COMMITTEE ON APPROPRIATIONS

GEORGE H. MAHON, Texas, Chairman

NOTE. This Surveys and Investigations supervisory staff is supplemented by selected personnel borrowed on a reimbursable basis for varying lengths of time from various agencies to staff up specific studies and investigations. This current average annual fulltime personnel equivalent is approximately 42.

ADMINISTRATIVE SUPPORT
GEMMA M. HICKEY
VIRGINIA MAY KEYSER
FRANCES MAY

LAWRENCE C. MILLER
MARILYN R. QUINNEY

DEPARTMENTS OF LABOR AND HEALTH, EDUCATION, AND WELFARE APPROPRIATIONS FOR FISCAL YEAR 1973

MONDAY, FEBRUARY 7, 1972.

OVERVIEW OF 1973 BUDGET

WITNESSES

JAMES B. CARDWELL, ASSISTANT SECRETARY, COMPTROLLER
CHARLES MILLER, DEPUTY ASSISTANT SECRETARY, BUDGET
WILFORD J. FORBUSH, DIRECTOR, BUDGET

J. T. SMITH, SPECIAL ASSISTANT TO THE ASSISTANT SECRETARY,
COMPTROLLER

MICHAEL STURMAN, CHIEF, METHODS AND

BRANCH, DIVISION OF BUDGET

PRESENTATION

GERALD F. MEYER, CHIEF, HEALTH BRANCH, DIVISION OF BUDGET FRED PFLUGER, CHIEF, EDUCATION BRANCH, DIVISION OF BUDGET EARL CANFIELD, JR., CHIEF, WELFARE BRANCH, DIVISION OF BUDGET

Mr. FLOOD. The committee will come to order.

We now have the honor and privilege of hearing Mr. James B. Cardwell, the Assistant Secretary, Comptroller, for the Department of Health, Education, and Welfare who will be our first witness on the budget for that Department for fiscal year 1973.

In view of the size of the budget that has been requested by the President this year, he has an extraordinary burden since we are advised that, for the first time, it exceeds even that of the Department of Defense. I think that isn't because of any one person, any particular committee or committees of Congress, the Department of Health, Education, and Welfare or the Department of Defense-I think it is because that is what the people of the Nation want. I remember the song from the great old play "Damn Yankees," "What Lola Wants, Lola Gets." I think that probably accounts for the size of the request being made this year with reference to the budget for the Department of Health, Education, and Welfare.

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Mr. Cardwell we have known long and favorably and well. It is too bad the record can't show the enthusiasm of my inflections when say those things. He has served many years in this Department and has served it well, and has been before this committee for more years probably than he cares to remember.

Mr. Cardwell is accompanied by Mr. Charles Miller. Mr. Miller is the Deputy Assistant Secretary for Budget. Mr. Miller is doing his best to fill the very large shoes of Mr. Cardwell who before he became the

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top brass was in Mr. Miller's job. In the opinion of this committee he is doing very well with a tough assignment.

Mr. Cardwell and Mr. Miller will be accompanied by Mr. Wilford J. Forbush, the Director of the Budget.

Mr. Cardwell, with that suppose you take up the curtain.

CHART PRESENTATION

I think perhaps I should add that this first hearing traditionally is in the nature of a chart presentation for the purpose of giving us an overall picture of the Department's budget. We listen, I am sure, attentatively; but we don't consider this an examination period unless there is some item a member wishes to have clarified. We will have the Secretary here tomorrow and the next day to present the rationale for the budget and will be questioned on the reasoning and policy considerations behind it.

Mr. CARDWELL. Thank you, Mr. Chairman. I really do enjoy coming back. I have always admired and respected this group and the consideration it gives to HEW's budget.

As you said the Secretary will be here tomorrow.

Mr. FLOOD. I think you would like to know, all of you and the subcommittee too, at the annual dinner of the Wilkes Barre Chamber of Commerce the Secretary was our guest and delivered the principal address. It is the first time I ever heard him speak at that sort of thing. I introduced him elaborately, going into the Harvard background and his ethnic origin and so on, as well as his long years of public service. I want you to know that he made quite a hit, he really did. He did very well. He is a good fellow as well as a distinguished member of the President's Cabinet. As a matter of fact I couldn't have done better myself and that is going pretty far.

Mr. CARDWELL. Yes, it is.

PRESENTATION BY COMPTROLLER

Mr. CARDWELL. Our purpose today is to give you a kind of a background for the budget. It is a fairly complicated one as I am sure many of you already know.

I would like to introduce some of the other men here in addition to Charlie and Bill Forbush. J. T. Smith that works for my office. The rest of the members here are members of Charlie's staff. Gerry Meyer handles the health part of the budget, Fred Pfluger, the educational, and Earl Canfield, the Social and Rehabilitation Service.

Mr. FLOOD. We have known Pfluger long and well.

Mr. CARDWELL. Mike Sturman who will be at the charts handles putting the papers together that make up the budget.

With that background let's get started. We have a lot of territory to cover. Don't hesitate to interrupt. We would like to keep it as informal as we know how. It is your hearing.

FEDERAL FUNDS AND TRUST FUNDS

Mr. CARDWELL. As you know the budget is made up of a combination of Federal funds and trust funds. Federal funds consist primarily of direct appropriations.

Mr. FLOOD. How do you use the term Federal funds vis-a-vis trust funds?

Mr. CARDWELL. Federal funds are funds collected and used by the Federal Government, as owner. The major federally owned fund is the general fund, which is derived from general taxes and borrowing. Trust funds in this case represent the funds collected and used by the Federal Government, as trustee, for specified purposes, such as those administered by the Social Security Administration for old age and survivors and disability insurance and medicare.

The appropriated portion of the budget would be $28.7 billion in 1973 compared to $27.4 billion in 1972 and $22 billion in 1971. Mr. FLOOD. What was that figure 10 years ago?

Mr. CARDWELL. The Department's 1963 budget was $20 billion of which $5 billion was appropriated Federal funds.

FEDERAL FUND OUTLAYS

The other figure that is interesting I think with regard to Federal funds, is outlays-the cash that will go out of the Treasury against appropriations in 1973. It shows an increase of only $300 million from $26.1 billion to $26.4 billion, but I ought to tell you at the outset that that is quite a misleading figure.

Mr. FLOOD. What is an outlay?

Mr. CARDWELL. Outlays represent cash paid out of the Treasury against commitments made in current or prior years by HEW against authorities approved by the Congress.

The item that distorts the picture involves the proposal in this year's budget to offer States in the last month of the current fiscal year (1972) cash advances equal to July's estimated public assistance requirements including medicaid. This would add up to about $1 billion. This would in effect add $1 billion to the 1972 figure and consequently lower the 1973 figure by $1 billion. The net difference turns out to be $2 billion. If it were not for that particular advance there would be a net increase in outlays of $2.3 billion rather than the $0.3 billion shown.

We might talk about that item later. We had a meeting with the Ways and Means Committee staff Friday. They were very interested in the item-how it affected the budget and how it might affect the States.

HEW BUDGET COMPARED WITH DEFENSE BUDGET

There has been much said already this year about the fact that the HEW budget has this year grown beyond the level that is proposed for the Defense Department in both budget authority and outlays. HEW in terms of total budget authority would be $86.8 billion. The Defense Department comparable figure is $83.5 billion. In terms of outlays, the HEW budget would be $78.9 billion, and the Defense Department would be $77.7. The Defense Department budget increased about $6.5 billion and the HEW budget again in terms of budget authority increases $10.4 billion.