Mr. SISK. The point is there are so many of these agencies. Let's take TVA or REA, you name it. There are literally dozens upon dozens of these agencies with borrowing authority. How many are there? Mr. VANIK. I think there are about 25 principal ones.

Mr. SISK. I thought there would been a lot more than that.

Do you propose to limit on a percentage basis? The point is that here, again, you get down to priorities. I understand in essence the point you are making. Technically, I don't see how to do it.

Mr. VANIK. We could establish an overall ceiling.

Mr. SISK. I see what you mean. In other words, first come, first served. In other words, when those agencies that had borrowed reached a certain amount.

Mr. VANIK. We could say that they should anticipate their borrowing a year ahead, just like anything else we do. They should submit their borrowing needs to us and let Congress fix the priorities for any given year.

Mr. SISK. In other words, return the power to Congress.

Mr. VANIK. Return the power to Congress that we have granted and which now operate without any control by us at all. For example, the Export-Import Bank has $10 billion authority. You probably wouldn't want to take that away, but we could have an amendment that would state that the total borrowing for next year shall be $23 billion. Of the $6 billion that they have remaining, they-the bank-cannot, in the next year, borrow more than $2 billion.

Just to fix it at some amount, the same way you establish your priorities here. I think the legislation is possible.

Mr. SISK. I agree with your point, Charley. I think this is an area where, so far as inflation is concerned, it is terribly inflationary.

Mr. VANIK. It is just as much a cause of inflation as your deficit between receipts and expenditures. I want to tell you as one member of the Ways and Means Committee, I don't see any new tax changes as any form of relief, nor do I candidly expect that we are going to pick up any more revenue in tax reform.

We did have a report the other day that the receipts of the Government are going to be considerably higher. I think you should have that before you in your considerations.

Secretary Shultz told us the other day that because of increased profitability there has been a pickup in tax receipts that are well beyond the budget. I think they go $5 billion or $6 billion beyond the initial budget estimates.

Mr. LONG. The inflation, itself, has caused that, too.

Mr. VANIK. Inflation is a great part of it. Probably over half of it. The CHAIRMAN. Mr. Quillen?

Mr. QUILLEN. No questions.

The CHAIRMAN. Mr. Young.

Mr. YOUNG. Thank you, Mr. Chairman.

What you have said I think is tremendously interesting and there is a lot to it. But that only pertains to the Federal Government's borrowing, its agencies and so forth. Is it or is it not a fact that other agencies of Government, State, local, so forth, plus the private sector in their fiscal operations really far exceed the U.S. Government?

Mr. VANIK. That is correct. I am talking about what we can do. There is no real way that we can cut back on their expenditures or their borrowing. I think that is a matter that they have to decide.

Mr. YOUNG. You are not saying, then, that the U.S. Government is solely responsible for inflation, the expenditures of the U.S. Govern

ment.

Mr. VANIK. I think our Federal borrowing is a substantial contributor to the inflation. It is the substantial contributor.

Mr. YOUNG. But not entirely?

Mr. VANIK. Not entirely, you see, this is controllable. As a matter of fact, the administration, itself, has felt the need of some kind of control over its own agencies. They act as though they don't even talk to each other. You might wake up in the morning and one of the agencies might decide to float a loan for $2 billion and it throws the whole money picture completely out of line and feeds inflation.

It is a time that Congress ought to step in and say, "You have to tighten your belt. Though you will still have your authority, we will only allow you to use a certain percentage of it.

Mr. YOUNG. I can recall 18 or 20 years ago when a country government cleared before it issued or sold bonds.

Mr. VANIK. Yes.

Mr. YOUNG. That is all.

The CHAIRMAN. Mr. Latta.

Mr. LATTA. Did I understand you to say in your amendment it would include the guaranteed loan program?

Mr. VANIK. I Wouldn't include the guaranteed loan program in this kind of amendment, but I just wanted to point out that the loan guarantee program is used sometimes as a substitute for direct borrowing, and this is something that we have to watch. We have to watch the guarantee or contingent liability program because it is getting out of control. It is up near the trillion-dollar mark right now.

The liabilities which might come due from all these guarantees and insurances could probably be one-twentieth of that. But it is a tremendous sum and it also fuels inflation. For example, the ExportImport Bank had a new gimmick in the LNG gas deal. The ExportImport Bank guaranteed a loan made by a foreign government to the Government of Algeria.

The CHAIRMAN. To which government?

Mr. VANIK. TO Algeria. The loan was made by Europeans to a foreign government and our Export-Import Bank, using the backing of the American taxpayer, guaranteed that loan at subsidized rates.

There are all sorts of things like this going on. The Export-Import Bank is really something to watch.

Mr. LATTA. Your proposed amendment would not go to that.
Mr. VANIK. No.

Mr. LATTA. Nor would it go to the guaranteeing of mortgages on homes, for example, the Farmers Home Administration, the VA. You wouldn't go to that?

Mr. VANIK. No. We don't disturb that. We would try to control other agencies. The Export-Import Bank, for example, can issue bonds at any time. They could go out tomorrow and issue $6 billion worth and throw us into a real spin.

The Government's interest rate could go up 111⁄2 points on that. I think we have to have some control over the way they can freely march into the money market and increase the cost of our own Government borrowing and our own deficit because of what they do and when they do it. I think we can't possibly fight off the inflationary effect, unless we put a curb or some limitation on the annual borrowing.

Mr. SISK. Could I clarify this with you again: Do you think this would require a special provision of the rule to cover the kind of amendment you are talking about for either one of these bills?

Mr. VANIK. I think so. I think either one of the bills would require a rule simply saying that it would be in order to offer an amendment which would endeavor to limit the borrowing in the next fiscal year, borrowing in and out of the debt ceiling.

I think we have to have that special language in the resolution. Mr. CLAWSON. Do you think that has to be spelled out in order to take care of the germane requirement?

Mr. VANIK. I am absolutely certain it would have to be spelled out to meet the germane test. There would be no harm in letting this go to the House and let the House work its will on this issue. The debate would be astounding in that it would reveal the tremendous extent of the borrowing and the arbitrary nature in which it is made.

People that we have no control over can just go ahead and decide they are going to go to the money market and borrow $4 billion or $1 billion and they don't talk to anybody. They don't even clear with the White House. It is a dangerous thing.

Mr. YOUNG. If this is made an order, you will be heard on the floor, wouldn't you?

Mr. VANIK. Yes.

Mr. YOUNG. In that connection, if it is not too much of a burden, I, for one, would be very much interested in seeing the ratio between private and other Government activities along these lines.

Mr. VANIK. I will be glad to try to provide that. I will provide every member of the Rules Committee with a list of the outstanding direct loans and the power that remains.

Mr. CLAWSON. Mr. Chairman, may I ask for unanimous consent that these be inserted into the record?

The CHAIRMAN. Without objection it is so ordered.

Mr. VANIK. There are two tables. One is a table relating to the Executive control over major and federally assisted borrowings in the private market, which our colleague from Texas talked about, and the other is outstanding direct loans, guaranteed insured loans. Those two tables should be in the record. Again, my amendment would not affect all these programs. I just want to give you an idea of the size of these backdoor activities.

[The tables referred to follow:]

TABLE 1.-EXECUTIVE CONTROL OVER MAJOR FEDERAL AND FEDERALLY ASSISTED BORROWINGS IN THE PRIVATE MARKET

TABLE 1.-EXECUTIVE CONTROL OVER MAJOR FEDERAL AND FEDERALLY ASSISTED
BORROWINGS IN THE PRIVATE MARKET-Continued

B. Securities issued by Government agencies (budget agencies)-Con. 3. Tennessee Valley Authority..

1 The Secretary of Commerce and the Secretary of the Treasury have agreed to consult on a continuing basis concerning the timing, terms, and other financial arrangements of offerings of guaranteed merchant marine bonds.

Source: Office of Debt Analysis, Office of the Secretary of the Treasury (revised June 8, 1972).