As is well known, new obligational authority can be expended either in the year in which it is appropriated, or in subsequent years. It does not have, therefore, as great an impact on the economy or the taxpayer as does the actual dollar outlay.

If discipline is to be imposed on the Congress and the administration, it will be necessary for the proper expenditure figure to be determined, and then it must be made very difficult for that figure to be exceeded. In my opinion, the proper expenditure figure should be that amount which keeps the economy on an even keel. Perhaps, it would be better stated, to say that it is that amount of money which neither deflates the economy, or inflates it at an unacceptable rate. Mainly, I should think that a figure which would result in 3 percent inflation or less would be acceptable.

The question then arises as to how such a figure will be determined, and by "whom. Economic forecasts are certainly not the product of an exact science. However, they can be, and increasingly are becoming quite accurate. It seems to me that a body of the Congress, perhaps the Joint Economic Committee, should have as its first duty in each session the determination of the proper level of expenditure for the coming fiscal year. This determination should be made only after consultation and testimony from people both in and out of government who are experts in the field.

The figure thus derived should then become the basis upon which the Appropriations Committee would hold very general hearings, preparatory to coming up with the figure at which the government must operate. This figure can either coincide with the optimum figure derived by the Joint Economic Committee, or it may not. The Appropriations Committee can, however, make a rational decision as to whether or not the operations of the Government will be deflationary or unduly inflationary. This is a decision which nobody makes at the present time.

At the close of the hearings, the Appropriations Committee should not only set the figure for overall expenditures, but should divide that figure in accordance with the areas of jurisdiction of the various subcommittees of the Appropriations Committee.

Concurrently with the deliberations of the Appropriations Committee, the Ways and Means Committee should also be looking at prospective revenues for the coming fiscal year, and deciding whether or not they will be adequate to meet the probable level of expenditures. If they are not adequate, the Ways and Means Committee should be considering raising sufficient revenue, or in the alternative should make the decision to let the Government operate on a deficit basis. This also is a decision which nobody makes under the present system. It either happens or it doesn't.

When these three committees have completed their work, a resolution should be brought to the floor of the House under the auspices of the Appropriations Committee. This resolution should contain the recommended figure for expenditures, broken down by subcommittees of the Appropriations Committee. It should also contain the intention of the Ways and Means Committee with reference to the possible revisions of the revenue structure. These revisions would not be submitted in detail, but only in generalities, and the appropriate legislation implementing the resolution would be considered in detail by the Ways and Means Committee and presented at a later date.

The resolution offered would be debated and should be made subject to amendment. There will undoubtedly be tradeoffs suggested between the various areas of jurisdiction of the subcommittees of the Appropriations Committee. There may be amendments suggested in the total of expenditures. All amendments should be considered and disposed of in the ordinary way. At the close of debate and amendment, the Congress will then have its tentative level of expenditure set, and that level of expenditure will be broken into the various subheads as mentioned above. Also, a decision will have been reached as to whether taxes should be adjusted to counteract a prospective deficit or surplus. The Appropriations Committee should then proceed with its subcommittee hearings so that the funds allotted each subcommittee can be properly allocated by line item. As each bill is made ready, it should be brought to the floor. After general debate, the bill should be read for amendment, but no amendment should be debated or voted on until the bill has been completely read and all amendments have been offered. Then, the amendments cutting the bill should be con

sidered first. Then amendments to raise the bill may be offered. If amendments to raise are adopted but the total of the bill will still be under the figure agreed upon, amendments would be adopted by majority vote only. If, however, an amendment or amendments are presented which would cause the level of expenditure to exceed the amount allotted to the particular subcommittee, such amendments could be adopted only by a two-thirds vote. Any bill which exceeds the limit after the amendment process must be adopted by a two-thirds vote.

It is obvious that a considerable staff will have to be assembled to complete this task. In my opinion, it will necessitate much more thought and planning ahead than we now have. In fact, the Appropriations Committee should maintain a running analysis of the effects that legislative actions, both enacted and contemplated, would have on spending for the next 5 years. Any bill which authorizes expenditures should have as part of the committee report a statement from the Appropriations Committee, or another committee entrusted with this task, as to the probable effect on the expenditures that the legislation would have for at least a 5-year period.

As to backdoor spending, there should be a rule that any bill which provides for expenditures except by the usual method of appropriations should be passed by a two-thirds vote. It would not be realistic to try to repeal existing legislation, but as this legislation requires renewal, the two-thirds vote should be required.

As to trust funds, the probable expenditure from these sources would be, of course, part of the expenditures for which a ceiling was set. However, those expenditures would naturally come "off the top," and only the sums remaining after their deduction would be available for appropriation as set forth above. All appropriations will remain tentative until all have been adopted. After the adoption of the last appropriations bill, the Appropriations Committee will be charged with the responsibility of determining the probable level of expendi tures for the coming fiscal year, including all trust funds and all backdoor spending authority. Concurrently, the Ways and Means Committee, or the Joint Committee on Internal Revenue Taxation will prepare an up-to-date estimate of the probable revenues to be received during that period, taking into account any changes made in the tax structure. Then the Joint Committee on the Budget should meet and determine that either the budget will be in balance, or that it will not be. If the budget will probably be unbalanced, the joint committee will either recommend that further revenues be raised, or that cuts be made in spending, or that the Government operate at a deficit. If cuts should be made in the spending, the joint committee should recommend the places where such cuts should take place.

If the joint committee recommends that more revenues be raised, the Ways and Means Committee of the House should be directed as first priority of business to prepare the necessary legislation and the Houses of Congress should pass it as soon as practicable.

If the joint committee recommends that cuts be made in expenditures, the Appropriations Committee would then be directed to bring a bill to the floor effecting such cuts, and press for action by both Houses of the Congress as soon as possible.

If the joint committee determines that for the next fiscal year the Government should operate at a deficit, it should submit a resolution to the Houses of Congress declaring that such is the case. The Houses of Congress could then either concur with the joint committee or recommit the matter for action aimed at producing a balanced budget.

All of this is aimed at getting the Congress to either operate within its revenues, or make a rational decision that it does not intend to do so. No scheme should be considered which would deprive the Congress of exercising its will. However, a mechanism should be devised which if faithfully followed would produce a balanced budget. It should be made necessary to upset the mechanism in order to unbalance the budget. This, I submit, would operate as considerable constraint to the Members of both Houses, and in fact might even offset the penchant many of our Members have to "go for the goodies."

Mr. ROSENTHAL. I want to take this one step further. If we can maturely dispose of the impulsive response of pique argument, I suppose anybody in high public office has emotional ups and downs, and

if we can dispose of that and lay it aside for a moment, if we can agree with you the congressional budget would be useful for Congress to have and operate out of, if we can dispose of those two objectives, I don't know what your really major opposition is to confirmation. I don't see it as the most earth-shattering thing that is going to happen. It seems like a nice orderly thing to be done and I don't see what your objection is.

Mr. RHODES. My objection would come to this point which I attempted to make. That is the fact that every President is going to have a budgetary adviser and I just happen to feel it is better to have the budgetary adviser to be a person who is well known in the country and who has the status of a Cabinet member and whose views and background are well known rather than to have it to be some more obscure person. I feel that if the Director of the Budget has to go through the process of confirmation and perhaps making definite pronouncements, as quite often the other body's committees require an applicant for confirmation to do, the President might in that event find it necessary to use somebody else for his budgetary adviser.

Mr. ROSENTHAL. Do you think he would really say some things that would extend beyond where the President would want him to go? In other words, he would hand it to the Senate in order to gain approval?

Mr. RHODES. I would hope not. But I can see that it is possible in the interest of procuring confirmation that this might be possible. I wouldn't say this would happen. I am just saying it could happen. Mr. ROSENTHAL. Thank you very much, Mr. Chairman.

Chairman HOLIFIELD. The Chair must say this, that all the Cabinet Secretaries are approved by the Senate. If during their confirmation questioning they overstep themselves, I am sure the President would withdraw the nomination and send someone else up.

I have watched these appointees, and I think they are pretty careful, and I think they should be. But it would seem to me you are unduly concerned about this particular office, when the Secretary of Defense, the Secretary of the Treasury, certainly these are important people, and they submit to confirmation. I can't remember within my service where any appointee of the President to an important position of Cabinet rank with the exception of one case in the Department of Commerce, where the individual was not confirmed.

Mr. RHODES. If the chairman will yield. I certainly don't intend to put myself in the position of being against the confirmation of Cabinet members, as such, but I would like to point out the fact that in this Executive Office, as well as in the last one, at least, and I think the one before that, the staff, the personal staff of the President, has expanded rather mightily and the job of giving advice to the President is now being accomplished by people on the President's personal staff rather than members of the Cabinet who are confirmed by the Senate.

Chairman HOLIFIELD. That is exactly what happened when we set up the Domestic Council. Its staff are all appointees, personal appointees of the President. They are all within the shelter of claiming executive privilege, and I would assume that they would furnish the type of advice that was necessary.

However, the information which the Director of the Office of Management and Budget would bring to the Congress would be the same information which the Directors of the Budget have always brought to the Congress. Although they were not subject to confirmation, they did respond to congressional inquiries and the Directors of the Budget have been before this committee and many other committees over the years. However, a different situation has developed since Reorganization Plan No. 2, which I opposed on the floor and which was reported adversely from this committee. That difference is that all of the powers that heretofore resided in the Director of the Budget were placed in the President and then the President delegated those powers to the Director of the Office of Management and Budget.

Now, that is a little quirk that has come in in the last 2 or 3 years, which did not exist in previous years. So I think the Government's fears that Mr. Ash or any other appointee would come before a confirmation committee and overextend himself in promises just to get the job, I believe it is rather unreal.

Mr. RHODES. Well, Mr. Chairman, all I am trying to say, really, is that I think the legislative should have its own budgetary process and I think the President ought to have his budget man. I would hope his budget man would be the Director of the Budget instead of somebody else. I am just a little at a loss to understand why the impetus has suddenly arisen to subject the Director of the Budget to the confirmation process, unless it does come, as I indicated in my statement from some feeling of legislative inferiority, or pique, caused by these recent impoundments.

If there is another reason, then it hasn't come to my attention. Mr. ERLENBORN. Would the Chairman yield?

Chairman HOLIFIELD. I am through. I yield.

Mr. ERLENBORN. If I might just make one observation. If this confirmation process is not intended to give the Congress some sort of hold over the man who has that office, and some ability, therefore to make him more responsive to the Congress, then what is the purpose of the legislation?

Mr. RHODES. Well, that is the point I was trying to make and I think the gentleman from Illinois has made it better than I possibly could have. I don't really see any other purpose in the legislation.

Chairman HOLIFIELD. Of course, the same argument could be made to every Cabinet level appointment, which does receive Senate confirmation, and many other statutory jobs that have been created in the executive branch, which also require confirmation.

Mr. Horton.

Mr. HORTON. Mr. Chairman, I want to express deep appreciation to the gentleman from Arizona for his statement. I think it is an outstanding statement. I think it is most scholarly, and I think it comes to grips with the main problem, and sets the proper atmosphere for this legislation. Because, what the gentleman from Arizona has pointed out is that in essence this is really not any resolution of the conflict between the Congress and the Executive, especially with regard to the impoundment of funds.

As a matter of fact, the thing that impresses me is if the President didn't have this machinery that the country would be in worse shape

than it is now because the Congress doesn't have the machinery that it needs to exercise fiscal restraint.

And I must say, I don't agree with all of the impoundments, and I am sure the gentleman at the witness stand doesn't agree with all of the impoundments, but somebody has got to keep a lid on this budget and on expenditures.

What you have done is set the atmosphere to make the point that this is an officer of the President, the Director of OMB, and it is important to keep him as such. I think your last point with regard to the appropriations process is a very good one, because if it is required. that there be Senate confirmation, it will create more strains as far as the legislature is concerned on the authority of the President to keep within the budget.

What we should be trying to do is find ways for the Congress to put restraints on the budget in its own area of responsibility, rather than to try to remove the techniques and tools that the President has to put restrains on expenditures.

So I want to say to the gentleman, I think it is an outstanding statement; it helps very much.

Mr. RHODES. I want to thank my good friend from New York and then reiterate the fact that the Joint Committee on the Budget is working and will begin holding hearings this week. The gentleman from Oregon, Mr. Ullman, is doing a magnificent job of acting as chairman of that committee. I have high hopes that from the work of this committee, we will develop a legislative mechanism which, if followed, will result in a balanced budget each year.

In other words, instead of having a situation whereby you have to work to balance the budget, I hope that this joint committee will come out with a report, which if adopted, would make it a job to have an unbalanced budget. I think the mechanism needs to be turned around. Chariman HOLIFIELD. Any questions, Mr. Erlenborn or Mr. Brown? Mr. ERLENBORN. Yes, Mr. Chairman. Not a question, really but just a short observation.

First of all, I want to thank the gentleman from Arizona for his testimony, which I think raises some very good points. The real underlying controversy here is the question of control of the budget and expenditures. It occurs to me that the whole fight is sort of reminiscent of watching the firemen and the policemen fight with each other as to who has the right to go inside the burning building to save the people that are trapped in there.

Really, the question isn't who ought to do it, somebody has to. Somebody had better. And the Congress has shown a complete inability to do it, to control this budget, to control expenditures. I would hope that, as the gentleman suggested, the Congress would strengthen its own ability to make these tough decisions, to look at appropriations in the context of a congressional budget that would introduce some discipline to what we do.

But I am not certain we will. I am not certain we want that kind of discipline. When that extra billion dollars is offered for the education appropriation, I am not certain that a majority of the Members of Congress want the kind of discipline that would require them to vote "No." It is so much nicer to vote "Yes."