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that recommendation in it. I have never consulted with the Social Security Commissioner about that feature, but I also did not choose to consult with him or make any request about the elimination of that. I simply made the decision to let his recommendation come to Congress as he made it.

That is, as to whether the President will make a recommendation for instance, that it be done at a certain time, or to alter in any way that report, I am not prepared to say.

Are you satisfied with my answer? When I say that I have not consulted with the Social Security Commissioner, I told you what took place.

Mr. BUSBEY. You have answered that but not given us the personal opinion you have on the reduction of two-tenths of 1 percent.

Mr. WEBB. I said that I have no opinion until I study all of the facts.

Mr. BUSBEY. Mr. Webb, I do not have a copy of the Reorganization Act of 1945, but if my memory serves me right, it specifically states that there must be a showing that the savings effected in any reorganization proposed must be not less than 25 percent.

Mr. WEBB. No, sir.
Mr. Manasco. That was simply a pious hope.
Mr. WEBB. I have the act. Would you like to have me read it?
Mr. BUSBEY. You might paraphrase it.

Mr. WEBB. It states that it is the expectation of Congress that the transfers, consolidations, coordinations, and other abolitions under the act shall accomplish an over-all reduction of at least 25 percent in the administrative costs of the agency, or the agencies affected.

Mr. BUSBEY. Do you think the Reorganization Act will effect a 25-percent saving?

Mr. WEBB. No, sir.

Mr. Busbey. Mr. Webb, if this proposal goes through would you be willing to recommend to the appropriation committees of the Congress that the Bureau of the Employment Security, the Bureau of the Budget, and the Federal Security Agency budget for the next fiscal year will be cut 25 percent? Also, the budget for the United States Employment Service for the next fiscal year will be cut 25 percent?

Mr. WEBB. No, sir.

Mr. BUSBEY. You must have received the impression somewhere, perhaps in the President's statement, or in our speeches on the floor, that a few of us in Congress are what might be called economy-minded?

Mr. WEBB. Yes, sir.
Mr. BUSBEY. Where is the economy in that proposal?

Mr. WEBB. I have stated that the consolidation of these bureaus was expected to save in the neighborhood of $50,000. I have also stated that the primary purpose to be effected by this plan was not necessarily economy, but item No. 4, under section 2 (a), Reorganization Act, which is to group, coordinate, and consolidate agencies and functions of the Government as nearly as may be, according to major purposes.

That is the statement that I have furnished for the record.

Mr. BUSBEY. You brought up the matter of a cigarette tax in North Carolina. Do you think that is an appropriate comparison with what we have before us to consider in this Reorganization Act?

Mr. WEBB. I do not think of it as a comparison, but I thought of it as an illustration of the fact that a tax is frequently collected by either a company or some agency for a very broad area, and that that agency is in effect a collecting agency for the Federal Government. That is the only implication that I meant to have drawn from that.

Mr. BUSBEY. How much in funds in excess of what is expended do you think should be reached as a total amount before we start to reduce that figure of three-tenths of 1 percent?

In other words, we have gone up to where somebody has said $800,000,000, and the figure given by others was $900,000,000. I think the chairman put a figure in the record of $927,000,000, which was in excess of what was expended for this service.

My question is, How far is that excess to be built up before they reduce the amount of the tax?

Mr. WEBB. Congressman, that is not a fund that has been built up. You have had excess collections that have gone into the Federal Treasury. For the year 1949 the expenditures are estimated at 151.8 million dollars. The collections are estimated at $224,000,000. That is at a time when unemployment is very low, and one thing that I think may have been overlooked, as I stated earlier, is that at the very time unemployment increases your expenses go up and your taxes go down because, after all, the tax is on the pay roll.

When you have unemployment, the total pay-roll payments go down, and therefore your income goes down. Those figures could meet, and on the expenditure side they could exceed the collection side under conditions that are not too hard to visualize over the next

few years.

Mr. BUSBEY. You do appreciate that Congress is in session every year; is that right?

Mr. WEBB. Yes, sir.

Mr. BUSBEY. These next sessions should take those figures down materially, and also you can see that Congress could actually pass legislation very easily to correct that situation to bring the tax up, if necessary?

Mr. WEBB. Yes.

Mr. Busbey. I do not think it is a big problem that we have to consider in trying to reduce the figure of three-tenths of 1 percent. If we had put into the general revenue of this country $900,000,000 on this tax, I think we could certainly justify a reduction in the tax and be given a little moral credit even if it is not in the fund, and to take appropriate action if there is a deficit.

According to your figures, you have been coming to Congress asking for a larger appropriation every year, and asking for a still larger appropriation for the 1949 budget. I do not see the economy of it, even if you say that there is a saving of $50,000.

Mr. WEBB. Do you mean for this purpose?
Mr. BUSBEY. Yes.
Mr. WEBB. I believe the appropriations have been coming down.
Mr. HARNESS. Except in 1949.
Mr. BENDER. I remind you, gentlemen, that you have 17 minutes left.
Mr. Busbey. That is all I have; thank you.
Mr. CHENOWETH. Mr. Webb, who drew the plan? Whose idea is it?

Mr. WEBB. The plan was drawn in the Bureau of the Budget by our staff and the Government Organization Branch. , It was done in cooperation with other people in Government departments who contributed. We had considerable consultations with the Department of Labor.

Mr. CHENOWETH. I think that to keep the record straight I should ask whether this is really your plan. Is that right? The President is just adopting your plan; is that not correct?

Mr. WEBB. No; I would not say that.

Mr. CHENOWETH. The President does not have time to figure all of that, does he?

Mr. Webb. That is right, but the President considers a problem and he decides after considering certain factors what should be done, and then he instructs his staff to draw the papers to accomplish that purpose.

Mr. CHENOWETH. Congress last year refused to adopt the proposal? Mr. WEBB. Yes, sir.

. Mr. CHENOWETH. Then you are back here asking for the same thing again?

Mr. WEBB. Yes, sir.
Mr. CHENOWETH. You are not easily discouraged, are you?
Mr. WEBB. No; I would say that the President is not.
Mr. CHENOWETH. Why are you so persistent in that?

Mr. WEBB. Congressman, I think we have stated that there is a natural relationship here under which the President feels that he should act under the reorganization law. The law itself states that whenever he finds that there is this kind of grouping, such as I mentioned, that he shall transmit a plan of the kind he has proposed to the Congress. He has acted under that instruction in the Reorganization Act.

Mr. CHENOWETH. You are submitting a plan somewhat similar to last year's, so far as the United States Employment Service goes into the Department of Labor?

Mr. WEBB. The evidence last year presented to Congress had a very large amount of criticism as to the separation of the bureaus. That has been met in this plan, I hope.

Mr. CHENOWETH. It is obvious to me that the proposal of the plan has aroused a storm of protest all over the country. Some of the other members of the committee have called your attention to the same situation. It is not being popularly approved among the groups affected by it.

Mr. WEBB. I believe that there is considerable misunderstanding on the part of some people as to some features of this plan.

Mr. CHENOWETH. The committee has been hearing these witnesses for some time, and practically all were opposed to it. There must be something inherently, fundamentally, wrong with the proposal since it has met with such opposition. We have to carry out what the people want, and apparently the people do not want this plan. That is my impression.

I say that with no criticism of you at all, but it looks as if we are on the wrong track.

Mr. WEBB. The law does not say that the President will submit what he thinks will be popular. It says that he will submit what meets the standards laid down in the law.

Mr. CHENOWETH. But Congress is supposed to do what the people want.

Mr. WEBB. Absolutely.

Mr. CHENOWETH. If the people do not want this plan we would be justified in rejecting it?

Mr. WEBB. That is right.

Mr. CHENOWETH. We would be justified in rejecting it, would we not?

Mr. WEBB. You would be justified in rejecting it for any reason that appeared good to you.

Mr. CHENOWETH. There seems to be a fear of putting the United States Employment Service in the Labor Department, and that there would be some advantage accrued to labor as opposed to the employers. How would you answer that criticism?

Mr. WEBB. Congressman, I would say that that is not a justifiable criticism. I have said earlier that my feeling is that men rise to the responsibilities that are given to them. In my experience, either with the legislative branch when I first entered Government service in 1932 in the Rules Committee of the House, or in my experience in the executive branch, I have not found that public officials were motivated other than by their duties under the law and did not rise to the responsibilities imposed upon them.

I would also say that under our system of government there is a mighty good system of checks and balances on any abuses. As I explained earlier, these two bureaus will be under a commissioner who will run both of them. That commissioner will report through the Under Secretary to the Secretary of Labor.

I also said earlier that I felt that both of these men were men of the highest character and integrity and would administer the law as Congress wrote it.

I do not believe you would have any different situation in any other department.

Mr. CHENOWETH. You mentioned that you came into the Government service in 1932.

Mr. WEBB. Yes, sir.

Mr. CHENOWETH. I would be interested in hearing that length of service, and I am sure the members of the committee would also, if you would tell us what your service has been.

Mr. WEBB. I might say that I really got into Government service in 1930. I joined the Marine Corps then. I went to the flight school at Pensacola. I then entered the Marine Corps as an officer on active duty and I later came to Washington to be secretray to the chairman of the Rules Committee, where I served until 1934.

Mr. CHENOWETH. Who was chairman at that time?

Mr. WEBB. Mr. Pou, who had been chairman for many years. He was the senior Member of Congress at that time, having been here for over 30 years.

When I left Mr. Pou, I did some work with a law firm as a sort of an apprentice. At the time I was studying law at night at George Washington and working in the daytime. I passed the bar in 1936 when I completed my course.

I joined the Sperry Gyroscope Co. in New York, where I served until the early days of the war, and then I served in the Marine Corps during the war. When I was discharged I went back to my old law firm. When the senior member of the firm was appointed Under Secretary of the Treasury he asked me to go to the Treasury with him. From that position I was appointed by the President as Director of the Bureau of the Budget.

Mr. CHENOWETH. That is a very interesting career.

Mr. WEBB. I was not in personnel work all of the time. I was later vice president and treasurer at Sperry.

Mr CHENOWETH. In the event that Congress rejects this plan, would you be satisfied with the plan of placing both of these agencies under the Federal Security Agency? They should go together, you say?

Mr. WEBB. I think that I ought to wait and see what happens. I believe that Congress

will approve this plan. Mr. CHENOWETH. Thank you, Mr. Webb.

Mr. BENDER. In regard to the figures as to how much money has been contributed and expended, I knew that you had submitted for the record the total amount of those contributions, but I do not believe they were broken down by States. Am I correct in that?

Nr. WEBB. Yes, sir; I have given the over-all tabulation.

Mr. BENDER. You have not broken it down by States. Can you give us that information by States?

Mr. WEBB. I do not have it, but I will try to obtain it.

Mr. BENDER. Please show how much Ohio contributed, and how much was spent in Ohio.

Mr. BUSBEY. I think that the gentleman from California has that figure which was sent up by the Bureau of Labor Statistics this morning.

Mr. HOLIFIELD. The United States Employment Service and the Veterans' Administration. I have that broken down by States. .

Mr. BENDER. Broken down by States?
Mr. HOLIFIELD. Yes, sir.
Mr. WEBB. I would be glad to obtain it for you for the record.
(The material is as follows:)

Federal tax collections under Federal Unemployment Tax Act for the fiscal year 1947,

by States and Territories 1 Alabama. $1, 714, 511. 83 Nevada_

$136, 437. 03 Arizona 338, 043. 62 New Hampshire.

576, 124. 06 Arkansas. 578, 381. 66 New Jersey

6, 827, 811. 79 California 13, 315, 773. 49 New Mexico.

196, 666. 72 Colorado. 1, 062, 762. 30 New York...

37, 461, 950. 10 Connecticut 3, 660, 758. 29 North Carolina.

2, 799, 222. 26 Delaware. 1, 134, 503. 65 North Dakota

112, 687. 14 Florida. 1, 649, 611. 36 Ohio.

12, 869, 199. 41 Georgia 2, 221, 214. 53 Oklahoma.

1, 483, 618. 31 Hawaii. 419, 261, 87 Oregon...

1, 530, 238. 07 Idaho. 333, 530. 88 Pennsylvania

16, 880, 789. 20 Illinois. 16, 943, 958. 40 Rhode Island.

1, 245, 015. 25 Indiana 3, 423, 685. 51 South Carolina.

1,079, 427. 61 Iowa 1, 422, 848. 37 South Dakota.

140, 194. 63 Kansas. 949, 385. 73 Tennessee.

2, 062, 989. 95 Kentucky 1, 470, 265. 17 Texas.

4, 895, 920. 34 Louisiana 1, 543, 912. 43 Utah.

439, 470. 16 Maine.. 721, 352. 94 Vermont

272, 511. 46 Maryland 2 3, 211, 833. 12 Virginia,

2, 086, 401. 41 Massachusetts. 7, 955, 180. 29 Washington

2, 434, 139. 52 Michigan 11, 739, 677. 06 West Virginia

1, 481, 527. 95 Minnesota 2, 713, 471. 53 Wisconsin

3, 782, 312. 32 Mississippi 505, 011. 95 Wyoming

129, 861. 90 Missouri.

4, 914, 016. 75 Montana..

229, 791. 81

Total..

185, 875, 786. 44 Nebraska..

778, 525. 31 1 Data compiled from Bureau of Internal Revenue collection districts. 2 Includes approximately $1,000,000 for District of Columbia. 3 Includes approximately $45,000 for Alaska. Source: Bureau of Internal Revenue.

71539—48-415

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