« PreviousContinue »
Mr. BROWNLOW. You might get complaints, but I do not think complaints of investigation are warranted. I think that complaints of where there have been stoppages and changes in the administrative process, which is the responsibility of the administrative official, are warranted. I do not object to a little irritation on the way of investigation and audit.
Representative COCHRAN. The complaints that came to Congress of the activity of the Bureau of Efficiency were that their investigators were so numerous that it resulted in the Congress destroying or abolishing the Bureau of Efficiency.
The CHAIRMAN. Gentlemen, have we concluded this afternoon with Mr. Buck? I think in all possibility that is all, and we thank you, sir. I will confer with the House chairman and announce when the next meeting will be held. We will stand adjourned subject to the call of the chairman.
REORGANIZATION OF THE EXECUTIVE DEPARTMENTS
MONDAY, MARCH 29, 1937
JOINT COMMITTEE ON GOVERNMENT ORGANIZATION,
Washington, D. C. The joint committee met, Senator Robinson presiding.
The CHAIRMAN. The hearings lately håve dealt with that phase of the proposed legislation which relates to accounting. The President's committee and others representing that committee have expressed their views on the subject and explained the plan that is incorporated in the report and recommendation of the President's committee.
This morning we have with us representatives of the Brookings Institution, which, on behalf of the committee of which Senator Byrd is the chairman, have made a study of this subject, and I shall ask Senator Byrd, who is familiar with the state of the studies and reports by the Brookings Institution to call the witnesses.
Senator BYRD. The first witness will be Mr. Meriam.
STATEMENT OF LEWIS MERIAM AND DANIEL T. SELKO,
Senator BYRD. Will you give your position in the Brookings Institution?
Mr. MERIAM. I am a member of the staff of the Institute for Government Research of the Brookings Institution.
I will present at this time my colleague, Dr. Daniel T. Selko, and my colleague, Mr. Malcolm Merriam. We are all members of the staff of the Institute for Government Research of the Brookings Institution.
I should perhaps say a few words regarding our procedure at the Brookings Institution, which is dedicated to group research in the social sciences. To be brief, I shall use the present report of the financial administration of the National Government as an example. The primary research was done by Dr. Selko, assisted by Mr. Malcolm Merriam. They prepared a first draft of a report which was then read by almost all the members of the staff of the institute, who made criticisms and suggestions.
The recommendations were then gone over in detail in what was virtually a committee of the whole, so that they represent the result of the group think of the institute.
When we were invited to appear before your committee our group elected me to what was called the office of chief spokesman of our own institute committee, with the understanding that I should be assisted by Dr. Selko and Mr. Merriam who have done the major work. Dr. Selko is entitled to the credit for the report.
The Brookings Institution in its study of the financial administration of the National Government has found three major defects in the present system. These defects are:
(1) The budgetary system fails to provide the President with satisfactory implements for centralized budgetary and administrative management.
(2) Existing provisions for the final audit and settlement of accounts fail both to assure complete control by Congress of the collection, custody, and disbursement of public moneys and to require the preparation of current statements of the financial condition and operations of the Government as a whole.
(3) The existing financial procedure permits unnecessary delay in the liquidation of obligations, and the final settlement of accounts.
Our recommendations to overcome these defects are based on three assumptions:
(1) That the President should have adequate current financial data to enable him to exercise full managerial control over the executive branch of the Government.
(2) That there should be some effective, independent control to prevent the expenditure of public funds by administrative officers for objects, or by procedures, which are not authorized by law.
(3) That the system should be so designed that it will operate with maximum dispatch and economy.
Let us consider at the outset that second assumption, that there should be some effective control to prevent the expenditure of public funds for objects or by procedures which are not authorized by law.
The Congress of the United States has from the beginning adopted legislation designed to secure such control. In the Continental Congress and under the Articles of Confederation, the device used was to have committees of the Congress settle the accounts of the administrative officers. In the early days, after the adoption of the Constitution, a number of separate officers, each appointed by the President and confirmed by the Senate, were set up in the Treasury, each independent of the Secretary of the Treasury and each serving as a check on the others. One of these officers was the Comptroller of the Treasury.
Congress placed real control in the hands of the Comptroller of the Treasury by providing that his decisions could not be reversed by any officer in the executive branch of the Government. As time passed, the Treasury Department acquired a number of nonfiscal functions. This situation meant that the Comptroller, who was the final arbiter on matters of the legality of expenditures, was located in a great spending department. It also meant that the Comptroller, who was supposed to be sufficiently independent to exercise proper control over the legality of expenditures, was dependent upon the Executive for continuance in office. Indeed, one President is reputed to have said, "I cannot reverse a decision of the Comptroller, but I can fire
In the Budget and Accounting Act of 1921, Congress abolished the office of Comptroller of the Treasury, created the General Accounting Office with the Comptroller General as its head, and provided that although the Comptroller General should be appointed by the President for a 15-year term, he could be removed from office only by joint resolution of the two Houses of Congress, and was not eligible for
reappointment. Thus Congress provided for an independent officer, directly responsible to itself, who could prevent the final settlement of any accounts that were not legal.
Federal legislation on financial administration shows clearly that there are two types of control. The first type, administrative control, is exercised by the President as general manager of the Government to see that the laws are faithfully carried out with economy and efficiency. The second type, auditing control, is designed to prevent illegal action by administrative officers.
Administrative control involves the allotment of appropriations among legal objectives within the appropriation, and the time scheduling of appropriations to see that no deficiency is incurred. The President, or his subordinates, have full power to act within the legal limits of an appropriation and the laws prescribing procedure. But neither the President nor any of his subordinates, by virtue of the executive authority, has power to spend money for an object not authorized by law. If Congress has prescribed a legal procedure to be followed in spending for a legal object, administrative officers have no authority to act by any other procedure. They have no authority to spend more than the amount appropriated, even if both the object and the procedure are otherwise legal.
The second type of control is exercised to prevent an unauthorized transaction by the executive branch of the Government. Such control is of a distinctly different nature from managerial control, for it may even involve control of the Chief Executive.
To secure control with respect to the legality of action of administrative officers Congress has, in our opinion, the authority to provide a controlling officer responsible either to itself or to the Chief Executive. In all the years during which neither the President nor any of his administrative subordinates could reverse a decision of the Comptroller on the legality of an expenditure, the right of Congress to pass legislation making this officer thus independent of Executive control has never been so challenged that the right has been passed upon by the Supreme Court. In the absence of any definite decision by the Supreme Court, the question is one which the Congress is still free to determine for itself. We believe that Congress could well continue to provide for final settlement of accounts after audit by an independent officer primarily responsible to it. On the other hand, we believe Congress could delegate final settlement to an administrative officer completely subject to the President. If Congress should delegate the power of final settlement, however, it would obviously relinquish its own control and its ability to recover in part, if not in whole, payments made by administrative officers as the result of unauthorized transactions. It is prevented by its own act from exercising effective control over the expenditure of appropriations. In other words, if Congress should delegate the power of settling accounts to the Executive, it would allow the executive branch of the Government to audit its own accounts.
We have assumed in our report that the Congress would continue its historic policy of providing for an independent audit prior to the final settlement of accounts, for in a Government of divided powers such as ours, the power of audit prior to final settlement is one of the few devices that the elective representative legislature