volve the President as the Chief Executive Officer doing something which he felt was in the best interests of this country at that time? Rather than all-out war, an economic war could threaten, and he might see a perilous road ahead if we continued to spend at the same rate. Would you broaden your stand if the President could prove that set of extraordinary circumstances?

Mr. AIRIS. Senator, I would have to rely on what I have said here, sir, and not get into my opinion, or my colleague's opinion, of the political or the economic ramifications of the entire problem. I think that is up to the Congress and to the administration to work out.

But I would like to add this, sir. You have mentioned a surplus. I think it is our position there is no surplus in the Highway Trust Fund. Congressman Harsha has introduced a bill this year that calls for some billions of dollars to be spent on highway safety, and in this regard, Senator, it is common knowledge that over 50,000 people are killed every year on our highways. Now, certainly this is a problem that is most serious. You can relate it to the casualties in Vietnam, or you have got a number of comparisons. But there is something that begs for attention.

Likewise, sir, many of our secondary roads are in very great need of additional work. Your own State has quite a program on resurfacing of rural secondary roads.

Now, all of these things are part of the problem that the legislative branch and the executive branch are going to have to address themselves to. I don't believe the AASHO can make this determination. But this part of it, this safety, this need for additional betterment, is a very serious problem, in our opinion.

Senator PERCY. Well, I realize that, and you touch my heart when you mention Illinois' secondary roads. I know they are dangerous, and we have had a balanced program to correct this over a period of time. But I don't mind taking our share of the cuts when it is in the national interest to do so. Those are your words and I think they are very good words, indeed.

I do think the highway deficit can be handled another way. I have a bill which would take a portion of the alcohol tax and set it aside for highway safety, to cut that 25,000 of the 50,000 deaths that are caused by drunken drivers. But that is another subject.

I think your testimony has been very helpful and broad-gauged and that you can work in the direction of walking in the shoes of the budget director here in the administration when he faces these problems.

I would like to take exception to one statement that you made, and, Mr. Chairman, I think this is very important. The statement was made that it does not cost the U.S. Treasury a single cent for these highway trust funds. That is not true, of course, because the Treasury's inability to touch the funds means it has to find money for other things by borrowing the funds. The cost of borrowing today is $22.8 billion out of our $250 billion budget outlays. That is 9 percent. That is a tremendous fixed cost that we have to start with when we start talking about the funds available for expenditure. Those are owed because we have not been able to touch other funds that have been earmarked. So it is a highly costly procedure to have these earmarked funds. Thank you very much, indeed.

Senator CHILES, Mr. Airis, as I understand your testimony, you appear before the committee as representing the State highway officials?

Mr. AIRIS. I do, indeed. I would like to emphasize that. I am not appearing as your strict highway director or for Mayor Washington. Senator CHILES. Are you appearing as a constitutional authority on the division of powers of the executive and legislative branches?

Mr. AIRIS. I think, sir, I would have to say that is a little beyond the AASHO-be a little presumptuous for me to appear as any part of a legal entity.

Senator CHILES. So when we get into these questions as to whether policy is within the executive or the legislative branch, your testimony doesn't really go to that?

Mr. AIRIS. No, sir, I don't think so.

Senator CHILES. As I understand your testimony, really what you are trying to tell this committee is the State highway officials have relied upon laws passed by this Congress and those laws haven't been carried out?

Mr. AIRIS. Yes, generally speaking, yes. We were given a job to do and they have worked at it consistently since 1966. The cutback has introduced an element that has created a lot of problems in performing the mission that was handed to us by the Congress, of course, in the original Highway Act.

Senator CHILES. And the law is kind of written out so you can read the law, but you never know what the cutback is going to be?

Mr. AIRIS. Yes. I pointed out to Senator Percy the similarity in running a freight train or as in the house when you turn a faucet on and get the faucet running-if you shut that faucet off real quick, you get water hammer all over the pipes in the house. In a big hydraulic system, that can even break up the system. It is that type of thing that these cutbacks are imposed in an arbitrary-maybe not arbitrary, but a manner that cannot be anticipated in cost.

For instance, steel has to be ordered in some cases a year ahead. Right-of-way has to be ready. Concrete-cement for concrete has to be ordered and all of these things have to fit into a very, very complicated schedule. As they start and get these set up and funds are cut off and you have to cut back these things it is a long time before the State organizations of any kind can get them back in motion.

Senator CHILES. Much of the State funds are set up on the basis of matching funds from the State sources and then other funds from local sources? Many times real property tax dollars, is it not a fact, would have to go for right-of-way acquisition and other things to make up the State's share?

Mr. AIRIS. Well, yes. In all cases, except with a very few exceptions. In certain areas there are matching funds and that has to be ready on the State's part to match the Federal funds and that is another element.

Senator CHILES. Does it give the State any problem in its financial planning of its tax picture because of these

Mr. AIRIS. Because of the cutbacks?

Senator CHILES. Yes, sir.

Mr. AIRIS. Well, I have Mr. Stafseth, who was the top man until a few months ago in the State of Michigan and he is well acquainted with that aspect of it. I might ask his opinion.

Mr. STAFSETH. Yes. I would be very glad to speak to this.

In the State of Michigan we had a situation where we accumulated about $60 million in our State funds which was basically ready to go on interstate and Federal projects. The embarrassment of the process was that our State legislature would say if you got $60 million why do you need more money, but we had no idea when the Federal funds were going to be made available.

I think your point and questions are very well put. When the cutbacks are made almost instantaneously without warning, and we have no idea when they will be released again, it is a very difficult proposition in a large State to plan the finances. We have some cases where some States even have gotten to where they are borrowing money and can be harmed by such a proposition.

Senator CHILES. So the Federal Government tells you when you pass a law, what you must do to comply with a program and what kind of funds you must put in, and we do that when we pass the law and then another part of the Federal Government holds back funds and leaves you hanging when you try to comply with the law?

Mr. STAFSETH. That is right, and it makes it very difficult because of the balances you hold in the State it is hard for the State legislature to look upon this and understand the problem. So it compounds itself.

I would like to point out one other difficulty with the highway director of Michigan. I had a situation where a veteran from the Korean war had a house which laid within the right-of-way of an interstate highway project that has been held up for many reasons, including the lack of funds, and he pleaded with me if we would hurry up and buy his property, build a highway so he could sell his home and move. 80 miles closer to his job. The minute that we designate a highway right-of-way and it is held up for any reason it causes personal hardship on many people because it is hard to get rid of their property.

I know through the Federal highway administration we have developed some systems to better relieve these hardship cases, but that has been only in the last 2 or 3 years. So I guess that has been corrected partially. But the financial bind has not been corrected.

Senator CHILES. Senator.

Senator ERVIN. As I understand, the funds that were used for highway construction were passed, derived from taxes, imposed upon a special group of taxpayers and not upon taxpayers at large, namely, upon taxpayers who use the highways?

Mr. AIRIS. Yes, sir.

Senator ERVIN. They are collected under the law, they are put in a trust fund, and the law prescribes they cannot be spent for any purpose other than the construction and repair of highways?

Mr. AIRIS. Yes, sir.

Mr. STAFSETH. I would like to mention the concept of the trust fund is the point I would like to make. Our funds are different than some of the other general fund programs. These were taxes collected to do a certain job just like you pay for your own electricity. The industry and highway departments were committed to carry out a program and without having dependable funds it makes it difficult.

Senator ERVIN. I am sorry Senator Percy left because I have very different opinions on some subjects from those of his.

If you take the highway funds to build mass transit systems, then the next step you will take them to subsidize airlines, and then the

next thing you will probably be taking them to maintain the Army and Navy, or to establish a home for blind cats or something like that. I think it is a gross injustice to impose taxes for use of the highway and then take these taxes and use them for some other purpose. If you want money to build mass transit systems, let them levy taxes on all the people and not on a selected group. In my mind taking highway funds for that purpose is about as fair and just and logical as taxing meaning nothing personally-taxing baldheaded men and giving benefits to the redheaded men. That is my analysis of the situation. I know a great many Members of the Senate disagree with me, but that is my very abiding convictions.

Senator CHILES. Senator Muskie.

Senator MUSKIE. Senator Ervin entertained some of my convictions as to which I am willing to abide with him.

I think the Senator raised a very interesting point in the light of one of the guidelines the President gave us yesterday as to his view of the constitutional right of the President to impound the funds, and this is what he said:

Constitutional right of the President of the United States to impound funds, and that is not to spend money when the spending of money would mean either increasing prices or increasing taxes for all people. That right is absolutely clear.

Now with respect to the second criteria that he stated, increasing taxes, the case of the highway trust fund, it is sustained by its own taxes: is it not?

Mr. AIRIS. Yes, indeed.

Senator MUSKIE. And those taxes are earmarked for highway trust funds still. It is earmarked for that purpose, is it not?

Mr. AIRIS. Yes, indeed.

Senator MUSKIE. Would the full funding of the program, as authorized by the Congress have resulted in spending in excess of the revenues accruing to the highway trust fund?

Mr. AIRIS. Well, I don't have those figures, Senator, with us here. I think I would have to leave it with the general statement that the trust fund was established to fund the highway program, that is 100 percent, that is with the State matching funds and that was it.

Now, of course, in any program you get deficits and small surpluses. But it was established for a particular purpose.

Senator MUSKIE. But the trust fund is in the black, is it not?
Mr. AIRIS. It is at the present time.

Senator MUSKIE. If it were not placed in the red by the full funding of the program that has now been held up, would it? That is my very strong impression.

Mr. AIRIS. Well, I pointed out the needs for a program to cut down accidents, to finish up the Interstate, and just answering you generally, I think there would be no surplus in the funds, if that is what you are driving at.

Senator MUSKIE. You are talking about down the road. I am talking about this year in which the highway funds have been impounded. If it is not this year, the full implementation of the program as Congress authorized, would have been to put the fund in the red?

Mr. AIRIS. Maybe so, maybe so. I don't have those figures. But certainly it would have been used up if it had not been the money in the fund, that is if their cutbacks had not taken place.

Senator MUSKIE. Money would have been drawn from the fund but the fund would not have been left in deficit; would it?

Mr. STAFSETH. I am informed back in the middle 1950's when there was no impoundments, there were times

Senator MUSKIE. I am talking about the effect of this specific act. The President says that under the Constitution he can withhold spending and the effect of the spending would be to require an increase in taxes. Now, it is my view as a member of the Public Works Committee and as a member of the Subcommittee on Roads of the Public Works Committee that the highway trust fund is solvent, that it would have been solvent had this program been implemented, and I am rather astonished that you should now be suggesting to me that that isn't the case. Perhaps we haven't been given full information in the Public Works Committee.

Mr. STAFSETH. The fund apparently is solvent. There is no question about that.

Senator MUSKIE. This year's program, if these funds would have been solvent?

Mr. AIRIS. What, sir?

Senator MUSKIE. Solvent.

Mr. AIRIS. If they had not been impounded?

Senator MUSKIE. Yes, at the end of this year. I am not talking about unmet needs 3 or 4 years down the road. I am talking about this year's allocation.

Mr. AIRIS. Well, I think I would have to just answer it in general words that it probably would have been solvent, but it would not have the money in it that that is now if the cutbacks had not taken place. Senator MUSKIE. My definition if you spend money you have to guard it. I am talking about the net result at the end of the year.

The President says the effect of spending money is to increase taxes. In the case of the highway trust fund those taxes can be spent for only one purpose and that is the building of highways and other incidentally related purposes the Congress has authorized. So if you don't spend it for highways, you don't spend it for schools, not yet, or homes for blind cats, not yet, or any of those purposes, only for highways. So if the President's argument is that his constitutional right of impoundment exists by holding up spending you can save taxes, you can focus your spending on highway taxes. If, by completely implementing the program the Congress authorized, if in the course of the year the fund is made insolvent or operating on a deficit basis and you don't think you can under the law, but if it were, then maybe the President at least has got the facts to sustain his argument, whether or not his argument is legally sound.

What I am trying to get at, and I guess maybe I can do it with Mr. Ash, if he knows anything about the highway trust fund, get at it that

way.

But my point is on the base of information that we have been given in the Public Works Committee, and I had hoped that you had it, that the highway trust fund has had it, it is implementing the fund, it would not require an increase in taxes and not be left in the black and so that reason for impounding does not exist with respect to the highway trust fund. That is my view. I had hoped to get the basic kinds of facts from you to sustain the argument.