[Senate Hearing 109-651]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 109-651

                  NOMINATION OF HON. ROBERT J. PORTMAN

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                 ON THE

   NOMINATION OF HON. ROBERT J. PORTMAN, TO BE DIRECTOR, OFFICE AND 
                         MANAGEMENT AND BUDGET

                               __________

                              MAY 11, 2006

                               __________

           Printed for the use of the Committee on the Budget

                                     
                                     

                                 _____

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                           WASHINGTON : 2006 
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                        COMMITTEE ON THE BUDGET

                  JUDD GREGG, New Hampshire, Chairman

PETE V. DOMENICI, New Mexico         KENT CONRAD, North Dakota
CHARLES E. GRASSLEY, Iowa            PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               PATTY MURRAY, Washington
MICHAEL ENZI, Wyoming                RON WYDEN, Oregon
JEFF SESSIONS, Alabama               RUSSELL D. FEINGOLD, Wisconsin
JIM BUNNING, Kentucky                TIM JOHNSON, South Dakota
MIKE CRAPO, Idaho                    ROBERT C. BYRD, West Virginia
JOHN ENSIGN, Nevada                  BILL NELSON, Florida
JOHN CORNYN, Texas                   DEBBIE STABENOW, Michigan
LAMAR ALEXANDER, Tennessee           ROBERT MENEDEZ, New Jersey
LINDSEY O. GRAHAM, South Carolina

                  Scott Gudes, Majority Staff Director

                      Mary Naylor, Staff Director

                                  (ii)




                            C O N T E N T S

                               __________

                                HEARINGS

                                                                   Page
May 11, 2006--Nomination of Hon. Robert J. Portman, of Ohio, to 
  be Director of the Office of Management and Budget.............     1

                    STATEMENTS BY COMMITTEE MEMBERS

Chairman Judd Gregg..............................................     1
Ranking Member Kent Conrad.......................................     6

                               WITNESSES

Honorable Jim Bunning............................................  1, 3
Honorable Mike DeWine, A United States Senator from the State of 
  Ohio...........................................................     4
Honorable Robert J. Portman, of Ohio, Nominee to be Director of 
  the Office of Management and Budget............................23, 76
    Statement of Biographical and Financial Information Requested 
  of Presidential Nominees.......................................    79

                         ADDITIONAL STATEMENTS

Senator Michael B. Enzi..........................................    88

                                APPENDIX

Ranking Member Kent Conrad.......................................    90
Senator Paul Sarbanes............................................   109
Senator Patty Murray.............................................   110
Senator Roy Wyden................................................   111
Senator Johnson..................................................   118
Senator Menendez.................................................   123


 
                  NOMINATION OF HON. ROBERT J. PORTMAN

                              ----------                              


                         THURSDAY, MAY 11, 2006

                                       U.S. Senate,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:59 a.m., in 
room SD-608, Dirksen Senate Office Building, Hon. Judd Gregg, 
chairman of the committee, presiding.
    Present: Senators Gregg, Domenici, Allard, Sessions, 
Bunning, Crapo, Alexander, Conrad, Sarbanes, Murray, Wyden, 
Stabenow, and Menendez.
    Staff present: Scott Gudes, Majority Staff Director; and 
Denzel McGuire, deputy staff director.
    Staff present: Mary Naylor, Staff Director for the 
Minority; and John Righter, deputy staff director & commerce 
and housing credit.

            OPENING STATEMENT OF CHAIRMAN JUDD GREGG

    Chairman Gregg. We are going to call the hearing to order a 
little early and thank everybody for being here on time, 
obviously, and for having Ambassador Portman here as nominee to 
be the Director of OMB.
    As a courtesy to the people who are going to be introducing 
him, the Senators who are going to be introducing him, we 
thought we would let the Senators who are introducing 
Ambassador Portman go first, and then we will do our opening 
statements. And then we will go to Ambassador Portman for his 
opening statement and then we will proceed to questions.
    So I understand that the Ambassador is going to be 
introduced by Senator Jim Bunning from Kentucky, who is a 
neighbor and has been for many years of the Ambassador; and 
Senator Mike DeWine who represents Ohio, which is the residence 
and the home of the Ambassador.
    So why do we not proceed with Senator Bunning as a member 
of the Committee.

STATEMENT OF THE HONORABLE JIM BUNNING, A UNITED STATES SENATOR 
                   FROM THE STATE OF KENTUCKY

    Senator Bunning. Thank you, Mr. Chairman.
    I am honored to have the opportunity to introduce my good 
friend Rob Portman to the Committee today.
    As my colleagues all know, Rob served in the House of 
Representatives for over 10 years, representing the Cincinnati 
area District just across the river from where I live in 
Kentucky. We also served together for 4 years on the House Ways 
and Means Committee, and worked on everything from trade to 
pensions to health care, even constituency case work.
    Just as importantly, Rob and I and our wives, Mary and 
Jane, have spent many hours together, more of them than we care 
to count, talking as we sat on planes going back and forth from 
Washington and Cincinnati, which, is always like to remind Rob, 
the Cincinnati airport is in Northern Kentucky.
    Over the past year or so, I have gotten to know Rob Portman 
as well as any Member of Congress. I can tell my colleagues 
wholeheartedly that President Bush could not have picked a 
better man to trust with the important responsibilities that 
come with being the Director off the Office of Management and 
Budget.
    Rob is one of the smartest guys I know. He works hard. He 
is destined for great things. He did a wonderful job as our 
trade representative, and would do a fine job as head of OMB.
    I urge my colleagues to act favorably and quickly on his 
nomination.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Bunning follows:]

    [GRAPHIC] [TIFF OMITTED] T8459.004
    

    Chairman Gregg. Thank you, Senator. It is an honor and a 
privilege to have you here testifying, as well as a member of 
the Committee.
    Senator DeWine.

STATEMENT OF THE HONORABLE MIKE DEWINE, A UNITED STATES SENATOR 
                     FROM THE STATE OF OHIO

    Senator DeWine. Mr. Chairman, thank you very much for 
allowing me a few minutes to speak on behalf of my good friend 
and fellow Ohioan, Rob Portman.
    Let me first congratulate Rob on this nomination. Really no 
one is more qualified or more prepared or more ready to be our 
next Director of the Office of Management and Budget than Rob. 
He brings commitment, sincerity, intelligence, expertise, and 
skill to this position.
    Mr. Chairman and members of the Committee, I have known Rob 
for many, many years. I have worked with him in Congress on 
many issues.
    Rob Portman, as I think we all know, is the real deal. He 
is thorough and thoughtful on all of the issues that he 
undertakes. He is as honest and genuine and sincere as they 
come. He is a devoted, serious, hard-working, and caring man 
who always puts his family first.
    It does not seem that long ago that I had the opportunity 
to introduce Rob to the Senate Finance Committee after he was 
nominated to be our U.S. Trade Representative. I jokingly told 
Rob that I was just going to get my old introduction out and 
read it again today.
    But during that introduction, I talked about Rob's 
diplomacy and his skills as a negotiator, and he certainly has 
shown that over the last year or so.
    In his new position, Rob, you are certainly going to need 
those skills even more.
    In all seriousness, Mr. Chairman and members of the 
Committee, I know Rob Portman. In Rob Portman, we are going to 
have a man who will listen to our concerns and while we may not 
always agree with him, we know that he will take our concerns 
into consideration and we know that he will always shoot 
straight with us.
    Rob's legislative accomplishments speak for themselves. He 
has helped make Government more accountable through his efforts 
to overhaul the IRS and his efforts to reform pension law. I am 
very proud to have worked on several legislative issues with 
him over the years. He has always been there to make a 
difference for Ohioans and for our country. He has been a true 
champion in the fight to get illegal drugs out of our 
communities. And he has been instrumental in turning the vision 
of an Underground Railroad Freedom Center into a reality. 
Because of his commitment and his hard work, Cincinnati is now 
home to our Nation's premier history center dedicated to 
telling the story of freedom and perseverance through the 
legacy of the underground railroad network.
    Again, let me congratulate Rob, and I thank you, Mr. 
Chairman, for giving me the opportunity to appear here today to 
introduce my good friend to this Committee.
    Chairman Gregg. Thank you, Senator, and thank you both for 
presenting the nominee today. It is obviously a reflection of 
his quality and caliber that he would have folks of your 
quality and caliber representing him and presenting him today.
    It is a pleasure, obviously, to have the nominee before us 
today for the OMB directorship. Congressman, Ambassador Portman 
has been a tremendous public servant, somebody that has set an 
extraordinary track record of ability and intelligence as he 
has approached issues which have faced our Nation.
    One must ask the question, however, why someone would leave 
the USTR to become head of OMB. That may be the most 
significant issue we have to address in this hearing.
    But the fact that he is willing to take on the job of OMB 
is clearly a reflection of the fact that he is willing to take 
on significant challenges. The OMB directorship is the center, 
the epicenter of fiscal policy at the Federal level. And the 
OMB Director is put in the position of having to discipline 
spending throughout the Government and make sure that that 
spending is done effectively when it is done. It is a job that 
does not win a whole lot of friends, but does play an absolute 
critical role in maintaining fiscal discipline.
    I know that Ambassador Congressman Portman has all the 
talent and ability to accomplish and carry forward what I think 
was an extraordinary job done by his predecessor in Director 
Bolton, who I enjoyed working with immensely and who was moved 
on to be Chief of Staff, obviously, for the President.
    There are a lot of things going on today that involve 
fiscal policy. Ironically, on the floor of the Senate today we 
have the extension of the tax rates relative to a number of 
areas that were put in place in 2003.
    The tax cuts of 2003 are producing huge dividends to this 
country. The revenues are up dramatically. Just in the first 6 
months of this year we have seen an 11 percent jump in revenues 
over the baseline projection, $134 billion of additional 
revenues coming in. Last year it was a 14 percent jump. We have 
seen, as a result of the economic activity energized by these 
tax cuts, tremendous increase in job growth, 5.3 million new 
jobs added to the economy. We have seen once again the 
philosophies of John Kennedy and Ronald Reagan and now George 
W. Bush, which says that if you put a fair tax rate in place, 
especially on the formation of capital, what you get is much 
more entrepreneurship, much more creativity, much more 
willingness to go out and take risk and as a result create 
jobs. And the result of creating jobs and economic activity in 
an economy is that you generate revenues to the Federal 
Government.
    We are a government which is seeing huge explosions in our 
revenue growth and that does not appear to be abating at all. 
In fact, it appears to be going up, as this economy continues 
to grow and grow in a very positive and effective way. We have 
not had any significant inflation.
    I think that the Administration's policies relative to tax 
policies can take a lot of credit for this economic turnaround. 
We were confronted obviously with a major recession, the attack 
of 9/11 and the right policies were put in place to bring us 
out of that and they have brought us out of that in a way which 
has shown a robust and aggressive growth in our economies and 
has proven once again that if you give people an incentive to 
go out and work and be productive in our economy they do. And 
as a result they generate revenues to us as a Government.
    But on the only other side of the ledger, we still have the 
question of fiscal discipline. Especially in the entitlement 
accounts, we confront some very serious problems. The biggest 
problem we confront is a demographic problem. Clearly the 
deficit is moving downwards, moving in the right direction. In 
fact, deficit projections are well below what they were just 
three or 4 months ago and dramatically below what they were 6 
months ago.
    But those deficit projections, which are moving down, are 
good and they are positive and they reflect good economic 
policies. But in the long run we still have to face up to the 
fact that as we head out into the next decade the baby boom 
generation is going to retire on us. Most of us here are 
members of that generation. And the effects of that retirement 
is that it will put tremendous strain on our Government, but 
more importantly tremendous strain on our children as they try 
to pay for the cost of those fiscal policies of maintaining a 
retired generation which is twice the size of any generation 
that has ever retired before.
    This becomes an issue for this Government and for us as 
policymakers. We should not allow ourselves to get to this 
precipice. We should anticipate it and try to make it less of a 
precipice. And so that is something I would like to hear about 
when the witness speaks, relative to what the policies will be 
to address the issues of the demographic shift in our country 
and how it is going to affect entitlement spending.
    In addition, of course, we have the question of 
discretionary spending, and specifically the issue of how we 
are budgeting. The fact that we have adopted this two-tier 
budgeting approach where we are basically running a budget that 
is under the control of the budget policies, which hopefully we 
will be seeing passed by the House this week, and a budget 
which is under no control, the emergency budget. And the 
emergency budget being a function of our fighting the war and 
the function of the Katrina situation.
    Obviously, those numbers are going to start to fall, we 
hope. They will fall, there is no question about that. Clearly, 
the Katrina situation is being addressed. And the war, at least 
in Iraq will, it appears to me, start to cost us less.
    So I will be interested to hear what the witness has to say 
relative to that issue of discretionary budgeting and how we 
handle it effectively.
    But we do congratulate him for being willing to step into 
this turf to take on this job. It is one of the most 
challenging jobs in the Government and, in my experience of 
working with Ambassador Portman, I think he is the right guy to 
do the job and I know he will do it well.
    At this point, I will yield to the Senator from North 
Dakota for his thoughts.
    Senator Conrad. Thank you, Mr. Chairman.

        OPENING STATEMENT OF RANKING MEMBER KENT CONRAD

    Welcome, Ambassador Portman.
    First of all, I want to say you had the good fortune to be 
introduced to the Committee by a respected member of this 
Committee, Senator Bunning. We know that you are very close 
neighbors there, that border between Ohio and Kentucky.
    First of all, I want to say I like Ambassador Portman 
personally and have high regard for him professionally. He 
certainly was an outstanding member of the House of 
Representatives and we welcome him here before the Committee.
    With that said, I think you would expect that we also have 
serious policy differences. The great thing about our democracy 
is we express those openly and honestly, and we will do that 
here today.
    With that I would like to, Ambassador Portman, take you 
back to 2001 when this fiscal policy was put in place. And the 
time you said, ``President Bush outlined his budget last week, 
which showed for the first time in decades we are going to be 
able to actually preserve the Social Security and Medicare 
Trust Funds. We have never done that before. It is historic. We 
are also going to be able to pay down all of the available 
public debt, $2 trillion of it, also be able to increase 
spending for important priorities like education, national 
defense, and yet there is almost $2 trillion left over for tax 
relief for the American people.''

[GRAPHIC] [TIFF OMITTED] T8459.039


    I would just go back now and test those claims against what 
has actually happened.
    What has actually occurred is quite different. The fact is 
none of the Social Security Trust Funds have been preserved or 
lock-boxed or used to pay down the liability. Instead, all of 
it has been spent and will be spent for other things, $2.5 
trillion from 2006 to 2015.

[GRAPHIC] [TIFF OMITTED] T8459.040


    And on the assertion that all of the public debt was going 
to be paid down, instead of debt being paid down what we have 
seen is the debt sky rocket. In fact, the debt, just in the 
first 5 years of this Administration, has increased by $3 
trillion, $450 billion of increase in 2002, $984 billion in 
2003, $800 billion in 2004, $781 billion in 2006. So there is 
no debt being paid down here. None. The debt is exploding.

[GRAPHIC] [TIFF OMITTED] T8459.041


    And in large measure, I believe, because of the failed 
fiscal policies of this Administration.
    The result is we are building a wall of debt that is really 
unprecedented in American history. At the end of the 
President's first year in office the gross debt of the United 
States stood at $5.8 trillion. If we continue on the current 
course with the budget that is before Congress, the estimates 
are now that it will reach $11.8 trillion in 2011. That is 
truly an astounding buildup of debt, about a doubling of the 
debt of the country on this president's watch.

[GRAPHIC] [TIFF OMITTED] T8459.042


    Perhaps even of deeper concern is how much of this debt is 
being financed by foreigners. As I have pointed out before with 
this chart, it took 42 presidents 224 years to run up to $1 
trillion of external debt, U.S. debt held abroad. This 
president has more than doubled that amount in just 5 years.

[GRAPHIC] [TIFF OMITTED] T8459.043


    Some see that as a sign of strength. I do not. It seems to 
me to be an extraordinary vulnerability for our country. Just 
as the President said we are addicted to oil, I also believe we 
are addicted to foreign capital.
    Our Chairman indicated that revenues have exploded because 
of this fiscal policy. He is talking about the recent few 
months. If you go back to where revenue was in 2000, you see 
that it was over $2 trillion. And after all of the tax cuts 
that we were repeatedly promised would lead to this explosion 
in revenue, we see we did not get back to 2000 revenue until 
2005. In fact, after 2000 revenue went down in 2001, we had big 
tax cuts. That was supposed to lead to the explosion of 
revenue. But in 2002 revenue went down. In 2003 revenue went 
down some more. In 2004 revenue stayed down.
    Only when we got to 2005 have we seen revenue get back to 
where it was in 2000.

[GRAPHIC] [TIFF OMITTED] T8459.044


    As a share of GDP the numbers are even more stark. As a 
share of GDP this chart shows we went from a record in 2000 of 
20.9 percent to in 2004 revenue was 16.3 percent, the lowest it 
had been since 1959.

[GRAPHIC] [TIFF OMITTED] T8459.045


    Finally, even now we see that the revenue for this year has 
not come anywhere close to what the prediction was in 2001. In 
2001 they said that revenue now would be $2.7 trillion. Instead 
it we see revenue in the range of $2.3 trillion, far below what 
the estimates were in 2001.

[GRAPHIC] [TIFF OMITTED] T8459.046


    The result of all of this is a massive run-up in debt, 
increasingly financed by foreigners. Many of us are deeply 
concerned about what that means for the future of the country 
because all of this is happening before the baby boomers 
retire. And when the baby boomers retire, as the Chairman has 
correctly described, then we face a real tsunami of debt. It is 
incumbent on all of us to work to change direction to get this 
country back on a more firm fiscal footing.
    With that, I again welcome the Ambassador and look forward 
to your statement.
    Chairman Gregg. Mr. Ambassador, you have received the true 
Budget Committee welcome, chart-wash we call it.
    Mr. Ambassador, under the committee rules, I have to swear 
in for your testimony, if you would rise, please?
    Do you swear the testimony you are about to give will be 
the truth, the whole truth, and nothing but the truth?
    Ambassador Portman. I do.
    Chairman Gregg. Mr. Ambassador, we look forward to hearing 
you.

 STATEMENT OF THE HONORABLE ROBERT J. PORTMAN OF OHIO, NOMINEE 
     TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET

    Ambassador Portman. Thank you, Mr. Chairman. I was looking 
forward to some charts today and I was not disappointed. I hope 
my friend, Mr. Conrad, is not done with those charts because I 
would love to have the opportunity to address them perhaps in 
more detail during the question and answer period.
    I want to thank both the Chair and ranking member for the 
introductions and for the input and, again, I look forward to 
getting into some more detail about the fiscal situation.
    I also want to thank them for meeting with me before this 
hearing. I want to thank the other members of the Committee for 
spending some time with me prior to the hearing. It was very 
helpful and I look forward to continuing to stay in close touch 
with you.
    I want to thank my friend and your colleague, my former 
Ways and Means colleague, Jim Bunning, for that very kind 
introduction. I accused him of having his wife, Mary, write it 
because it was so kind.
    But as was noted, Jim Bunning and I shared a border when he 
represented a Northern Kentucky District in the House, actually 
about 100 miles of the Ohio River. And through that we got to 
know each other quite well. He was not only my neighbor but 
also he and his wife, Mary, are dear friends of my wife, 
Jane's, and mine. And I appreciate his support and comments 
this morning.
    I know in his questions he will be as tough as any member 
of the Committee, by the way, which I also love about him.
    And to Mike DeWine, who has since had to depart, I thank 
him for his nice words. As a fellow Ohioan, we have worked very 
closely together on a number issues, as he said, economic, 
education issues and others. He has been a good sounding board 
and a good friend.
    Mr. Chairman, as you know, a little more than a year ago I 
left the House Budget Committee to assume the role of U.S. 
Trade Representative. Now I find myself happily back in the 
budget world as the President's nominee to be the Director of 
the Office of Management and Budget.
    It was a great honor and has been a great honor to serve as 
U.S. Trade Representative. I have enjoyed the job immensely. I 
have also enjoyed working with, as I look around the room, 
every member of this Committee who is present at least on trade 
issues. And should I be confirmed as Director of OMB, I intend 
to continue that kind of close Congressional consultation in 
both the House and the Senate and on both sides of the aisle.
    As a former House member, I place a very high value on open 
lines of communication with the U.S. Congress. I also believe 
that with the budget challenges we face, which were just 
discussed in the two opening statements, we can only solve them 
through a constructive dialog with both sides of the aisle 
about the very real issues again that have been addressed in 
the opening statements.
    As you know well, OMB has a unique role in our system of 
government. All spending decisions and major regulatory changes 
are within its purview. It also oversees the management of the 
executive branch and the agencies. It is a serious 
responsibility. And if confirmed, I will approach it with a 
seriousness of purpose and with the interests of our country at 
the forefront.
    Working together which this Committee, which includes a 
number of key budget policymakers, we can help influence the 
legacy that we are leaving to our kids and our grandkids.
    In the last 5 years our country and its budget have faced a 
number of very serious challenges, from the 2001 recession, the 
corporate scandals, the stock market decline, to the horror of 
9/11, the ensuing war on terror, and of course most recently 
the unprecedented natural disasters on the Gulf Coast with 
Hurricanes Katrina and Rita.
    In facing these challenges, the American people and our 
economy have proven up to the task. With help from the bold 
steps the President took, our resilient economy has bounced 
back. We are now experiencing strong and positive growth in the 
economy in general, and in jobs and in revenue, as the Chairman 
said, in particular.
    From a budget perspective we are on track to meeting the 
President's target of cutting the deficit in half by 2009. We 
have done this by working with Congress in recent years to 
focus spending on our national priorities while reducing 
spending elsewhere. We need to do more and I look forward to 
your thoughts and recommendations on how we can accomplish this 
goal while continuing to protect Americans at home and fight 
terrorism around the globe.
    Restraining discretionary spending, as we have done in 
recent years, is an essential part of deficit reduction. But I 
think the greatest threat to our budget comes from the 
unsustainable growth in entitlement programs, including 
Medicare, Medicaid, and Social Security. It is absolutely 
critical that we work together to develop sound policies that 
address the long-term fiscal danger and put these programs on a 
sustainable footing for future generations. There, too, I 
welcome your input as to how we can achieve this difficult task 
together.
    As we work to rein in spending I hope we will always keep 
in mind that need to continue our strong economic expansion. 
GDP grew at a healthy 4.8 percent in the first quarter of this 
year. That follows our economic growth of 3.5 percent in 2005, 
the fastest rate of any industrialized nation. Productivity 
increased at a strong annual rate of 3.2 percent in the first 
quarter. And just last week we learned that hourly compensation 
rose sharply at a 5.7 percent rate in the first quarter.
    Together with Congress, the President has put in place pro-
growth policies to create the environment for this economic 
expansion. I believe keeping these pro-growth policies in place 
is critical if we are to continue benefiting from strong 
economic growth and growing revenues that are essential to 
deficit reduction and entitlement program solvency.
    As you know, in 2005 tax receipts grew by 14.5 percent, or 
more than twice as fast as the economy itself. In February, the 
Administration estimated that receipts would grow. This year 
again the estimate was 6.1 percent growth in 2006. Most private 
sector and other Government forecasters have since estimated 
that revenues this year will be significantly higher than that, 
higher than was just projected in February.
    Just yesterday the Treasury Department reported that 
Federal revenues surge in April with corporate receipts at a 
record $46 billion. Tax receipts for the first 7 months of the 
fiscal year, fiscal year 2006, are now at an all-time high. 
Obviously, this higher revenue growth will have a very positive 
effect on deficit reduction.
    Even with this good news, there is a lot of hard work ahead 
to ensure our fiscal house is in order. I am optimistic that 
working together we can be creative and find solutions to the 
challenges we face in ways that will continue to strengthen our 
economy, meet our national priorities and serve the American 
people.
    Again, Mr. Chairman, I appreciate the Committee's 
consideration of my nomination today and I look forward to your 
input and to your questions.
    Chairman Gregg. Thank you for your statement. Do you like 
to be called Ambassador or Congressmen or what is the right 
term for somebody who has had as many jobs as you have had and 
done so well at all of them.
    Ambassador Portman. You know, it is interesting, I never 
really got used to be Ambassador thing. I would prefer rob, if 
you are comfortable with that.
    Chairman Gregg. I think we will stick with Ambassador, as a 
term of reflection of your success, which has been considerable 
obviously. And you have seen the Government from a variety of 
different angles.
    I am interested that you outlined some of the things that 
have been happening. There were some statistics that you did 
not mention that I think should be noted. For example, you are 
probably aware of this, but capital gains receipts last year 
were $30 billion higher than projections. Capital gains 
receipts this year are going to be $30 billion higher than 
projections.
    And when you see that type of revenue coming in as a result 
of the President's policies on capital gains, you see a win-win 
situation where not only is the Government getting more 
revenues but people are out there recognizing gains and then 
taking those dollars and reinvesting them probably in a more 
productive way because they are taking out assets that have 
been locked up and investing them in assets which logically are 
going to give them an even better return. As a result the 
bottom line is you are going to create more jobs, more economic 
activity, and then again more receipts.
    So it is very, very positive.
    In addition, another number, you mentioned it, alluded to 
it, that individual income tax revenues are up about 10 
percent. In fact, the vast majority that revenue is coming from 
the top taxpayers. I saw a chart a while ago, a couple days ago 
in I think it was the Post, that said how these tax rates 
affected different income groups. What it did not put in, they 
should put up another chart, is the taxes being paid by those 
income groups and the fact that we have seen a dramatic 
increase in the amount of taxes being paid by higher income 
individuals.

[GRAPHIC] [TIFF OMITTED] T8460.055


    There is a chart there that reflects that 85 percent of the 
taxes today are now being paid by people with incomes over 
about $80,000. The vast majority of that is coming from people 
with incomes over $180,000. And that reflects the fact that 
these folks are paying a higher tax because they are being more 
active. They are generating more capital gains activity instead 
of sitting on assets.
    In addition debt, and my colleague from North Dakota talks 
a lot about debt. But the publicly held debt, non-government 
held debt, is actually below the average of the publicly held 
debt as a percentage of GDP--which is the right way to value it 
rather than in dollar terms--throughout the Clinton 
Administration. The Clinton Administration average of publicly 
held debt was about 38 percent. Today it is about 36 percent 
and has been through this Administration.
    So the stewardship of this economy, considering the cards 
that were dealt to this president, has really been rather 
extraordinary in that this president was dealt the bursting of 
the largest bubble in the history of the world, the Internet 
bubble, which was bigger than the Tulip bubble and bigger than 
the South Sea bubble. And when that burst, we should have had 
probably a huge recession. Instead, we had a shallow recession 
because we put in place tax cuts that worked.
    That hit was then geometrically increased by the attack of 
9/11, was obviously dislocated this country in a long of a lot 
of ways, not the least of which was the fact that so many 
Americans were so viciously killed and injured. But in 
addition, the economy was viciously attacked by that. So we did 
have a recession. And those reflect, those revenues reflect the 
fact we went through a recession of the Internet bubble, and a 
recession of the 9/11 attacks. But because we put in tax cuts 
which energized economic activity, we have turned that around.
    So I guess my question to you is do you not think that was 
pretty good policy? I mean, it is a tough question, but let me 
ask it? Tell us your thoughts on that policy.
    Ambassador Portman. First, I thought your opening comments 
and the statement you just made were absolutely accurate in 
terms of what has happened. Senator Conrad talked about the 
projections in 2001 and that we were going to have a big 
surplus. That was a mere projection and I am glad to see that 
he does not believe, based on his comments about my comments at 
the time, that we should be viewing that as anything more than 
a projection.
    Unfortunately, what happened is this President found a 
recession on his doorstep. Literally, the economy started to go 
down in 2000, and 2001. In early 2001 we had a recession. And 
then as you say, we had the corporate scandals. We had the 
stock market bubble burst. Then 9/11, the ensuing war on 
terror, and of course more easily over $100 billion out of our 
Federal deficit has been added just by Hurricanes Katrina and 
Rita.
    These are big challenges. And despite all of that, what we 
have seen is not just a growing economy and growing jobs, but 
actually substantially increased revenues.
    You mentioned the capital gains increases and I will go 
back to your opening statement where you talked about the fact 
that we want to encourage people to take risk. Why? Because 
that encourages entrepreneurial activity and economic activity 
and therefore jobs and revenue. And so I think you are 
absolutely right about the capital gains changes that have 
resulted in more revenue coming in, as you say $30 billion more 
than projected last year.
    I will also say though, Mr. Chairman, if you look at what 
happened last year, we had a 14.5 percent increase in revenue 
overall which means $274 billion more revenue came in last year 
than the year before.
    This year we had predicted it would be about a 6 percent 
increase even on that relatively high 14.5 percent, which was 
the highest revenue increase in a couple of decades. We are 
seeing, in the first 7 months, that it is higher than that.
    Not to be one that relies too much on projections for the 
next 5 months, but that increase over the first 7 months of 
this year has been 11.2 percent increase. Again, that is a 
substantial increase. It means about $241 billion in additional 
revenue this year, should we continue to have this 11.2 percent 
over the next 5 months.
    This is substantial and it does help us to get the deficit 
numbers down. The deficit we projected in February, before I 
was involved in this budget process, will be substantially less 
thanks to the increase in revenue.
    So I think you are absolutely right. What has happened is 
that the tax relief was well timed to deal with the very 
serious challenges that we faced. When you look back now at 
what happened since May of 2003, which is when all the tax 
relief that you passed was implemented, you see an amazing 
correlation between those tax cuts being implemented and 
economic growth, job growth, now over 5 million jobs created 
since that time period, and revenue increases as those tax cuts 
began to take hold.
    So it is a very positive story and it is a story that I 
think, for all of us, we should take the lesson that we need to 
do everything we can to continue to encourage economic growth. 
That means it would be, in my view, a great risk for us to 
raise taxes at this time. Rather we should be continuing what 
has been a successful process of encouraging investment, 
savings, and as you say, encouraging entrepreneurs to take risk 
and therefore growing the economy.
    Can I mention one other statistic that you did not mention 
but is implied in your remarks? That is what should be the 
take? What should be the percentage of our economy represented 
by taxes? It was mentioned by Senator Conrad at the outset and 
it is very interesting because if you look at the historical 
numbers on revenues, historically we see about 18.2 percent GDP 
represented by taxes. And this President, as you know, has been 
criticized sometimes by some saying that we are not paying 
enough taxes.
    My view is that it was very necessary to put the tax rates 
in place. As we have seen it has resulted in exactly the kind 
of economic growth and increased revenue we had hoped it would. 
But even as a percentage of the economy, I ran some numbers 
this morning showing that if we continue to have this 
relatively high revenue surge this year, and again it is a risk 
because we have five more months left in the fiscal year, but 
we will actually be above the historical average, barely, in 
terms of the percentage of the economy represented by taxes. 
That is extraordinary. No one has predicted that.
    If you look back in February, in fact, it was predicted we 
would be in the 17, I think 17.6 or 17.8 range.
    So what we are seeing here is, I think to address your 
opening statement and your question, is that the tax relief is 
working in a few ways. One is it is growing the economy. It is 
growing jobs. It is creating a better environment for all 
Americans. Working Americans are better off. Wages are up, as I 
said in my opening statement.
    But second, its impact on the deficit is actually going to 
be very positive this year, as it was last year. It is the only 
way, in my view, that we are going to get back to the kind of 
fiscal discipline that we all seek.
    Chairman Gregg. Thank you.
    Senator Conrad.
    Senator Conrad. You know, sometimes I feel like I am in a 
surreal setting. When I hear you describe what is occurring as 
a great success, all I can tell you is I would hate to see a 
failure. If this is a success, I would hate to see what you 
would describe as failure.
    Here is what is happening to the debt of the country. Now 
the Chairman just wanted to talk about publicly held debt. But 
we all know that leaves out something pretty big. That leaves 
out all of the money that this Government under this 
Administration is borrowing from Social Security. Trillions of 
dollars, over $1 trillion so far, another $2 trillion to come. 
All of it has to be paid back. None of it is in the debt 
numbers he is talking about. it is all in this chart that shows 
the total debt, because this is what has to be paid back.

[GRAPHIC] [TIFF OMITTED] T8459.046


    This is not my view of a success.
    Let me go to the next one.
    Even more, I think, stunning, in terms of the fiscal pair 
of this Administration is this chart. It took 42 presidents 224 
years to run up $1 trillion of debt held by foreigners, U.S. 
debt held by foreigners. This president has more than doubled 
that amount in 5 years.

[GRAPHIC] [TIFF OMITTED] T8459.043


    This is not a success. This is a failure. It is a stunning 
failure.
    I would say to you, Mr. Portman, you said at the time this 
fiscal policy was adopted that it was going to lead to maximum 
pay down of debt. There is no pay down of debt going on here, 
as you well know. The debt has exploded.
    Let us go to the questions on performance of the economy. I 
think there was a reference that the economic performance has 
been extraordinary. Yes, it has been extraordinary. It has been 
extraordinarily bad.
    If you compare this recovery to the nine previous 
recoveries since World War II, what you see is this is the 
weakest of all and by a big margin, not even close. We have 
seen real median household income decline for 4 years in a row. 
That is a pretty good indicator of whether this strategy is 
successful.

[GRAPHIC] [TIFF OMITTED] T8459.047


    Let us go to the question of business investment. Business 
investment, the dotted red line shows the average of the nine 
recoveries since World War II. That is the dotted red line. The 
black line is this recovery. We are running 45 percent behind 
the typical recovery.

[GRAPHIC] [TIFF OMITTED] T8459.048


    Something is wrong here. Something is not working.
    Let us go to the next one. There was a mention of job 
creation. Well, you compare this recovery to the nine previous 
recoveries since World War II, look at the difference. The 
dotted red line is the average of the nine recoveries since 
World War II. The black line is this recovery. We are 6.5 
million private sector jobs behind the typical recovery. 
Something is wrong.

[GRAPHIC] [TIFF OMITTED] T8459.049


    We have an economy that, in comparison to other recoveries, 
is under performing. Can you tell us why do you think we see 
these shortfalls compared to previous recoveries?
    Ambassador Portman. Partly because the recession was not as 
deep, as Senator Gregg said. The fact is, Senator, I have spent 
the last year spending a lot of time, as you know, with trading 
partners around the world. Whether it is in Europe or Japan, 
they look at us and say how do you all do it? Our economy has 
grown over the last few years at twice the rate of our other G-
7 partners, the other industrialized countries.
    Senator Conrad. Let me just answer that and say to you, you 
know you can get amazing results if you write hundreds of 
billions of dollars of hot checks. You can get pretty good 
economic performance.
    It kind of reminds me of----
    Ambassador Portman. You said it was a good economic 
performance.
    Senator Conrad. Yes, you have economic performance that is 
utterly unsustainable because it is all based on borrowed 
money.
    I will tell you, this reminds me of a guy, in my previous 
life before I came here, I remember very well a guy that came 
to me and told me he was doing great. And I said to him well, 
share with me what your financial situation was.
    He had maxed out every one of his credit cards. He had 
completely tapped out his home equity line. He was borrowing 
money from his parents and his in-laws. And he told me 
everything was great. Everything was great for the moment.
    That reminds me very much of what is going on here because 
you have doubled the National debt. You have more than doubled 
the amount that we owe foreign countries. And I hear you saying 
everything is fine.
    We compare this recovery to the nine previous recoveries 
and we are way behind in job creation, in business investment, 
and revenue. By the way, if you look at revenue growth, we are 
lagging far behind the average of the previous business cycles.
    So your answer is the reason, as I hear you say it, the 
reason that we are lagging behind is because the recession was 
shallower? Why would that not--if the recession were shallower, 
why would we not have better performance than previous 
recoveries?
    Ambassador Portman. Your question was you were comparing 
this recovery to other recoveries. And I was saying that the 
recession was not as deep as other recessions because, in my 
view, of the bold steps the President took in 2001 to put tax 
relief in place that helped us get out of not just that 
recession but the other challenges that we faced.
    Let me give you a couple of numbers that are statistics 
that I do not think we would quibble with. Last year we had a 
$274 billion increase in revenue. That is the largest increase 
in 24 years. We have 4.7 percent unemployment.
    I do not know how to compare that except to say that it is 
lower than it was on average during the Clinton years, the 
1970's, the 1980's or the 1990's. We have created over 5 
million new jobs.
    And when I talked about the U.S. being the envy of the 
other countries in the world, they have not seen that kind of 
growth or that kind of job growth.
    Senator Conrad. They have not seen this kind of growth in 
debt either, have they?
    Ambassador Portman. On the debt, as you know, you and I 
have talked about this, I could not agree with you more. You 
are absolutely right. The challenge we face, in my view, is 
unsustainability of our mandatory spending over time, which 
creates those charts that you put up, which show the stepping 
up of the debt. That is a huge challenge.
    And I hope that nothing that I have said indicates to you 
or any other member of the Committee that I do not see that as 
a huge problem that this Committee and the Administration and 
future administrations are going to have to deal with. And I 
look forward to working with you on that.
    But in terms of the economy, my gosh, something is 
happening very positive in terms of revenue growth that is 
helping on the deficit short-term. I do not think we should 
look at that and say that economic growth is not both important 
to the people we represent and to the deficit. And, we should 
take lessons for the importance of keeping that growth going 
while restraining spending in terms of the domestic 
discretionary issues we talked about and so on. But looking, as 
you rightly point out, and as you have said many times to me, 
not just in this time period, in prior discussions we have had, 
looking at that long-term issue which is how do we sustain that 
steady growth on the entitlement side, over 6 percent growth in 
Medicaid, over 7 percent growth in Medicare, Social Security, 
and how do we deal with that?
    And that is your internal debt issue that you talked about, 
as well.
    Senator Conrad. My time has expired. let me just conclude 
by saying look, we agree on economic growth. That has to be the 
top priority.
    The grave question I have and the grave doubts I have about 
this strategy is that it is built on a mountain of debt. And 
that is unsustainable. I see this economic performance as not 
doing well compared to the previous recoveries since World War 
II. I think the statistics are very clear on that.
    So I welcome the opportunity to work with you. The place we 
clearly agree on two things, economic growth is the key to our 
future. And No. 2, that we have a situation long-term that is 
unsustainable. And together we have to face up to it.
    Chairman Gregg. Thank you. Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman.
    Welcome Ambassador Portman.
    I am going to get a little more specific as far as things 
that OMB and the current budget address. America is blessed 
with an abundance of coal--that black stuff--that comes out of 
the ground. Coal is essential in producing electricity and 
helping our country achieve energy independence.
    President Bush highlighted this importance in his State of 
the Union Address and previously pledged $2 billion for this 
initiative. Yet this year the Department of Energy proposed 
nearly $50 million in budget cuts for coal R&D programs.
    As Director of OMB, will you work to fully fund these 
programs?
    Ambassador Portman. Thank you Mr. Bunning.
    Did I not tell you he would ask me tough questions, tougher 
than anybody else probably by the end of the day.
    If confirmed, I am going to be looking into this, but let 
me tell you what I have learned so far, based on our 
conversation of a few days ago. One is that you are right, the 
budget this year for overall coal research is a reduction of 
about $33 million. But my understanding is that that reflects a 
drop in new funds for the Clean Coal Power Initiative, which 
has a backlog. The backlog, I am told, is over $500 million.
    Senator Bunning. Only because of permitting, state 
permitting.
    Ambassador Portman. But it is an unused balance that is 
that account. I am told that is why there is any reduction at 
all. I am also told that the commitment that was made will be 
kept. I certainly would be the first to say that that is 
important to keep. Representing Southwest Ohio, as I did, and 
understanding the importance of coal to our economy, and 
particularly given our current energy issues, I concur with 
you.
    So I look forward, if confirmed, to working with you on 
this. I also agree with you that we need to be sure that we can 
use those hundreds of years of coal that is in the ground in a 
productive way.
    Senator Bunning. Here is the problem: getting a site 
permitted for a Clean Coal Initiative or recycling of a plant 
and getting it permitted for clean coal technology to be 
introduced into that plant. If we do not get it permitted and 
you do not fund, through OMB, the Clean Coal Initiatives at 
full dollars, even though they are not used immediately, you 
stymie the growth in the initiative on clean coal and clean 
coal technology initiatives.
    So I urge you, I know there is a $500 million backlog of 
appropriated funds currently. Many of these unused balances are 
obligated but waiting for permitting.
    Without additional funding, the next round of project 
solicitations will be delayed. So please have OMB maintain the 
future projects and fund them. Because if we do not get them 
funded, they will not get in line for the money. And if we do 
not get them funded, we surely will not get the people asking 
for those new permits.
    TVA and SEC. I have been watching TVA for years, since I 
got to the Congress, because we have a big group of TVA 
customers in Kentucky inside the fence. We finally have 
regulations in place that the TVA had to file their debt, TVA 
had to file their debt with the SEC. The President's Budget 
this year, for the first time, has required TVA to register 
their debt securities with the SEC, providing the needed 
oversight of other utilities.
    I support the OMB proposal. Someone needs to keep a 
watchful eye on TVA. If you become OMB Director, will the OMB 
continue to push for more oversight of TVA?
    Ambassador Portman. Again, Mr. Bunning, having not had the 
time to look into this issue closely, I am not sure I can 
answer your question in any detail except to say that I support 
what was in the President's budget, which you just mentioned, 
which requires TVA to register its debt securities with the 
SEC.
    And I will certainly support that proposal and continue to 
work with you and others to ensure that we do have appropriate 
oversight on TVA.
    Senator Bunning. Maybe if we get a GSE law or regulator out 
somewhere between the Committee on the floor right now and get 
it to the floor, maybe we can do something else on TVA.
    Thank you very much.
    Ambassador Portman. Thank you.
    Chairman Gregg. Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman, and welcome, 
Ambassador Portman.
    I enjoyed working with you in the House and in your current 
position, and I am supportive of your move to this new position 
and wish you well.
    I do not know what is more difficult, trying to get other 
countries to obey trade rules or trying to deal with the 
current deficits and challenges of the budget.
    But I do want to followup on some of the things that 
Senator Conrad said. First of all, I will start by saying when 
we talk about what President Bush walked into, the reality of 
what this Administration walked into was a $5.6 trillion 
projected surplus over 10 years, which has now become the 
largest series of deficits in the history of the country. So 
that is what the president did. He magically turned huge 
surpluses into huge deficits, which we are now having to deal 
with.
    What I want to speak specifically to, though, is a series 
of numbers. You have talked about how things are going so well. 
I would like to present a different picture. I think it depends 
on who you are in this country as to how things are going. I 
represent Michigan. You come from Ohio. My guess is Ohio is lot 
like Michigan, in the Midwest, where folks really feel like 
they are in a fight for their way of life right now. They are 
not seeing big increases in salaries.
    In fact, the average weekly wage since President Bush has 
come into power has been $1.52. The average weekly wage has 
gone up $1.52, adjusted for inflation. So $1.50 basically as 
what we have seen the average person's wages go up.
    But we all know gas prices are up, the cost of college 
tuition is up. We saw a $12 billion in interest to college 
loans which are being shifted over to the people that we 
represent now, so they are going to be paying more for college. 
Interest rates on home mortgages are up. Lord knows health care 
costs are up. Anxiety about losing pensions, and I think that 
is immoral that anybody who has paid into a pension their whole 
life would lose it, but that is certainly up. Costs for small 
businesses are up.
    So there is a very different picture here.
    On the other hand, if you are an oil company, if you are 
the former head of ExxonMobile, who was making $110,000 a day, 
which is more than the average person in Michigan makes in a 
year or I would guess Ohio or the majority of America. If you 
are ExxonMobile, you are feeling pretty good right now. You are 
feeling pretty great.
    If you have been making over $100 billion a year in 
profits, when we look at the oil companies, you are feeling 
pretty good.
    So I think it depends on where you sit in this country. I 
think the majority of people are feeling squeezed on all sides. 
And what we are seeing because of their costs going up, their 
jobs being in jeopardy, their health care, their pensions being 
in jeopardy, what is happening as it relates to trade and jobs 
going overseas. You have folks who really believe they are in a 
fight for their way of life.
    So what is the answer here? Well, we have a tax bill in 
front of us that will give somebody making $20,000 a year, $2, 
$2. That will not even buy maybe half a tank of gas, maybe two-
thirds of the tank--I mean a gallon of gas, $2.
    If you are making $100,000 or less, you get less than $100.
    But if you are making over $1 million a year, you are going 
to get $42,000 or more back on the tax cut we are going to be 
voting on today.
    So what I am concerned about is the fact that middle 
America is being squeezed on all sides, and frankly split 
apart. So that the rosy numbers you talk about, the majority of 
Americans are not feeling those rosy numbers.
    The question that I have for you relates to a provision in 
the tax bill right now, because there are ways for us to save 
money and there are ways for us to help with the deficit. One 
of those is a provision that the Senate tax bill passed, we 
included in that was closing loopholes for oil companies that 
would create almost a $5 billion closing of loopholes that 
could be used to help pay down the deficit. And this was taken 
out in the final bill.
    So here we have the highest gas prices that people are 
paying right now, the highest profits by the oil companies, and 
we are going to continue to subsidize them, one of many 
subsidies which is in this tax bill which is about a $5 billion 
continued tax subsidy for them with no accountability on what 
is happening for consumers.
    I wondered if you might comment on that because we could 
find $5 billion for you to put on that deficit right now if we 
would tell the oil companies, who make more than anybody else 
right now in the country or the world, that we are not going to 
have taxpayers continue to subsidize them with that $5 billion.
    Ambassador Portman. Thank you, Ms. Stabenow, and again I 
have enjoyed working with you on some of the trade issues and 
appreciate your leadership there. I think there is now plenty 
of work for us to do, as you said, on another issue which is 
our fiscal situation.
    On the $5.6 trillion surplus you talked about, if I could 
restate what I said earlier, that was a projection. And it was 
based on economic growth, and it was based on not having some 
of the external factors that I talked about like 9/11, like the 
corporate scandals and the stock market bubble bursting. And 
what happened instead was we went into a recession.
    So I just want to make it clear, when I made my comments 
that Senator Conrad was talking about, or others made comments, 
as I am sure you did and others, based on that projection, it 
was a projection based on something that ended up not 
happening, which is instead, starting in 2000 and then a 
recession in 2001, our economy went down to the point that 
revenues were dramatically decreased.
    Senator Stabenow. With all due respect, though, I might 
just say is that where I disagree is with the policies that 
came after that, which have kept the hole getting bigger and 
bigger.
    Chairman Gregg. Senator, we have a lot of members who want 
to ask questions. We are going to have to stay to the 5-minute 
time limit.
    Ambassador Portman. Let me just quickly say, I was just 
asking about the budget proposal. I think the President's 
budget proposal does deal with some of these oil and gas 
incentives. And I believe that even in the legislation that you 
are going to be considering there are some incentives which are 
changed in ways that you would find helpful, from what you 
said.
    I think this one particular provision you talked about on 
the $5 billion is not likely to be in the conference report. 
But I just do not know enough about these issues yet to be able 
to give you the specifics.
    I will tell you I am happy to sit with you and talk about 
what is actually in the President's budget with regard to some 
of these incentives because we do make some suggestions in the 
2007 budget to change some of those incentives, to reduce some 
of those incentives, and eliminate some all together, along the 
lines that you talked about.
    Senator Stabenow. Thank you.
    Chairman Gregg. Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman.
    Ambassador, I welcome you here.
    I, too, have very fond memories of the time I served in the 
House with you and the friendships we have developed and look 
forward to working with you in this new position. I am glad the 
President nominated you and look forward to your prompt 
confirmation by the Senate.
    I hope to get to two questions. I have about a dozen but 
just a couple I would hope to get to in my 5 minutes.
    I want to go back, frankly, into the debate that we are 
having here among ourselves on the Committee about the policies 
of management that the Administration and this Congress are 
pursuing as we face the challenges that we have as a Nation 
these days.
    I want to also reiterate that as we talk about what has 
happened over the last term, the two terms of this president, 
we have to remember that when all of us were debating these 
issues at the beginning we did not know then that the stock 
market bubble was going to pop. We did not know then that 9/11 
was going to occur. I believe that very few people can deny 
that 9/11 changed this country in many, many ways, not the 
least of which was economically in terms of what it did to our 
budgets both in terms of spending and in terms of revenue.
    So while we can debate these things endlessly, what I would 
like to do is come back to you to an issue that has been raised 
by Senator Conrad and has been discussed to some extent, and 
that is the effort to blame the growth in debt on this 
president.
    I know that Senator Conrad has talked a lot about the debt 
and he has referred to the hot checks that this country is 
apparently issuing because we engaging in so much debt. And you 
have indicated that you agree that the growing debt that we are 
incurring in this country, as I do, is a serious problem.
    But what I would like to ask you to do is to talk with us a 
little bit about that debt. What is the major cause or causes 
or what are the major causes, in your opinion, of the mounting 
debt? And who is responsible for it?
    Ambassador Portman. Thank you, Mr. Crapo, and I appreciate 
you giving me the opportunity to do that.
    One, the public debt, of course, is an accumulation of 
deficits. And this current debt we have, of course, reflects 
deficits not just in this administration but in all previous 
administrations. So it is an accumulation.
    We had one short period, as you know, you were part of 
this, a balanced budget in 1997 and going to 1999 and 2000 
where we actually reduced some of that debt, over $500 billion 
of it. So we did reduce some of it, not all of it, not nearly 
all of it.
    But the point is this is an accumulation. That is the 
public debt.
    The internal debt that was talked about, or the 
governmental debt, would be debt that relates to these 
entitlement programs we talked about, primarily Social Security 
and Medicare. And those are the long-term issues that we 
addressed earlier.
    Again, I agree wholeheartedly with those on the Committee, 
including Senator Conrad, who believe we need to focus on the 
unsustainable growth there and the debt that is being built up 
internally.
    With regard to the public debt, the historical average is 
about 35.4 percent of our GDP. As Senator Gregg indicated, 
currently we are within that historical average. We are a 
little higher than that, as I see on my figures for this year. 
We may be a little lower than that coming up, but we are 
basically within that range.
    It was mentioned by Senator Gregg that during the Clinton 
years that percentage was higher. I do not have those data 
points in front of me here.
    But the point is our public debt, which is what most 
economists will focus on as the critical element because it can 
affect our economy, including interest rates and inflation, is 
within the historical average. Should we have it come down? 
Absolutely.
    The way you get it down is you restrain spending and grow 
the economy, which is exactly what we have been trying to do.
    Senator Crapo. In terms of spending, for those who would 
like to create the impression that we have an uncontrolled 
spending here, which I believe we do, is it not correct that we 
are approaching the point at which about 63 percent or 64 
percent of the spending on an annual basis is mandatory? 
Meaning it is either entitlement spending or interest on the 
national debt?
    Ambassador Portman. That is roughly correct. As I 
understand the figures, roughly 20 percent for defense and 
homeland security, roughly 19 percent for so-called 
discretionary spending that is non-security and non-homeland 
related, which would include the day-to-day operations of the 
Government. And the rest, just over 60 percent, would be as you 
indicated sort of on autopilot. In a sense, it is the 
entitlement programs and it is payment on the debt.
    Senator Crapo. And until this Congress will authorize the 
president to be able to submit a budget that addresses Medicare 
and addresses Social Security, that is spending that is on 
autopilot at this point; is that not correct?
    Ambassador Portman. That is correct. It takes a change in 
law. Again members of this Committee, as I said at the outset, 
are going to be absolutely critical to making those changes to 
enable not for us to cut anything. It is about reducing the 
rate of growth so that it is sustainable and doing it in smart 
ways, so that we are keeping our promises to seniors and 
others.
    And I believe, maybe I am too optimistic, Mr. Crapo, but I 
believe that we can do it. And we have time to do if we act 
now. If we wait too long, as Chairman Gregg has said, and wait 
until we are on the precipice as he has said, or as Senator 
Conrad has said, looking at the way the debt increases, that 
would be a major problem for our economy and for many 
Americans. So we need to act and act now.
    Senator Crapo. I have not had a chance to get to my next 
question but my time is up so I will yield back. Thank you.
    Ambassador Portman. Thank you, Mr. Crapo.
    Chairman Gregg. Thank you, Senator.
    Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman, and welcome, Mr. 
Ambassador. I have two questions, as well.
    As you know, the Administration wants to sell off hundreds 
of thousands of acres of public land in order to pay for rural 
schools. This proposal makes no sense because nobody thinks you 
ought to sell off your crown jewels to pay your operating 
expenses.
    Last week, before Senator Domenici's Committee, Dirk 
Kempthorne, who is sort in your shoes as a nominee coming 
before us, said that he was going to back away from the 
Administration's funding proposal for those rural schools. He 
said he would work with Senator Craig and myself to develop an 
alternative funding mechanism.
    I want to see if you will do a Dirk Kempthorne here, 
because you are the person who counts. We are very pleased 
about Dirk Kempthorne's statement that he will not support that 
funding mechanism. I would like you to say what Dirk Kempthorne 
said last week, that you will work with Senator Craig and I for 
an alternative.
    What is your view on that?
    Ambassador Portman. First of all, I appreciated, Mr. Wyden, 
talking to me about this the other day. It sounds like, if 
confirmed by this Committee and the Senate, I may have some 
interesting challenges on my hands in terms of this issue.
    But as you and I talked about, it is important that we 
continue to provide funding that is provided in the budget, 
although as you know, originally this was to be transition 
funding.
    Senator Wyden. That is not correct. There is no history 
that it was a transition.
    Ambassador Portman. Well, it expired. And in the process of 
reauthorizing it, my understanding is the Administration was 
looking for offsets, which I think is reasonable. And the 
question is what should the offsets be? And because it has to 
do with Forest Service lands, I suppose they thought gee, it 
would make sense to do it within the Forest Service budget.
    That is what I have been told and there is a certain logic 
to that.
    The question is are these lands surplus lands and isolated 
lands, as some have said? Or are they, as you said, the 
jewels--or maybe not crown jewels but they are the jewels of 
the Forest Service system?
    I will certainly take a careful look at it. I committed to 
you to do that when I met with you. And I look forward to 
trying to work with you to find the appropriate offsets in this 
program.
    Senator Wyden. I appreciate that. Please look at Dirk 
Kempthorne's statement to the Energy Committee.
    Ambassador Portman. I will now. That is very interesting. 
Thank you.
    Senator Wyden. Because I want you to do a Kempthorne. That 
will give us a chance, on a bipartisan basis, to fund this 
program properly.
    Let me turn to an area that I think is particularly 
fruitful for bipartisan support, and that is tax reform.
    To me, I want a tax code that gives everybody in the United 
States the chance to accumulate wealth. I want a tax code that 
is simpler and fairer. I have introduced a proposal that I 
think could be the basis of a bipartisan effort. It is called 
the Fair Flat Tax and it will save the Government, according to 
the Congressional Research Service, $100 billion--a modest step 
toward paying down the deficit. A simplified system, according 
to the Tax Advocate for the Internal Revenue Service, would 
save the American people billions of dollars on tax compliance.
    Where are we in terms of getting the Administration moving 
on a tax reform proposal that is simpler, gives everybody the 
chance to accumulate wealth in this country, and gets out these 
ridiculous expenditures we have for tax compliance?
    This year the American people spent more complying with 
their taxes than the Government spent on higher education. This 
is a disgrace. The President had a Commission but then the 
Administration just sort of vanished. And I would like to work 
with you all on what could be done on a bipartisan basis in 
this area.
    Ambassador Portman. As I told you in our meeting, I applaud 
your efforts in this regard and your interest in it. Senator 
Conrad and I have talked about another issue, which is the tax 
gap, and the fact that our current system is not collecting all 
the revenue due, and there may be ways to reform the system to 
be able to do a better job in that, which is to the tune of 
hundreds of billions of dollars now.
    As you know, through my career I have been an advocate for 
tax reform and worked on a bipartisan basis to try to promote 
some major changes in our tax system.
    I like what you said about simpler and fairer. You also 
talked about, in essence, savings and allowing people to 
accumulate wealth which help our economy and is one of the 
issues we have with regard to our economy today.
    And the other one I would mention that you and I talked 
about is competitiveness, is to be able to compete in our new 
global economy, which is increasingly focused on competition as 
the world gets more and more integrated in an economic basis.
    So I look forward to working with you on that. My 
understanding is the President's Commission has now given its 
report to the Secretary of the Treasury. The Treasury is 
analyzing the proposals and is going to make a recommendation 
to the President.
    So I think that is where the status is. But I think with 
the information we have from the Commission, with the work that 
has been done over the last couple of decades, I would love to 
work with you, with the Treasury Department and others on this.
    Senator Wyden. My time has expired. I just hope that you 
can be a catalyst for speeding this up. I would really like to 
work with you on a bipartisan basis. I have talked with Mr. 
Bolton about this. I think there is a real chance to come up 
with something that could be seen like what was done in 1986, 
where Ronald Reagan got together with folks on a bipartisan 
basis and did something that really resembles my Fair Flat Tax 
Act.
    Thank you, Mr. Chairman.
    Chairman Gregg. Thank you. Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. I also would like 
to welcome Ambassador Portman to the Committee. I also had an 
opportunity to serve in the House and appreciated his 
leadership in working with him over a number of years.
    I have been working with you on trade issues as recently as 
this past week. And I think your capacity as United States 
Trade Ambassador, those responsibilities have been carried on 
very well.
    I look forward to continuing to work with you as Director 
of OMB.
    I have to say that I think the economy right now is 
experiencing unprecedented growth, particularly in light of 
some of the adversarial things that have been happening out 
here that could have really--any one of them separately could 
have driven our economy really down into the doldrums. We have 
a record number of Americans that are working. We have revenues 
that are coming into the Government at record levels.
    This is all a reflection, I believe, of the President's 
economic policies.
    I do not think we should downplay those at all. I recall 
back in the late 1970's, during the Carter Administration, when 
we had energy problems that were driving high energy costs. It 
drove this economy right into double digit inflation, double 
digit interest rates, double digit unemployment.
    We are facing a similar situation today with very high 
energy costs, but we are not seeing the economic impact that 
happened in the 1970's, the late 1970's. And I think this 
reflects the strength of the President's economic and incentive 
growth package that he presented to the Congress and the 
Congress passed. We now have that package before the Senate, 
trying to get those tax incentives put in and extended out so 
that we do not have tax increases occur in what I think would 
be a very unfortunate thing to happen during this economy when 
we are experiencing the growth that we are having.
    My question that I have for you is that in the President's 
past budget he had talked about the deficits, and right now our 
deficits are going down at a very encouraging rate. But he 
talked about 2009 having the deficit cut in half.
    I wondered if you feel like we are on--are we meeting that 
goal? And how you feel about that personally?
    Ambassador Portman. Thank you, Mr. Allard.
    With regard to the trade issues, I have enjoyed working 
with you. And as recently as this week I have still got my day 
job, which is U.S. Trade Representative, and I am very 
interested in trying to solve some of the issues we talked 
about, including the SOC issue and with regard to the China 
textile agreement. I appreciate your giving me some more input 
on that this past week.
    We are on track to achieve the President's goal of reducing 
the deficit in half by 2009. If the spending restraints that we 
have been able to put in place over the last couple of years on 
the domestic discretionary side, non-homeland and non-defense, 
continue which I think is crucial, if the economy continues to 
grow as projected--and I say as projected having warned others 
that those were projections in 2000 and 2001 and they are 
projections now.
    If revenues continue particularly to increase, as they have 
in 2005, and in the first 7 months of 2006, we will achieve 
those targets.
    In fact, if you look at the trajectory we would more than 
achieve those targets. Now that assumes we will not have some 
other major hits on the economy. As Mr. Crapo said, 9/11 was 
not just increased Federal spending which affected our deficit, 
but also reduction of economic growth. But assuming that, we 
are on track. And we are on track because I think we are 
getting the message, all of us, that fiscal discipline requires 
two things. One is making tough decisions on spending. We have 
to continue to that. And second, do everything we can to 
continue to grow this economy.
    After 2009, and in those out years, we then have the baby 
boomers retirement beginning to hit the budget, and therefore 
our deficits, in more significant ways. So I do not want to 
leave with just assuming that we are on track to have balanced 
budgets forever.
    In fact, we face a very real challenge in terms of the 
unsustainable growth in the entitlement programs. That is 
something that I look forward to working with you and other 
members of the Committee on.
    Senator Allard. The fact remains is the President's 
economic package, built around tax reduction rates that would 
stimulate the economy, has worked. You have affirmed that in 
your comments and I thank you.
    Mr. Chairman, I see my time has just expired.
    Ambassador Portman. Thank you, Mr. Allard.
    Chairman Gregg. Senator Sarbanes.
    Senator Sarbanes. Congressman Portman, I join my colleagues 
in welcoming you before the Committee. I use the 
``Congressman'' advisedly. Avril Harriman, who held many, many 
distinguished positions in our Government, always wanted to be 
called Governor Harriman. When asked about that, since he had 
held some very high ranking sub-Cabinet positions and so forth, 
he said in a democratic society, the highest appellation is the 
recognition that comes from the people in choosing you for 
elected public office.
    Ambassador Portman. Yes, sir.
    Senator Sarbanes. Presumably, we will soon be calling you 
Director. But I want to put some questions to you before we get 
to that stage. I have a number of them. I will try to be brief, 
and if you could be brief in response, maybe we can get them 
all in.
    Do you think it is appropriate and relevant, in judging the 
unemployment rate, to look at the labor force participation 
rate?
    Ambassador Portman. I think it is one thing that should be 
looked at. I think the way we have measured unemployment over 
the years, through Republican and Democrat administrations 
alike, through payrolls also, the appropriate measure if we are 
to benchmark from past years.
    Senator Sarbanes. I ask the question because the 
participation rate right now is about 66 percent. Before the 
recession it was 67.2 percent. If you were to assume the same 
labor force participation rate, the unemployment rate today 
would be not quite 6 percent.
    So I think it is a relevant criterion as we are looking at 
the performance of the economy. If people drop out of the labor 
force, we do not count them as unemployed. And a fair number of 
people do that if they are discouraged by job prospects and so 
forth. So I just wanted to add that.
    The next question I have, is it your intention as Budget 
Director to put the war on budget? How long are we going to go 
on with this fiction where we fund the war, now to the tune of 
some $280 billion over the period of the war, off budget in 
emergency supplementals? Do you not think it ought to be on 
budget?
    Ambassador Portman. Senator, you and I talked briefly about 
this in our meeting. And I was pleased, frankly, to see the 
2007 proposal from the Administration in February include, for 
the first time ever, an amount for the war in Iraq and 
Afghanistan.
    Senator Sarbanes. I regarded that as a small down payment 
on honesty in budgeting, and I am just looking forward to what 
the future might bring.
    Ambassador Portman. Well, I think the $50 billion will 
probably not cover the full cost. But it is a step, I believe, 
in the right direction.
    The difficulty, of course, is predicting what those costs 
will be. The budgets are put together about 2 years in advance 
and then about 9 months in advance presented. So it is 
difficult to know. None of us, with certainty, are going to be 
able to know what the amount is. So some supplemental funding 
will be necessary.
    Senator Sarbanes. Let me ask you this question: do you 
recall any previous instance in which, in time of war, we cut 
taxes?
    Ambassador Portman. I do not know the answer to that, 
Senator.
    Senator Sarbanes. I urge you to take a look. My 
understanding is there has not been a case where we are in a 
wartime context that we cut taxes.
    Given the way the tax cuts are weighted, very much to the 
upper end of the income scale, the consequence of that is that 
the people at the top are making no sacrifice in this war. And 
the people in the middle and on down are making a very 
substantial sacrifice, since the overwhelming number of the men 
and women who go to fight in Iraq and risk their lives and 
their limbs come from those categories in our society.
    So you have not only the inequity in terms of the tax 
structure but you have an inequity in terms of the burden being 
borne with respect to the war. And I think that ought to enter 
into the calculations.
    I want to ask you a question about the current account 
deficit. In 2005, last year, the current account deficit rose 
to the staggering figure of $805 billion. Of course, you are 
familiar with this because you have been the Trade 
Representative so it is an important part of your portfolio. 
That is more than 6 percent of GDP, over 6 percent. And so 
foreigners are financing our deficit to absolute record amounts 
and many have expressed a deep concern about that.
    Furthermore, a recent column in the Wall Street Journal 
said there is growing concern that foreign governments may 
decide for political reasons to reduce their appetite for U.S. 
dollars. The argument is always made, they will not do it for 
economic reasons because it is counter to their own economic 
interest.
    That is not an altogether empty argument and I recognize 
that.
    But this went on to say, and I quote the column, 
``Economists speak in particular of the danger that China, in 
defending its vital interests, Taiwan's status or threats to a 
key energy providing friend like Iran, might significantly 
reduce its buying of U.S. treasuries or sell billions of 
dollars. Politics in such a case might prompt China to overlook 
the damage it would do to its biggest overseas market by 
showing the muscle to drive the dollar value down, U.S. home 
mortgage rates up, and demonstrate the limits to American 
clout.''
    How serious a problem is this?
    Ambassador Portman. If I could address those two last 
questions quickly, the current account deficit is driven by a 
lot of factors, macroeconomic factors. Significantly, it is our 
economic growth, as you know. More recently it is oil. In 
particular, about 60 percent of the growth last year, as you 
know, in our trade deficit, came from increased prices of 
energy, which is foreign oil almost exclusively.
    Second is the way in which the U.S. has driven economic 
growth globally, along with China, over the last several years. 
This has led to us consuming more and, in fact, other 
countries, Japan and Europe in particular, have not grown as 
fast, meaning they have not been absorbing the imports we have.
    Finally, it is a structure issue with the way our economy 
works as compared to some other economies. Our savings rate, we 
talked about earlier, is relatively low, particularly our 
personal savings rate. Whereas in other countries, China as an 
example, over 50 percent personal savings rate. Here our 
personal savings rate is below zero now. So there are a lot of 
factors that affect it in terms of the impact.
    I agree with you there is a concern that at some point, if 
this imbalance is not corrected, you could have an issue. What 
we are hoping for, of course, is a soft landing not, as that 
column might indicate, a harder landing. And I think that is 
the more likely scenario.
    Why? Because it is in their interest both economically and 
in terms of keeping stability in our economy with the large 
amount of investment those countries and their investors have 
in the United States. As long as we continue to grow the 
economy, as long as we continue our unique political stability 
in this country, we will be a good place to invest.
    So it does not concern me particularly, in terms of the 
possibility of that hard landing. But I do think we need to 
start working toward the soft landing.
    As you see, with Japan beginning to grow this year, and 
some countries in Europe beginning to grow, and some changes in 
terms of the policies that China at least is saying that they 
are advocating, some of those factors are now in place for a 
softer landing.
    The one that I would like to see more of here, obviously, 
is increasing our savings rate. And that goes to some of the 
issues we are addressing today on the public side, as well as 
the personal savings rate.
    Just quickly on taxes, Mr. Sarbanes, not a lot of concern 
has been raised here about the tax relief, and particularly the 
relief on the floor this week. The only point I want to make to 
your point about who should be bearing the burden, particular 
during wartime, is that actually the wealthiest taxpayers, 
whether it is the top 1 percent of taxpayers, the top 5 
percent, or the top 10 percent, are paying a bigger burden of 
the taxes, a bigger percentage overall than they were before 
the tax cuts were in place.
    Why? Because the tax relief included, as you know, the 
Child Tax Credit, the 10 percent bracket, and other relief that 
went primarily to the middle income----
    Senator Sarbanes. Of course, they are realizing a bigger 
share of the income, too. It is like Willie Sutton. He went to 
the banks because that is where the money was. You have had a 
marked concentration of income and wealth at the top of the 
scale, so when you cite these figures that they are 
contributing more in revenues you have to keep that in mind. I 
mean if they had all the revenues, they presumably would pay 
all of the taxes.
    Well, my time is up. I do, Mr. Chairman, look forward to 
further exchanges with soon-to-be, I think, Director Portman. 
And I welcomed his statement at the outset that he looks 
forward to having open lines of communication with the 
Congress, which I think is extremely important.
    Thank you.
    Ambassador Portman. Thank you.
    Chairman Gregg. Thank you, Senator.
    Senator Domenici.
    Senator Domenici. Senator Sarbanes, let me just say I 
listened attentively to your questions and I commend you on the 
probative value of the questions, very interesting and to the 
point questions that you have asked today.
    The one on who is the work force, what part of the work 
force is seeking work, I just wanted to suggest I have been 
wondering about that myself, but from a different point. It 
would seem to me that there may be a growing percentage of the 
American population that just does not seek work period. And it 
may be bigger than we think, if you understand what I am 
saying.
    It is because of what is going on in this society. I think 
whatever the percent was, I think it is getting bigger of those 
who just do not seek work in the country. They are not counted 
anywhere in the numbers you have been referring to, and I think 
your questions were very probative.
    First, let me commend you on this new job. I came almost 
singularly to look you over and see if you were really sane.
    Ambassador Portman. I wonder myself sometimes, Senator.
    Senator Domenici. Why in God's earth you leave the 
wonderful safety and accomplished potential job you had to take 
this one, but everybody says that you are just that kind of 
person. From what I have heard so far, I think that is correct. 
And I commend you for the courage to take the job.
    It is a tough job, no matter how you cut it. It is very 
difficult because the American budget is made up of 
untouchables that you have to continue to explain away. 
Whatever we call them, they are untouchable.
    I would like to talk a little bit about something that I 
think is very important that is waiting here in the wings and 
that was discussed in the President's State of the Union 
Address. He talked about a number of very exciting things, but 
one that it just seemed to me he threw in. And that was a 
statement about a commission to be appointed to look at and 
recommend to him and the Congress solutions to the problems of 
Medicare and the problems we have with our over-promises to the 
people versus the real expectations that you and I know should 
be there.
    I would like to ask you do you not think it would be good 
for the President to get on with pursuing that bipartisan 
commission and get it appointed so that it can be referred to 
as looking at this major, major problem of the entitlements on 
the health care side and studying them and referring, in a 
bipartisan way, some real solutions to us as soon as possible?
    Ambassador Portman. Mr. Domenici, you are absolutely right, 
it is critical. You and I talked a little bit about this during 
our meeting. And I told you that you have been at this longer 
than I have, and I asked your advice on what the proper form 
should be.
    The critical element is that, as I said earlier, we address 
the unsustainable growth in these programs not by cutting them 
but by reducing the rate of growth. And we do it in a 
bipartisan way. Because in my experience, and I think you 
confirmed that in our meeting, that is the only way we are 
going to have success here, both in getting it through the 
process but also in having it be sustained over time.
    The commission was something that the President felt 
strongly about. he also talked about it including Members of 
Congress, which I like, because I have always thought that 
these commissions are more productive where Members of Congress 
are directly involved, those who have a stake in it and 
therefore can move it through the legislative process.
    My understanding is there is a consultation process going 
on right now with leadership on both sides of the aisle in both 
houses, and it has not been named yet. But I think there is a 
good faith effort going on to determine who the members should 
be and what its scope might be.
    But whether it is a commission or whether it is a group of 
you who, with the right experience and clout, including members 
of this Committee, and good will are willing to look at it, I 
think it is absolutely critical.
    And I intend to, in my role, if confirmed, be encouraging 
from the administration side that we engage directly with you 
on that critical issue.
    Because if you look at the budget, as I said earlier, we 
are making good progress in the short term, some would say even 
in the mid-term. But the long-term continues to be 
unsustainable. That is because we cannot continue to have this 
high growth, as you said, particularly in the health care area, 
but also in Social Security.
    This is something that we all now recognize on a bipartisan 
basis and we need to deal with it.
    Senator Domenici. Let me once again repeat to you here and, 
publicly for the record, state that I see no solution to the 
problem unless it is done in a bipartisan manner. And I do not 
see a bipartisan development unless it is done in some way by 
Presidential commission.
    We cannot get it done here. The House cannot get it done. 
We are in a box where the first party to speak on the issue of 
changing significantly Medicare, so as to save money and 
deliver what we can afford rather than to leave out there the 
expectations that cannot be paid for, the first party that does 
that is dead at the next election. At least that is what is 
perceived.
    So it has to be done in a bipartisan way.And this Senator 
sees no way, short of something like this commission. And so I 
urge you, in your position as OMB Director, to push vigorously 
for that commission to be appointed. You have just stated 
publicly, and I am glad to hear it, that the White House is 
engaged in trying to put it together. Is that a pretty good 
assessment of what you said?
    Ambassador Portman. Yes, sir.
    Senator Domenici. They are trying to see who should be on 
it out, how do you put it together in a way that is 
satisfactory?
    Ambassador Portman. That is my understanding.
    Senator Domenici. Because if you do not put it together in 
that way, then everything I said about its potential is also 
for naught. It cannot be something Congress disagrees with.
    So the chairman, whoever it is, is going to be a very 
powerful person. But Congress is more or less going to have to 
say we concur, or he will be engaged in a battle from the 
beginning.
    I have been through this where you attempt to make changes. 
And let me tell you it gets to the point where you cannot put 
up your hand before the other guy on a change. We even invented 
words to describe what that was. I invented one called the 
simultaneity test, the simultaneity test. We had to vote on a 
change in Social Security and everybody had to see your hands 
at the same time.
    So that commission is going to have a tough job. The sooner 
they get started the better.
    We are doing more than a good job on the domestic programs 
under this Chairman. We are on a path on the domestic spending. 
In my opinion, that is almost not sustainable it is so 
vigorous, in terms of the reductions and the restraint. And I 
say that publicly.
    The domestic programs that are controllable are being 
controlled, in spite of all the talk about us wasting money. 
They are being controlled in a way that if the American people 
could just get the overall message, they would be proud of us, 
proud of the way this Committee has helped do that.
    But that is not the issue. Because we can do all of that 
and still end up with this mounting debt and say well we have 
everything under control. What happened?
    Well, Medicare, Medicaid, Social Security and other 
entitlements related principally to pension-type activities are 
just commitments in the out years, in the future years, that we 
have over committed compared to the available resource. That is 
what is showing up there as that gigantic overage.
    I just want you to know that many of us understand it. We 
are empathetic. We want to help you. It just cannot be done, it 
seems to me, unless we do it through this commission. And I 
urge that we do that quickly.
    Thank you.
    Ambassador Portman. Thank you for the counsel.
    Chairman Gregg. Thank you, Senator. Those are very wise 
words. I know the Administration will listen to them, I would 
hope, and is listening to them hopefully.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Ambassador, welcome, and I enjoyed the working relationship 
we had in the House. And I think you are well on your way 
toward moving to this new position and we look forward to 
having that same type of attitude you brought to the House that 
while is strong partisan in some respects, is also reaching out 
to the other side. so we look forward to that in your role as 
the OMB Director.
    I have two specific lines of questioning.
    One is OMB utilizes the Program Assessment Rating Tool as a 
way to assess the results of discretionary programs and helping 
to achieve better results. There is no equivalent mechanism to 
look at the effectiveness of tax expenditures, which are an 
increasingly large revenue loss, $872 billion in the 2007 
President's budget.
    Given our fiscal climate that we are looking for ways to 
cut the deficit and cut unnecessary or ineffective spending, 
and considering the countless tax provisions Congress has 
created, I am wondering if you support or will support as the 
OMB Director using that same PART system to assess tax 
expenditures?
    Ambassador Portman. That is a very interesting question and 
not one I have thought about honestly, Bob.
    The program you talked about, what you call the Program 
Assessment Rating Tool, as you know is a way to rate the 
effectiveness of programs. It is not perfect because it does 
not look at whether it is a Federal role or not, or how 
important the Federal involvement ought to be. But I think it 
has been very helpful, from what I can understand.
    Applying that to the tax side, which I guess would be 
something the Treasury Department would have the expertise in, 
not OMB, I guess would be looking at not performance in a 
management sense but performance in an economic sense.
    Senator Menendez. GAO, in its report last year, said that 
it recommended that the Director of OMB, in consultation with 
the Secretary of the Treasury, take that has one of four 
actions. I certainly think that I would urge it to your 
consideration.
    Ambassador Portman. I will take a look at it.
    Senator Menendez. Because as I read your statement upon 
accepting the nomination as the OMB Director, I think one of 
the problems with what you said is that there is a significant 
part of the equation you did not consider. I think it is a 
false paradigm to simply talk about spending in entitlement but 
not talk about the fiscal picture, as well.
    And when you do not automatically include that, then I 
think you are undercutting the ability to truly dig into both 
the deficit and the debt, which I think are the most 
challenging parts the country has to meeting its long-term and 
short-term needs.
    The question is who is this economy working for? Even if we 
accept the statements of our colleagues about this economy, who 
is this economy working for? If you talk to families in New 
Jersey, they will tell you that they are treading water just to 
keep their head above it and to be able to try to make ends 
meet.
    So in my mind, we have to look at the effectiveness of tax 
spending, as well. We extend tax breaks that are not even 
expiring, and yet we have a vast middle class in which we will 
put a patch on the AMT, 15 million people in this country, who 
are at the very core of the underpinning of this Nation's 
economy by virtue of the middle-class efforts that they 
promote.
    So it seems to me that that has to be a big part of the 
equation.
    And PAYGO provisions, which seem to be have been rejected 
here, something that I know when you were in the House you were 
a big supporter of. I would assume that we would hope to see 
those again, and talk about fiscal responsibility, something 
that has been jettisoned, in my mind, by the majority.
    And second, I looked with great interest on you talking 
about greater transparency in budgeting. If we talk about 
transparency in budgeting, it seems to me that the President's 
budget for 2006 and 2007 did not provide details for program 
funding beyond the immediate budget year, which is a break from 
past Presidential budgets.
    Yet when OMB documents surfaced and they were taken by some 
public entities to do a vetting of, under those projections 
there are some very deep cuts that some question are either so 
severe that they will affect the very fabric of the essential 
programs in our society or really not very serious.
    So I just want to ask you, under those projections over the 
next 5 years, domestic discretionary programs would be cut $183 
billion, meaning that higher ed would be cut by nearly $16 
million, elementary and secondary education by $18 million, 
veterans benefits by $10 billion, and so on.
    Is that the Administration's intent, to pursue those cuts 
in that way? Is it your interpretation that these are to be 
taken seriously?
    Ambassador Portman. Mr. Menendez, I am not sure what you 
are referring to in terms of the greater transparency that was 
previously provided. I will look into that.
    In terms of the 5-year versus 10 year, maybe that is part 
of the concern that you are raising. I understand that during 
the Clinton Administration for a short time there was a 10-year 
projection but that typically it has been 5 years. And we have 
found that these projections----
    Senator Menendez. Actually, the President's budget for 2006 
and 2007 do not provide details for program funding beyond the 
immediate budget year, beyond the immediate budget year.
    Ambassador Portman. You are talking about the second 
through fifth year.
    Senator Menendez. Some of us believe in 10 years, but 5 
years might be a good starter to look at the real results of 
some of these cuts along the way.
    Brian Riedl at the Heritage Foundation, not someone who is 
loath to necessarily be of my view all of the time, takes the 
view that in fact the figures should not be taken as serious.
    So the question is, as we are talking about this debt, and 
I will close up on this, the reality is there should be 
transparency in budgeting. And it should start with the 
Administration who, in the first instance, moves the budget. 
There needs to be long-term opportunities to understand the 
long-term consequences of the president's suggested cuts. And 
you need to put tax spending on the table, as well, if you want 
to be intellectually honest about where we are going on the 
debt.
    Thank you.
    Chairman Gregg. Thank you, Senator.
    Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman.
    Mr. Ambassador, thank you for joining us. I look forward to 
working with you and appreciate your service.
    Just one comment about Senator Domenici's comments and the 
frequent comments about Medicare and Medicaid.
    We have to get Medicare and Medicaid under control. That is 
where the spending problem is. But it seems to me that this 
commission that the President is working on appointing somehow 
has to also look at transforming health care policy before we 
start figuring out how to restrain growth in spending. Because 
if we restrain growth in spending on the old model, it might 
not work.
    I do not know whether that is part of the goal but I want 
to observe that.
    What I want to ask you about, though, is a different 
subject upon which we seem to agree around here, and that is 
the subject of helping our country keep its edge in science and 
technology so that we can keep our good jobs from going to 
China and India and other places. We have a remarkable economy 
in the United States and most studies show that since World War 
II 85 percent of our growth in per capita income have come from 
advances in science and technology.
    But it was as a result of a budget hearing last year that 
some of us asked the National Academy of Sciences to tell us 
exactly what we needed to do to keep our edge in science and 
technology. Because we could see that if we continued to grow 
with unsustainable Medicare and Medicaid that we would not make 
the investments in engineering, education, science and research 
to fuel this economy.
    In other words, if we spent all of our money on war and 
welfare and debt and Medicare and Medicaid, we would not have 
an economy to support these urgent needs.
    The Academy did a tremendous job with a report from Norm 
Augustine and others. And they came back with 20 specific 
proposals. And there were other proposals around. Much of this 
work has been going on for quite a while, as you well know. But 
there is a consensus now. We have a consensus document, the 
Augustine Report, written by the National Academy of Sciences 
and Engineering, Institute of Medicine--IRS 20 recommendations 
are broadly supported across the country.
    In the Senate we have a consensus, 70 Senators have 
sponsored legislation that fairly closely resembles the PACE 
recommendations, 35 Republicans, 35 Democrats, including 
Senator Frist, the leader, and Senator Reid, the Democratic 
leader. It is hard to find anything else around here about 
which there is that much consensus.
    The President's budget was very generous toward this idea, 
and he proposed his own American competitiveness initiative, 
for which I give him great credit, exactly the kind of 
Presidential leadership that we need for our country.
    According to my figures--and he recognized the need.
    For example, the proposal would increase Federal funding 
for research. It would provide fellowships to grow more of our 
own scientists. A Nobel Prize winner told me earlier this week 
that he just hired his postdoctoral students. He did not hire a 
single postdoctoral fellow who was not from another country. 
University of North Carolina, over the last 5 years, has 
graduated 9,500 teachers. Three of them have been physics 
teachers. So we are not growing our own scientists and 
engineers.
    I am now coming to my question. The President has done a 
terrific job here, taking the lead. His budget has about $6 
billion, as I see it, for a competitiveness initiative. That is 
a lot of money in a tight budget. About $4.6 billion of it is 
for the research and development tax credit.
    The PACE recommendations, which we support, have a little 
more than that, $8.8 billion in the first year. We set aside 
the majority of that, too, for the Research and development tax 
credit. So in the area of Federal expenditures for the research 
and education and energy, we are about $2 billion apart.
    I would describe this as having gotten the ball down to the 
red zone, within the 20 yard line. And we need your help to 
help get it passed and help find the money in the rest of this 
year.
    So my question is what will you be doing to make sure we 
properly fund the President's American Competitive Initiative 
and the recommendations of the Augustine Commission, so we can 
meet these urgent needs in this year?
    Ambassador Portman. First, Senator Alexander, if I could 
say your leadership in putting together a bipartisan group of 
members and then a nonpartisan group of experts is one reason 
you see these budget numbers. This is in the context of a 
budget proposal from the president in this general area, which 
is discretionary spending that is not homeland or defense 
spending of a minus 0.5 percent, in other words below a freeze.
    We think that is necessary to keep spending under control, 
but we also think it is important to prioritize key programs. 
And that is why there is an increase in the American 
Competitiveness Initiatives, which are entirely consistent, as 
I look at them, with the Gathering Storm Report that you shared 
with me that came out of this group of experts led by Chairman 
Augustine, and the PACE legislation that you now--you did not 
say how many cosponsors. I understand it is----
    Senator Alexander. 70.
    Ambassador Portman. --the majority of the Senate.
    So you have moved this ball down the field substantially. 
That red zone, it is always hardest to move it within the red 
zone. But you should be receiving a lot of credit for where we 
are in terms of prioritizing, as you say, science and 
technology and being sure America has a competitive edge there.
    I will take a look at this. If confirmed, I will be working 
closely with you on it. One of the issues you raised with me 
was the R&D tax credit being made permanent and how that 
compares to some of the other initiatives you have talked 
about.
    One of the concerns, honestly, that I have heard as I have 
looked into this even since our conversation is the issue of 
creating new programs when in the Department of Education, 
which you know better than anyone, there are a lot of programs 
that do not meet some of the effectiveness standards that we 
talked about earlier, whether it is a PART analysis or other 
analyses.
    So there is some concern about creating new programs at a 
time when we are trying to figure how to consolidate and make 
more efficient the programs that we have.
    But there is a substantial increase in the budget for these 
areas that are, again, entirely consistent with where you are 
headed. And I look forward to working with you going forward on 
that.
    Senator Alexander. Thank you.
    Chairman Gregg. Thank you.
    Senator Murray.
    Senator Murray. Thank you, Mr. Chairman.
    Welcome, Ambassador Portman. And we appreciate your 
willingness to take on this tremendous responsibility.
    As we told you when we met, I really appreciated your 
excellent leadership where you are now. We will miss you there. 
But I hope that we can continue to rely on your knowledge and 
openness and in the new role and wish you the very best.
    You certainly are taking this on at a very challenging time 
and I want to share some of the concerns that I heard Senator 
Sarbanes allude to, in terms of continuing to see budgets, as I 
have said many times, that do not reflect the true cost of the 
war or the tax cuts. I am deeply concerned that we seem to be 
governing by emergency supplemental, which I think is a 
dangerous way to go. And I hope that we get, from the 
Administration, budgets that really reflect the expenditures 
that we are having today.
    I also just will say I am concerned that we are just 
focused solely on the earmark as a way of walking us out of 
this debt. I think that is not going to get us there. And I 
hope that we look at a much more fiscally responsible budget, 
with real costs, coming from your agency.
    Having said that, let me focus on a national issue that 
resides in my home State, that of the Hanford site, which we 
had a chance to talk about when I met with you. But I wanted to 
reiterate it.
    I have been working on Hanford for 13 years. I have worked 
with a number of OMB Directors and Energy Secretaries, every 
one of them who come and see this financial plan as a way to 
solve other problems.
    As I told you, we have a radioactive plume that is moving 
into the groundwater and toward the Columbia River with a very 
complex funding that is in place that we need to keep in place 
because of the danger to not only the people in the region but 
to the entire country if we do not get that solved.
    I just wanted to ask you a personal request, that if you 
see anybody in your agency come forward with a proposal to 
rescind funding for Hanford, will you please contact me so that 
we can talk and your agency can be aware of the significance of 
that before we see it publicly?
    Ambassador Portman. Thank you, Senator.
    I did appreciate our opportunity to visit on this and some 
other issues. And I told you at the time that when I was in 
Congress I had the opportunity to work a lot on a smaller 
facility, but an important one, at Fernault, where we were able 
to expedite the cleanup and save the taxpayers billions of 
dollars. These costs are tremendous. They are a huge burden on 
the budget. But this is a responsibility for the Federal 
Government.
    As you know, the Hanford site in this 2007 budget receives 
an increase. Overall the environmental management budget is 
reduced because of some of these cleanups, including Fernault. 
But there is a substantial increase here. So far you have been 
very persuasive. It is an 8 percent increase above the 2006 
level, again in the context of the part of the budget that 
overall is under a freeze.
    So my understanding is that the cleanup----
    Senator Murray. Right, and I am most concerned about the 
VIP Plant because it is a complex spending plan that has been 
in place that we talked about. But I just want to make sure 
that we are on track.
    Ambassador Portman. It continues the money for the Hanford 
waste treatment plant, I think which is one of your concerns.
    Senator Murray. Let me ask you about funding for the VA 
because we faced a very serious $3 billion shortfall last year, 
as you well know, and had to go through a lot of work here in 
Congress to make that up at a time when we are asking young men 
and women to service overseas as well as seeing an increasing 
number of veterans who are facing this.
    I am positive that that shortfall was due to the fact that 
we were not looking at realistic projections to our service 
members who are now accessing the VA. And I wanted to find out 
from you what we can expect when it comes to making a VA budget 
based on real numbers and real expectations?
    Ambassador Portman. Thank you.
    Again, I do not pretend to know all of these issues yet. 
But I do believe that there has been a change in the 2007 
budget. I think you see it reflected in the numbers, which is 
that OMB is now not just working with but in agreement with the 
actuaries at the VA, which apparently was not always the case, 
in terms of coming up with a more realistic model showing, I 
assume, increased utilization. And so I think you will find 
that the resource projections have been improved.
    Senator Murray. I would just ask your personal attention to 
that because we do not want to get back to that point again. So 
I hope that you can focus on that.
    In my last few seconds I am going to ask you a question I 
am positive you do not have the answer to but I hope you can 
get back to me.
    That is because for the past of 5 years I have been working 
to try and ban the production and importation of asbestos in 
this country. We still allow asbestos to be used in many 
products. And we are now looking at billions of dollars in 
Federal liability to bail out that industry.
    OSHA and EPA have been working really hard to implement 
some workplace safety and indoor quality standards to reduce 
the exposure of asbestos and their efforts have been hindered 
so far by OMB. They are trying to deal with this very serious 
public health threat.
    And I would like you to get back to me if you could. If you 
can look into this issue and let me know what is holding up, in 
particular, the publication of the OSHA fact sheet at EPA. I 
understand that that is being held up at OMB. It is a critical 
health issue in this country.
    And I want to find out if you can provide me with 
information on when EPA is going to be sending their brake 
mechanic guidance around for review as a part of that, as well.
    So if you and your staff could get back to us, I Would 
really appreciate it. It is a serious health issue in this 
country.
    Ambassador Portman. Thank you, Senator.
    If confirmed, I look forward to working with you on that, 
too.
    Senator Murray. Thank you very much.
    Chairman Gregg. Thank you, Senator.
    Senator Sessions.
    Senator Sessions. Thank you, Chairman Gregg, for your 
leadership and your effort to make sure that we manage the 
taxpayer moneys wisely.
    Mr. Portman, you are moving into a difficult spot. But I 
think, based on what I hear about your reputation and what your 
colleagues have said about you in the House, how well you 
performed as a Trade Representative, and the bipartisan respect 
that you have engendered, I think you are a good person for the 
job.
    It certainly looks to me that you will not have any serious 
opposition to your confirmation. And we look forward to working 
with you.
    As a matter of perspective, of course OMB prepares the 
budget for the president, and that comes to the Congress. You, 
therefore, coordinate with every Federal agency and department 
to review their budgets. And you do have an opportunity and 
play a key role in containing the growth of spending and 
management. I believe you are committed in that area.
    Let me ask you this: Tell me what were the latest numbers 
that just came out showing an increase in revenue, projected 
revenue, for the U.S. Treasury?
    And then I would like to ask you a followup question about 
that.
    Ambassador Portman. My understanding is Treasury just 
issued a report saying that the first 7 months, through as I 
understand the first week of May, there was an increase in 
Federal revenue over last year of 11.2 percent.
    Last year, as you know, was 14.6 percent increase in 
revenues, which is a substantial jump. In fact, in absolute 
terms, the biggest increase in Federal revenue in 24 years. So 
this is an increase even above last year's relatively high 
increase.
    Senator Sessions. So it would be 11 percent on top of 14 
percent, which will really be more than 25 or 26 percent over 2 
years.
    Ambassador Portman. This is again to caution the Committee, 
this is the first 7 months of the year. So we still have 5 
months left to go.
    Senator Sessions. What I would like to ask you to state for 
us, should we feel great about that? I think we should. Should 
we therefore assume that we can spend more money? Or should 
this not give us encouragement that if we contain spending and 
stay disciplined, we can make more progress on reducing this 
deficit than a lot of people have projected?
    Ambassador Portman. I like the latter option a lot better. 
We should not look at this as an opportunity to spend more. I 
think we have made that mistake. I think we made it when I was 
in the House in the late 1990's and early part of this decade, 
and we cannot afford to do that. The last year of the Clinton 
Administration, we had an increase of 15 percent in our 
domestic discretionary spending.
    That cannot be the reaction of Congress or the 
Administration to this increased revenue. Rather it needs to be 
what many members have talked about here, which is keeping our 
fiscal belt tight and reducing these deficits and eventually 
reducing these debts and then dealing with our long-term issue 
of entitlement.
    Senator Sessions. I could not agree more. To repeat, we are 
in a position where we can make a real dent in this deficit if 
we stay on course and hold our spending down, and we should be 
proud of that.
    I am looking at potential legislation that would authorize 
the president to effect efficiencies in various departments, in 
every department. It may be limiting that number to 2 or 3 or 4 
percent, and requiring or allowing the president who affects 
those efficiencies to pay that down on the national debt.
    Right now some agencies feel like every dollar that is 
authorized and appropriated by Congress they must spend. And if 
they do not spend it, somebody else will.
    Do you think that might encourage the various agencies to 
be more responsible in creating efficiencies?
    Ambassador Portman. Senator, I think it is an interesting 
proposal and I am happy to look at it further. You did share a 
copy of that with me yesterday, which I appreciated. And 
although not confirmed, I took the liberty of sharing it with 
the OMB staff.
    I think you are right, that every agency and department of 
government, and I am coming from one right now at USTR, we have 
our annual budget and go through this process, needs to look at 
ways to save on the administrative side or you say the overhead 
side, but also to have the proper incentive in place so that 
there is an incentive to look at these efficiencies rather than 
an incentive working the other way, which would be to keep the 
funding, to ensure perhaps that you have adequate funding in 
the next fiscal year.
    I like the idea of creating the kinds of incentives to 
encourage that the taxpayer dollars are spent as wisely as 
possible.
    Senator Sessions. And having been in the Congress and now 
assuming this new job, do you feel like your life could be made 
easier, Congress's life could be made easier, and the agencies' 
lives could be made easier if we had a 2-year budget instead of 
a 1-year budget? Have you thought about that and do you have 
any opinions on that?
    Ambassador Portman. Senator, you are trying to get me into 
some hot water here and I will step into it.
    I have supported that in the past. More importantly, the 
President has supported that. My understanding is again this 
year the President has indicated his support for biannual 
budgeting, in part because, as I read the material and I happen 
to agree with this, it encourages more oversight. Some would 
say that maybe that is not something we want to encourage. I 
think it is good to have the opportunity to be focused more on 
oversight here in the Congress and also at the Office of 
Management and Budget.
    Senator Sessions. Thank you, Mr. Chairman.
    Chairman Gregg. Thank you.
    Senator Conrad for the last set of questions.
    Senator Conrad. Let me just say, first of all, on the 
question of biannual budgeting, the most important oversight is 
budgeting. And I think it is a profound--myself, I think it is 
a profound mistake to go to biannual budgeting. I think 
absolutely the most important discipline we exercise is the 
budget process and we need to go through it every year.
    I really suspect you would not get more oversight. I 
suspect you would get less.
    With that said, I want to say, Ambassador Portman, before I 
go to my final questions, I intend to support your 
confirmation. As I told you privately, and as I have said 
publicly, I think you are a high quality person. Although we 
have profound disagreements on fiscal policy, and we do, I 
think you are an outstanding person. And I look forward to 
working with you.
    I want to try to get you to think a little more about the 
question I asked you earlier. Let me first mention this. While 
the deficit is showing some improvement, the difference between 
the deficit and the debt is very dramatic.
    So this year we have just been told by CBO that the deficit 
will be in the $300 billion to $350 billion range. We took the 
midpoint of that range, $325 billion, for this comparison.
    We then looked at how much the debt is going to increase 
this year. And it is not $325 billion. it is over $600 billion.
    And I find in my own constituency people think the deficit 
is the amount by which the debt will increase. But of course, 
you know that it is not. And there are these other factors, the 
biggest one among them Social Security, money that is being 
borrowed that is not counted as part of the deficit but is part 
of the debt and does have to be repaid.
    Let me go to the thing I really wanted to focus on, though, 
Ambassador Portman. I go back to these charts. Looking at the 
typical recoveries since World War II, there have been nine of 
them, nine of them. And your suggestion was the reason we have 
been lagging in all of these measures on this recovery of what 
we have seen in the nine previous recoveries is that we had a 
shallower recession.
    But as I look at it, I do not see that. On job creation, 
the dotted red line is the nine previous recoveries since World 
War II. The black line is this recovery. You can see the job 
loss on the front end was almost identical to previous 
recoveries.
    But look at the gap here between the other recoveries, the 
dotted red line, and this recovery where we are running way 
beyond what we have seen in other recoveries. In fact, we are 
now 6.5 million private sector jobs behind the typical 
recovery.

[GRAPHIC] [TIFF OMITTED] T8459.049


    Let me go to the next one, and then I am going to ask you 
to seriously help me understand what you think is going on. 
Because I find these numbers very troubling, that there is 
something else going on here that perhaps we do not fully 
appreciate.
    This is business investment. Again, the dotted red line is 
the average for nine previous recoveries and the black is this 
recovery. In fact, we saw a steeper falloff in business 
investment in this recovery than the nine previous recoveries. 
And these are in real terms here, so we are comparing apples to 
apples.

[GRAPHIC] [TIFF OMITTED] T8459.048


    Something is wrong here. Something is not going right. And 
what I am trying to understand is why is this recovery lagging 
the previous recoveries? Is it because of international 
competitiveness? Is it because, and I have had people in the 
business sector tell me at this stage of the recovery they 
should be doing much better than they are.
    Let me go to the next one, which is the question of 
revenues. Here is the nine previous recoveries. The dotted red 
line is what happened to revenue. This is this recovery. And 
again, the revenue falloff was far sharper on this downturn, 
and we are still far below where we should have been compared 
to the nine previous recoveries.

[GRAPHIC] [TIFF OMITTED] T8459.046


    So your earlier answer to me is that it is because the 
recession was shallower. I do not see that in the data. Do you 
have any other ideas as to why this recovery seems to be so 
badly lagging the nine previous recoveries since World War II?
    Ambassador Portman. Senator Conrad, I should probably 
restrain myself from answering, since I have not thought about 
it carefully, but let me give you a couple of observations 
anyway.
    One, this is, from my understanding, one of if not the 
shallowest recession we have experienced measured by GDP. In 
other words, when you look at the other recessions, they were 
deeper, the trough was longer in most cases.
    Senator Conrad. In terms of loss of GDP?
    Ambassador Portman. Yes, which is how you measure 
recessions. Is it not two successive quarters of negative GDP? 
So it was a more shallow recession, technically speaking.
    In terms of jobs, when you look at what has happened in 
terms of the unemployment numbers, and we can talk about 
whether unemployment numbers are properly reflected, but it is 
the same standard that was used in previous administrations and 
recessions, this 4.7 percent number someone earlier was talking 
about the significance of that and some would say that is close 
to full employment.
    If you look at the 5 million jobs, 5.3 million jobs that 
have been created since 2003, which was when the tax relief 
took hold and was fully implemented, compare that to other 
recoveries, I do not have the data in front of me but I cannot 
believe that this is not a substantial both increase in jobs 
but also the percentage.
    What does this mean? It probably means, in terms of those 
other recessions, that we had higher unemployment.
    If you look at, even within our adult lifetimes, other 
times when there has been a downturn in the economy, we have 
had unemployment in double digits. We never had that. We never 
experienced it in this one.
    So again, I am jumping in here where I probably should not 
because I do not have all the data that you do. But I would say 
that part of the answer to this is that because we did not have 
as deep a recession, because unemployment numbers never got as 
high as they have in previous downturns, that the upturn in the 
economy may not look as a dramatic.
    But what is important to you and to me, I think, is where 
we are now. And at 4.7 percent unemployment nationally, that is 
relatively low, as I said, both in terms of the average in the 
1970's, 1980's and 1990's, below that of course, but also 
significantly in the time during the 1990's in the Clinton 
Administration when we had substantial economic growth. So 
these are good numbers, strong numbers.
    In terms of revenue, gosh again, looking at these 
projections that were talked about, we will see whether they 
are true or not. But if they are, to have that kind of growth 
last year, the best growth in 24 years in revenues, and then to 
build on it this year with something even approaching 11 
percent would be pretty dramatic and frankly outstrip any of 
our estimates.
    Senator Conrad. Let me just end on this. I am really not 
trying to score political points. I really am struggling to 
understand. I am struggling to understand what is going on.
    Because I suspect there is something going on here that we 
have not correctly analyzed. And I go back to this job 
creation. That red line is the nine previous recoveries.

[GRAPHIC] [TIFF OMITTED] T8459.049


    And you see, this is from business cycle peak. So we tried 
to do this on a fair comparison. The initial job loss tracked 
very closely, the nine previous recessions and this one. Do you 
see what I am saying? Initially it tracked very closely. You 
had about 2.5 percent job loss. This is private sector jobs.
    But then you had, in these nine previous recoveries, much 
faster recovery. In this one, recovery has really been stalled.
    Ambassador Portman. But 2.5 percent from what base, though?
    Senator Conrad. That is from the cycle peak.
    Ambassador Portman. No, but I mean what was the 
unemployment percentage at the bottom of that trough? In other 
words, what was it from?
    Senator Conrad. This is jobs. This is jobs, not 
unemployment. This is job creation.
    So job creation in both of these, in the nine previous 
recoveries job creation was off about 2.5 percent. Job 
creation, not unemployment. And in this recovery, as well. But 
then we saw, in all of the other recoveries, much faster 
recovery on private sector jobs than we are seeing in this one.
    Now remember unemployment, this year we are on a war 
footing. Of course, that affects employment. I think we also 
have a lot of people who just quit looking for jobs so they do 
not get counted, which is what Senator Domenici was talking 
about.
    But I do think we need to seriously analyze this gap and 
try to understand is there something structural going on here? 
I suspect there is. I suspect our dominance in the world 
economy and our vulnerability on energy and on borrowing money 
has something to do with this gap.
    In any event, we look forward to working with you.
    Ambassador Portman. If I could just add one issue here that 
is critical to determining whether we are losing footing, would 
be productivity. Every economist turns that issue to determine 
whether or not we are losing our competitive edge.
    It has been high. A 3.2 percent growth----
    Senator Conrad. That may be part of the reason for the gap.
    Ambassador Portman. It is increased efficiency. We are 
doing more with less. Our industrial output is actually up. Our 
manufacturing output is up. Our manufacturing exports are up. 
But there are fewer jobs.
    Senator Conrad. Well productivity, that may be one of the 
elements here as to why the private sector----
    Ambassador Portman. But that keeps us competitive 
internationally. It enables us to have strong economic growth.
    Chairman Gregg. We have actually had, we are now at a 
historical level, post-World War II period our productivity is 
the highest in history. Last year we had a 3.2 percent growth 
in productivity. We have had 32 months of consecutive expansion 
and growth.
    And so the numbers are very good. You can compare them to 
other recessions, but the fact is there are more people working 
today than ever before, and 4.7 percent is full employment or 
historically is deemed to be full employment. Revenues are up 
to their historic levels. They are closing in on the historic 
levels, as you said in your opening statement.
    So to the extent we continue to have a deficit, I think it 
is really a function of we are spending too much money. That is 
a function of entitlement spending and the fact that we are at 
war and the Katrina event.
    In two of those areas on the discretionary side I think we 
are going to start to see a lessening of the pressure on the 
budget. But on the entitlement side we really need is still 
address that, something which Senator Conrad and I totally 
agree on.
    In any event, just for the record, this record will stay 
open until 6 p.m. tonight for other questions or comments. I 
have talked with Senator Conrad. I intend to support your 
nomination, also. So that is two of us and so you are doing 
pretty well. You are on a roll.
    Senator Conrad. The rest of the votes look a little shaky.
    Ambassador Portman. They were fine until today.
    Chairman Gregg. Senator Conrad has been generous enough to 
say that we can move on your nomination probably. So I would 
hope that we will probably do it next Tuesday after a vote off 
the floor. Staff may advise their staffs of that.
    And ironically you are, I think, the only member of the 
administration who is subjected to two committees for your 
nomination. You have to be approved by two different 
committees. So I know you still have the Government oversight 
committee to go before. But we do intend to expeditiously move 
your nomination and appreciate the fact you are willing to 
continue to participate in public service.
    Thank you very much.
    Ambassador Portman. Thanks for expediting this hearing and 
thanks for the input today. I appreciate it.
    [The prepared statement of Ambassador Portman follows:]

    [GRAPHIC] [TIFF OMITTED] T8459.001
    

    [GRAPHIC] [TIFF OMITTED] T8459.002
    

    Chairman Gregg. Thank you.
    We are adjourned.
    [Whereupon, at 12:16 p.m., the committee was adjourned.]

          United States Senate Committee on the Budget

                          Room SD-624

                         (202) 224-0642

                   Washington, DC 20510-6250

   STATEMENT OF BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF 
                         PRESIDENTIAL NOMINEES

                      A. BIOGRAPHICAL INFORMATION

1. Name: Robert Jones Portman

2. Position to which nominated: Director, Office of Management 
and Budget

3. Date of nomination: April 27, 2006

4. Address: Office: Office of the United States Trade 
Representative, 600 17th Street, NW, Washington, DC 20508

5. Date and place of birth: December 19, 1955; Cincinnati, Ohio

6. Martial status: Married to Jane Dudley Portman (maiden name 
Dudley)

7. Names and ages of children:

8. Education: University of Michigan Law School, 9/81-6/84, 
J.D. 5/84; Dartmouth College 9/74-5/79, B.A., 5/79

9. Employment Record: 

    
      5/81 Select Commission on Immigration; Research 
Assistant; Washington, DC
    
      6/82-8/82 Taft, Stettinus & Hollister; Summer Law 
Clerk, Cincinnati, OH
    
      6/83-9/83 Surrey & Morse; Summer Law Clerk; 
Washington, DC
    
      9/83-12/83 US Department of State; Legal Extern; 
Washington, DC
    
      10/84-10/86 Patton, Boggs & Blow; Associate 
(Attorney); Washington, DC
    
      11/86-3/89 Graydon, Head & Ritchey; Associate 
(Attorney); Washington, DC
    
      3/89-9/89 White House, Executive Office of the 
President; Associate Counsel; Washington, DC
    
      3/89-5/91 Executive Office of the President, 
Deputy Assistant to the President and Director, White House 
Office of Legislative Affairs
    
      9/91-4/93 Graydon, Head & Ritchey; Partner 
(Attorney); Cincinnati, Ohio
    
      5/93-4/29/05 US House of Representatives; US 
Representative; Washington, DC
    
      4/29/05-present Office of the United States Trade 
Representative, Executive Office of the President, United 
States Trade Representative.

10. Government Experience:

    
      Co-Chairman, National Commission on Restructuring 
the Internal Revenue Service (1996-97)

11. Business relationships:

    
      Board of Trustees 1991-2000, The Springer School 
(Elementary School for learning disabled)
    
      Government Relations Committee, 1999-2002, United 
Way of America
    
      State and Federal Relations Committee, 1996-2002, 
Greater Cincinnati Chamber of Commerce
    
      Board of Directors, 1996-2000, Community Anti-
Drug Coalition of America (CADCA)
    
      Member, Congressional Advisory Committee 2003-
2005
    
      Founder and President, 1996-2001, Coalition for a 
Drug-free Cincinnati
    
      Chairman, 2001-2003
    
      Founding Chairman, 2003-4/2005
    
      Board of Directors, 2002-4/2005, The Clement and 
Ann Buenger Foundation, Cincinnati, Ohio
    (Section 501(c)(3) private charitable foundation)
    
      CincyTech USA Leadership Council, Cincinnati, 
Ohio (non-profit regional technology initiative) 2002-4/2005
    
      Board of Directors, 2002-4/2005, Jobs for 
America's Graduates, Inc.
    
      Advisory Board Member, 2003-4/2005, The Nelson A. 
Rockefeller Center for Public Policy at Dartmouth College
    
      Member-Board, 2003-4/2005 Coalition to save 
Hillcrest Cemetery, Cincinnati, Ohio
    
      Co-Chair, Fundraising Committee, 2002-4/2005, ACT 
(Accountability & Credibility Together), Cincinnati, OH
    
      Honorary co-chairperson, 2002-4/2005, Promount 
House Museum Campaign, Milford, OH
    
      Government relations Committee, 1991-2004, 
Greater Cincinnati United Way & Community Chest
    
      Reginal Public Policy Council, 2004/2005, Greater 
Cincinnati United Way & Community Chest
    
      Honoray Member, (non-voting), 2003-4/2005, 
Clermont County Convention & Visitors Bureau Board of Trustees
    
      Board of Selectors, 2001-4/2005, Jefferson Awards 
for Public Service
    
      Honorary Chairman, 2002-March 25, 2005, America's 
Majority Trust
    
      Limited and General Partner, Portman Investors 
Limited Partnership, 2003-3/31/2005
    
      LLC Member, Peavler Partnership, General Partner, 
1988-4/2005
    
      Limited Partners Interest, Village Properties, 
1992-2004
    
      LLC Member, Shaker Properties, Managing Member, 
1996-4/2005
    
      LLC Member, Graustark, Managing Member, 1997-4/
2005
    
      Shareholder, Portman Equipment Company, (1960-
2004)
    
      Board of Directors, Portman Equipment Company, 
(1991-5/1993)


12. Memberships:

    Member, The Explorers Club, NYC

13. Political affiliations and activities

    (a) List all offices with a political party which you have 
held or any public office for which you have been a candidate.

    US Representative-Ohio-2002

    (b) List all memberships and offices held in and services 
rendered to all political parties or election committees during 
the last 10 years.

    Vice Chairman, Hamilton County Republican Party (4/11/2000 
until 2/13/2001)

    (c) Itemize all political contributions to any individual, 
campaign organization, political party, political action 
committee, or similar entity of $50 or more for the past 5 
years.

    
      07/06/2005, $1,000 Schmidt, Jeannette
    
      07/25/2005, $1,000, Schmidt, Jeannette
    
      11/7/2000, $1,000, Shaw, E. Clay Jr.
    
      6/30/1999, $500, Baker, Richard
    
      8/9/2000, $1,000, Lazio, Rick A.
    
      9/30/2003, $2,000, Bush, George W.
    
      7/30/1999, $500, Bush, George W.
    
      10/11/1994, $500, Ney, Bob
    
      4/11/1994, $500, DeWine, Mike

14. Honors and awards:

    
      Emergency Committee for American Trade 2006 Trade 
and Investment Leadership Award
    
      Clermont County Leadership Award 2005
    
      Honorary Degree Chatfield College 2005
    
      Ohio Parents for Drug-Free Youth, Annual Hope 
Taft Substance Abuse Prevention Advocacy Award, 2005
    
      Securities Industry Association, Foundation for 
Investor Education, for support of the Stock Market Game 
program at Ripley-Union-Lewis-Huntington High School, Spring 
2004
    
      Coalition for a DrugFree Greater Cincinnati, 
Portman Award, May 5, 2003
    
      American for Tax Reform, Hero of the American 
Taxpayer Award 2004, 2000
    
      Southern Ohio Health Services Network, 2003 
Community Health Award
    
      Honorary Degree Urbana University 2002
    
      American Bar Association, for commitment to 
simplification of tax and pension laws, May 7, 2002
    
      National Conference of State Legislatures, 
Restoring the Balance Award, for leadership on pension 
portability and simplification and service to our federal 
system of government, February 2002
    
      National Defined Contribution Council, Public 
Sector Leadership Award, 2002
    
      The Small Business Council of America Special 
Congressional Appreciation Award, 2002
    
      Friend of the Farm Bureau
    
      FMI/FDI Thomas Jefferson Award, 1994-2004
    
      National Federation of Independent Business, 
Guardian of Small Business Award, 103rd-108th Congresses
    
      National Association of Manufacturers, Award for 
Manufacturing Legislative Excellence, 105th and 107th 
Congresses
    
      Coalition to Preserve Retirement Security, for 
Outstanding Leadership, January 30, 2001
    
      Institute for Electrical and Electronics 
Engineers Distinguished Public Service Award, 2001
    
      National Defined Contribution Council, in 
recognition of bipartisan leadership on pension reform and 
simplification in the US, September 2000
    
      American Shareholder Association, 2000 Friend of 
the Shareholder Award
    
      Cincinnati Health Network and Affiliated 
Organizations, in appreciation, 2000
    
      Savings Coalition of America, Philadelphia 
Financial Freedom Award, 2000
    
      Citizens Against Government Waste, 1999 Taxpayer 
Hero Award
    
      National Association of Professional Employees, 
1999 Millennium Award
    
      Association of Ohio Philanthropic Homes and 
Housing for the Aging Board of Trustees, Citation Award, 1998
    
      Christian Coalition, Friend of the Family Award, 
1998
    
      National Family Partnership, 1998 Kiki Camarena 
Award
    
      Mid-American Multicultural Travel and Tourism 
Network, Beacon of Freedom Special Legislator of the Year, 
September 17, 1998
    
      Boston University School of Public Health Join 
Together Certificate of Appreciation for leadership in 
promoting interdisciplinary collaborations to create safe and 
health communities, 1997
    
      Community Anti-Drug Coalitions of America, 
Congressional Leadership Award, 1997
    
      National Association of Enrolled Agents, Tax 
Legislator of the Year, 1997
    
      Community Anti-Drug Coalition of America, 
Congressional Leadership Award, 1996
    
      Pride, Special Achievement Award, 1996
    
      S Corporation Association Crusader of the Year 
Award, 1996
    
      Young Republicans, Award of Special Recognition, 
March 31, 1995
    
      National Association of Counties, Legislator of 
the Year Award, March 5, 1995
    
      U.S. Chamber of Commerce, Spirit of Enterprise 
Award, 1993-2002
    
      Citizens Against Government Waste, in 
appreciation of dedication to taxpayers of America, March 15, 
1994
    
      Free Congress Foundation, Sound Dollar Award, 
1994
    
      SBSC Small Business Advocate, 1994-2004
    
      Associated Builders and Contractors, Award, 
103rd-106th Congresses
    
      Citizens for a Sound Economy, Jefferson Award, 
103rd Congress
    
      Watchdogs of the Treasury, Inc., 103rd-106th 
Congresses
    
      National Association of Government Defined 
Contribution Administrators, Award of Appreciation
    
      National League of Cities Award
    
      National Society of Accountants, Champion of 
Small Business
    
      Young President's Organization, Sharing of 
Knowledge Award


15. Published writings:

Wisdom's Paradise: The Forgotten Shakers of Union Village (with 
Cheryl Bauer) Orange Frazer Press, December 31, 2004, 296 
pages, ISBN 1882203402

16. Speeches:

17. Selection:

    (a) What do you believe in your background or employment 
experience affirmatively qualifies you for this particular 
appointment?

    House Member, 1994-2005
    Member, Ways & Means Committee
    Member, then Vice-Chairman, House Budget Committee
    Previous White House experience as Associate Counsel to the 
President 1998 and Director, White House Office of Legislative 
Affairs 1989-1991

    (b) Were there any conditions, expressed or implied, 
attached to your nomination? If so, please explain.

    No.

    (c) Have you made any commitment(s) with respect to the 
policies and principles you will attempt to implement in the 
position for which you have been nominated? If so please 
identify such commitments and all persons to whom such 
commitments have been made.

    No.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations 
if you are confirmed by the Senate?

    Yes, other than the limited partnerships and LLC interests 
I have listed in question 11 of this Questionnaire and in my 
SF-278 report.

2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your 
service with the government? If so, please explain.

    No.

3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation 
or practice with your previous employer, business firm, 
association or organization?

    No.

4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? If so, please 
identify such person(s) and commitment(s) and explain.

    No.

5. If confirmed, do you expect to serve out your full term or 
until the next Presidential election, whichever is applicable? 
If not, please explain.

    Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

1. If confirmed, are there any issues from which you may have 
to recuse or disqualify yourself because of a conflict of 
interest or the appearance of a conflict of interest? If so, 
please explain.

    None to my knowledge.

2. Identify and describe all investments, obligations, 
liabilities, business relationships, dealings, financial 
transactions, and other financial relationships which you 
currently have or have had during the last 10 years, whether 
for yourself, on behalf of a client, or acting as an agent, 
that could in any way constitute or result in a possible 
conflict of interest in the position to which you have been 
nominated.

    None to my knowledge.

3. Describe any activity during the past 10 years in which you 
have engaged for the purpose of directly or indirectly 
influencing the passage, defeat or modification of any 
legislation or affecting the administration and execution of 
law or public policy other than while in a federal government 
capacity.

    None to my knowledge.

4. Do you agree to have written opinions provided to the 
Committee by the designated agency ethics officer of the Office 
of Management and Budget and by the Office of Government Ethics 
concerning potential conflicts of interest or any legal 
impediments to your serving in this position?

    Yes.

5. Explain how you will resolve potential conflicts of 
interest, including any disclosed by your response to the above 
questions.

    I am not aware of any financial holdings or personal 
relationships that would create a conflict of interest. Should 
I ever become aware of any potential conflict of interest, I 
will notify the Designated Agency Ethics Official to seek 
appropriate advice.

                            D. LEGAL MATTERS

1. Have you ever been disciplined or cited for a breach of 
ethics for unprofessional conduct by, or been the subject of a 
complaint to any court, administrative agency, professional 
association, disciplinary committee, or other professional 
group? If so, provide details.

    None to my knowledge.

2. To your knowledge, have you ever been investigated, 
arrested, charged or convicted (including pleas of guilty or 
nolo contendre) by any Federal, State, or other law enforcement 
authority for violation of any Federal, State, county or 
municipal law, regulation, or ordinance, other than a minor 
traffic offense? If so, provide details.

    None to my knowledge.

3. Have you or any business of which you are or were an 
officer, director or owner ever been involved as a party of 
interest in any administrative agency proceeding or civil 
litigation? If so, provide details.

    None to my knowledge.

4. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered 
in connection with our nomination.

    None to my knowledge.

                     E. TESTIFYING BEFORE CONGRESS

1. If confirmed, are you willing to appear and testify before 
any duly constituted committee of the Congress on such 
occasions as you may be reasonably requested to do so?

    Yes.

2. If confirmed, are you willing to provide such information as 
may be requested by any committee of the Congress?

    Yes, all appropriate information.

                           F. FINANCIAL DATA

    All information requested under this heading must be 
provided for yourself, your spouse, and your dependents. (This 
information will not be published in the record of the hearing 
on your nomination, but it will be retained in the Committee's 
files and will be available for public inspection.)


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    2. Ambassador Portman, when we met previously, I spoke to 
you about the importance of the Vit Plant out at the Hanford 
Site in my home State.
    I've been working on Hanford for 13 years, and I've worked 
with many different OMB directors and Energy secretaries. At 
times, I've had to explain to them the history of this project 
and the legal obligations that the Federal Government has under 
the Tri-Party agreement.
    As you know, this is the Department of Energy's largest 
construction project, and it's a priority for me.
    Last year, under the previous director, OMB offered the Vit 
Plant as an offset to fund a supplemental package. That 
proposal ignored the spending plan for Hanford and complicated 
my efforts to fund the clean up.
    If enacted, it would have delayed the cleanup and 
threatened families in the Tri-Cities as that radioactive plume 
moves toward the Columbia River.
    Fortunately, in the end, I was able to intervene and 
prevent that outcome.
    This is a complex project, and the funding schedule called 
for a build-up of fund for anticipated peak years of 
construction. That money wasn't really available, but someone 
at OMB either didn't know that or didn't care to ask.
    To prevent a repeat of last year's mistake, I'd like to 
make a personal request of you.
    If you see--somewhere in your agency--a proposal to rescind 
funding for Hanford, will you reach out to me so that I can 
make sure you understand the implications of any proposed 
recession?

      Will you offer me that courtesy?

    I have dedicated myself to the clean up of Hanford, and I 
hope that OMB will work with me in that effort.

    Answer
    I enjoyed the chance to talk to you about the issues at the 
Hanford site, and appreciate your dedication to the clean up. I 
will work with you to ensure that the Hanford site is cleaned 
up in a cost-effective manner that protects the public and the 
environment. As I hear of the Hanford site issues, I will 
certainly have in mind you and your special interest in the 
site.
    3. Ambassador Portman, as you know, last year it was 
announced that the VA faced a nearly $3 billion shortfall.

    I worked with my colleagues to provide emergency funding to 
cover this shortfall, but it has been made clear by the VA, GAO 
and others that much of this shortfall was due to the fact that 
the VA did not base its budget on the real demands it faces, 
and did not adequately take into account programmatic efforts 
within the VA.
    I believe much of that was due--in part--to pressure from 
OMB for the VA to do ``more and more'' with ``less and less'' 
funding.
    In the end, our veterans are the victims. As you know for 
every service member killed in Iraq, we have 1,000 returning 
home wounded.
     Recent reports indicate that over one-third of all those 
who return are in need of mental health services. I am very 
worried that when these veterans turn to the VA in need, the VA 
won't be able to help them.

      What can we expect from you when it comes to making the 
VA budget based on real numbers and real expectations?

    Answer:
      I understand that VA and OMB jointly developed the FY 
2007 budget and worked to improve projection models. Together, 
both organizations are also closely monitoring performance and 
workload to ensure that veterans' needs are covered.
      The 2007 Budget proposed $34.3 billion for medical care--
an 11.3 percent increase over the 2006 enacted level and over 
69 percent more than the budget in effect when President Bush 
took office.
      If confirmed, I will work to ensure that these efforts 
continue and that the appropriate resources are requested to 
meet our veterans' physical and mental health care needs.

    4. As you may know, I've been working for the past 5 years 
to ban the production and importation of asbestos into the US. 
It has been a frustrating and difficult challenge.
    As we are looking at billions of dollars in Federal 
liability to bail out the asbestos industry, we have done 
little to actually ban the use of asbestos.
    It is my understanding that OSHA and EPA have been working 
to implement workplace safety and indoor air quality standards 
to reduce the expousre to asbestos, but these efforts have been 
hindered by OMB.
    OSHA and EPA are trying to address the serious public 
health threat, and OMB is killing these efforts.

      Will you look into this issue and let me know what is 
holding up the publication of the OSHA fact sheet at EPA?
      Will you also provide me with information on when EPA 
will be sending their brake mechanic guidance around for review 
by OSHA, NIOSH and other government agencies?
      And, finally when will EPA's new version of their brake 
mechanic guidance be released for public comment?

    I urge you to do whatever you can to move OMB on these 
efforts. Every day that OMB delays progress is another day that 
workers are exposed to deadly asbestos.

    Answer:
      It is my understanding that, in 2003, in response to an 
Information Quality Act correction request, the Environmental 
Protection Agency (EPA) committed to updating its ``Guidance 
for Preventing Asbestos Disease Among Auto Mechanics,'' which 
is also known as the ``Gold Book.'' EPA also committed to 
engaging the public in the process.
      If confirmed, I will look into this matter and will work 
with EPA, and OSHA, to find out when they plan to release their 
respective drafts for review.

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