THE BUDGET FOR 1970 THURSDAY, JANUARY 16, 1969. WITNESSES TREASURY DEPARTMENT HON. JOSEPH W. BARR, SECRETARY OF THE TREASURY JOHN H. AUTEN, DIRECTOR, OFFICE OF FINANCIAL ANALYSIS DONALD A. WEBSTER, ASSISTANT TO THE SECRETARY-DESIGNATE ERNEST C. BETTS, JR., DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION AND BUDGET OFFICER BUREAU OF THE BUDGET HON. CHARLES J. ZWICK, DIRECTOR, BUREAU OF THE BUDGET SAMUEL M. COHN, ASSISTANT DIRECTOR FOR BUDGET REVIEW OPENING REMARKS OF THE CHAIRMAN Mr. MAHON. The committee will please come to order. For some years, early in the session, the committee has met to hear the Secretary of the Treasury and the Director of the Bureau of the Budget in regard to the major overall features and thrust of the new budget. This year we have a different situation. The outgoing President, in accordance with law, has submitted his budget-the budget for fiscal year 1970-which begins on July 1, 1969. It is a budget we will be considering along with the amendments that may be recommended by the new President to be inaugurated next Monday, the 20th of January. It would be most unrealistic for the outgoing President not to submit a budget for the guidance of Congress and for the benefit of the incoming administration. Of course, a budget is merely a plan, a set of plans embracing many projections and proposals. It is based on a number of economic and other assumptions. It is the primary vehicle on which the Congress basis its evaluations of what should be done about various expenditure programs, what should be done about fixing priorities, what should be done about revenue questions, and so forth. The purpose of this hearing is not so much to probe the witnessesthe Secretary and the Director-but to give them an open and un (1) hampered opportunity to brief us as to the content of the budget submitted by President Johnson yesterday. I haven't yet read and studied all of the President's budget message. I am not familiar with the details. As I say, it was received only yesterday. Therefore, as a beginning to our study of the budget for 1970 it seems most appropriate that we continue our procedure of former years and have this briefing. Any member who has a question will have an opportunity to ask it. I will have a few questions. Mr. Secretary, what is your suggested procedure? Secretary BARR. Mr. Chairman, I would like to paraphrase a very short statement I have. Then I would like to go rather rapidly through a series of charts as we have done in the past. These charts have been a feature of this presentation in the past 3 years, Mr. Chairman. I would like to use them to put the budget into total perspective. Mr. MAHON. Where do we go from there? Secretary BARR. Then, I think it would be appropriate if Mr. Zwick would discuss the expenditure functions of the budget as has been customary in past years and then we will answer any questions you would like to ask. Mr. MAHON. We will be pleased to hear you at this time. GENERAL STATEMENT OF SECRETARY OF THE TREASURY Secretary BARR. Mr. Chairman and gentlemen, I am grateful for the opportunity to appear before this distinguished committee—incidentally, for the last time. I think it extremely important that you understand the economic rationale that underlies the financial plan President Johnson has recommended to the Congress before reviewing the expenditures in detail over the months ahead. Before getting into the body of my remarks, Mr. Chairman, since this is my last time before this committee I would like to pay a special tribute to you, Mr. Chairman, and to the ranking minority member, Mr. Bow. It seems to me that, under your leadership you have taken some giant steps forward in making this committee and the Congress, itself, perform the way the Founding Fathers wanted it to perform. As I understand the Constitution and I speak from an insideoutside experience as an ex-member of this body-the House is especially concerned with the control over money. This is where the House gets its power. Its effectiveness in the final analysis depends upon the effectiveness with which it handles money. Now, what have you and Mr. Bow done, Mr. Chairman, and what has this committee done to improve the financial effectiveness of the Congress? No. 1, this annual meeting in which you review the entire Federal budget to me is a giant step forward. You bring your whole committee together. You look at the total budget and you give the Secretary of the Treasury an opportunity to put it into perspective of the total picture of the Federal budget for the United States. NEW BUDGET CONCEPTS Now, what else have you done? You and Mr. Bow sat on a presidential commission on budget concepts with Secretary-designate Kennedy and Budget Director-designate Mayo. These new concepts give to the Congress for the first time, in my opinion, a budget that is understandable. When I came to the Congress 10 years ago, I realized I was not an expert in military affairs, diplomacy or atomic energy. I did think I was something of a financial expert. I had a master's degree in economic theory; I had been treasurer of six corporations. I had also been treasurer of my party upon various occasions. After I had been here for 6 months, I learned, to my dismay, that I could not reconcile the figures that I read in the reports or heard on the floor. I went to the then chairman of the Appropriations Committee, our beloved ex-colleague, Mr. Cannon. I said, "Mr. Cannon, I am completely confused. I can't figure out what is going on here in these figures and in these budgets." I said, "To the best of my knowledge, you are using four sets of figures. One set is for the legislative budget which the Congress uses, the appropriations. The President seems to be using three sets of figures. He has his administrative budget, he has his cash budget, and he also has a budget which economists refer to as the Federal sector of the national income and product accounts." Frankly, I never could track my way through all four sets of figures and I couldn't reconcile them. I will never forget what Mr. Cannon said to me. As you will remember, he was a very kindly and very courtly gentleman. He said,"Joe, I know it must be confusing but after 10 years everything is going to be very clear indeed." I served only 2 years, so I didn't have the luxury of ever getting to understand the content of the figures which were used at that time. Now, let's take the case of a poor freshman Congressman coming to Congress this year. He can turn to page 10 of the budget document. There is a very simple table there. He can look at the first section and that will tell him what the President recommends. It will identify the portion of the budget-that he will have to pass upon. He can move down to the next section and he can see clearly the lending and the spending programs which the President is recommending. He can then look down and see whether the President is predicting a deficit or a surplus. He will have a pretty good idea whether the budget that is being proposed will stimulate the economy or hold it down. The concepts in the new budget are quite close to the national income and product accounts that most economists and most businessmen use to judge the effect of the Federal budget on the economy. He can look beyond that and see how the budget is going to be financed. He can find in there very quickly the amount of pressure |