not in any sense of the word relieve the city traffic congestion but it will do its part to ease some of it by routing through traffic way from the highly congested areas and it should give impetus to the cities and highly congested urban areas to take appropriate steps to modernize their traffic routes and to improve traffic discipline. Skyways, tunnels, and one-way streets should be in every city's improvement plans for today. Parking garages and parking areas are of private concern, but where the individual entrepreneur fails to keep ahead of his city to town's growth and progress, the municipal government should not neglect to incorporate such projects in their planning (only if to prod private entrepreneurs into taking positive action). (Thereupon, at 12 noon, the subcommittee was adjourned, to reconvene at 10:45 a. m. Tuesday, March 22, 1955.) NATIONAL HIGHWAY PROGRAM TUESDAY, MARCH 22, 1955 UNITED STATES SENATE, SUBCOMMITTEE ON PUBLIC ROADS, Washington, D. C. The subcommittee met at 10:50 a. m., in room 412, Senate OfficeBuilding, Senator Albert Gore presiding. Present: Senators Gore (presiding), Symington, Thurmond, McNamara, Case, and Bush. Senator GORE. The committee will come to order. The committee is pleased indeed to have before it the HonorableGeorge Humphrey, Secretary of the Treasury, and Mr. Burgess, also of the Treasury Department. You have a prepared statement, I take it? STATEMENT OF HON. GEORGE M. HUMPHREY, SECRETARY OF THE TREASURY, ACCOMPANIED BY HON. W. RANDOLPH BURGESS, UNDER SECRETARY FOR MONETARY AFFAIRS Secretary HUMPHREY. I have; yes, sir. Secretary HUMPHREY. Mr. Chairman, I am glad to have the opportunity to participate in your discussion of the President's highway program, with particular reference to the financial aspects of S. 1160.. We are all agreed on the need for an expanded highway program. The question is how best to finance it. The plan embodied in S. 1160 of setting up a self-sustaining Government Corporation to handle the expanded highway program has been carefully designed to serve the following objectives: 1. To get the road program underway with the speed required by the rapidly growing volume of automobile traffic. 2. To produce promptly an adequate interstate network more effectively than can be done by dependence on programs of the separateStates. 3. To tie firmly together the expenditures on roads and the income which can reasonably be drawn from the users of the roads, so that the operation is self-sustaining. 4. To finance this road program with taxable securities rather than tax-exempt securities; this is an important objective, since the growing volume of tax-exempt securities for roads involves a serious loss of revenue to the Treasury. 5. To hold down further increases in the mounting levels of Government obligations payable out of general revenues. The evidence that has already been presented to your committee, I am sure, has convinced all of us of the urgent need for building highways more rapidly. To do so will result in a substantial economic gain to the American people in terms of time saving through more rapid movement of traffic, greater efficiency through more prompt delivery, the reduction of the accident toll, and lower costs on the upkeep of vehicles. These are all matters difficult to measure, but all of them are important. In suggesting this program, the administration has clearly in mind the advantages to the whole country of an expanded road program which will employ more people, and add to the country's rate of economic growth. Such a road program will encourage the continued development of the automobile industry and the construction. industry; in fact, all our citizens will be better off as benefits of the program run through the entire economy. The Treasury has given particular study to the financing of the proposed highway program and its relationship to the Federal budget. I would be the last man to advocate a program that simply added to our Federal budget and the charge on general Federal revenues. We must think in terms of cutting back the volume of Federal expenditures, and I have repeatedly stated that I think this can be done and that the load of general taxes, which weighs so heavily on the economy, can be decreased over a period of years. One of the reasons I am in favor of the road program is that it does not interfere with the long-term objectives of reducing general Federal expenditures and reducing general taxes. Let me say also that no one could have a higher regard than I have for the views of Senator Byrd. I have been in agreement with him on the major principles of sound Federal Government finance. I have read with care his impressive statement last Friday before the committee. It raises important questions of principle as well as questions of administrative practice and Government accounting. I believe the principles involved in this bill are sound. My reasons are simple. There are real earning assets here-new highways vital to the future of our Nation. If the program could be paid for completely by tolls, there would be no question about its financial soundness. But "tolls" can be measured in a great many ways. You can base them on mileage traveled. You can levy a charge based on the weight of the vehicle, the number of passengers, or the number of axles. Or, you can carry that one step further and measure your tolls by consumption of motor vehicle fuel. This is a practical way of doing it. There is no doubt in my mind that this program should be handled on as close to a pay-as-you-go basis as possible. I would not object, therefore, if the Congress sees fit to increase the Federal gasoline tax in order to finance this program. If it cannot be on a pay-as-you-go basis and borrowing is necessary, then that borrowing should not involve a pledge of the general revenues of the United States Government. It should rather rely upon specific user taxes, in the last analysis, for servicing the bonds and for their security. Now as to details of administration and accounting-the Board of Directors of the Highway Corporation would have the authority nec essary to assure flexibility in handling the program in the future. We don't know enough about the future to spell out all the details now. I hope your committee will examine with care questions of accounting and budgetary supervision. It may cost somewhat more to issue the bonds through the Corporation rather than by the use of public debt obligations. I think it is worth it. It provides a semiautomatic way of paying off the debt thus incurred over specific periods. If they carry a higher rate, that very fact may give them wider distribution of ownership by real investors and require less use of bank credit. It is a wholesome thing to have debt limits set by the Congress. It provides a standard in our fiscal policy for everybody to think about and respect. It is wise for the highway program to have a debt limit, too, and one is provided for in the bill. There is one further point on this program that is very important, and that is its inflationary potential. If the Congress and the administration were to stop suddenly right now in their drive toward a lower level of budget expenditures, then I would say that to pile this highway program on top of it might be inflationary. As I mentioned before, however, we are firmly committed to further reducing Government expenditures and working toward a less oppressive tax system. As we succeed in cutting expenditures, a highway program like this can, I believe, be handled without inflationary effects. I should also like to call your attention to the fact that the bill provides that the Secretary of the Treasury is responsible for the supervision of the borrowing program and all borrowing requires his consent. In this way the borrowing of money can be harmonized with Government fiscal, monetary, and debt management policy. Within limits, the timing of the borrowing can be subject to control and adjusted to varying conditions in the economic life of the country. Thus provision is made for keeping any possible inflationary effects of the program under better control. That concludes my statement, Mr. Chairman. Senator GORE. Thank you, Mr. Secretary, for your statement. I will have a few questions and then other members of the subcommittee, I am sure, will have some questions. On page 1 of your statement you refer to this as a "self-sustaining Government corporation." I do not quite understand the meaning in which you use the term "self-sustaining," since under S. 1160 the revenue to retire the bonds of this corporation would come from appropriations from the Treasury, and it is without assets or other income. Secretary HUMPHREY. I suppose the word "liquidating" would be better than "sustaining." Senator GORE. Then how would it be self-liquidating? Secretary HUMPHREY. The pledge of the gasoline taxes to the payment of these bonds will liquidate these bonds. Senator GORE. That is more than a pledge; it is an outright appropriation from the Treasury of the United States enacted by Congress. Secretary HUMPHREY. That is the same thing, is it not? As long as you have a pledge by an appropriate authority, whatever the appropriate authority may be, of monies coming in in a sufficient amount to liquidate the obligations to be paid off, you have a self-liquidating operation. 61030-55- -35 |