Senator HARTKE. Is there a difference between the Treasury position and the President's position upon this matter?

Mr. SURREY. No, sir.

Senator HARTKE. Pardon me?

Mr. SURREY. No, sir; there is not.

Senator HARTKE. They are identical.

Mr. SURREY. Yes, sir.

Senator WILLIAMS. If the Senator could yield

Senator DIRKSEN. There could not be between the Treasury and the President. After all the Secretary of the Treasury is a member of the President's family. How could there be any difference?

Senator HARTKE. I do not know, but there might be.

Senator DIRKSEN. The House Ways and Means Committee took considerable testimony. Now this committee_contents itself with a half day's hearings. That is one point that I make, and they went into this quite thoroughly.

Now, do we arrogate to ourselves a higher intuitive power on this side of the Capitol? We know so much more about it that we require no testimony on the subject?

Senator LONG. May I say this as far as the President's position is concerned? Here is a letter, and I quote, discussing this Ways and Means Committee action, and he said:

While I prefer the program I recommended, I feel that if the entire tax is to be removed, the Ways and Means Committee program represents a prudent way of doing so.

Now what the President is saying in effect, if you insist on doing this, he will sign the bill-I assume that is what it means-but that on the other hand, he would prefer what he recommended, and it is signed by Lyndon B. Johnson. That is the administration's position. Does that give the correct position, Mr. Surrey?

Mr. SURREY. Yes, sir. In other words we certainly felt there should be no increase in the tax reduction that would affect fiscal 1966 and fiscal 1967. We did not think it desirable to increase the deficit with respect to these 2 years.

Now, the House did not do that to any significant extent, and that is what the President is in effect saying when he says this is a prudent way of doing it. It is at least pushing the reduction forward and not adding to the deficit in these immediate years.

But as he indicates, certainly the administration believes that the original recommendation of five points now and then letting the future take care of itself is the wise way to do it.

Senator WILLIAMS. Do I understand that the administration thinks that the way the House did it is a prudent way of doing it but it is not the most political expedient way of doing it?

Mr. SURREY. No, prudent with respect to fiscal years 1966 and 1967. The House did not increase, except by $100 million, the situation in those 2 years.

Senator SMATHERS. Mr. Secretary, may I ask a question on that point. Since yesterday I have been, as I stated a moment ago, called by a large number of people, many of whom say very frankly they like the House approach with respect to the first 5 percent because if you took the 5 percent off immediately, every dealer in the automobile

business who has a large stock of used cars say it would actually depreciate the value of his used car business to such a great extent that many of them would have to go into bankruptcy. Are you familiar with that particular argument?

Mr. SURREY. Yes, and consequently we thought that the three points this July was about as much as could be done at that time, and that any more than that would be an unwise step. That is the reason why we recommended phasing it out three, one, and one.

Senator LONG. I am hoping if the Senators have any more questions to ask, they will reserve them for executive session because Mr. Surrey will be available to us for technical advice with regard to the meaning of these amendments and the administration's position. And as long as this Senator has his say about it, Mr. Surrey can either be in the room or out of the room depending upon how the committee wants it. Being the Assistant Secretary of the Treasury, it is very good to have him advocating something, but we want him for advice, too. Mr. Surrey will be available too if we want him to advise, will you not, Mr. Surrey?

Mr. SURREY. Yes.

Senator DIRKSEN. I want him very much. I want him around all the time.

Senator LONG. I declare this session adjourned. The committee will be in executive session.

(Whereupon, at 10:50 a.m., the committee proceeded into executive session.)

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COMMITTEE ON FINANCE

HARRY FLOOD BYRD, Virginia, Chairman

ELIZABETH B. SPRINGER, Chief Clerk