cost center operations or where they think a job might be improved upon. It's made up of seven high-level management officials from our user agencies and a permanent representative from Mr. Dewhurst's office.

As the official responsible for the health of the Fund, I'll continue to do my part to make sure that our users both inside and outside the USDA-we can't forget that other Governmental entities make use of the Working Capital Fund facilities-will have their interests equally safeguarded. We would direct your attention to that. We'll make certain that the cost to USDA will be held to the lowest possible level and that the USDA will not subsidize any other Department or agency.

I believe our proposed funding level for the Working Capital Fund of $128,470,000 is consistent with efforts to manage effectively. We hear the words "budget restraint" a great deal. I certainly subscribe to your thoughts and your views, Mr. Chairman, on the necessity for constraint and restraint. I believe in the Administration we're doing it. The offices that report to us, and the services that we provide to program agencies are doing this. We know the important thing is to deliver those programs, and the systems are not nearly so important. I think we can make our systems more effective so that they serve the program needs of the Department of Agriculture.

That concludes my remarks, and I would attempt to answer any questions, Mr. Chairman, that you might have.

[CLERK'S NOTE.-The prepared statement appears on pages 101 through 117. The explanatory notes appear on pages 118 through 203.]

PROPOSED BUDGET

Mr. WHITTEN. Thank you, Mr. Franke. We are glad to have you before us today.

As you know, I'm Chairman of the full committee on Appropriations, and there are 13 subcommittees. Mrs. Smith serves on a number of subcommittees, and we've both been here some several years.

I think basic to everything, including the economy, is agriculture. In the first place, rural areas, including cities of 50,000 and below, cover 84 percent of the land area of this country. We are very proud of our record, and I have retained the chairmanship of this subcommittee because I believe that it is basic to the rest of our economy.

I know that you're in the administrative and records end, and maybe not in policy. But you are in a position to recommend things to the Secretary.

Now, the records show here that the total budget before Congress this year has $294 billion in the latest request for military spending. There's $13.3 billion for international affairs, $468 billion for mandatory payments to individuals and corporations. Of the total of $1.1 trillion outlay request, only 25.4 percent is subject to the discretionary spending of Congress.

4-H PROGRAM

We are proud of our long record here on the subcommittee. We set up the 4-H program. I note that this election year you've got 4-H in here. But every year, for many years you've cut it out, and we've had to put it back. Not only that, but many soil conservation programs have been cut in recent years. But when you look around, we're proud of what we've been able to do.

We set up 4-H works in our major cities. We provided that they shouldn't be restricted to home economics and agriculture. The biggest 4-H Club some years ago was in Indianapolis, Indiana. They had a black boy from the Boston Club, and he and I were on the same program. He said he was glad to come down here to Washington and find out that rural people also had 4-H clubs

EXTENSION SERVICE AND SCS

We set up home economics type work in the cities under the Extension Service. We have restored funds for soil conservation. I say this, which you already know-our money is nothing but paper. We have no gold and silver behind it. All we have is our own country. And it's sad to me to see you come in here-the Executive branch-and leave out soil conservation payments. You don't need the soil conservation technical service if there's no program for them to serve.

As you know, for eight years I've been pointing out that we're entitled to keep our foreign markets for agricultural production.. Agriculture is our biggest industry. It hires more people, provides more for our consumers at a cheaper cost, than any other three industries in this country. Nevertheless, you've scaled it back. When I say you, I mean the Administration.

FARMERS HOME ADMINISTRATION

Of those engaged in agriculture, 300,000 farmers went bankrupt because the Department required him to show that he could pay everything he owed, everything he borrowed this year, and the interest. Otherwise he couldn't get a loan.

Now, that's the Farmer's Home Administration. That was set up to keep people in business. Of course, when the Farmer's Home Administration wouldn't make a loan, the banks couldn't make a loan. The FDIC got tough with banks that had farm loans because if the lender of last resort wouldn't make a loan, that scared off all the rest of them.

We had an investigation of the FDIC and slowed that down.

We've had numerous suicides because the Department made unreasonable demands on U.S. farmers-the only place in the world where such a thing was required. This country extended credit all around the world, but not to American farmers. We've pointed this out year after year. We've passed two bills through the House to prevent this, only to lose them in the Senate.

FEDERAL CROP INSURANCE

Now, with all these cuts that everybody is asked to make, you are in here wanting more money for overhead. You have in your

Department the crop insurance program. The record as of now shows that while crop insurance is just about the size it was eight years ago, the overhead has increased 300 percent. This increase went to the insurance companies.

SALE OF ASSETS

Yesterday, in the appearance of the Secretary of Energy before another subcommittee, he said we should sell Elk Hills. I mentioned this earlier. Elk Hills is an oil reserve that we've had for many years. Forty years ago they tried to give it away, and we blocked it. Now the record shows that they have made $10 billion on this oil reserve in the last 10 years. They want to sell it for $3.5 billion. The record also shows that they can expect, if they keep it, to make another $15 billion.

FOREIGN IMPORTS

Not only that, but we've opened our country up to imports, where all other countries can sell their agricultural products over here. I believe it was May a year ago that we let $365 million worth of farm products above what we exported come in here in competition with ours. We are in a fix on the National debt. I've tried to point out that, if you let agriculture go down, the rest of the country goes down. If you don't believe that, look at your own records. Eight years ago, our public debt was $900 million. Now it's $2.6 trillion. If you want any evidence of what your policies are dcing, just look at the National debt. I don't see what we can do.

NATIONAL FINANCE CENTER

Now, you haven't mentioned it in your oral testimony, but after you brag all over the place about the National Finance Center, and we agree with you, you want to give it away to somebody else so you can rent it back. What is the story there? That didn't originate with you, did it?

Mr. FRANKE. The National Finance Center?

Mr. WHITTEN. Getting rid of it and paying a commission to have it done for you. In other words, it looks like everything in Government that makes money you want to give to somebody so they can make money at the expense of the rest of us. I want the appropriate sections of the Administration's proposal to "privatize" the National Finance Center put into the record.

[The information follows:]

EXECUTIVE OFFICE OF
THE PRESIDENT

OFFICE OF MANAGEMENT

AND BUDGET

MAJOR POLICY INITIATIVES

FISCAL YEAR

c. NATIONAL FINANCE CENTER

The Department of Agriculture operates the National Finance Center (NFC), which provides automated financial management systems for USDA and non-USDA Federal agencies. These commercial services are readily available from the private sector, in clear contrast to the government's cost-effective policy to rely on the private sector for the provision of goods and services. The President's budget proposes to establish a Federal Employee Direct Corporate Ownership Opportunity Plan (FED CO-OP) at NFC.

PROGRAM HISTORY AND CURRENT STATUS

NFC activities incorporate payments, accounts receivable, central accounting, payroll/personnel and property management information.

The Center processes 16 million transactions annually, disbursing over $5 billion and collecting $300 million on behalf of Federal clients.

NFC receives no Congressional appropriations, rather it provides services at cost: Fiscal year 1987 NFC budget was $51 million, with 1,123 employees (FTE). The estimated net value of NFC in 1987 was $13.6 million.

The intent of the FED CO-OP plan is to share government savings with affected employees (for more information on FED CO-OP refer to pilot projects section). In the case of NFC, where no financial savings will be realized, the structure of Employee Stock Ownership Plan (ESOP) funding would be altered to reflect:

• A pre-set value, as specified by bidding firms, and thereby becoming a selection criterion; or • A percentage of revenue generated, in which case the privatized NFC would directly share profits with employees.

Both employee and industry support of FED CO-OP is an essential ingredient to the success of the plan. Top management at NFC has expressed interest in privatizing the activity, and industry response has been extremely favorable.

ADMINISTRATION PROPOSAL

The Administration supports efforts to create a FED CO-OP pilot case at NFC. Government provision of the commercial services provided by NFC is a clear cut example of government competition with private sector firms providing similar services. In addition, employees at NFC are eager to privatize and expand the market base they currently service. Administration support to privatize NFC is an example of allowing the private sector to service a Federal need.