every form of abuse of the rules so long as it was in substantial agreemen with the purpose. We must assure through hearings such as these that a similar acquiescence not be made in the area of domestic affairs. The power of the purse-the power of Congress to determine the expenditure of public money, the money of America's taxpayers— must be preserved if we are to preserve the fundamental balance between the legislative and executive branches. What was tolerated in the foreign and military areas where facts were few, expertise limited and differences dangerous is not likely to be accepted at home even in an atmosphere of harmony. Let us make clear that Congress will not sit idle and watch its domestic authority slip away. We are here addressing ourselves to the role of Congress and of the Executive in the spending of appropriated funds. The question goes to the very lifeline of our government. The Constitution clearly delegates sole authority to Congress to raise and expend money. But what is the role of the Executive in the context of its responsibility to execute the laws and its inherent duty to have an efficient, effective, and orderly government? The Executive must have some opportunity to fulfill its objectives, for as we know, it must suffer the political burden for any failure. These are fundamental questions-hard questions which must be answered, when we consider when and under what circumstances the Executive can play an independent role in the appropriation process. Three separate classes of cases come to mind: A standard authorization and appropriation, a mandatory appropriation, and the appropriation of unrestricted funds for "revenue sharing." Illegal impoundment takes place when the Executive holds up-impounds— money the Congress clearly directed to be spent. If language is permissive not mandatory-where we give the President the discretion to impound or build reserves-we then cannot be surprised at the Executive for the exercise of that discretion. We are on notice from previous experience and could have acted differently to prevnt repetition. We cannot allow, however, the President or the executive branch to have an informal line item veto of appropriated money which cannot be overridden by the Congress. This is in effect to impound declared congressional policy and threaten Congress' very existence. This is clearly in violation of the spirit and intent of our Constitution. There are certainly instances when in the name of efficiency of Keynesian management of the economy the executive branch would decline to spend certain appropriated moneys. It would just not make good business sense to do otherwise. But where efficiency ends and infringement begins is a very thin yet fundamental line. Perhaps we should consider a formal line item veto with provisions for congressional review and authority to override the President's objections. Some consideration of this possibility would not be inappropriate to this hearing. The practice of impoundment is not an exclusive characteristic of any administration. Executives of both parties have been guilty. Impoundment has become a tradition-an incidental benefit and power to the Executive within the mushrooming growth of the executive branch. Impoundment affects us all. It affects the quality and integrity of Government as well as the implementation of the needed programs which have been specifically approved by Congress. In the State of Maryland, for example, recent Federal impoundment has caused harmful results in housing and education. As we approach the concept of revenue sharing, it is particularly timely to inquire into the role of the Executive in the appropriation process. Billions upon billions of dollars, Mr. Chairman, may be passing through the executive branch on their way to the States. It is important that these hearings lay the ground rules for the participation of the executive branch. Revenue sharing cannot tolerate revenue impoundment. If Congress ever authorizes revenue sharing without this clear understanding with the Executive, it will have sounded, I think, its own death knell. If Congress delegates the power of the purse to a President by authorizing him to appropriate Federal revenues or withhold them at his sole discretion, then the purpose of Congress as an institution would have become obsolete. And, Mr. Chairman, I speak in this way as both a cosponsor and as a friend of revenue sharing. Mr. Chairman, opposing points of view are being advanced as to the authority, right, and jurisdiction of both the Congress and the executive branch in the area of appropriations. I hope we do not make this mere academic exercise for it must be clearly understood that all rights must be qualified in the public interest. Also, I sincerely hope that this subcommittee makes strong legislative recommendation to remedy the problem. We must act now to preserve the balance of power. Senator ERVIN. I want to commend you on this statement and say that I am delighted that one of our new members, Senator Gurney of Florida, is with us here today. Senator, we will be glad to hear any statement you wish to make at this time. Senator GURNEY. I do not have one at this time. Senator ERVIN. We are glad to have you with us. Senator ERVIN. The counsel will call the first witness. Mr. EDMISTEN. Mr. Chairman, we are delighted to have with us Mr. Caspar Weinberger, Deputy Director of the Office of Management and Budget. He will introduce the gentleman with him. STATEMENT OF CASPAR W. WEINBERGER, DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET; ACCOMPANIED BY SAMUEL M. COHN, ASSISTANT DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET (BUDGET REVIEW) Mr. WEINBERGER. Mr. Chairman, Samuel Cohn, Assistant Director of the Office of Management and Budget in charge of our Budget Review Divisions, is accompanying me here this morning. We will have a short statement to present to the subcommittee if you would like to hear it at this time. Senator MATHIAS (presiding). We are very happy that you could be with us this morning. We would like very much to have your statement. Mr. WEINBERGER. Thank you, sir. I hope I will be able to go into and describe to you the general views of the Office of Management and Budget, because this is an area in which we have been delegated a significant role by the President. I think that it would be most helpful to the subcommittee if I began by discussing in general terms what the power of the executive branch is in spending or not spending appropriated funds and the sources of that power in law and the Constitution. Then, if the subcommittee has particular questions on anything. I will be happy to answer them. Any discussion of the respective powers of the legislative and the executive branches regarding the spending power should begin with a reference to the clear and succinct provision in section 9 of article I of the Constitution that "No money shall be drawn from the Treasury, but in consequence of appropriations made by law ***" It does not follow from this, however, that the expenditure of government funds involves an exclusively legislative function; in fact, the provision I have just quoted seems to assume that the expenditure of funds as distinguished from the granting of authority to withdraw them from the Treasury-is an executive function. In any event, it has always been so regarded. The prohibition against withdrawing funds from the Treasury without a law appropriating them is essentially negative in character. No more than the Congress approves may be spent. It is perhaps this character of phrasing which has given rise to the view that a law appropriating funds is permissive and not mandatory in nature. This thought has been expressed in various ways in recent times. In 1943, the then Senator Harry Truman observed that When the Congress appropriates funds it gives the Executive Branch an authority to incur obligations. Certainly none of us hold that we give a mandate to expend the funds appropriated. We expect the funds to be used only where needed, and not in excess of the amount appropriated. to carry out some phase of law. (89 Cong. Rec. 10362). Again, as the Committee on Appropriations pointed out in 1951— H.R. No. 1797, 81st Cong. Appropriation of a given amount for a particular activity constitutes only a ceiling upon the amount which should be expended for that activity. The administration officials responsible for administration of an activity for which appropriation is made bear the final burden for rendering all necessary service with the smallest amount possible within the ceiling figure fixed by the Congress. ... More recently, in an opinion of February 25, 1967, then Acting Attorney General Clark referred to the above-quoted statement of the House Appropriations Committee as a "classic exposition" of the proposition that an appropriation act in itself does not constitute a mandate to spend, and he went on to say that "An appropriation act places an upper and not a lower limit on expenditures." Much earlier, in a letter to Senator Russell in 1942, President Roosevelt had said: ... the mere fact that Congress, by the appropriation process, has made available specified sums for the various programs and functions of the Government is not a mandate that such funds must be fully expended. What is the basis in law for this view so commonly held? Under what circumstances may the executive branch spend less than the total sum appropriated by the legislative branch? Perhaps the most explicit authority for withholding appropriated funds is section 3679 of the Revised Statutes-the so-called "Antideficiency Act" (31 U.S.C. 665). Since the turn of the century, this statute has required that appropriations be subdivided so as to insure that agencies will not enter into commitments in excess of the amounts appropriated. In 1950, the law was strengthened by the addition of provisions for central mangement of appropriations of the executive branch. These provisions include the authority to establish reserves in particular circumstances to: (1) Provide for contingencies, and (2) Provide for savings when savings are made possible by changes in requirements, greater efficiency of operations, or other developments subsequent to the date when the appropriation was made available. The apportioning authority contained in the Anti-deficiency Act was vested in the director of the Bureau of the Budget by the 1950 amendment. However, by reorganization plan No. 2 of 1970, the one that created the Office of Management and Budget, transferred that authority to the President, who subsequently delegated it to the Director of the Office of Management and Budget by Executive Order No. 11541 of July 1, 1970. At the present time, therefore, the authority which is being exercised when funds are reserved under the Antideficiency Act is the authority of the President. In addition to this specific statutory authority provided by the Anti-deficiency Act, authority for the President to establish reserves is derived basically from the constitutional provisions which vest the executive power in the President. Most often it is the general provision of article II, that the President "take care that the laws be faithfully executed," which authorizes and occasionally requires that the President withhold appropriated funds. In addition to these general provisions, however, brief mention should be made of the specific provisions of article II which designate the President as Commander-in-Chief of the Armed Forces and give him responsibility for negotiating treaties and conducting foreign affairs. It is impossible, of course, to delineate all of the circumstances in which the President-in the exercise of his authority as Commanderin-Chief or in the field of foreign affairs-might find it necessary to prevent or defer the expenditure of appropriated funds. An example of the exercise of executive authority in this respect is President Truman's 1949 action directing the Secretary of Defense not to expend funds appropriated for a 70-group Air Force. Returning now to the general provisions of article II, we believe the power to withhold appropriated funds is implicit in them. The President, in the exercise of his authority as Chief Executive, must be concerned with the execution of all the laws, not simply with those laws which appropriate funds or which authorize the making of appropriations for particular programs. As the subcommittee is undoubtedly aware, several laws explicitly restrict the spending of funds regardless of what sums may have been apropriated on an individual basis. The nonmandatory character of an appropriation is evident in this very fact. The President must, for example, bear in mind that the Congress has placed a limit upon the public debt and that expenditures must be managed in such a fashion as not to require borrowing which would exceed the limit. Thus, in 1957 President Eisenhower was obliged to direct that expenditures for the fiscal year 1958 be kept at or below the level for the fiscal year 1957 so that borrowings could be kept within the debt limit. In addition, as is the case in the current fiscal year, the President may be confronted with specific limitations upon expenditures and he may from time to time be obliged to impose restrictions upon certain programs in order to insure that such limitations are not exceeded. The constraints thus placed upon the President in the management of appropriated funds are aptly illustrated by Title V of the Second Supplemental Appropriations Act, 1970-that is the ceiling on outlays and expenditures-which limits budget outlays for the fiscal year 1971. Although the President must curb expenditures so as to comply with that limitation, it is not always possible even at the beginning of the 9th month of the fiscal year to determine the precise effect on expenditures of such still unsettled items as supplemental appropriations or even a basic appropriation increase, as occurred this year-required for pay increases, and projected increases in certain uncontrollable items designated in the statute. Accordingly, reserves must be maintained in amounts sufficient to insure that final resolution of those items will not cause total expenditures to exceed the statutory limit. Finally, mention should be made of the Employment Act of 1946, which declares it to be: ... the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy. . . to promote maximum employ. ment, production and purchasing power. In the past, actions have been taken to restrict Government spending in order to resist inflationary pressures. Thus, in 1966, President Johnson ordered substantial cutbacks in appropriations in an effort to stabilize the economy and combat inflationary pressures. Subsequently, action taken by the director of the Bureau of the Budget and the Secretary of Transportationpursuant to President Johnson's order to reduce obligations against Federal-aid highway funds was upheld by Acting Attorney General Clark in the 1967 opinion previously referred to. These are the general authorities which from time to time require the executive branch to withhold appropriated funds. As you can see, there are both explicit and implicit directions on the subject. In closing, let me emphasize one point. Any action to prevent or defer the expenditure of funds which have been appropriated by law is obviously not one to be taken lightly, nor do we take it lightly. Such an action necessarily involves the exercise of a high degree of discretion and judgment, as well as the careful weighing of compet |