TABLE 6.-Estimated taxable earnings of workers covered under the old-age, survivors and disability insurance program in 1960, and amounts obtained by applying specified percentages to these earnings, by State 1

1 Preliminary; State represents place where workers are employed (with the exception of Armed Forces and instrumentalities shown separately).

2 Includes earnings of employees in the Canal Zone and outside the United States, not shown separately. 3 Represents instrumentalities operated by 2 or more States, such as bridges, waterways, tunnels, oil conservation operations, etc.

Source: U.S. Department of Health, Education, and Welfare, Social Security Administration, Bureau of Old-Age and Survivors Insurance, Division of Program Analysis, May 9, 1960.

The CHAIRMAN. Mr. Flemming, as I understand your statement, your plan is not a substitute for the House bill but is to supplement the House bill.

Secretary FLEMMING. That is correct, Mr. Chairman. As I indicated in my opening statement, the first part of my opening statement, we favor the title VI of the House bill.

The CHAIRMAN. You say it is desirable and, while there is some question whether the provisions in the bill would produce the intended results, it is probably worth trying. That is a kind of left-handed endorsement, is it not?

Secretary FLEMMING. Mr. Chairman, that does not refer to title VI. That part of my statement refers to a proposal that was entered in the present title II dealing with old age assistance, which is designed to provide an incentive to the States to step up their medical care program for those who are covered by old age assistance.

What follows, you will notice right after that, I talk about title VI, which is the provision in the House bill which establishes a new Federal-State grant-in-aid program.

I say:

In view of the fact that this title would put States that take advantage of it in a better position to deal with illnesses incurred by low income aged persons, we favor its inclusion in the bill.

In other words, that is a flat statement of approval.

The CHAIRMAN. Does the administration favor the House bill in toto?

Secretary FLEMMING. Yes, Mr. Chairman.

The CHAIRMAN. Do you disagree with any part of the House bill? Secretary FLEMMING. No, Mr. Chairman; there is none.

The CHAIRMAN. Your purpose then is to supplement the House bill-if the figures I have are correct, the House bill would cost the Federal Government $175 million a year, and will cost the States $164 million a year, aggregating $339 million. Your supplement, supplemental legislation, will cost $700 million to the Federal Government, and $675 million to the States, making a total cost of $1,700 million. Are those figures correct?

Secretary FLEMMING. Mr. Chairman, those figures are substantially correct. I should qualify them in this way: If the proposal that we have made should be put into effect, there would be some overlapping between that and title VI, and that would have the effect of reducing your overall total by some really unknown amount. I couldn't estimate just what the overlapping would be. I don't think we have made any estimate along that line but there would be some reduction. The CHAIRMAN. The figures I have read are your own figures taken from your own statement.

Secretary FLEMMING. That is right. As I say, they were figures presented first for the program that I just outlined to you.

The CHAIRMAN. What you propose to do is to add to the total cost, Federal and State $1,400 million, to the $339 million as proposed in the House bill, is that correct?

Secretary FLEMMING. Just one moment. We propose to add to the $339 million

The CHAIRMAN. Your proposal will cost the Federal Government and the States $1,400 million in addition to the House bill, which costs around $300 million. That makes a total cost of $1,700 million.

Secretary FLEMMING. Mr. Chairman, we estimated that the cost of our proposal would be $1.2 billion, and then added to that $100 million, because of a stepup in public assistance payments making a total of a billion three hundred million. That was our estimate of the total cost of our program.

The CHAIRMAN. Take a billion three.

Secretary FLEMMING. That is right.

The CHAIRMAN. And add to it $339 million as proposed under the House bill.

Secretary FLEMMING. That's right; that would give you a billion six hundred and thirty-nine. And as I indicate there would probably be some overlapping there so that we could, I think, round that figure out at a billion six.

The CHAIRMAN. Does the administration favor an increase to the extent of one billion three above the House bill, does the Budget Director favor it?

Secretary FLEMMING. Mr. Chairman, as I know you appreciate, the billion three represents the total Federal-State costs.

The CHAIRMAN. I understand that but in order to pay-wait 1 minute.

Secretary FLEMMING. Yes.

The CHAIRMAN. In order to avail themselves, the States in order to avail themselves, they will have to increase their taxes.

Secretary FLEMMING. That is correct.

The CHAIRMAN. $800-some-million; that is correct, is it not?
Secretary FLEMMING. Approximately, that is right.

The CHAIRMAN. Then the Federal Government must get $800 million from some source.

Secretary FLEMMING. That is correct.

The CHAIRMAN. That must come from current tax revenue or from borrowing. There is this talk about a 1961 surplus which, in my judgment, has no basis in fact. This money has got to be either borrowed funds or current tax revenue. Does the administration, or the

Budget Director, approve this proposal?

Secretary FLEMMING. The plan which I have just outlined to you is the plan that I outlined to the House Ways and Means Committee with the complete support of the administration.

The CHAIRMAN. Did the Budget Director approve it?

Secretary FLEMMING. Well, he testified to that effect before the House Ways and Means Committee.

The CHAIRMAN. Did he affirmatively approve it or not?

Secretary FLEMMING. Well, of course, he can be the best witness on that. All I know is that when I presented it to the Ways and Means Committee I had the complete support of the administration in presenting it.

The CHAIRMAN. Does that include the Budget Director?

Secretary FLEMMING. The Budget Director is a part of the administration, Mr. Chairman.

The CHAIRMAN. Has he affirmatively approved it?

Secretary FLEMMING. Mr. Chairman, he testified before the Ways and Means Committee and I don't want to interpret his testimony. It is available and should be read.

The CHAIRMAN. But you said it has the complete approval of all the administration, beginning with the President and running down; is that correct?

Secretary FLEMMING. Mr. Chairman, when I talk about the approval of the administration, of course, I would not come up and present a program of that kind without the approval of the President of the United States, and he is the only person who can set administration policy. No one else can set it.

The CHAIRMAN. Has the Budget Director affirmatively approved it? [Laughter.] That is a fair question.

Secretary FLEMMING. I can only testify

The CHAIRMAN. The Budget Director represents the administration in matters of expenditures does he not?

Secretary FLEMMING. The President represents the administration, and the President

The CHAIRMAN. Do you want us to call the President down here before the committee?

Secretary FLEMMING. Well, Mr. Chairman, I would not have presented the program to the House Ways and Means Committee without the approval of the President of the United States.

The CHAIRMAN. I have asked you a simple question-
Secretary FLEMMING. That is the administration.

The CHAIRMAN. I have asked you a simple question: Does the Budget Director affirmatively approve this increase in expenditures? Secretary FLEMMING. I cannot testify for the Budget Director, Mr. Chairman, and I don't think it is fair to ask me to do it.

The CHAIRMAN. He has testified at different times and you have talked to him, have you not?

Secretary FLEMMING. I don't think it is fair for me to interpret the views of the Budget Director. He testified before the Ways and Means Committee. I was not there. I have not read it but I am sure the Ways and Means Committee will make it available to this committee.

The CHAIRMAN. Have you ever discussed it with the Budget Director?

Secretary FLEMMING. There were a lot of discussions on this.
The CHAIRMAN. Did he approve it?

Secretary FLEMMING. I am not in a position to speak for him.

The CHAIRMAN. Why is there any secrecy about what the Budget Director says?

Secretary FLEMMING. I am not in a position to speak for the Budget Director. I can only speak for myself and for the position of the administration.

The CHAIRMAN. Do you have a list showing the burden that is going to fall upon the States under your proposal?

Secretary FLEMMING. Pardon me?

The CHAIRMAN. Do you have a list showing what each State will have to raise in the form of taxes to meet the provisions of your proposal?

Secretary FLEMMING. Just one moment. I have a table here which I think covers the point which you have in mind.

The CHAIRMAN. I want to say you are the first witness we have had before this committee who has not been willing to say "Yes" or "No" on how the Budget Director stands. We shall be forced to call the Budget Director and get that information direct from him.

Secretary FLEMMING. Well, Mr. Chairman, I certainly don't want to be in a position of not cooperating with you on a matter of this type.

The CHAIRMAN. Mr. Flemming, the Budget Director has stated his position one way or the other in all these conferences, has he not? Secretary FLEMMING. He participated in it but I don't think it is fair for me to present to a committee of Congress the views expressed by my colleagues on matters that were under discussion in the executive branch after the President has made a decision. As you know, if I had certain views on a matter, and the President made a decision, which was not in complete conformity with my views, I would be up here defending not my views but the views of the President of the United States. He is the only elective officer in the executive branch.

The CHAIRMAN. Is there any secret about how the Budget Director stands? You have talked to him about it; he has been in all these conferences. Is he for it or against it?

Secretary FLEMMING. Mr. Chairman, he has testified in favor of the administration proposal before the Ways and Means Committee, according to my understanding. I was not there

The CHAIRMAN. He testified affirmatively?

Secretary FLEMMING. That is my understanding. I was not there but

The CHAIRMAN. Why didn't you say so in the first instance?

Secretary FLEMMING. Well, I did say it in the first instance, but I wasn't there. Mr. Chairman, I don't want to be in a position of saying that the

The CHAIRMAN. In other words you are not at liberty to state anything that occurred in conferences between you and the Budget Director: is that correct?

Secretary FLEMMING. After the President has made a decision.

The CHAIRMAN. Well, you are aware of the fact that practically every bill that is submitted by congressional committees to the different departments of Government comes back with a statement as to whether the Budget Director approves it. You know that, don't you?

Secretary FLEMMING. But he speaks in behalf of the President, and what he sends up here is in behalf of the President, and there are some matters that are so important that the policy decisions as to whether or not the administration favors or is not in favor is a policy decision that is made by the President, and in this particular instance

The CHAIRMAN. You think it is important that you can't give definitely the position of the Budget Director as to the money involved? Secretary FLEMMING. As to what?