[Senate Hearing 108-260]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-260
 
                      NOMINATION OF JOEL D. KAPLAN
=======================================================================


                                HEARING

                               before the


                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                 ON THE

    NOMINATION OF JOEL D. KAPLAN, TO BE DEPUTY DIRECTOR, OFFICE OF 
                         MANAGEMENT AND BUDGET

                               __________

                             JULY 29, 2003

                               __________

      Printed for the use of the Committee on Governmental Affairs








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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Deleware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas
              Michael D. Bopp, Staff Director and Counsel
                    Johanna L. Hardy, Senior Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                   Susan E. Propper, Minority Counsel
           Jennifer E. Hamilton, Minority Research Assistant
                      Amy B. Newhouse, Chief Clerk













                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Lautenberg...........................................     2
    Senator Coleman..............................................     7
    Senator Akaka................................................    11

                                WITNESS
                         Tuesday, July 29, 2003

Joel D. Kaplan, Deputy Director, Office of Management and Budget
    Testimony....................................................     4
    Biographical and professional information requested of 
      nominees...................................................    17
    Pre-hearing questionnaire and responses for the Record.......    24
    Post-hearing questions and responses for the Record from:
      Senator Collins............................................    94
      Senator Lautenberg.........................................    95
      Senator Lieberman..........................................   105
      Senator Akaka..............................................   109
















                      NOMINATION OF JOEL D. KAPLAN

                              ----------                              


                         TUESDAY, JULY 29, 2003

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:52 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Coleman, Akaka, and Lautenberg.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will be in order.
    Today the Committee on Governmental Affairs is holding a 
hearing to consider the nomination of Joel Kaplan to be the 
Deputy Director of the Office of Management and Budget, a key 
position within the Federal Government.
    The Office of Management and Budget has many significant 
and cross-cutting responsibilities for the Executive Branch. 
Critical to the position we are examining today, OMB provides 
the President with recommendations in formulating his budget 
and oversees the administration of the budget once the 
appropriations bills become law.
    As Deputy Director of the Office of Management and Budget, 
if confirmed, Mr. Kaplan will have many responsibilities, but 
probably one of the most important will be helping the 
President build a Federal budget that is fiscally responsible 
and responsive to the needs of the American people. This will 
be a difficult job in a time of spending imperatives and 
revenue constraints.
    Earlier this month, the Office of Management and Budget 
released the mid-session review of the budget which did not 
paint a rosy picture. The Federal deficit is now estimated to 
be $455 billion for fiscal year 2003, compared to $304 billion 
that OMB had predicted in February of this year. In addition, 
the deficit for fiscal year 2004 is projected to be $475 
billion.
    Although the dramatic turnaround from surplus to deficit in 
the span of 2 years is troubling, it is important to bear in 
mind that economic and technical factors, much more so than tax 
cuts and spending increases combined, are the single biggest 
cause of our fiscal woes. It is important to remember also that 
these deficit projections are just that, projections. They are 
not set in stone, nor are they guaranteed. Indeed, if there is 
any certainty, it is that they will change. In the time that I 
have been in the Senate, never once have the projections of 
either OMB or the CBO, the Congressional Budget Office, 
regardless of whose administration it is or who is in charge of 
Congress, proved to be accurate.
    We must now look forward and find ways to bring fiscal 
restraint to the government and show the American taxpayers 
that the Federal Government can operate within a budget and 
work effectively.
    In his Fiscal Year 2004 Budget, the President proposed 
several budget enforcement mechanisms, including biennial 
budgeting, automatic continuing resolutions and the extension 
of the pay-as-you-go provisions. Additionally, several Senators 
have introduced legislation this year that would put 
enforcement mechanisms in place. We must examine these options 
to determine whether or not they are the proper tools to help 
bring accountability to the Federal budget, but nothing can 
really replace good old-fashioned budget responsibility.
    As I mentioned, Mr. Kaplan's job will not be an easy one. 
His background as an artillery officer in the Marine Corps is 
undoubtedly useful training for the many battles ahead. 
Implementing a Federal budget is never easy, but with strong 
guidance from the Office of Management and Budget, under the 
leadership of Director Bolten, and with the addition of Mr. 
Kaplan, I am confident that we will move in the right 
direction.
    Mr. Kaplan will face many challenges if confirmed. I am 
very pleased he has agreed to the President's request that he 
serve in this position because I have concluded that he 
possesses the background, intelligence and experience needed to 
be a successful OMB Deputy Director; that is, assuming all goes 
well at this hearing today.
    So I want to thank the witness for being with us today, and 
I would now like to yield to Senator Lautenberg for any 
comments that he might have.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. Welcome, Mr. Kaplan. I am not 
accustomed to calling people as young as you ``mister,'' but I 
am going to observe the protocol here.
    And I want to join you, Madam Chairman, in welcoming the 
President's nominee to be Deputy Director of OMB to the 
Committee this morning. Mr. Kaplan is obviously an unusual 
young man, sterling academic credentials and having clerked on 
the Fourth Circuit Court and for Supreme Court Justice Antonin 
Scalia, who has New Jersey roots, I do not know if you 
remember.
    Apparently, you have served in the Marine Corps. Was that 
on active duty?
    Mr. Kaplan. Yes, Senator, it was.
    Senator Lautenberg. Four years' worth?
    Mr. Kaplan. Just under 4 years, Senator.
    Senator Lautenberg. Well, having said all of those nice 
things, I am concerned about the nomination, and I will tell 
you why. Because as bright as you obviously are, I do not see 
anything in your experience, prior business or government work 
experience, for helping you prepare for this post. And it is, 
as everyone knows, the No. 2 position at the Office of 
Management and Budget--the agency charged with preparing the 
President's budget request and overseeing the administration's 
procurement, financial management, information technology and 
regulatory policies.
    Now, aside from the question of that experience, there is 
another matter that warrants some discussion. It is no secret 
that you were in Florida to work for the Bush-Cheney campaign 
during the recount that followed the 2000 election.
    One aspect of that sorry moment that I still find troubling 
is that on the Wednesday before Thanksgiving, there was a 
court-ordered manual recount being conducted in the Miami, Dade 
County building. I am not telling you anything new, obviously. 
When the Canvassing Board attempted to move the recount up to 
the 19th floor, where the tabulating machines were, a group of 
protestors spontaneously assembled and caused enough commotion 
and fear that the Canvassing Board was intimidated enough to 
call the recount off. It was never resumed.
    That group, we discovered later, did not really consist of 
irate local Republican voters, as was portrayed, it was largely 
a group of Republican staffers flown down by the campaign to 
Florida. The group intimidated, physically accosted county 
workers and Democratic campaign staff. They did everything they 
could to disrupt the recount, and they succeeded. We are not 
rehashing who is President. President George W. Bush is 
President, period. So that is not where we are at. But mobs are 
not supposed to rule in this country, but on that day one did.
    And then in the pre-hearing interviews with staff, you 
indicated that you were not part of the mob, that you were in 
the tabulating room on the 19th floor as an official Republican 
observer, and there is no reason to doubt that. But also there 
was an acknowledgment that you knew several of the people who 
were in the mob.
    And I am curious to know why, when the Canvassing Board 
asked people from both parties to help calm things down, that 
you did not stand up, with your education, your skills, you did 
not kind of stick your head out the door and say to these 
friends--you say that you knew a lot of people--``Do not worry. 
We have our observers. Everything is above board.''
    And I think Mr. Kaplan also called the affair the ``Brooks 
Brothers'' riot. It seems to suggest there was some kind of 
whimsy about the episode, and there was not anything funny 
about a mob trying to prevent people from counting votes, 
whether the people in the mob are wearing brown shirts or 
button-down shirts.
    So I look forward to hearing Mr. Kaplan's opening statement 
and your version of what happened that day.
    I thank you, Madam Chairman, for conducting this hearing.
    Chairman Collins. Thank you, Senator Lautenberg.
    I want to point out that Mr. Kaplan currently is serving as 
Special Assistant to the President in the Office of the Chief 
of Staff. We have talked about his Marine experience and his 
clerkships. He has filed responses to a biographical and 
financial questionnaire, answered pre-hearing questions 
submitted by the Committee, answered questions in a Committee 
staff interview and had his financial statements reviewed by 
the Office of Government Ethics.
    Without objection, this information will be made part of 
the hearing record, with the exception of the financial data 
which are on file and available for public inspection in the 
Committee's office.
    Mr. Kaplan, our Committee rules require that all nominees 
give their testimony under oath, so I would ask that you stand 
and raise your right hand.
    Do you swear the testimony you will give to the Committee 
will be the truth, the whole truth, and nothing but the truth, 
so help you, God?
    Mr. Kaplan. I do.
    Chairman Collins. You may be seated.
    Mr. Kaplan. Thank you, Madam Chairman.
    Chairman Collins. Mr. Kaplan, do you have any family 
members that you would like to introduce to the Committee 
before you proceed with your written statement?
    Mr. Kaplan. If I may, Madam Chairman.
    I would like to introduce my mother, Rosalind Kaplan, my 
sister Sharon Chabot, my niece Jessica Chabot, who have all 
come down from Massachusetts to be here with me today. I would 
also like to introduce Lee Sax, who is a former assistant 
secretary of the Treasury in the Clinton Administration and is 
here to show strong bipartisan support for my nomination and 
also because he is my cousin. [Laughter.]
    Chairman Collins. That may have undercut his credibility 
just a little bit.
    Mr. Kaplan. He has told me that several times, Madam 
Chairman.
    Chairman Collins. Thank you. You may proceed with your 
statement.

 TESTIMONY OF JOEL D. KAPLAN, TO BE DEPUTY DIRECTOR, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Kaplan. Thank you, Madam Chairman and Senator 
Lautenberg. I appreciate the opportunity to be here this 
morning and am deeply honored to come before you as the 
President's nominee to be Deputy Director of the Office of 
Management and Budget.
    I would like to take this opportunity to express my 
gratitude to the President for nominating me to this position 
and also to Director Bolten for his confidence in me. If 
confirmed, I will work tirelessly to meet their high standards 
and their expectations.
    Since the start of the administration, I have had an 
opportunity to work with many officials at the Office of 
Management and Budget and throughout the Executive Branch on 
the development and implementation of administration policy. 
Through that experience, I gained a tremendous appreciation for 
both OMB's important role in that process and for the 
dedication and skill of the professionals who work there.
    The budget of the Federal Government represents the 
judgment of Congress and the President about how much of the 
people's money to spend and for what purposes. The President's 
priorities, which are reflected in his budget submission, are 
winning the war on terror, protecting the homeland, and 
strengthening the economy. If confirmed, I will work faithfully 
to ensure that we fund those priorities, while at the same time 
setting a course that moves our Nation's budget back towards 
balance.
    The other important role OMB plays, which I know is of 
particular interest to the Members of this Committee, is 
improving the management of the Executive Branch. The President 
and his administration share your commitment, Madam Chairman, 
to giving the American people the well-functioning and 
efficient government they deserve and to energizing and 
empowering the thousands of hardworking Federal employees who 
come to work and serve their country every day.
    This Committee has shown great leadership in this area and, 
if confirmed, I look forward to working with you to make 
progress on the President's Management Agenda and your 
management priorities. In fulfilling these important 
responsibilities, Madam Chairman, I will work diligently to 
make sure that OMB's relationship with this Committee, and with 
the Congress, is an open and productive one.
    Thank you again for the opportunity to appear this morning, 
and I will look forward to answering your questions. Thank you.
    Chairman Collins. Mr. Kaplan, I am going to start with the 
three standard questions we ask all nominees, and then I am 
going to defer to Senator Lautenberg for his questions so that 
he can keep a previous commitment.
    First, is there anything you are aware of in your 
background which might present a conflict of interest with the 
duties of the office to which you have been nominated?
    Mr. Kaplan. No, Madam Chairman.
    Chairman Collins. Second, do you know of anything personal 
or otherwise that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Kaplan. No, Madam Chairman.
    Chairman Collins. And, third, do you agree, without 
reservation, to respond to any reasonable summons to appear and 
testify before any duly constituted committee of Congress if 
you are confirmed?
    Mr. Kaplan. Yes, I do, Madam Chairman.
    Chairman Collins. Senator Lautenberg.
    Senator Lautenberg. Thank you very much, Madam Chairman.
    Mr. Kaplan, I will try to be brief because you heard the 
couple of concerns that I raised.
    I want to talk about what you think the scope of your 
responsibilities within OMB might be and what do you bring, by 
way of experience, to the job that would prepare you for this?
    Mr. Kaplan. Sure, Senator. The scope of the 
responsibilities of the office, as the Chairman described them, 
are quite broad and I think important ones. The two primary 
responsibilities have to do with helping to design, propose, 
and then implement the President's budget. And as I mentioned 
briefly in the opening statement, helping to improve the 
management of the Executive Branch.
    As to the first primary responsibility, I have spent the 
last several years working in the Office of the Chief of Staff, 
directly involved in designing, coordinating and overseeing the 
implementation of administration policy. In that capacity, I 
participated throughout the process with many officials at the 
Office of Management and Budget and throughout the Executive 
Branch in determining how those policy initiatives of the 
President fit into the President's priorities, as reflected in 
the President's budget.
    I have participated in numerous discussions and reviews of 
the budget at every stage in the budget process from the review 
of the agencies' submissions, which typically takes place in 
September, through the OMB's pass-back of those requests, to 
ensure that the President's priorities and policies are 
properly reflected in the agency budgets, through to the 
preparation and presentation of the President's budget and 
review of that document, and through the administration's 
efforts to work with the Congress in the budget process, and 
then, later in the year, through the appropriations process.
    So I think I have had, Senator, a good experience working 
in this administration. I am quite familiar with most, if not 
all, of the significant officials in the agencies that I will 
be charged with working with, and certainly in OMB as well and, 
for that matter, with the officials in the White House, who I 
have worked very closely with over the last several years.
    In fact, it is because of these relationships and because 
of the work I have done with those officials that I believe the 
President, his senior advisers and Director Bolten have 
developed the confidence in me that I do have the 
qualifications and the abilities to execute these 
responsibilities.
    Senator Lautenberg. Because I have a commitment to the 
Chairman that I am going to wrap up very quickly, so I do not 
want to interrupt your testimony, but I do want to just move 
along. And that is the experience that you just presented for 
us to review is mostly on the budget side of things. It is the 
Office of Management and Budget. It is really an arm of the 
chief executive that is involved with the management side of 
things.
    Do you think you have had any experience in that area that 
would enable you to move into this job and participate in a 
full fashion?
    Mr. Kaplan. I do, Senator. I think I have had two 
particularly relevant experiences; the first that the Chairman 
mentioned in her remarks was my experience--and you did as 
well, Senator--was my experience as an officer in the Marine 
Corps.
    Senator Lautenberg. Platoon leader.
    Mr. Kaplan. Platoon leader and then an executive officer.
    Senator Lautenberg. How many people in the platoon?
    Mr. Kaplan. Forty-five in the platoon, 150 in a battery, of 
which I was the executive officer.
    Senator Lautenberg. They are quite different because here, 
regardless of whether you are in the majority party or not, it 
is awful hard to command people to do things, as you have 
probably seen already, but if you would, just give me a word of 
comment about my review of those what I call kind of dark days 
for everybody. Again, we are not discussing outcome. The 
outcome is what it was and what it is.
    But why you, with all of the training that you have had in 
the law, and the skills, the academic background that you 
bring, and I am sure accompanying that is a fairly deep 
conscience--I would bet that your family has produced that kind 
of an awareness in you--why did you not say, hey, let's cut 
this out?
    You knew what was happening. I am not saying that you 
participated, but why did you not object so that people would 
hear your voice?
    Mr. Kaplan. Senator, my role in all of the proceedings in 
the recount up until that point, and in Miami Dade on that 
date, was as an observer/representative of the Bush-Cheney 
campaign to ensure that the activities of the Canvassing Board 
were properly viewed by our campaign. The Democrats had 
representatives there, as well--to register any objections and 
to take note of the process. That is what I was there to do, 
and that was my intention in attempting to get into the room, 
where I was permitted and invited to be. I was not in charge of 
the people who were congregated outside.
    Senator Lautenberg. I understand. But I know enough about 
you, from reading about you, seeing your family here and the 
pride that they share and that we will share in your life thus 
far as an upstanding young person, but I bet anything that you 
would never walk by an attack in the street, where someone was 
being victimized or intimidated and let it pass. Your training 
as a Marine would not permit it, and I served 3 years in the 
Army during the war, and I know I could not do it, and I do not 
believe that you are of any different character. But it was 
disappointing that even though you were officially an observer, 
you were there as a responsible human being and that you were 
not disturbed in any way by the things that were going on.
    Mr. Kaplan. Respectfully, Senator, I certainly hope that I 
would do what you described if I were to come upon a scene like 
the one you described. What I saw before I went into the room 
was a group of people protesting, and I didn't see anything 
that suggested any violence or any violent activity preparing 
to take place.
    Senator Lautenberg. Thank you very much, Madam Chairman.
    Thank you, Mr. Kaplan.
    Chairman Collins. Senator Coleman, I have not yet 
questioned the witness because I deferred to Senator 
Lautenberg, who was under a time constraint. If you are under a 
similar time constraint, I would be happy to yield to you for 
your questions first.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Madam Chairman, I will defer to my 
Chairman, and then would love to follow up a little bit on just 
the last line of questioning. And being an ex-protestor myself, 
by the way, I would love to explore, but I defer to my 
Chairman.
    Chairman Collins. Thank you.
    Mr. Kaplan, before I do go to my questions, I just want to 
clarify one issue, and that is were you a participant in the 
demonstration that Senator Lautenberg mentioned this morning?
    Mr. Kaplan. Madam Chairman, I was present while there was 
protesting taking place. My responsibilities and role was to go 
into the room and be an official observer. So, while I was 
there, I was not, to my recollection, a participant, as I think 
Senator Lautenberg envisions.
    Chairman Collins. Thank you. That is a helpful 
clarification.
    I am going to ask you questions in three areas. First, I 
want to talk to you about the budget deficit; second, I want to 
talk about certain procedural reforms that the President has 
proposed; and, third, I want to talk to you about funding for 
some specific programs. Even though I know you are not 
responsible right now for preparing the budget, you will be 
assisting in that regard going forward, and I want to make sure 
that you are aware of certain programs that I think are of high 
priority.
    First of all, on the budget deficit, as I mentioned in my 
opening remarks, OMB has significantly revised the budget 
deficit upward from its February estimation. It is $150 billion 
more than OMB estimated in February of this year, and it is so 
for very good reasons; the cost of the war, the cost of 
homeland security, and most of all, the decline in the economy 
has meant that revenues are far lower than anticipated.
    For that reason, OMB Director Bolten has stated that these 
levels of deficits are ``manageable'' if we continue pro-growth 
economic policies and exercise serious spending discipline.
    I would also note that the deficit, as a percentage of GDP, 
remains at a manageable level. But how long can the Federal 
Government continue to run so-called manageable deficits before 
we start seeing an impact on the economy, on interest rates, on 
our ability to function in a healthy economy?
    Mr. Kaplan. Thanks, Madam Chairman, for that question.
    I think you have asked the right question which is, with 
the deficits that we are currently running, which I think, as 
you correctly note, although large in nominal terms, are not by 
any means deficits that are, as a percentage of GDP, beyond 
what we have seen even in recent years.
    It is difficult to say how long deficits of this magnitude 
could be sustained before there would be an impact on interest 
rates. I think what is important to note, as Director Bolten 
did when discussing the mid-session review, is that we have not 
seen the impact on interest rates that we'd be concerned about 
so far, but it is, as he said, a legitimate subject of concern, 
and it is important that we exercise and continue the types of 
economic policies and fiscal restraint that will allow us to 
bring the deficit into a declining trajectory and back towards 
balance.
    The projections that were released at the time of the mid-
session review do show, Madam Chairman, as you know, that by 
2006 the deficit, as a percentage of GDP, will be half of what 
it is projected to be this year, and I believe it is that 
budget path that Director Bolten was discussing in terms of its 
manageability. But it is important that we continue these 
policies and that the Congress work with the administration to 
exercise the fiscal restraint that will put us on that path.
    Chairman Collins. The President has proposed that there be 
an automatic continuing resolution, and in many ways, that is a 
very appealing concept because, when Congress does not finish 
its work by the start of the fiscal year, there is always a 
battle to get a continuing resolution passed.
    Of course, ideally, we ought to finish all of the 
appropriations bills before October 1st. However, in the 
President's proposal, the automatic continuing resolution would 
be funded at either the President's proposed budget level or 
the prior fiscal year's level, whichever is smaller.
    That concerns me because the President may have zeroed out 
programs that Congress will restore almost certainly. That 
happens every single year. And it seems to me that we are 
tilting the balance of power toward the Executive Branch if, 
rather than funding at the previous year's level, a figure that 
has gone through Congress and been signed into law, we use the 
President's proposed budget if it is a lower figure. Could you 
comment on that?
    Mr. Kaplan. Yes, Madam Chairman. That is the President's 
proposal. I understand the concern that you raise, and were the 
Congress to take action on the President's proposal, I would 
look forward, if confirmed, to working with you, to minimize 
any of the concerns that you have along those lines.
    All of the President's proposals, reflected in his budget 
submission that deal with reforms of the budget process, are 
designed to help the administration and Congress put in place 
the type of discipline, Madam Chairman, that you spoke of. 
Discipline that will be necessary if we are to reduce these 
deficits and to get back on a path towards balance. I think, 
that is the intent of the automatic continuing resolution 
proposal, as well as the others in the President's submission.
    Chairman Collins. Let me give you an example of one such 
program which the President's budget, for both fiscal years 
2003 and 2004, would be zeroed out that I can virtually predict 
will be restored by Congress, and that is the Rural and Small 
School Achievement Act. This is an education program that I 
worked very hard on a bipartisan manner to incorporate into the 
No Child Left Behind Act legislation, which I was pleased to 
support and helped to draft.
    Part of ensuring our commitment to Leave No Child Behind is 
to make sure that we leave no child of rural America behind. 
The Rural and Small School Achievement Act, which is the first 
of the rural education programs, has delivered needed money and 
flexibility to small rural school districts. We crafted this 
legislation to respond to a problem in which small school 
systems receive very small funding streams from numerous 
Federal programs, none of which is sufficient to really 
accomplish any goal. So we allowed this money to be combined 
into one block grant program, essentially, under the rural 
education program and then used for whatever is the greatest 
need of that district.
    Of the 4,700 eligible school districts nationwide this 
year, 4,028 applied and received funding. I think that shows 
just how well received this program was. The State of Maine has 
received $1.9 million under this program, and it has made a 
real difference in the lives of children attending rural small 
schools.
    Let me give you an example. For Fiscal Year 2003, the 
Bradley School Department in Penobscot County, Maine, which has 
104 students in the whole department, is slated to receive 
about $21,000 through the rural education program. The previous 
year, Bradley's entire non-Title I Federal allocation totalled 
only about $4,400. So now the total Federal money going to 
Bradley in Fiscal Year 2003 will be more than $25,000. That is 
enough in Bradley, Maine, to hire a reading specialist, to 
update computer systems or provide for extended day learning 
opportunities, and that is typical.
    I could give you many other examples of school systems in 
Maine that have been able to use that small pot of money to 
make a real difference, and this does give them the 
flexibility.
    So I want to express to you my disappointment that the 
administration has zeroed out a program that is so in keeping 
with the principles of flexibility that the administration has 
embraced, and I realize you were not involved or at least I do 
not think you were involved in that decision--if you were, I 
would not tell me that, if I were you. [Laughter.]
    But I would urge you to take a look at the funding for that 
program and also to think about it in the context of the 
continuing resolution proposal, where a program that almost 
certainly will be restored has been zeroed out. And I would ask 
for your comments.
    Mr. Kaplan. I certainly will, Madam Chairman, consider, if 
confirmed, everything that you have just said. I appreciate, as 
I know the people of rural Maine do, your support for providing 
the resources that they need to those rural districts.
    The President's proposal for No Child Left Behind was to 
provide, as you know, large, flexible amounts in grants to the 
States so that they would have the ability to take care of the 
specific concerns and the specific circumstances of their 
State.
    Again, I will, if confirmed, look forward to working with 
you on the particular program that you have described. Of 
course, if Congress sees fit to fund the program, I will work 
diligently to make sure it is implemented according to 
Congress' direction.
    Chairman Collins. Thank you. Senator Coleman.
    Senator Coleman. Thank you, Madam Chairman.
    I would just briefly follow up on my distinguished 
colleague from New Jersey's questions about protest. It kind of 
caught my interest.
    I really protested in the sixties, and here I am in the 
U.S. Senate. It is kind of part of my life. But just reflecting 
on Florida, and the Chairman I know asked that question, but I 
just want to clarify, you were an official observer of a 
campaign; is that correct?
    Mr. Kaplan. That's right, Senator.
    Senator Coleman. And you were not there to organize, plan 
or participate in protests.
    Mr. Kaplan. That's right, Senator.
    Senator Coleman. And I must say, Madam Chairman, I do not 
look at those as the dark days. It is part of American 
democracy. Things get difficult, and we come back stronger than 
ever. So I just have a different reflection on that, but 
appreciate and understand your position.
    Senator Lautenberg also asked or raised a question about 
experience, noting that you have tremendous experience on the 
budget side. Let me explore, though, on the management side, if 
I can. Give me some of your reflections on what OMB can do to 
help agencies better manage the Federal Government. What are 
your thoughts on that?
    Mr. Kaplan. As you know, Senator, shortly after the 
President came into office, the Office of Management and Budget 
designed the President's Management Agenda, which focused on 
five particularly problematic areas in managing the Federal 
Government that were cross-cutting across the agencies.
    OMB's role is to work with Congress and others who watch 
these things to identify what the major management challenges 
are to the Executive Branch and to focus the attention of the 
agencies on those challenges, which the administration has done 
with the President's Management Agenda and with the design of 
the scorecard. The scorecard is intended to highlight the 
progress or lack thereof on occasion, of agencies and to 
incentivize them to take action to address these longstanding 
problems of government.
    OMB, because of its central role, also has the ability to 
work with the agencies to share with them the best practices 
that other agencies of government have developed in addressing 
these challenges in their agency. So I think it is a critical 
role.
    The President recently nominated, and the Senate confirmed, 
Clay Johnson to be the Deputy Director for Management. I know 
he is as enthusiastic as the Members of this Committee are and, 
if confirmed, I will work very hard with Deputy Director 
Johnson and with Director Bolten to try to implement the 
President's Management Agenda and the other significant 
management challenges that the Committee is interested in.
    Senator Coleman. Thank you. I would just follow up a 
comment about experience, and I often reflect on my own 
experience. I talk about being at the bottom of the political 
food chain being a mayor. Your experience working in the Marine 
Corps, platoon leader, executive officer, you were dealing with 
people on a one-to-one basis, and I take it responsible for 
making sure things get done.
    Mr. Kaplan. Yes, Senator. That's correct.
    Senator Coleman. I think that is very good experience, by 
the way, and I would hope that you bring that same mentality, 
working now with your commanding officer, Josh Bolten, and the 
President, to make sure things get done.
    I will just raise, however, one issue, and it was your last 
comment in regard to the Chairman's comment about a particular 
program. Many of us get involved in discussions with OMB about 
programs. I am involved right now in a discussion about sugar, 
and your comments were that you will work hard to implement the 
will of Congress. I hope you reflect on that and take that to 
heart. We sometimes have some different perspectives, as part 
of the legislative body, on this beautiful democracy and 
balance. I think it is important that OMB understands it has 
responsibilities regarding the budget, and see it as a whole 
and look at the bottom line. We do, and I want to take you at 
your word that you will work hard to implement the will of 
Congress in some of these programs. That is what we get elected 
to do, and I think that is part of the job.
    Mr. Kaplan. I will, Senator. Thank you.
    Senator Coleman. With that, no further questions, Madam 
Chairman.
    Chairman Collins. Thank you, Senator. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Madam Chairman. I join 
you in welcoming our nominee today. In the interest of time, I 
ask that my statement be included in the record.
    Chairman Collins. Without objection.
    [The prepared opening statement of Senator Akaka follows:]
              PREPARED OPENING STATEMENT OF SENATOR AKAKA
    Thank you very much Madam Chairman. I join you in welcoming our 
nominee today.
    At the nomination hearing of OMB Director Bolten last month, I 
noted that it is a President's prerogative to implement management 
proposals such as the President's Management Agenda. We must ensure, 
however, that these management proposals are an improvement.
    The success of any management policy requires recruiting and 
retaining the right people with the right skills. OMB should foster 
government's ability to retain current Federal workers and attract 
those considering Federal service. I am concerned that the 
administration's contracting out policies may do just the opposite. 
Just last week, I participated in two hearings which raised concerns 
over the costs of implementing the administration's competitive 
sourcing initiative.
    As the Ranking Member of the Senate Subcommittee on National Parks, 
I believe that the cost of conducting public private competitions may 
have serious consequences for visitor services and seasonal operations. 
But, the Parks Service is not alone. Government wide, managers are 
working to find creative ways to implement the administration's 
contracting out policies. In fact, there is currently no reliable 
estimate of the government wide cost of the administration's 
outsourcing proposals.
    I believe the administration can do more to promote an employee-
friendly work environment. Management proposals should be discussed 
with Federal employees, not handed down as orders. There have been 
actions that have sparked alarm and distrust among Federal employees 
who are concerned for their jobs. We should respect and value the 
government's most critical asset--its workforce.
    Mr. Kaplan, if you are confirmed as Deputy Director of OMB, I look 
forward to working with you to ensure that Federal agencies have 
adequate resources and personnel to fulfill their missions. I hope you 
will make it your priority that sufficient resources are made available 
to agencies to enhance the government's efforts to recruit, retain, and 
manage the Federal workforce.
    Mr. Kaplan, I look forward to your testimony.

    Senator Akaka. Mr. Kaplan, in response to one of my 
questions at Director Bolten's nomination hearing, he said that 
OMB should ensure that Federal agencies have the resources to 
compete effectively in public-private competitions, including 
resources training. I have a keen interest in workforce and 
training.
    If confirmed, how would you ensure that resources are made 
available for training Federal workers to conduct public-
private competitions?
    Mr. Kaplan. Senator, if confirmed, I think what we would do 
at OMB is to sit down with each agency, on an individual 
agency-by-agency basis, and look at what their needs are, look 
at what their capacity is, look at what their mission is and 
try to figure out in the budget process what they need in order 
to accomplish the mission that they have set out for themselves 
in this area and that the administration has worked out with 
them.
    As we enter into the 2005 budget process, I will commit to 
you, Senator, if confirmed, to very closely follow those 
developments and to work with the individual agencies to make 
sure that they have the resources they need to do what is 
expected of them and what they expect of themselves.
    Senator Akaka. Thank you. We are looking forward to working 
with you, too.
    Last week, Angela Styles, the Administrator for Federal 
Procurement Policy, testified before this Committee that OMB 
will work with agencies to establish agency-specific plans for 
contracting out Federal jobs. Yet, we know that many agencies 
lack the funds to effectively participate in these public-
private competitions.
    As Deputy Director of OMB, how will you work to ensure that 
the President's budget includes sufficient resources to support 
these plans?
    Mr. Kaplan. Senator, if I may, I think I will give you 
roughly the same answer that I did on the last question, which 
is that I will work very closely with the agencies, as those 
plans are being developed for 2005 and beyond, to look at them 
in light of the resources that each agency has because, as you 
point out, Senator, they do come to the table with different 
resources, with different abilities and capacity, and we will 
work with them, and I know Administrator Styles will as well, 
on making sure that they have the resources they need.
    Senator Akaka. The President's Management Agenda includes 
several government-wide management initiatives. However, there 
are management challenges not addressed in the management 
agenda, such as contract management, which has been on GAO's 
high-risk list for 13 years.
    My question to you is how will you ensure that the 
President's budget request addresses management challenges, 
such as contract management and also other areas not in the 
President's Management Agenda?
    Mr. Kaplan. Yes, Senator. I don't want to suggest that the 
President's Management Agenda represents all of the challenges 
that the government agencies face in managing their agencies. 
As you point out, GAO has done a lot of work, as has this 
Committee, in identifying other very significant challenges 
that agencies face across the government.
    I know that Deputy Director Johnson has already sat down 
with GAO and is going through the list of concerns on GAO's 
high-risk list and trying to design initiatives, and programs, 
and approaches to dealing with those problems. I expect, if 
confirmed, that I will work closely with Deputy Director 
Johnson and with Director Bolten to make sure that we are 
addressing those concerns and are dedicating the resources we 
need to address them.
    Senator Akaka. You have stated that the primary management 
tool of the administration is the Program Administration Rating 
Tool, known as PART. The Government Performance and Results 
Act, which is known as GPRA, requires that agencies develop 
performance plans and also report on their performance. Could 
you explain how PART and GPRA differ and how one enhances the 
other?
    Mr. Kaplan. I can, Senator, or at least I can try. The act, 
as I understand it, was designed to require agencies to put 
together performance plans that reflect their overall goals and 
objectives.
    PART, which has been designed and implemented as part of 
the President's Budget and Performance Integration Initiative, 
is designed to look at individual agency programs, starting 
with 20 percent of those programs last year, adding an 
additional 20 percent this year and 20 percent every year 
moving forward, to make sure that we're asking the right 
questions about each of those programs, to measure those 
programs and to be able to determine whether they are doing 
what Congress wanted them to do in authorizing them and 
appropriating the funds for them.
    And the idea is that once we can measure how successful 
those programs are, we will have information to evaluate them 
and make further budget decisions and will be able to share 
that information obviously with Congress to help inform your 
decisions about what programs you want to authorize and 
appropriate funds for going forward.
    So my understanding is that PART is intended to complement 
and essentially meet the goals and requirements of the act, 
even if the form is not specifically what was contemplated and 
described there. So it is supposed to, as I understand it, meet 
Congress' intention and this Committee's intention in working 
on the act.
    Senator Akaka. During your pre-hearing interview, you 
stated that you will work with the Deputy Director of 
Management to maintain OMB's strong commitment to improve 
management policies and practices across the Federal 
Government.
    Do you believe that the full requirements of the Chief 
Financial Officers Act of 1990 and the Klinger-Cohen Act will 
be extended to the Department of Homeland Security? As Deputy 
Director, how will you ensure that this occurs?
    Mr. Kaplan. Senator, my understanding, specifically with 
regard to the requirements of the CFO Act, is that OMB will 
require DHS to conform to the substantive requirements of the 
act. With respect to Klinger-Cohen, I know that OMB is working 
very closely with the Department of Homeland Security to review 
its information technology plans. The specifics of the act I 
cannot speak to, Senator, but I will certainly look into it and 
can get back to you, if that is alright, Senator.
    Senator Akaka. Thank you very much, Madam Chairman.
    Chairman Collins. Thank you, Senator Akaka.
    Mr. Kaplan, I want to follow up on an issue that Senator 
Akaka raised that is of great concern to me as well. I was 
pleased last week when Administrator Styles announced that OMB 
had abandoned its government-wide goals for competing 
commercial positions in the Executive Branch because I always 
felt that having a government-wide goal was an arbitrary 
approach to what should be a worthwhile system of reducing 
costs and improving performance in the Executive Branch. 
Individual agency goals, it is my understanding, still remain.
    What assurances can you give us that those will not be 
subject to the same kinds of problems that afflicted the 
government-wide goal? In other words, would it not be better 
to, instead of a goal applied to each agency, use a cost 
reduction or a performance measure, rather than an arbitrary 
percentage?
    Mr. Kaplan. Madam Chairman, I think cost reduction and 
performance-based measures are worth looking at. As you have 
described, this is an initiative that, as I understand it, has 
evolved considerably from the way it was initially proposed in 
2001, in large part because of the very legitimate concerns 
that Members of this Committee have raised and other Members of 
Congress.
    And I know Director Bolten, for one, heard in his 
confirmation process loud and clear the Committee's concerns 
and is committed to trying very hard to address those concerns, 
beginning with the report that he sent up last Thursday.
    As to the specific agency plans that are described in that 
report, I don't believe they are arbitrary. In fact, in 
response to the Congress' concerns, OMB has worked very closely 
with the agencies to ensure they are not arbitrary, but rather 
that they are the result of considered research and sound 
analysis, where OMB sits down with the agency, discusses their 
workforce, the particular challenges they face, the other 
alternatives in the marketplace, whether they have the capacity 
to actually do competitions and what is a reasonable number for 
that agency based on their mission.
    So I think what OMB is trying to do here is to avoid the 
arbitrary goals or targets that were the subject of some 
considerable concern, and we are making real progress on that, 
and I will look forward, if confirmed, to continuing to work 
with you on that.
    Chairman Collins. I also want to follow up briefly on a 
comment made by my distinguished colleague from Minnesota, and 
that is to emphasize to you how important it is that OMB not 
only work with Congress, but also follows the will of Congress 
when it is expressed in law.
    And I am going to submit for the record the details of this 
because I do not expect you to have the answer, but this spring 
the Department of Agriculture, as I understand it, under the 
direction of OMB, diverted more than $150 million from four 
working land conservation programs to pay for the cost of 
administering the Conservation Reserve Program and the Wetlands 
Reserve Program.
    And that is troubling to me because, under the 2002 Farm 
bill, these costs were intended to be paid out of the Commodity 
Credit Corporation funds, as the result, the effect of the 
diversions is to deny funds for farmers who are seeking to 
participate in these conservation programs, which are already 
oversubscribed, and that has an impact on the EQIP program, the 
Environmental Quality Incentives Program, and others.
    And I will submit the details of that to you for the 
record, but that is indicative of the kind of action taken 
allegedly by OMB that is very frustrating to us. When we are 
crafting legislation and providing funding for specific 
programs, to then have money diverted from one program to 
another, thwarts the will of Congress.
    So I hope we can receive from you today a general pledge 
that you will try to ensure that does not happen, and when OMB 
feels the need to reprogram funding, that you will come to 
Congress, as is anticipated, for permission from the 
Appropriations Committee.
    Mr. Kaplan. Madam Chairman, you can certainly receive that 
pledge from me today.
    Chairman Collins. Thank you. And my final question today 
concerns the Low-Income Heating Assistance Program. And the 
question that I want to pose to you is whether OMB looks at how 
funding streams go to programs and whether there are more 
efficient ways of funding programs that would allow us to 
stretch scarce Federal resources further.
    And the LIHEAP program is a perfect example of that. Every 
year there is a battle over the LIHEAP program, and the 
administration is very slow to release the money. The result is 
the money is always released at the height of the winter, when 
fuel costs, home-heating costs and natural gas costs, are the 
highest, and thus the money buys the least.
    Ideally, what you would want to do is double fund for 1 
year the LIHEAP program so you could change the funding cycle 
so that the money would be received by States and community 
action agencies that administer the program in the summer when 
the costs are far lower. That way you can serve more people or 
you would at least be able to provide a greater benefit if 
people were able to use those funds to fill up their home 
heating oil tanks in the summer.
    But at the very least, if the administration would release 
the money promptly at the beginning of the fiscal year, rather 
than at the height of the winter, even that would be an 
improvement.
    Would you take a look not only at the LIHEAP program--I 
definitely want you to take a look at that--but also at other 
programs where, when the money is released, will make a 
difference in the number of clients we can serve and the amount 
of benefits that we can provide.
    Mr. Kaplan. Madam Chairman, if confirmed, I will certainly 
look forward to looking at and considering these types of 
funding mechanisms and any other good ideas that will allow 
these programs to be managed more effectively.
    With respect to LIHEAP, in particular, I would want to 
reiterate something I think Director Bolten discussed with you, 
either in the hearing or outside of it. I know he shares your 
concerns about the administration not responding rapidly enough 
and is committed to making sure that those funds are released 
very rapidly, as needed.
    And with respect to the specific advanced funding proposal, 
I know that he promised to review it and, if confirmed, since I 
will be working for him, I know that I will be doing that as 
well.
    Chairman Collins. I thought it could not hurt to get a 
second commitment on this issue----
    Mr. Kaplan. Absolutely, Madam Chairman.
    Chairman Collins [continuing]. To emphasize its importance 
to me and to many other members.
    Senator Coleman, do you have any further questions?
    Senator Coleman. Thank you, Madam Chairman. I just want to, 
by the way, applaud your commitment and persistence on the 
LIHEAP program in getting that second commitment. I also 
represent a Northern border State and have the same concerns. 
So thank you, Madam Chairman, and I would just note that I look 
forward to supporting the confirmation of Mr. Kaplan. I think 
he is very well-qualified, and I think he will serve this 
country well. So I look forward to that happening.
    Mr. Kaplan. Thank you, Senator.
    Chairman Collins. Thank you, Senator, and thank you for 
your participation in this hearing today.
    I want to thank Mr. Kaplan for appearing before the 
Committee, and also for his public service to date and to what 
I am sure will be an equally impressive career as the Deputy 
Director.
    We do hope to expedite the confirmation of your nomination. 
So, without objection, the record will be kept open until 5 
p.m. today for the submission of any written questions or 
statements for the record. I would encourage you to reply to 
any additional questions as rapidly as possible so that we can 
expedite your nomination.
    Thank you for appearing today, and this hearing is now 
adjourned.
    [Whereupon, at 11:47 a.m., the Committee was adjourned.]











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