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This would be then considered. There would be a staff rcommendation coming from the Division to the Director's review. There might be, as a result of that, some change at that point, in what the Director, who is looking at the whole picture, again might decide that he wants to recommend to the President. The Secretary may appeal this recommendation to the President.

This is a reasonably fluid process, I might say.

Then there are informal discussions going on all the time. This is not a formal procedure in which everything is written down.

We would then go to the President and give him some informal advice on an initial totaling up of what the budget looks like and the President would say, "You go back and cut that across the board." So then instructions go out, and you find places where cuts can be made.

Mr. DOWNING. Is this what happened in this case?

Dr. SEIDMAN. I think in part, certainly, that was true. It was probably as a result of discussion.

Mr. DINGELL. If the gentleman will yield, are these cuts predicated on saving money, or upon national need?

Dr. SEIDMAN. They are in terms of saving money, and in terms of priorities of national need, Mr. Dingell.

Mr. DINGELL. You will concede to me that there was pretty clear proof that we needed 25 ships. Am I correct?

Dr. SEIDMAN. I would have no personal knowledge of this at all. I did not examine the budget.

Mr. DINGELL. It would be fair to assume that somebody made the assumption that there was a very clear national need of 25 ships. Am I correct?

Dr. SEIDMAN. There was an assumption by the Department of Commerce, initially, in making this recommendation, yes.

Mr. DINGELL. Now, is it your assumption that there is no national need for 25 ships, that there is only national need for 10 ships?

Dr. SEIDMAN. I make no such assumption, Mr. Dingell, because I am not qualified to make it, but national need is a relative term, and the problem is—and this is the problem that the President faces each year-that the requests which the heads of agencies make in good faith and based on their best judgment of national needs to the Budget Bureau each year, I can assure you, far outrun our resources. You have to make a judgment, and ultimately it is the responsibility of the President, under the budget process, and the Budget and Accounting Act, to determine the order of priorities as among these identified national needs.

Mr. DOWNING. I understand that your task is most difficult, and I think I am with you, Doctor, but I have trouble following your reasoning, sometimes.

You funded the highway beautification program at $350 million, to my recollection, and yet you cut the maritime program in half. I have trouble weighing these things.

Dr. SEIDMAN. I might say as a footnote in terms of this, in terms of the organizational question, that the Bureau of Public Roads, and the highway programs, have never been in an independent agency, and they have been quite effective in obtaining funds for their programs, but this was a Presidential judgment.

Mr. DOWNING. Let's go back to this 25 ship thing again.

It came to you as 25 ships, and then went through the process of the evaluation board, is that correct, between the agency and the office of the Bureau of the Budget?

Dr. SEIDMAN. Yes.

Incidentally, I think we have, if it would help the committee, a flow chart which we prepared for other purposes of actually how the budget process operates. It indicates where budget requests originate and the steps in the budget process.

This shows how the budget process operates.

The CHAIRMAN. Could you give us a chart of this particular instance that we are speaking of?

Dr. SEIDMAN. I Could not give the particular instance.

The CHAIRMAN. Could you give the 25 ships? Could you keep it to that?

Dr. SEIDMAN. That I don't think I could do.

The CHAIRMAN. If this chart refers to other programs, it would not refer to this!

(The flow chart mentioned follows herewith:)

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Dr. SEIMAN. It is the same process which it goes through, and. as I said, again this came from the Secretary of Commerce to the Bureau, and was reviewed by the stad, and I cannot speak here as to what the mdgment was of the Division and the examiners that re rewed it, or the Director, and what he revmmended.

I cannot speak to that, and the factors they considered

I know generally, sitting from time to time on the review board. the kind of considerations that do come up in making budget determinations bet in this specite one. I am ny personally familiar with the elements

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In cooperation with the Treasury Department and Council of Economic Advisers

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Mr. DOWNING. Let's go back to this 25 ship thing again.

It came to you as 25 ships, and then went through the process of the evaluation board, is that correct, between the agency and the office of the Bureau of the Budget?

Dr. SEIDMAN. Yes.

Incidentally, I think we have, if it would help the committee, a flow chart which we prepared for other purposes of actually how the budget process operates. It indicates where budget requests originate and the steps in the budget process.

This shows how the budget process operates.

The CHAIRMAN. Could you give us a chart of this particular instance that we are speaking of?

Dr. SEIDMAN. I could not give the particular instance.

The CHAIRMAN. Could you give the 25 ships? Could you keep it to that?

Dr. SEIDMAN. That I don't think I could do.

The CHAIRMAN. If this chart refers to other programs, it would not refer to this?

(The flow chart mentioned follows herewith:)

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Dr. SEIDMAN. It is the same process which it goes through, and, as I said, again this came from the Secretary of Commerce to the Bureau, and was reviewed by the staff, and I cannot speak here as to what the judgment was of the Division and the examiners that reviewed it, or the Director, and what he recommended.

I cannot speak to that, and the factors they considered.

I know generally, sitting from time to time on the review board, the kind of considerations that do come up in making budget determinations, but on this specific one, I am not personally familiar with the elements that in this particular case entered the decision that this program would go from 25 to 13 ships.

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Revises and approves budget message.

Transmits recommended budget to Congress.

TRANSMISSION OF BUDGET TO CONGRESS

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In cooperation with the Treasury Department and Council of Economic Advisers

• OFFICE OF THE PRESIDENT • BUREAU OF THE BUDGET

MID-JANUARY

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