ORGANIZATION OF CONGRESS TUESDAY, AUGUST 31, 1965 CONGRESS OF THE UNITED STATES, JOINT COMMITTEE ON THE ORGANIZATION OF THE CONGRESS, Washington, D.C. The joint committee met, pursuant to recess, at 10:10 a.m., in room AE-1, the Capitol, Senator A. S. Mike Monroney (cochairman of the joint committee) presiding. Present: Senators Monroney and Case, and Representatives Madden (cochairman), Brooks, Hechler, Curtis, Griffin, and Hall. Also present: W. DeVier Pierson, chief counsel; George Meader, associate counsel, and Nicholas A. Masters, research consultant. Cochairman MONRONEY. The Joint Committee on the Organization of the Congress will resume its hearings. Today, we are honored to have with us the distinguished Director of the Budget, Mr. Schultze, accompanied by Mr. Elmer B. Staats, Deputy Director. We know that there are exciting things going on in the Bureau of the Budget, in the program that you are initiating, and we are very happy to have you proceed in your own way, Mr. Schultze. STATEMENT OF CHARLES L. SCHULTZE, DIRECTOR, ACCOMPANIED BY ELMER B. STAATS, DEPUTY DIRECTOR; CARL W. TILLER, CHIEF OF BUDGET METHODS; HAROLD SEIDMAN, ASSISTANT DIRECTOR FOR MANAGEMENT AND ORGANIZATION; AND PHILLIP S. HUGHES, ASSISTANT DIRECTOR FOR LEGISLATIVE REFERENCE, BUREAU OF THE BUDGET Mr. SCHULTZE. Mr. Chairman and members of the committee, I appreciate the invitation to appear before this committee. Great changes have taken place and are taking place in the nature of our society, the nature and distribution of our population, America's role in the world, and the scientific and technological explosion. It is most appropriate, under these conditions, that we reexamine the organization and functioning of our basic governmental institutions to make sure that they are effective instruments for the expression of the popular will and for the prudent management of the Nation's affairs. Within the executive branch the operation of the Reorganization Act of 1949, as amended, permits the President, subject to congressional veto, to shift and streamline organization. Within each organization we are constantly trying to improve both the management system and the decisionmaking process. 1775 I should like to place the major emphasis of my remarks today on the process of budget review and fiscal controls, subjects which are of crucial interest to both the legislative and executive branches. The budget process involves two elements: First, overall fiscal policy. The relationship of total budget receipts and expenditures has a major impact on the levels of national production, employment, and income. In this aspect the budget can be a powerful tool in achieving high levels of prosperity and rapid economic growth. The fact that we are now entering our 55th month of uninterrupted economic expansion bears dramatic witness to the potency of enlightened fiscal policy. The second major element in the budgetary process relates to individual program decisions. The budget is the instrument for reaching decisions about the individual programs of the Federal Governmenttheir scope and purpose, the way in which they will be carried out, and the inputs of manpower, material, and money that will be required. In this aspect, budget decisions reach into almost every area of national policy, and inevitably influence, for good or for ill, the quality of our national life. In both of its aspects-overall fiscal policy and individual program decisions--the budget process provides a major opportunity each year to reconcile conflicting views as to what the Government should do and what its role should be in the social and economic life of the Nation. All of us are familiar with the basic distribution of responsibility between the two branches with regard to budget and fiscal matters. The conventional framework of the four major phases of the budget process provides a convenient method of considering this subject. First, the preparation of the budget is an executive branch matter, and, since 1921, has been particularly a responsibility of the President. The Congress has by law provided that the budget shall reflect the amounts necessary in the President's judgment for the Government's activities for the coming year. The Bureau of the Budget assists the President in reaching his judgment. However, the President has not delegated to us the task of making his decisions for him, and, indeed, President Johnson has given a great deal of his time to careful consideration of the issues and the making of judgments with respect to the makeup of the budget. We in the executive branch are accountable-and rightly so to the Congress and the public for an explanation of any recommendation and any estimates appearing in the budget. To maintain that accountability, it is, of course, necessary that the President have free access to recommendations from various places within the executive branch and that the suggestions which are thus laid before the President be regarded as matters for his consideration and not for premature disclosure to the public. The principle of the executive budget has served our Government well. Second, the "action on the budget" is a legislative branch matter. The President proposes; the Congress disposes. No money may be spent from the Treasury except pursuant to appropriations made by Congress. No taxes may be collected except pursuant to laws enacted by Congress. The executive branch must convince the Congress of the worthwhileness of its proposals, and get assent in the form of necessary statutes before the Executive may act. In the examination of the budget, Congress is entitled to full disclosure with regard to transactions of the past and with regard to the basis of the proposed appropriations for the year ahead. Third, the “execution" of the budget is primarily a matter for the executive branch. It is the responsibility of the President and those appointed officers to whom appropriations are made to see that the laws are faithfully executed, that appropriation limits are observed, that costs are minimized, that the Government gets the greatest possible value for each dollar it spends. It is similarly the responsibility of the executive branch to enforce the revenue laws. In this stage of the budget, Congress may be an interested observer, but is not expected to take part in administrative decisions. Fourth, the "audit" of the execution is a legislative branch function. The Comptroller General of the United States, as agent of the legislative branch, reviews the application of funds, the validity of reports and the fidelity of fiscal management, and reports thereon to the Congress. The Congress, through such committees as it chooses, may study and investigate those reports and, where necessary, call executive branch witnesses for further explanation and discussion. One of the principal criticisms often voiced with respect to congressional action on the budget is its lack of cohesion. Only limited opportunities are available to look at the budget as a whole. In recent years Congress has sought to deal with this problem in three ways. First, the Joint Economic Committee seeks to review with us, the Bureau, the Secretary of the Treasury, the Council of Economic Advisers, and others the total economic and fiscal policy of the Government and the role of Government finances in the economy. Each year, Bureau of the Budget witnesses testify on these matters before that committee. The committee's report to the Congress is, of course, focused on a review of the President's Economic Report, but it helps to place the budget within an appropriate setting. Since the economic outlook cannot be considered except in the context of the budget proposed by the President, the second opportunity is the one which has been given to the Secretary of the Treasury and the Director of the Bureau of the Budget to discuss the budget as a whole with the Appropriations Committees. On a few occasions, including this year, this presentation was before the full Appropriations Committee of the House; in other years, the general presentation was made before the House Subcommittee on Treasury, Post Office, and Related Agencies. In 1963 the Bureau appeared before the full Senate Appropriations Committee. I believe that the sessions of the Budget Director and the Secretary of the Treasury with the Appropriations Committees are very useful, should be continued, and might profitably be expanded. Finally, the Secretary of the Treasury and the Director of the Budget have appeared rather regularly before the Ways and Means Committee of the House and the Finance Committee of the Senate in connection with the statutory limit on the public debt. At these sessions, the financial transactions of the Federal Government and the budget as a whole have been discussed in considerable detail. In general I believe the Congress has ample opportunity, through the means I have listed, to consider the budget as a whole. I do not think that major criticism on this score is warranted. Neither do I believe that basic new procedures are called for in this area. Most importantly, it is my view that the key to improved budgetary results lies in the area of "individual program decisions." There is no such thing as a "right" budget expenditure total. What the Federal Government ought to spend in total is the summation of individual decisions on specific programs. An appropriate overall level of Government expenditures cannot be selected "a priori.' Rather it stems from a judicious review of particular programs in which benefits to the Nation are carefully weighed against program All of this must be done with the knowledge of our overall fiscal situation in mind and with a full appreciation of the true budgetary costs of each individual decision. I do not believe that results would be much improved by a change in procedure to obtain a more formalized review of overall budget totals. In short I think attention ought primarily to be directed toward establishing the kind of procedures and providing the kind of information and analysis on program benefits and costs which will contribute to better decisionmaking on individual programs. With this in mind, I believe the real problems of congressional action on the budget are these: 1. Do the committees desire and, if they do desire, do they have available the information with which to look into important matters of "program choices" in acting upon appropriations? It is my impression that the committees often devote large blocks of time to reviewing details of input requirements manpower, material, and money-rather than giving primary attention to the alternatives which may be open to us with regard to choices among programs and basic methods of carrying out the programs. In other words, do the committees wish to concentrate primarily on the details of agency management or on issues of program choice? 2. Can greater consistency be achieved between actions on various appropriations bills; that is, can a more uniform depth of examination and a more evenhanded treatment of agency requests be obtained in the recommendations of the several appropriations subcommittees ? As more and more programs involve, and necessarily involve, the cooperative efforts of several agencies, it becomes increasingly critical with respect to these related program components. Greater consistency of treatment might be achieved by more frequent consultation among members of the full Appropriations Committees. 3. Is the information required of us and of the agencies the right information Congress needs for its examination of the budget? The budget appendix is filled with hundreds of thousands of figures. While the figures serve to answer one's curiosity--and sometimes to whet it-I must say frankly that a large proportion of those figures are only of marginal relevance to us in our own examination of the budget. Some of them might be helpful in a report on the execution of the budget. Others are of doubtful value for even that purpose unless they were needed once in 10 years for some kind of special study. We understand that in many cases appropriations subcommittees require submission of detailed data by the agencies in still other formats than those used in the budget, and these too often get into minor details. It may well be that, if the Congress were able to redirect its budget examination toward broader program issues, their funding and their costs in program terms, the budget could be made simpler, and more |