    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

      TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR
                                FISCAL YEAR 2000

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS
                                  FIRST SESSION
                                    ________

      SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT
                                 APPROPRIATIONS
                          JIM KOLBE, Arizona, Chairman
     FRANK R. WOLF, Virginia           STENY H. HOYER, Maryland
     MICHAEL P. FORBES, New York       CARRIE P. MEEK, Florida
     ANNE M. NORTHUP, Kentucky         DAVID E. PRICE, North Carolina
     JO ANN EMERSON, Missouri          LUCILLE ROYBAL-ALLARD, California
     JOHN E. SUNUNU, New Hampshire
     JOHN E. PETERSON, Pennsylvania

     NOTE: Under Committee Rules, Mr. Young, 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
     56-420                     WASHINGTON : 1999

                             COMMITTEE ON APPROPRIATIONS

                       C. W. BILL YOUNG, Florida, Chairman

     RALPH REGULA, Ohio                      DAVID R. OBEY, Wisconsin
     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                 STENY H. HOYER, Maryland
     TOM DeLAY, Texas                        ALAN B. MOLLOHAN, West Virginia
     JIM KOLBE, Arizona                      MARCY KAPTUR, Ohio
     RON PACKARD, California                 NANCY PELOSI, California
     SONNY CALLAHAN, Alabama                 PETER J. VISCLOSKY, Indiana
     JAMES T. WALSH, New York                NITA M. LOWEY, New York
     CHARLES H. TAYLOR, North Carolina       JOSE E. SERRANO, New York
     DAVID L. HOBSON, Ohio                   ROSA L. DeLAURO, Connecticut
     ERNEST J. ISTOOK, Jr., Oklahoma         JAMES P. MORAN, Virginia
     HENRY BONILLA, Texas                    JOHN W. OLVER, Massachusetts
     JOE KNOLLENBERG, Michigan               ED PASTOR, Arizona
     DAN MILLER, Florida                     CARRIE P. MEEK, Florida
     JAY DICKEY, Arkansas                    DAVID E. PRICE, North Carolina
     JACK KINGSTON, Georgia                  CHET EDWARDS, Texas
     RODNEY P. FRELINGHUYSEN, New Jersey     ROBERT E. ``BUD'' CRAMER, Jr.,
     ROGER F. WICKER, Mississippi              Alabama
     MICHAEL P. FORBES, New York             JAMES E. CLYBURN, South Carolina
     GEORGE R. NETHERCUTT, Jr.,              MAURICE D. HINCHEY, New York
    Washington                               LUCILLE ROYBAL-ALLARD, California
     RANDY ``DUKE'' CUNNINGHAM,              SAM FARR, California
    California                               JESSE L. JACKSON, Jr., Illinois
     TODD TIAHRT, Kansas                     CAROLYN C. KILPATRICK, Michigan
     ZACH WAMP, Tennessee                    ALLEN BOYD, Florida
     TOM LATHAM, Iowa
     ANNE M. NORTHUP, Kentucky
     ROBERT B. ADERHOLT, Alabama
     JO ANN EMERSON, Missouri
     JOHN E. SUNUNU, New Hampshire
     KAY GRANGER, Texas
     JOHN E. PETERSON, Pennsylvania

                     James W. Dyer, Clerk and Staff Director

                                      (ii)

      TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR
                                      2000

                                  ----------

                                                Tuesday, March 2, 1999.

                       EXECUTIVE OFFICE OF THE PRESIDENT

                                    WITNESS

    MARK LINDSAY, DIRECTOR, OFFICE OF ADMINISTRATION, EXECUTIVE OFFICE OF
        THE PRESIDENT
        Mr. Kolbe. The meeting of the Subcommittee on Treasury,
    Postal Service and General Government will come to order.
        Good morning, Mr. Lindsay----
        Mr. Lindsay. Good morning, Mr. Chairman.
        Mr. Kolbe [continuing]. And welcome. This morning's hearing
    is on the Executive Office of the President, and we are pleased
    to welcome our witness here today. Mark Lindsay is certainly no
    stranger to this subcommittee, but it is the first time that he
    is appearing in this capacity as Director of the Office of
    Administration for the Executive Office of the President.
        Mr. Lindsay, we very much appreciate the relationship that
    we have developed over the years. We all have found you to be
    very forthright with our subcommittee, and your cooperation has
    gone a long way to making our jobs easier. I look forward to
    your new role, and I think it will be a very constructive one
    for both of us.
        Mr. Lindsay. Thank you very much, sir.
        Mr. Kolbe. Over the past several years, this subcommittee
    has taken a fairly aggressive role in its oversight
    responsibilities of the Executive Office of the President,
    including the White House and the Executive Residence. For
    those who have followed this oversight that we have done, it is
    no surprise that we have been frustrated at times by what we
    thought was a lack of cooperation on the part of the White
    House.
        I have been and I remain sympathetic to those who suggest
    that we should be sensitive to maintaining the traditional
    sense of comity between the Executive and Legislative branches.
    But I also believe very strongly that the subcommittee has a
    responsibility to ensure public dollars are being used in the
    most prudent manner and for official duties and
    responsibilities of the Presidency in the same way that I would
    think that the Legislative Branch Subcommittee should exercise
    vigorous oversight of ourselves.
        This is my third year as Chairman of this subcommittee. As
    I have reviewed the operations of the Executive Office of the
    President, what I have been struck with over this time is the
    very informal, and what I have thought lax, procedures that
    have been in place for managing what is a fairly large
    organization. There are 12 separate entities under the umbrella
    of EOP, all with the unique responsibilities and duties, so to
    say that your office is constantly challenged and managing such
    a diverse group is somewhat of an understatement.
        I think that EOP can be managed better and smarter. I
    believe we have seen and continue to see some fairly
    significant problems with day-to-day operations of these
    organizations. We have seen problems in the past with the White
    House Travel Office; the operations of the Executive Residence
    as it relates to hosting both political and nonpolitical
    events; the use of the Executive Residence personnel to host an
    extraordinary number of overnight stays, and now, something we
    will be talking about in a little bit, the phenomenal
    escalation in the cost of modernizing the White House computer
    systems.
        Quite frankly, and certainly through no fault of the
    current witness, I think many of these problems could have been
    avoided by some better management procedures, particularly in
    terms of improved internal controls and financial accounting.
    The request of the President for this forthcoming year for the
    White House activities is for all practical purposes a current
    services budget.
        Nonetheless, there has been a tremendous increase
    associated with the computer modernization efforts underway,
    including efforts to ensure that the White House computers are
    Y2K compliant. I continue to have concerns that the White House
    doesn't have a system in place to provide either its own
    internal management teams or the Congress with valid estimates
    of this and some of its other projects.
        I look forward to hearing from our witness today and hope
    that some of these concerns about the financial management
    systems in the White House might be addressed in your remarks
    and perhaps in our questions.
        Before I recognize Mr. Hoyer for any opening remarks, I
    would just make note that the subcommittee is not going tohave
    a separate hearing this year on the operations of the Executive
    Residence. I understand Mr. Lindsay is prepared to answer questions
    that might relate to the operation of the residence.
        With that in mind, let me call on my distinguished friend
    and colleague, Mr. Hoyer, for some opening remarks.
        Mr. Hoyer. Thank you very much, Mr. Chairman. And I, too,
    want to welcome Mr. Lindsay to the committee and to his new
    role, not his new presence, because he has been present often
    and worked on many of the problems which you have raised.
        I want to say that the nine accounts relating to the
    operation of the Executive Office of the President, which we
    will hear about, with a total of request of $111.7 million, the
    chairman raises the issue of Y2K compliance costs and others,
    but I want to compliment you on keeping the costs down
    associated with running the Executive Office of the President.
        We had no new FTEs requested. In fact, this fiscal year
    2000 request is a decline, as I understand it, of seven-tenths
    of a percent from '99 when you include the fiscal year 1999 Y2K
    request level and you take into mind the technological changes
    that have occurred in the electronic communications. I am
    pleased you are able to serve the President without the overall
    4.4 percent increase for pay, which is essentially being
    absorbed.
        I share the chairman's view, and I appreciate his
    expressing it once again, about the comity that ought to exist
    between the White House and the legislative branches of
    government. Having said that, I think it would be inappropriate
    if I did not make some comments at this point, and the chairman
    has also made some comments, with reference to the review that
    this committee has put the White House under.
        I must observe that having served on this committee since
    1983, it is a review that no previous White House had been
    placed under in my opinion. Secondly, although the chairman
    observes that there have been administrative shortcomings in
    the management of the White House, there is no doubt about
    that. I happen to serve on the House Administration Committee
    and have for at least the last 5 Congresses.
        And frankly, Mr. Chairman, I wouldn't want an independent
    auditor to be grading the White House administration and then
    grading the administration of the House offices. I think we are
    improving in that central management of the House, and I think
    what has been on a bipartisan basis, but certainly the
    leadership of Mr. Thomas and indeed Speaker Gingrich, has
    helped in that regard. But neither the legislative nor
    executive branches would win awards, in my opinion, for
    management administration, and largely because there is such a
    high turnover of members and essentially of White House
    personnel.
        Having said that, I have observed before, and I am pleased
    that we have a chairman who is fair, considerate and moderate
    in the sense of his approach to how to deal with things. Having
    said that, I don't want anybody offended. But I remarked
    before, this White House is the most investigated White House
    in the history of the Presidency, period. And for all intents
    and purposes, those investigations have come up dry, dry, dry,
    not only on the small things, but even the large things.
        We recently had an impeachment, which nobody in the House,
    nobody, thought would result in a conviction. And in fact it
    did not. But I might observe, Mr. Chairman, that I have had the
    opportunity, as I am sure you have as well, of reading the GAO
    report on the investigation that--not oversight, but in my
    opinion investigation, visits to the White House, the family
    visits were more than previous residences. But as the report
    shows, and I think I want to read the report at this point in
    time, because we are not going to have the residency and,
    therefore, this is the only opportunity to do it.
        But, Mr. Chairman, this is not a criticism of you, but you
    and I have disagreed on this, as you know, and we have done it
    in what I think is in a gentlemanly and fair fashion, but we
    have nevertheless disagreed. And in the audit report dated
    October 29th, 1998, we found the fiscal year 1996 certificated
    expenditures of the President and Vice President under 3 year
    SC section 105 and 106 respectively were proper; operative
    words, ``were proper.''
        The report goes on then relatively extensively with respect
    to the overnight visitors at the White House, and essentially
    concludes that although there was not auditworthy reports on
    which the GAO could rely to verify assertions of how many
    overnight visitors, it also pointed out correctly, and in my
    opinion, from a policy standpoint properly, that we do not
    monitor overnight guests at the White House.
        I believe that as a policy we ought not to do that. There
    is no recordkeeping requirement for overnight guests. What the
    audit report clearly indicates is that those overnight guests
    were properly reimbursed, that is to say, meal costs and other
    direct costs that were incurred.
        They observed, as I knew was going to be the case--I used
    the example of my daughter having a visitor over, and that when
    I put those sheets in the washing machine as opposed to other
    sheets in the washing machine, I did not know what the
    differential cost was. And so I didn't attribute to her
    inviting guests over extra costs.
        But it indicates that the consequential costs of keeping
    lights on and things of that nature were difficult, if not
    impossible, to ascertain. Mr. Chairman, I raise this only
    because this is the only time this year following the receipt
    of the audit report that this will be able to be raised. Unlike
    when it was originally asserted, and the hearing was originally
    maintained, when there were TV cameras in this room and the
    room was packed, it is always true that the assertion gets a
    lot of publicity.
        This President has been subjected to unremitting attacks.
    Now having said that, the President has brought some of it on
    himself, we understand that. But the fact is, now when the
    audit report comes out and says essentially we are proper, that
    is the certificated costs and that it verifies that the--to the
    extent that the records can assert it, that, in fact, the White
    House's own report of the number of visitors, and they say we
    did not identify any notable discrepancies between the names
    the White House publicly disclosed and materials we examined.
        There was not a requirement for records to be kept. I think
    there ought not to be a requirement that records be kept. I
    agree 100 percent with the chairman, the White House is
    spending public money. This committee has a responsibility to
    assure that that money is properly applied. But nothing that I
    have seen, heard, read or reviewed interms of the GAO's report
    indicates to me anything, other than the expenditures made by the White
    House have, in fact, and have been proper.
        And I appreciate your being here, Mr. Lindsay. I look
    forward to hearing about the budget. And I appreciate, Mr.
    Chairman, the time you have extended to me.
        Mr. Kolbe. Thank you very much.
        Mr. Lindsay, you may proceed. Your full statement, of
    course, will be placed in the record. And if you wish to just
    summarize, you may do so.
        [The statement of Mr. Lindsay follows:]

    [The official Committee record contains additional information here.]

        Mr. Lindsay. Thank you very much, Mr. Chairman. I would
    like to summarize my comments for this hearing this morning.
        I would like to thank you for having me here before you. It
    has been a privilege to be able to work with this committee in
    addressing some of the very important issues that have had to
    be addressed for the Executive Office of the President.
        Mr. Chairman, Representative Hoyer, members of the
    subcommittee, it is my honor to appear before you to present
    the fiscal year 2000 appropriations budget request for the
    Executive Office of the President. Our budget request
    represents the following nine Executive Office of the President
    accounts. Those accounts are: Compensation to the President,
    the White House Office, Special Assistance to the President,
    the Official Residence of the Vice President, the Office of
    Policy Development, the National Security Council, the Council
    of Economic Advisers, the Unanticipated Needs, and the Office
    of Administration.
        The total budget request for these nine Executive Office of
    the President accounts is $111.7 million. This represents an
    average increase of only 1.1 percent over last year's total
    request. This modest increase will allow the Executive Office
    of the President accounts to maintain a high level of effective
    service to the President and the Nation.
        This is important because of the demanding environment in
    which we now live and work throughout this country. While our
    fiscal year budget request represents a modest request, our
    achievements over the last year have been quite significant. In
    cooperation with the Subcommittee, we have implemented an
    information technology architecture plan that has allowed us to
    not only address the year 2000 problem, but also make
    improvements to our information technology infrastructure that
    have allowed us to maintain a level of service and meet the
    ever increasing demands that are required by the environment in
    which we work.
        This has been accomplished through the implementation and
    the access to the Federal funds made available to the Y2K
    supplemental fund. This has allowed us to address issues which
    have come up in our costing and assessment requirements, which
    were not apparently available to us when we first did our
    assessment.
        This is inherent in the investigation of the kinds of
    issues which are involved in the year 2000 crisis that this
    Nation faces. In addressing this issue, in many cases, we have
    discovered that you really don't know the extent of many of
    these problems and difficulties until you actually look into
    the systems and identify what those costs are actually going to
    be. That is the problem that we have faced, and it hasn't been
    unique with the Executive Office of the President which is like
    other Federal agencies that have been forced to go into this
    fund to finance additional activities for their Y2K activities.
    But in addition to that, as a result of our efforts to address
    the Y2K problem, we are 100 percent confident that the
    Executive Office of the President will be Y2K compliant this
    fall and that the President will suffer no interruption in
    services.
        In addition to meeting the Y2K challenge, we must continue
    to make improvements to our information technology
    architecture. As we have agreed, and as we have worked out with
    this subcommittee, we have committed to bring the information
    technology architecture of the Executive Office of the
    President to a level that is commensurate with the office that
    it serves.
        Thus, our budget request includes an $8.8 million capital
    investment plan. This is to carry on the improvements that are
    consistent with the information technology architecture and to
    make improvements that are significant and make us the kind of
    place that we continue to improve on. This capital investment
    plan has several basic components. Those are network
    infrastructure improvements, internet infrastructure,
    additional improvements to our financial management system, and
    in addition other information technology architecture additions
    which will enhance the effectiveness of our agencies to perform
    services helpful to the President of the United States.
        We are confident that this budget request will allow the
    Executive Office of the President to maintain a high level of
    effective service to the President and the Nation and remain
    fiscally disciplined.
        Thank you for your consideration. If you have any
    questions, I would be pleased to answer them. Thank you very
    much.
        Mr. Kolbe. Well, it would be a first if there were no
    questions from the Committee. So there will be, and I am going
    to start. I have some other areas of questioning. But I want to
    start with this capital investment plan, because I think it
    raises some really substantive questions here, and in my
    opening remarks I mentioned this is the area that I have the
    greatest concern about this year, particularly some of the
    increases that we have seen in this.
        Last year, I was concerned about the total costs of Y2K,
    estimated at $12.2 million. It seemed that the $12.2 million
    was being considered merely as a compilation of a lot of
    projects that had been identified by the independent contractor
    that had been hired to do your architectural requirements
    document.
        Your predecessor assured this Subcommittee that the costs
    of the individual projects have been validated once by the IT
    management team, and then also by another independent
    contractor. But now we have an amended request from $12.2
    million to 19.8 million, or $7.6 million increase. That is a 60
    percent increase.
        Can you explain why we have a 60 percent increase if all of
    the costs had been validated?
        Mr. Lindsay. Most certainly, sir. As I made reference to in
    my opening remarks, addressing the year 2000 problem has been a
    crisis for the entire Nation. It has been a problem which is
    manifold in its complexities. It has a problem associated with,
    number one, awareness, what kinds of systems must be addressed
    and what needs to be repaired.
        In that sense, I believe that we have scored reasonably
    well in terms of making an assessment of what systems needed to
    be addressed and moving forward with making a request that is
    based on our best estimation of what would be required to do
    the nuts and bolts laborious task of renovating many of those
    systems or performing the actual work and making sure that
    those systems move forward.
        But, Mr. Chairman, unfortunately, we had to make estimates,
    and in doing so, you are exactly correct, we followed the
    procedures that we have within the Executive Office of the
    President to do the best we can to validate those numbers; that
    is, to do an assessment as to what the problem is, to meet with
    those customers, to identify the value of those services that
    are being provided, should we keep them, should we move to
    another system, is this a least cost method of moving forward.
    In that we process would then move [Clerk's note.--The agency
    clarified this to read ``consult with''] to our Information
    Technology Management Team and the Information Systems and
    Technology Division in the Office of Administration to work
    together to do a technical assessment of what are the
    possibilities in addressing the year 2000 problem associated
    with that particular system.
        These individuals, mainly career individuals, work very
    diligently in their best efforts to identify those costs and
    then, working with our procurement department, to identify
    contractors that can actually perform the work and help with
    performing some of the assessments. Those efforts were quite
    significant on our part. And, unfortunately, we were not always
    right on target. The examples that you have made reference to
    were good examples of where we really weren't as successful as
    we hoped that we would be.
        But there are points of example where we actually did have
    some success in identifying systems and actually eliminating
    those particular costs. A good example of that is the fax on
    demand service which we provide. The Executive Office of the
    President had a fax on demand service which was going to
    require a substantial amount of money to renovate.
        What we did in this process is identify what the need was
    and, working with the client, essentially made the assessment
    that we have got another means to accomplish that, through the
    White House webpage. Essentially what we did is take a product
    which took about $6 per page or per product cost to produce to
    about 4 cents per product to produce to the public. So in that
    sense, we were able to reduce costs quite significantly.
        But unfortunately, you are exactly correct, overall the
    costs associated with addressing the Y2K problem have been
    quite substantial. And the problems are manifold because of the
    reason I just identified, but in addition to that, market
    forces. The market forces and the compressed time frame that we
    have to address the Y2K problem has made it so that the costs
    associated with paying for these activities have escalated
    quite substantially, and in many cases 100 percent over what we
    had actually considered over a year ago when we made these
    estimates.
        So the combination of those factors have all conspired
    against us to make the estimation and the actual costs
    associated with these projects very difficult.
        Mr. Kolbe. Well, that was a lot of words. I think if I
    summarized it, we goofed, we underestimated the amount of costs
    with this, and frankly I think it is just like the tip of the
    iceberg. I think what we are seeing, and we are seeing this
    over the Federal Government, is a lot of contractors are
    ripping us off. They come in and they say, it is going to cost
    this, you have got to do this, this, this, and it is going to
    cost you this much, $120 an hour, and if you don't pay it, we
    are out the door.
        And I think given the extreme nature of what we have to
    accomplish, I don't know if there is anything else we can do
    right now.
        But I have some other questions in this whole area of the
    Capital Investment Plan, but I will yield to Mr. Hoyer.
        Mr. Hoyer. Thank you, Mr. Chairman. And I want to echo your
    comments. I think the contractors are escalating costs very
    substantially in the face of a crisis, because they think that
    the purchasers have no alternative. Very frankly as the sponsor
    of the ADA, consultants came in and advised people to do things
    far beyond what I think the act required, because they wanted
    to make sure also that there was no subsequent liability either
    for themselves or their clients. And so they went far beyond. I
    think probably some of that is involved in this as well.
        My own view is the ultimate ripoff was the computer
    manufacturers, and I have heard the explanation about saving
    space and, you know, you didn't have the capacity and all that
    sort of stuff. Selling computers that didn't know that 2000 was
    coming in 1993, '4, and '5 ought to subject them to liability.
        I just think it is costing billions, maybe billions and
    billions of dollars around the country that computer
    manufacturers did not produce a product that knew 2000 was
    happening. I know they would say we knew it, but we didn't have
    a capacity and life is a series of trade-offs and 18 months
    later you have to have a new one anyway.
        Having said that, $8.8 million computer modernization. If
    you do not get that, what are the consequences?
        Mr. Lindsay. The consequences of not getting that $8.8
    million are quite profound. I think the most dramatic example
    of what the implications would be if we don't receive that
    funding is when we look at one of the major components, and
    that is the $4.7 million that we have requested for network
    infrastructure improvements.
        Essentially, Mr. Hoyer, the systems that we have made
    improvements to in terms of addressing the Y2K problem and in
    addressing the information technology architecture improvements
    are systems that are connected by the network. Without the
    network, they are islands and they don't operate together. The
    network is the connecting glue that holds our systems together
    and allows us to communicate with each other and with the
    world. That infrastructure is in serious need of system
    improvement.
        The $4.7 million identified in our budget request willallow
    us to complete the work that we started this year in addressing that
    problem. We are at 25 percent of the network replaced right now,
    because of Y2K issues, and this will allow us to complete the remaining
    75 percent of the work. This includes the replacement of all kinds of
    technical equipment, routors and switches and other equipment which is
    just plain outdated, much of it Y2K compliant, but just plain outdated.
        Mr. Hoyer. Thank you. Now, this Committee properly wanted
    you to have an information architecture----
        Mr. Lindsay. Yes, sir.
        Mr. Hoyer [continuing]. And you spent some money and did a
    number of things to ensure that was happening. How does the
    $8.8 million fit into that ITA, and are you modifying your ITA
    in any way?
        Mr. Lindsay. Yes, sir, on both counts. The $8.8 million
    fits very nicely into our information technology architecture.
    The only component of it which I would say is probably a bit of
    an outlier is the financial system, though we believe that that
    financial system is consistent with the principles that are
    identified in the information technology architecture.
        And also reinforces your second question, which is why the
    information technology architecture is a living document. This
    is a document that we just didn't lay down and just set in
    stone; it is something that must move as technology and as the
    times improve. And one of the things that we have been able to
    do to buttress that is present and develop an information
    technology management and implementation strategy: That
    management and implementation strategy helps refine the process
    for how we actually make decisions on financing, assessing
    costs, and how we are going to keep that moving forward and
    make modifications to our information technology architecture
    in the future.
        Mr. Hoyer. Thank you. I have a couple of other questions
    that I will submit for the record. But let me ask you
    something. On your FTEs, my understanding is that you are at--
    1,186 was your target?
        Mr. Lindsay. That's correct.
        Mr. Hoyer. And where are you?
        Mr. Lindsay. We are at 1,126 right now.
        Mr. Hoyer. Okay. Which is?
        Mr. Lindsay. Below our target.
        Mr. Hoyer. Below your target. Now, with respect to the 25
    percent staff reduction, a pledge which I thought was
    inappropriate to make, but nonetheless was made, how are we
    doing with respect to that?
        Mr. Lindsay. We have made every attempt to adhere to that
    guideline. There was an increase in FTEs with the Office of
    National Drug Control policy which was mandated by Congress.
    And other than that, there were just modest increases in other
    categories. But overall we have maintained our guidelines and
    goals and are still well below the prior administration's
    staffing levels.
        Mr. Hoyer. That would have been the 109, that ballpark
    addition?
        Mr. Lindsay. Exactly, sir.
        Mr. Hoyer. If you took the 109 from the 126 you would come
    up with 1,027 which would be--am I correct on that?
        Mr. Lindsay. I believe.
        Mr. Hoyer. 17, excuse me, 1,017. And the figure in actual
    fiscal year '93 was 1,005. So you are pretty much in that
    ballpark?
        Mr. Lindsay. Exactly correct, sir.
        Mr. Hoyer. Mr. Chairman, I know my time is up. Thank you
    very much.
        Mr. Kolbe. Mrs. Meek.
        Mrs. Meek. Mr. Chairman, I have a list of questions, but I
    will ask only one and put the rest in for the record.
        First, I would like to compliment you, Mr. Lindsay, and the
    members of the White House staff. You have come through quite a
    bit of scrutiny in the past year. I think now is the time that
    we should begin to see this scrutiny as maybe not having been
    necessary--I didn't think it was necessary, but even if it
    were, it means that from now on you will progress, I am sure,
    at a much faster pace than you have before.
        I think that the Executive Office of the President should
    carry with it a certain amount of budget authority to the point
    of saying the job has to be done, and this is what it takes to
    do it. Perhaps you should come up with a comparative analysis
    of what has been done in the past. I am sure that it would show
    that this President has undergone much more budgetary scrutiny
    than the others.
        And having said that, I have a few questions regarding the
    information which you have given us in your testimony. You
    spoke quite a bit about your CIP program.
        Mr. Lindsay. Yes.
        Mrs. Meek. And I understand now why it is important that
    you have the monies which you have requested and the technique
    which you have requested, in that you need to make an
    assessment, you need to try these methodologies out to be sure
    that they work, and to be sure that they are applicable to what
    you are trying to have them do. So I think that the testing
    environment is one that has some merit and it should be done.
        The other thing, I am just wondering, what kind of
    initiatives do you intend to fund with your fiscal year 2000
    capital investment plan?
        Mr. Lindsay. Thank you very much, Mrs. Meek. The
    initiatives that we are looking at are the kinds of issues
    where we can try to bring some automation into how we go about
    doing business. One of the things that we have done, I think in
    large part inspired by the leadership in this Committee, is to
    look at how we do business, and how can we do it better and do
    it in a way so that it meets our fiscal restraints, but also
    makes us--helps us perform better services to the President.
        One of the things that we are looking at in these IT
    initiatives is--a good example is how we process documents
    through the Executive Office of the President. We are looking
    at, and one of the things you will look at, is a process of
    digital signature, as opposed to using paper to move documents
    from one particular place to the other, and then having people
    approve them and then having to go to the next person. We have
    developed, and are going to look at a process of digital
    signature where documents will go to an individual for review,
    and they will provide a code, which will provide a signature,
    an authorization to allow the process to move forward.
        That will help speed up the process, automate and increase
    the level of documentation for all different kinds of systems
    that we want to move forward with. Another example is looking
    at fee for services that are provided by, for example, the
    Office of Administration, toother Executive Office of the
    President agencies.
        We want to look at and see if, in some cases, if people
    understand the actual costs associated with the activities that
    they are providing. Perhaps that will affect the level of use
    and manage or lead to better stewardship of those resources in
    appreciation for what those items cost. Those are examples of
    some of the planning initiatives that we are looking at in the
    information technology initiatives.
        Mrs. Meek. Would you please see, Mr. Lindsay, that the
    committee gets information on how you are promoting the use of
    women and minorities with your Y2K procurements?
        Mr. Lindsay. Yes.
        Mrs. Meek. It appears that you are going to spend quite a
    bit of money in this process. Would you please let us know just
    how you are going to utilize that money in terms of assisting
    women and minority businesses?
        Mr. Lindsay. Most certainly. We have been very proud of our
    record and making sure that our efforts in expending this money
    is very inclusive.
        Mrs. Meek. I am very concerned about that. In every
    committee I attend I ask that question and the preceding year I
    asked that question. I have yet to receive enough information
    as to what really happens out in the real world. It happens
    here. It happens in a HUD subcommittee. It happens on almost
    every committee. So I would appreciate a closer scrutiny for
    this committee.
        Mr. Lindsay. We would be more than happy to provide you
    information on that.
        Mrs. Meek. Thank you. Thank you, Mr. Chairman.
        Mr. Kolbe. Yes, Mrs. Meek.
        Mr. Peterson.
        Mr. Peterson. Good morning, Mark.
        Mr. Lindsay. Thank you very much, sir.
        Mr. Peterson. I guess I would like to begin by thanking you
    for the time you spent last week trying to familiarize me as a
    new member of the committee with the White House operation. I
    sincerely appreciated that.
        Mr. Lindsay. Thank you very much.
        Mr. Peterson. Also having been in state government 19
    years, I know that government agencies and even administrations
    of government are seldom anywhere near the edge of computer
    technology. And it has been one of my fears that major agencies
    are going--are so far behind that the technology explosion that
    is going on is going to put government at peril if we don't get
    there somehow.
        So I guess as I look at--you talked about the hodgepodge of
    systems that were there and the gutters full of wires and
    cables of all kinds and that usually but just--it just seemed
    like--and I wasn't here when $12 million was appropriated or
    approved, but it almost seemed like for $12 million for a
    thousand employees and the numbers of systems you could have
    almost put in new. Because I am aware of the costs of fiber
    installation is far less than it was a few years ago. The
    digital switching is getting better and faster and cheaper
    every year. Computers themselves are getting much cheaper. It
    almost seems you could have almost bought an entirely new
    system and just put your information back into it for $12
    million. But I am not speaking technically accurate.
        But it just seems to me for a thousand people you could
    connect them for $12 million and have some sort of a system
    that made sense. But what does 12 million buy us? What does 19
    buy us? What's the difference?
        Mr. Lindsay. Well, in this particular case, Mr. Peterson,
    the $12 million that you are referring to, 98 percent of those
    funds were earmarked for Y2K improvements. One of the things
    that is a reality in terms of the way the Executive Office of
    the President works is though there are 2300 people in the
    complex, it interfaces with the entire government, from
    military, government agencies, from the Office of Management
    and Budget, which has to work and collect budgets from other
    budgets.
        The White House webpage, which is really a contact or
    window onto the rest of the country, which has hundreds of
    thousands of hits and e-mail messages which come in from the
    rest of the world. The actual amount of volume of work that
    actually takes place within the Executive Office of the
    President is one that greatly exceeds the number that you would
    normally experience in an organization with that number of
    people.
        So to answer the question, the $12.2 million went to
    addressing primarily our year 2000 requirements and needs. One
    vital step was we have been able to replace about 25 percent of
    our network infrastructure. We have been able to--these funds
    will allow us to address the bulk of many substantial
    components of modernization and bring our systems up to a
    reasonable level so in many cases they can actually be
    upgraded.
        We were at a point where in the past our capital
    investments were a very, very much smaller percent than what we
    saw in that particular year, to a point where in many cases
    there really wasn't that much being put into it. So what we had
    to do is essentially catch up to a point where we can actually
    get our systems to a level where current vendors and the
    current marketplace could actually provide some of the
    information to make some of the fixes.
        That was--is a costly endeavor unfortunately. I wish we
    could have made and just gone and done everything whole and
    new. But unfortunately the costs associated with conducting
    this work are quite substantially higher.
        Mr. Peterson. Are we sometimes though maybe spending as
    much money as we could to put in new making old systems work,
    does that happen?
        Mr. Lindsay. I have no doubt that it probably does happen
    somewhere. But one of the things that we have done, just
    because of the time constraints associated with us addressing
    the Y2K problem and the financial constraints that we have had
    in the past, our staff has become quite adept in making the
    most out of a very limited set of resources.
        So when we came to them with $12.2 million for addressing
    the Y2K problem, frankly one of the issues that our staff did
    is to take that money and to stretch it out as far as they
    possibly could, because they are not used to just when you need
    a new system just replacing it, but where that was possible and
    where that was appropriate, we followed and took those
    procedures.
        But in many cases, it wasn't the best solution and then we
    went with the renovation side. So our staff essentially picked
    the right solution, I believe, in most cases for the problem
    that they had to face in that particular individual case.
        Mr. Peterson. Then what do we get for the $7.7 million or
    whatever?
        Mr. Lindsay. The $7.7 million will continue our Y2K effort
    in addressing all of the systems. A substantial portion of that
    money addresses the issue of independentverification and
    validation. The costs that we have experienced and associated with
    conducting those kinds of tests have been five times over what we
    originally considered they were going to be. Those escalating costs, in
    combination with the scope of the work that has to be performed, added
    up to take up a substantial portion of the additional funds.
        Mr. Peterson. Could we, looking back, probably have went to
    some complete new systems, complete new fiber wiring, complete
    new switching, cheaper than where we spent our money?
        Mr. Lindsay. Looking back like 5 years perhaps in terms
    of--I mean, what we are planning on doing, what our information
    technology architecture contemplates is phasing out equipment
    within reasonable life cycles within time frames when they are
    going to be supported by vendors. So our plan is that in the
    future that is something that is incorporated in the way we do
    business right now.
        So that is part of our plan. It wasn't as much a part of
    our plan in terms of how we address the Y--not the Y2K
    problem--but the information technology improvements in the
    past. But that is the way we do business now, and it is
    consistent with the information technology architecture and the
    ITMT.
        Mr. Peterson. Okay. Thank you.
        Mr. Lindsay. Thank you, sir.
        Mr. Kolbe. Ms. Roybal-Allard.
        Ms. Roybal-Allard. Mr. Lindsay, it appears that the
    Information Technology Management Team is working and enabling
    you to modernize your information technology systems and your
    Y2K compliance in a very coordinated manner, something that had
    not been done in the past.
        The question that I have really has to do with what is
    going to happen in future administrations, because it has been
    my understanding that what created this hodgepodge in the first
    place is that every time a new administration came in, they put
    in their own ideas of how they wanted things to work in the
    various agencies within EOP.
        Is there anything in the current system that will prevent
    the hodgepodge that has taken place in the past from happening
    in future administrations?
        Mr. Lindsay. Very much so, ma'am. What we have done through
    the ITMT is to primarily incorporate a set of individuals who
    work on developing these principles who are career individuals.
    A lot of these people are going to be there from one
    administration to the next. What the ITMT does is it works with
    a board which has a group of individuals who are at the top,
    but the people who actually do the work and perform most of the
    analysis are the working groups.
        Those working groups are made up primarily of career folks
    who are going to survive one administration to the next. What
    we have done through the Information Technology Management
    Team, through the information technology architecture, and
    other documents is institutionalize the process.
        In the past, there was a process that mandated how a
    particular individual may have approached a particular issue or
    what issues may have been hot at that particular time. What we
    have done is essentially put out on--for the public to view
    what we plan to do, where we plan to go and present that to
    this Committee and to make sure that the people within our
    community are aware of it and arm them with the process so that
    they can continue to push for those initiatives when this
    administration moves on.
        Ms. Roybal-Allard. Okay. Mr. Chairman, I believe that this
    committee was largely responsible for putting together or
    requiring that the ITMT be a part of this process, and I think
    you and the subcommittee are to be commended for that
    recommendation.
        Mr. Lindsay, in your written statement you stated that only
    25 percent of your mission critical systems will be Y2K
    implemented by March 31st and that the rest will be ready
    around October of 1999. Could you describe the 75 percent that
    will not be ready and its significance to the rest of the EO's
    operation? And also, since it is only a couple of months from
    October to the deadline, can you tell me is there a contingency
    plan in place in the event that something goes wrong and you
    cannot fix the remaining 75 percent in time?
        Mr. Lindsay. First off, we are very confident that we will
    be able to meet our requirements. In the June time frame, we
    plan on having 50 percent of our systems complete. In the
    August time frame, we will have 75 percent of our systems
    complete. Within the October time frame, we are looking for 100
    percent compliance for our mission critical systems.
        But in addition to that, following the guidelines and
    guidance, because some of our systems will not be ready by the
    March 31st deadline, what we have done is we have implemented a
    contingency planning process for all of the critical systems
    within the Executive Office of the President and, in addition
    to that, followed that with plans for some of the systems which
    are not even mission critical so that our staffs will be able
    to provide uninterrupted service to the President.
        This is something that is very, very important to us to
    make sure that there is a level of continuity of operations
    that isn't going to interfer with these particular activities
    and that we are strongly committed to ensuring that by the fall
    we are 100 percent compliant on those mission critical systems.
        Ms. Roybal-Allard. Thank you, Mr. Lindsay. Mr. Lindsay, I
    am also very interested in the statistics on minority
    procurement that Mrs. Meek----
        Mr. Lindsay. Most definitely.
        Ms. Roybal-Allard [continuing]. Asked for. My understanding
    is that EOP has done a better job than some of the other
    Federal agencies. Perhaps you could also share with us some
    of--how you recruit and retrain, and how the methods that you
    used seem to be better than other agencies.
        Mr. Lindsay. Certainly.
        [See Questions for the Record.]
        Mrs. Meek. I just want to ask Mr. Lindsay a critical
    question that my colleague asked about the Y2K compliance. You
    mentioned some of the projects that are being deferred. How
    these agencies react to your so-called master list which may or
    may not include some of their favorite projects?
        Mr. Lindsay. Well, one of the things that we have done
    through our process of doing business better is we didn't
    develop that list where I or someone else just sat in a room
    and developed that list; what we did is we worked with our
    customers. Our customers identified what those mission critical
    systems were and were not.
        So the fact is that our customers knew what systems were
    not going to be on that mission critical list before we did.
    And what we did then was a technical scrub working with them to
    make sure that that made sense. Our customers I believe are
    right on board with us and are very comfortable with our
    decisions in that respect.
        Mrs. Meek. Thank you.
        Mr. Lindsay. Thank you very much, ma'am.
        Mr. Kolbe. The time of the gentlelady has expired. Just to
    follow up on this Y2K issue of Ms. Roybal-Allard again there. A
    couple years ago, as I recall, when Mr. Koskinen and others
    began talking about this, we were told that the timetable for
    agencies really needed to be the end of March to have mission
    critical systems up and ready, so that they can be tested.
        Are you satisfied with the fact that only 25 percent of
    them are going to be ready by the end of March?
        Mr. Lindsay. No, I am not, sir.
        Mr. Kolbe. It looks to me like you are not going to be able
    to have them all tested. What confidence do you have that you
    really are going to be ready by January 1st?
        Mr. Lindsay. I have a very substantial amount of
    confidence. The reason why I have that confidence is that I
    look at the time frame that we have had to address the issues
    that we had to. We have come an awfully long way even to get to
    the point that we are right now within a relatively short
    period of time. It is true we started very late in addressing
    this particular issue. So when you look at the methodology that
    we have used for addressing the issue and the--progress we have
    made thus far, I am very confident that that progress will not
    only continue, but it will increase.
        Mr. Kolbe. One other question on this. Do you expect to
    have--I think you have indicated to staff that there will
    probably be additional resources required for Y2K efforts. Is
    that true, and when can we anticipate receiving such a request?
        Mr. Lindsay. Yes, that is true, sir. I believe that it will
    probably be in the end of March and the beginning of April time
    frame.
        Mr. Kolbe. End of March, beginning of April. We have a lot
    of questions on the capital investment. So I am going to kind
    of leave that aside for the moment here. I would like to ask
    you what is the Administration's position on establishing a
    Chief Financial Officer within the Executive Office of the
    President?
        Does the Administration support the provisions of H.R. 437
    of the Presidential Executive Office Financial Accountability
    Act of 1999, which did not, of course, get enacted.
        Mr. Lindsay. We continue to have concerns about that
    legislation. One of the primary concerns that we have is that a
    lot of the issues that are identified are requirements of the
    Chief Financial Officer Act, which would be mandated under this
    legislation, are factors that we already incorporate in how we
    go about providing financial services right now.
        The Financial Management Division performs the majority of
    those services, except for the preparation of an audited
    financial statement, which would have some substantial costs
    associated with it in terms of the preparation. We believe that
    the system that we have developed in terms of addressing the
    financial needs for the Executive Office of the President is
    the most efficient and effective means of doing that, given the
    fact that the Executive Office of the President is not a
    Federal agency.
        It is really a conglomeration of offices which serve the
    President. So we have had concerns over placing a Chief
    Financial Officer in the Executive Office of the President and
    what that mandates and what that might lead to, and so our
    concerns continue about that.
        Mr. Kolbe. I would have a disagreement with that last
    statement of yours. But the Administration's position is that
    each of the 12 agencies should retain their individual
    financial accountability for their own financial activities. I
    mean neither is Congress a Federal agency in the sense that an
    executive agency is. But I think in the House the system has
    worked fairly well in terms of imposing some discipline on the
    budgeting process. I am not saying we don't have a long ways to
    go, but I think it certainly helped to do that.
        Mr. Lindsay. Well, Mr. Chairman, I would argue that we have
    been very successful in terms of imposing that discipline. Our
    Financial Management Division within the Office of
    Administration provides the kind of financial----
        Mr. Kolbe. Is there a standard financial management system
    within EOP that is used by all of these agencies?
        Mr. Lindsay. Yes, there is. As a matter of fact, one of the
    items identified in our capital investment plan, the FAMIS
    upgrade system is one of those systems, it is frankly one of
    the systems that is used by the United States Senate. Our staff
    has met with folks in the Senate--to learn from the lessons
    that they have experienced in using that system to provide
    financial advice.
        And our staff have found a lot of similarities in terms of
    what kinds of experiences we can learn from implementation of
    that particular system. So we do have a standardized financial
    system in our Financial Management Division in the Office of
    Administration that is useful and provides service to all EOP
    agencies.
        Mr. Kolbe. Okay. Turning to another subject, despite the
    comments made by my colleague Mr. Hoyer. I think that this
    Subcommittee's oversight has helped in terms of bringing at
    least some of the discipline to some of the reimbursable
    activities at the White House. One of the things that we agreed
    on last year, and I think is working fairly well, is the system
    for having reimbursable events and for establishing procedures
    for interest and penalties when reimbursable events are not
    paid within 90 days.
        I appreciate very much the report that you have given us on
    that. That one which was submitted to the committee inJanuary
    suggests or it indicates that there are I think 11 events in 1998 that
    hadn't been reimbursed within the 90-day period. I want to know what
    the status of those are and whether or not interest and assessments for
    penalties or late payments are being imposed.
        Mr. Lindsay. I am happy to report that only 2 of those 11
    remain outstanding and over $500 in penalties have been
    assessed.
        Mr. Kolbe. Some of them look like they were a little more
    money, they had a little more than that. At least it is
    working, which is what we wanted.
        Mr. Lindsay. Yes.
        Mr. Kolbe. One last question that I have. Last year, the
    Park Service testified that the estimated overtime costs for
    the domestic staff was $596,479 for fiscal year 1998. Two
    questions. What were the actual overtime costs last year, and
    what is the estimate for overtime costs for domestic staff in
    1999 and fiscal year 2000? I believe you put into your budget
    for it.
        Mr. Lindsay. The actual costs for 1998 were $596,479, the
    estimated costs for fiscal year 1999 were $629,330.
        Mr. Kolbe. And do you have an estimate for this coming year
    in the budget?
        Mr. Lindsay. We believe it is going to be a little bit
    over--under what we estimated for this year, which would be
    about $625,000.
        Mr. Kolbe. You didn't give me one figure. Do you have an
    actual for last year yet?
        Mr. Lindsay. For 1998?
        Mr. Kolbe. Yes. You gave me the estimated $596,000. That is
    the actual $596,479 was right to the penny in terms of the
    estimate we were given last year?
        Mr. Lindsay. I will have to double-check that, sir. I can
    get back to you with the actual figure.
        Mr. Kolbe. Okay. Thank you very much.
        Mr. Hoyer.
        Mr. Hoyer. Mr. Chairman, we are not in disagreement either
    with the gentlelady from California or yourself in terms of I
    think that the Committee's interest did spur appropriate
    reforms in terms of reimbursable costs. I have just seen the
    list. Unfortunately, I didn't see it before this, and it was
    submitted January 5th.
        But in looking at the list, it appears that the
    reimbursements are being made, some pretty late still. The
    weather forecasters' reception was 7 months late in paying. I
    won't comment on how that relates to weather forecasting. But
    having said that, it does seem to be working. And I think it
    was a warranted reform.
        And I think--I don't want anybody to be misled on my view
    that a number of things that this Committee has asked for have
    been appropriate and have led to better procedures. So I don't
    have any additional questions other than saying, Mr. Lindsay, I
    am sure that everybody on the committee feels, as I do, that
    your testimony has been very impressive. Whether one may have
    agreed on a particular assertion or not, obviously you are on
    top of this.
        Obviously, from a management standpoint, we are, in fact,
    considering all the options available. Getting the cheapest
    option and an option that will last, as Ms. Roybal-Allard has
    pointed out, will not just last for the present administration,
    but will be a system that successive administrations can take
    advantage of. It has been--because obviously each
    administration had its own view of what it needed and what kind
    of information it wanted to use--somewhat of a difficult
    transition for--I talked to a number of people in the Clinton
    White House. When they came in, there were very disjointed
    systems, not because President Bush was not on top of it, just
    because the way they managed was perhaps different.
        And frankly I don't think any of the government was up to
    speed. The troubling thing is that the world is not up to speed
    on this. And while the United States is spending billions of
    dollars essentially in the public and the private sector to
    solve this Y2K problem, it is clear that the world is way
    behind on this. And I know that a number of people, both in the
    Senate, Senator Bennett, Steve Horn over here and others are
    trying to anticipate what problems we are going to confront at
    the end of this year. But I am pleased that at least the White
    House is going to be compliant by October. It would have been
    nice if everything had been compliant by the end of March. I
    think that would have been appropriate. It is a shame that we
    didn't make it. But I am pleased to have your confidence that
    we are going to make it by September 30th, which will give us
    at least a quarter to make sure we are ready for the new year.
        So, again, I thought your testimony was very impressive,
    and I think that I would like to comment that staff has related
    to me your outreach to the committee has been outstanding as
    well. Mr. Peterson has left. But I know that you met with him.
    You have met with me and I am sure with Ms. Roybal-Allard and
    others, and I think that really establishes a confidence level
    that I think is appropriate, because I think frankly this
    committee ought to work with the White House.
        There ought to be comity. I think there is comity, and I
    stress the fact we are fortunate on this committee to have a
    chairman as fair and judicious as Mr. Kolbe. I think we will
    work together and things have gotten a lot better, and I
    congratulate you and your predecessors for getting us to this
    point.
        Thank you, Mr. Chairman.
        Mr. Lindsay. Thank you very much, sir.
        Mr. Kolbe. Thank you, Mr. Hoyer. Ms. Roybal-Allard.
        Mr. Hoyer. Mr. Chairman, can I make a comment on this
    reimbursement? I think one of the things that one notes in
    comparing this list to the list that we had received
    previously, there are apparently no--excuse me, there are some,
    but relatively few pending payments, I think, of the--I don't
    know how many are on this, 11 pending----
        Mr. Kolbe. 11, there are now two pending he said.
        Mr. Hoyer. Now two. That is a very, very, significantstep
    forward in collection of these monies due and owing, and I think the
    chairman and the staff of this committee deserve some credit for that.
    Really calling your attention to it, it wasn't anybody was doing
    anything wrong, it just wasn't being done very systematically and,
    therefore, agencies slipped.
        Mr. Chairman, as you know, we had the same problem as it
    dealt with our restaurant bills here. I know I got tied--a
    reporter called me up and said you owe $4,000 to a restaurant.
    I said, what do you mean I owe $4,000? I ate there maybe twice
    all last year. I said it wasn't that big a meal, honest. And
    what had happened, the University of Maryland Alumni
    Association had, through me, gotten a room here, and the
    catering bill went through the restaurant and the University of
    Maryland 6 months later hadn't paid its bill.
        And this is on the record, I probably shouldn't have put
    that on the record, it is my alma mater and I know, but the
    fact of the matter is that they paid it shortly thereafter, but
    it was just in that time frame. But it looked like it was on my
    tab. Well, the same thing was happening at the White House and
    the House restaurant. I am pleased we have taken care of it.
        Thank you very much, Mr. Chairman.
        Mr. Kolbe. Thank you. Ms. Roybal-Allard.
        Ms. Roybal-Allard. Mr. Chairman, I don't have any more
    questions. But I, too, have been very impressed with Mr.
    Lindsay's testimony and would like to thank him for coming to
    the office and briefing me and my staff on the EOP. It was very
    much appreciated.
        Mr. Lindsay. Thank you.
        Mr. Kolbe. Thank you. I think--I have a couple more
    questions which we will submit, minor questions, we will submit
    for the record. And again, Mr. Lindsay, we thank you very much
    for coming this morning.
        Mr. Lindsay. Thank you.
        Mr. Kolbe. This is certainly an easy hearing.
        Mr. Hoyer. I might say, Mr. Chairman, that Mr. Lindsay's
    predecessors are saying to themselves timing is everything.
        Mr. Kolbe. We thank you very much. For the members of the
    subcommittee, this afternoon's hearing will be at 2:30,
    beginning at 2:30 with Director Lew, OMB. Thank you very much,
    Mr. Lindsay.
        Mr. Lindsay. Thank you.
        [Whereupon, at 11:05 a.m., the subcommittee was recessed,
    to reconvene at 2:30 p.m., this same day.]

    [The official Committee record contains additional information here.]

                                                Tuesday, March 2, 1999.

                        OFFICE OF MANAGEMENT AND BUDGET

                                    WITNESS

    JACOB J. LEW, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

                               AFTERNOON SESSION

                               Chairman's Remarks

        Mr. Kolbe. The subcommittee will come to order. This
    afternoon we are hearing from OMB. Mr. Director, I would like
    to welcome you this afternoon. This is the first time that you
    are appearing before this subcommittee in your capacity as
    Director of the Office of Management and Budget. It looks like
    we are going to have some votes here.
        By now you probably have heard that I have expressed some
    concern about the President's proposed fiscal year 2000 funding
    levels for Treasury law enforcement. Unfortunately, you are
    faced with the dual responsibilities appearing before us today
    to justify your own fiscal year 2000 appropriation request, as
    well as proposed funding for other important programs that fall
    under this subcommittee's jurisdiction.
        Director, I am going to get right to the point. I
    appreciate the fact that you are requesting a current services
    level budget for OMB for the coming year, requesting only
    inflationary adjustments for your operations, but this isn't
    news and is typical, I might add, for OMB.
        I appreciate that OMB is trying to set a good example for
    other agencies by managing its resources efficiently. But I
    will be honest. Given some of the very shortsighted and even
    counterproductive proposals that are included in the
    President's budget for Treasury law enforcement, I ambeginning
    to question OMB's performance, particularly as it relates to meeting
    your strategic goals.
        First, the President's budget claims to be strong on law
    enforcement. I am confused. The President's budget says that it
    is strong on law enforcement. Additionally, OMB's performance
    plan states one of its top goals is to promote the enactment of
    legislation that is consistent with the President's program.
        Given the proposed funding levels for Treasury law
    enforcement, I believe OMB has put forward a funding plan that
    jeopardizes drug interdiction, legitimate and illegal cargo and
    passenger processing, money laundering and financial crimes
    investigations. In my opinion, OMB has clearly not met its goal
    of promoting the President's agenda.
        I have before us many charts which I would like to show
    you. The members of the committee have seen them, and, I
    suppose, some of the audience have also seen them. We see a
    very clear indication of the funding levels for Justice versus
    Treasury law enforcement agencies. You begin to see in 1994, as
    they diverge rather sharply, Justice goes up very rapidly, and
    Treasury law enforcement remains stable.
        The next chart shows the same for law enforcement
    personnel. It is virtually flat in Treasury law enforcement
    numbers with a fairly rapid increase in Justice. I serve on
    Subcommittees on Commerce, Justice, State Appropriations. We
    acknowledge the need for the INS and the other law enforcement
    officers there, but I think we have some real concerns about
    why we are not seeing a commitment to increase Treasury. What
    is it about Treasury law enforcement is so unimportant?
        The third chart compares the two principal border agencies;
    it looks even worse here. If you compare INS versus Customs,
    the two that have the joint responsibility for our interdiction
    of drugs on the border and for stopping illegal personnel along
    the border, INS spending has increased 134 percent from 1994
    through to 2000 budget request and Customs has a reduction of 3
    percent.
        Similarly if you look at just those two agencies, in
    personnel, on the last chart, you also see here again an even
    more dramatic rise in INS and level, stable numbers of
    personnel in Customs.
        Thank you very much, Clif.
        What makes these numbers even worse, is that they assume
    the President's new proposed tax cut will be enacted by July of
    this year. Without that tax, the numbers are really decimating.
    Customs will have to lay off 4,959 people, which is a cut of 28
    percent. I wonder if OMB has analyzed the probability that this
    legislation will be enacted into law. Certainly I wouldn't bet
    the jobs and livelihoods of almost 5,000 dedicated employees on
    this occurring.
        Director, I am struggling to understand the rationale
    behind the President's proposal to fund current operations of
    the U.S. Customs service through a new tax. It would have been
    one thing if they proposed to fund new initiatives with a new
    tax; that would have been at least a believable tax and spend
    budget. But to threaten ongoing law enforcement efforts along
    our borders by proposing a new tax as a means of financing them
    is incomprehensible and even negligent.
        I had this conversation with your predecessor during last
    year's cycle. We didn't get very good answers to that then, and
    I get tired of repeating myself, but apparently that
    conversation fell on deaf ears. It was also suggested by some
    that if this subcommittee was serious about Treasury law
    enforcement we would go to bat for these bureaus and secure
    additional resources for their operations.
        Well, I am happy to report we did just that. Final
    appropriations for law enforcement efforts under this
    subcommittee's jurisdictions were $382 million above the
    President's request. We upped the ante in terms of the amount
    that was available. Quite frankly, with the proposed funding
    levels in the President's fiscal year 2000 budget for law
    enforcement, you haven't brought enough money to the table to
    even get in the game, much less being a credible player.
        This subcommittee is clearly on its own with regards to
    Treasury law enforcement. We have no support from the
    Administration. There is no interest on the part of the
    Administration to address the systemic funding deficiencies
    that exist for Customs, the Secret Service and ATF. It is
    unfortunate that the Administration will not help carry the
    water to protect our borders and the jobs of our dedicated work
    force. I will certainly be interested in your comments on that
    during the course of this meeting.
        Let me call on Mr. Hoyer for opening remarks. Then we have
    two votes, and we will be back for the remainder of the
    hearing.

                     Representative Hoyer's Opening Remarks

        Mr. Hoyer. Thank you, Mr. Chairman. First let me recognize
    and welcome Mr. Lew as the Director of OMB. He of course has
    been the Deputy Director and prior to that has served in many
    very distinguished positions, including in this Congress
    working for our Speakers. I want to say that I think he is
    doing an extraordinarily good job, and we are lucky to have
    somebody who understands the Congress as well as he does at
    OMB.
        Mr. Chairman, with respect to your remarks, I unfortunately
    don't have the analysis, but I share your concern, and Mr. Lew
    knows that. I share the concern about Treasury law enforcement,
    and at times the sort of knee jerk reaction that law
    enforcement is at Justice, when in fact 40 percent of Federal
    law enforcement is at Treasury. The charts and statistics which
    the chairman displays, and has on a number of occasions,
    concern all of us on this subcommittee.
        Having said that, Mr. Chairman, the analysis I don't have
    is the total investment that this administration has made on
    fighting drugs, whether it is an INS officer or a Customs
    officer. I frankly cannot agree with you that this
    administration is not committed to law enforcement, to stopping
    drugs at our border, and to maintaining and enhancing our
    effort to fight drugs and illegal imports into this country. In
    fact, I think the statistics, when viewed as a whole as opposed
    to discretely comparing Justice and Treasury, will reflect
    that.
        Now, as I have said before, you are on both subcommittees
    and obviously, therefore, have a call to address both issues in
    terms of what is needed by the Justice Department and what is
    needed by the Treasury Department in this subcommittee, and I
    am appreciative of the point that you make. It is a good point,
    and it is a point that I would hope OMB and the administration
    would look at more carefully. And I look forward to hearing Mr.
    Lew's response, because I am sure this concern does not come as
    a surprise to him.
        On the other hand, I think it unfair to make this
    comparison, which is a bad comparison from our subcommittee's
    standpoint, as proving the point that this administration has
    not committed itself fully to the war on drugs. And, very
    frankly, Mr. Chairman, I will get those statistics cumulatively
    so that we know those. But I think that is frankly a fairer
    portrayal of this administration's efforts.
        And, Mr. Lew, I look forward to your testimony and look
    forward to hearing particularly on this issue, because I don't
    want to make a mistake about this, I do share very much the
    chairman's concern, because Customs and ATF, Secret Service,
    IRS and other agencies within Treasury obviously have a very,
    very critical role in crime fighting at the Federal level, and
    we need to make sure that they are not only equal in terms of
    numbers, but also in terms, by the way--and I raise this issue,
    Mr. Chairman, you and I are both concerned about--as to having
    the ability to compete for qualified effective personnel by
    having sufficient SES spots and by having sufficient pay
    flexibilities so they can compete for technical personnel and
    not have their technical personnel stolen by other agencies who
    have a greater ability to enhance paying benefits.
        Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you. The subcommittee will stand in
    temporary recess. We have two votes. As soon as the second one
    takes place, we will come back for your opening statement and
    questions.
        [Recess.]
        Mr. Kolbe. The committee will resume. Director Lew, you are
    welcome to go ahead with your opening statement. As always, the
    full statement will be placed in the record, if you want to
    summarize your statement.

                            treasury law enforcement

        Mr. Lew. Thank you, Mr. Chairman. If I might, with your
    indulgence, before I address the OMB budget, I would like to
    very briefly summarize. I thought maybe I could begin by
    responding generally to the very important questions that you
    posed with regard to Treasury law enforcement.
        Mr. Kolbe. Certainly you may. I will have some specific
    questions on it as well.
        Mr. Lew. Sure. I think that we begin by looking at the
    overall budget, as Congressman Hoyer suggested, and by any
    measure, we think our overall law enforcement budget is one
    that we can be very proud of over the period from '93 to '99.
    There may be differences in terms of allocation, but on just
    the aggregate basis, in 1993 total spending on crime was $14.6
    billion, and in the 2000 budget it is $26.4 billion.
        If one looks at the drug control funding, in 1993 it was
    $12.3 billion. In fiscal year 2000 it is $17.8 billion.
    Comparing '99 to fiscal year 2000, we think it is necessary to
    remove some of the emergencies that were enacted in '99 that
    were one-time purchases of equipment, and once one does that
    the budget proposes a $735 million increase over last year.
        With regard to the allocation between Treasury and Justice,
    I think it is a very important policy question. That is one
    that frankly has come across at my office, not just as a money
    issue but as a policy issue, in terms of coordination and
    making sure we do the very best job we can as an overall
    government, in terms of putting our law enforcement resources
    to bear.
        I have looked at the Treasury/Justice comparisons, and I
    guess I see a slightly different story than the charts that you
    were showing a moment ago. INS is clearly a special case, and I
    think it is necessary to look at law enforcement between
    Treasury and Justice without counting INS and then separately
    looking at INS. If you do look at it without INS, Treasury has
    grown from '93 to '99, 46 percent and Justice 53 percent. It is
    a little bit of a difference, but it is not the striking
    difference of 46 percent versus 80 percent.
        Within the agencies, if you compare the FBI and the ATF,
    the FBI has grown less quickly than the ATF. ATF has grown 52
    percent, FBI 48 percent. Customs is about the same as the FBI.
    The INS/Customs comparison is one that one really has to ask
    about the mission at the borders, who is doing what and are
    they doing it well together, and I don't think we have the
    absolute answer to that. It is an ongoing kind of a question.
        But in 1993, if you looked at a border station, roughly 62
    percent of the time it would be a Customs agent and 48 percent
    of the time, [Clerk's note.--This was subsequently revised to
    ``38 percent of the time''.] it would be an INS agent. The
    policy goal in '93 was to bring that into parity so it would be
    roughly 50/50. The large increases in INS have been to add the
    personnel to bring the ratio to the 50/50 point. We are roughly
    there now, and I would expect as one looks out to the future
    that the growth rates would be much more consistent one to the
    other and the disparity would diminish.

                        omb budget for fiscal year 2000

        Next I will turn, if I may, just briefly to my OMB
    testimony. I look forward to answering any questions that you
    have. We very much appreciate the support that this
    subcommittee has shown for law enforcement generally and for
    OMB when I address the OMB budget, and I hope that we can work
    together on these issues because I know we share the same basic
    goal, which is to do the very best we can in terms of law
    enforcement, in terms of drug control policy, in terms of
    protecting our borders. And we look forward to working with you
    on that.
        If I may, Mr. Chairman, if I could just ask your
    indulgence, I will very briefly summarize my OMB testimony, and
    then be happy to answer any questions that the committee may
    have. It is a pleasure to be here this afternoon to discuss the
    President's fiscal year 2000 budget request for the Office of
    Management and Budget.
        As I already mentioned, we very much appreciate the past
    cooperation between this committee and ourselves both in terms
    of funding and in terms of general management, where I think we
    have had a very good working relationship, and we look forward
    to continuing that. Our budget, as the chairman noted, is
    basically a freeze in the sense of keeping our manpower
    constant, our space constant. The only area where we have a
    little bit of growth is in the information technology area.
        OMB plays a central role in our fiscal policy and in the
    management of our government. We continue to maintain a work
    force that focuses diligently on fiscal discipline and
    management. We are very proud of the contribution that we have
    made both to the Nation's economic health and fiscal well-being
    and to making sure that we have a government that does better
    than it used to at managing its resources and getting more done
    with less resources.
        We believe that as the chief management and budget office
    of the executive branch, that OMB has a special obligation to
    adhere to budgetary discipline and to maximize the productivity
    of our resources. Over the past several years, there have been
    many increases in the workload of OMB. And Isay this not by way
    of criticizing, many of the increased responsibilities are, we think,
    very important, and we worked with the Congress in designing them. But,
    nonetheless, they do increase the workload and the requirements on our
    staff. The fact that we are proposing a budget that maintains our staff
    at the current level of 518 FTEs we think is really a statement of
    fiscal discipline, because to do more with the same number of people
    requires efficiency and, unfortunately, long hours and very hard work
    by the OMB staff.
        I will skip over the discussion of the specific items that
    go into length in my prepared testimony, but I just would note
    that the Government Performance and Results Act, the many
    responsibilities we have with regard to the year 2000
    compliance and the many other statutes are the kinds of burdens
    that OMB should be expected to perform, and we appreciate we
    have been given the resources in the past that have enabled us
    to do that.
        If I could shift my attention just for a moment to
    information technology. As an agency that is very much data-
    intensive, keeping our computer systems current and maintaining
    them is of exceptional importance. We have in this year's
    budget requested money, $400,000, to allow us to upgrade and
    modernize our computers, particularly our desktop computers.
    There are many of them that are 5 years old and getting older.
    The technology has changed dramatically. We are trying to get
    on a 4-5 year replacement cycle so the machines are capable of
    doing the task that they are expected to do. With the software
    changing, that is getting harder and harder to do.
        We have instituted a number of management measures designed
    to maximize our capacity as an organization to meet our
    additional responsibilities. We have an investment review
    board, a management committee and a workload subcommittee,
    which I am particularly proud of, because I think what it has
    enabled us to do is keep information flowing in both directions
    so that as we take on new responsibilities and work as hard as
    we can work, we don't waste as much time as we would if we
    didn't understand well the first time what is needed and how it
    needs to be done. We really improved communication, I think, in
    both directions at OMB, and it is reflected in the quality of
    the work environment and in terms of the quality of the work
    that we do.
        In the interest of time, Mr. Chairman, I would like to
    conclude by saying that OMB is a fine organization that I am
    proud to be the Director of. It continues to provide
    outstanding work on a broad range of matters. We remain
    committed to producing the best possible work even as staff
    resources are stretched by new and important assignments.
        I urge you and the committee to maintain our staffing level
    and to provide the up-to-date technology that are necessary for
    us to continue to do the work that we do. We have submitted to
    you the OMB performance plan in keeping with the Government
    Performance and Results Act, and we have carefully integrated
    the performance goals of that plan into the management of OMB
    and the President's budget.
        This concludes my opening remarks. I would be delighted to
    answer any questions that you have.
        [The statement of Mr. Lew follows:]

    [The official Committee record contains additional information here.]

      Customs and Immigration and Naturalization Service Functions on the
                                     Border

        Mr. Kolbe. Thank you. I am just noting the members as they
    come in here. We have a lot of members here this afternoon.
        I will begin with questions. I appreciate the general
    comments you made about the view of law enforcement and that
    you have to look at it in the overall picture. And I appreciate
    that. But I did both look at that and the overall picture when
    we looked at all of Treasury versus all of Justice. And I guess
    what I am hearing from you is that you somehow have to take out
    INS from all of this as though somehow they had to be treated
    differently. If you look at all the other agencies, you would
    find that it was not that kind of a pattern.
        Well, I am willing to take it out. But if you are going to
    take it out, I am also going to take Customs out and look at
    those two together. So let me just begin by asking, do you
    agree that those are the two agencies that have primary
    responsibility for our border both in interdiction of
    personnel, illegal personnel, and of illegal goods and drugs
    coming across the border.
        Mr. Lew. And for maintaining the smooth flow of traffic
    across the border, absolutely.
        Mr. Kolbe. And, conversely, something that I have said at
    every hearing, for maintaining the flow of that which is legal
    coming across the border?
        Mr. Lew. I agree with you.

         Comparing treasury and justice law enforcement funding levels

        Mr. Kolbe. I understand. You have done an informal study
    concerning Treasury law enforcement versus Justice law
    enforcement. Can you share any of those findings with us or do
    you know anything about that?
        Mr. Lew. I am not sure what informal study you are
    referring to. I have been involved on a number of matters, I
    wouldn't call them a study, in areas where we looked.
        Mr. Kolbe. Specifically concerning the funding level of the
    two.
        Mr. Lew. In the preparation of this year's budget, I
    reviewed the numbers that I raised with you just a few moments
    ago. And, frankly, it is a concern of ours that we need to
    maintain the overall funding levels so that we are able to do
    the best job we can in law enforcement. And we do keep an eye
    on the agencies to make sure that we have each agency properly
    funded to do its share.
        The competition between agencies is one that we try to keep
    from influencing the decisions as much as having the decisions
    driven by what the needs of the agencies are, because there is
    a kind of a competition where sometimes there is a request that
    is triggered by one, because the other made a request. We try
    to sort thatthrough. You know, the increases that we have
    proposed in both Treasury and Justice are substantial.
        I think that we, I am sure, will discuss some of the user
    fee funding proposals in the area of Treasury law enforcement,
    and I understand that is a cause of concern to the
    subcommittee. But when you look at the rate of growth that we
    have proposed in the overall top line level, we think it is
    adequate to maintain the kind of presence on the border that
    Treasury needs to have and the kind of modern technology that
    they need to have to do their job.
        I think the question of who is at the border is a very fair
    question to ask. There is not a magical formula that 50/50 is
    right or 62/38 was wrong, but we know that we don't need to
    have duplication between the two. Our job is to coordinate so
    that we are covering the border in all the places we need to
    cover with the manpower we need.
        We tried to coordinate between Justice and Treasury.
    Frankly, they work better together than they used to, and it is
    not always easy but I think we made a lot of progress.
        The reason the INS budget has grown, because INS was a less
    substantial presence at the border than was Customs in '93, and
    now they are roughly equal.
        Mr. Kolbe. Well, I appreciate the comment that we made
    substantial progress. I agree we have made some. This
    subcommittee has worked on the idea of unified port control and
    we had some resistance I think from both sides, Treasury and
    Justice, on that. So I think there is tremendous resistance to
    that idea.
        Mr. Lew. That may be an understatement.
        Mr. Kolbe. Let me just go back to, nevertheless, the prior
    years. Last year we were told by OMB that, and I am quoting
    here, that OMB's goal is not to achieve parity between Justice
    and Treasury law enforcement, but rather analyze Treasury and
    Justice programs on their merits while ensuring that the
    resulting budget recommendations reflect Administration
    priorities.
        Would it be safe to say at least then regarding Customs and
    INS that the priority is clearly INS. I think we would have to
    say that based on the budget.
        Mr. Lew. I think there has been more of an increase in INS.
    I think if you look overall, I don't think it is fair to say
    that INS is a higher priority than Customs in terms of the jobs
    that they do. INS has a different mission than Customs, and we
    obviously have paid a lot of attention not only in the law
    enforcement side, but on the legal immigration side, to making
    sure that INS has the resources it needs to do its many jobs.
        We have tried to make sure that we have full coverage but
    not double coverage by asking who is at the point of entry: is
    it an agent for the Customs Service, is it an agent for the
    INS? If we had decided that INS should replace Customs, perhaps
    it would be fair to agree that INS is a higher priority. But
    our objective was to reach some kind of equal balance where
    they were equally present and coordinated with each other.
        And I think as you see our budgets in the future, we
    anticipate that the differences in the rates of growth will be
    much less dramatic now that they have reached that rough parity
    and we have also reached a better working relationship where I
    think the agencies are working better together at the borders.
    It is not perfect. I don't want to sit here and say all the
    management problems of 20 years have been fully addressed. But
    I think we have made progress and I think it has helped that we
    have reached rough parity in terms of personnel.
        Were it to grow so INS started to be a majority and we had
    a reverse of the situation we had in '93, that is not our
    objective, it never has been. So I am just taking issue with
    saying that INS is a higher priority. Each has needed different
    funding levels in order to do their job, but they are equal
    priorities.
        Mr. Kolbe. I have many, many more questions in this area
    and others, but my time is up.
        Mr. Hoyer.

         Agency progress in upgrading computers for the Y2K date change

        Mr. Hoyer. Thank you, Mr. Chairman. I apologize for missing
    your opening statement. I was managing a bill on the floor with
    Bill Thomas. You have indicated that obviously March 31st is
    our objective for having our Y2K solved in the Federal
    Government. We know we talked to the White House earlier, they
    are not going to meet that. Your statement indicates that 61
    percent of the agencies mission critical systems were compliant
    at the end of '98.
        Would you estimate which agencies will not be compliant by
    your deadline of March 31st?
        Mr. Lew. We have made a lot of progress in terms of
    reaching compliance., The precise list of agencies that are not
    compliant, I would be happy to look up for you, but we are
    hopeful that all the agencies will be compliant in a timely
    manner. We are moving to end-to-end testing throughout the
    government, and we are discovering some new problems as we go
    into the final stages of testing.
        If you give me just one moment, I would be happy to look up
    which agencies in specific.
        Mr. Hoyer. I think we would like to have that.
        Mr. Lew. I will submit that for the record.
        Mr. Hoyer. You don't have to necessarily recite them all
    now.
        Mr. Lew. We would be happy to submit them to you.
        Mr. Hoyer. Get them for the record as soon as possible.
        [The information follows:]

        At this time, we anticipate that the agencies that will not
    be compliant by March 31, 1999 include:

                               Percent of compliant mission critical systems
    NASA..............................................................    99
    DOE...............................................................    98
    Commerce..........................................................    97
    HHS...............................................................    95
    DOJ...............................................................    93
    USDA..............................................................    93
    Treasury..........................................................    93
    DOD...............................................................    88
    State.............................................................    85
    DOT...............................................................    85
    AID...............................................................     0

        Mr. Lew. Obviously, the problem agencies are the ones we
    focused the most public attention on. We made a lot of
    progress. We made a lot of progress at HHS, at DOD, and we have
    had some problems arise in the late stages of testing, and we
    are grateful that Congress proposed the flexible funding they
    did in terms of the emergency fund.

                          Status of Y2K Emergency Fund

        Mr. Hoyer. What is the status of that emergency funding?
        Mr. Lew. The emergency funding is being used so that we
    reserve some of it for the end of the year as we discover what
    the final needs are. Of the $2.25 billion that was available
    for nondefense agencies, we have allocated roughly $1.56
    billion of it, reserving $570 million, [Clerk's note.--This was
    later changed to read $690 million.] so that as we move through
    the final part of the year and we discover new problems we have
    the resources to deal with them.
        It has been enormously valuable to have those resources. As
    you know, the estimates of Y2K compliance several years ago
    were not as high as the actual costs. We are seeing this year
    that there are some new costs yet but we can manage within the
    costs that have been appropriated.
        Mr. Hoyer. IRS has asked for $250 million. I asked
    Commissioner Rossotti whether or not those funds won't be
    available till at the earliest October 1, whether he could use
    those funds earlier. His response was we can use them as early
    as we can get them. Is there any thought that that might be
    included either in the emergency allocation of your balance of
    $500-plus million or in the supplemental?
        Mr. Lew. In response to your question on the reserve, I
    gave you the wrong number, the $570 million that I gave you was
    the number that we already allocated to Treasury. They did in
    their 2000 budget request the additional funding that you
    described.
        When we reviewed it in December, that funding was for
    fiscal year 2000. And we took the view there, as in several
    other cases, that the '99 emergency appropriation was really
    for '99.
        Mr. Hoyer. Was that number sufficient?
        Mr. Lew. The needs to have funds available in '99 is very
    important. Any month we lose in terms of putting funds into '99
    problems, we don't get back that time. So we didn't want to use
    the '99 funds for 2000 expenses. If there are additional
    requests from Treasury for '99, we would review them, and we
    have been working very well with the departments. Almost all of
    the requests the departments have submitted have been good,
    solid requests and we have provided them and if they submit
    additional '99 requests, we will review them.
        The concern we have is that we don't want to pay for the
    2000 expenses first and then find 2 months from now when we do
    an end-to-end test on a mission critical system in an agency
    that we don't have the funds available to deal with the '99
    problem because we won't have the resources available to deal
    with it. It would obviously be a relief to many agencies were
    we to fund 2000 expenses out of '99. We have been trying to be
    careful not to do that.
        Mr. Hoyer. I will talk to you about the caps later on. It
    might be helpful to that as well, he says as an aside. OMB
    performance plan, I am very interested in that. But I know my
    colleague is interested in that as well. And the A-110
    amendment disclosing underlying research of great concern, but
    I know Mr. Price has extensive questions. So I will skip over
    that. My time is probably----
        Mr. Lew. If I can just correct. When I told you it was 570
    million reserve on Y2K, the real number is more like 750.

                        Courthouse Construction Funding

        Mr. Hoyer. I thought it was closer a billion the way you
    described it.
        The courthouse funding. I don't know whether you mentioned
    that in your--was it in the statement?
        Mr. Lew. I believe that it was not in the statement. The
    statement was just on the OMB budget.
        Mr. Hoyer. Courthouse funding, why are you so hostile to
    the judiciary?
        I ask that with tongue in cheek. The judiciary is convinced
    that they are. But we have this problem in the committee. You
    know last year you didn't fund courthouses, and to the
    chairman's credit and the credit frankly of this committee, we
    took the priority list. There was no politics in it. Nobody in
    the committee got a courthouse. I mean if they did it was
    because it was on the priority list and the chairman just
    followed the list irrespective of the political ramifications.
        And we did so--and I agreed with the chairman on that. And
    we did so because clearly there are a lot of needs out there
    that need to be met. I know there are members on this
    subcommittee who are very concerned, as I look to my right in
    Los Angeles and Florida, Miami, and some others, and I am sure
    to the other side, some real concerns about this. And what we
    are forced to do in this committee is to try to find those
    resources, which just squeeze us more.
        Mr. Lew. We understand the very tight situation in this
    subcommittee. It is not unique, but it is particularly tight in
    this subcommittee. And when we look at the courthouse budget,
    there is no hostility towards the courts. We have had debates
    with the courts over the years as to what the proper design
    standards were--whether we were doing it as expeditiously as
    possible. But those are issues that we should be able to work
    through. And in the end, if there is a need for a courthouse,
    we should buy the most efficient courthouse that is appropriate
    to the site and to the task.
        For '91 through '99, we will have spent about $3.7 billion
    on building courthouses. It is not an area where we have been
    over the years spending lightly. Given the choices that we have
    had to make in putting very tight budgets together under the
    caps, we thought that this was not the area of highest
    priority, that we wanted to have the extra resources for things
    like law enforcement and other functions that were timely. And
    courthouses can be scheduled but law enforcement you have to do
    it when you have to do it.
        On the other hand, we are concerned that courts need to be
    safe. There need to be enough of them so we can have an
    efficient administration of justice so that judges have rooms
    available when they need them. It has not been the most
    efficient management of resources over the years. I think it is
    better than it was. We have worked with them.
        It hasn't always been an easy working relationship given
    the independence of the branches, but I certainly would hope to
    correct any impression, whether in jest or not, that there is
    hostility between us and the judicial branch. We try----

                         Funding Problems in the Budget

        Mr. Hoyer. That wasn't just--Mr. Director, as you know, my
    concern is though, and the chairman has mentioned it, for
    instance, we are essentially a billion dollars late in this
    subcommittee, because of, I guess the chairman mentioned, I got
    back late, but the fees, the forfeiture fund that is $450
    million in Treasury alone and Customs. This is a $500 million
    item, if we are going to do sort of the increment that we did
    last year on these.
        So it really puts our committee in a very big bind. The
    chairman has a very difficult problem confronting it.
        Mr. Lew. I think it does put the committee in a difficult
    bind, but we do have policy differences here as well. In the
    areas of the fees and the forfeiture funds, we think the
    proposals for it are solid. In case of the user fee, we have
    designed the user fee in Customs to try and address some of the
    concerns about earlier user fees, to tailor it much more
    directly towards the cost associated with providing services at
    the border. In the case of the forfeiture fund, we have
    designed the amount and the reliance on the funds so that it
    doesn't create a long-term reliance in excess of what we expect
    the availability of resources to be.
        Mr. Hoyer. The problem--if I can interject, Mr. Director,
    and you perhaps heard me ask this question, let me just finish
    this point--the problem, though, in anticipating forfeiture
    funds for operating costs, very frankly it puts an awful lot of
    pressure on law enforcement to forfeit those items necessary
    not for law enforcement but to fund their operations. And I
    think it is a problem that could bite us in the end.
        Mr. Lew. Which is why we think it is important to do it in
    the right amount and not to over-rely on it. We don't think we
    did over-rely on it. If we did and we had the effect that you
    described, we would agree it was a problem. I think we have
    principle differences as to whether the user fees and the
    forfeiture funds are well designed. We think they are.
        In the case of the courthouses, it is a decision on whether
    or not that is a high priority compared to other priorities. To
    some extent the box is as tight as the committee perceives the
    need for additional courthouses this year.
        Mr. Hoyer. On our side, I will let Mrs. Meek and Ms.
    Roybal-Allard discuss with you how important the projects are.
    Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you. Mrs. Emerson is next.

                     PAPERWORK REDUCTION ACT IMPLEMENTATION

        Mrs. Emerson. Thank you, Mr. Chairman. Thank you for being
    here today, Director Lew. My first question has to do with the
    Paperwork Reduction Act of 1995 and can you just give me an
    overview of how the process OMB uses, how that works in
    determining whether an agency's paperwork is too much, too
    little, et cetera.
        Mr. Lew. The role of the agency is, I think, somewhat
    misunderstood by many. We don't get to approve or impose
    burdens on agencies. We work with the agencies. We review their
    submissions. We ask them questions. But ultimately whether or
    not they reduce the paperwork burdens by 5 percent, as the
    target would call for, is a function of many things that we
    don't have direct control over.
        In the last several years, for example, if you look at some
    new laws that were enacted in 1997 in the Balanced Budget Act,
    the tax provisions that were enacted, many of which we
    supported so I don't say this by way of criticism, imposed
    burdens, paperwork burdens that were new burdens that drove the
    total amount of paperwork up, which made it that much harder to
    hit the 5 percent reduction.
        So our Office of Information and Regulatory Affairs works
    with the agencies. It does have the review authority under the
    Paperwork Reduction Act to try and make sure that forms are as
    simple as possible, but we don't have the ability by fiat to
    impose a paperwork reduction on a percentage basis.
        Mrs. Emerson. But you could in fact make a request to an
    agency. I bring that up because right here is a packet. This is
    what one home health care visit by a home health care agency
    for one patient, like if I came to visit Mike Forbes here, I
    would have to fill out all this paperwork just about him if I
    were a home health care agency. This is outrageous. It is 39
    pages just for the first visit and another 39 pages. So is this
    something that I could request OMB to take a look at and
    analyze and then speak to the appropriate----
        Mr. Lew. I would be happy to have our staff take a look at
    it. Not knowing that issue specifically, but knowing generally
    the area of HCFA and home health care, I suspect that the
    reason for the volume of paper is that we have collectively
    worked over the years to try and ensure that we pay for
    services that are properly provided but not pay for services
    that are improperly provided or not provided at all. And the
    result sometimes is more paper than we would like, but our
    desire to eliminate fraud and abuse, which I think we share,
    sometimes runs head-to-head with our desire to reduce paperwork
    and we have to balance the two.
        And as I say, I am not familiar with that specific set of
    papers but I would suspect, just knowing the subject, that that
    is what we will find, that there are a lot of pieces of
    information there that are only important in cases where
    providers are doing things they shouldn't do. We try very hard
    not to have the burden be on all providers, but I understand
    the concern.
        Mrs. Emerson. So I will submit this for the record, Mr.
    Chairman. You can take it back, because I really feel very
    strongly about it, because just the time involved takes away
    from actual care if there is a certain amount of time that you
    can allocate for that.

            Paperwork Requirements Associated With Home Health Care

        HHS published the OASIS proposed rules in March 1997 and
    the final rules on January 25, 1999. The form that will be used
    to collect the OASIS data is currently under review at OMB for
    final clearance. OASIS was developed in 1993 to implement
    section 1891(a) of the Social Security Act that requires, as
    part of the home health assessment, a survey of the quality of
    care and services furnished by home health agencies using a
    standardized, reproducible assessment instrument. OASIS was
    designed by doctors and clinicians to include key indicators of
    quality. HCFA also plans to use the OASIS data to construct the
    prospective payment system mandated by the Balanced Budget Act
    of 1997.

                         kyoto protocol implementation

        Mrs. Emerson. Let me ask another question that is totally
    unrelated to that. That has to do with the issue of global
    climate change. Has OMB taken any action or made any kind
    ofproposal or programs that seek to implement the Kyoto Protocol on
    global warming?
        Mr. Lew. No, the administration is not implementing the
    Kyoto Protocol in any way. We continue to do work in the area
    of climate change, as we did before Kyoto, and we continue to
    work on the policy area but not on implementation.
        Mrs. Emerson. Can I ask you to just send me a note or a
    letter actually saying that you are not implementing the Kyoto
    Protocol? Because in my ag appropriations committee meeting 20
    minutes ago, they in fact used words ``commitment to the Kyoto
    Protocol,'' ``the administration's commitment,'' et cetera, et
    cetera. Realizing of course it has not been ratified by the
    Senate, I would appreciate it.
        Mr. Lew. We are committed to the Kyoto Protocol. We will be
    doing work to seek its ratification, and there will be perhaps
    some confusion about our advocacy for the Kyoto Protocol, but
    there shouldn't be any doubt that we are not implementing it.
    We support it. We are going to advocate it, and we are
    simultaneously going to pursue climate change policies that
    are, you know, self-contained, without regard to the Kyoto
    Protocol. And if others try to draw the two together, we do our
    best to separate them because we see them as separate
    functions.
        Mrs. Emerson. Well, I would appreciate it if you would just
    give me a letter that basically says that you haven't taken any
    action or proposed any programs that seek to actually implement
    it. That would be very helpful.
        [The information follows:]

    [The official Committee record contains additional information here.]

                        federal budget surplus estimates

        And let me ask you just one more question, because this is
    very confusing and I just kind of want your personal opinion
    about this. This has to do with the budget surplus. The fact of
    the matter is, what exactly are we talking about? I mean, we
    are talking about a fiscal year 1999 budget surplus that is
    basically entirely due to what? About $127 billion surplus in
    Social Security Trust Funds?
        Mr. Lew. In 1999 there is an off-budget surplus, not an on-
    budget surplus, so it would be entirely attributable to the
    off-budget sources which are mostly Social Security. This has
    been an area where there has obviously been a lot of debate
    over the last few weeks, and I hope there will be more debate
    over the coming months.
        We don't think that it is correct to view the dollars in
    the surplus as being Social Security dollars per se. The trust
    funds keep the resources in the form of Treasury bonds and the
    dollars flow through to the unified surplus, and we have a
    unified budget and we budget on that basis. So the President
    has proposed a framework for Social Security reform and long-
    term fiscal discipline that would, over 15 years, invest back
    in Social Security 62 percent of the surplus, which over 15
    years is roughly the amount of the surplus that is attributable
    to Social Security.
        Mrs. Emerson. But with his plan essentially we would be
    using general revenue funds in the future to finance Social
    Security; is that correct?
        Mr. Lew. Yes.
        Mrs. Emerson. I just wanted to set the record straight,
    though, that technically we do not have this year a budget
    surplus due to any other reason other than FICA taxes?
        Mr. Lew. We have a unified budget surplus but it is
    attributable to the Social Security receipts.
        Mrs. Emerson. Thank you.
        Mr. Kolbe. Mr. Price is next.
        Mr. Price. Thank you, Mr. Chairman.

        revising circular a-110 concering federally funded research data

        Mr. Director, I would like to turn our attention to
    Circular A-110 concerning the availability of federally funded
    research data. Last year language affecting Circular A-110, the
    OMB document governing federally funded research grants, was
    included in the Treasury-Postal section of the Omnibus
    Appropriations Act, as you know. This provision directed OMB to
    revise the Circular to ``ensure that all data produced under an
    award will be made available to the public through the
    procedures established under the Freedom of Information Act or
    FOIA''.
        In complying with the statute, OMB published a proposed
    revision to Circular A-110 in the Federal Register on February
    4, and I believe the comment period lasts until April 5. In my
    view, this proposed revision would have a serious, wide-ranging
    and very negative impact on research and research institutions,
    and I am not alone in that view.
        I have here a statement issued by the National Science
    Board, the governing body of the National Science Foundation,
    that very succinctly identifies the major problems this change
    would give rise to. I would at this point in the record insert
    this document, as well as letters from the National Science
    Foundation and the National Academy of Sciences opposing the
    proposed rule, Mr. Chairman, if we could include that in the
    record.
        Mr. Kolbe. Yes, we will put that in the record.
        [The information follows:]

    [The official Committee record contains additional information here.]

        Mr. Price. Let me raise a couple of my specific concerns
    about the proposed legislation and ask you to comment on them.
    First, as I read it, OMB has drafted the revision so that it
    would apply only to data supporting published research
    findings. However, OMB has not defined what constitutes
    published research. That leaves open to interpretation when the
    data would have to be shared and at what point research
    findings would be considered published.
        For example, researchers typically present papers giving a
    preliminary review of their findings at association
    conferences. They provide an abstract sometimes for the
    conference materials, so that participants have some sense of
    the scope and nature of their project. Would that abstract
    constitute published research?
        Surely you would have to agree if a researcher must release
    data before he has had a chance to review it fully, his work is
    undercut and his ultimate work product is open to
    misinterpretation and attack even before it is written. So I
    would like to know how you are going to attempt to deal with
    the issue of defining published research.
        Secondly, OMB states in the Federal Register notice that
    the intent of Congress was to apply the Circular and thereafter
    FOIA to all federally funded research ``regardless of the level
    of funding or whether the award recipient is also using non-
    Federal funds.'' I think that was taken froma floor statement
    made by Senator Campbell, but I must tell you I have no earthly idea
    how that would work.
        Applying the Circular to all research data that has been
    compiled with the help of even one dollar of Federal support
    would seem to expand the definition of a Federal agency to
    include any institution that receives grants under Circular A-
    110. That would give rise to a very strange situation, it seems
    to me. If we consider grantees to be Federal agencies for FOIA
    purposes, would we have to consider them Federal agencies for
    purposes of other statutes like the Privacy Act? And if we
    don't consider them Federal agencies, doesn't laying claim to
    their data constitute a kind of taking?
        The situation is especially problematic for research that
    may lead to development of new medicine or technology. How do
    we address intellectual property rights if data must be
    released? Who will agree to participate in studies knowing that
    their responses may not be kept confidential? And what will be
    the fate of public-private partnerships?
        The questions just go on and on. I can't imagine any
    private sector operation being willing to operate under these
    constraints.
        Another key aspect we need to weigh is the potential cost
    of compliance. Who will bear those costs? In many lengthy
    health studies there are literally millions of records and
    thousands of pages of data collected. As I understand it,
    agencies currently do not actually receive FOIA reimbursements.
    The fees they assess actually go into the general fund.
        Under your proposed revision, would the additional costs
    incurred by agencies in responding to FOIA inquiries be
    returned to the agencies or continue to go into the general
    fund? In addition, what will the grantees be able to seek
    reimbursement for? Can they include only the cost of copying
    and mailing the data, or would the staff time used to delete
    confidential information and package the material be
    recoverable? What kind of cost estimates have you come up with,
    and is it possible we are in fact setting up an unfunded
    mandate for Federal grantees?
        Let me just ask you to respond there and to the question of
    what constitutes published data and also these other questions
    about costs and compliance.
        Mr. Lew. Congressman, as you know, the A-110 revision is
    not something that we generated on our own motion. It is in
    direct response to a provision that was enacted. We have tried
    in developing the revision to stick as closely as we can to the
    new law, which I would concur with you is not entirely clear in
    some cases, though I think there is a sort of common sense
    approach to terms like ``publish'' which we may need to work
    through more as we go through the process.
        We drafted the revision, sticking to the text of the
    amendment that was enacted at the end of last year, and looking
    very closely at the various statements that were made, the
    explanatory statements that were made during the debate. The
    standard that data must be related to published findings comes
    directly from the statements that were made at that time.
        I must say the technical details of where the line between
    published and not published falls is something that I would
    have to go back and consult with our experts on. I understand
    the concern you raise, a very real one, but the goal of the
    amendment was not to have it be intrusive on the research
    process. On the other side, there is a real concern about
    privacy and the Freedom of Information Act, and privacy
    protections are really as much to protect individuals as much
    as researchers.
        I think we share the concern that in implementing this
    revision, we have to protect those privacy rights. It is both
    for the best interests of the citizens involved and for the
    purpose of the research. As I say, we have tried to stick
    closely to the law. To the extent that there is ambiguity that
    you have discovered in terms of reading the draft revision, we
    look forward to working with you and understanding better what
    the concern is and how we might respond.
        Mr. Price. Does your understanding of the scope of the law
    include any kind of organization or project that has even a
    fraction of Federal funding? Are we bringing all of these kinds
    of organizations and projects under the statute?
        Mr. Lew. The only reason I am hesitating, I don't know if
    there is a threshold. In your initial comments before your
    question, you suggested that even if there was some de minimis
    Federal funding commingled. I don't know that it would reach
    all the way to something that was not funded with Federal money
    but was an entity that received Federal funding. Certainly if
    it was a research project that was federally funded, that would
    be the clear case. If it is a research study produced by an
    organization that receives Federal money but for which Federal
    money was not directly used, that is something I am frankly not
    100 percent sure of and I have to check.
        Mr. Price. And we don't have a clear answer on the
    reimbursements--on what kinds of expenses incurred in gathering
    the data and making it available would be eligible for
    reimbursement.
        Mr. Lew. I am told that agencies are permitted to charge a
    fee for the cost of the FOIA request, and that doesn't directly
    answer your question. These rules are out for comment now, and
    there is a 60-day period where we will be receiving comments
    and we will be going through these kinds of concerns as they
    come up.
        To the extent that the fees that are permitted are not
    commensurate with the costs, that is something that I would
    hope we would learn in this comment period. But I think that is
    actually a question that has been resolved in the context of
    other FOIA matters. I am not sure why this would be different
    from the others.
        Mr. Price. Well, I think you are going to get thousands of
    comments. I expect you have already. And I am concerned that
    the statutory language really doesn't give you the flexibility
    you need to deal with these comments and the problems they
    raise. I suspect repeal may be the only adequate solution to
    these problems.
        I hope you will keep the Subcommittee apprised of the
    rulemaking process and the extent to which you determine that
    your agency is going to be in an untenable position under this
    rule, just as this revision I think would put our researchers
    in an untenable position.
        Mr. Lew. We will do that, Congressman. This was not a
    change in law that we had sought. We worked with the Congress
    to try and make sure that it was as unburdensome as possible,
    so many provisions that were in the original proposal were
    removed. But with that said, we have our concerns, and we will
    work with you as we go through the comments on the revision.
        Mr. Price. Thank you.
        Thank you, Mr. Chairman.
        Mr. Kolbe. The time of the gentleman has expired.
        Mr. Sununu.

             judiciary request for courthouse construction funding

        Mr. Sununu. Thank you, Mr. Chairman.
        Mr. Lew, I would just ask you to briefly delve a little
    deeper into this issue of the Federal courts. You spoke about
    priority, that the Federal courts are not a high priority; but
    for point of clarification, I mean, it is not a priority at
    all. There is no funding for Federal courthouse construction or
    refurbishing in the budget at all, correct?
        Mr. Lew. No new funding in our fiscal year 2000 budget, but
    as I stated, over the past number of years----
        Mr. Sununu. What was the request by the Judiciary?
        Mr. Lew. I would have to go back and check. It was a
    substantial number.
        Mr. Sununu. Mr. Hoyer suggested it was in the neighborhood
    of $500 million. Is that approximately correct?
        Mr. Lew. That actually is probably the amount that was on
    the recommended list. The request list was probably larger than
    that.
        Mr. Sununu. And so the Judiciary makes a recommendation and
    then you alter that recommendation?
        Mr. Lew. Well, this is a case--this is not a passthrough
    item so it is part of the GSA budget, not the court budget. As
    with all other GSA budget submissions, we view it and we make
    recommendations based on allocating scarce resources.
        Mr. Sununu. You don't consider the courthouse construction
    budget to be part of the Judiciary budget?
        Mr. Lew. It is not technically part of the Judiciary
    budget. The Judiciary has its own budget that it submits
    directly, which we do not change. It is submitted to the
    Congress directly.
        Mr. Sununu. Would the members of the Judiciary agree that
    this is subject to the passthrough requirements?
        Mr. Lew. I think the Judiciary is disappointed with the
    funding levels proposed in our budget.
        Mr. Sununu. To say the least.
        Mr. Kolbe. Would the gentleman yield?
        Mr. Sununu. Certainly, Mr. Chairman.
        Mr. Kolbe. Do you agree it should be a passthrough item?
    The Judiciary believes it should be a passthrough item.
        Mr. Lew. I think it is actually problematic if this were to
    be a passthrough item. To the extent that we are operating in a
    world of caps, spending caps, it is necessary for all parts of
    the budget that are drawing on the limited resources to be
    balanced against each other. Even in the case of the
    passthrough budget I think there are questions that arise as to
    whether there is any discipline, enough discipline on that part
    of the process.
        Mr. Sununu. I appreciate the fact that you may think that
    Judiciary isn't disciplined enough, but there is a statutory
    requirement that their budget be considered a passthrough. I
    mean, the law is the law.
        Mr. Lew. This is not technically part of the Judiciary
    budget. It is part of the General Services Administration
    budget.
        Mr. Sununu. So there is disagreement between OMB and the
    Judiciary whether or not the courthouse portion of their budget
    is part of the passthrough, but you are not suggesting that
    there is not a statutory requirement for passthrough on the
    Judiciary.
        Mr. Lew. I am not aware that the Judiciary has asserted
    that the courthouse is now a passthrough. You asked me earlier
    whether they would like it to be a passthrough. I suspect they
    would like it to be a passthrough, but I don't think they are
    under the impression that it is now or should be interpreted
    under current law to be a passthrough.
        Mr. Sununu. Are there any other agencies whose funding is
    considered to be or required under law to be a passthrough?
        Mr. Lew. There are a number of other--the legislative
    branch is a passthrough as well. I mean, I could go get you a
    list of all the passthroughs. There aren't a lot of them. It is
    basically the separation of powers issue in terms of the
    legislative and judicial branch.
        Mr. Sununu. If you could submit a list for the record, I
    would appreciate it.
        Mr. Lew. There are small independent agencies that fall
    into that category, but the bulk of the dollars----
        Mr. Sununu. Does the Consumer Product Safety Commission
    fall under that category?
        Mr. Lew. I don't believe so. Federal Reserve Board is one I
    am aware of.
        Mr. Sununu. If you could submit a list for the record, that
    would be helpful.
        [The information follows:]

    [The official Committee record contains additional information here.]

        Mr. Kolbe. Postal Service is a passthrough.
        Mr. Sununu. And in all those areas you obviously obey the
    law?
        Mr. Lew. We always obey the law.

                      implementing climate change programs

        Mr. Sununu. Excellent.
        In your answer to Mrs. Emerson's question regarding climate
    change policy, I thought you were providing a good answer up
    until you got to the point where you stated, and I am quoting
    from my notes here, ``We are going to pursue climate change
    policies that are self-contained to the protocol.'' Now up
    until that point you were suggesting you weren't going to
    implement any policies required by the Kyoto Protocol, and I am
    confused as to what you meant by that statement, ``We are going
    to pursue policies that are self-contained to the protocol.''
    If you are pursuing policies that are consistent with the
    protocol, it would seem to me by definition you are pursuing
    protocol implementation.
        Mr. Lew. Let me try to be very clear, if I wasn't earlier.
    We are pursuing climate change policies which, independent of
    the protocol, have been our policies and continue to be our
    policies.
        Mr. Sununu. To the extent that they bring you into
    compliance with the protocol, that would be a coincidence?
        Mr. Lew. Correct. But there are many things that we have
    done. We have had energy conservation and technology programs
    for the past 20 years, all of which when they succeed have the
    effect of reducing emissions and coming closer to compliance.
    So we don't think the standard whether there is a result that
    is consistent with a protocol is the same as implementing the
    protocol.
        We are not going to cease and desist from all activities
    regarding climate change. We have had climate change policies
    from way before the time of the protocol. We are very
    concerned. So that we don't have there be confusion, we
    understand there is a difference between implementing the
    protocol and pursuing other policies where the goals are
    consistent with the protocol but are not the protocol.
        We need to have conversations like this if there are areas
    where there is any misunderstanding, but one would have to go
    back and repeal a number of programs in order to be able to
    make the statement that nothing we are doing would help us make
    progress in such a way that would be consistent with the
    protocol. That is different than implementing the protocol.
        Mr. Sununu. I recognize the fact that this subcommittee
    doesn't have jurisdiction in this area, but I think you are
    going to find some very real disagreement in those committees
    and subcommittees that have jurisdiction in this area because
    it is a pretty tough sell to argue that, ``Well, we are
    undertaking policy that will help us comply with the Kyoto
    Protocol, but the fact that it is bringing us into compliance
    with the Kyoto Protocol is completely coincidental, and we
    would have done this anyway even though the protocol wasn't
    there.'' I mean, that is just a comment, doesn't require you to
    respond, but I think it is a pretty tough sell to those who are
    concerned about the cost implications, and I would certainly
    include myself, and clearly Mrs. Emerson, in that lot.
        Has my time expired, Mr. Chairman?
        Mr. Kolbe. Your time has expired.
        Mr. Sununu. Thank you very much.
        Mr. Kolbe. Let me just note, although I would agree with
    you the courthouse is not a passthrough item, there are some
    judges who believe that they could make a legal case that it
    is. I don't think they have any intention of filing a lawsuit,
    though there have been some who have suggested it. Mr. Forbes
    is next but if you would permit me, the Ranking Member has to
    leave for a meeting with the Minority Leader, if you will allow
    him at least one question on his second round.

                     federal employee pay comparability act

        Mr. Hoyer. Thank you. Thank you, Mr. Forbes. I appreciate
    that. I have got a number of other questions, Mr. Lew, and I
    will submit those, but can you tell us, we included language
    about the pay setting formula. As you know, I have had
    discussions and I particularly but the committee as well,
    discussions with the--with OMB over the years under both
    administrations as to the appropriateness of the present
    formula. And if it is not appropriate, how do you modify it?
    Can you tell me what the status--will you get the report by May
    31--May 1?
        Mr. Lew. We have had a number of conversations over the
    years, Mr. Hoyer, and as you know we have been consulting
    widely with the Members of Congress, with interested parties
    both in organized labor and agencies. This is a very difficult
    issue. It is an issue we have wrestled with, and ultimately
    legislation has been enacted on a number of occasions to set a
    pay rate that reflected the current evaluation of what was the
    right thing and the best thing we could do at the time.
        We have a real dilemma, given the total resources
    available, that were we to go to the pay rate that would be
    indicated by the standard, we would have a very large increase.
    It would be over 10 percent, and the cost in terms of agencies
    would be quite dramatic. The FTE reductions would be in the
    many thousands. It would draw resources away.
        And also we think it would not reflect the current real
    need to meet the pay comparability requirements. We worked very
    hard this year to try and work on a policy that would fully
    compensate for the employment cost index plus a little bit to
    catch up a little bit of ground from the past. We think that
    looking forward, the path we have been on is one that gradually
    does restore some of the ground that was perceived to have been
    lost.
        I think the problem is that the index isn't all that good,
    and it drives you in a direction that would have results that I
    don't think anyone would advocate in terms of the loss of
    Federal jobs or the amount of resources. On the other hand, I
    shouldn't say anyone.
        Mr. Hoyer. Certainly not me, right.
        Mr. Lew. The challenge is to be fair because we do need----
        Mr. Hoyer. Mr. Director, with all due respect, and you are
    my friend and we have gone around on this, all that you have
    said is true. I am not standing on top of the Capitol saying we
    ought to have 17 percent, which is what I believe what it would
    require, maybe a little higher than that.
        Mr. Lew. It depends on how one does the arithmetic.
        Mr. Hoyer. That is not the issue. The issue is, up until
    last year the administrations had the ruse of saying--I
    shouldn't call it a ruse--had the legitimate claim that because
    we had a deficit, however you compute that deficit, that the
    law gave the administration the opportunity not to follow the
    recommendations of the Pay Council's findings.
        Last year, as you know, I made the point pretty
    strenuously. We say we have got a balanced budget, things are
    great, hooray for us, our administration looks good, we
    Democrats look good from our standpoint. My point was, ``Okay,
    if we are saying that, then we no longer have this out under
    FPCA to say we can do less than the formula calls for.''
        I understand that you and your predecessors have said the
    formula overestimates the disparity. I may agree with that.
    What I don't agree with is not coming up with an alternative
    formula that we can agree on accurately reflects that, so this
    committee knows at least what the law would require and the
    administration and the Congress could agree on that number.
        Then your point is well taken. We would have to make
    asubsequent decision, can we afford it, but at least we would know what
    the law tells us we should do. Very frankly, if we can't afford it, we
    ought to say to Federal employees and to American taxpayers honestly,
    ``Hey, this is what we would do under the law but we can't afford it,''
    so we don't amend the law. That is my point.
        Mr. Lew. Your point is well taken. We will continue to work
    on it.
        Mr. Hoyer. Will we have a report by May 1?
        Mr. Lew. I am being a little bit hesitant on that date on
    the report because I know over the last few years it has been a
    difficult area to conclude our analysis on a timely basis.
        Mr. Hoyer. It has been five years, Mr. Director.
        Mr. Lew. I am hoping to do better than our past experience.
        Mr. Hoyer. I am not going to get an answer, Mr. Chairman,
    so I will leave.
        Thank you, Mr. Director.
        Mr. Kolbe. Mr. Forbes.

      concerns from the research community on revisions to circular a-110

        Mr. Forbes. Thank you for being here. It is good to see you
    again, Director Lew. I would like to identify myself first of
    all with the sentiments and concerns expressed by Mr. Price. I
    think that there is really, in the research community there is
    great angst about the rescission and the need to comply with
    what Congress has requested last year in circular A-110.
        In my own district we have got two fine research
    facilities, the State University of New York at Stony Brook and
    Brookhaven National Laboratory which are great participants,
    Stony Brook alone to the tune of about $111 million. And I
    think that there are well-placed concerns by the researchers,
    and in this case in my own facilities.
        They mentioned to me their concern for protecting patients'
    confidentiality and safeguarding intellectual property and
    technology transfer rights, and the imposition of significant
    new unfunded administrative and financial paperwork
    requirements, all not unfamiliar to you I know, director. I
    would just like to align myself with those who have a very keen
    concern for what this would do to our research institutions. I
    would hope that OMB, after the comment period is over, would be
    able to strike some kind of balance between what Congress has
    asked of you and what I think our research institutions rightly
    can absorb in any requirements.
        Mr. Lew. I would offer you the same comments that I made to
    Congressman Price, that we look forward to working with you. We
    are concerned that the burden on universities. We have to keep
    it very much in mind, and the statute doesn't give us infinite
    flexibility, and we are trying to do the best we can. We need
    to see what the comment period produces and then evaluate it.

                  gao report on management of the y2k problem

        Mr. Forbes. Thank you. I appreciate that.
        I have a question, actually a follow-up to your testimony,
    in which you on page 3 again acknowledged, of course, managing
    the preparation for the Federal Government's computer
    conversion for the year 2000, the now infamous Y2K conversion
    dilemma that we are working through as a Nation.
        There was a draft, as you well know, a draft report by GAO
    not too long ago which strongly criticized OMB and the
    Conversion Council's management of the Y2K problem, citing
    weaknesses in leadership. One criticism leveled by GAO is that
    OMB has never required the agencies to adhere to specific steps
    in completing the five phases of year 2000 conversion work.
        As a result, GAO went to the agencies and found widely
    varying interpretations amongst the different agencies of each
    phase of the process. One agency, and there are many concerns
    here across the government, I would say, but one agency that is
    of vital importance and of critical concern to all of us I know
    is that which handles Medicare and Medicaid, the Health Care
    Financing Administration.
        GAO said in February and a report indicated that of 74
    external systems that HCFA reported compliant with Y2K
    standards at the end of last year, 54 still fail to comply
    overall. And I know that the HCFA administrator has suggested
    that the discrepancies between her agency's counted Y2K
    compliance systems and GAO's is really due to what they term a
    lack of a paper trail. The lack of a paper trail comes right
    back to the question of oversight and leadership.
        Director, if you could, enlighten me and the committee a
    little bit more about how we can make sure that our mounting
    concern about how HCFA will handle Y2K and the subsequent
    problems that could be experienced if we don't get our hands
    around it.
        Mr. Lew. Congressman, if I could maybe answer the general
    question and then the specific one on HCFA, we have over the
    past several years, I think, gotten our hands around the Y2K
    problem and are working very effectively with the agencies.
    There is an effort, as you know, between the Y2K Council and
    OMB to coordinate very closely, and really to elevate the issue
    so that it is each department head's responsibility to manage
    the Y2K conversion and not to have it be a delegated
    responsibility. It is very clear that this is something that
    each agency head is being held accountable on.
        We worked with each department, with their different needs.
    It is not a one-size-fits-all problem. HCFA has had enormous
    problems. In general we have made a lot of progress. The new
    upcoming Y2K report is going to show that we only have three
    agencies left in the tier one category, AID, Transportation,
    and HHS, but even within those three agencies there has been
    substantial progress. The fact that they haven't addressed all
    the problems doesn't mean they haven't made progress. DOD and
    Energy have made enough progress that they moved out of tier
    one. Overall we are now projecting 79 percent of mission
    critical systems to be compliant.
        HCFA has been an enormous undertaking. The millions and
    millions of lines of code that had to be rewritten, the
    relationships between HCFA and the contractors who do the work
    directly, has been very complicated. We have made some
    extraordinary decisions to try and assist HCFA and give them
    the resources they need, and also to perhaps lessen some other
    requirements so that Y2K compliance could be their number one
    administrative priority.
        I think they are going to finish the job. They are going to
    get it done. There is no doubt that it was a bigger problem
    than was originally understood, but we have now for several
    years known the size of the problem and been managing it, I
    think, effectively.
        Mr. Forbes. Director, to the criticisms by the GAO, is
    there validity in the criticisms that they have leveled, that
    there hasn't been, if you will, the ability for specific steps
    to be laid out? I hear you saying that each directorof each
    department is responsible, but where does the coordination come in for
    OMB if it really gets back to directors of these departments?
        Mr. Lew. As you know, we have a Deputy Director for
    Management for whom Y2K compliance has been a major part of
    their work responsibility for several years. John Koskinen, the
    former head of management, former Deputy Director of
    Management, came back from a brief retirement to come back as
    the executive director of the Y2K Council. Ed DeSeve, who is
    the current deputy director, and he have been working very
    closely. I don't think it is fair to say there haven't been
    clear steps discussed with each of the agencies. I think that
    the concern we have is that in each case it is not the same
    five steps.
        Mr. Forbes. Are you saying the GAO concerns are in fact not
    relevant?
        Mr. Lew. We all had a lot of concerns about Y2K compliance,
    but it is a very, very difficult problem to tackle. I would
    disagree with the notion there hasn't been leadership. I would
    disagree with the notion that there hasn't been direction. I
    wouldn't disagree that it took us a while to figure out the
    extent of it and the costs involved in remediation, but that is
    several years ago and we have, I think, been working very
    effectively throughout the period to address the problem.
        Mr. Forbes. I just want to make sure that I am clear on
    this. The concerns raised by GAO, is OMB working to address
    those concerns or have you dismissed those concerns?
        Mr. Lew. OMB is working to solve the year 2000 problem. We
    work day-to-day with agencies to make sure that they are either
    going to be able to get their mission critical systems fixed by
    March 31, or if not, have a plan for getting there, so that
    well before the end of the year they reach the compliance
    stage. We are very optimistic that the fact that there are only
    three agencies left in the tier one category means that we have
    made an awful lot of progress.
        Mr. Forbes. I appreciate it, director. I am just honestly
    trying to find out, have you given any relevance to the GAO
    concerns?
        Mr. Lew. I have actually tried to be reflective in my
    answer that this has been a hard problem. It has been a problem
    that my predecessors wrestled with, that I have wrestled with.
    I don't concur with the conclusion, but we are very much
    concerned, not with the grade you get by one or another rating
    official or agency, but getting the job done. There has been no
    lack of leadership or concern, and I think we are on track to
    solving the problem.
        Mr. Forbes. Thank you.
        Mr. Kolbe. Mrs. Meek.

                   managing increased responsibilities at omb

        Mrs. Meek. Thank you, Mr. Chairman.
        Thank you, Mr. Lew. My question will be short because of
    the time. I noted that in your fiscal year 2000 budget, your
    level of funding on FTEs will be the same level as '99. Yet
    when I go over your budget here, you have a lot of expanded
    opportunities, expanded programs, expanded responsibilities.
    You talk a lot about productivity, but you put most of your
    money in terms of hardware instead of in peopleware.
        I am concerned that with the personnel that you have now, I
    noticed you are doing a lot of review. I know what it is like
    to do all these strategic planning kinds of things. They are a
    headache and then once they are done, they just wear staff down
    to nothing and then they have to go back and review them. It is
    really a quagmire. I have been out in that world for a long
    time, and I am just wondering how you are going to handle all
    of this.
        Mr. Lew. I appreciate that question. I must say the wear
    and tear on OMB staff is of great concern to me. I have now
    been in OMB for over four years. I am not the typical political
    appointee who is sort of in and out without getting to really
    be part of the organization for a long time. These are people I
    work with, I know well, and I think there is a lot of wear and
    tear.
        I distinguish between the hard work and the performance
    because I think the performance has been excellent. Were we to
    shrink in size, I think we are at the point where I would have
    to say we would have to remove some responsibilities, because
    you can't expect the same number of people to do more and more
    work without going beyond a point that I think would be
    unacceptable. I think with the FTEs we have now, we can manage
    the additional responsibilities.
        We have tried to be more efficient in a number of important
    ways. If you can get the instructions right the first time so a
    project has to be done once instead of three times, that makes
    a big difference in terms of the quality of the workplace. We
    have put a lot of emphasis on those kinds of problems. I know I
    have put a lot of my own time into it. It is not perfect but I
    think we have made a lot of progress.
        With regard to the increase, a fair amount of the increase
    that we have requested, $2,137,000, is for the increase in pay
    to maintain the FTE level at a constant level. I would have
    preferred to be able to say that we could have absorbed the pay
    raise as we have expected many other less labor-intensive
    agencies to do, but we are at a point if we were to shrink in
    our FTEs, I don't think we could do all the tasks that are
    expected of us.
        I appreciate your question. I think it is a very well-
    placed question. I think it is your right to question, to ask
    the head of OMB and next year to ask it again, because I can't
    tell you with confidence that it will be the same a year from
    now.
        Mrs. Meek. Thank you, Mr. Chairman. I will submit my other
    questions for the record.
        Mr. Kolbe. Thank you. Ms. Roybal-Allard.

         president's proposal to reduce federal debt held by the public

        Ms. Roybal-Allard. Mr. Lew, let me add my name to the long
    list of Members who were extremely dismayed at the fact that
    there is not any money for courthouse construction, especially
    in light of the fact that I represent the downtown Los Angeles
    area. Los Angeles is first on the priority list because of the
    fact that it has met the criteria that requires us to have a
    new courthouse in the near future.
        Let me just point out that as you become more successful in
    your law enforcement efforts, it creates greater demands for
    new courthouses, which is what we are seeing now. Also,
    according to GSA, the longer you delay, the more costly
    courthouses are going to be. The increase is about, according
    to GSA, about 3 to 4 percent annually. So I think those are
    also two important considerations. If you are going to be
    successful in dealing with crime, which we want to be, then the
    other end is we have to have the courthouses in order to
    prosecute those that have been arrested.
        My question has to do with the President's proposal to
    commit approximately 60 percent of the projected unified budget
    surplusover the next 15 years to Social Security and 16 percent
    to Medicare. Needless to say, there have been mixed reviews of that
    proposal. Also, I believe that it has created some confusion, even
    among Members like myself. I would appreciate it if you could explain
    how the President's plan reduces the Federal debt, specifically the
    debt held by the public, and what the concrete benefits are that
    taxpayers and families can expect to see from reducing the publicly
    held debt?
        Mr. Lew. The mechanics of how the debt held by the public
    is reduced is more what we don't do than what we do. We won't
    be rolling over debt at the same rate that we otherwise would.
    Instead of rolling over debt, we will be retiring debt. When we
    pay off debt, we won't issue new debt.
        So last year, for example, we ran a unified budget surplus.
    We reduced the debt held by the public. It wasn't exactly in
    the amount of the surplus because there are some other
    transactions that go on in the financing, internal financing of
    programs, but it was roughly the amount of the surplus last
    year, $69 billion that didn't need to be refinanced. So by not
    refinancing debt as it rolled over, we reduced the debt held by
    the public.
        The benefits of reducing debt held by the public we think
    are many. The measure of whether or not the Federal Government
    is crowding out private capital is really what the debt held by
    the public is. When that number is going up, it means the
    Federal Government is out there in the private marketplace
    competing with private businesses and individuals who are
    trying to finance homes, and the less competition, the more
    access to capital the private sector has. It is good for the
    private economy. It is good for individual families. It is good
    for the economy.
        In terms of getting our fiscal house in order, it is really
    much like a family that is planning to send their kids to
    college. If you look ahead, how you are going to pay the
    tuition bills, one of the things you know for sure is you don't
    want to have a lot of credit card bills and a lot of mortgage
    bills, because you are going to need to have the cash flow so
    you can pay for a little bit of college every month.
        By writing down our debt, we are writing down the interest
    we are going to be paying next year and the year after, really
    forever. To put it in sort of the starkest terms, when we did
    our first budget in 1993 we looked at 2014, the end of the 15-
    year period we are now talking about, and we projected that net
    interest, interest paid on debt held by the public, would be 27
    cents out of every dollar. Now the same analysis is 2 cents out
    of every dollar.
        That just means that 25 cents out of every dollar is
    available for other purposes, and we think that that is
    enormously helpful to committees like this that are strapped
    for resources. We think it is enormously important in terms of
    the many demands on the Federal Government, and it means that
    we will be able to pay Social Security benefits in the future.
        By making commitments to the trust fund, we are essentially
    committing, as one of your colleagues suggested, general
    revenue in the future. The way the general revenue commitment
    is made is we are putting bonds in the trust fund. The bonds
    will come due after 2032 and we will have the cash flow to pay
    those bonds back.
        We are saying Social Security should have the first call on
    the fruits of our fiscal benefits, but that is only the case if
    we don't make other commitments, because if we run up the
    credit card bill again we won't have the money to pay back the
    bonds. We think it makes good sense for a family to manage
    affairs that way, and certainly makes good sense for the
    government to manage affairs that way.
        Ms. Roybal-Allard. Thank you.
        Mr. Kolbe. Thank you very much, Ms. Roybal-Allard.
        Ms. Roybal-Allard's questions open a whole line of
    questioning. I would love to get into it, but I think I will
    leave that to the Budget Committee.
        Mr. Lew. I look forward to any opportunity where we can
    discuss those issues.
        Mr. Kolbe. I actually did have an opportunity en route to
    Tucson with the President last Thursday. I had some discussion
    with him about some of that.
        Mr. Lew. I enjoyed our conversations in Albuquerque over
    the same.

                       Treasury's Role in Law Enforcement

        Mr. Kolbe. In Albuquerque you and I did as well. I want to
    maybe take one more stab at, and I don't want to belabor the
    thing, what I see as the disparity between Treasury and
    Judiciary and law enforcement. I do want to ask a couple of
    more questions along these lines. Maybe it will give me some
    more confidence that we are getting the consideration that we
    need for Treasury.
        What is your understanding of what Treasury's law
    enforcement role is in combating crimes--financial crimes,
    excuse me. Financial crimes specifically.
        Mr. Lew. Well, clearly the various Treasury agencies,
    Secret Service in particular, have substantial responsibilities
    in terms of financial crimes. We turn to them both for direct
    enforcement and for expertise on how to design enforcement
    strategies. I am not sure I understand the question in terms of
    what you are looking for.
        Mr. Kolbe. I am trying to get some understanding of whether
    there is much appreciation down at OMB of what the role of
    Treasury is in these financial crimes. For example, what agency
    has the primary responsibility for credit card fraud?
        Mr. Lew. I believe it is the Treasury Department. I am not
    sure if it is Secret Service. I think it is Secret Service.
        Mr. Kolbe. Identity fraud, Secret Service. West African
    Task Force fraud, Secret Service. Money laundering
    investigations is FinCEN and Secret Service and Customs. I
    guess I am just saying it seems to me the more we shortchange
    these agencies in these law enforcement areas, the more
    difficulty we have related to our efforts to interdict drugs.
    It just seems to me that it is a problem.

                           customs user fee proposal

        On Customs, the Customs budget is obviously very heavily
    weighted towards getting two significant tax increases, the
    passenger and the transfer taxes, or fees. I don't care what
    you call them. You made some reference to the fact that you
    thought they were well-designed fee, or tax increases. In that
    regard, was there careful consultation with the affected groups
    that would be subject to these fees?
        Mr. Lew. I think probably, as in most cases, there could
    have been more consultation. We are certainly aware of the
    views of many of the affected parties.
        Mr. Kolbe. Aware now.
        Mr. Lew. We have had some history in this area over thelast
    few years, so we have the benefit of sort of ongoing consultation. When
    I say it was well-designed, what I was referring to, it was designed to
    cover the costs associated with providing the services at the border.
        One can design a fee so that it produces more revenue but
    that is disproportionate to the costs associated with the
    service. If there is to be a user fee, one tries to design it
    to mirror the costs as closely as possible. I have never run
    into a case--well, rarely run into a case, where the parties
    who pay the fees thought they were desirable. The only
    exception is when there is a real perception of imminent
    deterioration of services that are critical.
        I must say the consultation, as I understand it, did
    produce a sense that we are at a cusp now where there is some
    sentiment in the affected community that in order to preserve
    essential services, extraordinary actions may need to be taken.
    I don't want to mischaracterize that or exaggerate it. I don't
    think we are going to see resounding endorsements of fees by
    the affected parties, but I think there are concerns amongst
    the affected industries that there is a real need to make the
    kinds of investments that we call for, and I hope that gives us
    the basis to work together to try and design a fee that could
    muster support and augment the resources available for the
    Customs Service.
        Mr. Kolbe. You have had a few weeks at it. What is your
    realistic assessment of the likelihood of these being enacted?
        Mr. Lew. I am an optimist. I think we have an uphill battle
    but we have an uphill battle that we would hope we could work
    together on, and if it isn't exactly the fee that we propose,
    perhaps there is some other version of it or an incremental
    version of it that would be helpful. It is not the first time
    we have proposed something that didn't succeed on the first go-
    around, and we have found that if you keep going at it, you can
    get the job done. We hope we can.
        Mr. Kolbe. Thank you. But with all due respect, the problem
    is you don't have any backup as to how we are supposed to fund
    customs if it doesn't happen. What is the number of people that
    would have to be RIFed if Customs doesn't get this fee?
        Mr. Lew. Well, I would have to check the number, but it is
    clearly----
        Mr. Kolbe. It is 28 percent of personnel.
        Mr. Lew. I wouldn't for a moment argue that the funding
    level for Customs without the fee is a desirable or acceptable
    level. I agree with you, if the fee is not adopted, we are
    going to have a challenge--you will have a challenge. We would
    hope we can work with you to try and help.
        Mr. Kolbe. Who is going to have the challenge? We are going
    to have the challenge. You haven't given us anything to work
    with.
        Mr. Lew. We think that the fees are appropriate policy and
    very much would help----
        Mr. Kolbe. We know what is going on here. You know
    perfectly well that it is not going to happen, and then when we
    have to find the money from other areas you can say, oh, that
    subcommittee or that appropriations committee just took the
    money out of all these wonderful new programs we were trying to
    do and didn't fund those kinds of things. This game is being
    played every year with these kinds of tax.
        But I think it ought to be clear that, what you have really
    suggested with this fee, knowing that that is not going to
    happen, is a reduction out of current operations. You are
    talking about a 28 percent reduction in Customs, and I think
    the impact of that on drug interdiction would be devastating. I
    can't imagine how we could possibly fund that.
        Mr. Lew. In fairness, we are not proposing a 28 percent
    reduction. We are proposing a fee which we think is a
    legitimate fee. We hope we can work with you on it. We
    understand it is difficult and we understand there are affected
    parties who are concerned, but we think it is a legitimate and
    fair proposal.
        So I think our budget has to be viewed as a whole. We don't
    view it as a game. We view it as a very serious proposal that
    we would hope to work with you on. I can't say that it is going
    to be easy but, as I say, I am an optimist. I think we can make
    progress.

                        customs air interdiction program

        Mr. Kolbe. Let me turn to a more specific issue, and that
    has to do with Customs' air interdiction program. OMB has
    directed that the $1.3 million provided in the supplemental
    appropriation to cover current shortfalls on the P-3 aircrew
    only be used for overtime. Customs has told us already that its
    existing aircrews are flying the maximum number of hours
    allowed by FAA regulations. Under these conditions, why are you
    restricting the use of the fiscal year '99 funds to overtime,
    although it was clear that was not the intention of the
    committee?
        Mr. Lew. If I can just check, I am not aware that that is
    what we have done.
        Mr. Kolbe. It is what you are doing.
        Mr. Lew. I just want to doublecheck because I think it is a
    misunderstanding of the way the apportionment was handled.
    There is an aircraft at issue which won't be on-line until
    2001, I believe.
        Mr. Kolbe. We are talking about current aircraft that are
    flying now.
        Mr. Lew. I am not aware of this issue. Let me check on it.
        Mr. Kolbe. You do need to check on it because Customs sat
    there last week----
        Mr. Lew. I am aware of the issue regarding the new
    aircraft, and I know that is a case where the information
    hasn't yet come out.
        Mr. Kolbe. New aircraft do come online during this coming
    fiscal year, 2000. The first will come online in the up coming
    fiscal year, for which you have no funds for training crews.
        Mr. Lew. My understanding is that the funds will be
    available for training the crews when they are ready to come
    online. I can check the dates but, as I say, my understanding
    was the issue in terms of the aircraft has been, it hasn't been
    ready to proceed in terms of the quality of information we
    have.
        Mr. Kolbe. So we are clear there is no funding in the
    fiscal year 2000 request, I don't expect you to understand
    every detail, but just to illustrate the problems we have,
    there is no funding in the fiscal year 2000 budget for
    recruiting and training aircrews. The first of these aircraft
    do come online at the end of fiscal year 2000.
        Mr. Lew. If I could, Mr. Chairman, I will go back and
    check. That is my understanding of the schedule. My
    understanding of the schedule is the aircraft come onlinelater,
    and the training would be provided to staff and fully--let me check.
    The principal issue is my understanding of the date for the aircraft
    coming online does not conform to yours. There is a right and a wrong
    answer. I will check.

                     efforts to enhance productivity at omb

        Mr. Kolbe. I don't think there is any question about it. We
    have a schedule and we have done work with Customs on that. We
    know when delivery is supposed to take place for that aircraft.
    There is just nothing in the budget for them to train aircrews.
        There was discussion here about the workload requirements,
    stretching limits of OMB, about your staff really, and that you
    have done well with limited resources. You did say that the new
    workload, in your justification terms, the new workload
    requirements are really stretching the limits of OMB staff.
        Sometimes there is such a thing as being penny wise and
    pound foolish. I am certainly not one to urge Federal agencies
    to increase their budgets, but if your workload requirements
    are going up, your staffing is remaining static, what are your
    current plans to enhance productivity at OMB?
        Mr. Lew. There are a number of different areas that we have
    tried to implement and improve productivity measures. One, as I
    mentioned, of course, is communication. The reason I start
    there is I think an information organization like OMB, the
    principal thing we can do to operate more efficiently is to
    communicate better internally and between ourselves and other
    organizations.
        Secondly, computers, the frustration of an examiner who is
    working 10, 12 hours when their system crashes when they are
    trying to finish a project, is a very special kind of
    frustration. It is difficult, as I am sure your staff
    experiences it. We are trying to have our computer system such
    that it enhances the ability to produce work efficiently.
        Many of the things that we are doing in an area like the
    GPRA implementation really should be integrated with the budget
    work that we do, and shouldn't be a totally separate kind of
    function. This year when we did our budget reviews we very much
    drew on the work that the staff were doing in the GPRA process
    to help us understand, agency-by-agency, program-by-program. So
    by integrating the work we do, we try to be more efficient.
        We have committees at OMB that were set up under OMB 2000,
    a Management Committee with a Workload Subcommittee, Investment
    Resources Board. These are management tools that I think work
    quite well. They reflect both the career and the political
    staff judgment. They not only inform me, but I have to make
    decisions on internal management and I listen very carefully to
    what they have to say. I don't want to go overboard in terms of
    how much one can accomplish through efficiency. People work
    very long days and they work very hard and they produce very
    good work.
        I think we have to be cautious when we predict what the
    future will look like. I know it wasn't an easy decision for us
    to recommend the funding level for OMB that we requested at a
    time, frankly, we made some very difficult choices with other
    agencies that were not given full cost-of-living adjustments.
        In the best of all worlds we might seek an increase. I
    could certainly justify additional FTEs and use them well. At a
    time when we have balanced the budget and we are expecting
    fiscal restraint and good management throughout government, OMB
    has to set an example of living by the rules it is trying to
    impose. So we are trying to balance that but not punish your
    work force at the same time.
        I think we have struck a balance that works but I must say
    the year-round budget process has an enormous toll on an
    organization like OMB. We had a one-day break between
    concluding the omnibus negotiations and going into our full
    peak season. One day is not a long time between two very
    difficult processes.
        People are encouraged to work at home in the sense that we
    have home computers that make it possible that people don't
    have to run in. If they have an hour of work to do, they don't
    have to spend two hours coming in on a weekend day. We have
    used the e-mail system to try and reduce the need for
    unnecessary meetings, but at the core it is a lot of work.
    People do very well. We hold ourselves to a very high standard
    of performance and will continue to do so.
        Mr. Kolbe. Thank you.
        Mr. Price, I have one more line of questioning, but I would
    be happy to yield to you if you would like because I certainly
    used more time on the second round here.

                 announcing the availability of federal grants

        Mr. Price. Thank you. I have one brief question I would
    like to pursue in the area of the Notices of Funding
    Availability (NOFA) the way those are handled across the
    Federal Government and what OMB might do to make better public
    information available about Federal grants. I do think this is
    an area where OMB could be very helpful, and I would just like
    to explore briefly with you what the situation looks like to
    you now and what we might do to improve it. I think it is
    important that the Federal Government provide adequate public
    access to information about potential sources of funding, and
    that this information be clear and consistent across the entire
    Federal Government.
        So I wonder how you would assess the situation at present.
    There is such a thing, of course, as the Catalog of Federal
    Domestic Assistance, but this document isn't always kept up to
    date in terms of actual funding availability, as I understand
    it, and therefore is of limited help in researching grant
    opportunities.
        There doesn't seem to be a uniform method for notifying
    potential grant recipients about funding availability. Some
    agencies do public NOFAs in the Federal Register; others donot.
    Some put notices on their web sites and other publications; others do
    not. As a result, of course, Members of Congress get contacted by many
    organizations seeking assistance, and we sometimes find ourselves
    handicapped in being able to give clear and consistent information.
        So it seems to me, based on the experience in part in our
    congressional offices, that we need to do a better job of
    giving everyone a shot at applying for Federal dollars and
    making sure the information is out there as to what is
    available. I would like for you to comment today and maybe
    comment at more length for the record, if you wish, about what
    OMB has done and is doing to try and make this NOFA process
    more effective and more consistent. Assuming there is some room
    for improvement here, are there efforts that you might
    undertake?
        Mr. Lew. Congressman, as you know, there is not a standard
    government-wide practice on how to handle notices of funding
    availability. Many agencies do put out public notices, and do
    make the information generally available. I think that actually
    relates very much to the question the Chairman was asking a
    moment ago in terms of work load burdens. If one had unlimited
    resources, certainly one could have a more coordinated approach
    to the notice of funding availability.
        But the project that you mentioned, the catalog of domestic
    assistance is a very, very time-consuming project. It is one
    that the agencies and OMB have juggled back and forth, over the
    years, responsibility for. And when I came to Washington in
    1973, I found it an extraordinarily helpful tool as a young
    aide in a congressional office who didn't know very much about
    the structure of the Federal Government, so I personally sort
    of have always thought of it as one of the things that I
    learned a lot from.
        With that said, you know, if we have to choose between the
    coordination of this information at a very high work load
    burden, against the other responsibilities that OMB has, the
    question is, is that the highest and best use and should we
    make additional resources available for that? At the moment I
    think I would have to have a little bit of caution in terms of
    offering that the OMB could do a lot more coordinating in this
    area, because it is quite labor-intensive.
        On the other hand, it is something we are happy to look at
    and to see--in principle we certainly agree that there ought to
    be wide dissemination of this information, and with modern
    technology we should be able to do it rather efficiently. I
    would suspect that the answer really will lie more in how to
    work with the agencies, to help provide guidance for the
    agencies to do it more effectively and more directly and less
    in the area of coordination. But I would like to think a little
    bit more about it and perhaps get back to you.
        Mr. Price. Well, I would appreciate that. I certainly agree
    with that last statement, that we are not talking about OMB
    doing this job. We are perhaps talking about a level of
    encouragement to agencies, a standardization of the way
    information is formatted and presented.
        So I would appreciate the benefit of your reflections on
    this, because I think there is room for improvement here. And
    we, in our attempt to be helpful to our constituents and
    organizations and to local governments, often come up against
    the need for this.
        Thank you.
        Mr. Kolbe. Thank you, Mr. Price.

         meeting the march 31, 1999 deadline for agency y2k compliance

        I would like to end by just going back to the topic that
    Mr. Forbes addressed, and that is Y2K: I have a couple of
    questions on the management and a couple on funding issues
    here. This is that critical month of March, the one that you,
    yourself, selected--when I say you, your agency selected--as
    being the month we should have 100 percent Federal mission
    critical systems being Y2K compliant.
        Your January 31st report, as I understand it, estimates 79
    percent of these systems are compliant. Do you think two months
    later at the end of March you are going to be at 100 percent?
        Mr. Lew. We are certainly striving to be as close to 100
    percent as possible. One of the reasons for choosing March 31st
    was we wanted to have a bit of a cushion after March 31st to do
    the final work.
        I think we have made enormous progress. Seventy-nine
    percent is big progress over the month before. We expect big
    progress in the month that we are in. In all candor, I can't
    tell you I think we will be at 100 percent on March 31st, but I
    think we will be much closer than we would have been if we
    hadn't set a tough deadline and worked with the agencies in
    sticking to the task. And we will complete the work in a timely
    manner, so that we can avoid the kinds of problems that we are
    all worried about at the end of the year.
        Mr. Kolbe. I would find it extraordinary if you reach 100
    percent by this month. I heard rumors, and I admit I have
    absolutely no substantiation for this, that there has been some
    shaving away of systems designated as mission critical. I hope
    you can tell me that that is not being done in order to try to
    be sure you are at 100 percent compliant.
        Mr. Lew. I think what is happening as we get to the testing
    stage is that we are reaching the point where it is not a
    projection of what the mission critical systems are, but we are
    doing the testing that determines what the mission critical
    systems are. And we have used a conservative approach in terms
    of anticipating what the mission critical systems were, so that
    we didn't assume you could find a way around a critical system
    and not have a problem.
        But as you get to the testing phase and some of these--I am
    trying to get the right word--but some of these mechanisms
    around a mission critical system turn out to be effective, then
    you have a mission critical capacity, even though the mission
    critical system may or may not have been tested or may not have
    become compliant.
        So the question is, can we perform the missions? And I
    think what you are finding is that some of the things are being
    removed because it turns out they weren't mission critical. You
    could get the mission done without them. I agree with you 100
    percent we should not be in the business of defining away that
    problem. If there is a problem, we need to identify it, we need
    to address it.
        I didn't mean to suggest that I thought we were going to be
    100 percent. I was trying to be quite candid, saying we were
    going to get close, but I think we are going to have work to do
    between March 31st and December 31st. The good news, I think we
    will be able to get the job done. I think we have the resources
    to get the job done. We have the people working on it, making
    the progress they need to make.
        We are so much farther along than we were two years ago,
    and I think so much farther along than many expected us to be,
    and I am much more comfortable sitting here discussingthis than
    I would have been.
        Mr. Kolbe. If I might, then, I am glad to hear you say
    that. If we are doing that well in the Federal role, how about
    the coordination with State and local governments,
    international, private sector?
        Mr. Lew. We have been doing a great deal of outreach and
    coordination. Obviously we can't undertake the direct work of
    doing the Y2K compliance for State and local governments, the
    private sector and international, but we have tried to play a
    leadership role. Right now John Koskinen is either in Manila or
    coming back from Manila, where he led a group of international
    ministers responsible for Y2K activities to work through their
    problems, to understand what they need to do to finish the job.
        We have worked closely with State and local governments. As
    you know, many of our Federal programs are administered through
    the States, and we have a very direct concern that if you take
    a program like the unemployment insurance program, the Federal
    Government could be Y2K compatible but if the States are not,
    then Federal benefits won't be delivered in a timely manner. We
    have given a lot of guidance.
        What we have tried to do, in part, was to be humble about
    what we could do directly, and understand that the leadership
    role that we were playing and the leadership role that we were
    expecting agency heads to play was something that we had to
    convince governors and their cabinet secretaries was a similar
    need at the State level, at the local level. I think we have
    succeeded in helping disseminate an understanding of the
    problem and to provide technical support.
        I think that there has been a great deal of public
    awareness because of the efforts that we have undertaken, and
    there has been a lot of technical support to help as well.
        Mr. Kolbe. Are you developing contingency plans at this
    point?
        Mr. Lew. We are indeed.
        Mr. Kolbe. Or is there no need to because you think you are
    going to be so close to 100 percent?
        Mr. Lew. I think it certainly is necessary to think in
    terms of contingency plans in areas where there are--you know,
    even if you hope to have 100 percent compliance, the risk of
    not having compliance is one that you can't take, and there is
    a range of activities. The Defense Department has been very
    active in this area; many of the things that they are doing
    have domestic applications as well.
        The problem is not necessarily that there are contingency
    plans to take over the permanent functioning of agencies where
    there might be a failure, but how to get through the transition
    so that you solve the problem without an interruption. The
    agencies are aware of that. We are certainly mindful of the
    need to keep that in mind, as are the agencies.
        Mr. Kolbe. Last year the committee directed that the Y2K
    czar, if we can call him that, should have Administration
    standing to directly access or in a sense take control of a
    system if he deemed that it was not going to meet the January
    1st deadline. A, does the Director have that standing, and do
    you believe that there would be any systems that will be taken
    over in that sense?
        Mr. Lew. I am not aware of any expectations of taking over
    any systems. As you know, agencies are required to develop
    contingency plans so that systems that have been behind their
    internal schedule by more than two months have some contingency
    planning built in. I would be delighted to go back and check to
    see whether there is any expectation of system takeovers. I am
    not aware of any.

                 funding for y2k in the fiscal year 2000 budget

        Mr. Kolbe. Okay. Just a couple quick questions on funding.
    The President's fiscal year 2000 budget request has $641
    million for Y2K, but according to documents the committee was
    given, we are told that wasn't the final figure, the final
    submission. Do you have that yet? Do we know what the figure is
    for fiscal year 2000 government-wide that we are talking about?
        Mr. Lew. I think that is the correct number.
        Mr. Kolbe. That is?
        Mr. Lew. Yes, roughly. I mean, I have to go back and
    double-check, but I am not aware of any additional requests
    coming forward.

                       FY 2000 Funding Requested for Y2K

        Question. In the President's Budget, how much FY 2000
    funding is requested for Y2K? How can the agencies use this
    funding to fix Y2K if it doesn't become available until
    October?
        Answer. In OMB's 7th Quarterly Report on Y2K, issued on
    December 8th 1998, the estimate of obligations for Y2K-related
    activities in FY 2000 was $641 million. In the 8th Quarterly
    Report, issued on March 18, 1999, that estiamte was revised to
    $614 million, as some agencies have been accelerating
    activities. The estimates are based on obligations flowing from
    appropriations in FY 2000 and prior years. In terms of FY 2000
    budget authority, $433.2 million has been specifically
    requested in the President's budget. These costs are primarily
    Y2K project office costs to manage and monitor the transition
    into 2000 and the completion of final contingency planning.

        Mr. Kolbe. Can we assume agencies have been told to absorb
    that fiscal year 2000 request in their budgets?
        Mr. Lew. Well, we worked through on an agency-by-agency
    basis where the definition of ``absorb'' is built into their
    2000 requests. So if you think they should have had more
    activities and they don't have them, then it is absorbed. If we
    have the right level of activities, it is additional resources.
    So that is a little bit of a subjective question.
        Mr. Kolbe. I guess what I am trying to get at, you are not
    anticipating, because I don't think it was the committee's
    intention, that the emergency appropriation be used in fiscal
    year 2000?
        Mr. Lew. No. We have, as I commented earlier, we have
    managed the '99 emergency to deal with '99 expenditures, and we
    do not anticipate using it for fiscal year 2000, nor do we
    expect to be coming up requesting additional emergency funds
    for fiscal year 2000. We very much appreciate the flexible
    funding that was provided. It has given us the ability to
    manage this problem and I think as best as we can.
        And it is giving agencies the resources they need infiscal
    '99 to do the critical work. There will be some expenses in 2000 that
    are the sort of tail-end expenses that are built into the agency
    budgets. Hopefully that will make some of the funding issues in fiscal
    2001 a little bit easier, so we don't have a repetition of that, but--I
    can't sit here and tell you with 100 percent certainty that when we do
    end-to-end testing over the next couple of weeks, we won't discover
    some large problem that we don't know about now. But barring something
    that we haven't yet seen, we are not expecting additional research
    requirements.

      estimates of total federal costs for fixing the y2k computer problem

        Mr. Kolbe. That goes to my last question. Your last quarter
    report shows the total costs through fiscal year 2000 for Y2K
    to be $6.4 billion. Do you anticipate outyear costs?
        Mr. Lew. Well, we have built into our 2000 budget the
    outyear costs we anticipate, obviously, after January 1st,
    2000.
        Mr. Kolbe. I am talking about 2001. Do you anticipate any
    costs for your agencies?
        Mr. Lew. I am not aware of any substantial costs.
        Mr. Kolbe. I have seen some private sector things, I forget
    who it was, one of the consulting firms that suggested that
    there would be some fairly substantial costs for private
    industry that would go on beyond 2000.
        Mr. Lew. I think we are going to see--this is now
    speculation, more than it is reflection of knowledge. But just
    based on the conversations I have had on specific Y2K
    compliance plans, there is going to be a rethinking of some
    information technology requirements based on what people have
    learned in the course of Y2K compliance.
        We are at a point in development of technology where major
    strides continue to be made, and I am sure that we are going to
    face information technology investment requirements that don't
    go away after the Y2K conversion. I think with regard to
    dealing with the specific issue of Y2K conversion, the funding
    of $6.4 billion, which is quite substantial, is what we
    understand the current estimate to be.
        If there are any ongoing costs, we will come back and talk
    to you as we discover that, but I am not aware of it at the
    moment.

                                closing remarks

        Mr. Kolbe. Thank you very much. You have been very
    responsive. This has been a long hearing, and I appreciate your
    answers. We may have a few other minor questions to submit for
    the record, but that completes everything that we have for
    today, and we thank you very much----
        Mr. Lew. Thank you, Mr. Chairman.
        Mr. Kolbe [continuing]. For testifying.
        Mr. Lew. We look forward to working with you.
        Mr. Kolbe. Just for anybody in the audience that needs to
    know, tomorrow morning we will have ONDCP, the Office of
    National Drug Control Policy at 10 a.m., and in the afternoon
    the Postal Service at 2 o'clock. Thank you very much. This
    subcommittee stands adjourned.

    [The official Committee record contains additional information here.]

                                              Wednesday, March 3, 1999.

                     OFFICE OF NATIONAL DRUG CONTROL POLICY

                                    WITNESS

    GENERAL BARRY R. McCAFFREY, DIRECTOR
        Mr. Kolbe. The subcommittee on Treasury, Postal Service and
    General Government will come to order. General McCaffrey,
    welcome.
        This morning we are very pleased to welcome General Barry
    McCaffrey, who is the Director of the Office of National Drug
    Control Policy, as he testifies this morning on the President's
    fiscal year 2000 budget request for his office, ONDCP.
        General, as you know, and I think we probably concur, there
    are few things that matter more in the policy and political
    life of this country than our efforts to end drug abuse. It is
    a cancer that eats at our public institutions, threatens our
    families, harms our national health.
        We are constantly reminded by this struggle against drugs
    that simply being a great and prosperous country is not enough.
    To defeat the constant and insidious corrosion of drugs, we
    have to have the strength of character, the will to act, and we
    have to be prepared to stay the course and foot what we all
    must acknowledge is a substantial bill to defeat this.
        That is what we are here today to talk about. The cost of
    this challenge is daunting. The enormous Federal drug budget
    that you oversee, $17.8 billion is the fiscal year 2000 request
    is amazing also because we no longer question the need for such
    spending levels, and yet what a scale.This is equivalent to the
    entire military payroll of the Air Force and more than that of
    the Navy.
        We have much to discuss today, so I want to proceed right
    away to your testimony and then to questions. However, I think
    we should point out that we continue to see some mixed stories
    on the drug war, and the question that people continually ask
    us is what are we getting for the $17.8 billion that we spend
    at the Federal level alone?
        On the one hand, there appears to be a slowing or slight
    dip in the trend to youth drug use overall. However, marijuana
    use remains very high, and an alarming one-third of high school
    children engage in binge behavior of one sort or another. The
    children continue to experiment with drugs in unacceptable
    numbers.
        The volume of traffic across our border, with little of it
    subject to inspection, continues to explode: 287 million
    people, four million trucks and rail cars, 86 million passenger
    cars cross our border with Mexico alone each year.
        While we see increases in seizures and some reduction in
    production overseas, there is no indication that the volume of
    drugs entering our country is any lower than the more than 300
    metric tons we estimate has been entering each year.
        And then there are our prisons which are overflowing with
    drug offenders who, in many cases, are still abusing drugs even
    while they are incarcerated.
        We see good news in eradication in Peru and Bolivia, but we
    need to sustain that success, and we look with concern at the
    growing supply of drugs coming from fragmented Columbia or,
    increasingly, from or through other countries in the region.
        We know more about the neuro biology of addiction, but we
    still continue to have a chronic addict population of at least
    four million people. So, today, I look forward to our
    discussion with you, General, and particularly hearing about
    the progress we are making and better gauging the performance
    of our Federal efforts, of coordinating our efforts to
    eradicate, interdict and deter the supply of drugs into this
    country, of streamlining our investigative intelligence and
    other tools of law enforcement and making real lasting impact
    on the attitudes and behavior of our children and their
    families.
        Before you begin, I want to ask Mr. Hoyer for his opening
    comments, and then we will go to your testimony, General.
        Mr. Hoyer. Thank you very much, Mr. Chairman. General, I
    want to welcome you again to our committee, as we oversee what,
    as the chairman has pointed out, is a very substantial sum of
    money, indeed. It is a sum of money that the American public
    dedicates to one of its most important objectives set forth the
    1988 act, and subsequent acts, andthe Reauthorization Act of
    last year; that is, of course, to substantially reduce the threat to
    health, the threat to safety, the threat to the futures of a lot of
    young people and the ruination of the lives of a lot of adults, both
    users and those whose users' behavior adversely affect.
        One of the things that you and I discussed when you first
    came into my office at the time of your appointment was that I
    thought the American public needed to perceive ONDCP and the
    Director of ONDCP as operational, as you recall. And by that I
    meant not just as a bystander or coordinator, but as an agency
    of not only policy, but of operational effectiveness.
        You will, in your testimony today, talk about the drug
    control strategy, its goals, and how we assess the attainment
    of those goals and the success of the expenditures which the
    chairman has talked about and you are here to testify about.
        I believe that there is some good news. I have read your
    statement. Obviously, you have set forth some good news as it
    relates to cocaine use, crack cocaine. As the chairman says,
    marijuana continues to be readily available, but we do have
    some positive statistics, and that is the good news.
        Not only do we have good news in terms of use, but in terms
    of availability some 500 metric tons in 1992 down to about 289
    metric tons of cocaine entered this country in 1997. I guess it
    was 1992 to 1997 was the comparison. That obviously is a step
    in the right direction.
        This committee has been concerned about the expenditures on
    Treasury law enforcement, and this committee's law enforcement
    component, of which ONDCP is obviously a critical part, as it
    relates to justice law enforcement.
        The Director of OMB correctly, in my opinion, Mr. Lew made
    the observation that their effort was to look at the overall
    picture, not necessarily by agency or by committee or by
    department, but the overall effort that was being made to
    determine whether the discrete parts of that effort were
    getting sufficient funding and whether that funding was being
    used effectively. Then look at the composite picture, the
    overall picture of where we are spending.
        Obviously, what we look to you for, General--and you, in my
    opinion, are uniquely qualified to carry out this role--is to
    ensure that that $17.8 billion spent by a lot of different
    components of the Federal Government are, in fact, coordinated
    and are effective, and I look forward to your testimony today
    focused on those points.
        Again, I want to reiterate how much I appreciate, I think
    this Congress appreciates, and I believe, to the extent they
    are knowledgeable, the American public appreciates your
    willingness to undertake this responsibility at the request of
    the President. You could have gone out and made five, ten,
    fifteen, twenty times the salary that we are paying you in the
    private sector based upon your experience and performance. You
    have chosen to continue your public service, and I think it is
    a testimony to you and a great benefit to our country, and I
    thank you again for that.
        Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you.
        General McCaffrey, we will hear your testimony. As always,
    of course, the full statement will be placed in the record, and
    if you would like to summarize it, that will give us more time
    to get to questions.
        General McCaffrey. Thank you, Mr. Chairman, and also to Mr.
    Hoyer for your opening statements and, more importantly, for
    your leadership, your support, and your wisdom on this issue
    and the involvement of the members of your committee.
        With your permission, I would not only enter into the
    record our written statement, which we put an enormous amount
    of effort into trying to pull together in one document and that
    we will put up on the Web today, but we have also pulled
    together with Dr. John Carnevale and Ms. Michelle Marx, who do
    all of our budgetary planning, a summary of the Drug Control
    budget.
        With your permission, as in the past, I will respond
    directly to my own ONDCP sort of modest budget of just under a
    half-billion dollars. I would also welcome the opportunity to
    explain the larger nine appropriations bills that have drug-
    related funding in them. Those two documents, with your
    permission, I would offer for the record.
        Mr. Chairman, let me also just briefly take note of some of
    the important people in our national drug strategy who are here
    in the room with us, and I am grateful for their support. Dr.
    Alan Moghul, representing NASADAD [Clerk's note: The National
    Associated of State Alcohol and Drug Abuse Directors]; Major
    General Retired Art Dean and Sue Thau of the Community Anti-
    Drug Coalition of America, CADCA, 4,000 anti-drug coalitions
    all across the Nation; and Dr. Linda Wolf Jones from
    Therapeutic Communities of America. My right arm in the media
    campaign is Partnership for a Drug-Free America, and Mike
    Townsend was good enough to come down from New York,
    representing Jim Burke.
        We have with us Jessica Hulsey, who, as you may know, is
    one of the board members of our Drug-Free Communities Advisory
    Board which Congress set up last year with your active
    involvement. Her story, by the way, is a very compelling one. A
    Princeton grad raised by two parents who were seriously
    involved in heroin and other drug addictions.
        Don Murray is here from the National Associations of
    Counties. We have really benefitted from working with not only
    county leadership, but the Mayors and Governors Association.
        Robbie Callaway is senior vice president of Boys and
    GirlsClubs of America. If there is one organization that I am most
    proud to be associated with in terms of drug prevention, it is the Boys
    and Girls Clubs.
        Irene Gainer is here from what you know as TASC, Treatment
    Accountability for Safer Communities. This is a tremendous
    program to link criminal justice and drug treatment
    communities.
        And finally, Stefanie Greenberg, vice president of the Ad
    Council is here. And the Ad Council, as you know, has very
    generously acted as quarterback for the nonpaid component of
    the media campaign and has, been very active in trying to pull
    together under Ruth Wooden's leadership, our support of
    educating America's children.
        There is a lot of material to cover, and I am very
    interested in responding to your own questions and really
    listening to your own views. So, let me, if I may, give you a
    quick overview of some of the documents that are in front of
    the committee and which I would welcome the chance to respond
    to.
        The most obvious one is the 1999 Strategy, but I would
    underscore that since the Congress, with unanimous support,
    reauthorized ONDCP last year in the omnibus bill, this Strategy
    is now on the table as a long-term document, and I owe you an
    annual report on how well we are going about achieving its
    strategic goals, [Clerk's note.--Agency clarifies: ``ONDCP
    provides to Congress an annual report on our progress in
    achieving its strategic goals''], I will modify it as the
    environment changes.
        But thanks to congressional action, this is now a five-year
    strategic concept, and I think we are successfully selling this
    around the country as the conceptual architecture to organize
    programs and budgets, and we are very proud of the work that
    has gone into that.
        The second document, obviously, of importance to this
    committee, is a five-year budget summary of the National Drug
    Control Strategy. This last year, the first year we put this
    out, but it was collegial partnership with my 14 cabinet
    colleagues [Clerk's note.--Agency inserts ``served as the
    foundation for producing last year's document.'']. This year
    they did it because you put it in the law. We are required to
    give you a five-year budget plan. It is not a [Clerk's note.--
    Agency inserts ``as of yet''] a very good document, but I will
    bet in another year or two of debate by Congress and the media
    and people who are aware of the issue we'll get the five-year
    budget projection to match our conceptual goals in the
    strategy. We are on the way.
        The next document you should be aware of is something we
    are extremely proud of. And, again, Dr. John Carnevale has
    provided our governmental leadership on this. It is called the
    Performance Measures of Effectiveness. We have outlined 12
    targets for a decade out. Where do we want to be in America on
    drug abuse in terms of its impact on our society?
        Then we backed off and identified 85 subordinate variables
    that you have to effect if you are going to get to your
    ultimate goal. We are going to provide you with annual goals
    and annual accountability, and this is the first year we are
    giving you an update report.
        We do not have databases for all of these 85 subordinate
    variables. We are going to have to build those very patiently
    and with some sense of humility as we do this. But this is the
    annual report card that I will give you on what we achieved
    with the money you gave us in the last year.
        I might also add last year I did this. It was not quite as
    effective as the document you have now, but it was based on
    collegial support from my cabinet colleagues. This year they
    had to do it because you put it in the law last year. So, I am
    required now to give you Performance Measures of Effectiveness
    over time.
        The next document is available through the normal mechanism
    for handling classified information. This is the second year we
    have done the National Drug Control Strategy Classified Annex.
    We classified it secret, NOFORN. What we tried to do is put
    down the President's strategic guidance to law enforcement, the
    intelligence community, and the defense community so that we
    have an agreed-upon guidance on how to organize what is
    primarily border and overseas activity. But there are also
    elements of law-enforcement-sensitive information in that
    document. That is very widely distributed now inside the
    Government. We are going to try and get people accustomed to
    explaining what they are doing in terms of that document.
        Finally, Michelle Marx and Dr. Carnevale put together an
    outline of the ONDCP budget, my personal budget of under a half
    billion dollars. It outlines in tab form what we have requested
    that you support in the fiscal year 2000 budget.
        A quick overview of that budget is that the salaries and
    operating expenses of ONDCP are $21.9 million. That is about a
    tenth of a percent of the Federal Drug Control budget. I say
    that because I am enormously proud of the impact of what is
    essentially a modest policy agency of 154 people, of whom 30
    are detailees, has on this rather enormous Federal effort.
        If you look at the larger budget that we have tabled, $17.8
    billion, and go back to fiscal year 1996 or fiscal year 1996 to
    2000, and look at what we have done, we have increased drug
    prevention funding by 55 percent. We have increased treatment
    funding by 25 percent. Research is up by more than a third. If
    you turn to the supply reduction side, domestic law enforcement
    is up by 24 percent, interdiction is up by 47 percent and our
    international programs, working with Peru, Ecuador, Thailand,
    et cetera, are up by 120 percent. I underscore that because
    there has been an awful lot of mischief with changingnumbers.
        What I want to do was just put on the table fiscal year
    1996 and fiscal year 2000. Here is what we have tried to do
    during the budget period that I have affected. That is a total
    growth during that time frame of 32 percent in the Federal
    anti-drug programs over time.
        I think we are steadily moving to put our money where the
    strategy said we would go. Now, if I can, Michele Manatt, who
    is my Legislative Affairs Director, has a series of charts that
    I will just comment on.
        The strategic goals and their 31 objectives have to be the
    way in which local, State, and Federal governments and NGOs
    organize ourselves to deal with this problem. I think,
    increasingly, in the last three years, we are finding a growing
    acceptance of that. You cannot pick off a menu and say, I am
    going to be an international drug reduction guy. Or, I will be
    in prevention. You have to do all of it in some balanced,
    coherent manner and stay at it over time.
        If there is any central component to this strategy, it
    argues that prevention and education of adolescent Americans to
    keep them off gateway drug-using behavior is really the highest
    value payoff we have. You have got to do it all.
        Next chart. The budget, if you look at it again, fiscal
    year 1996 through 2000, last year there was an extremely
    generous .8 billion dollar supplemental. Some would argue it
    was inadequately thought out because it was rushed, but it is
    there. We are attempting to fund the tail-end costs of that
    $800 million package. But as you look at it, there has been a
    steady and, we think, largely sensible growth in this funding,
    and I just gave you the kind of percentage period.
        The bottom line is that it [Clerk's note.--Agency refers to
    the budget] has gone up a billion dollars a year in the last
    few years while we have been trying to argue for rational drug
    policy.
        Next viewgraph. I will not go into this. It is somewhat
    intimidating. I do think it is important for you and for us to
    use the same tools that the CEO of 3M or Avis or IBM would use.
    You have got to have measurements. There has got to be an
    output function. I cannot just talk about what you gave me. We
    have got to say what did we achieve? What was the purpose of
    this expenditure. That is the way that we designed the output
    function. Those are the 12 target outcomes. There are numbers
    on them. And to get there we said you have to effect 85
    subordinate variables. I would be glad to respond to your own
    interests along this line.
        Next. Here is the whole argument on prevention education.
    If you change youth attitudes, you change youth behavior, and
    there are a series of ways to change youth attitudes. If we
    look at it over time, you can see that drug attitudes among
    adolescents steadily worsened from about 1991 on and drug abuse
    went up from 1992 on. That went on until two years ago when Dr.
    Shalala, Donna Shalala and I, carefully lowered expectations.
        However, we did announce that there was stabilization of
    drug abuse rates among kids two years ago. This year, we said
    it went down. And I do not want to overstate that, but I want
    to be unmistakable. If you look at that 12 to 17 population,
    almost across-the-board, with a couple of exceptions among 12th
    graders, all these lines of both attitudes and use, instead of
    going up, stabilized or went down. In all three key categories,
    8th graders, 10th graders, 12th graders, drug abuse went down
    slightly. These are not huge margins of change. And it was most
    dramatic among 8th graders, which is what you would expect.
    They are the youngest. They have just arrived into the arena in
    which they are seeing drug abuse.
        What we do argue is this is not the light at the end of the
    tunnel, but this program, if kept up for a decade, we argue,
    will substantially lower the number of young adults who enter
    the workforce with a drug abuse problem.
        Next viewgraph. A lot of this, of course, is monitoring the
    future data out at the University of Michigan. They have got
    pretty good data all of the way back to the sixties.
        Having said that, perhaps we are starting to affect
    adolescent attitudes. And if you look at the impact of drugs on
    America, it is getting worse. America's addicts, 4.1 million
    are older, and sicker, and more dangerous. They are behind
    bars. They are in trouble. And so if you look at the age rate
    or crime rates or who is behind bars, almost any one of these
    social indicators of malignancy in America, one of the dominant
    variables is drug abuse, drug and alcohol abuse combined, and
    it has gone up, not down.
        Next chart. Part of my budget is the High-Intensity Drug
    Trafficking Program. I am grateful for the support from
    Congress. I will raise a caution about the program. That it has
    gone from five HIDTA's when the program started--and
    Congressman Hoyer and others were part of starting this up--to
    current NIDTAs. I have got somewhere between three and nine
    serious additional candidates to get HIDTA status. It is not a
    lot of money as Federal programs go, but they are important
    dollars. You give a locality maybe $3 million up to $9 million.
    It pays for connecting infrastructure, training,
    communications, consultants. You glue together [Clerk's note.--
    Agency would amend ``glue together'' with ``coordinate efforts
    of''] local, State, Federal prosecution and law enforcement.
        The caution is--I will have a study done by this summer
    that shows by county in America, where drug abuse, by different
    ways of slicing it, is the worst. We have got to have a logic
    behind expanding this HIDTA program. And as we expand it, we
    have got to get more money into it, not justtake the existing
    dollars and turn it into another Federal minor grant program. There has
    got to be a logic behind this because I think there is a big payoff,
    and I think law enforcement authorities around America are grateful for
    it.
        Next viewgraph. Health impact of drug abuse. Again, older,
    sicker addicts, hospital emergency room entries, you name it,
    things have not gotten better. When I talk to the addicted in
    America, and that means the Talbott-Marsh Clinic in Atlanta,
    where I will sit in a room like this with 30 addicted
    physicians, a 45-year-old white female plastic surgeon in San
    Francisco or addicted airline pilots or if I go to the Hazelden
    Institute with 30 adolescent kids in a room, all paying $14,000
    a month for drug treatment, the consequences of drug addiction
    are just abysmal. And it is not a problem of the minority, the
    inner city, the poor, the mentally ill--it is also that--but it
    is a problem that affects all socioeconomic classes in America.
        Next chart. Some good news in supply reduction. We have
    actually, for those of you who have worked the coca producing
    regions, which I have, off and on for six or seven years, this
    is almost beyond belief. There has been a dramatic, unarguable
    major reduction in coca production in Peru. That was the number
    one [Clerk's note: agency would insert ``coca-producing'']
    country on the face of the earth.
        I credit some of this success to the U.S. Air Force, U.S.
    intelligence, the regional partners, a lot of it to the
    political will of the Fujimori administration, to the
    reintroduction of civil police into the Huallaga Valley to the
    general destruction of the Sendero Luminoso movement. You go
    over to the Bolivian side, where I never believed we would see
    a definitive reduction, and there is clearly a reduction in
    coca production in Bolivia. That was done in two years. And,
    again, although I think there has been a tremendous amount of
    work done by U.S. authorities, that was President Banzer, a
    young Vice President Quiroga, a group of technocrats and a
    changed way of going about confronting coca production.
        Having said that, our problem ten years from now, when my
    daughter testifies while serving as the U.S. Drug Czar, may
    well not be heroin or cocaine. It may be methamphetamines,
    Rohypnal, PCP, MDMA, chemically manufactured drugs. So I think
    we ought to remind ourselves that it is not the type of drug,
    but drug behavior that we are trying to confront in a
    systematic way.
        But this is good news. I cannot, unfortunately, add equally
    good news for heroin production which is such a giant growth
    industry around the world. It is hard to deal with. We may be
    consuming ten-plus metric tons of heroin a year. We think the
    world is producing easily just under 400 metric tons. So the
    supply grossly exceeds the demand for most of these illegal
    substances.
        On that note, Mr. Chairman, let me again thank you for the
    opportunity to come down here to testify, and I look forward to
    responding to your own interests.
        [The prepared statement referred to follows:]

    [The official Committee record contains additional information here.]

        Mr. Kolbe. Thank you very much.
        I understand Ms. Roybal-Allard has to leave for another
    event. Mr. Hoyer, if you have no objections, we will let her go
    first here with the line of questioning.
        Ms. Roybal-Allard. Thank you, Mr. Chairman and Mr. Hoyer.
        Mr. McCaffrey, a couple of weeks ago I was down in San
    Diego and met with various law enforcement agencies there; the
    INS, the DEA, and the FBI, Customs, and Border Patrol. I had
    the opportunity to fly over San Diego east towards the Inland
    Empire and get a good view of that area and learned some of the
    issues that are of great concern with regard to drug
    trafficking.
        One of the key issues that was raised by the law
    enforcement officials and the agents, was the importance of the
    Government of Mexico and the importance of its cooperation with
    the United States in doing their part to stop the flow of
    illegal drugs.
        Just recently, the President recertified Mexico. Given the
    recent criticism of Mexico and its efforts to stop drug
    trafficking, could you please explain why the President felt it
    was important to recertify Mexico and why you are supportive of
    this effort.
        General McCaffrey. The certification process, particularly
    as it relates to Mexico, has been an interestingone to me
    because three years ago on 1 March [Clerk's note: agency inserts
    ``1996''] I was sworn in at 9 o'clock in the morning. At 10:30 we had
    the certification press conference in the White House, and later the
    President asked me to head the U.S.-Mexico high-level contact group.
        So for three years I have watched--and helped organize
    State, Defense, Treasury, Justice, CIA, DIA and other
    authorities to deal with the Mexican drug challenge. I say that
    sort of as a background--that I spent a good bit of my adult
    life off and on working with the Latin-America region. Although
    I do not pretend to be an expert, there is nowhere from
    Patagonia to the U.S.-Mexican border I haven't been, and I know
    all of their political, and military and intelligence
    leadership among the 34 nations.
        On Mexico, let me also cite the law. The law that was
    passed essentially says that the President, on the
    recommendation of the Secretary of State, must decide two
    things with an allied country, with an identified major country
    that is a known drug-producing or transit or consuming Nation.
    Are they supporting the objectives of the 1988 Vienna
    Convention on Illegal Drugs, to which we are mostly
    signatories? That is number one.
        Number two, are they working in partnership with the United
    States? It does not have to be in partnership, as long as we
    can certify that they are actually supporting the 1988 Vienna
    Convention.
        It does not, in fact, require them to have achieved the
    objectives, but are they supporting them. And I say that not to
    make legal distinctions, but I think that is essentially the
    intent of the law. Are they a Myanmar, an Afghanistan, where
    there is literally collusion between Government and drug
    producers? And we got in the same situation with Colombia with
    President Samper. There was reason to believe he was complicit
    with drug forces.
        When it came to Mexico, to be honest, my own view of it has
    been that with regard to the certification process, it has been
    very easy to reach a decision. We looked at President Zedillo
    and his senior officers of Government, whether it is a foreign
    minister or Rosario Green or Minister Cervantes of Defense or
    Minister Gurria in Finance or across the board, Mr. Madrazo,
    the Attorney General. These are people who are committed, in
    our view, to protecting Mexico from what they term their number
    one national drug threat.
        The problem with Mexico is, when they pull on the levers of
    authority, they are connected to institutions that are
    inadequate for their own purposes. And so, corruption and
    violence, the two tools of international drug crime, have been
    sufficient to intimidate in many cases or corrupt elements of
    the judicial branch of the law enforcement agencies, to a
    lesser extent, sometimes the military, the news media, the
    Congress, legislative branch. It has been a tremendous
    challenge to them.
        Now, Dr. William Perry, one of my personal heroes and I,
    went to Mexico four and a half years ago and, against all of
    the advice of the U.S. Government. He was the first Secretary
    of Defense to set foot in Mexico. I was the first four-star
    general to ever set foot in Mexico.
        We had a full hearing from all of their authorities. At the
    time, I would characterize our joint cooperation on things
    other than political and economic as zero, nothing, on no
    program could you say we had genuine cooperation.
        Here it is four and a half years later, I would
    characterize it as a revolutionary change in attitude with real
    concrete, cooperative things going on. Mexico is very sensitive
    to their sovereignty issues, as you know, but our Coast Guard
    and Navy ships [Clerk's note: agency inserts ``can now''] pull
    into their ports, with under 24-hours notice, and buy gas with
    a credit card. We fly through their airspace with permission.
    We have an 85-percent approval rate.
        We are helping to train their military, their police, their
    judicial system. We have an active intelligence-sharing
    program. We have a series of sensitive programs of cooperation
    going on. So, in my view, the American people are better served
    by this cooperation than not, and I do believe they met the
    requirements of the certification law.
        Ms. Roybal-Allard. My understanding is that the United
    States and Mexico also developed performance measures that are
    being adopted.
        General McCaffrey. We did. We have been working on it for
    18 months. It was interesting to me, that one of our major TV
    reporters dismissed this as just another piece of fluff. This
    is 18 months of hard work. U.S.-Mexico bi-national performance
    measures of effectiveness, we said, and we had to negotiate it,
    first inside our own Government, where it was somewhat harder
    than dealing with the Mexicans, and then we went to the
    Mexicans and tried to negotiate symmetrical balanced ways of
    holding friends accountable for achieving real results. That is
    it. It is not what you would want, but it is what we have got,
    and we are going to try and work with this over the coming
    years to get out of the finger-pointing exercise and to see if
    together we can move toward the future.
        What we pledge: two years from now, we are going to be
    better off than we were two years ago.
        Ms. Roybal-Allard. Mr. Chairman, I have other questions
    that I would like to submit for the record.
        Mr. Kolbe. Of course, you may submit those questions, and
    of course if you return in time, we would be happy to get
    another round of questions.
        Ms. Roybal-Allard. Thank you for your courtesy.
        Mr. Kolbe. Thank you very much.
        Let me begin my round of questioning. General McCaffrey,
    you have been talking about the media campaign and some
    questions there. This has been one of the initiatives that
    Congress has been very supportive of.
        We have provided you I think, to date, with $380 million
    for the youth media campaign, and you are requesting $195
    million for next year, which is the same, of course, as we had
    this last year. And you have funding at that level going
    through projected out through 2004. In other words, a total, if
    you take all of those next five years, a total of $1.35 billion
    in Federal spending. That is on top of the match, the private-
    sector match, both from the media outlets as well as the
    contributions that would be received from private sector. So it
    is a huge proposal far beyond anything that we had originally
    talked about or anticipated. Let me begin by just asking do we
    see this now as a continued indefinite part of a ten-year
    strategy?
        General McCaffrey. Mr. Chairman, I have argued from the
    beginning that if you look at the total Federal drug budget
    over time it will go down, not up. But if you look at how we
    spend money, $17.8 billion, and go out a decade, you should not
    expect it to go up, but instead decrease because of the massive
    costs, law enforcement, prisons, health, et cetera, that occur
    from addiction.
        The one aspect that probably ought to get tied to the
    demographics of the nation is the prevention education piece.
    So, yes, I would argue that over time, if it works and it is
    effective on prevention education, we ought to keep it up, and
    that would include this program.
        I would also suggest to you that from the start, this
    wonderful man, Jim Burke, Partnership for a Drug-Free America
    and I always envisioned that this had to be a minimum of a
    five-year, substantial task and it had to be public-private
    partnership. You could not just do it with Federal dollars.
        Our initial results, I think, were astonishing. We owe you
    another report. I gave you a Phase 1 report a few months back,
    but if we just look at the evolving national campaign, we told
    you we would go to four times a week, 90 percent market
    penetration. We are actually achieving about 93 percent and
    more than seven times a week when you throw in all components.
    So it is starting to work.
        Mr. Kolbe. General, let me just correct one thing. You said
    you gave us a Phase 1 report. We have a draft. We have never
    received a final report on that.
        General McCaffrey. Let me go find out if we are still
    characterizing that report as a draft. The Phase 1 analysis I
    believe is done. Now we have got a Phase 2 national campaign
    with the original material.
        Mr. Kolbe. I have some questions along those lines.
        General McCaffrey. We have a fairly extensive and well-
    thought-out evaluation program for this campaign done both by
    the Federal Government, led by NIDA and a contractor and by an
    advisory council. So, we will give you periodic explicit
    reports on what we think we are achieving.
        Mr. Kolbe. Let me just then go right into that issue here.
    I will come back maybe to some general questions on that
    because that is one of the questions that we have is some of
    the controls that we have on this media campaign.
        We did have some controls placed in the fiscal year 1999
    funding, and one of those was an evaluation on Phase 1 and
    Phase 2.
        My question really is, it is interesting that you are
    saying you think it is a final report. It was clearly, I think,
    labeled a draft report, and as I understand it, it is still
    being negotiated----
        General McCaffrey. Phase 1 was the 12 test cities.
        Mr. Kolbe. That is correct.
        General McCaffrey. Right. But let me check----
        Mr. Kolbe. That 12 test was completed last July or last
    June or so, and I think we have seen some drafts of that, but
    there has not been a final report on that, and my understanding
    is we were not going to obligate the funds for fiscal year 1999
    until we had the draft report. Are you obligating funds for----
        General McCaffrey. Absolutely. This program is up and
    moving.
        Mr. Kolbe. Then I need to know from you, since there was a
    statutory restriction on that about not obligating those funds
    until we had the report in hand as to why you were not able to
    meet that--I mean, I am not trying to hamstring you, but there
    were reasons for having these evaluations, so that we would
    know before we proceeded what we were doing, whether we knew
    what we had there.
        General McCaffrey. Yes.
        Mr. Kolbe. And I guess what you are saying to me is you
    have moved right on ahead, and we really have----
        General McCaffrey. Absolutely. What I owe you is,
    obviously, a better explanation, which we will get, on where we
    are and what we are doing. We are in compliance with the law.
    We are clearly obligating 1999 dollars, and I have not only a
    Phase 1 evaluation, but I have some pretty good data to give
    you on Phase 2. But I would strongly suggest we actually do
    know what we are doing.
        Mr. Kolbe. And I appreciate that, but I think I need to
    just emphasize--again, I am not trying to get a technicality
    here, but if you are obligating 1999 funds, you are not in
    compliance with the law.
        General McCaffrey. Well, we are clearly obligating
    1999funds. We are out in the marketplace. We have hired Ogilvy Mather
    which runs the paid advertising component. We have hired Fleishman-
    Hillard to do the public relations component. Porter-Novelli is
    providing critical oversight. A NIDA contractor is doing an evaluation.
    We are well launched. We are developing new ads. I have approved second
    Generation ads.
        Mr. Kolbe. I would just remind you, then, since we did not
    meet that statutory obligation, there is a requirement that
    before 75 percent of the 1999 funds----
        General McCaffrey. Mr. Chairman, apparently we did not
    substitute perhaps the one stamped draft with a final. Dr.
    Carnevale advises me we do have the bound final copy of the
    Phase 1 evaluation, and I will make sure that--we have
    obviously inadequately responded to your concerns, and we will
    get on with that.
        Mr. Kolbe. General, it is not that it was a concern, it was
    just a requirement that you do so.
        General McCaffrey. Right.
        Mr. Kolbe. And you did not do it. There is a requirement
    that before you obligate more than 75 percent of the funds, the
    fiscal year 1999 funds, that we have to have a final Phase 2
    report as well. Just so that you are aware of that, that we try
    to meet that requirement at least.
        General McCaffrey. We will obviously comply with the law.
    You should not have any question in your mind, and I will
    respond.
        Mr. Kolbe. Again, my issue is not whether or not you are
    meeting this particular deadline, and I will come back to this
    in my next round, but I think we have an obligation to know
    what we are finding out from these evaluations, and that is
    really what I think I wanted to talk to you about. But my time
    is up on this first round, so I will come back to it.
        General McCaffrey. Mr. Chairman, I wonder if you would
    permit me, though, to say that by the end of the day there will
    not be a difference in views because I am going to respond to
    your own requirements. But it is extremely important that I be
    allowed to run the program. I will not be able to run it in
    tandem with congressional committees. So what I need to do is
    look at the law, get the appropriations and actually execute
    it. Then I can report how I am doing it.
        But I, clearly, see no way, nor am I going to actually
    micro-manage the program. I have got a contract which is
    revocable with three firms now, and I am going to hold their
    feet to the fire. They have to recompete each year. So they
    know they have got to deal with me as if they are an
    advertising firm dealing with a CEO or they will not get any
    more money.
        But you and your committee, I think, have to allow me to
    exercise authority and responsibility on running this program,
    and I will keep you scrupulously informed of how I am going
    about it, but I really do not want to share that executive
    responsibility with the Congress.
        Mr. Kolbe. General, I am just a little disturbed by what I
    have just heard you say. I agree, our intention is not to try
    to micro-manage. Our intention is to try to give you the
    flexibility to do what you need to do. But you were quite aware
    of the provisions that we put into the law regarding these
    reports, and they are done for what I think is a very sound
    legislative and public purpose, and that is oversight.
        We are spending a lot of money on this media campaign over
    the next four or five years. The public, the taxpayers have a
    right to know whether or not we are getting anything for our
    money, and that is really all we are at. We are not trying to
    put a straightjacket on you. We are not trying to micro-manage
    or to suggest that you have to micro-manage this, but I think
    these are reasonable reports. If they are not reasonable, you
    have an obligation to let us know or, ultimately, you have an
    obligation to tell the President he has to veto the bill rather
    than let it be signed into law, put into law.
        General McCaffrey. Well, let me go back and review it. I
    will come down, have a very direct response to your concerns.
    To be honest, I did not realize we were having a problem. I
    thought we were being responsive to the interests of your
    congressional staff and, clearly think we are in accordance
    with the law.
        But I would also argue that, I hope that what we are doing
    is, we are given the annual appropriation of money and a law to
    comply with, and that we are not going to go by quarter telling
    me how to manage this because there is no way that either
    Ogilvy and Mather, a huge corporation that is laying stuff out
    over 18 months, nor I, can manage a program like that.
        Mr. Kolbe. I exceeded my time.
        Mr. Hoyer.
        Mr. Hoyer. Thank you, Mr. Chairman.
        Following up on this issue that you have raised, General,
    it is my understanding that you consider the September
    submission to be the evaluation and results of Phase 1 of the
    campaign; is that correct or not?
        General McCaffrey. Yes, I do, Mr. Hoyer.
        Let me go back, though, and find out why you do not have
    something that you considered a final report. We may have been
    remiss in not providing you some document that gave you an
    indication we were complying.
        Mr. Hoyer. My point, General, is the legislation says
    nothing about a final report.
        General McCaffrey. Yes.
        Mr. Hoyer. The legislation says you cannot spend the money
    until ONDCP has submitted the evaluation results of Phase 1 of
    the campaign to the Committee on Appropriations.
        General McCaffrey. Right.
        Mr. Hoyer. My question to you is I think there may be
    simply, not necessarily a disagreement on substance, but a
    disagreement on the characterization of the September
    submission.
        General McCaffrey. Yes. I think we have got a Phase 1
    evaluation, right? And it is a pretty positive one, too. It was
    very encouraging to me.
        Mr. Hoyer. I will admit that I have not read that
    submission. But if, in fact, it is what we have asked for, the
    evaluation results of Phase 1, then it would seem to me that it
    would comply with this language, whether it is called an
    initial draft or final report.
        General McCaffrey. Right. I am working on Phase 2
    evaluation right now. I think we have done Phase 1. I think
    that is over here, and I think we are working on Phase 2 and
    have continuing good news to report to you.
        Mr. Hoyer. Well, I think we can clarify it. I presume you
    have complied with the law. Whether we like the law or not, we
    need to comply with it, obviously, and I know you agree with
    that.
        Let me go on, and I will ask, first of all, a preliminary
    question. I am on the Labor and Health Committee, and we talked
    to the institute that deals with alcohol abuse and addiction.
        Does ONDCP consider alcohol a gateway drug?
        General McCaffrey. Well, what the strategy included, under
    Goal 1, was the use of alcohol and tobacco products by underage
    users as part of, essentially, gateway drug use and behavior.
    The answer is yes. There are pretty decent numbers out of
    Columbia University that show that. And, oh, by the way, we
    think they are linked.
        When you look at a kid at risk, it is an adolescent smoking
    pot on weekends. That same adolescent, almost without question,
    is abusing alcohol, beer, and smoking cigarettes. So they are
    normally clustered behaviors. The more they do it, the earlier
    it is, the worse off statistically they are. This increases the
    likelihood of having a drug-using problem.
        Mr. Hoyer. General, in that context of the relationship
    between the abuse of alcohol and the subsequent or concurrent
    abuse of controlled dangerous substances, do you believe that
    your office has sufficient authority to include underage
    drinking in the media portion of your budget or do you think
    that is appropriate?
        General McCaffrey. I think we took a moderate, balanced
    position. What we agreed, and I think what the law says is that
    on appropriated monies we are not to spend funds on either
    anti-alcohol or anti-tobacco ads, but on the media matching
    component we will.
        So we have, and I have tried to explain this to MADD,
    Mothers Against Drunk Driving, and others, that they are now
    getting a tremendous access to the media, TV, radio, print
    media, on anti-use alcohol use because of the law that Congress
    passed. But I do not think we ought to spend the appropriated
    dollars [Clerk's note.--Agency would insert: ``on anti-alcohol
    use advertising''] at this time.
        We are going to get into a conflict on are we against
    alcohol per se, a legal drug, regardless of one's viewpoint or
    not. So I think the law is okay the way it is right now.
        Mr. Hoyer. Let me ask a second question. In your report,
    there are differences between some of the targets set by the
    act, the 1988 act, and those contained in the strategy. Let me
    give you an example. The act specifies reduction of illegal
    drug use by 3 percent by 2003, and you have substituted in the
    strategies the goal of 2007. Can you explain that? I do not
    know how endemic that is to other parts of the strategy. Can
    you comment on that?
        General McCaffrey. We ended up with a confusing negotiation
    with the Speaker of the House and others, and Senator Hatch. We
    finally bought off on a compromise. The law is a bit confusing.
    Congress has required me to develop PME, to have annual goals,
    to submit them for Congress and to explain the extent to which
    I reach it or do not.
        Then there is another piece of the law that says, and these
    are congressionally mandated objectives and that part of the
    law, in my reading, is binding on Congress, that if I am not
    reaching those mandated objectives, then you will use that to
    appropriate more funds to reach those objectives.
        The reason I mention this is Mr. Mica, and his
    subcommittee, said, well, they sort of expected there would be
    two budgets that came down there. There would be the
    administration budget and a different congressional budget, and
    there cannot be two budgets. There is a budget. We believe this
    will achieve the stated performance measures of effectiveness,
    and then Congress can hold me accountable for not having
    achieved what I believe to be unrealistic and unachievable
    congressionally mandated goals.
        However, whether I believe that or not is irrelevant if
    Congress wants to shape a larger budget, with a faster wrap-up,
    for example. Let us say I think it is achievable, but I think
    it would take ten years. If Congress says, no, we want it done
    in four years, then presumably we would triple the size of the
    Coast Guard or something.
        It is a bit confusing, but the PME are mandated by law, and
    I appreciate that, and I am submitting annual targets, and I am
    submitting an annual report to you on what I did.
        Mr. Hoyer. I asked if my time had expired, and he said it
    had, but his time had expired, also, so he is giving me equal
    time. I appreciate that.
        With due respect to my colleagues, let me make that
    observation first. Obviously, it is relatively easy to set a
    goal in legislation. It is another matter to accomplish that
    goal and to put the resources necessary to accomplish that
    goal.
        One of your colleagues, General Schwarzkopf, came back from
    the Persian Gulf, spoke to a joint session of Congress, and I
    will never forget what he said. He thanked the Congress and the
    American people for setting the goal, dedicating sufficient
    resources to accomplish that goal, and although he did not say
    it this way he meant, getting out of the way. [Laughter.]
        Mr. Hoyer. You have said that a little bit today. I
    understood that, and I think it is probably appropriate and
    that then we assess some point in time, annually, every two
    years, whatever, whether or not you are doing the job, and if
    you are not, then either we give you more resources or we get
    somebody else to do it.
        Let me ask you, you have discussed this in response to the
    Chairman's question, but let me ask it again. You are quoted in
    February in a press release on the media campaign describing
    Phase 1 as, and I quote, ``Strong initial success.''
        Now, you have referenced some percentages of how many
    people have heard in a week, seven hits in a week in terms of
    teenagers, through one media source or another, the billboards,
    the TV, the radio. Beyond that, do we have any indication of
    success or is it too early?
        General McCaffrey. I have got a report, Mr. Hoyer, in your
    packet. So if I get slightly off on the numbers, we can correct
    the record later.
        The Phase 1 report was pretty encouraging, but it was a
    pretty simple test. It was six months. It was 12 cities. There
    were 12 control cities, same demographics. We tried to pick
    control cities where there might be something unusual to learn;
    a lot of meth, a lot of pot, a lot of heroin, or something, and
    then we went out and said, one, do people see the ads? Are they
    believed credible? Do they cause some reaction?
        And by the way, some of them did not work too well. One of
    the weak areas we thought was one of the toughest drug
    problems, which is pot use by adolescents. It is easy to be
    against methamphetamine abuse by a 26-year-old mother who works
    in a meat-packing plant and has a second job. So some of these
    ads were not all that good. But the PFA has got ten years
    experience. So we came out of it, we did have some measures
    that were pretty favorable, and we sent them over here.
        Then we went to Phase 2, which meant we did a national
    campaign, but again we were still using material that PDFA had
    developed over the years. If I remember, it was like 130 TV
    ads, 100-and-some-odd radio ads, some print material, not
    enough billboard, some shortcomings, and we went nationwide.
    Now we have got some feedback on that.
        And, again, I need to be cautious with you and use numbers
    as opposed to anecdotes, but it has really been quite
    remarkable. One of the things we are doing is 10 percent of
    those ads have a telephone number on it. There are going to be
    more of them before we are done. But right now about 10
    percent, and so you see the ad, and it says, ``Call this number
    and do something. Call it and get a booklet `How to Talk to
    Your Kids about Pot.' Call it and join your community
    coalition.'' That is a key one for Art Dean and CADCA.
        And when we do that, the response is astonishing. So calls
    to community coalitions are going up. We need more of those
    telephone numbers in those ads. Calls to the drug clearinghouse
    have skyrocketed.
        Now, the other thing we have got to do, Phase 3, which we
    are now into, is the message cannot be one primetime 30-second
    clip. It has got to be targeted at 102 different media
    concentrations, a separate substrategy for each one. And, oh,
    by the way, it has got to resonate with me, whoever I am;
    Native American reservations, Spanish. So by the end of next
    summer, I hope we are in 11 languages, and we are starting to
    get into substrategies that target Arizona or Maryland or
    Hawaii, and we are really getting some responses.
        I would say the initial feedback we have got is that we are
    on track. But we have got an evaluation and, Mr. Chairman, I
    agree, we have two opposing factions who are arguing over what
    we are doing. And then we have got outside agencies, the
    Annenberg School of Journalism and others, who are watching
    what we are doing. And I will ensure that this committee gets
    access to that data as it develops.
        You get the raw data, if you want to pour through that or
    you can let us analyze it and see what our conclusions are.
        Mr. Hoyer. Thank you, Mr. Chairman.
        Mr. Kolbe. Mr. Peterson.
        Mr. Peterson. Thank you, Mr. Chairman.
        General McCaffrey, I want to welcome you this morning and I
    want to share with you that I believe you have one of the most
    important jobs in America, because I do not think there is any
    issue facing America that is more important than stopping the
    explosion of drug use in this country, especially with our
    young people.
        Is it accurate, the figures that I have, that we are
    5percent of the population and we are 50 percent of the demand for
    drugs? Those are the figures that I was given by some people.
        General McCaffrey. I think it is worse than that. As 6
    percent of the population are using drugs. That is 14 million
    Americans and then there is 4 million of them who consume \2/3\
    of all the drugs consumed in America.
        So, I would say----
        Mr. Peterson. No, no, I meant in the world. We are 5
    percent of the world's population and 50 percent of the drug
    use.
        General McCaffrey. No, not even. I have been trying to get
    that out of the President's speeches, and out of common things,
    it is complete nonsense. I cannot imagine why we keep saying
    that. We have--the numbers, by the way, are almost impossible
    to find to disprove the allegation. The number I use is we use
    probably 3 percent of the world's heroin.
        The UN Report says we consume 11 percent of the drugs in
    the world. I think that is nonsense. That is because we report
    our drug abuse figures and most nations do not.
        If you want to talk about drug abuse, go to Pakistan. Three
    million or more people may be addicted to heroin in that tiny
    country. If you go to Western Europe, there is an argument--
    and, again, this data you should not compare data from
    different sources--but maybe they are using 30 metric tons of
    heroin a year to our 13 metric tons.
        So, it bothers some of our hemisphere partners when I say
    this, but the drug problem in Rio is worse, in my judgment,
    than in Miami. The drug problem in Caracas is worse than in
    Detroit. Mexico, the drug problem is a fraction of ours, but it
    is getting worse and our's is getting better.
        Now, I make those arguments not to evade our own
    responsibility but to tell people, look, this is your problem
    as well. Our problem is we have got too much money. If you look
    at the amount of money we spend on drugs, $57 billion, that
    dwarfs what is spent on drugs in Mexico or Malaysia or
    Pakistan.
        Mr. Peterson. But I notice in your chart of your priorities
    that stopping demand is your number one issue.
        General McCaffrey. Absolutely.
        Mr. Peterson. Lessening demand.
        General McCaffrey. Doing prevention as the principal
    strategy of demand reduction. So, if you wait until I am
    chronically addicted you have got a real expensive problem with
    me. If you get me to age 19 and minimize my exposure to drugs,
    it is a tremendous investment.
        Mr. Peterson. I was looking at the map of your high-
    intensity areas. I am not near one. I live in Northwestern
    Rural Pennsylvania, the most rural district east of the
    Mississippi, and I am probably 350 miles from Philadelphia
    which is the closest drug, high-intensity drug-trafficking
    area. But I am here to tell you that kids tell me it is
    available in every community, it is available in every school;
    even in the little wee towns with very small schools, very
    rural populations, drugs are there.
        And sometimes even in a higher proportionate use than in
    some of the suburban/urban areas because if it becomes the
    ``in'' thing in a very small school, it becomes the ``in''
    thing and you are sort of a nerd if you do not do something.
        The school children--I try to interview every youngster
    that comes through my office and I ask them more questions I
    guess than they ask me--but they tell me that a third of their
    friends use drugs regularly from 8th grade on, and 75 percent
    occasionally.
        Now, that is just almost a----
        General McCaffrey. And 75 percent of what, Mr. Peterson?
        Mr. Peterson. Use it occasionally. You know, that have used
    or will use. I just find those numbers astounding and I press
    them pretty hard but in over my two-and-a-half years in
    Congress they have not changed. They just keep telling me those
    same figures, you know, a little bit different. Some will say
    25 and 70; other ones will say 35 and 80, and, so, it averages
    about that.
        So, it is there. It is everywhere. But I guess another one
    that I guess in your overall campaign some tell me that the
    cocaine today is 7 to 10 times more potent than it was a decade
    or two ago; is that true?
        General McCaffrey. Cocaine has never been cheaper,
    available and of higher purity probably than ever. And part of
    that is, you know, the supply has been modestly reduced, the
    demand is down substantially among a number of casual users.
    So, just on Economics 101, you know, there is 650 metric tons
    available, let us say we are consuming under 300 metric tons,
    and the number of us who are trying it has gone casually from 6
    million down to 1.7 million, there is more cocaine available.
    Now, they are peddling heroin along with the cocaine to get a
    new market.
        Mr. Peterson. Well, is it true that marijuana is, some of
    the marijuana today is 20 times more potent than it was back
    when the generation started using marijuana in this country in
    the 1960s?
        General McCaffrey. We probably have over-stated that and it
    makes me nervous. Yes. There is 12 percent up to as high as 24
    percent THC marijuana available. Canadian, hydroponically-grown
    marijuana, grown up in Vancouver and smuggled south is so high
    in THC that they are trading it a kilogram of pot for a
    kilogram of cocaine. So, that is atone extreme.
        The actual, when you go to the DEA signature analysis, to
    be honest, most of the pot seized is still 6 to 12 percent THC.
    So, I think what is the case is that you can tell a 16-year-old
    son or daughter, if you find pot out in the street the chances
    are it could be ferociously high THC and also, oh, by the way,
    it may well be mixed with other drugs. It may have PCP mixed in
    with it or cocaine.
        Mr. Peterson. Okay. Well, I am also told that in Western
    Pennsylvania where I come from, I mean it grows very well and
    that we grow some of the--some of the very potent marijuana is
    grown right where we live. And, so, the local stuff is pretty
    potent.
        But I guess, does our youth really know and do the parents?
    You know, I also find in schools that the kids are talking
    about they know friends who have parents who still do pot
    parties. And, so, there is drug use among parents.
        Do parents know that the drugs their kids are using are so
    much more potent than what they started on? I think that is
    part our problem. We have more of an acceptance with a small
    minority of parents but there are parents out there who are
    still using drugs and kids know it.
        But does the American public realize how much more potent
    drugs potentially are?
        General McCaffrey. Well, I think probably not. You know,
    your point is an excellent one. You have got to not only
    educate young people, you have to talk to their adult mentors,
    adult care-givers, et cetera, and you can do that. But part of
    this media campaign is aimed at--half of it is aimed at young
    people and the preponderance of that at middle school years.
    The other half is aimed at those who help youth form attitudes
    and you have to educate them. You have to say, look, you may
    have smoked marijuana in your life but your children, your
    employees, your work place needs to be drug-free.
        We got to educate parents on that.
        Mr. Peterson. But should not everybody know that what is
    out there is so much more potent than it used to be and so
    consequently it is so much more dangerous? I mean should that
    not be part of your advertising campaign?
        General McCaffrey. Sure. I think so. But, again, you know,
    even then I tell people that 72 million Americans, one out of
    three adults, have tried an illegal drug.
        And most people walk away from exposure to pot, booze and
    cigarettes. The problem was a lot of people did not. So, we had
    100,000 dead in the decade of the 1990s alone from drug use.
        We are trying to drive out the words, recreational drug
    use, soft drug use, casual drug use. I think the most dangerous
    drug in America is a 12-year-old-to-16-year-old smoking pot on
    weekends. Because that kid, 15 percent of them I actually
    believe is probably the number, end up dependent upon drug use
    by the time they hit the end of high school.
        That 15 percent is the problem that you and I will be
    dealing with 10 years from now.
        Mr. Peterson. I will take another round later.
        Mr. Kolbe. Okay.
        Mr. Price.
        Mr. Price. Thank you, Mr. Chairman.
        General, welcome back to the Subcommittee. I would like to
    start out talking about the HIDTA network, and I do that
    because, as you no doubt know, North Carolina has submitted an
    application to your office. I know you have spoken personally
    to our governor, Jim Hunt, about this. And as you know,
    Congressman Coble and I have written in support of the
    designation as well.
        Your budget references the huge increase in HIDTA
    designations since inception of the program in 1990--some 400
    percent, from 5 to 21 HIDTAs--and you also express the concern
    that you are reaching a saturation point in terms of managing
    that program.
        As a result, you have requested two additional FTEs for the
    HIDTA program, which would bring the total to four. Is that
    right? You also say that your office is ``improving the
    methodology for determining those areas in the country with the
    greatest need for inclusion in the HIDTA program.''
        What is the direction of that methodological analysis? And
    to what extent are these improvements being driven by resource
    limitations?
        General McCaffrey. Improvements in the----
        Mr. Price. In the methodology for choosing these designated
    areas?
        General McCaffrey. Well, we are working on a study which is
    long overdue and I trust will now be done by June, in which we
    tried to go to tie data to county-level geographic
    subdivisions. And to look at all the available data bases so we
    can determine in some systematic way how would we describe drug
    abuse in America geographically.
        Mr. Price. You are talking about county-level data as to
    drug use and drug abuse?
        General McCaffrey. Drug arrests, drug use, drug smuggling.
    So, there is a series of attempts. We are going to overlay one
    after another onto----
        Mr. Price. So, trafficking indicators as well as use
    indicators?
        General McCaffrey. Use, arrest rates, and we will try and
    come up with some way of talking about comparative drug
    problems. And right now it is very difficult to do that.
        One of the things we should not do is assume that thedrug
    problem in New York City is worse than in rural Pennsylvania. It may
    not be. It is terrible in Arizona, Idaho, Hawaii, Southern California,
    and in Baltimore. But you really have to see it in subdivisions. There
    is no national drug problem, there are only local community drug
    epidemics.
        Now, we need to make sure our resources go out to take that
    into account.
        Mr. Price. One can readily see the need for more
    sophisticated indicators and using these criteria in allocating
    funds. However, you are talking here about the saturation point
    in terms of managing the program, and you seem to be looking
    for some limitations in this proliferation of HIDTAs.
        Naturally we wonder what is driving that and to what extent
    it is a matter of resource limitations.
        General McCaffrey. Mr. Price, the only thing I am concerned
    about is we not take $180 million and divide it among 21 and
    then 31 and then 41 areas. So, that we lose some sense of
    concept, of strategic purpose.
        But I am supportive of the HIDTA program. I like what I see
    out there. They are modest dollars, $3 million, $9 million. You
    get into a community, Baltimore, New York, San Diego, Miami,
    the rural Midwest, and suddenly lots of things start happening.
        I am not sure the money is as important as the concept. I
    am sort of open-ended in being receptive to new thinking, but I
    want to make sure we resource it and then I need to go hire an
    accounting firm to watch the expenditure of this money or we
    are going to get in trouble.
        Like any good business, I have to take a percentage off the
    top and make sure I have auditors watching how these dollars
    are being spent. I have picked up some anomalies so far. ONDCP
    has a wonderful guy, Mr. Joseph Peters, a former Assistant U.S.
    Attorney in Philadelphia, helping me manage it. But I have got
    to watch how this money is spent or 5 years from now somebody
    is going to come back and tell you, we have some improprieties
    in the way we spent the money.
        Mr. Price. Well, certainly, no one is going to dispute the
    need for good, careful management, and I think you are very
    convincing when you are talking about not wanting to dissipate
    these funds over an impossibly broad area.
        At the same time, we want the areas that deserve and could
    benefit from the HIDTA designation to continue to be
    designated. We do not want to be bumping up against artificial
    limits in that regard. That is why I asked you the question
    about what extent this is resource-driven.
        General McCaffrey. I do not see a limit. The law right now
    tells me that I am supposed to certify the requirement. There
    was a danger last year and we reversed it, and I had Congress
    giving me the money by designation based on who had access to
    political authority. That is essentially what started to
    happen.
        I was not too concerned about it because I thought the
    designated areas that I was force-fed money tended to be ones
    that darned sure required a HIDTA. I had no problem with
    Dallas, Texas, with some of the other things that we did. It
    was a sensible move. But I do not want to just have this just
    be handing out, you know, political checks.
        The money is being well spent in the field.
        Mr. Price. Good.
        I will wait for the next round for further questions.
        Thank you.
        Mr. Kolbe. Mr. Sununu.
        Mr. Sununu. Thank you, Mr. Chairman.
        In response to an earlier question about certification of
    Mexico you spoke I think clearly about the growth in the
    relationship and the positive aspects of the relationship. I
    want to address the issue, though, from really the other side,
    and ask where are your areas of concern?
        How can the relationship be improved? Even though you may
    feel strongly about the appropriateness of certification, what
    areas have been lacking in that relationship with Mexico?
        General McCaffrey. Well, you know, I have spent, as I am
    sure several of you have, a lot of my life living overseas
    working in the international community, personally living
    abroad and most of the rest of it here in the United States
    helping organize it. So, I have very few, very little blinders
    on when it comes to dealing with what is possible in the
    international community.
        By the way, I also decry occasionally the creative
    hypocrisy of the United States, particularly on the drug issue,
    where it is our $57 billion and to some extent our guns going
    abroad that fuels an awful lot of the problem. You know, we do
    not use all the drugs, but our dollars do create tremendous
    corrosive damage on foreign governments.
        Having said that, Mexico is trying to--my analogy is that
    Mexico is more akin to Poland after the end of communism than
    it is to anything else. They have gone from a one-party
    dictatorship to where they are trying to construct a multi-
    party democracy and an international open, NAFTA-driven market
    economy.
        And in the process PRI has lost control of the lower house,
    half the State governors, the Mayor of Mexico City. They are
    approaching an election in two years. They have honest
    elections. They cannot get out of it now.
        Mr. Sununu. I am sorry to interrupt but my time is limited
    and I appreciate all of that transition and I certainly
    appreciate again the positive aspects of the relationship that
    you described before. As a member of this subcommittee I am
    trying to identify where the existing areas of weakness are so
    that we----
        General McCaffrey. Law enforcement, and judicial system
    institutions are inadequate for the purposes of Mexican
    democracy.
        Mr. Sununu. Is it a question of structure and organization
    and infrastructure in law enforcement or the judiciary or is it
    a problem with corruption?
        General McCaffrey. It is a problem of corruption, violence,
    lack of training, and inadequate pay.
        Mr. Sununu. Thank you.
        General McCaffrey. Training institutions. It is just a
    terrible problem.
        Mr. Sununu. Now, in a related area of the world where the
    United States is also involved, the Panama Canal will
    transition into the control of Panama this year. And my
    question is do you have any concerns or have you identified any
    issues with regard to that transition, either concerning
    control of the drug trafficking or activity within the Canal
    Zone or with regard to transportation and smuggling through the
    Canal itself?
        General McCaffrey. I am extremely sad about the way this
    has come out. I have been working on this problem for five
    years, it is going the wrong way. It is unfortunate. We have
    worked this with good faith and goodwill. I am disappointed in
    Panamanian political leadership which I do not think stood up
    for the interests of the region or for bi-national cooperation
    or for the Panamanian people.
        So, we are coming out lock, stock and barrel by December
    31st, this coming year. The Howard Air Force Base closes 1 May.
    The runway will be shut down. We are going to encounter serious
    problems on maintaining counter-drug cooperation in the
    hemisphere because of it.
        Depending on which figure I believe there may be
    substantial temporary reductions in our air interdiction and
    intelligence capability, which has been flying out of Howard
    with foreign officers aboard our aircraft, Peruvian, Brazilian,
    Venezuelan, Ecuadorian, Colombian, we are all co-located there.
        So, we have a real problem, that is the reduction in the
    U.S. capability to base military, Customs, Coast Guard and DEA
    operations in support of regional partnerships.
        I think the second problem is that Panama is directly
    threatened by their immediate neighbor, Colombia. They are
    directly threatened by these narco-guerilla forces that cross
    into Panama. There is a massive amount of drug smuggling going
    on through Panama right now. And their seizure rates are
    astonishing. It was over 11 tons last year.
        They are also struggling to confront money laundering, but
    they are in trouble. And having us gone, I would argue, is not
    good for the Panamanian people.
        But that is where we are.
        Mr. Sununu. In your testimony and in the documentation you
    have provided us, you speak about a great number of different
    programs and speak in very positive terms about a number of
    those programs. During your tenure, though, what can you point
    to or what have you seen that has not worked? Where have our
    efforts, not necessarily been misguided, but been of very
    limited effectiveness and efficiency and what are you doing in
    the budget request that you have presented to us, quite simply,
    to move away from those kinds of efforts and even away from
    specific programs?
        General McCaffrey. There is a lot left to be done, Mr.
    Congressman. You know, it is hard to know where to start
    because I have a bunch of things that I owe you and the country
    here over the next couple of years.
        There are a couple of them that are achievable. I am going
    to be disappointed if we do not pull them off. We need to
    better organize the Southwest border. I think this is a serious
    flaw. There are historical reasons, there are only good people
    involved in this. We have 15,000 Federal agents on the
    Southwest border, at 39 ports of entry. We are inappropriately
    organized in my view to handle this responsibility.
        Someone needs to----
        Mr. Sununu. Is that organization in a particular agency,
    through border control?
        General McCaffrey. Well, there is no agency in charge.
    There are four departments of Government that play major roles
    on the border and no one is in charge at any port of entry or
    across the Southwest border of integrating those efforts.
        And I think we are moving forward. We do have a study done.
    The Attorney General and the Director of the CIA and I
    completed an analysis of the intelligence system, and we are
    not done with organizing ourselves, but we now know who
    collects intelligence on drugs. And we know on what automation
    system, coms systems, who the users are and we have come up
    with a way to better it, so, law enforcement can be better
    supported by the best intelligence system in the world. That is
    part of the solution.
        The other one is that we have in front of Congress in this
    budget a lot of money for non-intrusive inspection techniques
    and the chairman knows a lot about this. Youcannot search 82
    million cars and trucks and find kilograms of heroin welded in the wall
    of the trailer or the rail car. So, we are going to deploy this
    technology. We need to organize that appropriately and not at a low
    level but instead get a decent-sized program going.
        So, the Southwest border is one threat we have not
    addressed adequately.
        There are a couple of other ones that are easily achievable
    in the two years we have got left that I hope I can deliver.
    Methadone maintenance programs, we need to rationalize the way
    we give our drug treatment community access to certain new
    tools. And it has got to be based on science, medicine, and
    still have good DEA oversight. I owe Congress an answer on
    that.
        I think we need to do better at managing drug prevention
    dollars. Our safe drug-free schools money I am 100 percent
    supportive of but I think I have got to find a way to have
    Congress change the law or get governors more forcefully
    involved so that fairly substantial programs, $640 million, so
    that we know the dollars, are being spent in accordance with
    NIDA-approved prevention guidelines and not on nonsense.
        Mr. Sununu. And that point, one last question, final
    question. There are in your own budget, I counted, 46 different
    streams of funding, agencies and programs. Is that too many? Is
    that too difficult to manage effectively?
        And is the concern you have about the safe and drug-free
    school program symptomatic of that? Are there opportunities to
    consolidate or join some of these programs together or
    strengthen them in the way that you described so that is not so
    cumbersome?
        General McCaffrey. Well, some of them do need to be
    integrated. And, Mr. Congressman, I think that is a good
    comment. Attorney General Reno and I are working and trying to
    make sure we rationalize HIDTA and OCDGTF. So there are some of
    these programs that need to have at least some nested
    relationship with one another.
        I think we are actually doing pretty well on getting a
    coherent integration of these programs from the Federal
    Government now. We have got the documents. We own the document
    on the table. The President, the Vice President and the cabinet
    have supported our leadership. So, there is a table to come to.
        The Congress gave me a lot of authority last year, so, I
    now can mandate cooperation on 5-year drug budgets, PMEs. I
    think we are getting a pretty sensible structure together now
    and there is a lot of goodwill to solve the problem.
        Mr. Sununu. Thank you.
        Mr. Kolbe. Thank you.
        We will try to hold the second round of questioning as
    close to the allotted time as possible and I will begin.
        I want to go back, and hope your answers will be short
    also, General McCaffrey.
        I want to go back, you mentioned the Southwest border. Our
    1999 appropriation mandates a study, requires a joint review
    and a plan submitted to the committee. What is the status of
    that study?
        General McCaffrey. We have not gotten the interagency
    process to agree. I am trying to think which ones. There were
    three requirements for me to report in the Southwest border.
    Which ones, specifically?
        Mr. Kolbe. This is the one that is to conduct a joint
    review with Treasury and the Attorney General to submit a plan.
        General McCaffrey. We have conducted a review.
        Mr. Kolbe. It is due next month.
        So, you are not behind schedule on this. I am just trying
    to understand if we are on track with this.
        General McCaffrey. It is likely that we will be before we
    are done with this. We have conducted such a review. We have a
    white paper. And we also have the intelligence review done and
    we have a paper on that. We are trying to get interagency
    agreement so that we can go to the President.
        Mr. Kolbe. It is supposed to be designed to show how to
    improve coordination with the agencies along the border.
        General McCaffrey. Right.
        Mr. Kolbe. And that is obviously of critical importance to
    us. So, if there were any preliminary results you could share I
    was going to ask you to do so. But it sounds like----
        General McCaffrey. The Attorney General, the Secretary of
    the Treasury, I, and Director Tenet are actively working to try
    and achieve a consensus to give to the President.
        Mr. Kolbe. The President's budget has $50 million for new
    border surveillance technology for INS but no funding to either
    continue the Customs technology initiative for the Southwest
    border or its money-laundering efforts on the Southern tier.
    Can you give me some idea what kind of suggestions or requests
    you made in terms of the budget to the President and OMB for
    Customs in this area?
        General McCaffrey. Mr. Chairman, I would be glad to outline
    the budget that I certified at agency level and then the
    budgets I certified at the department level before they went to
    OMB and show you what we were after. There is an argument that
    this tight budget has driven an inadequate understanding of the
    long-term payoffs of having a 5-year, adequately-funded
    coherent Customs and border patrol technology initiative on
    that border. We have got to get that done in the next year.
        Mr. Kolbe. Well, you spoke about the technology and the
    value of that technology and we raised this whole question ina
    more general way yesterday, or I did, with Director Lew. But it seems
    to be a tremendous disparity between the direction we are going on INS
    and Customs. And if Customs is our number one agency at the border on
    the interdiction of drugs, to not have any of the funding for the
    technology--unless you are here to tell me that we do not have any good
    results on that technology, that it is not effective.
        General McCaffrey. No. I think the technology is very
    promising. I would want us to be a little prudent as we do
    this. I do not think we are yet prepared to say what the 5-year
    program completely ought to look like but I share your concern
    about the Customs funding. And we are also going to have to
    watch how the Congress works on the Customs bill.
        There is a $400 million user fee in that bill. So, if that
    is not found compelling by Congress then we have got to watch
    what we are doing on funding the Customs Service.
        Mr. Kolbe. Okay.
        General McCaffrey. There are a couple of problems there,
    Mr. Chairman, that deserve public debate. The other one is that
    last year there was a supplemental that gave a giant amount of
    aviation machinery to the Customs Service. So, the question is
    do we wish to go to 30 P-3B aircraft, both AWACS and slick
    version, the second biggest air reconnaissance force on the
    face of the earth, bigger than the Russian Air Force, and how
    do we man it, train it, operate it? What is the concept of
    operation? Where are we basing these aircraft? Do we know what
    we are doing?
        And I would suspect, and some would argue that we do not. I
    told them go over and get a Rand Corporation, to hire a bunch
    of Air Force colonels and show me a concept on how they are
    going to use this unasked for machinery.
        But we are going to end up with a real embarrassment in 3
    to 5 years. If we want to do that, and I did not ask for that
    equipment, and we need to be able to explain to ourselves what
    we are going to do with it. That is one of the biggest Customs
    problems we are looking at.
        Mr. Kolbe. Thank you.
        Let me--I only have a minute or so left here--let me
    quickly go back, if I can, to the media campaign and ask some
    specific questions about how we are doing with the private
    sector match.
        You are supposed to have a timetable plan to get 40 percent
    corporate sponsorship-level and up to 100 percent by 2002. I
    understand you have a contract with Porter Novelli that is
    working on that implementation plan. Is there a plan and is it
    being implemented?
        General McCaffrey. Well, the immediate results, I remember
    the numbers, we got 107 percent media match. So, we are way
    over our goal already.
        Mr. Kolbe. Is that combining both what the media, itself,
    and corporate sector?
        General McCaffrey. In other words, we put this year's $129
    million----
        Mr. Kolbe. I mean the sellers. I mean an NBC giving you
    additional time? I think that is different than what the idea
    of the corporate sponsorships where you can get IBM to kick in
    some additional funds for this program.
        General McCaffrey. Well, let me give you a written document
    that answers your question. But the media match we have
    achieved and exceeded our goals. And we do have a conservative
    method, it will withstand audit. I have been adamant as I have
    gotten these briefings, both on--Bates/Zenith in phase 2, and
    now we are with a new competed contract with Olgivey-Mather and
    Fleishman-Hillard. But in both cases we have used a
    conservative way of measuring what we give credit to in the
    media.
        So, I think our results speak for themselves and we are
    getting the matching funds.
        Mr. Kolbe. I think we are talking a little bit past each
    other because I am not talking about the match program, I am
    talking about the corporate.
        General McCaffrey. Corporate-sponsorship.
        Mr. Kolbe. Yes, correct. But we will try and come back to
    that.
        Mr. Hoyer.
        Mr. Hoyer. Thank you.
        General, I was interested in your comment about the need to
    better organize the Southwest border. I thought Mr. Sununu
    asked some excellent questions in terms of dealing with the
    budget, which is sometimes not what we do here. But I thought
    he asked some excellent questions.
        Your response was, we need to better organize the Southwest
    border. My question to you is you have been in this post now
    for 4 years, sir?
        General McCaffrey. No. A little over 3 years.
        Mr. Hoyer. One of my concerns has been as you know, we
    somewhat casually refer to your spot as the Drug Czar. If that
    is the case, you are probably the weakest Czar that ever
    existed because you really do not have authority to tell people
    to do things, it is more of a coordinative role. And we did
    raise your authority a little bit last time, so, you do have to
    sign-off on the budgets and that gives you some influence. But
    do you have sufficient authority to affect a better
    organization of the Southwest border or a better organization
    of our drug-fighting effort anywhere?
        Everybody around this table has said we believe this is one
    of the critical problems confronting America. My concern has
    been, since 1988 to this date, that we have yet to give you
    sufficient authority to coalesce the various components that
    are spending the $17.8 billion so that it is aseffective as we
    can make it.
        General McCaffrey. Well, possibly not. My own view is that
    we seem to be making steady progress. There is an awful lot of
    goodwill by the Attorney General, Secretary of State, Secretary
    of Defense, et cetera. And the law enforcement guys cooperate
    extremely well. Customs, ATF, FBI, DEA, they have known each
    other, they like each other. I think we are moving ahead.
        Having said that there are institutional budgetary, turf-
    conscious struggles that will obviate the logic of an argument
    if we are not careful. There are separate congressional
    committees between the Customs agency and the INS. And, so, we
    are going to have to have an open discussion of what we want to
    achieve.
        I think they are moving, for example, in the Southwest
    border to implement second order improvements that are changing
    the world out there. We have made three years of steady
    progress. This is not STASA, where we argue about will we ever
    do something. The border patrol's manpower has gone up,
    technology is showing up, INTEL is getting better, Customs and
    INS now have a border management scheme at ports of entry that
    is better than it was before. So, you know, there is room for a
    belief that we are moving ahead.
        I would like to see us leave office in two years and hand
    over this operation having achieved some more. I think there is
    a couple of more big deals we can achieve this coming year with
    the support of Congress.
        Mr. Hoyer. I do not accept the premise that you are leaving
    in two years--I just wanted to not let that slip on the table
    for free--whoever wins the Presidential election, because I
    think we need a continuity.
        This is important enough an effort that it is taken you
    some time to just get familiar with the players. You were very
    familiar with the players in South America and Central America
    which was an incredible benefit to your taking this
    responsibility, but it takes time. As you know I am not a term
    limits fan and it takes time to figure out how you make it
    happen because it is not a simple as being, you know, the
    command that you once had where you could make things happen
    because it was a much more organized operation.
        I have two additional questions. The Drug-Free Communities
    Act, you are $8 million short of the authorization. We already
    have a letter signed by 485 members of the Congress. That is a
    slight exaggeration. But everybody is for this, and it is a
    great program, you are $8 million short. Why are we $8 million
    short and how do we make that up?
        General McCaffrey. Well, I welcome your----
        Mr. Hoyer. And is it worth the--I do not want to get you in
    hot water with the 485 members that have written to us--but
    this is a question similar to Mr. Sununu's, we have budget
    caps, we have got limited resources, should we put $8 million
    more in the Drug-Free Communities Act?
        General McCaffrey. Well, it is a tremendously useful Act.
    And the caution I have, and I welcome the debate of whether
    additional funding is required. There certainly is a strong
    argument for the program. We have got another burst of anxiety
    going right now, and it was not just based on the $22 million,
    it was based on this program as designed by Congress. My read
    of the law and the funding, is that it was to be seed money to
    expand the number of community anti-drug coalitions.
        So, we put out 93, if I remember correctly, grants last
    year. We are going to do a similar number this year. But it was
    not to be five years of guaranteed funding for each coalition.
    We were trying to expand the number of community coalitions.
        I am a little bit worried about it. I said we will not
    grant you five years of funding. You do not win a grant and get
    it for five years at $100,000. If you need matching funds, I am
    going to try to get you off Federal dollars so I can give those
    Federal dollars to start up other community coalitions. And
    right now, there are probably a couple out of 300 coalitions
    that are pretty aggressive in seeking these dollars. I do not
    blame them. But I do not see this program as another HHS block-
    grant program for selected community coalitions.
        I hope that we end up two years from now with a lot more
    coalitions in Arizona and in Maryland than we currently have.
        Mr. Hoyer. Well, we will be talking about that. I agree
    with you and I frankly think most of the members who have
    witnessed agree with the premise that you get people started up
    and then you wean them off. As a matter of fact, on the
    Republican side one of the criticisms of programs has been, in
    these grant programs, once you start them, you never end them.
        General McCaffrey. Right.
        Mr. Hoyer. And what you are saying is you have to do that.
    Last question, Mr. Chairman.
        As you know, I am an enthusiastic supporter of HIDTA and
    agree with you, 100 percent, it is not the dollars. The dollars
    are important. We ought not to dilute existing dollars so that
    we are giving smaller sums to existing HIDTAs so that we can
    fund new HIDTAs because that means they are relatively
    ineffective, the new and the old.
        Having said that, the Southwest border, as you pointed out,
    we have had some significant success. As a result, however, the
    information that I am receiving--I have not read the INTEL, you
    are much more knowledgeable--is that the pressure on the
    Caribbean has increased, in particular, Puerto Rico as an entry
    point to the United States.
        In that regard, I would like to have your response to an
    increased allocation of resources to the Puerto Rico HIDTA.
        General McCaffrey. Well, I think we have put a lot of new
    resources into Puerto Rico/Virgin Islands, both the HIDTA, and
    the DEA has a number of agents there, and Coast Guard presence
    has gone way up, ATF, border patrol, some brilliant leadership
    by Governor Rossello down there and his associates.
        Maybe more needs to be done. The----
        Mr. Hoyer. Excuse me----
        General McCaffrey. As of yet, there actually has not been a
    major shift in the tonnage of drugs through the Caribbean
    versus Mexico, Eastern Pacific. Most drugs still go into either
    the Eastern Pacific, Western Caribbean, Central America, Mexico
    and up into the U.S.
        A considerable amount of drugs do get targeted on Puerto
    Rico/Virgin Islands and because of some excellent work by the
    Coast Guard and the DEA, in particular, and that HIDTA, it went
    down and now they are going to Haiti/Dominican Republic, some
    to Jamaica. But that is about 15 percent of the total, so, we
    do need to watch Puerto Rico/Virgin Islands very carefully.
    They need our support.
        Mr. Hoyer. Before we get to do the markup, Mr. Chairman, we
    need to engage General McCaffrey about that because, again, the
    strength of HIDTA is not so much the money in it as the
    coordination it brings to the Coast Guard, the DEA, INS, FBI,
    and other law enforcement agencies, Mr. Chairman, I think we
    need to look at that because it is an area where we are seeing
    a growth in activity. And it is an area of opportunity for drug
    dealers. We need to cut it off.
        Thank you.
        Mr. Kolbe. Mr. Peterson.
        Mr. Peterson. Thank you, Mr. Chairman.
        Kind of picking up where I left off, I bring a rural
    perspective to this issue because of the size of my district
    and being very rural. And I also have a State perspective
    having been in State government for 19 years.
        And there, this was an issue I was always very involved in
    and I always looked at it as a three-legged stool, enforcement,
    interdiction and education and treatment. Now, I have become a
    believer that if there is the demand, they will get here
    somehow. I mean I am just not sure we will ever secure the
    borders.
        So, I guess I think our efforts need to be more on
    curtailing demand and, of course, that is expanding education,
    making treatment available to everybody that we know has the
    problem and that has not always been the case.
        But the issue I guess that I have moved towards, sort of
    reluctantly, at the State level we rewrote almost every law
    that had anything to do with catching drug pushers and we wrote
    all the laws. We gave very controversial power to some of those
    agencies that was debated heavily because we were giving them
    powers they normally do not have in our country and none of
    that has really stopped anything.
        But I think, personally, the one thing that I have hope in
    is--you know, I think the military, you understand it, had a
    lot of success with testing and bringing down the number of
    people that were using drugs in the military.
        I know there are States who have taken strong positions
    about testing all of the people that are in their prisons and
    they are having a very strong success there. Because so often
    we were dumping them back out after many years in prison with
    the same habit that put them there. And, so, if we do not know
    and cannot prove and cannot treat them, we are not going to
    solve that problem.
        Corporate America is, I think, moving fast. I know the
    National Chamber is pushing hard urging companies, helping
    companies to drug-test their employees. If you want a good work
    force then they need to be drug-free.
        I think it is time that we look at schools. Personally,
    there are some private schools that have been very creative and
    the one, I think, I heard of recently drug tests all of their
    students as they enter in September with hair tests which takes
    them through the summer. So, if they have had any activity in
    the summer they know it and then they have random testing
    throughout.
        What are your thoughts on a program to provide the capacity
    for schools to have mandatory, random drug testing if they
    choose?
        General McCaffrey. You know, Mr. Congressman, in a way it
    is a question I rush to avoid.
        And the reason I say that is it comes up a lot. New Orleans
    has a very aggressive good district attorney down there that is
    pushing this. It is my own view that the work place has been a
    tremendous payoff. I totally agree with you. But when you go to
    a work place EAP, employee assistance program, they have sold
    it to the work force, they have decided we want to work in a
    drug-free environment. It is easy to sell if it is dangerous
    work or driving trucks or installing machinery, flying planes.
        And once the employees buy into it, then they embrace it.
    That is the way we felt about it in the armed forces. You know,
    at my last official act down there, I was a Four Star General,
    the Command Sergeant Major and I took our drug test and then we
    went on TV to announce how proud we were to be part of a drug-
    free institution.
        So, in schools, if the local authorities, if the parents
    and the school leadership finds there is a benefit and it is
    easy to explain that to the football team or the women's
    swimteam where you say, we are relying on safety and competition for
    our school, then I think perhaps there is a tool.
        I am a little bit apprehensive about having rivers of urine
    tested when the linkage to what are you doing right now to
    engage young people between 3 and 7 p.m. is more likely to be
    the problem. Do you have a sports program? Do you support the
    Boys and Girls Club? Is the YMCA active in your town? Are
    ministers engaging youth in their religious programs?
        That is the bigger payoff than the drug testing.
        Mr. Peterson. I guess I do not see the relevance that
    athletes are something special. You know, some of our smartest
    kids are not athletes. Our future is not necessarily just
    athletes. I think every young----
        General McCaffrey. Well, you can explain it, in other
    words, easier to the football team than to the chess club.
        Mr. Peterson. That does not make sense to me. I do not
    agree with that argument. I happen to think, personally, that
    every child in our school is of equal value whether they are an
    athlete or not. We put a lot of relevance on athleticism. I
    think we put too much.
        But, I, personally, am convinced--and I have talked to a
    lot of young people about it and I brought it up at a lot of
    youth groups--if they had a reason not to smoke grass, they
    would not. But right now in many schools you are a nerd if you
    do not smoke grass. You are just not one of the kids.
        There are children in elementary schools who smoke grass
    before they puff on a cigarette. I mean that is scary. I mean
    it is not real common but it is happening. There are kids in
    middle school who smoke grass before they will smoke
    cigarettes.
        General McCaffrey. Oh, it is very common.
        Mr. Peterson. But when you look at the 14- and 15- and 16-
    year-old crimes in this country I have had a number, I have a
    15-year old boy who shot his 14-year old sister seven times. He
    had been a several-year marijuana user. And when his sister
    threatened him with exposing something he was going to do, he
    went and got his pistol and loaded it and shot her until it was
    empty. And it was in fine detail how he killed her over a
    period of 20 minutes and then tried to save her life when he
    called 911 and was sorry because he shot his sister. I think it
    was very related to his drug use over the last couple of years
    and going through those very difficult years.
        I, personally, believe that we need to have available to
    schools, with parental consent, drug testing money where
    schools can do random testing if parents approve and make sure
    there is a deterrent. I mean there is no deterrent today from
    using grass, marijuana, it is epidemic because kids are not
    afraid of it. They do not think it is harmful.
        They do not think it is any more harmful than cigarette
    smoking which they know has some health problems. But it is no
    worse and so many people do that.
        I, personally, think that we have to figure out some way to
    give kids a reason to say, no. And if they know they are going
    to get caught smoking grass at 8th, 9th or 10th grade, they
    will never get the habit. And they will be a little older and a
    little wiser, because you are dealing--this is down into the
    middle schools, where kids just are not very wise, street-wise
    yet and they do not realize what they are doing to themselves
    and their lives.
        They get a little older, a little more mature, a little
    more street-wise, and then they will have the courage to say,
    no.
        I guess I, personally, would love to further discuss with
    you sometime some kind of programming that would--because I do
    not think we are going to stop this epidemic until there is a
    fear in a child's heart that he is going to get caught at that
    young age and he is going to be marked and he will not want to
    be. He will not want that in his record.
        Now, the proposal I had would not be a crime in effect. You
    would notify the parent the first time. You would notify the
    parent and the school the second time. And then it would be
    utilized as the school and the parent would see fit. But it is
    like you can help them if you know.
        General McCaffrey. Yes. Well, Mr. Congressman, I agree with
    the overwhelming majority of what you said, and the age group
    you are worried about. When you ask kids who are not smoking
    marijuana how come? The dominant reason is fear of what my
    parents will say or do if discovered.
        Now, I might go about it from a different perspective
    though on the drug testing. I do believe in our country you
    have got to sell these programs locally as opposed to imposing
    them nationally. The couple of times it has been tried it has
    been a real uproar. No good came out of it.
        The football teams seem to be able to sell it. The NYPD,
    there are a lot of groups you can sell it to. But I am very
    sympathetic to your argument and I would like to hear more
    about it.
        Mr. Peterson. Thank you.
        Mr. Kolbe. Mr. Price.
        Mr. Price. General, I would like to follow-up on the line
    of questioning that Mr. Hoyer started with respect to under-age
    drinking, just for a moment.
        As I understand it, you regard under-age drinking as a
    serious problem that often leads to various kinds of drug use.
    You indicated, as I heard you, that you were satisfied with the
    place of under-age drinking in the advertisingcampaign at
    present. As I understand it, it is not included in the ads that your
    office places on the air directly. It is included in some of the pro
    bono match ads.
        General McCaffrey. And excellent work.
        Mr. Price. My information is that of the 21 ads currently
    approved, only two of those involve under-age drinking, with
    one maybe involving drunken driving. Is that correct?
        General McCaffrey. Let me go find out and I will submit it
    for the record. We went through this a few months ago. Mothers
    Against Drunk Driving were very concerned about it. And I think
    they probably had bad information but the person in the room
    who will know about this are the Advertising Council and my own
    people. So, I can give you an answer.
        Mr. Price. Well, I would appreciate updated and correct
    information on this, and also some indication of how prominent
    the under-age drinking Ads are likely to be in pro bono
    advertising. Is it simply one option among many in terms of
    what the stations can choose to run? How many times are these
    ads being run? Are they really going to have the desired
    effect?
        Assuming you believe that this, number one, is important,
    and, number two, ought to be a complementary effort to your own
    campaign, then I would like to know how you would assess the
    effectiveness of it, the centrality of it and the effectiveness
    in the context of this pro bono advertising.
        General McCaffrey. One of the legitimate concerns, I might
    add, that we had was that the paid advertising would dry up the
    media's willingness to sustain these other PSAs. Thankfully
    that has not happened.
        So, the Advertising Council has been very aggressive and I
    think we are still on track. There is a lot of access that has
    come along with this paid component.
        Mr. Price. Well, I know when we discussed this a year ago
    that was your hope, and you clearly put a great deal of
    importance on those pro bono efforts to complement what you are
    doing. And I think it is clear in terms of the kind of
    penetration levels we want to achieve that it is important and
    must be encouraged.
        In terms of your assessment of this campaign, to what
    extent does it involve testing the various creative ideas? I
    remember last year you showed us some ads that had been
    produced, and you talked with great enthusiasm about the
    partnership you had with various creative concepts people, and
    presumably not all of those work equally well. There is a need
    for continuing innovation here.
        To what extent does your assessment involve focus groups or
    whatever ways that you test the various creative concepts?
        General McCaffrey. Well, of course, the first and most
    important filter is the Partnership For a Drug Free America
    actually works with 200-plus advertising agencies and develops
    a lot of this material. We give them written guidance on what
    we need and their ideas eventually have to get vetted through
    an evaluation responsibility that my people, SAMHSA, NIDA, CDC
    and other agencies of the Government participate and I serve as
    chair.
        But they have a creative review committee that looks at
    this material before I ever see it. Then they bring it to me
    and we do put it through an evaluation component which includes
    things like focus groups. And by the way we are going to change
    it. Now, we have professionals doing it, Ogilvey-Mather. So, we
    are going to test their ideas, for example, not going to final
    form. It costs too much money. We are going to do the same
    thing that smart people in business do.
        So, we will try and test it in story board form and then we
    test them when they have been out on the air and if they do not
    work we pull them. And we have pulled some of these ads. We
    have also found the holes. We do not have enough billboards, we
    do not have enough print media. We did not have enough anti-
    marijuana use, adolescent, younger kids ads.
        And oh, by the way, it is not clear to me that Seinfeld is
    the way you go. Instead it may be Learning Channel, Fox Family
    TV, MTV, et cetera. So, we have got some very sophisticated
    people who will also place these products. And then evaluate,
    are they being seen, what is reaction to them, and are they
    starting to have second order effects? Does somebody call the
    number we put up there, yes or no. Those are measurable. Do
    they start to respond with other observable behavior. So, we
    will try and evaluate this very carefully.
        Mr. Price. So, those partnerships continue and there is a
    continuing flow of new material?
        General McCaffrey. Oh, absolutely. I just went to the
    second and third wave and some of this is absolutely
    spectacular what they are doing, what they are bringing in
    right now to show us.
        We have got a lot of hard work, though. The next year is
    going to be a tough one. We need to be in 11 foreign languages
    and 102 different media markets and we have got to listen to
    our own feedback loops as we do it. But we have got the right
    people who are now engaged in this. This is not six people
    working for me. These are three of the most sophisticated
    companies in the nation and they are excited about what they
    are doing.
        Mr. Price. Thank you.
        Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you very much and General, thank you. The
    last comments you made I think and as well as some of theother
    questions we were trying to get into with the media campaign suggest to
    me that we really do need to have an oversight hearing that really
    focuses on this media campaign and what has been done and what needs to
    be done.
        General, yes, go ahead very quickly.
        General McCaffrey. We do have a final phase one report and
    I think we have been remiss if we did not adequately explain
    that this is in print, it is out all over the country. And, you
    know, just reviewing the law, we did submit it. We have not yet
    obligated 75 percent of the 1999 phase two funds. We are in
    compliance now and we intend to stay in compliance.
        Mr. Kolbe. Okay.
        We will still have an oversight hearing because I think
    there are just a lot of questions about this media campaign and
    as you suggested we are going into a lot more spending on this
    and you said you have a hard year coming up in terms of getting
    this into the number of languages and stuff. And I think in
    terms of our budget considerations that it would be valuable
    for us to do so.
        Mr. Hoyer.
        Mr. Hoyer. Mr. Chairman, I know you have to go. Let me make
    a comment. You have an incredible array of people that you
    introduced at the outset of this hearing who are making a great
    impact in so many different areas.
        But I wanted to mention, in particular, that I am not
    objective because he is a very close friend of mine, but Robbie
    Calloway does extraordinary work and my experience has been as
    a parent that the peer group cohort is much more important than
    the parents. The parents are important. You have good values,
    set examples, and try to supervise properly.
        But ultimately if you have boys and girls together saying
    this is bad and, as Mr. Peterson said, we ought to say, no,
    that will be the most powerful thing that we can do ultimately
    after we educate them as to why the reasons.
        And, so, I want to say to Robbie Calloway, that he and
    thousands of people, hundreds of thousands of people around
    this country who make the Boys and Girls Club a haven and an
    educational force for productive, positive behavior is
    extraordinarily important.
        Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you.
        I know Mr. Forbes has some questions. I have a whole series
    of other questions and I think many members do which we will
    submit for the record.
        General McCaffrey. Yes, sir.
        Mr. Kolbe. The subcommittee will stand in recess until this
    afternoon, at 2 o'clock.

    [The official Committee record contains additional information here.]

                                              Thursday, March 25, 1999.

              OFFICE OF NATIONAL DRUG POLICY YOUTH MEDIA CAMPAIGN

                                   WITNESSES

    GENERAL BARRY MC CAFFREY, DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL
        POLICY
    DR. ALAN I. LESHNER, DIRECTOR, NATIONAL INSTITUTE ON DRUG ABUSE
    JAMES E. BURKE, CHAIRMAN, PARTNERSHIP FOR A DRUG-FREE AMERICA
        Mr. Kolbe. The subcommittee will be in order. We are very
    pleased today to welcome back once again General McCaffrey,
    who, as we know, is the Director of the Office of National Drug
    Control Policy. This morning we are going to be talking about
    the youth media campaign.
        We have had our regular budget hearing. This is a special
    oversight hearing on a very important topic, one of the more
    important things that I believe this subcommittee funds.
        General, let me just mention at the outset it was a
    pleasure to be with you yesterday for the launching of the AOL
    and ABC-Disney web sites. I think this kind of effort
    represents the best of corporate citizenship and cooperation in
    a long-term effort against drugs that I know you want to foster
    in this campaign, and I know that Congress wants to foster, and
    I think we all hope we will and we will continue to nurture.
        The hearing today is going to give us a chance to review
    the components of the Campaign to date, its funding, operation,
    reach and coverage of advertising and other efforts, and most
    importantly, an attempt to look at the evaluation of its
    performance. This last element is really what I am most
    interested in. I think it is the critical one. Measuring the
    impact of the Campaign is key to determining where and how the
    Federal dollars, as well as those we are going to get in the
    matching funds from the private sector, how those should be
    used.
        Dr. Alan Leshner, the Director of the National Institute on
    Drug Abuse, is going to speak on the evaluation of Phase III of
    the Campaign, for which NIDA will be responsible, and we will
    have him up here afterwards.
        The media campaign in its current form began with funding
    contained in fiscal year 1998 TPO Appropriations Act and
    continued with funding in the next year's, 1999 bill. But
    groundwork for this had been laid by the efforts made by Jim
    Burke and the Partnership for a Drug-Free America, in concert
    with the Ad Council and other groups supporting the use of
    public service announcements to go after drugs, and
    particularly drugs used by young people.
        Mr. Burke will speak today on this campaign, and hopefully
    give us some context on whether we are headed in the right
    direction.
        General, on March 3rd you said that ONDCP can't be
    micromanaged, and I tried to make it clear that certainly was
    not our intention. Our desire I think is very clearly
    nonpartisan and uncomplicated. All of us want to prevent kids
    from abusing drugs in the first place. If we can stop a kid
    from using drugs, we save enormous amounts in treatment and in
    law enforcement later on.
        Nonetheless, it is important that we exercise responsible
    oversight to ensure our confidence in and the impact this
    program is making and to support the significant investment
    that has been made and is going to be made in the future. So I
    expect we will have some lively questions today. I know we want
    to be able to pursue this in some depth.
        Before I call on you for an opening statement, and I think
    you may have some material you are going to show us, let me
    call on Mr. Hoyer for a statement.
        Mr. Hoyer. Thank you very much, Mr. Chairman. I am pleased
    we are having this hearing, giving General McCaffrey another
    opportunity, more expansively than he could in our budget
    hearing, to focus in on this very, very important effort on
    which we are investing a lot of money. I want to also join you
    in thanking him for setting up yesterday's event in which we
    conveyed to the public some exciting things that are happening,
    thanking ABC/Disney and America On Line and Disney for their
    participation from the private sector in assisting us.
        I said yesterday that the two most powerful communications
    mediums in the world today are television and the Internet.
    Clearly accessing those and providing sites or visuals on the
    television can have a tremendous effect on educating people
    and, hopefully, getting at the psychology of demand.
        Obviously prevention, as Rob Portman said
    yesterday,Chairman Kolbe said yesterday, and as you have made
    repeatedly clear, is absolutely essential. I think Rob Portman made the
    point that every law enforcement individual with whom I have ever
    talked and obviously he has ever talked and I am sure you have ever
    talked and the chairman has ever talked has said you cannot solve this
    problem by locking up people, because you will just keep locking up
    more and more people, building more and more jails. We have to stop
    people from using, and we have got to get at the psychology of use.
        I think your television ads are powerful for parents. I
    think in particular the ads which are directed at the great
    silence that exists between parents and children with respect
    to this issue are very, very useful.
        So I am pleased to see you here. I am pleased at this new
    effort, I am pleased to see Jim Burke here as well, President
    of the Partnership for a Drug-Free America, and Alan Leshner,
    Director of the National Institute on Drug Abuse. They are both
    with you, playing a critical role in this effort.
        General McCaffrey, over two years ago you came to us with a
    vision for a national media campaign that would change the
    attitudes of our youth concerning drug use and eventually
    reduce the drug use itself. Frankly, there were a lot of people
    who were very skeptical as to whether or not ONDCP, which was
    relatively inexperienced as it related to major media campaign
    groups, could undertake such a mammoth program and produce
    results. However, the evaluation and results of Phase I are in
    and you have exceeded your own aggressive goals.
        Specifically I understand your goal to reach 90 percent of
    the target audience with an anti-drug message four times a week
    was exceeded in every instance. We congratulate you on that. I
    might say looking at your former career, that really shouldn't
    surprise any of us. You have had a career of exceeding goals
    and expectations.
        But this is exciting news, not because it means that youth
    drug use has gone down, but because we are investing in a
    strategy that has promise to make that happen. I am aware that
    from 1996 to 1998 there was a leveling off of drug use rates
    which had grown from 1991 to 1996. That is good news. However,
    all of us in this room would agree that youth drug use is still
    far, far, far too high, and the consequences of that use
    continue to be far too devastating.
        Drug use can wreck loving families, individuals, husbands,
    wives, fellow business partners, all the consequences are far
    more expensive than the investment we are making. I think I
    want to make that point again.
        I was elected to the state Senate in 1966. Spiro Agnew was
    elected Governor that same year. He was an excellent Governor
    of Maryland, by the way. But in his inaugural address, Mr.
    Chairman, I think you may have heard me say this before,
    January, 1967, he said that the cost of failure far exceeds the
    price of progress. The cost of failing to stem the drug use,
    the cost of failing to divert people into positive lives
    unaffected and undebilitated by drug use will far exceed the
    price of our investment in that effort. I think we need to tell
    our taxpayers that because that is their money we are
    investing. It is a significant sum of money, but we are here
    today for you to be able to and for us to be able to
    communicate how well that investment is working and how well it
    will pay off in the long term.
        Mr. Chairman, I want to again congratulate you on having
    this hearing and congratulate General McCaffrey and ONDCP and
    all those in the private sector participating and giving of
    their time and talent to confront this insidious enemy that I
    said yet was both from within and without.
        Thank you, sir.
        Mr. Kolbe. Thank you. General McCaffrey, you may proceed.
    As always, of course, the full statement will be placed in the
    record, if you want to summarize or discuss other issues.
        [The statement of General McCaffrey follows:]

    [The official Committee record contains additional information here.]

        General McCaffrey. Mr. Chairman, thank you and Mr. Hoyer
    and the other members of your committee for the chance to come
    down here and lay out some of our own thinking and respond to
    your questions. I would like to underscore as strongly as
    possible our sincere appreciation for the manner in which you
    and others have helped shape this campaign. While I am very
    determined to be responsible for managing it and executing the
    will of Congress, I welcome the continuing consultation between
    those of you in Congress and your staffs. I think a lot of good
    has come out of that, and we look forward to continuing very
    close collaboration with you in the coming years.
        Let me also note, as you have already pointed out, the
    presence of your second panel, Mr. Jim Burke, Partnership for a
    Drug-Free America, and some of his senior associates, Dick
    Bonnette, the President, Mike Townsend, and the 30-some odd
    professionals at PDFA. I was just honored to sit through one of
    their creative review committee hearings in which they act as
    the critical arbiter between what is submitted and what is
    allowed to move forward in this campaign.
        I would underscore that the work we are getting out of PDFA
    is essentially pro bono. We are picking up production costs,
    but that cost is essentially 20 percent of what it would be if
    I were approaching this responsibility as the CEO of Avisor 3-
    M. So PDFA is not only our intellectual partner in this effort, but a
    tremendous lever to get corporate America to stay involved in the
    issue.
        Dr. Alan Leshner is here. I should note that Alan Leshner
    and the National Institute on Drug Abuse in general are really
    a treasure on how we go about this. This campaign is not just
    the artists and the creative people; it is bounded by a
    behavioral science panel. It is based upon scientific research.
    Essentially, the NIDA prevention guidelines form the going-in
    point as we devise this campaign. He will explain his own views
    on it. We have asked him to organize, along with a contractor,
    Westat, the Phase III evaluation, but he and his associates are
    going to be key factors in how we design the Campaign.
        The Advertising Council is here. Ruth Wooden has provided
    absolutely brilliant leadership in a very crucial aspect of
    being the clearinghouse for our national public service
    announcements. She is represented here today by Stephanie
    Greenberg, the Vice President and Campaign Director, and we
    thank her for her support.
        The American Advertising Federation is represented here
    today. They have been doing, as you know, pro bono ad screening
    in the local markets. Perhaps most importantly we have present
    General Art Dean and Sue Thau and others from the Community
    Anti-Drug Coalitions of America. At the end of the day, the
    problem gets solved at community level. So the power of these
    advertisements in many cases is to not only provide information
    and education, but to get people involved. So we thank them for
    their participation.
        I have asked some of our contractors to be here today. Paul
    Johnson, the Regional President for Fleishman Hillard, is here,
    along with Rob Gustafson. From Ogilvy & Mather, Shona Siefert
    and Dan Merrick are present.
        I should note that Bates & Zenith Corporation provided
    absolutely superb support to us in Phase I and II, and that
    Porter Novelli provides continuing engagement in acting in some
    ways as my own intellectual quarterback to watch the various
    forces at play. We are very impressed by their energy, by their
    talent, and, beyond the fact that they won competitive bids
    which will be subject to reevaluation each year, I think they
    bring a genuine personal collective commitment to it that is an
    inspiration to many of us.
        We have some of our attentive communities here today, and I
    thank them again for their continuing oversight and support:
    Johnny Hughes from the National Troopers Coalition; Dean
    Keuter, National Sheriffs Association; Jim McGivney from DARE,
    the biggest, most successful prevention program for young
    people in America; Jim Kopple, the Crime Prevention Council;
    Liz Pearson, National Criminal Justice Association; and Sandra
    Edgecomb from NOBLE, the Black Law Enforcement Officers
    Association. We thank them for their involvement.
        Prevention and treatment constituent groups, such as
    NASADAD, are here. As you know, an awful lot of our Federal
    dollars from the $17.8 billion budget goes to States and
    territories, so Jim Gustafson and Kathleen Sheehan from NASADAD
    play a key role. Bill Novelli is here from Campaign for
    Tobacco-Free Kids, and Dr. Linda Wolf Jones from Therapeutic
    Communities of America. We thank them for their engagement.
        With your permission, Mr. Chairman, I would offer for the
    record not only my written statement and the associated
    briefing charts that I will very quickly run through, but also
    a series of letters and statements for the record. I won't
    outline them in detail.
        First and most importantly, I asked Secretary Donna
    Shalala, my partner in all of this, to provide a letter to
    outline her own views. She, in many ways, is a dominant factor
    in how I view this ongoing effort. With the Center for Disease
    Control, the Surgeon General, the National Institute of Drug
    Abuse, the Substance Abuse and Mental Health Center for Mental
    Health and Services Administration, she has been a tremendous
    partner. I have asked her to write a letter to you, as the
    Chairman, explaining her views.
        There are also statements for the record from Ruth Wooden,
    the President of the Ad Council, and Dr. Herb Kleber from the
    Center for Alcohol and Substance Abuse at Columbia University.
    He, Joe Califano, and others are really an enormous resource to
    us in staying engaged in the problem.
        Finally, there is a series of letters. Just as a sort of a
    sampling, the National Crime Prevention Council, National
    Committee to Prevent Child Abuse, Save the Children, and
    President's Council on Physical Fitness and Sports and others
    [Clerk's note: agency insert, ``sent letters concerning the
    media campaign.''] I mention these because there are literally
    hundreds of NGOs who, properly so, watch what we do carefully
    and are providing advice and counsel and indeed feedback, as
    the Campaign unfolds. With your permission, I will offer that
    material for the Congressional Record.
        [The information follows:]

    [The official Committee record contains additional information here.]

        General McCaffrey. If I may, I will very quickly run
    through a few charts and talk about them briefly. If I may, the
    first chart, again, probably the fundamental assertion that we
    hold valuable to this campaign, is that attitudes drive
    behavior. It sounds like a commonplace assumption. We have
    decent historical data, 10 years or so, out of the Partnership
    for a Drug-Free America. It is sustained by other credible
    studies that show as youth attitudes change, as they encompass
    a stronger disapproval of drug use and a sense of danger of
    personal engagement in drug use, then drug taking behavior goes
    down. Whenever the opposite happens, it goes up. Obviously, a
    piece of that is this 1 percent of the Federal counter-drug
    budget that we are devoting to this attempt to communicate to
    America's children and their care givers using modern media.
        So we underscore that. We saw a tremendous increase in drug
    taking behavior; the attitudes probably started to change
    around 1990. Drug taking behavior started up in 1992. In the
    last two years, we have seen a modest but encouraging change in
    attitudes and indeed a change in drug taking behavior. We are
    talking 1 to 2 percent, but instead of going up, it went down.
    If we keep at it for a decade, intelligently listening to our
    own feedback, we believe we can achieve dramatic reductions of
    more than 50 percent. That is the fundamental hypothesis that
    drives our effort.
        The next chart is complicated, but let me just state, this
    is an enormously complex but carefully designed campaign effort
    undetaken by hundreds of professionals. We started with five of
    us in ONDCP and 30 of us in PDFA, but now we have the power of
    some of these enormously sophisticated industries behind us;
    that is, one of the reasons I wanted them in the room today. We
    do have from Phase I a considerable body of evidence in two
    reports that I know your staff has gone over, along with the
    GAO. The reports show when we did our first 6 month test in 12
    cities, with 12 control cities, and said do these ads, which
    are really off-the-shelf material, and asked can you hear them
    and did you see them; the answer was yes. I will talk about
    that in some detail. But that was the going-in basis.
        We have two documents I want you to be aware of. One of
    them I know you have probably read is the National Youth Anti-
    Drug Media Campaign [Clerk's note.--Agency adds
    ``Communications Stragety'']. This is the strategic framework.
    This is what we tell the industries we are working with is
    their guiding organizational concept. It was written by ONDCP,
    PDFA, and Porter Novelli Corporation, which has enormous
    experience in public health issues. In fact, they are our
    contractor to help us write that. That is the strategy. Then we
    needed to develop the tactics; and that was done in a very
    thorough manner, to produce an integrated communications plan.
    That is how we deal with the day-to-day rules of organizing a
    5-year, $2 billion effort.
        Fortunately, there is an executive summary. But these are
    the tactics of it.
        Having said that, that is only the tip of the iceberg,
    because what we do on a periodic basis is sit down and listen
    to professionals like Bates & Zenith in Phase II and now Ogilvy
    Mather and Fleishman Hillard in Phase II and III, and we talk
    about the media buying plan, the placement plan, the monitoring
    of these ads, and the testing of the ads.
        What you are looking at, I should stress, is an integrated
    communication campaign based on six different components. Some
    of them are visible, exciting, and fun, particularly if you are
    14 and an African American young guy, or you are 16 and native
    American female on a reservation, or if you are Hispanic in the
    L.A. Basin. You are seeing the paid advertising. We will talk
    about the frequency and reach of that.
        We have to remind ourselves it is much more than that. It
    is also interactive media, as you saw dramatically demonstrated
    yesterday, with America On Line bringing out this talk to
    parents, providing them a resource, a community, and Disney-ABC
    communicating to children. It is also the entertainment
    industry, both PDFA and us, out there providing tutorials based
    on Dr. Leshner, PDFA, and others. If you are going to use drug
    abuse in your entertainment, in your depiction of life as art,
    then make sure it is realistic. So we have said there is no
    First Amendment issue here with us. We encourage you to have
    drug abuse as part of your depiction of American life, but make
    sure it looks realistic.
        I might add in a couple of weeks we will share with you our
    analysis using another contractor, Media Scope, on how drug
    abuse, alcohol abuse, and cigarette use is depicted in music,
    film, and TV. We are going to try to keep track of that,
    because we think that is another important aspect.
        We also know we have to do partnerships, whether it is the
    4,000-some odd coalitions that Art Dean represents, or Boys and
    Girls Clubs, or PDFA. We know we have public information news
    media challenges. One of them is working with the power of the
    American press. Do we make our case in reasonable terms, yes or
    no, and stay in the story.
        Finally, we have a tremendous effort in corporate
    participation. We will release a contract in May where we are
    going to hire somebody to help orchestrate this participation,
    which I might add you have wisely mandated in the law to
    increase corporate involvement in the media campaign.
        Finally, you know we are talking to three audiences. We are
    talking to youth. That is half of it. A good bit of that needs
    to focus on the middle school age group. We are also talking to
    parent audiences and influential adultaudiences. Those are the
    three targets of the whole campaign.
        Finally, of course, you will want to question us about how
    we are going about evaluating the campaign. Evaluation is on
    two levels. One is I need steering instructions. I have to make
    sure we modify our behavior throughout this campaign so that
    what works gets reinforced and what doesn't gets pulled.
        Finally, I think we have to document it, because I would
    argue this is going to be a 10-year effort we will then want to
    rediscover and start over. So the evaluation is a sophisticated
    approach and it is being done by several different groups.
        Let me briefly talk to the next chart. If you and I were
    involved in a corporate effort trying to sell a new product in
    a cold market, we would say ``I want as my private branding
    standard a 17 to 28 percent increase in the awareness of my
    ad.'' That is what we would be after. I think the graph on the
    right is probably overstated, but as we look at four of our ads
    in the 12-city test market, in general across those ads, among
    different target lines, kids, parents, and care givers, the
    increase in awareness was within the range of the private
    branding standard. But to show the drama of it, it was as high
    as an end result of 68 percent ad awareness.
        This figure is a little bit off because there was
    considerable awareness on some of these ads in the target
    cities already, but the bottom line, clearly demonstrable:
    ``yes, we saw the ad and we had a reaction to it.''
        The right side of the chart, we went into it, as
    Congressman Hoyer mentioned, thinking that four times a week,
    90 percent market penetration was a standard. That is based on
    some pretty good work by PDFA. They really went to 1991 as a
    base year when things were going right, when they were getting
    over $300 million a year in PSA access, and things were moving
    in the right direction. They said maybe this is a standard if
    somebody was trying to sell Nike shoes to teenagers; it looked
    like that was about the right answer. I think I owe you a new
    look at that by next year--what should our standard on reach
    and frequency be? But that is where we went into it, four
    times, 90 percent. We are hitting, as you mentioned, about 7
    times and up to 95 percent. In certain subpopulations, such as
    African Americans, we are doing much better than that. It is
    astonishing. Part of that is clearly the cooperative response
    out of the media. That is far more than our money at work. That
    is a creative response by the media.
        Next chart. To underscore the success with some of these
    subpopulations, Ogilvy & Mather has 10 subcontractors of
    cultural ethnic diversity firms, such as Hispanic-American,
    African-American, Alaskan native, and native American. We tried
    to get people who have experience in communicating with
    subpopulations. They are doing a great piece of work.
        Before we are done with this we will have ads in 10
    languages besides English. When we started doing Spanish
    language advertisements, it was astonishing the reaction we
    got. The number that sticks in my mind is from 4 phone calls a
    day to Donna Shalala's clearinghouse to over 60 an hour. As you
    can see, we are doing almost 5 ads a week in Spanish to a 16
    million target population. We are doing even better in the
    African-American and general population.
        As you look down at the bottom, one of the things Alan
    Levitt, who organized this for me, is probably most proud
    about, is when we started this, we put $1 million into African-
    American owned media. We are up to $33 million in that program
    now. That is both paid and pro bono, half and half. So we have
    a very dynamic focus. We are the largest governmental
    advertiser in African-American newspapers and we are one of the
    leading advertisers in Black Entertainment Television. So this
    is a story that all of us ought to feel very good about.
        The next chart shows some numbers. We diced these away last
    night every which way but loose. Let me attempt to explain it
    to you at the top line. You gave us $185 million. We got $217
    million in some kind of corporate or matching payback. That is
    pretty good. And it wasn't throw away time. It is not 2 o'clock
    in the morning. In addition, we are measuring that $217 million
    in a very conservative, circumspect way. Some of it is probably
    of much more value than the value we assigned to it. I don't
    have time to show you today some of the story content that we
    have gotten into play on NYPD Blue and ER, et cetera, where we
    have a very strong, science based message out. But bottom line,
    that is where we ended up. We received 102 percent matching if
    you want to target it against the output function of the $165
    million. We received 109 percent matching if you want to talk
    about broadcast matching.
        So the bottom line is they are responding to us in a pretty
    impressive manner. $42 million corporate payback. That is the
    overall view of it.
        Finally, I would like to talk about our partners. This is a
    representative sample. These are some of the famous names in
    the business. There are more than 2,200 different media outlets
    that are using our material. There are literally hundreds of
    coalitions who are directly involved in this effort. Some of
    them play an enormous role as co-quarterbacks: the Ad Council,
    PDFA, et cetera. Others, like major league soccer, for an
    example ??? of 100 sports teams in baseball, swimming, major
    league soccer, the NBA, and football, and others that are
    partners in this effort [Clerk's note.--Agency amends this by
    deleting ``major league soccer''].
        So I would suggest to you at the end of the day, that maybe
    the best aspect of it. We have these communities fairly well pulled
    together.
        Let me show you a quick example, Mr. Chairman, if I may.
    This is under 3 minutes of 18 different ads produced by our
    media partners in 7 major television networks, some of the work
    that is on the air. Go ahead.
        [Tape.]
        General McCaffrey. The numbers as we look at Phase II are
    staggering. I gave you the reach and frequency numbers, but it
    turns into other numbers like 203 million impressions, banner
    ads on the Internet, 14 million-plus different public service
    announcements that you could have seen if you were in a movie
    theater, watching television, listening to the radio, looking
    at a billboard as you drove by on the highway, reading
    magazines, reading newspapers, including in Spanish or on a
    native American reservation. We have been out there. Probably
    the best news that I would report to you is that Phase III ads
    are now under development by PDFA. I have already signed off on
    the next two generations of story lines. The work that is
    coming along is powerful. It will resonate with the target
    population, and it is scientifically correct.
        Mr. Chairman, I thank you and your committee for your
    leadership and support. We look forward to responding to your
    questions.
        Mr. Kolbe. Thank you, General McCaffrey. I think this is a
    good beginning here, and I think there will be a lot of, as I
    said at the outset, some spirited questions here.
        I want to begin in my time here with just a few questions
    dealing with the performance and evaluation. Maybe I should say
    at the outset, I think that there are two ways in which
    perhaps, at the beginning, we could conceive of this campaign
    going. One is to just move on a continuum all the way through
    from Phase I to Phase II to Phase III, and perhaps another, and
    this may be at the heart of what this hearing is about, but
    there may be some--misunderstanding isn't even the right word,
    but there may have been more of a focus of some of us in
    thinking that maybe there was going to be a pause between the
    phases as we evaluated them and decided where to move from one
    to the other.
        But whatever it is, let me just try to focus on some of the
    evaluation issues. We just got the report a few days ago, this
    is report number 2. We had some discussion, I won't go into
    that, with the other one [Clerk's note.--Phase I, report number
    1], whether it was preliminary or whether we were supposed to
    have that report or no. This is labeled report number 2. But
    were there any methodological or data collection or analysis
    problems that affected getting this report completed?
        General McCaffrey. Surely there have been continuing
    discussions of challenges in these areas. We, of course,
    started this and got it going in a short period of time, so,
    for example, when we were collecting data, we had a great deal
    of difficulty getting data directly out of schools. That is one
    of the reasons why in Phase III we have gone to home-based
    sampling systems.
        So, yes, this was hard work to do it the right way, to make
    sure that we tried to get the baseline changes, even though we
    are using ads that have been seen already, so to some extent
    you have a contamination of what was there first and what was
    there after you did it.
        But having said all that, no, I think it was a pretty
    rigorous analysis. The findings are dramatic. If we were
    selling a commercial product, we would be very happy with our
    results. The first report laid that out fairly ably, and then
    the subsequent work in more detail substantiated our findings.
    So we are pleased with Phase I. The analysis for Phase II is
    well under way. It is very encouraging and I will try to have
    that report over to you shortly, probably by May.
        Mr. Kolbe. Well, you may have just answered the next
    question, but I was going to ask whether the fiscal year 1998
    appropriation requires that you report by October of this year
    on the effectiveness of the media campaign ``based upon
    measurable outcomes provided to Congress previously.''
        So I guess my question is, is there going to be any delay
    that we are going to see in completing Phases I and II
    evaluations that is going to impair your ability to provide
    measurable outcome evaluations by that deadline?
        General McCaffrey. No.
        Mr. Kolbe. So you expect to be able to have that?
        General McCaffrey. Absolutely, yes. Let me be quite clear,
    I think throughout this we are learning as we go.
    Notwithstanding this very sophisticated planning effort and
    notwithstanding our tools, Ogilvy & Mather and Fleishman
    Hillard know what they are doing. I expect we are still going
    to learn as we go, we are going to have to modify the Campaign.
    We have an Annenberg School of Journalism focus group
    evaluating our ads. We are going to pull ads if they don't
    measure up.
        So this is not a momentum on a given line of drift. We are
    going to change this as we go along.
        Mr. Kolbe. Do you expect the results that we are going to
    get in the evaluation this fall will be qualitative or
    quantitative or both?
        General McCaffrey. Both. Another caution, if I might, Mr.
    Chairman, in Phase I and Phase II, the measurement is primarily
    the message being seen. Even though as you look at how we
    designed that, that is a central component, you still get a lot
    of feedback on did it make you believe the message.So it is not
    just did you see it, but did you find it credible; did it make you
    think more about the dangers of drugs?
        But that is the behavior that we are measuring in Phase I
    and Phase II. The harder task, what you actually demanded we
    accomplish, is change youth attitudes and affect drug use
    behavior.
        Mr. Kolbe. Ultimately that is really what you need to do. I
    think you can take credit, and I agree in Phase I and II, the
    reach, how many messages we were getting out was what we were
    talking about. Ultimately it is like an advertising plan. Your
    advertising firm may say ``look at how many people get this
    message'', but if you see no increase in sales ultimately, you
    are not going to be happy with that plan. If we are not going
    to see any decline in the use, we wouldn't be very happy.
        General McCaffrey. At the end of the day, there will be no
    grade for style. It will be what effect did we have on youth
    drug taking behavior. I might add that those numbers, when we
    put them by slight declines, very positive declines in alcohol,
    tobacco, pot, and general drug use that we have seen last year,
    were unaffected by this campaign. That data was collected prior
    to the beginning of Phase II.
        I would argue that in the next two years, before we walk
    out of these offices and turn them over to the next leadership
    team, you should expect to see a definitive bite into the kind
    of malignant behavior we are concerned about. I am confident
    that is going to happen.
        Mr. Kolbe. That is a pretty good prediction. I obviously
    hope you are correct. Maybe that answers this question then
    before my time is up here as to why you moved so swiftly from
    Phase I to II. I am just wondering, did you have time to pause
    and breathe and incorporate anything you learned in Phase I
    into Phase II?
        General McCaffrey. Absolutely. The Phase II campaign was
    informed by Phase I, and the Phase III is absolutely based on
    feedback from the earlier work. Thankfully, Bates & Zenith did
    a first rate job and cooperated fully with Ogilvey Mather when
    they picked up the responsibility.
        Mr. Kolbe. This is not just a test, but I am wondering, can
    you give me an example of something you learned in those phases
    that you incorporated into the next phase?
        General McCaffrey. When we get a buyer-placer mechanism,
    like either Bates & Zenith or Ogilvey & Mather, it is not just
    TV time, 30 second ads. At that point you say here is a market,
    the way to get that market is using Spanish language
    newspapers, billboards, and radio ads. A huge drug problem is
    pot in adolescents. So we want to go to a billboard and use a
    pot in adolescence ad. Where is the material in there. That is
    one of the problems. So PDFA is in a heroic effort to get the
    tools we need to respond to and hand over to Ogilvey & Mather
    so we can go after our target. We are woefully short of some of
    these tools.
        Some of the work I saw yesterday in New York City, PDFA's
    creative review committee, goes after marijuana smoking, and
    why is it a threat to your development. That is one of the
    challenges. Some of the other challenges we ran into is you do
    have to recognize these audiences respond differently. If you
    are going to put an ad on in Guam, it can't talk about poison
    ivy. They don't have any. If you are going to talk about drug
    abuse in the Asian American community, there are certain cues
    that are more useful to resonate with your target audience than
    others. So there is a lot learned, I would argue, particularly
    out of Phase II.
        Mr. Kolbe. Thank you. Mr. Hoyer.
        Mr. Hoyer. Thank you very much, Mr. Chairman. Initially we
    started this program as I said in 1998, fiscal year 1998, and
    it was to run to fiscal year 2002, a 5-year plan. It is my
    understanding we are budgeting for a longer period of time than
    that.
        My question to you is how long a period of time do you
    think we need to contemplate--at whatever level we are, about
    the $200 million level or below that--for the media campaign to
    have its intended effect?
        General McCaffrey. That almost gets back to Mr. Kolbe's
    initial question, what is the hurry? The hurry is there is a
    danger of losing a generation. It was clearly moving in the
    wrong direction. We have literally hundreds of thousands of
    kids involved in self-destructive personal behavior, and it was
    going up.
        We have made an argument, which I think is a very sound
    taxpayer argument; if you get an adolescent American addicted,
    that is a $2 million bill over their lifetime. Maybe that is
    high or maybe it is too low, but it is about $2 million,
    including the damage they will do to their community, health
    care costs, criminal justice, et cetera. We said this is an
    emergency and we moved on it quickly. I believe it requires an
    emergency response at the beginning, and then we will drop to
    some steady state, preventative, prophylactic approach over
    time. That is tied to the fact that every year a new group of
    eight-year-olds shows up and we again ought to continue talking
    to them.
        I owe you an answer within a year or two on what the steady
    state ought to be. I don't know what the answer is. Maybe it is
    less than $185 million a year. But right now we are in an
    emergency.
        Mr. Hoyer. But essentially what you are saying is you have
    got to convince every generation that Coke is the real thing.
        General McCaffrey. Yes, sir, I think so. I think we did an
    excellent job in the seventies, with the revulsion inAmerica's
    cities, crack cocaine in particular, shocked everybody. We had to
    organize. Law enforcement got engaged, a lot of good things happened,
    and drug use plummeted. Then the conditions that created that outrage
    started to dissipate and our efforts dwindled.
        Mr. Hoyer. Let me have you comment on what I know Mrs. Meek
    is interested and maybe she has some questions on it as well. I
    asked you in the budget hearing about alcohol and tobacco, the
    legal substances, but which we know are either precursors of
    harder drug use or in and of themselves debilitating.
        What if any focus do you think we ought to have with
    respect to those two substances in this ad campaign or does
    that detract from the ad campaign, add to it? What are your
    thoughts?
        General McCaffrey. There is no question that alcohol abuse,
    primarily beer and wine coolers, is a disaster to American
    adolescence. In terms of car wrecks, teenage pregnancy, and
    vulnerability to physical assault, it's a disaster. It is the
    most widely seen illegal drug using behavior, underage
    drinking. We know we have thousands of kids, the number is
    3,000 a day, that begin smoking. So when they are 55, a third
    of them will die from it. So it is a huge social, medical, and
    legal problem to us.
        Analyzing the law, what you told me to do, we have decided
    the appropriated funds stay on drug abuse, which you have
    defined under the law as controlled substances.
        At the same time though, I think the good news is that by
    telling me to get at least 100 percent match, we have set up an
    advisory council which certifies groups and messages as
    contributing to a reduction of drug taking behavior among
    American youths, and we have included drug and alcohol abuse in
    that category. So the Advertising Council's work is going to be
    crucial to us. There is a huge increase in anti-alcohol ads and
    tobacco ads directed at young people which are in first rate
    time slots on the right media. Literally thousands of them are
    now appearing. I think they are going to do a lot of good. So
    Mothers Against Drunk Driving, Tobacco Free Kids, et cetera,
    should be encouraged and pleased by what we are doing.
        Mr. Hoyer. Mr. Chairman, I have no further questions.
        Mr. Kolbe. Mrs. Meek.
        Mrs. Meek. Thank you, Mr. Chairman. Welcome, General
    McCaffrey. I am certainly interested in the situation regarding
    youth and use of alcohol, and my colleague just mentioned a
    follow-up question to that. On page 16 of your testimony, you
    refer to the pro bono match component of the Campaign as
    helping public service efforts that target risk factors such as
    early alcohol use that make youth drug use more likely. You
    have often stated that the best way to prevent illegal drug use
    is to start with the drugs of first use, and that the drug of
    first use for most children is alcohol. In fact, the ONDCP drug
    site states that the later the children start to drink, the
    lower the likelihood they will end up using illegal drugs.
        You also state in your prepared testimony today that paid
    advertising has proven to be more effective than PSAs in
    communicating an anti-drug message.
        Given that alcohol is a gateway drug, why are the ads
    discouraging alcohol use not included in the paid media segment
    of the Campaign?
        General McCaffrey. I think your comment is right on the
    money. There is no question that the abuse of alcohol, if you
    listen to Secretary Shalala, the dominant problem among college
    kids hands down is beer, followed by marijuana. That is the
    reason they drop out of school, they get physically assaulted,
    and they get into these terrible lifestyle problems. So I have
    no disagreement with what you have said, Madam Congressman.
        The only thing I would add is that when Jim Burke didn't
    have the power of this program behind him, because of a lot of
    reasons, the economics of the business is changing. I don't
    need to talk to you about it, I know you understand that, but
    it is no longer three television networks, it is seven, so
    things are changing in the business. The amount of money behind
    his program was steadily dropping. I think it was worse than
    the dollar amount because of places they weren't reaching
    people.
        So we had a disaster going on. Now that we have got this
    appropriated component, we believe that the matching PSAs are
    appearing in the right publications, on the right shows, at the
    right times. So anti-alcohol ads for MADD and for cigarette
    smoking are going to have much more impact. I think we are
    going to start seeing that behavior change.
        Mrs. Meek. Having had long experience with PSAs,
    particularly when it comes to the communities that I serve, the
    stations usually put them on the back burner. If you have paid
    advertising, they put those ads up first, particularly in some
    of the smaller radio stations which really impact on the people
    I serve. The radio stations have been significantly important
    in terms of the messages being put out. Unless they get some
    paid advertising, it is very, very hard to make the message
    convincing. Also it sends a message to the minority
    communities. If you relegate them pretty much to PSAs and not
    to the paid ads, they get the feeling of the status that they
    have in this drug war.
        Now, we know pretty much, you have mentioned it in your
    testimony this morning, you mentioned African-Americans and you
    mentioned Hispanics. You want to try to go where youfind the
    problems as I perceive it. Many of the problems are there, the
    advertising has to be focused there, and I applaud you for your
    efforts. It is significant to me and very appealing to see that you are
    really doing this in a systematic way. I think it is well done, it is
    well documented.
        Of course, I know that unless you get to some of the drug
    cultures, maybe the hip-hop groups and those kind of groups,
    you are going to have a hard time infiltrating these kids at a
    lower level, particularly with alcohol as well as drugs.
        So I guess my appeal to you is to try to focus some of this
    on some of the problems you really are having and be sure to
    try to focus some paid advertising on alcohol as well as on
    drugs.
        I don't think I am reaching you though.
        General McCaffrey. No, you are reaching me. Our
    interpretation right now is that the law tells me to carry out
    our paid advertising against controlled substances, and I think
    if there is a different view on the part of Congress, I will
    absolutely be guided by it. I certainly don't disagree in any
    way with what you are saying.
        I would also underscore that we do have a tremendous amount
    of money going into Hispanic and African-American owned and
    targeted media. So we will be on African-American radio
    stations with significant dollars, and that will leverage their
    pro bono match. I find a great deal of credible response out of
    the media.
        Mrs. Meek. Mr. McCaffrey, do you seem to get the feeling
    that the intent of the Congress is merely to focus as far as
    children are concerned on drugs alone, knowing that alcohol is
    a drug? I seem to feel that you think that the Congress' intent
    is that. It certainly is not the intent of this Congresswoman.
        General McCaffrey. We asserted in the national strategy we
    wrote and submitted to Congress, that Goal One is targeting
    American adolescents on illegal drug use, alcohol and tobacco.
    I did that based on the fact that it was, generally speaking,
    illegal behavior--underage use--and I tried to tie it to Mr.
    Bill Bennett and the Bush administration as to why I was doing
    that. I put that in the Strategy.
        Having said that, the law, the authorization of the Office
    of National Drug Control Policy, was a 1989 law. We were just
    reauthorized last summer, thanks to your leadership, among
    others. I did petition Congress to include underage alcohol and
    tobacco use, and that was denied. So our own sense of it is
    that right now these are paid advertisements that you want me
    to target to control substances that are defined in the law.
        Mrs. Meek. I didn't get the answer I wanted, but sometimes
    I don't. I am trying to find out----
        General McCaffrey. I think you and I are on the same side
    of the issue.
        Mrs. Meek. I want to tie you down. It is hard to tie a
    general down, but I think I can try.
        Mr. Hoyer. If anybody can do it, you can.
        Mrs. Meek. I am trying to find out, are you going to put
    some money in paid----
        General McCaffrey. No. We are interpreting the law as
    saying that the paid dollars can go to target drug abuse under
    the controlled substance law.
        Mr. Kolbe. If I can, Mrs. Meek, and your time is well up
    here, but to reiterate, the law as this was reauthorized does
    say that the paid media, that money we appropriate, goes to
    prohibited, that is, illegal drugs. If we want to change that
    and do the gateway things that you are talking about, smoking
    and alcohol, then that would be something certainly Congress
    needs to reconsider.
        Mrs. Roybal-Allard.
        Mrs. Roybal-Allard. Thank you, Mr. Chairman. Mr. McCaffrey,
    let me just echo my support for what Mr. Hoyer and Mrs. Meek
    have said----
        Mr. Kolbe. Would you move your microphone towards you?
    Thank you.
        Mrs. Roybal-Allard [continuing]. What Mr. Hoyer and Mrs.
    Meek have said about the need to really focus more on anti-
    alcohol advertising.
        In my other life, before I entered politics, I worked in
    alcohol and drug abuse programs, and one of the things that
    came up over and over again in talking to people about how they
    got involved in drugs, very often it was at a party, they were
    drunk, they weren't thinking clearly, and someone offered them
    the drug, and they accepted it and used it and that is how they
    got hooked.
        It seems to me that even though the law is focused, as you
    said, on these illegal drugs, there may be a way of tying in
    the alcohol to some of the advertising to show that very often
    a kid who is using says it happened because they were drunk and
    weren't thinking clearly.
        There may be a way, until we change the law if it needs to
    be changed, to somehow tie that in. Because, there is
    definitely a connection, at least in the years that I was
    working with these addicts. Even adults who have started using
    cocaine, when you ask them, what were you thinking? They will
    say ``I was drunk and somebody offered it to me.''
        So there is a connection, and it seems to me there is some
    way, even under the current law, that you can tie thetwo
    together in your advertising.
        General McCaffrey. Yes.
        Mrs. Roybal-Allard. I want to point out one thing that is
    also alarming. It came out in the L.A. Times article of March
    21, where it reported that the incidence of alcohol abuse among
    Mexican American men has reached epidemic proportions,
    surpassing any other ethnic group. This is really a threat to
    Mexican American communities, particularly those like the ones
    that I represent.
        So there is definitely a problem there. I hope that you
    would consider maybe talking to those that work with you in
    terms of the advertising, about finding a way of tying this in.
        General McCaffrey. If I can, let me again, though, stress
    that the non-paid PSAs have gone from a throw-away factor to a
    consideration by these TV studios and radio stations, and they
    are increasing their frequency and the placement is improving
    and the Ad Council is screening their ads too. So you can't
    just spin one up and throw it into the hopper. You have to get
    through Ruth Wooden and the Advertising Council. So we have
    some pretty high quality work that you are going to see. One of
    the numbers I have in my data bank is $6.8 million in increased
    alcohol advertising, just at the start of this Phase II. It is
    literally thousands of ads are now on the air. I think your
    point, though, is a very powerful one.
        Mr. Chairman, yesterday I went to Roosevelt hospital
    complex, New York City, and I wanted to release the pulse
    check, this qualitative assessment of drug abuse in America,
    and then turn to emergency room doctors and ask them to talk
    about what really happens in America.
        The Congresswoman's point was reiterated by all three of
    these doctors. When you sit there, it isn't drug use, it is
    poly-drug use, and alcohol invariably is one major component of
    it. It is alcohol and cocaine, it is alcohol and pot, and it is
    not just the addictive potential. If I use a lot at age 14,
    will I be a 30-year-old addict. It is also the bad judgment,
    the vulnerability to sexual assault, and the car accidents that
    come out of it.
        I really think both your points are powerful. I support
    your viewpoint. It is a major problem in America, alcohol abuse
    by underage drinkers.
        Mrs. Roybal-Allard. Part of the evaluation of Phase III of
    the Campaign is going to involve a nationally representative
    survey of youth and parents from the same household, and it is
    my understanding that the survey will be conducted every six
    months to track the ongoing progress.
        Could you explain how the NIDA and ONDCP are planning to
    collect the data for Phase III in a way such that we will be
    able to gauge the effectiveness of the campaign in low income
    and minority communities?
        General McCaffrey. Dr. Leshner will address this in some
    detail. He and Westat Corporation have come up with what we
    believe is a very comprehensive and sound plan. It is a well-
    funded effort, too, as I remember, a $9 million piece of work.
    Fortunately, Alan Leshner will talk about not just documenting
    the affair, but a report coming out every six months, so we can
    come down to Congress and go to the news media and say here is
    your interim feedback, and then go to Ogilvy & Mather and
    Fleishman Hillard and ask them to adjust what we are doing. I
    think you will benefit more from Dr. Leshner's explanation. But
    this is a big database. This is a countrywide sample. It is
    extremely complex. It is not just kids and parents and adult
    care givers, but it will be a kid and a parent in the same
    household, so you can see the interplay between the two of
    them. It will be talking not just about attitudes, but
    behavior, drug taking behavior. I think it will give us an
    extraordinary powerful analytical tool to understand what we
    are up to.
        Mrs. Roybal-Allard. I would like to submit other questions
    for the record.
        Mr. Kolbe. Certainly.
        Mr. Wolf.
        Mr. Wolf. Mr. Chairman. General, welcome to the committee.
    I think you are doing a good job. I think your staff is doing a
    good job. I want to congratulate you. I don't know if you are
    going to be successful or not, but I think you are totally and
    completely committed, and if anybody can, I think you probably
    will.
        I do want to share though the same opinion that the last
    three members, Mr. Hoyer, Mrs. Meek and Ms. Roybal-Allard said
    with regard to alcohol. I would encourage maybe somebody may
    want to offer an amendment when the time comes up.
        Frankly, the Congress though can't cover itself with glory
    on this issue. There was not even the ability to get a vote in
    the House of Representatives on point 08. So I think that was
    actually a disgrace. I think it was something that we all,
    looking back on, whether it is political action committees,
    whether it is the power of whatever is going on.
        But I do think Mrs. Meek is exactly right though. I think
    not to deal with this issue--and I know you do. I pulled out a
    statement that you made at the White House back in January
    where you said as a general note, I frequently say by
    background the most dangerous drug in America today is still
    alcohol. You went on to say it is the biggest drug abuse
    problem for adolescents and it is linked to the use of other
    illegal drugs. So from the viewpoint of adolescents, we are
    quite concerned about reducing alcohol use.
        So I would urge you to maybe work with the chairman andwork
    with Mr. Hoyer and Mrs. Meek and Ms. Roybal-Allard to see if there
    could not be in the interpretation of the law some pilot project or
    some way to do this. Obviously there is not a lot of money, and I think
    the progress that you are making is important that we not dilute what
    you are trying to do, whereby we do neither of them very, very well.
    But there is a pilot whereby we could work together to see it.
        Could you give me some of your thoughts there? I have a lot
    of confidence in you. I really do. Again, like I say, I am not
    sure if you are going to be successful. Nobody knows. But if
    there is anybody putting his heart and soul into it, you are. I
    would feel comfortable knowing you could take the same
    experience, with the great team you have in the private sector
    and on the government payroll, to try this. Do you have any
    thoughts on that if the committee gave you that authority?
        General McCaffrey. We again did come to Congress and ask
    for the authority to include underage drinking and tobacco use
    as part of our legal mandate. I think it is unfortunate we
    didn't do that. There is even a larger argument that prior to
    coming out of these positions, that you should instruct the
    Director of the Office of National Drug Control Policy to deal
    with drug abuse, so it took into account not just the absolute
    nightmares caused by cigarettes and alcohol, but also things
    like the diversion of legal drugs, and the use by older people.
    30,000 people a year get into terrible trouble in retirement
    years by combining alcohol and prescription medicine. So there
    is a whole series of drug abuse problems that are hard to
    disentangle. It may well be the Congress should instruct the
    person in my position to handle just that question. That was
    not supported by the Congress.
        I will go back to Speaker Hastert, who has been a
    tremendous source of wisdom and energy on this issue, and
    discuss it with he and Mr. Gephardt and see what their views
    are. But, again, in the meantime, I think what we can do, and I
    will take all this to heart, is to go back and look at the
    matching component to ensure that we guide that with the same
    scrutiny that we do the appropriated funds. I think we are
    going to get a lot of energy out of this.
        Mr. Wolf. Thank you very much. The Speaker has been very,
    very good on the issue. If Mr. Hoyer, Mrs. Meek and others want
    to offer an amendment, I would be glad to help and work with
    them. I do appreciate your attitude too, General. I don't want
    to abuse my time. I would ask one other question.
        You pretty much are saying this really never ends. We just
    have to stay with this and stay with this. Do you have any
    sense, if there was one reason, why do you think it went up
    again? Is it the breakdown of the family? What do you think was
    the reason we were going back up?
        General McCaffrey. I have listened very carefully to some
    people who know what they are talking about. Dr. Leshner is one
    of them. Dr. Lloyd Johnson, the University of Michigan and UCLA
    has done a lot of work in this area. My own deputy, Dr. Donald
    Vereen, has done a lot of work on youth drug use and violence
    and the family. I think there are a lot of factors. The primary
    one for us as Americans I would suggest is we have very short
    time horizons. We got energized on a problem that was starting
    to destroy America in the 70's, drug and alcohol abuse. We did
    something about it, and actually it worked. The armed forces
    went from a disaster to a drug free institution. The
    transportation industry, nine million of us are now under drug
    testing. The Fortune 500 companies have drug testing. PDFA was
    created and got to work and brought the power of the media to
    bear. 4,000 community coalitions got on line. Len Bias died and
    shocked us, and our sensibilities. It worked. As it worked, it
    dissipated those social forces, those political dynamics
    sustaining the effort.
        A bunch of kids came along and they didn't know that
    snorting heroin would kill them. And, oh, by the way, mom and
    dad smoked a joint or two when they were growing up. They are
    not doing it now, they don't want the kids smoking marijuana,
    but they were ambivalent about the message. Then we saw the
    change in social dynamics in America. My two girls are
    professional women helping run America. I am glad for it. But
    now we have a different dynamic. Mom is not at home. So from 3
    p.m. to 7 p.m., it seems to me that you and I have to support
    the boys and girls clubs and the YMCA programs. We have to do
    innovative things with the school infrastructure so there are
    mentored activities for our children. We were not doing that.
    So the kids started getting into trouble. I think the more of
    them that experiment with these destructive drugs, the more
    likely they have learning problems, physical development
    problems, and crime problems.
        Ask our cops where the problem is. It is not where my
    daughter is as a 7th grade school teacher, it is when the kids
    leave her classroom. But we have an organizational challenge
    and a communications challenge to us.
        Now, this is just a tiny program. This is less than 1
    percent of our Federal dollars, never mind our State and local
    efforts. The big answers will be in community action, but we
    can certainly use this tool to stimulate responses by other
    groups. We have got now 42 of the great civic organizations of
    America that came together and committed themselves to work on
    young people and drugs. 100 Black Men, Kiwanis, Rotary, they
    are there. They are starting to get moving on that now. So I
    think there is some good news.
        But the problem will be when my daughter is back here in a
    decade testifying in front of this committee as drug czar; will
    she have sustained and reinvented the prevention education
    effort? I don't think it will be at a knowledge level though.
    This will work.
        Mr. Congressman, I would argue that we are extremely
    confident that what we are doing absolutely will pay off. It
    isn't two years, it is a decade-long program. You should expect
    drug abuse in America to go down, and we will save us money and
    we will reduce crime. I am very confident from listening to
    these professionals around America that this absolutely will
    work.
        Mr. Wolf [presiding]. Thank you, General. I am pleased you
    are there, and I was concerned, I saw the article in the paper
    a couple months ago about the possibility of you going to the
    American Red Cross. I thought that would have been good for the
    Red Cross, but I think to have someone leave in this time. So I
    sense by what you said, you are here through the end of this
    term, and I am really glad you are there. I want to thank you
    and the people in the private sector helping you.
        Mrs. Northup.
        Mrs. Northup. Thank you. I, too, want to thank you for a
    campaign that seems well organized and well focused. I have to
    tell you, I have had many conversations with my kids about the
    effect of advertising and tobacco use and the rise of teen use
    in tobacco, and they insist that no advertising ever affects
    them. Of course we know that is not true and we know that it
    has a profound effect on them.
        But they want to believe that they are too sophisticated to
    be engaged by something like advertising. So I would not
    discount in your focus groups as you hear kids say oh, ads
    don't affect me. You probably hear that occasionally with kids,
    but we all know they do affect them.
        The one ongoing conversation that seems to prevail among my
    kids, who luckily are almost out of the teen years, is that
    their friends and the conventional wisdom that surrounds their
    schools are that drugs don't really harm you, that the effects
    are inflated.
        When I ask specific questions about this, they tell me that
    their friends say well, there is no hangover if you smoke pot
    instead of drinking, that you actually can learn faster and
    better and retain information. There is sort of a series of
    things that repeat themselves. They come from more than one
    high school, from more than one college.
        I believe that we have to appeal to kids, both their heads
    and their hearts. Their hearts, their feelings make them not
    want to smoke or use drugs. I think the ads are really good in
    that area.
        But I am concerned that we also don't provide the mass
    information that they really do harm you, that this isn't like
    what adults have done to scare you to death, to not want you to
    do something that really is not that harmful.
        If kids don't think it is harmful, then generally they
    think they can handle it. It may have hurt somebody else
    because then it escalated on to something else, but generally,
    if you take a poll of any teenager that smokes, the polls show
    that 90 percent of kids that smoke do not believe this time
    next year they will be smoking. They will be different. They
    can handle it.
        Likewise, with drugs. I just wondered if you could sort of
    address the balance between appealing to their hearts and their
    minds?
        General McCaffrey. It is a very important point you make.
    The public ethic of young people today is worse than our
    numbers indicate. Because I talk to these groups all the time,
    high school and grade school kids, and the dominant public
    discourse will sound to you strongly pro-pot. Now we get into
    our numbers. We have some good understanding of what kids are
    actually saying to each other and themselves. They have
    anonymity when they respond to certain types of surveys.
        There is a lot of reason for optimism here. Young people
    listen to their parents. They listen to people they trust and
    respect. So even though they are in this awful adolescent era
    in rebellion, when you look at their behavior and say how come
    you are one of the people saying you are not using drugs, the
    dominant response is, I am fearful of what my parents will do
    or think if I am discovered. Then you say did your parents talk
    to you about drugs? Then you get these discrepancies where
    twice as many parents remember communicating as kids remember
    hearing. So the communication process is not adequate, big guy
    to little guy.
        Another snapshot, and I don't mean to borrow Jim Burke's
    work, but I read his statement and he has one chart that I used
    at the President's budget appeal group last year. Chart number
    one was a Harvard study that said what is the biggest problem
    in America according to parents? And the answer is their
    children and drugs. Hands down. That is what mothers and dads
    are worried about. The second chart I used was a study that
    said what are kids worried about? The dominant reason children
    are concerned about aspects of their lives is drugs, number
    one.
        So what they are saying when they are talking to me as 600
    presidential callers here in a hotel is quite different from
    the anxieties they got in their life. They want to hear
    realistic feedback. They don't want to hear they will die at 56
    of emphysema. They do want to know their athletic abilitywill
    be impaired, as will their attractiveness to the other sex, and so on.
    We have a responsibility to appeal, I agree, to their sense of
    vulnerability.
        Mr. Norwood. We also need to effectively counter the
    conventional wisdom that they pass around to each other. If you
    are a user of drugs, then when you have a friend that says why
    are you doing that, they can't be left out there with not
    enough--they have to know that if they say well, it doesn't
    really hurt you, that that information is emphatically wrong. I
    am afraid there isn't enough information also. I don't mean to
    say that that would do it by itself, but it is just a component
    that is important.
        General McCaffrey. I think you are entirely right.
        Mr. Kolbe. Let me just say here, you have heard the bells.
    We have two votes, a vote on the previous question and a vote
    on the rule, so we are going to have to break. But we have a
    couple of minutes. Let me see if we can finish General
    McCaffrey. I understand Dr. Leshner is going to have to leave
    us anyhow at I think 11:45. So we may not get back to you. We
    will try if we can get back in time and get a couple of
    questions in.
        Mr. Hoyer. With all due respect to Dr. Leshner, it is not
    going to happen we will get back. We have two votes.
        Mr. Kolbe. We will come back immediately when the second
    vote starts. I will come back and start with Dr. Leshner and
    Mr. Burke. Do you have a question?
        Mr. Hoyer. I have other questions, but not within the time
    frame. I will submit those questions. I am particularly
    interested in the assessment of success. So I will submit some
    questions on that, because that obviously will be a critical
    item as we mark up.
        I am interested in and we will ask a question for the
    record, General, with reference to the consequences of
    incremental reduction in the $195 million. What do we lose if
    we go to $185 million, what do we lose if we go to $175
    million. We have a $1 billion hole in this budget, about half a
    billion in unmet needs we are not funding in the
    administration's budget, and another some $400 million that
    were taken care of supposedly by fees or the forfeiture fund
    that we are going to have to figure out how to do. So we need
    to know the consequences of reducing in any way either by an
    across the board cut or specific cut in this program.
        Thank you, Mr. Chairman.
        Mr. Kolbe. Thank you, Mr. Hoyer. I will also have some
    specific questions I want to ask about the corporate
    sponsorship and how well we are doing in terms of implementing
    that, and some other things about measurements. I think also we
    will have to submit those for the record. So, General, there
    will be a series of questions we will submit here for the
    record.
        We will recess and return just as quickly as we can. We
    will understand if you have to be gone at that point. As soon
    as the second vote starts, I will be back here. We will have
    both of you and Mr. Burke back here. Thank you.
        [Recess.]
        Mr. Kolbe. We will get Dr. Leshner and Mr. Burke up at the
    table. Jim, how are you.
        Mr. Burke. Very well, thank you.
        Mr. Kolbe. If it is acceptable to both of you, because he
    has got to have a speech given downstairs in 15 minutes, we
    will take his statement and ask a few questions of him and then
    go to you, Mr. Burke.
        Mr. Burke. That is fine.
        Mr. Kolbe. Dr. Leshner, if you want to proceed.
        Dr. Leshner. Thank you, Mr. Chairman. I am delighted to be
    here with my distinguished colleagues to talk about the role of
    the National Institute on Drug Abuse in the National Youth
    Anti-Drug Media Campaign. My institute has been involved in the
    Campaign actually at two levels. First, we provided initial
    input to help ONDCP develop a scientific foundation for the
    overall campaign. Second, NIDA was asked to oversee evaluation
    of the final phase of the Campaign.
        Shortly after the President announced plans to launch this
    campaign, we at NIDA asked a group of leading prevention and
    communications researchers to articulate a set of science based
    principles that would be directly applied in designing and
    implementing a national media campaign. We gave the principles
    to ONDCP, and they continued the development work from a
    research base. I think this is probably the first ever truly
    science based anti-drug media campaign in our history, and I
    just want to say that from my point of view at the National
    Institute on Drug Abuse, it has been clearly faithful, not only
    to the science based principles and design, but in preserving
    the content.
        NIDA's second major role in the campaign came when ONDCP
    asked us to oversee outcome evaluation of Phase III which will
    begin this summer. Without going through the details of how we
    came up with the design, which is in my longer statement, let
    me say that this evaluation is designed to determine the extent
    to which changes in drug abuse related knowledge, attitudes,
    beliefs, and behaviors among parents and their children, will
    be attributed to exposure to this media campaign. The
    evaluation will measure both exposure levels and attitude and
    behavior changes over time, and it will do this by a multilevel
    data collection process.
        I make mention here that ONDCP will provide an average of
    just about $7 million a year for 5 years for this evaluation
    contract that NIDA is overseeing, and those funds will be used
    to carry out three major data collection activities. I will not
    describe those in great detail, but let me say thatthere will
    be, first, a national survey of parents and youth that will interview
    over 60,000 people in a series of waves to capture and provide data at
    6-month intervals to show how the Nation as a whole is reacting to the
    Campaign. The interviews will be conducted in person, protecting
    privacy and reducing interviewer error through the use of state of the
    art computer technology.
        Secondly, the longitudinal community surveys of parents and
    youth will provide insight into the effects of the Campaign at
    the community level. Three thousand families from four
    communities within large metropolitan media markets will be
    followed over the course of the Campaign to determine changes
    in attitudes and belief about drug use and drug use behavior as
    they occur over time during the course of the Campaign.
        The third component will look at the existing drug use
    monitoring systems and illustrate the three different data
    collection activities against each other so we actually can in
    fact answer the question that we have been asked to answer.
        Finally, I want to point out that this design has been
    developed in a way that we can in fact provide, as General
    McCaffrey suggested, ongoing feedback at 6-month intervals to
    the Campaign about progress that is being made. So that
    although it will take a number of years to see dramatic changes
    occur, and that is why the evaluation has to run for the years
    of the Campaign, the fact is that we will in fact have feedback
    mechanisms that can help guide the Campaign as it proceeds.
        Why don't I stop at that point and see what questions you
    have.
        Mr. Kolbe. Thank you very much, Dr. Leshner. I know because
    of your time frame, I will probably submit some questions to
    you. As you just suggested in those brief remarks that you
    made, you said that the Phase III evaluation should not be seen
    as a pass or fail kind of a report card, I think is the phrase
    that you used, at least in your testimony. I agree with that.
    But that means all the more that we have to have good
    methodology and measurements so we know what we are looking at.
        So let me just ask a few questions about this. How are we
    proceeding in the Phase III evaluation design? Is it done at
    this point?
        Dr. Leshner. The overall framework of the design has been
    done for a while. What we are finalizing at the moment are
    actually, sitting in front of me, are the interview
    questionnaires which are now in the clearance process, so we
    are, A, well on track; B, the technology is developed, the
    questionnaires are developed.
        Mr. Kolbe. The framework is done. We are now developing the
    specifics.
        Dr. Leshner. That is correct.
        Mr. Kolbe. That will be completed, it will be fully
    completed by about what time?
        Dr. Leshner. We will launch this at the end of the summer.
    We will literally launch it by September.
        Mr. Kolbe. By September.
        Dr. Leshner. That is correct.
        Mr. Kolbe. Okay. So you would submit it to OMB this summer?
        Dr. Leshner. Possibly earlier than that. It has to be
    cleared by OMB. Hopefully the spring.
        We have to field test.
        Mr. Kolbe. Once they approve it, then you have field tests.
        Dr. Leshner. We have to train all the interviewers in the
    literal use of that. That is why it takes from the clearance
    point, which I can't commit OMB to a fixed date, to the literal
    launch, which will be in September.
        Mr. Kolbe. Do you have any estimated time that we might see
    the first report from you?
        Dr. Leshner. I think you can expect the first coherent
    report by the end of next spring. I would say April to June----
        Mr. Kolbe. We may have incoherent reports before then?
        Dr. Leshner. You don't know me. I am a notorious
    micromanager. I will know a lot about what is going on before
    then, incoherently. But in fact we will have a formal report,
    we are expecting one in June.
        Mr. Kolbe. I think that is important to know. I think our
    timetable calls for it in September of this year, doesn'tit.
    Just so we would expect to see some definitive first report from you by
    next spring, some results.
        Dr. Leshner. By the end of the spring. I will say by June.
    What I want to be cautious about is not to imply that you are
    going to see a dramatic effect one way or another, because it
    is going to take a year or two before you are going to see
    attitude change actually occur. What we will be able to do is
    reinforce whether people are in fact seeing the ads, they are
    experiencing the ads, and it will give us all of the baseline
    information that we will use over the course of the Campaign as
    well.
        Mr. Kolbe. I don't think as it is designed now, worded now,
    the law requires supplemental reports from you at specific
    times after this, does it?
        Dr. Leshner. Our contract requires supplemental reports
    every 6 months.
        Mr. Kolbe. Every 6 months.
        Dr. Leshner. Yes, sir.
        Mr. Kolbe. We may want to consider that and have report
    language to make it clear.
        Dr. Leshner. ONDCP asked us in designing this to develop a
    mechanism by which we cooperate with the Campaign so the
    Campaign would benefit from the information collected along the
    way.
        Mr. Kolbe. Tell me what you mean by that. If it is going to
    have any benefit you want the feedback to go back in, or is
    this going to be a continuous process of redesigning?
        Dr. Leshner. At approximately 6-month intervals, sure. We
    have to collect the data, and once the data are collected and
    analyzed, you know, we will discuss it with the Campaign.
        Mr. Kolbe. That kind of goes to my other questions. Were
    you able to look at the Phase I and II evaluations and learn
    anything from that in designing this Phase III?
        Dr. Leshner. Actually, we are using a somewhat different
    design, because those were school-based designs primarily, and
    this is a household design.
        Mr. Kolbe. Let me specifically ask you on that, is the
    household design because of what was learned in Phase I and II
    evaluations, the school didn't work very well?
        Dr. Leshner. Not really. It was used for two reasons. One,
    it has become more and more difficult to go into the schools
    with so many different surveys going in, and the survey we are
    trying to conduct in fact tracks a large number of kids on a
    large interview survey, and we have to be able to do it year-
    round in order to have it work.
        Secondly, we choose the household survey for this based on
    the advice of our advisers, of course, that we wanted to get
    parents and children from the same family so they could track
    the interaction between them, because the charge we have been
    given is to look at attitudes, parents' attitudes and how these
    affect the kids.
        Mr. Kolbe. Let me ask you, because we only have 5 minutes
    and I want Mr. Hoyer to have a chance to ask you a couple
    questions, are there any other studies that you know of that
    you have looked at that study the effectiveness of advertising
    campaigns as they relate to influencing health behavior?
        Dr. Leshner. There is a body of literature. In fact, it is
    that literature that we used in developing the original set of
    science based principles, and I think that same literature is
    what is being used by the Campaign to guide its process. So
    nobody is starting totally in a void.
        Mr. Kolbe. Narrowing it down and being more specific, does
    that body of literature include campaigns that relate to drug
    use?
        Dr. Leshner. Oh, yes, sir, I am sorry. I should have been
    more specific.
        Mr. Kolbe. I said health behavior, was my wording.
        Dr. Leshner. Okay. We have a research portfolio that looks
    at this and in fact we have just issued an additional $2.5
    million worth of research grants to help us hone what we know
    about the use of media campaigns in changing both drug use
    attitudes and behavior.
        Mr. Kolbe. Thank you. Mr. Hoyer. Mr. Hoyer, he [Clerk's
    note: Dr. Leshner] has to leave in 3 minutes.
        Mr. Hoyer. Dr. Leshner, I have an opportunity of working
    with him most on the Labor-Health Committee, Mr. Chairman. It
    is a privilege to do that. I think he has probably already
    answered my question, and that is the scientific basis on the
    relationship that he--the advice and expertise he is bringing
    to the ad campaign, as well as his preparation for Phase III. I
    won't ask a question. You have to go give a speech. But I will
    at some point in time want to talk to you further about the
    impact we are having and the expectations of results.
        Dr. Leshner. Let me just say, because you weren't here,
    that I do believe that the Campaign has taken full advantage of
    the scientific literature that does exist, and in fact General
    McCaffrey showed you that strategy document which I sort of
    wish I had written myself. It actually lays out using
    documented scientific literature, a science-based campaign.
    This is in fact the first we have ever had like that in this
    country.
        Mr. Hoyer. Well, I think that is very important for us to
    emphasize, Mr. Chairman, when we go to our colleagues on the
    funding of this, that this is unique, and, as a result has a
    higher degree of probability of success. Therefore, as I said
    at the outset of this hearing this is an investment that will
    far exceed the cost of failure, of not doing thingsto change
    attitudes and change the psychology of perceptions of drug use.
        So I appreciate your answer and appreciate your efforts on
    that.
        Dr. Leshner. Thank you.
        Mr. Kolbe. Thank you very much. We are going to get you out
    of here in time. Let me say as you leave, as you go through
    this, if at any time there are any of these issues that are
    raised or any information you would like to share with us
    informally, even without a report, I know that Mr. Hoyer and I
    and our staffs would be very anxious to hear from you. I hope
    you will feel free to come and see us to report on how you
    think it is going. Thank you very much.
        Dr. Leshner. I apologize.
        Mr. Kolbe. We understand. Thank you for staying around as
    long as you did.
        Mr. Burke, we welcome you as Chairman for the Partnership
    for a Drug-Free America. Let me just say that this country, I
    believe, and the youth of America, owe you a tremendous debt of
    gratitude for the work that you have done, the tireless work
    you have done to really save a generation from drugs. I believe
    that your efforts are going to bear tremendous fruit in the
    years and the decades ahead. I personally want to acknowledge
    that and tell you how grateful I am for the work you have done.
    Thank you for being here.
        Mr. Burke. Thank you. I am just one instrument in what is
    really fundamental in terms of the kind of country we live in,
    to have a country decide at the very lowest level that the
    media could make a real impact on this issue. A young guy in
    California decided, so he got himself into an airplane, came to
    New York and persuaded the advertising media industry to put
    the Partnership in place. It is remarkable, and it has been
    given over $1.5 billion worth of media and the creative genius
    of over 200 advertising agencies. So it is remarkable. It
    couldn't happen any place but here.
        I want to say I started working on this issue 10 years ago
    right after George Bush was elected. He was President-elect at
    the time. I spent a lot of time with him and his administration
    trying to figure out how I could be most useful. I felt because
    my experience had been in marketing, all of my experience,
    starting at Procter & Gamble and 35 years at Johnson & Johnson,
    I thought I understood the consumer pretty well and I thought
    that is where I could be most useful. Then it was my brother
    who persuaded me to be chairman of the Partnership. He was then
    president of ABC. But, in any case, I want to say up front, and
    I mean this sincerely, I am a born optimist, but I have never
    been more optimistic about ``solving this problem'' than I am
    right now.
        I have had 10 years of experience with it. I am not going
    to take too much of your time to explain why I feel that, but I
    do. I would like to make a couple of comments. It was mentioned
    earlier by the general that he had some letters attached that
    were sent to him. I have some too. You have an awful lot to
    read. I would urge everyone, however, to read them. We have
    letters from Bill Bennett, Mario Cuomo, Lloyd Johnston, Herb
    Kleber, as he did, Rob Matteucci, who is vice president and
    general manager of Procter & Gamble. The most important letter
    to read in my opinion comes from Lloyd Johnston, who is a
    social scientist. You ask about how much information do we have
    of a scientific nature on this issue? We have a lot.
        I think there is a consensus among those of us who work in
    this field that the most carefully thought out information that
    we have got comes from Lloyd Johnston, and it is massive.
        By the way, it touches on the cigarette and alcohol issue
    which he tracks along with illegal drugs. I can comment on that
    if you wish me to. But I don't need to, unless you do. I do
    hope you get a chance to read that.
        When I first went to talk with General McCaffrey about paid
    media, which many of us in the Partnership never really thought
    we would want to do, but we came to the conclusion we had no
    other alternative because of the nature of the business in
    terms of pro bono media. But I remember talking to the General,
    and I said there are three things that I think you should
    insist on. One is a minimum budget that will deliver messages
    four times a week to our prime audience, children and their
    parents. If you can't get it, don't do it.
        At that time we mentioned $175 million. That was before
    some of the inflation that occurred in advertising. I mention
    that because I know you have problems which were mentioned
    earlier in terms your own budgets.
        My optimism for this issue would evaporate very, very
    quickly if there is any cut in the budget at all. If anything,
    I think it is on the short side. One of my concerns is that we
    may be dissipating pieces of the budget which happens in all
    programs like this, away from the main game, which is talking
    to children and their parents through the media.
        The second thing I said to him is this should last at least
    for 3 years, and Congress [Clerk's note.--Witness would amend
    this to say ``General McCaffrey'' rather than ``Congress.'']
    has generously said we want it for 5 years. That was a surprise
    to me, and I think it wonderful.
        But that gets to the third thing I said. I said do not do
    this unless you evaluate, and thank God, I am sorry he is not
    here to hear me, we have this man to help in that evaluation
    [Clerk's note.--Witness refers to Dr. Alan Leshner]. That
    evaluation should be very carefully done, but you shouldn't be
    impatient with results. Having spent my life in marketing, you
    don't get things this difficult tochange overnight. The reason
    I said 3 years is I think it will take 3 years.
        The general has said he thinks he can cut, we can as a
    country cut the numbers of drug users in half again. We have
    gone from 12 to 6 percent, and we can get to 3. He thinks he
    can do that by the year 2007. I think that can be done by the
    year 2002. If we aren't doing it by the year 2002, I think we
    ought to consider whether we ought to keep the Campaign or not.
        So three things: One, make sure that we have adequate
    campaign; make sure that it lasts for 3 years; evaluate,
    evaluate, evaluate. Evaluate awareness first, then attitude and
    behavior. Don't look for behavioral changes quickly. Nobody is
    going to be better able to track that stuff than the previous
    speaker.
        So I have great confidence in all of that. Now, let me go
    back to why I am so optimistic.
        As a marketing person, I have never seen a market better
    defined than this one is, and as huge as this one is. It was
    alluded to by the General, 56 percent, [Clerk's note.--Witness
    refers to chart] this was done by Robert Wood Johnson
    Foundation, of which I am a trustee, and the University of
    Maryland. This is an overwhelming market, when 56 percent of
    the adults in this country say the biggest problem they worry
    about is drugs and their children. Go ahead.
        Just as importantly, and this was done by Joe Califano's
    group, which I also used to be a director of, when they are
    asked what the most important problem is, they say the same
    thing. If we can't solve this with all the brilliance of this
    country's marketing know-how, I will be very, very surprised.
    When I say solve it, we had 12 percent of Americans using
    drugs. If we could get to the goal which the General has set,
    and I agree with it, 3 percent, I consider that a solution.
        What kind of maintenance we need when we get to 3 percent,
    I don't think we have to concern ourselves with. The important
    thing is to get to the 3 percent. I think we can get to it. I
    think we know an awful lot about this issue. We know an awful
    lot about what works. But, most importantly, we know what the
    market is. It is kids 12 to 17 years old and their parents, and
    they are with us. They want to solve the problem.
        The media hasn't done a very good job of explaining this,
    because the media, quite normally, talks about the bad news,
    not the good news. There is bad news, but they ought to say
    that is good news, because it empowers us to solve the problem.
        We have reason to be optimistic. Again, this is not well-
    known and not well understood, because it isn't talked about
    much. [Clerk's note: witness refers to chart showing decline in
    drug use] But we went from 23 million users to 14 million
    users. That is astounding.
        Even more astounding is this: Those of you who can remember
    when we talked about violent crime in this country, it was
    always connected in our minds and the media's minds to drugs.
    Does anybody really believe that violent crime would be down
    this dramatically in this country if it weren't for that? Not a
    chance. That isn't terribly well understood, even by the media.
    The New York Times had an article and an editorial, which I
    talked about, and I am going to talk more about, that said
    there has been no progress in drugs in this country for 10
    years. That is the general consensus and wisdom of the country,
    because they don't know the facts and they need to know the
    facts.
        If that doesn't empower us to act, I don't know what does,
    and it should.
        Now, again, this does not show cause [Clerk's note.--
    Witness refers to chart showing correlations between heavy
    media support and attitude change]. This is not considered to
    be cause and effect. But as has been indicated by the General,
    there are two drivers here in terms of this issue, ``perception
    of risk'' and ``social disapproval.'' When those two things are
    in place, things happen. If they aren't, they don't happen.
        The thing that happened to us here was that the media,
    under George Bush's leadership, in September of '89, Labor Day,
    he went to the country and talked to them about the drug
    problem. He also used that to ask the media to help the
    Partnership for America get $1 million a day for 3 years, and
    we got it.

        (Refers to chart which shows PDFA media support by years,
    peaking in 1990 and declining steadily from 1991 through 1998,
    with a concomitant deterioration in the ability to properly
    target our messages, and with a parallel decline in perception
    of risk of marijuana.)

        Now, think of that. That wasn't perfect, there was a lot of
    time that wasn't going to our audience and so forth, but it was
    extraordinary. And what you see is what we are now concerned
    with, we have had a terrible erosion in terms of the pro bono
    advertising, which is what took us to the conviction that we
    must in fact have paid media.
        Now, the bad news when that eroded came with children.
    While we got a lot of things to be thankful for, we ought to be
    scared to death about this one, and I think we all are. The
    good news is there is some turning, particularly among eighth
    graders, in the rate of increase. This is the best time to act
    in a market, when the market is already beginning to move, and
    that is one of the reasons for my optimism.
        We talked about social disapproval and perception of risk.
    Again, you saw some of that with the General's charts. As they
    go up, usage goes down. As they go down, usage goes up. By the
    way, that is true of every drug, every age group, every ethnic
    group, urban or rural. We can cover you with reports on that.
    That isn't all there is to this issue, but it is a way to
    simplify the issue in a very meaningful way and a way to help
    track whether what we are doing is working or not.
        You have to first get the message through. Then you haveto
    change attitudes. If you change attitudes, behavior will follow. I am
    absolutely convinced of that.
        Finally and most importantly, I think, are parents. Again,
    that was mentioned briefly by the General. The baby-boomer
    parent doesn't want their kids to use drugs. They think they
    are talking to their kids. The kids don't think they are. We
    have a disconnect between parents and children on this issue,
    and that disconnect, in my opinion, with the help of the media
    and help of leadership and people like yourself, can be
    changed. We have seen it change. If it does change, we are
    going to see this issue go where it needs to go, and that is to
    put in the past drug use as a common behavior, particularly
    among our children.
        Our children don't want this problem. If we could somehow
    figure out a way to give them the solution, to say to them, sit
    down with your parents and tell them what you need from them,
    as well as telling parents to talk to their children.
        Mr. Kolbe. I just have to interrupt to say I am shocked to
    learn there are 26 percent of teenagers that think they can
    learn anything from their parents.
        Mr. Burke. See, that is why I am an optimist.
        Mr. Kolbe. You should be, with that figure.
        Mr. Burke. I agree with that. This is an issue, as long as
    kids think it is the most serious issue and parents do, that
    gives them something to talk about. It is not easy to get them
    to do it, but I think we have the marketing skills in this
    country to do it.
        I think this new plan, working with the private sector and
    the public sector--and by the way, I want to make sure
    everybody understands, we have been involved from the beginning
    in establishing this thing with the General, but the
    Partnership takes no Federal funds and we don't want any. We
    started it pro bono, we will continue to be pro bono. My
    associates and I raise the money through people like the
    Johnson Foundation to run the Partnership, and then we work
    with the advertising people who will now get out of pocket, but
    they will make no profit on anything they do. So a lot of the
    good part of this as a public service issue will continue in
    partnership with the government.
        I, again, think we have everything in place that we need to
    turn this into one of the greatest social marketing successes
    ever conceived of.
        Thank you.
        [The statement of Mr. Burke follows:]

    [The official Committee record contains additional information here.]

        Mr. Kolbe. Thank you very much. A lot of good stuff to
    think about in all of that. Let me just, if I might, start with
    a couple of the charts you showed up there, one that the
    general also showed, and that is the relationship between
    perception of risk and the rising use of marijuana.
        Then you had an earlier chart on cocaine, which showed a
    steady decline in the number of users. Why do we seem to have
    the difference here? Cocaine use is going down, but marijuana
    use is going up.
        Mr. Burke. It is a lot easier to demonize cocaine than
    marijuana. The sense of risk by age is different. Cocaine, it
    is all ages. This is not. This is 12th graders, and it is only
    marijuana. That is a tough game. Again, these kids, the parents
    all tried it. It is a very difficult thing but it is not as
    difficult a drug as cocaine and never will be.
        Somebody talked about alcohol. You can make a very strong
    case that alcohol is a more serious drug, as a drug, as is
    cigarettes, than marijuana. So it is a tougher job. But it can
    be and will be done.
        Mr. Kolbe. Well, that was going to be my next question. Do
    you think we should just not be focused on marijuana?
        Mr. Burke. No, I don't. I think we should be focused.
        Mr. Kolbe. Because it can be a gateway drug into other
    uses?
        Mr. Burke. Not only a gateway drug, but it also sends the
    wrong message. One of the reasons we are tied up in this
    medical marijuana issue, medical marijuana is a very appealing
    thing emotionally. Put somebody up there crippled or in pain,
    they say marijuana makes me feel better, it is pretty hard to
    say no to that. The problem with that is we don't really need
    another alcohol or cigarettes for kids. That is what we would
    do if we legalized marijuana or if we walk away from the
    problem. If you begin to take the numbers in terms of kids who
    smoke and kids who drink and say if we let marijuana go, what
    would it look like, it would be a disaster.
        Mr. Kolbe. Mr. Burke, look at that top chart----
        Mr. Burke. Jim. Call me Jim. Nobody calls me Mr. Burke,
    including my children.
        Mr. Hoyer. We are glad to hear that, Dad.
        Mr. Burke. I tried. God knows I tried.
        Mr. Kolbe. Looking at that top chart there again, the
    rising trend of disapproval and the perception of risk of
    marijuana in the 1980s, anecdotally, I know you don't have any
    study on this, but since you have been at this as long as you
    have, what was it we were doing right back then that caused
    that to happen, and is there anything to be learned from that
    that we should be incorporating into this media campaign?
        Mr. Burke. I think that is a complicated yes, and
    myassociates might have an even different answer than I. But a lot of
    it came down to the fact that everybody tried marijuana back in the
    sixties and seventies, and then all of a sudden we led ourselves to a
    thing called cocaine and from cocaine to crack, and that problem caused
    everybody to be concerned about all drugs, including marijuana.
        Mr. Kolbe. They just made a blanket.
        Mr. Burke. It helped to. The issue became so distraught.
    And, by the way, we did a lot of very good advertising in those
    days. We had a lot of very good leadership in the country. We
    had--there was a lot of effort going on that helped to make
    that happen. But I think it would not have happened to the
    extent that it did without it being married in a sense to
    cocaine.
        Dick, do you want to comment on that?
        Mr. Kolbe. Changing a little bit to the media, and then I
    want to call on Mr. Hoyer here, to the Phase I and Phase II,
    what factors were considered in selecting the ads? I have
    looked at these ads. Some of them are pretty shocking. There
    were some that tried to use humor.
        Mr. Burke. If we have the time, we have four of those
    commercials to show, if you would like to see them.
        Mr. Kolbe. Let's look at them.
        Mr. Burke. We have a process, while they are putting that
    up, which the General referred to. It is unique again. We don't
    create anything in the Partnership. What we do is act as a
    catalyst for the advertising and media industries. We got the
    top creative people in the country to be part of a creative
    review committee of everything that we do. Think of that. And
    they do this for nothing. And, boy, do they have fun yelling at
    each other. It was a circus. It wasn't as good as it usually
    was when the General came. They weren't quite as noisy as they
    usually are.
        But what we do is we have strategies on each product and
    each market. Those strategies are then discussed with the
    various advertising agencies. We let them bid out in
    competition with each other to come up with answers to those
    strategies, and then we go through a very laborious testing
    process to get to what we finally put on the air. I will just
    show you a few of them. The creative work is so good.
        Mr. Kolbe. You might say what market and what strategy this
    was targeted at.
        Mr. Burke. The first couple are used at the teen market
    using music artists.
        [Commercial.]
        Mr. Burke. The heroin commercial is right across the board,
    just like the cocaine stuff was.
        He is doing a full length movie on how he lost his son. He
    started with marijuana.
        [Commercial.]
        Mr. Kolbe. What is the target of that last one?
        Mr. Burke. Everybody who has any interest in mentoring.
        Mr. Kolbe. Any kind of mentoring.
        Mr. Burke. It doesn't matter. As a matter of fact, during
    the Bush administration we set a goal to get to 1 million
    mentors. We never got over 250,000. [Clerk's note.--Witness is
    referring to Colin Powell.] But thanks to the leadership of the
    General and his America's promise, mentoring is going like this
    (indicating), and it is just like the parent information. A
    child with a mentor is half as likely to use drugs as a child
    without a mentor, just as a child with a caring parent is half
    as likely to use drugs. I think we will get to 2 million
    mentors in this country. That is a huge number. Remember, we
    have 4,000 community coalitions in place. The Public Relations
    Society of America has made a deal with us to make this issue
    the number one public relations issue in the country at every
    one of their chapters. That is not mentoring, that is the whole
    drug issue. So a lot is happening in the country, and I think
    with your leadership and others, a lot more will.
        Mr. Kolbe. Steny.
        Mr. Hoyer. Mr. Chairman, Dad and Jim I felt was just a
    little bit too much, but I will not call you Mr. Burke. Mr.
    Chairman, let me ask you three questions: First of all, you
    referenced you would comment on the alcohol component, alcohol
    and cigarettes, but alcohol in particular. I would like to hear
    that.
        Mr. Burke. Yes. I think alcohol is a very serious problem.
    I think it is somewhat different than illegal drugs in the
    sense that the real problem with alcohol is binge drinking. It
    is one of the issues that we at the Johnson Foundation are
    spending a lot of time and a lot of money on. My problem with
    marrying the alcohol issue to the illegal drug issue is the
    dilution problem. Also we don't know how to talk about the two
    issues together in a given commercial. It has been tried. I
    can't say it can't happen. But kids don't think about substance
    abuse. They think about what they are going to do next, whether
    it is marijuana, whether it is cocaine, heroin, alcohol or
    cigarettes. I don't think you can marry them.
        What I think we need and we are getting some of that, as
    has been said, through the Ad Council, what we need is more
    advertising, a separate campaign, not connected, which talks
    about the potential for abuse in alcohol. By the way, a lot has
    happened through Hollywood and elsewhere in getting the whole
    business of DUI in place. We have really made progress there.
    The whole business of drinking and driving has gone down. So it
    shows you can get at it. But it is a separate, highly complex,
    very difficult problem.
        Underneath it, the reason it is as difficult as it is, we
    have socialized alcohol. It is part of our society, and avery
    big part of it. And we advertise it with a lot of money, and I am not
    taking apart the beer companies or the liquor companies, but to get at
    that problem through advertising means you have to spend a lot of money
    competitively. There is nobody spending competitive money on illegal
    drugs, but there is a lot of competitive money spent on alcohol.
        So I consider it to be a very important target. We in the
    Johnson Foundation are dedicated to it. I think it is very
    complicated. I don't think it should be mixed up with the
    illegal drug problem, nor do I feel that way about cigarettes.
        On the other hand, if you go back and study cigarettes, and
    that is how I got into this, I started to smoke cigarettes when
    I was 12, and I quit when I was 42 when my 6-year-old son,
    watching a commercial of a father smoking a cigarette,
    scrunching up the pack, the little boy picks it up, looks
    admiringly at his father. Four days later a woman that worked
    for us was laughing in the living room. I went in, and my 6-
    year-old son was smoking a cigarette. He got a different
    message from that commercial than I did. But I made the
    decision 10 days from then, I was going to be 42, I would never
    smoke again and I didn't. I haven't.
        I had tried over and over and over again. So I believe that
    advertising can play a very important role in cigarettes as
    well. But I think it has got to be separate from and different
    than what we are trying to do on illegal drugs.
        Mr. Hoyer. Thank you. The second question: One of the
    concerns about spending $195 million, that it would be in lieu
    of dollars as opposed to add-on dollars, is still a concern. It
    is particularly a concern when you show a chart that shows that
    media advertising, pro bono donated media time, is going down.
    Can you comment on that concern?
        Mr. Burke. I am not sure I know exactly what you mean.
        Mr. Hoyer. If you spend $195 million of public monies, the
    perception that the private sector can reduce its----
        Mr. Burke. I see what you are saying. That was a----
        Mr. Hoyer. It was a great concern that we maintain it. One
    of the reasons that obviously so many of us are so thankful for
    what you and your colleagues have done, and frankly what
    President Bush did and President Reagan before him. Nancy
    Reagan, I am one of them that didn't laugh at ``just say no.''
    I think it was a powerful message.
        Mr. Burke. She made a huge difference.
        Mr. Hoyer. We need to do a lot more. Some criticized her,
    because she didn't say all the things you had to do in addition
    it that. What she said was what the deal was, you have to say
    no. I think General McCaffrey was an extraordinarily wise
    choice for that President to make.
        Mr. Burke. I do, too.
        Mr. Hoyer. But I am concerned that there is some truth. If
    the government is doing it, we don't have to, because the
    government is taking care of it. And that will defeat our
    effort if it is just replacement dollars as opposed to add-on
    dollars. That is my point.
        Mr. Burke. Actually, one of the reasons, when we talked
    with McCaffrey before this went to Congress, we said this
    should be a match. We got to try to keep as much of the pro
    bono in place as we can. That is a difficult job to do for just
    the reason that you mentioned. My associate just gave me a
    note, the match stopped the decline in pro bono, that is
    correct. We think it will continue to.
        One of the things going on now is the person who is running
    a network or running a local station has a double incentive.
    One, they can get money to run stuff, and, two, they can learn
    from that ways to do a better job on a pro bono basis. So far,
    that is happening. Pro bono has not been hurt. We thought it
    was going to get hurt.
        Mr. Kolbe. That was our fear.
        Mr. Burke. But at the moment, it is okay. I think it is
    something that has to be watched and watched very carefully.
    But at the moment, the media world is cooperating extremely
    well and on a highly creative basis.
        Mr. Hoyer. Now, the last question, obviously I think you
    have answered this question, but to think it bears repeating.
    You answered it in terms of your optimism. I was struck also by
    your perception of the time frame of success, where you think
    2002 would be a doable time to reach the 50 percent reduction
    rate.
        You have indicated you think General McCaffrey and ONDCP
    are doing a good job. I think that is very important, because
    there are some people who perceive, and neither the chairman
    nor I are among that group, even though we are from different
    parties, but there are some people that feel the government
    can't do anything and should stay out of it. But the
    Partnership that has been created here you obviously feel is a
    very productive one, am I correct?
        Mr. Burke. I think it is working. I don't think it is easy
    all the time. It is difficult for both sides of the
    Partnership. But the evidence is clear at this point. And one
    of the good things is we have people like NIDA and others
    looking over our shoulders. The Johnson Foundation is looking
    over our shoulders. They give us money. Lloyd Johnston is
    looking over our shoulders. There are an awful lot of people
    involved in wanting to make this work. The real power here is
    with the people. The consumer drives our economy in ways that
    no other country has ever been able to duplicate. Part of that
    is because we know how to use the media better than any other
    country ever has. People come to school here to try to figure
    it out. But those countriesthat decided to have government-run
    media after the war--I did a study once and made a speech on it, the
    reason this country went like that post war when we were supposed to go
    in depression was in part because we had television. It was not in the
    hands of the government. It was in the hands of the people. Television
    revolutionized it. I think that is where the power is. As long as we
    have that power overseeing all of us, you think we can and will make
    this work, or I wouldn't be so optimistic.
        Mr. Hoyer. Mr. Chairman, I want to thank you for the
    dedication of your time and talent, and all of those with whom
    you work in the private sector. This Partnership for a Drug-
    Free America has been a tremendous asset to our country, and I
    know that all of us who care deeply about this problem, as you
    do, see it as such a threat to the welfare of not just our
    young people, but of our country. I appreciate all that you do
    and have done and will do in partnership around this country
    with people who are similarly motivated who want to dedicate a
    portion of their time and talent and money to solving this
    problem. So I thank you very much.
        Mr. Burke. I thank you. I would like to close in saying I
    spent 36 years with Johnson & Johnson and I loved almost every
    minute of it. I have had more fun in the last 10 years on this
    issue than I had at Johnson & Johnson. So it hasn't been a
    burden.
        Mr. Hoyer. We tend to say this is a tough job, but very
    frankly, you made a lot of money at some point in time. I
    didn't make a lot of money. But I made more money 20 years ago
    than I am making today. It is a great job and I love it. I
    would like it to pay me more. You are right, you get a
    tremendous personal satisfaction. It is hard to replicate in
    dollars, personal satisfaction in terms of trying to do
    something to make your community better, and you certainly made
    an unbelievably generous contribution toward that.
        Mr. Burke. We are 30 of us, and we have more fun trying to
    do what we are doing and make a difference than you can
    imagine.
        Mr. Kolbe. I take it, Steny, you can count me as a yes on
    the COLA increase.
        Mr. Hoyer. You can count me as a yes on an amendment to
    double or triple or whatever. My comment to my constituents is
    if you don't think I am worth it, you need to get somebody new,
    because the job is worth it.
        Mr. Kolbe. Mr. Burke, I just--Jim, I have just one final
    question. The early strategy for ONDCP really called for a
    media plan of about $150 million. That is I think of the
    Federal funding, not including the pro bono. I believe the
    current contract with Ogilvy & Mather is for $129 million. We
    have reached the goals of the frequency and reach
    substantially. We have gotten past those. I guess my question
    is, what is the level of funding we really need to achieve
    this? You said earlier if we cut this you would be very
    worried.
        Mr. Burke. Yes. I am very worried about the 129.
        Mr. Kolbe. You don't think it is enough?
        Mr. Burke. I do not.
        Mr. Kolbe. I will submit questions for the record, but
    where is the other money going of the 195?
        Mr. Burke. I can't answer that question. You have to ask
    ONDCP people.
        Mr. Kolbe. I will, obviously.
        Mr. Burke. I am concerned, because I have seen too many
    products fail in the marketplace for inadequate funding, and
    you can push the numbers around, but I am just told it is now
    145, so you----
        Mr. Kolbe. The contract is 145.
        Mr. Burke. I guess it has gone from 129 to 145. That makes
    me feel better, but again looking at this issue through the
    eyes of my own marketing experience and the marketing
    experience of the Partnership, they are all marketing people,
    from agencies or from clients, the biggest mistake you can make
    when you have a winner is to underspend against it. I don't
    know, as you can tell, the facts as well as I should perhaps,
    but I don't. I think the biggest mistake we could make is
    underspend. It is why I said what I said; I would lose
    confidence in this plan if this total budget was cut. How much
    of this budget should be spent on media versus other things
    that are obviously being spent against, I guess the total
    budget is 185, is that right? 195.
        Mr. Kolbe. 185 this year, that is right.
        Mr. Burke. It went from 195 to 185, I believe. Where that
    other 40 million is, I don't know. But I think that is one of
    the things that the Partnership and ONDCP ought to spend a lot
    of time in debating.
        Mr. Kolbe. I would agree. We will obviously ask that
    question of ONDCP in writing. I am embarrassed I didn't get
    that one into the record here, but we will certainly be talking
    about that. But in your view, it requires at least an aggregate
    media funding of 150 million?
        Mr. Burke. I think it requires more than that. The original
    number that I gave to the general based on a study we did with
    an advertising agency was 175 million. That was for media. That
    was to reach the goals that were put up here earlier.
        Now, whether we can continue to reach our target audience
    with the appropriate frequency, I haven't gotten into the
    numbers.
        Mr. Kolbe. Don't you have that amount when you consider the
    pro bono?
        Mr. Burke. Oh, yes. Absolutely. But that was not what I was
    talking about.
        Mr. Kolbe. 175----
        Mr. Burke. I was talking about paid media. I must say, I
    also was skeptical about the match, that we would get what we
    have gotten. I think it is remarkable that we have done as well
    as we did.
        My own thinking has been that if we could get 160 million
    in paid and 160 million in pro bono, it would be hard to argue
    that we don't have enough. It is one of those things that I
    think my associates at the Partnership are more sophisticated
    about than I am because they are closer to the--you know, I
    haven't been at Johnson & Johnson for almost 10 years. Some of
    them were in the advertising business just a few years ago. But
    it is an issue that needs a lot of debate and discussion to
    make sure that we--that would be the worst thing we could do,
    would be to underspend against our target audience,
    particularly when you have kids and parents that feel like they
    do.
        Mr. Kolbe. Jim, let me again say, as Mr. Hoyer did, as
    Steny said, we really are very grateful to you for the
    contributions you have made. It is wonderful to know that you
    feel as satisfied as you do and you have had as much fun as you
    have. But nonetheless, it has been a very significant
    contribution you have made to our society, and we are very
    appreciative of that.
        Mr. Burke. Thank you.
        Mr. Kolbe. We look forward to talking with you from time to
    time as we review this. Thank you for taking the time to come
    up with us today.
        Mr. Burke. Thank you all very much.
        Mr. Kolbe. The subcommittee is adjourned.

    [The official Committee record contains additional information here.]

                               W I T N E S S E S

                                  ----------
                                                                       Page
    Burke, J.E.......................................................   783
    Leshner, Dr. A.I.................................................   783
    Lew, J.J.........................................................   295
    Lindsay, Mark....................................................     1
    McCaffrey, Gen. B.R..............................................   543
    McCaffrey, Gen. B.R..............................................   783

                                   I N D E X

                                  ----------
                                                                       Page
    Executive Office of the President:
        Budget Justification.........................................   163
        Budget Requests for Executive Office of the President
          Accounts...................................................    14
        CFO Legislation..............................................    24
        Executive Office of the President Opening Remarks............     5
        Executive Residence..........................................    25
        Fiscal Year 1998 and Fiscal Year 1999 Y2K Costs..............    15
        Fiscal Year 2000 Computer Modernization......................    17
        Information Technology Capital Investment Plan...............    25
        Information Technology Planning and the Information and
          Technology Management Team.................................    22
        Office of Administration Capital Investment Plan.............    20
        Progress with Y2K Program....................................    16
        Questions Submitted by the Committee.........................    29
        Representative Meek..........................................    35
        Representative Northup.......................................    39
        White House Staffing.........................................    18
    Executive Residence of the White House:
        Budget Justification.........................................   277
    Office of Management and Budget:
        Agency Progress in Upgrading Computers for the Y2K Date
          Change.....................................................   309
        Announcing the Availability of Federal Grants................   342
        Comparing Treasury and Justice Law Enforcement Funding Levels   307
        Concerns from the Research Community on Revisions to Circular
          A-110......................................................   332
        Courthouse Construction Funding..............................   311
        Customs Air Interdiction Program.............................   340
        Customs and Immigration and Naturalization Service Functions
          at the Border..............................................   307
        Customs User Fee Proposal....................................   338
        Efforts to Enhance Productivity at OMB.......................   341
        Estimates of Total Federal Costs for Fixing the Y2K Computer
          Problem....................................................   347
        Federal Budget Surplus Estimates.............................   316
        Federal Employee Pay Comparability Act.......................   331
        Funding for Y2K in the Fiscal Year 2000 Budget...............   346
        Funding Problems in the Budget...............................   312
        GAO Report on Management of the Y2K Problem..................   333
        Implementing Climate Change Programs.........................   330
        Judiciary Request for Courthouse Construction Funding........   327
        Kyoto Protocol Implementation................................   314
        Managing Increased Responsibilities at OMB...................   335
        Meeting the March 31, 1999 Deadline for Agency Y2K Compliance   343
        OMB Budget for Fiscal Year 2000..............................   299
        Opening Remarks--Chairman Kolbe..............................   295
        Opening Remarks--Representative Hoyer's......................   297
        Opening Remarks--Director Lew................................   301
        Paperwork Reduction Act Implementation.......................   312
        President's Proposal to Reduce Federal Debt Held by the
          Public.....................................................   336
        Revised Circular A-110 Concerning Federally Funded Research
          Data.......................................................   316
        Status of Y2K Emergency Fund.................................   310
        Treasury Law Enforcement.....................................   298
        Treasury's Role in Law Enforcement...........................   338
    Office of National Drug Control Policy:
        Subcommittee's Opening Statement.............................   543
        Director Barry R. McCaffrey's Opening Statement..............   545
        Director Barry R. McCaffrey's Written Statement..............   551
            Overview of the National Drug Control Strategy...........   551
            The Supporting Fiscal Year 2000 Federal Drug Control
              Budget.................................................   558
            ONDCP's Coordinating Role................................   560
            ONDCP's FY 2000 Budget Request...........................   561
            Conclusion...............................................   570
        Question and Answer Session..................................   571
        Questions for the Record.....................................   598
        ONDCP's Fiscal Year 2000-2004 Budget Submission..............   701
        ONDCP's FY 2000 Annual Performance Plan......................   760
    Office of National Drug Control Policy--Youth Media Hearing:
        Director Barry R. McCaffrey's Opening Statement..............   806
        Director Barry R. McCaffrey's Written Statement..............   786
        Letters of Support and Statement for the Record..............   808
        Opening Statement by Dr. Alan Leshner, Ph.D., Director
          National Institute on Drug Abuse...........................   840
        Overview of the Campaign.....................................   789
        Progress to Date Exceeds Expectations........................   797
        Question and Answer Session..................................   827
        Questions for the Record.....................................   858
        Statement by Chairman, Partnership For a Drug-Free America,
          James E. Burke.............................................   849
        Subcommittee's Opening Statement.............................   783
        The Media Campaign is Making a Difference For America's Young
          People and Families........................................   787