ously so that the legislative branch retains the posture required to carry out its constitutional responsibilities. I hope that these comments will be helpful. ROBERT J. MOWITZ, Director, Institute of Public Administration. Representative HECHLER. In addition to that I have 11 or 12 questions which I would like to submit and have you answer for the record. In answering these, I hope, Mr. Schultze, that you will give us your frank and critical reactions. Your answers should be perhaps halfway between the type of answer that is simply an oral answer you give before the committee, and the kind that might be watered down so far that it might not have too much meaning. Mr. SCHULTZE. I will try to answer it properly. (The questions and answers referred to are as follows:) Question 1 In your prepared statement, you noted criticisms that there is lack of cohesive congressional review of the budget and limited opportunities for Congress to look at the budget as a whole. You also emphasized "overall fiscal policy" as a major element in the budget process. But you went on to say that "in general" you "believe the Congress has ample opportunity *** to consider the budget as a whole." The opportunities which you listed are all in terms of hearings or discussions before particular committees of the Congress and on selected aspects of the budget. You also said "the key to improved budgetary results lies in the area of individual program decisions." [Italic supplied.] Are you intending to say, in effect, that the Appropriations Committees generally and each House as a whole need not take into consideration-when it acts on particular appropriation bills (or, for that matter, on tax bills)—such broad factors as the overall dimensions of the budget, the monetary and economic outlook, regional interests, the different priorities for various segments of governmental activity, the size of the deficit or surplus, and other similar broad factors that go beyond the particular program itself? And if you are not saying that, do you have any suggestions for helping Congress to bring such broad considerations into focus when it takes particular budgetary and fiscal actions? Answer I did not say, or intend to say, that the Congress should ignore overall fiscal or other broad budgetary considerations in its actions on the budget. I did state that as a general proposition, I believed the Congress had ample opportunity to consider the broader aspects of the budget. In matters both of detail and of broad issues the Congress works heavily through its committees. The Joint Economic Committee, the Appropriations Committees, the House Ways and Means Committee, and the Senate Finance Committee do have an opportunity, to the extent they wish to avail themselves of it, to consider the overall fiscal aspects of the budget. There is laid before them the budget and economic message of the President, both of which discuss, in some depths, broad budgetary issues. The practice, reviewed last year, of having the Director of the Budget and the Secretary of the Treasury testify before the full Appropriations Committee of the House, is a very useful device to subject top administration budgetary officials to questioning on broad budgetary matters-in addition to the discussions which take place between these officials and the Joint Economic Committee, the Ways and Means Committee, and the Senate Finance Committee. The sessions with the full Appropriations Committee might profitably be expanded, and extended to the Senate. In addition, the Appropriations Committees might wish to consider, in their reports on various appropriations bills, discussing the relationship between the particular appropriations being considered and the broader budgetary problems and issues raised in the President's budget message, in testimony of the Budget Director and the Secretary of the Treasury, or in the committees' own deliberations. The Appropriations Committees might wish to further consider the issuance of a special report bringing to the attention of the Congress as a whole, their own analysis of the broader budgetary issues raised by the President's budget message. These would make companion pieces for the Joint Economic Committee's report on the President's Economic Report. I did not wish to convey, in my testimony, that no improvements could be made in the extent to which the Congress takes into account overall fiscal and budgetary issues. But I do believe these improvements can be made through the existing committee arrangements and do not require drastic institutional surgery. In the formulation of the budget in the executive branch two types of considerations are brought to bear concurrently over a period of 6 months— overall fiscal policy and individual program requirements. We cannot determine reasonable budget totals on the basis of overall fiscal policy alone, without regard to individual program needs. Nor is it possible to determine budget totals on the basis of adding up individual program decisions without regard to overall fiscal policy. The procedures for assisting the President in the formulation of the budget through the spring, summer, and fall of each year permit needed flexibility in the decisionmaking process so that the budget presented to Congress can reflect considered judgment on the requirements of overall economic and fiscal policy and of individual programs as well. The necessary formalities required for the enactment of bills by the Congress would make it very difficult, however, for the Congress to be flexible in the same manner as the executive branch over a period of 6 months or more of concurrent review. As I stated above, I think that the hearings and reports of the Joint Economic Committee-particularly those on the President's Economic Report each year-and the reports of the committees having jurisdiction over revenues and appropriation matters can be helpful for Congress to bring broad considerations into focus in connection with the budget. However, I do not see how Congress can effectively determine the size of budget totals before it has considered the individual programs. Where fiscal policy should significantly affect action on individual programs, it should certainly be brought into specific focus by the relevant committees in their reports. You might want to consider yet other provisions for informal coordinating efforts. For example, the Congress might want the Joint Committee on Internal Revenue Taxation to make periodic reestimates of revenue. Possibly the Congress would also want to provide for regular consultations at the staff level between the committees having jurisdiction over appropriations, those having jurisdiction over revenue, and the Joint Economic Committee. Question 2 You described a budgetary process in which the departments, the Bureau of the Budget, and the President would measure needs, then go from needs to goals, from goals to programs, and from programs to costs. Of course, each of you-a department Secretary, the Bureau, the President-can do all these things under a single hat, so to speak. But here in the Congress, just howat what stages-would you divide these several steps between the legislative committees and the Appropriations Committees? Or do you recommend a fundamental realinement and readjustment of committee structure and assignments? Answer I would favor a procedure under which the legislative committees considered broad needs of our people and our economy and the missions and goals which the Government should have to meet those needs. The legislative committee might recommend authorizing legislation in terms of expressing the view of Congress as to goals or objectives, or in terms of authorizing certain program outputs (for example, so many units of housing to be provided). Whether a program should be authorized permanently or for a limited period will depend on the nature of the program, but preferably authorizations should cover at least 4 years. Annual authorizations make sound planning and administration difficult and should be avoided. Within the period of 4 or more years covered by the authorizing legislation, I would suggest that the Appropriations Committees consider the quantity and quality of program that would be appropriate each year, and the dollars to be appropriated to permit the program to proceed at the levels they think best, and by means which minimize the budgetary cost of achieving program objectives. In short, the legislative committees might concentrate on longrun goals, objectives, and broad program specifications to achieve those objectives. The Appropriations Committees, in turn, could concentrate on the annual level of budgetary resources devoted to the programs. Given the dynamic nature of Government activity in these days, it seems to me that the Congress may need to review the structure of its legislative committees from time to time and make changes which would permit the committee structure to coincide more directly with the basic functions of the Government and with the structure of the executive branch. That is, responsibility for considering policy in the area of a particular broad function or in the area of a particular Government department might best be concentrated in a single legislative committee of each House or at least in as few such committees as feasible. However, I have not studied the committee structure in detail and therefore have no specific suggestions for the implementation of this principle. More recognition obviously needs to be given, however, to the impact of congressional organization on executive branch structure. In some instances executive branch reorganizations might well be accompanied by corresponding reorganizations in committee jurisdictions. Question 3 How do you suggest that Congress can best evaluate the success of multiagency programs which fall within the jurisdiction of more than one legislative committee and more than one appropriations subcommittee? Answer In the answer to question 2 above I have suggested a principle which might lead to some adjustment and streamlining of the jurisdiction of legislative committees. Of course, some major programs of the Government of necessity enlist the assistance of two or more agencies for their execution. The antipoverty program is one of the most obvious illustrations. It does not seem feasible to suggest that structural lines in the Congress be drawn tightly along organizational lines. A crosscutting major program such as the antipoverty program can best be considered in one piece by one committee. In There are other cases where several agencies have activities in one area, but each agency's activity contributes toward the fulfillment of its own basic functions. For example, a number of agencies engage in the collection of statistics, and most experts consider that it would not be feasible to withdraw this work from the respective program agencies and put it all in one place. However, it is appropriate for the Congress to look at the whole package of statistical activities and to maintain consistency, harmony, etc., among them. Subcommittees of the Joint Economic Committee and the House Post Office and Civil Service Committee give some attention to the statistics field. other fields, such as oceanography or health, particular legislative committees have been quite interested. Perhaps the Appropriations Committee might wish to explore informal devices for coordinating their evaluation and action on similar activities of the various agencies. The procedure now generally employed with respect to reorganization plans might have application in other areas. The Government Operations Committees have jurisdiction over all reorganization plans, but as a regular practice the views of the legislative committees with jurisdiction in the subject matter area are solicited before action is taken on the plans. Staff studies going to the various subcommittees involved might be a helpful approach. Question 4 Can a Committee on Appropriations judge the amount of new financing that an agency or program will need without considering the means that will be used (the input required) to carry out the purposes and the program objectives? That is, can the committee ignore the number of employees and their grades, the amount of travel, the quantity of machinery, equipment, supplies, and so forth? Under your proposals, what specific changes would there be in the work and procedures and the factors of judgment in the Appropriations Committees? If the committee or either House were to modify a requested appropriation, would it have to specify how it expected the goals or outputs to be modified? Answer To reach a judgment on appropriations required there must be consideration of both the desired output (goals and programs) and the required input (manpower, material, etc.). The output should be considered first; it is not possible to consider input intelligently without having a judgment on the output toward which the effort is to be directed. I believe, therefore, that agencies should continue to submit two schedules (as is often done today) relating to their appropriation needs: one that is oriented toward program and output, and another that is based on a uniform object classification for examination of input. In those cases where the appropriation pattern does not lend itself directly to program considerations, as is most notable in the Defense Department, Congress should have overriding program presentations that are not constrained by traditional appropriation lines. However, it should not be necessary for Congress to examine each appropriation twice-once for output and once for input. Input and output can and should be related. In many cases overall productivity ratios or unit costs can be ascertained, thus obviating the need for detailed review each year of all the input components. We are moving toward the improvement of our capability along these lines, and we would expect such measures of input-output relationships to be available to the Congress in the agency justifications as fast as they can be developed. While each appropriations subcommittee should, of course, examine the budget in the way it deems best, I believe that serious consideration should be given to the practice of conducting appropriations reviews on the basis of programs and program elements. For many civilian agencies these have been or can be easily integrated with the appropriation structure. I believe that major attention should be given to evaluating the extent to which agency activities have contributed and will contribute to the accomplishment of goals and objectives. Less time might be devoted to the detailed examination of minor elements of input. It would be helpful if the overall time devoted to examination of the budget could be reduced so that action on the budget could be completed before the start of the fiscal year. When an appropriations subcommittee modifies a requested appropriation, it is helpful if they indicate in their report whether their action is based upon the conclusion that the program should be cut back or that the same program can be maintained with less input of manpower and materiel. I would not suggest that the committees try to write such conclusions into the appropriation acts themselves. Frankly, most cuts in appropriations result in cutbacks in program; the room for increases in efficiency beyond those already projected in the Presidential budget requests are relatively slim, and it is not always possible to achieve desired program results when Congress reduces appropriations. Nevertheless it is helpful to the executive branch to know the basis for congressional committee actions. Question 5 How will the changed system of budgetary evaluation help in comparing different programs? I don't mean the evaluation of alternatives for reaching the same objectives. I mean competing programs which serve different purposessay, for example, different kinds of public health activities that are competing for some of the same limited supply of dollars and manpower? How would you arrive at the decision that you should increase program A, cut back program B, and hold program C level? Will the evaluation process contribute any criteria which can be used either by the Executive or the Congress in making such decisions? Answer One of the most difficult aspects of budgetary formulation is the determination of how to allocate resources among unlike programs with completely differing objectives. There is no precise scientific answer to the question of whether an additional $100 million, for example, can best be spent for national defense, for educational aid, or for loans to small business. Cost evaluation studies should assist in determining optimum expenditure levels for each of the various objectives. Not all benefits are completely measurable in dollar terms. Decisions as to the relative emphasis to give to different national goals and objectives of the Government must finally be based upon the informed judgment of those elected by the people the Congress and the President-in the light of their understanding of our Nation's needs and resources. A list of criteria will probably never be available as a substitute for that judgment. As a general proposition, the more closely related are the objectives of two or more programs, the more likely is it that measures of performance and "output" can be developed which are comparable for the several programs. In such cases, formal program evaluation techniques are a very direct aid in making program choices. Where programs have substantially different objectives-education and defense-formal program evaluation can still be a help, in calling to the attention of decisionmakers the explicit consequences of their decisions. Since the measures of output are not comparable, however, the assistance is much more indirect than in the prior case. To the extent that we can set down our goals and objectives in a more explicit way, array our activities in relation to the objectives, improve our quantitative information about needs, goals, accomplishments, costs, alternatives, etc., I believe that Congress as well as the President will be helped in determining the criteria they will use in decisionmaking. Question 6 Will the cost-effectiveness studies by the agencies be prepared and continuously updated in written report form? Shouldn't these reports be available to Congress? Answer Perhaps we should distinguish between program indicators and studies in depth. One of the charts presented in my testimony indicated an annual cycle in which there would be updated each year some multiyear goals and objectives, and program plans. Within the executive branch it is contemplated that these would be set forth in program memorandums. Each agency may have such detailed program information as it wishes. We expect to obtain from each agency annually a rather simple presentation, largely in quantitative terms, a list of significant program indicators, or accomplishments, quantity and quality of output, workload received and backlogs, etc. Those that we receive will include proposals for use of the President in preparation of the Executive budget. I see no reason why the Appropriations Committees in Congress should not obtain, from the respective agencies after the budget has gone to Congress, the relevant program statistics for the years that have passed, for the year in progress, and for the year for which the budget has been submitted. The same chart also referred to "continuing program studies." Within the executive branch new studies will be assigned from time to time, and old studies will be completed. We will examine cost effective issues in some depth, usually for a single program or parts of a program. It is expected that these studies will contribute toward Presidential and agency head recommendations to the Congress for changes in programs. The results, of course, will be reflected in budget recommendations. In some cases legislative changes will be needed. The significant findings and appropriate backup material will ordinarily be presented to Congress in justification of the budget and legislative proposals. Question 7 At one point you spoke of looking for the "least-cost alternative" of reaching some specific objective. Is it your view that for any given purpose, there is only one set of inputs that will be the most economical? If so, how do you arrive at that view? Also, do you think that the standards of competitive enterprise should determine choices in governmental programs? What about human and social costs which a business enterprise is not required to take into account when it aims at maximum profits? Answer We will seek to compare two or more alternatives where feasible and base the budget upon the one with the lesser cost. We cannot pretend to discover every possible alternative; nor can we conclude in advance that there will not be cases where two alternatives cost approximately the same. There will also be cases where no satisfactory alternatives can be advanced for consideration— where there seems to be only one feasible method of progressing toward an objective. The procedures will necessarily be flexible in the light of the circumstances relating to any particular objective. Human and social costs are of great importance. So are human and social benefits. We hope that such costs and benefits can be quantified in some cases. However, we recognize that it is exceptionally difficult to put a price tag on the number of lives saved or the number of lives lost, even though these are a significant consideration in programs such as air traffic safety. Be assured that neither the President nor the others in the executive branch are going to eliminate such factors from consideration. |