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as a policy board in conjunction with the 3 appointed members. The Chairman of the National Highway System Authority to be 1 of the 3 appointed members. In each State and Territory, a 3-man State or Territory National Highway System Commission to be appointed by the governors of the various States or Territories consisting of (whenever and wherever practical) (1) an engineer; (2) an automobile dealer; (3) a farmer (all residents of the State or Territory); or men adequately qualified, but no 2 from the same field of endeavor. This mission to administer and implement the programs approved by the National Highway System Authority-the commission members to be authorized and expected to suggest and recommend plans and programs involving their State or Territory which will assist the National Highway System Authority in accomplishing their overall mission.

Where their interest is involved, each county and city within the State will be expected to designate a liason representative to offer plans and suggestions to, and work with, the National Highway System Commission.

The National Highway System Authority to have the power to appoint regional directors to expedite the funneling of plans, programs, and suggestions from the various commissions into the National Highway System Authority and to assist the various commissions in carrying out the National Highway System Authority's approved plans and programs.

A roving inspection and audit board to be established and maintained by the National Highway System Authority to assure specific performance of contracts and economy of operations.

(2) Financing.The Federal Government should appropriate approximately $500 million to be used as a revolving fund to assist in the first steps of unit (State) financing of the National Highway System--all funds to be used on a strictly loan basis until appropriate permanent financing can be approved, underwritten and sold.

The director of this fund to be appointed by the President, and approved by the Secretary of the Treasury, and to be consulting member of the National Highway System Authority but without authority to vote.

All State and Territory projects should be jointly financed by tax-exempt securities by the National Government and State governments on a pay-as-you-g basis.

Bonded indebtedness should be supported by (1) toll; (2) concessions; (3) tax on gas and oil or other fuel purchased on the system; (4) where it has been decided by the National Highway System Authority that for military necessity a plan or program in a particular area should be implemented but not of urgent need for commercial or travel requirements, the National Govern. ment should underwrite the project and charge it to the national defense appropriations.

(3) Specifications and requirements.—Each National Highway System Commission should, with the approval of the National Highway System Authority, set forth specific specifications and requirements for all projects within its area and demand rigid enforcement of same.

All State contracts for construction, concessions, etc., should be let to entrepreneurs within the specific State where the project is to be built (wherever and whenever possible). In large States where feasible, the contracts should be let to area bidders.

All projects should be properly publicized and bid for by sealed bids. The right of property condemnation should be embodied in the law.

(4) Sarlaries and compensations.The Congress of the United States should set the salaries and wage scale of the Federal appointees and employees.

State and Territorial appointees and employees should be determined by the respective State or Territory but appointees' salaries should not exceed the national appointees.

(5) Objectives.--Traffic situation in the United States has become an extremely important problem-new road and highway construction has lagged so far behind other lines of progress during the past 10 years that the general welfare has suffered great losses; (1) in lives due to accidents; (2) in time due to traffic congestions; (3) in money due to accidents and higher insurance rates.

The National Highway System Authority should, within 30 days after being established, announce the plan and program for the objectives in rough. At the end of 90 days some specific near term plans and within 1 year, a well rounded out comprehensive plan for objectives to be implemented over the next 3 to 5 years. The mission of the National Highway System Authority will 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.)




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 Honorable George Humphrey, Secretary of the Treasury, and Mr. Burgess, also of the Treasury Department.

You have a prepared statement, I take it?



Secretary HUMPHREY. I have; yes, sir.
Senator GORE. Will you proceed?

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 separate States.

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 reclucing 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 sound

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


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