Reducing the Public Debt. 86-2, 1960

REDUCING THE PUBLIC DEBT

(H.R. 1337, H.R. 5203, H.R. 7469, H.R. 10971, H.R. 12515, and H.J. Res. 184)

WEDNESDAY, JUNE 8, 1960

HOUSE OF REPRESENTATIVES,

COMMITTEE ON GOVERNMENT OPERATIONS,

EXECUTIVE AND LEGISLATIVE REORGANIZATION SUBCOMMITTEE,

Washington, D.C. The subcommittee met at 10 a.m., in room 1501-B, New House Office Building, Hon. William L. Dawson (chairman of the subcommittee) presiding.

Present: Representatives William L. Dawson, Dante B. Fascell, and Neal Smith.

Also present: Elmer W. Henderson, counsel; Phineas Indritz, counsel; and Lawrence Redmond, clerk.

Chairman DAWSON. We will proceed now to the consideration of several bills relating to the Federal budget and financing the national debt. There has been considerable interest in and discussion of these problems in the Congress.

This subcommittee has long been interested in taking whatever steps are necessary to improve our budgetary procedures and reduce the heavy burden of the public debt.

(H.R. 1337, H.R. 5203, H.R. 7469, H.R. 10971, H.R. 12515, and H.J. Res. 184 follow :)

[H.R. 1337, 86th Cong., 1st sess.]

A BILL To provide that the President shall include in the budget submitted to the Congress under section 201 of the Budget and Accounting Act, 1921, an item for not less than $2,000,000,000 to be applied toward reduction of the national debt

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 201(a)(5) of the Budget and Accounting Act, 1921, is amended by inserting immediately after "fiscal year," the following: "with not less than $2,000,000,000 to be applied toward reduction of the national debt;".

[H.R. 5203, 86th Cong., 1st sess.]

A BILL To amend the Budget and Accounting Act, 1921, to provide for the retirement of the public debt by setting aside the first 5 per centum of the budget receipts of the United States for each fiscal year for the sole purpose of retirement of obligations counted as part of the public debt

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 201 (a) of the Budget and Accounting Act, 1921 (31 U.S.C. 11), is amended by inserting immediately below paragraph (11) thereof the following:

"Except in time of war each budget submitted to the Congress shall include an item, in an amount not less than 5 per centum of the estimated budget receipts for the ensuing fiscal year, which item shall be exclusively for retirement of the public debt. For the purposes of section 202 of this Act (31 U.S.C. 13), such item shall be treated as an expenditure for the ensuing fiscal year.'

SEC. 2. Section 202 of the Budget and Accounting Act, 1921 (31 U.S.C. 13), is amended (1) by striking out ", loans," in subsection (a); (2) by inserting immediately after "appropriate action” in subsection (a) the following: “(including, but only in time of war, loans)"; and (3) by adding at the end of such section the following:

"(c) Except in time of war, the first amounts received in the Treasury of the United States after July 1 of each fiscal year shall be set aside in a special account, until the aggregate of the amounts so set aside for that fiscal year equals the amount included in the budget for that year under section 201 of this Act, for retirement of the public debt.. Amounts so set aside shall be used exclusively for retirement of obligations of the United States which are included in determining the face amount of obligations which may be outstanding at any one time pursuant to section 21 of the Second Liberty Bond Act (31 U.S.C. 757b)."

[H.R. 7469, 86th Cong., 1st sess.]

A BILL To amend the Budget and Accounting Act, 1921, to provide for the retirement of the public debt; to limit the size of the Federal budget; and for other purposes

"Except in time of war, each budget submitted to the Congress shall include a request for an item of appropriation equal to 1 per centum of the aggregate face amount of the obligations outstanding as of July 1 of the calendar year in which this sentence is enacted which are included as a part of the public debt. Such item shall be used exclusively for the retirement of the public debt. No budget for any fiscal year shall be considered as balanced, or as providing for estimated receipts equal to or in excess of estimated expenditures, unless such item is taken into account, and considered as an estimated expenditure for such fiscal year."

SEC. 2. Section 202 of the Budget and Accounting Act, 1921 (31 U.S.C. 13), is amended (1) by striking out ", loans," in subsection (a); (2) by inserting immediately after "appropriate action" in subsection (a) the following: "(including, but only in time of war, loans)"; and (3) by adding at the end thereof the following:

"(c) Except in time of war, no budget shall be submitted to the Congress for any fiscal year which shall request appropriations aggregating in excess of the total of appropriations requested in the budget submitted for the prior fiscal year."

[H.R. 10971, 86th Cong., 2d sess.]

A BILL To provide that until the national debt is retired, not less than 10 per centum of the net budget receipts of the United States for each fiscal year shall be utilized solely for reduction of the national debt

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 201 of the Budget and Accounting Act, 1921, is amended by adding at the end thereof the following new subsection:

“(g) Until the public debt has been retired, the budget submitted to the Congress for each fiscal year beginning after the date of enactment of this subsection may not provide for expenditures in a total amount exceeding 90 per centum of the estimated net budget receipts of the United States for such fiscal year. The net budget receipts of the United States in excess of such expenditures for each such fiscal year shall be available only for retirement of the public debt. This subsection shall not be applicable in time of war."

[H.R. 12515, 86th Cong., 2d sess.]

"(g) Until the public debt has been retired, the budget submitted to the Congress for each fiscal year beginnig after the date of enactment of this subsection may not provide for expenditures in a total amount exceeding 90 per centum of the estimated net budget receipts of the United States for such fiscal year. The net budget receipts of the United States in excess of such expenditures for each such fiscal year shall be available only for retirement of the public debt. This subsection shall not be applicable in time of war."

[H.J. Res. 184, 86th Cong., 1st sess.]

JOINT RESOLUTION To prevent deficit financing by limiting appropriations to the amount of the President's budget except where additional revenues to cover such appropriations have been specifically made available

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That no amount shall be appropriated for the fiscal year ending June 30, 1960, or for any subsequent fiscal year, if the appropriation of such amount, when taken together with all other appropriations theretofore made for such fiscal year, would result in total appropriations for such fiscal year in an amount in excess of the President's budget for such year, unless (at or before the time when such appropriation is made) provision is made by law for additional Federal revenue in an amount at least equal to the amount of such excess.

Chairman DAWSON. Our first bill will be H.R. 5203, introduced by Congressman Haley, which provides for retiring the public debt by setting aside 5 percent of budget receipts for each fiscal year.

Congressman Haley, we are happy indeed to have you with us, and we hope that you are as much interested and will take as good care of this matter as you have been of the Indians who are surviving.

STATEMENT OF HON. JAMES A. HALEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. HALEY. Thank you very much, Mr. Chairman and members of the committee.

First, I would like to thank you for the opportunity of being here this morning. We not only take care of Indians down in my community, we also try to take care of some of my colleagues, like Mr. Fascell, who has people down there who forgot to file on lands that they have been living on for 80 years, and so forth; so we have many problems.

Mr. Chairman, since I believe fiscal responsibility can be achieved, that Federal spending can be reduced and the budget balanced, and inasmuch as I am firmly convinced something must be done to bring about an orderly retirement of the public debt, I introduced this bill which I believe presents a reasonable method of paying off the tremendous debt we have accumulated. I hope that this committee and the Congress, if the committee sees fit to pass this bill out, will support this plan and bring about the above desired results with respect to fiscal policies of the Federal Government.

My bill, H.R. 5203, is a very simple bill. It would require the President to include in each budget he submits to the Congress an amount not less than 5 percent of the estimated budget receipts for the ensuing fiscal year for retirement of the public debt.

After July of each year, the Treasurer would be required to set aside the first amounts received until the 5 percent figure was obtained. That amount would then be applied on the debt.

In addition, the bill would prevent the President from recommending loans as a means of making up any estimated deficiency in the budget except in times of war.

This provision would require the President to recommend taxes or other appropriate action as a means of balancing the budget. For example, if the receipts for fiscal year 1961 were estimated to be $80 billion, the President would include $4 billion as a budget item to be used solely for the retirement of the public debt. The President would be required to recommend additional taxes or other taxes, but he could not recommend loans as a means of making up the estimated deficiency.

Then, after the budget went into effect July 1, 1961, the first $4 billion received in the Treasury would be applied on the debt.

Several bills have been introduced which prescribe methods of retiring the public debt, but my bill is the only one setting forth the above method.

Any family or business may be faced with the necessity of borrowing money at times, but the prudent family or businessman will set aside a certain amount of money out of receipts to meet such obligation. If not, that family or businessman will soon face bankruptcy.

Is it not reasonable to say the same principle applies to the Federal Government? As a matter of fact, I am of the opinion the Government should be even more alert in employing sound methods in meeting its obligation, since the solvency of the Federal Government is a matter affecting the lives of each American citizen.

It is time for us to realize the true fact about the significance of this gigantic public debt. It is also important for Congress to recognize the danger inherent in our trend toward the form of government with bureaucracies and ever-increasing budgets.

In 1940, the national debt amounted to $42 billion-those are approximate figures, of course. As of June 1, 1960, the debt amounted to approximately $289.5 billion, and it is estimated that by the end of the next fiscal year the debt will be $290.1 billion.

In 20 short years the debt has increased over $247 billion. Those who think we can continue this trend are living in a dream world. By the end of 1960, the per capita debt will be about $1,600 per person, which means the share of the debt of the average family of four will be approximately $6,400.

When you compare that with the national per capita income, which was reported to be an average of $2,196 in 1959, you will realize we must wake up to the fact that some steps toward sound fiscal policies are absolutely necessary.

Now, Mr. Chairman, and members of the committee, I have searched the speeches and the platforms of both major parties in this Nation, and for the past 25 years or better every platform and every candidate who has aspired to the office of the Presidency has said that he ran on

the platform of reducing or wanting to reduce Federal expenditures and the national debt.

If you will recall, after the conference between the late distinguished Senator from Ohio, Senator Taft, and the present occupant of the White House in 1952 when he was running for that office, he told the American people, according to the newspapers:

If you elect me President of the United States, within 4 years I will reduce the expenditures of the Federal Government to $60 billion.

I want to call the attention to the committee that consistently, I think, the Congress over the past 7 years, at least, has reduced the requested amount of appropriations. I think I am certainly justified in saying that.

Now, since 1952 or 1953, the beginning of 1953, the national debt was $259 billion. Today-and I will use just rough figures-this is as of June 1, 1960-the statement of the Treasury Department shows the national debt at $289 billion, an increase of approximately $30 billion over that time.

In the last 10 years, in 1952, or the last 8 years, from 1952 to 1960, the spending of the Federal Government in 1952 was $65 billion. Today it is approximately $80 billion, or an increase of $15 billion per year. That, of course, does not take into consideration the tremendous expenditure of tax money going out in trust funds, and so forth, like, for instance, the Federal highway program, and so forth.

Now many people say and we have heard much about this, this increase in expenditures has been occasioned by the tremendous increase in the cost of national defense. I want to call your attention, Mr. Chairman, to the fact that the national defense cost in 1952, and that was when we were supposed to be having a little police action that some people called war, and I think was a war, the Defense Department at that time was expending $44 billion fighting the war. Today, in 1960, the defense requirements are $45 billion, so when you take into consideration that the cost of government has increased $15 billion, only 1 billion of that, Mr. Chairman, has gone into the cost of the national defense.

The increase in cost of government is not in national defense expenditures; $14 billion of that is going into domestic production. Now, we shouldn't mislead the American people on this thing, and they are being misled.

Now, of course, if this bill could become law, they would be required to set aside $4 billion a year to be applied to the retirement of the national debt. I hear much complaint about the $9 billion of interest that we are paying in this country on the national debt. We have to borrow money just like you and I have to borrow it, and the Federal Government does. If this money were set aside and applied on the national debt, it would reduce the interest rate that we have to pay for every year approximately $200 million per year.

Here are some more figures that might be startling to you. The expenditures in 1958, which is only 2 years ago, were approximately $72 billion; today $83 billion-plus, or an increase in the last 2 years of approximately $11 billion.

Now, Mr. Chairman, we ought to realize that we are using up, day by day and month by month and year by year, the natural resources

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