[Senate Hearing 116-475]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 116-475

                       NOMINATION OF DEREK T. KAN

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

                                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
        
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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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

                                 ------                                
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

                              ----------                              


                         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.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Johnson appears in the 
Appendix on page 27.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \2\ The prepared statement of Senator Peters appear in the Appendix 
on page 28.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kan appears in the Appendix on 
page 30.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \1\ The chart referenced by Senator Hassan appears in the Appendix 
on page 112.
---------------------------------------------------------------------------
    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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