MARCH 9, 1948.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. CANFIELD, from the Committee on Appropriations, submitted the following

REPORT

[To accompany H. R. 5770]

The Committee on Appropriations submits the following report in explanation of the accompanying bill making appropriations for the Treasury and Post Office Departments for the fiscal year ending June 30, 1949.

With the exceptions subsequently specified, the bill includes regular annual appropriations for these Departments, the estimates for which are found: For the Treasury Department, on pages 849 to 894, inclusive, of the Budget; and for the Post Office Department, on pages. 791 to 813, inclusive, of the Budget.

Appropriations for Bureau of Customs, Coast Guard, acquisition of strategic and critical materials, and refunding internal-revenue collections have not been included in the bill, but will be presented to the House later.

Detailed management surveys of the customs service and the Coast Guard, authorized in the Treasury-Post Office Appropriation Act, 1948, were made on a contract basis by commercial firms during the latter part of the calendar year 1947. Reports thereon were received in January 1948. In order that management and budgetary improvements pointed out in these reports can be analyzed and initiated, time must be afforded during which the recommendations made can receive

thorough study by Treasury officials and the committee. The Secretary of the Treasury should insure that his officials spare no effort immediately to initiate concrete action on all recommendations made in these management surveys and be able to demonstrate specific improvements in efficiency and reductions in costs by the time hearings are held on the 1949 budgets for these two agencies.

The appropriation for strategic and critical materials has been deferred pending determinations relating to their procurement in conjunction with the European recovery program and further study by the committee. The appropriation for internal-revenue refunds requires further consideration by the committee.

In comparing estimates and amounts recommended in the bill for 1949 with appropriations for 1948, it should be noted that certain supplemental estimates for 1948 have been received by the committee. Authority was granted by the Second Supplemental Appropriation Act, 1948, for the Post Office Department to draw heavily against certain of its funds in the first part of the current year in the event of increased mail volume. Postal revenues, which are indicative of mail volume, for the first two quarters of the current year were the largest in history, necessitating supplemental appropriations for fiscal year 1948. Unforeseen demands for currency have occasioned supplemental estimates for the Treasury Department, and claims certified by the General Accounting Office for payment have exceeded original estimates for 1948.

For convenient reference, comparative figures for the items contained in the accompanying bill are as follows:

TITLE I-TREASURY DEPARTMENT

Direct appropriations carried in the accompanying bill for the Treasury Department total $290,453,100. Budget estimates covering items for which the foregoing amount is recommended total $306,981,700, and appropriations for the regular operations of those Bureaus and agencies of the Treasury Department in 1948 for which provision is made in the accompanying bill amounted to $313,678,400. Budget estimates for 1949 are thus $6,696,700 less than funds provided for these activities for 1948, and the committee has made reductions below the budget estimates by $16,528,600.

Permanent appropriations.-The Treasury Department, in addition to the regular activities appropriated for in the accompanying bill, administers certain permanent appropriations such as interest on the

public debt, statutory public debt retirements, and others, for which the estimated obligations in 1949 aggregate $5,877,868,083. This amount is less than the total of $6,021,281,560 for 1948 by $143,413,477. While interest on the public debt in 1949 is estimated at $5,250,000,000, exceeding the 1948 amount by $50,000,000, the amount for statutory debt retirement in 1949 is 193.7 million dollars less than the 1948 amount. The increase in interest on the public debt is attributable, according to the Secretary of the Treasury, to a rise in the average rate of interest paid, and not to an increase in total debt. The decrease in statutory debt retirement in 1949 is due to the nonrecurring application of the surplus of the War Damage Corporation to reduction of the public debt.

Trust funds.-The Treasury Department also administers trust funds, such as the Federal old-age and survivors insurance trust fund, the unemployment trust fund, and others. Total obligations of these funds in 1949 are estimated at $3,313,584,430, an increase of 89.8 million dollars over the 1948 amount of $3,223,762,500.

The tabular statement at the end of the report provides an itemization of all of the foregoing.

Organizationally under the immediate office of the Secretary of the Treasury as administrative or service offices are the Chief Clerk, Superintendent of Treasury buildings and Division of Personnel, and as technical units the Office of the General Counsel and Division of Tax Research.

The Budget proposed an appropriation for the office of the Chief Clerk, which the Department supported by written justifications. The committee was surprised to learn from the testimony given on this item that a new Office of Administrative Services, which "takes the place of the Chief Clerk's office and contains the Division of Treasury Buildings," was created by administrative order more than 3 months before the budget was presented to the Congress. though not appreciative of being belatedly advised of budgetary changes, the committee believes that a consolidation of the "housekeeping" functions of the Department is a move in the proper direction. This should be merely the first step in a major realinement of overlapping components. There is no justification for maintaining separate units such as the office of the Chief Clerk, Superintendent of Treasury buildings, and the Division of Personnel. Also, the guard force for Treasury buildings, which was formerly under the office of the Secretary but is now under the Secret Service Division, should be considered as a departmental service organization. All of these service units should be integrated under the office of the Secretary and headed by a single administrative officer without intermediate administrative units or officers. A thorough survey of this matter should be undertaken at once by the Department, and the budget for 1950 should present a consolidation of these functions as well as the appropriations therefor. The committee expects that specific reductions in costs will accompany the consolidation.

H. Repts., 80-2, vol. 2- -12

The written justifications for the 1949 estimates of the Department were unnecessarily voluminous and not sufficiently uniform. The Secretary of the Treasury should insure that all irrelevant matter and verbiage are eliminated in the justifications for 1950, with substantial reduction in the volume of material presented. Proper care should be exercised to insure maximum clarity and uniformity in presenting all information relative to the estimates. The departmental budget officer should confer with the committee staff in this regard.

The estimate of $409,000 for salaries for the office of the Secretary has been reduced to $380,000, a decrease of $29,000, of which $20,000 should be applied against employment of public-relations personnel. There are presently 7 such employees in the office of the Secretary and 28 elsewhere in the Department, an excessive number. Only 13 messengers are currently employed in the Secretary's office, and the number authorized has been reduced from 18 to 15.

The estimate for personal or property damage claims, $50,000, is admitted by the Department to be a mere guess, and has been reduced to $30,000.

Obligations for penalty mail in 1948 are estimated in the budget at $5,900,000, leaving $800,000 of the current appropriation unused. No increase for 1949 has been justified, and the estimate has been reduced from $6,350,000 to $5,900,000, in conformity with 1948 requirements.

The appropriation for refunds under the Renegotiation Act, administered by the Secretary of the Treasury, has consistently been grossly overestimated since its inception. The estimate of $3,250,000 for 1949 has been reduced by the committee to $2,000,000, the amount presently estimated in the budget to be necessary for 1948.

Despite a reduction of personnel in the Division of Tax Research for 1949, the budget proposes no offsetting reduction in funds. The committee has reduced the estimate of $141,400 to $110,000 to compensate for the proposed smaller number of employees. This appropriation should not be utilized to pay for work performed for foreign governments unless such is authorized by law.

The office of the General Counsel is staffed with 56 persons, of whom only 19 are attorneys. There are 477 attorneys in the entire Legal Division of the Treasury Department, the majority of whom are in the Bureau of Internal Revenue. In all, the Treasury Department estimates for 1949 include $5,500,000 for legal services, and the office of the General Counsel is, according to the Acting General Counsel, largely a service organization for which no work-load statistics are maintained. The amount for this office has been reduced from $250,000 for 1948 to $225,000 for 1949. The detailed legal work is performed principally outside this office in the various bureaus, and the amount provided is adequate for the function of correlating departmental legal activities in addition to any detailed legal work required of this unit.

Funds for the Division of Personnel have been reduced from the estimate of $127,000 to $120,000, since in the past 3 years there has been a constant reduction in the total numbers of civilian personnel in the Treasury Department.

The departmental witness who sought to justify the appropriation for health-service programs for the Department was unable to advise