TREASURY, POST OFFICE, AND EXECUTIVE OFFICE HEARINGS BEFORE THE SUBCOMMITTEE OF THE NINETY-FIRST CONGRESS SECOND SESSION ON H.R. 16900 AN ACT MAKING APPROPRIATIONS FOR THE TREASURY AND PURPOSES 45-174 O Printed for the use of the Committee on Appropriations U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1970 EX OFFICIO MEMBERS FROM COMMITTEE ON POST OFFICE AND CIVIL SERVICE ON POST OFFICE ITEMS GALE W. MCGEE, Wyoming JENNINGS RANDOLPH, West Virginia HIRAM L. FONG, Hawaii JOE E. GONZALES, Clerk to Subcommittee (II) DEPARTMENTS OF THE TREASURY AND POST OFFICE AND EXECUTIVE OFFICE APPROPRIATIONS FOR FISCAL YEAR 1971 MONDAY, MAY 25, 1970 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, The subcommittee met at 10:30 a.m., in room 1224, New Senate Office Building, Hon. Ralph W. Yarborough (chairman) presiding. Present: Senators Yarborough, Boggs, and Allott. DEPARTMENT OF THE TREASURY STATEMENT OF HON. CHARLS E. WALKER, UNDER SECRETARY OF THE TREASURY ACCOMPANIED BY: A. E. WEATHERBEE, ASSISTANT SECRETARY FOR ADMINIS- ERNEST C. BETTS, JR., DEPUTY ASSISTANT SECRETARY FOR BUDGET REQUEST Senator YARBOROUGH. The subcommittee will come to order. We will begin hearings on H.R. 16900, the bill making appropriations for the Treasury and Post Office Departments, the Executive Office of the President and certain agencies for fiscal year 1971. Gentlemen, we appreciate your being here. I regret the unavoidable events that delayed me this morning. We will bear that in mind as I cut down on the number of questions I ask, which will compensate for this lost time. I apologize also to my efficient colleague, Senator Boggs. We have served on more than one committee together, and he is always efficient in the Senate and I envy him with the size of the population of his State. Now, we will take up first the items contained in title I, Treasury Department. The budget estimates for fiscal 1971, for all agencies, under this title, total $1,252,551,000, an increase of $162,461,000 over fiscal 1970 appropriations enacted to date. There are pending before Congress several 1970 supplemental items which, when enacted, will reduce the difference between the 1971 budget estimates and final 1970 appropriations. We do not know, at this time, what the exact difference will be between the two figures. (1) HOUSE ALLOWANCES The House passed H.R. 16900, as reported, on April 13, and that bill contains a total of $1,222,122,000 for all agencies of the Treasury Department for fiscal 1971. The House, in passing the bill, imposed a total reduction of $30,429,000 composed of eight items. The overall cut is about 2.4 percent of the budget estimates. APPEAL LETTER Mr. Walker, we have Secretary Kennedy's appeal letter of April 16, and it shall be placed in the record at this point. It outlines the 1971 budget estimates, the House reductions, and the items and amounts appealed. It should be noted that the entire amount of the House reduction is appealed to the Senate. (The letter follows:) Hon. RALPH W. YARBOROUGH, Chairman, Treasury, Post Office and Executive Office Subcommittee, Senate Committee on Appropriations, Washington, D.C. DEAR MR. CHAIRMAN: The Treasury, Post Office and Executive Office Appropriation Bill, 1971, (H.R. 16900) was passed by the House of Representatives on April 13, 1970. It included in Title I annual operating appropriations for the Department of the Treasury totalling $1,222,122,000. Reductions of $30,429,000 were made from the budget estimates for fiscal year 1971. These reductions and the amounts appealed are as follows: We have carefully reviewed the actions of the House and determined that we should request full restoration of these reductions. The President's Budget as presented to the House Committee had gone through three phases of reviews and parings to achieve what I consider a conservative budget. It is not possible to accomplish our program objectives satisfactorily at the fund levels suggested by the House. The restorations requested are described briefly below. OFFICE OF THE SECRETARY In the Office of the Secretary, a restoration of the $160,000 reduction is requested. It is possible to make program adjustments to comply with the House reduction of five positions and $60,000 by reducing some quality of staff assistance, but I do not recommend it. Reduction of an additional $100,000, however, would force a reduction of positions beyond that contemplated by the House action. It would force curtailment of work in tax policy analysis, equal employment opportunities, and administrative support functions that I consider essential. FEDERAL LAW ENFOREMENT TRAINING CENTER (S & E) The reduction of $113,000 for the Federal Law Enforcement Training School is a small reduction that could be absorbed in many of the larger programs. In this particular instance it would delay the employment of the staff required to change from 60-man classes to 30-man groups. Since there is a backlog in enforcement training, due to the expansion already approved in the Bureau of Customs and the Secret Service, it would be in the best interests of our new agents and our law enforcement training program if we could begin as soon as possible to provide the best available training. BUREAU OF CUSTOMS During the fiscal year 1970, the Congress provided the long-needed assistance to strengthen Customs law enforcement capability. The programs increases of 357 man-years and $6,687,000 requested in the 1971 budget would primarily improve the examination of cargo and mail. This would increase the examination to a level that would not only protect the revenue but would provide an acceptable level of enforcement. Not only will an increased examination of cargo im portations produce approximately $55 for each dollar expended and mail examinations $3 for each dollar expended, but the savings resulting from increased enforcement are incalculable. The House reduction of 170 average positions will apply nearly in the entirety to cargo and mail examination with resultant losses in revenue. BUREAU OF THE MINT It is requested that the total reduction of $1,663,000 applied to the Bureau of the Mint be restored. The reduction by the House would result in a lower amount of coins being produced than the 8.7 billion planned under the President's Budget. Only about 7.6 billion coins could be produced under the House allowance. The information we now have from the Federal Reserve Banks is that more than the 8.7 billion coins will be needed in 1971 for the trade and commerce of this country-not a lesser number. Reduced production could lead to rationing of coins to the banks— a first step toward another coin crisis. This situtaion I am sure we all want to avoid. INTERNAL REVENUE SERVICE It is requested that the total reduction of $22,308,000 applied to the IRS be restored. In the Salaries and Expenses appropriation, the cut of $596,000 reduces both management support and integrity programs below the already minimal fiscal year 1970 level. The services provided by this appropriation must be in proper relation to the Service's other programs. An imbalance was begun in the past two fiscal years and was being only slightly adjusted (5 man-year) in the 1971 budget. The Revenue Accounting and Processing appropriation had been held to a level in the President's Budget that would require deferring into fiscal year 1972 all but 500,000 of the estimated 15 million full-paid tax returns to be received in fiscal year 1971. The reduction by the House of $2,239,000 man-years leaves no option except a 3 to 4 month delay in processing about 3.3 million “refund” and "balance due" returns. This could delay refunds of about $675 million re sulting in additional interest charges to the Government of around $12 million It would also delay the billing of 400 thousand taxpayers owing the Government an estimated $144 million. The House was not fully informed about the need for an increase in the language limitation for temporary employment for this appropriation and reduced the request from $36,900,000 to $35,500,000. Part of the increase requested would be used to meet pay increase costs and the remaining would be used to provide flexibility if the need arose to use temporary rather than permanent employees during period of transition to the new service centers. The justifications and House hearings did not make evident the full intent of the language change. The reduction of $19,473,000 in the Compliance appropriation cuts more deeply into the manpower requested than the House Committee Report indicates. Of the total budget increases for Compliance, $22,459,000 was for staff to meet the growth of the population and the economy; the balance of $19,008,000 was for the uncontrollable costs of continuing the 1970 program levels into fiscal year 1971. Consequently, the reduction would permit the addition of less than 400 average positions rather than 1,550 cited in the House Report. The reduction plus other unfunded costs which have arisen during recent months would result |