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Mr. ERLENBORN. I have no questions.
Chairman HOLIFIELD. Mr. Brown?

Mr. Brown. I would just like to say, John, I sympathize with your conversion on the road to Damascus, as far as this legislation is concerned. I may be in the process of being converted the other way.

It seems to me that an objection to the President making fundamental decisions without either public scrutiny or congressional input has some merit, but there is very little merit in the argument that the President, or the Office of Management and Budget Director, should not have some rather severe authority over the budget, which the Congress seems not to be able to bring under control.

The exercise of congressional responsibility, I think, would be very welcome and in that case we can get the argument back to where it ought to be: whether the President or the Director of the Office of Management and Budget should have the authority which has developed in this position. But that responsibility—and I use the term in both ways, responsibility and the responsible exercise of responsibility–has to go some place, and I gather that the current method of operation, is designed to assure that the President will exercise that responsibility with reference to the budget.

I have some concern that the proposed legislation is somewhat vindictive with reference to the exercise of that budgetary responsibility by the present Director of the Office of Management and Budget.

Mr. MELCHER. I would say to my colleague that I think it would be beyond possibility that the President be aware of the actions taken by the Office of Management and Budget and the details that occur. I can't believe that the President is intimately aware of the hundreds of impoundments that are now being made in his name, under

his authority, through the Director of the Office of Management and Budget. I think that perhaps one of the classic examples of the power that the OMB wields was revealed to us in the Agriculture Committee a few weeks ago, when we had Secretary Butz before us, and we asked Secretary Butz concerning the dropping of the REAP program--rural environmental assistance program-if he fully concurred with that action, and he said, “regretfully so," or words to that effect. He recognized the value of the program but felt there were other priorities.

And when questioned on who established the priorities, he hastened to lean on the Office of Management and Budget.

And when I asked him specifically how he arrived at the amount involved for cuts in his Department, he said that he collaborated with an official, an officer, an employee, of the Office of Management and Budget, completely unknown to the committee-none of us had ever heard of him. And yet Secretary Butz reluctantly collaborated in the dropping of a program of some 35 years' standing, as authorized by an act of Congress and continuously funded by acts of Congress.

Part of the decisionmaking, as Secretary Butz indicated, perhaps a joint decision or a team decision, was by some underling in the Office of Management and Budget.

I find it hard to believe that we have let the authority and the power of Congress as delegated to Cabinet officials to run their agencies, to be diluted by OMB underlings whom we have never heard of and never will hear of, except when brought out in testimony.

They make an important decision. Who was most important in that joint decision of Secretary Butz, I can't say, but the Secretary did make it very clear that it was a joint decision.

Mr. Brown. So this decision, you think, did not have the support of the President at that time? I am a little lost on this issue.

Mr. MELCHER. Well, the President's decisions are being made for him and in his name by people in the OMB and I would presume that since he does not reverse them, he must approve them. But the point is that a Cabinet member who is supposedly to advise the President on a very important part of our economy, agriculture, has to jointly make a decision with somebody you nor I nor anybody on the House Agriculture Committee ever heard of. Yet, our committee has the responsibility of directing the Agriculture Department by good legislation and the Secretary of Agriculture must carry out the acts passed by Congress.

Mr. Brown. And often the President has to affirm or deny the decision that has come up to him and either sustain the Secretary of Agriculture or the Director of the Office of Management and Budget.

If it were not for the Office of Management and Budget working with the President, then the President's thoughts on the budget would not, it seems to me, get translated directly into action. It seems to me this is a continuation of that whole question of whether or not the President should or should not be able to set his budget.

Mr. MELCHER. I certainly think that he should set his budget but I don't think the Budget Director should be exercising the policy of saying which part of the budget can be used, which part of the appropriations can be used, and which can't. And I think the details are being left to him in his office and they are not being handled very wisely.

The budget is proposed by the President, and then under the Constitution we here in the House have the duty to start the appropriations bills, either approving or disapproving of the President's budget.

Chairman HOLIFIELD. The Chair would hope we can move along. We have in the audience a distinguished Member of the Congress, John Rhodes of Arizona, and I would like to get to him.

Thank you, Mr. Melcher.

Mr. MELCHER. Thank you, Mr. Chairman, and members of the committee.

Chairman HOLIFIELD. The Chair recognizes the gentleman from Arizona, Mr. Rhodes.

STATEMENT OF HON. JOHN J. RHODES, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF ARIZONA

Mr. RHODES. Mr. Chairman, it is a pleasure and a privilege for me to appear before this distinguished committee to testify in opposition to S. 518. As you are aware, this bill would provide for the Senate to advise and consent in the appointment of any person who fills the position of Director of the Office of Management and Budget.

The timing of this legislation is rather interesting. It comes during a period in which the President of the United States has found it necessary to impound rather massive sums of money appropriated by the Congress. He has done so out of a genuine concern for the economy, and in an attempt to stop inflation and attendant increases in the cost of living

Yet admittedly these impoundments have irked certain Members of Congress on both sides of the Capitol. The feeling is that the Executive has infringed upon the prerogatives of the legislative as defined by the Constitution.

I submit that the legislation currently before this committee should not be enacted in a fit of pique. If the legislative body had been willing to face up to its responsibilities concerning the fiscal operations of the Government, impoundments would not have been necessary and I am convinced they would not have been made. The hard truth, however, is that the Congress has failed to put our economic house in order. The President has been forced to man the fiscal barriers by himself. This is not a recent development. History has shown us that:

1. The Congress never makes a rational decision as to the relationship between income and outgo.

2. The Congress never makes a rational decision as to whether its activities will be inflationary or deflationary concerning the economy,

3. The Congress never makes a rational decision as to whether or not its fiscal activities strengthen or weaken the dollar in the money markets of the world.

Mr. Chairman, I submit that this has been the case not because of any lack of concern on the part of the legislative branch, but rather because of an inherent inability of the Congress to view overall spending perspectives. This assessment was underscored in the 1971 report of the House Ways and Means Committee-comprised, I might add, of a majority of Democrats—which pointed to "a historical inability on the part of the Congress to define economic priorities.” It is the President, Mr. Chairman, who has been forced to take the long fiscal viewand that is the essential case for Presidential impoundment of funds.

The failure of the Congress to face up to fiscal realities creates a vacuum of no mean proportions. Government like nature, abhors a vacuum. In order to fill this vacuum, those individuals who have occupied the office of the Presidency have for years found it necessary to impound funds.

I would ask the members of this committee to bear in mind that impoundment is not a new practice. It has been imposed upon the appropriation process by every President in my memory. I well remember the celebrated fight between the late President Harry Truman and the Republican 80th Congress concerning the size of the Air Force.

In that instance, the Congress appropriated funds, and the Executive impounded them. I think in that instance it is also well to note the impoundment came as a result of a Presidential disagreement with the Congress concerning the size of the Air Force, and not because the Executive felt that the expenditure of these funds would inhibit the economy, cause an unbalanced budget, or hurt the dollar on the monetary markets. In other words, Harry Truman had less reason to impound funds than Richard Nixon now has for the impoundments which he is making at the present time.

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More recently, we remember the Kennedy administration's refusal to release $180 million which the Congress added to the President's request for development of the B-70 bomber.

În 1966, President Johnson cut back Federal spending by $5.3 billion in order to meet the inflationary effects of the Vietnam war. President Johnson's cutbacks were in the areas of transportation, housing and urban development, education, agriculture, and health and welfare.

I should like now, Mr. Chairman, to address myself to the essential question: should the Senate have the power to advise and consent in the matter of appointment of the Director of the Office of Management and Budget?

Apparently certain Members of the body feel that if the person to occupy the directorship of the Office of Management and Budget is called upon to testify before the appropriate committees of the Senate, it may be possible to exact certain promises from him concerning impoundments, and perhaps other fiscal matters.

I do not doubt that this might happen. I can easily imagine a future designate for the directorship of the Office of Management and Budget making all sorts of promises to the Congress in order to procure favorable advice and consent to his appointment. At that time, I can easily imagine a future President of the United States finding himself a brandnew adviser on budgetary matters. In short, the hapless individual who has made all of those economic promises to the Senate would find himself completely bypassed and cut down to the size of an errand boy.

It is only realistic to assume that any President is going to have his adviser on budgetary matters. That person can either be the visible Director of the Office of Management and Budget, or he can be some less visible member of the President's personal staff.

Certainly, if the person appointed as Director of the Office of Management and Budget is hampered by having made certain promises in order to secure confirmation, the President's budgetary adviser will be someone other than that person. The intentions of those who support S. 518 in order to elicit promises of fiscal policy will thus remain unfulfilled.

I am of the judgment, Mr. Chairman, that there are alternate routes toward developing for the Congress an efficient fiscal mechanism by which we can rationally oversee appropriations. I am hopeful that the Joint Committee on the Budget, of which I am a member, will outline such a mechanism. I would entirely support an honest, mature effort on the part of the Joint Committee on the Budget rather than the impulsive response to the impoundment question which, in my opinion, this legislation represents.

Mr. Chairman, there is one further point of relerance which I would like to bring to the attention of this committee. The House of Representatives has a constitutional right to initiate revenue matters. As a matter of custom and usage, the House also originates appropriations. For years, the other body has attempted to cut down on the House's prerogatives as to appropriations by the sponsoring of legislation calling for backdoor spending. Too often the House of Representatives has fallen for this type of legislation and as a result, the appropriations process has been severely diluted. These changes have made the House

almost incapable of performing the type of fiscal surveillance that it is expected to perform.

However, the Office of Management and Budget and its Director have been peculiarly oriented toward the House, because of the fact that we still have this vestige of appropriations' power. If now, we acquiesce in the request of the other body to subject the Director of the Office of Management and Budget to confirmation, I can see that the attention of the person who holds that office will shift from the House to the Senate. The power of the House in appropriations and fiscal matters will have been further diluted. I, for one, do not favor any legislation which might cause this to happen.

For these reasons, Mr. Chairman, it is my hope that this great committee will withhold its approval of S. 518.

Thank you, sir.

Chairman HOLIFIELD. We thank the gentleman from Arizona for this very thoughtful communication.

Mr. Rosenthal, do you have any questions?
Mr. ROSENTHAL. Very briefly. Thank you, Mr. Chairman.

I do want to thank my colleague for a very significant statement. Is the burden of your opposition to this legislation grounded in the fact

you don't want to see the committee of the House act in an impulsive way or out of pique ?

Mr. RHODES. That would certainly be one reason. It appears to me the timing of this legislation is most unfortunate, in that it appears because of the various pronouncements, mainly from other Members of the other body, concerning impoundments, that this is an attempt to slap the President's wrist. And I don't think it is worthy of the Congress to operate in this way.

If we face up to our responsibilities, I think, it will not be necessary to worry about impoundment.

Mr. ROSENTHAL. Is it also a principal burden of your argument that if Congress had its own budget, budget machinery, this wouldn't be necessary

? Mr. RHODES. Absolutely. I am very much is favor of Congress having that type of machinery, so that we will have a legislative budget.

And if it might be possible, Mr. Chairman, I would like permission at this point, to insert in the record a memorandum of about three pages in length, which I have prepared as a member of the Joint Committee of the Budget, which sets forth my ideas along these lines.

Chairman HOLIFIELD. The Chair would ask for its pertinence to the legislation.

Mr. RHODES. It is pertinent to my comment on the legislation.

Chairman HOLIFIELD. We will stretch a point and allow it to be entered.

Mr. RHODES. I appreciate it.
(The document referred to follows:)

STUDY "ON FISCAL MATTERS

In evolving a new system for the appropriation and expenditure of funds, it is necessary to find either the hen or the egg. In my opinion, the only proper starting point is not the amount of new obligational authority, but the amount of dollars to be spent in a tiscal year.

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