AGRICULTURE APPROPRIATIONS

Senator MCGEE. Thank you, Mr. Chairman.

Mr. Secretary, I want to say that this exercise has reminded all that when we are looking for somebody to soak with the respo sibility of the bind we are in there is plenty of the piece to go aroun to hang around each one of our necks. We have lot to do here the Congress and the Senate to perform differently as we seek squeeze excess fat and that sort of thing out of budgets.

We try and we try constantly. I do think that we are being motivat into some new approaches, laying all of the budget in front of us one time, as you do. It is easy for us to appropriate generous mone for, let us say a social program, because that is the only item up f consideration that day. Two weeks later we have another item y say natural resources, and it is easy for us to understand that. V never have had the time or taken the time to say, well, is this o worth giving up this one for?

So, it is an important step forward, I think, that we are taking he I want you to know that you have my support in these efforts.

I want to go to the question that I raised at the outset which think has something of a different connotation and which gives great trouble. That is, in programs that were my responsibility Chairman of Agricultural Appropriations Subcommittee along with t then ranking member, Senator Hruska, in good faith we spent lo hours in that subcommittee judging what ought to be done about t $140 million for example that the White House requested for REA This was the official request.

We decided it wasn't enough from all the petitions we had. We h people who testified that they thought it ought to be five times th much. We were trying to be reasonable and rational about it. So arrived at a figure a bit more, $85 million more than the administrati requested.

In the context of what has been going on here now we would ha understood, even though we would not have liked it, had the Preside frozen the difference between what he requested and what we provid in the appropriation. The same way with the REA 2 percent loan It is a controversial program. It has been ongoing, however, for great many years.

The administration requested on electric loan program level $438 million. We increased it to $595 million because there was demonstrated need of almost $1.5 billion projected through 1973. we thought we were not unreasonable. This is a payback progra But the point of this is that having done all that and having spe those hours trying to make our best judgment as the administrati requested us to do, then suddenly, at Christmas time, to be fac with the wiping out of the programs, not a cutting back to what t requests had been, or even less than the request, but the eliminati of the two programs, is most difficult to understand.

Now, do you see any difference between that action, eliminati congressionally enacted programs in their entirety, as contrasted action by the administration in simply impounding funds to redu a program level?

REDUCTION OF FEDERAL SPENDING

m

Secretary SHULTZ. I suppose you could say in a sense the Pr may have felt that if he had to whack out what you added, ought to take a whack out of what he proposed in the first plac realistically, let me describe the process that the Presiden through in coming to the 1973 and the 1974 budget proposals before you.

When the dust settled after Congress adjourned last fall totaled up what was implied by just spending the money as app ted-following the path of least resistance, you might say-w to a total of about $261 billion. That is what it looked like w spend in fiscal 1973 if you just followed along. The President f $250 billion was, if anything, already on the high side of what o be spent. So, the problem is, given all of the problems that Byrd pointed out about uncontrollables and so forth, how do yo 250 out of 261?

Well, it is hard. I tell you, it is really hard. We tried to do it b you might say, budgetary-type means, but you can't go very f those. You just have to cut into programs and you have to be to go over your thinking and re-ask, as the chairman sugges should do all the time, was my proposal right, should I revan the light of the overall program that I now see before me?

Now, it was not as though this was a total surprise, by any because we had had a lot of discussion with the Congress, parti in connection with the debt ceiling and the bill that establis committee that Senator Hruska referred to. But these were th esses that brought about the substantial reductions, which ar in detail here in the budget document.

ELIMINATION OF PROGRAMS

Senator MCGEE. My question was, do you not differentiate a cutting down and cutting out. The program is authorized un constitutional process. We understand the dispute over cuttin because of judgments that have to be made. The prerogatives responsibility of the President is to try to be as responsible as in fiscal matters. That is one matter.

But the matter of eliminating programs entirely brings into o the broader aspect of the problem-the constitutional que checks and balances or however you want to describe it.

Secretary SHULTZ. Just as a technical matter, I wonder if it that a program that is zero-funded is abolished if nothing hap the authorization of that program. The authorization is the potentially fundable, and it has not been really abolished, a obviously nothing is going on.

Senator MCGEE. The two programs are being dismantled, pe are being let out. It is not just a matter of leaving it there It is already being taken apart. This is why I raise the consti question-why a former Chief Justice of the Supreme Court say flagrant shattering of the constitutional process. They make for a constitutional issue on impounding. That is a matter of and priority of judgments and we have some real misgivings

over here also, but not on the unilateral dismantling of the progra such as the two I have illustrated here. We had no warning, no whatsoever.

Had the administration come up a year ago this month, when started our hearings on agricultural appropriations, and said don't like this program, we think this one is unsound, we doubt if can afford it at this time, that would have been a different matt But they made a request for these ongoing programs. That is t responsibility of the administration to either fish or cut bait. Th made their request and we took it on good faith. The problem that poses for me is why should I ask my colleagues to meet again on new budget in agriculture? Why should we meet on it and simply through the act? We can make, we hope, a wise decision on it, and th so far as we know, read next Christmastime, that it has been abolish too. If it is to be abolished, it ought to be abolished by congression committee, it would seem to me. That is the reason that I am 1 interested in holding hearings on agricultural appropriations unl we can go back under the Constitution.

I don't think this is beating a dead horse. I think this is a ve very live animal where somebody down there made a very seri misjudgment in terms of what the Constitution means. That is wh it seems to me is the basic issue.

REQUIREMENT FOR A RIGID CEILING ON OUTLAYS

Mr. Asн. Senator, I think the matter you have described illustra the reason that the Congress must establish an outlay ceiling bef individual programs are taken up. Had that been done during past year, it could well be that the very issue that you are now talki about would not have arisen. Because during the course of the y there was no spending ceiling, the effect of the individual acti taken was to substantially increase total spending. There was not any time any looking back to determine the effects of prior acti on the total, or to see whether some of the earlier actions might n be less appropriate in light of the changing conditions. When it beca necessary, as Secretary Shultz indicates, to attempt to move that $2 billion back down to $250 billion it was really, at that point, necessa to approach all programs on a zero basis, that is, to reexamine need for each of them, to determine which ones could be cut. H there been a spending ceiling established at the beginning and h each of the programs, including the REAP and the REA progra been taken up and acted upon in the context of the total, the probl might never have developed. But, there being no spending ceiling w were the alternatives when they all added up to $261 billion? Si none of us relished the prospect of inflationery spending or a tax crease, the only acceptable course of action was to go back over ev program, and make determinations, program by program, amo by amount, to bring the total back to $250 billion.

REDUCTION OR ABOLISHMENT?

To reduce a program to zero, as was done to the two programs y have mentioned, is really a matter of degree. I suppose if these p grams had been reduced to a million dollars each, or to a hund

the program arning, none

th, when we and said we e doubt if we rent matter. That is the t bait. They oblem that it t again on a nd simply go n it, and then en abolished, congressional hat I am not ations unless

mis is a very,
very serious
That is what

AYS

bed illustrates ceiling before ne during the e now talking se of the year idual actions re was not at prior actions ns might now hen it became Love that $261 int, necessary reexamine the be cut. Had ning and had REA program, 1, the problem g ceiling what billion? Since g or a tax inack over every gram, amount

programs you e if these pro

to a hundred

thousand dollars each, technically they would have been alive the same time they would not have served the purpose that y in mind for them.

So I think reducing a program to zero, while it is the possible reduction, is for all practical purposes about the reducing it to a very low level.

Senator MCGEE. Aren't you confusing dollars and dollar sig constitutional process of legislating? I think that is the wh ference. It has nothing to do with the dollars. That is wh shattered, the constitutional process. It was torn to shred million dollars would have made a mockery out of it, to be you want to make a mockery out of a program, that is one get at it, and the Congress can judge on that, but you did no a mockery of it, you abolished it. You not only reduced it you are dismantling it. That is the point. That has been done the executive process only. It would seem to me to be much grace and certainly more constitutional had you come befor this new budget and made known your wishes. You initiat yourself last year, we did not draw up the budget, the adminis drew up the budget.

George, you were deeply involved in drawing up that These imponderables you don't know for sure, and I don't th should straitjacket you for a full year. You have to have y room but you don't have to tear up the Constitution by ab programs which you have no constitutional right to abo executive decree.

NEED TO EFFECT PROGRAM REDUCTIONS

Mr. Asн. I don't have in front of me the constitutional au But I believe the actions taken both have precedent and are within the Constitution. That of course we will leave to the to testify about rather than myself. As to the budget origina mitted last year, it certainly did not add to the $261 billion-i to $246 billion. And then with some amendments it did read billion. But it was the subsequent actions beyond that that le total of $261 billion.

Senator MCGEE. I don't know how we are going to get you tion down there. Many have suggested that we cut off the mor don't cut off money with a resolution-I imagine you would s down there if we passed a Senate Resolution that this is a n way to go about things. But you have a committee that n acted, accepting in good faith your request for programs th obviously valid ones in the judgment of those who drew up the Then suddenly to be confronted by a unilateral executive announcing their abolition after they were the law, had been of and had been re-requested by the President in his budget la seems to me to do real violence to whatever rule we are talkin in the legislative process in this country.

For that reason I can't see why we should ask 13 grown hear a new agricultural budget, to be specific, unless we go bac the Constitution on the first one. We are not talking about im ment at this time, we are talking about a basic constitutional o I think that is where somebody really goofed.

Senator YOUNG. Would the Senator yield?
Senator McGEE. Yes.

REA LOAN PROGRAM

Senator YOUNG. I think with respect to REA you went a s further. We appropriated the money. It was insufficient to take o of all the applications. The REA administrator did make a c mitment for certain loans that by your action was cancelled. Government in this respect broke the commitment to the R This is something I have never seen done before.

Mr. AsH. Sir, I believe that all outstanding commitments have b honored. As you know, the exchange of correspondence between REA and the applicants which leads up to a commitment does at least from the point of view of the administrator's communicati contain anything to be regarded as a commitment. This is in the es planning stages.

Now, I agree with you that it could well be that some of the ap cants under the REA program might have considered this ea correspondence as a form of commitment, but to my knowledge correspondence from REA made clear that there was no commitm up until the time when REA explicitly stated that a valid commitm existed and all those valid ones have in fact been honored.

Senator YOUNG. Mr. Ash, I think if you will look into how program operates the administrator has to make verbal agreeme an understanding before all those documents are signed. You talking about signed documents but there were verbal agreemer and the verbal agreement should be honored by the Government j as much as written ones. You are talking about written agreement am talking about verbal agreements.

Mr. Ash. I think right there is where the problem exists. development of each case having been accompanied by verbal sta ments of many kinds could well have been taken as a degree of comm ment, and the program was terminated as it related to the lega obligating agreement rather than the discussions that undoubte took place.

Senator YOUNG. These verbal agreements had been honored 20 years or more. REC's throughout the United States did not ha any idea, could not even guess that that policy would be chang I can't help but feel that at least those verbal agreements which w made should have been honored before you cut off the program. Mr. Asн. I think there were a very limited number of those, t would be considered in that stage.

Senator YOUNG. I would hope that the Administration would sugg some replacement program. I can understand we should not go with two percent loans to co-ops who are well fixed and have h density factor. But there are some sparsely populated areas wher think two percent loans can be justified. I would hope that the A ministration would send up some alternative program.

Mr. Asн. It is in fact proposed that the Rural Development supplant the REA program in this regard. There the money is av able, at rates ranging from substantially less than five percent up the market level for co-ops, and at market rates for private compani Senator YOUNG. Is the administration opposed to all the 2-perce loans even for the more sparsely populated areas where REA cocan't exist without the 2-percent loans?