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



 
                      THE PRESIDENT'S FISCAL YEAR
                              2019 BUDGET

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

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

          HEARING HELD IN WASHINGTON, D.C., FEBRUARY 14, 2018

                               __________

                            Serial No. 115-9

                               __________

           Printed for the use of the Committee on the Budget
           
           
           
           
           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]        






                       Available on the Internet:
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                U.S. GOVERNMENT PUBLISHING OFFICE
                   
30-531                   WASHINGTON : 2018                                 
                            
                            
                        COMMITTEE ON THE BUDGET

                    STEVE WOMACK, Arkansas, Chairman
TODD ROKITA, Indiana, Vice Chairman  JOHN A. YARMUTH, Kentucky,
DIANE BLACK, Tennessee                 Ranking Minority Member
MARIO DIAZ-BALART, Florida           BARBARA LEE, California
TOM COLE, Oklahoma                   MICHELLE LUJAN GRISHAM, New Mexico
TOM McCLINTOCK, California           SETH MOULTON, Massachusetts
ROB WOODALL, Georgia                 HAKEEM S. JEFFRIES, New York
MARK SANFORD, South Carolina         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

                       Dan Keniry, Staff Director
                  Ellen Balis, Minority Staff Director
                  
                                CONTENTS

                                                                   Page
Hearing held in Washington D.C., February 14, 2018...............     1
    Hon. Steve Womack, Chairman, Committee on the Budget.........     1
        Prepared statement of....................................     3
    Hon. John A. Yarmuth, Ranking Member, Committee on the Budget     6
        Prepared statement of....................................     8
    Mick Mulvaney, Director, Office of Management and Budget.....    10
        Prepared statement of....................................    13
    Hon. Gary Palmer, Member, Committee on the Budget, reports 
      submitted for the record...................................    45
    Hon. John Faso, Member, Committee on the Budget, questions 
      submitted for the record...................................   138
    Mick Mulvaney's responses to questions submitted for the 
      record.....................................................   139


                THE PRESIDENT'S FISCAL YEAR 2019 BUDGET

                              ----------                              


                      WEDNESDAY, FEBRUARY 14, 2018

                          House of Representatives,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1334, Longworth House Office Building, Hon. Steve Womack 
[Chairman of the Committee] presiding.
    Present: Representatives Womack, Black, Diaz-Balart, Cole, 
McClintock, Sanford, Palmer, Renacci, Johnson, Lewis, Smucker, 
Ferguson, Grothman, Woodall, Arrington, Smith, Yarmuth, Lee, 
Lujan Grisham, Moulton, Higgins, DelBene, Wasserman Schultz, 
Jayapal, Carbajal, Jackson Lee, Jeffries, and Khanna.
    Chairman Womack. Good morning. The hearing will come to 
order. Welcome to the Committee on the Budget's hearing on the 
President's fiscal year 2019 budget. Today we will hear 
testimony from the director of the Office of Management and 
Budget, the honorable Mick Mulvaney. During our hearing, we 
will hear directly from the director of OMB, and we appreciate 
you being with us here today, Mr. Director. Your insight will 
be very helpful in our understanding.
    Receipt of the President's budget each year marks the 
beginning of the Federal budgeting process, or budget season as 
we like to call it, and the White House officially kicked it 
off on Monday. While Congress ultimately controls the purse 
strings, the President's budget request is still an important 
document for lawmakers to consider along the way.
    Each fiscal year, the administration's budget documents the 
President's policy and spending priorities. These 
recommendations to Congress are important for the Budget 
Committees in both chambers to consider as work crafting the 
budget resolution begins in earnest.
    Without question, there are plenty of worthwhile ideas 
included in the President's budget this year. First, I am 
encouraged that the administration prioritizes and boosts the 
investment in our national defense. With mounting threats to 
our security both at home and abroad, it is critical that we 
provide for a strong and capable military. And we must ensure 
our warfighters have the necessary resources and training to 
complete the missions with which they are tasked today and 
those with which they will be tasked in the future.
    I am also glad to see the administration confront head on 
the issue of opioid abuse, which has turned into a nationwide 
epidemic. More than 115 Americans die every single day from 
opioid overdoses, so we can all agree this is a serious, 
rampant problem that can no longer be ignored.
    Additionally, the administration's budget request calls for 
enhancement in security at America's borders, reflecting 
President Trump's commitment to address our broken immigration 
system. And there is no question that America's infrastructure 
is in dire need of attention.
    This request also proposes funding for an infrastructure 
overhaul. More detail on the initiative was also released 
earlier in the week. I welcome President Trump's plan to cure 
decades of neglect and ultimately build a safe, fast, reliable, 
and modern infrastructure to meet the needs of the American 
people and the economy.
    Last in this list of examples but certainly not least, I 
appreciate that the President's budget, an American budget, 
acknowledges fiscal reality and takes significant steps toward 
reducing the deficit. The President's budget projects $3 
trillion in deficit reduction, including $1.7 trillion in 
mandatory savings, bringing us to within 1 percent of GDP in 
the 10-year window.
    The budget emphasizes a need for efficient, effective, and 
accountable use of taxpayer dollars and takes real steps to 
target waste, fraud, and abuse in government. These are all 
good things for our country, and we will certainly consider 
embracing the President's best ideas.
    However, it is important to remember that even with a 
positive economic impact of tax reform that is being felt 
across the Nation by hardworking Americans, the financial state 
of our country is still undeniably grave, and the President's 
budget certainly highlights this sobering reality.
    And while there are many worthy policy proposals in this 
budget request, it is also very telling of our financial 
situation that the proposal does not get to balance. It should 
always be the goal to balance our books. Every year we neglect 
to do so, the task becomes more daunting and more difficult.
    In order to slow down and ultimately pay down our Nation's 
unsustainable debt, we have to make some tough choices. And so, 
our work writing the budget resolution begins within the House 
Budget Committee. Balance does remain the ultimate goal. 
However, today and in the coming days our Committee will 
carefully consider the President's suggestions and work to 
incorporate many of his budget ideas.
    Thank you for this initial time, and with that I will yield 
to the Ranking Member, the gentleman from the Commonwealth of 
Kentucky, Mr. Yarmuth.
    [The prepared statement of Chairman Womack follows:]
    
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    Mr. Yarmuth. Thank you very much, Mr. Chairman. Welcome, 
Director Mulvaney. I appreciate your coming here to testify on 
the President's budget and to answer our questions, and I would 
like to publicly thank you as well for coming to meet with our 
Democratic members yesterday. I know it was valuable for us and 
I hope it was good for you too.
    Last year when we received the President's budget for 2018, 
I described it as a betrayal with a long list of broken 
promises, which it was. This year, I am going to start with the 
positive. In this budget, the Trump administration has done 
something extraordinary. They have finally realized that you 
cannot balance the Federal budget by cutting taxes, you cannot 
balance the Federal budget by cutting spending, and you cannot 
balance the Federal budget through gimmicks. God knows we have 
tried all of those.
    So with this new acknowledgement or enlighten, whichever 
the case may be, maybe there is hope that we can work together 
in a bipartisan way to advance a responsible budget that truly 
addresses the needs and priorities of the American people, but 
it cannot start with the values reflected in the rest of the 
Trump budget.
    Let's be clear: this is an irresponsibly extreme budget 
that reflects a disdain for working families as well as a 
disheartening lack of vision for a stronger society. This 
budget calls for massive cuts to healthcare, antipoverty 
programs, and investments in economic growth all to blunt the 
deficit-exploding impact of the President's tax cuts. It takes 
aim at the bipartisan budget agreement the President signed 
into law just last week, cutting non-defense spending in 2019 
by at least $57 billion below the level called for in the 2-
year agreement.
    This is funding that would go to veterans' programs, law 
enforcement, diplomatic operations, education, research, and 
other investments to boost jobs, revitalize communities, and 
improve economic security.
    Beyond 2019, the budget sets nondefense spending on a steep 
and steady downward trajectory so that by 2028, nondefense 
discretionary funding would be cut by 33 percent below the 
bipartisan budget agreement level for this year, and that is 
without accounting for inflation. That is such a dangerously 
low level of funding, it would leave the government unable to 
carry out its basic functions.
    The budget, then, goes directly after mandatory spending, 
brutally targeting programs that help Americans living paycheck 
to paycheck. It cuts $263 billion from mandatory programs that 
safeguard basic living standards, including a $214 billion cut 
to the Supplemental Nutrition Assistance Program that protects 
44 million people including 20 million children from going 
hungry each night.
    It takes $72 billion from disability programs, including 
Social Security and more than half $1 trillion from Medicare, a 
full betrayal of the promises the President made to the 
American people not to touch either program.
    And despite the public's outright rejection last summer, 
the President's budget continues the Republican obsession with 
dismantling and destabilizing healthcare for millions of 
Americans. It makes another attempt to repeal the Affordable 
Care Act and replace it with an already-rejected plan that will 
leave millions more people without meaningful health coverage 
and weakened protections for people with pre-existing 
conditions.
    As part of this continuing attack, the budget cuts $1.4 
trillion from Medicaid, jeopardizing care for seniors in 
nursing homes, children with disabilities, and low-income 
families.
    Even where this budget claims to increase investments, it 
fails. This proposal pretends to make infrastructure a priority 
with $200 billion in Federal funding, a figure that falls 
embarrassingly short of our Nation's infrastructure needs. But 
then the budget simultaneously cuts $122 billion in highway 
programs while severely cutting or eliminating other 
infrastructure investments our cities and states need.
    But even after all of these reckless cuts, the budget 
cannot hide the true devastation of the tax cuts, so it once 
again relies on unrealistic economic assumptions to make its 
deficit projections look less ominous. It counts $800 billion 
in deficit reduction from some magical policy growth effects, 
even though independent economists predict those high growth 
rates are not sustainable given trends in our labor supply.
    So while this budget includes some honesty by acknowledging 
that their tax cuts did not pay for themselves, it turns to 
gimmicks to hide the full consequences of these cuts while 
decimating critical investments the American people need.
    The Federal budget is about choices, choices that have 
major impacts on the American people. Not a single millionaire 
would have gone hungry without the new tax cuts my Republican 
colleagues just gave them, but many American families will not 
be able to put food on the table under this budget. Others 
would not be able to afford healthcare or housing or to heat 
their homes in the winter. These are choices my Republican 
colleagues are making and they are reprehensible.
    Our task here is to build a stronger society and to do what 
we need to do that, we need investments in education, 
healthcare, job training, innovation, infrastructure, and more. 
If you believe America is better off by gutting these 
investments, you fundamentally misunderstand the true source of 
our Nation's strength. I yield back.
    [The prepared statement of Mr. Yarmuth follows:]
    
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    Chairman Womack. I thank the gentleman. In the interest of 
time, if other members have opening statements they would like 
to make, I ask that you submit them for the record.
    Chairman Womack. And now, I would like to introduce and 
recognize the director of the Office of Management and Budget, 
Director Mulvaney. We appreciate your time today, Mr. Director. 
The Committee has received your written statement. It will be 
made part of the formal hearing record. You will have 10 
minutes for your opening remarks and the floor is yours.

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

    Mr. Mulvaney. Thank you, Chairman. Thank you, Ranking 
Member Yarmuth, former Chairwoman Black. It is good to be back 
at the Committee. Thank you very much for having me, giving me 
the opportunity today to talk a little bit about the 
President's budget. I am not going to read the opening 
statement that we have submitted for the record. I am going to 
just talk very briefly about sort of an introduction, then we 
will move straight to your questions.
    When I was before you last year, it was an unusual year. We 
had sort of broken the budget into two pieces. We had a skinny 
budget and a discretionary budget only first, and then sort of 
a fuller budget later in last spring. That is not unusual in a 
transition year.
    This year has been another unusual year in that the 
Congress and the White House negotiated and signed a caps deal 
as recently as, I think, Friday afternoon or early Friday 
morning, which as you can imagine threw all of the budget 
process in a good bit of turmoil.
    So, what we have actually brought you today is almost two 
budgets. What we have submitted to Congress is an addendum to 
the 2018 budget, which purports to take the budget we had 
previously submitted to you in the spring and bring up the 
spending to the levels of the caps deal that was executed a 
couple days ago.
    In addition, we have also sent you the original 2019 budget 
we were working on until Friday that was written to last year's 
caps level. I believe it was 1091 or 1092. However, that 
changed as well. We have decided not to write an addendum to 
the 2019 budget that takes us all the way up to the caps, but 
instead spends less than the caps. Why is that? Because this 
is, as everyone is quick to point out, a messaging document 
from the administration to the legislature.
    And what is the message by doing those two budgets? A 
couple different messages. Number one, we do not believe you 
have to spend all of the money. In fact, you saw the 
President's tweets over the weekend that said that we believe 
that we had to spend more or pay out more in non-defense 
discretionary during the negotiations in order to get the 
defense spending that we wanted as the administration, and we 
do not think you have to spend all of that money. That is 
reflected in the 2019 budget and the 2019 addendum.
    However, if you do, you also now have the 2018 budget and 
the 2018 addendum that does spend all the way up to the caps. 
Keep in mind, when you look at the two numbers, the caps are 
not that different. It is a $10 billion difference from one 
year to the next.
    So if you decide going into the omnibus appropriation that 
you are going to have I believe before the end of March and 
decide to spend up the caps, which we fully expect that you 
would, you have a guide from the administration as to how the 
administration would purport to spend that amount of money.
    Between March and the end of the fiscal year in September, 
if you decide to, again, spend up to the caps on 2019, then you 
could use the 2018 number as a guide because the numbers are 
not that different. If, however, intervening circumstances 
prompt you for whatever reason to not want to spend all the way 
up to the caps, then you also have guidance already in your 
hand from the administration on how we would spend that money. 
That is the 2019 budget with the 2019 addendum. So that first 
message is that you do not have to spend it all, but if you do, 
here's how we would spend it.
    The second message behind this budget is pretty 
straightforward, which is that we are not condemned to year 
after year after year of trillion-dollar deficits. There is a 
way to get off of that ride, and that is the larger, 
overarching message of this budget that there is probably more 
than one way, but we have offered at least one way to get off 
of that cycle of trillion-dollar deficits. So as you start to 
look into the out years in this budget, you see that we 
dramatically reduce the overall size of the deficit and the 
debt as a percentage of GDP.
    No, it does not balance. I believe that I said to you when 
I was here last year that we had worked very hard last year to 
try and show a budget that balanced in 10 years, and I also 
pointed out, as many of you have individually, especially in 
the Republican side of the room, that if we did not start to 
make changes earlier rather than later, it would become more 
and more difficult to balance the budget every single year. And 
I think I actually told a couple of folks last year that I was 
unlikely to be able to balance the budget this year, and that 
turned out to be the case.
    In hindsight, I probably could have brought you a budget 
today that balanced, but it would have been made up of funny 
numbers. I did not want to do that. I wanted to give you a 
budget that you could look at and know the numbers were solid, 
know that they were truthful, know that there was a lot of 
transparency in this budget, and know that this budget, 
especially for 2018 and 2019, reflects the actual physical 
condition of the country. So even though it does not balance, 
we are extraordinarily proud of it.
    And to that end, by the way, I read in the newspapers this 
morning that someone reported that I would not support this 
budget if I was in Congress. That is absolutely false. I 
absolutely and without reservation support this budget. I think 
someone was making a reference to the caps deal. This is a 
really good budget. You all may be able to do a little bit 
better than this.
    The Chairman and I have already talked about things that 
might be done in addition to it or instead of it. But we are 
very proud of this budget that the administration and I 
wholeheartedly support it and endorse it and would vote for it 
if it would ever come to the floor, which I understand was my 
job when I was here.
    Anyway, with that, Mr. Chairman, I am happy to go over the 
details over the course of the next couple of hours, but we do 
welcome the opportunity to come in here and tell you and show 
you, give you examples of the specific message that the 
administration has for the Congress when it comes to the fiscal 
year 2018 and the fiscal year 2019 budget, and I thank you very 
much.
    [The statement of Mick Mulvaney follows:]
    
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    Chairman Womack. Thank you, Mr. Director, for your opening 
remarks, and, again, we appreciate you being here today. And 
you are going to get an opportunity, I am sure, because I have 
absolute confidence in the people to my right and my left that 
they are going to ask some really direct questions and give you 
an opportunity to expound. And I am going to lead off here this 
morning.
    I am glad to hear you talk about deficits and debt. 
Because, at the end of the day, what we do with our budgets and 
how we appropriate the dollars that fund our government has to 
be checked by what we are doing to future generations insofar 
as running up deficits and piling up more debt that will surely 
fall on future generations.
    And I am reminded of the many times the people on my side 
of the aisle have talked about shrinking the size of 
government, the cost of government, and giving some relief to 
the fact that there is just a certain amount of money out there 
and sometimes we kind of overpromise our government to our 
people.
    But generally speaking, we talk about this in terms of 
numbers, and sometimes these numbers are so large. In fact, 
they are often so large that they just fly over the head of 
most people because of the number of zeroes and the number of 
commas in these numbers. But what is our moral obligation as 
the legislative branch of government who has the Article I 
authority to fund this government? What is our moral obligation 
to make sure that we get our arms around these deficits and 
debt?
    Mr. Mulvaney. I am disappointed Mr. McClintock stepped out 
for just a second, because I am actually going to use one of 
his lines that I have always liked, which is, ``There is no 
such thing as a deficit. It is simply a future tax increase 
delayed.'' If you assume that we are eventually going to pay 
all of our debts, which I think everybody in the room assumes 
that we will, you are going to have to pay for it at some time. 
And since the only way the government raises money is through 
taxes, then what we are really simply doing is spending money 
now that we are going to raise in the future.
    So I think the moral obligation there is to do as little of 
that as you possibly can. Does it disappoint me that we do not 
balance in 10 years? It does. Do I think it is a failure 
because of that? I do not. This budget proposes $3 trillion in 
savings against the baseline, which is essentially what we 
would spend about for the budget. That is the second largest 
production spending of any administration budget in history 
exceeded only by last year's budget.
    There is $1.7 trillion here. Did I say billion? I meant 
trillion. I am sorry. They run together after a while. We saved 
$1.7 trillion against the baseline in mandatory spending. This 
administration has been accused of not being willing to tackle 
the difficult question of mandatory spending. $1.7 trillion of 
mandatory proposals here in this budget, the largest ever by 
any administration, so we do make some difficult decisions.
    Is it easier to spend money than it is to cut? Absolutely. 
In fact, I did it. We went through the plus-ups when we took 
the 2018 budget and spent up to the caps as part of the 
addendum and took the 2019 budget and almost spent up to the 
caps.
    I have got to tell you, those meetings are a lot more fun 
when you get to spend money than they are when you have to cut, 
but this is not supposed to be fun. This is supposed to be 
responsible and honest, and sometimes that does take making 
difficult decisions. Sometimes doing the moral thing does take 
difficult decisions, and we think that we have done that with 
this budget.
    We look forward to working with you on yours, because I 
know you all are going to be doing the same thing.
    Chairman Womack. There is a difference between cutting and 
slowing the growth, although those terms sometimes in the way 
we approach the numbers are used interchangeably. Does it not 
make sense that we have got a slow growth first, and if so, how 
in the world do we do it particularly on the side of spending 
that is on autopilot?
    Mr. Mulvaney. It does. I am always fascinated in 
Washington, D.C. that the word ``reduce spending'' does not 
seem to exist. It is ``gutting'' and ``slashing'' and 
``cutting,'' but we do seem to use a different language here.
    Plus we always compare spending against the baseline, that 
if you spend up to the baseline, that is not an increase. It is 
not a reduction, although back home if we spent more money one 
year than we did the previous year, we would call that 
increase. Here, sometimes we call it a freeze or we actually 
call it gutting or cutting. You are absolutely right.
    In fact, if you look at our proposals, especially in the 
mandatory area, Mr. Chairman, we continue to spend more money 
from one year to the next. We simply slow that spending. 
Medicaid is a good example in terms of the proposals that we 
have. We can talk more today about Graham-Cassidy and about our 
proposals for how fast healthcare programs should grow.
    And I would contend to you that you are absolutely correct: 
growing something more slowly than it might otherwise grow does 
not constitute a cut or a slash or a gutting. It might instead 
be the responsible thing to do.
    Chairman Womack. The CBO, in their last economic forecast--
this is June of 2017--expected economic growth to average under 
2 percent, at 1.9 percent over the next 10 years. Your economic 
forecast counts on 3 percent sustained growth in that budget 
window.
    Specifically, because I believe in my heart that the 
interest rate environment is going to likely rear its ugly head 
if, in fact, we accelerate growth in this economy, how do you 
anticipate higher economic growth impacting interest rates and 
the impact it will have on the net interests on our debt?
    Mr. Mulvaney. As we did last year, we think we have made 
some very reasonable and defensible estimates and assumptions 
regarding economic growth. We have slightly ratcheted up our 
estimates for economic growth in the next couple of years from 
last year's budget. Keep in mind, I do remember being in here 
last year and even taking a little bit of heat from my former 
delegation mates from South Carolina for having overly rosy 
economic assumptions that in the real world we actually beat.
    As a result of the economic performance of the economy of 
the Nation for the last 12 months, we have made some slight 
increases in our assumptions for the next couple of years, some 
slight reductions in our assumptions in the out years as we 
think we bring them more in line with reality.
    We have made some changes to our interest rates, but we 
still think these are entirely defensible. They are slightly 
lower than they were last year, simply because we think the 
environment has certainly been that interest rates are lower 
than everybody thought that they would be.
    In fact, if you read some of the economic literature, what 
you will discover is that there is a discussion worldwide right 
now as to where the inflation is. We saw a little bit of an 
uptick this morning, but still I think economists around the 
world would tell you that they are surprised at the low rate of 
inflation and the corresponding low rates on government debt, 
keeping in mind that our assumptions are still well within 
where we are seeing debt today. So, we think the assumptions 
continue to be defensible.
    And importantly, Mr. Chairman, they generate something 
absolutely critical. They generate more money for the Federal 
Government. We took a lot of heat as an administration and you 
did as a legislature for passing the tax bill that supposedly 
would run up the deficit.
    And the fact of the matter is that our numbers indicate 
that over the course of the 10 years that we have--it is 
technically a 9-year window because the CBO has not updated its 
numbers yet--as a result of the tax bill, we will generate more 
money for the Federal Treasury than we would have but for the 
tax bill.
    In the final year that we have some comparisons, which is 
2027, that policy combined with the other administration 
policies generate almost $350 billion more in government 
receipts in 2027 and that number continues to increase outside 
the budget window.
    So we absolutely believe that what we have done to try and 
fix the economy to get away from those slow rates of growth, 
the Obama economy as we like to call it, of 1.6, 1.9 percent 
growth forever, and move to a more stable and more traditional 
growth rate of 3 percent not only is good for everybody in the 
country, it is good for the government.
    Chairman Womack. Growing the government creates savings 
because it provides more revenues for us to be able to play 
down on this deficit structure, but there is always a net 
effect of it because you grow and then you have the potential 
for the interest rate hike, and then so there is a net effect 
in there. Do you have numbers that show maybe on average what a 
certain amount of growth in the GDP would do as opposed to a 
certain amount of growth in the interest rate environment?
    Mr. Mulvaney. We do, and you and I have had a chance to 
talk about this, and I think I talked about it with both 
parties in our private meetings before this. Our estimates are 
that an additional 1 percent increase in GDP over the course of 
the 10-year window reduces the deficit by roughly $3.25 
trillion. About 2.5 of that looks to be additional revenue to 
the government and the balance is on reduced expenditures by 
the government. Keep in mind if you have a healthy economy for 
a long period of time, we expect fewer people to need means-
tested welfare programs.
    So not only do we generate more money in for the government 
through a healthy economy, we have to spend less to help take 
care of people because the economy is allowing them to take 
care of themselves, so a 1 percent increase across the window 
in GDP and the growth of the economy about $3.25 trillion. We 
weigh that against a 100 basis points or a 1 percent increase 
in interest, which across that same window generates about an 
addition $1.6 trillion in interest costs.
    So clearly the challenge is to grow the economy without 
adding dramatically to inflation or to the costs of borrowing 
money. We believe that we are in a position to do that. We have 
already started to see that. Again, there are some questions as 
to why inflation is not higher than it already is, but we do 
believe that some of the policies that we have undertaken will 
allow us to keep inflation under control and also the slack in 
the labor market will allow us to do the same thing.
    So, yes, all things considered, how do you pay down this 
debt in the long term? You have to grow your way out of it. You 
combine that growth with fiscal discipline, spending restraint. 
The good news here, ladies and gentlemen, is that we have a 
model on how to balance the budget because we did it; both 
parties take credit for it in the 1990s.
    We grew the economy faster than we thought we otherwise 
would and we kept spending under control. You have to grow your 
revenues faster than your expenses. The money you take in has 
to get bigger, faster than the money that is going out. That is 
how you end up paying down the deficit and that is how you end 
up paying down the debt.
    Then we think that the policies the administration has 
already put forward have started to do that and the policies 
that we put forward again in the budget will continue that 
trend.
    Chairman Womack. Thank you, Mr. Director. I am out of time. 
I yield now to the Ranking Member, Mr. Yarmuth.
    Mr. Yarmuth. Mr. Chairman, I am going to defer to my 
members and question last.
    Chairman Womack. With that, Ms. Lee of California.
    Ms. Lee. Thank you, very much. Thank you, Mr. Chairman, to 
our Ranking Member, and thank you, Mr. Director, for being 
here. Good to see you. First, let me just say, this budget is 
really shameful. It dismantles our basic living of standards 
that Americans have turned to for decades and pushes millions 
of people into poverty. It will destroy people's lives.
    Now, let me list a few of these cuts. You have cut $213 
billion in SNAP, $72 billion in disability programs, $3 billion 
in rental assistance. You cut in half adult employment and 
training programs. You eliminate, mind you, the Workforce 
Innovation Fund. You cut education by 10 percent. You eliminate 
the Minority AIDS Program, and at the Office of Minority 
Health, you eliminate this program specifically for people of 
color to being to help close these health disparities. You just 
totally eliminate these programs. You eliminate TIGER grants 
which have created thousands of jobs. You cut $1.4 million in 
Medicaid and you eliminate education programs important to low-
income and students of color like GEAR UP.
    It is hard to imagine how you could be proud of this 
budget, Mr. Director, especially since these cuts are to pay 
for the tax cuts for the wealthy billionaires, millionaires, 
and corporations. It is clear to me that you do not care about 
paying down the debt or the deficit, because this budget really 
shows exactly what this tax scam was all about.
    So let me ask you about a family, for instance, in 
Kentucky. I think the minimum wage there is about $7.25 an 
hour, $7.50 an hour. A family of four, $24,000, $25,000. What 
in the world is this going to do that family who is struggling, 
working each and every day to take care of their family, then 
you come up with this kind of a budget?
    And secondly, I want to ask you about this military parade 
that the President is proposing, you know, the parade that is 
very similar to those held in authoritarian countries like 
North Korea. How much is that parade going to cost and where is 
that money coming from?
    Mr. Mulvaney. Thank you, Congresswoman. On to the second 
question first, we actually had military parades in this 
country before. I think we had one as recently as the 1990s or 
maybe more recently than that. I have seen various different 
cost estimates from between I think $10 million and $30 million 
depending on the size of the parade, the scope of it, the 
length of it, those types of things. We have not accounted for 
it in this year's budget simply because it has come up at the 
last minute, so we will continue to work with you folks if we 
decided to push forward with that initiative.
    Ms. Lee. No, if who decides to push forward? Do you mean 
the President?
    Mr. Mulvaney. Yes, ma'am. That is who I work for.
    Ms. Lee. Oh, okay. I am sorry. I thought you said, ``we.''
    Mr. Mulvaney. ``We'' being the administration. I am sorry.
    Ms. Lee. Oh, okay.
    Mr. Mulvaney. Yeah, no.
    Ms. Lee. I am sorry.
    Mr. Mulvaney. But of course, you have to appropriate funds 
for it and we have to find funds for it that you have already 
appropriated.
    Ms. Lee. That would be an estimate, $10 to $11 million----
    Mr. Mulvaney. Again, they are very preliminary, so it is 
between 10 and 30 depending upon the length. Obviously, an hour 
parade is different than a 5-hour parade in terms of the cost 
and the equipment and those types of things. So, you have asked 
a straight question. I have tried to give you a straight 
answer.
    Ms. Lee. Okay.
    Mr. Mulvaney. We have not done much research on it yet.
    Ms. Lee.--I just wanted to verify that so we can----
    Mr. Mulvaney. Regarding pushing people into poverty, your 
family in Kentucky, for example. Congresswoman, it probably 
does not come as a surprise, Republicans and Democrats do see 
things a little bit differently. We see the best welfare 
program as a job and we see a healthy economy as a way to push 
people out of poverty, allow them to lift themselves out of 
poverty. The reason you see reductions in SNAP and TANF and the 
other types of programs is, yes, we offer reforms, improvements 
to the programs that we think can work better, but we also 
assume that there are fewer people on there. I would think that 
would be a goal that we all share.
    If you propose continual increases in SNAP and TANF, are 
you not just assuming that you are never solving the problem? 
In fact, I think we would all want to see a world where we do 
not even have to spend any money there, because no one should 
need the program in a perfect world. And we do not get there 
with this budget, but we do think we move in that direction. 
That is one of the reasons you see less spending on those types 
of programs.
    Ms. Lee. But, sir, $7, $8 an hour people need a little bit 
of help from their government. First of all, in terms of job 
training, in terms of job retraining, you are cutting all of 
these programs in the Department of Labor. You are cutting out 
the TIGER grants. You are cutting funds that actually create 
jobs and economic growth. And so, this budget goes in the 
opposite direction for people who are living on the edge. And 
believe me, I understand what SNAP is about. I formerly was a 
SNAP recipient, because I had needed that bridge over troubled 
water raising my kids. It was not permanent. It was just so I 
could get through what I was going through, and that is the 
majority of people in this country.
    And so to take that away now, and what you want to do is 
put them in a Depression-era box with food that is high in 
sodium and sugar content, it is a way that you are trying to 
make sure that we do not believe that they have the dignity 
that they deserve the way you are reforming and trying to put 
SNAP into a box now. And I think it is a shame and disgrace 
that you are treating low-income and working families in this 
manner.
    Chairman Womack. Thank you. Mrs. Black from Tennessee?
    Mrs. Black. Thank you, Mr. Chairman, and thank you, 
Director Mulvaney, for being here with us today. This obviously 
is a very important subject for us to discuss and that is 
because if we continue to spend the way we are, we are not 
going to be able to afford any of the programs.
    But I want to go to the idea of cut versus reform. As the 
previous Budget Chair, and now we have a distinguished member 
sitting in the Chair seat; I know that he will continue to look 
at those kinds of reforms that we talked about in here last 
year. And we had 11 of our authorizing committees take a look 
at each one of their areas of authorization to look at possible 
reforms. You know, when programs are out there for 30 years, 
they maybe need to be reformed. They need to be looked at.
    And one of those programs that I do think needs to be 
reformed in Medicaid. Medicaid was originally put into place 
for those that were disabled and aged and children, and now we 
see that we have people who are able-bodied workers on 
Medicaid, which only takes away from those that the program was 
originally intended for and we have less and less opportunity 
to take care of people that truly, truly do need those 
services.
    And so, what I wanted to ask you was in the President's 
budget, do we look back and say, ``Is there a way to reform the 
Medicaid that is currently in place to actually have that 
program be there for those that are the most in need, and do 
you put a work requirement in there?'' And I want to say it is 
not just to save money. We obviously will say money, but there 
is something about a dignity of life and the loss of that 
dignity of life when people are not working. And so do you have 
a proposal for a work requirement in the program?
    Mr. Mulvaney. We do. In fact, we have work requirements 
across various different welfare programs. We have proposed 
that this is actually one of the best ways to make sure those 
programs are available for folks who truly need it. We could 
talk about rent support. We could talk about TANF. We could 
talk about SNAP if you like. We could talk about Medicaid. But 
we try and bring this able-bodied worker concept to a lot of 
the welfare programs so that folks who can work do.
    We need folks to go back to work. You talk about the 
dignity of work. You are absolutely right. The country needs 
those folks to go back to work. I got asked last year, ``What 
would you tell somebody who wants a job but cannot find one?'' 
I said, ``Thank you. You are the people who are going to save 
the Nation.''
    The folks who want to work are the people that we are 
relying on to grow the workforce, to grow the economy, to grow 
the GDP. We do need folks to go back to work. I think we have 
deemphasized the dignity of work for generations now and I 
think the budget starts to move things in a different 
direction.
    More writ, more large, Congresswoman, on Medicaid, what we 
assume is the Graham-Cassidy bill. We could talk about that if 
you would like. We also changed some of the growth rates there 
if you would like to talk about that. And by the way, as part 
of that, we give the states a level of control over whether or 
not they want to do work requirements as well.
    Mrs. Black. That was my second question, is that I believe 
that one size does not fit all and we are culturally different 
from one side of this country to the other. And so, I did have 
that as a question, is what do you have in there for state 
flexibility?
    Mr. Mulvaney. We anticipate a dramatic improvement or 
expansion of state flexibility. I was in the state legislature 
in both the House and the Senate before I came here and I can 
assure you that, those of you who have served, probably one of 
the things you recognize, the difference between there and here 
is that it works back home. Somehow, we managed to muddle 
through all the partisan divide and you actually get state 
governments that work.
    They also know what is best for their state. I was 
tremendously frustrated year in and year out in the South 
Carolina legislature when mandates would come down from 
Washington and we would look at them and go, ``This is just not 
tailored to the folks who need this care in South Carolina.'' I 
do not know why we automatically assume that state legislatures 
do not want to take care of folks back home just as much as we 
do.
    I also do not know why we think that I, being from South 
Carolina, understand the folks in Kentucky or the folks in 
California, Tennessee, better than the folks who live there. 
So, we do try and move a lot of that decision making to the 
states.
    Mrs. Black. Mr. Director, I only have a brief period of 
time left and I will probably have to submit the rest of this 
for the record, but I am concerned about the medical equipment 
competitive bidding, and we are losing more and more of our 
providers and less and less services that are available to 
those in need. I know there is an interim final rule that is 
pending at OIRA, and I would like to know more about where we 
are on that rule to get this moving forward so that we can open 
that back up again.
    Mr. Mulvaney. And I apologize, Mr. Chairman. I cannot see 
the time, so I do not know how long I have to respond to that.
    Mrs. Black. Forty-one seconds.
    Mr. Mulvaney. Thank you. Very quickly, we are aware of the 
interest that many folks from both sides of the aisle have 
about the DME rule. That is under consideration right now at 
OIRA, the Office of Information Regulatory Affairs. It is not 
appropriate for me to comment on the status, but we are working 
with HHS to take into consideration all of the issues that have 
been raised by members of both parties and we look forward to 
getting that rule out expeditiously.
    Mrs. Black. Thank you. I yield back.
    Chairman Womack. Young lady from New Mexico, Ms. Lujan 
Grisham.
    Ms. Lujan Grisham. Thank you, Mr. Chairman, and welcome to 
the Budget Committee again, Mr. Mulvaney. And while I certainly 
respect your work in putting together a budget, I think that 
with many of my Democratic colleagues in particular, I am going 
to disagree that the budget reflects something that you just 
said, which is we can do a budget and we can do spending that 
is both in a responsible and honorable way. And I am going to 
take, I hope, a different tact about pointing out what I think 
are some real, concerning issues.
    So this poor Committee has heard me over and over and over 
again, because I am lucky. I got to spend 30 years--I still do 
it now--doing direct services, largely in health and long-term 
care, but most of my constituents and clients, disabled adults, 
grandparents, grandparents raising grandchildren, are folks who 
need an array of services. And not just was I responsible for 
doing the budget and figuring out what those expenditures look 
like and having to demonstrate to the legislature what the 
impact on the individuals I was serving, but the impact on the 
state budget and the sustainability of those investments would 
look like.
    But, maybe a bit differently--and I do not know for sure--
but maybe a bit differently is that I spent a lot of time 
actually directly in the homes, hospitals, nursing homes, even 
went undercover in a nursing home to expose terrible care. I 
really spent time navigating those services, and in fact, I 
spent a great deal of my current career still navigating those 
services and still get calls from people in rehab facilities 
and nursing homes that need my help getting out and figuring 
out housing and a variety of services.
    And so, I want to give you a quick example. Most people 
have never read a Medicare bill. Most policymakers have no idea 
about what the deductibles and some of those benefits really 
are and are not. And so, for example, if you need dialysis, 
which is a great number of Medicare beneficiaries in my home 
state of New Mexico, a huge percentage in fact, and many of 
these Medicare beneficiaries live in rural and isolated areas 
which means they have to travel to limited dialysis clinics. 
That, when you pay your Part B deductible and then you are 
responsible for 20 percent of that Medicare cost for dialysis, 
you are spending about $18,000 a year, to be exact, $17,946.
    The average Medicare beneficiary has just over $23,000, to 
be exact, $23,500. So, simple math, you cannot afford that 
lifesaving treatment, and that is before we deal with figuring 
out your transportation.
    And when we talk about people's dignity, I have to help 
them find a ride. I have to figure out what kind of food and 
services. And often these are men and women who served our 
military, who have worked their whole lives, and as you know, 
in both Medicare and Medicaid, the vast majority of individuals 
and the highest expenditures are seniors in long-term care with 
their prescription drugs and long-term care services.
    And while it does not cost as much money, the vast number 
of individuals covered by Medicaid are children. So, this whole 
notion that able-bodied adults somehow are going to save the 
Medicaid system if we do work requirement reforms, the math--
and I know you are good at this math--it does not work out, 
right? So these are not reforms when it is a $1.4 trillion cut, 
a $500 billion cut, to Medicare and Medicaid, those two 
combined, $72 billion to disability programs.
    And in my state, which everyone knows we are one of the 
poorest states in the country, so I wanted to go about this 
with a minute left a little differently. Twenty percent of New 
Mexicans live in poverty. We have some of the hungriest 
families in the country. A third of us are on SNAP. We have 
some of the highest unemployment rates in the country. We have 
a governor who, I would say, has applied many of these same 
principles to running state government and to making reforms or 
cuts, and we are in real trouble. It is the worst trouble the 
state has ever been in, ever.
    So, I was wondering. I think there is nothing better than a 
partnership, and I would like to invite you to come with me to 
New Mexico and we can go to the Navajo Nation, we can go to 
some of the most remote areas, and I want to introduce you to 
some of these very beneficiaries.
    I would provide with their support a list of things that 
keep them afloat and the kinds of things that would go away 
under this budget, and maybe you and I could think about a 
different approach to creating meaningful, lifesaving, long-
term reforms, but without creating vast more harm and, quite 
literally to that dialysis patient, a death sentence for these 
cuts in Medicare. Would you be willing to do that?
    Mr. Mulvaney. In the 1 second I have left, I would be happy 
to talk to you about it. In fact, I think it would satisfy Mr. 
Pearce who has been asking me to do that since 2011, so maybe 
we can all do it together.
    Ms. Lujan Grisham. We could do it. I would be happy to do 
it with Representative Pearce because I know he knows many of 
these same constituents. Thank you. I will be in touch, Mr. 
Chairman.
    Chairman Womack. I thank the gentlelady. To Florida, the 
gentleman from Florida, Mr. Diaz-Balart.
    Mr. Diaz-Balart. Mr. Chairman, thank you very much. Mr. 
Director, good to see you. Look, all of us who have known you 
and who have worked with you, whether we have disagreed with 
you or not in the past, and I have had both, know that you are 
a straight shooter. And I will just tell you, as a member of 
this Committee and also as the Chairman of an Appropriations 
Subcommittee, I look forward to continuing to work with you on 
these very important issues.
    You know, when you were here last time, Mr. Director, as 
the Chairman said, the CBO projected that the growth of our 
economy would be 2 percent or less for the foreseeable future. 
You mentioned some of the things that were said by some of our 
distinguished colleagues about you in that hearing. I do not 
want to point fingers, but without mentioning who they are, let 
me read some of those things.
    ``No economist will approve your budget in terms of it 
working. There will not be 3 percent growth.'' They went on to 
say that, ``This is a betrayal of the American people.'' 
Another distinguished friend and colleague said, ``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.''
    I could go on and on how it was said that in essence your 3 
percent growth projections were fantasyland projections or a 
pipe dream. So now that we know that despite very costly 
natural disasters, we are basically now at that pipe dream 
fantasy that was so impossible. But, again, I thank you for 
your leadership and for actually coming up with real 
projections.
    The leadership of the administration and your decisive 
actions have also reversed unnecessary regulations, but we are 
really choking small and mid-size businesses and I think that 
has been a major factor of that 3 percent growth. With that in 
mind, I want to go talk to you about an industry that has a 
rich history in south Florida, the cigar industry. It has been 
struggling in the face of excessive, burdensome regulations 
imposed by the FDA.
    It is my understanding, Mr. Director, that the FDA is 
currently reviewing these regulations and plans to release an 
advanced notice of proposed rulemaking in the coming months. 
So, if I may, very quickly, how is your office going to work to 
ensure that the FDA's decision on the topic is supported by 
appropriate cost benefit and regulatory flexibility analysis?
    And also, I would be grateful if you could have some folks 
from your team reach out to my team to make sure that that is 
in fact going to be happening. So kind of pose it as a question 
or as a statement, but if you would like to try to address 
that, please?
    Mr. Mulvaney. Thank you, Congressman, and I have enjoyed 
talking to you about this before and I was just checking behind 
me to make sure that this was not in OIRA similar to the DME 
question that came up, but it appears that it is not. So, it 
looks like it is still over at the FDA.
    We have absolute confidence that the FDA is going to apply 
the administration's sort of new standard when it comes to 
cost-benefit analyses, which is that we are actually going to 
do them, and we hope to actually have science and numbers 
behind them as opposed to the qualitative type of analyses that 
were done by the previous administration. I have learned a 
great deal about cost-benefit analyses in the last 13 months 
and have been extraordinarily disappointed to see what passed 
for a cost-benefit analyses under the previous administration.
    So I think one of the things you can count on with Director 
Gottlieb at the FDA is a much more rational approach to the 
process, and when it comes to OIRA, really our job is to make 
sure that that is exactly what has happened.
    We are sort of the policy police and regulatory police just 
to make sure that the folks are following the rules of the 
various agencies. We do not supplement our view for theirs. We 
simply make sure they have gone about it in the proper process. 
So we look forward to working with you and with all of the 
stakeholders on that issue going forward.
    Mr. Diaz-Balart. Mr. Director, I do too as well and I agree 
with you that I think that we have seen a different change in 
attitude in actually looking at signs versus just, you know, 
gut or whatever. So I look forward to working with you.
    I would be remiss if I did not mention that, you know, I 
also sit on the Defense Subcommittee of Appropriations, and I 
just want to thank you for recognizing and putting in your 
budget in essence what is desperately needed, which is a 
rebuilding of our national defense.
    And so, again, I also look forward to continuing working 
with you on that. This is not the only conversation. This is 
the first public conversation, but as I mentioned before, you 
have been accessible, you have been easy to deal with, you have 
been straightforward, and I look forward to further discussions 
and communications. I thank you and I yield back, Mr. Chairman.
    Mr. Mulvaney. Thank you, sir.
    Chairman Womack. Gentleman from Massachusetts, Mr. Moulton?
    Mr. Moulton. Thank you, Mr. Chairman, for the time. 
Director Mulvaney, thank you for coming back, and I especially 
appreciate your willingness to meet with Democratic members to 
hear our concerns and have an open discussion about how to 
prioritize government spending, so thank you for that.
    Mr. Director, I would like to start with a statement from a 
freshman Congressman. ``One of the most frustrating and 
disappointing lessons I have learned about Congress since I 
arrived here about a year ago is the simple truth that 
Washington does not know how to count. If we tried to run a 
private business using the same accounting methods that the 
government uses, we would likely end up in jail. This has 
brought us to a place where our spending and debt levels are 
unsustainable.'' Do you agree with that statement, Mr. 
Director?
    Mr. Mulvaney. I do. In fact, I seem to recall someone 
saying something like that. I really liked that person at one 
time.
    One of the things that you will see in this budget, 
Congressman, that I hope has bipartisan support is that we have 
taken advantage of the additional spending available under the 
caps to close a lot of the loopholes that gave rise, in part, 
to that statement. CHIPs, for example--and I know I have just 
put half of the room to sleep, but we actually----
    Mr. Moulton. Mr. Director, you have put me to sleep too. 
So, I may ask? You have said before that deficits are 
dangerous. Do you still believe that deficits are dangerous or 
have you changed your mind?
    Mr. Mulvaney. No, no, I do. In fact, I continue to agree 
with the statement of the head of the Joint Chiefs several 
years ago that said one of the greatest threats to the Nation 
was the debt.
    Mr. Moulton. So, I could not agree more. The 
administration's budget request would add $984 billion to the 
Federal deficit next year and add a total of $7 trillion to the 
deficit over the next 10 years. Do you find it hypocritical for 
the President who claimed that he would get rid of the national 
debt, and I quote, ``over a period of 8 years,'' to send this 
budget to Congress?
    Mr. Mulvaney. It is not hypocritical. Again, keep in mind, 
what the budget does, Congressman, it simply assumes and 
supports the caps deal that was approved by this body just 5 
days ago.
    Mr. Moulton. But either the President meant what he said or 
he did not.
    Mr. Mulvaney. I am sorry. I could not hear----
    Mr. Moulton. Either the President meant what he said, or he 
did not.
    Mr. Mulvaney. The President takes deficits very clearly, 
but also recognize we live in a world where in order to get the 
funding that we needed for the Defense Department that we 
considered critical and to be a priority of ours, we had to 
agree to higher non-defense discretionary spending levels than 
we otherwise would have liked.
    Mr. Moulton. So is it safe to say that the President no 
longer intends to end the national debt after 8 years, which is 
what he said?
    Mr. Mulvaney. I do not think it is possible at this point, 
given what has happened in the last 12 months especially, to 
pay off the debt in 8 years.
    Mr. Moulton. Do you think it is hypocritical for 
Republicans to have slammed the Obama administration for not 
eliminating the deficit when his Republican administration is 
now making it far, far worse? Do you think that is 
hypocritical, Mr. Director?
    Mr. Mulvaney. In fact, what was hypocritical about it--and 
I have sat in this room. I do not remember if you and I were on 
the Committee before. One of the things that was most 
hypocritical about the previous administration was the numbers 
they used in not being able to balance.
    Mr. Moulton. But I am not asking about the hypocrisy of the 
previous administration----
    Mr. Mulvaney. Well, that is what I want to talk about.
    Mr. Moulton.--talking about the hypocrisy of yours, Mr. 
Director. You are here to represent your administration. Do you 
think it is hypocritical for Republicans to have slammed the 
Obama administration over deficits and yet support your deficit 
spending?
    Mr. Mulvaney. I think it is fair to say that we are 
disappointed in the size of the deficit, disappointed in the 
fact that it does not balance. But again, this recognizes that 
the reality in Washington, D.C. right now, which is that, with 
all respect, sir, your party insists on nearly a dollar for 
dollar ransom for military spending, and we cannot change that, 
especially with the 60-vote rule in the Senate.
    Mr. Moulton. But your ransom is my investment, and that is 
as a veteran of the military----
    Mr. Mulvaney. Right.
    Mr. Moulton.--I think there is nothing that we can do to 
further our chances of defeating great world adversaries like 
Russia and China than to invest in things like education, to 
invest and science and technology. That is how we maintain an 
edge over our greatest adversaries.
    But I have another question about the assumptions you have 
made. It seems that they are overly optimistic. Last year, you 
project annualized economic growth of 3.1 percent over the next 
three years. In December, the Federal Reserve projected an 
annualized growth of 2.2 percent over that period. A survey of 
professional economic forecasters has estimated an annualized 
growth rate of about 2.4 percent. You mentioned earlier the 
Obama economy. It seems that the Trump economy growth estimates 
are already in a nosedive and you are yet just a year in.
    The Trump administration now, to your credit, Mr. Director, 
created 2.06 million jobs over the past year. That sounds 
pretty good, except that more jobs were created by President 
Obama in 2011, in 2012, in 2013, in 2014, in 2015, and in 2016.
    And finally, you take credit for being willing to make 
tough decisions on Social Security and Medicare. Can you 
explain this quote, Mr. Director? ``I was the first and only 
President potential GOP candidate to state that there will be 
no cuts to Social Security, Medicare, and Medicaid.''
    Mr. Mulvaney. May I?
    Chairman Womack. The gentleman will take a few seconds to 
respond.
    Mr. Mulvaney. Yeah. First of all, I think your jobs numbers 
are probably correct. I think your GEP numbers are just flat 
out wrong. But to the point about Medicare and Social Security, 
we do not touch anybody's benefits. We do not means test. We do 
not raise ages. We do not do anything to Social Security 
retirement. It is very similar to some of the proposals we had 
last year on Social Security. But I look forward to talking 
with you about it more. Thank you, Congressman.
    Mr. Moulton. I look forward to it as well. Thank you, Mr. 
Director, and thank you----
    Chairman Womack. Thank you, gentleman. Members, please, if 
you have got a question for the director, do not wait until you 
have got 5 seconds left in your time before you ask that 
question, and we will give the director a little bit of time to 
respond. Gentleman from Oklahoma, Mr. Cole?
    Mr. Cole. Thank you very much, Mr. Chairman, and Mr. 
Director, thank you for being here. It is always a pleasure to 
have you.
    I want to begin like the Chairman did and complement you on 
some things because I think this is a better budget than last 
year, and I know you did not have a lot of time last year. This 
shows that and, of course, we complicated things for you at the 
end, and I think you have adjusted that as well as you could. 
But I agree with what the Chairman had to say.
    I appreciate the emphasis on defense. I appreciate the 
emphasis on border security. I appreciate the recognition that 
the opioid crisis is a crisis and you are trying to move and 
respond that way. That is something the President mentioned in 
the campaign and I think deserves bipartisan praise and 
support.
    I like the idea there is more mandatory reforms in here 
than last time. I do not agree with them all, but I 
particularly like the Graham-Cassidy embrace. I think that is 
an important initiative. It is going to take a while, but I 
think you are right to seize on it.
    And I also want to point to one particular area that I am 
interested in because I chair the Subcommittee where you had 
one proposal last year. I think you have listened to some of 
the things that we had to say in that Committee, and that is 
the National Institutes of Health, where you have not only 
level-funded, you actually have had a modest increase, and that 
is very important for us. It is very important, obviously, for 
the health and security of the American people.
    But it is even more important in a sense long-term for 
bending the cost curve out there. I mean, we spend $259 billion 
a year in Medicaid looking after Alzheimer's patients. We have 
no cure. We have no way to really slow the progression, so that 
is an area that we have made a lot of emphasis on in the last 2 
or 3 years.
    Honestly, it is the right thing to do, it is the 
humanitarian thing to do, but also ultimately, if we do not get 
our hands on that disease, it will be over $1 trillion on the 
line it is on by 2050. So, you know, preserving those 
initiatives is really important. You are to be commended on 
that.
    I want to engage you with a little bit in the time that I 
have left on an area that you have not addressed, and I am not 
being critical of the President or anybody else, but I just 
want to offer a path forward, and that is Social Security, to 
pick up a little bit on the discussion we just had. We all 
know, politically, that is a very sensitive and difficult area 
to address, so I am never too critical. The last President did 
not do anything to address Social Security. The last one that 
tried, Mr. Bush, got savaged over it.
    But I think there is a way forward here and I would just 
ask you to study it, and I would not expect you to embrace it 
today, but Mr. Delaney and I have a bipartisan proposal that 
really goes back and mirrors what Ronald Reagan, Tip O'Neill, 
and Howard Baker did working together in 1983. And the idea is 
a commission, and people always argue they never work. Well, 
that one did. It was the Greenspan Commission.
    You know, Social Security was much closer to going bankrupt 
then than it is today. As a matter of fact, the reason we have 
it today is because of the work that commission did and the 
surplus that was piled up in intervening years until finally 
the baby boomer generation began to retire and they are now 
drawing it down pretty rapidly.
    I think that an opportunity exists to do that again, and if 
we could reform something like that--and again, Mr. Delaney and 
I have presented this for three consecutive Congresses--I think 
this President could actually be the person who saves Social 
Security, who puts it on firm footing, and it would be done in 
a very bipartisan way.
    I would be the first to tell my friends on the other side 
of the aisle that are always concerned that this means 
slashing. Go back and look at what Ronald Reagan did with that 
commission with Tipp O'Neill. And by the way, Ronald Reagan in 
the next year won reelection with 49 states and Tipp O'Neill 
remained Speaker of the House, so you can do this in a 
bipartisan way as long as you are protecting the program 
because it is a popular program.
    But the way they did it is frankly, was they very gradually 
raised the age. I was 34. They told me, ``You are going to 
retire at 66, not 65. Your 1-year-old is going to retire at 
67.'' They raise the cap, so they put more income in there as 
well. They made a modest increase in the deduction as well. In 
other words, there were a lot of little tweaks that could be 
done that would have a huge advantage.
    So I would just ask you in the time you have left what 
thoughts you have going forward because that is over a $1 
trillion program now, and we are either going to put it on firm 
footing or not.
    Mr. Mulvaney. A couple of different things very briefly, we 
do make some small proposed changes to the S.S. program, not in 
retirement. We are talking about SSDI and SSI, and those have 
some marginal improvements on the state of the trust fund. But 
you are absolutely right. There is going to be a bigger issue 
to deal with and I think the best point you make is you talk 
about making small changes. The longer you wait, the larger 
those changes must be. I would look forward to talking with you 
further about that.
    I also encourage you to look just as closely at Medicare 
and Medicaid, which are actually larger drivers of our deficit 
right now than Social Security are and are probably a little 
bit more complicated to fix, but we can deal with those and I 
look forward to working with Congress on behalf of the 
administration.
    Mr. Cole. I absolutely agree. I spoke with the Speaker 
about that last year. I yield back.
    Chairman Womack. The gentleman from New York, Mr. Higgins?
    Mr. Higgins. Thank you, Mr. Chairman, and Director, thank 
you for being here. We appreciate very much your accessibility. 
You have got a folksy and modest approach to things and that is 
very, very refreshing here in Washington.
    Infrastructure is obviously a centerpiece of this bill with 
159,000 structurally deficient bridges in America. Every second 
of every day seven cars drive on a bridge in this country that 
is structurally deficient. It should be the centerpiece of this 
bill. However, the White House infrastructure plan, in my 
estimation, is another thinly veiled hit on local and state 
taxpayers. For every $6.50 of local and state road and bridge 
spending, the Federal Government will spend $1, so more state 
and local taxes to fund roads and bridges.
    So people get more taxes at the state and local level, they 
already pay an 18.4 cents a gallon gas tax to fund the Federal 
Highway Fund, and then this plan relies on tolls. So, people at 
the local and state level will be taxed three times to finance 
this bill.
    Secondly, total spending over the next decade in this plan 
will not exceed $200 billion. Oddly, that amount of Federal 
spending is nearly equal to the U.S. road and bridge spending 
in Iraq, in Afghanistan over the past decade, but Iraq and 
Afghanistan get a much better deal. The $180 billion that we 
have spent over the last decade, there was no local match. 
There were no toll roads. It was entirely deficit financed by 
the American people, by American taxpayers. So, no local match, 
no gas tax, and no toll roads. Every American, Democrat, 
Republican, and Independent, should find this truth to be 
sickening and highly insulting.
    On Tuesday, September 25th, 2017, I was at a meeting with 
the President and members of the House Ways and Means 
Committee. I personally had asked the President about 
infrastructure and he categorically rejected the viability, the 
workability of public-private partnerships. In fact, he pointed 
to the Vice President, Vice President Pence, and told the 
entire group--I was not the only one there--that public-private 
schemes did not work, and he cited Indiana as a glaring 
example.
    In August of 2017, the headline was, ``Indiana Highway 
Gives Black Eye to Public-Private Partnerships Funding 
Infrastructure.'' The President was referring to a 21-mile 
stretch of highway in Indiana. They call it the ``Highway to 
Hell.'' The project, private and state partnership, was signed 
by Vice President Pence back in 2014 when he was the governor. 
The project was 2 years behind schedule and only 60 percent 
built before the state took over the entire project and issued 
debt to finance the project in a more traditional way.
    Nothing here adds up. You not only have a math problem--you 
have a math problem for certain--but there is also a values 
problem here, and this is not an American-first budget. And I 
think the infrastructure piece in this plan is but one example 
of that. In order to grow the American economy, you have to 
invest in it, and infrastructure, based on any objective 
analysis, has been identified as an essential piece to growth.
    I applaud the administration's goals of achieving 3 to 4 
percent growth. If we could achieve that over an 8-year period 
or a 4-year period, that would solve a lot of problems. But the 
budget that you have does not do that because it takes away 
from the very people that you depend on to spend money because 
the fundamentals of economics are that with higher incomes, 
there is more spending. Where there is more spending, there is 
more demand.
    Where there is more demand, there is more growth. And I 
would submit to you, Mr. Director, that we have a growth 
problem, and getting and addressing that issue requires 
investing in growth. I have gone on, but you have got 20 
seconds.
    Mr. Mulvaney. I am not sure what to do with the 15 seconds 
I have left. I will tell you that the infrastructure plan has 
specific provisions--maybe we can talk about it with some of 
the other folks--to overcome the shortcomings that we saw in 
the Obama stimulus from a decade ago, where we threw a bunch of 
money at a problem and did not solve any of those problems. 
That is one of the reasons you see public-private partnerships. 
It is one of the reasons you see a focus on shortening the 
regulatory pipeline.
    As I have told the President, you can throw $10 trillion at 
infrastructure today and it is unlikely that a single new road 
would be built within 10 years because of the pipeline and how 
long it takes to get stuff built. So we did try to learn from 
things that have been done in the past that did not work, but I 
look forward to talking about that more.
    Chairman Womack. Mr. McClintock, California?
    Mr. McClintock. Well, I have often reflected on just how 
much more infrastructure we could have if the government would 
simply get out of the way, and we have seen that across the 
country, but I do want to compliment you. This budget proposal 
has already achieved a miracle. It has made the Democrats 
suddenly very concerned about the debt.
    You know, for 8 years, the Obama administration literally 
doubled the entire debt of the United States and there was not 
a single protest from the other side. In fact, they were 
cheering it. Now they are concerned, although their response is 
to spend more money. I do not see how that addresses the debt, 
but that is a subject for a different day.
    This sort of hypocrisy, though, is not an excuse for 
Republicans to suddenly become very complacent about the debt. 
At a budget briefing a year ago, I asked one of the experts how 
long we have before a sovereign debt crisis, and he said, you 
know, there is no way to make such a prediction.
    There are many different variables that could trigger such 
a crisis. But he said if we start approaching trillion-dollar 
deficits, things will start to get very unstable very quickly, 
and we will have set the stage for a sovereign debt crisis. 
Now, as I look at these numbers, that is next year. What can 
you offer to allay these concerns?
    Mr. Mulvaney. Keep in mind that a trillion-dollar deficit 
does mean something different in a 1.9 percent growth 
environment than it does in a 3.4 percent growth environment. I 
think you would agree with that. The real question is the 
relationship between the size of the debt to the size of the 
economy. It is not an excuse for not being able to balance. I 
am not trying to minimize the challenges that we face. But I 
think you would agree that a $1 trillion deficit in a $20 
trillion economy is not the same as a $1 trillion deficit in a 
$25 trillion economy.
    Mr. McClintock. Agreed, but the only other time we have had 
a debt this large proportional to our economy was at the end of 
World War II when we had exhausted all of our resources and our 
credit fighting that war. We are at that level percentage-wise 
now. That concerns me greatly.
    Now Truman's response was to cut spending dramatically. He 
took the Federal budget from $85 billion down to $30 billion in 
a single year. He fired 10 million Federal employees. It was 
called war demobilization. The Keynesians predicted a 25 
percent unemployment and a second Great Depression. Instead, we 
had the post-war economic boom. He also cut taxes, but he cut 
taxes while he was cutting spending. Now we just cut taxes. 
That is absolutely vital for economic growth.
    There are strong early indications that it is working 
beyond our expectations, which were very high, but having cut 
taxes, we also have a keen responsibility to restrain spending. 
I appreciate being quoted by the budget director. That is a 
first for me, and I am glad somebody was listening over these 
years.
    Mr. Mulvaney. I heard it for 6 years, Tom. I was going to 
pay attention.
    Mr. McClintock. I keep repeating it until somebody hears 
it, and I thank you for recognizing that taxes and debt are not 
opposites. They are exactly the same thing. A debt is simply a 
future tax. Once we have decided to spend a dollar, we have 
already decided to tax it, either now or in the future.
    But borrowing from the future also has very real 
implications in the present, because we borrow it from the same 
capital pool that would otherwise be available to loan to 
consumers, to make consumer purchases, to homebuyers to buy 
homes, to businesses seeking to expand. That money is now not 
there for economic growth because the government has consumed 
it.
    My concern is we are working across purposes, but with the 
tax bill. By cutting taxes, we are in the process of producing 
I think a remarkable economic revival, but at the same time, we 
are undermining that by increasing borrowing against that 
capital pool that the private sector desperately needs to 
expand. How do we deal with this problem?
    Mr. Mulvaney. One of the messages that I tried to convey in 
my opening statement was that one of the primary messages we 
hope this budget conveys to the legislature is that you do not 
have to go down that road to permanent trillion-dollar 
deficits. You do not have to worry about the perpetual crowding 
out, which is the economic phenomenon you are describing.
    Even though this budget does not balance in year 10, the 
deficit is just slightly over 1 percent of GDP, and the total 
debt as a size of the overall economy actually starts to come 
down. Yes, it peaks around 80 percent, which is one of those 
numbers that economists fear when crowding out becomes a very 
real economic concern, but it then bends the cost curve down 
almost immediately after reaching that peak.
    So, the answer to your question ``how do we solve some of 
the problems'' is we simply encourage you to take the ideas 
that you like in this budget and incorporate it into your own 
and try and help work with us to solve the problems that you 
just laid out.
    Chairman Womack. Gentlelady from Washington, Ms. DelBene.
    Ms. DelBene. Thank you, Mr. Chair, and thank you, Director, 
for being with us today. You know, I am disappointed that when 
there has been talk about cuts or reforms, there has not been 
talk about return on investment, and as a budget person, I 
would think that would be an important concept. Let's talk 
about, you know, when we make investments. There are many 
investments that we make that give us a great return and 
actually save us much more money long into the future--
education, infrastructure, research, and important programs.
    So let's talk about SNAP. The administration's budget cuts 
$213 billion from Supplemental Nutrition Assistance Program, 
SNAP, over the next 10 years, which would place millions of 
vulnerable Americans at unnecessary risk of losing the most 
basic critical nutrition assistance. The SNAP benefit is $4.50 
a day. Mr. Director, have you ever taken the SNAP challenge and 
had all your food, $4.50 a day?
    Mr. Mulvaney. No, ma'am, I have not.
    Ms. DelBene. Well, I would encourage you to do that, 
because I have and it is very difficult to get by on a SNAP 
benefit. You are not able to get fresh fruits and vegetables 
and healthy foods. And if we expect people to be able to do 
their best job at work, to be able to be a great student, 
children to grow up healthy, then we need to make sure they 
have healthy, nutritious food.
    We also cared a lot that we could do what we could to make 
sure that people did not have to stay on nutrition programs, to 
be in a place where they could take care of themselves and 
their families. In the last farm bill, I served on the Ag 
Committee and on the Conference Committee. When you put 
together a program based on work done in my state, the Basic 
Food Employment and Training Program, that took people on SNAP 
and gave them training so they were able to find employment in 
jobs where they are able to be self-sufficient.
    I, then, help secured $200 million for USDA competitive 
grant pilot programs to expand job training opportunities for 
recipients of SNAP. Those programs have been going in USDA. And 
if we want to talk about something that works and helps people 
in a place where they do not need nutrition benefits because 
they are in a place where they are able to get a good job, 
those seem to be great investments that actually we get a good 
return on.
    But I worry, because now the focus of this budget seems to 
be just on cutting SNAP and putting people in a vulnerable 
position. Approximately 44 percent of people who rely on SNAP 
have at least one person in the family who is working. This is 
not about people who are not working. In the many cases people 
are working and just do not make enough to get by. So, in the 
meantime, I guess we are saying we should punish them by taking 
away their access to food, and I actually think that would have 
a terrible impact on families across our country.
    I am also trying to understand the proposal that families 
receiving $90 or more per month would receive a portion of 
their benefits in the form of a USDA foods package, something 
you talked about as a Blue Apron-type program that would have 
only nonperishable products, and when we hear from others about 
the need for healthy food and fresh fruits and vegetables. This 
would also move in the wrong direction.
    So I have questions since you are relying on such a 
program, how would it actually work? You know, how much would 
it cost the government to set up the physical infrastructure 
that would be necessary to package and distribute boxes like 
these?
    Mr. Mulvaney. Thank you for the questions, Congresswoman. 
One of the ways you can stretch that $4.50 a day further is by 
buying food wholesale instead of retail, which the government 
can do and individuals cannot, so we actually get more bang for 
the buck by doing this program. And I would point out to you 
that Democrats have actually supported this program in the 
past. One of the biggest defenders of the program has been 
Senator Feinstein from California when it comes to the food box 
program that we have had for many years for seniors.
    It does work. It is one of the reasons we were very excited 
to see the USDA proposed to expand it because it is one of 
those programs because it seems like it actually works.
    Ms. DelBene. How do the people actually get these? What is 
the budget for actually getting them? Do you have a database so 
that you know what people's allergies are, what their dietary 
restrictions are? There are no fresh fruits and vegetables that 
would be part of this? What if a person's housing is unstable? 
How do you know how to get them the package? They do not have a 
concierge with someone who is going to sign for a package. How 
do you know it even actually gets to them? Have you thought 
through any of these things?
    Mr. Mulvaney. Again, the challenges to actually get the box 
are very similar to the challenges to get them their EBT cards 
in the first place because if you are homeless, it is hard to 
find you.
    Ms. DelBene. Someone carries an EBT card with them and can 
use them wherever they are. This is an ill-conceived policy. It 
is going to deprive people of the most basic nutrition 
assistance and cost everyone more not only in quality of life, 
but more money in the long term. I yield back.
    Chairman Womack. Gentleman from South Carolina, Mr. 
Sanford?
    Mr. Sanford. Thank you, Chairman. Let me first say, Mick, I 
admire you. I appreciate your competence, the way you handle 
yourself. I think you make the state of South Carolina proud.
    Mr. Mulvaney. Usually when he talks like that there is a 
``but'' at the end of the sentence.
    Mr. Sanford. All these things are true. There is a ``but.'' 
I guess I struggle with this budget, and I will say this. I 
applaud the fact that you all have cuts. I mean, it is hard to 
come up with cuts in public policy, and yet you all have 
stepped to the plate on that front. But let me get to the 
``but.'' I think that this budget perpetuates this myth that we 
can balance the budget without impacting entitlements. I think 
that is a really dangerous myth to perpetuate. I think that we 
are sleepwalking our way to the largest financial crisis in the 
history of our country.
    And it was interesting that the Wall Street Journal 
entitled the budget deal a ``Guns and Butter'' budget deal. I 
would argue that this budget is the, you know, ``Guns and 
Optimism'' budget deal in that, you know, Gordon Sullivan, who 
is former Chief of Staff of the United States Army, once 
observed that hope is not a method. But there is a lot of hope 
that is built into this, and I know that you are an optimistic 
guy by nature.
    But I want to go back to this reality, which is if we have 
a budget that never balances and we predicate it on certain 
things that are stretches at minimum and they are somewhere 
between optimism and stretches. But, I mean, you look at this 
notion of in essence saying we are not going to have a 
meaningful economic downturn in the next 10 years as a 
component of the growth numbers that are built into this 
budget, I think that that is widely optimistic. And if it is 
wrong, we are off by trillions of dollars. We are not talking 
billions. We are talking trillions.
    My colleague on the Democratic side just a moment ago 
mentioned the other projections in terms of economic forecast. 
The fed says 2.2. Private consensus is 2.4. CBO says 1.9. And 
yet, we are going to go at 3 percent.
    You know, it is not that I am not optimistic. I am. But if 
you look at the building blocks of growth, as you well know, it 
is labor force growth and it is productivity growth that gets 
you to final growth. In an aging population, labor force growth 
is really, really difficult. That leaves you other variables.
    I pulled some numbers here. This is actually from the 
Committee for Responsible Government. Their point is to hit the 
3 percent growth number, it would take a doubling of the 
current immigrant population. I do not think that one is 
realistic. Okay.
    If we are not going to do that, how about put every single 
working-age adult to working including full-time parents, the 
unemployed, the disabled, those in prison, and those in 
graduate school--that is probably not going to happen. Initiate 
two simultaneous dot-com size booms--difficult. Develop and 
utilize innovations more consequential than electricity, or--
how about this one--phase out the weekend?
    It is really mathematically difficult to get there and stay 
there. So, we have had something of a running back and forth on 
this. You certainly won the first quarter, but a couple of 
quarters at the front end do not make a 10-year buildout.
    And so, I think you have got a question on growth. I think 
you have a question on interest rate. You know, you cannot have 
the growth that you all project without a consequent 
simultaneous rise in interest rates. It has never happened in 
the history of man. CBO's numbers are a close correlation 
there.
    And so, I would just say, you know, how do we get to these 
numbers because what they perpetuate is this myth that we can 
balance a budget or move toward balance without affecting 
entitlements, and I think that is a really dangerous myth to 
hold onto whether on the Democratic or the Republican side of 
the aisle.
    Mr. Mulvaney. Really quickly, in reverse order, yes. 
Interest rates, yes, we do have something that is a little bit 
lower than the CBO for the first couple of years, which we 
think reflects reality. We are actually slightly higher than 
CBO in a couple of the out years. Labor force productivity, I 
encourage you to look at the fourth quarter capital investment 
numbers.
    While the GDP numbers were less than we expect, the capital 
investment numbers were almost four times what we expected. And 
it is that capital investment as part of the tax bill that you 
all voted for that we know we have to have in order to get that 
productivity growth. So this is all part of a plan. Capital 
investment leads to future productivity growth through 
additional machinery, additional education, additional 
innovation.
    Keep in mind, all economic analyses are done like that. You 
can never know when the recession is coming. You go back and 
you look at the period from the Great Recession. Now, we 
averaged over 3 percent. Yes, we had a Great Depression in the 
middle of that. You go from just about every period of time up 
until the 2007s or 2008s and we had that 3 percent even though 
we had dramatic downturns in the middle. So these are simply--
--
    Mr. Sanford. But we did not have a baby boom generation 
retiring as we do now.
    Mr. Mulvaney. I will look forward to doing this on the next 
flight home, because you know how I much I enjoy this, but 
thank you for your questions.
    Mr. Sanford. Thank you. That is right.
    Chairman Womack. Gentlelady from Florida, Ms. Wasserman 
Schultz.
    Ms. Wasserman Schultz. Thank you, Mr. Chairman. Mr. 
Mulvaney, it is good to see you. Thank you for joining us this 
morning. On the screen, I would direct your attention to a 
tweet from the President that he wrote in 2015 as a candidate 
which reads, ``I was the first and only potential GOP candidate 
to state there will be no cuts to Social Security, Medicare, 
and Medicaid. Huckabee copied me.'' As I am sure you know and 
as Mr. Moulton has already asked you, this budget would cut all 
three of those programs--breaking that promise along with many 
others that have already been broken, so the track record is 
clear--and that threatens the health and dignity of seniors, 
children, and people with disabilities.
    The budget would cut Social Security by $72 billion over 10 
years, Medicare by $266 billion, and Medicaid by $1.4 trillion. 
And I know you referenced in your answer to Mr. Moulton that 
you do not cut benefits for any of these programs. Well, I beg 
to differ because you do cut benefits for more than a million 
households in Social Security Disability Insurance and SSI, 
more than a third of whom have multiple individuals in those 
households with disabilities.
    In cutting Medicare, you can argue that you are not cutting 
benefits directly to patients, but the provider benefit cuts 
make it far less likely that providers will continue to 
participate in the Medicare program, diminishing the quality of 
access to healthcare that seniors have and also the diversity.
    You know, in many places in this country, you know, going 
to a specialist and then adding a sparsity of providers who are 
participating in Medicare is really, really a challenge. I 
represent, as you know, the state of Florida with the largest 
percentage of seniors in the country by population, and so 
these cuts disproportionately impact our seniors.
    The Social Security disability cuts will make it 
excruciatingly more difficult for people to qualify for SSI, 
and I do not know when you were a legislator if you ever helped 
a constituent try to get through the SSI and that disability 
process, but it takes years, which is insane to begin with, and 
now you will make it even harder. We are talking about an 
extremely vulnerable population.
    So I am trying to understand why President Trump broke his 
promise to the American people and, frankly, if you are going 
to raise the issue of our deficits and debt, that does not hold 
water given that you added $1.5 trillion to the deficit in the 
tax cut scam bill that President Trump signed into law at the 
end of last year.
    Mr. Mulvaney. Thank you, Congresswoman, a couple of 
different things in response to that. Lowering drug prices, 
which is what we do in this budget, does not break that 
promise. Ending the abuse that you and I have both railed 
against that pharmaceutical companies commit in the way price 
drugs within Medicare does not break that promise, and so I 
thought it was something we could both support. Putting a cap 
for the first time on true out of pocket expenses for seniors 
in part D does not break that promise. I think it is something 
we could all be able to support. For the first time, 
introducing a zero copay for some needy seniors in part D does 
not break that promise.
    Ms. Wasserman Schultz. You are trying to distract----
    Mr. Mulvaney. Oh, every single one of those things is in 
this budget.
    Ms. Wasserman Schultz. You are trying to distract from the 
fact that the President promised--I will direct your attention 
to the screen again--specifically that he would not cut 
Medicare, Social Security, and Medicaid in writing, black and 
white----
    Mr. Mulvaney. So you think lowering drug prices for seniors 
is a bad idea?
    Ms. Wasserman Schultz. No. What I am saying is that----
    Mr. Mulvaney. Good. Then I would look forward to your 
support for these programs.
    Ms. Wasserman Schultz. Mr. Mulvaney, what I do not support 
is when the President makes a commitment to the American people 
and breaks that promise. He specifically said here that he 
would not, as President, cut any of these programs. This budget 
does cut all of those programs and directly targets the most 
vulnerable recipients who participate in those programs, and 
there is no denying that. You can point to other window 
dressing things that you have put in this budget, which on top 
of that further explodes the deficit.
    Let me just ask you also about an issue of great concern to 
Floridians. The budget would also cut NOAA, climate research, 
by 37 percent, and despite what you might think about climate 
change, there is no denying--and you are from a state that is 
in hurricane alley on occasion--we are still recovering from 
one of the destructive hurricane seasons in recent memory. We 
have got more and more coastal areas dealing with flooding. I 
have neighborhoods in my district, Mr. Mulvaney, that flood 
even when it does not rain now even on clear days.
    So why does this budget turn away from national efforts to 
assist communities like mine that are bearing the brunt of 
severe weather and climate change----
    Mr. Mulvaney. I am sorry, floods on clear days? Did I hear 
it correctly?
    Ms. Wasserman Schultz. Yes, even on clear days, there are 
times when the coastal parts of my district----
    Mr. Mulvaney. Oh, okay.
    Ms. Wasserman Schultz.--the neighborhoods flood.
    Mr. Mulvaney. All right. All right. We do reprioritize 
within NOAA, within the Department of Commerce, to move away 
from climate change and more towards weather. We think that 
would more efficiently serve the needs that you have described.
    Ms. Wasserman Schultz. You cut regional coastal resilience 
grants. How are communities like mine supposed to be able to 
make sure they can gird against flooding when you are cutting 
the very funding that will prevent flooding from occurring----
    Chairman Womack. The gentleman will have to take that one 
for the record. Let's go to Alabama, Mr. Palmer.
    Mr. Palmer. Thank you, Mr. Chairman. I have sat here and 
listened to this, and I wish I had about 30 minutes to talk 
about climate change, for instance. We had a record 142 months 
with no hurricanes. We talk about rising ocean levels, and I do 
not know how many people in this room realize that Alabama was 
once a seabed. Something happened to cause the seas to recede. 
But I do not want to get into science, because I think it would 
take too long to explain it all.
    But I have some major concerns about the budget as you 
know. You and I have had conversations privately and I want to 
continue to work with the White House to figure a way forward. 
But I do want to point out some things that I think are 
important and helpful in this budget, and that is the work 
requirements and some of the things that are being suggested 
and implemented by this administration, Mr. Director.
    For instance, Kansas implemented work requirements back in 
2011, and I just want to point out that since that time, 
incomes for the people who left TANF and SNAP, the nutrition 
program as our colleagues referred to it, their income 
increased 247 percent. Costs came down for the state and for 
the Federal Government, but their incomes went up 247 percent.
    Now, my dad was blind in one eye, had an eighth-grade 
education, and I grew up skidding logs from mules. I grew up 
dirt poor, and I understand the benefit of work. I have heard 
our colleagues attack the tax reform bill, the first time in 30 
years that we have reformed taxes, and I would just like to 
point out when you give tax cuts to small businesses and to 
major corporations, it benefits people who grew up like I did 
because, frankly, I never had a poor person give me a job.
    I also want to point out that they implemented the work 
requirements in Maine, and about 7,000 people were removed from 
the rolls. Now these are able-bodied adults with no kids, all 
right, not everybody, able-bodied adults with no children, and 
their income went up a combined $18 million per year. That is 
not crumbs, is it?
    All right, now let me get back to some more fundamental 
issues here, and, you know, I wish that we could have a 
dialogue where both sides were really working for what is best 
for the country instead of throwing out political talking 
points. It is not a political campaign when you get to the 
budget. It is really an effort to get us on a sound physical 
path. I am not sure we are there yet, and you and I have had 
these conversations.
    I could literally sit down on a napkin and show you $1.2 to 
$1.6 trillion in additional revenues or savings that we could 
get. But if we do not fix the appropriations process, if we do 
not get back to making the House and Senate work, making this 
government work, it does not matter, does it?
    Mr. Mulvaney. No, sir, it does not. In fact, one of the 
reasons that we supported the caps deal was to encourage a 
return to regular order in the appropriations process. It is 
the proper way for money to flow, the proper way for the 
administration to participate in the process, the proper way 
for all of you all to be heard, and we would very much like to 
see a return to that paradigm.
    Mr. Palmer. Well, in that regard, if we can get the 
appropriations process restored the way it should work--and by 
the way, I think everybody in this room knows we passed all 12 
appropriations bills last year. We did them in two packages, 
and we only had five Democrats vote for either one of them. So 
we did our appropriations work.
    But in regard to some of the issues that, I think, we can 
deal with in terms of trying to reduce our spending is--and you 
and I have talked about the improper payments. In 2010, when 
the Democrats had both Houses of Congress and the White House, 
they passed the Improper Payments and Recovery Act.
    In 2012, they amended that act and passed Improper Payments 
and Recovery Improvement Act. What is going on right now is 
that even though we have tried to address this issue, we never 
did real enforcement, so the improper payments rate has 
continued to go up.
    Last year, it was $144.3 billion, yet you are only showing 
a savings of about $150 billion over 10. I think we can do 
better, and I think it should be a bipartisan effort. Would you 
agree with that?
    Mr. Mulvaney. I would. We try to be conservative. As I 
said, I probably could have run that number up 10 times what we 
had and come in and said, ``I am going to balance the budget,'' 
but we have just not shown an ability yet to reduce the 
payments much larger than we have in the budget, so we think 
the numbers are a lot more solid.
    We look forward to working with Congress on reducing the 
amount of improper payments, keeping in mind that improper 
payments cover a wide variety of things. Everybody thinks it is 
simply a check written to somebody that should not receive a 
check, and it is a lot more than that as you know.
    Mr. Palmer. I know, and every dollar we send out improperly 
is a borrowed dollar that we are paying interest on. Thank you, 
Mr. Director. Mr. Chairman, I would like to enter into the 
record the report on Kansas, and I will print the report from 
Maine's Department of Health and Human Services.
    Chairman Womack. Without objection.
    [The information follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    
    
    Mr. Palmer. Thank you, sir.
    Chairman Womack. I thank the gentleman. Let's go to 
Washington, Ms. Jayapal.
    Ms. Jayapal. Thank you, Mr. Chairman. Thank you, Director, 
for being with us. Director, I am calling this the ``Three 
Strikes, You Are Out'' budget, and it is the American people 
and working people who are rounding the bases and they are 
being called out by this President and this administration. And 
I just want to walk through those strikes.
    Strike one was when you transferred $1.3 trillion from 
working people to the wealthiest in this country and the 
wealthiest corporations, and strike two, I will give this to 
you in this budget. You admit that that was a tax scam, that 
you do not have the growth to pay for those tax cuts to the 
wealthiest, and you are now going to saddle this generation and 
future generations with $1 trillion in debt, $1 trillion in 
this next year, $7 trillion over the next 10 years.
    And then, strike three is cut all the programs that people 
actually rely on to have a decent life, and some of these have 
been called out, but I have to say it again: Temporary 
Assistance for Needy Families cut by $1.7 billion in this 
budget; economic opportunity programs cutting half a billion 
from rural and wastewater programs; cutting job training 
programs for workers across the country; Economic Development 
Agency that invested millions in coal communities that Donald 
Trump said he was going to save; and programs that help 
struggling manufacturers.
    But I also want to talk about SNAP, because my good friend 
from Alabama just mentioned Kansas and Maine, and I want to 
tell you what actually happened in Kansas and Maine. A year 
after instituting work requirements in Kansas, 40 percent of 
unemployed were still unemployed, and the SNAP participants who 
lost their benefits had an average annual income of $5,562. I 
would hardly say that that was a success.
    Here is what happened in Maine. Eighty percent reduction 
immediately, that is true, but a year later 60 percent still 
did not have any income, and as Secretary Purdue himself said, 
``SNAP is a,'' and these are his words, a ``very important, 
effective program.''
    Let's talk about Medicaid for a second. $1.4 trillion cut 
to Medicaid, and I think this administration would like people 
to think that Medicaid is somehow just benefitting the poor, 
lazy, black, brown. Who knows what you are thinking? But 11 
million adults with disabilities, 70 percent of those folks get 
their coverage through Medicaid. You look at the number of 
long-stay nursing home residents. Sixty percent of those 
residents get their coverage through Medicaid. So I do not know 
how you can call this a moral budget in any way, shape, or 
form, Mr. Director.
    And I want to talk about two specific things that are 
separate from everything I just mentioned. Yesterday when you 
came to visit us, and thank you for doing that, I asked you 
about DACA and what assumptions you have made in this budget 
around DACA. And I believe you told me that you have assumed 
that the DACA recipients get to stay, that there is some 
permanent solution for DACA.
    Mr. Mulvaney. What I have said, that is mostly correct. 
What I said was that we assume that an agreement is reached on 
immigration, on DACA, between Republicans and Democrats, I was 
very disappointed to see that Democrats in the Senate did not 
allow the debate to go forward yesterday after demanding that 
they do for such a long time.
    Ms. Jayapal. Thank you, Director Mulvaney, but let me----
    Mr. Mulvaney. We do assume that there is an agreement.
    Ms. Jayapal. I am sorry. This is my time.
    Mr. Mulvaney. Yep.
    Ms. Jayapal. Let me just point out that the President 
rescinded DACA and put 800,000 Dreamers at risk of being 
deported and the economic impact of that, estimates are that 
280 to $430 billion in either a cut to our GDP or an increase 
to our GDP, so what happens if this Republican-led legislature 
in the Senate and the House--Paul Ryan has not committed to 
bring a real DACA bill to the floor that would pass--what 
happens if DACA is rescinded?
    Mr. Mulvaney. A couple different things. I would suggest to 
you that it was the law that rescinded DACA and not the 
President.
    Ms. Jayapal. That is not the answer to my question. So 
reclaiming my time to answer the question. Thank you.
    Mr. Mulvaney. I am sorry. Your question was what?
    Ms. Jayapal. Well, I actually think I just answered my own 
question, so I will let you pass that. Let me ask you about 
whether you know what the suspense earnings fund is.
    Mr. Mulvaney. The suspense earnings fund. No, ma'am, I do 
not know that one off the top of my head.
    Ms. Jayapal. Well, that is a fund that basically is 
earnings that are contributed to Social Security, where the 
names of the people and the earnings and the Social Security 
numbers do not match. There is about $1.2 trillion in that fund 
as of 2012. That is about $200 billion contributed to Social 
Security by undocumented immigrants into the Social Security 
that is paying for older Americans today. So if you assume 
increases in enforcement as you have done in your budget, have 
you accounted for the decreases to the economy and to the 
Social Security fund if that were to pass?
    Chairman Womack. The gentleman will have to take that one 
for the record. Gentleman from Ohio, Mr. Renacci.
    Mr. Renacci. Thank you, Mr. Chairman. I want to thank you, 
Director Mulvaney, for being here today and for all your hard 
work on putting together this budget. While I may not agree 
with every policy decision made in the budget, I am encouraged 
that the President remains committed to reducing our national 
debt and deficit.
    And again, this will be my last time in a Budget Committee 
hearing where we are talking about a budget. It is interesting, 
because Mr. Carbajal and I this morning had a bipartisan 
breakfast where we talked about how we have got to get politics 
out of the way. And the frustrating thing about the Budget 
Committee is we get into politics versus into substance too 
often.
    But I was taking some notes. One of the things you said, it 
is easier to spend than to cut. Yes, it is. God help our 
children and grandchildren. Too often we worry about the next 
election and not the next generation, which is a problem with 
the politics many times that show up in this Committee.
    You also said something that was interesting. Both parties 
have taken credit for balancing the budget in the 1990s. 
Neither party should take credit for balancing the budget in 
the 1990s. If you go back to those years you will find out that 
there were $2 trillion budgeted and 4 trillion spent. We could 
not even control our spending back there and thank goodness we 
had something called the tech bump, which grew our economy by 
over 5 percent for most of those years, which gave us the 
ability to balance the budget. Otherwise no Democrat or no 
Republican could ever take credit for that balanced budget.
    The last thing I want to bring up, and I was listening and 
I apologize. I had run down to a Ways and Means hearing. I 
heard one of my colleagues on the other side say that this 
budget will destroy people's lives. Let me explain something. 
As the Comptroller General said, a Democrat, a Comptroller 
General who sat in that same seat last year, said we are 
heading for an unsustainable situation. And that is what will 
destroy people's lives.
    So, as this budget reflects, I believe that we need to take 
a serious look at the non-defense discretionary programs we 
currently fund and where we can cut out disputative and 
unnecessary spending. However, I also understand and I know you 
understand that the drivers of our drivers of our long-term 
debt and deficit today are the mandatory spending.
    Seventy percent of Federal spending today is as we--and 70 
percent of mandatory spending in the next 20 years, that 
percentage will increase to 80 percent is mandatory spending.
    So Director Mulvaney, by the way, I give you and the 
President credit that you have included 1.7 trillion in 
mandatory cuts, but do you believe it does enough in the 
mandatory spending to correct the mandatory spending problem?
    Mr. Mulvaney. Well again, I think it preserves the 
President's promises. We have talked about this last year and 
talked about the process we went through with the President to 
write the budget. That I gave the President certain options 
within Medicare, within Social Security, that Congressman 
Mulvaney probably would have supported. The President said, 
``Now wait a second. Now I promised people I would not change 
retirement. I promised people I would not means test. I 
promised people I would not change their benefits in 
Medicare.''
    So what we have done is to try and show you in this budget 
you can still have dramatic savings in mandatory spending--$1.7 
trillion in a 10-year window--and not touch those programs. So 
I think that we have at least given you some ideas of things 
that you can do short of that if you do not want to do that as 
well.
    Mr. Renacci. Thank you. And you would probably also agree, 
and that is why I want to go back to the tax cut and jobs act. 
As someone who has spent most of my career in the business 
world creating jobs and looking for opportunities to expand my 
business, I believe that bill will help the economy grow. I 
know you have projected 3 percent growth. I actually believe it 
will be higher than 3 percent in the early years as this tax 
bill starts to roll in. I am not an economist who can judge 
whether it will stay at 3 percent, but I know we have used 3 
percent.
    But just going back to what I talked about in the 90s. We 
balanced our budget by having 5 and 6 percent growth, not 
cutting spending, and where do you see us in the near term and 
the long term with your thoughts on that?
    Mr. Mulvaney. We continue to think the numbers that we put 
forth in the budget are defensible and actually towards the 
conservative side. As evidence of that I would suggest that, I 
would point to the Atlanta Federal Reserve that just tends to 
or is in the practice now of projecting the next quarter's GDP, 
and I think the number they put forth last week or 2 weeks ago 
was a projection of 5.4 percent for the first quarter of this 
year.
    To Governor Sanford's point, there will be declines over 
the course of a 10-year window, most normal 10-year windows, 
but we also expect there to be times above 3 percent. These 
numbers that we put in the budget are averages and they are 
extraordinarily defensible, and we have the policies critically 
to back them up and to get us there.
    Mr. Renacci. Well, thank you, and like many of my 
colleagues, including you, we were elected in 2010 with a 
mandate to reduce government spending and ensure that our 
children and grandchildren are not held with this debt crisis. 
Right now we are quite simply on an unsustainable path. I 
appreciate what you are doing and thank you, and I yield back.
    Chairman Womack. Thank the gentleman. Mr. Carbajal from 
California.
    Mr. Carbajal. Thank you very much. Thank you, Mr. Mulvaney, 
for being here today and thank you, Mr. Renacci, for touching 
on those bipartisan discussions we try to have to see if we can 
find common ground, which oftentimes eludes us.
    Mr. Mulvaney, I am incredibly troubled by this budget. 
Budget cuts to domestic programs. Just to name a few: this 
budget calls for a 10.5 percent cut to the Department of 
Education, including eliminating the subsidized student loan 
program and the public service loan forgiveness program; a 34-
percent cut to the Environmental Protection Agency, which is 
yet another attempt to undermine environmental safeguards; a 
$1.4 trillion and actually more than $2 trillion, if you 
include Medicare, cut to Medicaid over the next 10 years; a 
$214 billion cut to SNAP over 10 years, including the new food 
box proposal that takes choices away from households to buy 
groceries that they need.
    This budget pretends to make infrastructure a priority by 
highlighting the President's 200 billion infrastructure 
proposal with one hand while taking away infrastructure funding 
with the other hand. The budget assumes a 122 billion cut in 
highway programs after the expiration of the current highway 
bill. It also cuts discretionary transportation accounts, 
including reductions in Amtrak and the elimination of TIGER 
grants and cuts the capital investment grants program.
    Director Mulvaney, can you explain to me how the budget 
incorporates the President's new $200 billion infrastructure 
proposal. Would the infrastructure plan actually lead to a net 
increase in Federal investment in transportation 
infrastructure?
    Mr. Mulvaney. It would, and I am discouraged to hear you 
reference Mr. Schumer's numbers, because they are just flat-out 
wrong, which is unfortunate that he has chosen to demagogue the 
issue. But if you look at Mr. Schumer's numbers, what he is 
assuming is a $122-billion cut because of the highway trust 
fund. The highway trust fund is $122 billion short. We all know 
it and unless you all make a separate appropriations for it, 
that money is not going to get spent anyway. So it is one of 
those classic examples, Mr. Carbajal, where we compare 
something to a baseline that everybody knows is not right. It 
is one of the ways that Washington counts that is different 
from the way the rest of the world counts.
    He takes, I think, into consideration a reduction in the 
CDBG program, which might be infrastructure and might not. So 
really it is demagoguing an issue instead of talking about ways 
to actually pass an infrastructure bill that works. My concern 
is that Mr. Schumer is heavily invested in simply seeing the 
President fail as opposed to talking about the issues that are 
important to people back home.
    Mr. Carbajal. Mr. Mulvaney, help me understand--if the 
TIGER grants go away--this is a priority of mine. Both Santa 
Barbara and San Luis Obispo counties in my district have 
applied for TIGER grants to widen the U.S. 101 corridor, which 
is a critical link for the regional movement of goods, and to 
widen highway 46, another critical economic connector, which 
recently served as an alternative route when the disaster hit 
and mudslides shut down the 101. Without TIGER grants, where do 
you suggest communities like mine pursue funds for this type of 
infrastructure?
    Mr. Mulvaney. Through the new infrastructure program that 
we are proposing. If TIGER grants were the answer, Mr. 
Carbajal, we would not have this problem in the first place. If 
just throwing money at the problem was the answer, then the 
stimulus 10 years ago would have solved the problem.
    Clearly, what we have been doing in the past, which 
includes TIGER grants, does not work. It is one of the reasons 
we have the crumbling infrastructure that we have. I give 
tremendous credit to the President for at least coming up with 
new ideas on how to fix the problem. Because, again, if we 
simply do the same thing we have always done, we are going to 
get the same results we have already gotten.
    Mr. Carbajal. Mr. Mulvaney, but we are actually inverting 
the formula that the Federal Government has always utilized to 
help local communities. That is, they used to do 80 percent 
funding and allow local communities to come up with 20 percent. 
Now we are saying you come up with 80 percent and we will come 
up with only 20 percent. How is that helping?
    Mr. Mulvaney. Because we also found that when we increase 
Federal spending on infrastructure, as we did during the Obama 
stimulus, all it did was displace state funding. No additional 
roads actually got built. What happened, was states took money 
they were going to spend on building roads and bridges and 
other infrastructure, and moved it to other priorities, and the 
Federal money displaced that so that nothing additional got 
built.
    Mr. Carbajal. Well, we will agree to disagree on how that 
impacted local communities. I was in local government and I 
will tell you we saw the benefits of those investments, which 
is not the case with what is being proposed here.
    Mr. Mulvaney. Thank you, sir.
    Chairman Womack. Gentleman yields back. Gentleman from 
Ohio, Mr. Johnson is recognized for five minutes.
    Mr. Johnson. I thank you, Mr. Chairman and Director 
Mulvaney, thanks for being with us today. I still need my 
baseball pants back, by the way. That is an inside joke.
    Mr. Mulvaney. He lent me a pair of part of my baseball 
uniform a couple of years. I want to point out that it was much 
too large.
    Chairman Womack. That will be stricken from the record.
    Mr. Johnson. Well, thank you, Director Mulvaney. I am 
optimistic, and I am glad to see that you and the President, 
the administration is looking at the other side of the ledger 
sheet--cost and controlling spending as we move forward. And I 
think his budget reflects it.
    Now, I do have some questions about the budget, but last 
May when you came before this Committee to President Trump's 
fiscal year 2018 budget I expressed to you at that time--we had 
a private conversation about the fact that the funding for the 
Appalachian Regional Commission had been zeroed out based on a 
dated study.
    This year, however, I am very quite pleased that the 
administration's budget has maintained level funding for ARC at 
152 million. This funding is so critically important for 
reinvestment and development of the Appalachian region, 
including eastern and southeastern Ohio, where I live, and to 
ensure that Appalachia does not continue to get left behind. I 
know the President is very concerned about that area of the 
country.
    I am also pleased that the administration has taken 
seriously the opioid epidemic. As President Trump declared last 
August, this is a national emergency and one that is hitting 
eastern and southeastern Ohio particularly hard. Addiction does 
not discriminate by age, race, social status, economic status, 
or political party. Solving the problem is going to take 
communities, families, local elected officials, churches, 
faith-based organizations, and elected officials from the 
President all the way down to the lowest level. It is going to 
be an American solution. We are all going to have to be vested 
in the fight. And I am pleased to see that the President's 
budgeting includes approximately 20 billion to combat the 
opioid crisis.
    So here is my question. Specifically, can you give us an 
idea what the administration is doing to combat the opioid 
crisis and can you expand on how the administration intends to 
use these funds and how it will coordinate between the agencies 
and the departments to ensure that these funds are used most 
efficiently?
    Mr. Mulvaney. Thank you, Congressman. It gives me an 
opportunity to let everybody know, if they have not heard 
already, that I believe we have named a Director of the Office 
of National Drug Control Policy, which is going to be 
extraordinarily helpful.
    If you look at the line items in the budget, Congressman, 
you will see a dramatic reduction in the ONDCP budget. That, 
however, is a result of simply moving the grant programs that 
were managed out of the White House over to, I believe it is 
HHS and DOJ. So while it appears on a piece of paper as a 
reduction, actually it is simply a movement from one section to 
another.
    We have $3 billion, I think, in the 2018 budget; $10 
billion in the 2019 budget for opioids. And then, a bunch of 
other money in other places to bring up that number close to 20 
billion that you have mentioned. The various things the 
President has talked about is a national advertising campaign 
similar to what we were able to do to simply discourage people 
from using it. There are some very powerful tools we have 
there.
    One of the most interesting things is the work Congressman 
Cole mentioned earlier. The NIH, we have tasked the NIH with 
trying to come up with a non-addictive painkilling replacement 
for opioids. So there are a bunch of different initiatives and, 
obviously, with $20 billion you can do a bunch of different 
things.
    But I think no one can, I think, doubt the President's 
commitment to this, not in terms just of money because money is 
not always the best measure of whether or not we are committed 
to something. But the commitment of energy and time and 
attention, I think, is encouraging.
    Mr. Johnson. I would agree. This is, the opioid epidemic is 
not something that we are going to be able to spend our way out 
of, arrest, or incarcerate our way out of. It is a big problem. 
Shifting gears just a little bit, the President requests 647 
billion in base Defense discretionary spending in fiscal 2019. 
I think I know the answer but I want to give you a chance to 
respond. Why is funding of that magnitude necessary?
    Mr. Mulvaney. I would defer for the details to Secretary 
Mattis, because I only have 10 seconds left but the long and 
the short of it is that to deal with some of the new threats, 
including North Korea, we needed a considerable up fit to some 
of our capabilities and also to undo some of the decay that was 
experienced over the last several years.
    Mr. Johnson. Okay. Thank you. Chairman, I yield back, and 
you can keep the baseball pants.
    Chairman Womack. Thank the gentleman. The gentleman's time 
has expired. Ms. Jackson Lee--where are we? Mr. Jeffries, you 
are recognized for 5 minutes.
    Mr. Jeffries. Thank you, Mr. Chair, and thank you, Mr. 
Director, for your presence here today. I was confused by a 
statement that you made in November, so hopefully you can 
clarify it for me. You stated in defense of the tax bill's 
obliteration of the state and local tax deduction that ``it is 
simply not fair, it is not right, that the folks who live in 
low-tax jurisdictions are actually subsidizing the folks that 
live in high-tax jurisdictions.'' Did you make that statement?
    Mr. Mulvaney. Yes, sir. Several times.
    Mr. Jeffries. Now, there are two types of states in this 
country: donor states and taker states. Is that correct?
    Mr. Mulvaney. There are, but that deals with the receipts 
from the government, not the pays in.
    Mr. Jeffries. Okay. So a donor state, like New York, New 
Jersey, or Connecticut regularly send more money to the Federal 
Government than we get back in return. Is that correct?
    Mr. Mulvaney. I believe that to be true. Yes, sir.
    Mr. Jeffries. Okay. So, I do not understand how there can 
be any other distinction as it relates to Washington-speak that 
you have previously descried, when you talk about high-tax 
jurisdictions like New York, New Jersey, and Connecticut 
subsidizing the Federal Government. We actually receive less 
regularly from the Federal Government than we get back in 
return. In fact, New York, a high-tax state, generates 9.4 
percent of the Federal Government's income tax receipts. We 
receive only 5.9 percent of Federal spending allocated to 
States.
    Similarly, as I think you are familiar with, a real taker 
state--states like North Dakota, South Carolina, Alabama, 
Kentucky, West Virginia, Indiana--get more than $2 back in 
Federal spending for every dollar they send to the Federal 
Government in taxes. Is not that the real donor state/taker 
state dichotomy?
    Mr. Mulvaney. The distinction, Congressman, is that you are 
looking at it at a state-wide basis, and I am looking at it at 
an individual basis. My comment was and remains that if you and 
I live in two different states but make the exact same amount 
of money and you lived in a higher-tax state and I lived in a 
lower-tax state, you were actually paying less Federal tax than 
I was, which we did not think was fair. And it did act as a 
subsidy, where I was paying more so that you could pay less.
    Mr. Jeffries. Okay. That strikes me as sort of the 
Washington-speak that you have consistently descried, but I 
will take your answer as one rendered in good faith. In 2011 
you called President Obama's fiscal year 2012 budget a joke. 
Correct?
    Mr. Mulvaney. I do not remember that, but that sounds like 
something I would say.
    Mr. Jeffries. Okay. And that budget, you indicated it is 
hard to explain from detached from reality this is to think 
that the country can spend another $1.6 trillion when it does 
not have the means. Do you recall making that statement?
    Mr. Mulvaney. Again, not specifically but I absolutely 
believe I said something like that.
    Mr. Jeffries. Okay. And then back in 2011 you told 
attendees at a town hall in Sun City Carolina Lakes 
development----
    Mr. Mulvaney. Wonderful place.
    Mr. Jeffries. ``I am sure that the country's debt is much 
worse than I ever thought. Allowing this figure to increase 
compromises U.S. foreign policy.'' Do you recall making that 
statement?
    Mr. Mulvaney. Again, no, but I absolutely believe that I 
made it.
    Mr. Jeffries. Okay. And then, in April of 2011 you said, 
when asked whether you would vote to raise the debt limit, 
which some had called Armageddon, you said, ``It is no more 
Armageddon and no more catastrophic than what we are doing 
right now, spending $1.5 trillion that we do not have every 
year.'' You recall making that statement?
    Mr. Mulvaney. That one I actually do remember, yes.
    Mr. Jeffries. Okay. And then in 2015 during another debt-
ceiling standoff, you stated--this is a great one--``If 
reconciliation is used to try and raise the debt ceiling there 
may well be blood on the floor of the House Chamber.'' Do you 
recall making that statement?
    Mr. Mulvaney. No, but that is a really good one. I like 
that one.
    Mr. Jeffries. I agree. Now, you voted against raising the 
debt ceiling in October of 2015. Correct?
    Mr. Mulvaney. I do not recall but I voted against debt 
ceilings several times. I voted to raise the debt ceiling a 
couple of times as well, but I do remember voting against the 
debt ceiling more than once. Yes, sir.
    Mr. Jeffries. And in May of 2017 before this Committee, 
when asked by Representative Barbara Lee about the cut to food 
assistance to the poor, you responded that we should be 
focusing on the standard of living of your unborn 
grandchildren. Is that correct?
    Mr. Mulvaney. Again, I do not remember that, but that is 
consistent with what I believe. Yes, sir.
    Mr. Jeffries. Okay. Now, the debt, which you once descried, 
was previously $14 trillion. It is now in excess of $20 
trillion. Is that correct?
    Mr. Mulvaney. Yes, sir. I believe the total debt is 20 
trillion. I think the debt held by the public is about 16 and 
change.
    Mr. Jeffries. Okay. What confuses me, in the time that I 
have remaining, is the absence of real intellectual consistency 
here. Not doubting your good faith, but you take one set of 
positions as a Member of Congress and then come forward with an 
administration supporting a bill that saddles our children and 
grandchildren with more than $1.5 trillion in additional debt 
simply to pay for tax cuts for millionaires, billionaires, big 
donors to the Republican Party, and special interest 
corporations, and then triple down on that by presenting a 
budget that would increase the debt by $7 trillion.
    I think that, unfortunately, is a shameful abdication of 
the fiscal responsibility that I always believed the Republican 
Party stood for in this Nation. I yield back.
    Chairman Womack. Thank you, sir. Gentleman yields back. Mr. 
Lewis, gentleman from Minnesota is recognized for five minutes.
    Mr. Lewis. Director Mulvaney, thanks for coming today. I 
think I only have one quote of yours going back a couple of 
days I am going to use. So, you will be relieved to hear that, 
probably.
    Mr. Mulvaney. Remember.
    Mr. Lewis. And I do want to talk about intellectual honesty 
in a moment, and I will get to that. But first I am not going 
to sit up here and defend the spending in this budget. But then 
again I will not defend the spending in a number of 
congressional budgets either. The fact is, last Sunday you made 
the salient point that you had hoped the Democrats would come 
along on the defense side, but without giving us additional 
money for welfare spending. But they refused and that is just 
the world we live in.
    And I think that is absolutely true. In fact, I do not 
think it is possible in this world to plus-up defense from $549 
billion to $716 and say we will just zero out social programs. 
That is not going to pass anybody, let alone the United States 
Senate.
    So, instead of a shared sacrifice being everybody tightens 
their belt across the Federal budget, we get these stair steps. 
You fund mine, I will fund yours. Except in the budget you have 
got discretionary spending in the President's budget request 
taking defense up all the way but social spending goes from 
about $591 with the BBA all the way down to under $400 billion 
in 2028. How is that not possible now but it is going to be 
possible over 10 years?
    Mr. Mulvaney. Keep in mind that in 2018 we do spend up to 
the caps, as I have mentioned before, and in 2019 we do not. 
Those are the two budgets that are sort of in front of you 
right now. Once we start talking about 2020, that is the vision 
for the future. It is not next year's budget. It is the vision 
for the future.
    And what we are saying is look, there is a way to get off 
of this trillion-dollar trolley, right? Off of this carousel of 
trillion-dollar deficits, and one of the ways that you could do 
it is to look at what the President would call the two-penny 
plan, which is to reduce these programs over the course of 
time. We do not put any specifics behind it because these are 
the out years. This is how budgets work, right? So we have 
details for 2018 and 2019 and then policies, general ideas 
going forward. And that is what we do: offer one way to get off 
of that trillion-dollar deficit.
    Mr. Lewis. I just think, Director, it's going to be a 
challenge and I do think we have to sort of get religion on the 
Budget Committee, get it in Congress, that real fiscal 
restraint means restraint across the budget. This sort of red 
versus blue tribalism is not working and we end up with a sort 
of a scratch your back, you fund mine, I will fund yours. And 
they are all Federal programs and they all can take some belt-
tightening.
    I do want to spend the rest of the time talking about 
intellectual honesty and two kinds of deficits. You will see on 
the screen a President a few decades ago said, ``Our true 
choice is not between tax reduction, on the one hand, and the 
avoidance of large Federal deficits on the other. It is 
increasingly clear that no matter what party is in power, so 
long as our national security needs keep rising, an economy 
hampered by restrictive tax rates will never produce enough 
revenues to balance the budget.''
    I repeat, ``Our practical choice is not between the tax-cut 
deficit and a budgetary surplus. It is between two kinds of 
deficits. A chronic deficit of inertia has the unwanted result 
of inadequate revenues in a restrictive economy, or a temporary 
deficit of transition resulting from a tax cut designed to 
boost the economy, increase tax revenues, and achieve, I 
believe, and I believe it can be done, a budget surplus. The 
first type of deficit is a sign of waste and weakness. The 
second reflects an investment in the future.''
    Now, if some of our colleagues were really concerned about 
intellectual honesty, they would have to disavow John F. 
Kennedy's speech to the Economic Club of New York in 1962 
because the former President made a specific distinction 
between a deficit that is caused by increased spending, which 
comes out of the capital market and a deficit caused by tax 
reduction designed to boost the economy but does not increase--
let me put it to you this way real quick. Would you rather have 
a balanced budget of $4.4 trillion by raising taxes or a budge 
out of balance of 1 trillion? What is going to be more 
deleterious to the economy?
    Mr. Mulvaney. I would rather have the latter.
    Mr. Lewis. So there is a difference between these two kinds 
of deficits, and I hear the other side constantly say, ``Oh, 
gosh, the tax cut scam bill. Raise the deficit.'' You do not 
care about deficits. It does not matter whether you tax, 
borrow, or inflate. It is the amount of spending that comes out 
of the capital markets. Is not that true, Director?
    Mr. Mulvaney. And the type of spending the government does, 
recognizing that letting people keep more of their own money is 
not spending. It is the most efficient allocation of capital 
that we can have.
    Mr. Lewis. It is the most efficient allocation, because the 
productivity increases. So, I just want to make certain we 
understand that we could ``balance the budget by raising 
taxes.'' But you are still crowding out the capital markets if 
disposable personal income is basically the amount of money you 
earn minus the taxes you pay. That is disposable income. 
Consumption can stay the same. But if you raise taxes, what 
happens? Actual disposable income goes down, so that is 
crowding out.
    Mr. Mulvaney. Spending is the crowding out. There is no 
question.
    Mr. Lewis. So, I would just encourage everyone if you 
really want to keep your eye on the prize, it is a problem, no 
question, interest on the debt. But it is not necessarily all 
the time how we finance government. It is how much government 
we choose to finance. I will yield back.
    Mr. Mulvaney. Am I the only one who feels like I am on a 
radio program right now?
    Chairman Womack. That was cheap.
    Mr. Mulvaney. It is not cheap. I enjoyed the show.
    Chairman Womack. Gentleman yields back. Ms. Jackson Lee is 
recognized for 5 minutes.
    Ms. Jackson Lee. Mr. Director, it is good to see you again. 
I thank the Chairman and the Ranking Member for this time and 
the time is obviously short. There have been a lot of quotes 
drawn by some of your statements, Mr. Mulvaney. I am going to 
quote one of my predecessors of many years ago. When the 
Honorable Barbara Jordan sat on the Judiciary Committee during 
the impeachment hearings of President Richard Milhous Nixon, 
and she said that she was not going to allow the Constitution 
to be diminished.
    And what I would say to you, with all due respect, that I 
am not going to allow the American people to be debased and to 
have them publicly excoriated by a morally bankrupt budget. 
This is not a personal statement because you were so kind to 
tell us that a budget is a statement of policy and beliefs of 
the particular administration that offers it. So, I think it is 
important to allow just a quick rundown.
    Your budget zeroes out the Federal Work Study Program. It 
zeroes out community service's block grant. It zeroes out 
LIHEAP, that helps for those seniors and others who need 
support for heat in the winter and air conditioning in the 
summer. It zeroes out the community development block grant 
that so many urban and rural areas are dependent on. I think it 
zeroes out the rule of development under agriculture that my 
own small cities depend on. It zeroes out the senior community 
service program.
    It zeroes out a very important asset of the United States, 
which is the National Aeronautics and Space Administration, 
their science missions. It zeroes it out. It zeroes out the 
TIGER grants. It eviscerates the Legal Services Corporation. It 
eviscerates the arts. And this is a poor statement on what 
America is about and how the American people voted.
    I do not believe they voted for the President to destroy 
the very fabric of this Nation. So, let me raise the question: 
I believe you have a policy to eliminate Federal workers. Right 
now as relates to the Bureau of Prison, which comes under the 
Department of Justice, of which I sit on the Judiciary 
Committee.
    They are looking to cut 6,000 jobs nationwide; in my own 
community 37 jobs. They have preemptively cut these jobs. You 
are killing Federal workers. You are now causing Federal 
workers to vet prisoners to send out to private prisons. 
Private prisons do not allow FOIA requests to know what they 
are doing. Disturbance control is now done by our Federal 
employees dispatched out to private prisons, because they are 
not capable of putting down disruptions.
    So, I will be asking a question along these lines: Violence 
against Women Act or violence or domestic abuse has been a 
major issue over the last couple of days. We have found that to 
be a problem in your own White House. The inability to speak 
against it; the inability to denounce it. But yet your budget 
does not have a separate line item for violence against women. 
You have put it in the victim's fund that does have about $13 
billion.
    You are taking out a sizeable amount for this and many 
other things, and therefore, what you are saying is America's 
tax dollars do not believe in fighting against domestic 
violence. Because you have thrown it into a fund that really, 
the victims of crime across America should be aware that they 
can be able to apply for the victim's fund, but you are 
throwing the domestic violence in that.
    Would you answer the question about getting rid of Federal 
employees and the insignificance of the violence against women 
funding so much so that it is thrown into a pot of money that 
should be for those victims of other crimes?
    Mr. Mulvaney. I would be happy to. Thank you for that, 
Congresswoman, and I appreciate your perspective on that. We 
just respectfully disagree. We moved the VOWA program into that 
fund because we thought it was the absolute best place to 
guarantee the flow of funds. There is a tremendous amount of 
money there. We are actually fully funding VOWA. I think it is 
a tremendous commitment by the administration to do exactly 
that. We may disagree, ma'am, over the source of the funds, but 
not over the use of the funds. You and I would both agree that 
that program needs to be fully funded, and we do exactly that.
    Ms. Jackson Lee. Would you comment about getting rid of 
Federal employees across America?
    Mr. Mulvaney. I cannot speak to the prison program in 
particular. I apologize. I do know that we have proposed 
reductions in force at places like the EPA as a result of our 
reductions there. But I cannot speak to the Federal program.
    Ms. Jackson Lee. May I reclaim my time with only the few 
seconds I have. As I indicated as I started, I believe this is 
morally bankrupt. I believe we can do a better job. And I 
believe that we are not here to crush the American people and 
to deny them the very sources of Medicare, Social Security, and 
basic living standards. With that I yield back. I thank you, 
Mr. Director.
    Mr. Rokita. [Presiding.] Gentlewoman's time has expired. 
Mr. Smucker from Pennsylvania, you are recognized for 5 
minutes.
    Mr. Smucker. Thank you, Mr. Chairman, and good afternoon, 
Director. There has been a lot of discussion around the debt 
and the deficit. I share the concerns that have been discussed 
but on both sides of the aisle; I think it is a threat to our 
economic future and to our country if we are not able to get it 
under control.
    I would like to thank the administration, thank the 
President, for taking what I think is a very important first 
step and that is generating strong economic growth. I believe 
that we cannot at 1.9 percent growth get this under control, 
and so the regulatory relief the tax reform that the President 
has shown the leadership in really is the first step needed to 
solve the deficit.
    I am disappointed that the budget does not balance, as you 
have testified, within a 10-year period, but I understand you 
are saying that you expect annual deficits to decrease. Could 
you expand on that and further, do you think we are, if not 
within 10 years, are we putting, with this budget, ourselves on 
a path of balancing the budget within a certain period of time. 
And if so, how long will that take?
    Mr. Mulvaney. Sure. The projections right now, keep in 
mind, these projections may change a little bit, ladies and 
gentlemen, simply because we have not had a chance to fully 
digest the caps deal. These are bits and pieces. The example I 
give is, there is a 2-year extension to the mandatory sequester 
that we have to factor in, I think, but these numbers should 
roughly stay the same, which is that we are looking at $948 
billion in deficits this year. That goes down to $448 in 2028.
    Keep in mind, a big piece of that in the out years is--we 
have not raised this yet, Mr. Smucker--our assumption that the 
reduction in individual tax rates that phase out under the tax 
bill are actually made permanent. So, if you actually ran this 
against the tax law itself verbatim, the numbers would actually 
be smaller. But we always thought it was a fair point to make 
the case that we thought that was good policy. The only reason 
it was not permanent in the first place was to deal with the 
reconciliation rules in the Senate, so the budget assumes 
something that actually goes beyond what the tax bill does. But 
we sort of trend down.
    You have heard me say earlier that that gets the deficit 
down around 1, I think 1.1 percent of GDP in the last year.
    To your larger question, outside the budget window we went 
back and forth in this sort of philosophically within the 
office. I did not want to go any further than that. I think 
that coming to you and saying oh, do not worry. The budget 
balances in 17 years or 27 years or 37 years. I thought that 
undermined the credibility of the numbers. I thought it was 
much more difficult for the administration to come in and admit 
that it was not going to balance, but I think it is a lot more 
honest and transparent and accountable to do exactly that, 
which is why we did it.
    Mr. Smucker. I would love to follow up on that but I have 
an additional question I would like to ask you.
    Mr. Mulvaney. And I will try and give shorter answers. I 
apologize.
    Mr. Smucker. After serving on the Budget Committee for one 
year, in the past year one of the biggest takeaways is how 
broken the process is. And that is certainly, it is recognized 
by probably everyone in this room. It is very difficult to even 
argue that the Federal budget process is working when in the 
past 20 years we have had more than 100 CRs, an average of five 
per year. And under the current budget process, there have been 
19 government shutdowns. It is just simply unacceptable.
    I have seen the difference in--this is Pennsylvania State 
Senate--I have seen the difference in the process there from 
here. Very decentralized, not a lot of accountability in the 
process. Do you believe that there needs to be greater 
coordination between Federal agencies, such as OMB and Congress 
throughout the current budget process to ensure more fiscal 
responsibility?
    Mr. Mulvaney. I would welcome that. In fact, I would have 
been pleasantly surprised to hear some of my Democrat folks, 
especially commend me and my staff for being much more 
available than in previous administrations of both parties, so 
we have looked forward to doing that, continuing that.
    I would suggest to you, however, that really the hurdle 
right now to the appropriations process functioning is not OMB 
and it is not the House. It is the Senate. And until they 
figure out a way to either work together or figure out a way to 
change the rules to allow them to pass bills with a majority 
and not a super-majority, it is unlikely that we will see an 
end to the current budget impasses that we have.
    Mr. Smucker. Yes. I believe there are other changes that we 
could make in the process to drive additional accountability. 
In fact, a few weeks ago I introduced a bill that would create 
a joint commission on budget process. And this is modeled after 
something we did in Pennsylvania, where we had a similar 
difficult problem there for decades and created a sort of 
inside commission with appointed members from the House and in 
that case, the Senate, and the administration. And my idea 
would be to do that here as well. We would include folks from 
the administration--potentially yourself.
    I just wanted to get your thoughts on that. Do you believe 
that the administration should be involved in efforts by 
Congress to reform the Federal budget process?
    Mr. Mulvaney. We would absolutely welcome it. In fact, I 
encourage you to reach out to your counterpart, Mr. Enzi in the 
Senate. He is one of the leading voices over there on budget 
process reform. Also Senator Daines, a former member of this 
body. Very interested in trying to figure out a way to reform 
the system so that it works and we can spend money 
appropriately.
    Mr. Smucker. I think it is a bipartisan issue. It is one 
that we should all look to, to try to solve. So thank you. I 
look forward to continued discussions on that.
    Mr. Rokita. Gentleman yields back. Gentleman from 
California, Mr. Khanna is recognized for 5 minutes.
    Mr. Khanna. Thank you, Mr. Chairman. Thank you, Director 
Mulvaney. I want to associate myself with my colleague's 
comments of concern about the cuts and so many social programs. 
It is why I oppose this budget. Given that I am the last person 
to ask questions, I do not want to cover ground that has 
already been covered. And so, I want to bring up two different 
issues.
    First, in the interest of proving that Democrats can say 
something nice when we do agree with a policy perspective, I 
want to commend you for supporting the Will Hurd/Robin Kelly 
bill on modernizing government technology. It is $210 million 
to help make the government better with the internet and 
technology, and I think that is common sense. I really hope the 
Appropriations Committee will fund that bipartisan effort and I 
appreciate that being part of the budget.
    My question is a more philosophical question, because I do 
not think there is a person on this Committee who does not 
believe or does not want America to succeed and outstrip China 
and be the dominant economy in the 21st century. I read a 
report a few days ago by Bain. You cannot accuse Bain of being 
like the New York Times or CNN or biased. I mean, you know, 
Mitt Romney worked there.
    And here is what Bain's report said. Bain's report said, 
basically, we are going through a technology revolution similar 
to the industrial revolution. The industrial revolution took 40 
years. The transition from manufacturing to services took 20 
years. This technology revolution is probably going to take 10 
years. It is going to displace potentially 20 percent of 
workers. And they said that the biggest challenge to America's 
economic growth is actually income inequality, because there 
may not be enough people with money to buy things.
    Now, we know China has their problem. China does not care 
about the consumer welfare of their individuals. It is all an 
export-driven economy. The success of our country has been a 
strong middle class that buys things. Not just from a 
perspective of fairness. From an actual perspective of economic 
growth and making sure we outstrip China in the 21st century.
    So, I guess my question is just, is simple and it is really 
not partisan, but do you see the world from a similar lens, 
that we have to tackle income inequality and care about the 
growth of the middle class if we care about America's success?
    Mr. Mulvaney. I will surprise you and say that we do, and I 
think many of my party do. I think one of the places 
philosophically where we start to vary is how to remedy this 
situation. There are many folks in your party, writ large, who 
would say well, the way to solve that gap is to have government 
get involved to redistribute wealth. Folks on this side of the 
aisle would say no.
    The best way to do it is to allow folks to lift themselves 
up out of poverty to close the gap. I have always contended 
that people really do not care much about how much other people 
make. They care a lot more about how much they make. It is not 
income inequality that I care about as much as it is my own 
income.
    And if I feel like I am able to provide for my family, I am 
able to provide my children with what I want to give them, that 
I am happy. I do not care that you make 10 times or 100 times 
what I do.
    I would point out on the Bain thing--I have not seen that 
but I have seen similar reports. I would encourage you to, and 
again, I know it was a philosophical question. I will draw it 
back to the budget very quickly. Displacement does not always 
mean unemployment. That it never has. When cars displaced the 
horse and buggy all it did was create new opportunities at 
higher-paying jobs. That is why it is so critical, obviously, 
to have education as part of this. I know we have taken some 
criticisms today from your side of the aisle regarding some of 
the proposals on education. What has not been mentioned is the 
doubling of the commitment we make to apprenticeship programs 
because we have proof that they work.
    A classic example is trade adjustment assistance, which the 
data actually suggests if you go through that Federal program 
you are worse off than not having gone through it. But if you 
go through an apprenticeship program you are actually much 
better off. So, we would move money around in order to fund 
those types of things. So I would agree philosophically we 
would look forward to working with you on ways that maybe we 
can work together to accomplish that same end.
    Mr. Khanna. I appreciate the acknowledgement on income 
inequality, and I agree with you that new jobs are going to be 
created. And Bain says that the challenge is, it took 40 years 
from the transition when we went from agriculture to 
industrialization. And the question is how long is it going to 
take for these new jobs and what are we going to do on the 
transition?
    But my hope would be given the recognition in income 
inequality, maybe there are productive investments, whether it 
is in technology credentialing, whether it is in public 
colleges, universities, expanding access to the internet--that 
people on both sides could come together on to say look, we 
have got to do this because this is what is going to make 
America competitive in the 21st century. And I hope sometime in 
the next year or few years we can actually start working on 
some of that in a bipartisan basis.
    Mr. Mulvaney. Thank you, sir.
    Chairman Womack. Thank the gentleman. To Wisconsin, Mr. 
Grothman.
    Mr. Grothman. Yes. First of all, thanks for coming over 
here, Mr. Secretary. We are glad to see you. I will do a 
follow-up on that last question. I personally believe one of 
the reasons for the widening income gap is for whatever 
motivation, there are a lot of programs out there that are 
designed to make sure that people do not make more money or 
they lose their benefits.
    And there is no question, I think, that the widening gap--
both the wealth gap and income gap--is caused maybe 
intentionally by people who like to keep people dependent and 
maybe unintentionally, you know, to make sure people do not 
make more money.
    But I notice while I thank you for doing what you can to 
reduce some of these programs, you did not really touch the 
housing assistance programs, which I think are sometimes almost 
as pernicious as the SNAP programs. Is there any reason why you 
did not, you know, do things on the housing assistance 
programs, which also discourage people from working or getting 
married?
    Mr. Mulvaney. Actually, I think you will find that we did 
make some proposals there, Congressman, deep down in the 
details in the weeds in the budget. But we try to encourage 
folks to work so that they can pay a larger percentage of their 
income towards their rent. Those are folks who actually can 
work. Again, we have taken some criticism that I think is----
    Mr. Grothman. And I just mean people of working age who are 
not disabled.
    Mr. Mulvaney. Correct. And that is who it should be.
    Mr. Grothman. There is no question those programs right now 
are like designed to keep the income gap as great as possible.
    Mr. Mulvaney. We agree.
    Mr. Grothman. Okay. Next question. I voted for the budget 
last week. A very difficult vote. And sometimes when you take a 
vote in this business you either have a choice of voting for 
bad things if you vote yes and worse things if you vote no. But 
as I get the numbers, there was about a 10.4 percent increase 
in defense discretionary and 9.4 in non-defense discretionary. 
And I believe what happened in the negotiation on it was there 
was the executive branch. I know there was Paul Ryan. I know 
there was Mitch McConnell. I think in order to go up on one you 
had to go up on the other as a practical matter.
    I wondered if you would be willing to weigh in and say when 
we reach the final deal, rather than going up 10.4 or 9.4, if 
say we would go up 8.4 and 6.4. Do you think that would be 
advantageous for the administration to weigh in on something 
like that?
    Mr. Mulvaney. Well, again, the administration's priority 
was not in terms of a percentage increase as much as it was a 
raw dollar increase. I think Secretary Mattis admitted the case 
to both parties that he thought a funding level of $700 billion 
this year and $716 next year was what was necessary. So that 
was, that was our starting point.
    Mr. Grothman. I did not mean to cut you off but I only have 
5 minutes.
    Mr. Mulvaney. No. That is fine.
    Mr. Grothman. When you were before us a year ago you were 
talking about a 5.5 percent increase in defense. Now you 
thinking a 10.5 percent increase?
    Mr. Mulvaney. I do. I do not think we got a lot of the 
increases last year that we hoped to get, so we had to make up 
for some lost time.
    Mr. Grothman. Okay. Next question. I am afraid in this 
budget that because you are giving these increases and the 
agencies, be it Defense or other agencies, have to spend this 
whole 9 or 10 percent increase in the second half of the year, 
that these agencies will just be shoveling money out the door 
because that is the only way they can absorb such a big 
increase.
    Do you have any suggestions you can give our negotiators so 
that these agencies, some of which will get a 10 percent 
increase this year compared to last year and only have the 
final 6 months of the year to spend it, to not spend it 
wastefully?
    Mr. Mulvaney. Keep in mind, they cannot spend all that 
money in the last 6 months of the year. What will happen, is 
that the money that they have already spent under the CRs will 
sort of be taken into consideration. So you do not get to spend 
$100 if your budget for the year is $150 and you have already 
spent $75 on a CR; you cannot spend $125.
    Mr. Grothman. What I understand is this. Let's say your 
budget is $10, okay, and you decide to give them a 10 percent 
increase and now they get $110. Presumably they were going 
along at $10. In the first six months of the year they spent $5 
and all of a sudden the second half you are saying, ``Well, you 
do not have $5. You have $6. So you have a 20 percent 
increase.'' See what I am saying? In the final.
    Mr. Mulvaney. But the point is they do not have 11 to spend 
in the second half. It is 5 plus 6, not 5 plus 11.
    Mr. Grothman. Okay. I do believe that is a potential 
problem. You see what I am saying?
    Mr. Mulvaney. And we tend to agree. One of the things we 
are very proud of because of the work the Congress had done and 
previous administrations had done of both parties, the Defense 
Department announced they are now ready for an audit and they 
are going through that process.
    Mr. Grothman. Okay. My final question for you: since this 
kind of a high amount of spending is discretionary, would you 
be willing to again and again publicly weigh in on it till the 
Senate agrees to reconciliation instructions to take up some of 
these welfare-type programs that the public believes is so 
abused. I know right now Mitch McConnell is not there, but 
would you guys be willing to strongly push to get in there?
    Mr. Mulvaney. Again, the priorities for us this year, 
Congressman, are the infrastructure, obviously getting a DACA 
deal, which we are hoping would be debated today and apparently 
I am not sure if it is or not, and then infrastructure would 
come after that.
    Chairman Womack. Mr. Woodall of Georgia.
    Mr. Woodall. Thank you, Mr. Chairman, and thank you, 
director, for being here. Thank you for your service. I wanted 
to thank you for the seriousness of the document that you 
prepared. It makes our job harder, as you recall from your time 
on this Committee, if you do not get a serious document out of 
the administration. It would always be easy to come up with 
some funny numbers and optimistic options and say you got to 
balance when you did not. So thank you for doing that.
    I also want to thank you for your work in the shutdown a 
few weeks ago. In yet another opportunity you can make those 
events as painful as possible or you can make them as non-
painful as possible for the people that we all represent, and 
this administration obviously made it as least painful as they 
could. And I am grateful to you for that.
    I wanted to ask you in part of that shutdown context if 
there were any discussions--you may remember in the Carter 
administration our great President from the state of Georgia--
government shut down six times for more than 60 days during 
that 48-month presidency. Two of those months were shut down, 
but prior to Reagan's attorney general, Mr. Civiletti and his 
decision that you actually had to close the doors and padlock 
them, shutdowns meant something different. Was there any 
discussion about what a shutdown means and whether that has to 
be a painful event for the American people?
    Mr. Mulvaney. There was. In fact I got direct instructions 
from the President to try to make it as painless as possible, 
to keep as many people at work as possible. To keep as much of 
the government open as possible. In fact, he and I commented 
that he was extraordinarily proud that the monuments were open 
for the folks who were here to protest against him on that 
Saturday. We thought that sent a message that the President 
really did care about the importance of managing the shutdown 
properly.
    What we found was that the previous administration probably 
was not as aggressive as it could have been on using carry-
forward funds and the transfer authorities that various 
agencies have. And that you could make the argument, and I have 
made the argument that they weaponized that shutdown for 
political purposes as opposed to trying to make it as painless 
as possible for both Federal workers and for folks who use 
Federal services.
    Mr. Woodall. Well, as you have seen demonstrated here 
today, a lot of these disagreements are thoughtful, 
representative disagreements about how dollars ought to be 
spent. When we allow a shutdown to weaponize the policy 
discussion, I think we end up with less thoughtful decisions at 
the end. So, thank you for what you did to make that less of an 
extortive event and if we can do that more going forward, I 
would be grateful.
    My colleague, Mr. Khanna, mentioned that America's success 
had been a strong middle class that buys things. I happen to 
disagree. I think it is a strong middle class that dreams 
things, that produces things, that builds things, and provides 
things, and I appreciate what the administration has been doing 
to make the American worker more competitive with what is going 
on around the globe. We have at least several trade deals going 
on right now, several tariff conversations going on right now. 
I am grateful for that.
    I see OCO falls in the tail end of the budget window. I 
remember you and I worked together on some amendments to try to 
make OCO represent exactly what it was to represent instead of 
pad the DOD budget. Does that reduction OCO in the out years 
represent a movement of fundamental defense dollars into 
defense spending or in anticipation that we will be withdrawing 
from conflicts around the globe?
    Mr. Mulvaney. No. That is exactly what it is. We took 
advantage of the opportunity, given the increase in the caps, 
to move stuff that should not have been OCO in the first place 
onto the base so that the OCO number more appropriately 
reflected OCO, which is the overseas contingency operations, 
the war budget, for example. So no, it actually accomplishes, 
if we choose to do it together, exactly what you and I set out 
to do several years ago.
    Mr. Woodall. And it is obvious from your seat now why we 
require an extra OCO account as opposed to moving that in? In 
the absence of a caps system of any kind, it does not seem to 
be a necessary component.
    Mr. Mulvaney. It does. I have learned that. Also the 
importance of the supplemental process. For example, we came to 
the supplemental request last fall to deal especially with the 
North Korean threat and some of the things we wanted to 
accomplish immediately regarding missile defense and so forth. 
So, some of the flexibility that OCO gives, some of the 
flexibility that emergency supplemental gives are important. It 
is also important at the same time not to abuse them and to use 
them for things that they were not originally intended.
    Mr. Woodall. I appreciate what you all are doing to squeeze 
every nickel. I would call attention to the Corps of Engineers 
funding particularly in the out years. As you know, we have a 
big project going on of national significance at the Port of 
Savannah in Georgia. Is there any conversation about what would 
be pennywise and pound foolish in terms of reducing some of 
those infrastructure investments when those investments are so 
close to paying off?
    Mr. Mulvaney. A couple different things. Obviously, you all 
set aside a good bit of money in the emergency supplementals 
that might be available to other Army Corps projects, which 
could free up money for projects like Savannah. We also offer 
some new ideas on how to do capital spending, capital 
budgeting. Not doing a full capital budget. But I look forward 
to talking to you about that in more detail because there are 
some ideas floating out there that could be extraordinarily 
productive.
    Mr. Woodall. Thank you very much for your service. Mr. 
Chairman.
    Chairman Womack. Ms. Schakowsky from Illinois.
    Ms. Schakowsky. Thank you, Mr. Chairman. Thank you, Mr. 
Mulvaney, and thank you for meeting with Democratic members 
yesterday. Appreciate that.
    Last year, I asked you about proposed cuts to Social 
Security Disability and cuts that are repeated in the 2019 
budget. You told me, ``Social Security Disability is not Social 
Security. Social Security Disability Insurance is disability 
insurance. It is a welfare program for the disabled.'' And I 
wanted to give you a chance to clarify the answer, but I just 
want to say that it was added to Social Security in 1954 and 
the money for both, the retirement and disability, are paid for 
by everyone through the same FICA contributions and yet you 
distinguish them. So, I wondered if you could clarify your 
answer.
    Mr. Mulvaney. Sure. And I think--and I do not remember the 
exact context but I do remember talking with you and with 
others about it last year--was regarding the President's 
promises and I think what I tried to make the case last year 
could make again right now, will make again right now, is that 
there is something different about Social Security Disability.
    There is something different about SSI as well and what a 
lot of people associate with Social Security, which is old-age 
retirement. You are absolutely correct. SSDI is funded through 
FICA. It is managed through the Social Security Administration. 
SSI is not funded through FICA, I do not believe. But again, 
neither of those are what a lot of folks would consider 
mainline Social Security.
    Ms. Schakowsky. Even though a lot of people might think of 
it as retirement it is also an insurance program for families, 
right? So maybe many people do not think about it as for widows 
and children as well. Regardless of what people think about it, 
I would argue that it is Social Security. Let me ask you about 
just SSA, the Social Security Administration.
    So, the operating budget for the Social Security 
Administration dropped 11 percent in real terms from 2010 to 
2017. Last year, SSA reported that the average hold time on the 
phone when you call is 16 minutes, up from 3 minutes in 2010. 
Half of callers hang up before getting services and 12 percent 
get busy signals. So do you consider that an acceptable level 
of customer service for Americans?
    Mr. Mulvaney. Having served in your position--you have been 
a Member of Congress for 6 years--I do not like the wait times 
and the hold times any more than you do.
    Ms. Schakowsky. Are you saying that it is mismanaged in 
some way?
    Mr. Mulvaney. No, and I apologize, Ms. Schakowsky. I am not 
as familiar with this off the top of my head so I am looking at 
our notes on this right now. But it looks like that part of the 
argument we make is that the Social Security Administration has 
not done as good a job as it probably can on modernization, on 
its IT work, and it could do better than that. We have asked 
many other agencies to become more efficient. We are asking SSA 
to do the same thing.
    Ms. Schakowsky. So the 2019 request for the Social Security 
Administration is 5 percent lower than the current funding 
level, and meanwhile SSA is expected to serve an additional $1 
million beneficiaries each year as baby boomers retire. So, how 
is the Social Security Administration supposed to handle its 
increased workload and fewer resources? I am sure all our 
agencies probably could be more efficient but it seems to me 
with the tremendous increase in need that SSA is in a very 
difficult position without more resources. I wonder if you 
could comment.
    Mr. Mulvaney. I think yeah, we have asked many 
administrations, many parts of the bureaucracy, to be more 
efficient. A lot of them have been slow to take up improvements 
in their systems simply because they have not been required to. 
They have always resolved their problems by asking for more 
money and often getting it. And until you force them to start 
making some difficult decisions, they will not change.
    Ms. Schakowsky. Well, I certainly hope you will look at 
that because the service aspect is very important to consumers 
in every single district in this country. Regarding Social 
Security Disability Insurance, the wait time for hearing 
decisions for disability claims spiked to 21 months in 2017. 
Those claims go through the Social Security Administration. 
This budget proposal to limit retroactive SSDI benefits for 
Americans with legitimate disability claims at the same it cuts 
funding for Social Security Administration is a real problem.
    Mr. Mulvaney. Actually, there we agree with you and think 
that our research indicates that part of the difficulty, in 
fact a good part of the difficulty when it comes to the delay 
on SSDI and some of the other programs, is the administrative 
law process. We are not the best at hiring in that particular 
area, and our proposal includes a way to reform that program so 
that we can actually get decent ALJ--administrative law 
judges--in there to move things through the system. I think 
what you will see, the research would indicate that there is 
actually a small number of judges account for a large part of 
the backlog.
    Ms. Schakowsky. Thank you. I yield back.
    Chairman Womack. Mr. Ferguson of Georgia.
    Mr. Ferguson. Director, thank you for being here today and, 
Mr. Chairman, thank you for recognizing me. I want to start 
with something that was said early on by our colleague from New 
Mexico, Ms. Grisham. She talked about the dire straits of New 
Mexico, 20 percent poverty, right? And I think she invited you 
to go and see that first-hand. You know, very dire straits in 
New Mexico. I compare that with my state of Georgia, where we 
are thriving in many, many areas.
    Do not you agree that policy and what is reflected here in 
the budget should reflect those differences and allow states to 
have flexibility so that New Mexico can address their issues in 
a different way than Georgia, and the fact that this budget is 
growing the economy and creating opportunities for Americans?
    Mr. Mulvaney. The administration does not believe that any 
particular state is condemned to permanent poverty, any group 
of people is condemned to permanent poverty; that everyone in 
every state has the ability to improve themselves.
    Mr. Ferguson. Okay. I want to focus for just a minute on 
the process that we go through here. I find it very 
disingenuous. I have written an op-ed talking about the big lie 
we tell ourselves is the budget process. Since 1974 this 
process has worked, I think, four times properly. We have seen 
Republicans in the White House, Democrats in the White House, 
Republicans in control of the House and Senate, and any various 
form that you want. And yet we are $20 trillion in debt. We 
have put in budget caps. We have gone down the road of removing 
earmarks.
    No matter what we do we wind up having these same 
conversations where the minority voice shuts down the 
government no matter which party is in control, and that is how 
they get their legislative agenda pushed to the front. Do you 
agree that we need to reform our budget process?
    Mr. Mulvaney. Absolutely. And would look forward to working 
with you on ideas. Again, I do not think that this is the 
chamber that is necessarily broken at this particular time.
    Mr. Ferguson. That is an interesting perspective. I think 
the entire process is, and while this chamber, while the House 
may be doing some really good work and strong work, we have to 
do it in the context of realizing that we have got to do this 
in conjunction with the administration and the Senate.
    Mr. Mulvaney. We do. I just point out as, I think, someone 
else pointed out rightly so that you all have actually done a 
pretty good job of passing the appropriations bill since I have 
been here. I think we have passed them more often than not. I 
think they get out of Committee a good bit. Sometimes they do 
not get across the Floor but I think last year you all passed 
all 12 of your props' bills, so, you are to be commended for 
that.
    Mr. Ferguson. The other thing that I want to touch on, and 
everybody, we have had a lot of conversation on this today. And 
that is the mandatory spending side of the equation. What I 
think we have got to do is we have got to change how we have 
this conversation. We sit in this particular hearing and look 
at how we frame the conversations. It is either you are cutting 
or you are doing something crazy to it.
    I mean it becomes a very political environment. Our side 
demonizes the minority party. The minority party demonizes us. 
And we are not having an honest and transparent conversation 
about what the future of these programs look like, where we can 
keep our promises to our seniors.
    Yet we can have an honest conversation about what the 
future of those programs looks like for somebody in their 50's, 
40's, and 30's. How do you think we should go about having that 
conversation differently, realizing that the only way that we 
are probably going to be able to do that is for that to be a 
bipartisan conversation?
    Mr. Mulvaney. You know, I do not know if I have any magic 
answers to that, Mr. Ferguson, as to how to solve the toxicity 
in the government right now. I think that a good start would 
probably be to get back to regular order.
    I cannot tell you, and this is not the question you asked, 
how disappointed I am and we are, as an administration, that 
Mr. Schumer is holding up debate on DACA in the Senate. He may 
have relented and allowed it today, but for the last day or so 
did not allow something that he insisted on having in the first 
place. It was a golden opportunity.
    You have probably not even seen real debate in the House. I 
only saw it once in the 6 years I was here. There are folks in 
the Senate who are really welcoming the opportunity today to 
have a floor debate on an issue with everybody able to offer 
their ideas and have them voted up or down. That is a fantastic 
concept. I just wish it would be allowed to run its course.
    Mr. Ferguson. One final thing. We have had a couple of 
hearings with the Congressional Budget Office on scoring. One 
of the things that strikes me is that the CBO, I asked the 
question do you have accurate number, if you go for any 10-year 
period, your projections in year one, how accurate were they in 
year 10?
    And they only get to year 6 and yet there is no data and no 
determination of accuracy in year 7, 8, 9, and 10. Yet we are 
being asked, and every Congress has been asked, to make 10-year 
budget decisions on a number that we have absolutely no idea 
how accurate it is. How would you address that?
    Mr. Mulvaney. The 10-year budget window is voluntary. I 
think the act does not specify the amount of window you have to 
take. Different administrations have done five, seven, 10. We 
looked at the possibility of doing 20. So if that is an issue 
to you, I encourage you all to look at possibly doing longer or 
shorter budgets. Again, really what matters, that when the 
rubber meets the road is this year and next, right? The rest of 
it is aspirational and a messaging document.
    Mr. Ferguson. Thank you.
    Chairman Womack. Mr. Arrington, Texas.
    Mr. Arrington. Thank you, Mr. Chairman and thank you, Mr. 
Mulvaney, for your heart for public service, and your love for 
our country, and your support for our President. I am 
encouraged by what I have seen, the results and the actions of 
this President, and so I want to start with a praise that this 
President has put our safety and security first. And it is 
about time. And our troops are desperately in need of those 
resources, so thank you for that and I want to say through you 
to him how much I appreciate his unwavering commitment.
    Also, from a national security perspective, to border 
security, and then, of course, your efforts and his efforts to 
support our moving tax reform through so we could unleash the 
full potential of our economy. In west Texas, I can tell you 
our folks are delighted with keeping more of their money and 
jobs coming online and wages increasing. And so, there is just 
hope for a better and brighter tomorrow for their families.
    And I think the best thing, though, from my perspective, 
that this President has done, and it is what is most needed in 
this country--it is not changing of the course that we were on 
over the last several years, although I am fully committed to 
that and obviously by his actions he is and you are. But it is 
the change in the culture. See, he has done exactly what he 
said he would do. Now, I wish he said he would take on 
entitlement reform in a much bigger and more meaningful way, 
but he has done exactly what he said he would do, and he is a 
promise keeper and I appreciate that.
    I wish we could add to his proposition of promises that we 
would go more aggressively at what I believe is the greatest 
threat to the future of this country and to our children and 
grandchildren. And I believe you believe that. It is obvious by 
looking at you and others that this is the beginning of Lent.
    This is Ash Wednesday, and the theme is repentance for the 
church. And just to kind of borrow from that and in the spirit 
of Lent, repentance means to turn from something, turn away and 
go a different direction. Where do we need to repent, Mr. 
Mulvaney, in this government with respect to our spending, our 
budget, and fiscal reforms? Where do we need to repent the 
most?
    Mr. Mulvaney. Well, every dollar is a dollar, Mr. 
Arrington. And every dollar you can save is one fewer dollar 
that you are going to not have to borrow, which is why our 
budget, we think, does offer an idea on how to save a bunch of 
money.
    Now, we do focus on the non-defense discretionary side of 
the budget, but we also, as I mentioned earlier, have $1.7 
trillion of reductions in mandatory spending over the course of 
the 10 years. So, we are open-minded about how to do better. We 
think this is one idea and a really good idea on how to get off 
of that road to permanent trillion-dollar deficits, but we look 
forward to working with both parties to see if there are ways 
to supplement this or do things in addition to it.
    Mr. Arrington. And I appreciate the efforts to reduce 
spending on both sides of the equation, mandatory and the non-
defense discretionary, while we are making the appropriate 
investment in our military and other core functions of the 
government.
    But I know you know that if we are really going to solve 
the debt issue and stave off a crisis and commit to our 
children a strong, safe, and free America, we have got to go 
bigger on these entitlement reforms. And I think the issue is 
the political will just is not there, that I have observed in 
Congress, to do that.
    But this President is a fighter and he has got amazing will 
and he has risen above what is the typical political culture, 
and I just plead with him through you to make this a priority. 
Everything he has made a priority and everything he has 
promised, he has done. So I just, I want him to embrace this. 
For such a time as this he is there and--what do they say? 
Leaders do the right things; managers do things right. This is 
the right thing. You know it. I know it. The American people 
know it. And I think he could make a big difference there. That 
is just my two cents.
    Mr. Mulvaney. And I will certainly deliver that message, 
thank you, Congressman.
    Mr. Arrington. I come from a big swath of rural Texas and 
as you know, these are the food, fuel, and fiber producers. 
These are the backbone of this country from a traditional 
American value standpoint, but they do not just contribute to 
our economy. They contribute to food security and energy 
independence. Now, 75 percent of the geography--rural America. 
But one of only every six Americans lives in rural communities, 
but virtually 100 percent of the food, fuel, and fiber produced 
by these country boys and country girls living in country 
places. Thank you for the commitment to rural infrastructure.
    Tell me how that process is going to work and how would 
broadband and access to the internet, which is not having in 50 
percent of rural communities, and you know it is the 
underpinning for the economy and the community, et cetera.
    Mr. Mulvaney. Very quickly; what we try to do is a large 
portion of the infrastructure bill is focused on things that we 
know could cash flow, could generate receipts: an airport, a 
port, a toll bridge, that type of thing. But we also recognize 
in a large of the country, as you mentioned, those models do 
not work, which is why we earmarked, for lack of a better word, 
I think it is $50 billion for things specifically like rural 
broadband, because we know they are absolutely critical to the 
long-term infrastructure of the country, the long-term economic 
health of the country. And that they could not be leveraged the 
way that other programs might be.
    Mr. Arrington. Thank you. I yield back.
    Chairman Womack. To Michigan. General Bergman.
    Mr. Bergman. Thank you, Mr. Chairman, and is there anybody 
left other than me? Okay. I was going to say I am last, but I 
guess I am not last.
    Mr. Mulvaney. We still have the Ranking Member, too, so. 
That is what I am sticking around waiting for.
    Mr. Bergman. But I would like to start with a general 
comment, small G. In being from where I am in the first 
district of Michigan, I have got more big water, Great Lake 
shoreline bigger than any other district in the country. And 
the Great Lakes are truly our lifeblood and not only of our 
people in our communities but also our economies, when it comes 
to the types of industries we have up there. And 
notwithstanding that 20 percent of the world's fresh surface 
water resides in the Great Lakes.
    So the Great Lakes is a, I would say a global resource, 
definitely a national resource that we need to preserve and 
make sure it is healthy.
    A year ago when we came out with the Great Lakes, the 
original Presidential Budget, the Great Lakes got, you know, 
cut to zero. The Great Lakes Restoration Initiative. Working 
with some colleagues, we got it funded back to the 300 million.
    I see in this budget, it concerns me, a 90 percent cut. 
There are about 3,500 line items in that GLRI, and I would 
suggest to you probably about 10 percent of them are being 
spent in such a way that we need to give them more money 
because they are great stewards. And 80 percent are probably 
doing okay. And there is probably 10 percent that that funding 
line needs to dry up.
    But my concern in this budget right now is that with that 
90 percent cut. I am hopeful to work with the administration 
and my colleagues in those 22 other districts that border the 
Great Lakes to work with you to make that number realistic so 
that we truly, as we look at the health of our natural and 
national resources, that would be fresh water, that we do not 
make a mistake there with this 90 percent cut.
    Now, we agree on more than we differ. And that is the 
beauty and why I am excited positively about the budget. But I 
have a couple of questions on the opioid crisis. We have 
started about a month and a half ago in the district to have 
listening sessions with the people who are boots on the 
ground--you know, the healthcare providers, the courts, the law 
enforcement, the social workers, the teachers, all of that--to 
find out what it is like in our district, what we are dealing 
with.
    So when we come to a national level of how do we handle 
this addiction crisis, any thought or detail you can give me on 
how this 20 billion that has been allocated, how it is going to 
be allocated on the front end here?
    Mr. Mulvaney. Sure. A couple different things. And you may 
not have heard me mention before, I would encourage you to not 
be misled by a reduction dealing with opioids that appears in 
the budget that is not a true reduction. There is about a 95 
percent reduction in the line item for the ONDCP, the Office of 
National Drug Control Policy. All that reflects, Congressman, 
is a move of the grant programs that currently resided in that 
program over to the Department of Justice and HHS.
    So please do not be misled and allow people to say that is 
an indication of our lack of commitment. All we did was move 
them to where they thought they could be better administered.
    So we will do that. Some of the money will be spent, as I 
mentioned earlier today, on NIH programs to try and develop 
non-addictive alternatives. We also have a proposal in this 
budget, I have not mentioned it before, to cover methadone 
treatment in both Medicare and Medicaid. We also have money set 
aside for a fairly aggressive national ad campaign to try and 
discourage people from taking----
    Mr. Bergman. Well, since you have answered it a couple 
times I apologize. I was in and out.
    Mr. Mulvaney. No, that is fine, and I did not mean say----
    Mr. Bergman. Thank you.
    Mr. Mulvaney. I honestly forgot what I have said a couple 
times already, so.
    Mr. Bergman. It does not hurt to repeat good, solid policy. 
Any update on the status of the DOD audit?
    Mr. Mulvaney. Yes, sir. They are undergoing now and I think 
you saw the first fruits of it this past week, where they said 
they had discovered about $800 million's worth of improper 
payments. I want to be very clear on that, by the way. First of 
all, the system is working. The reasons we found that money is 
because they have prepared themselves for audit and they are 
going through the process now, and they are able to find stuff 
that they would not have found before. So that is good.
    I do want to point out, however, that just because we say 
it is an improper payment does not mean we sent a dollar to you 
and we should not have. Improper payments also include sending 
you 95 cents when we are supposed to send you a dollar or $1.02 
instead of a dollar, or not having the paperwork. So I think it 
will be curious to see what type of improper payments they 
discover.
    Mr. Bergman. I have 15 seconds left. Any final thoughts on 
does this budget really start to look at duplicative actions 
and how do we eliminate those?
    Mr. Mulvaney. We could do an entire hearing on the number 
of programs that we condense because they are duplicative.
    Mr. Bergman. Thank you very much. I yield back.
    Chairman Womack. Gentleman from Indiana, Mr. Rokita.
    Mr. Rokita. I thank the Chairman. Thank you, Director 
Mulvaney, for being back.
    Mr. Mulvaney. Hello, Mr. Rokita, sir.
    Mr. Rokita. Yes, and Happy New Year. Appreciate your work. 
We all saw the benefit that the people of South Carolina saw 
with you when you were a member of Congress and now the whole 
country is seeing your work. Greatly appreciate your 
leadership, sir. Greatly appreciate the President's leadership.
    I am particularly heartened to see that in your budget you 
are calling for the idea that Federal employees, when they do a 
bad job, can actually be fired. And at the same time, you are 
proposing a bonus pool so that Federal employees who do a good 
job, and there are those who do excellent work, who serve with 
servant's hearts like you do, for the people who understand 
that when some professions, when you enter them, it is not 
about you. It is not about yourself. It is about service to 
others.
    The Federal bureaucracy used to be that way a long time 
ago, but now the average salary for a Federal public official 
is sometimes double that of a private-sector counterpart and, 
you know, all things being equal, that is not right.
    Mr. Mulvaney. And I do not want to interrupt you, 
Congressman, but 99.7 of them get their performance bonuses 
every single year--performance increases.
    Mr. Rokita. Yes. And you are reforming that, so count me in 
as a soldier in that effort to reform that effort. Like I was 
saying, bonus pools for those who actually do a good job. You 
know, I think that is the right way; make this place run like 
more of the private-sector counterparts, again recognizing that 
some professions are about public service and service to 
others.
    I have a pay check, by the way, that would do a lot of 
these things from two Congresses ago. We still continue to 
fight for it, so again, if you could have your staff note that 
I would be happy to help in these efforts, this part of the 
budget.
    Inland waterways. You are proposing some for the industry 
for a lot of us some pretty bold ways to make ends meet, help 
our infrastructure. I come from a state that values and has 
successfully privatized different assets.
    We never turned them over to an industry or various users 
of an industry. It was always about putting out the concession 
to be run and seeing who had the best bid and who we wanted to 
run it and what the best deal was, but at all times the 
legislature kept control of fees and caps and what could be 
done and made sure people had the equal access and all that.
    We had this discussion a little bit the last time when we 
talked about air traffic control. Now it is not the same as air 
traffic control but it is an idea that we might turn over the 
inland waterways, the operation and maintenance of locks and 
dams and those things, to private actors. The industry puts in 
about $100 to $200 million of a $1 billion yearly operational 
cost. So, I do not think the industry can take all that on. 
There has been some concerns. I think we ought to work on it.
    I think you should, if you do not mind, the Olmsted Lock 
and Dam Project. It, for years, was ballooning in costs. 
Previous administrations were letting cost overruns control. It 
is not unheard of for the corps to get halfway through a 
project, Mick, and then stop.
    But as I have talked with you about the Olmsted Project, it 
is going to get done now because of an adjustment in the cost-
sharing formula that we were able to do on the Transportation-
Infrastructure Committee. It is going to come down under 
budget, come in under budget and ahead of schedule; and it was 
heading for disaster.
    I do not have to tell you, given your previous work, about 
the disaster it would be if we cannot get grain and steel and 
all our raw products out of our inland waterways and onto the 
world market. It is helping with our trade deficit.
    So I would encourage you and your staff and the 
administration to look at the Olmsted Project as a poster child 
for, you know, just say you do not get the votes for 
privatization for the inland waterways. You know, a few crazier 
things have happened in Congress than not getting the votes, 
but this might be privatization-lite or way too organized----
    Mr. Mulvaney. Keep in mind, the infrastructure bill, and 
the reason I say this is that name has come up before, so I 
know we have looked at that as a potential model. There are a 
bunch of different models. One of the beauties of the 
infrastructure bill, Congressman, is not that it is married to 
one program. You do not have to have privatization. You do not 
have to have public-private partnerships. You could do 
concessions. You could give states financial incentive to sell 
the stuff that they have now and to move it off of their books. 
There are a bunch of different models and we do look forward to 
working with you on examples of things that actually work.
    Mr. Rokita. Great. Thank you, sir. Jodey Arrington 
eloquently put forth the argument for automatic spending 
reform. I do want to note, and you may have talked about this 
earlier, you are doing some autopilot spending reform in terms 
of TANF, SNAP, and some of the other programs, correct? And how 
much will that yield?
    Mr. Mulvaney. Honestly, Congressman, off the top of my head 
I have no idea what those proposals are because the number gets 
wrapped in with some of the other reforms that we----
    Mr. Rokita. It will keep compounding and returning savings 
even outside a 10-year window.
    Mr. Mulvaney. That is absolutely correct. These are 
structural returns that reap benefits for many years.
    Chairman Womack. I thank the gentleman. And finally, he 
reserved his questions to the end, and I am pleased to 
recognize the Ranking Member, Mr. Yarmuth from the Commonwealth 
of Kentucky.
    Mr. Yarmuth. Thank you very much, Mr. Chairman. Director 
Mulvaney, thank you for hanging around this long. In the spirit 
of Valentine's Day, I will be very nice.
    Mr. Mulvaney. Thank you for having me and for being nice.
    Mr. Yarmuth. Now, any discussion of the budget is going to 
involve a judgment as to what the appropriate role of 
government is, and many of us in this room have different 
philosophies about what is the appropriate role of the Federal 
government, what we should be doing more of and less of. And I 
think that is a very healthy debate to have always.
    But it has to be an honest debate, and that requires that 
we make sure the American people understand the discussion we 
are having. So, with that in mind, this week on Face the 
Nation, you were asked about the spending levels of the 
President's budget, and you said that the Democrats--you said 
this actually again today, ``would not give us a single 
additional dollar for defense unless we gave them dollars for 
social programs.'' And, again, you made a similar comment 
earlier today.
    Mr. Mulvaney. Yes, sir. I believe those are my words.
    Mr. Yarmuth. So with that in mind, I want to ask you do you 
consider the FBI a social program?
    Mr. Mulvaney. No, sir. And I see where you are going. Non-
defense discretionary is a better description of that money. 
Yes, sir.
    Mr. Yarmuth. Right. So, okay, I will not go through the 
laborious task of going through everyone, but whether it is 
DEA--Drug Enforcement Administration--veterans' healthcare, 
Centers for Disease Control, the FDA, TSA, IRS, the Federal 
court system, NIH, Census Bureau, ICE, border patrol. These are 
all things that are in the non-defense discretionary side of 
the budget.
    Mr. Mulvaney. And I hope we have your support for 
increasing spending on those types of things.
    Mr. Yarmuth. Well, you know, we know what happens when 
people say social programs. Many Americans think welfare. As a 
matter of fact, Mr. Lewis used the terms interchangeably. I 
think Mr. Grothman did the same thing, and we actually kind of 
ran an analysis and we made our own definition of social 
program, and we defined it as something that is based on 
income. Okay?
    Mr. Mulvaney. Means tested.
    Mr. Yarmuth. Means-tested programs.
    Mr. Mulvaney. Okay.
    Mr. Yarmuth. With that standard in mind, basically 
somewhere less than 11 percent of non-defense discretionary 
could be categorized as a social program. So, again, I hope we 
never get to the point in this debate or in this country where 
we are trying to pit tanks against teachers or many of these 
other things--border security against soldiers--things where we 
would argue that most of the non-defense discretionary side of 
the budget is as much involved in national security--whether it 
is physical security, economic security, or personal security, 
health security--as the defense budget. So I would appreciate 
it if you----
    Mr. Mulvaney. Again, your point is well-made. I do not know 
if I would go as far as you would, which is not surprising, 
since we have different political philosophies, to say that 
some of the matters that you have addressed are as critical as 
national defense. They are critical. There is no question. But 
in terms of the prioritization, which is what this discussion 
is about, right?
    Mr. Yarmuth. Always is.
    Mr. Mulvaney. We have, regardless of how big the pie is, at 
some point the pie runs out. We can choose to borrow nothing or 
$1 trillion, but there are limited resources at some level.
    Mr. Yarmuth. Absolutely.
    Mr. Mulvaney. What the priorities are, and I think that is 
what the debate is about.
    Mr. Yarmuth. I always agree with you on that. Now, with 
that in mind, we are talking about adding to the Federal 
budget, the defense side of the budget, essentially $195 
billion over 2 years: 80, 85, and then some other things.
    Mr. Mulvaney. It is 165 before you count--it is $80 billion 
in 2018; 85 in 2019; 165 billion. And a lot of it depends on 
how you want to call it OCO in the out years. But that is a 
rough estimate. Yes, sir.
    Mr. Yarmuth. Exactly. Okay. Plus or minus, we will say, 195 
billion. A huge increase in what we are spending on defense. 
Absolutely a huge amount of increase, and you have already 
mentioned that, until January, the Pentagon has never been 
audited. They have begun an audit. Just in the initial stages 
they have discovered billions of dollars that they cannot 
account for.
    And my question is with an increase like that, which I 
think amounts to about a 14-percent increase overall in the 
defense budget--close enough for government work--that we have 
done this. And I know the defense committees, the Armed 
Services Committee meet and they do an authorization bill and 
so forth.
    But my question is has the administration really dug into 
the question of what this military needs and what our missions 
are? Because as I recall during the campaign, the President has 
been unabashed when talking about basically reconsidering our 
role throughout the world, talking about our involvement in 
Afghanistan. And so, that is my question to you, is what kind 
of review of our military objectives, our short- and long-term 
military needs are?
    Mr. Mulvaney. Yes, sir. The answer to your question is yes. 
I have been extraordinarily impressed not just with Secretary 
Mattis, who is the one everybody recognizes. But there is a 
Deputy Secretary by the name of Pat Shanahan, who came over 
from the Boeing Corporation. I believe he was able to turn 
around their 787 program, and he is sort of running the 
business of the Defense Department right now, and he and I work 
together regularly.
    And I think he would be able to convince you, sir, that 
this is not a number they have picked out of the air. In fact, 
it is the entire opposite. I think they have backed into a 
strategy-driven amount of money.
    We have often talked about that here, which is instead of 
picking a number and then picking a strategy, pick the strategy 
first and then figure out what it costs to do that. And I think 
that is how they got here. I would be more than happy, you and 
I and Secretary Shanahan, go to lunch and talk about that 
because I am absolutely convinced that they are doing the work 
necessary to justify these types of requests.
    Mr. Yarmuth. I would really appreciate that opportunity. So 
we talked about Medicare earlier, cuts in Medicare, and you 
basically, I think, claimed that it was unfair that we talk 
about cuts to Medicare because we are not cutting patient care. 
We are actually just cutting----
    Mr. Mulvaney. No, sir. I was trying to discourage that $500 
billion number, as I mentioned to you yesterday in private. I 
did not think that was accurate, but go ahead.
    Mr. Yarmuth. Okay. Well, I was going to say, whatever the 
number is, if it is $200 billion that it is going to be reduced 
or whatever it is, I vividly remember in 2010--and now while I 
was not following your campaign individually very closely--I 
know Republican candidates all over the country were beating us 
to death with the fact that we were proposing to cut $750 
billion out of Medicare, when in fact none of that came out of 
patient services.
    Actually, we expanded patient services and we were crying 
foul. So if we beat you over the head with it, your party over 
the head with it this year, I hope you will not cry foul.
    Mr. Mulvaney. I will cry foul as you probably did in 2010 
and the Republicans will not believe you and the Democrats will 
not believe me.
    Mr. Yarmuth. That is probably right. So, you compare your 
current tax revenue estimates in this budget to last year's CBO 
baseline. Given that we do not have an updated CBO estimate yet 
based on the Tax Act that was enacted, to get an apples to 
apples comparison, let's instead look at how your estimates 
changed from last year to this year. And you estimated, last 
year, $3.7 trillion more in tax revenues over the period 2018 
to 2027 than your current estimates. How much of that reduction 
and revenue projection is from the tax cut?
    Mr. Mulvaney. Roughly 1.8 trillion.
    Mr. Yarmuth. 1.8 trillion, okay.
    Mr. Mulvaney. And I would be happy to explain the 
difference between the 1.8 trillion that the OTA came up with 
at Treasury and the CBO. You all scored it at 1.5. We scored it 
after the fact at 1.8. The difference is the way that the CBO 
and the Treasury, who does all these numbers for us, deal with 
the individual mandate.
    CBO has often said that if you get rid of the individual 
mandate, folks will drop off of Medicaid, and that actually 
generates a huge savings. We simply do not believe that to be 
the case. So we do not believe that we will experience the same 
savings from folks not taking Medicaid as the CBO assumes.
    Mr. Yarmuth. Okay. So, basically, half of the change in 
revenue estimates is that you are projecting this budget came 
from tax cuts. Okay.
    Mr. Mulvaney. Yes, sir. Another $0.5 trillion, as you and 
I, I think, discussed yesterday, came from the extension of the 
individual tax rate reductions. The law that passed phases that 
out, I believe, after 5 years. We have it being permanent.
    Mr. Yarmuth. Right. Got you. One quick question and this is 
not a contentious question at all. I am just curious. And I do 
not know what you have in your budget, but you talked about 
interest rates and you are projecting that interest rates 
actually stay fairly low over the period.
    Mr. Mulvaney. Yes, sir. I could read them to you, if you 
like, or I can share them with you.
    Mr. Yarmuth. No. I just referenced, because I know over the 
past 6 months the 10-year Treasury note has gone up by 70 basis 
points, which is a pretty significant rise in a short period of 
time. So yeah, just out of curiosity, what do you project?
    Mr. Mulvaney. For the 2019 budget, 3.1--this is a 10-year 
number. So we are talking apples to apples because I think the 
reference and the 70 basis points is to the 10-year.
    Mr. Yarmuth. Ten-year number. Right.
    Mr. Mulvaney. 2019: 3.1. 2020: 3.4. 2021: 3.6. Then 3.7, 
3.6 out to sort of the end of the 10-year budget window. Again, 
we are slightly higher than the CBO baselines from January 
17th. A little bit lower, perhaps, than their numbers from 
June, and then roughly in line with the CBO for the out years.
    Mr. Yarmuth. Okay. Thanks for that information and thank 
you for your testimony. I greatly appreciate it.
    Mr. Mulvaney. It is always a pleasure. Thank you, sir.
    Mr. Yarmuth. I yield back.
    Chairman Womack. I thank the Ranking Member. Director 
Mulvaney, you have been very generous with your time today.
    Mr. Mulvaney. I think I have destroyed your table here, Mr. 
Chairman.
    Chairman Womack. That is quite all right. We will add that 
to the budget. Members are advised to submit written questions 
to be answered later in writing. Those questions and your 
answers will be made part of the formal hearing record. Any 
members who wish to submit questions or any extraneous material 
for the record may do so within 7 days. And with that, the 
Committee stands adjourned.
    [Whereupon, at 1:07 p.m., the Committee was adjourned.]
    
    
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