follows: In the future, we anticipate that many refinements will be made in this list of activities and our basic work-load data in order that more detailed and exact comparisons may be made between the programs, the number of work units, and the man-years required to produce a given number of work units. The estimates this year contain over-all work-load indicators, but no satisfactory weighting formulas have been developed which will permit the mathematical calculation of the precise number of manyears required to perform given numbers of work units of different types. Moreover, so many changes are currently being made which will affect the productive capacity of each employee that it is unusually difficult to make precise estimates at this time.. As to the five primary activities shown, it is important to note that, as compared with the fiscal year 1949, actual decreases in number of man-years are being recommended in two instances: namely, (a) processing and control, and (b) technical enforcement. In view of the fact that the two activities-processing and control, and front-line enforcement-comprise 93 percent of all employees, Í think it is important for you to have certain details concerning them. PROCESSING AND CONTROL The processing and control activity embraces all routine operations involved in the receiving, processing, recording, filing and controlling of taxpayer returns, remittances and claims, and related information documents. The estimates for 1951 provide a total of 19,604.3 manyears, or 33.8 percent of the total requested for the Bureau. This activity is the field of operations at which we have been hammering with the end in view of reducing costs through the adoption of improved methods. Concentrated attacks have been made upon it by an investigative group of your committee; an investigative group of the Joint Committee on Internal Revenue Taxation; a committee established by the Secretary under the chairmanship of Mr. Wiggins; a privately employed management-engineering firm; and operating officials of the Bureau. These have resulted in a long list of completed changes, with many more in process of installation and still others in the testing stage. I shall not take your time to itemize these improvements, as the major ones are set forth in the 1949 report to the Secretary of the Treasury from the Committee to Direct the Management Studies of the Bureau of Internal Revenue. I would like to leave with each member of the committee a copy of this report. With your permission, I should also like to have a copy incorporated in the record. Mr. GARY. I will glance through this and decide about putting it in the record. If it is to go in, I think it really ought to go in at the end of your statement. Mr. SCHOENEMAN. Yes, sir. The important point is the over-all effect of such improvements. This effect can best be demonstrated by the absolute decrease in the number of employees being requested for 1951 to perform the processing and control work. We had 20,261 man-years devoted to this activity during the fiscal year 1949. For the fiscal year 1951, our estimates provide for 19,604, or a decrease of 657 man-years. This is indisputable evidence that the drive which we have been making to find new and better ways of performing our "housekeeping" functions is beginning to bring tangible and substantial results; and I can assure you that, as additional reductions become possible from still further improvements, they will be reflected in our estimates for future years. The figures I have just given you, however, do not tell the whole story of our advances in the performance of processing and control operations. There has been a marked improvement in the quality of the work done. Notices of estimated tax installments are sent out well in advance of the due dates. Index cards are filed promptly. Backlogs of correspondence with taxpayers are being gradually eliminated. The scheduling of all 1948 overpayment refunds-almost 38,000,000-was virtually completed by May 31, 1949. In a word, our housekeeping duties are being performed fully, neatly, and promptly. 60561-30-pt. 1—10 |