[Senate Hearing 111-683]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-683
 
   TOOLS TO COMBAT DEFICITS AND WASTE: EXPEDITED RESCISSION AUTHORITY

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


                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                                 of the

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 16, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana                  ROBERT F. BENNETT, Utah
ROLAND W. BURRIS, Illinois
PAUL G. KIRK, JR., Massachusetts

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk
                                 ------                                

 SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 
              FEDERAL SERVICES, AND INTERNATIONAL SECURITY

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
ROLAND W. BURRIS, Illinois

                    John Kilvington, Staff Director
                 Harlan Geer, Professional Staff Member
    Bryan Parker, Staff Director and General Counsel to the Minority
                   Deirdre G. Armstrong, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator McCain...............................................    12
Prepared statements:
    Senator Carper...............................................    37
    Senator McCain...............................................    40

                               WITNESSES
                      Wednesday, December 16, 2009

Hon. Russell D. Feingold, a U.S. Senator from the State of 
  Wisconsin......................................................     2
Todd B. Tatelman, Legislative Attorney, American Law Division, 
  Congressional Research Service.................................     7
Susan A. Poling, Managing Associate General Counsel, U.S. 
  Government Accountability Office...............................    10
Raymond C. Scheppach, Ph.D., Executive Director, National 
  Governors Association..........................................    20
Robert L. Bixby, Executive Director, The Concord Coalition.......    22
Thomas A. Schatz, President, Citizens Against Government Waste...    24

                     Alphabetical List of Witnesses

Bixby, Robert L.:
    Testimony....................................................    22
    Prepared statement...........................................    76
Feingold, Hon. Russell D.:
    Testimony....................................................     2
Poling, Susan A.:
    Testimony....................................................    10
    Prepared statement...........................................    56
Schatz, Thomas A.:
    Testimony....................................................    24
    Prepared statement...........................................    87
Scheppach, Raymond C., Ph.D.:
    Testimony....................................................    20
    Prepared statement...........................................    71
Tatelman, Todd B.:
    Testimony....................................................     7
    Prepared statement...........................................    46

                                APPENDIX

Hon. Robert C. Byrd, a U.S. Senator from the State of West 
  Virginia.......................................................    42


   TOOLS TO COMBAT DEFICITS AND WASTE: EXPEDITED RESCISSION AUTHORITY

                              ----------                              


                      WEDNESDAY, DECEMBER 16, 2009

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                               and International Security  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:32 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper and McCain.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Senator Carper. Well, welcome, everyone. We are delighted 
to see our witnesses and an audience of thousands of people who 
have joined us here, and my colleague, Russ Feingold, from 
Wisconsin.
    I have an opening statement that I am going to get into, 
but I want to simply yield initially to Senator Feingold.
    As we know, we are spending way more money than we can 
afford to in the long term. There is a lot of ideas on how to 
slow the growth of spending and how to raise some revenues and 
close that gap between spending and revenues. One of the ideas 
that I have been interested in for some time is strengthening 
the President's rescission powers, and, as it turns out, so is 
Senator Feingold and Senator McCain, who is a ranking 
Republican on this Subcommittee.
    Senator Feingold and I were talking about the hearing 
today. We were talking last evening in the cloak room, and I 
said, you may want to come to this hearing and open us this up 
and start off the hearing with some comments of your own.
    I am just going to yield to him to do that at this time, 
and then go back to my opening statement and allow others to do 
that, and we will go to our first panel of witnesses.
    But thank you for your leadership. If there is anybody here 
who is determined, committed to reining in budget deficits, I 
know no one who has a greater commitment to that, a highly 
principled commitment to that, than Russ Feingold. It is great 
to serve with you, and it is great for you to join us here 
today. Please proceed.

 TESTIMONY OF THE HON. RUSS FEINGOLD, A U.S. SENATOR FROM THE 
                       STATE OF WISCONSIN

    Senator Feingold. Thank you, Mr. Chairman, for the very 
kind words and for your exceptional courtesy in letting me go 
before your opening statement. It is unnecessary but extremely 
courteous of you.
    I want to thank you and, of course, the Ranking Member who 
is my co-author of the proposal that I will discuss, for 
allowing me to make a brief statement today on my proposal, and 
I know you have one as well, to give the President effective 
line-item veto authority to go after unauthorized, wasteful 
earmark spending.
    As I said, it is a special pleasure to appear before you, 
Mr. Chairman. I have been proud to work with you on quite a 
number of critical budget issues, including the restoration of 
the pay-go budget rule which was so central to our ability to 
balance the government's books during the 1990s. You have been 
a true champion of taxpayers, and today's hearing is another 
example of your leadership on their behalf.
    And, as I said, I have been working with Senator McCain for 
the better part of two decades to go after wasteful spending. 
People think of us as the campaign finance duo. We were working 
on these issues before we even got into campaign finance in 
1995.
    Senator McCain may be the foremost opponent of wasteful 
earmark spending, and he has been joined in that effort in 
recent years by other Members of this Subcommittee including 
Senator McCaskill and Senator Coburn. Those three Senators may 
have caused more heartburn among those who promote earmark 
spending than any other group in either house.
    And I also want to mention my colleague from Wisconsin, the 
Ranking Member of the House Budget Committee, Congressman Paul 
Ryan, whom I have been working with on this issue for the last 
several years. He and I belong to different political parties, 
and we differ on many issues, but Congressman Ryan and I do 
share at least two things in common: Our hometown of 
Janesville, Wisconsin, and, an abiding respect for Wisconsin's 
tradition of fiscal responsibility.
    The bill I will highlight today is one Congressman Ryan and 
I have authored. It would grant the President specific 
authority to rescind or cancel congressional earmarks including 
earmark spending, tax breaks and tariff benefits. It builds on 
the landmark earmark disclosure legislation we passed in the 
last Congress, the Honest Leadership and Open Government Act, 
and in fact uses the definition of earmark that is laid out in 
that measure.
    Under our bill, when Congress passes a bill, the President 
has 30 days to propose that some or all of the earmarks in the 
bill be rescinded or canceled. The President sends that 
proposal to Congress which then considers the proposed 
rescissions within a limited time.
    Both houses must vote up or down on the measure. If either 
house defeats the proposal, then the earmarks would take 
effect. But, if both houses pass the rescissions, the spending 
is canceled, and the resulting savings is applied to the 
deficit.
    I will be brief because you have a number of distinguished 
witnesses today, but let me just note that this could not be 
timelier, as you were indicating. Congress has just passed 
another must-pass year-end omnibus appropriations bill. That 
bill reportedly included nearly 5,000 separate earmark 
provisions costing billions of dollars.
    The President is now faced with a choice, having to sign or 
veto the entire measure into law. The only way he can get at 
those thousands of earmarks is to veto the whole bill, and, of 
course, that is exactly what the authors of the thousands of 
earmarks want. They have slipped their unreviewed, unauthorized 
special interest spending provisions in a bill that will be 
hard for the President to veto.
    So, given those two choices, I certainly hope the President 
does not veto the bill, but we should give the President more 
options than just these two. The measure that Senator McCain, 
McCaskill, Coburn, and I proposed would let the President get 
at those earmarks without having to veto the entire bill.
    I know the Subcommittee will consider a variety of 
different approaches today, but let me just close with this. 
Whenever someone proposes giving the President this kind of 
line-item veto authority, the examples they give are like money 
for a mule museum in Bishop, California, or funds to refurbish 
the statue of Vulcan in Birmingham, Alabama. That is how the 
line-item veto is sold.
    And I am willing to consider giving the President broader 
authority, but, at a minimum, any expedited rescission 
authority we grant the President as a kind of line-item veto 
would include within its scope cancelling congressional 
earmarks.
    So much has happened this year that we should recall that 
we began it by enacting an omnibus appropriations bill for 
fiscal year 2009, and it too was filled with thousands of 
earmarks. We have, therefore, Mr. Chairman, bookended the year 
with measures that serve as vehicles for exactly the kind of 
spending that taxpayers want the President to reject.
    This practice has to end, and, if Members of Congress will 
not restrain themselves, they should at least let the President 
act to end this abusive and fiscally irresponsible practice.
    So, again, thank you so much for your courtesy and for the 
way in which we share our interest in trying to get something 
done in this area. Thanks so much, Mr. Chairman.
    Senator Carper. I thank you. We thank you, and I just look 
forward to working with you on this, you and Senator McCain, as 
we have on other issues in the past.
    And thank you for taking the time to share your thoughts 
with us, and we will work together. Thanks.
    Senator Feingold. Thanks, Mr. Chairman.
    Senator Carper. You bet.
    As Senator Feingold leaves the hearing, I want to start off 
by thanking our witnesses for joining us today and for the 
testimony that you have provided us and for your willingness to 
respond to our questions.
    We are holding this hearing because, as Senator Feingold 
has said, our Nation is on a fiscal path that is not 
sustainable. Our Country has accumulated as much new debt in 
the first 8 years of this decade as we did in the first 208 
years of our Nation's history.
    Our national debt is approaching $12 trillion, and this 
year we are likely to add another $1 trillion to it as we begin 
to come out of this great recession.
    As a percentage of GDP, our national debt stands today at 
almost 85 percent, a level I think exceeded only during World 
War II, during the past 70 years.
    As our Nation emerges next year from this recession, we 
need to begin easing off of the accelerator with one foot and 
start tapping the brakes with the other foot, as we begin to 
slow the growth in spending and again begin to grow revenues.
    In this Subcommittee, we have examined many things. This is 
a wonderful Subcommittee. Federal financial management is part 
of it, but it enables us to look into all kinds of nooks and 
crannies in the Federal Government to see where we are not 
spending money very wisely, and we are trying to do that.
    We look at things like closing the tax gap. We have about 
$300 billion of revenue that should be paid, ought to be paid. 
We have some idea who owes it. We are not collecting it. It has 
been that way for a long time.
    Other things are recovering improper payments, something 
like almost $100 billion worth of improper payments last year 
to other issues such as reining in the growth of the Department 
of Defense cost overruns. Last year, major weapon systems cost 
overruns exceeded $295 billion, up from about $45 billion in 
2001. Finally, we've also looked at issues like disposing of 
much of the Federal Government's surplus property.
    Those are all ideas. They are just some of the ideas that 
we are working on. I hope when the President gives the State of 
the Union Address in a month, some of those issues, some of 
those concerns will appear and draw his interest and concern.
    But today's hearing will look at the spending side of our 
goal of deficit reduction. Every year, as Senator Feingold has 
said, Congress passes a number of spending bills, and, not 
surprisingly, these bills sometimes include spending on items 
which many of us would consider of marginal value, some even 
wasteful, and which contribute unnecessarily to our rising 
deficit.
    While many in Congress and the President may want to remove 
this waste, their desire to do so is often pitted against an 
array of interests intent on protecting that spending or by a 
compelling need to pass those bills in order to direct funds to 
urgent priorities. So we accept a little waste at the cost of 
getting bills passed. My guess, it has been that way in the 
Federal Government, and probably in State and local 
governments, for a long time.
    Having said that, we need to find a better way to reduce 
wasteful spending without jeopardizing the funding for our top 
priorities. One of those ways relates, at least in my view, to 
the President's ability to get Congress to consider, maybe 
reconsider, spending cuts. Currently, when Congress sends a 
spending bill to the President, he can sign it and then propose 
that Congress consider rescinding or reducing spending in 
certain categories of that bill.
    The problem is that Congress is under no obligation to 
consider these rescissions, and when Congress receives 
rescissions they often arrive dead on arrival. Congress has 
tried to fix this in 1996 by passing the Line-Item Veto Act, 
but that ended quickly with the Supreme Court affirming that 
the bill was unconstitutional after it had been struck down by 
a district court judge.
    I agreed with that decision in 1996. The legislation was 
deemed unconstitutional. It extended extraordinary power to 
Presidents to veto specific spending and revenue measures 
within legislation unless super majorities of both the House 
and Senate voted to override a President's action. The 
unconstitutional legislation not only dramatically shifted 
power from the Legislative Branch to the Executive Branch of 
government, but it did so permanently.
    So what was given in 1996 was a right to the President 
essentially to almost line-item veto discretionary spending, 
entitlement spending and revenue provisions. That is a pretty 
broad extension of power, and the only way that the Congress 
could override it was with a super majority, two-thirds votes 
in the House and in the Senate. The Court said that seemed like 
a lot of power shifted to the Executive Branch, and they threw 
the measure out, and that was 13 years ago.
    Today, we have these huge deficits, and we think maybe it 
is time to improve on that earlier product and still get at 
part of the concern that earlier efforts attempted to address.
    Well, in this hearing, we will explore the President's 
existing rescission authority, try to determine how successful 
it has been at reducing spending that most of us, again, would 
consider to be of marginal value or really wasteful. We will 
also consider several ways to change that authority or to try 
to make it more effective.
    Before we turn to our first panel of witnesses, I want to 
take a moment to describe one legislative change that 21 of my 
colleagues and I have proposed, to strengthen safeguards 
against wasteful spending that we can no longer afford in the 
era of trillion dollar deficits.
    Over here to my left, to our audience's right, is a 
chart,\1\ and it talks a little bit about S. 907. We are 
calling it the Expedited Rescission Authority Act, and it 
guarantees that the President's rescission package gets a vote 
within 10 days, provided that the President's package does not 
cut tax benefits or entitlement spending. We do not want to 
include in our legislation what was included in 1996 and 
ultimately deemed unconstitutional.
---------------------------------------------------------------------------
    \1\ The chart submitted by Senator Carper appears in the Appendix 
on page 00.
---------------------------------------------------------------------------
    The President's package cannot cut authorized items by more 
than 25 percent. Unauthorized items could be reduced entirely 
up to 100 percent.
    In order for the rescissions to become law, a majority in 
both chambers must vote in favor of the package, and the 
authority would sunset after 4 years.
    I describe it as a 4-year test drive with something akin to 
certainly enhanced rescission authorities for the President. 
Sometimes people say it is almost like statutory line-item 
veto. I do not know that I would go quite that far, but it is a 
4-year test drive.
    If Presidents abuse it, as they could, in order to coerce 
legislators, Representatives or Senators to vote with the 
Administration on a particular issue in order to have the 
legislators' favorite program, protected, then we want to make 
sure if that kind of behavior is adopted by Presidents, that 
they will lose this authority in the future because we are only 
providing it for 4 years. Then we will stop and see how it is 
working. Is it effective? Is it being abused or not?
    We want to protect authorized programs. We want to provide 
less protection, almost no protection, for unauthorized 
programs, and we do not want to allow the President, at least 
through the authority of this legislation, to go after revenues 
or to go after entitlement spending.
    One other thing I would mention, and it is mentioned on the 
chart, but I will mention it again. The legislation that was 
deemed unconstitutional in 1996, when the President submitted 
his rescission proposals to the legislature, to Congress, they 
became law unless two-thirds of the House, two-thirds of the 
Senate voted to override the President's proposal.
    We are taking a different approach here, and we have 
consulted with some constitutional scholars who say, well, this 
was unconstitutional 13 years ago, but what we think that we 
are doing here is not. And the reason why is that the President 
would submit his proposal for rescinding spending in certain 
areas, in conjunction with a particular bill, and we would have 
to vote on it.
    We could vote with a simple majority in the House or the 
Senate, but we would have to essentially pass the President's 
proposal. We could not walk away from the vote. We could not 
ignore the vote. They are not going to go away. The rescission 
will be there, and we have an expedited timeline during which 
to vote.
    If 51 Senators say, no, we are not interested in doing 
that, it is dead. If 218 House members say, no, that is not 
what we want to do, then it is a dead item there too. But if 
the majority of the House and the majority of the Senate vote 
for it, then the President's rescissions would become 
effective.
    I only say as a recovering governor whose State 
constitution gave me line-item veto powers, I just want to be 
clear: Neither line-item veto powers nor enhanced rescission 
powers alone will restore fiscal sanity to this government, or 
really to any government.
    Sometimes I think the line-item veto powers are oversold, 
but I think we all realize in addition to the kind of spending 
restraint that this legislation could bring, entitlement 
spending must be reined in, revenues that are owed must be 
collected, and some new revenues may need to be collected. I 
think they will need to be collected. Programs must be run more 
cost-effectively.
    I wish I could say there are silver bullets in this 
business. I do not know that there are a whole lot of them. But 
there are a number of arrows in our quiver that can help, and 
we need to figure out which ones are most likely to help, and 
we need to put them to use.
    I think this could be one of those arrows in our quiver. As 
it turns out, so do a number of my colleagues including Senator 
Feingold and Senator McCain.
    If he were here, I would recognize Senator McCain now to 
make some comments of his. When he comes, I will yield to him 
to make whatever comments he wants to add. But, as you know, he 
is the lead sponsor of the bill, lead co-sponsor of the bill 
that he and Senator Feingold have introduced.
    I think that pretty much wraps up what I wanted to say. I 
think now I get to introduce some witnesses, and one or two of 
you look pretty familiar.
    For our second panel, we are going to start by receiving 
testimony from Todd Tatelman from the Congressional Research 
Service, or affectionately known as CRS. The Congressional 
Research Service is the nonpartisan research arm of our 
Legislative Branch here in Congress. CRS strives to provide 
comprehensive legislative research and analysis to Members of 
Congress and their staff. I have personally benefited, my staff 
have benefited greatly from the service that the Congressional 
Research Services provides, and we are grateful.
    Mr. Tatelman is a legislative attorney in the American Law 
Division at the Congressional Research Service. He specializes 
in the areas of congressional laws and procedures, 
constitutional law, administrative law, transportation law, and 
international law.
    We thank you for being here.
    He is going to be joined at the witness table on this panel 
by our next witness whose name is Susan Poling, who is Managing 
Associate General Counsel at the U.S. Government Accountability 
Office, affectionately known as GAO. Ms. Poling has spent more 
than 19 years at GAO, starting right out of high school, where 
she has focused on providing support for GAO audit teams on 
budget and appropriation issues. Additionally, Ms. Poling, I am 
told, is responsible for GAO's duties under the Empowerment 
Control Act, and we will be hearing more about that here in 
just a minute.
    Before joining GAO, Ms. Poling was in private practice and 
worked as an attorney in the Office for Civil Rights at the 
U.S. Department of Education.
    With that having been said, you all are welcome to come to 
the table, and we will sit back and listen to your testimony.
    Normally, we ask our witnesses to keep their comments to 
about 5 minutes. If you go way beyond that, I will rein you in. 
If you do not, then we will just let you fill it up, but try to 
stay close 5 minutes, please.
    OK, Mr. Tatelman, do you want to go first?
    Mr. Tatelman. Certainly, Senator. Thank you.
    Senator Carper. No, we thank you, I think. I am sure we do.

    TESTIMONY OF TODD B. TATELMAN,\1\ LEGISLATIVE ATTORNEY, 
     AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE

    Mr. Tatelman. Mr. Chairman, thank you very much, and thank 
you for the very kind words about the Congressional Research 
Service. We certainly appreciate them and do our best to abide 
by that nonpartisan objective mandate that you laid out.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Tatelman appears in the Appendix 
on page 46.
---------------------------------------------------------------------------
    This afternoon, I have the distinct privilege of offering 
you testimony related to both the Line-Item Veto Act of 1996, 
the Supreme Court decisions that flowed from Congress' passage 
and President Clinton's eventual use of that authority, and 
then I will talk a little bit about both S. 907, the bill that 
you have spoken of, and S. 524 which was Senator Feingold's 
bill, and discuss what might be some of the issues that would 
arise and how it would differ from the Line-Item Veto Act.
    So, to start, I would also like to ask that the full 
prepared statement be submitted as part of the record. I think 
there is a lot more detail there than I will be able to cover 
here.
    Senator Carper. Without objection, the entire testimony of 
each of our witnesses will be made a part of the record. Thank 
you.
    Mr. Tatelman. Thank you, Mr. Chairman.
    To start, I suppose it is worth going back through in a 
little bit of detail what the Line-Item Veto Act of 1996 
actually provided. Senator, you did that very nicely a minute 
ago, but I will stress a few points just to make it clear, so 
that when we discuss the Supreme Court opinions we know exactly 
what we are talking about.
    The Line-Item Veto Act called for the President to have the 
authority to cancel any dollar amount of discretionary budget 
authority, any item of new spending or any limited tax benefit. 
So it was quite a broad base of authority covering a number of 
different legislative proposals.
    In order to effectuate the cancellation or rescission of 
the bills under the Line-Item Veto Act, the President needed to 
send a special message up to Congress within 5 days of the 
enactment's passage. The cancellation legally took effect upon 
receipt of that special message by either the House or the 
Senate, whoever got it first.
    And, as you mentioned before, in order for the Congress to 
overturn a presidential cancellation, it needed to pass a 
disapproval resolution which would render the cancellation 
legally null and void. That was the language of the statute. 
And it needed to be done, as you mentioned, by a two-thirds 
majority in both houses.
    Almost immediately after the Line-Item Veto Act passed the 
Congress, it was facially challenged by a number of Senators 
who had voted against the bill when it was on the Senate floor. 
That initial facial challenge resulted in a Supreme Court 
opinion known as Raines v. Byrd. That opinion was handed down 
in 1997.
    Interestingly, Raines does not deal with the constitutional 
question about whether the Line-Item Veto Act was 
constitutional or not. Rather, Raines turns on whether or not 
the Members of Congress had standing to bring the case before 
an Article III court. So Raines does not answer any of our 
constitutional questions. Nevertheless, it is a very important 
decision in its own right having to do with the separation of 
powers between Congress and the courts.
    So I will not spend a tremendous amount of time on Raines, 
but I do note that the impetus for the case was a facial 
challenge to the line-item veto. The plaintiffs in that case 
felt that it was facially unconstitutional.
    The Court, in Raines, indicated that it was not going to 
decide the constitutional question regarding the Act because, 
in part, not only did the plaintiffs not have standing, but the 
Act had not been used by a President yet. The Court indicated 
very clearly in one of its opinions that a more applied 
challenge needed to wait until the President actually enacted 
and used the authority provided to him.
    Well, President Clinton did exactly that at the end of 1997 
by cancelling two provisions in the Taxpayer Relief Act of 1997 
and one provision in the Balanced Budget Act of 1997. The 
affected plaintiffs in those instances, the entities that were 
to receive those benefits under the bills, brought suit 
pursuant to the statute in 1997, and that statute called for a 
decision first by a district court here in the District of 
Columbia who almost immediately held the Act to be 
unconstitutional.
    The Supreme Court, under the same statute, expedited its 
appeal, and the case went directly from the district court to 
the U.S. Supreme Court and resulted in the 6 to 3 decision 
known as Clinton v. the City of New York.
    The Court was very clear and very narrow in its holding 
with respect to the line-item veto. They held that it was 
unconstitutional because it violated Article I, Section VII of 
the Constitution. According to the Court, the Constitution 
provides for only a ``single finely wrought and exhaustively 
considered procedure for adopting laws in the United States, 
namely, passage by both houses of Congress, presentment to the 
President for his signature or veto.''
    Nothing in the Constitution, according to the Court, 
allowed for the President to amend, alter, cancel or rescind 
provisions of the bill. Because the President, according to the 
Court, acted unilaterally under the auspices of the Line-Item 
Veto Act, they felt that that was an unconstitutional use of 
the President's veto power.
    The Court was very careful to distinguish constitutionally 
permissible vetoes from the vetoes that were provided 
statutorily by the Act. According to the Court, constitutional 
vetoes take place before a bill becomes law, whereas the line-
item veto provisions or cancellations by the President did not 
take effect until after he had signed the underlying provision 
into law. That distinction was incredibly important to a 
majority of the members of the Court.
    Turning now briefly to the two bills and the expedited 
rescission possibilities, as you described earlier, Mr. 
Chairman, under S. 907, the bill you have introduced, the 
President needs to submit his special message to the Congress 
within only 3 days of passage of the underlying message. Your 
bill applies only to discretionary budgetary authority and does 
not appear, at least on its face, to apply to the other areas 
of law that the Line-Item Veto Act dealt with. Most 
importantly, it requires Congress to enact a bill or joint 
resolution approving of the rescission before the rescission or 
cancellation is legally permitted to take place, and as you 
mentioned, the authority would expire after 4 years, in 2012.
    Similarly, S. 524, sponsored by Senators Feingold and 
McCain, would also give the President the ability to suggest 
rescissions to the Congress. However, their bill provides for 
that suggestion to be made up to 30 days after the bill was 
permitted, and their bill specifically applies to congressional 
earmarks, limited tariff and tax benefits. It does not mention 
discretionary budget authority, but it rather uses the other 
language that I just mentioned.
    Similarly, it requires Congress to enact a bill or joint 
resolution prior to the rescission or cancellation becoming 
law. Similarly, it also uses expedited procedure provisions to 
move the suggestions through the process.
    One major difference between S. 524 and S. 907 is that S. 
524 also provides the President with temporary authority to 
withhold legally obligating the funds for up to 45 days from 
the date that the special message is received from Congress, 
and something that S. 907 does not appear to provide for. And, 
similarly, S. 524 would expire in 2014, as it contains 
provisions there.
    Very briefly, applying the constitutional analysis that the 
Court used in Clinton vs. City of New York to the expedited 
rescission proposals, both S. 907 and S. 524, would appear to 
be distinguishable from Clinton v. City of New York. Unlike the 
bill in Clinton, the Line-Item Veto Act of 1996, the expedited 
rescission authorities do not provide the President with 
unilateral cancellation authority.
    Rather, it provides him with the authority to suggest 
rescissions or cancellations to the Congress and then requires 
the Congress to take an affirmative action of passing a 
separate bill or joint resolution before those cancellations 
would become legally effective. That distinction would appear 
to abide by the provisions of Article I, Section VII as 
Congress would, in a sense, have to pass a second bill or joint 
resolution before the President's suggestion cancellation were 
to become legally effective.
    Because there appears to be a second resolution or bill 
that would go through the Article I, Section VII procedures, it 
would seem that if the expedited rescission provisions were to 
be challenged in a court that the court would easily be able to 
distinguish the situation from that which appeared before it in 
Clinton v. City of New York and would likely hold it to be at 
least constitutional under the Article I, Section VII analysis.
    Of course, remember the Court does not address any 
additional constitutional reasons and did not address any 
additional constitutional holdings in Clinton v. City of New 
York. So, if there are additional arguments that plaintiffs 
would make against the expedited rescission bills, those have 
not yet been addressed by any court, including the Supreme 
Court. They focused very narrowly on that bicameralism and 
presentment language in Article I, Section VII.
    And, with that, I will end and turn it over to my colleague 
from GAO.
    Senator Carper. Good. Nice job. Thanks very much. Ms. 
Poling, welcome.

  TESTIMONY OF SUSAN A. POLING,\1\ MANAGING ASSOCIATE GENERAL 
         COUNSEL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Poling. Thank you, Mr. Chairman, and Senator McCain.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Poling appears in the Appendix on 
page 56.
---------------------------------------------------------------------------
    I am pleased to be here today to discuss GAO's role in the 
congressional rescission process and to provide some 
perspective on the use and impact of rescissions. My written 
statement also includes statistical data on rescissions from 
1974 to 2008.
    The Impoundment Control Act of 1974 was enacted to tighten 
congressional control over presidential impoundments and 
establish a procedure under which Congress could consider the 
merits of rescissions proposed by the President. Under the Act, 
the President may propose a rescission when he wishes to 
withhold funds from obligation. These funds may be withheld for 
a limited time period, and, if Congress does not approve the 
rescission during this period, the President must release the 
funds. The Act also provides for a special discharge procedure 
permitting 20 percent of the members of either house to force a 
floor vote on any presidential rescission proposal.
    Since the enactment of the Impoundment Control Act, 
Presidents have proposed about $76 billion for rescission, of 
which Congress has accepted about $25 billion. Presidents of 
both major parties have submitted rescission proposals, but, as 
you can see in Figure 1,\1\ which is also in the written 
testimony, the dollar values proposed vary widely with each 
administration. The Reagan Administration proposed the largest 
amount for rescission, a total of $43.4 billion. In contrast, 
President George W. Bush did not transmit any proposals for 
rescission under the Impoundment Control Act; he did propose 
something called cancellations.
---------------------------------------------------------------------------
    \1\ Figure 1 referenced by Ms. Poling appears in the Appendix on 
page 61.
---------------------------------------------------------------------------
    For example, in October, 2005, President Bush sent a letter 
to Congress proposing the cancellation of $2.3 billion from 53 
different programs. As this was not a rescission proposal under 
the Act, agencies were not authorized to withhold funds from 
obligation. However, our study showed that seven agencies 
withheld budget authority from 12 programs, in violation of the 
Act. After our inquiry, the agencies released the funds.
    Since 1974, the Congress has approved about 33 percent of 
the President's rescission proposals as measured by dollar 
value. The approval rate varies by Administration. As you can 
see in Figure 1, in the Clinton Administration, Congress 
approved about 54 percent of the rescission proposals as 
measured by dollar value, but the total amount rescinded under 
President Clinton, $3.6 billion, was small in comparison with 
the amount rescinded under President Reagan, $15.6 billion.
    On its own initiative, Congress has made increasing use of 
rescissions as a tool to revise enacted budget authority, from 
$1.4 billion in 1974 to a high of $18.9 billion in 1995. 
Overall, congressionally initiated rescissions are about 2.5 
times the amounts proposed by all the Presidents since 1974.
    Figure 2\2\ compares by year the amounts proposed by 
Presidents for rescission which is the short dashed line, 
presidentially proposed amounts enacted by Congress which is 
the solid line, and congressionally initiated rescissions which 
is the large dashed line.
---------------------------------------------------------------------------
    \2\ Figure 2 referenced by Ms. Poling appears in the Appendix on 
page 63.
---------------------------------------------------------------------------
    As you look at it, you can see that in the first 10 years 
of the Act, from 1974 through 1983, Congress accepted $18.6 
billion of the $37.4 billion of presidential rescission 
proposals, just under 50 percent in the first 10 years. At the 
same time, Congress enacted about $9 billion in rescissions on 
its own initiative.
    Fast-forward to the last 10 years, 1999 through 2008, and 
you will see that Congress enacted approximately $17 million, 
not billion, of the $163 million proposed for rescission by the 
President, about 10 percent, while enacting about $92 billion 
in congressionally initiated rescissions.
    Over time, the share of the total rescissions enacted each 
year which were proposed by the President has fallen, and the 
share originating in Congress has increased. While these 
statistics highlight Congress' increasing use of rescissions, 
the relatively small amounts rescinded make clear that 
rescissions have not been a major tool in reducing spending.
    This is in part because discretionary budget authority, 
which is the only spending for which rescissions can be 
proposed, constitutes approximately 40 percent of Federal 
spending. Spending growth is driven by the remaining part of 
the budget which is spent on such programs as Social Security 
and Medicare. These mandatory programs and interest on the 
Federal debt represent about 60 percent of the budget.
    This is not to say that rescissions are unimportant. The 
President's proposals can foster debate between the President 
and Congress over funding priorities and cuts in specific 
programs. To enhance accountability and further public debate 
over spending priorities, there have been a number of proposals 
presented in Congress over the years for an expedited 
rescission process.
    Although the details of the proposals vary, expedited 
rescission proposals are designed to ensure rapid and formal 
congressional consideration of rescissions proposed by the 
President. An essential element of an expedited rescission 
procedure is a prompt up or down vote in the Congress on the 
President's proposals to reduce enacted spending authority. 
Since budget authority is not cancelled unless a law rescinding 
existing budget authority is enacted, in accordance with 
Article I, Section VII of the Constitution, an expedited 
rescission process does not present the constitutional issues 
that led the Supreme Court to strike down the Line-Item Veto 
Act.
    Mr. Chairman, this concludes my prepared remarks, but I am 
happy to answer any questions that you or Senator McCain may 
have.
    Senator Carper. Good. Ms. Poling, thank you very much for 
that testimony. We really are grateful to GAO for the good work 
that you do not just for us, but really for the citizens of 
this Country.
    We have been joined by Senator McCain, and I am going to 
yield to Senator McCain for any comments that he wants to give, 
or any questions that he would like to ask of these first two 
witnesses.

              OPENING STATEMENT OF SENATOR MCCAIN

    Senator McCain. Well, let me ask Ms. Poling first, were the 
Congressional rescissions that you pointed to, were they used 
for deficit reduction or just reallocation to other programs or 
projects?
    Ms. Poling. We cannot actually answer either/or on that 
question, Senator. They are rescissions, and that is all they 
are. We do not know how the money was used, or whether it was 
used at all. So, actually, I cannot answer the question.
    Senator Carper. If I can interrupt, when I heard how much 
the Congress had rescinded and how relatively little Presidents 
had rescinded, I thought maybe we are making better use of our 
rescission powers than the President. I do not know if that is 
true. I say it partly tongue in cheek.
    Senator McCain. Ms. Poling, I think if you checked into it, 
most of it was not for purposes of reducing spending. It was 
for moving money around for different priorities and different 
projects that the Congress had. Members of Congress, 
particularly members of the Appropriations Committee, it has 
been my experience. But perhaps you could illuminate on that 
for us for the record.
    Ms. Poling. Just to make sure you understand my comment. If 
there is a rescission that comes in an appropriation bill, 
which would be one way of making room for other priorities, 
that is not counted as a rescission. It is when a rescission is 
of already enacted budget authority.
    Senator McCain. Well, again, I guess my response is that 
they have a certain budget level, and they meet it, and they 
move money around. But the budget does not decrease overall, 
and the spending does not decrease overall.
    Ms. Poling. I think that the record is going to show that 
spending and the budget did not decrease overall for most of 
the years in question. [Laughter.]
    Senator McCain. I guess that goes in the category of a dumb 
statement.
    Ms. Poling. No, I agree with you wholeheartedly, Senator.
    Senator McCain. On my part, I mean, Ms. Poling.
    You stated that there have been a number of proposals. 
Senator Carper has a very strong proposal. You have heard them 
all. What would be the ideal proposal that you think would pass 
constitutional muster and, at the same time, be most effective? 
Mr. Tatelman.
    Mr. Tatelman. Well, Senator, I can only speak to the 
constitutional question.
    Senator McCain. Yes.
    Mr. Tatelman. Its effectiveness is something far beyond my 
own expertise.
    In an ideal setting, I am not sure that there is an ideal 
way to do it. There are a number of possibilities and proposals 
that would pass constitutional muster in the sense that as of 
now we only have a court decision that seems to require that 
whatever happen, it has to happen in accordance with Article I, 
Section VII, which requires Congress to affirmatively pass 
either a bill or a joint resolution, and the President must 
sign that into law before a rescission or cancellation of any 
budget authority can take place. As long as that centerpiece 
part of any expedited rescission bill or other rescission 
proposal is there, I think you are on solid constitutional 
ground, at least as far as we know from this point.
    My written statement indicates there may be some separation 
of powers questions that would get raised, depending on how the 
temporary impoundment authority is structured. So providing the 
President with the ability to temporarily withhold obligation 
of funds while that second bill or joint resolution is being 
considered by Congress might, in some people's view, raise 
constitutional concerns. Then again, it may not as we do not 
have a direct Supreme Court or even court of appeals opinion on 
any proposal that includes that temporary withholding 
obligation.
    So there are some potential questions that exist out there, 
but for now I think we can confidently say that anything that 
meets that Article I, Section VII requirement would at least 
pass constitutional muster.
    Senator McCain. And the last effort did not meet that 
constitutional requirement because?
    Mr. Tatelman. Because the President's action, according to 
the Court, was unilateral in the sense that his line-item veto, 
according to the majority of the members of the Court, took 
place after he signed the bill into law.
    So the process was different from Article I, Section VII in 
the sense that Congress presents the appropriations bill to the 
President. The President would sign it, therefore creating a 
law that he arguably has a duty to take care, as faithfully 
executed under Article II, Section II. Then he would enact the 
authority, or execute the authority given to him by the line-
item veto power, which was an automatic cancellation with no 
consideration by Congress at the time that the cancellation 
became legally effective.
    So the line-item veto occurred after the bill had become 
law, which the Court zeroed in on and focused on and pointed 
out was the constitutional infirmity of that particular act.
    Senator McCain. Ms. Poling.
    Ms. Poling. With regard to the expedited rescission 
proposals that I particularly looked at for this hearing, which 
are S. 524, Senator Feingold's bill, and Senator Carper's bill, 
S. 907, both of these are generally consistent with the very 
constitutional issues that Mr. Tatelman brought up. They are 
consistent with Article I, Section VII, with regard to 
presentment. Both of them are passed by both houses of Congress 
and then presented to the President.
    They are bills. They take the normal way a bill would go 
through, with the exception of the rules that get at this 
expedited consideration on the part of the Congress.
    And with regard to the usefulness of this, we leave it in 
fact to the Congress as a matter of policy about whether it 
would indeed like to pass this type of legislation.
    We do note that it cedes some control over the 
congressional calendar to have this expedited process. The 
provisions that limit the number of messages or the time period 
in which the President can send it, to make it eligible for 
this fast-track legislation, may help maintain control of the 
congressional calendar.
    But the short timeframes also could present other 
challenges for the Congress. In the past, under the Impoundment 
Control Act, the Congress has looked to GAO to provide it with 
information about the various rescissions. We would go and we 
would get a copy of the special message at the same time as it 
is sent to the President, and this is still true under Senator 
Carper's bill.
    But we would get a copy of the bill, and then we would 
contact the Office of Management and Budget officials to find 
out the reasons why it is being requested and to double-check 
their figures. We would talk with program officials to find out 
how this bill would affect the program, the overall program, 
this particular type of rescission. Then we would report back 
to the Congress within 25 working days.
    We can still do that under Senator Carper's bill. But 
obviously, when the time is compressed, there is a limit to how 
much we can do for the Congress, and there is a limit on how 
much information the Congress itself can get.
    Certainly, Senator Carper's bill also includes the same 
types that are in the Impoundment Control Act, and there is a 
list of five things that the President must provide when he 
sends forward this rescission proposal under the bill. Those 
will certainly help the Congress decide whether in fact these 
are, as a package, what the Congress wants to pass.
    So, from our point of view, we do think that it is perhaps 
important to permit the President to also bring forward to the 
Congress a rescission proposal outside the expedited process. 
Senator Carper's bill, by amending the Impoundment Control Act, 
still permits that process.
    So, if in fact after the 3 days have passed, 6 months have 
passed, and the President looks at the program, and some things 
have changed, and he wants to bring forward to the Congress the 
idea that this is something that we can rescind--we either no 
longer need this program, or we do not need this much money for 
the program, and we would like to withhold that from budget 
authority--under the Impoundment Control Act, the President you 
can still do that.
    So you have a dual procedure for bringing things to the 
Congress' attention--both the expedited procedure and the 
regular procedure under the Impoundment Control Act.
    Senator McCain. Thank you. Thank you, Mr. Chairman. It has 
been very helpful.
    Senator Carper. You bet. Thank you.
    I am going to ask you to answer the next question just for 
the record, and it is a little bit along the lines of Senator 
McCain's question, one of his earlier questions. We are just 
soliciting input for how to improve on what we have drafted and 
introduced, and I would just ask you to answer for the record, 
any further thoughts that you have on how we might improve the 
legislation, whether it is respect to its constitutionality or 
its potential effectiveness. If you could do that for us, I 
would be most grateful.
    Mr. Tatelman, quite often we have heard that expedited 
rescission proposals like our bills are proposals, a type of 
line-item veto that puts too much power in the hands of the 
Executive Branch. When I looked at the 1996 legislation, as I 
said earlier, that was a concern to me to give the President 
these extraordinary powers over discretionary spending, over 
entitlement spending, over revenue provisions and require a 
super majority to undo all that. That just seemed like a bridge 
too far to me.
    Knowing what you do know about these proposals, do you 
think it is fair to characterize expedited rescissions as a 
type of line-item veto, and do they change the power dynamic 
between the Legislative and Executive Branches in what you 
might deem an unfair manner? This would be for you, Mr. 
Tatelman.
    Mr. Tatelman. I think it is a very good question, and there 
is certainly a lot of divided opinion on the answer. I am not 
sure that I can, CRS does not generally tend to, speak in terms 
of a fair and unfair manner.
    I would say that I think there definitely would be a shift 
in the power dynamic, even under an expedited rescission 
authority. I would agree, as a matter of constitutionality, it 
does not go as far as the Line-Item Veto Act of 1996, and it is 
a very different animal.
    I would only add as a matter of sort of process here that I 
think Ms. Poling's point is one that is incredibly important, 
which is that the expedited procedure process in and of itself 
may pose some difficulties in the future for future Congresses, 
and thus her point about preserving both the two-track 
process--both having an expedited manner by which the President 
can bring rescissions before the Congress and preserving the 
existing budget Impoundment Control Act process--I think 
becomes critically important, especially when you consider that 
in future Congresses those expedited procedure provisions would 
not be binding in any way, shape or form, not as a matter of 
law and not as a matter of congressional procedure and not as a 
matter of constitutionality.
    There is nothing unconstitutional at all about Congress 
limiting its own ability to consider and deliberate per 
processes, but the 111th Congress cannot put that imposition on 
the 121st Congress or the 130th Congress, or even the 112th for 
that matter. So future Congresses are going to need to not only 
evaluate the rescissions on their merits, but they may also 
feel compelled to reevaluate the process by which they consider 
those rescission.
    Thus, again, I would stress that I think Ms. Poling's point 
about a two-track process may in fact prove to be very 
prescient in the sense that Congress may decide that the 
expedited procedures do not work for it. Even though it is in 
the law and even though they have passed them before, they may 
decide that those are inadequate to deal with the rescissions 
that a particular President in the future may propose. Thus, 
preserving that longer-term, more deliberative process may be 
something worth considering.
    Senator Carper. All right. Thank you.
    As has been noted earlier today, our bill, maybe our bills 
essentially superimpose fast-track authority on top of the 
President's current rescission authority. I have two questions 
I just want to ask about this, Mr. Tatelman.
    First, has there ever been a constitutional challenge, to 
your knowledge, to fast-track authority as it is used in other 
laws?
    Second, has there been a constitutional challenge, that you 
are aware of, to the President's rescission authority as it 
stands under current law?
    Mr. Tatelman. I think the answer to both questions, to my 
knowledge, is no, there have not been. And I will be honest 
that I have not done the adequate research on that question, 
but to my recollection and knowledge, certainly not on the 
expedited procedures question.
    I am not entirely sure that anybody currently, under 
current jurisprudence, would have the ability to bring such a 
challenge. The Supreme Court has ruled in other instances not 
involving fast-track procedures, that they will not look into 
and rule on the internal procedures and workings of the 
Congress in a constitutional manner. You can find cases going 
all the way back to United States v. Ballin in 1890 that will 
establish that precedent, and there are a host of others, none 
of which have been on fast-track specifically though. But I 
think the concept that the Supreme Court is not likely to 
consider, for political reasons and for jurisprudential 
reasons, a challenge to fast-track would probably hold.
    Again, I have not looked into seeing if there have been 
constitutional challenges to the rescission authorities that 
are currently in place.
    Senator Carper. If you could just answer that for the 
record, I would appreciate that.
    I do not want to put words in your mouth with this next 
question, but let me ask it just the same. Do you think it is 
fair to say that if S. 907 was to pass, then for the bill to 
survive judicial review the courts would have to address the 
constitutionality of both fast-track authority and the 
President's existing rescission authority?
    Mr. Tatelman. No, I do not think they would have to address 
those questions in order to issue a ruling. It is impossible to 
predict what a court case would bring forward and what 
allegations an affected plaintiff, might raise in bringing such 
a case. But I do not think as a matter of constitutional law or 
as necessity they would have to answer either of those two 
questions, no.
    Senator Carper. OK. Let me yield back to Senator McCain for 
any other questions that he might have.
    Ms. Poling, I do not want to let you escape without any 
questions. So let me ask one or two of you.
    I think a vote has begun. We will go about another 10 
minutes and then break for the vote.
    Ms. Poling, after reading your testimony, we noticed a 
provision of the Impoundment Control Act that I believe to be 
very rarely used or maybe not well known in the Congress, and 
that provision states that 20 percent of either chamber of 
Congress can force a floor vote on one of the President's 
proposed rescissions. Could you explain for us how this works a 
little bit more and any idea when this might have last been 
used, this authority?
    Ms. Poling. Well, we are unaware of any instance in which 
any member of any house has actually used this special 
discharge procedure of forcing the vote. We did a Congressional 
Record search under the Impoundment Control Act for votes under 
the Impoundment Control Act, and we found no instances of it. 
We polled some GAO employees who had been doing Impoundment 
Control Act work for the last 25 years, and none of them had 
ever heard of it being used either.
    That does not mean that no one has tried to use it. They 
may have. But if it did not come for a vote, then it is not 
going to come up in the Congressional Record.
    Senator Carper. A follow-up question if I could, one 
frustration with the current rescission process is that 
Congress receives these rescissions from the President, but the 
cuts are never voted on, or rarely voted on in the Congress 
because of a few members' desires to thwart the President.
    Your testimony says that since 1974 Presidents have 
requested over 1,000 rescissions. I think it is 1,178. Do you 
know how many times these rescission requests have resulted in 
a floor vote in the House or Senate, any idea? If you do not 
know, we will invite you to just respond on the record.
    Ms. Poling. In terms of a floor vote, all the ones that 
have been enacted rescissions have gotten a floor vote on the 
bill in which they appeared. But in terms of the President's 
bill as of a piece, we never did track that in terms of whether 
one bill went forward. Certainly, our experience in the last 25 
years is that is not the way the rescissions are enacted.
    The bill goes forward. It goes to the various committees. 
They get our reports. They decide whether they are going to put 
it in whatever bill is moving at the time. That is the way it 
generally has worked.
    Senator Carper. All right. Thank you.
    Another question for you, Ms. Poling, I know that under the 
previous administration, President Bush threatened to veto 
several appropriations bills because they contained spending 
that he viewed as wasteful. At the same time, he also made a 
push for his very own type of expedited rescission authorities, 
as I think you mentioned, in 2006. What did he call it? 
Cancellations, I think they were called.
    Ms. Poling. Oh, cancellations, yes.
    Senator Carper. From my perspective, he was clearly 
dissatisfied with his existing rescission authority. I believe 
you said that he never used it in 8 years. But, according to 
your efforts from fiscal year 2002 to 2008, the President, as I 
said earlier, did not make a single rescission request.
    In your testimony, you explained that he instead started to 
cancel certain funding. You have talked about this a little 
bit, but could you just go into a little bit more detail about 
what happened from 2002 to 2008 on this front? Why do you 
suppose it happened that way?
    Ms. Poling. Well, we do not really know why President Bush 
decided not to use the rescission authority under the 
Impoundment Control Act.
    Now a President can propose a rescission in a bill at any 
time. He does not need to use the Impoundment Control Act. By 
using the Impoundment Control Act, the President is permitted 
to withhold that budget authority, to actually impound those 
funds for the 45 legislative days, to give Congress the time to 
act on it.
    When we talked to Office of Management and Budget officials 
with regard to the cancellations, they explained to us very 
clearly that the President was not proposing these under the 
Impoundment Control Act and that none of the agencies were 
being permitted to in fact withhold the funds from obligation.
    So I am not sure I can say what the reasons are behind 
President Bush's decision, but we do know that he was not using 
the Impoundment Control Act method for asking for rescissions.
    Senator Carper. OK. All right.
    Mr. Tatelman, one more question if I could, for you, and I 
do not think I asked this. In your testimony, you say that S. 
907 would not be susceptible to the constitutional concerns 
that overturned the Line-Item Veto Act of 1996. Do you have any 
other additional concerns about S. 907 that were part of the 
1996 line-item veto debate?
    Mr. Tatelman. No, none that I can think of, Senator. I 
think they are sufficiently distinct, that many of the issues 
that came up in 1995 and 1996 when it was being debated and 
being heard by the courts would not be the same types of 
concerns that would be raised by S. 907.
    Senator Carper. OK. Thanks.
    And last question before we break for a vote, and this is 
for Ms. Poling, you have been tracking for quite a while now 
these matters. Can you identify any use for presidential 
rescission authority if the President cannot get a vote in 
Congress on the rescissions that he or she proposes?
    Or, to put it another way, if Congress does not give the 
President a vote on his or her rescissions, is there any 
additional use for this authority?
    Ms. Poling. The Impoundment Control Act has two aspects to 
it. One is a proposal for rescissions, and the other is a 
proposal for deferring budget authority. Both of them permit 
the President to impound and not spend the funds until the 
statutory framework has taken its regular procedure, including 
the 45 legislative days, and this actually has come before the 
courts. The courts have said that the President may not impound 
the funds beyond the 45-day period.
    So, in terms of what the President can do if Congress is 
not giving him a vote on the particular programs, I think all 
the President can do is have someone introduce another bill 
that would specifically mention whichever programs he feels 
very strongly about.
    Senator Carper. OK. Thanks.
    Again, we are very grateful for your testimony, for being 
here today, for your preparation and your willingness to 
respond to our questions and then some questions for the 
record. Some of our colleagues, I am sure, will want to submit 
other questions for the record, and I appreciate your 
responding to those.
    I will get in the business of gathering co-sponsors. I 
think we have maybe 21 on the bill that I have introduced, S. 
907. If you all want to sign up as a co-sponsor later on, when 
you submit your responses, you can add that as a P.S. for us, 
OK.
    In the meantime, happy holidays and thank you again for the 
good work that you do for all of us. Thank you.
    Ms. Poling. Thank you very much.
    Senator Carper. You bet. We are going to take a recess. 
Hopefully, I will be back in about 20 minutes. Thanks very 
much.
    For now, we stand in recess.
    [Recess.]
    Senator Carper. I am going to call the Subcommittee back to 
order.
    As we start off our third panel, let me just first of all 
say thank you for your patience with us. We voted once. We will 
probably be voting again, but my goal is to conclude our 
hearing before we have to reconvene on the floor for votes.
    We are going to hear from some people whose names are well 
known around here and highly regarded. Let me start off our 
third panel by introducing Ray Scheppach, who I was privileged 
to serve with when I was governor for 8 years for the State of 
Delaware. His official title is Executive Director of the 
National Governors Association (NGA), a position he has held 
since 1983. That is an amazing feat, 26 years. I was really 
grateful to him for his continued service.
    As Executive Director, Dr. Scheppach oversees the day to 
day operations of the association and works closely with the 
NGA chair and vice chairs and heads of the NGA's respective 
committees as they help develop priorities for our Nation's 
governors and our States.
    Prior to his position at the NGA, Dr. Scheppach worked for 
7 years at the Congressional Budget Office--I had forgotten 
that--serving his last 2 years as Deputy Director.
    And Dr. Scheppach has testified before the Congress on many 
occasions, including to the full Senate Homeland Security and 
Governmental Affairs Committee earlier this year.
    So our thanks to you for joining us, and we look forward to 
hearing your testimony.
    Our next witness is Robert Bixby, Executive Director of the 
Concord Coalition. The Concord Coalition, for those who may not 
know, is a nonpartisan, nonprofit organization established by a 
couple of former Senators, Warren Rudman and Paul Tsongas, and 
by Commerce Secretary Peter Peterson, in order to educate our 
public about the causes and consequences of Federal budget 
deficits.
    For the past 17 years, Mr. Bixby has served in a variety of 
positions including field director, policy director and for the 
past decade as executive director. He frequently represents 
Concord's views on budget reform policy at congressional 
hearings and in the national media, and I have been privileged 
to be on panels where he has appeared before, and I always 
enjoy that and appreciate it.
    We welcome you back today to testify and look forward to 
your input on today's hearing topic.
    Our final witness will be Thomas Schatz. Mr. Schatz is the 
President of Citizens Against Government Waste, a nonpartisan 
organization dedicated to eliminating government waste. He has 
been at Citizens Against Government Waste for 22 years.
    He has testified before Congress on numerous occasions 
about government waste. I think once or twice before panels 
that I was privileged to serve on.
    Before joining Citizens Against Government Waste, Mr. 
Schatz spent 6 years as legislative director for one of my old 
colleagues, Ham Fish, in the House of Representatives.
    Thank you for your service to our Country, and we thank you 
for your testimony today.
    Normally, we do not swear in witnesses to try to verify 
veracity. I am tempted to swear in Ray Scheppach. But, no, I am 
kidding. I will not. We are not going to do that.
    We are delighted you are all here.
    In presenting your testimony, try to stick close to 5 
minutes. Your full testimonies will be made part of the record.
    But again, welcome. We are happy to hear from you. Thank 
you.
    Please proceed, Dr. Scheppach.

    TESTIMONY OF RAYMOND C. SCHEPPACH, PH.D.,\1\ EXECUTIVE 
            DIRECTOR, NATIONAL GOVERNORS ASSOCIATION

    Mr. Scheppach. Senator Carper--I will not use the term 
governor--I am pleased to appear before you today on behalf of 
the Nation's governors to talk about line-item veto.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Scheppach appears in the Appendix 
on page 71.
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    I would first say that the timing on this is unusual in 
that just last week I was a panelist at a major conference down 
at the Miller Center at the University of Virginia that focused 
essentially on this question of how do countries manage with 
increasing amounts of debt. They had budget experts from a 
number of countries, and international economists as well.
    I would say that one of the conclusions is that there is an 
increasing concern among everybody internationally about the 
potential unraveling of the international financial system 
because of these high levels of debt. It could start with the 
value of the dollar. It could start with such small things like 
Dubai or Greece--although they in themselves are fairly small, 
it could touch off a run where you found individual investors, 
dumping dollars on the market.
    So the first point I think is that the risk of this is 
growing every year now, not only because of the U.S. debt but 
because of the total amount of international debt.
    I would say the second reason why we need to get this debt 
down is that the interest now, as a percentage of total 
spending, is getting quite significant on the order of 
magnitude of $700 billion, which limits your ability to invest 
in other things. And also, I think it is an inter-generational 
problem of leaving a huge debt to our children.
    The final reason I think you need to be concerned is that 
the components that you are cutting are probably the investment 
components of budget. It is the R&D, it is the education, and 
so on.
    Let me move on to State budget procedures. Let me first 
make the point, following up what the Senator mentioned, that 
you do have to be careful in pulling out one particular 
component or one tool because State budgeting processes and the 
Federal processes differ quite dramatically. States have 
balanced budgets; the Federal Government does not. States have 
capital budgets; the Federal Government does not. One of the 
big differences is that most governors really have the ability 
to make cuts across the board on previous appropriations 
without essentially going to the legislature.
    In terms of the line-item veto, 41 States have line-item 
veto authority on appropriations. In addition, 15 States have 
veto authority over selected words. Even four have the ability 
to change words.
    About 15 governors actually have the ability to reduce 
their appropriations. So, if something came in at $100 million, 
you could essentially amend it down to $50 million, and these 
would have to be overridden by some super majority. So line-
item veto authority is fairly strong.
    If you look at the evidence among States, in terms of what 
the academics have looked at, there has been some interviews of 
governors, very extensive interviewing of seven governors in 
Georgia. Most felt very strongly that the mere fact that you 
had veto authority was a discipline in of itself, but they also 
felt that it was used a lot, and there are indications where 
you have major savings.
    Concerning other statistical evaluations, many of them 
found that in the short run you had major reductions in 
spending, although more questions about the long-run impact.
    I thought I would just review a couple of States very 
quickly: Missouri and Wisconsin. Last year, Governor Nixon of 
Missouri used the veto 50 times and believes that they saved 
$105 million out of a total of about $8 billion.
    The feeling was that this line-item veto is used mostly in 
good times where there is disagreement over the underlying 
policy issues, but also in bad times you find that governors 
use them quite extensively, mostly to get rid of low priority 
items.
    A similar experience in Wisconsin, as they went from 457 
vetoes in 1991 down to 33 vetoes in 2007, but averaged a couple 
hundred per year over that period, used extensively to maintain 
discipline.
    So I would say the conclusion is that we are in times right 
now where the risk of debt is huge and increasing, and I think 
what that requires is a pretty fundamental change in budget 
processes, including giving the executive a lot more authority 
to help control deficits.
    I would argue that there is a lot of evidence at the State 
level that they are done for low priority items, actually, what 
the Federal Government might call earmarks, because they are 
essentially things that State legislative leaders put in 
appropriations bills for a highway in their district or some 
other type of thing, which is similar to what happens here. And 
I would argue that this is probably one of the most effective 
ways at getting at those particular issues.
    I guess in the recent omnibus there was close to $4 billion 
in set-asides or earmarks. So it would be very valuable in 
doing that.
    So governors tend to support more power, veto authority for 
the executive, the President.
    Thank you, Mr. Chairman.
    Senator Carper. Thank you very much.
    Who was the governor of Wisconsin in 1991? It was not a guy 
named Thompson, was it?
    Mr. Scheppach. Thompson, I think.
    Senator Carper. I thought it was.
    Mr. Scheppach. Who did not very much like OMB as I 
remember.
    Senator Carper. Maybe not, that is true. All right, thank 
you. Thank you, Dr. Scheppach.
    Mr. Bixby, please proceed. Thank you. Welcome.

   TESTIMONY OF ROBERT L. BIXBY,\1\ EXECUTIVE DIRECTOR, THE 
                       CONCORD COALITION

    Mr. Bixby. Thank you, Senator Carper. Thanks for inviting 
me to discuss the role of enhanced rescission in combating 
Federal budget deficits and waste. Given our Nation's 
unsustainable fiscal outlook and the rising public concern over 
mounting debt, this is a very timely and relevant discussion.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bixby appears in the Appendix on 
page 76.
---------------------------------------------------------------------------
    I am here representing the Concord Coalition, as you 
mentioned, co-chaired by your former colleagues, Warren Rudman 
and Bob Kerrey. The Concord Coalition believes that the current 
budget process suffers from a lack of transparency and 
accountability, and this has contributed to the unsustainable 
fiscal path that we are engaged in, and it has engendered 
corrosive public cynicism about government finances.
    So the testimony that I will give today will emphasize four 
points:
    One is that the public is increasingly frustrated with how 
Federal tax dollars are spent. We find that on our Fiscal Wake-
Up Tour and on other projects that we have done. Of course, you 
have been a guest speaker on the Fiscal Wake-Up Tour.
    The second point is that restoring public trust is 
essential to winning broad support for needed hard choices.
    Third is that enhanced rescission can help to restore 
public trust in the budget process.
    And, fourth, the enhanced rescission alone will not have a 
meaningful effect on the budget deficit.
    To reiterate what everybody else has said, we find 
ourselves at a time of uncontrollable, or uncontrolled, Federal 
budget deficits. The task right now is to try to find some way 
to bring them under control.
    I look at the numbers going forward, and I think the 
projected cost of interest and the cost of debt is just 
astronomical. Today's 20-year-olds are facing a situation, that 
by the time they are in their early 40s and in their prime 
working years, would just be economically ruinous. So it is 
really the challenge of our generation to do something about 
that, and in doing that you really have to use all of your 
policy tools.
    As you mentioned at the beginning, what is driving the 
long-term budget problem is not earmarks or out of control 
discretionary spending. It is really the underlying dynamic of 
entitlement programs and lagging revenues, and you put that 
together, and that is what is really driving us over a cliff.
    But that does not mean that we should not bring all of our 
weapons to bear on resetting priorities in the best possible 
way. Enhanced rescission is a pretty good tool for doing that.
    I think that the value of enhanced rescission should not be 
measured by the dollar figures alone. I would certainly agree 
that you are not going to save a huge amount of money with 
enhanced rescission. But the value I think is from showing the 
public that somebody cares and that somebody is taking a look 
at the priorities, and so it is not just anything goes.
    I think that is really important because I believe in 
entitlement reform. You believe in it. I believe that we are 
going to have to put revenues on the table as well. But I do 
not believe the public is going to go for it if they think that 
the money is just going to be wasted.
    So here is where something like enhanced rescission comes 
in. The President can send some bills back to Congress and say, 
``take another look at these. Are these really high priority in 
a time of budget deficits and rising debt?''
    That allows Congress to say, well, OK, maybe this was not 
high priority.
    I think that would help restore public trust that something 
good was happening with the budget process.
    Unfortunately, there is no line-item in the budget that is 
labeled waste, fraud and abuse. So there are always going to be 
differences. That is a matter of interpretation.
    Now there are a couple of issues with enhanced rescission 
that have come up earlier in the discussion. I certainly agree 
with you that it is not a massive transfer of authority to the 
Executive Branch. That was true with the line-item veto. I 
think what we are doing here is just giving the executive a 
chance to ask Congress to take a second look.
    I would say with S. 907, your bill, there are a couple of 
suggestions I would have. One is I think there should be some 
sort of mechanism that would help ensure that the savings that 
you got did go to deficit reduction, whether it would be 
adjusting the budget caps and the budget resolution or having 
it go towards pay-go, I think would be important.
    I would test the waters a little bit and apply it to 
targeted tax provisions and mandatory spending as well. There 
is probably more money there, certainly on the targeted tax 
cuts.
    Tax entitlements are really a sleeping giant in the budget, 
and I think that we should put some attention on that side and 
not just think that if it is not a discretionary program, it is 
not waste. It can be waste if it is mandatory spending or taxes 
as well.
    So I would put everything on the table, and I would just 
summarize by saying that nobody should expect that the enhanced 
rescission authority would be a panacea. But you do not need a 
panacea. You need to bring all your tools to bear. I think that 
this is a very common-sense one, and I think it would have 
great public support.
    Senator Carper. Thanks for your testimony. Thanks also for 
your constructive ideas, and we will take those under 
advisement. If you have some more, we would welcome those as 
well.
    Mr. Schatz, again, thanks. Welcome. Please proceed.

 TESTIMONY OF THOMAS A. SCHATZ,\1\ PRESIDENT, CITIZENS AGAINST 
                        GOVERNMENT WASTE

    Mr. Schatz. Thank you, Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schatz appears in the Appendix on 
page 87.
---------------------------------------------------------------------------
    Citizens Against Government Waste was created 25 years ago, 
following the report of the Grace Commission under President 
Reagan. The commission made 2,478 recommendations to save $424 
billion over 3 years. At the time, the commission projected 
that if those recommendations were not adopted the Federal 
Government would have a $2 trillion deficit and a $13 trillion 
debt in the year 2000.
    We are not saying we would have saved the world, but it is 
interesting to note that we will soon have a $13 trillion debt 
and we have a $1.4 trillion deficit in the last year and 
possibly the same in the current fiscal year.
    One of the commission's recommendations was the line-item 
veto, which would give the President the authority to eliminate 
wasteful programs and earmarks.
    Senate Majority Leader Harry Reid once said that earmarking 
has been going on since we were a Country. But nothing could be 
further from the truth. For much of the Nation's history, 
constitutional objections from Members of Congress, the 
President and State legislatures were effective in limiting 
this kind of spending.
    Thomas Jefferson wrote to James Madison about Madison's 
proposition for improvements to roads, using a system of 
national mail delivery. Jefferson wrote, ``I view it as a 
source of boundless patronage to the Executive, jobbing to 
Members of Congress and their friends, and a bottomless abyss 
of public money. You will begin by only appropriating the 
surplus of post office revenues; but soon other revenues will 
be called into their aid, and it will be a scene of eternal 
scramble among the members, who can get the most money wasted 
in their State; and they will always get the most who are 
meanest.''
    In 1822, President James Monroe argued that Federal money 
should be limited to great national works only since, if it 
were unlimited, it would be liable to abuse and might be 
productive of evil.
    Now we have certainly heard Members of Congress, including 
Senator McCain, talk about the consequences of earmarking and 
pork barrel spending: Members of Congress going to jail, 
corruption of the appropriations process.
    And, of course, we all understand it is not the biggest 
part of the budget, but it seems to have the greatest value to 
Members of Congress because they will argue forever about this 
0.5 of 1 percent of the $3.6 trillion budget because they think 
that it is their right to go spend that money.
    Now since 1991, CAGW's annual Congressional Pig Book has 
identified 100,849 pork barrel projects which have cost 
taxpayers $290 billion.
    A constitutional line-item veto, which everyone seems to 
agree would occur under your bill and Senators McCain's and 
Feingold's bill, would have an impact on the number and cost of 
earmarks as well as duplicative and nonessential programs. It 
would not upset the balance of power. In fact, it would restore 
some of the imbalance that has occurred following the 1974 
Budget and Impoundment Control Act.
    We support what you have proposed. We support what Senators 
Feingold and McCain have proposed, and whatever comes out would 
be better than what we have now. We would prefer not to have a 
25 percent restriction on authorized earmarks or programs, but 
whatever ends up being agreed to and passed by the Congress 
would be more important than arguing over which is the better 
approach.
    One of the things that we even see within the current 
process is despite requirements for transparency even those 
rules are not being followed:
    57 percent of the cost of earmarks in the fiscal year 2009 
Defense Appropriations Act were anonymous. That included $465 
million for the alternate engine for the Joint Strike Fighter.
    In the fiscal year 2010 DOD Appropriations Act, the Senate 
version has $9.3 billion in earmarks; 71 percent of the cost is 
anonymous. That included $2.5 billion for 10 additional C-17 
aircraft.
    There is a good example. In both cases, the alternate 
engine and the C-17s, with enhanced rescission they could come 
back on both of those items and force the House and the Senate 
to vote. The alternate engine was defeated in the Senate, in 
the authorization bill. Yet it was stuck back in, in the 
conference between the House and Senate, and now we do not know 
where it is because nobody has seen the DOD Appropriations Act.
    Mr. Chairman, successive Presidents have asked Congress to 
provide them with the line-item veto. It is the very least we 
can do with this record deficit and debt. Adopting many of the 
other larger items on budget reform, whether it is alone or 
part of a package, it is something that will really help and 
give the taxpayers a little bit of perhaps an improved view of 
Congress right now since they do not seem to be very happy with 
how much money is being spent.
    Thank you for allowing me to testify today.
    Senator Carper. You bet. Thanks. Thanks very much and thank 
you especially for your mentioning of some of our weapon 
systems. I mentioned earlier in my opening comments that we 
have seen cost overruns for major weapons systems grow from $45 
billion in 2001 to I think about $295 billion last year.
    We finally got to the F-22 which has never flown in Iraq, 
never flown a mission in Afghanistan. I think the cost per 
flight hour is about $40,000. The cost per aircraft, I am not 
sure what it was, but it was in the tens of millions of 
dollars.
    I think the President finally saying, if you include 
funding again for the F-22, I am going to veto the bill, and 
that was very helpful. We still had a fight over it, but we got 
the job done.
    Dr. Scheppach, in your testimony you mentioned it was 41 
States have some kind of line-item veto authority, and 38 
States give their governor the ability to make budget cuts 
without legislative approval.
    We have heard criticisms of our rescission proposals, which 
is actually quite modest when compared to some of the powers 
that you just shared with us. But some have criticized our 
proposals as being the equivalent of an Executive Branch power 
grab that will only result in the President abusing his 
authority and maybe intimidating legislators to get them to go 
along with his or her priorities.
    In the time that you served at the NGA for all these years, 
do you recall any instance where a State legislature decried 
the governor's line-item veto authority as being too powerful 
and shifting too much power to the State's executive?
    I ask that question knowing there are a lot of people who 
serve in the State legislatures who want to be governor. So I 
think they might want to be careful how they would criticize a 
governor's line-item veto power. Do you recall ever hearing of 
that?
    Mr. Scheppach. No, I do not. I mean basically what happens 
is particularly what we have seen over the last 2 years is that 
States have cut over $200 billion worth of previously 
appropriated funds. I mean that is just a huge amount.
    So what happens, though, is the legislature really does not 
want to do it. So their attitude is let the governor do it. 
Then the governor is willing to do it. So we have not seen any 
sort of public and/or legislatures rebelling at that. It really 
works.
    Senator Carper. Good point.
    One of the findings that you presented in your testimony is 
that line-item veto authority is used much more frequently 
during periods of economic stress and hardship. I think it was 
Governor Nixon of Missouri that you mentioned, pointing out 
that he used his power 50 times last year to eliminate lower 
priority items, cutting out some $105 million on a revenue base 
of about $8 billion.
    Those funding cuts were only about 1 percent of his State's 
revenue base. So the vetoes did not have a huge impact on the 
State's budget. However, is it possible that the frequent use 
of a line-item veto by Governor Nixon could serve as a warning 
to the State legislators that in a time of economic hardship, 
wasteful spending will not be tolerated?
    Mr. Scheppach. I think so. I mean most governors you 
interview really believe that the mere fact that you have the 
line-item veto creates a certain amount of fiscal discipline, 
particularly when you realize that it is almost never 
overridden. If the governor does it, it pretty much stays. It 
does, over time, sort of erode the desire of legislatures from 
putting in all those special projects. So, yes.
    Senator Carper. All right. Thanks.
    Why are line-item veto authorities so prevalent in States? 
You seem to indicate it is because 49 States have balanced 
budget requirements. Maybe that is part of it.
    I really cannot understand why line-item veto is good 
enough for 41 States, but when it comes to the Federal level a 
much tamer expedited rescission authority is viewed by some as 
an unacceptable shift in power from one branch to another. 
Maybe if the Federal Government had a true balanced budget 
requirement and we were forced to live in our means as many 
States do, then the prospect of expedited rescission authority 
would be better.
    But would you just comment briefly on the applicability of 
some of these States' rescission authorities to the Federal 
level?
    Mr. Scheppach. I personally think a lot of it does come 
from the balanced budget requirement, and, as you say, the 
line-item veto authority is kind of the mild side of it. The 
much bigger power really is for the governor to have the right 
at any time to just go back and cut previous appropriations, 
and that is a pretty powerful type of tool.
    But again, I think most of it is dictated by the balanced 
budget requirement, and so when revenues go down in a decline, 
a sort of economic dip, there is no alternative. You have to 
get back to the balanced budget requirement. So I think 
legislatures are very willing to give the power to governors.
    Senator Carper. Did you say there were four States where 
the governor can just go back and take money out of 
appropriated spending, on his own? Was that it?
    Mr. Scheppach. Well, there are 39 States that can go back 
and can cut previous appropriations. Now some of those States, 
like Connecticut, will limit it to 1 percent. Some States, I 
think Iowa, says it has to be across the board. Some States say 
you can do it everywhere but the legislative appropriation 
bill. So there are some restrictions on some of the States, but 
about 38 States have some sort of ability to cut across the 
board.
    Senator Carper. All right. Thank you.
    Mr. Bixby, you made a similar point to Dr. Scheppach in 
that I think you both mentioned that the use of rescission 
authority, budget rescission authority will not yield, is not 
likely at least to yield dramatic budget savings that will save 
a State's budget problems or help close the Federal deficit, 
and I agree with you in that assessment.
    However, while this is true, would not expedited rescission 
authority at least have some sort of positive effect on the 
overall budget process you spoke, at least to some extent?
    In my mind, the threat of voting on a rescission would at 
least help to deter legislators from trying to advance wasteful 
spending in the first place. We saw this with the earmark 
reforms in Congress in the last year or so. While those reforms 
did not prohibit earmarks, the transparency requirements 
certainly have deterred members from introducing earmarks, and 
as a result our appropriations bills are containing fewer 
earmarks.
    Do you think that expedited rescission authority can have a 
positive effect here on the budget process? I think I heard 
that from you already, but I am going to ask that question 
anyway just for the record.
    Mr. Bixby. Yes, the explicit answer is yes. In fact, that 
is why the Concord Coalition supports it.
    I think sometimes budget process things are sold for the 
wrong reasons or misunderstood or judged by the wrong 
standards. I look at enhanced rescission as a mechanism to 
accomplish just what you mentioned. It increases the 
accountability of the budget process, the transparency of the 
budget process, the priority-setting.
    It is sometimes sold as a deficit reduction tool, and, if 
that is how you sell it, it is easy to dismiss it.
    So I think speaking from the Concord Coalition's point of 
view, the value in enhanced rescission is the deterrent effect 
it would have, the exposing. The ability to have a President 
that took earmark reform as seriously as Senator McCain, making 
it a crusade, would have a substantial deterrent effect.
    Senator Carper. Thank you.
    Again, Mr. Bixby, we have often heard that expedited 
rescission proposals are just attempts to restore some sort of 
line-item veto power in the Executive Branch or to the 
Executive Branch. They argue that this authority will shift the 
balance of power, as I mentioned earlier, from a state of 
equilibrium between the President and the Congress to a 
situation that gives too much power to the President.
    You have seen several presidential administrations propose 
the Federal budgets, and you have seen even more Congresses 
pass spending bills accompanying these budgets. Do you think 
that a proposal that guarantees that Congress will vote, must 
vote on President's rescissions would alter the power balance 
in the negative way that I have just described?
    Mr. Bixby. No, I really do not. Maybe it gives the 
President another card to play, but I think that is actually a 
good thing. I do not think it would be a major shift.
    The fear would be of something that would give the 
President maybe the sort of line-item powers that some of the 
governors have. I can imagine Congress may not want to do that, 
and it would probably be deemed as unconstitutional.
    But here you are giving the President a role in looking at 
the priorities of Federal spending. All he is doing is saying, 
take another look at this. Here are some items I want you to 
look at again.
    And Congress retains the power. The President cannot. This 
is not a veto. It is not that the line-item veto was declared 
unconstitutional. This is not a major shift of power because 
Congress would still have to vote to approve the rescissions 
that the President recommends.
    So, if Congress retains the absolute power here, I do not 
think it is a major shift.
    Senator Carper. Good. Thank you.
    Mr. Bixby, your testimony mentions that an expedited 
rescission authority could restore the public's trust in the 
Federal Government. You just reiterated that.
    Can you explain how this public trust has eroded with 
regards to our budget and what this improvement could mean for 
future budgets and how the rescission bill could play into 
this? I do not know if you want to add anything to what you 
have already said. I think you already addressed this pretty 
well.
    Mr. Bixby. I do, and I do not want to belabor the point, 
but I do think it is a hidden strength of the enhanced 
rescission process.
    What we find in our field events consistently is that we 
have our charts with unsustainable entitlement programs, and 
you lay them out. But inevitably we get questions about waste 
because it is on people's minds and it bothers them.
    They like Medicare. They like Social Security. They may 
understand that they are unsustainable, and we have to make 
hard choices. They do not like waste. So, even if it is a small 
amount of money, they want something to be done about it.
    I look ahead to the sort of hard choices that we are going 
to have to make in the future, and the public is going to be 
very resistant to do that if they keep coming back to a reset 
point in their mind that says, but it is going to go to a 
bridge to nowhere. Why should I cut Medicare or Social Security 
or pay more taxes if it is going to be wasted?
    So I think the credibility of the Congress, and even 
entitlement scolds like myself, is at stake here. We have to do 
something to restore public trust, and this is a way to do it. 
It is one way to do it.
    Senator Carper. In your next to last sentence, you mention 
the term entitlement scolds. It seems like every day I learn 
something new. That is the first time I have heard that.
    Mr. Bixby. I have been called that, but it is not the worst 
thing.
    Senator Carper. Well, I am sure.
    Mr. Bixby. What do you mean, you are sure?
    Senator Carper. I know it is not as bad as some of the 
things my colleagues and I have been called.
    OK, well, entitlement scold or not, we are delighted you 
took the time to be with us. Thanks for responding to those 
questions.
    Mr. Schatz, a couple comments if I could for you, and then 
I want to go back to ask one question.
    We are hearing what the States have done, what powers have 
been provided to the executives, chief executives of our States 
in these regards. Before we close, I will ask all of our 
panelists if they have heard anything, any steps, any powers 
provided in other countries along these lines, to help 
contribute to fiscal responsibility. So you all be thinking 
about that.
    But, in the meantime, Mr. Schatz, your organization has 
been tracking issues regarding wasteful Federal spending for 25 
years. I remember well as a deficit hawk when I was in the 
House of Representatives, working with people like Tim Penny, 
Buddy MacKay, Charlie Stenholm, and others.
    Clearly, you are well acquainted with the relationship with 
the Executive Branch and the Legislative Branch when it comes 
to this kind of waste, and you have seen Presidents make 
rescission requests time and again only to have Congress, in 
many cases, ignore them.
    In your opinion, what purpose does this rescission 
authority serve if Congress never or rarely considers any of 
the proposed cuts?
    Mr. Schatz. In this case, the legislation requires Congress 
to vote. So there is a different process that did not exist 
previously.
    And I want to briefly address, if you are not asking me, 
the question you asked Mr. Bixby about how this affects overall 
spending.
    Senator Carper. Sure.
    Mr. Schatz. There was an interesting report by Professor 
James Savage at the University of Virginia about the 
administrative cost of earmarks. He did a study on the Office 
of Naval Research and just the time that is spent answering to 
members on earmarks. They do not get extra money to administer 
the earmarks, and yet they become the high priority.
    In addition, the appropriations staff spends an inordinate 
amount of time because in many cases there is no set process 
for how to review these. There is no statutory authority. They 
do not fit into the legislature's or I should say the agencies' 
process.
    And there has been another report. Senator Coburn asked for 
a report in September 2007. The Inspector General of the 
Department of Transportation talked about the impact on higher 
priorities at many of the agencies and FAA. Yes, at Department 
of Transportation, including FAA replacement towers where they 
were 3 years behind the high priority replacement towers 
because of earmarks.
    So the impact is not just on the budget because it is not a 
large amount. It is on other priorities. It is also on how 
Members of Congress view legislation. If they were not 
necessarily voting for this tiny, little $500,000 teapot museum 
in Sparta, North Carolina, for example, they might not 
necessarily support the entire piece of legislation. So there 
is a larger amount that is addressed by this enhanced 
rescission authority.
    Senator Carper. OK. Thank you. Those are some points that I 
had not thought of before, and I appreciate those.
    Of all our witnesses here today, I think your organization 
seems to be the most vocal about the Federal Government's and 
especially Congress' lack of good management practices with 
respect to our taxpayers' dollars. I think you said in your 
written testimony, ``The Constitution does not give Congress a 
blank check to spend tax dollars on anything that it wants.''
    Some have criticized expedited rescission authority, saying 
that if it passes, then it will give the President license to 
abuse his or her power. Are you concerned that Presidents, 
future Presidents will abuse this authority in the same way 
that Congress has abused, allegedly abused, our authority when 
it comes to spending?
    Mr. Schatz. Well, there is a check on this. You have a 4-
year sunset. I think the taxpayers will certainly be watching 
this, concerned about whether the President will trade 
something of value in return for his own priorities or maybe 
higher spending, saying, I am going to reduce this earmark 
unless you vote for $25 billion more in spending. Those kind of 
things will hopefully be transparent and the opposite impact of 
what we would really want to see.
    Based on what Dr. Scheppach has said, it seems to work at 
the State level. You, of course, had that experience as 
governor, where the balance does work out pretty well. So I am 
not really concerned because there is currently an imbalance, 
and some of that would be restored under this enhanced 
rescission.
    Senator Carper. I mentioned one of the questions I wanted 
to ask of all of you is if you are aware of any powers that are 
used or bestowed upon, if you will, chief executives in other 
countries along these lines. Do you all have any thoughts along 
those lines? Dr. Scheppach.
    Mr. Scheppach. Yes, let me just make a couple comments. One 
is that there seems to be a growing consensus that any country 
that has an outstanding debt of 60 percent or more of GNP is 
definitely getting in the risk category.
    Senator Carper. Say that number again.
    Mr. Scheppach. Any country that has a debt-to-GDP ratio of 
more than 60 percent is getting into the risky area. The Pew 
Foundation with an advisory group, I think funded by Peterson, 
came out with that the other day. The European Market Community 
has that. The IMF has made that recommendation.
    So, first off, I think at some point Congress needs to 
think about once you hit certain points that are risky, maybe 
you ought to change the budget process and provide emergency 
authority, so that you can help correct that. In other words, 
one approach is to say, all right, maybe you go this direction 
now, but if in fact you get over 60 percent, maybe you go to a 
stronger line-item veto authority or other things. That is 
point one.
    Number two is Germany was at this conference, and they are 
an example of a country that has completely changed their 
budget process, and at least for the first year or two they 
have been making progress in bringing that debt down. Now it is 
a different form of government, so I am not sure whether it 
works here or not.
    Another point I would make is that there was a person--John 
Hilley, who used to work up here. I think he may have worked 
for Majority Leader Mitchell at one time--but that perhaps you 
ought to think about changing the baseline. Coming from CBO, 
the baseline is very clear. You build in inflation on 
discretionary items and defense, and your entitlements are best 
estimates.
    What Mr. Hilley said was freeze everything. No inflation 
adjustment for discretionary spending. Freeze the COLA, no 
COLA. No increase in reimbursement rates for any of the 
entitlements. Then you set a pile of money aside, a box, and 
you have to decide how much is in that box. But everything 
competes for that money, which is then forcing entitlements to 
compete against discretionary.
    But I think you are at the point, in all seriousness, that 
you have to think about much more draconian types of things.
    The only other thing I will add is that we are not starting 
that at the State level. This downturn now has sent 
repercussions through States that are going to last eventually 
8 to 10 years. We are not going to be back to the previous 
revenue levels of 2008 until 2014, and that is in nominal 
terms. Then the overhang of needs is phenomenal.
    So it is like essentially States have to understand that 
their revenue path in the last 2 decades has been 6 percent. It 
is now going to be 3.5 to 4 percent. So we are now, at NGA, 
going through the process of how you cut to core services on a 
sustainable way, and that is going to start.
    As you know, we are probably going to have 28 new governors 
next November, and we are going to start working with them on 
that because we are in what we call the new normal now. 
Everything we have had up to now gets thrown out. We are in a 
very different revenue path. We got to get looking at it as 
sustainable. Otherwise, at some point, this thing comes apart, 
and I do not think we have the fiscal policy or monetary policy 
tools to deal with it if and when it does.
    Senator Carper. Thank you very much.
    Mr. Bixby, any idea, anything out there we can learn from 
other countries in this regard?
    Mr. Bixby. Well, resuming my role as the entitlement nag, 
scold, I am actually more familiar with what they do on that 
front than on the discretionary front, and I do think that 
other countries are ahead of us on that. Countries with even 
older societies and more ambitious health care plans are 
realizing that they have to do some of the things that Mr. 
Scheppach was talking about.
    We do need to have more automatic controls, triggers, that 
sort of thing that are sprinkled throughout the budget process. 
I was part of a group that signed a document called ``Taking 
Back Our Fiscal Future'' last year, including several former 
CBO directors. What we were essentially saying is let's take 
programs like Medicare and Social Security and Medicaid and put 
them on a budget, which we do not have now.
    Now other countries do that sort of thing, and that is 
where they are ahead of us. That is where the game is in 
controlling spending.
    I do like the idea that Mr. Scheppach mentioned of 
combining these things with the debt limit in the way that if 
you go over a certain point of debt as a percentage of your 
economy. Say it is 60 percent, which we are getting very close 
to. I think we may be there by the end of next year. Then it 
might trigger enhanced rescission, where Presidents have an 
even greater authority to cut spending simply because that 
would be a deterrent effect on Congress.
    So I think we are going to have to look at things like 
that.
    I am not aware of what other individual countries are doing 
with respect to the line-item veto. I will inquire and get back 
to you for the record if I can.
    Senator Carper. OK. Yes, thank you so much. Mr. Schatz, 
please.
    Mr. Schatz. Yes, Mr. Chairman. We have met in recent years 
with a lot of organizations from other countries. They are just 
trying to figure out how to address their excessive spending, 
the debt that has been discussed here.
    I do not recall anyone specifically mentioning line-item 
veto. It is a recommendation, among many others, that we 
suggest to these organizations, mostly nongovernmental 
organizations, and sometimes individuals who just want to get 
something started in certain countries. We might be able to get 
you some more specifics based on the information, or at least 
some links to the groups that do exist.
    I do not want to spend a lot of time again on this issue 
that they have discussed, but we are talking about a massive 
amount of new spending--the bill that was just approved by the 
House and Senate, has a 12 percent increase. It is really 
difficult to sit here and say, and even to hear Members of 
Congress say, we have to get spending under control, when they 
are talking about a massive new entitlement in health care and 
they just passed a 12 percent increase in the appropriations 
bills.
    Yet, the President says, we are going to have fiscal 
discipline. Members of Congress say, we are going to have 
fiscal discipline. Our question is when?
    Senator Carper. OK. Last question I would ask of each of 
you, take off your entitlement scold hat or any other hat you 
might be wearing and put on a critic or the hat of someone who 
is skeptical of what we are trying to do with the legislation 
that Senator Feingold, Senator McCain and the legislation that 
I have introduced with a number of my colleagues. Maybe just 
share with me what you think the most valid criticism of what 
we are trying to do might be, the most legitimate and valid 
criticism, and then rebut that for me.
    Try that, Dr. Scheppach.
    Mr. Scheppach. It is a very targeted, very mild approach. I 
realize due to the previous court decisions and so on, and 
having worked at CBO and we were set up by the Impoundment Act, 
I am pretty sensitive to the balance of power issues that you 
are dealing with. But it is a very mild approach, and I think 
it would end up focusing largely on these earmarks. That is a 
good thing, though.
    I would rather, if this is as aggressive as you can get 
through the House and Senate, then I would support it because 
any small adjustment there that even on the margin helps 
control it I think is a good thing.
    So I would say it is very mild, particularly relative to 
what States do. But having some appreciation of how difficult 
it is and the balance of power and the sensitivity in the 
Congress, I would not be a critic. I would be supportive. Move 
it, if you can.
    Senator Carper. Thank you. Mr. Bixby.
    Mr. Bixby. I think that the most legitimate question raised 
would be sort of the bang for the buck issue. Presidents have 
not made aggressive use of the authority they now have, and so 
one could question whether as a matter of politics a President 
would make aggressive use of the enhanced rescission authority. 
So it may be you would go through all this, and still the 
President would say, I do not want to roil the waters here.
    I think a little of that happened actually in the early 
President Bush years. You remember when Mitch Daniels was the 
OMB Director, and he came up with the nickname ``the Blade'' 
and testified a few times about earmarks. There was a quite 
pushback from the Hill, quite a vocal pushback. As we saw in 
the earlier panel, President Bush actually never proposed any 
rescissions at all.
    So you do have to have the President actually use the 
authority that would be given, and so one could make the 
argument that you really would go through all this and frankly 
not accomplish much.
    My rebuttal to that would be you need to put the mechanisms 
in place before they can be used. You have to be standing in 
the end zone before you can catch a touchdown. Now it may be 
that somebody is standing in the end zone, and they are going 
to drop the ball. There is nothing you can do about that. But 
you have to put in place the mechanisms.
    So I think that if you put in enhanced rescission, given 
the fiscal pressures that we are going to have coming, I think 
it is inevitable that a future President would make greater use 
of this. So you want to have a good process in place. That 
would be how I would handle that criticism.
    Senator Carper. Good. Thank you.
    Mr. Schatz, you get the last word on this question.
    Mr. Schatz. Thank you, Mr. Chairman, and I agree with what 
the other two witnesses have said.
    But recalling what you quoted from my remarks about the 
constitutional prerogative and Article I, Section VII and 
Members of Congress who view this as their absolute right, I 
recall one of our porkers of the month, in fact, Congressman 
John Mica of Florida said, this is the most important thing we 
do.
    How can somebody realistically say adding a teapot museum 
or a bridge to nowhere is the most important thing that we do?
    That is where I think the criticism comes from is your 
colleagues who believe that they just can do this and not worry 
about it because they view it as a way to get reelected. They 
view it as something that they have to do, although more and 
more Senators and Representatives are saying no to earmarks, 
period, because they understand it is just not worth the time 
and effort and a lot of the criticism that they get.
    So I think it is a matter of convincing them that this is 
one thing that should be done, and they do get a second bite at 
the apple. If their project is so worthy, then there should be 
a separate vote in the House and in the Senate, rather than 
sticking this in, in the middle of the night, air dropping it 
in conference, having bills that get approved when nobody knows 
exactly what is in them.
    There is so much talk about accountability and 
transparency. The Administration has new transparency rules for 
agencies. This would be a nice way to open up what is going on, 
on Capitol Hill, and allow members to defend these wonderful 
projects on the floor.
    Senator Carper. Thank you. That reminds me of something I 
have said from time to time: I am not a prolific earmarker. I 
am actually a piker compared to most. To some, I should say.
    I have always said that if I cannot convince 50 of my 
colleagues to support a request that I have made, then I am in 
the wrong business, or at least I am picking the wrong 
projects. So I would welcome that challenge.
    That reminds me of the old saying, be careful what you ask 
for. [Laughter.]
    This has been terrific, and you all are great to come and 
share your thoughts, your expertise, your literally invaluable 
expertise and experience. To add up the years that you all have 
thought about these issues, worked on these issues, focused on 
these issues, it is just a real treasure trove here of 
experience and wisdom. So we thank each of you.
    As I said earlier to the first panel, some of my colleagues 
will probably want to submit some questions in writing, and, if 
you would take the time to respond to them in a forthright 
manner, we would be grateful.
    But again, thanks for your service. Thanks for your 
presence here today. And Merry Christmas, Happy New Year. 
Thanks.
    With that, this hearing is adjourned.
    [Whereupon, at 4:58 p.m., the Subcommittee was adjourned.]


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