[Senate Hearing 113-897]
[From the U.S. Government Publishing Office]
S. Hrg. 113-897
NOMINATION OF BRIAN C. DEESE, OF
MASSACHUSETTS, TO BE DEPUTY DI-
RECTOR OF THE OFFICE OF MANAGE-
MENT AND BUDGET
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
----------
May 21, 2013--NOMINATION OF BRIAN C. DEESE, OF MASSACHUSETTS, TO BE
DEPUTY DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
----------
Printed for the use of the Committee on the Budget
www.govinfo.gov
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
56-109 WASHINGTON : 2026
=======================================================================
COMMITTEE ON THE BUDGET
PATTY MURRAY, WASHINGTON, CHAIRMAN
RON WYDEN, OREGON JEFF SESSIONS, ALABAMA
BILL NELSON, FLORIDA CHARLES E. GRASSLEY, IOWA
DEBBIE STABENOW, MICHIGAN MICHAEL ENZI, WYOMING
BERNARD SANDERS, VERMONT MIKE CRAPO, IDAHO
SHELDON WHITEHOUSE, RHODE ISLAND LINDSEY O. GRAHAM, SOUTH CAROLINA
MARK R. WARNER, VIRGINIA ROB PORTMAN, OHIO
JEFF MERKLEY, OREGON PAT TOOMEY, PENNSYLVANIA
CHRISTOPHER A. COONS, DELAWARE RON JOHNSON, WISCONSIN
TAMMY BALDWIN, WISCONSIN KELLY AYOTTE, NEW HAMPSHIRE
TIM KAINE, VIRGINIA ROGER F. WICKER, MISSISSIPPI
ANGUS S. KING, Jr., MAINE
Evan T. Schatz, Staff Director
Eric Ueland, Republican Staff Director
C O N T E N T S
----------
TUESDAY, MAY 21, 2013
HEARING
Page
May 21, 2013--Nomination of Brian C. Deese, of Massachusetts, to
be Deputy Director of the Office of Management and Budget...... 1
STATEMENTS BY COMMITTEE MEMBERS
Chairman Murray.................................................. 1
WITNESSES
Deese, Brian, of Massachusetts, Nominee to be Deputy Director of
the Office of Management and Budget............................ 4
BIOGRAPHICAL INFORMATION
Statement of Biographical and Financial Information Requested of
Presidential Nominee Brian C. Deese to be Deputy Director of
the Office of Management and Budget............................ 19
ANSWERS TO QUESTIONS SUBMITTED *
Chairman Murray.................................................. 31
Ranking Member Sessions.......................................... 40
Senator Wyden.................................................... 59
Senator Whitehouse............................................... 61
* Questions and statements to the record may be found
on file with the Committee.
THE NOMINATION OF BRIAN C. DEESE,
OF MASSACHUSETTS, TO BE DEPUTY
DIRECTOR OF THE OFFICE OF
MANAGEMENT AND BUDGET
----------
TUESDAY, MAY 21, 2013
Committee on the Budget,
U.S. Senate,
Washington, DC.
The committee met, pursuant to notice, at 10:36 a.m., in
Room 608, Dirksen Senate Office Building, Hon. Patty Murray,
chairman of the committee, presiding.
Present: Senators Murray, Whitehouse, and Kaine.
Staff Present: Evan T. Schatz, Majority Staff Director; and
Marcus Peacock, Minority Staff Director.
OPENING STATEMENT OF CHAIRMAN MURRAY
Chairman Murray. This hearing will come to order.
And before we begin, I do want to just take a moment to
join the President in expressing my sadness at the
heartbreaking destruction in Oklahoma. Too many people have
lost so much--their loved ones, their children, their homes,
their livelihood--and a lot more are injured and fighting for
their lives as we speak. So I know I join the President, all of
my colleagues here, and all Americans in saying that my
thoughts are with those who are affected by this horrendous
tragedy. At times like this, I know that we are also incredibly
grateful for the heroic work of our first responders, who are
working to help those who have been impacted by this storm, and
I will work with all of our colleagues to do everything I can
to provide them and the communities affected with the resources
they need for relief and to recover from this horrific disaster
as soon as possible.
With that, I want to thank my Ranking Member, Senator
Sessions, and we will have some of our colleagues who are
joining us throughout this morning's hearing, as well. To all
the members of the public here or watching online, thank you
for being here.
Today, we are considering President Obama's nomination of
Brian Deese to be the next Deputy Director of the Office of
Management and Budget. Brian, thank you for joining us here
today.
I want to recognize and welcome Brian's family, who are
also with us today, his wife, Kara, his parents, Patricia and
David, and extended family. As we all know, the support of
families is so important to those of us in public service, so
thank you to all of you for your dedication and sacrifice, as
well.
This nomination comes at a critical time for our country.
We continue to face serious fiscal and economic challenges that
we need to work together to address. The American people are
looking to us to end the constant artificial crises and
political brinkmanship that is threatening our fragile economic
recovery. It is time we stop governing from crisis to crisis
and return stability and regular order to our budget process.
That is why I am so proud of the work we did here in this
Budget Committee and on the Senate floor to write, debate, and
pass a responsible budget plan that puts economic growth and
the middle class first and that tackles our deficit and debt
responsibly.
It has now been 59 days since the Senate and House have
each passed budgets. The President has weighed in with his
proposal, and the next step in the budget process is for the
two sides to come together in a Conference Committee and work
towards a bipartisan deal. Democrats and Republicans have been
talking about the need to return to regular order, including
some of my Republican colleagues on this committee who just a
few months ago were very explicit about the fact that once the
two chambers passed their budgets, the work of conferencing
must begin.
So I have been very disappointed that Senate Republicans
seem to now be backtracking from that and have blocked us from
moving to conference every single time we have asked over the
past few weeks. I am hopeful that this obstruction ends soon,
because I had thought the one thing that Democrats and
Republicans could agree on is that we should be working
together to return stability and regular order to a budget
process that has been broken and chaotic for far too along.
Aside from the recent Budget Conference obstruction, there
have been some recent positive steps. Last month, the Senate
voted unanimously, 96 to zero, to confirm Sylvia Burwell as the
next Director of OMB. It is critical we continue to have strong
and consistent leadership at OMB, especially now as we work
towards a responsible bipartisan budget agreement. I know
Sylvia will be a great leader, but we cannot afford to have
vacancies in other key budget positions during this important
time for our economy.
That is why today's hearing in consideration of Brian Deese
to be the next Deputy Director of OMB is so important. Brian
has been a key part of the administration's economic team over
the past six years as a top economic advisor on the campaign
and transition team, then as Special Assistant to the President
for Economic Policy, and now as Deputy Director to the National
Economic Council. In these roles, he was instrumental in
pulling our economy back from the great recession, making sure
key American industries remained healthy and strong and
investing in policies that boosted the economy and created
millions of new jobs.
As the chief architect of the auto rescue plan, Brian
reinvigorated a definitive American industry during a time of
deep economic uncertainty and did it in a way that it helped
our economy recover. Brian recognized that letting Detroit go
bankrupt would actually increase Federal spending on programs
like Medicaid and unemployment insurance, and if instead we
invested in American workers and jobs, we could actually spur
economic growth, and he was right. The auto rescue helped save
a million American jobs and the auto industry today is
thriving.
We have also started to see the government make important
headway on reducing our deficit responsibly during Brian's time
in the administration. Just last week, CBO released its latest
baseline. These revisions show we have begun to make
significant progress on reducing our short- and medium-term
deficits, and that is welcome news. CBO now estimates the
deficit for 2013 will be more than $200 billion less than its
February projection. This means that in two years, CBO expects
the deficit will have fallen in half.
To be clear, we still have important work to do to continue
to tackle our longer-term debt and deficit challenges in a
responsible and fair way, but we should acknowledge that under
this administration, we have begun to make significant
progress. In fact, just on Friday, CBO informed us the
President's 2014 budget continues this important progress by,
first, stabilizing the debt by 2015, and then lowering it
further as a share of the economy to down below 70 percent by
2023.
As a key economic expert over the past four-and-a-half
years in the administration, Brian has been part of these
efforts, so I am pleased he will bring this important knowledge
of fiscal and economic policy with him to his new role at OMB,
and we will discuss those issues with you today.
Brian also made comprehensive Wall Street reform a priority
during his time in the administration, working to put in place
measures to protect the country against the devastating impact
of another financial crisis. As someone who grew up working at
my dad's five-and-dime store on Main Street in small town
Bothell, Washington, I could not agree more we need to bring
Main Street values back to our financial system.
That is why, as Chair of this Budget Committee, I have made
an effort to bring those values to our budget process, as well.
I believe budgets are a reflection of our nation's priorities
and they are about families across America who are impacted by
the decisions that we make. So I am glad Brian has a track
record of putting middle class families over Wall Street
profits, and it is my belief he will bring these values to the
budget process at OMB.
Brian also knows we need to create a sustainable path for
future economic growth. Our country has serious deficit and
debt challenges, but we also face equally significant deficits
in education, worker skills, infrastructure, and innovation. We
need to keep investing in infrastructure, jobs, our students,
and our workers. We cannot continue to sacrifice long-term
investments to solve short-term problems.
So I appreciate that as Deputy Director of the National
Economic Council, Brian emphasized we need to do more than just
recover from our current fiscal challenges. We need to invest
in future growth and ensure we can compete in the global
economy of tomorrow. I share this commitment to investing in
our future and I look forward to working with you, Brian, to
make sure these important investment priorities are reflected
in our budget process.
There are tough challenges before Brian and Sylvia and all
of us here on the Budget Committee. I had a chance to sit down
with Brian earlier this month. I am looking forward to hearing
from him today. It is clear he has a strong understanding of
economic and budgetary policy and knows firsthand how to create
fiscal policies that work for middle class families and help
our economy grow.
So I am confident Brian possesses the kind of experience,
knowledge, and judgment necessary to succeed in this leadership
position and to help bring a balanced and responsible approach
to our budget challenges. I hope we can quickly move on this
nomination since we need to return stability to our budget
process and filling this position is a very important part of
that effort. So I hope to schedule a committee vote on this
nomination soon so the full Senate can confirm the nominee in a
timely manner.
Brian, I look forward to asking you some questions
following your testimony, so at this time, I would ask you to
stand. Our nominees are required to testify under oath, so if
you will rise, I will administer that oath.
Do you swear the testimony that you will give to the Senate
Budget Committee will be the truth, the whole truth, and
nothing but the truth?
Mr. Deese. I do.
Chairman Murray. If asked to do so and if given reasonable
notice, will you agree to appear before this committee in the
future and answer any question that members of the committee
might have?
Mr. Deese. I will.
Chairman Murray. Okay. Please be seated.
We will now have a chance to hear from Mr. Deese, and then
members will have an opportunity to ask him questions. So, Mr.
Deese, again, thank you very much to you and your family for
being here and please proceed with your testimony.
TESTIMONY OF BRIAN C. DEESE, OF MASSACHUSETTS, NOMINATED TO BE
DEPUTY DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
Mr. Deese. Thank you. Thank you, Chairman Murray, and thank
you to this committee for welcoming me here today.
Before I begin, I want to join with you in reinforcing that
all of our thoughts and prayers are with the people of Oklahoma
this morning. The devastation that we have seen is unspeakable
and we are still in the process of emergency activities and
recovery, and the road to rebuilding will be long, but our
country will stand with the people of Oklahoma, and I know that
all of our thoughts are with them this morning.
It is an honor to be considered by this committee as the
President's nominee to be Deputy Director of the Office of
Management and Budget.
I am very pleased that members of my family could join me
today. As you mentioned, both my mother and my father, my step-
father, are here today. My family instilled in me a deep
commitment to public service and it is something that I have
taken with me throughout my career, and so it is very
gratifying to have them here with me today.
I particularly want to recognize my wife, Kara. As you
said, Madam Chairman, these jobs are really a family affair and
that is certainly true for us. My five-and-a-half-month-old
daughter, Adeline, was not able to make it today. [Laughter.]
Mr. Deese. She joined us at the hearing last week and did
not enjoy it, so----
[Laughter.]
Mr. Deese [continuing]. We made the executive decision to
not impose this one on her, but she is watching somewhere.
I would also like to thank President Obama for nominating
me to this position and to Director Burwell for her support and
her confidence in me.
And, finally, I want to thank members of this committee and
their staff for taking the time to meet with me over the last
few weeks. And if confirmed, I look forward to continuing those
conversations and strengthening the vital relationship between
OMB and this committee.
Over the past several years, I have had an opportunity to
work with many officials at OMB and across the executive branch
to develop and implement administration priorities and this
experience has given me a deep respect for the role that OMB
plays in setting budget priorities, in improving the
performance of government, and, importantly to me, for the
skill and the commitment of the professionals who work there.
I am humbled to be considered for this position, and
particularly at a moment where our nation faces such critical
work of strengthening our economy and our fiscal position, as
well.
We have made important progress. Our economy is growing. We
are seeing promising growth in several sectors, including the
housing market. Our manufacturing sector is showing signs of
strength. Our businesses are creating jobs on a consistent
basis. And, importantly, Congress and the President have begun
the work together of bringing down our deficit and
strengthening our nation's long-term financial position.
But there is a lot more work that we need to do, work that
we need to do together to deliver on what I believe must be our
ultimate goal, which is an economy that provides opportunity
and stability for working families.
Much of my professional work has focused on the role that
fiscal policy can play in promoting stronger and more durable
economic growth, and I believe that sound fiscal policy
requires all of us to not shy away from our long-term fiscal
challenges and to work diligently to reduce our deficits in a
way that will strengthen our economy for both current and
future generations.
If confirmed, I will work very closely with Director
Burwell to build on the progress that we have made and we have
seen, including, as you referenced, the return to regular
order, and help try to find common ground on the type of
comprehensive deficit reduction plan that would achieve these
economic objectives.
Another important area of focus, particularly in this
period of fiscal and economic challenges, must be to make our
government more efficient and more effective. Over the last
several years, most recently as Deputy Director of the National
Economic Council, I have developed a deep appreciation for the
importance of applying sound management practices across the
Federal Government, and I look forward to working with this
committee and with Congress to make progress on our shared
priorities in that area, as well.
Finally, I believe that a budget is fundamentally a vision
for how those of us in public service can deliver better
outcomes for our economy and for middle class families. At its
core, it is a reflection of our values and our priorities as a
country. And if confirmed, I would work every day to uphold
those values and those priorities.
I want to thank the committee today for considering my
nomination and I look forward to answering your questions.
[The prepared statement of Mr. Deese follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Murray. Well, thank you very much.
Let me begin. My understanding is you have ten years of
experience working on economic and policy matters, including
the last four-and-a-half at the National Economic Council
working on the kinds of issues that you would oversee at OMB.
And as part of your role as Deputy Director of the National
Economic Council, you also do a fair amount of coordination and
oversight across the Federal Government, helping to manage and
oversee the President's fiscal and economic agenda.
I am interested in hearing from you about your policy and
managerial experience and how you see these experiences as
helping you prepare for the job of Deputy Director.
Mr. Deese. Thank you for the question. When I think about
the role of Deputy Director at OMB, I think there is at least
three sets of skills that I could bring to bear.
The first is a strong understanding of the Federal budget
and budget process. That is something that I have developed
over the last several years, working closely on the development
of the President's budgets and implementation of budget
priorities, including working closely with OMB in that effort.
The second is an understanding of how fiscal policy fits
into a broader economic strategy for growth and job creation.
That has been the principal focus of my professional work and I
think it is something that is particularly important right now
at the economic moment we find ourselves in, where our economic
challenges are so interrelated with our fiscal challenges.
And the third is a pragmatic understanding of how to get
things done in government. One of the key responsibilities that
I had as Deputy Director at the National Economic Council was
to coordinate policy development and implementation across the
executive branch, which involved working with senior management
in the agencies across government, identifying teams,
identifying goals, and driving to actually execute against our
budget and fiscal priorities. I think that that is a set of
skills that I can bring to bear in this new role in OMB, as
well, if confirmed.
Chairman Murray. Okay. I do not think there is any question
you have the necessary training and experience in budgetary and
economic matters, but in addition to policy making duties, you
would be tasked with overseeing an agency of about 500
employees during an extremely challenging time, given the
sequester and the continued demands on OMB and the budgetary
process. Talk with us a little about how you view the specific
challenge of stepping in at this point in time to help guide
OMB through the sequester and the intense budget negotiations.
Mr. Deese. I think it is an incredibly important question,
and I think that when I--when I think about the priorities for
OMB and how to manage toward those priorities, this is
something that Director Burwell and I have had a chance to
discuss, and I think that we have to be very focused on
executing against our core priorities.
First and foremost is presenting and implementing a sound
budget framework, which includes in this environment managing
in an environment--in a sequestration environment.
Second, I think, is to identify goals and responsibilities
across the management agenda, and that is a place where OMB
plays a vital role, and I think that the Director and the
Deputy Director, working with the Deputy Director for
Management, have an obligation to set out a vision for
management priorities and make sure that we are effectively
demonstrating to the American people that we can manage our
resources wisely.
And the third goes to OMB as an institution. I think this
is going to have to be an area of focus for the management team
because it is an incredible institution with a vital mission
and a really dedicated professional staff. It is also facing a
lot of challenges in the current environment and has for the
last couple of years.
So focusing on the management challenge of ensuring that
OMB is able to play the vital role that the administration and
Congress expects of it, is able to continue to attract and
retain top-flight talent is going to be a priority, and I think
that that is going to require a strong management team at OMB
that works together well, that is able to identify priorities,
and then able to execute against those priorities. And I think
that that is something that I can contribute to.
Chairman Murray. Okay. One policy area that you are
particularly well known for is your work in restructuring
General Motors and Chrysler, helping to rescue the U.S. auto
industry, and, as I mentioned earlier, save a million jobs.
That really was an extraordinary effort and one that required
you to coordinate with and oversee a wide variety of
stakeholders. Can you talk a little bit about that process and
your involvement in it and why you think that policy ultimately
was successful and what you see as the take-aways from that
experience.
Mr. Deese. Sure. In terms of my role, I was part of a team
that worked within the administration to provide guidance on
how to manage the crisis in the American auto industry. And as
you have referenced, both the prior administration and the
current administration faced a difficult set of choices in the
face of deep economic concerns that had GM and Chrysler
liquidated at the end of 2008 or the beginning of 2009, then it
would have had a cascading effect throughout their supply base
and through the industrial economy, and the estimates at the
time were that over a million jobs were at stake.
I think the decision of both the prior and the current
administration to provide resources was ultimately the right
one. I think the President drew a very difficult line in saying
that those resources were only available if those companies
could come forward with strong viability plans to return
themselves to financial viability. Our role was to assess those
viability plans in a clear-headed way, and I do believe that
decision was the right one.
Two take-aways for me. One is the importance of having
strong teams and executing against priorities within
government. The team that I had an opportunity to work with was
made up of a lot of people who had distinguished careers in the
private sector, had not served in government before, came to
serve their country during a unique moment, and we tried to
stay very focused on what our objective was during that period.
I think that is very important.
Another take-away for me, though, was that we all need to
work incredibly hard to make sure that we never put our
economy, our financial markets, in that kind of unique crisis
situation again. It was not--outside of those extreme crisis
situations, this was not an appropriate role for government to
be in. The President made these decisions quite reluctantly and
it was because of the unique degree of crisis that those
decisions were necessary. And from my perspective, it reaffirms
my commitment that we need to work together to build a
stronger, more durable economy that does not face the kind of
extreme crisis that we saw at the end of 2008, the beginning of
2009.
Chairman Murray. So we do not want to go through that
again.
Mr. Deese. Absolutely not.
Chairman Murray. So we had better be making the right
investments and policies now.
Mr. Deese. I think for the sake of the economy and for
future generations, we absolutely have to.
Chairman Murray. Okay. Senator Kaine.
Senator Kaine. Thank you, Madam Chair. It is good to be
back in this room with you. We spent a lot of time here
together in March, and I am still struck by the fact that all
of that great work product to produce a Senate budget is
languishing with a determined opposition to even placing the
budget in conference. I just am hoping for the day when you
will be conferring with your House colleagues and showing the
American public the difference between the two budgets.
Chairman Murray. Well, I agree. I cannot believe we are not
there. We should be there. That is what the American people
expect and deserve.
Senator Kaine. Indeed. Indeed.
And, Mr. Deese, congratulations to you. I am excited to
support your nomination.
You know, the best anti-deficit strategy--so I cannot now
resist to get your take on this--the best anti-deficit strategy
is growth, and it strikes me that as we are looking at these
two budgets that are on the table right now, there is a House
budget that I think proceeds from the fundamental philosophical
position that the goal of the budget should be to reduce
Federal spending and a Senate budget that proceeds from the
position that the goal of the budget should be to produce
economic growth, facilitate economic growth.
You have been known for your work on sort of the growth
ideas. What are some of the kinds of things in your role
working with your Director and working with the administration,
pro-growth policies that you would most encourage us to
embrace, or the things that you will be most excited to work
on?
Mr. Deese. Well, thank you for the question. When I
approach this basic question of fiscal policy, I do start from
that question of what is the right overall economic strategy
for the country, and fiscal policy plays a very important role,
but it is a part of an overall economic strategy.
I think in the current environment, we face interrelated
economic challenges. We face a near-term challenge associated
with increasing the rate of growth, increasing the rate of job
creation, to try to move our economy into a stronger position.
Over the medium and long term, we face a set of fiscal
challenges that are real and that, if left unaddressed, will
undermine our nation's long-term growth potential.
So when I think about how to address those challenges, I
think it takes the form of putting together a set of wise
investments that would help support the economy and couple
those with an overall comprehensive approach to deficit
reduction that would send signals to the markets and the
American people that we are getting serious about our longer-
term fiscal challenges.
I think when you think about the kinds of growth enhancing
investments that you referenced, the way I think about it is
what are the drivers of long-term productivity growth in this
country, and I think that among them are a strong and educated
workforce and strong assets in this country that make this
place an attractive place for businesses to come and invest. So
when I think about something like infrastructure investments,
if we do it right, that is the kind of investment that can have
a long-term productivity-enhancing impact by making this a more
attractive place to invest.
So that is the approach that I take to thinking about where
should we be investing, and I think it is useful to do that as
part of an overall fiscal strategy that is sending strong
signals about our commitment to get our long-term deficits
under control.
Senator Kaine. I have been heartened, as the Chair
mentioned in her opening comments, about some of the CBO recent
discussions of the deficit being cut essentially in half over
the period of two years, and there is much more work to do, as
we know, but I commend the administration for the progress that
has been made.
One of the issues about growth, I think, that is also
important, is that growth ought to be sustainable rather than,
you know, episodic, unreliable. I think we had a growth
strategy that was a growth strategy of an earlier decade that
was a strategy of trying to promote growth through overreliance
on debt and leverage. You know, families drove their savings
rate down from seven percent to less than two percent.
Governments, businesses, others overused debt. Consumer debt
dramatically increased. And that produced growth for a short
period of time, but then it led to kind of a sugar-high growth
and then a major collapse.
So I think the challenge that you have addressed in your
answer is what is the next growth model that does not over-rely
on leverage but that is more sustainable, and the
infrastructure and human capital investments of the kind that
you discuss are the ones that, I think, we also embrace and
that were evident in the committee's budget.
We talked when you came to my office, Mr. Deese, about kind
of regular order. I am kind of a regular order fanatic, partly
because it is the rules, but also partly because I think it
sends the right signals to others that we take it seriously,
and I know this committee embraces it. In my questioning of
Director Burwell and in my private questioning of you, you
indicate you also see the connection between sort of following
the basic rules, and it enables us to do our work better and
sends the right signals of confidence and I just wanted to get
you to confirm that.
Mr. Deese. Yes, sir. I think that this is an economic
issue, not just a fiscal issue, because one of the things that
has not helped our overall growth prospects over the last
couple of years has been a process, a fiscal process that has
been characterized by a rolling set of crises. And so I think
that returning to a process where we are all expressing a
shared commitment to follow a more regular order and actually
then delivering on that and showing concrete steps in that
direction will help reaffirm the sense that we can budget
responsibly, we can make choices. And so I think it is an
important part of our overall economic strategy.
Senator Kaine. And then, lastly, and this is really just an
encouragement, I think within the OMB portfolio, there is often
sort of a sense that the budget is one side and the management
is the other. But I do want to just connect the two sides.
One of the many things that is wrong with the sequester is
the non-strategic and across-the-board nature of the cuts. It
makes no sense. If you are going to make cuts, you ought to be
making them in a targeted way, and how do you make targeted
cuts? Well, you have to use performance data and priority
judgments to help you determine what are the things that should
be cut, how much should they be cut, and then what are the
things that should not be cut and, in fact, that may even need
more investment?
And I think the management wing of OMB really is very
valuable, because we will continue to be looking for targeted
cuts. The Senate's budget had an assumption of some targeted
cuts going forward. The stronger that management muscle within
OMB, the more sophisticated the work product in determining
where cuts can be made that will not jeopardize economic
growth. And, actually, if you cut things that are not really
needed, then you create opportunities when revenues come back
to use them for their highest and best use tomorrow rather than
do the same old thing the same old way. So I would just
encourage the management part of the portfolio, as well, to
assist in these challenging budget times.
Mr. Deese. Well, I agree. I think it is a priority, and one
of the things I think about the Deputy Director role,
certainly, if confirmed, I think the Deputy Director role is
vitally important in making sure that the ``M'' and the ``B''
sides of OMB are working seamlessly together and that those
priorities and the tools that are on the ``M'' side are
integrated fully into the budget and vice-versa. So that would
certainly be a priority for me, if confirmed.
Senator Kaine. Great. Thank you.
Thank you, Madam Chair.
Chairman Murray. Thank you.
Senator Whitehouse.
Senator Whitehouse. Thank you very much, Madam Chair, and
let me add my voice to those who are looking forward to trying
to resolve these budget differences through the regular order
of the Senate. I think we have a very important debate ahead of
us. We have a well-established structure for that debate to
take place. We had a litany of calls for regular order, and I
would hope that now, those calls would be matched with action
that allowed the Chairmen to negotiate and for the process to
continue forward.
I have four specific topics that I want to touch on with
you today, Mr. Deese. The first is the health care problem that
we have, the spectacular cost of it, and I very strongly
believe that there are immense savings to be had by gaining
efficiencies in our health care delivery system, that those
costs will redound to the benefit of corporate budgets, the
Federal budget, military budgets, that we can bring down the
cost of the entire system, which now lies like a terrible
weight across our entire economy, all while making the system
work better for people--better as patients, better as
consumers, better as people who want to take command of their
own health care destinies.
I think that one of the challenges has been that those
methods are hard to do what is called scoring in this budget
environment, and although they cannot be scored, perhaps, or
they can only be scored pretty late in the game, we know enough
about what is going on in this part of the world now that the
administration could start setting hard budget targets, not
predictions, directions. I want to see this much in savings,
hard dollar number, by this period, hard date, and that that
would help guide and direct the efforts of a very big
government more energetically and more focusedly [sic].
So I would urge you to try to produce as soon as you can
that number and that date, a dollar and a deadline, because I
think that will really help us move forward, and I think it
will also help in the budget discussions. If the
administration, with all of its administrative capabilities to
determine how quickly this takes place and how effectively,
will not set a number out there for itself, then we in Congress
have no way to try to come up with a number. You have to act
first, and I very much hope that you will.
I hope, also, you will clear the backlog at OMB. You guys
are supposed to be making decisions in 120 days on regulations,
according to Executive Orders. Just to use two examples, there
is a Clean Water regulation that has been sitting over there
for 455 days and there is a chemical safety regulation that has
been sitting over there for over 1,100 days. You are closing in
on ten times the amount of time in which you are supposed to
have cleared that.
We want to continue to work with you both on the speed with
which you move through these things and also the transparency
of the process. Things kind of disappear at OMB, and who knows
who is talking to whom and how things are getting--why things
are being delayed. It is not a model of transparency for those
of us on the outside looking in.
The third thing, I hope you will work with us and the
Department of Justice to try to figure out what the best way
going forward is with cyber. The Department of Justice, I do
not think, is resourced the way it should be. They, obviously,
are not keen to ask for additional resources behind OMB's back.
So getting the Department of Justice and OMB in the room
together to have that discussion, I think, is very important.
Senator Graham and I are working on bipartisan legislation that
I hope will address this. So I would ask you to help with that.
And, last of all, regulatory capture is a doctrine that
goes back to the days of Woodrow Wilson. It has enormous
foundation in administrative law. It has enormous foundation in
economics. Nobel Prize winners have written about it. And yet,
we do not have any established mechanism for identifying and
trying to head off the capture of regulatory agencies by the
industries that they seek to regulate. We have experience of it
with Minerals Management Service and, I think to a degree, with
the Securities and Exchange Commission, but we do not have a
mechanism for dealing with it in a thoughtful and official way.
So those are the four topics I would like to work with you
on and I would like to hear your thoughts on any and all of
them, DSR, OMB delays, DOJ cyber, and regulatory capture.
Mr. Deese. Great. I will try to hit on all of those. First,
on your points on health care costs, I believe that the--
addressing the rate of growth of health care costs across our
health care system is the principal long-term fiscal challenge
that the country faces. And I believe that we absolutely have
to take serious steps and be very rigorous about how we go
about addressing it. I think we do have some reason for
optimism. We have seen the rate of growth of health care costs
come down over the last couple of years.
One of the things that was promising about the CBO report
that has been mentioned was that beyond 2013, if you look over
the ten-year budget window, much of the reduction in out-year
deficits was associated with reductions in projections about
health care spending, which, I think, suggests that some of the
reductions in the growth rate of spending that have happened
over the last couple of years may be sustained.
But I agree with you that the way that that is going to
happen is by identifying delivery system reforms that actually
work and then being rigorous about implementing those across
the entire health care system. And, if confirmed, I certainly
want to both learn more about your ideas for goal setting and
also then think about OMB and how OMB can participate in that
process as part of the management activities of OMB, rigorous
goal setting in an accountability framework where we are not
only setting a goal, but then having real culture change within
agencies I around being accountable for that goal as a
priority. So I think that we definitely want to work more with
you on that.
With respect to regulations, both on the backlog and the
issue of regulatory capture, I think that, to me, there are a
number of issues at play. One of is the regulatory process has
to, at base, provide trust to the public that this is a process
that they understand and can rely on. They may not agree with
every individual decision, but they understand how the process
unfolds and they understand transparency, transparently how
balances are being made between important protections for
health, safety, and the environment, and promoting and
sustaining economic growth.
And I think that--so I think transparency is a real
important part of that, because I think that that does go to
this question of trust. And so this is not an issue that I have
been closely involved in or worked on over the last several
years, but I know it is an issue that Director Burwell is very
focused on and, if confirmed, that I would focus on, as well,
to try to ask--bring fresh eyes and ask a set of questions
about what could we do to improve the transparency of the
process and then also the rigor of the process, including
looking at issues like the issue of regulatory capture that you
have raised.
And, finally, with respect to cybersecurity, it is a major
priority for the President. It is a big economic challenge, as
well. And I think that the economic risks to our country from
being exposed by cyber attacks are real and they are
substantial and so we have to treat them with that level of
seriousness. And that is, in part, about making sure that we
have effective tools and effective ability to share information
while also protecting privacy, but some of it is about
resources and making sure that we have the resources to protect
our critical infrastructure, secure Federal networks, and
effectively prosecute potential wrongdoing.
So I think that it is a priority for us and certainly, if
confirmed, I would look forward to working with you and other
members of the committee to make sure that we are adequately
resourcing those activities.
Senator Whitehouse. Thank you very much.
Chairman Murray. Thank you.
The House, as you are aware, recently released their 302(b)
allocations, which show large cuts--very large cuts to some
critical investments in programs like health and education. You
have written articles regarding the ability of foreign nations
to invest in human capital. At the Center for American
Progress, you actually outlined strategies to keep America
competitive in a global economy where you have argued in favor
of improving research and education while simultaneously
returning to fiscal discipline and seeking deficit reduction. I
wanted to ask you, what does fiscal discipline mean to you and
how do we go about deficit reduction?
Mr. Deese. Well, I think, for me, this comes back to what
is our overall economic strategy and then how does fiscal
policy fit into that overall strategy, because at the end of
the day, the fiscal choices we make are about the resources we
need to invest in the functions that we believe are necessary
to support an economy that is consistent with our values and to
protect the vulnerable among us.
I think that the question about choices and trade-offs
within that fiscal strategy and how to have a fiscally
disciplined approach, from my perspective, should start with
asking, where do we have long-term challenges and what is a
responsible way to address them? And so when I look across
our--the Federal budget, I think our long-term challenges are
largely in our mandatory programs and they connect to this
issue of health care cost growth that we were discussing as
well as the demographics of our country. And I think the Budget
Control Act has already imposed substantial discipline on the
discretionary side of the budget, both defense and non-defense,
and I think that when we think about a long-term fiscal
strategy, our real challenges are in those mandatory programs.
And so I think the key questions for us are how can we
implement sensible and thoughtful reforms that actually protect
and strengthen the core promise, the core purpose of those
mandatory programs? And how can we couple that with looking at
sensible reforms to our tax system that are designed to reduce
complexity, support overall economic growth, but also
contribute to deficit reduction, as well? So that is how I
think about the issue broadly.
Chairman Murray. Okay. The long-term goals of this country,
I think, are being really threatened by the sequester being put
in place right now. How are we going to invest in critical
programs that are so important for this country's long-term
future in this environment?
Mr. Deese. Well, I think it starts with coming up with a
strategy to replace the sequester with a more thoughtful
approach, a more thoughtful fiscal approach. I think the
sequester is problematic for two reasons. The first is that the
magnitude of cuts imposed in an indiscriminate way are doing
harm to our economy. The second is, when you think about our
long-term fiscal challenges, it does not address any of the
serious challenges we face. We were just talking about the
growth rate of health care costs and our mandatory programs.
The sequester does not have meaningful long-term deficit
reduction associated with it. In fact, after ten years, it goes
away altogether.
So I think that that provides us an opportunity to develop
a plan that is more sensible both in the short-term and in the
long-term than the sequester and work to replace the sequester
with that kind of approach. I think that the Senate budget lays
out a strategy. The President's budget is quite consistent with
that overall strategy. I think that that allows us for an
opportunity to have this conversation, as you say, as we move
to regular order and have a conversation about a truly
bipartisan approach that says, we can do much better than the
sequester for our economy and for our long-term fiscal goals.
Chairman Murray. So replacing the sequester is a very
important short-term goal for this country, economically?
Mr. Deese. I think if you are focused on the economic and
fiscal health of the country, then replacing the sequester has
got to be a priority.
Chairman Murray. I appreciate that.
Senator Kaine, do you have any additional questions?
Senator Kaine. Just two quick ones. On the sequester, you
know, one of the things, Madam Chair, that I liked about the
Senate budget is it really did three things with sequester.
First, it reduced the amount of the cuts. Second, it made them
strategic and targeted rather than across-the-board and
indiscriminate. And, third, it phased the cuts so that they
were a little bit steeper toward the back end of the ten-year
budget window instead of sort of straight line across, which
was a better reflection of trying to grow the economy in the
short-term, and also gave agencies more time to sort of plan
the cuts as they went into place. And I think that that
sequester approach is far preferable and I was pleased to see a
President's budget that sort of had a similar philosophy as the
Senate budget.
The other comment I wanted to make is to follow up on your
comment, your colloquy with Senator Whitehouse about health
care costs. Just to remind you, you have got a great ally in
your CMS Director. So the Affordable Care Act, if you look at
the health care system in the country, how is it financed, a
portion of the pie chart is Medicaid plus Medicare, and what
the ACA did is it took that portion of the pie chart and made
it greater. So since that is a bigger sort of center of gravity
of how health care is financed in the United States post-ACA,
any changes within that portion of the pie chart not only have
the ability to drive down costs, but they can be innovations
that can sort of bleed over into the rest of how health care is
financed.
And I really think CMS can be an innovator, and they are
being innovative in things like bundling payments, payment
reforms. Let us pay for quality, let us pay for outcomes rather
than pay for procedures. We pay for procedures in this country
and we get the best procedures in the world and we get a lot of
them, but we do not necessarily get health. In other nations
that pay for health or outcome, they get more health and they
spend less money.
I think CMS is a critical place, and the Administrator that
we just confirmed I know well, because she was my cabinet
secretary when I was Governor, and we were having to shrink a
State budget in real dollar terms. I did not have anyone who
was a more creative cost saver than Marilyn Tavenner, and yet
because she was a nurse, she always approached the project with
a patient-first attitude that meant she was not just saving
costs by putting on the green eyeshade and looking at it as a
numbers exercise. She realized it was patients involved.
And I think using the demonstrated cost-cutting expertise
of your CMS Administrator, coupled with the fact that CMS
reforms now have such an ability to drive cost curves down, but
also influence other players in the health care financing
model, I think you have got a great ally that you can utilize
in the work that OMB is trying to do on this health care cost
issue and I just would encourage that to you.
Mr. Deese. Well, thank you. I think this effort is going to
require a strong team across the administration and working
closely with Congress to make sure that we identify those
interventions that actually work and implementing them
systemwide. So we are, if confirmed, I, as part of the OMB
team, would look to work closely with CMS and HHS on this
issue.
Chairman Murray. Thank you very much, Senator Kaine. Thank
you for the participation and cooperation of all of our
colleagues on this committee.
Mr. Deese, thank you so much for your willingness to serve,
particularly during such a difficult and very consequential
time. This committee greatly appreciates the sacrifice of you
and all of your family.
As a reminder to my colleagues, additional statements or
questions for the record for today's hearings are due in by
6:00 p.m. today, to be signed and submitted to the Chief Clerk.
Also for the information of our colleagues, it is my
intention that we move Mr. Deese's nomination as expeditiously
as possible. This committee does have a 48-hour notice
requirement. I will be talking with Senator Sessions about when
we can give that notice, but it is my intention that we vote on
this nomination quickly when we return from the State Work
Period.
Finally, this committee will meet again tomorrow,
Wednesday, to consider supporting broad-based economic growth
and fiscal responsibility through tax reform. I encourage the
attendance of all of our committee members for that important
hearing.
With that, this hearing is adjourned. Thank you.
[Whereupon, at 11:24 a.m., the committee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]