[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                 TREASURY, POSTAL SERVICE, AND GENERAL
                     GOVERNMENT APPROPRIATIONS FOR
                            FISCAL YEAR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

  SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT 
                             APPROPRIATIONS

                      JIM KOLBE, Arizona, Chairman

FRANK R. WOLF, Virginia          STENY H. HOYER, Maryland
ERNEST J. ISTOOK, Jr., Oklahoma  CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York      DAVID E. PRICE, North Carolina
ANNE M. NORTHUP, Kentucky        
ROBERT B. ADERHOLT, Alabama      

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

      Michelle Mrdeza, Bob Schmidt, Jeff Ashford, and Tammy Hughes,
                            Staff Assistants
                                ________

                                 PART 3

                  EXECUTIVE OFFICE OF THE PRESIDENT AND
                   FUNDS APPROPRIATED TO THE PRESIDENT

                              
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
48-708 O                    WASHINGTON : 1998
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             For sale by the U.S. Government Printing Office            
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                          Washington, DC 20402                          













                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director











TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR 1999

                              ----------                              

                                          Thursday, March 12, 1998.

                 EXECUTIVE RESIDENCE AT THE WHITE HOUSE

                               WITNESSES

TERRY R. CARLSTROM, REGIONAL DIRECTOR
JAMES I. McDANIEL, DIRECTOR, WHITE HOUSE LIAISON
MARILYN J. MEYERS, BUDGET ANALYST

                  Opening Comments From Chairman Kolbe

    Mr. Kolbe.  The hearing of the Treasury, Postal Service, 
and General Government will come to order. This morning we have 
two parts of the White House and the Executive Residence before 
us.
    Before we begin our hearing this morning on the Executive 
Residence, I have a brief statement that I want to make. I will 
then make an additional statement regarding the witnesses that 
we have before us.
    I certainly had no intention of coming out with both 
barrels loaded, maybe one of them, figuratively speaking, but 
certainly not both of them. Yesterday, during the White House 
daily press briefing, this subcommittee was issued a direct 
challenge; one that cannot be ignored and I take very 
seriously.
    When questioned about our hearing today, the President's 
spokesman said, ``Well maybe they will cut our budget.'' He 
also suggested that, ``it is precisely the Congressional 
inquiries that generate the need for staff.''
    The President of the United States is not here with us 
today to answer these questions, but I ask them nonetheless. Is 
the White House challenging us to cut their budget, cut the 
budget of the White House?
    Does the White House find questions on the use of taxpayer 
dollars burdensome to them? Just so there are no ambiguities 
about the roles and responsibilities of the Appropriations 
Committee, I want to lay down just a few facts.
    Fact No. 1, The Constitution vests the power of the purse 
in the Congress of the United States.
    Fact No. 2, House Rules provide that the Committee on 
Appropriations has jurisdiction over the appropriation of all 
federal revenues.
    Fact No. 3, The Appropriations Committee is authorized to 
conduct such studies and examinations on the organization and 
operation of agencies as it may deem necessary to assist in the 
determination of matters within its jurisdiction.
    Fact No. 4, The Treasury, Postal Service, and General 
Government Subcommittee is assigned jurisdiction of the 
Executive Office of the President; this includes both the White 
House Office of General Counsel and the Executive Residence of 
the White House.
    So, I would say to the President: Mr. President, not only 
is it the responsibility of this subcommittee to review the 
operations of the White House to ensure that all federal funds 
are used only for the purpose for which they were appropriated, 
it is our obligation to the American taxpayer to do so.
    I would agree with the White House spokesman that this 
White House has been under an inordinate amount of scrutiny by 
committees of Congress. I trust that the President's spokesman 
does not believe that I am part of any right wing conspiracy.
    Let us face it, Congress has been given a lot of material 
to work with. Yes, there have been a lot of scandals in 
Administrations before this one. I think it is a fairly 
accurate statement to say that never have there been so many in 
a single Administration; from White Water, to Travelgate, to 
Filegate, the improper fund raising, and on and on.
    In each instance, I think there are a lot more questions 
than we have ever gotten any answers to. As it relates to this 
subcommittee, my oversight of White House operations has been 
thwarted; particularly as it relates to political events in the 
Executive Residence.
    I have only been Chairman of this subcommittee for a year. 
I have to tell you, I feel as though I have been engaged in the 
longest and slowest chess game in my life. Each move has been 
exquisitely calculated, extraordinarily slow, and aimed at 
depleting the resources of those on the other side.
    Quite frankly, I am sick of this game. The subcommittee has 
a great many questions on the operations of the White House. In 
the event that our questions are not answered to our 
satisfaction, I have a simple and single message to send back 
to the White House.
    Mr. President, the buck quite literally stops here at this 
subcommittee. With that, we will begin our hearing here with 
the Executive Residence.
    We are pleased to welcome before us today personnel from 
the National Park Service. As my colleagues are aware, the 
National Park Service is testifying on behalf of the operations 
of the Executive Residence of the White House.
    Unless there have been some significant changes to the way 
the Executive Residence is run, I am afraid that today the Park 
Service is not going to be able to answer most of the pertinent 
questions related to the daily operations of the residence that 
I will have, just as they were not able to answer them last 
year.
    That was certainly the case last year and I requested the 
attendance of the Chief Usher and/or the Administrative 
Officer, the very competent people who run the Executive 
Residence.
    Not surprisingly, we have been unable to secure their 
attendance. This is, indeed, very unfortunate. During the 
fiscal year 1998 appropriations hearing, the Park Service was 
unable to answer a very important series of questions related 
to overtime costs of the domestic staff, the relationship of 
those costs to certain work loads within the residence, and in 
particular, overnight guests. That hearing took place just 
about a year ago this time. In the interim, and as aresult of 
the fact that we were not able to get answers to our questions, we 
tasked the General Accounting Office to review the operations of the 
Executive Residence, again, seeking answers to what we think were very 
simple and straightforward questions about overtime costs and the cost 
of overnight stays in the Executive Residence. This is not an 
insignificant question.
    Since the beginning of this Administration, we have spent 
$2 million on overtime in the Executive Residence. Last year, 
the White House revealed they had 938 overnight guests at the 
Executive Residence, though we still do not now how many 
different individuals or how many nights total people stayed in 
the White House.
    We know for a fact that many of those guests stayed on more 
than one occasion. We also know from memos that we have seen 
from the White House that many of them were invited as a quid 
pro quo for political donations.
    From all appearance, many of these overnight stays were 
part of an aggressive White House fund raising strategy. I will 
repeat my position on this issue. I respect the President's 
prerogative to host personal guests in the Executive Residence. 
It is the home of the President while he serves in that office, 
in that capacity, as President of the United States. What I do 
not support is the use of taxpayer dollars to support political 
activities.
    Just as we ended the practice of federal taxpayers paying 
for political events in the White House in last year's bill, 
and established a separate accounting process to support these 
events, we will end the practice of using federal dollars to 
support political overnight stays in the Executive Residence, 
if that is ultimately what we discover has been going on.
    Given the history of stonewalling, and of refusing to 
answer our questions that has characterized this 
Administration, it should come as no surprise that the General 
Accounting Office has been unable to complete their 
investigation of the Executive Residence.
    It is a fairly simple, small, and narrow task that they are 
undertaking. Quite simply, they have not been able to get 
access to the individuals and the documents they need in order 
to complete a reliable and comprehensive review of the 
Executive Residence operations.
    Last November this subcommittee held a hearing on the lack 
of progress being made on that investigation. On the day of the 
hearing, the very day of the hearing, the White House faxed a 
letter to the General Accounting Office saying they were ready 
and willing to set-up the meetings to provide the information 
and documentation that was needed.
    Since that time, since last November, two days of meetings 
at the White House with White House personnel have actually 
been scheduled for the General Accounting Office; two days of 
meetings in four months.
    Sadly, other than the list of overnight guests, which were 
available from a White House press release several months 
earlier, not one piece of paper has been turned over to the 
General Accounting Office on this matter. Not one single 
document has been turned over.
    It is clear that the White House has no intention of 
cooperating with this subcommittee or the General Accounting 
Office. I have not made up my mind exactly what steps we will 
take next as a result of the failure to complete this GAO 
investigation.
    Much of that will depend on the answers that we get here 
today. Clearly, something is going on within the Executive 
Residence as it relates to overtime costs. I have a chart over 
here that I think paints a very fascinating picture.
    Last year at this time, the White House told us that they 
would need $543,000 for domestic staff overtime. That is the 
fourth line there, the highest red line there. I am sorry. It 
is the third line from the right. The yellow line; the first 
yellow line.
    That is what the White House said they would need for 
overtime in fiscal year 1997, and they would need, 
correspondingly, $500,000, just about the same amount for 
fiscal year 1998. You see those two yellow lines there.
    Well, something happened between our hearing a year ago and 
today. Now, the White House tells us that the actual overtime 
for domestic staff was $193,000 in fiscal year 1997. That last 
red line is the last actual amount. You can see the rather 
dramatic decrease from 1995. So, 1996 was a presidential year. 
The President was on the road a lot more.
    In 1997, where they projected it would go back up, it has 
fallen by 64-percent. So, what has happened? This is also the 
case for overtime in the current fiscal year. The White House 
is now spending, even though they asked for and we put in the 
budget $500,000, but they have spent only $200,000 for 
overtime.
    Either the White House has seriously miscalculated the cost 
of overtime or certain activities were significantly reduced or 
shut down. I am not going to beat around the bush about this.
    What I think that happened is in the middle of last year's 
appropriations cycle, the White House realized that they could 
not continue to host overnight guests at the same pace that 
they had been doing.
    There was simply too much political scrutiny of this. So, 
it is my guess that the White House has significantly reduced 
the number of overnight stays, in essence, mid-way through 
fiscal year 1997.
    As a result of shutting down those activities, overtime 
costs fell by more than half for fiscal year 1997 and continues 
to stay at a relatively low level, if you look at what they 
estimate for this year and what they are asking for next year, 
which is again at $200,000. I have no way of knowing this for a 
fact, but it is my guess. We would be able, of course, to make 
some determination of that if the White House would be 
cooperative and they have not been.
    So, I hope that our witnesses today will be able to shed 
some light on this. If they cannot, we will continue to try to 
ask the White House to help us with that.
    With that in mind, I look forward to the testimony of the 
Park Service. I am hoping they are going to be able to answer 
some of these questions.
    In the event that my questions on overtime costs for 
domestic staff are not answered here today or subsequently 
before we have a bill ready to go to the Floor, I intend to put 
everybody on notice, everybody in this room, and everybody that 
could be listening, or will surely be reading this statement or 
the testimony that takes place here.
    I will not fund a single penny of overtime for domestic 
staff in the fiscal year 1999 appropriations bill unless we get 
some explanation for this. Based on the way the numbershave 
fluctuated so dramatically, there has obviously been something that has 
been going on during the last year.
    Until I know what we are funding and what it is for, I will 
not include one cent for overtime for the domestic White House 
staff. With that, I would recognize my colleague, Mr. Hoyer, 
for opening remarks that he may have before we go to our 
witnesses.
    Mr. Hoyer.  I thank the Chairman for yielding.
    I was initially going to welcome Mr. Carlstrom to the 
committee and congratulate him on his new post and say how much 
I have appreciated working with him through the years and how 
competent I think he is and his office is.
    I want to thank you for that. Let me, however, address the 
comments of the Chairman and place it in context. I served in 
the Maryland Senate for 12 years, the last four of which I was 
president of the Maryland Senate.
    I have served in the Congress of the United States since 
1981; some 17-plus years. This is therefore close to three 
decades of public service. Since January of 1995, I have 
experienced a more partisan focused attack on political enemies 
than I have ever experienced in my previous service in office.
    I believe there is a conspiracy against this White House, 
right wing or not. Speaker Gingrich, Majority Leader Armey, 
Majority Whip DeLay have all sent letters to all of the 
committee chairs in the last Congress directing them to focus 
on any matters before their committee within their jurisdiction 
that might embarrass or call in question opposition.
    Not just political opposition, such as the White House, but 
opposition of senior citizens and opposition of the 
representatives of organized workers in this country. Indeed, 
they set-up a slush fund to carry out that objective. It was 
said on the Floor that it would be for unanticipated needs.
    In fact, it has been used continually for the purposes of 
investigating organizations or individuals perceived by the 
Majority Leadership as being in opposition to them.
    I have read Mr. McCurry's remarks, Mr. Chairman. I think he 
is absolutely correct. There is no analogous time in history, 
including Watergate, when a President was asked for 
information, bedeviled by more minutia than this President and 
this White House; not by this committee, but by the Government 
Oversight Committee, by the Senate Committee headed by Mr. 
D'Amato that was an absolute abysmal failure and disgrace, and 
by many others as well.
    This White House and this President, like so many of the 
opponents of the leadership of this Congress, have been 
subjected to unprecedented historic attacks. You can tell I am 
angry about this. I have been on this committee since 1983.
    On it during the Presidency of Ronald Reagan and the 
Presidency of George Bush. We had disagreements. We were in the 
Majority. Never, underline never, was the Reagan or Bush White 
House subjected to the kind of onslaught that this White House 
has been subjected to.
    Now, when it comes to budgets, never was there a threat by 
this committee against President Reagan or President Bush with 
reference to their budget. In fact, consistently, this 
committee reported out the request of the President of the 
United States. Why? Because historically since 1789, the 
Congress of the United States has perceived, correctly that the 
White House, not the Executive Department, but the White House, 
elected by the American Public is a co-equal branch of 
government.
    Mr. Chairman, I understand the Constitution and the 
statutory authority of this committee, and the responsibility 
this committee has to the taxpayers of the United States. We 
have to answer directly to them.
    The President, of course, has to answer to all of the 
people of the United States. It has been historically the 
precept of this committee that because the President, like 
ourselves, answers directly to the American Public, that we 
might raise questions, focus on issues of importance, and on 
expenditures.
    That we would not try to intimidate the President of the 
United States by undermining his ability to perform his duties. 
Now, I want to say, because there may be people listening to me 
who do not know the relationship between the Chairman and 
myself; I have the highest respect for Chairman Kolbe.
    He is a man of high integrity, ability, and common sense. I 
will tell you that I believe that this is not an effort of this 
subcommittee. It is a centralized effort operating through many 
committees and many subcommittees.
    Unfortunately, the GAO is not here before us on this issue 
of overtime and visitors to the White House. In 209 years, I 
suppose it ought to be 208 because this request was made last 
year, in 208 years, this question was never asked of a 
President of the United States.
    In fact, there is no legal requirement, as far as I can 
determine that a President or a White House keep any records, 
underline any records, of visitors they choose to have to the 
White House. This is their home. Mr. Kolbe keeps no records 
that I am entitled to, of visitors to his home and I keep no 
records of visitors to my home to which the public is entitled.
    Obviously, it is a unique home. It is an historic home. 
This hearing, frankly, is about the maintenance, upkeep, and 
preservation of an historical site; not about politics, not 
about partisanship, not about this President or any other 
president.
    This hearing ought to be about how well we are maintaining 
that historic site so that Americans who revere the site as the 
center of government, from the Executive standpoint, as they 
revere the Capitol of the United Statesas the center of 
democracy; it is unfortunate, however, that these hearings about the 
White House itself and about the Executive Office have too often 
degenerated into partisan opportunities.
    Again, I will reiterate my respect to the Chairman. We have 
a difference of view on the issue that he has raised and 
focused on with respect to visitors to the White House. The GAO 
is not before us, so I cannot ask them any questions.
    They have specifically said they do not believe the cost 
can be divided out and specifically identified for visitors 
beyond the general cost of maintaining this historic building. 
Mr. Chairman, we will continue to have a respectful and close 
relationship; not just respectful, but a friendly relationship. 
You are my friend.
    The President of the United States has weighty 
responsibilities. Mr. McCurry is absolutely correct. No 
President has been bedeviled the way this President has been, 
not by this committee, but by many, many, many committees of 
this Congress.
    Committee-after-committee, redundant committee-after-
redundant committee. A House committee, a Senate committee 
because, in my opinion Mr. Chairman, the Majority, when it was 
elected in 1994 took out, in effect, to redress all the 
grievances that had mounted up for that 40 years that they 
lamented the fact that they were not in the Majority.
    We are seeing the consequences of those grievances being 
spewed out. The present incumbent of the White House, 
unfortunately, is the recipient of much of those grievances and 
this historic get-even opportunity.
    I regret that these words have been as harsh as they have, 
Mr. Chairman, not directed at you, but to set before the public 
and the record, the situation that I believe exists today as it 
relates to this White House and this President.
    It is time for us to focus on the real issues of the day. 
This hearing on how well we are doing maintaining the White 
House, on the Executive Office, how well we are doing on having 
expenditures properly spent, which is your point, on the 
objectives of properly running the Executive Office of the 
President, but not on knit-picking and trying to find ways and 
means to embarrass and undercut the operations of the 
Presidency. Thank you.
    Mr. Kolbe.  Mr. Price. Do you have an opening statement?
    Mr. Price.  No.
    Mr. Kolbe.  Ms. Meek.
    Ms. Meek.  [No audible response.]
    Mr. Kolbe.  Before I call on Mr. Carlstrom, let me just say 
I would agree with Mr. Hoyer that we will agree to disagree 
from time-to-time, but we will remain friends. We will have a 
good relationship as we have had a good working relationship 
all along.
    I just want to clarify for the record, however, I think a 
statement was made and I think is a very serious charge, that 
this is a centrally directed operation in Congress.
    I have had no discussion, not one word of discussion, with 
either the Speaker or the Chairman of the Appropriations 
Committee or their staffs about this hearing today; not one 
word about it, personally. Mr. Carlstrom.

                       Statement of Mr. Carlstrom

    Mr. Carlstrom.  Good morning. Mr. Chairman and Members of 
this Committee, I am pleased to appear before you and present 
for your consideration the funding requirements for the 
maintenance and operation of the Executive Residence at the 
White House for fiscal year 1999.
    The appropriation for this account for fiscal year 1998 is 
$8.45 million for the operation of the Executive Residence. A 
separate no-year account for repair and rehabilitation of the 
Executive Residence was established in fiscal year 1996, with 
initial funding for the repair of the roof of $2.2 million.
    In fiscal year 1998, $200,000 was appropriated for 
renovation of an electrical vault for possible relocation of 
the laundry within the Executive Residence.
    The fiscal year 1999 request is $8.691 million for the 
operating accounts at the Executive Residence. No funds are 
being requested for the no-year repair and rehabilitation 
account for fiscal year 1999.
    The increase of $646,000 for the operating accounts 
includes, $375,000 for funding of the projected 3.1-percent 
COLA pay scheduled in January 1999, for step and merit pay 
increases, and the annualization of the 1998 COLA pay raise.
    Additionally, $153,000 is requested to fund two FTEs, a 
computer network engineer to oversee the growing complexity and 
required modernization of the Executive Residence's computer 
network, and an accountant technician to track and capture 
costs associated with official and ceremonial functions of the 
Presidency, repair and execute prebilling and final billing for 
reimbursable functions, ensure prompt payment of reimbursable 
functions, and other new duties as required by Public Law 105-
61.
    An increase of $70,000 is requested to fund the costs of 
preventive cyclic and scheduled maintenance, to include 
replacement of equipment and materials for the water filtration 
system that has been in use for ten years, and for the heating, 
ventilation, and air conditioning systems.
    An increase of $50,000 is requested for computer hardware 
upgrades and support of new custom-written software used to 
modernize the accounting functions of the ExecutiveResidence.
    An increase of $29,000 is requested for increases in the 
cost of official and ceremonial functions of the Presidency 
which is offset by reductions of $31,000 in overtime costs of 
the Executive Residence's full-time staff.
    We are happy to report that the roof repair and restoration 
has been completed, and that the last punch list items are 
being taken care of by the contractor. It was a successful 
project which went smoothly and quickly. We are currently in 
the last stages of the transfer vault relocation, and at that 
time the planning will begin for the possible moving of the 
laundry facility.
    That concludes our budget requests, Mr. Chairman. Myself, 
Mr. McDaniel, and Ms. Meyers shall be pleased to answer any 
question you and Members of this Committee may have about the 
operation of the Executive Residence at the White House.
    [The statement of Mr. Carlstrom follows:]


[Pages 8 - 14--The official Committee record contains additional material here.]



                  staffing at the executive residence

    Mr. Kolbe.  Thank you very much, Mr. Carlstrom.
    Let me begin my questions with what I have been trying for 
a year to get to the bottom of, despite the comments of my 
friend and colleague, Mr. Hoyer.
    I just think it is a very legitimate question. We are 
talking about the overtime issue. It is my understanding that 
there are currently 86 full-time employees within the Executive 
Residence, and of those about 36 are the domestic staff: 
butlers, housekeepers, chefs, maids, et cetera.
    Am I correct to assume that these 36 staff care for the 
President and the First Family, as well as any other private 
guests that may be staying in the Executive Residence?
    Mr. Carlstrom.  That is correct.
    Mr. Kolbe.  Can you tell me what the other 50 do or, for 
the record, at least provide a list of the positions and the 
number of FTEs that are associated with those?
    I assume they are carpenters, electricians, and people like 
that are the maintenance of the Executive Residence.
    Mr. Carlstrom.  Yes, they are. They are broken down.
    Mr. Kolbe.  No security is involved in this.
    Mr. Carlstrom.  No, there is not.
    Mr. Kolbe.  Okay. If you would just provide us with a list 
of those.
    Mr. Carlstrom.  We will.
    Mr. Kolbe.  We will appreciate it.
    Mr. Carlstrom.  Yes, sir.
    [The White House FTE positions referred to follows:]



[Pages 16 - 17--The official Committee record contains additional material here.]



                    overtime costs of domestic staff

    Mr. Kolbe.  Mr. Carlstrom, if you would look at that chart 
over there that I referred to earlier. Last year you testified 
that overtime costs for domestic staff during fiscal year 1997 
would be and you were very specific, $543,271.
    That is the number that is up there. Yet, your budget 
justification materials that were submitted last month show the 
actual overtime paid to employees was $193,600. That is a 
difference of 64-percent.
    What accounts for this difference? Specifically, what work 
loads were anticipated in fiscal year 1997 that never took 
place?
    Mr. Carlstrom.  I cannot respond to that officially. I 
would suggest that the Executive Residence provide that 
information for the record. I do not have that information 
available.
    Mr. Kolbe.  Well, we have been trying to get that 
information. The current estimate for overtime for full-time 
domestic personnel for 1998 is $200,000. That is, again, a 64-
percent decrease from the amount you told us you would need a 
year ago.
    Specifically, what work loads and activities were 
anticipated during fiscal year 1998 that are not now 
anticipated in the next fiscal year?
    Mr. Carlstrom.  I can only surmise. I have no exact 
information. Again, the Executive Residence will be asked to 
provide that information.
    Mr. Kolbe.  So, you just take the amount that Executive 
Residence gives you and plug it in for this, for overtime? You 
do not have anything to do with the preparation of the number.
    Mr. Carlstrom.  I do not have anything directly to do with 
the preparation of that number, no.
    Mr. Kolbe.  Last year, the White House told us that there 
were, as I mentioned in my earlier statement, 938 overnight 
guests in the Executive Residence since the beginning of the 
Clinton Administration. Can you tell me if this number has 
changed? Do you get any of that information from the Executive 
Residence?
    Mr. Carlstrom.  No, sir. I do not have that information.
    Mr. Kolbe.  Do you have any idea what the total number is 
to-date? If 938 was last year, what is the total number as of 
now of overnight visitors in the residence?
    Mr. Carlstrom.  I have no idea what the overnight residency 
occupation is.
    Mr. Kolbe.  I am only curious as to how you prepare your 
budget; if you do not have any information on these things, how 
are those budget requests prepaid?
    Mr. Carlstrom. The budget request is based upon the amount 
of dollars required for the care and maintenance of the 
facility.
    Mr. Kolbe. But it includes overtime. I mean, it is in your 
budget.
    Mr. Carlstrom. The overtime is a component.
    Mr. Kolbe. How did you determine that number, $200,000, to 
come up with?
    Mr. Carlstrom. To my recollection, it would be based upon 
the projection of the kinds of events and occurrences that----
    Mr. Kolbe. Does the White House give you a document?
    Ms. Meyers. Yes, they do.
    Mr. Kolbe. Well, will you provide that document for the 
record as to what they give you?
    Ms. Meyers. I will request that of the Executive Residence, 
yes.
    [The information referred to follows:]


[Pages 20 - 21--The official Committee record contains additional material here.]



    Mr. Kolbe. It would seem to me to be a legitimate thing to 
know how you come up with this figure.
    Ms. Meyers. It is based on historical precedence, but the 
problem is----
    Mr. Kolbe. Something is different historically here. That 
is what I am trying to get to the bottom of.
    Ms. Meyers. So much of it is determined upon world events, 
local events. If there is a crisis, for instance, during the 
Gulf War, everybody, the whole staff, all 86 of them work 24 
hours a day.
    If you are having different things happening, it is very 
hard to estimate from the beginning as to exactly what it is 
going to be. That is why we kept it down this year rather than 
taking it way back up as it had been in prior years, but that 
is provided to me by the Executive Residence Administrative 
Office.
    Mr. Kolbe. I am sorry, would you repeat? It was taken down, 
why?
    Ms. Meyers. Because it had been leveling off.
    Mr. Kolbe. It certainly was not through 1995 leveling off.
    Ms. Meyers. Are we speaking of just the domestic staff or 
are we speaking of----
    Mr. Kolbe. This is the overtime for the domestic staff; 
just the domestic staff there.
    Ms. Meyers. Right.
    Mr. Kolbe. Obviously, something has changed. That is what I 
am trying to get to the bottom of. Maybe you can help. You gave 
a useful piece of information there that I am surprised to hear 
that during a crisis, like the Gulf Crisis, all of the maids 
and everybody works 24-hours a day.
    Ms. Meyers. They are on-call 24 hours a day.
    Mr. Kolbe. On-call or at work? Is it overtime if they are 
on-call?
    Ms. Meyers. No, it is not.
    Mr. Kolbe. Okay.
    Ms. Meyers. They all work 40 hours, plus anything over that 
would obviously be overtime.
    Mr. Kolbe. Right, right. I am not sure I know why somebody 
that is a maid would be required for extra hours during that 
time.
    Ms. Meyers. Well, there are many people walking around the 
White House and all of that needs to be taken care of.

                staffing patterns at executive residence

    Mr. Kolbe. Let me just ask you this. I would like some 
information from you about what the normal staffing pattern 
would be on an average when the Executive Residence is occupied 
by the President and the First Family. For example, are there 
three 8-hour shifts for personnel, White House Executive 
Residence personnel?
    Mr. Carlstrom. I can respond to that, Mr. Congressman.
    The staff members, all of them, work a 40-hour week. That 
may run through Monday to a Friday, or from a Tuesday to a 
Sunday, or any combination. This is similar to what we do in 
the National Park Service when it comes to managing and taking 
care of our parks.
    The Executive Residence is staffed seven days a week, day 
time and into the evening, on regular time. There is one shift 
of maids and butlers that come on early in the morning to take 
care of preparation for the 1.1 million visitors that come 
through the White House every year.
    That is one shift, or an 8-hour shift, if you would want to 
refer to it that way. The second shift comes on in the 
afternoon and begins the clean-up, after the visitors have 
left, and prepares the White House for the functions that are 
to occur either for the First Family and/or for special events 
in the evening hours. Those are the two shifts that occur which 
relate to a daily function.
    It is staffed seven days a week for 24-hours by the 
operating engineers. There are two employees on duty at all 
times in case there are any problems with the mechanical nature 
of the heating, ventilation, or other systems in the White 
House.
    Much of the scheduling depends on the amount of time that 
the First Family is in the Executive Residence. This Family 
spends more time at the Executive Residence than has been true 
in previous Administrations. That could account for some of the 
increased cost that you see. That is my editorial.
    There are some things that have happened that have already 
been alluded to in world events in past Administrations. That 
was during the Bush Administration when the Gulf War was 
occurring.
    All members of the staff in all of the different divisions, 
some of them were on duty for 24-hours a day and were on-call.
    I would just like to emphasize one other thing, that the 
Executive Residence is first and foremost a home and that is 
what the budget deals with. How we take care of the White 
House, its historical character, and its importance to the 
American people.
    Mr. Kolbe. Well, I have taken more than my time. Let me 
just say that, first of all, that I would concur with your 
statement that this President has spent more time in the 
Executive Residence. He has not used Camp David as much.
    None of that, however, explains this dramatic, more than 
50-percent, or 64-percent, almost a two-thirds decrease in the 
amount of overtime. That is what we are not able to get to the 
bottom of. I may come back with some other questions on that. 
Mr. Hoyer.
    Mr. Hoyer.  Thank you, Mr. Chairman.
    I am constrained to observe that I do not know how much it 
costs to operate Air Force One, but I would venture to say to 
fly back and forth to Rancho Mirage in California was at least 
a $250,000 item every weekend.
    I have no criticism of that at all, but this President does 
spend a lot of weekends in the White House. I happen to know 
that and that he does not spend much time at Camp David. He 
does not have another place. So, this is his home.
    One flight to California would eat up that overtime, it 
seems to me. Having said that, Mr. Carlstrom, how long have you 
been with this office?
    Mr. Carlstrom.  Do you mean the National Park Service?
    Mr. Hoyer.  Yes, sir.
    Mr. Carlstrom.  I have been with the National Park Service 
since 1972.
    Mr. Hoyer.  Since 1972. That was the Nixon Administration.
    Mr. Carlstrom.  Yes. You are giving me a history lesson, 
yes.

                   past treatment of budget hearings

    Mr. Hoyer.  I want to ask you this question. To your 
knowledge, to the extent of your knowledge, has the White House 
budget been treated differently since 1993 than it was from 
1972 to 1993?
    Mr. Carlstrom.  You said the National Park Service. I was 
not associated with the White House specifically at that time.
    Mr. Hoyer.  That is why I said ``to your knowledge.''
    Mr. Carlstrom.  No.
    Mr. Hoyer.  I do not know how long your history goes back, 
but the point of my question is, has this White House budget 
been treated any differently than prior White House budgets to 
your knowledge?
    Mr. Carlstrom.  Jim McDaniel has been around a little 
longer than I have and dealt with it on a personal basis.
    Mr. Hoyer.  Fine, then I will ask Mr. McDaniel.
    What I am simply trying to find out, obviously, is whether 
there is something unusual about how this budget is handled 
than prior budgets.
    Mr. McDaniel.  I, too, Mr. Hoyer, have been associated with 
the National Park Service for many years. I joined in 1967 as a 
Park Ranger in Lexington and Concord, Massachusetts. In 1971, I 
became a part of the White House Liaison Operation and have 
either been supporting the Park Service officials who have 
testified at this hearing or have been at this hearing since 
1971.
    The simple answer to your question, Mr. Hoyer, is yes, 
there is a difference.
    Mr. Hoyer.  What is that difference?
    Mr. McDaniel.  In the years prior, this hearing and the 
Senate hearing were much less formal. Certainly, I had not seen 
before that time any media coverage of the hearings.
    Mr. Hoyer.  Never?
    Mr. McDaniel.  Never.
    Mr. Hoyer.  The Appropriations Committee did not have a 
press arm prior to 1995, I think. Go ahead, Mr. McDaniel.
    Mr. McDaniel.  The tone of the hearing was much more 
conversational; much less formal. There was more presentation. 
I can remember several times when the Members themselves and 
their staff actually came to the White House, climbed the 
scaffolding to look at the exterior restoration work in 
progress.
    There was a very strong focus on the historic preservation 
of the White House. So, there was more of, I think, more 
details into the maintenance and the construction needs and the 
infrastructure needs of the White House.
    Mr. Hoyer.  Am I correct, Mr. McDaniel, that is in fact 
what you focus on? I do not mean you, personally, but the Park 
Service focuses on the maintenance and preservation of the home 
of the President, which is also one of America's and the 
world's most historic sites.
    Mr. McDaniel.  Yes. In 1961, during the Kennedy 
Administration, when a public law was passed that more fully 
defined the role of the National Park Service at the White 
House, there was a very strong emphasis on historical 
preservation and the museum aspects of the White House. That is 
the reason why we are there.
    Mr. Hoyer.  I understand. The committees, the Republicans, 
and Democrats, and Presidents focused on in these hearings the 
White House itself.
    Mr. McDaniel.  Yes.
    Mr. Hoyer.  The building, in other words.
    Mr. McDaniel.  Yes.
    Mr. Hoyer.  Thank you. Now, you have been there since 1971. 
Has the question of overtime of the domestic staff ever come up 
prior to last year, to your knowledge?
    Mr. McDaniel.  Not to my knowledge, no.
    Mr. Hoyer.  Has the issue of whether or not the President 
had one, or two, or ten visitors to the White House ever come 
up to your knowledge?
    Mr. McDaniel.  No, it has not.
    Mr. Hoyer.  So, since 1971, to your knowledge, this is the 
first time this issue has been raised by the committee?
    Mr. McDaniel.  Yes.
    Mr. Hoyer.  Now, Mr. Carlstrom, let me ask you something. 
In a letter to the committee dated March 9th, Mr. Ruff, counsel 
to the President, said, ``Accordingly, we will be pleased to 
receive your questions on matters,'' this was to the Chairman, 
``about which you have concerns in advance of the hearing to 
ensure that, to the extent appropriate, National Park Service 
personnel are prepared to address these questions.''
    Mr. Carlstrom, the question I ask you, do you know whether 
Mr. Ruff received any questions prior to your appearance here 
and did you have the opportunity to talk to them about 
questions that were of interest?
    Mr. Carlstrom.  No, not to my knowledge or Ms. Meyers who 
handles all of those kinds of correspondence.

                                overtime

    Mr. Hoyer.  Ms. Meyers, last question. Clearly, the 
overtime about which I have limited knowledge, at best, other 
than our discussions here, relates to the particular demands on 
the White House from time-to-time that can be caused by crisis, 
domestic or international, or challenges that may not have been 
anticipated which would require longer hours for staff, and the 
President, and the White House staff itself. Am I correct? Is 
that what you are saying?
    Ms. Meyers.  That is correct.
    Mr. Hoyer.  So that, the overtime is not necessarily 
related to visitors that the President might have at the White 
House, but visitors in his non-official capacity, if you will, 
as his home, as much as it would be related to the White House 
resulting from the Office of the President, the official duties 
of the President of the United States. Is that correct?
    Ms. Meyers.  That is correct.
    Mr. Hoyer.  Thank you very much, Mr. Chairman. I may have 
some additional questions.
    Mr. Kolbe.  Yes. We will have another round.
    Just one very quick question before I yield to Ms. Meek. In 
that response, Mr. McDaniel, to something you said about the 
differences in the hearings. Would you tell me White House or 
not the preservation and other maintenance needs at the White 
House have not been met by this subcommittee since 1995?
    Mr. McDaniel.  Absolutely not, Mr. Chairman.
    Mr. Kolbe.  Thank you very much. Ms. Meek.
    Mr. Hoyer.  Mr. Chairman.
    Mr. Kolbe.  Yes.
    Mr. Hoyer.  Might I just respond. I certainly did not imply 
that nor did I mean it and want to make it clear that I think 
you and I, as your predecessor, both are very concerned about 
the maintenance and preservation of the White House.
    I did not mean to imply that. What I did mean to imply was 
that the character of this hearing is an historic precedent. 
Ms. Meek.

                         statement of ms. meek

    Ms. Meek.  Mr. Chairman, I do not have any direct questions 
for the staff at the White House at this point. I do have a 
concern and that is the focus on the domestic staff of the 
White House in that when an environment is created that focuses 
on, I would say, the lower rung, even though I would hate to 
put it in that category, of any kind of entity, it creates for 
me a problem.
    In that when we begin to look at the domestic staff and 
their overtime pay, and question whether or not it is a viable 
kind of expenditure, I have a strong concern about that. I will 
be watching this throughout this subcommittee, being sure that 
there is an essence of fairness throughout the hearing on this 
particular account.
    At this time, I feel very strangely touched by what I hear 
here this morning, the discourse, the dialogue, the way it is 
going. I would hope I would learn more about how the White 
House operates, how you run that residence.
    Many of the problems that exist for you are the kinds of 
things that we as a committee should be concerned about. I feel 
that last session I sat on this committee for the first time.
    We did get into some of the questions which have been asked 
again here this morning. I do not think there will ever be any 
answers for those questions. There is not any instrument that 
will measure what we purport to measure here this morning.
    So, I will be watching that as a committee Member here. I 
will have questions as I listen more and more to the dialogue. 
Thank you, Mr. Chairman.
    Mr. Kolbe.  Thank you very much, Ms. Meek. Mr. Price.

                         reimbursable functions

    Mr. Price.  Mr. Director, thank you for being here this 
morning. You have furnished a listing, as you did last year, of 
reimbursable official and ceremonial functions in the White 
House and also reimbursable political events. Presumably, those 
will be reprinted in the record as they were last year.
    I wonder if you could share your observations with us as to 
how the list we discussed last year, particularly the rather 
long turn around time for the reimbursement of some of these 
events, compares with the record you furnished us this year.
    Are there any noteworthy trends either in terms of the 
composition of these lists, the lengths of these lists and/or 
the turn around time for reimbursement?
    Mr. Carlstrom.  I just saw these lists a week ago, I guess. 
One thing that impressed me was, I have to admit, last time 
around there were some two or three-year gaps between events 
and payments.
    As I look at this list in any category of the reimbursable 
official and ceremonial functions, or the political functions, 
or the nonreimbursable official and ceremonial functions, the 
gap has closed in terms of the payment time. That is my 
observation.
    Mr. Price.  Just perusing the list quickly, it would appear 
on the reimbursable official and ceremonial events, which 
number, what would you say?
    Mr. Carlstrom.  Fifty.
    Mr. Price.  Fifty. There are, according to my count, about 
four in which the reimbursement time was six months or more. 
So, that would seem to bear out what you are saying, that the 
reimbursement time has been rather dramatically shortened.
    Mr. Carlstrom.  I counted two this morning, but you are 
undoubtedly right. That would be about 2-percent, I guess.
    Mr. Price.  Actually, no. I think you are right. I think a 
couple of mine come in at less than six months.
    Mr. Carlstrom.  Down to one-percent.
    Mr. Price.  What about the length of the list, especially 
on the political events. That is a much shorter list.
    Mr. Carlstrom.  Well, you are asking me for my observation. 
The first time I looked at it, I was surprised that there were 
only five of those events listed.
    Mr. Price.  Again, the reimbursement times have been 
dramatically shortened.
    Mr. Carlstrom.  I think dramatically shortened because of 
the kind of testimony that we gave last year and the Executive 
Residence has responded by implementing a much better system of 
accountability.
    Mr. Price.  Good. Lest we forget what the bottom line in 
this hearing is, it is a budget request; a budget request for 
next year for operating accounts at the Executive Residence. I 
want to focus on the increase you are requesting in those 
accounts--an increase of $646,000. Is that right?

                          increases to budget

    Mr. Carlstrom.  That is correct, sir.
    Mr. Price.  How does that increase break down?
    Mr. Carlstrom.  I can provide it for the record, since our 
time has been shortened, or I can go through it item-by-item.
    Mr. Price.  Well, the bulk is for the 3.1-percent COLA pay 
raise. Is that correct?
    Mr. Carlstrom.  Yes; the fixed increases.
    Mr. Price.  All right. And $153,000 for two FTEs.
    Mr. Carlstrom.  That is correct.
    Mr. Price.  What are those? How are those positions going 
to be utilized?
    Mr. Carlstrom.  It goes back to the public law that was 
enacted last year that requires a better accountability system. 
As we move forward with implementation of that system, it will 
require an accountant that will track the bills that are 
provided on a monthly basis.
    It will also provide for a computer technician or a 
computer engineer, if you will, and provide for a computer 
system, a new system, that will cost approximately $50,000.
    I can go through what the current accounting office of one 
person does and then illustrate to you the additional duties 
that are going to be performed by that one person, or if you 
would like, I can provide it for the record.
    Mr. Price.  Well, I think providing a more detailed account 
for the record would be helpful.
    Mr. Carlstrom.  Yes, sir.
    [The information referred to follows:]

    The Executive Residence has an Accounting staff of one 
person. The Accountant in the past has been responsible for 
capturing all costs associated with Official and Ceremonial 
Functions of the President, preparation of the detailed file 
for each function, preparation of bills for reimbursable 
functions, tracking the payments of reimbursable functions, 
preparation of all Service by Agreement payment vouchers and 
assisting the Administrative Officer in budget planning and 
execution.
    The requirements in the FY98 budget legislation require 
additional duties to be performed by the Accountant Office. The 
Executive Residence has had to set up the $25,000 revolving 
fund for functions sponsored by the National Political Party of 
the President which must be tracked and coordinated with the 
National Park Service Finance Office. Estimates for all 
functions are now provided so that prepayment can be collected 
as required by the new law coordinated with the Social Office 
and Administration Officials. The new prepayments tracked and 
reconciled with the actual costs of the function resulting in a 
second billing for the issuance of a refund. The new law 
requires that billing for a function be prepared within 60 days 
from the billing date. If necessary, the National Park Service 
must be notified to impose late fees and penalties for late 
payments. Detailed reports must be maintained on the payment 
statistics for all reimbursable functions and sent to congress 
annually. These new tasks along with assisting the 
Administrative Officer and Accountant with existing job 
requirements justify the addition of this position.

    Mr. Price.  In relation to our previous discussion, though, 
is it not true that a good portion of these duties will involve 
the billing for reimbursable functions to ensure prompt and 
accurate repayment?
    Mr. Carlstrom.  Yes, there will.
    Mr. Price.  So, there should be some continuation of the 
rather hopeful trend we have seen already in terms of complete 
and prompt reimbursement.
    Mr. Carlstrom.  I would definitely anticipate that.
    Mr. Price.  The bottom line is, this is basically a flat 
budget request. You are requesting two additional positions, 
but for the most part this is a continuation of last year's 
level of funding.
    Mr. Carlstrom.  That is correct, sir.
    Mr. Price.  Thank you very much. Thank you, Mr. Chairman.
    Mr. Kolbe.  Maybe I can try to get a couple of questions in 
there before we go break here. Mr. McDaniel, how many years 
have you been appearing before this subcommittee?
    Mr. McDaniel.  Since 1983.
    Mr. Kolbe.  You made the comment that no one has ever asked 
about political events. Just to refresh your memory, I think if 
you go back and look at the record in 1993 or 1994, I do not 
know which year it was, Ms. Pelosi asked several questions 
about political events in the White House by the previous 
Administration.
    Mr. McDaniel.  I am sure the Chairman is correct, sir.

                        Cost of Political Events

    Mr. Kolbe.  So, it is not an unknown thing for that to 
happen. Let me leave the domestic staff for the moment, and go 
over to the political events that were asked about a moment ago 
here.
    In documents that you have given us, you have showed there 
were only four reimbursable political events. This is a huge 
decrease from previous years. For example, in 1995, there were 
46 events for a total cost of $585,000. In 1997, there were 73 
events; $639,000.
    I know the political events are scheduled by the social 
secretary, but have they provided you or do you have any 
explanation for what the tremendous drop in the number of 
political events in the White House? It looks for all practical 
purposes like it has virtually been stopped.
    Mr. Carlstrom.  No, I do not. As you say, the social 
secretary makes determinations. The Executive Residence, 
responds and provides services necessary to carry them out. I 
could make some of my own observations, but I do not know 
whether they are correct, sir; not an election year.
    Mr. Kolbe.  No, that does not quite work because you go 
back to 1993. It does not jive with that. Let me get to the 
real issue here. In 1996, there were 73 reimbursable political 
events; forgetting the domestic staff.
    We are now talking about reimbursable events and overtime 
costs for that, with the total overtime costs of $123,000. Last 
year, there were four political events with a total 
reimbursable time cost of $149,000. Can you tell me, are they 
broken down that those four events actually cost $149,000?
    Mr. Carlstrom.  I cannot say that it does.
    Mr. Kolbe.  In overtime.
    Mr. Carlstrom.  I cannot say that it does, but we can 
certainly provide for the record what that information would 
be.
    Mr. Hoyer.  Mr. Chairman, the lawyer in me is constrained 
to say that you are posing a question which adopts a premise 
which may or may not be true, in that the overtime is in fact 
related to those events as opposed to----
    Mr. Kolbe.  No. It is. I mean it specifically is related to 
those events; reimbursement for those events.
    Mr. Hoyer.  Do we have such a list? We can ask the 
Executive Residence to provide it.
    Mr. Kolbe.  That is what is puzzling. I do not understand.
    Mr. Carlstrom.  I do not have it.
    Mr. Kolbe.  I do not understand why four are costing 
actually more than 73. I am not making any charge here. There 
is no rational explanation for this.
    Mr. Carlstrom.  I do not know the cost of the 73 events. If 
I added these events up, I could come up with a cost.
    Mr. Kolbe.  These are just overtime costs. This is not the 
total reimbursable cost. This is the overtime cost.
    Mr. Carlstrom.  But as a part of that total cost, then some 
of it is overtime. I do not know what that percentage is. Nor, 
do I know what the 73 events were back in, what year was it, 
1996?
    Mr. Kolbe.  Yes, 1996.
    Mr. Carlstrom.  I do not know what the total of that is and 
what proportion would be overtime or why. I would assume the 
type of event probably had something to do with the overtime.
    Mr. Kolbe.  Well, again, it would be helpful if we had some 
information; if the White House would assist us with this.
    Mr. Carlstrom.  Yes, sir.

                         Staff Working Off-Site

    Mr. Kolbe.  Something odd is happening here. Again, I am 
making no allegations or charges here, but something odd has 
happened. One possible explanation is that these events have 
been moved off the White House grounds, so they are not 
reimbursable, but they are being supported by White House 
staff. That would not normally be the case; would it? The White 
House staff would be used at a hotel function?
    Mr. Carlstrom.  No, sir.
    Mr. Kolbe.  You have no explanation then for why four cost 
more than 73 cost in overtime.
    Mr. Carlstrom.  I gave you the best observations I can.
    Mr. Kolbe.  We have only four minutes. We had better be on 
our way. We will come back. We will recess. We have two votes; 
this vote immediately followed by one other. Then we will have 
a long period of time. So, we will resume as soon as we come 
back. The committee will stand in recess.
    [Recess.]
    Mr. Kolbe.  The subcommittee will resume its hearing. My 
understanding is we have an hour and a half until about the 
next vote. So, we hope to finish both parts of this hearing so 
that we will have time this afternoon for the Office of 
Management and Budget.

                 Additional FTE for Reimbursable Events

    I just have one final question, before we had the recess, 
on this issue of the reimbursable political expenses. I am 
wondering if you can tell us about the need. If there are only 
four reimbursable political events, why is there a need for one 
full-time additional employee--an accounting technician--to 
track these events?
    Mr. Carlstrom.  Right.
    Mr. Kolbe.  I am wondering what we need that person for.
    Mr. Carlstrom.  Well, it is not just the political events.
    Mr. Kolbe.  It is all reimbursable events?
    Mr. Carlstrom.  Yes.
    Mr. Kolbe.  I have a question on that. I do not have that 
number. What is the number? Okay, fiscal year 1997 was 50 of 
those events. Is that correct? Sorry; the non-political.
    Mr. Carlstrom.  Reimbursable official and ceremonial 
functions of the President. I counted them up. That is my 
count, 50.
    Mr. Kolbe.  Well, we can both count the same. So, this 
individual is needed for both. The fact is that the number of 
political events dropped so dramatically to only four. So, you 
have a total of 54 events. That still does not cause the White 
House or you to question whether or not you need this full-time 
additional individual for tracking those?
    Mr. Carlstrom.  No. There are so many other duties that 
this person is responsible for. The accounting office is just 
one, it does not cause me to question this request. It is 
something that is needed.
    Mr. Kolbe.  Okay. Mr. Hoyer.
    Mr. Hoyer.  To make the point that the reimbursables, 
therefore, incorporate not just political events. They are not 
segregated in that sense. These are all reimbursable events, 
whether by so-called political, that is to say, partisan 
organizations as well as the American Legion or the Chamber of 
Commerce.
    Mr. Carlstrom.  The non-political.
    Mr. McDaniel.  Yes, sir.
    Mr. Hoyer.  Let me ask you a question to tread on the 
substance that Mr. Price pursued. Tell us, if you will, is the 
White House physically in good shape?

               Physical Condition of Executive Residence

    Mr. Carlstrom.  Well, we have done a considerable amount of 
work, going back to the removal of the paint and repainting, 
repointing all of the brick work. That work was done over the 
last ten years, Jim.
    Mr. McDaniel.  Yes.
    Mr. Carlstrom.  Roughly. That did a lot to stabilize the 
House itself; 132 rooms in the historic section. We have done a 
lot of work on the sash and windows. We have sealed many of 
those areas, if not all of them. So that we have improved the 
tightness of the House, if you will, and improved the condition 
of the wood around the historic window panes and other window 
projects.
    We have completed the roof, as I indicated, which was a 
major event that will prevent further deterioration on the 
interior of the structure. The heating-ventilation-air-
conditioning system is nearing completion after many years.
    It took many years because it was determined some years ago 
not to move the Family out of the residence. So, we had to work 
around them, so to speak. We have done a lot of work on the 
interior, and keeping it as it is, and as it is intended to be 
a museum, and of museum character and quality.
    So, the assessment is up-to-date with the work that is 
ongoing. It is improving. As to whether or not it is in good 
shape, Jim, I would defer to you on that. There may be other 
projects that are necessary now. We have shown an interest in 
establishing a permanent repair/rehab account, if you will, for 
the White House to ensure that it stays in that condition. So, 
Jim, you may want to allude on that.
    Mr. McDaniel.  Mr. Hoyer, I think this committee in the 
past and the present has made absolutely sure that we focus our 
energies on making sure that we have a White House that is in 
good condition for the people of this country to visit and to 
be proud of as a symbol.
    Between the work of this committee and your colleagues who 
support the National Park Service, several projects have been 
completed. We now have actually come to the point where this 
summer we will be providing to the public a draft plan, a 20-
year master plan, for the White House and the parks around the 
White House to take this powerful symbol of our democratic form 
of government into the next millennium.
    Mr. Hoyer.  To reiterate, Mr. McDaniel, the focus of the 
Park Service has primarily been to look after the physical well 
being and maintenance of the White House and its grounds. Am I 
correct?
    Mr. McDaniel.  Yes, sir.
    Mr. Hoyer.  I have no further questions, Mr. Chairman.
    Mr. Kolbe.  Ms. Meek.
    Ms. Meek.  No further questions, Mr. Chairman.
    Mr. Kolbe.  Mr. Price.
    Mr. Price.  No further questions, Mr. Chairman.
    Mr. Kolbe.  Mr. Istook.
    Mr. Istook.  No questions.
    Mr. Kolbe.  Mr. Forbes.
    Mr. Forbes.  No questions.
    Mr. Kolbe.  I have some other questions, but I will submit 
them for the record.
    I have a few questions dealing with the reimbursable 
political activities as it relates to the legislation last year 
requiring the--well, let me just ask at least one of these 
here.
    Mr. Carlstrom, I was very pleased to hear you say that as 
the result of these provisions, that accountability has been 
improved. I think this subcommittee can take some credit for 
doing that by requiring these pre-payment procedures.
    The procedure we required is that these be prepaid in 
advance. We have a deposit on-hand from the political parties 
in order to cover those. Let me just ask, to your knowledge, 
has that deposit been received?
    Mr. Carlstrom.  Yes, it has.
    Mr. Kolbe.  It has been received, okay. Has any of it been 
used as a revolving fund yet or has it all been expended? Is 
there still some in that deposit account?
    Mr. Carlstrom.  I believe it was used once and is in the 
process of being replaced.
    Mr. Kolbe.  Being replaced.
    Ms. Meyers.  It has been replaced.
    Mr. Carlstrom.  It has been replaced.
    Mr. Kolbe.  Exactly what we intended it to do. I am 
delighted to see that. I will have a few other questions for 
the record on that.
    With that then, we thank you for your participation here 
today. I want to say in closing, that the frustration that I 
expressed earlier was certainly not directed to the Park 
Service, which I think does an extraordinarily competent job.
    I hope you will realize that, as uncomfortable as it may 
seem to you today my frustration is directed at the White House 
personnel who I believe have not been very helpful and very 
clearly as the GAO has made it clear, has not been terribly 
helpful in trying to get this information that we have asked 
them to do.
    It is not directed at you personally. I thank you very much 
for your participation today. Thank you. With that, we will 
dismiss this panel. We will go to the next.


[Pages 33 - 69--The official Committee record contains additional material here.]



                                          Thursday, March 12, 1998.

               EXECUTIVE OFFICE OF THE PRESIDENT AGENCIES

                                WITNESS

ADA L. POSEY, DIRECTOR

                              Introduction

    Mr. Kolbe.  Thank you, Ms. Posey. If you all will take your 
seats please, we would like to get started here. We are behind 
schedule, obviously. We appreciate your being with us here.
    I am pleased to welcome back Ada Posey to this 
Subcommittee. Ms. Posey will be testifying on the fiscal year 
1999 appropriation request for nine separate accounts that make 
up the Executive Office of the President that is funded through 
this Appropriation Subcommittee, excluding the Office of 
National Drug Control Policy and the various programs funded by 
ONDCP.
    The Executive Office of the President is requesting a total 
of $216.6 million for the coming year, an increase of $16.7 
million or 8.4 percent. Almost all of the increase is targeted 
to the Office of Administration where the President is 
requesting $40.5 million.
    That is an increase of more than 40 percent. In general, 
although this is a current services budget, almost all of the 
funds are targeted to computer modernization; more 
specifically, the renovation and replacement of computer 
systems to make them Y2K or year 2000 compliant.
    Ms. Posey, there really is not any ambiguity at all or 
should not be about how this Subcommittee feels about the 
computer modernization efforts. We are sticklers and we have 
been with all of the agencies that come under our jurisdiction 
for the details. Frankly, we have had the wool pulled over our 
eyes on a couple of occasions by some of the larger agencies. 
We are determined that this will not happen again.
    We are also determined, to the extent that we can make a 
difference, to make sure that every agency of the Federal 
Government is Y2K compliant.
    In this regard, although I have been extremely frustrated 
with the foot dragging on developing a modernization blue print 
for the White House, I have reviewed the information technology 
architecture that you submitted to the Committee, just a few 
days ago, February 28th.
    Quite frankly, I am very pleased with the progress that 
this shows. I just wish it had not taken so long; two years of 
fencing off the resources to get your attention on this. Having 
said that, I also do see some gaps in the architecture.
    In particular, I am concerned about the lack of details on 
the costs of this endeavor, as well as the mechanism and 
processes that are in place to assure that the top management 
is giving this project the attention it needs.
    If there is one lesson we have learned on this 
Subcommittee, it is that no modernization effort will succeed, 
no matter how big or small, unless top management is committed 
to it.
    Over the 1995 to 1997 period, this Subcommittee has given 
the White House $16.5 million for ADP purchases. That does not 
include the $3.6 million provided last year.
    This request has jumped to $12.2 million for the coming 
year. Ms. Posey, you have made progress, but we are not there 
yet. My concern is that we may not be ready to spend the $12.2 
million in the way that ensures that the White House has 
information technology it needs to meet its fundamental 
business requirements.
    I say that, not as a technological expert, but as one who 
has expressed these concerns with other agencies and has gotten 
more involved in this issue, and certainly have been learning 
something about it.
    I look forward to hearing your testimony. I certainly 
promise that I am going to keep an open mind. You have a fair 
shot at convincing me that the $12.2 million is not going to be 
wasted.
    Finally, the recent activities surrounding the Independent 
Counsel's investigation has given me, and I know other Members 
of this Subcommittee, serious concern about the way in which 
the White House Office of General Counsel is being used to 
provide for the private defense of the President.
    Given that federal funds are available only for the support 
of the President as he meets his official, ceremonial, and 
statutory responsibility, I hope, certainly, that this is not 
the case. But I think many Members of this Subcommittee will 
look forward to hearing your clarification on this matter.
    Mr. Kolbe.  Let me recognize Mr. Hoyer for opening remarks. 
Mr. Hoyer.
    Mr. Hoyer.  Well, Thank you, Mr. Chairman. I want to 
welcome Ms. Posey back to the Committee and her colleagues, Mr. 
Lindsey, and Ms. Crabtree, and others. She has a difficult job 
and very much in the spotlight.

                EXECUTIVE OFFICE OF THE PRESIDENT BUDGET

    Ms. Posey is testifying in support of nine accounts 
relating to the operation of the Executive Office with a total 
request of $112.4 million, which excludes, of course, the 
Executive Residence.
    This is a budget hearing. I certainly hope that we can 
review this funding request with objectivity and leave the 
political discussions to other more appropriate forum.
    Ms. Posey, as I look down this chart of accounts, it 
appears that, as the Chairman has pointed out, with the 
exception of the $12 million for your needed computer 
modernization expenses, which as the Chairman rightly points 
out, this committee has been very concerned about not just with 
respect to the White House, but with respect to all federal 
agencies, particularly as it relates to the Y2K problem, which 
is endemic, not only in the public sector, but in the private 
sector as well your operational increases are about at 
inflation. I want to say that I think the Administration has 
done very well in keeping its costs in line within the White 
House. The impact on the White House of technological changes, 
obviously, in the area of electronic communications, I am 
amazed that you are able to keep most of your operational 
increases beyond that in check.
    I believe that it is absolutely imperative that we give the 
Executive Office of the President adequate resources to do its 
job. These appropriations must provide high quality support, 
maintaining and upgrading a sound infrastructure that meets the 
needs of the Presidency.
    The President is the Executive of all the people. Once 
elected, he has the awesome responsibility of presenting the 
case of the United States to the world, as well as projecting 
the domestic agenda of the nation. I look forward to your 
testimony and to any further explanations that you have to 
give. Thank you, Mr. Chairman.
    Mr. Kolbe.  Thank you, Mr. Hoyer. Let me ask any other 
Members if they have opening statements. Mr. Livingston.
    Mr. Livingston.  Thank you, Mr. Chairman. If I may, I have 
to express a concern I have. If I may take this opportunity to 
do it, I would appreciate it. We are glad to have you.

                          WHITE HOUSE COUNSEL

    We do not wish, Ms. Posey and others, to bear down on the 
messenger. The fact is you are here and so are we. We have some 
questions to ask that concern us greatly. There has been a good 
bit in the press and, in the words of the Washington Times, 
about the fact that the Counsel's Office in the White House has 
become the largest and most expensive West Wing legal operation 
in history.
    It now stands at 34 attorneys, para-legals, and 
researchers, which is about 10 percent of the total White House 
salary budget of $24.3 million. I would simply preface my 
comments with the question that I hope you will address in your 
opening remarks.
    The question is how do you and the White House define the 
line between the use of legal services with taxpayers' funds: 
(a) for official duties of the President and the First Lady, 
and (b) as distinguished from the personal benefit of the 
President and the First Lady?
    It is a very serious question. In fact, it is based on 
allegations in the press that members of the Counsel's Office 
have operated as a sort of taxpayer-funded private legal 
service to the President and the First Lady.
    Highlighted by Council Bernard Nausbaum, when he and former 
Deputy Council Vincent Foster, spent his time at the White 
House working on the Clinton taxes and White Water issues, and 
then subsequently died.
    Mr. Nausbaum refused to allow high ranking Justice 
Department Officials to participate in going through the papers 
that Mr. Foster left behind.
    Secondly, that Mr. Nausbaum's signature was on a White 
House request to the FBI for the private background files of 
ousted White House Travel Office Director Billy Dale, and on 
requests for some 900 other confidential FBI files of former 
Republican White House staffers. That one, I will come back to.
    Next, Counsel Jack Quinn; the Counsel's Office worked to 
keep damaging documents from Congressional committees 
investigating Whitewater and the Travel Office scandal. That 
obviously even went so far as to doctor titles of memos, 
according to the Washington Times, memos that he was forced to 
hand over to Congress so as to remove references to Mrs. 
Clinton's involvement in Travelgate.
    That the Counsel's Office also advised and debriefed Mrs. 
Clinton on her appearance before the Grand Jury to discuss her 
law firm billing records that had disappeared and reappeared 
two years later after being subpoenaed.
    That Counsel, paid for by the U.S. taxpayer, pushed claims 
of attorney/client privilege, which were rejected by the Eighth 
Circuit Court of Appeals. That the Counsel's Office, under 
Charles Ruff, has been deeply involved in Clinton's full court 
press against Mr. Starr's investigation into the Monica 
Lewinsky affair and on and on.
    Likewise, White House tax dollars have not paid the 
salaries of Mickey Cantor, who is currently the political 
advisor, along with Harold Icky's and Harry Tomlinson's. They 
are not paying their salaries, but the White House is providing 
office space and secretaries to aid them at the behest of the 
taxpayer. Like, Mr. Sidney Blumenthall, who was recently in the 
press condemning his treatment as a representative of the 
press, is a paid employee of the White House, paid for by 
taxpayer's dollars.
    Presumably using his salary, his tax dollars that he is 
spending and absorbing, and using for his own sustenance to 
launch his attack described by James Carville as open on Mr. 
Starr and his aides.
    Then when you combine the fact that they have got these 
some 34 lawyers on the payroll, which is unprecedented when it 
is compared to previous Presidents', to this whole issue of 
files that were gotten by the White House from the FBI.
    The man in charge of security in the White House, Craig 
Livingston was presumably perusing those files. We still do not 
know who hired him.
    When you add that to the fact that the President's private 
defense team, whether paid for by the taxpayers or otherwise, 
has been described by the President's friend, Dick Morris, as a 
rag-tag band of private investigators, or at least he described 
the people that they hired a rag-tag band of private 
investigators, to allegedly dig dirt up on the President's 
opponents.
    That federal tax dollars went to a group called 
Investigative Group International, IGI, which is run by a 
fellow by the name of Terry Lindsey, the founder and chairman, 
who served as an assistant chief counsel in the Senate 
Watergate Committee.
    He was criticized last year as co-authoring a proposal to 
dig up dirt on Senator Don Nichols and his wife. When you 
consider that the people who have been associated with IGI have 
been people who have come and gone from the Clinton 
Administration in one official capacity or another, including 
Larry Potts, a former FBI official who was in charge of the 
Ruby Ridge Incident, Ricky Sideman, a person who was currently 
at the Justice Department in a high-ranking position who was in 
charge of the efforts to derail the nominations of Robert Bork 
and Clarence Thomas a few years ago. She is a former IGI senior 
investigator. Howard Schapiro was the chief counsel to the FBI. 
Brook Sheer who has served as an aide to Hillary Clinton on the 
1992 Campaign and is a former member of IGI.
    Coty Sheer, who is Brook Sheer's twin brother, was at the 
White House or had back channel connections to the White House. 
Ann Lazuto, former IGI employee who is now spokesman for the 
National Security Council.
    You read the accounts that IGI has been instrumental in 
digging up background information on a potential enemy's list 
of the Administration. That they are described by Dick Morris 
as being the White House secret police. Then I have to come to 
the conclusion that taxpayers dollars have been misused, 
misappropriated, misspent, and diverted for the purposes of 
playing politics at the behest of the White House rather than 
conducting official responsibilities at the behest of the 
United States taxpayer.
    We are not talking about small change. If we are talking 
about the salaries for 34 attorneys, para-legals, and 
researchers, plus the secretaries, the office space, and all 
that goes into maintain those people. We are talking about 
serious money used by this Administration for its own purposes, 
for its purposes other than that for which the President of the 
United States was elected to office.
    Ms. Posey, I am concerned about that. I apologize to the 
Committee for taking the time to describe my concerns, but I 
share Dick Morris' fear that taxpayers' money is being used to 
fund an investigation squad to go after enemies of this White 
House. That has to stop. It has to stop immediately. Thank you, 
Mr. Chairman.
    Mr. Kolbe.  Thank you Mr. Chairman of the Committee. Mr. 
Hoyer, briefly, then let us get to Ms. Posey.

                      Walker and Nussle Memorandum

    Mr. Hoyer.  Mr. Chairman, I thank you. I respect the 
Chairman of our Committee's observations. Earlier, I referenced 
a memorandum, about as to why expenses are incurred. I want to 
say at the outset that I think it was one of the great mistakes 
of this Administration to hire Dick Morris for anything. It was 
a great mistake for the Majority Leader of the United States 
Senate, Trent Lott, to hire him for anything.
    I would not rely on the representation of Dick Morris if my 
life depended on it very frankly. My opinion of him could not 
be much lower than it is. Having said that, I want to reference 
a memorandum, a memorandum to all House full and subcommittee 
chairmen.
    This memorandum is dated April 23, 1996. All of the 
recipients of this were Republican leaders at the House of 
Representatives. It is from Bob Walker and Jim Nussle, two 
close allies of the Speaker and leaders of his.
    On behalf of the House leadership, we have been asked to 
call all committees for information that you already have on 
three subjects listed below. We are compiling information for 
packaging and presentation to the leadership for determining 
the agenda.
    You are a tremendous source for this project. The source 
for this project is taxpayer-paid staff of committees of the 
Congress of the United States. In this case, the Majority staff 
of the Congress of the United States.
    The subjects are waste, fraud, and abuse in the Clinton 
Administration, influences of Washington labor union bosses/
corruption, and examples of dishonesty or ethical lapses in the 
Clinton Administration. Please have your staff, I am presuming 
this is to the committees, and therefore it is taxpayer staff, 
review pertinent GAO reports, Inspector General reports, or 
committee investigative materials, or newspaper articles.
    The Washington Times has been cited; a great friend of this 
Administration as we all know, or departments and agencies 
within your jurisdiction that expose anecdotes that amplify 
these areas.
    Send your material to Jenny Thomas, H-226, U.S. Capitol or 
fax to 6116. We need this information as soon as possible; no 
later than the close of business April 26th. I would say to the 
Chairman that I understand his concern. I am sure that he was 
very concerned about this as well.
    To think that taxpayers funds would be spent by the House 
of Representatives to try to get, and I use that term 
advisedly, the President, the First Lady, and this White House. 
I am not talking about the Administration or Executive 
Department of Government. I am talking about this President, 
this First Lady, and this White House.
    Mr. Livingston.  Would the gentleman yield?
    Mr. Hoyer.  To you, sir?
    Mr. Livingston.  For just one comment. I appreciate the 
Gentleman yielding. I would just say that I think the Gentleman 
has amply pointed out that that is not a very wise memo. In 
fact, that is probably a pretty dumb memo. It does not negate 
any of the facts to which I have just alleged.
    Mr. Kolbe.  With that, we are going to get on with the 
hearing here. Ms. Posey, we will call on you for an opening 
statement and hope that you can keep it as brief as possibly. 
Obviously, as always, the full statement gets put in the 
record. I know Members will have many questions here.

                      Summary Statement--Ada Posey

    Ms. Posey.  Certainly. I will abbreviate my comments.
    Good morning, Mr. Chairman, again, and Members of this 
Subcommittee. It is an honor to appear before you once again to 
present fiscal year 1999 budget requests for the Executive 
Office of the President and accounts.
    I want to start by telling you why I am so thankful that I 
have the opportunity to serve in the EOP, as we call it, and to 
enable the Executive Office of the President to face the 
challenges and seize the opportunities presented to us by these 
ever changing times caused by daily advances in technology 
associated with the information age.
    Such challenges remind me of my grandmother, Mrs. Ada 
Barryman who was recently recognized by this Congress in the 
Congressional Record when the Honorable Louis Stokes 
acknowledged her as the first African American to be appointed 
to the Ohio State Housing Board in the 1940s.
    She was born in 1910 in Troy, Alabama. When she wasyoung, 
her family fled to Ohio to escape the segregation of the south. She 
resided in Warren, Ohio for 45 years and is credited with founding the 
Warren Chapter of the NAACP, as well as serving as President of the 
Warren Urban League Board, and is a Member of the Trumble County 
Welfare Board.
    Throughout her life, she was faced by the dynamics of this 
changing country. She sought to make a difference. She sought 
to challenge segregation. She challenged inequity and the 
deficiencies of the political system, and she challenged our 
society.
    As my grandmother lead my family into the industrial age, I 
now find myself in the position to help lead the EOP into this 
dynamic information age. The EOP must adapt to this radically 
changing world and economy.
    The explosion in computer technology, especially the rise 
of the Internet and e-mail are transforming government and the 
way it responds to the American people. As the seat of 
Executive authority, the White House is in a position to use 
the new information technology to involve the American people 
in their government in real time in a way that was never 
possible before.
    At the same time, the new information technology poses new 
challenges from the year 2000 problem, to the sheer inundation 
of the EOP system. The number of hits to our WEB site is 
increasing exponentially. Before June 1996, we received an 
average of 15 hits per day. We are now up to an average of 
8,787 hits per day. In 1994, the number of records captured by 
our automated records management system, we call ARMS, was 1.7 
million. In 1997, it was 4.1 million. We estimate that by the 
year 2000, we can expect to be managing 30 million records.
    While we have witnessed these exponential increases, our 
information technology infrastructure has not been able to keep 
up with the ever decreasing demands of change, in order to 
provide the EOP with the tools necessary to most effectively 
represent the American public.
    I now present you with the EOP's budget for fiscal year 
1999, since the most significant increase is related to the 
EOP's 12.2 million Capital Investment Plan, which is critical 
toward taking the EOP into the next century.
    I will address this first. In order to understand where we 
are going, however, it is necessary to understand where we 
were, where we have been, and where we are now. In the year 
just 365 days since I last testified before you, the Office of 
Administration has engaged in a methodical plan to revitalize 
its information technology, a plan begun by my predecessor, 
Frank Reader, when he formed the EOP's Information Technology 
Advisory Board in 1995.
    Mr. Kolbe.  Let me just interrupt you for a moment. You 
have a 12-page statement. So far, you have gone through all of 
it. We all have that in front of us. Could you summarize the 
few points?
    Ms. Posey.  I certainly do not plan to read all 12 of the 
pages, sir.
    Mr. Kolbe.  Okay.
    Ms. Posey.  Let me say that, again, with the rapid 
advancement of information technology in the past 20 years, 
spanning several administrations, EOP agencies were 
independently constructing custom, redundant, inconsistent, 
incompatible, and inaccessible systems.
    I am pleased to report that we have provided to you, first 
in July of 1997, our information Technology Architecture Plan, 
a document that built on the five-year plan originally 
submitted in 1996 by my predecessor.
    Logicon, which are outside consultants, indicated that we 
believe the EOP is caught in a double bind. It has too many 
legacy systems that cannot be shut down without a functional 
replacement. It does not have the budget to maintain the status 
quo in the face of escalating maintenance support costs while 
attempting to accomplish strategic improvements.
    I will be glad to respond to any of your questions. I 
believe that the information technology submission that we have 
for you is the most important part of our budget submission 
today. I will be glad to answer any other questions that you 
may have and hope that my entire statement be placed in the 
record.
    Mr. Kolbe.  Trust me, the entire statement will be in the 
record.
    Ms. Posey.  Thank you.
    Mr. Kolbe.  Thank you.
    Ms. Posey.  And I did not read all 12 pages.
    [The statement of Ms. Posey follows:]


[Pages 79 - 90--The official Committee record contains additional material here.]



    Mr. Kolbe.  You certainly did not.
    Ms. Posey.  Okay.

                          White House Counsel

    Mr. Kolbe.  And I appreciate you summarizing the important 
parts of that. I would quite agree that the information 
technology is at the heart of the issues with you. It may not 
be at the heart of the political issues we are going to discuss 
today, but I can tell you that the vast majority of my 
questions have to do with that.
    However, because we are going to have a lot of interest in 
the issues of the White House Counsel, I am going to ask my 
first and only set of questions on that, just to try to 
establish the ground work for some other questions which may 
come up here.
    I hope just so that everybody is dealing from the same data 
base here. Let me say also, since we have a very full number of 
people here, we will strictly adhere to the five-minute rule.
    In the testimony before the Subcommittee in 1995, your 
predecessor indicated that no White House staff, specifically 
talking about the attorneys and the Counsel's Office, as it 
related to the Whitewater investigation, were acting as lawyers 
for the President and First Lady, ``where there is no official 
nexus.'' The question is, is there an official nexus between 
the current investigation by the Special Prosecutor, Mr. Starr, 
Judge Starr, in the matters relating toMonica Lewinsky and 
others as it relates to the President's constitutional ceremonial or 
statutory responsibilities? If so, can you define that nexus for us?
    Ms. Posey.  Sir, I would love to be able to provide to you 
a legal answer to that question. I am not an attorney.
    Mr. Kolbe.  Neither am I.
    Ms. Posey.  I will attempt to answer that question from my 
perspective as a manager. The Counsel's Office devotes their 
time to addressing the legislative, Constitutional, and policy 
agenda of the President.
    In addition to that, they perform daily counseling 
responsibilities for the White House. In addition, the 
Counsel's Office is obligated to ensure compliance with 
numerous requests for documents and information from various 
investigative entities, including Congressional committees.
    In 1997 alone, there were 600 document requests, through 
those document requests from the Burton and also the Senate 
committee. Almost a quarter of a million pieces of paper were 
submitted. Now, in addition, there are Independent Counsel 
Offices, the Justice Department, private litigators, et cetera. 
Since 1995, the Counsel has had a team of up to six attorneys 
and three para-legals devoted to responding to requests from 
investigative entities.
    The other attorneys and the staff in the office handle the 
routine matters of the Counsel's Office. Clearly, there is 
federal business done when there are Congressional requests for 
information. That information is then provided to Congressional 
and other investigative bodies. This is official business. This 
is the business that is taken care of by the White House 
Counsel's staff.
    Mr. Kolbe.  Thank you very much, Ms. Posey for your answer. 
It was totally non-responsive to my question which, of course, 
had to do with something that is not a question of the 
Congressional committees at this point; the nexus between the 
matter of the President's deposition to the jury in a case in 
Arkansas and the Monica Lewinsky case.
    What I was asking was the nexus between that and the 
official statutory responsibilities that would involve the 
White House Counsel's Office. Let me ask you, since funds are 
only to be used for official expenses in the White House 
Office, are there procedures to enforce this requirement? 
Specifically, is there an outline of those procedures?
    Ms. Posey.  I can assure you, Mr. Chairman, that all 
activities that are taking place in the White House Counsel's 
Office, and all offices of the White House, are activities that 
are to be funded and appropriate by appropriated funds.
    Mr. Kolbe.  So, they are official activities.
    Ms. Posey.  They are official activities. With regard to 
specific procedures, I do not have them at my finger tips. I 
would be glad to take that question for the record.
    Mr. Kolbe.  Yes, I would like you to.
    Ms. Posey.  If you would like me to.
    Mr. Kolbe.  I am running out of time. Can you tell me, how 
are work loads tracked in the Office of the Counsel? Most law 
firms have billable hours. Do you know if they keep track of 
their billing time or their time that they spend in some 
similar kind of fashion?
    Ms. Posey.  I do know generally, Mr. Chairman, that there 
are assignments that are given by Charles Ruff and also the 
Deputy Counsel. I do not believe that there is a tracking 
system as a law firm that is billable. Certainly, there are 
assignments given by the managers of that area.
    Mr. Kolbe.  In fiscal year 1994, the operating budget was 
$1.9 million for the Office of General Counsel. What is it in 
fiscal year 1998 and what is the request for fiscal year 1999?
    Ms. Posey.  Specifically for the White House Counsel's 
staff, sir, I do not have the specifics on that right here with 
me. With regard to the White House Office, the White House 
Office is provided with 400 FTEs, authorized FTEs, as you well 
know.
    Mr. Kolbe.  We got the $1.9 million from, I guess, your 
predecessor a couple of years ago. When you are compiling this 
budget, you do not have it down by various component offices in 
the White House?
    Ms. Posey.  I do not have the specifics now, sir. I can 
provide that to you.
    Mr. Kolbe.  Yes, I think that would be a rather important 
part of a budget request. I think we would like to have you 
provide that.
    Mr. Kolbe.  My time is up. Mr. Hoyer.
    Mr. Livingston, I will go to Mr. Hoyer and recognize you 
immediately after. Is that satisfactory?
    Mr. Livingston.  Yes.
    Mr. Kolbe.  Mr. Hoyer.
    Mr. Hoyer.  I would be glad to yield to Mr. Livingston.
    Mr. Livingston.  I just have really one question. I have a 
few for the record that I would like to submit, Mr. Chairman.
    Mr. Kolbe.  The questions will be submitted.
    Mr. Livingston.  The one question I have, Ms. Posey, if you 
could please, would you differentiate for me the use of legal 
services in the White House Counsel's Office with taxpayer 
funds, first, for official duties of the President and the 
First Lady when those are for personal benefit of the President 
and the First Lady?
    Would you tell me how your office goes about defining the 
differences between those services?
    Ms. Posey.  Mr. Livingston, I would answer by saying to you 
that all business that is conducted in the White House 
Counsel's Office is in furtherance of official business, 
official duties.
    Mr. Livingston.  All $2.5 million worth and all 34 Counsel 
were all exclusively for the President's and the First Lady's 
official business. Is that right?
    Ms. Posey.  Yes, sir.
    Mr. Livingston.  Thirty-four attorneys, para-legals, and 
researcher, all for the official duties.
    Ms. Posey.  Yes.
    Mr. Livingston.  You then would categorize the barring of 
law enforcement personnel from Vince Foster's records, the 
keeping of damaging documents from Congressional Committees in 
the White Water and the Travel Office scandal from the 
committees, the review of Rose Law Firm billing records which 
disappeared for two years despite their subpoena, the exercise 
of attorney/client privilege which was rejected by the Eighth 
Circuit Court of Appeals, and such things as the investigation 
of enemies of the Administration at the behest of that private 
group known as IGI, you would determine that these were all 
incidents of official business. Is that correct?
    Ms. Posey.  I would say that all business performed, all 
business conducted by the White House Counsel's Office is for 
official business.
    Mr. Livingston.  Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Kolbe.  Mr. Hoyer.
    Mr. Hoyer.  Ms. Posey, with respect to the Counsel's 
Office, I do not know whether you have made a study, but do you 
know whether there is any historical precedence for the level 
of inquiries made from the Congress of the United States, 
including Whitewater counsel which may or may not be related to 
official business, quite obviously, and may or may not seek 
official documents quite obviously? Do you know whether there 
is any historical precedence for the level of inquiries made to 
this White House?
    Ms. Posey.  I believe that this is unprecedented.
    Mr. Hoyer.  Let me ask you something. The Office of 
Administration, which you head, does not have within it the 
Counsel's Office; does it?
    Ms. Posey.  No, it does not.
    Mr. Hoyer.  The Counsel's Office is within the White House 
Office.
    Ms. Posey.  Yes, it is.
    Mr. Hoyer.  So that from a managerial standpoint, you do 
not manage the Office of Counsel.
    Ms. Posey.  No, I do not.
    Mr. Hoyer.  In fact, the determinations that are made by 
the Office Counsel as it relates to what appropriately the 
Office should deal with are in fact made by the Counsel in that 
office. Am I correct?
    Ms. Posey.  Yes. You are correct, sir.
    Mr. Hoyer.  Am I also correct, from what I understand your 
testimony to be that you are saying that representations made 
to you is that in fact there are no actions being taken by the 
Counsel's Office or services rendered that are not in fact 
related to the official duties and position of the President of 
the United States?
    Ms. Posey.  That is correct, sir.
    Mr. Hoyer.  Now, I would observe, and this is not a 
question, Ms. Posey, that some of the questions that you were 
asked, of course, adopt premises that have been alleged by 
newspapers, which we found to be incorrect in the past.
    I just got through a case, Loretta Sanchez, in which the 
basis for the proceedings were based upon newspaper reports. 
Specifically, the individuals on the Majority side said the 
newspapers said there must be something there. Thirteen and 14 
months' of investigation incurred thereafter, and the District 
Attorney for Orange County had a Grand Jury investigate 
everything.
    In fact, the Grand Jury found that there was no reasonable 
probability that a crime had been committed or that X, Y, or Z 
had committed a crime. It is very difficult to determine that 
at the outset, obviously. So, the newspaper reports are not 
fact. They are reports.

                executive office of the president budget

    Now, having said that, let me move on to what I believe to 
be the substance of this hearing. That is if we do not fund the 
$12.2 million that you have asked for with respect to the 
technology computerization, what will be the result?
    Ms. Posey.  The result will be that the Executive Office of 
the President's computing capabilities will be shut down.
    Mr. Hoyer.  The consequences of that would be?
    Ms. Posey.  I believe the consequences are untenable. I 
believe that the staff would have to resort to typewriters. I 
believe that we would not be able to respond to the American 
people in the way that they would expect of the Executive 
Office of the President.
    Mr. Hoyer.  Would information be lost as well that you 
would be unable to retrieve?
    Ms. Posey.  We would have paper records, probably, piling 
as high as this building and every other building in 
Washington, DC and beyond.
    Mr. Hoyer.  So that from your perspective, the $12.2 
million in fact carries out what the Committee's objectives 
were as it relates to the ability of the White House to have an 
up-to-date working information management system?
    Ms. Posey.  Yes. The Committee required us, as the Chairman 
mentioned before, to take a hard look at what we were doing and 
how we were doing it. To comply with the Clinger-Cohen Act. To 
comply with Government Performance and Results Act. To do the 
right things to put together a modernization plan that makes 
sense, that was prudent, that was reasonable, that took care of 
our Y2K problem. We have done that.
    I believe very strongly in our plan. I believe it does not 
provide for whiz-bang technology. It provides for a 
cornerstone, a frame work. That is what our information 
technology architecture provides. That is the direction that we 
are leading to.

                   white house communications agency

    Mr. Hoyer.  Because my time is limited, let me go to the 
last subject I would like to deal with in this round. The White 
House Office accounts includes funding now to reimburse the 
White House Communications Agency for non-telecommuting support 
services which was previously paid by the Defense Department.
    How is this working? Has it become more difficult to track 
costs? What management controls have been instituted to track 
costs? What is the new bill payment procedure between the White 
House and the WHCA?
    Ms. Posey.  We have developed a memorandum of 
understanding, IAGs, Inter Agency Agreements for personnel and 
audio visual services. Let me say that the reimbursement does 
not generate a need for us to invent a whole new process of 
mechanisms for approving activities.
    Certainly given the limited latitude that we have in our 
budget, as opposed to the Department of Defense, it behooved us 
to come up with some very strong internal controls to manage 
those costs.
    The White House Communications Agency bills monthly to the 
White House Office as opposed to quarterly. There are trending 
and tracking reports. There is the development of standard 
operating procedures.
    As a former auditor, an internal auditor, those are 
probably the most sound controls that you can put in place to 
track expenses. It behooves us to do that. We do not have the 
flexibility. Actually, it is not more difficult. It is more 
consuming, I would say, but we do it because it is the right 
thing to do.
    Mr. Hoyer.  Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe.  Ms. Meek.

                              fenced funds

    Ms. Meek.  Thank you, Mr. Chairman. Welcome, Ms. Posey.
    I have been reading your testimony. I notice that you are 
experiencing some system failures and some other things you 
have described here which certainly will inhibit your capacity 
to serve the President to the best of your ability.
    Certainly that is noted. However, my question is you 
endured a level of hardship imposed through the fencing of your 
funds from which you are still recovering. Would you elaborate 
on that statement and tell me what kind of problems you are 
having? Tell me how the funds were fenced or what that process 
is like?
    Ms. Posey.  Let me just say that the fencing of the funds 
was significant for us. What we essentially had to do is 
cannibalize equipment that we used for development projects in 
preparation for our Y2K assessment to fix and repair 
operational equipment that was in place.
    It had been deployed for operations, this equipment that we 
cannibalized, over the years. As a result, as I have said 
before, we had to suspend projects underway, which addressed 
our short term strategies such as advancing our Lotus Notes E-
mail System, such as our migration project from moving from a 
main frame environment to a client server environment.
    This put us behind. It certainly had an impact to our 
customers. It certainly had an impact on the morale of my 
staff. At the same time, it did provide a wake-up notice to all 
of the heads of the agencies in the EOP that we needed a strong 
management structure to manage information technology in the 
EOP.
    That is why we created the ITMT, the Information Technology 
Management Team. That team addresses and provides advice and 
counsel to me in terms of corporate decisions that are made 
with regard to information technology.
    So, I think that the fencing, of course, had an effect on 
us in both ways; a lot of hardship. We are still living with 
it. We have done a lot in the last 365 days. I think that we 
will get through and over that particular period when our funds 
were fenced.

                        legacy computer systems

    Ms. Meek.  Thank you. You mentioned something about you 
have too many legacy systems that cannot be shut down. What 
solutions have you worked out in terms of this year's budget 
application that you submitted to this committee?
    You have delineated quite a few problems that you have had, 
one, because of fencing, others because of break downs, et 
cetera. In your budget presentation, what have you asked for, 
Ms. Posey, that will help to alleviate these problems?
    Ms. Posey.  Thank you for the question. Today, I brought 
along with me Laura Crabtree who is our senior technical 
advisor to our ITMT. In terms of a person who knows how to 
break down technical information into a lay person's terms for 
all of us here and for me, I would like to defer that question 
to her and she will be glad to answer how those things have 
been affected. Laura.
    Ms. Meek.  Thank you.
    Ms. Crabtree.  I appreciate the question, thank you.
    We have had a tremendous challenge, as you are aware, at 
the EOP to get our information systems and our technology 
architecture into a standard spaced environment, and to 
position ourselves in such a way that we can respond to the 
Government Performance Results Act and the criteria cited in 
ITMRA (Information Technology Management Reform Act).
    While doing this and moving toward our Y2K evolution, we 
have had the additional challenge of working in such an 
environment where we have legacy systems, and applications and 
technology, that has exceeded its life cycle.
    In the budget that has been submitted before you, there are 
some key project areas that allow us to set the foundation in 
place in order to move forward into the next out years of 
taking advantage of our technology.
    We are moving towards basically a new focus. We have 
shifted the paradigm into user based processes and analysis. We 
are now moving the architectural platforms from legacy 
environments, such as Novell Netware Operating Systems, which 
are not Y2K compliant, into current technology operatingsystems 
such as Windows NT, so that we can then in turn build upon the 
infrastructure and implement the appropriate applications necessary to 
solve the business processes that are needed in order to affect the 
missions of the agencies of the EOP.
    Ms. Meek.  Thank you very much.
    Mr. Kolbe.  Mr. Price.

                           year 2000 problem

    Mr. Price.  Thank you, Mr. Chairman. Ms. Posey, I would 
like to add my welcome to you and Ms. Crabtree and also to Mr. 
Lindsey, whom we know for his work with our colleague Lou 
Stokes for a number of years. We are glad to have you here 
today.
    As you say in your testimony, this is mainly a continuation 
budget with only incremental changes from the previous year.
    There is one change that goes beyond that. It has to do 
with your Capital Investment Plan, which the bulk of your 
testimony is dedicated to, $12.2 million for next year. In the 
portion of your statement that you did not read, you indicate 
that about 90-percent of that amount, one way or another, is 
directed toward the year 2000 effort.
    Ms. Posey.  Yes.
    Mr. Price.  You also point out that in effect what you are 
doing here is seizing the opportunity that the year 2000 
problem offers to improve the overall quality of information 
technology services in the White House.
    Of course, the need for that is underscored by the figures 
you cite about the increased demands on the system from the 
public and otherwise. I wonder if you could elaborate on this 
year 2000 problem and the urgency with which you regard it?
    You say 90-percent of this $12.2 million is earmarked for 
that one way or the other. How is that going? Are you on 
schedule with regard to addressing this issue? What happens if 
we fall short of the budget request in terms of that specific 
issue, the year 2000 challenge?
    Ms. Posey.  Let me answer your last question first and say, 
again, that if monies are not provided for the Capital 
Investment Plan we will shut down the Executive Office of the 
President computing functionality.
    Mr. Price.  Well, I heard you say that in response to Mr. 
Hoyer earlier. That is, of course, a rather draconian 
prediction. Is that based on the year 2000 problem? Is that why 
you use that terminology?
    Ms. Posey.  Yes. It is based on the year 2000 problem. 
Laura can speak more technically to this in lay person's terms. 
We have in the Executive Office of the President old legacy 
main frame systems and other software applications that simply 
will not compute for the year 2000.
    One of the major applications that we have that is not Y2K 
compliant happens to be our E-mail Lotus Notes application. 
That is an application on our NT operating system that we use 
to communicate within the Executive Office of the President and 
outside of the Executive Office of the President.
    So, we have to update that software application and others. 
With regard to the two-for-one strategy, let me give you an 
example of one of the things that we are doing. With our help 
desk renovation, you should know that our help desk function 
resides on a non-Y2K compliant main frame system.
    This means we would not be able to communicate with our 
customers internally about what is happening with the computers 
that are on their desk tops. They would not know how to reach 
us in a sense. We would not know who is asking for what kinds 
of services.
    It is our automated trouble desk which we need these days 
for folks like me who are past the age of being able to learn 
how to use computers very easily, and software, and different 
hardware on our desk top and in our various agencies.
    What we are doing with the help desk is not only moving off 
a non-Y2K compliant mainframe, but we are also renovating it so 
that we provide information management systems within that help 
desk so I can identify, as a manager: what are the trends?
    Who needs what kinds of services where in the EOP? Who is 
having difficulty with the common software that we want to have 
in our areas? It would provide an opportunity for us really to 
capture the essence of what is going on with information 
technology through the help desk function. We are unable to do 
that at this time. So, there is a two-for here where, one, we 
move it off the main frame and put it onto a compliance system.
    Two, we renovate the function so that we can get the kind 
of information, the data that we need, to make sound management 
decisions. That is the essence of the two-for-one strategy.
    Mr. Price.  It is obvious that it promises considerable 
benefit, but the prediction of draconian consequences, if you 
are not able to move ahead, is based on the year 2000 
difficulties.
    Ms. Posey.  Yes, sir.
    Mr. Price.  Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe.  Mr. Istook.

                          white house counsel

    Mr. Istook.  Thank you, Mr. Chairman. Before my time, I 
would like to ask that the record include a letter that Mr. 
Barr has sent and asked to be put in the record. It is to the 
Comptroller General asking for an audit of the use of illegal 
services at the White House.
    Mr. Hoyer.  Reserving the right to object, Mr. Chairman. I 
do not intend to object, but I have not seen the letter.
    Mr. Kolbe.  All right.
    Mr. Hoyer.  I think it would be appropriate for this side 
to see the letter before we object or not object to it.
    Mr. Kolbe.  I have not seen it either.
    Mr. Istook.  It is fairly straightforward, Mr. Hoyer.
    Mr. Kolbe.  We will share this. If there is no objection, 
it will be placed in the record.
    Mr. Istook.  It is very straightforward.
    Thank you. Ms. Posey, thank you for being here. I 
understand that sometimes you get caught in the cross fire 
because you are not personally an attorney; are you?
    Ms. Posey.  No, I am not, sir.
    Mr. Istook.  You are certainly not employed by the White 
House in the capacity of legal counsel.
    Ms. Posey.  No, I am not.
    Mr. Istook.  That office, even though you have some 
supervisory functions for providing resources, that office 
basically functions independently of your supervision. Would 
that be correct?
    Ms. Posey.  Yes, that is correct.
    Mr. Istook.  I know there is a lot of perception that, even 
though the White House takes the position that their attorneys 
spent time answering questions, there is a lot ofpeople who 
take the position that their attorneys spend a lot of time inventing 
reasons not to answer questions. That is a controversy that I know we 
are not going to be able to settle today.
    I want to make sure that we are talking about the same 
things. The number has been mentioned of 34 attorneys, para-
legals, and researchers. Is that the accurate number of persons 
employed in the White House Legal Counsel Office?
    Ms. Posey.  At this time, I believe there are approximately 
34. I want to be sure. I do not want to give you specific 
numbers that do not jive with the reality because I do not want 
to come back to you, Mr. Istook, and say, whoops, we made a 
mistake.
    Mr. Istook.  It might range one or two from that figure, 
but that is pretty much accurate as best you know that.
    Ms. Posey.  As best I know, Mr. Istook. Also, if I can make 
this point. The White House Office budget that I present today 
has a ceiling of 400 FTE for all of the White House Offices.
    The White House Office, just like the Office of 
Administration, for which I am responsible for from time-to-
time has to expand or contract different offices based on 
needs.
    Mr. Istook.  Since we have limited time, how long then 
would you say then that it has been true that the approximate 
number has been 34 in the White House legal counsel?
    Ms. Posey.  I would not be able to answer that question 
with certitude, sir.
    Mr. Istook.  Does that number include detailees who are 
assisting the White House legal office but actually come from 
other agencies and who, accordingly, may for some period of 
time be paid for the payroll of other agencies?
    Ms. Posey.  Again, I would not want to speak to the 
specifics because I want to get the information correct for 
you.
    Mr. Istook.  I have seen a number that says there are 
approximately 12 detailee attorneys, but I am not sure if that 
12 therefore brings the number from 34 to 46 and you are not 
sure either then.
    Ms. Posey.  That is true.
    Mr. Istook.  Let me ask, because I understand you have made 
representations regarding what these people do, but they are 
not really under your supervision. So, I think it is a very 
fair question to ask how do you know?
    With whom have you briefed and prepared yourself or 
received any material to prepare yourself to make such a clear 
cut representation to this committee that the only use of their 
time has been for official purposes rather than personal 
purposes?
    Could you tell us who has provided that information to you?
    Ms. Posey.  Let me say, sir, that it is my job to 
understand the policies and practices of the various areas 
within the Executive Office of the President. I do have to 
understand that each agency or area within the White House 
complies, what they do, how they function.
    Mr. Istook.  But do they actually do what they are supposed 
to do?
    Ms. Posey.  The policy, sir. That is what I am speaking to.
    Mr. Istook.  We are trying to speak to the practice because 
it is very easy to have an official policy that may state, as 
the law does, that government resources must be used for 
official government activity and not for personal, private 
purpose. That is a criminal violation which perhaps should be 
investigated by the Department of Justice, if necessary.
    There is a great difference between having a policy and 
actually having that policy followed. Have you ever devoted any 
effort to determine whether the policy in fact is being 
followed?
    Ms. Posey.  Sir, I can assure you that I have been assured 
that----
    Mr. Istook.  By who?
    Ms. Posey.  By White House Counsel staff.
    Mr. Istook.  Who? Give us a name or names if it is plural.
    Ms. Posey.  The White House Counsel staff, the counsel to 
the President.
    Mr. Istook.  Ms. Posey, you are telling us you do not have 
personal information. We are trying to find out how we can find 
out. I am asking you who has made those representations to you? 
What individuals?
    Ms. Posey.  The chief manager of the White House Counsel 
staff.
    Mr. Istook.  That is who?
    Ms. Posey.  Charles Ruff's Staff.
    Mr. Istook.  Go ahead, please. Who else?
    Ms. Posey.  Charles Ruff is the chief manager of the White 
House Counsel's Office. He is the President's Counsel.
    Mr. Istook.  Did you inquire with him before the media 
reports of the last week? Did you make inquiries with him 
regarding whether these people were in fact performing only 
official duties as opposed to potentially performing private 
functions?
    Ms. Posey.  My staff contacted the White House Counsel 
staff to discuss what had been in the paper and, again, 
reassured, reassured once again that the policy that I spoke to 
is in fact practiced by the White House Counsel staff.
    Mr. Istook.  So, the oversight did not begin until media 
attention was devoted. I would like, if you have received, Ms. 
Posey, any sort of talking points, memorandum, e-mail, or other 
communication designed to give you guidance and information 
which would have come obviously from a person more important 
than you personally are on this, would you please provide that 
to us?
    Ms. Posey.  I will provide information to you, yes, sir.
    Mr. Istook.  So, if you have received any sort of memo or 
talking points from Mr. Ruff or anyone else who provided this 
information to you and to give you any guidance in testifying 
on this, you will provide that documentation to us.
    Ms. Posey.  I will consult with the office of the White 
House Counsel.
    Mr. Istook.  That is not the same as providing the 
information, Ms. Posey. So, you are not willing to state 
whether you will give us that information?
    Ms. Posey.  I will give you all of the information that the 
office of the White House Counsel provides to me with regard to 
that question, sir.
    Mr. Istook.  I think we are kind of going in circles on 
that.
    I understand my time has expired. Thank you, Mr. Chairman.
    Mr. Kolbe.  Mr. Istook, we will come back for a second 
round of questions. Mr. Hoyer, did you have a comment on the 
request for placing in the record, this letter?
    Mr. Hoyer.  I just want to make a comment because I have 
now read Mr. Barr's letter. Mr. Barr makes certain premises 
that may or may not be correct. Notwithstanding that, I am not 
going to object to the letter, although I cannot remember 
another Member's letter being included in the record of 
testimony, but I am not going to object to it.
    If Mr. Barr wants to make a request, I am not sure what it 
adds or detracts from the record, Mr. Istook, other than to 
continue to make allegations that cumulatively will be 
perceived as there must be something there. I will not object.
    Mr. Kolbe.  Without objection, the letter will be placed in 
the record.
    [The letter referred to follows:]


[Pages 102 - 103--The official Committee record contains additional material here.]



    Mr. Aderholt.  Thank you, Mr. Chairman. Ms. Posey, thank 
you for being here today. Of course, we have all received your 
budget request. I have one question. Does your budget request 
include salaries for support staff for any non-paid individuals 
working within the White House Complex?
    Ms. Posey.  No, sir.
    Mr. Aderholt.  Are there any other expenses that are 
incurred to support these individuals?
    Ms. Posey.  No, sir.
    Mr. Aderholt.  Okay. Thank you very much.
    Mr. Kolbe.  That was short and to the point. We will start 
a second round and hopefully we will be able to finish on this 
round. I just wanted to say, once again, Ms. Posey that I am a 
little astonished that you tell me that you cannot give me the 
information, the break down, of the component parts of the 
budget within the Executive Office of the President.
    We did not ask you specifically for it. I recognize that. I 
am asking for it now. Your predecessor did give us that 
information for fiscal years 1993 and 1994. My understanding is 
it has not been asked for since that time.
    I would just assume that it would be available. It breaks 
down about 14 different functions within the White House from 
Counsel's Office to the Immediate Office of the President, 
Legislative Affairs correspondence, the President and so forth. 
So, I would ask that you give us that information so that we 
know what we are talking about in the Counsel's Office on 1998, 
1999 both of them, the current fiscal year, and in the 
requested year.
    Ms. Posey.  I will do that, sir.
    [Clerk's note.--The information requested is provided in 
``Questions for the Record''.]

                         information technology

    Mr. Kolbe.  Let me turn very briefly to the question of 
information technology. That is very much at the heart of this 
budget request this year. Ms. Posey, you mentioned that the 
actions of this Subcommittee had demoralized your staff and 
caused a great deal of hardship.
    Then you went on to say that perhaps it provided a wake-up 
call. We have taken an even tougher position with a lot larger 
agencies--we are talking about hundreds of millions of dollars 
for computer technology, such as with the Internal Revenue 
Service.
    This is not a partisan issue. In the case of the IRS, we 
are talking about something that goes well-back into the 
previous Administration and money that turns out to have been 
poorly spent and planned for.
    This is doubly important with, as you have said, with year 
2000 compliance. What this Subcommittee was attempting to do 
and has been attempting to do has been to get agencies, whether 
it was the IRS, or in this case the Office of the President, 
any agency, and that is a part of our oversight function, to 
focus on the need to have computer technology and an 
architectural plan that works and is compliant with the Y2K.
    We have not been doing this to demoralize your staff, to 
cause a hardship. We have fenced this in order to try to direct 
the White House to get this modernization program on track. As 
I mentioned in my opening statement, I am pleased. I think the 
progress we have made has been significant. We released that 
money to you almost, I believe, 11 months ago. So, you have had 
the funds from the previous year released to you.
    We are now talking about some additional dollars. I want to 
ask a couple of questions about that. There is a noticeable 
lack of cost data included in the ITA which was submitted to 
the Committee on February 20th.
    You provided a five-year table on February 28th. The price 
tag for this modernization effort over five years is a little 
more than $39 million. Is this what we are talking about to be 
the total cost of this modernization?
    Ms. Posey.  This is what we project. Certainly the $12.2 
figure for 1999 is a number with great certitude. The years 
out, I would share with you, Mr. Chairman, that those are 
estimates. Those are our best estimates at this time.
    We have not completed, although we will in April of this 
year, our total assessment for Y2K. We have completed our 
assessment of commercial off-the-shelf hardware and software. 
We are completing busily our focus on legacy systems. At that 
point, I will have even greater certitude with our figures for 
1999.
    Mr. Kolbe.  My next question then, when you say there are 
estimates, then can we assume that these cost figures havenot 
been validated?
    Ms. Posey.  The cost figures for 1999 have certainly been 
validated.
    Mr. Kolbe.  Who develops the cost figures and the estimates 
for you?
    Ms. Posey.  My internal staff has developed those figures 
and validated those figures. Most recently with our James 
Martin Group, our Y2K assessor outside consultants, they also 
have independently validated our $12.2 million figure for 1999.

                              fenced funds

    Sir, if I could just briefly address a statement with 
regard to fencing of the funds and the morale of the staff. I 
mentioned that in terms of my position as a manager and needing 
to deal with the reality of what the Committee was telling us.
    What the Committee was telling us certainly I acknowledge 
and the entire Executive Office of the President acknowledges 
that, that was something that you were not doing just to the 
EOP. It is very difficult to tell people who are working 
extraordinarily hard, 10 to 14 hours a day, who are career 
staff like Laura Crabtree here, that I cannot get the monies to 
help them do their job, their tools, because there are things 
we have to do first.
    It was difficult to explain that to staff. I am not saying 
that it was the wrong thing to do. I am just merely saying to 
you that it was harmful with regard to me, as a manager, trying 
to continue to motivate folks to get them going. We have done a 
tremendous amount of work in 365 days. I appreciate your 
acknowledge of that.
    Mr. Kolbe.  I give you credit for that, but obviously as 
you have suggested, that is one of the jobs of the manager to 
say we have to get these things done before we can go forward.
    Imagine what some of the people in the IRS thought after 
they had spent over $4 billion and have the head of the IRS 
computer technology information, the chief information officer 
tell this Committee basically that none of the money had been 
spent in a systematic way to develop the systematic functions 
we had talked about.
    That would be fairly demoralizing. My time is up. Mr. 
Hoyer.
    Mr. Hoyer.  Mr. Chairman, I may have some additional 
questions. I want to reserve my time.
    Mr. Kolbe.  Thank you. Mr. Istook.

                          white house counsel

    Mr. Istook.  Ms. Posey, I realize that you have not been in 
your position throughout the Administration, but I have been a 
Member of this Subcommittee throughout that time. I certainly 
cannot recall any time when any witness from the White House, 
in justifying the appropriations which they sought, and that is 
what we are talking about, proper expenditure of appropriated 
money, taxpayer money, I cannot recall any instance where any 
person from the White House ever told us, we have need for more 
legal staff. I cannot recall a single incidence of that 
throughout the years.
    You, of course, I know have examined the record for your 
predecessors, as well as yourself. Can you point me to any 
occasion during this Administration where they have told us 
that some of our needs, according to them, are for more legal 
staff in the White House?
    Ms. Posey.  Last year, sir, in my testimony, I talked about 
the 1,185 staff number for the Executive Office of the 
President. I specifically recall, and I can provide that to 
you, that I spoke to the need of adding staff, not only in 
ONDCP as the result of General McCaffrey's drug program, but 
also the White House Counsel's staff.
    Mr. Istook.  How many did you say at that time were in the 
White House Counsel staff? How many did you say were needed?
    Ms. Posey.  I did not say a specific number at that time.
    Mr. Istook.  So, certainly you have never mentioned that we 
need to go from what was the prior record of another 
administration, eight people to 34 or any such number?
    Ms. Posey.  I have not, myself, no.
    Mr. Istook.  In this review, because you have testified, 
and understand, you have an obligation not to make a 
representation to this Committee unless you know it to be true. 
You are testifying, according to what you have said before, as 
though it were personal knowledge on what the legal staff is 
actually doing. Has there been any review of the actual time 
expended by different members of the White House legal counsel 
staff on particular projects?
    Has there been any reckoning to say, we expended 300 hours 
working on this task, or 50 hours working on that, or similar 
reckoning? Has there been?
    Ms. Posey.  Sir, I personally have no evidence to the 
contrary, but I would certainly be glad to take that question 
back to the EOP and the White House Counsel staff and ask them 
directly.
    Mr. Istook.  When you say you do not have evidence to the 
contrary, do you have evidence that there has ever been any 
such reckoning?
    Ms. Posey.  I do not have any evidence that there has or 
has not been.
    Mr. Istook.  So, when we try to understand, for what 
purposes have people expended time and taxpayers' money, there 
is nothing that has been in place, to your knowledge, that 
enables us to make such an evaluation, other than asking 
somebody for their conclusion, and they say well, my conclusion 
is that I have only followed the law.
    You do not really know of any records that have been kept 
by the Counsel's Office detailing the manner in which they have 
utilized their time; something akin to the time slips that are 
kept by an attorney in private practice?
    Ms. Posey.  Again, sir, I would not want to represent to 
you today what I do not know. It is important for me to find 
out specific facts. I will be glad to provide that information 
to you.
    Mr. Istook.  That is why it is so important to know if you 
have talked to anyone, other than Charles Ruff, to make your 
broad sweeping statement that 34 or so people have done nothing 
except to work on official business. Have you talked with 
anyone, besides Mr. Ruff, before you made such a sweeping 
statement to this Committee?
    Ms. Posey.  Yes, sir.
    Mr. Istook.  So, you do not really know, do you, whether or 
not they have worked exclusively on official matters? Do you 
know?
    Ms. Posey.  Mr. Istook, the fact that I personally may or 
may not know does not mean that----
    Mr. Istook.  Can we first establish do you or do you not 
know?
    Ms. Posey.  Sir, I will tell you that the policy of the 
White House Office is that there is no unofficial business 
conducted in the White House Counsel or in any other office.
    Mr. Istook.  Ms. Posey, you are evading the question.The 
question is simple. Regardless of what the policy is, do you or do you 
not know if the White House has used this large number of attorneys to 
devote themselves exclusively to official business rather than 
performing personal legal business on behalf of the President or the 
First Lady. Do you or do you not know?
    Ms. Posey.  Sir, I would, again, answer and say to you 
that----
    Mr. Istook.  Ma'am, you can answer yes or no. Do you know 
or do you not know?
    Ms. Posey.  I do not know specifically.
    Mr. Istook.  Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe.  I have no further questions. I have questions I 
will submit for the record.

                executive office of the president budget

    Mr. Hoyer.  Mr. Chairman, I have no further questions. I 
think Ms. Posey has answered the questions with respect to the 
matters of particular concern to the Chairman, myself, and this 
Committee.
    That is that we have every agency of government, large or 
small, obviously, the White House is a relatively very small 
office of the Executive Department; have the computer 
capability required of this day and age to operate effectively 
and efficiently, and to serve the American public responsibly.
    My review of your budget, particularly the $12.2 million 
leads me to believe that it is in fact justified. That is 
really effectively the only increase above and beyond 3-percent 
of adjustment, which is essentially the salary adjustments, 
both in terms of the cost of living adjustment and the step 
increases for the career personnel.
    So, Mr. Chairman, I do not have any more questions. I thank 
Ms. Posey. Ms. Crabtree, I want you to know that I found your 
testimony very, very impressive. I am in a generation much 
older than Ms. Posey.
    So, when I hear people who are as literate as you are with 
reference to information technology systems, I am very 
impressed with the younger generation and very competent that 
we are going to be successful in the years ahead. Thank you.
    Mr. Lindsey, I want to join in that you of course have been 
a colleague here in the House. I have great respect for your 
integrity and intellect. You add a great deal to the White 
House Office. Glade to have you here, sir.
    Mr. Lindsey.  Thank you, sir.
    Mr. Hoyer.  Thank you, Mr. Chairman.

                           closing statement

    Mr. Kolbe.  Thank you very much. Mr. Hoyer, Ms. Posey, Ms. 
Crabtree, and Mr. Lindsey thank you very much for being with us 
here today.
    This Subcommittee will have questions that will be 
submitted for the record. We would appreciate your prompt 
response to those so we can get the record completed.
    The Subcommittee will stand in recess until 2:00 p.m. when 
we will resume with Frank Raines, the Director of the Office of 
Management and Budget.


[Pages 109 - 303--The official Committee record contains additional material here.]



                                          Thursday, March 12, 1998.

                    OFFICE OF MANAGEMENT AND BUDGET

                                WITNESS

FRANKLIN D. RAINES, DIRECTOR

                      Chairman's Opening Statement

    Mr. Kolbe.  The Subcommittee on Treasury, Postal Service, 
and General Government will come to order.
    Mr. Hoyer is testifying before another Subcommittee and 
will be here in a moment. We have been advised by his staff 
that we may proceed. Hopefully, he will be here before we get 
to questions here.
    Let me welcome this afternoon Director Franklin Raines, the 
Director of the Office of Management and Budget. We welcome you 
in your second appearance before this Subcommittee on the 
resource requirements of your office.
    Director, last year you had only been on the job a few 
months when you appeared before us. At that point, I was 
certainly willing to provide a lot of latitude.
    I did not expect that you would have the answers to some of 
the concerns that we have expressed relating to OMB's oversight 
and management responsibilities, not only for the agencies that 
come under this Subcommittee's jurisdiction, but government-
wide.
    Now, I am a little less inclined to give latitude. I hope I 
am not harsh today with questions, but I am going to ask what I 
hope are some tough questions because I think they require some 
tough answers.
    As we proceed with the hearing, I want you to understand 
that my concerns about OMB actions in this area that are 
critical, not only for the effective operations of federal 
programs, but I believe they also go to our ability to make a 
qualitative difference in the day-to-day lives of many 
Americans. There is certainly nothing personal with the 
questions that I am asking.
    I have three areas of serious concern. First, is OMB's 
performance goals. One of OMB's performance goals is to 
coordinate and maximize the President's fiscal policy budgetary 
goals and programmatic objectives.
    This goes to some statements that I made last week in an 
earlier hearing with some of the Department of the Treasury. If 
the objective has been to achieve what I think is a disjointed, 
inconsistent, and one-sided law enforcement policy, then I 
guess maybe we have met the performance goal.
    Mr. Raines, I have traveled, along with my staff, traveled 
along the southern tier of states here in the United States, 
the border states. We met with Treasury law enforcement 
personnel. Frankly, we met with a lot of the others.
    We also met with the INS Border Patrol and other Justice 
Department Agencies. What we have seen is Black Hawk 
helicopters with no apprehension teams on board; night 
operations that are handicapped by a lack of night vision 
equipment; air and marine assets that are not being 
coordinated.
    That, I think, Mr. Director, only scratches the surface of 
all of the disconnects that I see in the area of federal law 
enforcement. Actually this should not come as any surprise to 
you and it certainly does not to me when you look at the budget 
figures.
    If you look at the resources for Treasury law enforcement 
bureaus, you begin to understand why the situation exists. 
Since 1997, resources have been much more abundant for the 
operations of the Justice Department; notably for INS and 
Border Patrol.
    This is not the case for Treasury, and particularly for 
Customs Service, which most of us believe and have acknowledged 
in the past is the first line of defense in drug interdiction 
into this country.
    During these years, INS law enforcement funding has grown 
by 51-percent, while Customs' rose by only 3 percent. Between 
1994 and 1999, INS pending will rise by 178 percent in real 
terms, while Customs' spending will increase by only 15 
percent.
    While I accept the critical role that Congress plays in the 
allocation of resources to these agencies, and we bear some of 
that responsibility for not having redirected that, the power 
of the purse does rest with us after all.
    I am disturbed because I do not see the Administration 
proposing what I would consider an equitable or logical or 
coordinated allocation of law enforcement resources among the 
budgets of the different agencies of the Federal Government.
    This year, the Administration is asking for an additional 
1,000 Border Patrol Agents. I dare say, since I live along the 
border, I can tell you that we need them. The request for 
Customs is 119.
    As we proceed through the appropriations cycle, and I know 
this from my 10 years' of experience on the Appropriations 
Committee, the Administration will threaten to veto overfunding 
levels for INS, but they will barely engage in the debate on 
levels of funding for the Customs Service and other Treasury 
law enforcement bureaus.
    So, I would say the history is the report card for your 
office and the Administration in this regard. I think it is 
clear the Administration really has not shown the interest it 
needs to show what I would call an integrated law enforcement 
strategy.
    I want to underscore those words, an integrated law 
enforcement strategy. I am not saying that we need to take 
money away from Border Patron, INS, and the other Justice law 
enforcement agencies.
    It just does not seem to me that when we look at the 
allocation of resources, do we have anything that makes any 
kind of a management sense? I am hoping today that you can 
share some of your thinking on that with us.
    Second, OMB is charged with providing management leadership 
to agencies. In this regard, I ask where has OMB been in the 
management of agency efforts to ensure our computer systems are 
ready for the century date change?
    Frankly, I find the OMB performance in this area to be 
seriously lacking. This is not an issue that we can afford to 
deal with tomorrow. January 1, 2000, the beginning of the 
millennium is coming, like it or not.
    I do not think we are going to postpone it with the law. 
You are not going to postpone it with an Executive Order from 
the President's Office. So, if our information systems are not 
ready to accommodate this change, the effects, I think you 
would agree and we would all agree, are going to be crippling 
and they are not going to be just temporary.
    It has draconian implications for our national interests 
and for our international security interests. Director, I just 
have to tell you that I think that OMB's performance in this 
area is unacceptable.
    I do not see, as I talk to the other agencies, the 
leadership being given by OMB in this area. We are running out 
of time. OMB has to take aggressive action now. The resources 
we give you to oversee these efforts are going to have to be 
moved someplace else if we do not see this action, to make sure 
that they get to someone who is going to get this done for all 
of the agencies.
    I have to tell you that I talked to a small agencythe other 
day in a personal visit; not one of the agencies under this 
Subcommittee. When I asked about Y2K, the head of that agency just 
blinked and said, ``What are you talking about? I have never heard of 
it. I do not know that anybody in this agency is doing anything.''
    He made a little note to check with some of the management 
administration people in that agency. Now, it is a small one. 
It only has a couple of hundred people, but they have some very 
important issues with regard to Y2K, it seems to me as I look 
at the operations of that agency.
    Third, and finally, Director Raines, as if the first two 
issues were not enough, I have concern over OMB's Performance 
Plan, its lack of detail on how OMB is going to measure 
specific outcomes of the job it does.
    I believe that OMB, who has been doing this for other 
agencies, needs to act as a leader for the other federal 
agencies and the implementation of the Results Act. I think 
your performance plan is a start. But I think it misses the 
point when it actually comes to measuring results. So, with 
these words meant in the spirit, I hope, of trying to encourage 
some dialogue and to help us to help you.
    I look forward, Mr. Director, to hearing your testimony 
today. Before we ask you for your testimony, let me call on my 
colleague, Steny Hoyer, for any opening remarks that he might 
have.
    [The statement of Mr. Kolbe follows:]


[Pages 308 - 314--The official Committee record contains additional material here.]



                 representative hoyer's opening remarks

    Mr. Hoyer.  Mr. Raines, I am pleased to welcome you to the 
Committee. I know that you will be giving us an account of your 
stewardship over the last year and talking to us about your 
budget.
    The federal budget I think is $1.8 trillion or thereabouts 
this year.
    Mr. Kolbe.  Just under $1.7 trillion.
    Mr. Hoyer.  Just under $1.7 trillion. We live in 
interesting times, but I think we always have. This morning we 
had at least two television cameras present in the room. We had 
at least ten reporters in the room.
    We had great interest in the room over White House 
expenditures, some of which were in the hundreds of thousands 
of dollars, not insignificant dollars.
    It is ironic that dealing with the Gentleman who is charged 
with the responsibility of overseeing that $1.7 trillion that 
we have such little interest in terms of relaying your comments 
to the American public.
    That is not, I want to make it clear, a comment on anything 
that the Chairman has done or that the Committee has done.
    Mr. Kolbe.  Well, the three of us that are here. We are 
here today.
    Mr. Hoyer. Right. It is a comment on the intent in this 
country to focus on the small and on the sensationalized. In 
any event, Mr. Director, I want to say how proud I am of what 
you, OMB, and this Administration are doing. You presented for 
the first time since 1969, with the President, a balanced 
budget.
    We are going to get to a balanced budget before fiscal year 
1999. It appears at the end of fiscal year 1998 we will have at 
least a $10 billion surplus. Now, we all realize that we have a 
unified budget.
    Social Security receipts are in that. There is a surplus in 
Social Security masking an operating deficit. The fact is we 
have always done that. So, given level analysis, we are going 
to have a budget surplus.
    Quite frankly, in my opinion, that budget surplus resulted 
from two very significant acts that the Congress took, as well 
as obviously a very strong economy and a very, very strong 
entrepreneurial private sector.
    One of those, of course, was the 1990 Budget Agreement 
forged between Former President Bush and the then-Democratic 
Majority. It was a budget agreement that was savaged by the 
present Speaker, by the present Majority Leader, and by the 
present Majority Whip.
    In fact, Former President Bush ended up repudiating that 
agreement during the course of the 1992 elections. The other 
reason for that, Mr. Director, in my opinion, was the courage 
and wisdom that the President showed in offering to the 
Congress an economic program in 1993 that was adopted on the 
closest of votes. CBO's analysis, not OMB's, but CBO's analysis 
indicates that it was that agreement that brought down the 
budget deficit very dramatically.
    That coupled, of course, with a very significant and 
surprising greater than expected growth of the U.S. economy has 
lead to that budget surplus.
    As you know, again, the Speaker, the Majority Leader, the 
Majority Whip, the Chairman of the Budget Committee, and 
numerous others leaders in the Majority Party now said that, 
that bill, if passed, would lead to very significantly 
increasing the deficit, which was then $292 billion.
    Very significantly increasing unemployment. Very 
significantly increasing interest rates. Bottom line, being 
that the economy would go into the dumpster if we passed that 
agreement. We passed that agreement.
    For the first time in our history since the end of the 
Civil War, in over 130 years, you, and this Administration, and 
the President have brought the budget deficit down every year 
you have been in office; unprecedented accomplishments.
    Mr. Director, I share some of the Chairman's concerns, 
obviously about the specifics that he talked about. He is 
reflecting, I think, a view of many of us on this Committee.
    In general, I want to tell you that I am very pleased that 
you are where you are. You are doing anexcellent job. We have 
some differences. I will ask you some questions about how good the 
economy is going.
    The fact of the matter is, you are doing outstanding, and 
as a direct result of your service and this Administration's 
policies, the American public is enjoying today, the best 
economy they have enjoyed, in many respects, in their lifetime, 
if they are under 35 years of age.
    For those of us over 35 years of age, one of the best 
economies we have ever enjoyed in the history of this country. 
You probably have to go back to the Kennedy years to find 
economic times as good as we are having today.
    So, I might say, Mr. Chairman, obviously this may be 
somewhat partisan, but as a Democrat, who was at times very 
sensitive about the fact that Democrats were not perceived by 
some and alleged by others not to responsibly manage the 
economy.
    This economy, as reflected by public opinion and by every 
economic indicator, and as attested to by no less an authority 
than Alan Greenspan, not a publicist for the Democratic Party 
or this Administration, has said the economic programs of this 
President, this Administration, are due much of the credit for 
the status of this economy.
    You, as the Director of OMB, are a critical element in 
that. I congratulate you. Thank you.
    Thank you, Mr. Chairman.
    Mr. Kolbe.  Ms. Meek, do you have any opening comment?

                 Representative Meek's Opening Remarks

    Ms. Meek.  Thank you, Mr. Chairman.
    Welcome, Director Raines. I must say to you that I am very 
pleased and encouraged by your performance as OMB's Director. I 
served one session on the Budget Committee prior to your coming 
to this position.
    I want to tell you, when you came, you broke things down in 
such a way that those of us who were lay people who were just 
coming to that Committee could understand the budget process 
and how the President's budget is made, and how it reflects on 
us.
    So, I must say as a planner, you are the best, you and the 
people in your area, in that OMB is more than an acronym 
because you are dealing with management. You are showing us the 
path to good management.
    I appreciate so much that no longer is the dictum around 
that we must balance the budget. It was almost like an acronym. 
You heard it everywhere you went. Balance the budget. Balance 
the budget. It was like a pulse.
    Then the deficit. The deficit. Now, you have taken that out 
of our nomenclature. We no longer can run around and talk about 
that all the time because, under your leadership, the budget 
has been balanced, with the help of both parties.
    We now have some indicators as to where we are going. In 
your management, you have been very precise. You laid out a 
strategic plan. From that, after that strategic plan, you laid 
out your performance goals and objectives.
    It looks like from reading the information you gave us that 
you are following that. There is no better way to manage the 
federal budget or any other budget than the way you have gone.
    I commend you and your staff. Certainly I hope that we are 
able to keep within the framework of what you have laid out to 
us. Thank you for being here.
    Mr. Kolbe.  Thank you, Ms. Meek.
    Ms. Meek.  Mr. Chairman, he asked for just a 2.7-percent 
increase. So, I know it is not, with the performance he is 
doing, that is a good indicator that he has been a shrewd 
manager. Just a 2.7-percent increase is good.
    Mr. Kolbe.  Thank you very much, Ms. Meek.
    Mr. Raines, please proceed. As you know, your full 
statement will be put in the record. So, if you would like to 
summarize that for us, it would be helpful so we can go 
directly to questions.

                   Director Raines' Opening Statement

    Mr. Raines.  Thank you very much, Mr. Chairman, Mr. Hoyer, 
and Ms. Meek for those introductory statements. I do have a 
longer statement for the record, but I would like to just 
summarize some of the points included.
    I particularly appreciate your kind words about the 
performance of the economy and our fiscal policy. There is 
nothing more important for an OMB Director than to be a 
participant in establishing a sound fiscal policy because so 
much else flows from that.
    It has been a great privilege for me to be a part of that 
effort in this Administration and to be a part of extending 
this extraordinary expansion that we have seen that will, by 
the end of this year, become the longest peace time expansion 
in the nation's history.
    In the post-war period this is the only one of the long 
expansions that has not been fueled by deficit spending. Unlike 
the 1960s and the 1980s when the full employment deficit was 
rising and helping to push along the economy, this expansion is 
happening with the full employment deficit declining.
    So, we see a strong quality to this performance, 
particularly in the private sector. We are here today to 
request from the Committee funds to operate the Office of 
Management and Budget for fiscal year 1999.
    The President's budget included a request for just slightly 
more than $59 million for salaries and expenses. That would be 
a 2.7-percent increase over 1998 and finance our 518 full-time 
equivalent positions; the same level as in fiscal year 1998.
    The budget also included an allowance for later transmittal 
related to information technology. The President, on March 9th, 
sent to Congress an additional request for $1.6 million for 
information systems improvements that are related to the 
production of the President's budget.
    That brings our total request to $60.6 million. OMB has 
been playing a leading role in the effort to balance the budget 
to improve government performance, audit government programs, 
and manage information technology.
    We have had many new and broadened responsibilities added 
by Congress in recent years. A number of those laws, in 
particular the Government Performance and Results Act (GPRA), 
required intensified OMB activity as they reach full 
implementation.
    We responded to this increased work load by expanding our 
utilization of technology, increasing the ratio of analysts to 
total staff, and improving our work load management. While we 
continue to handle our expanding responsibilities without an 
increase in staff size, it is essential that we maintain our 
current staffing level.
    To continue to meet these growing needs at the current 
staffing level, we need to invest in information technology. My 
written testimony includes more information on OMB's 
implementation of major new statutes, including GPRA, the 
Unfunded Mandates Reform Act of 1995, the Paperwork Reduction 
Act of 1995, the Information Technology and Management Reform 
Act of 1996, the Government Management Reform Act of 1994,the 
Electronic Commerce Provisions of the 1998 Defense Authorization Act, 
and the 1996 act setting forth Congressional Review Agency Rulemaking. 
I will not take the time here to review our implementation, which is 
reviewed in that written statement.
    I would note that since I became Director, I have 
reaffirmed the approach in the OMB 2000 Reorganization that was 
put in place by my predecessors to improve the integration of 
our budget and management capabilities.
    It is my goal that our implementation of these important 
statutes reflect this improved integration. Let me take just a 
few moments to describe OMB's Performance Plan and the steps we 
are taking to improve our productivity by investing in 
information technology.
    As required by GPRA, OMB submitted its strategic plan to 
Congress on September 30, 1997. The plan contains a statement 
of missions, four general goals, and 16 objectives related to 
our major responsibilities.
    GPRA also requires that we present an annual performance 
plan covering each program activity set forth in our budget. We 
submitted the OMB Performance Plan for 1999 concurrently with 
our budget justification.
    The performance plan follows the same structure of the 
strategic plan with performance goal indicators that track 
those general goals and objectives. Some highlights of our plan 
include development of a balanced budget as part of the 
national fiscal policy.
    Helping agencies meet important objectives, such as year 
2000 computer compliance, receiving clean audit opinions on 
annual financial statements, ensuring annual performance plans 
are fully integrated with budget submissions, maximizing the 
benefit of regulations while minimizing their costs and 
burdens, reducing paperwork burden on the public, improving 
agency procurement systems, and effectively using interagency 
working groups on a wide range of government functions. Another 
part of our performance plan highlights recruiting, developing, 
and retaining a high quality and diverse OMB staff.
    Let me pause for a second on that one. We are an agency 
that expects a lot of our people. It is an agency that during 
the budget time, our people work seven days a week, often 18 
hours a day. This takes a real toll.
    When I was at OMB 20 years ago, the turnover rate was 
substantially lower than it is today. That is because OMB was 
larger then. Its responsibilities were narrower then, and we 
did not provide or have as much of a burden on junior examiners 
as we do today.
    This is a matter of great concern to me; something that we 
are trying to put efforts into to deal with. I wanted to 
highlight it to the Committee because OMB is nothing but staff. 
If you look at our budget, you will see that our entire budget 
is pay for our people, space for our people, technology for our 
people. We have nothing else. It is important to me, as 
Director, and I think for any Director, and I hope for my 
successors, that there be a focus on sustaining the quality of 
the staff.
    It really is a national resource. It is not a resource of 
just any particular President. It is a national resource. One 
important focus for now and through 1999 is our plan to improve 
the President's budget submission to Congress through the use 
of automation.
    You know it is very complicated putting together the 
President's budget, given the short time frame which it all has 
to come together. We worked closely with this Subcommittee and 
its counterpart in the Senate to design and approve a five-year 
Information Technology Improvement Program that has already 
greatly improved the production of the President's budget.
    We have implemented that plan on time and on budget. We are 
now taking further steps to improve our information technology 
resources. We have established an Investment Review Board 
consistent with the Clinger-Cohen Act.
    This Board is an integral part of our strategic plan to 
leverage technology to assist our people in doing their jobs. 
We have hired an information technology systems engineer to 
work internally and with the Office of Administration. We have 
also looked to see what additional needs we might have. We are 
asking for $1.6 million of appropriations to allow us to 
migrate our large budget applications from the White House 
Office of Administration's main frame computer to a separate 
year 2000 compliant data center.
    We started this migration in 1994 to increase the 
efficiency of our budget process and to reduce the burden on 
other agencies.
    We have been working closely with the Office of 
Administration and their team to provide an orderly transition. 
Before moving to a new data center, OMB will work with OA to 
assure that all of these applications are updated, verified, 
and tested for year 2000 compliance.
    For the other applications that OMB uses, we will work with 
OA to assure that they are year 2000 compliant. They will 
remain resident in the OA Data Center.
    Mr. Chairman, the Bipartisan Budget Agreement requires 
agencies to continue their efforts to do more with limited 
resources.
    Our proposed budget will allow us to meet our new and 
expanded requirements of the laws that I have discussed, in 
addition to our many existing responsibilities, with the same 
staffing level as in fiscal year 1998.
    We are committed to increasing and maximizing 
ourefficiency; particularly through the use of information technology.
    That concludes my statement. I will be happy to answer any 
questions that Members of the subcommittee might have.
    [The statement of Mr. Raines follows:]


[Pages 321 - 327--The official Committee record contains additional material here.]



                     Resources for Law Enforcement

    Mr. Kolbe.  Thank you very much, Mr. Raines.
    I will lead off. I mentioned three areas. I hope to get to 
all three of them, but I certainly want to get to the first 
two. That is the issue of law enforcement resources and the 
Y2K.
    Let me start with the issue of law enforcement resources. I 
hope this does not come as any surprise. These were charts we 
used last week. Presumably you have some knowledge of them.
    You see in these charts a really rather striking disparity 
of funding levels between Treasury Law enforcement and Justice 
Law Enforcement. This is the funding level here. You notice a 
rather sharp increase in Justice, lead largely in part by 
Congress in its concern over immigration, specifically as a 
result of immigration reform and the problem of undocumented 
persons coming into the country.
    Also, a lot of it having to do with FBI and a lot of it 
having to do with drug problems and drug interdiction. You will 
notice the flat line there for the Treasury. I think the next 
chart shows personnel, if I recall correctly here.
    Those are the personnel numbers which is even more striking 
in terms of numbers; 0-percent increase from 1994 to today. I 
think then there is one more chart here.
    These next two narrow it down to looking at just INS and 
Border Patrol versus Customs. Here, it is even more striking as 
you can see the increase in INS and Border Patrol; again, the 
flat line in Customs. Go on to the next one there. It is the 
same in personnel; a very dramatic increase there. For Customs, 
a 3-percent increase. It does not even look like it from the 
numbers there, but a 3-percent increase in the number of law 
enforcement personnel.
    So, the bottom line is I think it is safe to say whether we 
look at Treasury versus just as a whole or whether we just take 
Customs and INS, the two major agencies. When I say major 
agencies, with regard to drug interdiction.
    We have a huge disparity here. I am wondering whether you, 
personally, are aware of some of the problems in Customs. The 
fact is in Customs we have interdiction boats that do not have 
crews. We have Black Hawk helicopters that do not have 
apprehension teams on the helicopters. We have operations that 
have no night vision and infra red. We have air and marine 
assets that are not being coordinated.
    Can you give me some explanation of what is going on here? 
Why do we have so much in one department and not in the other.
    Mr. Raines.  Well, Mr. Chairman, this is an issue that we 
looked at specifically during what we call our Director's 
reviews in putting together the budget this year. Let me give 
you my perspective on this.
    First, we do not start with the assumption that the budget 
of one agency is necessarily related to the budget of the 
other. Because they have different functions and they are at 
different stages of their development, at different times one 
budget may go up dramatically and another budget may not.
    Mr. Kolbe.  Well, I think there is pattern here.
    Mr. Raines.  It would not be unusual to see different 
agency budgets move differently, even though law enforcement 
agencies, they are enforcing different laws in different ways 
and facing different problems.
    Secondly, some of these changes actually have been to the 
benefit of the Customs Bureau. For example, there has been 
historically a problem of INS not really providing 50 percent 
of the personnel at points of entry.
    We have worked over the last several years to move them 
from where Customs had to provide about 62 percent of those 
personnel where INS is providing more. That has now freed up 
some Customs personnel for other activities.
    If you look just in the most recent year, I think you will 
see that even though these agencies continue to do far better 
than the rest of the budget, these are very large increases for 
both of these agencies, compared to a 4.7-percent increase for 
the government as a whole in discretionary funds.
    In this most recent year, if you take both the appropriated 
funds and the mandatory funds that each of these agencies has 
available to it, Customs' budget is going up 10.4-percent year-
over-year, and the INS budget is going up 10.3-percent. So, the 
extent to which there is a disparity in the prior years, that 
is not playing out in 1998 to 1999.
    As you know, Congress and the President have supported 
substantial increases in our law enforcement budget since 1993. 
You see that line takes off in fiscal years 1993 and 1994. We 
have had very large increases in the number of Border Patrol 
agents.
    Where we have proposed large numbers, Congress has added. 
Last year, we proposed 500 Border Patrol agents. Congress added 
another 500 on top of that, which has made a difference in 
these numbers as well.
    We are using different years and different sets of numbers 
here. So, I do not want to compare the numbers I have directly 
to the ones you have. In most comparisons between Justice and 
Treasury, you have to first take out of those comparisons the 
grant programs that Justice has that Treasury does not have.
    Prisons that Justice has that Treasury does not have and 
some specialized problems, such as you mentioned, Border Patrol 
where we have had a dramatic increase in their personnel 
dealing with the illegal immigration problem alongthe border.
    We do not view this as favoring one over the other. We look 
at each of the requests. We look at their mission. We try to 
match resources to the mission that they are given.
    Mr. Kolbe.  So, you see no problem with the funding that we 
are giving Treasury and law enforcement agencies?
    Mr. Raines.  Well, I think, again, as the Budget Director 
looking at the whole budget, both of these agencies have fared 
far better.
    Mr. Kolbe.  The figures I have up here are taken from your 
budgets.
    Mr. Raines.  Let me give you an example. Since 1993, 
discretionary spending for the government as a whole has gone 
up 4.7 percent. Treasury law enforcement is up 26 percent. The 
Department of Justice is up 94 percent.
    So, again, within the context of very tight budgets, both 
of these agencies have done very well. As between the Treasury 
and Justice, I think that there are particular aspects of their 
mission that account for the differences.
    To the extent to which they are not managing their 
resources well, and you are seeing unutilized capital assets, 
you are seeing a failure for them to coordinate. That is the 
real management problem that we will look into and try to see 
why is it that an agency that has adequate resources is unable 
to utilize these very expensive capital assets in an effective 
manner. I will be happy to look into that.
    Mr. Kolbe.  It does not seem to me there is any 
acknowledgement of the pressures you put on law enforcement and 
Treasury when you make the kinds of increases you have in INS. 
For example, just the sheer numbers of increases of Border 
Patrol agents has a tremendous impact on the Federal Law 
Enforcement Training Center which comes under Treasury.
    We are not seeing the kinds of increases there that seem to 
go with that. My bottom line is, I do not think that there is 
any integrated approach in law enforcement by the 
Administration.
    It looks like it is a battle between two agencies and one 
has clearly won out here. I do not see you exercising the 
management function of trying to provide an integrated approach 
to this law enforcement problem.
    Mr. Raines.  Well, I think if you talk to these agency 
heads----
    Mr. Kolbe.  We have.
    Mr. Raines.  They will tell you that when they have 
disputes among themselves, whatever the topic may be, they 
almost uniformly come to us to help resolve those disputes 
among themselves from a management standpoint.
    I know that the Secretary of Treasury and the Attorney 
General have consulted with each other on integrating their 
strategies. I know that General McCaffrey has put in particular 
reference in coordinating not just the civilian law 
enforcement, but also military personnel; particularly down in 
Florida.
    The President was in fact down visiting there and looking 
at some of the coordinated activities. To say that the 
coordination could be better I think is almost certain. Twenty 
years ago when I was the Associate Director of OMB, this was 
one of the agency's accounts that I had.
    We had similar problems then. I would like to say that we 
have resolved some of them, but we had similar problems then. 
There are some inevitable problems that come from law 
enforcement agencies being in different departments.
    It is just a fact of life or my experience is they each 
want to replicate whatever the other one is doing.

         Should Treasury and Justice Law Enforcement be Merged?

    Mr. Kolbe.  This leads me then to my last question before I 
yield my time because I have gone over my five minutes, but it 
leads right into that.
    Some have suggested that we need to consolidate federal law 
enforcement. Do you think that we should be looking at putting 
law enforcement under Justice or one agency of the Federal 
Government?
    I would like your rationale for that or not. You can think 
about it and provide it in writing if you would.
    Mr. Raines.  I will be happy to follow-up in writing.
    I think the answer is probably no. I think there are real 
concerns about having a federal police agency, where we have 
concentrated all of that authority in one place.
    Also, I think it would also overlook that even though they 
are nominally involved in law enforcement, many of them have 
functions that are very specialized. The Secret Service, for 
example, has a very specialized function.
    It is not a general, all purpose, law enforcement agency. 
Customs officers, similarly. The Drug Enforcement 
Administration very similar.
    They have very particular purposes that tie them much more 
closely to their agencies than to law enforcement generally. 
So, I do not believe that having one large police agency at the 
Federal Government would be a good idea.
    [The information follows:]


[Page 332--The official Committee record contains additional material here.]



    Mr. Kolbe.  Mr. Hoyer.

     Progress in Solving the Year 2000 Computer Conversion Problem

    Mr. Hoyer.  Thank you, Mr. Chairman.
    Let me make an observation in response to one of the 
observations made by Director Raines. There have been times 
when Justice law enforcement agencies and Treasury law 
enforcement agencies have had disagreements on functions; 
essentially turf battles.
    I want to say that in recent years, Mr. Chairman, as you 
may know, OMB has been helpful with respect to lawenforcement, 
ATF, in particular, ballistic imaging, and the Secret Service as well 
in terms of money laundering issues. I appreciate that. I think that 
OMB has shown an even handed approach to that.
    I do share the concern which is not necessarily intentional 
in its result, that when people think of law enforcement, they 
naturally think of Justice, especially that when we know 40 
percent of law enforcement is in fact in Treasury.
    In fact, ATF deals with some of the most dangerous and 
deranged criminals in America and; not only dangerous but 
compounded by their derangement in many respects. The funding 
levels sometimes do get, by the Congress as well as by the 
Administration, out of balance.
    So, there is a concern. We hope that you will look at that 
and reflect a concern for making sure that Treasury law 
enforcement stays as viable as it needs to be. Now, having said 
that, let me move on to a different subject, the Y2K problem.
    In your latest quarterly report on this issue you report 
that, ``While good progress is being made, it is not rapid 
enough overall.'' Now, I am concerned about the implications of 
that and what you think it might mean to us next year.
    Mr. Raines.  Well, Mr. Hoyer, I am very concerned about the 
progress that we are making in dealing with the Y2K problem. 
The President and the Vice President share that concern. Indeed 
a few weeks ago, we had a meeting with the Cabinet on which the 
President, the Vice President, and I all talked to the Members 
of the Cabinet about the essential requirement that this become 
a major priority for Members of the Cabinet and all agency 
heads.
    The Vice President followed up on that with a meeting with 
the President's management counsel, the chief operating 
officers of the major agencies where he personally reiterated 
this message and the priority.
    We have been taking a number of steps, some of them 
suggested by Members of this Subcommittee and other Members of 
Congress to try to step up our efforts. The President issued a 
new Executive Order making sure that each of the agencies is 
aware that they will be held accountable.
    We have said to the agencies that dealing with the year 
2000 problem is their number one information technology issue 
and they should fund it before any other applications that they 
have before them.
    The President has just appointed as his Assistant to the 
President and head of a new council over the year 2000 problem, 
John Koskiner who was formerly my Deputy Director for 
Management.
    He has an outstanding management history, dealing with 
crisis management, and corporate turn arounds, as well as 
having done an excellent job in the government. His full-time 
responsibility is to be the year 2000, czar to oversee this 
problem.
    It is a very different problem. We are, I think, getting up 
to speed, but I am concerned that not all the agencies are 
putting their resources into this.
    I have said to Members of the Cabinet, if they do not 
personally know the person who is in charge of this problem, if 
they do not personally know what the plan is, if they do not 
personally know when the solution is to be in place, they 
should assume that there is no such person. There is no such 
plan. There is no such date.
    I can tell you that a number of Cabinet Members have told 
me since our meeting with them that they have personally become 
involved in managing this problem. So, it is a great 
difficulty. I share your concern and that of the Chairman.
    Indeed, virtually every speech I give now, almost no matter 
who it is to, I include a segment about the year 2000 problem, 
and it is not just a federal issue.
    It is a problem for state and local governments.
    It is a problem for private companies. It is a particular 
problem with our counterparts in foreign countries who are 
further behind than any segment in the United States.
    Just last evening, I gave a talk to the city council and 
other representatives from the Chamber of Commerce from the 
City of New Orleans, which I spent a period of time talking 
about the year 2000 problem. So, this is something to which I 
have given a great deal of attention.
    It is a problem that is going to require ever-increasing 
effort. The numbers in our report I predict will get worse 
before they get better. So, we do not have a poly-annish view 
toward this. We think this is going to take an enormous amount 
of effort by the agencies to have this problem dealt with on 
time.

 adequacy of funding to solve the year 2000 computer conversion problem

    Mr. Hoyer.  Well, you are right. The Chairman certainly has 
been as outspoken and strong a leader on this issue as any of 
us. I have joined with him. We are all very concerned what 
might happen next year as we move close to 2000.
    It is tough to think of what will happen with the 
international community which is behind us. I might ask you 
another question in terms of resources, the utilization of 
resources.
    Has OMB looked at the availability of sufficient resources 
in the fiscal year 1998 as well as fiscal year 1999 budgets in 
all of the departments? Was this a priority to make sure they 
had sufficient resources to carry this out?
    Mr. Raines.  It was indeed a priority in 1998 and in 1999. 
We have said it is the first priority for each agency. That if 
they are short of resources for the year 2000 problem, that 
they should set aside other application development efforts and 
move the money to year 2000.
    We have a number of agencies who are in fact doing that. 
So, we have estimated, I think in our last report, that this is 
going to cost about $4.7 billion. I assure you that before we 
give you our last report on this, it will cost more than that. 
We are encouraging agencies to make the investments needed to 
ensure that their systems are year 2000 compliant.
    Mr. Hoyer.  Thank you, Mr. Chairman.
    I know I have used my time. I will ask further questions on 
the second round.
    Mr. Kolbe.  Ms. Meek.

                  reduction in federal employee levels

    Ms. Meek.  Yes. Thank you, Mr. Chairman.
    I understand, Director, that OMB has certain targets that 
they set to reduce civilian employment. Is that correct?
    Mr. Raines.  We had an initial target that was met that was 
tied to the funding of the Crime Trust Fund. We currently do 
not have a numerical target that we are aiming to government-
wide.
    There are certain agencies who have pledges that they are 
all working toward. We have not set a new numerical target for 
personnel level.
    Ms. Meek.  So, you do set certain employment ceilings for 
certain agencies?
    Mr. Raines.  In each agency, we make a determination 
withthat agency as to how many people they will need. It is not an 
arbitrary number. We are not artificially trying to hold down agencies 
who may have needs. In part, because we have done a very good job at 
bringing down the level of civilian employment. We are down over 
300,000. We have not tried to set arbitrary FTE requirements on the 
agencies.
    Ms. Meek.  Well, let me see if I can set sort of a scenario 
as to what could happen and ask you how you would respond to 
that.
    This has to do with Customs. That is very crucial to the 
area I represent. Let us say if a private company such as 
Federal Express and move or UPS is willing to reimburse the 
Federal Government for Customs inspectors for its operations.
    These additional Customs jobs must be offset, as I 
understand it. I need to know from you if they are, if that 
operation does happen. If they are offset by cuts by employment 
elsewhere in the Federal Government, do you match those off or 
are they offset?
    If so, that means that whatever happens will be at the cost 
of the Customs area. If UPS or one of these companies can 
provide those inspectors, then you must offset it, according to 
what I understand. Am I correct with that?
    Mr. Raines.  No. We have actually entered into agreements 
with agencies who have reimbursement authority where we have 
entered into agreements with them where if they can pay for the 
additional employees through the reimbursements, that they have 
been permitted to increase the employment.
    It is done on an agency-by-agency basis. Now, sometimes 
agencies will come and they will only have one year of funding 
and do not want to hire permanent employees. We will be very 
resistent to that.
    Where we have had agencies that are providing service, they 
can collect a user fee for it. We have been willing to enter 
into agreements with them to account for those increases.
    Ms. Meek.  It is not taken out of any of the Custom 
functions.
    Mr. Raines.  I would have to look at that particular case. 
I am not familiar with that particular case. I am simply saying 
we have not done this in other areas. I will give you an 
example.
    The Veterans Administration, historically any collection 
that the Veterans Hospital made were turned over to the 
Treasury and were not available to the Veterans Department, and 
therefore could not support employment in the Veterans 
Department.
    In last year's budget, together with Congress, we permitted 
the VA to keep those fees which they can then use to support 
FTEs. We try to match the FTEs to what the agency can support 
as opposed to simply having an arbitrary number that is there.
    We are obviously not trying to grow the size of the federal 
work force. Indeed, the only part of the federal work force 
that is really growing is the law enforcement area.
    Where agencies can demonstrate that they have the resources 
to pay for the people, we have been willing to enter into 
agreements with them permitting them to do so.
    Ms. Meek.  So, their association with the business 
community would not prohibit them from getting the same 
allocation or a similar allocation in some other Customs' 
function. It is not taken out of their hides.
    Mr. Raines.  In fact, if anything it probably would improve 
their argument because it would have a direct connection to 
providing improved customer service which is one of our major 
management objectives. The extent to which that can occur could 
be very helpful. It is a major objective of the Vice President, 
for example, to improve customer service with all of our 
agencies.
    Ms. Meek.  All right. Thank you.
    Mr. Kolbe.  Mr. Price.

                 need for additional customs inspectors

    Mr. Price.  Thank you, Mr. Chairman. Mr. Raines, let me add 
my welcome and my commendation for the work you are doing and 
for the budget you just submitted in particular. The budget for 
fiscal year 1999 is balanced three years ahead of projections 
with a number of well-targeted initiatives, all of them paid 
for within the parameters of that budget.
    I commend you for the quality of that effort. I want to 
return in a moment to a question involving some of those 
broader issues, but let me first focus on a line of questioning 
that the Chairman has initiated here today. It is directly 
related to the work of this Subcommittee. That is the disparity 
between Treasury and Justice, the law enforcement funding.
    I understand you do not want to set up a zero sum conflict 
between those two. I am not suggesting that you should. We 
have, in the course of our hearings this season, come across 
some fairly disturbing shortfalls in law enforcement funding in 
some of the projections for next year. I would like to ask you 
to address them further.
    Let me talk about ATF, the Bureau of Alcohol, Tobacco, and 
Firearms. When Director McGaw testified before us, he indicated 
that his agency is currently inspecting 73 percent of 
explosives facilities, far short of the 100-percent goal that 
he is reaching for.
    He says he requested 56 additional FTEs to reach the 100-
percent goal and that OMB approved a request of only 24; less 
than half. The Director says the 24 additional FTEs will take 
the agency only up about 7 percent, to an annual inspection 
rate of maybe 80-percent.
    Now, you know as well as we do that this is an area of 
increasing concern. We certainly know it in North Carolina. 
Given the fact that there are increasing numbers of criminals 
and increasing severity of crimes involving explosives, I 
wonder if you could tell us what the rationale was behind 
funding less than half of ATF's request for these additional 
inspectors?
    Mr. Raines.  Our overriding limitation in looking at the 
budget in fiscal year 1999 were the very tight caps on domestic 
discretionary spending that were negotiated as a part of the 
Balanced Budget Agreement last year.
    As you know, discretionary spending will decline by about 
10-percent in real terms between 1998 and the year 2002. So, we 
are allocating scarcity when we put together that budget. ATF's 
budget increased in our request by $23 million or 4.1 percent 
year over year.
    That is up in the range of some of the highest increases of 
any agency in the government.
    Mr. Price.  Could you repeat that? That is what percentage 
over what period?
    Mr. Raines.  It is 4.1 percent from 1998 enacted to 
thePresident's 1999 budget. At 4.1 percent that is a significant 
increase compared to other agencies. It is appropriate because law 
enforcement is a priority.
    The work of the ATF is very important. So, we do not 
apologize for them doing better than other agencies, some of 
whom were flat or declining. It is, in the context of a very 
tight budget where the caps are very tight, it is a significant 
investment of the scarce funds that were available to the 
President.
    Mr. Price.  I noted in your response to Chairman Kolbe you 
gave a very similar answer with respect to Customs. What does 
that 4.1-percent increase look like in the context of the last 
several years? Do you have those figures readily available?
    Mr. Raines.  I do not believe I have them at my finger tips 
for the ATF. I can get those for you.
    Mr. Price.  That would be helpful, just to put this in a 
little broader context. I realize that the kind of budget 
restraint you are being praised for on the one hand, you are 
being asked to defend on the other when it comes to specific 
governmental functions.
    We are all, of course, interested in the specifics, as well 
as the overall numbers. This line of questioning, which a 
number of us have engaged in, underscores the priority we 
assign to this, and to some of the things we have heard over 
the last couple of weeks about law enforcement functions that 
are being only partially addressed.
    So, I would appreciate those further figures. We will refer 
to them in the future.
    [The figures referred to follow:]


[Page 338--The official Committee record contains additional material here.]



    Mr. Price.  Let me return now to a considerably broader 
issue in the limited time I have here or is my time up?
    Mr. Kolbe.  Time is expired.
    Mr. Price.  All right. I will wait until the second round. 
Thank you.
    Mr. Kolbe.  Mr. Aderholt.

          Availability of Data From Federally-Funded Research

    Mr. Aderholt.  Thank you, Mr. Chairman. Mr. Raines, thank 
you for being here today. I understand that OMB uses circulars 
to communicate certain instructions to executive departments on 
a broad range of issues relating to the budget and financial 
management. Is that correct?
    Mr. Raines.  That is correct.
    Mr. Aderholt.  While certainly these circulars do not 
constitute regulation, there is an expectation that executive 
departments and agencies will comply with these circulars. In 
fact, I understand that circular A-1 states that the provisions 
of any circular or bulletin, except as otherwise specifically 
provided, shall be observed by each and every department or 
established in so far as the subject matter pertains to the 
affairs of such department or established.
    I take it that you agree with OMB's expectation with regard 
to the Executive Branch compliance with these circulars and 
bulletins; correct?
    Mr. Raines.  Yes, sir.
    Mr. Aderholt.  I would like to direct your attention to a 
circular A-110, which is entitled ``The Uniformed 
Administrative Requirements For Grants and Agreements With 
Institutions For Higher Education, Hospitals, and Other Non-
Profit Organizations.''
    It was last revised August 29, 1997. In that particular 
circular under subpart C, the circular establishes standards 
for executive departments, agencies, and award recipients 
regarding data produced under a particular award.
    The circular states that under section 36 of Intangible 
Property it says,

    Unless waived by the federal awarding agency, the Federal 
Government shall have the right to:
    one, obtain, reproduce, publish or otherwise use the data 
first produced under an award; and
    two, authorize others to receive, reproduce, publish or 
otherwise use such data for federal purposes:

    I just wanted to ask you what you believed the intent or 
rationale behind this requirement on executive branches and 
departments is?
    Mr. Raines.  Well, if I remember correctly, our general 
policy is that if the federal government has paid for the 
creation of intellectual property, for example, that should be 
generally available to the public.
    I believe what that is referring to is that the creation of 
such intellectual property would be or should be available to 
the public, unless there has been a determination by the agency 
to the contrary specifically.
    Mr. Aderholt.  I guess also in essence it is to protect the 
interest of the taxpayer to make sure that they assure the 
public they receive the full benefit from their expenditure I 
would assume as well.
    Mr. Raines.  Yes, that is the same. I was trying to make 
the same point. To make sure that if the government is paying 
for something, it is not just kept as a private property of the 
grant recipient, but that it should be available generally to 
the public.
    Mr. Aderholt.  Also, of course I mentioned, it says 
``unless otherwise waived by the federal awarding agency.''
    As a matter of policy, how often do federal agencies waive 
this right to obtain or reproduce or publish the data under a 
federal award?
    Can you provide the Committee with examples where agencies 
have willingly waived the right obtain the data?
    Mr. Raines.  We would have to look to see. I am sure we do 
not keep track of such waivers, but we could see if there are 
some examples of that.
    Mr. Aderholt.  All right, thank you, if you could provide 
that. That is all.
    [The information referred to follows:]


[Page 341--The official Committee record contains additional material here.]



     Getting Management to Focus on Solving the Year 2000 Computer 
                           Conversion Problem

    Mr. Kolbe.  Thank you Mr. Aderholt.
    Mr. Director, I am going to return to the Y2K issue here 
and leave federal law enforcement for the moment. I appreciate 
the comments you made about how you talk about this every place 
you go and the concern that you have.
    Excuse me if I just act a little bit like a worry wart on 
this issue here. Maybe I have been reading too much. I just 
read a Forbes' piece on it and a Business Week's piece on it 
and scanning a book on the subject here.
    It is a serious issue. I am concerned when I look at your 
statement here. The sum total of your comments on Y2K is 
``highlights for the OMB Plan for 1999 include . . . achieving 
compliance with the year 2000 computer changes.'' That is it.
    Starting a couple of years ago, in 1997, Congress required 
the OMB to submit reports on agency progress to correct the Y2K 
computer problem. Your most recent report submitted yesterday 
shows that only 35 percent of the agency's mission critical 
systems are compliant.
    Sixty-percent of the 7,850 systems; That is down, I might 
say, from the last quarterly report. still must be repaired or 
replaced.
    Now, in and of itself, that should not be a matter of 
concern because all of these things may be coming together at 
the right time. In the end, we are going to resolve all of 
these, but there is some real concern about that. Some other 
Committees have expressed concern and doubt that that will 
happen. The Information Technology Subcommittee, Chaired by 
Representative Horn, reports that, in their view, one-third of 
the Federal Government's critical information systems will not 
meet the Y2K conversion date deadline.
    They also say that the Administration is not taking an 
effective leadership role in coordinating and ensuring Y2K 
compliance, which will contribute to the crisis we are facing. 
So, let me, if I might, ask you a couple of questions.
    Since one of the strategic objectives of OMB is ``working 
within and across agencies to identify solutions to a mission-
critical problems'' is it safe to assume that you will consider 
Y2K a mission-critical problem?
    Mr. Raines.  Absolutely.
    Mr. Kolbe.  The literature on the subject is pretty 
consistent. It is not a technical problem. It is a managerial 
problem. Do you agree; that the issue really is mostly getting 
management to focus on this problem and deal with the complex 
labor requirements that are required to actually address the 
problem?
    Mr. Raines.  Well, I do not think I would agree with that. 
I think that management is a very large piece of it. So, I do 
not disagree that, that is very important. That is why I 
emphasized the need for agency heads to be directly involved.
    If nothing else, it sends a very important signal of 
priority. There are some technical issues that are involved 
here. There are some technical resource issues. Let me give you 
an example.
    The FAA had a plan for dealing with the year 2000 problem. 
Their plan involved updating some of the inroute computer 
systems which are large main frame computers that have been in 
place for years.
    A part of it was they were focused on their software. The 
hardware, they were dependent on the manufacturer to provide 
the solution. They were recently told by the manufacturer, that 
the manufacturer was not going to provide a solution to the 
hardware problem.
    That there were not enough of these systems still in use. 
We are one of the few remaining users of these old main frames. 
And they are just not going to do that. Now, that is a 
technical problem that is now going to turn itself into a huge 
management problem.
    That is something that, from the technical side, has caused 
difficulties. Another is the software renovation. There are 
tools now that have been developed for going through legacy 
applications to find out what is in them.
    For many of these big main frame applications, there is no 
documentation as to what is in them. They have been changed so 
many times over the years without adequate documentation, that 
no one knows what the use of date coding is within the 
application. It may be buried down two or three levels.
    So, there is a need to use these new technical resources to 
go in and actually find what is in this application. So, there 
are some technical issues. The last one I would mention is a 
very simple one.
    It is not high tech, but it involves thinking technically. 
I will give you an example. Lots of elevators have within them 
a computer chip that ensures that the elevator is maintained 
periodically.
    If it has not been maintained it is to shut the system 
down. What it does is every day it says, ``What is today?'' It 
compares today to the last time there was maintenance. If the 
period is too long, the elevator goes to the basement and shuts 
down.
    Well, when the year 2000 problem comes around, it is going 
to say, ``What is today?'' It is going to say 1900. It is going 
to calculate the difference in time between 1900 and the last 
time it was serviced.
    Then it is going to say, ``Oops, I have got to shutdown.'' 
Now, that is not a high tech problem, but you have to know how many of 
these embedded chips that there are. There are more embedded chips than 
any of us just sitting in normal life would ever think about. If you 
said Y2K problem and someone said elevator, I mean, none of us would 
naturally say, yes, that is one of the problems. Well, that is just an 
example. So, there are technical aspects to it.
    I do not want to elevate the technical over the managerial, 
but I do want to indicate this is not something that if we 
simply have a lot of good generalists looking at it, that they 
will be able to cure it. There is a need for some serious 
technical skill.
    Mr. Kolbe.  I appreciate that answer. I think it kind of 
confirms what I am saying that the elevator is not, as you have 
said, a purely technical issue. It is a labor-intensive thing; 
identifying the problems and then making the changes.
    The changes are not that difficult to make. You just have 
to do it. You have to find them and do it and make those kinds 
of changes.
    Mr. Director, you said that your office has a policy that 
you would withhold or not provide, or you would look askance at 
requests by agencies for funding for information technology 
that was not Y2K specific.
    If they were not making sufficient progress, if that agency 
was not making sufficient progress on the Y2K, can you tell me 
if any agency request for non-2000 information technology 
investments were denied by OMB as a result? If so, which ones?
    Mr. Raines.  No. During our budget review process, there 
were numerous requests by agencies that for additional funding 
for non-Y2K where they were not making sufficient progress, 
where we diverted the money to Y2K----
    Mr. Kolbe.  That was my question. They were specifically 
diverted or not approved for those non-Y2K because of their 
failure to really address, or their slowness to address, the 
Y2K problem?
    Mr. Raines.  Yes. We also took the position that we were 
not simply going to give them money for Y2K, in addition to 
funds they already had. You have before you now a supplemental 
request from the IRS where they want to invest additional funds 
in Y2K.
    We said to them what we have said to everyone. This is your 
number one priority. You should reprioritize within the agency 
to move funds that are available to you to Y2K. They have a 
supplemental request up here now to do just that, which would 
give them the authority to spend additional money on year 2000.
    Mr. Kolbe.  I have some more questions in this area, but my 
time is up. We will come back. Mr. Hoyer.

            strength of our economy compared to recent years

    Mr. Hoyer.  Thank you, Mr. Chairman. I mentioned the 
economy was in probably the best shape it has been in since 
President Kennedy's years. Would you tell the Committee whether 
you think that is accurate?
    Mr. Raines.  It is accurate. It may be that the economy is 
in better shape than those years, which is startling to me. I 
did not think that I would ever sit around seeing that. The 
reason I say that is that this expansion is being propelled 
fundamentally by the private sector.
    Whereas, the later years of expansion in the 1960s was 
being propelled by government spending; particular the build-up 
in Viet Nam. So, we are now moving into the time when we are 
going to equal or exceed the length of that expansion without a 
buildup of government spending as the thrust.
    I think that is, in part, accounting for this low 
inflation, steady growth, job creation nature of this 
expansion, as well as the additional revenues that it is 
throwing off for governments at all levels.
    Mr. Hoyer.  I think your observation in terms of being 
private sector driven is absolutely correct. I have talked 
repeatedly about the Kensian approach to government taken by 
the Reagan Administration and fueled by deficit financing the 
economy, which I think was what happened.
    We poured vast amounts of deficit spending into the 
economy. At that point in time, did you think we would have a 
surplus in fiscal year 1998?
    Mr. Raines.  Not in 1998. When we closed up the budget, we 
thought we would have a slight deficit in fiscal year 1998.

in light of the expected surplus, should federal employees get a larger 
                               pay raise?

    Mr. Hoyer.  We are all very pleased with the budget report 
and I mentioned the CBO report on fiscal year 1998. We are now 
going to have a surplus. While the budget was put together in 
October, November, December of last year, happily under the law 
the President will have another opportunity in August to make a 
determination whether FEPCA, under the present status of the 
economy should be followed.
    You and I have had some discussions, all of which have been 
good-humored, but also serious on both sides. I want to ask you 
two questions. First of all, I would hope you would do this.
    I hope that OMB and the Administration, as it is required 
to under law, revisits the recommendations it will make by 
August 31st on federal employee pay.
    We will look at the economy's present state and compare 
that with FEPCA requirements and follow the law. Would you like 
to comment on that?
    Mr. Raines.  Well, we will certainly follow the law.
    Mr. Hoyer.  I think that may be enough.
    Mr. Raines.  We have had very good discussions on this 
issue. It is quite a serious ones. There is federal pay, as 
well as other areas.
    For example, various trust funds, Highway Trust Fund and 
other trust funds have been areas in which we have had very 
strong fiscal restraint during our periods of serious deficits. 
This President and other Presidents have utilized the authority 
given to them in the law. We have expressed our policy concerns 
about some aspects of this Act and how it functions and 
expressed a desire to work with Congress to see if we could 
improve some of the calculations under the Act.
    Certainly, the time is coming when we will have to look 
very carefully at the interaction of our fiscal policy 
decisions and the calculations of pay under this Act. They have 
very significant consequences.
    So, we have to be very careful. For example, the pay raise 
that currently would be called for under the Act would cost an 
additional $7.4 billion.
    Mr. Hoyer.  What figure are you using; at 12 percent?
    Mr. Raines.  At 12 percent. That is over the $2.5 billion 
we already have. That $7.4 billion would have to come from 
agency budgets within the caps that we have. So, that is a very 
large resource allocation question.
    I think that we need to face that question just as we are 
now facing questions related to the Highway Trust Fund andother 
ones, and make some very tough decisions about how we are going to 
proceed in allocating those resources.
    Mr. Hoyer.  I thank the Director for his answer as usual, 
who is thoughtful, candid, and honest. Mr. Chairman, this 
Committee has had the opportunity through the years to, as you 
know, adjust federal pay in a fashion that we thought was fair. 
That has been supported very strongly by the Congress, by the 
House, and by the Senate. This is an issue which, as you know, 
we have not visited recently.
    There has not been an adjustment from the President's 
numbers for a number of years, specifically because I and 
others understood the position that the Administration was in, 
and we were, as a Congress, and the state of the budget 
deficit.
    I thought it inappropriate to visit it at that point in 
time. I think it is appropriate for us to visit it now. We do 
have a surplus. There is a statute on the books. That statute 
passed with some 25 Members voting against it. It passed 
overwhelmingly.
    We made a commitment to our federal employees that they 
would be treated comparably with the private sector. That is 
always fair. We should not do more than the private sector. As 
a matter of fact, the statute provides that ultimately we will 
do 95-percent of private sector comparability.
    The last question, therefore, Mr. Chairman, I would ask the 
Director is, because I think this is very legitimate and we 
need the Director to deal with it.
    What steps have you and/or the Administration taken to deal 
with the coming to a consensus on a formula that you believe 
accurately reflects what would be a fair pay system? I want to 
tell you, frankly, since 1981 I have had Administrations tell 
me, obviously Republican and Democratic, that gee whiz, it 
would be nice to do, but the formula does not accurately 
reflect what the pay adjustment ought to be.
    Since 1981, I have been hearing that and nobody has ever 
come up with a formula where they said, but this one does. I am 
in the position, as you know, Mr. Director, of saying fine. 
Which one does?
    It seems to me it is a serious matter. In fairness to our 
federal employees who do, in my opinion, extraordinary jobs, 
that we ought to have a formula that we can all refer to and 
say is the accurate formula.
    We know it is a difficult task. They do have some good 
benefits. Certainly, the retirement benefits are superior to 
the private sector. Nobody doubts that. The health benefit has 
become as good as the private sector, not because it is has 
gotten better, but because the private sector has come down, 
both in terms of contributions and in terms of benefits.
    On pay levels, even if you take those into consideration, I 
am convinced that whatever formula you come up with will show a 
significant disparity that needs to be addressed, if we are 
going to remain competitive in the market place.
    My last comment, and I know, Mr. Chairman, I have gone some 
time, but this is a very big issue that we are going to have to 
deal with in this Committee, in my opinion, this year.
    I am not sure where we are going to get the money. We 
clearly cannot go to 12 percent. That would be totally 
unreasonable. We do not have $7 billion.
    I would certainly hope, Mr. Chairman, that we could focus 
on making an adjustment above the 3.1 percent that is proposed 
because that 3.1 percent, when compared with 12 percent, is 25 
percent of what the law, in my opinion, requires.
    So, we are going to have to deal with this. We ought to 
deal with this in fairness to our federal employees.
    Mr. Raines.  Well, Mr. Hoyer, since we last talked about 
this, we have set up a working group between OMB, OPM, and the 
unions to begin talking about this issue. We have had several 
meetings between employee representatives and senior 
Administration officials.
    I have had meetings myself with them to talk about the 
issue. OPM has included in its strategic plan and in its 
performance plan coming up with a pay reform proposal. So, we 
have begun the process.
    We certainly have not concluded it. I think we are getting 
the focus more on the issue of how can we have a process that 
we can all depend on. Where it does not become a litigated 
issue each year.
    I agree with you. I think federal employees have a right to 
be considered. That their pay is not considered to be the last 
item to be put into the budget. I think that is wrong.
    How we get from where we are to a pay system that makes 
sense for the Federal Government I think is important, if for 
no other reason than from a management standpoint. We all put a 
lot of emphasis now on making the government work better.
    We have got a lot of difficult problems. How will we expect 
to deal with all of these and, at the same time, underpay our 
employees in a tight labor market, does not make a lot of 
sense.
    Over time, what is going to happen is that our best people 
are going to leave. They are going to leave and go elsewhere 
and we are going to be constantly wondering why is it we cannot 
perform to the levels we would like to perform?
    We will quickly find that we are not being competitive for 
our best people. That does not mean everybody is our best. So, 
we are going to have to have some ability to make some 
judgments. That will be hard for some of the employee 
representatives to permit judgment to be a part of that 
process.
    Good management will require that as well. I am hopeful we 
will come up with something that can endure and not just simply 
be a one-year wonder as most of these have been. Then as the 
reality of the cost hits, then we sort of shrink from carrying 
it out. I do not personally have the formula yet, but I have 
been working to try to come up with one.
    Mr. Hoyer.  Thank you, Mr. Chairman.
    Mr. Kolbe.  Mr. Price.

 complex issues associated with making research data available to the 
                                 public

    Mr. Price.  Thank you, Mr. Chairman.
    Mr. Director, I would like to just briefly refer to the 
discussion you had with Mr. Aderholt. You may or may not want 
to comment on this, but it occurs to me that this business of 
ensuring that the public has access to publicly-funded research 
has some complexity to it. It requires some common sense in 
application.
    Departmental waivers may be one thing. Common sense may be 
another. There are lots of questions that occur to someone 
thinking about this for five minutes. What is the 
accountability of the individual researcher?
    What is the responsibility of the individual researcherfor 
responding to requests from whomever? How is this to be administered? 
What do we mean when we talk about the product of research?
    Are we talking about review of the transcripts? Are we 
talking about the laboratory data? Are we talking about 
material where there may be a confidentiality question? Are we 
talking about the finished product of the research?
    As I said, you may not want to give a detailed response, 
but I think there are some complexities here that do not 
necessarily lend themselves to simplistic solutions.
    Mr. Raines.  I tried to be careful in my answer to talk 
about the creation of intellectual capital. That is different 
than reading the circular as being a Freedom of Information Act 
in disguise.
    The research that the Federal Government typically funds, 
particularly university research, the results typically are 
published, if they are publishable. Sometimes the result is 
something that is not publishable, but it typically is 
published.
    Most universities insist on that right to be able to 
publish the result of research. It is important that we 
encourage the dissemination of research because it does add to 
our intellectual capital.
    As to the information that is otherwise associated with a 
grant, we have other laws and regulations that relate to those 
as to when Freedom of Information requirements apply, when 
Privacy Act requirements apply, when the ethical requirements 
for whatever the field of research may be.
    Those should not be read into a general requirement on the 
recipients of grants that the product, the intellectual 
product, the intellectual capital be made available.
    The clearest example of that is where there is a patent 
that comes from the research. The agencies have to negotiate 
that with the grantees.
    Who gets the rights to the patent? Who has the rights to 
the work? It is getting more complicated because now we are 
encouraging more and more of our grantees to put their own 
money in.
    Therefore, you must have a negotiation because it is a 
partnership. We are not paying 100 percent of the cost of many 
of our grant programs as we did in the past. So, you are going 
to see on a case-by-case basis where it may in the government's 
interest to in fact waive its rights because it will encourage 
the recipient to take certain actions or make certain 
investments.
    A general proposition that I think is the right one, that 
the product, the intellectual product of research, must be made 
available to the public; not only because it is publicly-
funded, but because a part of the reason we are funding it is 
to add to the nation's intellectual capital.

               reserving the surplus for social security

    Mr. Price.  Absolutely. We should not be funding it if 
there is not a legitimate public purpose involved. Well, that 
is very helpful.
    Let me move to my broader question before my time expires 
yet again. It has to do with a much remarked upon feature of 
your budget presentation last month. That is the decision to 
recommend against spending any surplus that might be generated 
and to reserve those funds until some kind of long-term Social 
Security plan is developed.
    The President proposed that and the result, as you remarked 
before our Budget Committee, would be to buy down the debt 
owned by the public in the process of reserving those funds.
    Let me ask you for your preliminary comments on this. What 
if we used that surplus to reduce the debt owed to the Social 
Security Trust Fund and then prudently invested those funds in 
a more diverse portfolio, including equities.
    As you know, some have suggested that, including some long-
term champions of Social Security. What would be the advantages 
of such a course in your view? I wonder if you could offer us 
some brief thoughts on this as we anticipate this national 
discussion.
    Mr. Raines.  Well, without prejudging where the 
Administration may come down on this issue, let me give you a 
little of our analysis of investing Social Security Trust Funds 
in things other than the special treasuries that they are now 
invested in.
    The first affect is that investment would count as an 
outlay. Therefore, if you invested, for example, $10 billion of 
a surplus, having made that investment would cause that $10 
billion to go away in a unified budget, so that you would be 
spending it in that sense. Since it is a surplus, it would not 
throw the government into deficit.
    Then you have got the question of how you make the decision 
of what to invest in. Equities have traditionally and over long 
periods of time had substantially higher returns than 
treasuries.
    So, you would have an expectation of a higher return over 
the long run. One of the reasons equities have a higher return 
is that they have a higher risk. That risk is manifested in the 
volatility in the value of that stock.
    So, that over any period of time, you would expect the 
value of that portfolio to have substantial changes, as much as 
25-percent changes, during any one particular period of time. 
If you are investing the Trust Fund, what that can mean is that 
you may see periods in which the value of the Trust Fund would 
decline dramatically.
    You will see periods where it will rise very dramatically. 
We would have to, as a government, get comfortable with that 
prospect and not decide, as many individual investors do, to 
sell at the bottom because of the drop and then fail to recover 
to the top and then again buy in at the top and sell at the 
bottom.
    That is a discipline that the Government would have to 
develop. We would also have to decide who gets to decide what 
to invest in.
    Mr. Price.  We would need to have some type of government 
structure in which we could have confidence.
    Mr. Raines.  Well, you would have to have that, but it 
would have to be fairly independent because very quickly you 
could understand how for good and sound public policy reasons, 
people might want to say, well, yes I believe in investing in 
equities of companies, but not in these kinds of companies; not 
in companies who engage in these kinds of activities.
    For example, if we were still in the period when South 
Africa was under an apartheid government, would companies that 
did business in South Africa be eligible or not? There is a lot 
of research that has been done by universities as to what 
affect that has on returns.
    Who would vote the proxies? Since that controls the 
management of the companies, would the Government vote its 
proxies? So, there are a number of issues that would have to be 
resolved in any such plan.
    We would have to, as a government, get ourselves 
comfortable with the government owning some share of the 
economy and its actions as an owner of some share of the 
economy.
    Over the long run, the portfolio theory would tell us that 
you would have higher returns from investing in equities than 
you would from investing in fixed rate treasuries.
    Mr. Price.  Therefore, the solvency of the Trust Fund would 
presumably be extended by some years.
    Mr. Raines.  Yes. A rough rule of thumb is $100 billion 
added to the Trust Fund today would extend the life of the 
Trust Fund by about one year if it was invested in treasuries, 
and some multiple of one year if it were invested in equities.
    Mr. Price.  Thank you, Mr. Chairman.
    Mr. Kolbe.  Mr. Aderholt.
    Mr. Aderholt.  I do not have any questions right now, but I 
might have some to submit for the record.
    Mr. Kolbe.  Certainly. Submit those for the record.
    Mr. Kolbe.  Just one thing on what Mr. Hoyer was suggesting 
here on the issue of voting. I have some other questions back 
on Y2K. But on voting the proxies, the Thrift Savings Plan does 
not vote any of the proxies.
    Mr. Raines.  If you own the stock, you do not have any 
choice. You cannot vote.
    Mr. Kolbe.  Is that what we do with the Thrift; all of the 
stock that is held by the Thrift?
    Mr. Raines.  No. The Thrift Savings Plan actually has an 
instruction to those to whom are managing the funds that they 
will vote the proxies in the interest of the shareholders. So, 
it has been delegated to the managers of the several funds.
    Mr. Kolbe.  So, there is no decision by the government.
    Mr. Raines.  That is right.

   establishing year 2000 computer conversion as a priority activity

    Mr. Kolbe.  I have just been advised that the Maryland 
Basketball Game is on. We have some priorities. I do have a 
couple of very quick questions.
    Mr. Raines, you gave what I thought was a very good answer 
on the issue of, or at least I was hopeful about your answer 
that you have actually withheld or redirected some of the money 
for non-Y2K information technology in order to resolve this 
problem.
    You also said, last year, that if agencies were falling 
behind in reaching their compliance with the Y2K, that you 
would set up some specific structures, management structures, 
to oversee it. Have such structures been set up in some 
agencies? Can you tell us which ones or give us a list for the 
record of those?
    Mr. Raines.  I can give you a list.
    [The Y2K compliance list referred to follows:]

                     Year 2000 Computer Conversion

    All agencies have designated a senior official to be 
responsible for the Y2K effort. Ordinarily that official is the 
CIO or reports directly to the CIO. And in every major agency, 
the agency head is personally involved in assuring that the 
resources necessary to fix the problem are being applied.
    In our March 10, 1998 report to the Congress on Y2K 
progress, we listed six agencies where we believe progress is 
not satisfactory. In these agencies in particular, the 
effectiveness of the current management structures is one of 
the issues we are examining. Of those six agencies, only in the 
Labor Department are we satisfied with the current structure. 
In four of them--Education, Energy, Transportation, and AID--we 
are working very closely with top management to assure that a 
senior, qualified Y2K team is in place with adequate authority 
to make satisfactory progress. In the sixth, HHS, the problem 
is structural. The Health Care Financing Administration has 
limited ability under statute to induce its Medicare 
contractors to address the Y2K problem in a timely manner. We 
have transmitted legislative language that would correct this 
structural problem.

    Mr. Raines.  Let me just mention quickly two. The IRS has a 
special board that manages their technology investment.
    Mr. Kolbe.  I am very aware of that one.
    Mr. Raines.  We have a representative who sits on that 
board. Within HCFA, a similar structure has been set-up. We 
have representation there as well. We are working now with the 
Department of Education in a similar way with regard to their 
student loan operations.
    So, we expect that we will see, over time, more of our 
participation in areas where there needs to be an additional 
dose of management.

 independent review of agency progress on year 2000 computer conversion

    Mr. Kolbe. Are there independent mechanisms for overseeing 
what agencies are doing on the Y2K or do you just rely on their 
reports when they tell you, oh yes, everything is coming along 
fine?
    Mr. Raines.  Because we only have 500 people, we cannot do 
audits.
    Mr. Kolbe.  So, what do we do to make sure an agency is 
really doing what we think they should be doing, that they say 
they are going to do?
    Mr. Raines.  Well, we have got several. One is these 
periodic reports that are not just done by their CIOs, but are 
also reviewed by their budget offices internally. Their 
Inspectors General have the right to go in and look at whether 
or not these reports are accurate.
    The second is we have been motivating the general 
management of the agency through the President's Management 
Council, to make this one of their management priorities. So, 
those managers are looking, overseeing this as well as OMB.
    So, there may be cases where the information is not 
accurate, but I think we are giving an intensity now to the 
seeking of information that we will have all of the management 
structures of the Federal Government focusing on this issue 
through this next year and a half.

       accountability for year 2000 computer conversion failures

    Mr. Kolbe.  One final question, Mr. Raines, on January 2, 
2000, we have had a major failure of, let us say, the FAA 
computer systems. If we have the failure to get Social Security 
checks in the mail, tell me, where do you think the buck stops 
on this? Who do you think we should hold responsible for this? 
Should it be the agency manager, director, or at the level of 
secretary, or should it be Franklin Raines at OMB, or should it 
be Congress? Who should it be?
    Mr. Raines.  Well, this is the responsibility of 
management. All of those of us who signed up for fixing this 
problem as one of our performance goals should be held 
responsible.
    OMB has signed up. The Assistant to the President, John 
Koskinen, has signed up. The Cabinet Members in 
theirperformance plans have signed up. I expect that they are holding 
accountable people within their agencies. So, each of us who signed up 
in the performance plan should be held accountable. That is why we are 
working so hard on this to make it happen.
    That is the purpose of performance plans, to get people to 
sign up, and then you hold them accountable. If we have serious 
problems, then it will have been a serious management failure.
    It is one that I hope that we can avoid. I cannot promise 
you there will not be any problems. My hope is that there will 
not be serious problems because we have focused the best talent 
in the government on trying to solve this problem.
    Mr. Kolbe.  Thank you, Mr. Raines.
    Unless Mr. Hoyer has some questions that override the 
basketball game, I am prepared to complete the hearing.
    Mr. Hoyer.  No, sir I do not. My assumption was, if it were 
the Arizona game, we would have ended before this. But maybe it 
will be Maryland and Arizona at some point in time.
    Mr. Kolbe.  It could be. Mr. Raines, thank you very much 
for being with us today. The Subcommittee stands adjourned 
until tomorrow morning.


[Pages 353 - 482--The official Committee record contains additional material here.]



                                            Friday, March 13, 1998.

                 OFFICE OF NATIONAL DRUG CONTROL POLICY

                                WITNESS

GENERAL BARRY R. McCAFFREY, DIRECTOR

                      Chairman's Opening Statement

    Mr. Kolbe. The meeting of the Subcommittee on Treasury 
Postal Service and General Government will come to order. We 
are very pleased this morning to have with us General Barry 
McCaffrey, the Director of the Office of National Drug Control 
Policy, as he testifies on the President's 1999 budget request 
in this area of drug control.
    The problem of drugs and the human tragedy that it has 
caused has been with us for a long time. But at no time in 
history have there been so many resources, so many people and 
institutions that have felt its sting. We are reminded daily of 
the destruction that drugs cause in our country, and the damage 
it wreaks on children and families, the waste that it lays to 
communities, the millstone that drug production represents to 
the struggling societies in Latin America and Asia, the health 
scourge that it represents, the horrific violence, crime, the 
corruption that it engenders.
    The Federal Government's effort that we mount every year 
against drugs is tremendous, or at least it seems so. $17.1 
billion is requested for fiscal year 1999. But it is only a 
small part, really, of the total cost that the Nation bears in 
this fight. Certainly, that $17.1 billion is not too high a 
price to pay if we can be making a difference in the war 
against drugs. That is the issue that we have before us today. 
That is the concern that I have and that our committee has. And 
I know that is the reason, General McCaffrey, that your office 
exists today.
    I hope that we are going to be able to explore with ONDCP 
how you think we are doing in that regard--both in terms of 
your agency's activity, but even more importantly, in terms of 
the overall National Drug Strategy and how well we are doing 
with that. General McCaffrey, you have heard my views and those 
of some of the others about the concerns that I have expressed 
in Committee hearings here in the last couple weeks about the 
imbalance in the resources and the attention that is paid to 
Treasury law enforcement, which happens to come under the 
jurisdiction of this subcommittee.
    I do not believe, however, that my concern about this is a 
parochial one, just because I chair this Subcommittee, as it is 
related to resources. I think I would feel the same if I was 
chairing the Subcommittee that has Justice Department under it. 
And I say that because both of them are important along my 
border. It is really whether or not we have an integrated 
approach to the drug policy, whether or not we have the ability 
to manage Federal programs so that we can respond to the 
dynamic situations that confront this country in drugs. It 
seems to me there is a major disconnect in the development of a 
coherent policy on law enforcement and the implementation of 
that policy--and counterdrug efforts are central to that.
    I think, I am afraid, that we are not succeeding, as well 
as we might as a government in this area. We have the 
resources, the people. We have talent. We have the will. But we 
seem to just lack what I would consider a concerted approach to 
our policy. It is not enough to compile a book with all the 
Federal programs that are in it or to develop a detailed 
performance plan that looks good on paper. These are points of 
departure as we discuss the national drug policy.
    What is needed is to be able to make the best use of our 
Federal agencies, the State, local, foreign governments with 
which they work, given the flexibility and the vast funding 
that is available to our opponents. But that, too, it does not 
seem to me is happening, and we are not doing the best we can 
to serve the American public when that happens.
    I know that you oversee the entire Federal counterdrug 
effort, so I think it is right that you address some of these 
concerns today. Even if we disagree about the metaphor that is 
best used to describe the drug problem in our country, whether 
we talk about it in terms of a disease or war, I think you will 
agree with me that law enforcement, interdiction and supply 
control legs are all critical to our success in this effort.
    General, you oversee an organization that will soon reach 
an authorized level of 154, including the detailees that 
areassigned to you. Your budget, chiefly coming from the Special 
Forfeiture Fund, has grown as well. Although there are misgivings about 
the top-heaviness of ONDCP, this Committee is certainly giving you the 
support, all the support and more actually, that has been requested by 
the Administration, and we wait expectantly to see what it is bringing 
us.
    I think so far the results are very mixed. Let me highlight 
a few of those. Last year, you announced that youth drug use 
seemed to be peaking; that the rate of use and attitudes seemed 
to be leveling. In the most recent Monitoring the Future Study, 
however, the tables in your survey indicate there was an 
increase in drug use of various types, including marijuana, 
cocaine, heroin, and LSD. While the rate of increase in drug 
use may be slowing, it is not good enough; we need to see some 
real and actual reductions.
    Seizures of drugs are up for the Coast Guard, but 
significantly, significantly, down for Customs, where drugs 
appear to continue to make it through our borders. Seizures of 
cocaine by Customs went down significantly in 1997, 12 percent 
for cocaine. Smuggling appears to be continuing unabated, which 
suggests that something is going on with new avenues of 
smuggling into the country.
    New and creative pressures seem to be driving more 
contraband to where we are not doing the interdiction job; in 
containers, railcars, cargo trucks, and to new destinations. 
The seaports are facing massive pressures with mediocre 
resources, and there is very little inspection of growing 
railcar traffic between the United States and Mexico.
    You claim that our international efforts are bearing some 
fruit, and yet for the reductions of cultivation in Peru and 
Bolivia, there may be mixed explanations and they seem to be 
offset by the increased cultivation in Colombia, where our 
strategy seems very unclear at best. In the Caribbean, where 
activity is increasing dramatically, we are being caught short, 
resources there have been reduced quite dramatically.
    Defeating money laundering is critical to throttling the 
drug lords' business and hitting traffic organizations where it 
counts. Yet, we seem unable to really get the resources into 
this area in the direction where I think it is beginning to 
bear some fruit in several major investigations.
    Operations by law enforcement agencies are being hampered 
by the lack of adequate tactical, operational intelligence, 
despite increased funding for intelligence operations of all 
kinds in different agencies.
    General, I am uneasy that all these resources and energy, 
and the lives that have been risked, and the lives that have 
been lost in this struggle, we are not putting it to the best 
use because we just do not seem to have adequate coordination, 
both in and out of the budget process to see that all the 
pieces in this drug fight fit together between agencies of the 
Federal Government and, frankly, between agencies of State and 
local and Federal Government, and between the United States and 
other countries.
    I know that you have to defer to the OMB for some of this 
problem, but just yesterday before this subcommittee, Director 
Raines said that OMB does not specifically consider the impact 
funding one area may have on another. I think the OMB and ONDCP 
have to take a bigger view to be able to address this problem 
and to fix it.
    But finally, I want to credit ONDCP, and I am not trying to 
be totally critical here today. I want to credit ONDCP with 
developing a system to measure performance effectiveness. I 
know about the work that went into the product that you have 
delivered recently to us, and we are going to continue to 
evaluate this over the coming year. We accept it as a very good 
faith effort to make the agency performance accountable so the 
policy, and most certainly resources, are going to be used in 
the most effective manner possible.
    Now that the system is in place, it really has to be used; 
it has to stand up to the test. This subcommittee and, for that 
matter, I think the whole committee, and I think the entire 
Congress authorizing committees, as well, is going to be 
watching this very closely as to how well we monitor and hold 
the agencies' feet to the fire on their performance standards.
    It is critical that the scarce resources that we are using 
in this effort have the absolute maximum impact we can. And 
that may mean that we are going to break somebody's big rice 
bowl along the way. That, General, is where you have got to be 
willing to stand up, stick your neck out, and be counted in 
this fight. You have done it before in your career, and I have 
every confidence that you can do it again.
    I look forward to hearing from you this morning. I know we 
have some presentations as part of your remarks. But before I 
do, let me call on our ranking member, Mr. Hoyer, for his 
remarks.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Let me echo the chairman's remarks with reference to the 
scourge of drugs that confronts our country and confronts the 
international community. It is a cancer in our communities that 
we seek to eradicate, we seek to confront as effectively as we 
possibly can. That is why, of course, the Congress in the 
latter part of the 1980s adopted legislation which set in place 
an operation to coordinate the drug effort.
    I am pleased to welcome General McCaffrey to this 
enterprise. General McCaffrey, on numerous occasions, has been 
requested by his country to confront some of its most deadly 
enemies. He has done so in every instance with distinction and 
with courage and with great ability.
    It is important for us to recall that he began his military 
career at the age of 17 as a cadet at the United States 
Military Academy. On graduation from the Academy and during the 
course of his career, he served in four combat tours in the 
Dominican Republic and two tours in Vietnam and most recently 
in the Persian Gulf.
    In fact, Mr. Chairman, as you know, when he retired from 
the United States military, he was the youngest four-star 
general in the U.S. Army and the most decorated soldier in 
America. He twice received the Distinguished Service Cross, the 
Nation's second highest award for valor. He received two awards 
of the Silver Star for heroism, and three Purple Hearts for 
wounds that he received in the service of his country.
    It was for all those reasons that the President chose 
General McCaffrey to lead this critical effort. It was 
obviously the President's perception that we needed someone of 
unimpeachable integrity, unquestioned courage, extraordinary 
organizational skill, who had held large critical enterprises 
in the past. I believe since undertaking this responsibility, 
Mr. Chairman, that General McCaffrey has gone about the 
business not of politics, but of accomplishing an objective. He 
has done so by bringing to bear his skill in identifying the 
objectives and organizingto accomplish those objectives.
    I remember when General Schwarzkopf came back from the 
victory in the Persian Gulf, he spoke to a joint session of 
Congress, Mr. Chairman; and you will recall as well, he said to 
the Congress that he thanked the President, the Congress, and 
the American public for having the faith and trust in him and 
the men and women, including General McCaffrey of the forces 
that we sent to the Persian Gulf to give them an objective, to 
give them resources sufficient to attain that objective, and 
then although he did not phrase it exactly this way, getting 
out of the way. Doing that, we saw ourselves victorious.
    I am convinced, Mr. Chairman, that we can be victorious in 
this battle as well. In 1989, Mr. Chairman, we spent $6.7 
billion on the coordinated drug effort. That was six/tenths of 
the budget, which was then $1.2 trillion. This year's budget, 
Mr. Chairman, is $1.7 trillion, and we are going to dedicate 1 
percent, a 40-percent increase over what we did in 1989, in the 
effort to confront those who would undermine the health of our 
communities, the lives of our young people, the safety of our 
families by bringing drugs into this country, by selling drugs 
and by lionizing a drug culture.
    General McCaffrey, I congratulate you for the multifaceted 
approach that you have outlined in your strategy. That strategy 
has been attacked, as you know. You are not unused to having 
your strategies attacked, both rhetorically and on the 
battlefield. I have confidence that you will be able to answer 
those attacks, convince the American public of the rightness of 
the strategy, and the confidence that you have in the 
effectiveness of that strategy in doing what the American 
public wants done, eradicating to the extent possible illicit 
drugs, those undermining the health and safety of our 
communities, from our communities.
    So, General, I look forward to hearing from you. This is a 
very important hearing. It is important that the American 
public have confidence in our plan and that the Congress have 
confidence in that plan so that we can implement it in an 
effective fashion. And as General Schwarzkopf has said, define 
the objective, allocate the resources necessary to accomplish 
that objective, and then trust those whose responsibility it is 
to carry out the plan and accomplish the objective.
    I, General, have confidence that you are such a leader, but 
I share the chairman's view, and I have said this to you in 
private as well, it is critical that someone of your skill and 
ability and reputation ensure that all of the disparate 
elements of our Federal Government and, indeed, State and local 
governments that are critical to the accomplishment of this 
objective do, in fact, coordinate their efforts and marshal the 
incredible resources that we are spending, $17.1 billion at the 
Federal level, but billions more at the State and local levels, 
marshal those efforts for success.
    General, I look forward to your testimony and thank you 
very much.
    Mr. Kolbe. Thank you very much, Mr. Hoyer. Do any of the 
other members have any opening statements? All right. We will 
go directly to General McCaffrey. I think you have a 
presentation as well that you want to give us this morning. 
Thank you very much, General McCaffrey, and again welcome.
    General McCaffrey. Thank you, Mr. Chairman and Congressman 
Hoyer, and other members of your committee. Let me, if I may up 
front, thank you quite sincerely for your own leadership and 
support, you personally, as well as other members of this 
committee over the last year.
    In particular, I could underscore, Mr. Chairman, your own 
commitment to strengthening the Southwest Border. The 1998 
Strategy had $105 million in there for the port and border 
security initiative. We will deploy a thousand new border 
patrol agents, and more importantly, possibly in response to 
your own concern which I share, we will give Customs Service 
the technology they need so that these 20,000 dedicated men and 
women of the Customs Service can begin to more effectively do 
their jobs.
    Now, let me also underscore that there are others in the 
Congress that have been vital to this interdiction effort. I 
need to publicly thank Congressman Wolf for his own energy in 
the interdiction effort as well as the leadership of 
Congressman Dennis Hastert and others from your caucus.
    I would also like to publicly state my gratitude to all of 
you that were involved in the National Youth Media Strategy; 
$195 million bipartisan support, both Houses of Congress. It 
will pay off and I will talk about that in some detail. But I 
would specifically mention Congressman Carrie Meeks and her 
belief in this from the beginning, and the energy with which 
she personally became involved in it.
    We are in 12 pilot cities right now. We are collecting 
data; we will try to go nationwide in June. Mr. Chairman, there 
are present with us in the room, and I am very grateful for 
their support and participation in creating these strategies, 
some folks that I would like to recognize; Mary Elizabeth 
Larson from CADCA has been absolutely vital, integral to our 
community coalition efforts, and as you know, CADCA represents 
more than 4,000 community coalitions across America. And with 
the support of the Portman-Levin bill, which also had very 
strong bipartisan support in the Senate, we will try and expand 
the number of those community coalitions from 4,000 to 14,000 
in the coming 5 years. So we thank CADCA's leadership and 
support.
    We also have Mike Townsend and Sean Clarken, both Vice 
Presidents for Partnership for a Drug-Free America; our media 
campaign partner, Jim Burke, of course, has provided overall 
vision and leadership, 30 some odd professionals who have made 
absolutely major contributions for 10 years to communicating a 
no-drug-use message to America's children. I thank them for 
their participation.
    There are several people here from the Baltimore-Washington 
HIDTA. They are representative of the more than 20 HIDTAs that 
are now supported countrywide because of the money that your 
committee has stood behind. But I thank Tom Carr, Johnny 
Hughes, Floyd Pond and others for being present with us.
    Finally, let me mention, if I may, probably the most 
important person around, Dennis Windsheffell, because he is a 
Lion's Club representative, who has acted as one of our primary 
leaders to what we call the Civic Alliance. We brought together 
33 of the great patriotic organizations of this country, One 
Hundred Black Men, Kiwanis, YMCA down the list, the rotary of 
the great organizations that make America work at the community 
level. And they wrote in the space of 3 days a program that 
they have dedicated themselves to in the coming years. And we 
believe that the 56 million Americans who are participants in 
those 33 coalitions are really another major component of what 
we are going toachieve in our efforts to confront drug abuse. 
So I thank all them for being present.
    Let me very briefly, Mr. Chairman, give you an overview of 
what we are trying to do, and I will do that to give you a 
context for the $449 million ONDCP budget. But to see that as 
part of a larger reality, which as you say, involves our 
leadership of 14 Cabinet officers and President Clinton's Drug 
Cabinet Council and in nine appropriations bills totaling this 
coming year $17.1 billion, a 6.8 percent increase with, 
disproportionately large investments in prevention and 
treatment of drug abuse, and in linking those treatment 
programs to the criminal justice system.
    I would be glad to talk about that larger budget context to 
the extent that you wish. Let me make sure that I hold up and 
tell you of the four key documents that are my management tool 
approved by the President of the United States to bring 
together this Federal and national effort. Document number 1 by 
law is the National Drug Strategy that I send to you each year. 
It was released to the American people by the President in a 
radio address a few weeks ago. It is a 10-year document.
    We will put it on the table each year to take into account 
the dynamic changes in this problem over the years. We have 
suggested that the five goals that are outlined on the chart to 
your right, and the supporting 32 objectives, represent a 
coherent long-term look at the problem that is informed by the 
people in this country in prevention, treatment, law 
enforcement, education, medicine and coalition building who 
know what they are talking about.
    This document has been extremely well-received. It should 
have been. It was the product of more than 3,000 individual 
consultations, most of them in writing. I, my chief of staff, 
and my strategic planner read each one of them. So I would 
underscore that we do have the Strategy. It is widely 
understood in the field to be the central conceptual outline 
around which we will organize our efforts.
    The second document you should be aware of is OMB and 
ONDCP's 5-year drug budget. Now, we ought to be modest in our 
estimation of how good it is. This is the first time in our 
history that OMB and ONDCP, with the other nine appropriations 
bills that we have sent to Congress for the 1999 budget, have 
had a progression of our drug funding. I welcome your own 
guidance and leadership, along with the other congressional 
appropriators, on this issue.
    I don't think we can talk about drug abuse in America in a 
1-year time frame. If we are to see the trade-offs between 
prevention and treatment and the $36 billion we now spend on 
locking up 1.7 million Americans, we simply have to have a 
longer perspective than simply next year's budget. Frank Raines 
and I offer that for your consideration in that document.
    The third document, and there is a chart here that may be 
helpful in understanding this, are the performance measures of 
effectiveness. Mr. Chairman, I thank you for your kind remarks 
about its utility. This is a revolutionary step for Dr. John 
Carnevale of my staff, and 26 work groups around the Federal 
Government who spent over a year of effort to produce this 
document.
    We think it is probably a first-rate initial attempt to 
gain a handle on the output functions of government, in 
response to the 1993 GAO guidance. It finds some way to measure 
not just how many dollars and manpower were expended on input, 
or to talk about the process, but to say, what did you achieve 
with the resources that Congress gave you last year?
    We have identified and articulated 12 outcome functions. 
Where do we want to be in 10 years? We put numbers on those 
outcomes. We then backed off and said, what would the 5-year 
intermediate goals be, and we put numbers on those goals. In 
the coming year, we will develop annual targets so that our 
intent clearly is to yield ourselves vulnerable to debate by 
this committee and others on what did you do last year with the 
money we gave you. And that is the purpose behind this 
document. I am sure we will learn from it. I am positive we 
will find that the 82 intervening variables that we identified 
may need revision, and I would welcome your own input in that 
process.
    Now, let me, though, be unequivocal on one aspect of it. 
And I have asked Sarah Vogelsberg to put up this chart. If we 
achieve the 10-year goals as outlined in the President's 
performance measures of effectiveness, we will have reached the 
lowest rates of drug abuse in America in 30 years. Before my 
two shiny new grandsons are in the eighth grade, we would get 
drug abuse among youngsters and the adult population down to 
the lowest rates in over three decades. And that is a laudable 
goal.
    Now, I also think it is absolutely fair for the Congress to 
debate whether those goals are adequate or whether they can be 
achieved in a front-loaded manner. I would welcome a debate, 
founded on expert opinion and studies, as opposed to what I am 
concerned about, a political debate oriented around the 
November congressional elections or the Presidential election.
    So that is on the table. We believe those are ambitious but 
achievable goals. And I would tell you they were developed with 
the absolute direct involvement of some 200 experts around the 
country: at UCLA, at the University of Michigan, at Harvard, at 
Johns Hopkins, at the National Institute of Health, and the 
National Institute on Drug Abuse. I leaned very heavily on the 
advice of Dr. Alan Leshner our NIDA Director; Dr. Harold 
Varmus, a Nobel prize laureate NIH Director, and others. I 
offer that performance measure of effectiveness for your 
consideration and debate.
    Now, finally, we have a classified secret document. This is 
the second year we will put it out. This gives our strategic 
guidance to the 50 agencies of the government who are involved 
in either law enforcement sensitive actions or intelligence 
functions or DOD support of the drug effort. We will try and 
make sure that this year's achieves a better sense of 
integration with the unclassified and principal document. That 
is also on the table.
    Very quickly, let me mention our own budget. The ONDCP 
budget is on the table. It includes 154 positions. You are 
quite right, we are now up to almost full strength, 124 full-
time employees.
    I still lack the Senate-approved positions. We have one 
approved, a very distinguished police chief in Rochester, New 
York, Bob Warshaw. I will soon, hopefully, see an approval of 
Mr. Tom Umberg, our Director of Supply Reduction. And we have 
two more beyond that to table and get approved.
    I think that the budget achieves our purpose, and I would 
welcome your own questions on the HIDTA program, which is a 
part of our $449 million, on the Drug-Free Communities Act, on 
the National Youth Media Strategy, on the CTAC scientific 
technology budget.
    Let me very quickly talk about some of these programs. Let 
me see what the next one is. The National Youth Anti-drug Media 
Campaign, and we can respond to your own questions, but we are 
enormously encouraged by where this is going. You gave us $195 
million, $178 million to be spent this year. We have designed 
and are now implementing our pilot test phase, $20 million, 12 
cities.
    PDFA, of course, is our coequal partner in this. But we 
have been assisted by some really smart people. The Porter-
Novelli Corporation is providing our strategic document and 
planning. We borrowed DOD's media buying service for this pilot 
phase. We have had Annenberg School of Journalism involved in 
it, the QUAD-A, the Ad Council of America, and others.
    We are seeing some unintended effects that we are going to 
have to assess before we go national in June. It is prompting a 
greater sensitivity on the part of these 12 communities to the 
extent of the problem in their midst, and it is therefore 
creating a cascading effect in which Americans who are facing 
this tragedy of drug abuse in their own family, the 13 million 
of us who are abusing drugs around the country, are now calling 
in asking for help. We think this is solid good news.
    We are also seeing a tremendous increase in orders for 
information out of our clearinghouse. We are seeing an enormous 
increase of volunteerism in which the local news media is also 
now tracking over to the issue. So the initial program is 
pretty good. In June we will go countrywide. The big challenge 
will be a national effort sustained for 5 years that is 
targeted on 200 different news media areas of the country so 
that the message is not just national TV, but local radio, 
local print, on the Internet, and a message that resonates with 
the target population, Native American, Hispanic, African 
American, Hawaiian, Southern. The message has to resonate with 
our children and our parents regionally.
    Next chart. Let me, again, go back to why this is 
important. If we look at University of Michigan data, one of 
the four principal Federal studies that we look at each year, 
Secretary Donna Shalala, of course, being the principal monitor 
of this study, as well as the household survey, we understand 
that drug use among adolescents is a function of their 
attitudes. If we can shape their values between the ages of 9 
and 19 and do it with parents, school teachers, ministers, 
coaches, community coalitions, local law enforcement and this 
news media campaign, we will then affect their likelihood of 
being fearful of drugs and not using them. And if we look back 
over the history of it, on MTF data, we have seen that 1990 
youth attitudes started to go bad. In 1991, fear of drugs 
started to go bad. In 1992 drug use rates went up and it went 
up for 5 years straight.
    Now, Mr. Chairman, what happened last year, we ought to be 
cautious about characterizing. But last year, for the first 
time in 5 years, it didn't go up. The Household Survey said it 
went 10.8 percent down to 9 percent. This is not statistically 
significant. But what is significant was it didn't go up.
    In the Monitoring the Future study, we are seeing a 
continued momentum in increase in drug use by 12th graders. If 
you look at the eighth grade population, and I would argue that 
is the most sensitive group, the drug use, and the value system 
relating to the use of drugs including alcohol and cigarettes 
for the first time in 5 years went down and not up. So I would 
say it is premature to be optimistic. What I hope to alert you 
to is that next year I hope we are looking back at this last 
year as the turning point in which we started to bite into 
youth value systems.
    Next chart. Let me just briefly mention the HIDTA program. 
We do have the Baltimore-Washington HIDTA in the room. There 
have been three new HIDTAs identified. I will designate them in 
the coming weeks. This is a widely applauded program. It began, 
as you know, a very short time ago with some five HIDTAs, 
primarily a port of entry approach into the United States. We 
are now up to $162 million funding for this effort. There are 
20 of them.
    We have five of them that link the entire Southwest border. 
The whole notion is, that local, State and Federal law 
enforcement and prosecutors--and now we are adding to this 
council, the corrections community, and to some extent, 
prevention and treatment people--attempt to integrate their 
approaches to the drug problem on a regional basis. It is 
undoubtedly a program that you and others of your colleagues 
need to consider. As I finish my study this coming summer, I 
will be recommending further HIDTAs for your consideration.
    Let me just close up by summarizing the Drug-Free 
Communities Act. The Portman-Levin bill, of course, was 
supported very strongly in the Senate by both Senator Grassley 
and Biden and others.
    We have got the money. It is a $10 million pilot program 
this year; 8.7 million of that I will put out in grants between 
now and 30 September. We are going to be careful to be prudent 
in our awarding of those grants. It is modest. It is 100 to 200 
potential grants nationwide. We are designing a system where we 
place those out so that we have regional diversity, large and 
small, new and old, and we will try to get some sense of the 
payoff over the next year. I've asked in this 1999 budget for 
$20 million; the following yearfor $40 million. Twenty million 
will also be a rather modest expansion of the pilot effort.
    But, again, the whole purpose behind this, which as you 
know, is strongly supported by both parties in both Houses is 
to explode the number of community-led efforts to some 14,000 
before 5 years have gone by.
    Finally, let me mention CTAC, run by Dr. Brandenstein. We 
have in the budget a $16 million request to fund the 
Counterdrug Technology Assessment Center. We are very 
optimistic. We are starting to get a better comprehensive 
approach to this. As you know, we have a $13 million technology 
transfer going on in the 1998 budget. We have a partnership 
with Fort Huachuca to manage that money, and we are going to 
try to get some of the technology that has been tested and 
works out in the hands of law enforcement primarily by using 
the HIDTAs, the 20 HIDTAs you funded, as the mechanism by which 
we distribute these funds.
    Let me, if I may, just close up by suggesting that I have 
pulled together our thinking in a written statement. I would 
ask, sir, for your consideration to enter this in the record 
and look forward to responding to your own questions and 
comments.
    [The information follows:]


[Pages 493 - 509--The official Committee record contains additional material here.]



    Mr. Kolbe. Yes, General McCaffrey, of course, your full 
statement will be placed in the record, as it always is.
    We will go to questions at this point. And I suspect we 
have a lot of different questions for you. I know I have 
several areas that I'd like to direct some questions to. We 
will try to adhere as closely as possible to the 5-minute rule 
here so that we go back and forth and do our rounds here.
    General, just something from your testimony, your informal 
testimony here that I want to ask about. You mentioned that we 
have 14 Cabinet offices that are involved in these nine 
appropriations bills. I can't imagine a war being fought--and 
we use the analogy of war a lot, you are a general, you were 
brought into this department because we think we have to use a 
military approach to this thing--where the person at the top, 
and I put that as you at least under the President, has no line 
or operational authority. Is that a fundamental problem that we 
have got in this thing, we have got so diverse and so scattered 
nobody has the overall operational authority?
    General McCaffrey. Well, clearly, I don't have operational 
responsibility under the 1988 law that authorized my agency. 
And I might add, we have sent the reauthorization bill over to 
the Congress. It is being considered. I would argue that.
    Mr. Kolbe. That wouldn't change that through the 
reauthorization you have sent.
    General McCaffrey. No, it would keep us as a policy 
budgetary operation.
    Mr. Kolbe. Right.
    General McCaffrey. But it is there as a vehicle for you to 
consider any way you wish to see this agency.
    Mr. Kolbe. I don't have the answer. It would be, obviously, 
a huge, huge change. I'm just wondering about that.
    General McCaffrey. Well let me, if I may directly say, it 
seems to me that we now have, by Presidential directive, the 
interagency responsibility to look at all these drug issues, 
both foreign and domestic. We have started to exercise our 
certification responsibility under the law on agency budgets.
    I would argue that the big people in my life are absolutely 
part of the team, Secretary Donna Shalala, Attorney General 
Janet Reno, Secretary Dick Riley and the others. And some of 
them have billions of dollars involved in it. The Secretary of 
Veterans Administration, $1.38 billion, the Secretary of 
Defense, over $900 million. I think we have a reasonably good 
coordinating process now in which the strategy is accepted as a 
conceptual framework in which they understand that the budget 
is absolutely certified by ONDCP and the OMB and in which I 
intend to hold all of us accountable for achieving results over 
time.
    So I would argue that there is a pretty decent policy 
consensus and a shared commitment to achieving the results that 
you demand.
    Mr. Kolbe. Like I say, I don't have the answer to this. 
Because, politically, probably there is no way that this would 
be different. But again, using that analogy, it would have been 
unthinkable for General Schwarzkopf in Desert Storm to have had 
operational control only over his Army forces, and that he 
would have convened some council to talk about how the Air 
Force and the naval forces might have been used, but then they 
all go back and use them depending on whether they agree or 
not. They use them as they see fit.
    General McCaffrey. Of course, that is how we won World War 
II, just that way. But it worked a lot better in Desert Storm, 
I would agree.
    Mr. Kolbe. Well, what do you mean? I mean General 
Eisenhower did have operational control over all forces at D-
Day.
    General McCaffrey. Well, that is questionable. I think the 
Goldwater-Nichols Act has changed in a major way for the 
better.
    Mr. Kolbe. Well, there is no question about that. Let me go 
to the five goals. I wonder if we might put that one chart back 
with the five goals. And I like the goals; I think they are 
good. But, again, I am just asking questions. Some of these are 
definitely advocate kinds of questions here. At this point, 
there is a little bit of everything in there. There is some 
prevention, there is some treatment, and there is some 
interdictions in there.
    Are these goals that again, you have goals in a war that 
you thrashed out that are political goals, but then if you're 
talking about military objectives, you use the best 
intelligence that you have and the commander comes to the 
decision about what the objectives are going to be. These are 
clearly the kinds of things that are thrashed out more in the 
political arena; would you not agree? When I say ``political'' 
I mean internal, and the larger arena that we deal with.
    General McCaffrey. We will exercise leadership after having 
consulted literally around this country and, in many occasions, 
the international community. Then we achieved a governmental 
consensus that this was the way to organize it, and we have had 
the President approve it. So these five goals, and more 
importantly, the 32 objectives now that define the outcome of 
those goals, are an agreed upon concept for our entire 
government. The 50 agencies, the 14 Cabinet officers, the nine 
appropriations bills, that is thescheme; that is the concept. 
That is where we are headed.
    Mr. Kolbe. Okay. Thank you. I haven't even gotten to my 
starting point here for my line of questioning here. So let me 
stop and we will go to--I will come back with another line of 
questioning in a little bit--Mr. Hoyer.
    Mr. Hoyer. Mr. Chairman, it is my understanding we are 
going to go to 12:30; is that correct? So I imagine we will 
have a number of rounds.
    Mr. Kolbe. Yes.
    Mr. Hoyer. General, I want to ask some additional questions 
on this round, and then I will go to some more serious 
questions on the second round. Not that these aren't serious 
questions, but there are serious concerns about this program, 
and I want to get to them.
    You have referred to the fact that we are not facing a 
national drug problem, but a series of regional drug epidemics. 
I would like you to relate that concept to the 1998 National 
Drug Strategy and how it ensures that this series of regional 
epidemics will be addressed in an effective way, especially at 
the national level.
    General McCaffrey. Well, I borrowed some of this thinking 
from several really distinguished students of this problem. I 
normally quote Jeremy Travis, who worked for Attorney General 
Janet Reno, being the author of a very good study that talks 
about the idea that drug abuse in America does have a regional 
context. It spreads in a regional way. Different drugs have a 
different impact on different communities. Methamphetamine has 
had a devastating impact in the Midwest and Hawaii and San 
Francisco; but it seems in Washington, New York, and Miami, 
that the age of the people, the races involved, all of it lends 
itself to suggesting that to even understand what is going on, 
you have to collect data in a regional environment; then, 
organize yourselves to confront it. Since at the end of the day 
it is not a Washington policy paper, but a community coalition, 
it is the local law enforcement backing up educators, the 
health community, and others.
    So I would suggest that the focus we are bringing to bear 
on this problem is one in which you see the expansion of the 
HIDTA as a concept that provides Federal resources to allow the 
police chief, the sheriff, the State attorney general, the 
State prosecutors and others to coordinate with the Federal 
agencies, and to do it in a regional context. The same thing 
will happen with our National Youth Media Strategy.
    You have got to talk to people in the L.A. basin 
differently than you talk to those in Hawaii or in the New York 
City area. We are going to try and reflect that in everything 
we do: decentralize policy and resources [Clerk's note.--Agency 
added ``and distribute them''] to regional actors and then back 
them up. That is why this Mayors Conference, Mayor Rich Daley, 
Brent Coles and Scott King and others, have been so important 
to us to help us see this issue more clearly.
    Mr. Hoyer. I think that makes sense, and for the reasons 
you have stated, obviously there are different problems in 
different regions. It is a part of a fabric of drugs period, 
but obviously you are correct. I think there are different 
aspects of the problem found in different geographical areas of 
our country.
    You mentioned, if we could put that other chart up, which 
shows the goals and the performance measures, that the goal 
that we have is to reduce drug use to the lowest point in 30 
years. Now, 30 years ago would have been the 1968 period, which 
was, from my perspective, having gone through those years after 
college, different, frankly, from those 5 or 6 or 7 years 
younger than I. Going to college in the late fifties and early 
sixties was a radically different experience than going to 
school in the late sixties and early seventies.
    But I presume that is a period that we are relating to when 
the drug use and drug culture and drug psychology, and very 
deleterious, I think, and detrimental philosophy that all could 
do your own thing, whatever that was, was fomented on young 
people of America with devastating effects. But that is, I 
suppose, when our drug use started to rise; is that correct, 
General?
    General McCaffrey. Of course, I normally lend credence to 
my own arguments by citing Professor David Mustaf at Yale 
University, who is probably the best scholar in the country 
watching the history of drug abuse. Basically, you are quite 
correct that in 1964 when I left college level studies, there 
was no drug abuse in America one would argue. By 1968, no one 
was saying that, and that is why we had 70 million adult 
Americans, 1 out of 3 in the population, that had used an 
illegal drug. But we have had worse drug problems before.
    In 1900 to 1918 after the Civil War, there was a rise and 
fall of opiate and cocaine drug abuse in America. Now not 
unsurprisingly, when you look at these measures, we put up here 
current drug use is 6.1 percent. We are saying let's get to 3 
percent. We do believe based on expert argument that that's 
achievable.
    The 30-year low is 1992 at 5.8 percent. In 1992, it came 
down dramatically from the worst point of 1979 when 26,000,000 
Americans were regularly using drugs, or 14 percent of the 
population. It is half as bad now as it was then. Cocaine use, 
casual cocaine use is down by 75 percent.
    Again, our problem is more likely to be youth drug use. 
Most of these have a lag time of a decade or so. The kids who 
are smoking pot in their adolescent years right now and smoking 
cigarettes and abusing alcohol, will be the body from which 
will come the chronic drug abusers of 10 years out. Again, that 
is why I welcomed your own focus in this committee on 
supporting us on youth-oriented initiatives.
    We are going to try and raise the age of initiation, for 
example, of drug use. We will try and make sure that that is 
later in their life and that youth drug use--12 to 17 years 
old--currently at 9 percent, down from 10.6 percent last year, 
goes down to 4.5 percent. The lowest it ever was, was 5.3 
percent. So these are very aggressive but achievable goals.
    Now, if we get out 5 years from now and have some real 
successes, and I wouldn't argue that couldn't happen. Len Bias 
death was a gift to other young Americans. It so shocked the 
country that it and his mother's subsequent speeches around the 
country knocked down cocaine use in America substantially in 
one year and so we may see some surprises out of our efforts. 
But what we said is cut it in half, 4.5 percent of drug use 
rates for 12 to 17 years old, and that would be the lowest in 
30 years.
    Mr. Hoyer. I thank you, General. My time is up. But I am 
going to be referring to those figures in my second round.
    Mr. Kolbe. We will be coming back.
    Mr. Aderholt.
    Mr. Aderholt. Thank you, General McCaffrey, for being here 
today and testifying before the subcommittee. It appears that 
one of the key foundations of the paid mediaprogram is the 
network of the advertising industry members who have contributed their 
creative talents to the ad campaigns by the Partnership for a Drug-Free 
America, which most of us, I think, are all familiar with. What 
safeguards have you put into place to ensure that those pro bono 
contributions will continue now that we are paying for the actual 
broadcast and the print media space?
    General McCaffrey. It is a vital question, and it is vital 
not only to the drug question, but also other public service 
announcements. If you look back over the past decade that Jim 
Burke and his associates have been doing this, they maintain a 
magnificent record. But in the last few years alone, their PSA 
time went down by 30 percent in dollar value. I think it was 
worse than that because we weren't getting the time slots to 
communicate with the target audience we were after. So these 
dollars have now allowed us to achieve a penetration rate of 
the target we are talking to, youngsters and their parents, at 
incredibly high rates.
    That is what our pilot statistics are telling us. At the 
same time we are gratified to learn that we are getting the 
matching PSAs that we had hoped to. We built that into our 
media negotiation strategy. Now, the details of it are 
proprietary information by market area, but essentially let me 
just suggest to you that we have got over a 100 percent of the 
public service match for media outlets that we needed. It is a 
surprisingly good news story.
    In Tucson, as an example, we have a total of about 1800 
public service announcements as a result of our ad negotiations 
with TV, radio and print media, and a majority of these PSAs 
are in attractive time slots. So I think we are getting great 
support out of the industry.
    Mr. Aderholt. One of the things that has convinced, I 
think, many of us to support this program last year was the 
fact that we were told the Partnership for a Drug-Free America 
would be central to the program development; and that is to say 
that you would draw directly on the experience, which dates all 
the way back to the Reagan Administration.
    Could you describe to us the nature of ONDCP's agreement 
with the partnership and what their role would be over the life 
of this program?
    General McCaffrey. Well, Jim Burke is one of probably the 
most magnificent people I have run into in the last 2 years in 
this job. He is a personal friend. He has been a mentor. The 
genesis of this idea was really the two of us talking 2 years 
ago. He will remain in that posture. We have an MOU with PDFA 
them that outlines our agreement.
    Essentially, they act as the principal conduit of the 
creation of this work pro bono by the industry. And the Ad 
Council is going to be the principal conduit of PSA matching 
efforts. PDFA also will be the recipient of scientific and 
other findings out of the National Institute of Health 
Community and others, for example, Annenberg School of 
Journalism, and we will try and provide feedback so that the 
creative industry hears how we are doing as we evaluate these 
ads. I would term them as my right hand in exercising this 
responsibility.
    Mr. Aderholt. That is all I have for right now, Mr. 
Chairman.
    Mr. Kolbe. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. General, welcome. We 
appreciate your testimony and fine work you are doing. I want 
to focus on the National Youth Drug Media Campaign, which you 
have described briefly.
    Last year, Congress appropriated $195 million for that 
campaign and you are requesting about the same amount in next 
year's budget. And as you note in your testimony, that makes 
this one of the largest paid advertising efforts ever 
undertaken by government. The pilot program ads began airing in 
January in several cities across the country, and I understand 
you are going to take this nationwide in late spring. You say 
in your testimony that you have a goal of reaching on average 
90 percent of the target audience at an average frequency of 
four exposures per week.
    And, of course, that is a far more concentrated exposure 
than any public service ads that we know about. You also say 
that prevention experts believe that this public-private 
campaign is will begin to influence the attitudes of youths in 
a measurable way 2 or 3 years out. Does that mean that the 
level of exposure that you are going to be able to reach with 
these ads is going to be enough to in some significant 
percentage of cases influence attitudes and behavior?
    General McCaffrey. I think there is very high confidence by 
all that are involved in it that this single tool will have a 
measurable impact directly on youth values, and will also have 
an impact on their parents. Forty percent of the targeting is 
at parents, not kids. Probably even more importantly is what we 
anticipate and we are now seeing. It will have unintended 
secondary effects of enormous benefit to all of us. It is going 
to create suddenly the demand for treatment and prevention 
services from families and communities who are suffering and do 
not understand what they can do about it. Now suddenly they are 
going to have a telephone number and they can get 
scientifically valid information from NIDA, from HHS, and from 
SAMHSA, from Partnership for Drug Free America, and from CADCA 
on what they can do about it. So I think there will be a direct 
payoff.
    Having said that, I would argue that the heart and soul of 
the effort is not the National Youth Media Strategy. It is 
organizing community coalitions, parents, educators, and local 
law enforcement to act in concert with one another so that 
young people from 3:00 p.m. to 7:00 p.m. and on weekends and 
during the summer have positive engagement with mentors and 
with activities.
    Mr. Price. That was my next question. What kind 
ofpartnerships do you anticipate flowing from this? What kind of 
participation, financial and otherwise, do you expect this 195 million 
to leverage in bringing forth perhaps complementary ad campaigns but 
also the kind of community based activities that you are talking about?
    General McCaffrey. We are already seeing some incredible 
response. Phase 3 is when a lot of these will really start 
coming on-line. We will go nationwide in June with phase 2, but 
then as soon as possible, I would anticipate October to 
December, PDFA will have regionally targeted ads and we will 
start seeing public-private partnerships come on-line. We have 
already got people like Gateway 2000 with $100,000 and United 
Parcel Service with $30,000 out in Sioux City in our pilot 
program. We have got KTIV TV in Sioux City donating all the 
revenues they got from our paid ads to local coalitions and 
charities. There is a great will, we sense, among the business 
community and coalitions not to exploit this but to benefit 
from it. We went to Hollywood and the Actors Guild has agreed 
to forgo their payments on these PSAs when we run them under 
appropriated funding. There is just great cooperation in that 
creative industry.
    Mr. Price. The professionals involved in this and the media 
outlets in many cases are recycling the funds.
    General McCaffrey. Yes, sir. Very encouraging. In Boise, 
Idaho the same kind of thing is happening. San Diego too.
    Mr. Price. What kind of creative talent have you marshalled 
to design these ads? This is a notoriously hard audience to 
influence in the way that we want sometimes. How have you made 
these ads attractive and is this going to be monitored 
carefully in this pilot period?
    General McCaffrey. Well, we have Partnership for Drug Free 
America. They have 10 years experience in dealing with arguably 
the most creative industry in America, which is these 
advertising firms. They are used to creating results. We have 
given them a slightly more difficult task than not to impel 
people to buy a product, but create a new mindset, and values 
among adolescents and to some extent parents. So it is a tough 
proposition. There are two new communities that are now in this 
mix. One of them is the scientific/medical. We need to have Dr. 
Allen Leschner, our National Institute of Drug Abuse Director 
and SAMHSA, Dr. Nelba Chavez, involved. They have to be part 
and parcel of what we are doing. The ads have to have 
scientific validity. And then, secondly, we are going to start 
measuring the impact of these ads just like we would do if I 
was CEO of 3M. What feedback, what return am I getting for my 
money. So there are three people in the creative mix. That will 
be something that we will work out in the coming years. I am 
very optimistic that they are working in partnership now.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe. We will begin our second round of questions 
here. General, just kind of a small aside here, what kind of 
message do you think was sent to people by the snow boarder, 
Canadian snow boarder at the Olympics who got his medal back 
after he tested positive for drugs?
    General McCaffrey. We were troubled by it. Let me tell you, 
I am asked what is the most dangerous drug in America. You can 
show the films from the California narcotics officers of a 30-
year old white male on methamphetamines with a blown brain 
function or watch the devastation of a crack addict age 30, HIV 
positive, tuberculosis, unemployed, or somebody involved in 
heroin addiction with the absolute devastation that that 
causes. I wear this 17-year-old girl's memory bracelet, who 
died in her first semester at college from heroin abuse. Many 
of us would argue the most dangerous drug in America is a 12 to 
16-year-old regularly smoking pot. And oh, by the way, he 
probably started with cigarettes and added alcohol. If they do 
a lot of it, we just got handed as taxpayers a two million 
dollar potential lifelong liability from that young person's 
addiction.
    The biggest challenge in our National Youth Media Strategy 
is how do we talk about why marijuana and cigarettes and 
alcohol abuse are the principal threats to our young people's 
future. That was a bad signal in that case. It is unfortunate.
    Mr. Kolbe. That was just purely an aside. I want to move on 
to something that I know you and I have discussed before. You 
have heard me talk about it. That is this, what I regard as 
this troubling imbalance between Justice and Treasury in law 
enforcement. I think that goes to the whole heart of the 
question about how we are coordinating these resources. We have 
had a massive increase in INS and border patrol as you know, 
but only very token increase in Customs law enforcement and the 
numbers in Customs--virtually no increase. Meanwhile Customs 
has recorded a significant drop in the seizures on the southern 
border. You and everybody agrees that there has really been no 
drop in supply, so there has clearly been a shift that has 
taken place here. I have some of the charts that we have used 
before. We used them with Secretary Rubin here.
    We have massive amounts of sea containers, railroad cars, 
truck traffic that are coming in. These [charts] just show the 
numbers in Justice and in Treasury law enforcement. You can see 
a rather dramatic increase in the Justice resources that have 
been available. This is in personnel here. Again, not to take 
away from the need for more in the area of INS and border 
patrol, DEA, FBI, all those that are in Justice, but just to 
ask the question about what are we doing, really to ask the 
question, are we coordinating the resources in the best way? Is 
there an explanation as to why law enforcement in one cabinet 
office should go up much, so much more dramatically than law 
enforcement in the other? I say the other because the two major 
law enforcement Cabinet officers being Justice and Treasury, 
most of us acknowledge that Customs is kind of the first line 
of defense on the interdiction.
    General McCaffrey. Well, Mr. Chairman, let me start off by 
acknowledging I share your concern. I think you are quite 
correct. We must have what Customs has called packages of 
enforcement capability. You cannot build a fence at border 
patrol and not take into account you will run drug smuggling in 
increased amounts through the port of entry. If you do the port 
of entry, you have got to include the Department of Justice 
lawyers, and administrative detention facilities. If you are 
going to do that in San Diego, you have to do the Maritime-
Coast Guard-border patrol-Customs adjunct to it. I think you 
are entirely correct. I have given the President a concept 
which he has approved. We are involved in attempting to come up 
with a more coherent southwest border strategy than we have had 
in the past. Basically I share your own viewpoint. We need to 
work on that.
    Let me if I can, though, give you some other ways of 
looking at it. First of all, we did come over and ask for drug 
funding for Customs. Last year you enacted 606 million. We 
asked for 672 million in the '99 budget. So I hope you find 
that that is responsive. The interdiction portion of Customs 
you enacted 501 million last year. We asked in '99 for 558 
million. So we are putting increased energy into that effort. 
Indeed, I pulled out the three budgets I have been privileged 
to work on, '96 to '99, and Customs had an increase in funding 
of 19.8 percent in those three budgets. That is not meant to 
dispute your point, which I think is right on the money. But we 
do have more energy in Customs.
    Let me also suggest one caution. When Congress passed the 
Violent Crime Reduction Trust Fund, they--between '95 and '98 
they put almost 16 billion into Justice and 319 million into 
Treasury. So Congress has put grossly disproportionate funding, 
I think for probably decent reasons, into Justice as opposed to 
Treasury. I would also tell you that when you look at the drug 
piece of Customs and the drug piece of Justice, our own 
methodology suggests that Justice agencies are 49 percent of 
the Federal drug control budget, almost half of it. And 
Treasury law enforcement agencies are 8 percent. They are a 
much more modest piece of that whole budget.
    Now, if you will, let me tell you what I pledge to you. 
First of all, we have an incredible public servant, Ray Kelly, 
going before the Senate for consideration. Hopefully we will 
pick up leadership in Customs. There is a professional over 
there, Sam Banks, who really knows what he is doing. Their 
problem is they have got 20,000 people and more money when what 
they need is technology. We cannot inspect 82 million cars, 
3\1/2\ million trucks, 340,000 rail cars with manpower at 39 
ports of entry on the busiest international frontier on the 
face of the Earth. By the way, they are our second biggest 
trading partner. You cannot do it with mirrors and fiberoptics. 
You have to have an intelligence system that supports law 
enforcement better and you have to give them things like back-
scatter radar, which we now are proliferating to these other 
ports of entry. I think that is the future. We need to give our 
Customs people the tools they need to do their job.
    Mr. Kolbe. My question took all of my time, but if I might 
just indulge the Members for one follow-up. If you agree with 
the basic premise of what I am saying--can you raise this issue 
with--in the budget discussions? Because I don't think I am 
mischaracterizing Director Raines yesterday, who basically told 
us, no, the resources are adequately appropriated and they are 
adequately allocated between the different agencies.
    General McCaffrey. Well, we are working with the President, 
Erskine Bowles and others, certainly the Attorney General and 
Secretary Rubin. I have been with them in several meetings on 
just this point. We owe the President a better concept by this 
summer on how to do just what you say. I think we have work to 
do and we owe you a more rational answer on how to support an 
integrated southwest border approach. I think you are right on 
the money.
    Mr. Kolbe. Mr. Hoyer.
    Mr. Hoyer. Thank you, Mr. Chairman. I share your view as 
generally you and I have discussed in terms of the focus on the 
Treasury law enforcement component of this money laundering, 
critically important for drug dealers because profit is the 
ultimate objective of the folks who really organize this 
industry. Clearly I think what I heard Mr. Raines saying 
yesterday was that, and I appreciate what he was saying, 
Justice funding is not a function of Treasury funding and 
Treasury funding is not a function of Justice funding; i.e., 
discrete decisions are made as to what Justice needs to carry 
out its objectives, what Treasury needs to carry out its 
objectives and recommendations made in those two instances, as 
opposed to saying that if Justice goes up 10 percent, Treasury 
ought to go up 10 percent.
    I understood his comment there. But unfortunately all too 
often there is the concept if you are fighting crime you are 
giving money to Justice. In point of fact, Treasury law 
enforcement is 40 percent of crime fighting in America. I am 
very pleased to see Tom Carr here, Johnny Hughes and other 
members of the Washington-Baltimore HIDTA. We are very 
enthusiastic about the Washington HIDTA. Last year 186 drug 
organizations dismantled, 1,616 arrests made, 12 firearms 
organizations dismantled, 466 weapons seized. This is critical, 
$11.3 million in assets seized. In other words, the cost of 
that HIDTA was offset entirely by the dollars that were seized, 
give or take $200,000 or $300,000. Additionally, looking at the 
success rate in terms, General, of what you have talked about, 
which is I think a critical component, if you have got drug 
buyers that are on drugs, one of the ways to defeat the drug 
sellers is to get those folks off drugs, stop the consumers 
from wanting to buy drugs. The Washington HIDTA has a 
prevention and rehabilitation component which is unique. Prior 
to HIDTA, 60 percent client dropout rate throughout the 
Washington Metropolitan Area; HIDTA, 10 percent. Clients 
testing positive, 100 percent; that is on retesting, 100 
percent prior to HIDTA, 13 percent, Mr. Chairman, the success 
of HIDTA. This was of course started in your State and as you 
know, you are really the leader on this, it's working. Percent 
of on time sanctions imposed for failing to go along with drug 
rehab, 10 percent prior to HIDTA, 75 percent in the Washington 
metropolitan HIDTA area. This is a staggering statistic. And if 
we could replicate it, it would be an incredible victory for 
us. Recidivism rate, before HIDTA, 50 percent. We are spending 
money and all of this is recycling. Under HIDTA clients, 12 
percent recidivism rate, 88 percent not recidivism. That is 
extraordinary progress that we have made.
    I congratulate the Baltimore-Washington HIDTA, but I also 
congratulate you, General, on the effort because HIDTA really 
is the coordination of all our resources, State, Federal and 
local and it is working, and my guys, when I say guys, the 
sheriff, I have three Republicans sheriffs in southern 
Maryland. Two of them are not directly involved, Charles County 
is. They are very enthusiastic about this program. Anne Arundel 
and Prince George's, which is involved, as well as Montgomery 
and Baltimore County, are very enthusiastic.
    That is not a question really. That is an observation. I 
take that opportunity to bring it to the attention of the 
public and to the chairman and the members of this committee, 
and I congratulate you for your leadership on this effort.
    However, here is the question I have: This timid, defeatist 
attitude set a lofty but achievable goal with us.
    Let me do the full sentence: ``I urge the President to 
renounce this timid, defeatist attitude and set a lofty but 
achievable goal.''
    General, I talked about your career at the outset of this 
hearing. I do not perceive you as an individual that wantsto be 
associated with a timid, defeatist program. I would like you to comment 
on the observations that Speaker Gingrich made about this program which 
you have outlined so well as a timid, defeatist program.
    General McCaffrey. Well, let me say first of all that I 
know and respect the Speaker. He is a brilliant man. I am 
listening very carefully to his viewpoints and the viewpoints 
of others. Congressman Denny Hastert, Rob Portman and Bill 
McCollum certainly were given to me by House Republicans as 
their leader. I do not have a monopoly on wisdom nor do the 
people I consult with. So we will be very attentive to the 
ideas we hear.
    Having said that, Mr. Chairman, this is a serious effort. 
This is a result of thousands of hours of work, of me listening 
carefully to people who know what they are talking about in law 
enforcement, education, the health professions, religious 
leadership, and the mayors and governors. That is a management 
tool. Basically what I have been my entire life is an organizer 
of people, machinery and money. I have been expected to achieve 
results and those were really the guidelines upon which I 
accepted this job. The President of the United States told me 
to run this in a nonpartisan manner. That is what the law tells 
me to do. I am determined to offer a rational, effective 
policy.
    Now, I also would argue that if we do not do that, if we 
cannot allow the country to come together behind a common sense 
approach, then we are about to lose four years of addressing 
this problem seriously. We have got three years left on this. I 
intended to stick around until the next President of the United 
States released me and turn over something with momentum and 
balance in it. That is really where I come down on the issue. 
It is not only appropriate, but will be valuable to me for 
Congress to look very carefully at that five-year budget, for 
Congress to look at the notion of these performance measures of 
effectiveness, the 12 outcomes, the annual targets, the 82 
variables. I take into account your viewpoints, but I do not 
see how I can provide leadership in the interagency, never mind 
in the national setting, with slogans. I need sensible 
objectives and that is what we have put down on paper.
    I thank you for that question, Mr. Congressman. I hope that 
is responsive to what you are getting at.
    Mr. Hoyer. Just to make the point, am I correct in 
reviewing your record and knowing you as I do that you would 
not be associated with a timid, defeatist program to attack 
this critical problem facing America?
    General McCaffrey. Well, I just would say unequivocally, I 
have been honored to take part in this effort. I feel a 
tremendous sense of obligation to people in the room like Linda 
behind me and the therapeutic communities and the mayors I am 
working with. I see myself as their servant in this effort. I 
turned in my retirement salary. I would be honored to take part 
in it for another 3 years. I will not be a hockey puck in a 
political game. That is really where I come out on it.
    Mr. Hoyer. Thank you, general. Thank you, Mr. Chairman.
    Mr. Kolbe. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman. Let me follow up 
with one question. In regard to the safeguards that you have 
put in place to ensure that the pro bono contributions will 
continue now that we are actually paying for the actual 
broadcasts and the print media space, do you ever anticipate 
ever using public funds to pay for the creative developments of 
these advertisements?
    General McCaffrey. Our notion is we will pay cost of 
production. I am enormously grateful to the Writers Guild, 
Producers Guild, Actors Guild and others. The Partnership for a 
Drug Free America of course is really the lead on this. We will 
continue to get the creative best out of America's advertising 
world pro bono. It is very gratifying to see this kind of 
response.
    Mr. Aderholt. My last question deals with another key 
motivation for the support of many of us, and that is the 
public-private partnership aspect of the program. Could you 
define for us how you define public-private partnership as you 
and the President see it?
    General McCaffrey. Well, we have got an awful lot of it 
bubbling up now. There is one major concept that I am not 
really prepared yet to outline to you, in which we have 
linkages between the big organization corporations and this 
effort. We are seeing money, talent and energy in the business 
world and among mayors and among the news media to take part in 
this effort. So they are already up on the net. They are trying 
to find a creative way to support what we are doing.
    I would also tell you that I have got to find a better way 
to link the National Youth Media Strategy and the Safe Drug 
Free Communities Act. I think there is a linkage there. The 
telephone numbers ought to impel you not only to have a new 
attitude toward the threat of methamphetamines but to see that 
you now are linked into community leadership. I think we are 
going to move in that direction also to link those two 
together.
    Mr. Aderholt. Thank you, General.
    Mr. Kolbe. Mr. Price.
    Mr. Price. Mr. Chairman, thank you. General, I was 
interested to hear you say a minute ago that 40 percent of the 
media campaign is going to be aimed at parents. It brings to 
mind the discussion we had before the subcommittee last year 
about strategies for involving parents in the whole range of 
drug control efforts. As you know, we requested in our 
appropriations bill last year that you pull together 
information about the efforts that you have underway. We now 
have a report which details this, a report delivered on 
February 4, concerning the various strategies for involving 
parents and mentors in drug control programs. Let me just quote 
a few sentences from the summary of this report. ``ONDCP, along 
with its Federal prevention partners, have initiated a range of 
parenting and mentoring initiatives that seek not only to 
educate parents on the dangers of drug use but also to provide 
them with the skills and resources to establish dialogue with 
their children on drug use, to become mentors to youth in their 
communities, to recognize how their behavior influences their 
children's behavior, and to take a leadership role in the 
communities on prevention issues to reduce the incidence and 
prevalence of drug use and ensure a drug free future for the 
Nation's children. Assessment of the effectiveness of these 
measures are crucial to ensuring that only the most effective 
programs are implemented in communities throughout the 
country.''
    I would like to give you the opportunity to comment on 
where we go now with this assessment strategy or any other 
aspects of this report you would choose to highlight?
    General McCaffrey. Well, the assessment of course isgoing 
to be crucial. The actual National Youth Media Strategy, had built into 
it from day one an evaluation component trying to get a baseline before 
we started the ads. We are at midpoint. We are going to gauge them. 
Then prior to the kids getting out of school we will go back and again 
try and capture what was the impact of these ads. We thought that was 
probably inadequate. We have tried to widen the field of view to 
involve other evaluation actors, not only in the National Youth Media 
Strategy but all those who take part in the parenting approach to 
influencing value systems on drug use among kids.
    So there is, in every one of these programs, we will assure 
you, an evaluation piece. We are trying to build that into the 
Drug Free Communities Act of 1997 to make sure that every grant 
we make--100 to 200 this coming year--will require an 
evaluation component.
    Back the performance measures of effectiveness. This is the 
document that all of us in the country need to start picking up 
and using. This does not say a system for assessing the 
National drug control strategy. It talks about assessing the 
performance of the National Drug Control Strategy. So if you 
are receiving federal or state or local money, they need to go 
back and see what is it we are trying to achieve and how do we 
intend to go about evaluating it. We have got some excellent 
tools that are already on the table. Donna Shalala has 
Monitoring the Future, Household Survey, the DUF data, the DAWN 
data and other systems. Institute of Justice has got other 
instruments by which they assess the effectiveness of the 
various programs.
    Mr. Price. Thank you, Mr. Chairman. I would like to request 
that we put in the hearing record this brief report on the 
efforts of General McCaffrey's office to develop parenting and 
mentoring strategies.
    Mr. Kolbe. Without objection, that will be placed in the 
record.
    [The information follows:]


[Pages 522 - 535--The official Committee record contains additional material here.]



    Mr. Price. Thank you.
    Mr. Kolbe. We will begin what I would guess to be a final 
round of questioning. We have been joined at the dais by one of 
our colleagues, Mr. Mica of Florida. I would ask unanimous 
consent of the Subcommittee Members that the rules be suspended 
and he be allowed to ask a question when we complete this 
round.
    Since it does appear this will be our last round, I will 
try to get into one other thing. I just wanted to come back to 
the issue that Mr. Hoyer raised, and it is certainly a valid 
one, about the comments of the Speaker. I think that there can 
be legitimate differences over the goals that we have and the 
time frame for those goals. I see much of what as I have 
listened to the Speaker. I have talked to him some, about his 
frustration that the timetable is too long on these goals, that 
we are really not putting our best foot forward and saying that 
we can do this faster than we have done. I guess the question I 
have for you, General, don't the long-term goals that we have 
have impacts in later years? I ask that because if we look at 
your projected funding, these are--I wish I had this blown up 
in a larger chart but this is taken from your own funding 
requests here--estimates of funding. You show beginning with 
this next year a decline overall, if you measure Treasury, this 
is just the drug part, the part that is spent by Justice and 
Treasury on drug interdiction, you show a gradual decline, not 
massive but a gradual decline over the next several years in 
drug spending in these two areas. I guess my question is, does 
this mean that we will be shifting, having a gradual shift away 
from interdiction over the next several years and if that is 
true, I think maybe even though I don't believe this has been 
seen by the Speaker, this may be at the heart of what he is 
talking about. I wish you would comment on that?
    General McCaffrey. Mr. Chairman, I think one aspect of this 
is my failure to adequately communicate what we are doing. This 
10-year performance measures of effectiveness that we have, 141 
pages done with thousands of hours of work, does have a 10-year 
focus on it. It has 5-year midpoint targets identified and 82 
supporting variables. This coming year we will provide some way 
of getting at annual targets. I welcome the viewpoint of 
Congressmen and for that matter the country's expert opinion on 
how we can front load that option. So there is no question that 
this is not a case where 10 years from now we will ask my 
daughter, when she is back as the drug czar, how we did. We are 
going to get a measurement of this next year, sir. I welcome 
your involvement in telling me if you have a different view of 
how quickly we can achieve that.
    Having said that, let me also suggest that we cannot do 
anything without a 10-year perspective on a question of this 
legal, social, medical and international complexity. We could 
not build the interstate highway system without a 10-year plan. 
We could not put a man on the moon without a 10-year plan. It 
took us 15 years to produce the armed forces that won the 
Desert Storm war. It takes a 10-year business acquisition plan 
to buy a Boeing air transport and make sure you have thought 
through how to exploit it. So I do not think we will ever 
achieve our purpose if we do not have a perspective that 
understands this is a generational business we are in. I also 
expect you to demand results each year. Again that is why I 
think Donna Shalala and Janet Reno and Dick Riley and I have 
been careful on how optimistic we sound, but there is no 
question in my mind we will give you results over time.
    Mr. Kolbe. I want to get into one other area. You didn't 
really address this question. If you could give me a very quick 
answer. You still show a decline over the next five years at 
least in combined Justice-Treasury drug funding.
    General McCaffrey. The '98 to 2003 budget goes from $15.977 
billion up to $17.183 billion. It would be a plus 8 percent 
over that time frame. Here is the tough thing. Here is where 
Congress can help me with these 5-year budget predictions. If 
this works, there is no reason that you and I should assume 
that the drug budget by theFederal Government will go up every 
year. It should not go up every year. As we get out to five years, if 
we link drug treatment in the criminal justice system, Janet Reno put 
$85 million in to break the cycle this year. Donna Shalala put $200 
million additional into drug treatment. There is additional money, as I 
have noted, in Customs. If it works, drug abuse in America is going to 
go down, not up. We ought to be spending far less money a decade from 
now than we currently are because we have got 13 million Americans 
abusing drugs.
    Mr. Kolbe. You are right in one sense, I might have some 
difference over that, but let me, if I might, in my last 
question here come to a very specific budget question here. You 
have requested $251 million from the Special Forfeiture Fund, 
apart from another $195 million for the media campaign, that 
includes $20 million for the Drug Free Communities Act, $10 
million above last year's funded level, and also $10 million to 
fund the project to estimate the size of the hard core user 
population. There is also $26 million there for discretionary 
spending.
    Can you give us some justification for the $26 million 
beyond the general description in your budget materials? Did 
you make specific requests to OMB that were denied that they 
then just put into a discretionary pot for you? Would you give 
us some explanation of that?
    General McCaffrey. Let me if I may, Mr. Chairman, give you 
a table in which we laid out our request to OMB and the 
President's decision on it. Both of them equal $251 million. I 
asked for $251 million, I got $251 million. OMB rather than 
funding each one of my line items, chronic user study, domestic 
heroin, expand break the cycle, modeling drug trafficking flows 
and intelligence architecture, did not fund any of those lines, 
wrapped it up, give me $26 million and said, go back and spend 
this money prudently and get results. So they gave me the money 
I asked for but moved it down. I asked for no discretionary 
funds. I got $26 million. Those are the ways we intend to spend 
it, intelligence, modeling drug trafficking flows, expand break 
the cycle, domestic heroin and a chronic user study. Then also, 
as you have already mentioned, drug free communities program 
and the national media campaign.
    Mr. Kolbe. You intend to use them in these areas that--I 
have got that chart.
    [The information follows:]


[Pages 538 - 539--The official Committee record contains additional material here.]



    General McCaffrey. Yes, sir, that is our intention.
    Mr. Kolbe. Four areas they didn't put anything in.
    Mr. Hoyer.
    Mr. Hoyer. Thank you, Mr. Chairman. General, because I 
think these things need to be answered and we are going to hear 
about them in the future, I would like to have you answer them 
here in this forum. A recent Washington Post article stated 
that the southwest border, quote, was in shambles. That Mexico 
has not met its goals or accomplished its counternarcotics 
objectives, nor have they succeeded in cooperation with the 
United States. Because clearly this is a critical problem in 
terms of not only the southwest border, which I know the 
chairman is concerned about, but also with respect to 
interdiction efforts generally having the cooperation of our 
international partners in this effort in South America and 
Central America, as well as in other parts of the world, would 
you comment on that story?
    General McCaffrey. I thought it was accurate reporting by 
Molly Moore and Doug Farrah, both very astute reporters. I 
think most of the facts they probably had right. A lot of them 
were old information rather than where we think they are now. I 
think they were probably on the money. Last year on that border 
there were over 200 violent attacks on our law enforcement 
officers. Men and women of the Customs Service, Border Patrol, 
DEA, FBI, and local law enforcement are at risk from massive 
levels of violence and corruption based on what we say is $50 
billion, U.S. funds, spent on illegal drugs, 60 percent of 
which is coming through Mexico. And by the way, it is not only 
U.S. dollars driving that, it is U.S. weapons going south. On 
the other side of the border there is incredible levels of 
violence and corruption as well as a growing drug problem.
    We also believe that there is a very strong will on the 
part of people like their Attorney General Jorge Madraso, their 
President, elements of the armed forces, the new organized 
crime unit that Mr. Mariano Horan has put together and others 
to confront this problem. Thank God for Tom Constantine, the 
DEA and the FBI training Mexican law enforcement. The Mexican 
border task forces now finally have funding and people who have 
been trained and vetted here in the United States.
    The OCU and other elements of Mexican law enforcement fired 
their whole drug police force, 3000 people, and they started 
over. The number they now have vetted and on-line is sensitive 
but significant and growing. They have passed new laws and 
legal reform. They have coordinated maritime operations with 
them. We have given them a lot of equipment. Normally I give 
you a chart, and I will provide that, on extradition, and 
expulsion of fugitives between both nations has gone from none 
four years ago to a growing number today. I share a frustration 
and sense of fear. What we have done though is we have looked 
at the partners we are working with and we have looked at our 
interest in defending the American people and said let us work 
in partnership. We are convinced this is going to pay off for 
both nations.
    Mr. Hoyer. Am I correct then, you believe the certification 
at this point in time as recommended by thePresident is 
appropriate.
    General McCaffrey. Yes, sir, no question. The Mexican 
authorities are in trouble. They know that. They are trying to 
preserve democracy and the future of their own country from 
massive levels of internal criminal conduct. We ought to work 
with them on that.
    Mr. Hoyer. Thank you.
    Mr. Kolbe. Before I call on Mr. Aderholt, let me just say 
that I was in Mexico 10 days ago and had a meeting with the 
President and the Attorney General. I think the start they are 
making, building a new police force for vetting it and using 
the kind of techniques that we have used--they have very tough 
drug testing--is very encouraging. But they have a long way to 
go. They are starting from ground zero with it. I think there 
is a real commitment there.
    General McCaffrey. I might add, I thought the Speaker's 
comments on that were very helpful as well as Senator Dole and 
Senator Trent Lott and Mr. Armey, Governor George Bush and the 
others who have come up on the net and said, let us work with 
our second biggest trading partner to try and solve a threat 
that faces both of us.
    Mr. Kolbe. Mr. Aderholt.
    Mr. Aderholt. Mr. Chairman, thank you. General, many 
Americans have heard about the triple fences that have been 
constructed on our borders where we have concerns about drugs 
coming across our borders. I have been told that this is very 
effective in keeping drugs out of the country. I would like to 
note what your thoughts are on this and do you support that 
effort? Just briefly give an overview of your thoughts and 
concerns about that.
    General McCaffrey. Yes, sir. We have this 2000-plus mile 
border. The first month I had this responsibility two years ago 
I had a group work its entire length. I have been down there 
multiple times listening to the Border Patrol, the Customs 
people, local law enforcement, mayors and then crossing into 
Mexico and asking them for their views on how the two nations 
can work together to maintain the rule of law, to protect 
people in those border regions, not only the ones living there 
but the people moving back and forth across the border. I think 
we are making progress. One of the things we need is we need to 
give the manpower technology and doctrine and resources for 
U.S. unilateral efforts so that on our side of the border we 
finally have a mechanism, as the chairman has noted, that makes 
sense. Customs cannot do their job without technology. The 
Border Patrol could not do their job with the manpower of 3000-
plus that they had five years ago. Now they are at 7000. They 
are programmed to go to 10,000. Some of us are studying whether 
that is an adequate figure: The best place I have seen is in 
southern California. There we finally got in the last three or 
four years through hard work, as I remember it, 46 miles of 
fencing and a modest increase in border patrol and some 
technology for the Customs Service. That San Diego-Tijuana area 
is the biggest international city on the face of the Earth. If 
I remember the numbers correctly, three years ago there were 
over 60 murders in that part of the frontier and over 10,000 
pounds of drugs seized. Last year because of this new energy 
and organization there were zero murders and 6 pounds of drugs 
outside the Customs POEC. And you can go out and look at the 
beach--I held a press conference out there and looked at 
families sitting on the beach on both sides of the border where 
three years ago it was no man's land. We have to extend that 
kind of common sense thinking to other parts of the border. 
That is one way and I think there is a lot of commitment to 
that on the part of the Attorney General and the Secretary of 
the Treasury.
    Mr. Aderholt. Thank you.
    Mr. Kolbe. We welcome our colleague, Mr. Mica, to the dais 
here.
    Mr. Mica. Thank you, Mr. Chairman and also our democratic 
Members, for granting me the opportunity to participate today. 
As you know, I am on the National Security-International 
Affairs-Criminal Justice Oversight Subcommittee on the House 
side that has had the responsibility to deal with our national 
drug policy. I might say at the outset that we have had the 
good fortune of working with the director and I will say 
publicly that General McCaffrey has done an excellent job in 
restarting the war on drugs. We have had some differences of 
opinion over the time as to how we should proceed. But I do 
want to compliment him on his fine efforts. I have just a 
couple of questions today. We did have a hearing yesterday. We 
had Admiral Kramek, the commandant of the United States Coast 
Guard, testify both at a closed session and also a public 
session and General Charles Wilhelm, Commander in Chief of the 
United States Southern Command, and also Mr. Donny Marshall, 
who is the Acting Deputy Administrator of DEA. One of the 
things that, there are two things that have concerned me and I 
have been involved in this a bit since 1980 as a staffer over 
on the Senate side, now on this committee, is that we try to 
put our limited resources, taxpayer dollars, where they do the 
most good. I noticed that the President's budget contains $190 
million, 12 percent increase for drug interdiction programs 
over the '98 level. I have also sort of guesstimated, maybe you 
could help us with this, Director, the level of money that is 
spent on the source countries and what percentage of increase 
we see again having dealt in this, sometimes if you can stop 
drugs at their very source, basic source, it can be cost-
effective. I saw a report that said we spend around $200 
million on source countries and that is out of about $16 
billion overall when you take in treatment, enforcement, 
education, interdiction, other elements. Could you tell us 
where we are and what is proposed and do you think that that is 
adequate?
    General McCaffrey. Let me first of all say that I share a 
concern on the part of the Coast Guard and the DEA in the 
Puerto Rico Virgin Islands HIDTA, those who are responsible for 
the eastern Pacific and western Caribbean. We have got to be 
more flexible in using the assets and resources. We have to 
follow these international drug criminals. I am not sure we 
have got it right yet. I am really grateful for General 
Wilhelm's leadership on this as well as all the Southwest 
Border HIDTAs as well as the Caribbean HIDTA. Having said that, 
our source country strategy is beginning to work. Cocaine comes 
out of three nations. For 8 years nothing has worked. Last year 
we finally saw the second year in a row of a decrease in coca 
cultivation, net, overall, on the Andean Ridge, a dramatic drop 
of over 40 percent in Peru, a drop, notional, of some 9 percent 
in Bolivia and probably about 110 metric tons less of cocaine 
were produced last year than the year before that. It is a 
function of a lot of things, not just the effectiveness of our 
DEA, armed forces and Treasury Department team, but also 
President Fugimori'sleadership and political will, the defeat 
of the Sendero Lominoso, and the reassertion of civil law in growing 
areas. We have a new team in Bolivia that we are impressed by, 
President Banzar and others. They have had a national dialogue. They 
tell us they will take Bolivia out of coca production in the next five 
years. That is the good news. The bad news about that source country 
strategy is that Colombia has dramatically increased coca production 
for the third year in a row. They have lost control of probably 40 
percent of the land area of the nation and the armed forces and the 
police are suffering tactical defeats by battalion-sized units 
operating in conjunction with the drug cartels. So we have got a 
problem. But the source country strategy with rather modest investments 
of U.S. funds is paying off. The INL budget is a problem. It is 46 
percent of the level it was in '92. So that is a challenge and I 
welcome your own thinking on it.
    Mr. Mica. Could you give us the figures of, again, what are 
the source country, you said they are 42 percent of what they 
were in 1992.
    General McCaffrey. Forty six.
    Mr. Mica. And they are increased to what, what percentage 
this year?
    General McCaffrey. It has gone up. Essentially 
international funds goes up 9.6 percent.
    Mr. Mica. Well, again, in the two instances you cited, 
Bolivia and Peru, we have had cooperative government. We have 
had problems of potential human rights abuse, but we have had 
committed leaders in both of those countries, having met with 
President Fugimori, having discussed the issue personally on a 
number of occasions with President Banzar. They are committed, 
they are doing things with a very small amount of money and 
stopping drugs at their source. Colombia right now we learned 
yesterday is a total disaster and partly because the money that 
the Congress funded, the request that we have had for waivers, 
the granting of waivers to get equipment to the General 
Serrano, the head of the national police, most of that 
equipment is still not there. Within the last two weeks I think 
they suffered an incredible slaughter of 150 troops who are 
fighting, as you, General, and testimony yesterday indicated 
that their sole source of hard cash is from narcoterrorism. It 
is important not only that this Congress funds these efforts 
but that the money gets to these countries. Columbia may be 
lost but, Mr. Chairman, it is critical that we get the money to 
these folks. We have also seen that tough enforcement does 
work. Mr. Hoyer cited his HIDTA and its success. I thank others 
for cooperation and this committee for getting a HIDTA in 
central Florida to get tougher enforcement. I was reminded of 
how well tough enforcement works when I walked into the Cannon 
Office Building today. There is an Officer Thompson who is at 
the corner, I think it is First Street, right near the metro 
stop. And he was there this morning. He is not there some 
mornings but when he is there, Officer Thompson enforces the 
jaywalking law. And this morning no one was jaywalking. I think 
you talk to almost every staffer, they find that they do not 
jaywalk when they see Officer Thompson out there. It is a very 
effective means. In Mr. Hoyer's district, they have a HIDTA 
that is very effective because we have tougher enforcement. You 
see a reduction of almost 40 percent of the crime, a lot of the 
drug trafficking in New York City because a tough prosecutor 
has instituted tough prosecution.
    Finally, I would like the Director to provide our committee 
and your committee with drug prosecutions at the Federal level. 
The last information we had is that they were down 12 percent. 
This committee deals with, I think, funding some of the 
prosecution levels. I believe if you could provide us, 
Director, with the information and how we could increase the 
prosecution, getting tough nationally, not just in selected 
areas where we have a little bit more political clout to get 
that done, hopefully we could more wisely spend our taxpayers' 
money. Thank you, Mr. Chairman.
    General McCaffrey. Mr. Chairman, let me thank Mr. Mica for 
his comments. I share his pride in the HIDTA program. I look 
forward to working with him and Senator Bob Graham in the 
central Florida designation which is coming up.
    Let me remind us though of what we have in the '99 budget 
on international funding--last year you enacted $500 million. 
We are requesting $548.1 million. I would ask for your support 
for that funding. We have increased our interdiction budget by 
36.6 percent. It is going up. We share your view that a 
rigorous interdiction campaign has to be supported. I will 
listen for your own ideas on it.
    Now, finally, I will give you the numbers on the Department 
of Justice, but if I may suggest that Attorney General Reno and 
the Federal Government, State and local government have one 
thing we don't lack. It is strong law enforcement. We arrested 
1\1/2\ million people last year for drug-related crime. In the 
Federal government we put 19,000 people in front of Federal 
courts and locked up 17,000 of them. Now 66 percent of our 
105,000 Federal prisoners are for drug related offenses. And I 
am glad of it. I think what is lacking though is an adequate 
recognition of drug treatment dollars that are effectively 
linked to that criminal justice system. That is one of the 
areas we are going to work on. I share Mr. Mica's views that 
neither prevention nor treatment can work unless we stand 
behind U.S. law enforcement.
    Mr. Kolbe. Thank you very much. General McCaffrey, I know 
that there we have--I have several other questions. I am sure 
others on the Subcommittee may have other questions for the 
record. If there is not----
    Mr. Hoyer. General, I thank you very much for your 
testimony. For your leadership and your agreeing to take on 
this task. Your experience, as I said earlier, in managing 
large enterprises directed at accomplishing specific and 
critical objectives I think, is and will bode very well for 
this effort being successful.
    Mr. Kolbe. I would echo that, General McCaffrey. Thank you 
very much for your testimony today. We certainly appreciate 
your being with us and sharing this information with us. We 
will have other questions as we go through the record here.
    Mr. Hoyer. Before we adjourn, we had some significant 
discussion yesterday about counsel in the White House. The 
reason I bring this up at this time is, I want to, while it is 
fresh in everybody's mind, talk about the request for some $4 
million or $3.4 million out of the contingency fund that was 
provided to the House Committee on House Oversight and which 
has been appropriated. The reason I raise this is because of 
that sum, Mr. Chairman, that was for contingencies that would 
be unforeseen. We have already approved at the request of the 
Speaker, 7 attorneys, 2 researchers to help those attorneys, 
another paralegal and 2 investigators and a forensic auditor at 
$60,000 for six months.
    My only point being, Mr. Chairman, that we are not doing 
too badly ourselves getting counsel on board.
    Mr. Kolbe. Mr. Hoyer, I am sure we will make that point in 
the record at the appropriate place.
    The subcommittee will stand adjourned.




[Pages 546 - 654--The official Committee record contains additional material here.]











                           W I T N E S S E S

                              ----------                              
                                                                   Page
Carlstrom, T. R..................................................     1
McCaffrey, Gen. B. R.............................................   483
McDaniel, J. I...................................................     1
Meyers, M. J.....................................................     1
Posey, A. L......................................................    71
Raines, F. D.....................................................   305












                               I N D E X

                              ----------                              
Executive Residence of the White House:
                                                                   Page
    Additional FTE for reimbursable events.......................    30
    Biographies of Witnesses.....................................    11
    Budget Justification.........................................    55
    Costs of political events....................................    29
    Increases to budget..........................................    27
    Opening comments from Chairman Kolbe.........................     1
    Overtime costs of domestic staff.............................    18
    Overtime.....................................................    25
    Past treatment of budget hearings............................    24
    Physical condition of Executive Residence....................    31
    Prepared Statement of Mr. Carlstrom..........................     9
    Questions from the Committee.................................    33
    Questions Submitted by Congressman Istook....................    44
    Questions Submitted by Congresswoman Northup.................    42
    Reimbursable functions.......................................    26
    Staff working off-site.......................................    30
    Staffing at the Executive Residence..........................    15
    Staffing patterns at Executive Residence.....................    22
    Statement of Mr. Carlstrom...................................     7
    Statement of Mrs. Meek.......................................    26
Executive Office of the President, Office of Administration:
    Budget Justification.........................................   188
    Executive Office of the President Budget................72, 94, 107
    Fenced Funds................................................95, 105
    Information Technology.......................................   104
    Legacy Computer Systems......................................    96
    Opening Statement from Chairman Kolbe........................    71
    Prepared Statement of Ms. Posey..............................    79
    Questions Submitted by Chairman Livingston...................   125
    Questions Submitted by Congressman Hoyer.....................   127
    Questions Submitted by Congressman Istook....................   128
    Questions Submitted by Congresswoman Northup.................   138
    Questions Submitted by the Committee.........................   109
    Walker and Nussle Memorandum.................................    75
    White House Communications Agency............................    95
    White House Counsel.................................73, 91, 98, 106
    Year 2000 Problem............................................    97
Office of Management and Budget:
    Accountability for Year 2000 Computer Conversion Failures....   351
    Adequacy of Funding to Solve the Year 2000 Computer 
      Conversion Problem.........................................   334
    Availability of Data from Federally-Funded Research..........   339
    Chairman's Opening Statement.................................   305
    Complex Issues Associated with Making Research Data Available 
      to the Public..............................................   347
    Congressional Review Act (CRA) Implementation................   522
    Disparity of Treasury Law Enforcement Resources..............   491
    Director Raines' Opening Statement...........................   317
    Establishing Year 2000 Computer Conversion as a Priority 
      Activity...................................................   350
    Federal Accounting Standards.................................   526
    Fiscal Year 1999 Budget for the Office of Management and 
      Budget.....................................................   559
    Getting Management to Focus on Solving the Year 2000 Computer 
      Conversion Problem.........................................   342
    Independent Review of Agency Progress on Year 2000 Computer 
      Conversion.................................................   351
    In Light of the Expected Surplus, Should Federal Employees 
      Get a Larger Pay Raise?....................................   345
    Need for Additional Customs Inspectors.......................   336
    OMB Management and Oversight of Year 2000 Computer Conversion   454
    OMB Performance Plan.........................................   542
    OMB Workloads, Management Structure, and Performance Plans...   479
    Paperwork Reduction Goals....................................   495
    Performance Standards........................................   525
    Progress in Solving the Year 2000 Computer Conversion Problem   333
    Questions Submitted for the Record by Representative Aderholt   537
    Questions Submitted for the Record by Representative Meek....   541
    Questions Submitted for the Record by Representative Northup.   528
    Reduction in Federal Employee Levels.........................   335
    Regulatory Review............................................   508
    Representative Hoyer's Opening Remarks.......................   315
    Representative Meek's Opening Remarks........................   316
    Reserving the Surplus for Social Security....................   348
    Resources for Law Enforcement................................   328
    Should Treasury and Justice Law Enforcement be Merged?.......   330
    Strength of Our Economy Compared to Recent Years.............   344
    Year 2000 Computer Conversion................................   351
Office of National Drug Control Policy:
    Budget Justification.........................................   605
    Chairman Kolbe's Opening Statement...........................   483
    Opening Statement of Congressman Hoyer.......................   486
    Prepared Statement of Director McCaffrey.....................   493
    Programs to Prevent Substance Abuse Among Youth: Parenting 
      Strategies.................................................   522
    Questions Submitted by Chairman Kolbe........................   556
    Questions Submitted by Congresswoman Northup.................   546