Senator GORE. I do not know what you mean by "self-liquidating," Mr. Secretary. There is nothing that this corporation does that brings in any revenue to liquidate itself. It is not a self-action which would liquidate the obligations of the corporation, as I understand the bill; it is rather an act of the Congress in appropriating the money out of the Treasury of the United States. How is that self-liquidating?

Secretary HUMPHREY. This is more than that. This provides for the dedication of certain revenues to certain purposes.

Senator GORE. How are they dedicated?

Secretary HUMPHREY. They are dedicated by an act of Congress. Senator GORE. Which is not a self-act of this corporation.

Secretary HUMPHREY. I do not want to quibble about words. I don't care whether you call it self-sustaining or what you call it. The setup contains its own basis for liquidation.

Senator GORE. I don't want to quibble about the word either, but you have used the words "self-sustaining" and the words "self-liquidating." Frankly, I do not think that this proposed Highway Corporation has any earmarks of self-liquidation.

Secretary HUMPHREY. That is a difference of opinion between us. I think that if certain revenues are dedicated to a certain purpose that that purpose tends to liquidate itself. And these bonds are not to be issued in excess of the anticipated revenues to be received.

Senator GORE. We can, I am sure, agree that the bill provides an appropriation of the revenues from this source until such time as the bonds are retired?

Secretary HUMPHREY. That is right.

Senator GORE. Do you seriously contend that it is a self-liquidating corporation?

Secretary HUMPHREY. I think it is the same thing. I think the objective is obtained. I think that it is a self-liquidating arrangement, the entire arrangement liquidates itself and the obligations that are put out are concurrently provided with the means with which they will be paid.

Senator GORE. Through an appropriation from Congress?
Secretary HUMPHREY. That is right.

Senator GORE. I think we understand each other in that regard now. Then further down on page 1 you refer to holding down further increases in the mounting levels of Government obligations payable out of the general revenues. Do I understand by that that you would want to hold the expenditures on the other category of roads at the present levels?

Secretary HUMPHREY. That is correct.

Senator GORE. For the next 30 years.

Secretary HUMPHREY. Out of these particular revenues. Whether other revenues

Senator GORE. You say here though "general revenue"?

Secretary HUMPHREY. That is right.

Senator GORE. What is a general revenue?

Secretary HUMPHREY. General revenues are brought in from customs and excises and largely from income taxes.

Senator GORE. Would you consider an excise tax, which you just described, as general revenue?

Secretary HUMPHREY. Unless it is dedicated to a special purpose it goes into the general revenues, that is correct. An excise tax can be a user tax. You can dedicate a user tax to a specific purpose and then it would no longer be part of the general revenues.

Senator GORE. Whether that is dedicated to a particular purpose or not the revenue from an excise tax goes into the general fund, does it not?

Secretary HUMPHREY. They all go into the general fund and they are paid out. It is a separation, a dedication for a special purpose.

Senator GORE. Then it is a general revenue.

Secretary HUMPHREY. It goes for special purposes. I am distinguishing largely between the income-tax base and the excise tax or dedicated or user tax. Let me put it that way. I think that roads should be paid for as largely as possible from user taxes.

Senator GORE. How do you regard the excise tax on automobiles? Secretary HUMPHREY. That is not a user tax.

Senator GORE. Is that a general revenue?

Secretary HUMPHREY. Anything that goes into the general pot goes into general revenues eventually, unless it is dedicated elsewhere. Senator GORE. Whether it is dedicated or not it still goes into the same pot?

Secretary HUMPHREY. It may but that is just a matter of bookkeeping.

Senator GORE. I know you are an accomplished bookkeeper, but I do not quite follow you. You want to reduce expenditures from the general revenue?

Secretary HUMPHREY. That is right; general expenditures.

Senator GORE. Yet you have said that the revenue from an excise tax is general revenue.

Secretary HUMPHREY. It may or may not be. I am distinguishing between the general revenues and user revenues, if you want to put it that way. I think that is the clearest way to make the distinction. There are certain revenues that can be brought about by use of various assets. Those revenues can be dedicated to the liquidation of the obligations for the payment of those assets. They are different than just general revenues.

Senator GORE. When Congress makes an appropriation, out of what fund in the Treasury do you pay that appropriation?

Secretary HUMPHREY. You mean just an ordinary appropriation? Senator GORE. Any appropriation.

Secretary HUMPHREY. If it is a dedicated appropriation it would be out of a particular fund. If it is not out of a particular fund then it is paid out of general funds.

Senator GORE. You do not contend that S. 1160 creates a special fund within the Treasury into which the revenues of the fuel tax will be deposited.

Secretary HUMPHREY. For all practical purposes it does. It is not a technical earmark because the particular dime or the particular nickel is not followed through. But it is the same as we do with some other funds where the money is estimated. The particular amount of dimes and nickels that will come in are estimated and then that is designated as the fund that will be used and the Secretary of the

Treasury is ordered to pay out that amount of money into that particular fund. But it is to save the trouble of earmarking, it accomplishes the same practical purpose. That is what this will do.

Senator GORE. Would you be able to show to the committee any provision of the bill which sets up such special fund?

Secretary HUMPHREY. If you earmark, if you dedicate this money to that purpose, that is what happens, is it not? That is the way it works in practice.

Senator GORE. As I understand it, the bill proposes to appropriate from the funds in the Treasury indefinite amounts, namely all revenue from this particular source of taxation.

Senator HUMPHREY. Certain described amounts.

Senator GORE. Until such time as the bonds of this corporation shall have been liquidated?

Secretary HUMPHREY. That is right.

Senator GORE. As I have served on the Appropriations Committee for some years and also on the Banking and Currency Committee, I had understood that when Congress made a general appropriation, without reference to appropriation from a specific fund, that you discharged your obligation from the general revenue, from the general fund of the Treasury.

Secretary HUMPHREY. I think you have just outlined yourself the difference, or exactly what happens. The amount of the appropriation is not a fixed amount in dollars. The amount in appropriation is a described amount of certain revenues. That described amount of certain revenues which is not fixed in dollars but which later becomes fixed is what is appropriated by the Congress to pay out, and that is quite different from just appropriating a million dollars for a certain purpose because this is not a known, definite amount. This is a described area, all of which is appropriated.

In practice the way it works-and the same thing happens in some other cases in government; this is not new, it is done elsewhere-the Secretary of the Treasury estimates the amount that was in there. that would come in that way if it was followed through as individual items, and then that is the amount which is fixed to meet that appropriation.

Senator GORE. Maybe we can get at it this way, Mr. Secretary. Is the revenue from the gasoline tax and fuel-oil tax, now in general revenue?

Secretary HUMPHREY. If it goes into general revenue without dedication to other purposes, it is. But if it is dedicated

Senator GORE. Is it general revenue under present law?
Secretary HUMPHREY. Yes; it is, I believe.

Senator GORE. Is it your position that the passage of S. 1160 would prevent the revenue from the gasoline and fuel-oil tax from coming into the general fund of the Treasury and becoming general revenue? Secretary HUMPHREY. It will not be general revenue available for all purposes. It is revenue dedicated to a specific purpose.

Senator GORE. Then, if that be the case, the dedication of this amount of general revenue would reduce the general revenue available to the Treasury; would it not?

Secretary HUMPHREY. That is right.

Senator GORE. Then if you did not have enough revenue to meet the obligations of the Treasury, that would be deficit financing; would it not?

Secretary HUMPHREY. That is right. That is correct.

Senator GORE. I notice you pay generous compliments to Senator Byrd and his testimony. The committee was impressed with that testimony, too. Senator Byrd described this financing scheme as "fantastic." I wonder if you would comment on that?

Secretary HUMPHREY. He has told me that. I have talked with him a number of times about this. As I said in my statement, I have the highest regard for Senator Byrd's financial knowledge and his capacity in every way, but there are occasionally times when he and I have differed in what we think can or should be done from a practical point of view. I always hesitate to differ from Senator Byrd because of my great regard for him and his abilities. But sometimes we do, and this is one of those unfortunate cases.

Senator GORE. Would you mind informing the committee as to whether you had hesitation in approving this plan?

Secretary HUMPHREY. What do you mean?

Senator GORE. This particular plan of financing-did you hesitate in giving your approval to that?

Secretary HUMPHREY. I gave it a good deal of thought, Mr. Chairman, a good deal of thought as to what was the best way to accomplish this purpose. I think we have here an objective that is really a necessary objective to be accomplished for the good of this country, and I think that it is a very difficult thing to try to figure out what is the best way to accomplish that objective. I studied it a lot and all of our people studied it a lot to try to think in our ways how is the best way to accomplish this thing.

Of course I like to, insofar as possible, pay as you go. That is not at all times practical. There are times when it is desirable that you should not pay as you go, when you want to go a little faster than you pay. And there are times when it is perfectly proper to do that. Under what circumstances and how would you accomplish that purpose? Each case has to be decided on its merits.

I think in this particular case the probabilities are that because of the limitations on the States' ability to raise money and so forth, that it is desirable here to go somewhat faster than you pay. That rests finally in the judgment of this committee. But if you are going to go on this recognized good objective faster than you can currently pay for it, then I think this is as good a way of providing for the difference between the pay as you go and the borrowing as I know of. Senator GORE. Would you recommend some other plan to meet the exigencies, the severe exigencies of school construction?

Secretary HUMPHREY. Schools are somewhat different than roads although it is possible that a plan could be developed that would be appropriate for schools on a rental basis. I think that what you have to do, if you have an asset that can, on its own, because of its own contribution to society, earn money and it is so set up that it will earn money and you measure it in such a way that money is earned by it, I think it is appropriate to take the money that it earns and dedicate that money to the payment of obligations incurred in the acquisi

tion of the asset. The simplest illustration, of course, is a toll road. Senator GORE. Mr. Secretary, in your statement, the part to which I have already referred, you say that it is your objective-by which I take it, it is the administration's objective-to reduce expenditures and taxes. To quote exactly, from No. 5:

To hold down further increases in the mounting levels of Government obligations payable out of general revenues.

One of the things we are aware of in this committee is that you would, by S. 1160, dedicate all of the funds beyond the present level, minus $100 million for secondary, primary, and urban roads, not for just the next 30 years but for such longer time as there may be bonds outstanding.

Secretary HUMPHREY. It might be shorter, too.

Senator GORE. If it were enacted?

Secretary HUMPHREY. It would not ordinarily exceed 30 years. It might be shorter.

Senator GORE. But for such time, however long it may be, until all the bonds are retired. That would appear, from your position here, to at least doom the other category of roads to the present level of expenditure.

Secretary HUMPHREY. Not necessarily. It would doom them to the present level of expenditure provided the revenues were not increased. But if you are going to spend more money you have to raise more

money.

Senator GORE. You advocate a lowering of all other expenditures in general revenue?

Secretary HUMPHREY. That is right.

Senator GORE. So insofar as your present position, it is to hold the expenditures for primary, urban, and secondary roads to the present levels, minus $100 million for the next 30 years or until such time as the bonds are retired?

Secretary HUMPHREY. Or until such time as additional revenues, earned revenues from those roads are dedicated to their payment. There is no reason why the tolls cannot be increased if it seems desirable to do so.

Senator GORE. You mean the gasoline tax?

Secretary HUMPHREY. That is right. Or any other method of measuring income from the roads.

Senator GORE. Mr. Secretary, do you realize that those other roads carry six-sevenths of the traffic?

Secretary HUMPHREY. I didn't know that that was the figure but I could well imagine that it might be.

Senator GORE. Do you not think within the next 10 years or 20 years or 30 years that those roads are going to wear out and become obsolete?

Secretary HUMPHREY. Oh, yes. I think that you are going to have your road problem continually with you. I think you are going to have to keep working at it. I think as you build more and more roads and get increased roads that you may be justified in having increased revenues for them.

Senator GORE. But you tie all of the increased revenue from this present source of taxes at the present rates to the Interstate System?