[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
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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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