Remarks of George M. Humphrey,

Secretary of the Treasury

Governor Kohler, Governors, it is needless for me to say to you again, as I have before, how very pleased I am to have the opportunity to appear before you and to tell you about some of the things that we're thinking about and why we're thinking as we do and to have the opportunity to answer such questions as occur to you that you think are within my field of activity.

Now the subject this morning that we are considering and that we are particularly engaging our attention on is this road program. And while I'm a little out of order in one way, I'm very pleased to say that we're proceeding in what any treasurer would think was exactly the right way to do it. And that is to decide where, and how, and how much money you're going to get before you decide how you're going to spend it. So we'll start out with the idea of investigating to see where and how and how much money we can get for this program and then the other gentlemen on the program will tell you their ideas of how to spend it and what we will buy with that money.

Now, I just want to point this out-that no treasurer ever objects to paying as you go. No treasurer ever objects to coming as near to paying as you go as you can. On the other hand, there are many times desirable things to be done that are desired by everyone, and it's right for the country and the people to expedite their construction and their creation faster than you want to pay for it, or than it is desirable to pay for it. The treasurer's job is to limit the amount of borrowing to proper amounts and to proper methods of borrowing the money. So I would say that the Treasury will have no objection to increasing taxes to whatever is desired-whatever they want to go to, clear up to paying as they go-but I do want to put in a word of caution as to the amount of money that might be borrowed and to the methods which could be used to borrow it.

We have, as I believe, and as I have said many times, a tremendous debt in this country. We have a tremendous budget in this country. We have a tremendous annual tax load in this country. I think that tax load is too high to be continued over any extended period of time. I think the present tax load in America is such as to gradually limit the stimulation of free, independent, competitive enterprise. It will limit our incentive system and I think that the tax load in this country, the current annual tax load, should be reduced as time goes on.

Now, we have as a burden which we must carry and which has a great deal to do with that current tax load-the matter of the security of the country. And as long as we have the tremendous needs for money for our security, it is difficult to reduce that current tax load as rapidly as we would like to see it reduced. So that I am quite leery about any program that undertakes to increase the current general tax load.

In this particular case I think we have here a distinguishing characteristic, a distinguishing feature, which can be very definitely given a special treatment. In this particular case we are talking about the creation of earning assets. There is nothing in this country that is more important throughout the whole economy than the development of an improved highway system-catching up, if you want to put it that way, on our highway system. I think we all agree on that. I think everyone will agree that the highways of this country are behind the rest of the country and that we need to catch up in highway development.

That means we will have a stimulation of activity, not only from the construction of the highways, but from the continued expansion of the automobile business and its tremendous ramifications that reach into all sorts of fields and all sorts of places. America lives on wheels, and we have to provide the highways to keep America living on wheels and keep the kind and the form of life that we want.

The great movement of people to the country and to the outskirts of the cities, which is a very desirable thing from every point of view, adds to the requirement for more and better highways and rapid development of our highway system.

So I think we can just start off with the theory that we have a very desirable objective and an objective that we want to expedite as rapidly as possible and as rapidly as we can afford.

An improved highway system, as I said, will constitute an earning asset, and should, in my opinion, contribute to paying for itself. It should not just be thrown into the general pot. It should not become a charge upon general revenues. The financing should be so arranged that special revenues based on measuring the use of the earning assets will pay for those earning

assets.

Now, you can measure their use so that the users of the assets will pay for them in a number of different ways. You can do it by straight tolls. You can do it by mileage charges, or gasoline charges or any of the various measures of use. Senator Byrd has been an outstanding critic of this plan and program-and right here I want to say that I have the very greatest, highest regard for Senator Harry Byrd, and I have great respect for his judgment. I think in this particular case that he is seeing ghosts and that he has gone a little too far, because I think that this program can be completely rationalized into a paying asset program. He would have no objection whatever to a straight toll. Now, the difference in his thinking and in our thinking is simply this: I think you can measure the use in more ways than just a straight mileage toll charge.

As I said before, you can do it in various different ways, and a gasoline measure is roughly an entirely suitable measure. If it were practicable, I think that there would be no difference between a mileage measure and a measure of the exact amount of gas that was used on your trip over a particular road. But that is not a practical measure. This measure that has been developed, a segregation of the gas tax, is a rough measure that accomplishes a practical purpose; the tax is easy to collect. It is a charge that is easy to measure, that from a practical point of view will work and work easily for both the taxpayer and the collecting agency.

So I think that a proper segregation, a proper dedication of the Federal gas tax to pay for the Federal portion of an interstate highway system is a perfectly proper measure of use. And I think whatever the amount that you are going to dedicate may be, this amount can be used as a measure of what you can afford to spend currently, annually, and what you can afford to borrow. It will provide the funds that will liquidate the indebtedness that you expect to incur, and the amount of the indebtedness that will be incurred or can be properly incurred must be measured by the amount of the dedicated tax that is going to be used for that purpose.

I think the amounts that have been arranged in the Committee program are reasonable. I think the amount of dedication can support the amount of the proposed borrowing.

Now, as to the rate of interest. If this program is carried out, I think a road authority, from the point of management and from the point of financing and for several other reasons, is a desirable thing to have. If a road authority issues these obligations, as proposed in this report, we will have to pay a somewhat greater interest charge than we would on direct borrowing. The charge will be somewhat comparable in gross to tax-free State obligations.

On the other hand, you must remember that these will be taxable bonds, and we will collect back a substantial part of that interest. It is impossible to tell exactly what that part is, but some portion of the interest on the average comes back to the Treasury. So while there is a somewhat higher charge, we do get a substantial part of it back, and the net cost to the Government is a relatively low interest charge.

I just want to say a word about the debt limit. I don't want this program in any way to be a run-around of the debt limit. I don't think it should be so used. I don't think it should be so considered. I believe that the amount of money that the citizens of a State or that the citizens of the United States owe the total amount-should be brought as continually and as forcefully to their attention as it is possible to do. I think that every man, woman, and child in this country ought to know and ought to have brought continually to his attention the tremendous amount of money that he owes, so that he can determine what he wants and what he demands of his Government. He will know how much we owe and what our obligations are, what obligations the future generations in this country have already had put on us that we're going to have to pay for and carry, in one way or

another. So that I do not want to in any way have this considered a trick or an elimination or a scheme to get around the debt limit.

I have said in testifying before the Congressional Committees the debt limit is an arbitrary designation of certain obligations of the country that go into "debt," and those obligations are limited in amount. It does not include them all. There are many obligations that are not included in the debt limit.

I would be very happy if this program prevails to have the prescription of what goes into the debt limit changed by the Congress so as to include all sorts of items, to show as nearly as we can really what we owe. I don't think that slightly contingent obligations should be included in the debt limit. In that way you can fool yourself just as much as you can any other. But I do think that this highway program should not be in any way regarded as a trick to get around the debt limit.

Now, there is one other restriction that I think should prevail-and it is provided in the bill. I think that a thing we have to guard against in this country-and we haven't been too careful of it in the past-is the number of agencies which can put out obligations of various kinds. They actually are competing obligations when they are marketed. I think that any obligations of the United States should be issued under the control of the Treasury, so that you have one source of control of when, how, and in what way those obligations are issued; so that you do not compete with various agencies or with the Government itself in putting out those obligations. These particular obligations, I think, as obligations of an authority, will be an attractive security for a market that is not reached by the direct obligation of the United States. They would tap a market that would be available to us without competition with the general securities of the country.

Now, that is our view of the financing of this program as we see it. I'll be very glad to try to answer any questions that any of you may have with respect to it.

Remarks of Mrs. Oveta Cúlp Hobby,

Secretary of Health, Education, and Welfare

Mr. Chairman, Members of the Governors' Conference, I am glad to have an opportunity today to discuss matters which are of vital concern to you and to the Department.

The problems of health, of education, and of welfare are the primary concern of the States; for under our Constitution immediate responsibility in these fields has been reserved to the States. However, the health, the education, and the welfare of our people are also a concern of the Federal Government.

To unify the activities of the Federal Government in this field, the Department of Health, Education, and Welfare was created in 1953.

Consideration of these serious concerns was thereby brought to the highest level of government. During 1953, we undertook a careful review of most of the programs of the Department and developed legislative recommendations. In 1954, the record of legislative accomplishments in the field of health, education, and welfare included:

(1) The enactment of three bills to strengthen our resources in the field of education; and

(2) Amendments to the old-age and survivors insurance portion of the Social Security Act; and

(3) Expansion of the Vocational Rehabilitation program; and

(4) Extension of the Hospital Survey and Construction Act to include new types of medical care facilities.

Today, we shall outline to you our current proposals for Federal cooperation in meeting the problems which face the States and the Federal Government.

The first major area which we would like to consider is that of Education. At the outset let me tell you briefly what has happened to the education legislation which the Administration sponsored last year.

The State and White House Conferences on Education were authorized by Public Law 530, and I am glad to report that the 53 States and Territories are holding conferences. A majority of them have held conferences or are planning to do so in the near future. This record is a testimonial to your interest and initiative. Mr. Clint Pace, the Staff Director of the Committee for the White House Conference on Education, will review specific developments later.

A National Advisory Committee on Education was authorized by Public Law 531 last summer. We are ready to appoint the Committee and start its work as soon as appropriations are assured.