of H.R. 14412 was on the basis that a report would nevertheless be required and was an effort to indicate, under those circumstances, how best the requirement governing the content of such a report should be stated in statute. Mr. BROWN. May I suggest that whether the language was furnished by the administration or was not furnished by the administration, it is totally consistent with including such a report in the report of the Council of Economic Advisers, unless you want a report with a nice cover page saying, "Report of the Council on International Economic Policy. Mr. CARLUCCI. Mr. Chairman Mr. BROWN. Can we move on to something more substantive? Mr. Ashley. I would say now after you have outlined the four areas of opposition, I mean if you want to weigh them you should have told us that. Mr. KOCH. That is really going to be the thrust of my question. As I read your statement and having listened to you, the proposals which you make in terms of amending the legislation relate to: (1) the makeup of the Board (2) the appointment of the Director and whether or not it should be subject to Senate ratification, and (3) the report which has become the main subject of the discussion. My question is would you tell us of the three areas how you rate them in terms of priority? Mr. CARLUCCI. In this connection we think its very important to understand the nature of the Council the legislation would establish, and we think that the relationship between the Executive Director of the Council, who is essentially a staff person, and the President, is exceedingly important. He must enjoy the full confidence of the President and should owe his job in effect to the President and to no one else. To require the Senate confirmation and testimony would create a different kind of a relationship. It would create an operating type of organization and we do not see the Council as an operating type of organization. We also believe that, following along these lines that an annual authorization is not appropriate. An annual authorization is appropriate when you are reviewing a program, but we are not setting up an agency designed to administer a program. We are setting up, once again, a forum, a coordinating mechanism, and we are talking about funding people to do the coordinating responsibility. So we think that the preferred approach would be to authorize such sums as may be necessary for the expenses of the Council. Third, we think that there is an anomaly with regard to the membership of the Chairman of the Federal Reserve Board. We would like to see the Secretary of Defense as a member of the Council simply because of the heavy impact of the Defense Establishment on our domestic and foreign economic policies, and finally we agree that information should be made available to the Congress and we are simply talking about what the format of making that information available is. Mr. KOCH. So the item which has really become the major subject of discussion is the one that has the least priority for you. Isn't that so? Mr. CARLUCCI. I think that is generally correct. Mr. KOCH. Aside from the work involved, are there any limitations or untoward affects that would result by your furnishing the report? If the committee decides it wants such a report, can you see any damage that can be done as a result of your furnishing that report? Mr. ASHLEY. Mr. Koch, if we could move away from the report. Mr. ASHLEY. I think we have pretty well exhausted that. Why don't you get on with the one that you managed to adduce as the No. 1 priority and why don't we start to zero in on that? Mr. ROUSSELOT. I wonder if we could go to regular order? Mr. BLACKBURN. We are veering from the procedure. Mr. ASHLEY. Mr. Koch is recognized. Mr. Kocн. Well, I think at this minute I am going to go back to the regular order. Mr. ASHLEY. Mr. Gettys. Mr. GETTYS. Thank you, Mr. Chairman. I think what we have been discussing all along is a constitutional question. As I look at the Constitution-nobody pays it much attention anymore-Mr. Secretary, and Mr. Carlucci, it says the Congress shall have power to lay and collect taxes, and so on, to regulate commerce with foreign nations and among the several States. Well, as I view both your statements, it looks to me as though you are using Congress in this instance only as a convenience for appropriation of funds. Incidentally, who is funding the Council now? Mr. CARLUCCI. The Council is presently being staffed by people on detail from different agencies. There are some 26 people on detail from different agencies. Mr. GETTYS. But who pays for it? Is it out of general appropriations by Congress for this purpose or is it not? There has been an agency created here which is being paid for by money appropriated by Congress for different purposes. Mr. CARLUCCI. That is why we are requesting legislation. Mr. GETTYS. After the fact? Mr. CARLUCCI. We are requesting Mr. GETTYS. Under what authority has this Council been established? Mr. CARLUCCI. The Council has been established under the President's general authority to coordinate interagency activities. Mr. GETTYS. You think that general authority under the Constitution exists? Mr. CARLUCCI. Yes sir; we know of nothing illegal. Mr. GETTYS. Mr. Secretary, and Mr. Carlucci, I appreciate very much your appearance here this morning because it is an indication that you do want to legalize the appropriation of funds for the use of the Council. Mr. CARLUCCI. On the legal question, Congressman, I am not a lawyer but I would be glad to submit a legal opinion for the record. Mr. GETTYS. I would like to have it. (In response to the request of Mr. Gettys, the following legal opinion was submitted for the record by Mr. Carlucci.) REPLY RECEIVED FROM MR. CARLUCCI The legal authority to detail personnel to perform functions relating to the activities of the Council on International Economic Policy is as follows: The Council on International Economic Policy was established by the President, and he serves as its Chairman. It was established to advise and assist the President in carrying out his responsibilities with respect to international economic programs and activities that affect the United States. Consequently, the Council and its staff provide assistance to the President in this area. In view of the foregoing, the detail of personnel from the various departments and independent establishments to the Council is, in fact, a detail to the White House Office which is expressly authorized by Section 107 of Title 3 of the United States Code. That section reads as follows: "Section 107. Detail of employees of executive department to the Office of President. Employees of the executive departments and independent establishments of the executive branch of the Government may be detailed from time to time to the White House Office for temporary assistance." Mr. GETTYS. Let me ask you this. In connection with the provisions of the Constitution that give the power to regulate foreign commerce to the Congress, not to the Executive, I think it is unrealistic to expect that Congress is willing to play a passive part in the formulation of international economic policy. I think we have already gone too far in that direction. I read in recent days of the executive branch entertaining thoughts of extending long term credits to the Soviet Union, in effect refinancing their supply of war materials to North Vietnam. I cannot help feel that a more equal partnership indicated in the bill we are considering today is preferable to the blank check that you have requested. I think it is incongruous that we are losing our traditional markets abroad-such as Latin America-to the French and the Germans and others, frequently because we fail to provide the kind of flexible competitive rates and terms that they are offering while at the same time we entertain the notion of extending large credits to our principal adversary in the world. I noticed Mr. Secretary, your very fine presentation last night on television and in the papers this morning, that you yourself expect a United States-Soviet trade agreement within months and all of this without any congressional involvement at all, of which I am aware. I wish you would comment on that phase. Has Congress been involved at all in the agreements that have been made? Mr. PETERSON. I have had informal discussions, Congressman, with the appropriate, at least what I thought were the appropriate specific committees concerned with that particular issue-the Ways and Means Committee and the Senate Finance Committee-and we have had informal discussions briefing those committees on the problems that came up in getting their views on the matter. So informally we have but not in a sense of a formal hearing, no. Mr. GETTYS. Do you think in the sense of the constitutional requirements you have fulfilled the provisions of the law? I am just asking for information, not to be critical in any way, because I share with you and all Americans the hope that the President's visit to China and to Russia will be successful in every way, and I commend him for his great efforts toward peace, but I am disturbed about these constitutional matters. Mr. PETERSON. Well, there will come a time, Congressman, when it will be essential to engage in very specific dialog on specific agreements. For example Mr. GETTYS. Don't they come in the form of ratification, Mr. Secretary? Mr. PETERSON. No. Mr. GETTYs. Almost? Mr. PETERSON. The most-favored-nation proposals, for example, will require Senate approval, as you know. The Senate looks at the annual appropriations, the authorizing for the Eximbank. There will be a variety of opportunities then to explore any arrangements that have been made but in the meantime we are discussing the issues informally with key Members of the Congress. I have done that myself. Mr. GETTYS. Each one of us feels like we are sort of key Members of the Congress. I would hate to go to South Carolina and tell them. the Secretary of Commerce, my dear friend and a man whom I admire, says I am not a key Member of Congress, and Lud Ashley and Ben Blackburn and John Rousselot, and so forth. We each sort of feel we have a tremendous obligation to approximately 450,000 people. Mr. PETERSON. I have made a number of mistakes this week; I think that is one of them. What I meant was there were relevant committees that had been set up for this purpose and those particular committees I meant key in that sense, not in terms of status. Mr. GETTYS. I wasn't in any way attempting to criticize you because I think you know the great respect with which I hold you, but I am very disturbed about these matters that I am discussing, and, Mr. Carlucci, would you care to comment? Mr. CARLUCCI. Yes sir, Congressman. I would like to stress that there is nothing in the comment I have made which is in any way intended to weaken the cooperative relationship between the Congress and the executive branch. Indeed, there is nothing in what I have suggested which would have Congress play a more passive role. To the contrary, we think that better staff work in the Executive Office of the President and better cooperation among the various departments engaged in international economic policy will result in clearer decisionmaking and better information for the Congress. So we see this as a vehicle by which the President can organize his own house so that we can continue to have a fruitful partnership with the Congress. Mr. GETTYS. I would not want to consume too much time, but one further question. Don't you think this Council should be responsible to the Congress as well as to the Executive? Mr. CARLUCCI. No sir; we don't. Mr. GETTYS. The Council was created for the purpose of advising the Congress. How would Congress get its information of a similar nature? Mr. CARLUCCI. Once again, we go back to the nature of the Council, which is a forum for the President to hear the views of the responsible agency heads, but the decisionmaker is the President, not the Council itself. The Council is essentially a staff body-a body which would prepare position papers and see that the options are presented in this forum. Now the individual Council members are always available, the Cabinet heads are always available to the Congress for testimony. In addition, as has been pointed out, the President sends up messages at the appropriate time. So I think it is important to make a distinction between a confidential staff relationship and an operating responsibility. Mr. GETTYS. You would want to even eliminate the confirmation by the Senate of the Executive Director? Mr. CARLUCCI. That is correct, because we are trying to set up a body which parallels the Domestic Council and the National Security Council, which serves as a staff arm of the President. It has no in dependent existence of the President and the members are themselves agency heads who are confirmed by the Senate. Mr. GETTYS. One final statement, Mr. Chairman. This leans again toward another point I am concerned about. It looks to me as though, the Cabinet system that we have had is beginning to deteriorate and everything is concentrated in the White House. Would you comment just on that? Mr. CARLUCCI. To the contrary, we think this is an effective way of pulling together the various Cabinet members who are engaged in international economic policy and I think our experiences over the past year or so, and Secretary Peterson is in a better position to comment on this than I am, have demonstrated this. Mr. GETTYS. Thank you, Mr. Chairman, and thank you, Mr. Secretary and Mr. Carlucci. Mr. ASHLEY. Mr. Blackburn. Mr. BLACKBURN. Thank you, Mr. Chairman. Gentlemen, I have to confess that I have some reservations about the need for this being an independent organization. I recognize the need for the function, for the services, but I also feel that any attempt to pretend that international economic policy can be divorced from or treated separately from domestic economic policy is just grossly untrue, and I think you would agree that we can't act in the domestic economic field without it having international repercussions. Just recently we voted the minimum wage increase, which frankly I did not support, because I can see it's going to create more problems as far as competing in international markets. Now, in my own mind it would make more sense to expand the staff of the Council of Economic Advisers and there build up some expertise. They have the ear of the President. Would you care to comment on that? Mr. PETERSON. I will take a crack at that. First, Mr. Chairman, if you would bear with me on the issue of this public report business for one sentence on that subject. I can't believe that this is an issue of strategic importance to the administration, that is whether there is or is not a report. I think Mr. Carlucci was expressing a preference because the requirement of an annual report with a small staff of this amount, 20 some people, might take an inordinate amount of their time and it is a substantially smaller staff than the other departments but it is hardly what I would call a strategic issue. On your question, however, I think you are raising an important question. I would like to come to that. The Council has on its membership at the present time the Chairman of the Council of Economic Advisers, the Domestic Council head, the head of the Office of Management and Budget. All three of these members have very important domestic economic inputs. The problem, Congressman, that you run into is the following, and I would like to illustrate it. When we looked at the international competitive position of the United States, for example, and I think you may have gone through that briefing with me, it became clear that improving our technological position and our position on technological products was a very important object of the United States internationally. It was also a very important objective of the United States domestically. While we have, may have, made a role in focusing its importance, if we are going |