This question of continuing new obligational authority has been a matter of deep concern to the administration. As you know, when President Eisenhower entered office he inherited the problem of $81 billion in outstanding obligations and unsatisfied authorizations to spend Government funds. The expenditures for the fiscal year 1954– the expenditures I will talk about in a few minutes-will come largely from this overhang. If we are ever going to balance the budget and bring expenditures within the tightest possible control, we must do something about achieving a runoff of the large carryover of unspent authorizations. We cannot continue to ask each year for substantially more money than we will actually spend in the ensuing 12 months, because that means the overhang constitutes a snowballing threat to financial stability. Now we have tried to do something about this problem in the bill that is before you. We are changing the direction that has been followed in the past few years. But we are not proposing to do so with unreasoning abruptness. We are trying to strike a proper balance between maintaining an adequate and continuing free world defense and creating the conditions for long-term financial stability in this country. The way to do that, it seems to me, is to request each year less than will be spent in the next 12 months. You will note from the exhibits before you that we are beginning to put that policy into practice right now. Changing the practice of the past, we now propose that the Congress authorize new funds for foreign assistance in an amount smaller than the anticipated expenditures during the coming fiscal year. As we do our future planning we will have constantly before us the objective of reducing the overhang of unutilized authorizations. That is a very important objective, and I want you to know that it is not only our objective but is now our determined practice. That is why I have talked first about this problem of new obligational authority. Now I turn to the problem of actual expenditures during fiscal year 1954. These will be large. There is no question that these expenditures and others necessary to our national security will affect the possibility of balancing the budget and the time when we can look forward to tax reductions. Because this administration is committed to a program of sound money and of reducing taxation at the earliest possible time, I can assure you that these expenditures have been most carefully studied from the standpoint not only of their effectiveness but also from the point of view of the necessity of making them in the proposed amounts to contribute to essential security. We are committed to the policy of constantly reviewing the necessity of making the expenditures currently during the year and will make reductions or eliminations whenever and wherever justified. Although expenditures of such magnitude will necessarily create problems, they can be handled under the sound financial principles to which we are committed. In formulating the foreign assistance program, close attention has also been given to the desirability of fostering private investment abroad. This will not only reduce public expenditure but the Government should not undertake activities that can better be carried on by the people themselves. In this direction we will be constantly alert to utilizing the International Bank for Reconstruction and Development and the International Monetary Fund wherever that is possible. To this end also it is the policy of the Government that interest rates on any governmental loans which may be necessary shall be such as not to discourage private investment. As we progress throughout the year, we will give serious consideration to the problem of the rate of expenditures which we will lay before you next year. We will strive for proper balance between military preparedness in the United States and overseas, and maintenance of economic strength at home. We have already laid the groundwork for establishing that balance. In the NATO meeting in Paris last month my associates and I took steps in that direction. Our friends abroad were fully advised of this policy. As we go through the next year we will build upon that foundation. Meanwhile, we feel that the program which has been presented to you today is the best balance between security for our friends and ourselves and our necessity for reducing expenditures that can be appropriately managed at this time. We are looking forward to making savings wherever possible and further progress in making additional reductions in the future. Thank you very much. Chairman WILEY. Thank you, Mr. George M. Humphrey, Secretary of the Treasury. We also want to say that we are very grateful for hearing the facts that have been given us from the representatives of the executive department. The next meeting of the Senate Foreign Relations Committee will be held in the Old Supreme Court Chamber, in the Capitol Building, at 10:30 a. m. tomorrow, and Mr. Stassen will be the witness. The House committee will have Mr. Dulles as their witness. There are no more witnesses to appear before us this morning, and the meeting stands adjourned. (Whereupon, at 11:30 a. m., the committees adjourned; the Senate Committee on Foreign Relations to reconvene at 10:30 a. m., Wednesday, May 6, 1953, in the Old Supreme Court Chamber, Capitol Building.) MUTUAL SECURITY ACT EXTENSION WEDNESDAY, MAY 6, 1953 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met, pursuant to call, in room 262, House Office Building, at 10:35 a. m., Hon. Robert B. Chiperfield (chairman) presiding. Chairman CHIPERFIELD. The committee will come to order. Mr. Secretary, I understand you are ready for questioning? STATEMENT OF HON. JOHN FOSTER DULLES, Mr. VORYS. I do not know how far you are ready to go into the details of the program in public session, Mr. Dulles. I would like to ask you about the new infrastructure agreement which was made in April at Paris. Is the amount and plans of that agreement open to public discussion? Secretary DULLES. It is; but you can discuss it more effectively, I think, with Mr. Stassen than you can with me, and perhaps with the representatives of the Defense Department. It is an extremely complicated affair, as you know, and I think a subcommittee on this has made a very careful study of it, and I think a very useful study of it, as far as I can judge, but I do not believe you would find me very well qualified to deal with it in detail. As you know, at the time, we have arrived at a 3-year agreement for calendar years 1954 to 1956, which we believe will permit a much better planned progress than has been the case heretofore when they have been operating on a sort of year-to-year basis, and there has been a good deal of squabbling about that and difficulty in getting agreement. There is now this agreement which will operate for 3 years. I am told that it will bring about, for example, the addition of airfields at the rate of approximately 50 a year for a little while, which will very greatly increase the security and the mobility of the forces in Europe. I can only speak of it in such general terms. Mr. VORYS. I only know about it generally from reading the very fine report of our subcommittee, but as far as I can tell from reading that report, this was a 3-year program, added on top of the program that they studied, and is to continue for 3 years after fiscal year 1954. I note that the legislation, here, runs up to 1961. I have been perplexed about making agreements that far in advance at a time when we are still uncertain as to whether EDC, or the European army, is going to be a reality. It seems to me that it is a little difficult to plan that far in advance when our allies in Europe have not made their plans firm for a European army, which is so important and so imperative in our planning. How can we expect Congress to make such plans when we do not know that they are going to have a European army? Secretary DULLES. Of course we have to plan on certain assumptions. We have to make the best agreement we can as to whether or not those assumptions are sound. I am not happy, as you all know, about the progress that has been made with reference to the creation of the EDC. It has been somewhat slower than we had hoped for because of parliamentary difficulties. As I tried to bring out in my statement yesterday, the leaders of the cabinets in Europe feel just as strongly as you or I would feel as to the importance of EDC. I am convinced that they are exerting every possible, practical pressure upon their various parliamentary bodies to get action taken. I do believe that there will be such action taken. However, I do not now believe that it will be taken in time so that Congress can know, before it has to act finally, that is in the month of June. I doubt whether we would know definitely by the month of June whether or not EDC will be realized. There can be some favorable developments by then which will give us a further clue on this matter, but we probably would not know definitely. That does raise a very real problem. The probability is, as I say, that the wisest course is to proceed with this infrastructure, 1954-56, 3-year agreement. If there is a failure to carry out EDC, if that whole program collapses, then I believe there should be some kind of an escape clause with reference to it. I do not think that is going to happen. I do not think we should alarm the situation by seeming to take for granted a failure of EDC. I think it is much more apt to happen if we take its realization for granted and plan on that assumption. Mr. VORYS. As you know, the Congress, with language originating in this committee, has increasingly urged increasing unification in Europe year after year. It is somewhat discouraging to find that we are asked to plan so many years in advance for Europe, on a basis that has not yet been realized. That is the problem we face, and of course the problem which our country faces. Thank you very much. Chairman CHIPERFIELD. Mr. Richards Mr. RICHARDS. Mr. Secretary, I want to congratulate you on your very fine statement yesterday at the joint meeting of the Foreign Affairs and Foreign Relations Committees. It was a statesmanlike statement, there is no doubt about that. Secretary DULLES. Thank you. Mr. RICHARDS. I wanted to ask you 2 or 3 basic questions and will have more questions later on, when you are before the committee in executive session. You support this bill, as is; is that right? |