of projects or programs for which funds have been appropriated, it is suggested that language to that effect might more appropriately be added as a proviso following the first sentence of section 3679 (c) (2), Revised Statutes, as amended. 31 U.S.C. 665 (c) (2), or as a proviso in the appropriation for each project desired to be so limited. This would not impair the authority to effect savings in appropriate cases and yet might accomplish what is intended by the bill."

The Director of the Bureau of the Budget, after referring briefly to the development of the Antideficiency legislation, points out that "the basic prohibition that 'No officer or employee of the United States shall make or authorize an expenditure from or create or authorize an obligation under any appropriation or fund in excess of the amount available therein; . . .' remains in the present Antideficiency Act. In order to insure that this prohibition may be observed, it is obviously necessary for the departments and agencies to have available to them a system for the administrative control of funds, such as that which is required by subsection (g) of the present statute. That is to say, control over the timing of the use of appropriations, and authority to establish administrative reserves, must be maintained if provision is to be madewithout exceeding the amount of the appropriation-for necessary obligations and expenditures for emergency or unforeseen purposes that may arise from time to time."

Referring to the effect of the pending bill on existing law, the Director stated:

"The enactment of this bill would obviously make it impossible for the Antideficiency Act to continue to have any real meaning or effect. The Congress has never adopted the philosophy that an appropriation should be construed as a mandate to spend ***" (citing the excerpt from House Report No. 1797, quoted above).

"This bill would have the effect of changing the concept that appropriations are not mandates to spend into a requirement that they be spent promptly regardless of any reason-however compelling-why they should not be used, or why the timing of their use should be controlled. To adopt the premise embodied in this bill, that appropriations must be fully and promptly used, would place a premium on waste and inefficiency and destroy every incentive for good management and the practice of commonsense economy. This is particularly important in times of rapid change in general economic conditions and with respect to programs and activities in which exact standards or levels of operation are not and cannot well be prescribed by statute.

"The Congress, in the major portion of its appropriations, provides for an entire fiscal year. These appropriations are usually made before the beginning of that fiscal year, and are based upon estimates prepared more than six months earlier. The conditions which determine the amount of appropriations often change during the ensuing months to such an extent that the appropriations, if fully expended as this bill would require, would result in an unnecessary burden on the taxpaying public."

The Deputy Attorney General, after reviewing briefly the major provisions of the Antideficiency Act, stated:

"It would appear that the bill would have no legal or practical effect unless its provisions (prohibiting withholding, impounding, etc.) are construed as repealing by implication the apportionment and apportionment reserve provisions of section 3679 of the Revised Statutes. This would tend to result in waste of public funds in instances in which all legislative objectives could be achieved with the expenditure of only a portion of those funds.

"Additional evidence that the Congress expects the Executive Branch to accomplish savings with respect to appropriations is found in section 2 of the Act of July 6, 1949 (63 Stat. 407; 31 U.S.C. 712b). That section provides that unexpended balances of appropriations shall lapse two years after the year or years for which the appropriations were made.

"Enactment of the bill would overemphasize appropriation acts to the detriment of other laws and would substantially disrupt or destroy the Federal financial management system developed during the entire course of this Nation's existence; and would be contrary to traditional concepts enunciated by the Congress that the Executive Branch should effect savings whenever savings are feasible."

The Department of Defense, through its General Counsel, summarized briefly the pertinent provisions of the Antideficiency Act and advised the Committee that:

"The enactment of S. 3578 would, to all intents and purposes, negate these worthwhile provisions of the statute and would have the effect of requiring that appropriations must be spent regardless of the need. To adopt the premise embodied in the bill would destroy every incentive for sound management and economy in the Executive Branch as a whole and would seriously hamper all elements of the Executive Branch in the discharge of their constitutional functions in the manner normally expected and required by the Congress as representatives of the taxpayers."

The Secretary of the Treasury reported to the Committee that:

"The bill would in effect repeal the safeguards established by the AntiDeficiency Act, as amended (31 U.S.C. 665), under which the use of appropriations is now regulated. That Act requires the apportionment of appropriated funds to prevent the necessity for deficiency or supplemental appropriations and to insure the most effective use of such funds. That Act also authorizes the establishment of reserves whenever savings are made possible by or through changes in requirements, greater efficiency of operations, or other developments subsequent to the date on which the appropriations became available. Thus, the Act prevents exhausting appropriations shortly after they are made and at the same time permits curtailing expenditures to effect savings if such curtailment is warranted in light of intervening developments. The provisions of the Anti-Deficiency Act establish guides for the efficient administration and budgeting of appropriated funds and they should be left and undisturbed." The Department of State reported to the Committee that:

"As you are aware, the compilation of regular appropriation estimates commences about a year before the beginning of the fiscal year to which the estimates apply. Even in the best of circumstances and with the most informed and intelligent planning, reprogramming of funds becomes necessary to meet changing, fluid conditions. While the Department interprets the bill as applying only to appropriations and the language of the appropriation acts, and as not applying to the budgetary justification supporting appropriation requests, which specifies function, purpose, and object of expenditure beneath the appropriation level, it appears that proper and economical management of appropriated funds would be impaired by the proposed bill.

"The Department feels that those officials of the Government having responsibility for the management of programs should consider appropriated amounts as ceilings and not as goals. If the purpose of an appropriation can be served effectively by expenditure of less than the amount appropriated, the excess over requirements should not be spent. A bill which would make it unlawful to 'prevent any moneys appropriated by the Congress from being promptly used' would appear to nullify efforts to manage efficiently and effect savings in Government expenditure."

The Secretary of Agriculture, after recommending against the enactment of S. 3578, stated:

"In the interest of sound administration of the funds appropriated by the Congress for the programs administered or supervised by this Department, responsible officials must be charged with careful planning of the use of these funds. Their plans recognize the importance of providing for contingencies, and reflect opportunities to effect savings whenever possible by or through changes in requirements, greater efficiency in operations, or other developments subsequent to the date on which the appropriation was made available. The management of appropriated funds in the Department also requires frequent review of apportionments or financial plans, at which time reapportionments may be made or reserves of funds may be established, modified, or released, as may be necessary to further the effective use of the appropriation concerned. Funds are not reserved or impounded to nullify or negate the intent of the Congress with respect to specific projects or levels of programs."

The Department of Health, Education and Welfare reported:

"It appears to us that it would be wise for the Congress to recognize the possibility of a significant change occurring in program requirements subsequent to the enactment of appropriations but prior to their full utilization, and that the Executive Branch should be authorized to give effect to such changes. There are instances where circumstances will have so significantly changed after the enactment of an appropriation that it might be unwise to proceed with the plan for which the appropriation was made available. In addition, there may be circumstances where there have developed significant cost savings

which would permit carrying out the program for which the appropriation was made available at a lesser cost than the earlier estimate. The question arises as to whether or not these funds should be placed in savings or the program expanded. We believe that the Congress would prefer that the funds normally should be placed in savings under such circumstances and that program expansion should not occur unless or until Congress approves their application to a larger program than had originally been contemplated.

"Thus, we believe that the intent of the provisions of section 3679 serves a worthwhile purpose and should be continued in force.

"While we firmly believe that it is our responsibility to carry out the programs for which appropriations have been made available in accord with the intent of Congress and we do not propose the substitution of the judgment of any officer or employee of the United States for that of the Congress, we do believe that authority should be given to the President and department heads for the orderly execution of these programs which will give effect to changing circumstances and conditions.

"We would therefore not recommend the enactment of this bill by the Congress."

The Postmaster General reported that:

"Insofar as this Department is concerned the provisions of this measure could be construed as prohibiting the Department from establishing administrative reserves of funds, which are an important mechanism in promoting the economical administration of the postal service and in assuring the continuity of its operations. The Department, with its unpredictable and uncontrollable workload, is already handicapped by the provisions of the AntiDeficiency Act (Section 3679 of the Revised Statutes, as amended) which prohibit the expenditure of funds at any time at a deficiency rate. The measure proposed would make our situation more difficult by further restricting our flexibility in financial matters.

"It is not possible to estimate the cost to the Department of the proposed legislation. To the extent that it might force unnecessary spending, as we believe it might, the cost could be substantial.

"For these reasons the Department is opposed to the enactment of this legislation."

The Administrator of General Services stated:

"It is the policy of GSA to use funds made available to it for the purposes specified in annual appropriation acts. The length of the Federal Budget cycle is such as to preclude 100% accuracy in forecasting program execution and related financial requirements. Consequently, there have been a few instances in the past where changing conditions and circumstances necessitated adjustments in programs covered by appropriations.

"For these reasons, GSA does not favor enactment of the subject bill." The Atomic Energy Commission stated that:

"Enactment of this bill would seriously impair the Commission's ability to insure sound and efficient administration of funds appropriated for its program. From its inception the Commission has operated under the principle of decentralization of management and fiscal responsibility. In a program such as ours it is not possible to program office by office, and for a year or more in advance, every dollar appropriated. Prudent fiscal management dictates that some funds be reserved to meet emergency and unforeseen requirements in order that operations may be continued through the fiscal year within the limitation of available appropriations. Furthermore, items are sometimes included in budgets and funds are appropriated therefor prior to a determination as to which Commission office will have the responsibility for such items. Uncertainties such as this make it essential that the Commission, through its fiscal officers, establish reserves or withhold funds pending necessary determinations. "In view of this the Commission feels that the power to withhold funds and to apportion funds is necessary to the proper discharge of its responsibility for the prudent and business-like management of appropriated funds. Accordingly, we do not favor the enactment of S. 3578 in its present form.

"The Bureau of the Budget has advised that it has no objection to the submission of these comments."

The United States Information Agency reported that it operates with funds from two types of congressional appropriations, an annual appropriation, "Salaries and Expenses", and a no-year appropriation, "Acquisition and Con

struction of Radio Facilities." Referring to its annual appropriation funds, the Agency stated:

"It should also be noted that during the course of fiscal year 1954 it became clear that some $2 million in savings would be realized within the annual appropriation for 'Salaries and Expenses.' (Approximately $1.5 million represented savings within the $5 million limitation for program liquidation and $.5 million in the programmed cost of moving the operations of the Voice of America from New York to Washington.) Under section 665 (c) (2) of Title 31, United States Code, the Agency requested, and the Bureau of the Budget established, a reserve of that amount. Similarly, a reserve was established at the end of fiscal year 1957 when it became clear that some $132,000 in savings would be realized. ($95,000 represented salaries earmarked for positions which were subsequently eliminated and $37,000 represented savings on a contract with private broadcasters.)

"The limitations of our experience preclude our saying more with respect to the proposals embodied in S. 3578 than that legislation ought not inhibit the careful management of public money, or the establishment of reserves to impound legitimate savings."

PROBABLE EFFECTS OF S. 3578 ON NO-YEAR APPROPRIATIONS

From time to time, the Congress appropriates sums of money to carry out programs and provides that they shall be "available until expended." Appropriations of this type, which are referred to as 'no-year appropriations", are sometimes not completely obligated for several years.

Referring to the effect of the pending bill on appropriations of this type, the Comptroller General states:

"Also, we do not know just what is meant by the language 'otherwise prevent any moneys appropriated by the Congress from being promptly used' (underscoring added). As you know, numerous appropriations in substantial amounts are made available until expended. These appropriations, commonly referred to as 'no-year appropriations', sometimes are not completely obligated for several years. The above-quoted language could be construed to require the obligation of such funds prior to the time most advantageous to the Government. For example, it might be desirable not to begin a new research and development program until some existing research or testing program is completed and the results become available. It would be desirable to clarify this language, or, at least, to explain fully in the Committee report what is intended."

The United States Information Agency expressed concern over the effect of the subject bill on its no-year appropriation covering its program relative to "Acquisition and Construction of Radio Facilities," as follows:

***** projects financed by construction funds generally require several years to complete. Therefore, programming of these funds involves setting aside funds for use in future fiscal years to insure fund availability throughout the period required to complete the construction projects."

PROBABLE EFFECTS OF S. 3578 ON OTHER LAWS

The Departments of Justice, Defense and Labor called the Committee's attention to the impact of the subject bill on other statutes.

The Department of Justice stated that:'

"Appropriaion acts have no greater dignity or effect than other laws of the United States and appropriation acts must be interpreted and carried out in context with those other laws. In fact, appropriation acts merely provide the funds necessary to carry out the provisions of other laws. For example, lump sums are appropriated to the various departments and agencies for salaries and expenses. Except for provisions imposing limitations on the expenditures of appropriations, those appropriation acts contain no specific direction or guidance concerning the expenditure of the funds made available by those acts. Consequently, the department or agency must look to the provisions of a multitude of other laws for direction and guidance. Aside from the laws which directly relate to the activity for which the appropriation was made, there are other laws which must be observed, such as the Budget and Accounting Act of 1921, the aforementioned section 3679 of the Revised Statutes, and other laws relating to budgeting, accounting, and auditing.

"It necessarily follows that the expenditure of appropriations is not a mere ministerial function, but is a discretionary function that requires the exercise of sound judgment by the Executive Branch."

The Department of Defense reported that:

"Also of concern to the Department of Defense is the impact of the enactment of the bill on two other provisions of law now in force for the Department of Defense. The first of these is section 404 of the National Security Act of 1947, as amended, wherein it is provided that 'appropriations made to the Department of Defense or to the military departments, and, reimbursements thereto, shall be available for obligation and expenditure only after the Secretary of Defense shall approve scheduled rates of obligation, or modifications thereof.' This provision was incorporated in the National Security Act as a safeguard to prevent overdrafts and deficiencies in any fiscal year for which appropriations are made.

"The second provision referred to above is currently contained in section 621 of the Department of Defense Appropriation Act for 1958. This provision which generally limits obligations of annual appropriations during the last two months of the fiscal year to 20% of the amounts appropriated for that year has been repeated in Department of Defense Appropriation Acts since 1953. Congress obviously adopted this limitation to prevent the unwarranted obligation of annual monies without regard to need prior to the end of the fiscal year. In other words, to prevent the 'year-end buying rush,' S. 3578 would be entirely incompatible with congressional intent underlying this appropriation Act provision."

The Department of Labor referred to the effect of S. 3578 on statutes under its jurisdiction, as follows:

"However, we should like to point out that, as applied to one area of concern to this Department, the language of S. 3578 appears to be excessively broad and subject to an interpretation which hardly could have been intended. Certain statutes, such as the Walsh-Healey Public Contracts Act, the Davis-Bacon Act, and the Eight-Hour Law, provide that every contract subject to any one of those laws shall contain a provision incorporating prescribed labor standards requirements into the contract. These laws further authorize the appropriate Government agency, in the event of a failure to comply with these requirements in connection with the performance of a contract, to withhold certain amounts from payments due to the contractor. Since these payments are made from funds appropriated by Congress, the sweeping language of S. 3578 might be construed as removing the present authority to withhold funds from persons contracting with the Government in cases where labor standards requirements applicable to the contract are violated.".

CONSTITUTIONAL PROBLEMS RAISED BY S. 3578

As previously noted, S. 3578 appears to raise constitutional problems relative to the exercise by the President of certain constitutional prerogatives, and to the doctrine of separation of powers.

A conflict appears to arise, particularly with respect to legislation involving the Military Establishment. Thus, although the Congress may decide that the Army, National Guard or Marines shall have a given strength, and money is appropriated for such purposes, the President, as Commander-in-Chief of the Armed Forces of the Nation may decide that these components of the Military Establishment shall have a lesser strength. This also applies to the number of naval vessels, airplanes, armories, etc.

In taking care that the laws be faithfully executed, as required by the Constitution, the President may find it necessary or desirable to defer or eliminate certain projects. S. 3578 would appear to compel their implementation promptly, despite the fact that there is no way of compelling the President to spend the money.

The Department of Justice has advised the Committee that departments and agencies must look to the provisions of a multitude of laws for direction and guidance, and must give effect to all of them in carrying out their duties. The Department states further: