INTRODUCTION OF WITNESSES

Mr. PATTEN. We now have Federal Unemployment Benefits and Allowances. The presentation will be made by Mr. Robert C. Goodwin.

We have his biography, which we will put in the record, along with the others.

[Biographies follow:]

ROBERT C. GOODWIN

Robert C. Goodwin, Associate Manpower Administrator, Manpower Administration, U.S. Department of Labor, Washington, D.C.

Mr. Goodwin was born in Payette, Idaho, June 8, 1906. He is a graduate of Whitman College, Walla Walla, Wash., from which he also holds an honorary Doctor of Laws degree. He took graduate work in public administration at the University of Cincinnati.

He began his career in employment security in 1930, as a supervisor in the Cincinnati Public Employment Service. In the following years, he served as director of the Hamilton County, Ohio Department of Public Welfare; then, as regional director of the Social Security Board, and regional director of the War Manpower Commission, both in Cleveland.

He came to Washington in 1945 as Executive Director of the War Manpower Commission, later serving as Director of the U.S. Employment Service. In 1948, he was named Administrator of the Bureau of Employment Security, and remained in that post until March 1969, when he became Associate Manpower Administrator for Unemployment Insurance.

ALFRED M. ZUCK

Alfred M. Zuck is the Associate Manpower Administrator for Financial and Management Information Systems. In this position, Mr. Zuck is responsible for establishing policy for planning, developing, and administering a financial and management information system for manpower programs.

Prior to assuming this position, Mr. Zuck served as Director of the Office of Evaluation of the Manpower Administration where he was responsible for the program evaluation of the effectiveness of all manpower training, work experience, and job programs operated by the Department of Labor.

Mr. Zuck entered Federal service in July 1958 as a Management Intern in the Office of the Assistant Secretary for Administration, Department of Labor. He has since served in a variety of administrative management positions with the Department, including, Deputy Assistant Manpower Administrator for Administration-sharing in the full range of administrative management activities for the Manpower Administration, including budget, financial management, personnel, and management analysis.

Mr. Zuck also served as Director of Federal programs with the President's Council on Youth Opportunity.

In 1970 Mr. Zuck was chosen to receive the William A. Jump Memorial Award. This award is presented annually to the two most exceptional young men in Federal service in recognition of their outstanding contributions to the field of public administration.

A native of East Petersburg, Pa., Mr. Zuck graduated from Franklin and Marshall College with an AB degree, magna cum laude, in 1957. He took his master's degree in political science with distinction at the Maxwell School of Syracuse University in 1958. He is a member of Phi Beta Kappa, Phi Gamma Mu, and Kappa Sigma.

Mr. Zuck is married and has two children. They reside in Vienna, Va.

MARVIN M. FOOKS

Mr. Fooks has been Assistant Director for Trade Adjustment Assistance since July 1971.

Just prior to assuming his present position, Mr. Fooks was a staff consultant to the President's Commission on International Trade and Investment Policy (the Williams Commission).

Mr. Fooks, an economist, joined the Department of Labor in 1962 as a management intern in the Wage Hour and Public Contracts Division. He was detailed to the Bureau of International Labor Affairs in 1963 to participate in the revision of the U.S. Tariff Schedules and subsequently served as a member of the U.S. delegation to GATT that initiated negotiations on the revised tariff schedules. In 1969, he was a recipient of the Secretary of Labor's Career Service Award. Mr. Fooks holds an A.B. (1960) from Northeastern University; an A.M. (1962) from the University of Illinois; and an M.P.A. (1970) from Harvard University. A native of Sommerville, Mass., he served with the U.S. Air Force from 1952 to 1956.

Mr. Fooks and his wife, the former Frances Stone, live in Bethesda, Md., with their one child.

CONRAD M. JONES

Mr. Conrad M. Jones has served as Director, Office of Budget, Office of the Assistant Secretary for Administration, since August 1968. From July 1965 to August 1968 he served as Deputy Director.

Prior to his service in the Department of Labor, he served as a supervisory budget analyst at the Federal Aviation Agency from 1960 to 1965. Mr. Jones served as a fiscal management officer from 1957 to 1960 with the Housing and Home Finance Agency. He entered Government service in 1939 with the National Capital Housing Authority holding increasingly responsible positions in the field of financial management, including comptroller from 1953 until 1957. Born on December 30, 1916, in Little Rock, he attended public schools in Joplin and Kansas City, Mo., and received a B.C.S. in 1942 and a M.C.S. in 1943 from Benjamin Franklin University in Washington, D.C.

Mr. Jones interrupted his civilian employment to serve for 2 years in the U.S. Army in World War II, participating in three European campaigns.

He and his wife, the former Catherine L. Dent, reside in Rockville, Md., and have three children: Conrad M., Jr., Mrs. Michael L. Hemmis, and Mrs. Steven B. Shaw.

Mr. PATTEN. How would you like to proceed? Would you like to read the statement?

Mr. GOODWIN. If it is all right with you, Mr. Chairman, I will read this statement and then try to answer any questions you might have.

GENERAL STATEMENT

Mr. Chairman and members of the committee, the budget request for fiscal year 1974 is for $365 million, which is a decrease of $110 million from the 1973 revised appropriation of $475 million. This appropriation finances unemployment compensation for the payment of benefits to former Federal employees, ex-Postal Service employees, and exservicemen as authorized under title V, chapter 85 of the United States Code, and the payment of trade readjustment allowances.

For fiscal year 1974, the estimated costs of benefits that will be paid to former Federal employees, ex-postal employees, and ex-servicemen will amount to $348.200.000. This amount will be offset by a reimbursement of $26,500,000 from the U.S. Postal Service for benefits paid to ex-Postal Service employees, making the net cost to this appropriation $321,700,000.

The Department is requesting reimbursement from the U.S. Postal Service for benefits paid to ex-postal employees. This is because operations of the Postal Service Fund are not part of the budget totals. It was the intent of the legislation establishing the U.S. Postal Service that its financial structure should include all costs attributable to its operations. Therefore, the budget makes provision for reimbursement. of these benefit payments since inception of the U.S. Postal Service.

Reductions for ex-Federal and postal employees and for ex-servicemen are due primarily to an estimated shorter average duration of compensable unemployment based on anticipated improvements in the economy. These reductions will be partially offset by an increase in the average weekly benefit amount.

For 1974, we estimate that $43,300,000 will be needed for the payment of allowances to 19,000 workers covered under the Trade Expansion Act which provides for readjustment allowances to workers from the time unemployment or underemployment begins as a result of trade agreements. This is a decrease of $1,700,000 from the 1973 requirements and is primarily due to a decrease in the number of workers who are expected to be adversely affected by trade agreements. This concludes my statement, Mr. Chairman.

Mr. PATTEN. Thank you.

REIMBURSEMENT BY THE U.S. POSTAL SERVICE

You are requesting some new appropriation language relating to transfers from the Postal Service Fund. Will you please explain why this language is necessary?

Mr. GOODWIN. It is my understanding that that was considered desirable in order to completely clarify the situation.

Mr. Zuck may wish to comment further on it.

Mr. Zuck. Mr. Patten, the language would provide that the Postal Service transfer to this appropriation such sums as the Secretary determines necessary to reimburse this appropriation for the cost of benefits paid to ex-postal employees. That is the reason for the language.

Mr. PATTEN. Can you cite the legislative authorization?

Mr. Zuck. The basic legislation establishing the Postal Service makes it self-sustaining and self-sufficient and that is the authority under which this language is being proposed.

Mr. PATTEN. Are you acquainted with the letter we have received from the U.S. Postal Service objecting to this proposal?

Mr. Zuck. No, sir.

Mr. PATTEN. We will insert the letter in the record at this point. [The letter follows:]

SENIOR ASSISTANT POSTMASTER GENERAL,

U.S. POSTAL SERVICE,

SUPPORT GROUP,

Washington, D.C., March 27, 1973.

Hon. GEORGE H. MAHON,

Chairman, Committee on Appropriations,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: It has been brought to my attention that the President's budget for fiscal year 1974 (p. 635 of H. Doc. 93-16) recommends the enactment of language to require the transfer from the Postal Service Fund to the appropriation for Federal Unemployment Benefits and Allowances such sums as the Secretary of Labor determines to be the cost of benefits for ex-Postal Service employees through June 30, 1974.

This recommendation is made on the ground that the Postal Service should operate on a financially self-sufficient basis, financing its operating costs out of its revenues and not out of hidden subsidies. The Postal Service agrees with this as a matter of principle. Properly understood, the principle of postal self-sufficiency calls for those who use postal services to bear the costs of those services.

The principle does not call for present postal customers to bear the burden of costs that are not reasonably related to the performance of present services. Thus, the principle would not justify imposing on present or future postal customers the burden of unemployment insurance benefits paid to the former postal employees in past years.

Under existing law, unemployment compensation for Federal employees is furnished under the terms of subchapter I of chapter 85 of title 5, made applicable to the Postal Service by 39 U.S.C. § 1005 (f). Sections 8503 and 8505 of subchapter I of chapter 85 authorize the Secretary of Labor and the Secretary of the Treasury to make payments necessary for the operation of the unemployment system for Federal employees. Annual appropriations to the Department of Labor provide funds for carrying out the purposes of the unemployment system. Neither the Postal Reorganization Act nor the portions of chapter 85 of title 5 applicable to the Postal Service impose any special requirement that the Postal Service finance the portion of Federal unemployment benefits paid to former postal employees. Therefore, it is clear that the proposed language requiring the Postal Service Fund to contribute to the appropriation for Federal Unemployment Benefits and Allowances for benefits to expostal employees would constitute a change in existing law. If such a change in existing law is to be made, it would be inequitable to impose the change on postal ratepayers retrospectively. Moreover, we believe that if the change is to be permanent, it would be preferable to accomplish it through substantive legislation, amending title 39, United States Code.

Accordingly, we recommend that responsibility for that portion of expenditures for unemployment benefits to former postal employees allocable to periods before July 1, 1973, remain in the United States, where it now resides. Specifically, we recommend that the proposed rider be amended to read as follows:

"* * * Provided, That, in addition, there shall be transferred from the Postal Service Fund to this appropriation such sums as are necessary to cover the cost of benefits for ex-Postal Service employees during the current fiscal year."

Under our proposal, the Postal Service would not be required to reimburse the Federal Unemployment appropriation for benefits (estimated to be about $23.5 million) paid to ex-Postal Service employees during fiscal years 1972 and 1973. However, the Postal Service would be required to reimburse the appropriation for benefits (estimated to be about $26.5 million) to be paid to such employees during fiscal year 1974. Sincerely,

BENJAMIN F. BAILAR,

Senior Assistant Postmaster General Support Group.

Mr. PATTEN. Please examine the points raised in this letter and give us your comments on them. It apparently refers to exPostal employees. Mr. ZUCK. Their recommendation is that the reimbursement be only for the current year rather than the retroactive period. We may require some legal interpretation from the Comptroller General to clarify this situation.

Mr. JONES. To give you a little background on this situation, in last year's budget and in the budget the year before, we had discussed with the Post Office Department this reimbursement and they insisted they had to reimburse to keep their costs right. It was put in the budget not as a reimbursement to this appropriation, but as deposits into the Treasury for that amount. It appeared that way for a couple of years. They never paid it. The question was raised: Why was it not paid?

We were not billed for it. So this year, because it was excluded from the budget totals, it was put in as a direct reimbursement to this appropriation and they raised the same questions with us that they raised with you as to why they should have to pay it. But it has been in the budget for a couple of years as a reimbursement to the Treasury Department.

Mr. PATTEN. I should think it would wipe itself out by now then. Because anyone who now leaves the Service and asks for the unem