far better than the present system, because over the years we in Congress on both sides of the aisle have a tendency to engage in what I call slippery arithmetic, and it is due largely to the things which Mr. Ullman so ably pointed out, that this budget is a horse and rabbit stew that very few people in this whole country properly understand. As a result, you hear all sorts of figures bandied about. For example, I have heard it said that the combined action of the 83d, 84th, and 85th Congresses was a reduction in budgetary requests of the President by some 22.6 billions of dollars.

Technically, if you want to take one point of view, that is correct. It is about as correct as saying that you had an automobile with a bright shiny body, when someone overlooked putting the engine in it. It doesn't tell the whole story.

Actually, it doesn't take into consideration increased lending authorizations, and increased authority to incur obligations which we commonly refer to as back-door spending, and deficiency appropriations which restore earlier budget cuts. It doesn't take into account unrecommended tax cuts. It doesn't take into account the failure to pass recommended tax increases. So I think that the figures which are passed around are utilized by a great many different people who serve their own purpose. The present system, to summarize, has in times of prosperity resulted in a gradual increase in the obligations of the United States as secured by Government bonds and negotiable instruments, and as represented by future obligations which this country is committed to pay without further action on the part of the Congress.

Now, to me this is a system which should be abhorrent to all of us when consistently in periods of good times we do allow this sort of thing to take place. If we don't allow ourselves the luxury of using slippery artithmetic, we will have to admit that the obligations of the future taxpayers are going up each and every year, and I don't think anyone can dispute that. I quote as my authority Mr. Stans, Director of the Budget, whom I know is partisan at times, but who also is an eminent certified public accountant, and whom I think is a truthful man.

Now, gentlemen, I have seen the system which I propose in practical operation. I was privileged to serve in the Legislature of California when our present Chief Justice, Earl Warren, was our Governor. I was privileged to work very closely with him. I admit that this practice which I propose was brought about not by statute, or not by the method which I propose, but the practical effect was exactly the same, because the Governor of California has the privilege of a lineitem veto.

Governor Warren, and his successor, Governor Knight, and his successor, Governor Brown, have religiously followed the practice of vetoing any item which is in excess of the budget or is a new expenditure which does not carry with it a revenue-producing measure. As a result, the State of California, I am proud to say, has been able to absorb a most tremendous population influx, build proper schools, and to build reasonably good roads which are all paid for. We have done this by following the very policy which I recommend today, which I say to you is imperfect, but which is certainly better than the system that we are operating under at the present time. On that basis I

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again thank you for considering this, and respectfully urge your sincere consideration.

Chairman DAWSON. Mr. Fascell.

Mr. FASCELL. Thank you, Mr. Chairman.

I have several questions that have occurred to me in this discussion which my colleague has so ably presented. For example, on an extra budgetary item-that is an appropriation made by Congress, not in the budget-why does the executive branch pay any attention to that item? It has been suggested, for example, that the President should have an item veto. I am not so sure about that, because he doesn't have to spend the money if he doesn't want to. The department head doesn't have to do it. The department head can't even get the money unless the Bureau of the Budget gives it to him after it has been appropriated. Do you feel that any legislation is necessary with respect to the controlling of a nonbudgetary appropriation?

Mr. GUBSER. I feel this way, that regardless of which administration happens to freeze funds which are voted in due process by the Congress of the United States, that it is wrong. We express the will of the American people. I think we are the responsible body, and we are the policymaking body. What we direct should be done by the executive branch. I also think that if it were more the policy that the executive branch would be found to follow the policy set down by Congress, there would be more responsibility on the part of Congress, too.

Mr. FASCELL. Then, as I understand it, you really don't feel, as an addition to your proposal, the President should have a line item veto power?

Mr. GUBSER. No; if he had the line item veto power, this would be completely meaningless and unnecessary. That, of course, I would prefer.

Mr. FASCELL. Now let me ask you about this other thought, and that is this: I don't quite reconcile your position, frankly, on how you would support line-item veto, and then be against the administration not doing what Congress does regardless of the budget.

Mr. GUBSER. Because the line-item veto could come back to Congress, and we would have the possibility to override it through the means the Constitution prescribes.

Mr. FASCELL. How does your proposal become effective in the face of an appropriation bill?

Mr. GUBSER. I am afraid I don't understand the question.

Mr. FASCELL. Well, in other words, when you pass an appropriation bill, it is a new law.

Mr. GUBSER. That is right.

Mr. FASCELL. And if it doesn't do what your law says, then your law has been amended.

Mr. GUBSER. The part of the appropriation which would be in excess of the budget would be inoperative.

Mr. FASCELL. How can you do that? It is a subsequent act of Congress.

Mr. GUBSER. This is a resolution, as you see, and I would not get into the question of which would take precedence. I would presume the public law would, so we could consider this more or less as a guidepost, which I will admit could probably be ignored at will.

Mr. FASCELL. In other words, you would have a resolution in one Congress not binding on any other Congress.

Mr. GUBSER. That is correct.

Mr. FASCELL. But you would like an expression of some Congress on the subject, and that is the purpose of your resolution?

Mr. GUBSER. That is absolutely right.

Mr. FASCELL. How about turning your proposal around, instead of putting a limitation in this fashion, why not put a limitation on on expenditures?

Mr. GUBSER. Mr. Fascell, I would be happy to see this Congress do anything along these lines, and if you could turn it around, turn it sidewise, or do anything that tends to get us away from the slippery arithmetic we have been using for so many years, I would be all for it.

Mr. FASCELL. I am happy to hear you say that, and I concur with you. I see no political capital, and I see a great deal of danger in everybody analyzing or interpreting the budget to suit themselves, because the sufferers of that process are the American people.

That is all I have, Mr. Chairman.

Chairman DAWSON. Mr. Smith.

Mr. SMITH. Under your bill, now, suppose the first bill that went through, which is a bill to appropriate some money for something that was not in the President's budget, would there have to be a tax bill with that, too?

Mr. GUBSER. Not as I read it, no.

Mr. SMITH. It would depend, then, on whose bill was passed first? Mr. GUBSER. That is why I pointed out as an imperfection of the proposal the fact that there would be no restraint on the earlier appropriations of the session, and there would be a definite squeeze on the later ones, probably.

Mr. SMITH. The last one might be the defense appropriation bill, and you couldn't pass it until you had the Ways and Means Committee compute

Mr. GUBSER. Unless Congress had used foresight throughout the

session.

Mr. FASCELL. And that foresight would be to pass the defense bill last. We would really then squeeze the last drops out of everything. Mr. SMITH. Well, for example, under this bill-so I will know how it operates-we will suppose that the total amount in the President's budget-that is what you are talking about-suppose that had been exceeded, and up comes the San Luis project we had here a couple of weeks ago. Then you would be against passing that until or unless the Ways and Means Committee passes another bill first, or how do you operate this?

Mr. GUBSER. Yes; I would, and I will say to you very frankly that this is an imperfect way of doing it, but what we are doing now is so imperfect that I think we have got to take some drastic means, and perhaps if we realize this, we would be a little careful in some of the earlier bills.

Mr. SMITH. Well, as you know, that bill was a controversial bill. Do you wait to see whether or not it is passed, first?

Mr. GUBSER. Well, it was just an authorization bill, it was not an appropriation bill.

Mr. SMITH. Well, suppose it was the appropriation part. Would you wait to see whether or not you pass the appropriation before bringing the tax bill out?

Mr. GUBSER. Appropriations for projects like the San Luis project are reasonably well estimated in advance, because they are limited by the engineering capability of those constructing the project.

Mr. SMITH. What you would do, then, is prohibit bringing it up to a vote until after the tax bill had been passed. Then what if the vote fails, after you have levied the tax you fail to pass the appropriation? Mr. GUBSER. In the case of San Luis, if the normal custom is followed, undoubtedly next year if agreement is reached with the State of California and construction is ready to proceed, the Bureau of Reclamation will submit the estimate of what it needs, and it is usually realistic, and this will be in the President's budget with no need to exceed it.

Mr. SMITH. In California, did you put all this in one bill?

Mr. GUBSER. Yes; we have one budget bill in California, which is of course a different situation.

Mr. SMITH. That is what I was getting at, it seems complicated here where we have the Ways and Means Committee to come forward with one bill. Appropriations with another, and you can't get everything in one bill.

Mr. FASCELL. I have seen a process which had a single appropriation bill, and also a process that allowed the placing of a tax measure with a nonbudgeted item and pass them jointly.

Mr. SMITH. We can't do that under our rules.

Mr. FASCELL. And with separate committees involved in this case, an Appropriations Committee and a Tax Committee.

Mr. SMITH. That would make sense, but under our rules we can't do that.

Mr. FASCELL. There are a lot of factors in this thing, no doubt, and you have brought them out very well in your questioning.

Mr. SMITH. That is all I have.

Mr. GUBSER. Thank you very much, Mr. Chairman.
Chairman DAWSON. Mr. Taylor.

Mr. TAYLOR. I have a brief statement here in support, in general, of Congressman Ullman's bill 5135, on behalf of the AFL-CIO. If the Chair feels the time is available, I will read it. I will leave it up to his judgment.

Chairman DAWSON. We are liable to hear the bells at any time to go on the floor, so if you would introduce it for the record, we will consider it when we meet in executive session.

Mr. TAYLOR. All right, sir. I think copies have been made available. Thank you very much.

STATEMENT OF HON. JIM WRIGHT, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS

Mr. WRIGHT. Mr. Chairman, I only learned of these hearings this morning. It is necessary to run if we are going to stand still these days. Having heard some of the discussion in the committee proposing to create a systematic plan of debt retirement, and being the author of a bill now pending in the Ways and Means Committee, which

would have a similar effect, I thought it worthwhile for me to come down and listen in.

I should like to say this with respect to H.R. 5203 and companion bills, that having only read the language in the bills I think they are the step in the right direction. Let me give you in a few words my response from the general public as a result of my having introduced last year a bill which would commit the Congress to paying not less than 1 percent of the outstanding public debt each year.

I have been completely amazed, and extremely pleased with the uniformity of good response and the volume of response that I received from people of all kinds. I think the American people have a guilt complex about this public debt, and the fact that in these times of relative peace and prosperity we continue to increase this debt.

There is among the public, I think, a dawning awareness of the fact that interest charges alone on this debt are becoming an enormous item of deadweight until today, standing at somewhere in the neighborhood of $9 billion annually, they are consuming about 11 cents out of every tax dollar that the American taxpayer pays.

I think, briefly, our situation, as we have followed it in the last few years, may be compared with that of a family which says, "Well, let's wait until the end of the month and see if perchance we have something left with which to pay on our debts."

Now, if I were to do this in my family, and I dare say if the average Member were to do this in his family, he would find, alas, at the end of the month he had already spent everything available and didn't have anything left to pay on his debts, and this in fact has been the experience of our Government in the last few years.

The average family has discovered that it makes sense to set aside a specific amount initially, and pay that at the first of the month on its installments and its mortgage, and then to live on what is left, or if more is needed to find some additional source of income with which to meet these additional needs rather than simply continuing to let the debt mount.

I did a little amortization study based upon two assumptions, first that we would not increase the debt, but would simply continue to pay the mandatory interest obligations every year, and second, that the interest rate would stay at its present level, and would not continue to rise.

Based upon those assumptions, I discovered these things, that if we were to pay 1 percent of the public debt each year, of the principal, along with the interest payments, in a period of 28 years we would reach a point at which we were paying less on principal and payments of interest on the unpaid balance than we are paying today on the interest alone on the whole debt. I discovered, secondly, that if we paid it off no more rapidly than at 1 percent a year, which would amortize the debt in a hundred years, that at the end of this 100 years it would have cost us less by some $485 billion to pay it off than it would cost us simply to owe it and continue to pay the interest on what we presently owe for this next 100 years.

I would like to ask permission of this group, if you are seriously considering taking some step in this direction, to file with you some copies of editorial response that has occurred throughout the country, and it is quite general in some 55 or 60 metropolitan daily news