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Mr. REES. We had two groups in California. One was the legislative analyst; its analysis was an ongoing one, so that if a program was started they would go back and look at it and analyze it for the next year's budget and make recommendations.

We also had a legislative auditor. It performed more or less a GAO-type of function.

So that there were two different functions. One was a management type of analysis, the other was an accountant-type of analysis.

Mr. MATSUNAGA. You spoke of recommendations as opposed to what?

Mr. REES. What this bill does here is come up with a joint resolution. It is ironclad.

Mr. MATSUNAGA. Then it is only a recommendation as to the Congress, isn't it?

Mr. REES. Again, I would think that a recommendation by a Joint Committee of the Budget really becomes a rebuttable presumption, so that if a person wants to break that ceiling he had better come up with a pretty good idea or he is not going to manage it. At least when we start, the whole legislative process of developing a budget and developing a tax program, we begin from go, which is the May 1 resolution. We have to blame ourselves if we mess it up. But at least we start off with a specific recommendation. We know all of the problems are.

In California we used to get reports every month to let us know how much we were breaking the budget by. I was on both the tax committee and the appropriations committee. Then we tried to make adjustments within the committee because we had to have a balanced budget.

Mr. MATSUNAGA. It was made clear-I don't know if you were here or not when Mr. Ullman testified-that whatever the committees come out with would be mere recommendations to the Congress, to the separate bodies.

Mr. REES. If they are merely recommendations then this does away with your consistency requirement which I don't like, it does away with the automatic surcharge which I don't like. I think they should be recommendations. When you come up with an ironclad, joint resolution, I think it becomes counterproductive, because you have to allow the various committees the flexibilities to operate within the recommendations.

The CHAIRMAN. Thank you, Congressman, for your analysis of this legislation.

Congressman Rousselot has asked to make a few brief remarks and present his statement for the record.

STATEMENT OF HON. JOHN H. ROUSSELOT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. ROUSSELOT. Thank you, Mr. Chairman. I will ask unanimous consent to submit my statement for the record.

[The statement referred to follows:]

STATEMENT OF HON. JOHN H. ROUSSELOT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Chairman and Members of the Committee, thank you for allowing me this opportunity to appear before you today.

In summary, my testimony before you today will focus on the following points: 1. I urge the Committee to approve H.R. 7130 as soon as possible. It is my firm conviction that Federal spending must and can be controlled through the enactment of the provisions in this bill.

2. I support the concepts of H.R. 7130 requiring Congressional approval of a budget reflecting anticipated revenues and limiting expenditures before proceeding with the appropriations process.

3. Federal deficit spending has not been good for the economy, and H. R. 7130 would provide the mechanism to bring Federal expenditures in balance with anticipated revenues.

The Congress clearly recognized the need for improving its control of the current splintered budgetary procedure when it approved for enactment Public Law 92-599 creating the Joint Study Committee on Budget Control. The Joint Study Committee is to be commended for its hard work and the fine piece of legislation, H.R. 7130, that resulted.

The concepts embodied in H.R. 7130 are sound, and I strongly urge the Committee to favorably report this bill as soon as possible in order that it may be scheduled for action in the House.

Congressional approval of a budget reflecting anticipated revenues and limiting expenditures before proceeding with the appropriations process would be an important step for the Congress to take to bring Federal spending under control, and ease the burden of inflation on our Nation's citizens. It is my firm belief that Congress must bring the level of Federal spending in balance with anticipated revenues, and the provisions in H.R. 7130 would provide the mechanism to accomplish this. We can no longer ask the taxpayers to bear the brunt of the whopping deficits incurred as a result of our Congressional fiscal irresponsibility. Under the current system, Federal commitments to programs are expanding more rapidly than sources of revenue, and at a rate faster than the economy can accommodate. Most economists generally agree that the continued trend of the Government to increase spending for goods and services financed through heavy deficits, coupled with the Federal Reserve Board's creation of new money, is the primary inflationary pressure in our economy. In the column which appeared in Newsweek, January 29, 1973, Dr. Milton Friedman, University of Chicago economist and a leading monetarist, stated:

"Lower governmental spending is important primarily because we are not getting our money's worth for what the government spends. But it is important also because large deficits tend to raise interest rates, which induces people to hold less cash relative to their income and also puts pressure on the Fed to finance the deficits. If the President succeeds in holding down Federal spending, he will do the most important single thing he can to hold down inflation...."

Article I, Section 8 of our Constitution gives the Congress the power to lay defense and general welfare of the United States, and Article I, Section 9 further mandates that "No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law;". I submit that under the current system of appropriating funds without a Congressional budget limiting expenditures, and without regard to, or knowledge of, how the appropriation compares with the total appropriations for that fiscal year, we are abrogating our Constitutional responsibility. The President has found it necessary to withhold appropriated funds in order to keep down Federal spending. The Congress must assume its proper role and this can only be accomplished by enacting the provisions in H.R. 7130 which will allow the Congress to establish it own priorities and spending limitations.

We, as the elected representatives of the people, are also being negligent in our Constitutional responsibility by allowing the Federal government to go along year after year spending more than it receives in revenues, never making provisions for repayment of the public debt. Since the beginning of World War II, the debt limit has grown from $65 billion to the present $465 billion, an increase of $400 billion in just a little over three decades.

Interest is the third largest outlay by the Federal government on a functional basis. A recent Library of Congress report states that it is estimated that in FY 1974, the per capita outlay for interest will be $117. The per capia outlay for interest on an annual basis in FY 1965 was $54, which is less than half the estimate for the coming fiscal year. This rise is, of course, attributable to the increase in the public debt, which has grown from over $317 billion at the end of FY 1965 to an estimate of over $492 billion at the end of FY 1974, and which

has been accompanied by an increase in the interest rates. In this period of high deficits, we have seen the dollar devalued twice in world markets, wage and price controls imposed, and a shocking decline in our balance-of-payments position combined with rising costs in all segments of our domestic economy.

One of the major problems that has contributed to the increasing deficits is that the Congress does not consider debt increase legislation until after it has already appropriated and committed funds. The need for reversing this trend is clear if the Congress is to assert its proper Constitutional role to control the spending of tax dollars. I believe H.R. 7130 will accomplish this. Part 2 of H.R. 7130, Sec. 121(b) (2), would require that the Congressional budget reflect the overall level of Federal revenues, and the overall level of the public debt of the United States, to be associated with the overall limitation on budget outlays for the fiscal year. Sec. 121(b)(3) requires that the Congressional budget set forth the amount of the surplus or the amount of the deficit in the budget which is appropriate in light of the economic conditions. In addition, it would be appropriate for the concurrent resolution on the budget to direct that legislation be reported out raising or lowering the aggregate level of Federal revenues, and raising or lowering the limit on the public debt. H.R. 7130 also provides that the Congressional budget must be adopted before changes in revenues and the public debt limit, as well as appropriations, are made. Another important provision that impressed me in this legislation is that the bill establishes a definite and reasonable timetable for adoption by the Congress of its budget.

In recent testimony before the Ways and Means Committee on the Administration's proposal to increase the public debt limit, I urged that Committee to give prompt consideration to legislation which I have sponsored, H.R. 98, and similar proposals to provide for the systematic repayment of the existing public debt. H.R. 98 establishes a constructive method of balancing the Federal budget, and (a) would provide the Congress with regular reports by a Taxpayers' Advocate; (b) would establish that clear notice be given the Congress and the American public on the current status of the gross public debt, with a statement of the cost to the taxpayers; and (c) would provide for the reduction of the existing Federal debt on an annual basis.

Enactment of H.R. 7130, combined with the enactment of legislation reported out from the Ways and Means Committee to provide for the systematic repayment of the existing debt, in order that repayment provisions can be included in a Congressional Budget, would establish the basic framework to restore economic stability and relief for the taxpayers we represent.

I very much appreciate having this opportunity to appear before this Committee to support H.R. 7130, and to present my views on why this legislation is of such paramount importance. I urge the Committee to approve this bill in order that it may be scheduled for floor action as soon as possible.

Mr. ROUSSELOT. I favor H.R. 7130. I think it would put Congress back in the ball game of really participating in budget control instead of just complaining about it. I believe it would give us the technical equipment.

I partially disagree with my colleague from California who has just completed his comment. I think it would give us the necessity for having the data computer capability. I think it would require of us the kind of data collection that we have needed for some time to compete with the Budget Bureau and others. I feel the committee that came up with the bill is to be complimented for taking testimony from so many Members of Congress and others. I feel it is an excellent bill because it gives us deadlines.

I think that is good, setting allocations of our resources that are participated for the year. I think that is a good sign to cope with that problem. It forces us to set priorities and vote on priorities and I think that is good. Even though my colleague from California has said that it has this ironclad thing, kind of a ceiling, we can break that if we want to vote for additional taxes. I think that is good, too.

It puts us on the line as to how important we really think it is to break a line of anticipated revenues that have been anticipated at the beginning of the year.

I think it provides a good system of deciding whether we will have to have increases in taxes and it requires, I think, the concept of an additional vote of two-thirds if we are going to do that; that puts an extra demand on us to really decide whether we think it is important to do those kinds of things.

I promised very faithfully I would stay within 2 minutes. I am going to do that. I want to say I hope you will put into the floor as rapidly as you can, hopefully with an open rule, so we can debate this fully on the floor. I think this is one of the more important pieces of legislation that we have had in some time to reassume our authority for budget control. I favor it and hope you will move it to the floor as quick as you can.

The CHAIRMAN. Thank you for submitting your statement.

Are there any questions?

Mr. MATSUNAGA. How many amendments have you prepared?

Mr. ROUSSELOT. I have none. I favor the bill as it is. It does not mean I might not participate if there were additional amendments. I think the bill is well conceived. The Joint Committee did an excellent job. They went out of their way to get full input from everybody in Congress and even legislative branches around the country. That doesn't mean it is absolutely perfect. But I think it is a good effort. The CHAIRMAN. Thank you, Congressman.

[Brief recess.]

The CHAIRMAN. The committee will come to order.

Mr. MARTIN. I ask unanimous consent that Mr. Davis' statement be included in the record.

The CHAIRMAN. Congressman Davis' statement will be included in the record without objection.

[The statement referred to follows:]

STATEMENT OF HON. GLENN R. DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

Mr. Chairman, members; I appreciate this opportunity to express my views in support of H.R. 7130, the proposed Budget Control Act of 1973.

It has been my privilege to serve as a Member of the Joint Study Committee on Budget Control and I am a co-sponsor of the implementing legislation which this Joint Committee has produced, and which is now before you for your consideration.

We have been hearing a great deal about the Executive impoundment of appropriated funds, and much of what we have heard has been critical. In recent days, those of use on the House Appropriations Committee have been wrestling, in Conference, with Members of the Senate, on the problem of proposed mandatory spending provisions in individual appropriations bills. Yesterday, we passed in the House a so-called anti-impoundment bill, which, in my opinion, is totally unworkable. If Congress is to have effective, responsible control of the purse it is my view that the provisions contained in H.R. 7130 provide the appropriate vehicle. Dealing with impoundments on a piecemeal basis, on the one hand, while setting a reduced arbitrary expenditure ceiling, on the other hand, simply will not do the job that needs to be done.

There is no doubt that in the early years of operation, legislation based on H.R. 7130 will cause problems and irritations, but those propsects must be weighed against the serious problems of current irresponsibility. The constitutional right to make appropriations must be balanced by effective Congressional control of public spending.

Particularly important to the effectiveness of H.R. 7130 is the "rule of consistency" which requires that proposals which would exceed the previously fixed expenditure targets must be compensated for in a manner that will not create deficits or exceed previously accepted deficits. These compensations could be provided either through increasing revenues, increasing borrowing, or reductions in other programs of the Federal Government. The rule of consistency is the heart of proposals for a Congressional control of spending.

I would not want the proposed budget committees provided for in H.R. 7130, with a joint staff to serve these committees, to be used as the excuse for a huge legislative bureaucracy on Capitol Hill. In other words, I would not want to see us attempt to set up a legislative counterpart for the Office of Management and Budget in the Executive Branch. It is, after all, the responsibility of the Executive to propose a budget. It is the responsibility of the Legislative Branch to revise that budget in accordance with the will of the majority of the Members of the Congress.

With these major thrusts in mind, it is my hope that this Committee will expeditiously work its will and bring this legislation to the Floor of the House at an early date.

[Whereupon, at 12 noon, the committee adjourned, to reconvene Thursday, August 2, 1973.]

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