[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE ADMINISTRATION'S EXPEDITED RESCISSION PROPOSAL
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
HEARING HELD IN WASHINGTON, DC, JUNE 17, 2010
Serial No. 111-27
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COMMITTEE ON THE BUDGET
JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio Ranking Minority Member
XAVIER BECERRA, California JEB HENSARLING, Texas
LLOYD DOGGETT, Texas SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota DEVIN NUNES, California
JOHN A. YARMUTH, Kentucky ROBERT B. ADERHOLT, Alabama
ROBERT E. ANDREWS, New Jersey CYNTHIA M. LUMMIS, Wyoming
ROSA L. DeLAURO, Connecticut, STEVE AUSTRIA, Ohio
CHET EDWARDS, Texas GREGG HARPER, Mississippi
ROBERT C. ``BOBBY'' SCOTT, Virginia CHARLES K. DJOU, Hawaii
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon
DENNIS MOORE, Kansas
Thomas S. Kahn, Staff Director and Chief Counsel
Austin Smythe, Minority Staff Director
C O N T E N T S
Hearing held in Washington, DC, June 17, 2010.................... 1
Hon. John M. Spratt, Jr., Chairman, Committee on the Budget.. 1
Hon. Paul Ryan, Ranking Minority Member, Committee on the
Letters from Messrs. Boehner and Cantor submitted for the
Hon. Walt Minnick, a Representative in Congress from the
State of Idaho, prepared statement of...................... 4
Jeffrey B. Liebman, Acting Deputy Director, Office of
Management and Budget...................................... 4
Prepared statement of.................................... 6
Responses to questions submitted for the record.......... 39
Hon. Russell D. Feingold, a U.S. Senator from the State of
Wisconsin, prepared statement of........................... 17
Hon. Robert B. Aderholt, a Representative in Congress from
the State of Alabama, questions for the record............. 39
Hon. James R. Langevin, a Representative in Congress from the
State of Rhode Island, prepared statement and questions for
the record................................................. 40
THE ADMINISTRATION'S EXPEDITED RESCISSION PROPOSAL
THURSDAY, JUNE 17, 2010
House of Representatives,
Committee on the Budget,
The Committee met, pursuant to call, at 10:04 a.m., in room
210, Cannon House Office Building, Hon. John M. Spratt, Jr.
[Chairman of the Committee] presiding.
Present: Representatives Spratt, Becerra, Doggett, Berry,
Etheridge, McCollum, Scott, Connolly, Schrader, Ryan, Austria,
Also Present: Representative Minnick.
Chairman Spratt. I call the Committee to order. The
Committee meets today to examine the Administration's proposal
for expedited rescission authority.
Expedited rescission is not a new idea. I introduced a bill
myself on the subject it seems like 20 years ago, it was at
least the early 1990s, as did others like Charlie Stenholm. But
it may just be that it is an idea whose time has finally come.
Expedited rescission enhances fiscal discipline by allowing
the President to sign spending bills into law or culling out
unneeded, unjustified, or wasteful items and sending these back
to Congress with a request that they be rescinded.
Congress is required to consider these recommendations as
one package without amendment and on a fast-track basis
guarantee an up or down vote within an expedited time frame.
The Administration and Congress inherited a $1.3 trillion
deficit and an economy reeling from the worst recession since
the Great Depression. As the economy recovers, we need to see
that the budget recovers along with it.
The statutory PAYGO rules that we enacted earlier this year
are part of that purpose and discipline and so is the
President's bipartisan fiscal commission.
Expedited rescission is also an addition to that effort. It
will not wipe out our deficit, that is for sure, but it will be
one more tool in our kit for disciplined spending.
We are bound to be good stewards of the taxpayers' money.
It must be made clear to the taxpayers that we are spending
their money wisely and well.
So the Administration's expedited rescission proposal is a
welcome step forward. I introduced the Administration's bill by
request with the caveat that we want to look at it very closely
and probably we will want to make some improvements. Today's
hearing is the beginning of that process.
I was joined by 20 Democratic members as original co-
sponsors of the bill and we have added at least a dozen or so
more since then. I am pleased that there is such interest in
expedited rescission on both sides of the aisle.
The Ranking Member, Mr. Ryan, has a long-standing interest
in the subject and he has, I believe, filed his own proposal on
expedited rescission. Other members have introduced expedited
rescission proposals over the years and in this Congress as
Today we focus on the Administration's proposal for
expedited rescission. Our witness is the Acting Deputy Director
of the Office of Management and Budget, Jeff Liebman. This is
his first testimony before the Committee, so we welcome him all
the more heartily for that reason.
We are glad to have you and we appreciate your coming.
Before we turn to you for your testimony, let me recognize
the Ranking Member, Mr. Ryan, for his statement.
Mr. Ryan. Thank you, Mr. Chairman. And thank you for
scheduling this hearing.
Mr. Liebman, welcome to the Committee. Good to have you.
Look forward to your testimony.
Four years ago, I introduced a Constitutional version of
the line item veto. It is a bill that we passed in the House
with bipartisan support and we marked it up right here in this
At the beginning of the year when the President visited us,
the House Republicans, at the Baltimore retreat that we had, I
asked him for support of the line item veto. And I am very
excited and pleased that four months later, he has taken us up
on the idea. That is a step in the right direction from my
If we actually enacted a line item veto, it could be used
as an effective tool to eliminate some wasteful spending and
devote the savings to deficit reduction. In that spirit, I have
two specific concerns with the Administration's proposals.
Constructive criticism is my goal here.
First, savings from the line item veto should be directed
solely toward deficit reduction. As it stands, the measure
would simply result in the Administration using this tool to
fund other priorities and it would not save taxpayers a dime.
A second problem with this proposal, it does nothing to
address new entitlement spending or special interest tax
breaks. Believe me, I serve on the Ways and Means Committee, I
have seen that stuff come around. Both parties do it.
Both were subject to the legislative line item veto that
passed the House four years ago and both would make this a
Now, the bill I have with Senator Feingold does not do
this, so I understand, you know, in the interest of compromise,
that is not necessarily possible sometimes. But I think it is a
better idea to add special interest tax breaks and direct
spending as well.
But I have a much deeper concern within the context of this
recommendation. The President and this Congress has increased
spending by $1.8 trillion. It passed the so-called Stimulus
Bill with a price tag that has grown to $862 billion and it has
failed to hold down unemployment as promised.
And they twisted the budget reconciliation process to force
through a government takeover in the U.S. healthcare sector.
Now, the Majority likes to tout the PAYGO rule in practice.
With all due respect, it is a sham.
Take the recent so-called Extenders Bill. According to the
CBO, this bill would increase the deficit by $54 billion. But
through the magic of the Majority's PAYGO counting, it is
recorded as reducing the deficit by $887 million.
The President's budget we are operating on drives the debt
held by the public to an alarming 90 percent of GDP in ten
years, but neither he nor the Democratic Majority have offered
any specific proposals to tackle the problem. And it appears
increasing likely that for the first time since the adoption of
the Modern Budget Act that we operate under, the House will
fail to even bring a Budget Resolution to the floor.
What kind of message is this sending to American taxpayers
and to financial markets around the world? Rather than bringing
some real discipline to spending, I believe this Administration
and Congress has opted to budget by press release.
The Administration recently asked Agency heads to submit
proposals for a possible five percent reduction in spending
next year. I just remind people that comes after these agencies
have received an 84 percent increase in spending. This makes me
a little more skeptical about getting spending under control in
this current Congress with this Administration.
The President could right now send us a proposal cutting
spending under their existing rescission authority. In fact,
our leaders, Representative Boehner, Representative Cantor
promised the President's support for bringing these cuts to the
floor. Even if the President were serious about reducing
spending, he faces a Democratic Congress that has zero interest
in reducing spending or acting on these rescissions.
Despite my support for a strong Constitutional line item
veto, much needed process reform is no substitute for actual
spending restraint. And all the press releases, hearings, and
Washington talk will not mean a thing if Congress and the
President do not have the will to actually reduce spending.
This is an effective tool. It is a good tool if it is used
correctly. The proceeds ought to go to deficit reduction, but
let us not kid ourselves that it is some panacea that will get
our fiscal house where it needs to be. We actually need real
discipline and reform here.
But with that, I look forward to your testimony.
Chairman Spratt. Before proceeding with Dr. Liebman, we
have a member who has taken a signal interest in this, Walt
Minnick, who would like to participate in the hearing this
morning. I would like to ask unanimous consent that he be
allowed to take one of the empty seats here and when his time
comes at the end of the process ask questions. If there is no
objection, so ordered.
Walt, come up and take a chair. But if somebody arrives to
claim that chair, you will have to yield to them.
Walt will have the authority as all members if unanimous
consent is granted as usual to submit an opening statement for
the record at this point. Without objection, so ordered.
[The prepared statement of Walt Minnick follows:]
Prepared Statement of Hon. Walt Minnick, a Representative in Congress
From the State of Idaho
Chairman Spratt and Ranking Member Ryan, I come before the
Committee today to speak on behalf of HR 5454, the ``Reduce Unnecessary
Spending Act of 2010.''
Mr. Chairman, as a dedicated fiscal hawk and an original co-
sponsor, this proposal creates a potent and critically important
deficit reduction tool that will help us to restore fiscal discipline
to federal spending.
The exploding trillion dollar plus budget deficit is the most
serious single problem facing our country. It is the gravest threat to
our future strength as a nation and to our children's standard of
living. To solve this problem, Congress must change the way it does
business, which is why I am pleased to offer this important bill along
with the distinguished chairman and other of my colleagues, both
liberal and conservative.
HR 5454 allows the President to propose elimination of wasteful or
special interest spending within large appropriations bills. And, once
identified, the bill requires those items be presented to Congress for
a simple up-or-down vote. Because Congress retains the final say on
whether these proposed cuts are approved, this process passes
Like the line item veto authority possessed by the President for 6
years in the 1990's, Expedited Rescission, as this process is called,
should save the taxpayers many billions of dollars and help us to
reduce the currently out of control federal budget deficit.
Historically, this process has had bi-partisan support. It is endorsed
by the Administration and incorporated into a companion bill introduced
by our colleagues from both parties in the Senate.
As a longtime Idaho businessman and the primary author of this
proposal within the 53 member Blue Dog Caucus, I look forward to
working with the Committee as we move this critically important measure
through Congress as rapidly as possible. Our children and grandchildren
deserve no less.
I urge your support and yield back.
Chairman Spratt. Let us proceed now with the hearing. Dr.
Liebman, the floor is yours. We welcome you here and we look
forward to your testimony and the questions we can put to you
later. Thank you for coming and thank you for taking this
STATEMENT OF JEFFREY LIEBMAN, ACTING DEPUTY DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Liebman. Thank you.
Chairman Spratt, Ranking Member Ryan, and members of this
Committee, thank you for inviting me here this morning to talk
about the President's new proposal, the Reduce Unnecessary
Spending Act of 2010.
This legislation would create an expedited procedure that
guarantees an up or down vote on certain rescissions proposed
by the President, helping to eliminate unnecessary spending and
discouraging waste in the first place.
Since taking office, the Administration has made a priority
of identifying and cutting wasteful spending, proposing
approximately $20 billion of terminations, reductions, and
savings in each of the 2010 and 2011 budgets.
While recent Administrations have seen between 15 and 20
percent of their proposed discretionary cuts approved by
Congress, we worked with Congress last year to enact 60 percent
of the proposed discretionary cuts in the fiscal year 2010
President's budget. And for that, I thank you and your
Further, the Administration has worked with Congress to
curb earmarks and the fiscal year 2010 appropriation bills
enacted a significant decline in earmarks, a drop of 17 percent
in volume and of 27 percent in dollar value.
These reductions build on the progress that Congress has
made on earmarks since 2006, reductions prompted by a series of
reforms that then Senator Obama helped to write with a
bipartisan coalition which helped to bring more transparency
and disclosure to the process.
In this year's budget, the Administration also committed to
restraining spending more broadly and has proposed a three-year
freeze on nonsecurity discretionary spending. This freeze will
save $250 billion over the next ten years relative to
continuing the 2010 appropriation levels for these programs
adjusted for inflation.
This spending restraint complements other measures in the
budget that together produce more deficit reduction over the
next ten years than any budget that has been introduced by any
President in the last decade.
Furthermore, the Administration proposed and Congress
enacted statutory Pay As You Go legislation. PAYGO forces us to
live by a simple but important rule. The federal government can
only spend a dollar on entitlement increases or tax cuts if it
saves a dollar elsewhere which encourages the types of tough
choices necessary to sustain fiscal discipline.
Significant progress has been made in cutting unnecessary
spending including earmarks, but more can be done. The
President's proposal for expedited rescission authority would
create an important tool for reducing unnecessary spending. In
short, the bill would provide the President with additional
authority to propose a package of rescissions that would then
receive expedited consideration in Congress and a guaranteed up
or down vote.
Here is how it works. Under this new authority, the
President can propose fast-track consideration of rescissions
of discretionary and nonentitlement mandatory spending. The
President is limited to proposing changes that reduce funding
levels and cannot use this authority to produce any other
changes in law. The fast-track process is thus limited only to
simple funding reductions for which a straight up or down vote
After enactment of funding, the President has 45 days
during which Congress is in session to decide whether to submit
a rescission package using this expedited procedure. A
rescission package submitted under this authority receives
fast-track consideration in Congress. Debate is limited in both
Houses and the package is guaranteed an up or down vote without
amendment. From the package's introduction to its final vote in
the Senate, the process can take no more than 25 days.
Following submission of a rescission request using this
expedited procedure, the President may withhold funding for up
to 25 days, after which funding must be released. This ensures
the agencies do not obligate funds before Congress has had an
opportunity to consider the rescission package.
The proposal has been crafted to preserve the
Constitutional balance of power between the President and
Congress. Under our proposal, Congress, which is empowered to
set its own rules, changes those rules under which it considers
rescission packages proposed by the President using well-
established fast-track procedures. Rescissions only occur if
Congress affirmatively enacts them into law. In other words,
our proposal does not expand the Presidential veto authority in
A number of members have co-sponsored the Chairman's
legislative version of the President's proposal and other
members including the Ranking Member have sponsored similar
proposals that would, like our proposal, target unnecessary
spending by fast tracking consideration of rescissions.
Thank you, Chairman Spratt, and the members of your
Committee who have sponsored the Reduce Unnecessary Spending
Act. I also want to thank Representative Minnick for his
leadership on this issue. We applaud these efforts and look
forward to working with Congress to resolve any differences in
the details of these various legislative proposals and to enact
this authority into law.
[The prepared statement of Jeffrey Liebman follows:]
Prepared Statement of Jeffrey B. Liebman, Acting Deputy Director,
Office of Management and Budget
Chairman Spratt, Ranking Member Ryan, and Members of the Committee,
thank you for inviting me to testify this morning about the President's
new proposal, the Reduce Unnecessary Spending Act of 2010. This
legislation would create an expedited procedure that guarantees an up
or down vote on certain rescissions proposed by the President, helping
to eliminate unnecessary spending and discouraging waste in the first
Since taking office, the Administration has made a priority of
identifying and cutting unnecessary spending, proposing approximately
$20 billion of terminations, reductions, and savings for fiscal year
2010 and 2011. While recent administrations have seen between 15 and 20
percent of their proposed discretionary cuts approved by Congress, we
worked with Congress to enact 60 percent of proposed discretionary cuts
in FY 2010. For that, I thank you and your colleagues.
Further, the Administration has worked with Congress to curb
earmarks, and the FY 2010 appropriations bills enacted a significant
decline in earmarks--a drop of 17 percent in volume and 27 percent in
dollar value. These reductions build on the progress that Congress has
made on earmarks since 2006, reductions prompted by a series of reforms
that then-Senator Obama helped to write with a bipartisan coalition,
which helped to bring more transparency and disclosure to the process.
In this year's Budget, the Administration also committed to
restraining spending more broadly and has proposed a three-year freeze
on non-security discretionary funding, saving $250 billion over the
next ten years relative to continuing the 2010 funding levels for these
programs adjusted for inflation. This spending restraint complements
other measures in the Budget that, together, produce more deficit
reduction over the next ten years than any Budget has proposed in over
a decade. Furthermore, the Administration proposed, and Congress
enacted, statutory pay-as-you-go (PAYGO) legislation. PAYGO forces us
to live by a simple but important principle--the Federal Government can
only spend a dollar on an entitlement increase or tax cut if it saves a
dollar elsewhere, which encourages the types of tough choices necessary
to restore fiscal sustainability.
Significant progress has been made on cutting unnecessary spending,
including earmarks, but more can be done. That is why, in recent weeks,
the Administration has put forward additional measures to discipline
the budget process. This includes tasking agencies with identifying
their lowest-impact programs, providing agencies with incentives to cut
administrative expenses, and establishing a process to better use our
federal property and sell off the property we do not need. And, it
includes the proposal about which I am here to testify today.
The President's proposal for expedited rescission authority would
create an important tool for reducing unnecessary spending. In short,
the bill would provide the President with additional authority to
propose a package of rescissions that would then receive expedited
consideration in Congress and a guaranteed up-or-down vote.
In more detail, here's how it works:
Scope. Under this new authority, the President can propose
fast-track consideration of rescissions of discretionary and non-
entitlement mandatory spending. The President is limited to proposing
changes that reduce funding levels and cannot use this authority to
propose other changes in law, including new transfer authority,
supplemental funding, or changes in authorizing legislation. The fast-
track process is thus limited only to simple funding reductions, for
which a straight up-or-down vote is desirable.
Proposing a rescission package. After enactment of
funding, the President has 45 days during which Congress is in session
(excluding weekends and national holidays) to decide whether to submit
a rescission package using this expedited procedure. The President is
also limited to a single package of rescissions per bill under this
procedure, and the requested rescissions must be limited to provisions
in that bill.\1\
\1\ There is one exception to the packaging rule: when a single
appropriations bill includes funding that is in the jurisdiction of
more than one appropriations subcommittee such as in an omnibus
appropriations bill. In that case, the President may submit up to two
Congressional procedure. A rescission package submitted
under this authority receives fast-track consideration in Congress.
Debate is limited in both houses and the package is guaranteed an up-
or-down vote without amendment. The package is first introduced and
considered in the House and, if approved there, is taken up in the
Senate. From the package's introduction to its final vote in the
Senate, the process can take no more than 25 days. Note that, while
Congress cannot amend the package, our proposal enables Congress to
omit from the bill any proposed rescission that it believes goes beyond
the scope allowed.
Withholding funding. Following submission of a rescission
request using this expedited procedure, the President may withhold
funding for up to 25 days, after which the funding must be released.
This ensures that agencies do not obligate funds before Congress has
had an opportunity to consider the rescission package.
In sum, the proposal provides the President with important, but
limited, powers that will allow the President and Congress to work
together more effectively to eliminate unnecessary spending, including
earmarks. Knowing this procedure exists may also discourage lawmakers
from enacting such spending in the first place.
The proposal has been crafted to preserve the constitutional
balance of power between the President and Congress. In 1996, Congress
granted the President ``line item veto'' power over certain spending
and tax bills, allowing the President to use his veto authority to
strip out select provisions of legislation while signing the rest into
law. The Supreme Court found this to violate the constitutional
procedure for presenting a bill to the President for approval or veto
of the entire bill. The Administration's proposal is fundamentally
different from this. Under our proposal, Congress, which is empowered
to set its own rules, changes those rules under which it considers
rescission packages proposed by the President--using well-established
fast-track procedures. Rescissions only occur if Congress affirmatively
enacts them into law. In other words, our proposal does not expand the
Presidential veto authority in any way.
Our proposal also preserves the President's two existing
authorities for proposing rescissions. First, the President would
retain the Constitutional authority to recommend legislation such as
rescission packages to be considered under regular order in Congress.
Second, the President would retain the power to recommend rescissions
under the procedure already established under the Impoundment Control
Act of 1974. This existing authority provides more limited fast-track
protections to a Presidential rescission package than what we have
proposed and, specifically, allows committee and floor amendments and
so does not guarantee a clean up-or-down vote on a package submitted by
I am encouraged that the Administration's proposal has received
bipartisan and bicameral support. I thank Chairman Spratt for
introducing the Reduce Unnecessary Spending Act and members on this
Committee--Representatives Boyd, Dennis Moore, Larsen, Connolly, and
Schrader--for joining as cosponsors. The proposal has also received
strong support in the Senate from Senators Feingold, Carper, and
McCain. I also commend Ranking Member Ryan for introducing a proposal
similar to ours. We applaud these efforts, and look forward to working
with Congress to hammer out the details and enact this authority into
We recognize that our proposal is not a magic bullet. While it
lifts procedural barriers, the President and Congress will still have
to make the tough choices to cut back unnecessary spending.
Furthermore, restoring fiscal sustainability in the medium and long
term will require not only targeting unnecessary spending in specific
programs, which our proposal aids, but also making larger choices about
overall budget priorities and revenue levels--a process now being
facilitated by the President's National Commission on Fiscal
Responsibility and Reform.
The Reduce Unnecessary Spending Act provides a new and important
way for Congress and the President to ensure that taxpayer dollars are
spent wisely. The Administration urges prompt and favorable
consideration of our proposal, and we look forward to working with you
on this matter in the coming weeks.
Chairman Spratt. Thank you very much for your testimony.
And, once again, thank you for coming today and for proposing
There are still some features in the bill that are open to
question in my mind. For example, 45 days it has allowed the
Administration, those are 45 legislative days.
Typically it would be twice that many calendar days; would
Mr. Liebman. Yes, that could easily be.
Chairman Spratt. That is three months which is a long
period of time during which items in the budget could be
Is there an empowerment problem here?
Mr. Liebman. No. The purpose here is to have a very
expedited process. And in most circumstances, one would not
need 45 days.
The fear we had in trying to decide how long to put into
this proposal was what happens if an Omnibus Bill comes in on
December 20th, which is not that rare. And between the holidays
and putting together the President's budget, we need time for
our staff to go through the whole bill and find all the things
that need to be rescinded.
So apart from that part of the year and that kind of
Omnibus Bill, one would not need 45 days. So one thing one
could do, which we did not do for simplicity, but you could do
if you preferred it, would be to have a shorter time period,
say 30 days, for general laws and the 45 day for Omnibus Bills
or something like that so that one could have a much faster
procedure for standard legislation rather than these big bills
that come at the end of the year and may need appropriate
amounts of time to----
Chairman Spratt. We had this bill in the floor in the 1990s
at least three times as I can recall. I was a floor manager
twice, once with Ford and once on the Democratic side.
One of the ideas added to the bill by Charlie Stenholm, as
I recall, was that you would guarantee the President an up or
down vote on his resolution, but you would also be allowed to
propose a congressional substitute, a pull-up substitute at
least equal in amount to the President's proposal.
If the President's proposal were defeated, you could then
vote upon the substitute. So Congress would have an incentive
itself to go through spending and decide where it might be
exorbitant or unnecessary or wasteful.
Do you have a problem with that idea?
Mr. Liebman. I do not think so. I would have to see the
details. But the point here is to work together to get rid of
unnecessary spending and whatever procedures work for that,
we're amenable to.
Chairman Spratt. We have passed several tax bills, too,
where there was widespread criticism that they would target
benefits to limited numbers of taxpayers, substantial benefits,
And we offered something and passed it in the Government
Operations Committee as it was called then which had
jurisdiction of budget process which included targeted tax
benefits. And the definition of that varied between ten and a
hundred taxpayers. It was assumed that JCT could figure out
which were limited to that few number of taxpayers.
Is there a reason that you did not include something like
that in the bill and could you accommodate that idea as well?
Mr. Liebman. Well, we share your interest in eliminating
those kind of targeted tax provisions. But the challenge is
that when one makes changes to the Tax Code, one often needs to
make amendments to the statute and make legislative changes
that are not simply a matter of taking a dollar amount and
reducing it to zero or reducing it to a lower amount.
And so for tax provisions, tax provisions do not really fit
into the very streamlined framework we have where the only
thing that can happen is spending levels can be reduced. And so
that is the reason we did not include it in this piece of
But if there is a way to apply a similar streamlined
procedure to limited purpose tax provisions, we would be very
much open to that. We just did not think it really worked given
how we were trying to set up a way that could just simply
reduce spending levels and do nothing else.
Chairman Spratt. What about tax expenditures, irrespective
of the number of beneficiaries, with a tax expenditure that is
really using the Tax Code to promote some particular purpose or
Mr. Liebman. Yeah. Well, the Administration shares your
interest in reforming tax expenditures. I think we eliminated
or significantly reformed over two dozen provisions in our
current budget. Those are typically proposals that actually
need changes in legislative language.
So I do not think the kind of streamlined procedure we are
talking about here works for that, but we very much think that
tax expenditures need much more attention than they are getting
right now in terms of reducing their use in bringing down the
Chairman Spratt. Now, there are 12 different appropriation
bills. Is the President seeking the right of rescission, power
of rescission on each of those 12 so that it could be as many
as 12 bills at the end of the fiscal year and the beginning of
a new one?
Mr. Liebman. Yes. On each bill, one would have the option
of proposing a rescission package.
Chairman Spratt. That would be the only bill for that
particular bill, but still there would be 12, potentially 12.
What happens if there is a supplemental or if there is a CR,
continuing resolution? Would the President still have the power
Mr. Liebman. Yes. For any piece of legislation, within 45
days, one could propose rescissions.
Chairman Spratt. Now, you have included something in your
testimony about nonentitlement mandatory spending. Would you
define and illustrate that for us?
Mr. Liebman. So what happens sometimes is in an
authorization bill, basically appropriations get accomplished
just as they would in a standard appropriations bill, but a
specific spending item will be provided for.
And in order to prevent there being a loophole in this
provision where everyone simply shifts all their earmarks or
their other wasteful spending to authorization bills, we wanted
to make sure that direct spending that happens in authorization
bills would be subject to the same procedures.
Chairman Spratt. You also propose in this bill limited
debate. To your way of thinking, what is limited debate? And
does the legislator make the case to you that if I have got
something in the bill that helps my particular jurisdiction
that I worked hard to get through and believe that it will
stand scrutiny if I can just get in the well of the House to
explain it at adequate length, I do not want to be limited to
one, two, or three minutes and unable to call supporting
witnesses and supporting speakers and things like that, what do
you think is fair debate for a single member with a single
Mr. Liebman. I think we are willing to defer to you on that
part of this bill. What we are trying to do is have a
streamlined, fast-tracked procedure, something that cannot be
filibustered in the Senate, something that will guarantee an up
or down vote within a reasonable amount of time. But in terms
of the exact time limits, we would absolutely be happy to defer
to whatever your judgment is on that.
Chairman Spratt. This is not a concern of the
Administration because the President would like to have this
authority, I am sure.
But Jim Wright used to tell us, Lloyd and the other Texans
here, that if you really wanted to understand why a line item
veto or expedited or enhanced rescission was a problem, ceding
that much power to the President, you needed to serve under
From a Constitutional viewpoint, have you given any
consideration to how you keep the scales evenly balanced at the
same time we make this substantial rescission power to the
Mr. Liebman. I think this proposal has been carefully
crafted to preserve the existing balance of power. What it does
is it gives the President who currently has the authority to
propose legislation, the opportunity to propose an expedited
rescission proposal, and then Congress which currently has the
authority to alter its rules however it wants to deal with
things on an expedited basis chooses to alter its rules to deal
with these kinds of bills on an expedited basis.
And I think the way to think about this is it is a
constructive tool for letting the President and Congress work
together to go after wasteful and duplicative and unnecessary
spending rather than as an attempt to change the balance of
Chairman Spratt. Thank you very much for your testimony.
Mr. Ryan. Thank you. I will pick up where you left off,
I have spent a lot of time on this issue over the years.
When we wrote this bill originally four years ago, we consulted
the attorney who successfully argued against the line item veto
in 1996 at the Supreme Court to make sure that it is done in a
way that is clearly Constitutional.
As a member of the Legislative Branch and a big fan of the
Constitution, I very much am interested in preserving the
Legislative Branch's prerogatives as separation of powers and
not delegating law-making authority to the Executive Branch.
I think this bill does that, so I think the way this is
written, and it is very similar to our bills, I think it fits
that fine line on the timing issues.
We spent lots of time with your predecessor agency, with
the OMB in the last Administration. You have to find a way to
deal with the Omnibus appropriation bills that hold over over
the break. So I think the point you made is very, very valid.
Perhaps you elongate the time for Omnibus bills and then
shorten it for everything else. Maybe that is a good
But, you know, a lot of the spending gets done at the end
of the session right before we leave. It is an Omnibus Bill
that is ten inches thick that none of us had time to read
before voting on it. And I think you need to accommodate that.
I think that is a pretty important point.
Another point that I think is the targeted tax benefits.
You get into the tax expenditure area, that is doing tax
policy. And there is a good argument that tax expenditures have
gotten out of control. A lot of us serve on Ways and Means and
that is a good policy argument, but I think you need to limit
that one to limited and that is why we had this definition of
ten people. And then, you know, some of those people will not
think are earmarks, you know, the orphan drug tax credit or
something like that. But that is something we ought to consider
on its own merits.
But I do believe there is a lot of waste in the Tax Code
that are very narrowed, very limited that is worth considering.
And I think you ought to consider that.
One quick question. Why not make sure that the savings go
to deficit reduction? Now, there is a way to do this which is
you lower the 302A. If we ever get caps in place, you lower the
caps by the amount. Supposing the other body does not do it,
you have some kind of reconciling procedure in a conference to
lower the A by the lower of the two amounts is what I would do
or split the difference or something like that. Why not make
sure that this savings goes to deficit reduction? What is your
opinion on that?
Mr. Liebman. The only thing that can happen through the
enactment of one of these expedited rescission proposals is
spending can get reduced. It can get reduced to a lower level
or it can be eliminated altogether. That is the only thing that
can happen under the President's proposal. You cannot introduce
new spending into the--at the same time, you cannot alter
Mr. Ryan. Right.
Mr. Liebman. All you can do is reduce spending. So that is
what we are trying to do here.
Mr. Ryan. From your perspective. But you understand how it
works here. That frees up fiscal space within the allocation to
be spent somewhere else.
Mr. Liebman. We are happy to talk to you about what the
best procedures are, but the goal here is to get rid of
Mr. Ryan. Right.
Mr. Liebman. And whether one needs to combine this with
some other procedure or not to accomplish that, we are open to.
There is also, I think, an interesting question of whether
one also wants to be able to use this tool in cases where the
purpose is okay, but the way the money is being spent is wrong.
So a very heavily earmarked approach to spending where there
might be a merit-based way to do the same thing.
If you also want to be able to go after that and reallocate
spending, then you might not want to be adjusting the
allocations. But our main purpose here is to reduce spending.
And so if it seems like this is not going to work for the
reasons you suggested, we would be happy to have a discussion
with you about that.
Mr. Ryan. Yes. Okay. So what I am trying to get is the
Administration, I know it is not in your proposal, but you are
not opposed and you are generally supportive of making sure
that the savings goes to deficit reduction?
Mr. Liebman. Absolutely.
Mr. Ryan. Okay. We have, it is not as good as what this
proposal or this idea offers, but we already have existing
rescission authority today, meaning the law has that. The
President can send us a rescission bill. The Committee of
jurisdiction, if they have not acted in 25 days, the bill can
just be discharged if 88 members co-sponsor it.
I would like to include into the record a letter from Mr.
Boehner and Mr. Cantor, two letters from Mr. Boehner and Mr.
Cantor to the President if I may.
Chairman Spratt. Without objection.
[The attachments follow:]
Mr. Ryan. What we are trying to tell you is, and I
understand the OMB Director said the other day it comes down to
a question of whether it is a fruitless exercise or not, we are
extending the olive branch. We need to cut spending now. And we
are telling you we will get the 88 co-sponsors you need to make
sure that your rescission requests are acted on here in the
So, please, send us some spending cuts. This is not a
fruitless exercise. You will have the support you need if you
are sincerely interested in cutting and rescinding spending.
What say you about that?
Mr. Liebman. Well, in our last two budgets, we proposed----
Mr. Ryan. No. But now. I know in your budgets----
Mr. Liebman. No. Let me be clear. We proposed $20 billion
in terminations and reductions through the appropriations
process. We accomplished an historic amount. Sixty percent of
the discretionary cuts actually happened.
Mr. Ryan. I understand all that.
Mr. Liebman. So we think that, you know, where should we
spend our energy in the next six or eight weeks to control
spending, it is in making sure this year's appropriation bills
stick to the freeze and that they cut these unnecessary
And as you know, floor time is very precious, especially in
the other body. You introduce one of these proposals. It gets
amended. It goes on and on. What we want to do is control
spending and we think that right now the best way to do it is
through the regular appropriations process. But we need this
tool that we are proposing today so that we can guarantee an up
or down vote when we send up such a----
Mr. Ryan. All right. So you are not going to do it is what
I am getting.
I would just simply say, first of all, the appropriations
process is for the next fiscal year, not the current fiscal
year. We have been on an enormous spending binge. Domestic
discretionary spending has gone up in this session of Congress
I would like to think we could find some savings somewhere
in this fiscal year to rescind spending to just show the credit
markets, if anything, you know, we are getting serious about
this stuff. But it sounds like the effort is not going to be
Last thing I want to ask you--well, I guess the last thing
I would ask you is let us try and work together to get this
thing done the right way. I want you to know that we are
sincerely interested in doing that.
The timing issues, I think that can be banged out to a
mutually satisfactory level. The limits of debate, I think it
is ten hours in the Senate, which I know it seems like a
nanosecond in the Senate terms, but that is plenty I would
argue over there in the Senate.
This is a good start, a good proposal. I think if we just
finish the job of getting it to deficit reduction, that would
Lastly I want to ask unanimous consent to include in the
record a statement that Senator Feingold asked me to insert. Is
there objection on the other side of the aisle to that?
Chairman Spratt. Without objection.
[The prepared statement of Russ Feingold follows:]
Prepared Statement of Hon. Russell D. Feingold, a U.S. Senator
From the State of Wisconsin
Mr. Chairman, thank you for permitting me to offer testimony as
part of your Committee's hearing on the President's expedited
rescissions proposal, more commonly referred to as his line item veto
bill. I was pleased to join with Senator Tom Carper (D-DE), Senator
John McCain (R-AZ), and others to introduce that legislation in the
Senate as S. 3474, the Reduce Unnecessary Spending Act of 2010, and I
very much hope we can enact that measure this year to give us another
tool to go after wasteful spending.
Just a few weeks ago, I chaired a hearing of the Senate Judiciary
Committee's Constitution Subcommittee at which this proposal and
similar proposals were reviewed, and I am pleased to say that the
consensus of that hearing is that the bill you are reviewing today is
When he took office, President Obama was handed perhaps the worst
economic and fiscal mess facing any administration since Franklin
Roosevelt took office in 1933. The legacy President Obama inherited
poses a gigantic challenge.
There is no magic bullet that will solve all our budget problems.
Congress has to make some tough decisions, and there will be no
avoiding them if we are to get our fiscal house in order. But we can
take some steps that will help Congress make the right decisions, and
that can sustain the progress we make.
A line-item veto, properly structured and respectful of the
constitutionally central role Congress plays, as our legislation is,
can help us get back on track.
Mr. Chairman, I have been working on this issue for some time now,
and have been pleased to partner with my colleague from Wisconsin, the
Ranking Member of this Committee, Congressman Paul Ryan, on a bill
strikingly similar to the President's proposal. Congressman Ryan and I
belong to different political parties, and differ on many issues. But
we do share at least two things in common--our hometown of Janesville,
Wisconsin, and an abiding respect for Wisconsin's tradition of fiscal
Earlier this year, in a critical moment in the evolution of this
proposal, Congressman Ryan raised the line item veto issue directly
with President Obama at a meeting in Baltimore, asking him to consider
the legislation he and I had introduced. I don't think there is any
doubt that the Congressman's comments helped develop the
Administration's thinking in this area, and helped lead to the proposal
the President made just a few weeks ago. I know the bill before you
today may not be everything he wants to see in a line item veto
measure, but Congressman Ryan's efforts have been absolutely central to
the bill we are now considering, and I very much appreciate his
dedication to this issue.
Mr. Chairman, the bill before you today, like the one we have
introduced in the Senate, is a significant step forward in our efforts
to provide the President with the kind of authority needed to cut
wasteful spending. It provides the President the ability to get quick
and definitive congressional action on cuts to individual programs in
large spending bills.
Currently, the President must choose between vetoing a bill in its
entirety, or signing it and possibly enacting billions of dollars of
wasteful spending. With this bill, and the one we introduced in the
Senate, the President will have a third option--signing a spending
bill, but then submitting a package of proposed cuts from that spending
bill to Congress for quick review. The package of cuts proposed by the
President will get an up or down vote in the House and, if it passes
there, an up or down vote in the Senate.
Mr. Chairman, our line item veto bills cover earmark discretionary
spending as well as broader non-entitlement spending accounts. The
measure excludes entitlement spending and tax expenditures from the
expedited rescission approach. Spending done through entitlements and
tax expenditures make up an enormous amount of the total spending done
by the federal government. However, unlike the programmatic spending
done in discretionary programs, where cuts can be made by zeroing out
or reducing a number for a specific account, reducing spending in
entitlements or tax expenditures often requires a change in the
underlying policy. Indeed, Congress already has a fast-track procedure
designed specifically for considering legislation that reduces spending
done through entitlements and tax expenditures. It is called
reconciliation, and it was used effectively in the 1990s to reduce the
As I mentioned, a key target of this new line item veto bill is the
unauthorized earmark spending that too often finds its way into large
appropriations bills. Earmark spending was what Congressman Ryan and I
targeted in our line item veto proposal, and it is the example every
line-item veto proponent cites when promoting their legislation.
When President Bush asked for this kind of authority, the examples
he gave when citing wasteful spending he wanted to target were
congressional earmarks. When Members of the House or Senate tout a new
line-item veto authority to go after government waste, the examples
they give are congressional earmarks. When editorial pages argue for a
new line-item veto, they, too, cite congressional earmarks as the
reason for granting the President this new authority.
Unauthorized congressional earmarks are a serious problem. We won't
solve our budget problems just by addressing earmarks, but if we are to
get our fiscal house in order, eliminating earmarks has to be part of
the solution. For all the lip service Congress pays to this issue,
there are still thousands of earmarked spending provisions enacted
every year. Just last year, the Omnibus Appropriations bill for FY 2009
passed in March of 2009 contained more than eight thousand earmarks
costing $7 billion, and the Consolidated Appropriations bill for FY
2010 passed in December of 2009 included nearly five thousand earmarks,
costing $3.7 billion.
There is no excuse for a system that allows that kind of wasteful
spending year after year. And given the unwillingness of Congress to
discipline itself in this regard, it is appropriate to provide the
President some additional authority to seek an up or down vote in
Congress on proposed cuts in this area of spending.
Mr. Chairman, some will argue that the President's line item veto
proposal is not a cure-all, and they are right. We will not balance the
budget just by passing a line item veto-like authority for the
President. Nor will we balance the budget just by eliminating wasteful
earmark spending. But we can make real progress in getting our fiscal
house in order, and in changing the culture of Washington which over
the last two decades has seen an explosion of spending done through
unauthorized earmarks that circumvent regular congressional review and
the scrutiny of the competitive grant process.
Like the measure Congressman Ryan and I introduced, under the
President's proposal, wasteful spending doesn't have anywhere to hide.
It's out in the open, so that both Congress and the President have a
chance to get rid of wasteful projects before they begin. The
taxpayers--who pay the price for these projects--deserve a process that
shows some real fiscal discipline, and that is what this legislation
President Obama recognizes the pernicious effect earmarks have on
the entire process. When he asked Congress to take the extraordinary
step of sending him a massive economic recovery package, he knew such a
large package of spending and tax cuts would naturally attract
earmarks. He also recognized that were earmarks to be added to the
bill, it would undermine his ability to get it enacted, so he rightly
insisted it be free of earmarks.
I am delighted he has stepped forward to propose a new line item
veto-like authority, and I am especially pleased to have joined with
Senator Carper and others in introducing that proposal in the Senate,
and to be working with you, Mr. Chairman, as the principal author of
this measure in the House.
Thank you again for allowing me to offer testimony before your
Mr. Ryan. All right. Thank you.
Chairman Spratt. Mr. Doggett.
Mr. Doggett. Thank you very much. I appreciate your
professed concerned about unnecessary expenditures and I am
reviewing what you propose to address it. But I am unequivocal
in my concern and objection to what you and the Office of
Management and Budget have not addressed in the way of
As you well know, the amount of tax expenditures, the tax
expenditures that are basically entitlement spending since they
are outside of the budget process, are approximately the same
as all of the discretionary spending that comes through this
Just to give you an example of the way this process is
working today, in consideration over in the Senate, if you were
to come on behalf of the Administration to this Committee and
ask us to write a check or through the appropriations process
for $38 million for this year only to NASCAR, if you were to
come and say that these big Wall Street banks that control 60
or 70 percent of our economy are just barely skimping by, can
only afford to pay a few hundred million dollars in bonuses to
their top executives, and so we need to write them a check for
a billion, a couple billion, maybe even $3 billion because of
their overseas operations, you would be laughed out of this
And, yet, that is exactly the position that the
Administration and a majority of this Congress, certainly not
me, have taken with reference to the Extenders Bill because
those provisions are in there as tax expenditures to do just
that even in this rough economy.
I have raised this concern about tax expenditures with the
Office of Management and Budget when Dr. Orszag was here in
March of 2009, I raised it when the Deputy Director of OMB was
here in November, I raised it again this year when Dr. Orszag
came, that as far as evaluating tax expenditures, this
Administration was doing nothing other than taking a Xerox
machine and copying the language of nonengagement that the Bush
Administration had in its last budget.
Since Dr. Orszag was here before this Committee in February
of this year, has the Office of Management and Budget done a
single thing to advance the cause of evaluating tax
expenditures which keep going up?
Mr. Liebman. We have been working hard in analyzing tax
expenditures. I think in the table in the chapter of the budget
that you are referring to, there are 173 tax expenditures and
there are more than 20 that in our current budget we propose to
either end or to significantly reform.
We propose to eliminate 12 different tax expenditures for
fossil fuel producers. We propose to cap Schedule A deductions.
Mr. Doggett. We can discuss the merits of your budget
proposal. We had that when Peter was here in front of the
Committee in February. But there was no evaluation process
going on and no reason to believe that next year when we get
the budget that that table and that evaluation process will be
any different than it was when the Bush Administration left
What, if anything, is the, other than a couple, three,
twenty provisions that you propose to eliminate, what has been
done since February to get into serious and critical evaluation
of these tax expenditures?
Mr. Liebman. With all due respect, the way we come up with
the specific proposals, the over two dozen proposals to either
eliminate or reform these tax expenditures, is through doing
careful analysis of these just as we do with other budget
provisions. And as we go through the year and as we get toward
the next budget, we will continue to study ways----
Mr. Doggett. Is there any reason to believe that we will
see an appendix to the budget as far as evaluation of all of
these provisions that will look any different next year than it
did this year or last year or in the last year of the Bush
Mr. Liebman. Again, that chapter of the budget goes through
and really the chapter next to it on our tax policies goes
through the changes we have proposed to lots of tax
expenditures and explains our rationale for that.
Mr. Doggett. You are talking about specific provisions and
I am talking about a critical evaluation process that looks at
tax expenditures the way we look at direct expenditures. And it
sounds to me like the answer is not anything.
On May the 24th, when Dr. Orszag had his conference call
about this particular proposal, he indicated that you were open
to the idea of covering some of these tax breaks. Both the
Chairman and the Ranking Member, in fact, the Chairman, when he
introduced a proposal similar to this in prior years included
at least some of the special interest tax breaks that were in
Has anything happened since that declaration of openness
about tax benefits or is the attitude of the Administration
that it does not want to deal with tax at all in this proposal
and does not have any other proposals to deal with the
rescission or even the evaluation of tax provisions?
Mr. Liebman. If there is a way to preserve the streamlined
up or down process, fast-track procedure that this legislation
is meant to achieve and to include tax provisions, we are all
But the question is whether one can simply eliminate levels
of tax provisions without having to rewrite the Tax Code. And
many tax provisions interact with each other. And so in order
to get rid of them, you have to not only zero them out, you
have to change alternative parts of the Tax Code.
And once you are into that kind of legislative drafting, we
fear that one would lose the fast-track ability to get a vote
quickly, just have an up or down vote. But if there is a way to
do it, we are completely open to that.
Mr. Doggett. Well, we kind of look to you for proposals of
ways to do things. And I gather you do not have one this
morning. And as long as we continue to draw this distinction
and add to limitations on direct expenditures but do not apply
them to tax expenditures, we will have more and more $38
million unnecessary and unjustified expenditures to NASCAR.
Chairman Spratt. Thank you, Mr. Doggett.
Mr. Djou. Thank you, Mr. Chairman.
Dr. Liebman, a few quick questions. First off, I like this
proposal. It is good. Anything to reduce the overall spending I
think in our federal government is a positive thing.
But I have a few questions to begin with, and that is,
could you explain to me the Administration's position on line
item veto and why--actually, what is the Administration's
position on just going forward with line item veto?
Mr. Liebman. The line item veto, at least as it was enacted
in the 1990s, was determined by the Supreme Court.
Mr. Djou. A Constitutional amendment to adopt the line item
Mr. Liebman. I see. I am not sure that we have a formal
position on that. I mean, we think that the proposal we have
before us is the best way to move forward because it preserves
the existing balance of power.
Mr. Djou. Okay. So the Administration is neutral on a
Constitutional amendment to line item----
Mr. Liebman. I do not know that we have explicitly had a
discussion around it. I will have to check.
Mr. Djou. Okay. All right. A few other questions.
Chairman Spratt. Will the gentleman yield?
Mr. Djou. Yes, Mr. Chairman.
Chairman Spratt. There was a line item veto proposed in the
mid 1990s, mainly by Republican supporters, and it was held
under the Constitution.
Mr. Djou. So I am asking the Obama Administration's
position on a Constitutional amendment----
Chairman Spratt. Oh, I beg your pardon. Okay.
Mr. Djou [continuing]. For a line item veto. Thank you, Mr.
A few other quick questions, Dr. Liebman. Whether or not
this rescission proposal passes, will the Administration
voluntarily comply with it and submit proposals for rescission
whether or not--because you can do it anyway?
I mean, the Administration can submit these even if this
measure does not pass. And it is up to the Congress. I mean, at
least so the public can understand what the Administration
believes should be cut in a budget.
So will the Administration voluntarily comply with its own
proposal whether or not this legislation eventually passes the
Mr. Liebman. Well, we have a current mechanism for us
indicating which proposals should be eliminated and that is the
termination and reduction line of the budget. So that is the
first step we take.
Then we try through the appropriations process to get those
provisions eliminated. And we are working on that at the moment
You know, whether at a particular point in time an
expeditious rescission package is or is not the best way to go
about getting after wasteful spending will determine, you know,
depend on the circumstances. But we very much are dedicated to
finding ways to eliminate duplicative and wasteful and
Mr. Djou. I am going to try and pin you down here a little
bit. So the Administration likes this proposal. I like this
proposal. I do not think you actually need a law from Congress.
Nevertheless, after the appropriation bills are done for
the Administration to come back and say these are the programs
we think should be eliminated from the budget, will you do that
regardless of whether this bill is passed?
Mr. Liebman. Well, we have already indicated which programs
we want eliminated from the budget. In terms of whether we
would make a formal rescission request under the existing
rescission authority, we are concerned that when one does that,
one does not get an up or down vote and that it basically----
Mr. Djou. Right, right. I know that that is a----
Mr. Liebman [continuing]. Sets up a fruitless process. So,
you know, we want to work at any point in time in whatever the
best way is to accomplish the terminations and reductions that
we have proposed.
Mr. Djou. No, I know you are not going to get an up or down
vote because you need this law. What I am saying here is will
you do it anyway? Will you put a proposal so the American
people can see what the Administration would have wanted to
have cut anyway regardless because I think highlighting the
spending is oftentimes as powerful as actually the legislative
act itself? So I want to know, will the Administration comply
with this proposal whether or not it passes Congress?
Mr. Liebman. And the way we tell the American people what
we want to cut is the volume of the budget that has
terminations and reductions.
At times, for example, on some of the weapons systems that
the Defense Department thinks should be eliminated, we will
indicate that the President's advisors are issuing a
recommendation of a veto if those things are included in bills.
So we have a lot of techniques to go after wasteful
spending. And at any point in time, we will use the technique
that we think is likely to be most effective.
Mr. Djou. Okay. Last follow-up question then and that is
earmarks. Will the Administration, should this measure pass,
will you use it on Congressional earmarks?
Mr. Liebman. Yes. One of the things that this is meant to
do is to go after programs that are heavily earmarked and have
there be a way to work with Congress to reduce the level of
Mr. Djou. Because I am new, could you explain quickly the
Administration's position generally on budget earmarks?
Mr. Liebman. Sure. I mean, in general, our position is we
need to significantly reduce earmarks.
Mr. Djou. What is significantly reduce? Cut it by 90
Mr. Liebman. I do not think we have used a specific number.
I think if you look at the history, you know, there was a real
surge in earmarks starting in 1995 going through about 2006.
In the last two Congresses, there was in the first of those
two Congresses a big movement toward transparency that Senator
Obama played a big role in bringing about. In the last
Congress, in the last two years, we have brought down
significantly the number of earmarks, as I mentioned in my
opening statement, by 27 percent last year.
So we have made good progress, but we need to make more
progress. And, you know, we hope we will make more progress in
this year's appropriation bills.
Mr. Djou. Thank you.
Thank you, Mr. Chairman.
Chairman Spratt. Mr. Berry.
Mr. Berry. Thank you, Mr. Chairman.
Mr. Liebman, the President already has the authority to
veto a bill; is that not right?
Mr. Liebman. Absolutely.
Mr. Berry. And I fail to see how this proposal maintains
the balance of power. It seems to me that it does give the
President an advantage when it comes to deciding how the money
is spent. And right now that is clearly delineated in Article
1, Section 9 of the United States Constitution.
Do you agree with that?
Mr. Liebman. I certainly agree that that is the right
article to look at. I think that this is crafted to preserve
the balance of power. What it does is the President sends up a
piece of legislation which certainly the Constitution provides
for and Congress chooses to set rules such that that
legislation gets treated in an expedited way which Congress has
done for other fast-track procedures. So I do not think there
is anything that fundamentally upsets the balance of power
Mr. Berry. Well, it forces the Congress to take action
which they had an option to either take action or not take
Mr. Liebman. It lets Congress choose to amend its rules to
do so, yes.
Mr. Berry. No. It forces us. If this bill you are talking
about passes, it forces us to deal with your proposal.
Mr. Liebman. The purpose is to require an up or down vote,
Mr. Berry. Right. You talked about earmarks. How much of
the discretionary budget is earmarked by the Administration?
Mr. Liebman. We do not earmark proposals. There are some
specific things in the budget that are, for example, at a
specific location, but those all come from either competitive
or merit-based procedures. So, you know, we do not have
earmarks per se in our budget.
Mr. Berry. I would take great exception to that. I do not
believe it. It seems to me that the Administration is of the
opinion that they know better how to spend money than we do.
Mr. Liebman. That is not our point here. Our point is to
let Congress and the President work together so that we can
have a way to get rid of wasteful spending.
Mr. Berry. When was the last time the Office of Management
and Budget had a conversation with a member of Congress about
how to spend money?
Mr. Liebman. Certainly several times a day we are talking
with Congressional offices.
Mr. Berry. How is it going?
Mr. Liebman. Some go well, some go less well.
Mr. Berry. Well, I would like to register my opposition to
this idea that we give any President more authority over the
Now, I can agree that we have not as a Congress for a long
time have not done a real great job. It has been interesting to
me to see my colleagues across the aisle since the election of
2008 suddenly have this attack of fiscal conservatism. And I am
glad they did. I wish they had gotten the religion a little
sooner, a few years before that.
Mr. Ryan. Will the gentleman yield?
Mr. Berry. No.
But how this solves any of our problems is beyond me. You
know, if I had room in my shirt for the city of Chicago, I
would not be in favor of giving any President any more power
than they already have. And so I want to formally register my
opposition to this whole idea.
And I thank you.
Chairman Spratt. Any members on your side? Mr. Austria is
Ms. McCollum. Thank you, Mr. Chair.
This country and this Committee is well aware that we are
facing a budget crisis of historic proportion. And in light
especially of the European debt crisis, no one thinks the
federal debt and deficits are problems America can face are
going to go on much longer.
Today the national debt is over $13 trillion. Congressional
earmarks did not dig that hole and reducing earmarks will not
get us out of it. This budget crisis calls for decisive
Now, this proposal sounds attractive, but ultimately offers
little help and may actually make our problem worse. And I am
going to give an example.
This is similar to what you are requesting, similar to a
process that was just recently used in Minnesota where the
Governor has line item veto. The state budget is in its worse
crisis in 50 years, if not more. The Governor made cuts using
his authority to cut transit, healthcare, universities, and
other investment areas wherein particularly the Governor did
not get very many votes.
A much stronger version of this proposal I believe is being
discussed today and it has failed to deliver back home in
Minnesota any promise of fiscal responsibility in my State.
So I want to be clear, Mr. Chairman. I am serious about
tackling the budget crisis. I stand prepared to make the
difficult decisions ahead. I have not hesitated to make them in
the past. I supported Pay As You Go. I voted against President
Bush's tax cuts in 2001 and in 2003. And I am ready to vote
against extending them.
I am an original co-sponsor of Chairman Obey's legislation
to create a war tax to pay for the cost of the war in Iraq and
I have never supported the expansion of rescission
authority because I believe it is a clear violation of the
separation of powers in the Constitution and it is not a real
solution to fiscal challenges.
I want to make clear. I did not support this idea under
President Bush and I do not support it now.
And part of what I am hearing from your testimony is that
there are problems in the other body getting up and down votes.
I do not see changing the Constitution or the House's
responsibility to solve a problem that is in the Senate rule
making is a very wise decision.
As has been pointed out, the President already has holds
and sufficient power to restrain spending. He submits budget
requests. He has veto power and he already has the ability to
submit rescission proposals to Congress.
Now, this new authority and this legislation in my opinion
starts to become a blank check. So here are my points that I
would like to have for discussion.
Under this legislation, could the President include farm
subsidies, highway funding? Tax extenders we hear are not going
to be possible in this package of rescissions. And I am also
interested in hearing about other proposals being discussed.
For example, is there any discussion in OMB about ending
the practice of requesting funds in the President's budget that
are not authorized by Congress?
Mr. Liebman. Well, Congressman, I first want to agree with
you that this is only one and frankly a small part of what we
need to do to get the deficit under control. But I think it is
an important tool and along with statutory PAYGO that we were
pleased to work with Congress to enact along with the
President's proposed discretionary freeze. I think it is a tool
that will be valuable in helping us reduce deficits.
As you correctly said, there are large classes of spending
that this would not apply to. And that is why we need other
tools. That is why statutory PAYGO was important on the
mandatory side. It is why the fiscal commission is important.
It is why the President put more than a trillion dollars of
specific deficit reduction proposals in his budget.
But I think this is an important tool because so frequently
one gets a very big bill of which 95 percent, even more of it,
can be important----
Ms. McCollum. Sir, my time is limited. Would you answer my
second part of the question because I have heard your comments
The President when he supports his budget proposal moving
forward quite often asks for money for programs that are not
authorized by Congress.
Is the President prepared to not do that? President Bush
did the same thing as well. I am not singling out President
Obama. Presidents have done this, asked for money for programs
that have not been authorized. What is your position on that?
Mr. Liebman. Well, in our budget, we often request
authorization for new things. So, I mean, if we think there is
a piece of legislation that needs to be introduced, even if
Congress had not moved first, we will often put such a proposal
in the budget.
Ms. McCollum. Thank you, Mr. Chairman.
You know, I appreciate the discussion here. I think it is
important to have. And I appreciate the fact that you said that
when the President puts forward their spending ideas that it is
competitive based and merit based. So are my legislative
directives of spending, i.e., earmarks.
Thank you, Mr. Chairman.
Chairman Spratt. Thank you.
Mr. Scott. Thank you, Mr. Chairman.
Dr. Liebman, I notice the title there was Reduce
Unnecessary Act of 2010. How does the bill define unnecessary?
Mr. Liebman. I think there are a range of policies that
would be in that category. There are programs that duplicate
other programs, so we are running similar programs in two
different agencies and maintaining the overhead of both.
Mr. Scott. Is that defined in the bill? Does the bill
Mr. Liebman. No, it does not.
Mr. Scott. If the President lists spending that Congress
determines is necessary and some unnecessary, what option does
Mr. Liebman. They can either vote for the proposal or they
can vote against it.
Mr. Scott. So they would have to vote against necessary
spending? They would have to take it or leave it? They would
have to actually vote against necessary spending? You would
have up or down----
Mr. Liebman. It is a single package. It is a single
Mr. Scott. Now, are all----
Mr. Liebman. And to----
Mr. Scott. Are all Congressional earmarks presumed to be
unnecessary, but earmarks proposed by the Administration
presumed to be necessary and merit based?
Mr. Liebman. No. There are Congressional earmarks that are
good programs and good uses of funds and there are ones that
are bad uses of funds.
Mr. Scott. Now, in your statement, you said that the
Administration made a priority of identifying and cutting
unnecessary spending, proposing approximately $20 billion in
terminations, reductions, and savings for fiscal year 2010 and
2011. That is $20 billion.
Can you remind me what the deficit was in those two fiscal
Mr. Liebman. That has been about ten percent of GDP in the
last couple years.
Mr. Scott. Compared to $20 billion, what is the number?
Mr. Liebman. One point five trillion.
Mr. Scott. Are you talking about this proposal has the
potential of addressing what, one or two percent of the
Mr. Liebman. It is true. But it is not just about reducing
the deficit. We have other aspects of our plan.
Mr. Scott. Okay. Well, in the early 1990s, we were able to
make the tough choices to actually balance the budget. I mean,
100 percent of the deficit, just knock it out.
This only deals with one side of the equation, that is
spending. It does not deal with taxes at all as I understand
it. When we balanced the budget, we cut spending and increased
taxes, did both.
If we are willing to make those tough choices, we obviously
do not need this. And if we are not willing to make the tough
choices, will this make any difference?
Mr. Liebman. Well, I agree, first of all, that this is only
one component of what we need to reduce the deficit. But even
if we had surpluses, I think this would be an important
proposal because it is important that we go after unnecessary
and wasteful spending regardless of the level of the budget.
And so having a way so that when low-value spending is
tacked on to a large bill, to be able to separate it out and
give Congress the option of voting to get rid of it I think is
a very valuable tool.
Mr. Scott. Well, I think we and some others have suggested
that the President is not restrained by present law to veto a
bill and suggest if you take these out, I will sign the bill.
All we would have to do is just reprint the bill and pass it
and send it back. We can essentially do what is in the bill
Has the President tried that?
Mr. Liebman. I think the veto is a very blunt tool. You
often have a piece of legislation that is essential, needs to
get passed soon. And you run up against the question of whether
one vetoes a whole bill over a limited part of the bill that is
And I think members of Congress face the same issue whether
you vote for or not vote for a bill that you like the bulk of,
but there are some things you do not like.
Mr. Scott. Well, and put us in that box when you send a
rescission package that we have to vote up or down and cannot
consider the good parts and bad parts.
I mean, this whole bill creates that box; does it not?
Mr. Liebman. Well, I think one of the constraints that will
operate on the President in proposing such a rescission package
is that if he proposes one that has things are not wasteful
spending in it, it is going to go down. And so that will
provide a strong----
Mr. Scott. Well, it may go down or may not. It may have a
lot of wasteful spending and may have a lot of a little bit of
good spending on a balance. You have to vote it up or down.
Lyndon Johnson's name has been mentioned. Could you explain
what Lyndon Johnson would do with a bill like this?
Mr. Liebman. I think I would probably defer to people on
the panel here as the experts on the new----
Mr. Scott. Well, how does it change the balance of power of
Congress and the power of the President to coerce Congress into
taking unrelated action?
Mr. Liebman. I think what this does is it allows the
President and Congress to work together to go after unnecessary
spending. This is really not about coercing anybody.
Mr. Scott. The President would not coerce members of
Congress into taking unrelated action by using this rescission
Mr. Liebman. No. I think you have seen in our terminations
and reductions volumes that we have proposed, we go after broad
classes of spending that we think are----
Mr. Scott. So if the President needed a vote on an
unrelated bill, he could say that I will leave your earmark
alone or I will put it in the package? He would not do that?
Mr. Liebman. The purpose here is not to do anything like
that. The purpose is to----
Mr. Scott. Is that in the bill prohibiting the President
from using that kind of coercion?
Mr. Liebman. All this bill does is allows the President to
propose a set of unnecessary spending and let Congress then
decide what to do with it. Not to mention it is no different
than being able to have the President send up a piece of
legislation at other points in time that single out a
particular member's projects. And we do not see that very
frequently because I think there are good social norms that
require the President and Congress to work together that
prevent that kind of thing from happening.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Spratt. Thank you, Mr. Scott.
Mr. Schrader. Thank you, Mr. Chairman.
I am a big supporter of this bill. I think this is another
tool in the toolbox that is definitely very, very, very needed.
And I think the balance that is struck in this bill retains
clear legislative authority over spending. The President may
propose and the Congress can dispose of any recommendation that
comes as a result of this bill.
I guess a couple of specific questions though. One would be
during the time that a particular program is targeted for
potential rescission, what happens to that money? What is the
Agency going to do be doing in that interim?
Mr. Liebman. The President has the option of telling an
Agency to withhold spending that money until Congress has a
chance to act during the 25 days because you would not want to
have a procedure where an Agency has started setting up a
program and then a few weeks later, Congress chose to end that
program. So it allows that spending to be withheld for those 25
Mr. Schrader. Then the only other question I had, a follow-
up of Mr. Ryan's line of questioning and interest, am I to
understand based on your responses that the Administration be
friendly to an amendment that the dollars that actually did
make it through the rescission process supported by Congress,
that there be a possibility for an amendment to use that money
solely to reduce the deficit as opposed to being spent
Mr. Liebman. We would be happy to talk about that because,
again, our purpose here is to reduce the deficit and to reduce
Mr. Schrader. I yield back, Mr. Chair.
Chairman Spratt. The gentleman yields back.
Mr. Becerra. Thank you, Mr. Chairman.
Mr. Liebman, let me thank you for coming here and trying to
help us understand the proposal from the President.
I am somewhat puzzled that you would be here now talking to
us about the proposal without being able to define what would
be unnecessary spending. And I am wondering if that is a sign
that you all have not thought the proposal out, thought it
through thoroughly, or it is that you would rather have it be
vague to be able to decide what is considered unnecessary.
Mr. Liebman. I do not think it is that we cannot define it.
It is that----
Mr. Becerra. Okay. So can you define it?
Mr. Liebman [continuing]. It applies to a broad set of
types of programs.
Mr. Becerra. Okay. So let us----
Mr. Liebman. It could apply to programs that are not
allocated based on merit. It could be defined----
Mr. Becerra. Okay. So let us try to go through that.
Mr. Liebman [continuing]. As duplicative programs.
Mr. Becerra. Okay. So let us go through that. The so-called
bridge to nowhere by a Republican member sending I think it was
$28 million to Alaska to construct a bridge to a remote area,
would that be considered unnecessary spending?
Mr. Liebman. I do not want to comment on specific programs,
but that sounds like the kinds of programs that one might well
want to call unnecessary.
Mr. Becerra. Okay. Would money by a member to a particular
region of the country to help bolster Head Start programs that
are having difficulty with their facilities because of the age
of the facilities, would that be considered unnecessary, an
Mr. Liebman. Let me be clear. This is not meant to go after
every earmark. It is meant to go against low-value spending and
one would have to evaluate each proposal on its merits.
Mr. Becerra. Right. And, see, the concern I have is you are
using all sorts of code words, low value, unnecessary, but how
are we to know what you consider low value or unnecessary?
Mr. Liebman. Well, the proposal----
Mr. Becerra. If we decide to have a bridge go to nowhere,
how will we know if you think that is okay or not? And if we
have a Head Start program that is trying to stay open and meet
all the local code requirements to keep a facility in place,
how do we know if that is going to withstand your scrutiny of
Mr. Liebman. The proposal requires us in sending up the
rescission proposal to explain clearly why it is that we are
Mr. Becerra. But that is after the fact. That is after we
have worked the different spending bills to figure out where to
Now you are telling us after we have already been working
with our constituencies back home, with all the families, and
all the employees of these Head Start programs, you name the
type of program, whether it is a transportation project to take
care of potholes that are affecting the freeways and our local
communities or whether it is trying to bolster up dilapidated
bridges that are on the verge of falling over.
How do we know in advance if you do not give us a clear
definition? So I hope you will work on that so we can get a
The other concern I have is that, and it was raised by Mr.
Scott and Mr. Doggett and others, if you really want us to be
fiscally responsible, and I think you do, I think we all want
to be able to go back to the public and say we are being
fiscally responsible and open and transparent which are words
the President used in his letter to Congress to explain his
proposal, why would you leave out half of all the expenditures
that this government makes by excluding tax expenditures?
Some people would call those tax loopholes. Some people
would call those tax shelters. Some people would call them tax
credits. But you leave out over a trillion dollars, about a
trillion two hundred billion dollars in expenditures at the
federal level that we cannot touch.
Let me give you an example. Well, actually, Congressman
Doggett gave you a great example. But on top of that, why is
that you do not tell us that you are going to deal with, for
example, the close to $300 billion in cost overruns that you
know yourself are occurring in your own house in the Department
Now, I should put a caveat. These are cost overruns that
were found by the auditors to have taken place under the Bush
Administration. But $295 billion in cost overruns to 95 weapons
programs. That is a thousand dollars for every man, woman, and
child in America in extra taxes or put another way, for the 145
or so million families that file income tax statements, that is
close to $2,000, it is about $2,000 in extra taxes they are
paying because we had weapons systems that ran over their
costs, but they told us they would charge this to the taxpayer
by close to $300 billion. And we are, by the way, late by about
Why don't we tackle that before you tell us that you want
to get, say, the $20 billion in savings that you might have out
of a $1.5 trillion budget?
Mr. Liebman. Well, we are doing that too. We proposed in
the budget over $300 billion worth of savings from tax
expenditures. We are working hard on----
Mr. Becerra. I do not see it your proposal.
Mr. Liebman [continuing]. An initiative to cut $40 billion
and better acquisition.
Mr. Becerra. Is there a legislative proposal to try to deal
with tax expenditures?
Mr. Liebman. Well, again, we proposed it in our budget.
Mr. Becerra. But that is not legislative language the way
you gave us on this particular proposal.
Mr. Liebman. If the thing that is stopping us from enacting
our tax policies is drafting systems, we would be happy to
Mr. Becerra. Look forward to working with you on that.
Thank you, Mr. Chairman.
Chairman Spratt. Mr. Becerra, thank you.
Mr. Etheridge. Thank you, Mr. Chairman.
And let me thank you for being here this morning.
Let me ask mine a little differently. Before I got in
public service, I was in small business. So I know the issues
of balance and budgets. And one of the first major votes I took
when I came to this body was a vote to get to a balanced budget
at the federal level and it balanced and we ran a surplus,
created millions of jobs and the biggest surplus in decades.
And for the people who are so supportive of things today,
the Bush/Cheney Administration said deficits did not matter, as
I remember, and ran up some of the largest budget deficits in
history that has put us in the crippling situation we find
ourselves in now.
And so all of us are concerned about deficits. And we
worked in the 1990s to do something about it, turned it around,
and now we find ourselves in a tough situation where my
children and grandchildren are facing a difficult challenge for
Chairman Bernanke before this Committee just last week
pointed out that long-term plans for deficits are important. So
I am proud that Congress has restored PAYGO that was done away
with by the previous Congress that got this process started
down the wrong way. But clearly PAYGO is just one tool in the
path toward budget discipline. We all know that.
We have also passed in this Congress defense acquisition
reform that gave the Pentagon some common-sense rules for its
purchasing that will help cut wasteful spending and make an
effort. So Congress has been on the watch and is moving.
So let me ask you that I believe the Administration views
these expenditure rescission proposals as another tool
alongside PAYGO and nondiscretionary, et cetera. If you do, and
you have already heard some of the previous discussion, let me
ask it a little differently.
What other tools has the Administration considered to
promote budget discipline and, finally, could you speak more
specifically about what kind of spending, and you tried to do
it and I must confess I am not satisfied, when you think of
expenditure rescissions that it be used for, what kind of
spending are you talking about?
Mr. Liebman. Let me start with the second question and then
I will come back to the other question about the other tools.
We put in our terminations and reductions volume lots of
examples of the kind of spending we would hope to accomplish
through this procedure if we could not get it done through the
normal appropriations procedures. That includes heavily
earmarked programs such as EPA state assistance grants for
water that duplicate other merit-based ways of allocating
resources to those kinds of objectives. It would include
Like, for example, at the moment, we have programs in both
the Commerce and the Agriculture Department that provide
assistance to public broadcasting at the same time that we have
a perfectly effective corporation for public broadcasting. And
we do not need to have this going on in three places. So those
are some kinds of examples of the kinds of programs.
Mr. Etheridge. Well, let me ask the question another way
because other colleagues have raised it. And I think it is a
The Administration has significant tools currently, any
Administration does, because a threat of the veto is about as
big as it gets. That is the biggest pin, I believe, in this
town. And if the President threatens a veto, he can get a lot
of things done, I believe.
Mr. Liebman. And as you know----
Mr. Etheridge. As I remember, President Bush, it took him a
long time to decide if he was going to even use it one time.
Mr. Liebman. Well, the President made clear in the State of
the Union that if Congress does not stick to his targets of a
nonsecurity discretionary freeze, he is prepared to use his
veto pin for that purpose.
And so I think the veto can be an effective tool at times,
but there are also times when you have large bills of which the
bulk of it is necessary and it is essential spending and may
need to get passed fast. And what gets tacked on are some
And at the moment, we do not have a good procedure for
either letting Congress on its own get rid of those procedures
or for the President afterward.
Mr. Etheridge. Well, I think we are all concerned about the
tack-ons. I mean, I do not think anyone likes that.
But how would you envision the Administration working with
Congress before they issue a rescission package?
Mr. Liebman. That is a good point. I mean, if this
provision works like it should, its biggest impact will not be
in passing rescission packages, but I think it will be in
preventing wasteful spending from being added on in the first
place. It will be enough of a deterrent that in the lead up to
passing bills, one will be able to avoid getting those tack-ons
And my prediction would be that if this ends up saving real
dollars, it will be more through that avenue than through the
direct passage of the rescission bills later.
Mr. Etheridge. Well, I do not think you would disagree with
people want to save money and balance the budget. I do have
concerns about the balance of power issues as it relates to
Congress delegating their authority some place else. I think
that is a dangerous road to go down.
Thank you, Mr. Chairman. I yield back.
Chairman Spratt. Thank you, Mr. Etheridge.
Mr. Connolly. Mr. Chairman, I was necessarily late because
I was at another hearing. I think my colleague, Mr. Minnick, I
know is not a member of the Committee, but a guest, and, Mr.
Chairman, I am certainly willing to wait one more turn to allow
Mr. Minnick questioning if he would like, if that is all right
with the Chairman.
Chairman Spratt. The gentleman proposes to yield to Mr.
Minnick. How much, for the balance of your time?
Mr. Connolly. Well, I would defer and hope that I would
still have my time.
Chairman Spratt. The gentleman may proceed.
Mr. Minnick. I thank the gentleman from Virginia.
And I want to thank the Chairman and Ranking Member Ryan
for the privilege of being with you today. This is a very
important issue to me.
And I would like to thank OMB for working with Congress and
wanting to proceed in a way that the Administration and the
Congress can work together to put this authority into effect to
give the President and the Congress another tool for dealing
with an absolutely run-away deficit which I believe poses the
most serious problem to America's children and its future that
we face as a society today.
As a dedicated fiscal hawk and original co-sponsor of this
bill, I cannot think of a more important tool to provide at
this point in time to the Administration to show that it is
serious about tackling deficit reduction.
I am also a member of the 53 member Blue Ribbon Caucus
which is--it is the Blue Dog Caucus, I apologize, some other
members of whom are here and have been here today. And we have
endorsed this proposal and look forward to working with this
Committee and across the aisle to refine it in a way where we
give it maximum effectiveness.
I would like to ask you in response to a question that was
raised by the Ranking Minority, Ranking Member in his opening
statement, are you open in addition to the other modifications
that you said you would be willing to consider to try to extend
this concept to entitlement legislation and spending as well as
Mr. Liebman. To be clear that this does allow one to go
after spending that is done in authorization bills that is sort
of discretionary like. But in terms of entitlements, this
legislation I do not think is well designed for that because it
is meant to have a simple transparent up or down vote that
basically zeroes out or lowers spending levels.
When one makes changes to entitlement programs, one
typically needs to change statutory language, have an extensive
legislative process with amendments and the like. And so we
think it would be very difficult to deal with entitlements.
Mr. Minnick. The same problem that you have with extending
it to tax expenditures?
Mr. Liebman. Yes. And I guess it is even harder with
Mr. Minnick. All right. Thank you.
Another suggestion that was made by several members on both
sides of the aisle this morning was that whether or not this
passes, it would be useful to send a signal to the American
people and I think even more importantly financial markets who
are nervous about the size and growth of our deficit to propose
a rescission bill under existing authority.
It seems to me that it would be a useful way to highlight
this issue as well as highlight the seriousness of the
Administration's commitment to reduce expenditures that you
would work with us to go through the rescission process whether
or not this bill passes and becomes law and that it might be a
way for you to develop some momentum for passage of a more
efficient straight up or down vote to go through the process
without the benefit of the streamlined legislation.
Would you be open to considering that?
Mr. Liebman. Certainly willing to discuss it. I think there
are a number of things that all of us who share the goal of
going after wasteful spending could think about doing in the
next weeks and months, you know, finding things where--there
are several proposals that are both in our budget termination
proposal and is also on some of the Minority party's lists of
proposed cuts. And there may be things where we have the
opportunity to work together and we can do something in the
short term that would send an important signal.
Mr. Minnick. I am very concerned that we are going to wake
up some morning and the markets are going to be doing to us the
same thing they did to Greece. And anything we can do to
demonstrate commitment to reducing unnecessary spending would
be helpful and salutary and something that perhaps would have a
prophylactic effect. So I think that would be something worth
Also, I am a little concerned with the objections of some
of my colleagues to the thought that this involves a massive
shift of power. All this does is, if I understand it correctly,
is the power to highlight and to shine the light of publicity
on particular spending proposals because there is nothing in
this proposal that, other than publicity, would impair the
ability or reduce the ability of Congress to vote yes or not on
a particular proposal; is that correct?
Mr. Liebman. That is right. It simply lets the President
propose something and Congress decide what to do with it.
Mr. Minnick. Thank you.
My time is expired, Mr. Chairman.
Chairman Spratt. Thank you, Mr. Minnick.
Mr. Connolly. Thank you, Mr. Chairman.
I am pleased to join you, Mr. Chairman, in co-sponsoring
this legislation. I do it with some enthusiasm frankly because
I feel that it is another tool in the kit bag of trying to get
at the whole issue of structural deficits. You know, in 74 of
the last 100 budgets in this country, we had deficits. Only one
President ever left the White House with the country debt free
and that was Andrew Jackson. It has been a while. And we have
to do something about hemorrhaging red ink.
I would say, however, to you, Dr. Liebman, that you have
heard here in this Committee the legitimate institutional
concerns. Now, some of this is the normal dialectics of
budgets. Some of it is the inherent tension deliberately built
into the Constitutional framework of checks and balances.
But I am sure you understand that when phrases such as
unnecessary spending or low-value spending are used, it clearly
brings up an element of subjectivity. What the Executive Branch
or the particular occupant of the Executive Branch in the White
House may deem unnecessary may be deemed quite warranted here
or to the sponsors of that particular spending. So it is a
matter of viewpoint.
And it seems to me that we have to, if this legislation is
ever going to have a fighting chance to pass, I think some of
the concerns you have heard here in the Budget Committee need
to be addressed. There would have to be some guidelines, not
rigid guidelines, but some guidelines that minimize that
element of subjectivity and can reassure members that it will
not just be an arbitrary wholesale grab of additional authority
and influence by the Executive Branch at the expense of the
Legislative Branch particularly when it comes to earmarks.
After all, when a spending item gets into a bill in most
cases, it has had some review process, some thought has gone
into it, and it has stakeholders. It has, you know, advocates.
And so I do think there has to be some kind of definition
of what we mean by unnecessary spending or low-value spending
and what those guidelines would be.
I would also echo the concern of several of my colleagues
that I think we need to include tax expenditures moving forward
as an item for either further consideration or perhaps ultimate
inclusion in whatever we pass. It is a huge part of the budget,
and there are some even on this Committee who seem to think
that a tax reduction is not an expenditure of the budget, but,
of course, it is. And it needs to be looked at too.
So I just wonder if you might want to further comment on
the whole idea of some kind of explicit guidelines that could
give reassurance to those who are understandably and
legitimately concerned about the balance of power.
Mr. Liebman. I think it is a good suggestion to think about
whether there is a way to develop such guidelines.
Fundamentally every spending program is in some way different
from others and there may not be a way to up front say this
program is definitely going to be on the high-value and this is
going to be on the low-value list. You have to analyze things
one by one and look at the costs and benefits of things.
So it is not obvious to me that there is going to be an
easy way to make those guidelines, but I think it is something
we should work to.
I think there is going to be an important constraint on the
President misusing this authority which is that the House can
always amend its rules after this piece of legislation has been
changed to eliminate the fast-track procedure. And so if a
President misuses this, first of all, it has an expiration date
and will not get renewed, but, in fact, the House has the
ability to amend its rules to end this procedure if it gets
And so I think Presidents will use this responsibly. I am
sure this Administration will. But there is always going to be
disagreements about particular spending items and whether they
are high value or not and that is in the nature of it. I think
the important thing is that there be the opportunity to
actually analyze each of these spending programs and determine
And so often in large bills right now, spending gets tacked
on and there really has not been a thorough opportunity for
people to analyze it. And this would provide that analysis and
if the analysis finds that it is not a great use of taxpayer
funds, it would provide a mechanism for the President to
propose and Congress to decide to take another look at it.
Mr. Connolly. Thank you. I yield back.
Chairman Spratt. The gentleman yields back.
Now we are in the second round of questions. Mr. Ryan
wanted to ask a question. He is not here. Mr. Scott wants to
ask a question.
Mr. Scott. Thank you. I just have one brief question.
Obviously one of the targets of this would be Congressional
earmarks. And there has been some misleading discussion about
saving money by eliminating an earmark because are not most
earmarks set-asides from larger amounts of money?
For example, out of $200 million, you would spend $1
million in my district, that is my little earmark. If you
eliminate my earmark, instead of me spending $1 million and the
Administration spending 199, the Administration would spend all
$200 million resulting in actually no cost savings at all; is
that not right?
Mr. Liebman. That is basically right. I think that is why
some of the members have suggested that one should at the same
time that one rescinds an earmark, change the 302 allocation.
But you are right that under existing mechanisms what would
happen is that the spending would instead be allocated under
merit or competitive-based method, but it would not alter the
Mr. Scott. And you would assume that the Administration
spending the $200 million would be on merit and that my program
would not be as meritorious?
Mr. Liebman. I think there are definitely cases where
members identify spending that is very high value and it would
not be identified by the Administration's process. I also think
there are a lot of cases where that does not happen and we end
up not subjecting particular proposals to an evaluation
Mr. Scott. Mr. Chairman, the point that is often overlooked
is that elimination of an earmark would only shift the spending
to the Administration rather than Congressionally directed
resulting in zero savings. And if this whole thing is to help
balance the budget, striking earmarks in most cases would not
make any difference at all.
And thank you for allowing me to make that point.
Mr. Liebman. Can I just clarify one thing. It is the case
that as the expedited rescission bill went through and
eliminated an earmark, the direct effect of that would be to
strike the spending on that program by that amount.
So the way that the President's proposal works is that if
there was an account with $200 million in it and the President
chose to strike 20 of that, there would only be 180 left to
spend and the explanation would explain which programs were
being eliminated. So the direct effect of this proposal would
be to reduce spending.
Mr. Scott. And reduce if you have got an after-school
program like you are funding boys and girls clubs, the fact
that you aimed at my program would reduce the amount of money
for boys and girls clubs nationally?
Mr. Liebman. It would in this case if that is the
mechanism. The only thing that can happen in this proposal is
spending levels can be reduced. And you cannot repurpose money.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Spratt. Thank you, Mr. Scott.
Mr. Ryan. Thanks. I will do it pretty fast. I wish some of
the colleagues were still here.
Let me try and go back and give the rationale for this
idea. As some have said, there is existing rescission
authority. We are offering you to use it and we will help you,
but apparently, you know, I can tell them the Administration is
reluctant to spend their time on it because they do not think
it is going to be worth their while. And I understand that
argument. That is why I think we ought to beef this authority
up and make it more effective.
Let me pick a Republican earmark just so it does not come
across as partisan. When I first started moving this bill a
number of years ago, I watched a situation in which a U.S.
Senator Republican decided to fund a rain forest museum to the
tune of something like $50 million. And it got tucked into a
bill, an appropriations bill that had nothing to do with that
particular type of issue. It got put in in a conference report.
Never got to see it or vote on it in the House or the Senate
and it became law.
Now, what happens obviously around here is all these things
get thrown in these bills at the end of the process, no
scrutiny, and it has become a system that both parties have
abused to load up these appropriation bills with lots of
Now, there are other authorization bills and other bills
that do the same thing, but the power of this is the power of
embarrassment and sunshine. This is not a tool that is going to
balance the budget. This is not a tool that is going to save
us, you know, $1.6 trillion.
This is a tool that is going to make that member of
Congress think twice before trying to shove a $50 million rain
forest museum into an Omnibus appropriations bill because they
know if they can shove it in that appropriations bill, on it
If they know that there is a possibility that they might
have to go to the floor of the House or the Senate and defend
this proposal on its own merits, then they might think twice
before submitting those spending proposals.
So what I see this doing is bringing some more
accountability to the process, some more transparency to the
process, and embarrassing wasteful spending out of these bills
in the first place. So it is the existence of this tool that
probably has its best effects versus the actual use of the
That is point number one. Point number two is
Constitutionality, a very important point. I agreed with the
Supreme Court in their ruling in 1996 because that line item
veto I believe was unconstitutional. It did represent the
Legislative Branch ceding its authority to the Executive
Branch. That is why this is written and it looks like you have
written it pretty much the same way, the OMB plan, to make sure
that that is not the case.
And it is very important that we remember this is not the
President executing the spending decision. This is the Congress
making the decision executing the spending decision. The
President can write a bill and send it to Congress any day he
wants to right now. We used to give him fast track on trade
agreements and many other things. This is no different than
that. Giving the President the ability and the power and the
tool to take a piece of spending out, send it back, and then
we, the Legislative Branch of government, make the final
decision as to whether or not it is canceled or not.
So I think it is very clearly Constitutional. It very
clearly keeps the prerogatives of the Legislative Branch in
tact. And what this effectively does is it just brings needed
sunshine to the process and it helps get at the culture of
spending in Congress.
I love boys and girls clubs. My wife and I donate our
private dollars to the boys and girls clubs of Rock County in
Janesville, Wisconsin. But we cannot fund every good idea that
is out there. If we keep trying to do that, we are going to
accelerate the bankruptcy of this country. And the country is
going bankrupt. That is an irrefutable point.
So we need to change the culture of spending. And I would
argue earmarks as small as they are in the aggregate have a
huge impact on the culture of spending in this place. If we
cannot get the little spending right, we are not going to get
the big spending right.
And so this helps us shift the culture of spending so that
we are focused on actually trimming the budget, living within
our means, and making sure that we are scrutinizing the use of
taxpayer dollars. And under the watch of both political
parties, that has not been done lately.
That is the point I would make. Thank you.
Chairman Spratt. Mr. Scott, do you have further questions?
Mr. Scott. Just one more briefly. I just wanted to follow-
up on the question I had asked before. And that is on the
inappropriate use of this by a President using it as a coercive
technique for unrelated items.
You have got a major piece of legislation you are trying to
get out. You could conceivably threaten legislators that their
projects would be placed in the rescission package.
Do I understand you to assure us that this would not happen
in the future?
Mr. Liebman. That is not the way this is going to be used.
This is going to be used to work with Congress to eliminate
Mr. Scott. And we can count on that?
Mr. Liebman. That is the way it is going to be used.
Chairman Spratt. The gentleman yields back.
Thank you again for your testimony.
Let me just leave for you and the record some of our
concerns. As I told you when we were discussing the bill to
begin with, we will take exception to some provisions. We think
that decidedly some improvements can be added.
Number one, I am concerned and I think legitimately about a
legislative log jam. If you have 12 bills, potentially 12
rescission bills following those appropriation bills, if you
would have a CR and then have the CR expire and have 10 or 11
appropriation bills separately acted upon, how many rescission
bills would come up from that? Is 45 days too long? Will that
stymie the legislative process or create a legislative log jam?
Those are concerns.
I think that we could also look at enhancement of incision
of the expedited rescission bill as we did in the past and
include things like targeted tax benefits and tax expenditures.
I do not have a ready definition for tax expenditures that
would fit in the bill, but I think it should certainly be borne
And I do think that we should take steps to see that every
member who fervently believes that what he has passed for his
constituency as an opportunity, an ample opportunity to go to
the House and make the case for his particular proposal if it
is included in your package.
I am not talking about enough time to tie the process up. I
am talking about 10 to 15 minutes, but at least the opportunity
to make the case and call to his aid and assistance some other
members who would share his support.
And then I think some definition with funding unnecessary
which was raised by some. We probably need some criteria for
what the President would--we expect the President to apply in
culling out unwarranted, unnecessary, and wasteful spending.
So these things remain to be worked out, but the bill is in
active play, as you can see. It is getting support on both
sides of the House and we will be working to improve it and
make it something that we can take to the floor and pass with a
Thank you today for your participation. We look forward to
working with you in the perfection of this bill.
Mr. Liebman. Thank you very much.
Chairman Spratt. I ask unanimous consent that members who
did not have the opportunity to ask questions of the witness be
given seven days to submit questions for the record. Without
objection, so ordered.
This concludes the hearing. Thank you again for coming.
[Responses by Mr. Liebman to questions submitted for the
Responses by Mr. Liebman to Questions Submitted for the Record
questions from robert b. aderholt
1. If Congress ever approves expedited rescission, don't you think
those funds should go to deficit reduction as opposed to increased
The Administration expects rescissions approved through this
mechanism to go toward deficit reduction, and specifically restricts
rescission packages from including any new spending.
2. Why is the President pushing expedited rescission when he has
deferred most decision making on the fiscal outlook of the country to
his fiscal commission? Is the fiscal commission considering expedited
rescission as a way to reduce federal spending across the Board?
The President has shown time and again that he is willing to make
the fiscally responsible decisions that are critical to the future of
our country. The 2011 President's Budget proposes over $1 trillion in
deficit reduction, more than any President has put forward in over a
decade. The Budget proposes terminations, reductions and savings that
would eliminate more than $20 billion in unnecessary spending. The
expedited rescission proposal complements these efforts by providing a
new tool for eliminating duplicative, wasteful, and unnecessary
spending. The Fiscal Commission's two charges--proposing policies that
reduce the deficit to 3 percent of GDP by 2015 and meaningfully improve
the long-term fiscal outlook--are significantly broader in scope than
the savings that would likely be achieved with the proposed rescission
3. Since taking office, President Obama has signed legislation
resulting in an 84 percent increase in domestic non-defense
discretionary spending and the nation is facing a deficit of $1.5
trillion for FY 2010. Will expedited rescission be an effective tool in
cutting federal spending when tax and tariff benefits or new
entitlement spending are not included and the nation faces such a large
deficit? Would it be better for the Administration or Congress to
propose a long term fiscal plan to reduce federal spending?
Expedited rescission is intended to be a tool for the President and
Congress to work together to eliminate unnecessary spending. The
authority is designed to be used to expedite a straightforward
decision--whether to reduce or eliminate funding for specific programs
or projects. Under the proposal, the President could not propose any
other changes in law. Given that the decision is a straightforward one,
the proposal requires an up or down vote and does not permit any
amendments to the President's proposed package.
We do not believe this expedited proposal would be appropriate for
altering entitlement programs or tax policies. Changes to entitlement
and tax provisions generally involve more than simply a decision about
funding levels. Because such provisions are often deeply interrelated
with other provisions, striking or changing entitlement and tax
provisions generally requires more complex legislation. Nonetheless,
the Administration is committed to eliminating unnecessary entitlement
and tax expenditures, and we look forward to working with Congress to
Regarding a long term fiscal plan, the President's 2011 Budget
proposes over $1 trillion in deficit reduction, more than any President
has put forward in over a decade. The President has also established a
bipartisan Fiscal Commission. The Commission is charged with proposing
policies that reduce the deficit to 3 percent of GDP by 2015 and
meaningfully improve the long-term fiscal outlook.
prepared statement and questions from james r. langevin
Fiscal responsibility is vital to our long term economic
prosperity. As Fed Chair Bernanke testified in front of this committee
last week, ``unless we as a nation make a strong commitment to fiscal
responsibility, in the longer run, we will have neither financial
stability nor healthy economic growth.'' I couldn't agree more. Given
our significant fiscal challenges, we are naturally interested in
exploring all options to reduce the federal deficit and achieve a
Today, we are considering a proposal that would make significant
alterations to the current budgetary process. The proposal uses a
procedure called ``expedited recession,'' which would allow the
President to recommend additional cuts to spending bills that he signs
into law, subject to Congressional approval.
In order to determine the relative effectiveness of this proposal,
I think it would be helpful to put it into context and examine some of
1. How much do you anticipate this proposal could save? To put that
amount into context, what is the total amount of discretionary spending
enacted in FY2010, and how much of the total federal budget does
discretionary spending comprise versus mandatory spending? Would this
proposal address anything on the mandatory side of spending?
Expedited rescission authority would provide a useful tool for the
President and Congress to work together to eliminate duplicative,
wasteful, and unnecessary funding. Since taking office, the
Administration has prioritized identifying and cutting unnecessary
spending. For example, the President proposed approximately $20 billion
in terminations, reductions, and savings in both the FY 2010 and 2011
Budgets. These proposed cuts are examples of the type and scope of
savings that we believe could be achieved if Congress enacts the
Administration's expedited rescission proposal. Knowing this procedure
exists may also discourage lawmakers from enacting wasteful spending in
the first place, providing additional savings.
The expedited rescission proposal targets both discretionary
spending and non-entitlement mandatory spending, where the decisions
involve straightforward choices about whether to reduce or eliminate
spending on a particular program or project. Changes to entitlement
programs generally require more complex legislation and are more
appropriately handled through standard legislative procedures.
We recognize that this proposal is not a magic bullet. Enacted
discretionary spending in FY 2010 is around $1.4 trillion and mandatory
spending is around $2.0 trillion. While expedited rescission authority
lifts procedural barriers, the President and Congress will still have
to make the tough choices to cut back unnecessary funding. Furthermore,
restoring fiscal sustainability in the medium and long term will
require not only reducing unnecessary or excessive funding provided
annually for specific programs and projects, which the expedited
rescission proposal aids, but also making larger choices about overall
budget priorities and revenue levels--a process now being facilitated
by the President's National Commission on Fiscal Responsibility and
2. As you mentioned in your testimony, the President announced a
proposal to freeze non-security discretionary spending levels for three
years, and Congressional Leadership has been supportive and committed
to this. In fact, the Senate Budget Committee passed a resolution that
would go further with an additional $4 billion reduction in
Given these developments, would you agree that Congress can
effectively reduce spending without expedited rescission if it has the
political will? How would this proposal address or change that?
While expedited rescission lifts procedural barriers, there is no
substitute for political will. The President and Congress will continue
to have to make the tough choices to cut back unnecessary spending. The
purpose of expedited rescission is to give the President and Congress
an additional tool to eliminate unnecessary spending and to discourage
waste in the first place.
3. Under this proposal, the President has 45 ``session'' days to
send a rescission package to Congress. Congress then has 25 days to
act. I am concerned this time frame threatens to slow down an already
time-consuming appropriations process. How would that affect omnibus
appropriations bills, which tend to come toward the end of the session?
Since the President would not be able to submit a rescission
package until the applicable spending bill has already been enacted,
expedited rescission by itself would not slow down the consideration of
spending bills. In designing the expedited rescission proposal, it was
our intention to streamline debate on presidential rescission packages,
to minimize the use of floor time, and to enable quick Congressional
consideration of proposed rescissions. We are open to working with
Congress on other ways to speed the process.
4. How would a delay in spending affect federal agencies, as well
as state and local funding recipients, who are unable to engage in
specific program planning until the appropriations process is complete?
The Administration's expedited rescission proposal includes a
number of measures that would limit spending delays, especially
compared to the President's existing authority under the Impoundment
Control Act (ICA). Under the Administration's proposal, the President
would have a deadline of 45 days after enactment of the funding to
propose a package of rescissions. In contrast, the ICA allows the
President to propose rescissions any time before the funds expire. In
addition, under the Administration's proposal, Congress would consider
the President's package using an expedited procedure that takes no more
than 25 days. This ensures a shorter period of withholding funds after
transmittal than under ICA procedures, in which Congressional
consideration is more drawn out and open-ended.
5. In the 1990s, the line-item veto was determined to be
unconstitutional. How does this proposal differ from the line-item
veto, and do those differences resolve the constitutional concerns?
The Administration's proposal has been carefully crafted to
preserve the constitutional balance of power between the President and
Congress. Under the proposal, the President would submit a legislative
package and Congress, which has the authority to set its own rules,
would consider the package using fast-track procedures. This stands in
contrast to the line-item veto power enacted in 1996 and later struck
down by the Supreme Court. The 1996 law allowed the President to use
his veto authority to strip out select provisions of legislation while
signing the rest into law. The Supreme Court found this to violate the
constitutional procedure for approving or vetoing laws. The current
proposal is fundamentally different since it does not expand the
Presidential veto authority in any way. Rescissions would occur only
if, as with any other law, they are passed by Congress and signed by
[Whereupon, at 11:34, the Committee was adjourned.]