Are those dollars immediately withdrawn from the Treasury and put into your account, or do they stay in the Treasury until you draw them out?

Secretary LOVETT. There is an account set up in the Treasury for us, but it is the rate of expenditure, Senator Sparkman, that is the critical item in the tax matter, and not the obligation amount; and it is covered in annually, is it not, Mr. Garlock?

Mr. GARLOCK. The budget as it comes to the Congress carries a new obligation budget and the expenditure budget, and the tax requirements are figured against the expenditure budget, so, when we say we will have this money on hand unspent at the end of fiscal 1953, the Treasury will take that into consideration in figuring their 1954 requirements. They would not attempt to raise the money in 1953.

Senator SPARKMAN. It is segregated from the Treasury funds?

Mr. GARLOCK. Yes, sir. They carry a cash balance just like an individual's checking account, what cash you have in there, not how much you have charged at the department store or anything. Their cash balance shows their cash position.

Senator SPARKMAN. But what about their daily report, where they show intake and outgo?

Mr. GARLOCK. This does not come into the daily Treasury statement until the check is cashed by the manufacturer for delivering the goods.

Senator SPARKMAN. It is not counted as an expenditure until you issue the check?

Secretary LOVETT. That is right, sir.

Mr. GARLOCK. Even longer than that; until the man cashes the check.

Senator SPARKMAN. Then, so far as the cash situation, or so far as the budget balance is concerned, it does not matter whether we appropriate that money or not, does it?

Senator WILEY. If we authorize it, you mean.

Senator SPARKMAN. I will put it another way. Whether it is spent or not, it does not matter so far as the showing of the Treasury is concerned, whether that money is spent or not.

Mr. GARLOCK. I am afraid to answer that "Yes" or "No." May I restate it?

it.

Senator SPARKMAN. I am afraid I have got confused even in stating

Secretary LOVETT. I think the easiest way to state it is this: The daily Treasury statement on its cash basis does not indicate the unexpended balances available to us. It only picks up the checks presented to them under our unexpended balance, which is carried in another account.

Senator SPARKMAN. Let me ask one more question, and I think this will settle it. Suppose at the end of the fiscal year you have $5,000,000,000, just for the sake of argument, left over, obligated but not spent. The Treasury, in its daily statement, shows so much revenue received for the fiscal year to that date, and it shows certain expenditures up to that date. Of course, the 5 billion would have been included in the receipts but would not be included in the expenditures.

Mr. GARLOCK. It would not be included at all, because that is a cash statement, Senator.

Senator SPARKMAN. It would not be included in the expenditures? Mr. GARLOCK. No, sir; and in making their calculations the Treasury would assume that on the basis of what we would have told them as to the time we were going to spend it, if we were going to spend it in 1954, it is in 1954 that they must either have the money through taxes or bonds.

HEARINGS PROCEDURE

Senator SMITH of New Jersey. Might I ask a parliamentary_question? Do we expect to have Mr. Lovett with us tomorrow? I have a number of questions on foreign aid.

The CHAIRMAN. It depends on how far we get.

Senator SMITH of New Jersey. I may have to go to the floor on account of the Japanese Peace Treaty debate. If he is not coming, I will submit them in writing and ask that they be put in the record. Secretary LovETT. I am scheduled either tomorrow or the next day for other hearings up here, but I will check that, Senator Smith. The CHAIRMAN. I think we want to give Mr. Lovett complete opportunity to finish his testimony, even if we have to meet tomorrow. Senator SMITH of New Jersey. That would be my thought. I think it is desirable to meet tomorrow.

The CHAIRMAN. I think in fairness to the Secretary we ought to give him an opportunity to answer all these questions.

Senator GILLETTE. I have a number of questions I want to ask; and, because of my extreme juniority on the committee, up to the present time I haven't had a chance; and, if Mr. Lovett can come back, I should like very much to have the opportunity of questioning him.

The CHAIRMAN. I am in favor of his coming back.

Secretary LOVETT. I would be delighted to come back, sir, if I am not already committed to another hearing tomorrow.

Senator GILLETTE. I am making no complaints, Mr. Chairman, excepting the fact that unfortunately I am in that position. I have sat through all these meetings, and I haven't had a chance to ask a question yet. They haven't gotten to me.

The CHAIRMAN. The chairman hasn't bothered the Secretary either. Senator TOBEY. I have just one question, very briefly, Mr. Chairman, if I may ask it.

(Discussion was had off the record.)

POSSIBLE REDUCTION OF AMOUNT REQUESTED

Senator WILEY. How much do you think we should reduce this $7.9 billion?

Secretary LOVETT. Well, Senator, the figures which we sent up are the best estimates that we can make. We did not leave any padding in this with the idea that it might be cut. I think the answer to your question, if any, is that the degree of risk must be measured by the Department and the Congress and responsible officials if any cut is applied to this.

(Discussion was continued off the record.)

Secretary LOVETT. In order to keep the matter in focus, I said that with a lesser amount of money we would be limiting our military program to a level which I felt had gone a little bit below the prudent level but which could be fairly defined as the calculated risk, and urged the Congress to regard this as an item which, if cut, would require the acceptance of a higher order of risk than I personally felt was appropriate to take at this time. I think that also applies here. Senator GEORGE. Would it be in order for me to ask you to please send me directly-I don't care whether it is put in the record-the total appropriations for the NATO program? You are only charged with the responsibility of the end items.

Secretary LOVETT. The military items.

Senator GEORGE. The military items; yes; the total appropriations up to as late a date as you can make it, and the unexpended balances and the unobligated balances. Break it down as you see fit so I can understand it.

Secretary LOVETT. I will be very glad to do that.

Senator GEORGE. Thank you very much.

(The following information was furnished:)

[In millions of dollars]

See footnotes at end of table, p. 146.

Mutual Security-Estimate of funds available, obligations, and expenditures-Continued

* UNKRA, United Nations Korean Reconstruction Agency.

6,507.4

1 This schedule is prepared on a net appropriation basis with adjustments reflected for actual transfers of funds between appropriation. However, the 1952 figures have not been adjusted for comparability to conform with the minor changes proposed in the 1953 appropriation structure.

2 Reflects the merger of funds appropriated for the Mutual Defense Assistance program with the funds appropriated for military assistance pursuant to the Mutual Security Act for 1951. Excludes $478.2 million transferred to title I economic under authority of section 101 (b) of the Mutual Security Act for 1951.

3 Reflects the merger of funds appropriated for the ECA European program with funds appropriated for economic assistance under title I of the Mutual Security Act for 1951.
4 Includes only 1952 funds appropriated for the economic program under title II of the Mutual Security Act of 1951.

Reflects the merger of funds appropriated for assistance to China under the China Aid Act of 1948 as amended with funds appropriated for economic assistance under title
III of the Mutual Security Act of 1951. Excludes $125 million appropriated for purposes of sec. 404 (b) of title IV, Public Law 472, 80th Cong.

Includes only the unobligated balance brought forward from funds appropriated for assistance to the Republic of Korea for 1951 pursuant to sec. 303 (a) of the Mutual
Security Act of 1951.

7 Includes funds appropriated in 1952 for the Mutual Security Act of 1951 plus a balance at end of fiscal year 1951 brought forward from funds available to the Institute
of Inter-American Affairs.

* Includes funds appropriated in 1952 for the Mutual Security Act of 1951 plus $62,5 million public debt authorization for loan to Spain authorized in chapter XI "Foreign Aid", Public Law 759, 81st Cong.

'Not available.

Source: Prepared by Comptroller, Office of the Director for Mutual Security, Mar. 26, 1952.