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I am pleased to submit to the Legislative Branch Appropriations Subcommittee this letter of justification for the budget request of the Joint Economic Committee for Fiscal Year 1995. As you know, in the 104th Congress, the Committee will be chaired by a member of the Senate. Accordingly, this letter represents my best judgement of the resources that the next chairman will require in the 1995 Fiscal Year.

As a member of the Legislative Branch Subcommittee, I clearly understand the severe budgetary pressure that the Subcommittee is under. As our Subcommittee chairman, you have done a superb job in reducing spending while continuing to fund the activities necessary to keep Congress operating. I know that the Subcommittee will face more difficult choices for the coming fiscal year.

In recognition of these budget pressures, the Committee is
requesting $4,120,000, which represents an increase of $140,000
over FY 1994. This request is entirely accounted for by the 1995
anticipated cost of living adjustment and increased agency
contributions, a category over which the Committee has no
control. The Committee is not requesting an increase in staff;
staff positions have been frozen since FY 1989, and have only
increased by two since FY 1987.

The Committee has been very careful in its spending. JEC spending adjusted for inflation is now lower than it was in FY 1988, six years ago. Real spending for the Committee has fallen by seven percent in the past two fiscal years, and the reduction is even greater if mandatory agency contributions are excluded.

The issue of agency contributions needs to be highlighted.
Unlike other Congressional committees, the JEC must pay its

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The Honorable Vic Fazio


Subcommittee on Legislative Branch Appropriations
Page two



agency contributions health and life insurance, retirement costs, and contributions to the employee savings plan directly from the Committee's budget. As the attached figures show, these mandatory costs are the only part of the budget that has been increasing.

Without these mandatory increases, JEC spending in all other areas has fallen in real terms for the past several years. If agency contributions are excluded, JEC's real expenditures have fallen by over 12 percent from their FY 1992 level, and are lower for FY 1994 than they were in FY 1982.

This cost-conscious record has not kept the Committee from performing its duties. As you know, the Joint Economic Committee was established by the Full Employment Act of 1946 in order to provide Congress with an institutional counterpart and counterweight to the Council of Economic Advisers and the vastly greater economic resources of the Executive Branch.

In line with the Committee's broad statutory mandate, activities during 1993 have covered a wide span of economic issues. In the coming year, the Committee will examine several issues of major importance to the nation's economic well-being. Among those issues are:

--Health Care Reform. The Congressional debate over health care will take up one of the most important and complex issues facing the nation and the economy. The Committee held two wellreceived hearings on health care in the fall of 1993, and will have an active agenda on this issue, concentrating on the economic impacts of different health care proposals.

--Monetary Policy. As the economy has changed, many experts, including governors of the Federal Reserve, have claimed that our old methods of evaluating monetary policy and its impacts are no longer relevant. However, there are no new measures or guideposts in place that attract wide agreement among policy makers, economists, and financial markets, and the Committee will explore this issue in depth.


-Incomes Growth and Jobs. Although there are welcome signs of a cyclical economic recovery, the U.S. economy is still creating jobs and increasing incomes more slowly than in previous recoveries, especially for those workers without a college education. Continuing a line of analysis that the JEC pioneered in the 1980s, the Committee will analyze the causes of and

The Honorable Vic Fazio


Subcommittee on Legislative Branch Appropriations
Page three

The Committee also will continue to carry out its ongoing activities, including its studies on economic developments in the former Soviet Union, China, and Eastern Europe. The increasing importance of foreign trade and international development for the U.S. economy will also be a major topic of interest.

Finally, the Joint Economic Committee will continue to inform Congress about complex, but essential economic issues. For example, starting in February of 1994, the Bureau of Labor Statistics will begin reporting the results of a new unemployment survey, which is widely expected to result in a higher reported unemployment rate. The Joint Economic Committee will help to publicize and explain this change, in order that members of Congress, the financial markets, and the public do not misinterpret the new figures.

In the next Congress, we will face important decisions that will affect the economy and the well-being of the United States for decades to come. The debate will not be simple, and Congress and the public will need clear economic analysis, in a forum that brings together members of Congress, policy makers, and outside experts. Our nation's economic problems are at least as complex as they were in 1946, when the Committee was founded, and there is no other institution that can provide the forum for analysis and debate that the Joint Economic Committee has provided for over 45 years.

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