Mr. LAWTON. I should say he would not have to spend as much money on the project or he might delay for some reason the initiation of the project.

Senator MUNDT. In another part of the bill dealing with transfers there is a limitation of 5 percent put in, but here there would be no limitation.

Mr. LAWTON. That is a grant of authority rather than a limitation. The five percent interchangeability exists in a few places now. It does not exist everywhere. This 5 percent is an additional grant of authority rather than a limitation.

Senator MUNDT. In my opinion, the item veto of an appropriation bill is a matter of such substantial significance, with highly persuasive arguments on both sides, that if we are going to get into that area at all we should walk in boldly and bravely with our chins up and say that we are for it or against it and then discuss it on the merits. Mr. LAWTON. I believe your committee has a bill for that purpose

now.

Senator MUNDT. I believe such legislation is before us, but I would not want to see anything in here that would move in that direction surreptitiously.

Mr. LAWTON. This provision as it stands here is not an item veto, because the limitation on the Presidential authority is to the extent that he determines that the purpose intended by Congress will be accomplished by the expenditure of a lesser amount.

Senator MUNDT. Under current and existing authority, what you have described, he can do as he did with the reclamation appropriation bill.

Mr. LAWTON. It was a deferment of a project because of conditions which existed at the time.

Senator MUNDT. Was that done under a wartime power or under a peacetime power?

Mr. LAWTON. It was done in peacetime. It was done after the end of the war, and it was done because of the shortage of materials for purpose of commercial building and reconstruction operations. The projects were delayed a total of about 6 months.

Senator MUNDT. I understand as to when it was done. I was wondering whether it was done because of the vestigial authority remaining in the President as a result of the fact that we have not signed peace treaties after the war.

Mr. LAWTON. No.

Senator LEAHY. What is your reference to the 5 percent? Will you develop that, please?

Mr. LAWTON. There is a provision in this bill, in section 30, which is lifted from the amendments to the Armed Services Act last year, the National Security Act amendments, to permit the President to make transfers between appropriations to the extent of 5 percent. Senator LEAHY. Would that be within the same department? Mr. LAWTON. It was intended really to avoid supplemental or deficiency appropriations.

Senator LEAHY. Is that limited to transfers within the same department?

Mr. LAWTON. It is limited within the department or establishment, any single department or agency. It is internal within those.

Senator LEAHY. There is no transfer from one department to another?

Mr. LAWTON. No. The head of each department is authorized to do it with the approval of the President, so he does it within his own department on Presidential approval.

The CHAIRMAN. I do not see how there could be any serious objection to that. You can well appreciate the difficulty in estimating the exact expenditure needed in any particular service, and you might find in the course of a year that one particular function that we have appropriated for had an excess of funds, more than required whereas another was short, and within reasonable limitation-and I think 5 percent is reasonable-I can see no objection to that provision. Senator Schoeppel?

Senator SCHOEPPEL. No questions, thank you.

The CHAIRMAN. Any other questions?

We want to thank you, Mr Lawton. We appreciate your presence and your testimony. I may say to you that in the course of further study of this bill we may have to request you to come down and be of some further help to us.

Mr. LAWTON. I shall be glad to.

The CHAIRMAN. There is just one thing I happened to think of, before you go. As I understood your testimony from your prepared statement, you do not favor part II of the bill. You do not think that is necessary now? In view of the interagency cooperation between the Treasury and GAO and the Budget Bureau, the progress you are making and have made up to date indicates that you can solve the problem without legislation. Is that correct?

Mr. LAWTON. That is correct.

The CHAIRMAN. Of course, the other agencies will speak for themselves. We will consider it and go into it, but if you are convinced from the experimentation up to date, from your exploration of it to date and from your efforts, that the same objective is being accomplished by the voluntary cooperation, I am just wondering about the necessity, then, of enacting legislation to compel it.

Mr. LAWTON. We have indicated, I think, in our testimony and in our letters to the committee on this bill that we feel that the present system should continue, the cooperative effort between the three agencies, and it is not only between those three but it is between the other agencies of Government who are actually doing this accounting. Unless you have a jointly sponsored effort on the part of the people most interested and most in need of central accounting information and on the part of the agencies which need that kind of information in their own agency or department for management purposes, it won't succeed no matter where you put the jurisdiction.

The CHAIRMAN. I see. Thank you very much.
Mr. LAWTON. Thank you, Mr. Chairman.
(The letter referred to follows:)

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D. C., October 11, 1949.

Hon. JOHN L. MCCLELLAN,

Chairman, Committee on Expenditures in the Executive Departments,

United States Senate, Washington, D. C.

MY DEAR SENATOR MCCLELLAN: Your letter of June 20 requested my views relative to S. 2054, a bill to authorize the President to determine the form of the national budget and of departmental estimates, to modernize and simplify Government accounting and auditing methods, and for other purposes.

This bill, for the most part, would give statutory effect to certain recommendations of the Commission on Organization of the Executive Branch of the Govern

they are fixed charges, like interest on the debt. You have to pay The President has not any more discretion on that than you

those.

have.

Mr. LAWTON. That is right.

Senator MUNDT. Congress would have to change the law if you were going to change that. It would give us a picture to look at.

Senator LEAHY. I wonder whether the difficulty has not been in determining what was essential. Take our appropriation for defense: Is the President going to say, "If you wipe out all appropriations for defense, we can balance the budget"? What is the President going to do? What is essential and what is not essential? Who is going to determine that?

Senator MUNDT. We have the advice of the President under that plan. If we cut the President by, say $10,000,000,000 in total, he can come to us and say, "If you do that I have to take $4,000,000,000 off National Defense; I have to take something off these other programs.' Congress might say, "We do not want that at all. We had better go back to our original budget, the one that you recommended."

Mr. LAWTON. Of course, in actual practice Congress does exactly that in a great many cases. They do it now, they do it through committees, through the appropriations committees and the subcommittees. If the subcommittee structure remains the same, you would be dealing with this thing in 10 different places, and each one would be dealing with a portion of it. It is a question of whether you get the entire look at it or not.

Senator MUNDT. You have all these subcommittees. One subcommittee is very economy minded and is slashing very desperately, too much, perhaps, in one budget; and another one tends to. coast along with whatever the President has recommended. There is no composite picture that everybody can see as to what you would buy with a balanced budget.

The CHAIRMAN. There is this change being made in the experimental approach of having only one appropriation bill. One of the ideas in support of such procedure is that it will better enable the appropriations committees and the Congress to look at the whole picture at the time of passing the appropriations. I do not know how it is going to work out. We are experimenting with it. That was one of the thoughts in support of this procedure.

May I ask you just one other question about the bill. It is not at all important, but I was just wondering the reason why section 120 page 5 provides for a change in the name of the Bureau of the Budget to the Office of the Budget. I do not know that there is an important point in that, but I am just wondering why it was felt that the name should be changed since it has been so long established. Mr. LAWTON. I think the reason for that probably stems from the Hoover Commission's idea of something of a uniformity of terminology. Actually I think the only real effect of it would be a little additional cost of printing to change all the letterheads, forms, and so forth that are now established. Other than that it would not make any difference.

The CHAIRMAN. I wanted to determine whether there is any essential need for changing the name so far as you know.

Mr. LAWTON. None.

The CHAIRMAN. This provision is not in the bill at the instance of the Bureau of the Budget?

Mr. LAWTON. This bill is not at the instance of the Bureau of the Budget, none of it.

The CHAIRMAN. None of it. I see.

Mr. Lawton, in your prepared statement I believe you referred to a letter that you had submitted on October 11, 1949, to the committee. Mr. LAWTON. Yes, sir.

The CHAIRMAN. With your permission I shall be glad to have that printed in the record right at the conclusion of your testimony.

Mr. LAWTON. That letter does refer to the original draft of the bill and not to the amended bill.

The CHAIRMAN. Yes, I understand, but I thought we might have it printed in the hearings.

Are there any questions by other members?

Senator MUNDT. Mr. Lawton, is there anything in this legislation that you see which would tend to bring the Comptroller General's office more under the control of the Office of the President than it now is, and does it in any way jeopardize its semi-independent status?

Mr. LAWTON. The bill in part II changes the present authority of the Comptroller General with reference to the prescription of accounting and places him in a position of approving or agreeing with the Secretary of the Treasury with respect to the prescription and development of accounting methods. It is a restriction and change in the present authorities of the Comptroller General.

Senator MUNDT. As I gathered from your testimony, it appears to me that to that extent it did destroy the benefit of his independent status. I should like to have your expert opinion as to whether I have interpreted that correctly.

Mr. LAWTON. As to that particular phase, it certainly would change his present independent authority.

Senator MUNDT. Is there anything in the legislation that moves in the direction of giving the President an item veto on the budget?

Mr. LAWTON. There is one section which is related to that subjectsection 32, which writes into this statute provisions for reducing expenditures, and so forth, consistent with public interest and the maximum of economy in operation. It merely reiterates what the present practice is with respect to the establishment of reserves where conditions have changed and where there is the opportunity to save money. That is now done under the apportionment system and reserves are established. This specific statute would simply spell out the present practice.

Senator MUNDT. If section 32 were adopted as written, with no further modifications or restrictions, and Congress were to appropriate $2,000,000 to build a portion of a ship canal, say, in Florida, or the portion of the Passamaquoddy project in Maine, under this as I read it, the President could exercise what would be tantamount to an item veto simply by setting that aside and not spending any portion of it. Is that correct?

Mr. LAWTON. If and to the extent he determines the purpose intended by the Congress will be accomplished by the expenditure of a lesser amount.

Senator MUNDT. He would have to go forward with the project, though, would he?

ment dealing with budgeting and accounting. In my letter to you dated July 5, I expressed views on recommendations of the Commission which affect the Bureau of the Budget, some of which are now covered in this bill. I will refer below to the views expressed in this earlier letter as they pertain to specific provisions of S. 2054.

I am in general accord with the provisions of part I of the bill, which part pertains to the Bureau of the Budget and the budget process. I am, however, suggesting certain modifications, including deletion of one section of this part and modification of another. In addition, I am suggesting that you may wish to add one new section which would adopt a recommendation of the Commission not now covered in the bill. On the other hand, I am in disagreement with many of the provisions of part II of the bill, pertaining to accounting. In view of objectives of the present joint program of the General Accounting Office, the Department of the Treasury, and the Bureau of the Budget looking toward major improvement in Federal financial administration, I suggest that part II be dropped from the bill and that consideration of legislation dealing with accounting be deferred until the extent and nature of such legislation can be more definitely determined. I am in concurrence with Part III of the bill, which provides for the repeal of a number of acts or parts of acts presently codified in title 31 of the United States Code, and am suggesting the incorporation of three additional provisions in this part. My specific comments and suggestions are presented below in the approximate order in which the provisions appear in the bill.

Section 2 (a) of part I, amending section 201 of the Budget and Accounting Act, 1921, provides that the President will submit the budget to Congress during the first 3 months of each regular session of Congress instead of "on the first day of each regular session," as presently required. This provision would permit a certain amount of flexibility with respect to the date for submission of the budget. In this connection, I recognize that, while certain advantages would be gained by submission of the President's budget to Congress closer to the beginning of the fiscal year, later submission, on the other hand, would pose a major question in regard to congressional timing and procedures for handling the budget. While I have no objection to the more flexible provision included in this section, it would be necessary that the exact date for submitting the budget be determined in a manner that will best suit the requirements of both the President and the Congress. I am in concurrence with the provisions of sections 2 (b), 2 (c), 2 (d), and 2 (e) of the bill. Section 2 (b), which amends section 204 of the Budget and Accounting Act, 1921, provides a desirable clarification with respect to the authority of the President to determine the contents, order, classification, and arrangement of proposed appropriations and estimates included in the budget. Sections 2 (c) and 2 (e), which amend sections 214 and 216 of the Budget and Accounting Act, 1921, make the head of each department and establishment responsible for preparation and submission to the Bureau of the Budget of annual and supplemental or deficiency estimates; while these sections do not alter present practices, they bring provisions of the Budget and Accounting Act in line with recommendations of the Commission on Organization of the Executive Branch stressing the responsibility of the department head for budget formulation. Section 2 (d), which amends section 215 of the Budget and Accounting Act, 1921, to permit the President to prescribe the date for submission of departmental estimates to the Bureau of the Budget instead of requiring their submission on September 15, is desirable in that it permits flexibility in setting the date for submission of departmental estimates to the Bureau of the Budget.

I have no objections to section 3 of the bill, which changes the name of the Bureau of the Budget to the Office of the Budget, and I endorse section 4, which deals with functions of the Director of the Budget with regard to Government statistical activities. My letter of July 5 commented on the Commission's recommendations dealing with these two points.

While I agree with the objective sought by section 5 of the bill, which authorizes the Director of the Budget, at the direction of the President, to develop programs for improvement of agency field services, I do not feel it desirable or necessary that the bill include this section as now constituted. In my letter of July 5, I pointed out that the Bureau was in agreement that a comprehensive management study of the Federal field services, as recommended by the Commission, should be made. No legislative authorization is needed, however, for the Bureau of the Budget to undertake the staff work recommended by the Commission or for the President to direct the Bureau of the Budget to conduct such work. Furthermore, I do not consider it desirable to include a provision in the bill dealing with this one problem of Government management as distinct from others that need attention now or that will confront us in future years.