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(The committee reconvened at 3 p. m., Senator Edward J. Thye presiding.)
Senator THYE. The Chairman, Senator Aiken, is unable to join us for the moment, and so he has asked that we proceed.
I find on his schedule here that a Mr. F. J. Lawton, Acting Assistant Director of the Bureau of the Budget, is here to testify. Mr. Lawton, if you will come forward you may proceed with your statement which will make up the record.
STATEMENT OF F. J. LAWTON, ACTING ASSISTANT DIRECTOR, BUREAU OF THE BUDGET
Mr. LAwTon. Mr. Chairman and members of the committee, I have no prepared statement. This morning at the opening of the session, Senator Aiken read into the record the letter from the Director of the Bureau of the Budget which stated briefly that if the Congress saw fit to enact legislation of this character, that the President would extend his full cooperation in order that the objectives might be attained. The letter pointed out that this type of organization for the purposes of reorganization proposals had not been too successful in the past, and I believe there was some question raised by Senator Lodge this morning on that point. What we had reference to in that statement in the letter were the attempts that had been made at reorganization by commissions, starting with the Taft Commission in 1910 to 1913, a commission which was financed by an appropriation from Congress and appointed by the President. The commission made a report to the President. He transmitted that report together with recommendations, but nothing was done with those recommendations. Later on, in 1920, there was a joint committee appointed—three members of the House, three of the Senate, and later a member from the executive branch was added who was made the chairman of that committee. That committee, after revising extensive recommendations received from President Harding, submitted broad proposals to Congress, and again no action was taken. There was a joint committee created in 1936 to study the subject of reorganization. It was composed of nine members of the House and nine of the Senate. That committee developed no specific reorganization proposals of its own, but its efforts contributed to the enactment of the Reorganization Act of 1939, giving to the President the authority to propose reorganizations to the Congress which would remain before the Congress for 60 days, and unless the Congress disapproved them by means of concurrent resolution, the plans would go into effect. That, briefly, is the matter that we referred to in this sentence that past experience with methods generally similar to this would not indicate that a substantial degree of success might be expected to attend the efforts of the proposed comission. However, we are not firmly of the opinion at all that the past is necessarily a gage of the future, and for that reason the statement was made in the Director's letter that the President would extend his full cooperation. That cooperation will be extended if the Congress sees fit to enact legislation of this character. The second point that was made in the letter was that we do not believe reorganization is a one-time matter. There was an indication this morning that perhaps that was not the intention of the bill, but the language of the bill requires this commission to make a report 10 days after the opening of the Eighty-first Congress, to make a report of its findings and recommendations to the Congress, and 90 days thereafter the commission is to cease to exist. We believe that study of organization and particularly of methods must be on a continuing basis; that the Government is not static; that what you do today may not be good under changed conditions 2 years from today. For that reason, we stated that we do not believe that a one-time approach to this problem is a complete answer. That constitutes, Mr. Chairman, all the comments that I have on the bill before you. Senator THYE. You are the Assistant Director of the Bureau of the Budget. In which manner do you supervise the appropriations as made in the expenditures of the various departments? Mr. LAWTON. In the expenditure of funds we have two principal functions. One is the apportionment of the appropriations for expenditure by quarters, namely, passing on the rate at which funds are expended by quarters. - - Senator THYE. Then, if that is your responsibility, and you find a department that has its budget set up in such a manner that it will deplete the entire appropriation before the end of the fiscal year, then what power or what supervision have you over that department from a standpoint of what they do? Mr. LAwToN. We have no legal supervision over a department or establishment. The Bureau of the Budget acts as an adjunct or an office of the President, a staff arm of the President. In the case of violations of the apportionments, the only control that we would have would be to make a report to the President. However, there is a legal and penal provision attached to the incurring of a deficiency. That does not attach until an appropriation is overrun. Senator THYE. But, in other words, we will say that there are a million dollars made avilable for a certain program administered by a certain department, and that department will break it down into categories of activities and expenditures. That is, it will set up various categories of expenditures. Then, in the event that you note that that budget will deplete the fund before the end of the year, will you advise, as a Budget commissioner or Director, that that is taking place, and will you advise the President that this particular department has set up an expenditure that will deplete the appropriation before the end of the fiscal year? Mr. LAWTON. If no changes in the situation have occurred since that appropriation was made, we would probably decline to approve any apportionment on that basis. Senator THYE. Supposing you disapproved, and the director of that particular division proceeded to disregard your nonapproval of the proposed budget. Then what would take place? Mr. LAwToN. In that case I presume that we would report it to the President.
Senator THYE. You presume? Well, have you never had that experience with deficits that have been incurred in various activities? Mr. LAwToN. We have not had the case where an agency has violated the apportionment on the basis of what you might say a willful and total disregard of that apportionment. There have been cases where an agency has exceeded a quarterly apportionment. But that reduces the apportionment for the succeeding quarters. If the case is warranted by a change in conditions or a change in legislation, we would recommend supplemental or deficiency estimates to the President for transmittal to Congress. Senator THYE. But, that is done afterward? You have no means or ways of controlling it so as to avoid deficiency? The deficiency can occur, and the next step would be to recommend a deficiency appropriation to take care of the overbudgeting of a known fund for the entire fiscal year? Mr. LAwton. Well, Senator, let us get clear that ordinarily the deficiency does not occur before action of that kind is taken. When there is an indication that an action of that sort, that that sort of a situation is about to occur, then one of two things happens. The agency either must curtail or it must receive additional funds. Take the current case that exists in practically every agency. The pay act was passed at the last session of Congress and no appropriations were made for it. Agencies were required to pay at that rate. Estimates of supplemental appropriations were submitted in February by the President to the Congress. They have not been enacted yet, but those agencies, practically every agency of government that has employees subject to the Classification Act, is running at a rate higher than the original appropriation would provide, simply because the pay act increased its cost 14 percent as to the pay of its employees. Another case in point is the legislative reorganization act which was passed last year which transferred the payment of tort claims to the departments and agencies. No provision was made in appropriations for the payment of those claims. Some of the claims are due and payable, and in a sense the agencies have incurred the obligations, but they will have to wait until appropriation authority is given before actual payment is made. Of course, in any case the question of actually overrunning an appropriation is one that depends somewhat on the character of the authority. The War Department has authority to feed its troops whether the appropriation for food is sufficient or not. There are a number of other uncontrohable types of appropriations. The Department of Justice, for example, in regard to the fees of witnesses. If more witnesses are called to the various cases around the country than the Department of Justice has money to pay for in its appropriation, then it has incurred a deficiency. It cannot very well control the number of witnesses appearing or the number of cases that go before a court. And, the antideficiency act itself applies only to contingent and general expenses of departments. It does not apply to contractual obligations of departments. That is, where you have a law that sets up a contractual obligation—the Public Roads Act, for example. The minute these funds are apportioned and the program approved, you have a contractual obligation on the part of the Government. The money that is appropriated is an estimated expenditure of those funds within a year. The obligation is incurred long before any appropriation is ever made. Now, that type of thing, of course, is not controllable in the antideficiency act or through the appropriation. It is controllable only through the basic law that Congress has put on the books which says that when you make the apportionment of funds and when you approve the projects, then you have incurred an obligation. The appropriations follow later. So a single broad statement covering all cases of appropriations or overrunning of appropriations is not feasible. A great deal depends on circumstances. Senator O'ConoR. May I ask a question right there? I did understand you to say, did I not, that you look with some misgivings on this proposal as being somewhat a one-shot operation? Mr. LAwToN. That phase of it; yes, sir. Senator. O'ConoR. Do you not feel, however, that it is a very worth-while undertaking and that possibly the continuity of it or the further steps on it might be taken if and when the commission report shows the need for further action? Mr. LAWTON. Do not misunderstand me. I am not condemning the bill on that ground at all. I am simply stating that we do not believe that that is all that is needed. In other words, a one-time operation does not go far enough. Senator O'Conor. But, are you not of the opinion that there is an imperative need for such an undertaking as this in addition to other things that you might have in mind? Mr. LAwton. I think there is a need for a continuous study of Government organization and methods. Senator O'Conor. In other words Mr. LAwToN (interposing). I think there is need for change when conditions warrant change. Senator O'ConoR. In your opinion, is there not room for improvement at the present time? Mr. LAwToN. Certainly, Senator. There always is. Senator O'ConoR. But particularly so, do you not feel, in the era in which we find ourselves now just after there has been set-up— necessarily, let us assume, for the sake of discussion—a great many independent agencies and other branches of government to cope with the emergency? That now, in this time of all, there is need for a thorough-going and comprehensive study as is proposed in this bill? Mr. LAWTON. I think the need is present now, and I think the need is present to a great degree now. I think it will be present to a great degree, maybe not as great but to a great degree, 5 years from now. Senator O'ConoR. That is, of course, assuming this is not done now and done effectively? Mr. LAwToN. Even if it is done, Senator. My point is that conditions may change within 2 or 3 years thereafter which might require further steps to be taken to make additional changes. Senator O'ConoR. Do you not think that will already have been anticipated though if such a study as this is made with a continuing set-up effected that will keep abreast of developments as they go along? Mr. LAWTON. If the continuing set-up has the authority to recommend, and if there is some method—I do not suppose it can be assured, but some method—by which congressional action on those recommendations, at least congressional consideration, will be assured.
Senator O'ConoR. You made reference to, of course, the several instances dating back to 1910 in the Taft measure. Do you not feel that that really is a further argument for the adoption of such a matter as this, even though the others might have been unsuccessful? It certainly indicates the need in that part of the century and the feeling on the part of the elected representatives of the country that such a thing as this was necessary. . Mr. LAWTON. Well, of course, Senator, there have been reorganizations that have taken place in that period, but by far the bulk of them have been as the result of the legislation granting to the President authority to make studies and report to Congress and Congress to act on them. o In those cases, perhaps the impelling reason why some of the reorganization took place was that there was a requirement for action. In other words, the plans presented by the President in one instance back, under the 1933 act—March 20, 1933—became effective within 60 days. In the 1939 act they became effective within 60 days unless Congress by concurrent resolution provided otherwise. The same thing is true of the current Reorganization Act of 1945 which requires that Congress disapprove the plans by concurrent resolution within a 60-day period; otherwise the plans became effective. Those reorganizations took effect because when they were proposed there had to be positive action to stop them. Now in the other situation where it takes positive action to start them, the results have not been nearly as good. Senator HoF.Y. Mr. Chairman. Senator THYE. Yes? Senator HoF.Y. You are familiar with the legislative reorganization act passed last Congress? Mr. LAwTON. Somewhat, Senator. Senator HoF.Y. Now section 206 of this act, which is entitled “Expenditure analysis by Comptroller General,” says that the Comptroller General is authorized and directed to make an expenditure . analysis of each agency in the executive branch of the Government, including Government corporations, which would enable Congress to determine whether public funds had been economically and efficiently expended. It provided that the report on such analysis shall be submitted by the Comptroller General from time to time to the Committees on Expenditures in Executive Departments, to the Appropriations Committees, and the legislative committees having jurisdiction over legis#. relating to the operation of the respective agencies of the two OUISéS. If that were done—of course, this is a continuing thing—what would be your opinion as to the efficacy on the part of the Comptroller General if he carries that out? Mr. LAwToN. I think that provision of the law, Senator, is what you might consider an administrative audit as opposed to his present system of financial audit. He is auditing the method and manner by * inds are expended, and that is, of course, the same as a part of this bill. But it does not, as I see it, necessarily cover or is not a specific directive to suggest changes in organization or elimination of functions which are provided in this bill. It would be the same as the methods part, I think, but it would not cover this part of the bill that relates