[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