as proposed, what would the estimated savings and interest changes to the Commodity Credit Corporation be in 1966 and 1967?

Mr. GRANT. I have not projected that beyond 1965, where we estimate the savings would amount to $172 million. I would say that it would be somewhere in the neighborhood of $200 million, roughly in 1966.

Mr. MICHEL. Would the effect of this proposal, the interest-free borrowing, be to lower the new obligational authority-the obligational authority for CCC for the first couple of years, during which time it can request additional funds to make up for the deficits and the reimbursements requested for 1965?

Mr. GRANT. It would have the effect of reducing the appropriations requested for the Corporation, not only for the first couple of years, but for each year.

Mr. MICHEL. In future years?

Mr. GRANT. Yes as long as it were continued.

FEED GRAIN LEGISLATION

Mr. MICHEL. Is it assumed that if there were no significant changes in legislation for major farm commodities this year, that the cost to the Commodity Credit Corporation would be higher by several hundred million dollars?

Mr. GRANT. I am sorry. I want to be sure I understand your question. If we assumed

Mr. MICHEL. That there were no significant changes in legislation for major farm commodities this year, the cost to the Commodity Credit Corporation would be more. Is that correct?

Mr. GRANT. Yes; there would be increased expenditures by the Corporation. The President's budget proposes legislation with respect to the cotton and dairy programs which, if enacted, would reduce expenditures by some $230 million, and these are reflected in the $5.8 billion expenditure projection for 1965.

If the legislation is not enacted, the expenditures would go up accordingly.

Mr. MICHEL. If you don't have it in capsule form, could you supply it for the record, Mr. Grant, the estimated cost of the feed-grain program for the 1964 crop year in terms of price support loans, price support payments, diversion payments, and administration?

Mr. GRANT. Yes.

(The material requested follows:)

Price support loans..
Price support payments.

Diversion payments.-

Administrative expenses-

Millions

1 $414

374

755

32

1 It is estimated that loan repayments will total $168,000,000.

CROPLAND CONVERSION PROGRAM

Mr. MICHEL. In the cropland conversion program, does this program include authority to contract commitments of expenditure in advance of the appropriation of funds?

Mr. GRANT. The law so provides; yes, sir.

Mr. MICHEL. What is the limitation?

Mr. GRANT. The limitation in the present law is $10 million in each calendar year.

Mr. MICHEL. You would feel in the Department of Agriculture that you have no authority whatsoever to exceed that figure?

Mr. GRANT. Not under existing law; no, sir. Legislation has been proposed to increase that limit from $10 to $50 million for calendar years 1964 and 1965.

Mr. MICHEL. Is that reflected in the budget?

Mr. GRANT. Yes.

ANALYSIS OF BUDGET

Mr. MICHEL. Mr. Grant, the 1964 budget estimate, including new obligational authority, is at a figure, I believe, of $7,264,900,000. Mr. GRANT. That is right.

Mr. MICHEL. And for 1965, that figure, according to your prognostication, should be $5,995,952,000?

Mr. GRANT. I have a figure of $5,956 million. It is pretty close. Mr. MICHEL. Let's use your figure.

Mr. GRANT. I can reconcile them.

Mr. MICHEL. Or a change then of $1 billion-a reduction of whatever that net figure would be.

Mr. GRANT. Approximately $1.3 billion.

Mr. MICHEL. It would seem to me that adjustments as follows would be appropriate: That in Commodity Credit Corporation, reimbursements to include contract authority should show an increased amount of $599,932,000; that CCC's reimbursement in new obligational authority should reflect an increased figure of $930,900,000; that in the area of REA loan authorization it ought to reflect an increase of $347 million; and that in FHA rural housing insurance fund, here I would subtract, possibly, $103 million; and that in the cropland conversion program, where in 1964 it shows an increased figure of $14,350,000, that that ought to read $17 million; and that in meat inspection an increase of $30,837,000; in poultry and other inspection an increase of $18,635,000; and that a removal of surplus agricultural commodities under the special milk program, an increase of $99,831,000, or, in other words, a total increase figure of $1,941,135,000.

When I look at these figures, I get a total figure over and above what we have in 1964. I would like to have you comment on those figures in a moment.

The figures, Mr. Grant, which I have given you contain the major adjustments that in my opinion should be made to the budget estimates to more accurately reflect the change in new spending authority requested for 1965. These adjustments (1) delete budget assumptions in respect to proposed changes in substantive legislation; (2) correct for postponement of obligations properly due in 1965; and (3) correct for misleading accounting procedures which serve only to lower the 1965 new obligation authority figure.

As a result, the new spending authority for 1965 exceeds 1964 by more than $600 million instead of a reduction of $1,200 million, as the Department so says.

Mr. GRANT. All right, sir.

(The following was submitted for the record:)

Following are comments on each of the items mentioned:

(1) Commodity Credit Corporation.-The amount of $599,932,000 shown on page 180 of the 1965 budget as "Appropriation to liquidate contract authorization" is involved in the distinction between the concepts of "new obligational authority" and "appropriation." CCC has obligating authority under the laws which govern its operations, but its borrowing authority is limited to $14.5 billion which can be outstanding at any one time. However, the Corporation may, from time to time, incur necessary obligations in excess of its borrowing which do not require immediate cash outlays. These obligations or commitments include such items as purchase agreements, letters of commitment to banks, feed grain and wheat certificates, etc. In order that the Corporation will have sufficient operating funds, appropriations are requested each year to reimburse CCC for realized losses. The 1965 budget requests an appropriation of $1,724 million for this purpose. Of the appropriation of $1,724 million, it is estimated that $599.9 million will be used to liquidate prior-years commitments. This $599.9 million

is not new obligational authority in 1965, since it will be used to pay obligations incurred in prior years. The remaining $1,124.1 million is new obligational authority.

The $930.9 million represents the portion of the fiscal year 1963 realized losses which would not be restored by the appropriation requested for 1965. The 1965 estimate of $1,724,000 is on the basis of requesting restoration of CCC realized losses only to the extent needed to provide operating funds for the Corporation in 1965. Since the intent is to provide only the funds needed to commitment by the Corporation in 1965, the estimate does reflect the additional spending authority required as best it can be estimated at this time. There are also other unrestored losses of prior years; namely, $100 million of 1962 losses and $1,057 million of the inventory revaluation adjustment made in 1961.

(2) Rural Electrification Administration loan authorization.-The 1965 budget reflects an estimated decrease of $347 million which could be made in the loan authorization requested for REA if proposed legislation to establish a direct loan account were approved by the Congress. Collections on loans beginning in the fiscal year 1964, would be deposited into this account and used to make additional loans to the extent approved by the Congress in annual appropriations acts.

In order to provide as completely as possible the outlook with respect to the Government's fiscal situation, the budget submitted by the President customarily includes information showing the financial impact of legislation proposed by the administration. These proposals are included in the budget, and separately identified, as items proposed for later transmittal. Actual estimates are not submitted for action of the Congress until such time as the basic legislation is finally approved. Failure to include in the budget any information on the cost effect of the legislative program would mean that the budget would not fully show the financial impact of the legislative proposals of the President.

(3) Insured rural housing loans.-The budget indicates that an additional $103 million would be requested if proposed legislation to provide for an insured rural housing loan program is approved. This is another instance where the actual estimate will not be submitted until the legislation is passed.

(4) Cropland conversion program.-Under existing legislation this program is limited to $10 million a year. Proposed legislation would provide for a $50 million program annually. The budget indicates that the adoption of this legislation would increase new obligational authority by $40 million in 1964 and 1965. Estimates for the additional appropriations required will not be submitted, however, until the legislation is approved.

(5) Meat and poultry inspection.-The budget indicates that legislation will be proposed to place meat and poultry inspection on a self-financing basis by charging fees for the services performed. If this legislation is approved, the appropriations for these services could be eliminated. The pending estimates include funds for Federal financing of these inspection services on the existing basis.

(6) Special milk program. The budget provides for the transfer of $99.8 million from section 32 funds for this program. From 1956 through 1962 the special milk program was financed by Commodity Credit Corporation funds. In 1963 and 1964 a direct appropriation was made. It has been determined that section 32 funds can be used for this program in 1965. This results in a reduction in total appropriations and new obligational authority for the Department. This change will not affect operations under the special milk program.

FUNDS AND PERSONNEL FOR AREA REDEVELOPMENT WORK AND CIVIL DEFENSE FUNCTIONS, 1963-65

Mr. WHITTEN. Mr. Grant, at this point in the record will you insert tables showing funds and personnel for fiscal years 1963, 1964, and 1965, for Rural Area Development work (including transfers from ARA), and civil defense functions throughout the Department. (The material requested follows:)

Appropriations specifically for Rural Areas Development

[In addition to the amounts reflected in this table, appropriations for the ongoing programs of the various Department agencies will support rural development and land use adjustment activities]

Authority to make insured loans for rental housing for the elderly will expire June 30, 1964, but extension of this program is being proposed.

Man-years shown where applicable. Loan and other program funds do not cover personnel employ

ment.

NOTE. In addition to the above, rural housing building loans to farm and nonfarm rural residents were $183,000,000 in fiscal year 1963 and are estimated to be $122,000,000 in 1964, and $355,000,000 in 1965 (assuming enactment of an insured rural housing loan program).

Funds transferred from Area Redevelopment Administration, Commerce, fiscal years 1963, 1964, and 1965

1 Distribution is about 50-50 between Washington and the field service.

2 Amount available through Feb. 18, 1964. Not determined.

Man-years and obligations incurred for civil defense activities under funds received from the Office of Emergency Planning, fiscal year 1963, amounts available in 1964, and budget estimates, 1965