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ing control to prevent unauthorized or illegal expenditures. We believe that these two types of control are essentially different and should not be consolidated under the Executive.
Senator BYRD. Mr. Meriam, would you explain to the committee the changes in the existing organization that your recommendations would bring about?
Mr. MERIAM. We have here, Mr. Senator, a three-column chart which compares the existing system with the system that we have proposed and the suggestions of the President's committee, Committee on Administrative Management. We have copies of this chart, and they will be distributed.
Existing and suggested financial procedure
I. Existing system
II. Suggestions of the Presi.
dent's Committee on Admin-
III. Suggestions of the Brookings
1. Accounting: Forms and proce- 1. Accounting: Transferred to 1. Accounting: Should be Acdures prescribed by General Secretary of Treasury.
counting Division under Accounting Office.
Director of Budget. Forms and procedures should be concurred in jointly by Director of Budget and Auditor General.
below.) 2. Budget: Nominally under Secre- 2. Budget: Under the President. 2. Budget: Place directly under tary of Treasury. Limited Expand organization.
President. Expand funcfunds available.
tions and organization. 3. Apportionment of appropriations: 3. Apportionment of appropri- | 3. Apportionment of appropri. Made by Budget Bureau.
ations: No change.
ations: No change. 4. Allotment of appropriations: 4. Allotment of appropriations: 4. Allotment of appropriations: Made by departments and bu- No change.
No change. reau heads. 5. Encumbrance of appropriations 5. Encumbrance of appropri- 5. Encumbrance of appropri.
and allotments: Made by de- ations and allotments: ations and allotments: Made partments and bureau heads. Made by departments and by department and bureau Approval of contracts obtained bureau heads. Approval of heads. Approval of confrom Comptroller General.
contracts obtained from tracts obtained from Audi. Secretary of Treasury.
tor General. 6. Disbursements: Vouchers drawn 6. Disbursements: No change... 6. Disbursements: No change by departments. Checks
except to expedite payments. drawn by Treasury disbursing
officers. 7. Final settlement: Made by Comp. | 7. Final settlement: Made by 7. Final settlement: Made by
troller General, responsible to Secretary of Treasury, with- Auditor General, respon• Congress.
rulings by Attorney Gen. sible to Congress.
eral on major legal issues. 8. Audit: Made by Comptroller 8. Audit: Made continuously by 8. Audit: Made continuously by General, responsible to Congress. Auditor General, respon
Auditor General, respon. sible to Congress but with- sible to Congress, with powout power to disallow pay. er to make suspensions and ments.
The CHAIRMAN. Can you state the distinctive or important differences between your plan of accounting and that which is now in force?
Mr. MERIAM. We would expand very materially the accounting data that are available for the President in the Bureau of the Budget. We would get the data for that expanded system of accounting, not by having the original expenditure documents go there and a very large expansion of the bookkeeping staff but through reports made to the Budget Bureau from the necessary accounts kept in the operating units. The forms for those accounts should be made jointly and cooperatively between the Auditor General and the Chief of the Accounting Division in the Budget Bureau, because it is entirely possible to develop one system of accounts that will furnish all the necessary data and all the necessary books for the entire system.
The second change which we would make is in the Budget Bureau. The Budget Bureau as it is at present set up is nominally under the Treasury Department. We would prefer to have it made an independent establishment, directly under the President, not within the Treasury Department at all, and we would expand the functions of the Budget Bureau, both with respect to the accounting and with respect to the machinery, for following the efficiency and economy of the operations of the Government, and we would further expand it for the purpose of coordinating the activities of the various departments.
The CHAIRMAN. May I ask you in that connection: What would be the advantages, in the opinion of the organization, in making the Bureau of the Budget an independent agency directly under the President? Would it in fact be an independent agency if it was put under the President?
Mr. MERIAM. I think it would be more of an independent agency than it is at the present time. One of our major objectives in having it an independent agency is that we do not like to see control agencies—and by “control agencies" I mean both the Bureau of the Budget and the Comptroller General, or the Auditor General, as we call him—in a large administrative department which has many functions of expenditure in operation and management. In our : judgment, the control agencies and the coordinating agencies should be independent and directly under the President, so that they do not get involved in the same problems of management, control, and operation of the great spending agencies that are involved in all the other major departments.
Senator BARKLEY. As a matter of fact, the Bureau of the Budget is not under the Secretary of the Treasury now, is it?
Mr. MERIAM. No, sir.
Senator BARKLEY. It just so happens that the present Acting Director is also an officer of the Treasury.
Mr. MERIAM. Yes, sir.
Senator BARKLEY. Which leaves the impression that it is really under the Secretary of the Treasury, but, as a matter of fact, it is not.
Mr. MERIAM. That was a compromise that was put into the Budget Accounting Act in 1921, when the House demanded that there be an independent agency and Senator McCormick advocated that it be under the Secretary of the Treasury, and the compromise was to put it nominally under the Secretary of the Treasury.
Representative TABER. Well, he really always has been an outand-out independent agent, except perhaps the last couple of years; is that not true? General Lord, General Dawes, and Mr. Douglas unquestionably were independent agents; is that not correct?
Mr. MERIAM. Yes.
Representative Vinson. He was virtually independent but he was not an independent agency.
Representative TABER. He was not under the Secretary of the Treasury.
Mr. MERIAM. General Lord, General Dawes, and Colonel Roop always reported directly to the President.
Representative TABER. Did not Mr. Douglas also ?
Representative Vinson. But that does not make it an independent agency, as we generally understand that term.
Mr. MERIAM. We would like to see that ambiguity removed and have it definitely recognized that it is directly under the President and that it is his agency for managerial control. We believe that the situation would be clarified if that action were taken.
Senator BYRD. You and the President's committee are in substantial agreement on that proposition.
Mr. MERIAM. Yes, sir.
Senator BARKLEY. I was just going to ask that question, as to whether that is not what the President's committee recommends also, so there is no difference between you on that.
Mr. MERIAM. No, sir; there is no difference between us on that. The Senator's question, as I recall it, was directed to the change we were proposing over the existing system.
The CITAIRMAN. I intended to follow that with the question you now answered, namely, what is the distinction in your mind with respect to that phase of the subject and the plan of the President's committee. You say there is substantially no distinction in that item. I do not quite understand yet how important that is, since it appears that the Budget is now merely housed in the Treasury and nominally under the Treasury Department.
Mr. MERIAM. I think it would become more important if the Budget Bureau were expanded to the extent which it should be, and it would remove all question of whether the Secretary of the Treasury was supposed to have any particular influence over the Budget Bureau. We would prefer to see the Budget Bureau entirely independent of any Cabinet officer who is responsible for large expenditures within his own establishment.
The CHAIRMAN. What, in your opinion, is the outstanding difference between the system that prevails, that which is recommended by the President's committee and that which your organization recommends, with respect to control?
Senator BYRD. Mr. Chairman, would it not be better to let him continue? Here are these different items, numbers 4, 5, 6, 7, and 8.
The CHAIRMAN. Very well. What I am trying to do is to get clear in my own mind what the real issues are between the two reports and what changes you propose to make in the existing arrangement.
Mr. MERIAM. The major issue between our group and the President's committee is on the question of where the control should be located to prevent an illegal or unauthorized expenditure. We agree with the President's Committee on Administrative Management that the question of the spending of an appropriation for a legal purpose in a legal way is entirely an administrative or executive matter, but when an executive officer, or an administrative officer proceeds on an illegal basis either spending money for an object which was not authorized by law or failing to follow the definite procedure which the Congress has prescribed to govern that type of transaction, or spending more money than the Congress has appropriated, then that is a type of auditing control. Auditing control should, in our judgment, be independent of the executive branch of the Government. Congress should continue its past practice of setting up an officer who could make a ruling that the transaction involves an illegal expenditure and cannot be approved. Now, we believe that such power should be in the hands of an independent agency answerable directly to Congress.
Senator BARKLEY. Even though the expenditure is made illegally it is still an administrative matter. I do not see where you draw the distinction between a legal expenditure being an administrative matter and an illegal expenditure, made by the same man, being not an administrative matter.
Mr. MERIAM. They are both actions of an administrative officer, but one is a legal action, well within his powers, and it is merely a matter of his discretion.
Senator BARKLEY. Now, is the Congress any better qualified to sit beside this man and pass upon the legality of his acts than some other administrative officer above him or independent of him?
Mr. MERIAM. Well, you have got the situation in which there are a large number of laws which have been developed by the Congress over a long period of years. For instance, a law on purchasing that calls for competitive bidding, open and competitive bidding. Now, if an administrative officer chooses to buy without any competitive bidding he is going beyond his powers, he is going beyond his authority, he has no legal right to spend the money in that way. Now, under our existing system we have the Comptroller General who will audit those transactions and disallow the administrator's action, because he did not comply with the law.
Senator BARKLEY. I agree with that, but it isn't any more the duty of the Congress to follow that up and be alongside of this officer all the time, to keep him from doing that, than it is for some other administrative officer to be responsible for seeing that that is done.
Mr. MERIAM. Both are responsible.
Representative Vinson. That goes to the question of the practical side of it.
The CHAIRMAN. That is the question I am going to raise now.
Representative VINSON. It seems to me that the question of power is involved here.
The CHAIRMAN. Your plan, as I understand it, is to continue and expand the preaudit in the form of a control through a legislative authority; is that correct?
Mr. MERIAM. Yes, sir.
The CHAIRMAN. Now, has your organization given thought to the question as to whether Congress, after it makes an appropriation and fixes the conditions for its expenditure, can follow the appropriation and enforce those conditions through a congressional agency? In other words, under the Constitution, as has been frequently pointed out, the enforcement of the laws is directly and expressly charged to the Executive. Congress has no law-enforcement power. Even assuming an administrative officer should undertake to expend a fund in a questionable way is it the duty of Congress, the responsibility of Congress to see that he does not do it? What is the control that you
are proposing? Is it an executive function or is it a legislative function? That is the question that rises in my mind, and I think we will have to answer that when we come to writing the provision of law in the bill relating to this subject.
Mr. MERIAM. I have a written answer to your question, Senator. I more or less anticipated a question of that type to be raised.
Representative VINSON. Before we go into that I would like to have the background of the gentleman. Are you a lawyer?
Mr. MERIAM. I have been to law school but I am not a practicing lawyer; no, sir.
Senator BARKLEY. Are you admitted to the bar?
Representative Vinson. You have never had any experience in courts?
Mr. MERIAM. No, sir.
Representative VINSON. I want to get your background, as to what kind of a lawyer you are.
Mr. MERIAM. No; I am not much of a lawyer. We at the Institute for Government Research are not constitutional lawyers.
Representative TABER. I think perhaps you should give us your background. Perhaps it would be just as well at this time to give us your experience since you graduated from school, what activities you have been in, so that the committee may know. It has been customary with the other witnesses and I think you should do it. It is for the benefit of the committee.
Mr. MERIAM. I took my bachelor's degree and my master's degree at Harvard, specializing in social sciences, particularly economics and government. I then came into the United States Government service, in the United States Census Bureau. I served in the Census Bureau for 7 years.
Representative Vinson. In what capacity ?
Mr. MERIAM. I ended up as division chief. I was appointed orig. inally as a statistical editor. I was then appointed Assistant Chief of the United States Children's Bureau, at the time the Children's Bureau was established. I served there for 3 years.
I then resigned to go to the New York Bureau of Municipal Research where I worked with Dr. Frederick Cleveland who had been the director of President Taft's Commission on Economy and Efficiency.
In 1916 I came back to Washington when the Institute for Government Research was established, and I have been connected with the Institute for Government Research ever since.
During the World War I went back into the service for 3 years as production manager of the Division of Planning and Statistics of the United States Shipping Board, where I was associated with Dr. Edwin F. Gay and Wesley Mitchell, and that group.
Then I did a good deal of work for the Congressional Joint Commission on Reclassification of Salaries. I was the statistician. Subsequent to that I worked with Senator Sterling. I was his aide