The CHAIRMAN. That is right. Are you satisfied with the operations of the Reorganization Act of 1946?

Mr. HELLER. In my letter referred to this morning, I said that a good start had been made, that our committee felt that three improvements were in order: (1) strengthening the fiscal control of Congress; (2) improving the staffing of the standing committees, on which a start has been made, and (3), more legislative surveillance by the standing committees of the executive departments.

Senator MCCLELLAN. In that regard, I should like to ask you what you think of the proposal to create a joint committee of the two Houses and invest it with the authority to carry on a continuing surveillance of government in the administrative branches of government? The reason I say joint committee to carry on such investigation or surveillance is to eliminate overlapping or duplication of work.

Mr. HELLER. Well, you have reduced your number of standing committees, however. I see no particular objection to a joint committee. The biggest advantage to a joint committee that I could find was that it was good for administrative purposes, and that is a sort of an administrative job of Congress.

Senator MCCLELLAN. Frankly, I am thinking of a joint committee being created for that purpose; giving it an adequate staff so that it can do the work, so that it will be available at all times, and then in many instances when reports of some administrative procedure come in that is not according to law or that is questionable in any way, you can call up in that committee the chief of the department involved, and often lock the door before the horse is stolen. Now, most of your investigation comes after the harm is done.

That was my thought about a committee constituted that way, making it a permanent committee, and I am persuaded that there would be enough work for it to do so that the members composing that committee would hardly have time to serve on legislative committees, except possibly on one committee.

Mr. HELLER. Well, as long as we don't relax in our job of staffing up the standing committees.

Senator MCCLELLAN. There would be no reason for it to detract from the standing committees in their legislative work, and it wouldn't preclude them from making an investigation.

Mr. HELLER. That is my point.

Senator MCCLELLAN. But there are so many things that ought to be investigated on which your legislative committees as such, doing their other work, hardly have time to concentrate, and then they don't have an adequate staff. They are not equipped to do it.

Mr. HELLER. That is my point. We made the same recommendation in regard to a permanent Joint Committee on Accounts in connection with the General Accounting Office, in order to receive those reports and do something with them on a permanent, all-yearround basis. I see no objection, sir, and many advantages.

Senator MCCLELLAN. Mr. Chairman, is he through with his statement? I didn't want to interrupt him.

The CHAIRMAN. Yes, he has completed his statement.

Senator MCCLELLAN. I wanted to ask him about one more thing with regard to his testimony. if I may. I may have misunderstood

you, but what did you say about the balancing of the budget annually? What did you say about that being bad practice or inadvisable?

Mr. HELLER. I said yes, that the procedure today was impractical. In the first place, it is almost impossible to forecast revenues a year or 18 months in advance. Even if you were able to do it—while I am not a fiscal expert-I call attention to a report just put out by the Committee for Economic Development, of which I was part author, referring to this whole subject of budget balancing and the possible substitute for annual budget balancing. It is a thoughtful document and one which would require considerable study. It is one which I deduced to be related to the discussion here today. I leave this with you. ("Taxes and the Budget" on file with the committee.)

Senator MCCLELLAN. What I am trying to determine is, do you not attach any importance to keeping a balanced budget?

Mr. HELLER. I attach great importance to it, but it is a very difficult procedure under today's very complicated conditions.

Senator MCCLELLAN. I am sure it is, but should it not be a goal for which we should constantly strive?

Mr. HELLER. I made the statement here I thought I made it clear that the machinery should be established for some kind of a congressional budget, and that, if it did nothing more than call attention to the Members of Congress to economics, it would be a great gain.

Now due to our system, we have a constant change in the faces in Congress and a need for re-education as regards many of the things that go on. Consequently, I continue to stress the necessity for a legislative budget, but not necessarily do I say that the budget can be balanced annually; and if it is balanced annually, it is not necessarily the right thing to do, which is all in that statement that I am leaving with you here today and which is a big subject.

Senator MCCLELLAN. I am sure it is a big subject, but I cannot conceive of this Government pursuing a policy that would indicate or suggest indifference to deficit spending, whether we have a balanced budget or not. I am thinking in terms of the present high current costs of government, the present high taxes and present level of revenues that we collect. I am also thinking of perhaps a dozen bills that are now pending in Congress which, if enacted into law immediately, would increase the current cost of government by about $15,000,000,000.

We have got to think in terms of a balanced budget, or else we have got to incur a deficit each year if we are going to pass some of this legislation some of which I favor but I think we have got to take that into account. And I think the time has come when the Government has got to consider what it can afford.

Senator AIKEN. It seems to me that we should divide appropriations into the proper classes. We might have administration of government that is completely balanced, and by reason of making a capital investment which would yield good returns or by appropriating to some lending agency of government to make loans which will be returned with interest and profit, you can unbalance the budget completely. Now I think we, by all means, ought to balance the administrative costs of government.

Senator MCCLELLAN. You mean current operating costs?

The CHAIRMAN. Current operating costs should be paid for as we go along, but we have these other capital investments which will yield returns. We have loans which will come back with interest, and some agencies of government have made very substantial profits by spending that money which has been appropriated by Congress or authorized by Congress for the purpose of making the loans.

Then we have listed as expenditures of the Government, railroadretirement payments and social-security payments which, in effect, are not expenses of Government at all, but simply the payment of funds which are already authorized and provided for by money collected for that purpose. Any money collected for social-security purposes far exceeds the amount which has been spent, and some of the States are getting rather restive for that reason, since they are paying in several hundred million dollars over a few years' time. It is not required for that purpose, but it is spent for ordinary purposes of government. In other words, it is a pay roll tax used for meeting operating expenses of the Government, and some of the larger States particularly do not like that. So it seems to me the system of expenditures is so complicated, with all classes of expenditures lumped together, that it is almost impossible to tell so far whether our budget is balanced or not, and certainly not for at least 2 years after the end of the fiscal year. Senator MCCLELLAN. Mr. Chairman, I readily concede that the making of capital investments has been with the expectation of just a fair return which is not to be included in the balancing of the budget, but I am talking about the current costs of government. I think the time has come when the Government must live within its income.

Mr. HELLER. Senator, to make sure that you don't think that we are a collection of New Dealers or

Senator MCCLELLAN. I didn't call you that.

Mr. HELLER. Or to make sure that I am clear here in the record, I did not intend to say that the budget should not be balanced. Í was talking about the procedure of trying to balance it annually. Now the substitute as recommended by our group here says as follows:

Set tax rates to balance the budget and provide a surplus for debt retirement at an agreed high level of employment and national income. Having set these rates, leave them alone, unless there is some major change in national policy or condition of national life.

Senator MCCLELLAN. I didn't want to believe that you were advocating deficit spending. That is why I wanted to clear it up. I didn't want to misunderstand you.

Mr. HELLER. I refer again here to the record, and I hope that you gentlemen will have time to take care of it.

The CHAIRMAN. Mr. Van Horn has a question or a statement. Mr. VAN HORN. This is purely a theoretical concept.. It might clarify matters if I said this, and I think I would not misrepresent Mr. Heller in saying so, that there are several ways to look at the budget. One way is if you find that you have 40 billions coming in during the year and you decide then to spend 40 billions, that is an annually balanced budget, but what I think Mr. Heller has said is that if you find you are getting 40 billions in and you spend only 35, then you have got 5 to put in the bank. If a bad year comes and you need to accentuate a public-works program or any other activity,

then you spend 45 billions. It is merely the difference between those two methods I think.

Mr. HELLER. That is right. We say here tax rates by themselves do not determine necessarily how much revenue will be collected. It is a big subject.

Senator THYE. I should like to get Mr. Heller's reactions from his observation of the reduced number of standing committees. Do you feel that this is somewhat nullified by the number of subcommittees that have been appointed and that are functioning at the present time? Mr. HELLER. No; I dont. I believe, in the first place, that we are in a transition stage. There were perhaps too many subcommittees in the first session of the Eightieth Congress. There is no reason why there should continue to be too many. Even if there are a number of subcommittees, they provide a specialization which I think is healthy. Furthermore, you people in the Senate, I believe, have a rule as regards the number of activities that one Senator can engage in under this subcommittee structure, don't you? That is the case in the House and Senate, I think.

Senator THYE. If it is, I have never seen it in operation in the Senate.

The CHAIRMAN. Not with respect to subcommittees, Mr. Heller. That would obviously be impossible, because some subcommittees are only appointed for a week's time; others are standing subcommittees. They have various lengths of life, and the report on the number of subcommittees appointed by the chairmen of full committees is rather misleading, in view of the fact that the life of some of those subcommittees is so short that it gives a rather wrong impression to the public, but I don't know how we can help that.

Mr. HELLER. I understood that in the House, they were restricted to two kinds of activities and the Senate to one.

The CHAIRMAN. For instance, we have in this committee a Subcommittee to Study Intergovernmental Relations, under the chairmanship of Senator Bricker, that so far has studied principally the matter of the division of the field of taxation. Of course, there are many other fields, but many people think of the tax relationships first. Then we have a Subcommittee on Relations of the United States with International Organizations of which it is a member. We have found to our surprise that we belong to over a hundred international organizations, with a considerable amount of dues to pay each year. [Laughter.j

Senator THYE. That isn't confined only to Government, Senator. I find that I belong to a lot of them that I didn't think I belonged to-just from the constant demands of associations.

The CHAIRMAN. That is right.

Then we expect to have a third subcommittee engaged in making investigations where there is probable reason to believe that executive agencies or their officers or employees have been guilty of extreme wastefulness or illegality in the expenditure of funds. Those three major subcommittees of the whole committee will work as separate committees, but will make regular reports as to what they are doing to the full committee of 13 members, which at all times will have control of the situation.

I think that is the logical way to handle this work and there is much less conflict in the way of getting attendance at the hearings than there

would be if we had more regular committees of the Senate. It seems to have worked out very well. I am for the subcommittee procedure. As a matter of fact, the law now requires that a majority of the full committee be present when you are voting on legislation or recommendations to the Congress. During all this last year, this committee, to the best of my recollection, never canceled a single meeting for failure to have a quorum present. I think a few committees had difficulty in that respect, but there was much less difficulty than there was before the law went into effect.

Mr. HELLER. It was unfortunate, in my opinion, that some publicity was given to the springing up of this myriad of subcommittees. The CHAIRMAN. It was misleading.

Mr. HELLER. It was very misleading.

The CHAIRMAN. For instance, Senators Hoey, Thye, and McClellan are on subcommittees to consider, well, half the legislation we act on. We have a subcommittee who explore into a matter and then present the facts which they find to the full committee. I don't know how many Senator Hoey has been on, but he has been on a lot of them. He is an expert in subcommittee work. That is a great help to the committee and saves time for the full committee.

Senator THYE. It would be utterly impossible to take the entire committee and sit through the details of these hearings or the investigation of questions. I do believe that the public had a wrong impression of what was going on by the mere fact of the announcement of new subcommittees.

The CHAIRMAN. Have you any further questions, gentlemen?
Senator THYE. No.

Senator HOEY. No.

Senator MCCLELLAN. No.

The CHAIRMAN. We thank you for appearing here this morning. We have Mr. Kefauver's statement. I understand he went home over the week end, and evidently his means of transportation has not gotten him back here in time this morning.

The committee will meet again tomorrow morning at 10 o'clock. We are scheduled for the next 2 days and then again for the 17th. (Whereupon, at 11:20 a. m., the subcommittee adjourned until 10 a. m., Tuesday, February 3, 1948.)

(The hearings scheduled for Tuesday, February 3, and Wednesday, February 4, were postponed due to conflicting engagements of members and witnesses.)