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Form P, TO R. 511(a) Mr. Vest FROM Gov. Eccles Feb. 26, 1951. REMARKS: This is the letter from Sen. McClellan, about which I just talked to you on the phone. Would appreciate your preparing a reply for my signature. M.S.E. GOVERNOR ECCLES1 OFFICE C O P Y UNITED STATES SENATE Washington, D. C. Committee on Expenditures in the Executives Departments February 22, 1951 Hon, Marriner S. Eecles Board of Governors Federal Reserve System Washington, D. G. Dear Mr. Eccles: The attached bill, S. 913 > would amend the Legislative Reorganization Act of 194-6 to provide for more effective evaluation of the fiscal requirements of the executive agencies of the Government of the United States, It closely resembles S. 2898, introduced in the 81st Congress. Hearings are planned on this proposed legislation in the near future. Will you please therefore send the Committee your views and recommendations, in triplicate, at the earliest possible date? Thanking you for your attention to this matter, I am Sincerely yours, (Signed) John L. McClellan Chairman March 8, 1951. Honorable John L. McClellan, United States Senate, Washington 25> D. C. Dear Senator McClellan: This will acknowledge your letter of February 22, 1951, with which was attached your bill S. 913 which would amend the Legislat ive Reorganization Act of 194-6 to provide for the more effective evaluation of the fiscal requirements of the executive agencies of the Government. As you have indicated, S. 913 is similar in every substantial respect to S. 2898 introduced in the 81st Congress. You may recall that at your request I submitted my views on S. 2898 by letter dated February 15, 1950, .copies of which I am enclosing for your ready reference. My views with reference to S. 913 are generally similar to those which I expressed with referernce to S. 2898. 1 feel that some legislation of this kind is needed and that you are to be commended for your constructive efforts in this direction. The bill provides for an organization and adequate procedures which should enable the Congress to secure information essential to proper consideration of the complex problems involved in the appropriation requests of the various executive agencies. if I can be of any further assistance to you in connection with this matter, please let me know. With kindest personal regards, I am Sincerely yours, M. S. Eccles. Enclosures Form F. R. 511(a) TO FRQM_ REMARKS: This came from Senator McClellan through the mail. © — (Not printed at Government expense) Congressional Hecord United States of America PROCEEDINGS AND DEBATES OF T H E 8 2 ^ C CONGRESS, F I R S T S E S S I O N ONGRESS, to be accomplished, m order to adjust for The work units are then multiplied those expenditures in the budget year which will be met from the unused portions of multiyear contracts awarded in the two prior year. HON. JOHN L. McCLELLAN amount of the actual annual construction proposed expenditures relative to the budget OF Wherever possible by estimated costs per unit, thus developing EXTENSION OF REMARKS must first be made from developments and needs. these programs are divided into proper work the Federal Government social, economic, political, and many other units. Budgeting and Accounting Problems of years (unliquidated obligations carried for- But from here on, the Alice-in-Wonder- OF ARKANSAS April 25, 1951 Mr. McCLELLAN. Mr. President, I ask unanimous consent to have printed in the Appendix of the excerpts RECORD estimated and still available for expenditure. land conditions start. The controlling finan- Further, the appropriation for the proposed cial statutes require that proposed expendi- IN THE SENATE OF THE UNITED STATES Wednesday, ward) the construction program must be increased by tures be translated into so-called obligations, two additions in order to provide for ex- which [are] the total dollar amounts re- penditures occurring m the two subsequent quired to make the arrangements which are years under the long-term contracts which necessary as a practical matter to accom- are to be let m the budget year. from an article by Herman C. Loeffler, a plish a work program. They consist of the The upshot of these adjustments is that member of the staff of the Committee on full commitments to obtain desired serv- in determining the size of the appropriation Expenditures in the Executive Depart- ices by hiring people and to obtain com- for a given construction program, considera- ments, on budgeting and accounting problems of the Federal Government. The article was published in the Quarterly National Tax Journal of March 1951. There being no objection, the excerpts were ordered to be printed in the RECORD, modities and other objects by the letting tion must be given to work involved during of short- a total period of 5 years. or long-term contracts, usually limited by statute to a maximum life of 3 years. The amount of the appropriation may therefore give no indication whatever of the actual amount of The result of this requirement is that although the proposed work programs of a work to be done in the fiscal year. Expenditures not comparable with appropria~ tions i Federal agency may be identical for two suc- This Alice-in-Wonderland confusion is of course equally bad in connection with the complish these programs may be quite dif- Federal budget and appropriation pracAlice-m- actual expenditures under annual appropria- ferent. A L I C E I N BUDGET L A N D (By Herman C. Loeffler)1 tices have long since developed cessive years, the obligations requested of Congress as proposed appropriations to ac- as follows: tions. Why? Assume that in the first of As has been indicated, annual appro- two identical annual work programs of a priations include, in addition to adjustments r eral agency for successive years, obli- for carry-overs between years, the total con- Wonderland overtones of unreality and con- gations were incurred to cover a relatively tracts to be awarded m the fiscal year, with- fusion. They are badly m need of basic re- large number of 2-year contracts in their out regard to the longer period over which forms. * entirety, and that in the following year few expenditures under those contracts may be multiyear contracts were included because spread before they are completed. the expiring contracts were available from nual expenditure reported by an the prior year to supply required goods and therefore has no relation to the year when services. the contracts were let or other obligations * * DEFECTS I N CURRENT Appropriations The initial and PRACTICES based on obligations traditional stages of preparation by the departments and agencies of their annual spending requests make good sense. The organization units formulate their desired work programs in the light of 1 The ideas expressed in this article by Mr. Loeffler are his own and not to be construed as those of the Senate Committee on Expenditures in the Executive Departments, With which he became associated as a professional staff member m early 1949. For years Le was active in research work on problems of local government in New York, St. Louis, Boston, and other cities. Starting in 1941 he served 8 years with the U. S. Bureau of the Budget, mostly as one of the Assistant Chiefs of its Fiscal Division. 943626—38977 Under this assumption the agency The anagency might have the same $10,000,000 work pro- were incurred to obtain the necessary cur- grams in both fiscal years 1949 and 1950, rent deliveries. although requiring an appropriation of $12,- Imagine trying to exercise sound judgment 000,000 for the first year as contrasted with in preparing budgets under this theoretical an appropriation of only $8,000,000 for the background. second year. ready given, the agency would report expend- Under these circumstances, ap- Using the simple example al- propriations of course cease to indicate the itures of scope of agency work programs. 1949 and 1950. $10,000,000 each in fiscal years Since $12,000,000 was the This example is much simpler than the first year's appropriation, the agency had conditions existing in practice, particularly presumably been very economical and had in those departments and agencies which underspent its allowance. carry on many year, however, it had supposedly construction projects for In the second broken which 3-year building contracts are frequent. the law and seriously overspent by the same In these cases computation of an annual amount. appropriation requires that two deductions sions are entirely incorrect. Of course, both of these conclu- CONGRESSIONAL RECORD 2 Accounting In many agencies, annual appropriations controls a factor pended balances which shall have remained provide only the annual salaries of those The reader may wonder why responsible upon the books of the Treasury for two fiscal employed, plus quarters and small amounts o.ncials have so long clung to the present years, to be carried to the surplus fund and for travel and the like, so that there is prac- confused procedure. covered into the Treasury." 6 tically no carry-over between years. tion is probably due to a myriad of technical The In part that hesita- The second statute, the so-called Anti- above difficulties are therefore either non- and departures deficiency Act of 1905, provides that "no existent executive department or other Government or relatively inconsequential. perplexing details which In from traditional methods would raise in the other agencies, however, notably those letting far-flung and complicated operations of the establishment of the United States shall ex- contracts for big building operations, the Federal Government. pand, in any one fiscal year, any sum in reverse will be true; very heavy carry-over will occur between years because of multiyear contracts in effect. the Other agen- cies will lie between these two extremes. The difficulty is that one never knows to what degree the annual expenditures reported for an agency are comparable with the appropriations voted for it. Lack of cohesion More important, however, is undoubtedly excess of appropriations made by the Con- the fact that the present system lends itself gress for the fiscal year, or involve the Gov- to easy accounting controls to prevent over- ernment in any contract or other obligation spending of appropriations. fcr the future payment of money in excess Thus, each ap- propriation is set up as a control figure over an account when it is voted. is then cumulatively charged with a variable mixture of expenditures as they occur—of in budget document As to this never-never land of fiscal planning and control under practical operating conditions, let me comment very briefly on the resultant serious problems for the annual Federal budget document. That huge tome cf telephone-directory size contains an immense amount of valuable data laboriously prepared after much discussion and planning ty the Federal agencies and then gathered and reshaped by the Bureau of the Budget to fit into the President's program. It is a fact of great importance to the whole democratic process that this large collection of very important financial material of such appropriation. The account current expenditures such as the regular payroll and of the full amounts of mult;year * * *"6 These two statutes are primarily responsible for the confusion which has been briefly discussed. It is proposed that they be modified by three statutory amendments. These amendments are by no means the original contracts as awarded, regardless of their ex- ideas of the author. piration dates beyond the close of the fiscal findings of various writers (A. J. Wilson, The year. National At the end of the fiscal year, the residual ment Budget', They also reflect the Charles G. Dawes, in 1921 Federal Budget; unobligated amount is by law then no longer lcughby, The National Budget available for further obligation. Buck, Public But the Budgeting, System; Financial obligated balance is carried forward, usually and Accountability, Government-, tracts and other obligations are completed, Methods in National and State expenditures and Lucius Wilmerding, The Spending cumulated against the A. E. Control for 2 years,3 so that as the unfinished conare State- W. F. Wil- and Financing Canadian J. Wilner Sundelson, Budgetary Governments', Power, original obligations which were entered in and his testimony on June 26, 1C45, on H. the accounts to provide for each full contract Con. Res. 18), who have developed different to maturity. aspects of the thesis underlying this article. Moreover, the proposed statutory changes are Some of In this simple fashion eventual overspend- this negative reaction undoubtedly stems ing of any appropriation is prevented regard- in line with the fiscal methods successfully less of the mixed sequence of long-term and used in Canada and Great Britain. scares off many interested persons. from the fact that the basic design of the It starts with short-term transactions with either -slow or The following three-way program would some 200 pages of Presidential budget mes- rapid subsequent rates of liquidation * * *.4 replace the present loose and inadequate budget document is so faulty. sage and summary tables, prepared quite exclusively on an expenditure basis so that PROPOSED THREE-WAY PROGRAM Many laws control Federal transactions One of these, dating priations based on obligations, with a pro- requires that "the Sec- posed annual control which bases appropria- the programs proposed in the budget may be and finance * fitted into economic and financial develop- from 1874 ments in national affairs of the present and retary of the Treasury shall cause all unex- * * * *. * tions on expenditures. From such an "annuality" concept would arise many bene- near future. Incredible as it may sound, that material is supported—of necessity under existing law—by over 1,000 pages of densely packed and unrelated detail on the obligation basis which must be used for appropriations. The result is that the document has an unbelievable lack of internal cohesion.2 * annual control by Congress over the operations of Federal agencies through appro- * * * # 2 The budget document transmitted to the Congress on January 15, 1951, considerably modifies a former important summary table in an effort to bridge the gap between the expenditure approach of the budget message and the immense supporting obligation detail required by law. To that end the modified table continues the usual six columns of both appropriation and expenditure figures for the three fiscal years covered, then adds eight new columns to trace the degree to Which annual expenditures are based on the later liquidation of obligations incurred 943626—38977 against prior year appropriations. This painstaking exercise is of doubtful usefulness and unfortunately falls short of meeting the criticisms which motivate the action program proposed in this article. 3 Actually, under a 1949 statute, unused parts of appropriations are continued as available for paying claims and judgments approved by the General Accounting Office until the statute of limitations takes effect. 4 It is a great pleasure to indicate a recent basic change promulgated for agency accounting by the General Accounting Office on June 1, 1950 (Accounting Systems Memorandum No. 7, May 2, 1950). The new system permits relegating present accounting for commitments and obligations to memorandum accounts, so that the primary basis of accounting may be the expenditure controls which this article argues would have many beneficial effects in Federal operations. This development has possibilities of farreaching significance. fits of better budgeting, of a cohesive budget document, and of reports which the public really use for controlling the annual expenditures of the executive agencies. * I. LAPSING * # APPROPRIATIONS * AND * OBLIGATION'S On each June 30, lapse all annual appropriations and all unfulfilled obligations against them, thus, without exception, limiting the availability of each annual appropriation to those goods which are actually delivered and those services which are actually rendered up to the end of the fiscal year. As to permanent appropriations (which are undesirable because they escape fresh budget consideration and readjustment each year), it is proposed that the amounts thereby made available in successive fiscal years be 6 18 6 Stat. 110. 31 U. S. C. 665. 3 CONGRESSIONAL RECORD treated as if they were individual annual proposed expenditure basis of appropriations. mit the making of a meaningful table of appropriations. The reason is that the unobligated surplus receipts from and payments to the public. to be used up as the fiscal year matures Increasing importance is being placed on * * * • * * * * The essence of budget planning should be the translation of the proposed actual work program of each agency for the budget year into estimated dollars of expenditure. Once approved or modified by the Congress, these would usually be revealed too late to permit this approach in various quarters. entering purchase orders and also obtaining II. delivery of these the proposed of « BILLS porary reserves from expiring annual appro- annuality lapsing priations to pay tardy bills for goods and provision adopted, the question of obligations each annual appropriation. TARDY * CLAIMS Authorize each department to set up tem- Other benefits If # RESERVES, ETC., T O P A Y AND last-minute purchases by June 30. dollar amounts ought then to become the simple, understandable basis of control for thereunder NINETY-DAY is services actually provided up to the end of will the fiscal year, which are rendered within Instead, as has been indicated, there must drop out of part II of the budget document 90 days after June 30. now first be deducted from such amounts because both parts will then be on an ex- appropriation to pay billings delayed more the obligations of the two prior years which penditure than 90 days. it is estimated will be liquidated as expendi- duced between parts I and II by standard Many Federal agencies operate over huge tures in the current year. tables which will present a simple, uniform areas and distances—on a world-wide basis be added the "extra" amounts of long-term comparison, first in summary and then in in the case of the State and Military Depart- new obligations to be incurred against cur- detail. rent appropriations although they will not parison will show actual expenditures for the peacetime be liquidated until the two subsequent fiscal last completed fiscal year, estimated ex- cannot always render bills promptly for goods years. The comprehensibility of such a proc- penditures for the year underway, and pro- which have been delivered or services which ess is obscure, to put it mildly. posed appropriations (that is, proposed ex- have been rendered in the closing days of Then there must In past years the Budget Bureau has prepared at the request of the House Appropri- basis. Cohesion will be intro- This simple, standard, 3-year com- penditures) for the budget year ahead. ments in particular. Even under normal conditions, each fiscal year. The new basis would permit easy follow-up Use special single therefore, creditors After the bills are re- vived, some time is required to prepare ations Committee, but has not printed for and control of the financial aspects of a checks in payment. general public circulation, a complicated and work program elapses while the checks are being cashed as presented in successive and cleared by the banks. extended tabulation which bridges the gap budget documents. between the disparate part I expenditure and expenditures for each agency's program, as It has been testified by experts that the part II obligation bases of the budget docu- reported in the 1952 budget document, could printing process of the Government Print- ment. It shows for each proposed appropri- ation the proposed expenditures for the budget year ahead and the carry-overs at the beginning and end of that year. * * *7 The proposed lapsing provision would have the very great advantage of giving Congress direct control over both the amount and purpose of spending within each fiscal year, through appropriations based on expenditures. As things now stand, the carry-over to a later year of part of the obligations incurred against prior years' appropriations makes it possible for an agency to use up more of those obligations carried forward than had been anticipated, and therefore for the agency to spend at a more rapid rate than Congress had in mind when the relevant was considered and enacted. Prevent wasteful last-minute obligations Of importance also is the fact that since appropriations are based on obligations, unobligated balances of an unexpected size will arise in some agencies as the end of the year approaches. These balances should become Instead, they are a source of pos- sible waste and extravagance. The agen- cies are now prone to use them to incur lastminute obligations for delivery over future months of rugs, typewriters, motor equipment, and other items which were not part of the original budget plan. Such abuse Is also possible but probably would be of much smaller scope under the 7 be directly compared with (figures for the ing Office involves up to 90 days of delay same year in earlier documents). in billing; travel, communications, supplies, * * * This proposal would also make possible an rents, and utilities introduce delays ranging important start toward budgeting Federal up to 75 days, and transportation items up capital expenditures. For that purpose, sim- to as much as 140 days. In the latter (a) c?.ses, the railroads must not only assemble actual expenditures, by years and cumula- all freight bills but must then work out ple tables would be feasible showing tively, from the annual appropriations voted the amounts due each participating rail- in prior years to implement each multiyear road. contract authorization (see point III below); * * * It is suggested that early in July, 90-day (b) the estimated expenditure during the reserves be set up in departmental accounts current year; (c) the proposed expenditure from expiring appropriations to pay antici- during the budget year; and (d) the residual pated tardy bills submitted for goods actually amounts required to carry contract authori- delivered and services actually rendered be- zations to completion, fore July 1. for which annual This length of period seems adequate to meet anticipated tardiness of appropriations must still be voted. Such capital-budget data would show how all except a very small proportion of the bills See footnote 2. 843626—38977 far • "Uncle Sam has incurred and paid oil for the year's transactions. outstanding mortgages." appropriation savings. Thus, the actual 1950 Finally, further time time this period leaves another 90 days be- This very impor- At the same tant information is now inextricably mixed fore early January during which in with current appropriations. Treasury Department can assemble final fig- Surely the (a) the financial deliberations of the Congress on ures on total actual departmental expendi- new projects would be greatly improved by tures for the year ending June 30, and (b) this much more adequate progress data on the Budget Bureau can incorporate the ac- authorized projects underway. tual data in various comparisons The proposed expenditure approach would make possible for the first time the legislative budget stipulated under the Legislative Reorganization Act of 1946. in the budget document before it is transmitteu to the Congress. » * Treatment That act • • * of bills over 90 days late was designed to control total expenditures After the conclusion of the above 90-day during the year ahead, but the obligation period, there arises the problem of what basis shall be done with tardy bills received there- of appropriation makes it impos- sible really to limit expenditures specifi- after, including the judgments and claims cally certified by the * • * Likewise, appropriation controls on an expenditure basis would for the first time per- fice.8 8 * * General Accounting * See 63 Stat. 407, of 1949. Of- CONGRESSIONAL RECORD 4 The departments might be allowed to ab- Present construction contracts may cover sorb some or all of items below $500 each 2 or 3 years of work, thus permitting more anticipated. from their appropriations for the following labor-saving devices to be used by contrac- might actually be designed to provide for year, or a simple solution would be to vote tors a single annual appropriation to a central bringing about lower bids. for the large projects and moving ahead more rapidly than had been Or the annual appropriation thereby completion of work under contract in the Large multiyear shortest possible time, assuming the most account in the Treasury Department to pay contracts are equally feasible under the pro- favorable conditions. all posed system, but Congress may subsequent- Bureau of the Budget would be directed to ly reduce annual appropriations, and it is to hold back in nonexpendable reserves any be expected that contractors amounts not spent because of delays. amounts late. • * * billed more than 90 days * * * * * will submit In the latter case, the Where accrual accounts are installed in higher bids to take care of this eventuality. The latter proposal is also a solution for the departments, adjustment can be made It is felt that this loss is justified m order to the difficulty of estimating construction and for changes in inventories during give flexibility to Congress to adjust con- other multiyear costs far in advance. The exact role of accrual ac- struction programs to impending booms or problem here is * * one of reducing counts m the Federal scene must be worked depressions. the amount available * * out, however. achieved by specifying m each contract the priating for average or good conditions, and * * * each year. On the revenue side they can- Flexibility could also be * * The by appro- not follow State and local practice too close- amount of work to be done in each of the then holding back proper amounts in re- ly because the Federal tax liabilities of indi- years covered as specified m the original work serves if poor conditions develop. viduals, unlike individual tax liabilities on plan. local real estate, are usually not known jn advance. * * * * * Under present multiyear contract awards, * JOINT * ACCOUNTING * PROJECT As to expenditures, the accrual the public benefits if favorable weather con- accounts will be open to serious basic criti- ditions or other good luck permits a con- cism if they weaken or obscure clear, simple tractor to make the new facility available congressional control through annual appro- sooner than was anticipated. priations m the current year for goods actu- natuial sequence of operations in the elec- ally delivered and services actually rendered Budget, and the Treasury Department. tion of a large building, for example, ard m that current year. does not seem, however, that those agencies but little speeding up is feasible as the work are well-advised in compromising with adap- moves from excavation to construction of tation via accrual accounting to adjust to an * III. * CONTRACT * * AUTHORIZATIONS * SUPPORTED BY contract authorizations exclusively rather than only occasionally, as at present, to provide for multiyear programs. that each multiyear contract Require which is awarded shall contain a clause specifying that until the work is completed annual amounts of expenditure thereunder are to be wholly contingent on the size of the successive annual appropriations General Accounting Office, the Bureau of the voted by Congress. The latter provision has long been fol- foundation, floors, and walls, to installation obligation than Steel, concrete, and the joint voluntary accounting projcct of the of internal equipment. APPROPRIATIONS Use But there is a Good work has been done in recent years to improve Federal accounts through basis of supporting appropriations, an expenditure It rather basis of other supplies arrive on prearranged sched- appropriations to bring about adequate re- ules from their separate places of manufac- form ture, perhaps over limited railroad or high- cedures. way facilities. * The employment of different types of skilled and expensive labor must also of The budget and * * members of accounting * the pro- * joint accounting project can render a great service to the be planned in advance. Under such circumstances any great speed- Nation by urging Congress to adopt the ing up of the completion of large contracts three-way program here proposed to meet because of favorable conditions seems im- the probable. thing short of this fundamental approach To the extent, however, that cufiicult problems which arise. Any- lowed in the important construction con- there is early completion of contrac. work, fai1 to clear up the Alice-m-Wonderland tracts of both the Corps of Engineers and the supplementary appropriations could be voted conditions prevailing in Federal budgeting Bureau of Reclamation. between January and July if a project is and other fiscal practices. 943626—38977 82d C O N G R E S S 1st C ? Session ^ ^ R K 1 O J^ IN T H E S E N A T E OF T H E U N I T E D S T A T E S FEBRUARY 1 9 (legislative day, JANUARY 2 9 ) , 1951 Mr. M C C L E L L A N introduced the following bill; which was read twice and referred to the Committee on Expenditures in the Executive Departments A BILL To amend the Legislative Reorganization Act of 1946 to provide for more effective evaluation of the fiscal requirements of the executive agencies of the Government of the United States. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 That section 138 of the Legislative Eeorganization Act of 4 1946, as amended, is hereby amended to read as follows: 5 "joint committee o n the budget 6 "Sec. 138. (a) There is hereby created a joint service 7 committee, to be known as the Joint Committee on the 8 Budget (hereinafter in this section called the 'joint commit- 9 tee') and to be composed of ten members as follows: 2 1 " (1) Five Members who are members of the Commit- 2 tee on Appropriations of the Senate, three from the majority 3 party and two from the minority party, to be chosen by 4 such committee; and 5 " (2) Five Members who are members of the Commit- 6 tee on Appropriations of the House of Representatives, 7 three from the majority party and two from the minority 8 party, to be chosen by such committee. 9 " ( b ) No person shall continue to serve as a member 10 of the joint committee after he has ceased to be a member 11 of the committee from which he was chosen, except that 12 the members chosen by the Committee on Appropriations 13 of the House of Representatives who have been reelected to 14 the House of Representatives may continue to serve as 15 members of the joint committee notwithstanding the expira- 16 tion of the Congress. 17 A vacancy in the joint committee shall not affect the power of the remaining members to 18 execute the functions of the joint committee, and shall be 19 filled in the same manner as the original selection, except 20 that (1) in case of a vacancy during an adjournment or 21 recess of Congress for a period of more than two weeks, 22 the members of the joint committee who are members of 23 the committee entitled to fill such vacancy may designate 24 a member of such committee to serve until his successor 25 is chosen by such committee, and (2) in the case of a 3 1 vacancy after the expiration of a Congress which would 2 be filled from the Committee on Appropriations of the 3 House of Representatives, the members of such committee 4 who are continuing to serve as members of the joint com- 5 mittee, may designate a person who, immediately prior to 6 such expiration, was a member of such committee and who 7 is reelected to the House of Representatives, to serve until 8 his successor is chosen by such committee. 9 " ( c ) The joint committee shall elect a chairman and 10 vice chairman from among its members at the first regular 11 meeting of each session: Provided, however, That during 12 even years the chairman shall be selected from among the 13 members who are Members of the House of Representatives 14 and the vice chairman shall be selected from among the 15 members who are Members of the Senate, and during odd 16 years the chairman shall be selected from among the mem- 17 bers who are Members of the Senate and the vice chairman 18 shall be selected from among the members who are Members 19 of the House of Representatives. 20 " ( d ) A majority of the Members of each House who 21 are members of the joint committee shall together con22 stitute a quorum for the transaction of business, but a lesser 23 number, as determined by the joint committee, may con- 24 stitute a subcommittee and be authorized to conduct hear- 25 ings and make investigations. Any member of a sub- 4 1 committee so designated shall constitute a quorum for the 2 conduct of any hearing or investigation, but the concurrence 3 of a majority of the members of such subcommittee shall 4 be necessary before any report or findings may be sub- 5 mitted to the joint committee. 6 7 "(e) It shall be the duty of the joint committee— "(1) ( A ) to inform itself on all matters relating 8 to the annual budget of the agencies of the United 9 States Government, during and after the preparation 10 thereof; (B) to provide the Committee on Appropria- 11 tions of the House of Representatives and the Com- 12 mittee on Appropriations of the Senate with such in- 13 formation on items contained in such budget, and the 14 justifications submitted in support thereof, as may be 15 necessary to enable said committees to give adequate 16 consideration thereto; and (C) to consider all available 17 information relating to estimated revenues, including 18 revenue estimates of the Joint Committee on Internal 19 Revenue Taxation, essential programs, and changing 20 economic conditions, and, on the basis thereof, report to 21 said committees findings relating to revisions in appro- 22 priations required to hold expenditures to the minimum 23 consistent with the requirements of Government opera- 24 tions and national security; 25 "(2) to recommend to the appropriate standing 5 1 committees of the House of Representatives and the 2 Senate such changes in existing laws as may effect 3 greater efficiency and economy in government; 4 " ( 3 ) to make such reports and recommendations 5 to any standing committee of either House of Congress 6 or any subcommittee thereof on matters within the 7 jurisdiction of such standing committee relating to devia- 8 tions from basic legislative authorization, or in relation 9 to appropriations approved by Congress which are not 10 consistent with such basic legislative authorization, as 11 may be deemed necessary or advisable by the joint 12 committee, or as may be requested by any standing 13 committee of either House of Congress or by any subcommittee thereof. 15 « (f) The joint committee, or any subcommittee thereof, 1® shall have power to hold hearings and to sit and act any17 where within or without the District of Columbia whether 18 the Congress is in session or has adjourned or is in recess; S. 913 2 6 1 vice chairman of the committee and shall be served by any 2 person designated by them. 3 to 104, inclusive, of the Revised Statutes (U. S. C., title 2, 4 sees. 192-194) 5 any witness to comply with any subpena or to testify when 6 summoned under authority of this section. 7 8 "(g) The provisions of sections 102 shall apply in the case of any failure of The joint committee shall, without regard to the civil-service laws or the Classification Act of 1949, as 9 . amended, employ and fix the compensation of a staff director 10 and such other professional, technical, clerical, and other 11 employees, temporary or permanent, as may be necessary to 12 carry out the duties of the joint committee, and all such 13 employees shall be appointed without regard to political 14 affiliation and solely on the ground of fitness to perform the 15 duties to which they may be assigned: Provided, however, 16 That the services of any such employee may be terminated 17 by the concurrence of a majority of the members of the joint 18 committee. 19 mittee until a thorough investigation as to loyalty and se- 20 curity shall have been made by the Federal Bureau of 21 Investigation and a favorable report on said investigation 22 submitted to the chairman or vice chairman. No person shall be employed by the joint com- 23 (h) The joint committee shall assign members of its 24 staff (1) to assist the staff of the Committee on Appropria- 25 tions of the House of Representatives and the several sub- 7 1 committees thereof during the periods when appropriation 2 bills are pending in the House of Representatives, and (2) to 3 assist the staff of the Committee on Appropriations of the 4 Senate and the several subcommittees thereof during the 5 periods when appropriation bills are pending in the Senate. 6 At other times the staff of the joint committee shall serve the 7 joint committee directly. 8 " (i) Employees of the joint committee, upon the writ- 9 ten authority of the chairman or vice chairman, shall have 10 the right to examine the books, documents, papers, reports, 11 preliminary and other estimates of budget requirements, or 12 other records of any agency of the United States Grovern- 13 ment within or without the District of Columbia: Provided, however, That such employees shall not be permitted access 25 to books, documents, papers, reports, estimates, records, or 2g any other thing containing information classified for security yj purposes unless specifically authorized by the joint com- 2g mittee to receive such types of classified information. 29 " (j) It shall be the duty of each agency of the Govern- 20 ment to supply to the joint committee any copies of any 21 budgetary request submitted to the Bureau of the Budget, 22 which the joint committee or any subcommittee thereof may 23 request, either for regular or supplemental appropriations 24 required for each fiscal year, with the detailed justifications 25 in support thereof. Members of the staff of the joint com- 8 1 mittee are authorized to attend hearings of the Bureau of 2 the Budget at which representatives of agencies justify their 3 budgetary requests. 4 " (k) Qualified members of the staff of the Bureau of 5 the Budget shall, at the request of the Committee on Ap- 6 propriations of the House of Representatives or the Senate, 21 or any subcommittee thereof, be assigned to attend executive 8 sessions of the subcommittees of the Appropriations Com- 9 mittees and to explain the content and basis of proposed 10, appropriations. 11] " (1) When used in this section, the term 'agency' means 12 any executive department, commission, council, independent 13 establishment, Government corporation, board, bureau, divi- 14 sion, service, office, officer, authority, administration, or other 15 establishment, in the executive branch of the Government. 16 Such term includes the Comptroller General of the United 17 States and the General Accounting Office, and includes any 18 and all parts of the municipal government of the District of 19 Columbia except the courts thereof. 20 " (m) There are hereby authorized to be appropriated 21 such sums as may be necessary to carry out the purposes of 22 this section. 23 committee shall be disbursed by the Secretary of the Senate 24 upon vouchers signed by the chairman or vice chairman/' Appropriations for the expenses of the joint 01 B JJ CD i 5 ? p P O C C Q D H M O I f § 1 R to gI 3 § SM 1+ $ C D 2 f3 S^ CD P 3 * a C tc P G H P^ J - * S <^ M T > (D p. o fcn c> t M £ P o * I H M w CD P £ B o O w p CD s I _ CD ^ <1 P £ CD 3 S. & ^ O ® Hb a> M CD o CD P CD CD city o ^ o 5- P g CTQ W CD O £4 P-I w CD ' s» CD O f-a 5 O 5D X C' 3 O <1 CD CD CD H CD 3 W city CD p y P ' O H o r r > 5 00 Q CO <x> W m a o H ^ W 00 JOHN L . M C C L E L L A N , A R K . , C H A I R M A N C L Y D E R . HOEY, N . C . HERBERT R. O'CONOR, M D . H U B E R T H. H U M P H R E Y , M I N N . A. WILLIS ROBERTSON, V A . MIKE MONRONEY, OKLA. THOMAS R. UNDERWOOD, KY. JOSEPH R. M C C A R T H Y , W I S . KARL E. MUNDT, S . DAK. MARGARET CHASE SMITH, MAINE ANDREW F. SCHOEPPEL, K A N S . H E N R Y C . D W O R S H A K , IDAHO RICHARD M . NIXON, CALIF. W A L T E R L. REYNOLDS, CHIEF CLERK ^Crdicb Syetictle COMMITTEE ON E X P E N D I T U R E S IN T H E E X E C U T I V E DEPARTMENTS April 23, 1951 Honorable M. S. Eccles ghalrman, Board of Governors Federal Reserve System Washington, D. C. Dear Mr. Eccles: I acknowledge with gratitude your extended letter and enclosures of March 8, 1951 commenting so cogently on the budget bill, S. 913> which I have again introduced this year to bring about *more effective evaluation of the fiscal requirements of the executive agencies of the government"* I hope that you will wish to present those views orally and also submit to questioning by this Committee at daily morning hearings on S. 913 which are slated to start at 10:00 A.M. in Room 357 of the Senate Office Building, on May 8. If you will indicate when you can appear, we shall fit you appropriately into the agenda of witnesses. With thanks for your cooperation, believe me Sincerely yours,