[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                      THE PRESIDENT'S FISCAL YEAR
                              2018 BUDGET

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, D.C., MAY 24, 2017

                               __________

                            Serial No. 115-5

                               __________

           Printed for the use of the Committee on the Budget
           
           
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                        COMMITTEE ON THE BUDGET

                    DIANE BLACK, Tennessee, Chairman
TODD ROKITA, Indiana, Vice Chairman  JOHN A. YARMUTH, Kentucky,
MARIO DIAZ-BALART, Florida             Ranking Minority Member
TOM COLE, Oklahoma                   BARBARA LEE, California
TOM McCLINTOCK, California           MICHELLE LUJAN GRISHAM, New Mexico
ROB WOODALL, Georgia                 SETH MOULTON, Massachusetts
MARK SANFORD, South Carolina         HAKEEM S. JEFFRIES, New York
STEVE WOMACK, Arkansas               BRIAN HIGGINS, New York
DAVE BRAT, Virginia                  SUZAN K. DelBENE, Washington
GLENN GROTHMAN, Wisconsin            DEBBIE WASSERMAN SCHULTZ, Florida
GARY J. PALMER, Alabama              BRENDAN F. BOYLE, Pennsylvania
BRUCE WESTERMAN, Arkansas            RO KHANNA, California
JAMES B. RENACCI, Ohio               PRAMILA JAYAPAL, Washington,
BILL JOHNSON, Ohio                     Vice Ranking Minority Member
JASON SMITH, Missouri                SALUD O. CARBAJAL, California
JASON LEWIS, Minnesota               SHEILA JACKSON LEE, Texas
JACK BERGMAN, Michigan               JANICE D. SCHAKOWSKY, Illinois
JOHN J. FASO, New York
LLOYD SMUCKER, Pennsylvania
MATT GAETZ, Florida
JODEY C. ARRINGTON, Texas
A. DREW FERGUSON IV, Georgia

                           Professional Staff

                     Richard E. May, Staff Director
                  Ellen Balis, Minority Staff Director
                                CONTENTS

                                                                   Page
Hearing held in Washington, D.C., May 24, 2017...................     1
    Hon. Diane Black, Chairman, Committee on the Budget..........     1
        Prepared statement of....................................     3
    Hon. Pramila Jayapal, Vice Ranking Member, Committee on the 
      Budget.....................................................     5
        Prepared Statement of....................................     7
    Hon. Mick Mulvaney, Director, Office of Management and Budget     9
        Prepared statement of....................................    12
    Hon. Lloyd Smucker, Member, House Committee on the Budget, 
      letter submitted for the record............................    54
    Hon. Michelle Lujan Grisham, Member, House Committee on the 
      Budget, article submitted for the record...................    72
    Hon. Barbara Lee, Member, House Committee on the Budget, 
      questions submitted for the record.........................    90
    Hon. Debbie Wassermen Schultz, Member, House Committee on the 
      Budget, questions submitted for the record.................    93
    Hon. Jim Renacci, Member, House Committee on the Budget, 
      questions submitted for the record.........................    95
    Director Mulvaney's responses to questions submitted for the 
      record.....................................................    96

 
                THE PRESIDENT'S FISCAL YEAR 2018 BUDGET

                              ----------                              


                        WEDNESDAY, MAY 24, 2017

                          House of Representatives,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 9:34 a.m. in Room 
1334, Longworth House Office Building, Hon. Diane Black 
[chairman of the committee] presiding.
    Present: Representatives Black, Rokita, Diaz-Balart, Cole, 
Woodall, Brat, Westerman, Renacci, Johnson, Lewis, Faso, 
Smucker, Ferguson, McClintock, Sanford, Bergman, Smith 
Grothman, Palmer, Gaetz, Arrington, Higgins, Boyle, Khanna, 
Jayapal, Lee, Carbajal, Schakowsky, Wasserman Schultz, Jackson 
Lee, DelBene, Jeffries, Moulton, and Lujan Grisham.
    Chairman Black. The hearing will come to order.
    Welcome to the Committee on the Budget's hearing on the 
President's fiscal year 2018 budget. Today we will hear 
testimony from the director of the Office of Management and 
Budget, the Honorable Mick Mulvaney.
    Good morning, once again to everyone, and thank you for 
being here today. I want to especially thank Mr. Mulvaney, the 
director of the White House Office of Management and Budget, 
for being here today to discuss the President's budget and 
spending priorities. And we look forward to hearing his 
remarks.
    While Article I of the Constitution gives Congress the 
power of the purse, the Federal budget is a collaborative 
process. The administration, this committee, and our 
counterparts in the Senate work together to build a budget that 
reflects our unified priorities. For the last 8 years, we have 
seen budgets from the White House that reflect the status quo 
of more spending, more regulation, and never even trying to 
achieve balance. Over the same time period, economic stagnation 
lead the Congressional Budget Office to continually downgrade 
their projections for economic growth.
    And what is the result of more spending, more regulation, 
and slower economic growth? It is a large debt burden on the 
future generation of Americans, a burden that reflects a moral 
failure to face head on our challenges.
    This administration and this committee agree wholeheartedly 
on our responsibility to improve our country's fiscal situation 
and put us on the path to a balanced budget that allows us to 
start paying down our national debt.
    Our friends across the aisle will no doubt defend the 
status quo of the Obama years where the national debt increased 
by over $9 trillion, the largest increase of any Presidency. 
Their solutions which are to simply keep on doing what we have 
been doing are not only unsustainable, they are an abdication 
of our responsibility to current and future generations.
    Our fiscal situation is not just problematic, it is dire. 
According to the CBO, the Federal debt held by the public, 
which currently stands at 77 percent of gross domestic product, 
will rise to 150 percent of GDP in the next 30 years if nothing 
is done. Over the same period of time, deficits will rise from 
2.9 percent of GDP to 9.8 percent of GDP. These are levels of 
debt and deficits that have never been seen like this before in 
American history and are well beyond what the economists 
predict would result in a crisis.
    The CBO says that maintaining the status quo would, and I 
quote: ``reduce national saving and income in the long-term; 
increase the government's interest costs, putting more pressure 
on the rest of the budget; limit lawmakers' ability to respond 
to unforeseen events; and increase the likelihood of a fiscal 
crisis,'' end quote.
    Let me repeat a piece of that, the last line, quote: Doing 
nothing and continuing the status quo will result in a fiscal 
crisis. Put simply, the status quo is not an option. And this 
committee and this administration are committed to building a 
Federal budget that begins to deal with our out-of-control 
spending, incentivizes economic growth through tax and 
regulatory reform, and makes sure that the government works for 
the people, not for the bureaucrats.
    Our committee and this administration also agree on the 
commitment of funding our military. The threats to our national 
and homeland security continue to grow. The previous 
administration left the world less safe and secure with growing 
threats from all corners of the globe. Ensuring the safety and 
security of our Nation is our first and foremost responsibility 
of the Federal Government, and we should give our men and women 
in uniform the resources they need to complete their mission.
    I applaud the President for making our national defense a 
top priority once again as our committee and our Senate 
counterparts go through this process of building our budget 
resolution. The input from the administration officials, such 
as Mr. Mulvaney, is an invaluable resource to provide 
information background and details on the goals of President 
Trump.
    Balancing the budget over 10 years presents major 
challenges, but also a great opportunity. And for the first 
time since I have been serving on the Budget Committee, we have 
a President who is willing to take action to reform government 
and to get our fiscal house in order.
    Our budget resolution is no longer a vision document; it is 
a blueprint for building the better America we have promised 
our constituents for years. It is our opportunity to show our 
real progress in limiting the size and the scope of government, 
ensuring our children and grandchildren aren't burdened by our 
unsustainable levels of debt, and persevering for a safe and 
strong America. I know that working together we can find the 
right solutions for the American people.
    Thank you. And with that, Ms. Jayapal, you are recognized.
    [The prepared statement of Chairman Black follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Jayapal. Thank you, Chairman Black, and vice ranking 
member, and also ranking member John Yarmuth [off mic].
    Director Mulvaney, it is good to see you. Congratulations 
on your new position.
    As you know, this hearing traditionally gives the American 
people the chance to see the differences between the priorities 
and values of our two parties. Those contrasts will be made 
absolutely clear today. The Trump budget is shockingly extreme; 
the antithesis of what the American people have said they want 
from their government. It leaves no question of what this 
administration values: greater gains for millionaires and 
corporations at the expense of American families, economic 
progress, and our national security.
    Yes, the President's budget is a betrayal, a line by line 
tally of broken promises. But above all, it is a shattering of 
dreams and a loss of hope and opportunity for millions of 
families. This budget starts by taking away healthcare, then 
food, then housing, then education, then job opportunities. For 
nearly every American family struggling to get ahead, this 
budget makes that much harder, if not impossible.
    The level of cuts to investments that Americans need is 
astonishing and, frankly, immoral. This budget cuts nondefense 
discretionary funding for 2018 by a massive $54 billion from 
the already austerity level spending cap. Then the budget goes 
haywire, cutting NDD more and more each year until 2027 when 
investments are decimated by nearly 30 percent, and that is 
without adjusting for inflation. A 30 percent cut in nondefense 
discretionary spending, which includes Homeland Security, 
education, medical research, veterans healthcare, 
transportation, and much represents a total disinvestment in 
our Nation and a complete departure from every standard of 
responsible governing.
    But it gets worse. We know that at least 24 million 
Americans will lose healthcare coverage because this budget 
includes the Republican healthcare repeal bill. This budget 
cuts Medicaid by another $600 billion, that is a total cut of 
$1.4 trillion to a program that is the only source of 
healthcare for tens of thousands of individuals in every single 
congressional district in the country. The vast majority of 
those people are children, seniors in nursing homes, and the 
disabled.
    This budget actually targets help for people with 
disabilities, cutting Social Security disability insurance by 
as much as $72 billion, despite the President's pledge to not 
touch Social Security at all. And it cuts $193 billion from the 
Supplemental Nutrition Assistance Program. This is the program 
that makes sure our poorest families have at least some chance 
to put a meal on the table. It provides just $1.42 per person, 
per meal, again, mainly to seniors, children, and the disabled.
    The President's budget eliminates or eviscerates 14 
education and arts programs. It makes it harder for Americans 
to get needed skills to compete for jobs, guts investments in 
rural and urban communities, jeopardizes the safety of our 
food, air, and water, and leaves roads and bridges to crumble.
    The Trump administration makes all these cuts for one 
simple and, frankly, disgraceful reason: to hide the fact that 
their huge tax breaks for millionaires, corporations, and 
special interests will explode the debt, and they even do that 
in a dishonest way. This budget relies on absurd economic 
projections and pretend revenues that no credible economist 
would validate. It provides no real information on tax reform, 
other than to claim that it is revenue neutral. I guess this is 
the President's ``believe me'' part of his budget.
    With all due respect, we aren't going to take the 
President's word for it, particularly when no one else will.
    And, Ranking Member Yarmuth, would you like me to turn it 
back over to you or finish your statement?
    Okay. So let me go ahead and finish this. We have been down 
this road before more than once, and I know you believe it with 
all your heart, but you are wrong. Tax cuts for corporations 
and the wealthiest Americans do not pay for themselves. They 
drive up our deficits and rob our country of needed 
investments, and that is the truth. And it is also true that we 
can't trust a budget that sets up false choices.
    This budget increases 2018 defense spending by $54 billion, 
while cutting NDD by the same amount. We don't have to choose 
between updating tanks or textbooks, and we should not be 
pitting teachers against soldiers. To strengthen our national 
security we have to ensure that our military and American 
families have the tools needed for success. And that is our 
responsibility, to invest in the future of American families 
and help grow our economy.
    Education, healthcare, job training, innovation, 
infrastructure, programs that help individuals with nowhere 
left to turn, and a Tax Code that helps families get ahead. 
Those are American priorities and they should be the priorities 
of this Congress and this committee.
    Thank you.
    [The statement of Ms. Jayapal follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Black. Thank you, Ms. Jayapal, and welcome. I know 
that there was a little confusion in the time. So welcome, 
Ranking Member Mr. Yarmuth. I look forward to hearing 
discussion a little bit later.
    So, now, I would thank you--in the interest of time, if any 
other members have opening statements, I ask that you submit 
them for the record.
    And I would now like to recognize Director Mick Mulvaney. 
Thank you for taking your time to come here today. The 
committee has received your written statement and it will be 
made part of the formal hearing record. And you will now have 
10 minutes to deliver your oral remarks, and you may begin when 
you are ready.

STATEMENT OF HON. MICK MULVANEY, DIRECTOR, OFFICE OF MANAGEMENT 
                           AND BUDGET

    Mr. Mulvaney. Chairman Black, thank you so much for having 
me. Vice Ranking Member Ms. Jayapal, thank you for the opening 
statements. Ranking Member Yarmuth, thank you for making it. So 
I wouldn't dream of doing this without you. So thank you all 
for having me here today.
    It is really an honor to be here, to be back in this 
committee. For those of you who I don't know, I served in this 
committee for 2 years. And it is an honor and a privilege to be 
here on behalf of the Trump administration.
    Mr. Lewis, welcome. You are sitting in my chair.
    So it is an honor to be here. I am not going to read my 
opening statement. I am going make a couple of comments and we 
will get right to the question and answers.
    When we looked at the budget for the very first time, I 
picked it up on Friday, the New Foundation for American 
Greatness, I spent most of the weekend, as you can imagine, 
reading it. And as I went through it, it struck me that we 
could have come up with a different title. And the title could 
have been the taxpayer first budget. Because the first time in 
my memory, at least, this is a budget that was written from the 
perspective of the people who actually pay for the government.
    And we went line by line through what this government does 
and asked ourselves, can we justify this to the folks who are 
actually paying for it? If I am going to take money from Mr. 
Diaz-Balart in taxes, and I am going to spend it on a program, 
can I justify to him actually spending that money? If I am 
going to take money from you, Ms. Schakowsky, and do the same 
thing, can I justify it to you? Can I look you in the eye and 
say, I need to take this money from you in order to give it to 
a disabled veteran? And I think that I can.
    I am not sure I could look at Mr. Woodall and say, Mr. 
Woodall, I need to take some of your money so that I can give 
it to a program that is completely ineffective, doesn't help 
anybody and is rife with waste, fraud, and abuse. And that is 
the perspective that we brought to this bought from the very 
beginning. And maybe that is what is new about the New 
Foundation for American Greatness budget.
    The other thing that is new, by the way, is that it does 
balance. And for those who have been here for a long time, you 
know that it has been a long time since the President's budget 
has balanced. It certainly hasn't happened since I arrived in 
Washington, D.C., in 2010.
    Someone mentioned on the news today this is a moral 
document, and it is. And here is the moral side of it: If I 
take money from you and I have no intention of ever giving it 
back, that is not debt, that is theft. If I take money from you 
with an intention to pay it back and I can show you how I 
intend to pay it back, that is debt. And what we have been 
doing for too long, both parties by the way, in this city have 
been taking money from people without laying out a plan for how 
we are ever going to pay it back. And we start doing that with 
this budget. This budget does balance within a 10-year window. 
Something that is completely new in this town.
    What is the foundation? The foundation for the plan is 3 
percent growth. In fact, that is Trumponomics. People ask me, 
you know, you are the budget director, what do you think about 
Trumponomics? Trumponomics is whatever can get us to 3 percent 
growth. And I can assure you when I am in the Oval Office with 
the President and we are talking about trade policy, we are 
talking about energy policy, we talk about tax policy, we talk 
about healthcare reform, we talk about budgets, we are figuring 
out--trying to figure out a way to get to 3 percent growth.
    I have news for you, both parties: If we do not get to 3 
percent growth, it is unlikely we will ever balance the budget 
again. And that is not a plan. That is not a plan for the 
future. That is not moral, to continue to take money from 
people without having a plan to pay it back. So we do 
everything we can to try and get to 3 percent growth. I look 
forward to the questions today about how we do that.
    We do all of this, by the way, and still fund the 
President's priorities. You have heard it by now we wanted more 
money for national security, border security, law enforcement, 
veterans, school choice, even paid parental leave. For the 
first time ever, President Trump, the first President of either 
party, is proposing a national paid parental leave program. 
There is $20 billion in this budget to do that. We don't touch 
Social Security and Medicare, following through on his campaign 
promises.
    And we're able to do all of that and still balance. Why? 
Because what we did here is try and change the way that 
Washington looks at spending. We no longer want to measure 
compassion by the number of programs that we have or the number 
of people that are on those programs. We want to measure 
compassion, true compassion, by the number of people we help to 
get off of those programs. We don't want to measure our 
commitment to the country by the amount of money that we spend, 
but instead on the number of people that we help get off of 
these programs and get back in charge of their own lives. That, 
that is what we think makes this the American Greatness budget, 
because we are going to try and get the country back to where 
we have a healthy economy, people are working again, people are 
optimistic about the country again.
    I remind you, if you are under the age of 30, you have 
never had a job as an adult in a healthy American economy. And 
a healthy American economy is very, very different than what 
you have seen for the last 10 years. And the dynamism and the 
optimism that comes from that is what this administration is 
about. It is what this President promised. It is what we are 
going to do everything in our power to deliver, and the budget 
is a start to that.
    So with that, Madam Chairman, again, thank you for having 
me today. I look forward to the questions and in explaining the 
budget to members.
    [The prepared statement of Mick Mulvaney follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Black. Thank you, Mr. Director. And I look forward 
to the conversation. And thank you for yielding back those 5 
minutes, and members will have more time and opportunity to ask 
you questions.
    So now we will begin the question-and-answer period. And I 
am going to begin with the first question. You mentioned, 
during your opening comments, about a moral obligation of 
balancing the budget. And around here in Washington, you will 
hear some folks say, this is just kind of a quaint anachronism 
that we should balance a budget, that somehow that would not be 
something that would be very important.
    And you mentioned about it being a moral obligation. I 
certainly as a mother and a grandmother and hopefully a great-
grandmother some day do feel that it is our moral obligation to 
make sure that we leave a strong country without huge deficits 
for our children and grandchildren. And so will you talk a like 
bit more about your view on the fiscal and economic well-being 
and what will happen if we continue these chronic budget 
deficits and ever-rising debt on the moral issue for the future 
generations?
    Mr. Mulvaney. I will approach it this way. Thank you, 
Chairman Black. Everybody around this table owes the Federal 
Government $60,000. I have three 17-year-olds. Okay? They are 
not even out of school yet and they owe this government $60,000 
each. Every man, woman, and child in this room owes the Federal 
Government $60,000. I am not sure if they know that. I am not 
sure if we have done a good job as both parties of explaining 
to people what government truly costs. In fact, I happen to 
believe we have done a really good job of hiding the true cost 
of government from the American people. I don't believe that 
people are willing to pay for as much government as they have. 
And I don't think that we have been entirely honest with them 
for about the last 40 years on what government truly costs.
    I and do think there is a moral imperative to tell them. 
Say, look, this is how much it costs and this is how much we 
have to take from you in order to do this. Do you really want 
us to take from you that much money or do you want us to try 
and find a way to balance and to spend less? And balance is 
something that it seems foreign in this city, which completely 
stuns me. I don't know how many of you used to be on the State 
legislatures. I was. I know that Governor Sanford was when he 
was my Governor in South Carolina. But a balanced budget was 
the ordinary course of business for just about everybody in the 
world except this body. States have to do it, families have to 
do it, businesses have to do it. My goodness, my church has to 
balance its budget or else they cease to function.
    And I think there is a disconnect between the American 
people and the government when we don't lay out a path to 
balance. When you talk about the financial impact of that, 
Madam Chairman, what you look at as we go forward is every 
single year we talk about more and more of our money going to 
pay interest payments on the debt. And I don't know the exact 
numbers, but at some point in the very near future, we expect 
to be paying more money for debt than we do for defense. And 
that worries me.
    I was in, not this room, because this is a temporary room, 
but I was in the old Budget room my very first year when I saw 
the Chairman of the Joint Chiefs of Staff sit in front of this 
committee and say that he thought the greatest threat to this 
Nation was the national debt. Great countries are not destroyed 
from without; they rot from within. And that debt, that 
crushing debt that we have on every man, woman, and child is 
part of that rot, and that is what we are trying to address in 
a very candid, open, and honest way in this budget.
    Chairman Black. And I do appreciate that. And I appreciate 
you putting it in a context as well, that we would look at our 
students in high schools and say to them, would you like to 
have a $60,000 car or would you like to just pay your share of 
the debt to the Federal Government? So I appreciate putting it 
in a real context where folks understand that when we talk 
about trillions of dollars, I know even before I came here to 
Congress and serving in the State legislature, we talked about 
millions and billions. We don't talk about trillions of dollars 
in State legislatures.
    And, honestly, you sometimes think that is a fictional 
amount, because people cannot wrap their heads around trillions 
of dollars. But when you put it in a real context of your share 
of that is $60,000, and you are really, at the end of the day, 
not paying off even the debt that we are continuing to build 
up.
    Along with that, I do want to say it is gratifying to see 
that the administration is taking a stand on some Federal 
entitlement programs and reforming them. Do you consider 
entitlement reform an indispensable part of reaching that 
balanced budget, especially as we look at how we are only 
spending one-third of our total dollars on everyday spending 
and the rest of it is over in that column with the debt and the 
entitlement, Social Security, Medicare, and the other 
entitlement programs? So do you consider that an indispensable 
part of what we must be doing? And along with that, do you 
agree that even if we weren't facing a fiscal crisis, that 
reforming these entitlement programs really is the right thing 
to do?
    Mr. Mulvaney. Let me answer it this way, Chairman: I don't 
believe it is possible. In fact, I know it is not possible to 
balance the budget solely using the discretionary portion of 
the budget. There have been years that I was here, 2010, 2011, 
I believe, where we could have taken discretionary spending to 
at or near zero and we still would have had a deficit.
    In our budget, we do address mandatory spending, what some 
people call entitlement spending, but we do not address the two 
that the President simply didn't want to touch, which was 
Social Security retirement and Medicare. I have told this story 
many times, I actually sat across the desk from him in the Oval 
Office with my list of mandatory reforms. And at the end of--I 
think we had four meetings on it, he would go, yes, yes, no, 
no, no. And the noes were all Social Security retirement and 
Medicare. And when I pressed him on that, he said, look, I made 
a promise. I made a promise to people that I would not touch 
those. And we didn't.
    And I will be perfectly frank with you and candid: I didn't 
think we could balance the budget, and that is why I was 
extraordinarily impressed with my team when they were able to 
figure out a way to balance the budget without touching those 
things. I will tell you it is probably the last time we could 
do that. It will be very difficult in the future to do that 
because of the role that those programs do play in our future 
spending, but I was excited to be able to keep the President's 
promise.
    By the way, the budget is nothing more than a collection of 
his promises. That is how we wrote it. If he said he wanted to 
spend more money on something during the campaign, we spend 
more money here. If he said he wanted to spend less, we spent 
less here. If he said he wanted to add to Defense, he wanted to 
add to border security, wanted to add to school choice and 
veterans affairs but didn't want to add to the deficit in year 
one, that is the framework for the budget.
    But to your larger point, yeah, you cannot address our 
long-term drivers of our debt without looking at the mandatory 
side of the budget. It is three-quarters of what we spend going 
to 80 percent in the near future. So, yeah, you would be hard 
pressed to be able to balance the budget without looking at 
mandatory spending.
    Chairman Black. And along those lines, and then I will 
conclude my questions here, but along those lines, we sat and 
talked privately about some of the ideas that you had. And you 
shared with me that we don't want to hurt people who really 
need the kinds of services that we want to be sure they get. In 
other words, we don't want somebody who is unable to afford 
their heat and air conditioning to go without getting those 
services, but there are wastes in these programs. And I think 
that is important that we talk about the waste in the programs, 
at the same time acknowledging that we are not heartless 
people. We want to make sure we take care of people. We also 
want to make sure our dollars are well spent.
    Would you give an example of it, just in the LIHEAP 
program, about how there are ways that we need to make sure 
that we are cleaning up?
    Mr. Mulvaney. Sure. And I know it fits a certain narrative 
that our party doesn't care about poor people, and that is--
that seems to always filter out during budget time. In fact, it 
filters out all the time.
    I believe in the social safety net. I really do. I actually 
think that it helps us get to that 3 percent growth. And I have 
made that exact argument to the President, that a healthy 
social safety net gives people that confidence that we need 
them to have in order to take risks, in order to start your own 
business, in order to go out on your own, to bring the sort of 
dynamism that we need into the economy to get 3 percent growth. 
And that a healthy safety net is part and parcel of that. And 
we can absolutely afford to do that for folks who really need 
it.
    Part of the difficulty, I think, and we will talk about 
this, I know, as we go through the various programs, though, 
is, are there folks who are on these programs who shouldn't be? 
Again, when we have a chance to go into more detail, I will 
answer your specific question about LIHEAP. Eleven thousand 
dead people got this benefit a few years ago, dead people. One 
of your States, I can't remember which one it is, has a 
requirement that they approve three-quarters of the 
applications, regardless of merit.
    When you look at that through the perspective of the folks 
who pay for the program, it is an entirely different 
perspective than, oh, my goodness, you are going to put--you 
are going to put people out on the street or people are going 
to freeze to death. No, they aren't. We are not going to kick 
any deserving person off of any meaningful program. We want to 
help people just as much as you do. Republicans care about poor 
people as much as Democrats, just the same as we care about 
clean air and healthy drinking water.
    But we look at it from a different perspective, which is to 
balance those who receive the benefits with the folks who pay 
for the benefits. And you show me a program where 11,000 dead 
people are getting benefits, I have a problem with that, 
because I think taxpayers would as well. I look forward to 
having those conversations as we move forward.
    Chairman Black. Thank you, Mr. Director.
    And I now recognize Mr. Yarmuth for questions.
    Mr. Yarmuth. Thank you, Chairman Black. And, Director 
Mulvaney, nice to see you. Welcome back to the committee, and 
thank you for your work.
    The first thing I want to do today is thank you, because 
one of the things that I think you have done by submitting this 
budget to Congress is highlight some incredibly important vital 
programs that--and investments that the Federal Government 
makes that help working families throughout this country and 
that support much of the economy in this country.
    You know, it is one thing to say, well, we can do without 
CPB, we can do without NEA, we can do without NEH, we can do 
without CDBG. And people just hear initials and they don't 
really know what we are talking about. But when they say would 
you like arts programs in your community? Would you like 
historical displays in your rural community? Would you like 
Meals on Wheels to help your seniors survive? Then they 
understand that these are critical, critical programs that are 
worthy of government investment. So I thank you for 
highlighting that for the American people.
    I just have to respond to one thing. That guy who is 
deciding whether to buy a $60,000 car or pay $60,000 to the 
government, I wonder what he would answer if you said, you can 
have a $60,000 car or your senior parent can come live with 
you, because the money that would put her or him in a nursing 
home that is paid for by Medicaid is not going to be available 
to you. I think you would probably get a little bit different 
perspective on that.
    And, Mr. Mulvaney, you said on several occasions that you 
would not ask--you could not ask a single mother, I think you 
said in Detroit, but it obviously doesn't matter where that 
single mother would be, whether she would be willing to pay for 
her share of public television or NEA and so forth. And I would 
say most single mothers that I would know, if you asked them 
whether they would pay $1 a year for children's programming or 
would they rather pay $2,000 a year for their share of the 
Defense budget, they wouldn't have any problem paying that $1 
for children's programming, but they might balk a little bit at 
the $2,000 payment for Defense.
    So what we are really talking about in this budget, I 
think, is this is the age old guns versus butter argument, and 
I think we will continue to have that debate. And I think it is 
really unfortunate in a way. And I thank Ms. Jayapal for that 
impressive rendition of my opening statement, but this really 
is pitting one against the other, this budget. That is what it 
does. It pits Defense investment against investment in 
everything else. And that is a frightening concept, I think, 
for this country if we have to ignore the portion of the 
Federal budget that invests in people, whether it is job 
training, education, important medical research, and other 
innovation, or whether we buy guns. But that is what we are 
being asked to do in this budget.
    So, you know, you have justified many of the cuts in this 
budget by saying that there is no evidence to prove that these 
programs actually work. For example, you have suggested that 
Meals on Wheels doesn't work. I would think that just by nature 
of the fact that you are keeping people alive by feeding them 
is pretty good evidence. But beyond the question of morality of 
providing meals to seniors, there is abundant evidence that it 
does work, including evidence that even small increases in that 
program pay dividends in the form of lower Medicaid spending. 
Granted, there are many other programs where the evidence may 
be more nuanced, but that doesn't mean the programs don't work 
and should be eliminated, pulling the rug out from working 
people, children, and the elderly who need them.
    So if direct empirical evidence that something works is the 
only standard for funding, then what is the direct empirical 
evidence that an additional submarine or one more F-35 
increases our security? That kind of evidence would be 
difficult, if not impossible, to produce. Does that mean we 
shouldn't buy submarines or F-35s? No, of course not. We rely 
on a comprehensive body of information, including opinions of 
our military leaders and national security and foreign policy 
experts to make those decisions.
    So the administration is asking for an additional $54 
billion above the caps. And there has been plenty of evidence 
and reports indicating waste and mismanagement at the Pentagon, 
including it is the only agency that can't pass an audit, there 
have been hundred of billions of dollars in weapon system cost 
overruns, reports of significant bloat and the overhead. The 
Defense Business Board concluded $125 billion in savings over 5 
years could be achieved. The GAO has identified a myriad of 
high-risk management areas in DOD's business operations. And 
just this past weekend, the Washington Post reported on gross 
overpricing of fuel in DOD, which created billions of dollars 
in reserve cash for the Pentagon to spend on new priorities.
    So my question to you is, how have these reports of 
mismanagement and waste factored in the administration's 
decision to add $54 billion for national defense?
    Mr. Mulvaney. A couple of different things to that, Ranking 
Member Yarmuth. Thank you for the questions. On the DOD, a 
couple of things. I am just as interested and you are I 
believe, in waste at the Department of Defense. And I am happy 
to announce, once I got over to OMB, I started asking questions 
about what we are going to do about that. And I am told by the 
DOD--in fact, I think they just filed a confirmation of this a 
couple of weeks ago--that they intend to be fully audit ready 
by September of this year. That is pursuant to law I think they 
are required to hit that deadline. They told us they are ready 
to hit that deadline. In fact, I think certain subparts of the 
Department are already ready. But I do look forward to continue 
to work on those with you.
    Regarding Meals on Wheels, I will come back to that for a 
second, you know I have no intention to embarrass you because 
you are a friend of mine, but I do believe that the article 
that you read about that has been withdrawn by the Washington 
Post. We never said that Meals on Wheels was ineffective. As is 
too often the case, the story got printed like this and the 
redaction got printed like this.
    Mr. Yarmuth. Okay.
    Mr. Mulvaney. But let's talk about the Meals on Wheels, 
because we don't reduce it. Okay? Most of that is funded 
through, oh, it is an HHS program--no, ma'am, CDBG is not--the 
primary funding for Meals on Wheels comes through the senior 
nutrition services. I believe that is at HHS, it could be HUD. 
I lose track of the alphabet soup.
    There is no reduction in that program. Yes, we do cut the 
CDBG program, but that is a program that accounts for less than 
1 percent and it is optional by the States. We block grants for 
the States, and some States do choose to use some of that money 
for Meals on Wheels. But that funding accounts for 1 percent of 
total Meals on Wheels. So I just wanted to clarify that.
    Regarding the Corporation for Public Broadcasting, look, I 
mean, my mom tells me I saw the very first Sesame Street. Okay? 
In fact, I was curious that there is a printer in the back room 
here with Bert's picture on it. They have evidently named the 
printers here Ernie and Bert. It is a for-profit corporation, 
and it does extraordinarily well. I don't know if Henson 
Associates is owned by Disney or has a licensing agreement with 
Disney. I can assure you Big Bird makes more money than 
everybody in this room. But when I do go to that family in 
Grand Rapids and say, look, is this what you want your money to 
go to? I think they might tell me no, that maybe they can 
afford to do it without us. So that is why I talk about we are 
looking through those----
    Mr. Yarmuth. Would you think the same family in Grand 
Rapids would say, oh, I am very happy paying $430 million for 
military bans?
    Mr. Mulvaney. I think that when we look at the priorities 
that the President has given us--it is not just Defense, by the 
way. You said all of the money is going to Defense, and it is 
not. But I will answer your question, then I will fill in some 
gaps.
    Yeah, I think folks understand that a function, a proper 
and appropriate function of the government is to defend the 
Nation. I think, in fact, if we got together and came up with a 
list, if everybody from every different wing of both parties 
came up with a list of what they thought the priorities of 
government should do, my guess is defending the Nation would be 
fairly high up on everybody's list.
    Mr. Yarmuth. Everybody on both sides of this committee, I 
am sure, this Congress.
    Mr. Mulvaney. I think one of the knocks against your party 
is that you don't believe in national defense. I don't happen 
to agree with that. I know that you think it is a priority just 
like we do. Okay. So I think that family in Grand Rapids, if 
you ask, do you think some of your money should go to defending 
the Nation, the answer would be yes, sir.
    Mr. Yarmuth. Oh, no question about that. I am just asking 
about military bans, because you are cutting out NEA and NEH 
cultural enrichment programs, and then you have got this other 
program that I would argue really provides no service.
    But let me say one other thing, and this is just in 
relation to the methodology that was used here. And I think the 
media are doing a pretty good job of documenting many of the 
problems with the assumptions that were made in this budget: 
the 3 percent growth rate that no economist thinks is 
reasonable; the possible double counting of $2 trillion; the 
notion that tax cuts pay for themselves, which even 
conservative organizations don't necessarily support. But I 
just have to repeat what was written today by Michael Grunwald 
when he said, you know, I can say that I want to dunk, and I 
can make the assumption that I am going to grow a foot and 
return to the athleticism of my 20s, but that is probably not 
going to happen. And I think that is what many of us are 
concerned about with the construction of this budget, it relies 
on things that just aren't going to happen. So to make the 
claim that it balances with basically fantasyland predictions, 
to us is a claim that is not valid.
    So I thank you for your appearance, and I yield back.
    Mr. Mulvaney. Thank you, Mr. Ranking Member.
    Chairman Black. Thank you, Mr. Yarmuth.
    I now recognize the vice chair of the committee, the 
gentleman from Indiana, Mr. Rokita.
    Mr. Rokita. I thank the chair.
    And, Mick, it is good to see you back at committee again. I 
really appreciate the leadership that you and the President and 
the administration is providing. As you said in your opening, 
you are putting forth priorities. And they are priorities that 
are responsible in light of the fact that we are $20 trillion 
in debt going to $100 trillion before too long.
    I also take notice that you said this is probably the last 
budget we are able to do that. That is to say if we implemented 
every word of your proposed budget or something similar, very 
similar in terms of the numbers--we reflect our Article I 
priorities--that means in 10 years, we are going to have to 
look at Social Security, Medicare, again look at Medicaid 
perhaps, in order to be responsible and sustainable again, 
because those three programs are eating up so much of our 
budget.
    And I really think that Republicans--when we started out, 
Mick, 6 years ago, we were saying the same thing as the 
President, we don't want to effect anyone on or near to be on 
these programs. But we are looking for something to do for the 
next generation so that these programs are strengthened, 
sustainable, and around. And not speaking for the President, of 
course, but that is how I interpret his promise. In fact, we 
are doing the responsible thing and are saying the same thing.
    And I also appreciate your announcement that DOD will be 
auditable by the end of this year. I think that is something 
that you and I both care about.
    And I thank you for our prioritizing school choice, 
something I work on in the K through 12 Education subcommittee 
that I chair. We stand fully ready and behind what the 
President wants do to make sure that parents can pick the 
choice that is best for their kids and not be shackled to a 
particular ZIP Code. When parents have a choice, you know, the 
kids have a chance. And I thank the President and you for doing 
that.
    I want to focus something that is come up in my 
Transportation Committee that I am also on, and that is this 
ATC privatization. When the CBO scored H.R. 4441 last year, 
which was the AIRR Act, CBO said that privatizing air traffic 
control would cost nearly $20 billion over the 10-year window. 
And if our goal is to reduce deficit and not add to the debt, 
like you said, why are we embracing things that are going to 
cost $20 billion?
    Mr. Mulvaney. Thank you for the question. And by the way, I 
will apologize in advance to addressing all of you today by 
your first names. It is a bad habit I got into when I was a 
Member. I am going to try and call you Mr. Rokita. If I call 
you Todd, I apologize.
    Mr. Rokita. I am going to call you Mick.
    Mr. Mulvaney. Yup. And I have been called a lot--you have 
called me a lot worse, as I recall.
    Here is why we do it: Because we think the current system 
is broken and we think it supports the expenditure. When we 
look around the world, we look at the technology, when it comes 
to air traffic control, we are behind the curve. We are way 
behind the curve, as a matter of fact. And we do support the 
efforts that are currently moving through the House.
    Mr. Rokita. With regard to that, I fly in the system, I use 
the system, 145 hours a year that I am flying in the system, 
not just as a passenger. And for the size that we are, which is 
the biggest in the world, it works well. We continue to search 
for, many of us, the actual problem that it is trying to solve. 
We don't think really one exists. How you can say Canada, like 
I think your counterpart mentioned the other day, Gary Cohn, 
said, quote, ``Everyone else has done it, so we know it is 
relatively easy to do,'' unquote.
    So that is the view of the administration that--he was 
referencing Canada, by the way, which is one-third the 
transactions and the size of our system. Just because it was 
easy to do it--and it took Canada nearly a decade, by the way--
that all of a sudden it is going to be easy for us to do?
    Mr. Mulvaney. I don't think anything on that scale, Mr. 
Rokita, would be easy, but I do think the system that you see 
in other countries that is much more modern is a satellite-
based system, instead of a ground-based system. It is scalable, 
but you can take it up to something----
    Mr. Rokita. Yeah, but you don't need to take the governance 
and the dispassionate third party that is the FAA to decide 
disputes in an ecosystem that has different interests, and 
sometimes a competing interest, and turn it over to--it is a 
monopoly, and you are going to turn it over to the airlines is 
the problem. That is going to be the effective result of this 
board. And so that is concerning.
    But do you guys support all parts of that ATC privatization 
proposal, even the labor agreement that is been codified in the 
proposal?
    Mr. Mulvaney. Yeah. Mr. Rokita, I don't get into that level 
in my budget, because we look at the monetary impacts of the 
proposals, not the----
    Mr. Rokita. Well, that is part of the $20 billion cost is 
this labor agreement that you are taking from the FAA, the 
controllers, and you are actually codifying it and baking it 
into law, if you--you know, if you agree with that part of the 
proposal, which was my question.
    Tax rates on this very thing, the budget states that you 
will work with Congress to establish successor tax rates if 
this new ATC corporation is created. Does the administration 
have a general idea of what those tax rates would be, and would 
the administration support moving to a user fee for all 
segments or any of the segments instead of creating new tax 
rates?
    Mr. Mulvaney. And I am not trying to dodge your question, 
Mr. Rokita, it is just we don't get to that level of detail. I 
understand that Secretary Chao I think is on the Hill today or 
tomorrow. You may get a chance to ask her that question as 
well.
    Mr. Rokita. Okay. Well, these just go--this goes to the 
bottom line budget numbers, so that is why I asked.
    Mr. Mulvaney. Yes, sir.
    Mr. Rokita. Mick, thanks for being here.
    Mr. Mulvaney. Thank you.
    Chairman Black. The gentleman's time has expired.
    And I now recognize the gentleman from New York, Mr. 
Higgins, for 5 minutes.
    Mr. Higgins. Thank you, Madam Chair. And welcome, Budget 
Director Mulvaney.
    Under your budget, 3 million wealthy Americans get a 
$213,000 tax cut; 240 not so wealthy Americans get a $210 tax 
cut. I appreciate all the concern about debt, but the White 
House budget increases the national debt by $5.5 trillion over 
the next 10 years, this according to the nonpartisan committee 
for responsible Federal budget. Economists right, left, and 
center say the tax cuts don't pay for themselves and they never 
have.
    You want 3 percent annual growth, so do I. The 
Congressional Budget Office projects lower than 2 percent 
growth each year over the next decade. You want growth in the 
United States economy, you have to invest in that growth.
    I think China is serious about their growth and I don't 
think that we are. And let me explain. China's America's 
largest trading partner. Last year, we sold $115 billion to 
China, and they sold to America $462 billion. Our trade deficit 
last year with China was $347 billion for stuff, for goods. 
China wants to overtake the United States as the global 
economic leader. China just announced a $1 trillion 
infrastructure investment to open up China to 47 other Asian 
countries to sell the stuff they make to 47 new markets much 
more efficiently.
    Under your budget, you want $1.4 billion to build a $40 
billion wall that we were told that Mexico would pay for. Your 
budget spends $3 billion a month for a 16-year war in 
Afghanistan. In response to a $2 trillion need for American 
roads and bridges with a pathetically weak $200 billion, maybe.
    China is making an aggressive move to challenge the United 
States' global leadership. And the President in his first 
budget does nothing, absolutely nothing to seriously grow the 
American economy and to reclaim economic share from China and 
other countries.
    Your thoughts on that.
    Mr. Mulvaney. Again, you have given me a bunch to work 
with. Let me take them in turn, and we can backfill if you 
would like to.
    You talk about investments in China. Investments are 
absolutely critical, absolutely critical to get economic 
growth. We all agree on that. I think the difference between 
you and I and China and myself might be where we think the most 
effective investments are made. We happen to believe that 
private capital investment is always more efficient, more 
effective, and more accountable than government investment. And 
when you say that we make absolutely no provision for investing 
in this country, sir, I have to disagree. The whole tax plan 
that we have come up with is designed to try and drive capital 
investment, businesses investing in new technology, investing 
in people, trying to figure out new markets; that that is a 
much more effective way to get to 3 percent growth. And I can 
assure you that we are fairly confident that we can beat the 
Chinese at that.
    Regarding the trade deficit, we share your concerns. And I 
think that is why you have seen a focus on trying to rebalance 
some of our trade agreements, renegotiate some of our trade 
agreements. We have made some small progress on that already in 
the first couple of months. You have seen some progress, I 
think, on some agricultural exports to China.
    You mentioned that China is doing a massive $1 trillion in 
infrastructure, and we are only doing a--I can't remember what 
the----
    Mr. Higgins. $200 billion.
    Mr. Mulvaney.----$200 billion. And what I would point out 
to you is that we are proposing to figure out a way, and there 
are ways, to leverage that, to at least a trillion dollars 
worth of spending. Let tell you how that is. Let me give you an 
example of how that might be.
    You are a governor and you want to build a road, okay, and 
the road is going to cost you $100 million. Okay. And you have 
tried to figure out a way to pay for it and you just can't. And 
you can only raise $80 billion--$80 million. What if we kicked 
in the extra $20 million? That is a $100 million road that 
would not have otherwise been built with a $20 million Federal 
investment. That is a 5 to 1 return on that investment.
    Mr. Higgins. Let me just reclaim my time, respectfully, 
because I only have a few minutes.
    We spent $108 billion rebuilding the roads and bridges of 
Afghanistan. We spent $78 billion rebuilding the roads and 
bridges of Iraq, and they were all deficit financed in the 
traditional way that goes back to Lincoln and how you do it. He 
called them land improvements. You issue debt over the length 
of an infrastructure project. Cities, villages, towns, and 
States do it all the time. And what the infrastructure 
investment does, sir, it unleashes the resources of the private 
sector, and you see that from Buffalo, New York, to Boston, 
Massachusetts----
    Chairman Black. The gentleman's time has expired.
    Mr. Higgins. So I just think that we need a more serious 
attempt to get away from building walls and build bridges and 
roads that are in desperate need of repair throughout America.
    Chairman Black. The gentleman's time has expired.
    Mr. Higgins. I yield back. Thank you.
    Chairman Black. I don't mean to interrupt when you are 
making a comment. I really appreciate the fact that you want to 
finish your comment. But if I could ask everyone to try to stay 
within the time, because these committee meetings do run very 
long, and I know everybody has other meetings they need to go 
to.
    So I now recognize the gentleman from Florida, Mr. Diaz-
Balart, for 5 minutes.
    Mr. Diaz-Balart. Madam Chairwoman, thank you very much. Mr. 
Mulvaney, good to see you, sir.
    Let me first thank you for being accessible. You have been 
exceedingly accessible to all of us who have had questions, 
issues, and that is refreshing and grateful. I am not going to 
talk to you about some of the issues. You know that in my other 
life I was an appropriator, I chaired THUD, and will have an 
ample opportunity to talk. And I know that the President and 
you are emphasizing again infrastructure, and that is something 
that I am very happy about, and we will have ample opportunity 
to talk about in detail.
    So let me kind of shift to talk a little bit about national 
security. I am pleased that this budget recognizes the 
importance of our military and national security. I don't have 
to tell you that for the number of years in the last 
administration military spending was, in essence, was held 
hostage to nonmilitary discretionary spending. That is 
something that was broken, fortunately, in the 17 Omnibus that 
was just passed. And I don't have to tell you, sir, about the 
growing threats around the world, how the world is in flames. 
And again, I believe that having a strong military is essential 
for our security, for the stability of the world, for ourselves 
and our allies, and the United States must continue to lead.
    And I also believe that, by the way, part of however that 
is investing not only in defense, but also in targeted soft 
diplomacy and funding there. Obviously, a big part of having a 
safe world and a safe Nation is that when the President of the 
United States sets a red line, that that red line is enforced.
    So let me talk to you a little bit about, again, where you 
see that spending, military spending being, going, how you see 
the future of our Armed Forces. That is one issue that I would 
like you to elaborate a bit on.
    The second thing, and if we have some time and I am going 
to open it up to you, is I keep hearing that 3 percent growth 
is not possible anymore in the United States of America. We 
have to give up on 3 percent growth for the future, for our 
children, and our children's children, that that is not 
reasonable anymore. I refuse to acknowledge that and believe 
that if we do some things, that my 11-year-old son will 
inherent the same country that we inherited, which is not a 
country growing at 2 percent growth. And the forecasts are that 
if we don't change a track, that that is exactly what we are 
going to be condemning our children for.
    So if you would talk a little bit about, obviously, you 
know, tax reform, reg reform is key, domestic energy production 
is key, a little bit as to how you foresee this budget and, 
frankly, this administration, looking at ways to make sure that 
our kids do not inherit what some believe is inevitable, which 
is a country that will never grow above 2 percent.
    Mr. Mulvaney. Thank you, Congressman. A couple of different 
things that you asked me. Where we thought the defense spending 
is headed and, of course, what is driving all of this is the 
President's promise. And I will come back to this again and 
again during the testimony today, the President's promise to 
undo the sequester. And that was what drove the decision.
    The top line spending number that you see in our budget, 
which is $603 billion this year for defense, I think is the 
exact number it would have been but for the sequester. So that 
is what we see is a presequester spending level, informed by 
what is going on right now. We are in the middle of our new 
national defense strategy, and we are looking forward to 
getting that information from Secretary Mattis.
    The President also made promises, again, coming back to 
that theme on the campaign trail, about the size of the Forces. 
And you will see funding to try and get us in that direction. I 
will be perfectly candid with you, it is very difficult to do, 
given some of the industrial base that we have now, but we are 
working on ways to try and address those problems.
    So the President is just as committed as you are to trying 
to figure out a way to fix some of the damage that may have 
been done during the previous administration within the Defense 
Department.
    Regarding 3 percent growth, I am stunned. I mean, there was 
an article the other day, I think again in The Washington Post, 
said it was an outrageous assumption. How pessimistic do you 
have to be to assume that 3 percent growth, which is less than 
the historical average going back to the founding of the 
country, less than the historical average going back to the end 
of World War II, that that is somehow unreasonable? What does 
it say about the previous administration? What does it say 
about the CBO, about their view of the country that they don't 
think we are ever going to be able to do that again?
    We refuse to accept it as well, Congressman, as you 
mentioned. We think that if that is where you are, then don't 
accept it. Help us figure out a way to get back to 3 percent 
growth. Taxing doesn't do it, but come up with other ideas and 
work with us and try to figure out a way to get to 3 percent 
growth, because everybody around the table will benefit in 
terms of your role as lawmaker, every one of your children will 
benefit in your role as parents. Three percent growth should 
not be something we are just sort of talking about; it should 
be what drives everything that we do.
    Mr. Diaz-Balart. I yield back the balance of my time.
    Chairman Black. Thank you.
    I now recognize the gentleman from Pennsylvania, Mr. Boyle, 
for 5 minutes.
    Mr. Boyle. Thank you, Madam Chair. And welcome back, Mick.
    There was something I wanted to ask you about. You said a 
few moments ago that we shouldn't worry about Sesame Street and 
the rest of the PBS programs because Big Bird is making more 
money than any of us in this room. Well, I guess the good news 
is that if Big Bird really is a billionaire, he is standing to 
get a huge tax cut from the Trump budget that does more to help 
billionaires and less to do working people and middle class 
people that happen to populate my district.
    I want to key in on one broken promise of this budget, and 
that is as it relates to transportation and infrastructure. You 
know, many principal conservatives, such as yourself, don't 
necessarily agree with a big transportation and infrastructure 
plan. And I respect that viewpoint.
    President Trump is someone, though, who clearly does. When 
he came dozens and dozens of times to my State of Pennsylvania, 
he talked, frankly, like a Democrat and said things that I 
happen to agree with and many of us agree with on the need to 
repair our historically decrepit infrastructure, which the 
American Society of Civil Engineers has given us a D plus. We 
don't even rank in the top 20 anymore in the world. That should 
bother all of us as Americans.
    So President Trump, as a candidate, talked about a $1 
trillion infrastructure plan. When the Democratic nominee for 
President released her plan, he as the Republican nominee 
criticized it, not for spending too much, a historically 
Republican position, but for spending too little. Well, here we 
are now with the budget plan. And instead of having that $1 
trillion plan, something that I would sincerely like to work 
with him on in this administration in a bipartisan way, instead 
it is actually $200 billion. Just a fraction of the $1 trillion 
that he talked about and that is the bare minimum that we need 
as a country, according to the experts.
    And it turns out that that $200 billion isn't even real, 
because included in the same budget is a $95 billion cut in the 
Highway Trust Fund. I don't think anyone driving America's 
highways drives them thinking, boy, we are spending too much on 
highways, these are just so state-of-the-art and don't need any 
repair.
    So I want to ask you about that, about why it falls so 
short of what Donald Trump says, the candidate.
    And I also, before you do that, just want to make a point 
about spending and investment. Not all spending is the same. 
Granted, if someone took $60,000 and spent it on some sort of 
luxury car, that would be, while perhaps fun, wasteful 
spending. That has no return on investment. It depreciates the 
moment you buy it. However, if you take instead that amount of 
money and invest it, for example, in the Community Development 
Block Grant program--there is one program I know about in the 
neighborhood that I grew up in in Philadelphia, an area that 
has been overlooked for decades. They took this small Community 
Development Block Grant on the North 5th Street corridor and 
invested it into the main business thoroughfare, something that 
once was thriving and had really fallen down for decades.
    With just that little bit amount of money, they were able 
to improve, not just the storefronts that they worked on, but 
then to actually bring business back to that area. It had, in 
other words, a multiplier effect. And now you see that business 
thoroughfare, that corridor thriving again and good things 
happening. That was an investment. That is quite different from 
just taking the same amount of money and spending it on 
something wasteful.
    So I think too often those of us in Washington, D.C., 
especially my friends on the other side, treat all spending as 
the same, when really we should look at the return on 
investment of these dollars. And any time we spend on 
education, or I would argue, the Community Development Block 
Grant program, we are actually investing in rebuilding this 
country.
    So with that, as I say again, welcome back. And you are an 
example of someone who I have many disagreements with on 
policy, but shows that good people can still be friends and 
work together on these issues.
    Chairman Black. Mr. Director, do you think you can answer 
that in 20 seconds?
    Mr. Mulvaney. I can do Big Bird in 20 seconds. Big Bird 
actually does get a fairly large tax cut. And we want him to, 
because Henson Associates that owns Big Bird has been paying 
the highest corporate tax rate in the world for the last 
several years. And we want them to have more money to reinvest 
in that type of creativity that created Big Bird in the first 
place, because we believe that Henson Associates is a lot more 
creative than we are. And we believe that money will be much 
better invested by a private corporation, by private 
individuals, than it would be by the government. And I am happy 
to talk about infrastructure. I am sure I will get that 
question again. So thank you.
    Chairman Black. Thank you.
    I want to remind the members one more time that you have a 
total of 5 minutes, so if you leave the director 20 seconds, we 
are only going to be able to give him 20 seconds to answer the 
question.
    With that, I would like to recognize the gentleman from 
Oklahoma, Mr. Cole, for 5 minutes.
    Mr. Cole. Thank you, Madam Chairman. And, Mr. Director, it 
is really great to have you back here again. Full disclosure, 
shortly after my questions, I am going to have to get up and 
leave because I have got to go chair a hearing for Secretary 
DeVos. So please don't take anything----
    Mr. Mulvaney. We will let Mr. Yarmuth read your closing 
statement. How about that?
    Mr. Cole. I want to start and compliment you, frankly. It 
is a huge seat change to see a representative of the President 
of the United States bring us a budget that tries to balance 
and does balance within 10 years. We haven't seen that in a 
long time. And just the shift in emphasis that that represents 
is a really welcomed change. And I want to congratulate you for 
it. I think, you know, we can all disagree with this or that, 
but that one change is fundamentally going forward.
    I also want to thank you for the emphasis on defense. I sat 
on the Defense Appropriations Subcommittee. I think that is a 
wise choice. And to some of my colleagues that are critical, I 
want to also point out that the President could have gone a lot 
further here. There is a lot of people in, certainly on my side 
of the aisle and the House Armed Services Committee, that 
wanted a $640 billion line.
    Mr. Cole. So I think this is actually a pretty prudent 
balance of letting us move back in the right direction. But 
even that number to me shows fiscal restraint. You could have 
gone a lot further. And in some ways, I would have liked it, 
but I think you made the wise decision financially for the good 
of the country.
    And there are a lot of your proposed cuts in here that I 
strongly support. You know, I suppose you probably had--you 
won't take credit for it, but I am going to give you credit for 
Social Security disability. I know the President, this is an 
area which he has not wanted to go, and I am glad you talked to 
him about this, because I think, ultimately, that is the big 
crisis we are going to face, as my friend Mr. Rokita, suggested 
down the road, entitlements are where we are going to have to 
come back to at some point. I just think the math drives you 
there.
    I have got two areas I want to ask you about: One is with 
respect to entitlements. What is the spending balance between 
mandatory and discretionary spending today? And in 10 years 
under your budget, what will that balance be?
    Mr. Mulvaney. I don't have the numbers in front of me, Mr. 
Cole, but I think right now, you are looking at sequence of 74, 
-5 percent of the budget, 72 percent of the budget is 
mandatory. And that will continue to grow, because what we, in 
essence, do is we keep the BCA caps in place on total 
discretionary but allow defense to grow.
    So under--should not change from current law in terms of 
the distribution. Mandatory will continue to get larger and 
larger as part of our total spending.
    Mr. Cole. Again, I would suggest that bears some more 
thought, and I hope we see it in your next budget. Because, 
honestly, that math can't be sustained. And it will crowd out, 
eventually, defense and other areas that I think are important 
to national investment.
    Mr. Mulvaney. And we look forward to talk with you about 
that, begin this conversation.
    Mr. Cole. I know you will, because I know from our time 
together on this committee how serious you take that sort of 
thing. So, again, I don't question anybody. You work for a 
President. It is your job to advance and defend his views, but 
I hope over time, we can have that dialogue, because I don't 
think we are on a sustainable course.
    One place where I do think we are being in your budget 
penny wise and pound foolish are National Institute of 
Development and Center for Disease Control. Those are 
relatively modest investments, and they are investments of 
Congress on a bipartisan basis has increased in the last 2 
years. And let me tell you why we have done it. We have done it 
partly because we think that, obviously, it is the right thing 
to do. You want a good health outcome for the American people. 
But it is also the fiscally prudent thing to do.
    Right now in your budget, in Medicaid, we are spending $259 
billion a year taking care of Alzheimer's patients and people 
with dementia. Right thing for us to do. But that will rise to 
over $1 trillion in uninflation adjusted dollars but 2050. We 
have now, back to back, the two largest increases in 
Alzheimer's funding, really, ever.
    The reason, again, is to try to deal with a dreaded 
disease, but also to get ahead of this things fiscally so we 
can either cure it, hopefully, or even slow down the 
progression.
    You know, I am going to give you an opportunity to respond. 
But I think there you should look. And I will also tell you, 
sometime in the President's terms, you will have a pandemic. 
You will have a Zika; you will have Ebola. And cutting the 
Centers for Disease Control, I think, leaves you very 
vulnerable and the American people very vulnerable. So I want 
to give you an opportunity to reply to those things.
    Mr. Mulvaney. Let me address very briefly--thank you for 
that--the NIH, because we actually, despite what you may have 
heard in press, we wholeheartedly support research in this 
area. We especially support research, what we call basic 
research, which the stuff that is early in the process, that is 
far away from marketability, the stuff that will not get done 
or is less likely to get done unless the government does it. 
But I encourage the entire committee to consider this, which is 
the biggest change we have made in the NIH is to look at the 
overhead costs. If a private foundation gives the university 
money, typically, the university is required to spend 90 
percent of that money on actual research, only 10 percent goes 
to overhead costs. With our money, it is 72 percent actually 
goes to research. So I would encourage you to look at ways to 
lower the overhead. Because if you look at the numbers, Mr. 
Cole, at 90 percent research in our budget, you would actually 
be roughly spending the same amount on actual research as you 
did in previous years.
    Mr. Cole. We will have that debate another day.
    Mr. Mulvaney. Yes, sir.
    Mr. Cole. But, again, I want to thank my friend for being 
here and thank him for his service.
    Mr. Mulvaney. Thank you.
    Chairman Black. The gentleman's time has expired.
    I now recognize the gentleman from California, Mr. Khanna, 
for 5 minutes.
    Mr. Khanna. Thank you, Madam Chair.
    Thank you, Director Mulvaney, for being here.
    I want to recognize Representative Cole's thoughtful 
comments on the NIH, and I appreciate your speaking out on 
that.
    We have very strong philosophical disagreements about the 
budget, but I don't want to spend my 5 minutes on that. I am a 
freshman, new around here, so I am going to try on two concrete 
issues where I hope we may find common ground, and I hope you 
keep an open mind.
    The first is the Manufacturing Extension Partnership. This 
was a program that President Reagan started. I worked at the 
Department of Commerce. It helps small and medium-sized 
manufacturers, many of whom that--the way it helps them is--you 
know, you look at my district, Silicon Valley, they have cloud 
technology. This program says, how do we get our small- and 
medium-sized manufacturers using cloud technology, other 
things, to be competitive to work--to create jobs in an 
environment where trade is unfair.
    My sense is it was zeroed out at 0.003 percent of the 
budget by some junior staffer. I am convinced if the President 
actually met with the manufacturers who are benefitting from 
the program, or if you met with them, he would probably want to 
quadruple the budget given how he campaigned.
    And my question is, could we, at least, have the President 
meet with some of the manufacturers who are benefiting with 
this program, or could you take a look at it? Because, 
honestly, it was a Reagan program. It is bipartisan, and it is 
probably the biggest thing we can do to help manufacturers.
    Mr. Mulvaney. It was a Reagan--thank you for that, 
Congressman. It was a Reagan program. And I had a policy when I 
sat in your chair, which is that I was always careful about my 
Reagan quotes and my Bible quotes, because my guess is you 
could always find something on the other side of the argument 
from the same source.
    So I am going to be very careful of my Reagan quote. I also 
think you said one time there was nothing as permanent as a 
temporary government program. This program was funded under the 
Reagan administration, was designed to be temporary. In fact, 
you are only to be supposed on it for 6 years. There have been 
folks who have been on it literally decades. And that is why it 
got our attention. Again, coming back to the folks who paid for 
it, said look, yes, maybe we can justify giving seed money to 
businesses so they can get a start and get their feet 
underneath them, but it is supposed to be temporary, and it is 
not. And that was the reason, we think we sourced this--we 
focused on this program.
    But to your request by having the President get first 
involved in it, I think the President's already shown a 
tremendous interest in talking with manufacturers. A lot of his 
focus so far, in terms of the executive action, has been on 
manufacturing, and your invitation is welcome, indeed, sir. 
Thank you.
    Mr. Khanna. I appreciate that. I just would ask that you 
take a look at it and the manufacturers benefiting.
    The second area, I had the privilege of going down to 
Congressman Hal Rogers' district in Appalachia near Ranking 
Member Yarmuth's district. And, as you know, Hal Rogers is one 
of the most distinguished members of this body. He is a 
Republican, chaired the Appropriations Committee. What I saw 
there were coal miners' kids getting apprenticeship programs, 
jobs, learning IOS software for Apple, learning android 
software at Google. I mean, these are jobs in Appalachia, jobs 
in middle America, future jobs.
    The Appalachian Regional Commission funded this program. 
And I think you could talk to Congressman Rogers about it. I 
urge that, again, the President may visit this area and see 
what is happening. Because this is--you know, this is how he 
campaigned. He said, I want to help folks here get the jobs. 
The Appalachian Regional Commission does exactly that.
    Again, my hope would be that he would quadruple the 
funding. You know, people often say, well, the Democrats 
participate in supporting things that the President doesn't. If 
the President were to say, let's quadruple funding for the 
Appalachian Regional Commission, I would vote for it. But that 
is zeroed out.
    And is there a way we could have the President visit there 
or you visit there and see firsthand the jobs that are being 
created for coal miners' kids and others in that area?
    Mr. Mulvaney. And I appreciate that. I believe the 
President and I keep--I don't keep track of his travel schedule 
probably as closely as I should. I think he has already been to 
that part of the country at least once. I know he has been to 
Kentucky at least once. Whether he even got into eastern 
Kentucky, I can't remember.
    Your points about the Appalachian Regional Commission are 
well taken. And certainly, there are anecdotes of success 
within that program. It is just when we sat down to look at it, 
as we have mentioned with our new perspective, it has been a 
very difficult time confirming that it was regularly as 
successful as you mentioned.
    That being said, we still recognized the need in the area. 
So while we did zero out the Appalachian Regional Commission, 
we moved the money around to programs that we thought were even 
more effective, or at least we can prove are more effective.
    So the budget provides an additional $80 million for the 
Department of Agriculture's rural economic infrastructure grant 
program, which includes community centers, housing repair, 
distance learning, telemedicine, broadband grants and the like. 
It also provides an additional $66 million for job training and 
employment services through the Department of Labor.
    So, again, your points are well taken. And we tend to agree 
that those areas are a place that do deserve Federal attention. 
I guess I can come back to folks in southern California and 
say, can I take some of your money to move to the Appalachian 
region because of the challenges that it faces? The answer is 
yes, but we would like to do it through more effective programs 
than we are able to identify at the Appalachian Regional 
Commission.
    Chairman Black. Thank you. The gentleman's time has 
expired. I now recognize the gentleman from Arkansas, Mr. 
Westerman for 5 minutes.
    Mr. Mulvaney. Did I guess right, by the way, in southern 
California? By the way I guessed at that. Was--is that not 
right.
    Mr. Khanna. Northern California.
    Mr. Mulvaney. Okay.
    Chairman Black. Mr. Westerman, you are recognized.
    Mr. Westerman. Thank you, Madam Chair.
    Director Mulvaney, thank you for being here today, and 
thank you for the hard work that you have put into this budget 
proposal. It is refreshing to see a proposal that actually 
balances in 10 years.
    You are in a tough situation. Any time you talk about 
cutting anything, somebody is not going to be happy about that.
    But it takes courage to put these cuts on the table. We may 
not all agree with the same areas where we need to prioritize 
spending, but I think we all, at least on this side of the dais 
agree, that we have to do something about the debt that is in 
our country and the burden that it is putting on our children, 
our future generations.
    So I appreciate the courage, that you took in putting forth 
this.
    I have read the headlines about draconian cuts and deep 
budget cuts. So, you know, I would like to go back and look at 
the numbers. And as I studied these numbers, there is a 
phenomenon here that I think the general public may not 
understand and maybe even a lot of people in D.C. don't totally 
understand. But we have this process called the baseline 
budget. And if I look at the baseline budget, over the 10-year 
window, it is--we--it starts at $4.1 trillion and it goes to 
$6.7 trillion. That is $2.6 trillion of increase over the 10-
year window. That is a 63 percent increase. So if you simplify 
it and average that, that is 6.3 percent increase in each of 
the 10 years for the next 10 years. That is the baseline. So if 
we look at the budget, this so-called draconian budget that you 
have proposed, it starts at $4.1 trillion. It goes to $5.7 
trillion in 2027, which is a $1.6 trillion increase over the 
10-year window, or 39 percent increase, or 3.9 percent per year 
over that 10-year window.
    Could you explain in a little more detail about how, when 
we say cut in Washington, D.C.--and I served in my State 
legislature as well where we had to balance the budget. I had--
worked in a business where we talked about a cut, it meant that 
it was less money next year than it was the year before. And my 
home and the people--the other families I know in my district, 
when they talk about a cut to their budget, it actually means 
you spend less money next year than you spent last year.
    However, in D.C. in budgeting, we can still spend more 
money than we spent last year and call it a cut somehow. Would 
you explain that in more detail?
    Mr. Mulvaney. Sure. Here is how I used to do it back home 
when I was trying to explain it to people.
    In Washington, D.C., if we spent $100 on a program last 
year and $100 on a program this year, back home we would call 
that a freeze. In Washington, we call that a cut.
    If you spend $100 on a program last year, and $104 on a 
program this year, back home we would call that an increase. In 
Washington, D.C. we call that a cut. Back home, if you spend 
$100 last year and $106 this year, back home you call it an 
increase, here we call it a freeze. And it is not until you 
spend $100 last year and $108 this year that we call it an 
increase in both normal back home English and Washingtonese.
    And that is because of what you mentioned, baseline 
budgeting. The baseline assumes that we are going to grow the 
government at population plus inflation, I think, every single 
year, and it leads to that.
    I can't tell you the number of people who used to come to 
my office, Mr. Westerman, and say, Oh, 2 years ago, oh, you cut 
my budget on this. I am, like, No, we didn't. They say, well, 
everybody is telling me you cut my budget. I said, no, all we 
did was grow it slower than otherwise. And they said, well, 
that sounds an increase. I said, yes, it does.
    They said, well, why everybody telling me it is a cut? I 
said so you will come to Washington and tell me to give you 
more money. That is how the system works. And that is why I am 
a big fan of zero-based budget, getting away from the baseline 
and actually using English language that people can understand.
    If you want to be real cynical about it, under the world 
where we spend $100 last year and $104, okay, to your 
conservative friends back home--and we all have them in both 
parties--you can say, you know what, I cut that program. 
Because in Washington, that is a cut. But to your more liberal-
minded friends back home--and we all have those in both 
parties--you say, You know what, I like that program, too. We 
spent more money on that. And both of those statements are 
right; one using back home English and one using Washingtonese.
    And I think it is part of the thing that undermines the 
credibility of the institution. We have to start speaking a 
language up here that everybody can understand. So I thank you 
for drawing attention to the effort. I do encourage this 
committee to continue to look at ways to articulate how we 
spend money better, go back to my opening statement, explain to 
people how much government really costs them, because I think 
in the long term, folks in both parties will be well served by 
that.
    Thank you for that question.
    Mr. Westerman. I yield back.
    Chairman Black. Thank you. The gentleman yields back.
    I now recognize the gentlelady from Washington, Ms. 
Jayapal, for 5 minutes.
    Ms. Jayapal. Thank you, Madam Chair.
    And thank you Director Mulvaney. I am very pleased that I 
had the opportunity to give the opening statement on behalf of 
our excellent ranking member.
    So I just wanted to highlight a couple of things and then 
get to some questions. Let's talk about clear language and 
telling the American people exactly what is happening in this 
budget.
    We are slashing in this budget--you are slashing Medicaid 
by $610 billion. Combined with the healthcare cut, that is 
almost $1.5 trillion of cuts to a program that currently serves 
74 million Americans. So in plain language for the American 
people, that is a dramatic cut to their healthcare for most 
people, healthcare that they wouldn't be able to get elsewhere.
    A $1.2 billion cut to Centers for Disease Control, clear 
English, cuts drug addiction treatment and prevention services. 
A $1 billion cut to housing assistance programs, including for 
veterans who are struggling to keep a roof over their heads. We 
talked about infrastructure already, so I won't go into that. 
Mentioned SNAP. This is nutritional assistance for the most 
needy families in our country. And let's just talk about the 
border wall for a second. This is a $1.6 billion investment 
into what I call the wall to nowhere. This is a wall, a down 
payment on a wall, that is ultimately going to cost the 
taxpayers $40 billion according to a recent MIT study.
    And as Janet Napolitano once said when she was governor of 
Arizona, show me a 100-foot wall, I will show you a 101-foot 
ladder. This is not the solution to any of our immigration 
issues.
    Now you said, Director Mulvaney, that you should have 
called this a taxpayer first budget, but I have to ask you, 
which taxpayer? Out of the almost $1 trillion in tax cuts in 
this budget, which are on the backs of all these other cuts we 
have mentioned, 50 percent of those tax cuts are going to go to 
the top 1 percent. And 75 percent of the tax cuts are going to 
go to the top 75--top 75 percent of income earners.
    So what we are doing is taking away essential benefits for 
working families across this country, positions that the 
President ran on, and putting them into the top earners in the 
country.
    So when you talk about Trumponomics, I think that was the 
word you used in your opening statement, and you said let's do 
anything that gets you to 3 percent growth, is that the 
statement philosophy that got the President to six separate 
bankruptcies, $1.8 billion for debt in Trump hotels before he 
declared those bankruptcies? I am not really sure what 
Trumponomics is when you look at the President's record.
    So what I would like to ask you, Director Mulvaney, is can 
you explain how taking away from programs like the Children's 
Health Insurance Program, the disabled and student loan 
repayments, one of the top issues in this country Republicans 
and Democrats alike, $1.4 trillion in student loan debt right 
now, can you explain how that benefits the economy or working 
families across this country?
    And I might reclaim my time, too, just to make sure. But 
let's start there.
    Mr. Mulvaney. I can try. Because folks are throwing me 
notes. You have raised a bunch of issues, so let's do this in 
as rapid a form as I possibly can. CHIP is being extended; it 
is not being reduced. Total spending on drug treatment goes up. 
It is not being reduced. You used the word ``plain language,'' 
slashing Medicaid. To most people, plain language, slashing 
Medicaid means we spend less next year than we did this year. 
That is what a slash means--right? No, that is not true. I 
think it is one year in 10-year window where we have a little 
tiny, tiny dip because of the cliff that is caused by the AHCA 
on the Medicaid expansion stage. But generally speaking across 
the budget, all we do is slow the rate of growth, which is to 
say, we will be spending more on Medicaid every single year, 
again, I think except one, and you can call that a slash but I 
am telling you back home, people say you slash spending on 
something, I think they would expect you to think that you are 
spending less money one year versus the previous year.
    The SNAP. What we do on SNAP is a couple of differently 
things. Again, we can take more time on this if you would like. 
We do ask for an able body work requirement. We can go into the 
fact that SNAP went up dramatically during the downturn. I 
think roughly 28 million people on the program before the 
recession to 47 million people on the program at the height of 
the recession. I think the most recent number we have is 
roughly 42 or 44 million. We are back near what we like to call 
full employment. We have had several years of slow but growing 
economy. Don't we think----
    Ms. Jayapal. I am going to reclaim my time----
    Mr. Mulvaney. I apologize----
    Ms. Jayapal. We are limited, so I am sorry for that. I 
think if you look at what the American people thought about the 
Republican healthcare bill, you will see that that slash in 
Medicaid is, in fact, a slash in Medicaid. But even Republican 
Governors spoke out against. Let me ask you about Social 
Security, because you consistently said you are not cutting 
Social Security. $72 billion----
    Chairman Black. The gentlelady's time has expired.
    Ms. Jayapal.----including Social Security disability 
insurance.
    Thank you, Madam Chair. I yield back.
    Chairman Black. If I may, and you have additional questions 
that you are not able to get in your 5 minutes, I know that the 
Director would be happy to get those in writing for you.
    So now I would like to yield 5 minutes to the gentleman 
from Ohio, Mr. Renacci.
    Mr. Renacci. Thank you, Madam Chairman.
    I want to thank you, Director Mulvaney, for your service to 
the House of Representatives, and now as OMB director. It has 
always been a pleasure working with you. And I continue to 
admire your passion for public service and understanding of the 
fiscal challenge facing our Nation.
    I applaud the President, your office, for putting together 
a budget that balances, over the next 10 years, your commitment 
to addressing the debt and deficit crisis that faces our 
country. While I may not agree with all the policies, I am 
encouraged to finally have an administration that understands 
that we need to get our fiscal House in order.
    Right now we are quite simply on an unsustainable path, and 
this proposed budget is recognition of that reality.
    I am going to use a few words my colleagues on the other 
side said, slashing and cutting. But would you really agree 
that your budget is reducing what we borrowed from China to pay 
for programs we don't have money to pay for?
    Mr. Mulvaney. Absolutely.
    Mr. Renacci. That is what I thought. And would you also 
agree that today, our corporate tax rate of 35 percent is the 
highest in the world, so we can continue to say we don't charge 
corporations enough, but if we continue to do that, they will 
just go overseas, and then we will have less money to spend. 
Would you agree with that?
    Mr. Mulvaney. Which is exactly what they have done for the 
last several years.
    Mr. Renacci. Exactly. On the personal side, today, 70 
percent of our individuals actually pay as passthroughs 
corporate businesses, so they are businesses that employ people 
and eventually, since 70 percent of them are paying a rate that 
is higher than most worldwide tax rates, they are going to find 
places to go other than the United States which will also take 
revenues away from us if we don't come up with a plan to reduce 
taxes.
    Mr. Mulvaney. Taking jobs with them as they go.
    Mr. Renacci. Absolutely. So we can continue to say you are 
slashing and cutting and all the other words you want to use, 
but clearly, what you are doing is you are looking at a budget 
and saying we can't continue to borrow, we can't continue to 
pass this on to our children and grandchildren. Shame on 
anybody that continues to do this year after year after year 
and doesn't realize that all we are doing is handing our 
children and grandchildren a debt they can ever pay. So I 
appreciate what you are doing.
    Would you also agree that if we do nothing, and we don't 
start looking at the programs that aren't valuable and that 
aren't working, that our debt will become one of our greatest 
concerns and our interest costs will start to begin to swallow 
the budget? In fact, the Congressional Budget Office says our 
interest, if it stays as it is, will still triple in 3 years 
based on the debt growing?
    Mr. Mulvaney. I think they used to put out a report that 
says it would take 100 percent of revenues under certain 
circumstances by the 2050s, but I think they took down that 
graph.
    Mr. Renacci. So we are clearly at a real problem here with 
budgeting and how we spend money, because we can continue to 
say we are slashing and cutting, but clearly, what we are doing 
is we are borrowing money we don't have, and are continuing to 
spend money we don't have. And we are continuing to be willing 
to pass that on to our children and grandchildren, and only say 
that the only way to fix it is to raise more revenues from 
people when, again, as I said, if we continue to raise our 
taxes, business will just leave, companies will just leave, and 
we will have less and less revenue.
    So I want to make sure we understand that. So I want to 
switch gears over to tax reform, which I really believe is an 
opportunity. And I appreciate you talking about getting a 3 
percent, because if we don't at least set a goal around here of 
3 percent, you are exactly right. We might as well say that we 
will never be able to balance a budget. So whether people agree 
we can get to 3 percent or not, I think we should all be 
focused in on 3 percent, and that is why I am a big believer on 
tax reform and growth.
    I have a question for you regarding the budget window. Do 
you believe that Congress should consider expanding the budget 
window beyond 10 years in order to make tax reform more 
permanent, increase the likelihood of Congress to be able to 
pass some type of tax reform?
    Mr. Mulvaney. I do. And my understanding is that you can do 
that without legislative change. That you all have the ability 
to look at different periods of time. My understanding is over 
the course of the last couple of administrations, some budgets 
have been 5 years, some have been 7, but we sort of settled on 
the 10-year budget window for the last couple of years. And we 
will continue to do it like that.
    We are exploring the possibility of also looking a little 
further out, especially when you start to talk about changes in 
the mandatory spending, even putting aside for a second Social 
Security and Medicare, if you don't look out beyond the 10-year 
window. If you want to phase some changes in, a lot of the 
benefits aren't reaped until outside the budget window.
    So I think it is a more reasonable way to look at the 
budget window, and I think it is important for us to look at 
whatever options give us the best and most commonsense view of 
the economy and our proposals to change it.
    Mr. Renacci. You would also probably agree, and I know you 
and I have served on the Budget Committee, but also on other 
committees. In the old days, with a 10-year budget, we passed 
legislation that really dumps everything into the 11th year in 
many cases. All the problems in the 11th and 12th year. I even 
think that Affordable Care Act dumped a lot in the 11th and 
12th year. Wouldn't you agree?
    Mr. Mulvaney. It is possible, Congressman, to game the 
system in order to move the costs of a program outside of the 
budget window. We are coming very close to the outside budget 
window of the original Affordable Care Act, and now you are 
starting to see the costs rack up at an exponential rate.
    Mr. Renacci. I agree. And I know I am running out of time, 
and I will yield back.
    Chairman Black. The gentleman yields back.
    I now recognize the gentlelady from California, Ms. Lee, 
for 5 minutes.
    Ms. Lee. Thank you very much. Good to see you, Mr. 
Director. I really want to, first, say to you that never 
before, really, have I seen such a cruel and morally bankrupt 
budget. It dismantles our Nation's basic living standards, 
which Americans have turned to for decades. This budget--and 
you know this--it will push millions of people into poverty and 
over the edge. This budget destroys people's lives. This 
budget, what you are doing is you are asking people to fend for 
themselves, and you are really leaving them out in the cold. 
And our moral obligation is to make sure that every American 
has a decent standard of living.
    This budget is a broken promise, and it is really a 
betrayal to every American in favor of tax cuts for 
millionaires, billionaires, and corporations.
    I would like to just ask you, how are people going to eat 
when they need a temporary helping hand with a cut of $190 
million in food assistance? Then you add these onerous work 
requirements, and then, yet, you cut $1.3 billion in workforce 
training program so people cannot be trained or retrained for 
jobs, which I don't see much in terms of investment in job 
creation in this budget either.
    How are people going to get health insurance with a cut of 
1.3 trillion in Medicaid? And how are people going to get a 
house to either purchase or rent with elimination of the 
housing trust fund and a $2 billion cut in rental assistance?
    You are forcing families to choose between putting food on 
the table and a roof over their head. That is just down right 
wrong. You are forcing them to choose between lifesaving 
prescription drugs and higher education.
    Again, that is wrong. And I guess I just have to say with 
looking at these percentage of cuts: EPA, 30 percent; 
Department of State, 29 percent; Ag, 20 percent; education, 13 
percent; housing, 13 percent; Interior, 10 percent; Health and 
Human Services, 16.2 percent; Department of Labor, 19.8 
percent; Department of Commerce, 15.8 percent; you wipe out the 
Minority Business Development Agency; the Department of 
Transportation, 13 percent cut.
    For the life of me, I just have to remind my colleagues 
that Steve Bannon said that part of the goal of this 
administration was deconstruction of the administrative state, 
and I think what we see here is really the elimination of the 
public sector.
    And so, Director Mulvaney, I just want to ask you, one is, 
are these SNAP cuts, for example, how do you think people are 
going to survive when they need this helping hand? Most people 
on SNAP don't rely on this for a lifetime. It is a bridge over 
troubled waters.
    Mr. Mulvaney. Thank you, Congresswoman. I will deal with a 
couple of things in reverse order, if I can.
    SNAP, as I may have mentioned--I have forgotten how many 
times I may have answered the question----
    Ms. Lee. And also, let me remind you, Secretary Perdue 
mentioned that it was a program that was working, why fix it if 
it is not broken? And he appeared to not be aware that you all 
were going to recommend these cuts.
    Mr. Mulvaney. I think it is reasonable to ask if you had 28 
million people on SNAP before the recession, 47 million people 
on it at the height of the recession, and 42 or 44 million 
people today, it is not unreasonable to ask if there are folks 
on SNAP who should not be, because we should have seen that 
number go down. SNAP should be countercyclical; it should go up 
during bad economic times, it comes down during better economic 
times. We have not seen that. The EPA was a promise that the 
President made----
    Ms. Lee. Mr. Mulvaney, at least 20 percent of people who 
are eligible for SNAP don't even receive SNAP because of stigma 
and other reasons. So there are more people who need SNAP 
benefits.
    Mr. Mulvaney. Let me be--let me deal with the every 
American deserves a decent standard of living. Does that 
include our kids?
    Ms. Lee. And you have a 13 percent cut in the Department of 
Education. Those are the most vulnerable kids who need----
    Mr. Mulvaney. What about the standard of living for my 
grandchildren who aren't here yet, who will end up inheriting 
$30 trillion in debt, $50 trillion in debt, $100 trillion in--
what about their standards? Who is going to pay the bill, 
Congressman? That is what this bill is all about. That is what 
new perspective is. Who is going to pay for all the stuff you 
just mentioned? Us? Or somebody else? And I suggest to you if 
it is important enough for us to pay--to have, then we should 
be paying for it, because right now, my unborn grandchildren 
are paying for it, and I think that is morally bankrupt.
    Ms. Lee. I have grandchildren also, and I want to make sure 
that they have the opportunity to get a job so that they can 
help pay for our government, which is a government that should 
be enhancing the standard of living and making sure everyone 
has a chance for the American dream.
    Chairman Black. The gentlelady's time has expired.
    I now recognize the gentleman from Ohio, Mr. Johnson, for 5 
minutes.
    Mr. Johnson. Thank you, Madam Chairman.
    And Mr. Director, first of all, congratulations on your 
selection for this position.
    Mr. Mulvaney. Thank you, Bill.
    Mr. Johnson. You got an awesomely tough job, and I 
appreciate having worked with you for the last 6 years.
    I associate my position with yours in the sense that our 
children and grandchildren are expecting us to address this 
problem now, because it is not going to get any easier. And I 
hear the cries from my colleagues on the other side calling for 
more opportunities. Well, I don't--I don't know that the 
Federal Government has ever created jobs. That is a--that is a 
private market-driven economy that creates jobs. And if we are 
over $20 trillion in debt, that is just going to get that much 
worse.
    I appreciate that we finally have an administration that 
understands how critically important it is to bend the spending 
curve in the other direction. And I certainly accept that there 
are some very, very tough budget decisions to make to get us 
there. And so I think you and the team have done a remarkable 
job putting together a budget that does exactly that.
    Now, we all know that this is a proposal. That ultimately, 
the final say will come from Congress, because that is where 
the power of the purse resides. But I--this is a--a significant 
step in the right direction.
    That being said, I do want to bring one thing to your 
attention. You and I actually talked about this a little bit 
yesterday as we met outside of this room.
    I am concerned with the rationale about the Appalachian 
Regional Commission. I understand the logic. I understand what 
you are saying about moving that money around. My concern stems 
from two basic premises. One, I think the study that you cite, 
Mr. Director, indicating that there is not a lot of evidence 
that ARC has lived up to its reputation. If I am not mistaken, 
that is a nearly 30-year-ago study. That is a 1996 study by 
GAO. And I think if you look at what has happened, let's take 
last year, for example. $175 million investments by the ARC 
into 662 projects across the region, that money being matched 
with another $257 million by the local governments, and an 
additional $443 million in leveraged private investments, you 
know, that brings us to a total of $866 million of investment 
in--through the Appalachian Regional Commission into 93 
counties that are--76 percent of that money is going to those 
93 counties that are considered economically distressed.
    And so my first point is, I think that 1996 study is 
probably outdated. I would urge either you or the GAO or 
someone to take another closer look at what the Appalachian 
Regional Commission has been doing over recent years.
    And, number two, I understand giving the States and the 
governors the--moving this money around so that they have more 
flexibility. But, look, I live in Appalachia, and I can tell 
you that governors are concerned about the region where the 
voters are, the big metropolitan areas. And when the money gets 
doled out, I know, personally, from history, where that--how 
that money gets allocated.
    So while I am very optimistic on the budget and think you 
guys have done a great job, I would just urge you to go back 
and take another look.
    And one final thing, I really was pleased to see the 
administration reversed its position on the Office of National 
Drug Control Policy. Funding for the--right now, with the 
opioid epidemic being what it is, the President's task force is 
in place, we need to make sure we have a national focus on 
that. So I appreciate that.
    And I have taken up all the time with my comments.
    Mr. Mulvaney. I appreciate that, Congressman, and we will 
look into that study for you. Thank you.
    Mr. Johnson. I yield back.
    Chairman Black. The gentleman yields back.
    The gentleman from California, Mr. Carbajal, is recognized 
for 5 minutes.
    Mr. Carbajal. Thank you, Chairman Black.
    Thank you, Mr. Mulvaney, for being here.
    I must say, I have to start with your comment about 
Democrats not supporting defense and military.
    Have you ever served, Mr. Mulvaney?
    Mr. Mulvaney. Actually, Congressman, I think my comment was 
that we do believe in defense.
    Mr. Carbajal. I heard it otherwise.
    Mr. Mulvaney. I am sorry. Then I would like to correct the 
record. I think I said you were accused of not supporting 
national defense, and I thought that that was wrong.
    Mr. Carbajal. Thank you. I misheard it. So I appreciate you 
setting the record, because I had some choice words for you, so 
thank you.
    Let me just say that for a number of years, the Department 
of Defense Overseas Contingency Operations, known as OCO 
designation, which has been used as a budget practice to 
circumvent budget caps. There are now billions of dollars in 
OCO funding being used to fund so-called base budget 
activities. This practice obfuscates the true cost of regular 
government operations. Disincentives--disincentivizes trade-
offs in the budget and inhibits long-term planning.
    Director Mulvaney, does using OCO designation in this way 
adhere to your notion of sound budgeting and accounting 
principles? You have been a fierce critic of the OCO budget as 
a Member of Congress, and has characterized it as a gimmick, 
and you have sponsored legislation to curve this practice.
    Does your budget include OCO funding for nonwar activities?
    Mr. Mulvaney. Congressman, our budget does include OCO 
during the 10-year practice. And your criticism is well-taken 
and well-put. It can be and has been a way to get around budget 
caps in the past. It has included things that, perhaps, are not 
properly defined as OCO. I simply suggest to you a couple of 
things: First of all, both parties seem to be interested in 
using it that way, that the reason that it is used that way is 
that there is a bipartisan support for using it that way. What 
I encourage you to look at is this: If you look at the tables 
in the budget, you will see that we slowly reduced the OCO in 
the outyears in hopes, in hopes that we can instill some 
discipline in the OCO line item so that it is used for what it 
is supposed to be used for, which is Overseas Contingency 
Operations.
    I would also suggest to you that one of the reasons I think 
it has been used in the fashion in which it has been used for 
the last several years is because the top line defense number 
was simply not enough to accomplish the missions that we were 
on.
    So--but your criticisms are well taken, and I could assure 
you that I am as skeptical of long-term use of the OCO in ways 
that are not as intended, and will continue to look at them 
very closely at the Office of Management and Budget.
    Mr. Carbajal. Mr. Mulvaney, you know that past Democrat and 
Republican administrations, as well as Congress and the Armed 
Services Committee, have failed to get the DOD to do an audit 
to really look at the waste.
    Clearly, you would agree that there are many examples of 
waste in the Department of Defense. And having said that, it is 
quite disappointing that we look to waste and domestic 
programs; we point those out extremely rapidly, but we kind of 
just gloss over them when it comes to increasing the Department 
of Defense spending.
    There seems to be a hypocrisy. And I guess I ask you, why 
is that the case?
    Mr. Mulvaney. And I apologize, Congressman. Again, I may 
have covered this before you came into the room on a previous 
question.
    I share, as does the President, your interest in finding 
more efficiency, more accountability inside the Department of 
Defense. In fact, I can assure you it is a priority for the 
President, a priority that I have discussed at length with 
Secretary Mattis, and he is as interested as you and I are in 
trying to drive out that waste within the Defense Department, 
because a wasted dollar is a dollar that is not going to defend 
the Nation.
    Regarding audits, what I mentioned earlier in the hearing 
was that the DOD, I believe, is required by law to make itself 
auditable by September. They just gave an update on that a 
couple of weeks ago, and they intend, and they tell me, and 
they tell you that they intend to hit that deadline.
    One of the reasons that you see more focus on the domestic 
side and not on defense--or defense, domestic nondefense 
discretionary, is that we have the ability to sort of look at 
those programs. There are tools available to us that don't 
exist in the Defense Department, because they are not 
auditable. But I am looking forward to them following through 
on their promise to be fully audible by September, and I hope 
that is the first step in a long process to drive the 
efficiencies at the Defense Department that we are all 
interested in.
    Mr. Carbajal. Thank you, Mr. Mulvaney.
    And lastly, there is a 30 percent cut projected for the 
U.S. EPA. Have the impacts to the health of our water, of our 
air been tabulated, the impacts they would have in the health 
of Americans in this country?
    And when we talk about grandkids, what does that mean? I 
have future grandkids coming. What is the impact to them when 
we have degraded regulations?
    Chairman Black. The gentleman--if you would, please answer 
that by written--as I say, you have 5 minutes. And so if you 
wait until the end, you are probably going to get your answer 
in writing. So if the Director will answer that in writing. 
Thank you.
    I now recognize the gentleman from New York, Mr. Faso, for 
5 minutes.
    Mr. Faso. Director, thank you for being here today, and 
thank you for your service to the country.
    I wanted to ask if you could clarify the Medicaid spending 
in the proposal.
    We are aware of the reduction in expected increase in 
Medicaid spending through the American Health Care Act. And 
there is some confusion as to how the calculation of that 
reduction and projected increase is also included within the 
President's budget proposal. I am wondering if you could 
clarify this issue for me.
    Mr. Mulvaney. I could do my best, Mr. Faso, and if I don't 
satisfactorily do it, I would be happy to meet with you outside 
or get something to you in writing. But here is how I explain 
it to folks, is that the largest line item deals with the 
scored version of the American Health Care Act, which is all we 
had available to us when we started writing the budget. The 
budget--by the way, for those of you, and I learned this the 
first time, the budget for 2019, we start work on that in 
September of 2017. So that is how long a lead time is when you 
work on budgets.
    So what we had available to us is the first scored version 
of the American Health Care Act, and that accounts for a big 
part of our Medicaid savings, because that is how that proposal 
was scored.
    We added to that an additional change on the growth rates. 
We believe that the growth rate that is contained in the bill 
is actually higher than what we expect to see in the real 
world. So we propose a growth rate that we think is closer to 
actual growth rates in these types of costs. What you get when 
you do a couple of different things, then, and the reason that 
so many folks talk about the $1.4 trillion number, if you have 
two large numbers--roughly, I am going to round now, $800 
billion in savings from one, and $600 billion savings in 
another. Okay? But my point to you is that it is almost 
impossible for those two numbers to be added to get to $1.4 
trillion, because they contain within them the sum of the same 
factors.
    Mr. Faso. There is double counting?
    Mr. Mulvaney. There is double counting. So what you end up 
is, you are going to take the 800--some of the 800 is contained 
in the 600 and vice versa. So when you put it together and you 
actually have a proposal, it would never get as high as 1.4 
trillion. In theory, it is possible, but it is highly unlikely. 
Number would be between 8 and----
    Mr. Faso. Thank you. And I also appreciate your discussion 
about the debt. The CBO informed us earlier this year our debt 
is going to go from $19 trillion to $29 trillion in just 10 
years. And so many of my friends on the other side believe that 
the problem is we are not taxing certain groups within our 
country enough.
    And I recently noted the Forbes 400. And if you calculated 
the net worth of all the Forbes 400; in other words, pretend we 
are in Venezuela or the old Soviet Union for a second, and we 
just confiscated all of their net worth, not what they pay 
every year on taxes, but take all their money away from them. 
If you confiscated the net worth of the richest 400 people in 
America, all you would do is cover the Federal budget deficit 
for about 4 years. And that is it. So I do think one of the 
problems in our country is that we are not speaking frankly to 
the American people as to the true nature of our debt and 
deficits.
    I wonder if you could comment also as to the risk in terms 
of servicing our national debt, if we have a 1 percent increase 
in long-term interest rates, and what that would mean in terms 
of additional national debt service that we have to pay every 
year?
    Mr. Mulvaney. Sure. To your previous point, what I like to 
tell people, if we could tax our way to growth and if we could 
tax our way to prosperity, every government in the world would 
have done it a long time ago. You simply can't do it. You have 
to figure out a way not to tax yourself into lack of growth.
    Regarding the 1 percent, it is fairly simple. When we talk 
about the $20 trillion debt, that is the total debt, we call 
total debt, gross debt, subject to the cap. Some of that 
obviously is contained within the Social Security system, the 
private debt. But the bottom line answer is, roughly speaking, 
1 percent increase in long-term rates cost us $200 billion a 
year.
    Mr. Faso. A year. So over a 10-year period, that is about 
$2 billion?
    Mr. Mulvaney. Would also make it the second largest line 
item in the budget after defense.
    Mr. Faso. Lastly, the discussion of SNAP--and I also served 
on Agriculture, and I do want to see--to make sure that people 
who are in need of food assistance are able to receive it. 
However, in our discussions in the Agriculture Committee, we 
learned this year that the taxpayers are paying $3 billion a 
year for folks on SNAP to buy soda, for which there is no 
nutritional benefit.
    I am wondering what the administration's position might be, 
if you have thought about this as trying to restrict SNAP to 
actually things that are nutritious rather than things that are 
not.
    Mr. Mulvaney. Congressman, in all fairness, it is an 
excellent point. And we have not--I don't know that we have 
given that some consideration. I would be happy to talk to the 
policy council and get back to you on at that.
    Mr. Faso. Great. Because there is $3 billion there you 
could probably save.
    Thank you, Madam Chairman. I yield back.
    Chairman Black. The gentleman yields back.
    I now recognize the gentlelady from Illinois, Ms. 
Schakowsky, for 5 minutes.
    Ms. Schakowsky. Thank you, Mr. Mulvaney.
    You have mentioned that the President promised that he 
would not cut Social Security, Medicaid, and Medicare. And 
after he won the election, with the help of plenty of older 
Americans, I think we are seeing today a tremendous betrayal of 
that promise, and of the people who rely on those programs. And 
I think it is in order to give enormous tax cuts to the 
wealthiest individuals and corporations. He never did say 
Social Security retirement. He said Social Security, Medicare, 
and Medicaid. And the trust fund, the Social Security trust 
fund, has two major components. The OASI, Old Age and Survivor 
Insurance, and SSDI, the Social Security Disability Insurance. 
The contributions come from the same payroll tax. They go into 
the same Social Security trust fund, and together, make up what 
we know as the Social Security program.
    Yet, this budget makes dramatic changes to SSDI that would, 
among other things, cut the retroactive benefits that a serious 
disabled construction worker, for example, can receive for the 
time the Social Security Administration takes to work through 
its backlog of cases and finally give approval which can take 
rates--can take years.
    So, Mr. Mulvaney, what I am asking, yes or no, does the 
President's budget cut $72 billion from the Social Security 
Disability Insurance program?
    Mr. Mulvaney. I am not sure--I don't have the number in 
front of me, but yes, we do make reforms and reductions within 
the Social Security Disability Insurance program. A couple of 
things. I think you may have----
    Ms. Schakowsky. I am sure your staffer could provide you 
with a number. That is really what I am asking.
    Mr. Mulvaney. You said the money goes into the same trust 
fund as old age. It does not. They are separate trust funds. So 
that is important to know, because they are on different 
timelines.
    This is how I explain Social Security Disability Insurance, 
Ms. Schakowsky, which is that we also propose a parental--paid 
parental leave program. We are running that, funding that 
through the unemployment insurance programs in the States, 
which is, by the way, the same way Canada does it. New York, 
New Jersey, California, one of the States----
    Ms. Schakowsky. Mr. Mulvaney, my time is so limited, and I 
am not asking about that particular program.
    Mr. Mulvaney. No, you asked about SSDI, ma'am, and I am 
happy to get to that. The point of the matter is that many 
States fund their parental leave through disability, we propose 
through unemployment insurance.
    Does that mean having a baby is unemployment? No. Does it 
mean having a baby is disability? No. It just happens to be 
that that is how the program is structured because the 
infrastructure is there.
    Social Security disability is not Social Security. Social 
Security Disability Insurance is disability insurance. It is a 
welfare program for the disabled.
    Ms. Schakowsky. Okay. We disagree on that. I think most 
Americans disagree that Social Security Disability Insurance is 
part of that guaranteed program.
    Mr. Mulvaney, the President pledged not to cut Medicaid. 
Now, I just want to point out, we have dealt with this a little 
bit today, but we are talking about half the births in the 
United States, 30 million children, and half of all nursing 
home and long-term care nationwide for senior citizens and 
people with disabilities comes out of Medicaid.
    So it is really yes or no if the--does the President's 
budget cut $1.3 trillion from Medicaid over 10 years?
    Mr. Mulvaney. I will ask you a question, Congresswoman. 
When you say ``cut,'' are you speaking Washington or regular 
language?
    Ms. Schakowsky. Will the President's budget mean that 
Medicaid gets $1.3 trillion less than it would otherwise?
    Mr. Mulvaney. In the CBO baseline score, the answer is yes. 
It will spend more money every single year over the previous 
year with the exception I mentioned; that, in my mind, is an 
increase in Medicaid spending.
    Ms. Schakowsky. Okay. I want to quote you, Mr. Mulvaney.
    You said that in regard to after-school programs, they are 
supposed to be educational programs, right? They are supposed 
to help kids who don't get fed at home and--so they do better 
in school. Guess what, there is no demonstrable evidence they 
actually--they are actually helping result--they are helping 
results, helping kids do better in school.
    The way we justified it was these programs are going to 
help these kids do better in school, and we can't prove that 
that is happening.
    You--this budget cuts the 21st century learning program. It 
eliminates it entirely. And this is a program that does before 
school, after school, and summer programs that do include food 
for children. What the heck is going on?
    Mr. Mulvaney. Less than 20 percent of the children who 
enroll in that program actually move from not proficient to 
proficient. 20 percent is a failing grade.
    Ms. Schakowsky. So let's just not feed them. My time is up.
    Mr. Mulvaney. How do we justify--thank you.
    Chairman Black. The gentlelady yields back.
    I now recognize the gentleman from Minnesota, Mr. Lewis, 
for 5 minutes.
    Mr. Lewis. I would thank the chair and welcome Director 
Mulvaney. Glad to have you back in the Budget Committee.
    Let me start with a couple of quick questions and a short 
yes-or-no answer on a couple of these things, and then we will 
get into more substantive give-and-take a little bit.
    It is interesting to note, especially from the other side, 
that the first balanced budget in over 8 years, or in 8 years, 
has been greeted by moral outrage, shockingly extremes, I think 
is the phrase I heard.
    Do you find it shockingly extreme that our debt has gone 
from $10.6 trillion to $19.9 trillion in just the last 8 years?
    Mr. Mulvaney. I absolutely do.
    Mr. Lewis. Do you find it shockingly extreme that we are 
mired in 1.9 percent growth over the next 10 years.
    Mr. Mulvaney. Frustratingly so, yes, sir.
    Mr. Lewis. Do you find it shockingly extreme that we have 
had a record tax revenue last year over $3.2 trillion and yet 
we have a $600 billion deficit this year?
    Mr. Mulvaney. It is unacceptable.
    Mr. Lewis. Shockingly extreme that net interest expense is 
projected to be $768 billion, but if interest rates go back to 
their post World War II average, 10-year Treasury at 5.7 
percent, it will be well over $1 trillion?
    Mr. Mulvaney. We will be broke.
    Mr. Lewis. Is it shockingly extreme that Federal budget 
outlays has gone from $1 trillion in 1987 to $2 trillion in 
2002 to $4 trillion today.
    Mr. Mulvaney. Growing much faster than every other measure 
of economic outgrowth.
    Mr. Lewis. Is it still shockingly extreme that Federal 
revenue is above its 50-year average of 17.4 percent of GDP? 
Now, it is 17.8 percent of GDP and yet, we are told it is not 
enough?
    Mr. Mulvaney. It is never enough. Is it?
    Mr. Lewis. Shockingly extreme that Federal outlays are 
above their 50-year average of GDP 20.3 percent, today at 21 
percent, scheduled to go to 23.4 percent of GDP?
    Mr. Mulvaney. It is unacceptable.
    Mr. Lewis. Federal debt held by the public, 77 percent of 
GDP, but actually, total Federal debt is almost 100 percent of 
GDP, correct? Is that shockingly extreme?
    Mr. Mulvaney. And going to have long-term, detrimental 
economic impact on our economy.
    Mr. Lewis. And the civilian labor force participation rate 
back to 1977 levels at 60, what, at 62.8 percent?
    Mr. Mulvaney. Even lower than it should be, giving the 
graying of the American work force population.
    Mr. Lewis. And finally, is it shockingly extreme that the 
top 25 percent of taxpayers, those households making $78,000 a 
year or more, two teachers making $40,000 a year, actually pay 
87 percent of all income taxes collected?
    Mr. Mulvaney. That is where the money is. Right.
    Mr. Lewis. So despite of all of the debt, all of the money, 
all of the Keynesian stimulus, we are stuck at 1.9 percent 
growth. The CBO says it is going to be 1.9 percent growth for 
the next 10 years, and I am wondering why that is if that is 
all supposed to be so stimulative, and we are going to have the 
multiplier effect and demand side economics is going to pull us 
out of this, is it the President's budget and what you are 
defending today an attempt to make certain that we grow at 
historical averages by not focusing on this pumping up or 
priming of demand, but getting investment and productivity back 
into the economy?
    Mr. Mulvaney. Private investment is what is going to save 
the company--save the country, because that is where innovation 
comes from; that is where productivity comes from, and that is 
where GDP growth comes from. But we have tried it the other 
way. We have tried it with huge Federal funding for the last 30 
years.
    And now, here we are where a large portion of the 
population, a large portion of this body thinks that 1.9 
percent is the best we are going to--ever be able to do, and 
that just speaks of pessimism about the country that we simply 
refuse to accept.
    Mr. Lewis. And we have heard this notion of malaise, we are 
stuck in slow growth, just can't move. Jimmy Carter talked 
about malaise, and yet, we have had 5 consecutive quarters 
after the progrowth policies in the early 1980s of 7 percent 
growth. Where is the empirical evidence that we can't grow at 
3, 3.5 percent?
    Mr. Mulvaney. Well, I think the empirical evidence is that 
we can grow at 3 percent.
    Mr. Lewis. So the emphasis of this budget is to say we have 
got the highest corporate tax rate in the developed world of 35 
percent. We have got $2.6 trillion in profits that could be 
repatriated. We have got a passthrough tax rate subchapter S, 
LLC, small business men or women, paying not 39.6 percent, but 
43, 44 percent when you take out the PEP and Pease and the 
itemized deductions, lowering those tax rates is going to 
provide more capital, which is going to increase productivity. 
The truck driver, is it not true, Director Mulvaney, is always 
more productive with the truck?
    Mr. Mulvaney. Always.
    Mr. Lewis. And, therefore, that is what the budget is 
supposed to do. And we have got data that show it has been done 
in the past, in the 1960s, in the 1980s, and even in the 1990s.
    Mr. Mulvaney. Not only that, we need to do it to save the 
country.
    Mr. Lewis. In fact, without this sort of growth and this 
investment in productivity, we will never balance the budget?
    Mr. Mulvaney. No, sir. Well, I take that back. At some 
point, we will balance the budget. The question is, do we do it 
on our terms or on someone else's, because at some point, 
people will start to refuse to lend us money. And I would much 
rather do it on our terms than somebody else's.
    Mr. Lewis. Thank you, Director Mulvaney. Good to see you 
again, and I yield back.
    Chairman Black. The gentleman yields back.
    The gentlelady from Florida, Ms. Wasserman Schultz, is now 
recognized for 5 minutes.
    Ms. Wasserman Schultz. Thank you, Madam Chair.
    Since, Mr. Mulvaney, you began the meeting by providing a 
better name for this budget, you described it as the taxpayer 
first budget. I describe it as the taxpayer shaft budget, 
because that is really what you are doing to millions and 
millions of people who simply are trying to make sure that they 
can keep their head above water and live a decent lifestyle.
    And I find irony in your lamenting that there is some kind 
of double counting in the total costs of the cuts in TrumpCare. 
Because let's be clear, this budget, as you have described, 
does not balance; hubris doesn't solve basic math problems.
    The Trump budget counts the savings from tax cuts and 
projects that these same tax cuts will stimulate growth in the 
economy and generate so much new revenue that it will produce 
$2.1 trillion in additional Federal revenue.
    Now, you can't balance the budget by ignoring the reduction 
in revenue from tax cuts, and then count the cuts as generating 
unprecedented, never-before-realized growth attributable to 
those tax cuts, and then trying to use that growth and revenue 
as a pay-for for the tax cuts. That is what is called double 
counting.
    So let me give a real--a real-life example. If I bought 
solar panels for my house, and I reduced my electric bill 
through the savings by disconnecting from the grid, but then I 
didn't count the cost of the solar panels in my household 
budget and just ignored that there was a significant cost, and 
then I tried to also count the savings in my electric bill as 
an offset to the costs of the actual solar panels, then that 
would be double counting, particularly, if I say that the 
offset is more than the cost of the solar panels.
    If I went to my accountant and said, my household budget, 
using this configuration, is balanced, he would laugh at me.
    Your Treasury Secretary, when confronted with the double 
counting, said that it was premature to put in any changes as a 
result of taxes since you are not far along enough--far enough 
along to estimate what the impact would be.
    So, I mean, look, we can all go through this exercise, and 
that is certainly what we are doing. We can pretend that we are 
actually going to come up about a budget that we can all agree 
on and send to the President when we haven't done that in 
years. One thing, though, that is absolute certainty is that a 
budget is an expression of our values. And your values and your 
boss's values are appalling.
    If this is a reflection of our Nation's values, then we 
really are in an internecine battle for the heart and soul of 
this country.
    So with that in mind, and I would love to have you respond 
to that, I will ask both of my questions and then leave you the 
remaining time: 65 percent of seniors who rely on Medicaid to 
be able to afford a nursing home or nursing care in their homes 
do it through Medicaid.
    How can States continue to implement innovative programs to 
deliver long-term care to seniors and people with disabilities 
in their home when you are taking $610 billion from them? So if 
you will could answer both of those questions. If you just 
illuminate the committee on your math.
    Mr. Mulvaney. Sure. I could try. Yes. And I will start, 
Congresswoman, with the pushback on the never before realized 
growth. That is what is so depressing, because people think 
that 3 percent growth is never before realized. It used to be 
an annual thing. And yet, here we are assuming that that is how 
we describe below average, long-term growth in this past.
    Ms. Wasserman Schultz. Please address the double counting. 
The double counting, that is my question.
    Mr. Mulvaney. Yes, the double counting. Mr.--Secretary 
Mnuchin was right. It is and was too early to make any 
assumptions about the final tax bill, looks like. We gave a set 
of principles to the House, and the House and the Senate are 
both looking at them right now.
    Ms. Wasserman Schultz. So then clearly you representing 
that this budget is balanced is inaccurate.
    Mr. Mulvaney. No, it is not.
    Ms. Wasserman Schultz. You can't both say it is premature 
and say that the budget balances.
    Mr. Mulvaney. I would be more than happy to answer your 
question if you would give me the chance. But I am absolutely 
not suggesting that the budget balance is inaccurate. So if I 
may continue.
    We assumed--we had to make assumptions regarding what the 
Tax Code would look like. There are three assumptions you could 
make: Either it adds to the deficit, subtracts from the 
deficit, or is deficit neutral. And we assumed for sake of 
doing the budget that it would be deficit neutral, that 
removing the exclusions, the deductions, the loopholes, would 
lead us to a deficit-neutral tax plan. The dynamic benefit is 
only counted one time and that is towards the 3 percent 
economic growth.
    And I am happy to explain that further to you in writing, 
if you would like.
    Ms. Wasserman Schultz. You can explain whatever you would 
like. You are counting revenue twice and saying that that 
budget was balanced. And anyone running their household budget 
that way would be in serious financial trouble down the road as 
you are heading us towards.
    Chairman Black. The gentlelady's time has expired.
    Ms. Wasserman Schultz. I yield back.
    Chairman Black. I now recognize the gentleman from 
Pennsylvania, Mr. Smucker, for 5 minutes.
    Mr. Smucker. Thank you, Madam Chair.
    Good morning, Director.
    Mr. Mulvaney. Good morning.
    Mr. Smucker. As a previous small-business owner, I 
understand the need to balance a budget. Each year we had to 
match expenses to revenue or you threaten the future of the 
company. And of course as families we need to do that on an 
annual basis as well. So I have talked about the Federal budget 
in those terms. We expect families, businesses to do that, why 
can't we do at that the Federal level?
    In the States we have had a tool. We have a balanced budget 
amendment in Pennsylvania, I served in the State senate there. 
That required us to--it imposed discipline on the process, if I 
will.
    But I brought this up at a--I spoke at a Rotary recently 
and the first question from the constituent said that the 
Federal Government is different. We cannot compare the two. We 
can't compare the Federal Government to businesses because at 
the Federal Government we can print money, so it is not the 
same thing.
    That is, by the way, very different than--we had a hearing 
in this very room, CBO Director Hall was here, and he used a 
term called sovereign debt crisis. If we don't change the 
trajectory of our annual deficits, there is growth in those 
deficits--so I am curious, what is your thought on that? What 
happens if we continue down the path that we are on right now?
    Mr. Mulvaney. Well, let me speak to the point someone 
raised to you at the Rotary meetings, which is technically I 
suppose they are right, you could simply print money. But what 
does that mean? But what does that mean in the real world? It 
is not free to do that. If it were, we would do it every single 
day, right?
    When we print money to pay off debts, when we print money 
to pay for things, what it essentially does is make the 
existing dollars in your pocket work less. That is why they 
call inflation one of the cruelest taxes, especially on the 
older generations that have saved for retirement, now living 
off investments and so forth.
    So when you print money, you do nothing but essentially tax 
the people who are already there, to tax in a different form. 
So you can go back to your folks at Rotary and say, ``Look, I 
guess you are probably right. Why don't you give me, say, 20 
percent of the money in your pocket and we will call it even?'' 
Because that is what it would take to effectively balance the 
budget. Actually I think the number this year is going to be 
about 14 percent.
    But where are we headed? We are headed to where I talked 
about before, which is we will balance the budget eventually, 
one way or the other, on our terms or on somebody else's, 
either by balancing the budget the proper way, printing a bunch 
of money that impoverishes our citizens, or having somebody 
else who won't lend us money force certain considerations on us 
in order to get us to balance as a condition to lending us 
money.
    Only one of those outcomes is desirable, Congressman, and 
that is the one about figuring out a way do it ourselves before 
it is too late.
    Mr. Smucker. Which requires tough decisions.
    Also, as a business owner, I saw the real impact. We talk 
about 3 percent, 2 percent, 1 percent growth. And when you are 
just talking figures it doesn't seem like a lot. But we had 
about 150 employees in our business, and I have been through 
times of recession, times of low economic growth, and the jobs 
just weren't available. We were a construction company. So a 
small enough company we knew the employees and we knew the 
families and saw the impact when we with had to tell people we 
simply don't have enough work and had to lay people off.
    One of the reasons that I think we are all here is to 
provide opportunity for our kids, our grandkids, to help lift 
people out of poverty, provide that economic mobility. And I 
think the best possible thing that we can do is have the higher 
economic growth that will provide that opportunity. I would 
just like to hear your response to that.
    Mr. Mulvaney. I am interested to hear a story about your 
family. My family is in the home building business. And one of 
the things my dad, he turns 75 this year, and one of the things 
I think he is most proud of is the number of folks who are 
making more than $100,000 at his company--this is 20 years ago 
now--that didn't have a college degree, in fact many of them 
didn't have a high school degree, because you could make that 
kind of living in a healthy American economy in the 
construction business. And I think that growth cures so many 
ills.
    Bill Clinton gave more people--``gave'' being the wrong 
verb--but provided health insurance for more people than 
HillaryCare would have simply by having economic growth. It 
solved so many of our problems and in fact would probably cure 
a lot of the ills between the two parties because it is a lot 
more fun to govern in a growing economy than it is in a 
sluggish one.
    Mr. Smucker. I think there is a lot we can agree on here in 
both parties.
    But I do want to mention one other aspect of the budget and 
this was brought up. Our Nation faces a growing heroin and 
opioid epidemic that is shattering the lives of families in my 
district and devastating communities across the Nation. This 
public health crisis claimed the lives of more than 3,383 
Pennsylvanians and 33,000 Americans in 2015 alone and is 
getting worse.
    I sent you a letter last week, which I would like to submit 
to the record, Madam Chair, if I could.
    Chairman Black. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Smucker. And I again laud you for recognizing the 
severity of this crisis and for prioritizing lifesaving 
investments into the Office of National Drug Policy.
    I was wondering if you could explain to the members of this 
committee just exactly how the President's budget requests 
increases in the Federal Government's response to the opioid 
crisis.
    Mr. Mulvaney. I can, Congressman. I see that my time has 
expired. But I would be more than happy to both talk to you 
about that and send you a letter in writing.
    Mr. Smucker. Thank you. I appreciate that.
    Mr. Mulvaney. Madam Chair, if I may be so bold, would it be 
possible to take like a 90-second break?
    Chairman Black. It absolutely would. Let's take a 90-second 
break for the committee.
    [Recess.]
    Chairman Black. The committee will come to order. I now 
recognize the gentleman from Georgia, Mr. Woodall, for 5 
minutes.
    Oh, excuse me, I think that I did not--excuse me, Mr. 
Woodall. I need to go to the Democrat side. I apologize. I am 
incorrect. You are next.
    I now recognize Ms. Jackson Lee from Texas for 5 minutes. I 
apologize.
    Ms. Jackson Lee. Mr. Mulvaney, you indicated in your 
statement that reducing lower priority, nondefense, 
discretionary spending was going to be a core of this budget's 
success. I interpret that as a betrayal, betrayal of the 
children, seniors, working families, people who voted for 
Trump, cities, counties, and States. That is the interpretation 
that I believe the American people will understand.
    In the course of your budget you have gutted or cut the 
National Endowment for the Arts, the National Endowment for the 
Humanities, and something that the Gulf region needs 
desperately, coming from South Carolina you should understand, 
the Army Corps of Engineers.
    You repealed the Affordable Care Act, but $880 billion, 
that is your premise, when the Senate said that that repeal is 
dead on arrival. They said the budget was dead on arrival.
    You are going to eliminate the Community Services Block 
Grant, you are going to eliminate the Community Development 
Block Grant, you are going to eliminate Federal Emergency 
Management Agency State and local grants, all lifelines for 
Americans.
    I won't have to worry about shutting the government down 
because Americans will shut it this government down if the 
Trump betrayal budget ever passes.
    So let me ask you these questions. And as I do so, let me 
remind my fellow Texans that they get $70 billion from the 
Federal Government for their budget and they just balanced 
their budget on the $70 billion from the United States 
Government Federal Government of which you eliminate.
    I also want to put on the record that the trips that Trump 
takes to Mar-a-Lago in the past 5 months cost $20 million. If 
we keep going at this rate, it will be in 4 years $200 million. 
I would like to suggest that one of the things you do is to cut 
not only his trips to Mar-a-Lago, but his trips overseas, 
because you are cutting $9 billion from the State Department.
    So my question to you involves the Army Corps of Engineers, 
why you would be so much against the important flood work that 
counties like mine need, number one.
    The other question is I want to ask about a letter you 
wrote last week to the Director of the Office of Government 
Ethics, Walter Shaub. The letter appears an effort to try and 
shut down the investigation of Trump, giving waivers to so many 
billionaires who are working in his administration, number two.
    Number three, you have a comment: That doesn't mean we 
should take care of the person who sits at home and eats poorly 
and gets diabetes. Are you saying that you support a healthcare 
plan that makes distinctions between the deserving ill and the 
undeserving ill in deciding who can get Federal support and how 
much? Is that why you have the audacity to cut $800 billion 
out?
    My third question is, Director Mulvaney, is it reasonable 
to assume that the budget includes $1.4 trillion or more in 
cuts to Medicaid? And I just met with the State of Texas, they 
are begging for their Medicaid so they can provide for the poor 
in their State.
    I would appreciate you answering the question. And would 
you answer the question, are you betraying those who voted for 
Trump looking for a lifeline? And are you betraying the 
American people?
    Mr. Mulvaney. Thank you, Congresswoman.
    In reverse order, are we betraying the American people? No. 
In fact we believe that giving them 3 percent growth is giving 
them exactly what they wanted when they elected this President.
    Is it true or untrue to state that we have cut $1.4 from 
Medicaid? That is untrue, for the reasons I stated earlier.
    Regarding my statement week on diabetes, I was speaking at 
a healthcare conference. What I was trying to do is draw a 
distinction between type 1 and type 2.
    Ms. Jackson Lee. But you did say it.
    Mr. Mulvaney. Again, I am trying to put my comments into 
context, ma'am. I am aware of the difference between type 1 and 
type 2 diabetes.
    On the OGE----
    Ms. Jackson Lee. But you are not a doctor.
    Mr. Mulvaney. I am not a doctor. Are you?
    Ms. Jackson Lee. I know diabetes. It is my in family and it 
is in my community and it particularly impacts African 
Americans. And we will be devastated by this budget along with 
American working families.
    Mr. Mulvaney. Regarding the OGE letter, I got a letter from 
the Office of Government Ethics that I thought was 
inappropriately broad and violative of statutes. So I did what 
I think is the exact right thing to do when there is a dispute 
between two pieces of the administrative--of the executive 
branch, we referred the matter to the Department of Justice and 
the Office of Legal Counsel, which I think is the statutory 
thing I am supposed to do.
    Regarding infrastructure, we are, as I mentioned before to 
an earlier question----
    Ms. Jackson Lee. Army Corps of Engineers.
    Mr. Mulvaney. The Army Corps of Engineers, writ large with 
infrastructure, is that we are focusing, trying to focus our 
attention on getting to the $1 trillion worth of new 
infrastructure, leveraging $200 billion of new spending.
    Ms. Jackson Lee. Your budget is full the tricks and 
trickery. It does not work. No economist will approve your 
budget in terms of it working. There will not be a 3 percent 
growth because the working population is expired. This is a 
betrayal of the American people.
    Mr. McClintock. [Presiding.] The gentlelady's time has 
expired.
    Ms. Jackson Lee. Thank you. I yield back.
    Mr. McClintock. Mr. Woodall.
    Mr. Woodall. Thank you, Mr. Chairman.
    I want to thank the Director for being here. I remember 
when he was a young freshman, I was a young freshman. In fact, 
our current chairwoman, Ms. Black, was a young freshman. We got 
here having been just elected in that giant class of 2010, and 
the first thing we got to do was write the budget. And, oh, 
golly, what an amazing honor that is. You get elected to serve 
your folks back home and you get to come up here and start 
making priorities.
    And I remember that first moment, and I suspect you 
remember it too, Mr. Mulvaney, when you realize the budget 
doesn't actually get signed into law, that the changes that you 
make don't actually become the new law of the land, that the 
conversations that we have here are simply about vision and not 
about how policy is going to change tomorrow.
    Do you remember that moment of realization?
    Mr. Mulvaney. Realization is a positive spin to put a on 
it, yes, Mr. Woodall.
    Mr. Woodall. I asked you that because I heard my friend 
from Florida say that your values are appalling, and I 
apologize for that. We are not talking about your values here. 
I know you. I know you to be a man of integrity. And you are 
exactly the right guy to have in this job.
    We are talking about choices. I think in the ranking 
member's opening statement as read by Ms. Jayapal it was said 
that these are false choices, that we don't have to choose. 
What I hear you saying is that in the spirit of finding 
reputable economists, that you cannot find a reputable 
economist that says continuing as we are continuing is a recipe 
for success. Is that accurate?
    Mr. Mulvaney. Not a single one. No, I don't think you will 
find any reputable economist that says we can do what we are 
doing forever.
    Mr. Woodall. And, in fact, over the last 8 years we haven't 
been making choices. It is hard to make these choices. But in 
all of the doom-and-gloom conversation about cuts, explain it 
to me in simple terms that I can understand, exactly which 
year, going from one year to the next, are you going to spend 
less money on behalf of the American people?
    Mr. Mulvaney. Not one.
    Mr. Woodall. Let me make sure I am understanding you. You 
are saying that in all of this conversation about the cuts and 
the erosion of public spending, you are spending more every 
single year proposed in this budget?
    Mr. Mulvaney. Yes, sir.
    Mr. Woodall. I know that there is more that unites this 
country than that divides it. And I believe we can find that 
pathway forward together.
    If I could put a slide up here on the screen. This is what 
I have seen in my short time in Congress. This is CBO-projected 
growth. And of course OMB has one projection of growth, CBO has 
a separate projection of growth.
    But time and time again in this committee hearing I have 
heard folks say that your projection of 3 percent growth is 
just outrageous, that it is unsubstantiated, that absolutely no 
one would ever agree that such a thing was possible. As I look 
back on my chart, even we here in Congress agreed that such a 
thing was not only possible, but probable just 5 years ago.
    When you talk about 3 percent growth going out on the 
horizon, is that the same 3 percent growth that CBO was 
projecting just a short time ago?
    Mr. Mulvaney. And other administrations, previous 
administrations were actually projecting higher than that.
    Mr. Woodall. Now, when you move from 1.9 percent economic 
growth to 3 percent GDP growth, what does that translate into 
in terms of revenues for the Federal Government?
    Mr. Mulvaney. I can't remember what the topline number is, 
Congressman, but it is a substantial sum. Remember the 
difference between 2 percent growth--and I always cringe when 
people say when you go from 2 percent to 3 percent growth, that 
is only a 1 percent increase. It is not, it is a 50 percent 
increase.
    Mr. Woodall. So my understanding of that revenue means we 
would be looking at something close to a balanced budget. If 
these numbers had stayed at 3 percent going back to the time 
you and I got started, we would be looking at a balanced budget 
today so significant would be that revenue.
    Mr. Mulvaney. I have seen studies that, based on what 
assumptions you want to make, that would say you are very, very 
close to getting there.
    Mr. Woodall. What I have heard the President say and what I 
would like to hear from you is that every single thing that he 
is doing is geared towards returning us to these 3 percent 
growth figures. Is that accurate?
    Mr. Mulvaney. Every single thing that he is doing is geared 
towards getting us back to 3 percent growth.
    Mr. Woodall. There is not one family in my district that 
doesn't believe that is going to make a difference.
    I will close with this. You all just sent a $10 million 
check to the State of Georgia to rebuild a bridge that 
collapsed in our district. That was a fire. Twelve lanes of 
interstate collapsed. We rebuilt it in 6 weeks--6 weeks--a 
performance budget going out to that contractor.
    There is not a conservative family in my district that was 
not proud to pay their tax dollar to go to that project because 
they got value for that dollar. Thank you for trying to squeeze 
those dollars and bring that pride back in what we do together.
    Mr. Mulvaney. And I would encourage you to look at the 
permit process that was necessary to build that in 6 weeks. It 
would stun you as to how much time we spent.
    Mr. Woodall. I thank the gentleman.
    Mr. McClintock. Ms. DelBene.
    Ms. DelBene. Thank you, Mr. Chairman.
    And thank you, Director Mulvaney, for being here with us 
today.
    My background is as a businesswoman and an entrepreneur, 
and I know how incredibly important it is to have a budget that 
is responsible. And I must say that this budget is incredibly 
irresponsible and dangerous. It would be an enormous setback in 
pretty much every area that affects American families, 
particularly for children, seniors, and people with 
disabilities. It would have a negative impact on critical 
research, on healthcare, job training, our environment, 
affordable housing programs, education, and that is just to 
name a few.
    Rather than gouging programs--and important programs--that 
the middle class relies on just in order to give the wealthiest 
Americans a tax break, we should be working on a bipartisan 
budget. That is what works. A bipartisan budget that provides 
working families certainty and stability.
    And so let's start with farmers. Under your budget, more 
than 5,200 positions at USDA would be eliminated. This is part 
of a larger 8 percent cut. The Farm Service Agency alone, which 
my farmers rely on for critical assistance, would lose 973 
people, USDA Rural Development would lose 925 employees, and on 
and on. This was a bad idea when it was proposed in the past 
and it is still a bad idea.
    What is the rational for making a farmer drive hours out of 
his or her way to get to one FSA office that is open three 
counties away because you decided that rural America is doing 
just fine as it is? Farmers lead incredibly busy lives, and 
making their lives more difficult through cuts like this is 
incredibly shortsighted. So why are we cutting important 
programs for farmers.
    Mr. Mulvaney. Congresswoman, I appreciate the question. And 
while I have received some questions about some of the farm 
supplement and subsidy programs, I have not received that exact 
question before. So I apologize if I am only going to be able 
to give you half an answer. I am not satisfied with half an 
answer, so I want to give you a full answer in writing 
afterwards.
    Mr. Mulvaney. But I am looking at my notes very quickly on 
a the topic I am not as familiar with as some of the other 
things, and I see that the farm loan programs are up $564 
million in the budget. So I am not saying----
    Ms. DelBene. The Farm Service Agency alone would lose 973 
people, and we already know that access is hard. I have heard 
that from my farmers directly. I just heard it from a farmer 
last night. So I would appreciate more information on that.
    Mr. Mulvaney. And I apologize for not having it on the top 
of my head.
    Ms. DelBene. This budget would also cut the National 
Institutes of Health, the NIH, by $6 billion, which is a truly 
stunning and irresponsible cut. In the last few years Congress 
has worked on a bipartisan basis--bipartisan basis--to boost 
NIH funding by nearly $4 billion. And I would remind you that 
Federal finding for NIH supports more than 400,000 American 
jobs and generates more than $60 billion in new economic 
activity.
    Unfortunately, the Federal Government's contribution 
towards basic research at the NIH has consistently failed to 
keep pace with inflation, which has allowed the agency's 
purchasing power to diminish by nearly 20 percent since the 
year 2003. So if we are serious about breaking new ground in 
our understanding of complex and life-threatening conditions, 
then it is absolutely essential that we increase funding for 
the NIH. We can't hope to accelerate development for new cures, 
therapies, vaccines without additional resources for research, 
and these need to be consistent, stable resources.
    We just agreed through the end of this year to make sure we 
increase funding for NIH in a bipartisan fashion. So why can we 
not support bipartisan ideas, important ideas, that have a 
positive impact on our economy and a positive impact on our 
communities in terms of the innovation and the impact it would 
have on people's lives? I would like to understand your 
rationale for setting back medical progress and research across 
many critical areas.
    Mr. Mulvaney. Sure. I think we probably can agree on more 
than you realize, Congresswoman. I don't know if you were here 
when I answered a similar question from Congressman Cole 
earlier. But the administration wholeheartedly believes in the 
commitment to research.
    We would like to see more focus on what they call basic 
research, which is research further away from the marketability 
of products, because that is one of the gaps that the 
government can and should fill. When you look at the long lead 
time on developments of new drugs, for example, many companies 
cannot afford----
    Ms. DelBene. And that is why consistent dollars are 
important.
    Mr. Mulvaney. It absolutely is.
    Ms. DelBene. And so here we have had continuing resolutions 
and we disrupt that ability for scientists to see their 
research. Partial research doesn't work. If you are going to 
fund something it has to be funded all the way through.
    We are running out of time, so I just want to say this is 
critically important, it is a bipartisan issue, something we 
agree on. You are cutting dollars, you are not adding dollars, 
and I think we have to focus on that.
    Mr. Mulvaney. As I mentioned, in the last 3 seconds, if you 
look at the way we have proposed to spend the money, we can 
actually spend as much money on research next year as we did 
last year.
    Ms. DelBene. I yield back.
    Mr. McClintock. The gentlelady's time has expired.
    Mr. Ferguson.
    Mr. Ferguson. Director, thank you for coming today.
    And it is interesting, as I sit here and listen to a lot of 
the comments on both sides, but particularly from those here on 
the left, it reminds me so much of where I was just a few years 
ago in my hometown.
    I lived and come from a hometown and governed in a hometown 
that lost its manufacturing backbone. We lost tens of thousands 
of textile jobs. And no matter in the coming decade and a half 
after that, no matter how many government programs the 
communities relied on, no matter how much public assistance 
went to those in poverty, education, community block grants, no 
matter what those small wins may have looked like, you could 
not pour enough money into the problem to address those issues. 
It simply did not change until we created the environment for 
advanced manufacturing to call our community home.
    And it is when we put 16,000, 17,000 people back to work 
that we really begin to see our fortunes change. It changed our 
city budgets, budgets that we had had to cut doing the same 
things that we are doing now, really programs that communities 
valued, but we simply did not have the mechanism to pay for 
them. It wasn't until we grew our local economy, that we grew 
our city revenues and cut taxes, that we were able to have the 
revenues needed to put back into those important programs that 
our community wanted.
    So with that, the things that we had to do is we had to 
create the right tax environment. We had to have the right 
regulatory environment where we partnered with our industry, 
not penalized it. We had to have an education system that 
developed a viable workforce. And we had to make strategic 
public investments in infrastructure to support it.
    So with that I will ask these very few questions. Does this 
budget and is it the desire of the President to do those 
things, create the right tax environment for business?
    Mr. Mulvaney. Absolutely.
    Mr. Ferguson. Create the right regulatory environment?
    Mr. Mulvaney. Drives everything we do.
    Mr. Ferguson. Create the right education environment that 
really prepares people for a job in the 21st century economy?
    Mr. Mulvaney. Yes, sir.
    Mr. Ferguson. Does it create strategic public investments 
in infrastructure that allowed the public sector to come in 
behind it and to work the public investments.
    Mr. Mulvaney. One of the reasons we talk about increasing 
spending on infrastructure.
    Mr. Ferguson. If we do all of those things, can we in fact 
get above 3 percent GDP growth?
    Mr. Mulvaney. Yes.
    Mr. Ferguson. If we do that, can we develop the resources 
that we need to build a bridge to really effectively deal with 
what is ultimately the biggest cost driver in the budget, and 
that is the mandatory spending curve?
    Mr. Mulvaney. As I said before, I think you are moving to a 
point where you won't be able to balance the budget if you 
don't address mandatory programs.
    Mr. Ferguson. Okay. If we are able to do that, if we are 
able to have significant deficit reduction, or at least be 
neutral as this much it does, I think it is important that we 
recognize that we are fighting over a small part of the budget. 
If we want to make those strategic investments in these 
programs that our members on both sides of the aisle feel are 
valuable, we have to address the mandatory spending curve. 
There is no doubt about it. We have to address issues with 
Social Security and Medicare and Medicaid and interest on the 
debt.
    Typically, when those conversation are had, the first thing 
that happens is one side or the other throws up some wild 
headline that says: Hey, Bergman over here or Ms. Wasserman 
Schultz wants to cut your Social Security or Medicare.
    We need to have an honest conversation with the American 
public about where that is and where we are headed. And every 
single Member of Congress has an obligation to address the 
programs in such a way that we protect those that are receiving 
them now, those that are close to the finish line, but be very 
transparent about the fact that we are going to have to change 
something long term and we are going to have to create enough 
economic activity to be able to build that bridge to get us 
from where we are right now until when those programs changes 
can actually go into effect.
    Mr. Mulvaney. I think it is absolutely valuable, 
Congressman, that you have the perspective of someone who is 
either a councilman or a mayor, judging by what you mentioned, 
that folks who have to balance the budget at the town level and 
the city level get it. Folks that have to balance the budget at 
the State level get it.
    And for some reason this body--and I count myself amongst 
you because I was one of you until recently--we just don't get 
it. And I don't know why we lose that commonsense approach, 
where that reasoned look at economics and life goes away 
because somehow we get elected to Congress. So I appreciate 
that input. It is extraordinarily refreshing.
    I want to clarify one thing I said before, because I hate 
being wrong on numbers, I probably have done it more than once. 
But I got asked earlier the size of the nondefense 
discretionary budget versus mandatory. I think I said mandatory 
was 72 percent; 66 is what my staff told me is the right 
number. But either way you look at it, it is the 800-pound 
gorilla in the room.
    Mr. Ferguson. There is no greater program that we can give 
our American people than the dignity of work.
    Mr. McClintock. Thank you.
    Mr. Jeffries.
    Mr. Jeffries. Thank you, Mr. Chair.
    And thank you, Director Mulvaney, for your presence and for 
your service.
    The Trump budget balances itself on the backs of working 
families, middle class folks, senior citizens, the poor, the 
sick, the afflicted, as well as rural America. It does this, in 
my humble opinion, largely to just provide a massive tax cut to 
the wealthiest 1 or 2 percent of the people in this great 
country. That is reckless and that is irresponsible.
    Now, the Trump budget as proposed balances itself and 
eliminates the deficit in 10 years. Is that right?
    Mr. Mulvaney. Yes, sir.
    Mr. Jeffries. And part of the reason why it is able to 
balance itself is that it assumes that there will be increased 
revenue in the amount of $2 trillion connected to exponentially 
more significant job growth. Is that right?
    Mr. Mulvaney. It assumes a 3--you are referring to the GDP 
growth, because I think--I don't know if we talk about full-
time----
    Mr. Jeffries. Economic growth.
    Mr. Mulvaney. Yeah, it is economic growth. We do have some 
numbers on unemployment as well. But, yes, you are correct, 
that we do assume additional government revenues through 
economic growth.
    Mr. Jeffries. And that is $2 trillion in additional 
revenue, not $2 million or $2 billion, $2 trillion in 
additional revenue. Is that right?
    Mr. Mulvaney. I think that is right, yes, sir, 2.1, 2.0, I 
can't remember the exact number.
    Mr. Jeffries. And the projected economic growth of 
approximately 3 percent is due in large measure to the theory 
that significant tax cuts disproportionately benefiting the 
wealthy and the well-off will stimulate the economy. Is that 
right?
    Mr. Mulvaney. Congressman, that is part of it. When we 
looked at the CBO baseline of 1.9, the way that we moved 
towards 3.0 included tax reform, but it also included 
regulatory reform, which we think actually can have a larger 
impact on GDP, it included our trade policies, our 
infrastructure spending. So there was a basket of policies that 
we think moved us from 1.9 to 3.0.
    Mr. Jeffries. But it is fair to say that a substantial part 
of the theory as to the increased economic growth is anchored 
in your strong, authentic, principled belief in tax cuts. Is 
that right?
    Mr. Mulvaney. Again, it depends on what your definition of 
substance part is. We also assumed the repeal of ObamaCare, 
which the CBO said actually added 0.1 percent to economic 
growth.
    Mr. Jeffries. Okay. There is no scintilla of evidence, 
certainly for the last 25 years, that tax cuts in part are 
responsible for stimulating any meaningful economic growth. Is 
that fair?
    Mr. Mulvaney. No.
    Mr. Jeffries. Okay. Well, let's look at the record at least 
at the Federal Government level. Bill Clinton was President for 
8 years and during his 8-year Presidency there was substantial 
economic growth. Is that correct?
    Mr. Mulvaney. That is a true statement, yes, sir.
    Mr. Jeffries. And the tax rate when Bill Clinton came into 
office was at 31 percent, correct?
    Mr. Mulvaney. I don't remember the tax rate, Congressman.
    Mr. Jeffries. Okay. We can stipulate the highest tax rate, 
easily ascertainable, 31 percent. He immediately with the 
support of Congress changed that top tax rate from 31 percent 
to 39.6 percent, correct?
    Mr. Mulvaney. Again, Congressman, I don't remember. I was 
not paying much attention to national politics in the mid-
1990s.
    Mr. Jeffries. Okay. And 20 million-plus jobs were created 
during the 8 years of the Clinton Presidency, true?
    Mr. Mulvaney. I believe there was substantial economic 
growth. I don't remember the number of jobs.
    Mr. Jeffries. Okay. George Bush was elected President in 
2000, correct?
    Mr. Mulvaney. That is correct.
    Mr. Jeffries. And the top tax rate at the time was 39.6 
percent, true?
    Mr. Mulvaney. Again, Congressman, I take you at your word.
    Mr. Jeffries. Okay. Thank you. And the Bush tax cuts that 
were put into place 2001 and 2003 resulted in the top tax rate 
being dropped from 39.6 percent to 35 percent, correct?
    Mr. Mulvaney. I think that is correct.
    Mr. Jeffries. And how would you characterize economic 
growth and job creation during the Bush Presidency?
    Mr. Mulvaney. Congressman, if you are trying to get me to 
say that the cause of the Clinton economic boom was an increase 
in taxes and that the cause of the recession of 2008 was a 
decrease in taxes, you are just not going to get me to go 
there. If we could tax our way to prosperity, we would have 
done it a long time ago.
    Mr. Jeffries. I am just asking a factually based question. 
Actually during the 8 years of the Bush Presidency when the top 
tax rate was dropped, this country lost 400,000 jobs.
    Now, during the subsequent 8 years we have got, again, 25 
years of a record here. Barack Obama comes into office, the top 
tax rate is 35 percent, it is raised to 39.6 percent. And 
during the Obama Presidency, 12 million private sector jobs 
were created.
    I simply say that there is no evidence anchored in any 
reality as to this theory of dynamic scoring and trickle-down 
economics yielding substantial economic growth.
    I yield back.
    Mr. Rokita. [Presiding.] The gentleman's time has expired.
    The gentleman from California Mr. McClintock, is recognized 
for 5 minutes.
    Mr. McClintock. Mr. Director, welcome.
    I would like to continue that very line of analysis. As I 
recall, Bill Clinton reduced Federal spending by 4 percent of 
GDP. He approved what amounted to the biggest capital gains tax 
cut in American history. He overhauled entitlement spending, in 
his words ending welfare as we knew it. And we did have a 
period of profound economic expansion.
    Mr. Mulvaney. As I recall, over his objection and at the 
insistence of a Republican-controlled Congress.
    Mr. McClintock. And I understand that the growth 
assumptions are at issue here, but the growth assumptions, 
which are very relevant to whether and when the budget 
balances, are really irrelevant to the policies that are 
required to produce that growth. Are they not?
    Mr. Mulvaney. Policies will drive everything, yes, sir.
    Mr. McClintock. And with respect to the policies, this 
budget reminds me a great deal of the first Reagan budget, when 
he rebuilt our defenses, restrained the growth of nondefense 
spending, enacted the tax and regulatory reforms that were 
necessary to grow the economy, where wages are growing and 
opportunity to prosper expands to include every American.
    What was the result of these policies that you are 
restoring to our Federal fiscal plan?
    Mr. Mulvaney. We built an American economy that was the 
envy of the entire world and can be again if we can have the 
sense to reinstill some of those same policies.
    Mr. McClintock. In fact, we averaged 3.5 percent growth 
every year for 8 years, compared to the Obama policies that 
increased taxes, increased the regulatory burdens, increased 
our deficits dramatically, and produced one of the slowest 
growth rates in the history of the country. I believe we 
averaged 1.5 percent every year for his 8 years. Is that 
correct?
    Mr. Mulvaney. I think that sounds right, Congressman. In 
addition, I think in his very first budget he assumed that he 
would get 3.5 percent growth, 4.4 percent growth, 4.6 percent 
growth, and 3.8 percent growth.
    Mr. McClintock. And when Reagan took office the top 
marginal income tax rate was 70 percent, getting to the 
question of these terrible tax cuts for the very wealthy. Top 
rate was 70 percent when Reagan took office. He cut that rate 
from 70 percent down to 28 percent. And the result was our 
income tax revenues went from $285 billion to $456 billion in 
the same period. Is that correct?
    Mr. Mulvaney. Again, I don't remember the exact numbers, 
but I will take you at your word as I did with the previous 
Congressman.
    Mr. McClintock. And the share of taxes paid by that top 1 
percent actually went up dramatically, from 17.6 percent to 
27.6 percent. So when we cut the top marginal tax rate, the 
economy expanded dramatically, revenues to the Federal 
Government expanded dramatically, and the proportion of taxes 
paid by the wealthy actually increased, it didn't decrease.
    Mr. Mulvaney. And don't forget President Reagan also 
dramatically simplified the tax plan, which is something we are 
talking about doing as well.
    Mr. McClintock. So this isn't theory, this is practice, and 
it has been practice under both Democratic and Republican 
administrations, when you cut the tax and regulatory burdens 
the economy expands. We saw that under Reagan, we saw that 
under Clinton. We saw that under Coolidge and Harding. We saw 
that under John F. Kennedy. These are the plans that actually 
work. This isn't theory, this is longstanding practice.
    And it is so good to see an administration returning to the 
policies that work and for the first time in 16 years having a 
President who actually gives a damn about balancing the budget 
before it bankrupts the country.
    That is the one point I wanted to differ are you on, you 
said that if we continue down this path our grandchildren will 
have $30 trillion, $40 trillion of debts on their shoulders. I 
don't think we would get that far.
    You mentioned the sovereign debt crisis. When the 
government loses access to capital, pension systems implode, 
basic services, including public safety, falter, while 
ultimately you have runaway inflation and the economy 
collapses.
    I asked a leading economist from Mercatus, how long do we 
have? And his answer was, well, you can't really make a 
prediction like that because a number of different factors will 
influence the onset of a sovereign debt crisis. But he said, 
``I can tell you this. When we reach a trillion dollars a year 
in annual deficits, the markets will be destabilized at that 
point and you will set the stage for a sovereign debt crisis.''
    Your budget turns us away from that bleak future. But that 
day comes, according to the Congressional Budget Office, if we 
don't change course, 5 years from now. We don't have a lot of 
time left.
    Mr. Mulvaney. And I hope the House Budget Committee takes 
your words to heart as well, Congressman.
    Mr. Rokita. The gentleman's time has expired.
    The gentleman from Massachusetts, Mr. Moulton, will be 
recognized for 5 minutes.
    Mr. Moulton. Thank you, Mr. Chairman.
    Director, thank you very much for joining us here today.
    I would like to touch on your comment about Washington-
speak versus regular language for the American people. 
Director, do you believe in inflation?
    Mr. Mulvaney. I believe that it is very real, yes, sir.
    Mr. Moulton. Do you believe in population growth?
    Mr. Mulvaney. I do, yes, sir.
    Mr. Moulton. Okay. So I think that people back home 
understand that if you flatline budgets for things like 
Medicare and Medicaid, that, you know, let's say my parents are 
counting on getting cataract surgery so they don't go blind 
today, but if there is enough money in the budget to cover them 
both today and that budget is flatlined going forward and the 
price of cataract surgery goes up or there are simply more 
people in America who need that surgery, then they won't be 
both covered in the future. One of my parents will go blind.
    That is why in Washington that we account for inflation and 
population growth when we do budgeting. I think people back 
home understand that the cost of bread is not the same today as 
it was 10 years ago or 20 years ago because of inflation.
    And I am concerned that in the same way that you are 
returning us to the failed President Bush policies of tax cuts 
to spur economic growth that when only directed at the 
wealthiest don't in fact spur any economic growth at all, that 
we are getting back to the fuzzy math of the Bush era as well.
    But I would like to talk for a second about your cuts to 
the State Department. General Mattis in 2013, who was then 
Commander of U.S. Central Command, said before Congress that: 
If you don't fund the State Department fully, then I need to 
buy more ammunition. And that quote, ``The more that we put 
into had the State Department's diplomacy, hopefully the less 
we have to put into a military budget as we deal with the 
outcome of an apparent American withdrawal from the 
international scene.''
    Do you agree with his assessment, Mr. Director?
    Mr. Mulvaney. I will answer the question this way, 
Congressman. What you see there is the President doing exactly 
the same thing he has done on other line items in the budget 
that I have talked about today. I recognize the fact there are 
folks in this room who do not appreciate or support the 
reductions in the State Department line item, just like there 
are folks over on this side of the room who probably do not 
agree with our decision not to tackle Social Security and 
Medicare.
    Mr. Moulton. Director, I am actually not talking about 
Members of Congress, I am talking about our own Secretary of 
Defense.
    Mr. Mulvaney. I am going to answer you this way, is that 
this is what the President promised he would do. I understand 
what Secretary Mattis said before he was Defense Secretary----
    Mr. Moulton. Well, the President also promised he wouldn't 
cut Social Security, Medicare, and Medicaid, and he is cutting 
them. He also promised us a healthcare plan that would see 
everybody get beautiful coverage, and that is not what we are 
getting from the AHCA, which, in fact, is guaranteeing that a 
lot of people, like my parents, will see their healthcare costs 
go up over the next 10 years if it is passed.
    Mr. Mulvaney. Go back to your basic assumption, 
Congressman, though, which is that the government most grow. 
That is what the CBO baseline says, that you are required to 
grow at inflation plus population growth. And I think we 
simply--there are many of us who simply reject that. There is 
no reason that the government must on auto pilot----
    Mr. Moulton. Mr. Director, I would love to see the 
government not grow because we would get more efficient. I 
share your belief that we ought to be able to achieve that. But 
I am not going to dismiss inflation, I am not going to dismiss 
population growth when we talk about budgeting.
    Director Mulvaney, do you disagree with the statement of 
General David Petraeus, former CIA Director, retired General 
John Allen, retired Admiral James Stavridis, and 120 other 
retired generals and admirals who expressed their opposition, 
just like Secretary Mattis, to cuts in diplomatic programs.
    They said the State Department, USAID, Millennium Challenge 
Corporation, Peace Corps, and other development agencies are 
critical to preventing conflict and reducing the need to put 
our men and women in uniform in harm's way.
    Do you disagree with that assessment?
    Mr. Mulvaney. Yes, sir, I don't necessarily agree with 
that, and the budget does not agree with that.
    Mr. Moulton. But why do you disagree with that? It sounds 
an awful lot like our President who says that he is smarter 
than the generals. Is that your view?
    Mr. Mulvaney. What you are seeing----
    Mr. Moulton. There are 120 respected generals who say you 
are wrong. Your own Secretary of Defense says you are wrong. So 
why is it that you are willing to put our troops at risk by 
cutting aid to diplomatic programs that keep them out of harm's 
way? Why is that? That is not fair to our troops, that is not 
fair to those of us who are on the ground, Mr. Director, with 
all due respect.
    Mr. Mulvaney. Putting troops at risk is what this body has 
done with the sequester that we are trying to undo.
    Mr. Moulton. Mr. Chairman, I yield back.
    Mr. Mulvaney. Thank you, sir.
    Mr. Rokita. The gentleman yields back.
    Mr. Sanford, the gentleman from South Carolina, you are 
recognized for 5 minutes.
    Mr. Sanford. I thank the gentleman. I thank the Director as 
well for his time here.
    I want to say how much I applaud your goal of balancing the 
budget. As has already been noted, the last administration did 
not have that as a goal. It didn't balance in perpetuity. I 
very much admire that. I admire your willingness to make cuts 
both in taxes and in spending. We have had much conversation on 
the Appalachian Regional Commission because you have actually 
proposed cuts, and it is something a lot of administrations 
have not proposed.
    I admire you. We have worked together over any number of 
different years in different capacities. I think you are 
bright, capable, and caring.
    Mr. Mulvaney. You have to write that down.
    Mr. Sanford. Yeah, I will, I will. And I generally 
sympathize with the fact that you are doing an executive branch 
budget, which I did for 8 years of my life, and that is a 
difficult process.
    But--and we will go to the ``but''--I want to go back to 
what we talked about yesterday. You have said that the 
foundation of your budget is 3 percent growth. And I have 
looked every which way at how you might get there and you can't 
get there. And as a consequence, I think it is just 
disastrously consequential to build a budget on 3 percent 
budget. The Bible says you can't build a house on a sandy 
foundation.
    What it does is it perpetuates a myth that we can go out 
there and balance the budget without touching entitlements. It 
the not only a myth, it is, frankly, a lie. And if it gets 
started at the executive branch level, it moves from there.
    And so I think that this notion of 3 percent--I heard 
literally the Speaker of the House talking today about the 
notion of 3 percent growth and how we can balance the budget. I 
just again, as earnestly as I have looked at this, I don't know 
how you get there.
    And what this does is it creates real debates from 
happening. I mean, legitimately, myself and Democratic 
colleagues can see things quite differently, but for us to have 
a real debate we have to base it on real numbers.
    I would also say it is important, because I am a deficit 
hawk, as you well know, and if you are wrong on these numbers, 
it means all of a sudden we have created a $2-plus trillion 
hole for our kids and grandkids here going forward.
    So I want to walk through a couple different numbers with 
you. One, this budget presumes a Goldilocks economy, and I 
think that that is a very difficult thing on which to base a 
budget.
    If you look at the average economic expansion in the 
history of our country, it is 54--58 months. The current 
expansion that we are in is actually the third-longest economic 
expansion in American history. We are at 94 months.
    But what you presume in this budget is not only will we not 
have a recession, though we are in the third-longest economic 
expansion in history, but it is going to keep going for another 
214 months. It is not only unprecedented, I would think that to 
be unreasonable. It assumes that the stars perfectly align with 
regard to economic drivers.
    Can you guess the last time we had an unemployment rate of 
4.8 percent, growth at 3 percent, and inflation held at 2 
percent?
    Mr. Mulvaney. I can't remember.
    Mr. Sanford. It has never happened. The last time that 
growth was at 3 percent where we were held for a sustained 
period of time, the 10-year bond yield below 5 percent, you all 
presumed 3.8 percent, can you guess the last time that has ever 
happened?
    Mr. Mulvaney. Again, I am trusting you on the assumptions--
--
    Mr. Sanford. Yeah, it has never happened. So we are going 
way out there on a curve in terms of assumption.
    And then in terms of the ingredients of growth, I actually 
broke out some numbers here, capital formation would have to go 
to the record level that we have seen in terms of capital 
growth from 1965 to 1974, though capital formation actually 
goes down as people retire. They withdraw from the savings 
accounts.
    Labor force growth would have to go to see what we saw in 
1970s and 80s when women were joining the work force en masse. 
And even if you include the labor participatory rates took them 
back up to the numbers that we saw in the 1990s, we would see a 
two-tenths of 1 percent, a decimal increase, not a percentage 
increase. It would require either radically opening immigration 
or a radical change to demographics as we are having adding 
10,000 baby boomers retire each day.
    If you look at productivity growth, it would require 
numbers, again, that we haven't seen since the golden days of 
1958 to 1967 in the final wave of electrification, consumer 
appliance, and the completion of the highway system to achieve 
what we are seeing. Even if we went to 1990 numbers, we would 
only see one-quarter of what is necessary to achieve 3 percent 
growth.
    Mr. Rokita. Time is expiring.
    Mr. Sanford. The Rand Corp says that a reduction of 15 
percent is to be presumed with aging.
    I would just lastly submit this for the record, which is to 
say, if you look at the correlation between OMB and CBO----
    Mr. Rokita. Entered for the record, without objection.
    Mr. Rokita. I am sorry, the gentleman's time has expired.
    The gentlewoman from New Mexico, Ms. Lujan Grisham, is 
recognized for 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman.
    And welcome, Director.
    That wasn't the strategy I was going to take, but maybe I 
can finish up just a little bit of what my colleague, Mr. 
Sanford, was hitting on.
    This committee, as you well know, it is very difficult for 
us to have--and I mean no disrespect to my colleagues and I 
don't think that you mean any disrespect to us on this side of 
the Budget Committee either--but we don't have these earnest 
dialogues about how you might look at this and what your 
priorities could or should be. And I agree, if with a want to 
have kind of a Cadillac growth in the economy and GDP, you want 
that and you want to get kind of a balanced perspective about 
who thinks that can happen, do comprehensive immigration 
reform.
    Now, we might disagree about the policies related to that, 
but I think it is going to be very hard for members of this 
committee to disagree that that in fact will grow the economy.
    You want to make sure that government is lean and 
efficient, you want to make sure that we are not hoarding money 
or not being accountable? Well, let's deal with $125 billion at 
the Pentagon.
    There are things that we can do. If we are concerned about 
population issues that are very expensive, boy, I spend a lot 
of time doing aging policy. It is a very delicate effort here. 
You want dignity and respect and quality of life for older 
Americans. But we recognize unequivocally that they are 
chronically ill, they are on an average of seven medications, 
most need long-term care, including my mother, who, by the way, 
is only 77. And the amount that we spend, unsustainable.
    So if we are interested in that, then you bet, get NIH and 
CDC and every research arm and institution, public or private, 
in the United States and get them to prevent and cure 
Alzheimer's, and we have got a boon to the economy and we have 
lowered our risks.
    And I realize that particularly the last one, you know, 
there is a not a one of us here who doesn't wish we could do to 
that and eliminate all chronic disease, but we aren't going to 
invest in addressing that at all. And, in fact, we are saying, 
look, because there have to be sacrifices to deal with a 
balanced budget and to really address some serious issues, we 
are just going to have one side of the American population, you 
sacrifice, and everybody else.
    And I want to talk to you a little bit how I am living 
that. NBC News just put out a report, I will submit it for the 
record if that is----
    Mr. Rokita. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Lujan Grisham. I will then. And here it is. It says, 
look, New Mexico would be hit the hardest. All right. So I am 
living in a State that is using many of the trickle-down 
economic and cut policies, agendas that are clearly embedded in 
this budget document. And let me tell you a little bit about 
our--and we are a defense State with two labs, right? So a lot 
of the stuff that you are proposing should really work in a 
State like ours, except NBC says not so much.
    And let's talk about my State. And if you remember from 
being on this committee, I talk about it a lot, because it is a 
huge problem.
    Ten years ago we had a 3.7 unemployment rate. Today, we 
have the highest unemployment rate in the Nation at 6.7 percent 
for the third month in a row.
    Our graduation rate is the worst in the Nation with only 69 
percent of our students graduating on time.
    Twenty percent of New Mexicans live in poverty, 28 percent 
of New Mexico children live in poverty, second highest in the 
Nation.
    Half the State is on Medicaid with some of the worst 
healthcare outcomes, second for infectious diseases, fourth for 
teen pregnancy, third for suicide, first for chronic liver 
disease, eighth for drug overdose.
    One-third of New Mexicans rely on SNAP and nutrition 
assistance, half of New Mexico's children under 4 are, in fact, 
receiving State or SNAP benefits.
    Now, we might argue about, well, see, Medicaid is not 
working, but we have a Governor that has actually been cutting 
Medicaid and being more draconian about work requirements and 
not being very smart about reinvesting. Cut, cut, cut, cut, 
trickle-down economics, which, in fact, have driven out 
businesses. We have the highest teacher vacancy rates in the 
country.
    I could spend way more than just the 40 seconds I have left 
to tell you that we are the only State losing population, 
people have lost hope. And in fact embedded in every decision 
that our current conservative leadership both at the local 
level and at the State level have made mirror many of the 
priorities in this budget with none of the outcomes that you 
project for the Nation's economy.
    So I would like to just point to a different perspective, 
that while States are working to get ahead and balance these 
issues and sacrifices, shared opportunities, shared returns on 
those investments, that, in fact, exactly what you are 
proposing, and I didn't get to any of the other stuff, student 
loans, Pell grants any of it.
    Mr. Rokita. The gentlelady's time has expired.
    Ms. Lujan Grisham. We are, in fact, a disaster using your 
budget blueprint.
    Thank you, Mr. Chairman.
    Mr. Rokita. Mr. Bergman is recognized for 5 minutes.
    Mr. Bergman. Thank you, Chairman.
    Director Mulvaney, thanks to you and President Trump for 
all the hard work in crafting the fiscal year 18 budget 
proposal.
    I am encouraged by the strong conservative reforms the 
President has proposed and the consideration shown for our tax 
dollars. As a freshman member of the Budget Committee, one of 
the most interesting documents I have read, it was about 26 
pages, it was called the Evolution of Federal Budgeting. I have 
subtitled that, when 2 and 2 ceased to equal 4.
    We have got challenges and we have heard it in different 
ways. As a career member of the military, I am encouraged by 
the investments made in our national security and the military 
in general. I applaud the President for taking our national 
security threats seriously and for responding in a serious way. 
But I would suggest to you that this is not a plus-up of the 
military, it is a catchup over the last 8 years.
    So I just have one question that I would like to discuss or 
hear your thoughts on this afternoon, and it regards overseas 
contingency operations, or OCO, as we call it.
    The President's budget slowly brings down OCO spending. 
Could you explain briefly the rationale behind the reduction? 
And in your opinion, would the administration support 
establishing a set of criteria, prioritized criteria, for 
allocating OCO dollars in the future to ensure that the money 
that is being spent is actually being spent on security needs 
and to ensure we don't allocate more than necessary into the 
OCO account in future years?
    Mr. Mulvaney. We have not had a chance to talk about that 
in particular, Congressman, but I can assure you that I welcome 
that conversation. We simply haven't had a chance to do it yet 
because we have been doing budget since the day I got there. 
But I share your concerns, as I mentioned with one of our 
colleagues earlier today, that OCO be used for OCO and that it 
not be used in other ways.
    Because of the nature of the account where it is not quite 
as accountable, it is not quite as transparent, it is not in 
anybody's benefit to use it as a place to park other spending. 
It is an important piece of how we operate the Defense 
Department, a necessary piece of how we operate the defense 
department, but it does need to be properly used.
    Mr. Bergman. Thank had you. And this is something we 
haven't heard much this morning.
    I yield back the balance of my time.
    Mr. Mulvaney. And you won't hear that much in this 
committee, Congressman.
    Mr. Rokita. I thank the gentleman.
    I see that we have no more speakers, at least at the 
present time, on the Democratic side. So we will continue on 
the Republican side with Mr. Grothman from Wisconsin for 5 
minutes.
    Mr. Grothman. Thank you very much for coming all over here, 
glad to see you on that side. Dream come true.
    Right now the average debt per person, as you pointed out, 
in this country is about $60,000. I know this is going to be a 
difficult next 4 or 5 months for us all because there are a lot 
of people, both on the Democratic side and I guess what I will 
refer to as the Bush Republicans, who feel that $60,000 can get 
higher.
    But I would like to thank you for trying to hold the line 
on 60. And in this budget over the next couple of years how 
much higher do you think that is going to get or do you think 
we can kind of hold it at 60 for now? Or do you expect by the 
end of this year it is going to be up to 63, 64?
    Mr. Mulvaney. Well, it depends, Congressman, on what sort 
of assumptions we make about what you all do. Keep in mind, our 
budget is a message document, it contains the vision of the 
administration. You all control the power of the purse. So when 
it comes to spending, that will fall to you.
    I think the CBO baseline number has us adding $9 trillion 
of debt in the next 8 years. If you allow that to happen by not 
changing the current law, that is exactly what is going to 
happen.
    Mr. Grothman. Okay. I know you have a little bit more in 
here for border enforcement. Do you plan on in the next year 
doing a lot of work towards building the wall?
    Mr. Mulvaney. Yes, sir, we do. We asked for an additional 
plus-up of the Department of Homeland Security of $4.5 billion, 
of which 2.6 will go to actual border security.
    Mr. Grothman. And how much of the wall do you think we will 
build, first of all, by the end of our current fiscal year, and 
then beginning the year that we are talking about in this 
budget, how many miles do you plan on building?
    Mr. Mulvaney. It is really difficult to say for a couple of 
reasons. I am not trying to dodge the question, I am just 
trying to give you the variables that we deal we deal with. We 
haven't picked the ideal kind of fence yet. We are going 
through a prototype process where there are a bunch of folks 
trying to build small sections of wall to sort of see what they 
look like, see how they might function. And then we have not 
decided if one size fits all on a wall or if different parts of 
the border need different types of barriers.
    Mr. Grothman. What is your goal? You must have a goal.
    Mr. Mulvaney. The goal is securing the border.
    Mr. Grothman. I know. On November--on October 1 of this 
year how many miles, if I tell my constituents back home, if I 
have a town hall meeting?
    Mr. Mulvaney. You all appropriated $341 million in the 2017 
appropriations bill for replacement, and we plan on spending 
all of that money this year.
    Mr. Grothman. You have no idea, guess, 100 miles, 500 
miles? No idea?
    Mr. Mulvaney. Mr. Grothman, again, it depends on the kind 
of wall that you build. I think the bollard wall is roughed out 
at $8 million a mile. But I think that is an all-in cost and I 
think it is actually cheaper to do it when you replace wall 
that is there already, because you already own the land, the 
infrastructure is there. So it is very difficult to give you 
that number, sir, and I apologize. We can give you our best 
estimates, though, in writing after the meeting.
    Mr. Grothman. Why don't you come back and give me an 
estimates as to when we are going to start billing and how many 
miles we will get at the end of this fiscal year.
    Mr. Mulvaney. Work is going on today. Work is going on on 
the southern border today.
    Mr. Grothman. Good. Okay. Next question.
    I think your increased border enforcement will result in a 
savings, but I wondered if you could work towards, in three 
areas, work towards the amount of savings we could get if we 
kept certain immigrants here we wouldn't want here. And I am 
thinking of three areas.
    I am thinking about crime, because we all have heard about 
stories about crimes-committing people who broke the law to get 
here. Welfare payments, even though they shouldn't be getting 
welfare payments. And providing medical care for expensive 
illegal immigrants coming here. Do you have any numbers on all 
three, how much savings we could have in all three areas?
    Mr. Mulvaney. I don't have the numbers at my fingertips, 
Congressman, but I can tell you that the budget does provide, 
or propose that we require Social Security numbers for 
recipients of both the childcare tax credit and the earned 
income tax credit, which we think would result in dramatic 
savings.
    Mr. Grothman. I hear from my, like, social workers or 
maintenance workers sometimes because they are sanctuary cities 
or sanctuary counties, is not able to ask questions, but that 
people are just taking advantage of our general income support 
programs, low-income housing, food share that I hear are 
illegal. Can we do anything to crack down on those people?
    Mr. Mulvaney. Yes. We also propose, Congressman, as part of 
the policies contained in the budget, switching from a current 
lottery system to a merit-based system, to ensure that folks 
who come here can actually contribute more quickly to economic 
growth.
    Mr. Grothman. I am glad you are working on that regard. One 
of the things that I have been trying to do since I have been 
here is do something about the marriage penalty, and which 
apparently is the current policy of the American Government to 
discourage parents of children from getting married. You know, 
it is not hard to think of a hypothetical, $20-, $30,000 a 
year, assuming $20,000 a year for not getting married. I don't 
see anything specifically dealing with that problem here. Would 
you be willing to work with Congress as we work our way through 
the system to try to not pay people so much not to get married?
    Mr. Mulvaney. Yes, sir. I would be happy to do that, 
because we agree with the principles.
    Mr. Rokita. [Presiding.] I thank the gentleman. The 
gentleman's time has expired. Continuing with questions on this 
side of the dais, Mr. Smith from Missouri, you are recognized 
for 5 minutes.
    Mr. Smith. Thank you, Mr. Chair.
    Director, it is a pleasure to have you here.
    When I am home and talking about the budget to our 
constituents, they--they have never seen $1 trillion, and so 
the best way to talk about the fiscal--the fiscal situation of 
the Federal Government is to take off eight zeros when I talk 
to them.
    And you could take off those eight zeros right now, and I 
put it in perspective that the folks back home make roughly 
$36,320 a year, give or take a little bit. That is the revenue 
that comes into the United States in this past--past year, 
roughly, estimated, but yet, that same individual would be 
spending $42,680 a year, almost $6,000 more a year. But when 
you add the eight zeros, which is the Federal Government, that 
is a whole lot more than $6,000. But when we talk to the people 
back home, it is, you make $36,000, you spend $42,000, but yet, 
on your credit card, you have $190,000. It is unsustainable, as 
you know, as the President knows, and that is why I want to 
thank you and thank President Trump for offering a solution 
that comes towards a balanced budget in 10 years.
    So then, we are at that point that you make $36,000, and 
you spend only $36,000, and then you can stop reducing the 
debt.
    Do you have the numbers of where we would be if we leave it 
as a status quo of how much the debt would be over the next 10 
years?
    Mr. Mulvaney. Again, I think the 10-year number is--I think 
the 8-year number is $9 trillion, according to the baseline, if 
you leave status quo, if we simply go home and don't do 
anything different for the next 8 years. I think it is $9 
trillion versus 10 years, but roughly $9 trillion, to answer 
your question.
    Mr. Smith. So $9 trillion not to do anything. But if we 
pass this President's budget, we would add $5 trillion?
    Mr. Mulvaney. Yes. I think it is half that, because we 
actually get to balance in the 10th year, was a $16 billion 
surplus, I think.
    Mr. Smith. Okay. Is there any items that you feel like that 
would be great that you would love to express that you may have 
been cut off in prior testimony that might be helpful?
    Mr. Mulvaney. No. I have to admire the way you articulate 
the numbers. Because I think what is so frustrating, we talked 
earlier today about regular language, regular English versus 
Washingtonian English. And at some point, Congressman, I wish 
we didn't have the word ``trillion.'' I can't tell you the 
number of times I have gone out, I asked folks that I used to 
represent, what do you think is more, $952 million or $1.1 
trillion? And some people actually think 952 is more. It is a 
thousand times different. It is actually more than a thousand 
times different.
    And so you are right to get it down to the numbers that 
people can understand. I don't like using trillion dollars in 
OMB, because I have never seen $1 trillion either.
    I had a constituent one time give me a calculator that 
actually could do trillion dollars, which it was about this 
big. And it will absolutely frustrate you. I think you are 
absolutely doing the right thing, trying to explain to people 
what that real world looks like, because that credit card debt 
that you mentioned, $190,000 is absolutely right. And though 
know what it would mean for their families if their families 
had that kind of debt. And it is not mortgage debt, as you 
pointed out; it is credit card, which is entirely different.
    Mr. Smith. It is unsecured.
    Thank you, Director. I appreciate you being here.
    Mr. Mulvaney. Thank you.
    Mr. Rokita. The gentleman yields back.
    The gentleman from Alabama, Mr. Palmer, is recognized for 5 
minutes.
    Mr. Palmer. Good you to see, Director Mulvaney.
    I want to ask a question that was asked by one of our 
colleagues. Did one of our colleagues on the other side say 
that she had never seen economic growth of 3 percent?
    Mr. Mulvaney. No. I think she was what I was proposing was 
never before seen growth.
    Mr. Palmer. I would like to enter into the record----
    Mr. Rokita. Without objection.
    Mr. Palmer.----this document that shows that our average 
growth since--for the 7 years has been 3.21 percent.
    Mr. Rokita. Without objection.
    Mr. Palmer. Thank you, Mr. Chairman.
    I want to ask you a few questions and try to go through 
this fairly quickly.
    In your budget, you show $142 billion over the next 10 
years in reductions and improper payments. I want to know why 
so little when last year, the improper payments alone was 
133.7?
    Mr. Mulvaney. Thank you. We never had a chance to talk 
about that yet. That was a conscious decision. We only took 10 
percent of the improper payments. We didn't want to be accused 
of using different numbers, so we tried to be as conservative 
as possible. I think it would have been reasonable for us to go 
as high as 40 or 50 percent on that. I think that is a goal 
that you should shoot for.
    Mr. Palmer. I think it would be reasonable, and I would 
like to have the opportunity to help you with that.
    Mr. Mulvaney. And keep in mind, if we do what the budget 
suggests, and we get to that 40 or 50 percent, that is a faster 
path to balance.
    Mr. Palmer. Thank you. Thank you, Mr. Director.
    Let me ask you this: How does the administration define 
success when it comes to social programs? Do you consider 
adding more people to the welfare rolls a success? That is the 
answer to that?
    Mr. Mulvaney. No. It is so frustrating to me when I see 
incentives at the State level to get people on the programs. 
That is not how you decide--that is not how you measure 
success. Success should be somebody who was employed, became 
unemployed, used the benefits available to him or her, whether 
it is unemployment, SNAP, whatever, as the bridge to get to the 
next job, get back into the workforce, back in charge of their 
own life, back providing for their own family. That is what the 
safety net is for. That is what it needs to be for. And it 
needs to provide that type of comfort, but it can't be a 
permanent dependency.
    Mr. Palmer. So you are aware that when the government puts 
people on support that really shouldn't be there, that it 
disadvantages people who should be on there.
    For instance, there is a report out at the Department--
Illinois Department of Human Services, that indicated they were 
given preference to the able-bodied working age adults because 
they were in Medicaid expansion, that resulted in thousands of 
people at the lower reimbursement rate being--having to wait 
for care. As a matter of fact, 752 died between 2013 and 2016. 
That is a bad policy. Wouldn't you agree with that?
    Mr. Mulvaney. It is. But the people who pay the highest 
price for the abuse within the safety net are the folks who 
really should be on and need the safety net.
    Mr. Palmer. Well, let me ask you this: My Democratic 
colleagues cast many of the things that are in this budget as 
cuts when in fact, they should really be talking about savings. 
For instance, eliminating LIHEAP payments to dead people. 
Wouldn't that be a savings and not a cut?
    Mr. Mulvaney. Last time I checked, that would be a savings, 
yes, sir.
    Mr. Palmer. When you--when an able-bodied person, who is 
working age, that doesn't have young children, is encouraged to 
get a job when--in order to continue to get Medicaid or food 
stamps or some other government program, and that able-bodied 
person actually improves the quality of their life, they raise 
their income, and they get off of government support, is that a 
savings or a cut?
    Mr. Mulvaney. That is a win for that person and that 
person's family, and a win for the country, and we should claim 
it as such.
    Mr. Palmer. As a person who grew up pretty much dirt poor, 
I can tell you that work is the right path. I can tell you that 
from personal experience.
    Let me ask you something else.
    Mr. Mulvaney. I would suggest to you, Congressman, it is 
probably the only path.
    Mr. Palmer. It is the only path.
    Let me ask you something else in regard to the tax reform. 
And I also have a chart here that indicates that a high tax 
burden damages economic growth. And it is particularly damaging 
to small business. Everybody gets caught up in the big 
corporations, but it--the employment engine of our economy is 
small business.
    And over the last 8 years, we have really seen that damage 
in full-blown, livid color. The Gallup put out a report that 
indicated that prior to 2008, we had 100,000 more businesses 
starting up than closing. By 2014, we had 70,000 more 
businesses closing than starting up. It is a disaster for 
employment in the United States.
    Can you briefly tell us how you think the tax reform 
policies----
    Mr. Mulvaney. Yes. It is the dynamism in the market that 
you are talking about, new business formation is at 
embarrassingly low levels, and we believe that tax policy 
certainly has an impact on that. We also actually believe that 
regulatory policy has more an influence over that than even tax 
policy. I have started a small business; I have started a 
restaurant. I want to tell you, figuring out how to handle all 
the regulatory requirements was harder than rolling a burrito. 
Business people want to be in business. They don't want to be 
in the business of filling out government paperwork.
    Mr. Palmer. Mr. Chairman, I just would like to address the 
chair for a moment. I think it is wonderful. While I don't 
agree with everything that is in the President's proposed 
budget, I think it is wonderful that we have a Budget Director 
that supports a progrowth economy, that supports small business 
formation and supports getting people back to work.
    I yield back.
    Mr. Rokita. The gentleman's time has expired. I thank the 
gentleman.
    The gentleman from Florida, Mr. Gaetz, is recognized for 5 
minutes.
    Mr. Gaetz. Thank you, Mr. Chairman.
    I just find it ludicrous that Democrats in this hearing has 
suggested that President Trump has betrayed his voters by 
presenting a balanced budget. So, Director Mulvaney, please 
share with the President that the folks in Florida's first 
congressional district who voted for the President are proud of 
the fact that you have worked so hard to bring a balanced 
budget forward for our consideration and review.
    I honestly wish that we could vote out the President's 
budget today and make it the law and use it as a device to 
constrain the growth of government.
    I don't want to see the swamp of this town submerged and 
swallow up the bold decisions that you and the President have 
made together to put us on a path to fiscal responsibility.
    My question for you, Director, is this: Detail for us the 
ideas that Democrats on the Budget Committee have brought to 
your office to balance the budget.
    Mr. Mulvaney. It is none.
    Mr. Gaetz. Is it safe, then, to assume that a balanced 
budget is not truly a priority or objective of those who have 
been asking you these questions today?
    Mr. Mulvaney. You can certainly assume from the experience 
on this committee, for example, over the last 8 years, that 
since the previous administration never offered a balanced 
budget, that that administration representing their party are 
not interested in balancing the budget.
    Mr. Gaetz. I want to speak for a moment about work 
requirements. This committee, in the context of healthcare, 
took the position that able-bodied, childless adults should 
have to meet a work requirement if they want someone else to 
pay for their healthcare. What is the position of the President 
in this budget relative to work requirements?
    Mr. Mulvaney. Actually, we support that, both within the 
affordable--the American Health Care Act, which we support, and 
that you all have already voted on. We also take that same 
sentiment and apply it to food stamps, under the theory that if 
you are an able-bodied person with no dependents and you are 
able to work, we should require you to prove that you are 
trying to work in order to get food stamps.
    Mr. Gaetz. Should that be a mandatory requirement within 
these Federal programs that we have work requirements, or 
should States be able to choose whether or not to have work 
requirements?
    Mr. Mulvaney. Well, both is the answer to your question. I 
think in the American--in the AHCA, we allowed the States to do 
it, because I think that deals with Medicaid, which is a State-
administered program. In our budget, we introduced that concept 
into SNAP, which is, I believe--it is a federally run program. 
I am sure the States are involved in providing the services, 
but I think we are a lot heavier involved in food stamps, SNAP.
    Mr. Gaetz. And if you tell folks in the food stamp space, 
the SNAP space, and the Medicaid space that the path to greater 
progress is not further dependence on the government, it is 
actually getting the benefit of work, what impact do you think 
that will have on our aspirations for broader economic growth?
    Mr. Mulvaney. In order to get that 3 percent growth, we 
need folks to work. Okay? And we need to figure out a way to 
provide them with the economic opportunity so that they can go 
to work. I didn't get a chance to talk here today about the 
difference between the U-3 measure of unemployment and the U-6 
measure. U-3 is the measure that we use most traditionally. It 
is folks who are defined as being in the workforce but unable 
to find work.
    U-6 is those people, plus folks who are--I think we 
described it as marginally attached, who are working part-time 
for economic reasons against their will. Okay? That difference 
is, I think, over 6 million people. Those are folks who want to 
work full-time but haven't found the opportunity to do that 
yet. That is the folks we want to go to and say, look, if we 
can get the 3 percent growth, we can get you into the full-time 
job that you want.
    Mr. Gaetz. Director Mulvaney, please also share with the 
President the gratitude from the folks in my district who are 
so grateful to see a President willing to prioritize our 
military, and the capabilities within our military to meet the 
challenges presented by our adversaries.
    As a member of the Armed Services Committee, I have seen 
time and again our adversaries invest in next generation weapon 
systems, testing, evaluation. And so, maybe, could you speak to 
the opportunities that would be presented for our military and 
our capabilities in the test and evaluation mission if we were 
to accept the budget that you and the President have proposed?
    Mr. Mulvaney. Yes. And I think if you are encouraged, I 
will have you reach out to Secretary Mattis, but, yes, what I 
think you will hear him say is he wants this money now so that 
he can modernize and get readiness up to where it needs to be. 
That is his first priority is taking what we already have and 
making sure it is able to be used to defend the Nation.
    We are all interested longer term at looking at larger 
troop numbers, larger ship numbers, larger plane numbers, but 
his first priority is making sure the defense capabilities we 
have can be used if necessary.
    Mr. Gaetz. Thank you, Mr. Chairman. I yield back.
    Mr. Rokita. The gentleman yields back.
    The gentleman from Texas, Mr. Arrington is recognized for 5 
minutes.
    Mr. Arrington. Thank you, Mr. Chairman.
    And thank you, Director Mulvaney, for your service to our 
country in the House, and now your new role with the President.
    Growing up in Plainview, Texas, my dad said that money--
repeatedly, that money didn't grow on trees, and I believed 
him, until I came to Washington. And now I have got to tell him 
I found the money tree, and it is the United States Treasury.
    And I am just grateful that you are presenting a budget 
that is not a money tree trimming budget, but it is a money 
tree cutting budget. And that is what we have got to do if we 
are going to get our country back.
    I want to applaud you and the President for proposing a 
long overdue balanced budget, and one that begins reducing our 
national debt, which I believe is the greatest threat to my 
children's future in this great country.
    And we know what to do. You know what to do. I know what to 
do. The committee's know what to do. The American people know 
what we have to do. They are waiting on politicians to have the 
courage to do it.
    I commend you on your courage, and I commend the President 
equally.
    I agree with your growth projections. I think there is 
pent-up growth demand in this country. If we would just unleash 
it, unleash the economy, unshackle it from the $2 trillion in 
regulatory costs, the highest corporate income tax in the 
industrialized world, and relieve the American people, middle-
class and working-class families, from this disaster called 
ObamaCare.
    We are not going to agree on every item of the budget. You 
know that. I know that. Let me highlight for you what is, I 
think now, after Ms. DelBene has expressed her thoughts, a 
bipartisan concern, with all due respect: Our food, fuel, and 
fiber producers in rural America are feeding and clothing the 
American people, and they are fueling the American economy.
    That is not just economic development for West Texas. That 
is ag and energy independence for the entire Nation. That is 
national security for every American citizen.
    Now, I have got a question, and I will qualify it with four 
very important facts. Agriculture is the basis for the economy 
in rural America. In the last farm bill, we cut billions of 
dollars from foreign programs. The last 3 years, we saw a 50 
percent decline in farm income, the steepest decline since the 
Great Depression. And you know this, Director Mulvaney, but 
farm policies represent a mere 0.26 percent of the entire 
Federal budget.
    Here is my question: Recognizing that we need to make cuts, 
recognizing there are cuts to be made everywhere, why now, and 
why such deep cuts to our farm sector safety net?
    Mr. Mulvaney. Thank you, Congressman.
    As I mentioned earlier, and I can't put my hands on the 
piece of paper, there is actually--I think we dramatically 
increased spending on some ag programs, not the least of which 
I think is the farm loan program.
    We have also, as I am sure you have listened to farmers to 
find out what their priorities are, what can allow them to 
change that trend you talked about in terms of farm incomes? 
And what we hear from them again and again and again is more 
favorable trade deals, because the world is their market and 
the world needs to be their market, and we need to be able to 
ship U.S.-grown agricultural products everywhere, and right 
now, we lack the ability to do that. So I applaud the 
President, as I am sure you do, being from West Texas, even the 
incremental benefits we have been able to get with the Chinese 
in terms of our meat exports. It is a big deal for our folks 
back home.
    I was from a rural district as well. You look, then, at the 
regulatory climate and what we were doing to our farmers in 
terms of waters of the U.S. and clean streams and regulations 
from top to bottom. Farmers are farmers, and they want to grow 
stuff, and they want to be productive. They don't want to be 
paper pushers who try and figure out how the Federal Government 
is going to punish them for doing something that they thought 
was right.
    So we hear those farmers and again and again. They are down 
at the White House on a regular basis. To your point--I won't 
be Pollyannish--yes, we do make some proposed changes in some 
of the farm programs.
    I think we deal with--let me put it to you this way: We 
focus exclusively on what we would call corporate farmers, 
protecting, I think, 96 percent of farms in this country.
    Mr. Arrington. If I may, just because I have a little time.
    Mr. Mulvaney. Yes, sir.
    Mr. Arrington. We need freer markets, as you suggested. We 
need fair trade, better trade deals as the President has 
suggested. They will never be able to compete, though, with 
China and India and others that don't have an EPA, they don't 
have an OSHA; they don't have these costs. So we need a safety 
net, a reliable strong safety net.
    I yield back.
    Thanks for your time.
    Mr. Mulvaney. Thank you, sir.
    Mr. Rokita. I thank the gentleman for yielding back.
    The gentleman's time is expired.
    Let me recognize the ranking member, Mr. Yarmuth, for 
closing remarks.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Mick, thanks so much for being here.
    Just for the record, when I--as you know, when I was 
alerted that you were a possible appointee for this position, I 
wrote a note to the transition team saying that I consider Mick 
Mulvaney a man of the highest character, principle, and 
intelligence, and one with whom I agree on almost nothing. But 
that as ranking member on the Budget Committee, that I know we 
would have an amicable working relationship and a mutually 
respectful one, and I haven't changed my opinion about any of 
that.
    Thank you so much for your work and your appearance, and I 
look forward to discussions as we go along.
    Mr. Mulvaney. If I may, Congressman, I want you to know 
that I have protected that secret with my life over the course 
of the last several months. I am glad that you were the one to 
out that and not me.
    Mr. Yarmuth. Absolutely.
    Mr. Mulvaney. I do appreciate those words and also your 
efforts during the transition process. Thank you.
    Mr. Yarmuth. Thanks.
    I yield back.
    Mr. Rokita. I thank you the gentleman. Secrets. Secrets.
    I am going to use my closing, Director Mulvaney, to clean 
up some of the record, if I could, or establish more of the 
record.
    I don't think we have talked much about the debt ceiling 
concept, and I know you were worried we were going to get to 
that. So let me ask a few questions in that regard.
    Mr. Mulvaney. Sure.
    Mr. Rokita. Of course, the statutory debt limit was 
reinstated on March 16, 2017, at just under $19.809 trillion. 
Treasury Secretary Mnuchin at that time informed Speaker Ryan 
beginning that day, the outstanding debt of the United States 
would be at the statutory limit immediately in that he would be 
using, quote, unquote, ``extraordinary measures'' to 
temporarily continue to meet all the Federal Government's 
financial obligations.
    Mnuchin also wrote that he was declaring a, quote, ``debt 
suspension period,'' or DISP, to allow him to use additional 
extraordinary measures to extend the debt limit, and that is 
something his predecessors had declared under similar 
circumstances, you remember as well.
    He encouraged the Congress to protect the full faith and 
credit of the United States by acting to increase the statutory 
debt limit as soon as possible.
    So the two questions, I guess, would be: Does the 
administration have a preferred legislative approach to the 
debt limit issue; for example, specific amount or specific time 
period? And then, secondly, how soon do you think we need to 
act?
    Mr. Mulvaney. Thank you for that. Very briefly, the answer 
to your first question is, no, we do not have a final stated 
policy yet. I can tell you that I met for about an hour 
yesterday with Secretary Mnuchin to discuss this exact topic. 
We look forward to Director Cohn, who is the third person of 
the troika, so to speak, that sort of run lead on economic 
issues within the West Wing, within the White House returning 
from overseas so we can continue that conversation.
    We look forward to working with the Hill on the best way to 
go about that.
    Secondly, regarding the timing, my understanding is that 
the receipts currently are coming in a little bit slower than 
expected, and you may soon hear from Mr. Mnuchin regarding a 
change in the date.
    Mr. Rokita. Okay. I thank the gentleman for coming. Again, 
let me add my appreciation for what you are doing. I thank the 
President for prioritizing, as he had done in this budget, and 
I appreciate the respect he has given us to do our Article 1 
duty.
    I think, Mick, the President is lucky to have you, the 
administration is happen to have you, and, indeed, the country 
is lucky to have you in this position. Thank you for being here 
today.
    Mr. Mulvaney. Thanks, Todd, I really appreciate it.
    Mr. Rokita. With that, the meeting is adjourned.
    [Whereupon, at 1:03 p.m., the committee was adjourned.]
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