    [Senate Hearing 115-49]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 115-49

         NOMINATIONS OF KEVIN ALLEN HASSETT AND PAMELA HUGHES PATENAUDE

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                NOMINATIONS OF:

       Kevin Allen Hassett, of Massachusetts, to be Chairman, Council of
                               Economic Advisers

                                   __________

    Pamela Hughes Patenaude, of New Hampshire, to be Deputy Secretary, U.S.
                         Housing and Urban Development

                                   __________

                                  JUNE 6, 2017

                                   __________

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                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                          MIKE CRAPO, Idaho, Chairman

    RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
    BOB CORKER, Tennessee                JACK REED, Rhode Island
    PATRICK J. TOOMEY, Pennsylvania      ROBERT MENENDEZ, New Jersey
    DEAN HELLER, Nevada                  JON TESTER, Montana
    TIM SCOTT, South Carolina            MARK R. WARNER, Virginia
    BEN SASSE, Nebraska                  ELIZABETH WARREN, Massachusetts
    TOM COTTON, Arkansas                 HEIDI HEITKAMP, North Dakota
    MIKE ROUNDS, South Dakota            JOE DONNELLY, Indiana
    DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
    THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
    JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada

                         Gregg Richard, Staff Director

                     Mark Powden, Democratic Staff Director

                          Elad Roisman, Chief Counsel

            John O'Hara, Chief Counsel for National Security Policy

                  Kristine Johnson, Professional Staff Member

                     Matt Jones, Professional Staff Member

                    Graham Steele, Democratic Chief Counsel

                Laura Swanson, Democratic Deputy Staff Director

                   Colin McGinnis, Democratic Policy Director

               Beth Cooper, Democratic Professional Staff Member

              Homer Carlisle, Democratic Professional Staff Member

                           Dawn Ratliff, Chief Clerk

                          Shelvin Simmons, IT Director

                              Jim Crowell, Editor

                                      (ii)

                                C O N T E N T S

                                  ----------

                             TUESDAY, JUNE 6, 2017

                                                                       Page

    Opening statement of Chairman Crapo..............................     1

    Opening statements, comments, or prepared statements of:
        Senator Brown................................................     2

                                   WITNESSES

    Rob Portman, a U.S. Senator from the State of Ohio...............     4
    Jeanne Shaheen, a U.S. Senator from the State of New Hampshire...     5

                                    NOMINEES

    Kevin Allen Hassett, of Massachusetts, to be Chairman, Council of
      Economic Advisers..............................................     5
        Prepared statement...........................................    30
        Biographical sketch of nominee...............................    32
        Responses to written questions of:
            Senator Brown............................................    89
            Senator Sasse............................................    95
            Senator Reed.............................................   102
            Senator Menendez.........................................   103
            Senator Warner...........................................   103
            Senator Heitkamp.........................................   104
            Senator Cortez Masto.....................................   107
            Senator Schatz...........................................   108
    Pamela Hughes Patenaude, of New Hampshire, to be Deputy
      Secretary, U.S. Housing and Urban Development..................     8
        Prepared statement...........................................    77
        Biographical sketch of nominee...............................    79
        Responses to written questions of:
            Senator Brown............................................   114
            Senator Shelby...........................................   121
            Senator Sasse............................................   121
            Senator Reed.............................................   122
            Senator Menendez.........................................   123
            Senator Heitkamp.........................................   129
            Senator Cortez Masto.....................................   131
            Senator Schatz...........................................   134

                  Additional Material Supplied for the Record

    Letters submitted in support of the nomination of Kevin Allen
      Hassett........................................................   136
    Letters submitted in support of the nomination of Pamela Hughes
      Patenaude......................................................   142

                                     (iii)

     NOMINATIONS OF KEVIN ALLEN HASSETT, OF MASSACHUSETTS, TO BE CHAIRMAN,
       COUNCIL OF ECONOMIC ADVISERS AND PAMELA HUGHES PATENAUDE, OF NEW
     HAMPSHIRE, TO BE DEPUTY SECRETARY, U.S. HOUSING AND URBAN DEVELOPMENT

                                  ----------

                             TUESDAY, JUNE 6, 2017

                                           U.S. Senate,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The Committee met at 10:05 a.m., in room SD-538, Dirksen
    Senate Office Building, Hon. Mike Crapo, Chairman of the
    Committee, presiding.

                OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

        Chairman Crapo. This hearing will come to order.
        This morning, we will consider the nominations of Mr. Kevin
    Hassett to be Chairman of the Council of Economic Advisers and
    the Honorable Pamela Patenaude to be the Deputy Secretary for
    the United States Department of Housing and Urban Development.
        We will begin today's hearing with an opening statement by
    me and then by Senator Brown. And then I will turn to Senator
    Portman, who will introduce Mr. Hassett, and to Senator
    Shaheen, when she arrives, who will introduce Ms. Patenaude.
        I see friends and family behind you as well, and I also see
    my good friend Bob Dole--at least I did just a minute ago--and
    we welcome him here.
        Each of these nominees stands to impact the standard of
    living for Americans across the country and will play an
    important role in spurring economic opportunity.
        Mr. Hassett has had a distinguished career in economics
    that includes positions in academia, Government, and policy. He
    is a widely consulted expert on economic policy and has
    contributed countless scholarly papers, commentary, and
    testimony. His nomination has received bipartisan support from
    notable economists, including past CEA Chairmen.
        Mr. Hassett's particular understanding of tax policy and
    the way it affects citizens and businesses will be an
    invaluable asset to the Administration. He has extensive
    experience with economic modeling and will be able to provide
    sound economic analysis for pro-growth policies. Key to
    economic growth is not only robust financial markets, but also
    economic policies that will best enable all Americans to unlock
    their potential. I look forward to hearing from Mr. Hassett on
    how economic analysis can play a role in achieving this goal.
        Ms. Patenaude is a seasoned veteran in housing and
    community development who has held leadership roles at the
    local and Federal level. Twelve years ago, Ms. Patenaude
    received unanimous support from this Committee and was
    confirmed by the Senate with a voice vote to become Assistant
    Secretary for Community Planning and Development at HUD. In
    this role, Ms. Patenaude oversaw all of the Department's
    community development operations.
        As a former leader in a local housing agency, she has on-
    the-ground experience and developed an important understanding
    of the impact HUD's policies have on local partners. Ms.
    Patenaude's nomination has been met with bipartisan support as
    well from industry leaders, affordable housing advocates and
    public housing agencies alike.
        This speaks to Ms. Patenaude's distinguished reputation and
    her commitment to addressing important housing issues.
        I look forward to working with Ms. Patenaude on
    opportunities to improve the efficiency of HUD programs, reduce
    regulatory burdens on local housing authorities, leverage more
    private capital, empower local decision making, encourage self-
    sufficiency, and address comprehensive housing finance reform.
        At this time, I ask unanimous consent to enter into the
    record two letters endorsing Mr. Hassett, one of which is
    signed by 44 economists from both sides of the aisle, including
    several top economists from the Obama administration. Without
    objection, so ordered.
        I also ask unanimous consent to enter into the record more
    than 30 letters showing bipartisan support for Ms. Patenaude,
    including a letter signed by former Majority Leaders Bob Dole
    and George Mitchell. Without objection, so ordered.
        Congratulations to both of you on your nominations to these
    very important offices, and thank you for your willingness to
    serve.
        Senator Brown.

                   STATEMENT OF SENATOR SHERROD BROWN

        Senator Brown. Thank you, Mr. Chairman. Mr. Hassett, Ms.
    Patenaude, welcome. Senator Shaheen and my friend and colleague
    from Ohio, Senator Portman, nice to see you two.
        Thanks for holding this hearing. I look forward to hearing
    the views of the two witnesses on important areas of the
    Committee's jurisdiction: the economy, housing, community
    development.
        Ms. Patenaude comes to us with a long resume of involvement
    with housing and community development programs, HUD
    management, and housing advocacy. More recently, she has headed
    the Terwilliger Foundation for Housing America's Families. In a
    report entitled ``The Silent Housing Crisis'', the foundation
    reported that having access to safe and affordable housing has
    long been recognized as a part of America's critical compact
    with its citizens. I look forward to hearing her views,
    particularly since her past advocacy seems at odds with the
    approach that HUD has taken in its budget proposal.
        Mr. Hassett is a respected economist. He has done important
    work related to the policies that drove manufacturing out of
    Ohio communities and others like it across the country. I hope
    that his work at the Council of Economic Advisers will focus on
    policies to create jobs and improve education and workforce
    development and actually rebuild infrastructure. That is what
    is needed to strengthen the economy. Instead, we have seen the
    Administration threaten Wall Street reform, attempt to take
    away health insurance from 23 million people--I appreciate my
    colleague from Ohio speaking out on the Medicaid cuts--target
    working Americans with steep budget cuts and increased debt,
    all to further the interests of the wealthiest Americans.
        The Administration's HUD budget proposal is a stark
    illustration of this agenda. Eleven million renters, as Ms.
    Patenaude and I discussed in my office--and she is so very
    aware of this--pay over half their income in rent, meaning one
    thing goes bad in their lives, and they are evicted. They
    lose--their children have to go to a different school.
    Everything turns upside down. Eleven million renters--I want
    you always to remember that number, 11 million renters--pay
    half their incomes in rent. Five hundred thousand people are
    homeless. The President's budget would cut $7 billion, 15
    percent, from the HUD budget. The budget would eliminate
    programs like Community Development Block Grants and HOME, cut
    funding for public housing repairs by 70 percent. We all know
    the condition of public housing, and to cut their funding for
    repairs by 70 percent, to eliminate funding for an estimated
    250,000 housing vouchers next year, it reduces funding for lead
    hazard control and healthy housing grants, to protect children
    from lead poisoning, from asthma, and other health problems.
    Senator Portman knows, in cities in my State, in housing built
    before Senator Portman and I were born, the lead content, the
    lead exposure in those homes are overwhelming. In some cases,
    according to the Health Department, 99 percent of those homes
    have toxic levels of lead.
        Five months ago in this room, Dr. Carson scoffed at the
    notion that he would support a 10-percent cut in the HUD
    budget. He said he understood from his experience as a
    pediatric neurosurgeon how it was far less costly to avoid lead
    poisoning than to treat it. I was one of five or six Democrats
    that voted for his confirmation on the floor of the Senate. I
    did that because of his personal and his public promises on
    lead. Yet this budget, which apparently he is defending--and
    that is one of the things we want to hear from you, Ms.
    Patenaude--undermines all of this.
        The broken promises do not end there. The President
    promised in the campaign trail in Toledo and across the country
    to revitalize our inner cities and rebuild infrastructure. I
    had hoped we would be able to work with the Administration to
    strengthen our Nation while providing good jobs in Ohio.
    Instead, the President proposes to cut more existing
    infrastructure programs than the $200 billion he is willing to
    invest. The HUD budget will only add to the struggles of our
    inner cities.
        I look forward to hearing from our two witnesses how we
    tackle the many challenges that face this country from the
    crisis of housing affordability for our families and seniors to
    the stagnant wages and employment prospects of far too many of
    our fellow Americans.
        Thank you, Mr. Chairman.
        Chairman Crapo. Thank you, Senator Brown.
        Now we will turn to Senator Portman to introduce Mr.
    Hassett.

    STATEMENT OF ROB PORTMAN, A U.S. SENATOR FROM THE STATE OF OHIO

        Senator Portman. Thank you, Mr. Chairman, for letting me do
    this, and I thank my colleague from Ohio and my friend who just
    spoke, the Ranking Member.
        It is a pleasure to introduce Kevin Hassett. He, as you
    know, is being nominated to serve as Chairman of the Council of
    Economic Advisers. I am delighted to see that he has brought
    his own team of advisers with him today: his sons Jamie and
    John, and his wife, Kristie. Who is the Chair, by the way, of
    that Council?
        Mrs. Hassett. That would be me.
        [Laughter.]
        Senator Portman. That would be Kristie. Kristie is the
    Chair.
        We have known each other a long time. Kevin Hassett and I
    served together in the first Bush administration, the
    Administration of George H.W. Bush. He was in the Treasury
    Department. I was Director of the White House Office of
    Legislative Affairs, and I got to know him and respect him. And
    he continued to serve as a policy consultant for the Treasury
    Department under the Clinton administration. I went on to the
    House and the Ways and Means Committee where I looked to him to
    provide economic counsel as we tried to reform the Tax Code.
    And, again, as the Chairman has mentioned, that is one of his
    specialties, and I am pleased that he is being nominated for
    this position, in part because there is a need to fix a broken
    Tax Code.
        He has gotten a lot of respect from economists from both
    sides of the aisle. His predecessor as Chair of the Council of
    Economic Advisers, Jason Furman, has called him an ``excellent
    pick.'' That is from Jason Furman. He has also been endorsed by
    Obama administration economists Austan Goolsbee, Peter Orszag,
    and Christina Romer, all of whom I think you all know and have
    had here before the Committee.
        He has served as a senior economist at the Federal Reserve
    Board of Governors and as an economic adviser to five major
    Presidential campaigns. In particular, I want to point out that
    Kevin is an expert, again, on tax reform. I think this is going
    to be incredibly important to us, and his focus has been on how
    to have a Tax Code that gets rid of some of the loopholes and
    some of the preferences for special interests and a simpler Tax
    Code with lower rates. And I think that, again, is exactly what
    we need to get the economy moving.
        What he has shown is that if you could fix the Tax Code in
    that way, the major beneficiary would be middle-class families;
    wages are flat right now and the best thing to do to get wages
    up is actually to reform the Tax Code. And I think that is
    really important research. The middle-class squeeze that too
    many of our constituents are feeling, flat wages and higher
    expenses, is something we can address through a number of ways,
    and one certainly is through tax reform. And his work in that
    area has respect on both sides of the aisle.
        He is the right person at the right time, Mr. Chairman. I
    think as Chairman of the Council of Economic Advisers, the
    difficult task of tax reform, among other things, will be much
    easier.
        So thank you very much for giving me the opportunity to say
    a few words this morning about Mr. Hassett, and I strongly
    support him, and I hope the Committee will send him to the
    floor.
        Chairman Crapo. Thank you, Senator Portman.
        Now, Senator Shaheen, would you please introduce Ms.
    Patenaude?

     STATEMENT OF JEANNE SHAHEEN, A U.S. SENATOR FROM THE STATE OF
                             NEW HAMPSHIRE

        Senator Shaheen. Thank you, Mr. Chairman and Senator Brown
    and Members of the Committee. I am really delighted to be here
    to introduce a fellow Granite Stater, Pam Patenaude, to be
    President Trump's nominee to serve as the Deputy Secretary of
    the Department of Housing and Urban Development. And what I
    have to say is probably overkill after your glowing review of
    her resume, Mr. Chairman, but Ms. Patenaude's experience in
    housing policy goes back nearly three-and-a-half decades,
    beginning with her work in New Hampshire at the New Hampshire
    Housing Finance Agency. That was followed, as you pointed out,
    by service as White House Liaison at the Department of Housing
    and Urban Development in the Reagan administration.
        Now, Pam and I first got to know each other when I was
    Governor and she served in a succession of high-level
    positions: Director of New Hampshire's Small Business
    Development Centers, the Deputy Chief of Staff and later State
    Director for then-Senator Bob Smith of New Hampshire, and
    Assistant Deputy Secretary at HUD. And as you pointed out, she
    later served as HUD Assistant Secretary in the Office of
    Community Planning and Development, and as an executive with
    the Urban Land Institute.
        You know, what impressed me always about Pam is that she
    understands that access to affordable housing and a safe place
    to call home is the foundation of families and strong
    communities. And throughout her career, she has been engaged in
    these challenges as a thinker, a leader, and a problem solver.
    And I have especially appreciated her ability to bring together
    disparate stakeholder groups to forge bipartisan agreements in
    the housing arena, and that she is personally dedicated to the
    core mission of HUD, including the challenge of bringing
    opportunity, as you pointed out, Senator Brown, to America's
    most disadvantaged urban communities.
        I think our Nation is fortunate to have someone of Pam's
    high caliber who is willing and eager to serve in this position
    in the Federal Government, and I hope that Members of the
    Committee will agree with me that her experience and expertise
    makes her superbly suited to serve as Deputy Secretary at HUD.
        So thank you, Mr. Chairman. Thank you, Members of the
    Committee.
        Chairman Crapo. Thank you very much, Senator Shaheen. We
    appreciate that introduction.
        And now, before we begin your testimony, I would like to
    place both of the nominees under oath, so would you please rise
    and raise your right hand? Do you swear or affirm that the
    testimony you are about to give is the truth, the whole truth,
    and nothing but the truth, so help you God?
        Mr. Hassett. I do.
        Ms. Patenaude. I do.
        Chairman Crapo. And do you agree to appear and testify
    before any duly constituted Committee of the Senate?
        Mr. Hassett. I do.
        Ms. Patenaude. I do.
        Chairman Crapo. Thank you very much. You may be seated.
    And, Mr. Hassett, you may proceed.
        Each of you may take a few moments, which we will not take
    away from your time, to introduce any members of your family
    you may wish to introduce.

       STATEMENT OF KEVIN ALLEN HASSETT, OF MASSACHUSETTS, TO BE
                 CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS

        Mr. Hassett. Thank you very much, Senator Portman, for the
    kind introduction. And Senator Crapo, Ranking Member Brown, and
    distinguished Members of the Committee, I am truly humbled and
    honored to be before you today as President Trump's nominee to
    be the Chairman of the Council of Economic Advisers. I am also
    deeply grateful to have had a chance to get to know many of you
    throughout this process. I wish that the people who worry about
    Washington could have witnessed the many private kindnesses
    that the Members of this Committee and staff have extended to
    me in the last few weeks.
        And I would also like to begin, as you invited me to,
    Senator, by introducing my college sweetheart and wife of 31
    years, Kristie Hassett, and next to her are my sons John and
    James, who are sitting behind me. I would also like to
    acknowledge my father, John, who was a Korean War veteran but
    could not be here today; and my mother, Sylvia, and my sister,
    Julia, who sadly are no longer with us.
        Senators, I have almost always been a student of economics,
    even before I knew it. I was raised by two public school
    teachers in the beautiful town of Greenfield, Massachusetts. My
    mother was a kindergarten teacher in neighboring Turners Falls.
    My father taught English at Greenfield High School and still
    lives in Greenfield in the same house I was raised in.
        As I was growing up, my town went through a very painful
    transition. For the longest time, Greenfield was a thriving
    mill town, with the world's largest tap and die operation that
    employed thousands of citizens. Neighboring Turners Falls was
    almost as prosperous, housing a massive paper mill along the
    banks of the Connecticut River. But as we got older, times were
    changing. Plants closed. Families started moving away.
    Graduates stopped coming home after college.
        It seemed impossible to look around and not wonder what was
    happening to my town. When I started studying economics in
    college and again in graduate school, I always came back to the
    example of how my town changed. Why did plants move away or
    close? Why did many of the good jobs disappear? And is there
    something that policymakers can do to restore prosperity?
        Now, economic models suggest a simple answer. Workers can
    have high wages if they have high productivity, and high
    productivity is enabled by an ample supply of capital. But
    going from things that work in textbook models to actual policy
    recommendations is a difficult thing. The real world has many
    complications that are not included in the models, and the data
    often surprise economists, especially those who have too much
    confidence in their theories.
        That observation led me over the years to focus on things
    that can be learned from the data. My dissertation focused in
    part on how wages have moved over the business cycle. What do
    the periods when workers prosper have in common? My early
    career was spent studying how firms' investment decisions
    respond to Government policy and how labor and capital
    interact.
        Since then, my studies have taken me in many different
    directions, but I think my record makes clear a few things that
    I would like to emphasize about my approach to economics.
        First, I believe it is essential to gather evidence and not
    just rely on theory. Early in my career, the empirical
    literature on international taxation contained many holes,
    often because the country-by-country data that one would need
    for study were not available. My coauthors and I responded to
    this by building a large international tax data base and making
    its data available to anyone who wanted it.
        Which leads me to my second point: I believe that economic
    analysis should be transparent and replicable. An example of my
    commitment to this idea is the Open Source Policy Center, which
    I cofounded at the American Enterprise Institute. The OSPC has
    open source computer code that allows anyone to score tax
    plans, evaluate the distributional consequences of that plan,
    and see what the assumptions are that others use when they
    score their own plans. The OSPC promises to democratize the tax
    debate.
        Finally, while I respect the need for all types of
    research, even the very theoretical, my own focus has mostly
    been work that holds the promise of improving the lives of
    others and that sheds light on the circumstances of those less
    fortunate, like those in my hometown who lost their jobs when I
    was growing up. A recent example of this would be my work with
    the Economic Innovation Group, where I explore the causes and
    cures of the striking geographic inequality that we see in
    America today. EIG researchers have worked hard to identify and
    measure distress and have constructed publicly available data
    sets that shed light on the communities around the country that
    most need our help. There is an interactive map even at the EIG
    website that helps people explore their own communities, with
    the dark color red indicating extreme economic distress. One of
    the reddest shapes on the map in Massachusetts is Turners
    Falls, the town across the river from my dad's house where the
    paper mill closed.
        The Council of Economic Advisers was created to provide the
    President with professional and objective economic advice, to
    help policymakers craft solutions for problems like those we
    face today. Throughout history, the CEA has done so admirably
    during both Democratic and Republican administrations. In 2009,
    then-nominee Christina Romer told this Committee that she would
    do her, and I quote, ``utmost to protect the integrity of the
    CEA, and make it a center for unbiased, scientific analysis.''
    Chairman Crapo and Members of the Committee, if confirmed, I
    pledge to you that I would do the same and that I would
    enthusiastically and energetically take the helm of this great
    American institution.
        Thank you.
        Chairman Crapo. Thank you, Mr. Hassett.
        Ms. Patenaude.

     STATEMENT OF PAMELA HUGHES PATENAUDE, OF NEW HAMPSHIRE, TO BE
          DEPUTY SECRETARY, U.S. HOUSING AND URBAN DEVELOPMENT

        Ms. Patenaude. Thank you, Chairman Crapo, Ranking Member
    Brown, and distinguished Members of this Committee. It is a
    great privilege to appear before you this morning. I am deeply
    honored by President Trump's decision to nominate me as the
    Deputy Secretary of the U.S. Department of Housing and Urban
    Development.
        I also want to thank Senator Shaheen for her very
    thoughtful introduction, and a special thanks to my dear friend
    Senator Bob Dole for joining us this morning.
        Mr. Chairman, if I may take a moment to introduce my
    husband and our three daughters: my husband of 32 years, Chuck
    Patenaude; Caitlin--they are out of order here--Meghan, and
    Jennifer. And I also want to recognize my niece, Kristen
    Hughes, who is also here with us today, and the many friends
    who are sitting behind me showing their love and support.
        Housing has always been close to my heart and part of my
    family history. My late parents, Bob and Estella Hughes,
    together created and ran a successful homebuilding business in
    New Hampshire. In the Hughes household, there was simply no
    escaping talk about housing.
        For that reason, it was no surprise to my parents when I
    came to share their passion for housing. As a senior at Saint
    Anselm College, I experienced our Nation's capital as many
    college students do: as an intern. I never imagined that that
    internship at HUD headquarters 35 years ago would launch a
    career that continues to energize, challenge, and inspire me.
    Upon graduation, I administered the Section 8 rental assistance
    program at the New Hampshire Housing Finance Authority, where I
    observed firsthand the transformational impact that HUD
    programs could have on improving the quality of life for
    seniors and our most vulnerable citizens.
        During my career, I have also served at HUD in several
    leadership roles. As Assistant Deputy Secretary for Field
    Policy and Management, I restructured HUD's critical field
    operations and contributed to the development of the 5-year
    Strategic Plan. As Assistant Secretary for Community Planning
    and Development, I administered more than $8 billion in
    community economic development and affordable housing funds and
    managed a team of more than 800 experienced professionals
    committed to carrying out HUD's mission.
        Outside of HUD, my career has focused on promoting housing
    policies that are aligned with the significant and changing
    needs of the American people.
        At the Urban Land Institute, I established the ULI
    Terwilliger Center for Workforce Housing to draw attention to
    the plight of America's most essential workers: firefighters,
    police officers, nurses, and teachers, who are too often priced
    out of the communities they serve.
        At the Bipartisan Policy Center, I directed the Housing
    Commission under the steadfast leadership of three of your
    former colleagues: Senator George Mitchell, Senator Kit Bond,
    and Senator Mel Martinez, as well as former HUD Secretary Henry
    Cisneros. The Commission developed a comprehensive report
    outlining a new direction for Federal housing policy.
        Currently, I serve as president of the J. Ronald
    Terwilliger Foundation for Housing America's Families, where we
    seek to elevate rental affordability as a national priority and
    to educate policymakers about the silent housing crisis in
    America.
        Through these initiatives, I have developed strong working
    relationships with diverse groups, diverse members of the
    housing community--affordable housing advocates, homebuilders,
    mortgage bankers, Government policymakers, and academics. I am
    very proud to say that bipartisan collaboration has been a
    hallmark of these initiatives.
        My career in housing at the local, State, and Federal
    levels of Government and in the private sector has broadened my
    view of America's housing policies. This unique perspective
    enables me to understand the factors that contribute to the
    success of some programs, as well as the factors that diminish
    the well-intended impacts of others.
        As Matthew Desmond articulated in his Pulitzer Prize-
    winning book ``Evicted'', ``we have failed to fully appreciate
    how deeply housing is implicated in the creation of poverty.''
    Dr. Desmond believes that ``powerful solutions are within our
    collective reach.'' I agree with Dr. Desmond. I believe that as
    a Nation, we must recognize that housing is not just a
    commodity but a foundation for economic mobility and personal
    growth.
        If confirmed by the U.S. Senate, I pledge to work closely
    with this Committee, with Congress, and with Secretary Carson
    to develop new solutions to address the affordable housing
    crisis in America and to implement the critical mission of the
    U.S. Department of Housing and Urban Development.
        I appreciate the Committee's thoughtful consideration of my
    nomination. Thank you, Mr. Chairman.
        Chairman Crapo. Thank you very much, Ms. Patenaude.
        My first question, and I mean brief here because I only
    have 5 minutes, but I would like you each to briefly, like
    within 60 seconds, to just take a minute to discuss what your
    top priorities will be as you are confirmed. Mr. Hassett.
        Mr. Hassett. Senator, thank you for the question. If
    confirmed, my first priority would be, frankly, to recruit a
    lot of economists because the Council of Economic Advisers has
    a proud tradition of recruiting folks from universities all
    around the country to come to Washington to provide unbiased,
    scientific, objective advice to the President. And unlike a lot
    of agencies, the Council of Economic Advisers turns over a lot,
    and so that there are new people coming to town to serve their
    country all the time. And if confirmed, that would be the very
    first order of business for me because the staff probably would
    go from around 35 to 10 were we not to start recruiting.
        The second thing I could say is a very high priority for me
    is to increase the transparency of the modeling and the
    communication that goes on in all of the economic communication
    of the Administration. So I would like to take the work that I
    have done at the Open Source Policy Center and at EIG where we
    have made these interactive maps and bring that kind of spirit
    of transparency to the CEA.
        Chairman Crapo. Thank you.
        Ms. Patenaude.
        Ms. Patenaude. Thank you, Mr. Chairman. My priorities
    obviously will be the Secretary's priorities, but the first
    thing I would like to do is to hear what the Secretary has
    learned during his first 100 days during his listening tour.
    From my past experience, I know that I need to certainly assess
    the human capital needs and the operations needs of the
    Department, and I look forward to working with the Secretary on
    developing a strategic plan based on his priorities and those
    of the Administration. Thank you.
        Chairman Crapo. Well, thank you. And, Ms. Patenaude, I will
    stick with you because I am going to go back to both of you
    with sort of a priority of mine I would like you to assume. And
    with regard to you, Ms. Patenaude, there are actually several.
        There has been a bipartisan interest in addressing a number
    of important issues in the housing space, such as streamlining
    regulatory requirements for smaller PHAs, increasing the role
    of private capital in financing affordable housing, and
    creating a new, sustainable housing finance system. And I do
    not need you to talk about these. I just want to know: Would
    you agree to prioritize those and work with us as we seek to
    achieve those objectives?
        Ms. Patenaude. Yes, Mr. Chairman.
        Chairman Crapo. Thank you very much.
        And, Mr. Hassett, my question for you is: In the space you
    just referenced, you have extensive experience with economic
    growth modeling and evaluating the economic impacts of policy.
    You mentioned you would like to prioritize getting that more
    transparent and, I assume, out there and understood and used.
    Various growth estimates have been discussed recently in the
    context of tax and budget and other reforms. In your opinion,
    is 3 percent growth a reasonable target? And if so, please
    explain what policies would be needed to reach that goal?
        Mr. Hassett. Thank you very much. The 3 percent growth is
    something that Americans used to be accustomed to; 3 percent
    growth was the rule rather than the exception. But growth
    comes, basically if you want more output, ultimately from more
    inputs, and historically we have had a lot of labor force
    growth, capital stock growth, and technological innovation that
    have driven growth up to around 3 percent.
        All three of those factors have been very disappointing for
    some time now. We had the computer revolution in the 1990s, but
    that seems to have slowed down. Capital formation in the late
    1990s was contributing about 1.2 percent per year to growth.
    Right now it is about 0.4 or 0.5. And labor force growth, of
    course, has been disappointing as well.
        And so if we want to go from the 2 or so percent growth
    that we have been experiencing to 3 percent, then we are going
    to have to get those three things moving. And the thing that I
    have researched the most throughout my career is capital,
    capital investment, how it affects workers and how to get it
    going. And I think that it is absolutely possible to return to
    a place where you could get 3 percent growth if we design
    policies in a way that would encourage capital formation in the
    United States.
        Chairman Crapo. Thank you. And I would assume that would
    include some comprehensive tax reform. Is that correct?
        Mr. Hassett. That is correct, Senator, and I think this
    estimate was a little bit high, but there was a survey at the
    National Bureau of Economic Research a number of years ago
    where a bunch of economists were surveyed about the impact of
    the 1986 Tax Reform Act, and I believe the median estimate of
    the economic growth that they said was about 1 percent per
    year. And so, again, if you are thinking about how could we get
    from 2-ish to around 3, then tax reform is certainly part of
    the--one of the tools that we would want to use.
        Chairman Crapo. All right. Thank you very much.
        Mr. Hassett. Thank you.
        Chairman Crapo. Senator Brown.
        Senator Brown. Thank you, Mr. Chairman.
        Ms. Patenaude, thank you again for being here. In your work
    with Terwilliger, you cited stagnating wages, a weak economy,
    and ``the acute shortage of rental homes that are both
    affordable and available to those households with the lowest
    incomes'' as factors in the rental affordability crisis we see
    today. This indicates you believe broad economic trends are
    contributing to the current shortage of affordable rental
    housing. Is that correct?
        Ms. Patenaude. That is correct.
        Senator Brown. OK. Thanks. You mentioned Matthew Desmond's
    observation in his book ``Evicted'' that ``we have failed to
    fully appreciate how deeply housing is implicated in the
    creation of poverty.'' When he came to see a group of us in the
    Senate 1 day, I asked him to meet with a number of Senators.
    When he signed his book, he wrote, ``Home equals life,''
    understanding, as you do, in our discussion that I know you
    believe that families turn upside down in so many ways if they
    do not have a stable, affordable home.
        When I quoted him just now, ``we have failed to fully
    appreciate how deeply housing is implicated in the creation of
    poverty,'' if you believe what he wrote to be true, then the
    HUD budget, if adopted, would it not create additional poverty?
        Ms. Patenaude. Senator Brown, I was not involved in the
    proposed budget in any way, shape, or form, and I very much
    appreciate and understand the role of Congress in formulating
    the budget and look forward to working with this Committee.
        Senator Brown. But you are going to be--let us just put it
    gently, that your knowledge and expertise far exceeds your
    boss'. I think that is generally believed. You may not want to
    agree with that, but he will be listening to you. What will you
    say to him about this budget, that these kind of cuts far in
    excess of what he said he would support when he was in front of
    us 3 or 4 months ago, what do you argue with him? What do you
    say to him?
        Ms. Patenaude. I have not had a conversation about the
    budget with Secretary Carson. He is going to testify before the
    House tomorrow.
        Senator Brown. My question is: What will you say to him,
    once confirmed----
        Ms. Patenaude. As a lifelong houser, I think you can count
    on me that I will advocate for programs that work and are
    effective going forward.
        Senator Brown. So does that mean you do not agree with the
    President's budget cuts?
        Ms. Patenaude. No. As the President's nominee, I support
    the President's budget.
        Senator Brown. But you will advocate for adequate funding
    of these programs that you know work?
        Ms. Patenaude. Going forward, if I am confirmed by the U.S.
    Senate, yes.
        Senator Brown. OK. I do not know how you support the
    President's budget cuts, but you support adequate funding for
    these programs that work. Can you explain that to me?
        Ms. Patenaude. To clarify, I did not say, you know, the
    specific amount on what I would advocate for, but I am--
    certainly there are programs that have been very effective at
    HUD, and along with that I would be making--I can imagine that
    I would be making recommendations to streamline some of these
    programs. I am very hopeful that we will come up with new
    solutions working with this Committee and your staff to address
    the changing housing needs in this country.
        Senator Brown. Thank you. I want to give a moment to your
    partner there.
        A little over a decade ago, there was a debate over whether
    the economic growth rate assumed by the Social Security
    trustees was too pessimistic, in line with Chairman Crapo's
    question. You coauthored a paper then that defended that rate,
    1.9 percent, over the more optimistic 3-percent growth rate
    that we had experienced over the previous four decades. I think
    that was rather prescient of you. Part of your reasoning was
    that prudent planning for the future should actually place more
    weight on the downside risk than on the upside potential. Now
    that it is conservatives who want to assume their way to
    balance, do you believe a 3-percent growth rate over the next
    decade really is warranted--I heard your comments to the
    Chairman--when the consensus among the Fed, the Blue Chip
    forecasts, and the Kevin Hassett of 2006 is on the order of 1.9
    percent?
        Mr. Hassett. Senator, again, I do not want to take up too
    much time, but for sure if we do not change policy, we can
    expect to stay around 2 percent. I think if you look at the
    Blue Chip forecasts, they do not envision the kind of sweeping
    tax changes that we experienced in a bipartisan fashion in 1986
    and that have been proposed in the House's----
        Senator Brown. So if I can interrupt, I am sorry.
        Mr. Hassett. Sure.
        Senator Brown. So that 3 percent is really contingent on
    getting real tax reform, not just a tax cut. You know from your
    years in the Bush years that two significant cuts went
    overwhelmingly to the wealthy and there was literally zero--
    zero--private sector net job growth in those 8 years. So you
    are arguing that only if we do real tax reform, not just tax
    cuts but real tax reform, can we get anywhere close to the
    assumed 3 percent?
        Mr. Hassett. I think that is a fair assessment.
        Senator Brown. OK. Thank you.
        Let me take my last 3 seconds--sorry, Mr. Chairman. I want
    to talk about lead for a second because of your boss the
    Secretary of HUD's comments as the nominee, Nominee Carson
    rather than Secretary Carson. I am particularly troubled by the
    proposal on reducing funding for HUD's lead grants and
    eliminate HOME and CDBG use for home repairs and other
    activities. As I mentioned briefly, most of the homes in
    Cleveland, most of the homes in Appalachia, most of the homes
    in Dayton and Cincinnati and Youngstown are at least 50 or 60
    years old. The head of the Cleveland Health Department said
    literally 99 percent of those homes have toxic levels of lead.
        Share your thoughts on the effects of childhood lead
    poisoning in this country and the role that HUD can play to
    eliminate it.
        Ms. Patenaude. Thank you, Senator Brown. I appreciate
    hearing your concerns. Yesterday Dr. Carson proclaimed June
    ``Healthy Homes Month'', and he released a video. I did not
    watch the entire video because I was preparing for today's
    hearing, but the video addresses lead. So I believe that
    Secretary Carson is very committed to this issue and will
    continue to be.
        The budget, as I understand it, it was level funding until
    the omnibus, so under the CR, that level of funding is what was
    requested in the proposed budget. It was not until after the
    omnibus was passed that it actually became a cut. But I think
    the level of support is significant.
        Senator Brown. Well, that is a matter of opinion. The
    original CDBG proposal was deep cuts.
        Chairman Crapo. Thank you very much.
        Senator Corker? And I do remind my colleagues to hang in
    there with that 5-minute rule.
        Senator Corker. Yes, sir. I just want to get ready before
    my 5 minutes.
        [Laughter.]
        Senator Corker. They have not started yet.
        Ms. Patenaude, I want to thank you for your willingness to
    serve. We had a very good meeting in the office, and numbers of
    people that I have worked with in housing speak very highly of
    you, and I look forward to your confirmation.
        Mr. Hassett, your wonderful family is here, and I know
    that, you know, you are one of the nicest folks I have met that
    is coming through. And I know that when we met, on the other
    hand, by the time the meeting was over, my temperature was
    about to take my head off as I thought about the fact that
    think tanks that you have been a part of, of course, but so
    many think tanks here in our Washington community make the
    perfect the enemy of the good and really can be very
    destructive--very destructive, as we discussed--as we try to
    move ahead and actually pass legislation that accommodates some
    commonality on both the Republican and Democratic side. And,
    actually, the think tank that you have been a part of has
    played a big role in trying to undermine actually bipartisan
    efforts that we have put together here on the Committee. You
    and I discussed that fully. And as I thought about it, I
    thought about a person coming into the White House that had
    been ``in an ivory tower,'' if you will, sitting over at a
    think tank, writing perfect things in a perfect world. I then
    began to question whether someone like you would even be good
    in this position.
        Now, let me say this: As my temperature cooled down and I
    thought a little bit more about, you know, your past, obviously
    you are qualified for this job, but can you talk with me a
    little bit about the role that you will be playing there and
    hopefully share a little bit of understanding about the fact
    that we live in a world where we represent 320 million people
    here, and sometimes, you know, economists sitting over in a
    think tank that have nothing in the world to consider but
    perfect do not always help us in a constructive way as we try
    to move the country ahead.
        Mr. Hassett. Thank you, Senator, and thank you for your
    time in your office. I can tell you that I think a hallmark of
    my career is that I have never been that person who says that
    the perfect is the only thing that you should do, and if you do
    not do that, then, you know, you are someone who is a traitor
    to economics. In fact, I think that I have worked collegially
    with people on all sides on pretty much every issue that I have
    ever been involved in.
        I think that at the Council of Economic Advisers in
    particular, the role of the CEA is to provide objective advice
    about what decision makers do. I think that the problem of
    governing is often one that there are a lot of decisions that
    have to be made, and they have to be made urgently, and we need
    expert analysis to inform those decisions. And someone who
    says, ``Well, in a perfect world, with perfect markets, here is
    what you ought to do, and if you do anything else, then''----
        Senator Corker. Well, actually, that is not what people
    say. They just say, ``This is the only way for it to occur,''
    because the perfect is the enemy of the good. They are not
    saying in a perfect world. They are actually undermining
    legislative processes that have to take into account, you know,
    different temperaments, if you will, different values that are
    part of democracy. So it was not really that. It was really
    just the straight undermining of bipartisan efforts here on the
    Committee.
        Mr. Hassett. Sir, at the American Enterprise Institute,
    there are people with very strong opinions, and they do not
    take my advice about what their opinions should be. But I can
    assure you that that is not the way I would behave if
    confirmed.
        Senator Corker. Who will you report to there?
        Mr. Hassett. The President, sir.
        Senator Corker. So not through Gary Cohn but directly to
    the President.
        Mr. Hassett. The Council of Economic Advisers was
    established in 1946, and by statute it is quite clear, yes.
        Senator Corker. You wrote a book in 1999 about ``Dow
    36,000'' by 2009. I noticed it was at 10,428. What happened?
        Mr. Hassett. Sir, I think that one critic of mine once
    looked at that book and called it a ``youthful indiscretion,''
    and I think that as youthful indiscretions go, it was not such
    a bad one. I think the motivation of the book then was to make
    sure that people understood how to think about equities and how
    important it was, if you can be a long-run investor, to invest
    in equities because they are a good investment in the long run
    but not in the short run. And I think that looking back, folks
    that bought and held were glad that they did.
        Senator Corker. So I know the President has said some
    things about trade, and you are a full-blown free trader. Is
    that correct?
        Mr. Hassett. Historically, yes, sir. That is right. That is
    what I have----
        Senator Corker. And he has also mentioned some things about
    hedge fund taxation. You are a low carried rate--carried
    interest rate person on hedge funds. I wonder if you might
    expand a little bit on that.
        Mr. Hassett. I have written one piece on carried interest,
    sir. It is in the journal Tax Notes, coauthored by Alan Viard,
    a fellow economist at AEI, and we just analyzed the law of
    carried interest taxation and how it relates to partnership
    taxation. I think one of the main points of the piece, written
    many years ago, was that partnership law is what is applied to
    carried interest taxation, and so to change carried interest
    taxation would require writing a new special provision.
        Senator Corker. Thank you for your desire to serve, and I
    look forward to serving with you.
        Mr. Hassett. Thank you, Senator.
        Senator Corker. Yes, sir.
        Chairman Crapo. Thank you, Senator Corker.
        Senator Warren.
        Senator Warren. Thank you, Mr. Chairman. And thank you both
    for being here and for your willingness to serve.
        I want to follow up on Senator Brown's questions with a
    little more detail about the budget, and I want to focus in on
    housing. According to a report earlier this year from the
    National Low-Income Housing Coalition, there is a shortage of
    about 7.4 million affordable rental units in this country.
    Millions of families are now forced to spend more than half
    their income on housing, on rent.
        The Department of Housing and Urban Development is
    responsible for addressing this crisis, but President Trump's
    budget now calls for cutting HUD's budget by $6 billion. That
    would be a 13-percent cut.
        Ms. Patenaude, if you are confirmed, you would be
    responsible for overseeing HUD's housing programs, so I want to
    know where you stand on some of the specific cuts in the
    President's budget. So let me start with CDBG. The President's
    budget called for eliminating all Community Development Block
    Grants. All of them. That is $3 billion that currently helps
    fund shelter for people with special needs, that helps build
    nursing homes, that helps create homes for veterans, that helps
    create shelters for victims of domestic abuse. This proposed
    cut would hurt some of the most vulnerable people in
    Massachusetts and all across this country.
        Do you support eliminating this funding?
        Ms. Patenaude. Thank you, Senator Warren. The CDBG program
    has been around for over 40 years, and $150 billion has been
    dedicated to this program.
        Senator Warren. So do you support eliminating all funding
    for the CDBG program?
        Ms. Patenaude. During the last two Administrations, there
    were significant cuts proposed in the budget for CDBG, and I
    believe that was due to the lack of targeting for the program.
        Senator Warren. So I am still asking the question. Do you
    support eliminating the CDBG program or not? It is really a
    pretty simple question.
        Ms. Patenaude. I support the President's proposed budget.
        Senator Warren. So you support eliminating----
        Ms. Patenaude. I was not involved in the negotiations of--
    --
        Senator Warren. I did not ask whether you were involved.
    You have now read it like the rest of us have. I was not
    involved either, but I have a very strong opinion about it. Do
    you support eliminating all of the Community Development Block
    Grants that are used to support housing?
        Ms. Patenaude. I certainly would support reforms to CDBG,
    and the----
        Senator Warren. Do you support the cuts in the President's
    budget? This should not be an arm-wrestling contest here. It is
    a yes or a no. You either support where the President is or you
    do not.
        Ms. Patenaude. Well, I did. I did state that I support the
    President's----
        Senator Warren. OK. You do support all of these cuts then.
    OK. We got it. You know, there are going to be a lot of people
    who are going to be hurt by that.
        Donald Trump's budget also eliminates $948 million in
    funding for the HOME Investment Partnerships. Now, HOME funding
    helps States build and rehabilitate housing for low-income
    families. Organizations in Massachusetts rely heavily on HOME
    funding to create more livable, affordable housing units.
        So, Ms. Patenaude, there is a housing shortage of more than
    7 million affordable housing units in this country, and this
    proposed cut would make that shortage worse. More people will
    end up on the street. More women, more children, more veterans,
    more seniors, more people with disabilities. It is that simple.
    Do you support elimination of this funding?
        Ms. Patenaude. Senator, the HOME Program has grown, the
    number of recipients, participating jurisdictions, over the
    years, and the grants are getting smaller and smaller and more
    difficult----
        Senator Warren. So do you propose--do you support
    eliminating funding for this program?
        Ms. Patenaude. I support the President's proposed budget.
        Senator Warren. So you support eliminating it. That is
    going to hurt a lot of people, too.
        More than any other Federal agency, HUD is how Americans
    help friends and families in need. It is not about handouts. It
    is about helping people find decent, safe places to live so
    that they can raise their kids, so they can go to school, so
    they can get a job. The President's HUD budget attacks those
    who need help. It attacks seniors, it attacks children, it
    attacks veterans, it attacks people with disabilities, it
    attacks abused women. It attacks people trying to put their
    lives back together. It is a disgrace, and anyone who cares
    about housing in this country should oppose it.
        Mr. Chairman, I yield.
        Chairman Crapo. Thank you.
        And, Senator Rounds.
        Senator Rounds. Thank you, Mr. Chairman.
        Ms. Patenaude, I would kind of like to just follow up a
    little bit on the conversation that you began with Ranking
    Member Brown, and I am just curious. With regard to the
    President's budget and so forth, and the allocation of scarce
    resources through HUD, could you share with us a little bit
    perhaps how you would prioritize--I mean, nobody is going to
    have as much money as we want to have, and yet there are some
    very important projects out there. I am certain that you have
    had a chance to look at where your priorities would be. Can you
    share with us a little bit what you would see as the priorities
    and how you would use the dollars that are allocated and where
    you would like to see the focus at with regard to the use of
    scarce resources?
        Ms. Patenaude. Thank you, Senator Rounds. The priority has
    been for a long time to target to the most vulnerable
    populations, so I certainly support the continuation of that. I
    would also support programs that have a proven track record
    that we can measure the performance. But with that said, I
    would also like to look at reforms of some of these programs
    that I would certainly support in a future budget.
        Senator Rounds. So as you take a look at all of these, one
    of the areas that we have got concerns with is in Native
    American housing and so forth, particularly in the Dakotas,
    where we have large land masses, large areas, but basically a
    very scarce population. We have found time and again that we
    really do lack housing in those areas, and to us, we are
    talking about some of the poorest counties in the United
    States, actually, where they are on the reservations, and they
    really do rely on assistance, particularly when it comes to
    housing.
        Would you see it appropriate that in those areas where you
    can evaluate and you see that these are perhaps some of the
    poorest and some of those that are most in need, are these the
    types of areas that you would consider prioritizing with regard
    to the resources that are available?
        Ms. Patenaude. Yes, Senator. As I mentioned during our
    meeting, I have limited exposure to Indian country and look
    forward, if I am confirmed, to visiting Pine Ridge with you so
    I can get a better understanding of the needs. But I was
    surprised to learn about the number of barriers to construction
    with the lands, and I certainly would like to look at ways to
    work--you have more barriers than even normal circumstances for
    development, so I would like to look at ways where we can help
    reduce those regulatory barriers to development, use of the tax
    credit program in Indian country. I think it would be a high
    priority.
        Senator Rounds. OK. Last year, Congress passed the Housing
    Opportunity Through Modernization Act by unanimous votes in
    both chambers. This legislation was the first substantive
    housing reform enacted by Congress in decades. Among the many
    reforms in the legislation were provisions that helped address
    homelessness, reduce the administrative burdens on the public
    housing authorities and other organizations that HUD works
    with, and provisions that further incentivize Americans who use
    HUD to find work and provisions that help improve the quality
    of life for residents of public housing.
        How do you think that Congress can continue to build on
    this progress in the future? As you have looked, what other
    barriers do we--what have we actually set up that we need to
    take a look at in terms of improving to make the job of
    actually helping these individuals more realizable?
        Ms. Patenaude. Senator, the President has actually
    requested that each agency review their regulations, and I
    think there are numerous regulations that are on the books that
    are outdated, no longer necessary. I believe that if we are
    going to make a difference, we have to look at barriers at the
    local level, the State level, and the Federal level, and
    particularly at the local level. All zoning is local; all real
    estate is local. And I think HUD needs to help these
    communities see that there is indeed barriers, unnecessary
    barriers sometimes, to development.
        Senator Rounds. The CDBG Program, Community Development
    Block Grants, is an area that we have really relied on at the
    State level. During the time that I worked as Governor in South
    Dakota, we used CDBGs. I really think that Governors and local
    units of Government have a real sense of where the resources
    can be put to use the best. And in many cases, these products
    can be used to create infrastructure, to improve
    infrastructure, to upgrade infrastructure. That really makes a
    huge opportunity for individuals to see an improvement in their
    quality of life in smaller communities as well as some of the
    inner-city communities.
        I am just curious what your thoughts are about the use of
    Community Development Block Grants, your support for them, and
    whether or not they have been an effective tool in your view.
        Ms. Patenaude. Senator, you certainly have more experience,
    having been the Governor, in utilizing CDBG. But, of course, we
    do have success stories with it, but I do not believe that the
    amount of money that is available to the grantees is
    significant enough to make, you know, infrastructure
    investments, and I believe that the President's infrastructure
    bill perhaps is a better place to address infrastructure, water
    and sewer, than through the CDBG.
        Senator Rounds. I most certainly think that additional
    resources would be welcome and that when we start talking about
    investment in infrastructure, I think the fact that we could
    look at areas in which it would actually improve housing by
    creating infrastructure that promotes more housing is a really
    good thing. But I am also glad to hear that you think that
    maybe there were not enough resources put into CDBG as well to
    actually make a difference, because we would like to talk to
    you about perhaps increasing that in the future as well.
        Ms. Patenaude. Thank you, Senator.
        Senator Rounds. Mr. Chairman, with that, thank you. My time
    has expired.
        Chairman Crapo. Thank you.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman, and thank you
    both for being here.
        Ms. Patenaude, during your recent visit, we discussed the
    crisis in East Chicago, in Indiana, where the lives of more
    than 300 families were upended and put at risk due to the
    presence of significant levels of lead and arsenic in our soil.
    HUD has helped most of the residents find new housing. Local
    officials are pursuing emergency HUD funding for the safety and
    the security and the ultimate demolition of the complex. Can I
    have your commitment that, if confirmed, you will advocate for
    HUD to dedicate the resources needed, including emergency
    funding, to assist these residents and the local officials in
    getting this situation taken care of?
        Ms. Patenaude. Yes, Senator Donnelly, you have my
    commitment, and I believe that Secretary Carson is committed to
    this issue as well.
        Senator Donnelly. Yes, I think we are working right now
    with his staff to find an exact date for him to come to East
    Chicago so he can witness it firsthand.
        When I was in the House of Representatives, I served on the
    House Veterans' Affairs Committee, and far too many veterans,
    as we all know, that served our country find themselves
    sometimes without a home or a place to put their head down at
    night on a pillow. We need to continue efforts to address this
    problem, and that includes the Veterans Affairs Supportive
    Housing Program from HUD and VA.
        I was troubled to see that the recent HUD budget proposal
    did not include any additional funding for new HUD VASH
    vouchers, and the broader Tenant-Based Rental Assistance
    Program is set for a funding cut.
        How can we help end veteran homelessness when we are
    cutting the very programs intended to help them?
        Ms. Patenaude. Senator Donnelly, in preparation for the
    hearing, I met with the career staff and met with the director
    of the homeless programs at HUD, and during that briefing the
    staff informed me that the allocation of vouchers that they
    currently have are sufficient to address the veterans' needs.
    And I found that to be somewhat surprising, so I asked again,
    and then I did some research. Obviously, there is going to be a
    difference of opinions depending on who you talk to, but I do
    trust that the career staff that are running the homeless
    programs, administering the homeless programs, have the data to
    make an informed decision. So I accept their recommendation
    that the current allocation is sufficient to address this
    issue.
        Senator Donnelly. OK. Well, we would love to see all that
    data because, you know, the concern, the thought, the
    heartbreak of one veteran who does not have a place to go home
    to or is in a facility that is nowhere near what they should be
    able to expect in terms of living conditions is something that
    we owe to every single veteran.
        How do you plan to utilize HUD's resources to help house
    our homeless veterans?
        Ms. Patenaude. The allocation of the vouchers is based on a
    formula for veterans for the VASH Program, and I would like to
    look at this. If I am confirmed, I would like to look into how
    we can reallocate so that the homeless veterans in need of the
    voucher and the support services that they are not currently
    reaching, that we can get this assistance to the veterans.
        Senator Donnelly. Communities such as Gary, Indiana, have
    benefited from blight elimination funding, but there are still
    really big needs. The population declines there have led to a
    plague of abandoned and neglected buildings, resulting in
    increased crime and resulting in distressed sections. The main
    funding source for Gary to battle housing blight, and other
    cities, is the Community Development Block Grants, the CDBGs,
    but the President's budget eliminates this program.
        How can we help cities like Gary combat housing blight if
    the CDBG Program is eliminated?
        Ms. Patenaude. Senator, there are other programs, there are
    other funding streams that can be used for demolition. I think
    the tax credit program, when you are looking at perhaps, you
    know, new construction or preservation of affordable housing is
    another funding stream that could be used.
        Senator Donnelly. Well, we would like to work together with
    you because I think the elimination of CDBG makes this much,
    much more difficult, makes it much, much more challenging. And
    this is not a situation where there is not a need. All you have
    to do is walk around the streets and walk around town. And,
    actually, you can just drive by on the highway and see it right
    from there, some of the same houses that have been abandoned
    for a very long time.
        Mr. Hassett, I do not want you thinking that I was trying
    to ignore you. I wanted to ask you about the desire to see
    financial deregulation and the concerns I have about all of
    that. I was serving on the Financial Services Committee
    during--and I have to ask this quickly--the most difficult and
    challenging times we had in 2008, 2009, and 2010. Dodd-Frank
    was put in place to ensure safety and soundness. When we saw
    the dot-com bubble occur and then we saw collateralized debt
    obligations and similar things, I would love to hear from you,
    do you see any bubble on the horizon that should concern
    policymakers? And what is your biggest concern? You know, I
    always try, after that experience, to look at worst-case
    scenarios so that it never happens again because it destroyed
    my State in terms of employment and other areas. What do you
    see as the biggest challenge out there right now, the thing
    that concerns you the most?
        Mr. Hassett. Financial regulation, Senator, is not my
    immediate area of expertise. But, you know, economists study--
    --
        Senator Donnelly. Well, you have written books about the--
    --
        Mr. Hassett. Not on financial regulation, and the financial
    markets are very complex. They are what economists call
    ``incomplete,'' which means that they can at times act in
    incredibly befuddling ways. And anyone who has seen ``Mary
    Poppins'' and saw what happened to a bank understands the
    importance of financial regulation. As financial markets
    evolve, it is really important that regulation----
        Senator Donnelly. Well, what I was asking you was if you
    had one thing to keep an eye on or to worry about right now,
    what would it be?
        Mr. Hassett. I think that----
        Chairman Crapo. A short answer.
        Senator Donnelly. Yes, sorry about that.
        Mr. Hassett. I think that we have got a recovery that is
    very long in the tooth. Recoveries very often end of old age,
    and that is something that we need to be attentive to and think
    about policies that we can adopt that would extend the
    recovery.
        Senator Donnelly. Thank you, Mr. Chairman.
        Chairman Crapo. Thank you.
        Senator Scott.
        Senator Scott. Thank you, Mr. Chairman. Thank you to the
    both of you for being here this morning.
        Good morning, Ms. Patenaude. Good to see you again. Thank
    you for coming by the office and having a good conversation
    about the direction of HUD. Certainly as we have had a lot of
    questions about the President's budget, I think it is important
    to note that while we in Congress will have the opportunity to
    negotiate and wrestle with the outcome of the budget
    requirements and priorities, your responsibility will be to
    take whatever is given to the Administration, to the
    Department, and do as much good as possible.
        Speaking of as much good as possible, we talked a little
    bit about the importance of treating the whole person as a part
    of the HUD approach. Myself, I will be joining Senators Blunt
    and Reed in introducing the Family Self-Sustainability Act. The
    bill cuts Department costs through consolidating redundant
    programs, and at the same time it expands the scope of the FSS
    Program to provide more residents access to job training or
    help in attaining a GED. Lower costs, more self-sustainability,
    I think that is what we call a ``win-win.''
        What would be your approach to treating the whole person at
    HUD?
        Ms. Patenaude. Well, certainly public-private partnerships
    would be a critical component to that. The communities that
    have the resources are certainly better positioned to be able
    to help. But I believe that the private sector as well as local
    government can play an enormous role in helping to facilitate
    programs, whether it is, you know, after-school programs or
    these centers, the vision centers that Secretary Carson has
    talked about during his listening tours. So I really do believe
    that we need to look to the private sector to help rebuild some
    of these communities.
        Senator Scott. Thank you very much. I look forward to your
    confirmation.
        Dr. Hassett, thank you for your work at AEI. I have watched
    you from a distance and certainly appreciate your commitment to
    our economy, and certainly the way that you have said things
    paints pictures, like ``long-toothed recovery.'' Interesting.
        You have also said that while certain areas of the country
    are doing remarkably well, the recovery has profoundly been
    uneven with large swaths of the country facing chronic rates of
    long-term unemployment and historically low levels of new
    investment.
        Can you elaborate on the social and economic cost of this
    uneven economic recovery? And, also, what could we do to bring
    more resources into distressed communities?
        Mr. Hassett. Thank you, Senator. I think that one of the
    things that economists have learned in really the last decade
    of research--it was really startling to me how extreme it was--
    was that there are so many people that, if they lose their job
    and they do not get a job back in a little while, then they
    start to despair, and they start to have personal problems, and
    often it can happen that it turns into a spiral that takes them
    to a very bad place. And we know that there are pockets of our
    country where, because a mill closed like in my home town,
    there are a number of people that end up having substance abuse
    problems and so on. Nobel Prize-winning economist Angus Deaton
    and Anne Case just wrote a really moving piece on this.
        And I know that when I give economic talks around the
    country, if you ask Americans about this problem, they
    recognize it. And something that I have noticed is that
    everyone wants to do something about it. Everybody does. But
    they do not know what to do about it, especially the really
    concentrated geographic inequality.
        And so I think that what we need to do is think of ways not
    only with policies but individual-by-individual that we could
    help people make a difference, because I know that Americans
    want to.
        Senator Scott. Yes, sir. Well, I know there are two
    individuals who have been working on this, myself and Cory
    Booker being those two individuals. We have legislation called
    the ``Investing in Opportunity Act'', which seeks to defer the
    capital gains tax up to 7 years if folks are willing to
    reinvest those capital gains into distressed communities using
    the New Market Tax Credit designation. I would love for you to
    take a look at the legislation and come back with some thoughts
    on how we might have some success in impacting long-term
    poverty and unemployment in those distressed communities.
        Mr. Hassett. Thank you. If confirmed, I would really look
    forward to working with you on that.
        Senator Scott. A final question, since I have, I guess,
    according to the folks who have asked questions before, 2
    minutes and 38 seconds left in this conversation. I thought it
    was funny, too. You are next.
        So the question I have is on the whole notion of the
    workforce participation rate as you just described the impact
    of long-term unemployment makes it very difficult to return to
    the workforce; hence, our workforce participation rate has been
    declining for the last 8 or 9 years.
        I think about the economy to come, the gig economy or the
    shared economy, the technology economy. It seems like our focus
    on workforce investment is going to be a very important part of
    how to navigate the future challenges that will displace
    millions of workers in a way that we have not seen in the past.
    How do you factor that into the goal that we have of growing
    our economy?
        Mr. Hassett. Thank you, Senator. It is really an urgent
    call for us to address the problem that the share of our
    population working is something like 27th out of the 35 OECD
    countries, that we need to help people get back to work. And I
    think that the sharing economy can be part of that, but also
    presents a number of challenges.
        Senator Scott. Thank you, Mr. Chairman.
        Chairman Crapo. Thank you.
        Senator Cortez Masto.
        Senator Cortez Masto. Thank you, Mr. Chairman and Ranking
    Member. And welcome to both of you, and thank you for the time
    that you spent with me in my office talking about the issues
    that obviously are important to so many of us, particularly in
    Nevada as well. And it is nice to see your family here.
    Welcome. And I appreciate your commitment to public service.
        Dr. Hassett, let me start with you, and we had this
    conversation, and let me just follow up with this. In 2013, you
    said in a written research piece, ``With lackluster GDP growth
    threatening to become our new normal, allowing more immigrants
    to enter for the sake of employment is one of the few policies
    that might restore our old normal. If the U.S. doubled its
    total immigration and prioritized bringing in new workers, it
    could add more than half a percentage point a year to expected
    GDP growth.''
        And despite the clear evidence indicating that you are
    correct, here we are in 2017 with the Administration pursuing
    precisely the opposite policies. In fact, the President's
    policy of mass deportation is sparking panic and fear in many
    Latino communities, causing consumer spending to fall by double
    digits. This is threatening these communities' confidence in
    the economy just as it was starting to be restored after the
    financial crisis--and, by the way, a financial crisis that was
    hardest hit in Nevada.
        So the question I have for you is: Is what you said in 2013
    still true about immigration and economic growth?
        Mr. Hassett. Thank you, Senator. I think that there are a
    lot of policy angles on immigration. One of them is border
    security. I am not a border security expert. But economists are
    very good at mapping inputs into outputs, and if we have more
    input of labor, we will get more output.
        My ancestors are Irish immigrants. They were not allowed in
    the country because they had a computer degree, I presume. I
    think that immigrants in this country have been an important
    source of growth. Entrepreneurship is flailing right now in our
    economy, but high-skilled immigrants are about twice as likely
    to be entrepreneurs. And so I think that any immigration
    policy, comprehensive immigration policy, would have to
    recognize all the policy challenges and the simple economics of
    inputs and outputs.
        Senator Cortez Masto. So what you said in 2013 still holds
    true?
        Mr. Hassett. I do not know if I would advocate specifically
    for a number of exactly how much immigration should go up or
    anything like that, and that is certainly not the role of the
    CEA----
        Senator Cortez Masto. But you would agree----
        Mr. Hassett. ----but if there were more workers, we would
    have more outputs, Senator.
        Senator Cortez Masto. Thank you. I appreciate that.
        In the past, you have characterized Wall Street reform as
    ``the worst piece of legislation that I have seen in my entire
    life,'' and that the law ``needs to be repealed as soon as
    possible.'' Is it still your view that Wall Street reform
    should be repealed?
        Mr. Hassett. Senator, I would have to look back at what I
    was--I do not recall this. I would have to look back at what I
    was talking about and get back to you on that. It would take
    more to review what it was I was talking about and why I was so
    adamant about it. I am not usually so strident, and so I would
    really have to review it. So I would look forward to getting
    back to you on the record.
        Senator Cortez Masto. So let me just say this, because
    Nevada, I just said, came out of the worst financial crisis
    that we have seen since the Great Depression; and if we are
    going to continue to make economic progress, we cannot
    eviscerate the rules that we have put in place after the
    collapse. So I would hope you would consider that and take that
    into consideration when you are looking at this.
        Mr. Hassett. Thank you.
        Senator Cortez Masto. Thank you.
        Ms. Patenaude, thank you again for the conversation. Let me
    say this: I am absolutely concerned about the conversation we
    just had about eliminating the CDBG, which is proposed in the
    President's budget. As somebody who has worked at the local
    level in local government and at the State level in the State
    of Nevada, I know that that money is crucial to what we do in
    Nevada when it comes to homeless services in our rural
    communities like Lyon County, transportation for seniors in Nye
    County, and Catholic Charities Food Pantry in Clark County, as
    well as Meals on Wheels and so many other important services.
        So let me ask you this, because I know we had this
    conversation. I heard what you said. You support the
    President's budget, which concerns me because he eliminates the
    CDBG, which is about $20 million coming into the State of
    Nevada. But let me give you an opportunity, because you also
    talked about reform. Would you eliminate it or reform it?
        Ms. Patenaude. Thank you, Senator, and I appreciated the
    time that we spent together. I learned a great deal about your
    State and the challenges you are facing there.
        As I mentioned earlier, as the President's nominee, I
    support the President's budget. Going forward, as a lifelong
    houser, I would certainly be advocating for programs with
    proven track records. When I mentioned reform, CDBG is
    certainly a program that we have had a very difficult time
    measuring the performance and the outcomes. And I do believe
    that the allocation--the amounts that are allocated are
    oftentimes not enough to make a significant impact.
        Obviously, there are many exceptions to what I am saying,
    but over the years, under both Democrat and Republican
    administrations, there have been cuts to the CDBG Program.
        Senator Cortez Masto. And I appreciate that, and in our
    conversation you mentioned how you have strengthened CDBG
    accountability and transparency during your previous tenure at
    HUD, and I appreciate it. So why not build on that previous
    work instead of eliminating that program? And that is the
    concern I have with this discussion today.
        I understand my time is up. There are others that I will
    submit for the record, and I appreciate you being here today.
    Thank you.
        Chairman Crapo. Thank you.
        Senator Tillis.
        Senator Tillis. Thank you, Mr. Chair. Thank you both for
    being here, and congratulations on your nominations.
        Mr. Hassett, I will start with you. I want to go back just
    briefly to the discussion about immigration. The point of your
    report had to do with, I would assume, legal immigration, guest
    worker programs, H-1 at one end of the spectrum to H-2A and -B
    at the other end of the spectrum, because they create an
    economic multiplier. And I think some would even argue that
    they create American jobs as a result of that reliable,
    predictable guest worker program that ebbs and flows in this
    country, and it is something that we need to get fixed. Was
    that the essence of your analysis?
        Mr. Hassett. Yes, sir.
        Senator Tillis. I have to tell you, I am looking forward to
    supporting your nomination, but now it is with a little
    asterisk after I read your report on Deflategate because I am
    not a Patriots fan. But I am sure the folks in New England love
    you. But, no, I thought it was remarkable. It is actually going
    to have to make me go back and change my Mac Talk, but I am not
    going to use the hearing here to drill into that.
        I do want to talk a little bit about a report. You are very
    well published and a very impressive list of writings. One that
    I wanted you to spend maybe a minute or two on is ``Spending,
    Taxes, and Certainty: A Road Map to 4 [percent GDP]''. In your
    current role, how would you cut through all the noise that we
    have right now and emphasize what we think we have to do to
    build the momentum to actually get to a sustainable 4 percent
    GDP growth?
        Mr. Hassett. Thank you, Senator. I think that it is
    essential, if we are to move forward and make the policy
    changes we need to get higher growth, that we have to build
    consensus by having rigorous modeling that draws on empirical
    evidence and is replicable and transparent.
        Senator Tillis. But is it purely based on tax policy? Is it
    regulatory policy? In other words, what are the fundamentals,
    what are the top-line issues that people can understand that do
    not necessarily have your expertise that we as Congress Members
    should focus on?
        Mr. Hassett. And thank you for referencing the specific
    article. There are a number of challenges. One is tax policy,
    one is regulation, to make sure that they pass cost-benefit
    tests. Another is to look at the long-run budget balance and to
    help remove uncertainty about what the future holds, because we
    have not fully funded the promises that we have made. If you
    look back at each of those, the countries that have sort of
    gotten their act together on those things have experienced
    surges in growth, and I think that there is every reason to
    expect that that could be an opportunity for the United States.
        Senator Tillis. I agree.
        Ms. Patenaude, I wanted to give you an opportunity to
    talk--CDBG is something anybody who has worked in State
    government knows about, knows the impact that it can have. But
    I know that HUD has 100 or more programs and then sub-programs,
    duplicative efforts, some are working, others are not working.
    When Dr. Carson and I met before his confirmation, I asked him
    if he was going to focus on people who would come in,
    rationalize the programs, with the goal of--do you believe
    within the President's budget, if he zeroes out CDBG, do you
    think that the Administration simply wants to turn their back
    on the 11 million households that spend 50 percent of their
    income on rent and utilities? Or do you think they are trying
    to come up with a more efficient way to do it to produce more
    resources to people that need it?
        Ms. Patenaude. Senator Tillis, thank you for that question.
    I absolutely believe that the Administration is not abandoning
    the population that you referred to, but that we need to be
    more creative. We need to harness the power of the private
    sector. We need to work with local communities to help reduce
    the barriers. The cost of building has become prohibitive in so
    many places in this country, and it can contribute--regulatory
    barriers contribute to up to 35 percent of the cost of a unit
    or a home, so there is certainly an opportunity there.
        As far as the HUD programs, I just wanted to add on CDBG,
    we tried to--we proposed formula reform back in 2005, and we
    were not successful with the reforms at that time.
        Senator Tillis. I think that if we are going to get to a
    point to where we are producing more resources to people who
    desperately need it, then we have to be open to a different way
    of addressing the needs. And I think that we have a lot of
    duplication, we have a lot of inefficiency, and it is at the--
    while you can pick--and CDBG is personally very important to me
    right now because we were successful with getting $334 million
    through the CDBG Program for Hurricane Matthew relief.
        So it is a vehicle that I am using today, but if you can
    give me a more effective, more efficient vehicle that gives me
    more productivity for those dollars that we are allocating to
    the States for housing, for disaster relief, that is what we
    need in HUD. We need to go back, revisit it, make it leaner,
    and get it to a point to where the dollars that are going to
    these programs are ultimately affecting lives, not funding
    programs.
        Thank you. I look forward to your confirmations.
        Ms. Patenaude. Thank you.
        Chairman Crapo. Thank you.
        Senator Reed.
        Senator Reed. Well, thank you, Mr. Chairman, and thank you
    to the witnesses.
        First, Dr. Hassett and I had the opportunity to collaborate
    together in the Work Share Program. I am extraordinarily
    impressed with not only his knowledge but his thoughtfulness
    and his analytical skills. We do not always agree, but we do
    agree on Work Share. And in that vein, Dr. Hassett, I would
    hope in your new role that you would continue to promote this
    as an option in every State. I know with your help we have
    expanded it to about 19 or 20 States. Could you comment on
    that? Is that an appropriate way to deal with----
        Mr. Hassett. Thank you, Senator. In fact, I commend the
    Senator for his leadership on this issue. There is now an
    empirical literature evaluating your efforts that says that
    Rhode Island really outperformed a lot of other States because
    you not only helped States change their unemployment insurance
    to help it serve workers better, but you made sure that the
    people of Rhode Island knew that they could take advantage of
    this Federal program. And I know that now there is, you know,
    hard, peer-reviewed evidence that that was successful.
        I think that, absolutely, if unemployment insurance reform
    were to be on the agenda again, there is now a large body of
    economic evidence that would support extending efforts in that
    direction.
        Senator Reed. Thank you very much.
        Mr. Hassett. Thank you.
        Senator Reed. Ms. Patenaude, thank you again for your
    service prior in the previous Administration but also your
    efforts. One of the issues that came up with Secretary Carson
    was I asked him to kind of work with me and others to maintain
    the U.S. Interagency Council on Homelessness, and yet I see in
    the budget it has been zeroed out essentially. Senator Collins
    and I have legislation to restore it. Interestingly enough, you
    served on the Council from 2005 to 2007. Will you support our
    efforts to restore it? And if not, what is the option to
    coordinate all these different programs?
        Ms. Patenaude. Senator Reed, thank you very much. The
    Interagency Council on Homelessness was certainly unique at the
    time. We did not on a regular basis collaborate with other
    Federal agencies. As I mentioned, I had never been in the
    Department of Transportation or the Department of Health and
    Human Services. The only interaction I had, as well as VA, was
    during these meetings at the Interagency Council, and I think
    the Interagency Council perhaps has outlived, you know, its
    time because now collaboration is expected, it is part of, you
    know, the Performance Management Agenda, and I would like to
    take a look at how the Interagency Council is working right
    now. After our meeting, I did go online, and certainly it is a
    source of a lot of data, but that perhaps is duplicating
    efforts at HUD.
        So if I am confirmed, it is something that I would really
    like to look into and, you know, give more consideration to the
    Council before I could make a definitive decision on that.
        Senator Reed. Well, I wish you would. Again, our
    legislation, Senator Collins and I, would extend or eliminate
    the sunset date in the Council, so it would give it sort of a
    long-term existence, and I would very much like you to look at
    it and get back to us.
        I can recall, again, serving as the Ranking Democrat on the
    Appropriations Committee for HUD, having a hearing with Senator
    Collins, and we asked the IG what was the number one concern,
    and his response was cybersecurity. And in your role, you are
    sort of the chief administrative officer. Can you discuss what
    steps you intend to take with respect to cybersecurity?
        Ms. Patenaude. Thank you, Senator. After our meeting, I
    actually scheduled a meeting with the Office of the Chief
    Information Officer, and this is an area that I have limited
    expertise in, and I think that would--I was amazed at how far
    HUD has come, and I realize I was talking to the gentleman that
    is in charge of this. He is the Deputy CIO. And it appeared
    from the conversation that we had that HUD is actually in much
    better shape than perhaps the Inspector General, you know, has
    portrayed in the report to Congress. So I was encouraged by
    that meeting. It certainly was, you know, an hour long. I would
    need, you know, several hours with the CIO, and hopefully we
    will have a CIO on board or nominated soon.
        So it is an area that I certainly will spend a lot of time
    researching and trying to understand the needs of HUD. But it
    was a very encouraging conversation.
        Senator Reed. And just finally and very quickly, I am
    concerned about the cuts to CDBG. That is a refrain you have
    heard, I think, from many people. And it is a worthy endeavor
    to look for a more efficient model, but in the interim, cutting
    a model that appears to work very well, I do not--I have not
    heard a lot of complaints. In fact, I have heard lots of
    acclaim, particularly by local leaders, mayors, Governors,
    about how effective it is, because basically it provides
    resources for local initiatives, and I think that is something
    that you should consider.
        One other point, too, and just to clarify this. In a
    response to how you are going to make this more efficient, some
    of these uses, the suggestion was the local regulatory
    barriers?
        Ms. Patenaude. That is to new construction and
    preservation. Local zoning is certainly contributing to the
    lack of supply in this country. And I feel that that is an area
    that we really need to address.
        Senator Reed. So let me be clear. The Trump administration
    is going to intervene in local zoning to make it more efficient
    and effective to develop affordable housing?
        Ms. Patenaude. No, Senator, I do not think that HUD or the
    Federal Government should, you know, have the zoning powers,
    but to be able to encourage local communities. And when
    Secretary Kemp was at the helm of HUD, he led a very
    comprehensive effort, Not In My Back Yard, which identifies
    regulatory barriers that exist at every level of Government.
    But the purpose of this was to be able to share best practices.
    During the Bush administration, we had an effort to work with
    mayors, so I think there are ways to incentivize, but certainly
    not to dictate to local decision makers. But I think there is a
    lack of education and oftentimes----
        Senator Reed. So there is money in the budget to
    incentivize changes to local zoning to encourage more
    affordable housing?
        Ms. Patenaude. No, Senator, I do not see anything in the
    budget to do that. We had the Affordable Housing Communities
    Initiative, though, that was run through the Office of
    Community Planning and Development, and it is certainly an
    area, if I am confirmed, I would like to share the results of
    that program and the efforts and to work with the Secretary.
        Senator Reed. I appreciate it very much, and you have been
    very kind, so I will at this point just thank you for your very
    kind comments. Thank you.
        Ms. Patenaude. Thank you, Senator.
        Chairman Crapo. Thank you, Senator, and that concludes the
    questioning. Before I give a couple final announcements, I want
    to thank each of you for coming and appearing here today and
    participating at the hearing, and thank you for your service
    and your willingness to give more service to the country.
        For Senators, all follow-on questions need to be submitted
    by Thursday, and for our witnesses, responses to those
    questions are due by Monday morning. So please respond quickly
    to the questions that you may get.
        With that, the hearing is adjourned.
        [Whereupon, at 11:29 a.m., the hearing was adjourned.]
        [Prepared statements, biographical sketches of nominees,
    responses to written questions, and additional material
    supplied for the record follow:]
                   PREPARED STATEMENT OF KEVIN ALLEN HASSETT
                  To Be Chairman, Council of Economic Advisers
                                  June 6, 2017
        Chairman Crapo, Ranking Member Brown, and distinguished Members of
    the Committee, I am humbled and honored to be before you today as
    President Trump's nominee to be the Chairman of the Council of Economic
    Advisors. I am also deeply grateful to have had a chance to get to know
    many of you throughout this process. I wish that the people who worry
    about Washington could have witnessed the many private kindnesses the
    Members and staff of this Committee have extended to me.
        I would like to begin by introducing my college sweetheart and wife
    of 31 years, Kristie, and my sons, John and James, who are sitting
    behind me. I would also like to acknowledge my father John, a Korean
    War veteran who could not be here today, and my mother Sylvia and my
    sister Julia, who sadly are no longer with us.
        Senators, I have almost always been a student of economics, even
    before I knew it. I was raised by two public school teachers in the
    beautiful town of Greenfield, Massachusetts. My mother was a
    kindergarten teacher in neighboring Turners Falls. My father taught
    English at Greenfield High School, and still lives in Greenfield in the
    same house I was raised in.
        As I was growing up, my town went through a very painful
    transition. For the longest time, Greenfield was a thriving mill town,
    with the world's largest tap and die operation that employed thousands
    of citizens. Neighboring Turners Falls was almost as prosperous,
    housing a massive paper mill along the banks of the Connecticut River.
    But as we got older, times were changing. Plants closed. Families
    started moving away. Graduates stopped coming home after college.
        It seemed impossible to look around and not wonder why it was
    happening. When I started studying economics in college, and again in
    graduate school, I always came back to the example of how my town
    changed. Why did plants move away or close? Why did many of the good
    jobs disappear? And is there something that policymakers can do to
    restore prosperity?
        Economic models suggested a simple answer. Workers can have high
    wages if they have high productivity, and high productivity is enabled
    by an ample supply of productive capital. But going from things that
    work in textbook models to actual policy recommendations is a difficult
    thing. The real world has many complications that are not included in
    models, and the data often surprise economists, especially those who
    have too much confidence in pure theory.
        That observation led me, over the years, to focus on things that
    can be learned from the data. My dissertation focused in part on how
    wages have moved over the business cycle. What do the periods when
    workers prosper have in common? My early career was spent studying how
    firms' investment decisions respond to Government policy, and how labor
    and capital interact.
        Since then, my studies have taken me in many different directions,
    but I think my record makes clear a few things I would like to
    emphasize about my approach to economics.
        First, I believe it is essential to gather evidence, and not just
    rely on theories. Early in my career, the empirical literature on
    international taxation contained many holes, often because the country-
    by-country data that one would need for study were not available. My
    coauthors and I responded to this by building a large international tax
    database and making its data available to anyone who wanted it.
        Which leads me to my second point: I believe that economic analysis
    should be transparent and replicable. An example of my commitment to
    this idea is the Open Source Policy Center, which I cofounded at the
    American Enterprise Institute. The OSPC has open source computer code
    that allows anyone to score tax plans, evaluate the distributional
    consequences of that plan, and see what the assumptions are that other
    users use when they score their own plans. The OSPC promises to
    democratize the tax debate.
        Finally, while I respect the need for all types of research, even
    the very theoretical, my own focus has mostly been work that holds the
    promise of improving the lives of others, and that sheds light on the
    circumstances of those less fortunate, like those in my hometown who
    lost their jobs when the factory closed. A recent example of this would
    be my work with the Economic Innovation Group, where I explore the
    causes and cures of the striking geographic income inequality that we
    see today in America. EIG researchers have worked hard to identify and
    measure distress, and have constructed publicly available datasets that
    shed light on the communities around the country that most need our
    help. There is an interactive map at the EIG website that helps people
    explore their own communities, with the dark color red indicating
    extreme economic distress. One of the reddest shapes on the map of
    Massachusetts is Turners Falls, the town across the river from my
    father's home.
        The Council of Economic Advisors was created to provide the
    President with professional and objective economic advice, to help
    policymakers craft solutions for problems like those we face today.
    Throughout history, the CEA has done so admirably during both
    Democratic and Republican administrations. In 2009, then-nominee
    Christina Romer told this Committee that she would do her ``utmost to
    protect the integrity of the CEA, and make it a center for unbiased,
    scientific analysis.'' Chairman Crapo and Members of the Committee, if
    confirmed, I pledge to you that I would do the same, and that I would
    enthusiastically and energetically take the helm of this great American
    institution. Thank you.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 PREPARED STATEMENT OF PAMELA HUGHES PATENAUDE
           To Be Deputy Secretary, U.S. Housing and Urban Development
                                  June 6, 2017
        Chairman Crapo, Ranking Member Brown, and distinguished Members of
    the Committee, it is a great privilege to appear before you this
    morning. I am deeply honored by President Trump's decision to nominate
    me to serve as the Deputy Secretary of the United States Department of
    Housing and Urban Development.
        Mr. Chairman, if I may take a moment to introduce my family, my
    source of support and unconditional love: my husband of 32 years, Chuck
    Patenaude, and our three daughters, Caitlin, Meghan, and Jennifer.
        Housing has always been close to my heart and part of my family
    history. My late parents, Bob and Estella Hughes, together created and
    ran a successful homebuilding business in New Hampshire. In the Hughes
    household, there was simply no escaping talk about housing.
        For that reason, it was no surprise to my parents when I came to
    share their passion for housing. As a senior at Saint Anselm College, I
    experienced our Nation's capital the same way as many college students
    do: as an intern. That internship, which began my career in housing,
    was at HUD's headquarters some 35 years ago. Upon graduating from
    college, I worked for the New Hampshire Housing Finance Authority as a
    Section 8 rental assistance program administrator.
        After observing firsthand the transformational impact HUD programs
    could have on improving the quality of life for seniors and our most
    vulnerable citizens, I returned to Washington, DC, to serve in HUD's
    Office of Multifamily Housing, where I further enhanced my technical
    knowledge of HUD's rental assistance programs.
        During my three-decade career in housing, I have also served at HUD
    in several leadership roles: first as Assistant Deputy Secretary in the
    Office of Field Policy and Management, and later as Assistant Secretary
    for Community Planning and Development.
        As Assistant Deputy Secretary for Field Policy and Management, I
    helped restructure HUD's critical field operations and developed a
    comprehensive training curriculum on HUD programs and policies for
    Regional and Field Office Directors. I also played an instrumental role
    in the development of HUD's five-year Strategic Plan. More importantly,
    I worked hand-in-hand with the dedicated men and women of HUD who are
    closest to the people the department serves.
        As Assistant Secretary for Community Planning and Development, I
    administered more than $8 billion in community economic development and
    affordable housing funds. I managed a team of more than 800 experienced
    professionals committed to carrying out HUD's mission. I also had the
    opportunity to support the recovery efforts in Lower Manhattan
    following September 11th and in the Gulf Coast States devastated by
    Hurricane Katrina.
        Outside of HUD, my career has focused on promoting housing policies
    that are aligned with the significant and growing needs of the American
    people.
        At the Urban Land Institute (ULI), I established the ULI
    Terwilliger Center for Workforce Housing, helping to draw attention to
    the plight of America's most essential workers--the firefighters,
    police officers, nurses, and teachers, who are too often priced out of
    the communities they serve by high housing costs. Working alongside a
    bipartisan advisory board of national housing experts, we identified
    the regulatory policies that contributed to prohibitively high housing
    costs and shared best practices in tearing down unnecessary regulatory
    barriers.
        At the Bipartisan Policy Center, I directed the Housing Commission
    under the leadership of two former HUD Secretaries, Senator Mel
    Martinez and Secretary Henry Cisneros and Senators George Mitchell and
    Kit Bond. The Commission developed a comprehensive report outlining a
    new direction for Federal housing policy. Many of you may be familiar
    with the Commission's recommendations on housing finance reform, which
    were released in 2013.
        Currently, I serve as President of the J. Ronald Terwilliger
    Foundation for Housing America's Families, which seeks to elevate
    rental affordability as a national issue and educate policymakers about
    the silent housing crisis in America. Today, more than 11 million
    households pay in excess of 50 percent of their income on rent and
    utilities. A major cause of these high rent burdens is the severe
    shortage of affordable rental homes, particularly for the lowest-income
    families. Unfortunately, there is no single solution to this problem.
    It must be approached from multiple fronts--reform of regulatory and
    land use policies, greater incentives for private investment in
    affordable homes, and increased attention from State and local
    governments.
        Through these initiatives, I developed strong working relationships
    with diverse members of the housing community, from affordable housing
    advocates and developers, to homebuilders, realtors, and mortgage
    bankers, to Government policymakers and academics. I am very proud to
    say that bipartisan collaboration has been a hallmark of these
    initiatives.
        In addition, my career in housing at the local, State and Federal
    levels of government has broadened my view of America's housing
    policies. This unique perspective helps me understand the factors that
    contribute to the success of some programs, as well as the factors that
    diminish the well-intended impacts of other programs.
        As Matthew Desmond articulated in his Pulitzer Prize winning book
    Evicted, ``we have failed to fully appreciate how deeply housing is
    implicated in the creation of poverty.'' Dr. Desmond believes that,
    ``powerful solutions are within our collective reach.'' I agree with
    Dr. Desmond and believe that as a nation, we must recognize that
    housing is not just a commodity but a foundation for economic mobility
    and personal growth.
        If confirmed, I pledge to work closely with this Committee,
    Congress and Secretary Carson to develop viable solutions that align
    with HUD's critical mission--to ensure that HUD's programs are
    responsive to the housing needs of our Nation's most vulnerable
    citizens.
        I appreciate the Committee's thoughtful consideration of my
    nomination to serve as the Deputy Secretary of the U.S. Department of
    Housing and Urban Development. Thank you for your time today. I look
    forward to your questions.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                        FROM KEVIN ALLEN HASSETT

    Q.1. President's FY2018 Budget Proposal--The President's
    proposed budget for FY2018 cuts more than $200 billion from
    current infrastructure programs over the next 10 years, while
    his infrastructure initiative proposes only $200 billion of new
    investment. We don't know the details of the infrastructure
    initiative, except that the plan will incentivize private
    sector and foreign investment in our infrastructure, proposals
    that will likely line Wall Street's pockets.
        At the moment, I know that the President proposes cutting
    funding for programs that help Ohio. And I don't know that
    these funds will be replaced, because I assume they will go to
    projects where the profit is greatest, particularly projects
    that can charge new tolls and fees on users, rather than where
    the need for repair is greatest.
        The private sector has no interest in repairing or funding
    most of our publicly-owned infrastructure, and failure of an
    infrastructure package to dedicate significant funding for
    repairs of public infrastructure would continue the drain on
    our citizens and our economy that results from the inferior
    condition of that infrastructure: congested roadways, travel
    delays for transit riders, exposure to health and environmental
    hazards in dilapidated housing facilities, etc.
        What is your view on the need for direct Federal investment
    to repair and improve public infrastructure? Won't cutting
    funding for repairs and asking Ohioans to pay tolls and fees
    for private projects do little to improve our aging public
    infrastructure such as our neglected roads and bridges and
    aging public transportation systems?

    A.1. I was not part of the budget process, and my research has
    mainly focused on tax policy, not transportation policy. But my
    understanding is that we currently have a system where Federal,
    State, and local governments contribute to maintaining and
    expanding our infrastructure, and Federal contributions are
    largely funded by the gasoline tax and other taxes. These
    revenues comprise the Highway Trust Fund, which allocates money
    by formula to the States for their maintenance and capital
    priorities, which are determined by the States themselves. This
    source has served the nation well, and I believe that the
    budget will continue to support the States' efforts to maintain
    and improve their infrastructure.
        In addition, the private sector has already been helpful
    and could continue to play a helpful role in providing new
    roads and in managing any systems that have been historically
    underfunded. For example, in the D.C. metropolitan area, the
    Dulles Greenway toll road has been shown \1\ to be an effective
    example of a private company relieving traffic congestion on
    the public road system, and providing benefits to its users
    without the aid of public money (Bipartisan Policy Center
    2016). High Occupancy Toll (HOT) lanes are another example
    where the private sector has provided road services that
    economic research \2\ suggests are highly valued by their users
    (Morgul et al., 2015). Again, unlike traditional projects,
    these lanes do not rely exclusively on public funding.
    ---------------------------------------------------------------------------
         \1\ https://cdn.bipartisanpolicy.org/wp-content/uploads/2017/05/
    BPC-Infrastructure-Case-Studies.pdf
         \2\ http://trrjournalonline.trb.org/doi/abs/10.3141/2495-05
    ---------------------------------------------------------------------------
        If confirmed, I commit to working with this Committee and
    the rest of the Administration to model and understand the
    economic effects of specific infrastructure proposals,
    including the impact of fees and tolls on consumers.

    Q.2. What economic effects would result from a reduction in
    funding as proposed in the President's budget for current
    Federal programs that assist in repairing and improving public
    infrastructure?

    A.2. I was not part of the budget process, but my understanding
    is that the President's Budget proposals would not result in a
    reduction in funding. If confirmed, I look forward to working
    with the rest of the Administration to model the specifics of
    budget proposals and to present the empirical evidence on the
    effectiveness of these programs and their effects in the most
    objective and data-driven way possible.

    Q.3. Highway Trust Fund (Including the Mass Transit Account)--
    President Obama in 2015 signed into law a 5-year surface
    transportation law that authorizes Federal highway and public
    transportation programs for fiscal years 2016 through 2020.
    That law provides modest, but important, increases in Federal
    surface transportation investment. However, President Trump's
    FY2018 budget proposal outlines a significant cut to highway
    and public transportation beginning in FY2021. The budget
    proposal suggests that ``Highway Trust Fund outlays conform to
    baseline levels of Highway Trust Fund revenues'' (Table S-6),
    which would result in a net reduction of investment of more
    than $95 billion between FY2021 and FY2027.
        Do you believe that the reduction in Federal investment in
    highway and public transportation as suggested by the
    President's budget proposal would have significant negative
    economic consequences?

    A.3. I was not part of the budget process. My understanding is
    that the budget does not propose to change the basic support of
    States' ongoing maintenance and capital programs. If confirmed,
    I look forward to modeling the specifics of the President's
    proposed budget and presenting the empirical evidence on its
    effects to the rest of the Administration and Congress in the
    most objective way possible.

    Q.4. How would you generally describe the economic effects that
    would result from a reduction in Federal funding to repair and
    improve highway and public transportation infrastructure?

    A.4. I have not performed independent analysis of this
    question, but if confirmed, I look forward to presenting the
    empirical evidence on its effects to the rest of the
    Administration and Congress in the most objective way possible.

    Q.5. Do you believe that the reduction in Federal investment in
    highway and public transportation as suggested by the
    President's budget proposal would have significant negative
    effects on employment?

    A.5. My understanding is that the President's Budget calls for
    a net increase in spending on infrastructure. But if confirmed,
    I will work on developing empirical evidence on the economic
    impact of Federal, State, and local spending on governmental
    infrastructure.

    Q.6. Do you believe that the reduction in Federal investment in
    highway and public transportation as suggested by the budget
    proposal would limit or delay efforts to repair and improve
    aging highway and transit infrastructure?

    A.6. I was not part of the budget process but my understanding
    is that the President's Budget proposal would result in an
    increase in Federal investment in infrastructure. If confirmed,
    I look forward to modeling the specifics of the President's
    proposed budget and presenting the empirical evidence on its
    effects to the rest of the Administration and Congress in the
    most objective way possible.

    Q.7. ``Healthy Returns'' report--In 2005, you coauthored the
    report, ``Healthy Returns: The Economic Impact of Public
    Investment in Surface Transportation''. Page 4 of the report
    contains the following passage:

            Moreover, research has demonstrated clearly that public
            investments in highways and public transit can raise an
            economy's underlying growth rate. One leading study
            found that a 1 percentage point increase in a country's
            total public capital stock raises its growth by about
            0.3 percentage points, and for a lengthy period of
            time. Other research has shown the other side of this:
            Poor infrastructure constrains growth and increases
            congestion by channeling and often limiting a nation's
            economic development to its largest cities.

            Conversely, public spending on highways and public
            transportation systems that relieve congestion and
            disperse economic activity can boost a Nation's growth,
            especially in countries actively engaged in
            international trade.

        Does the passage above still represent your view on the
    benefits to economic growth from investment in highways and
    public transit?

    A.7. Yes, although developments in transportation and
    technology have changed rapidly over the past 12 years. For
    example, there is great economic potential for autonomous
    vehicles to help with our infrastructure needs as well as
    improve the safety of drivers and passengers. These are
    important new technologies and I look forward to further
    research being conducted to test them and to help think about
    regulations governing their use.

    Q.8. Is it your view that the proposed reductions in spending
    from Highway Trust Fund beginning in FY2021, as suggested in
    the President's FY2018 budget proposal, would reduce economic
    growth, unless those reductions in investment are rejected by
    Congress or offset by new sources of investment?

    A.8. The economic literature suggests \3\ a positive
    correlation between infrastructure investment and economic
    growth, but the proposed budget targets wasteful discretionary
    spending, not authorized spending for the formulas used to give
    States construction and maintenance funds (e.g., Lakshmanan
    2011). If the spending is wasteful, then it would not have the
    impact on growth of the average infrastructure project. In
    addition, autonomous vehicles could spur economic growth by
    reducing commute times, reducing the costs of shipping goods
    and holding inventories, and facilitating the exchange of
    ideas. In research \4\ by Edward Glaeser of the Harvard
    Economics Department, Jose Gomez-Ibanez of the Harvard Kennedy
    School, and Clifford Winston of the Brookings Institution, for
    example, the authors show how autonomous vehicles could spur
    economic growth as well as improve safety (Glaeser et al.,
    2017). While no single study can resolve an issue, these
    results are suggestive.
    ---------------------------------------------------------------------------
         \3\ http://www.sciencedirect.com/science/article/pii/
    S0966692310000037
         \4\ https://policyexchange.org.uk/news/finalists-for-wolfson-
    economics-prize-unveiled/
    ---------------------------------------------------------------------------
        If confirmed, I look forward to modeling the specifics of
    the President's proposed budget and presenting the empirical
    evidence on its effects to the rest of the Administration and
    Congress in the most objective way possible.

    Q.9. Page 5 of the report contains the following passage:

            We can estimate the economic value of surface
            transportation with some precision by simply
            approaching it like any other investment. Most studies
            show that while the yields from investments, public and
            private, vary from very small to very large, investment
            in public infrastructure as a whole has generally
            produced higher returns than private investment as a
            whole. One study conducted for the Federal Highway
            Administration (FHWA) found that the net return on
            highway capital averaged 32 percent from 1960 to 1991,
            ranging from 54 percent in the 1960s to 16 percent for
            the 1980s. By comparison, private capital over that
            period produced an average net return of 17 percent.

        Do you continue to believe that evidence indicates that
    investment in public infrastructure as a whole has generally
    produced higher returns than private investment as a whole?

    A.9. The problem with private investment is selectivity. The
    private sector is not free to choose the best projects so the
    comparison could be misleading. It is possible, also, that
    public infrastructure investment returns could decline over
    time. But if confirmed, I look forward to presenting the
    empirical evidence on this issue in the most objective way
    possible.

    Q.10. Page 7 contains the following passage:

            It is virtually certain that the total annual economic
            benefits produced by public spending on roads, highways
            and transit substantially exceed $788 billion.

        Does the passage above and the underlying analysis in the
    report still represent your view on the economic benefits from
    spending on highways and public transit? If not, please
    explain.

    A.10. There is a multiplier effect. However, I would add that
    the paper you are referring to analyzes the benefits from all
    existing physical infrastructure. What most people have in mind
    as they discuss infrastructure policy is the case of a new
    marginal investment in infrastructure. And the average rate of
    return and the marginal rate of return can differ quite a bit.

    Q.11. Is it your view that the proposed reductions in spending
    from Highway Trust Fund beginning, as suggested in the
    President's FY2018 budget proposal, would reduce the present
    level of economic benefits from spending on highways and public
    transit, unless those reductions in investment are rejected by
    Congress or offset by new sources of investment?

    A.11. My understanding is that the President's Budget calls for
    a net increase in spending on infrastructure. If confirmed, I
    look forward to modeling the specifics of the President's
    proposed budget and presenting the empirical evidence on its
    effects to the rest of the Administration and Congress in the
    most objective way possible.

    Q.12. ``Conserving Energy and Preserving the Environment: The
    Role of Public Transportation'' report--In 2002, you coauthored
    the report, ``Conserving Energy and Preserving the Environment:
    The Role of Public Transportation''. That report identified
    significant environmental benefits from public transportation
    ridership. Page 2 of the Executive Summary contains the
    following passage:

            Even at current rates of usage, public transportation
            produces large environmental benefits.

             For every passenger mile traveled, public
            transportation produces only a fraction of the harmful
            pollution of private vehicles: only 5 percent as much
            carbon monoxide, less than 8 percent as many volatile
            organic compounds, and nearly half as much carbon
            dioxide and nitrogen oxides.

             Compared to private vehicles, public transportation is
            reducing annual emissions of the pollutants that create
            smog, volatile organic compounds (VOCs) and nitrogen
            oxides (NOx), by more than 70,000 tons and 27,000 tons
            respectively. These reductions equal:

             *nearly 50 percent of all VOCs emitted from the dry
            cleaning industry, a major source of this pollutant;

             *45 percent of VOCs emitted from the industrial uses
            of coal;

             *50 percent of NOx from the industrial uses of coal;

             *more than 33 percent of the NOx emitted by all
            domestic oil and gas producers or by the metal
            processing industry.

             The reduced VOC and NOx emissions that result from
            public transportation use save between $130 million and
            $200 million a year in regulatory costs.

             Public transportation is reducing emissions of carbon
            monoxide (CO) by nearly 745,000 tons annually. This
            equals nearly 75 percent of the CO emissions by all
            U.S. chemical manufacturers.

             Public transportation is also reducing emissions of
            carbon dioxide (CO2), which contributes to global
            warming, by more than 7.4 million tons a year.

        Do you believe that public transportation ridership
    continues to generate significant environmental benefits,
    including the categories of benefits identified in the quoted
    summary? If not, please explain and specify which category or
    categories of benefits are no longer generated and why your
    previous analysis is no longer applicable.

    A.12. As I have noted before, analysis I have conducted does
    show a link between public transit and environmental benefits.
    I stand by that analysis.

    Q.13. ``Capital Investment Grants'' program (49 U.S.C. 5309)--
    The construction of new fixed-guideway public transportation
    corridors (heavy rail/subway, light rail, bus-rapid transit)
    and capacity expansion projects on fixed-guideway routes that
    have reached ridership capacity during peak service hours,
    allow more Americans to utilize public transportation for their
    daily travels. However, the President's FY2018 budget proposal
    seeks to eliminate the ``Capital Investment Grants'' program
    that provides $2.4 billion annually to support such projects.
        Do you agree that the elimination of the ``Capital
    Investment Grants'' program would curtail environmental
    benefits that would be gained from present levels of investment
    under the program?

    A.13. It is not an area that I have looked at, and I was not
    part of the budget process. If confirmed, I look forward to
    working with you and the rest of the Administration on the
    specifics of this program and providing objective and
    empirical-based analysis on its economic impact.

    Q.14. Do you agree that the elimination of the ``Capital
    Investment Grants'' program would curtail economic activity and
    economic growth that would be gained from present levels of
    investment under the program?

    A.14. It is not an area that I have looked at, and I was not
    part of the budget process. If confirmed, I look forward to
    working with you and the rest of the Administration on the
    specifics of this program and providing objective and
    empirical-based analysis on its economic impact.

    Q.15. Do you agree that the elimination of the ``Capital
    Investment Grants'' program would reduce employment in
    construction and other industries?

    A.15. It is not an area that I have looked at, and I was not
    part of the budget process. If confirmed, I look forward to
    working with you and the rest of the Administration on the
    specifics of this program and providing objective and
    empirical-based analysis on its economic impact.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
                        FROM KEVIN ALLEN HASSETT

    Q.1. I'd like to explore your views on artificial intelligence
    and automation.
        What positive and negative impacts, if any, will the
    increasing artificial intelligence and automation of routine
    work tasks pose to the economy over the long-term, particularly
    for wages and employment.

    A.1. Artificial intelligence research is advancing rapidly,
    with programs now available that can beat the best Chess,
    Jeopardy, and Go players, and even learn to generate paintings
    in the styles of the great masters. The possibility of rapid
    and accelerating technological change is clearly very high. As
    a person who has been writing computer code since the early
    1980s, and continues to do so, this has been an area I have
    followed quite closely.
        At least since the industrial revolution, there have always
    been genuine concerns that the disruptions from innovation
    might harm workers and reduce welfare. As with trade, according
    to recent research, \1\ the concentrated harms have sometimes
    been significant (Acemoglu and Restrepo 2017). We are certainly
    much wealthier as a society today because of accumulated
    innovations, but that does not mean that our nation always
    helped individuals adjust to their new world as effectively as
    it could have. As we look forward to driverless cars and other
    dramatic innovations, there is no question that much new
    economic research is required to fully understand the
    challenges and opportunities. Certainly, innovation continues
    to hold tremendous promise to increase the welfare of our
    citizens. If confirmed, I would make such research into these
    issues a high priority, as it already has been in my own
    academic life.
    ---------------------------------------------------------------------------
         \1\ http://www.nber.org/papers/w23285

    ---------------------------------------------------------------------------
    Q.2. How long will it take for these risks to come to fruition?

    A.2. As computers programs get ``smarter'' and computers get
    more powerful, innovation becomes easier. On the other hand, it
    may be that discoveries get harder and harder to make after the
    low hanging fruit have been picked. Automation and artificial
    intelligence research is clearly advancing rapidly, but
    predicting exactly when an innovation will arrive is beyond the
    reach of professional economists. Economic models \2\ suggest
    that the human impact of automation will depend on a number of
    factors (e.g., Acemoglu and Restrepo 2016). These issues are
    clearly already having a major impact on our economy.
    ---------------------------------------------------------------------------
         \2\ http://www.nber.org/papers/w22252

    Q.3. What, if any policy solutions should be explored in order
    ---------------------------------------------------------------------------
    to respond to artificial intelligence and automation?

    A.3. There are 2 noted schools of economists who have widely
    differing views on this question. Robert Gordon at Northwestern
    does not believe \3\ the U.S. has another great technological
    revolution to come, whereas his colleague Joel Mokyr and Erik
    Brynjolfsson at MIT believe \4\ that technology is racing ahead
    and that it has many positive impacts to come (Brynjolfsson and
    McAfee 2014; Gordon 2016; Mokyr 2013).
    ---------------------------------------------------------------------------
         \3\ http://press.princeton.edu/titles/10544.html
         \4\ http://books.wwnorton.com/books/The-Second-Machine-Age/
    ---------------------------------------------------------------------------
        Over time, as we develop a better understanding of how
    these issues affect peoples' lives, we will certainly identify
    policy challenges. While it is difficult at this time to
    conceive of a complete list, a major challenge will certainly
    be that an economy that is changing rapidly requires a
    workforce that has ready access to effective education and
    retraining, and I look forward to investigating these issues
    more thoroughly, should I be confirmed.

    Q.4. I'd like to explore your views on deficits and the debt.
        During Federal Reserve Chair Yellen's February 14, 2017,
    Senate Banking Testimony, Chair Yellen told Senator Corker that
    ``fiscal sustainability has been a long-standing problem, and .
    . . the U.S. fiscal course, as our population ages and health
    care costs increase, is already not sustainable.'' Do you
    agree?

    A.4. I agree with Chair Yellen's statement that fiscal
    sustainability is a long-standing problem. In a 2012 testimony
    on the fiscal cliff before the Joint Economic Committee, I
    noted that evidence of the long-term effects of high Government
    debt-to-GDP ratios has been borne out by the literature. As I
    have noted previously, in a widely cited paper \5\ reviewing 44
    countries over about 200 years, Reinhart and Rogoff document a
    strong relationship between high debt levels and slow GDP
    growth (Reinhart and Rogoff 2010). They find that this
    relationship is especially strong when countries exceed a gross
    debt-to-GDP level of 90 percent. This relationship holds true
    when examining all of the countries in their sample and when
    they restrict their analysis to developed economies. Although
    the Reinhart and Rogoff analysis has been criticized for
    implying only correlation and not controlling for other factors
    that may impede growth and lead to high levels of debt,
    separate research by Manmohan S. Kumar and Jeajoon Woo concurs
    that higher levels of Government debt lead to lower levels of
    output (Woo and Kumar 2015). They estimate that a 10 percentage
    point increase in debt as a percentage of GDP is associated
    with an annual decrease in 0.2 percentage points of GDP growth.
    They also find evidence that the negative impact on economic
    growth is even stronger with higher levels of debt. These
    results conform with the predictions of economic theory, but
    firm conclusions would require a more thorough review of the
    evidence. If confirmed, I look forward to helping policymakers
    address the U.S.' fiscal course.
    ---------------------------------------------------------------------------
         \5\ http://www.nber.org/papers/w15639

    Q.5. In correspondence with me last year, Chair Yellen told me
    that ``fiscal policymakers should soon put in place a credible
    plan for reducing deficits to sustainable levels over time.''
    ---------------------------------------------------------------------------
    Do you agree?

    A.5. I agree that fiscal policymakers should work toward
    reducing deficits to sustainable levels. As I have previously
    noted in a 2009 working paper \6\ coauthored with Desmond
    Lachman Aparna Mathur, failure to address the deficit exposes
    the U.S. Government to significant risk that could, if history
    is a guide, emerge as a disruptive factor to financial markets.
    If confirmed, it will be the role of the Council of Economic
    Advisers to objectively evaluate the risks associated with U.S.
    debt levels, and provide policy advice.
    ---------------------------------------------------------------------------
         \6\ http://www.aei.org/publication/the-deficit-endgame/

    Q.6. What level of deficits and debt are sustainable over the
    ---------------------------------------------------------------------------
    long run?

    A.6. In the same paper \7\ coauthored with Desmond Lachman and
    Aparna Mathur, I write that if spending grew as projected in
    2009 and revenues did not rise at a matching rate, annual
    deficits would climb and Federal debt would grow significantly.
    As debt increases, a higher and higher share of national output
    will be devoted to interest payments, and the level of taxation
    needed to sustain Government becomes historically
    unprecedented. Large budget deficits would reduce national
    saving, lead to more borrowing from abroad and also lower
    domestic investment. Thus, while there is no magic number for
    deficits or debt, there is ample cause for concern.
    ---------------------------------------------------------------------------
         \7\ http://www.aei.org/publication/the-deficit-endgame/

    Q.7. What metrics would you consult in order evaluate the
    impact of the U.S.'s debt and deficit levels? What levels must
    these metrics reach in order for the U.S. debt and deficit to
    ---------------------------------------------------------------------------
    be sustainable?

    A.7. There are several measures of the U.S. debt and deficit
    levels including gross debt, net debt, and external debt. Each
    measure has strengths and weaknesses, and should be used
    jointly to gather a full picture of the current fiscal
    situation. The most commonly accepted predictor of a financial
    crisis, for example, has been the external debt-to-GDP ratio or
    how much of our debt is held by foreign creditors as a
    percentage of GDP. If foreign creditors lose confidence in our
    fiscal stability, then it is likely that U.S. investors will
    lose confidence as well. Once again, there are no magic numbers
    when evaluating the sustainability of the U.S. debt and
    deficit, and if confirmed, I look forward to evaluating all
    metrics when evaluating sustainable levels of the U.S.' debt
    and deficit.

    Q.8. How would you evaluate the economic impact of an unfunded
    $1 trillion infrastructure spending package?

    A.8. It is difficult to evaluate the economic impact of any
    package without making specific assumptions. There are several
    considerations when conducting such an evaluation, including
    the economic gains from specific investments and the
    willingness to make cuts to other parts of the budget that are
    less productive. If confirmed, I look forward to working with
    the rest of the Administration and Congress to evaluate the
    impact of any proposed infrastructure package with respect to
    our broader fiscal trajectory.

    Q.9. According to research from the Economic Innovation Group,
    the new startup rate is near record lows, dropping by ``half
    since the late 1970s.'' The total number of firms in the U.S.
    dropped by around 182,000 from 2007-2014.
        Are you concerned about this decline in new startups and
    broader economic consolidation?

    A.9. The decline in new startups is an area of concern in which
    I have a particular interest. In their report on economic
    growth and recovery, the Economic Innovation Group (EIG) notes
    that the 2000s recovery saw a 5.6 percent increase in business
    establishments, while the 2010s recovery only saw a 2.3 percent
    increase. The EIG attributes much of this decrease in business
    creation to a lack of startups rather than closures, and
    research \8\ by Robert Litan and Ian Hathaway has showed that
    for the first time in over 30 years, the U.S. business dynamism
    declined in all 50 States and in all but a handful of the more
    than 360 metros (Litan and Hathaway 2014). This decrease in
    startups is attributable to a lower rate of business creation
    among millennials. Given that millennials will soon be the
    largest age segment in the U.S., there is legitimate concern
    regarding the rate of business creation.
    ---------------------------------------------------------------------------
         \8\ https://www.brookings.edu/research/declining-business-
    dynamism-in-the-united-states-a-look-at-states-and-metros/

    Q.10. What, if any, policy solutions should be explored in
    ---------------------------------------------------------------------------
    order to respond to these challenges?

    A.10. If confirmed, I look forward to studying possible policy
    solutions to the declining rate of business creation. An
    important consideration is the role of policy uncertainty.
    Uncertainty can result in lower levels of investment. If an
    investment involves sunk costs, it may be optimal to wait for a
    potential policy change, even if that policy change is not
    guaranteed. With startups, many of the investment costs are
    sunk, for example, the costs of complying with complex
    regulations. Thus, by reducing policy uncertainty and
    encouraging tax and regulation policies that address the high
    fixed costs of starting a business, the challenges of business
    creation could be alleviated. In addition, it is worth noting
    that older, entrenched firms now are a larger share of all
    firms than at any time in recent history, which helps them have
    and keep their competitive advantage over newer,
    entrepreneurial firms--which, according to Litan and Hathaway
    (2014), \9\ could be the cause of lower productivity, and less
    innovation and job creation. As CEA chair, I would provide
    objective analysis of these potential challenges to determine
    the optimal policy solutions.
    ---------------------------------------------------------------------------
         \9\ https://www.brookings.edu/wp-content/uploads/2016/06/
    other_aging_america_dominance_older_firms_hathaway_litan.pdf

    Q.11. I'd like to discuss trade policy.
        How would a 45 percent tariff on Chinese goods impact the
    U.S. economy?
        How would a 20 percent tariff on Mexican goods impact the
    U.S. economy?

    A.11. Free trade has been both a source of prosperity and a
    challenge for individual industries and individuals over time.
    There is a general consensus among economists that the movement
    toward more open and free capitalistic societies has been a
    major factor in the dramatic reduction of global poverty we
    have seen over the past forty years. That consensus is driven
    in part by empirical observations of the benefits to removing
    trade barriers such as high tariffs.
        It is difficult to fully evaluate the two hypothetical
    tariff scenarios you mention, as there are so many other
    factors that one would have to nail down before one could
    adequately model the impact. Why were the tariffs imposed in
    the first place, for example? Trade models often rely on game
    theory in order to model the response of the world community to
    policies such as higher tariffs, and that response would depend
    on the cause of our own policy. A full evaluation would require
    estimating the likely response of other countries. One would
    also have to model currency adjustment, and the extent to which
    the demand for products from these countries is responsive to
    price changes, not to mention the actions of the Federal
    Reserve.
        To be sure, though, economists would tend to agree that
    higher tariffs would take us off the path that has contributed
    to the spread of prosperity around the world. If confirmed, I
    would, if requested to, work with the staff to provide detailed
    and objective analysis that draws on the lessons of the
    academic literature of the likely implications of such trade
    policies.

    Q.12. How would a trade war with China impact the U.S. economy?
        How would a trade war with Mexico impact the U.S. economy?

    A.12. It is widely accepted by economists that the Smoot-Hawley
    Act of 1930 induced a trade war that significantly worsened the
    Great Depression. I am aware of no economic model that would
    produce the result that a trade war would be a good thing. If
    someone did present me with such a model, I would expect to be
    able to quickly identify flaws in its design.

    Q.13. How would NAFTA's dissolution impact the U.S. economy?

    A.13. The academic literature on NAFTA suggest that it, like
    most expansion of free trade, produced diffuse benefits and
    concentrated harms. One recent estimate \10\ of the
    concentrated harm suggested that, in localities exposed to
    NAFTA, the wages even of workers whose jobs do not compete with
    imports (e.g., local restaurant workers) suffered as a result
    of the trade expansion (Hakobyan and McLaren 2016). The diffuse
    benefit is, by its very nature, difficult to measure, but was
    surely positive.
    ---------------------------------------------------------------------------
         \10\ http://www.mitpressjournals.org/doi/abs/10.1162/
    REST_a_00587?journalCode=
    rest&#authorsTabList
    ---------------------------------------------------------------------------
        NAFTA dissolution would, again, be difficult to model, as
    one would have to work out what happens next. If a trade war
    ensued, the previous answer would apply.

    Q.14. Would dissolving NAFTA be preferable to maintaining the
    current version of NAFTA?

    A.14. The original NAFTA agreement was signed by the parties
    all the way back in 1992. The economies of the United States,
    Canada, and Mexico have changed dramatically since then, and a
    modernization of this agreement could hold the potential to
    provide significant economic benefits for all involved. For
    example, the digital economy barely existed back then.
        It is difficult to model precisely what would happen should
    NAFTA be dissolved, as there are so many factors that would
    have a major impact on the modeling. If the countries decided
    to act as if it were in place after dissolution, for example,
    then there would be little effect. If a trade war ensued that
    spread around the globe, then there would be a negative effect.

    Q.15. Mexico has reportedly been exploring ways to reduce corn
    imports from the United States, including by opening up trade
    with Brazil or Argentina. Is there a risk that restricting
    trade will drive other countries to explore other import
    markets? If so, how significant is that risk?

    A.15. The USDA outlook \11\ for U.S. agricultural trade
    projects exports of agricultural products of $136 billion in
    2017, with imports expected to be $114.5 billion. This trade
    surplus is the result of the hard work and tremendous
    productivity of America's farmers, and could be at risk should
    trade barriers begin to rise around the world. The potential
    response of this surplus to changes in trade policy is
    something I would be committed to model carefully, should I be
    confirmed and requested to do so.
    ---------------------------------------------------------------------------
         \11\ https://www.ers.usda.gov/topics/international-markets-trade/
    us-agricultural-trade/outlook-for-us-agricultural-trade/

    Q.16. Many economists point to weak productivity growth as one
    of the major contributors to slower economic growth overall.
        Do you agree with this assessment?

    A.16. I agree that weak productivity growth is a major
    contributing factor to slower overall economic growth. A recent
    OECD study that looked at the variation in productivity across
    firms finds that while average productivity growth has been
    declining, the inequality of productivity has been skyrocketing
    (McGowan et al., 2017). \12\ It could be that the most
    productive firms are improving as rapidly as ever, innovating
    at a rate consistent with the theory that innovation should be
    accelerating. But these technical changes are not spreading
    down the food chain as they did in the past. We can see the
    gains from the high-tech sector, but mostly in the most
    productive firms. The problem is that everyone else is doing so
    poorly that the aggregate number appears as a disappointment.
    ---------------------------------------------------------------------------
         \12\ https://www.oecd.org/eco/The-Walking-Dead-Zombie-Firms-and-
    Productivity-Performance-in-OECD-Countries.pdf

    Q.17. Do you believe productivity measurements accurately
    ---------------------------------------------------------------------------
    account for new technology?

    A.17. Measuring productivity is a challenge, especially if we
    are not estimating our inputs properly. Increasing use of the
    Internet, email, and texting at work may mean that hours are
    being overstated and that productivity is being understated.
    Mismeasurement can also come in the form of digital innovation
    where digital innovation replaces products with tangible
    values. The other type of mismeasurement to consider is that it
    is possible that the things we purchase are not added into GDP
    correctly because quality changes are not incorporated into
    their deflators.
        However, Federal Reserve economist David Byrne, Federal
    Reserve Bank of San Francisco's John Fernald, and the IMF's
    Marshall Reinsdorf \13\ conclude that it is very unlikely that
    mismeasurement explains the productivity slowdown. They show
    that mismeasurement would have to increase in importance in
    order to create a productivity growth slowdown, but it has
    likely declined in importance because the U.S. imports a much
    larger share of high tech goods than it did in the past.
    Second, when one looks at industry details, the industries that
    account for the slowing are not the industries that arguably
    are mismeasured. This is, of course, not the final word on the
    question. If confirmed, I look forward to exploring ways to
    better estimate the real impacts of new technology on
    productivity growth, and how to increase productivity.
    ---------------------------------------------------------------------------
         \13\ https://www.brookings.edu/wp-content/uploads/2016/03/
    ByrneEtAl_ProductivityMeasurement_ConferenceDraft.pdf

    ---------------------------------------------------------------------------
    Q.18. How does current policy impede productivity growth?

    A.18. There are many reasons why current policy may not
    encourage productivity growth: taxation, regulation, and
    interest rates, to name a few. For example, economist Fadi
    Hassan and Gianmarco Ottaviano find \14\ that the reduction in
    multifactor productivity is partly caused by low interest rates
    and bank forbearance. If unproductive firms can slog along,
    average productivity can slow. In addition, too many
    regulations can limit the introduction of new firms, reducing
    the inflow of new and productive firms inhabited by
    unimpressive incumbents. Lastly, too high tax rates discourage
    capital formation for all types of firms, giving workers few
    new tools to work with. If confirmed, I look forward to
    studying productivity growth in greater depth to help advise
    policymakers on how to tackle this issue.
    ---------------------------------------------------------------------------
         \14\ http://voxeu.org/article/productivity-italy-great-unlearning

    ---------------------------------------------------------------------------
    Q.19. How can the United States improve productivity?

    A.19. As I have noted previously, one factor that could help
    productivity would be to get tax policy right regarding capital
    spending. Labor productivity growth averaged 3.2 percentage
    points per year between 1995 and 2004, but has only averaged
    1.3 percentage points since then. In some collections of boom
    years, capital spending added 1.2 percentage points per year to
    productivity growth but in recent years has dropped to an
    average of 0.5 percentage points. We could potentially add
    three-fourths of a percentage point to baseline growth if we
    could get capital spending back to what it has been in past
    boom years. Capital spending is highly responsive to tax
    policy, research \15\ (e.g., Djankov et al., 2010) has shown.
    The U.S. has recently increased tax rates on pass-through
    investments and let the corporate tax rate become the highest
    in the developed world. As the chair of the Council of Economic
    Advisers, I look forward to providing objective advice on
    policy to improve productivity, and I would, of course, explore
    arguments against this analysis, and other possible policies.
    ---------------------------------------------------------------------------
         \15\ https://www.aeaweb.org/articles?id=10.1257/mac.2.3.31

    Q.20. According to research compiled by AEI scholar, Nicholas
    Eberstadt, in his book ``Men Without Work'', the proportion of
    prime-age men out of the labor force more than tripled in the
    past 50 years, from only 3.4 percent in 1965 to 11.8 percent in
    2015. In addition, eight times as many prime-age men were
    economically inactive and not pursuing education in 2014 than
    in 1965.
        What priority should we give this measurement in our
    broader economic calculus?

    A.20. The decline in work is a significant issue facing the
    country. It is something that I have studied and written
    extensively about, including testifying before the Joint
    Economic Committee. Increasing labor force participation is a
    vital component of increasing GDP growth. A 2013 Congressional
    Budget Office report \16\ stated that while potential hours
    contributed 1.7 percentage points to GDP growth each year in
    the 1970s, from 2002 to 2012 hours worked only contributed 0.3
    percentage points. From the supply side, labor force growth
    could provide a significant boost to GDP growth.
    ---------------------------------------------------------------------------
         \16\ http://www.cbo.gov/publication/43910

    Q.21. To what do you attribute this decline in labor force
    ---------------------------------------------------------------------------
    participation?

    A.21. There are several causes of the decline in labor force
    participation. The downturn certainly discouraged many, many
    people. A contributing factor is also the structure of the tax
    code. Corry and Slavov (2013) write \17\ that the treatment of
    married couples creates disincentives for secondary earners to
    work, as households face a higher average tax rate when the
    secondary earner begins working. A 2011 review \18\ of the
    literature by Michael Keane finds that women are particularly
    responsive to marginal tax rates, resulting in large effects on
    their decision to work. An efficient tax code would minimize
    the disincentives to work and may increase labor force
    participation. If confirmed, I look forward to following the
    development of this literature closely and helping to advise
    policymakers about how to tackle this issue.
    ---------------------------------------------------------------------------
         \17\ http://www.aei.org/publication/the-tax-treatment-of-the-
    family/
         \18\ https://www.aeaweb.org/articles?id=10.1257/jel.49.4.961

    Q.22. What policies do you believe would be effective in
    ---------------------------------------------------------------------------
    improving labor force participation among prime-age men?

    A.22. While there is evidence that labor force participation
    would rise with wage growth, achieving this wage growth may
    well require policy changes to corporate taxation. In work \19\
    coauthored with Aparna Mathur, I found that the burden of
    corporate taxation is largely borne by labor due to the
    relative mobility of capital (Hassett and Mathur 2015). There
    have been many developments in the literature since. If
    confirmed, I look forward to considering this topic further.
    ---------------------------------------------------------------------------
         \19\ http://www.tandfonline.com/doi/full/10.1080/
    00036846.2014.995367
    ---------------------------------------------------------------------------
                                    ------

             RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                        FROM KEVIN ALLEN HASSETT

    Q.1. In your opinion, how does work sharing soften the blow to
    our overall economy when a regular economic downturn occurs?

    A.1. I will use this opportunity to dig deeper into this topic.
    When faced with a downturn, a company could reduce \1\ the
    hours of 100 employees by 20 percent instead of firing 20 full-
    time workers.
    ---------------------------------------------------------------------------
         \1\ http://www.hamiltonproject.org/assets/legacy/files/
    downloads_and_links/policies_address_poverty_in_america_full_book.pdf
    ---------------------------------------------------------------------------
        The impact of job loss is also not limited to the person
    unemployed, with recent research showing that job termination
    for a parent is related to lower education attainment and
    lifetime earnings for his or her children (Hilger 2016; \2\
    Oreopoulus, Page, and Stevens 2008 \3\). Keeping workers
    employed, albeit with reduced hours, can limit the risks
    associated with long-term unemployment.
    ---------------------------------------------------------------------------
         \2\ https://www.aeaweb.org/articles?id=10.1257/app.20150295
         \3\ http://www.jstor.org/stable/10.1086/588493

    Q.2. Do you believe that, if more States had work sharing
    programs in place prior to the Great Recession, we would have
    seen fewer job losses than what the nation suffered during that
    ---------------------------------------------------------------------------
    time?

    A.2. There is evidence that work-sharing programs limit the
    effects of long-term unemployment, like that we saw during the
    Great Recession. It is the role of the Council of Economic
    Advisers to objectively and critically evaluate the
    applicability of these work-sharing programs to the U.S. Rhode
    Island offers an example of a work-sharing program with use
    levels similar to those of developed European countries. As I
    note in my 2014 report \4\ on work sharing with Dr. Michael
    Strain, Rhode Island's labor department estimated that the
    program kept the State unemployment rate down and saved about
    9,500 jobs between 2009 and 2010 (Hassett and Strain 2014).
    ---------------------------------------------------------------------------
         \4\ https://www.aei.org/wp-content/uploads/2014/04/-hassett-
    strain-workshairng-and-long-term-unemployment_173834868095.pdf
    ---------------------------------------------------------------------------
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
               SENATOR MENENDEZ FROM KEVIN ALLEN HASSETT

    Q.1. In a 2010 article, you urged Republicans to support legal
    immigration and to rally around former President Reagan's view
    that the U.S. is a land of opportunity where ``the doors were
    open to anyone with the will and the heart to get here.'' In
    2013, you called for the U.S. to double its total immigration
    to spur economic growth. During your nomination hearing, you
    said that economic research demonstrates that ``immigrants in
    this country have been an important source of growth'' and that
    ``if there were more workers, we'd have more outputs.'' If
    confirmed, will you commit to presenting this evidence to the
    President in discussions regarding proposed immigration
    policies?

    A.1. Yes. On this and all other topics, I commit to always
    presenting the President with the best possible objective read
    of the economic evidence should I have the honor of being
    confirmed.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER
                        FROM KEVIN ALLEN HASSETT

    Q.1. During your testimony, you said that the Administration's
    goal of 3 percent economic growth is achievable, but both
    history and major forecasters tell us that that's an
    unreasonable assumption. Experts have estimated that policy
    changes like deficit reduction and tax and regulatory reform
    are likely to improve the growth rate by only a few decimal
    points, not percentage points.
        Why do you believe that we will be able to completely
    reverse recent trends in productivity, capital growth, and
    labor force participation to achieve sustained economic growth
    of 3 percent?
        Do you agree that higher debt from reducing revenues would
    have a negative impact on our economy that could offset or even
    wipe out any economic boost from tax reform?

    A.1. A variety of research documents the relationship between
    higher output and lower taxes. A path-breaking study \1\ by
    David Romer and Christine Romer (2010)--herself a former CEA
    chair--finds that tax increases tend to lower output. Others
    have pursued a similar strategy with data from other countries
    and found similar results. This includes the Cloyne (2013)
    analysis \2\ of the U.K. fiscal experience and the Hayo and Uhl
    (2014) analysis \3\ of the German fiscal experience. The scale
    of these effects is uncertain, but the evidence is promising.
    ---------------------------------------------------------------------------
         \1\ http://www.jstor.org/stable/27871230
         \2\ https://www.aeaweb.org/articles?id=10.1257/aer.103.4.1507
         \3\ https://academic.oup.com/oep/article-abstract/66/2/397/
    2362257/The-macroeconomic-effects-of-legislated-tax
    ---------------------------------------------------------------------------
        Meanwhile, the labor force participation rate, as described
    in Keane and Rogerson (2012) could possibly be responsive to
    policy parameters like tax rates, which can determine how much
    one profits from one's labor. In a forthcoming publication in a
    book published by Oxford University, I note that the model in
    Keane and Rogerson (2012) seems \4\ to be able to explain the
    divergence in trends in labor force participation between
    different age cohorts that seems to have occurred in recent
    years.
    ---------------------------------------------------------------------------
         \4\ https://www.aeaweb.org/articles?id=10.1257/jel.50.2.464
    ---------------------------------------------------------------------------
        The relationships between output, interest rates, and
    spending can be extraordinarily complex. It is true that higher
    interest rates could serve as a headwind to growth, but given
    the complexity of the macroeconomic forces involved, it is
    difficult to comment on the macroeconomic interactions at the
    heart of fiscal policy in the abstract. One would have to dig
    more deeply into the details.
                                    ------

           RESPONSES TO WRITTEN QUESTIONS OF SENATOR HEITKAMP
                        FROM KEVIN ALLEN HASSETT

    Q.1. Objectivity: As you're well aware, your primary job in
    this Administration will be to provide objective economic
    advice to the President on a range of issues. Many times facts
    and reason don't match up with ideology and rhetoric. So I'd
    like to get your commitment today that you're willing to put
    fact and reason above ideology and be a strong advocate in this
    White House for an objective approach to policymaking?

    A.1. The Council of Economic Advisers (CEA) was created to
    provide the President with objective economic advice and to
    assist policymakers in solving the issues we face. The CEA has
    done this throughout its 70-year history under both Democratic
    and Republican administrations. If confirmed, I pledge to you
    and to the rest of the Committee to do my utmost to protect the
    integrity of the CEA and provide unbiased, scientific analysis.
    I look forward to working with the Administration and Congress
    in this pursuit.

    Q.2. Future of Work: As a conservative economist, you've made
    some surprising comments on the need for our Government to play
    a more active role in providing direct job opportunities for
    the long term unemployed. As I look into the next decade, one
    of my biggest concerns is that we're going to have a whole lot
    of hard working men and women displaced by automation at a
    greater pace than we've ever experienced in this country.
        The Bank of England projects that 47 percent of U.S. jobs
    could be replaced by technology over the next 15 years (a PWC
    study projects 38 percent of jobs in the U.S. will be at high
    risk in 15 years).
        Former Treasury Secretary Larry Summers recently commented
    that a third of men between the ages of 25 and 54 may not be
    working by the end of this half-century.

    A.2. Long-term unemployment is one of the biggest issues we
    face as a county. A large and growing literature has explored
    the impact of unemployment for extended periods--generally
    defined as 6 months \1\ or longer--on the workers affected. A
    key finding \2\ is that the relationship between unemployment
    and employability is nonlinear, with harm from unemployment
    rising over time.
    ---------------------------------------------------------------------------
         \1\ https://www.bls.gov/spotlight/2015/long-term-unemployment/pdf/
    long-term-unemployment.pdf
         \2\ https://www.aei.org/wp-content/uploads/2014/04/-hassett-
    strain-workshairng-and-long-term-unemployment_173834868095.pdf
    ---------------------------------------------------------------------------
        Long-term unemployment has obvious financial impacts.
    Johnson and Feng (2013) detail \3\ the financial losses to
    workers who experienced long-term unemployment between 2008 and
    the end of 2011, finding that for those out of work for 6
    months, half experienced declines in per-capita family income
    of 40 percent or more. These financial hardships were felt
    especially by African Americans and Hispanics, along with
    workers without a high school education and unmarried workers.
    Jacobson, Lalonde, and Sullivan (1993) find \4\ that even when
    previously unemployed workers find jobs, their earnings are
    persistently lower than before their unemployment spells.
    ---------------------------------------------------------------------------
         \3\ http://www.urban.org/research/publication/financial-
    consequences-long-term-unemployment-during-great-recession-and-recovery
         \4\ https://www.jstor.org/stable/2117574
    ---------------------------------------------------------------------------
        The empirical evidence also suggests there are other, less
    obvious, effects on individual and family well being. A 2010
    Pew report \5\ found that long-term unemployed workers were
    more likely to report a loss of self-respect, and that the 2008
    recession had an impact on their career goals or brought
    ``major changes'' to their lives. Sullivan and von Wachter
    (2009) find \6\ a 50 to 100 percent increase in death rates for
    older male workers in the years immediately following job loss
    if the worker has been consistently unemployed. Long-term
    unemployment is also correlated with increased suicide. Classen
    and Dunn (2012) find \7\ that for each proportional increase in
    the unemployment rate of 10 percent increases the suicide rate
    for males by 1.5 percent. The key link is the duration of
    unemployment, which increases the probability of suicide.
    ---------------------------------------------------------------------------
         \5\ http://www.pewsocialtrends.org/files/2010/11/760-recession.pdf
         \6\ http://rricketts.ba.ttu.edu/
    sullivan_vonwachter_job%20displacement%
    20and%20mortality_qje.pdf
         \7\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3423193/
    ---------------------------------------------------------------------------
        Stevens and Schaller (2009) found \8\ that there are also
    significant negative effects from unemployment on overall
    family well-being. Parental unemployment can increase the
    probability that a child will have to repeat a grade in school,
    especially when parents have lower educational attainments.
    Charles and Melvin (2004) find \9\ that unemployment by a
    spouse can increase the probability of divorce. Nichols,
    Mitchell, and Linder (2013) found \10\ that communities with a
    higher share of long-term unemployed workers tended to have
    higher rates of crime and violence.
    ---------------------------------------------------------------------------
         \8\ http://www.sciencedirect.com/science/article/pii/
    S0272775710001202
         \9\ http://www.journals.uchicago.edu/doi/abs/10.1086/381258
         \10\ http://www.urban.org/sites/default/files/publication/23921/
    412887-Consequences-of-Long-Term-Unemployment.Pdf
    ---------------------------------------------------------------------------
        Given all of this evidence, it is clear to me that
    Government policies need to take the concentrated harms more
    seriously.
        There is a literature on the effectiveness of work sharing
    in preventing long-term unemployment. Abraham and Houseman
    (2014) \11\ note that work sharing encourages employers to
    reduce hours rather than terminate employment during periods of
    depressed demand. The literature suggests that even at reduced
    hours, keeping employees in work can prevent the effects of
    long-term unemployment. Work sharing also benefits firms by
    retaining valuable employees and limiting the costs of
    recruiting, hiring, and training new employees in the future.
    There are also several examples of work sharing programs which
    showed positive results during the 2008 recession. A 2010 OECD
    study found \12\ that without work sharing, Finland, Germany,
    Italy, and Japan would have experienced about a three-quarters
    of a percentage point greater decline in permanent employment.
    In the U.S., Rhode Island offers a model case of a work-sharing
    program with use levels similar to those of developed European
    countries. Using back-of-the-envelope calculations, if
    confirmed, I look forward to exploring further the role that
    work-sharing programs can play in preventing long-term
    unemployment.
    ---------------------------------------------------------------------------
         \11\ http://www.hamiltonproject.org/assets/legacy/files/
    downloads_and_links/policies_address_poverty_in_america_full_book.pdf
         \12\ http://www.oecd.org/employment/emp/48806664.pdf

    Q.3. You've made it clear that you understand the high toll
    joblessness takes on the health and welfare of a society and
    have argued in favor of German-style work-sharing programs, in
    which unemployment is averted by encouraging companies to
    reduce workers' hours and subsidizing the workers' lost wages.
    Would you recommend these types of German-style work sharing
    programs to the President in order to help workers displaced by
    automation? What other options should Congress be exploring to
    ---------------------------------------------------------------------------
    help displaced men and women re-enter the job market?

    A.3. I addressed this in my previous answer.

    Q.4. Trade and Immigration: On the issue of trade and
    immigration, your academic work diverges significantly from the
    rhetoric coming from the Administration. You've made it clear
    in your writings that open trade and sensible immigration
    policies benefit the U.S. economy. Indeed, 95 percent of the
    world's consumers live outside our country. What is your
    argument to the President on the issue of trade policy with
    countries like Mexico?

    A.4. Economic researchers have been studying the cost and
    benefits of free trade at least dating back to the birth of
    this country, when Adam Smith was debating the mercantilists
    about the relationship between trade and wealth. The economic
    literature is clear that trade can be an important source of
    welfare improvements for the world's citizens. The large
    benefits from trade are often very diffuse, and those affected
    negatively can be a quite concentrated group. These two factors
    present us all with significant challenges.
        There is a more modern empirical literature \13\ that
    explores the concentrated harm to specific industries and
    geographic regions that can ensue when plants are closed
    because of pressure from foreign competition (e.g., Autor et
    al., 2016). Much of my personal attention to geographic
    inequality has been focused on helping to give policymakers the
    data and analysis they need to understand concentrated harms
    better, so that they can craft policies to help avoid or
    alleviate them.
    ---------------------------------------------------------------------------
         \13\ http://annualreviews.org/doi/abs/10.1146/annurev-economics-
    080315-015041
    ---------------------------------------------------------------------------
        There is also a large and vibrant literature \14\ on
    immigration and its economic impacts (e.g., National Academies
    of Sciences 2016). If confirmed, I would look forward to
    providing the President with objective analysis that draws from
    my own past work and the broader economic literature on trade.
    ---------------------------------------------------------------------------
         \14\ https://www.nap.edu/catalog/23550/the-economic-and-fiscal-
    consequences-of-immigration
    ---------------------------------------------------------------------------
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
             SENATOR CORTEZ MASTO FROM KEVIN ALLEN HASSETT

    Q.1. During my questioning period, I asked you if you still
    believed that the Dodd-Frank Wall Street Reform and Consumer
    Protection Act of 2010 was ``the worst piece of legislation
    that [you've] seen in [your] entire lifetime,'' and whether the
    law ``needs to be repealed as soon as possible.'' You responded
    that you did not recall making those comments. Pasted below is
    a transcript of some of your comments from a debate sponsored
    by Bloomberg \1\ on August 11, 2011:
    ---------------------------------------------------------------------------
         \1\ https://www.youtube.com/watch?v=CkxlPpDtbDo

            My view [is] that Dodd-Frank is the worst piece of
            legislation that I've seen in my entire lifetime. The
            impact of Dodd-Frank is conceivably going to be
            horrifying, and that it has to be repealed as soon as
            possible. Dodd-Frank is lame-brained, horrifying
    ---------------------------------------------------------------------------
            legislation ...

        Please describe whether you continue to agree with this
    statement from 2011.
        What is your current view of the Dodd-Frank Act?

    A.1. Thank you for clarifying this, as I did not recall the
    interview during the hearing and I would like the opportunity
    to set the record straight. I regret my tone and do not now
    agree with what I said. There are certainly many, many pieces
    of legislation in American history that even the harshest
    critic of recent financial reforms would have to concede were
    worse than the Dodd-Frank Act.
        In the Bloomberg appearance you mention, I expressed
    disapprobation towards Dodd-Frank on the grounds that the
    structure of its costs put a larger burden on smaller, rather
    than larger, financial institutions. While there are aspects,
    like this, of the Dodd-Frank Act that I believe are less than
    optimal because our Nation needs small banks as well as larger
    ones, I would look forward, if confirmed, to working with the
    President and Members of this Committee to support efforts to
    seek sensible reforms.
        I would like to add that while Congressman Frank was
    Chairman of the House Financial Services Committee, we had
    collegial relations. I would ask that you review my testimony
    of February 23, 2010, before that committee, and the hearing
    transcript, to see evidence of my ability to focus on economic
    substance, an ability that was poorly lacking in the transcript
    you cited.
        Financial regulation is a very serious and difficult
    business, and financial markets evolve naturally over time,
    often in unexpected directions. It is essential that
    policymakers be nimble, collegial, and willing to consider
    modifications of existing law.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ
                        FROM KEVIN ALLEN HASSETT

    Q.1. For at least the last 10 years, you have advocated for
    implementing a carbon tax to address greenhouse gas emissions,
    and using the revenues to reduce distortionary taxes elsewhere
    in the code, such as the corporate income tax or the payroll
    tax. As the Trump administration and Republicans Congress
    attempt a broad overhaul of the tax code, in your capacity as
    the President's chief economic adviser, will you commit to
    advocating on behalf of a carbon tax that both (1) reduces
    emissions in line with the commitment made by the U.S. in
    Copenhagen in 2009 (83 percent reductions below 2005 levels by
    2050; see http://unfccc.int/files/meetings/cop_15/
    copenhagen_accord/application/pdf/
    unitedstatescphaccord_app.1.pdf), and (2) does not increase the
    overall regressivity of the tax code?

    A.1. The Employment Act of 1946 created the Council of Economic
    Advisers as a means to ensure that the President has
    information that is both ``timely'' and ``authoritative'' with
    respect to current and future economic conditions. I view the
    core commitment of the Council of Economic Advisers to be the
    presentation of the best objective evidence. As you mentioned,
    I have been an active participant in the economics literature
    in this space, including the study of carbon taxation, its
    economic effects, and distributional consequences. I stand by
    that work, and if confirmed, I would also be sure that the
    other members of the team would know not to weigh my academic
    work more heavily simply because I wrote it. The CEA
    professional staff should always produce unbiased and objective
    work that weighs all of the relevant scientific evidence.

    Q.2. In your writings, you have argued that cutting corporate
    taxes would lead to wage increases because companies would have
    more capital to invest in their workers.
        However, several market analyses over the past few years
    have shown a clear trend. Ccompanies have funneled extra
    capital to shareholders through stock buybacks and dividend
    payments--not to research and development, wages, or worker
    training.
        Since the end of the recession. U.S. nonfinancial companies
    have amassed $1.77 trillion in cash holdings. Yet, wages and
    productivity have stagnated.
        Just after the election, Goldman Sachs predicted that stock
    buybacks would climb 30 percent to $780 billion. Goldman thinks
    $150 billion, or about 20 percent, will come from repatriation
    of overseas cash. According to the Wall Street Journal, \1\ if
    Goldman is right, ``buybacks will make up the largest use of
    cash among S&P 500 companies for only the second time in the
    last two decades.''
    ---------------------------------------------------------------------------
         \1\ https://blogs.wsj.com/moneybeat/2016/11/21/goldman-sees-30-
    buyback-surge-in-2017/
    ---------------------------------------------------------------------------
        If cutting corporate taxes would give U.S. companies the
    cash they need to boost workers' wages and productivity, why
    aren't they doing that now?

    A.2. There are many possible explanations for the patterns in
    the data that were identified in my work with Aparna Mathur,
    and then confirmed by many others (Hassett and Mathur 2015). My
    own intuition for the emergence of the factors you mention is
    that highly profitable multinational firms are able to locate
    production in low tax countries in order to avoid the high U.S.
    tax. When they do that, they do not create jobs here in the
    U.S. so wages stagnate, even when profits soar. The data
    suggest that blue-collar workers benefit when countries reduce
    their corporate tax rates in order to attract investment. There
    is no reason to expect that pattern not to hold should the U.S.
    do the same. If confirmed, I would look forward to interacting
    with the staff to provide an update on developments in this
    literature.

    Q.3. Do you think Goldman Sachs' prediction is wrong?

    A.3. The capital formation that could drive domestic wages
    higher would require financing should there be tax reform in
    this country. There is a large academic literature that
    identifies the sources of financing for capital spending,
    including work \2\ by myself and my coauthor Alan Auerbach of
    Berkeley (Auerbach and Hassett 2003). I have no reason to
    dispute the Goldman analysis, but it would, I believe, change
    significantly if the U.S. were suddenly a more attractive
    locale for the location of capital spending. At that point, the
    literature suggests that a good bit of the capital spending
    would likely be financed by internal cash holdings, and share
    repurchases would decline. Indeed, Auerbach and I found exactly
    this link.
    ---------------------------------------------------------------------------
         \2\ http://www.sciencedirect.com/science/article/pii/
    S0047272701001724

    Q.4. Do you support the inclusion of a border adjustment tax in
    ---------------------------------------------------------------------------
    any proposals to reform our tax system?

    A.4. The theoretical optimal tax literature suggests that moves
    toward tax systems like the border adjusted business cash flow
    tax can be positive for economic growth. There are also a
    number of uncertainties regarding specific attempts to move
    from theoretical modeling to real world tax law, and academic
    economists have raised a number of possible transition
    concerns, such as the impact of currency adjustment, that
    should be taken seriously. If confirmed, I would provide the
    President with unbiased analysis of the broad economic
    literature in this space.

    Q.5. What do you think the impact of a border adjustment tax
    would be on an average American's annual cost of groceries and
    other consumer goods?

    A.5. The impact of a border adjustment tax on the cost of
    groceries and consumer goods would depend on the extent to
    which the dollar adjusts to offset the tax. If confirmed, I
    would, if requested, instruct the professional staff at the CEA
    to review the literature in this area and provide a range of
    estimates of possible effects.

    Q.6. According to independent economists, President Trump's tax
    proposal is estimated to cost $3 to $7 trillion over 10 years.
    While we don't have all the details, nothing in the President's
    proposal suggests a new stream of revenue sufficient to pay for
    the cost of the proposed tax cuts. When Secretary Mnuchin
    testified before the Banking Committee in May, he claimed that
    the Administration expected that the tax cuts would be paid for
    by economic growth.
        Do you think it is realistic to think that economic growth
    will generate sufficient revenue to fully pay for the tax cuts
    proposed by the Administration?

    A.6. If confirmed as CEA Chairman, I would be actively involved
    in the budget process. I was not part of the modeling effort
    for this budget, and do not have all of the background
    information one might need to provide my own perspective on the
    numbers.

    Q.7. As a historical matter, one can think of examples where
    tax reform efforts have produced positive revenue effects. For
    example, the Tax Reform Act of 1986 was designed to be revenue
    neutral on a static basis. To the extent that it generated
    positive economic growth, which it certainly did (e.g.,
    Feldstein 1995), \3\ it would have had a positive effect on
    revenue.
    ---------------------------------------------------------------------------
         \3\ https://dash.harvard.edu/bitstream/handle/1/2766676/
    feldstein_taxable.pdf?sequence=2
    ---------------------------------------------------------------------------
        Do you think it is realistic to assume that our economy
    will grow at 3 percent for 10 years without any downturns?

    A.7. It is not reasonable to expect economic growth to return
    to 3 percent without significant policy changes. There are many
    headwinds at the moment, including low productivity growth and
    low capital formation. Should tax policy change in the
    direction indicated in the President's tax outline, it would be
    natural to expect growth to increase significantly, even to 3
    percent if the tax reform is well designed.
        Downturns, sadly, are very difficult to see coming. Looking
    back at economic history, it was not uncommon for us to
    recognize that the data indicated we were in a recession only
    after the recession ended. It is standard practice for growth
    assumptions not to factor in a specifically dated recession
    because economists are simply unable to see ahead accurately
    enough to do that.

    Q.8. The budget proposed by the President assumes that the tax
    cut proposal the Administration has put forward will be revenue
    neutral. As Secretary Mnuchin testified to the Banking
    Committee, the tax reform proposal would be paid for by
    economic growth. However, the budget proceeds to assume that on
    top of the economic growth needed to pay for tax cuts, an
    additional $2 trillion in economic growth will reduce the
    deficit. Independent analysts have pointed out that this double
    counts the estimated revenue from economic growth and that,
    after correcting for this double counting, the budget would add
    to the deficit.
        Do you agree that the budget double counts revenue from
    economic growth?

    A.8. Since I was not part of the modeling team that produced
    the budget, and have not seen the model outputs that lead to
    it, I cannot speak to its assumptions. If confirmed, I pledge
    to be actively involved in the process, and to be available to
    you to explain all of the modeling assumptions behind the
    numbers.
        As to the double counting claim, the 1986 Tax Reform Act,
    again, was designed to be revenue neutral, but probably was a
    positive for revenue after the growth effects. When I read the
    budget, it was this kind of dynamic that first came to mind.

    Q.9. Do you think the Administration's budget will create the
    conditions necessary for greater economic growth?

    A.9. While estimates vary, the economics literature is \4\
    clear that tax reform can have a large positive effect on
    economic growth (e.g., Feldstein 1995). As this budget proposes
    a tax reform, it is logical that it would predict growth to be
    higher than private sector forecasts that do not factor in the
    President's proposed policy changes.
    ---------------------------------------------------------------------------
         \4\ http://www.journals.uchicago.edu/doi/abs/10.1086/261994

    Q.10. Do you think the Administration's budget will reduce the
    ---------------------------------------------------------------------------
    deficit?

    A.10. As mentioned, I was not part of the modeling effort that
    went into the production of this budget, but have no reason to
    doubt the professionalism of the staff that produced it. One of
    my favorite parts of every budget is the end, where the staff
    members that produced the budget are acknowledged individually.
    This year's budget ended with a list of 597 credited OMB staff
    who burned the midnight oil to produce the numbers, a majority
    of whom (about 75 percent) also worked on and were credited in
    President Obama's final budget. If confirmed, I would relish
    the opportunity to work with so many able civil servants, with
    long institutional memory, who play such an important role
    serving their country.

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    Sullivan, Daniel, and Till Von Wachter, ``Job Displacement and
        Mortality: An Analysis Using Administrative Data'', The
        Quarterly Journal of Economics 124.3 (2009) F: 1265-1306.
    United States Department of Agriculture, ``Outlook for U.S.
        Agricultural Trade'', February 2017. https://
        www.ers.usda.gov/topics/international-markets-trade/us-
        agricultural-trade/outlook-for-us-agricultural-trade/
    Woo, Jaejoon, and Manmohan S. Kumar, ``Public Debt and
        Growth'', Economica 82.328 (2015): 705-739.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. HOTMA Implementation--Last year, Congress passed the
    Housing Opportunity Through Modernization Act (HOTMA) with
    bipartisan support. If confirmed, will you work to ensure the
    expeditious implementation of HOTMA?

    A.1. Yes, if confirmed, I will ensure expeditious
    implementation of HOTMA reforms.

    Q.2. Housing and Poverty--As you point out in your opening
    statement, Matthew Desmond makes the case for how the lack of
    safe, affordable housing contributes to poverty.
        In recent years, we have heard more about how important
    safe, affordable housing is as a platform to build better long-
    term outcomes for children, seniors, workers, and people with
    disabilities. These investments may also help save money in
    other areas like health care, education, and criminal justice.
        What are your views as to the role that safe, affordable
    housing plays as a platform for better outcomes for Americans?

    A.2. I believe that decent and safe affordable housing is
    critical to family stability and the alleviation of poverty and
    prevention of homelessness.

    Q.3. Funding for Blight Elimination--Communities across Ohio
    struggle with a legacy of blighted properties. These properties
    depress neighborhood property values, create crime and safety
    hazards, and reduce local tax rolls. Communities in Ohio and
    other States have struggled to find resources to remove these
    blighted properties.
        In response to a question from Senator Donnelly, you
    mentioned that Federal funds other than CDBG, which the
    Administration has proposed for elimination, could be used for
    the elimination of blighted properties.
        Can you provide a list of the other Federal programs that
    are providing new resources to communities for removal of
    blighted properties?

    A.3. There are a number of HUD programs that fund demolition,
    though most of these allow it when in conjunction with
    reconstruction. HUD's Neighborhood Stabilization Programs
    (NSP1, NSP2, and NSP3) also allow for demolition of blighted
    structures, as a standalone activity. I believe there is over
    $400 million in unexpended NSP funds remaining in all three
    programs, roughly $10 million unexpended in the State of Ohio
    and the State's local recipients of the funds. Additionally,
    there are other Federal programs that fund demolition, for
    instance the Treasury Department's Hardest Hit Fund (HHF),
    which for many communities conducting demolitions, HHF is the
    largest source of funds for these demolitions.

    Q.4. LIHTC and the Budget--Ms. Patenaude, both you and
    Secretary Carson have cited the Low Income Housing Tax Credit
    as an example of a public-private partnership that works. I am
    concerned that some of the President's proposals could weaken
    the impact of the LIHTC. For example, we are already hearing
    that investment in LIHTC has already dropped in Ohio and across
    the country in anticipation of the President's proposed tax
    rate cuts. This is causing some developments and preservation
    projects to fall through, and sending States and developers
    scrambling to fill holes in their budgets. The budget also
    proposes to eliminate the HOME program, which was already being
    used to fill critical funding gaps in about 25 percent of LIHTC
    developments.
        Have you examined the potential impact of these policies on
    LIHTC? How would you generate funding for affordable housing if
    the President's plans are adopted and HOME is eliminated and
    the value of LIHTC is greatly diminished?

    A.4. Tax credit pricing at the end of 2016, beginning of 2017
    declined. However, to date anecdotal evidence suggests that
    market conditions have stabilized in terms of equity pricing
    (even in anticipation of Federal tax reform). If the Congress
    reduced HOME and CDBG to requested levels, the unobligated
    budget authority would take some time to spend down. State and
    local governments also provide critical gap funding resources
    to support LIHTC developments through State housing trust funds
    provided in some cases by State fees on closings. In addition,
    some States are using funds earned through participation in
    FHA's risk share program.

    Q.5. Opioid Recovery and Housing--As you probably know, Ohio
    has been ravaged by the opioid epidemic. We hear heart-breaking
    stories every day about families struggling with addiction.
        Last year, I had the pleasure of speaking at an awards
    ceremony for a permanent supportive housing development in
    Lancaster, Ohio, called Pearl House. Pearl House provides
    affordable housing and access to comprehensive services to
    parents in recovery and their children, many of whom were
    previously homeless or at risk of homelessness. In this
    environment, parents can continue their recovery and work
    toward self-sufficiency while their children have a stable
    environment in which to grow. It took a combination of LIHTC,
    other grants, and dedicated rental assistance vouchers to
    create Pearl House and ensure affordability for these fragile
    families.
        What are your thoughts about whether permanent, supportive
    housing such as Pearl House can contribute to addiction
    recovery for more Ohioans and people across the country?

    A.5. Evidence based research demonstrates that a Housing First
    approach is an effective strategy to improve health outcomes
    for individuals suffering from substance abuse including
    opioids. We should learn from the success of the Interagency
    Council on Homelessness as a model for addressing the
    complexity of the opioid epidemic.

    Q.6. What role do you believe available, affordable housing can
    play in helping people avoid or escape opioid addiction?

    A.6. I believe that affordable housing plays a critical role in
    promoting family stability. Stable housing is a critical
    platform for substance abusers seeking treatment for addiction.

    Q.7. Federal Housing Administration/Housing Counseling--In the
    past, you supported the Obama administration's ``HAWK''
    proposal, which emphasized homebuyer education for FHA
    borrowers. Do you still agree with this proposal?

    A.7. If confirmed, I look forward to working with Congress to
    better understand the concerns about this proposal.

    Q.8. What are your views about the role of housing counseling
    in building sustainable homeownership?

    A.8. Housing counseling is a critical component of sustainable
    homeownership. The proposed budget for FY2018 requests $47
    million for these important programs, a funding level
    consistent with the level provided by Congress during the
    current fiscal year.

    Q.9. HUD's Affirmatively Furthering Fair Housing (AFFH) Rule--
    If confirmed, do you intend to carry out HUD's Affirmatively
    Furthering Fair Housing Rule?

    A.9. Yes, if confirmed, I pledge to carry out HUD's
    Affirmatively Furthering Fair Housing Rule.

    Q.10. LGBTQ Housing Rights--Do you believe that HUD should
    continue to provide equal access to housing opportunities for
    lesbian, gay, bisexual, transgender, and queer (LGBTQ)
    individuals?

    A.10. Yes, I believe HUD should continue to provide equal
    access to housing opportunities for all Americans.

    Q.11. In recent months, HUD has withdrawn two Notices and
    removed from its website several resources intended to carry
    out its policies to ensure housing rights for LGBTQ
    individuals. This includes LGBTQ youth, who make up nearly 40
    percent of all homeless youth. The withdrawn Notices were
    designed to (1) require HUD-participating housing providers to
    display information regarding the rights of LGBTQ individuals
    and (2) collect information necessary to evaluate the
    effectiveness of an LGBTQ youth homelessness demonstration
    program.
        If confirmed, will you work to reinstate these notices and
    guidance? If not, why not?

    A.11. HUD career staff has informed me that this survey was
    withdrawn to allow the program office to thoroughly examine the
    information included in the survey and its effectiveness. It is
    currently under review and I pledge to consider this issue, if
    confirmed.

    Q.12. Preserving Access to Opportunity--In recent years, many
    cities have seen a wave of population growth and investment
    that have led to greater economic activity, tighter rental
    housing markets, and rising rental housing costs. As a result,
    many lower-income families and businesses who endured
    challenging decades in their communities are finding themselves
    priced out of their long-time neighborhoods just when
    additional economic opportunities are opening up. Loss of
    housing in urban neighborhoods can push residents away from
    access to jobs, transit, and local support networks such as
    hospitals and child care. In many of these neighborhoods,
    federally assisted housing may be coming to the end of long-
    term affordability contracts or at risk of loss due to physical
    deterioration. HUD estimates that we are losing 10,000 units of
    public housing every year due to physical obsolescence. By
    2025, nearly 2.2 million units of HUD-assisted and Low Income
    Housing Tax Credit-supported housing will reach the end of
    their affordability periods. \1\
    ---------------------------------------------------------------------------
         \1\ See ``America's Rental Housing: Expanding Options for Diverse
    and Growing Demand, Key Facts'', p. 4, Harvard Joint Center for Housing
    Studies, December 9, 2015, available at http://jchs.harvard.edu/
    americas-rental-housing.
    ---------------------------------------------------------------------------
        Do you believe that HUD and communities should help
    preserve housing and economic opportunities for lower-income
    families in neighborhoods experiencing economic growth and
    rising rental costs?

    A.12. Yes, HUD and local communities should encourage and
    incentivize economically integrated neighborhoods.

    Q.13. If so, what role do you think HUD and HUD's programs
    should play in preserving these opportunities?

    A.13. HUD should incentivize creative and innovative approaches
    to preserving affordable housing developments with nearing
    expiring use restrictions.

    Q.14. Housing for People With Disabilities--Very-low income
    people with disabilities have great difficulty in finding and
    paying for suitable affordable housing with access to
    appropriate features and services. Over 1 million very low-
    income, non-elderly persons with disabilities pay over half of
    their incomes for housing, and approximately 2 million more
    people--including those with developmental disabilities--are
    living in more restrictive, institutional environments than
    they would choose or are living with an aging caregiver. Rent
    on a modest 1 bedroom apartment at HUD's estimated national
    fair market rent would consume all of the income of a person
    relying upon Supplemental Security Income (SSI).
        What do you view as HUD's role in meeting the housing needs
    of low-income people with disabilities?

    A.14. HUD programs are designed to allow persons with
    disabilities to live as independently as possible in the
    community, subsidizing rental housing opportunities which
    provide access to supportive services. For at least the last 8
    years these programs have faced funding pressure. HUD should
    focus on ways to provide such support in the most efficient way
    possible. If confirmed, I commit to working with our
    stakeholders, including States, local governments, Congress,
    and other partners to seek rental reforms that allow these
    programs to be sustainable and help our most vulnerable
    citizens.

    Q.15. Housing for Senior Citizens--Across America, seniors are
    struggling to pay for their housing costs. We know that very
    low income seniors who pay more than half of their incomes for
    housing also spend much less than their peers on health care,
    food, transportation, and retirement savings. We also know that
    affordable housing can be a tremendous, cost-saving platform
    for the provision of services to seniors--services that help
    seniors remain healthy, address health challenges, and age in
    place.
        Yet, only one-third of seniors eligible for HUD rental
    assistance programs get to use them, resulting in the housing
    cost burdens and associated lower spending on health, food, and
    transportation. These shut-out seniors also miss out on the
    health benefits that come with access to a service coordinator
    in their apartment buildings, from living in appropriately
    accessible homes that HUD-assisted housing provides, and living
    in a community that guards against social isolation.
        What is more, as you know, recent studies from both the
    Bipartisan Policy Center and Harvard's Joint Center for Housing
    Studies have documented a coming wave of housing needs for
    America's senior citizens. These needs will include: additional
    affordable rental housing, housing and community adaptations
    necessary to help seniors age in place; integrating health and
    supportive services into housing; and improving technologies
    such as telemedicine. To meet these challenges, the Bipartisan
    Policy Center has recommended a combination of continued
    investment in affordable rental housing, home modification
    programs, and coordination between health care and housing
    providers to improve health outcomes and lower costs.
        If confirmed, what will you do to meet the housing
    challenges of an aging America?

    A.15. Housing an aging population represents a major challenge
    for the United States. By 2030, the senior population is
    projected to exceed 74 million, representing more than one in
    five Americans. Over the next 15 years, millions of Baby
    Boomers will seek to ``age in place'' in their own homes and
    communities.
        Yet many of our homes and communities lack the structural
    features and support services to enable safe, independent
    living by seniors. The Bipartisan Policy Center (BPC) Housing
    Commission, which I led as director, identified the desire of
    seniors to age in place as a ``new frontier'' in housing
    policy. If confirmed, I intend to help focus the Department on
    this critical issue. Strong leadership at HUD can help harness
    the creativity and resources of the private and nonprofit
    sectors, as well as Government at all levels, to respond to the
    growing need for affordable housing that is also suitable for
    senior living. New and emerging technologies will likely play
    an important role in enabling aging in place. It is also more
    critical than ever to break down the silos in the Federal
    Government to ensure the most effective and efficient delivery
    of services across a broad array of fields, including housing,
    health care, and transportation.

    Q.16. Will you take actions to increase the supply of
    affordable, accessible rental housing for lower-income seniors?

    A.16. Yes, I will. Throughout my career, I have been a strong
    supporter of the Low-Income Housing Tax Credit, which has been
    a critical source of financing for rental homes affordable to
    the Nation's lowest-income seniors. Some States provide set-
    asides and preferences in their LIHTC allocation plans for
    senior housing developments and promote the adoption of
    universal-design features to improve accessibility. The BPC's
    Senior Health and Housing Task Force recognized, regulatory and
    land-use policies at all levels of Government can act as
    barriers to the production of affordable senior housing. On the
    positive side, some communities have adopted policies that
    allow for and encourage greater affordable housing options for
    seniors, such as accessory dwelling units. If confirmed, I will
    make it a priority to illuminate the impact of regulatory
    barriers on access to affordable housing, highlight best
    practices drawn from communities throughout the country, and
    show how these policies can both positively and negatively
    impact one of our Nation's most vulnerable groups: low-income
    seniors.

    Q.17. Will you take actions to help seniors modify their homes
    in order to help them age in place?

    A.17. Yes. According to Harvard's Joint Center for Housing
    Studies, just 57 percent of existing homes have more than one
    of five universal design features--no-step entries, single-
    floor living, switches and outlets accessible at any height,
    extra-wide hallways and doors, and lever-style door and faucet
    handles--that can help make homes safer for seniors and enable
    aging in place. Improving safety through home modifications has
    tremendous upside: Falls are the leading cause of injury-
    related death among seniors, and most falls occur in the home.
    In 2015, treating falls cost Medicare more than $31 billion. If
    confirmed, I will work to ensure that HUD programs are
    coordinated with programs administered by other Federal
    agencies that also provide resources and expertise for home
    assessments and modifications. I am aware of legislation
    recently introduced by Senators Angus King and Susan Collins,
    the Senior Home Modification Assistance Initiative Act, which
    seeks to improve this coordination and provide more consumer-
    friendly information on how these programs can benefit older
    Americans. Some State and local governments assist low-income
    seniors with home modifications through property tax credits,
    grants, or forgivable loans.

    Q.18. How would you foster collaboration with health care
    providers to meet the needs of America's seniors?

    A.18. With the rapid expansion of the senior population,
    greater collaboration between the health care and housing
    sectors will be critical. During my career in housing, I have
    found that housing and health care professionals rarely
    interact with each other, and when they do, they utilize very
    different vocabularies. A notable exemption was the successful
    work and model collaboration of the Interagency Council on
    Homelessness. If confirmed, I will make it a priority to help
    bridge this divide. HUD serves approximately 1.3 million senior
    renters, most of whom are dually eligible for Medicare and
    Medicaid. I will work with my counterparts at the U.S.
    Department of Health and Human Services and the Centers for
    Medicare and Medicaid Services to identify ways to improve
    health outcomes for these seniors and potentially generate
    savings for the two taxpayer-funded health insurance programs.

    Q.19. Do you support service coordination as a strategy for
    improving outcomes for seniors?

    A.19. Yes, effective service coordination can improve health
    outcomes for seniors and has the potential to reduce health
    care costs. There are a number of locally driven programs like
    Support and Services at Home (SASH) in Vermont that are showing
    promising results.

    Q.20. Listening to Assisted Families and Advocates--If
    confirmed, do you plan to meet with assisted families and
    organizations that advocate on behalf of HUD program
    participants and low-income families?

    A.20. Yes.

    Q.21. Do you support dialogue between HUD staff and organized
    tenant groups to assist HUD in its oversight of housing
    programs?

    A.21. Yes.

    Q.22. Potential Conflicts of Interest--I understand that your
    husband works at a mortgage firm that deals with both HUD-
    backed and Government Sponsored Enterprise-backed multifamily
    and other mortgages. Is that correct?

    A.22. Yes, my husband, Chuck Patenaude is employed by Dougherty
    Mortgage, LLC.

    Q.23. If so, how are you planning to make sure that you do not
    have the appearance of any conflicts of interest with your
    husband's firm?

    A.23. At all times, I will abide by the terms of my executed
    Ethics Agreement. I will take the following steps to avoid any
    actual or apparent conflicts of interest. I will not
    participate personally and substantially in any particular
    matter that to my knowledge has a direct and predictable effect
    on my husband's compensation and employment with Dougherty
    Mortgage, LLC. I will also not participate personally and
    substantially in any particular matter involving specific
    parties in which I know Dougherty Mortgage, LLC is a party or
    represents a party.

    Q.24. HUD Staffing and Program Oversight--According to HUD's
    FY2017 Congressional Justifications, the Department ``confronts
    two major challenges: (1) HUD has experienced the greatest
    percentage decline of permanent career employees across the
    Government from 2005 through 2014 and (2) HUD possesses the
    highest percentage of any agency of career permanent employees
    eligible to retire by 2019. This retirement wave can cause a
    loss of leadership and institutional knowledge at all levels.''
    Such a loss could also cause a failure to ensure that the
    Department is upholding its duties to taxpayers by ensuring the
    quality of federally assisted housing, enforcing program rules,
    and overseeing FHA lending programs, for example.
        Have you examined the potential impact of a loss of staff
    on HUD's ability to carry out its mission and ensure the public
    trust?

    A.24. If confirmed, I look forward to approaching this issue
    through the work of HUD's agency reform plan. I am confident we
    can maintain the quality of HUD services that the American
    public expects, despite the staff reductions the Department has
    sustained. I look forward to guiding the development of HUD's
    hiring plans to ensure that the most critical needs are met
    rather than maintaining positions that may no longer be needed
    due to technological advancements or from improved ways of
    doing business.

    Q.25. HUD Fair and Equitable Lawsuit--A recent HUD Inspector
    General's audit noted that HUD faces a significant potential
    litigation liability of between $55 million and $650 million
    for an arbitration known as the ``Fair and Equitable
    Arbitration Remedy''. This case has been going on over 10
    years.
        Are you familiar with this case?

    A.25. No, I am not familiar with any pending personnel or labor
    cases at HUD.

    Q.26. If confirmed, will you commit to looking into this case
    and working to wrap it up in a fair fashion?

    A.26. Yes, if confirmed I will commit to looking into this case
    and requesting regular updates from legal counsel.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SHELBY
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. Ms. Patenaude, more than 22 million Americans reside in
    manufactured housing. Manufactured homes are particularly
    important in rural States such as Alabama (where manufactured
    homes are 16.2 percent of occupied housing units, compared to
    7.3 percent nationwide). Manufactured housing is critical in
    addressing housing needs in many rural communities where
    multifamily options are often limited or impractical.
        I have long been an advocate for agencies conducting a
    cost-benefit analysis when crafting regulations. Without this
    analysis, costs are increased without a clear justification
    that the new regulations will lead to improvements that are in
    the best interest of consumers. Can you ensure that HUD
    properly takes into account the economic impacts and necessity
    of new requirements when issuing regulations about the
    construction and installation of manufactured housing?

    A.1. Yes, If confirmed, I look forward to working with you and
    your staff to better understand the unique aspects of this
    industry.

    Q.2. President Trump has asked all Federal agencies to examine
    the way their departments are organized. He has recommended
    that all agencies determine structural plans that allow for
    more efficient and effective operations. Will you commit to
    making sure that manufactured housing is well represented and
    has an active role in any new HUD reorganization?

    A.2. I will. Manufactured housing is the largest source of
    unsubsidized affordable housing in America and a critical
    component of housing rural America. The importance of
    Manufactured Housing will certainly be considered when
    considering any reorganization.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. In 2015, HUD's inspector general found that as many as
    25,000 families received HUD funding despite exceeding income
    limits that determine eligibility for HUD programs. For
    example, one Nebraska-based HUD beneficiary had $1.6 million in
    assets and had an income that was almost twice the income
    threshold. Will you commit to addressing the problem of over
    income families as HUD Secretary?

    A.1. If confirmed, I will review this issue closely.

    Q.2. How will HUD defer to State and local governments under
    your leadership?

    A.2. I believe State and local governments understand their
    communities much better than Washington, DC, based officials.
    If confirmed, I will delegate as much authority as possible
    HUD's regional and field offices. Where the statute allows, I
    will work with State and local leaders to provide flexibility
    with allocated resources. I pledge to continue to develop
    strong working relationships with HUD's partners.

    Q.3. How can HUD avoid interfering with community-based,
    nongovernmental efforts to fight poverty?

    A.3. HUD must respect the role these valuable partners play in
    eliminating poverty and to providing opportunity for our
    Nations' most vulnerable populations.

    Q.4. As HUD Secretary, the late Jack Kemp supported policies
    that were aimed at revitalizing urban areas. How will HUD
    promote urban renewal under your tenure?

    A.4. Consistent with Secretary Kemp's approach, I seek to
    ensure that individuals and communities explore a broad range
    of options to promote urban revitalization efforts. While
    public resources are certainly a component of an overall urban
    strategy, we need a greater reliance on market resources to
    stimulate investments that will improve the quality of life in
    the Nation's communities. The combining of these resource
    streams through an expanded use of public-private partnerships
    and nonprofits will be critical to these revitalization
    efforts. I intend to ensure that HUD will contribute its staff
    expertise to aid communities in developing these partnerships
    and while also ensuring that available HUD financial resources
    are effectively used to promote these efforts.

    Q.5. Much of my State of Nebraska is rural. What unique
    challenges does HUD face in rural areas and how will you
    address them?

    A.5. If confirmed, I pledge to work closely with Members of the
    Congressional Delegation representing rural communities to
    better understand the unique housing and community development
    needs of their constituents.

    Q.6. How will you police waste and protect taxpayer dollars at
    HUD?

    A.6. If confirmed I will work with the program offices to
    improve program oversight to prevent fraud and abuse. I pledge
    to establish a strong working relationship with the office of
    the Inspector General.

    Q.7. When, if at all, should HUD ignore local zoning laws?

    A.7. HUD does not and should not preempt local zoning laws.
    However, HUD can share best practices and encourage local
    communities to consider adopting land use regulations that
    promote the production and preservation of affordable housing.
                                    ------

             RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. The Federal Housing Administration (FHA) has several
    foreclosure avoidance tools at its disposal to keep families in
    their homes. If confirmed, will you ensure that HUD and FHA
    exhaust every possible means of helping a family to avoid
    foreclosure before actually foreclosing on a family?

    A.1. Loss mitigation alternatives to foreclosure, such as loan
    modifications, are very important to HUD and FHA. These
    alternatives not only help borrowers stay in their homes, but
    can reduce losses for FHA. FHA has in place a clear set of
    requirements for lenders to evaluate the borrower's situation
    and extend appropriate loss mitigation options to borrowers
    interested in staying in their home. If confirmed, I will
    ensure that FHA will continue to provide alternatives to
    foreclosure tailored to the borrower's hardship circumstances.

    Q.2. Given your work on affordable housing in the past and the
    time that you have now had to review the President's FY18
    budget request for HUD, do you personally believe there are any
    programs that are proposed to be cut for which funding should
    be maintained or increased?

    A.2. As a life-long housing practitioner and advocate I have
    witnessed the positive outcomes these programs can achieve but
    I am also aware of the urgent need to reform programs to create
    efficiency and achieve greater outcomes for the program
    participants. As I stated during my confirmation hearing, I was
    not involved in the budget development process. If confirmed, I
    will be an advocate for programs with proven track records of
    success. I will bring my housing perspective to future budget
    debates.

    Q.3. The National Low Income Housing Coalition (NLIHC) has
    described the National Housing Trust Fund, which I authored, as
    ``the first new housing resource in a generation. It is
    exclusively targeted to help build, preserve, and rehabilitate
    housing for people with the lowest incomes.'' NLIHC also
    recently reported that our nation has ``a shortage of 7.4
    million affordable rental homes available to the lowest income
    people.'' If confirmed, will you commit to working with me to
    preserve the National Housing Trust Fund?

    A.3. If confirmed, I will commit to implementing the existing
    resources provided to the department for the National Housing
    Trust Fund in accordance with all statutes and regulations in
    the most efficient and effective manner.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
             SENATOR MENENDEZ FROM PAMELA HUGHES PATENAUDE

    Q.1. During your nomination hearing, you repeatedly stated that
    you support the President's fiscal year 2018 budget request.
    Included in the request is the proposed elimination of the
    Community Development Block Grant program, the HOME Investment
    Partnership Program, and the Choice Neighborhoods program, as
    well as significant cuts to the Public Housing Operating and
    Capital Funds, to the Tenant Based Rental Assistance program,
    and to the Section 811 Housing for Persons with Disabilities
    program. When asked about large-scale cuts to HUD's programs
    during his nomination hearing, Secretary Carson said that it
    would be ``cruel and unusual punishment to withdraw those
    programs before you provide an alternative route.'' If enacted
    in its current form, will this budget proposal increase housing
    instability and homelessness?

    A.1. In the short term, if Congress funds HUD at the proposed
    level, I believe it will take some time to spend down the
    existing unobligated budget authority. If Congress maintains
    this level of funding beyond the short term, these are concerns
    that will need to be monitored.

    Q.2. Do you support elimination of the Community Development
    Block Grant program as proposed in the budget? If you do
    support the budget, please explain what specific alternative
    funding mechanisms will be provided to States, cities, and
    localities to fill the void created by elimination of the
    program.

    A.2. The proposed FY2018 budget does not request new funding
    for CDBG, although unexpended budget authority and staffing
    remains. As a life-long housing practitioner and advocate for
    CDBG, I've seen the great outcomes this flexible program can
    achieve. But CDBG's flexibility, one of its greatest virtues,
    can also be a curse. For every example of housing created,
    detractors can point to cities where mayors have used these
    dollars to plug budget holes. Better targeting in areas such as
    lead abatement, low- to moderate-income housing production/
    preservation and blight elimination would create more
    measurable results. As the President's nominee, I support the
    Administration's proposed budget, which balances priorities
    governmentwide. If confirmed, I will bring a robust,
    practitioner's view to future internal budget deliberation
    processes. Further, if confirmed, I look forward to working
    with Congress on policy reforms to improve the programs of the
    department into the future.

    Q.3. Do you support elimination of the HOME Investment
    Partnership program as proposed in the budget? If you do
    support the budget, please explain what specific alternative
    funding mechanisms will be provided to States, cities, and
    localities to fund the creation of affordable housing for low-
    income households.

    A.3. As Secretary Carson laid out in his hearings last week,
    the Budget reflects hard choices to maintain fiscal
    responsibility. When the previous Administration reduced HOME
    program funding below $1B, it resulted in national allocations
    that can make it difficult for recipients to achieve the goals
    of the program. As I said in the previous question, HOME, like
    CDBG, has produced some positive outcomes. It has also been the
    subject of national media attention surrounding the misuse of
    these Federal funds. Significant unexpended budget authority
    remains. If confirmed, I commit to ensuring the efficient and
    effective utilization of all available HUD resources. I look
    forward to working with the Congress, State and local
    governments, and private sector partners to identify mechanisms
    and means to support the development and preservation of
    affordable housing.

    Q.4. Do you support elimination of the Choice Neighborhoods
    program as proposed in the budget? If you do support the
    budget, please explain what specific alternative funding
    mechanisms will be provided to revitalize distressed public and
    assisted housing and their surrounding communities. I support
    place-based strategies. Choice Neighborhoods and the iterations
    of the HOPE program have created some strong communities.
    Although, many believe it can lead to gentrification and may be
    at odds with a mobility or high opportunity area strategy. The
    RAD program is showing promising results.
        Do you support a 67 percent reduction to the Public Housing
    Capital Fund as proposed in the budget? If you do support the
    budget, please provide a detailed explanation of what funding
    sources public housing agencies can utilize to address the
    backlog of capital repairs estimated in 2010 to be at $26
    billion and increasing each year.

    A.4. This account faces pressure every year. No matter what
    amount is appropriated, the repair estimates continues to grow.
    If confirmed, I would very much welcome the opportunity to work
    with Congress on finding additional ways to address the capital
    backlogs.

    Q.5. Do you support a 12 percent reduction to the Public
    Housing Operating Fund as proposed in the budget? If you do
    support the budget, please describe how this proposed cut will
    impact public housing agencies' ability to operate and maintain
    the country's 1.1 million public housing units. Please also
    describe how the proposed cut will impact the residents living
    in public housing units.

    A.5. HUD career staff advise that this funding level will
    support existing households and that this is a first step
    towards holistic rental reforms. If confirmed, I commit to
    working with stakeholders to identify fiscally sustainable
    options to transform this antiquated delivery system. Voluntary
    PHA consolidations may be one option. ACC conversion may be
    another. Local decision making and flexibility is critical.

    Q.6. Do you support a nearly 5 percent reduction to the Tenant
    Based Rental Assistance account as proposed in the budget? This
    proposed cut will result in elimination of approximately
    250,000 housing vouchers, nearly 8,000 of which are in New
    Jersey. If you do support the budget, how would you propose
    addressing the resulting increased housing instability and risk
    of homelessness?

    A.6. I'm advised by HUD staff that these funding levels support
    existing households. I think some of these numbers are very
    hard to project under our current system. As a life long
    housing practitioner and advocate, I believe in the goals of
    the Section 8 program. As I stated during my confirmation
    hearing, I was not involved in the budget development process.
    As the President's nominee, I support the Administration's
    budget request. If confirmed, I will bring my housing
    perspective to future budget debates.

    Q.7. Do you support a 17 percent reduction to the Section 811
    Housing for Persons with Disabilities program as proposed in
    the budget? This proposed cut would result in the elimination
    of approximately 6,800 homes, nearly 200 of which are in New
    Jersey. If you do support the budget, please explain what
    specific alternative funding sources will be used to subsidize
    supportive rental housing that allows persons with disabilities
    to live independently in the community.

    A.7. HUD staff have advised that these funding levels support
    existing households. I think some of these numbers are very
    hard to project under our current system. As a life long
    housing practitioner and advocate, I believe in the goals of
    the Section 811 program. As I stated during my confirmation
    hearing, I was not involved in the budget development process.
    As the President's nominee, I support the Administration's
    budget proposal. If confirmed, I will bring my housing
    expertise and perspectives to future budget debates.

    Q.8. Do you support the elimination of the Housing Trust Fund
    as proposed in the budget?

    A.8. I will commit to efficient utilization of all resources
    provided to the Housing Trust Fund. I am aware of the fact that
    GSE reform could impact the funding level.

    Q.9. In 2014, you spoke positively about the Federal Housing
    Administration's Blueprint for Access, which unveiled the
    Homeowners Armed with Knowledge (HAWK) Program--pairing a
    modest decrease in mortgage insurance premiums with pre- and
    post-purchase housing counseling for first-time homebuyers. You
    called the HAWK program a ``particularly welcome development''
    and said that it ``recognizes that it is possible to increase
    mortgage access for underserved borrowers without exposing
    lenders and taxpayers to significantly greater risk.'' Do you
    still hold the view that the Federal Housing Administration
    should pursue such programs, and will you recommend to the
    Secretary that he consider initiatives such as HAWK that expand
    access to mortgage credit for underserved but creditworthy
    borrowers?

    A.9. If confirmed, I look forward to working with Congress to
    better understand the concerns about this proposal.

    Q.10. FHA-insured loans are an essential source of mortgage
    credit for minority homebuyers. During the last two decades, a
    third of all African American and Latino borrowers have used
    FHA-insured loans. And since 2008, approximately half of all
    African-American and Latino households looking to buy homes
    received mortgage loans insured by FHA. This is in comparison
    to FHA's average market share of 13 percent over its 81-year
    history.
        What is your vision for the Federal Housing Administration?
    How will you ensure that the mutual mortgage insurance fund
    remains strong and that HUD serves it mission to provide access
    to mortgage credit for underserved borrowers, many of whom are
    minorities and first-time homebuyers?

    A.10. I agree with the Secretary that FHA should continue to
    help low- and moderate-income, minority and first-time
    homebuyers access to affordable credit to achieve sustainable
    homeownership. FHA has played an important countercyclical
    role. We must balance FHA's mission and risk exposure to the
    taxpayer.

    Q.11. Are you willing to revisit the Administration's decision
    to reverse the mortgage insurance premium reduction in January?

    A.11. I support the Administration's decision to suspend the
    proposed FHA mortgage insurance premium reduction. I believe
    further analysis is required to evaluate the impact of any
    premium reduction on the health of the MMI fund and the risk to
    taxpayers.

    Q.12. In prior articles, you have written about low
    homeownership rates and particularly among African Americans
    and Latinos. In recent years, advances in alternative data and
    credit scoring models have made it possible to generate credit
    scores for individuals that were previously ``unscoreable.''
    Both the GSEs and FHA have taken steps to explore the viability
    of alternative credit scoring models. As Deputy Secretary, will
    you recommend to Secretary Carson that FHA research and
    consider alternative credit scoring models that would provide
    credit scores for individuals that may not be able to otherwise
    qualify for a mortgage loan?

    A.12. Yes, as we discussed during our meeting in your office,
    if confirmed, I will continue to explore alternative credit
    models.

    Q.13. What specific policy recommendations would you make to
    Secretary Carson to expand housing opportunities that will
    allow our nation's low-income elderly to maintain independence
    and age in place?

    A.13. Housing an aging population represents a major challenge
    for the United States. By 2030, the senior population is
    projected to exceed 74 million, representing more than one in
    five Americans. Over the next 15 years, millions of Baby
    Boomers will seek to ``age in place'' in their own homes and
    communities. Yet many of our homes and communities lack the
    structural features and support services to enable safe,
    independent living by seniors. The Bipartisan Policy Center
    (BPC) Housing Commission, which I led as director, identified
    the desire of seniors to age in place as a ``new frontier'' in
    housing policy. If confirmed, I intend to help focus the
    Department on this critical issue. Strong leadership at HUD can
    help harness the creativity and resources of the private and
    nonprofit sectors, as well as Government at all levels, to
    respond to the growing need for affordable housing that is also
    suitable for senior living. New and emerging technologies will
    likely play an important role in enabling aging in place. It is
    also more critical than ever to break down the silos in the
    Federal Government to ensure the most effective and efficient
    delivery of services across a broad array of fields, including
    housing, health care, and transportation.

    Q.14. In my State of New Jersey, New Jersey Community Capital
    (NJCC)--a nationally recognized Community Development Financial
    Institution--has been tremendously successful with the loans it
    has purchased through FHA's Distressed Asset Stabilization
    Program (DASP), which allows FHA to sell defaulted mortgages to
    investors. NJCC is able to make modifications to reduce loan
    balances and lower monthly payments for homeowners that are
    behind on their mortgages, allowing them to avoid foreclosure
    and stay in their homes. And where modifications are not
    possible, NJCC has turned foreclosed homes into affordable
    rental housing or new affordable ownership opportunities.
        Will you commit to making improvements to DASP that allow
    community-focused groups like New Jersey Community Capital to
    purchase more loans and therefore achieve better outcomes for
    more homeowners and communities?

    A.14. The Department values all its purchasers, including its
    nonprofit and community-based purchasers. FHA continues to
    review and constantly improve DASP and similar tools to
    maximize recoveries to the insurance fund while also maximizing
    community involvement. If confirmed, I will commit to looking
    at what can be done to ensure the inclusion of community-
    focused groups while still seeking best execution and
    protecting the interests of the taxpayers.

    Q.15. Will you commit to strengthening the program's loss
    mitigation, vacant property, and neighborhood stabilization
    standards so that we can ensure homeowners and neighborhoods
    are the beneficiaries of this program--not private equity firms
    and hedge funds?

    A.15. DASP and all note sales are primarily designed to
    maximize recoveries/reduce losses to the insurance fund--the
    insurance fund's health and viability is the beneficiary. HUD
    is proud of the efforts made to date in strengthening DASP loss
    mitigation, vacant property, and neighborhood stabilization
    elements. If confirmed, I will continue look at ways to improve
    all aspects of the Department's note sales.

    Q.16. The Department of Housing and Urban Development employs
    about 8,300 people nationwide. Job titles and wages, assigned
    during the hiring process, typically set a course for an
    employee's career for years to come. The quest for diversity at
    all levels of Government is an issue of fairness and
    opportunity, and it's fundamentally tied to an inclusive
    workplace. However, decades of social scientific research have
    shown how bias in the employment and hiring process can limit
    opportunities for historically excluded groups. What steps will
    you take as Deputy Secretary to make your agency a more
    inclusive and diverse workforce in both senior and mid-level
    management positions?

    A.16. Working closely with HUD's Office of Departmental Equal
    Employment Opportunity, if confirmed, I look forward to having
    the opportunity to advance the work achieved to date in making
    HUD among the most diverse Federal agencies. I plan to engage
    HUD's Diversity Council to get their feedback on how we can
    continue to improve. EEO will continue to be a key management
    objective in HUD's strategic plan during the Trump
    administration.

    Q.17. The Department of Housing and Urban Development has a
    unique role in empowering disenfranchised communities of color.
    This is an area about which I care deeply. Understanding the
    challenges that these communities face, be it housing
    discrimination, affordability, homelessness, limited employment
    opportunities, or other, will require a diverse workforce at
    the most senior level to help you carry out the agency's
    mission. What steps will you take as Secretary of Housing and
    Urban Development to ensure the strategic planning and mission
    of the Department is led and crafted by people who look like
    the communities they serve?

    A.17. Over half of HUD's employees are from minority
    populations as well as 44 percent of the career senior
    leadership team. In further building the team, I am committed
    to ensuring diversity is a critical component of all hiring
    decisions. Additionally, if confirmed as Deputy Secretary, I
    will work closely with HUD staff on a comprehensive stakeholder
    outreach plan in addition to the great work Secretary Carson
    has already conducted during his listening tour.

    Q.18. The President's budget request includes a general
    provision increasing tenant rent contributions from 30 percent
    to 35 percent of income. According to the Department's own
    estimates, for households living in units receiving subsidies
    through the section 8 project-based rental assistance program,
    this proposal would result in a nearly 22 percent tenant rent
    increase in the first year, and a 31 percent rent increase in
    subsequent years. In addition, the Department calculated that a
    staggering 64 percent of the population impacted by the
    proposed rent increases are elderly or disabled.
        Do you believe that tenant rent increases of 22 percent and
    31 percent are significant?

    A.18. I believe the idea is that the move to gross rent
    proposal would help simplify rents by relying on gross income
    rather than adjusted income. If confirmed, I commit to working
    with Congress and stakeholders on a rental reform package that
    improves the efficiency and effectiveness of HUD rental
    assistance programs, to allow us to serve as many as possible
    without displacing currently-served households.

    Q.19. In your opinion, how will the impacted elderly and
    disabled households--the vast majority of whom live on fixed
    incomes--be able to afford a 22 percent and ultimately 31
    percent rent increase?

    A.19. Please see the answer above.

    Q.20. Do you believe that a 22 percent rent increase, and
    ultimately a 31 percent rent increase, on the Nation's lowest-
    income families, elderly, and persons with disabilities will
    increase housing instability? If not, please explain.

    A.20. Please see the answer above.

    Q.21. Both you and Secretary Carson have repeatedly stated that
    there is a greater role for State and local governments to play
    in the provision of housing assistance and the development of
    affordable housing. I agree that States and local governments
    have a critical role to play, but they are not able to do it
    alone. As a former mayor, I understand that our cities need a
    strong Federal partner, particularly when it comes to
    investments. What specific evidence have you considered that
    leads you to believe State and local governments have the
    financial resources to take on more of this responsibility?

    A.21. As a life-long housing practitioner, I support the goals
    of HOME and CDBG. Many States and some cities have established
    housing trust funds. These communities have decided housing is
    important and have taken the necessary steps to support it.
    State and local governments can eliminate exclusionary and non-
    value-added regulations that unnecessarily increase the cost of
    housing and restrict the supply of affordable housing. Reducing
    regulatory barriers will enable Federal investments in the
    production and preservation of affordable housing to extend its
    reach.
                                    ------

           RESPONSES TO WRITTEN QUESTIONS OF SENATOR HEITKAMP
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. Wrap Around Services--In past writing, you've stated that
    in order to address some of our long term housing needs--
    particularly for older Americans--we need to better integrate
    health care and other supportive services with housing. I share
    this view and strongly believe that we need a more holistic
    approach to housing services in this country.
        During your distinguished career working on these issues,
    what policies and programs have you seen that effectively
    adopted a holistic approach to housing services?

    A.1. Yes, effective service coordination can improve health
    outcomes for seniors and has the potential to reduce health
    care costs. There are many locally driven programs like Support
    and Services at Home (SASH) in Vermont that are showing
    promising results.

    Q.2. What can Congress do to work with HUD to advance these
    types of holistic housing programs?

    A.2. If confirmed, I look forward to working with Congress to
    develop viable solutions and ways to better account for savings
    in other Federal programs when HUD provides a less expensive
    service delivery option.

    Q.3. Do you support HUD's recent hard push toward housing first
    policies, which have put many effective transitional housing
    facilities at risk of losing funding?

    A.3. Evidence based research demonstrates that a Housing First
    approach is an effective strategy to improve health outcomes
    for individuals suffering from substance abuse. If confirmed, I
    pledge to work with your office to ensure that the unique needs
    of your constituents are addressed.

    Q.4. Trauma/Native American Housing--The evidence is clear that
    children who have had four or more adverse childhood
    experiences--such as living in poverty or facing exposure to
    physical or mental abuse--have a 20 year difference in life
    expectancy. In North Dakota, we see this throughout our Native
    American communities who are struggling with poor housing
    conditions, among other challenges.
        Will you commit to help design and improve trauma-informed
    policies at HUD and work to address the housing challenges
    facing our Native American communities?

    A.4. If confirmed, I look forward to working with you and
    members of your staff, as well as continuum of care providers,
    to identify specific policy solutions to address the acute
    needs of domestic violence victims. As I mentioned during my
    meetings with your staff, I would welcome the opportunity to
    travel to North Dakota to visit Indian country and to learn
    more about the challenges these communities are facing. Working
    together, I'm confident we can find viable solutions to address
    the unique housing needs of Americans living in rural
    communities.

    Q.5. What role does having a safe, clean and affordable place
    to live play in helping an individual get a job, avoid drugs
    and crime, and become a productive member of society?

    A.5. Safe, stable housing is a critical platform for
    opportunity and the avoidance of despair.

    Q.6. Homeownership Affordability--In an April 2015 article for
    housingwire, you discussed your concerns with the plunge in
    U.S. homeownership rates, which has hovered around 63 percent
    for the past several years. You concluded that due to high
    student debt, tight credit markets and increasing rents
    millions of families find themselves stuck between a rental
    market they can no longer afford and a homeownership market for
    which they do not qualify.
        What policies do you recommend to help address this fall in
    the homeownership rate? Do you believe that the CFPB's
    qualified mortgage rule has significantly contributed to this
    trend?

    A.6. Regulatory uncertainty has contributed to the decline in
    the homeownership rate. Looking forward, I believe HUD policies
    should stress sustainable and affordable homeownership for
    credit worthy borrowers. Prudent underwriting standards and
    Housing Counseling are critical to achieving sustainable
    homeownership.

    Q.7. GSE Reform--I've asked this question to Secretary Carson
    and I'd like to get your answer as well. Do you believe a
    Federal backstop is necessary to support a 30-year fixed rate
    mortgage?

    A.7. The current state of the Nation's housing finance system
    is unsustainable. I believe the Government should assume the
    catastrophic risk on securities backed by standard, long-term
    fixed-rate mortgages to maintain broad access to sustainable
    homeownership. If confirmed, I look forward to making a
    meaningful contribution to this dialogue.
                                    ------

               RESPONSES TO WRITTEN QUESTIONS OF SENATOR
               CORTEZ MASTO FROM PAMELA HUGHES PATENAUDE

    Q.1. President Trump's FY18 budget proposal includes several
    legislative proposals aimed at increasing rents on HUD-assisted
    households, especially households in the Section 202 Housing
    for the Elderly, Section 811 Housing for Persons with
    Disabilities, and Project-Based Rental Assistance programs. The
    budget states that existing hardship exemptions would apply,
    but HUD's own research \1\ has shown that these hardship
    exemptions have functioned poorly, with 82 percent of housing
    authorities reporting that they provided hardship exemptions to
    less than 1 percent to families subjected to minimum rents.
    Further, HUD has yet to comply with a recently passed law (P.L.
    No: 114-201) requiring the Agency to certify to Congress that
    hardship exemptions are being enforced.
    ---------------------------------------------------------------------------
         \1\ https://www.huduser.gov/portal/publications/affhsg/
    srrf_2011.html
    ---------------------------------------------------------------------------
        Do you agree with the policy proposal to experiment on
    increasing rents on America's poorest households, especially
    the elderly and persons disabilities, with what little we know
    about the enforcement of hardship exemptions and during a time
    when housing options are becoming scarcer for the over 11
    million households rent burdened in this country?

    A.1. I believe Federal rental policies need significant reform.
    The current calculation process is very complicated and I am
    sensitive to the belief that every assisted person should
    contribute some amount toward his or her rent. The policy
    proposal, I believe includes an ``up to'' qualifier to provide
    the Secretary with some flexibility to adjust the impact of
    this change. Regardless, this proposal is a first step toward a
    holistic reform. If confirmed, I very much look forward to
    working with you on policy reforms.

    Q.2. At what rate to you estimate that hardship exemptions
    would be granted pursuant to the rent reform proposals outlined
    in the budget?

    A.2. If confirmed, I commit to working with Congress and
    stakeholders on any enacted rental reform package. I believe
    any policy change should have a defined process to grant
    hardship exemptions. The rules should be clear and unambiguous.
    Thus, once clear eligibility standards are established, 100
    percent of those eligible should be granted an exemption.

    Q.3. Earlier this month, with Senator Rubio from Florida, I
    sent a letter to Secretary Carson regarding a change proposed
    in the President's 2018 budget as it relates to reverse
    mortgages. Our letter raised concerns that the President's
    budget may imperil widows and widowers that seek to continue
    living in their home after the death of their husband or wife.
    Can you please explain, in detail, the rationale for requesting
    this statutory change, how it might interact with existing,
    related Mortgagee Letters, and any estimated impact on both
    surviving spouses and the Mutual Mortgage Insurance Fund?

    A.3. If confirmed, I look forward to working with you and
    Senator Rubio on this important issue. HUD staff informs me
    that in 2014, to protect the residency status of nonborrowing
    spouses, HUD added safeguards on newly issued reverse
    mortgages. The April 2014 Mortgagee Letter 2014-07 extended FHA
    insurance coverage to nonborrowing spouses so the period of
    time following the death of the last surviving mortgagor was
    further deferred based on the continued satisfaction of the
    requirements for a Nonborrowing Spouse.
        As HUD advances changes to stabilize the HECM reverse
    mortgage program, including those to meet the minimum capital
    ratio goals for FHA budget purposes, I have been assured that
    none of the changes would result in surviving spouses losing
    their current contractual rights to continue to stay in their
    home as long as they continue to stay current on taxes,
    insurance and reasonably required repairs.
        I am further informed that for those nonborrowing spouses
    on HECM contracts prior to April 2014, borrowers retain the
    ability to refinance to gain the protections included in new
    HECMs.

    Q.4. In your testimony, you note that as Assistant Secretary
    for Community Planning and Development, you supported HUD's
    role in the Gulf Coast recovery after Hurricanes Katrina and
    Rita. As you know, HUD's role in that recovery was
    controversial. Most significantly, HUD was sued by the NAACP
    and fair housing advocates over the formula they used to
    compensate homeowners for storm losses. After a lengthy court
    battle, under the Obama administration, HUD agreed to settle
    claims of racial discrimination for $62 million. \2\ During the
    Presidential campaign, Secretary Carson conceded that he
    wouldn't know what to do if a hurricane struck. \3\ So HUD will
    be relying on you to ensure the fair and efficient allocation
    of disaster resources. What was your role in the Road Home
    program, and what lessons did you learn from this episode that
    you would use at HUD, if confirmed?
    ---------------------------------------------------------------------------
         \2\ https://portal.hud.gov/hudportal/documents/
    huddoc?id=RoadHomeSettlement.pdf
         \3\ http://abcnews.go.com/Politics/video/ben-carson-handle-
    hurricane-joaquin-34162816

    A.4. The ``Road Home'' was the name Louisiana gave its recovery
    program. The State had to create an action plan and submit it
    to HUD for review. The language Congress included in the
    appropriation that funded this recovery was quite interesting.
    The Congress directed that the Secretary ``shall waive'' any
    provision of any statute or regulation that the Secretary
    administers upon a request by the State that such waiver is
    required to facilitate the use of such funds. This was the
    first time the Congress used the term ``shall''. This ``shall''
    language limited HUD's involvement dramatically. Over the years
    the Congress rolled ``shall'' back to ``may'', so HUD has much
    more involvement in the process than it did under my tenure as
    assistant secretary of Community Planning and Development and I
    believe this is a good evolution. Congress is still very
    prescriptive when it comes to the allocation of these dollars,
    but if confirmed, I will work to find ways to improve the
    timeliness of the data HUD uses to make the allocation
    determinations. Louisiana's Road Home program was a very labor-
    intensive process. It took a long time for a recipient to work
    through that process and that slowed recovery down immensely.
    Many lessons were learned for the response to Hurricane
    Katrina. I would note that disaster recovery is an excellent
    example of where CDBG is used in a very targeted way to produce
    ---------------------------------------------------------------------------
    important results.

    Q.5. Secretary Carson, in his listening tour across the
    country, has suggested that public and affordable housing
    developments were somehow too lavish. \4\ And earlier this
    month in an interview he said, ``poverty is a state of mind.''
    \5\ I think that views like this can make it difficult for
    seniors, veterans, and people with disabilities to have
    confidence that the leadership at HUD has their best interests
    in mind. Do you agree with Secretary's Carson's views that
    ``poverty is a state of mind?''
    ---------------------------------------------------------------------------
         \4\ https://www.nytimes.com/2017/05/03/us/politics/ben-carson-hud-
    poverty-plans.html?mcubz=1&_r=0
         \5\ http://www.npr.org/2017/05/25/530068988/ben-carson-says-
    poverty-is-a-state-of-mind

    ---------------------------------------------------------------------------
    A.5. Secretary Carson clarified his remarks on this issue.

    Q.6. Federal Housing Administration-backed loans have helped
    millions of Americans attain homeownership, especially first-
    time and minority buyers who may've been locked out of other
    sources of credit. FHA insurance also stepped into the void
    after the private mortgage market collapsed in 2008.
        As Congress contemplates housing finance reform, will you
    commit to protecting the important role of FHA lending,
    including its low downpayments and affordable premiums?

    A.6. Yes.

    Q.7. To the extent that HUD maintains the Distressed Asset
    Stabilization Program--which sells off delinquent FHA loans in
    bulk to institutional investors like private equity funds--will
    you commit to preserving the neighborhood stabilization and
    borrower protection guardrails put in place in 2016?

    A.7. The department is proud of the efforts made to date in
    strengthening DASP loss mitigation, vacant property, and
    neighborhood stabilization elements. If confirmed, I will
    continue to look to improve on this program.

    Q.8. The previous Administration wrote rules to ensure that all
    housing programs at HUD serve people without regard for sexual
    orientation or gender identity. These rules are particularly
    important for homeless youth, who disproportionately identify
    as LGBTQ. Will you commit to upholding nondiscrimination
    protections for LGBTQ people seeking housing, particularly
    homeless youth?

    A.8. Yes.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ
                      FROM PAMELA HUGHES PATENAUDE

    Q.1. As deputy secretary of HUD, you would be in charge of
    implementing HUD's programs.
        Do you think the Administration's budget, which proposes to
    slash HUD's budget by $6.7 billion (a 13 percent cut), would
    make it harder for you to do your job?

    A.1. If the Congress were to enact a reduction at this level,
    the short run issues of redeploying and reallocating staff
    would increase the operational workload, but in the long run,
    it could create efficiencies.

    Q.2. Given your extensive experience at HUD and knowledge of
    these programs, do you think cuts of this size are a good idea?

    A.2. As a life-long housing practitioner and advocate I've seen
    the positive outcomes these programs can achieve. If confirmed,
    I look forward to working with Congress to create viable
    solutions to address the changing housing and community
    development needs of our Nation.

    Q.3. Do you think the President's budget would increase or
    decrease the availability of affordable housing?

    A.3. If the Congress were to appropriate funding at the
    proposed levels, it would take time for the current level of
    unobligated budget authority to spend down.

    Q.4. Do you think the Federal Government should continue to
    fund programs to reduce homelessness and provide affordable
    housing?

    A.4. Without question. The Federal Government should continue
    to fund programs to reduce homelessness, particularly among at-
    risk youths and veterans, and continue to support funding for
    affordable housing for our most vulnerable populations,
    including low-income seniors and persons with disabilities.

    Q.5. In your experience, do you think that it is realistic to
    assume that State and private funds can make up for a loss of
    $6.7 billion in Federal funding?

    A.5. It would take time for currently appropriated funds to
    spend down, but it would also take time for States to adjust
    their budgets to reallocate their resources for this purpose.
    Some States have a 2-year budget process. Likewise, I think it
    would take some time to ramp up private sector and
    philanthropic participation.

    Q.6. The budget proposes cutting the rental assistance program
    by $2 billion through ``policies that encourage work and self-
    sufficiency, including increases to tenant rent
    contributions.''
        Do you agree that the Federal Government should shift $2
    billion of the cost of subsidized housing on to the low-income
    families that the program is supposed to serve?

    A.6. I believe rent reform is a discussion worth having.

    Q.7. Do you think that increasing the cost burden for low-
    income families will help them achieve greater self-
    sufficiency?

    A.7. There is certainly evidence that it can happen.

    Q.8. Many of the proposed cuts in the President's budget are
    intended to pay for tax cuts for corporations and wealthy
    taxpayers. Do you think it is fair to make low-income families
    pay $2 billion more for housing in order to pay for these tax
    cuts?

    A.8. I am only familiar with the broad principles of any
    proposed tax reform.

    Q.9. I am troubled that Secretary Carson believes that public
    housing creates a culture of dependency and that poverty is a
    ``state of mind.'' The evidence demonstrates just the opposite-
    stabilizing housing for low-income families is very effective
    in lifting families out of poverty.
        In your prior experience at HUD, did you find that HUD's
    affordable housing programs created a culture of dependency?

    A.9. I am sure examples of how HUD programs can create
    dependency and as a platform for opportunity can both be
    documented.

    Q.10. Do you agree or disagree with Secretary Carson's belief
    that poverty is a ``state of mind?''

    A.10. Secretary Carson clarified his remarks in recent press
    interviews and before the Senate and House appropriations
    committees.
                  Additional Material Supplied for the Record
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