[Senate Hearing 112-194]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 112-194
 
                  ENHANCING THE PRESIDENT'S AUTHORITY 
      TO ELIMINATE WASTEFUL SPENDING AND REDUCE THE BUDGET DEFICIT 

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


                                HEARING

                               before the

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

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                                 of the

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 15, 2011

                               __________

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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
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee
                                 ------                                

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

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 SCOTT P. BROWN, Massachusetts
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           RON JOHNSON, Wisconsin
MARK BEGICH, Alaska                  ROB PORTMAN, Ohio

                    John Kilvington, Staff Director
                  Bill Wright, Minority Staff Director
                   Deirdre G. Armstrong, Chief Clerk
















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator McCain...............................................     4
    Senator Brown................................................     5
    Senator Begich...............................................     6
Prepared statements:
    Senator Carper...............................................    43

                               WITNESSES
                        TUESDAY, MARCH 15, 2011

Maya MacGuineas, President, The Committee for a Responsible 
  Federal Budget.................................................     8
Virginia McMurtry, Ph.D., Specialist in American National 
  Government, Congressional Research Service.....................    10
Todd Tatelman, Legislative Attorney, American Law Division, 
  Congressional Research Service.................................    13
Thomas Schatz, President, Citizens Against Government Waste......    15

                     Alphabetical List of Witnesses

MacGuineas, Maya:
    Testimony....................................................     8
    Prepared statement...........................................    46
McMurtry, Virginia Ph.D.:
    Testimony....................................................    10
    Prepared statement...........................................    51
Schatz, Thomas:
    Testimony....................................................    15
    Prepared statement...........................................    78
Tatelman, Todd:
    Testimony....................................................    13
    Prepared statement...........................................    67

                                APPENDIX

Questions and responses for the Record from:
    Ms. MacGuineas...............................................    82
    Ms. McMurtry.................................................    83
    Mr. Schatz...................................................    87


                  ENHANCING THE PRESIDENT'S AUTHORITY
      TO ELIMINATE WASTEFUL SPENDING AND REDUCE THE BUDGET DEFICIT

                              ----------                              


                        TUESDAY, MARCH 15, 2011

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                              and International Security,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper, Levin, Begich, Brown and McCain.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Our hearing will come to order, not that it 
is in disorder, but our hearing will come to order. Welcome, 
one and all. Senator McCain and I are delighted that you are 
here. We will be joined by some of our colleagues. Our caucus 
lunch is just breaking up. We will be joined by some of our 
colleagues here in a little bit.
    But as we gather here today for this afternoon's hearing, 
our Nation's debt stands at $14 trillion. Ten years ago on this 
date, it stood at less than half that amount, $5.7 trillion to 
be precise. If we remain on our current course, it may double 
again by the end of this decade.
    The debt of our Federal Government held by the public as a 
percentage of Gross Domestic Product (GDP) has risen to 63 
percent. That is up from 33 percent a decade ago. The last time 
it was this high was at the end of World War II. In fact, the 
only time it has ever been this high was at the end of that 
war.
    That level of debt was not sustainable then and it is not 
sustainable today. We need only ask our friends in Greece and 
in Ireland about that. The Fiscal Commission led by Erskine 
Bowles, former White House Chief of Staff under Bill Clinton, 
and by former Senator Alan Simpson, provided us with a roadmap 
out of this morass. We see at least one person sitting at this 
table today who worked on that, maybe more than just one. So we 
thank you for that.
    They provided us with a roadmap out of this morass, 
reducing the cumulative deficits for the Federal Government 
over the next decade by some $4 trillion. That roadmap offers a 
balanced approach to fixing our long-term fiscal problems, with 
about a third of the savings coming from new revenues and about 
two-thirds coming from spending reductions that would touch 
domestic spending, defense spending, and entitlements.
    However, if we really want to dig our way out of this mess, 
we are going to have to explore a number of innovative ideas 
and address the problems from all angles. Sometimes when 
Congress passes appropriations bills, a spending item or two, 
maybe three, may be included that do not make much sense. And 
while the majority of lawmakers, along with the Administration, 
may view those specific items as wasteful and unnecessary, 
there is no practical mechanism that enables them to single out 
the egregious items.
    Oftentimes, these items are contained in must-pass 
legislation that we are considering just days or hours before 
the end of session or the expiration of a continuing resolution 
(CR). Far too often, we accept a handful of spending items that 
are truly wasteful as the cost of doing business in just 
getting bills passed.
    A common sense way to prevent this from occurring is to 
modify the President's ability to get Congress to consider 
spending cuts. Under current law, the President has the 
authority to suggest rescissions. The President has had this 
authority since 1974 with legislation, I think it was called, 
John, I think it was called the Impoundment Act. It was signed 
into law by, maybe by former President Nixon.
    Any time we send the President a spending bill under 
current law now, he or she can sign it and then propose that 
the Congress consider rescinding or either reducing or 
eliminating certain items, spending items, in that bill. 
However, Congress has no obligation to vote on these 
rescissions and, in point of fact, rarely does.
    If no action is taken within 45 days, the President 
releases the funding. The past two Presidential 
Administrations, I am told, have abandoned usage of this tool 
due to its ineffectiveness. My staff tells me that not a single 
rescission has been proposed in the last decade, which is 
pretty amazing if it is actually true.
    Congress did pass legislation in 1996 that aimed to 
increase the President's rescission powers. It was called the 
Line Item Veto Act (LIVA). It permanently enabled the President 
to veto any spending or revenue measures within legislation 
unless both chambers voted, by a super-majority, to override 
the President's action.
    It did not say the President--it just said the President 
could veto spending items, line items in spending bills, in 
appropriations bills, so the President could go into 
entitlement legislation and veto, line item veto, items there; 
and also, do the same thing with revenue measures. And that 
those vetoes, those line item vetoes within discretionary 
spending, entitlement programs, and in revenues would become 
law unless two-thirds of the House and two-thirds of the Senate 
voted to override those cuts.
    The Supreme Court unanimously, I think, rejected that 
change in law, in part, I presume, because they thought it was 
unconstitutional. If nothing else, I will tell you this, it 
sure was a major, major shift in the power between the three 
branches of government.
    I talked to one of my colleagues today, Senator McCain, who 
was here in 1996, and I was trying to convince him to sign as a 
co-sponsor of our legislation, and I compared our legislation 
to a 4-year test drive, which really was a statutory line in 
the veto powers to the President, and I said, ``Compare this to 
what was available in 1996.'' I said, ``In 1996, it was like 
giving the President a bazooka to keep under his desk.'' And 
then my colleague, our colleague, said, ``Oh, in 1996 I was no 
good.'' I said, ``You voted for it.''
    And so, my hope is that some folks who voted for that who 
now think it was too extreme will look at what we are trying to 
do here and say, ``This is just about right.'' The story of the 
three bears, three little bears, too hot, too cold, just about 
right? My hope is that a lot of people say, ``This might be 
just about right.''
    Well, I am not interested in a proposal like that, but I do 
believe there is a way to enhance the President's existing 
authority without overstepping constitutional boundaries. 
Senator McCain and I have introduced legislation to do just 
that. We did this in the last Congress with Russ Feingold, our 
former colleague from Wisconsin, but we introduced the Reduce 
Unnecessary Spending Act that seeks to do just that, and that 
is to strengthen the President's rescission powers without 
violating the Constitution.
    It does not change--our legislation does not change how the 
President proposes rescissions, but it does require Congress to 
actually vote on them in a timely manner. Our bill would 
provide this authority only through 2015, creating something 
akin to what I call a 4-year test drive, a 4-year test drive 
for statutory line item veto powers.
    This would allow the Congress to see how well or not the 
new authority works to determine whether to extend it, amend 
it, or allow it to expire after 2015. I believe that the 1996 
Line Item Veto Act ceded far too much power to the Executive 
Branch, and it came at the expense of the Legislative Branch. 
Our proposal would simply update an existing budget process to 
give the President a targeted, effective tool that he or she 
can use to single out individual line items in appropriations 
bills. Our measure is not a bazooka.
    By the same token, our measure is not a BB gun. It is not a 
.22. Some might say it is the McCain-Carper rifle, and that is 
about where we need to be. Congress would still have a strong 
voice in the process and we would have to approve the 
President's proposed rescissions, but the expedited rescission 
authority would help root out some questionable spending that 
makes it more difficult to reach our deficit reduction goals.
    I am not the only one who thinks this legislation takes the 
right approach in reducing wasteful spending. Over a third of 
the Senate has now joined Senator McCain and myself--one of 
them sitting right here beside me--and a number--actually, we 
will see who shows up for this hearing, but most of the people, 
I think, on this Subcommittee, I think a majority of people on 
this Subcommittee, have now co-sponsored our legislation.
    But we have over a third of the Senate joining us as co-
sponsors. I think it is a balanced mix of Democrats and 
Republicans. In addition, the Administration is strongly 
supportive of the proposal and helped us actually craft the 
legislation. Sitting here, my colleagues may recall about a 
week ago, was a woman, a young woman who has been nominated by 
the President to be our Deputy Office of Management and Budget 
(OMB) Director. I believe her name is Heather Higginbottom. I 
think that is her name. And she was here and embraced the idea 
as well, even though she is just a nominee. But the 
Administration supports it.
    Now, I know, as I said earlier, there is not a silver 
bullet or magic solution, but in order to get our fiscal house 
in order, it is going to take a combination of approaches and a 
willingness to put everything on the table, entitlements, 
revenues, domestic discretionary spending, defense spending as 
well, and, frankly, a lot of ineffective spending.
    I like to say--I mentioned this to some of the folks in the 
Administration this morning. Everything that I do I know I can 
do better. I think the same is true of all of us. Part of our 
challenge is to figure out how do we get, from programs A to Z, 
how do we get better results for less money. That is it. How do 
we get better results for less money or how do we get better 
results for not a whole lot more money.
    An expedited rescission authority may prove to be a useful 
tool in our toolbox at a time when our Nation is rapidly 
approaching our statutory debt limit. We should seriously 
consider many ideas and implement common sense changes like the 
Reduce Unnecessary Spending Act.
    And now, I am not sure who I should turn to first, Senator 
Brown as the Ranking Member of this Subcommittee, or to Senator 
McCain as the lead sponsor of the bill. Senator Brown, what do 
you think?
    Senator Brown. I am happy to have Senator McCain go before 
me.
    Senator Carper. Are you? OK. All right. Fair enough. 
Senator McCain, you are recognized. Thanks very much.

              OPENING STATEMENT OF SENATOR MCCAIN

    Senator McCain. Well, thank you, Mr. Chairman. I think you 
covered the issue very adequately. I want to thank the 
witnesses and finally, after more than 20 years of fighting 
this issue, maybe we are going to succeed. I know that Tom 
Schatz did not have a gray hair on his head when we started 
this, and I think Maya was without children. Is that right? So 
anyway, I want to thank the witnesses for--she was in grade 
school.
    So I want to thank the witnesses and thank you, Mr. 
Chairman, for your, really, determination, strong determination 
to get this done with me and I am very grateful. Obviously, I 
think it is a very important time. I thank you, Mr. Chairman.
    Senator Carper. You bet. Happy to be a wing man on this 
one. If Senator Lieberman, our Chairman of our full Committee 
were here, he would probably use a biblical injunction here. He 
would probably say, ``We are like Moses standing on the 
mountain top looking at the promised land. The Children of 
Israel marched for 40 years until they finally found the 
promised land.'' We have been at this, you about 20, me 19 
years, and I do not want to go another 20 years. We have to get 
to the promised land this year, and I think this actually will 
help us, and frankly, this will help us with more than just 
this. I think this will be helpful in us putting together a 
broader compromise on deficit reduction that we desperately 
need. All right.
    Senator Brown and then we are over here to the former Mayor 
of Anchorage, Alaska, and now our Senator from Alaska, Mark 
Begich.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thank you, Mr. Chairman. Thank you, Senator 
McCain, for your leadership in this issue. I will make a brief 
statement and then I will look to Senator Begich and then 
obviously the witnesses.
    As you know, $1.6 trillion is what we face for a deficit 
for this fiscal year (FY), and it is the highest ever. When I 
got here it was $11.95 trillion national debt. It is over 14--
almost over 14 and continuing to rise, as you can see by the 
charts here. The level of our spending is just--there is no end 
in sight, unfortunately, and it is out of control. It is 
unsustainable. I think we have all agreed on that.
    It is interesting, Mr. Chairman. We have had about 55 or 60 
hours of hearings--I am sorry--informal meetings, I should say, 
bipartisan. About 70 percent of Senators are getting together 
to try to figure out what is real and what is not, what is fact 
and what is fiction. It is the numbers. Are the numbers real or 
is it just kind of all made up?
    I think we have all agreed collectively that the numbers 
are real. It is just a question of how we get there. Do we go 
this way or that way? Do we kind of do a little bit of 
everything and put everything on the table, as you have 
indicated? All the leaders and other members are sounding the 
alarm about the looming fiscal crisis; yet, we have a lot of 
difficult decisions ahead of us as to how to get a handle on 
them and how to actually fix and avert a catastrophe.
    I feel and I have been public--respectful, but public about 
the fact that the President put forth a task force to come up 
with--the Debt Commission. We moved on it. We had a State of 
the Union speech; yet, we have had no real leadership in moving 
forward with what to do. It would be nice to know what his 
priorities are so we can actually move forward on them 
together, collectively, because right now, people are still 
hurting. They still want us to solve the problems. They not 
only want us to deal with the debt and deficit, they just want 
jobs.
    That is it, debt, deficit, taxes, jobs, spending, national 
security. That is it. While most of these challenges cannot be 
fixed overnight, as I said, I am hopeful that we will get some 
leadership on these very important issues so we have an idea of 
what can ultimately be signed, because there is only one person 
that can sign on the dotted line and have a bill be in effect 
and that is the President.
    I am hopeful that he will, in fact, move forward and work 
with us on this issue. So obviously, the current moratorium on 
earmarks is encouraging. Ever since it happened, the Senator to 
my right has been the happiest guy in the world. He is a 
totally different man. And it is up to the Congress to take, 
obviously, responsibility to control spending more seriously. 
As I said, ``we cannot do it alone.''
    I am looking forward to continuing on with our efforts on 
this Subcommittee. I fought to get on this Subcommittee and 
wanted to do so because of your leadership and because of the 
issues that we are tackling, and obviously the Washington 
spending culture is real. It is not hard to fix, though, if we 
just work together to do it.
    I am looking forward--for example, I have a Taxpayer 
Receipt Act, which is a bipartisan bill that I have introduced 
with Senator Nelson from Florida, also, that I am hoping you 
will sign onto which basically gives people the knowledge that 
they need to advocate on their own behalf and on their family's 
behalf as to where the money is going.
    Here we are, we are doing this. Well, why can we not also 
have a transparent effort to show what is going for defense, 
what is going for welfare, what is going for this. It will cost 
hardly any money. It would be something they could just 
reconfigure their computers to do so.
    The McCain-Carper bill demonstrates that common ground does 
exist for meaningful action and it needs to be taken now. I 
think we all agree on that. So I am looking forward to hearing 
the testimony and then working together to solve these 
problems. Thank you.
    Senator Carper. Thanks very much and thank you for your 
strong support of this measure and for your work in these other 
areas as well. Former Mayor of the largest city in Alaska.
    Senator Begich. Thank you very much.

              OPENING STATEMENT OF SENATOR BEGICH

    Senator Begich. Thank you very much, Mr. Chairman, and 
first I want to say, for all the reasons that Senator Brown 
mentioned, I think this Committee has a huge opportunity for 
oversight and what we can do to help the Federal Government 
operate in a much better way.
    When you first came to me, and I know, Senator McCain, this 
piece of legislation, Reduce Unnecessary Spending Act, the 
concept of it with the rescission power for the President, I 
have to tell you, I am a line item veto guy, so I like this. I 
know when I was Mayor, I would actually show up at the assembly 
meetings with a yellow folder that actually had a blank veto 
message that I would just fill in if I did not like what they 
were doing.
    We had a very strong form of government and it sure did get 
disciplined to the budget process, to be very frank with you. 
So when I heard about this legislation, not only last year did 
I support it, this year I support it. I think it is the right 
move. I am not a lawyer, but I know a lot of lawyers have views 
on this, but I think this is the right approach. It does not go 
to the level I would love, because I know there is a 
constitutional issue there, but it does do a level of engaging 
in some constraint by individuals in the way they deal with the 
budgets here.
    The one thing I know in the art of compromise in purveying 
a piece of legislation, I know this would expire in 2015. I 
would be one of those that would not want it to expire. It is a 
power. It does not matter if it is a Democrat or Republican 
White House, they should have the capacity to do this. So I 
think the work you are doing on this is very positive. I am 
supportive of it.
    The other thing I would say to Senator Brown, I think your 
receipt idea, I am more likely going to be signing on because I 
think it is a great idea. We did something very similar in 
local government where people want to just know if we spend 
this money in taxes, where does it go? Who gets it?
    And when we did that, we had an incredibly positive 
response also, Senator, as you can imagine, people would call 
us up and say, Why are we doing that? And we had to justify it. 
If we could not justify it, out it went. So it is actually a 
very good idea.
    So again, Mr. Chairman, I like this Committee for a lot of 
the reasons that I have just stated, but also, the oversight 
capacity of Congress has not been as aggressive as I would have 
hoped in their last 2 years and this may have a new opportunity 
for us. So thank you very much for allowing me to be here, but 
also to our witnesses.
    Of course, I am biased. I hope you look fondly on the piece 
of legislation that we are looking at, but you will have your 
opinions, I am sure, but I do think it is incredible to let 
needs be part of this equation in order for us to get some 
additional discipline to the spending habits of this Congress 
or any future Congress. I will leave it at that, Mr. Chairman.
    Senator Carper. Thanks very much. Thank you for bringing 
your previous role as Mayor of a large city and a leader of the 
Nation's Mayors to these issues. Thank you.
    All right. Maya MacGuineas, no stranger to most of us on 
this side of the dais, but Ms. MacGuineas comes to us from The 
Committee for a Responsible Federal Budget (CRFB). The 
Committee for a Responsible Federal Budget is a bipartisan, 
non-profit organization committed to educating the public about 
issues that have significant fiscal policy implications.
    Ms. MacGuineas is the President, the President of The 
Committee for a Responsible Federal Budget, and she frequently 
appears before congressional hearings like this, and the 
national media, to offer insights on a wide range of budgetary 
issues and, I think, played a modest, not inconsiderable role 
in helping to guide the work of the Fiscal Commission led by 
Erskine Bowles and Alan Simpson. Ms. MacGuineas, we welcome you 
to the hearing. We look forward to hearing your comments and to 
help us not just on this issue, but more broadly. You are 
probably uniquely qualified to do that.
    Our next witness is Dr. Virginia McMurtry--did I get that 
right, McMurtry.
    Ms. McMurtry. McMurtry.
    Senator Carper. McMurtry, McMurtry.--from the Congressional 
Research Service (CRS). The Congressional Research Service is 
the only non-partisan research arm of the Legislative Branch. 
The Congressional Research Service strives to provide 
comprehensive legislative research and analysis to Members of 
Congress and their staff. They are really quite a treasure and 
we are grateful for all that you do in providing us with 
guidance and counsel.
    Dr. McMurtry is a Specialist in American National 
Government in the Executive Branch Operations Section of the 
Congressional Research Service. She has dedicated over 30 years 
to the organization. She specializes in the Federal budget and 
the Office of Management and Budget and relations between the 
President and the Congress. We thank you very much for joining 
us.
    Also from the congressional Research Service, we will be 
receiving testimony from Todd--I want to say Tatelman. Is that 
Tatelman?
    Mr. Tatelman. Yes.
    Senator Carper. Oh, good. Todd, welcome. Todd is a 
Legislative Attorney in the American Law Division at the 
Congressional Research Service. He specializes in congressional 
laws and procedures and constitutional law, administrative law, 
transportation law, and international law. Thanks so much for 
being with us today.
    Our last witness, certainly not the least, is Tom Schatz. 
Mr. Schatz, President of Citizens Against Government Waste 
(CAGW), a non-partisan organization dedicated to eliminating 
government waste and someone and whose organization we see as a 
real partner in this effort with us. He has been at Citizens 
Against Government Waste for almost 25 months. Is that right? 
Is it 25 months?
    Mr. Schatz. Years.
    Senator Carper. Twenty-five years, since its inception, 
almost since your inception. And has testified before Congress 
on numerous occasions about government waste. Prior to joining 
Citizens Against Government Waste, Mr. Schatz spent 6 years as 
the Legislative Director for my old colleague and friend, 
Congressman Hamilton Fish. Thanks so much for your testimony.
    I would just say to each of our witnesses, this will not 
come as a surprise, but your entire statements will be made 
part of our record. You are welcome to summarize it as you see 
fit. I will ask you to stay pretty close to 5 minutes. If you 
go a little bit beyond that, that is OK. If you go way beyond 
that, we will have to rein you back in.
    Ms. MacGuineas, you are welcome to lead us off. Thank you 
so much for joining us.

STATEMENT OF MAYA MACGUINEAS, PRESIDENT,\1\ THE COMMITTEE FOR A 
                       RESPONSIBLE BUDGET

    Ms. MacGuineas. Thank you, Chairman Carper and Members of 
the Subcommittee. It is an honor to be joining you today. 
Senator McCain, since you brought up my son, I will tell you, 
today is his 7th birthday, so I invited him to come, spend the 
afternoon with me, come to the hearing, and he, of course, 
said, ``Mom, the budget is so boring. Have you not fixed it 
yet? '' Which is like the attitude I get at home.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. MacGuineas appears in the 
appendix on page 46.
---------------------------------------------------------------------------
    Senator McCain. Wise young man.
    Senator Carper. How old is he?
    Ms. MacGuineas. He just turned seven.
    Senator Carper. Maybe when he is eight.
    Ms. MacGuineas. Yes, exactly. Future budgeteer.
    Clearly, we face a dangerous fiscal situation and deficits 
and debt are rising as far as we can see. And under reasonable 
assumptions that we project, that the debt held by the public 
will be nearly 90 percent of the economy by the end of the 
decade. Interest obligations will be almost a trillion dollars 
and they will exceed spending on all domestic discretionary 
parts of the budget.
    I doubt we would make it to that point. Markets are 
forward-looking and not only is our debt too high, it is 
projected to escalate at an increasing pace as the aging of the 
population and health care costs push up spending and 
borrowing. At some point, we will be hit by a fiscal crisis as 
credit markets lose face in the U.S. political system's ability 
to fix the problem.
    Our creditors would either abandon U.S. debt or ask for 
extraordinarily high interest rates. The economy would take a 
huge hit and there would be no chance for lawmakers to respond 
with thoughtful, coherent budget reforms as there is now.
    Instead, we would be in triage mode and tax rates would be 
hiked dramatically, new taxes created, critical investments 
abandoned, and the social safety net decimated. So the effects 
on businesses, seniors, and families would be devastating.
    The solution is a multi-year, comprehensive fiscal plan 
that tackles all areas of the budget. The sooner we enact such 
a plan, the better. We need to reform entitlements, cut 
spending, raise revenues through fundamental overhaul of the 
Tax Code. Putting a plan in place would--we can put a plan in 
place immediately and that would give us even more fiscal space 
to allow the economy to continue to recover.
    In addition to supporting necessary policy reforms, the 
Committee for a Responsible Federal Budget has long worked to 
find ways to improve the budget process and institute fiscal 
rules. That is where expedited rescission authority comes in, 
and we believe rescission authority can be an effective tool in 
promoting fiscal discipline.
    The Reduce Unnecessary Spending Act allows the President to 
identify wasteful or unnecessary spending in legislation for 
cancellation and would create an expedited procedure for 
approving or rejecting rescissions. It would increase 
accountability and transparency in the budget process while 
respecting the responsibilities of both the White House and 
Congress.
    In 1998, the Supreme Court found the Pure Line Item Veto to 
be unconstitutional because it shifted too much budgeting 
authority from Congress to the White House. This modified 
rescissions process both provides the White House with 
responsibility in ensuring that wasteful measures are not 
included in new spending bills, but it also retains the final 
decisionmaking power with Congress in a balanced and bicameral 
way. So as I think you suggested, Senator Carper, it kind of 
hits that Goldilocks sweet spot.
    By limiting the number of requests per bill, it is also 
crafted to be effective without being overly demanding or 
allowing the President to consume the legislative calendar. 
Currently Congress can too easily ignore the President's 
rescissions requests. According to the Congressional Budget 
Office (CBO), only about a third of the Presidential 
rescissions made from 1976 to 2005 were approved by Congress, 
and as a result, only about $25 billion over those 30 years 
have been saved through the Presidential rescission authority.
    Giving the President more of a central role could increase 
accountability and serve as a deterrent to members for adding 
low priority spending that is likely to be included in a 
rescissions package. Furthermore, the plan would sunset in 
2015, which would allow Congress to review its overall 
effectiveness.
    I believe it will be beneficial to broaden the rescissions 
tool to new mandatory spending as well as tax expenditures. So 
much of the budget is now run through the Tax Code that these 
so-called tax expenditures are, in most cases, more like 
spending than tax cuts. Not applying the same type of 
oversights to this side of the budget opens up loopholes, and I 
realize, though, that this may be more challengingly 
legislatively, but it is an area of the budget that needs to be 
treated with high levels of scrutiny as well.
    Strengthening the current rescissions process could help to 
build trust with the public for broader and deeper deficit 
reduction efforts. One of the most common misperceptions about 
our fiscal problems is that we can solve them by eliminating 
waste. This is not true. But eliminating waste should, 
nonetheless, be a given.
    It is harder to make an important and legitimate case that 
fixing our budget will require shared sacrifices from everyone 
and all parts of the budget when wasteful items are still stuck 
in spending bills and tax bills with depressing regularity. 
Bridges to nowhere undermine the important case that Social 
Security has to be changed, health care costs controlled, 
outdated programs eliminated, and tax breaks ended.
    However, the point cannot be emphasized enough that cutting 
waste is no substitute for making the difficult choices that 
are necessary to rein in our deficits and debt. Our situation 
will require that lawmakers keep every part of the budget open 
to changes. Passing important budget reforms should build 
momentum for the effort, not be used as an excuse to delay 
them.
    So, Senators Carper and McCain, I congratulate you on this 
important bill and your excellent line-up of bipartisan co-
sponsors, and I hope we can move quickly forward with this 
idea. I think just to conclude, I would reinforce the point you 
made, Chairman Carper, which is we really have to figure out 
how we are going to get better results for less money in this 
new time of fiscal constraint. That is one of the things we 
need to focus on better, oversight, in order for us to spend 
our dollars more wisely.
    So thank you so much for the opportunity to come today.
    Senator Carper. Thanks so much. Thanks not only for being 
here today and for your testimony today, thank you for fighting 
this good fight in a very informed, intellectually, bright 
smart way for years. Thank you.
    Ms. MacGuineas. Thank you.
    Senator Carper. Dr. Virginia McMurtry, please proceed.

    STATEMENT OF VIRGINIA MCMURTRY,\1\ PH.D., SPECIALIST IN 
  AMERICAN NATIONAL GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE

    Ms. McMurtry. Thank you, Chairman Carper.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. McMurtry appears in the appendix 
on page 51.
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    Senator Carper. Make sure your microphone is on, please.
    Ms. McMurtry. I am sorry?
    Senator Carper. Make sure your microphone is on. We do not 
want to miss a word.
    Ms. McMurtry. OK. I think I have activated it now.
    Chairman Carper, Senator Brown, and Members of the 
Subcommittee, thank you for inviting me to testify today in 
conjunction with the Subcommittee's consideration of S. 102. 
You asked that I provide some data regarding the use of 
rescission authority by Presidents since 1974.
    You also requested that I review the use of this existing 
rescission authority and consider whether expedited rescission 
authority for the President, as provided in S. 102 and now in 
H.R. 1043, might facilitate efforts by an Administration to 
curtail non-essential expenditures by the Federal Government.
    As Chairman Carper indicated, the Impoundment Control Act 
(ICA), enacted as Title X of the Congressional Budget 
Impoundment Control Act back in 1974, established a new 
framework for congressional notification and review of 
rescissions from the President. The 1974 law requires that the 
President inform Congress of any proposed rescission or 
permanent withholding of appropriated funds in a special 
message, and the special message must contain specified 
information on each of the designated rescission proposals.
    With regard to congressional participation, after receiving 
the rescission proposals from the President, the law provides 
that the funds must be made available for obligation unless 
both houses of Congress take action to approve the rescission 
within 45 days.
    Congress may alter the amount proposed for rescission by 
the President, either increasing or decreasing it, as well as 
approving the requested rescission in toto. In addition, 
independent of any specific request from the President, 
Congress may initiate rescission actions by canceling 
previously appropriated funds in a subsequent law.
    Based on data compiled by the Government Accountability 
Office (GAO), and I am happy that it is very similar to that 
cited from the Congressional Budget Office, between fiscal year 
1974 and fiscal year 2008, Presidents requested over 1,000 
rescissions under the ICA, totaling over $76 billion. Close to 
40 percent of the proposals were approved by Congress, with 
slightly more than a third of the dollar amounts or around $25 
billion enacted.
    This sum of rescissions requested by the President and 
subsequently enacted since 1974 exceeded $1 billion in only 4 
years. Meanwhile, in this same period, Congress initiated close 
to 2,000 rescission actions totaling over $197 billion, or 
nearly eight times the total of the Presidentially requested 
rescissions, which reflects a trend toward the increasing 
number of rescissions and rescinded funds originating in 
Congress.
    When reviewing this data on rescission actions since 1974, 
some have questioned whether Presidents have used the ICA--why 
Presidents have used the framework so infrequently. A variety 
of factors may be involved here such as limitations in the ICA 
framework allowing Congress to ignore rescission messages, to 
the consternation of the Executive Branch.
    At a House Budget Committee hearing last June, Dr. Jeffrey 
Liebman, testifying for the Office of Management and Budget, 
made a statement in favor of the expedited rescission bill that 
was introduced last year, and at this hearing, some members 
urged OMB to submit rescission requests under the existing 
framework suggesting that it could at least send a useful 
signal to help build a consensus on the need to reduce 
spending.
    In response to a direct question as to whether the 
Administration would transmit rescission messages pursuant to 
the ICA, Dr. Liebman replied, ``We are concerned that when one 
does it now, one does not get an up or down vote, and that 
basically, it is a fruitless process.'' That view from OMB last 
June.
    Another consideration in assessing the effectiveness of the 
ICA since 1974, or the potential impact of expedited rescission 
authority for the President, is the so-called deterrent effect. 
Representative Paul Ryan has characterized the threat of 
inclusion in a Presidential rescission package as, quote, ``the 
power of embarrassment in transparency.''
    OMB's Acting Deputy Director referred to this potential in 
a statement last spring and said, ``Knowing this expedited 
rescission procedure exists may also discourage policymakers 
from enacting such unnecessary spending in the first place.''
    The scope of the deterrent effect ultimately depends on 
political calculations by each Member of Congress. If lawmakers 
decide that a project is of value to their district or State 
and will be appreciated by their constituents, they arguably 
will not be deterred by the prospect of a President singling 
out their project in a rescission bill.
    There are other factors that may influence whether a 
President may make use of rescission authority in the ICA such 
as collegial solidarity when the Executive and Legislative 
Branches are controlled by the same political party, or a 
President's disinclination to cut funding for agencies or 
departments under his control. Finally, a serious problem 
associated with rescissions is the challenge of coming up with 
agreed-upon guidelines on which to base rescission decisions.
    In conclusion, the framework established by the ICA in 1974 
has provided the opportunity for greater accountability in 
reporting of rescissions and for increased congressional 
oversight and control of impoundment actions. Total budgetary 
savings of $25 billion from Presidential rescission requests 
approved by Congress since 1974 may appear rather 
inconsequential, with total Federal outlays and annual budget 
deficits both in the trillions.
    Yet, any budgetary mechanism that helps restrain spending, 
even in a small way, arguably may prove useful for deficit 
reduction. It remains an open question whether providing the 
President with expedited rescission authority would increase 
the employment or effectiveness of the rescission tool in 
reducing unnecessary spending.
    Senator Carper. Thanks so much, Dr. McMurtry. And Todd 
Tatelman is next. Todd, you are up. Thanks for being with us.

 STATEMENT OF TODD TATELMAN,\1\ LEGISLATIVE ATTORNEY, AMERICAN 
          LAW DIVISION, CONGRESSIONAL RESEARCH SERVICE

    Mr. Tatelman. Thank you, Mr. Chairman, Senator Brown, and 
Members of the Subcommittee. Before I start, I would like to 
take a brief second and recognize the exceptional contributions 
of one of my colleagues in the American Law Division, Todd 
Garvey, sitting behind me, who assisted me greatly in preparing 
today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Tatelman appears in the appendix 
on page 67.
---------------------------------------------------------------------------
    Senator Carper. Would Mr. Garvey raise his hand, please? 
Thank you. Would you raise the other hand? [Laughter.]
    Mr. Tatelman. His assistance on the written statement was 
invaluable to the contribution that Congressional Research 
Service is able to make this afternoon.
    Briefly, in the remarks I will prepare here today, or 
deliver here today, the Subcommittee asked that we discuss the 
constitutionality and the constitutional basis for the Supreme 
Court's decision in the Line Item Veto Act case, Clinton versus 
city of New York. And the Subcommittee also asked that we 
review S. 102, the Reduce Unnecessary Spending Act of 2011, and 
discuss its constitutional--any constitutional questions or 
issues that may arise.
    So really briefly, in order to do that, I have to go back 
over some of the provisions of the Line Item Veto Act of 1996, 
as it was enacted by Congress. That law applied to any amount 
of discretionary budget authority, item of new direct spending, 
or limited tax benefit. It permitted the President, by special 
message to the Congress, to cancel provisions within 5 days of 
their passage by the Legislative Branch.
    The rescissions or cancellations authorized by the Line 
Item Veto took effect upon receipt of that special message by 
either the House or the Senate, whichever received it first. 
The only way that those cancellations could be overcome was by 
passage of a disapproval bill by two-thirds vote, which 
rendered the President's cancellation, quote, null and void.
    This law, when it was enacted in 1996, was immediately 
challenged by several members of the Senate who had voted 
against it. This first constitutional challenge was what 
lawyers would call a facial constitutional challenge. Senator 
Byrd and others who challenged the law claimed that it was 
unconstitutional basically on its face as written, before any 
president had ever attempted to exercise the authority.
    This case, Raines versus Byrd, made it all the way to the 
Supreme Court. However, the Supreme Court decided not to rule 
on the constitutionality of the underlying statute; instead, 
choosing to discuss the case based on the standing of the 
various Members of Congress who had brought the suit.
    In that decision, however, the Court strongly indicated 
that in an as-applied challenge, once a President had actually 
utilized the authority, would, in fact, be something that the 
Court would be interested in entertaining.
    About a year later or so, when President Clinton vetoed 
three provisions, one in the Balanced Budget Act of 1997, and 
two in the Taxpayer Relief Act of 1997, another case was 
brought to the Court's attention, this one making it all the 
way to the Supreme Court, by the city of New York and other 
affected parties who were the subject of those provisions that 
had been rescinded.
    The Supreme Court case, Clinton versus the city of New 
York, is what we would call an as-applied challenge. It was 
challenging the constitutionality of the President's actions 
under the Line Item Veto as it was applied to those budgetary 
provisions that he canceled.
    The Supreme Court, in a six to three decision in Clinton 
versus city of New York, held the Line Item Veto Act 
unconstitutional on the grounds that it violated Article I, 
Section 7 of the Constitution, the bicameralism and presentment 
clauses.
    Essentially, the Court argued that the Line Item Veto Act 
violated what the Court considered to be, quote, the single, 
finely wrought, and exhaustively considered procedure, end 
quote, for adopting laws under the Constitution. Phrased 
another way, the Court believed that the actions by the 
President under the Line Item Veto Act of 1996 did not satisfy 
those parts of the Constitution.
    The Court noted the possibility that Presidents had to veto 
legislation and cited historical examples from Presidents 
George Washington on forward, which indicated that Presidential 
vetoes were an all or nothing proposition. In other words, 
Presidents had to veto entire pieces of legislation or sign 
them in their entirety into law. The possibility of only 
vetoing specific sections was something that the Constitution 
did not contemplate.
    The Court further differentiated the line item veto from 
the traditional veto which is provided for in Article II of the 
Constitution by noting that the traditional veto takes place 
before a law is signed by the President. Whereas, the line item 
veto occurs after the President has signed the bill into law. 
These combinations of effects led the Court to conclude that 
the act was unconstitutional.
    Turning to S. 102, the Reduce Unnecessary Spending Act of 
2011, as has been described by my colleagues on the panel, this 
does present somewhat of a different situation. Under the S. 
102, the President is permitted to submit rescissions from a 
general version of what is called funding, which is defined as 
new budget authority and obligation limits except for 
entitlement funding.
    Here requests must be made within 45 calendar days, and the 
Congress is given the opportunity to vote up or down on whether 
or not those rescissions are to be accepted. The important part 
here is, is that unlike the Line Item Veto Act, the rescissions 
under S. 102 would not take effect until after Congress has 
approved the President's requests. Under the Line Item Veto 
Act, the rescissions took place, you will recall, upon receipt 
of the President's message. So there was no need for Congress 
to act and, in fact, Congress could only act after the 
President had already made his decision.
    So it seems entirely plausible to argue that S. 102 is 
differentiable from the Line Item Veto Act which was held 
unconstitutional by the Court in Clinton, and here one might 
argue very cogently that S. 102 does not present the same sorts 
of constitutional concerns that the Line Item Veto Act did.
    Again, I would thank the Chairman and Senator Brown and the 
Members of the Subcommittee for the opportunity to testify here 
this afternoon.
    Senator Carper. Mr. Tatelman, thank you. We will close, at 
least the testimony part, with Tom Schatz. Mr. Schatz, please 
proceed.

  STATEMENT OF THOMAS SCHATZ,\1\ PRESIDENT, CITIZENS AGAINST 
                        GOVERNMENT WASTE

    Mr. Schatz. Thank you, Mr. Chairman, and Members of the 
Subcommittee, and Senator McCain for his many years of support 
for this legislation. We certainly cannot improve on CRS saying 
it is constitutional or Maya's expertise as well, but when the, 
quote-unquote, unconstitutional Line Item Veto was passed in 
1995, it passed the House by a voice vote and by 69 to 31 in 
the Senate. So there was a great deal of support back then, a 
Republican Congress with a Democratic President. Now we have a 
split Congress with a Democratic President and it does not 
really matter who is where. It is something that should be 
done.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schatz appears in the appendix on 
page 78.
---------------------------------------------------------------------------
    Given our fiscal situation, this is as good a time as any 
to move forward with this proposal. It will not eliminate the 
$1.6 trillion deficit or reduce the debt all that much, but it 
will help identify areas where the President says Congress has 
gone too far.
    While there is currently an earmark moratorium, there are 
rumblings over in the House about redefining earmarks, coming 
up with some way to continue to earmark money for either 
transportation or the Army Corps of Engineers (ACE) or some 
other areas. While we believe the leadership when they say they 
will not change the definition, which was proposed by Democrats 
in 2006 and has been carried forward, they are still getting 
used to the idea that earmarks are not there. They are still 
talking about trying to do something that sounds like an 
earmark.
    Whether it is an earmark or a program or any other form of 
spending that would be subject to the rescission authority, it 
does restore at least a little bit of balance between the White 
House and Congress, which many believe was really lost under 
the Impoundment Act of 1974. In fact, many argue that we are in 
our situation today because of the way that this legislation 
was passed and adopted, and that the entire budget process 
needs to be reformed, as I know many Members of this 
Subcommittee have proposed over the years.
    So while the line item veto did exist, President Clinton 
used it to cancel $355 million in spending in 1998, .002 
percent of that year's budget. It was minuscule, but it made 
the point that there was some desire to use that particular 
tool.
    We agree that this is a constitutional form of the 
legislation. The prior law, the current law allows the 
rescissions to be ignored, nobody is using it, and this would 
not tilt the power over the Nation's purse strings in favor of 
the President. It would hold both the Legislative and Executive 
Branches more accountable for the expenditure of our tax 
dollars.
    The bill would allow the President to only propose cutting 
discretionary and certain non-entitlement mandatory spending. I 
agree with the gentleman from Alaska that we should allow much 
more to be done, and perhaps this will lay the groundwork for 
something stronger in the future, but it would be difficult to 
argue that this should not be done given the situation that we 
find ourselves in, and we are not just facing our own problems 
here.
    Unfortunately, what has happened in Japan is going to have 
an impact on our deficit and debt. Some of the money that had 
previously been lent to the United States will not be there 
anymore. So it will have an impact on this. We do not know what 
it is yet, but a lot of things can increase interest rates. 
Interest on the debt is going to be a massive part of our 
budget and something that we can only control by controlling 
how much we spend and the size of the deficit and debt.
    Any concern that these rescissions would give the President 
unlimited power is really unfounded and I am glad to see a 
bipartisan effort to move this legislation forward. The 
Government Accountability Office estimated in 1992 that a 
Presidential line item veto could have cut $70.7 billion in 
pork barrel spending for fiscal years 1984 through 1989. That 
is money that would have, during that time, helped to reduce 
the deficit.
    And the expedited rescissions are not the same as a line 
item veto, but it would serve the same purpose and help restore 
some control over the budget process. And if earmarks come 
back, and they might, it would certainly allow the President to 
weigh parochial expenditures which benefit the few against the 
common good and the priorities of many. The American people do 
not like the way business is being done here in Washington. 
They are seeking changes and this is one change that should be 
very easy to move forward. Thank you for the opportunity to 
appear here today.
    Senator Carper. Thanks so much, Tom, for your testimony 
today. Thanks a lot for all that you and Citizens Against 
Government Waste have been doing for 25 years.
    I noticed as this hearing has gone on and as our witnesses 
have been testifying, we have been joined by some young people 
sitting back in the back couple of rows here. You are probably 
wondering, What is going on here? I will just say to our young 
guests, Mark Begich, who just walked out of here, is a Senator 
from Alaska. He is the former Mayor of Anchorage, Alaska. I am 
a former Governor of Delaware.
    Most Governors and a lot of Mayors have what we call line 
item veto power. That is when they sign a bill into law, a 
spending bill into law, we can actually go back and see whether 
certain lines of that particular spending bill they did not 
like or they thought were inappropriate.
    And they can say, I would like to veto that provision or 
reduce the amount of spending in that provision, and then send 
it back to the legislative body and say, All right, I think 
this is a good bill that you sent us, but there is one 
provision or these couple of provisions make no sense, we ought 
to not do them, and then the legislative body, in this case the 
Congress, would have to vote or not.
    The President has these kinds of authorities. The President 
can sign the spending bill into law. The President can pick out 
from that spending bill that he or she signed into law and send 
to Senator Brown and me and the rest of the Senate and the 
House, a list of items that he or she thinks are inappropriate, 
wasteful, if you will.
    Under current law, we do not have to vote for those. We can 
ignore them if we choose to, and for the most part, in the last 
30-some years, Congress has chosen to ignore them. And it is 
almost like they go away, almost like they were written in 
invisible ink, and the Congress never has to take a stand on 
the proposed further reductions in spending.
    Senator Brown and I, Senator McCain, who is our co-sponsor, 
leading Republican co-sponsor of this bill, Senator Begich and 
I think that the Congress should have to vote on the 
President's proposals, we call them rescissions, reducing, 
rescinding spending, think that the Congress should have to 
vote on that. So that is what we are doing here.
    We are running a deficit this year of about $1.5 trillion. 
We need to look at almost every corner of our budget, where we 
spend money, and try to do something about it. So for those of 
you who are wondering what is going on here, that is what is 
going on here. So welcome, we are glad you have joined us. We 
have a good panel here, so you have their backs. You have their 
backs. Keep an eye on them. Give them plenty of backup.
    Let me come to Ms. MacGuineas, we will just start with you, 
if I could. Let me just ask really the first question of each 
of you. What would you change about our proposal? If you could 
change some portion of our proposal and still believe you could 
get it enacted, get it through the House and through the Senate 
and by the President, if you could change something and still 
think you would have a good shot at getting it enacted, what 
would you change? Ms. MacGuineas, do you want to lead off with 
that?
    Ms. MacGuineas. Sure. Well, I had the answer until you said 
had to get enacted, because it takes a while to lay a 
foundation for things. So I think you stick with what you have 
and I think you probably are going to get this enacted. My 
fingers are crossed.
    What I think we need to push for is expanding this so that 
it does look at changes in entitlement programs and tax 
expenditures. And I think that drawing up that legislation is 
more complicated and I think it is politically more 
challenging. But particularly focusing on treating tax 
expenditures more like spending, which is really what they are, 
I think, holds a lot of promise.
    So I would not change a thing about the way the bill is, 
but I would extend it and expand it as soon as possible to 
other areas of the budget.
    Senator Carper. All right. Thanks very much. Dr. McMurtry, 
you always struck me as kind of a legislative strategist. What 
would you change, if anything, and still be able to get 
something passed, enacted?
    Ms. McMurtry. Well, I agree with that.
    Senator Carper. Go ahead and use your microphone, if you 
will. I know you do not want to.
    Ms. McMurtry. I agree with that statement----
    Senator Carper. Would you pull the microphone down just a 
little closer to your mouth, please? Thanks. There you go, 
perfect.
    Ms. McMurtry. OK. In terms of getting something passed, 
probably the existing package is the most practical way to 
proceed. But I think that it would be useful, at least, to 
reconsider other aspects of what was available under the Line 
Item Veto Act of 1996. New items of direct spending were 
available. In other words, the President could not go in and 
touch an existing entitlement, but if there were a change that 
would increase the amount of the entitlement, that could come 
under the authority to send it back to Congress.
    Now, clearly, with this framework in S. 102, it would be a 
different framework from the LIVA in terms of it not being 
canceled and then Congress having to re-institute it, but--just 
in terms of Congress taking a second look at it. And the same 
thing with tax expenditures, or as they were called in 1996, 
tax benefits that were only useful to under a hundred 
recipients.
    So again, there were problems that were worked on with 
expansion of the coverage of the expanded rescission authority 
in 1996. I guess the one other thing that has been mentioned 
since then--I do not necessarily--I do not have an opinion on 
it, but that would be to cover tariff benefits. That has been 
seen in some of the recent bills as well, that the President 
could single out some of those for reconsideration and send it 
back.
    Senator Carper. OK, thanks. Mr. Tatelman.
    Mr. Tatelman. Well, Mr. Chairman, as merely a humble 
attorney and expert in constitutional law, the budget process 
is far beyond my area of expertise, so I would not have an 
opinion about what you could change other than to stress that 
you need to maintain the current structure with respect to 
requiring that Congress be the actor in order to satisfy the 
bicameralism and the presentment requirements.
    As long as you leave that portion of it alone, on 
constitutional grounds, you are at least different from the 
Line Item Veto Act and probably OK with at least to respect to 
what the Court has said thus far. I will defer to my colleagues 
on how you fix the policy side on the budget stuff as that is 
something I do not know nearly enough about or only know enough 
to be dangerous.
    Senator Carper. OK, good. Thanks. Mr. Schatz, and then I am 
going to yield to Senator Brown.
    Mr. Schatz. Looking at the definition of an earmark, it 
includes appropriations authorizations and tax expenditures or 
tax--tariffs and taxes, as I understand it, tax expenditures. 
So I think you have to cover these tax expenditures. They are 
very targeted. They are objectionable, in many cases.
    Dr. McMurtry mentioned that under a hundred people could be 
benefiting. There is a lot more that could be covered. I do not 
know if that particular provision would increase any 
opposition, but there might be a way to tie it to the earmark 
definition to say the President would not even be able to 
rescind anything that we define as an earmark. So I think that 
is worth looking at.
    Senator Carper. Good. Thanks very much. I will come back 
for a second round. Senator Brown, you are on and I am going to 
slip out. We have some folks, I think, from the Dover Air Force 
Base, out in the anteroom. I have to go spend a few minutes 
with them and then I will be back. In the meantime, pass as 
much legislation as you want to.
    Senator Brown. Well, thank you, Mr. Chairman.
    In Dr. McMurtry's testimony, she concludes that if you add 
up all the rescissions since fiscal year 1974, including both 
Presidential and congressional, that the amounts appear modest 
compared to the total Federal outlay, topping $3.5 trillion in 
fiscal year 2008. Dr. McMurtry posed a similar question in her 
testimony, but I will ask everyone, why have the Presidents 
employed--why have the Presidents employed the original ICA 
framework so infrequently, do you think? Do you want to take a 
shot?
    Mr. Schatz. Well, I think because of the process that 
currently exists. They come here, the President might be taking 
some risk in identifying these proposals, and he knows that 
nothing will happen. So if you are sending something that is 
not going to go anywhere, I believe the view is that it is just 
not worth doing.
    In a sense, a better question is, why is it taking Congress 
so long, since 1996, to come up with something that is getting 
this kind of support? Because I think that could----
    Senator Brown. Well, I think it is obvious, because right 
now we have never been in this fiscal mess to the point where 
we are right now and everything is on the table, and sometimes 
it takes something like this to push people forward in a 
bicameral, bipartisan manner, to do just that.
    Mr. Schatz. Well, it would be better if we were proactive 
instead of reactive.
    Senator Brown. I do not disagree with that at all. I am up 
beating that drum regularly. But we are here, fortunately, and 
I am hopeful that it will continue to move forward. I did not 
mean to interrupt.
    Mr. Schatz. No, that is fine. I am just making the point 
that I think it is something that they viewed as fruitless and 
therefore did not bother with. There is enough going on with 
the budget generally that this required an additional amount of 
work and they, I imagine, did not see it as something that 
would be helpful to them.
    Senator Brown. Anyone else have any thoughts at all? Maya.
    Ms. MacGuineas. Sure. I mean, I think basically the point 
is, they did not do it very much because they thought it was 
not going to work, and now you have the reverse, assuming you 
pass this legislation, which means people are going to be less 
inclined to slip things into bills now because it is not going 
to work.
    It is not going to be as effective as it was before, which 
actually can serve to magnify the overall effect of this, which 
is, you will be able to remove unnecessary and wasteful pieces 
of legislation, but you will also be able to create an 
effective deterrent, which we have not had before because 
people know that these will be identified, publicly so. 
Hopefully there will be some shame factor in it. So I think 
that the effect can actually be larger just because of that 
deterrent factor.
    Senator Brown. So I know that President Bush did not use it 
at all and President Clinton, over 5 years, only used it 
sparingly, saving about $600 million over a 5-year period. Do 
you think this is more of a result of the limitations in the 
original framework or a lack of political will?
    Mr. Schatz. Again, I think it is the framework. Clearly 
there was a desire to reduce the deficit all along so it would 
not grow quite as large as it is now, and given the current 
situation, given the new legislation, I would expect that there 
would be more use of it. The President has said he wants it, 
and I think more vocally than, I think, has been said recently.
    Looking at the way the Congress is concerned about 
spending, this is something that should move fairly quickly 
because it is probably one of the least controversial aspects 
of deciding what to do about the budget.
    Senator Brown. I noticed there seems to be a consensus 
based, Todd, on your commentary about the constitutionality of 
it, that it would survive constitutional muster based on the 
way it is being presented. It seems to be the challenges would 
be more from the political side of the house, obviously, versus 
the constitutional. Is that a fair assessment?
    Mr. Tatelman. At least based on what we know the Supreme 
Court has said so far. I mean, again, we can only use precedent 
to give us a guideline. In this case, I think, as I testified 
to and as the written statement indicates, the bill that is 
currently before the Senate and a companion piece before the 
House, are distinguishable from what has come before.
    But the Court has never actually passed on an expedited 
rescission procedure like this. There are other--all that we 
can say is there are certainly other examples of legislative 
fast-tracking, as it is sometimes referred to, or expedited 
procedures that are out there. And to my knowledge, Senator, 
none of them have been held to be unconstitutional. So based on 
that precedent, I would tend to agree at this point.
    Senator Brown. And, Dr. McMurtry, particularly with the 
first Bush Administration, you mentioned in your testimony that 
the use of rescissions became a controversial and highly 
partisan political issue to the extent not seen since Nixon. 
Why do you think it was such--and obviously, I was not around 
here then and I am still somewhat new. Why do you think it was 
such a contentious issue, and do you think these issues are 
still relevant today?
    Ms. McMurtry. Well, I think part of it was----
    Senator Brown. Turn on your microphone again. We are 
testing you today.
    Ms. McMurtry. Yes, you are.
    I think part of it was the fact that in 1992, it was a 
Presidential election year and that President Bush wanted to 
try and establish a record of trying to save Federal moneys. So 
it began at the beginning of the year, and there were just a 
series of these rescission requests that were sent to Congress, 
and eventually, the House and Senate Appropriations Committees 
came up with an alternate proposal.
    I believe the President's total rescission in all the 
different requests totaled $7 billion, and the congressional 
plan that got approved was $800 billion--I mean, $8 billion, 
another billion more. And yet, they had taken things that they 
considered as examples that the Executive Branch was being 
wasteful.
    I think this whole issue of guidelines or any kind of 
objective criteria to try and use in determining whether a 
given expenditure is wasteful or necessary is an issue that may 
be addressed in time. I know there was discussion at the House 
Budget Committee hearing in June 2010 in terms of things that 
the White House considered unnecessary, not necessarily just 
one member with an earmark, but a contingent of Members of 
Congress might consider as essential and not unnecessary.
    Senator Brown. And for Ms. MacGuineas and Dr. McMurtry 
again, a witness in a previous Subcommittee hearing in 2009 
commented that expedited rescission authority is sometimes sold 
as a deficit reduction tool, and if that is how you sell it, it 
is easy to dismiss it. Would you both agree with that 
statement?
    Ms. MacGuineas. I think it is one of the tools in the 
toolbox that is necessary here. I think in terms of deficit 
reduction, we obviously are at the point where we are going to 
need to do as much as possible as quickly as possible, and that 
is why I emphasize the need for a broad-based, multi-year 
fiscal plan, and none of us should fool ourselves into thinking 
that any process changes any fiscal rules are going to make 
that task accomplished on its own.
    That said, there is still a lot of mistrust about how funds 
are spent, and any steps that we can take quickly that do not 
divert attention from an overall package of fiscal reforms, but 
can improve the budget process, can improve the oversight, can 
improve the transparency, and can improve our ability to 
generate savings, are very important trust builders with the 
public.
    We are soon going to have to turn to the entire public and 
say, We need everybody to sacrifice in order to get a fiscal 
package done. We are going to have to look at entitlements. We 
are going to have to look at defense. We are going to have to 
look at domestic discretionary spending, and we are going to 
have to look at tax reform.
    And in order to do that, you need to be able to say to the 
public, And we are doing everything possible to make sure that 
your money is well spent. So that is what I look at this as, as 
a very useful and credible piece of building trust. But what it 
should not do is stop the momentum for the broader fiscal 
reforms that we need to turn our attention to as quickly as 
possible.
    Senator Brown. I am just going to ask one more question and 
then I will turn it over to Senator Levin. In the earlier 
testimony you were talking about tax issues also should be 
looked at as a form of an earmark. I think, Mr. Schatz, you 
said that. Could you just explain that to me a little bit more? 
I do not think I have ever heard that because the folks that I 
work with and speak to, whether they are working down at the 
local market or they are heads of businesses, they say, ``You 
know what? '' It is really the people's money. It is not the 
government's money. And we give it to the government for a 
certain type of usage and sometimes we are happy and sometimes 
we are not. So how do you figure it out as an earmark?
    Mr. Schatz. Well, it is the definition that was originally 
passed in House Resolution 6 in 2007. It is in Section 404 and 
I do not have it memorized, but I know----
    Senator Brown. So you are referring to institutional 
knowledge?
    Mr. Schatz. Correct.
    Senator Brown. OK. I was just wondering.
    Mr. Schatz. Right. The definition of earmark----
    Senator Brown. I have heard that as well.
    Mr. Schatz [continuing]. Right, that the Senate and the 
House are using.
    Senator Brown. I thought I was missing something.
    Mr. Schatz. Oh, no, no. I am all in favor of letting people 
keep their money.
    Senator Brown. No, no problem. Thank you very much.
    Mr. Chairman, I think Senator Levin.
    Senator Carper. Senator Levin, glad to see you. Please jump 
right in here. Thank you.
    Senator Levin. One of the things which we have to worry 
about is giving some people the money which other people should 
be paying to the Treasury. In other words, if you have a tax 
expenditure, there are tax loopholes. There are all kinds of 
tax loopholes in this tax law of ours that gives special 
benefits to special interest groups that are able to get a tax 
loophole for themselves. That is called a tax expenditure, like 
any other.
    I do not know whether you want to put your imprimatur on 
every single one of those loopholes, but I sure would not. It 
is the people's money, but I sure as heck do not want to 
provide an incentive to people who move their businesses 
offshore and create a tax loophole so that the cost of doing 
that is deductible now, but the income that they make offshore 
is not taxable until later on.
    I consider that to be a tax expenditure that I do not 
favor, but it is an expenditure. It is something which we ought 
to get to. And I was kind of interested in, actually, I think 
it was your testimony, Mr. Tatelman, that we ought to consider 
including tax expenditures in the rescission power that the 
President would be given here. Is that true? Was it you who 
said that?
    Mr. Tatelman. Not me, Mr. Levin.
    Senator Levin. No, I am sorry. It was Ms. MacGuineas.
    Ms. MacGuineas. Yes, I did say that. Tax expenditures, I 
mean, if you look at tax expenditures, where they have grown 
since 1986 reforms, we now are facing over one trillion dollars 
in lost revenue to the Federal Government a year because of 
these tax expenditures. And I think they do not fit the test of 
good tax policy more often than not.
    So when they are created, they do not get the same kind of 
scrutiny that a normal government program would. They do not 
receive the same kind of oversight once they are in place. They 
are generally quite regressive. And they are very poorly 
targeted. So if you look at one of the best places to start 
looking at functional budget reforms, it is going to this whole 
tax expenditure budget, which is basically this trillion-
dollar-plus shadow budget.
    So I think one of the keys, in thinking about budget 
process and rules and reforms, is treating that piece of the 
budget the same way that we do as spending as often as 
possible.
    Senator Levin. We sure are not doing it right now----
    Ms. MacGuineas. No, we are not.
    Senator Levin [continuing]. As we are looking at 
discretionary spending cuts. We are not even looking at tax 
expenditures, which I happen to agree with you, in many cases 
are inappropriately lost revenue, just as much as some of the 
expenditures are, but they are not included in this rescission 
authority. Is that correct?
    Ms. MacGuineas. That is correct and we said that they 
should be, but we also acknowledge that legislatively it is 
much more difficult to craft. So we were making the point as 
well that it is important to go forward with this and try to 
expand it wherever possible. Tax expenditures present their own 
problems in all sorts of different budget process reforms. But 
we always think that they should be included wherever possible. 
Agreed.
    Mr. Schatz. Mr. Levin, if I may?
    Senator Levin. Yes.
    Mr. Schatz. Because when--the question I was answering was 
in regard to expanding the definition. What I was talking about 
is the current definition of an earmark, which includes some of 
these tax issues and tariff issues, but not all of them.
    So I thought that would be a good place to start because 
people were asking--the Chairman was asking, what else would 
you include. And while we think this legislation should move 
quickly and perhaps be expanded later, this was at least 
something else that could be considered. It would be consistent 
with what Congress has already agreed to.
    Senator Levin. Which is that tax expenditures are included 
in the earmark definition in our rules. Is that correct?
    Mr. Schatz. Yes, correct.
    Senator Levin. But all the focus these days is on 
discretionary spending. It is not on tax expenditures. It is 
not on revenues. It is just on discretionary spending, even 
though--what was your number? One point what trillion?
    Ms. MacGuineas. 1.5 trillion.
    Senator Levin. Lost in tax expenditures, some of which are 
just as abusive, as far as I am concerned, even more so than 
some of the expenditures that are made under the discretionary 
domestic rubric or any other discretionary rubric, for that 
matter.
    Would you say, Mr. Tatelman, that an enhanced rescission 
authority would be added power for the Executive Branch?
    Mr. Tatelman. No, I do not know that I would say that it is 
an added power considering that the President already has the 
ability, under the Impoundment Control Act, to make the 
rescissions to Congress, and he already has the constitutional 
authority to make any--to recommend legislation in almost any 
form that he wants, that he deems necessary and appropriate. So 
I do not know that I would consider it an added power. I think 
that the----
    Senator Levin. It is enhanced.
    Mr. Tatelman. Yes, I believe that there is a more accurate 
way of saying it.
    Senator Levin. Would you say that this enhances the 
authority of the Executive Branch?
    Mr. Tatelman. No, I do not know that I would say that 
either.
    Senator Levin. Like its title says?
    Mr. Tatelman. I think that it enhances the likelihood that 
the Congress will----
    Senator Carper. Are you suggsting--are you suggesting that 
there is a problem with truth in advertising here?
    Senator Levin. No, I would not do that, no.
    Senator Carper. All right.
    Mr. Tatelman. Senator, I think it would enhance the 
President's faith in the Legislative Branch to take on his 
requests. Even if they did not enact them, I think the 
knowledge that the President would gain--that it would get an 
up or down vote or get consideration by the Legislative Branch, 
the argument would be that would spur him to make more requests 
than Presidents have currently been doing.
    Senator Levin. I think Senator Brown made reference to the 
requests for rescissions made by--I assume that was the first 
President Bush?
    Ms. McMurtry. Correct. We were talking about 1992, in 
particular.
    Senator Levin. 1992. And I noticed that the more recent 
President Bush did not even ask for rescissions, according to 
the CRS report. Is that right?
    Ms. McMurtry. President George W. Bush did not ask for any 
rescission requests under the framework of the Impoundment 
Control Act. However, in a rather curious move, there was 
forwarded to the agencies a package of cancellations, which the 
President said were distinct from rescissions, and they were 
simply identifying unspent balances in accounts that had been 
around for awhile.
    But ultimately, there was an exchange between OMB and the 
Government Accountability Office, which is kind of the 
policeman for the Impoundment Control Act, to make sure that 
things are going according to the rules. And GAO said, You may 
be calling these cancellations, but they amount to rescissions 
because the agencies were withholding money in anticipation 
that there were going to be cancellations.
    So that is the long way around, but if you consider those 
cancellations as otherwise named rescission requests, then 
there have been some in the last decade.
    Senator Levin. What happened to them? Did President Bush 
honor the GAO decision?
    Ms. McMurtry. Right. And OMB issued a clarifying memorandum 
to the agency saying, Oh, we did not mean that you were to 
withhold money, no, no, no, they are not rescissions. And so, 
after that, there was no confusion. After that, in fact, there 
was not any more mention of cancellations, that I recall.
    Senator Levin. And were there any requests for rescissions 
to Congress from President Bush?
    Ms. McMurtry. No.
    Senator Levin. According to your chart here, there were 
none.
    Ms. McMurtry. No, there were not any under the Impoundment 
Control Act. I was just saying this little cancellations 
episode was kind of an interesting footnote.
    Senator Levin. I think he was the first President on your 
list here that never requested a rescission from Congress, 
right?
    Ms. McMurtry. That is correct. President Obama has also 
not--did not make any rescissions requests in the first 2 
years.
    Senator Levin. Yes, right. But so far, President Bush is 
the only one except for President Obama, who is still in his 
first term----
    Ms. McMurtry. That is correct.
    Senator Levin [continuing]. Who has not requested a 
rescission.
    Ms. McMurtry. That is correct.
    Senator Levin. And Congress, as I understand your numbers, 
has rescinded more money than all the Presidents put together 
during the same years as your study; is that correct?
    Ms. McMurtry. Oh, yes, considerably more. The 
congressionally initiated rescissions are several times the 
total of the Presidential requests that were enacted.
    Senator Levin. My time is up. Thank you.
    Senator Carper. Senator Levin, good questions, very good 
questions. Senator Begich, please.
    Senator Begich. Thank you very much. I have just a couple 
questions, but first, again, I just want to echo my support for 
the legislation, and actually, your comments on the tax 
expenditures--I have only been here 2 years, but as I look at 
all the budgets, that is a significant portion of what we do. 
Discretionary is like, you know, it is a sliver of everything, 
and then you add the mandatory and that is another big chunk.
    Do you think there is a legal framework that, at some time, 
we could figure out how to get down that path, I guess is the 
question? I do not know if you want to--I am not a lawyer, so 
my view in life is as a former Mayor. With or without this law, 
if I did not like the program, I think it was wasteful, I 
probably would not have spent the money and let my assembly 
fight me. The reality is, executive power is much more stronger 
than legislative power, at the end of the day, is my own 
personal view. So I would have a different approach.
    But could there be something crafted that could get down 
this path on tax expenditures?
    Ms. MacGuineas. Well, I certainly will not weigh in on the 
legalities of doing that----
    Senator Begich. OK.
    Ms. MacGuineas [continuing]. Because I am ill-suited to do 
that.
    Senator Begich. That is fair.
    Ms. MacGuineas. But without question, first off, right now, 
tax expenditures are one of the most important areas in the 
budget for the overall need to reform the fiscal situation that 
we have to look at. If you look at budget concepts, which is 
something that we have not, as a country, kind of overhauled in 
decades, but it is basically how we think about a lot of these 
concepts, tax expenditures are so similar to spending in so 
many ways, far more than they are tax cuts. And that is 
probably why they are so popular and so much easier to do 
legislation, which is a tax cut that also achieves a goal than 
it is to actually cut spending or to have broad-based tax 
reductions.
    But if we were to reframe these and look at them as 
spending programs, which in many ways they are----
    Senator Begich. They are.
    Ms. MacGuineas [continuing]. They are much more closely 
related to spending programs, then it is much easier to apply 
the same levels. In fact, on spending programs as well, we need 
to increase the levels of oversight, evaluation, rules, kind of 
capping the growth of things.
    When we talk about spending caps, tax expenditures need to 
be a part of that discussion as well. So I think the objective 
here is to shine the light on this huge trillion-dollar piece 
of the budget that has basically been going under the radar and 
saying we need to treat it as close to spending as possible, 
sort of legal challenges aside, and figure out how, in terms of 
budgeting, to recognize them for what they are, which is really 
spending through the Tax Code.
    Senator Begich. Very good. On a separate subject, and this 
is really--is it Schatz? Is that right?
    Mr. Schatz. Schatz.
    Senator Begich. Schatz. If I could ask you this question, 
there is a piece of legislation that Senator Coburn and I 
introduced on what we call orphan earmarks, earmarks that are 9 
years or older and less than 10 percent of it has been expended 
and you get a year to figure it out. If not, it is sucked back 
in or rescinded back in.
    Has your organization looked at that and taken any thought 
on that at this point? The only reason I am taking advantage of 
this moment is because you happen to be here, I happen to be 
here, and here we are.
    Mr. Schatz. Did you or Senator Coburn offer an amendment on 
this, as I recall----
    Senator Begich. We had legislation and we tagged it onto 
the FAA bill on the Full Overall Government----
    Mr. Schatz. Right. And you got about 30-something votes on 
that?
    Senator Begich. No, it actually passed.
    Mr. Schatz. Oh, it passed?
    Senator Begich. It was actually--we got it unanimous 
consent.
    Mr. Schatz. Oh, then that surprises me.
    Senator Begich. How is that for----
    Mr. Schatz. I thought it was interesting that members would 
even object to turning over earmarks that would never be spent, 
especially since there is now a moratorium, and obviously it is 
money that, again, should be easy to get back----
    Senator Begich. Right.
    Mr. Schatz [continuing]. Out of the system. And certainly, 
I would imagine that most taxpayers would be surprised that 
money sits around for 3, 4, 5, 6, 7, 8, 9 years and never gets 
spent.
    Senator Begich. Ten, twenty.
    Mr. Schatz. Especially under these circumstances, there is 
a moratorium on earmarks at all being requested or being 
included in legislation. The President has said he would veto 
bills with earmarks, so yes, it makes a lot of sense to get 
this money back. And hopefully, you will find even more than 
you have already found.
    Senator Begich. I think so. Well, obviously, as you guys 
look at legislation, please look at that. I would only say now, 
Senator Coburn and I disagree on the earmark concept. I am a 
supporter of earmarks. I think legislative power is--part of 
what we do is represent our constituency and it does not add, 
it rearranges the deck of resources, not adds to the 
requirements of the Federal Government.
    But that is another debate at another time. But I think 
this was the right public policy. As I did as Mayor, we cleared 
the books many times of stuff that was old, so we thought this 
was a good approach.
    Let me ask, again in general back on the legislation in 
front of us, one, it is bipartisan which I think is a huge 
statement on that. For those that make the claim that this is 
just kind of a back-door line item veto attempt, even though to 
be very frank, as I said earlier, I would be all fine with line 
item because it keeps legislative bodies in check and there is 
a process to override it, which I can tell you, I only 
exercised it once when I was Mayor, but when I was on the 
assembly, we had a Mayor that did about 40 vetoes a year, we 
averaged about. We overrode probably 85 percent of them. So it 
is a process.
    So how do you, those that are supportive of this type of 
legislation, how do you respond to that when people say, This 
is just another line item veto and we will have the same 
constitutional problems? Anyone want to----
    Mr. Schatz. Well, I would certainly leave that up to CRS, 
but I mentioned earlier that the Senate approved the prior 
version 69 to 31 and the House approved it by voice vote, so 
they approved something that was much stronger when the deficit 
was much lower.
    I think that this is certainly something that has met all 
of those constitutional parameters and should be a lot easier 
to get through this time. But as I said, CRS has said this; a 
lot of the attorneys outside of Congress have said that. It 
meets those qualifications now.
    Senator Begich. Go ahead, Todd.
    Mr. Tatelman. Well, Senator, I mean, I think that one has 
to distinguish between the strict sort of formalist 
constitutional debate that was had over the Line Item Veto Act 
versus one who might take a more sort of practical or political 
view of the relationship between executive and legislative 
powers.
    I think if you can confine the constitutional discussion to 
that sort of formalism that the Court used in---or the majority 
of the Court used in the 1997 Line Item Veto decision, I think 
you will reach the same conclusion that I did, which is that 
this bill and others like it are, at least, distinguishable and 
operate differently than the Line Item Veto Act did, and those 
differences seem to meet the Court's criteria for what would 
pass constitutional muster.
    I think those that are looking at it more from what we 
would call a functional standpoint or purely the political 
interplay between the branches might come to the conclusion or 
might make the argument that suggests that you have sort of 
shifted some power away from the Legislature toward the 
Executive and that, in some ways, is either too much or 
potentially offensive or subject to abuse, whatever line they 
choose to take.
    I mean, it becomes a question of degrees at that point. 
There is no doubt you are moving some powers, is this too much, 
too little, or just the right amount, as the Chairman indicated 
in his opening. I think that is a debatable proposition.
    Senator Begich. Let me ask you, because my time is up, as 
an Attorney, what is your confidence level on the way this is 
drafted now, that it will withstand constitutional challenge?
    Mr. Tatelman. If the constitutional challenge is similar 
to--in other words, on the similar basis that it was brought in 
1997, I think the likelihood is fairly good that this would 
withstand constitutional challenge. There are, however, 
potential other questions that might get raised that the Court 
did not address because it did not have to in 1997.
    Senator Begich. Sure.
    Mr. Tatelman. And for those, of course, I do not know what 
the outcome would be. But I think, again, if we can take it to 
a similar constitutional challenge on Article I, Section 7 
grounds on bicamerals and presentment issues, I think the 
likelihood is that this would withstand those challenges. 
Others, I do not know.
    Senator Begich. Very good. Thank you very much, Mr. 
Chairman.
    Senator Carper. Good questions. Thank you, Senator, thanks 
very much.
    Let me raise a couple of practical examples, if I could. We 
are joined by the Chairman of the Armed Services Committee, 
Senator Levin, who has forgotten more about defense spending 
that most of us will know. He has led the fight to try to make 
sure we spend our tax dollars in a more cost-effective way in 
the way we buy weapons systems.
    We have had hearings in this Subcommittee that were--GAO 
has come and testified that earlier this last decade, our major 
cost overruns for major weapons system was almost $300 billion 
per year. One of the weapons systems that we ended up having a 
debate on--I am sure the Chairman will remember--a year or so 
ago was the F-22, where the F-22--the Administration was not 
asking for more F-22s.
    As it turns out, the cost of the F-22--Mr. Chairman, do you 
recall what the cost per item for an F-22 is? It is about $200 
million. It is roughly $200 million, I think. And the cost per 
flight hour for flying an F-22 is about $45,000. I am an old 
Navy P-3 mission commander. I think the cost per flight hour of 
a Navy P-3 13-man aircraft, four engines, I think it was about 
maybe $10,000. F-22 $45,000 per flight hour.
    At any given point in time, the mission capable rate for 
the F-22 was about 55 percent. So that means that if you had a 
hundred of them, only 55 of them could actually fly the 
mission. If you look at the work we have done with F-22s in 
Iraq or Afghanistan, the number of missions they have flown, 
sorties they have flown in Iraq is zero. The number of missions 
they have flown in Afghanistan, zero.
    And yet, we had a lot of folks who wanted to keep buying 
them. Really, in a down economy it was almost like a jobs 
machine. We finally, with the leadership of this man to my left 
and Senator McCain and this President, we basically pulled the 
plug on the F-22.
    A similar kind of situation with the C-17, although the C-
17 cargo aircraft, not a maligned aircraft, actually an 
aircraft that gives a great mission capable rate, does the job 
that we need, we just have too many of them. It is made in 
about 45 States, and while the last President, last Secretary 
of Defense, current President, current Secretary of Defense 
said, We have enough C-17s. Thank you. We do not need anymore.
    Why don't we modernize those C-5s that are bigger, carry 
more, fly further, cost about half as much to modernize. 
Modernizing two or three C-5s, we can get--they fly twice as 
far, carry twice as much as a C-17, and it will be good for 
another 30 or 40 years. So the last President, this President, 
current Secretary of Defense said, ``Why don't we stop buying 
more C-17s? ''
    Let me just ask, in those situations, how would a 
President, exercise his or her discretion under this rescission 
legislation to be able to stop buying more C-17s, stop buying 
more F-22s? How might it work? Anyone? Because I thought we had 
a tough time. I was not killing those programs, but stopping 
those programs. Had a tough time. How might they have been 
addressed if the President had this kind of authority and the 
Congress was required to vote on it? Anybody?
    Mr. Schatz. Well, the way the legislation reads is the 
President can only propose changing spending levels, so I do 
not believe he can eliminate the entire program. But he might 
be able to say, If you want to spend $20 billion on a 
particular defense project----
    Senator Carper. Weapons system.
    Mr. Schatz [continuing]. Weapons system, we can drop it to 
$15 billion. I believe that is the accurate way of describing 
the----
    Senator Carper. Or in the case of the F-22 to take it to 
zero and then the Congress would have to vote, as I understand 
it. We would have to vote.
    Mr. Schatz. Right.
    Senator Carper. And we could say yes or no. And if 51 
Senators said no, then basically the money is restored. Is not 
that the way it would work? Yes, I think it is. Everybody seems 
to say yes.
    Mr. Schatz. Yes.
    Senator Carper. OK, good. Could we talk a little bit 
about--and it has been an interesting discussion here, Senator 
Levin. For the most part, the witnesses have said they think 
this would be constitutional, what we have proposed would be 
constitutional. They think it would be helpful. It does not go 
nearly as far as the 1996 legislation, which I think you, along 
with Senator Byrd and others, challenged whether it was 
unconstitutional.
    But the witnesses seem to believe it would be 
constitutional, that it would be helpful. They also said it 
would be, I think, helpful to see how it works and let us get 
some experience under our belts and if it makes sense to look 
at tax expenditures later on or maybe to look at other kinds of 
spending later on, then maybe we should do that. But first, let 
us see if we can get this passed, see if it works. I tend to 
agree with that.
    One of the ideas behind this legislation, I think, is to--
it deals with mandatory spending, mandatory spending. Can any 
of our witnesses give us some practical examples of how this 
legislation might address or affect mandatory spending? Can 
anybody just think of something, have some good concrete 
examples that come to mind, anybody?
    Ms. McMurtry. I think----
    Senator Carper. Go ahead and make sure your--you can just 
leave that on, if you want.
    Ms. McMurtry. OK. I think that in the section by section 
that OMB submitted along with the draft legislation last year, 
this was mentioned in passing, but no examples were given in 
terms of being non entitlement direct spending, which would be 
provided in other than appropriations acts. But I have not been 
able to come up with a particular example. They must exist or 
OMB would not have used that language.
    Senator Carper. All right. I am going to ask you all to 
answer that question for the record, if you would, just 
whenever we send you some questions in writing. Mr. Schatz, you 
want to say something?
    Mr. Schatz. I would agree. I cannot think of anything off 
the top of my head.
    Senator Carper. All right. We would like for you to do 
that----
    Mr. Schatz. They have all been in this a long time.
    Senator Carper [continuing]. For the record. The other 
thing I want to say, I had an interesting conversation with 
some folks over at the White House this morning and saying to 
them, We need for the White House, the Executive Branch, to 
provide stronger leadership on long-term deficit reduction. We 
do not expect them to be involved up to their eyeballs in this 
3-week CR stuff, continuing resolution stuff. But certainly for 
the continuing resolution for the balance of the fiscal year 
and then a multi-year deficit reduction plan, we certainly 
expect them to be fully engaged with us and I think they are 
going to be.
    But one of the things that we talked about today was 
entitlement spending, and a lot of people say, Well, so much of 
the budget is really not--is uncontrollable. We actually cannot 
affect it because it is entitlements that some of the people 
are entitled to.
    But even in an entitlement setting, we had a hearing here 
last week that Senator Levin and I have talked a little bit 
about, and the issue was an entitlement program for people that 
serve on active duty in our armed forces. I popped out here 
just a minute ago when Senator Levin was coming into the 
hearing room. I had about six or seven Air Force folks, 
officers and enlisted, out in the hall from Dover Air Force 
Base.
    We have Dover Air Force Base active duty and reserve folks 
who participate in a program called Tuition Assistance Payment 
(TAP). Senator Levin knows a lot about that. But if you happen 
to be at Dover or anyplace in Michigan or any other active duty 
base around the country, they can sign up for college credits, 
college courses, off base at a local college or university, on 
base where a college or university actually offers the courses 
on base, or they can sign up for distance learning courses that 
could be offered by a local college or university, or by a 
college or university on the other side of the country.
    We are just trying to drill down on that program to see if 
we are getting our money's worth, taxpayer money's worth. A lot 
of these programs, about 90 percent of the money--and the way 
it works is, let us say we are all on active duty someplace. We 
sign up for college courses. The way it works, we have to pass 
the course, but if we do, we get, for every credit hour, we get 
$250 reimbursement to us that we pay for out of our pockets.
    So for a 3-hour course, you get $750. In the course of a 
year, I think you can get up to, I want to say, about $2,500 in 
money back for the courses that our active duty personnel have 
taken.
    Too many cases and it is not just for-profits. For-profits 
get the biggest tip for this, but it can be non-profits, public 
colleges and universities. It can be private colleges and 
universities. Where a lot of times folks who should not, 
frankly, are not prepared to take college level courses, are 
sort of signed up, recruited to be in those programs.
    They do not get the kind of support they need in terms of 
mentoring, tutoring. They basically are set up for failure and 
they do. It reminds me a little bit of sub prime lending where 
a lot of people were sucked into buying homes that they could 
not afford, they did not have the ability to pay for, frankly, 
to maintain. It is actually very, very similar.
    I have said this to Senator Levin and I am going to kind of 
kick this out to our panel. What I said to Senator Levin, we 
have our incentives in a number of our entitlement programs 
that deal with tuition assistance. Really important stuff, 
tuition assistance, trying to improve the credentials of our 
workforce, strengthen our workforce in this country.
    But incentives are set up not to incentivize colleges and 
universities, whether they are for-profit, whether they are 
distance learning, or local. The incentives do not really 
incentivize those institutions to make sure that people are 
prepared that are being recruited into those programs, to make 
sure that they get the--the students get the help they need, 
and to make sure that we incentivize colleges and universities 
for quality, not for quantity.
    So that is--people say to me, Well, we cannot do anything 
about those entitlement programs. Yes, we can. We had a hearing 
here last week where we had--we looked at improper payments. 
For last year, the Administration says, Improper payments all 
in, not including Medicare Parts C and D, maybe not including 
Department of Defense, improper payments, about $125 billion.
    We had a guy here from the Department of Justice (DOJ) who 
said, Well, Eric Holder, the Attorney General, says that fraud 
on top of that in Medicare alone is anywhere from $30 to $60 
billion. I mean, there is a lot out there. To say that we 
cannot do anything about entitlements to stop improper 
spending, I just do not agree with it. We have to do it all. We 
have to do it all.
    Do you all just want--it is kind of a brain dump there, but 
just react to a little bit of what I just said. Thank you.
    Mr. Schatz. Mr. Chairman, on top of what you have 
described, I am sure you are well aware of the GAO report on 
duplication that came out 2 weeks ago, and my understanding is 
that they will be providing some additional information about 
the savings that could be achieved, more specific responses on 
that, and I know that Chairman Issa has looked at this as well, 
and I would imagine that you will on this side.
    Perhaps in some sense, there could be more coordination on 
those kinds of issues from this Subcommittee and the House 
Government Oversight and Reform Committee, because so many of 
these things are fairly obvious and should be addressed on a 
bicameral basis. Legislation can move a lot more quickly if the 
two committees had just some larger oversight on these issues 
like improper payments and the duplication.
    I know that I was pleased to see that the President signed 
into law the Improper Payments Improvement Act because I 
remember the first Improper Payments Act simply said to issue a 
report; nothing happened. It went from $20 billion to $125 
billion, and as you mentioned, that does not even include the 
new prescription drug program where we expect there will be 
some improper payments.
    And that is just a management issue, having been on this 
Subcommittee for many years and as Chairman Levin knows, not 
the most exciting thing that gets done around here, but there 
are literally hundreds of billions of dollars that could be, at 
least spent more effectively if the management practice is 
improved.
    Senator Carper. Others, please.
    Ms. MacGuineas. Sure. I would like to sort of like to take 
a step back and reinforce what I think you have said.
    Senator Carper. OK.
    Ms. MacGuineas. And if you think about what is going on 
right now and the focus on spending cuts and the CR, it is a 
strange discussion that we are in the middle of, where, at 
least in my mind, I feel like we are moving too quickly in 
aggressive spending cuts given where we are in the pace of the 
recovery, something you could slow down if you put in place a 
multi-year budget plan that could reassure markets.
    We are doing it in too short a timeframe because you want 
to be thoughtful and have oversight of Federal spending, and we 
need to expand this whole discussion out to the rest of the 
budget.
    But what is happening and is going to happen is that there 
is a new focus on spending reductions and that is here to stay. 
That is going to be part of the fiscal reality that we face, 
and that is a good thing when it is used in the right way.
    And so, I think the spotlight on spending cuts means that 
we really need to hone in on spending that is unnecessary, on 
spending that is wasteful, on spending that has the wrong 
incentives, and on spending that does not work. And that is a 
lot of what you are talking about here in figuring out 
different tools to really work on that.
    We are going to have to do that all. I cannot not make the 
point, however, of course, that it is not going to be painless, 
the overall fiscal situation that we have to contend with, so 
it is going to require more than that. That is the necessary 
component of tackling all the things that we have to look at, 
from Social Security to controlling health care costs to 
defense spending to new revenues, and that all of that has to 
be put in a new framework of how we are going to do what we do 
well, how we are going to do it as part of economic growth, and 
that these tools are necessary to do government better in a 
time of kind of real fiscal restraints. But we cannot run away 
from those issues as well.
    Senator Carper. Thank you. Dr. McMurtry, I am not going to 
let you out of this one. Any reaction?
    Ms. McMurtry. Well, I think that since the discretionary 
piece of the budget is not much over a third at this point, you 
are going to have to look at other components of the 
entitlement programs and the revenue side of things to try and 
get things in balance, ultimately.
    Senator Carper. All right. Thank you very much. Senator 
Levin, you have been very patient. Thanks.
    Senator Levin. [Presiding.] When we say ``ultimately,'' it 
is the wrong word as far as I am concerned. It is now. It is 
always ultimately when we look at hard things. It is never now. 
Let me tell you some of the problems that I have with the bill. 
I am sorry that Senator Carper has left because I wanted him to 
hear this, but I will find him at another time to share it with 
him.
    First of all, we talk about wasteful and unnecessary 
spending. I do not know of anybody who wants to support 
wasteful and unnecessary spending. I think the vote is a 
hundred to nothing on that. The problem is that we have a very 
different view as to what is wasteful and what is unnecessary.
    A lot of the differences between Members of Congress and 
each other, Members of Congress and the President, is over 
priorities. It is just simply a difference of priorities. It is 
not wasteful, it is not unnecessary, it is just that something 
else, in someone's view, is a higher priority than in someone 
else's view.
    We wanted to add more drones and unmanned aerial vehicles a 
few years back. It was not in the President's budget. We did it 
anyway. We thought, in the Armed Services Committee, By God, 
that is a weapon system which is really important and will 
really give us a capability. We added them. It was not in the 
President's budget.
    I guess if he had one of these rescissions he could have 
put a rescission package together which included that, and 
there may have been some things in that package that some 
people wanted to rescind, other people did not, but it would be 
an up or down vote, unamendable.
    So we favored the unmanned aerial vehicles when the 
President did not ask for them and could have put the finding 
for them in a rescission package that we could not amend. Those 
vehicles have now saved an awful lot of American lives and 
accomplished an awful lot of missions 5 or 10 years later. We 
would have seen that gone down the drain because the President 
had the power to put together a package which is unamendable.
    That is not waste. That is priorities. It is one view of 
what is important. It happens all the time. It is totally 
legitimate, and if we all agree to what is important and what 
is not important, you would only need one Member of Congress 
and one President. So it is a very important, honest difference 
in many cases that we are talking about here.
    I disagree with this President on the second engine, by the 
way, the so-called second engine on our new fighter plane. I 
have always favored a second engine because I believe 
competition will drive the price of that engine down, and if 
you sole source that engine, you are going to end up with a 
very expensive engine. It is not wasteful spending.
    The President says it is wasteful spending. Secretary Gates 
says it is wasteful spending. Half of the Senate and less than 
half of the House say it is wasteful spending. But in my view, 
it is mighty useful spending. I do not have any back home 
interest in it. I have wanted competition in that engine. There 
never has been competition in that engine. Do you believe in 
competition or not? I do.
    Senator Levin. So label it wasteful. That is what some of 
the ads say. About half of the ads that oppose the second 
engine will say it is wasteful. The ads in favor will say it is 
not. But just to say we are going after wasteful spending in 
this kind of a bill is really ignoring, to me, a very important 
point, which is--I am glad the Chairman is back here now.
    These are debates frequently over priorities. If you label 
something wasteful, everybody is opposed to it and there is not 
much of an argument. When you say, Well, what are the 
Congress's priorities or Members of Congress's priorities and 
how does that differ from the President's priorities, now you 
are going to get into an honest debate over priorities and who 
should have the power.
    And when you say there is no enhanced authority granted to 
the President here, I could not disagree with you more. We 
cannot get something voted on around here without amending it. 
We cannot get something done around here without being able to 
table it. But the President, under this bill, would be able to. 
So it is an enhanced power of the President. It is a serious 
business.
    I do not know whether it is unconstitutional, by the way. I 
kind of agree with you that it probably is not 
unconstitutional, probably not, but I would not want to assume 
it is not since I was one of the plaintiffs going after line 
item veto, as our Chairman said, with Senator Byrd when he was 
alive, and bless his memory. Senator Byrd worried about things 
like this, enhanced power to the Executive Branch.
    We just gave the--or tried to give the OMB a whole bunch of 
power the other day by saying, They could just rescind any 
unobligated balance. I did not vote for it, but that is what 
the majority did. OK? That is their right. But to just suggest 
that such a rescission is not additional power to the President 
is simply wrong. It clearly is. His OMB, unilaterally, under 
that authority, can just rescind any unobligated expenditure. 
That is a huge shift of power to the Executive Branch.
    We are supposed to have the power of the purse around here. 
The President can veto it. He can veto a bill which has items 
in it he does not like. That is his first shot at rescission, 
is veto the bill. That is our choice. We are put in that 
position all the time.
    There are things in bills that are comprehensive bills 
which most of us do not like, there are some things there that 
most of us do not like. And those who vote for it think the 
positive outweighs the negative. That is the position we are 
in, but this gives the President that ability to force an up or 
down vote, unamendable, cannot be tabled, which is a power we 
do not even have, I do not think, unless we take it away from 
ourselves, which we sometimes have. In rare cases, we have 
taken it away.
    So I think we have to look at this for what it is. You may 
favor it. And by the way, I admire the testimony of those of 
you who said this is not going to do much in terms of deficit 
reduction because it will not. And I know a number of you in 
your testimony or in your answers to questions have said this 
is not going to do much for deficit reduction.
    It is going to do a little in terms of giving the President 
even more power, and I am leery about giving any executive more 
power. Now, we have a lot of former Governors and former Mayors 
that understand the need for executives to have power. I am an 
old legislator. I come out of the Legislative Branch of local 
government. I am not a former Mayor. I am a former City 
Councilman. So as far as I am concerned, Presidents have plenty 
of power, if they want to use it.
    I am very leery about giving Presidents more power. In any 
event, that is a long speech. I did say that I had hoped that 
you would be here because I do have some issues with this bill, 
particularly the fact that it is--and I guess I am out of 
time--that it is unamendable and that it cannot be tabled. I 
think that is giving a real power to the President that we do 
not even have most of the time. I am leery about giving that 
kind of power to the President.
    I also have, by the way, procedural concerns. The Committee 
has to act in 3 days? It is a minor point, because I have 
problems with the whole bill, but to say that the Committee of 
jurisdiction has 3 days to act on a rescission message and then 
it is ousted of jurisdiction? Wow. Three days? That is way too 
short a period of time, but that is not the major issue that I 
have.
    I would suggest to even the people who favor the bill that 
they should take a look at that provision. I think that after 3 
days on the calendar, anybody can force a vote on it. So you 
may want to look at that just from a practical point of view. 
But I just think we have to be very careful here. It is 
enhanced power to the President. I just disagree with you.
    Mr. Tatelman. May I respond for 1 minute there, Senator?
    Senator Levin. Please. The Chairman would want to give you 
time and so do I.
    Mr. Tatelman. Senator, actually, I do not think we disagree 
as much as you think we do, and let me just try to explain why 
I think that is. When you asked the question about whether or 
not this was an enhanced power to the President, I was--my 
response was narrow with respect to the fact that the President 
merely sends up the bill. Your comment that he sends up the 
rescission request just like he would make any other 
recommendations, just like he sends up here a budget or sends 
up here proposed legislation on education programs or social 
entitlements or whatever it is that the President thinks is in 
the best interest of the Nation.
    Your comments--and I actually would agree with them with 
respect to how Congress chooses to receive that message and 
what it does with that message are not Presidential powers. 
Those are determinations that Congress itself has made and has 
the authority to make under Article I, Section 5 in setting its 
own rules and regulations for procedures.
    And, in fact, Senator, I think you do, in fact, have the 
power to make things unamendable and move them quickly through 
the committee process. It is much more difficult here on the 
Senate side of the chamber because of the way the history, 
practice, and traditions of the Senate have operated, and I 
know that you are very familiar with those.
    On the House side, though, it is much, much easier. Many, 
many bills on the House side are taken up without the ability 
to amend on the floor, without the ability for extended debate. 
The House Rules Committee, which controls procedural elements 
over there, acts very, very differently than the Senate does.
    Senator Carper. [Presiding.] Would you let me? Would you 
say a majority of the bills that the House takes up are brought 
to the floor without the opportunity for amendment?
    Mr. Tatelman. In the past. I believe that there are some 
statistics that would support that claim. I am not 100 percent 
sure.
    Senator Carper. Brought up on a suspension calendar. 
Brought up on a suspension calendar when you need a two-thirds 
vote. If you get a two-thirds vote, that is it. I think they do 
a lot of business on the suspension calendar over there.
    Mr. Tatelman. I do believe so.
    Senator Levin. I agree with that. It is too bad that there 
is only one house that can have extended debate. As far as I am 
concerned, it is a pity that you cannot offer amendments in the 
House of Representatives and that both parties have denied 
other parties the opportunity to amend bills. I am talking 
about the Senate where this power is--better preserved, folks. 
It is the only place it exists. It sure does not exist in the 
House.
    I happen to agree with our Chairman. It does not exist in 
the House. It does exist here. And your point that we can give 
away that power? Sure, we can. But should we give it away? That 
is the question. Not whether we have the power to give it up.
    Mr. Tatelman. My point, Senator, was merely that you have 
not given it to the President. What you have given it is to 
that particular piece of legislation, if you want to think 
about it in that sense. The President's power ends, even under 
this type of a piece of legislation, the President's power ends 
when he sticks it in an envelope and sends it up Pennsylvania 
Avenue. His ability to turn it over, it becomes then the 
Senate's and the House's call.
    Senator Levin. That is excessively----
    Mr. Tatelman. Legalistic?
    Senator Levin. Excessively legalistic. He has the power 
to----
    Mr. Tatelman. It is a sickness, being a lawyer, Senator.
    Senator Levin. Well, I have the same problem.
    Senator Carper. I am not encumbered by a legal education.
    Senator Levin. The power is to obtain something from 
Congress. That is the power. If we give it to him, he can 
obtain something. He can obtain a vote on an item by itself. I 
cannot. He can. Members of Congress cannot unless we, for some 
reason or another, through unanimous consent or through 
filibuster--when I say Members of Congress, by the way, you are 
correct. I should say members of the Senate.
    So we are giving him a power, a power to obtain something 
very, very important.
    Mr. Tatelman. I understand.
    Senator Levin. Obtain an up or down vote on an item, 
separate from everything else, if he chooses to send us a 
message. That is a very important power. His message cannot be 
amended and it cannot be tabled. I wish Senator Robert Byrd 
were here, for a lot of reasons, but the power to amend is an 
incredibly important power and I will not give it away. Thank 
you.
    Senator Carper. You bet. Thank you so much for being here 
with us, Senator.
    Senator Levin. I thank our witnesses, too.
    Senator Carper. I want to close out with just another 
thought. Let me say while Senator Levin is still here, if you 
think about the legislation that was voted on and approved by, 
I think, 69 Senators in 1996 that said basically, the President 
can come in here and line item, if you will, appropriations 
bills, entitlement spending, revenue legislation, and the only 
way to undo that is for a two-thirds vote of the House and the 
Senate, and in a combination, undo that Presidential power.
    What a huge shift of power that represented. I would not 
have favored that, and I described it before you got here as 
giving the President--like putting a bazooka under the 
President's desk. I am not interested in giving any President, 
ours or Republican, a bazooka under their desk.
    What I want to do is to provide for a reasonable response 
when a President says, my hands are tied, I really cannot do 
more than we have done in terms of deficit reduction, and 
really to say to the Congress, we all have to share some 
accountability and responsibility here in getting this job 
done.
    But if all we do is focus on domestic discretionary 
spending or defense spending, if all we do is focus on 
entitlement spending, and not also focus on the revenue policy, 
or tax policy, then think we missed the boat, to some extent.
    If you go back and look at the years where we actually had 
a balanced budget--did we have two or three at the end of the 
Clinton Administration?
    Ms. MacGuineas. Three.
    Senator Carper. Three. But I think there was some good work 
with respect to reining in the growth of spending on the 
entitlement side and on the domestic and defense spending side. 
We also, presumably, did some reasonable work. I was not here. 
I was trying to govern my little State. But I think some work 
was done on the tax side, too.
    But the other big factor then, you may recall, we were in a 
tech bubble and we just saw an enormous growth of revenues. I 
do not want another tech bubble, I do not want another housing 
bubble. We have had bites out of those apples. But we really do 
need to grow revenues and we need to make sure that the 
policies that we adopt, whether they are spending or tax 
policies, actually do promote growth.
    And that is something that we are sort of losing sight of. 
The President has continued to call for the United States on 
educating, on innovating, on competing with the rest of the 
world. That is awfully important.
    A guy named John Chambers, who was the CEO of Cisco, said 
the two most important things for us to do to make sure that we 
are going to grow jobs in this country, or any country, is No. 
1, create a world class productive workforce. It cannot be with 
anybody else. No. 2, world class infrastructure, broadly 
defined.
    And I would add to that maybe a third one, to make sure, 
particularly on the tax side, that we are actually encouraging 
investments in research and development that will actually lead 
to the creation of new technologies, new innovation, new 
products that we can build, stamp Made in America, and sell 
them all over the world. I think that is critically important 
that we do, do all three of those.
    Senator Levin. Can I just add to that in terms of the tax 
side? That we eliminate those tax loopholes which give 
incentives to people to move jobs offshore. I have to get that 
in.
    Senator Carper. Thanks for getting that in.
    Let me just--we have had a chance to go at it for awhile 
and the hour is growing late. I like to sometimes give our 
panels an opportunity to give like a short benediction, each of 
you, and then I will maybe close it out with an even shorter 
benediction.
    Ms. MacGuineas. Well----
    Senator Carper. Mr. Schatz, why don't you go first and then 
we will just go from your right to your further right.
    Mr. Schatz. As we discussed right at the beginning, we hope 
that this will be the last time of looking at this legislation, 
other than to improve it in the future. So I hope that this 
Subcommittee moves it forward quickly, and putting on the hat 
that is our lobbying arm, we will fully support it and urge 
Senators to vote for it.
    Senator Carper. Thanks so much. Mr. Tatelman.
    Mr. Tatelman. I would just take the opportunity again to 
thank the Chairman for his support of the Congressional 
Research Service and for the opportunity to testify here this 
afternoon. Thank you very much.
    Senator Carper. We are grateful for the work you do. Thank 
you. Dr. McMurtry.
    Ms. McMurtry. I might just add a footnote to what Senator 
Levin was saying in terms of sometimes having a difference of 
priorities and not just a difference of something being 
necessary or unnecessary, essential or un-essential. I do not 
believe I mentioned it in my earlier remarks, but ultimately, 
the scope and the impact of the deterrent effect depends on the 
political calculations of the respective Members of Congress.
    If the lawmakers determine that a particular project is of 
value to their State or district and that their constituents 
are going to appreciate it, just like the one Member of the 
Subcommittee stated, not everyone thinks that earmarks are bad, 
and to the extent that members will stand by their earmarks, so 
to speak, the deterrent effect, which is incalculable at the 
moment, we just do not know how that is going to play out with 
expedited rescission should that be granted.
    Senator Carper. Thank you. I have used this analogy before, 
I think, in this Subcommittee or in this Committee, and in our 
experience in Delaware, we had something akin to earmarks. In 
Delaware, we have three budgets for our State. We have an 
operating budget, we have a capital budget, and we have 
something called a grant and aid budget. The Governor proposes 
an operating budget and proposes a capital budget in our State.
    The legislature is really--they are really the people who 
craft the grant and aid budget. And for the most part, the 
items that are included in the grant and aid budget are Boys 
and Girls Clubs, Boy Scouts, Girl Scouts, any number of good 
organizations who do worthwhile work that would be, frankly, 
hard for most of us to criticize or question.
    But one of the problems we ran into in the 1990's was, at a 
time when we were constrained for a while with revenue growth, 
we saw the operating budget, the capital budget constrained at 
a time when we actually needed to invest in our infrastructure. 
But the grant and aid budget continued to grow apace.
    And we finally decided, maybe what we should do is just put 
a cap on the grant and aid budget. I think we capped it at 
maybe 2 percent of revenues, and that was basically it. It 
provided pretty good restraint. We still have a grant and aid 
budget, but it is no longer growing like topsy.
    I think on earmarks the argument--I do not know if Senator 
Levin made it while I was out of the room, but if we have a 
grant program, we will say it is a transportation program, so 
we have like $100 in it, and somebody comes along and we have 
like a dollar's worth--a hundred dollars goes out for earmarks 
around the country.
    That does not mean we spend $101. It means we spend $99-
plus for that one. But what I think we may want to consider--we 
have this moratorium on earmarks. If we ever go back in a 
future Congress and say we are going to restore earmarks in the 
appropriations process, maybe we could do this: Put a cap like 
some percentage of revenues that earmarks cannot exceed.
    No. 2, I think we are trying to do this, is to provide a 
whole lot of transparency. We are all Representatives or 
Senators and if we have a request for a particular earmark, it 
has to be very clear who is asking for it, one of us; who will 
it benefit, make it very clear; and the idea that if it is not 
in the House or Senate version of a bill, we are not going to 
sort of air drop it and it is going to appear like magic in a 
conference committee.
    That sort of approach, for me, and maybe it is 1 percent or 
it has to be less than 1 percent, I do not know, but that kind 
of approach might, make some sense.
    If we were to restore earmarks in that limited way with a 
lot of transparency, the idea of having the legislation before 
us, actually signed into law, I think would be helpful in an 
earmarks restored world, to say, All right, let us make sure 
that the stuff that some enterprising Senator or Representative 
has put in a bill, let us just make sure it stands the test of 
time and a test of further scrutiny, and just say, The Senate 
and/or the House we would like to give you the opportunity to 
revisit this one. I think it would be helpful.
    Mr. Schatz. Not to take away from Maya over there, but it 
is difficult for me not to say something about earmarks. I 
would very much enjoy debating everyone who has talked about it 
today, but that would be a different hearing and I would 
welcome the opportunity to discuss this in the future.
    Senator Carper. Good, thanks. We may have that opportunity. 
Thanks. Ms. MacGuineas.
    Ms. MacGuineas. A couple of quick comments. So I think it 
is absolutely impossible in this environment to argue against 
the need for additional transparency and accountability. That 
has to be worked into the budget process at every single 
opportunity and every way that we find that we can do it.
    In terms of fiscal policy, I completely agree with you and 
I think, as the focus in this country and the world is turning 
to fiscal policy, we cannot lose that it is all piece of a 
picture of how to promote economic growth. And that means not 
just getting the numbers to add up, but doing it in a way that 
is smart. And that means protecting public investments in a way 
that we shift our budget, which is now very consumption 
oriented, to become an investment oriented budget.
    I think it also means protecting the safety net so that we 
do not shred programs that are very important for people who 
depend on them. And likewise, I think changing our tax system, 
which is remarkably outdated, into one that is competitive for 
the century in which we are competing on a global basis, is 
necessary. And, of course, you cannot run unsustainable levels 
of debt. But it is not just because those of us who are deficit 
hawks like getting the numbers to add up. It is because it is 
how you create a competitive growing economy.
    And I do believe that transparency and oversight are a 
critical part of that, and I think the balance of this bill has 
it right, because what it basically says is that nothing 
happens unless Congress affirmatively enacts these changes. But 
it is an opportunity to go back over bills and give them more 
scrutiny, all of which is going to increase the faith that what 
government is doing it is doing well, and that is all a piece 
of this.
    So I really--I applaud you and your colleagues and I hope 
that we move forward on it.
    Senator Carper. Well, thank you. Thanks for those comments. 
And really, our thanks to each and every one of you for joining 
us today, for your preparation, for your testimony, for your 
responses to our questions, and for your willingness to maybe 
answer, if a couple of us send follow-up questions in writing, 
that you are willing to respond to those. Let me just ask, 
Stefan Wirth, Stefan, how long would these witnesses have, our 
witnesses have to respond? Is it 2 weeks?
    Mr. Wirth. Two weeks.
    Senator Carper. I think it is 2 weeks, so if you get some 
questions in writing, if you would respond to those in 2 weeks, 
that would be great.
    The last thing I will say, one of the things that I have 
sort of become interested in is the last year or two is the 
grant process, whether we have grants that are distributed to 
the States, Federal grants distributed to the States on like a 
formula basis, number of people, number of miles, or whatever, 
highway, whatever it might be, poverty, or whether the grants 
should be distributed on a different kind of criteria, and I 
will use like a transportation grant.
    One of the things that seems to make sense, at least to me 
so that we put more transportation money out on the basis of 
competition, where the criteria would include, particularly an 
investment in transportation, that it reduce congestion. Does 
it reduce pollution? Does it reduce our dependence on foreign 
oil? Does it enhance public safety? Does it reduce accidents? 
And that sort of thing.
    So that is an approach that I think makes a whole lot of 
sense. I would like to--and I am still kind of new at 
considering this broadly, but I think that is an approach that 
we need to move or migrate toward.
    People say to me, Why do you--even today at the train 
station in Wilmington waiting for the train and it pulled in 
right on time--some folks said to me, It has to be tough 
working down there in the Senate these days. It must be kind of 
miserable. And I said, Actually, I am encouraged by what we are 
doing in these big deficits in a struggle to get an economy 
moving. I think we are.
    But I am actually encouraged that we are seeing a little 
bit of a restoration of bipartisan spirit in the Senate, which 
is good. We have passed the FAA reauthorization bill. It took 
us years to get that done and we have done that, I think, in a 
responsible way. We have just passed, in the last week or two, 
patent reform to help us on the innovation side of our economy.
    We are working this week on, I think, some very thoughtful 
legislation that encourages investments in R&D, particularly 
for smaller businesses. And we are seeing some pretty good 
bipartisan cooperation. So I am encouraged by that.
    The other thing is I am encouraged that my colleagues, 
Democrat and Republican, House and Senate, and the 
Administration are beginning to think, a good part of this 
budget, the way we spend money, it is not sacrosanct. And we 
just really do need to drill down and to see the ways we can 
get better results for less money across the board, or better 
results for not much more money. That is very encouraging.
    What we are doing here today is looking for one more tool 
to get better results for less money or maybe better results 
for not a whole lot more money. We really do appreciate your 
testimony in helping us to realize that goal.
    With that having been said, this hearing is concluded and 
we look forward to seeing and working with you again. Thanks so 
much.
    [Whereupon, at 4:29 p.m., the subcommittee was adjourned.]




















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