Mr. HARNESS. I believe you could find that there has been disagreement between some States and the Labor Department on the question of suitability of jobs and when compensation should be paid. an agency that represents a particular economic group, might be prejudiced in favor of that group.

Mr. WEBB. Under the law, as I understand it, a man must be offered a certain kind of a job before he need accept. There must be no job available that meets standards as applying to his former job, namely, comparable standards to the one applying to the job he had before. The determination of that comparability, or his eligibility, would rest in the State agencies.

Mr. HARNESS. Up to this point the Labor Department would have the right to make certain rules in interpreting that law by which the States would be bound. They have the money. You know how strange some of the interpretations are in some of our Federal administrations. Let us pursue that point.

Mr. WEBB. Let us take it this way: You have a bureau that has employment-security phases confronting it. You have another bureau that has employment-service phases confronting it. They both are responsible to the Commission provided in the reorganization plan, and they in turn are responsible to the Under Secretary and the Secretary of Labor. They in turn are responsible to the President so far as the executive branch is concerned. All of their actions are printed, and they are known, and subject to question by the State agencies or other officials, or by the Congress. I do not think that they would get away with making an interpretation not in accord with the fundamental law.

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Mr. HARNESS. I know, and you know, that the Secretary of Labor has an assistant from the CIO and one from the A. F. of L. I do not attribute any ulterior motive to these gentlemen-they are fine menbut their thinking has been along the lines that they have followed for years with these labor organizations. Is that right?

Mr. WEBB. Yes.

Mr. HARNESS. Naturally, they would favor certain things that would benefit their particular groups. You cannot blame them for it. Having listened for the last couple of days to all of these businessmen who have come here from many States and who have testified that they would not have the same confidence in going to this agency for employees as they would have if it was left in the Federal Security Agency, or some neutral agency; what do you say to that? They have expressed the fear that Labor Department officials might be biased in favor of particular groups of labor. In spite of that, do you still say that it would be a good thing to transfer this project over to the Labor Department?

Mr. WEBB. Yes, I do. I think there is a misunderstanding of this phase of the problem, just as there are misunderstandings of other phases of the problem.

For instance, this morning I heard one witness testify that if the three-tenths of 1 percent tax that goes to pay for administrative expenses were left completely in the States there would be more than enough money to take care of the expenses.

It happens that there are 25 States where the amount collected is not as much as the amount spent for administration. I think the misunderstanding comes through such things as this. The Federal

Government collects the three-tenths of 1 percent only on those employers who have eight or more employees. Many States make collections from employers who have less employees than that number. Mr. HARNESS. But they do not turn that over to the Federal Government?

Mr. WEBB. That is right, but it is easy to think of the total sum of money collected by the States and apply the three-tenths of 1 percent figure to that, but the fact is that the Federal Government collects an amount less than that. I think there are some misunderstandings which may be cleared up by the figures.

That is shown on a report which I have prepared.

Mr. HARNESS. That is a different thing from what we were talking about. What we want to know now is the advisability, of making the transfer. Don't you think that if these two functions were turned back to the States that the Federal Government, and even the States, in turn, could expect some economies that might be well worth making?

Mr. WEBB. Congressman, that is a very broad question. I would like to speak on one phase of it, briefly:

I would say this: Undoubtedly the committee would want to consider the fact that during the period of high employment the amount of the tax collections, if you wish to call it that, is higher than it would be in periods when employment would be less. In addition to that, the amount expended for actual payments to people who are unemployed, and for administrative expenses, is less than it would be in time of unemployment.

Mr. HARNESS. When does that enter into it at all? The States can only spend as much as they have in the fund. Each State pays in 2.7 percent, and that goes into an earmarked fund in the Treasury. That is all they can ever spend.

Mr. WEBB. For payments to the unemployed, but not for administrative expenses. I was coming to the point that if you had a period of substantial unemployment, then there would be a much greater effort to place people on a regional basis, or a national basis, and a much greater effort at interchange between the States or States where workers were needed as compared to States where workers were in surplus. I think that you would have considerable difficulty if the program were transferred to the States, even on the strength of the testimony given this morning, and also the fact that the States were beginning to diverge with respect to regulations.

Mr. HARNESS. That takes into consideration only the cost of administering the program, does it not? That is a very small percentage?

Mr. WEBB. But it is the total amount that would be spent for helping people find jobs as against paying unemployment compensation. Mr. HARNESS. That is to be done at the State level anyway; is it not?

Mr. WEBB. That is right.

Mr. HARNESS. If we turned this back to the States we would save this year an amount in excess of $3,800,000?

Mr. WEBB. You are assuming that you save the total appropriation for the Federal activity in this field?

Mr. HARNESS. That is right.

Mr. WEBB. You are taking a year in which unemployment is at a minimum. If you reached a situation where there was widespread unemployment, and the Federal activity was thereby much more important in the process of bringing people together with jobs, you might have to pick up the machinery and spend a great deal more. I do not believe it would be a true saving.

Mr. HARNESS. I do not see where the Federal cost would be that high. I think it costs us $3,000,000 that we ought not to spend.

The CHAIRMAN. From now on I am going to ask the members to confine themselves to 10 minutes. I realize that many times you cannot develop a particular point in that time, but I will appreciate your cooperation.

Mr. WILSON. Mr. Chairman, I have one more question.

Mr. Webb, two or three witnesses have laid considerable importance on the fact that three-tenths of 1 percent will not in some States be ample, and I believe it has been stated by Mr. Holifield that the number is 25.

Mr. HOLIFIELD. It is 26.

Mr. WILSON. It has been stated that it will not be enough to defray administrative expenses. What could keep that State from raising its taxes if it had fewer manufacturers or employers? Why could not they raise their own taxes? If the amounts were $200,000 or $300,000 that were needed to defray its expenses, it could be raised by taxes. Our city tax in Dallas is $2.49 a hundred. That is on a 65 percent of the valuation of the property. That is besides other taxes. Why should any State pay the tax of any other State? If it takes more for the State to function why should not it be raised in the State?

Mr. WEBB. They could raise it. You would not have the equalizing factor between a number of more prosperous States under that arrangement. We have the same problem in North Carolina where in effect Winston-Salem is a tax-collecting agency for the United States. If that tax were employed for schools, the tax which is collected in North Carolina, they would have a nice situation.

It is something on the order of the same situation to which you refer. Mr. WILSON. I do not consider that a very strong argument in favor of this plan; do you? The very fact that some States do not collect enough money on their three-quarters of 1 percent to defray their own expenses, I do not consider that a very strong argument in favor of centralization.

Mr. WEBB. I think that is a side issue to the consideration of the reorganization plan.

Mr. WILSON. But several witnesses have mentioned it, and you mentioned it, yourself, that some States would not collect enough to pay their own administrative expenses, but if you let them raise the tax they might possibly pay for the administrative expense.

Mr. WEBB. What I mean to say is that the question of the tax is not inherent in the discussion of this plan. It has to do with the other question that has been raised as to whether or not you should have these activities at the Federal level at all, which would go to the fundamental law.

Mr. WILSON. Thank you; that is all I have.

Mr. SNYDER. Mr. Webb, I understand that this three-tenths of 1 percent collected for administrative purposes goes into the general revenue; is that true?

Mr. WEBB. That is correct.

Mr. SNYDER. There has now been accumulated some $900,000,000, or more, that has been collected, and that has been expended; is that about right?

Mr. WEBB. There is no pool or fund of that much money that has accumulated. The money from this tax has gone into the general revenues, and that general revenue has been spent for all of the expenses of Government. You could make a calculation and say that over a period of time greater collections have been made than expenditures for this particular service.

Mr. SNYDER. I understand that, but according to the bookkeeping, there is, or would be, an amount of about $900,000,000 in the general revenue? Is that right? That was collected for a specific purpose and not spent?

Mr. WEBB. I thought the amount would have been nearer $700, 000,000. I would have to check the figure. In any event, somewhere between $700,000,000 and $900,000,000 more has been collected than was expended.

Mr. SNYDER. About a month ago I got information that it was over $800,000,000, and yesterday it was developed that it was over $900,000,000.

Do you believe the Government is warranted in collecting money for a specific purpose and letting it go into a general revenue fund and continuing that policy when we have such a large accumulation that is not used for the purpose for which the levy was made?

Mr. WEBB. Congressman Snyder, as I understand that

Mr. SNYDER. Answer that "Yes" or "No." Do not give an explanation.

Mr. WEBB. I am sorry, but I cannot. If you want, I could give you a quick answer.

Mr. SNYDER. Either the Government is not warranted in doing that, or it is warranted. Answer "Yes" or "No," and then you may explain your answer.

Mr. WEBB. This is a general tax. I do not believe the law is specific as related to it. In addition, you have to consider a longer period of time than that which has been involved in the calculation up to now. I think it is entirely conceivable that this three-tenths of 1 percent would not be enough to pay the total cost.

Therefore, you would be appropriating funds out of other general revenue for this purpose.

Mr. SNYDER. How much have we spent in the past year, in toto, for the administration of this fund, approximately?

Mr. WEBB. I have a statement here which goes back to 1945, and I would be glad to insert that in the record, if you wish. It shows the grants under employment service and under unemployment insurance-total Federal expenditures.

Mr. SNYDER. I am talking about the administrative expenses, the three-tenths of 1 percent. What has been used for the administrative expense?

Mr. WEBB. For 1945, the total was $108,773,000, rounded off.
For 1946, $131,386,000.

For 1947, it was $146,443,000.

The estimate for 1948 is $136,306,000.
The estimate for 1949 is $151,870,000.

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Mr. SNYDER According to those estimates and actual expenditures, we would now have to our credit in the Treasury-and I recognize the fact that the money is not there a sufficient amount to run this program for some 4 years without even collecting another cent for administrative. expenses; is that true?

Mr. WEBB. If you will assume that the level will continue at the estimate for 1949, and that your unemployment will remain at its present level, your expenditures will run to that figure.

Mr. SNYDER. I am assuming a figure of actually $50,000,000 more, or $800,000,000 in 4 years. I am actually assuming $200,000,000 a year. I am being liberal in my assumption. We would actually have a certain amount supposed to be in the Federal Treasury collected by the Government for a specific purpose, and a sum of money to run that program.

The question that I come back to is the original question, which is, Do you think as a Government policy we are warranted in collecting taxes in excess of the specific program requirements which that assessment is supposed to finance?

Mr. WEBB. I do not understand that this is specifically related to financing this program. My understanding of that question is that that amount would approximate the going cost of this program over a long period of years, which supposes that in good times that you will have an excess and in bad times you will have a deficit that will come out of the general revenue.

Mr. SNYDER. Maybe I have not made myeslf clear. I understand that there is three-tenths of 1 percent collected for the specific purpose of being used for administrative expenses; is that true?

Mr. WEBB. The very fact that it goes into the fund

Mr. SNYDER. Is it or is it not true?

Mr. WEBB. It is generally true but not exactly. You cannot say technically that it is an exact statement of fact.

Mr. SNYDER. What is not true about it? I want to find out what is not true about it.

Mr. WEBB. The fact that the fund is collected from the taxes going into the general revenue and the fact that any overage of expenses would also come from the general revenue means that it is intended to average out over a period of years.

The Government undertakes to utilize this collection as a matter of general revenue when it exceeds, and make up the difference where it is not enough. There would be very great variations in collections and employment variations as the years go by.

Mr. SNYDER. You either miss my point or you evade my point. I think you are just missing the point.

My point is this: Is the policy of the Government warranted in levying a tax for a specific purpose, and then using that tax for other purposes other than for which the tax was levied, and continue on with that tax when the objective in view is well financed, for at least 4 years in advance?

Mr. WEBB. I would say "No." They are not justified in levying a tax for one purpose and using it for another.

Mr. SNYDER. Your recommendation would be, I assume, that the three-tenths of 1 percent would be reduced to one-tenth of 1 percent or one-half of 1 percent when possible?