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Executive and now into the hands of an international organization over which Congress has no control except a delegate's vote.

The CHAIRMAN. Do you think that is an admission of weakness? Mr. SMITH. It could be argued both ways. It could be argued that the development falls in line with the tendency toward international operation.

The CHAIRMAN. It could be either an admission of weakness or evidence of breadth of vision.

Mr. SMITH. It is true that congressional operations in the field of tariffs were not very desirable. There was quite a bit of log rolling, dissensions, and troubles, and it was a good thing, probably, to set up the reciprocal trade agreement program. The point I make about this is not that it went that far but that it is passing from that stage on to some international body which will be able to make directives in the future which will determine whether or not any given state shall have imports and exports and of what kind.

The CHAIRMAN. During the thirties municipal and State governments surrendered their authority to the Federal Government because they, in too many cases, adopted the attitude, "We can't handle it, it is too big for us." Isn't that one of the principal reasons why the Federal Government grew to its present unwieldy proportions? It was either inability to assume the proper responsibility or else the smaller units of government took the line of least resistance and to get rid of their problems handed them over to the larger units of government.

One reason I think we have grown so big is because the country, as a result of increased speed of transportation and other improved methods of doing business, has become smaller. But it has seemed to me lately in considering what to do about this question and in thinking of means to spread responsibility for government over more people and more units back to the smaller units of government, that there has been a reluctance on the part of the people to accept the responsibility for government that we ought to have. I have been trying to think what the trouble is, whether it lies in our system of education, whether our schools are not teaching young people that they must assume responsibility when they grow up. There is a great tendency these days for a young person, rather than to take the chance of going into business for himself when he finishes college-he just wants to get a job with one of the biggest, most wealthy corporations. It is probably outside this subject that we are on, but it is still a very disturbing situation.

Senator FERGUSON. It is the question of bigness, whether it is in business or in government.

Mr. SMITH. Yes; as a small authoritative group progressively withdraws from the people the things that are best done by the people themselves because they are closest to the problem, the people thereby become less self-reliant. It would be just the same thing in a family, if you brought up a child never to depend upon his own resources, never to do anything for himself-mother will always do it, father will always do it when the child needs anything it is always provided. If that went on to the age of majority the result would be a psychopathic case instead of a grown-up, self-reliant son or daughter. He would be unable to fend for himself under any conditions. The strength of this country formerly used to lie in the initiative and self

reliance of the people themselves and not in transferring their worries or their troubles to some group called Congress or some group called "the bureau." It used to be when people got in a tight spot they relied upon their own work and resources. But progressively, behind the centralization that is going on not only in Congress but in the Federal Government and throughout the country, we are making our people mere onlookers in the destiny of their own lives.

Senator FERGUSON. Don't you think that people have found out that it is much easier to get an appropriation in Congress than it is to do their own work?

Mr. SMITH. Maybe that is one of the causes, one of the reasons. Now I think that also you are rapidly losing control over the Senate treaty power. Executive agreements have largely taken the place of the former constitutional treaty power. In 1940 to 1944 there were 38 treaties presented to the Senate and 256 executive agreements, which is a complete reversal of what used to take place in Congress. Even if it were all right to make the transition of power-or at least the transfer of power to the executive department because of the complexity of international business, my next contention is that we are reaching a stage in our executive power where the capacity to deal with the problems in front of them is getting beyond the Executive.

I should like to read in that connection a very short editorial which was just written by Walter Lippman (Washington Post, February 10, 1948). He is speaking about our foreign policy, the commitments we have made, the implications they have, where they are leading us. I should like to put this whole editorial in, if I may, as part of the record. This is what he says:

The common factor in all these places is that, thanks to the Truman doctrine, we are losing our freedom of action. Our clients are becoming our masters. The western Germans, the governing party in Greece, the Iranian Government, the Zionists, the Arab League, and Gen. Chiang Kai-shek have been given such unqualified support so publicly that the Truman administration is constrained to follow them and cannot lead them. We must support our clients no matter what they do because we have slammed and bolted the door behind us. They know that we cannot withdraw our support without eating our words and suffering humilitation and spectacular loss of prestige.

(The complete editorial is as follows:)

TODAY AND TOMORROW

(By Walter Lippmann)

THE COSTS OF CONTAINMENT

President Truman's foreign policy is about to cost well over 20 billion dollars a year in direct expenditures. The bill for foreign aid put in by the State Department is well over 8 billions figured on a yearly basis, and there is besides the bill for many other activities in foreign relations. The bill for the armed forces is over 10 billions, not counting the additional expenditures for the proposed strategic Air Force or anything more than a first small installment for universal military training.

The disturbing thing about these costs is not the burden they impose this year. It is that they support a foreign policy in which, as it is now conducted, this rate of expenditure will increase rather than diminish.

That is because we are operating a policy of global containment, rather than one designed to induce and compel a settlement.

For a policy of holding the line all over the world requires more and more money, more and more armaments, merely to hold the line as the situation behind the line we are holding deteriorates.

During the past year it has been deteriorating in Germany, in Greece, in the whole Middle East, and in China. The deterioration is marked by the fact that as the Truman administration has increased its commitments, its diplomatic influence on events has declined.

We have assumed the whole burden of the deficit of western Germany but our control over the destiny of Germany is rapidly evaporating. We have assumed the whole burden in Greece but the prospects of our being able to subdue the rebellion or to settle it are less favorable than when we rushed in a year ago.

The whole Middle East from Iran to Iraq to Palestine to Egypt is proving once more the old rule that when great powers intervene separately and competitively in a rich and backward region of the world, the result is anarchy and violence. And in China we are about to increase our commitments at a time when our capacity to influence the course of events is approaching zero.

The common factor in all those places is that, thanks to the Truman Doctrine, we are losing our freedom of action. Our clients are becoming our masters. The western Germans, the government party in Greece, the Iranian Government the Zionists, the Arab League, and General Chiang Kai-shek have been given such unqualified support so publicly that the Truman administration is constrained to follow them and cannot lead them. Once we declared that it was a vital interest of the United States to make western Germany solvent as a bulwark against communism, or to make Greece prosperous as a bulwark against communism, or the Middle East, or China, we deprived ourselves of diplomatic bargaining power.

We must support our clients no matter what they do because we have slammed and bolted the door behind us. They know that we cannot withdraw our support without eating our words, and suffering humiliation and a spectacular loss of prestige.

The policy of containment has thus become what it was bound to become-an ever deeper entanglement in ever more insoluble difficultues. There is only one way out of it and that is by concentrating our diplomatic effort upon a settlement at some critical point. That point may be Austria. It may be Greece. It could be the Middle East. But at some deliberately selected point the stalemate must be broken decisively by that combination of pressure and compromise which is the essence of diplomacy. The important thing is to break the stalemate somewhere, and thus to change the political currents of the world. An Austrian treaty, which resulted in the military evacuation of Austria, would do that. It might well mark the turn of the tide from another war to an eventual peace. Therefore it would be worth a considerable price.

What has to be determined by diplomatic negotiation is whether the Russians mean to stay in Austria or to leave it, in other words whether an Austrian peace treaty can be had for a price; whether Austria can be ransomed. If it can be, then the cost of the ransom will be small compared with the cost of not making peace, of maintaining the armies of occupation indefinitely, of never reaching the time when Austria is independent and no longer divided under alien rule.

The worst of the Truman foreign policy is that in order to justify the enormous and mounting costs, it has been necessary to argue ourselves into the assumption that nothing can be settled. From that it is a small step to the view that nothing ought to be settled since any settlement requires concessions and compromises— and thus to acquire the habit of not looking for, of not trying to think out, ways and means of breaking the stalemate.

This habit is easy to acquire and hard to throw off. Especially as is now the case in the State Department, the habit tends to become fixed because the few men at the top who would have to direct a policy of settlement are so busy with the complicated consequences of the policy of containment that they cannot pay serious attention to the remedy for it.

Mr. SMITH. I believe that is quite true, and it is being demonstrated right at the present moment by the President's announcement that he is going to be compelled to ask for more money in the Greek-Turkish situation. The situation has gotten beyond the executive department to control. The executive department becomes a victim of the very people it is trying beneficially to serve. With more and more of what happens abroad, Congress and the executive department will have no voice in it. Decisions will be made in Greece; they will be made in China; and the United States will have to take actions compelled by what has been developing in these areas beyond our control.

Government can be extended to the point where its capacity breaks down if the authority in government has no control over the objects of its operations. That is largely what is happening now. I think Walter Lippmann shows exceeding insight into precisely the position in which we are finding ourselves. By extending the range of government beyond effective control we are loading the machinery with more than it has capacity to handle.

Now, I would like to pass on and say that we are rapidly losing control over appropriations. More than two-thirds of the $40,000,000,000 budget is now a hard core of Federal obligations. Congress cannot cut down on that hard core, without raising such a storm of popular protest that it will be compelled to restore the cuts made. Flexibility of fiscal operations on the part of Congress is reduced to the extent that two-thirds of the budget cannot be touched no matter how necessary or desirable it may be to economize.

Senator FERGUSON. In other words, the old idea of Congress having the control of the purse strings is no longer a reality.

Mr. SMITH. It is no longer a reality. We have lost control over the purse strings.

I would say that that same thing is true with regard to the executive department. They, too, are losing a large degree of control over budget-making. They cannot cut down the $5,000,000,000 of interest on Government bonds. Let them try to cut down what the veterans are getting. Let them try to cut down on other Government services; there will be such a popular storm against it that the cuts would have to be restored.

What is the implication of that? It is that conditions have reached a stage where Congress and the Executive are compelled to the extent of two-thirds of the huge annual expenditures to appropriate the funds whether it is a wise thing to do or not. No freedom of action exists. I think that is a deplorable situation for Congress to be in. It is just one of the many straws tending to show that conditions are getting beyond the capacity of the machinery to handle.

You have lost accounting control. The accounts of an increasing number of Government departments are impossible to audit. That is true of the RFC. I think you yourself found out, Senator Ferguson, that the General Accounting Office reported the accounting of the Reconstruction Finance Corporation to be in a deplorable state of affairs. There were over a million-and-some-odd dollars worth of checks undeposited in a file drawer in New York City because accounting control did not exist over those checks and determine what was to be done with them. This was only a small part of the accounting deficiency reported.

Senator FERGUSON. They didn't even know where to apply them. Mr. SMITH. Yes. There is also lack of accounting control in the Maritime Commission. There are hundreds of millions, in my opinion, in the war operations of this agency that it cannot account for, and admits that it cannot account for them. That is dealing pretty fast and loose with the taxpayer's money.

The same is true of the Federal Public Housing Authority (now the Public Housing Administration.) It was Senator Aiken's committee that reported the condition in that agency. After a very earnest attempt upon the part of Price, Waterhouse & Co., a very high-grade accounting group, to audit the books of the Federal Public Housing

Authority, the accounting firm had to give it up and state that all they could do was to make a report of the delinquencies and deficiencies in the accounts.

Senator FERGUSON. Of course, this same Government that insists that everybody else have their books in shape to audit has grown to an extent that they can't audit their books. Isn't that about what has happened?

Mr. SMITH. That's right.

Senator FERGUSON. There, again, bigness comes in.

Mr. SMITH. If a private corporation presented to the Bureau of Internal Revenue a set of books which they said they could not balance "We don't know where a million dollars of these checks are"the Government would prosecute the company's officers within 24 hours for violating the securities law, the Internal Revenue Bureau law and everything else. Yet we have erected a colossus so big and so sprawling that it no longer can take care of the money placed in its care as a public trust. I think that indicates once again that Government is so big that the capacity to deal with the matters in its jurisdiction has gone beyond its control.

The same thing is true with the Interior Department as far as the Reclamation Bureau is concerned. They have no control over their funds. It is impossible to get an accounting of the details of their obligated, unobligated, carry-over, and all of the balances they try to carry at one time in their accounting sheets. Hearings have been going on now for months to determine these details and the picture is more confused than ever.

Congress will soon pass a civil service retirement bill-it is now reported from conference-which is an excellent bill. I helped and worked on this bill in an effort to bring it within the area of prudent cost of operation. My experience demonstrates beyond any question whatever that Congress does not have the slightest idea of what the bill is going to cost over the next 20 years. No statisticians, no actuaries, none of them can give any reliable facts at all on what the bill is really going to cost. They have guesses; they have estimates based on all sorts of flexible qualifications but if you said, "How much is this going to cost out of pocket for the next 10 years," they cannot tell you. Senator FERGUSON. Hasn't it finally become one of those mandatory items that Congress will not be able to help itself on? Isn't that true? Mr. SMITH. That will be another one of those inflexible items over the next score of years which you cannot change.

The CHAIRMAN. We have them now. You were saying Congress can exercise control over only one-third of our annual expenditures. I think that is a very high estimate. You realize there is an amount of several hundred million dollars a year in railroad retirement payments and social security payments, which are considered as Government expenditures. Refunds on taxes come each year. That is an inflexible amount. I think you will find you can reduce your onethird to no more than 20 percent over which Congress actually has much control, to the extent that it can vary those appropriations substantially up or down.

Mr. SMITH. That's right, sir.

The CHAIRMAN. I think it would be nearer 20 percent than 33% percent in the final analysis.

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