Agency and account National Highway Traffic Safety Administration: Other. Atomic Energy Commission: Operating expenses. Plant and capital equipment.. Environmental Protection Agency: Operations, research and facilities. General Services Administration: Construction, public buildings projects.... Sites and expenses, public buildings projects. National Aeronautics and Space Administration: Research and development.... Research and program management. Veterans Administration: Construction of state extended care facilities.... Atlantic-Pacific Interoceanic Canal Study Commission. District of Columbia: Loans to the District of Columbia for capital outlay. Farm Credit Administration: Short term credit investment fund.... Banks for cooperatives investment fund... National Science Foundation: Salaries and expenses. Special international exhibitions. Other..... Other Agencies.. Total amounts withheld from obligation... * $500,000 or less. 1/ Includes unspecified reductions required by the Congress pending program redirection. #$500,000 or less. amounts withheld by agency heads, and amounts reserved AMOUNTS RESERVED AS BALANCES OF REVOLVING FUNDS (In millions of dollars) Funds Appropriated to the President: Economic assistance: Advance acquisition of property--revolving fund.. Department of Housing and Urban Development: Export-Import Bank of the United States fund. Credit 100 Business Total reserved balances of revolving funds. 450 3,545 2,882 1,204 Mr. EVINS. You have told the committee the OMB has impounded more than $8 billion of funds appropriated by the Congress last year. I can tell you that in two subcommittees on which I serve the amount of funds withheld has been substantial and excessive. In the Subcommittee on Independent Offices and HUD we found that you had frozen and withheld $1,325 million for urban renewal, for housing, for water and sewage grants, and for model cities. These are programs that are recognized as vital and important in our Nation today-to cities both large and small. Water and sewage grants are on a matching basis. You arbitrarily withheld and impounded $1,325 million and said in effect that these funds could not be used even though the Congress authorized them and appropriated them. In the other committee on which I serve-the Subcommittee on Public Works and Atomic Energy Commission Appropriations we found that you had frozen $91,700,000 for public works projects. Mr. Director, this includes every project that the Congress initiated as priority projects and please bear in mind that our bill was $26 million below the budget. We cut and reduced the budget by $26 million and initiated some projects which Congress felt were important. In other words, we set our own priorities. Now the OMB has stepped in and disregarded our priorities-you have substituted your judgment for the judgment of the Congress. All projects initiated by the Congress were impounded in the public works bill. Some were delayed 1 year, some 2 years and you have transferred funds from two line items which the Joint Committee on Atomic Energy specified and authorized-and for which funds were appropriated and used these funds for other purposes, which in effect amounts to an item veto. AUTHORITY FOR WITHHOLDING FUNDS What authority does the Bureau of the Budget have for the withholding of funds in such magnitude? We are aware of the AntiDeficiency Act passed by Congress which can be used to prevent agencies and departments from spending all their money in one quarter to assure allocations to all four quarters of the year. This was the intent and purpose of Congress. We are aware of that act. What authority does the Office of the Bureau of the Budget-or the Office of Management and Budget-have for withholding money in this magnitude which has been appropriated by the Congress? Will you comment on this and then I will yield to my friend, Mr. Whitten. Mr. SHULTZ. I think that to a degree the kind of answer you want is a lawyer's answer, and I will see that we do have a proper legal response in the record. I am not a lawyer and I would hesitate to answer these questions. But I do think as a budgetary matter Mr. EVINS. I wrote a letter to your predecessor asking for his legal authority for impoundment and never got an answer to my letter. They have never given us an answer in writing as to the authority. This is not partisan. This has been happening to some degree in other administrations. The Bureau has grown in power, and is exercising more power in making excessive impoundments and disregarding the priorities set by Congress. We feel that Congress should be able to set some priorities. In effect, you have deferred an action of this committee for an entire year. I yield. (The information requested was subsequently provided for the record as follows:) The expenditure of funds which have been appropriated as required by law is an executive function. The Constitution (art. II, sec. 1) vests the executive power in the President, and it also requires (art. II, sec. 3) that he faithfully execute the laws. Whether withholding of funds is proper in any particular case depends upon the application of these broad powers to circumstances which may arise from time to time. Any withho'ding of funds necessarily involves the exercise of a high degree of discretion and judgment and the careful weighing of competing, and sometimes conflicting, statutory and other considerations. For example, in executing the laws the President may be required to strike a balance where the laws appropriating funds result in conflict with another law. An instance of this kind occurred in 1957 when President Eisenhower directed that expenditures for the fiscal year 1958 be kept at or below the level for the fiscal year 1957 in order that total expenditures of the Government might be kept within the debt limit prescribed by law. Other constitutional provisions of a more specific nature may also be involved in the withholding of funds; for example, those provisions vesting power in the President with respect to the armed services and the conduct of foreign affairs. In both of these instances, certain powers are also vested in the President by statute. Many times the exercise of Presidential power with respect to the use of appropriated funds involves not a withholding of funds but, rather, a deferral; thus, President Truman's 1949 action directing the Secretary of Defense to place in reserve certain funds provided in the military appropriation act for 1950 had the effect of delaying expenditures for increasing the structure of the Air Force, but the funds in question were actually expended at a later time. Wherever funds are available without fiscal year limitation (that is, "no-year" appropriations), a withholding may simply result in the failure to prosecute certain projects until later in a particular year or until a succeeding fiscal year, but it usually does not result in a complete failure to prosecute a particular project or projects. The "Antideficiency Act" (31 U.S.C. 665) requires that appropriations be subdivided so as to insure that agencies will not enter into commitments in excess of the amounts appropriated. In 1950, that act was strengthened by the addition of provisions for central management of appropriations of the executive branch. These provisions include the authority to establish reserves in particular circumstances to: (1) provide for contingencies, and (2) provide for savings when savings are made possible by changes in requirements, greater efficiency of operations, or other developments subsequent to the date when the appropriation was made available. The apportioning authority contained in the Antideficiency Act was vested in the Director of the Bureau of the Budget by the 1950 amendment. However, by Reorganization Plan No. 2 of 1970 the authority was transferred to the President, who subsequently delegated it to the Director of the Office of Management and Budget by Executive Order No. 11541 of July 1, 1970. At the present time, therefore. the authority which is being exercised when funds are reserved under the Antideficiency Act is the authority of the President. The President, in the exercise of his authority as Chief Executive, must be concerned with all the laws, not simply with those laws which appropriate funds or which authorize the making of appropriations for particular programs. The President must, for example, bear in mind that the Congress has placed a limit upon the public debt and that expenditures must be managed in such a fashion that the limit will not be exceeded. Similarly, the President must take into account other statutes which have been enacted as guides to governmental policy. Thus, in 1966 President Johnson ordered substantial cutbacks in appropriations in an effort to stabilize the economy and combat inflationary pressures, partly to carry out the policy expressed in the Employment Act of 1946 "to promote maximum employment, production, and purchasing power" (emphasis supplied). Subsequently, action taken by the Director |