Mr. INK. I mean, this point, maybe we should have put it into two, because there are involved both positions that are eliminated, and also positions that are transferred. For example, the Space Council is a function that is eliminated, and the positions are eliminated, and there are savings coming out of that. As you have just indicated, however, in the case of OEP, these functions are transferred. Although that is a reduction in the Executive Office of the President, that is not a net reduction in the budget or in the Federal Government. And I think, when we combined these two, in that one point, it made it a little confusing.

Mr. HORTON. I am still not clear.

You say of 389 positions.

Mr. INK. Yes, sir.

Mr. HORTON. Are those actual reductions? Three hundred and eighty-nine?

Mr. INK. No; they are reductions in the Executive Office of the President.

Mr. HORTON. But they are not reductions overall?

Mr. INK. In an overall sense, there are only 60 or 70 that are a net reduction to the Government. The others are transferred, largely to General Services Administration, and to HUD.

Chairman HOLIFIELD. Why don't you supply that breakdown for the record so that we will know actually what the saving is. This is a little bit misleading here. And if the functions are going to be transferred over into other organizations, you have got to assume that it is going to take personnel to implement those functions. And, therefore, there will not be the elimination of any way near like 389-as you say, maybe it will be 60. And that would be confined, I would think, mostly to the Office of Science and Technology.

Mr. INK. This number is the reduction in the Executive Office of the President.

Mr. HORTON. The second question may or may not be related. The $2 million in budget savings, is that related to the reduction of positions?

Mr. INK. Primarily, yes, sir.

Mr. HORTON. You say 60 positions. And that means $2 million?

Mr. INK. It is somewhat more than 60 positions. There are some incidental costs, but primarily that is where it comes. These are, of course, relatively high level, and consequently the usual factors that you apply to the cost of salaries in an organization

Mr. HORTON. I think it would be important for our hearing to have it specifically itemized, with the positions and the amount that will be saved. And it is not a saving, as you pointed out and as I tried to convey, if the people are transferred over to HUD.

Mr. INK. That's right.

Mr. HORTON. But I can see that 389 positions are reduced in the Executive Office. If they are absorbed elsewhere, they ought to show that.

Mr. INK. Yes.

Mr. HORTON. And then they should have shown to us the positions. that are eliminated, and then what that budget saving is so that we can make a itemization of that in the event we have to talk about that? Mr. INK. Yes, sir.

CIVIL DEFENSE RESPONSIBILITIES

Mr. HORTON. Now, the other thing I wanted to ask you about is what activities are being undertaken today for civil defense, and will there be any changes in these programs. What will be the GSA responsibility for civil defense after you abolish OEP?

And I have got one following question after you have answered

that.

Mr. INK. By the way, these figures I have been talking about are in the budget, but we will provide you something for the record for this hearing.

Mr. HORTON. You mean the 1974 budget?

Mr. INK. Yes.

Mr. HORTON. I think it would be well if you dig them out and put them in capsule form.

Mr. INK. We will be happy to do that.

(The information referred to follows:)

IMPACT OF BUDGET AND REORGANIZATION PROPOSALS ON AFFECTED AGENCIES-RESOURCES

Source: The "Budget of the United States Government, Appendix, Fiscal Years 1973 and 1974," or best available estimates. Mr. INK. Your question had to do with civil defense. And I believe that is in the Defense Department. This reorganization does not affect that work which is done in the Defense Department.

There are several steps that have been taken which OEP can speak to better than I can, in terms of more effective working arrangements between OEP and the Defense Department.

But the role and the functions of civil defense are not changed by this reorganization.

Mr. HORTON. Let me ask you this one: Executive Order 10952, issued in 1961, by President Kennedy made the Director of the Office of Civilian Defense Mobilization-which was later the Office of Emergency Preparedness-responsible for advising and assisting the President in determining policy for and in planning, directing and coordinating the total civil defense program.

These responsibilities included coordination of civil defense responsibilities with neighboring nations-Mexico and Canada-and promoting interstate compacts on civil defense matters among the States. Will these functions be assumed by GSA, or will this go to DOD? Mr. INK. Nothing goes to DOD by this reorganization plan. And the functions that you refer to do go to GSA.

Mr. ROBACK. I might add in that connection, Mr. Horton, that an Executive order makes OEP the civil defense adviser to the President. And the question then is, does GSA take over that responsibility; and if so, by what qualification?

Mr. INK. Mr. Chairman, Mr. Charles Simms, who used to be in OEP and is now with OMB in Mr. Bingman's office, has just joined me at the table. He has some understanding of the legal background. Mr. HORTON. That would be helpful if he could tell it to us.

Mr. INK. Yes.

Mr. HORTON. You were with OEP?

Mr. SIMMS. I was the General Counsel at OEP at one time.

Mr. HORTON. Now what is your responsibility?

Mr. SIMMS. I am an attorney in Mr. Ink's office.

The role that GSA will assume with respect to civil defense is exactly the same role that the Director of OEP has now.

The capacity of General Services Administration to perform that will be exactly the same as those of the Director of OEP.

He will have the same staff being transferred to him to perform those functions. And so the administrator should have the same capability as the Director of OEP now has.

Mr. ROBACK. The point here, Mr. Horton, if I may, is that OEP always had a policy role at a high level in the Government. And GSA was a service agency, a housekeeping and service agency. The question is: How you are going to develop that kind of capability in the GSA? Mr. INK. First, the GSA has, of course, been changing. And I think Mr. Sampson can speak to that this afternoon.

The GSA under the current arrangements works through Mr. Ash, an assistant to the President for executive management, and has an entry into the Executive Office of the President and the Presidentwhich he hasn't had heretofore.

And third, the functions which are being transferred over for the most part do relate to activities which they already have in an operational sense.

And we think that any agency that has the operational role, it is much easier for them to pick up the policy.

Mr. HORTON. In other words, what we have said is that civil defense functions are going to go over to GSA, and the disaster functions are going to go over to HUD.

There has been a lot of discussion about this, about combining civilian defense and national disaster operations, particularly since such activities frequently are combined or integrated at the State and local level.

In New York, for example, the legislative committee which investigated Agnes found that residents of threatened areas were inadequately warned, and they recommended coordination between disaster and civil defense officials be effected. They felt that was warranted. And it was strongly recommended that those functionings be merged in a single agency.

Isn't it true that this reorganization plan then continues the existing fragmentation and division of effort at the Federal level?

Mr. INK. It is true that this reorganization does not deal with that issue.

It is not a reorganization that attempts to draw together all the emergency activities in the Federal Government. It is designed to deal with the Executive Office of the President.

And our judgment was that to go beyond that would create problems of the type Mr. Roback was alluding to earlier.

As we see it, it neither improves nor worsens that kind of problem of coordination between the Defense Department and what has been OEP.

Mr. HORTON. I think the point that I am trying to get to is this. I can understand trying to transfer those programs out of the Executive Office of the President and putting them into existing agencies and departments, and I think this is commendable. But I am concerned because of many of the difficulties that I have experienced in my own district and that have been brought to my attention by other Congressmen, as a result of recent disasters in the New York State

area.

We have an impending disaster in the Lake Ontario and Lake Erie areas because of the high water situation.

Mr. Brown asked questions earlier about the matter of land use. It seems to me that-and maybe this is a suggestion aside from the reorganization plan-that some attention ought to be given to the mechanism for handling disasters.

I think what you are doing here is taking disaster relief out of the Office of the President and putting it out into agencies. But the whole question of how we handle disasters is not thought through.

So probably you are going to have to come up with some type of plan to determine how you can best handle disasters.

Mr. Roback referred to a study of a task force that was reporting or that you are going to be making a report on. Maybe that will cover it. But there certainly are a lot of problems in handling disasters. We saw some of it with HUD and with Agnes, and the problems that they had.

Mr. Carlucci went down and tried to solve some of it. And there were some criticisms of some of the things that he did. And I have already alluded to problems that we have between SBA and the Farmers Home Administration, and the Corps of Engineers limit as to what they can do in certain emergencies. And they have law that affects them. They can do certain things with respect to flood control, but they can't do them with regard to erosion control.

All of these things, it seems to me, ought to be looked at and pulled together so that we have a better, up to date modern means of handling these problems of disasters as they arrive.

Mr. INK. Mr. Horton, I agree with this, and as I indicated, it was not the purpose of this plan to come to grips with all the various problems and program issues that we have in conjunction with disasters. I hope that the report that will be coming up will help in a number of those areas.

It may be that there are still other things that can be done.

Mr. HORTON. The point that I am making is that what we are doing here is kind of a band aid, and I am not sure it is going to solve the problems. It might add to what the problems are.

I hope it won't.

Mr. INK. I don't think it will add to them, but I certainly agree that it is not designed, and we don't pretend that it is going to solve all the problems dealing with disasters, that was not the thrust of the reorganization.

Chairman HOLIFIELD. We are going to curtail the questions for a

moment.

Mr. Simon, would you like to come back after lunch, or would you like to try to testify for 30 minutes and not come back?

Mr. SIMON. I would much prefer to do it now, if I could.

Chairman HOLIFIELD. All right, will you come to the stand, then, and you may go ahead.

Mr. Ink, you will be here later?

Mr. INK. I would be happy to come back, and Mr. Bingman will be here for the whole day.

Chairman HOLIFIELD. Dr. Stever was here and he left.

Do you think he will be back?

Mr. INK. He will be back after lunch.

Chairman HOLIFIELD. Go ahead. We have had time to read your statement, Mr. Simon. So we will accept your statement as read for the record and go right into the questions.

And that may save some time also.

STATEMENT OF HON. WILLIAM E. SIMON, DEPUTY SECRETARY, DEPARTMENT OF THE TREASURY; ACCOMPANIED BY DUKE LIGON

Mr. SIMON. All right, sir.

(Mr. Simon's White House press release and prepared statement follow :)

FROM THE OFFICE OF THE WHITE HOUSE PRESS SECRETARY, CAMP DAVID, MD., DECEMBER 6, 1972

The President today announced his intention to nominate William E. Simon, of New Vernon, New Jersey, to be Deputy Secretary of the Treasury.

He will succeed Charls E. Walker, who has been Deputy Secretary of the Treasury since June 12, 1972. The position was created by Public Law 92-302 of May 18, 1972. Dr. Walker served as Under Secretary of the Treasury from January 1969 until he became Deputy Secretary.

Mr. Simon is Senior Partner in charge of the Government Bond Department and the Municipal Bond Department of the New York City investment banking firm of Salomon Brothers. He joined Salomon Brothers in January 1964, was elected a Partner in October 1964 and was elected to the firm's Executive Committee in 1970.

He was active in the Investment Bankers Association of America from 1955 until 1972, serving on the Board of Governors (1966-67), on the Executive Committee (1966-68), 1970, and as chairman of several committees. When the organization merged with the Association of Stock Exchange Firms in 1972 and became the Securities Industry Association, Mr. Simon was elected to the Board of Governors, the Executive Committee and the Governing Council, and was elected Chairman of the SIA's Public Finance Council.

Mr. Simon was born November 27, 1927, in Paterson, New Jersey. He received his B.A. degree from Lafayette College, Easton, Pennsylvania, in 1951, and began his career in finance in 1952 with Union Securities, where he became Assistant Vice President and Manager of the firm's Municipal Trading Department in 1955. In 1957 he joined the investment banking firm of Weeden & Company as Vice President, a position he held until joining Salomon Brothers.

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