Mr. CURTIS of Nebraska. And the cost of our veterans' programs is based largely on the number of veterans. That certainly is a factor that was not determined by anyone in this calendar year. And to a considerable extent, the expenditures and activities in foreign affairs, the various programs that we have, is not due to decisions made in the last few months. Is that not correct?

Secretary HUMPHREY. That is largely correct. I do not want to interrupt your train of thought, but at the proper point I would like to say something.

Mr. CURTIS of Nebraska. Do so now.

Secretary HUMPHREY. I thought you would be interested in this. There has been a lot of talk about cutting the MSA program sufficiently so they could put enough money back, or cut expenses enough so as to justify bill No. 1. I thought you might be interested in just little discussion of that subject. The MSA program this year contemplates the expenditure, and I will not go into any detail, this will be very short. The MSA this year contemplates the expenditure of about $612 billion. That is cash out in fiscal 1954. Of that amount, about $5 billion is for military procurement. In other words, it is the purchasing of military end items that are shipped abroad to arm and equip people abroad to fight for us in lieu of sending American boys over there to do the same thing, to the same extent. In other words, $5 billion is military end items going over there out of the 6.5, roughly. Now, then, out of the billion and a half that remains, there is about 1.1 billion or 2 billion that has to do with defense financing in Europe or the war in Indochina. About four-hundred-and-someodd-million dollars has been granted to France to help to finance, to contribute to the financing of the war in Indochina which France is carrying forward, which is directly connected with defense. A number of other items in that billion and a half are direct military procurement items, either offshore purchases, what they call offshore purchases, which means that you buy military end items in England, made in England, and give them to the Greeks, or you buy them in France and give them to the Turks, or however it may be.

Another substantial item is where they buy like the Hunter Hawker planes, where we bought $100 million of planes that are being built in England and left in England for English boys to fly instead of sending American boys over to fly them.

So out of your total of $6.5 billion, $5 billion is military and items going over there, and a substantial part of the billion and a half that remains are strictly defense items for the Indochina war or something of that kind.

So when you get down to what you might call economic aid, the economic aid, the cash, that is going into economic aid, for the fiscal year 1954, is a relatively small amount of money.

Mr. CURTIS of Nebraska. You are talking about the cash budget? Secretary HUMPHREY. I am talking about cash expenditures. The appropriations for this, of course, were voted 2 or 3 years ago.

Mr. CURTIS of Nebraska. The money that has been obligated since Mr. Stassen took over, that will affect the cash budget not so much in fiscal 1954 as in the following years, is that not correct? Senator HUMPHREY. That is right.

Mr. CURTIS of Nebraska. Do you know how much has been obligated?

Senator HUMPHREY. I cannot tell you. I do not know.

Mr. CURTIS of Nebraska. Those figures are not submitted to the Treasury?

Secretary HUMPHREY. I have not the detail of the MSA budget. I just have these particular figures because I wanted to know just what the possibilities were of substantial cuts other than military cuts which could be made in the MSA. The cut that could be made in MSA if you cut it all out except the directly connected military expenditures is a very small amount of money.

Mr. CURTIS of Nebraska. But even if something is classified as military, you have to hunt quite a little bit to find somebody that can spend dollars running into billions, do you not?

Secretary HUMPHREY. It is a terribly hard job, Mr. Curtis, to spend a billion dollars and get your money's worth.

Mr. CURTIS of Nebraska. Are there many businesses in the country that have an annual budget as much as $5 billion?

Secretary HUMPHREY. No, indeed.

Mr. CURTIS of Nebraska. So without a doubt, in handling such tremendous amounts, there is no one that can vouch for the wisdom of the way it is all handled, is there?

Secretary HUMPHREY. I think I said to you in some of our previous meetings, Mr. Curtis, that one of the hardest things there is in the world to do is to spend money, to spend a lot of money, to spend it rapidly, and to get your value for it. I said the other day that it is harder to spend money, a lot of money fast, and get value for it, than it is to make money. I said it for just this reason: That may sound peculiar, but if you will think about it a minute you will see why I say that. In a business-I am talking about business, not government, I have had a lot more experience in business than I have in government. You will find you get experience fast in government, however-in business, to make money you go over a longer period of years, building up a company, building up an organization, building up people, having a fine organization that is all set and equipped and ready to work day after day in the business in which you are engaged for the purpose of turning out your product and selling it and distributing it and making money. That is the way you organize, and that is the way a successful business makes money, by having a fine organization all established.

Now, something happens, and that particular business decides it wants to take on a great big expansion, and wants to spend a lot of money, and spend it fast. You haven't got the organization for it. You are not equipped for it. You are not organized and all set to do it and do it intelligently and well.

So I say to you that it is much harder to do that, to make that big expenditure, to go into that big expansion program, and get your money's worth, than it is to just run your current business, because you are organized to run your current business, and you are not organized to spend a lot of money fast in an unusual development. If you jump into an unusual development and go to spending a lot of money fast, before you get organized, before you build the organiza

tion and get the right people in the right places to know what they are doing, and get a sequence of order in your materials, and get the whole thing coordinated, you will just waste a lot of money and you will not get the results that you ought to get from the money that you spend.

Mr. CURTIS of Nebraska. Is that why it is contended that in some fields of Government activity you can get more on less money than you can get on more money?

Secretary HUMPHREY. It is my private opinion that the money appropriated to be spent and the time we stepped out to spend the amount of money we did, it could not have been spent efficiently by any group of men on the face of the earth, that you just tried to spend too much money too fast. You do not get results by spending money. You have to be organized and you have to have efficient management along with the spending of the money and well planned, or else you do not get results. You can spend the money but you do not get the results.

Mr. CURTIS of Nebraska. In some instances you can defeat the desired results by too much spending.

Secretary HUMPHREY. Absolutely. The wasting of money will defeat the getting of the results you want to have. You get to competing with yourself.

Mr. CURTIS of Nebraska. Whether it is at home or abroad, if there are wasteful and extravagant and unnecessary expenditures going on, it affects the confidence of the others whose confidence we need; is

that not correct?

Secretary HUMPHREY. Yes; and waste makes waste. It keeps getting worse.

Mr. CURTIS of Nebraska. Now of this $6.5 billion that will go out of the Treasury, in other words be in our cash budget for fiscal 1954, in the field of foreign affairs, how much of that is a fixed obligation from the standpoint that it is not due to decisions made in the last 2 or 3 months?

Secretary HUMPHREY. I think the detail of MSA you will have to get from someone else. I do not like to guess. I am not sure that a substantial part of that is on a program.

Mr. CURTIS of Nebraska. A substantial part of it?

Secretary HUMPHREY. On a program. But I better not get into the detailed figures. I will stick to what I know.

Mr. CURTIS of Nebraska. The very existence of the lag between the congressional authorization act, the effectuating of the program, the appropriating of money, the letting of contracts, and the money flowing out of the Treasury, leads us to the conclusion that a substantial portion of it would have to be based upon decisions that the Congress or the Executive have made in times past, is that not correct?

Secretary HUMPHREY. I will put it this way: The appropriations that were made by the Congress for that money that is being spent were made some time ago. They were not made in the recent few months.

Mr. CURTIS of Nebraska. Yes. And our friends on the Appropriations Committee, they say that the people come before them, the spending bureaus and others, and say, "You have to give this because 2 years ago it was authorized." To pay all these taxes we have talked

about is really going to call for a sacrfice on the part of the American taxpayer, is it not?

Secretary HUMPHREY. That is right.

Mr. CURTIS of Nebraska. Do you feel even though it amounts to small sums, that if taxpayers are called upon to sacrifice, that various Government agencies and bureaus should also be called upon?

Secretary HUMPHREY. I certainly do. I think the various Government bureaus and agencies, all of them, require much more tightening up than we have been able to make in this period of time.

Mr. CURTIS of Nebraska. And might that also not be said as to foreign governments depending upon us?

Senator HUMPHREY. Yes. I agree to that very definitely.

Mr. CURTIS of Nebraska. After all, in the payment of the taxes, the amount of money that comes in, depends upon the attitudes and the morale and the faith that the people have in their Government to a large extent, is that not right?

Secretary HUMPHREY. That is right.

Mr. CURTIS of Nebraska. That affects whether or not they will go ahead and make money?

Secretary HUMPHREY. That is right.

Mr. CURTIS of Nebraska. That affects to a degree, with a portion of our population, whether or not they will report the income after they make it?

Secretary HUMPHREY. That is right.

Mr. CURTIS of Nebraska. So waste or unnecessary spending, or unwisely spending of necessary money, regardless of how small, is very detrimental to the country, is it not?

Secretary HUMPHREY. It is a very detrimental thing. It is bad atmosphere to let be created.

Mr. CURTIS of Nebraska. Do you feel that if any of these automatic tax increases are canceled out by the Congress the sacrifice should not end there so far as the Government is concerned?

Secretary HUMPHREY. That is correct. I think that our battle against, I will not say improper, but I will say large, Government expenditures should continue with more force all the time.

Mr. CURTIS of Nebraska. As a matter of fact, the American people through the Congress and other elected representatives will have to answer the question whether or not they want certain activities and functions of the Government eliminated; is that not correct? Secretary HUMPHREY. That is right.

Mr. CURTIS of Nebraska. They will also have to answer the problem of whether or not they want certain functions now performed by the Federal Government returned to the States or localities?

Senator HUMPHREY. That is exactly right.

Mr. CURTIS of Nebraska. So much for philosophy. I now want to ask you a direct question. There are businesses that might face a situation sometime where a special tax could and would actually put them out of business; is that not correct?

Secretary HUMPHREY. Yes, I think that is so.

Mr. CURTIS of Nebraska. Taxes hurt all businesses, but a situation might arise where a particular tax the Congress has imposed means that a number of businesses close?

Secretary HUMPHREY. I think one of the most far-reaching decisions that was ever made by the Supreme Court of the United States was the one that decided that the power to tax was the power to destroy.

Mr. CURTIS of Nebraska. I am not going to particularize as to any tax, but I want to ask this question: If in this period of high taxes, a business or a class of business feels that a tax is actually closing them up so that they make no income, and they employ no people who pay payroll taxes, will their situation be examined by the Treasury Department to ascertain your opinion on their tax problem?

Secretary HUMPHREY. You mean before a new tax is proposed? Mr. CURTIS of Nebraska. No; I mean concerning the existing taxes. If a business or a class of business is facing a situation where they feel a specific tax now on the books is definitely closing their doors-I mean separate and apart from the general load of taxation, and if they are closed of course they make no income and they have no payroll-will their case be heard by the Treasury Department? I am not asking you whether you will grant them what they want, but will you go into it to determine in your opinion whether their conclusions are justified? Secretary HUMPHREY. Yes, sir. One of the principal things that we have to study and that you people have to study, that we both have to study, is the effect of taxation on industry and to make sure that we have not passed the point of diminishing returns, which is a very easy thing to do. You may very well get taxes raised to a place where a much lower tax will collect more money than the higher tax, and that can easily happen, and if industry is in the position that you speak of, then it is very evident that you have reached that point.

Mr. CURTIS of Nebraska. If an industry is facing an excise tax that, according to their estimate of the facts and figures, is actually closing them up, as I understand it, you will examine their particular problem to see how your conclusion coincides with theirs?

Secretary HUMPHREY. That is exactly right and we will do it for this purpose, Mr. Curtis: We will do it for the purpose of coming to you gentlemen and recommending that something be done about it if we find a new tax is justified. When the new tax bill is prepared one of the things we and you ought to do with the new tax bill is to see that we are not so taxing industries that we have passed the point of diminishing returns wherein the tax is deceiving its own purpose.

Mr. CURTIS of Nebraska. I am thinking perhaps of situations and I shall not enumerate them here, whereby the very nature of things they should not wait for a general tax bill, in the first place because of the time element and in the second place because such a general tax revision bill that overrevises is going to cause a considerable loss in revenue, is it not?

Secretary HUMPHREY. Mr. Curtis, you are talking about special action for one group of special things at a time. I am afraid I cannot agree that we ought to go into a lot of special things, each one at a time. I fear there are so many groups, Mr. Curtis, in this country, that these high taxes are hurting that, just as we are talking about with the excess profits tax, if you pick out one small group and favor one small group you are doing an injustice to a lot of other people because there are a lot of people under the various provisions of this tax bill.