TREASURY DEPARTMENT APPROPRIATION BILL FOR 1947 WEDNESDAY, MARCH 6, 1946 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D. C. The subcommittee met, at 10:30 a. m., Hon. Kenneth McKellar (chairman of the subcommittee) presiding. Present: Senators McKellar, McCarran, Hayden, Green, Maybank, White, and Reed. Senator MCKELLAR. Mr. Reporter, we will insert at this point in the record the letter from the Secretary of the Treasury dated February 26, 1946. TREASURY DEPARTMENT LETTER FROM SECRETARY OF THE TREASURY ON REQUESTED AMENDMENTS (The letter referred to is as follows:) Hon. KENNETH MCKELLAR, TREASURY DEPARTMENT, Washington, February 26, 1946. Acting Chairman, Subcommittee in Charge of the United States Senate. MY DEAR MR. CHAIRMAN: Reference is made to your letter of February 12, with respect to the Treasury Department appropriation bill for the fiscal year 1947 (H. R. 5452), in which you request information as to any changes in the bill which the Department deems absolutely necessary. The Treasury's appropriation estimates for the fiscal year 1947 were carefully scrutinized by the Department prior to transmittal to the Bureau of the Budget, and they were subsequently subjected to careful study and analysis by the staff of the Budget Bureau. As finally presented to the House, these Budget estimates represented, in our judgment, the minimum amounts which will be required to perform the essential functions of this Department in 1947. The House Appropriations Committee, however, has made reductions in a considerable number of our Budget estimates for annual operating expneses, such reductions aggregating $10,482,500. In discussing these reductions on the floor of the House, Chairman Ludlow of the Treasury appropriations subcommittee stated that if the amounts allowed should prove in any instance to be lower than necessary to perform essential services, the Department's officials could present their case to the deficiencies subcommittee. With the exception of five items, which are hereinafter discussed in detail, the Treasury is not at this time requesting the restoration of the various amounts disallowed by the House committee. In most instances we shall accept the judgment of the House Appropriations Committee and endeavor to perform our functions within the limits of the reduced amounts as provided in the bill. During the coming fiscal year, after having had the benefit of several months' actual experience, we shall be able to determine whether we can satisfactorily perform our operations within the amounts provided. In this connection, you may be assured that the Treasury will make every effort to avoid requests for supplemental appropriations. 85 There are five items, however, with respect to which the Department feels that the House committee's reduction will seriously impair its operations. In these cases the Department feels that it cannot await developments in the ensuing year, and we are compelled, therefore, to request your committee to restore the amounts by which such estimates were reduced. The five items in question are as follows: OFFICE OF THE SECRETARY OF THE TREASURY Appropriation: "Salaries, Office of the Secretary." Page 2, line 5: Strike out the amount "$422,000" and substitute the amount "$442,000." With the exception of additional requirements to effect mandatory salary increases provided by law and the transfer, of funds incident to the reassignment of certain functions, the Budget estimate ($442,000) for the Office of the Secretary for the fiscal year 1947 represented no increase over the amount required for similar purposes in 1946. In reporting the 1947 bill, the House Appropriations Committee reduced the estimate for the Secretary's Office from $442,000 to $422,000. In commenting on the reduction in this estimate, as well as the reductions made in the estimates of the Office of Tax Legislative Counsel, the Office of General Counsel, the Division of Personnel, and other staff offices, the committee stated that since "heavy expenditures for and incident to the war have substantially diminished and will continue to decline, the burdens of these offices should be lessened * * With respect to the Office of the Secretary, it is my opinion that the Treasury's postwar problems will unquestionably demand the continued services of our present staff not only for the ensuing fiscal year but in all probability for even a longer period. To in any way curtail these facilities at this time would impose a serious handicap on our operations, and because of this I most emphatically urge that the House committee's reduction of $20,000 be restored to the above appropriation. OFFICE OF TAX LEGISLATIVE COUNSEL Appropriation: "Salaries, Office of Tax Legislative Counsel." Page 3, line 12: Strike out the amount "$87,500" and substitute the amount "$90,500." The amount approved by the Bureau of the Budget for the Office of Tax Legislative Counsel for the fiscal year 1947 is in effect the same, after adjustment for Pay Act increases, as was appropriated to this Office for the fiscal year 1946. The amount so approved by the Bureau of the Budget, $90,500, is necessary to the effective functioning of the Office. The amount appropriated for the fiscal year 1946 represented a reduction of $10,000 under the amount appropriated for the fiscal year 1945. The reduction of $3,000 which the House committee has proposed, coming after such a large reduction last year, will seriously impair the efficient and proper functioning of the Office. The Office of Tax Legislative Counsel assists, on the legal side, the Secretary of the Treasury in his statutory and traditional responsibility of preparing and reporting to the Congress plans for providing the revenues and improving the internal revenue system. The Office also directly serves the Committee on Ways and Means of the House and the Senate Finance Committee during consideration of revenue legislation, furnishing legal and technical information and assisting in the drafting of tax legislation decided upon by the committees and in the preparation of the technical aspects of their reports and legislation. The chairman of the Senate Finance Committee stated in 1943 before your committee, in connection with the work of this Office, that the Office of Tax Legislative Counsel was a particularly serviceable agency to the Congress in the preparation and study of tax questions and in the preparation of tax bills, and that the Committee on Finance and the Ways and Means Committee could not well get along without the fullest cooperation and constant service of the Office (Rept. No. 127, 78th Cong., 1st sess., p. 3). In connection with these functions, the Office of Tax Legislative Counsel is also constantly discussing with taxpayers, lawyers, accountants, business groups and their representatives, as well as with other Government departments, their suggestions respecting the revenue laws. It would be most undesirable and inappropriate if, in this very technical field, the Office of Tax Legislative Counsel were unable to justify continued reliance upon it by the congressional committees and Members of Congress, or if it should not be able to work effectively with qualified experts representing taxpayers, due to inadequacies in either quality or number of personnel. The improvement of the revenue structure, its adaptation to the changed conditions of a peacetime economy, and its proper and equitable functioning will undoubtedly require continued consideration of major revenue legislation by the Congress. The end of the war, therefore, has not lessened the burden of this Office. In addition, moreover, to the difficult problem of postwar revision, there is a large backlog of projects, particularly those involving technical and administrative amendments to the tax laws, which were necessarily postponed during the war. A reduction in the appropriation below the amount ($90,500) approved by the Bureau of the Budget will impair the service which is rendered by this Office to the Congress and to taxpayers and their representatives. It is therefore respectfully requested that the $3,000 disallowed by the House Committee on Appropriations be restored by your committee when the bill is reported to the Senate. OFFICE OF THE GENERAL COUNSEL Appropriation: "Salaries, Office of the General Counsel." Page 3, line 18: Strike out the amount "$175,000" and substitute the amount "$179,100." The amount approved by the Bureau of the Budget for the Office of the General Counsel for the fiscal year 1947 is the same as that appropriated to this Office for the fiscal year 1946, except for an additional amount of $19,100 composed of $18,596 necessitated by the basic salary increases under Public Law 106, Seventy-ninth Congress, and $504 required to project 1946 within-grade promotions into 1947. In reporting the bill, the House Committee on Appropriations reduced the estimate for the General Counsel's Office from $179,100 to $175,000. The amount approved by the Bureau of the Budget is necessary to the effective functioning of this Office. The general counsel is by statute the chief law officer of the Treasury Department, and the scope of the activities of the Office of the General Counsel is as broad as the operations of the Department. The regular functions of this Office include the preparation and coordination of all matters relating to legislation, Executive orders, and proclamations affecting the Treasury Department; the rendering of all formal and informal opinions for the guidance of administrative officers of the Department; the consideration of offers in compromise for the settlement of general claims of the United States and of similar cases under the customs and narcotics laws; the legal work incident to the enrollment and disbarment of attorneys and agents licensed to practice before the Treasury Department; responsibility for all legal matters pertaining to the varied activities of the Procurement Division; the review of Internal Revenue closing agreements, compromises, regulations, and other revenue documents requiring the approval of the Secretary; the responsibility for all legal work in connection with the freezing control of property in which certain foreign countries and their nationals have an interest; the handling of legal problems pertaining to gold and silver transactions and the administration of the stabilization fund; the passing upon legal questions incident to the payment of awards of the Special Mexican Claims Commission; and the handling of legal work in connection with railroad liquidations, receiverships, and reorganization proceedings under the Transportation Act of 1920, as amended. The impact of the war upon the activities of the Office of the General Counsel continues to be increasingly heavy, both in the volume and complexity of the legal questions presented, and it is anticipated that this situation will continue for some years. During the war period the Office was hampered in the effective discharge of its functions by its inability to obtain competent personnel. With the termination of hostilities and the transition from a wartime to a peacetime economy the shortage of legal personnel qualified for appointment has become less acute and it will be possible during the fiscal year 1947 to round out the general counsel's staff. The amount approved by the Bureau of the Budget for this Office is the minimum required to secure the personnel necessary to the effective functioning of the Office. It is respectfully requested, therefore, that the amount of the House committee's reduction, i. e., $4,100, be restored to the bill. DIVISION OF PERSONNEL Appropriation: "Salaries, Division of Personnel." Page 3, line 21: Strike out the amount "$190,000" and substitute the amount $206,900." As approved by the House Committee on Appropriations, the appropriation for "Salaries, Division of Personnel," was in the amount of $190,000, representing a reduction of $16,900 below the Budget estimate. The Treasury feels that the Budget estimate of $206,900 constitutes the minimum funds needed by the Division of Personnel to perform its functions, among which are the recruitment of qualified personnel, the placement of employees in positions for which they are best fitted, the settlement of employee grievances, the counseling of employees, and the provision of facilities for their health, welfare, and recreation, as well as various miscellaneous functions relating to personnel management. The reduction of $16,900 would definitely impair the Division's work. While the House committee did not allocate the reduction of $16,900, it is to be assumed that $13,240 may have been intended to apply to four additional positions of classifiers which were requested for 1947. Funds for these additional classifiers are essential if the Division is to effectively administer the laws of Congress, the rules of the Civil Service Commission, and the policies of the Treasury Department concerning the compensation of personnel. These four additional classifiers are needed for the additional specific purposes (1) of establishing allocation standards under Executive Order 9512; (2) of allocating individual positions in accordance with the foregoing standards; (3) of handling the volume of classification work incident to the postwar reorganization of Treasury Department functions; (4) of resolving the classification aspects attending the return of veterans; and (5) of performing the increased volume of work relating to job analysis and wage surveys incidental to the fixing of pay for craftsmen. Executive Order 9512 directs the Civil Service Commission to issue allocation standards which departments must apply in classifying field positions under the Classification Act of 1923, as amended. The purpose of this order is to bring about the more uniform allocation of field positions by Federal departments and agencies, in order to avoid the spiraling of grade and salary increases in competing for and retaining employees, and to help restore and maintain adherence to the principle of equal pay for equal work. In its report on the 1945 Treasury and Post Office Departments appropriation bill, the House Committee on Appropriations referred to the presentation of numerous requests covering increased costs due to the reclassification of positions in the field service. The committee's report was critical of the fact that while there was a reasonable degree of uniformity in the classification of positions in the departmental service, there was very wide variance in the classification standards established by the various departments and agencies in their respective field services. According to the committee, this condition "not only promotes confusion among the various field services, resulting from the constant transfer of employees from one service to another, but it creates a constant upward trend in salary levels in the implementation of this competition among the several departments." Executive Order 9512, as previously stated, directs the issuance of allocation standards for the classification of field positions. The work involved in developing these standards, together with the other classification functions previously referred to, will call for the four additional classifiers, at an annual cost of $13,240. The remainder of the House committee reduction, or $3,660, apparently was intended to be applied partially against the following items: $1,635 was requested for within-grade salary increases and $2,800 for changes in grade. The $1,635 is needed to cover increases made under the provisions of the Mead-Ramspeck law which authorizes within-grade pay increases for employees who have served certain periods of time and who have attained specified efficiency ratings. Therefore, the funds requested are not for payment of salaries increased administratively; they are requested for increases in salaries made mandatory by an act of Congress. The Treasury Department cannot revoke these increases or refuse to pay them. On this basis, it is felt that the request for $1,635 for this purpose of carrying out the law of Congress is fully justified. The item of $2,800 is needed to cover increases made under the provisions of the Classification Act of 1923, as amended, in which Congress provided a system of equal pay for equal work. The increases were approved by the Civil Service Commission under authority given to it by Congress in the Classification Act. This means that the Commission is satisfied that the increases are required by comparison with other departments and by the Classification Act. Therefore, the funds requested are needed to cover the only legal rates of compensation payable in accordance with the grades and compensation schedules prescribed by Congress. On this basis, |