[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]






          ADMINISTRATION EFFORTS ON LINE-BY-LINE BUDGET REVIEW

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 5, 2011

                               __________

                           Serial No. 112-92







[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

              Subcommittee on Oversight and Investigations

                         CLIFF STEARNS, Florida
                                 Chairman
LEE TERRY, Nebraska                  DIANA DeGETTE, Colorado
SUE WILKINS MYRICK, North Carolina     Ranking Member
JOHN SULLIVAN, Oklahoma              JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania             MIKE ROSS, Arkansas
MICHAEL C. BURGESS, Texas            KATHY CASTOR, Florida
MARSHA BLACKBURN, Tennessee          EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         GENE GREEN, Texas
PHIL GINGREY, Georgia                DONNA M. CHRISTENSEN, Virgin 
STEVE SCALISE, Louisiana                 Islands
CORY GARDNER, Colorado               JOHN D. DINGELL, Michigan
H. MORGAN GRIFFITH, Virginia         HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)

                                  (ii)










                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     1
    Prepared statement...........................................     4
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, opening statement.................................     7
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     8
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     9
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     9
Hon. H. Morgan Griffith, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................    10
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    10
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   214

                               Witnesses

Clinton T. Brass, Analyst in Government Organization and 
  Management, Congressional Research Service.....................    25
    Prepared statement...........................................    27
    Answers to submitted question \1\............................
    Answer to request from Mr. Griffith..........................    89
Thomas A. Schatz, President, Citizens Against Government Waste...   101
    Prepared statement...........................................   104
Tad DeHaven, Budget Analyst, Cato Institute......................   125
    Prepared statement...........................................   127
Patrick L. Knudsen, Grover M. Hermann Senior Fellow in Federal 
  Budgetary Affairs, The Heritage Foundation.....................   135
    Prepared statement...........................................   137
Veronique de Rugy, Senior Research Fellow, Mercatus Center, 
  George Mason University........................................   147
    Prepared statement...........................................   149
Andrew Moylan, Vice President, Government Affairs, National 
  Taxpayers Union................................................   152
    Prepared statement...........................................   154
Gary Kalman, Director, Federal Legislative Office, U.S. Public 
  Interest Research Group........................................   160
    Prepared statement...........................................   162
Stanley E. Collender, Partner, Qorvis Communications.............   185
    Prepared statement...........................................   187
Scott Lilly, Senior Fellow, Center for American Progress.........   192
    Prepared statement...........................................   194

                           Submitted Material

Majority memorandum, dated October 3, 2011, submitted by Mr. 
  Stearns........................................................    13
Letter, dated September 30, 2011, from Allie Neill, Acting 
  Associate Director for Legislative Affairs, Office of 
  Management and Budget, to Mr. Upton and Mr. Stearns, submitted 
  by Mr. Stearns.................................................    22

----------
\1\ Mr. Brass did not answer a submitted question for the record 
  from Mr. Terry by the time of printing.

 
          ADMINISTRATION EFFORTS ON LINE-BY-LINE BUDGET REVIEW

                              ----------                              


                       WEDNESDAY, OCTOBER 5, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:34 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Cliff 
Stearns (chairman of the subcommittee) presiding.
    Members present: Representatives Stearns, Terry, Sullivan, 
Murphy, Blackburn, Bilbray, Scalise, Gardner, Griffith, Barton, 
DeGette, Schakowsky, Green, Christensen, and Waxman (ex 
officio).
    Staff present: Carl Anderson, Counsel, Oversight; Mike 
Gruber, Senior Policy Advisor; Todd Harrison, Chief Counsel, 
Oversight and Investigations; Katie Novaria, Legislative Clerk; 
Alan Slobodin, Deputy Chief Counsel, Oversight; Sam Spector, 
Counsel, Oversight; Peter Spencer, Professional Staff Member, 
Oversight; Kristin Amerling, Democratic Chief Counsel and 
Oversight Staff Director; Alvin Banks, Democratic Investigator; 
Brian Cohen, Democratic Investigations Staff Director and 
Senior Policy Advisor; and Anne Tindall, Democratic Counsel.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Good morning, everybody.
    We convene this hearing to find out what this 
administration has done to implement the President's repeated 
promise to conduct a page-by-page, line-by-line review of the 
Federal budget and what more can be done. The aim of such a 
review is to eliminate unnecessary, duplicative, or wasteful 
government programs and to cut costs and create new 
efficiencies.
    The urgent need for such a review, of course, is obvious. 
Under the Obama administration, Federal spending has increased 
by more than 20 percent a year, or more than $600 billion per 
year. Under the Obama administration, the size of the 
cumulative Federal debt has increased about 40 percent, from 
$10.6 trillion to $14.8 trillion, and, frankly, it continues to 
climb.
    President Obama promised a fresh, in-depth, and exhaustive 
review of the Federal budget. What measurable actions have been 
taken, and of course, what are the results?
    Unfortunately, the Office of Management and Budget, the 
agency in charge of the line-by-line review, declined to 
provide a witness today to testify to answer these questions. 
It is curious that OMB claims that it has no witness to testify 
on this issue when Jack Lew, the OMB Director, discussed line-
by-line review in February 2011 testimony before the House 
Budget Committee, and Jeffrey Zients, OMB's Chief Performance 
Officer and Deputy Director for Management, is the official 
that President Obama linked to conducting the review.
    This line-by-line review has supposedly been a top priority 
for the Obama administration for the last 3 years. With that 
understanding, one would think there are things they would want 
to talk about and they would come today and testify. 
Unfortunately, they did not.
    This is not the first time during this Congress that OMB 
has refused to send a witness. Jeffrey Zients, the Deputy 
Director for Management, failed to appear at the June 24th 
hearing on Solyndra, and OMB is the only agency to require a 
subpoena from this committee because of its refusal to provide 
documents. One can't help but wonder whether OMB's refusal to 
provide a witness is because they don't have anything to say or 
because they are upset that their stonewalling tactics in the 
Solyndra investigation have not worked.
    In a letter to the committee, OMB noted that a major 
accomplishment of its effort to comb through the budget line by 
line has been the identification of innumerable so-called 
``terminations, reductions, and savings.'' However, as Clint 
Brass, a Congressional Research Service analyst, has 
confirmed,``The Obama administration's issuance of a volume 
like the Terminations, Reductions and Savings''--or TRS is what 
it is called--``document among a President's budget proposals 
was not new.'' ``Generally speaking,'' he continues, ``these 
kinds of budget documents have been produced by Presidents 
dating back to President Ronald Reagan, if not before, in a 
variety of configurations.''
    The TRS document is, by nature, an inadequate tool for 
achieving the ambitious goal of line-by-line review. Aside from 
being non-exhaustive, there is no clear one-to-one 
correspondence between the line-by-line review and the 
proposals included in the TRS documents. In any event, the 
proposed $17 billion to be saved by the way of 121 cuts or 
restructurings to discretionary programs and mandatory spending 
in the fiscal year 2010 budget is not that impressive. In 
comparison, in fiscal year 2009, the Bush administration 
proposed double that amount, or $34 billion. Ultimately, the 
Obama administration's proposed $17 billion in cuts, of which 
$11.5 billion was on the discretionary side of the budget, 
resulted in only $6.9 billion in cuts approved by Congress.
    Now, complicating things further, as Mr. Brass pointed out, 
``Typically, these kinds of TRS documents have not been 
followed by subsequent publications that showed in detail the 
extent to which Congress adopted the President's 
recommendations.'' Thus, there is little proof of what the 
actual savings are. Also, it is not unusual for the budget 
authority behind these proposed terminations, reductions and 
savings to simply be transferred or consolidated elsewhere. 
More than offsetting any administration effort toward real 
progress in restoring fiscal discipline is the inconvenient 
fact that despite the cuts it has proposed thus far, Federal 
spending is soaring and the budget deficit is exceeding over $1 
trillion a year. As a share of gross domestic product, spending 
grew from 18 percent in 2001 to 24 percent in 2011, while debt 
held by the public jumped from 33 percent to 67 percent. The 
Congressional Budget Office projects that without reforms, 
spending and debt will continue to rise for decades to come. No 
$17 billion or even $50 billion, for that matter, worth of 
proposed terminations, reductions and savings in any given year 
is enough to reverse this harmful trend.
    We need to find out the actual results from this review, 
build on ongoing initiatives, pursue new approaches to find 
more cuts and save more money.
    Today's hearing can be a good start to help us deal more 
effectively with the enormous challenges of getting Federal 
spending under control.
    [The prepared statement of Mr. Stearns follows:]


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    Mr. Stearns. I ask unanimous consent that the majority's 
supplemental memo and attached letter from OMB be introduced 
into the record.
    Ms. DeGette. I will review and then I will let you know.
    Mr. Stearns. All right. The gentlelady said they will 
review.
    With that, I recognize the distinguished lady from Colorado 
for her opening statement.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you very much, Mr. Chairman.
    As we embark on this line-by-line budget review hearing 
series, I want to urge my colleagues to keep the important 
passages of the Constitution in mind, which I am sure they all 
remember since we read the Constitution at the beginning of 
this session of Congress. ``No money shall be drawn from the 
Treasury but in consequence of appropriations made by law,'' 
and ``The Congress shall have the power to lay and collect 
taxes and to borrow money on the credit of the United States.'' 
These provisions of Article 1, clause 8, of our Constitution 
grant the power of the purse to Congress. That means that 
legislation to authorize the Nation's fiscal path begins in 
Congress, and Congress is the steward of our Nation's budget.
    I note these provisions because I believe if my colleagues 
on the other side of the aisle are going to use today's hearing 
as a forum to express concern about whether the President and 
the administration have done a ``line-by-line'' review of the 
budget. They should have to answer whether they have done this 
review themselves. Right here next to me on the desk is the 
President's fiscal year 2012 budget proposal, the document that 
launches the Federal budget cycle and provides the President's 
views on how Congress should develop budget legislation. It 
includes volumes on the budget, analytical perspectives, 
historical tables and an appendix of detailed budget estimates 
for each agency. I would like to ask my colleagues on the other 
side of the aisle, have you done a line-by-line review of these 
documents or of Congress's budget? Have you done a line-by-line 
review of the proposal specifically regarding agencies under 
this committee's jurisdiction?
    I am not asking these questions to suggest that oversight 
of the budget, particularly the agencies we oversee, is 
inappropriate. No one can dispute that Congress has a 
legitimate oversight role with respect to the administration's 
budgeting process and decisions. Reigning in the deficit 
obviously should be a priority at both ends of Pennsylvania 
Avenue, and I also agree with the chairman that OMB should have 
sent a witness, and the minority told the administration as 
much.
    But the issue is not whether the President or even members 
of Congress have done a line-by-line review of the budget. 
Rather, Congress should be taking a close look at substantive 
questions relating to the budget. We should be asking, are we 
making appropriate expenditures to promote job creation, 
biomedical research and ensure important public health and 
safety protections for the American public. We should be asking 
whether we should be cutting the budget for unnecessary wars or 
duplicative programs. We should be working to ensure that 
programs that serve the Nation's neediest do not receive 
disproportionate cuts while subsidies to multibillion-dollar 
industries remain intact.
    I hope that today's hearing will provide a constructive 
examination of the budget process under President Obama. To 
that end, let us review some basic facts. When President Obama 
took office, he inherited a deficit of over $1 trillion created 
in large part by two massive tax cuts, a new Medicare 
prescription drug program, not paid for, and wars in 
Afghanistan and Iraq, none of which was paid for on budget by 
the Bush administration.
    The Obama administration proposed a budget that would have 
cut this deficit in half by 2013. In his first two budgets, 
President Obama identified 120 terminations, reductions and 
savings totaling $20 billion in each year. His 2012 budget 
proposal proposed 211 terminations, reductions and savings 
amounting to an estimated $33 billion in savings for 2012. 
These budgets were marked by a new level of transparency as 
well. For example, unlike his predecessor, who kept the war 
funding off the books, President Obama's budget acknowledged 
the conflicts in Iraq and Afghanistan and that they had an 
impact on our Nation's bottom line.
    Now, this approach stands in stark contrast to the approach 
of my friends on the other side of the aisle who would impose 
massive cuts on Medicare and Medicaid, balancing the budget on 
the backs of seniors, the poor and the middle class while 
cutting taxes for millionaires and billionaires.
    I look forward to hearing from our witnesses about how the 
budget process has been improved in the Obama administration 
and could be improved further, particularly with respect to 
budget issues affecting programs under the committee's 
jurisdiction, and I hope that today's discussion is fact-based 
and productive. I yield back.
    Mr. Stearns. I thank the gentlelady, and I recognize the 
gentleman from Texas, Mr. Barton, for 2 minutes.
    Mr. Barton. Thank you, Mr. Chairman.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    As you know, there is a privacy hearing going on in another 
subcommittee, so I will have to, after I give an opening 
statement, go and attend to that.
    Mr. Chairman, nearly 3 years ago, then-President-elect 
Obama said, and this is a direct quote, ``In these challenging 
times when we are facing both rising deficits and a sinking 
economy, budget reform is not an option; it is an imperative. 
We will go through our Federal budget page by page, line by 
line, eliminating programs we don't need and insisting on those 
that we do operating a sensible, cost-effective way.''
    Mr. Chairman, here we are 3 years and $4 trillion of 
additional Federal debt later, and we still don't have that 
line-by-line examination. However, House and Senate Democrats 
along with the President and his agency administrators appear 
to have rejected every effort to truly reform the budget, and 
as far as I can tell, are spending much more time increasing 
the financial and regulatory burden on the taxpayers of our 
Nation.
    Today I hope that we can begin to uncover what, if 
anything, the President has done to truly reform our budget and 
get the Nation's fiscal house in order. I want to echo your 
disappointment, Chairman Stearns, that the Office of Management 
and Budget could not supply a witness for today's hearing. 
Perhaps they are too busy meeting with large political donors 
like those who encouraged the investment in the Solyndra loan 
guarantee to come before the Congress and tell the American 
people exactly where their tax dollars are going.
    With that, Mr. Chairman, I yield back.
    Mr. Stearns. The gentlelady from Tennessee, Ms. Blackburn, 
is recognized for 2 minutes.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. I also am going to 
be back and forth with the privacy hearing, but unlike a lot of 
our colleagues who had great hope when President Obama stated 
that he would go through the budget line by line to eliminate 
wasteful and duplicative government, I was further encouraged 
when he stated in Executive Order 13571 that, and I'm quoting, 
``Government managers must learn from what is working in the 
private sector and apply these best practices to deliver 
services better, faster and at a lower cost.''
    Unfortunately, while this administration routinely repeats 
this line, they simultaneously force job creators, innovators 
and American taxpayers, hardworking American taxpayers to the 
very end of the line, only to pave the way for the golden era 
of government regulation.
    Furthermore, I have cause for concern that the President's 
initiative since the man who oversaw it was Jeffery Zients, and 
we heard from him last week on the half-billion-dollar Solyndra 
loan. While Mr. Zients may not be present, it is my hope that 
we can assist him this morning in carrying out his stated goal 
on the June 13, 2011, conference call when he said, and I am 
quoting, ``to crack down on waste, step up oversight and hold 
bad actors accountable.''
    I yield back.
    Mr. Stearns. The gentlelady yields back, and I recognize 
the gentleman from Nebraska. Mr. Terry is recognized for 2 
minutes.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. I appreciate that.
    Obviously, I think all of us are united in our effort to 
reduce the size of government to eliminate overlapping agency 
responsibilities, therefore, wasteful spending, abusive 
spending and simply just making sure that taxpayers have 
confidence that their money is being used wisely and 
efficiently, which they do not have that confidence today. So 
this effort could go a long ways in providing people 
confidence.
    I am disappointed that OMB does not have a representative 
here to show where we could work together, but also as the 
gentlelady from Colorado mentioned, if they are proud of their 
efforts, then I want to hear what successes they have had and 
we could help them perhaps achieve them. There may be obstacles 
to implementing them within the Executive Branch that controls 
the agencies, and my fear is that that is why they aren't here 
is because they would probably have to embarrass the Executive 
Branch for failing to follow through on the recommendations of 
those respective agencies.
    With that, I will yield back.
    Mr. Stearns. The gentleman yields back, and the gentleman 
from Virginia, Mr. Griffith, has 35 seconds if he would like.

OPENING STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE 
         IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Griffith. Thank you, Mr. Chairman.
    I would just say that I would like to see a line-by-line of 
the Executive Branch done by the Executive Branch but I also 
agree that it wouldn't hurt for the Congressional offices to 
take a look line by line on their budgets as well. I think our 
country needs us working together to find every penny that we 
can find that would help with our national debt and deficit 
situation, and I yield back, Mr. Chairman.
    Mr. Stearns. The gentleman yields back, and with that, I 
recognize the distinguished ranking member of the full 
committee, Mr. Waxman, for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Mr. Chairman, I am not sure what this hearing 
is all about. If it is about whether the Obama administration 
has scrutinized the Federal budget to eliminate wasteful 
spending, this is an important hearing and I support it. But if 
this hearing is a ``gotcha'' hearing to examine whether the 
administration has actually done a line-by-line review of the 
Federal budget, I reject its premise.
    There is no question that the Obama administration has 
carefully examined the Federal budget to eliminate wasteful 
spending. The budget process each year involves close review by 
each agency of its spending needs. Through its terminations, 
reductions, and savings review, the Obama administration has 
recommended cuts in hundreds of programs totaling over $60 
billion.
    But if the question is whether there has been a literal 
line-by-line review of the Federal budget, which Republican 
members say the President promised, I am afraid my colleagues 
have misunderstood a figure of speech. The phrase ``reading 
line by line'' in American English is commonly understood to 
mean performing a careful review. Likewise, ``meeting you 
halfway'' in negotiations, which seems to be a forgotten art in 
this Congress, does not mean that you literally have to move 
your chairs closer together. And ``bridging our differences'', 
another devalued skill, does not involve major construction 
projects.
    And I know we are going to ``get down to brass tacks'' 
because our first witness is Mr. Brass, but ``getting down to 
brass tacks'' doesn't mean what some people might have thought 
it meant when the furniture industry developed the term ``brass 
tacks.'' It means getting down to the facts and reality.
    Well, these are all figures of speech, and I hope we have 
not arrived at the absolute bottom of political discourse in 
which the Oversight Subcommittee is checking to see if the 
President's figures of speech are literally true.
    Unfortunately, I think the most important question we need 
to ask is why our budget system has become so dysfunctional. 
And the answer, I believe, will be found here in Congress, not 
in the White House.
    Let us take a brief look at how Republicans have handled 
the budget in this Congress. First there was the promise from 
the Speaker at the beginning of his term that there is not 
going to be any more omnibus appropriations bills. He told the 
American Enterprise Institute that he would do away with 
comprehensive bills. At another point he said that the House 
would do all separate appropriations bills and that 2,000-page 
bills are not in anyone's interest. Yet today we are operating 
on the heels of a 4-day continuing resolution, which will be 
followed by a 6-week continuing resolution, which will be 
followed by an omnibus appropriation, if we are lucky.
    Then there was the debt ceiling standoff. Every Republican 
and Democratic economic and financial observer said that this 
ceiling had to be lifted to preserve the American credit rating 
and not to rattle the markets. Instead, the Republicans held 
the ceiling hostage until default was imminent, using it for 
negotiation leverage and headline value.
    And now there is the Super Committee. For members who say 
they want a line-by-line review of the budget and for a party 
that claims it doesn't want omnibus bills because they are too 
big to review, it seems pretty strange that the Super Committee 
is the method that has been adopted. This process sweeps past 
all authorizing committees' consideration and all amendments 
and input from members of Congress. If it is successful, the 
Super Committee will create a giant omnibus bill, bigger than 
any before, and give us perhaps 3 weeks to read it but not 
change it, not even to offer changes to it. If it fails, it 
will produce an across-the-board cut in programs that could be 
accomplished by a pocket calculator but that will reflect no 
public policy, no economic realities, and no sense of justice 
and fairness.
    Well, I hope the Super Committee process achieves positive 
results, but if we are really serious about ensuring sound 
fiscal policy for our Nation, Congress needs to take a long, 
hard look in the mirror. I believe that examining ways to meet 
halfway and bridge differences would take us a lot further than 
examining whether the President did a line-by-line budget 
review.
    I remember a conversation I had with my son when he was 
quite little, and we had to explain to him that ``stopping on a 
dime'' did not mean we literally stopped for a dime. There are 
figures of speech and expressions, and I am pleased now that 
the Oversight Subcommittee has become the arbiter of whether 
people are actually stopping on a dime, getting down to brass 
tacks, literally reading a budget line by line. This is a 
wonderful exercise and I only wish the cameras were here so the 
American people could see what Congress has come to.
    And I think my time is now expired, so I will yield back.
    Mr. Stearns. I thank the gentleman.
    I hope the gentleman will stay for the questions that I 
will have. I am going to actually show the video clip of the 
President mentioning----
    Mr. Waxman. Nothing could make me more excited, Mr. 
Chairman. If I can do that, I will certainly try to get back.
    Mr. Stearns. Yes, ``line by line''----
    Mr. Waxman. But otherwise I am going to read the testimony 
line by line very carefully.
    Mr. Stearns. Well, you wouldn't want to miss the President 
mentioning ``line by line,'' and you will clearly understand 
his intent with this video clip.
    I ask unanimous consent again from the gentlelady that the 
majority's supplemental memo and attached letter from OMB be 
introduced into the record. Without objection, the documents 
will be entered into the record.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Stearns. And with that, Mr. Brass, you are aware that 
the committee is holding an investigative hearing and when 
doing so has had the practice of taking testimony under oath. 
Do you have any objection to taking testimony under oath?
    Mr. Brass. No, Mr. Chairman.
    Mr. Stearns. The chair then advises you that under the 
rules of the House and the rules of the committee, you are 
entitled to be advised by counsel. Do you desire to be advised 
by counsel during your testimony today?
    Mr. Brass. No, Mr. Chairman.
    Mr. Stearns. In that case, if you would please rise and 
raise your right hand, I will swear you in.
    [Witness sworn.]
    Mr. Stearns. Mr. Brass, you are now under oath and subject 
to the penalties set forth in Title XVIII, section 1001 of the 
United States Code. You may now give your 5-minute opening 
statement. Please proceed.

     STATEMENT OF CLINTON T. BRASS, ANALYST IN GOVERNMENT 
  ORGANIZATION AND MANAGEMENT, CONGRESSIONAL RESEARCH SERVICE

    Mr. Brass. Thank you. Chairman Stearns, Ranking Member 
DeGette, members of the subcommittee, thank you for the 
invitation to testify today.
    The subcommittee requested that CRS discuss the Obama 
administration's line-by-line budget review and what it appears 
to entail. The subcommittee also requested that CRS identify 
some policy options that Congress might consider in this 
context. The CRS written statement goes into these subjects in 
detail, so I will provide some highlights.
    At the outset, several caveats arguably are necessary. It 
should be noted, for example, that formulation of the 
President's budget largely occurs outside of public view. The 
Office of Management and Budget, OMB, closely manages this 
process to prevent so-called pre-decisional information from 
leaving the Executive Branch. As a consequence, it is 
frequently not possible to make definitive statements about a 
process like this one. Even with qualifications like these, 
analysis suggests that the line-by-line review appears to be 
closely related to the annual development of the President's 
budget proposals. The line-by-line review may be another name 
for the Obama administration's perspective on how it formulates 
the President's budget.
    The first mention of this topic appeared during the 2008 
Presidential campaign and subsequent transition. The incoming 
administration characterized the effort as an exhaustive line-
by-line review of the budget in which the administration would 
focus not only on identifying cuts but also more generally on 
how to allocate funds. In February 2009, OMB released an 
initial budget overview for the upcoming fiscal year saying it 
had begun a line-by-line review and would release related 
proposals for that in subsequent fiscal years. In May 2009, the 
administration issued a document that included selected 
proposals for ``terminations, reductions and savings.'' The 
Obama administration's issuance of a volume like this among a 
President's budget proposals was not new. Presidents dating 
back to President Ronald Reagan, if not before, have 
occasionally produced similar documents.
    The Obama administration characterized the document as the 
first report from the line-by-line effort. On the same day, OMB 
released a more comprehensive budget appendix, account-by-
account budget proposals. Agencies also submitted to Congress 
their much more detailed budget justifications. In subsequent 
years, the Obama administration released similar sets of 
documents. In these documents, representations that an 
administration makes about the performance of a program may 
provide information that not all observers would necessarily 
perceive to be complete or fair. Past experience suggests that 
a President may in some cases make representations about 
performance from the perspective of one definition of success 
while omitting any mention of other perspectives. Consequently, 
Congress may consider whether the definition of success that is 
being used reflects underlying authorizing statutes or 
Congressional intent. Congress has indicated in statute that 
when agencies set goals, and arguably, thereby define success, 
the agencies are first required to consult with Congress and 
stakeholders. Statutes like this may provide Congress with an 
opportunity to influence how agencies and OMB present 
information to Congress.
    The subcommittee also requested that CRS identify some 
policy options that Congress might consider to accomplish the 
following outcomes. These include bringing additional 
transparency to Presidential budget proposals including the 
outcomes of such proposals are Congress considers them, options 
to bring enhanced credibility to representations that an 
administration may make regarding an agency's or program's 
performance, and options to bring more effective engagement 
between Congress and agencies on topics like these.
    The CRS written statement mentions a few options, and CRS 
takes no position on whether changes from the status quo are 
advisable. However, some potential advantages and disadvantages 
might be explored if options were of further interest. In the 
meantime, I would be happy to answer any questions you may 
have. Thank you.
    [The prepared statement of Mr. Brass follows:]


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    Mr. Stearns. Mr. Brass, thank you. I would like to lead off 
with my questions, but before I do, I would like to play the 
following video clip if I could.
    [Video playback.]
    Mr. Stearns. Well, I think it is clear from that video, 
contrary to what Mr. Waxman indicated, the President indicated 
he is going page by page, line by line, item by item, program 
by program, so it is unfortunate that Mr. Waxman is not here to 
show that he meant, the President, that is, meant literally to 
go that way.
    Ms. DeGette. Will the chairman yield?
    Mr. Stearns. Well----
    Ms. DeGette. Do you know the President didn't go through 
the budget line by line?
    Mr. Stearns. Well, it appears Mr. Waxman was trying to 
indicate the President did not have to go line by line.
    Ms. DeGette. Well, do you know if he did or didn't?
    Mr. Stearns. Well, you should ask Mr. Waxman.
    Ms. DeGette. Why?
    Mr. Stearns. Well, Mr. Waxman is making the charge.
    Mr. Brass, let me ask you the question just to put it on 
the record. Did the President issue an Executive Order after he 
took office directing the Executive Branch to undertake a line-
by-line analysis of the Federal budget?
    Mr. Brass. No, Mr. Chairman.
    Mr. Stearns. He did not?
    Mr. Brass. He did not issue an Executive Order. That is 
correct.
    Mr. Stearns. Did OMB issue a specific directive to this 
effect?
    Mr. Brass. That is unknown. Not in public form. There may 
be internal guidance that may have gone out to agencies or OMB 
examiners but from what is publicly available, I have seen no 
such document.
    Mr. Stearns. So I think the basic fact is, the President we 
saw from the video has talked about line by line, item by item, 
program by program, page by page, yet you're telling us this 
morning the President did not issue an Executive Order to the 
office to undertake a line-by-line analysis, so that is a 
little disconcerting.
    Other than the video clip that you saw moments ago, is 
there anything that you have come across in your research and 
analysis that defines or better explains what a line-by-line 
review of the budget entails?
    Mr. Brass. I have only seen general representations of what 
is involved in a line-by-line review. When I initially saw it, 
I wasn't sure what it meant to review something line by line in 
budget jargon, and had several meetings. My interpretation 
generally from the statements that have come out was that the 
President was signaling internally in the government and 
externally that he wanted to bring focus and scrutiny to all 
government programs.
    Mr. Stearns. Well, let me just back up a bit. How does that 
characterization compare with how the Obama administration has 
conducted its line-by-line analysis? I mean, how does it 
compare in real life?
    Mr. Brass. That is a good question, and unfortunately, I 
was not at OMB at the time to be able to observe that because 
in some ways the formulation of the President's budget occurs 
within a black box where it is not subject to public view and 
so it is hard to say exactly what occurred.
    Mr. Stearns. Well, let us go back to other administrations. 
How would you compare how prior administrations conducted an 
annual budget analysis? Can you give briefly what your 
observations have been?
    Mr. Brass. Well, in the past what is known is that the 
President's budget is formulated through a rather elaborate 
process of agencies submitting requests to OMB, OMB passing 
back initial determinations----
    Mr. Stearns. Did prior administrations use a line-by-line 
analysis in your opinion?
    Mr. Brass. Not in those words, no.
    Mr. Stearns. In your review of the Obama administration's 
line-by-line review, did you find any example of decision-
making taking place that was based on evidence-based analyses?
    Mr. Brass. I saw references to evidence-based analyses in 
citations to program evaluations and that sort of thing, and so 
there have been some instances, yes, where the administration 
has said proposals were based on evidence.
    Mr. Stearns. Did they result in actual cuts being made, in 
your opinion?
    Mr. Brass. I have not examined empirically item by item 
whether they were ultimately adopted.
    Mr. Stearns. Forget the word ``empirically.'' Were there 
any cuts made that you can see?
    Mr. Brass. I have not examined that, so what I have 
focused--that gets at the transparency issue to some extent.
    Mr. Stearns. So you are saying if there were, you can't 
tell them, and if they are not, you still can't tell them?
    Mr. Brass. I should preface that by saying I could tell if 
I could a lot of time looking at it but it is difficult to find 
time to go through a document like that.
    Mr. Stearns. Do you think the average person, if they took 
the time, could find the cuts?
    Mr. Brass. I don't know if I am the average person or not 
but I could not easily find whether cuts were made.
    Mr. Stearns. Is it possible there were no cuts?
    Mr. Brass. I doubt that but----
    Mr. Stearns. Is it a possibility? Let me ask you this. Are 
there different ways to conduct an exhaustive line-by-line 
review beyond what occurs in the annual budget process, and 
what are they?
    Mr. Brass. Certainly. You can have special processes that 
go on parallel to the budget process. In past administrations, 
you had what was called, for example, under the Jimmy Carter 
administration, zero-based budgeting, which was an effort to 
assume that nothing would continue where agencies would have to 
justify everything in their budget all over again. So yes, many 
techniques and approaches are possible.
    Mr. Stearns. I thank the gentleman and recognize the 
ranking member, Ms. DeGette.
    Ms. DeGette. Thank you very much, Mr. Chairman. Let me just 
say at the outset what I said in my opening statement. I join 
you in wishing that we had someone from OMB here because Mr. 
Brass, you work for the Congressional Research Services, which 
is an arm of Congress, correct?
    Mr. Brass. That is correct.
    Ms. DeGette. You don't work for the Executive Branch, 
correct?
    Mr. Brass. That is correct.
    Ms. DeGette. Now, I am going to assume you have not talked 
to the President about whether he in fact went through the 
budget line by line as that extremely cute video showed, 
correct?
    Mr. Brass. That is correct.
    Ms. DeGette. And you haven't talked to anybody over at OMB 
to see if they went through it line by line over at OMB, have 
you?
    Mr. Brass. Not in a way that I could attribute, no.
    Ms. DeGette. OK. And have you talked to the people over at 
OMB about whether they did a thorough analysis and 
investigation of the budget to see where cuts and adjustments 
could be made?
    Mr. Brass. Informally, and----
    Ms. DeGette. And what were you told by OMB?
    Mr. Brass. Well, full disclosure, I used to work at OMB 
before I came to CRS, and so----
    Ms. DeGette. OK. But when did you leave OMB?
    Mr. Brass. In 2003.
    Ms. DeGette. OK. So you haven't been at OMB for like seven-
plus years, right?
    Mr. Brass. That is correct.
    Ms. DeGette. And you left when a different administration 
was there too, right?
    Mr. Brass. That is correct.
    Ms. DeGette. So to ask the question again, did you talk to 
your former colleagues at OMB about whether they did a thorough 
investigation and analysis of this budget?
    Mr. Brass. Informally, yes.
    Ms. DeGette. And what did they say?
    Mr. Brass. They said that they went through the President's 
budget formulation process which is rather elaborate and 
extensive.
    Ms. DeGette. OK. Now, in response to one of the chairman's 
questions, you said that your view of line-by-line analysis 
means a focus and a scrutiny given to all government programs, 
right? I wrote that down when you said that.
    Mr. Brass. That is one possible, yes, interpretation.
    Ms. DeGette. OK. And do you have any sense whether the 
administration gave a focus and scrutiny to all government 
programs when they proposed their budget to Congress?
    Mr. Brass. That is--I don't think it is possible for CRS to 
authoritatively say whether or not----
    Ms. DeGette. OK. You don't know?
    Mr. Brass. That is correct.
    Ms. DeGette. Right. Now, as I mentioned in my opening 
statement, the administration sends a budget to Congress but 
Congress plays a role in developing the Federal budget as well. 
Isn't that correct?
    Mr. Brass. That is correct.
    Ms. DeGette. And in fact, the Constitution places the 
primary responsibility for the Federal budget at Congress's 
feet, not the President, right?
    Mr. Brass. That is correct.
    Ms. DeGette. So, I mean, the President could send us a 
budget, we could throw it in the trash, which we often do, and 
make our own budget, right?
    Mr. Brass. Yes, ma'am.
    Ms. DeGette. OK. Now, Congress is expected to pass a budget 
resolution and 12 separate appropriations bills for fiscal year 
2012, is it not?
    Mr. Brass. Yes, ma'am.
    Ms. DeGette. And so I was a little confused when the 
chairman was asking you were cut made in the President's budget 
because in fact the only body that can actually make cuts is 
Congress when it passes those 12 appropriations bills, right?
    Mr. Brass. Cuts are made figuratively from previous 
spending amounts.
    Ms. DeGette. Right. So there is a spending amount from last 
year and then Congress passes an appropriations bill which 
either increases the appropriation or cuts the appropriation, 
right?
    Mr. Brass. Congress and the President jointly.
    Ms. DeGette. Right. The President can't unilaterally make 
cuts, he can propose cuts, right?
    Mr. Brass. That is correct.
    Ms. DeGette. The only way you actually make cuts is if 
Congress passes legislation which the President then signs, 
correct?
    Mr. Brass. That is correct.
    Ms. DeGette. Now, do you know whether the President has 
proposed cuts to any programs in his budget to Congress?
    Mr. Brass. Yes, he has.
    Ms. DeGette. And do you know offhand how many cuts those 
are?
    Mr. Brass. I have not racked up the figures, no.
    Ms. DeGette. OK. So just to summarize, you don't know 
whether the President or any over at OMB or in his 
administration actually went through the budget line by line. 
Is that right?
    Mr. Brass. That is correct. I do not personally know that.
    Ms. DeGette. OK. And you do know--well, you know from 
talking to your buddies over at OMB that there was some 
rigorous analysis done of the budget over at the White House, 
correct?
    Mr. Brass. That is how examiners at OMB would characterize 
that, yes.
    Ms. DeGette. OK. And you know that the administration gave 
us a proposed budget which did include proposals for cuts to 
some programs, correct?
    Mr. Brass. That is correct.
    Ms. DeGette. Now, have you yourself read the President's 
proposed budget line by line?
    Mr. Brass. No, ma'am.
    Ms. DeGette. Do you know anybody who has?
    Mr. Brass. I do not.
    Ms. DeGette. Because generally like when you used to work 
at OMB and now you work at CRS, people mean an overall review 
when they say--it is a figure of speech, generally speaking, 
right?
    Mr. Brass. That is one interpretation of the use of the 
term here.
    Ms. DeGette. OK. Thank you very much.
    Mr. Stearns. I thank the gentlelady. I think your 
questioning pointed out the reason why we need OMB here, and 
secondly, we got documents from OMB Friday night, and it turns 
out all those documents are already in the public record, so in 
addition to not being here, they sort of foolishly and 
subversively submitted documents that were already in the 
public record. So I think it is a double sort of affront that 
they are not here and it is unfortunate when your questions are 
asked----
    Ms. DeGette. Mr. Chairman, did you ask OMB for those 
records?
    Mr. Stearns. We sure did.
    Ms. DeGette. So if they didn't give you the records, you 
would be mad at them, so now you are mad at them because they 
did give you records?
    Mr. Stearns. No, they gave us records that were already in 
public record. It is like getting a book that you already have 
in your library.
    Ms. DeGette. Are there records that you asked for that they 
didn't give you?
    Mr. Stearns. Yes.
    Ms. DeGette. Well, let us work on that.
    Mr. Stearns. OK. Let us work on that.
    With that, I recognize Mr. Murphy, the gentleman from 
Pennsylvania. He is not here? Mr. Griffith is recognized for 5 
minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    You say the President has proposed some cuts to the budget 
but overall the budget is going up so they had more increases 
in their proposals than they had decreases. Is that not 
correct?
    Mr. Brass. I don't know. I don't cover that, the budgetary 
aggregates at CRS, but I would be happy to get folks in touch 
with you or your office on that question. I do more kind of 
budget process, program evaluation, the role of agencies and 
OMB and the President in the budget process, focusing less on 
what empirically occurs at your tier.
    Mr. Griffith. You would agree in the clips that we saw, the 
President made it clear that he was going to do a careful 
analysis of what was going on in the budget and your areas of 
the budget process. Have you seen any signs that the President 
has made any recommendations to Congress in ways that we could 
make the budget process more transparent for the American 
public?
    Mr. Brass. Yes, they have put out this TRS volume, this 
termination, reduction and savings volume. It is not required 
by law. The George W. Bush administration also did that to 
highlight budget cut proposals, and so there are some examples 
like that where some transparency is occurring beyond what is 
required by law.
    Mr. Griffith. But the same thing was done by the Bush 
administration so there is not any new innovation by the Obama 
administration. Would that be correct to say?
    Mr. Brass. Not necessarily in that respect with the caveat 
that it is difficult to know what is going on in the 
background.
    Mr. Griffith. That is why we like transparency, because it 
is difficult to know what is going on in the background. Isn't 
that correct?
    Mr. Brass. Many people like transparency for that reason, 
yes, sir.
    Mr. Griffith. All right. And as a part of that in the 
budget process, has the White House made any recommendations 
that you are aware of to Congress that would make the process 
smoother, easier, et cetera, such as maybe moving to a biannual 
budget?
    Mr. Brass. That is another area I don't cover closely at 
CRS. I am sorry. But there is a chapter usually in the budget 
appendix--excuse me, not the appendix but the analytical 
perspectives volume of the President's budget that focuses on 
Congressional budget process, but there have been some 
allusions to, for example, enhanced rescission authority, that 
kind of thing, but that is not a subject that I follow closely.
    Mr. Griffith. So you don't have a recommendation or you 
don't know of any recommendations from the White House or the 
administrative branch of government that might make the process 
in the budget a little smoother?
    Mr. Brass. Not right offhand. I could get back to you on 
that.
    [The information follows:]


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    Mr. Griffith. Yes, if you could get back to me on that. Do 
you think that a biannual budget would be a smoother process 
and smooth out some of the bumps in the road that we have 
experienced in this my first term?
    Mr. Brass. That is a question that comes up frequently. A 
biannual budget would allow Congress to look at 2 years of 
expenditures, at a time and advocates have focused on using 
that second year for additional oversight, and another argument 
that they use to plug that proposal is that it would allow 
Congress to focus more in-depth time during that consideration. 
That said, there might be some disadvantages too. The budget 
process in a way is an annual way of holding agencies 
accountable, and if they are only held accountable every 2 
years with a budgetary hammer, it might weaken Congressional 
controls.
    Mr. Griffith. But you haven't seen any indications that the 
White House has been working on ways to smooth out the process 
or make recommendations that might smooth out the process for 
the various administrative agencies that the White House is 
responsible for overseeing and making sure that they work 
smooth? You haven't seen anything like that?
    Mr. Brass. Unfortunately again, when it comes to proposals 
like that, many of them relate to the Congressional budget 
process. I focus more on what is going on within the Executive 
Branch. Within the Executive Branch, I have not seen big 
initiatives to open the lid, for example, on formulation of the 
President's budget.
    Mr. Griffith. So that is not something--so we are not sure 
whether they have done line by line, whether figurative or 
otherwise, and we have not seen anything where--you have not 
seen anything where it looks like they are opening the lid to 
look at making the process smoother, whether it be the biannual 
budget or any other proposal that they are just not looking in 
that direction. Would that be a fair characterization of what 
you just said? Isn't that true?
    Mr. Brass. I will have to get back to you on that, Mr. 
Griffith. I will need to----
    Mr. Griffith. But it is fairly reasonable based on what you 
just said that you have not seen anything along those lines. Is 
that correct?
    Mr. Brass. I would characterize it just that it has been a 
busy couple of years and I have been focused on other topics, 
and so things aren't coming readily to mind. That doesn't mean 
they are not out there, though.
    Mr. Griffith. Certainly nothing front burner? Might be some 
back-burner stuff. Is that what you are saying?
    And I yield back my time, Mr. Chairman.
    Mr. Stearns. The gentleman yields back his time and we 
recognize the gentlelady from the Virgin Islands, Dr. 
Christensen, for 5 minutes.
    Mrs. Christensen. Thank you, Mr. Chairman.
    I have to say that as I read the memo and some of the 
testimony, this seems like a hearing looking for a reason to 
exist, and I have to agree also with Ranking Member Waxman that 
seasoned members who admittedly rarely read budget bills can't 
be taking that line-by-line statement literally. I might agree 
to looking at developing clearer guidelines, goals and 
principles but I think we have to recognize that we are not the 
Executive Branch and be careful not to usurp their authority 
and to use the authority that we do have to address some of 
these issues.
    My questions--let me preface my questions by saying some of 
my Republican colleagues on the subcommittee appear to be 
calling into question whether the Obama administration has done 
a thoughtful review of budget issues. In their September 15, 
2011, letters to OMB and other agencies, Chairman Stearns and 
Chairman Upton cited a statement by the White House press 
secretary that the President had not gone line by line through 
omnibus spending legislation as a concession that raises 
questions about fiscal discipline in the administration. In 
order to best understand the attention the administration has 
paid to budget issues, I think it would helpful to walk through 
the process involved in preparing the President's budget.
    So Mr. Brass, it is my understanding that government 
agencies, one of my favorites, the National Institutes of 
Health, begin the development of their budgets far before the 
beginning of the fiscal year. Is that correct?
    Mr. Brass. That is correct.
    Mrs. Christensen. And I also understand that agencies like 
NIH prepare a first draft and then submit them for review to 
the department of which they are part, in this case, HHS. Is 
that correct?
    Mr. Brass. That is correct.
    Mrs. Christensen. And do all agency proposals make it 
through the departmental review, to the best of your knowledge?
    Mr. Brass. No, they do not.
    Mrs. Christensen. And then departments prepare their 
budgets for review by the Office of Management and Budget. Is 
that part of the process?
    Mr. Brass. That is correct.
    Mrs. Christensen. Do all departmental proposals make it 
through the OMB process?
    Mr. Brass. They do not.
    Mrs. Christensen. In fact, OMB tells departments what 
proposals it will support and which ones it will discard in a 
document that is usually known as the OMB passbook. Is that 
correct?
    Mr. Brass. Passback, correct.
    Mrs. Christensen. Passback. As a matter of fact, I remember 
going to the White House when we were doing the health care 
reform bill and we had several issues that we wanted the 
President to consider--this is an aside--and the President 
actually said to me, well, I am not going to support anything 
that doesn't work. So I have seen some of this process in 
action.
    But let me go on with my questions. I also understand that 
Cabinet members get one last chance to propose an item for the 
budget in a process that is an appeal to the President and the 
OMB director in a process that is called appeals. Is that a 
part of the process as well?
    Mr. Brass. Yes, it is.
    Mrs. Christensen. So do all Cabinet members' appeals get 
granted?
    Mr. Brass. No, they do not.
    Mrs. Christensen. Is this procedure, meaning the agency 
proposes to the department, the department proposes to OMB, the 
OMB passes back a decision, the Secretary appeals to the 
President, and final decisions are made. Has this procedure 
been used by both Democratic and Republican administrations?
    Mr. Brass. Yes, it is. It is a longstanding practice.
    Mrs. Christensen. To the best of your knowledge, when this 
procedure is being followed, does anyone review the entire 
Federal budget line by line?
    Mr. Brass. Again, that is a figure of speech that is 
subject to interpretation, but if it is meant actually reading 
every line and not figurative, no, I do not know of anyone who 
read the entirety of it.
    Mrs. Christensen. Well, in your opinion, does not reading 
it line by line and going through it line by line but really 
doing a careful review, doesn't that kind of equate to each 
other?
    Mr. Brass. So in colloquial speech to do a line-by-line 
examination of something frequently means a careful, 
exhaustive, scrutinizing review of a document, so yes.
    Mrs. Christensen. And yet both Republican and Democratic 
administrations do produce budget proposals despite going that 
process and not having done a line-by-line review but we end up 
with a budget regardless of what administration is in office?
    Mr. Brass. Presumably, yes, just again, not having observed 
it personally, but yes, reports are.
    Mrs. Christensen. Well, I just want to thank you for your 
responses. As we evaluate whether there are ways to improve the 
budget process, it is helpful to understand the existing 
process which is lengthy and involves detailed analysis from 
experts at agencies across the administration. I also would 
just like to say that I think that an honest and objective look 
at what President Obama and his team have done in his tenure 
would clearly show that the President has done much to 
eliminate duplication, waste, fraud and abuse and cut spending, 
and as a matter of fact, in going along with what the tea party 
Republicans have called for and cuts while we are still in a 
deep depression, I think the President has gone too far, and I 
yield back the balance of my time, Mr. Chairman.
    Mr. Stearns. The gentleman from Nebraska is recognized for 
5 minutes.
    Mr. Terry. Well, I appreciate what my tax-and-spend uber-
liberal Democrat friends state in their statements here. Let me 
just go through and try to get this clear in my mind. We can 
play that game too, Donna.
    Now, Mr. Brass--pardon me?
    Mrs. Christensen. They have hurt middle-class and poor 
Americans and they have gone too far.
    Mr. Terry. By trying to restrain spending.
    Let us look at that. Now, who decides the head of agencies?
    Mr. Brass. Who appoints them?
    Mr. Terry. Yes. Well, who makes the determination of who 
will be the Secretary or Director of an agency?
    Mr. Brass. It is joint between the President making an 
appointment and the Senate----
    Mr. Terry. The Senate confirming.
    Mr. Brass [continuing]. Confirming.
    Mr. Terry. And the management, day-to-day management is the 
Executive Branch, right?
    Mr. Brass. That is correct.
    Mr. Terry. And they answer to the President, correct?
    Mr. Brass. That is correct.
    Mr. Terry. And I think the gentlelady from the Virgin 
Islands made the good point that the process in budgeting is 
that the respective agencies, since they answer to the 
Executive Branch, start their budgeting process really right 
now and then submit those to OMB, which is an Executive Office 
branch, right, or an Executive Office agency?
    Mr. Brass. It is an Executive Branch entity, yes, and the 
process starts in the spring and summer preceding February 
submission of the President's budget.
    Mr. Terry. Right. They don't submit those to Congress, they 
submit those to the President?
    Mr. Brass. In general, yes. There are agencies where 
Congress has seen fit to carve them out from the law requiring 
that a budget be submitted to OMB first.
    Mr. Terry. Right, and those are the exceptions, but 
generally all the agencies submit their proposed budgets to 
OMB. The President and OMB make reviews of those budgets before 
they put them in the President's budget, correct?
    Mr. Brass. That is correct.
    Mr. Terry. OK. And then when the President decides whether 
there should be--whether they have found duplicative agencies 
or subagencies, does the President have to come to Congress to 
eliminate a subagency?
    Mr. Brass. If the subagency is established by law, yes. If 
a subagency is created through administrative action, the 
appropriations committees may get involved where in report 
language they require some communication to occur.
    Mr. Terry. Are you aware of any instance where the 
Executive Branch has eliminated a duplicative subagency? We 
know that no agency has been eliminated so it has to be the 
subagencies within an agency, so are you aware of whether by 
Executive Order or by request for legislation one has been 
eliminated?
    Mr. Brass. I have not studied that question in detail so I 
would have to----
    Mr. Terry. Who would we ask?
    Mr. Brass. At CRS?
    Mr. Terry. Well, just generally. Can CRS answer that 
question for us if we request it?
    Mr. Brass. Sure, of course.
    Mr. Terry. Or would we have to have OMB here?
    Mr. Brass. You could--to get a complete answer, you might 
ask both. CRS oftentimes is constrained to readily publicly 
available resources. Something like that, also you might ask 
GAO for more in-depth examination.
    Mr. Terry. All right. Then if we want to know what 
recommendations OMB has made after their review of the budgets, 
we would have to ask them?
    Mr. Brass. Well, the recommendations, you could ask them, 
but their recommendations are generally speaking in publicly 
available documents. The challenge oftentimes is going through 
them in detail and discerning what is a budget cut to a program 
where the program still exists or an entity still exists versus 
what is a zeroing out of an entity.
    Mr. Terry. I appreciate that. Then in that regard, 
exercising our constitutional rights, we do a budget. The 
Republican House did pass a budget. So the issue isn't whether 
we are exercising our discretion or constitution rights, it is 
whether they agree with our cuts or changes. Are you aware of 
whether the Senate has passed a budget?
    Mr. Brass. A budget resolution?
    Mr. Terry. Budget resolution.
    Mr. Brass. I believe they have not.
    Mr. Terry. I yield back.
    Mr. Stearns. The gentleman yields back, and the gentleman 
from California, Mr. Bilbray, is recognized for 5 minutes.
    Mr. Bilbray. Let me say first of all, Mr. Chairman, I 
commend you for having this hearing. In fact, if I have a 
complaint, we should have had it before. Any member that thinks 
that this is a hearing without a problem needs to take a look 
at 43 percent deficit running up. We are 43 percent underwater. 
There is not a city, a county or a State in this country that 
would think that 43 percent underwater is viable. Mr. Brass, 
can you name off just what city, maybe Philadelphia--can we 
find somebody that is 43 percent annually underwater?
    Mr. Brass. I don't cover that area. I am sure it----
    Mr. Bilbray. OK. Let me assure you in California, which has 
one of the worst economic downturns in the entire country--I 
mean, we have unemployment over 12 percent--we don't have that, 
and so, you know, I just think we ought to recognize, there is 
a reason to have this hearing. It should have been held before, 
and I don't think that it is just a problem that we can point 
to the White House. Even though the leader of the Senate 
happens to be a family friend with the Bilbrays, to take a look 
at the fact that it appears the Senate has not done their due 
diligence of the budget, basically have delayed it almost three 
times longer than what they are supposed to be doing. I think 
there is a lot of concern we should have with everybody in this 
process.
    I have just got to say personally, Mr. Chairman, it kind of 
reminds me of when Proposition 13 passed in 1978. I was a 
young, 27-year-old mayor and we had to make 40 percent cuts to 
be able--because that is what we lost in revenue in 1978. And 
so if I sound like it is deja vu all over again, there is a 
reason to it. Sadly, I have to tell you, that we ended up 
having to disband our police department because of the fiscal 
issues. You ought to try to make fun cuts like that and then 
hope to ever get the endorsement of the police department 
again.
    Zero-based budgeting seems like a no-brainer when you are 
sitting at the 43. When we were challenged with this, and I am 
saying across the State of California, everybody went to zero-
based; every item had to be justified. What would be the 
justification for not doing zero-based?
    Mr. Brass. Zero-based budgeting can be implemented in 
different ways, and in fact, people may interpret it 
differently. I can reflect back on the experience in the Jimmy 
Carter administration where GAO did a study 2 years after it 
was implemented that found that it was quite burdensome to go 
through. The notion of zero-based, that is, not just doing 
incremental budgeting but actually looking at everything, many 
budget analysts would agree it is a correct thing to do but 
some of the art and science of budgeting is how to do things 
like that. So one of the troubles there is just identifying 
what is meant by zero-based budgeting.
    Mr. Bilbray. OK. Let us go to the biannual budget system. 
Some members may forget but under a Democratic Congress, 
Democratic White House, we passed bipartisan support for a 
biannual budget for the veterans. Have we run into any major 
problems with the Veterans Department being on a biannual 
budget?
    Mr. Brass. I don't know. I don't follow that area closely.
    Mr. Bilbray. OK, Mr. Brass, let me just tell, one advantage 
was, when we get through this crisis, the veterans were 
addressed during the C.R. because we were on that, and I 
challenge both sides that we found bipartisan support for a 
biannual budget for the veterans. Maybe we ought to be 
considering maybe this is one place that Republicans and 
Democrats can cooperate and start expanding this effort.
    I have heard of lockbox. Black box is sort of an 
interesting new term as somebody who has been around the block 
a couple of times, and I am just wondering about this concept 
of budgeting and not really allowing anybody to know what is 
going in on that, and I am wondering how far does this go? The 
Executive Branch will keep it in the dark all the time ever and 
only until they release their budget no one has the right to be 
able to know what is being said or what is being proposed.
    Mr. Brass. People have argued that they have the right. 
Committees with subpoena power can certainly go after certain 
information that is considered pre-decisional in the Executive 
Branch but this goes back to 1921 with a law called the Budget 
and Accounting Act where Congress told agency personnel, do not 
submit budgets directly to Congress, you have to go through the 
filter of the institutional presidency before that is 
submitted. And so Presidents have used that law to shield some 
of what goes on inside the Executive Branch. That said, 
Congress has occasionally for specific agencies removed that 
lid to----
    Mr. Bilbray. Well, I think as much as possible--Mr. 
Chairman, I appreciate it. I just want to point out one thing. 
A lot of people talk about budget cuts and hitting the poor and 
the needy, but let me remind you, when the economy goes south, 
when the system crashes, it is not the rich and the powerful 
that get hurt. When there is an irresponsible budget handling, 
it is the poor and the needy always end up being hit. It is not 
the rich guys along the line. And if anybody believes that the 
President has been responsible on every expenditure on the 
budget and agrees with this, I have looked at everything, maybe 
they ought to look at so-called green fuel technology subsidies 
or certain money that has gone into certain renewable 
strategies that no science in the world would support but the 
administration has, and I yield back.
    Mr. Stearns. I thank the gentleman, and the gentleman from 
Texas, Mr. Green, is recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Brass, an underlying concern of my Republican 
colleagues at today's hearing appears to be the President of 
the United States did not conduct a line-by-line review of the 
budget proposal he submitted to Congress. For example, in 
requesting information from the agencies on line-by-line budget 
review, the letters from the subcommittee and the full 
committee chairs underscore that the President's Secretary 
conceded that the President did not conduct a line-by-line 
review of the omnibus spending bill in 2009.
    Let me start with a few questions, just simple yes and no. 
Mr. Brass, with your information, can you tell us for certain 
whether the President read every word of his 2012 budget 
proposals?
    Mr. Brass. I cannot.
    Mr. Green. Mr. Brass, have you ever read the entire budget 
submission by the President, and do you have any sense of how 
long that would take?
    Mr. Brass. I have not. It would take a long time.
    Mr. Green. And would you expect the President to read every 
word of his budget proposals?
    Mr. Brass. I would be surprised if the President were able 
to do that.
    Mr. Green. Now, there is no question there are differences 
between the Obama administration and my colleagues across the 
aisle regarding priorities, especially Federal spending. I am 
concerned, however, that the series of hearings the 
subcommittee is launching today is serving more as a forum for 
airing grievances about the Obama administration's policy 
priorities rather than meaningful attempt to improve the budget 
review process, and I think all of us want to improve the 
process.
    Mr. Brass, do you believe that a line-by-line reading of 
the Federal budget is likely to lead to dramatic changes to 
Federal programs like turning Medicare into a voucher program 
or are those sorts of discussions more likely to be made in the 
context of high-level policy decisions?
    Mr. Brass. I would say that hinges on how one defines a 
line-by-line review. If line-by-line review is interpreted as 
an exhaustive examination of the budget and fiscal policy more 
generally, then major policy changes could be proposed coming 
out of that.
    Mr. Green. But still, line by line is only the basic part 
you have to do. You have to understand the budget before you 
then come back and say OK, these are some of the policy 
decisions we may need, and those policy differences are 
obviously party differences, regional differences and lots of 
different differences that could get there.
    Mr. Brass, I think it is appropriate for Congress to 
examine whether the cuts and priorities reflected in the 
President's budget proposal are fair and wise. I am not 
convinced, however, that reiterating demands for the President 
to conduct a line-by-line budget review is the most productive 
means on carrying out this goal. Maybe in Congress we ought to 
require line-by-line review of the budget from our side, one of 
the branches of government.
    And I will close by, Mr. Chairman, I served in the 
legislature a number of years and I had a State house member 
who had served many, many years before me, and he said when he 
was first elected his first term, he read every bill that was 
introduced into the State legislature. His second term, he 
realized that was impossible because he was reading bills that 
would never see the light of day. He tried to read all the ones 
in his committee. And by the time his third term came around, 
he tried to read the ones he introduced.
    So sometimes reading it, it is more the comprehensive than 
it is just reading a line. It is actually comprehending what it 
is. And I appreciate the time, Mr. Chairman.
    Mr. Stearns. I thank the gentleman, and since you have a 
minute and 40 seconds left, I might have a colloquy with you.
    Mr. Green. I would love to.
    Mr. Stearns. You weren't here when we showed the video of 
the President in which he said he was going to go not only line 
by line, he said he was going to go page by page, item by item, 
program by program. So then we thought, well, let us go back 
and see what the OMB Director, Jack Lew, said in his testimony 
before the House Budget Committee on February 15, 2011. This is 
an exact quote from him: ``Each year since entering office, 
President Obama has asked his administration to go line by line 
through the budget to identify programs that are outdated, 
ineffective and duplicative.'' So I just submit to the 
gentleman, this doesn't sound like he thinks it was just a 
figure of speech, and I think in all deference to you and your 
side, you are trying to interpret this that the President 
didn't mean to go line by line but it appears from what he said 
and from what his OMB Director said that he actually wanted to 
go, and that was his intent.
    Mr. Green. If I could reclaim my time?
    Mr. Stearns. Sure.
    Mr. Green. Since you are the chair and you can have all the 
time you want, and I agree, but the President has an Office of 
Management and Budget who has staff that can do that, and I 
would hope that the President----
    Mr. Stearns. Which is Jack Lew.
    Mr. Green. Well, Jack Lew, that they would have staff who 
could do that and look at it, but I think the big issue is that 
we need to look at the policy decisions, whether it be the 
President makes, whether it is this President makes or the 
previous or the next President. That is our issue, and instead 
of focusing on whether the President read every line or maybe 
he had one of those literally dozens if not hundreds of people 
who work for the Office of Management and Budget or in any of 
the agencies to say OK, I want you to do this. I think that can 
happen. But let us talk about the policies and the priorities 
instead of just, you know, getting into whether somebody read a 
line or not, because I don't think----
    Mr. Stearns. Well, I agree with that program, we should 
look at the big picture, but I am just saying that we are 
trying to be fair to the President. But the other point is, we 
can't find out----
    Mr. Green. I would be shocked.
    Mr. Stearns. And we also can't even find out what in view 
of his line-by-line, item-by-item, program-by-program, page-by-
page review, we can't find any of these cuts. So we are going 
to move off Mr. Brass to our second panel and ask them to come 
forward.
    Let me--while they are setting up here, panel two is Thomas 
Schatz, President of Citizens against Government Waste; Mr. 
Patrick Knudsen, Grover M. Hermann Senior Fellow in Federal 
Budgetary Affairs, The Heritage Foundation; Veronique de Rugy, 
Senior Research Fellow, the Mercatus Center of George Mason 
University; Tad DeHaven, Budget Analyst, Cato Institute; Andrew 
Moylan, Vice President of Government Affairs, National 
Taxpayers Union; and Gary Kalman, Director, Federal Legislative 
Office, U.S. PIRG.
    So with that, I think we got everybody. Did we introduce 
everybody? Oh, we have a few more. We have Stan Collender, 
Qorvis Communications, and Scott Lilly, Center for American 
Progress. All right, gentlemen, it looks like we have got you 
all lined up here. All of you are aware that the committee is 
holding an investigative hearing, and when doing so, has the 
practice of taking testimony under oath. Do you have any 
objection to taking testimony under oath? The chair then 
advises you that under the rules of the House and the rules of 
the committee, you are entitled to be advised by counsel. Do 
any of you wish to be advised by counsel? In that case, if you 
would please rise and raise your right hand?
    [Witnesses sworn.]
    Mr. Stearns. You are now under oath and subject to the 
penalties set forth in Title XVIII, section 1001 of the United 
States Code. You may now each give an opening statement of 5 
minutes, and we will recognize Mr. Schatz.

  STATEMENTS OF THOMAS A. SCHATZ, PRESIDENT, CITIZENS AGAINST 
GOVERNMENT WASTE; TAD DEHAVEN, BUDGET ANALYST, CATO INSTITUTE; 
PATRICK L. KNUDSEN, GROVER M. HERMANN SENIOR FELLOW IN FEDERAL 
BUDGETARY AFFAIRS, THE HERITAGE FOUNDATION; VERONIQUE DE RUGY, 
     SENIOR RESEARCH FELLOW, MERCATUS CENTER, GEORGE MASON 
UNIVERSITY; ANDREW MOYLAN, VICE PRESIDENT, GOVERNMENT AFFAIRS, 
   NATIONAL TAXPAYERS UNION; GARY KALMAN, DIRECTOR, FEDERAL 
   LEGISLATIVE OFFICE, U.S. PUBLIC INTEREST RESEARCH GROUP; 
 STANLEY COLLENDER, PARTNER, QORVIS COMMUNICATIONS; AND SCOTT 
       LILLY, SENIOR FELLOW, CENTER FOR AMERICAN PROGRESS

                 STATEMENT OF THOMAS A. SCHATZ

    Mr. Schatz. Thank you, Mr. Chairman and members of the 
subcommittee. I appreciate being here today. My name is Thomas 
Schatz. I am President of Citizens Against Government Waste, a 
nonprofit organization dedicated to eliminating waste, fraud 
and abuse in government, and we have more than 1 million 
supporters and members nationwide.
    On November 25, 2008, President-elect Barack Obama vowed to 
conduct a page-by-page, line-by-line review of the budget to 
eliminate unneeded programs and increase the efficiency of the 
rest of the government. On May 7, 2009, OMB Director Peter 
Orszag said that there was a significant installment in this 
effort when they released the fiscal year 2012 terminations, 
reductions and savings document which identified 100 
recommendations that would reduce Federal spending by $17 
billion over 1 year. While the identification of these savings 
was laudable, it was not unique, and as the prior witness has 
stated, a list of terminations, reductions and savings has been 
submitted to Congress each year since 2006. A list of similar 
proposals entitled Major Policy Initiatives was submitted by 
President Reagan throughout his two terms in office.
    Now, the line-by-line review of the budget is one of six 
initiatives that President Obama has launched in an effort to 
streamline the Federal government and cut costs. Most recently, 
on June 13, 2011, he issued an Executive Order to deliver an 
efficient, effective and accountable government, and while the 
words ``line by line'' do not appear, he both identified 
previous proposals and created new initiatives. He talked about 
prior achievements and good progress but there was no list of 
accomplishments including how much money had been saved by 
taxpayers or what had been implemented from any prior list.
    Now, the subcommittee's request for information on the 
implementation of the review is therefore appropriate but the 
administration should already be answering these questions and 
there should be one place in the budget where this information 
is available. We have found over the years that the most 
effective method of promoting an initiative to increase 
efficiency has been to announce a single major idea and provide 
information about progress and results. President Reagan 
created the President's Private Sector Survey on Cost Control, 
better known as the Grace Commission. President Clinton had the 
National Performance Review and President George W. Bush 
initiated the Program Assessment Rating Tool. To achieve any 
level of success, such initiatives require a clear methodology, 
an appropriate time frame, transparent reporting and concrete 
steps to ensure that the recommendations are adopted.
    When the Grace Commission completed its report in January 
1984, Commission Chairman J. Peter Grace joined with syndicated 
columnist Jack Anderson to create CAGW to follow up on the 
recommendations. President Reagan immediately submitted 
recommendations of the Grace Commission in his annual budgets 
as part of the volume called Management of the United States 
Government. In fiscal year 1986, appendix B described how the 
President had accepted 80 percent of the Grace Commission's 
unduplicated recommendations and that 326 recommendations would 
be included in the following year's budget. The management 
report in 1987 noted the adoption of those 326 recommendations 
would save $7.4 billion in one year and $68.8 billion over 5 
years, and that $30.6 billion was included in the budget 
baseline for the prior fiscal year. Similar reports were 
included in the fiscal year 1988 management report and 1989 
management report, and that last report showed that $40.5 
billion had been included in the 1989 budget baseline. And 
despite the clarity and efficacy of these management reports, 
they disappeared after the Reagan administration, and nothing 
of similar substance and value has taken their place.
    In March 1993, President Clinton asked Vice President Gore 
to spearhead the National Performance Review, a 6-month project 
that ended up detailing 1,250 specific actions intended to save 
$108 billion. Eventually one-quarter of those recommendations 
requiring legislation were adopted. And in July 2002, the Bush 
administration launched the Program Assessment Rating Tool. 
This technique was used in the President's 2004 budget. It was 
specifically identified. The Web site expectmore.gov was also 
created to track the evaluations.
    In order for taxpayers to determine whether President Obama 
is achieving success in his line-by-line examination of Federal 
spending or his other initiatives, the results really should be 
provided clearly and concisely and on a regular basis. Really, 
new initiatives should not be announced without demonstrating 
substantial progress in the administration's current efforts to 
improve efficiency and effectiveness in government. The 
President, when he was in the Senate, did support and cosponsor 
the Federal Accountability and Transparency Act. There is 
USAspending.gov as a result, and a similar type of transparent 
reporting would be very helpful to taxpayers to determine 
whether the Obama administration is making progress on its 
efforts to eliminate wasteful spending.
    That concludes my testimony, and I ask that my full 
statement be submitted for the record, and thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Schatz follows:]


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    Mr. Bilbray [presiding]. It shall be accepted.
    Mr. DeHaven.

                    STATEMENT OF TAD DEHAVEN

    Mr. DeHaven. Members of the committee, thank you for 
inviting me to testify.
    After the November 2008 election, President-elect Obama 
pledged that his Office of Management and Budget will go 
through the Federal budget page by page, line by line, 
eliminating those programs we don't need. When the President 
released his first budget proposal in May of 2009, it included 
a separate volume, terminations, reductions and savings, which 
identified $17 billion in savings for fiscal year 2010. To put 
that figure in perspective, the President proposed to spend 
$3.6 trillion that year, which means that he proposed savings 
equal to 0.47 percent of what he planned to spend. Assuming 
that OMB did conduct a line-by-line review of the Federal 
budget, the President's proposal implied that he believed that 
99.53 percent of the Federal government was definitely needed 
at a time when we were running deficits in excess of $1 
trillion.
    Did OMB really conduct a thorough, line-by-line search of 
the Federal budget for savings? The list of savings created in 
all their thoroughness because it targeted some obscure 
programs. For example, the proposed savings included 
terminating tiny programs like the Christopher Columbus 
Fellowship Foundation, $1 million saved, the Javits Gifted and 
Talented Education program, $7 million saved. In all, the 
administration identified and provided a detailed explanation 
for 121 targets for savings. The fact that the administration 
proposed a cut, what amounts to needles in the budgetary 
haystack, suggests that the President truly believes that 
almost everything the Federal Government does is needed. 
Indeed, subsequent terminations, reductions and savings 
released with the President's annual budget proposals in 2011 
have offered similarly insignificant but detailed offering of 
spending cuts.
    It would be interesting to know whether some cuts 
recommended by OMB staff were shot down by the White House. Was 
it communicated internally to OMB staff that they should only 
look for savings that would be the least likely to ruffle the 
feathers of special interests? If that is the case, then the 
President's suggested savings were nothing more than a 
political prop designed to fool the American people into 
believing that his administration was serious about reducing 
Federal spending. Or was OMB given the green light by the White 
House to truly go program by program, line by line? In that 
case, OMB itself could be responsible for producing the 
insignificant cuts.
    I spent 2 years as a Deputy Director at the State of 
Indiana's Office of Management and Budget under Governor Mitch 
Daniels. If the circumstances at the Federal OMB are similar to 
that which I experienced as a State budget official, then it is 
quite possible that the White House chose to ignore OMB's 
suggestions for more substantive budget cuts. I was part of the 
dedicated team within Indiana's Office of Management and Budget 
called Government Efficiency and Financial Planning. The group 
was tasked with conducting a long-overdue inventory of the 
State's operations. We produced two reports with hundreds of 
recommendations for making State government more efficient and 
effective, and we also made recommendations to cut or eliminate 
programs and boards. Unfortunately, the Governor did not follow 
through and execute very many of the recommendations. I also 
suspect his political advisors also dissuaded him from ordering 
action. In fact, the advisors were so worried about the 
potential political fallout from aggrieved special interests 
over the recommendations contained in the second GEFP report 
that it was intentionally released when the media wasn't paying 
attention. They needn't have worried because those interests 
who might have had cause for concern already saw that the first 
report was barely acted upon. The Governor's advisors typically 
sided with turf-protecting department heads and they did little 
to support GEFP. The reason was simple: the perceived political 
cost of pursuing our recommendations usually exceeded the 
perceived political benefit.
    I learned from my Indiana government experience under a 
Governor thought to be a fiscal hawk that political leaders are 
good at generating sound bites designed to make taxpayers 
believe that their interests come first. In reality, taxpayer 
interests usually end up taking a backseat to the interests of 
select individuals or groups. I also learned that a failure to 
back up sound bites with follow-through action only serves to 
embolden special interests.
    Cato has publicly challenged the President on his pledge to 
go through our Federal budget page by page, line by line, 
eliminating those programs we don't need. Attached to my 
written testimony is a copy of a full-page ad that Cato ran in 
major newspapers. We suggested 10 areas to target for cutting 
that would result in substantial savings, and the suggestions 
were arrived at based on Cato's own page-by-page, line-by-line 
review. You can see the results of our review at 
www.downsizinggovernment.org. We posted essays laying out the 
case for terminating hundreds of agencies and programs, and it 
is worth noting that we have been able to cover all that 
budgetary terrain through the efforts of a very limited number 
of people.
    Lastly, it is important to note that the administration's 
inability or unwillingness to recognize that more than just 
half a percent of the Federal budget is unneeded is not a 
partisan affliction. President Obama inherited a Federal budget 
that had massively expanded under the previous Republican 
administration of George W. Bush. The massive warfare welfare 
state built by Republicans and Democrats is morally bankrupt, 
and if the Federal government were a business, it would be 
financially bankrupt. That means that the Federal budget's meat 
has to be cut in addition to the fat. Therefore, if President 
Obama isn't serious about terminating unneeded Federal 
programs, then it is up to Congress to do the job for him. 
Thank you.
    [The prepared statement of Mr. DeHaven follows:]


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    Mr. Bilbray. Thank you very much.

                STATEMENT OF PATRICK L. KNUDSEN

    Mr. Knudsen. Thank you, Mr. Chairman. My name is Patrick 
Louis Knudsen. I am the Grover M. Hermann Senior Fellow in 
Federal Budgetary Affairs at The Heritage Foundation. I should 
mention in the interests of full disclosure that until just 
recently, I was the Policy Director of the House Budget 
Committee here, a position I held for 20 years. My remarks 
should not be construed as expressing any official position of 
The Heritage Foundation.
    That said, I would like to take a slightly different angle 
on this subject and attempt to put it in context, a context 
that all the committee members are aware of, because this 
discussion about terminations and reductions and so on comes in 
the midst of a budget that is really wildly out of control, as 
Chairman Stearns mentioned earlier. If I may recite a few facts 
that I am certain all of you are familiar with but they bear 
repeating.
    Fiscal year 2011 was the third consecutive year with a 
budget deficit in excess of a trillion dollars. Debt held by 
the public is about three-fourths the size of the entire 
economy right now and growing. It can't be said often enough 
that three entitlement programs--Medicare, Medicaid and Social 
Security--are in the process of swallowing up the entire 
budget. All three are growing more rapidly than the economy, 
more rapidly than inflation, and those of you who wish to 
protect these programs need to be aware of that because they 
cannot be sustained at that level. They will collapse under 
their own weight. By 2005, those three programs alone will 
absorb all the tax revenue the government collects, if 
historical patterns hold. That means you will be borrowing 
every year for such other interesting activities as defending 
the country.
    Now, in this vein, the administration's discretionary 
terminations and reductions amount to less than 2 percent of 
the cap in the Budget Control Act. They are barely more than 1 
percent of the projected deficit for 2012, and they are only 
about one-half of 1 percent of projected total spending in 
2012. All of that is just context setting, and I say that not 
to dismiss the discussion that is going on here today or the 
practice of submitting terminations and reductions and so on 
but simply to recognize that this is the bare minimum of what 
administrations and Congresses need to be looking at. You 
should be able to adopt these kinds of proposals on an annual 
basis just as a starting point to get this fiscal situation 
under control because the things I just described represent a 
crisis. I believe there is no exaggeration in saying that.
    Now, that said, there are a number of tools that the 
President and Congress do already have and could use to get 
spending under control. The President does have a veto. 
President Bush was criticized for not using vetoes of spending 
bills often enough, and that criticism may have been fair. It 
could be leveled at President Obama as well. As far as I know, 
he has vetoed one appropriations bill and that was because it 
didn't spend enough.
    Congress also can apply spending caps, and right now you 
are facing a cap in the Budget Control Act. I would urge you 
most strenuously to stick with it and if possible reduce 
spending even below that level, because remember, the savings 
you are talking about under that cap are savings from a 
baseline that inflates every year, so they are really just 
savings from an illusion of projected spending.
    Other items you could look at are unauthorized 
appropriations. Every year the Congressional Budget Office 
submits a report of appropriations that have lost their 
authorizations or whose authorizations are to expire by the end 
of that fiscal year. This year's report identified $42 billion 
worth of non-defense programs whose authorizations were to run 
out on September 30. To my knowledge, all those programs have 
still been financed in the continuing resolution. You could 
easily make a rule that any program that loses authorization 
does not get funded anymore, and then you would have to justify 
restoring the program. That, it seems to me, is a more valuable 
approach than having to justify cutting a program. There are 
other recommendations in my written testimony that I would 
invite you to look at.
    What I would conclude by saying is, from time to time in my 
years at the Budget Committee, I would hear members complain 
that they spent all their time on the budget. I have two 
responses. And if you did the things I am recommending, you 
would be spending even more time on the budget. But I have two 
responses to that complaint. The first is, if you believe as I 
do that budgeting truly is governing, then budgeting is an 
exercise of your fundamental responsibilities and I would think 
you would relish the opportunity.
    Second, and far more important, considering the very real 
spending and debt crisis this country faces, I would hope every 
one of you and every one of your colleagues in the House and 
Senate would spend every minute of your time on the budget 
until you get it under control because the stakes are very real 
and the future of the country may very well be in your hands. 
Thank you.
    [The prepared statement of Mr. Knudsen follows:]


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    Mr. Bilbray. Thank you.

                 STATEMENT OF VERONIQUE DE RUGY

    Ms. de Rugy. Chairman Stearns, Ranking Member DeGette and 
members of the subcommittee, thank you for the opportunity to 
testify today about the President's promise to review the 
Federal budget line by line and eliminate programs we don't 
need. My name is Veronique de Rugy. I am a Senior Research 
Fellow at the Mercatus Center at George Mason University, where 
I study tax and budget issues.
    The goal to conduct an exhaustive review of the Federal 
budget and seek to eliminate wasteful spending is not only 
worthy of Presidential and Congressional attention, it should 
actually be your highest priority and taxpayers' too. It is 
hard to overestimate the harm caused by the current 
Congressional spending pattern and the economic damage caused 
by the misallocation of capital and the creation of perverse 
incentives. However, while the idea of putting an end to 
wasteful spending makes for great speeches and interesting 
headlines, waste as defined by the President is only a small 
portion of the overall wasted taxpayers' dollars. Depending on 
your point of view, concepts like waste or even inefficient 
spending means something different to each Member of Congress, 
each taxpayer and the President.
    Today I would like to go over guiding principles that I 
recommend be used to produce an effective review of government 
spending. There are four.
    First, Congress and the President should eliminate overt 
waste, the low-hanging fruit, so to speak, such as duplicative 
programs and overpayments. Taxpayers are currently paying for 
47 job training programs, and according to the GAO, it spends 
$125 billion in improper payments.
    Second, Congress and the President should eliminate 
spending for programs that don't measure the performance of the 
program they manage. Take the Small Business Administration, 
for instance. It only measures its performance by measuring how 
much it spends to guarantee loans. Instead, it should measure 
whether these loans are actually growing the economy. If it 
did, it would realize that this program isn't as relevant as 
one thinks, and that it isn't even fulfilling its stated 
mission.
    Third, Congress and the President should eliminate spending 
for programs that should be provided by the private sector. 
Having the government run businesses such as Amtrak and oversee 
infrastructure such as the air traffic control system is not 
just inefficient, it also hinders economic growth and costs 
taxpayers money while providing low-quality services to 
customers.
    Fourth, Congress and the President should eliminate 
spending on functions in the purview of the States. President 
Reagan wrote that federalism is rooted in the knowledge that 
our political liberties are best assured by limiting the size 
and scope of the national government. Sadly, Congress has 
ignored this advice and is now spending $500 billion in grants 
to the States for activity that it has no legal or practical 
reason to be involved in such as healthy marriage promotion and 
museum professional training grants. This is inefficient and it 
creates an unacceptable lack of accountability. What is more, 
when lawmakers are busy running State and local and private 
affairs, they have less time to oversee Federal agencies and 
focus on critical national issues such as defense or security.
    Outlining these principles is a necessary condition to 
conduct an effective line-by-line review of the Federal budget 
that would get rid of the wasteful spending that plagues our 
government and our economy. Make no mistake, there is 
absolutely no excuse for government and the President to allow 
such large amounts of wasteful spending to continue year after 
year.
    This is exceptionally shocking considering numerous 
programs have already been identified as wasteful, inefficient, 
or duplicative by Congress, OMB, and the GAO, as well as 
scholars, think tanks and universities. Their work should help 
facilitate Congressional oversight of the effectiveness of 
government programs and operations yet they are being ignored. 
So obviously there are a lot of questions still unanswered 
about how to enforce this principle and how to actually achieve 
real budget cuts. I mean, I don't know what this budget process 
is if in the end programs that have been identified as wasteful 
are still getting money and are being funded. Understanding 
that there are certain things that only the Federal government 
can do and that there are things that the government shouldn't 
do will guide the review process and help make hard decisions 
about where to cut spending.
    I have one final thing to add. It is key that all spending 
be on the table. Congress needs to make sure that no areas of 
the budget are untouchable, not entitlements, not defense. All 
parts of the budget must be on the table for review and 
potential cuts. With this guiding principle in mind, Congress 
and the President will be able to start making the difficult 
spending priorities that they need to make and the American 
people will start having confidence in their future and 
confidence in the way that the Federal government spends its 
money.
    Thank you for the opportunity to testify before you today, 
and I am looking forward to your questions.
    [The prepared statement of Ms. de Rugy follows:]


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    Mr. Bilbray. Thank you.
    Mr. Moylan.

                   STATEMENT OF ANDREW MOYLAN

    Mr. Moylan. Acting Chairman Bilbray and Ranking Member 
DeGette, members of the subcommittee, thank you for the 
opportunity to testify on behalf of the American taxpayer 
regarding the important issue of reviewing the Federal budget 
to identify waste. My name is Andrew Moylan and I am Vice 
President of Government Affairs for the National Taxpayers 
Union, a nonpartisan citizen group founded in 1969 to work for 
lower taxes and smaller government at all levels. NTU is 
America's oldest nonprofit grassroots taxpayer organization. We 
have over 362,000 members nationwide in every single State and 
most of the territories, as well, including several dozen in 
the Virgin Islands.
    I would like to sort of lighten the mood and start with an 
old joke that our budget tells us what we can't afford but it 
sure doesn't keep us from buying it. Unfortunately, that has 
been true of Washington for far too long. Our current budget 
situation is bleak, and I want to point to two nuggets that I 
think are instructive. First, in the President's recent budget 
outline, the lowest single-year deficit in the coming decade is 
$607 billion, a number higher in absolute terms than every 
annual deficit in our Nation's first 220 years and roughly 
equal, in inflation-adjusted terms, to our overspending in war-
mobilized 1944. Additionally, while many in Congress have 
attributed the recent explosion in spending and resulting 
trillion-dollar deficits to crisis response due to a financial 
meltdown and a recession, the Federal government has actually 
seen deficits during 45 of the last 50 years, and we believe 
that this ought to give pause even to diehard Keynesians who 
believe that surpluses should be the norm in most economic 
growth cycles.
    President Obama has repeatedly pledged to scour the budget 
line by line to eliminate waste, inefficiency and duplication. 
He and Senator McCain both made such a claim in a 2008 
Presidential debate after which we joined with our friends at 
Citizens Against Government Waste to send a letter to the 
candidates offering our existing research and our ongoing 
assistance in completing that task.
    Unfortunately, the tidal wave of red ink in our future 
suggests that a tremendous amount of work still remains. I want 
to give credit where it is due, however, and refer to a few 
areas in which the President has truly been a leader. First, 
the issue of billions of dollars in improper payments made by 
Federal agencies. From a 2009 Executive Order to the 2010 
signing of the Improper Payments Elimination and Recovery Act, 
a bill that NTU strongly supported, the President has been a 
consistent and effective advocate. In addition, his 
administration's recent efforts to reinvigorate whistleblower 
protections will help to protect Federal employees that 
identify waste and fraud from professional retribution. We hope 
Congress will follow that lead by moving swiftly to pass the 
bipartisan Whistleblower Protection Enhancement Act.
    While these efforts are laudable, there are still 
tremendous gaps that call into question the President's pledge. 
For example, the administration's most recent terminations, 
reductions and savings report, which has been mentioned several 
times, laid out $33 billion in suggestions to trim our deficit 
and was its most ambitious such effort to date, but still it 
represents just 2 cents out of every dollar that we currently 
borrow and less than 1 cent of every dollar that we spend. 
Surely, a comprehensive line-by-line review of the Federal 
budget did not determine that it operates at 99 percent 
efficiency.
    A more specific complaint is that the President has not yet 
crafted a comprehensive replacement for the Bush 
administration's Program Assessment Rating Tool. While it was 
imperfect with complaints that its structure did not yield 
objective results, PART was actually a good start at evaluating 
program performance and deserved to be improved and expanded 
upon, not ended.
    In order to further the debate on wasteful spending, we 
joined with the U.S. Public Interest Research Group to author a 
report called ``Toward Common Ground: Bridging the Political 
Divide with Deficit Reduction Recommendations for the Super 
Committee.'' In it, we identified over 50 specific 
recommendations totaling more than $1 trillion over the next 
decade for spending reductions. While we disagree with PIRG on 
a great many issues, we are united in the belief that we spend 
far too much money on programs that do not deliver results for 
taxpayers. For example, we are spending billions of dollars on 
things like export promotions for profitable corporations, 
excess spare parts orders for defense equipment and maintenance 
costs for thousands of unused or underutilized Federal 
buildings. Many of these items have been on budget watchdog 
lists for years and the opposition to these recommendations 
tends not to be primarily political or ideological in nature 
but rather parochial.
    Some highlights of the joint findings with U.S. PIRG 
include $215 billion in savings from eliminating wasteful 
subsidies, $445 billion from ending low-priority or unnecessary 
military programs, $222 billion in savings from improving 
program execution and government operations, and $132 billion 
from commonsense reforms to entitlement programs.
    We believe that the NTU/PIRG report demonstrates that 
reducing wasteful spending is not a question of right or left, 
it is a question of right or wrong, and we stand ready to 
assist this committee, the Congress as a whole and the 
President in the quest for a sustainable budget future, and I 
look forward to your questions.
    [The prepared statement of Mr. Moylan follows:]


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    Mr. Stearns. Thank you.
    Mr. Kalman, you are recognized for 5 minutes.

                    STATEMENT OF GARY KALMAN

    Mr. Kalman. Thank you, Mr. Chairman.
    Chairman Stearns, Ranking Member DeGette and members of the 
subcommittee, I thank you for inviting me to testify today on 
behalf of the U.S. Public Interest Research Group, U.S. PIRG. 
U.S. PIRG, the federation of state PIRGs, is a nonprofit, 
nonpartisan organization that advocates and educates on matters 
to encourage a fair, sustainable economy, promote the public 
health and foster responsive democratic government.
    As the Congressional Super Committee begins its search for 
$1.2 trillion in deficit reductions, my organization was proud 
to partner with NTU, as Andrew had mentioned, to offer a set of 
recommendations to this committee and the bipartisan panel of 
more than $1 trillion over 10 years of spending cuts and 
government reform with appeal from across the political 
spectrum.
    How government collects and spends money is critically 
important. Tax and budgeting decisions are the most concrete 
way that government declares its public priorities and balances 
between competing values.
    Unfortunately, budget-making rules and public laws about 
taxes and spending sometimes fail the public interest. U.S. 
PIRG advocates for improvements in fiscal policy to stop 
special interest giveaways, increase budget transparency and 
accountability, eliminate waste and ensure that subsidies and 
tax breaks serve the public. Public money should be spent for 
the most effective pursuit of clear public benefits or to 
encourage beneficial behaviors undervalued by the market. 
Budgeting should be open, accountable and follow long-term 
planning.
    Our September 2011 report with National Taxpayers Union, 
``Toward Common Ground'', details the specific spending cuts, 
and a copy of the report has been included in our written 
testimony submitted for the record.
    NTU and PIRG, as Andrew had mentioned, do not often agree 
on policy approaches to solving our Nation's problems. In 
recent high-profile debates around health care reform and 
oversight of the financial markets, the two groups proposed and 
advocated very different solutions. Even on a number of tax and 
budget issues, we often disagree. Here, we successfully 
identified programs that both Republican and Democratic 
lawmakers should recognize as wasteful and inefficient uses of 
taxpayer dollars.
    In calling for this hearing, the committee asked about 
``identification of characteristics of Federal programs 
suggestive of waste, fraud and abuse.'' U.S. PIRG's approach to 
the spending cuts is guided by four principles. We cite these 
principles as an appropriate lens through which deficit 
reductions can be judged.
    One: Oppose subsidies that provide incentives to companies 
that do harm to the public interest or do more harm than good. 
An example here is funding for biomass research and 
development. Large-scale agricultural production of corn and 
other crops used for biomass can accelerate problems caused by 
deforestation and compete with food production, raising prices 
globally.
    Two: Oppose subsidies to mature, profitable industries that 
don't need the incentive. These companies would engage in 
activity regardless of taxpayer support. We would include in 
this category subsidies for dairy management, which among other 
things pays pizza chains to make and market extra-cheesy pizza. 
Companies like Domino's have both the incentive and the 
resources to develop their own products to meet consumer tastes 
without taxpayer handouts.
    Three: We would support reforms to make government more 
efficient, and here examples include requiring the Department 
of Defense and the Veterans Administration to jointly purchase 
prescription drugs, saving more than $6 billion over 10 years.
    And finally, four, oppose subsidies where there is 
authoritative consensus to do so. By this, we mean strong 
independent agreement across the political spectrum that a 
program is wasteful where the agency or department itself 
receiving the funding has argued against it. Within Secretary 
Gates's recommended cuts, he included the expeditionary 
fighting vehicle. The Secretary of the Navy and the Commandant 
of the Marine Corps both agreed with the Defense Secretary's 
proposal.
    These recommendations are specific, targeted, and name 
individual programs for reductions and elimination. We are long 
past the time for general references and rhetorical calls for 
attacking nameless and faceless programs that contain waste, 
fraud and abuse. This is the precise reason that U.S. PIRG does 
not support a----
    Mr. Stearns. Mr. Kalman, I need you to summarize, if you 
could.
    Mr. Kalman. I am sorry. We are just going to say that the 
precise reason we don't support across-the-board cuts is just 
that they don't differentiate between genuine waste and 
inefficiencies in the system. We believe that there are good 
programs. They need to be separated out from the waste that we 
identified in the report.
    [The prepared statement of Mr. Kalman follows:]


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    Mr. Stearns. And I thank the gentleman.
    Mr. Collender, you are recognized for 5 minutes.

               STATEMENT OF STANLEY E. COLLENDER

    Mr. Collender. Thank you, Mr. Chairman. My testimony today 
is my own personal view on the subject of the hearing. My 
comments absolutely are mine and mine alone. A very brief word 
of personal introduction.
    I am generally thought of as a deficit hawk. I get 
criticized from both the far right for being too left and by 
the left for being far too right. I actually take a great deal 
of comfort in this. I am pleased that when it comes to the 
Federal budget, I am considered a centrist and rational.
    My budget background is also decidedly bipartisan. I 
proudly worked with three Democratic Members of the House of 
Representatives and the Democratic staffs of the House and 
Senate Budget Committees when I was much younger. But I was 
also the first speaker at the first meeting of the House Tea 
Party Caucus held on February 28th of this year. I spoke to the 
Tea Party Caucus at the invitation of Congresswoman Bachmann, 
who liked a column on the debt ceiling I had written for Roll 
Call in January. She asked that I discuss it in depth with the 
House Members and the other tea party supporters who attended 
the meeting. It was a privilege for me to be able to do so.
    My background is important because I want what I am about 
to say about this hearing to be understood in the bipartisan 
centrist context I am often criticized for having. Based on 
everything I have studied, observed, participated in and 
commented on about the Federal budget over the past almost four 
decades, it is hard for me to understand why this subcommittee 
is spending any time and wasting so many taxpayer dollars 
holding this hearing.
    The answer to the question on which this hearing supposedly 
is based is as straightforward as they come. Of course the 
Obama administration has done and continues to do a line-by-
line, program-by-program review of the budget. There is simply 
no reason for the subcommittee to think otherwise. A line-by-
line review is standard when every White House puts its budget 
together but it is especially the case in a year like this when 
spending cuts are the main course on the Federal budget menu. 
Here again, the reason is straightforward. Unless you are using 
a meat axe and eliminating whole departments and agencies, 
budget cuts require additional detailed line item reviews 
beyond those that routinely happen when the President's budget 
is being formulated. These additional reviews typically include 
the senior White House staff, the Cabinet and the President and 
Vice President. The inevitable policy choices and political 
decisions involved with those cuts cannot be made at lower 
levels.
    There are three extraordinary ironies about today's 
hearing. The first is that none of the witnesses, including me, 
has any firsthand knowledge of whether or how the Obama 
administration conducted the line-by-line review about which 
the committee says it is so concerned. That immediately raises 
a serious question about why any of us was asked to testify.
    Second, never mind the White House, Congress is the branch 
of the U.S. government that seldom, if ever, does the line-by-
line review of the Federal budget this committee seems so 
desperate to have done. That makes a hearing on Congressional 
line item review procedures far more justified than one like 
this on what the White House is doing.
    Third, final irony is that one of the primary reasons most 
Representatives, Senators and Congressional committees don't 
review every line item is because the White House provides 
Congress with voluminous, painstakingly detailed materials that 
are based on the in-depth line item reviews it conducts when it 
formulates the President's budget.
    Mr. Chairman, there is a good deal more I could say about 
this subject and I will be happy to try to answer your 
questions. But honestly, I really don't see any reason to waste 
any more taxpayer dollars by prolonging a hearing that never 
needed to be held in the first place. Thank you.
    [The prepared statement of Mr. Collender follows:]


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    Mr. Stearns. I thank the gentleman.
    Mr. Lilly, you are recognized for 5 minutes.

                    STATEMENT OF SCOTT LILLY

    Mr. Lilly. I would like to pick up where Stan left off and 
say I do think there is a good side of this hearing because I 
think line-by-line budgeting is extraordinarily important. It 
is not the best way to do a budget, it is the only way to do a 
budget, and I think it is slipping from our grasp for a number 
of reasons I would like to talk about.
    First of all, is the administration doing line by line? I 
would have to agree with Stan. I find a lot of the conversation 
this morning remarkably silly in that regard. Every April, 
every budget officer of every agency sits down with every 
section chief and goes through item by item of what was spent 
in the past year, what is needed in the coming year, what they 
could afford, how they could reduce their spending, how they 
could cut back on services, what would be the impact of a 10, 
20, 30 percent cut. That happens all across the board. It 
produces amounts of budget material that I think this committee 
can only imagine.
    Ranking Member DeGette pointed to the appendix of the 
budget. In that appendix, and there it is, there is probably 
half a page that talks about the United States Park Service. I 
have materials that the Park Service submitted to the Congress 
this year--this is a reprint of it--583 pages on the Park 
Service. If you want to go into whether this is detailed or 
not, this is an item on the Kennesaw Mountain National Park. 
Cobb County, Georgia, has bought and provided the Wallace House 
to that foundation and they are including $157,000 and two 
full-time-equivalent positions in order to staff that. That is 
a lot more than line by line. That is the detail that gets into 
everything that every employee of this government does, and so 
the idea that that is not happening is ridiculous.
    Do you like the decisions that were made? Well, maybe you 
do, maybe you don't. One big cut that this administration made 
that nobody has mentioned was the termination of the F-22, 
which I didn't agree with, but it was a huge, huge cut.
    Now, the other thing I would say is, I think there has been 
a real deterioration in line-by-line budgeting. The Executive 
Branch bears part of the burden for that. We have reams of 
needless, stupid data that is included in budget materials 
every year on a formulistic basis. It deprives our resources to 
get in and dig into the budget in a real way, and it ought to 
be eliminated. We have been relying because of the Executive 
Branch, year after year, on huge supplementals. Veronique has 
written eloquently about that. That has been at least slowed 
down in this administration. It has been a big step forward.
    But frankly, what puzzles me about this hearing is, it is a 
lot like the umpire stopping the game and going out and 
chastising the pitcher for not calling balls and strikes. The 
framers of the Constitution did not charge the Executive Branch 
with being a check and balance on excessive spending in the 
Executive Branch. That is why you guys are here. That is the 
purpose of the Congress and that is where the line-by-line 
budget review has to take place. If you don't do it, nobody 
will do it.
    Before 1921, from the first Congress in 1789 until 1991, 
the Executive Branch played no role in putting the budget 
together. Every agency went directly to the Appropriations 
Committee and asked for funds. So we don't even need the 
Executive Branch to be in here. It is your job to put the 
budget together.
    Now, I think that has been seriously deteriorating in my 
period of time here and there are three things that have 
happened, Mr. Chairman. First of all, we have deliberately 
destroyed expertise. The limitation on subcommittee 
chairmanships meant that a guy like Ralph Regula, who knew as 
much about parks and forests as any Member of Congress, had to 
move from the Interior Subcommittee to the Labor H Subcommittee 
where he had never served a day, just deliberately destroying 
the expertise necessary to do this process.
    The second is the earmark orgy that we went through over 
the last decade. From 1995 until 2005, we had a quadrupling of 
earmarking. We had as many as 15,000 requests for earmarks go 
to the Labor H Subcommittee, which is the biggest domestic 
appropriations subcommittee. Do you know how much staff time it 
takes to do that? It completely eviscerated the ability of that 
subcommittee and every other subcommittee to do the kind of 
oversight and line-by-line review that is necessary.
    Now, we have finally gotten rid of that, and I am very 
thankful, and there are people on both sides of the aisle that 
worked to get rid of it. What did we do with all the time and 
the resources that we gained by getting rid of that? We went on 
vacation. Look at the calendar that the Majority Leader posted 
this year. In January, the House was in session 6 full days. In 
February, we had 2 weeks off. In March, which is the height of 
the season for testifying by agency witnesses on their budgets, 
we were in 8 days. We had the first-ever St. Patrick Day 
recess. The same thing is true of April, May and June when 
the----
    Mr. Stearns. Mr. Lilly, I just need you to sum up.
    Mr. Terry. Yes, I think you are the silliness right now.
    Mr. Stearns. OK. Let us just have you sum up. You are a 
minute and a quarter over.
    Mr. Lilly. I would just simply say this. Line-by-line 
budgeting is hard work. It is the work of the Congress. The 
Congress has to be here to do it. It has to organize the 
resources. It needs to be tough with the Executive Branch in 
demanding the information that is necessary, but that has not 
been happening for more than a decade.
    [The prepared statement of Mr. Lilly follows:]


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    Mr. Stearns. Thank you, and I thank the gentleman.
    Ms. DeGette. Mr. Chairman, I would respectfully ask that 
the members of this committee at least be civil to the 
witnesses who have given up their day to come here.
    Mr. Stearns. I agree with you.
    Now that we have finished with our opening statements, I 
will start with my line of questioning. I would point out to 
Mr. Collender and Mr. Lilly, I agree with you, Congress should 
also do a line by line, and I think your points are well taken 
that Congress has a fiduciary responsibility and has had 
historically to do that.
    We have a letter that we received from the Office of 
Management and Budget, and one of the things we were concerned 
about is that when the President comes up with initiatives that 
are savings, we never know how much money this is saving. For 
example, you have Securing American Values and Efficiency that 
talks about the President's SAVE Act, that his award is going 
to save all this money, but we are not clear how much money it 
is saving, so it is hard sometimes for us and Members of 
Congress to hear the President say he is going to create all 
these savings line by line, whether you agree that the 
President should do it or Congress, but when the President says 
it and he says line by line, item by item, program by program, 
page by page, and then we try to understand where these savings 
are, it is difficult for us to find them. So the hearing today 
is to try and have a better understanding.
    Now, Mr. Schatz, your office actually with your staff has 
developed a database and you have actually gone in to do this, 
as I understand it, and so it is possible for the Citizens 
Against Government Waste to do this and you would certainly 
think Congress could do it as well as the President's Office of 
Management and Budget. Wouldn't you agree?
    Mr. Schatz. Well, since I am under oath, Mr. Chairman, we 
didn't do it exactly line by line. But we did use the resources 
that exist in the public and private sector and consolidated 
them into our list of prime cuts, so it is Congressional Budget 
Office, it is Congress itself, it is the President's budget 
recommendations that go through GAO or Inspectors General and 
just put together a comprehensive list, 691 recommendations--I 
am sorry--yes, recommendations save $691 billion--I am sorry--
over 1 year and $1.8 trillion over 5 years. So the information 
is there. A lot of these recommendations have been around for 
many years. Our origin, as I mentioned, goes back to the Grace 
Commission under President Reagan so those recommendations were 
incorporated into the President's budget, and our major point 
has been, if there is going to be an initiative, there should 
be a way to find out what has happened with that so that the 
taxpayers can say this was proposed, this is what happened, and 
in a sense, it doesn't matter what it is called, it just needs 
to be presented in a way that these questions shouldn't be 
asked.
    We are having a hearing because we don't have the answers, 
not because there shouldn't be a comment about whether it is 
line by line or not or what it means. It is just, there have 
been ideas in the past that have been proposed where someone 
can go and see what has been done, what has been saved, and 
what is being proposed the next year.
    Mr. Stearns. Well, I know when the Republicans first took 
over with the Contract with America, we had a long list pretty 
much that we developed from many of you in the audience and 
witnesses today that we tried to use to reduce spending, and 
the methodology that you use or your criteria for your program 
evaluation, could you just briefly tell us what that was?
    Mr. Schatz. Well, at least within what we looked at in the 
prime cuts, it was looking at the resources that had already 
reviewed a lot of these recommendations. For example, the 
Congressional Budget Office or our own evaluation, and 
certainly looking back at how these recommendations had been 
made. We have used some of the similar criteria that NTU and 
U.S. PIRG have used.
    If a program is going to be proposed and funded by the 
Federal government, there should be a way to determine whether 
that program is achieving its goals, and if it is not, it 
should be eliminated, and that is in a sense the simplest way 
to do it. Another way is to look at whether the government 
should be involved at all, the old Yellow Pages test under 
President Reagan that he used to speak about, and whether the 
government should even be, quote, unquote, in a business or in 
a situation that allows them to compete with the private 
sector. So, in some ways it depends on which area of spending 
we are looking at.
    Mr. Stearns. Regardless of what everybody says here, based 
upon the video we just watched, was your interpretation that he 
was going to go page by page, item by item, line by line? Was 
that your interpretation of what the President said?
    Mr. Schatz. Yes, but again, through the process that is 
supposed to occur. The better question is, what happened 
after----
    Mr. Stearns. Yes, what happened and where are those 
savings? Let us talk about transparency for a moment. Is the 
Federal government required to establish a single searchable 
Web site to track Federal procurement?
    Mr. Schatz. It is now under the Federal Accountability and 
Transparency Act after it occurs, yes.
    Mr. Stearns. When was this Web site launched and how 
effective is the site in providing transparency to the more 
than $1 trillion in Federal contracts? Do you have any idea?
    Mr. Schatz. It is USAspending.gov, and it was proposed 
originally by then-Senator Obama and Senator Coburn. It passed 
both Houses, was signed into law. It does have useful 
information. Interestingly, we received an email the other day 
from a gentleman who looked through it and just put in the word 
``coffee'' and found, you know, hundreds and hundreds of 
expenditures on coffee. So there is a way to search it. It is 
useful, but it is after the fact. It is spending that has 
already gone out the door as opposed to looking at the spending 
before it occurs, and that to us is more important.
    Mr. Stearns. I guess the question would be, if the 
administration is actually--are they using the information at 
USAspending.gov to complete its line-by-line review? I don't 
know.
    Mr. Schatz. I can't answer that.
    Mr. Stearns. Does anyone on the panel know, have any hint 
if the President is actually using that site at all? No?
    Mr. Lilly. I do know that they have been very focused on 
contracts as an area of potential savings, reducing the 
contracts, cutting the margins on contracts, and so that site 
is one way to find out what is going on there, and I know that 
that is being factored into their----
    Mr. Stearns. All right. My time is expired, and I recognize 
the gentlelady from Colorado.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Mr. Knudsen, up until very recently, you were the Policy 
Director at the House Budget Committee, correct?
    Mr. Knudsen. Yes.
    Ms. DeGette. When did you leave that position?
    Mr. Knudsen. In August.
    Ms. DeGette. August of this year, so very recently?
    Mr. Knudsen. Yes.
    Ms. DeGette. And so as you know, what happens in the budget 
process, the administration develops a budget. Mr. Lilly said 
they get all kinds of data through the different agencies. They 
come up with their budget. They send that to the House of 
Representatives, correct?
    Mr. Knudsen. They send it to all of Congress.
    Ms. DeGette. Right, and then the House and Senate Budget 
Committees go through that. In a good year, they come up with 
their own budget, they pass that budget. Then they do the 13 
appropriations bills, correct?
    Mr. Knudsen. I believe it is now 12, but yes, that is the 
process.
    Ms. DeGette. The 12 appropriations bills. Those bills 
actually appropriate the money from the budget, and Congress 
has the discretion about whether or not they are going to fund 
those programs, correct?
    Mr. Knudsen. Yes, ma'am.
    Ms. DeGette. Then that goes to the White House and then the 
President decides whether he is going to sign or veto those 
bills, right?
    Mr. Knudsen. Yes.
    Ms. DeGette. Now, in recent years, what has happened--and I 
actually think it is unfortunate and I think the chairman will 
probably agree with me on this--we have sort of devolved over 
the last number of years to doing a big omnibus appropriations 
bill, and as a result, Members of Congress don't have the 
ability to vote on those separate 12 bills, correct? They just 
vote on the omnibus, whatever it is?
    Mr. Knudsen. That is right, yes.
    Ms. DeGette. And the President doesn't have an opportunity 
to veto bills either because they spend too much or too little 
for each of those 12 areas of government, right? It is like an 
up or down on omnibus, right?
    Mr. Knudsen. That is correct, although, as you know, in the 
Constitution, he may provide a list of his objections and----
    Ms. DeGette. Right, but he doesn't have line item veto 
authority?
    Mr. Knudsen. That is correct.
    Ms. DeGette. We have argued about that over the years. So 
thank you very much for illuminating that for me because the 
point I would like to make, Mr. Chairman, I thought about 
asking all the witnesses whether they talked to the President 
to see if he in fact did a line-by-line review, and I thought 
about asking all these witnesses what does a line-by-line 
review mean, does it mean the agency looks at it or whatever, 
and then I realized, that is really aside from the point.
    It seems to me the point of this hearing was to bring a 
whole bunch of people in to testify as to their political 
beliefs about what the President should or shouldn't be doing, 
but the bottom line is, right here in Congress is where the 
rubber hits the road. Right here in Congress is where we can do 
a line-by-line review of the budget either figuratively or 
literally and decide where programs should be cut. The only 
useful testimony that I have heard, with all due respect, this 
whole day is the testimony by Mr. Moylan and Mr. Kalman, who 
came together from opposite ends of the political spectrum and 
actually made serious recommendations as to places that we 
could cut. And so Mr. Chairman, what I intend to do after this 
hearing is get their report and look at it and then I think I 
might forward it on to the Budget Committee, not the Energy and 
Commerce Committee, which is where we develop the budget in 
Congress.
    With that, I am happy to yield back the balance of my time.
    Mr. Stearns. All right. The next person is Mr. Griffith 
from Virginia who is recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I do note with some 
interest the whole debate that is taking place today in regard 
to the line-by-line item, and whether or not the President, you 
know, can in fact go line by line or whether he should go line 
by line, and all that is very interesting to me. What I think 
is more important with that line of questioning is that this 
was a promise that the President made and it does not appear, 
if I understood some of the testimony correctly, that he has 
actually done that. Was that my understanding of your 
testimony, that based on your analysis, Mr. Moylan, that you 
don't believe the President actually has followed through or 
his people have followed through on a line-by-line analysis?
    Mr. Moylan. Well, I think the President and his 
administration have done a tremendous amount of work to analyze 
the budget line by line. I think the question is really what 
the result of that has been, and the result of that from our 
perspective has not been enough in terms of tackling wasteful 
spending.
    But if I might take this time to respond at least in part 
to what Ms. DeGette said. I would actually largely agree that 
the President plays an important role in this process but it is 
a limited one, and this is part of the reason, for example, why 
NTU has for years supported something of an anti-appropriations 
committee, to have a standing committee in Congress that has as 
its job to do a consistent line-by-line review of the Federal 
budget to look for savings as opposed to what the 
Appropriations Committee does. So I think that there is a lot 
of work that can be done in concert there to help improve these 
processes.
    Mr. Griffith. In that regard, have you all taken a look at 
the House Rules and particularly Rule 21 in that area to 
determine whether a change in the House Rules might change 
things, the way business is done in the House Appropriations 
and Budget Committees?
    Mr. Moylan. Sure. We have for years analyzed many different 
suggestions to change the rules of the House in order to put in 
more incentives to tackle wasteful spending, to give Congress 
more tools to do so. Some of the concepts that we have talked 
about earlier, things like biennial budgeting as well, have 
been things that we have been supportive of because we think 
they would bring more accountability to the process.
    Mr. Griffith. Because my frustration, quite frankly, to the 
entire panel but particularly Mr. Moylan is coming out of the 
State legislature in Virginia where I served for a number of 
years, there the budget controls, and if we don't have the 
money to do something, the budget doesn't spend the money. I 
have learned here, at least what I have been told, is that if 
we have a law on the books as a result of these rules, we have 
to fund that whether we have the money or not, which is where 
we get into the whole debate about mandatory versus 
discretionary spending. Do you think that we as a Congress need 
to change the psychology where we maybe take a look at the way 
that Virginia does it where if we don't have the money, we 
don't spend it and the budget controls? As opposed to the law 
controlling the budget, the budget controls the laws.
    Mr. Moylan. That has actually been the subject of 
considerable debate in recent years, not just the fact that 
dollars that are considered mandatory spending are growing, in 
large part because of entitlement programs like Medicare and 
Medicaid, but how many other programs are now mandatory that 
their funding is more formula-based rather than a discretionary 
action by Congress, so yes, I do think that there is much work 
that can be done there to appropriately distinguish between 
what mandatory spending is and what discretionary spending 
ought to be and what ought to fall in which category.
    Mr. Griffith. Because notwithstanding Mr. Green's 
discussion of his legislative experience and the senior 
legislator saying that, you know, by the third year he only 
read his own bills, I have always tried to read the bills in 
both my State experience and here, and I have discovered some 
things in there that I would like to work on, some of which I 
have been told I can't yet because it comes up later in the 
mandatory, because it is mandatory, it is in a 5-year bill, et 
cetera, and that has been somewhat frustrating. And there are 
things like that. I discovered a 1970 law that says when we 
take horses off Federal lands, we can't humanely euthanize 
them, and as a result of that, we have what I call retirement 
homes for wild horses and burros at the tune of about $70 
million a year. And so when I am looking line by line, when I 
am actually reading the budget bill, and I am not going to tell 
you, as was pointed out, that every reference and cross-
reference that I am familiar with at this point, I hope to be 
sometime if I am allowed to stay in the Congress for a few 
years, but when I am looking at these things, those are the 
kind of things that I think a line-by-line analysis would find 
and would then, you know--if I were--and I don't plan to run--
but if I were President that I would say, hey, let us change 
that 1971 law and straighten that out because it just doesn't 
make sense when we don't have the money to be spending money on 
that when we have citizens who may need that money for other 
purposes.
    That being said, Mr. Chairman, I yield back my time.
    Mr. Stearns. I would say to the gentleman from Virginia, if 
you offer a bill to eliminate that $70 million for the Social 
Security for horses--is that what it is?
    Mr. Griffith. The retirement home for horses.
    Mr. Stearns. The retirement home. OK. Well, you might drop 
that bill and I would be happy to be one of the cosponsors.
    Mr. Griffith. I will see if we can get that drafted up, Mr. 
Chairman.
    Mr. Stearns. All right. Thank you.
    We go to the gentlelady from Tennessee, Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman, and thank you to 
each of you for being with us today.
    Mr. DeHaven, you were the Deputy Director of the Indiana 
Office of OMB, right?
    Mr. DeHaven. A Deputy Director.
    Mrs. Blackburn. OK. And did you ever do a line-by-line 
review for your State?
    Mr. DeHaven. No, I would not say we did a line by line. We 
actually went program by program. We actually conducted--when 
Mitch Daniels was the head of OMB, he came up with the PART 
system. When he became Governor, he directed the--he created 
the State Office of Budget and Management of Indiana and had 
them come up with PROBE, and basically do the same thing. We 
met with programs. We went through--we met with program heads. 
We went through the programs, on and on and on, and the result 
was, these reports would come up. In addition to those reports, 
we came up with these performance measures, and I do note with 
interest--I hear talk about PART and I hear talk about 
performance measures. I actually implemented performance 
measures in Indiana. That was my job. They were political. The 
numbers we got back were often BS--excuse me--and the whole 
purpose of the performance measurement system for Governor 
Daniels was to put out these temporary press reports and show 
the Indiana taxpayer that look, we are getting better, we are 
going from red to green, I am a better steward of the taxpayer 
dollar.
    As I put in my testimony, all the decisions that were made 
when it came to cutting programs or government efficiency or 
all that other stuff boiled down to politics and special 
interest.
    Mrs. Blackburn. OK. Let me ask you this. Did you all ever 
do what Governor Christie did in New Jersey with across-the-
board cuts? He did a 9 percent cut. In my State of Tennessee, 
the former Governor did significant cuts like that. Did you all 
ever do any kind of across-the-board cut to help get the 
spending under control?
    Mr. DeHaven. When I was there, we did not do across-the-
board cuts. I left right after the recession started to hit and 
State revenues dried up. Since then, I do believe that there 
were suggestions made for across-the-board cuts. The Governor 
can also withhold money a lot easier in Indiana.
    Mrs. Blackburn. All right. I know that Mr. Orszag did a 
memo that I have with me where he recommends a 5 percent 
across-the-board cut and stated, and I am quoting, ``To reach 
the 5 percent target, your agency should identify entire 
programs or sub-programs or, number two, substantial cuts 
amounting to at least 50 percent of total spending within a 
program or a sub-program. The intent of this exercise is to 
identify those programs with the lowest impact on your agency's 
mission.''
    I think what I want to do, I know Mr. Kalman is against 
across-the-board cuts but I would like to start with Mr. Schatz 
at the end and work down. How many of you favor across-the-
board cuts? You know, this is something I favor, 1, 2 or 5 
percent across the board just to trim the fat, if you will, and 
help agencies focus their attention on what needs to be 
reduced. So let us go down the line and let me see who all 
favors an across-the-board cut.
    Mr. Schatz. I would say yes, but I also note that you had 
proposed many of these amendments over the years, and when you 
talk about a penny on the dollar or 2 cents on the dollar or 5 
cents on the dollar, your amendments were consistently defeated 
in the prior Congresses, so it is not the first thing that 
should be done because waste is identifiable and should easily 
be eliminated, but it certainly points out that in any 
organization, if you need to balance your books because you 
can't keep spending money or borrowing it, it is something that 
could be done, but again, it wouldn't be the first thing I 
would do.
    Mrs. Blackburn. OK. Mr. DeHaven?
    Mr. DeHaven. No, we need a deeper philosophical discussion 
about the fundamental role of government. When you had the 
budget agreement for 2011, I actually noted that a lot of the 
cuts ballyhooed by Speaker Boehner were similar to cuts that 
Newt Gingrich engineered. The fact of the matter is, if you cut 
the head off the hydra and you don't burn the stump, it grows 
back. So you get your 5 percent or more, even if you are going 
to get it. So long as they exist, they will grow back.
    Mrs. Blackburn. OK. We have got 44 seconds left, so quickly 
down the list.
    Mr. Knudsen. The disadvantage is that obviously across-the-
board cuts don't choose priorities and so on but they have the 
same advantage that a spending cap does, and that is, they 
impose a limit and the limit can compel choices.
    Ms. de Rugy. I believe that there is easily 10 percent 
waste in each department, each program. However, again, I think 
it is not our priority because it doesn't allow us to 
differentiate between different programs.
    Mrs. Blackburn. OK.
    Mr. Moylan. I would say that NTU's view is that it is a 
second-best solution but it is one that--as you know, we have 
consistently supported those amendments because we believe 
spending reductions are necessary.
    Mr. Kalman. Very quickly, because obviously I said I was--
we have an issue with across-the-board cuts. And just to be 
very specific about it, there are a couple of programs, for 
example, that have received bipartisan support such as Pell 
grants and so cutting Pell grants in the face of when there is 
massive waste that NTU and PIRG found, we find that troubling. 
And so we prefer a closer look at the budget.
    Mr. Collender. I would rather you make decisions based on 
priorities as opposed to an across-the-board meat axe approach.
    Mrs. Blackburn. OK.
    Mr. Lilly. I think there are programs that are overfunded, 
there are programs that are underfunded. Across-the-board cut 
is the antithesis of line by line, which is what this hearing 
is about and what I think we need to dedicate ourselves to.
    Mrs. Blackburn. I yield back, Mr. Chairman.
    Mr. Stearns. I thank the gentlelady, and the gentleman from 
Texas, Mr. Green, is recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, and for my colleague 
who I heard earlier that he mentioned he read all the bills, 
congratulations. You are in your first term. Like I said, I am 
hoping to read the bills in my subcommittees on Energy and 
Commerce.
    In today's hearing, the majority is focused on the Obama 
administration's budget process and directed substantial 
criticism towards the administration. But ensuring a sound and 
efficient budget process should be a goal that doesn't break 
down on partisan lines. In fact, a number of the witnesses for 
us today have expressed concerns about the budgeting process 
that spans administrations and political parties.
    For example, Mr. DeHaven and Dr. de Rugy, in one article 
you both co-authored you said, and I quote, ``The fact that we 
are having a mounting deficit is because George W. Bush is the 
most gratuitous big spender to occupy the White House since 
Jimmy Carter. One could say that he has become the mother of 
all big spenders.'' Can I take this from you that you both 
agree that the Bush administration created a lot of the debt 
problem we now confront?
    Ms. de Rugy. Yes.
    Mr. DeHaven. It is an undeniable fact.
    Mr. Green. Both for each of you, Vice President Cheney is 
quoted by his Treasury Secretary as saying, ``Reagan proved 
that deficits don't matter.'' Do you think Vice President 
Cheney was wrong?
    Mr. DeHaven. Yes, absolutely.
    Ms. de Rugy. Yes, they matter.
    Mr. Green. OK.
    Ms. de Rugy. I mean, there could be a debate, an academic 
debate, right? Until recently, academics, you know, could not 
find a correlation, still haven't found a correlation between 
the size of deficits and interest rates. However, I mean, there 
has been--we don't know so there is this side of the debate, 
right? And then however, we know that there is a point where 
deficits are so big and the size of the government is so big 
and the size of the debt is so big that it becomes--the tumor 
becomes so big that it starts destroying everything, and then 
there is a principle issue, which is in theory the amount of 
taxes that are----
    Mr. Green. Well, I only have 3 minutes and I have a whole 
bunch of questions, but do you agree that----
    Ms. de Rugy. Yes, yes.
    Mr. Green [continuing]. Deficit is where we are at now----
    Ms. de Rugy. You guys shouldn't be spending more money.
    Mr. Green [continuing]. No matter where we have come in the 
last 10 years, because I will remind you all that in 1999 and 
2000, we had a balanced budget, or annual balanced budget.
    Ms. de Rugy. Well, not if you--if you had planned 
reasonably and put money aside to pay for all the unfunded 
liability and promises made, no, it is not a balanced budget.
    Mr. Green. Oh, well, granted, but officially, not counting 
Social Security and----
    Ms. de Rugy. Yes, officially.
    Mr. Green [continuing]. But officially we were actually 
buying down our national debt in 1999 and 2000.
    Ms. de Rugy. Officially, but budget gimmicks is what 
Congress has used to actually make something look black when it 
is red.
    Mr. Green. And those are bipartisan gimmicks, but let me go 
on.
    Dr. de Rugy, in one of your papers on an off-budget 
emergency spending, you document how most of the 8 years of the 
wars in Iraq and Afghanistan were paid for with money that was 
not part of the Congressional budget limits. That was literally 
hundreds of millions of dollars. As you point out in the paper, 
emergency spending is supposed to be used when the need is 
unexpected and unpredictable like hurricanes or something like 
that that we had a debate over the last month. Question: When 
the President proposed this misuse of offline emergency 
spending year after year, which President proposed this misuse 
of offline emergency spending year after year, long after they 
were expected and predictable?
    Ms. de Rugy. President Bush.
    Mr. Green. OK. And again, it was complacent with Congress 
obviously?
    Ms. de Rugy. Absolutely.
    Mr. Green. And both parties in control.
    Ms. de Rugy. Absolutely, and Congress, you know, was happy 
to let the budget rules that was supposed to restrict some of 
that abuse expire.
    Mr. Green. In one of your papers, you also called the Bush 
administration profligate, which coming from Texas, we don't 
see that very often. But did you say that in the paper, that 
President Bush's administration was profligate?
    Mr. de Rugy. In spending?
    Mr. Green. Yes.
    Ms. de Rugy. I am French, just in case you didn't notice.
    Mr. Green. Doctor, which President proposed to Congress 
that it stop using the off-budget emergency spending of which 
you have been so critical?
    Ms. de Rugy. Well, I mean, President Obama has accepted--
you know, there is no evidence that the abuse is not going to 
be continued. There are no rules that actually are on the books 
now to actually prevent it, and if the debate over the latest 
round of emergency spending is any indication, there is no one 
in Congress who is actually really serious about reconsidering 
the abuse of that loophole.
    Mr. Green. So this is both a Congressional and Presidential 
problem that we have?
    Ms. de Rugy. Yes.
    Mr. Green. Dr. DeHaven, in the past you have written about 
agriculture subsidies as ``the orgy of supplemental spending 
bills that have increased the spending.'' Would you tell that 
Congress agriculture spending is part of that low-hanging fruit 
for deficit reduction?
    Mr. DeHaven. I would consider it to be so, especially when 
you have record incomes, but then we saw that back in 1996. 
Congress comes up with Freedom to Farm because incomes are high 
and they said we are going to wean you off and we are going to 
give you temporary payments to do that. Farm income prices 
promptly dropped the next few years. They came up with 
emergency supplementals and then in 2002, under the Bush 
administration and Republican Congress, they take the temporary 
payments and make it a permanent handout, so----
    Mr. Green. Mr. Chairman, I don't think I have any more 
time, but I appreciate the answers to the questions.
    Mr. Stearns. I thank the gentleman, and the gentleman from 
California, Mr. Bilbray, is recognized for 5 minutes.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Mr. Chairman, I think there is an item we might be able to 
agree on here, and there might be a real opportunity to really 
get a focus on where both sides can cooperate on this. Let me 
first ask Mr. Lilly, you remember the comments about the 
earmarks in 1995. You also remember that the first initiation 
was that we had an administration that was taking line items 
and moving them from line item to another to basically get 
around cuts and so there was a lot of that originally was to 
lock things in so the administration couldn't shuffle funds 
and, you know--and also you do remember that a thing called an 
earmark was the Predator, which was probably the most cost-
effective and efficient weapons system ever developed in this 
country since the Monitor went out to Hampton Roads and 
confronted the C.S. Virginia. Those two items, in all fairness, 
you know--I am saying when it started off, there was a major 
reason why there was concern there.
    Mr. Lilly. I think if you look at my written testimony, I 
make the point that the Predator was--if it is not in the 
testimony I submitted today, I have often referred to this. I 
don't think that earmarks are evil as such but I think the 
practice where we went--on the Labor H appropriation bill, we 
had zero earmarks in 1995. We had about 40 in 1996. We had over 
$1 billion in earmarking by 2004.
    Mr. Bilbray. And I think the sad part about it----
    Mr. Lilly. It completely overwhelmed the system.
    Mr. Bilbray [continuing]. That we didn't get the education 
out that the real abuse was a thing called the air drop where 
people were dropping things in in conference where no one had 
the right to be able to extract it, as the person who had to 
inherit the seat of a certain Congressman who abused that.
    Let me go over and ask U.S. PIRG, U.S. PIRG today, I enjoy 
listening to your testimony about so-called renewable fuels and 
the abuses in the system because I remember in 1995 when I came 
here, you had the Lung Association and U.S. PIRG strongly 
pushing the auction and mandate, strongly pushing as an 
environmental and health issue the requirement that ethanol be 
put in our gasoline, MTBE and ethanol, and I appreciate the 
fact that U.S. PIRG has reassessed not only the lack of health 
and environmental benefits but also the cost on this.
    Mr. Kalman. Yes, I was not around in U.S. PIRG in the 1990s 
to the extent that I am unfamiliar with our previous position 
on ethanol but it is in the report. We believe that, you know, 
it doesn't serve the purpose and it is a wasteful----
    Mr. Bilbray. Not all items that people think, even the so-
called experts think are great for the environment and health 
turn out to be what is projected.
    And so I am real touchy about it, guys, because I had ads 
run against me that I wanted children to die because I opposed 
that, and I opposed it because my scientists in California knew 
that it was a problem back then.
    Let us go to something we can agree on. Mr. Knudsen, your 
idea about if it is not authorized, we should not be spending 
money on that.
    Mr. Knudsen. Yes.
    Mr. Bilbray. Now, that is something that I think 
Republicans and Democrats, and it comes back to your point 
about Congress now taking the responsibility and starting to 
take the reins back. Go down the list, each one of the people 
here, would you encourage us to demand that Congress take a 
look at that and make that a policy?
    Mr. Schatz. Yes.
    Mr. DeHaven. Yes.
    Mr. Knudsen. Yes.
    Ms. de Rugy. Yes.
    Mr. Moylan. Yes.
    Mr. Kalman. I would have to look more closely at it.
    Mr. Collender. Yes, but it is not required by the 
Constitution.
    Mr. Lilly. Let me just say----
    Mr. Bilbray. Neither is a balanced budget but----
    Mr. Lilly [continuing]. That we have had not only a 
collapse of the budget process in the appropriations process 
but the big collapse has been the authorization process. If you 
look at CBO's report to the Congress from last January, over 
half of the non-defense appropriations were for things that 
weren't authorized. Some of them haven't been authorized for 20 
years. Now, most people don't want to see those programs ended 
but unless the authorizers are able to reactivate this process 
and review those programs, then I think you are kind of stuck 
with appropriating money without authorization, and it is a 
terrible thing.
    Mr. Bilbray. You believe that we shouldn't force the issue 
and require authorizers to do their job and not reauthorize?
    Mr. Lilly. We should, but I don't think people that depend 
on those programs should suffer as the result of the failure of 
the authorizing committees to do their work.
    Mr. Bilbray. So you think that future generations should 
suffer by using continuing to spend 43 percent more than we 
have money for?
    Mr. Lilly. That is different from cutting spending. I am 
not saying we shouldn't cut spending. I am saying that is a 
very arbitrary way that is going to hurt a lot of people that 
you probably are going to find out you didn't want to hurt.
    Mr. Bilbray. OK. Democrats and Republicans work together 
and authorize a 2-year budget cycle for the veterans. Do you 
believe that we should look at applying the same application 
for the rest of the budget or large portions of it? Down the 
line.
    Mr. Lilly. I think that would be--if the Congress wants to 
maintain control of the budget, that is a bad thing for them to 
do.
    Mr. Collender. I agree with Scott. It will reduce 
responsibility, not increase it.
    Mr. Kalman. Again, I would have to look at it more 
carefully.
    Mr. Moylan. I would say it has to be done with care, but 
yes, it should be considered.
    Mr. Bilbray. Next.
    Ms. de Rugy. No.
    Mr. Knudsen. No.
    Mr. DeHaven. You get a bunch of more supplemental spending. 
Indiana had one, and that is--no.
    Mr. Schatz. Yes.
    Mr. Bilbray. OK. My argument is, if we did that, maybe 
would have time to start doing authorizations and be able to 
get our job the other way, but that is a disagreement.
    I yield back, Mr. Chairman.
    Mr. Stearns. I thank the gentleman.
    Mr. Bilbray. I think, though, we found an agreement of 
something hopefully the Democrats and Republicans on this 
committee can take to the other committees and say here is a 
common ground that we have found on this committee and that is 
why this hearing needed to be held. Thank you.
    Mr. Stearns. The gentleman from Louisiana, Mr. Scalise, is 
recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I know that there 
were some people who said they didn't think we should be having 
this hearing. I want to thank you for calling the hearing 
because I think as we have more hearings like this, I think it 
does put more pressure and put more sunshine on the fact that 
we really do need to be doing more on all fronts to not only 
find waste in government but also to hold people accountable 
for the things they say. I have been kind of amused by or 
intrigued by the comments from some of my colleagues. You know, 
when the President actually said these words, we will go 
through our Federal budget page by page, line by line, 
eliminating those programs we don't need and insisting that 
those we do operate in a cost-effective way, I am kind of 
shocked that some of my colleagues on the other side are now 
claiming that when the President said this, he really didn't 
mean it. I would be curious to know what other things the 
President has said that he doesn't mean.
    Ms. DeGette. Would the gentleman yield?
    Mr. Scalise. I would be happy to yield.
    Ms. DeGette. I don't think anybody said that the President 
didn't mean it. What we wanted to know----
    Mr. Scalise. The ranking member said----
    Ms. DeGette. I am the ranking member.
    Mr. Scalise. The ranking member of the full committee.
    Ms. DeGette. And I said----
    Mr. Scalise. Mr. Waxman said----
    Ms. DeGette [continuing]. And Mr. Waxman said that we 
didn't know if the President actually read it line by line or 
not but the OMB did, so don't put words in his mouth.
    Mr. Scalise. Well, but he said that he didn't mean it 
literally, he just--you know, I guess he just says things and 
whether he means them or not. But if he said it and he meant 
it, and, you know, I would love to have the OMB here, and as 
the chairman pointed out, we wanted to have the OMB here. They 
refused to come. We could ask them, you know, because obviously 
they must have had those conversations with the President and 
his staff of, you know, whether or not they were directed to go 
line by line through the budget but I think from seeing some of 
the things that we have seen clearly, that hasn't happened, you 
know, and of course, we had the President come before our House 
chamber and say, you know, with this latest stimulus bill 
saying ``pass this bill,'' and we found out there wasn't even a 
bill. He didn't even have a bill to pass yet he is saying 
``pass the bill,'' so maybe he does say things he doesn't mean, 
but he ought to mean what he says. And I think the American 
people deserve to hold him to the things he says, and I think 
that is the bigger issue is that if he is going to say these 
things, he thought to be--he ought to expect to be held 
accountable for those things he is saying, and that means as we 
try to go line by line through the budget, I think if you look 
at what we did in the House, we actually passed a budget, 
something novel, something that hasn't happened for years. In 
the Senate, it has almost been 900 days since the Senate passed 
any budget. We passed a budget and our budget was actually 
geared at getting us back on the path to a balanced budget. Our 
budget was $6.7 trillion less than the President's budget.
    And so we did in fact go line by line and found many areas 
of things that the government is doing that it can't afford to 
do. We are borrowing money we don't have. We have to stop 
spending money we don't have and we started to make that 
fiscally responsible decision that we were going to get our 
country back on the path to a balanced budget so we can create 
jobs and get the economy back on track, and in fact, our budget 
got more votes in the Senate than the President's own budget. 
The President's budget was brought up in the Senate. Not one 
member of the Senate voted for the President's budget, not one 
Democrat, not one Republican, nobody. You would think if the 
President was serious about going line by line and he saw such 
an embarrassment that not one United States Senator voted for 
his budget, maybe he ought to go back to the table. Maybe he 
ought to start over and write a different budget that maybe 
included ideas from both sides that showed some effort at 
bipartisanship instead of a budget that people on neither side 
of the aisle chose to vote for.
    And so it brings us to some questions because if you look 
at some of the things we have been going line by line in this 
committee. This committee is the committee that exposed the 
Solyndra scandal, and in fact, when we tried to go line by line 
and get more details, we actually had to get a subpoena because 
the administration wasn't even giving us the information. And 
so unfortunately, by the time we got the information, went line 
by line per se, we didn't have the ability to stop that from 
happening. The taxpayers lost $530 million. You know, the 
President, if the President would have just gone line by line 
with the memos that were written by his own staffers who said, 
you know, 2 days before he went to Solyndra for a photo op, 
they said frankly, you shouldn't be going down there and this 
thing is probably going to go bust and the taxpayers are going 
to lose hundreds of millions of dollars but instead they wanted 
the photo, you know, so maybe he went line by line and say you 
know what, I still want to go have the photo op anyway. But the 
taxpayers lost out and we tried to go line by line here in the 
House and we were denied. They stonewalled us and we had to 
subpoena the record, and fortunately, we finally got them. 
Unfortunately, the taxpayers are already on the hook.
    So I will ask--let me ask--let us see. The Heritage 
Foundation I know is here. The President has talked a lot about 
Medicare and, you know, saying he is going to go root out 
waste, fraud and abuse in Medicare, and it is something we have 
all encouraged to do. We all ought to be rooting out waste, 
fraud and abuse in Medicare, but has even that happened where 
they have gone line by line and gotten those hundreds of 
billions of savings that we have all heard about that he was 
going to go and find there?
    Mr. Knudsen. I can't say what really has happened inside 
the administration. What I would say, waste, fraud and abuse is 
always something you want to cut out just as these items the 
President has proposed. They should not be dismissed. They 
ought to be considered seriously and disposed of in some way. 
But when it comes to Medicare, the problem is much more 
fundamental than waste or overpayments or any of those things. 
The Medicare system is collapsing, and unless there is some 
fundamental restructuring of it to change the incentives and 
the way it works, the system can't stand up or it will swallow 
up increasing amounts of the budget and the economy----
    Mr. Scalise. And the President's own actuaries, President 
Obama's handpicked actuaries confirmed that Medicare goes 
bankrupt in 12 years if we don't do anything. So those folks 
that say do nothing, basically they are saying let Medicare go 
bankrupt, and that is not acceptable. So I appreciate that.
    Thank you, Mr. Chairman, and I yield back.
    Mr. Stearns. I thank the gentleman.
    We are going to go a second round, at least I am going do a 
second round, so any member that would like to is welcome to 
stay.
    This is an extraordinary hearing in the sense that we have 
these fiscally responsible groups, so many of you, in one room, 
and it is rare--I have been in Congress, this is my 23rd year--
that I have ever seen this collection of reputable 
organizations who are--really, their sole mission is to try and 
protect the United States from a bankruptcy or at least to try 
and have a responsible budget, and so I think kudos to all of 
you for, one, your interest and pervasive attempt to control 
spending and to give insight to Congress.
    I know many of us, before we vote, will ask, you know, 
whether the Citizen Against Government Waste, the National 
Taxpayers Union, The Heritage Foundation, at least on this 
side, we will ask and say what is your view, so I think it is 
important that all of you realize that you are important to us 
and that is why I think it is important to have all of you 
here.
    I want to ask Mr. Moylan, the National Taxpayers Union, I 
have--in your opening statement, you talk about this 
termination, reduction and savings plan that the Office of 
Management and Budget issued, and they total about $33 billion 
in savings for 2012, and I guess when you look at that, at $3.8 
trillion, that is less than 1 percent, and yet those are the 
expenses that the President and the OMB are offering, and it is 
so minimal. So the question all of us, well, where are the 
other savings in light of the fact that we have this huge 
budget deficit yearly and this huge debt growing, we borrow 41 
cents of every dollar, pay for the budget, and so these figures 
are staggering, yet to think that there is only $33 billion is 
the only level of cuts. Am I missing something? That just seems 
very austere and very minimal.
    Mr. Moylan. Well, I think your sense of it is very similar 
to ours in that when we review a report like that and see what 
is ultimately a relatively small number--and I would also point 
out that many of the specific recommendations that the OMB made 
in the terminations report are actually not just spending side, 
there are also tax provisions in there that would have the 
effect of raising revenue, so it is not all just spending cuts 
but, you know, this indicates to us that there is a tremendous 
amount more work that can be done in terms of tackling waste 
and inefficiency, and we think that, you know, we are offering 
ourselves up as a resource and our work and, you know, there is 
a lot of sort of partisan rancor in Washington about a lot of 
things, but there is actually a fair amount of agreement in the 
watchdog community about where the waste exists in the Federal 
budget. We think that our report with PIRG demonstrates that, 
and we hope to take that message not just to the President but 
to Congress as well.
    Mr. Stearns. Let me ask a few of the others. Mr. DeHaven, 
$33 billion seems so minimal. Now, you are saying that is not 
complete because there are tax increases, so there might be 
more savings that have been balanced out because of the tax 
increases.
    Mr. DeHaven. To clarify, it is $33 billion in deficit 
reduction. Some of that is extra revenue and some of that is 
spending reduction.
    Mr. Stearns. All right. Just a comment, Mr. DeHaven, what 
you think about that kind of--I think with the Cato Institute, 
that seems pretty minimal to you too, doesn't it?
    Mr. DeHaven. Well, it is paltry and insignificant, but I 
also want to point out, and I left this out of my spoken 
testimony, that the stuff about waste, fraud and abuse, waste, 
fraud and abuse in government programs will--like Christ said, 
the poor will always be with us--waste, fraud and abuse will 
always be with us. And the only way to get rid of waste, fraud 
and abuse in a government program is to make that government 
disagree. Now, whether it is Republicans or Democrats, they all 
fall back on this waste, fraud and abuse stuff and we need to 
be having a more fundamental discussion about the role of 
government and a deeper ideological discussion about where we 
are going to go and what the Federal government should and 
should not be doing.
    Mr. Stearns. One of the things that--I think many of us 
felt that government programs should sunset and then before 
they are reinstituted, that there should be an oversight 
hearing to determine whether that program was effective. Would 
all of you agree with that, that we should take government 
programs and sunset them?
    Mr. Schatz. Yes, I would.
    Mr. Stearns. Mr. DeHaven?
    Mr. DeHaven. I don't have a problem with some sort of 
process by which we have these discussions. The problem is--and 
I was going to bring in the budget appendix up there, and I 
didn't bring it in because I don't have the arm strength these 
days. It is massive and so when it comes to oversight, when you 
have a government that big when it comes to authorization and 
stuff like that, it is very hard for even a master of the 
budget to know what all is in there, let alone a Member of 
Congress, let alone Joe or Jane Lunchbucket out there that 
actually has a real life outside of Washington, DC, and it is 
just too big and overbearing and somehow you have to cut that 
down to make more sense of it. Otherwise we are going to 
continue to have these discussions year in and year out.
    Mr. Stearns. OK, just quickly, go ahead.
    Mr. Knudsen. Yes, I would support that idea.
    Ms. de Rugy. I agree and sunsetting is a good first step.
    Mr. Stearns. Mr. Moylan?
    Mr. Moylan. We have long supported sunsetting as a way to 
inject some more accountability into the process.
    Mr. Stearns. Mr. Kalman?
    Mr. Kalman. We would not support that. We think there are 
programs that have wide support and are widely agreed and, you 
know, Pell grants, as I said before, is one of them.
    Mr. Stearns. Then how would you get oversight of these 
programs without the threat of termination? You wouldn't get 
any oversight. These things would go on indefinitely. But 
anyway, I appreciate your opinion.
    Mr. Collender?
    Mr. Collender. Sure, but it is not the panacea you think it 
is. Most programs will just be continued anyway.
    Mr. Stearns. Because of the politics?
    Mr. Collender. Of course.
    Mr. Stearns. Mr. Lilly?
    Mr. Lilly. I think the reason we have 20 committees in 
Congress is so that we have the capacity to do the oversight. 
The problem is, those committees are not doing the oversight. I 
will give you one example. I did a report last year on a 
government contractor that is charging 80 percent gross 
margins. The product that that contractor produces was 
developed by the United States government. The facilities that 
they use to manufacture it were paid for by the United States 
government and we are paying 80 percent for it, and that 
contractor is getting paid under authority from this committee. 
Now, why aren't you having a hearing on that rather than this? 
You have got to get down in the weeds.
    Mr. Stearns. Let me ask you, can you name that contractor?
    Mr. Lilly. Emergent BioSolutions. I have a report on it 
here.
    Mr. Stearns. Well, if you don't mind, I would like to make 
that part of the record. Without objection?
    Ms. DeGette. No objection.
    Mr. Stearns. No objection, we will be glad to make that 
part of the record.
    And I think there are probably more programs like that out 
there, Mr. Lilly, and so----
    Mr. Lilly. Yes, there are.
    Mr. Stearns [continuing]. If you find any more, please let 
us know, and you are saying that is the jurisdiction of the 
Energy and Commerce Committee?
    Mr. Lilly. That is correct.
    Mr. Stearns. Well, I have finished my second round. Does 
anyone else on the Democrat side? No? Mr. Griffith, you are 
recognized.
    Mr. Griffith. Just a couple matters, Mr. Chairman. Thank 
you so much for the time. I appreciate your courtesy.
    First, let me just say, you all might want to go back to 
those who did not agree with the biannual budget and just take 
a look at some of the models that those hotbeds of ideas in the 
various Republican States of this union are coming up with. My 
experience was that as long as you had some ability to amend so 
that you can correct the errors that you might have made the 
first time around, that the biannual budget makes for a 
smoother process. The battles philosophically over what gets 
spent are not quite as pitched in some circumstances when you 
have that biannual budget the second time around and people 
seem to try to work with it. That is just my take on that.
    In regard to sunsetting, you know, it shows you I am new 
around here. I thought that is what reauthorization was, that 
if you ran out of authorization, that was a sunset. But I would 
have to say in relationship to those comments, if the program 
is worthy and somebody gets hurt accidentally, Congress will 
start to scramble quickly to reauthorize the program. I think 
reauthorization is very important because it is the tool by 
which a sunset is enforced, and if you don't have to worry 
about reauthorizing, then why put it in there in the first 
place. Just authorize it permanently and be done with it.
    In regard to the comments by Dr. de Rugy and Mr. DeHaven, 
you were asked some questions about the spending of the Bush 
administration and you gave your very frank and honest opinion. 
I am wondering if you are saying a major change in that 
spending growth under the current administration. If each of 
you could answer that, I would appreciate it.
    Ms. de Rugy. No, I don't. In fact, I often say that 
President Obama is President Bush on steroids.
    Mr. Griffith. Mr. DeHaven?
    Mr. DeHaven. I have made that same comment, but if we are 
still in Iraq and Afghanistan, we are still spending money on 
everything that Bush spent money on, maybe just more. I barely 
see the difference some days.
    Mr. Griffith. I appreciate that and agree with you all 
that, you know, we have got to take a look at the--somebody 
said it, I don't want to attribute it to everybody by using the 
colloquial ``you all.'' But the person who said that we have 
got to take a look at the role of government, which is why when 
I am reading bills and taking a look at these things, you know, 
a lot of times I am scratching my head wondering why the 
government got into this in the first place, even though they 
may be very good programs. I have seen quite a few of those. If 
you all can help us figure out where they are, and I do look 
forward to looking to the report that the two groups, both left 
and right, did. That is the kind of thing that is very helpful 
to us. I think there are a lot of things that we as Americans, 
both Democrats and Republicans, left and right, can agree on.
    I have found this hearing today to be very helpful and 
educational. I appreciate you all taking your time, and Mr. 
Chairman, I appreciate you calling the hearing. Thank you.
    Mr. Stearns. I thank the gentleman, and I just remind all 
members that we have 10 days to hold the record open for any 
additional comments or opening statements, and again, I want to 
thank all of the witnesses today for your time and willingness 
to help us out, and with that, the subcommittee is adjourned.
    [Whereupon, at 12:18 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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