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19756
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COMMITTEE ON GOVERNMENT OPERATIONS

ABRAHAM RIBICOFF, Connecticut, Chairman JOHN L. MCCLELLAN, Arkansas

CHARLES H. PERCY, Illinois HENRY M. JACKSON, Washington

JACOB K. JAVITS, New York EDMUND S. MUSKIE, Maine

WILLIAM V. ROTH, JR., Delaware LEE METCALF, Montana

BILL BROCK, Tennessee JAMES B. ALLEN, Alabama

LOWELL P. WEICKER, JR., Connecticut LAWTON CHILES, Florida SAM NUNN, Georgia JOHN GLENN, Ohio

RICHARD A. WEGMAN, Chief Counsel and Staff Director

PAUL HOFF, Counsel
PAUL L. LEVENTHAL, Counsel

ELI E. NOBLEMAN, Counsel
DAVID R. SCHAEFER, Counsel

MATTHEW SCHNEIDER, Counsel
John B. CHILDERS, Chief Counsel to the Minority
BRIAN CONBOY, Special Counsel to the Minority

MARILYN J. HARRIS, Chief Clerk
ELIZABETH A. PREAST Assistant Citief Clerk

HAROLD C. ANDERSON, Staj Editor

SUBCOMMITTEE ON REPORTS, ACCOUNTING AND MANAGEMENT

LEE METCALF, Montana, Chairman JOHN L. MCCLELLAN, Arkansas

BILL BROCK, Tennessee EDMUND S. MUSKIE, Maine

CHARLES H. PERCY, Illinois SAM NUNN, Georgia

LOWELL P. WEICKER, JR., Connecticut JOHN GLENN, Ohio

Vic REINEMER, Staff Director
E. WINSLOW TURNER, Chief Counsel
LYLE RYTER, Minority Counsel

JACK CHESSON, Counsel
GERALD STURGES, Professional Staff Member

JEANNE A. McNAUGHTON, Chief Clerk

(II)

Do 23 ke to

CONTENTS

OPENING STATEMENT

Page

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WITNESSES

Page 184

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Copy of Civil Action No. 75–0551 : Elmer B. Staats, Comptroller General of

the United States v. James T. Lynn, individually and in his capacity as Director of the Office of Management and Budget, et al., with argument

and conclusion Letter to Chairman Ribicoff from Arthur F. Burns, Chairman of the

Board of Governors, Federal Reserve System, setting forth the Board's view on S. 2418, November 14, 1975, with enclosuresStatement by George W. Mitchell, Vice Chairman, Board of Governors of

the Federal Reserve System, before the Subcommittee on Domestic
Monetary Policy of the Committee on Banking, Currency and Housing,

House of Representatives, May 8, 1975---
Letter to Senator Metcalf from Elmer B. Staats, Comptroller General of

the United States, expressing his approval of the language in H.R.

8948, November 18, 1975 Replies to issues raised by the National Security Industrial Association

concerning S. 2268, 94th Congress--Articles, publications, etc. :

The General Accounting Office: One Hope for Congress to Regain

Parity of Power With the President, by Thomas D. Morgan, from

North Carolina Law Review, October 1973.-
Alice in Wunderlich: The Attorney General's Dream of Limiting the

GAO's Claim Settlement Authority, from Catholic University Law

Review, vol. XVIII, 1969_--
The One-Eyed Watchdog of Congress, by Richard F. Kaufman, from

the Washington Monthly, February 1971.-
The Half-Hearted GAO: Congress Gets What It Wants, by Erwin

Knoll, from the Progressive, May 1971---
The GAO: A General Accounting. by Peter Gruenstein, from the Na-

tion, June 4, 1973_--
The Future of the IRS, Editorial from the Washington Post, April 28,

1975
Overseeing the IRS, by Louise Brown, from the Washington Post,

August 29, 1975_
Take Heart_Tax Men Now Being Investigated, by Robert P. Hey,

from the Christian Science Monitor, February 27, 1973_-
IRS: “They Protect Their Own," by Louise Brown, from People and

Taxes, October 1974.
IRS Needs Monitoring Agency, by Louise Brown, from People and

Taxes, July 1974.
Taxes : Tales of the IRS, from Newsweek, March 12, 1973-
A Watchdog for the IRS, Editorial from Chicago Tribune, April 15,

1975
IRS, Unlike Taxpayers, Avoids an Audit, by Lee Flor, from the

Washington Star, August 21, 1972-----
News on Tax Reform, by E. Edward Stephens, from The Washington

Star, November 2, 1975_

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GAO LEGISLATION

THURSDAY, OCTOBER 2, 1975

U.S. SENATE,
SUBCOMMITTEE ON REPORTS,

ACCOUNTING AND MANAGEMENT,
COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D.C. The subcommittee met at 10:05 a.m., pursuant to call, in room 3302, Dirksen Senate Office Building, Hon. Lee Metcalf (chairman of the subcommittee), presiding.

Present: Senators Metcalf and Weicker.

Also present: Vic Reinemer, staff director; E. Winslow Turner, chief counsel; Jeanne A. McNaughton, chief clerk; Lyle Ryter, minority counsel; John B. Chesson III, counsel.

OPENING STATEMENT OF SENATOR METCALF

Senator METCALF. The subcommittee will be in order.

Today we begin hearings on four bills relating to the Comptroller General and the General Accounting Office.

The first bill, S. 2206, shifts the power to appoint the Comptroller General, and his deputy, from the President to the Speaker of the House and t'e President pro tempore of the Senate. The Comptroller General's term would be reduced from 15 to 7 years, and he could be removed for any cause by a simple resolution of the Congress. The objective of this bill is to provide the Congress with full control over the General Accounting Office and the policies of the Comptroller General.

The second bill, S. 2268, would give the Comptroller General the authority to go into court and seek declaratory relief when he believes a Federal official is about to make an illegal expenditure. It would give him subpena power over records of contractors and other persons to which he has a right of access by law or agreement. It would give him the authority to seek a court order against a Federal department or agency which refused to grant him access to records which they are required to do under existing law. And it would also direct the Comptroller General to make a selective profit study with respect to Government contractors, and report the results of such study promptly to the Congress. The objective of S. 2268 is to strengthen the discovery and enforcement powers of the Comptroller General.

The third bill, S. 2352, requires the GAO to make an audit of the Internal Revenue Service and the Alcohol, Tobacco, and Firearms Bureau of the Treasury Department, and includes authority to obtain certain confidential access to tax returns and financial records.

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A fourth bill, S. 2418, would also authorize an annual audit of the IRS, as well as a similar audit of the Federal Reserve Board and its member banks, the Comptroller of the Currency and the Office of Alien Property. Special access to books, financial records, and examination reports is included as part of this bill.

These four bills will become part of the record immediately following this opening statement. All of these bills raise basic questions as to the appropriate role and scope of authority of the General Accounting Office and of the power of Congress to seek the enforcement of executive functions through an officer of its own choosing and under its own control.

Since its establishment in 1921, the agency has had a split personality: variously referred to as an "arm of the Congress” in conducting an 'investigative and oversight function, and as an “independent agency" in exercising its "executive-type" authority to approve or disapprove Federal payments and settle accounts, among other things.

The Comptroller General now seeks broader powers of discovery through subpena, and a new power—that of enforcement of his decisions on Federal expenditures through court action. I have no quarrel with granting him these powers if he were under the control of Congress, but as an “independent agency"_independent of the executive and independent of the Congress-a fourth branch of the Government-I have serious concern.

There is the further question as to whether the Comptroller General-if he is equipped with the new powers he is seeking-needs to have, or should be permitted to retain, the "executive-tvpe” functions of determining accounts provided to him under the Budgeting and Accounting Act, since with the new and extraordinary powers of discovery and enforcement he would have sufficient authority to challenge the expenditure decisions made by the executive.

Then there is the ultimate issue of whether such power to sue delegated to an officer of the Congress—which the Comptroller General would certainly be if he were appointed by the Congress—would be consistent with the principle of separation of powers. Certainly we should inquire into the extent to which the appropriations” power, together with the "necessary and proper" clause in the Constitution, would provide Congress with the authority to call into account the unlawful expenditure of Federal funds, and the right to exercise this authority through a special officer and the courts.

Finally, we will inquire into the adequacy of the GAO's present investigatory and oversight performance, and what additional areas of oversight should be pursued. The bills anthorizing audits of the IRS, the Federal Reserve Board, the Comptroller of the Currency, and other agencies go to this issue. There may be other executive agencies ripe for review. There may be a real need for stronger subpena authority in the GAO.

It is my intention to hold additional hearings where critics and supporters of the GAO will have the opportunity to express their views.

And I want to hear from constitutional experts as to how Congress may properly clothe the GAO with powers to represent the Congress in its application of "checks and balances” against Presidential excess and unwarranted power.

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