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cient basis--you cannot take it and speed it up without waste, or without cost. That is what it is. Waste is an invidious term. Costs that should be charged to the objective you have here.

Mr. CRAMER. Do you have any way of estimating the waste or additional cost of accelerating, for instance, these programs you suggest, such as irrigation, and water supply, and power projects, and whathave-you?

Mr. HUFSCHMIDT. I have no way of estimating it except that I have a notion, and this is backed up by some discussions with individuals who were associated with the Federal agencies. Last year's speedup program was taken on the existing notion that there is a certain limited amount of perhaps 5 percent of acceleration that can be had without too much cost. Then the cost rises rapidly if you try to push beyond this, and this

may change or vary with the individual project. There may be some Federal projects that are relatively underfinanced and are being carried along at what you might call less than efficient rates because there is only so much money in the total construction budget in the agency, and they spread it over a number of projects. To that extent, why, an acceleration can be had without any costs theoretically, or a little cost, but I don't think that there is an empirical evidence of how much cost is involved here.

Mr. CRAMER. You suggest irrigation, water supply and power projects as examples where good can be done. Aren't those minimal employment increase-type projects as compared to public buildings construction? Would not a minimal number of additional employees result per million dollars of additional expenditures in these types of projects as compared to public buildings? Isn't that correct!

Mr. HUFSCHMIDT. At the site. Yes.
Mr. CRAMER. That is what I am talking about.

Mr. HUFSCHMIDT. Of course, this program is an accelerated program, which involves not only at the site, but also the offsite employment. In fact, this was discussed specifically by Chairman Heller last week; and to the extent that you can increase orders, or accelerate orders, this has its effect in other areas. For example, this was done last year in connection with some of the water projects on last year's acceleration. There is a speedup of purchases of equipment and materials that would have to be used in the projects. But in terms of onsite-offsite ratios, it varies from project to project. I believe that there is a table in this committee print citing Labor Department esimates, and I believe that is probably the best thing. It is on page 13 of that Committee Print No. 15. The Labor Department estimates that the greatest offsite employment is associated with the classification of water supply and the least is associated with grading and drainage, which would be associated with highways, probably, I think; and reclamation also has a 1.6. Mr. CRAMER. I think we are pretty much in agreement. Mr. HUFSCHMIDT. Yes.

Mr. CRAMER. Onsite employment is less in these. Offsite, as compared to public buildings construction, and such, is comparable.

Mr. HUFSCHMIDT. That is right.

Mr. CRAMER. According to the President's Bureau of the Budget Staff Report, entitled “Federal Fiscal Behavior During the Recession of 1957–58," it shows that in public works expenditures, water re

sources and related activities in 1957 the Federal Government pumped in either by existing or new projects nearly $1 billion in 1957 in this one area alone$969 million. In 1958 it was $971 million. In 1959, $1,024 million, or a little over $1 billion. In 1960, $1,080 million; in 1961, $1,221 million.

Farmers Home Administration, farm housing loans, in 1957. $21 million; in 1958, $33 million; in 1959, $61 million; in 1960, $43 million and in 1961, $40 million.

Highways, grants to States; on other than the Interstate System was $729 million in 1957; $791 million in 1958; $1,095 million in 1959; $923 million in 1960; and $902 million in 1961. On the Interstate System alone, in 1957, $296 million; in 1958, $673 million; in 1959 $1,481 million; in 1960, $1,901 million; and, in 1961, $2,078 million.

In 1961, for instance, that means Federal expenditures for these purposes of $1,241 million in one year, and now the administration says we still have serious unemployment problems. Does this not most clearly point up what you yourself indicated? If you are going to put money into public works to create jobs in private employment, it takes very substantial amounts?

Mr. HUFSCHMIDT. I am not familiar with the figures you are citing there. At least the water resource figures. Aren't they the total public expenditures for water resources for those fiscal years, rather than increases over some base? The important point in using public works for this purpose which we are discussing here is the actual net addition to expenditures which would have otherwise occurred, and also the timing of it. I would agree with you we need substantial amounts, and perhaps also I would say that the limiting factor is perhaps not so much the availability of needed things to be done, nor the need for the employment impetus, but the limiting factor is the ability to use this particular tool.

I think the $2 billion right now represents a pretty good figure as an estimate of our ability to increase expenditures. It may be somewhat more than that. It may turn out to be less, but we cannot increase by $10 billion without excessive waste, which I do not think anybody would want to do. You say, can't you turn to other measures. Less than the amount we can do, perhaps is so small in relation to total expenditures and gross national product as not to seem worth bothering about as a program.

Mr. CRAMER. You say it is not worth bothering about. On one side that may be true, but on the other side, how is it paid for? It amounts to a pretty substantial amount of money. If you add this $600 million to the national debt and then you add the $2 billion program to the national debt, which eventually will be deficit spending, because we are in deficit spending now, that turns out to be a pretty substantial amount of money for the rather inconsequential new employ. ment that results, is it not?

Mr. HUFSCHMIDT. Well, of course, you have to look at the objective here, which is that the very purpose of an antideflationary policy is to pump additional funds into the economy, whether you do it by public works, or tax reduction, or whether you stimulate it by monetary means and lower interest rates.

Mr. CRAMER. Or an antideflationary policy.
Mr. HUFSCHMIDT. That is right.

Mr. CRAMER. Meaning inflation.

Mr. HUFSCHMIDT. No. What we hope is there will be consistent national growth without severe dips and without inflation. The national growth part will, of course, take care of increased tax revenues, so that concomitant with this antideflationary policy is a policy that in times when there is full employment that there be expenditures less than revenues so that there will be a surplus; and this I think is a part of the policy. We happen now to be in a recession period, so the tool you need now, whether tax reduction or public works increase, is to get more money into the economy.

Mr. CRAMER. That is the objective.
Mr. HUFSCHMIDT. That is right.

Mr. CRAMER. But it just has not proven out that way, has it? In 1960 there was over $3 billion pumped in and we had a $4 billion deficit. In fiscal 1962, that is. It looks like this year we will have a $10 billion deficit, and we are still pump priming with public works. In fiscal 1961 there is evidence here there was $4 billion put in and there was still some deficit. It just does not prove out, does it? And that obviously has an inflationary effect.

Mr. WRIGHT. Will the gentleman yield for a question ?

Mr. HUFSCHMIDT. I do not know what the deficit, if any, is going to be this year, at the moment.

Mr. CRAMER. The administration announced it is going to be $7 billion.

Mr. SCHERER. Closer to 10.

Mr. CRAMER. And I suspect it will be closer to 10, but the administration admits to $7 billion.

Mr. HUFSCHMIDT. This must be recent.
Mr. CRAMER. It is not recent. It was announced 2 months ago.
Mr. WRIGHT. Will the gentleman yield?
Mr. CRAMER. Yes.

Mr. Wright. The figures you are quoting, Bill, are they acceleration figures?

Mr. CRAMER. Just expenditures and acceleration.
Mr. Wright. The figure you gave is a total expenditure ?

Mr. CRAMER. Acceleration and new public works expenditures. Table 3-Budget or Trust Fund Totals for Selected Programs Affected by Antirecession Actions, including accelerated expenditures and new programs. This is the President's own Bureau of the Budget report.

Mr. Wright. Some of the new programs were part and parcel of our regular continuing programs, weren't they, Bill!

Mr. CRAMER. The administration says they were requested partially as antirecession measures, and were enacted on that basis.

Mr. BLATNIK. Are there any other questions?

Mr. SCHWENGEL. I would like to comment and then ask some questions. First I would like to say I am sorry I was not able to be here at the beginning of your testimony, but I have been here through part of it where it was discussed and talked about. I am glad to see that we are having people here from our schools and colleges. It might be well for the record to have you reveal a little bit about this school that you are a part of, which you represent and teach in at Harvard University. First I would like to ask how large is the department for which you speak?

Mr. HUFSCHMIDT. You mean the graduate school of public administration ?

Mr. SCHWENGEL. Yes. How many people do you have on the staff?

Mr. HUFSCHMIDT. Oh, there are about 70 or 80 students on the average in a year. The staff itself is actually made up primarily of the faculty of other departments—the department of economics and department of political science and department of government, law school and business school. Except perhaps for a few such people as myself and the dean, who is also a professor of government, the faculty actually is composed of the faculty of other schools.

Mr. SCHWENGEL. How many different members of the faculty are identified with this Littauer School?

Mr. HUFSCHMIDT. I can't give you a precise answer, but I should say that there are 20 or 30 different professors of economics and government and business and law, and engineering also.

Mr. SCHWENGEL. Let me ask you this: Have you within this group any conferences in which you studied this particular problem which is before us in this bill and the legislation on which you have given testi

mony here?

Mr. HUFSCHMIDT. I have not participated in any conferences as such. However, Professor Otto Eckstein has a public finance course and seminar in which he deals with these problems in great detail; and also Professor Warfield of the government department has a seminar and course in this field of public policy. So these problems are being considered pretty much continually, as is also Prof. Arthur Smithies, who has had a longtime interest in budgetary and finance problems. He wrote a text on the budgetary process. So there are a number of professors who deal with this.

My association with this has been more in connection with our water resources research program.

Mr. SCHWENGEL. Water resources research?

Mr. HUFSCHMIDT. Water resources research. Yes. Although I have an interest in this problem because of past experience in the Government in this field.

Mr. SCHWENGEL. I am glad to hear you say that you have an interest in water resources because that leads into an area in which I have a great interest too-the need to step up our water resources program all over the United States. I have an interest in developing and completing the watershed programs of America, and I imagine that you agree that it is very necessary, don't you?

Mr. HUFSCHMIDT. Well, I think, of course, that we have and will continue to have a major problem of planning and investment in water resources. Yes. From the headwaters to the mouth of streams. I think the problem now is, in view of the many interests and many purposes that are involved, to try to devise better ways of planning and developing these programs so that we can get the most out of it for the various objectives that the Government and others have for water.

Mr. SCHWENGEL. The special study and consideration you have given to this matter must indicate to you that it is more than money we need—a change of law, and a change of policy in many of these areas, and probably a lot more research. Do you agree?

Mr. HUFSCHMIDT. Yes. I think that the studies that have been made, for instance, in the Senate Select Committee on Water Resources, which did a comprehensive study in the last Congress, indicated certain improvements we need, and there is no question about it that to do the job required for the 1960's and 1970's we will need different kinds of legislation and policies than we have had in the past.

Mr. SCHWENGEL. And this could result in saving money as well as result in stepping up the program and attaining our goals in these various areas. Is that right?

Mr. HUFSCHMIDT. Yes, that is correct, and this is one example of it. We have been perhaps too much involved in construction per se of water projects. This is perhaps--this forum is not appropriate for this perhaps, but in water projects sometimes we need to include many management and nonstructural measures. For instance, in flood control we need flood plain zoning and flood management fully as much as we need reservoirs. This aspect has not been given the attention that it deserves. I am glad to see, though, that the Congress now recognized this in legislation, and the Army Corps of Engineers is pursuing this side of the problem.

Mr. SCHWENGEL. The bill we have before us would not substantially help in those areas you refer to.

Mr. HUFSCHMIDT. No.

Mr. SchwENGEL. So if we want to benefit most from this bill we had better get on with exploring the needs for amendments and revisions and corrections of our program first. Is that right?

Mr. HIUFSCHMIDT. Yes. I want to join with Professor Gray in saying that there is a sort of continuing long-term public investment program that we need, which ought to be fully justified, project by project and program by program, on its merits. But this is going to be with us, and we should not confuse that with attempts such as this to try to use public works as a contracyclical device. The two are separate, and our public works program, certainly in the water and land fields, must continue to

go

forward on a sound basis. Mr. SCHWENGEL. This proposal deals with recreation, and the development of watersheds and our water resource programs could very well fit into a step-up of the recreation programs that this legislation envisions; and we would do it better if we had some better planning. Is that right?

Mr. HUFSCHMIDT. I think recreation is one of the coming things. There is a problem of sorting out the Federal, State, local and private interests in this, and this recent report of the Federal Recreational Resources Review Commission certainly highlights some of the needs and trends in this area.

Mr. SCHWENGEL. And one of the greatest needs in the recreation area is to have a better balanced program to serve all of the people everywhere, and a program that will envision the cooperation of the local interests with the State and National interests more than it now does. Isn't that true?

Mr. HUFSCHMIDT. I think that is correct, when you consider the pressure of recreation of these expanding urban areas. Take the area of Boston to Washington. The problem really involves the cities and States and metropolitan areas and the Federal Government getting together so that whether they are dealing with highways, or

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