The journal. (Caldwell, Ohio) 1934-1961, 1959-10-08
M GlaAhington
with Rep. John Henderson
Back-DOOr Financing

reviewed the spending which the
past session of Congress auth
oriZed for the Federal govern
ment. 1t was pointed out then,
that the session provided direct
appropriations m u n t ng to
$72.97 billions and that an ad-
ditional $5.7 billions were auth
orized through the so-called
back door" financing. For lack
of space last week, it was not pos
sible to explain what is meant
by this process.
Traditionally, the Congress
controls what the government
may spend through appropria-
tions which are considered in all
of their volume of detail each
year by the Appropriations Com
mittees before they are brought
before the full membership for
debate. That means that there
are two major steps for every
new program that is proposed.
First, Congress must vote to
authorize the program and, sec
ondly, the money to finance it
must be provided in separate leg
islation. A yearly review by the
Appropriations Committees then
occurs.
Even in the Congress there is
a natural human tendency to
have whatever advantages and
benefits program is thought to
provide and at the same time a
reluctance to pay the full price
for financing it. This is obvious
when we sometimes see approved
programs left without funds. The
same process is at work when,
as often happens, the funds act
ually provided are less than those
authorized. The method of ''back-
door financing is an invention
to get around the hard scrutiny
of yearly evaluation by the Ap-
preparations Committees, the
centers of the Congressional
spending conscience.
The practice began in the early
thirties with the organization of
the Reconstruction Finance Cor
poration In the RFC legislation,
the new agency was allowed to
borrow money from the Treasury
instead of depending upon yearly
appropriations from the Con-
gress. The theory was that the
REC was a public lending in
stitution and that the Treasury
would be repaid when borrowers
'epaid the RFC.
Fancy FOotwork
The possible soundneSs Of this
principle has been strained badly
over the years as Congress auth
orized new agencies and granted
obligational authority under the
euise of repayment. It is plain
that the zeal for new programs
can cause some fancy footwork
on the financing questions. Re-
navinp some of the funds taken
from tho Treasury seems PATIENTLY
impossible. One good example is
the bilious which flow through
the Commodity Credit Corpora
ton for the so-called 1oans" in
the agricultural price-support
propram. Here the government
,or,oro3;D,, l>ocrourc ,,,ny,ox, Fro,,,
the Treasury to buy crops at
support prices while it disposes
IF some of what if buvs at lower
prices. The rest of the crops fill
| oostlv warehouses to overflow
| ing. The result is that CONGRESS-
must anprove LEGISLATION so that
the Treasury can be repaid for
| the loss sustained.
All of the programs financed
by borrowing from the Treasury
are not as unsound economically
as the Commodity Credit Cor
poration's sad experience which
is part of the ill-considcred and
intellectually bankrupt farm pro-
gram. However, as of the end of
last month. the Treasury was
holding $23.7 billions in notes
representing loans it has made
to the government agencies fl
nanced through the s'hack-door.
With each passing year, the man.
agement of the national debt be-
comes more difficult and more
costly. Since the Congress relin-
ouisheS much of its control over
this kind of spending when il
authorizes it in the first place,
there is a growing feeling in
WASHINGTON that further expedi-
tions in this direction need to be
considered very soberly indeed,
Team Sports
| AS World Series time arrives
the nations baseball fans take
sides with their favorite teams
Behind the spectacular perform
ances in baseball and the teams
in other professional sports there
are always searching legal ques
tions involving management anc
organization. In some of these
matters, the government has {
considerable interest.
The question of whether pro
fessional team sports are subiec
to the same antitrust laws tha
govern business has been receiv