FACED WITH THE INTRANSIGENCE OF THE ADMINISTRATION TO ACCEPT

CONGRESSIONAL POLICY WITH REGARDS TO THE CUSTOMS SERVICE, I SUCCESSFULLY

OFFERED AN AMENDMENT TO THE FISCAL YEAR 1987 CONTINUING RESOLUTION WHICH

PROVIDES THAT THE CUSTOMS SERVICE SHALL HIRE AND MAINTAIN AN AVERAGE OF

14,891 FULL-TIME-EQUIVALENT POSITIONS. I PLEAD GUILTY TO MICROMANAGING, WE HAD NO OTHER CHOICE. THE CUSTOMS SERVICE HAS RUN AN AVERAGE ANNUAL

BUT

VACANCY RATE OF APPROXIMATELY 400 POSITIONS. NOW I HAVE LEARNED THAT OMB IS

STILL RESISTING AND HAS PLACED APPORTIONMENT CONTROLS ON THE CUSTOMS SERVICE

QUARTERLY PAYMENTS TO PREVENT THE AGENCY FROM HIRING UP TO THE CONGRESSIONAL

MANDATED LEVEL. IT IS MY OPINION THAT THEY ARE VIOLATING THE BUDGET AND

IMPOUNDMENT CONTROL ACT OF 1974. OMB ARGUES THAT IT HAS A RESCISSION

PENDING, BUT I DOUBT CONGRESS WILL APPROVE IT.

THE EFFECT, MR. CHAIRMAN, IS THAT THE U.S. CUSTOMS SERVICE IS BEING

DECIMATED BY A CONTINUING ATTACK ON ITS RESOURCES WHILE ITS MISSION EXPANDS.

THE RESULT IS LONGER LINES AT OUR BRIDGES, LESS THAN EFFECTIVE ENFORCEMENT OF OUR TRADE LAWS, AND A LOSS OF BADLY NEEDED REVENUES. IF THE CONGRESS ALLOWS THE ADMINISTRATION TO CONTINUE DOWN ITS PRESENT PATH, WE WILL BEGIN

TO SEE RESOURCES DIVERTED AWAY FROM COMMERCIAL ACTIVITIES AND INTO DRUG

ENFORCEMENT. I BELIEVE WE ALL SUPPORT THE DRUG ENFORCEMENT EFFORTS OF THE

CUSTOMS SERVICE, BUT CERTAINLY WE CANNOT SHORTCHANGE THE ENFORCEMENT OF OUR TRADE LAWS. AS THE CHAIRMAN WELL KNOWS, OUR TRADE DEFICIT IS AS DISASTROUS

AS OUR DRUG CRISIS. AND THE ZERO-SUM BUDGET GAME BEING PLAYED BY THIS

ADMINISTRATION WITH THE U.S. CUSTOMS SERVICE WILL BRING NEGATIVE EFFECTS ON

OUR NATION'S WELL BEING.

THE BUDGET SAVINGS ARE FALSE. A $60 MILLION SAVINGS IN FISCAL YEAR

1987 THROUGH A RESCISSION WILL ONLY BRING SHORT RUN GAINS.

ACCORDING TO THE

CONGRESSIONAL BUDGET OFFICE, WE MAY LOSE AT LEAST $1.3 BILLION IN REVENUES THROUGH FISCAL YEAR 1989. THAT FIGURE DOES NOT INCLUDE THE COSTS OF

COUNTERFEIT GOODS ENTERING OUR MARKETS AND THE TOLL TAKEN BY INCREASED

NARCOTICS AVAILABILITY.

I BELIEVE MY COLLEAGUES ON THE HOUSE APPROPRIATIONS COMMITEE WILL

REJECT THE PROPOSED RESCISSION AND I INTEND TO OFFER AN AMENDMENT TO THE

FISCAL YEAR 1987 SUPPLEMENTAL APPROPRIATION BILL TO COVER THE INCREASED

RETIREMENT AND PAY COSTS. I WILL FIGHT THE ADMINISTRATION AND THE OFFICE OF

MANAGEMENT AND BUDGET TO ENSURE THAT THE CUSTOMS SERVICE FOLLOWS THE LAW

ESTABLISHED IN THE CONTINUING RESOLUTION.

I WILL ALSO FIGHT THE PROPOSED

FISCAL YEAR 1988 BUDGET CUTS. THEY ARE PENNY WISE AND POUND FOOLISH.

THE CURRENT SITUATION LEAVES THE CUSTOMS SERVICE MANAGING AN AGENCY WHICH

IS GIVEN MORE RESPONSIBILITIES AND LESS RESOURCES WITH WHICH TO CARRY THEM

OUT.

THE CONGRESS HAS MANDATED MOST OF THESE RESPONSIBILITIES, AND THE ADMINISTRATION HAS SOUGHT, BY ANY WAY POSSIBLE, TO TAKE AWAY THE RESOURCES.

I AM PLEASED THAT THE SENATE COMMITTEE ON FINANCE IS REVIEWING THIS PERILOUS

SITUATION. THE HOUSE WAYS AND MEANS COMMITTEE IS TO HOLD SIMILAR HEARINGS.

THE APPROPRIATIONS COMMITTEES OF THE HOUSE AND SENATE WILL HAVE TO HOLD

HEARINGS AND WRITE A BUDGET. WE NEED THE SUPPORT OF THE AUTHORIZING

COMMITTEES. YOU HAVE IMPORTANT RESPONSIBILITIES WITH RESPECT TO OUR TRADE

POLICY AND I BELIEVE THE CUSTOMS SERVICE IS AMONG THOSE RESPONSIBILITIES.

WE SIMPLY CANNOT AFFORD TO TURN OUR BACK ON THIS AGENCY. TOO MANY PEOPLE

SUFFER THE CONSEQUENCES.

THE BORDER ECONOMY SUFFERS FROM DELAYS,

CONGESTION, AND DISRUPTION OF TRADE AND COMMERCE. THE NATION'S ECONOMY

SUFFERS FROM LESS ENFORCEMENT OF OUR LAWS AND LESS REVENUE. AND THOUSANDS

OF AMERICANS SUFFER FROM THE GROWING INFLUX OF DRUGS. THESE ARE EQUALLY IMPORTANT CONCERNS, AND SHOULD BE TREATED AS SUCH.

MR. CHAIRMAN, YOU ARE TO BE COMMENDED FOR YOUR LEADERSHIP IN HOLDING

THIS SERIES OF HEARINGS.

THE CUSTOMS SERVICE MAY NOT BE AS GLAMOROUS AS

SOME ISSUES, BUT I THINK YOU WILL AGREE, IT IS FAR MORE IMPORTANT THAN MOST.

I APPRECIATE THE OPPORTUNITY TO TESTIFY THIS MORNING.

Senator MATSUNAGA. Thank you, gentlemen. I apologize for lowattendance of the committee. Finance Committee members had a last-minute summons from the White House so Chairman Lloyd Bentsen is at the White House with the other members of the committee.

But, being members of Congress, you know how it is. I served in the House for 14 years. Fortunately, you have a limitation of committees there. Here, you don't. And we belong to too many committees and too many subcommittees. You can't be at three or four places all at the same time. And then when you become a member of the Finance Committee, you get frequent calls from the White House.

Thank you, again. I am in full agreement with both of you. If your sentiments prevail this committee will turn down the request of the Administration to reduce funding for the Customs Service. Congressman BUSTAMANTE. Thank you, very much. Congressman COLEMAN. Thank you, Mr. Chairman.

Senator MATSUNAGA. In it's budget for Fiscal Year 1988, the Administration has proposed to reduce the number of Customs Service employees by nearly 2,000 from the number that Congress authorized in 1987. This means a 13 percent reduction in Customs Service personnel. Now, we are concerned in Hawaii, and I would think elsewhere in the country, when we hear about such cuts. After all, there are only about 14,000 people in the Customs Service.

We are concerned in Hawaii that the reductions could never be uniform across the nation. If Los Angeles keeps full staffing and our staffing in Hawaii is reduced, it will have a major impact on our economy.

Semiconductor chip importers, who might use Hawaii as their port of entry, will switch to Los Angeles; and Japanese tourists who visit Hawaii on vacation more than any other vacation destination outside of Japan, would be discouraged from visiting our state.

And that would be disastrous to our economy. As a matter of fact, even if the reduction in staffing were uniform all across the country, the President's budget would still have many harmful effects. There have been tremendous increases in the workload of the Customs Service. It now processes nearly twice as many entries of merchandise as it did in 1980. The Customs Service is also the front line in our defense against illegal drug smuggling.

That is why this committee has been saying for years that it wants to increase staffing, not reduce it. We are happy that the Commissioner of the Customs Service and the Senior Associate Director of the U.S. General Accounting Office are here to testify today.

And I do hope that they will be able to answer some of the questions this committee has.

And we have, as our next witness, The Honorable William von Raab, Commissioner, United States Customs Service.

We would be happy to hear from you, Mr. Commissioner.

STATEMENT OF HON. WILLIAM VON RAAB, COMMISSIONER, U.S. CUSTOMS SERVICE, WASHINGTON, DC, ACCOMPANIED BY C. WAYNE HAMILTON, ACTING COMPTROLLER, SAMUEL H. BANKS, ASSISTANT COMMISSIONER (INSPECTION AND CONTROL)

Commissioner VON RAAB. Thank you, Mr. Chairman. Also with me is Wayne Hamilton, who is the Acting Comptroller of the Customs Service.

Senator MATSUNAGA. Mr. Hamilton?

Commissioner VON RAAB. Right. And also present behind the table are other officers of Customs, should you have questions of such level of detail that neither of us are able to answer. I appreciate this opportunity to appear before you today to discuss the Fiscal Year 1988 appropriations request for the U.S. Customs Service. I have a short opening statement, and request that a more detailed one be placed in the record.

Senator MATSUNAGA. Without objection, it is so ordered.

Commissioner VON RAAB. I might just look back on the past five years of Customs appropriations, and point out that the Customs budget, when I came into the Administration, was around $450 million. The level at which we are operating now is over $1 billion. So, Congressman Coleman is correct. There has been a lot of constructive discussion, disagreement between the Administration and the Congress as to the best way to fund the Customs Service. I think the results stand for themselves, that the Administration and the Congress have agreed, generally speaking, on a tremendous increase in the Customs Service. A large part of that increase represents some capital investments, which are not recurring. Therefore, we are really operating with a budget somewhere around $800 million, with considerable amounts for increased equipment that is coming on line.

I think it is important to keep that in mind, because although the Administration is proposing some reductions in the Customs budget, it must be viewed in the context of enormous increases that Customs has received over the past five years.

Our request for this fiscal year totals $803,090,000 for the salaries and expenses account; $86,210,000 for the operations and maintenance or the Air Program account; $10 million for the forfeiture fund; and $486,000 for the services at small airports account.

Mr. Chairman, it has been an active year for the Customs Service, and we have deployed over 600 new personnel just on the southwest border alone. We have placed new, more sophisticated aircraft in the air, and intensified our cooperation with state and local law enforcement officials. A lot of this is in addition to our ongoing effort in the fight to stop illicit drug traffic.

Mr. Chairman, we have also taken dramatic steps on the commercial side. Our efforts have concentrated on improving processing of commercial traffic, while not cutting back enforcement efforts to detect narcotics, fraud and quota violations. We have done this through expansion of the automated commercial system, as we call it, and selectivity systems which allow our inspectors and other Customs officers to concentrate on high-risk passengers and cargo,