expires of itself at the end of the financial year.
In the United States the secretary of the treasury sends annually to Congress a report containing a statement of the national income and expenditure and of the condition of the public debt, together with remarks on the system of taxation and suggestions for its improvement. He also sends what is called his annual letter, enclosing the estimates, framed by the various departments, of the sums needed for the public services of the United States during the coming year.3 So far the secretary is like a European finance minister, except that he communicates with the chamber on paper instead of making his statement and proposals orally. But here the resemblance stops. Everything that remains in the way of financial legislation is done by Congress and its committees, the president having no further hand in the matter,4 although he may send messages pressing Congress to vote for money for some purpose which he deems important.
The business of raising money belongs to one committee only, the standing Committee on Ways and Means, consisting of nineteen members. Its chairman is always a leading man in the party which commands a majority in the House. This committee prepares and reports to the House the bills needed for imposing or continuing the various customs duties, excise duties, etc. The report of the secretary has been referred by the House to this committee, but the latter does not necessarily base its bills upon or in any way regard that report. Neither does it in preparing them start from an estimate of the sums needed to support the public service. It does not, because it cannot; for it does not know what grants for the public service will be proposed by the spending committees, since the estimates submitted in the secretary’s letter furnish no trustworthy basis for a guess. It does not, for the further reason that the primary object of customs duties has for many years past been not the raising of revenue, but the protection of American industries by subjecting foreign products to a very high tariff. This tariff (further raised in 1890 and 1897, altered in 1909, and reduced in 1913) brought in an income far exceeding the current needs of the government. Two-thirds of the war debt having been paid off, the fixed charges shrank to one-third of what they were when the war ended, yet this tariff remains with few modifications, surpluses constantly accumulating in the national treasury, until in 1890 a pension act was passed which increased expenditures so largely as almost to absorb even the growing surplus. The Committee on Ways and Means has therefore no motive for adapting taxation to expenditure. The former seemed likely to be always in excess while the protective tariff stood, and the protective tariff stood for commercial or political reasons unconnected with national finance.5 Of recent finance it would be difficult to speak without entering on controversial ground.
When the revenue bills come to be debated in Committee of the Whole House similar causes prevent them from being scrutinized from the purely financial point of view. Debate turns on those items of the tariff which involve gain or loss to influential groups. Little inquiry is made as to the amount needed and the adaptation of the bills to produce that amount and no more. It is the same with ways and means bills in the Senate. Communications need not pass between the committees of either house and the Treasury. The person most responsible, the person who most nearly corresponds to an English Chancellor of the Exchequer, or a French Minister of Finance, is the chairman of the House Committee on Ways and Means. But he stands in no official relation to the Treasury, and is not required to exchange a word or a letter with its staff. Neither, of course, can he count on a majority in the House. Though he is a leading man he is not a leader, i.e., he has no claim on the votes of his own party, many of whom may disapprove of and cause the defeat of his proposals. This befell in 1886, when the chairman of this committee, an able man, and perhaps, after the Speaker, the most considerable person in the Democratic majority, was beaten in his attempted reform of the tariff.
The business of spending money used to belong to the Committee on Appropriations, but in 1883 a new committee, that on Rivers and Harbours, received a large field of expenditure; and in 1886 sundry other supply bills were referred to sundry standing committees. The Committee on Appropriations starts from, but does not adopt, the estimates sent in by the secretary of the treasury, for the appropriation bills it prepares usually make large and often reckless reductions in these estimates. The Rivers and Harbours Committee proposes grants of money for what are called “internal improvements,” nominally in aid of navigation, but practically in order to turn a stream of public money into the state or states where each “improvement” is to be executed. More money is wasted in this way than what the parsimony of the Appropriations Committee can save. Each of the other standing committees, including the Committee on Pensions, a source of infinite waste,6 proposes grants of money, not knowing nor heeding what is being proposed by other committees, and guided by the executive no further than the members choose. All the expenditures recommended must be met by appropriation bills, but into their propriety the Appropriations Committee cannot inquire.
Every revenue bill must, of course, come before the House; and the House, whatever else it may neglect, never neglects the discussion of taxation and money grants. These are discussed as fully as the pressure of work permits, and are often added to by the insertion of fresh items, which members interested in getting money voted for a particular purpose or locality suggest. These bills then go to the Senate, which forthwith refers them to its committees. The Senate Committee on Finance deals with revenue-raising bills; the Committee on Appropriations with supply bills. Both sets then come before the whole Senate. Although it cannot initiate appropriation bills, the Senate has long ago made good its claim to amend appropriations bills, and does so freely, adding items and often raising the total of the grants. When the bills go back to the House, the House usually rejects the amendments; the Senate adheres to them, and a conference committee is appointed, consisting of three senators and three members of the House, by which a compromise is settled, hastily and in secret, and accepted, generally in the last days of the session, by a hard-pressed but reluctant House. Even as enlarged by this committee, the supply voted is usually found inadequate, so a deficiency bill is introduced in the following session, including a second series of grants to the departments.
The European reader will ask how all this is or can be done by Congress without frequent communication from or to the executive government. There are such communications, for the ministers, anxious to secure appropriations adequate for their respective departments, talk to the chairmen and appear before the committees to give evidence as to departmental needs. But Congress does not look to them for guidance as in the early days it looked to Hamilton and Gallatin. If the House cuts down their estimates they turn to the Senate and beg it to restore the omitted items; if the Senate fail them, the only resource left is a deficiency bill in the next session. If one department is so starved as to be unable to do its work, while another obtains lavish grants which invite jobbery or waste, it is the committees, not the executive, whom the people ought to blame. If, by a system of logrolling, vast sums are wasted upon useless public works, no minister has any opportunity to interfere, any right to protest. A minister cannot, as in England, bring Congress to reason by a threat of resignation, for it would make no difference to Congress if the whole cabinet were to resign, unless of course the congressmen most conspicuously concerned should be so palpably in fault that the people could be roused to vigorous disapproval.
What has been here stated may be summarized as follows:
There is practically no connection between the policy of revenue raising and the policy of revenue spending, for these are left to different committees whose views may be opposed, and the majority in the House has no recognized leaders to remark the discrepancies or make one or other view prevail. In the Forty-ninth Congress a strong free trader was chairman of the tax-proposing Committee on Ways and Means, while a strong protectionist was chairman of the spending Committee on Appropriations.
There is no relation between the amount proposed to be spent in any one year, and the amount proposed to be raised. But for the fact that the high tariff produces a large annual surplus, a financial breakdown would speedily ensue.
The knowledge and experience of the permanent officials either as regards the productivity of taxes, and the incidental benefits or
