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



                            FISCAL YEAR 2001



                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION


                      JIM KOLBE, Arizona, Chairman
 FRANK R. WOLF, Virginia            STENY H. HOYER, Maryland
 ANNE M. NORTHUP, Kentucky          CARRIE P. MEEK, Florida
 JO ANN EMERSON, Missouri           DAVID E. PRICE, North Carolina
 JOHN E. SUNUNU, New Hampshire      LUCILLE ROYBAL-ALLARD, California
 JOHN E. PETERSON, Pennsylvania     
 VIRGIL H. GOODE, Jr., Virginia     

 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, Jeff Ashford, Kurt Dodd, and Tammy Hughes,
                            Staff Assistants

                                 PART 3




         Printed for the use of the Committee on Appropriations


                     U.S. GOVERNMENT PRINTING OFFICE
 64-690                     WASHINGTON : 2000


                   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                 MICHAEL P. FORBES, New York
 ROGER F. WICKER, Mississippi           ROBERT E. ``BUD'' CRAMER, Jr., 
 GEORGE R. NETHERCUTT, Jr.,             Alabama
Washington                              MAURICE D. HINCHEY, New York
California                              SAM FARR, California
 TODD TIAHRT, Kansas                    JESSE L. JACKSON, Jr., Illinois
 ZACH WAMP, Tennessee                   CAROLYN C. KILPATRICK, Michigan
 TOM LATHAM, Iowa                       ALLEN BOYD, Florida
 ANNE M. NORTHUP, Kentucky              
 ROBERT B. ADERHOLT, Alabama            
 JO ANN EMERSON, Missouri               
 JOHN E. SUNUNU, New Hampshire          
 KAY GRANGER, Texas                     
 JOHN E. PETERSON, Pennsylvania         
 VIRGIL H. GOODE, Jr., Virginia     

                 James W. Dyer, Clerk and Staff Director




                                          Thursday, March 23, 2000.


                        OFFICE OF ADMINISTRATION


    Mr. Kolbe. The subcommittee on Treasury, Postal, and 
General Government will come to order. We resume this 
afternoon's hearing, the second one today, and welcome Mr. 
Michael Lyle. I believe, Mr. Lyle, this is your first 
appearance before this subcommittee.
    Mr. Lyle. Yes, sir, Mr. Chairman, it is, and I thank you 
for your welcome.
    Mr. Kolbe. We look forward to hearing your testimony on 
behalf of the operations of the Executive Office of the 
President, and we look forward to working with you during the 
coming fiscal year 2001 appropriations cycle.
    Given our anticipated fiscal restraints, it may be that 
expectations for the coming year are a bit high. The President 
is asking for an increase of 5.7 percent above the current 
year, and that does not include $2.5 million as a grant to 
Puerto Rico, which really has nothing to do with White House 
operations and, of course, the increase in the President's 
salary, which is mandated by law.
    I have some specific concerns about the proposed funding 
levels, the additional staff within the Office of 
Administration, the tremendous construction project that is 
being proposed within the Executive Residence and some of the 
costs associated with the transition. But I have a few other 
observations about some of the current events that I would like 
to just make here at the outset.
    First, I am enormously concerned by reports that the 
electronic mail messages within the White House have not been 
properly captured by the Records Management System. This 
Committee has worked hard at ensuring that the White House not 
only has sufficient appropriations to accommodate all of its 
information technology requirements, but also to ensure that 
the appropriate management tools are in place to develop and 
maintain these systems. I am particularly concerned about the 
implications this problem may have in terms of the White House 
compliance with the requirements of the Armstrong resolution.
    Second, and I am sure this comes as no surprise to others, 
since the First Lady has announced her intention of running for 
the United States Senate in New York, the phones in our 
subcommittee have certainly been ringing off the hook with 
concerned citizens calling to inquire about how the First 
Lady's travel is paid for. Clearly, the First Lady is 
authorized to use government aircraft, as well as government 
vehicles. In fact, during a 7-month period in 1999, according 
to the White House, she took 26 trips to New York on government 
aircraft. Twenty of these trips had some political component 
and 14 were 100 percent political in nature. All together, 
these totaled about 50 flight hours, at a cost to the 
Department of Defense of $3,705 per hour. That is the cost to 
operate a C-20. Although we do not know which aircraft was 
used, we assumed the smallest aircraft and the lowest cost. The 
total cost then, assuming they were all on C-20s, was $182,471. 
Based on the most recent information we have, her campaign was 
billed for $36,685 and, as of March 1st, $32,878 of the amount 
owed had actually been paid.
    So, in other words, the taxpayer has paid $145,000-plus to 
support the First Lady's use of government aircraft for a 
political campaign--for her political campaign, not a 
presidential campaign. Although the White House states that the 
Secret Service requires the First Lady to use government 
aircraft, this is not a factual statement. The subcommittee is 
in a good position to know the facts in this matter, since the 
Secret Service does fall under the jurisdiction of this 
subcommittee. The fact is the Secret Service prefers and 
recommends the First Lady travel on government aircraft, but it 
is, by no means, a requirement. It is my understanding the 
First Lady used private aircraft while she was promoting her 
book several years ago. Clearly, there is a discrepancy between 
what the White House is saying in regards to any Secret Service 
requirements and the types of aircraft that have historically 
been used in the past.
    I am well aware that First Ladies have traveled on 
government aircraft for political purposes in the past. But we 
are in new waters and charting new ground here today because 
the difference is that it is unprecedented that a First Lady is 
using a government aircraft for her own political purposes, for 
a political campaign that is regulated by the Federal Elections 
Commission and by Senate rules.
    The First Lady has both official and political obligations 
and I recognize that the First Lady wear several hats. She has 
official obligations, she has political obligations, not only 
in her own right, but in support of the President as he carries 
out his official and political responsibilities. We recognize 
that the President of the United States is also the leader of 
his party. So he has those responsibilities.
    But what we are talking about here has nothing to do with 
the First Lady's political or official obligations. She is 
wearing a hat that we have never seen before, and I think that 
is why her travel on government aircraft is a legitimate issue 
to be raised and discussed here today. By the way, on the issue 
of travel, it is not new for us to be asking about travel. This 
is just one of many hearings in the last couple of years where 
this subcommittee has highlighted some of the practices about 
travel. So it is an issue that has been legitimately talked 
about for a long time in this subcommittee.
    From all indications, the formula being used by the White 
House to seek reimbursement for political travel is the same 
formula that has been used by past Administrations. But I do 
have some concerns in regards to the billing procedures that 
are used.
    First, in some instances, it took up to 6 months for the 
White House to bill the campaign for this travel.
    Second, as I mentioned before, as of March 1st, there were 
outstanding balances due in the amount of $3,800. This is not a 
significant amount in regards to political activities 
undertaken by the White House, whether it is the President or 
the First Lady, but I think this subcommittee, and I think the 
American people, would remain adamant that appropriated dollars 
are used only for authorized purposes, that there are 
accounting mechanisms in place to capture total expenditures, 
and that there are timely reimbursements from political sources 
when payment is due. The fact is, this really, constitutes a 
loan from the government to the Senate campaign of Mrs. 
Clinton. These procedures that I mentioned are simply a matter 
of good government.
    Finally, as we begin our transition from this 
Administration to a new one, Mr. Lyle, I think the burden is on 
you to ensure that there is a smooth transition within the 
Executive Office of the President. That includes a process to 
ensure that the basic operations of the White House continue 
during the transition, as well as a process to ensure that all 
of the Presidential and Federal records now held in the White 
House are moved to their authorized repositories in an 
efficient and appropriate manner. We certainly will be 
interested in talking about some of that as well today.
    So, Mr. Lyle, I look forward to hearing your testimony. But 
before we take your statement and begin the questions, let me 
turn to my distinguished ranking member, Mr. Hoyer, for his 
    Mr. Hoyer.
    Mr. Hoyer. Thank you very much, Mr. Chairman.
    Mr. Lyle, I am pleased to welcome you to our committee for 
this your first hearing. This will perhaps be the first hearing 
that you have been in of this type.
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. I regret to say it is not mine. We have been 
down this political road before. This is a political hearing, 
Mr. Lyle. We will talk something about budgets, but this is a 
political hearing, make no mistake about it. This is a hearing 
to make political points. This is an extension of the Giuliani 
campaign, where Mr. Giuliani, obviously very concerned about 
his opponent, has made wild, inaccurate and erroneous 
statements about travel.
    Now, you are going to defend the travel. We do not, of 
course, appropriate these funds. They are out of DoD. But we 
are going to incorporate it in this hearing and let me tell you 
why, Mr. Lyle, so you will understand the context.
    In April of 1996, Mr. Walker and Mr. Nussle, two of Mr. 
Gingrich's henchmen, wrote to every appropriations subcommittee 
chairman, that ``On behalf of the House leadership, Mr. 
Gingrich, we want you to cull all committees' information on 
three subjects listed below. We are compiling information for 
packaging and presentation.'' That is interpreted ``spin'' in 
    ``You are a tremendous source of this project,'' a partisan 
political project. ``One of the things you will look at, 
examples of dishonesty or ethical lapses in the Clinton 
    Now, we went through that with respect to the White House, 
and we determined whether or not maybe Chelsea had two people 
over for an overnight, and we may have had to do some extra 
laundry in the White House. At that point in time, I observed 
to the chairman that I really never did segregate costs with my 
three daughters when they had somebody over for an overnight 
stay to see whether it cost me a little more to wash the sheets 
for an extra day.
    But we went through those hearings, long and extended, and 
we had the television cameras here, which is, of course, the 
purpose of this hearing. How do I know that? This is an RNC 
news release yesterday. This is a coordinated effort, Mr. Lyle, 
so you understand, but the public needs to understand it too. 
Mr. Nicholson put out a campaign release for the Giuliani 
campaign. He wants to see Mr. Giuliani elected. I do not blame 
him for that. But he is using this committee, Mr. Lyle, to try 
to accomplish that objective. By attacking a practice, as my 
distinguished chairman and good friend has already admitted, 
has been followed by every First Family since 1982.
    I have a memorandum here, as you do as well, signed by Jim 
Baker, chief of staff of the White House, that says, This 
process is exactly the way we ought to do it, not because the 
Secret Service told us to do it, but because the Secret Service 
said we ought to do it.
    Now, maybe some people want to expose the First Lady to 
risks. I do not want to do that, Republican or Democrat. ``Air 
Hillary Costs to be Unveiled, Finally.'' Everybody knows what 
the costs are and everybody knows the reimbursement. The 
figures that the chairman referred to are not secret.
    These figures that the committee has put out, I just saw 
these, total up the total cost of flying Air Force One or one a 
C-20, or a Gulfstreams. Everybody knows that is not the cost to 
be reimbursed because that cost is at the suggestion of the 
Secret Service. But I will tell the chairman, as he well knows, 
that you cannot drive on Pennsylvania Avenue now, not because 
the Secret Service told us to do it, but because they 
suggested, for security purposes, that you close off that 
portion of Pennsylvania Avenue--as a matter of fact, told this 
committee that as well.
    I am very sorry that we are having this kind of hearing, 
this kind of circus, this kind of political politicization of, 
once again, the White House budget. Now, very frankly, when 
there are not political points to make, there are nobody in the 
chairs, there are no cameras here. We talk about the White 
House budget, which has been fairly stable has not increased 
much, and as a matter of fact, decreased in some respects.
    I am sorry, Mr. Lyle, that you have to come here for a 
hearing of this type because it does not relate to your 
responsibilities. I know how you are going to testify. You are 
going to testify that these expenditures were made properly, 
consistent with policies pursued since 1982, and reimbursed. 
Now, I think you have been a little late in reimbursing. You 
will explain why that has happened. But the fact of the matter 
is we know that you are reimbursing consistent with policies 
that are not new to the Clinton administration.
    Now, it is unique that we have a First Lady running 
foroffice. She is an American citizen. She has that right to do it. I, 
frankly, support her in that effort. I hope she is elected Senator of 
New York City because I think she will be a great United States 
Senator, but that is irrelevant. What is relevant however, is she doing 
what is legal and proper and has been established as operating policy 
for first families at least since 1982 under Ronald Reagan? The answer 
to that I think is a clear, indisputable yes, and I guarantee you and 
everybody who is watching this hearing that 6 months from now or 2 
months from now or 2 years from now, that will be the result, just as 
it was the result in the previous camera-laden hearings that we have 
had about the White House budget.
    I welcome you, Mr. Lyle. I know that they are having a 
contemporaneous hearing on the e-mail. I know you are going to 
have some discussions about that in terms of ``fencing'' of 
dollars, so you did not have the proper personnel to pursue 
that as vigorously as you might. I will await those hearings.
    Mr. Chairman, I have great respect for you, as I know, but 
I do not have great respect for this process and this 
politicization by Jim Nicholson, the chairman of the Republican 
Party, directing us, in effect, in what kind of hearings to 
    Thank you, Mr. Chairman.
    Mr. Kolbe. Mr. Lyle, we will certainly take your statement. 
The whole statement will, of course, be placed into the record. 
If you want to summarize it, we would be happy to hear from you 


    Mr. Lyle. Yes, sir. Thank you, Mr. Chairman, Mr. Hoyer, 
members of the subcommittee. I appreciate the opportunity to be 
here. This is my first hearing as the Director of the Office of 
Administration. I took on that role in February of this year, 
and I am proud to be here.
    You have raised a number of issues, and I look forward to 
addressing those with you during the hearing. The good news in 
the areas of concern that you have raised is that we do adhere 
to all of the applicable rules and regulations with respect to 
travel and that we do manage those in accordance with all of 
the applicable laws that are applicable in this matter.
    I am also happy to tell you that the transition concerns 
that you have addressed are already being taken care of in the 
Office of Administration. We have already begun our planning, 
in that regard, to ensure a smooth transition, and I will be 
happy to explain that to you as well.
    The e-mail issue that you have raised, there are a number 
of issues which are being pursued, as I understand it, in Mr. 
Burton's hearing. I will be happy to answer questions that you 
have for me. But I did come here from a management perspective 
to talk to you about our appropriations budget, and I am proud 
of what we have been able to put together in terms of our 
    I testify, as you know, on behalf of a number of accounts: 
Compensation of the President, the White House Office, the 
Special Assistants to the President, the Official Residence of 
the Vice President, Office of Administration, Office of Policy 
Development, the National Security Council, Council of Economic 
Advisers and the Unanticipated Needs Account. I came here to 
testify and build on the partnership that the White House has 
been able to establish with this subcommittee in making 
improvements in critical areas within the Office of 
    One of the prime tasks that we undertook last year, when 
Mr. Lindsay sat here before you to testify, was the Y2K 
challenge. The White House, along with the rest of the country, 
and in fact the rest of the world, faced the Y2K crisis, and we 
met it straight on, and we were very successful. I am pleased 
to report to you that 100 percent of our Y2K compliance was 
made in advance of the year 2000, that all of our mission-
critical systems were Y2K compliant and modernized, and that 
our mission support systems also were Y2K compliant. When the 
year 2000 approached and came, we had not a single glitch 
within the White House office.
    That ability to turn what was, at the time, an antiquated, 
unreliable system into a modern, Y2K-compliant computer system, 
was achieved in partnership with this subcommittee, and I look 
forward to working with this subcommittee going forward. The 
Y2K effort that we undertook allowed us to achieve the goal of 
Y2K compliance and the goal of turning what can only be 
described as an unreliable computer system into a modern 
system, as I mentioned.
    Mr. Lindsay, and Ms. Posey before him, sat before this 
subcommittee telling you of the difficulties that were 
experienced in the Office of Administration in the computer 
system that serviced the Executive Office of the President. The 
Executive Office of the President experienced system outages, 
computer failures, system failures, and it was a function of 
the difficulties and the problems that existed in the state of 
the computer equipment at the time.
    We have taken that challenge on, and we have made use of 
the Y2K crisis to make the EOP computer system into a modern, 
reliable system. We have embarked on improvements to the system 
where we were able to install faster PCs. We were able to 
upgrade our common software package that we offer to our 
customers so that we can see to it that the best tools are 
available to service the President.
    We have switched from customized software that was 
difficult to maintain and manage to off-the-shelf products. All 
of these types of improvements were done in order to better 
manage and facilitate the EOP computer systems. Our old main 
frame computer that was prone to failure was replaced by an 
entirely new enterprise system computer, which became reliable, 
fast, and secure. It was the type of equipment that needed to 
be in place so that we can continue building, and that is 
exactly what we have been able to do in conjunction with this 
    We have instituted and continue to see to it that the 
Information Technology Management Team, which is the 
centralized, institutionalized management of our IT 
investments, is in the hands of career people who serve from 
one administration to the next, to see to it that the plans 
that we have in place for information technology are carried 
forward so that we can continue on this road.
    We have made a lot of progress. I am happy to report to you 
that during this year, Fiscal Year 2000, we are continuing to 
work in the right direction. We have upgraded our financial 
management system so that we can provide up-to-date, desktop 
reference materials for our fund managers. Those are the types 
of tools that are utilized in areas such as human resources 
management, procurement, travel information and related 
information that fund managers need to know on a real-time 
basis. We have done that.
    We have taken our Help Desk, which can only be described as 
arcane, into a modernized Network Operations Center. In the 
past, we were required to dispatch a technician any time we had 
a computer failure. When you are servicing over 2,000 
customers, you have a lot of computer issues to deal with. If 
you dispatch a technician to do that, it takes valuable time 
and resources. We have instituted a method now where you can 
remotely solve most of the problems. Actually, 80 percent of 
the problems are handled in our Network Operation Center.
    All of these initiatives that we are currently doing 
represent the funds that you appropriated to us last year. We 
are here this year to carry on with the progress that we have 
made. Our network infrastructure needs to carry on. We need to 
continue with the upgrades to the cabling and the wiring and 
all of the systems and the servers that connect the computers 
together and allow us to communicate within the Executive 
Office of the President. That is what our budget focuses on.
    The other component of our budget submission is to 
implement and carry forward the Chief Financial Officer Act, 
which is a congressionally mandated statute that will become 
effective in the next administration. We are trying to stay 
ahead of that. We are planning for it. We have asked for 
additional employees within the Office of Administration to see 
to it that the appropriate personnel and resources are 
available to implement that legislation. Those are the two 
prime areas that we have been focusing on in the Office of 
Administration, and that is the thrust of our budget 
    I am pleased to say to you that my staff worked very, very 
hard. My career staff worked extremely hard to solve the Y2K 
challenge. We have stepped up to the plate and delivered, as 
Mr. Lindsay promised you he would do last year. We would like 
to keep moving in the right direction and keep working with 
this subcommittee and improving what we have available in the 
Executive Office of the President.
    I appreciate the opportunity to be here, and I look forward 
to answering any questions that you might have. Thank you.
    [The information follows:]

                           FIRST LADY TRAVEL

    Mr. Kolbe. Thank you very much, Mr. Lyle. Let me just say 
at the outset, before I get into questions, in response to the 
comments that Mr. Hoyer made, I regret that he believes that 
this is an extension of Mayor Giuliani's campaign, and that was 
certainly what he said. And, frankly, I resent that 
    I want to make it clear there has been no discussion by me 
or anybody on my staff with Mr. Giuliani or anybody on his 
campaign, nor with anybody in the Republican National 
Committee. And, in fact, yesterday when the RNC called and 
asked for information, knowing this hearing was coming up, we 
said, no, we were not going to share that kind of information 
with them.
    Now, a press release is going to be put out. The Democratic 
Senatorial Campaign Committee has been putting out press 
releases on the same subject here. So who cares whether the RNC 
or the DNC is putting out press releases. The fact of the 
matter is this is a subject of legitimate investigation or 
information gathering. This is not an investigation, it is 
information gathering by this committee.
    Now, the ranking member said that the money for the air 
travel comes from the Air Force budget, and that is correct. 
But funds for official travel by members of the staff come out 
of this budget; is that not correct, Mr. Lyle?
    Mr. Lyle. White House----
    Mr. Kolbe. White House members traveling on official 
business with the First Lady.
    Mr. Lyle. Official travelers from the White House----
    Mr. Kolbe. Official travelers, even when it is on a 
political trip.
    Mr. Lyle [continuing]. Are paid from White House 
    Mr. Kolbe. Even when it is on a political trip are paid out 
of this budget.
    Mr. Lyle. Official travelers, yes, sir.
    Mr. Kolbe. Right. All I am trying to establish, is that 
there is an issue here in this budget, and that is all that I 
am talking about.
    Now, I understand that the procedures that are being used 
by the White House to make distinctions between the political 
and official travel are, for all practical purposes, the same 
procedures that have been used in previous Administrations. And 
I acknowledged that in my opening statement, and I appreciate 
that. But, Mr. Lyle, is it not true that we have never had a 
First Lady that has been running as a candidate for political 
office herself while she was First Lady; is that not correct?
    Mr. Lyle. This is the first time that a First Lady----
    Mr. Kolbe. Yes, and it is breaking new ground. Would you 
not say, in a sense, we are on new territory here?
    Mr. Lyle. First Ladies in the past have traveled in support 
of campaigns.
    Mr. Kolbe. Her husband's campaign or other political 
    Mr. Lyle. Or of others, yes, sir.
    Mr. Kolbe. As part of the role of the wife or spouse of the 
President, yes, correct. We will come back to that and why I 
think there is a distinction here.
    Because it is the first time that a First Lady has been a 
candidate herself, subject to the filings of the FEC, 
separately, I think we are into new territory here. And I think 
it is legitimate for us to gather some information about this. 
There have certainly been enough questions raised that I think 
we can at least gather this information. And I appreciate your 
help in doing so and helping us get this information.
    Now, specifically, we requested, in our discussions with 
your office, reimbursement data for both political and official 
travel for fiscal year 1999. Although there were a total of 29 
trips taken by the First Lady to New York in 1999, the White 
House provided data for 16 of these trips and data for 9 of the 
trips taken in fiscal year 2000; in other words, since October 
    Why did the White House begin the data they gave to us with 
June 9th, 1999, instead of the entire fiscal year? Why did you 
not give us the data for the entire fiscal year?
    Mr. Lyle. The request that we received, Mr. Kolbe, 
requested that time period. That was the request that your 
staff submitted to the White House, and we endeavored, under 
that request, to provide that information. So that is why we 
provided it.
    Mr. Kolbe. We made a request that said beginning June 9th 
give us the data? I think we said for fiscal year 1999.
    Mr. Lyle. There were two requests, Mr. Kolbe. One of them 
asked for all of the travel of the First Lady and the 
President, which we provided in writing to you and your staff. 
The other request that we received was in connection with June 
1999; in the sense that that was the time that the First Lady 
was looking, in an exploratory fashion. So that was the 
operative date that we were provided, and we provided it as of 
the request, which was in December of 1999. That is why we 
provided you with the 20 trips that you requested. That was the 
information that we had available, and we had not received a 
supplemental request.
    Mr. Kolbe. Let me just say that that was not what we asked 
for, and I am sorry if there was a miscommunication. But would 
you please go back and give us the information, as we 
requested, for fiscal year 1999. The same information that you 
provided from June 9th forward, would you give us that 
information for all of fiscal year 1999.
    Mr. Lyle. I would be happy to go back and obtain that 
    Mr. Kolbe. What we would like to have, specifically what we 
have asked for, just so it is very clear, I am going to put it 
on the record here, we are interested in getting information 
about the trip date, the invoice date, the payment date, the 
destination, the designation of the trip, the number of 
official passengers, the number of political passengers, the 
flight time, the type of aircraft, the official reimbursement 
and the political reimbursement. That is the information that 
we have been seeking.
    Can you give us that information?
    Mr. Lyle. I would be happy to take that question back, for 
the record, sir, and do what we can.
    Mr. Kolbe. Current law requires that the cost of campaign 
travel using government aircraft be reimbursed at the first 
class rate and that political travel be reimbursed at the 
commercial rate. That is obviously a pretty good deal, 
considering that it costs $3,705 to operate a C-20 and $13,900 
an hour to operate a C-32. Those are the aircraft that are in 
question here. But that is the formula, and we understand the 
formula is the formula, and that is the procedure, and that is 
what has been used, and I have no problem with that, as good a 
deal as it is.
    When there is a mixed purpose, for instance a trip is 
official and political, who within the White House determines 
which portions of the trip are political and which parts are 
official and the subsequent rate of reimbursement?
    Mr. Lyle. As you stated, Mr. Kolbe, we adhere to the law, 
the rules and regulations that apply in every instance. Each 
trip goes through a deliberate review each and every time a 
trip takes place. There are a variety of steps in that process. 
There is a management legal review. Staff members in the 
    Mr. Kolbe. Is that in your office, the management legal 
    Mr. Lyle. No. I am the Director of the Office of 
Administration. The White House Office of Management and 
Administration, which is currently headed up by Mr. Lindsay, 
the Assistant to the President, staff in that office work in 
concert with the White House Counsel's Office to do a thorough 
review of each and every trip, to take care of that exact 
concern that you are raising, which is to ensure that official 
funds are used to pay for official travel. We labor to make 
sure that 100 percent of official trips are paid with 
appropriated official funds, 100-percent political trips are 
paid by the political entities.
    The issue that you are raising is the mixed-trip concern 
and that is why we have a very deliberate review process that 
takes place. Staff review the trips and calculations are 
determined all in accordance with the Federal laws that apply 
in these instances and allocations are made in accordance with 
the letter of the law. That is how it is done.
    Mr. Kolbe. But your office, the Office of Administration, 
has nothing to do with that review. You are a clerk, 
essentially, forwarding the information once you get it.
    Mr. Lyle. Well, I think my Financial Management Division 
people would take exception to being called clerks.
    Mr. Kolbe. Well, all right. That was not a demeaning term. 
It is a clerical function. All you are saying is your office 
provides only a clerical function.
    Mr. Lyle. No. When the Office of Administration gets 
involved, we handle official travel. So once the determination 
has been made that appropriated funds are to be used, then the 
Office of Administration, which I head up, is brought in to pay 
the funds out of the appropriated funds. And we see to it that 
the appropriate accounts are accessed and that the funds are 
disbursed in a timely fashion within the Office of 
Administration. That is our contribution to the overall 
process, which is a multi-level process, multi-tiered process, 
to make sure that official funds are being used for official 
    The staff that I have in the Financial Management Division 
are career staff, who work very, very hard at doing that and 
adhere to all the rules and regulations. These are the same 
types of rules and regulations that have been in place since 
prior Administrations, going back to the Bush Administration, 
and Reagan Administration and so on. They monitor those rules 
carefully. They watch for those things, and they see to it that 
we are doing what we can to ensure that the concern that you 
are raising is addressed.
    And I am happy to say that some of the improvements that we 
have made within our budget submission, in the Office of 
Administration, in the Financial Management Division and its 
automation, which we are currently doing, have been very 
successful. We continue to work on those so that we can better 
automate and see to it that we handle those disbursements in an 
appropriate fashion.
    Mr. Kolbe. I noticed on almost all of the trips, no matter 
how they are designated, there are one or two people traveling 
with the First Lady in an official capacity. I think one of 
those usually is a trip coordinator and the other is often the 
White House photographer. Can you tell me why, on a trip that 
is classified, as are many in that chart there, as 100-percent 
political, what purpose does an official White House 
photographer have on a 100-percent political trip?
    Mr. Lyle. I have not seen this chart.
    Mr. Kolbe. Well, it is all information you gave us. Itis 
just a compilation of all of the information you gave us of trips.
    Mr. Lyle. If it is based on the information that I provided 
to you, then there are errors in this chart.
    Mr. Kolbe. Well, there may be in the compilation.
    The only thing we removed from this is the classified 
Secret Service information. Everything else here is information 
that you gave us.
    Mr. Lyle. From what?
    Mr. Kolbe. My question is there are political trips, yes? 
And there people that travel in an official capacity. We had 
that discussion a minute ago.
    Mr. Lyle. Yes, there are.
    Mr. Kolbe. What purpose does a White House photographer 
have or is there never a White House photographer traveling in 
an official capacity?
    Mr. Lyle. From the White House appropriation, there is, as 
you mentioned, a trip coordinator, who travels with the First 
Lady. The First Lady of the United States is the First Lady 24 
hours a day, seven days a week. As such, there are official 
staff who travel with her in support of her in that capacity. 
That would be the trip coordinator that we are referring to. 
The costs associated with that one person are always official. 
That is the law. Those are the rules, those are the 
regulations, that is what it says. So that comes out of the 
White House appropriation.
    The photographer that you are referring to is not a White 
House person. The photographer is a DoD, Department of Defense, 
employee. So it is not out of this appropriation, which I 
    Mr. Kolbe. Okay. Well, then you have answered my question. 
I was under the impression it was a White House photographer. 
When there is more than one, who would be the other that would 
be the official person traveling?
    Mr. Lyle. The only official travelers from the White House 
who travels----
    Mr. Kolbe. On a political trip.
    Mr. Lyle. The only official traveler from the White House 
who travels with the First Lady is the trip coordinator. There 
is one official traveler, and that is the information that I 
provided, or that the White House provided, in the chart that 
you are referring to, which is the Military Aircraft Airlift 
Operations Chart. The number on this chart appears to show that 
there are two official travelers. I do not know the source of 
that information on this chart. I have not seen this chart 
    Mr. Kolbe. It is on the document that you gave us. The 
document we have not released because there is some information 
that is classified, but at the bottom there is a note that 
says, ``Official staff includes trip coordinator, Secret 
Service detail, and White House photographer.''
    Mr. Lyle. The number, if you will look, under the column 
number of official staff, all of the ones, that refers to the 
trip coordinator. That is it.
    Mr. Kolbe. That document was never provided to us. This is 
the document we are dealing with here.
    Mr. Lyle. Well, I can tell you that the answer to your 
question is one official traveler from the White House. The 
United States Secret Service, as you know, is from another 
    Mr. Kolbe. Yes, I understand. So there is never more than 
one official traveler on a trip that is designated as 
    Mr. Lyle. That travels with the First Lady, that is 
    Mr. Kolbe. I have some more questions in this area and also 
in the e-mail area, but I have obviously used some more of my 
time, and we will give latitude to Mr. Hoyer for his questions 
    Mr. Hoyer.
    Mr. Hoyer. Thank you very much, Mr. Chairman.
    Mr. Lyle, first of all, let me thank you for your, I 
thought, very effective presentation with respect to the 
management of the White House accounts. That kind of 
presentation and the accuracy with which it is delivered is 
usually why our hearings are pretty low key on this budget, 
unless there is a political point to be made.
    Mr. Lyle. Thank you, sir.
    Mr. Hoyer. First of all, you have reviewed the records, I 
take it. I have been on this committee since 1983. I never 
recall any questions being asked of Mrs. Reagan or the White 
House with reference to Mrs. Reagan's travel or Mrs. Bush's 
travel. In your review of the records, has there ever been any 
question of this procedure before?
    Mr. Lyle. I am aware of no question into the procedure, Mr. 
    Mr. Hoyer. Mr. Lyle, are you aware of the memorandum, dated 
June 16, 1981, from Edward Hickey to Jim Baker and Michael 
Deaver, with reference to First Lady travel by military 
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Mr. Chairman, I would like to submit that 
memorandum for the record, at this time, if I might.
    Mr. Kolbe. Without objection.
    Mr. Hoyer. Thank you.
    In that memorandum, which is signed as approved by Jim 
Baker, III--JAB, III.
    Mr. Kolbe. Would you share that with us. We have not seen 
    Mr. Hoyer. Sure. Oh, I am sorry.
    Mr. Kolbe. I thought you were referring to an earlier 
memorandum there at first from the Secret Service in 1977 on 
    Mr. Hoyer. I have that one, too.
    Mr. Kolbe. That is the only one I have.
    Mr. Hoyer. In any event, the Chairman refers to a 1977 
memorandum from H.S. Knight, who was then the Director of the 
U.S. Secret Service to Marvin Beman, who was the Director of 
the White House Military Office, in which they say, and the 
Chairman is correct, that this is not under orders from the 
Secret Service. First of all, the Secret Service does not have 
the power to order the President of the United States or the 
White House to do anything.
    Mr. Lyle. I think that is right, sir.
    Mr. Hoyer. Yes, I think that is right. Our democracy is 
glad it is right. The KGB may have had that right at some point 
in time, but our Secret Service does not. But as they said, 
with respect to closing down Pennsylvania Avenue for the 
security of the White House and the First Family, ``But our 
preference is military aircraft for the following reasons.''
    And now I am reading, Mr. Chairman, from that memorandum, 
and I would submit that for the record as well.
    Mr. Kolbe. Without objection.
    Mr. Hoyer. Thank you, sir.
    [The information follows:]

    Mr. Hoyer. ``Assurance that the protectees will be 
utilizing an aircraft subjected to the highest standards of 
maintenance, eliminates the necessity of being confined to a 
set schedule, eliminates unnecessary exposure of the protectee 
to unknown persons, provide the necessary communications 
capabilities with Secret Service and military installations 
during flight.'' And it then goes on to say from the Secret 
Service perspective, ``This Agency has difficulty obtaining 
access to a commercial aircraft for security and technical 
searches.'' In other words, with a commercial U.S. Air, Delta, 
or United aircraft, they could not get access to the plane in a 
timely fashion to make sure that there is not a bomb on it or 
there is not some malfunction.
    The memorandum then to which I referred March 20, 1981, 
outlines this and puts five options for Mr. Baker: ``Continue 
to provide military aircraft without further action is a matter 
of traditional White House policy. Forward Director Knight's 
1977 memo to Baker and Deaver, with recommendations for the 
reasons stated, and which are still valid, that traditional 
policy be continued. Request Director Knight to submit another 
letter similar,'' et cetera, et cetera.
    The memorandum is then--excuse me. I have mixed up the 
second page. ``Allow for emergency evacuation--''
    ``What it does is it allows for evacuation of the protectee 
if there would be an attack and known crew levelof--known as 
security purposes and for flight efficiency.'' And that memorandum is 
then signed by Mr. Baker. You are aware of that memorandum.
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Now, my question is: Are we deviating in any 
way--``we'' being the White House and the First Lady--deviating 
in any way from the policy approved by Mr. Baker in 1981?
    Mr. Lyle. Absolutely not.
    Mr. Hoyer. Now, you are familiar, I take it, with a 
memorandum that was, in 1989, sent to Mr. Sununu, are you not?
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. That was dated January 24th from Antonio Lopez 
to Mr. Sununu, who was then Governor Sununu, whose son 
ironically serves on this committee now, also respecting First 
Lady travel by military aircraft in which the memorandum says, 
``It has been the policy of the last several administrations to 
routinely provide--'' the ``last several'' being the Reagan 
administration immediately preceding it--by the First Lady. 
There are a number of reasons for this. It is obviously of 
great assistance in meeting tight schedules. So apparently that 
was all right for Mrs. Bush to make sure that she could meet 
tight schedules. It was obviously of great assistance, also, of 
course, it provides an ability to work with members of her 
staff, which would not be possible aboard commercial aircraft. 
Apparently they thought that was very important for Mrs. Bush.
    ``Paramount, however,'' they said, ``are security 
considerations.'' And then they outlined that it assured the 
First Lady will be utilizing aircraft which has been subjected 
to the highest standards of maintenance. This was not for what 
the purpose of the trip was, it was for the purpose of making 
sure that the First Lady was secure. ``Usage of military 
aircraft eliminates the necessity of being confined to a set 
schedule known to many persons.'' It goes on to have the same 
reasons I have outlined from the Secret Service memorandum back 
in 1977.
    Now, this memorandum is not initialed by Mr. Sununu. But 
notwithstanding that, am I correct that from 1989 through 1993, 
January of 1993, that this policy was followed by the Bush 
White House, to your knowledge?
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Now, I know this has nothing to do with Mr. 
Giuliani. I know this press release from the RNC just happened 
to announce that we were having this hearing and announce that 
we were going to, for the first time, expose the costs of these 
trips, which, of course, are the same kind of costs that have 
been incurred by others in the past. Mr. Giuliani, of course, 
mentions in his press release, with reference to this matter 
that probably is not related in any way, I understand, that 
this kind of travel has disrupted other commercial travel.
    Now, are you aware of that allegation?
    Mr. Lyle. I have read reports of that, yes.
    Mr. Hoyer. Are you aware of the fact that Director Ronald 
Morgan of the FAA's Air Traffic Services declares, and I quote, 
``E1F''--Am I correct that E1F is the aircraft in which the 
First Lady is flying?
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. ``That E1F is not routinely provided priority 
over other aircraft, contrary to Mr. Giuliani's assertion, and 
does not receive the same handling as Air Force One.'' Morgan 
adds, ``The aircraft E1F has never caused a systemwide delay of 
any kind, contrary to Mr. Giuliani's assertion.''
    Am I correct, therefore, that notwithstanding the political 
attack by Mr. Giuliani on this, that the only reason for all of 
this interest is that, according to the chairman, this is 
unique that the First Lady is running for office, not, and the 
chairman has observed correctly, agrees with us, not because 
there is any deviation from previous practice?
    Mr. Lyle. That is correct. There is no deviation from 
previous practice. The Clinton Administration follows the 
recommendations in this area from the Secret Service to protect 
the First Lady.
    Mr. Hoyer. Now let me clear up one additional question 
because, apparently, the chairman and I have different forms--I 
showed it to our very distinguished counsel of the committee 
who does an excellent job for us all--the form that you had 
given to me and apparently it was not the same; is that 
    Mr. Kolbe. Would you yield?
    Mr. Hoyer. Certainly. All of us yield to the chairman.
    Mr. Kolbe. No, we were given this document, which is the 
same. The problem is there is information on here that is 
classified, and we had to extrapolate from it to get to that.
    Mr. Hoyer. I understand that.
    Mr. Kolbe. We are not allowed to say how many Secret 
Service travel with the First lady.
    Mr. Hoyer. I understand that. So, in effect, the document I 
have, I suppose, is the nonclassified document.
    Mr. Lyle. Yes. That is the document that we provided.
    Mr. Hoyer. And it indicates that the number of official 
staff, as you indicated, was one.
    Mr. Lyle. Yes, sir. And I would like to be clear. We did 
not produce classified documents in an inappropriate fashion. I 
do not understand what Mr. Kolbe is referring to. I want to be 
very clear.
    Mr. Hoyer. Let me tell you the confusion, and we ought to 
clear it up. In the note on the document that I have, which is 
I presume the same one you have, which has number of official 
staff, which is the next-to-the-last column, ``one'' straight 
down the line.
    Mr. Lyle. Yes.
    Mr. Hoyer. And then the times of the flights.
    Mr. Lyle. Correct.
    Mr. Hoyer. On that document there is, and I think this is 
the confusion and you ought to clear it up, the number of 
official staff includes trip coordinator, Secret Service detail 
and a White House photographer. Now, the Secret Service detail, 
I presume, is eliminated from that column so as not to reflect 
how many Secret Service agents may be on any given trip.
    Mr. Lyle. Exactly.
    Mr. Hoyer. And that is the classified part of this.
    Mr. Lyle. Yes.
    Mr. Hoyer. Which is absolutely correct to have done. 
However, if the trip coordinator is along and a White House 
photographer is along, then one seems to be inaccurate, which 
is I think what the chairman was getting at. Your response, as 
I understand it, to that was that this--there actually isno 
White House photographer that goes on purely political trips with the 
First Lady. It is a DoD photographer; is that correct?
    Mr. Lyle. The photographer is referred to as the White 
House photographer, but it is a DoD employee who is paid for by 
DoD and, therefore, is not paid out of the White House 
    Mr. Hoyer. And they go on all trips irrespective of the 
purpose of the trip.
    Mr. Lyle. They have been on trips in the past, and to the 
extent that they travel with the First Lady when they have, it 
is in that official capacity, taking official records, 
maintaining the White House records. Those are White House 
official photographs.
    Mr. Hoyer. Now, if Mrs. Bush or Mrs. Reagan happen to go to 
an event on behalf of a Republican candidate for the Senate, 
House or any other office, would the same practice have been 
    Mr. Lyle. It is my understanding that that is exactly what 
would have happened.
    Mr. Hoyer. Mr. Chairman, I do not know if my time has----
    Mr. Kolbe. Go ahead.
    Mr. Hoyer. Fine. Thank you, Mr. Chairman.
    Let me simply conclude this part of it, and I think the 
relevant part, Mr. Lyle, that you have quoted is, and 
apparently the chairman agrees, that the same policy is being 
pursued. Let me suggest then to you the problem here is that it 
is not the character, it is not the legality, it is not the 
appropriateness, it is the fact that the First Lady is doing a 
lot of traveling because she is pursuing something that she is, 
as a American citizen, able to pursue.
    The problem she has is she is the First Lady, and she 
cannot ``unbecome'' the First Lady. And as a result, the Secret 
Service, as was recommended in 1977, wants her to travel in a 
certain mode to serve their purposes. The observations about 
convenience certainly are true, and they applied to Mrs. Bush, 
Mrs. Reagan, Mrs. Carter, and Mrs. Nixon, presumably. The 
memorandum says, ``Several administrations prior to the Reagan 
administration.'' So I presume those are Carter, Ford and 
Nixon. But that that is done not to accommodate the First Lady, 
but to accommodate the security interests we have in not the 
person, but the position, of First Lady.
    Mr. Lyle. Yes. The paramount, overriding concern is the 
protection of the First Lady.
    Mr. Hoyer. Thank you. One additional question, and then I 
will cease. If you could expand somewhat on the e-mail, I know 
that Mr. Lindsay was primarily responsible for that. I know 
that he is before Mr. Burton's committee this morning. Is he 
still there? So that I know that that will be presumably fully 
investigated and will maybe have the same results that previous 
hearings Mr. Burton has conducted over the years. Do we have 
the chart on the expenses of Mr. Burton's committee hearings?
    Mr. Hoyer. We do not have that. I am sure it exceeds that 
figure by a substantial amount.
    Mr. Lyle, that is not my question to you though. On the e-
    Mr. Lyle. Yes, sir?

                         IMPACT OF FENCED FUNDS

    Mr. Hoyer. Would you explain, because you and I have had 
some discussions, about the ``fenced'' White House money.
    Mr. Lyle. Yes.
    Mr. Hoyer. Did that have an effect on your ability to 
respond to the myriad requests for information that came from 
Mr. Burton or from anybody else?
    Mr. Lyle. Yes, sir, it did, in the following manner: The 
``fenced'' fundings that you are referring to precluded, 
prevented, prohibited, the Executive Office of the President, 
Office of Administration, from expending any money with respect 
to information technology. That was the impact. As a result, 
our computer systems began to erode, and we were actually 
forced into situations where system failures occurred, and we 
had to cannibalize computer equipment to repair other damaged 
equipment to stay up and running.
    The effect was tremendous on our information technology 
area. It was devastating to the equipment, and it forced our 
staff to become very creative in the ways that they were able 
to go forward without any money. You could not spend a nickel 
to buy a computer chip. That caused the system to deteriorate 
over time to the point where we were back in 1997-1998, 
struggling with a computer system that had those outages and 
system failures in place. It was that condition that we were 
confronted with when we were trying to correct the Y2K 
challenge. We had to turn that system into a modern system. If 
we did not do that, we would not have solved the Y2K crisis. 
And in that instance, the systems would have failed because of 
the Y2K bug.
    It was in that sense that we were unable to undertake 
efforts in terms of any reconstruction of any of the back-up 
tapes that contained the e-mails that Mr. Burton's Committee is 
focusing on.
    Mr. Hoyer. Let me ask you a question. There has been some 
discussion about violation of the Armstrong bill and two other 
provisions of law.
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Am I correct that all of the information 
required to be kept by those three provisions was, in fact, 
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. It was kept on a tape, and you simply could not 
get to it in the time frame because you were doing the Y2K 
    Mr. Lyle. Correct.
    Mr. Hoyer. So while there was a delay in producing it that 
was consistent with all three of those provisions, the 
information was retained for archives or for other purposes.
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Thank you, sir.
    Thank you very much, Mr. Chairman.
    Mr. Kolbe. Well, I have some questions on that area, but I 
want to----
    Mr. Peterson. Go ahead.
    Mr. Kolbe. No. Frankly, I would just as soon get the 
questions out, come back to that and get the questions out of 
the way here on the travel.
    Mr. Peterson.
    Mr. Peterson. Good afternoon, Mike. It is good to see you 
again. I want to thank you for your candor and your composure 
here today. I think you are handling yourself well and 
compliment you.
    Mr. Lyle. Thank you very much, sir.
    Mr. Peterson. This does not have to be a political fight. 
This does not have to be political at all. Those who say that 
we are not on uncharted waters are not looking atthe facts. No 
manager of the White House has had to deal with what you are dealing 
with. No First Lady has visited the same State 38 times in less than a 
year, probably not 38 times in a full 8-year term--or two 4-year terms. 
So we are on uncharted waters. We have never had a member of the White 
House run for one of the highest political offices in the land. So your 
job has been made very difficult. But let me tell you what I think can 
rise above.
    I guess my first question is: The public is concerned about 
this. My questions did not come from the RNC. They have come 
from people in my district. I have had letters. I have had 
calls--``What is happening here?''--local news reporters. So I 
guess the first question I have, and this is not being critical 
of you because you did not make this decision, why has it been 
difficult to get this information? I mean, the committee I 
think has worked for weeks to put this chart together. It seems 
to me this ought to be readily available to the public.
    We all know, and I, in no way, question compromising any 
member of the First Family's safety. I am not going to make 
those decisions. And I know that the taxpayers are going to 
have a huge cost, had 38 visits to one State already, it is 
going to be more intense throughout the summer and fall, that 
is without question, and the taxpayers will, because she is a 
special person. She is the First Lady of this country. I do not 
have any quarrel with that. But they have a right to know what 
it is, how much does it cost, and who is involved, and what are 
they paying for, and what percentage of it is her campaign 
reimbursing. I think that is a fair, legitimate discussion 
because you are setting the standard from this day forward in 
this country of how a member of the White House who runs for 
political office is handled. This is new territory. It is not 
comparable to Nancy Reagan, it is not comparable to Mrs. Bush, 
it is not comparable to Mrs. Carter because they have never 
been there. They have never done this. This is new.
    So why has information been difficult to get?
    Mr. Lyle. Mr. Peterson, we have worked very closely with 
the subcommittee to provide timely responses to requests for 
information that we've received.
    Prior to the hearing, we received written requests and oral 
requests for the information that was presented. I received 
written requests, a total of four requests, separate requests, 
and dozens of questions--about 27 questions--which we responded 
to in a timely fashion. Also, Mr. Lindsay received oral 
requests, which we also endeavored to respond to in a timely 
    We are working to be cooperative and to carry on the 
partnership, which really moved in the right direction under 
Mr. Lindsay's leadership. I think considerable strides were 
made with him at the helm, and he is still actively involved. I 
had the pleasure of working with him, and we are responsive, as 
best we can, with the information that we have.
    Some of the information, as we're discussing these issues, 
is in other agencies. I can't comment on this chart because I 
haven't seen it before. I would be happy to look at it. We 
would be happy to answer the questions that we're getting, and 
that's really what we're trying to do.
    It's particularly important from a management point of 
view. I'm the Director of the Office of Administration, and 
what I do is manage. I provide common administrative support 
that needs to be there for the President of the United States. 
The best way to manage is to have suitable funds, which means I 
need to come before this Committee in a cooperative fashion, 
and that's what we do.
    So I don't know how it has come to the perception that you 
seem to have, but I assure you that we're trying to be 
responsive and cooperative in every way that we can.
    Mr. Peterson. I appreciate that.
    Did you not have some sort of a strategy session at the 
White House that says, you know, this is going to raise 
questions, this is uncharted territory, how are we going to 
handle it, how are we going to report it to the public, how are 
we going to furnish that information?
    Mr. Lyle. In terms of the First Lady travel issues?
    Mr. Peterson. Yes.
    Mr. Lyle. Very early on--in fact, when we first were 
confronted with the First Lady as a person who is running for 
office, an analysis was performed. It had to be performed 
because it was a situation that we needed to make sure that we 
followed all the applicable rules and laws that would be 
applied to her. Just like we endeavored to see to it that all 
of the rules and regulations that regulate travel are adhered 
to. So in the White House we did look into that early on. We 
continue to make sure that we are following all of those rules 
going forward.
    Mr. Peterson. Let me just share with you my thoughts on 
    I think the law is probably not written for the situation 
because nobody ever anticipated it. Like I say, it's kind of 
unexpected for somebody in the White House to run for high 
office and having to utilize White House services to do that. 
So I would say that just following the letter of the law might 
cause you problems in the public. I think you need to be very 
clear. You need to set a standard of what percentage of her 
costs are going to be paid for by the campaign and demand that 
of the campaign, and what percentage are going to be paid for 
by the taxpayers because she's the First Lady and you have to 
protect her and keep her safe and so on. So I think following 
the letter of the law, because the laws probably were not 
written to outline this case or any case such as this, 
anticipating it.
    So I think my advice to you is to come up with a plan of 
here's how we're going to do it, because it's probably going to 
happen day by day the rest of the year. The American taxpayers 
and voters are interested in how this will happen and how 
you're going to handle it. You're setting the bar. I guess I'm 
urging you to set it high.
    But the question I get asked is what is a fair percentage 
of her travel that should be paid for, will be paid for by the 
taxpayer, and what percentage will be paid for by the campaign.
    Mr. Lyle. Again going back to what I said earlier, in 
response to some of the questions I received, the regulations, 
rules and laws are, in their current form, followed in seeing 
to it that official funds are used for official purposes, and 
that political activities are paid for by political entities.
    That's what we do in this area. That's our guide. That's 
what we have currently. From a management point of view, I have 
learned along the way that you follow the law. That's good 
advice that I adhere to very carefully. A lot of time is spent, 
a considerable amount of effort, a very deliberate review 
process is in place to do that. That's howwe've been operating, 
and that's what we endeavor to do.
    Mr. Peterson. Of course, I think the law was implemented to 
deal with incidental trips that a First Lady takes. We're not 
in that situation. It's a campaign and it's very intense from 
now on. It's very intense and there will be lots of travel. I 
think that you ought to set a guideline of what the White House 
wants in reimbursement for all travel.
    I mean, there should be a standard set. I think the public 
will buy that. They may argue with the percentage; they may 
argue because of, you know, the Secret Service are separate 
costs. But I think it needs to be more definitive than that. I 
don't think the law was written to deal with this issue, but I 
think you can deal with it on behalf of the taxpayers, that 
what is done is fair, and that whatever travel is done on our 
aircraft that here's what it's going to cost. Here's the 
percentage you're going to have to pay that we'll reimburse the 
taxpayers. I guess I would urge you to develop that plan.
    Let me ask you a question. Would it be unfair to ask you to 
report weekly or every two weeks on here's the travel, to 
furnish it to this committee, and those who are interested 
would have the travel, here's the cost, and here's what the 
reimbursement is going to be, just keep it right up on the 
table. Don't make anybody dig and scratch and look for it. Just 
put it right up here.
    Mr. Lyle. You've made a couple of observations. We have a 
process in place that we use to handle the First Lady's travel 
in these areas. It is the process that we have used, and other 
Administrations have used. It is the one that works. It is what 
is dictated by the law, which is our best guide as far as how 
we should proceed.
    I think it would be burdensome to report on a weekly basis. 
It causes additional management challenges in the process. As I 
said before, our attorneys in the Counsel's Office are very 
capable people, who are there to handle these efforts. If you 
were to impose this type of thing, I think it would be 
    Mr. Peterson. Well, I guess I don't understand. If there 
were four trips taken this week at ``x'' cost, it's one sheet 
of paper, the reimbursement request is such. That's not 
burdensome paperwork. I mean, you would develop a simple little 
system in one computer, where you would pump it out each week 
and pass it out and the public knows.
    You see, this is not like it was with other Presidents. Let 
me finish. This is not the same. This is one of the most 
intense campaigns, a national Senate campaign, that anybody 
ever entered into. They're absolutely intense campaigns. Travel 
is constant.
    I just think that reporting the trips that were taken and 
the reimbursements, and taking that issue off the table, is 
just smart politically to do. It's right for the taxpayers to 
know what portion of the travel or campaign they're paying for. 
Because I think they will accept that, knowing that the First 
Lady needs to travel. I'm not going to question that, that 
she's the First Lady, the First Lady of this land, and she 
needs to travel in the most secure and safest way possible. I 
just have no quarrel with that. But I do feel it's not 
comparable to what has been historic of the First Lady's 
travel. It's a Senate campaign for the United States Senate, 
one of the most intense political things you could ever get 
involved in. The public needs more information than they're 
already getting, in my view.
    Mr. Kolbe. Miss Meek.
    Ms. Meek. Thank you, Mr. Chairman. And welcome, Mr. Lyle, 
and your company today.
    This is about my third year on this subcommittee. Before I 
came to this subcommittee, I served on governmental reform and 
oversight. It sometimes pains me about our focus, or maybe I 
should say foci, on these committees, and that we waste a lot 
of the taxpayers' time with extraneous, peripheral issues, when 
we can really get at the things that are hurting our government 
and hurting our people. We could strengthen them if we were to 
look more at those things.
    There are so many things that the people of this wonderful 
country need to worry about other than the First Lady's travel.
    Now, I know we must be what we call fiscally secure, and 
that we must be able to answer questions. But I think we have 
spent too much time on the First Lady's travel in New York. I 
think it's important that we look at her travel vouchers, but 
not to the extent that we spend a hearing, this hearing, on 
that. It gets to be ad nauseam by the time we finish looking. 
You could go on and on and on with this. It could be extended 
    Just as a person who has sat on these committees listening 
to this kind of thing, I can think of so many other things we 
could do. I know that each of you has mentioned the fact that 
this is uncharted territory, and I know it is. But it didn't 
take us this long to chart the North Pole. This took longer 
than it did to go to the North Pole and back. So in terms of 
relativity and importance to this country, I think we should 
have taken a little bit more time to sort this situation out 
before we came in, and then we could have structured our 
questions more, in such a way that it wouldn't look political 
at all, that it would look more substantive in terms of 
government accountability instead of political inquisition.
    Mr. Lyle--I must commend you on the way you have conducted 
yourself here today, and the way you've answered questions, in 
a forthright way.
    Mr. Lyle. Thank you, ma'am.
    Ms. Meek. And since you've done that, and you've shown that 
some of the terminology is hard to gather, like the mixed 
travel, the unmixed travel, the procedures that go back to the 
early Eighties to the other presidential wives and to the other 
presidents. But I just think that so often in appropriations we 
spend a whole lot of time on these extraneous issues when we 
could spend the people's money for the real things that are 
needed in this country.
    Anyway, as far as your budget is concerned, I'm wondering, 
as I read the chart, it appears to me that the number of days 
required to process invoices of so-called mixed trips has 
decreased considerably.
    Am I reading the chart correctly? In fact, the December 
14th trip was processed in 16 days. Is that correct, Mr. Lyle?
    Mr. Lyle. Yes, ma'am.
    Ms. Meek. How long does it usually take to process mixed 
trips for the President or Vice President?
    Mr. Lyle. If you look on that chart, you're looking in 
terms of a variety of different times. The average times we're 
looking at are consistent with what we've seen as far as 
processing the Vice President or the President's travel. Those 
numbers we are looking at are consistent.
    Ms. Meek. Thank you.
    I also want to commend you for----
    Mr. Kolbe. If the gentlelady would yield for a minute?
    Ms. Meek. Yes.
    Mr. Kolbe. Is that the document that has been given to the 
committee? I don't believe it is. Would you submit it to the 
committee for the record?
    Mr. Lyle. I believe it is the document that's been given to 
the committee. It's the chart that you said had the information 
on it.
    Mr. Kolbe. Oh, you're referring to that one?
    Mr. Lyle. Yes, sir.
    Mr. Kolbe. From your answer, it sounded like you were 
referring to a different document.
    Mr. Lyle. No, it's the one that's marked ``Air Lift 
Operations, Military.'' That's what this is.
    Ms. Meek. Would you mind commenting, Mr. Lyle, on your Y2K 
efforts--well, it's obvious that it was effective, in that you 
did a very good job getting ready for Y2K. That was quite a bit 
in itself to do that.
    Critics of government and of theagencies in government, 
including the Executive, Judicial and the Legislative branches, are 
saying we're still living in dinosaur-like age, in terms of information 
technology. What is your vision for the future of information 
technology for the Office of the President?


    Mr. Lyle. The vision that we have is for our information 
technology to become standardized, to become centralized, to be 
centrally managed. The management of our information technology 
resources are really being strategically planned, in connection 
with a solid infrastructure plan that we have in place. We seek 
to institutionalize, as I mentioned, the management of our 
projects by having the Information Technology Management Team, 
which was created under guidance that we received from the 
subcommittee. It has been very effective, and we look forward 
for that to continue.
    Our goal is to make it so that we have an architecture 
planning that drives, anticipates and sees to it that the 
technology that is available is brought to bear for demands 
that the Executive Office of the President faces.
    We have been pretty fortunate in that we know that the 
demands, the business issues, the business solutions, the 
processes that occur within the Executive Office of the 
President have remained static for a very, very long time. It's 
information technology, it's information management, it's data 
in and information and data out. It's word processing, 
financial reports and so on.
    Then there are some unique things in terms of some of the 
budget systems that exist. What we're looking to do is make 
sure that we are able to plan in advance so that the costs are 
strategically developed going forward. We can then see to it 
that we have a centralized architecture that really works. 
That's what our vision is.
    Ms. Meek. Thank you so much, and thank you, Mr. Chairman.
    Mr. Kolbe. Mr. Goode.

                         PUERTO RICO REFERENDUM

    Mr. Goode. Mr. Lyle, on the last page of your FY 2001 
budget request, you ask for $2.5 million, and I also note the 
chairman of the subcommittee commented for Puerto Rico, is that 
not correct?
    Mr. Lyle. Yes, there is a request in the Unanticipated 
Needs Account for a Puerto Rico referendum.
    Mr. Goode. It is said to be used for citizens education.
    Mr. Lyle. Part of the funds will be utilized for education 
purposes, in connection with the referendum. There are other 
costs--the total cost for the referendum is going to be $10 
million. $2.5 million is being included under this proposed 
budget by the United States. The remainder will be handled 
through the Election Commission in Puerto Rico.
    Mr. Goode. Why do you think the U.S. taxpayers should pay 
for ``citizens education'' on an election of that nature, 
because you've got at least two, and maybe three, sides down 
there. Why don't you just let them--That's almost like public 
funding of an election campaign.
    Mr. Lyle. The reason that some of the funds will be 
utilized for education purposes is because there was 
substantial confusion in terms of the referendum itself, what 
the issues are, what the questions were. As you mentioned, 
there were three different groups that are involved there.
    The Acting Governor of Puerto Rico wrote to the committee 
supporting the initiative, so that we can see to it that they 
have a referendum that works. Puerto Rico had a couple of 
referendums that the United States did not contribute to, where 
they were unable to come to a resolution.
    Mr. Goode. Let me ask you this.
    If you have a congressional campaign down in my district, 
and there's a lot of confusion among the issues, do you think 
the taxpayers ought to send down some money to ``straighten out 
the confusion''?
    Mr. Lyle. What the Administration is trying to do is see to 
it that we follow through with the commitment to have a 
suitable referendum. This is consistent with, I think, a 
presidential directive issued by President Bush--where from 
time to time we would ascertain periodically, by means of a 
general right of referendum, sponsored either by the United 
States Government or the legislature of Puerto Rico.
    The referendum we are seeking will carry forward with the 
commitment that we made with Puerto Rico in that regard. So 
we're trying to do it in such a way that it makes sense, that 
we can get a useful determination so that we can fulfill that 
    Mr. Goode. All right. Will you give the Commonwealth of 
Virginia $2.5 million to help run their elections?
    All right. Let me ask you this. In connection with that 
request, it is supposed to be, is it not, according to your own 
words, in furtherance of the national interest, security or 
    Mr. Lyle. Yes.
    Mr. Goode. And you think that $2.5 million comports with 
that requirement?
    Mr. Lyle. Yes, sir. It is in the national interest.
    Mr. Goode. Your definition of the national interest.
    Mr. Lyle. Well, I happen to agree, but we do believe it's 
in furtherance of the national interest to do that.

                           FIRST LADY TRAVEL

    Mr. Goode. I don't know much about White House travel here, 
but what is the formula you use to decide the amount of 
reimbursement on a particular trip--in this instance, the First 
Lady's campaign?
    Mr. Lyle. The rules, regulations and laws that we're 
talking about provide for two types of formulas. There is a 
hypothetical formula that's utilized and a hard time formula 
that is utilized.
    Mr. Goode. Which are you utilizing?
    Mr. Lyle. They are all utilized, depending on the nature of 
the trip. The exact ins and outs of how that formula is applied 
for the----
    Mr. Goode. Who decides the nature of the trip? You?
    Mr. Lyle. No, I do not.
    Mr. Goode. Who does?
    Mr. Lyle. The nature of the trip is determined by the 
management legal review that I referred to earlier, in response 
to Mr. Kolbe.
    Mr. Goode. Who are the determinors of the management legal 
    Mr. Lyle. The staff in the Office of Management and 
Administration, and White House Counsel.
    Mr. Goode. And how are the staff people that--It's White 
House Counsel and the staff of----
    Mr. Lyle. Management and Administration, and the 
appropriate other offices. I want to be clear that certain 
other offices are also consulted. There are other entitiesthat 
you need to look at. For example, if you're looking at the White House, 
or the Vice President's office, there are other steps.
    Mr. Goode. Let's just take the First Lady's trips, so I can 
understand. Who are the deciders?
    Mr. Lyle. The names of the individuals?
    Mr. Goode. Yes.
    Mr. Lyle. We have a staff in the Office of Management and 
Administration. The lead person would be Chris Szymanski. Don't 
ask me how to spell the last name. I'm just happy to pronounce 
it. He works very, very hard. He's a diligent staff worker.
    Mr. Goode. Go ahead and tell me.
    Mr. Lyle. The person in the White House Counsel, I don't 
know exactly the attorneys that work on it. I know one attorney 
is Dawn Chirwa, who has been with the Administration for a 
very, very long time, and is very, very adept at making these 
    Mr. Goode. Would you say it's a very objective decision in 
determining which formula you use, whether you use the hard 
formula or the first formula you mentioned?
    Mr. Lyle. I don't want to try to speculate on that.
    Mr. Goode. But would you think some subjectivity could come 
into play on it?
    Mr. Lyle. There is an analysis that's done in accordance 
with what the formula requires, and it is legally dictated. 
Those are the things that go into it. The ins and outs of it or 
the precise steps that are utilized, I couldn't begin to tell 
    Mr. Goode. You're not willing to say, though, there is no 
subjectivity in it?
    Mr. Lyle. I don't want to say one way or the other, sir, 
because I don't want to provide inaccurate information. I would 
have to say that I would have to ask or find out what the----
    Mr. Goode. Who are you going to ask?
    Mr. Lyle. I would return to the White House and ask----
    Mr. Goode. Chris Szymanski, or Dawn Chirwa, or are you 
going to go above them?
    Mr. Lyle. I could start there. I would be happy to find 
that out.
    Mr. Goode. You're going to ask them whether it's subjective 
or objective; is that what you're going to ask?
    Mr. Lyle. Well, I'm trying to help with the question that 
you're asking. I'm doing the best I can to answer your 
question. What I'm trying to tell you is that it is a process 
that they employ, that I don't employ. I know that they do it, 
that they're very good people, because I know them. They work 
very hard, are very diligent. The exact formulas and the ins 
and outs of that I don't want to try to characterize because I 
don't want to provide you with inaccurate information.
    Mr. Goode. Let me ask you this. You have so many full time 
persons that are paid that work at the White House Executive 
Office, right?
    Mr. Lyle. Yes.
    Mr. Goode. And you also have a lot of volunteers over 
there, right, interns?
    Mr. Lyle. Yes, there are interns and volunteers.
    Mr. Goode. What if you got a few volunteers on the 
Democratic side and the Republican side to work with these 
people, on any issues that might be subjective, and then that 
way it would be open to the public, would it not?
    Mr. Lyle. The volunteers typically work in the 
    Mr. Goode. No, I'm not saying volunteers you pick 
necessarily. You could pick two and maybe the other side pick 
two and look at it, and offer advice and suggestions, in 
    Mr. Lyle. As far as the process?
    Mr. Goode. Right. The bottom line is deciding how much 
you're going to pay for each trip.
    Mr. Lyle. I would say that--I think that your question is 
similar to what Mr. Peterson and I were discussing, which is we 
are doing the very best that we can with those staff to adhere 
to the rules and regulations that are applicable to travel. 
That's what we do. My office, the Office of Administration, 
once that process is in place and utilized, we see to it that 
the appropriate disbursements are made. That is our process.
    We have been forthright in providing the information that 
was asked of us by the subcommittee on that area, and that is 
what we do.
    Mr. Goode. Would you submit, if you find out this to be the 
case, after talking to Chris Szymanski and Dawn and the White 
House Counsel, that if it's totally objective in arriving at 
the dollar figure, could you just send a letter saying that's 
how we do it?
    Mr. Lyle. I would be happy to try to make the inquiry that 
you're asking for.
    Mr. Goode. With a letter follow-up?
    Mr. Lyle. I would be happy to provide you--a letter from 
    Mr. Goode. Or from them, I don't care.
    Mr. Lyle. Certainly.
    Mr. Goode. All right. Thank you.
    Mr. Kolbe. Thank you.
    Mr. Lyle, I am still trying to get to the bottom of this. I 
have other questions and I don't want to dwell on this, but I'm 
trying to get to the bottom of this issue here, of the 
documents you provided to us entitled, ``Air Lift Operations--
Exploratory Payment History'' and sanitized by the Secret 
Service, blacked out, the version which Mr. Hoyer referred to.
    The document you provided for the Committee on March 1st 
shows--and I'm not going to give the number because that's in 
question. That's the issue here we don't want to give it out. 
But it shows the number of official staff. We know the number 
of Secret Service that travel with the First Lady. And at the 
bottom it says, of the document you provided, ``Note: Number of 
official staff includes Trip Coordinator, Secret Service 
detail, and White House photographer.''
    Mr. Lyle. Yes, sir.
    Mr. Kolbe. Now, when you back out the Secret Service, that 
is where these numbers are that we came up with, the number of 
official people traveling with her, two, two, and in some 
cases, one. In most cases it is two.
    The document you have given Mr. Hoyer and did not give to 
us has ``one'' in every single case. What is the discrepancy?
    Mr. Lyle. The answer is--I understood you were provided the 
chart that shows----
    Mr. Kolbe. Just tell me what the discrepancy is.
    Mr. Lyle. I don't have an explanation for thediscrepancy. I 
can tell you that the number that you have on the chart, where it says 
one--whatever chart you're looking at--it's the one that Mr. Hoyer----
    Mr. Kolbe. The one you faxed us on March 1st shows a 
different number. I'm not going to read that because it 
includes the Secret Service. But you back that number out, and 
it is the number two, two, two, one, two, official people 
traveling with the First Lady.
    Mr. Lyle. To make a clarification so that we all understand 
what we're talking about, I think you've apparently got two 
versions. I have the one that has ones on it.
    Mr. Kolbe. The one I'm talking about came from you.
    Mr. Lyle. No, it was provided by the Management and 
Administration Office.
    Mr. Kolbe. Oh, I'm sorry. Not the White House. Okay.
    Mr. Lyle. No, no. It's in the White House. It's just not my 
    Mr. Kolbe. I see. Can you----
    Mr. Lyle. Now, I can tell you what I think happened, that 
if you include Secret Service and White House photographer, 
you're talking about appropriations that are not White House 
    Mr. Kolbe. All right. Let me get to the bottom of that now.
    The White House photographer is part of the Office of White 
House Communications, is that not correct?
    Mr. Lyle. No, the White House photographer is a DOD 
    Mr. Kolbe. The White House Communications office is part of 
DOD, but it's appropriated by funds in this bill.
    Mr. Lyle. The photographers are employees of the Department 
of Defense, but the White House photographers report to Mr. 
    Mr. Kolbe. So the question is, who paid for the White House 
photographer, whether his salary comes out of the Defense 
Department or otherwise? Who paid for the White House 
photographer on those trips?
    Mr. Lyle. The Department of Defense.
    Mr. Kolbe. So my question is do you have any idea what the 
purpose of the official photographer on a political trip is?
    Mr. Lyle. The purpose of the official photographer is--I 
was going to say----take official photographs, but you need 
more information than that.
    The photographers are there to document history. That's 
what the photographers do. They are official photographs that 
become part of the presidential record. When the First Lady is 
traveling abroad, she's making history, just like when the 
President travels and the Vice President. The photographers are 
there to capture that. That's their function. Each of the 
photos taken are official White House photographs.
    Mr. Kolbe. And they're not provided to the campaign in any 
    Mr. Lyle. Oh, no, no. Those are official photos.
    Mr. Kolbe. Well, I think there are some real questions 
involved in that. But let me go back now to the question of the 
    The White House has stated--and I accept this--the Secret 
Service certainly prefers that the First Lady use government 
aircraft. It prefers. It is not a requirement. Would you agree 
with that?
    Mr. Lyle. The Secret Service, as Mr. Hoyer pointed out, 
cannot require--What we do is like prior Administrations. The 
protection of the First Lady is of paramount concern.
    Mr. Kolbe. Of course. I assume the protection of the First 
Lady would be a paramount concern when she's doing a book tour, 
when she uses a plane provided by Simon & Shuster; is that not 
    Mr. Lyle. I don't know, sir.
    Mr. Kolbe. Well, she did.
    Mr. Lyle. I don't know the answer to your question. I can 
tell you that we adhere to the recommendations of the Secret 
Service when it comes to issues of security. We follow their 
advice, like prior Administrations have done.
    Mr. Kolbe. Mr. Peterson, I think, hit it exactly on the 
head. We're in uncharted territory here. It's not true that she 
and other First Ladies have not used other aircraft, and she 
did on a book tour. She used another aircraft for a number of 
    So I guess my question would be, of all the things, it 
would seem to me you would want to err on the side, or the 
political campaign would want to err on the side of being the 
most cautious, and the White House would want to err on the 
side of being the most cautious, when it comes to a political 
campaign that the First Lady is running on her own behalf. And 
yet, here government aircraft is being used.
    There's no question about it, that it is an advantage to 
the campaign to be able to have that paid for by the taxpayers. 
I don't think there's any doubt about that.
    So I guess my question would be--and you apparently can't 
shed any light--as to why it was deemed acceptable on a book 
tour to use a privately chartered aircraft but not for the 
political campaign.
    Mr. Lyle. As has been done in prior Administrations, back 
through the Bush Administration, back through the Reagan 
Administration, and even before that, we adhere to the advice 
that we receive from the United States Secret Service when it 
comes to the safety of the First Lady. That's true for any of 
the other principals--the President, the Vice President. That's 
what we do. As it has been put by prior Administrations, it is 
of paramount importance.
    Mr. Kolbe. Maybe this was answered by an earlier question, 
but on one occasion here in this document that the Office of 
Management provided to us, the reimbursable amount for two 
official travelers, is shown as $494. In another case, where 
there's one official traveler, it is shown also as $494. I'm 
sorry, it's two nonofficial travelers. That wouldn't have 
anything to do with the White House photographer?
    Can you explain why in one instance, for different numbers 
of people traveling, there's the exact same amount 
reimbursement shown? Specifically I'm referring to the trip on 
November 8th, where there was one nonofficial traveler, with a 
total cost of $494, and two weeks later, two non-official 
travelers, at a cost of $494, the First Lady and one other 
person, a total cost of $494?
    Mr. Lyle. I don't have the answer at my fingertips, but I 
would be happy to take that for the record and provide you a 
written response at a later time.
    Mr. Kolbe. Okay. I would like to get the answer to that.
    Mr. Kolbe. A final question in this area, and then I'll 
come back in my last round on e-mail, because I think those are 
extraordinarily important.

                            CAMPAIGN TRAVEL

    My final concern has to do with the length of time it took 
to submit invoices. Your documents indicate it took an average 
of 28 days for the political party to reimburse for the cost of 
the trip. I would say that it's been a fairly timely 
reimbursement. But I notice that it took up to six months to 
send the invoice to the political party.
    Eight of the 22 political trips taken that you provided us 
information on were not billed for at least three months, and 
14 of the billings didn't happen until after staff had 
requested this information on December 15th. You will note 
looking down the list there the date of the invoices here, 
December 29th, December 22nd, December 29th, December 29th, 
January 1st and so on down there for the invoices.
    Can you give me some idea as to why there is this 
tremendous discrepancy in the length of time for these 
    Mr. Lyle. The lengthy numbers are certainly more than we 
would have preferred. As you noted, and as Ms. Meek also 
pointed out, the time frame has improved significantly. We have 
been working very hard to make sure that we continue to see 
that that improvement is realized.
    The billing time frame that we are currently within is 
consistent with what we've seen with political travel in past 
years, so we're comfortable that we've come in the right 
direction. But your concern is absolutely correct. The time 
frame when we first got started was longer than we would have 
    Mr. Kolbe. I see that we've just started a vote here, and I 
do have a few questions on the e-mail that are really very 
relevant, because it's relevant to your budget here. I will ask 
them after our vote.
    We have a few minutes, so would you like to proceed, Mr. 
Hoyer, with some questions?
    Mr. Hoyer. Thank you very much, Mr. Chairman.

                         PUERTO RICO REFERENDUM

    Let me clarify, because I happen to support the $2.5 
million for Puerto Rico because I think that, unlike Virginia, 
which is an independent commonwealth, the great State of 
Virginia, it is not an independent state in many ways, and we, 
of course, make their national laws. We need to clarify that.
    My presumption is that, as a result of discussions with the 
parties, including the Governor, but other parties as well, 
that in order to clarify what the Congress has voted and 
authorized, would be done in a fashion that would presumably 
come up with a clear result.
    I think the important thing is that the education referred 
to is, in fact, analogous to public expenditures that are made 
by the State of Virginia and made by the State of Maryland. 
That is to say, notification of the questions that will be on 
the ballot, so that they're fully disseminated and everybody 
knows what the questions are. We do that in our State, and I 
presume that you do that in your State, furthermore clarifying 
when the election will be held, where it will be held, things 
of that nature. It is not any information of ``education'' 
which would have the effect of favoring one view or another; am 
I correct? I think the gentleman from Virginia raised an 
appropriate concern. We certainly wouldn't want to appropriate 
public moneys for the purposes of advocating any position that 
the voters in Puerto Rico ought to take, but educating the 
voters as to what the questions will be that they will have to 
decide upon is another matter.
    Mr. Lyle. Precisely. That is the intent of what the funds 
will be utilized for.
    Mr. Hoyer. Am I correct that--and the most important 
question--that none of the dollars included in this request of 
$2.5 million would be spent for the purposes of advocating any 
position to the voter of Puerto Rico?
    Mr. Lyle. That's correct. I apologize, Mr. Goode, if I did 
not understand the question.
    Mr. Hoyer. Mr. Warner, in particular, would be shocked, 
chagrinned and deeply disappointed if the Federal Government 
didn't send Virginia far more than $2.5 million. [Laughter.]

                        CAPITAL INVESTMENT PLAN

    I think you have spoken to this, but I would like for you 
to repeat it. You have requested $9.9 million for your 
continuing computer upgrades. What would be the consequences of 
straightlining funding for your capital investment program?
    Mr. Lyle. The consequences would be severe. We have sought 
to carry on the improvements that we started in partnership 
with this subcommittee last year. That's what we're seeking to 
do with our $9.9 million capital improvement plan. We want to 
carry on the network infrastructure improvements that we had 
begun last year. This will take us further along the line, and 
if we continue along this path, by next year we will be where 
we should be, in terms of our network infrastructure.
    We need to improve our data center. There are a number of 
issues in that area. There's equipment that's old, that is 
important to our power supply, that's unreliable, and it's 
becoming difficult to find replacement parts. We need to make 
sure we have funds to replace that.
    Our flooring, some of it is 20 years old. It needs to be 
replaced to continue to support and protect the equipment and 
the people that work in there. It's a special raised flooring 
for wiring and it needs to be replaced with flooring and 
equipment that sees to it there is no danger of static 
electricity and so on. Those are the kinds of examples that we 
see in our capital investment program.
    If we didn't get the $9.9 million, all of the steps that we 
took last year would be for naught, because we would not have 
followed through on the plan that we put in place under this 
subcommittee's guidance.
    Mr. Hoyer. Thank you.


    The last question would be on the e-mail. You testified 
that all of the information required to be kept by the records 
act, the archives act, the Armstrong Act--and what's the third 
one I'm groping for?
    Mr. Lyle. The Federal Records Act.
    Mr. Hoyer. The Federal Records Act--were, in fact, kept. 
The only problem was retrieving them immediately because you 
were focused on the Y2K issue and did not have the resources to 
go back after the computers were transferred.
    Mr. Lyle. Exactly.
    Mr. Hoyer. Mr. Chairman, I guess I answered my own 
question. I wanted to clarify that because I think that's an 
important point. The observation you made was that there was a 
question as to whether or not these three provisions had been 
complied with, and it's my understanding they have, although 
they did not retrieve the information immediately, for the 
reasons stated.
    Mr. Lyle. Yes, sir. The information is on back-up tapes, 
secure in the data center, in the New Executive Office 
Building, which has restricted access. They're all there on the 
back-up tapes, all the information that we captured on the 
back-up tapes.
    Mr. Hoyer. And I'm sure Mr. Lindsay is being asked a lot of 
questions about that and is responding in the same fashion.
    Mr. Lyle. Yes, sir.
    Mr. Hoyer. Thank you.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you.
    I'm going to have a few questions on the budget aspects of 
the automated records management system, so we will come back 
here after this one vote, which I understand is on a motion to 
    Mr. Peterson, would you like to try to get in a question 
here before we come back?

                            CAMPAIGN TRAVEL

    Mr. Peterson. Yeah.
    Mike, if a person is running for the United States Senate 
or Congress, the FEC rules require a candidate to pay in 
advance either the cost of a first-class ticket, if there's a 
scheduled flight, or comparable charter fares if there is no 
scheduled flight. That has to be paid in advance to the person 
entering the plane, or it's considered a loan to that 
committee. It's considered a contribution to that committee, 
which corporations cannot do that.
    Mr. Lyle. I believe what you're referring to is the 
hypothetical formula that's utilized and applied by the White 
House Counsel's Office, in conjunction with the analysis that 
I've been talking about, the management legal analysis.
    I think that's what you're referring to.
    Mr. Peterson. You have a hypothetical formula. So you're 
doing the same thing as the FEC, only you're not doing it prior 
to the flight? You're doing it after the flight.
    Mr. Lyle. I want to answer your question. I don't know what 
the specific nuances are--I was trying to answer Mr. Goode's 
question--with respect to the applications of those rules. 
Those are matters that are handled by the White House Counsel's 
Office and we rely on their determinations in that regard.
    Mr. Peterson. Of course, if it's not done that way, it's 
considered that a corporation made a loan, and in this 
situation it could be considered equal, that the taxpayers have 
made a loan to a campaign committee because they furnished 
travel that will be reimbursed at a later date.
    Mr. Lyle. Again, Mr. Peterson, I don't want to comment in 
that area because those are matters that are handled by the 
lawyers in the White House Counsel's Office.
    Mr. Peterson. Just one specific on the charts you gave us. 
On July the 7th, the exploratory trip was $46,000, the cost of 
an USAF C-20. There were four political people which reimbursed 
$3,662, which would be about $900 a person. Then there were two 
official people who reimbursed $417.
    Why is one reimbursed at a different rate than the other?
    Mr. Lyle. I'm sorry. Which document are you referring to? I 
don't have that.
    Mr. Peterson. June 9th, December 14th, it's the one I just 
received at 2:00 o'clock. The July 7th date, where there was 
    Mr. Kolbe. It's second on the list.
    Mr. Peterson. The cost of the trip was $46,000 for the 
plane. The four political people reimbursed $3,662, which I 
guess would have been paid for by the political campaign for 
the Senate, and then two official people that traveled 
reimbursed $417. I guess I didn't understand why the 
    Mr. Lyle. This chart that you're referring to was built on 
information that I don't have, and that I didn't provide to the 
subcommittee. I cannot comment on--I can't answer your 
    Mr. Peterson. Will you give us that in writing?
    Mr. Lyle. That I don't have this chart?
    Mr. Peterson. No, no. You'll be given the chart, I'm sure.
    Mr. Lyle. If I get the chart, we would be happy to try to 
look at that.
    Mr. Kolbe. If the gentleman would yield, Mr. Lyle, don't 
you represent the Office of Management here today?
    Mr. Lyle. The Office of Administration.
    Mr. Kolbe. The Office of Administration?
    Mr. Lyle. Yes, sir.
    Mr. Kolbe. That's in the information they provided us. It's 
been faxed right here.
    Mr. Lyle. I don't believe that----
    Mr. Kolbe. The letter is signed by you. ``I am attaching 
materials in response to the questions.'' This is one of the 
documents you----
    Mr. Lyle. I have not seen this exhibit.
    Mr. Kolbe. You sent it to us, signed----
    Mr. Lyle. No. I'm sorry, Mr. Chairman I don't know what 
else to say on that. If we get a copy of this chart, I would be 
happy to look at that and do what I can. I will take that 
question for the record and we'll get something back to you.
    [Clerk's Note--The information used to construct the chart 
referred to was provided by the EOP and is displayed as 
Exhibits 2 and 3.]
    Mr. Peterson. Thank you.
    Mr. Kolbe. We will stand in recess until we return here.
    Mr. Kolbe. The subcommittee will resume.
    Mr. Lyle, my apologies for the delay. I don't think any of 
us anticipated that the Speaker was going to choose this moment 
to try to announce his resolution of the Chaplain's issue here. 
But I apologize for that.
    I have just one other area of questioning. We have already 
touched on it some, and Mr. Hoyer has, and there has been some 
discussion here of the question of e-mails. Obviously, today's 
hearing in Government Operations with Mr. Lindsay is going into 
this in considerable detail, far deeper than anything I'm going 
to attempt to do here today. But I do want to touch on what I 
think are a couple of the budget issues that are related to 


    Just for the record, so that we can clarify here, the 
current Automated Records Management System, called ARMS--and 
we'll use that acronym--was installed in 1994, and was used to 
collect and sort electronic messages by the Executive Office 
agency; is that correct?
    Mr. Lyle. Yes. It is used to collect and manage e-mails.
    Mr. Kolbe. Is this the system that's used to comply with 
the requirements of the Armstrong resolution?
    Mr. Lyle. It is one of the elements that was required in 
connection with the Armstrong litigation. The opinion required 
a variety of steps. Guidance and schedules needed to be issued, 
which we did, and we were required to develop a suitable 
records management system that conformed with the Armstrong 
decision. It was our decision to create the Automated Records 
Management System, known as ARMS.
    Mr. Kolbe. Is it this system, the ARMS system, that had the 
glitch that we've been hearing about in the press reports?
    Mr. Lyle. Yes, sir.
    Mr. Kolbe. What has been the cost of developing and 
deploying this ARMS, do you know?
    Mr. Lyle. I know that we have provided, in response to some 
written materials, the total budget that was utilized, and in 
some cases the breakdowns. I can locate that for you and give 
you that number.
    Mr. Kolbe. The cost of developing and deploying, and I also 
would like to annual operating and maintenance cost, what we're 
spending on it annually just to keep it up.
    Mr. Lyle. The total operating budget was $13,115,000. It 
related to a variety of areas, including transportation, GSA 
rent, communications and utilities, contractual services and 
supplies and materials, and equipment.
    The total expenditure was $10,129,333.49. The current 
available balance, as of this report, which is dated March----
    Mr. Kolbe. I think you're referring to the Armstrong 
    Mr. Lyle. That's the Armstrong resolution account.
    Mr. Kolbe. That's the account, but that's not necessarily 
the exact amount that was used on developing the system.
    Mr. Lyle. I believe the equipment line of the account is 
the number that would include that. Whether that equipment line 
includes just the ARMS system or other components, I would have 
to check for you.
    Mr. Kolbe. What I would like to know is the amount that was 
used to develop this ARM system.
    Mr. Lyle. I would be happy to provide that, sir.
    Mr. Kolbe. And, as I said, the annual costs of the 
operation and maintenance of it.

                              FENCED FUNDS

    Now, in response to some questions from Mr. Hoyer, you said 
that the fencing of some of the funds that the Subcommittee had 
provided you in 1997, the funds for information technology, 
resulted in some of the problems that you had. You said that 
clearly that fencing has led to some of these problems that 
have occurred, the glitches that have occurred.
    Mr. Lyle. It was a contributing factor.
    Mr. Kolbe. Well, as you know, with the figure you just 
gave, in 1994 there was a supplemental appropriation of $13.1 
million for funds associated with the Armstrong resolution, to 
implement the Armstrong resolution.
    To your knowledge, are there restrictions on your use of 
those funds?
    Mr. Lyle. Yes.
    Mr. Kolbe. And what are those restrictions?
    Mr. Lyle. The restrictions are that the funds are to be 
used for the necessary expenses--this is in the March 20th 
letter that was submitted to you by Mr. Lindsay. The 
appropriations language requires that it needs to be for the 
necessary expenses for electronic communications, records 
management activities, for compliance with and resolution of 
Armstrong versus the Executive Office of the President.
    Mr. Kolbe. So that would include the ARM system, right, to 
maintain and operate the ARMS, right?
    Mr. Lyle. Yes, sir.
    Mr. Kolbe. So that's what the money was there for.
    Mr. Lyle. Yes.
    Mr. Kolbe. The $966,000, wasn't part of that $13.1 million, 
this was $966,000 to develop your new system. We had concerns, 
as you know, that for three years running we were having 
difficulty getting a management plan in place at the White 
House. And while Mr. Hoyer and I sparred a little bit over 
that, in the end I think we both agreed that the White House 
needed to have an architectural system in place before we let 
those funds go.
    But how does that relate to this? You have $13 million in 
an account specifically to deal with this.
    Mr. Lyle. The way that it relates is as follows: the ARMS 
system does not stand alone. It is connected to a variety of 
other systems. For example, the Lotus notes system, which is 
the e-mail system, is not part of ARMS. It's connected, and 
there's an interface that has to be in place. That's one 
component. ARMS is part of our overall electronics management 
effort within the Executive Office of the President.
    There are a whole variety of servers and components to that 
huge electronic e-mails management system, or communication 
management systems--that interface with ARMS. It doesn't stand 
by itself. When you have the funds that you need to access, to 
make improvements or to correct or to repair and maintain, 
there are other systems that are connected to it, that's where 
you run into other problems.
    That is when you have the fenced fundings issue as a 
contributing factor. Those other systems that it connects to, 
if they're unreliable and they're malfunctioning and they're 
having difficulties processing the information, ARMS is 
affected. And if ARMS is affected, you will run into glitches.
    Mr. Kolbe. Mr. Lyle, I think that's just a little 
disingenuous for you to say that it's because of the fencing 
    Mr. Lyle. I'm not saying that it's solely because of the 
fencing. I'm saying that it's a contributing factor.
    Mr. Kolbe. I know. Solely, partly, primarily, possibly, in 
some degree, because of that fencing. I think it's just a 
little disingenuous to suggest that. Those funds were fenced 
because we didn't believe--and ultimately I think we got 
agreement with you on this--that we had an architectural plan 
in place for using those funds.
    If those funds had not been fenced, are you saying there 
would have been no problems with the e-mail management?
    Mr. Lyle. I don't believe that the Subcommittee fenced the 
funds to purposely sabotage the ARMS system.
    Mr. Kolbe. No, or to purposely sabotage anything in the 
White House.
    Mr. Lyle. The effect of what was done is what I'm 
discussing. The intention and the reasons behind the fencing of 
the funds were because of difficulties that had existed earlier 
in the Executive Office of the President.
    Mr. Kolbe. Right.
    Mr. Lyle. Certainly prior to my tenure, and Mr. Lindsay's 
    Mr. Kolbe. Right. I acknowledge that.
    Mr. Lyle. What we have been able to do is forge the type of 
partnership that we should have with the Subcommittee to 
continue with our improvements.
    Mr. Kolbe. And I agree. I think we're on the right track on 
that. But I just----
    Mr. Lyle. I understand that the intent certainly was not to 
cause difficulties, but that is the effect. As a result, you 
had these systems that were, as I described, in very poor 
functioning condition. There were network failures; there were 
eroded levels of protection; and security issues. All of these 
things were occurring in the EOP, because you couldn't spend 
any money to buy information technology.


    Mr. Kolbe. Well, again, I just would suggest that itseems 
to me--I'm looking here at a letter dated March 20th in which Mr. 
Lindsay is requesting us to release the last $1.7 million from the 
Armstrong account. So there's been money in this account, and if it was 
needed to make sure we maintained the ARMS system, we've always been 
ready there to release this money and provide it for you.
    Mr. Lyle. Yes, and that's why we sent the letter, because 
it's an available funding source. We have a situation where we 
had e-mails on our backup tapes. We need to reconstruct those 
backup tapes so that we can place them back into the ARMS 
    Mr. Kolbe. This occurred in '98, didn't it?
    Mr. Lyle. It was discovered in 1998. It actually occurred 
in 1996 and was effective until November of 1998, until it was 
    Mr. Kolbe. So it was discovered long after the fencing of 
the funds.
    Mr. Lyle. It was discovered between that time, between 1996 
and November of 1998. The records that were affected by the 
anomaly that you're referring to, there were 526 total accounts 
that were involved. The e-mails that were involved were White 
House e-mails. Those are presidential records, not Federal 
records. The Armstrong decision only construed and related to 
Federal records.
    So, in order for us to access funds from the Armstrong 
account to reconstruct presidential records, we need to come to 
you for permission. That was why the March 20th letter was 
submitted to you. Because the Armstrong case, in which it says 
in resolution of Armstrong versus the Executive Office of the 
President, that was the litigation which only dealt with 
Federal records. We're talking about White House records, with 
four exceptions, on the account that are presidential records. 
But, in any event, if we want to do a reconstruction, we need 
to ask your permission, which is the safest course in terms of 
what we want to do.
    Mr. Kolbe. You're asking for the money for the 
reconstruction two years after you discovered the glitch, the 
    Mr. Lyle. Yes.
    Mr. Kolbe. Would you call that timely?

                               Y2K CRISIS

    Mr. Lyle. Under the circumstances that we found ourselves 
in, I believe it was. Back in November of 1998, that's when we 
were looking squarely into the eyes of the Y2K crisis that I've 
been talking about in the hearing. We had to make some 
decisions. We had to come up with a plan, which is exactly what 
we did. We had to prioritize projects. What we did as the 
number one priority, pursuant to the plan, was simple: make 
sure that you are Y2K compliant; all of your mission-critical 
systems first, and then, after that, your mission support 
    This e-mail reconstruction paled in comparison to the Y2K 
issue, like a variety of other projects that we had to defer. 
Management deferred the Network Operation Center and the 
financial management automation projects that I have been 
talking about. We deferred our introduction of an intranet and 
a whole host of other important information technology 
projects, because our singular purpose at that time was to 
bring every resource to bear to fix our Y2K problems.
    Mr. Kolbe. Understandably, and----
    Mr. Lyle. And we knew that we had the e-mails securely 
located in the room, in the data center. We knew that they 
would be there, and we knew that they would be there after the 
Y2K crisis had passed. So, we made a decision to defer that 
project, like we deferred a variety of other important 
projects, until the Y2K crisis had passed.
    Mr. Kolbe. Mr. Lyle, it wouldn't have been that difficult 
for you to have at least notified the Committee, since we had 
provided the money the Armstrong resolution, knowing that there 
was going to need to be a substantial expenditure of funds to 
reconstruct the e-mail.
    Did it ever occur to the White House to notify the 
Subcommittee that had jurisdiction over the funding for this 
problem, that there was a problem that had occurred?
    Mr. Lyle. Yes, and that's why we're coming to you now.
    Mr. Kolbe. I mean in 1998.
    Mr. Lyle. In 1998, the scope of the problem was difficult 
to understand. We knew we had the backup tapes, so we knew we 
had the data that was available on the backup tapes. We had 
asked Northrup Grumman, the contractor, to provide us with a 
plan on a reconstruction. They told us at the time that it 
would cost somewhere on the order of $602,000 just to figure 
out how to do the reconstruction.
    The information technology professionals that work in the 
Office of Administration said that we're not sure that that is 
a sensible way to proceed. We need to look at this, but we 
can't at this stage because we have to focus on Y2K.
    So we said we would defer it, and I asked my information 
technology staff, after we had done that, to reevaluate the 
situation--and this is on my watch now--in the February time 
frame. In January I was the Acting Director, and now I'm the 
Director, in February of this year.
    Once we had the Y2K problems behind us, our information 
technology staff could tackle the problem. As it turns out, my 
information technology staff spent time, in the January and 
February time frame, looking at this issue. We were able to 
save ourselves $602,000 because they figured out a way to fix 
it themselves.
    The reason we're coming before the subcommittee now is that 
we have done what we should do. We have come out with cost 
assessments and we have asked our information technology people 
to put together a plan of reconstruction that we can pass on to 
contractors, for them to give us proposals for the costs 
associated with a reconstruction. Once I had that, I could come 
to you and say to you, ``I have a request for money of a 
particular amount to try and tackle this problem.''
    The first questions I think you would ask, appropriately, 
would be: ``Have you done a cost assessment? Have you done an 
analysis? Can the $602,000 be saved? Do you really need to do 
that?'' Those are the questions we wanted to be able to answer. 
We are in that position today, and that's why we have asked for 
the money.
    Mr. Kolbe. Mr. Lyle, I have a whole series of other 
questions that I'm going to submit, specific questions about 
where we are with the fix and how many messages were effected, 
and we will submit all those questions for the record.
    But I do have to say that I'm disappointed with your 
answers, because you have said here, just in response to my 
question, that your first priority was Y2K. I understand that 
you needed to deal with that.
    But in response to another question, you said it was 
because this Subcommittee fenced the money. That was at amuch 
earlier time, not before the Y2K issue came up. So I think you're 
trying to have it both ways, to say that we fenced the money and caused 
the problem, and we had the Y2K issue, and that was really the cause of 
the problem. I just think you're not being entirely forthright with us 
here. I have to tell you that.
    Mr. Lyle. I'm endeavoring, sir, to be as forthright as I 
    Mr. Kolbe. Mr. Hoyer, do you have other questions?
    Mr. Hoyer. I would just ask one question.
    Am I correct, that what you are saying is that, because the 
Y2K problem was a priority problem, you had to deploy all the 
resources available to you at that time to confront it, so that 
we did not come up with the time, particularly with mission 
critical systems that were unable to cope with the Y2K 
transfer; and that as a result of using all your resources 
there, and the fact that fencing occurred, you did not have 
additional resources at that point in time to maintain or to 
upgrade systems that were necessary to deal with the ARMS 
    Mr. Lyle. Yes. The fencing of the funds was a contributing 
cause to the difficulties that we were having.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Before we close, let me say, Mr. Lyle, that I think your 
presentation has been excellent, very straightforward, and I 
congratulate you for the job you're doing.
    I might say that the Chairman and I have both been 
concerned by the gaps that exist in payments. We dealt with 
this, as you probably recall--and it wasn't on your watch--with 
respect to activities that went on in the White House, and then 
organizations simply didn't pay. In fact, what the taxpayer, in 
effect, was doing was giving a loan to good organizations--I 
think we weren't critical of them for having events in the 
White House--but that simply didn't pay their bills on time. 
The chairman and the staff were critical of that, and I shared 
their view. That has been fixed, to a large extent, and I 
congratulate the White House for doing that.
    I think Mr. Peterson raised a question. I think the public 
does deserve to know what's going on. It's their money. I think 
you're following, as I have indicated, procedures which are 
time-honored. The situation is different because the First Lady 
is a candidate. But she's not different to the extent that she 
is the First Lady and she travels, and we're treating that 
travel the same as we treat, as I understand it, any other 
travel that a First Lady undertook.
    But to the extent that we facilitate the disclosure of 
information on a timely basis, I think we will dissipate some 
of the controversy that might exist and, frankly, be able to 
respond to the use of such information for political purposes, 
by whoever wants to use that, much more effectively.
    Mr. Chairman, thank you very much.
    Mr. Kolbe. Thank you.
    Mr. Lyle, let me amend my earlier remark to say, rather 
than I don't think you're being candid, I think you have tried 
to be candid. But I don't think you're being fair, in my 
opinion, to try to blame both the Y2K and the fencing issue 
simultaneously for the e-mail problem.
    With that, let me say thank you for your appearance here 
today. We appreciate your testimony. The Subcommittee will 
stand adjourned.

                                          Thursday, March 23, 2000.



    Mr. Kolbe. The Subcommittee on Treasury, Postal Service and 
General Government will come to order this morning.
    We are very pleased this morning to welcome General Barry 
McCaffrey, the Director of the Office of National Drug Control 
Policy, as he testifies on his 2001 request for the ONDCP 
office, as well as the National Drug Control budget, the entire 
budget for all the areas that deal with drugs.
    Director, I congratulate you as you begin your fifth year 
as Director of this agency, and you have been our most visible 
spokesman against the danger that drug use poses to our 
children, our institutions, national and international 
security. In Aldous Huxley's nightmarish novel, ``Brave New 
World,'' the Government provided its citizens with a fictitious 
drug called ``soma'' to control them. Of course, what we try to 
do, the reality of today is the opposite: We aim to free people 
from the tyranny of drugs and the criminal organizations that 
profit from them. And, yet, for all of that, drugs seem as 
prevalent here as in Huxley's dark vision. After tens of 
billions of dollars and untold human efforts, we still seem to 
be running hard just to stay put.
    On the domestic side, emergency room mentions of heroin and 
cocaine use have grown 100 percent since 1990, while those for 
ecstasy are absolutely off the charts. Drug induced deaths have 
risen by 60 percent, prices for cocaine and heroin are down and 
purity remains at record levels. Seizures of ecstasy and 
methamphetamine labs have risen dramatically and youth drug use 
rates--while not growing as rapidly as in recent years--are 
higher for the ``any drug use'' category, for all age groups 
covered in the 1999 Monitoring the Future Study, that you have 
done. When Americans spend $63 billion a year to buy illicit 
drugs, we have to question what dents we have made in this 
    On the international side, the story is also a grim one. 
Initial successes in Peru and Bolivia have been offset by a 
disaster in Colombia, one that you have been very much in the 
forefront of challenging the American people to deal with. It 
may be worsening again in the other countries. We are 
considering enormous supplemental funding to address what has 
become a perpetual crisis. It is not only cocaine, of course, 
that poses a security threat. It is reported that Osama Bin 
Laden and other terrorists financed their campaigns against the 
U.S. using the proceeds from heroin grown in Afghanistan and in 
other places.
    We have thirteen different subcommittees that review the 
crazy quilt of Federal drug programs but you and OMB have to 
get your arms around the combined budget of a size that begs 
comparison. The $19.2 billion--that is your figure for the 
total drug program--exceeds the entire payroll of the U.S. Navy 
or the U.S. Air Force; it exceeds the entire Federal civilian 
R&D program; it is 50 percent larger than the 
entirediscretionary appropriation for this particular subcommittee. 
This Federal drug budget comprises everything from foreign aid to Coast 
Guard cutters to Customs inspectors, prisons, hospitals, schools, 
universities. And it sometimes seems like we are off-kilter in that 
budget. While it supports changing Customs approaches to fast boat 
trafficking, there is nothing that is going to Customs' marine program, 
and that is the principal defense against smuggling along our 
coastline. With trade doubling in five years, no technology investment 
has been made since 1999 to deal with the rapid growth of cargo and 
passengers crossing our borders. And as for sea ports, a major vector 
for drug smuggling, there is no word of action yet from the 
Administration's Port Security Study.
    On top of this, General, you are responsible for ONDCP's 
half billion dollar program that ranges from R&D and technology 
aid, to intelligence, the HIDTAs, the youth media campaign, 
community coalitions, and a demonstration treatment project for 
prisoners that you will discuss in more detail this morning. 
Last year, you requested additional staff to meet some of your 
rising work load and Congress agreed with your priorities but 
not with the additional staff. Based on your priorities and 
with an eye to reducing overhead costs when program management 
is critical, Congress directed that the new positions should 
come from Office of National Drug Control Policy overhead.
    I am concerned that in your realignment you apparently seem 
to disregard at least to some extent those directions and I 
will have some questions about that this morning.
    General, I fervently hope that we are going to succeed in 
our efforts, during your tenure, to give a true, as you know, a 
left-hook to our drug problems. I am encouraged by your 
commitment to getting measurable results through initiatives 
such as the performance measures of effectiveness and hope that 
these measures of effectiveness can be developed and assessed 
to bring accountability to the Government's wide-ranging and 
sometimes uncoordinated efforts to end drug use--even if the 
news that we get from that is sometimes unpleasant, sometimes 
    This will help us to do our job better by focusing our 
scarce resources on policies and programs that really produce 
results. So, I commend your dedication to new efforts such as 
the Youth Media Campaign. I think we all have high hopes and 
expectations that it will bear some fruit over the course of 
the years. I especially support your campaign against the 
disingenuous and I think very often dishonest efforts of some 
who seek to legalize and normalize the use of illicit and 
dangerous drugs and other substances that are so destructive to 
our society.
    We may sometimes disagree on tactics and details, but we 
are unanimous, we are here together this morning, unanimous in 
our desire to use every means at our disposal to stop the 
production, trafficking and ultimately the use of drugs. And I 
think if we all keep our mind on that goal, we will have a 
greater success.
    Let me recognize my very distinguished ranking minority 
member and my good friend, Steny Hoyer, for comments he might 
have before we take your statement, General.
    Mr. Hoyer. Thank you, Mr. Chairman, and General, I want to 
welcome you to the Committee again.
    I continue to be impressed with the job that you and ONDCP 
are doing to coordinate this Administration's needed anti-drug 
program. I think you have one of the toughest jobs in the 
Government. I also think you have one of the jobs in which the 
American public have the highest expectations and hopes.
    I look forward to hearing your testimony today regarding 
your almost half a billion dollar budget request and your 
update on the National Drug Control Strategy, which I see we 
have here on our desk.
    General, we are all too familiar with the heinous effects 
drugs can have and are having in many places in our society. 
The Federal Government is now spending approximately $19 
billion per year to ensure that society is protected from the 
devastation that illegal drugs inflict upon our children, 
adults and families and in our work places.
    The ONDCP has a daunting task, indeed, General. You are not 
inexperienced in daunting tasks, however, which is, of course, 
why the President chose you. The bottom line is that too many 
Americans are being arrested for illegal drug use, too many 
Americans are using drugs to their detriment, too many 
communities are drug infested.
    In your written testimony you mention that 1.6 million 
Americans were arrested for drug-law violations in 1998. That 
was down slightly but still, obviously, way, way, way too high 
and we, therefore, need to do more. I also think too many 
Americans, General, are forgotten when it comes to receiving 
treatment for drug use. Clearly, one of the reasons demand 
remains high is because recidivism to the extent of continuing 
ongoing drug use of abusers remains high.
    Recent estimates from organizations such as the National 
Household Survey on Drug Abuse and the Uniform Facility Data 
Set, concluded that roughly 5 million drug users needed 
immediate treatment in 1998, while only 2.1 million received 
it; approximately 40 percent. What that means, therefore, is 
that 60 percent of those who are addicts remain untreated and, 
therefore, remain as high-demand centers spending perhaps money 
they have but more frequently stealing money that is others to 
feed their habit.
    We know that treatment works. I think you make that message 
clear. Some people don't believe that but the fact is treatment 
does work. We need to ensure that those who need it, receive 
    I know that you are a big supporter of treatment, General, 
and you have talked about it a lot. You supported programs for 
drug abusers and I look forward to hearing more about the 
status of drug treatment as a part of our national strategy.
    Let me also mention, if I might, General, a few words about 
the HIDTAs, the High Intensity Drug Trafficking Areas. That 
program started out in five areas, then a sixth was added 
shortly thereafter and has now been expanded to many areas of 
our country. As you know, I am an enthusiastic supporter of the 
HIDTAs. The HIDTAs not only put money into areas but they do 
what your principle job is and your principle job, as I see it 
and I think you see it, is to coordinate efforts that are being 
made in many different areas and by many different agencies of 
Government to make sure that we are maximizing the 
effectiveness of that $19 billion. HIDTAs are doing the same 
thing. As a matter of fact, my local law enforcement officials 
believe that HIDTA's major contribution is facilitating 
cooperationbetween Federal, State and local law enforcement.
    In addition, as you know, the University of Maryland is 
involved in our local HIDTA, in the treatment component that is 
associated with our local HIDTA. I want to point out to you 
that we have had a local success story.
    I don't know that I have talked to you about it personally 
and I don't know whether you saw in on the media, but as you 
recall we put a half a million dollars, $500,000, into the 
local HIDTA in the supplemental last year. That $500,000 was 
put into a cross-border initiative between the District of 
Columbia and Maryland and has just recently resulted in the 
largest drug seizure that any of our law enforcement officials 
can remember which resulted as a direct result from HIDTA 
activity. And that resulted in a $8 million value seizure of 
cocaine, which if converted into crack would have been a $30 
million street value; $547,000 in cash from these dealers; and 
over 15 high-powered weapons and high-capacity clips for those 
weapons which, obviously, visited great damage to our 
    General, the American people, as I said, have great and 
high expectations for what you are doing, and the job that you 
have. You are not unused to being in such positions. We have 
confidence in you and look forward to hearing from you and look 
forward to working with you to make America a more drug-free 
country and our communities much safer places and much 
healthier places.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you very much.
    General, as always, your full statement can be placed in 
the record if you would like to summarize that and, so, that we 
can get to questions for the members of the Subcommittee, let 
me just say I understand that about 10 minutes from now there 
will be a general vote and, so, we will go as long as we can, 
we will break and then we will resume as quickly as possible.
    General McCaffrey.
    General McCaffrey. Mr. Chairman, thank you for the 
opportunity to come over here and lay out what we are doing and 
seek your own advice and guidance. I thank both of you quite 
sincerely for your leadership and the energy you have brought 
to bear in this process. I personally believe that we are 
better off today by far because of what the two of you and this 
Committee have done.
    You put real resources to work. I am going to walk through 
them point-by-point, but at the end of the day $496 million 
directly out of this Committee is having an enormous impact on 
drug abuse in America and its consequences.
    I also appreciated the opportunity, when I come to this 
Committee, to use this as the only body I have to talk to the 
overall drug problem, which is nine appropriations bills, 14 
Cabinet Officers, and $19.2 billion. I very much appreciate the 
chance to lay out on the record some oversight comments.
    As usual, I am very grateful to be joined at this hearing 
today by the team that actually is making the difference. 
Behind me are the representatives of literally more than 100 
million people who are actively involved in this effort. I 
start with arguably the most important: Art Dean, from the 
Community Anti-Drug Coalitions of America and Sue Thau. Four 
years ago we had about 4,000 community coalitions and they were 
doing well, but today there are more than 5,000 and there are 
an additional 213 that you funded in the Drug Free Communities 
Act. It is moving in the right direction.
    Dr. Linda Wolf Jones is here from Therapeutic Communities 
of America. As Congressman Hoyer mentioned, we have 5 million 
chronic addicts. We simply have got to organize effective drug 
treatment for those people. Kathleen Sheehan is here from 
NASADAD; Jim McGivney is here from DARE, the biggest anti-drug 
prevention program in the country with 26 million kids, 9 
million overseas, a science-based program that I think is 
paying off. Sarah Kayson from NCADD; Katherine Wingfield from 
the National Drug Prevention Network; Liz Carter from the YMCA. 
People ask me about drug prevention: it is the Boys and Girls 
Clubs, the YMCA, the Junior ROTC, community coalition activity.
    Dick Bonnette, of the Partnership for a Drug Free America 
is here. They are the co-equal partner in designing what is 
arguably one of the most sophisticated public health campaigns 
in the nation's history and I thank he and Jim Burke for their 
    Donna Feiner is here from the Ad Council. I am going to 
show one of their tapes. At the end of the day it is that pro 
bono match, it is the law that said I have to produce at least 
100 percent match and the Ad Council is the one brokering most 
of this public work. We are going to talk about what they are 
trying to achieve.
    Tom Carr is here from the Baltimore-Washington HIDTA, 
representing the 31 HIDTAs and the $192 million program which 
has been so well received around the country. Finally, we have 
Judge Jeff Tauber here from the Drug Court Institute. I think 
they have done a brilliant piece of work. Five years ago there 
were a dozen drug courts. Today, as we are sitting here, there 
are about 700 either on-line or coming on-line. This concept is 
now becoming institutionalized and documented. He has training 
systems. It also seems to be spreading in the international 
community. I thank all of them for their leadership.
    I welcome the chance to put into the record our written 
statement. We have put a tremendous amount of effort into that 
as well as some of the associated materials that we have.
    Mr. Kolbe. It will be placed in the record.
    General McCaffrey. Mr. Chairman, if I may, I am going to 
just hold up some documents so that you see them. There are 154 
of us in ONDCP. We are literally a sixth of 1 percent of the 
national counter drug budget [Clerk's note.--Agency amends this 
to refer to a tenth of a percent.] Many of us are working 18 
hour days, 7 days a week. What you have gotten out of us is 
primarily conceptual organization at the local, State and 
Federal level.
    We have also tried to act as the quarterback for the 
resources of the 9 appropriations bills. We are releasing today 
to your Committee, with the permission of the President--this 
is the forum we elected--the first annual drug report which was 
mandated by Congress. We said we were going to have a long-term 
strategy which we would adjust as the environment changes. Each 
year whoever is in my position would come down here and explain 
what we allege we have achieved with the resources you 
entrusted us with. This is the first such report and we think 
that there is some good news and it also articulates some of 
the concerns that you have already laid out in your opening 
    Mr. Kolbe. It will.
    General McCaffrey. We have also produced the third annual 
five-year ``Budget Summary.'' The document is getting better. 
It is starting to reflect the intellectual underpinnings that 
are in the ``Strategy.'' We are moving in the right direction.
    We state that we have a 52 percent increase in prevention 
funding since fiscal year 1996 in this document. There is a 32 
percent increase in treatment dollars. Those are the facts. 
Thanks to bipartisan support in Congress, this budget is moving 
in the right direction.
    We also have the 2000 ``Annual Report on Performance 
Measures of Effectiveness.'' Over time, it seems to us, we must 
be able to tell you in concrete terms what are we achieving. We 
have 12 target outcomes, we have 87 intervening variables. We 
are trying to measure where we are going, what we are actually 
doing in reducing drug abuse in America.
    Dr. Al Brandenstein has his 2000 ``Annual Report on 
Counter-Drug Research and Development Update.'' We have some 
organization. NIDA, NIH does an A-plus job organizing the kinds 
of research they do. But we have tried to pull together the 
interagency approach: Who else is doing research, and producing 
technology that assists in the drug effort. That is our update.
    What we have not yet completed for the year 2000 is the 
classified annex to the ``National Drug Strategy.'' Probably in 
April, we will have the update for 2000 done. It is going to be 
even more useful than the one produced in 1999. It is an 
attempt to give the intelligence communities, the Departments 
of Defense, Treasury, and Justice, law enforcement-sensitive 
guidance on how their actions relate to the overall strategy 
and we are asking them to participate in designing it. Once it 
goes to the President it is their justification for programs 
and budgets.
    Finally, at long last, I am proud, Mr. Chairman, to tell 
you we have the General Counter-Drug Intelligence Plan done. We 
ended up with nine Cabinet Officers--maybe it is the first and 
last time in history it ever happened--wrote their name one 
document and said, we agree, here is how we will pull together 
all the information in the Federal Government to better support 
the counter-drug mission. Primarily, to be blunt, that means 
how do we better support domestic law enforcement.
    We were always pretty well organized and getting more so in 
the international community with George Tenet being essentially 
the quarterback of that effort, but we had some very complex 
things to sort through to try to ensure that we comply with and 
are respectful of Federal law but we still get sheriffs and 
police chiefs and border patrol sector commanders and Customs 
inspectors intelligence in a timely manner to confront drug 
    That is really the centerpiece of the planning 
organizational effort that ONDCP has done. I have some brief 
slides, Mr. Chairman, if I may run through them and I have one 
video that is really a treat to see.
    There is the ``report.'' We went on ABC and CBS this 
morning to make sure they heard I would table it to your 
Committee this morning. Behind it, obviously, is the 
``Strategy'' and we keep going back to this. There cannot be 
brownian molecular movement in the drug effort. There has to be 
five goals, 31 objectives, and agencies have to explain to me 
how what they are doing contributes to that. Then they have to 
have some data collection so they can demonstrate that what 
they are doing makes a difference.
    Arguably the heart and soul of our strategy is bullet 
number one: Educate and enable America's youth to reject 
illegal drugs, as well as alcohol and tobacco. I will talk 
about how your media campaign is contributing to under-age 
drinking reduction.
    Next chart. Just a quick point. It almost does not need to 
be made. But sometimes I have to remind people that drugs are 
related to crime. And it is not just the obvious percentage of 
male arrestees who test positive for a drug. In 1998 in cities 
across America, DAWN data, DUF data, in hospital rooms it is 
related to illness. It is also data that is pretty conclusive 
that says, if you are an adolescent smoking pot, you are 
extremely likely to be involved in dysfunctional behavior, to 
include criminal behavior. We say that drugs relate to other 
malignant human activity; when you take away the drugs things 
get better.
    Next chart. Mr. Chairman, I think it needs to be 
underscored that when you put resources to work intelligently 
you should expect to get a payoff and you have put more 
resources to work. I have been privileged to work with you, 
essentially from fiscal year 1996 on. There have been 
substantial increases in prevention, education, treatment, 
domestic law enforcement and the international arena. I think I 
can give you the arguments on why that is starting to make a 
tremendous payoff.
    Next chart. Our budget is just under a half billion 
dollars, and I think, makes a tremendous contribution. I hate 
to get down in the weeds. I will occasionally make a couple of 
plugs as we go through this of things that I would ask for your 
consideration. The Special Forfeiture Fund, which I regret is 
the name of it, bags up those programs at the bottom. I have a 
chart that talks to each one. That is an accounting measure 
that I will never understand why we do it this way but that The 
Fund contains the National Youth, the Anti-Drug Media Campaign, 
The Drug Free Communities Program, the National Drug Court 
Institute, General Counter-Drug Intelligence Plan and the $25 
million Criminal Justice Treatment Demonstration Program.
    Then we will also talk to HIDTAs. To the 154 people who 
work with us I am asking for one additional slot to work on 
this Counter-drug Intelligence Secretariat. Finally, I will 
speak to a very important program that you are well aware of, 
CTAC, and the equipment and technology transfer that we are 
    Next chart. We are going to be fully staffed-up this year. 
I would respectfully ask your consideration on full funding on 
Salaries and Expenses. We are going to be right up to our FTE 
ceiling and now we have basically no flexibility.
    The Media Campaign, if you would allow me to just table a 
concern. We are worried about expenses. We had a 40 percent 
increase in the cost of advertising in the network television 
industry in the last several years since we did our planning 
figures. If you look over two-and-a-half year span, we are a 
little over $300 million and there is a total of literally a 
couple of hundred billion worth of advertising. These costs are 
having an impact on us.
    Thankfully, because of Partnership for a Drug-Free America, 
we are insulated from much of it. We are not paying actors' 
fees; we are paying only production costs. Then you have the 
match component which gives us huge leverage. But we are 
concerned that we get full funding on$195 million, primarily 
because we don't want to see our presence, our reach, affected in 
    But, Mr. Chairman, it is working. We are out there right 
now talking essentially eight times per week to 95 percent of 
the target audience. They hear the message; it is believed to 
be credible. They phone in to the Drug Clearinghouse, the 1-800 
numbers. We are beginning to get our ethnic outreach put 
together, 11 foreign languages, Native American dialects, 
Chinese, Vietnamese, Korean, and Spanish. Obviously, 16 million 
of us listen to media on radio or TV in Spanish.
    We have ethnic home pages and, obviously, most of them are 
in English, but we now have one in Spanish. We are putting 
together ones in Vietnamese, Korean, and Chinese. We are really 
getting that communication effort focused. And youth attitudes 
are starting to change. PDFA has some pretty decent evidence 
that it is already starting to pay off. Kids who are really 
cool don't use drugs. In my school, marijuana users are not 
    This is the kind of data--by the way, Westat Corporation 
has a $9.5 million formal evaluation of this, so, we have 
scientifically credible data. We think it is absolutely 
affecting youth attitudes in America. And as we suggest, if you 
want to see chronic abuse in America 10 years from now, watch 
the middle school kids. That is what your program is talking 
    Next chart. Let me, if I can, show a video----
    Mr. Kolbe. General, I think that we are going to have to 
hold that. How long is the video?
    General McCaffrey. Four minutes.
    Mr. Kolbe. Yes. We are going to have to hold that and we 
will go vote and we will finish your statement and begin with 
questions as soon as we get back here.
    General McCaffrey. Okay.
    Mr. Kolbe. The Subcommittee will resume. We have 
approximately one hour until the next vote, so, we are going to 
see, because of our time, if we can't get it done before noon 
here as much testimony and questions as possible, because I 
don't think it is to be possible to come back again.
    General, as rapidly as possible, then we will get to 
    General McCaffrey. I do appreciate the chance to lay these 
things out. We have been working on this hearing for a couple 
of weeks. It is unbelievable the complexity of the issues. We 
are really proud to be able to lay them out. Just a few more 
charts. On the High Intensity Drug Trafficking Areas Program: 
$192 million. It has gone up, as you know, dramatically. I 
think Congressman Hoyer's notion that it is coordination is the 
heart and soul of it.
    One of the challenges that I think the Committee needs to 
think about is we now have 31 HIDTAs. I have six new 
applications active. I have eight expansions active. I have a 
bunch more who have seen me, including in one case, an entire 
State's Congressional Delegation, plus the governor and they 
made a good argument. I think this is politically attractive.
    One of the challenges you and I will have is I would argue 
the law makes sense where you ask me to use discretionary 
management authority to allocate money. That you let me 
recommend which HIDTAs should be articulated and then move 
money as we have successes or failures.
    I am in a little bit of a difficult situation in that the 
law in the last couple of years has said, continue funding at 
exactly last year's level. So, really there is no flexibility. 
Over time I think that the program is going to have trouble if 
we don't change that.
    I would ask for your consideration to let me run this 
program with your oversight.
    Next chart. Drug Free Communities Program, we have a 
crackerjack person, thank God we hired, to run this. It is 
really starting to come on board. Lots of people around the 
country are involved in this. Just look at the 213 coalitions 
in 45 states. We will use that significantly this coming year. 
I think you will see us end up with more than 400 community 
coalitions by the time the next grants are awarded.
    We have a good evaluation going. Interim reports are in, 
that I could discuss in greater detail, and are saying this is 
paying off. We are getting young people involved and we are 
getting more people to join the coalitions. We are getting a 
lot of them into the rural communities and small towns. We are 
very carefully focused on ensuring we address Native American 
populations and especially vulnerable populations. I think it 
is moving in the right direction.
    Next chart. I think there are some tremendous payoffs, 
potentially, Mr. Chairman, out of this. Janet Reno, Donna 
Shalala and I brought together more than 800 officials from 
around America. We called it a National Assembly on Drug 
Treatment and the Criminal Offender. There are 200 million of 
us currently behind bars. Columbia University data would argue 
as many as 85 percent of them have a chronic poly-drug abuse 
problem, alcohol and drugs. If we don't get them into 
treatment, if we don't provide a drug-free prison environment, 
if we don't have a follow-on program we can't break this cycle 
of crime and addiction. That $25 million will give us 15 
demonstration areas to do just that and will provide a modest 
amount of money to evaluate it and then study how we can spin 
these lessons off to others. I would ask you to look at that 
and I think there is a great benefit potentially out of that 
    Mr. Kolbe. Director, how many? You said 200 million.
    General McCaffrey. Excuse me, two million.
    Mr. Kolbe. I thought that was so.
    General McCaffrey. Yes, two million people of which 
probably 85 percent are poly-drug abuse problems: Alcohol and 
other drugs.
    Mr. Hoyer. How many on the latter?
    General McCaffrey. Pick a study. It ranges from a low of 50 
percent to a high of 85 percent. Personally, when I listen to 
faith leaders who work with the lifers, they will tell you it 
is 100 percent of them. Clearly the dominant reason why you 
will end up behind bars is you started using drugs as at 
teenager and ended up with an alcohol and heroin problem, or 
pick any other combination, by age 30 you will have been 
arrested 100 times and you will end up serving time. If we 
don't do something about you, if we let you go--and we let a 
half million prisoners go a year--and if we send you back to 
Baltimore with no drug treatment or follow-on, you go right 
back to using drugs. Recidivism rates are astonishing.
    If you participate in drug treatment, the recidivism rate 
drops dramatically. You have given us funds through the 
Department of Justice to deal with that, something calledBreak 
the Cycle. We are now in five demonstration areas. We started in 
Birmingham, Alabama. We no longer have Birmingham, Alabama, trying to 
build a new county jail. They have dropped the prisoner population from 
something like 1,100 back to 900 because of the program. I think from a 
taxpayer argument it works.
    Next chart. The Counterdrug Technology Assessment Center is 
doing a tremendous piece of work. That is a very modest 
request, that $20 million. Arguably it should be higher. A lot 
of good comes out of it. We have transferred over 1,000 items 
of equipment just in the past two years. There are 18 different 
programs where we are transferring equipment. Law enforcement 
is grateful, is using it, and can document the payoff. So, I 
think Dr. Brandenstein's research program and the technology 
transfer are helping the American people.
    Next chart. The Counterdrug Intelligence Plan, essentially 
George Tenet, Janet Reno and I pulled this together in a year-
and-a-half of work. We studied the worldwide information 
systems and how intelligence impacts on the drug issues. We 
complied with the law and we are establishing a secretariat, a 
small one, about 30 people. We will have priorities and 
taskings and an established structure that looks like the NSC 
process. I think this is going to work and I would ask you for 
one FTE and $3 million to get this thing going in 2001.
    Next chart. This is a surprising success, Mr. Chairman. I 
have a team right now in Lausanne, Switzerland, Dr. Don Vereen, 
my Deputy, Rob Housman and others. We have been working the 
athletic piece, coaches and young people and doping for a 
couple of years in a serious way. The U.S. Olympic Committee 
has been a big help to us. They have established their own 
independent drug testing agency. Initially it will, of course, 
be Olympic sports, also NCAA, and I think you will see 
professional athletes who wish to compete in the Olympics drawn 
into it. We will set national standards. We have to worry about 
it, not just because of a elite athletes. We had a half million 
kids using steroids the last time we had accurate data. For the 
first time ever, we have more girls than boys using steriods. 
We are not talking college basketball, we are talking Little 
League baseball, high school swimming et cetera. I would ask 
you for that modest amount of money.
    I would like to show a tape to the Committee, Mr. Chairman, 
if you could roll it. It is in three different segments and I 
will talk to you about its significance.
    The first is four of the new public service ads that come 
out of PDFA and our contractors.
    [Video tape shown.]
    General McCaffrey. That shows you some of the television 
work. Obviously, it goes beyond that. We are on radios. I 
mentioned the five Internet home pages. Print media is very 
heavily involved in it. You will see in May a Road Block, the 
first ever in a public health campaign. 90 million Americans, 
through 61 publications that month will see a coordinated anti-
drug campaign. It will be both paid material and also 
advertorials done by, in a matching sense, magazines. We are 
very excited about that.
    Two other things you should be aware of, Mr. Chairman. We 
are now in the final stages of finishing up new statements on 
National Youth Anti-Drug Media Campaign Pro Bono Match Program 
and Guidelines. Both for Ad Council and the creative industry, 
this will be the published document. We will put it in the 
Federal Register. We are going to consult with the industry and 
make sure they get their fingerprints on it and feel 
comfortable with it. We will have this out and send it down to 
Congress for your review.
    We also have in the final stages of a corporate sponsorship 
and participation plan which you expect from us, correctly, on 
the National Youth Anti-Drug Media Campaign. The chart that I 
put in front of each of you talks about not just our 108 
percent match which we have achieved, which we are delighted 
with, but also the $72 millions we have got from in-kind 
support by industry.
    Mr. Chairman, that is a quick overview and I look forward 
to responding to your questions.
    Mr. Kolbe. Thank you very much, General McCaffrey and we 
appreciate getting that overview.
    We are going to start the questioning, and let me just say 
that I will be hard on myself and all of you on trying to keep 
the time limit because I think the vote which we are going to 
have will have to end the hearing this morning.
    So, we will stick to the five-minute rule here. Let me just 
begin with some practical questions about the budget here and I 
alluded in my opening remarks to the concerns we have about the 
number of FTEs and where they had come from this last year.
    Of the 124 permanent FTEs that you have authorized, how 
many are now in place?
    General McCaffrey. I better provide that for the record. 
The bottom line is we are essentially fully staffed. There may 
be some shortfalls in military detailees, but----
    Mr. Kolbe. No, no. I don't mean detailees. I mean FTEs.
    General McCaffrey. Right.
    Mr. Kolbe. I think your chart at the end of February showed 
you had 115 on board out of 124.
    General McCaffrey. I think given the new hires who are 
coming in, my personnel people before I came over here told me 
that we will be at full capacity this year.
    Mr. Kolbe. Okay. You had 117 at the beginning of January of 
last year and you dropped down to at the end of this fiscal 
year to 107 and you have come back up. So, you are back where 
you were essentially before. But it has apparently taken some 
    I notice you have a total of 44 separations and 44 arrivals 
during the course of these 13 months. And that means a turnover 
of a third. I don't know, just in a professional organization 
like that, does that concern you?
    General McCaffrey. I do not know if that includes the 
military people.
    Mr. Kolbe. No. This is just FTEs.
    General McCaffrey. They come and go.
    Mr. Kolbe. This is just FTEs.
    General McCaffrey. We are a small agency and we have had a 
huge promotion rate, which I suppose is attractive. We have 
very little capacity to, increase people's pay grades. I think 
that is primarily what has happened.
    We have very few people that have been fired in four years. 
Primarily people will leave when they get increased 
opportunities, which we encourage.
    Mr. Kolbe. Well, obviously, you want them to have increased 
opportunities but as I said, it would concern me alittle bit in 
a professional organization like this that consists of high 
professionals that you have a one-third turnover in a year.
    Let me ask about the FTEs last year. You asked for four 
additional FTEs; two for the ONDCP budget office, two for the 
HIDTA program office. But since you hadn't been able to fully 
utilize the FTEs, the appropriation bill didn't really give you 
more and instead directed you to realign within existing FTEs. 
In fact, we were fairly specific in directing that you take 
them from ONDCP's overhead office, as public affairs, 
legislative affairs and directors offices. Only two of those 
actually were realigned as directed. I think one from public 
affairs and one from legislative affairs.
    And then the other two----
    General McCaffrey. I think there are three. I think there 
is one from public affairs, one from legislative affairs and--
    Mr. Kolbe. Well, you took two out of State and local 
programs. But that wasn't what we had said to do.
    General McCaffrey. We already had things in movement when 
that hearing took place. But we----
    Mr. Kolbe. When the law went into effect?
    General McCaffrey. Right. Where it came out was we do have 
two more in BSLA [Clerks Note.--Bureau of State and Local 
Affairs.], two more in Financial Management. I believe one came 
from my office, one from public affairs, one from legislative 
affairs and one from some place else.
    That is where it came out.
    Mr. Kolbe. Okay.
    General McCaffrey. We ended up essentially getting the 
enhancements in place. We have completed that.
    Mr. Kolbe. Okay.
    General McCaffrey. We are asking for an additional FTE for 
the General Counter Drug Intelligence Plan, one FTE, and full 
support for ONDCP's alaries expenses account.
    Mr. Kolbe. General, let me switch gears here. Last year, 
Congress provided--in fact, in the last three years, I think it 
is, fiscal years, Congress provided about $13 million for the 
CTAC program, the Counter Drug Technology Assessment Center for 
the transfer of technologies being developed under the auspices 
of the State and local enforcement agencies.
    In fact, you alluded to this on the chart there. You said 
that this may be low; maybe we need more. You have only 
requested $3.7 million for this transfer program. I have to 
tell you it is popular among members, and I think it is 
enormously successful. Last year you responded on the record 
that you expected the fiscal year 1999 request to exceed the 
supply by $25 million. In other words, more than the $13 
million, more than double or almost double the $13 million that 
was being provided.
    And isn't it true that those requests for technology 
transfers are rising even more rapidly?
    General McCaffrey. Mr. Chairman, I made what we thought was 
a pretty compelling argument to OMB. We are obviously part of 
the Government operating within balanced budget guidelines.
    Mr. Kolbe. I understand. That is what I am trying to get 
it. It was--you did ask for more and OMB----
    General McCaffrey. Absolutely. I think this----
    Mr. Kolbe. Do you have any idea why they thought this 
program was----
    General McCaffrey. I do not really think there is any 
argument against the program. I do not believe that is it. I 
think they have tough choices to make on tradeoffs, but we have 
good evaluation and tremendous feedback from real life law 
enforcement around America on this.
    Mr. Kolbe. Last question, to stay within my time. How much 
would you need in order to meet unfulfilled requests that exist 
at present?
    General McCaffrey. Mr. Chairman, I could give you the 
argument we presented to OMB. Essentially we went after $20 
    Mr. Kolbe. Okay. Thank you very much.
    Mr. Hoyer.
    Mr. Hoyer. And that was a $5 million reduction from the 
previous year.
    General McCaffrey. It is hard to keep track of this. What 
has happened is that we request a level, you enact a higher 
level--if you look at what we have requested, the request has 
been going up for four years. But it bares no relationship. It 
is way under what you enact.
    This is a good program that I am proud to support.
    Mr. Kolbe. Good. I am glad to hear that because both the 
Chairman and I, I think, share the view that it is a very 
effective program.
    Let me ask you, General, I mentioned in my statement about 
treatment. And I think you agree that treatment is a very 
important component. Dr. Allen Leshner, Director of NIDA, 
recently testified that treating drug users while under 
criminal justice control, dramatically reduces recidivism, 
which you discussed also; that is both later drug use and later 
criminality by 50 to 70 percent. That is Dr. Leshner.
    General McCaffrey. Right.
    Mr. Hoyer. Now, if that is the case, let me ask you 
something, to relate that to the $1.7 billion request for 
assistance to Colombia. As you know, part of the debate in the 
Appropriations Committee when we marked up that supplemental 
was about treatment and the treatment component. However, not a 
great deal, if any, in that particular request was made for 
treatment. Can you comment on that?
    General McCaffrey. First of all, I think that you are 
entirely correct. The treatment component may be, at the end of 
the day, the biggest payoff we have. But you have these two 
million people behind bars. If you effectively engage them in 
drug treatment, crime goes down in America, as will health 
costs, welfare costs, and general misery. It is a huge payoff.
    Donna Shalala, in the budget we sent you, put $3.15 billion 
in treatment. If you look back over the five budget years, 
there is a 32 percent increase. And that is not taking into 
account the other related Department of Justice and Education 
programs that are prevention-based, which are up 52 percent. 
So, I think we have put our money where there's strategy.
    I would argue the Andean Ridge Plan, I would argue is also 
critical but it is noncompetitive. We have a huge problem with 
Colombia. There are 38 million people, most of them have 
nothing to do with drugs; a million internal refugees; a half 
million of them have fled the country in the last two years. 
They have lost probably a third to a half of the land area of 
the country to their own sovereign control. Peru and Bolivia 
used to be number one and number two on cocaine production and 
now cut the rug out from under drug production. It is an 
unbelievable success. Peru is down by 66 percent; Bolivia by55 
percent. If you look at Colombia, it is a disaster.
    We have argued that we have to stand with a democratic 
regime, we have money in that request that goes to Peru and 
Bolivia, Ecuador, Venezuela, and probably Panama. 85 percent of 
it goes to Colombia; half of that is a mobility package. It is 
63 helicopters to get the police and the armed forces of 
Colombia into the Southern two provinces and cut down the 
drugs, which have gone up 140 percent in two years.
    If you are in downtown Baltimore with cocaine and heroin 
problems, we should be aware that essentially 90 percent of the 
cocaine in America originated in Colombia or came through it. 
And over 70 percent of the DEA/Customs seizures last year were 
Colombian heroin, which is skyrocketing also. I think that is a 
sound program and I think that Congress needs to give it its 
    Mr. Hoyer. Let me ask you about HIDTA. Of the HIDTA dollars 
that we are spending how much, what percentage, or how many 
dollars are being spent on prevention?
    Do you know, off the top of your head?
    General McCaffrey. I do not. It depends on the HIDTA. In 
the Baltimore/Washington and the State of Washington and some 
others--it may be higher. I have tried to focus their attention 
carefully to make sure they do not forget that in our view, 
according to the law, this is a law enforcement program. I 
would like to see it used as connecting linkage to prevention, 
treatment, law enforcement, but not forget we have huge new 
resources in the drug court program and the COPS program, Byrne 
grant, et cetera.
    Mr. Hoyer. General, you mentioned Washington State. Is it 
Washington State you had mentioned?
    Is one of the HIDTA requests that you have pending--I know 
I have talked with Congressman Baird about it--a HIDTA request 
from the Southwest coast of Washington State; if you recall?
    General McCaffrey. I do not think that is one of the formal 
ones. There is a bunch of them that are just beyond the line 
and that may well be one of them. But six formal ones have done 
a lot of work and more are coming.
    Mr. Hoyer. Okay.
    General McCaffrey. Basically, law enforcement people and 
prosecutors all over the country are already doing this. They 
like the idea of task forces. When we provide a modest amount 
of Federal money--compared to the budgets of local police and 
sheriff's departments--$3 million, $9 million, what happens is 
that you end up with blue-on-blue deconfliction, intelligence 
centers, methamphetamine training centers, improved methods for 
cops to deal with methamphetamine lab clean up, et cetera, a 
lot of good comes out of it.
    You integrate their communications systems, and I think it 
is just a good program.
    Mr. Hoyer. My time is up but the methamphetamine concern, 
as I know, is great in that area.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you.
    Mrs. Emerson.
    Mrs. Emerson. Speaking of methamphetamine, welcome, 
General. That is exactly what I wanted to talk about. I 
represent a real rural area in Southeast and Southern Missouri 
which not only has an incredible methamphetamine problem but a 
lack of resources in our area to deal with them. For example, 
we have 3.2 million acres of the Mark Twain National Forest. We 
have only about 7 Forest Service law enforcement agents who 
cover that entire territory. That is what, about 430 thousand 
acres per agent. And the problem seems to be escalating rather 
than decreasing.
    Can you tell me what oversight or what relationship you 
have at the ONDCP with the Forest Service to help coordinate 
efforts on not only finding these dealers but helping the 
Forest Service and others to eradicate the problem in their 
National Forests?
    General McCaffrey. There is no question that Federal law 
enforcement outside of the principle agencies that we think of: 
ATF, IRS, Customs, DEA, Coast Guard, there are also other very 
important agencies and the Forest Service is one of them. They 
are part of our weekly law enforcement coordination meeting, 
chaired by Mr. Joe Peters.
    They are part of the Attorney General's monthly convocation 
of all the senior Federal law enforcement officials. I do not 
think that they have enough resources. They are aware of this 
problem. They are determined to do something about it. The 
Department of Agriculture has another heavy responsibility as 
well as the whole parks program.
    I think your point is a good one and it deserves better 
resourcing and examination on how to enable these people to do 
their job.
    Mrs. Emerson. Yes. Let me just ask a question. According to 
the Forest Service and what they have told me, they are saying 
that there are more drugs seized in our National Forests lands 
or in our forests lands, generally, than at our port of entry 
points; is that correct?
    General McCaffrey. I had not heard that. Let me go verify 
that. It doesn't sound realistic, but what is realistic is that 
there is a huge amount of high-THC-content marijuana grown on 
Forest Service lands.
    Mrs. Emerson. Right.
    General McCaffrey. That is what is causing problems with 
our youngsters.
    Mrs. Emerson. Well, and, you know, just getting back to the 
whole issue of methamphetamine, I am really, really very 
nervous about this as now high school kids are starting to use 
this, at least, in my district to keep skinny, particularly the 
girls as, you know, speed as a diet drug, if you will, and as 
the mother of two daughters and I have six additional 
stepchildren, it is really something that I pay very close 
attention to.
    And Missouri has been known to be one of the leading 
producers of methamphetamine. Would you also characterize 
Missouri as being a leading producer of methamphetamine?
    General McCaffrey. There is no question. As you move around 
the country the data is soft. Possibly half the meth in America 
comes out of Mexico, possibly half of it is produced 
domestically. The overwhelming majority of the big labs are 
still in Southern California, but there are hundreds of labs 
all across that rural Midwest, Idaho, Arizona, Hawaii, now, 
they are in Georgia--Beavis and Butthead operations. Arguably 
even though they are not producing pounds, they are doing 
ounces, they are doing ferocious damage to the environment, 
they are almost always children around these sites. They blow 
up, they burn.
    Dr. Allen Leshner, NIDA Director, is now developing studies 
that indicate that a modest exposure to methamphetamine may do 
permanent grossneuro-chemical damage to brain function. I think 
your concerns are entirely on track.
    Our prevention and education message has to focus on this 
and persuade our young kids. This is the first drug in the 
history of America, as far as I can see, where in some areas 
more women than men are using the drug.
    Mrs. Emerson. Well, would you characterize it as, at least 
our problem in Missouri and perhaps throughout the rest of the 
country, as being a crisis or an epidemic?
    General McCaffrey. Sure, absolutely. It is what the law 
enforcement people are outraged about. We do not have adequate 
treatment protocols yet. There is no therapeutic medication we 
can use on methamphetamine abuse. It is the dominant drug 
problem in the rural Midwest, Southern California, and Hawaii.
    Mrs. Emerson. Yes. And, you know, I think one of the things 
then that concerns me, just following on that, is the fact that 
there is virtual flat-line funding for the high-intensity drug 
trafficking areas in your budget. And I am wondering was the 
increase or did you all make an increase that OMB might have 
cut back, or since we have added a few new HIDTAs to the budget 
this year, as well?
    General McCaffrey. There is, of course, enormously 
increased funding on methamphetamines as a drug threat. You 
will see that if you look at the whole program and DEA and our 
prevention budget. There is a lot of attention being paid to 
that problem. The HIDTA funding, though, essentially we are--
our request was $214 million and we came out of there with $192 
    Mrs. Emerson. You did request $214 million? Okay.
    I appreciate that, just because I have had calls from more 
sheriffs than I can tell you in all of my 26 counties who just 
need even more help. So, perhaps, Mr. Chairman, I will stop and 
if we have time for a second round?
    Mr. Kolbe. Mr. Peterson?
    Mr. Peterson. Good morning, General, and welcome to the 
Committee and I want to commend you on the supreme efforts you 
make but I wanted to ask you if you were surprised at the 
recent announcement or news stories that said rural America is 
now higher drug use than urban/suburban America?
    General McCaffrey. I think that Mr. Califano's study was a 
good one and I think that it focuses attention on the denial 
that a lot of us would like to have that drug abuse in America 
is a city problem, a minority problem, poor people. It is 
anything but that. Indeed, in some ways it is not that rural 
America has a higher rate that is so bad, but it is still bad. 
The difficulty of organizing prevention and treatment and even 
supporting law enforcement is so much tougher and I think the 
suffering is more intense because of that.
    Mr. Peterson. Yes. I think, at least, the young people I 
talk to--periodically I will talk to a high school where it is 
an absolute epidemic, where it seems in some rural areas when 
it becomes the in-thing, it just almost takes over. And it is 
the minority that do not participate instead of, you know, the 
majority who do not participate. And, so, in rural areas, 
sometimes it just sort of catches on.
    Do you think we adequately warn young people of the dangers 
of marijuana? It is my opinion from talking to them that they 
don't fear marijuana. It is not harmful. It is just a fun thing 
to do and there is no downside. And I spoke with a man who has 
been in this business for a number of years and he gave me a 
very sad story two weeks ago over dinner. He said, I lost--I 
call marijuana a thief in the night. He said, my brightest, 
best young son, who had the most brains of anyone in our 
family, who had the most aggressiveness and who I had the 
highest hopes for, he said, marijuana stole all that from him. 
And my brightest and best young son is my least successful son 
now because of marijuana. It stole his edge.
    And I guess young people do not realize. Do you think we 
are adequately warning young people about the dangers of 
    General McCaffrey. That may be one of the biggest 
contributions that we are going to make out of this media 
campaign and also some of the related work that is going on in 
the Department of Education. I don't know of anybody in 
Washington who is more adamantly anti-marijuana use than Donna 
Shalala. This is primarily because she is a teacher at heart. I 
think you would hear her say that the biggest threat to young 
people's development is pot, and beer in combination. You end 
up with sexual assaults, criminal behavior, failure to learn.
    I would argue the most dangerous drug in America are middle 
school kids smoking pot on weekends. They get involved in a lot 
of that behavior and suddenly this bright person playing 
sports, wonderful to be around, turns into a loser. I think 
that the media campaign is trying to make that argument.
    We have also had a very clever campaign by drug 
legalization forces to soften the impact of this ``mild'' drug, 
less dangerous than alcohol, so-called, and to say that it is 
just not something we ought to focus on.
    We think it is a huge threat to the future of American kids 
and we ought to oppose it, it ought to be illegal, we ought to 
make a strong social argument against it and that that 
leadership ought to come from the community and not from me, 
but from moms and dads, and local law enforcement and educators 
and coaches.
    Mr. Peterson. Shifting gears, you spoke of the need for a 
drug free prison environment because of the two million we 
have. It is my observation that the military more than a decade 
ago had a huge drug problem. The only way they successfully 
dealt with it was testing. The work place problems of today, 
corporate America and even small companies in my district are 
solving that problem with drug testing. Prisons that I have 
worked with in the State, those who have a drug free 
environment or close to it, are drug testing.
    Why have you been unwilling to embrace that in our schools 
because there is no more important place to have a drug free 
place than in our schools? And drug testing would do it. I know 
there are legal ramifications but if the States have choices, 
if the schools have choices and the parents have the choice to 
opt out, it could be done and I would like to ask you why you 
have not embraced it?
    General McCaffrey. Let me characterize it slightly 
differently. I do not object to drug testing anywhere. My last 
official act before leaving the armed forces was to have the 
Command Sergeant Major and I take a drug test, get a field test 
done and go on television to explain why we were proud of being 
part of a drug free institution.
    I do believe that for drug testing to be successful in a 
corporation, whether it is Fortune 500 or 12 employees in an 
insurance office or in a high school football team, you have to 
sell it to the group and have them embrace the idea of living 
and working in a drug free environment. Basicallythat is what 
we want to do, all of us, young people as well as employees. I do not 
like top-down directed activities and I think that if management does 
not sell it to their employees it fails.
    I feel the same way about schools systems. If schools want 
to have a drug testing environment--lots of private schools 
do--so be it. Now, having said that, one day--and I will not 
tell you where--I talked to a drug riddled high school, one of 
the wealthiest schools in America, a public school, BMWs in the 
parking lot, terrible drug problems. The same afternoon I flew 
to another city and talked to a faith-based school, a girls' 
school, I might add, where they were in uniform, which was 
almost drug free. In neither school system is drug testing a 
tool. I do remind parents and educators and employers that the 
heart and soul of a drug free environment is not the testing--
it maybe a useful tool--it is creating a culture, an 
environment where you say in our family, in our school, we do 
not use drugs. That is certainly what happened in the armed 
forces. It was not discipline imposed through court martial, it 
was sergeants saying in this squad we do not use drugs.
    Mr. Peterson. But if young people know----
    Mr. Kolbe. Mr. Peterson----
    Mr. Peterson. Okay. I just have one more----
    Mr. Kolbe. Very quick follow-up.
    Mr. Peterson. If young people know that there is a chance 
of getting caught I think that gives the young people that 
don't have the family backup a reason to say, no.
    General McCaffrey. I think that is what the Columbia 
University studies indicate. The primary reason to not use 
drugs is I do not want my mom and dad to be disappointed in me 
or I do not know what they will do to me if I am caught.
    Mr. Kolbe. Ms. Roybal-Allard.
    Ms. Roybal-Allard. Thank you, Mr. Chairman.
    As you know, underage drinking is a big concern of mine and 
I know it is a concern of you, as well, although we may not 
necessarily always agree on how to approach the problem.
    Just to make the Committee aware of how alarming the 
underage drinking problem is, let me just cite some statistics: 
60 percent of teenagers drink alcohol and kids are starting to 
drink at a much younger age--the average age is now 13. 
According to a recent Harvard University study, binge drinking 
on college campuses is actually on the rise. Also, a recent 
report by the Department of Justice found that underage 
drinking costs society more than $589 billion per year. But I 
think the statistic that is the most alarming is that underage 
drinking kills six times more young people than all other drugs 
combined. Everything that we have been talking about here: 
Heroin, methamphetamines, all of these illegal drugs--alcohol 
kills six times more young people than those drugs combined.
    Now, in response to a question that I submitted last year 
to the record, you stated that a pro bono match ads dedicated 
to underage drinking were about 6 percent of the total pro bono 
match. Has this percentage increased over the last year?
    General McCaffrey. I think your analysis of the problem is 
entirely correct. I think that when this drug is legal, cheap, 
and readily available for adults, its spillover into the youth 
population clearly makes it the worst drug of abuse our young 
people face.
    Our pro bono match this year of the PSAs is up to 8 percent 
of the total, about 380,000 radio and TV time slots. It is a 
huge success. Concerning the TV programming match, more than 15 
percent of the total was underage alcohol use. Right now, I 
would suggest that the principle limiting factor we will 
address this coming year is new NIAAA ads. We lack the ads to 
    We have to make sure that we get science-based tested ads 
and do not just throw material out in public. I think you are 
right on target; this is a huge problem for us.
    Ms. Roybal-Allard. Also, this again was in response to a 
question that I submitted for the record, you mentioned that 
you didn't feel that you were receiving enough quality PSAs on 
underage drinking from both Governmental and non-Governmental 
sources. And noted that the Department of Health and Human 
Services was developing some ads on this issue.
    Could you tell me if those ads are completed?
    General McCaffrey. They are coming this year. NIAAA has 
been tasked to do that work and I think we are going to see 
some top quality material coming out of them. Also, of course, 
the tobacco program is another one that is spinning up now and 
there are huge amounts of money behind that. We are working 
with those State Attorneys General to try and make sure the 
anti-under-age tobacco use is also part of this public health 
    Ms. Roybal-Allard. Do you think working with other agencies 
is a good way to increase the number of available ads on 
underage drinking?
    General McCaffrey. I think NIAAA has it in their legal 
mandate to do this kind of work. That is probably the 
appropriate place. CDC has been very helpful, as well as the 
Surgeon General. We have a new president of Mothers Against 
Drunk Driving, a very impressive woman, and she is coming to 
see me and we are going to try to continue to be supportive of 
her work.
    Ms. Roybal-Allard. I just have one more question. Do I have 
the time?
    Mr. Kolbe. Yes.
    Ms. Roybal-Allard. Okay. And this has to do with the 
Arellano-Felix Cartel, which is probably one of the most 
notorious drug operations and is responsible for a large share 
of the drug related violence in Mexico and along the U.S. 
border. When I visited the U.S./Mexico border, down in San 
Diego, the DEA said that this cartel was really their biggest 
concern. On January 24, 2000, the Baltimore Sun said, and this 
is a quote, ``U.S. and Mexican authorities have made little 
progress against this ruthless cartel which profits from 
virtually every load of drugs crossing San Ysidro.''
    Now, my understanding is that the Arellano-Felix brothers 
have been indicted. And that they have been on the FBI's Most 
Wanted List for the past two years, but they keep evading 
arrest. Are you getting the kind of cooperation that you need 
from Mexico in order to apprehend these brothers?
    General McCaffrey. I think of all of the criminal groups 
that we face, the two gangs in that part of Mexico, the 
Arellano-Felix and the Amezcua organization, are certainly the 
most lethal groups. They are unbelievably murderous. They just 
assassinated the second police chief in ten years on the same 
stretch of highway, a man gunned down, more than 100 rounds of 
gun fire. They are incredibly dangerous people.
    The Arellano-Felix brothers, themselves, turned over most 
of the direct control of the gang to their operations officer. 
I am very proud of the DEA and other U.S. agencies who worked 
in full cooperation with Mexico's Attorney General. We did 
apprehend the operations officer about ten days ago, in day 
light. He is under arrest. He is back in Mexico City. That was 
a tremendous display of courage and commitment by the Mexicans.
    I say that because to be blunt, some of these major 
criminal figures in Tiajuana are moving around the city guarded 
by law enforcement officers in uniform and carrying automatic 
weapons. It is unbelievable. We find the same thing 
occasionally in other parts of the border. But the most brazen 
violence and corruption arguably has been those two gangs that 
I just cited.
    I think the Attorney General is committed to doing 
something about it and so is Minister Cervantes, who has 
military people up there cooperating as part of this effort.
    Mr. Kolbe. Thank you very much, Ms. Roybal-Allard.
    Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman.
    General, in your previous statement, I think that you said 
that 90 percent of the cocaine in this country was either 
produced in or went through Colombia; is that correct?
    General McCaffrey. Yes, sir.
    Mr. Goode. To break it down further, how much, just ball 
park percentages, would you say comes in by flight from 
Colombia or that region in South America?
    General McCaffrey. Let me give you for the record an 
unclassified cocaine flow analysis that we just updated. It is 
done--it is a splendid piece of work--by the Defense 
Intelligence Agency. In the last three years I have had them 
working on rationalizing that process. If I remember the figure 
it is very little of it but that is still a lot of cocaine. It 
strikes me that 15 percent of the total is direct commercial 
flight out of Colombia to the United States, primarily into two 
airports, Miami and New York. The Customs and the DEA people 
have done a phenomenal job of confronting that piece of it.
    Mr. Goode. And just a ball park percentage, if you can, 
that comes in by boat from that area?
    General McCaffrey. Directly from Colombia, very little of 
it. I will not say none of it, but it is approaching that. 
Basically what you have is 520 metric tons of cocaine produced 
in Colombia last year; the principal way into the United States 
is in the Eastern Pacific into Central America or Mexico and 
then over our 2,000-mile border at one of our 39 ports of 
entry. That is maybe 50, 60 percent of the cocaine, and a good 
bit of the heroin. The second major route is the Western 
Caribbean trying to get into Central America. The third, is a 
huge increase, a big change of drugs coming out of Colombia, 
headed out to Haiti, the Dominican Republic as well but 
primarily Haiti, and now landing light aircraft in Haiti and 
discharging drugs, where it then goes into the Dominican 
Republic or on boats or planes into the U.S.
    We have a fairly good view of it, and some pieces of it 
were confronting fairly effectively. We have some more work to 
do. We need a way to confront the Eastern Pacific dimension. 
The U.S. Coast Guard, Navy P-3s, Air Force AWACS, and Mexican 
cooperation. Mexico is about to spend $520 million to help us 
in that process to confront those maritime smuggling routes.
    Mr. Goode. If you broke it down between air, land and 
water. And by land, I mean if you brought the drugs up through 
Mexico into the U.S., just straight from Colombia or the 
adjacent countries, and then if it was flown from, say, 
Colombia to Haiti. Just in general on those three, can you give 
a ball park on that?
    General McCaffrey. When it leaves Colombia I would say the 
overwhelming majority of it now by tonnage is in non-commercial 
maritime smuggling. Fishing boats, cargo containers, fast 
boats, probably the majority of it off the Western Coast of 
Colombia, again, in Central America or Mexico.
    A good bit of fast boats in the Caribbean into, in the 
Western Caribbean or trying to get out to the islands. By the 
way not all of it is coming into the United States. A huge 
amount of it is now going to Europe into Spain and Amsterdam. 
So, non-commercial maritime is the principal way; the big cargo 
flights have stopped. We brought that to a halt. Small aircraft 
flying directly into the United States, pretty much at a halt.
    Mr. Goode. What about direct traffic up through Central 
America through Mexico and right across our border?
    General McCaffrey. It is a big problem and it is growing 
and it has terrified El Salvador. There is almost nowhere that 
it is not existing.
    It is boats or planes getting into Central America and then 
onto 18-wheeler trucks or cars and up the Pan American Highway 
and then across the ports of entry. The problem for the poor 
Central Americans is that while it is there it corrupts their 
institutions of government and their police; it creates 
violence, it is a huge problem in Panama, it is a huge problem 
in Nicaragua.
    Mr. Goode. What I am getting down to if we use some of this 
$19.2 billion with much tighter control of the Mexican/U.S. 
border, would that be a substantial help?
    General McCaffrey. Absolutely. I think also tighter 
controls of the Southern part of Mexico would help. I spent 
about a week down in Southern Mexico looking at their three 
Southern States and the Mexican Navy and Army and PGR programs. 
They bought 10 of these giant X-ray machines with mixed 
results. I think they are very determined to try to keep it out 
of Mexico, which is better for us, than having them fight it 
inside Mexico.
    Mr. Goode. Just ball park, on the drugs that come into 
the--well, the cocaine that comes into the country, what 
portion of it would come through the Mexican/U.S. border?
    General McCaffrey. Depending on the analysis you believe, 
50 to 60 percent of it. The majority of the cocaine coming into 
America comes--we are like a giant engine, sucking cocaine 
through Mexico from non-commercial maritime and air and the Pan 
American Highway.
    Mr. Goode. All right. Thank you.
    Mr. Kolbe. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman.
    General, I would like to welcome you back to the 
Subcommittee. And I would like to start out this morning by 
taking a minute to thank you and your staff, particularly Joe 
Peters, Kurt Schmid, and Michele Manatt, who have worked with 
us and with the State of North Carolina in exploring the 
possibility of a HIDTA designation for our State.
    I know you have put a lot of energy and time into revamping 
the application process for new HIDTAs to ensurethat national 
objectives are being met. This was envisioned originally as a way to 
help Federal and State and local law enforcement work together to crack 
down on targeted, identified drug trafficking threats that have a broad 
national impact. Congressional earmarks have not always been in keeping 
with that vision, I think it is fair to say. And I applaud your efforts 
to bring a greater measure of quality control, so to speak, to this 
    Now, moving from new HIDTAs, I would like to know what you 
are doing to oversee the existing HIDTAs. This Committee has 
expressed an interest in assuring that existing HIDTAs are held 
to specific performance measures of effectiveness. We have some 
report language to that effect in the fiscal 2000 conference 
report. We also had language stipulating that existing HIDTAs 
be funded at prior year levels.
    Now, as you mentioned in your opening statement, those two 
directives are in some tension with each other, at least 
potentially, and they may not allow you the flexibility you 
need to exercise appropriate oversight over existing HIDTAs.
    So, I have two specific questions. First, your fiscal year 
2001 budget requests $1.8 million for ongoing internal review 
and for a new independent auditing effort of the HIDTA program. 
Is there more that you would like to tell us, either here today 
or for the record about that effort and how it would facilitate 
oversight of existing HIDTAs?
    And secondly, your budget proposes $190.2 million for the 
HIDTA program. I understand you just clarified that you 
requested $215 million and it was reduced to $190 million in 
the pass back. That is an increase of just half a million over 
the fiscal year 2000 level. Given that you have some six new 
HIDTA applications pending, and given the requirement that 
existing funding levels be maintained, how is this going to 
work out? How will this funding level enable you to incorporate 
any new HIDTAs into the program or will it so permit?
    General McCaffrey. First of all, I am enormously grateful 
for the $1.8 million. I believe that this program is going to 
collapse along with other programs if I am not allowed to take 
funds and conduct audits and inspections. The HIDTA program--
$192 million in 31 different areas--I need to audit the 
program. I am extremely grateful and mindful of the confidence 
you have placed in me giving me that authority.
    While I am at it I might add that Drug Free Communities 
program has a cap on it of 3 percent for ``administrative'' 
costs. Mr. Chairman, I am asking you to increase that cap to 7 
percent or we are facing potential problems as we have ramped 
up from 30 coalitions to the 400 we will probably have in the 
coming year. I am just concerned that I maintain not only an 
evaluation but an oversight role over those dollars.
    I think that money is going to be well-spent and I think 
that we are really getting focused on the HIDTA program. Joe 
Peters has done a brilliant job.
    You asked about the impact of level funding restrictions by 
Congress of targeted new HIDTAs and the appropriations process.
    Mr. Price. Well, I am talking about your own request of 
$190.2 million for next year.
    General McCaffrey. Right. I think if there is going to be 
no money for new HIDTAs, period. There will be no way for me to 
adjust to reinforce excess and to take away money from programs 
that do not demonstrate effectiveness. I think this is the 
wrong way to go about it. I would ask the Committee for 
consideration of giving me the responsibility and holding me 
accountable for moving this money to where I can best support 
U.S. interests.
    Mr. Price. Your original request of $215 million to OMB 
would have let you do both the maintenance and the existing 
    General McCaffrey. Possibly.
    Mr. Price. And made room for some new programs.
    General McCaffrey. Right.
    Mr. Price. All right. I think we understand what you are 
saying on that very well. Now, let me switch to a question 
regarding the Forest Service and its involvement in drug 
control efforts. You, of course, are responsible for overseeing 
the entire drug control response and I wonder if we are taking 
into account the domestic as opposed to the international 
interdiction challenge. I understand Mrs. Emerson got into this 
with respect to methamphetamines.
    The seizure numbers that I have seen are as follows: We 
heard from Commissioner Kelly last week that the Customs 
Service seized 1.5 million pounds of narcotics at various 
points of entry in fiscal year 1999. And last year, with total 
law enforcement personnel of just 600 agents overseeing some 
191 million acres of national forests, the U.S. Forest Service 
destroyed the equivalent of 1 million pounds of marijuana being 
cultivated on public lands.
    North Carolina was one of the top four states in terms of 
seizures, with about 15,000 pounds, but we came nowhere close, 
I must say, to California and Kentucky, where over 400,000 
pounds were seized.
    Now, we may debate logging in the national forests and all 
sorts of other national forest issues. I don't think anybody 
believes that these lands were set aside for drug production. 
So, I would like to know what ONDCP is doing to work with the 
Forest Service to target additional resources at this serious 
domestic production problem?
    General McCaffrey. Clearly, they are part of the HIDTA 
program, particularly the marijuana production focus of the 
HIDTA that involves West Virginia, Tennessee and Kentucky. They 
were level funded between fiscal year 2000 and 01 at $6.8 
million. I think it is worth the Committee scrutinizing whether 
that is an adequate level of support. I think they are probably 
under-resourced to do this very critical job.
    I think you are quite right. There is a tradeoff there. 
When you talk about the overall internal interdiction now, we 
have put serious effort into that between the National Guard. 
Thank God for the National Guard support of this program. But 
also the Department of Justice grants, the State of California 
and others; we put a lot of money in internal interdiction with 
great success.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe. Mrs. Meek.
    Mrs. Meek. Thank you and welcome, General.
    The General and I, we came to Congress together and he has 
done an exceptional job. He is one of the best tacticians in 
the business. We are happy that you are working as the Drug 
    I am concerned about your written testimony, paragraph 34, 
it is alittle confusing to me, General. I want to quote it just 
as you said it. At point B, on page 34 of your testimony, you state: 
``ONDCP is also requesting restoration of personnel compensation to 
allow funding for a full component of staff, additionally, ONDCP 
requests one FTE to meet increased workload requirements. We have 
internally reviewed our staffing allocation in an attempt to reorganize 
to satisfy this requirement. However, we are unable to do so since all 
positions are in some process of being filled. Therefore, we are 
requesting one additional FTE.''
    That part is confusing to me. General, what does that mean? 
Does it say that all positions are filled or in some process of 
being filled?
    General McCaffrey. It does. We think we have hiring 
processes underway where every FTE will be utilized fully. We 
are grateful that we have been able to identify high-caliber 
people to do that. Having said that, the General Counter-Drug 
Intelligence Plan which is now established, it is already 
there, a 30-person secretariat, CDX. We are asking for one 
position to have an ONDCP person on that committee. And that 
is, of course, run by the Attorney General and the Director of 
the CIA, with representatives from throughout Government and we 
want to make sure ONDCP stays engaged with that.
    But all the rest of the positions you have given us will be 
filled and we are hopeful to get your support on salaries to 
pay those people.
    Mrs. Meek. So, then, you still are asking for one 
additional FTE?
    General McCaffrey. One more, yes, Ma'am.
    Mrs. Meek. My other question, General, your critics have 
been very hard on you. They say that your performance-based 
measures of effectiveness are illusionary. That is that it is 
impossible to speak of targeted reductions in drug demand and 
supply or use, when you acknowledge that your data has not 
allowed you to establish baselines. Would you mind commenting 
on that?
    General McCaffrey. I think that it is a huge challenge, 
clearly, establishing scientifically valid data on drug abuse. 
There is no question about it. I have to very carefully 
categorize my statements based on explaining to people in 
footnotes, normally in our statements, why did I say what I 
    But having said that, as I back off it and look at the work 
that NIDA does at a half billion dollars a year, which is what 
you funded NIDA at last year, and then look at some of the 
funding that NIDA and SAMHSA have given to the University of 
Michigan, Columbia University, Johns Hopkins, et cetera, it is 
astonishing what we do know. Most of these studies tend to 
cluster around the same conclusions.
    I almost never see two studies that draw diametrically 
opposite conclusions. I think we do understand who in America 
is using drugs among adolescents, why they use them, why some 
populations not use them, as well as risk and protective 
factors. I think a lot is known about this issue.
    Mrs. Meek. How can we develop good science to back your 
    General McCaffrey. I think you have put a lot of money into 
it, and you have a world-class scientist, Allen Leshner running 
it, and he has very high NIH standards and the work you see 
coming out of the academic community is first-rate. Some of it 
is hard science. We are about to--I hope in the coming years--
finally give the drug treatment community some tools they have 
lacked. Buprenorphine for heroin addiction. I think you are 
going to find some tools for cocaine addiction as well.
    I think this research is paying off, and not just in 
understanding the problem and organizing drug treatment 
protocols, and prevention guidelines. There are now published 
documents that say if you do it this way, you should expect the 
following results.
    Mrs. Meek. Thank you. I just want to mention my other 
concern which I think has been covered by other members of the 
Committee. That is my concern about drug treatment and 
    I think we can do a lot more, General, particularly in 
terms of treatment and prevention, and I am sure you have taken 
that into consideration in your initiatives.
    General McCaffrey. I agree, Mrs. Meek.
    Mrs. Meek. Thank you, General.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you, Mrs. Meek.
    We are running close to the end of our time here, but let 
me just ask one question and see if anybody else has one. I 
want to ask something about the criminal justice demonstration 
project. You have asked for $25 million from the Special 
Forfeiture Fund for the National Criminal Justice Treatment 
Demonstration Project. This is for people within the criminal 
justice system: probation, prisons, and so forth, I think.
    But that is only a quarter of the program. There is another 
$75 million that is covered by the Office of Justice Programs, 
OJP. And I think your proposal would include up to 15 grants of 
a million dollars each for communities to demonstrate the best 
practices in dealing with drug treatment for criminal 
    My question, General, is why are you asking for this 
program that is being split between the Office of Justice and 
ONDCP and why isn't it being entirely funded within OJP? 
Normally you do things that other agencies can't do or it is 
coordination, not this kind of direct program. I am not sure I 
understand why this $25 million program is being asked for?
    General McCaffrey. I asked the same question.
    Mr. Kolbe. But you asked--no? It is in your budget.
    General McCaffrey. Mr. Chairman, let me tell you where I 
think we are. First of all, we have had a hard time explaining 
this program to people. It does not get supported. It is going 
to have a huge payoff across America. I am hopeful, this 
Committee has listened to logic in the past, and if you give me 
the $25 million I will go and get 15 communities. It will work. 
We already know that. You will have a modest amount of money 
for me to transfer this knowledge into other communities.
    You are right, it looks like the $75 million in the 
Department of Justice. They have got some heavy lifting to do 
with their $75 million. They are going to do reentry courts, 
which is a big deal. Hopefully it is going to primarily 
satellite right on the existing drug court system. They are 
going to try to get a justice system to move people back into 
    Mr. Kolbe. Did you anticipate with your grants that there 
would be local partnering or matches from local?
    General McCaffrey. We did not write that in there. That 
ought to be a criteria for awarding the grant. I amundoubtedly 
going to have to go to the Department of Justice and ask them to do the 
work for me.
    Mr. Kolbe. You have got $25 million and they are going to 
have $75 million and you are going to duplicate the 
administrative top costs?
    General McCaffrey. I do not think so. I think we are going 
to end up really with the Department of Justice doing it but I 
am going to make sure my 15 communities work this year. I think 
next year I am going to be in a position to tell you this made 
a huge contribution.
    Mr. Kolbe. What is your time frame for this?
    General McCaffrey. I think we have to study it. We will 
have to put a few hundred thousand bucks in these 15 
communities once we identify them, make sure they put together 
a plan, look at their plan and then give them the money. It 
sounds to me like a couple of years to get this going.
    Mr. Kolbe. Thank you.
    Mr. Hoyer.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Just one question. I have got a lot but I will submit 
    Mr. Hoyer. General, we participated in doing your website 
some time ago. Obviously, we spent a lot of money on 
television, radio, print. Tell me how the website is doing and 
how many hits we are getting, what effectiveness we are having 
with communicating with young people who are on the website all 
the time?
    General McCaffrey. I need to send you a report. I do not 
think we have adequately conveyed this information--we need to 
get that back out to the American people, too. It has been an 
unbelievable payoff. Fleishman Hillard does a lot of our work 
in this area, but we have had a great amount of cooperation 
around the Government. The NASA site was the start. Now that 
has spread throughout Federal agencies. The numbers are simply 
beyond belief. The ONDCP sites, the athletic initiative, for 
example, has been ``hit'' a couple of hundred thousand times.

                        STATEMENT TO ONDCP STAFF

    There have been 86,000 hits on school zone. Our own home 
page, a couple of hundred thousand-plus hits. Media Campaign, a 
half million hits. Then you get into some of the work of--what 
we do not have here now is Ogilvy Mather figures, but you are 
literally talking--the number that stuck in my mind was a 
couple of hundred million impressions. What we have done is 
wrap-around advertising in all media. It is batched up by 
message platform. They are in flights four weeks, six weeks 
flights. If you are an African American teenager, last week, we 
talked to you almost 12 times with a scientifically credible 
    You go on the Internet now, you can do Chinese language and 
if you are a 36-year old mom, you can get drug feedback in 
Chinese or Vietnamese or Spanish; I think in the long run the 
payoff is going to be simply astonishing.
    It is interactive. We are learning from and accepting 
involvement. We are asking them to join community coalitions 
through the Web.
    Mr. Hoyer. Our time is up, General, but I remember 
participating with you on the announcement of the website in 
conjunction with the other sponsors. And it seems to me that 
that can be a very--as you have just indicated--a very, very 
powerful adjunct and perhaps primary route of communication 
with an awful lot of young people.
    General McCaffrey. Yes. Eighth graders, ninth graders.
    Mr. Hoyer. Yes. Exactly. I have a granddaughter who is on 
the Internet all the time. She is in junior high school. And it 
seems to me that to the extent that our website is kept up and 
is an attractive website that young people will want to use 
because it has a lot of entertaining aspects to it, that the 
educational impact will be very, very substantial.
    General McCaffrey. Let me pull together a better response 
to that question. Mr. Chairman, I will make sure that the 
Committee members get a feedback because it is good news.
    Mr. Hoyer. General, thank you very much and thank you, 
again, for all you are doing to lead and coordinate this 
incredibly important effort that we are about.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Mr. Peterson, you have one?
    Mr. Peterson. Yes. General, Drug Free Pennsylvania came to 
my office recently looking for help with their media program. 
To what extent do you work with existing State programs that 
are already in the business of informing youth?
    General McCaffrey. I think we are happy to do so. The two 
contractors do most of the work with their 11 subcontractors 
for us. We do talk to State authorities: California, Florida, 
and I will go find out what we are doing with Pennsylvania and 
make sure that we are receptive to their approaches.
    Mr. Peterson. One other quick one. Somebody working in the 
field told me that there are some really great concerns with 
some new compounds being manufactured locally. The recipe is on 
the Internet, very dangerous drugs. And I am not sure we even 
have tests for them yet. Do you have anything to comment on 
    General McCaffrey. I think this whole notion of young 
people on the--sort of a boutique drugs, rave parties, 
ingesting substances that you do not know what it is you are 
taking is a huge threat to young people. They are not only 
manufacturing drugs locally, regionally, but sometimes they go 
look at the Methamphetamines Control Act and manufacture 
something that is not illegal under the law but still has some 
psychoactive impact and we have to counter that.
    A lot of these kids do not believe that this stuff can kill 
them instantaneously.
    Mr. Peterson. Okay. Thank you. Keep up the good work.
    Mr. Kolbe. Mrs. Meek, do you have a final question?
    Mrs. Meek. Not if it takes a long time.
    Mr. Kolbe. If it is a short one, that is even better.
    Mrs. Meek. You made reference, General, in your testimony 
regarding a branding strategy for your ad campaign. And can you 
explain the rationale behind this?
    General McCaffrey. It is not a brand new strategy. The 
existing strategy, the communications strategy we have 
submitted to Congress only now Ogilvy Mather, working with 
Partnership for a Drug Free America and the Ad Council are 
trying to use the concept of branding to leverage these 
    What I showed you was the beginnings of that branding 
campaign. For adults, the anti-drug is the heart and soul of 
the branding concept. For the younger group, we are now going 
to use also my anti-drug. The message will tend to be positive 
that soccer, relationships, Boys and Girls Clubs, these are 
anti-drugs because I, a young person, have chosen them. We are 
going to measure this pretty carefully, but we are excited 
about it. I think what you will see is greater impact per 
dollar advertising using a branding concept.
    Mr. Kolbe. Thank you, Mrs. Meek.
    Mrs. Meek. Thank you, Mr. Chairman.
    Mr. Kolbe. General McCaffrey, let me just say that on 
behalf, I think, of all the members of this Subcommittee we 
appreciate the efforts you and your staff are doing. It is 
obviously extraordinarily important work. And I hope you know 
that you have the strong support of this Subcommittee. We may 
disagree with you from time-to-time but we try to do it in a 
constructive way. We want to be constructive. We share the same 
goals, we want to win this fight.
    General McCaffrey. Yes, sir. I very much appreciate your 
    Mr. Kolbe. Well, we appreciate yours as well.
    This Subcommittee will stand in recess until this 
afternoon's hearing.

                                           Tuesday, March 28, 2000.



    Mr. Kolbe. The subcommittee on Treasury, Postal Service and 
General Government will come to order. We are very pleased this 
morning to welcome the Director of the Office of Management and 
Budget, Jack Lew.
    Mr. Lew, we have had a chance to review your appropriation 
request for fiscal year 2001 and want to commend you and your 
staff for the level of detail you have provided us. I guess, 
actually, we should expect that coming from OMB for their own 
budget. More specifically, I commend the careful way in which 
you have addressed the specific Subcommittee concerns regarding 
OMB staff training and the strategic role played by OMB's 
communication office.
    This is the first time in 8 years that OMB has requested an 
increase in their, full-time employment levels. Given the 
potential spending allocation this subcommittee is likely to 
get this year, this may have not been the right time to have 
asked for that increase, but nonetheless, I am certainly 
receptive to hearing more about the request and specifically 
how this additional staff is going to help OMB meet its 
statutory obligations.
    Before we begin, I want to make one general observation. 
Mr. Director, over the years we have had a number of 
interesting hearings with you, not so much focused on the OMB 
appropriation request, but rather on priorities that this 
Administration establishes as it relates to Treasury law 
enforcement and Federal law enforcement.
    In the past, when I have asked you why Treasury law 
enforcement has not fared as well as enforcement efforts that 
come under the Justice Department in the President's budget 
request, you have, at least in a general way, I think, 
responded by saying that the recommendations reflect the 
Administration's priorities and that you have always said you 
believe the numbers are adequate to allow the agencies within 
Treasury to do their job.
    Obviously, I have not agreed with you on this point. 
Actually the Subcommittee has not really agreed on this point 
and we have fought fairly furiously for additional funding.
    There continues to be some serious gaps in both funding and 
personnel, particularly as it relates to the U.S. Customs 
Service and I don't think the requests have been adequate. Now, 
I know you would be very disappointed if I didn't have some 
charts for this hearing to reflect some of that. So I have got 
a couple of charts here to show what I once again am talking 
about. This first one is on the employment, the FTE numbers 
within Justice and Treasury. We show a 5 percent increase in 
the number of FTEs in Treasury and a 48 percent increase in 
Justice going all the way from FY 1994 up through FY 1999. So 6 
years of funding.
    The second chart looks at the total law enforcement 
employment FTEs within Treasury and with Justice. Now we are 
looking here just at taking the two major components of law 
enforcement, at least as it relates to our borders, and that is 
the INS versus Customs. Here we also see, in the way of 
personnel, a 73 percent increase in INS and a 6 percent 
increase in Customs.
    So once again, over the same length of time, you see an 
even greater disparity there in the personnel numbers for INS 
and Customs. I really wanted to bring those along because I 
didn't want to disappoint you by not having a chart or two to 
share with you here today. As you can see, we really haven't 
changed a lot of the story in the last several years. Hopefully 
as Secret Service brings new agents on board during the year, 
we will see a boost in some of these numbers, but I do remain 
very concerned about the budget and FTE numbers for the Customs 
    As we go forward here today, I will have some more direct 
questions regarding the funding for Customs, and, given my 
responsibilities as Chairman of this Subcommittee, I am all too 
familiar with the resource constraints that are before us, very 
similar to the ones you faced during preparation of the 
President's budget. It is a difficult job, and the choices have 
to be paid, but I still remain convinced that no matter how you 
cut it, how small the piece of the pie is, the Treasury part is 
clearly inadequate as its share of that law enforcement pie.
    Mr. Director, in many ways our two jobs are very similar, 
not only because we have to make difficult choices given the 
spending constraints that we have, but also in the way that we 
go about making these decisions. They can't be made in a vacuum 
and they need to be based on information and knowledge. I am 
sure it comes as no surprise to you, but unfortunately agencies 
are often very reluctant to share information with this 
Subcommittee, and I dare say that is true of all the 
Appropriations Subcommittees.
    This is really one of our greatest frustrations. We need 
information to make decisions, information that hopefully 
reflects your priorities, but also we can use to make what we 
regard, from the national standpoint, information the 
congressional views of what the priorities should be. It is 
very frustrating when we ask for comprehensive reviews of 
specific issues such as the Customs Air and Marine Program. We 
get absolutely nothing back in return. It makes our job very, 
very difficult, and I frankly feel like I am getting to the end 
of our rope on this. I am also beginning to have some concerns 
that the information void that this Subcommittee has 
experienced may not be isolated, as I suggested, but may be a 
chronic problem. I am curious about OMB's experiences in this 
regard as you try to get the information from agencies in 
preparing the President's request; I hope as we proceed here 
today, we can have a candid and honest dialogue about this 
subject, which I think is absolutely critical.
    I'm looking forward to your testimony, but before I call on 
you for your statement, let me turn to my Ranking Member, Mr. 
Hoyer, the distinguished Ranking Member, and ask him for his 
    [The statement of Mr. Kolbe follows:]

    Mr. Hoyer. Thank you very much, Mr. Chairman. As usual, on 
most matters you reflect my view as well. I think these charts 
you have presented continue to be a very telling statement as 
to the need to ensure that we are focused on Treasury law 
enforcement, and the important objectives that they pursue and 
I am very pleased at the Fiscal Year 2001 budget proposal that 
comes from OMB. I want to welcome you, Mr. Director. Jack Lew, 
as everyone knows, has been honed and refined through his 
service in the Congress of the United States. Mr. Lew did an 
outstanding job for Speaker Foley and Speaker O'Neill, and he 
is someone that I greatly admire and appreciate his work.
    Mr. Director, I also want to commend you on the role that 
you have played in this Administration's very successful 
policies which have resulted in, from my perspective, such a 
thriving successful growing job producing inflation-tamping 
economy. We probably have the best economy in the adult lives 
of any of us in the Congress of the United States and any of 
us, period.
    So to the extent that you have played a very significant 
role in that, I congratulate you and thank you. I also want to 
commend you for the budget that you are presenting today which 
includes the necessary FTE and technology funding increases to 
keep up with myriad new duties placed on OMB since 1993. I 
understand that theseincreases will make OMB a more effective 
tool for the next President, whoever that may be. OMB's role in this 
government's policy development and determination is evident throughout 
the Federal budget.
    It is ironic that the agency that oversees all of the 
discretionary dollars and has an impact on the policies related 
to the mandatory expenditures as well has one of the least 
controversial of hearings. I presume that is because all of the 
agencies that you have disappointed choose not to show up, but 
in any event, you are obviously the executive department's way 
of overseeing the management of our Federal Government and the 
people at OMB do an extraordinary job, given the limited 
numbers that you have to oversee a very large executive 
    Now, having said all those very nice things, let me say 
that I am unhappy to note that one of the exceptions in your 
budget's presentation appears to be OMB's courtroom-sharing 
policy reflected in the GSA courthouse construction request, 
which I believe the courtroom sharing proposal is premature and 
not grounded, as far as I can tell, in hard data and analysis. 
We will discuss that later in a little more depth.
    OMB, under your leadership, has played a central role in 
turning the Federal budget deficit into surpluses, as I have 
said, and I understand that it is necessary to have cost-saving 
effects, and we will discuss the courthouse issues in the 
question period.
    Ms. Roybal, who is very concerned about it, and Mrs. Meek 
could not be here, but both of them are extraordinarily 
concerned as I know you know at the impact that the proposal 
will have on both the Miami courthouse and the Los Angeles 
courthouse, an impact that they believe will undermine, as the 
judiciary believes, the effectiveness and efficiency of the 
operations of those facilities. But as I said, we will talk a 
little bit about that. I want to, again, congratulate you, say 
how pleased I am at your service and leadership in OMB and how 
much I personally appreciate your close working relationship 
with the chairman, with myself, with this committee, and with 
the Congress. It has led to a very positive relationship. Thank 
    Mr. Kolbe. Thank you. The black helicopter is coming here. 
    Mr. Lew, we will put your entire statement in the record of 
course as always, and if you would like to summarize, then we 
will go to questions.
    Mr. Lew.

                            OPENING REMARKS

    Mr. Lew. Thank you, Mr. Chairman, distinguished Ranking 
Member and Members of the committee. It is a pleasure to be 
here. One of the honors of being OMB Director is to have the 
opportunity to come before the Committee every year and talk 
about the things that OMB does and what we need to do our job 
well, because I am very proud of the work that OMB does. I 
would like to take a few minutes as we open to talk about the 
OMB budget. I know as we go through the question period, we 
tend to talk about a lot of subjects, but I want to make sure I 
cover the OMB issues.
    The increase that we have requested this year, as you noted 
Mr. Chairman, comes at a time when there are very difficult 
decisions. One of the very difficult decisions we had to make 
was on our own budget. The timing is opportune because as Mr. 
Hoyer noted, we are looking at a transition and the question 
is, what do we do by way of the institution of OMB--regardless 
of the outcome of the next election--to make sure that OMB can 
serve the President well and can work effectively with the 
    Over my years at OMB, I have enjoyed working with the 
Congress generally, and with this Subcommittee in particular, 
because we have had, even when we disagree, a very good working 
relationship, and that is something we want to continue. And 
one of the points that I am going to make is we need the 
resources to do that effectively.
    I think that working with the Congress, this Administration 
set out to create a government that works better, costs less, 
and gets results that the American people care about. OMB 
played an essential role in maintaining the fiscal discipline 
that has produced budget surpluses for three straight years and 
making government work better. In addition, OMB has significant 
management responsibilities, as you know. For example, OMB 
monitors and provides advice, support, and leadership in 
addressing our 24 priority management objectives described in 
the budget, and working with agencies on myriad other issues on 
a daily basis. OMB will continue to provide leadership and 
analytic support to address many other priorities, including 
modernizing student aid delivery, completing the restructuring 
of the Internal Revenue Service, and strengthening the Federal 
statistical system.
    Despite staffing levels that have actually decreased since 
1993, OMB continues to carry out what is an expanding range of 
missions. I say this not by way of criticism. We have worked 
with the Congress in many cases to create these new 
responsibilities and new requirements. When one looks at the 
Government Performance and Results Act, the Clinger Cohen Act, 
and a number of other new laws that are noted in detail in my 
testimony, these are very good management tools. But in order 
to use the tools, it does require the proper resources.
    If OMB is to continue to serve the Administration and the 
American people well, I think what we need to do is propose 
what we think are the right levels of resources and work with 
you to try and persuade you that they are, in fact, correct.
    We try, as we ask other agencies to do, to use our 
resources efficiently and effectively, and it is with some 
reluctance that we ask for more resources. If anything, we hold 
ourselves to a tougher standard than we hold others to. I think 
the increase that we have asked for this year is very much 
justifiable and necessary. We have requested $68.8 million, 
which is an increase of $5.5 million over the 2000 enacted 
level. Roughly 70 percent of the requested increase is simply 
to maintain current operating levels. The remaining $1.7 
million is requested to address increased workload demands by 
investing in staff, training, and new information technologies.
    I would like to talk for a few minutes about the investment 
in our people. In FY 2001, OMB requests an increase of $613,000 
to fund 9 new FTEs. This is to oversee a wide variety of 
management initiatives and to support some of the core 
functions on the budget side as well. It would bring our total 
FTE level to 527. Two of theadditional staff positions are for 
the Office Of Federal Financial Management, and this would support the 
review and implementation of financial systems as required by the 
Federal Financial Management Improvement Act. Two of the additional 
staff positions are for the Office of Information and Regulatory 
Affairs to support information technology issues ranging from capital 
planning, where I think we have made real progress, to computer 
security, where we share the Committee's concerns that we need to put 
even more resources.
    One additional staff each for several of our resource 
management offices, the national security and international 
affairs division, natural resources, energy and science 
division and the health and personnel division. This is really 
in recognition of the very extraordinary pace of effort there 
and the fact that the workload burden on the staff in those 
divisions needs to be reduced in order for us to maintain both 
the morale and the retention of good experienced staff, because 
there is simply more work than current staff can do on an 
ongoing basis.
    One of the additional positions is a financial economist to 
provide expertise on issues ranging from financial institutions 
to improvements in handling of government-held debts as 
required by the Debt Collection Improvement Act. The final 
position is to assist in preparation of the Federal budget and 
the many reports required of OMB, to try and improve the 
timeliness and the presentation of those documents. In addition 
to the staffing increase described above, OMB requests an 
increase of $85,000 for training to ensure that our staff have 
the tools to do their jobs effectively.
    OMB is requesting $1,030,000 for remediation improvements 
of our information systems. The FY 2001 IT request is an 
investment in a 5-year plan, which would really bring us into 
the modern computer era. We're working with computers that are, 
in computer terms, several generations old. Our request would 
correct network infrastructure deficiencies, improve the speed 
of remote access, modernize our correspondence system, provide 
classified communications--which we do not how have the 
computer capacity to deal with, modernize our report writing 
software, improve the A 11 data collection technology and 
increase in general our IT support capacity.
    I would like to conclude just by saying that after what is 
now many years at OMB, I couldn't be prouder to work at an 
institution where the career staff are as fine a set of public 
servants as they are. I have never had the pleasure to work 
with a better group of committed career Federal officials. They 
deserve the resources do their job well. I know this Committee 
cares that they have the resources to do their job well and I 
would be delighted to work with you through this hearing and 
try to work on a budget that helps get OMB where it needs to be 
in the new century. If I could make one comment on a non-OMB 
issue, and I know you will have questions in this area. On the 
general question of Treasury-justice funding, as you noted, Mr. 
Chairman, in your opening, I quite predictably will repeat that 
I think we have to look at each of the agencies on their own, 
and I think these charts do make a certain set of points quite 
clearly, as they always do. But we tend to look at the agencies 
each internally. As it turns out this year, the percentage of 
increase in Treasury is much greater than the percentage 
increase in Justice, in the law enforcement area.
    In dollar levels, we have never held them to a standard 
where they need to have parity. We look at functions, we look 
at people who are working together in comparable positions, we 
look at can they do the jobs that they are doing, and I would 
love to go into these issues in more detail in the questions 
and answers. I hope as we discuss issues, it can be in the 
context of finite resources where we have to constantly be 
asking the question--are we getting the most of each of the 
dollars we are putting in. That is how most of our decision-
making process at OMB is driven. I couldn't agree with you 
more. This Committee, and OMB are probably the two places in 
government that have the most need to ask those questions and 
we need the best information to do it. I share many of the 
frustrations that you have in terms of our ability to get good 
timely accurate information. We have to do it in a fairly 
constrained period of time between November and January. You 
have a little bit more time. We, as always, look forward to 
working with you to make sure you have the information you need 
to make good decisions.
    [The statement of Mr. Lew follows:]


    Mr. Kolbe. Well, thank you very much and I appreciate your 
comments. We will obviously have an opportunity to discuss 
this. Let me just say that I agree with you. I will go into 
some other questions first, but we do need to talk about this 
in terms of the finite amount of resources. We should look at 
it in a way of dollars, how can we best spend the dollars. I 
can tell you from serving on the Subcommittee also that funds 
the INS, which I think holds the title of the most mismanaged 
agency in the Federal Government, that I don't think anybody 
could possibly argue the dollars are being well spent in INS. 
So I still think the question actually rises to a higher level 
when you make that kind of comment.
    Let me start with asking some questions about your budget 
and the FTE increase that you have asked for. As you have 
noted, this is the first increase that you have asked for since 
President Clinton took office. In fact, nobody can complain 
about this. OMB may be the only area of government that hasn't 
been growing consistently over the last several years. Your FTE 
I think in 1993 was 573, and you are at 518 FTE right now.
    My first question is, in all these years, how have you been 
making up for that? Do you use detailees and, if so, how many 
do you have on board?
    Mr. Lew. We both use detailees and we provide detailees. 
The exact number of detailees I think I have here.
    Mr. Kolbe. This isn't a got-you question.
    Mr. Lew. I actually do have it here. I just need to--I 
can't say I remember it off the top of my head. First, let me 
say what we use detailees, for the most part, seasonally. One 
of the truly impressive management functions within OMB is 
peaking to produce the President's budget in a very short 
period of time. Rather than keeping full-year personnel that we 
really need for a three-month period, we use detailees, we call 
them temps, to assist in the preparation of the budget. OMB 
    Mr. Kolbe. What part of the year that you use them?
    Mr. Lew. It is in the November-to-January period.
    Mr. Kolbe. If you are using a detailee from Interior to 
help prepare the Interior budget, do you have any concerns 
about this being a little bit of the fox guarding the chicken 
    Mr. Lew. I actually did when I began working at OMB. After 
watching the process for a number of years, I don't anymore. I 
actually make it my business to go and visit with some of the 
detailees to see how it is operating. It is a very impressive 
system where they form quite an esprit de corps. They learn 
very quickly what they need to do to prepare the budget tables. 
They are working under the supervision of OMB managers, to 
implement thepolicies that OMB officials have made. They are 
not making policy. What they are doing is the technical work necessary 
to produce the many books that we put out.
    Mr. Kolbe. Can these detailees learn the ropes quickly 
enough? The work you do in budget is incredibly sophisticated 
and detailed, and requires an enormous amount of experience. 
Can a detailee really pick that up?
    Mr. Lew. I actually think the answer is yes, and it is 
largely due to the middle management supervision they get. It 
is extraordinary what some of our career middle managers do to 
bring these people together and have them very quickly up to 
speed. Producing a budget table is tough, but it is a learnable 
skill, and the attention to detail to make sure they are 
accurate depends on the esprit de corps and commitment. They 
quickly learn the skills and they have a great spirit. It does 
work very well. The alternative would be to have many , many 
more year-round OMB officials, career staff, and I think we 
would end up having a larger FTE load, which was not targeted 
with the skills we needed in the rest of the year.
    Mr. Kolbe. For the record, would you give us a table that 
shows the OMB divisions and the number of FTE and other 
government employees for each of those from 1993 to today so we 
can see where you have used those people?
    Mr. Lew. Sure.
    [The information follows:]


    Mr. Kolbe. You are asking for another full-time economist. 
How many do you have on board right now?
    Mr. Lew. Let me check. In our Office of Economic Policy, we 
have eight people.
    Mr. Kolbe. Are all your economists within that office?
    Mr. Lew. We have economists in other divisions. Let me 
describe what the Office of Economic Policy does.
    Mr. Kolbe. Is this additional in that office?
    Mr. Lew. Yes. It provides analytic support, not just in the 
preparation of the economic assumptions in the President's 
budget, but on many of the complex issues that come up, whether 
it is related to insurance policy or complex financial 
transactions. It provides analytic rigor that we couldn't 
duplicate in each of the branches and the divisions, just 
because it takes a certain kind of experience, economic 
analytic skills which may not be the same. You need to do the 
program evaluation and the management work.
    What we have got, I think now, is a team that works very 
well together where the divisions call on the Office of 
Economic Policy, just as I do when I am doing my macroeconomic 
work in the preparation of the budget. They work with our 
Budget Resources Division, which has many people who have very 
technical skills and people work as teams so that we don't have 
to duplicate analytic skills that we need on a periodic basis 
in each of the divisions. I think if we had one more economist, 
it would very much enable us to have the relationships be on 
more and more issues, which would improve the quality of 
analysis that we do and the work product that we put out.


    Mr. Kolbe. Last question because my time is up. Would it be 
safe to say in looking at where you have asked for people--two 
in ORIA and Office of Financial Management, one in national 
security, one in national resources, one in health personnel, 
one in OMB-wide offices. Would it be safe to say these requests 
are because of workload or more because they reflect the 
philosophical views of the Administration that these are the 
areas that should have additional personnel?
    Mr. Lew. Mr. Chairman, I think there is certainly an extent 
to which those divisions have higher workload because of the 
policies that we work on. We have been very active in the 
health area. We have been very active with international 
policies. I think that where we need the resources right now 
reflects the policies that Congress is working on. Let me give 
you an example. The environmental riders that we fight about 
every fall. That puts an enormous burden on our Interior Branch 
just to analyze them and understand them. Some of those things 
that we create, some of it are issues that the Congress 
    I think that it is fair to say with a new administration 
coming in, the mix of policies that people are working on will 
change. It may end up being that the next OMB Director says I 
don't really need another person in the International Branch. I 
need the extra person in the Defense Branch. But that is a 
decision they can make. They can move the FTEs around. I think 
what is clear is that we have real, real crunches in divisions 
that are at the peak of demand in terms of the work that they 
produce, and we are at the limit of our ability to manage 
within the 518.
    Mr. Kolbe. That was my thinking, even if these reflect your 
priorities, with a new Administration, they could move these 
    Mr. Hoyer.


    Mr. Hoyer. Thank you very much, Mr. Chairman. Mr. Lew, one 
of the things I did not mention in my opening statement but I 
want to reference is, I think this budget is as good a budget 
vis-a-vis Federal employees who are obviously a great concern 
of mine as I have seen since I have been in the Congress. You 
indicated your people were excellent, that you needed to shore 
policies that would allow you to retain your excellent people 
and then to fill vacancies by recruiting equally motivated and 
skilled people. Obviously to do that, we need to compensate 
them and protect their benefits appropriately.
    This budget, I think, does that. Let me, however, ask you 
the question which I generally do with reference to FEPCA 
comparability, the law as it relates to--relating the Federal 
pay to the private sector analogues. Can you comment on that 
and where are we with respect to OMB's agreement that we have a 
formula, a process which comes up with a fair figure for 
adjusting Federal pay?
    Mr. Lew. Mr. Hoyer, as you and I have discussed, this is a 
very complicated issue that is going to require our continuing 
to work together in the process, and the process is one that is 
frustrating to all of us because it isn't a faster one. I think 
what we have done while working on a longer-term policy in this 
area is to make real progress towards narrowing the gap, 
shifting from policies that have adjustments below the 
employment cost index to policies that have adjustments above 
the employment cost index.
    I would emphasize that there are a number of things in our 
budget which are not specifically pay issues where we have done 
an awful lot to try to increase and improve the benefit package 
that Federal workers have made available to them. Some of them 
involve going back and reversing some policies. For example, we 
proposed reversing the pay delay that was in last year's bill. 
Reversing some of the retirement contribution changes that were 
made in the Balanced BudgetAct of 1997, which were necessary at 
the time but are no longer necessary. And we have a range of new 
proposals, some of which are administrative, some of which are 
legislative. For example, in the Federal employees health program, to 
take advantage of the opportunities in current law for the Federal 
Government to offer a modern set of before-tax benefits for health 
    Mr. Hoyer. My understanding that can be done 
    Mr. Lew. Yes, sir. And we have proposed a new buyout 
authority. I think if you look overall at the items in our 
budget, many of the things move us closer to comparability in 
ways that you wouldn't see necessarily just looking at the cost 
of living adjustment alone. The overall pay and benefits 
package that Federal workers have made available to them, I 
think, with the proposals we have made, would be a much more 
modern package that competes more favorably with the kinds of 
opportunities that people in the private sector have to take 
advantage of both pay and non-pay benefits.
    Mr. Hoyer. We will keep discussing the first half or the 
first tenth of the answer, because I think nine-tenths are very 
positive. I agree with you, you have addressed both pay and 
non-pay issues, which have an impact on the net worth of the 
compensation received by the employee. I will work with the 
chairman between now and when we mark up to perhaps address the 
pay comparability issue.

                        COURTHOUSE CONSTRUCTION

    You and I have discussed the courthouse issue briefly. I am 
concerned about a number of things, number one, that there is a 
priority list of 19 courthouses that are ready to go. The 
budget includes seven. That is both the good news and bad news 
because we didn't have any last year. The last time we included 
money was in the fiscal year 1999 budget.
    But the $488 million figure is obviously far short of what 
would be necessary to do the 19 that are apparently on-line, 
ready to go, and needed. Obviously we don't want to spend money 
if we don't need it, but it is my understanding we do need it.
    In addition, I am very concerned as I have expressed with 
you privately and briefly in my statement, about the proposal 
to have shared courtrooms which, as you well know, the 
judiciary is very concerned about that in terms of the 
efficiency of dealing with courtroom dockets and the ability or 
the inability to manage the flow of business. Would you comment 
on the 12 courthouses that are not included in this budget and 
the courtroom sharing proposal which, as I understand it, has 
not been made on the basis of any particular study, but is an 
assumption made that this can be effected without harming the 
administration of justice.
    Mr. Lew. I would be happy to respond to both. In terms of 
the overall budget, we are obviously operating within 
constraints in each of the budgets we have put together. This 
year we proposed easing the constraints somewhat, but we are 
very mindful of what the overall aggregate amount of 
discretionary spending could be and within that, we had to make 
tough choices. We didn't have the ability in any area to put 
100 percent of what might be desirable with unlimited 
    What we did in terms of trying to determine an amount for 
courthouses--and I must make note as an aside that this is a 
substantial change from our recent policies as you noted where 
we are proposing a fairly aggressive policy compared to a no-
new construction policy--in each of the areas we try to make 
judgments based on what would be achievable in the short run 
and where the decisions could be made later without delaying 
construction. For example, we funded all of the construction 
projects that are ready for bid in 2001. Those were the ready-
to-go projects--Seattle, Gulfport, Mississippi, Washington, 
D.C., Miami, Florida, are in that category. If we had unlimited 
resources, we could have done new site acquisition and design, 
but that sets in motion demand for more resources on an ongoing 
basis, and we felt that we couldn't go and put the entire list 
in, given the constraints that we had.
    I think if you look at the courthouses that are not on the 
list, they are largely in the category of projects that weren't 
ready for construction or where we just didn't have the 
resources to do the additional design projects. In terms of 
courthouse sharing, I would take issue a little bit with the 
characterization that it is not based on a study. There have 
been a lot of studies on the efficiency of courthouse use and I 
would be happy to provide for the record our staff's analysis 
of those, which would show that courthouses in general are used 
a fairly low percentage of time. By ``low'' I don't mean 10 
percent but 50, 60 percent, not 100 percent.
    In order to maximize the number of projects we can 
undertake, we have to try and do each of the projects in the 
most efficient manner possible. We have had differences of 
views with the judicial branch on courtroom sharing. I must say 
it is a little bit of a frustration that we can't get all of 
the information that we would like to be able to make 
considered judgments on a court-by-court basis, so the part of 
your statement that I would agree with is that we don't 
necessarily have the best possible information to make these 
judgments. But frankly, that is in part because the judicial 
branch doesn't provide that data to us. When one looks at the 
specific projects, I think you have to look at whether the 
courtroom utilization really would be a problem or not.
    One can look at the room we are in. It is a shared room for 
subcommittees. Subcommittees schedule the use of the room. At 
the White House, we have shared rooms. Federal agencies have 
shared rooms. I don't think anyone is suggesting that judges 
should share their personal chambers. No one is suggesting they 
shouldn't have their private offices and their staff offices. 
The question is with the courtroom that they use, can we afford 
a couple of million dollars a courtroom for rooms that are used 
50, 60 percent of the time, or should we have a scheduling 
system where they share them. I might note, one of the judicial 
regions, Seattle, actually chose courtroom sharing in its own 
plan for its own region. That will give us a chance to see a 
little bit better how it works.
    One of the issues we deal with is whether retired judges 
who are no longer fully active need their own courtroom. I 
think there has been some movement from the judicial branch on 
this issue, but in order to really make a determination on a 
court-by-court basis, one really needs to know what is the 
workload of the judges who are no longer fully active. Are they 
hearing half a load or 90 percent of a load. And that, I would 
agree with you, we don't have the detailed information on.
    I would make the following observation. RepresentativeMeek, 
I am sure, will have questions of this. In the case of Miami, we really 
did endeavor to make the courthouse fit into the budget because we 
think it is an important project. We want to continue to work with the 
judiciary and with the representatives from the area. If there is 
better information available to suggest that the design that is 
anticipated could be improved, we are not rigid on this issue. We did 
the best we could with the data that was available to us and we think 
it is a good plan and I would be happy to go into more detail on it.


    A 1997 GAO study found that, on average, trial courtrooms in seven 
courthouses were in use (for trial or non-trial purposes) about 54 
percent of the all the days that they could have been used. Within the 
scope of its review, GAO found no courtrooms with a utilization rate 
above 61 percent. In addition, GAO found that
           courtrooms were used for actual trials less than 
        one-third of the available days--with the highest average trial 
        usage rate calculated at 32 percent and the lowest at 13 
           on most of the non-trial days, courtrooms were used 
        for two hours or less; and
           there was at least one unused courtroom on almost 
        every workday of the year at all of the locations included in 
        the report where there was more than one courtroom.

    Mr. Hoyer. Thank you very much. I think my time has expired 
on this round. I will ask some more questions later on. Just an 
observation. I think the judiciary does, in fact, believe the 
senior judges fall under a different category, and they do not 
expect to have senior judges have courtrooms and share those 
courtrooms that are available which will use some of that down 
time or dark time of the courthouses.
    So the judiciary is in sync with that part of your 
    Thank you, Mr. Chairman.
    Mr. Kolbe. Mrs. Northup.


    Mrs. Northup. Thank you. Welcome, Mr. Lew. I look forward 
to discussing several issues with you. Primarily, I want to 
discuss with you the Paperwork Reduction Act and the burdens 
and preface my remarks by saying I think that the results of 
the bill that was passed in 1995 have been discouraging. 
Certainly, the community that works with the burdens feels that 
there has been very little reduction, very little progress on 
that area. I didn't know whether they were just complaining. 
Most people do when they are being regulated, but I notice that 
recently GAO has just issued a very critical look at both EPA 
and their paperwork, and also OMB's failure to meet their 
statutory requirements, particularly--let me just say that, 
first of all, they said that GAO noted that 14 major 
regulations accounted for the vast majority of EPA's paperwork. 
And I just wondered whether or not you have denied any agency--
I know you didn't deny them--a proposed collection of 
information? Did you deny proposed paperwork for any agency 
that wanted to propose a new regulation or did you deny the 
paperwork burden for any significant regulation or are you all 
merely just a rubber stamp?
    Mr. Lew. We are not merely a rubber stamp. I think our 
reputation with the agencies is, if anything, that they wish we 
were a rubber stamp. I think the deniable versus non-denial, 
most of the regulations that are issued are issued pursuant to 
laws that require regulations. So the question isn't will there 
or won't there be paperwork burdens. Many of the burdens are 
because there are changes in tax law. There are changes in 
environmental law.
    Mrs. Northup. Excuse me. Weren't some of EPA's regulations 
proposed with no changes in the law, just their interpretation 
of the law?
    Mr. Lew. In terms of the volume of the paperwork burden 
changes over the last few years, a large number of them are due 
to changes in the law. I would have to go back and figure out 
which were due to changes in law and which were due to actions 
taken by agencies. We endeavor to work with the agencies as 
they put together new paperwork requirements to have them be 
both as understandable as possible in plain English and as 
unburdensome as possible. And I think that the measure of our 
success is not so much in denial versus approval, but are they 
better when they are finally issued than they were when they 
were proposed. And I would be happy to go back and pull some 
examples for you of things that changed in the course of the 
    I can't say I brought with me today a lot of examples, but 
in terms of our role with the agencies, our role is not to say 
don't issue anything that requires new paperwork. It is to make 
sure that the burdens are reasonable and as unburdensome as 
possible. With regard to not meeting the reduction targets, the 
5 percent annual reduction targets, I would argue that you 
really would have to look at statutory requirements that have 
changed as much as regulatory policies that have changed to 
understand the pattern.
    Mrs. Northup. Let me ask you, also it says specifically the 
Paperwork Reduction Act, that agencies are not supposed to 
collect information unless it has been authorized by OMB and 
the GAO report said that EPA alone has imposed at least $3 
billion in unauthorized paperwork burdens since the passage of 
this Act. I just wondered if you have sought--if you have 
requested that the agencies seek approval for these 
unauthorized activities, and if you notify the public, if you 
make sure that either the agency or you notify the public of 
any unauthorized collections because, of course, the public is 
not required to comply with the regulations if there is an 
unauthorized collection of data.
    Mr. Lew. I would have to go back and review the specific 
GAO report you are referring to. I would be happy to do that 
and respond to you more fully. I am not aware of the specific 
instances in which there might have been unauthorized 
requirements. I am aware of a number of cases in which there 
have been regulations that required the sort of public right-
to-know policies which may be part of that. But that is not 
unauthorized. That was part of very, very detailed process 
working through it.
    Mrs. Northup. I'm surprised. Maybe you haven't gotten this. 
It was just released in March 2000, and I have an extra copy, 
but I would tell you that GAO says that you alldeclined to 
comment when they invited you to comment. And I would ask you to 
comment on the record for this committee. I will include that question 
with my submission, but clearly they felt that you were not complying 
with the law. They were very critical of OMB, and I thought you would 
at least be aware of the fact that you all decided not to comment.
    Mr. Lew. I don't have the date on that report. There are 
many--we are still in March of this year. It could have been a 
few days ago or a few weeks ago. I'm not sure of the date of 
the report. I would be happy to take a look at it. I take these 
things very seriously. They come to me. They don't always come 
to me the day they are issued. There are hundreds and hundreds 
of GAO reports, so they do take a little bit of time to make 
their way to my office. I would be happy to take a look at it.
    Mrs. Northup. Let me ask you. I know that--I assume as I 
look at rulemaking, my thought about OMB is that you all are 
supposed to judge whether the regulation is one, legally sound, 
economically sensitive as well as necessary, that it is 
meaningful, that it is useful. Would you agree with that 
evaluation that your agency does on rulemaking?
    Mr. Lew. We have a number of functions that we play in 
reviewing rules. Obviously, the law requires rules. Part of our 
function is make sure the rules get implemented in a timely 
manner. In cases where agencies are undertaking policies, we 
have the responsibility to work with them to make sure they 
have done the kind of analysis to make sure that they have 
considered the views, both of other agencies, of other parties 
outside of the government, and the analysis in terms of--in 
case of major rules, the cost and benefits.
    Mrs. Northup. Do you also, though, judge a rule by whether 
or not it is legally sound?
    Mr. Lew. We do review whether there is a legal basis. That 
is one of many factors that we consider. I think that it is 
always our intention to make sure that we are doing things that 
are mandated by law or within the authorities we have under the 
law. That is not typically the area of greatest controversy. 
The area of greatest controversy is usually whether they are in 
the least burdensome way possible or whether or not they have 
taken account of cost as well we benefits, and we have very 
active processes on major rules in that area.
    Mrs. Northup. I'm going to submit the rest of my questions 
but I would be very eager, as we go through this process, to 
have your response as to what sort of the level, what sort of 
rules you have, apply those criteria to and some specific 
questions. Thank you.
    Mr. Kolbe. Thank you, Mrs. Northup. If you are able to 
remain, there will be time for a second round of questioning.
    Mrs. Emerson.

                         IMPROVING DATA QUALITY

    Mrs. Emerson. Thanks, Mr. Chairman. Director Lew, I want to 
ask you, if I could, about some action that was urged by this 
Congress in the FY 1999 Omnibus Appropriations Act, 
specifically as it related to regulations for data quality. We 
had stated that the Committee expected OMB to issue rules by 
September 30, 1999, with regard to data quality, and as far as 
I can tell, you all haven't done anything to date. Do you have 
any idea when these data quality regs might be issued?
    Mr. Lew. My recollection is that it was something that was 
in the House report, but we worked with the Committee over the 
conference period on it. I am not aware of a requirement.
    Mr. Kolbe. If the gentlelady would yield, the language does 
say ``urge,'' but we certainly urge very strongly.
    Mrs. Emerson. And if I may just say in the joint 
explanatory statement, it did, in fact, say something to that 
effect. You are right, Mr. Chairman, urging very strongly. So 
can I take it then because we only urged and didn't mandate 
that you all have not gotten around to doing that yet?
    Mr. Lew. Let me, if I may, respond on the substance of the 
matter and our concern. We have been concerned in the 
discussion of this policy that right now there are private 
rights of action in cases where there are consequences. We are 
concerned about a change of policy that would create rights of 
action where there aren't consequences. That is a tremendous 
expansion of potential litigation. It is the kind of issue we 
have worked with the Congress on over the years when we 
discussed regulatory reform generally, and it is a very, very 
serious matter. I don't want to suggest that this is a small 
issue. There may be real differences between us. I was just 
handed a letter that we received on March 27, which I haven't 
had a chance to read yet, where you have asked questions on 
this. I would be happy to read this and respond to it.
    Mrs. Emerson. My reason for asking this isn't to trick you 
or to get caught up in anything, but rather a lot of the 
information if, in fact, the public goes to the website of the 
EPA just, for example, they would see EPA's take on a 
particular policy as opposed to oftentimes perhaps a more 
objective viewpoint or the other side not having an opportunity 
to respond. So it is not the legal action part I am concerned 
about; it is the ability to get the straight skinny on things, 
if you will.
    Mr. Lew. The problem is--and this is not unique to this 
particular proposal--there are many proposals where when you 
change the administrative process to create rights. There are 
also opportunities for review and delay. I don't think we 
disagree on the basic premise that rules should be based on the 
best quality of information. That is not an issue we disagree 
on. The question on what constitutes the right quality, who 
makes the determination how, those are obviously very 
complicated questions. I would be happy to pursue this with you 
and have John Spotila, the head of our Office of Information 
and Regulatory Affairs, work with you on it. I don't want to 
suggest we don't have very serious concerns.
    Mrs. Emerson. I appreciate that and I know that the Center 
for Regulatory Effectiveness, which I believe is composed of a 
lot of ex-OMB officials, they put together some sort of a 
suggested policy that I would appreciate your at least taking a 
look at it and getting back to me about that.
    Mr. Lew. Be happy to.
    [The information follows:]


    Mrs. Emerson. Let me ask you another question with regard 
to the budget in general, and decisions that OMB makes as 
opposed to an agency's request for something more, and I am 
specifically referring to the Office of Drug--the Drug Czar's 
Office, who proposed a larger request for high intensity drug 
trafficking areas than OMB gave them, if you will. I think you 
all agreed to a $700 thousand increase as opposed to their 
request for $23 million. This is a great program, and since I 
represent a very rural area where thereis a high intensity of 
drug trafficking as well as manufacturing, my concern is that with 
adding 5 new HIDAs, if you will, you only increase their budget $700 
thousand, but yet added new programs, if you will, not that I don't 
agree with those programs, but did not reflect--I think it is important 
to continue funding programs that work as opposed to starting new ones 
and just leaving these be.
    Mr. Lew. Let me answer the question generally and then 
specifically. I think that it is more the rule than the 
exception that we have put in increases that are less than 
agencies' requested. If we put in the request that agencies' 
requested, our budget would probably be $70 billion bigger than 
it is. It is almost the rule that this is the case. To the 
extent that HIDTAs are effective, we obviously are supportive 
of them. The increase reflects that. We do have some questions 
as to whether all the HIDTAs have been as effective. There is a 
need for evaluation, the process of designation has not been, 
in all cases, competitive designation. I think we need to work 
together to evaluate the HIDTAs and make sure that the 
resources that we are putting into the program all are used 
effectively, and we would like to work with you on that.
    Mrs. Emerson. I can tell you that the one in my area is 
particularly good. My real question with regard to this is you 
have to decide that, but yet you took $25 million and put that 
into a new treatment program in the ONDCP's office. I thought 
that office was more of a strategic office as opposed to a 
policy treatment. I want to argue about treatment because I 
think it is very critical, but that is a new request, and there 
are other agencies in the government that do have 
responsibility for those types of treatment programs. I am just 
curious why you would make a decision like that.
    Mr. Lew. Obviously, we think the area of treatment needs 
additional work and we need the resources to support that work. 
As to the division of responsibilities between ONDCP and other 
agencies, ONDCP is in a role where what they do tends to 
overlap with what a lot of other agencies do. So if we had the 
basic decision rule to only have ONDCP work on things no one 
else works on, we probably wouldn't have HIDTAs. We would have 
programs run out of Justice and other agencies. So I think the 
notion that treatment is important, is one that I appreciate 
that you agree with us on. I think the balance of resources is 
one we will have to work together over the course of the 
process to persuade you that this is a good proposal. I would 
hope that it doesn't have to be a choice between HIDTAs and 
treatment, but if there is a case to be made that the treatment 
program is--or the function that we put into ONDCP is 
duplicative, we would like to know that, obviously. We didn't 
think so or we wouldn't have put it in.
    Mrs. Emerson. I understand that. Just so that you know, I 
do not disagree with the need for treatment, nor the amount of 
money put in the treatment. My concern is more with not funding 
the--actually adding five new HIDTAs, and I correct myself, I 
meant to say that you only increased their budget $700,000. You 
have got five new areas in there. So obviously that means the 
others will get less. I am just real concerned about something 
that's working well, and I hope that it won't take very long 
for you do some sort of cost benefit analysis to determine 
whether or not the HIDTAs need to be improved and/or the 
concept changed or what have you.
    Mr. Lew. I think we would very much appreciate your help as 
we try to work on the evaluation, and this is not the easiest 
area to do program evaluation. It is something that we think is 
very important.
    Mrs. Emerson. Thank you.
    Mr. Kolbe. Mrs. Meek.

                       OMB STAFFING REQUIREMENTS

    Mrs. Meek. Thank you, Mr. Chairman. Welcome, Mr. Lew. First 
of all, I want to commend you for the work you have done and 
the fiscal discipline you have shown, and I am glad--I was 
happy when I heard you tell Mr. Hoyer that you are going to 
work with us as you go along on the courthouse situation. If I 
have had one thing bedevilling me since I have been here, it 
has been the courthouse in the Southern District of Florida. I 
don't think I need to tell you nor the committee that the 
Southern District of Florida is the busiest trial court in the 
entire Federal system, and it has not changed a lot since 1970 
in terms of the needs there.
    So I am glad to know that you will continue to work with us 
on it. Of course we will continue to send you any new data 
which might help you in your decision-making relative to the 
need there in southern Florida. The drug trade directly affects 
the criminal court caseloads there, and of course, the civil 
court cases are very, very high. So there is a need in South 
Florida as shown in the Judiciary's analysis, and if they are 
not giving you enough information, we should be sure that you 
get what you need to make the kind of decisions that are fair 
to all concerned. So I am happy to know that.
    Mr. Hoyer asked you some questions about caseload, the load 
that your staff has, and I want to specifically get to my 
question on that. Last year at this hearing, I asked you about 
OMB's ability to handle its large burgeoning workload and 
whether you were stretching the agency's people a little bit 
too thin, and you indicated that you were concerned that you 
were reaching the limit of what the existing staff could do. 
Now you seek an additional 9 FTEs in fiscal year 2001. And your 
budget request identifies areas in which these additional FTEs 
would be deployed, but it does not specifically quantify the 
extent of the workload increases in these particular areas.
    Are these--FTE increases principally designed to fill 
skills gaps, or are they workload-driven or have you just 
reached a breaking point as to what you think you can get out 
of your existing staff without compromising their 
effectiveness? Would you comment on that?
    Mr. Lew. I would be delighted to. I actually think the 
answer is a little bit of each. The request for additional FTEs 
is partially to provide specific skills on financial 
management, economics, and regulations. That is related to both 
new requirements, many of them good requirements in terms of 
laws that are designed to improve the management of the Federal 
Government, and the fact that people are overworked to begin 
with. Three of the positions are for resource management 
offices that work in specific policy areas, and we have 
allocated those positions where the workload is the greatest 
and, frankly, where I fear that if we don't provide some 
additional resources, we are either going to have to reduce 
what we ask of people or the level of exhaustion and fatigue 
will become a problem.
    I commented earlier to Chairman Kolbe that another 
administration may find that they don't need those positionsin 
the exact areas where we have put them, but what I think I can say with 
great confidence is that at the 518 FTE level, we don't have the 
flexibility to put an additional person in the place where the workload 
hits that point, that limit where you just can't manage anymore. I know 
that I have designated the three areas where the current workload is 
the greatest. A year from now someone else sitting here for a new 
administration may see that problem somewhere else. I know they don't 
have the flexibility to address it. What I think we would do is get the 
resources in place where the current workload is, and then, as we have 
managed over the years, future OMB directors will move resources around 
to reflect changing policy burdens.
    One of the things that I think you are very well aware of 
is the year-round nature of this budget process has a real toll 
on the people here and the executive branch. There used to be 
months of the year when you were between cycles. We don't have 
those breaks anymore. We go right from a budget negotiation 
with a day break to preparing the next year's budget. We 
literally had one day between the final agreement on the fiscal 
year 2000 appropriations, and going full-bore into preparation 
of the 2001 budget. We sent it up to Congress the first week of 
February, and we have been working with Congress on 
supplementals ever since.
    At the point when we hopefully reach agreement on 
supplementals, we will be deep into the process of working on 
FY 2001 appropriations. This leaves very little room for all of 
the things that come up day to day where we try to help 
agencies solve their management problems and work through 
difficult analytical problems. This is where OMB has done an 
enormous amount to advance the quality of policy analysis in 
the executive branch, and I might add, helping committees 
responding to questions that come from the Congress as you work 
through tough problems.
    I think these are modest requests that will very much 
ameliorate the very difficult pressure that we now have, and I 
would note coming as it does at the end of an administration, 
it is not a change that we will personally benefit from but it 
is something the institution will benefit from, and the next 
president will benefit from.


    Mrs. Meek. If I may quickly ask another question, Mr. 
Chairman. You made a decision to ask for $210 million as a user 
fee to offset the costs of the automated commercial environment 
system. Did you involve Customs in that decision?
    Mr. Lew. We are working with the Treasury Department on the 
policy, and actually I think the proposal very much reflects 
concerns that Treasury had in the design of some earlier 
versions. It was designed very much to reflect the new costs 
associated with the improvements. Frankly, we think it is the 
right policy and we wanted to have the strongest policy to come 
up here and be able to say we are not raising the fees beyond 
the costs associated with the new system. Obviously, there are 
fees already. The fees currently support the Customs operations 
without the new changes. We have sized the fee so that in 2001 
and beyond, it will support the improvements which we think is 
the right way to answer the questions we have had in the past, 
about whether or not we were overcharging. I think that there 
were good arguments to defend some past proposals, but there is 
a stronger proposal and it is a result of having worked closely 
with Treasury.
    Mrs. Meek. Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you, Mrs. Meek.
    Mr. Goode.


    Mr. Goode. Thank you, Mr. Chairman. Mr. Lew, in your 
statement, you indicate that we have had three straight years 
of budget surpluses. Just to refresh my memory, what was the FY 
1998 surplus?
    Mr. Lew. $69 billion.
    Mr. Goode. What was the 1999 surplus?
    Mr. Lew. $124 billion. I am just checking my memory here.
    Mr. Goode. What do you think it will be in 2000?
    Mr. Lew. These are not numbers that I reviewed before 
coming in here today, so I have to go from the narrow numbers 
to the big numbers. Let me just grab a table. The current 
service surplus for 2000 is projected before policy to be $179 
billion. Obviously, the lion's share of it is the Social 
Security surplus, $148 billion. We have--
    Mr. Goode. 1999, all of it was a Social Security surplus.
    Mr. Lew. Actually, I think the reestimate was a tiny non-
Social Security surplus as well.
    Mr. Goode. What was it?
    Mr. Lew. I think it was less than a billion dollars. That 
was the final estimate as opposed to the end of year numbers.
    Mr. Goode. 1999, of course, it was all Social Security 
surplus. Now, with your 2001 budget, what is your surplus going 
to be?
    Mr. Lew. With our 2001 budget, we are obviously proposing 
to save the entire Social Security surplus and with all of our 
policies, we show a remaining non-Social Security surplus of $9 
    Mr. Goode. That, of course, includes the tax--the number of 
tax law changes that was----
    Mr. Lew. It is all of our policies, both things that reduce 
the deficit, things that raise the deficit, the net position is 
$9 billion of surplus.
    Mr. Goode. Does that include the Medicare?
    Mr. Lew. That is everything.
    Mr. Goode. No, I mean, do you include Medicare like Social 
Security? You roll that in?
    Mr. Lew. Medicare is not off-budget, so it is part of the 
on-budget calculations for all purposes.
    Mr. Goode. I understand that, but so is Medicare A.
    Mr. Lew. Medicare part A and part B are both in the on-
budget portion of the budget, so the $9 billion reflects the 
flows associated with both part A and part B.
    Mr. Goode. In your statement, you have indicated that OMB 
has played an essential role in maintaining fiscal discipline. 
Wouldn't you also concur that the House and Senate has played a 
big role in maintaining that surplus?
    Mr. Lew. I think that we are very pleased to have worked 
well with Congress throughout our time here. Obviously in 1993, 
it was more of a partisan decision. In 1997, it was quite 
bipartisan. That is the right way to do it. So we have worked 
with Congress consistently. I think the President's proposals 
have been very strong starting points, and we have worked with 
the Congress to implement very good policies.
    Mr. Goode. As I recall, though, in 1999 when you have about 
a billion dollar surplus, not using Social Security, that 
Congress pushed for that concept first. Would you not agree 
with that?
    Mr. Lew. I think that the results that we see in 1999 are 
more closely connected to the 1993 decisions than anything we 
did in 1997 or 1998 because those policies take some years to 
kick in.
    Mr. Goode. I know, but my question was, didn't Congress 
raise the point first about Social Security, and make it the 
Flagstaff of the ship, so to speak, and you all followed suit. 
Is that not true, regardless of whether the policy of 1993 was 
good or not?
    Mr. Lew. If we are going to get into 1999 policies, I think 
there was more than a little bit of luck that the 1999 
decisions did not end up spending the Social Security surplus. 
Based on the projections we were looking at, all of us thought 
that actions Congress was taken would have spent the surplus. 
It was only later estimates that proved that to be incorrect. 
So I think what I learned from this is we should all be quite 
careful in how we project and live within the projections. If 
the projections go the wrong way, we easily could end up being 
somewhere we don't want to be. So I think that caution has been 
most important to us. We have used conservative economic 
assumptions. We have lived within those, and we have been 
consistently greeted by better economic news than we projected. 
If that were the opposite, I don't think we would be discussing 
who is responsible for the good results. We would be looking 
for who to pin the bad results on. I worry a bit as we look 
forward to an economic debate where there is a desire to 
exaggerate the amount of surplus, that we won't--that we 
shouldn't go down that road.
    In the area of discretionary spending, the issues we are 
discussing here are all about what are the additional resource 
needs. If you look at the budget resolution, the budget 
resolution I think, has quite an unrealistic assumption in 
terms of what the level of discretionary resources will be. I 
don't think this Committee is going to have an easy time living 
with the totals in that resolution. I would just be cautious 
about a plan that pretends to be constrained when, in fact, 
reality will drive it to larger levels.
    Mr. Goode. Medicare A, of course, has a surplus of more 
than $9 billion for FY 2000, does it not?
    Mr. Lew. I don't have the part A numbers year by year in 
front of me, but until--I forget the year, we start drawing 
down--we have reserves until 2015. The question is what year do 
we start drawing from the reserves?
    Mr. Goode. Do you have more than $9 billion----
    Mr. Lew. 2015 is----
    Mr. Goode. In 2000, for----
    Mr. Lew. I don't have the year-to-year numbers, but I can 
get them for you.
    Mr. Goode. Thank you.
    [The information follows:]


    Mr. Kolbe. Thank you very much, Mr. Goode. Director, Mrs. 
Meek asked a question about the development of the ACE user 
fee, but I want to spend a little more time trying to ask some 
questions which I think are extraordinarily important. You 
submitted earlier this month a letter to the Committee in 
support of the new Customs user fee as a mechanism for funding 
Customs modernization in fiscal year 2001. The Administration 
proposes that it be implemented by amending the Consolidated 
Omnibus Budget Reconciliation Act of 1995 known as COBRA, which 
provided for collection of certain fees such as those for 
processing passengers and conveyances.
    In addition to the COBRA fees, Customs also collects a 
merchandise processing fee, or MPF, as it is called. That is an 
ad valorem tax based on the cost of providing Customs 
processing services. As you know, there was, more than a dozen 
years ago, a GATT panel finding that the MPF the merchandise 
processing fee, in effect, precluded Customs from assessing 
other charges for cargo inspection, except for those authorized 
under COBRA. In other words, they basically found that if it 
was not being used entirely for cargo inspection and processing 
of conveyances, then it was in violation of GATT. Let me ask 
you, is it your view that the new fee that is being proposed 
for ACE, the Automated Customs Environment, would violate the 
understanding of the GATT panel and be regarded possibly as a 
new and illegal tariff?
    Mr. Lew. It is my understanding that it would not.
    Mr. Kolbe. What basis do you come to that conclusion?
    Mr. Lew. We have worked with Treasury's General Counsel in 
evaluating proposals. For example, the automation modernization 
user fee is structured very similar and that is one they view 
as being GATT-consistent. There are benefits here in terms of 
increased speed of cargo processing, account-based transaction 
tracking, paperless processing that we believe the fee is GATT 
consistent and based on our consultations with Treasury, they 
concur on that.
    Mr. Kolbe. Well, if you collect this fee, and not all of it 
ultimately gets spent for ACE, I think you would be right in 
the same boat, wouldn't you?
    Mr. Lew. The proposal we put forward would all be spent on 
ACE. It was sized to be the amount needed for the improvements. 
If we are wrong in our estimate, then we might need to go back 
and reevaluate the size of the fee. But I think that that is 
something that you will decide as you size the ACE program--
what the fee needs to be to support it. We sized it 
appropriately to support the proposal we put forward. If it is 
a smaller proposal, then you might very well want a smaller 
    Mr. Kolbe. But I think your proposal is to do it as an ad 
valorem tax, is it not?
    Mr. Lew. No. The level of the fee is sized to raise the 
revenue consistent with the cost of the ACE program.
    Mr. Kolbe. I am incorrect. Your proposal, this one is not 
to do it as an ad valorem, but as a service base. If you add 
this on top, things have been quiet in this area for a dozen 
years, simply because we put a cap on the MPF, but if you add 
this on top of it, I think you are going to pull that scab away 
and you now have another cost on top of the current MPF. I 
would dare say you are going to trigger some kind of reaction 
on the MPF. Are you confident that the merchandise processing 
fee is GATT compliant? You are collecting money and we are not 
using it. It is basically another tax. We are not using it for 
merchandising processing. I think you would agree to that? It 
doesn't all go to that.
    Mr. Lew. I am not sure we would agree with that.
    Mr. Kolbe. Clearly, it doesn't go all to merchandising 
processing and furthermore, how can it possibly be if it is 
based on an ad valorem tax. It is not related to the service 
being provided. It is related to the value of the good that is 
coming in, so it is clearly not a service processing fee.
    Mr. Lew. That would only be the case if the ad valorem 
amount exceeded what it cost to cover the services. The fact 
that it is levied on an ad valorem basis doesn't necessarily 
prove the point that you are arguing that it is greater than 
the cost of the manufacturing processing servicing.
    Mr. Kolbe. It doesn't prove that it is greater but it does 
prove that it has no relationship to the service being 
    Mr. Lew. Unless it was sized properly to raise the amount 
that it costs to run the manufacturing processing or less. My 
understanding, and I would be happy to go back and ask these 
questions again, is that it was designed to cover the cost or 
less which would, I think, prove the point that it didn't 
create the GATT problems you are concerned about.
    Mr. Kolbe. Can you tell me how much you collect with the 
    Mr. Lew. I would have to check.
    Mr. Kolbe. I think it is in the neighborhood of $900 
    Mr. Lew. $953 million.
    Mr. Kolbe. How much does Customs use in processing of 
conveyances? You will find it is a fraction of that amount.
    Mr. Lew. You are asking questions at a level of distinction 
that I am not familiar with. I would be happy to go back and 
try and separate them. We look at commercial operations and 
manufacturing processing as a combined class, and I think that 
that is appropriate in terms of covering the costs associated 
with the Customs Service. To break it out for merchandising 
processing versus commercial services, I would have to go back 
and ask.
    Mr. Kolbe. Well, if you go back and review the 1987 finding 
you will find that the GATT panel said that a new fee had to 
fit into existing COBRA categories. This requires a change to 
COBRA, so we are now changing COBRA. And I think you will find 
that the panel, while reserving action against the MPF, 
indicated at that time that they would entertain challenges to 
it. I would say that you will have, in the blink of an eyelash 
if we add this new fee, a challenge.
    Mr. Lew. I guess, I don't have the expertise to evaluate 
whether or not there would be a challenge, but if there is a 
    Mr. Kolbe. Based on the 1987 decision, which said it had to 
fit into existing----
    Mr. Lew. But that doesn't mean that there isn't another way 
to levy a fee that would be GATT-consistent. I can't argue with 
you that there might be questions raised, and there might even 
be a challenge, but if it is GATT-consistent, that ought not to 
be necessarily the obstacle. If we only made policies based on 
no challenges, it very much constrains our collective decision-
making flexibility.
    Mr. Kolbe. I understand but I think you are begging for a 
challenge here. I think it has been made clear that there would 
be. I think you are overlooking the GATT problems you have with 
this fee. I think you have completely underestimated them and 
have just decided to brush them under the rug.
    Mr. Lew. I will be delighted to go back and ask some more 
questions on this. We certainly didn't intend to do that.
    Mr. Kolbe. I don't think you did. I don't think you thought 
about it frankly.
    Mr. Lew. We actually did have discussions----
    Mr. Kolbe. Treasury was totally blank on the issue when 
they were here.
    Mr. Lew. I can only speak for the conversations I have had 
with my staff. This is something people thought about, and in 
fact, had conversations at a technical level with Treasury 
about in general, if not on the specific details. With that 
said, I am delighted to go back and consult with the people who 
are more expert in GATT and the likelihood of action and get 
back to you in terms of our view after taking another look at 
it. I don't believe there is a GATT problem, but if there is, 
it is something we need to take seriously.
    Mr. Kolbe. Thank you. I am going to try to get a couple 
more questions on the courthouses if I get another round here.
    Mr. Hoyer.


    Mr. Hoyer. Thank you, Mr. Chairman. Mr. Lew, my friend from 
Virginia asked some questions about responsibility. I don't 
know whether you have these projections, but perhaps you can 
get them for the record. In 1999, of course the President 
vetoed a gargantuan tax decrease, a tax cut giving the people 
back their money so they can use it for themself. Do you have 
the projections on the consequences of that cut with respect to 
the surpluses that you indicated existed.
    Mr. Lew. My recollection is over the 10-year period, it was 
on the order of $750 billion, so the projections we have of 
surpluses would be that much less if the tax cut had been 
enacted. As you know, we have proposed a tax cut, but it is 
considerably smaller and part of a balanced approach that would 
enable us to deal with Medicare and prescription drugs and a 
number of other very important things.
    Mr. Hoyer. The $792 billion tax cut did not take into 
consideration the consequential interest, additional interest 
that we would have paid.
    Mr. Lew. That is correct.
    Mr. Hoyer. It was essentially over $900 billion.
    Mr. Lew. With the interest, it was over.
    Mr. Hoyer. The President vetoed the bill and the Republican 
leadership chose not to bring it to the House for override, 
presumably because they thought that it wouldn't be overridden 
and the American public didn't support it. In your opinion, 
would that have put our ability to extend the fiscal life of 
Social Security and the fiscal viability of Medicare?
    Mr. Lew. I think it would have. I think it is also 
important to note it was based on the assumption that we would 
adhere to the discretionary caps with very modest changes, 
which we saw in practice last year was not the case. What we 
tried to do this year is have the most realistic assessment of 
what the surplus would be so we could have an open debate about 
how not to get into the position where we said we were 
protecting the Social Security surplus, but in fact, we were 
forcing ourselves into the position of spending it.
    I think if the tax cut had been enacted or if a tax cut, 
the size of which we are hearing debated this year, is to be 
enacted, we would find ourselves fairly quickly butting up 
against what do you do? Do you make unacceptable cuts in 
programs like law enforcement or do you spend the Social 
Security surplus?
    We think the right time to ask those questions is before, 
not after, you enact permanent policy. And to make sure we can 
provide for adequate levels of law enforcement, which is what 
we are discussing in this hearing today, and many other areas--
education, health policy. It is kind of putting your head in 
the sand to pretend that we can have deep cuts in areas like 
law enforcement when the kind of debate we are having here, 
which I think is the right debate to have, is are the funding 
levels enough to serve the needs of the American people?


    Mr. Hoyer. On that particular issue, let me ask you a 
question about Treasury versus Justice law enforcement, FBI, 
DEA and INS. Am I correct the principal continuing discrepancy 
in staffing is the comparable grade level of employees between 
the two?
    Mr. Lew. Well, there is a continuing discrepancy. I think 
that I could answer the question perhaps in two parts.
    We don't, in general, try and make everything at Treasury 
and Justice be exactly the same. You have to look at what 
people are doing, whether they are performing the same 
functions, whether retention requires it and recruitment 
requires it.
    I think INS and Customs is kind of a unique situation, 
where you have people working, often at 5:00 in the morning, 
side by side at the same post, where they are very aware of 
each other's compensation; and there is a real morale issue, 
and a retention and recruitment issue. INS has been, in terms 
of the overall compensation package, paying its people less 
than Customs. The split between base pay and overtime pay and 
benefits is different, partially because of laws that are 
different, partially because of collective bargaining 
agreements that are different.
    We have endeavored over the years to try and bring them 
into some kind of parity not because we think, because of a 
broad principle, that Treasury and Justice should always be 
treated the same, but because of the fact when two people are 
doing jobs that require comparable skills in the same place, 
the right policy is to have parity.
    I think this year's proposals would help correct that. It 
has the kind of ironic appearance that it looks like we are 
paying INS more than Customs because of the difference in grade 
scale, but if you look at the overall compensation package, 
which I am quite confident that the people in the field are 
very aware of, it actually would bring us closer to parity.
    Mr. Hoyer. Could you discuss either now or for the record 
the disparity that also exists in the number of authorized SES 
slots, for instance, in ATF versus FBI, which is causing, from 
the Director's testimony that we heard previously, a problem as 
it relates to supervision.
    Mr. Lew. I have looked at that issue and it is a tough one, 
because I think the arguments that they have made amount to 
comparisons that may or may not be the right comparisons. They 
are very different SES to FTE ratios in a number of different 
law enforcement functions.
    What the right place for Customs to be is not an obvious 
matter. I think the comparison to INS is obviously one where it 
is favorable. The comparison to FBI is different; you have to 
look at what people are doing, what the job functions are.
    I think that within the constraints that are available, the 
question is, how do you get the job done? We obviously worked 
with them to give them more SES last year. I think we have to 
see how that is working. If there is a need for more SES, the 
argument ought to be made in terms of the Customs plan, why did 
they need more, not how do we get their ratio to some level 
that might not be relevant to the work that Customs does.
    Mr. Hoyer. We will discuss that further.


    Last question and then I will have to leave, Mr. Director. 
I apologize for that.
    You published in the Federal Register last year a notice of 
proposed revision OMB circular A-110, Uniform Administrative 
Requirements for Grants and Agreements With Institutions of 
Higher Education, Hospitals, and Nonprofit Organizations. I did 
not support that, as you probably know, when it was raised last 
year because I thought the burden it would place on medical, as 
well as other research institutions, was both unnecessary and 
    Can you update us on the status of the A-110 revision?
    Mr. Lew. As you know----
    Mr. Hoyer. Also whether there has been a negative impact, 
which some of us feared.
    Mr. Lew. As you know and as I testified last year, Mr. 
Hoyer, I shared some of the concerns about the basic 
requirement. It wasn't of our design. It was a legislative 
    I am very pleased that the work that my staff did working 
this issue through has been greeted with as close to support 
from all parties as I think one can imagine, in terms of having 
worked through some very difficult issues, where the research 
community and the business community really had very 
complimentary things to say about how we dealt with this 
requirement that we didn't ask for.
    I must say that I have not had an opportunity since it was 
issued to get updated on the impact. It is very early in the 
implementation. I don't know that we have data yet. But I think 
that our underlying concerns about the policy remain true, even 
though I think we did an excellent job implementing the rule.
    I would be delighted to go back and ask. I am not sure the 
data exists yet. I have talked with a number of university 
presidents who have thanked us for the way the rule was 
prepared, but didn't particularly offer any views as to what 
the impact was. I suspect it is a little early to do an 
evaluation, but I will go back and ask.
    [The information follows:]

                       FEDERALLY-FUNDED RESEARCH

    On March 16, 2000, 15 agencies published notice in the 
Federal Register  that they have amended their regulations to 
reflect the Circular A-110 revision OMB issued last fall, as 
required by Public Law 105-277. The agencies' notice of interim 
final revision is effective on April 17, 2000, and includes the 
opportunity for interested members of the public to again 
comment on this issue.
    Implementation of the revised Circular is still in its 
initial phase. At this point, we are not aware of any negative 
impact on Federally-funded research. When the revision was 
issued last fall, the research community let us know that while 
they disagreed with the original statutory requirement, they 
believed we had crafted a revision that addressed most of their 
concerns about its potential negative impact on research.

    Mr. Hoyer. Thank you.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you, Mr. Hoyer.
    Mrs. Meek.


    Mrs. Meek. Thank you.
    Mr. Lew, I would like to go back again to the Miami 
Courthouse. As you know the design for the courthouse has 
already been approved. It is about 50 percent complete, and it 
was scheduled to be 100 percent completed this month. GSA 
estimates that the cost of a complete redesign of this project 
would cost about $2.3 million and result in a 1-year delay in 
the project. According to GSA, such a delay would perhaps cost 
an additional $4 million.
    This project is currently on schedule to break ground in 
March of 2001. Isn't a redesign, at this point, fiscally 
irresponsible? I am sure the answer to that would be yes.
    Won't further delays in this project just simply drive up 
the cost? It is in a very high-cost area.
    Mr. Lew. There is no doubt it is in a high-cost area. I am 
not sure that the estimates are correct. I will go back and 
check. The analysis that we have done is that the design 
changes would save roughly $9 million in construction, and when 
I was discussing this right as you came in, we were talking 
about senior judges.
    One of the things that didn't conform to the design guidein 
the original plan was three courtrooms for judges with senior status 
over 10 years. They had a courtroom for visiting judges and a second 
special proceedings room. Courtrooms--each of the courtrooms are very 
expensive. To build courtrooms that are not immediately needed may or 
may not make sense if there is a predicted need for more courtrooms in 
the future. But we have to evaluate based on current needs, and the 
current needs certainly don't support those courtrooms in our view.
    The analysis that we have seen on redesign may not be the 
same as you have gotten, but we thought the redesign was more 
in the $1 to $2 million range. Obviously, if it is $9 million 
less in cost and 1-1/2 or 2 million more in redesign, net, it 
is a good economic decision to do.
    I think that the challenge in doing things quickly is the 
burden. We agree with you, we should move quickly. We wouldn't 
have put the courthouse in the budget if we didn't think it was 
needed. We wouldn't have put it in the budget if we didn't 
think construction could begin this year. So we want to work 
towards getting the money appropriated, completing design and 
beginning construction this year. We think that is possible.
    These issues on courtroom sharing are very, very difficult 
and I think that there are tensions between the branches that I 
wish we could reduce. I don't think it is a good thing when we 
have to make recommendations and you have to make 
appropriations based on less than perfect information. I don't 
think we had complete information on some aspects of the Miami 
courthouse. If we can work together and understand it better, 
you may be able to persuade us, but we had to work with the 
data we had.
    Mrs. Meek. Doesn't the very process hurt this project in 
that you are going to take the limited data which you have 
currently before the authorizing committee; isn't that correct?
    Mr. Lew. We only can present the data that we have. To the 
extent there are other data that we don't have, we probably 
would benefit from getting it. But there has been a little bit 
of a struggle to get information on some of these issues.
    Mrs. Meek. So then are you saying that you have been able 
to accumulate certain data, and this data will go to the 
authorizing committee; and that this data that you submit will 
determine what will happen in the Miami courthouse project? So 
if I send you new additional data, will that data have any kind 
of impact on your final decision-making?
    Is there still room in this process to try and take the 
consideration of constitutionality of what is going on there in 
decision-making; is there still room for that?
    Mr. Lew. I don't think it is a constitutional issue. I 
think there may be others who think it is a constitutional 
    Mrs. Meek. But judges do, and they are sort of good on the 
    Mr. Lew. I think the question of whether or not decisions 
can be changed, obviously, we have made a recommendation. We 
are open--as we work with the authorizers, with you, the 
appropriators--to consider new information; and we are not 
rigid in terms of saying, we will never change our view.
    I misspoke. The $9 million is net of the redesign. We think 
$9 million is--it is an amount of resources that make it is 
possible for us to proceed with other projects. If we were to 
decide to do a larger, more expensive Miami Courthouse, it 
means there would be less resources for others.
    I have heard from a lot of members who are concerned that 
there are projects that we didn't put in that we should have. 
The very first question, in fact, I got: Why didn't we do the 
whole list? We are either going to have to provide more money 
or do less projects.
    The reason I say it is not a constitutional issue is that 
this is a question of how much Congress appropriates and how 
many projects are undertaken. Congress has to make a judgment 
based on the best information available, and if you decide to 
increase substantially the resources that are put into 
courthouses, it will make it very difficult to be where I think 
you want to be on Treasury law enforcement and other important 
areas. We have to make these tough tradeoffs.
    I think it kind of does all of us a disservice to suggest 
that we ought to just assume that there is only one possible 
position on what the cost of a courthouse is and how many you 
need, because it competes for resources with everything else. I 
certainly have tried, in putting this budget together, to work 
with the judicial branch. I think it is the best situation for 
each of us, as branches and collectively as a government, to 
work cooperatively on this. I hope we can do so.
    If the answer turns out to be, we didn't have information 
that would have led us to believe that more courtrooms in Miami 
is the right answer, we will work with you. We based our 
judgment, based on the best information we had. As I told you, 
when we spoke several weeks ago, we thought we were doing 
something that would be considered very positive in Miami.
    I am not sure that I understand exactly what the problems 
are. I understand it is a smaller courthouse, but I don't 
understand, with the detail that I know I would want to, what 
the real consequences would be. Based on our analysis, we 
obviously didn't think that was the case; and as I say, we 
remain open.
    Mrs. Meek. I would like to talk to you further about this. 
I have lots of information; whether or not it is empirical or 
not, I would like for you to consider it. Thank you.
    [The information follows:]


    GSA estimates the redesign costs for the Miami Courthouse 
to be $1.5 million, which will take three months to complete. 
The construction cost savings achieved by removing departures 
from the U.S. Courthouse Design Guide and sharing courtrooms is 
approximately $12.5 million. The total net savings for the 
Miami Courthouse will be $11 million.

    Mr. Kolbe. Thank you, Mrs. Meek.
    Mr. Goode.

                           IMPACT OF TAX CUT

    Mr. Goode. Thank you, Mr. Chairman.
    To follow up on what Congressman Hoyer was asking you 
about, I believe that you--two of your observations about the 
$792 million tax cut were you would cut law enforcement and 
other necessaries. Law enforcement was exactly--let me go on; I 
am not through asking the question. And that interest payments 
would increase, is that not what you said? That is what you 
    Mr. Lew. Well, the interest payments associated with a tax 
cut, meaning that we would have to borrow more money were not 
included in the $792 billion.
    Mr. Goode. You remember in the tax cut bill that the most 
significant part, by far, of the tax cut did not take effect 
unless interest payments were going down. Do you recall that 
part of the bill?
    Mr. Lew. I recall that there was a section of the bill, the 
workability of which we had our questions about.
    Mr. Goode. You recall that section, right?
    Mr. Lew. I am not sure that it worked. I am going back now 
a year in my memory, but I remember we had serious concerns 
about the design.
    Mr. Goode. The largest part of the tax cut that would be 
phased in over a period of time would not have taken effect 
unless the interest payments were going down on public and 
national debt.
    Mr. Lew. I think our view of what the real effects of that 
tax cut were was that it was putting in place a structure for 
massive tax reductions which would be very difficult to stop in 
the future. I would have to go back and refresh my memory of 
the details.
    Mr. Goode. Let me ask you this: is $15 billion in foreign 
aid law enforcement?
    Mr. Lew. Obviously, you can go through function by function 
in the budget. I based my statement a moment ago on a budget 
resolution that passed the House last week, where the level for 
law enforcement was 2.4 percent below the baseline. So that 
means reducing the actual amount of resources because you can't 
pay people if you don't have money for the cost-of-living 
adjustments. And it was 15 percent below our request. I think 
that in the debate----
    Mr. Goode. Foreign aid, you don't consider that law 
enforcement, do you?
    Mr. Lew. I consider a lot of our foreign aid necessary 
towards maintaining the national security of the United States.
    Mr. Goode. I asked you, do you consider it law enforcement?
    Mr. Lew. It is not law enforcement.
    Mr. Goode. Is AmeriCorps, half a billion dollars, law 
    Mr. Lew. There is some public safety work at AmeriCorps.
    Mr. Goode. And the foreign aid to the OPEC nations, you 
don't consider that law enforcement, do you?
    Mr. Lew. No.
    Mr. Goode. Thank you, Mr. Chairman.


    Mr. Kolbe. Thank you very much. Let me go back. I have two 
things I want to ask some questions about--and I will submit 
some others for the record.
    Director, as you know, I have been very concerned--and we 
have actually talked about this here already--about Treasury 
law enforcement, and my view is that it hasn't been getting 
what it deserves over the past decade. We got a good, practical 
example of that when I was down in Miami in December looking at 
the problems there. We saw the very dedicated but very ill-
equipped Marine Division that is part of Customs. In fact, 
while we were on a boat that evening, one of the boats lost one 
of their engines.
    I think, due to a lack of resources, the marine mission has 
become reactive--and not proactive. We certainly saw that with 
the cutting, almost in half, about 5 years ago of the Marine 
Division, putting it over in the Office of Investigations. 
There is no clear direction for its transition coming out from 
under the Office of Investigations.
    And I also understand that the modernization plan that 
Customs prepared last year still hasn't been approved by 
Treasury or OMB. We heard from Customs just a couple of weeks 
ago that, nationwide, there are only 85 operational boats in 
the marine program.
    We have thought that these resources are inadequate. We 
have looked to guidance from Treasury in developing a marine 
interdiction modernization program. Have you seen this 
modernization strategic plan for the Marine Division?
    Mr. Lew. I think part of the basic problem is that we 
haven't seen the strategic modernization plan. It is sort of 
frustrating that we haven't had more. I think something was 
submitted very recently that is at a staff level of discussion, 
but I don't think it yet constitutes a strategic plan.
    Mr. Kolbe. It is not even at the level yet of being 
approved by you.
    Mr. Lew. Just to contrast it, perhaps, with the air side 
where we were presented with a good case for upgrades, we 
approved that. On the marine side, we just didn't have a plan.
    Mr. Kolbe. So you--perhaps then you can't even answer this 
question, which is, do you think that the marine assets that 
are in Customs are sufficient to maintain a viable drug 
interdiction program?
    Mr. Lew. I think we have an effective program. Whether 
there is a need for more assets to do more is something that I 
think is really the issue, and I think that we are waiting to 
review some material which would enable me to answer your 
question in more detail.
    Mr. Kolbe. I am reluctant to pass judgment on your 
recommendation to provide no additional resources for the 
marine program, based on what you just told me, that you 
haven't received it. Would you say then that the failure to 
give those additional resources, at least in part, has to be 
because you haven't been given the information on which to make 
the evaluation?
    Mr. Lew. In 1999, Customs submitted a draft to us. That was 
in November 1999. We commented on that. We, to my knowledge, 
have not received a revised set of----
    Mr. Kolbe. November 1999, you commented and sent it back to 
Customs and still haven't received anything. So, in essence, 
you do not have the information you need to make a decision 
about the resources?
    Mr. Lew. The expanded resources.
    Mr. Kolbe. Expanded resources for the Marine Division.
    Mr. Lew. I don't want to comment on the merits of a 
proposal that we haven't had a chance to review.
    Mr. Kolbe. Can you tell me what kind of date and background 
materials you would need in order to make an evaluation?
    Mr. Lew. Typically, we look at a range of things from what 
the workload is, what the missions are, what the age and 
effectiveness of the equipment are, what the cost of 
maintaining it versus replacing are.
    We also look at whether there is a tail, whether the 
increase in short-term capital will require more resources in 
the future. We try to have a plan over the years where we don't 
create a need for resources that perhaps is beyond what is 
realistic to budget for on a permanent basis.
    So we ask a whole host of questions, and it is not just 
with Customs. We have those kinds of proposals in many, many 
areas, and we try not to send you proposals that would explode 
on you in the second or third year. We try to make sure we 
understand what they are and they fit into along-term plan.
    Mr. Kolbe. All right. I may have a couple more questions.
    Mr. Lew. I may not be entirely up to date, because we were 
expecting something to come from them; I will check on that. I 
don't believe it came though.
    Mr. Kolbe. I think you will find that is correct, that you 
don't have it.


    Let me ask you a couple of questions--and then I will 
conclude here--about courthouse construction. We are going to 
have GSA and the judges up tomorrow. I am perhaps a little more 
sympathetic than Mr. Hoyer and Mrs. Meek would be to your 
plight, and appreciate in particular the comments you made 
about we have tough choices to make.
    I think we all need to be reminded that there are not 
infinite resources, and I think the concept of sharing of 
courtrooms is one that I don't believe the judges have yet 
looked at in an objective enough or realistic enough light, as 
a realistic way to deal with the rapidly rising costs of 
    First, before I get into the sharing issue, though, I want 
to ask a couple of questions on the priorities here.
    As you know, this Subcommittee, since I have been Chairman 
of it, has adhered very religiously to the priority list that 
has been given to us. I will not tamper with that. I don't want 
to get into the business of making political decisions about 
which courthouse should go next. We have just basically gone 
right down the line.
    But my confidence gets a little shaken when I see the list 
get changed, and I know you have responsibilities too, but the 
list that was submitted by GSA and the Judicial Conference was 
changed. I am wondering if you can tell me on what basis OMB 
made changes in the priorities for courthouse construction. For 
example, Little Rock, which was sixteenth on the GSA list, gets 
considerably higher ranking than either Buffalo which is number 
seven or El Paso, number ten.
    Mr. Lew. I believe we actually went in priority order. We 
just looked at it perhaps a little bit differently.
    We separated their requests into categories. In the 
category of construction projects where they could proceed this 
year, we approved all of them. In the category of new site 
acquisition design projects, we approved their two top 
priorities. Frankly, it was resource constraints that kept us 
from going down the list.
    In the case of Little Rock, it was completing the funding 
of an ongoing project, and it was the only one in that 
category; and since the funding has been initiated already, it 
by definition was a project that was higher on their list at 
another point.
    I think if you go down the list in order, one could 
challenge our approach, I guess, by saying we shouldn't have 
tried to fund the courthouses that could be built immediately 
first. That was our first objective, to try and take the 
projects that were farthest down the track--and frankly, going 
down the new site acquisition, we look at projects to see 
whether or not they meet the criteria--and then we went right 
down the list.
    Mr. Kolbe. I think Little Rock is for design, so I think 
you jumped over a whole bunch of others that were ready.
    Mr. Lew. Little Rock was not new. Little Rock was to 
complete the design. That is why it was a different case.
    Mr. Kolbe. We will go into this in a lot more detail 
tomorrow, but I think that the statement you just made about 
following the list really is not accurate. We will try to get 
into some more detail with GSA on that tomorrow.
    Does your office have any discussion, when you go through 
this and before you make your submission, do you confer only 
with GSA, or do you have any discussion with the Judicial 
Conference? Do you have any contact at all with them?
    Mr. Lew. We met with the Judicial Conference this year and 
last year, and listened, not just on construction, but on other 
matters related to the judiciary's budget. I think that we 
shared with them many of the comments that I have shared with 
you today, so I don't think I have said anything that they 
would be surprised by.
    The challenge we have of working with them, getting 
information, is much better than it was a few years ago. I 
think we are getting closer to where we should be. I think this 
Committee has helped that process by having studies that had to 
be conducted. I don't think that it rises to the level of 
constitutional crisis if one branch of government asks another 
to explain what the nature of the funding requirements for a 
construction project are.
    Mr. Kolbe. I would certainly agree with that.
    Mr. Lew. I fear by raising these levels to constitutional 
levels, it kind of blurs the issue.
    Mr. Kolbe. I would agree.
    Let me come to that sharing issue. Did you rely on some 
studies that you did in order to make this decision?
    Mr. Lew. We were relying on GAO's studies, actually. All 
the statistics that I cited in terms of the use of courtrooms 
were based on that. I can't swear that those are 100 percent 
accurate. There should probably be more work done in this area. 
It is the kind of area we need to work with the Judiciary to 
better understand the information.
    Mr. Kolbe. This is the May 1997 courthouse construction 
    Mr. Lew. We have no desire to undersize courthouses. Our 
goal is to have courtrooms available for speedy administration 
of justice. I think the line between what you need for speedy 
administration of justice and a kind of understandable 
preference to have a space that you control 100 percent of the 
time, there is a little bit of a conflict there.
    Judges certainly have an extraordinary need to have a 
courtroom available when they have an arraignment, when they 
have various things come up that they didn't plan on. It is a 
different question whether they need to be in Courtroom 1 
versus Courtroom 2, 3, or 4. As long as a courtroom is 
available when it is needed, that I think addresses the 
administration of justice concerns.
    To the extent that the desire is to have a single courtroom 
always be available, it will force us into more expensive 
courthouse construction projects which I fear will mean fewer 
courtrooms and fewer courthouses.
    Mr. Kolbe. And not a good administration of justice in the 
long run. I quite agree with you.
    I think it is important to recognize, especially when we 
are talking about larger courthouses where we have a large 
number of judges that are involved, say you have 10 or 12 
judges, when you factor in datesof illness and vacations and so 
forth, it is just not realistic to assume every courtroom would be in 
use at any one time. So a good system of time management of those 
courtrooms seems to me to be a realistic way, as you said, to spread 
our resources further and to make it possible to have more courthouses 
    The judges have been in my office, and I have heard all 
their arguments. But as you are, I am still not persuaded.
    Mr. Lew. I am sympathetic to their needs. They need to have 
courtrooms available. There is no doubt about that. The 
question is, what is the most efficient and effective way to 
provide for these.
    Mr. Kolbe. Exactly.
    Mr. Price, you haven't had a chance to ask questions. Would 
you like to ask some?
    Mr. Price. Thank you, Mr. Chairman.


    Mr. Lew, welcome to the Subcommittee. Good to see you this 
morning. I have a couple of questions, but I also have a couple 
of comments. Let me lead with those because I do not want to 
neglect, this morning, to thank you and your staff for the fine 
work you have done on North Carolina's disaster relief and 
recovery needs. Elgie Holstein, Wesley Warren, a lot of your 
people worked long and hard on that, getting the numbers shaped 
up, getting a credible request together, and helping advocate 
for our relief needs. So we are very grateful to you.
    North Carolina was hit by three major hurricanes in a few 
weeks' time, Floyd being the most powerful; and the damage from 
these storms and the subsequent flooding simply devastated the 
eastern part of the State. We will be recovering for some time 
to come. Fortunately, the Federal disaster response has been 
very heartening. OMB has worked with our governor, with our 
congressional delegation, and members from both parties very 
closely to provide funding for the most pressing needs and 
incorporate evolving damage estimates into the administration's 
    I particularly appreciate the way you revisited the matter 
as the supplemental appropriations bill was prepared this 
winter, and we are committed to working with you to pass that 
supplemental request. So I do want to thank you for that 
excellent cooperation.
    Mr. Lew. I appreciate the kind remarks.


    Mr. Price. I also want to turn briefly to Circular A-110. I 
understand Mr. Hoyer already raised this.
    This is something that took much of your time and the 
subcommittee's time last year. The mandated revision of 
Circular A-110 was aimed at making raw research data available 
under the Freedom of Information Act. As you know, I had a lot 
of concerns about the Shelby language, its potential to open up 
private medical data, its jeopardizing of public/private 
collaborations and so forth. And I know you worked very hard to 
develop a rule that would expand public access to federally 
funded research data, as of course legitimately needs to be 
done, so that results can be replicated but without having a 
chilling effect.
    Mr. Hoyer has raised the matter, so I will move on to other 
questions, but I do want to commend you for careful work on 
that rule. And I want to echo his request that you keep the 
committee informed about what is going on in the individual 
departments as they respond to your rule, and the kind of 
feedback you are getting as to how well these changes are 
    Mr. Lew. Mr. Price, one thing I think I neglected to say in 
my response to Mr. Hoyer, as we designed the final rule, we 
tried to build in the need to review the policy to see if it 
worked and to make clear that we didn't view it as being a 
permanent and unchangeable policy. What I have not yet seen 
since we issued the final rule at the end of September is what 
the results are.
    We made every effort to make what we didn't think was a 
particularly desirable requirement as workable as possible, and 
from what I have heard informally from academic institutions, 
they certainly feel that, within limits, we did achieve that. 
But I don't know, with that, whether it really works. I think 
we have to wait a little while to get the reports in from 
    Mr. Price. I know that was your intention and it does bear, 
I think, careful watching.

                        FEDERAL GRANTS INVENTORY

    Now let me ask a couple of questions, one having to do with 
the inventory of current Federal grant programs that is under 
preparation at OMB; and finally I would like to raise a 
question about the broader issue of biennial budgeting.
    In our fiscal 2000 bill, this committee directed OMB to 
prepare an inventory of current Federal grant programs, 
basically an update of the Catalogue of Federal Domestic 
Assistance, along with some other information. This inventory 
was due 6 months after the date of the enactment of the fiscal 
2000 bill, which, in other words, is tomorrow.
    What is your timeline on that? Will you be able to submit 
this grants inventory by tomorrow, and if not, when do we 
expect that to be completed?
    Mr. Lew. I don't believe tomorrow, but I believe very 
shortly. I am told within a week or so.
    Mr. Price. Good. So we can expect that in a matter of days.
    Mr. Lew. Yes. My recollection is that it is circulating for 
comment internally now, and the process ought to be completed 
in the next week or so.
    Mr. Price. I do think we have a responsibility to provide 
better and more user-friendly information about grant 
opportunities to potential applicants. Every organization that 
meets the eligibility criteria should have the opportunity to 
compete for this funding.
    Is there anything you would like to say about what follows 
the inventory, what the next steps are? Is there agency 
guidance that OMB is going to be issuing, or may be under 
development, to standardize the process by which notices of 
funding availability are published to ensure equal access to 
that information?
    Mr. Lew. Being at the end of the clearance chain 
internally, I am about 4 days premature from having a view on 
that. I expect to see it by Friday, and I would be happy to 
discuss it with you after I review it.
    Mr. Price. Perhaps you could submit for the record----.
    Mr. Lew. I haven't seen the response to the amendment. I 
know it is going through the organization on its way to me.
    Mr. Price. Of course, this next step will be issued in a 
matter of days.
    We do, I think, have a further responsibility in terms of 
agency guidance and standardization so that NOFAs are published 
in a comprehensible way.

                           BIENNIAL BUDGETING

    Finally, let me take up this issue of biennial budgeting. 
Of course, this is a big issue. It is one that the 
administration has expressed its support for, this planned2-
year budget/appropriations cycle. I think here on the Hill biennial 
budgeting is often supported as a kind of response to the frustration 
we feel with the budget process and the end-of-session train wrecks 
that we have had all too often. But I wonder about biennial budgeting 
and how well the remedy fits the problem.
    I understand that biennial budgeting would, in all 
likelihood, strengthen the hand of the President. I don't think 
it is any accident that President Clinton, as well as 
Presidents Reagan and Bush, expressed support for biennial 
budgeting because it would no doubt shift a good deal of power 
and control and authority to the executive branch for reasons 
that we can go into, but I think that is pretty well accepted. 
So it may be understandable in terms of presidential power.
    It seems to me less understandable in terms of budgetary 
discipline and budgetary control. After all, surely biennial 
budgeting would lead to more frequent supplementals. Surely it 
would lead to a less orderly, less predictable, probably less 
disciplined process. Our experience here is that supplementals 
are where the emergency is declared. That is where the caps get 
broken. That is where the regular order breaks down. Why on 
earth, in terms of budget discipline and budget control, would 
we want to move toward a biennial process when really the most 
orderly oversight Congress performs is in these annual 
appropriations bills; and moreover, it is oversight that has 
some teeth, it has some authority.
    Why would we want to go to a biennial process in terms, 
now, of your responsibility as a budget officer and a proponent 
of budget discipline?
    Mr. Lew. Mr. Price, I reviewed your testimony in 
preparation for my own testimony, just a couple of weeks ago, 
and I think you raise some very important questions. 
Respectfully, I think I come to a different conclusion, and 
that is what I testified in front of the Rules Committee about.
    I think that as far as supplementals and budget discipline 
goes, it is not the fact of a biennial budget or an annual 
budget that determines that. It is the decisions that you and 
we make when we make those judgments. I think it is kind of 
unrealistic to think that within the annual appropriations 
cycle we need supplementals, but that in a biennial process we 
wouldn't need supplementals.
    I think the question is, do we do those in an orderly way? 
Do we do the supplementals to deal with changing circumstances? 
Do we have proposals from the executive branch that come in an 
organized way and are reviewed by the Appropriations Committee 
in an organized way? If that is the case, I believe that the 
year when we were in between the 13-bill cycle would take much 
less of this Committee's time, which would actually give this 
committee more time for the oversight that I think is so 
    What you call oversight we call management. It is a 
constant frustration to me that we have to struggle with a 
calendar to find time to have a series of meetings on a 
management topic because they are so buffeted by the budget 
schedule. I think we all, you and we both have a lot of good 
that we can do if we had some islands of time when we weren't 
fully engaged in making new budget decisions to do management 
and oversight.
    I think the question of enhancing the power of the 
executive versus the legislative branch is a complicated one. I 
don't believe the biennial budget intrinsically enhances 
executive branch power. I actually think one can make an 
argument that this Committee, if it ended up having expanded 
review of reprogrammings, would have substantially greater 
power than we in the executive branch would want.
    I think it requires a balance, and if there is going to be 
a biennial system that works, it is going to have to anticipate 
midcourse corrections, some of which require reprogramming, 
some of which require supplementals; and frankly it is going to 
require somewhat more comity in the branches than we have seen.
    I don't think any process can create comity between the 
branches. These year-end negotiations, no one is more familiar 
with them than I am. I don't think it is a particularly good 
way to make policy for years and years and years. I think the 
biennial process would permit the kind of orderly review of 
budget needs, updates as appropriate, with a greatly expanded 
opportunity for oversight and management, which is why we 
supported--since 1993, the Administration has supported it.
    I don't think that any system will wave a magic wand and 
make it right. I think it ultimately boils down to how well we 
do our job and how well you do your jobs and whether we can 
work together. I think it is a challenge which the biennial 
process would help us with.
    Mr. Price. This is a longer discussion than we could have 
here. I think we can certainly agree on that latter point, that 
what the budget process needs is not endless tinkering, annual 
or biennial, but the political will and responsibility to make 
it work as intended. And of course, any budget process will 
require supplementals and require midcourse corrections.
    I think the point is, though, with the far longer timeline 
of biennial budgeting and the far greater uncertainty, there 
simply would be a lot more supplementals. It seems to be our 
experience with supplementals, that they are not the friends of 
budget discipline and budget accountability and responsibility, 
but often are the opposite.
    Finally, on your oversight point, you know, after the first 
round, after an election, we would be fiscal lame ducks up 
here, and it seems to me the yearly process we go through is 
about as good as oversight gets in the Congress; and the notion 
that, as fiscal lame ducks, we would be rushing in to do more 
responsible and more intensive oversight, I just think is 
highly unrealistic.
    Mr. Kolbe. Mr. Price, thank you very much.
    Mr. Lew, thank you. We appreciate this hearing today. I 
think it has been one of the better and more constructive ones 
we have had in a long time with you. I think--we have gotten 
into a number of topics, which I think has been very valuable 
in helping this committee do its work. We thank you very much 
for coming.
    Mr. Lew. Thank you very much for having me.
    Mr. Kolbe. The Subcommittee will stand in recess until this 

                           W I T N E S S E S

Lew, J.J.........................................................   451
Lyle, M.J........................................................     1
McCaffrey, B.R...................................................   231

                               I N D E X

Executive Office of the President:
    Armstrong Funding, Request to Use............................42, 49
    Automated Records Management System, the.............40, 47, 52, 75
    Campaign Travel..............................................36, 38
    Capital Investment Plan...................7, 10, 37, 58, 62, 67, 68
    Chief Financial Officer Act, Implementation of..7, 11, 54, 161, 177
    Committee, Questions Submitted by the........................    47
    Council of Economic Advisors.................................   210
    E-mail.......................................................38, 47
    Executive Residence/National Park Service....................    68
    Fenced Funds, Impact of..................................24, 41, 48
    Fisal Year 2000 Achievements.................................  6, 8
    Fiscal Year 2001 Budget Submission...........................   109
    First Lady Travel................................13, 25, 31, 57, 76
    Information Technology Architecture..........................    55
    Information Technology, Future Vision of.....................    30
    Knight, Memorandum on First Lady Travel......................    19
    Lyle, Michael J., Prepared Statement of......................     8
    Lyle, Michael J., Summary Statement of.......................     5
    National Security Council....................................   197
    Office of Administration.....................................   156
    Office of Policy Development.................................   184
    Personnel Requirements..............................7, 10, 161, 176
    President, Compensation of...................................   112
    President, Special Assistance to.............................   133
    Puerto Rico Referendum.........................30, 37, 63, 224, 226
    Transition Costs........................................65, 74, 107
    Unanticipated Needs........................................105, 222
    Vice President, Official Residence of........................   145
    White House Office...........................................   120
    Year 2000..................................................6, 8, 43
Office of National Drug Control Policy:
    Emerson, Congresswoman, Questions Submitted by...............   353
    Hoyer, Congressman, Opening Statement of.....................   233
    Kolbe, Chairman, Opening Statement of........................   231
    McCaffrey, Director, Opening Statement of....................   234
    ONDCP, FY 01 Congressional Budget Submission.................   376
    Questions Submitted by House Committee on Appropriations.....   260
    Roybal-Allard, Congresswoman, Questions Submitted by.........   364
Office of Management and Budget:
    Adequacy of Resources for the Customs Marine Program.........   495
    Basis for Proposed Increase in Staffing......................   471
    Biennial Budgeting...........................................   501
    Courthouse Construction......................................   473
    Did Recent Changes to Circular A-110 Impact Federally Funded 
      Research?..................................................   491
    Do Treasury and Justice Law Enforcement Personnel Have 
      Comparable Pay?............................................   490
    Emerson, Questions Submitted by Congresswoman................   558
    Federal Employee Pay Comparability...........................   472
    Federal Grants Inventory.....................................   500
    Federally Funded Research--Availability of Data..............   500
    Funding for High Intensity Drug Trafficking Areas............   480
    Hoyer, Questions Submitted by Congressman....................   555
    Hurricane Floyd Funding Request..............................   499
    Impact of Large Tax Cut on Projected Surpluses...............   489
    Impact on Tax Cut............................................   494
    Improving Data Quality.......................................   477
    Koble, Opening Statement of the Honorable Mr.................   454
    Kolbe, Questions Submitted by Chairman.......................   504
    Lew, Opening remarks of Mr...................................   457
    Lew, Prepared Statement of Mr................................   460
    Miami Courthouse Construction................................   492
    Need for Additional Economist Position.......................   471
    New User Fee for the Custom Service..........................   483
    Northup, Questions Submitted by Congresswoman................   532
    OMB Staffing Requirements....................................   481
    Peterson, Questions Submitted by Congressman.................   551
    Price, Questions Submitted by Congressman....................   542
    Priority Ranking of Proposed Courthouse Construction Projects   497
    Reducing the Burden of Paperwork on the Public...............   475
    Roybal-Allard, Questions Submitted by Congresswoman..........   529
    Size of Recent Budget Surpluses..............................   483
    Use of Detailees by the Office of Management and Budget......   467
    Would Proposed Customs User Fee Violate Trade Agreements.....   487