in an absolute reduction in Compliance programs, especially Adult and Collection, below the fiscal year 1970 levels. Obviously, this results in substantial losses of revenue that exceeds such a budget reduction by ratio of nearly 18 to 1.

U.S. SECRET SERVICE

The House reduction of $4,600,000 and 196 average positions will seriously impair the ability of the Secret Service to function adequately and fulfill its assigned missions in fiscal year 1971. These major missions include the candidate and nominee protection imposed by Public Law 90-331 and the control of counterfeiting, check and bond forgeries and other investigative workload.

Of the 196 positions not allowed, a total of 126 were for the candidate and nominee protective effort. These positions represent a second increment of trained men who would be protection oriented and experienced to make the judgments and responses to changing conditions that will arise in the 1972 campaign. This mission of the Service is of the highest priority. We cannot permit a repetition of the long hours of overtime and extreme fatigue which occurred in the the 1968 campaign because of a shortage of qualified agents. Since the law for protection of candidates did not pass until June 1968, there was no time to augment the Secret Service staff for the 1968 campaign. We must provide adequate staff if we are to carry out the intent of the law.

As you know, the Secret Service has no immunity from the effects of the increasing national crime rate. Just as other enforcement agencies, the Service needs more resources merely to keep abreast of such increases. The caseload of violations requiring investigation in areas other than protective cannot be backlogged without eventual disastrous consequences to the public.

MONETARY LIMITATION ON PURCHASE OF POLICE-TYPE VEHICLES

After some review and examination, the House Committee provided in the 1970 Appropriations Act for Treasury language which permitted the purchase of police-type vehicles without regard to the general purchase price limitation ($1,650). This was in consonance with similar authority in FBI and other Justice Department appropriations. This has permitted the purchase of economical but practical vehicles for enforcement use. Many of the vehicles purchased in the earlier years were not adaptable to surveillance or pursuit activities.

The House has included in the 1971 Appropriation Bill language that would again limit the purchase of police-type vehicles to only $400 above the purchase price limitation. This would limit the purchase price total of $2,050. This falls far short of the amount needed for a standard size automobile with such police-type features that are important to the accomplishment and to the safety of enforcement missions, as demonstrated by recent competitive purchases in 1970 considerably above that figure. Automobiles are an essential tool of enforcing laws. Treasury personnel should not be discriminateed against just to get uniformity in other Government agencies. The Justice Department agencies for a number of years have had no limitation on purchase price. We believe that better law enforcement will result if Treasury is not required to accept lower quality automobiles. This limitation would not, based on our experience in 1970, permit the acquisition of standard models of the big three-the standard eight cylinder models of Fords, Chevrolets, or Plymouths. The justifications will provide adequate detail for your consideration of this important requirement.

Justifications and materials explaining in detail the reason for the requested restorations are being prepared in the prescribed form and will be supplied to your Committee staff.

Sincerely yours,

OFFICE OF THE SECRETARY

DAVID M. KENNEDY.

Senator YARBOROUGH. We will take the appeal items in the sequence in which they were placed in the Secretary's letter. The first item the Secretary is appealing is not a large item in comparison with the $30,429,000 total reduction, but the House imposed a reduction in the request for the Office of Secretary in the amount of $160,000.

Any questions, Senator Boggs?

Senator BOGGS. No, thank you, Mr. Chairman.

Senator YARBOROUGH. Thank you. Mr. Secretary, you may proceed.

INTRODUCTION OF ASSOCIATES

Mr. WALKER. Mr. Chairman, I have a brief statement I would like to present first.

Senator YARBOROUGH. We will hear your overall statement, Secretary Walker.

Mr. WALKER. Mr. Chairman and Mr. Boggs, I am accompanied by A. E. Weatherbee, Assistant Secretary, and Ernest C. Betts, Jr., Budget Officer and Deputy Assistant Secretary for Administration. Secretary Kennedy asked me to apologize he couldn't be in two places

at once.

Senator YARBOROUGH. When we heard that Secretary Kennedy could not be present and he asked to be excused we definitely waived any request that he appear. We heard you were fully informed of the facts, Mr. Walker, and we trust you can furnish us with all of the information required; and, with the fiscal problems that this Government has, I felt he might well put that time in, with our vast millions involved, in more valuable items than what we talk about here $30 million.

Mr. WALKER. We appreciate that, sir.

STATEMENT BEFORE HOUSE COMMITTEE

I am pleased to present the fiscal 1971 budget requests for the Department of the Treasury. Because there have been very few changes in the Treasury budget situation since we made our statement to the House Appropriations Subcommittee, I would like to offer that statement for inclusion in the record and give you now the highlights of our 1971 request and the effects of the reductions made by the House. (The statement appears on page 10.)

INCREASE OVER 1970 APPROPRIATIONS

Mr. WALKER. As the Secretary's letter to you of April 16, 1970 explained, the Treasury portion of the President's budget as presented to the House subcommittee had gone through three phases of reviews and parings to achieve a very conservative level. This level is $1,252,551,000 and 91,358 average positions of employment.

The 1971 request is $85,584,000 more than the 1970 level and would add 4,733 average positions of employment. The House reductions, which we must ask to be restored in their entirety, would provide only $55,155,000 above the 1970 level with an additional 1,642 average positions of employment.

1970-1971 FUNDING COMPARISON AND EFFECT OF HOUSE REDUCTIONS

I have here a tabulation which displays by bureau and appropriation the budget level for fiscal year 1970, the budget request for fiscal year 1971, and the dollar and employment effects of the House reductions.

(The table follows:)

BUDGET AMENDMENT

Mr. WALKER. You will see in a footnote to the table that it excludes in the 1970 budget level the supplemental items of May 8 for public debt, Bureau of Accounts, and the Secret Service. These were transmitted by Senate Document 91-67. Because these new items do not change the need for the amounts of fiscal year 1971 increase which we justified to the House Appropriations Committee and on which that committee reported, I am continuing my discussion of the 1971 programs just as I presented them in the House.

The May 8 supplemental item for the Bureau of Accounts of $1,320,- · 000, for example, is for the one-time postage costs of mailing retroactive social security payments due under Public Law 91-231; the public debt item of $350,000 is likewise a one-time cost for additional services of the Federal Reserve Banks in fiscal year 1970, and the Secret Service item is $259,000 of pay increases for the newly created Executive Protective Service, whose costs will be met from the overall contingency item for pay in the 1971 President's budget.

SUMMARY OF INCREASES

The following breakdown summarizes our requested increase of $85,584,000 for fiscal year 1971:

Forty-seven million dollars is to meet additional work loads imposed on Treasury for coinage; revenue collection; customs inspections and collections; law enforcement; Presidential and diplomatic protection; and disbursing, paying, and public debt transactions. In every area demands for Treasury services are growing and will continue to grow with the population and economy.

Two million dollars is for specific Customs modernization in its intelligence network and automation of merchandise processing.

Fifteen million dollars is for the lease or purchase of major equipment or capital items-the bulk of this is data processing equipment for the Internal Revenue Service and the first increment of construction of the Federal Law Enforcement Training Center.

Forty-three million dollars is to maintain in fiscal year 1971 the 1970 level of staffing and activity.

Twenty-one million five hundred thousand dollars represents costs of fiscal year 1970 that will not recur in fiscal year 1971 and also management improvement savings and the $21.5 million have been taken as reductions in the fiscal year 1971 budget requests.

Summarizing our employment request for an additional 4,733 average positions:

Positions of 4,132 are needed to meet work load increases; 26 are needed for the expanded Customs intelligence network and automated merchandise processing; 1,144 are required to place crime reduction programs initiated in fiscal year 1970 on a full-year basis in fiscal year 1971; and 569 average positions are taken as reductions in our estimates because they represent 1970 activities not recurring in 1971 and management savings.

HOUSE REDUCTIONS

The reductions made by the House in each appropriation will create problems-some very grave. The Secretary's letter to you of April 16 spoke of these, and the bureau witnesses whom you may to hear will explain them further. I would emphasize certain points of difficulty.

CUSTOMS

In Customs, we had planned to improve the level of examination of cargoes and mail packages. Revenue would be enhanced at the rate of $55 to $1 expended for cargo examination and $3 to $1 expended for mail package examination. Even more importantly, perhaps, the limited mail examination we can do uncovers astounding quantities of narcotics, weapons, and illegal merchandise attempted to be smuggled into the country.

We asked funds to maintain the 1970 level of staffing and activity and program increases of 357 positions of employment and $6.7 million. The House allowed the funds to maintain the current level and 187 positions of employment and $5,102,000 for program increases.

MINTS

In Mint, our plans to make 8.7 billion coins were designed to avoid a coin shortage. Federal Reserve Bank estimates of coin needs for commerce are currently higher than the 8.7 billion coins we had planned. The House cut will permit making only 7.6 billion.

INTERNAL REVENUE SERVICE

In Internal Revenue Service, we had planned a very small increase to strengthen internal audit and security-the bulk of the 1971 increase being to maintain 1970 levels of staffing and activity in the face of higher costs. The House cut of $596,000 in the "Salaries and expenses" appropriation reduces staffing and activity below 1970 levels.

Revenue accounting and processing in IRS requires $10.8 million increase to meet the work load to be added in 1971 by the growth of the Nation. The House cut will require a backlogging of refund and balance-due returns, adding interest costs of $12 million for delayed refunds to taxpayers and delaying billings to 400,000 taxpayers owing the Government an estimated $144 million.

The total increase we requested for the "Compliance” appropriation was $41.5 million, of which $22.5 million was for program increases and a net of $19 million was to maintain the current levels of employment and activity. The House cut provides the funds to maintain current levels but only $3 million for program increases.

It was our urgent intent to broaden the scope of compliance programs where effectiveness has been eroded in recent years by severe limitations on manpower and funds. The regression of the Government's tax enforcement capability has received increasing public notice.

NEW POSITIONS

We asked additional employment of 2,421 average positions at a cost of $22.5 million in order to apply 1,601 to raise the level of audit coverage, 526 to improve collection of delinquent accounts and to secure delinquent returns, 122 to assist in tax fraud cases and special investigation of suspected criminal violations of revenue laws, 143 for enforcement of alcohol and firearms laws, and 29 for technical rulings and services.

The House reduction of $19.5 million would permit employment of less than 400 average positions of the 2,421 requested for broadening programs, and a substantial number of those 400 will be eliminated by unanticipated increases for 1971 that have developed in recent months. Unless there is restoration of the House reduction, audit and