[Senate Hearing 116-475]
[From the U.S. Government Publishing Office]
S. Hrg. 116-475
NOMINATION OF DEREK T. KAN
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HEARING
BEFORE THE
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
NOMINATION OF HON. DEREK T. KAN TO BE DEPUTY DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET
__________
JUNE 30, 2020
Available via the World Wide Web: http://www.govinfo.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-259 PDF WASHINGTON : 2021
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio GARY C. PETERS, Michigan
RAND PAUL, Kentucky THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah KAMALA D. HARRIS, California
RICK SCOTT, Florida KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
Gabrielle D'Adamo Singer, Staff Director
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Andrew J. Timm, Professional Staff Member
David M. Weinberg, Minority Staff Director
Zachary I. Schram, Minority Chief Counsel
Laura W. Kilbride, Chief Clerk
Thomas J. Spino, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 1
Senator Peters............................................... 1
Senator Portman.............................................. 9
Senator Carper............................................... 12
Senator Lankford............................................. 14
Senator Hassan............................................... 16
Senator Rosen................................................ 19
Senator Hawley............................................... 21
Senator Scott................................................ 24
Prepared statements:
Senator Johnson.............................................. 27
Senator Peters............................................... 28
WITNESSES
Tuesday, June 30, 2020
Hon. Derek T. Kan to be Deputy Director, Office of Management and
Budget
Testimony.................................................... 3
Prepared statement........................................... 30
Biographical and professional information.................... 31
Letter from U.S. Office of Government Ethics................. 59
Responses to pre-hearing questions........................... 65
Responses to post-hearing questions.......................... 108
APPENDIX
John Hopkins University Chart.................................... 112
NOMINATION OF HON. DEREK T. KAN
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TUESDAY, JUNE 30, 2020
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m., via
video conference. Hon. Ron Johnson, Chairman of the Committee,
presiding.
Present: Senators Johnson, Portman, Lankford, Scott,
Hawley, Peters, Carper, Hassan, Sinema, and Rosen.
OPENING STATEMENT OF CHAIRMAN JOHNSON\1\
Chairman Johnson. The hearing will come to order. Today we
are considering the nomination of Mr. Derek Kan to be the
Deputy Director of the Office of Management and Budget (OMB). I
want to first thank Mr. Kan for your current service to this
nation and your willingness to step up to the plate and take on
this role as a confirmed deputy director.
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\1\ The prepared statement of Senator Johnson appears in the
Appendix on page 27.
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The role of the Deputy Director of the Office of Management
and Budget varies with each Administration. In general, the
Deputy Director supports and advises the OMB Director in the
development, management, and administration of the President's
budget and oversees the execution of the President's management
agenda across the executive branch. In addition, the Deputy
Director oversees the entire agency, including the Deputy
Director of Management, as well as eight OMB support offices.
I have to admit, I am not sure I would want to necessarily
work in OMB, and you can talk to Senator Portman on that. Even
though I am a bean counter, it is such an enormous
responsibility and there is so much information that you have
to deal with. But I certainly appreciate those of you who do.
So again, I want to thank the nominee and I will turn to
over to Senator Peters.
OPENING STATEMENT OF SENATOR PETERS\2\
Senator Peters. Thank you, Mr. Chairman, and thank you Mr.
Kan for being here today and for your willingness to serve in
this very important and very challenging role.
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\2\ The prepared statement of Senator Peters appear in the Appendix
on page 28.
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Today we are considering Mr. Kan's nomination to serve as
the Deputy Director of the Office of Management and Budget,
which shapes budget and policy decisions across the Federal
Government. For the past several months OMB has been a central
part of the administration's response to our ongoing public
health and economic crisis.
Mr. Kan, you have held a senior role at OMB for the past
year, including serving as OMB's representative on the White
House Coronavirus Task Force. The role of the Task Force, and
of OMB in particular, is to ensure coordination across
departments and agencies that are involved in the response to
this pandemic.
Unfortunately, since the onset of the coronavirus pandemic,
a lack of effective coordination and a cohesive strategy has
actually hindered our response efforts and has contributed to
the tragic loss of over 120,000 American lives.
Containing and ultimately defeating this pandemic will
continue to be an enormous challenge going forward. We should
not have to contend with the added challenge of inconsistent
and conflicting messages from within the Administration. It
should not be a challenge for the American people to be able to
get straightforward answers about the government's response,
and States should not have to grapple with the additional
challenge of uncertainty and confusion over how Federal
resources are being allocated. Congress and the Administration
must work together if we are going to learn from past missteps
and effectively address this pandemic moving forward.
Mr. Kan, from your time at the Department of Transportation
(DOT) I know you to be a talented and thoughtful leader who can
work collaboratively with Congress and others to find common
ground. I know we share the goals of containing this deadly
virus and of safely reopening our economy. But to do so, we
also need a shared understanding of the facts on the ground and
the progress made so far.
I hear regularly from small business owners, hospitals, and
vulnerable communities in Michigan who are struggling but are
unable to access relief programs we designed specifically to
help them. We need clear information about how resources are
being allocated. We need data to understand whether relief is
reaching those who are most in need and fix programs that are
simply not working.
I am pleased that OMB has begun taking steps to cooperate
with the Government Accountability Office's (GAO) oversight of
the coronavirus response, and I appreciate OMB's work with
Congress on previous coronavirus relief legislation. But we
have a lot more to do, and I hope that if you are confirmed you
will be a champion for transparency and oversight both within
OMB and throughout this Administration.
So thank you again, Mr. Kan, and I look forward to your
testimony here today.
Chairman Johnson. Thanks, Senator Peters. It is the
tradition of this Committee to swear in witnesses, so, Mr. Kan,
if you would please raise your right hand. Do you swear that
the testimony that you will give before this Committee will be
the truth, the whole truth, and nothing but the truth, so help
you, God?
Mr. Kan. I do.
Chairman Johnson. Thank you.
Derek Kan is the Executive Associate Director of the Office
of Management and Budget. Mr. Kan started his career in public
service as a program examiner at OMB, and subsequently spent
over 4 years as a policy advisor in the U.S. Senate Republican
Policy Committee and the Senate Office of the Majority Leader.
Mr. Kan later held numerous positions in the private sector,
most recently as general manager at Lyft, before returning to
public service.
He was twice confirmed by the Senate under the Obama and
Trump administrations, in 2015, as a member of the Amtrak board
of directors, and again in 2017, as the Under Secretary for
Transportation Policy at the Department of Transportation.
Mr. Kan received a bachelor of arts degree from the
University of Southern California, a master's of science in
economic history from the London School of Economics, and
master's of business administration from Stanford Business
School. Mr. Kan.
TESTIMONY OF THE HONORABLE DEREK T. KAN TO BE DEPUTY DIRECTOR,
OFFICE OF MANAGEMENT AND BUDGET
Mr. Kan. Thank you, Chairman Johnson, thank you, Ranking
Member Peters.
In the interest of time I will keep my statement brief by
reading the first and last few paragraphs of my prepared
remarks and submit the rest for the record.\1\
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\1\ The prepared statement of Mr. Kan appears in the Appendix on
page 30.
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Chairman Johnson, Ranking Member Peters, and distinguished
Members of this Committee, I am honored by the opportunity to
come before you as President Trump's nominee for the Deputy
Director of the Office of Management and Budget. I am also
thankful for Director Vought's support of my nomination.
I am grateful for my wife, Connie, and our three kids,
Jordan, Evan, and Avery. They have all made significant
sacrifices in uprooting their lives to move out to DC 3 years
ago to allow me to serve this great nation and this
Administration.
I am also thankful for my parents, Scott and Julie, who
have worked so hard to give me plentiful opportunities
throughout my life. They immigrated here from Taiwan over 40
years ago, with nothing in their pocket, to pursue the American
dream. My mother, who never graduated from college, taught me
the value of hard work and persistence. My father, an engineer,
taught me the value of rigorous analysis and that it is OK to
laugh. Together, they taught me to have a deep respect for
authority, a love for this incredible country, and an
unwavering faith in God. I hope to make them proud in my
service.
It is with a deep sense of humility and gratitude that I
come before you for this nomination. Having worked closely with
the Homeland Security and Governmental Affairs Committee
(HSGAC) when I was a young staffer, I am grateful for the
important work that this Committee does in promoting good
government operations and great transparency and
accountability. Having been a civil servant at OMB, a Senate
staffer working with OMB, and a policy official at DOT working
to implement the guidance of OMB, I would be grateful for this
opportunity to serve as the deputy to improve the management of
our agencies and the finances of our Nation.
You have my commitment that if I am confirmed I will work
collaboratively with each and every one of you to address the
needs of our Nation. Thank you for the opportunity to come
before you and I would be pleased to answer any questions you
may have.
Chairman Johnson. Thank you, Mr. Kan. There are three
questions the Committee asks of every nominee for the record,
and I will ask those to you now.
Is there anything you are aware of in your background that
might present a conflict of interest with the duties of the
office to which you have been nominated?
Mr. Kan. No, there are not.
Chairman Johnson. Do you know of anything, personal or
otherwise, that would in any way prevent you from solely and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Kan. No.
Chairman Johnson. Do you agree, without reservation, to
comply with any request or summons to appear and testify before
any duly constituted committee of Congress if you are
confirmed?
Mr. Kan. I agree.
Chairman Johnson. Thank you.
Let me just quick start off the questioning. Senator Peters
made a number of statements that I think you may want to
respond to. From my standpoint, I have been here almost 10
years, worked with the Obama Administration and now the Trump
administration, I personally think Coronavirus disease (COVID-
19) is probably the most consequential event in my lifetime,
and I think since World War II, probably, the most
consequential event affecting people's lives, our Federal
budget, so many things that are very difficult to comprehend
and really grapple with.
From my standpoint, I think the Administration has been
incredibly available, accessible, and I would say quite
transparent. I personally am involved weekly a number of calls
every week, whether it is the Department of Health and Human
Services (HHS) or whether it is the Federal Emergency
Management Agency (FEMA), where officials are briefing us, then
taking an hour with that briefing as well as answering
questions.
I think the point I want to make is this is an overwhelming
problem we are dealing with. There is nothing easy about this.
I guess I would just kind of like to give you an opportunity to
kind of respond to what OMB's role has been in this, what you
have had to deal with, and how you have tried to discharge your
responsibilities in such an enormous task.
Mr. Kan. Right. Thank you, Chairman Johnson, and thank you
for the question. This has been an incredibly complex situation
where everything from the information that we are getting was
continually evolving. If we roll back the clock to January, we
were getting very spotty, inconsistent information out of
China.
And so in this fog of war, in this fog of a situation, we
have tried to do the best we could with the information we had.
Early on in January, we were told that the virus was under
control. The day after the World Health Organization (WHO)
declared a global pandemic, we shut down our borders with
China. And since the end of January until today, we have had
tens of thousands of faithful civil servants working nonstop
around the clock.
In terms of effective coordination, the Administration has
multiple calls every week with Governors around the country,
and it is difficult. Governors will often times come and state,
``We have an enormous need.'' As we sit and look at the need,
it is clear that some of the need is maybe exaggerated. Maybe
it is not as accurate as it actually is. So we have been
working collaboratively with State officials, local officials,
with public health officials around the country, and also
around the world, to combat this.
At the end of the day, the last time something like this
happened was over a century ago. There is nobody alive who was
around during the last pandemic. And in my mind, we have gone
from zero testing to now 27 million tests. We have gone from
ventilators that were in sort of the high single digit
thousands to now enough ventilators that we have that we can
help other countries.
So on every dimension we have responded as rapidly as we
could. Resources have never been a problem. We passed 3.5, 4
bills that have been some of the biggest bills in American
history. And so all of us together have a shared responsibility
and a shared commitment to bringing safety back to this
country.
And from my perspective, it seems like every government
official all across the country has been laboring nonstop
trying to respond to this once-in-a-lifetime pandemic.
Chairman Johnson. Yes, it is pretty easy to Monday morning
quarterback. There is no doubt about that. In a previous
hearing with FEMA Administrator Pete Gaynor, we saw some
information on the supply versus demand ratio, and demand was
outstripping supply in some of these basic personal protective
equipment (PPE) items by two or three times. That is difficult
to grapple with.
Again, I do not blame Governors trying to restock their
supply. Maybe they are not in a hot spot. Everybody wants as
much material as possible, but somebody has to make the tough
decisions and that has kind of landed to the Federal
Government.
Office of Management and Budget, let's focus a little bit
on budget and spending. The other thing that OMB and this
Administration has had to grapple with was $2.9 trillion--that
is $2,900 billion dollars of spending that was cobbled together
here in Congress over the course of just a few weeks. I think
we all realized we had to do something massive and we had to do
something fast. We also knew it would be far from perfect.
The fact of the matter is, I cannot quite get the exact
information on how much has been spent. I think the most recent
number, of the $2.9 trillion, about $1.3. Agencies are going
through this, what has been spent, what has been obligated. Do
you have any sense of that? Do you have some updated
information you are willing to share here today?
Mr. Kan. We do, and our staffs, I believe, are working
together on this. Roughly it is about 60 percent, I believe, is
the last report I saw, has been obligated. A significant
portion of that has not yet been obligated. We are working on
the Economic Support Fund, which is Treasury working with Fed.
I believe it is about $500 billion. That has not yet been
obligated because that is held in reserve as the Fed stands up
these facilities.
So if you back that out, we have obligated about 60 to 70
percent. And if you take a step back, the bill was the biggest
bill in American history. We are 13 or 14 weeks since passage
of that bill, and we have obligated an unseemly amount of money
to every corner of the country, as quickly as we could. As we
do this, we are trying to be faithful stewards of the taxpayer
resources. We are trying to make sure that reporting and
internal controls are set up. But some of these programs were
new programs, and it is difficult to stand up new programs in
the middle of a crisis. We are building a plane as we are
midair.
And so 70 percent of the money has gone out. Chairman
Johnson, I know that this has been a significant interest of
yours, and actually I want to thank you for being a leader on
this topic and making sure that we are continually tracking
these obligations closely.
Chairman Johnson. OK. Spending is different from
obligating, so is it relatively true we have spent about $1.3,
and then so we have obligated another $600 billion, let's say?
Is that about----
Mr. Kan. That is roughly correct. I can pull up the numbers
after and sit down with your staff. But spending occurs after--
when you say spending I think that relates more to outlays than
obligations. Obligations are a commitment to spend, and then
the outlay is the spending.
Chairman Johnson. OK. No, I would appreciate that,
following up with my staff.
The final point I want to make is Senator Rick Scott led a
letter to the States, trying to get information from the States
in terms of how they have spent the $150 billion that we have
already allocated out to them. I am not sure. I know we got one
response. Hopefully we will get 50 of those. I would imagine
when we get that you would probably be interested in seeing a
little bit of that information as well.
But again, thank you for your efforts, and, I appreciate
your willingness to serve in this capacity.
Senator Peters.
Senator Peters. Thank you, Mr. Chairman. Mr. Kan, let me
start with a question that I ask all nominees. If confirmed,
will you commit to fully and promptly responding to oversight
requests from this Committee, including from the Ranking Member
and every other minority Member on this Committee?
Mr. Kan. Yes.
Senator Peters. This Committee also, I am proud to say,
worked in a bipartisan way to give the GAO a central role in
conducting oversight of the pandemic response, and I am
certainly pleased now to hear that OMB is meeting with the GAO
staff and is responding to their requests. But my question to
you, Mr. Kan, yes or no, will you make a public commitment here
today that if confirmed you will ensure that OMB continues to
fully and promptly cooperate with all GAO requests pertaining
to the coronavirus response, and otherwise?
Mr. Kan. Yes. In fact, during the American Recovery and
Reinvestment Act (ARRA) of 2009, the 2009 stimulus ARRA
package, I was working for Senator McConnell, and worked
closely with GAO to ensure oversight for the distribution of
our funds. And so a number of the GAO leadership that is there
now, I worked in hand in glove with to ensure all spending and
all information that members of the Senate were tracking was
closely tracked by GAO. So I have first-hand experience of the
good work GAO does, and you have my commitment to continue that
collaboration.
Senator Peters. That is great. Great to hear.
Our top health officials agree that widely available
testing is an absolutely critical component in our fight
against the coronavirus pandemic, and the need for testing is
greatest as we certainly work to reopen our economy, and do it
in a safe fashion.
As a member of the White House Coronavirus Task Force, can
you assure me and Members of this Committee that the
Administration is working to increase testing?
Mr. Kan. Yes. Absolutely. In fact, 3 or 4 months ago there
was a decision at the task force to ensure every State leader,
every Governor and every State public health official knew
exactly every testing facility in their State. And so we gave
this information to each of the Governors to say, as Governors
were trying to figure out where in their States were there
different machines, we made sure that every Governor had the
full list of testing capacity so that they could surge
capacity.
And it was surprising, a number of Governors were unaware
of the amount of testing capacity they had in the States. And
so it seemed like early on there was a lack of information
sharing, particularly at the State and local level, of testing
capacity, and one of our first steps was to make sure that that
barrier was broken.
Senator Peters. Mr. Kan, you and I spoke recently about the
importance of reliable data to our ongoing response. And while
we know that coronavirus has a disproportionate impact on
minority communities, we simply do not have the data needed to
fully understand the actual scope of these disparities.
Demographic data on testing is one area, unfortunately, that is
sorely lacking.
Now I know earlier this month the Centers for Disease
Control (CDC) announced new guidance on race and ethnicity data
for testing, with reporting requirements that are expected to
go into effect on August 1.
My first question is why did it take so long for the
Administration to start collecting this data?
Mr. Kan. Thank you, Senator, for the question. CDC is
responsible, and oftentimes with a lot of this information
there are tradeoffs. If you request too much information at a
testing site, it is difficult to get folks to fill out forms.
Lines get longer. And so there are oftentimes tradeoffs with
the amount of information to collect.
I do not think that there was any desire, we were
responding to a crisis and initially trying to just scale
testing. As it went on we realized we needed more information
to help form more informed views.
And so at this point in time we have a lot of that data,
for about 80 percent of cases. CDC is collecting this and CDC
is also using a new surveillance system called COVID-NET to
track their race and ethnicity data.
Senator Peters. So when will we have a full picture? What
is your timeline of when we will have a full picture of the
disparities?
Mr. Kan. I think we already are beginning to have that now.
I think we have an 80 percent solution. And so we have a pretty
decent perspective of what parts of the Nation are most hit,
both in terms of racial and ethnic minorities but also in terms
of geography, also in terms of what States. So we are reaching
a point at which we have a pretty high degree of confidence of
where major gaps are.
Senator Peters. So you still have incomplete data. You are
working to close that gap. In the absence of complete data, how
is the Administration ensuring that coronavirus testing is
getting to those minority communities most at need?
Mr. Kan. Sure. One of the early actions we took is we
leveraged heavily the federally qualified health centers
(FQHCs). We provided them with almost $600 million to the 1,400
FQHCs. Most FQHCs are located in underserved communities, and
we ensured that FQHCs were providing testing to their local
communities. We also are scaling community-based testing sites.
These are the sites that popped up in parking lots across the
country. And then about 70 percent of these sites are located
in areas where there is high social vulnerability.
Also, with respect to Michigan, we have been on the phone
with major cities and major local public health leaders all
around the country. Detroit has a tremendous public health
leader, and we the administration has been on with them
constantly, ensuring that they have the resources needed to
respond in your State. And that is a situation that we see
across the country. As specific States develop hotspots, we
have been working with State and local leaders, really glove in
hand, to make sure they have the resources needed to combat
this.
Senator Peters. Since the onset of the pandemic, I worked
in a bipartisan manner to get this Administration to increase
the FEMA cost share to 100 percent for emergency assistance.
Last month, Acting Director Vought told me that OMB is still in
the process of reviewing this proposed adjustment.
So a question to you, Mr. Kan, is the Administration
willing to make this adjustment or will Congress have to
mandate it?
Mr. Kan. I think that is still in a policy process. I do
not think I have any new information to share with you today.
There are major tradeoffs here. We want to help cities and
States but we also want to make sure that there is some amount
of share of interest and aligned interest here.
Senator Peters. You say it is still in process. You realize
this has been going on for months now, and it has been going on
for an incredibly long time. It is time to make a decision one
way or the other.
Mr. Kan. Understood, sir. We have given States about $500
billion from the Coronavirus Aid, Relief, and Economic Security
(CARES) Act, and believe a significant portion of that can be
used for cost-share purposes. And so we are closely monitoring
this to ensure that States have enough resources for cost
share. If that no longer becomes the case, that is useful
information as we consider and we continue to monitor this
particular question.
Senator Peters. I am out of time right now, but, you know,
the CARES Act was specifically appropriated for a variety of
other uses, so it is really not an alternative to have the 100
percent cost share to help our States.
Thank you for the response. Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator Peters. Just for
everybody else's knowledge, the order will be Senator Portman,
Carper, Lankford, Hassan, and Rosen. Senator Portman.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. First let me say that I am delighted,
Derek, that you are willing to continue in public service, and
as you know, when you came out of private sector this last time
I thanked you for your willingness to serve, knowing it was
going to be an exciting experience. I had no idea that we would
be going through what we have, in terms of just these historic
challenges, particularly the global pandemic.
But your background and your record are needed right now,
badly, so I am supportive. Probably the most important part
about your background to this Committee is the fact that you
once were a HSGAC staffer, so you know what we go through. But
you have been in the private sector, you have been successful
there, you have been in the public sector and been successful
there. You actually were a Presidential management fellow at
OMB, which you did not mention earlier. You have also worked
for a biotech startup, which I think is actually helpful right
now with what is going on with regard to the COVID-19
challenges.
I am appreciative that you are willing to step up, and
based on your answers today to the questions that have been
posed obviously you have a good sense of what the deputy role
is. You are effectively doing it, and that is important too. We
do not have time to bring people up to speed right now. It is a
marathon being run at a sprinter's pace. I appreciate your
willingness to serve, and I am going to be supportive.
What I will tell you is, this Committee always wants more
and better information, and as the chair of Permanent
Subcommittee on Investigations (PSI), as you know, we struggle
with this constantly. And so I would like your commitment
today, as you have given already to Senator Peters, that you
will be there to be responsive to our requests and help us to
be able to do our important oversight job.
Mr. Kan. Absolutely, Senator Portman. You have my word.
Senator Portman. There are a number of projects I have
talked to you about in the context of our conversation on this
nomination, and one is the Safeguarding American Innovation
Act. I see Senator Hassan is on and others who are sponsors of
this legislation.
But it basically says we have to stop China from taking our
innovation, our research, and in some cases our intellectual
property that they then patent. It has been going on for 20
years. The only way to do it effectively, we thought, was to
give OMB a significant role here, because there are so many
agencies and departments involved, including National Institute
of Health (NIH), including the National Science Foundation
(NSF), including the Department of Energy (DOE), and others.
We established this Federal Research Security Council at
the Office and Management and Budget to include representatives
from all these Federal science agencies, of course, but also
the Intelligence Committee. The notion is that we would take
what has already been started at the Office of Science and
Technology, which is in the White House, and really supercharge
it with the authorities of the Office of Management and Budget.
The job would be to coordinate all the grantmaking agencies
to share information for the first time about grantees, look at
the risks, the national security risks of some research,
modernize the Federal grantmaking process, and develop a
uniform grant application.
By the way, the agencies are looking for this. They are
actually supportive of it, knowing that we have a huge
challenge. NIH just, as an example, fired, effectively, 54
scientists--54--90 percent of whom, by the way, had ties to
China. This just happened in the last couple of weeks. And we
see case after case of these arrests being made, and what has
happened has really been sort of--very helpful to China and
very harmful to us, in terms of our economy and our military.
I appreciate you already having reviewed this legislation
first. Do you support the legislation, and second, should the
legislation become law do you commit to supporting the
establishment of the Federal Research Security Council quickly?
Mr. Kan. Absolutely. Senator Portman, thank you for
flagging this very important issue. I have taken a close look
at the proposed legislation. One of the great sections of the
proposed legislation that you and Senator Hassan introduced is
Section 11, on Federal grant application fraud. It gives us the
tools we need to really prosecute the issue you have surfaced,
that developing research and development (R&D) and then
exporting it to countries that may not be friendly is a major
problem. We currently do not have some of the tools to
prosecute that. However, the legislation you have proposed
really provides us with some of those tools to pursue those and
shut off some of those liabilities.
Senator Portman. Thank you. I should say that Senator
Carper, at the permanent subcommittee, was my partner in the
investigation, and also is the co-author of the legislation,
and it is a bipartisan bill. And it really is a nonpartisan
issue, and one where we are going to need your help to be able
to ensure that we are better organized in our own Federal
Government.
There is a lot of finger-pointing at China, some of it very
deserved. But really, to me, our first job is to get our own
house in order, and it is amazing how naive we have been and
how we have been so lax to permit this to be able to happen.
On Federal infrastructure we are talking about a COVID-19
bill that might have some significant funding for
infrastructure. I think there are actually some great
opportunities there, including filling in the State coffers,
because they have less gas tax and yet a lot of shovel-ready,
merit-based projects that we could help on. There is some talk
about the need for more infrastructure spending in other areas,
like fiber optic cable for broadband, particularly expansion in
rural areas.
The problem we have with a lot of this stuff is permitting,
and the Federal permitting process has gotten out of hand over
the years. We still rank something like 26th in the world, in
terms of our ability to green-light a project, and so
infrastructure dollars globally do not tend to come to the
United States.
What has really helped is this infrastructure permitting
council. The OMB is responsible for housing this council. It
includes all the different departments and agencies that have
to do with permitting. We finally have a good executive
director there. We finally have an executive director that has
actually been appointed. The acting director did the best that
she could, but finally we have somebody there permanently. And
we are making some progress.
Do you commit to supporting the Permitting Council's work
as deputy at OMB because that will be one of your
responsibilities? And do you have any suggestions on how we can
bring more transparency, accountability and efficiency to the
permitting process going forward?
Mr. Kan. Absolutely, and thank you for your leadership on
this. A lot of the permitting advances we have made are largely
because of Fixing America's Surface Transportation Act (FAST-
41), in which you were a key player in that. At DOT, the
permitting dashboard and the management of the permitting
dashboard was a responsibility of mine, and so I managed the
team that managed the permitting dashboard.
I think one of the important aspects of the Federal
Permitting Improvement Steering Council (FPISC) is making sure
that we incorporate all of the types of permittings that exist.
We do not have full coverage. I think one of the types of
projects that we should also consider are projects that are not
simply mining transportation infrastructure projects but are
there other projects out there in which we should broaden the
scope of FPISC in order to ensure that if you have a permit for
a specific task we can use that permit for other projects as
well.
I look forward to working with you. This is such an
important issue, and frankly, a fairly cost-efficient way to
accelerate infrastructure in this country.
Senator Portman. Yes. Thank you. My time is up. I would
just say you are right about FPISC. We do have legislation to
expand it to other areas because it has worked. It saved over
$1 billion. Think about that. It saved over $1 billion,
otherwise wasted money, much of it taxpayer funding, and it has
not short-circuited the process. In other words, we still have
the National Environmental Policy Act (NEPA) reviews and so on.
It has been bipartisan--Senator McCaskill and I were the
original authors--but it is one where we need to get rid of the
sunset, keep it in place, and make sure it expands to more and
more projects. Because it really works to save money, and if we
are going to put more Federal money against infrastructure, we
have to be sure that dollar can be stretched as far as possible
by having sensible permitting.
Thank you, Mr. Chairman, and good luck, Derek.
Mr. Kan. Thank you.
Chairman Johnson. Thank you, Senator Portman. Senator
Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thank you, Mr. Chairman, and Derek, good to
see you. Thanks for your willingness to take on these
responsibilities.
Just a personal question, if I could start off. You have
had a wide range of jobs. You have been able to walk away from
all of those, I think, with your reputation in hand.
Very briefly, what is the secret to your success?
Mr. Kan. Being honest and above reproach. Being a
collaborative person and really seeking to preserve my
character has been a part of how I have not tarnished myself
yet.
Senator Carper. Good. Thank you.
Senator Portman talked to you a little bit about
streamlining, and I would just remind us all, I sit on the
Environmental Public Works (EPW) Committee, senior Democrat,
the ranking Republican--ranking Democrat.
Mr. Kan. [Laughs.]
Senator Carper. Barrasso would not like that if----
Mr. Kan. No.
Senator Carper. The last couple of service transportation
bills, I think we have adopted over 60 streamlining provisions,
and the last time I checked about half of them have not been
implemented. I am all for looking for ways to streamline, but
hope we also remember to look at the ones we have already put
in place and make sure that we are implementing it where it
makes sense.
I would like to ask just a real quick question. It does not
have to be a yes or no, but it could. I was having a
conversation with some people who were nominated to be on the
Tennessee Valley Authority (TVA), which is a big provider of
electricity that part of America. And we were talking about
climate change. One of the questions that was asked of the
nominees to serve on the board there was do they believe that
climate change is real? Do they believe that we, as people,
have a good deal to do with it? And is there some sense of
urgency to actually address it?
I would just ask the same quick question, without a lot of
discussion. Do you think climate change is real?
Mr. Kan. Yes, I believe that climate change is real.
Senator Carper. And do you think that we, as human beings,
have a fair amount to do with climate change?
Mr. Kan. I believe we have some amount. I believe the
scientists say the specific amount is debatable. But I believe
that humans have some impact on climate change.
Senator Carper. All right. The scientists that I talked to
say it is more than debatable. It is overwhelming.
My wife was down in Antarctica with some of her friends
back in January, on an island off of Antarctica, realizing
January temperature is about 70 degrees. There was a town up in
the Arctic Circle last week where the temperature reached 100
degrees. Our colleagues from Louisiana were talking the other
day about the sea level rise down there in that part of the
Gulf Coast, they lose about a football field of land to the
ocean every day.
So something is happening here. I think what it is is
pretty clear.
I have another question. I have been wondering here for
weeks, now months. How could the world's wealthiest nation,
that has less than 5 percent of the world's population, end up
with more than a quarter of the world's deaths from COVID-19?
How did that happen?
Mr. Kan. I would refer you to CDC, because they are the
experts. However, we have one of the best public health
infrastructure systems so we can count these things better. It
is premature to say we do not have as many deaths as China, but
part of that is because the data and the information coming out
of China, the veracity of it is left open to question?
Senator Carper. Let me interrupt you if I can. The people
of China have about 1.6 billion people. They are reporting less
than 10,000 deaths. Even if they are underreporting it by a
factor of 10, they still have fewer deaths than we do, which is
pretty amazing.
Let me go on to the next question. Improper payments, GAO
tracks this, and I know this is of great interest to OMB. But
talk to us a little bit about a sense of urgency to deal with
improper payments. I think we are looking at numbers over $100
billion now.
Mr. Kan. Absolutely. Thank you for your leadership on this,
Senator. I mean, $150 billion is an insane amount. If it were
its own agency it would be the third-largest Federal agency,
behind the Department of Defense (DOD) and HHS. So we see about
$150 billion a year in improper payments.
The solution is a complicated one and really needs to work
with Congress on it. It is how much do we want to share the
database from social security with other programs. At the end
of the day that is the biggest issue. At OMB we are using every
administrative tool we can to control improper payments and to
minimize improper payments, by identifying the programs that
have the highest risk of improper payments. In fact, it is such
a big problem that it reduces the confidence in government. The
CARES Act is something like $1.6 billion was already sent out
to the wrong individuals. That is a report that I just saw, I
think, last week.
Senator Carper. GAO reported last week, I talked to Gene
Dodaro, who you know is the Comptroller General----
Mr. Kan. Yes.
Senator Carper [continuing]. One of the people who received
the $1,200 check was his mother, who died in 2018, and
literally printed on the check was the word ``deceased.'' GAO
reported to us last week that $1.4 billion worth of $1,200
checks went out to people, and the checks all said
``deceased,'' and they still sent them out.
Senator John Kennedy and I, and a number of our colleagues
in the Homeland Security Committee co-sponsored legislation to
actually do what GAO has proposed to do for 7 years, and that
is to make sure that more agencies, including Treasury, would
have access to the master death file that the Social Security
Administration (SSA) modifies and keeps up to date.
Let me ask you, if I could, one last question. Again, more
of a personal question. When General Mattis stepped down as
Secretary of Defense, he resigned and he sent a letter to the
President basically saying, ``Mr. President, because you have
the right to a Secretary of Defense whose views are better
aligned with yours on these and other subjects, I believe it is
right for me to step down from my position.'' You do not see a
lot of letters like that. I thought that was a courageous thing
for him to do, and I think he ended up with his stature being
enhanced.
Has the President ever indicated to you that he wanted you
to do something that you think is wrong and maybe against the
best interest of our country? And if so, would you just mention
what that involved? If the President ever asked you to do
something that you did think was wrong and against the best
interest of our country, how would you react?
Mr. Kan. Yes. The President--I am not going to get into
sort of a back-and-forth conversation, but I would not do
anything wrong. I think integrity is an important quality, that
we have an obligation to protect our own integrity and the
integrity of the institutions we lead. So I would not do
anything that was inappropriate, and I [inaudible].
Senator Carper. I think my core values, as I learned from
my colleagues on this Committee are, No. 1, do what is right;
No. 2, treat other people the way you want to be treated; No.
3, surround yourself with the best people you can find; and No.
4, when you know you are right and you are sure you are right,
do not give up. I think that maybe describes pretty well your
values too.
Mr. Kan. Thank you, Senator.
Senator Carper. You bet. Good luck.
Chairman Johnson. Senator Lankford.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Thank you, Mr. Chairman. Mr. Kan, thank
you. Thanks for what you are doing and the engagement, things
that you have already done in being able to serve the Nation. I
appreciate that very much.
Let me talk you through a couple of things on this. As we
go through all the COVID response, there is a lot of regulatory
review in the process. Obviously, we have put a hold on a lot
of regulations. I would like to delve a little bit deeper into
some of the regulations that we have already put a hold on.
What is the process for restarting those, as far as
communicating those to people that, hey, there was a pause on
this for a season but now we have to restart it? So what is
that communication going to be like again, to people? And then
also, what is the process for reviewing all of those regs, and
going through the process to say, if we paused it for a year
then we need to do a retrospective review and to be able to
find out if we need to restart it at all?
Mr. Kan. Great. Thank you, Senator Lankford, for your
interest in this. I know you have been a champion for
regulatory reform and deregulation, so I very much appreciate
your leadership and partnership on this.
On June 1, Acting Director Vought sent out a memo to all
agencies, asking them to review which specific regulations they
hoped to waive or repeal to spur economic recovery. OMB is
tracking that and submissions have recently begun to come back,
and we are putting together a whole list of regulations that we
are seeking to waive or repeal.
Today we have taken over 700 actions, and a vast number of
those, plus the telehealth rule, is an example of if we were
able to relax that in the middle of a crisis it does not make
sense to continue it. And this piece, to some of the questions
earlier, that relaxing this rule would help provide better
health care to underserved populations such as minority
populations.
So we are receiving these rules and these lists back from
agencies. We are aggregating them and hope to work with them in
the coming weeks to identify what specific rules that should be
waived or repealed.
Senator Lankford. So what would be the process to actually
go through to be able to waive or repeal those?
Mr. Kan. We are working with agencies. We will sit down
with the Cabinet office and the Department Secretaries at each
of these agencies to ensure that there is alignment between
what an agency is proposing and what different components at
the White House agree with that. I think that once those are
reconciled--and I think a lot of them are fairly overlapping,
then we would probably have an agency start announcing them.
The specific rollout we have not yet put down on paper, but we
will need to identify how we communicate this to the general
public. And we will definitely keep you informed, Senator,
given your significant interest in this issue.
Senator Lankford. Thank you. I appreciate that. The restart
of regulations, where you have some that were paused for a
season during this health crisis, but they make sense, they
should be there, but we need to be able to re-engage those. How
will that communication happen, because there are lots of
companies, hospitals, others that said, ``We know this is on
pause,'' that information getting out to people again? We do
not want to put anyone at risk by unintentionally violating
something they thought was on pause but now is active again.
How is that going to work?
Mr. Kan. In general, those communications are often led by
agencies. As they relax rules and receive comment for any
general rule there is a long list of stakeholders that have
expressed a strong interest. So agencies will likely take a
lead with their respective public liaison offices to work with
their impacted stakeholders, to inform them.
I think that is probably the beginning of it. However,
given the complexity of how many rules we have, we will
probably need to continue to identify how we make sure to
communicate to all impacted stakeholders, even those that have
not submitted comments.
Senator Lankford. That is helpful. I would like to have
some working relationship with you on a couple of things. One
is on the issue of Federal hiring, and I know this is on the
personnel side of things, but this has been a challenge for a
while. The Federal workforce is getting older. We have our own
struggles with hiring folks that are younger, folks that are
coming out of university level, whatever it may be. We have
difficulty in direct hires. It seems like every agency wants
direct hire but instead we have 100-plus different hiring
authorities that are out there, many of them to try to get
around direct hire. We have all kinds of issues with Senior
Executive Service (SES), and they basically hire someone to be
able to write their paragraph and all of their information for
them, then they turn that in as their own.
But there are just a lot of issues across all the hiring
process. I would like to be able to sit down and to be able to
work with Senator Sinema and myself to be able to sit down with
you and whoever you want to be able to pull together, and say
how do we solve some of these things together?
Mr. Kan. Absolutely. I would welcome that opportunity.
Federal hiring is a massive challenge with a lot of frictions
and bottlenecks, and we need to figure out how we can do this
more expediently.
Senator Lankford. That would be helpful. We just did a
hearing through this Committee on the Commission Report and
several recommendations that they made. Of course, those
recommendations were swallowed up because it came out right in
the middle of COVID-19, in April. But I would like to be able
to go through some of those. They have spent quite a bit of
time making recommendations. We have other ideas that have come
in from agencies and from the chief human capital officers
(CHCO). So I would like to be able to get some of that
together, and I would appreciate that.
You and I have spoken before. I would like to be able to
find some way where we can get some transparency into the
process with the U.S. Army Corps of Engineers (USACE) and OMB
and all of the States, because all of us work with the Army
Corps of Engineers on projects. They put high priority onto
those. Those go into OMB. That ends up being a black box for
what happens next, and then out comes the actual priorities
that occur. Sometimes they are lined with the Corps of
Engineers priorities and sometimes they do not.
I know there are limited dollars. We know that extremely
well. But trying to be able to work through to get greater
transparency in that process. I would like to be able to work
with you and your team in the days ahead. Are you open to that?
Mr. Kan. Absolutely.
Senator Lankford. That would be terrific. I would love to
be able to have the help on that and to be able to get through
that well.
So I appreciate very much your engagement, to be able to
walk through some of these things. I know you have had a lot of
questions already about COVID-19 process, and I look forward to
getting the chance to be able to serve, and let's get some
things done.
So thank you, Mr. Chairman. I yield back.
Chairman Johnson. I saw Senator Hassan. Are you there,
Maggie?
OPENING STATEMENT OF SENATOR HASSAN
Senator Hassan. I am. Thank you. Thank you, Mr. Chair and
Ranking Member Peters, and thank you, Mr. Kan, for your
willingness to serve in this position and for your appearance
in front of the Committee today.
I know this is not the Committee that has enormous
jurisdiction over all the various part of the COVID-19
response, but because there has been a back-and-forth I do just
want to offer a couple of observations, fresh from data over
the last couple of days and Dr. Fauci's testimony before our
Health, Education, Labor, and Pensions (HELP) Committee this
morning.
Dr. Fauci testified that we may be on a trajectory of
100,000 new cases of COVID-19 a day in the near future.
Meanwhile, yesterday, Johns Hopkins University produced a
chart,\1\ or at least The New York Times produced it, and it
shows this. I am holding up a piece of paper. I will ask for
unanimous consent (UC) to get it into the record of this
hearing.
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\1\ The chart referenced by Senator Hassan appears in the Appendix
on page 112.
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You cannot see it over video, but what it shows is that the
United States currently has new confirmed cases of over--about
700 new confirmed cases per million residents per day right
now. Europe has about 100. Canada has a little bit less than
100. Japan has almost 0. The United States of America has 4
percent of the world's population. We account for 25 percent of
the cases and about 20 percent of the deaths.
So while I understand how hard everybody in the
Administration is working to combat this, it is not doing the
job we need to do, and we need to have a national strategy,
coordinated from the top, that includes the full invocation of
the Defense Production Act, so we can get PPEs out where they
are needed, and we can have the level of testing we need to
reopen safely.
So I will ask for unanimous consent to put into the record
a Johns Hopkins University chart that was published in The New
York Times yesterday, June 29, 2020.
Chairman Johnson. Without objection.
Senator Hassan. Thank you. Now, Mr. Kan, you and I have
discussed, and I recently wrote to 10 agencies about their
outdated information technology (IT) systems that urgently need
to be updated to be secure, reduce maintenance costs, and
better serve the American people. The emergence of the COVID-19
pandemic further emphasized the need for IT modernization on
the Federal, State, and local levels. If confirmed, how will
you prioritize IT modernization across the government?
Mr. Kan. Thank you, Senator Hassan, for this important
topic, and I know you have been a leader in this. I looked into
the matter after we chatted and looked at things like GAO
reports. It is incredible the types of legacy systems we have.
We have some systems that are over 50 years old, that are run
by common business-oriented language (COBOL), that run on
mainframes that use floppy disks. And these are not IT systems
that are on the side. These are actually core IT systems at
Social Security, Treasury, and Department of Education.
I think there are two important ways that OMB plays a role
in addressing this and helping modernize IT systems. One is on
the budget side and one is on the management side. On the
budget side, there is a complex issue with respect to budgeting
and scoring for capital projects. You see this with leasing,
and OMB has worked hard to try to create technology
modernization fund and using IT working capital funds to allow
agencies to make that multi-year commitment. So that is on the
budget side.
On the management side, we have the Office of the Federal
Chief Information Officer (CIO) here. It is up to the CIO to
issue guidance to really pull together best practices with how
to modernize IT systems.
Those might be the two ways [inaudible]. The second is
pulling together best practices through the CIO.
Senator Hassan. How will you work with Congress to fund
these modernization projects more strategically? Part of the
multi-year budgeting process? Is that your main point here?
Mr. Kan. Yes. The multi-year budgeting process--I think
there are two issues. One is the baseline of it, so what are
the rules that we are going to use, and two is do we receive
the appropriate appropriations. So we requested $90 billion,
and is that enough to not only maintain existing but modernize?
So those will likely be the two areas. One is changing the
budget scoring rules, and two, making sure we have sufficient
appropriations to modernize legacy systems.
Senator Hassan. OK. Thank you.
Now, on a different topic, during our conversation last
week you expressed that it is your goal, if confirmed, to
present quality data and information to policymakers. However,
it is not enough that policymakers have quality data and
information. Policymakers need to use that quality data and
information to inform their decisions and justify their
actions.
What affirmative steps will you take to ensure that
agencies are using the best data available to them to develop
policies and implement congressional directives?
Mr. Kan. Great. Thank you for this question, and I really
appreciate our conversation and our shared interest in having
data-driven policy.
There are really two ways. We have a number of tools and
authorities already provided from Congress, the Evidence Act
and Data Act, that decisions from agencies need to be based
upon data, that policy decisions, also recommendations, need to
be based on data.
So one, I would ensure that budget proposals and
legislative proposals are tied to something very specific that
we are able to measure and define. Too often we propose bills,
and new programs are stood up without any clear sense of what
is the policy objective we are trying to improve upon. So one
is leveraging the evidence and data.
The second, which we started in this Administration, is the
posting of congressional justifications (CJ) online. And so CJ,
which is one of the best place agencies have to display how
they think about their budget and their justifications for
their budget requests need to have more data underlying their
specific requests. And so that would be the second way, in the
spirit of transparency, for agencies to disclose and publicly
post within a week or two of the budget rollout why they are
increasing or decreasing levels of specific programs or the
specific data they are looking at to drive these decisions.
Senator Hassan. I appreciate that very much. Finally, last
week the GAO released a report on the Federal response to the
coronavirus pandemic. In that report, GAO expressed its
disappointment that OMB guidance has delayed the release of
information how the government spent $2.6 trillion on relief
obligations and expenditures.
Here is the quote: ``It is unfortunate that the public will
have waited more than 4 months since the enactment of the CARES
Act for access to comprehensive obligation and expenditure
information about the programs funded through these relief
laws.''
In your current role at OMB, as well as if you are
confirmed, how will you work to ensure that this information is
not further withheld from Congress and the American people?
Mr. Kan. Thank you for the question, and I think this is a
topic that Chairman Johnson has really been highlighting for
all of us, and it is a report on the information that we will
continually share with Congress. I think the first few months
post-enactment we were standing up these programs. We are now
getting a better hold on the bill's view of this information
and we intend to share it with GAO as well as each and every
one of you.
Senator Hassan. Thank you, and I see that I am over time,
so I thank the Chair's indulgence. I thank you, Mr. Kan, for
your willingness to serve, and I yield back.
Chairman Johnson. Senator Rosen.
OPENING STATEMENT OF SENATOR ROSEN
Senator Rosen. Thank you, Mr. Chairman, Ranking Member
Peters, and, of course, Mr. Kan, for your willingness to serve,
and I know you have had service on this Committee so that is
great as well.
I would like to speak a little bit about nuclear testing.
According to recent reports, the Administration discussed, as
recently as May 15, pursuing explosive nuclear weapons testing
for the first time in nearly three decades. Nevada is no
stranger to nuclear testing, and we do not want to return to a
time when we shook the ground and we had the risk of radiation
exposure. That was a fact of life for those in Nevada and the
States that surrounded us.
The Nevada National Security Site, which is the only
facility--I want to repeat, the only facility--in the Nation
equipped to accommodate underground nuclear testing is a
crucial part of our national security infrastructure. The site
conducts non-explosive, subcritical experiments, and it does
ensure the integrity of our nuclear arsenal. But any actions
that could place Nevada's health and safety at risk should be
off the table.
Nonetheless, despite the fact that there is general
consensus but there is no technical need to conduct explosive
testing, this Administration is considering resuming this
testing anyway. Mr. Kan, can you assure us, in your capacity,
as Deputy Director of the Office of Management and Budget, as
long as you are there, and as long as there is no technical
need, you would oppose requesting funding to resume explosive
nuclear weapons testing, which would threaten the health and
the safety of my constituents?
Mr. Kan. Thank you, Senator Rosen. I know that Nevada and
nuclear has oftentimes been a long history. I am frankly not
familiar with the specific matter of testing nuclear weapons. I
will certainly look into it. However, we will follow the
mandates of Congress and comply with the law. If there is a
prohibition against it, we absolutely will comply with that
prohibition.
Senator Rosen. Let me just interrupt you quickly. So given
that the resumption of explosive nuclear weapons testing would
directly compromise the health and safety of Nevadans, will you
commit to my office to hear the concerns of Nevadans before
making a budget request for funding explosive testing?
Mr. Kan. Absolutely, and I look forward to sitting down
with you to hear more from you or your constituents on this
important matter.
Senator Rosen. Thank you. I want to again talk a little bit
about Nevada, because the President tweeted about Nevada just a
few weeks ago. He sent out a tweet, and I am going to quote
this, that the State of Nevada, quote, ``thinks that they can
send out illegal vote-by-mail ballots.'' And if they do, and I
am going to quote again, ``I,'' meaning the President, ``think
that I can hold up funds to the State,'' obviously meaning the
State of Nevada.
I already discussed this subject with Mr. Vought a few
weeks ago during his confirmation hearing, because he was
tagged on the tweet. But given the role to which you have been
nominated, I want to ask you as well whether you will commit,
if confirmed, to doing everything in your power as Deputy
Director to ensure that the law is followed and that OMB is not
used as a tool to hash out political disagreements.
Mr. Kan. Absolutely. Thank you, Senator, for the question,
and we will follow the law. And as Mr. Vought said, we have not
done anything to withhold fundings, as you asked him.
Senator Rosen. So you would commit to, if pledged, to
ensure that funding is not withheld from States like Nevada
just because the President might not like our particular
policy?
Mr. Kan. Yes, Senator.
Senator Rosen. Thank you. I appreciate that.
I am going to move on a little bit to build on what Senator
Hassan said about basic rulemaking and science and data. In
your written responses to this Committee's questionnaire you
wrote that your top priority is advancing the President's
agenda.
I am concerned that that decisionmaking in this
Administration does often seem to be influenced by politics
rather than science or even legal principles. I have co-
sponsored and I support Senator Schatz's Scientific Integrity
Act, which makes clear that Federal policy should be based on
independent science and evidence, free from appropriate
political interference or bias due to ideology or conflicts of
interest.
All of our Federal agencies, particularly in this pandemic,
they must use the best science that we have available to
protect our public health and our environment. So again, Mr.
Kan, will you ensure that the Administration's budgeting
process is focused on accurate analysis of facts and data?
Mr. Kan. Yes.
Senator Rosen. Thank you. I appreciate that.
I am just going to move to my last question which is about
environmental deregulation. Earlier this month President Trump
signed an Executive Order (EO) waiving requirements for
environmental reviews of certain construction projects. In
doing so, the President cited emergency powers purportedly
granted under the Endangered Species Act (ESA), the Clean Water
Act (CWA), and the National Environmental Policy Act.
The emergency powers under these environmental statutes are
only for the purpose of fast-tracking projects to address
environmental concerns. On its face, it appears that the
President is taking advantage of the COVID-19 pandemic to
weaken environmental protections.
In the questionnaire, you were asked for your perspective
on whether the current economic emergency justifies weakening
enforcement of environmental laws. You referred to your
responses in an earlier question in which you wrote that the
Administration can only take such action that is consistent
with the protection of public health and safety.
So during your time at OMB, what actions has the
Administration taken to ensure that waiving environmental
protections in response to economic emergency is consistent
with protecting the public and the environment?
Mr. Kan. Thank you for the question, Senator Rosen. We
ensure that all rules we issue are aligned with specific
statutes. And if you look at our record for a number of
environmental rules, we particularly address any regs that may
have adverse effect to the environment. For instance, the
Environmental Protection Agency (EPA) groundwater rule we
cleared within 8 days. And so we rapidly address----
Senator Rosen. May I ask one brief question about that? Did
you consider any disproportionate environmental impacts on
communities of color or less-advantaged communities?
Mr. Kan. I am not aware. I do not know either way. I can
look into that and get back with you.
Senator Rosen. I would like to see how some of that was
determined, if we could please.
Mr. Kan. Absolutely. Thank you.
Senator Rosen. Thank you. I think I am out of time, Mr.
Chairman. I appreciate you answering the questions today. Thank
you.
Chairman Johnson. Thank you, Senator Rosen. Senator Hawley.
OPENING STATEMENT OF SENATOR HAWLEY
Senator Hawley. Thank you, Mr. Chairman. Thank you, Mr.
Kan, for being here, and congratulations on your nomination. I
would like to ask you a few questions, if I could, that I also
proposed--or posed, rather, to Acting Director Vought, who
appeared before the Committee earlier this month, having to do
with the coronavirus pandemic and some of the deregulatory
measures that the Administration has taken in order to meet the
challenges of that pandemic, including the economic downturn.
Can you give me a sense, is OMB currently considering any
new actions to help business, and particularly small business,
who are hurting during the pandemic? Are there any new relief
measure or other flexibilities from a regulatory standpoint
that are in the pipeline, that you could share with us?
Mr. Kan. Absolutely, sir. In May, the President issued
Executive Order 13924 that asked agencies to waive and repeal
rules that can spur recovery. A number of these rules adversely
impact small businesses. And so we are going through this
process now of identifying what those specific rules are and
how do we waive or repeal rules that would accelerate recovery.
Senator Hawley. Very good. Let me ask you about two other
Executive Orders that OMB helped produce, I think it was last
October, designed to rein in some of the administrative
overreach and improve the process for agency guidance, to make
that process more accountable, to make it more transparent. It
has been 6 months now since these have gone into effect. Again,
I asked Acting Director Vought these same questions. Do you
have any sense if those orders are working as intended? Can you
give us a status report?
Mr. Kan. Sure. I absolutely can. From an anecdotal
perspective, as we talk to agencies, they are much less willing
to post something on a blog or on their website that will have
the power of guidance that does not go through a rulemaking
notice and comment period. And so as we talk to agency heads
and deputy secretaries, it seems like the world of dark
guidance, or shadow guidance, what it is oftentimes called,
that has dramatically decreased in the past few years.
Senator Hawley. Very good. Let's talk a little bit about
the economic situation we find ourselves in, challenging
economic environment following, and because of, the coronavirus
pandemic and the various measures adopted to fight it. We find
ourselves facing pretty serious unemployment, very serious
unemployment, actually, and negative economic growth.
So in this current environment, tell us a little bit, as
you think over the next 6 months, what do you think are the
greatest risks that you see to economic recovery?
Mr. Kan. I think the greatest risk continues to be
uncertainty for employees, uncertainty for employers,
uncertainty for customers. And so how do we de-risk that
uncertainty? I think as folks begin to talk about a potential
Phase 4, legal liability is a massive risk that needs to be
addressed. I think you are seeing both ends of Pennsylvania
starting to talk about this issue, that there needs to be some
common-sense middle ground for us to at least mitigate legal
liability as we start reopening our States.
Senator Hawley. I wanted to come back to your point about
Phase 4 in a second. Just on the economic front again, is there
anything else now at OMB, that you are monitoring from a
recovery standpoint that you think Congress should be aware of,
that we should be clued into?
Mr. Kan. I think this goes back to something Chairman
Johnson talks about, the outlay rate of Phase 3. So one
question, before we pass any bill, if we still have money left
over from the previous bill then it raises the question why are
we appropriating or spending more money before the last tranche
of money has not even left the Treasury yet?
I think one area we are monitoring is the outlay rates of
existing programs, the impact on the economic well-being
throughout the country. Before we pass a new bill, we should
first assess how Phase 3 and Phase 3.5 performed.
Senator Hawley. And just on that point, when it comes to
any existing funds, for instance, that may be left over, not
appropriate or--well, they have been appropriated, I suppose,
but not actually claimed, not used, not spent, from the various
iterations of Phase 3, do you have any counsel on how you would
like to see those funds put to use, as we start to think about
continuing to spur recovery, particularly for workers, here in
the coming months?
Mr. Kan. I do not at this time. I do not have anything--I
do not want to get ahead of a policy process here. But if we
have unobligated funds we should think about, before we
obligate and appropriate new funds, let's think about what we
are going to do with the unobligated funds from 3 months ago.
Senator Hawley. Very good. You are, I am sure, aware of the
bill that I have introduced with Senator Gardner, that would
focus on getting workers rehired and helping businesses to
rehire the workers that have been laid off, or to hire new
workers who have lost their jobs but cannot go back to their
old job, for whatever reason, but are ready and willing to work
at a new firm, and giving business the power to do that, and
giving workers the security. I continue to believe that getting
workers back on the job, giving them their job security back,
getting them back to work is the best way to power forward this
economy into full-fledged recovery, and I look forward to
working with you on that.
Let me ask you just one last point, on the process of the
budget. You have seen the budget process from both ends now of
Pennsylvania Avenue. You have seen it on the Hill. You have
seen it at OMB in the White House. Given your extensive work on
the budget in both of these capacities, do you have any
suggestions or ideas for budget process reform that you think
that Congress could profitably take up?
Mr. Kan. Absolutely. It comes down to sort of three
dimensions. One is baseline, so what are the rules we use to
score the budget, two, what are the specific processes that
flow through it, so how does reconciliation work, and then
third is rules and tools, and what budget. What budget
enforcement tools we have. I actually think the Budget
Committee has a very good bipartisan bill that the Budget
Committee has already introduced that addresses some of these
things. But I think it begins with baselining, process for
reform, rules and tools. And at the end of the day it comes
down to unified will of Congress. It is very difficult.
When I was a staffer we would always tell members you
cannot bind a future Congress. But if you look at the last two
or three major budget reform, starting with Gramm-Rudman-
Hollings all the way to Murray-Ryan, it started with a
commitment that reached across the aisle to say hold on, we are
spending a lot of money, let's get our house in order and let's
exercise some discipline. And you saw Murray-Ryan, while some
folks may say those levels were too high or too low, folks said
let's try to commit to these levels. As we begin a potential
Phase 4--who knows if there is a Phase 4?--it may be useful to
think through what is a strong fiscal rule that we can reach
across the aisle and commit to at least for the next 5 or 10
years.
Senator Hawley. Very good. Thank you very much. Thank you,
Mr. Chairman.
Mr. Kan. Thank you, Senator.
Chairman Johnson. Senator Scott, Rick?
OPENING STATEMENT OF SENATOR SCOTT
Senator Scott. Can you hear me?
Chairman Johnson. Yes, we can.
Senator Scott. OK. Thanks for being here. I enjoyed seeing
you on TV again.
A recent GAO report found that over 1 million coronavirus
stimulus payments, totaling nearly $1.4 billion, were sent to
dead people. None of us would think that that was a good use of
taxpayer money. The GAO has recommended that Congress provide
the Treasury with access to the Social Security
Administration's full set of death records in an attempt to
reduce this waste. Do you think that makes sense, or is there
something else we could do? Because we know we sent out checks,
you talked at the hearing earlier, the government sent out like
$150-plus billion a year in checks to the wrong people, and it
seems like the craziest thing ever.
So what do you think we ought to be doing?
Mr. Kan. Senator, I agree. I think, obviously, the death
file is a very smart step in the right direction. I think it
does open up a bunch of privacy questions, but I think those
can be mitigated.
My sense is there are really things. One of the bills that
is working its way through Congress, and through the Senate,
actually, today, could be one solution. I think the second is
more powers to conduct a review. What tools can the Executive
branch use to stop and review payments to ensure they are going
to the right person? It is oftentimes difficult, especially
when you are putting out thousands, if not hundreds of
thousands of payments, to stop, hit pause, and conduct a
review. That may be one power to provide the Executive Branch
on specific mandatory programs to conduct a review, to ensure
we sample the program, we review it, and ensure that checks are
going to the right people.
Senator Scott. That makes sense. So, one thing, I finished
about a year and a half ago as Governor of Florida for years,
and one thing I was able to do, but I think it was a lot easier
because I had the line item veto, but I was able to take--there
were 4,000 lines in the budget so every year I was able to go
through every line, and I told people, what are we going to--I
asked everybody, we are not going to spend the money unless we
have a written plan of what we are going to get for it.
So if it was to help autistic children, then did you do it,
right? And then if you said you were going to do something, if
you did not do it, when the next budget came around--because,
of course, we did it once a year, like up here--I vetoed the
money, which I had that. And then nobody was going to override
it because I could say, look, I asked. They said they were
going to do this and they did not do it, so how can you fight
that, right?
Do we have anything like that that we can do here? Because
I see the same thing. You allocate dollars but we have no idea
whether we ever get anything for it.
Mr. Kan. Absolutely. Thank you for the question. And this
goes to budget process reform. Clinton v. New York, the Supreme
Court spoke about the powers of line item veto and essentially
said we are not able--the Executive Branch cannot use line item
veto.
However, in subsequent years, the Senate, Senate
Republicans, came up with a proposal called an expedited
rescission package, which is essentially a line item veto. If
we could identify specific programs, send it out for a quick up
or down vote, that could be one way to cure some of the Supreme
Court concerns, but also create a budget process that provides
line item veto.
It is interesting. Almost every Governor, from both
parties, serving in the Senate, will always say, ``Why don't
you guys have line item veto? There are a ton of things here
that just don't make any sense.'' We wish we had it.
So we share your interest. I think it is a fantastic
recommendation, and I would love to work with you on how we can
identify something that is like a line item veto for budget
process reform.
Senator Scott. Yes. I have not been able to figure out--I
know what we need to do. We have to say this is the goal of
this, and if you did not get it, the funding has to stop. But,
it seems like the only way you could get it done is through the
Executive Branch, of getting that done. And then if they do not
have the authority then, I mean, it does not work.
All right. Thank you for your commitment to watching how
dollars are going to be spent and getting better government and
making sure government, the dollars we do spend go for the
right--actually gets something done. So thank you very much.
And I want to thank Chairman Johnson for his commitment to
transparency and commitment to making sure we try to get a
return. Chairman Johnson is a business guy and he had to do the
same thing I did. If you did not get a return, eventually your
shareholders or your bankers are not going to be able to give
you any more money.
Chairman Johnson. Thank you, Senator Scott. I am not seeing
any other Senators who want to ask questions. Is that correct?
In that case, again, I want to thank you, Mr. Kan, in terms
of what you have already done for this nation and your future
service in this position. I am a big supporter of yours and
obviously your confirmation.
The nominee has made financial disclosures and provided
their responses to biographical and prehearing questions
submitted by the Committee. Without objection, this information
will be made part of the hearing record,\1\ with the exception
of the financial data, which is on file and available for
public inspection in the Committee offices.
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\1\ The information of Mr. Kan appears in the Appendix on page 31.
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The hearing record will remain open until 5 p.m. tomorrow,
July 1, for the submission of statements and questions for the
record.
This hearing is adjourned.
Mr. Kan. Thank you, Chairman. [Whereupon, at 3:44 p.m., the
hearing was adjourned.]
A P P E N D I X
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