[Senate Hearing 111-1]
[From the U.S. Government Publishing Office]




                                                         S. Hrg. 111-1

 NOMINATION OF HON. DR. PETER ORSZAG, OF MASSACHUSETTS, TO BE DIRECTOR 
 OF OMB AND THE NOMINATION OF ROBERT NABORS, OF NEW JERSEY, TO BE THE 
                         DEPUTY DIRECTOR OF OMB

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               ----------                              


       January 13, 2009--NOMINATION OF HON. DR. PETER ORSZAG, OF 
   MASSACHUSETTS, TO BE DIRECTOR OF OMB AND THE NOMINATION OF ROBERT 
        NABORS, OF NEW JERSEY, TO BE THE DEPUTY DIRECTOR OF OMB

                                     
                                     



           Printed for the use of the Committee on the Budget





                                                          S. Hrg. 111-1

 NOMINATION OF HON. DR. PETER ORSZAG, OF MASSACHUSETTS, TO BE DIRECTOR 
 OF OMB AND THE NOMINATION OF ROBERT NABORS, OF NEW JERSEY, TO BE THE 
                         DEPUTY DIRECTOR OF OMB

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

       January 13, 2009--NOMINATION OF HON. DR. PETER ORSZAG, OF 
   MASSACHUSETTS, TO BE DIRECTOR OF OMB AND THE NOMINATION OF ROBERT 
        NABORS, OF NEW JERSEY, TO BE THE DEPUTY DIRECTOR OF OMB

                                     
                                     



          Printed for the use of the Committee on the Budget





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                        COMMITTEE ON THE BUDGET

                  KENT CONRAD, North Dakota, Chairman

PATTY MURRAY, Washington             JUDD GREGG, New Hampshire
RON WYDEN, Oregon                    CHARLES E. GRASSLEY, Iowa
RUSSELL D. FEINGOLD, Wisconsin       MICHAEL ENZI, Wyoming
ROBERT C. BYRD, West Virginia        JEFF SESSIONS, Alabama
BILL NELSON, Florida                 JIM BUNNING, Kentucky
DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          JOHN ENSIGN, Nevada
BENJAMIN L. CARDIN, Maryland         JOHN CORNYN, Texas
BERNARD SANDERS, Vermont             LINDSEY O. GRAHAM, South Carolina
SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
MARK R. WARNER, Virginia
JEFF MERKLEY, Oregon

                  Mary Naylor, Majority Staff Director

                Denzel McGuire, Minority Staff Director

                                  (ii)







                            C O N T E N T S

                               __________

                                HEARINGS

                                                                   Page
January 13, 2009--Nomination of Dr. Peter Orszag, of 
  Massachusetts, to be Director of the Office of Management and 
  Budget.........................................................     1

Nomimation of Robert Nabors, of New Jersey, to be Deputy Director 
  of the Office of Management and Budget.........................     1

                    STATEMENTS BY COMMITTEE MEMBERS

Chairman Kent Conrad.............................................     1
Ranking Member Judd Gregg........................................    12
Senator Enzi.....................................................   148
Senator Grasslely................................................   150

                               WITNESSES

Nabors, Robert, of New Jersey, Nominee to be Deputy Director of 
  the Office of Management and Budget............................45, 47

Orszag, Peter, of Massachusetts, Nominee to be Director of the 
  Office of Management and Budget................................16, 19

                         ADDITIONAL STATEMENTS

Hon. John M. Spratt, Jr., A Representative in Congress from the 
  State of South Carolina........................................    12
Hon. Paul Ryan, A Representative in Congress from the State of 
  Wisconsin......................................................    14
Hon. David R. Obey, A Representative in Congress from the State 
  of Wisconsin...................................................    44

                                REDACTED

Statement of Biographical and Financial Information Requested of 
  Presidential Nominee Dr. Peter Orszag to be Director of the 
  Office of Management and Budget................................    55

Statement of Biographical and Financial Information Requested of 
  Presidential Nominee Robert Nabors to be Deputy Director of the 
  Office of Management and Budget................................    88

 ANSWERS TO QUESTIONS PRESENTED TO DR. PETER ORSZAG AND ROBERT NABORS 
                           BEFORE NOMINATION

Chairman Kent Conrad............................................94, 105
Ranking Member Judd Gregg........................................    98
Senator Jim Bunning..............................................   110

 ANSWERS TO QUESTIONS PRESENTED TO DR. PETER ORSZAG AND ROBERT NABORS 
                            AFTER NOMINATION

Chairman Kent Conrad.............................................   113
Ranking Member Judd Gregg........................................   120
Senator Crapo....................................................   114
Senator Ensign...................................................   115
Senator Enzi.....................................................   141
Senator Feingold.................................................   117
Senator Murray...................................................   122
Senator Nelson...................................................   143
Senator Sessions.................................................   132
Senator Stabenow.................................................   134


 
                           NOMINATION HEARING

                       TUESDAY, JANUARY 13, 2009

                                       U.S. Senate,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:05 a.m., in 
room SD-608, Dirksen Senate Office Building, Hon. Kent Conrad, 
Chairman of the Committee, presiding.
    Present: Senators Conrad, Murray, Wyden, Nelson, Menendez, 
Cardin, Sanders, Whitehouse, Gregg, and Sessions.
    Staff present: Mary Ann Naylor, Majority Staff Director; 
and Denzel McGuire, Minority Staff Director.

              OPENING STATEMENT OF CHAIRMAN CONRAD

    Chairman Conrad. I want to welcome everyone to the Senate 
Budget Committee this morning. Today, we consider President-
elect Obama's nomination of Dr. Peter Orszag to be the Director 
of the Office of Management and Budget and his nomination of 
Rob Nabors to be Deputy Director. In my judgment, these are two 
outstanding nominations. I would like both of these nominees 
confirmed quickly given the state of the economy and the 
Federal budget. It is imperative that the President-elect has 
his team in place without delay.
    We will first consider the nomination of Dr. Orszag. I will 
need to leave at about 11 o'clock today to return to my home 
State to attend my annual Marketplace for Entrepreneurs event. 
Senator Murray will chair the Committee if the hearing extends 
beyond that time.
    Let me begin by welcoming our distinguished guests from the 
House, House Budget Committee Chairman John Spratt, who I think 
is on his way, and the Ranking Member, Mr. Ryan, who will 
introduce Dr. Orszag. We very much appreciate your being here. 
Representative Ryan's presence in particular says a great deal 
about the respect that Dr. Orszag has attained on both sides of 
the aisle.
    Dr. Orszag is joined today by his daughter, Leila--I hope 
that is the correct pronunciation.
    Mr. Orszag. It is.
    Chairman Conrad. And his son, Joshua. We are very happy to 
have the two of you here, and we are honored by your presence.
    This Committee knows Dr. Orszag well. Two years ago, I 
picked Dr. Orszag to be the CBO Director, along with my 
colleagues in the House and the Senate leadership on the Budget 
Committee. We chose him based on his record and reputation as a 
talented economist and budget expert. I was not disappointed--
and I think it is fair to say all of us were delighted--by the 
leadership that he brought to the Congressional Budget Office.
    He has provided Congress and this Committee and the 
American public with invaluable information and insight on the 
economy and the budget, and his laser-like focus on addressing 
the growing cost of health care demonstrated his firm grasp of 
the tremendous long-term budget challenge facing our Nation.
    I am pleased that he will bring his immense talent and 
drive to OMB in the Obama Administration. We will need the best 
and brightest our country has to offer working together to pull 
us out of this fiscal and economic decline. Dr. Orszag is 
exactly the right person for this job at this time. I look 
forward to continuing to work closely with him as he assumes 
his new responsibilities.
    Before I turn to Senator Gregg, I want to lay out some of 
the very serious budget challenges facing our country. CBO's 
new estimates show that the deficit in 2009 will be $1.2 
trillion. That is more than 2-1/2 times last year's record 
deficit. And CBO's numbers show that under current policies, we 
will face record deficit for years to come, and that is before 
we adopt any economic recovery plan.

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    We are building a wall of debt. Gross Federal debt is now 
estimated to be $11.6 trillion in 2009. If we add in current 
policies, such as an extension of tax cuts, the alternative 
minimum tax reform, and ongoing war costs, we could easily see 
the debt rise to $21.3 trillion by 2019. That is nearly 100 
percent of gross domestic product.


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    Our debt is increasingly financed by foreigners. In 2008, 
68 percent of the increase in publicly held debt was held by 
foreigners. This presents a significant risk to our economy. If 
these foreigners stop buying U.S. debt, interest rates could 
shoot up and our economy could be thrown into a downward 
spiral. The warning signs are already there.
    This article was on the front page of the New York Times 
last week. It was headlined, ``China Losing Taste for Debt from 
the United States.'' The explosion in debt we are seeing is 
coming at the worst possible time, just as the baby-boom 
generation is beginning to retire. It is important to remember 
that within the decade, by 2018 more than half of the baby 
boomers will reach the early retirement age of 62. We are 
facing a demographic tidal wave.


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    But this is not just a demographic issue. Rising health 
care costs pose a bigger threat. These rising health care costs 
are exploding the cost of our health care system. By 2050, more 
than 18 percent of our gross domestic product will be spent on 
Medicare, Medicaid, and Social Security. That represents nearly 
all of current Federal spending. And this is not just an issue 
of Federal health spending. Private sector health spending is 
also exploding. Taken together, public and private health care 
spending will reach 37 percent of GDP by 2050 if we stay on our 
current course. Clearly, that is completely unsustainable.


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    Senator Gregg and I have made a proposal to our colleagues 
to face up to these long-term challenges. We are open to other 
proposals, but we believe something like what we have outlined 
is needed. Here are the highlights of the task force proposal:


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    One, it would be tasked with addressing our long-term 
fiscal imbalances.
    Two, it would consist of sitting lawmakers and 
representatives of the administration.
    Third, everything would be on the table.
    Fourth, the panel's legislative proposal would get fast-
track consideration, and Congress would have a vote.
    Finally, it would be designed to ensure a bipartisan 
outcome.
    In announcing his economic team, President-elect Obama 
said, ``Short term, we have got to focus on boosting the 
economy and creating jobs. Part and parcel of that is a plan 
for a sustainable fiscal situation long term.''


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    He has it exactly right. That is exactly what Senator Gregg 
and I are calling for. Our Nation's economic future will remain 
at risk until and unless we confront this long-term fiscal 
challenge.
    With that, I want to turn to the distinguished Ranking 
Member, Senator Gregg.

               OPENING STATEMENT OF SENATOR GREGG

    Senator Gregg. Thank you, Mr. Chairman. Thank you for your 
opening comments, which I am in 100 percent agreement with 
relative to the concern which you raise on the debt and the 
need to address it and the issue of the entitlement spending 
and the baby-boom generation. We have heard considerable good 
counsel on this issue from Dr. Orszag over the years.
    I am not sure why we are having this hearing since you have 
got the Republican Ranking Member of the House Budget 
Committee, the Chairman of the House Budget Committee, yourself 
and myself, and I suspect everyone in this room supports these 
two nominees. They are exceptional. They are talented. We are 
lucky to have them in public service, and I think the 
President-elect has done himself well and done his 
administration good service and is guaranteeing quality people 
when he puts people like this on his team.
    I would say this: You do not seem to turn out the crowd 
that Senator Clinton has turned out this morning, however.
    [Laughter.]
    Senator Gregg. There are a lot of other issues which we 
hope to discuss also, but in order not to extend this hearing, 
I am not going to get into those until we get to the question-
and-answer period. But I just want to reinforce what the 
Chairman has said on the issue of the need to address the 
underlying issue which we as a Nation are going to have to 
confront after we get by this immediate economic downturn, 
which is obviously severe, disruptive, and a terrible event for 
a lot of individual Americans. The bigger event is the coming 
fiscal tsunami that is facing us as a result of the retirement 
of the baby-boom generation and the huge costs which we will 
incur.
    And we are going to look forward to some encouraging and 
thoughtful ideas on this as to how we take that issue on from 
this team at OMB.
    Thank you.
    Chairman Conrad. Thank you, Senator Gregg.
    Welcome, Chairman Spratt. If you want to proceed, and then 
we will turn to the Ranking Member, Congressman Ryan, and then 
we will hear from Dr. Orszag. Then we will have questioning 
rounds, and we will limit it to 7 minutes, and we will try to 
be strict about it so that everybody can have some clear idea 
of when their time will come.
    Chairman Spratt, welcome to the Senate Budget Committee. We 
appreciate very much your being here.

  STATEMENT OF HON. JOHN M. SPRATT, JR., A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. Spratt. Thank you for inviting me across the Capitol to 
testify on behalf of Peter Orszag for Director of OMB. Had the 
choice been mine, Peter is exactly the person I would have 
chosen, and indeed, Mr. Chairman, 2 years ago, when the 
nomination for the directorship of CBO was our choice, we 
selected Peter Orszag. I think you would agree with me he 
fulfilled our expectations in every possible way.
    Our country faces massive problems: a recession that is 
deepening, unemployment that is soaring, business failures and 
foreclosures occurring at a rate not seen since the 1930's. As 
a result, the Government is racking up deficits and 
accumulating debt that will take a generation of sustained 
effort to overcome.
    During a time when we are plagued with problems, we can at 
least be thankful that the Obama Administration will have Peter 
Orszag, a steady hand, at the helm. Though Peter is young, he 
has experience beyond his years, a keen intelligence, and a 
breadth of knowledge about public policy. Over the last several 
years, he has trained his focus on two of the most vexing 
issues that overhang our future: fixing health care and 
securing retirement.
    While at CBO, Peter expanded its capacity for sophisticated 
health care policy analysis. He beefed up the health care staff 
and created a new panel of health advisers to bring together 
some of the Nation's leading policy experts to inform CBO's 
work. The investments he made have paid off. CBO's work has 
helped us illuminate why health care spending is growing faster 
than the economy and why it may be possible to reduce that 
growth without harming outcomes by spotlighting medical 
spending that is of limited or no health benefit.
    Before his work in the economics of health care, Peter 
authored what may be the best short treatise on Social Security 
there is. He analyzed its long-term problems, and then laid out 
a path for solvency with better benefits for those who need 
them most.
    Beyond his mastery of economic issues, Dr. Orszag has a 
great gift for explaining complex matters simply and 
succinctly. This talent has made him an invaluable resource on 
Capitol Hill, in the Senate as well as the House. It will stand 
him in good stead at OMB.
    Because of his clarity and insight, long before he became 
Director, Dr. Orszag was a frequent witness at our Committee. 
As Director of the Hamilton Project, he was searching for new 
ways to promote economic growth. These dwelt on ways to 
strengthen saving and education, help families deal with 
economic change, and ways to make Government more effective--
all useful pursuits if we are to build a stronger economy for 
the future.
    In the last 2 years, when Peter was Director of CBO, we 
called on him to testify before the House Budget Committee 13 
times. His testimony ranged from such topics as the outlook for 
the economy, the cost of the war in Iraq, how we can gain more 
value out of health care spending, and the impact of 
controlling carbon emissions. No matter the economic issue, Dr. 
Orszag's testimony has been informed, incisive, and eminently 
understandable.
    In the 1990's, he worked for President Clinton's National 
Economic Council and then for the Council of Economic Advisors 
(CEA). Armed with knowledge, commitment, and copious quantities 
of Diet Coke, Peter helped the Clinton Administration and the 
Congress fashion good fiscal policy.
    Peter has worked in government, in the private sector, in 
academia, and in the think tank sector. He is a summa cum laude 
graduate of Princeton. He won a Marshall Scholarship and 
completed two graduate degrees at the London School of 
Economics. He has published six books on retirement and 
homeland security, and papers too numerous to mention. He 
successfully managed a large staff of over 200 at CBO. All of 
the above, in addition to his integrity and his work ethic, 
make him a hands-down, superlative choice for the Director of 
OMB.
    Mr. Chairman, our economy is not undergoing your typical 
business cycle recession. There are no off-the-shelf solutions 
to turn to. In times like these, we need our best and our 
brightest, and Peter Orszag fills that bill. He has the skills, 
the temperament, the intelligence, and experience needed at 
OMB. I urge his swift confirmation.
    Thank you very much.
    Senator Gregg. Mr. Chairman, I would like to note that the 
Chairman missed one item on Dr. Orszag's resume, which is that 
he and I graduated from the same high school, which is probably 
the most significant item on his resume.
    Chairman Conrad. I regret to say that I went to that high 
school, too.
    Senator Gregg. That is correct.
    Chairman Conrad. I did not graduate there, however.
    Congressman Ryan, welcome here, and you are following 
Chairman Spratt, who, as always, did such a superb job of 
endorsing a candidate before this Committee. And we are 
delighted that you are here this morning as well, and we want 
to thank you for the role that you played in the interview 
process as we went through the selection process for a 
replacement for Dr. Orszag. I thought it was really an 
excellent process, and you played a very constructive role, and 
we appreciate that as well.

STATEMENT OF HON. PAUL RYAN, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF WISCONSIN

    Mr. Ryan. Thank you, Chairman Conrad. Thanks for having me 
here. Ranking Member Gregg, it is nice to see you again as 
well. I appreciate this opportunity to introduce Peter, my 
friend, the former Director of the CBO.
    First, I just simply want to say to Peter congratulations 
on your appointment to serve as our next OMB Director. It is 
fantastic and it is well deserved.
    Peter Orszag is slightly older than me, so I am very happy 
we are sending someone with wisdom and experience to OMB.
    But to my friends on the Budget Committee, I would like to 
give you my reasons for supporting his nomination. No. 1 is his 
understanding of the issues, of the budget, of the inner 
workings of the budget. No. 2 is his sense of fairness and 
impartiality. Those of us who are budgeteers have watched the 
CBO over the years. We care a great deal how this agency is run 
and how we are serviced here in this branch of Government.
    Peter Orszag brought a sense of fairness to that agency 
that we cherish so much. He gave us fair answers. We come from 
different economic doctrines and philosophies, but he did not 
bring that to the CBO, and he gave us the cleanest answers we 
could have asked for. When it comes to issues like health care, 
cap and trade, we got good research, fair research, impartial 
research from the Congressional Budget Office.
    Another reason that I am particularly interested in is his 
understanding of and his ability to effectively communicate the 
entitlement problem facing our country and the key drivers of 
that problem--namely, health care. I am particularly pleased 
with his ability and his success at beefing up the Health Care 
Analytical Section at the Congressional Budget Office because 
that is an area in which we are going to have a lot of work to 
do if we are going to get our hands around this looming 
entitlement crisis.
    And so when you take a look at his success and tenure at 
the CBO, it gave us all those qualities we look for in a great 
CBO Director. And I take a look at this new administration. The 
challenges confronting our country--and I cannot think of a 
better person for the President-elect to nominate from within 
his ranks from his party to serve as the next OMB Director. 
This is going to be a tough 2 to 4 years, and that is why it is 
important to have someone with credibility, someone with skill, 
someone with knowledge and experience to help us navigate our 
way through these extremely difficult times that we have ahead 
of us. And then going forward, I know that the things we are 
going to get from OMB, the numbers we are going to receive, the 
dialog we are going to have is going to be that much better, 
that much more dependable, and that much more reliable because 
Peter Orszag will be the next OMB Director.
    And so, with that, I think that this is the best person 
that this President could have nominated for his administration 
to run the OMB, and that is why I am happy to be here to 
support his nomination.
    Thank you for having me.
    Chairman Conrad. Thank you, Congressman Ryan. We appreciate 
very much your being here, as well as Chairman Spratt. We know 
that the two of you may have business on your side of the 
Capitol, and so whenever you need to take your leave, please 
feel free to do so.
    Under the rules of the Committee, we have to swear the 
witness, so, Mr. Orszag, if you would stand?
    Under our Committee rules, the nominee is required to 
testify under oath, so I will now swear you in. Do you swear 
the testimony that you will give to the Senate Budget Committee 
will be the truth, the whole truth, and nothing but the truth?
    Mr. Orszag. I do.
    Chairman Conrad. If asked to do so, and if given reasonable 
notice, will you agree to appear before this Committee in the 
future and answer any questions that members of this Committee 
might have?
    Mr. Orszag. I do.
    Chairman Conrad. Please be seated.
    We will now have a chance to hear from Dr. Orszag directly, 
and then we will go into a questioning round with each member 
given 7 minutes.
    Welcome, Dr. Orszag. Congratulations on your nomination by 
the President-elect. Thank you for your extraordinary service 
as the head of the Congressional Budget Office, and please 
proceed.

 TESTIMONY OF PETER R. ORSZAG, PH.D., OF MASSACHUSETTS, TO BE 
           DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Orszag. Mr. Chairman, Ranking Member Gregg, members of 
the Committee, I am honored to come before you as President-
elect Obama's nominee for Director of the Office of Management 
and Budget. I would like to particularly thank Mr. Spratt and 
Mr. Ryan for appearing and introducing me this morning. As 
Director of the Congressional Budget Office, I worked to 
establish good relationships with both of them and with members 
of both parties. If I am confirmed as Director of OMB, I hope 
to continue that spirit of bipartisanship as we struggle to 
meet the challenges that we face. I am also very pleased to be 
joined by my family this morning.
    This hearing is being held at a momentous time. In the 
short run, we face the most severe economic crisis that has 
occurred since the Great Depression. Over the medium and long 
run, we face the prospect of large and growing deficits that 
are unsustainable. These twin challenges of economic recovery 
and fiscal responsibility will make the job of OMB particularly 
challenging. But, again, if confirmed, I relish and look 
forward to attempting to meet those challenges.
    As we struggle to address both of those issues, we also 
need to make Government work better. I have never been 
particularly fond of the argument, ``That is just the way it 
has always been done around here.'' And as we struggle to meet 
both of these challenges, I think that argument in particular 
no longer makes sense. We need to be looking for new ways of 
doing things, exploring innovative approaches, and trying to 
make Government work better and smarter.
    Let me try to address both the short run and the long run 
briefly.
    As I mentioned, the short-term economic outlook that we are 
inheriting at the beginning of 2009 is bleak, and dramatic 
action is necessary to address it. In 2008, the economy lost 
more than 2.5 million jobs. Without policy interventions to 
bolster aggregate demand, projections suggest that it could 
lose another 3 to 4 million jobs over the coming year.
    As Figure 1 of my written testimony shows, the unemployment 
rate in the final quarter of 2010, although still elevated, 
would be much lower if we acted through an economic recovery 
plan than if we did nothing. So we need to act. In particular, 
during periods like the current one, the key impediment to 
economic growth is aggregate demand. With existing capacity, 
the economy could produce substantially more goods and services 
if there were more demand for them. More specifically, in the 
absence of action, estimates suggest that the gap between how 
much the economy could produce each year and how much it will 
actually produce over the next year or two amounts to $1 
trillion a year. That is $12,000 per year per family of four on 
average in lost income and output.
    An economic recovery plan will help fill this gap between 
aggregate demand and existing capacity. It can also help to 
expand capacity over the long run. Any such plan should include 
significant transparency, accountability, and oversight. The 
goal is to set a new standard for how we spend taxpayer 
dollars. Such heightened transparency and oversight is 
particularly important since we are inheriting not only an 
economic crisis but also a daunting fiscal gap, as the Chairman 
already mentioned.
    Even without steps to mitigate that economic downturn, the 
deficit we are inheriting for the current fiscal year, which 
began last October, is likely to exceed $1 trillion, more than 
8 percent of gross domestic product and the largest in our 
history, which the exception of the Civil War and the World 
Wars.
    The combination of the economic recovery package, 
interventions to stabilize the financial and housing markets, 
and the normal dynamic of the economy over the business cycle 
should help to bring back a period of economic growth. And as 
the economy recovers, we must shift our attention to our 
medium- and long-term fiscal challenges. The simple fact is 
that under current policies the Federal budget is on an 
unsustainable path. Even after the economy recovers from the 
current downturn and, again, under current policies, the Nation 
faces the prospect of budget deficits that are in the range of 
about 5 percent of GDP over the next 5 to 10 years. They grow 
larger thereafter. And over the longer term, as has already 
been mentioned, the fiscal gap is driven primarily by the rate 
at which health care costs grow.
    Improving the efficiency of the health system has benefits 
that extend well beyond just the Federal budget. Health care 
costs are already imposing severe burdens on State governments. 
For example, health care absorbs about one-third of State 
government budgets on average, and those costs are reducing 
workers' take-home pay to a degree that is both unnecessarily 
large and perhaps underappreciated. In all this, however, we 
have to keep in mind that we appear to have very significant 
opportunities to reduce health care costs without harming 
health outcomes.
    As Ranking Member Gregg knows, important research at 
Dartmouth University--I am kidding. Dartmouth College.
    [Laughter.]
    Mr. Orszag [continuing]. Suggests significant opportunities 
to reduce health care costs without harming health outcomes 
because of the very significant variation that occurs 
geographically in how health care is practiced. Many of the 
steps that would help to improve the value that we get from 
health care and improve the efficiency of the health care 
system include expanding the use of health information 
technology, which is necessary but not sufficient for a better-
performing health system; expanding research on comparative 
effectiveness, that is, what works and what does not; providing 
financial incentives for better care rather than more care; and 
providing incentives for prevention and healthy living.
    Finally, in tackling both our short-run and long-run 
challenges, we need to make Government work better and smarter. 
That means increased transparency and accountability. It also 
means strengthening the Federal Government's use of information 
technology so that we can better interact with the public and 
deliver services more effectively. It means reexamining our 
procurement budget and improving the management of Federal 
contractors. It means restoring the prestige and building the 
capability of the Federal work force, which is particularly 
important given that roughly half of the Federal work force is 
expected to retire over the next decade. We need to broaden the 
appeal of public service.
    Finally, we need to reexamine how we can best protect 
public health, the environment, and public safety. I am pleased 
that the President-elect has announced his intention to 
nominate Cass Sunstein, one of the Nation's leading legal 
thinkers, to run the office within OMB for coordinating 
regulatory policy.
    Mr. Chairman and members of the Committee, that concludes 
my prepared remarks. I want to reiterate my commitment to 
working across party lines to address both the short-run and 
long-run challenges we face. And I would be pleased to answer 
any questions you may have.
    Thank you.
    [The prepared statement of Mr. Orszag follows:]


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    Chairman Conrad. Thank you, Dr. Orszag.
    In my questioning time, I would like to first ask you how 
you assess--again, as Chairman Spratt and Congressman Ryan 
leave, we thank you for coming here to introduce Dr. Orszag, 
and thank you both for your service.
    As we consider the need for an economic recovery plan, can 
you give us your assessment of the near-term risk to the 
economy of the United States? How precarious do you believe our 
current circumstances are?
    Mr. Orszag. I will go back to saying I believe that we are 
facing the worst economic crisis since the Great Depression. 
That gap that I mentioned between how much the economy can 
produce and how much it is currently producing of $1 trillion 
is excessively large. That represents a lost opportunity, and 
it is reflected in elevated unemployment, job losses, distress 
for working families, because that is $1 trillion of lost 
income that could be there if we could just bolster aggregate 
demand.
    The danger in this kind of situation is that given the 
risks that exist in financial markets and this dynamic of lack 
of confidence and downward spiraling is that things can feed on 
themselves, where you have the real economy weakening, 
financial markets weakening, and then feedback effects that 
feed from one part of the economy to another in a negative 
spiral so that the situation can become particularly bad. That 
is why I think we need to act. We need to act boldly and we 
need to act quickly in order to bolster aggregate demand, and 
address some of the financial market turmoil that still 
persists.
    It is not going to be over quickly, and I think Figure 1 in 
my chart kind of encapsulates it. It shows that if we do not 
act, we have a very significant increase in the unemployment 
rate. Even if we do act, the unemployment rate does go up but 
not by as much. There is a big benefit from acting. But we are 
still in for some period of economic difficulty, even with a 
significant economic recovery plan.
    Chairman Conrad. Senator Gregg and I have decided that we 
would put together criteria to apply to any economic recovery 
plan. What would be your candidates for inclusion in an 
economic recovery plan? What criteria do you think ought to 
apply?
    Mr. Orszag. Well, I think there are several criteria.
    The first, and perhaps most important, is bang for the 
buck--that is, what bolsters aggregate demand the most and 
operates most quickly.
    The second is if there are any medium- or longer-term 
implications for spending or revenue from something that you 
are doing today, it would be better to minimize that; but to 
the extent that there are any such implications, that they are 
leading to things that help in the long term to promote 
economic performance.
    And then, finally, I would say there is the tension--and 
let me just again be forthright here--between that 
macroeconomic gap that I spoke about, the $1 trillion GDP gap, 
and the set of policies that you can come up with when you 
actually go through the possibilities that spend out 
immediately within the next 3 to 6 months and then add to 
aggregate demand immediately.
    If you put all those together, you wind up with a package 
that is much smaller than the GDP gap that we face, and then 
you face this choice: Do you accept a high level of 
macroeconomic risk by not expanding the package? Or do you 
expand the package into other areas that might have somewhat 
lower bang for the buck but that help you to address more of 
the macroeconomic problem?
    Chairman Conrad. All right. On your point No. 2, for those 
things that have longer-term implications--because to the 
extent possible we want this program to be temporary. To the 
extent it goes beyond the temporary, you make the argument that 
it needs to be helpful to securing longer-term economic growth, 
improve the competitiveness of the country. What would be 
examples of that?
    Mr. Orszag. There are a variety of examples of that. For 
example, various infrastructure projects that may spend out 
largely but not entirely over the next year or two will leave 
you with a physical infrastructure that can increase capacity 
and economic growth in the future. Various energy investments 
that may, for example, begin the process of leading to a smart 
grid can do so. Health information technology investments are 
another example of that.
    So you can go down a list of things that may not fully 
spend out over 6 months or a year, but that will have some 
macroeconomic benefit in the short run, and also do things that 
are beneficial for the economy over the longer run.
    Chairman Conrad. All right. Let me turn, if I can, to the 
longer-term challenges. As you know, Senator Gregg and I have 
laid out a process. So far, the incoming administration has 
been resistant to laying out a process to develop a plan to 
deal with our long-term imbalances. What can you tell us would 
be the intentions of the administration, your intentions, to 
cope with these long-term imbalances that you have previously 
described as unsustainable?
    Mr. Orszag. Well, let me say two things. First, the new 
administration will put out a budget and economic overview in 
mid-to late February in which we will have more to say about 
the medium- and longer-term deficits. But I think you are 
referring specifically to process issues, and my view, for 
whatever it is worth, is that it is difficult to argue that our 
current processes for addressing long-term budget issues, 
especially including health care, are working that well, just 
by looking at the evidence. And so, obviously, therefore, 
looking at possible changes in process is worthwhile. I know 
that you and Senator Gregg have an idea with regard to a long-
term fiscal commission. Senator Baucus and Mr. Daschle have put 
forward an idea on a Federal health board that would focus 
specifically on health care decisions. There are a variety of 
process changes that are under discussion that we are examining 
carefully and that, given the failures of the current system to 
address these problems, certainly seem worthy of examination.
    Chairman Conrad. Let me just conclude by saying I 
understand the notion of a health board. I think that has 
prospects. But what we confront here in terms of our long-term 
fiscal situation, while health care is the 800-pound gorilla, 
we face other major challenging areas as well: Social Security, 
the revenue system of the country. My own view is we have got a 
revenue system that is badly outdated, and that fundamentally 
needs reform if we are going to make America as competitive as 
it can be for the future.
    So I will leave you with that and turn to Senator Gregg.
    Senator Gregg. Thank you, Mr. Chairman. I have a number of 
questions. I would like to run through them fairly quickly.
    The first is the obvious one. I presume you are going to 
give the Minority the same deference you would give the 
Majority if a request is made of you folks.
    Mr. Orszag. Yes.
    Senator Gregg. Thank you.
    Mr. Orszag. One answer to that question.
    Senator Gregg. That is the right answer, and it is well 
phrased.
    Second, the baseline. As you know, this is a really 
critical issue, and I am sure you have some thoughts on it. I 
am hopeful that you will stick with the baseline you used at 
CBO so that we will have some consistency. What is the game 
plan there?
    Mr. Orszag. Well, what I would say on that is obviously the 
baseline that Congress uses is important for the integrity of 
the scoring process. The debate over the baseline in large part 
comes down to--let me put it this way: It is awkward because 
the sunsets in the Tax Code are now so large and the majority 
of them, I think everyone agrees, there is common agreement, 
the majority of them are going to be--if I understand the 
political economy correctly, they will be extended without 
being offset.
    So whether they are in the baseline and, therefore, they 
are extended without being offset, or whether they are not in 
the baseline but then PAYGO is waived for them, you do wind up 
at the same spot with regard to both revenue and the deficit.
    Senator Gregg. But on the other side of the coin, if you 
raise the taxes, then you get to spend the money if you do not 
use the baseline of CBO. So it really is a big issue. A big 
issue.
    Mr. Orszag. What I wanted to just clarify is that for the 
majority of them, the majority of the tax provisions under 
discussion, you wind up in the same place. Where it really does 
matter is for those tax provisions that under an administration 
policy or under a congressional policy would not be extended 
and what happens to that money. And so you can come to the same 
place; again, even if those provisions are in the baseline, but 
then not extending them is dedicated to deficit reduction as 
opposed to offsetting new proposals, you wind up in the same 
place.
    Senator Gregg. Well, can I simplify the issue? Don't you 
think the integrity of the process requires at least CBO stick 
with the traditional baseline?
    Mr. Orszag. I have every expectation that CBO will stick 
with the traditional baseline.
    Senator Gregg. On this issue of criteria, let me 
hypothesize a different approach, because what you are 
basically suggesting is that we need stimulus that energizes 
the next 6 months. We tried that--do we have our chart? We 
tried that with the first stimulus package, and it did not 
work. This is pretty definitive that you did not get a lot of 
consumption for the rebate.


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    My sense is that this, as you say, is such a unique 
recessionary event, and very different than what we have 
experienced since the Great Depression or certainly World War 
II, that what we really should be focused on is how we improve 
the economy and basically repair the economy fundamentally so 
that we can recover--whether it is 6 months, 8 months, 12 
months, or 16 months--in a way that makes us more competitive 
and more productive. So rather than using Keynesian philosophy 
on this, we ought to be using a philosophy that essentially 
says let's put the dollars that we are going to stimulate into 
the productive side of the economy; and if it is 
infrastructure, productive infrastructure, infrastructure that 
is going to generate return and competitiveness and 
productivity--bridges, as you outlined, IT in health care, 
broadband expansion in areas of low density, things like that.
    Rather than the traditional Keynesian approach--I do not 
know whether you accept that or not, but if we accept at least 
the second part of that, which is that a large part of this 
should be on infrastructure, shouldn't there be an entry test 
set up that it not be spent on running tracks and Main Street 
beautification and Halls of Fame, but it should be something 
that has valve to the economy in the area of productivity and 
competitiveness?
    Mr. Orszag. I think from the perspective of economic 
output, the more that we can focus any infrastructure 
investments on high-return investments, obviously, the better 
off we are.
    Even apart from this package, we do have issues that could 
be examined with regard to how infrastructure projects are 
selected, and the----
    Senator Gregg. Well, that is what I am saying. Shouldn't we 
have preconditions that basically set that up? Because as I 
understand it, it is probably just going to go out to the 
States. I know in my State every community has got their list. 
I have seen some lists that have changing the fire alarms in 
Town Hall. This is not where we get our return, and I think we 
have to have an entry-level set of principles that we as the 
Congress should set up, and that is what Senator Conrad and I 
were talking about trying to produce--something that would 
focus on getting bang for the buck in the area of productivity 
and competitiveness.
    On a second level, TARP is obviously the issue of the day. 
Isn't it true that if we are successful with the TARP 
investments--and they are investments rather than expenditures, 
and so far we have invested the TARP primarily in preferred 
stock. Although the debt may go up in the short run, in the 
long run the debt that represents TARP is going to come down, 
plus the taxpayer is going to get a return on that investment. 
So, really, this is, in a 4- or 5-year cycle, probably a wash 
with an income to us if it works correctly. Is that not true?
    Mr. Orszag. To a significant degree, although the estimates 
suggest that each dollar of expenditure or investment in an 
asset under the TARP does not necessarily lead to a full dollar 
in return. So it is not a dollar of cost, but the estimates 
both from CBO and the administration estimates suggest a net 
subsidy that is much smaller than 100 percent, but it is also 
greater than zero.
    Senator Gregg. But, of course, we are also borrowing this 
money at very cheap rates.
    Mr. Orszag. Yes.
    Senator Gregg. And we are getting back dividends on these 
stock purchases of 5 percent right now. I hear a lot of talk in 
the press, regrettably, not necessarily all the press but some 
of the press, that says this is an expenditure that we are 
sending this money out the door and it is going to banks vut 
that is not the case. It is an investment by taxpayers which we 
are going to get back, with interest, a fair amount of that 
money. Correct?
    Mr. Orszag. And, again, I think the better way--in fact, 
the way that the TARP legislation directs the scoring of those 
activities to be reflected is to look at sort of the net 
subsidy. So what you are putting out today versus what you can 
expect to get back in the future, it is not a $700 billion net 
cost.
    Senator Gregg. Right. In fact, we may make money on it.
    Mr. Orszag. Possibly.
    Senator Gregg. I disagree with the scoring.
    Mr. Orszag. Possibly.
    Senator Gregg. But the basic view that I am trying to point 
out is that what is happening here is that we are trying to 
stabilize the financial industry of this country using dollars 
which we will get back, for the most part. And, thus, it is a 
pretty good investment for the taxpayer to put the dollars into 
this industry if it does stabilize it--because they are the 
core of economic recovery--especially when those dollars are 
not being spent in the traditional sense but are actually being 
invested with a return.
    And isn't it essential to get an economic recovery that you 
have a viable financial industry?
    Mr. Orszag. The financial system is at the heart of any 
modern economy. Without a working financial intermediation 
system, firms cannot borrow to finance their investments; 
households have trouble obtaining credit to buy houses and to 
finance their spending. The people who save have trouble; you 
cannot move funds from net savers to net borrowers. That system 
is at the heart of a modern economy like the United States.
    Senator Gregg. And that system is and was at risk.
    The last question I have, and I appreciate your courtesy 
and the Committee's courtesy. Do you expect to send up a 
separate deficit reduction package independent of your budget?
    Mr. Orszag. At this point, we are--at least it is my view 
that we will incorporate our deficit reduction efforts in the 
economic and budget overview that we will be submitting to the 
Congress in mid-to late February.
    Senator Gregg. Thank you. I appreciate your time.
    Chairman Conrad. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman, and let me 
congratulate Dr. Orszag and his effervescent family. There are 
furious games of Tic Tac Toe going on over there. I would not 
try to compete with them.
    Dr. Orszag, as you and I have talked about, there is a ton 
of economic hurt about in our land, and you cannot, I think, 
today address specifically some of the economic stimulus 
initiatives. I do want to put on your radar right away that you 
will hear from the Westerners particularly about forestry--
Chairman Baucus, myself and others; Senator Murray has been a 
great advocate of this. We have got to go in and thin out these 
forests because of the risk of fire, and there is merchantable 
timber that we can get to the mills. And so we look forward to 
working with you on it as a special priority, and, in effect, 
these are the natural resources equivalent of shovel-ready 
projects. They are ready to go.
    What I want to spend the bulk of my time on, though, is 
talking about health care, because you and the President-elect, 
to his credit, have made it clear that health care is gobbling 
up everything in sight, and there has got to be major reform.
    The biggest chunk of money today in the health accounts of 
the Federal budget goes out through the Federal Tax Code. This 
is a sum of at least $247 billion a year. It comes from the 
World War II days of wage and price controls. The Tax Code 
makes it a write-off for employers who offer coverage. And it 
is free to the workers. It sounds good, certainly, but it 
rewards inefficiency and disproportionately gives the most 
money to the wealthiest among us and those who are lucky enough 
to have employer coverage.
    Now, here is my question. Barack Obama, to his credit, made 
two pledges in the campaign with respect to health care. First, 
the President-elect said he does not want to see middle-class 
folks clobbered with new taxes, and I sure agree with him on 
that. Second, he wants to make it clear that they can keep the 
health coverage that they have, and that is going to be 
protected, in my view, in any piece of legislation.
    Now, you and Senator Daschle are off to a very good start, 
in my view, in terms of the health reform agenda, and it is 
still being formulated. So I just want to talk theory with 
respect to you, and I want to emphasize this. This is not about 
a program or a bill. This is theory.
    Isn't it correct that there is so much money obligated 
under these Federal tax rules that you could still honor those 
pledges that Barack Obama made in the campaign and still in 
theory have the largest single sum available to quickly expand 
health coverage for those who are underinsured and uninsured? 
This is just in theory.
    Mr. Orszag. In theory, yes.
    Senator Wyden. The answer is yes.
    Mr. Orszag. Yes.
    Senator Wyden. Good. Well, I am very pleased that you have 
put that on the record, and it comes at a particularly timely 
period. Chairman Baucus, in my view, deserves great credit for 
his white paper. It is chockful of specific suggestions, and he 
in theory as well wants to address the same kind of concern.
    I read your budget books on health. I think they are 
superb. I will say to you and Claire--I see her in the front 
row--that Nancy nudged me awake from time to time on the books, 
but there is nothing that will produce as much money as quickly 
as reforming the health rules of the tax accounts, and I 
appreciate your answer.
    One other health question. You all are onto some very 
thoughtful suggestions with respect to health IT, and the big 
question there--and Dr. Coburn has pointed this out, and I 
think thoughtfully--is: How do you make these systems 
interoperable? That is going to be the single biggest challenge 
in terms of quickly making reform in the health IT payoff in 
the real world. How do you envision, again, in theory--because 
there is no specific piece of legislation--wringing the maximum 
value out of these health IT areas? Sheldon Whitehouse is here, 
and he has done good work in this area. Talk to us a little bit 
about interoperability with health IT.
    Mr. Orszag. Well, I would actually identify 
interoperability and privacy as the two issues that need to be 
addressed rapidly in order to move toward more universal health 
IT systems. We need to aggressively move toward standards that 
systems must meet in order to exchange data across different 
HIT systems at hospitals and doctors, because without that the 
system is not as valuable as it would otherwise be, and then 
also appropriately protects privacy.
    And on that, just to pause for a second on privacy, I know 
that this is also a significant concern. I would just note that 
with appropriate privacy concerns, it is possible that health 
IT actually bolsters privacy rather than reduces it, because 
right now you have paper records that a nurse or a doctor could 
be thumbing through without your knowledge. And if a health IT 
record, an electronic medical record, had a system so that 
whenever it was accessed, you knew exactly who was accessing 
it, your privacy could actually be better protected rather than 
less protected. But I would say both of those issues--
interoperability and standards--frankly, what needs to happen 
is we need industry to come together working with the 
appropriate people at HHS and elsewhere in the Government to 
rapidly reach agreement on appropriate standards, and then we 
need to move the systems out much more expansively than they 
currently are.
    Senator Wyden. One last question and it touches on the good 
work being done by Dr. Wennberg, and we have been kidding about 
how so many good ideas come from Dr. Wennberg and Dartmouth. He 
makes the point that we have these massive variations in terms 
of health care spending and that so often we pay for poor-
quality coverage.
    Now, clearly, you can make changes in these practices 
quickly if you are willing to hammer a lot of providers, and 
there will be a lot of opposition to that in the short run.
    How do you see phasing in some incentives to go to these 
innovative approaches--they used to be characterized as ``pay 
for performance,'' but I think there are other kinds of 
approaches--so as to get acceptance in terms of the medical 
profession moving to the kinds of changes that you and Dr. 
Wennberg envision in terms of rewarding best practices?
    Mr. Orszag. I think at the heart of a lot of the problems 
that we have in the health care system is the lack of 
incentives for better care, and we need to move toward 
incentives on both the provider and the beneficiary side for 
better care rather than more care.
    What does that mean? It means first that we need to know 
what better care is, and that requires investments in health IT 
and a lot more research on what works and what does not so that 
we know what better care is. Second, we need to be exploring--
and we could do this through pilot projects, we could do this 
aggressively through demo projects--different financial 
incentive schemes for providers. Do bonuses as opposed to 
penalties work better? Grouping accountable care organizations, 
does that work? All the various ways in which we can change the 
financial structure for providers, because, again, what happens 
in the current system is many providers are actually penalized 
for doing the right thing, and that makes no sense. They often 
have to give up something financial in order many times to get 
to better health outcomes for their patients by using a less 
intensive approach. And I do not think any of us would think 
that that makes much sense.
    Senator Wyden. Thank you very much.
    Chairman Conrad. Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman, and thank you 
for your leadership, and you and Senator Gregg for thinking 
very seriously about the challenge of our fiscal outlook and 
trying to do something about it.
    Dr. Orszag, congratulations on your nomination. You 
certainly have a reputation of integrity and fairness. You 
certainly have the experience to understand exactly what is 
being talked about here today and the issues that relate to it, 
and you will be challenged. And you are a popular guy. A lot of 
people like you. But how long do you think that will last after 
you become OMB Director?
    Mr. Orszag. Not very long.
    [Laughter.]
    Senator Sessions. Are you prepared--let me just ask you 
that. You are Dr. Orszag. How about being ``Dr. No''?
    Mr. Orszag. I am prepared, you know, and actually this is 
an aspect of the job at CBO, too, saying no. And I think my 
record there demonstrated that I am able to say no. And one of 
the things in my experience has been that it is not just 
whether you say no or not, but how you say it and whether you 
explain your reasoning, and that people are much less likely to 
get as angry at you if you explain yourself clearly. So that is 
what I will try to do: not avoid saying no but, rather, explain 
the reasons for saying no, and engage the other side in a 
dialog so that at least you can understand why, if the answer 
is no.
    Senator Sessions. Well, being nice about it probably helps.
    Mr. Orszag. A little.
    Senator Sessions. But it is remarkable, as Senator Gregg 
indicated, the excitement that is out there about the 
possibility of a big spending pot, and everybody wants a part 
of it. And your heart goes out to them, but a lot of the ideas 
are just not going to be stimulative of the economy.
    Do you agree with Senator Gregg--I think you do--that the 
purpose of the stimulus is to improve the economy as quickly as 
possible?
    Mr. Orszag. Well, I think there are two objectives. The 
first is to improve the economy as quickly as possible. And, 
second, to the extent that you are doing things, as Senator 
Gregg and others suggested, that may have somewhat slower 
spendout rates, you are doing things that then leave you in a 
better position in 5 or 10 years, like infrastructure spending, 
for example, if it is well selected.
    Senator Sessions. Well, there are some concerns that I have 
about the size of the stimulus package. Mr. Sunshine, CBO 
Director, in your chair just a few days ago projected that the 
economy would come out of this recession. And someone asked, 
``did it include the stimulus package'', and he said ``no''. 
And the question to Mr. Sunshine was: ``Well, would the 
stimulus package help?'' He said, ``It might.'' And I thought, 
well, it will add $1 trillion to our debt. And he says it might 
improve the economy. And his assistant indicated, well, 
throwing this kind of money in the short run should help some. 
So we know that. But there are costs when you add another $1 
trillion to the debt, are there not? We should not ignore the 
fact that for temporary advancement, we could suffer, we will 
pick up a long-term burden for decades to come with the debt.
    Mr. Orszag. There is a budgetary cost to addressing the 
current economic crisis, and, you know, there will be some 
effect over the medium to long term. What I would come back to 
saying, though, is over the medium to long term, the key really 
is rising health care costs and then, secondarily, Social 
Security and the demographic effects of the retirement of the 
baby boomers. Those are much, much larger over the next 5, 10, 
75 years than any lingering effects from addressing the current 
economic crisis if we do act.
    Senator Sessions. USA Today, when this was all happening, 
had an article that said that an economy founded on huge 
governmental debt, huge personal debt, and a huge trade deficit 
is not a healthy economy. Would you agree?
    Mr. Orszag. I do agree with that. As we emerge from this 
downturn, we absolutely need to put the Nation on a sounder 
course. It is unsustainable for the world's leading economic 
power to be saving 1 or 2 percent of its income, investing 7 or 
8 percent of its income, and borrowing the difference from 
abroad year after year after year. That will have to change. 
Markets will force a change if we do not act ahead of that 
forcing event.
    Senator Sessions. Well, basically when President Bush took 
office--and he inherited a slowing economy--Nasdaq had lost 
half its value by the time President Bush took office. That 
bubble had burst. He basically decided, I think it is fair to 
say, that we should focus in the short term on creating jobs. 
And that is exactly the quote our Chairman gave from President-
elect Barack Obama; we need not worry about the debt, we need 
to focus on the jobs.
    So is it your view that every time we go into an economic 
slowdown that we should spend $1 trillion to work our way out 
of it?
    Mr. Orszag. No. Two comments. The first is, again, the 
severity of the current downturn is beyond anything that I 
think we have seen, at least in my lifetime, and arguably since 
the Great Depression.
    Second, a preferable approach for more--I do not want to 
say ``normal downturns,'' but for the typical downturn is for 
the various automatic stabilizers that already exist, so the 
fact that unemployment benefits rise and food stamp 
expenditures increase, revenues normally decline during an 
economic downturn, which provides some additional spending 
assistance to the economy--those automatic stabilizers help to 
mitigate economic fluctuations.
    The problem is the crisis that has hit has overwhelmed 
those stabilizers, and we are facing a difficulty, again, that 
is far in excess of a typical downturn.
    Senator Sessions. Well, to our constituents, who favor 
infrastructure and highway improvements and that kind of thing, 
we are spending now about $40 billion a year on highways. I am 
not sure we can sustain doubling that. And certainly tripling 
that--if you tripled it, that would be $120 billion, and we are 
talking about an $800 billion to a $1 trillion stimulus 
package. So there is a limit to how much infrastructure we can 
get out of this money, and we have just got to be careful that 
when sums this large are dispensed, they are effective to 
accomplish the goal that we want to accomplish. And you will be 
a critical player in that discussion, and you are going to have 
to say no, I think.
    Thank you, Mr. Chairman.
    Chairman Conrad. I thank the gentleman.
    Senator Whitehouse.
    Senator Whitehouse. Thank you, Chairman, and----
    Chairman Conrad. If the Senator would withhold for one 
moment, we notice that the Chairman of the House Appropriations 
Committee, Congressman Obey, is here. I do not know if 
Congressman Obey would want to make a statement, but we would 
certainly welcome him to the Committee and thank him for his 
appearance.
    Senator Gregg. And can we give him our list while he is 
here?
    [Laughter.]
    Chairman Conrad. Senator Whitehouse.
    Senator Whitehouse. Thank you, Chairman.
    Peter, it is good to have you back. Welcome and 
congratulations on your appointment. Congratulations also on 
your family. I can remember when my kids were the age of your 
kids, and there is literally zero shot that mine would have 
been as well behaved through all this as yours have been so 
far.
    During the course of the Bush administration, the OMB has 
acquired the role and reputation of being the political fixer 
and hit man for the administration in agency regulatory 
proceedings. I do not think that is an appropriate or helpful 
role for OMB in the long run. I know that Cass Sunstein is 
coming on board, and he will probably be the lead person on 
trying to unwind that.
    You as the Director, obviously, will have an important 
voice in that. I am interested in your assurances that not only 
do you not consider that to be an appropriate role for OMB, but 
you would be happy to work with Professor Sunstein and others 
who are interested in this to figure out what sort of internal 
infrastructure can be done not only to stop doing that, but to 
prevent it or have alarms go off if future administrations 
should try to do it again.
    Mr. Orszag. Senator, yes, I would look forward to working 
with you, and if Cass Sunstein is confirmed as OIRA 
Administrator, which is part of OMB, I know that both he and I 
are committed to reinventing the OIRA process. And that is a 
big part of moving OMB as a whole toward sort of OMB 2.0, the 
new OMB, which we hope will work as well as possible.
    Senator Whitehouse. Thank you. I applaud you for your 
intense focus on health care. I could have possibly thought 
when I got here that I knew more about health information 
technology and delivery system reform than you did, but you 
have drilled very hard into this in the last 2 years, and I 
think those positions have reversed themselves now. And I 
applaud you for having done that because I agree with you, it 
is an absolutely critical choice that our country faces.
    I would like your comment on this: As I see it, you have a 
need to advance electronic health records and computerization, 
health information technology, and its infrastructure. Two, you 
need to improve the quality of care that Americans receive and 
optimize the invention--economics word--make better the 
investment in prevention. That is an area that we underinvest 
in right now. And, finally, we need to make sure that what we 
are paying for is what we want and we are not sending mixed 
signals between what we claim to desire and what our financial 
policies direct.
    Those three techniques, I think--I am probably more bullish 
than anybody on what the prospects are for improved lives and 
lower expenditures as a result of those. But I am also pretty 
sanguine that it is going to take some time for those 
strategies to roll themselves out into the economy.
    The worry I have is that if we do not get started rapidly 
on those strategies, what is going to happen is that the coming 
tsunami, as the Ranking Member referred to it, will be at the 
door before they really have a chance to take hold. And then 
instead of having friendly toolbox A--health information 
technology, quality improvement, prevention, better payment 
mechanisms--we will have ugly toolbox B, which is pay providers 
less, throw people off coverage, thin out benefits even more, 
and raise taxes.
    Could you speak to the timing of all this? Because that 
latter toolbox you can pick up and apply tomorrow. It just 
happens to be a wicked toolbox to apply to this situation. And 
how much time do you think we have to get the good toolbox in 
gear before we have to apply the tools from the wicked toolbox?
    Mr. Orszag. Well, I think you have identified a key 
tension, which is that many of these things will take time, 
perhaps more than 5 or 10 years, to really bear fruit, both in 
terms of cost and even in terms of quality and outcomes. In the 
meanwhile, we do face this stark and daunting fiscal problem of 
deficits of about 5 percent of GDP or so that will need to be 
brought down.
    So, in a sense, there is a tension. One could perhaps 
consider tolerating medium-term deficits that are slightly 
higher than one would want, knowing that you are bringing the 
long-term deficits down. Or what would be required are more 
immediate steps, whether in health care or other areas of the 
budget, to bring the budget deficit down over the medium term, 
while also bringing down the long-term deficit. Those are the 
sorts of choices that, as the budget process throughout the 
years rolls forward, both you and a new administration will 
need to address.
    Senator Whitehouse. I think I am making a slightly 
different point, thinking longer term about the health care 
problem per se, and that as that $35 trillion tsunami hits us, 
we cannot cope with that from a fiscal point of view, so we 
have to reduce the cost. And if we have not reduced the cost in 
the helpful, relatively benign ways of reforming the delivery 
system, then we are stuck with just whacking and bringing out 
the axe and cutting what providers get paid and whacking 
businesses with more taxes for health care. And that is 
something that I think is very much worth avoiding.
    Mr. Orszag. I agree.
    Senator Whitehouse. But unless there is a lead time on the 
other one, we may not avoid it. The highway exits are not 
parallel. One, we drive by the delivery system highway exit 
long before we get to the fiscal axe highway exit.
    Mr. Orszag. Yes, and I think for that very reason, it is 
crucially important that we put in place as soon as possible or 
start building in place the infrastructure, as you termed it, 
to make more intelligent choices moving toward a more efficient 
health care system, so, health IT and comparative effectiveness 
and changes in the payment methodology, incentives and 
promotion of healthy living and prevention. We need to start 
now for precisely the reason that you suggested, which is that 
if we have not started and we do not have that infrastructure 
in place, as the time comes to be making hard decisions, you 
are going to be making them without----
    Senator Whitehouse. Off a worse platform.
    Mr. Orszag. Off a much worse platform, yes.
    Senator Whitehouse. And so, your words, ``now'' and ``as 
soon as possible.''
    Mr. Orszag. Absolutely.
    Senator Whitehouse. OK. Thank you very much.
    Thank you, Chairman.
    Chairman Conrad. Thank you, Senator Whitehouse.
    Senator Cardin.
    Senator Cardin. Thank you, Mr. Chairman.
    Dr. Orszag, I also want to thank you for your incredible 
public service, and say thanks to your family for sharing your 
father with this Nation. And I am looking forward to you taking 
on the responsibility as the OMB Director.
    There has been a lot of discussion here about economic 
stabilization plan, and that obviously is of primary interest. 
We have got to get our economy back on track. But we will be 
talking soon about the 2010 budget. The budget, in my view, 
speaks to the priorities of our Nation; it speaks to how the 
Federal Government is going to be a partner in dealing with the 
problems of our country. Middle-income families are really 
stressed. You know that. You know what is happening in health 
care with so many people without health insurance and 
affordable health care. You know what is happening in housing 
with people trying to save their homes, and the lack of 
affordable housing, and the Federal Government's role has 
shrunk over the past few years. You know what is happening on 
energy and the environment, what is happening with social 
programs in this country, where the Federal Government's role 
has been diminished.
    So I just want to ask you a question. Let us assume that 
your estimates as CBO Director are accurate over the next 4 
years, and let us assume also the budgets that you submit to 
Congress are acted upon favorably. What type of role do you see 
the Federal Government having 4 years from now that is 
different from today as it relates to the Federal Government's 
role in providing affordable health care, affordable housing, 
and dealing with the fundamental problems that middle-income 
families are facing in this country? What changes do you 
anticipate we can look forward to?
    Mr. Orszag. Well--and, again, the new administration would 
have much more to say in mid-to late February when the economic 
and budget overview is released and then more detail 
thereafter--but I think if you look at the President-elect's 
statements during the campaign and what he is saying currently, 
clearly, among his top priorities, are moving toward a more 
efficient health care system with expanded coverage; a 
revitalized middle class, including through tax provisions and 
other support for the middle class. On housing, we clearly need 
to move out of the current downturn that is so severely 
affecting that sector. But beyond that, there are changes that 
could be made even as we emerge from the housing downturn for 
low- and middle-income households in terms of affordability and 
low-income housing in particular.
    And so I think if you start to--and you did not mention it, 
but energy is another----
    Senator Cardin. I did, energy and the environment.
    Mr. Orszag. I am sorry. Energy and environment are 
obviously also important, and then I would put education also.
    Senator Cardin. Absolutely.
    Mr. Orszag. So if you go through health care--and, in fact, 
perhaps in that order, health care, energy, education, housing, 
and obviously support for the middle class being kind of an 
overarching theme--I think you are going to see a lot of energy 
activity surrounding those major items.
    Senator Cardin. I would just make an observation. This 
Committee is required--and we need to--be very process 
oriented, and process gets us on a path where we need to be, 
and I applaud the Chairman and Ranking Member for continually 
reminding all of us in the Senate about our responsibilities to 
balance the budget.
    But I think we also need to take a look at how effective 
the Federal Government is as a partner in dealing with these 
problems, and in many of these areas, even during good budgets, 
we have seen the Federal Government diminish its effective role 
in dealing with, for example, affordable housing. And I would 
just hope that at the end of the day you have made a difference 
and the Obama Administration has made a difference in the 
effectiveness of the Federal Government in dealing with these 
problems in partnership with our local governments and in 
partnership with the private sector.
    I want to ask you about one other issue in the time that 
remains, and that is, recruiting and retaining qualified 
Federal employees.
    Mr. Orszag. Yes.
    Senator Cardin. I opposed the privatization initiative of 
the Bush administration, the OMB Revised A-76 Circular. This 
Congress took action to modify those provisions in the FY08 
omnibus appropriations bill. My concern is that we have not had 
a level playing field in analyzing which Federal services 
should be performed by Federal civil servants and which should 
be privatized.
    I would just like to have your assurance that the 
privatization initiatives are going to be reviewed very 
carefully, that we are going to reward the retaining and 
recruiting of the most qualified people we can find in Federal 
service, understanding fundamental services that need to be 
performed by Federal employees, and having a fair method for 
looking at what should be done by private contractors and what 
should be done by Government workers.
    Mr. Orszag. Absolutely, Senator. And, in particular, I 
think the dividing line between what is inherently governmental 
and what is not has become too blurred in recent history and 
needs to be clarified.
    Second, there has not been enough attention paid to the 
impact of contracting out on the ability of the work force in a 
particular agency to continue to do what it needs to do--so, 
the human capital of the agency itself.
    Third, in terms of the contracts themselves, there has not 
been enough oversight and auditing of the contracts themselves.
    So there are in each area steps that need to be taken to 
improve performance in contracting out.
    Senator Cardin. Well, thank you. I appreciate that.
    I also just want to underscore a point that Senator 
Whitehouse made, and that is, I understand the budget rules and 
how scoring is required as far as our budgets are concerned. 
But we all know that in health care particularly, investing in 
technology, investing in better information sharing, investing 
in preventive health care, investing in ways in which we can 
get more competitive pricing for prescription medicines--all 
that is going to save money over time. And our budget scoring 
rules do not always give full credit for these initiatives, but 
we know at the end of the day they will produce a more cost-
effective health care system, and that is where we need to be.
    I urge you to be creative in coming forward with ways in 
which we can reach those goals under our budget system and 
reward us for expanding preventive health care, which the 
President-elect has talked about, because I fully support his 
efforts for preventive health care, for better pricing on 
prescription drugs, and for better use of medical technology 
and information technology. I think all those are areas result 
in a more cost-effective system, and we have got to bring those 
initiatives forward.
    Thank you, Mr. Chairman.
    Chairman Conrad. Thank you, Senator.
    Senator Murray.
    Senator Murray. Thank you very much, Mr. Chairman. And, Dr. 
Orszag, welcome and congratulations--I think--for your 
nomination to this position. I appreciate the conversations we 
have had already, the opportunity to talk and the followup, and 
thank you for your openness and willingness to work with us. 
You are taking on this task at a very, very challenging time.
    In my home State of Washington, we have seen institutions 
that I have grown up with and assumed would be there long after 
I am going leave: Washington Mutual shutting down, thousands of 
people out of work from that; this past Friday, the Seattle 
Post Intelligencer announcing that they are up for sale, 
probably closing. That is an institution that is leaving us. 
Boeing announcing this past week 4,500 job losses. We have got 
businesses and restaurants in every community whose doors are 
shut or that I never expected to see in my lifetime. So you are 
coming into a country at a time that is very worrisome for many 
people.
    I had an economic forum in Everett about 3 or 4 weeks ago 
where people jammed into the room to hear what we are going to 
do to help them feel stronger, and a gentleman in the audience 
asked me--he said he was trying to start a small business and 
was running into all kinds of problems and what we were going 
to do about that. And I asked him what the biggest barrier was, 
and he sort of stepped back and thought for a minute, and he 
said, ``Fear.'' And that really is something that we have got 
to get past, and that is why I think this economic recovery 
package is so important to begin to instill that confidence 
that we are working, that we are going to put people back to 
work, that we want this country to feel strong again, and that 
is such an important part of it.
    As part of that economic recovery, one of the things I am 
concerned about is that just putting the money out for jobs 
does not ensure that people have the skills to take on those 
jobs. We have a gap between the skills that people have and the 
skills that are going to be needed in the future economy that 
you are working so hard to plan and prepare for.
    Can you talk a little bit about how education and job 
training for the next generation of workers will be part of 
this stimulus?
    Mr. Orszag. I think there are two parts to that question. 
The first is, as you correctly noted, making sure that let us 
say, hypothetically speaking, there is a significant 
weatherization program, for example, that there are enough 
qualified workers to do the weatherization of the homes, which 
currently is an issue, and the training programs that are 
necessary to qualify people to do that kind of work would need 
to be part of the package in order for it to make sense to have 
a dramatically expanded weatherization program. And you can go 
down the list. Similarly, if you are interested in dramatically 
expanding the electricity grid, you need to make sure that 
there are qualified workers who know how to do that.
    The second part of that, though--actually, I am going to 
give you three parts. The second part is, in the study that 
Christina Romer and Jared Bernstein released, the macroeconomic 
package as a whole will create significant numbers of jobs--
they said 3 to 4 million, given the contours of the package 
that is under discussion--many of which will be in areas that 
might not be directly tied to the package itself. They 
identified indirect effects. So when the worker who was trained 
to weatherize the house has higher income and goes out and 
spends the money, that promotes spending on food and household 
appliances. And so workers in those industries have more jobs 
and higher income also.
    The final part involves education, and obviously there are 
significant concerns that are arising with regard to the 
primary and secondary education system as State and local 
governments are coming under stress, with regard to community 
colleges and others. State governments have played such a large 
role in our system of higher education, for example, that as an 
economic downturn hits, State governments come under pressure. 
Support from the State governments to higher education gets 
constricted. The effect is then felt at places like community 
colleges that have to cut back on teachers and other things. 
And so a question that has arisen is whether there can be 
assistance provided to education to try to mitigate some of 
that. And, in addition, State and local fiscal relief in 
general will help to mitigate some of those effects from 
occurring in the first place.
    Senator Murray. Well, we have a lot of work to do.
    Mr. Orszag. Yes.
    Senator Murray. And I want to work with you on that, but we 
have to remember those workers who are laid off need to get the 
skills for the kinds of jobs that we are providing. So we need 
to, I think, focus some effort on that.
    I also wanted to talk to you about the EM budget in DOE. As 
you know, there has been a lot of discussion about the future 
of our energy system, and many are looking to the Department of 
Energy to play a really critical role in that effort. And I am 
supportive of that. However, there are other jobs at the 
Department of Energy that we have to attend to.
    Are you aware that the Environmental Management mission 
accounts for about 25 percent of the DOE budget?
    Mr. Orszag. Roughly. I cannot commit to 25 percent, but a 
significant share.
    Senator Murray. It is. About a quarter of that budget goes 
to that. And they are responsible for the cleanup of our 
nuclear waste sites across the country. We have a moral and a 
legal obligation--I wish we did not, but we do--to clean up 
those sites. Hanford is in my home State. I wish it was in 
someone else's, but it is not. And I am responsible, as we all 
are, for making sure we fund that. But there are other States, 
too. Idaho, New Mexico, Nevada, Tennessee, and New York all 
have sites, and to make progress on cleaning up these so they 
do not continually be something that I have to go talk to 
Chairman Obey about, we need to put in enough funds to reduce 
the sites there. We are actually paying quite a bit now for 
what we call ``hotel costs,'' just keeping the lights on. If we 
can use this time to get significant funding in there to reduce 
the size of those sites, it will be cost effective in the 
future. And I wondered if you could talk to me a little bit not 
only about that, but about making sure we have got the funding 
in the future to do the cleanup of those sites.
    Mr. Orszag. Well, again, I am very aware of the importance 
of the issue. I know Secretary-designate Chu and others are 
also focused on it, so we will have a lot more to say, again, 
in the context of the fiscal year 2010 budget. The issue has 
also arisen, as you know, with regard to an Economic Recovery 
Act.
    So I will assure you that I am focused on it, and more 
details will be forthcoming.
    Senator Murray. OK. Thank you very much. We had an 
opportunity to discuss in my office and on the phone several 
times a number of other issues, and I really appreciate your 
willingness to work with us and your ability to communicate 
with us in a way that all of us can understand. I appreciate 
that a lot.
    Mr. Orszag. Thank you.
    Senator Murray. Thank you.
    Chairman Conrad. That is a gift.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    Good morning, Dr. Orszag.
    Mr. Orszag. Good morning.
    Senator Nelson. I have just a couple of questions, but I 
want to offer some advice. A long time ago, as a pup 
Congressman, I was assigned to the House Budget Committee. 
Shortly before the Budget Act had been enacted, Chairman Obey 
was already a veteran of the House at that time, and we rocked 
along pretty good under the Budget Act. And it was doing what 
it was designed to do, which was impose fiscal discipline on 
the spending process.
    But then along came a former member of the Budget Committee 
named David Stockman, who was put in the position that you are 
about to enter, and it began the long series of the budget 
document not being used as a budget or fiscal document but as a 
political document. And I want to encourage you--this is my 
advice--with the fresh start that the new President is 
starting, to be transparent; do not make it a political 
document; make it a budget document on how we are going to have 
sanity and common sense in the budgetary and appropriations 
process and entitlement process of the U.S. Government. That is 
my piece of advice.
    And I would offer another one that is relevant to the 
current process of determining what is going to be the fiscal 
stimulus. Senator Murray had talked to you about how we have 
got to have help for education and health at the State level. 
But that presupposes that at the State level, the State 
legislators and Governors are doing their part, too. And I 
think if you look around, you will find some States that they 
are basically refusing to produce the revenue. As a result, 
they are whacking their budgets, and they are easily turning 
their heads toward Washington to get a bailout for what 
otherwise had been an irresponsible approach to fiscal policy 
in those States in balancing the revenue and spending needs of 
those States. So I hope you will take--and I can tell you I 
speak for a number of Senators, because we have discussed this, 
and we discussed it with Larry Summers last Sunday.
    Now, a couple of questions that I want to ask you, and I am 
going to put on a parochial hat, but these are issues that I 
deal with every day: preserving the environment, in this 
particular case the Everglades, whose environmental impact is 
far beyond the State of Florida; and the necessary projects to 
reverse what mankind has messed up in this Everglades 
Restoration Plan. In the 2000 bill, Everglades Restoration 
Plan, it was 50/50 Federal and State, but the Federal 
Government under the Bush administration has not come up with 
its appropriate share, and we have got to correct that. And 
there are a number of big projects that are ready to go. I want 
to put that on your radar scope.
    Now, the other one that I feel passionately about--and this 
is not just a parochial hat. Obviously, it involves part of my 
constituency. But this is to rekindle the spirit of adventure, 
exploration, and inventory. And there is nothing better than 
the space program.
    Now, I have visited with the President-elect over the 
course of our Senate careers, and then clearly over the course 
of the campaign, and he has made the most definitive, detailed 
policy statement on the future of America's space exploration 
program, more so than any other candidate for President in the 
history of this country.
    Again, the Bush administration starved NASA of the funds. 
They laid out a great vision, but they starved NASA. And as a 
result, we are in the unenviable position of shutting down a 
launch vehicle in 2010, namely, the Space Shuttle, and we do 
not even have access to our own International Space Station. We 
are going to have to buy rides from the Russians. And who knows 
what the geopolitics is going to be in 2011 to 2015, this 5-
year period that we are not going to have a human-rated 
American vehicle to get to our own Space Station. We can 
correct that, and the President-elect has stated so during the 
campaign by putting the appropriate resources, not only 
investing funds in NASA but other agencies that drive 
innovation that this country needs.
    Somewhere down there are two questions. I would like you to 
reflect on that.
    Mr. Orszag. OK. Do you want to remind me of what the two 
questions are?
    [Laughter.]
    Senator Nelson. Space innovation and Everglades 
restoration.
    Mr. Orszag. Yes, OK. On both topics, obviously those are 
crucially important issues. Let me take NASA as an example.
    I am aware of the statements that have been made. I know 
the President-elect--those statements reflect a shared passion 
that you have, and so we will be looking carefully at that 
topic.
    I do want to just remind ourselves that partly because of 
the environment that we are inheriting, the fiscal environment 
that we are inheriting, the out-year deficits are going to 
require a lot of scrutiny, and there are going to be lots of 
things that we would like to do that we are not going to be 
able to do. Those judgments have not been made yet, but I do 
want to just say vis-a-vis Senator Sessions' point, 
unfortunately, as we look out over the medium to long term, 
again, we face the prospect of very significant deficits. So 
there are lots of things that we will want to do that we are 
going to have to take a very careful look at and examine 
carefully in terms of whether we can actually afford to do them 
or not. And I am not speaking specifically about NASA or 
Everglades or anything else specifically at this point, but 
just a blanket statement that when we come back in mid-to late 
February and thereafter, we will need to work carefully with 
you to make sure that within that constrained budget 
environment, the priorities are things we all share.
    Senator Nelson. Now, we are talking about the stimulus 
bill.
    Mr. Orszag. I was talking about the out-year numbers, since 
you had mentioned some of the long-term----
    Senator Nelson. I am talking about the stimulus bill.
    Mr. Orszag. The details of the stimulus bill I think you 
have already been in some discussions on, and I am aware of 
both of those topics coming up with regard to discussions about 
the Economic Recovery Act.
    Senator Nelson. To the contrary, the discussion on Sunday 
was devoid of details with Mr. Summers. When are we going to 
get those details?
    Mr. Orszag. My understanding is that there are ongoing 
discussions. I am not in a position to give you a firm date 
right now.
    Senator Nelson. Well, isn't the President-elect supposed to 
make a statement today offering details? I mean, aren't we at 
the point that we are going to vote this week on TARP?
    Mr. Orszag. Again, I think the TARP legislation is on a 
different track from the Economic Recovery Act. I do not 
believe there will be a vote on the Economic Recovery Act this 
week.
    Senator Nelson. Well, don't we need to know some details of 
how you intend to spend TARP?
    Mr. Orszag. Again, I will defer to both Mr. Summers and 
Secretary-designate Geithner on the TARP piece. I do not think 
it is possible at this point for me to give you the precise 
full plan for how the TARP moneys will be allocated in the 
future post-January 20th.
    Senator Nelson. All right. This is part of the 
transparency----
    Chairman Conrad. I would just say to the Senator, the 
Senator's time has expired, and we have got to go to the next 
confirmation.
    Senator Nelson. Well, Mr. Chairman, I will stop with this. 
This is part of the new breath of fresh air that I am talking 
about and the transparency that is needed.
    Now, it is my understanding that by Thursday or maybe 
Friday, we are going to vote on whether or not to expand an 
additional $350 billion of TARP money, the first $350 billion 
of which none of us are satisfied how it has been spent. And I 
think in this era of freshness and transparency that the new 
administration would want to come forth with detail instead of 
this mumbo-jumbo that is going on.
    Chairman Conrad. I would just say to the Senator, we 
received a letter now from Mr. Summers yesterday outlining how 
they would change the expenditure of funds under the TARP. I do 
think we have got to keep these different categories separated. 
So, with respect to the TARP, they have now come forward with a 
letter that we would be happy to share--the gentleman perhaps 
has not seen it because it came to my office late yesterday--
with respect to what they would do to change TARP funding. And 
I think the gentleman will be quite pleased, because I know the 
Senator from Florida has been very clear about the mistakes 
made by the current administration with respect to expenditure 
of TARP funds. I think he will be quite pleased with the new 
direction.
    With respect to the economic recovery package, that is now 
going to come sometime later, which will give us all additional 
time to scrub the details. And the Senator is quite right that 
it is critically important that it be transparent and clear. 
For that reason, the Committees of immediate jurisdiction have 
been given some additional time so that all of us can have a 
chance to review and have input on those details.
    With that, I want to thank Mr. Orszag for his testimony 
here today. Let me just say that here is the circumstance the 
Committee faces.
    The parliamentarian has advised us that it would be 
inappropriate to hold a Committee vote in relation to any 
potential nomination until the papers have been received in the 
Senate. The papers will not be received until the 20th. The 
20th obviously is the inaugural day, and we would then have to 
try to convene the Committee for a vote if we are to get a 
confirmation on that day. I think that is fraught with 
difficulty. I think it is highly unlikely we could accomplish 
that.
    The second alternative is to have the Committee discharged 
on a unanimous consent agreement so that you could be confirmed 
on the 20th. And it is my intention to pursue that route, I say 
to my colleagues on the Committee. We have talked to the 
offices of the members of the Committee, and we have strong 
agreement, but I want to obviously reserve until the hearing is 
complete for Mr. Nabors, because we would like to handle his 
confirmation in the same way, and it is only right that we 
complete the hearing before a final decision is made. But I 
want to indicate that is my intention.
    The other alternative would be to have a vote. That would 
require 48 hours notice of a markup, and instead of having that 
delay, given the severity of the circumstance we are in, it 
seems to me the appropriate approach is to have the Committee 
discharged based on unanimous consent, and that is the approach 
that I will pursue. I have already talked to the Ranking Member 
about that approach, and we hope to have a conclusion later 
today.
    Again, Dr. Orszag, thank you very much for your service at 
the Congressional Budget Office. This Committee looks forward 
to working with you at the Office of Management and Budget. You 
take on an enormous responsibility here, and I know you are 
acutely aware of it. All of us have extraordinary 
responsibility given the seriousness of the economic conditions 
facing the country. So this is going to demand our very, very 
best, and I know that that is your intention and your 
commitment, and we look forward to your service.
    Mr. Orszag. Thank you very much, Mr. Chairman.
    Chairman Conrad. Thank you, Dr. Orszag.
    We will now consider the nomination of Rob Nabors to be the 
Deputy Director of the Office of Management and Budget.
    I want to begin by welcoming a distinguished colleague from 
the House, the Appropriations Committee Chairman, David Obey. 
Chairman Obey, we look forward very much to your statement 
introducing Mr. Nabors, and we are very appreciative that you 
are here. I also want to welcome Mr. Nabors' family, who I 
understand is here. I think they are on their way.
    Rob Nabors is somebody who is ideally suited for this job. 
As President-elect Obama stated in announcing his selection, 
``No one is more able or more qualified to assist Peter Orszag 
in this work than Robert Nabors.''
    Rob has served on the House Appropriations Committee since 
2001, has been the Democratic Staff Director there since 2004, 
including the last 2 years as Majority Staff Director. Before 
that, Rob served at OMB as senior adviser to the Director and 
then as Assistant Director for Administration and Executive 
Secretary.
    So Rob Nabors brings a wealth of experience to this 
position. His experience and knowledge in the appropriations 
and budget process will serve him well, especially with the 
perspective of both the executive and legislative branches.
    I have every confidence that Rob will be a great asset to 
the Obama Administration and the American people in this new 
role, and I want to thank him for his willingness to continue 
to serve. I know there are other things one could do in life 
that would be better compensated and perhaps less stressful, 
but this is important for the country.
    As with Dr. Orszag, we hope to have his confirmation 
completed as soon as possible after President-elect Obama is 
sworn in. With that, I want to welcome his wife, Theresa; his 
daughter, Georgia; and his son, Jude. We welcome you all to the 
Senate Budget Committee. I know you are proud of your Dad, and 
we are proud of him as well.
    Congressman Obey, it is a pleasure and an honor to welcome 
you and to recognize you for any statement.

 STATEMENT OF HON. DAVID R. OBEY, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WISCONSIN

    Mr. Obey. Well, thank you, Mr. Chairman. Let me say first 
of all, this is a very hard admission for a Member of the House 
to make, but I could not find a single thing that you said that 
I disagreed with.
    [Laughter.]
    Mr. Obey. Let me say, Mr. Chairman, that I commend Rob 
Nabors to you with a considerable degree of mixed feelings. He 
is a great gain for the executive branch of Government, 
assuming he is confirmed, but he is a great loss to the 
Congress as an institution. He is a person of great ability. He 
is a person of great wisdom of integrity. And I have never 
worked with anyone in my life who works as hard as he does.
    Mathematics is the universal language, but so is pain and 
so is the human hunger for opportunity. And I think Rob Nabors 
recognizes that budgets, while they may look like mathematics, 
in fact, they deliver both pain and opportunity to millions of 
people, not just in this country but around the world. And Rob 
fully recognizes that and acts like it every day.
    Mr. Chairman, he brings a special quality to this job that 
I think is badly needed at this time. We are in the midst of 
the greatest economic crisis in our lifetime, certainly our 
professional lifetimes, and to get through it, the executive 
and legislative branches of Government are going to have to 
work with each other with a degree of thoughtfulness and 
respect that has all too often been missing in recent years. 
Rob understands and respects both branches of Government. He 
has deep service in both. He will provide tough-minded service 
to the country and will help build an atmosphere of respect 
that is crucial to not only the executive branch functioning 
well but the Congress functioning well in relationship to the 
executive branch.
    So, Mr. Chairman, I am pleased to be here. I must confess, 
however, that there is one serious shortcoming that concerns me 
greatly. I am very concerned about the incredible concentration 
of power that you are going to have in this administration in 
the hands of Chicago White Sox fans.
    [Laughter.]
    Mr. Obey. As a Chicago Cubs fan myself, I note that the 
President, his Chief of Staff, and his to-be Deputy Budget 
Director are all White Sox fans. All I can say is that nobody 
is perfect, and I hope you will overlook that defect in his 
otherwise sterling character.
    Chairman Conrad. Well, I thank Chairman Obey. It is an 
honor for this Committee to have Chairman Obey come to this 
chamber to give a recommendation to Mr. Nabors, and it makes a 
great impression on this Committee.
    With respect to the White Sox, I am reliably assured that 
they are going to be AAA this year. You know, I am an Orioles 
fan, and it has been a pretty tough 10 years.
    Mr. Nabors, our rules require you to be sworn, so if you 
would please stand? If you would raise your right hand, do you 
swear that the testimony that you are about to give will be the 
truth, the whole truth, and nothing but the truth?
    Mr. Nabors. I do.
    Chairman Conrad. If asked to do so, and if given reasonable 
notice, will you agree to appear before this Committee in the 
future and answer any questions that members of this Committee 
might have?
    Mr. Orszag. I do.
    Chairman Conrad. I thank you and you may be seated. And 
please proceed with your testimony.
    Chairman Obey, as you depart, thank you very much for being 
here on Mr. Nabors' behalf.
    Mr. Obey. Thank you.
    Chairman Conrad. It makes a great impression on this 
Committee.

 TESTIMONY OF ROBERT L. NABORS II, OF NEW JERSEY, TO BE DEPUTY 
           DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Nabors. Mr. Chairman, I am honored by the opportunity 
to come before you as the President-elect's nominee for the 
Deputy Director of the Office of Management and Budget. I would 
like to thank Mr. Obey for his introduction, and I would like 
to acknowledge and thank my family without whose support I 
would not be here.
    I would also like to associate myself with the remarks made 
by Dr. Orszag concerning the state of the economy, and in the 
interest of time, I will close and answer any questions that 
you might have.
    [The prepared statement of Mr. Nabors follows:]


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    Chairman Conrad. Mr. Nabors, first of all, as I indicated 
in the introduction, you have a sterling record and reputation. 
You can be very proud of it. As we did our due diligence on 
your nomination, I was really struck by the depth and breadth 
of your support, the number of members that have served with 
you, Republicans and Democrats, who spoke highly of your 
competence, of your fairness, and of your integrity. So I want 
you to know you can feel very good about how others feel about 
you and the public statements that they have made.
    I want to ask you, as I asked Dr. Orszag, first of all, it 
is critically important that the Budget Committee, as we 
discussed privately, be advised of plans by the administration. 
We know that you are required to consult with the authorizing 
committees, the Appropriations Committee, the Finance 
Committee. It is also critically important that the Budget 
Committee be kept advised of plans of the administration, 
because, as you know, virtually all of these things have a 
budget impact. And you have pledged to this Committee that you 
will bend your best efforts to make certain that that happens. 
Maybe we could just have you respond to that for the record.
    Chairman Conrad. The understanding would be that when there 
are matters that are before the Office of Management and Budget 
that have implications for this Committee, you will be willing 
to keep staff and members briefed and advised. Is that correct?
    Mr. Nabors. Yes, sir.
    Chairman Conrad. I appreciate that.
    Let me talk a little about the extraordinary circumstances 
we confront as a country with the debt. I believe the debt will 
go up approaching $2 trillion this year. We say that in the 
context of a debt that is already $10.6 trillion, and this is 
more than numbers on a page. You know, sometimes I think people 
react to the work on budgets something the way Chairman Obey 
described, that this is really an exercise in mathematics. And 
this is so much more than that.
    The budget is really a reflection of the priorities of the 
American people. Where are they going to put their resources 
the best to assure their economic futures, the best to assure 
that people have the greatest opportunity available to them, 
the best to assure our common defense, the best to assure that 
people have health care that is affordable and available, the 
best to assure that the quality of life in this country is 
everything that it can be?
    So a budget, as you know, is so much more than numbers on a 
page. Help us understand what you see your responsibility as 
being in this position. How do you see what is being asked of 
you?
    Mr. Nabors. I think when the President-elect considered my 
appointment, my nomination, there were two things in my 
background that would be useful as Deputy Director of OMB. The 
first is my experience dealing with the programmatic impacts of 
macro budgetary decisions. It is important to be cognizant of 
the overall fiscal condition, but I also think it is important 
to recognize the impact that each micro decision that goes into 
creating that macro budget actually has. And that is something 
that I have been working on since my career began in 1996 in 
the Federal Government.
    I think the second thing that I bring to these types of 
discussions is a sense of this cannot just be a discussion 
within the administration. This really is a national set of 
priorities, a national conversation that needs to occur. And 
based on my work in the Congress, working with Members on both 
sides of the aisle, working with Members both in the House and 
in the Senate, I think that there was a belief that I would be 
someone who could communicate effectively within the 
administration what the views of a Congress would actually be 
so that that could be accommodated within the President's 
budget as well.
    Chairman Conrad. Well, you say it very well. You know, 
putting together a budget for the United States of America is a 
daunting undertaking. It requires literally thousands of 
decisions that affect tens of millions of people's lives and 
affects the most fundamental elements of our national future. 
So you are being given an extraordinary responsibility and an 
opportunity.
    Tell us, if you can, at the end of your service, what would 
you like for people to say about Rob Nabors? What would you 
like your legacy to be?
    Mr. Nabors. I think I would answer that in three ways.
    One, I did begin my career in Federal service at the Office 
of Management and Budget. As a result, the institution means a 
lot to me, and I think the opinions of the career staff at OMB 
means a lot to me. So, to the extent that the career staff at 
OMB believe that at the end of my tenure I have improved not 
just the quality of their work process at OMB, but have made a 
discernible difference in the quality of the product that is 
produced for the President, I would be very proud of that.
    I think, second, I would be--I would want people to look 
back at the decisions that were made within the administration 
and know that it was not just a numerical exercise; that the 
implications of each of the decisions on people were considered 
at the time when budget decisions were considered. I think that 
is the second point.
    And I think the third point is that if people would look 
back and say that the tough decisions that were necessary in 
order to bring our budget back into a more sustainable 
alignment were made and that those decisions were made in a way 
that were fair to all of the factors involved, I think those 
three things would for me be a successful tenure at OMB.
    Chairman Conrad. Could I offer a fourth?
    Mr. Nabors. Please.
    Chairman Conrad. That you always have North Dakota in mind.
    [Laughter.]
    Mr. Nabors. I will add that fourth.
    Chairman Conrad. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman. Could I add a 
fifth--that after North Dakota, he remembers New Jersey?
    [Laughter.]
    Chairman Conrad. I am not sure there is much left for New 
Jersey.
    Senator Menendez. Really? That is what I was afraid of.
    Mr. Chairman, thank you very much. I always say you can 
tell the mark of talented people by knowing where they got 
their start, and Mr. Nabors was born in Fort Dix, New Jersey. 
In fact, we can clearly see the impact the Garden State has had 
on him.
    Chairman Conrad. So he always will have New Jersey in mind.
    Senator Menendez. Well, I certainly hope so. But welcome to 
the Committee. I appreciate your path of public service. It is 
a commendable and a model for many to admire. I am fortunate to 
have served in the House when you were serving on the House 
Appropriations Committee, and I saw the incredible talent you 
had working with all of the different parties at work there, as 
well as all of the challenges in a very difficult period of 
time. And so I thought you did extremely well there, and I 
think you will serve very well at OMB.
    I have two sets of questions I just want to get your sense 
of. We obviously have enormously challenging time ahead of us. 
The President-elect has talked about a line-by-line review of 
the budget. Give us a perspective of what is the proper way to 
evaluate Federal programs and agencies during these tough 
economic times. What comes first: simply having a goal to cut 
and to fit targets, or developing policies that ensure the 
maximum benefit for the public?
    And, second, as part of all of that, how do you see OMB and 
Nancy Killefer, the President-elect's Chief Performance 
Officer, working with the Congress to finalize these 
appropriation bills as we move forward? Give a little sense of 
what you expect to come?
    Mr. Nabors. Well, I think in terms of evaluating programs 
and making decisions, I do not think we can start from a 
position of just cutting. I think that, first, we need to 
evaluate the programs with regard to whether the programs are 
sufficiently--are playing an important governmental role. I 
think, two, we need to look at the effectiveness of the 
program. And, three, I think that we need to evaluate what the 
shortfall would be in the overall economy and within the 
overall society if the Federal Government was not performing 
that function.
    I think as we evaluate the programs across the Federal 
Government, one of the things that we hope to do is to be 
sensitive to the fact that, yes, tough decisions have to be 
made in order to get the--to return our budget to an over all 
sense of balance, but at the same time, they have to be done 
with the sense that each program affects real people, and we 
cannot just cut things assuming that everything is going to be 
fine if these programs disappear. So we are going to have to 
make tough decisions, but the tough decisions have to be made 
with a sense of who these programs will actually be affecting.
    I think second, with regard to the Deputy Director for 
Management-designate and the President's nominee for CPO, Nancy 
Killefer, I see her being an incredible partner with myself, 
with Dr. Orszag, and with the Congress in terms of coming up 
with real metrics as to how effective these programs have been. 
I think one of the issues that has come up, as previous 
administrations have evaluated programs, is that there really 
has not been enough interaction with other stakeholders, 
including the Congress, as to exactly how programs should be 
evaluated. There are many, many levels upon which programs 
could and should be evaluated, and I think too often those 
decisions have been made behind closed doors.
    I think one of the things that you will see with myself and 
with Ms. Killefer is more openness in terms of sitting down 
with the affected parties and with other stakeholders to 
determine exactly how programs should be measured.
    Senator Menendez. I appreciate that. Let me take one 
provincial issue and give you a sense of why it will be 
important--and I appreciate the answer--as to how we look at 
the totality of how we go about making these difficult 
decisions.
    You know, we have an incredibly important coastline in New 
Jersey, which is the second driver of our economy, and it is 
beaches. And the beach replenishment issue has always been a 
challenging issue under the budget. I am sure you are familiar 
with that from the days on the appropriations side and people 
like Congressman Pallone and others who are advocates of this.
    You know, that is an issue in which some will argue that 
that is not a good investment of Federal money. I would say 
that if you look at it in the context of the importance of 
jobs, what drives that tourism industry to that part of New 
Jersey from the entire region is its beaches. We are talking 
about a couple million jobs that are generated as a result of 
that. We are talking about the property values. We are talking 
about the environment. We are talking about dealing with 
northeasters and the continual erosion that ultimately moves on 
to the property side of those communities, of which there is a 
whole slew along the waterfront, that would have real 
consequences if, in fact, the beaches are not there as a buffer 
to the northeasters.
    So that is a simple example--and I could go on--about how 
that particular program has many dimensions. It is about jobs. 
It is about the economy. It is about the environment. It is 
about public protection along the way. And so I appreciate your 
answer of looking at the totality of how we judge a program to 
make a decision as to whether it is effective or not.
    Is that a fair example of what you would be thinking about?
    Mr. Nabors. Yes, sir.
    Senator Menendez. Thank you very much.
    Thank you, Madam Chairman.
    Senator Murray [presiding]. Thank you very much, Senator 
Menendez.
    Mr. Nabors, welcome to the Committee, and thank you for 
your willingness to take this on. I have watched you across the 
way in many conference committees, and I look forward to 
working with you in this new position.
    As you do know, I serve as Chairman of the Transportation 
and Housing Appropriations Committee, and I want to put that 
hat on for a moment here and talk to you about a housing issue 
that I know that you are familiar with. For years, HUD has been 
playing games with the Section 8 project-based account, and in 
order to accommodate the cuts that were ordered by the White 
House, HUD began the practice of shortening the 12-month 
contracts it had with project owners paying for them for just a 
few months at a time. That allowed HUD to move costs into a 
future fiscal year and essentially kick the costs of the 
program down the road.
    As a result of that, there is now a huge gap or shortfall 
between the full cost of these contracts and the resources that 
HUD has to pay them. That shortfall is now estimated to be 
about $2.2 billion, so this is a practice that cannot continue.
    The consequences of this game-playing are not limited to 
our Federal budget. This program serves about 1 million of our 
Nation's most vulnerable people, and their housing is now at 
risk because HUD has gotten the reputation as a deadbeat 
partner in many of our housing communities. So I wanted to ask 
you about that and ask if you agree that addressing that 
project-based problem is important to the development and 
preservation of our low-income housing.
    Mr. Nabors. Well, thank you very much, ma'am. I have been 
aware of this issue for the last year or two, and I think that 
in many ways this issue symbolizes many of the problems that we 
face with the Federal Government.
    First, it is not clear to me exactly how we ended up in 
this position where there is such a lack of confidence in the 
Federal Government that lenders--or, excuse me, that landlords 
may think that it is in their benefit to actually not do 
business with the Federal Government. But the fact that there 
is the potential for that lack of confidence is very, very 
disturbing, and it is something that we need to address very 
quickly.
    I think, second, this issue suggests a lack of transparency 
in Federal budgeting that has been--that we really need to 
address if we truly want to understand the programmatic costs 
of the activities that we are undertaking.
    And I think, third, I think that there has to be some 
accountability for how we ended up in this situation. Within 
that framework, we will absolutely be making this a priority to 
evaluate as soon as the administration begins, if I am 
confirmed.
    Senator Murray. Can I have your commitment then to work 
with me to find an appropriate solution to this problem?
    Mr. Nabors. Absolutely.
    Senator Murray. OK. I appreciate that.
    You and I have talked before about the dire straits that 
our Nation's transmission system is in. President-elect Obama 
wants to bring online massive quantities of renewable 
resources. I agree with that--wind, solar. And I agree that it 
is an important step to do that in order to get to a 
sustainable energy future. But in order to bring all of those 
renewable resources online, we have to make some very long 
neglected investments in our transmission system so that we can 
bring those resources from the rural areas where they are being 
developed and put online into our urban areas and to our users.
    As you I think are aware, BPA owns and operates about 75 
percent of our Northwest region transmission lines, and it is 
now making plans to upgrade infrastructure and build some of 
those needed new lines. Including $5 billion in additional 
borrowing authority for BPA in any stimulus proposal is really 
key to integrating those renewable resources like wind onto 
that grid. We have got about 4,700 megawatts of wind that is 
ready to go, waiting to be integrated once that new 
transmission system is up. And, by the way, we will create 
thousands of good jobs along the way.
    I wanted to ask you about your thoughts on investing in the 
transmission infrastructure, particularly in terms of the 
economic recovery plan.
    Mr. Nabors. Well, I think as Dr. Orszag laid out earlier, 
there are several criteria that we are using to evaluate the 
types of items that might be included in a recovery package. 
One would be bang for the buck, ensuring that it actually puts 
people to work. Second is transforming our economy, moving our 
economy from a 20th century economy to a 21st century economy.
    I think that upgrading our transmission system fits in 
perfectly with both of those criteria, and it is something that 
we are looking very seriously at right now.
    Senator Murray. OK, good. In my State, we, of course, rely 
on hydropower, as I think you are aware, and it is very 
important now--and we are conscious about a lot of global 
warming and climate change issues--that renewable energy, cheap 
production, particularly in the Northwest, and relying on those 
is important. We need to invest in some of those hydropower 
projects now, and I hope that we get your support to do that, 
as they need maintenance and upgrading, too. We want to make 
sure they stay online, and I just wanted to bring that to your 
attention, and I hope we can work with you on that.
    Mr. Nabors. Yes, ma'am.
    Senator Murray. Obviously, there are no other Committee 
members here. I have a couple of other issues. You know that I 
care deeply about education and job investment and work force 
training. You heard me earlier talk about that, and I am 
positive you will hear me talk to your more about that in the 
future.
    But, again, I really do appreciate your willingness to take 
on this task at a critically important time for our Nation as 
we face the economic challenges that we have, and I look 
forward to moving you as quickly as we can to get on the job 
and get going. So congratulations to you.
    With that, we will adjourn this Committee and look forward 
to your confirmation.
    Mr. Nabors. Thank you, ma'am.
    [Whereupon, at 11:08 a.m., the Committee was adjourned.]

                      United States Senate

   STATEMENT OF BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF 
                         PRESIDENTIAL NOMINEES

                      A. BIOGRAPHICAL INFORMATION

1. Name:

Peter Richard Orszag

2. Position to which nominated

Director of the Office of Management and Budget

3. Date of nomination

January 20, 2009

4. Address:
    (redacted)

5. Date and place of birth:

December 16, 1968; Boston, Massachusetts

6. Martial status:

Divorced

7. Names and ages of children:
    (redacted)

8. Education:

London School of Economics
Attended 10/1994 to 06/1995 and 11/1996 to 01/1997
Ph.D. in economics awarded March 1997

London School of Economics
Attended 08/1991 to 06/1992
MSc. in econonmics awarded in June 1992

Princeton University
Attended 08/1987 to 07/1991
A.B. in economics awarded June 1991

Phillips Exeter Academy
Attended 12/1985 to 07/1987
High School Diploma awarded July 1987

9. Employment Record:


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


10. Government Experience:

Intern, Senator Thomas Daschle
317 Hart Senate Office Building
Employed from 03/1987 to 05/1987

11. Business relationships:

Competition Policy Associates, Director, 2003-2007
Sebago Associates, Director, 2002-2007
Orszag Association Limited Partnership, limited partner 1988-
2006

12. Memberships:

National Academy of Social Insurance (current member)
Institute of Medicine, National Academies of Sciences (current 
member)
Council of Foreign Relations (previously held term membership)
America Economic Association (former member)
Pension Rights Center (previous member of board)
Center for American Progress (previous member of academic 
advisory board)

13. Political affiliations and activities

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

None.

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

None.

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

05/09/2006-$1000; Judy Feder for Congress
05/09/2006-$1000; Actblue
09/24/2002-$250; Wofford for Congress

14. Honors and awards:

Awarded London School of Economics M.Sc. Economic Prize, June 
1992
Awarded Marshall Scholarship, 1991-1992
Awarded John Glover Wilson Memorial Prize in Economics, June 
1991
Inducted into Phi Beta Kappa, June 1991
Received and A.B. summa cum laude in economics, Princeton 
University, June 1991

15. Published writings:


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16. Speeches:


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


17. Selection:

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

I have extensive expertise in budget and economic matters. I 
have researched, written and spoken on these issues extensively 
while Director of the Congressional Budget Office and a Senior 
Fellow at the Brookings Institute.

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

No.

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

No.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

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

Yes. I have a custodial account which contains funds from the 
sale of my former employer, Competition Policy Associates to 
FTI Consulting. In the future, funds will be released into this 
account, but I no longer have any connection or employment with 
FTI Consulting or Competition Policy Associates. Details of the 
account have been disclosed on the SF 278 form.

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

No.

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

No.

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

No.

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

Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

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

None.

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

None. In connection with the nomination process, I have 
consulted with the Office of Government Ethics and the Office 
of Management and Budget's designated agency ethics official to 
identify potential conflicts of interest. Any potential 
conflicts of interest will be resolved in accordance with the 
terms of an ethics agreement with the Office's designated 
agency ethics official.

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

I filed a brief with Joseph Stiglitz explaining the economic 
and policy rationales for allowing foreigners harmed by global 
cartels to file suits in the United States.

``Brief of Amici Curiae Economists'' (with Joseph E. Stiglitz), 
F. Hoffman-LaRoche Ltd., et al., v. Empagran S. A., et al., 
Supreme Court of the United States, March 15, 2004

Additional activites directly or indirectly seeking to 
influence legislation include:

``The Impact of Asbestos Liabilities on Workers in Bankrupt 
Firms,'' with Joseph E. Stiglitz and Jonathan M. Orszag, 
Journal of Bankruptcy Law and Practice, Volume 12, Issue No. 1, 
February 2003. (Paper was orginally commissioned by the 
American Insurance Association)

``An Economic Assessment of the Exclusive Contract Prohibition 
Between Vertically Integrated Cable Operators and 
Programmers,'' with Jonathan M. Orszag and John M. Gale, Filed 
in Conjunction with Reply Comments Submitted to the Federal 
Communications Commission (CS Docket No. 01-290), Commissioned 
by EchoStar Satellite Corporation and DIRECTV, Inc., January 7, 
2002

``Quantifying the Benefits of More Stringent Aircraft Noise 
Regulations,'' with Jonathan M. Orszag, Northwest Airlines and 
Sebago Associates, Inc., October 2000

``The Economics of the U.S.-China Air Services Decision,'' with 
Jonathan M. Orszag, and Diane M. Whitmore, United Parcel 
Service and Sebago Associates, Inc., March 2000

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

Yes.

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

I will work with the Office of Government Ethics, OMB agency 
ethics officers, and the Congressional Ethics Committees to 
resolve any conflicts of interest should occur.

                            D. LEGAL MATTERS

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

No.

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

No.

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

No.

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



                     E. TESTIFYING BEFORE CONGRESS

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

Yes.

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

Yes.

                           F. FINANCIAL DATA

    All information requested under this heading must be 
provided for yourself, your spouse, and your dependents.

1. Please provide personal financial information not already 
listed on the SF278 Financial Disclosure form that identifies 
and states the value of all:

    (a) assets of $10,000 or more held directly or indirectly, 
including but not limited to bank accounts, securities, 
commodities futures, real estate, trusts (including the terms 
of any beneficial or blind trust of which you, your spouse, or 
any of your dependents may be a beneficiary), investments, and 
other personal property held in a trade or business or for 
investment other than household furnishings, personal effects, 
clothing, and automobiles; and
    (redacted)

    (b) liabilities of $10,000 or more including but not 
limited to debts, mortgages, loans, and other financial 
obligations for which you, your spouse, or your dependents have 
a direct or indirect liability or which may be guaranteed by 
you, your spouse, or your dependents; and for each such 
liability indicate the nature of the liability, the amount, the 
name of the creditor, the terms of payment, the security or 
collateral, and the current status of the debt repayment. If 
the aggregate of your consumer debts exceeds $10,000, please 
include the total as a liability. Please include additional 
information, as necessary, to assist the Committee in 
determining your financial solvency. The Committee reserves the 
right to request additional information if a solvency 
determination cannot be made definitively from the information 
provided.
    (redacted)

2. List sources, amounts and dates of all anticipated receipts 
from deferred income arrangements, stock options, executory 
contracts and other future benefits which you expect to derive 
from current or previous business relationships, professional 
services and firm memberships, employers, clients and 
customers. If dates or amounts are estimated, please so state. 
Please only include those items not listed on the SF278 
Financial Disclosure form.
    (redacted)

3. Provide the identity of and a description of the nature of 
any interest in an option, registered copyright, or patent held 
during the past 12 months and indicate which, if any, from 
which you have divested and the date of divestment unless 
already indicated on the personal financial statement.
    (redacted)

4. Provide a description of any power of attorney which you 
hold for or on behalf of any other person.
    (redacted)

5. List sources and amounts of all gifts exceeding $500 in 
value received by you, your spouse, and your dependents during 
each of the last three years. Gifts received from members of 
your immediate family need not be listed.
    (redacted)

6. Have you filed a Federal income tax return for each of the 
past 10 years? If not, please explain.
    (redacted)

7. Have your taxes always been paid on time including taxes on 
behalf of any employees? If not, please explain.
    (redacted)

8. Were all your taxes, Federal, State, and local, current 
(filed and paid) as of the date of your nomination? If not, 
please explain.
    (redacted)

9. Has the Internal Revenue Service or any other state or local 
tax authority ever audited your Federal, State, local, or other 
tax return? If so, what resulted from the audit?
    (redacted)

10. Have any tax liens, either Federal, State, or local, been 
filed against you or against any real property or personal 
property which you own either individually, jointly, or in 
partnership? If so, please give the particulars, including the 
date(s) and the nature and amount of the lien. State the 
resolution of the matter.
    (redacted)

11. Provide for the Committee copies of your Federal income tax 
returns for the past 3 years. These documents will be made 
available only to Senators and staff persons designated by the 
Chairman and Ranking Minority Member. They will not be 
available for public inspection.
    (redacted)

12. Have you ever been late in paying court-ordered child 
support? If so, provide details.
    (redacted)

13. Have you ever filed for bankruptcy or been a party to any 
bankruptcy proceeding? If so, provide details.
    (redacted)


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
                      United States Senate

   STATEMENT OF BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF 
                         PRESIDENTIAL NOMINEES

                      A. BIOGRAPHICAL INFORMATION

1. Name:

Robert Lee Nabors II

2. Position to which nominated

Deputy Director of the Office of Management and Budget

3. Date of nomination

January 20, 2009

4. Address:
    (redacted)

5. Date and place of birth:

March 27, 1971; Ft. Dix, New Jersey

6. Martial status:

Married; Theresa Kovscek Nabors, formerly Theresa Marie Kovscek

7. Names and ages of children:
    (redacted)

8. Education:

Robert E. Lee High School-Springfield, VA. High School Diploma 
awarded June 1989.
University of Notre Dame-Notre Dame, IN. Bachelor of Arts 
awarded May 1993.

University of North Carolina at Chapel Hill (NC). Master of 
Arts awarded May 1996.

9. Employment Record:

1/2007-present
Staff Director and Clerk
House Appropriations Committee
Washington, DC

2/2004-1/2007
Minority Staff Director
House Appropriations Committee
Washington, DC

02/2001-02/2004
Minority Staff Assistant
House Appropriations Committee
Washington, DC

1/2000-02/2001
Assistant Director for Administration and Executive Secretary
Office of Management and Budget
Washington, DC

8/1998-01/2000
Senior Advisor to the Director
Office of Management and Budget
Washington, DC

7/1996-8/1998
Program Examiner
Office of Management and Budget
Washington, DC

8/1994-5/1996
Instructor/Teaching Assistant
University of North Carolina at Chapel Hill
Chapel Hill, NC

10. Government Experience:

None beyond those listed in question 9.

11. Business relationships:

None.

12. Memberships:

Member, St. Joseph's Catholic Church (Washington, DC), 2000-
2003
Member, St. Ann's Catholic Church (Arlington, VA), 2004-present
116 Club, 2008-present

13. Political affiliations and activities

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

None.

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

None.

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

Obama for America, August 20, 2008 - $250.

14. Honors and awards:

Professional Achievement Award: Office of Management and Budget
Earl Wallace Award for outstanding political science teaching 
assistant: University of North Carolina
Notre Dame Scholar: University of Notre Dame
Bundschuh Scholarship: University of Notre Dame
Meyer Award: University of Notre Dame

15. Published writings:

I have one published article, ``Redistributive Cooperation, '' 
which was included in the Winter 1998 edition of the journal 
Interantional Organization (see attached).

16. Speeches:

None.

17. Selection:

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

In addition to serving seven years as a Congressional staffer 
dealing with appropriations issues, including four years as 
Staff Director, I previously served for five years in the 
Office of Management and Budget (OMB). During my tenure, I 
served as a budget analyst, senior advisor to then-Director 
Jacob Lew, and as Assistant Director for Administration and 
Executive Secretary responsible for the internal management of 
the organization.

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

No.

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

No.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

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

Yes.

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

No.

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

No.

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

No.

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

Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

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

No.

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

None.

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

None.

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

Yes.

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

In connection with the nomination process, I have consulted 
with the Office of Government Ethics and the Office of 
Management and Budget's designated agency ethics official to 
indentify potential conflicts of interest. Any potential 
conflicts of interest will be resolved in accordance with the 
terms of an ethics agreement with the Office's designated 
agency ethics official.

                            D. LEGAL MATTERS

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

No.

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

In June 1990, at age 19, I was arrested for misdemeanor 
shoplifting by Fairfax County (VA) Police in Springfield, VA. I 
was found not quilty by the Fairfax County Court.

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

No.

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

None.

                     E. TESTIFYING BEFORE CONGRESS

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

Yes.

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

Yes.

                           F. FINANCIAL DATA

    All information requested under this heading must be 
provided for yourself, your spouse, and your dependents.

1. Please provide personal financial information not already 
listed on the SF278 Financial Disclosure form that identifies 
and states the value of all:

    (a) assets of $10,000 or more held directly or indirectly, 
including but not limited to bank accounts, securities, 
commodities futures, real estate, trusts (including the terms 
of any beneficial or blind trust of which you, your spouse, or 
any of your dependents may be a beneficiary), investments, and 
other personal property held in a trade or business or for 
investment other than household furnishings, personal effects, 
clothing, and automobiles; and
    (redacted)

    (b) liabilities of $10,000 or more including but not 
limited to debts, mortgages, loans, and other financial 
obligations for which you, your spouse, or your dependents have 
a direct or indirect liability or which may be guaranteed by 
you, your spouse, or your dependents; and for each such 
liability indicate the nature of the liability, the amount, the 
name of the creditor, the terms of payment, the security or 
collateral, and the current status of the debt repayment. If 
the aggregate of your consumer debts exceeds $10,000, please 
include the total as a liability. Please include additional 
information, as necessary, to assist the Committee in 
determining your financial solvency. The Committee reserves the 
right to request additional information if a solvency 
determination cannot be made definitively from the information 
provided.
    (redacted)

2. List sources, amounts and dates of all anticipated receipts 
from deferred income arrangements, stock options, executory 
contracts and other future benefits which you expect to derive 
from current or previous business relationships, professional 
services and firm memberships, employers, clients and 
customers. If dates or amounts are estimated, please so state. 
Please only include those items not listed on the SF278 
Financial Disclosure form.
    (redacted)

3. Provide the identity of and a description of the nature of 
any interest in an option, registered copyright, or patent held 
during the past 12 months and indicate which, if any, from 
which you have divested and the date of divestment unless 
already indicated on the personal financial statement.
    (redacted)

4. Provide a description of any power of attorney which you 
hold for or on behalf of any other person.
    (redacted)

5. List sources and amounts of all gifts exceeding $500 in 
value received by you, your spouse, and your dependents during 
each of the last three years. Gifts received from members of 
your immediate family need not be listed.
    (redacted)

6. Have you filed a Federal income tax return for each of the 
past 10 years? If not, please explain.
    (redacted)

7. Have your taxes always been paid on time including taxes on 
behalf of any employees? If not, please explain.
    (redacted)

8. Were all your taxes, Federal, State, and local, current 
(filed and paid) as of the date of your nomination? If not, 
please explain.
    (redacted)

9. Has the Internal Revenue Service or any other state or local 
tax authority ever audited your Federal, State, local, or other 
tax return? If so, what resulted from the audit?
    (redacted)

10. Have any tax liens, either Federal, State, or local, been 
filed against you or against any real property or personal 
property which you own either individually, jointly, or in 
partnership? If so, please give the particulars, including the 
date(s) and the nature and amount of the lien. State the 
resolution of the matter.
    (redacted)

11. Provide for the Committee copies of your Federal income tax 
returns for the past 3 years. These documents will be made 
available only to Senators and staff persons designated by the 
Chairman and Ranking Minority Member. They will not be 
available for public inspection.
    (redacted)

12. Have you ever been late in paying court-ordered child 
support? If so, provide details.
    (redacted)

13. Have you ever filed for bankruptcy or been a party to any 
bankruptcy proceeding? If so, provide details.
    (redacted)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 





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