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HEARINGS

BEFORE THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

NINETIETH CONGRESS

SECOND SESSION

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

93-801 WASHINGTON : 1968

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COMMITTEE ON APPROPRIATIONS

GEORGE H. MAHON, Texas, Cha4rman,

MICHAEL J. KIRWAN, Ohio

JAMIE L. WRITTEN, Mississippi

GEORGE W. ANDREWS, Alabama

JOHN J. ROONEY, New York

ROBERT L. F. SIKES, Florida

OTTO E. PASSMAN, Louisiana

JOE L. EVINS, Tennessee

EDWARD P. BOLAND, Massachusetts

WILLIAM H. NATCHER, Kentucky

DANIEL J. FLOOD, Pennsylvania

TOM STEED, Oklahoma

GEORGE E. SHIPLEY, Illinois

JOHN M. SLACK, JR., West Virginia

JOHN J. FLYNT, JR., Georgia

NEAL SMITH, Iowa

ROBERT N. GIAIMO, Connecticut

JULIA BUTLER HANSEN, Washington

CHARLES S. JOELSON, New Jersey

JOSEPH P. ADDABBO, New York

JOHN J. McFALL„ California

W. R. HULL, JR., Missouri

JEFFERY COHELAN, California

THOMAS G. MORRIS, New Mexico

EDWARD J. PATTEN, New Jersey

CLARENCE D. LONG, Maryland

JOHN 0. MARSH, JR., Virginia

SIDNEY R. YATES, Illinois

BOB CASEY, Texas

DAVID PRYOR, Arkansas

FRANK T. BOW, Ohio

CHARLES R. JONAS, North Carolina

MELVIN R. LAIRD, Wisconsin

ELFORD A. CEDERBERG, Michigan

GLENARD P. LIPSCOMB, California

JOHN J. RHODES, Arizona

WILLIAM E. MINSHALL, Ohio

ROBERT H. MICHEL, Illinois

SILVIO 0. CONTE, Massachusetts

ODIN LANGEN, Minnesota

BEN REIFEL, South Dakota

GLENN R. DAVIS, Wisconsin

HOWARD W. ROBISON, New York

GARNER E. SHRIVER, Kansas

JOSEPH M. McDADE, Pennsylvania

MARK ANDREWS, North Dakota

WILLIAM H. HARRISON, Wyoming

LOUIS C. WYMAN, New Hampshire

BURT L. TALCOTT, California

CHARLOTTE T. REID, Illinois

DONALD W. RIEGLE, JR., Michigan

KENNETH SPRANKLE, Cleric and Staff Director

PAUL M. WILSON, Aasietant Clerk and Staff Director
APPROPRIATION AND EXPENDITURE REDUCTIONS,

1969

WITNESSES

HON. HENRY H. FOWLER, SECRETARY OF THE TREASURY

HON, WILLIAM McCHESNEY, MARTIN, JR., CHAIRMAN, FEDERAL

RESERVE BOARD

HON. JOSEPH W. BARR, UNDER SECRETARY OF THE TREASURY

HON. CHARLES J. ZWICK, DIRECTOR, BUREAU OF THE BUDGET

SAMUEL M. COHN, ASSISTANT DIRECTOR, BUDGET REVIEW,

BUREAU OF THE BUDGET

GENERAL REMARKS BY CHAIRMAN MAHON

Mr. MAHON. I am grateful to all of you for your appearance here

this morning. I have called this meeting in order that we might give

consideration to one of the most troublesome problems ever to confront

this committee, the Congress, and the people of the United States.

All of you know that we have had, for 17 of the past 18 years, an

unfavorable balance in our international payments account, and for the

first time in 5 years, in March. of this year we had an unfavorable balance in our foreign trade account. Our trade surplus, as you also know,

has been a main underpinning of our international payments account.

The problem is to do what is necessary to assist in maintaining confidence in the dollar at home and abroad, dealing appropriately with

rising inflationary pressures, dealing appropriately with rising Federal expenditures, and with taxes at a time when the budget is heavily

in the red. The welfare of the rich and the poor, and of the country

itself, is at stake.

The issues and implications are of monumental proportions. They

are matters for the House of Representatives and the Congress to

squarely meet. This committee is the conduit for focusing on the appropriation and expenditure questions and in channeling those questions

to the House.

Secretary Fowler made a speech yesterday to the U.S. Chamber of

Commerce in Washington. I started to read it this morning but did

not have time to read it in full. I would like to call attention to it.

It is entitled "The Hour of Fiscal Responsibility." He indicates that

that hour is at hand. I am going to insert it in the Congressional

Record.

On page 3, he says, "And what is more frightening"—and except

for the unusual fiscal situation confronting the country, Cabinet officers, especially the Secretary of the Treasury, would hardly be talking about something that is frightening—

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"And what is more frightening is a massive deficit in excess of $20

billion projected for the next fiscal year unless in the weeks immediately ahead the U.S. Congress whose Members you will be meeting this

week adopts a legislative package of fiscal restraint that combines a

substantial income-tax increase with a reduction in expenditures and

appropriations projected in the January budget."

Omitting a paragraph, I read further:

"We are facing nothing less than a test of representative governmentin economic and financial affairs."

In view of this test of the effectiveness of representative government

I have been willing to forgo some of the prerogatives of this committee

and put first what clearly seems to me to be the urgent requirements

in the overall best interests of all of our people. The country is interested not in the Appropriations Committee, or the Ways and Means

Committee, or any other committee, but in the actions by the Congress

itself in meeting the present fiscal challenges.

For weeks I have been saying to the executive branch, in numerous

conferences and negotiations: "Tell us what you recommend with respect to appropriations and spending in the light of the serious fiscal

situation and we will take action when you tell us what you recommend.

Not that we will necessarily approve what you recommend, but we will

undertake to act if you will make up your own mind and come before

us and tell us what your views are and what you are willing to do in

the way of spending restraints."

I think the hour is now ripe for an answer to this question. I have

asked the Secretary of the Treasury, the Director of the Bureau of

the Budget, and the head of the Federal Reserve System to appear

before us this morning, and assist us in coming forthrightly and

immediately to the question before us and tell us what is recommended by the executive branch by way of reductions in expenditures

and appropriations and possible rescissions of funds previously appropriated.

After we have heard from them we will then determine what we, as

a committee, think ought to be done in the situation.

Mr. Secretary, will you please respond to my question as to the

position of the Administration, and more particularly what is the

position of the Secretary of the Treasury with respect to the issue

now confronting us?

Will you please proceed?

GENERAL STATEMENT OF SECRETARY OF THE TREASURY

Secretary FOWLER. Thank you, Mr. Chairman.

You have very clearly described the many exchanges we have had

in recent days, and I have, anticipating your query, prepared a statement to make to members of the committee which is available for their

information.

In order to be very precise and responsive and to come quickly to

the points of your query I will read that statement.

Last August, the administration asked the Congress to enact a 10-

percent surcharge—amounting to an average of 1 cent on the dollar

earned. For all these many months now, we have repeatedly urged

that this measure be enacted:

To avoid the risk of inflation that will rob the poor, the elderly, and

the millions of Americans living on fixed incomes.
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To stabilize interest rates that are now climbing to new highs,

despite the best efforts of the Federal Reserve System.

To support responsibly the needs of our fighting men in Vietnam.

To sustain confidence in our dollar, the bulwark of the international

monetary system and world trade.

A tax increase is the cornerstone of fiscal responsibility. Without

such action, our own economy and the economies of other free world

nations stand in jeopardy. We have come too far to see the gains of

the last 7 years of unparalled prosperity endangered by inaction over

this vitally needed revenue measure.

The central fact is that because of the tax reductions of 1963 and

1964, just after President Johnson assumed office, Americans are paying lower taxes today than in any other period of great struggle. And

we are engaged now in two enormous struggles—in our cities and in

the field of battle in Vietnam.

A responsible fiscal policy requires that we keep our budget deficit

within prudent limits. The revenues raised through the tax surcharge—

about $10 billion for fiscal year 1969—will help us do that.

The budget the President submitted in January—which included the

surcharge—was lean, prudent, and designed to do America's urgent

work responsibility. That budget represents the best judgment of the

President and the best judgment of the top officials in the administration.

But there are many Members of the Congress, perhaps a majority,

who believe that more must be done and that reductions in expenditures are necessary if the surcharge is to be enacted.

Over the past few weeks, I have talked to the leadership and to

other Members of the Congress. In budgetary matters, the executive

branch does not decide alone. The Congress has the power and the duty

to determine appropriations and levy taxes. As the President told the

Nation on March 31, as part of the program of fiscal restraint that

includes the tax surcharge, he would be willing to approve appropriate reductions in the January budget when and if Congress so decides

that it should be done.

In light of the advice I have received from the leaders of the Congress and because I believe so strongly that it is critical for the

economy and to the future of this Nation that the surcharge become

law, the administration would approve, as part of a bill including tax

increase proposals that would bring additional revenue equivalent to

those we have long recommended, the following program of expenditure control:

A $4 billion reduction in already proposed expenditures for the

fiscal year 1969.

A $10 billion reduction in new obligational authority for fiscal year

1969.

An $8 billion rescission in new obligational authority outstanding

at the end of fiscal year 1969.

This "10-8-4" reduction formula should meet every reasonable demand for expenditure control. It will mean that eventually $18 billion

will be cut from the current spending plans of the agencies, and that

$4 billion of this reduction will actually occur in fiscal year 1969. It

provides us with just enough of a margin to adjust our programs so

that the highest priority needs of the American people can continue

to be served.
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The leadership has informed me that this combined tax surchargeexpenditure control program will generate the support of significant

numbers of House and Senate Members.

That concludes my formal statement, Mr. Chairman. I will be glad

to answer questions.

My colleague, the Director of the Budget is here, and is much more

familiar with the expenditure side and the appropriations side that

I am.

I could go on, as you know, for hours on this subject but I shall not

delay your deliberations any further.

URGENT NEED FOR ACTION

Mr. MAHON. Mr. Secretary, what is the urgency which causes you to

believe that we should take action now? The Committee on Appropriations plans to continue with its regular processing of the budget

and present the various bills, as soon as we have processed them, to

the House and send them on to the Senate. That is our time-honored

procedure, the procedure which we generally prefer, and which is not

only traditional but, in my judgment, appropriate.

Could we wait until after all the bills have been processed in the

regular way? The three bills for fiscal 1969 which have been processed

through the full committee, or in one case the subcommittee, have been

reduced at this time in terms of new budget (obligational) authority

to the extent of about $4.5 billion from the President's January budget

requests. Those reductions, if sustained, would probably result in reductions in expenditures from those projected for 1969 in the January

budget by between $800 and $900 million.

Last year, Congress cut budgeted obligations for fiscal 1968 by

about $10 billion, as you know. That included cuts against obligations

planned from both new appropriations requested and from unobli.

gated carryovers.

I must concede that, in the last 6 years, the total cut in new budget

obligational authority by Congress, according to figures prepared

for me, was only about $20 billion, which is a relatively small figure

when compared to the various targets for this single fiscal year of

1969, ranging from $10 to $14 billion.

What is your reaction, Mr. Secretary?

Secretary FOWLER. My answer to that is this: There are pending

two bills before a conference of the Members designated by the House

and the Members designated by the Senate from the taxwriting committees. One bill is the Tax Adjustment Act which was passed by the

House in early March which would extend certain excise taxes for a

period of time. They were due to expire on April 1 and this bill would

extend those excise taxes until the end of next year, and would also

accelerate the collection of certain corporate liabilities.

This bill was passed by the House and sent over to the Senate.

Hearings were held before the Senate Finance Committee, and

during the course of those hearings two members of the committee,

Senator John Williams, of Delaware, and Senator George Smothers,

of Florida, raised questions as to whether or not this bill, the Tax

Adjustment Act, should not be replaced by a measure they had introduced called the Balance of Payments and Domestic Economy Act
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of 1968, which did what the House bill did; namely, extend the excises

and accelerated the collection of corporate liabilities, but also did a

number of additional things, two of which are pertinent to our discussion here. One was to include the 10-percent tax surcharge proposals

of the administration. The second was to include certain provisions

dealing with expenditure controls, one in the form of an expenditure

ceiling which would have reduced the expenditures targeted in the

January budget from $186.1 billion to $180.1 billion, or a total of $6

billion; and a second provision which would have required the Director of the Budget to submit a report suggesting where particular cuts

in appropriations might be taken totaling $10 billion.

This bill passed the Senate. This bill also contained a number of

other provisions which I will not go into here because they are extraneous to this subject.

This amendment was after long and extensive debate, and efforts to

strike both the surcharge from the amendment and the expenditure

limitation from the amendment nonetheless passed by the Senate on

the 3d of April.

In the meeting of the conferees from the House and Senate the

urgency of a prompt and favorable disposition of this question of fiscal restraint, of what we will do about this deficit in our internal Federal budget which so vitally affects the deficit in our balance of payments—this question came up to the conferees in a very positive and

natural way.

The conference has met, and on various occasions there has seemed

to be a general feeling that it would be good for the country, good

for the world if there could be a prompt disposition of this question,

this fundamental question of fiscal responsibility in the context of

this conference.

Chairman Mills has taken a position in the Congress that the bill

as enacted by the Senate is unsatisfactory to the House conferees because it does not include adequate provisions in his judgment in taking

out of the upstream appropriations and existing budget authority and

unobligated balances that would be carried over in the year following.

It does not deal decisively with that aspect of expenditure control

which he and the House conferees feel is an essential element in any

combined package to deal with our deficit.

Obviously I cannot speak for Congressman Mills so I am reflecting

only my interpretation of his position as discussed in conference, but

the conferees as a whole are concerned with what the level of appropriations-and spending is going to be.

Chairman Mills has taken the view that he will not and the House

Ways and Means Committee will not discuss or consent, or agree in

any conference in an area that pertains to the jurisdiction of the

House Appropriations Committee, and that therefore any proposals

that should be put before the Congress for consideration by the conferees as to whether or not they are substantively satisfactory and

whether in view of a given measure of substantive agreement they

could be treated within the confines of the conference under the rules—

he will not do that until or unless the House Appropriations Committee has let its views be known on this subject and these views seem

to meet then the standards of expenditure control that his committee

has felt—and I think this is a well known fact since last October—are
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a necessary prerequisite of any decision on their part to vote an

increase in taxes.

In the comments I made yesterday, Mr. Chairman, which you may

or may not have used earlier, I put it succinctly this way:

. . . I had concluded and publicly stated back in March that it was my belief

that a responsible majority in the Congress is coming to the inescapable conclusion that we must increase taxes temporarily and that if taxes are to go up

the increase must be made temporary by conjoining it in a procedural form

yet to be determined with a reduction in the financial outlays and obligations

projected in the January budget.

I said further on March 26 on this in Philadelphia, and I want to

quote because this is the position I have taken consistently in hearings

before the Ways and Means Committee and the Senate Finance Committee and the conference:

The procedure by which a formula for combining spending reductions and a

tax increase is to be devised and enacted is a matter for decision by the Congress, its taxwriting committees, its appropriations committees, and its leadership.

That gives you as much background as I can give you on why it is

essential in my view for this committee at this time to consider the

questions that are proposed by the statement I have just read—consideration which will hopefully lead to a situation in which in this

grave hour of financial concern and distress in this country and

throughout the world the Congress can take the decisive action that is

needed at this time to deal with these massive deficits in the Federal

Budget which are facing us both in the fiscal year 1969 and in fiscal

year 1968 which it is too late to do much about it, given its order of

magnitude.

ESTIMATED BUDGET DEFICITS, 1968 AND 1969

Mr. MAHON. What is the deficit estimated to be in the current fiscal

year 1968, which ends in 2 months, and what do you think it may be in

fiscal year 1969 without a tax bill?

Secretary FOWLER. The deficit in 1968 without the tax bill--it will be

in excess of $20 billion. In 1969 it is around $21 billion.

Mr. MAHON. On top of this current year. This would be a $20 billion,

plus, deficit, probably more, followed by a $24 billion deficit. Is that

your best estimate?

Secretary FOWLER. That is my best estimate. I have some figures

here which I usually keep with me.

Mr. YATES. I didn't get those figures, Mr. Chairman.

Mr. LAIRD. Did he say "1968"?

Secretary FOWLER. Talking about fiscal year 1968 without the bill,

under the new unified budget it would be 22.8. Since that budget was

presented in January, the President in his March 31 message to the

Nation indicated there would be a need for an additional $2.5 billion

for fiscal year 1968, so in terms of fiscal year 1968 we are looking at

about $25 billion, and in terms of fiscal year 1969, about $24 billion,

back to back.

What is happening as the result of the coincidence of this budget

deficit in fiscal 1968 with an economy that is expanding on all fronts

is that our trade surplus, which has been the main reliance of our

balance-of-payments position, has just been shot down very badly, and
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we had in the month of March a trade deficit for the first time in

many years.

Mr. MAHON. Do you unequivocally support this package which you

laid out a moment ago—$4 billion cut in the January budget expenditures for fiscal 1969, a $10 billion reduction in the January new

appropriations or budget obligational authority requests, and $8 billion of recisions from carryover balances? Are you solidly and unequivocally behind this, Mr. Secretary?

Secretary FOWLER. I am with every ounce of conviction that I can

S111111I1011.

Mr. MAI-lox. If we should take unfavorable action on the package,

and if the Congress should take unfavorable action, and we do nothing

about the present situation as here recommended, in what position

would that leave the U.S. Govermnent ?

Secretary FOWLER. I think in the most serious state of financial

jeopardy that certainly I can recall in my time.

GENERAL STATEMENT OF CHAIRMAN OF FEDERAL RESERVE BOARD

Mr. MAHoN. Chairman Martin, may we now hear from you? Will

you respond to the situation here? We are seeking guidance.

I read your recent speech before the American Society of Newspaper

Editors. Some people said you were an alarmist and some people disagreed with you, but apparently most people agreed with you. I

happen -to have agreed with you and I think most Members of Congress probably agreed with you.

This is serious business involving the destiny of the country. Meaningful expenditure restraint involves many programs dear to the

hearts of a lot of people, including many Members of the Congress.

We want to do what is right in the overall best interests of the rich,

the poor, the old, the young, those of the middle class—all of our

people. We want to do what is best for the country.

want you to tell us what you think the present fiscal situation is.

I read from Secretary Fowler's speech of yesterday, on page 9, the

following:

In their recent communique on March 17 the Central Bank Governors noted

that an underlying premise for the measures taken was their belief that "It was

the determined policy of the U.S. Government to defend the value of the dollar

through appropriate fiscal and monetary measures and that substantial improvement of the U.S. balance of payments is a high priority objective.

I wonder if we have promised, directly or indirectly, to other nations that we will take steps to meet the situation which is resulting

in a trend which is eroding the dollar.

Will you speak to us for .several minutes?

Mr. MARTIN. I think you all know it is not my purpose to enter

into the discussion of where cuts ought to be made or how they ought

to be made. That is not my role in the Federal Reserve, but I do have

a responsibility in a situation such as this to point out to you, as I

have publicly and privately to a good many of you, that I believe that

we are in the most serious financial crisis since 1931. Now that is not

a business crisis. Business has not been better in my lifetime in the

country, but this is a financial crisis.

93-501--MS 2
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People will argue about this but I have related it to 1931 because at

that time the French were putting great pressure on the British pound,

and they succeeded really at that time in getting the pound into a very

erious situation.

Today the French have been putting great pressure on the American

dollar. There are dissimilarities in the situation but we see coming together here an intolerable balance-of-payments deficit which the

T7nited States is currently running and an intolerable domestic deficit.

These are overall observations, and I think that we have had three

0-old crises, three runs on our gold. I hope we will not have another.

Whether we have another will certainly depend on whether there is

some action to get our fiscal house in better shape than it is today.

You just put the figures in the record here on the budget deficit, let

us say, roughly $20 billion for 1968. These are very rough. It is more

than that for 1969 without any tax reduction at a time when we have

been having serious inflationary pressures.

In the third quarter of 1967 we had an increase in our gross national product of $16 billion and we lost roughly half of it in an increase in prices.

In the fourth quarter of 1967 we had another increase in our gross

national product of about $16 billion, and about half of that was lost

in prices.

We had a very, very strong quarter on some measurements of record

for the first quarter of 1968, $20 billion, and we lost 40 percent of that

in an increase in prices.

The second quarter of 1968 is already underway and in the second

quarter of 1968, if I were making a projection today I would say it

would be equally as good as the first quarter, and there will be a

tendency for us to lose more than the 40 percent in prices that we lost

in the first quarter.

The impact of this, gentlemen, is on the competitive position of the

United States in world trade and this is unquestionably responsible

for the protectionist sentiment that has begun to develop in the

Congress.

We can keep competitive only if we keep our general competitive

position in such a way that this trade surplus will not continue to

diminish and have an alarming decline as in the month of March of

this year.

What this does to the financial side of the picture is that there is a

relationship here between the balance of payments and the requirements of the Federal Reserve to try and keep the economy in balance,

and we have very reluctantly but very steadily had to push interest

rates up—not so much pushing them up but keeping interest rates in

tune with the market so that people who need funds can get funds.

Actually we have a situation now where the pressure for higher

interest rates is steadily growing, and you now have a prime rate of

61/2 percent, and I for one deplore rates of this magnitude but there

is no alternative under the present state of affairs.

If you have an unsound fiscal situation you are bound to have pressures on your monetary side.

We pursued an easier monetary policy than some of us thought
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was desirable in 1967 on the assumption that at some point we would

get some complementary fiscal action. It has not been forthcoming.

The financial crisis I am talking about—and I am not talking about

a business crisis—is that if we continue on this course we will have another run on gold and we will have pressure on the interest rate side

which is going to make it very, very difficult for a great many worthwhile enterprises to get financing at any reasonable rate of interest.

We have usury laws in many of the States at the 6-percent level.

With the high level of employment we now have and with the utilization of plant and equipment that we presently have, if the Central

Bank under these conditions, even with these high interest rates,

creates any more money it can do nothing but push prices up.

I stated this privately and publicly—I happen to consider this one

of the worst situations that the country has faced in a long time. I do

not want to exaggerate by giving you an indication that I think the

country is going to completely collapse if you do not do this. I do not

want to say that the world is going to come to an end if you do not do

it. However, I do say that you will have a setback for the United

States in world trade and finance that is going to take us a good many

years to overcome.

That is all I have to say, Mr. Chairman.

-URGENT NEED FOR ACTION

Mr. MAHON. If we do nothing you predict dire consequences. Would

that be 5 or 10 years from now or would it be sooner?

Mr. MARTIN. I will not put any time limit on it but I think it would

come very rapidly. I would say that this matter of fiscal responsibility

on the part of the United States has been exaggerated now in Western

Europe out .of proportion to what actually is the situation, but it has

now become a symbol of whether the United States intends or is willing to try to keep its affairs in order.

I think that is the best way I can answer the question. I think if we

continue to run this sort of a budget deficit and this sort of a balanceof-payments situation, which I think is related to this budget deficit,

over any period of time here, we are just asking for serious trouble.

Mr. MAHON. What do the financial people in Europe feel? What is

their attitude? Are they interested in protecting the dollar or do they

want to see it fall?

Mr. MARTIN. With the possible exception of the French, and I would

not even say that the French are in this situation today, almost to a

man they are anxious to see this country conduct itself responsibly

because they realize the importance to them of the dollar. The dollar

is the last fulcrum of monetary responsibility. Gold and the dollar are

really all we have today.

It used to be the pound and the dollar. The pound has been devalued now and the dollar is not in as strong a position even today

with devaluation as it should be.

I think they feel almost united that without fiscal responsibility in

the United States they do not want to continue to hold dollars on the

scale that they have and they believe that this will be a real setback

to them as well as to us.
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GENERAL STATEMENT OF DIRECTOR OF THE BUDGET

Mr. MAHON. Mr. Zwick, will you state the position of the Director of

the Bureau of the Budget with respect to the package which has been

projected here by the Secretary?

Mr. ZWICK. Yes, Mr. Chairman. I will be very brief on the need for

this action.

I think both Secretary Fowler and Chairman Martin have stated the

case. I think we all agree that these are extraordinary times and they

do require extraordinary action. The Buerau of the Budget is in complete agreement with this committee that the correct, standard, and

traditional way to handle appropriations is for the President to submit a budget and for the Appropriations Committees to act on it, and

that out of congressional action we get the budget decisions.

But these are extraordinary times, and there has been a widespread

feeling that the administration must speak out on this issue. Therefore,

we are prepared today to agree that we would live with a reduction in

spending of $4 billion for fiscal 1969, a $10 billion reduction in appropriations from what we asked for in the budget, and an $8 billion rescission of balances Of obligational authority.

I think that package meets every reasonable demand for expenditure

control.

REDUCTION IN "PIPELINE" OF CARRYOVER BALANCES

I went back and checked. There has been a lot of attention focused

on unspent authorizations, shown in that famous flow diagram on

page 56 of the budget, and on the need for reducing that amount. If we

enact this package, we will come out of fiscal 1969 with a $7.8 billion

reduction in unspent balances of Federal funds, which is comparable

to the old administrative budget.

The last time we had a reduction of that magnitude was in 1955 as

we came out of the Korean war and we had large unspent balances in

defense. This is an unprecedented and extraordinary action which

would reduce unexpended balances, other than trust funds, by $7.8

billion by the end of fiscal 1969.

Mr. MAHON. Thank you, Mr. Zwick. Mr. Bow, any questions?

DEVELOPMENT OF BUDGET REDUCTION PACKAGE

Mr. Bow. Yes, I have some questions, Mr. Chairman.

Secretary Fowler, as you know, the minority has been trying its

best to cooperate in this fiscal situation in its work with you and with

others and with this committee. I am a little surprised that we now

find a package which the minority has never had an opportunity to

discuss with those who have brought it up.

We have had meetings at the White House in the past, and I understand there was one last night to which the minority was not invited.

So this package comes to the minority as a complete surprise. None of

the leadership of the minority and none of the working members of

the committee were in that meeting.

I am wondering why a package now comes to us which the minority

had no opportunity to discuss with those who prepared it.

Secretary FOWLER. Mr. Bow, I cannot answer that question.
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Mr. Bow. Is there anyone here who can answer it?

Secretary FOWLER. I would like only to say that we have felt in the

meetings of the conference that there has been a great deal of

emphasis placed upon what is the position of the administration,

and on various occasions Mr. Zwick and I have been in difficulty in

commenting on the Senate bill and on the proposals in the Senate bill

and expressing a position of saying this is wrong with this provision,

and this is wrong with that provision.

The question always come back, "If there is something wrong with

this, what is the administration ready to do and ready to approve?"

Mr. Bow. I know that is your position, but it still does not answer

the question.

Secretary FOWLER. No, it does not.

Mr. Bow. Mr. Secretary, we have tried our best to make this a bipartisan effort to try to save the integrity of the dollar. I am a little

surprised at this $10 billion figure on new obligational authority. I

have been to the White House at meetings at which, as I recall it, the

Director of the Bureau of the Budget indicated we might go as high

as $14 billion.

Why this change from $14 billion to $10 billion?

Mr. ZWICK. The meeting at the White House you are referring to,

I presume, is the April 3 meeting.

Mr. Bow. I do not remember the date.

Mr. Zwicx. That is the evening we met there.

At that meeting there was a dialog between Congressman Mills

and myself as to technique. There was no discussion at that meeting

as to specific numbers.

Mr. Bow. I remember one where there was discussion that we might

be able to save $14 billion.

Mr. ZWICK. I would beg to differ. No numbers were discussed at that

meeting. Only the technique was discussed.

There has been a dialog, though, based on $14 billion. You are

certainly correct on that, Mr. Bow. The question, of course, is where

the $14 billion is to come from.

For example, I have personally thought that we could do more in

defense than other people think we can do in defense. At one time I

was talking about doing something on pay. You remember the dialop•

that evening on the pay raise now scheduled by law, and there was very

little enthusiasm around the room to do anything on pay. So, we lost

about $11/2 billion there. We have just whittled away the $14 billion,

Mr. Bow.

Mr. MAHON. If you will yield to me, Mr. Bow, I think I should comment at this point.

It is true that the minority has cooperated very well indeed in connection with the problems with which we have been confronted. A difficulty has been that I have not known just exactly what the administration would support. ill the way of reductions, and without the support of the Speaker and the majority leader, the Secretary of the

Treasury and the Director of the Bureau of the Budget, I did not feel

I should seek action by this committee, nor did I feel Congress would

favorably act without that support. So, this specific problem in developing this package was not with the minority. It was on the

majority side.
12

Late yesterday, it was decided that we would get those on the

majority side together and decide just what the group attending the

White House meeting could expect. This was basic to the solution of

the problem.

Arriving at the figures was difficult. We have talked about expenditure reductions of from $4 to $6 billion, even $8 billion. I did not want

to hold out false hopes or to participate in a futile operation. I was

seeking what I felt was a. meaningful package, in touch with legislative realities, one the President would support.

If Congress were to withdraw the pay raise which goes into effect

in July, that would save $1.6 billion in the budget. If we did that,

then we could increase to $5.6 billion the expenditure limitation. That.

possibility has been in the picture all the time. But it is now the consensus, as I understand it, of the leadership, and it is my belief, that

we cannot bring Congress to the position of eliminating the $1.6

billion in pay increases for the military and for civilians.

If we are unable to do that, we have to come below the $5.6 bllion,

or the $6 billion figure that has been discussed.

I take the major responsibility for insistence upon something positive and unequivocal from the leadership. I pressed on that, point for

several weeks. We have now received it. I have reported to Mr. Bow

this situation. I realize that he wants to go deeper in some respects

than this package goes.

Whatever the Committee on Appropriations wants to do, or the

House wants to do, or Congress wants to do, we should remember that

the amounts in this package are minimum figures. They are not maximum figures.

I did not invite anybody to the latest, White House meeting, but I

assume the reason that only majority Members were invited is that the

major problem with respect to the exact figures rested with the majority, and the majority had to come to an agreement before it was in a

position to make an overture to the committee and to the minority.

That is where we find ourselves.

I further yield to the gentleman from Ohio.

Mr. Bow. I would suggest, then, that the Secretary's statement

should be amended on page 4 in the last paragraph to read that "The

Democratic leadership has informed me that this combined tax surcharge-expenditure control program will generate the, support, of significant numbers of Democrats of the House and the Senate," becaus,

we certainly have not gone along with this. We have the feeling it

ought to be at least. $6 billion,

Tell us why we cannot take $6 billion.

QUESTION OF $4 BILLION VERSUS $6 BILLION EXPENDITURE REDucr io

Mr. MAI ION . Mr. Zwick, will you respond?

Mr. ZWICK. If we want to get into a long discussion of the arithmetic, let, me tell you the magnitude of the problem. The 1969 budget

is up $10.4 billion over 1968 in terms of outlays. Of that $10.4 billion

increase, $2.6 billion is due to increases in trust funds. There is a

greater increase than that, in the social security trust fund, but, you have

a reduction in the FNMA trust fund, so you have a net increase in

trust funds of $2.6 billion.
13

Then, you have an increase--I am talking now of the January

budget—you have an increase for Vietnam of $1.3 billion. That gives

you a total of $3.9 billion.

You also have $1.6 billion of pay increase in there. In addition,

there is an increase of $1.4 billion that is made up of $900 million for

interest and $500 million for public assistance.

Those increases total $6.9 billion. Now, you subtract $6.9 billion

from $10.4 billion and you get $3.5 billion, if I do my arithmetic

correctly.

There is some netting and grossing in here. As you know, we have

recommended some reductions and some increases. So, when you talk

about going above $4 billion, you are talking about taking programs

below their 1968 level.

Mr. Bow. What is wrong with that.? If I may interrupt, we have

gotten ourselves in a position where we are faced with a $25 billion

deficit because we were spending too much. We have had other deficits.

What is wrong with going below? What is so sacred about the 1968

level?

Mr. ZWICK. We believe it is more appropriate to orderly Government to take out of the spending stream over a period of years $18 billion, not to do it in a way that means in a given year you have a big

wrench in the program.

We have gone into 1969 with a very tight budget. We are saying we

would tighten it up even more by $4 billion. This is a judgment, obviously, but at this point you are talking about closing down projects

half completed. You are talking about not meeting the Government's

commitments in terms of power in the Northwest. You are talking

about fairly drastic actions.

How far one should go in any 1 year is, obviously, a matter of judgment. We thought, in terms of the consensus that came out of the meeting last night, that this was an appropriate package which would

allow us, first, to make a cut of an amount unprecedented since 1955 in

unspent authorizations and, secondly, to provide for an orderly transition to lower expenditures.

Mr. Bow. Thank you, Mr. Chairman.

Mr. WHIrIEN. Mr. Chairman.

QUESTION OF DOWNWARD REVISION OF THE BUDGET

Mr. MAHON. The gentleman from Mississippi.

- Mr. WHIPrEN. Mr. Chairman, I do not exactly see this as a package.

The Senate passed a bill that cut $6 billion, but it did not point out a

single, solitary place. The next day we met in conference on the supplemental and they added millions of dollars over the budget, and

would not yield an inch, and the conference is still pending.

Observing our friends here this morning, they are disturbed, but

they have not pointed their finger to a single place to cut. They say that

is not their job. I am sure we will meet our responsibility, however.

we could well look at some recommendations. The Budget Bureau has

never hesitated to send an amended budget down before. I have been

on committees where we were prepared to save considerable money as

against the budget request, and the Budget Bureau saw that we would

get a little credit in Congress, would send an amended budget down,
14

reducing it in the amount the Congress intended to cut in order to

claim credit. There is nothing wrong with Mr. Zwick and the executive

sending down an amended budget.

The last 6 or 7 years, just about every Monday morning a new 

“ 

proram has been recommended to Congress from the executive depart- ,-

nient. The Congress has passed most of them. This has accumulated.

I have been one to ask, please get Federal employees to forego a pay

increase for a year and, as you recall, Mr. Chairman, I did not get far.

If in my limited knowledge of economics I understand it correctly,

there are Federal programs that generate wealth, and to cut them out

would do injury to our overall situation. There are others which

may be highly desirable or even necessary, but they do not generate

anything. They are a deadweight.

So, rather than asking the Appropriations Committee to repeal,

without any advice as to where, these programs which everybody has

shouted about and which are the cause of our present predicament, we

do not have a word of advice about that which would help the immediate problem and that part of our expenditures which, whether you

have them or do not have them, will not affect the growth and development of our economy.

Mr. Chairman, you know this has been a longtime view of mine.

The one thing that I have always felt might add to the situation here

is this matter of full funding of the military. I have always felt full

funding has cost us $3 billion or S4 billion a year. You have a military

program and provide the full amount of money. That is the present

practice though there have been some exceptions to it. If you give the

full money for procurement of a given number of a certain plane, you

do not review the contract as regularly as if you just provide the money

for 1 year's payment. The aircraft and other manufacturers know that,

so they are all on the side of full funding, knowing if they have all the

money committed by the Congress, we are much less apt ever to

cancel it.

I think if these gentlemen would get out of this general attitude

about what a whale of a fix we are in and get lousy and send us an

amended budget down so we could see where you want to apply the

cuts, then the Appropriations Committee and the Congress could

decide. But you ask us to repeal the increase in social security benefits and bills on this, that, and the other. You ask us to repeal numerous acts, without a word of counsel and advice as to where.

I think all three of these gentlemen will have to agree that- within

the field of government there is much difference in the effect on the

general economy of eliminating some programs as against some others.

I am not trying to point my finger at the moment. I just say they

are down here asking us to make a firm commitment without a word

of advice, or an ounce of assurance as to where the executive department may freeze funds.

They would not be violating any past experiences if they should

go back and bring us a package in which whatever is desired is spelled

out.

Secretary FOWLER. May I respond to that?

Mr. MAHON. Yes, Mr. Secretary.

Secretary FOWLER. In two ways. I come here because, as the statement indicates, we need to do something right now that will be de-
15

cisive in dealing with these twin deficits that Chairman Martin has

referred to. Time has been going on for 9 months in which the Congress, the administration, and the people of the United States have

been confronted by the fact that we were running at a deficit in our

budget in excess of $20 billion. That was known and fully labeled

last August. There was a great deal of talk about a tax increase and a

great deal of talk about reducing expenditures.

This committee and the Appropriations Committee on the other side of the Capitol and the entire Congress since August 3 have enacted appropriation bills covering the fiscal year 1968, covering the

whole gamut of Government. Indeed, the administration came in in

December and asked for a special measure dealing with fiscal 1968

that, if the cuts that came out of the individual appropriation bills,

the 14 or 15 bills, did not constitute a reduction of $4.3 billion in the

controllable expenditures that were subject to control in fiscal 1968,

the President would then be charged with the responsibility of withholding appropriations to effect specific reductions in these specific

areas in that amount.

The Congress did finish its action on the individual bills. You have

the figures well in mind as to the total of the appropriations that were

reduced, but the end result was that they reduced expenditures in the

fiscal year 1968 in the areas affected about $1.7 billion.

So, it was then up to the so-called continuing act of December. It

became applicable and specific reductions amounting to $4.3 billion

have been effected in those areas.

In the meantime, expenditures have gone up in the uncontrollable

areas. They have gone up in Vietnam. They have gone up in interest

on the public debt. They have gone up in the welfare payments that

we are required by law to pay to the States.

So, today that budget deficit for fiscal 1968 is just as high as it was

when we first began talking about it in August of 1967, and in the

light of all of the actions that were taken on expenditures in the meantime.

We are here asking that this process not be repeated for fiscal 1969,

and that we deal decisively with this deficit by this combination measure, the action by the Congress, hopefully within the confines of this

conference, subject to whatever procedural action may be necessary,

so that we can decisively deal with this problem in such a way as to

assure ourselves, the American people, and the financial communities

of the world that this deficit will be sharply reduced from its presently

projected level to somewhere around the S8 billion figure or less that

was projected in the January budget and was the premise of the

January budget.

This is not going to interfere one whit with the way in which you

gentlemen formulate it in your regular processes. You go ahead in each individual appropriation bill and work your will on that particular

sector. What it will do, as I anticipate, is leave the monkey on the President's back. If, after you have completed this particular process,

there are still outstanding expenditures projected that are more than

the target figure of $4 billion of reductions it will then be up to the President to do as was done last year, 43 withhold expenditures accordingly.
16

I can say for the President when you come to the end of the session and you have added up what you have accomplished in the appropriations process and there is still a gap to be filled, to be reduced

in order to meet this target, the President will be willing to go ahead

on his own and do that, or he will be willing to accept any guidance

that is provided by law or resolution from the Congress as to the

method of effecting the reductions.

Mr. WitrrrEN. Since that is directed to my question, may I make

one comment at this point?

I would like to say at this point, having reported the bill on agricultural appropriations yesterday, which is coming up this afternoon, contrary to the press the bill cuts obligational authority $1,400

million, and it cuts expenditures 414 million hard dollars. I do not

want to be misunderstood. We have accepted our responsibility on the

bill which is up this afternoon. We have cut it 414 million hard dollars out of about $2 billion subject to congressional action, and we cut

obligational authority by $1.4 billion.

I repeat, we are willing to do our part, Mr. Fowler, but the procedures are that the Executive recommends and we act on the recommendation. Certainly, as an individual I am not trying to add anything to the President's load. But with the statement you make, one

way you look at it, we would be giving the executive department what

amounts to an item veto. I know we have no power to make the Executive spend funds appropriated by Congress. I insist, under the Constitution, he has no authority for an item veto.

We, in turn, are entitled to your advice in the key places that you

occupy so we may look at this problem and do a minimum of damage

to the economy, because there is much difference in the value of the

various programs handled by the Congress.

Mr. MAHON. Of course, if the gentleman would permit, the Committee on Appropriations is now in the process of amending and modifying and taking action on the President's budget as we markup and report the individual bills. I insisted on the $10 billion new budget

authority or appropriation cut rather than, say $12 billion or $14

billion, because I felt that this was a goal that with reasonable effort

this committee and the House could be expected to achieve. Thus

we would write the whole ticket with respect to the $10 billion appropriations reduction: that is, Congress would make the decisions as to

where the cuts would be made.

If this Committee, or the House, or Congress, wants to go to $12

billion or some other amount, that is within our power to decide. If,

however, we do not make reductions up to $10 billion, then the President would be authorized under the plan here, not unlike last year's

plan under House Joint Resolution 888, to take the additional actions

necessary to secure the $10 billion goal.

Will you comment, Mr. Zwick?

Mr. ZWICK. I just wanted to add a few thoughts. First, on the $10

billion, it is clear that if your forecast is correct, then the Appropriations Committees and the Congress will in fact have taken all the

action. I can assure you that the President would like nothing better

than to have the Appropriations Committee do it rather than for him

to have to do it at the end.
17

With regard to the $8 billion of rescissions, we can only recommend,

and we will recommend to you, where those rescissions should come.

So, the only change from normal procedures would be the difference

between the 10 billion and the amount by which the Appropriations

Committees in fact reduce the budget. The $8 billion of rescissions have

to be recommended as specific actions that the Congress must take

because the President has no authority to rescind them. So, the difference, if there is any, between us, Mr. Whitten, is the difference between

what the Congress will in fact cut and the $10 billion.

The only reason for that is the urgency of this. Every day that goes

on we lose $30 million worth of revenue.

Mr. MAHON. We hope to vote the sentiments of the committee with

respect to this problem this morning. In the meeting here yesterday,

I believe several Members remarked that the time had come to end the

talk and to act.

Mr. Cederberg has a question.

Mr. CEDERBERG. If this situation is as serious as it is—and I believe

it is—then it seems to me a great deal of the leadership will have to

come from the White House, from the President himself, if he expects

to get a tax bill along with the spending reduction.

He has the forum.

It concerns me when I know that meetings have been going on at

the White House regarding possible budget reductions, and have been

going on for a month or more, and then when the President signed the

civil rights bill he made a public statement that the Congress now must

get busy, pass all the appropriation bills and implement every message

that he sent up since January.

We know very well if we implement all those programs, if we fund

all those proposals, worthy as they may be, you cannot have a spending

reduction. It just is not in the cards.

So, I think we have to have direction out of the Bureau of the

Budget. I think the Bureau of the Budget should send an amended

budget up here and tell us where these cuts are to take place, and tell

the Nation they have to take place because of the serious situation for

our dollar internationally and domestically.

If you are to get a tax bill through this House, you will need a lot

of votes, and you will need great understanding from the public. The

President is the one who will have to make public statements in that

regard, and support spending reductions. You cannot tell the public

one thing and have meetings at the White House on the other side of

the question. You cannot implement the appropriation bills and all

the messages and then come back and blame the Congress later. It just

will not work.

RESTORATION OF INVESTMENT TAX CREDIT

Mr. JONAS. Mr. Chairman.

Mr. MAHON. The gentleman from North Carolina.

Mr. JONAS. I do not get a chance to ask the Secretary many questions.

The thing that puzzles me, Mr. Secretary, is how we got into this

crisis so suddenly. A year ago you were up here approving a tax reduction, restoration of investment credits and accelerated depreciation.
18

Secretary FOWLER. Not a year ago, Mr. Jonas.

Mr. JONAS. I think it was just about a year ago—early in 1967.

Secretary FOWLER. I advocated nothing but a tax increase.

Let us come to the investment credit.

Mr. JONAS. It amounted to a tax reduction for eligible concerns. And

now you suddenly find we are in a crisis requiring a tax increase. Some

of us thought we were in one or were approaching it a long-time before

that. How can you advocate a tax reduction one year, and several

months later be in such a financial crisis that requires raising taxes?

Secretary FOWLER. Mr. Jonas, the proposal to suspend the investment credit was made in September of 1966 at the time when the

capital goods industry—the plant and equipment area—was the sector

of the economy that was in a tremendous boom. The level of expenditure for plant and equipment which was stimulated by the investment

credit was increasing not at anything like a normal 5- or 6-percent per

annum rate of increase, but an 18-percent rate of increase.

So, we came up in the middle of the situation in September of 1966

with a 3-point program.

Mr. JONAS. I understand the reason for the suspension. What I want

to know is why you advocated its restoration so soon thereafter?

Secretary FOWLER. At the time we asked that it be suspended, both

the President and the House Ways and Means Committee and the

Senate Finance Committee in their reports made very clear that this

was a request for a temporary suspension to deal with the situation, the

boom in this particular sector of the economy which was creating

great strength throughout the economy, and the President took a contract and the Ways and Means Committee took a contract and the

Finance Committee took a contract to come back and ask that the

suspension be lifted as soon as that situation was corrected.

By the middle of March it was very clear to everyone that the boom

had faded as far as plant and equipment were concerned, and that in

that particular segment of the economy the anticipated rate of growth

was not 18 percent but about 2 or 3 percent. So, we lived up to our contract to restore the investment credit when the condition to which the

suspension had been addressed had receded.

Mr. JONAS. I do not see how you can advocate reducing taxes one

year and a few months later say that disaster will strike unless taxes

are raised.

QUESTION OF ACCURACY OF EXPENDITURE ESTIMATES

Mr. MAHON. Mr. Laird has a question.

Mr. LAIRD. Mr. Secretary, I happen to be one who favors a tax

increase and an expenditure reduction in order to keep our budget

deficit in 1969 at least at a deficit level of $8 billion.

With this package that you present to us today, what kind of tax

bill will we have to pass? Certainly the 10-percent surtax will not

keep your budget deficit at the $8 billion level.

Secretary FOWLER. Yes it will, Mr. Laird.

Mr. LAIRD. You recommend this tax bill and a $4 billion expenditure reduction knowing full well, as I do—and I am sure you have been

told—that Defense expenditures are underestimated presently for

1969.
19

Secretary FOWLER. Let me deal with that.

Under the excise tax extender and the corporation collections, there

is $3.1 billion involved in fiscal 1969. Under the surcharge there is

$9.8 billion. And with the $4 billion expenditure reduction there is a

total of $16.9 billion.

Since the budget was submitted, the President stated on March 31

that the level of expenditures in Defense would go up, I think, $2.6

billion.

Mr. LAIRD. $2.6 billion in fiscal 1968.

Secretary FOWLER. $2.5 billion in 1968.

Mr. LAIRD. For 1969 that is an underestimation, is it not?

Mr. ZwicK. I want to make completely clear that I disagree completely with your assertion that we have underestimated the fiscal year

1969 budget request for Defense.

Mr. LAIRD. You disagreed with me when I made the statement—and

I have it in the record—when I used the figure that the President now

uses. I used that figure when you were before this committee, and you

completely and emphatically disagreed with me at that time, and it

has proven to be correct.

Mr. ZWICK. No, sir. You said we would have $5 billion more

Mr. LAIRD. $5 billion more in expenditures in 1968 and 1969.

Mr. ZWICK. We will not have it in 1968, which is what I had understood you to say.

Mr. LAIRD. 1968 and 1969, my statement was

Mr. ZWICK. Our programs have 'increased for 1969. You also stated

we would be up for another supplemental for medicaid before the end

of 1968 that we had underestimated that in this January's budget.

Mr. LAIRD. You underestimated in last January's budget for fiscal

1968? You were up for a supplemental?

Mr. ZWICK. No.; the supplemental was sent up after your statement

but the amount was included in the budget estimate this past January.

Mr. LAIRD. We have not passed it yet. You asked for 1.1, and the

supplemental came up a few days after you were here. You are underestimating that already, we developed fin our committee, by $300

million for 1969.

Secretary FOWLER. May I complete my answer to your question, Mr.

Laird?

Taking the President's March 31 statement and Mr. Zwick's estimate,

and leaving the question of whether they will prove to be correct, the

answer to the question is, indeed of $8 billion, the projected deficit

under this package would now be $6.6 billion.

Mr. MAHoN. Whatever the deficit may be, it will be too big, and we

want to reduce it.

Secretary FOWLER. $6.6 billion. In other words, we are taking $4 billion off the $8 billion by the expenditure reduction. You are putting

back on $2.6 billion as a result of the additional Defense spending

projection in the President's March 31 statement.

Mr. MAHoN. Mr. Zwick and Mr. Fowler and Mr. Laird may amplify

their remarks for the record.

(The following statement. was furnished for the record by Mr.

Zwick:)

The following are the facts concerning the two estimates mentioned in the discussion with Mr. Laird in connection with 1968 and 1969 estimates:
20

Defense.—The President has stated that Defense expenditures for Vietnam are

now expected to exceed the January budget estimates by $2.5 billion in fiscal

year 1968 and $2.6 billion in fiscal year 1969. There has been no statement and

there is no plan to increase proposed budget authority for fiscal year 1969. There

has also been no indication that the expenditure estimate for the entire Government will increase in fiscal years 1968 and 1969 in any areas other than Defense.

Medicaid.—The January budget contained an estimate of $568 million for a

1968 supplemental for the medicaid program together with $567 million for other

public assistance programs. This supplemental was transmitted on February 8,

1968, in the exact amount contemplated in the January budget. No change has

occurred in the January estimate for the medicare program and none is now

being planned.

Mr. MAHON. Gentlemen, thank you very much for your help this

morning. The committee will now go into executive session to consider the question of what position the committee will take. I have

prepared a resolution to offer, incorporating the package proposal.
INDEX

A

Amendment of fiscal year 1969 budget indicating reductions, Presidential Page

submission of 13

Carryover funds, reduction in 10

Chairman of Federal Reserve Board, statement of 7

Deficit, budgets for fiscal years 1968 and 1969 

Director of the Budget, statement of 10

Expenditure estimates, accuracy of 1 8

Expenditure reduction and tax package :

Administration's position on 3

Development of 10

Expenditure reduction of $4 versus $6 billion 12

Investment tax credit, restoration of 17

Itemization of reductions proposed 13

Secretary of the Treasury, statement of 2

Tax surcharge:

Legislation pending 4

Necessity for 2

Urgent need for action 4, 9