1 Pursuant to acts of Feb. 24, 1938 (52 Stat. 79); Mar. 28, 1941 (55 Stat. 55); Dec. 22, 1944 2 For details of the years 1938-47, see the Combined Statement of 1947, p. 733. For details of the years 1948 and 1949, see the Combined Statements of 1948 and 1949, p. 672 and 635, respectively. 2 Building acquired by RFC Mortgage Company which was created by RFC under sec 5c of the RFC Act approved Jan. 31, 1935 (49 Stat. 3). Cochairman MADDEN. With regard to back-door spending, if that procedure were eliminated entirely would the department have to come to the Congress for appropriations from time to time to report on the progress of a program or a project Representative PELLY. Yes? Cochairman MADDEN. Let us suppose the department or person in charge of a project needed money when Congress was not in session. How would that be handled? Representative PELLY. Of course there are certain funds that are available to the President. We had a disaster in Alaska, and he used his emergency funds. The President could supply temporary funds. But I think basically the situation with regard to back-door spending borrowing is not unlike that of appropriations. Any agency of the Government is apt to run out of funds, and does run out of funds, and comes to Congress for a supplementary appropriation. I do think that in view of the fact that Congress is now in session for almost 12 months a year, it would make it unlikely that an agency of Government would not have anticipated its needs while Congress was in session-and for the short period that Congress is in adjournment, most assuredly a provision would have been made in advance. Cochairman MADDEN. Now, I notice on page 8 your tabulation of-is that the national debt for each year-page 8? Representative PELLY. No-page 8 is the tabulation of the year by year Cochairman MADDEN. I think that was page 6. That was the tabulation on the national debt. Representative PELLY. That was during the period immediately following the creation of the single committees in 1920. On page 6 it shows a 10-year period during which there was a surplus every year but one, and a total net Cochairman MADDEN. Yes. On page 20, I think it is that is the breakdown of the national debt from years 1932 to 1965, is it not? Representative PELLY. Right. Cochairman MADDEN. What was the national debt immediately following World War II? Say 1946-the national debt for that year. The gross public debt at fiscal year end. Representative PELLY. Well, the public debt in 1946 was $269 billion. Cochairman MADDEN. $269 billion. That was after the war. Representative PELLY. I am not arguing against the need for public debt, Mr. Chairman. Obviously, during wartime, we have to provide for the defense and other things. But I am indicating that we have had very prosperous times during this long period of years, and there have been very few years-only 5, I think, out of 34 yearswhen there has been a surplus. The reason may well be that Congress has consistently held Presidential budgets and programs under its control, but meanwhile the agencies of Government which are not financed through the appropriation process have not been under the same control. Cochairman MADDEN. Now, I may be wrong on this, but it is my recollection that-it is either 1944 or 1946-someplace in there our gross national debt in 1944 was $201 billion, and in 1945 $258 billion, and in 1946 it was $269 billion. A large part of that debt resulted from the war; isn't that correct? Representative PELLY. Right; I fully agree. Cochairman MADDEN. I don't know whether you have any statistics on it, but it is my recollection-and I may be wrong that our gross national product about that time was around $225 billion. Representative PELLY. Well, I would think that you are correct. And I would say that certainly there is a relationship between the gross national product and the national debt. I am not here arguing against debt. I am showing, I think, by this tabulation rather that the relationship between income and outgo over the period of years has been out of balance, and that certainly during a great many of these years we were trying to balance the budget. Cochairman MADDEN. I read in the papers the complaints about our national debt increasing. But you never hear them say anything about our gross national product, our economy, compared to 20 years ago. Representative PELLY. Well, the buying power of the dollar has changed so very much that you cannot compare a billion dollars back in 1920 with a billion dollars today. Cochairman MADDEN. That is right. But our gross national product today-Secretary Dillon, when he resigned from the Treasury, in his farewell message, predicted that at the end of 1965 our gross national product might be $665 billion. That was his prediction. Twenty years ago our gross national product was approximately $225 billion-I have not the exact figures. There is a difference of about $450 billion in our economy between then and today; $450 billion increase in our gross national product in 20 years when, as compared to 1945 or 1946, our national debt was $258 billion, and today it is $317 billion. Representative PELLY. I submit, Mr. Chairman, that the bigger it gets, the more difficult it is to control, and that while Cochairman MADDEN. That is true. I am not suggesting that we should not make every effort to keep the debt down. What I am saying is this: When you read in these magazines and newspapers about expenditures of money, they are often misleading. They never tell the American public that our gross national economy has increased $450 billion, while our national debt has increased only $70 billion. I think the public should be presented the complete picture. Do you agree? Representative PELLY. Well, it would be a wonderful thing if we could have the increase in the gross national product without the accompanying increase of the national debt, and an annual interest charge of $11 billion. Cochairman MADDEN. If some of these newspapers would come out and call the public's attention to that, they would be much better informed and not so greatly disturbed. Representative HECHLER. Mr. Chairman I wonder if the staff could put into the record a table which indicates for comparable years the rise in gross national product, the per capita debt, and thirdly, the national debt in relation to private debt and State and local debt. Cochairman MADDEN. It is so ordered. GNP, gross public debt, and per capita national debt, 1930-65 Source: U.S. Department of Commerce and U.S. Treasury Department. Cochairman MADDEN. Congressman Hechler, do you have any questions? Representative HECHLER. I want to commend Congressman Pelly for the very thorough historical research that has gone into this presentation. I think it is a magnificent statement of the case against back-door spending. I believe the material that has been compiled here will be extremely useful to the committee. There have been a number of suggestions before this committee that I want to get your reaction to. One is that appropriations be on a biennial basis rather than an annual basis. I want to get your reaction to that. Representative PELLY. Well, I think that the problem of the Appropriations Committee would be best commented on by its chairman. I am not on that committee. But I do think that in our State, in my State of Washington, we often now find a great deal of proponents for making it on an annual basis. So I think it points up this. Whether we do it on an annual or over a period of 2 years, it is going to be difficult at any time. With civilization creeping up on us to the extent that our Government is getting of necessity so involved and big, it is just a very difficult thing to keep these appropriations under control. I am not necessarily speaking against back-door spending. I am speaking for control over appropriations and expenditures. And when you reversed it in your statement, I would rather you would have stated it positively, and not have put me in the position of being a negative witness. Representative HECHLER. A second suggestion has been that Congress have split sessions-perhaps the first portion devoted entirely to appropriations, with a recess, and the second part to legislation. Representative PELLY. Well, I have discussed this with my senior Senator, Senator Magnuson, who has appropriations responsibilities in the Senate, and I know that he is a proponent of some such change, or at least maybe having Congress meet in the fall to have its hearings on appropriations, and perhaps a split session in that respect. I certainly think there can be improvements. And that is probably one of the ways in which we could do it. Representative HECHLER. A third suggestion brought before this committee by several Members has been to establish a Joint Committee on the Budget. Representative PELLY. In general, I favor that. I have thought it might be advisable for both bodies to have a joint staff to consider the level of spending. Representative HECHLER. What do you think of giving by constitutional amendment the item veto to the President, on items in an appropriations bill? Representative PELLY. I am glad you asked that question, because one time I introduced a bill, and I thought it would be a wonderful thing, because it would certainly give the Chief Executive an opportunity to economize and to eliminate spending where he felt it was not needed. On the other hand, as I have become more versed and experienced in politics, and I see the power that it would give the Chief Executive to call over some members of the legislative branch and say, "I am going to knock out your project and veto it unless you vote a certain way." I don't want to give that power to any President, Republican or Democrat. And I don't say that in any way against the present incumbent in the White House. I think it is a danger that we should never expose ourselves to. It is done in my State of Washington, and the Governor has that item-veto power. Sometimes it works and sometimes it doesn't. |