[Senate Hearing 112-231]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-231
 
                 NOMINATION OF HEATHER A. HIGGINBOTTOM

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

NOMINATION OF HEATHER A. HIGGINBOTTOM TO BE DEPUTY DIRECTOR, OFFICE OF 
                         MANAGEMENT AND BUDGET

                             MARCH 8, 2011

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  ROB PORTMAN, Ohio
MARK BEGICH, Alaska                  RAND PAUL, Kentucky

                  Michael L. Alexander, Staff Director
       Beth M. Grossman, Deputy Staff Director and Chief Counsel
   Lawrence B. Novey, Associate Staff Director and Chief Counsel for 
                          Governmental Affairs
               Kristine V. Lam, Professional Staff Member
               Nicholas A. Rossi, Minority Staff Director
              Molly A. Wilkinson, Minority General Counsel
              Mark B. LeDuc, Minority Legislative Counsel
                   Jennifer L. Tarr, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     4
    Senator Portman..............................................    12
    Senator Carper...............................................    15
    Senator Brown................................................    18
Prepared statements:
    Senator Lieberman............................................    25
    Senator Collins..............................................    27

                               WITNESSES
                         Tuesday, March 8, 2011

Hon. John F. Kerry, a U.S. Senator from the State of 
  Massachusetts..................................................     1
Heather A. Higginbottom to be Deputy Director, Office of 
  Management and Budget..........................................     6

                     Alphabetical List of Witnesses

Higginbottom, Heather A.:
    Testimony....................................................     6
    Prepared statement...........................................    31
    Biographical and financial information.......................    32
    Responses to pre-hearing questions...........................    41
    Letter from the Office of Government Ethics with an 
      attachment.................................................    85
    Responses to post-hearing questions for the Record...........    87
Kerry, Hon. John F.:
    Testimony....................................................     1
    Prepared statement...........................................    29


                 NOMINATION OF HEATHER A. HIGGINBOTTOM

                              ----------                              


                         TUESDAY, MARCH 8, 2011

                                     U.S. Senate,  
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:34 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Carper, Collins, Brown, and 
Portman.

             OPENING STATEMENT OF SENATOR LIEBERMAN

    Chairman Lieberman. The hearing will come to order. Thank 
you all for being here. It is a pleasure to welcome Heather 
Higginbottom today to this hearing on her nomination to be 
Deputy Director of the Office of Management and Budget (OMB), a 
really important position in our government.
    Perfect timing, Senator Kerry. I will give you a choice, 
dear colleague and friend of--I will not mention how many 
years. You can either hear Senator Collins' and my opening 
statements or you can go ahead with your introduction.
    Senator Kerry. That is a real choice? [Laughter.]
    Chairman Lieberman. But I know how busy you are, so I would 
invite your introduction.

  TESTIMONY OF HON. JOHN F. KERRY,\1\ A U.S. SENATOR FROM THE 
                     STATE OF MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you. I apologize for 
being a moment late, and I apologize especially to my friend 
and the nominee, Heather Higginbottom, who probably was 
thinking I had forsaken her and left her alone.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Kerry appears in the Appendix 
on page 29.
---------------------------------------------------------------------------
    Mr. Chairman, Senator Collins, and Senator Portman, thanks 
so much for inviting me. It is a privilege to be able to 
introduce Heather Higginbottom to the Committee.
    In a sense, I feel a very special bond to Ms. Higginbottom 
for a lot of different reasons. Her parents, George and Anne, 
are not here today, but they live up on Cape Cod in Yarmouth 
Port, and I think because of the last-minute changes they were 
not able to be down here. But I am sort of a surrogate in that 
sense.
    She came to my office, I think, in 1999, fairly fresh from 
graduate school and college and her early endeavors. She went 
to the University of Rochester and then received a graduate 
degree in Social Policy and Administration from George 
Washington University and worked at communities and schools in 
between on education reform. But I have seen her journey from 
the beginning as a young, idealistic member of my staff when 
she first came on, moving up to leadership within my 
presidential campaign where she was Director of Policy, and 
then becoming my Legislative Director when I came back to the 
Senate, and then leaving my office to join President Obama's 
campaign and to become his first National Policy Director over 
the course of that campaign, and subsequently going into the 
West Wing, into the White House, as a Deputy Assistant to the 
President where she has been for the last 2 years.
    I have been, frankly, continually impressed by her 
leadership skills, by her knowledge, by her energy and 
enthusiasm for the public sector. She is very smart, or she 
would never have survived any of those jobs. But she is also 
somebody who brings a very special understanding of the 
difficulties--the complexities--of public policy today and the 
tough choices that we face.
    One of the things that I think is interesting is that her 
experience in the campaigns, both mine and President Obama's, 
has given her a tremendous sense of what this is all about. She 
has interacted with mayors, State legislators, speakers, Senate 
leaders on the Federal, State, and county levels all across the 
country.
    When she looks at a budget, she knows the numbers, she 
understands the choices we have to face today. She also 
understands that the budget is a statement of priorities for 
the country and certainly for the President who puts it in. And 
I think she looks at those with a really critical eye, and she 
understands that the numbers represent people's lives. And they 
represent the hopes for our country for where we need to go and 
how we get there.
    We have tough choices ahead of us. I do not think anybody 
understands that better than she does. We are going to have to 
deal with Medicare, Medicaid, Social Security, these larger 
issues. And I think you will find she is very knowledgeable and 
very accepting of the global budget position that we find 
ourselves in and the tough choices we are going to have to 
make.
    She also worked very closely with me across the aisle. And 
I know, Senator Collins and Senator Portman, that is important 
to you and to others. She worked on education and social 
policy.
    We did a lot with Senator Gordon Smith, and it was Ms. 
Higginbottom who worked with his staff and worked very closely 
with them. We worked very closely with Senator Santorum's staff 
in developing the Workplace Religious Freedom Act. She did that 
and, in addition, helped develop my legislation for a 
presidential line-item veto that we thought was constitutional, 
and she helped to develop that.
    So I think all in all, the people who worked for her, on my 
staff and otherwise, have always found that she is a terrific 
boss. She is somebody who listens. She does not require 
everybody else to do the work and take the credit. She shares 
the pain. I remember, for instance, long weekends. If 
legislation was being developed, she would work her heart out 
with people and then put a note on my desk, ``so-and-so worked 
all weekend, you should let them know and thank them,'' and so 
forth. But she never sought that recognition.
    So, Mr. Chairman and Senator Collins, I really think that 
given the tough times we find ourselves in and the difficult 
choices we face, Jack Lew has made a terrific choice; and the 
President has made a terrific choice. I have every bit of 
confidence that she will deal with us openly, honestly, 
directly, be available, answer questions, be accountable, but 
also be driven by the right policy values in the choices that 
she will be required to make in this job. And I completely and 
enthusiastically encourage the Senate to consent to her 
nomination as rapidly as we can.
    Chairman Lieberman. Thanks very much, Senator Kerry, for 
that very thoughtful and obviously heart-felt introduction and 
endorsement. I was thinking as you were talking that our former 
colleague Pat Moynihan once said to me that he measured his 
career in one sense--not the only sense--by what people who 
worked for him did after they left working for him. So I would 
say that you should measure your career on this ladder quite 
high because of what Ms. Higginbottom has gone on to do.
    Senator Kerry. Thank you.
    Chairman Lieberman. Now, of course, he produced Tim 
Russert. Neither you nor I have done anything like that.
    Senator Kerry. And Lawrence O'Donnell.
    Chairman Lieberman. Yes.
    Senator Kerry. And a few others.
    Chairman Lieberman. I am looking around at my staff to see 
if anybody---- [Laughter.]
    Senator Kerry. We are working on it.
    Chairman Lieberman. Thanks, Senator Kerry.
    Senator Kerry. It was my pleasure. Thank you for letting me 
be here. I appreciate it.
    Chairman Lieberman. All the best.
    Senator Kerry. Good luck.
    Chairman Lieberman. We will go on now. If confirmed, Ms. 
Higginbottom, as Senator Kerry just said, you will have one of 
the Nation's most challenging jobs, always challenging, but 
particularly at this moment in our government's history and in 
our Nation's economic history. You are going to be called upon 
to work closely with a politically divided Congress at a time 
when there are very few easy decisions to make, decisions that 
are not politically risky. You have to try to help us bring the 
Federal budget under control and in a way that hopefully does 
not impede the national economic recovery. Given the size of 
the current debt and our existing spending commitments, the 
recurring threats of a government shutdown, the expiration, to 
bring it close, next week of the third Continuing Resolution 
for Fiscal Year 2011, and an impending showdown over the debt 
ceiling--that is an extremely tall order. I almost ended the 
sentence by saying, ``Are you sure you want to go forward with 
this job?'' But I know you do, and it is one that we all have 
to work together to meet.
    Our economic challenges today, I think, are as difficult as 
they have been at any point during the last half century or so. 
We have seen positive job indicators recently, which is very 
hopeful, and an unemployment rate that has finally inched below 
9 percent. But the uncertainty of the political situation in 
North Africa and the Middle East and its effect on the price of 
oil and gasoline threatens not just the economic gains we are 
beginning to make, but the return of the critically necessary 
public confidence or optimism that we are making economic gains 
again.
    Late last year, the President's National Commission on 
Fiscal Responsibility and Reform issued, I think, a series of 
tough recommendations to move us toward long-term solvency. The 
Commission recommended that we initiate many of its proposals 
in fiscal year 2012, and I want to talk to you about the extent 
to which you think the President's budget for fiscal year 2012 
does that and what else we can do in Congress to meet that 
standard.
    I would also like to raise two other issues that concern me 
and which I raised with Director Lew during his nomination 
hearing. They are about the system by which the Federal 
Government purchases goods and services from the private sector 
and the management, government-wide, of information technology 
(IT).
    I am going to include the rest of my statement in the 
record for now and just thank you for your years of public 
service in the Legislative and Executive Branches of our 
government, as documented by Senator Kerry, and thank you for 
responding to this latest call to serve our country.
    Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman.
    The last time our budget was balanced was in 2001. Since 
that time, the Federal debt has increased dramatically, rising 
from 33 percent of gross domestic product (GDP) to 62 percent 
in 2010. If we continue on our current course, debt will soar 
ever higher, reaching an estimated 97 percent of GDP in the 
year 2021. Interest payments alone on that debt would be 
approximately $1 trillion. By 2025, revenue would cover only 
interest payments, Medicare, Medicaid, and Social Security. 
Every other Federal obligation--from national defense and 
homeland security to transportation and education--would have 
to be paid for with borrowed money or terminated.
    Throughout our Nation's history, Americans have passed 
along to their children a Nation that is stronger and offers 
more opportunity. We cannot be the first generation to betray 
that legacy.
    I am deeply concerned about the President's lack of 
leadership on the challenge we face. Six months ago, at the 
hearing on the nomination of OMB Director Lew, I spoke of my 
concern that we are heading toward a future of financial 
stagnation, bogged down by costly entitlements, sluggish 
economic growth, and high unemployment. I expressed my hope 
that OMB would help put forth a realistic plan for the next 
budget year to prevent the Federal budget from becoming an 
albatross that threatens economic growth, job security, and 
career opportunities for young people trying to enter the 
workforce or that would jeopardize retirement savings right at 
the moment that baby boomers are all retiring. I had hoped that 
we could avoid our current crisis, where so many Americans are 
coping with what is turning out to be a decade of lost 
opportunity, lost prosperity, and lost investment.
    I based that hope on the expectation that the President 
would embrace the two-part mission that he himself assigned to 
the bipartisan Fiscal Commission that he created: First, to 
bring the budget into primary balance--that is, excluding 
interest costs--by the year 2015; and, second, to substantially 
improve our Nation's long-term fiscal outlook.
    The budget presented by the President last month fails in 
both respects. The President's proposed budget does far too 
little to rein in Federal spending and spends and borrows too 
much.
    While the President's budget does include a proposed 5-year 
freeze on discretionary spending, the money that we would save 
from this freeze is nowhere near enough to address our urgent 
fiscal challenges. The President's budget proposes nearly $46 
trillion in spending over the next 10 years--an increase of $18 
trillion over the past decade. By comparison, the $400 billion 
that would be saved through the President's ``freeze'' is less 
than one penny for every dollar he proposes to spend. That is 
like bragging about skipping dessert a few times and hoping no 
one notices that you recently put on 100 pounds.
    Compared to where things stood when this President took 
office, his proposal would double the public debt by the year 
2013 and triple it by the year 2021. That kind of spending is 
simply unsustainable, and that is the stark economic and fiscal 
environment that now confronts us.
    Washington not only spends too much, but also it does not 
spend well. A report released by the Government Accountability 
Office (GAO) last week, at the request of our colleague Senator 
Coburn, illustrates this, in embarrassing detail. The GAO found 
that the Federal Government has 15 different Federal agencies 
involved in food safety; 80 economic development programs; 100 
different surface transportation programs; a myriad of agencies 
involved in biodefense; and perhaps this last example is the 
most ironic: 20 different agencies and 56 programs engaged in 
helping Americans improve their financial literacy.
    Well, I would suggest that the American people can teach 
the government a thing or two about financial literacy: In 
difficult fiscal times, we should be paying for something once, 
not dozens of times. And it is part of the responsibility of 
the person who is the Deputy Director of OMB to look at the 
management of Federal programs to identify redundancy, 
duplication, and overlaps and to lead that charge.
    The nominee's background, while impressive in many 
respects, does not include a great deal of experience in the 
budget process or financial analysis. So I look forward to 
exploring with her today how she intends to evaluate the 
effectiveness of Federal programs and address the longer-term 
fiscal challenges facing our country, should she be confirmed 
as Deputy Director.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Collins.
    Heather Higginbottom has filed responses to the 
biographical and financial questionnaire, answered pre-hearing 
questions submitted by the Committee, and has had her financial 
statements reviewed by the Office of Government Ethics. Without 
objection, this information will be made part of the hearing 
record with the exception of the financial data, which are on 
file and available for public inspection in the Committee 
offices.
    I think you know, Ms. Higginbottom, that our Committee 
rules require that all witnesses at nomination hearings give 
their testimony under oath, so I would ask you to please stand 
and raise your right hand. Do you swear that the testimony you 
are about to give will be the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Ms. Higginbottom. Yes.
    Chairman Lieberman. Thank you. Please be seated.
    We would welcome a statement from you at this time and 
introduction of anyone you would like who is in the room with 
you.

TESTIMONY OF HEATHER A. HIGGINBOTTOM \1\ TO BE DEPUTY DIRECTOR, 
                OFFICE OF MANAGEMENT AND BUDGET

    Ms. Higginbottom. Thank you very much, Mr. Chairman, 
Ranking Member Collins, and Members of the Committee. I am 
honored to come before you today as President Obama's nominee 
to be Deputy Director of the Office of Management and Budget.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Higginbottom appears in the 
Appendix on page 31.
---------------------------------------------------------------------------
    I would especially like to thank Senator Kerry for taking 
time from his very busy schedule to introduce me to the 
Committee. For over 7 years, I had the privilege of serving in 
several capacities for Senator Kerry, and in many ways, what I 
have learned about public service and government, I learned in 
this body working for him. I am grateful for that, and I am 
confident that I would not be before the Committee today 
without the opportunities those experiences afforded me.
    I am also deeply grateful to President Obama, not just for 
nominating me for this position, but also for the tremendous 
opportunity he gave me when I joined his presidential campaign 
4 years ago. Over the course of the campaign and for the past 2 
years in the White House, I have had the opportunity to 
contribute to the Nation in ways I could never have dreamed of.
    Mr. Chairman, the serious fiscal challenges facing the 
country make this an extraordinarily important and humbling 
time to be nominated to join the Office of Management and 
Budget. We have only recently turned the tide on the worst 
economic downturn in a generation, and once again the economy 
is growing and the private sector is creating jobs. The 
policies deployed to rescue the economy necessarily added to 
this deficit in the short term. As the economy strengthens, it 
is time to make the tough choices necessary to place the 
country on a responsible fiscal path and focus on our long-term 
challenges. This means cutting where we can and making the 
investments necessary to foster continued economic growth and 
job creation for our long-term global competitiveness. It also 
means managing the resources of the Federal Government in a way 
that gets the most from every taxpayer dollar, cuts waste, 
boosts efficiency and effectiveness, and gives all Americans 
the means to see how their money is being spent and to hold 
their government accountable for its actions.
    The Federal budget is an articulation of the President's 
agenda, and that requires making choices among competing 
interests, within the constraints of the recovering economy, 
and with the best interest of the taxpayer in mind. In each 
position that I have held--as legislative director in Senator 
Kerry's office, managing policy in two presidential campaigns, 
and for 2 years in the White House Domestic Policy Council--I 
have worked on a wide range of areas, from economic policy to 
national security to domestic policy, and I have had to work 
through the budgetary implications of each. I have guided 
processes that made choices about what we could afford, what 
programs and initiatives were the most cost-effective, and how 
to implement them. If I am fortunate enough to be confirmed, I 
will bring this experience developing policy within our 
budgetary constraints to OMB and the Deputy Director role.
    If confirmed, I will work closely with the OMB Director, 
Jack Lew, and the Deputy Director for Management, Jeffrey 
Zients, to help our government run as efficiently and 
effectively as possible. And I also look forward to working 
with all of you on this shared goal.
    Thank you very much for your consideration today, and I 
would be pleased to address any questions you have.
    Chairman Lieberman. Thank you. Let me start with the 
standard three questions we ask of all nominees.
    First, is there anything you are aware of in your 
background that might present a conflict of interest with the 
duties of the office to which you have been nominated?
    Ms. Higginbottom. No.
    Chairman Lieberman. Second, do you know of anything, 
personal or otherwise, that would in any way prevent you from 
fully and honorably discharging the responsibilities of the 
office to which you have been nominated?
    Ms. Higginbottom. No.
    Chairman Lieberman. And, third, do you agree without 
reservation to respond to any reasonable summons to appear and 
testify before any duly constituted committee of Congress if 
you are confirmed?
    Ms. Higginbottom. Yes.
    Chairman Lieberman. Thank you. We are going to start with a 
first round of questions limited to 7 minutes each.
    Let me start with a kind of inside-the-office question. I 
presume that you and Director Lew have talked about what your 
responsibilities would be if you are confirmed, and I wonder if 
you would share your understanding of that. What do you see as 
your priorities and particular assignments if confirmed?
    Ms. Higginbottom. Sure, I would be pleased to. As Director 
Lew and I have discussed, I would work closely, if confirmed, 
with the Director on the development of the annual Federal 
budget, I would have responsibility for internal management 
within OMB, and I would lead and help coordinate OMB's 
participation in the policymaking process within the Executive 
Office of the President as well as with agencies to ensure that 
OMB's considerations are a part of those conversations.
    Chairman Lieberman. That should keep you busy.
    Let me go to one of the macroeconomic questions that is on 
our mind, but it comes right down to a specific. I mentioned 
the President's National Commission on Fiscal Responsibility 
and Reform. I was very pleased when the President selected the 
Commission and equally pleased by the recommendations it put 
out. Though it did not get the super majority that we hoped it 
would, it got a good, strong bipartisan majority, and they 
continue to go on working here in the Senate in the so-called 
Gang of Six.
    Obviously, a lot of people commented on the fact that the 
President's budget for fiscal year 2012 did not endorse any of 
the recommendations of his own Fiscal Commission that impact 
entitlements, notably Social Security, Medicare, and Medicaid. 
I presume you would agree that these three have to be addressed 
if we are going to get our long-term finances in order, so I 
guess I have two questions, really. First, do you agree? And, 
second, when do you believe the President will come forward 
with his plans for entitlement reform?
    Ms. Higginbottom. Well, on the first question, I do 
absolutely agree that as we tackle our long-term deficit and 
debt challenges, we have to look at the real drivers, 
specifically Medicare and Medicaid. Also, during the 
President's State of the Union address, he talked about the 
need to strengthen Social Security, and he laid out some 
principles for doing so, and I know that he is eager to engage 
in a conversation. I understand that there will be proposals 
made here in Congress addressing both of those entitlement 
programs. I know he is eager to participate in those 
discussions.
    He has said numerous times that we need to come together 
and do this across parties and that the big challenges that we 
have addressed in the past have happened in such a fashion 
where we could sit down and work things out.
    One of the things I am excited about working on with 
Director Lew, if confirmed, is these big challenges. He 
obviously has a record of success of working in this fashion to 
really get down, sit across the table and figure out where we 
can find common ground and solve and tackle some of these big 
challenges.
    So I know that this issue of entitlements and how they will 
be addressed is something that the President takes very 
seriously. The budget he put forward takes some initial steps. 
He has said it is a down payment to tackle our deficit, to 
stabilize our debt as a percentage of the economy, but it is 
just a first step, and the real work comes as we come together 
to tackle those longer-term challenges.
    Chairman Lieberman. So am I hearing you correctly to say 
that the President is committed to so-called entitlement reform 
or mandatory payment reform, but is unlikely to put forward his 
own suggestions soon for the details of that reform, but 
intends to engage in some bipartisan process with Congress to 
try to find solutions?
    Ms. Higginbottom. Yes, I think that is what he has said in 
the past. And one of the statements that he has made and I 
think the Director made during his testimony around the budget 
is that often when you put a very detailed plan out there by 
the Administration, it is something that becomes the subject of 
a lot of target practice. And what we really want to do is get 
to a place where we can have constructive discussion. So he is 
very open to those conversations, and I know the Director has 
great experience in trying to broker those conversations as 
well.
    Chairman Lieberman. I am going to leave that there. I would 
guess that my colleagues, some of them, may want to pursue that 
line of questioning.
    Thank you for confirming my suspicion, Senator Brown.
    As I mentioned in my opening statement, oversight of 
Federal procurement of goods and services is an increasingly 
important, financially consequential responsibility of OMB. The 
latest data show that the Federal Government spent over $536 
billion for goods and services in fiscal year 2010. Wasteful 
spending, as identified by both the GAO and various Inspectors 
General, of course, is unacceptable both from a management and 
a budget perspective.
    I know that early in his presidency, President Obama issued 
a memorandum directing the heads of agencies to address 
particularly problematic areas, such as use of noncompetitive 
and cost-reimbursement contracts, and the lack of clarity on 
which jobs can and cannot be contracted out.
    So I would say, to get to the question, that high level 
attention from the President and from OMB, it seems to me, has 
begun to force agencies to confront weaknesses in the 
procurement process. But obviously there is a lot more that 
needs to be done. I wanted to ask you if you have any 
particular plans of action to build on the reform efforts that 
have occurred so far.
    Ms. Higginbottom. Thank you. I know that this area has been 
a priority for the President from the beginning of the 
Administration and that the work that the Office of Federal 
Procurement Policy (OFPP) within OMB has been spearheading has 
been very important.
    The report just recently that for the first time in many 
years, 13 years, we have actually seen a decrease in spending 
on contracts is evidence of those reforms. They clearly need to 
be accelerated and implemented, particularly as the Federal 
budget comes under increasing pressure and we have to figure 
out how to do more with less. We have to look for more 
efficient ways to spend resources.
    I know that OFPP, through its Acquisition Council and the 
work it does with agencies, is looking for ways to be more 
strategic to get rid of contracts that do not make sense, that 
are not necessary anymore, and that is work that, as Deputy 
Director, if confirmed, I would work to support.
    Chairman Lieberman. Good. You are right, and I would 
mention for the record that there was a small decrease in 
procurement expenditures in fiscal year 2010 from the year 
before, and even though it was relatively small, every dollar 
counts, and it was a move in the right direction. So hopefully 
we can keep it going in fiscal year 2011. Thank you.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Let me start with some basic questions. I mentioned in my 
opening statement my concern about the fiscal path that we have 
embarked upon. The President's budget proposes spending $3.7 
trillion, and we are only going to take in revenues estimated 
to be $2.2 trillion, so a $1.5 or $1.6 trillion deficit in 1 
year, a record amount. In the month of February, we had the 
highest 1-month deficit ever.
    Do you think that this level of spending is sustainable?
    Ms. Higginbottom. No, of course it is not, and I think the 
steps that the President took in the fiscal year 2012 budget 
recognized that it is not. The freeze on non-security spending 
for 5 years is what he referred to as a first step that we need 
to do. As the economy is recovering and we are making careful 
cuts to try to cut the deficit and stabilize the debt as a 
percentage of the economy, we have to start carefully as we do 
this. But as he said when the budget came out and certainly 
what the Director and, if confirmed, the Deputy Director's role 
would be is to lay out a path that more aggressively tackles 
these issues in the long term.
    We are recovering from the worst economic downturn since 
the Great Depression. The recovery has been much more slow than 
we would have hoped, and it has taken longer to get out of the 
hole. We are beginning to see, obviously, some very positive 
signs from the economy--consecutive months of private sector 
job growth and the unemployment rate is coming down. But it is 
still quite fragile, and I think what the President has said 
with respect to his budget is that we have to take steps to cut 
spending and reduce the deficit, but we also have to do it very 
carefully.
    Senator Collins. Well, we do have to do it carefully, but 
the fact is that the $400 billion in savings that the President 
has proposed is less than one penny for every dollar that the 
President is proposing to spend and that he is still proposing 
enormous increases.
    Ms. Higginbottom. So a couple of things. First, I think 
that the budget that the President laid out achieves the goal 
of, as you said in your statement, primary balance by 2017, 
which means it will pay for the programs it is proposing.
    In terms of the deficit, in the situation that we find 
ourselves in, we have--the cost of----
    Senator Collins. Excuse me for interrupting, but let me 
stop you. You said that it would reach the goal of primary 
balance? How do you see that?
    Ms. Higginbottom. The President's fiscal year 2012 budget 
lays out a path that by 2017, the budget path will have revenue 
to pay for all of the programs. That is in the President's 
budget.
    Senator Collins. The President's budget has huge and 
expanding deficits for the next 10 years. It does not bring the 
deficit down.
    Ms. Higginbottom. The concept of primary balance is to pay 
for----
    Senator Collins. Primary balance means to exclude the 
interest payments only. The President's budget is not in 
primary balance by that year.
    Ms. Higginbottom. The President's budget by 2017, if you 
look in it, achieves the primary balance. I would just like to 
say one thing. I do not have all the budget documents. I did 
not put the 2012 budget together, and I did not bring those 
resources. But as the Director testified just a couple weeks 
ago, that is indeed the case.
    Senator Collins. So you are saying that without changing 
anything except having the freeze on discretionary spending, 
which is only 12 percent of the budget, the President's budget 
is going to be in primary balance in that year. The Commission 
proposed sweeping changes to bring the budget into primary 
balance by the year 2015.
    Ms. Higginbottom. That is correct, and one of the reasons--
--
    Senator Collins. But the President has not endorsed those 
changes.
    Ms. Higginbottom. That is correct. I did make a distinction 
that the President's budget laid out a path that would achieve 
primary balance by 2017, so it does not do it as quickly as the 
bipartisan Fiscal Commission did. And I think the President or 
at least Director Lew has indicated his concerns that making 
the level of cuts particularly in discretionary spending that 
quickly will jeopardize the recovery, and that is why it takes 
us longer. We do not hit the goal in the same time frame that 
the Commission did. And I did not mean to suggest that it was 
the same.
    Senator Collins. And that is not my dispute with you. I do 
not see, unless there is a lot more to come from the 
Administration, how you are saying that the President is going 
to produce a budget that is in primary balance by the year 
2017, 2 years later than what the Commission called for. So I 
will look forward to getting more information----
    Ms. Higginbottom. Absolutely. I would be happy to.
    Senator Collins [continuing]. On how that can possibly be 
the case unless there is a lot more to come.
    The President's State of the Union address mentioned the 
need to reorganize government to make it more effective. The 
President very memorably gave an example of the regulation of 
salmon--something near and dear to anyone in the State of 
Maine. We have yet to receive, however, any legislative 
proposals to cut or streamline government through 
reorganization beyond some general language in the President's 
budget. And this is in spite of the fact that the GAO has 
issued a truly alarming report that identifies many 
opportunities for streamlining and removing overlap and 
duplication.
    When exactly are we going to see legislative proposals that 
would streamline programs identified by the GAO, or by OMB, for 
that matter?
    Ms. Higginbottom. So I will take the two separately, if 
that is OK. The President appointed the Deputy Director for 
Management at OMB, Jeff Zients, to lead the reorganization 
effort. They have started that relatively recently. They have a 
team of folks who are working on it. I would expect, if 
confirmed, to work with them and support their work. I do not 
know under which specific timetable they would produce 
legislation, but I know that they are working as expeditiously 
as they can, and they will be meeting with Members of Congress 
and various stakeholders to do so. I look forward to working 
with them on that important initiative.
    With respect to the GAO report, actually OMB and a lot of 
the programs and initiatives that have been spearheaded by OMB 
have been working on many of those areas. In fact, throughout 
the report, it indicated places where the Administration has 
taken some leadership. So we really welcome this report and 
having it on annual basis, and we look forward to working with 
Members of this Committee who have been very supportive of 
these efforts and taken that beyond this Committee and to the 
rest of the Congress. Senator Coburn, obviously, who requested 
the report, I just read in an article recently, talked about 
the Administration's willingness to embrace many of these 
proposals. So that is another area that, if confirmed to be 
Deputy Director, I would look forward to working with you and 
the Committee on.
    Senator Collins. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Collins.
    I do not suppose you need any notice or warning before I 
call on the next Senator to know that Senator Portman brings 
unique experience to this Committee. One part of it is his time 
on the other side of the table at OMB. So as always, it is a 
pleasure to call on our colleague from Ohio.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Thank you, Mr. Chairman, and it is unique 
because no one who ever went to OMB has ever had a political 
future. There is probably a reason for that. [Laughter.]
    Chairman Lieberman. You really surprised us all.
    Senator Portman. Including myself.
    Senator Collins. Not me.
    Senator Portman. Well, first of all, having been there for 
13 glorious months, 2 weeks, 3 days, and 4 hours--not that I am 
counting--it is a difficult job, and I relied heavily on the 
Deputy who was there. I worked with Steve McMillan when I was 
there, who was someone--if you have not already spoken to him, 
I would encourage you to talk to him. You might not seek 
confirmation after speaking to him. But this is the President's 
choice. We get to advise and consent or not consent to it. But 
I have to tell you I share Senator Collins' concerns just as 
deeply and maybe even more because I was just so gravely 
disappointed in the budget. And you even said today that it is 
now time for us to make tough choices, and those choice were 
not made in the budget.
    When I was at OMB, we had tough choices to make, and it was 
not easy. When I left, the deficit was smaller because we had a 
better economy and there was some spending restraint going on 
in Congress at the time, and had been, so we had better 
numbers. The deficit was $162 billion in fiscal year 2007. I 
left that year in the summer, maybe during the June-July 
period. But even with those kinds of numbers, we proposed a 
balanced budget over 5 years. Secretary Geithner was before the 
Budget Committee recently, and he sort of turned the tables 
back on me when I talked to him about the fact that the 
assumptions that you all used, I thought, were way too 
optimistic in order to show any savings--in fact, your $1.1 
trillion, I think, is all eaten up by your economic 
assumptions, unfortunately. I hope I am wrong, but when you 
compare it to Blue Chip, you all assume the economy is going to 
grow faster than the private sector does. And he came back to 
me and said, ``Well, you were there, too.'' And I said, ``Well, 
yes, but''--I did not mention this to him, but we stuck with 
Blue Chip for those 5 years.
    Now the Congressional Budget Office (CBO) has different 
numbers than Blue Chip. Those numbers will be adjusted based on 
what happens on policy, and so the baseline will adjust. But I 
just have to tell you, I was really surprised by the budget, 
not only that it did not address, as Senator Collins said, the 
issues that need to be addressed, but that it used some of 
these so-called budget gimmicks to hide even the supposed 
savings as compared to the baseline.
    So I hope you are going into this job understanding that 
some of us feel that way. I do not know how you feel about it. 
I should ask you that, I guess, and so I will. And while you 
are answering that question, also if you could think about 
another question: What do you consider the biggest fiscal 
challenge facing the U.S. Government?
    Ms. Higginbottom. So just to make sure I understand your 
question, you are asking me how I feel about the President's 
fiscal year 2012 budget with respect to----
    Senator Portman. The economic assumptions or just in 
general.
    Ms. Higginbottom. Again, in general, I support the 
President's budget. I think that it takes the steps forward 
that we need to address the deficit in a responsible way in the 
short term and stabilizes the debt, which I think is really 
important, as a percentage of GDP. We clearly have more work to 
do. The President said that, the Director said that as he 
rolled out the budget. I did not, obviously, have anything to 
do with the selection of the economic assumptions in this 
budget. I appreciate your point. I think that they are within 
the consensus mainstream assumptions. I appreciate your concern 
and comment about the overall budget picture, and as I go into 
this position, if I am confirmed, I see what an enormous 
challenge we face.
    The second question you asked was what do I see as the 
biggest fiscal challenge, and I think clearly it is tackling 
our long-term drivers of deficit and debt in Medicare and 
Medicaid. I mean, there has been a lot of controversy and 
discussion of the Affordable Care Act, but one of the important 
elements of moving forward with that is implementation. The CBO 
estimates it will save $1 trillion over the next 20 years, $200 
billion just in the next decade, and I think those are 
important first steps to take that we need to build on as we 
continue the discussion, particularly around Medicare and 
Medicaid.
    Senator Portman. I agree with you that it is health care, 
and I asked Douglas Elmendorf, the Director of the 
Congressional Budget Office, that question, and he said the 
same thing, which was encouraging. I would disagree with you on 
the impact of the President's health care legislation. But that 
is a longer discussion. And, again, I think that was an 
opportunity lost because unless we get control of the health 
care costs, it is hard to get control of the cost drivers in 
Medicare and Medicaid, which ultimately is health care. And 
this year it will increase 9 percent, which is not sustainable.
    Two quick comments and questions. One is about the 
management job. The Deputy Director for Management, as you 
know, is a critical job. What do you view your role in that? 
What do you think is the mission of the Deputy Director for 
Management versus your role and how do you expect to interact 
with that person?
    Ms. Higginbottom. So obviously the Deputy Director for 
Management has responsibility for overseeing our entire 
Accountable Government Initiative, many of the reforms that we 
started to talk about, such as contracting reform, the IT gap, 
the performance of programs, and so on and so forth. I worked 
with Mr. Zients while I was at the White House on the Domestic 
Policy Council (DPC) staff and look forward to working with 
him, if confirmed. I can see many ways already that the Deputy 
Director, who is really the number two working with Director 
Lew, and the Deputy Director for Management have to work hand-
in-glove, particularly to ensure that high-priority goals, 
performance management, and effectiveness of programs are 
brought into the budget development process. They tend, I 
think--not all the time, but they can be siloed and think that 
the organization can be split like this. And it is really 
important not only that the information is being integrated but 
also that it is being integrated in a way that is added value 
and not looked at as a burden. In other words, we have a 
management side issue over here that needs to interact with the 
budget side over there. That needs to come together in a way 
that really ensures that all the program analysis is happening 
in a coordinated fashion, not in a sort of add-on way.
    One of, I think, the qualities that Director Lew saw in me 
for this role is the ability to ensure we have very strong 
communication and collaboration across OMB and within the 
Executive Office of the President. And it is an area, frankly, 
I am quite excited about. The core principles that are driving 
the management side in terms of accountability, transparency, 
and use of data and analysis for programming were really 
integral to the policy development we did during the campaign 
and the approach that we have taken in the Administration, and 
that is true of my job in the Domestic Policy Council as well.
    So I see these things as very well integrated, and I am 
excited to work with Mr. Zients on that, if confirmed.
    Senator Portman. I think you are right. I do think 
sometimes the Deputy loses sight of the fact that the person is 
the Deputy for OMB, not for budget. And I think it is important 
that you realize that you are actually also given 
responsibility for management. It sounds like you have an 
interest in it, which is good. But I think putting the M back 
in OMB, as they say, is important, and that comes partly from 
the Deputy taking a personal interest in it. So if you will do 
that--and I know this Committee is extremely interested in 
that. Senator Lieberman and Senator Collins have been involved 
in this issue over the years, and I think they would agree with 
me that often that gets left behind. And so you should look at 
your role not as the Deputy for budget, which too many deputies 
do, but for both.
    My time is up. Just one other final point, which is one 
that is almost a point of personal privilege here. The career 
people at OMB are among the best in government. It attracts the 
best and the brightest, and as you know, most of them take 
their responsibility extremely seriously because they are 
attracted to it because they care about management or they care 
about oversight of the agencies and they care about spending. 
And so there is a strong personal commitment. I hope you will 
reach out to them. I do not know how much you have worked with 
them in your role as Deputy at DPC, but I have often found 
that, again from experience, they were not brought into the 
process by some of the political appointees early enough, and 
often their expertise was left out. So, again, I would 
encourage you to look to the career staff, not just for some of 
the original data but actually for policy decisionmaking. I 
certainly found that to be successful.
    Thank you, Mr. Chairman.
    Ms. Higginbottom. Thank you. If I may----
    Chairman Lieberman. Go right ahead.
    Ms. Higginbottom. One of the reasons I am most excited 
about this job is to have an opportunity to work with Director 
Lew and to exhibit some management within OMB that will really 
recognize the contribution and the expertise of the career 
staff.
    Chairman Lieberman. Thanks, Senator Portman.
    Senator Carper, I think you were next in the order of 
arrival.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thank you, Mr. Chairman.
    Just sitting here and listening to a former OMB Director 
question a potential new Deputy OMB Director, I was wondering 
if it is better to be on this side of the dais or that side of 
the table.
    You may have already done this. Were you asked to introduce 
anybody who might be with you?
    Ms. Higginbottom. I was, but I skipped right over it.
    Senator Carper. Do you want to do that?
    Ms. Higginbottom. I would. Thank you.
    I am joined here by my boyfriend, Danny Sepulveda, who has 
supported me for over 12 years in the various positions in 
public service that I have taken.
    Senator Carper. That is about half as long as my wife has 
supported me.
    Chairman Lieberman. But in your wife's case, it was harder. 
[Laughter.]
    Senator Carper. You have the floor, Ms. Higginbottom.
    Ms. Higginbottom. And my brother is also here today. He is 
recently transplanted to Washington from Los Angeles, so it is 
a real pleasure to have him here. Our parents very much wanted 
to be here, but they escaped New England winter for Florida 
yesterday, and so we decided that was the right move for them 
to take. Thank you.
    Senator Carper. Welcome to all of you.
    You and I chatted a little bit before, and it is nice to 
see you again. Around here some of us are trying to create what 
I call a culture of thrift to replace, if you will, what some 
would perceive here as a culture of spendthrift, and we are 
suggesting that we really do not look all that closely at every 
Federal program to see if we getting the best result for the 
money we are putting into it.
    I always like to say that everything I do I know I can do 
better. I think that is true for most of us. And my sense is 
that for a lot of Federal programs, we could probably get a 
better result for the money that we are putting into it, and 
one of our challenges is to do that.
    The President recently signed into law legislation that 
some of us had worked on for a while, and I think among the 
folks that worked on it were, I think, Senator Collins and 
Senator Coburn--I am not sure if Senator Brown was on that one. 
He was on a bunch of them. But the legislation actually says we 
are going to consider performance. Do we have a lot of 
redundant programs? Do we have some programs that we ought to 
merge? What should we be expecting in terms of objective goals 
and measurements? We are just doing a much more systematic job 
in doing that.
    With this legislation the President just signed into law, 
is this an area that you are going to be involved in? Do you 
have a lot of direct involvement? And if you do, just take a 
minute to talk about that, please.
    Ms. Higginbottom. I am looking forward, actually, if 
confirmed, to assisting with the implementation of the GPRA 
Modernization Act. I think it is really important that we have 
a performance management system that is really focused on the 
higher-priority goals, which OMB has been doing with the 
agencies, and one of the innovations in this legislation is the 
real cross-cutting agency goals.
    One of the things that I frequently did at the Domestic 
Policy Council was convene agencies as we identified a 
presidential goal or initiative to come together to figure out 
how we could get aligned. In some cases that required agencies 
adjusting what they were doing, moving personnel here or there, 
and having clear goals and sort of check-ins. And this is 
really what this legislation is focused on doing. So I am 
excited to support the implementation of that and work closely 
with Mr. Zients on it.
    Senator Carper. Is Mr. Zients the person with the day-to-
day responsibility?
    Ms. Higginbottom. Yes.
    Senator Carper. And are you going to make sure he stays on 
track?
    Ms. Higginbottom. That is right, and I think it is 
important, to the point I was making to Senator Portman, that 
we have this hand-in-glove and integrated approach. 
Particularly when you are looking at something like cross-
cutting agency goals, these are performance management 
priorities, but they need to be brought into the budget 
process. We need to make sure as we are doing that review and 
as the budget side of the house is working with agencies that 
is all very well aligned. And I think the Deputy Director role 
is very well situated to do that.
    Senator Carper. Some people say, well, we have cut as much 
as we can, and we cannot find any more savings. I just do not 
buy that, whether it is the way that we are providing post-
secondary education, some of the programs make a lot of sense. 
Some of them, frankly, are spending a whole lot of Federal 
money and not getting a very good result. In our weapons 
systems, we have major cost overruns. Our friends at GAO do us 
a favor every year and publish the high-risk list. That is just 
a great place to start. For those of us who have been working 
on that list for a number of years and actually making a little 
bit of progress, there is still plenty to do, and we will 
really look forward to working with you on that.
    The other thing I mentioned to you before the hearing 
started is that some of us are involved--and Senator Portman 
has been involved in this for a number of years--in trying to 
figure out how to change the President's rescission powers to 
make them real. Since 1974, when the President signs into law 
an appropriations bill, he or she is able to send us a list of 
items within that appropriations bill that he or she would like 
to rescind spending for or reduce spending for. And as it turns 
out, the President sends us rescission messages, and for the 
most part we ignore them and they go away. A number of us--I 
think everybody who is sitting here today--actually cosponsored 
legislation to say, well, for the next 4 years, we are going to 
have a 4-year test drive on strengthening the President's 
rescission powers to make them real. Let us say you are the 
President, and we are the Congress. We send you a bill. You 
sign it. You send us a rescission message. And we would have to 
vote on it. We would have to vote it up or down. We could vote 
it down with a simple majority, 51 in the Senate or 218 in the 
House. But we would have to vote on it. It is not a silver 
bullet to balance the budget, but I think it is something that 
is going to provide a tool for the President, but it will 
really require some accountability on our side as well.
    The 1996 balanced budget amendment that was passed, you may 
recall, said the President could exercise his line-item veto on 
spending bills, tax bills, entitlement programs, and the 
Congress would have to override those with the House and the 
Senate, both with a two-thirds vote; otherwise, they take 
effect. Then the Supreme Court--with whom we all had dinner a 
week or so ago--basically said, no, that does not work for us, 
that is not constitutional, and they threw it out. We think we 
have come back with something that is constitutional here, and 
this was before you signed on to do this job, but the 
Administration seems to be embracing this idea, and I would 
just ask for your thoughts.
    Ms. Higginbottom. It is interesting. You were not here when 
Senator Kerry introduced me, but he actually mentioned the work 
that I had done to help draft his constitutional line-item 
veto. It is something that we had proposed during the campaign, 
and when we returned here, we developed it into legislation. I 
think it is an important tool, and, again, the times are such 
that we are going to need to really be looking and digging as 
deep as we can to ensure that we are only spending taxpayer 
dollars as effectively as we can. And an expedited rescission 
is a good way to do that. I know it is an idea that the 
Administration has supported, and I look forward to working 
with you on that if I am confirmed.
    Senator Carper. And I would say, Mr. Chairman, in closing, 
if you look at what was offered in 1996 that was deemed to be 
unconstitutional, where the President could not only 
essentially veto appropriations, tax measures, entitlements, 
and you needed a two-thirds vote by both the House and the 
Senate, that really shifted power to the Executive. It was an 
enormous shift of power. I describe that as like giving the 
President a bazooka under his desk. And this is not a bazooka, 
what all of us have cosponsored, but it is maybe a rifle. It is 
not a BB gun or a .22, but it is a rifle. This would make a 
difference, and so we are anxious to move forward.
    But my thanks to all my colleagues for supporting this, and 
we very much appreciate the Administration's support, as well 
as yours. Thank you.
    Ms. Higginbottom. Thank you.
    Chairman Lieberman. Thanks, Senator Carper. I presume the 
rifle was made in Connecticut.
    Senator Carper. Actually, the only thing the Carper family 
in West Virginia was ever famous for was the Carper rifle. 
Maybe it is from there. I am not sure.
    Chairman Lieberman. The mysteries of your life continue to 
unfold before my eyes. Thank you.
    Senator Brown, rescue us.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thanks, Mr. Chairman. Welcome. I am sorry I 
missed the introduction. I had another hearing.
    I notice from your resume you have some great political 
experience and some really good policy experience. I was 
wondering if you would share with the Committee what type of 
accounting and budgetary experience you have.
    Ms. Higginbottom. I would be happy to. As I was saying at 
the very outset of the hearing, the responsibilities that the 
Director and I have discussed, and the President, for this role 
are the development, working with the Director, of the Federal 
budget, the management of OMB, and taking a leadership role in 
the policy process. The experiences I have had here on Capitol 
Hill, developing campaign policy, working in the White House, 
have all had budgetary implications.
    I can take some examples most recently working in the White 
House, the Domestic Policy Council. I worked hand-in-glove with 
OMB as we developed the budget for education and other social 
policy areas. And obviously that is true----
    Senator Brown. Let me just interrupt, and I appreciate 
that. But, I mean, you will be the No. 2. If he is not there, 
you will be the No. 1 potentially. In that respect I would 
presume you would be dealing with accounting and budgetary 
problems obviously within the OMB. Is that a fair statement?
    Ms. Higginbottom. Sure.
    Senator Brown. What type of budgetary and accounting 
experience do you have?
    Ms. Higginbottom. I have done a lot of policymaking and 
budgetary implications throughout all of my professional 
experiences, and that will be the same at OMB, if confirmed. A 
lot of what this work entails is understanding the economic and 
budgetary impacts of programs, making trade-offs about what we 
can pay for and afford, and how these things stack up.
    Senator Brown. I understand that, but I guess I am asking, 
do you have any accounting or budgetary experience aside from 
dealing in policy matters?
    Ms. Higginbottom. I am not an accountant, but the 
President's budget is an articulation of his agenda.
    Senator Brown. I understand.
    Ms. Higginbottom. His policy agenda.
    Senator Brown. I understand that, and I guess that being 
said, the OMB did come out recently with information that there 
are billions of dollars of duplication and waste. If that is 
the case, why have they not just terminated those programs and 
streamlined and consolidated and saved us those billions of 
dollars so we can use them in other areas? Do you have any idea 
on that?
    Ms. Higginbottom. Are you referring to the GAO report?
    Senator Brown. Any report that says we have--I mean, 
obviously, you are dealing with the President's agenda, and he 
has also talked about the duplication and waste.
    Ms. Higginbottom. Absolutely. As I was saying, the GAO 
report includes many proposals that the Administration is 
working on. There is, as Senator Collins was referencing, a 
government reorganization effort underway specifically around 
trade agencies and that set of policies.
    Throughout the GAO report, there are indications of 
programs that need to be consolidated or combined and an 
indication that the Administration is working on that.
    I will take education as one example. The President's 
budget took 38 programs, condensed them into 11, and eliminated 
many more. So we are taking that approach across----
    Senator Brown. But the budget in education has still gone 
up fairly dramatically. I have to obviously connect with 
Senator Collins on the fact that we have dissected the budget 
as well, and I was hopeful that there would be some of the 
leadership shown by the Fiscal Commission and also in the State 
of the Union address as to incorporating a lot of those ideas 
into the budget. I know you did not write the budget, and I 
know you are obviously in a new position. You have only been 
there a couple of weeks, right?
    Ms. Higginbottom. Well, I have not been confirmed for this 
position, but I have been working as an adviser for a couple of 
weeks.
    Senator Brown. You have been working there a couple of 
weeks, so I do not expect you to have all the answers. Let us 
just start with that. But my concern is that there is going to 
be somebody at the OMB and every other agency that is dealing 
with the taxpayers' money to find out where the duplication, 
the streamlining, and the overspending is. I have to 
respectfully disagree with your analysis of the budget and 
agree with Senator Collins. There is nothing in that budget 
that says that we are going to be saving money over the time 
period that you referred to. We can agree to disagree.
    I guess my hope is if you are dealing with the management 
and the policy, is there going to be some type of initiative 
to--forget the hearings, enough with the hearings, enough with 
the rhetoric, and just actually say, by the way, we saved you 
$1 billion today? Is there something concrete that you can 
refer to that I have confidence I can take back to my caucus 
and say, by the way, she is great, she is qualified, she is 
going to do A, B, C, and D? Is there something concrete you 
have in your mind that says we are going to save some money?
    Ms. Higginbottom. Well, when you talk about the budget, 
there is an entire volume called Terminations, Reductions, and 
Savings (TRS) that has this year over 200 programs in it that 
would save more than $30 billion. If you want to point to 
something concrete, many of those----
    Senator Brown. Over $30 billion, with all due respect, 
while I love billions, but since I have been here, we are 
talking trillions now. When I got down here, there was an 
$11.95 trillion national debt. It is over $14 trillion in a 
year. And I do not see the effort to really get in the room 
with both parties and come up with some real solutions at this 
point.
    Ms. Higginbottom. Well, just to finish the point on the TRS 
volume, I just wanted to point out that many of those programs 
that have been recommended to be terminated were likely under 
OMB Director Portman's view as well. We have to come together 
as Congress and an Administration to really identify the 
priorities and make the appropriations and funding decisions to 
ensure that those programs are not funded. And I think we have 
an opportunity, as we are facing these significant deficits and 
debts, to come together and really make some of those tough 
choices. I think we are seeing some of that play out now in the 
fiscal year 2011 continuing resolution conversation.
    Senator Brown. The primary balance by 2017 issue that 
Senator Collins was dealing with means we are paying off the 
annual deficit, not the cumulative debt.
    Ms. Higginbottom. Right.
    Senator Brown. And so it is like paying a $1.6 trillion 
deficit minus the interest of $225 billion. So we are not 
really paying off the debt by 2017.
    Ms. Higginbottom. I did not suggest that. The concept of 
primary balance is paying for those programs minus the interest 
payments on the debt. That is why the President, when he rolled 
out his budget, talked about this being an important first 
step, reducing our deficit, stabilizing our percentage of GDP 
as a percentage of the economy, and coming together to address 
the long-term drivers of deficit and debt.
    Clearly, the level of debt that we have, particularly the 
trajectory that it is on, is unsustainable, and I do not think 
anybody within the Administration is defending that. And 
certainly we look forward to having those conversations to 
figure out how to tackle those problems.
    Senator Brown. I appreciate your candor. Thank you.
    Ms. Higginbottom. Thank you.
    Chairman Lieberman. Thanks, Senator Brown. We will do a 
second round as long as Members would like.
    Let me go to the subject of information technology, which I 
mentioned in my opening statement. The Committee has really 
been working on this for some years as a matter of our 
oversight responsibilities. And I will say that despite the 
focused efforts of both the past Administration and this one, 
we have continued to see out-of-control IT projects that cost 
taxpayers hundreds of millions of dollars and too often do not 
produce much for the agencies.
    This Administration has been using a number of new 
management techniques to address these problems and I know 
recently actually stopped 26 projects worth more than $30 
billion in life-cycle costs in order to review them to make 
sure that they were a good investment of public funding.
    I want to ask you to speak generally about this problem and 
more specifically about what you think now needs to be done to 
improve government-wide management and acquisition of 
information technology, particularly in a time of limited 
budget resources.
    Ms. Higginbottom. Thank you. It is my understanding that 
the approach that the Office of E-Government and Information 
Technology has taken within our Administration has been to 
really ensure we are working aggressively with the agencies to 
understand the scope of their IT projects, to break them into 
smaller components, to ensure we are really focused on their 
core functionality, and that because of the way the budgeting 
and appropriations process works, we have seen many instances 
in which by the time funding is appropriated and the program or 
the IT project is funded, the technology has moved far beyond 
it. Vivek Kundra, who leads that effort within OMB, has been 
very focused on trying to work with agencies to make sure that 
these projects are more effective and efficient.
    The use of the IT Dashboard to bring an unprecedented level 
of transparency into this process is important. I spoke with 
Senator Collins' staff during my staff interview about the 
quality of some of that data, and that has been a concern. I 
know that OMB and the agencies have been focused on trying to 
improve that, as well as the use of the TechStat sessions to 
have regular face-to-face interactions with OMB and the 
agencies to mark progress and to understand where there are 
problems, address them in the execution of these IT projects.
    So this is an area that I think the 25-point plan that the 
OMB Office of E-Government has put out is also a road map to 
follow for additional steps, and I have had the opportunity to 
work with Mr. Kundra over the last couple years. I think he is 
a really fantastic leader in this space, and I look forward to 
working with him, if confirmed.
    Chairman Lieberman. Good enough. I just urge you, with all 
the things you are doing, to really keep your eye on this one 
because we need IT, obviously, for the government to function 
effectively. But there are just too many occasions when I think 
for one reason or another the Federal Government has wasted its 
money on investments in this area.
    Let me talk a little bit about the Postal Service. The 
Postal Service concluded fiscal year 2010 with a net loss of 
$8.5 billion. A lot of that has to do, of course, with long-
term declines in mail volume and the economic downturn. As I am 
sure you know, the President's budget for fiscal year 2012 
proposes to return to the Postal Service an estimated $6.9 
billion surplus over a 30-year period that the Office of 
Personnel Management (OPM) agrees the Postal Service has 
overpaid to the Federal Employees Retirement System. The budget 
proposal also reduces the Postal Service's statutory 
requirement to make a payment into the Postal Service Retiree 
Health Benefits Fund by $4 billion for the current 2011 fiscal 
year.
    That is a good first step in helping the Postal Service, 
but this is a rising crisis, and we really have to get together 
and figure out how to head it off before it hits us very hard.
    So if you are confirmed as OMB Deputy Director, I wanted to 
ask you how you would go about working with the Postal Service, 
Congress, and others in the private sector who are deeply 
interested in this to help the Postal Service deal with its 
extremely challenging short-term and long-term financial 
problems.
    Ms. Higginbottom. Thank you. And it is an area that is very 
complicated and important. As you mentioned, the fiscal year 
2012 budget provides what has been referred to in the budget as 
breathing room for the Postal Service by returning some of the 
surplus funding to provide the time and the space for these 
stakeholders to come together and figure out what the long-term 
changes are that are going to be necessary. Within OMB, the 
General Government Programs have had branches in charge of 
this, and the Deputy Director has oversight over that, so it is 
an issue that I look forward to working with them on, if 
confirmed.
    It is clearly very important. We have the last couple of 
years come to this point where we have taken last-minute steps 
to address their solvency, but the can cannot be kicked down 
the road much further, and the budget is intended to provide a 
little bit of breathing space to really get everyone together 
and figure out what some of those long-term challenges are 
going to be, which I think everyone agrees are necessary to 
keep the Postal Service solvent.
    Chairman Lieberman. Good. Let me ask you finally about the 
debt limit. At this point, what is the Administration's best 
estimate about the time frame in which we will probably hit the 
debt limit and, therefore, Congress will be asked to extend it?
    Ms. Higginbottom. I believe that is mid-April.
    Chairman Lieberman. So we do not know exactly how many 
Members of Congress will use this necessity of increasing the 
debt limit to raise questions, really to force a discussion, as 
happened last year, and led to the President's appointment of 
the Fiscal Responsibility and Reform Commission. They will use 
it to force a discussion about making tough choices regarding 
the deficit and the debt.
    I wanted to ask you if you have thought at all about what 
message OMB and the President will convey to Congress when this 
happens. Again, I cannot predict how many Members of Congress, 
but I can sure predict that some Members of Congress will say 
they will not vote to extend the debt limit unless there is 
something forthcoming from the President, the Administration, 
and Congress in terms of a harder commitment to deal with our 
debt.
    Ms. Higginbottom. Well, I have not had conversations with 
the Director or the President about this, but one thing that I 
think is very important around this conversation, we are having 
a robust debate in Congress now over spending for fiscal year 
2011 funding levels for the remainder of this fiscal year, and 
it is a conversation that has focused just on the spending 
side, which is a relatively small slice of the pie. I think the 
debt limit, should there be a discussion about what could be 
attached to it or associated with it, provides an opportunity 
to broaden the conversation into the mandatory side, the 
entitlement side. I am not suggesting or putting a plan on the 
table for what that might look like, but I think that if we are 
going to get outside of just this conversation of discretionary 
spending, the debt limit is a place where that debate might 
start.
    Chairman Lieberman. That is a preview. Thank you. Senator 
Collins.
    Senator Collins. Thank you, Mr. Chairman.
    I want to go back again to the issue of primary balance by 
the year 2017. Would you at least agree that achieving primary 
balance in a single year, a year that is several years from 
now, is not the same thing as getting long-term spending under 
control?
    Ms. Higginbottom. Absolutely, and I think that when the 
President laid out the budget and as it was discussed, he 
discussed this as an important milestone. It is not an 
achievement--it is not an end in and of itself, but it is a 
place that we need to drive toward so that we can move into the 
longer fiscal challenges.
    Once we achieve primary balance, we have not solved all of 
our problems, but it is an important balance to achieve so that 
as we take the next steps, we are at least not digging that 
particular hole deeper.
    Senator Collins. But we are still going to have a $14 
trillion debt.
    Ms. Higginbottom. And we need to come together and address 
those issues and the long-term drivers, specifically Medicare 
and Medicaid.
    Senator Collins. And this is the second time that you have 
described Medicare and Medicaid as long-term drivers, but the 
Administration has yet to really present plans to deal with 
those long-term drivers. Do you know when we might expect such 
plans?
    Ms. Higginbottom. I know that the President is eager to 
work with Members of Congress on both sides of the aisle on 
these issues. He has said that many times. As I mentioned in a 
previous answer, implementing the Affordable Care Act is also 
very important. We have passed the law. There is a lot of 
implementation. There are a lot of savings associated with it 
on the health care side. There is much more that can be done, 
and that is an issue that, if confirmed, I suspect I would be 
very involved in working with the Director on as well as the 
President.
    Senator Collins. Well, I will spare you a discussion on the 
implications of the President's health reform act, but suffice 
it to say that creating new entitlements such as the Community 
Living Assistance Services and Supports (CLASS) Act, which is 
being used in the early years to make the implementation costs 
look smaller when it is collecting premiums that are going to 
come due in the out-years is not exactly responsible budgeting, 
in my judgment. But I am not going to ask for you to respond to 
that.
    Let me switch quickly to two other issues.
    First, I completely associate myself with the comments made 
by Chairman Lieberman about the IT challenges. I cannot tell 
you how many failed IT contracts this Committee and its 
Subcommittees have looked at. In fact, it would be a far 
shorter list to give you those that have been successful. So I 
hope that you will pay close attention to this.
    A second related issue, which has been a concern of mine 
for many years, is the fact that consistently the government 
seems to be stuck at awarding approximately a third of its 
contracts non-competitively. Now, there are sometimes 
legitimate reasons for no-bid contracts, but many times the 
government is forgoing what could be both lower costs and 
improvement in quality.
    The Administration has challenged agencies to do better, 
but we really seem to be stuck at between, according to GAO, 31 
to 35 percent of obligations awarded non-competitively. What do 
you think we can do to improve in that area?
    Ms. Higginbottom. It is an important issue and something 
that the President identified early on as a priority. I know 
that Dan Gordon and his team in OFPP are focused on this issue. 
It is something that comes up regularly when they meet in the 
Acquisition Status (AcqStat) sessions, when they sit down with 
agencies to review and address what their proposals are. I am 
not familiar with what their specific recommendations are in 
this area, but I think it is a really important priority, and 
it is something I would be happy to work with you and the 
Committee on, if confirmed.
    Senator Collins. Thank you. Finally, I have another 
contracting issue that I want to bring up with you. Under the 
previous OMB Director, the Administration was considering 
implementing a new policy for procurement that was misnamed the 
``high road'' procurement policy. There was a lot of dispute 
within the Administration since most experts will tell you that 
if the high road policy were put into place, it would actually 
be the higher-cost road that we would be embarking on. And it 
would put non-union small businesses at a competitive 
disadvantage simply because they do not have a unionized 
workforce and they would essentially lose points for that. What 
is the status of the high road contracting policy?
    Ms. Higginbottom. I am not familiar with this being a 
policy that is under review or being proposed in the 
Administration. It sounds like a complicated policy. I am not 
exactly sure how it would work, but I noticed that you had 
asked the Director this question during his confirmation, and 
so I did my diligence at OMB, and it is not being considered or 
proposed now. I was not able to get some of the answers to the 
questions that were being raised about it.
    Senator Collins. Well, that is good news if it is not under 
active consideration right now. I would ask that you inform 
this Committee and me specifically if it does start coming back 
under active consideration since we should be trying to 
decrease the cost of Federal procurements, not put artificial 
requirements and barriers that have no relationship to quality 
or cost into the contracting process. As you pointed out, it is 
complicated enough as it is now.
    Thank you, Mr. Chairman. I will submit the remainder of my 
questions for the record.
    Chairman Lieberman. Would you like to ask any other 
questions?
    Senator Collins. I will submit them for the record. Thank 
you.
    Chairman Lieberman. Thanks, Senator Collins.
    Ms. Higginbottom, thanks for appearing before the Committee 
today. We are going to attempt to bring your nomination before 
the next markup of this Committee, which is on March 16, so it 
would be next week. I hope we can do it because I know, 
presuming you are going to be confirmed, that Director Lew 
could use you right there working with him.
    So, without objection, the record will be kept open until 
the close of business tomorrow for the submission of any 
written questions or statements for the record. Thank you 
again. We look forward to working with you.
    The hearing is adjourned.
    [Whereupon, at 3:51 p.m., the Committee was adjourned.]


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