[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
MEMBERS' DAY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, D.C., MAY 10, 2018
__________
Serial No. 115-14
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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., May 10, 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 5
Prepared statement of.................................... 6
Hon. Dan Kildee, a Representative in Congress from the State
of Michigan................................................ 7
Prepared statement of.................................... 9
Additional statement submitted for the record:...............
Hon. Peter J. Visclosky, a Representative in Congress
from the State of Indiana.............................. 23
MEMBERS' DAY
----------
THURSDAY, MAY 10, 2018
House of Representatives,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to call, at 9:00 a.m., in Room
1334, Longworth House Office Building, Hon. Steve Womack
[Chairman of the Committee] presiding.
Present: Representatives Womack, Black, Woodall, Brat,
Smith, Faso, Smucker, Ferguson, Yarmuth, and Jayapal.
Chairman Womack. Good morning. This hearing will come to
order. I would like to welcome everyone to the Budget
Committee's fiscal 2019 Members' Day hearing.
The Congressional Budget Resolution offers a comprehensive
outline of the Federal Government's finances and provides a
roadmap to address the nation's fiscal challenges.
Understandably, crafting the budget each year is not a simple
or an easy task. In order to build an effective and responsible
budget, our Committee has taken the time to consider several
items.
Each year we look at the President's budget request, which
reveals the administration's policy and funding priorities; we
hear from authorizing committees about their legislative
priorities; and throughout the process of planning and building
the budget, we greatly rely on the Congressional Budget
Office's budget and economic outlook or baseline, this year
received on the 9th of April.
Because CBO's baseline serves as a benchmark from which to
consider the effects of policy options and determine funding
levels, the budget cannot be written without the baseline. Even
with receipt of all these pieces in the process, the House
Budget Committee cannot balance the budget alone.
We welcome and encourage the input of Members across the
whole House. While the House Budget Committee is responsible
for considering and ultimately writing the budget framework
each year, our work is better and more reflective of the whole
House when all Members engage in the process.
Each year our Members' Day hearing provides a forum for
Members to weigh in on their legislative priorities for their
districts, states, and, indeed, for our country, and to suggest
ideas for budget savings as required by the Congressional
Budget Act.
However, today is not the first opportunity Members have
had to be part of the process this year. We launched an online
portal earlier this year to accept submissions for innovative
policy reforms. As our work continues on the budget resolution,
we look forward to considering additional ideas that will help
us craft a responsible and balanced plan for the future.
I want to thank the Member that has joined us today. And
with that, I would like to yield to my friend and the Ranking
Member from the great Commonwealth of Kentucky, Mr. Yarmuth,
for his opening statement.
[The prepared statement of Chairman Womack follows:]
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Mr. Yarmuth. Thank you very much, Mr. Chairman. And I am
pleased to join you in welcoming our witness, at least our one
witness, for Members' Day. This annual hearing is a great
opportunity to hear from Members about their priorities for our
country.
As we all know, the budgets we debate in this Committee are
about choices; choices that directly affect our constituents
and the Nation as a whole. Each decision has consequences--
sometimes good, sometimes bad--that American people have to
live with for decades to come.
Unfortunately, last year's Republican budget fell squarely
in the bad for the American people category. It paved the way
for a partisan tax law that overwhelmingly benefits the wealthy
and big corporations at the expense of hard-working American
families.
At the same time, it increases our deficits by nearly $2
trillion. But that is not an unintended consequence. It is part
of the GOP's three-step plan that has failed the American
people again and again.
First, Republicans give huge tax cuts to the wealthy;
second, they cry and feign outrage about the skyrocketing
deficits they just created; and third, they insist the new
deficits are purely a spending problem and call for extreme
cuts to programs that are vital to American families.
But what we need from this Committee, what the American
people need from us is an honest debate about the fiscal
challenges facing our Nation. A truthful process that
acknowledges that we cannot produce a responsible budget
without considering the revenue side of the balance sheet.
Our constituents look to us to protect the national and
economic security of our country. They rely on retirement
benefits and access to healthcare. They want to see investments
in education, job training, innovation, and infrastructure. And
they want us to pay for it in a fair way.
I look forward to hearing from our colleague on his
priorities for the budget. Thank you, Chairman Womack, and I
yield back the balance of my time.
[The prepared statement of Mr. Yarmuth follows:]
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Chairman Womack. I thank the Ranking Member. As a reminder,
Members will have 5 minutes to give their oral testimony, and
their written statements will be submitted for the record.
Additionally, Members of the Committee will be permitted to
question the witnesses following their statements. But out of
consideration for our colleague's time and to expedite today's
proceedings, I would ask that you please keep your comments
very brief.
I would now like to recognize our first witness today,
perhaps our only witness, Representative Dan Kildee, from
Michigan. We appreciate you coming in today. The Committee has
received your written statement. It will be made part of the
formal hearing record. You have 5 minutes to deliver your oral
remarks. And the floor is yours, Dan.
STATEMENT OF THE HON. DAN KILDEE, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MICHIGAN
Mr. Kildee. Is it on now? There. I feel so much better
being able to hear my voice echoing throughout this room. Thank
you.
And thank you, Mr. Chairman, for this, and the Ranking
Member as well for offering Members this opportunity. The focus
of my remarks this morning will be on one particular set of
issues, and it has to do with the Federal Government's role in
the health, the fiscal and social and economic health of
America's cities and towns.
To a great extent this issue has historically not been a
strong aspect of the Federal Government's set of priorities.
After all, state and local government is, generally speaking,
in the particular domain of state governments. The role of
local governments, in particular, are creatures of state
government. But there is a clear public, and I think national
interest, in the health of America's cities. And, of course, I
do not need to remind all of you of the crisis that my own
hometown has faced.
Many people ascribe that crisis to a mistake that was made
regarding its water. The truth of the matter is the underlying
problem in the Flint crisis is a problem being faced by a whole
subset of American cities. And it is the continued erosion of
their financial base, of their fiscal strength. The integrity
of those communities are really challenged; and there is a
national interest in this.
At this point the most, I guess, direct and specific role
that the Federal Government plays in supporting cities and
towns is through a couple of programs; the Community
Development Block Grant Program, which I think we all are quite
familiar with. It takes different forms in our own communities;
it is quite flexible in its use, but it has, with the exception
of just this last year, seen a fairly steady decline in the
commitment that the Federal Government has made to the CDBG
program.
The same could be said of the Home Investment Partnerships
Program. Both of those are essential supports for cities, but
do not go I think nearly far enough in what the Federal
Government could be doing to support America's cities and
towns.
And I will just stress again that there is a looming fiscal
crisis that is being experienced in many communities that is
not getting near the attention that it should. The coping
mechanisms that state governments largely have used for
communities that are facing significant financial problems is
the same set of coping mechanisms that are used when, say, a
corporation is facing insolvency--using tools that are very
similar to bankruptcy. Even if bankruptcy is not utilized, the
coping mechanisms are essentially balance sheet approaches.
The problem, of course, is that unlike a corporation,
unlike a typical business, a municipal corporation is a
corporation formed to serve a city. It is not the city. The
city is a social and economic organism.
So I think we have to take I think significant steps to
make sure that communities, cities, and towns are not treated
as corporations that can be dissembled and have their parts
sold off. They are communities. And we see the result of the
failure to properly invest in sustainable support for
communities. And my hometown, again, is a great example.
What happened in Flint was the result of a long-term loss
of property tax values, changes in the economy, population
loss. This is something that is being experienced by
communities all across the country. There are 50 or so American
cities that have lost a significant percentage, half of their
population, in the last several decades. And while on one hand
it seems as though the Federal Government does not have an
explicit role in dealing with those problems, we deal with the
result of the lack of tools to address the problem.
And again, you all, many of you right here helped out when
my hometown was facing its most serious crisis ever and
participated in helping to provide Federal support to help that
community get through its struggles: $170 million was
appropriated.
Adding to that what the State government has put on the
table, we are talking about something around half a billion
dollars that could have been saved had we collectively, Federal
and State government, more thoughtfully invested in
infrastructure, in sustaining the tax base in those
communities.
Just thinking about one program in particular, the Clean
Drinking Water Revolving Loan Fund. Had we approached that
program in a way that understood that many communities that are
facing really significant challenges cannot simply just take on
more debt. Providing more debt opportunities for those places
really does not solve the problem. And there is one thing that
we can do here; and that is expand the portion of that Clean
Drinking Water Revolving Loan Fund that is eligible to be
offered in the form of grants for communities that have no
prospect of being able to recover the cost of reinvesting in
their water systems.
That is just one example. There are many others. I see my
time has expired. I think this is an important issue, and it is
one that the Congress ought to focus more attention on. And I
thank you for the time.
[The prepared statement of Mr. Kildee follows:]
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Chairman Womack. I thank the gentleman. We will engage in
an opportunity to do some Q-and-A, Mr. Kildee. This is a
subject, general subject, that I struggle with because in the
12 years preceding my time in Congress I was a Mayor in a
strong Mayor form of government. And it was my job, I thought,
as the CEO of our city and the elected titular head of our
city, to advocate for policies that were fiscally sound, left
to our own devices, which we were pretty much on our own, to be
able to address the priorities of our community, and to be able
to discern between what we wanted to have and what we actually
needed to have.
And like many other corporate structures, particularly
those in municipal corporations, you have to pick between those
kinds of things from time--and you cannot fund them all. You do
not have enough money.
And so my question is where does the responsibility of the
Federal Government begin? Or more importantly, where does the
responsibility of the local, city, and county and the state
actually end? And where do those things meet? Let me give you
an example. And I can use my own district as an example.
We have tax backed bond issues in our city, in our State
and most all cities utilize them. They go to the voters, they
ask for an increase in the sales tax to retire bonds. That is
the funding mechanism. And then most of them sunset after a
certain period of time and they build whatever they want to
build. In many cases they build things that could be debated
about whether they are actually needed. In one case, a city
used a tax backed bond issue to build a baseball stadium, to
bring a minor league baseball team to town.
But, yet, sometimes these same cities will come to us, the
Federal Government, and say I need money to hire police and
fire. And so my question is--and I am not, you know, bemoaning
the fact that a city in my district built a baseball stadium
with tax money--but it becomes a matter of priority. Why would
you come to the Federal Government when you could have used
your tax backed bond money to hire police and fire, or buy
apparatus, or whatever the need may be.
So the question is where does our responsibility at this
level begin and end with regard to the decisions made by our
local governments? And I am afraid they look at us as hey, we
can do what we want to do with our money, and then when we run
out, we can just turn to the Federal Government. So I ask the
gentleman.
Mr. Kildee. It is a very good question, and I think a
couple of points that I would make in response. One is to
clarify the direction of my commentary. My focus is on this
relatively small subset of American cities that in my
experience--and my experience precedes my time in Congress. My
previous work was focused on working in lots of cities around
the country that are facing really significant distress.
That subset of cities, they never would consider floating
bonds to build a stadium. They actually cannot even issue debt.
These are cities for which the coping mechanisms are long past
and are facing absolute collapse, and have no capacity to tax
their own citizens because of, number one, the high rates of
poverty; secondly, the lack of tax base to make the sort of
intelligent investments that might help them come out of the
circumstances they are in. So that is one.
I think secondly--and your question is really, I think, an
important point for us to focus upon--where does the Federal
Government responsibility end, and where does the local
government responsibility meet. How do we reconcile those two
competing concerns?
Two important ways. One, the condition that these
communities face, in some cases it is the result of their own
mismanagement for sure, or their lack of quality leadership.
But in many cases the conditions that they face are as a result
of decisions made well beyond their control. My hometown, which
is not an anomaly--it is just a good example. We lost, in the
course of just a couple of decades, 90 percent of our
manufacturing jobs; 90 percent. The idea that a community can
sort of manage its way through that process is really hard to
imagine how they might be able to do that.
The reason I mention that is policies that are made at the
state level, and even policy decisions that we make, have
positive and sometimes unintended negative consequences. The
decisions that we make in terms of the way we invest in
infrastructure, for example, can have a very positive impact on
a region, but sometimes has an unintended negative consequence
on a particular area.
The same could be said of trade policy, for example, or all
the forms of investment that we make that in some cases benefit
some regions to the deficit of others. Some communities
disproportionately experience the loss as a result. So in one
way we all bear a share of responsibility for the conditions
that these communities face, not just the elected leaders that
preside over those communities.
But there is a second important, I think, part of the
question--or answer to the question. Another way the Federal
Government's interest is retained in this question is that we
at the Federal Government end up paying for the result of the
failure of these places, whether we accept responsibility for
their condition or not. I would argue that there is some
responsibility, but even absent that, we pay for that.
The city of Flint--again, the example that I continue to
use--is not an anomaly. But as a result of the conditions
there, 45 percent of the people in that city live below the
federal poverty line; 58 percent of the children do. And we
have accepted as a matter of federal policy some responsibility
to make sure that there is a floor of decency, that there is a
safety net below which those folks are never allowed to fall.
So there are consequences that we bear whether we accept
the responsibility for the condition in the first place. And
again, the best example that I can come up with is absent about
$20 million of infrastructure investment in the city of Flint
about a decade ago, with that $20 million investment--which
they could not access because it was only available in the form
of a loan that they did not have the ability to repay--we are
now at $170 million appropriated by this Congress, another
couple of hundred million dollars spent by the state
government, and lots of other costs that we have borne publicly
and privately, and the loss of private value in that city that
will have social and economic consequences for decades to come.
The point being, we have some responsibility for the
conditions, and we could argue the details of that. But we
clearly end up paying for the lack of robust support for these
places one way or another, whether we like it or not. And I
think that is where the Federal Government's role comes in.
Chairman Womack. Mr. Yarmuth?
Mr. Yarmuth. Thank you, Mr. Chairman. And I think we have
introduced a discussion which is probably the most important
discussion we can have in this country. And I am not sure
whether the United States Congress is equipped to have it. But
it is critical.
And I think back, for instance, to the debate on the tax
bill and the question of state and local tax deduction. And in
the course of that debate, those who wanted to eliminate the
state and local tax deduction, many who did, said why should we
penalize a state which does not want to tax its citizens as
much to benefit the state that does.
Coming from a state which probably is somewhere in the
middle, but, you know, in Kentucky we have a 6 percent State
income tax, just was dropped to 5, and we have a city tax and
local and so forth, I said why would a state that is trying to
perform important services for its citizens be penalized to
serve a state--to the deference of a state that does not really
care about serving its citizens, or taxing its citizens.
And this fundamental debate about the division of
responsibility among different levels of government is really
critical. In my city--and my congressional district is only my
city--we have tried for a number of years to introduce or put
before the voters a proposal to increase the sales tax within
our city for dedicated infrastructure projects.
So we say here we are going to add a percent or a percent
and a half to the state sales tax just for citizens of
Louisville, and it is going to fund X. And the General Assembly
of Kentucky would not give us the permission to do it. So we
have these conflicts. And again, there are certain things that
a politician would never want to even bring up because the
potential political fallout would be substantial.
I think we need to have a debate in this country about what
is the Federal responsibility to sustain a lifestyle in many
areas that is not sustainable. When I look at coal communities
in my state, they are not sustainable. There is virtually
nothing that is going to keep them going except Federal
programs. And these are not in my district. These are in a
Republican district.
But if it were not for SNAP, if it were not for a variety
of Federal programs--and one congressional district, the 5th
Congressional District, which is coal country, 27 percent of
the people are on SNAP.
So where is the Federal Government--the taxpayers. I should
not say the Federal Government. The taxpayers are being asked
to support a lifestyle that is probably not sustainable. Is
that the appropriate role of the Federal Government? And I have
said for years now, I do not think the divide in this country--
and other people are saying that more recently--I do not think
it is Conservative/Liberal; I do not think it is Republican/
Democrat; I think it is urban/rural.
We have, time after time, in jurisdiction after
jurisdiction these conflicts between a Louisville and the rest
of Kentucky, a New York City and the rest of New York, an
Atlanta and the rest of Georgia. And the fact is that the
future is probably going to be in big cities. The trends are
certainly in that direction.
That I think one statistic is 80 percent of the Nation's
GDP is in major metropolitan areas, and yet we are trying to
figure out, because there is a great deal of appeal to small-
town America--it is part of the history of our country, it is
part of a flavor of the country that so many people appreciate.
And again, I do not know how we have that discussion here,
but it is an incredibly important discussion. And I thank you
for bringing it up. I do not have a question for you except I
guess one question quickly. And with a very pointed one. And
that is the tax bill that we enacted, the tax law that we
enacted at the end of last year, how would you say that is--in
your 30 seconds left--has impacted Flint, your citizens, and
has it been a plus or a negative?
Mr. Kildee. It has been a negative in a couple of ways.
One, because in those areas of our community that are still
sort of functioning in the marketplace, we are among those
states that will see an impact of the cap on deductibility and
the effect that that will have on local property values. So
that will have a depressing effect on the portion of the region
that is still functional in the marketplace.
But it is interesting. There are some unintended
consequences that I do not think were very well thought
through. The ability, for example, for a community like Flint
to redevelop is very much dependent on tax credit financing;
low income housing tax credits, historic tax credit financing.
Because of the impact--and I am not suggesting that this
ought to be the core of tax policy--but we just ought to
recognize the impact. The impact is that the value of those
credits is depressed, and the amount of revenue that will be
generated from tax credit financing to support the
redevelopment in communities like Flint, Saginaw, Detroit,
Youngstown, Gary, Indiana, fill in the blank, will be
compromised. So the tools are shrinking at a time when we need
more tools to help redevelop these places. And that is just a
couple of examples.
Chairman Womack. Other members? Mr. Woodall?
Mr. Woodall. Thank you, Mr. Chairman. I appreciate Mr.
Kildee being here. He is a strong advocate for his district,
and none of us want to be in his predicament, but we all hope
we are as strong an advocate as he was if we are.
I am thinking about the Ranking Member's comments and the
frustration with so many of the completely partisan votes that
go on. And he mentioned misguided tax policy and exploding
deficits, things that actually we would all care about. Lowest
unemployment rate in modern times. We would like to all be
celebrating that together. Challenges of urban and rural
America. These are things we ought to all be confronting
together, and we find ourselves so often these days having to
continue to defend our position from the last time we had a
strictly partisan vote instead of being able to celebrate
whatever the successes were last time, and then recognize
whatever the failures were last time.
So that is what I wanted to ask you, Mr. Kildee. I am
thinking about my parents' hometown; that is Sparta, Georgia. I
think Flint has dropped, since Spiro tells me, in population
from about 102,000 back in 2010 to about 97,000 today. Sparta,
Georgia has dropped from about 1,400 back in 2010 to about
1,200 today. So rural Georgia is actually losing population
faster than Flint, Michigan.
I do recognize that there is an opportunity for folks, I
think the word you used was disproportionate change, things
that have happened so rapidly folks could not deal with it.
There is no plan, to Mr. Yarmuth's point, nothing the Federal
Government can do to double the population of Sparta, Georgia.
It will never go back to its rural cotton is king economy.
How do we determine, in your view, what those
disproportionate communities are versus those communities that
are just in systemic decline and we are not going to be able to
move that needle?
Mr. Kildee. Well, it is a good question, and it is a
technical question. It is a question that I have spent some
time working on. And just to add a little bit of data to the
point, it is true that Flint had experienced, just in the last
8 years, a reduction in population that might not be
proportional to what you experienced in Sparta. But in the
preceding two decades, we lost half of our population.
Think about losing half of the population and two-thirds of
the wealth, because it is not just a matter of numbers of
people, but, you know, who remains. The people that remain in
these places are often the least capable, least able, least
wealthy, least well-trained, least well-educated. And so the
disproportionate impact is not just measured in population, but
in the kind of population that these communities are made up
of. And it is a real struggle.
The definitions, I think, are debatable. But what I would
suggest is communities that have faced sudden and severe
economic dislocation as a result of factors that are clearly
identifiable as being beyond the control of a local government
clearly would qualify.
You know, in our case it was the loss of the American auto
worker and the auto sector. In other places it might be, you
know, the furniture business, for example, in some parts of the
country. Or steel----
Mr. Woodall. Coal country Mr. Yarmuth referenced.
Mr. Kildee. Coal. And in those places, as Mr. Yarmuth
pointed out, the folks in that community, there is nothing they
could do. You could have the smartest mayor and city council,
the best city manager; there is nothing they could do to stop
those external trends from having a devastating impact on their
community. I think those communities are identifiable.
I helped craft--before I was in Congress, helped craft some
legislation that was introduced here, but did not see its way
through, that was a community revitalization and stabilization
initiative. And it had within it--and I can supply it to the
Committee--a definition of communities that have experienced
that sudden and severe economic change. It is places like that,
which would be Gary because of steel, Flint because of autos;
you know, other places obviously have their own unique
circumstances.
In some cases, the decline of a community is a result of
bad planning, you know, and bad execution. I would argue that
the people who live there are still citizens of the Federal--of
the United States and have some right to expect us to respond
to them. But in some cases, there is nothing anyone locally
could have done. And I think we do have a special obligation to
communities that experienced that sort of decline.
Mr. Woodall. I am certain there is an opportunity for
partnership there. I appreciate you being here. Thank you, Mr.
Chairman.
Chairman Womack. Mr. Ferguson?
Mr. Ferguson. Thank you, Mr. Chairman. Mr. Kildee, you and
I have shared something together. I do not know if you
remember, but in 2009 we shared the front page of the New York
Times.
Mr. Kildee. Oh, yeah.
Mr. Ferguson. And it was a dramatic----
Mr. Kildee. I remember that now. Yes.
Mr. Ferguson. You remember that now.
Mr. Kildee. You know, I am on the front of the Times so
often, it is hard to recall.
Mr. Ferguson. Well, I mean, when you are the Mayor of West
Point, Georgia and you land on the New York Times----
Mr. Kildee. I remember that.
Mr. Ferguson.----you put it in a frame.
Mr. Kildee. Yes.
Mr. Ferguson. But it is better to be on the front page than
in the comics section, though. I am sure I have been there,
too.
The point is, is that as a Mayor, I was where you were when
that article was written. We were coming out of doing exactly
what you just said, which is we had lost our manufacturing
base. We saw the decisions that were made by people,
particularly right here in Washington, D.C., that created the
environment for us to ship close to 35,000 textile jobs
overseas. We saw our entire manufacturing base go away probably
15 years prior to when that article was written.
And you are exactly right in one thing. Communities that do
not plan well, and communities that do not look ahead, and
communities that do not diversify many times are left holding
the bag when decisions that are made here in Washington, D.C.
have negative impacts on our hometowns.
But here is the thing that I did learn through all of that,
because it is painful to watch what happened in my hometown of
West Point, Georgia, just as it is painful to watch what
happened in Flint, Michigan. You not only lose the jobs, you
lose the human capital. You lose the men and women that are
going to serve in your Rotary Clubs, your Lion Clubs. You watch
the fabric of your community be torn apart. And it is painful
to watch.
So here is what I have learned through that process. And
people have asked the question what is the role of the Federal
Government in all of this? First of all, I think the most
important thing in all of this is economic development and job
creation. We learned through the loss of our manufacturing base
that the single most important thing that a community has to
have is an economic driver. You know, whether it is textiles.
In my case now it is the automotive industry. Whatever it is,
that community or that region has to have an economic driver
that is pushing forward.
And then I think the Federal Government's role is to be
there for communities to make strategic public investments in
new infrastructure that stimulates the growth and gives
stability to the private sector to come in and to create the
manufacturing jobs or the technology jobs. The Federal
Government's role should not necessarily be to be able to go in
and then rebuild an older community. It is to give it a spark
so that communities can then pick themselves up by the
bootstraps, because I know how tough it is. We did it.
Here are the other things that we know in that. Outside of
having a job, you have got to have decent education. As a
matter of fact, you need exceptional education. And that
education needs to be flexible and it needs to align with where
the economy is going. The training of the children in the 3rd
District of Georgia probably looks a little different than what
needs--the jobs that are being created in Flint, Michigan at
this point.
You mentioned housing. One of the most frustrating things
for me as a small-town Mayor was watching my friends and
neighbors and my patients that would come to my dental practice
live in 1960 style barracks and public housing--project-based
public housing, and not have those opportunities that other
members of the community did. I think what we do to those in
poverty right now is absolutely atrocious, and small
communities and cities have their hands completely tied by the
Federal Government.
I think it is the Federal Government's role to get out of
the way. It is one of the fundamental reasons that I ran for
Congress is that I knew that the hurdles that my friends and
neighbors back home being successful were barriers that were
created at the Federal level.
So my question to you on all of this--I do not mean to
lecture. I am just saying I have been there. You know, we have
shared that story. But there is a pathway out of it. You know,
I think the Federal Government--I think what we have done right
now to create job growth in the Nation is incredible. And I
think communities and states that are putting themselves in the
position to take advantage of this opportunity for what is
happening with the Tax Reform and Jobs Act, I think those
communities are going to be primed, and I think they are going
to be able to rebuild themselves.
I think the biggest challenge is not necessarily the urban
areas, but it is the rural areas. Mr. Woodall touched on this.
We have an incredible deficit in most of rural America right
now with job creation. And I think that sometimes we simply say
we have either got to recruit in industry for those areas, or
we have got to reinvigorate ag. And I would say, based on what
Mr. Yarmuth said--and I do not disagree with it--that you are
seeing more and more movement to the urban centers.
So how do you keep rural America from becoming this
Nation's next inner city? And I think you have got to connect
people to those jobs, and I think that we have got to start
looking at new critical infrastructures, such as broadband
access into rural America to be able to connect and disperse
workforce to the opportunities that are happening in the
metropolitan areas.
I think we get a lot of pushback on this. I know I do
sometimes in my own district where people say, that is not the
role of the Federal Government to get involved in broadband
access. I will tell you, and you can probably agree with this,
when you are the Mayor of a small town and your folks do not
have any hope, you will find a way to put that infrastructure
in to create those economic opportunities.
So I think that having that conversation in counting
broadband access as critical infrastructure is important. And I
think that we can then align our education system where people
can learn to make a living on the internet in rural America
connected to urban centers, we got a chance at saving rural
America.
So my question to you is how do you balance the investments
that you seek for these urban centers, how do you create parity
with rural America to make sure that we are not creating again
an inner-city situation in rural America? How do you create
that parity?
Mr. Kildee. I tell you, there probably is not a more
important point made than the point that you just raised,
because I think we have allowed for a falsehood to occur in
this debate for a very long time. And the falsehood being that
this is about large cities and everyone else, when the truth of
the matter is that it is about communities.
The effort that I launched, I do not know, 8 or 9 months
ago in my role on the Financial Services Committee is titled,
``The Future of America's Cities and Towns,'' because I think
there is this false dichotomy that we often do not challenge.
A small-town--the quality, the sustainability of a small
town in a rural region, the vibrancy of that little town is
just as important to the economic sustainability of that region
as, say, the sustainability and the quality of life in the city
of Detroit is to the entire State of Michigan.
I think we would do ourselves a big favor if we could
figure out a way, when we are making policy or just discussing
policy approaches, to try to break down what is I think a false
dichotomy between large and small.
What we are really talking about is communities that are
scaled on lots of different levels. And they all have basically
the same needs. You need to have a sense of community. You need
to have the essentials of a civil society--you know, decent
roads, good parks, opportunities for economic growth; and that
can be scaled in lots of different ways.
And I think, you know, as a person who has been identified
as largely an urban advocate, I can take it upon myself in the
last decade or so to make sure that I am talking about the
unique needs of those small places, just as important, and very
similar in some ways to the needs. They are just scaled at a
different level.
But unless we think about that, we are going to end up
creating policy that exacerbates the divide, where there really
should not be one. I think it is a really important point, and
I am glad you raised it.
Chairman Womack. Mr. Yarmuth had to leave, so a better
replacement is----
Mr. Kildee. Not much of a question there.
Chairman Womack.----the young lady from the great Pacific
Northwest who has joined us, Ms. Jayapal. And welcome.
Ms. Jayapal. Mr. Chairman.
Chairman Womack. Turn that mic on. If you got a----
Ms. Jayapal. Thank you, Mr. Chairman.
Chairman Womack. Kildee is just trying to dominate the
entire member----
Mr. Kildee. I am.
Ms. Jayapal. He does that well.
Mr. Kildee. I kicked everybody else out.
Ms. Jayapal. We are proud of Mr. Kildee for dominating. We
appreciate that.
I just was curious if you could talk a little bit about
CDBG funds and how CDBG funds get used in your district. I know
in my district they are incredibly important in a whole range
of areas. And so it would be interesting. I am always curious
about how that happens in other places. So maybe you could
elaborate on that.
Mr. Kildee. Well, it is a good example of how--thank you
for the question. It is a good example of how this urban/rural
question is actually reconciled pretty well. In my home county
we have two direct grantees, the City of Flint and the County
Metropolitan Planning Commission. I served in county government
for 25 years, so I am obviously quite familiar with that.
The way the money is used is really flexibly tailored to
the unique needs of the communities. In Flint, for example, as
you might expect, a significant amount of the money would be
used for blight elimination, for dealing with the fallout of
population loss, to try to reset those markets; to eliminate
the reminders of past failure; and to provide some leverage to
invest in development projects that will not sustain
themselves, you know, in a normal market operation.
In the county program, very often they are buying tires for
the fire trucks or supporting their senior programs, because
they just cannot make ends meet and they use it in a way that
clearly benefits low and moderate income individuals, but the
needs are different.
And this is one of the strengths and weaknesses of the
Community Development Block Grant program. And many of us, when
the program was designed--I have been around long enough to
recall those days--predicted this problem. The strength is that
it is tailored to the unique needs of a community and the
process of making those funding decisions requires public
involvement. That is a real strength.
The weakness, of course, is the uses are so diverse and so
different that when we hear about it, we hear about it in a
thousand different ways. It is not a program that you can
easily define; that you can say yes, CDBG does this. Because
what it does is provide tools for a community, flexible tools,
that are not so dependent on, you know, the sort of ebb and
flow of their local budgets that allow them to make critical
investments that may help grow their economy.
And so there is not a strong constituency for a program
that has so many diverse uses that does not get the attention
in some ways that it should. And I think that is a great way of
explaining why over the years, to be fair, under Democratic and
Republican administrations, we have seen the commitment to
CDBG, at least in the proposed budgets from the administration,
decline. I think Congress should pay more attention to that.
Ms. Jayapal. Can I ask a follow-up question, Mr. Chairman?
How would you target those investments? I mean if it were up to
you, how would you make it so that we preserve the flexibility,
we preserve the necessary elements, but we perhaps as a Federal
Government target those funds in a particular way? Or do you
think it is more about just telling people what we are doing
with them? What is your proposal for that?
Mr. Kildee. Well I think there are two ways I think to
address CDBG in terms of targeting. One, I think honestly is to
make sure that there is realistic oversight of the CDBG
program. I think sometimes we tend to over correct as a result
of, you know, bad actors in a few instances. And to a certain
extent, having been in local government for a while, it felt
like for a long time that the CDBG program went something like
this: Here is some money. Do not steal any of it. And if you do
something good with it, we will not be mad at you.
I think we have to be much more focused on providing to
target, providing significant technical assistance to really
weak communities so that they have the capacity to put together
projects that are not designed just to be in compliance because
they are simple, but actually can leverage the CDBG dollar, say
with other private investment that is more complex, but--and
this goes to this issue of capacity in these cities that Mr.
Ferguson also mentioned.
Communities that are facing fiscal stress and really deep
austerity measures lose the capacity to put together complex
projects. So targeting for me really starts with the Federal or
State government perhaps in partnership providing much more
substantial technical support to those communities so that they
have the capacity to, one, conceptualize, organize, and execute
more significant projects that leverage the CDBG dollar much
stronger with the use of other public and ideally significant
private investment.
That, to me, would be the most significant change that we
would want to see happen.
Chairman Womack. How do you do that without seeing more
money siphoned off of the available dollars of CDBG money for
administrative purposes? At the end of the day, what we want is
we want any money coming out of here going down to where they
actually meet the demand, meet the need. And I believe in more
oversight and I believe in more accountability for sure. But
how do we do that without continuing to erode the available
money for projects, you know, to pay the costs of the
administrative overhead?
Mr. Kildee. Yeah. I think one way is to measure the cost of
not providing higher degree of technical assistance, because
the cost in enforcement, the cost in de-obligating grants, the
costs in actually recapturing and chasing those communities
that fail to use the money properly is a real cost. Number one.
And secondly, I do think that we have to think about the
optimal use. In other words, I think it makes sense to provide
additional technical support, even if it means some additional
admin, if the use of that money leverages private capital in a
way that makes the dollar look a lot bigger. In other words, if
a community gets $1 million of CDBG, it is going to spend $1
million without a lot of technical help in the most careful way
they can to make sure they are in compliance.
If they are able to get some real support, technical
support, maybe that $1 million is one of the layers of
financing of a $20 or $30 million redevelopment project. In
that way, our $1 million equals $20 million. I would rather
spend a little bit to leverage much higher capacity in those
communities than take the approach that we are going to keep it
simple and not see these dollars be used in the most effective
way they can because--this is just based on years of experience
working in communities--they are petrified very often of
getting it wrong because there is an economic, there is a
fiscal, and a political consequence to blowing it.
And I think what we need to do is not just think about this
as more robust enforcement, because the effect that I have seen
is it scares them away from more creative uses of the dollars.
If we could provide more technical help for those communities
that do not have the capacity to put together more complex
projects--and again, that is disproportionately the subset of
cities that are really struggling--then I think we are using
our dollars more wisely.
Ms. Jayapal. You know, Mr. Chairman, I think that is a
really good question, because I think that there are projects
that do require technical assistance because they are more
innovative, they require complex putting together of public and
private dollars. But there are some projects that people
already know how to do. You know, housing projects, a
dilapidated building that just needs to be refurbished, access
to ramps for senior citizens. I know that that is how CDBG
funds were used in Louisville.
In my home district we have a lot of, you know, affordable
housing, homelessness issues that get addressed in part through
CDBG funds.
So I think the real question is what do we want to see out
of these programs, and how do we define the outcomes clearly?
There may be a couple. There may be some outcomes that are
about increasing access for people, addressing some critical
issues that are in the community where you do not need a lot of
technical assistance. You just need dollars. And federal
dollars are leveraged all the time by state, county, other
public funds, as well as some private funds. So I do not think
we should discount how they get leveraged, you know, in
multiple ways.
But then maybe we do want to have a part of CDBG funding
that is for the kinds of things that Mr. Kildee is talking
about. I do not think that they necessarily need to be
exclusive, but I do think we have to know what we want to get
out of it. And that is the question.
Mr. Kildee. I think there is a good example, if you do not
mind, Mr. Chairman. There is a good example in a program that
maybe not everyone supported, but as you recall is a part of
the economic recovery after the housing crisis. There was a
program called the Neighborhood Stabilization Program, NSP. It
basically had three iterations. One, two and three. It was
about a $7 billion program overall in the three iterations.
There was one, NSP-2, that was a competitive round that
also included really robust technical assistance. The reason I
am somewhat familiar with it is that the organization that I
was leading back then conducted a lot of technical support to
communities in implementing the Neighborhood Stabilization
Program. It was a 10-year program, so the program had a
beginning, a middle, and an end.
And what we saw is that in those places where we were able
to bring in not just technical support in the sense of creative
help, but actually bring in operating capacity, they spent the
money much more wisely, and I think much more effectively.
To me that program had its flaws, do not get me wrong.
But I think it is a better starting point in some ways for
the conversation because we have some experience with it. And I
think there is pretty good data that shows that where the NSP
program was coupled with significant technical assistance--in
the case of my organization, we were funded--I just called the
Center for Community Progress.
This is what I did before I was in Congress. We were funded
to provide help. And what we did is we literally hired people
to go sit at a desk in City Hall and make sure that that
program was operating the way it should and literally carry the
paper from one end to the next.
And it goes again to Mr. Ferguson's point. Often those
communities either cannot get or do not have access to the
technical expertise it takes to get this stuff right. This is
where the Federal Government I think would be really smart to
realize that, you know, in some cases, along with the money,
providing expertise makes the money go further and decreases
the likelihood that it is going to be misspent.
Chairman Womack. We appreciate your testimony today.
Mr. Kildee. Thank you. I really appreciate it very much.
Chairman Womack. Really do. Thank you so much.
Mr. Kildee. All right. Thank you, Mr. Chairman.
Chairman Womack. That completes the--not recognizing any
other Members who wish to make a statement before this
Committee on Members' Day, this completes the Committee's
business.
I would like to thank all the members. I would like to
thank the Member who shared his views before the Budget
Committee. My staff, when they drafted these remarks, maybe
assumed at least two. We had one. But thank you so much, Dan,
for doing this.
And with that, unless there is anything else for the good
of the order, this Committee stands adjourned.
[Whereupon, at 9:57 a.m., the Committee was adjourned]
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