REORGANIZATION PLAN NO. 1 OF 1949-PROVIDING FOR A DEPARTMENT OF WELFARE THURSDAY, JULY 21, 1949 UNITED STATES SENATE, COMMITTEE ON EXPENDITURES IN The committee met at 10 a. m., pursuant to call, in room 357, Senate Office Building, Senator John L. McClellan, chairman, presiding. Present: Senators McClellan (chairman), Eastland, Long, Ives, Smith, and Schoeppel. Present also: Walter L. Reynolds, chief clerk. The CHAIRMAN. The committee will come to order. We begin hearings this morning on the President's Reorganization Plan No. 1, which has been transmitted to Congress by authority of the Reorganization Act of 1949. Beginning Monday, the committee will hold hearings on Reorganization Plan No. 2. However, some of the witnesses we shall hear this morning would also desire, I believe, to give testimony concerning Reorganization Plan No. 2, and in order to accommodate these witnesses and save them from having to make a trip back to the committee again and testify next Monday, we will probably hear their statements with reference to plan No. 2 this morning. At this point I would like to have printed in the record a copy of the President's message of transmittal and also plan No. 1, which the committee is considering. (The message of transmittal and Reorganization Plan No. 1 are as follows:) [H. Doc. No. 222, 81st Cong., 1st sess.] MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING REORGANIZATION PLAN No. 1 OF 1940, PROVIDING FOR A DEPARTMENT OF WELFARE To the Congress of the United States: I transmit herewith Reorganization Plan No. 1 of 1949, prepared in accordance with the provisions of the Reorganization Act of 1949. This plan will provide for a Department of Welfare to take its place among the principal executive departments of the Government. This new Department will perform the functions and conduct the programs now administered by the Federal Security Agency. Responsibility and authority for the administration of these programs will be vested in the Secretary of Welfare. The creation of a Department of Welfare is long overdue. President Harding first recommended to the Congress the establishment of such a department in 1923. In 1937 President Roosevelt's Committee on Administrative Management likewise recommended the establishment of a Department of Social Welfare. More recently, the Commission on Organization of the Executive Branch of the Government has recommended the ceration of a department to administer the social security and education functions of the Federal Government. 1 The foundation for the Department of Welfare was laid in 1939 with the establishment of the Federal Security Agency. With respect to this action the Senate Committee on Expenditures in the Executive Departments stated in its report on the Reorganization Act of 1949 that "the Federal Security Agency should have been designated an executive department" at the time of its ceration; but the Reorganization Act then in effect did not permit such action. A second step was taken by Reorganization Plan No. 2 of 1946, which transferred additional related activities to the Federal Security Agency and strengthened its internal organization. Again, the Reorganization Act then in effect did not authorize the designation of the Agency as an executive department. However, I stated in my message accompanying that plan: 66* * * but, while this step is important in itself, I believe that a third step should soon be taken. The time is at hand when that agency should be converted into an executive department." Since then I have several times proposed that the Federal Security Agency be made an executive department. The central purpose of the Federal Security Agency is the conservation and development of the human resources of the Nation. Plainly, as I stated in my message transmitting Reorganization Plan No. 2 of 1946: "The size and scope of the Federal Security Agency and the importance of its functions call for departmental status and a permanent place in the President's Cabinet." In number of personenl and volume of expenditures it now exceeds several of the existing executive departments. The range of its programs and the significance of their impact upon national development obviously entitle it to a place in the highest rank of Federal organizations. On May 9 of this year, when it appeared probable that the reorganization legislation would not permit the establishment of a new department, I urged the Congress to enact a measure creating a Department of Welfare. Since that restriction was later eliminated from the bill and the Reorganization Act of 1949 authorizes the establishment of an executive department, I have concluded that the reorganization-plan procedure affords the simplest and most expeditious method of creating a Department of Welfare. In order to improve the administration of the Department, the plan consolidates in the Secretary of Welfare the functions now vested in the various officers and units of the Federal Security Agency and authorizes him to delegate their performance to appropriate officers and units of the Department. Thus, it carries out two of the cardinal recommendations of the Commission on Organization of the Executive Branch of the Government, namely, that the department heads should control and have full responsibility for the conduct of their departments and that they should have authority to organize their departments. Such authority will enable the Secretary to work out the most effective distribution of the work of the Department and will contribue both to efficiency and economy in administration and to the convenience of State agencies and the public in dealing with the Department. After investigation I have found and hereby declare that each reorganization included in this plan is necessary to accomplish one or more of the purposes set forth in section 2 (a) of the Reorganization Act of 1949. I also have found and declare that by reason of these reorganizations it is necessary to include in the plan provisions for the appointment and compensation of a Secretary of Welfare to head the Department of Welfare and of an Under Secretary and three Assistant Secretaries to assist him in the proper performance of the heavy duties involved in the direction of the Department. In In submitting this reorganization plan, I am fully aware of the recommendations of the Commission on Organization of the Executive Branch of the Government with respect to the various units of the Federal Security Agency. Among these are proposals for certain transfers to or from other agencies. Reorganization Plan No. 2 of 1949, which I am transmitting today, I am providing for one of the most important of these transfers. The other proposals are currently under study, but final conclusions have not yet been reached with respect to them. The establishment of the Department of Welfare will effectuate the one recommendation of the Commission on Organization of the Executive Branch of the Government for the creation of a new executive department. It will not in anywise interfere with the presentation of additional reorganization plans with respect to other recommendations of the Commission in this field or with the ability of the Congress to deal with any of them by statute. The reorganizations included in this plan will provide for greater flexibility of internal organization, clearer responsibility, and more effective administration of the functions of the new Department. The benefits in improved service and lower costs will flow from the administrative actions made possible by the plan rather than immediately from the plan itself. Over a period it is probable that substantial reductions in expenditures will result in comparison with those which otherwise will be necessary, but it is not practicable at this time to itemize such reductions. The creation of a Department of Welfare represents a sound and muchneeded step in the improvement of Federal organization. It provides appropriate recognition for the related and highly important functions which the Government carries on to advance the welfare of its people. I urge that the Congress allow this reorganization plan to become effective. THE WHITE HOUSE, June 20, 1949. HARRY S. TRUMAN. REORGANIZATION PLAN No. 1 OF 1949 Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, June 20, 1949, pursuant to the provisions of the Reorganization Act of 1949, approved June 20, 1949 DEPARTMENT OF WELFARE SECTION 1. Department of Welfare.-The name of the Federal Security Agency is hereby changed to "Department of Welfare" and such Department is hereby constituted an executive department. SEC. 2. Secretary of Welfare. (a) There shall be at the head of the Department of Welfare a Secretary of Welfare, who shall be appointed by the President by and with the advice and consent of the Senate and receive compensation at the rate of $15,000 per annum or such other compensation as shall after the date of transmittal of this rorganization plan to the Congress be provided by law for the secretaries of executive departments. (b) All of the functions of the Department of Welfare and of all officers and constituent units thereof, including all the functions of the Federal Security Administrator, are hereby consolidated in the Secretary of Welfare. (c) The Secretary of Welfare is authorized to delegate to any officer or employee or to any bureau or other organizational unit of the Department designated by him such of his functions as he deems appropriate, except that the function of promulgating or approving regulations may be delegated only to the Under Secretary or an Assistant Secretary. (d) Pending the initial appointment hereunder of the Secretary of Welfare, but not for a period exceeding sixty days, the Federal Security Administrator in office immediately prior to the taking of effect of the provisions of this reorganization plan shall be Acting Secretary of Welfare. He shall, while serving as Acting Secretary, receive the compensation of Secretary of Welfare. SEC. 3. Under Secretary and Assistant Secretaries of Welfare.-There shall be in the Department of Welfare an Under Secretary of Welfare and three Assistant Secretaries of Welfare who shall be appointed by the President by and with the advice and consent of the Senate and each of whom shall perform such duties as the Secretary shall direct. The Under Secretary (or, during the absence or disability of the Under Secretary or in the event of a vacancy in his office, an Assistant Secretary designated by the Secretary) shall act as Secretary during the absence or disability of the Secretary or in the event of a vacancy in the office of Secretary. The Under Secretary and the Assistant Secretaries shall each receive compensation at the rate of $10,330 per annum or such compensation as shall after the date of transmittal of this reorganization plan to the Congress be provided by law for the Under Secretaries and Assistant Secretaries, respectively, of executive departments. SEC. 4. Abolition of offices.—(a) The office of Federal Security Administrator is hereby abolished. (b) The office of Assistant Federal Security Administrator is abolished as of the time that the first Under Secretary of Welfare is appointed, or sixty days after the taking effect of this reorganization plan, whichever shall first occur. (c) The two offices of assistant heads of the Federal Security Agency (provided for in section 5 of Reorganization Plan No. 2 of 1946 (60 Stat. 1095)) are abolished as of the time that an Assistant Secretary of Welfare is first appointed, or sixty days after the taking effect of this reorganization plan, whichever shall first occur.1 The CHAIRMAN. This morning we are scheduled to hear three witnesses, the Director of the Budget, Mr. Pace, the Federal Security Administrator, Mr. Ewing, and also Col. George E. Ijams, Director of the Rehabilitation Service of the Veterans of Foreign Wars of the United States. The committee will hear Mr. Pace, the Director of the Budget, first. Mr. Pace, will you come around, sir? STATEMENT OF FRANK PACE, JR., DIRECTOR OF THE BUREAU OF THE BUDGET, WASHINGTON, D. C. Mr. PACE. May I have the privilege of bringing some of my staff up with me, Mr. Chairman? The CHAIRMAN. Of course. Bring your staff with you, and identify them, if you will. I know Mr. Lawton. Mr. PACE. This is Mr. Lawton. Mr. Levi is here, Mr. Atkinson over here, and Mr. Stauffacher is coming up now. The CHAIRMAN. You have a prepared statement on plan No. 1? Mr. PACE. I do, Mr. Chairman. The CHAIRMAN. Do you wish to read it, or do you wish just to submit it for the record and testify as to the highlights of it? Just proceed according to your wishes. Mr. PACE. I think that most of the points that I might make verbally I will make in this prepared statement, which is not unnecessarily long; and if it does not burden the committee I would like the privilege of reading it. The CHAIRMAN. It will not burden the committee at all. Mr. PACE. As this is my first occasion to appear before the committee, I would like to state first that it is a pleasure to appear before the chairman and the members of this committee. The CHAIRMAN. I may say for your information that we have had members of your staff here before the committee heretofore, and they have been most cooperative and very helpful. I can say that on behalf of all the committee. Senator LONG. As a matter of fact, Mr. Pace, it is sort of hard to tell which is our staff and which is yours, because we have seen Mr. Lawton here so much. Mr. PACE. Well, that is most pleasant for me to hear, of course. The CHAIRMAN. All right. You may proceed, Mr. Pace. Mr. PACE. Mr. Chairman and members of the committee; Reorganization Plan No. 1 of 1949 converts the Federal Security Agency into a Department of Welfare and improves its top administrative structure. The first section of the plan changes the name of the Federal Security Agency to Department of Welfare. Section 2 provides for a Secretary of Welfare to be appointed by the President with the advice and consent of the Senate. In order to fix responsibility and clarify lines of authority, it also consolidates in the Secretary the 1S. Res. 147, a disapproving resolution on Reorganization Plan No. 1, was introduced July 29, 1949. See p. 105. functions of the various officers and units of the Federal Security Agency, and authorizes him to delegate functions to subordinates. Section 3 creates an Under Secretary and three Assistant Secretaries. appointed by the President subject to confirmation by the Senate, and section 4 abolishes the offices of the Federal Security Administrator, the Assistant Administrator, and two so-called assistant heads of the Agency. The creation of a Department of Welfare, as provided by this plan, will accomplish an improvement in Federal organization which has been repeatedly recommended in the last 30 years by Presidents, special commissions, and students of government. President Harding proposed the establishment of such a department in a message to the Congress early in 1923. A similar recommendation was made by the Joint Committee on Reorganization the following year. While the reorganization orders submitted to the Congress by President Hoover in 1932 did not set up a separate Department of Welfare, they did group in one of the existing departments the principal agencies concerned with education, health, and welfare. In 1937, both the President's Committee on Administrative Management and the Brookings Institution in its report for the Senate Select Committee to Investigate the Executive Agencies of the Government recommended the creation of a Department of Welfare to administer these functions. Altogether, out of eight comprehensive plans for the reorganization of the executive branch developed by responsible officials and agencies within the last 30 years, six have concentrated the functions as to education, health, and welfare in a single department-five of them in a new department devoted exclusively to these activities-and the other two plans have provided a new department in charge of the greater part of these functions. In providing for a Department of Welfare, the plan does what undoubtedly would have been done when the Federal Security Agency was created in 1939 had not the Reorganization Act of 1939 specifically forbidden the creation of executive departments by reorganization plan. It has long been recognized that in practice the Federal Security Agency is a department in virtually all respects except in name and official status, and that the failure to give it its appropriate title and rank is anomalous and unfortunate. By any test the Federal Security Agency is of departmental magnitude and importance. It has more than 35,000 employees and total annual expenditures of more than $2,000,000,000. Thus, it outranks three departments in size of personnel and a majority of the civil departments in expenditures. Excluding payments for grants-in-aid and insurance benefits, it still exceeds several departments in volume of expenditures. Judged by the nature and scope of its programs, the Federal Security Agency likewise merits Cabinet representation and a place in the highest rank of executive agencies. Its functions are among the most basic performed by the Federal Government including as they do the principal national activities for improving the health, education, and social security of the entire population. No agency of Government has a more vital impact on the lives and well-being of the people. |