STATEMENT OF HON. JOHN J. RHODES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA

Mr. RHODES. Mr. Chairman, I appreciate this opportunity to appear before your committee on behalf of my bill, H.R. 1337, 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 billion to be applied toward reduction of the national debt.

This bill is similar to bills I have introduced in both the 84th and 85th Congresses.

I feel that the American public has become increasingly conscious of the fact that we must not only live within our means from year to year, but that we must start paying off the national debt. As you know, there is nothing in the law which requires the President to submit a balanced budget. This bill would not have that effect, but it would have the effect of throwing any budget out of balance which does not have in it an item of at least $2 billion for reduction of the national debt.

Recently I sent a questionnaire to 22,000 people in my district, and one of the questions I asked was: "Do you favor systematically reducing the national debt each year?" Eighty-eight percent of them answered affirmatively-the highest percentage on any question in the questionnaire. The mail I receive every day bears out with increasing certainty that this is the feeling of the people in my district. I believe it also is the feeling of most people throughout the Nation.

If I interpret the feeling of the Nation correctly, the moral force behind a balanced budget would cause each President to think several times before submitting one which is deliberately out of balance. My idea is that any budget to be balanced should include an item of at least this sum for the specific purpose of reducing the national debt. Mr. Chairman, I am firmly convinced that the time for legislation of this kind is now and that there is an urgency here which needs to be considered.

If we do not reduce the debt at times like the present, when the Nation is prosperous, it is difficult to see how we will reduce it at all. Because we have not had such a provision as my bill contains, we have not been reducing the debt. There is not the compelling force necessary to do it. We have put it off year after year until we may well ask ourselves if we intend ever to do it, or if it will be possible to do it. If we do not begin the systematic reduction of the national debt when it is economically possible, the task will simply be that much greater at a later date and our ability to undertake it will be correspondingly weaker.

From an economic point of view, the payment year after year of nearly $10 billion in interest on money we have borrowed and already have used is staggering. Borrowing is justified and paying interest is necessary to get the money to do things that have to be done, but simply to carry a debt like this indefinitely and add the interest costs to the heavy burden already imposed on the taxpayers is not in my opinion a responsible course of action. We talk about unnecessary spending and waste in terms of thousands and hundreds of thousands of dollars when it applies to other Government programs. Here is

one that costs more than any other program except defense, and what are we getting for it? We have already spent the principal; now we just go on paying interest for programs of previous years which have no direct benefit for taxpayers today.

Mr. Chairman, my bill contains no guarantee that we will actually reduce the national debt and reduce the amount of interest we are required to pay each year, but it is a step in that direction. As a step, as an encouragement, and as a gesture of intent at least, I urge this committee and Congress to give it their approval.

Mr. COLLIER. Mr. Chairman, if I may, I would like to make the same request, since we have a very important bill before our committee this morning, and in doing so, I reiterate the same sentiments as my good friend who just departed, temporarily, so if I may, I will submit my statement.

Chairman DAWSON. Very well.
Congressman Collier.

STATEMENT OF HON. HAROLD R. COLLIER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. COLLIER. I appreciate the opportunity to make this statement before this distinguished subcommittee of the Committee on Government Operations in connection with the bill originally introduced by my colleague, Representative Devine of Ohio, to which I have joined as cosponsor. May I commend the committee for its consideration of this and other bills with the same general purpose of reducing the current national debt.

I am sure that my deep concern over this Nation's present indebtedness is shared by many of my colleagues and millions of Americans. The accumulation of this Nation's present indebtedness is, as we all know, due to many factors. Some were of emergency necessity. On the other hand, a great part of the Nation's deficit spending over the years were acts of fiscal irresponsibility. But there is no point in dwelling upon the cause of this indebtedness, for the issue is one of a controversial nature. The divergence of philosophy on the proper role of the Federal Government in so many areas of our national life will keep it so.

The fact remains that it is incumbent upon the Congress of the United States to face the seriousness of this problem realistically and with sincerity of purpose. It is further the responsibility of this Congress to take steps to alleviate the burden of this indebtedness upon the generations to follow us.

Cognizant as we all are of the world situation and the necessity for maintaining a strong national defense, we are also morally obligated to maintain the fiscal stability of this Nation.

The bills in which I am particularly interested, H.R. 10971 and my companion bill H.R. 12515, provide a direct approach and a longrange solution to the problem of retiring our national debt. They simply provide that the budget submitted to Congress for each fiscal year, beginning the date of enactment, may not provide for expenditures in excess of 90 percent of the estimated net budget receipts of this United States for each fiscal year until the public debt has been retired. They do, however, provide that this subsection shall not be applicable in time of war.

As has been pointed out this would place the initial burden on the executive branch of government and provide Congress with a guideline for systematic debt reduction. Since the House of Representatives is responsible for controlling the purse strings of the Nation, it must, in my opinion, assume responsibility for supporting such a pro

gram.

In closing, may I say that whether the bills to which I have directed my statement are adopted or not, I would feel that the Committee on Government Operations would be doing the people of this Nation a great service in reporting some legislation that would provide for the systematic reduction of our present astronomical national debt. Chairman DAWSON. Our next witness is Congressman Robert W. Hemphill, author of H.R. 7649. Mr. Hemphill.

STATEMENT OF HON. ROBERT W. HEMPHILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA Mr. HEMPHILL. Mr. Chairman and members of the subcommittee, thank you for allowing me to come and make a statement in support of my bill, H.R. 7649 and others seeking the same goal, seeking some way to reduce this national debt which hangs over America like the sword of Damocles. Debt can cause the death of a nation as surely as war, as surely as immorality.

Speaking of immorality, I think it is immoral to burden future generations with our debts. One will say that by debt we are preserving our Nation, its freedom, for those who come after us. I say that we are preserving those things despite our increasing debt and our refusal to do something about it is wrong, it is just unpatriotic. I will not admit we cannot reduce this debt, and I am willing to legislate and I am willing to sacrifice to return to obvious and actual solvency. This is not the first time I have tried to get congressional sanction of this idea. In 1959, I appeared before the Ways and Means Committee in support of legislation to reduce the debt 1 percent each year.

It is amazing to me that a time when business is supposed to be booming that we cannot begin some effort to retire the national debt. How can we ever expect to retire the debt in hard times when money is scarce and the economy is at a low ebb? It does not make sense and it is not sense.

If we cannot handle our national debt in times of prosperity, we are certain to have no way to do so in hard times, and no surplus to apply to debt retirement.

Last year I voted against the increased debt limit. One of my friends asked me if I had any fiscal responsibilities. I told him I not only had fiscal responsibilities, but it was time somebody protested against the annual surrender to inflation. I consider raising the debt limit a surrender, and, like you, seek some alternative. The hypocrisy of the temporary increase each time the debt limit is raised is gradually being exposed.

My bill would do nothing to destroy flexible debt management by our Treasury Department. It says you must reduce this debt each year, and I tell you gentlemen, until we tell the Treasury Department it must, it can always say either (1) it has no clear mandate from Congress, or (2) it has no budgeted funds, or (3) it cannot afford, as a fiscal practice, to arbitrarily apply funds to debt reduction. I say

this in no criticism of the present Secretary of the Treasury; I am one of his admirers. He is a great man. I do not hold him responsible for the increase in our debt during the Eisenhower administration. I know he is concerned and wants to reduce the debt.

This administration has neither had the wisdom nor the ability to reduce the debt, nor the courage to tell the American people that they are mortgaged to the gills and that absolutely nothing has been done to reduce the debt.

There has been no plan, I repeat, no plan, presented to Congress by the executive department, during the 4 years I have been in Congress, to reduce this debt. Let us try the plan proposed in my bill. If it does not work, the law can be repealed next year. Shall we say we are unwilling to try? I cannot discharge my responsibility that way, nor do I take the situation lightly when my children face a world of tomorrow where their dollar is soft currency, possibly without any gold to back up that currency.

Do we have no brakes on the debt and price vehicle we call inflation? Do we want brakes? Have not we, as representatives of the American people, a responsibility of leadership in the matter of debt reduction? Dare we wait until public alarm and public clamor forces us to act? No. It will be too late then.

I suspect that one of the reasons for our loss of prestige in the world of today is our debt and our continued refusal to take steps in the direction I seek here. Canada's dollar is, in world eyes, "sounder" than ours. If Canada can do it, why can we not? If Western Germany can make the comeback it has despite war and destruction, why can we not? True, the Germans will work. They will work toward debt reduction, too.

The text of my bill is:

No

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. 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.

If we reduced a $290 billion debt 1 percent, we would not only "save" that $2.9 billion, but we would save an additional amount of $87 million in interest, if we calculate at 3 percent which might be used as an average, since, on June 30, 1959, we had outstanding $237plus billion of debt carrying average interest payments of $2.899, another $27-plus billion at 3.304 percent, and the cost has steadily risen.

A 1-percent reduction could be used as a sample. Are we unwilling to try? Perhaps we could progress to greater percentages.

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How could it be accomplished the first year? Call on every department to reduce its budget for its proportionate share. I believe the morale of Government would be raised and inspired if we could say, "we are trying to do something about the debt; we are all trying." The Government is the only borrower I know that makes no effort to reduce its debt.

No loans are made by our leading financial institutions without a plan and a promise of debt reduction at regular or specified intervals. No one in successful businesses would think of going to his banker when his loan was due and telling his banker that he not only could not pay off but that he wanted to borrow more.

If we demand solvency as a rule of business, why cannot our Government practice solvency? I know there are those who say the Government is not like a business. That is true, but that is only an excuse for faulty fiscal policies and faulty fiscal management. I dare any man in this Congress to advocate bad business practices in the handling of our national debt.

No, no one is going to advocate bad business practices openly. But by not meeting the problem head on and doing something about it, the administration and the Congress are sponsoring indirectly what they do not sponsor directly.

We can no longer neglect this problem. In private business the man who neglects his debts goes bankrupt, and this Government can go bankrupt or have the value of its dollar go to the dogs, which is the equivalent.

We are told we are the world banker. If we are, we are setting a poor example.

I beg of you, Mr. Chairman and members of this great and useful committee, that you welcome and promote this opportunity to help our great country.

Thank you.

Chairman DAWSON. Congressman Gubser is our next witness.

STATEMENT OF HON. CHARLES S. GUBSER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. GUBSER. Thank you very much, Mr. Chairman. I appreciate the opportunity to appear on my resolution, and doubly appreciate the fact that the committee is giving consideration to this important subject.

The purpose of my resolution is, as the title states, to prevent deficit financing. It should be more properly worded

to help prevent deficit financing by requiring that any amount appropriated in any one fiscal year in excess of the budget requests by the President carry with it a means of raising the revenue.

First let me address myself to the imperfections of the proposal. It is inflexible. It would apply in years when the economy needs the stimulation of deficit financing. It doesn't regulate the appropriation bills which are passed earlier in the year, and it would consequently place a squeeze upon the bills which are acted upon later in the session.

I admit these imperfections, but nevertheless I state that inflexible as this system may be, and possibly inadequate as it might be, it is