[H. Res. 263, 83d Cong., 1st sess.]

RESOLUTION

Resolved, That the House of Representatives does not favor the Reorganization Plan Numbered 9 transmitted to Congress by the President on June 1, 1953. Mrs. CHURCH. If there is no objection, Mr. McCormack, I think we will waive the swearing of the witnesses. We have a new counsel this morning, who tells us it is proper, but I think if there is no objection we will omit the process. I have never known of it taking place in hearings of this nature.

Mr. McCORMACK. I don't think it is necessary to swear the witnesses. Mrs. CHURCH. Mr. Smith tells us there is such a provision, but if there is no objection we will waive it.

Mr. SMITH. As a matter of policy I understood we were to do it. Committee rule 14 requires it.

Mrs. CHURCH. I think if Mr. McCormack agrees, we will omit it. Mr. McCORMACK. There is a difference between an investigation and a hearing on legislation or a plan, I think.

Mrs. CHURCH. I believe the first witness is Arthur F. Burns, chairman of the Council of Economic Advisers.

Mr. Burns, will you come up to the table, please?

STATEMENT OF ARTHUR F. BURNS, MEMBER, COUNCIL OF ECONOMIC ADVISERS; ACCOMPANIED BY WILLIAM F. FINAN, ASSISTANT DIRECTOR FOR MANAGEMENT AND ORGANIZATION, BUREAU OF THE BUDGET

Mrs. CHURCH. Dr. Burns, will you identify yourself and then proceed?

Mr. BURNS. At the present time I hold two positions with the Federal Government. I am a member of the Council of Economic Advisers, and I am also Economic Adviser to the President. I receive a salary, however, for only the latter of these two positions.

Mrs. CHURCH. Will you proceed? I believe you have a prepared

statement.

Mr. BURNS. I have prepared a brief statement, and if you would like to have me read it, I shall do so.

Mrs. CHURCH. I think that we would like to have it read.

Mr. BURNS. Reorganization Plan No. 9 of 1953 is aimed, as the President made clear in his message of transmission, at the achievement and preservation of a strong economy. The plan promotes this aim by permitting the Council of Economic Advisers to perform more effectively the functions vested in it by the Employment Act of 1946, and the plan treats these functions as divided into two categories.

In the first category is the Council's duty to analyze and interpret economic developments, to appraise the economic programs and activities of the Government, and to formulate national economic policies for promoting employment, production, and purchasing power under free competitive enterprise.

The plan facilitates the carrying out of this duty by making the chairman responsible for the internal administration of the Council, particularly for the management of its staff. In so doing, the plan will encourage the greatest possible effectiveness and coherence in management.

REORGANIZATION PLAN NO. 9 OF 1953

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In this concentration the Council will have the benefit of governmentwide coordination and analysis made possible by the interdepartmental Advisory Board on Economic Growth and Stability which the President has described in his message.

In the second category is the Council's duty to recommend to the President appropriate national economic policies, and the plan simplifies this duty by providing that the function of reporting to the President on the activities of the Council is to be performed by the Chairman.

In this way, the channel of economic advice from the Council to the President will be clearly defined and singular, thus assuring the most efficient use of the time that the President devotes to questions of economic policy.

As a relatively minor point, the plan abolishes the office of Vice Chairman of the Council, thereby removing the difference in position that would otherwise stand between the second and third members of the Council. With the President's approval, the Chairman can designate one of these other members as Acting Chairman in his absence. In summary, the total effect of this plan is to increase the effectiveness and efficiency of the Council of Economic Advisers in assisting the President to carry out the congressional declaration of policy in the Employment Act of 1946.

With the United States in its present position of world leadership, and with that leadership dependent in large part upon the preservation of a stable, high-level economy in this country, the importance of the economic advice supplied to the President can be clearly appreciated.

In facilitating the development and transmission of this advice, Reorganization Plan No. 9 of 1953 can make an important contribution to the success of democratic government in our generation. I urge that it be permitted to take effect.

Mrs. CHURCH. Would you like to discuss the plan informally, Dr. Burns, or any of its provisions?

Mr. BURNS. I wish only to say that this plan evolved after fairly careful study of the entire history of the Council of Economic Advisers. It rests on an examination of that history and also on an analysis of the kinds of problems that the Council will have to deal with. It attempts to supply as good an organizational scheme as seems possible in the circumstances.

Mrs. CHURCH. Mrs. St. George, have you a question?

Mrs. ST. GEORGE. Well, Mr. Burns, isn't it a fact that what this really does is that it streamlines the Council by giving more strength and more authority to the Chairman?

Mr. BURNS. Yes; it does that exactly.

Mrs. ST. GEORGE. So that that is the essential difference?

Mr. BURNS. Yes.

Mrs. ST. GEORGE. And it it a fact that this has been contemplated for a long time? I notice that you said it had been discussed some time back. Was it found almost immediately that this was a serious lack-

Mr. BURNS. I am unable to answer that question. Criticisms of the Council's operations began to multiply at a rather early stage, and a variety of solutions, based on a variety of diagnoses, were offered.

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You may possibly recall the recommendation made by the task force functioning under the Hoover Commission, which recommended a single Economic Adviser. This stimulated a good deal of discussion of the Council's operations.

Mrs. ST. GEORGE. And produced this plan, more or less?

Mr. BURNS. Not quite, though this plan was certainly influenced by that task-force recommendation.

What this plan does, essentially, or what it attempts to do, is to combine the advantages of a three-man Council and also those of a single Economic Adviser.

Mrs. ST. GEORGE. Thank you.

Mrs. CHURCH. Mr. McCormack, do you have a question?

Mr. McCORMACK. This is sort of like the military line of command, isn't it?

Mr. BURNS. Well, I don't think of the Council in military terms myself.

Mr. McCORMACK. No, but I mean the line of command through regular channels.

Mr. BURNS. Yes, there is an attempt made in this plan to articulate the channels of communication.

Mr. McCORMACK. You find in all of, the plans that come up the same basic theory which disturbs some of us who are very strong in the belief that this is a civilian government, and we are a little dissturbed about putting the military spirit into the civilian side of the Government.

Mr. BURNS. I must say I see nothing of a military nature in this plan.

Mr. McCORMACK. Of course, I did not say military nature; I said military spirit.

Mrs. CHURCH. Will the gentleman yield?

Mr. McCORMACK. Yes, I was just probing.

Mrs. CHURCH. Was it not a concept of the Hoover Commission that there should be a designation of responsibility under one person, where possible?

Mr. McCORMACK. I would like to have this off the record, please. (Discussion off the record.)

Mr. BURNS. Well, I find it very difficult, Mr. McCormack; you are suggesting that I grapple with a thoroughly new idea, and I am doing my very best. I find it difficult to see anything of the military spirit in this reorganization plan, but perhaps I know so little about military matters that I cannot detect the military spirit when it may exist.

Mr. McCORMACK. Well, I heard with interest and wrote down what you said, that the channel of communication shall be through the Chairman. Now, will you explain that, just how it will operate? Mr. BURNS. Well, all that it means is that the President, instead of meeting with the full Council on each and every occasion when he wishes to discuss economic policies, will talk matters over with the Chairman of the Council.

Mr. McCORMACK. Well, I wouldn't expect the President to meet on each and every occasion with the full Council. That wouldn't raise any serious considerations to me, but what do you mean by each and every occasion? Now, how many-would you explain that a little more?

REORGANIZATION PLAN NO. 9 OF 1953

Mr. BURNS. Well, I can't explain that numerically.

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Mr. McCORMACK. Well, under this line of command, and, of course, that has a military tenor, you know, and I am far from criticizing the Army and the Navy

Mr. BURNS. No, those are your words. The plan merely recommends having the Chairman of the Council come in to see the President on fairly routine occasions instead of having the full Council to do so.

Mr. McCORMACK. Very desirable, but suppose there is disagreement between the chairman and the other members; what then?

Mr. BURNS. Well, then in that case much would depend on the chairman, would it not? A sensible chairman who knows how to work with people would try to bring about agreement.

Mr. McCORMACK. I think that is correct. All of us in Congress have our experiences along such lines.

Mr. BURNS. If he didn't succeed, and if he is a man of good sense and judgment, he will insist that his colleagues accompany him to the meeting with the President.

Mr. McCORMACK. Well, I don't want to be put in the position of asking you what appear to be unwise questions; that is not my purpose. But assuming there is disagreement on matters which should come within the recommendations to the President; as long as you are chairman would you have the other members of the Council accompany you? I mean a serious disagreement; I am not talking about minor matters.

Mr. BURNS. Why, of course, I would if I were chairman. Nothing else would make sense to me.

Mr. McCORMACK. All right. Your word is good enough; not that you have to give me your word, but it would seem to me it would be necessary to apply common sense under those circum

stances.

You see, Doctor, we also have the Executive Order on the new Foreign Operations Administration, and we have the same level of directives in connection with foreign affairs that places everything in the hands of the Secretary of State. and on foreign affairs even the Secretary of Defense and the Secretary of the Treasury have to clear, in a sense, through him.

I can understand consultations, but when you have directives it is an entirely different proposition of what ought to occure in a civilian Government such as ours, and it isn't a question of one plan with that basic scheme. We have all of the plans coming up here with that underlying basic proposition of through regular channels.

Mr. BURNS. Perhaps I might say, Mr. McCormack, that I know nothing of other plans that have come before your committee. This plan evolved in its own independent fashion. If there is any similarity between this plan and other plans, it is entirely coincidental. Mrs. ST. GEORGE. Madam Chairman. Will the gentleman yield? Mr. McCORMACK. Yes.

Mrs. ST. GEORGE. Isn't it probable that these plans have this similarity because they are fundamentally based on the recommendations of the Hoover Commission? Wouldn't you say that is what it stems from rather than the present administration

Mr. McCORMACK. No, I think the recommendations of the Hoover Commission are in connection with the directives that, while not specifically included in the plan, will certainly be the guiding spirit of what will exist for the next 4 years, anyway.

Mrs. ST. GEORGE. Yes, I agree with that, but what I mean is that the reason these plans are all so similar is because they have their root in the same general philosophy.

Mr. McCORMACK. There is an additional mark added.

Mrs. ST. GEORGE. That is obviously true, and that is what you are worried about, and I might say-for instance, this chairman tells us that if there is any difficulty, of course, he will take the other members of the Council in with him. That is very fine, but he won't always be the chairman, and it is perfectly possible under this plan that there might be a chairman who would not take the other members in with him and he would not be obliged to do it. Mr. McCORMACK. I think I find you on my side.

Mrs. ST. GEORGE. I think I am inclined to agree, but, on the other hand, having struggled with congressional committees, I think if we are ever to get anything done this is the way to do it.

Mr. McCORMACK. Of course, I start off with a favorable state of mind as to any recommendation of a President, in the absence of evidence that would prompt me to take the contrary position, the same as I do with regard to legislative law; I have certain presumptions which I carry in my mind-and I would be glad to have this on the record. So I start out in favor of any plan submitted, as my colleagues know, not only in public bearings but in executive hearings; but I am somewhat concerned because the spirit is very contagious, the spirit of discipline, the spirit of obedience necessary in the Armed Forces; the spirit of teamwork on the civilian side is necessary, but when you have people developing a fear of the spirit, I am not saying it has developed

Mrs. ST. GEORGE. No.

Mr. McCORMACK. And I am not making that charge, but it is very easy to develop.

Mrs. ST. GEORGE. But don't you think probably the advantages that would be gained through the efficiency and effectiveness would well counterbalance any such fear we might have? I think it is right and proper to discuss it, but I think it is really amply counterbalanced. Mr. McCORMACK. Well, I think it is well for us to explore it. Mrs. ST. GEORGE. Very well indeed.

Mr. McCORMACK. Now, it is expected that the new Council, you and your associates, will seek advice not only from the departments and agencies of the Government, which is proper, but also from representatives of the different economic segments, particularly those that make up our life?

Mr. BURNS. Yes.

Mr. McCORMACK. And while this is a leading question, it is for the record, and I would anticipate the answer, Doctor.

I assume that in connection with the individuals that might be invited to constitute these groups and serve with regard to economic matters, would be representatives of State and local governments, and that would include, I assume, representatives from different colleges and universities and probably representatives from all other segments, particularly economic, and probably social, too, wouldn't it?