been shortened from "Civil defense and defense mobilization functions of Federal agencies" to "Defense mobilization functions of Federal agencies." (5) The annexed budgets in part III now include: the Board of Governors of the Federal Reserve System; the Federal National Mortgage Association's secondary market operations fund (which became entirely privately owned on September 30, 1968); and the Federal intermediate credit banks and banks for cooperatives supervised by the Farm Credit Administration (which became entirely privately owned on December 31, 1968). The budget schedules for these activities and institutions appeared last year in part I of the appendix. (6) As mentioned above, part III has been expanded to include the gross and net loan transactions of the Government by agency and fund. SPECIAL ANALYSES We have added significantly to the materials in the volume of "Special Analyses, Budget of the United States, 1970": Special Analysis A presents the Federal budget estimates in terms of the national income accounts. The new Special Analysis B classifies budget information by groups of funds and presents aggregate data on the gross receipts and outlays of all funds. Special Analysis C presents information on the debt of Government agencies, and on the investments of Government agencies in U.S. securities. Special Analysis D analyzes budget outlays to distinguish those of an investment or developmental type from those which primarily yield current benefits. Special Analysis E covers Federal direct loans and insurance or guarantee of private loans. Special Analysis F identifies the principal Federal programs for collecting current statistics, and current spending for periodic statistics obtained in census-type surveys. As mentioned above, the new Special Analysis G responds to section 204 of the Revenue and Expenditure Control Act, 1968, concerning possible rescission of 1969 unobligated balances of budget authority. Special Analysis H presents information on foreign currencies acquired by the U.S. Government without spending dollars, and on the use of these currencies. Special Analysis I deals with the levels of civilian employment in the executive branch. Special Analysis J presents information on Government outlays for education. The new Special Analysis K presents information on Government outlays for manpower programs. Special Analysis L presents information on Government outlays for health programs. The new Special Analysis M presents information on Government outlays for income security programs. The new Special Analysis N presents information on Government outlays for crime reduction programs. Special Analysis O summarizes Federal grants to State and local governments as well as loans and indirect assistance. Special Analysis P brings together information on Federal construction and federally aided State and local public works. Special Analysis Q identifies Federal programs for the conduct of research and development, and for facilities related to such activities. The new Special Analysis R provides a look at selected agency budgets classified in terms of the program structures used in agency planning-programing-budget systems. We believe that this new material should be helpful in reviewing Federal programs. CIVILIAN AND MILITARY PAY INCREASES We have continued the usual practice of presenting supplemental estimates needed to meet the costs of civilian and military pay increases effective in fiscal year 1969 under the provisions of Public Laws 90-206 and 90-207. Amounts of proposed pay cost supplementals are shown net of the application of reserves established under section 201 of Public Law 90-364. Authority to release these reserves will be requested of the Congress. Amounts required to meet the costs of statutory pay increases to become effective in fiscal year 1970 are provided for as a one-line contingency item for the entire Government, rather than in the individual schedules. The specific rates to become effective in July 1969 are not yet known. EXECUTIVE, LEGISLATIVE, AND JUDICIAL SALARY RECOMMENDATIONS A new document, "The Budget of the United States Government, 1970-Supplement," contains the President's recommendations on rates of pay for Senators, Representatives, Federal judges, Cabinet officers and other agency heads, and certain other officials in the executive, legislative and judicial branches. This supplement is submitted in response to the requirements of section 225(h) of Public Law 90-206. CHANGES IN GENERAL PROVISIONS General provisions of several 1969 appropriation acts prohibit the payment of salaries of Federal employees convicted of riot-related offenses. Deletion of these provisions is proposed because they are unnecessary and not susceptible of uniform enforcement. The more precise language of broader and permanent applicability contained in title V of the Omnibus Crime Control and Safe Streets Act of 1968 (Public Law 90-351) generally achieves the same purpose as these general provisions. In addition, the budget proposes the elimination of the provisions relating to student misconduct from the appropriation for the National Science Foundation and the appropriation acts for the Departments of Defense, and Health, Education, and Welfare. These provisions prohibit assistance to individuals convicted of crimes relating to civil disorders or to property of higher educational institutions. They require university officials to deny students Federal funds if the students violate certain university rules, or if they participate in civil disorders. These restrictions unnecessarily deprive universities of the flexibility which they have had, and should continue to have, to make penalties commensurate with infractions; and they inappropriately inject the Federal Government into the area of enforcement of university regulations and local laws. The Congress has enacted into law, in the Higher Education Amendments of 1968, a permanent provision providing for the termination, in appropriate circumstances, of this type of Federal aid under HEW programs. Section 510 of the Public Works for Water and Power Resources Development and Atomic Energy Commission Appropriation Act, 1969, prohibits the use of any appropriation for financing interdepartmental boards, or similar groups under section 214 of the Independent Offices Appropriation Act, 1946 (31 U.S.C. 691), unless there is prior congressional approval of such financing. The general coverage of this provision makes it unnecessary to retain the similar general provisions of a number of other appropriation acts, and they are proposed for deletion. FINANCING OF INTERAGENCY COMMITTEES Direct appropriations are requested to finance certain interagency committees, which are being financed in 1969 by contributions from interested departments and agencies under authority provided by section 307 of the Independent Offices and Department of Housing and Urban Development Appropriation Act, 1969. The requests for these organizations (President's Council on Youth Opportunity, Interagency Committee on Mexican-American Affairs, U.S. Section of the United States-Mexico Commission on Border Development and Friendship, and the National Council on Indian Opportunity) appear in the "Other Independent Agencies" chapter. REPORTING OF CONTRACT AUTHORITY The basis of classifying budget authority has been changed for three accounts-Civil Aeronautics Board: Payments to Air carriers. Maritime Administration, Department of Commerce: Operating-differential subsidies; State marine schools (allowances for uniforms, textbooks and subsistence of cadets). In each of these accounts, previous budgets have shown all of the budget authority as permanent contract authorizations, even though current appropriations to liquidate all or part of the contract authorizations were made available in the same year. "Contract authorization" has been defined as authority to incur obligations in advance of an appropriation. The 1970 budget, therefore, classifies as a current appropriation the portion of the amount provided in the appropriation act which is available for new obligations in the same year (that is, which is not required to liquidate obligations brought forward from prior years). Budget authority to cover the remaining obligations incurred (as provided by the basic legislation) is classified as permanent, indefinite contract authorization. The revised presentation does not change the total amount of budget authority. but does change the distribution between current and permanent authority. It is comparable to the presentation adopted earlier for similar transactions of the Commodity Credit Corporation. ADVANCE 1971 PROPOSALS The 1970 budget includes requests for advance 1971 budget authority for six accounts. Advance authority for "Elementary and secondary education," "Urban renewal programs," and the "Urban mass transportation fund," has been provided in previous years and is again requested to allow State and local governments sufficient time to develop plans and programs with assurance of Federal financing. For that same purpose, similar 1971 requests are made in this year's budget for "Model cities programs" and for the Appalachian Development Highway System under "Appalachian regional development programs." In addition. a request is made for the "Nineteenth Decennial Census" for $10 million in 1971 budget authority to become available in 1970 if needed to meet census data collection expenses which could occur in 1970 rather than in 1971 as presently estimated. Planning, Programing, Budgeting During the past year, significant strides have been made in agency implementation of the planning, programing, and budgeting system. This year, for the first time, special analysis R presents data on budget authority in terms of the program structure used in selected agency PPB systems. The changes outlined above are designed to improve the presentation of the President's budget recommendations. I hope that this information will prove useful to the Committee on Appropriations. The Bureau will be pleased to provide any further assistance you may desire. Sincerely, CHARLES J. ZWICK, Director. SUPPLEMENTARY ANALYTICAL INFORMATION AND COMMENTS RELATING TO THE BUDGET FOR 1970 (CLERK'S NOTE.-In harmony with previous practice, included below are pertinent additional analyses, tables, and related explanatory comments and notes in connection with the budget for 1970, submitted January 15, 1969. They are taken from floor remarks of the chairman, of that date, and are intended to lend some additional focus and perspective to various features of the overall budget and fiscal situation) (Mr. Mahon asked and was given permission to revise and extend his remarks and to include pertinent additional material, including tables and quotations.) Mr. MAHON. Under permission granted, I am inserting considerable additional material on the budget and related matters, including both general and specific observations, and a number of statistical tabulations. Mr. Speaker, it is a truism that, year in and year out, the President's annual budget is probably the most important message, the most encompassing executive communication to come to the Congress. It embraces the whole range of governmental endeavor, the policies and programs that affect the lives and welfare of every citizen. To some considerable extent it influences our national course and destiny. I should like to make a few observations about the thrust of the message and some of its big features. It will be some weeks, even months, before we can fully analyze and come to conclusions about all the countless features of the budget. HIGHLIGHTS RÉSUMÉ OF THE MESSAGE This is a transitional budget, submitted by an outgoing administration. It undoubtedly will be revised in many respects by the incoming administration. Nevertheless, it is a budget in balance for both fiscal 1969 and 1970, with projected surpluses of approximately $2.4 billion and $3.4 billion respectively. The projected surplus for 1970 is based upon extension of the 10-percent surtax for a full year beyond the July 1, 1969 expiration date and a few other revenue-producing measures. It also hinges on such important contingencies as performance of the economy. And there are a number of legislative proposals affecting the expenditure side of the budget. The budget would provide about $224 billion in gross new budget (obligational) authority for fiscal 1970, an increase, on a gross basis, of nearly $16.1 billion over the comparable reestimated gross total for fiscal 1969. It is this new budget (obligational) authority basis on which the Congress acts in various bills. However, Congress does not act on all of this $224 billion. Only about $143.9 billion of this new budget authority for fiscal 1970 will be required to come before Congress in individual bills. The remainder, some $80.1 billion, is already authorized and appropriated under earlier so-called permanent appropriations for such major items as interest on the debt, social security benefits, various retirement funds, highways, and so on. The difference between the gross budget authority of $224 billion on which the Congress acts in part and the net budget authority of $210.1 billion, most often referred to and seen in the general budget tables, is $13.9 billion in "intragovernmental transactions" and certain "proprietory receipts" from the public not credited to revenues but applied directly as offsets to outlays. Thus, Mr. Speaker, as the budget message states, the net increase in new budget (obligational) authority proposed for 1970, over the reestimated total for 1969, is some $15.5 billion. Estimated outlays (expenditures) are projected to be $195.3 billion for fiscal 1970, an increase of about $11.6 billion over the reestimated total for fiscal 1969. Projected receipts for fiscal 1970, including extension of the surtax and enactment of other revenue-producing measures, are estimated to be $198.7 billion, an increase of $12.6 billion over the reestimated total for fiscal 1969. * The increase of some $11.6 billion in spending projected in this budget for fiscal 1970 is by and large a built-in increase. About 75 percent of the $11.6 billion increase arises from laws already enacted or otherwise of a mandatory character, such as interest on the debt; social security; public assistance, including medicaid; veterans; pay increases already authorized; payment of prior obligations; and the like, excluding defense. These are expenditure increases that cannot be effectively controlled without changing the underlying laws that direct them. Not counting national defense, the budget classifies roughly only $20 billion of civilian expenditures-some 10 percent of the spending total-as the areas relatively controllable in the annual authorization and appropriation bills. The increases in net new budget authority for fiscal 1970 over fiscal 1969, of $15.5 billion, are accounted for in capsule form, as follows: 1. Increase for items not requiring current action by Congress... -Interest Trust funds (social security, etc.) All other (net) –. +$4.9 bil. +$800 mil. +$5,600 mil. 2. Increases for proposed legislation (net) 3. Increases in annual bills requiring action by Congress_ National defense.. -$1,500 mil. +$1.1 bil. +$9.5 bil. +$3,462 mil. Mil. July 1, 1969, civilian and military pay increase (already authorized)-- +$2,800 Public assistance, medicaid, etc.- Foreign economic assistance_ All others (net).. +2,000 +966 +272 The budget makes provision for supplemental appropriations of some $4,813 million for the current fiscal year 1969, covering a number of items as set out in the budget, but in significant measure accounted for in additional Southeast Asia defense costs and unabsorbed costs of the general civilian and military pay increases effective last July 1 and which were not specifically appropriated for in the regular 1969 appropriations. A lump-sum allowance of $1.6 billion was, however, included in the original fiscal 1969 budget total for such pay costs. For a few programs, today's budget proposes advance appropriations of $4,161 million for fiscal 1971. Budget for 1970 [Federal funds] Advance 1971 proposals: Funds appropriated to the President: Appalachian regional development programs: appropriation__ Commerce: Bureau of the Census: Nineteenth decennial cen- Health, Education, and Welfare: Office of Education: Elemen- Urban renewal programs: Contract authorization.. $175,000,000 10, 000, 000 1, 226, 000, 000 1, 250, 000, 000 Appropriation to liquidate contract authorization__ (1, 250. 000, 000) Transportation: Urban Mass Transportation Administration: Total, 1971 advance requests-- Indicated 1968 supplemental appropriation: Housing and Urban Development: Low-rent public housing annual contributions____ 1, 250, 000, 000 250, 000, 000 4, 161, 000, 000 7, 168, 000 In summary, then, on new appropriations-new budget (obligational) authority-a capsule situation of today's budget is this: New appropriations or budget authority proposed for 1970_. Millions $224, 035 4. 813 Proposed advances for 1971. 4, 161 Grand total__ 233, 009 Less amounts for 1970 permanent-type items not requiring action in bill this session__. -80, 168 Grand total, for action in bills this session (all 3 fiscal years)_ 152, 841 Projected budget receipts and the underlying economic assumptions are, of course, fundamental to the tentatively projected balance or imbalance of any budget. Receipts for fiscal 1970 are projected in the budget to increase $12.6 billion over the current estimate for fiscal 1969. In the aggregate, some $11.9 billion of the 1970 budget revenue total requires legislation. Any legislative denials would unhinge the budget balance outlook just that much. Although technically not classified as a budget revenue matter, there is another item, counted as a $519 million reduction in postal costs, involving proposed legislation to combine first-class and domestic air mail and adjust rates for this and for certain third-class mail. On the economic side, the budget assumes a gross national product of $92 ́ billion, a 7 percent rise in calendar 1969 over calendar 1968. The actual increase last year over 1967 was about 9 percent. Corporate profits before taxes are pro jected at $96 billion, compared to some $92.3 billion last year. Personal income i estimated at $736 billion, up $50.2 billion from 1968. Of course, how close to the mark these projections prove to be weighs heavily in the final outcome of the budget balance. RESPONSIBILITIES FOR THE BUDGET Mr. Speaker, there are certain fundamental points generally applicable to all budgets in all administrations. We he about priorities in spending--deciding how much is to be allo |