[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.

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             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.
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        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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                                ------                                


        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
 LETTERS SUBMITTED IN SUPPORT OF THE NOMINATION OF KEVIN ALLEN HASSETT
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    LETTERS SUBMITTED IN SUPPORT OF THE NOMINATION OF PAMELA HUGHES 
                               PATENAUDE
                               
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]