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penditures, standby authorities of various kinds which are on a contingent basis.

Mr. McFALL. Are those included in your budget for the year?

Mr. BELL. They are shown in our tables; but, as I say, the question of balancing the budget is normally confined to the actual cash expenditures during the year and, therefore, this standby block of obligational authority is reported to the Congress, but is not expected to be used during the budget year.

And, therefore, it does not affect the budget expenditures which are shown in the budget year.

The CHAIRMAN. May the chairman make a statement?

The Secretary of Labor has been waiting about 30 minutes. If the members will shorten their questions I think we can get along a little bit more rapidly.

Mr. Dooley.

Mr. DOOLEY. Since most, if not all, of the proposed projects would entail considerable State and local community matching there would have to be a backlog of unappropriated State funds available on short notice, and the experience of our highway program has shown that acceleration at the Federal level has very little effect on those States which have financial difficulties.

What do you think of that?

Mr. BELL. Well, there are two parts to that answer, sir.

In the first place, it may very well be that the States and localities can, to some extent, increase the funds which they are prepared to make available even on fairly short notice.

I do not believe the experience of the Highway Act is all black. I agree that they are limited. It is a limited extent to which the States and localites can act quckly to expand the funding that they can put into a program of this type.

Nevertheless, it is not negligible.

The second point, however, is that this draft legislation authorizes the Federal Government to make special loans, which would make money available to the communities quickly to pay for their share of the total funds to carry out a given job.

And the local community would then pay that part of the funding back to the Federal Government at a later time.

This would speed up the availability of funds in many cases to States and localities.

Mr. DOOLEY. Thank you.

Mr. GRAY. Mr. Chairman?
The CHAIRMAN. Mr. Gray.

Mr. GRAY. I have just one question.

Pursuing the question, Mr. Bell, asked by Mr. McFall, maybe I could put this in proper focus by asking you this: Fiscal year 1962 goes to June 30.

Do you have any idea what the unobligated balances would be as of June 30 of this year?

Mr. BELL. Yes. There is a table on page 268 of the budget for fiscal year 1963, table 17, which shows balances of obligational authority as of four dates: the beginning of the fiscal year 1961, the end of the fiscal year 1961, which was last June 30, the end of the fiscal year 1962, which is the coming June 30, and our expectation for the end of fiscal year 1963.

This shows that the anticipated unobligated balance of obligational authority, as of June 30, 1962, is expected to be $36,315 million, and the table shows how that is expected to be distributed by agencies.

Mr. GRAY. Well, the point is, it would be reasonable to assume that by the end of fiscal 1963 we would have a similar balance?

Mr. BELL. We expect it to be somewhat reduced, but it is still nearly $33 billion.

Mr. GRAY. So the point is that this $2 billion, proposed expenditure, would not throw the budget out of balance, in any sense. This, in effect, is what we might call a balloon note. Is that not correct? Mr. BELL. A what?

Mr. GRAY. A balloon note. Have you not ever heard of that remark?

Mr. BELL. I have not.

Mr. GRAY. That is where we are taking funds out of one pocket and putting them into another.

We are ballooning this obligation and going to have to pay it at the end of some other obligation. I used to be in the automobile business. Mr. BELL. In any event, I certainly agree with your basic point, which is that there are ample unobligated balances expected to be available to cover this $2 billion transfer authority which would be given under this bill to the President.

Mr. SCHERER. But is not the real question, how much cash does the Treasury have to pay for these accelerated expenditures? "Unobligated balances" do not mean a thing. Is that not right?

Mr. BELL. The Treasury normally carries cash balances of several billion dollars.

Mr. SCHERER. Well, you would have to raise the debt ceiling if a $2 billion expenditure was accelerated. The reason we can meet our obligations is we do not have to make expenditures from this unobligated balance in 1 or 2 years. They are stretched out over a long period of time?

Mr. BELL. Exactly. As I indicated, a large share of those there will never be any expenditures on. They are contingent.

Mr. SCHERER. That is right, but what you are really doing is accelerating cash expenditures; are you not?

Mr. BELL. That is right, up to $2 billion.

Mr. SCHERER. Up to $2 billion?

Mr. BELL. Right.

Mr. SCHERER. And that would mean that again you would have to raise the debt ceiling if we were in the same position we found ourselves in last March.

Mr. BELL. If we were in the position we were in last March, you are quite correct.

This is a proposal to step up, accelerate expenditures for these particular purposes and, to that extent, to the extent it is used it will obviously affect the budget in that way.

Mr. GRAY. Mr. Chairman, I thought I still had the floor. I did not remember yielding it.

The CHAIRMAN. Mr. Gray?

Mr. GRAY. I notice here in the testimony, Dr. Heller, that during the recession of 1961 we had a loss of-was it $175 billion?

Dr. HELLER. For all of the recessions during the decade of the 's the loss was $175 billion of product that would have been pro

duced had we been operating roughly at 4 percent unemployment throughout that period rather than 5 or 6 or 7 percent for a good part of that period.

Mr. GRAY. This is really an insignificant amount of money to spend then if we can keep our economy, certainly in the soft areas on the climb.

Mr. SCHERER. Remember, we are going to have to borrow this money if

Mr. GRAY. That is true, but I say to you that if you will come down to my district and see some of our people who are out of work you will see why some of us are so interested in this legislation.

The CHAIRMAN. This colloquy we can take a little later if we can get the witnesses finished and bring on the other witnesses. Mr. Harvey, you have been trying to get the floor.

Mr. HARVEY. Mr. Chairman, I would like to ask Dr. Heller one question that he has not touched on.

In the Senate subcommittee hearings on a fairly comparable bill, Dr. Heller, there was some testimony to the effect that there was already considerable inflation in the construction industry, and that-I think there is testimony that at least there is some shortage of some skills in labor already.

I wonder if you could give us your outlook on the construction industry at this time, and whether this bill would increase that inflation or what effect it would have upon it?

Dr. HELLER. Mr. Harvey, I have some unemployment rates in construction compared with overall unemployment rates that I think bear very directly on your question.

The unemployment rates in the construction industry have been running steadily higher than the unemployment rates in the economy as a whole for the period that I happened to have here.

Since February 1961 every month shows unemployment in construction higher than the total unemployment rate. For example, in June last year it was 1112 percent against 712 percent.

In November it was 1012 percent against 52 percent.

Of course, the winter months are not representative. For February, the last month which we have here, the unemployment in the construction industry was 19.8 percent against 612 percent. These rates are seasonable uncorrected.

In other words, we have concerned ourselves with precisely the question you have raised. We have looked at the resources available in the construction industry and the prospects for the construction industry, and find that both looking back and looking ahead, the prospects are for a higher rate of unemployment in that industry on the average than for the country on the average.

Mr. HARVEY. Would you differ with the conclusion then that there is already considerable inflation in that particular industry, more so than in other industries, for example?

Dr. HELLER. If you look at the price indexes for the whole postwar period you will find that the price index for construction has probably risen faster than the average, rather than slower than the average. I would grant that point.

Mr. HARVEY. Mr. Chairman, I have one quick question for Mr. Bell, if I could.

Mr. Bell, again in the same Senate hearings, on page 163, Secretary Goldberg testified in this fashion. He said, and I quote:

The administration does not believe that now is the appropriate time to initiate broad scale federally financed public works programs in addition to those currently authorized or to place further strains on the Federal budget which such expenditures would entail.

Is it your testimony, sir, that this bill at this time would not place such strains on the Federal budget, contrary to what this testimony was in June of last year?

Mr. BELL. The President's proposal of this morning, I think, Mr. Harvey, speaks for itself.

It is the President's judgment that at the present time, recognizing the position in the areas in question, the position Mr. Gray and Mr. Blatnik and others have referred to, it is indeed desirable for the Federal Government to stimulate additional public works and related types of developmental activity in those areas.

I think Mr. Goldberg will follow us on the stand-
Mr. HARVEY. I appreciate that.

Mr. BELL (continuing). And speak for himself.

Mr. HARVEY. Let me ask you this, because you have a peculiar knowledge of this: Have we used up all of the funds appropriated last year? It was better than $100 million in the area of the Redevelopment Act for public works projects alone.

Have those been committed and used up at this time?

Mr. BELL. Well, again, Mr. Batt, the ARA Administrator, will be on the stand here, I think, perhaps tomorrow or the next day and can answer that more precisely.

It is my understanding that the funds which are available for his program or for that program, the area redevelopment program, are in the course of being committed.

Mr. HARVEY. But this $600 million is in addition to that?

Mr. BELL. It is in addition, that is correct.

Mr. HARVEY. I have no further questions.

Thank you, Mr. Chairman.

The CHAIRMAN. I have one short question and it will be a very short answer.

Under this bill would the President have the power to transfer funds from the highway trust fund for other purposes?

Mr. BELL. Under the standby authority-well, excuse me-under the immediate bill, of course, there is no transfer authority involved. Under the standby legislation it is not our interpretation that the President would have authority to use trust funds. None of the unobligated balances, to which we have been referring here this morning, are trust funds and we do not anticipate that trust funds would be drawn upon under the transfer authority.

The CHAIRMAN. Mr. Johnson?

Mr. JOHNSON. Mr. Bell, there is one question that I have here which I want to place in the record.

You cite the Secretary of Defense and the Forestry Service of the Department of Agriculture as using this transfer funds account.

Just how is that treated when those funds are put back into the respective agencies?

Does that come up to the Congress

Mr. BELL. Yes, sir.

Mr. JOHNSON (continuing). In a supplemental appropriation bill? Mr. BELL. It comes up just as we would anticipate would happen under this standby bill, namely, the Cabinet officer in question, Defense, Interior, Agriculture, whichever program it is, would draw on the unobligated balance in some other appropriation for the spending that is authorized in this case.

Then the President submits, at a later date, to the Congress a request for an appropriation to restore the obligational authority which was thus drawn upon.

And those subsequent appropriation requests come before the appropriations committees in the standard manner, and the appropriations committees decide whether the restoration is necessary or not and the extent to which it may not be necessary.

Mr. JOHNSON. Thank you.

Mr. BELL. As Mr. Scherer said earlier, it is obviously-if this kind of legislation is enacted-it would obviously be an expression of the intent of the Congress that the President would draw on these funds by transfer, and that the Congress would, for the most part, restore them at a later date.

Mr. BALDWIN. Mr. Chairman?

Mr. JOHNSON. I am very familiar with the forestry section but while it does not amounts to billions, it does amount to millions that are used in that and

Mr. BELL. That is right. That is the way this would work, the same way.

The CHAIRMAN. Mr. Baldwin?

Mr. BALDWIN. Mr. Bell, although you mentioned this would not apply to trust funds it is true, however, under the wording of the bill, that any funds that were appropriated but not yet obligated for any other public works project, like any specific harbor dredging project or any specific flood control project, could be taken if they had not yet been obligated and utilized for some other purpose within the scope of this bill.

And then unless Congress appropriated additional funds for that project they would not be available for that original project?

Mr. BELL. That is correct. Now, it is obvious, as I indicated in my testimony, the President would have to choose which unobligated funds to draw on, and he would plainly draw on those for which there was the least likelihood for immediate demand so there would be plenty of time for the Congress to consider the question of restoration. Mr. SCHERER. Will you yield?

Mr. BALDWIN. Yes.

Mr. SCHERER. Now, you referred to your bill and to the Blatnik bill. The Blatnik bill I do not agree with at all, but it is better than your bill.

It provides for direct back-door financing. Yours is a subterfuge. It does the same thing indirectly.

The CHAIRMAN. Mr. Kunkel.

Mr. KUNKEL. What amounts to as a temporary bypass of the Appropriations Committee, leaving them with the moral obligation to vote a future appropriation for a different purpose, in order to re

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