[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

                               __________

           Printed for the use of the Committee on the Budget
           
           
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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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