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sufficient; or (2) the Congress will repeal or lower the taxes or repeal the direction to pay the proceeds to the Corporation without making adequate provision for another source of revenue for the Corporation.

The Congress and the investors are well able to judge whether the proceeds of the taxes involved are likely to continue to provide sufficient revenue for the debt service, and I think it inconceivable, once they have passed such a bill, that the Congress would ever callously remove this source of revenue without providing an adequate substitute.

So in real sense the investors would be relying on the good will and sense of responsibility of the Congress for their continued protection. Our whole history shows this to be a very small risk indeed.

In this connection, I might point out that there is nothing to stop the Congress from failing to appropriate for obligations of the United States as to which its faith is expressly pledged.

And, even in the event it did so, there would be nothing to prevent the Congress from going further and withdrawing consent to suit against the United States.

Investors and their counsel know this and know that if such hypothetical action were taken they would have no remedy. But it has never been done, and the faith that it won't be done is the thing that makes United States obligations a better investment than those of the most highly solvent private corporations elaborately protected by liens, pledges, mortgages, and other security.

Senator GORE. Then may I break in there just a moment, General? The gist of your statement is that these are not technical legal obligations of the United States Government, but in a broader and a moral sense they are; is that correct?


Senator GORE. In that respect you would, I take it, agree with the statement of the Secretary of the Treasury before this committee, in which he says, on page 986:

This bill does carry a debt limit in it. This bill will not-this is not a direct obligation of the United States Government. It is an obligation of the Gov. ernment, it is something that the Government sponsors, it is something that the Government says it will take this appropriate action to see that it is repaid, and it takes appropriate action in two ways to see that it is repaid. But it is not technically within the debt limit.

Mr. BROW NELL. That is right. The only comment I would make on that when he says it is an obligation of the United States Government, I think he means quite clearly in the context, a moral obligation.

Senator MARTIN. Mr. Chairman.
Senator GORE, Senator Martin.

Senator MARTIN. General Brownell, there is not anything that would even require the Congress of the United States to appropriate to pay the interest on the outstanding bonds, is there?

Mr. BROWNELL. That is right.

Senator MARTIN. That has to be done every year, and if the Congress did not do it, there would be nothing to pay the coupons on these various outstanding bond is that not correct?

Mr. BROWNELL. Yes, sir.

Senator Bush. I would also like to amplify that by saying that what the Attorney General's statement implies is that this places a moral obligation on the Congress, just as the other items, the interest on the public debt and other things, veterans' obligations, other leases and obligations of that kind, that we have to appropriate from year to year.

This places a moral obligation on the Congress not to welch on its duty in connection with the issuance, once the Congress passes the law to authorize it?

Senator MARTIN. Might I ask another question?
Senator GORE. Senator Martin.

Senator Martin. That would also apply to our retirement system, would it not?

Senator Bush. Yes, or any other long-term commitment.

Senator MARTIN. Or any other commitment that has to be appropriated by Congress.

Senator GORE. I notice that you say that you cannot conceive that Congress would wipe out this source of revenue.

Mr. BROWNELL. Without providing a substitute that was adequate.

Senator GORE. Suppose in the natural course of events, a fortuitous course of events as the case might be, that gasoline and oil should cease to be used as a fuel to the extent that they now are. Having had a ride on the Nautilus, I do not think it is impossible that we may have atomic automobiles in future years.

What would be the moral obligation of the Congress in case the natural course of events diminished, if not eliminated, this source of revenue?

M BROWNELL. I think they would have to provide a substitute to carry out this moral obligation.

Senator GORE. Thank you.

Mr. BROWNELL. In other words, I say that this same cent that we are talking about here would provide a basic security for these investments of the Highway Corporation.

Senator MARTIN. If I might ask one question, Mr. Chairman.
Senator GORE. Certainly.

Senator MARTIN. As I understand, you feel that the United States Government from historical precedent would take care of these obligations?

In the matter of building roads at one time out in the subdivisions of our various State governments, men even worked out by roads the road tax, and we have kept on developing it until now, of course, the big source of revenue is gasoline.

There may be atomic energy one of these days. I would not know how we go about taxing it, but I have always found fellows that have the ingenuity to tax these things.

Senator CASE, Mr. Chairman.
Senator GORE. Senator Case.

Senator Case. I doubt if the record is quite right on one point, somebody's question and the general's answer a moment or two ago, indicated that an annual appropriation would be necessary for the payment of interest.

The language of the bill would contradict that, for it provides at the top of page 8

Mr. BROWNELL. Senator, I understood the question to relate to obligations of the United States.

Senator MARTIN. That was what I asked him.

Mr. BROWNELL. It was just an analogy that we were talking about, not this particular bill. Am I right on that, Senator?

Senator Martin. That is right.

Senator Case. You are not denying that the money which the Secretary of the Treasury would advance to the Corporation might be used for the payment of the interest ?

Mr. BROWNELL. That is right. You are correct on that. I would just want to sum up, Mr. Chairman, by saying that I think the same faith would provide the basic security for these investments. That faith is justified, and the investment would be a good one.

Question has also been raised as to the legality of an appropriation of indefinite duration—a so-called permanent appropriation-because of the provisions in section 105 of the bill for a continuing appropriation to provide the necessary funds for servicing the bonds.

There is no constitutional objection to such a provision, and there are a number of precedents for similar legislative action by the Congress.

I cite as an example, section 201 (a) of the Social Security Act, as amended, which provides for appropriation of amounts for the fiscal year ending June 30, 1941, and for each fiscal year thereafter, "out of any moneys in the Treasury not otherwise appropriated” (42 U.S. C. 401).

Another example might be railroad unemployment insurance account, Congress provided that funds are permanently appropriated—to be continuously available for the payment of benefits (45 U. S. C. 360).

Nor is there any question as to the constitutionality of providing that the proceeds of a particular tax may be used for a specified purpose. I think the Comptroller General has already cited to you the case of Cincinnati Soap v. The United States (301 U. S. 308, 313), where there was involved the constitutionality of a provision in the Revenue Act of 1934 imposing a tax on the processing of coconut oil and providing that the proceeds thereof shall "be held in a separate fund and paid to the Treasury of the Philippine Islands."

The court in that case upheld this provision, statingIf the tax, qua tax, be good, as we hold it is, and the purpose specified be one which would sustain subsequent and separate appropriation out of the general funds of the Treasury, neither is made invalid by being bound to the other in the same act of legislation.

That appears to be precisely the situation which S. 1160 contemplates.

You have also requested me to comment on section 208 of the bill. That section is the one which provides that if the Secretary of Commerce determines that a State is "unable to obtain possession and the right to enter upon and use" required rights-of-way, lands or interests in lands "with sufficient promptness," he is authorized

Senator GORE. General.
Mr. BROWNELL. Yes, sir.

Senator GORE. Before you go to that point, I was not here yesterday, but I read portions of the statement of the Comptroller General, and his staff held that these bonds would be legal and constitutional Maybe he still reserved some doubt, but, as I recall what I read, he justified the legality of these bonds on the basis that the Constitution provides that the Congress may make appropriations "to pay debts and provide for the defense.” He said that in a broad sense these bonds would be debts of the United States.

Mr. BROWNELL. That is for the purpose of sustaining the tax?
Senator GORE. Yes.

Mr. BROWNELL. In other words, that is under the taxing power of the United States?

Senator GORE. So they are debts so far as tax is concerned, but not debts so far as the debt limit is concerned; is that it?

Mr. BROWNELL. That is a clearly recognized distinction, so far as that is concerned.

Senator GORE. I have heard of differences without distinctions.

Mr. BROWNELL. That has a very real distinction because of the practical consequences of it.

Senator Bush. I would like to refer the chairman to what the Attorney General read about the debt limit there. It has to be issued under that section of the law if it is to be regarded as in and out of the debt limit.

Senator CASE. Mr. Chairman, I would like to ask the Attorney General to comment upon the principles involved if you say that the taxing power of the Government constitutionally may be directly and specifically used only to take care of the debt.

Then you try to classify this as sort of an extraterritorial debt some way so that you still support it without violating the constitutional limitations on the use of the taxing power.

Mr. BROWNELL. In your statement of facts there, the taxing power under the Constitution is broad enough to cover anything-debts or national defense or general welfare, those are the three classifications.

The taxing power of the United States is broad enough to cover taxes levied for any one of those objectives.

Senator Case. This may not be a fair question to ask of the Attorney General. I asked it of the Secretary of the Treasury, though; but as a matter of public policy and looking ahead to the future and to other bond issues and to other dates, is it good public policy to use the taxing power of the Government and a general levy, an excise tax, and dedicate the proceeds of that to the service of a particular bond issue?

Mr. BROWNELL. I think it is entirely a matter of the wisdom of the Congress as to whether the situation is critical enough here to warrant this kind of setup.

If you believe, as I do after reading some of the reports and testimony before this committee, that this is a pretty serious problem for the United States, then you have got to find the most practical way to solve this problem.

Senator Case. You say the most practical way. Personally I do not believe it is the only way, and I do not believe it is the most practical way; but more and beyond that, I think it is bad policy to use the taxing power and dedicate it to the service of a particular bond, because if you follow that through you put the Treasury in a straitjacket; you have a situation where you have specific revenues for specific purposes, so that your general fund would be impaired, and you would find situations where you could not turn around.


Mr. BROWNELL. There have always been instances where the Congress has done that.

Senator Case. It may be, but I think it is bad public policy.
Senator GORE. Could you give those instances, General?

Mr. BROWNELL. There is that wildlife fund that the Department of the Interior has.

Senator GORE. The duck stamp?
Mr. BROWNELL. The duck stamp is one; yes.

Senator Case. That is a direct use. This is not a direct use. That is what I challenge all the way through.

Mr. BROWNELL. You mean the corporation that does these things?

Senator Case. I mean taking a general tax on gasoline, using the general tax on gasoline, and dedicating the revenue of that primarily to the service of an Interstate System, puts a tax on all users of gasoline. It is a general tax on motorists generally, whether they ever ride

on the Interstate System or not.

Senator GORE. As a matter of fact, whether they are using gasoline in a factory, on a farm, or wherever they use it.

Senator Case. It is not a specific user tax; it is an excise tax. It has to be a general tax to be properly an excise tax, and to dedicate it to a specific use—I challenge the propriety of that.

Whereas the only person that buys the duck stamp is a guy who is hunting. He might not get any ducks, but he has the license and the stamps which give him the permission to do so.

Mr. BROWNELL. I remember the debates in the legislature when I was a member between the farm-to-market roads, the feeder roads, et cetera; and it is a serious matter of public policy.

But I do not really feel that I am competent to answer that, Senator. It is a little outside my bailiwick.

Shall I proceed then, Mr. Chairman, with that new point, which involves section 208 of the bill?

Senator GORE. Yes.

Mr. BROW NELL. That section is the one which provides that if the Secretary of Commerce determines that a State is “unable to obtain possession and the right to enter upon and use” required rights-ofway, lands, or interests in lands "with sufficient promptness," he is authorized to acquire and take possession of such property “by purchase, donation, condemnation, or otherwise.”

The cost incurred by the Secretary in taking such actionshall be payable out of the funds available to the Secretary for construction of projects on the Interstate System to the extent of 95 percent of the appraised value of such rights-of-way, or of the actual cost, whichever is lower.

The Secretary is also authorized to convey the rights-of-way, lands, and so forth, so acquired to the interested State, except that the outside 5 feet may only be conveyed to States which are able to and agree to control access.

I understand that some question has been raised by the provision authorizing the Secretary to pay up to 95 percent of the appraised value or of the actual cost. There is a constitutional obligation to pay just compensation for land taken by condemnation, not merely 95 percent. I believe that the bill was not intended to deprive condemnees of full compensation, but merely to establish a formula relating to con


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