Mr. ARCHER. You have had the advent of these recent court decisions where people have actually forced you to spend money that you were trying to handle in a fiscal way to get closer to a balanced budget. That has taken some of your authority away. Mr. ASH. Yes. On the other hand, the Supreme Court has yet to rule on the fundamental constitutional issues that are involved. When they do, that will set a course that we will all follow thereafter. Mr. ARCHER. Primarily it is going to be up to Congress and the way we design and handle ongoing programs that affect the future to really have a fiscal effect on the policies of this country. Mr. ASH. It certainly will, and that, of course, leads right back to the chairman's own work on setting up the machinery by which the Congress can do that very job. Mr. ARCHER. How much control does the executive branch, the administration as it is generally called, have upon monetary policies in this country? Mr. ASH. I will let the Secretary answer. Secretary SHULTZ. Virtually none. That is done by the Federal Reserve Board. Mr. ARCHER. So that when we then as a Nation blame the administration or the Executive for failure in fiscal affairs or monetary affairs that really is not an accurate accusation? Secretary SHULTZ. Well, we have become so numb to it, but I think you have a point. Mr. ARCHER. Can you give me the total deficits that we haveSecretary SHULTZ. You develop that point in your speeches. Mr. ARCHER. I will try to do so. Can you give me the total deficits that we have run both on a unified basis and Federal funds basis for the years 1970, 1971, 1972, and 1973? Secretary SHULTZ. On a Federal funds basis-would you like me to insert it in the record? Mr. ARCHER. Could you just give them to the committee? Mr. ULLMAN. Without objection, it will be placed in the record. [The information follows:] FEDERAL FUNDS AND TRUST FUNDS (ACTUAL IN MILLIONS, ESTIMATES IN BILLIONS) 1960-74 Source: Budget of the U.S. Government; Office of the Secretary of the Treasury, Office of Debt Analysis. 1970 1971. 1972 1973_ Total BUDGET DEFICITS, UNIFIED BASIS AND FEDERAL FUNDS BASIS, 1970-73 Source: Office of Management and Budget. Mr. ARCHER. I want to confirm one thing that was not totally clear to me. In your figures you presented to the committee today are you reflecting the anticipated request for supplementary appropriations for arms aid to Israel, Thailand, Cambodia, and South Vietnam? Mr. Asн. No amount has been reflected in these numbers because this is still at such an early stage that all the work to develop the numbers is still going on. I have indicated a guess of the range of possible effects on this year's outlays, but that number has not been included in the numbers we have presented. Mr. ARCHER. And it did not include the countries other than Israel? Did your suggested estimate include the countries other than Israel? Mr. ASH. Fundamentally it is Israel. It could include some other issues which are lesser in size. I guess I am really saying it is a little early to know exactly how this whole situation will develop. Mr. ARCHER. One thing which has concerned me a bit when we look at our national figures is the fact that we don't have figures as to what is the contingent liability, the contingent debt that this country has. On most balance sheets in private corporations the accounting practice generally puts an asterisk, and they say that, "The following contingent liabilities exist against this corporation." Could we not get this as a regular matter in our national budget so that this Nation would realize what we, so to speak, are on the hook for in addition to our represented national debt, and can you give us at this time any ball park figures as to what the contingent liability of the U.S. Government is? Secretary SHULTZ. I think Mr. Volcker can respond to that. Mr. VOLCKER. We, in effect, have the asterisk, Mr. Archer, and we have a big one here which is public information. Mr. ARCHER. It is probably the biggest asterisk we have ever seen. Mr. VOLCKER. It is a big asterisk, that is right. The big difficulty you have is that there are different degrees of contingency and no one figure summarizes it very well. On this table-we don't actually add it up, but I can give you all the component parts. Mr. ARCHER. What would you guess, without trying to make a decision, subjectively, as to the type of contingency- Mr. VOLCKER. We have, for instance. Government guarantees insuring private lenders of $150 billion. We have almost a trillion dollars' worth of insurance commitments of one sort or another. Those are the two biggest items where you can put a number. Mr. ARCHER. What would be a ballpark guess for everything all put together including the housing programs Mr. VOLCKER. These are the figures that I am in effect reflecting to you. These reflect the housing programs and everything else. You will get over a trillion dollars. Mr. ARCHER. Would it be closer to $1 trillion or $2 trillion? Mr. VOLCKER. It looks to me closer to one, but over one. Secretary SHULTZ. You have in your table "social security"? Mr. VOLCKER. You get into something like future social security payments, do we put those down as a commitment or not? These are not in here. We have an asterisk on the asterisk when it gets to that one about the actuarial status of the annuity programs. Mr. ARCHER. How many months of benefits are we presently carrying in the social security fund today under the current payment load? You mentioned, I believe, Mr. Secretary, it was under 75 percent of 1 year's Secretary SHULTZ Presently the notion is to to try to have in the trust fund an amount equivalent to 1 year's flow. It is my understanding it has fallen below that. Mr. Ash informs me it is about 9 months. Mr. ARCHER. So that would be 75 percent. It is not significantly below the 75 percent figure then. Mr. VANIK. Would the gentleman yield? Could we not have Mr. Volcker's table put into the record at this point in its entirety? Mr. ULLMAN. Could you make that available, Mr. Volcker? Mr. VOLCKER. Certainly. Mr. ARCHER. That will be fine as far as I am concerned. [The material referred to follows:] Statement of liabilities and other financial commitments of the U.S. Government as of June 30, 1972 This report is compiled in accordance with Section 402 of Public Law 89-809 approved November 13, 1966 (31 U.S.C. 757f). It shows the liabilities of the Federal Government as of June 30, 1972 (Section I), and amounts representing financial commitments which may or may not subsequently become liabilities, depending upon a variety of future conditions and events (Sections II, III, and IV). A word of caution about the use of the data is essential. The four sections of the report deal with basically dissimilar types of commitments which cannot be aggregated in any meaningful sense. Within Sections III and IV, even the individual line items are largely dissimilar and not susceptible to meaningful addition. The "Liabilities" in Section I represent existing liabilities to pay for such things as (1) money borrowed, (2) goods and services actually received, and (3) adjudicated claims. The existence of the liability in each of these categories is certain and unconditional in all material respects and the amount owing is fixed or resonably determinable, but simply has not yet been paid. The "Undelivered Orders" in Section II represent obligations for goods and services ordered but not yet received and other legal commitments against appropriations, all pursuant to Section 1311 of the Supplemental Appropriation Act of 1955 (31 USC 200). These commitments will mature into liabilities in Section I when the goods and services ordered are delivered or when other performance stipulations have been fulfilled. The maturation of undelivered orders in Section II into Section I liabilities is a normal expectancy in the regular course of events in a relatively short time and the amounts of the undelivered orders are a reasonable measure of such future liabilities. The "Long-Term Contracts" in Section III represent commitments of a general nature which have some similarity to those in Section II but differ from the latter insofar as (1) they are not legal commitments against appropriations, (2) maturation to a liability stage is of longer-range nature, and (3) they are more susceptible to cancellation or modification and hence are much less susceptible to use as a measure of future liabilities. The "Contingencies" in Section IV represent commitments which have the basic characteristic of uncertainty (1) as to whether the conditions or events implicit as a matter of conjecture will ever occur to cause any liability to be incurred or (2) if they do occur, as to when, with what frequency and to what degree. Clearly, there is a vast difference between items in Section I-where the liability is certain and the amounts relatively precise and Section IV-where the possible future liability is highly speculative, and may never arise and where the amounts, if they can be projected at all, are stated for the most part in terms of maximum theoretical risk exposure (the upper limit of the Government's financial commitment) without regard to probability of occurrence and without deduction for existing and contingent assets which would be available to offset potential losses. The explanatory notes accompanying the data, particularly for Sections III and IV, are intended to assist interested parties in assessing broadly any risk of probable loss; for most of the items in Section IV, quantitative assessment becomes highly illusory. SUMMARY STATEMENT OF LIABILITIES AND OTHER FINANCIAL COMMITMENTS OF THE U.S. GOVERNMENT AS OF JUNE 30, 1972 The public debt on June 30, 1972 as published in the daily Agency securities issued and outstanding (schedule 2).. Total public debt and agency securities. Net public debt transactions in transit as of June 30, 1972. Checks and other instruments outstanding (schedule 4). Other liabilities on the books of the Treasury (schedule 4). 1 Includes $825,000,000 of public debt securities held by the International Monetary Fund. 2 Because the various annuity programs have been computed on different actuarial bases, it is not possible to compute a total. Details of individual programs are given in schedule 10. Note: The data presented in this report were compiled from reports submitted by the agencies in accordance with Treasury Department circular No. 966, amendment No. 1, dated Sept. 13, 1967. In several instances, incomplete data have been submitted by certain agencies since their accounting systems have not yet been developed to the point where they are able to provide the required information. In other instances the data furnished were on the basis of estimates by the reporting agencies. SCHEDULE 1.-THE PUBLIC DEBT AS OF JUNE 30, 1972 Public debt securities held by Government Accounts: Legislative Branch: Library of Congress Trust Fund.. United States Tax Court: Tax Court Judges Survivors Annuity Fund. The Judiciary-Judicial Survivors Annuity Fund. Funds Appropriated to the President: Overseas Private Investment Corporation.. Department of Agriculture.. Department of Commerce: Federal Ship Mortgage Insurance Fund Gifts and Bequests. Department of Defense. Department of Health, Education, and Welfare: Federal Old-Age and Survivors Insurance Trust Fund. Federal Supplementary Medical Insurance Trust Fund. Department of Housing and Urban Development: Federal Housing Administration Fund. Guarantees of Mortgage-Backed Securities Fund. Department of the Interior. Department of Labor: Unemployment Trust Fund. Other... Department of State: Foreign Service Retirement and Disability Fund. Conditional Gift Fund, General... Department of Transportation: Coast Guard Highway Trust Fund. Department of the Treasury. General Services Administration_. United States Postal Service.. Veterans Administration: Servicemen's Group Life Insurance Fund. Veterans Reopened Insurance Fund Veterans Special Life Insurance Fund.. National Service Life Insurance Fund. United States Government Life Insurance Fund_ Other Independent Agencies: Civil Service Commission: Civil Service Retirement and Disability Fund_ Retired Employees Health Benefits Fund. Emergency Loan Guarantee Board: Emergency Loan Guarantee Fund_ Federal Deposit Insurance Corporation.. Federal Home Loan Bank Board: Federal Savings and Loan Insurance Corporation... National Credit Union Administration: National Credit Union Share Insurance Fund. Railroad Retirement Board: Railroad Retirement Holding Account. Railroad Retirement Account_. Railroad Retirement Supplemental Account.. Small Business Administration: Lease and Surety Bond Guarantee Revolving Fund. Total Held by Government Accounts.. Noninterest bearing public debt securities held by: The public: İnterest bearing.. Noninterest bearing.. Total held by the public... Total public debt securities.... Amount of public debt securities outstanding $11,000.00 300, 500.00 7,234,000.00 95, 210, 000, 00 1,615, 672,00 33, 215, 000, 00 5, 146, 000. 00 165,000.00 952, 175.00 32,647, 577, 250.00 7, 011, 654, 000.00 2, 833, 958, 000.00 478, 075, 000.00 178, 700.00 4,827,000.00 1,098, 371, 450.00 154,000.00 2,743, 000. 00 599, 949, 500.00 3, 421,000.00 75, 160, 000.00 875, 650.00 9, 812, 535,000.00 73,000.00 58,569,000.00 130,000.00 32,200.00 4, 456, 381,000.00 2, 614, 708, 325.55 1, 156, 500.00 1, 265, 810, 500.00 11, 361, 000. 00 220,206,000.00 321, 028,000.00 6, 155, 084,000.00 716, 600, 000.00 1, 429,000.00 27, 293, 189, G00.00 206, 153, OCO. 00 1,091, 125, 500.00 31, 081,000.00 1,085,000.00 5,098, 505, 500.00 2,648, 384,000.00 16, 185, 000.00 3, 134, 000.00 4, 509, 325, 000.00 22, 318,000.00 3,270,000.00 111, 459, 652, 422.55 825, 000, 000.00 313, 900, 245, 804. 16 1,075, 562, 713.79 314, 975, 808, 517.95 427, 260, 460, 940.50 |