<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:30092.wais]
S. Hrg. 109-908
NOMINATION OF STEPHEN S. McMILLIN
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
ON THE
NOMINATION OF STEPHEN S. McMILLIN TO BE DEPUTY DIRECTOR OF THE OFFICE
OF MANAGEMENT AND BUDGET
__________
JULY 13, 2006
__________
Available via http://www.access.gpo.gov/congress/senate
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Jennifer A. Hemingway, Professional Staff Member
Michael L. Alexander, Minority Staff Director
Adam R. Sedgewick, Minority Professional Staff Member
Trina Driessnack Tyrer, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Collins.............................................. 1
Senator Bennett.............................................. 7
Prepared statements:
Senator Lieberman............................................ 11
Senator Stevens.............................................. 12
WITNESS
Thursday, July 13, 2006
Stephen S. McMillin to be Deputy Director, Office of Management
and Budget:
Testimony.................................................... 3
Prepared statement........................................... 13
Biographical and professional information.................... 15
Responses to pre-hearing questions........................... 20
Letter from U.S. Office of Government Ethics................. 49
Responses to post-hearing questions from Senator Collins..... 50
Responses to post-hearing questions from Senator Lieberman... 54
NOMINATION OF STEPHEN S. MCMILLIN
----------
THURSDAY, JULY 13, 2006
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 4:18 p.m., in
room 342, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins and Bennett.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will come to order.
First, let me apologize to the nominee and those present
today for the long delay in convening this hearing. Just as we
were about to begin the hearing, the Senate began a series of
roll call votes. The fourth one is underway right now and that
is the cause of the delay. But rather than postpone the hearing
to next week, I thought it was important that we try to
complete it today, so my apologies to the nominee.
Today, the Committee will consider the nomination of Steve
McMillin to be the Deputy Director of the Office of Management
and Budget (OMB). A key mission of the OMB is to assist the
President in preparing the Federal budget and to oversee its
execution by Executive Branch agencies. In carrying out this
mission, OMB evaluates the effectiveness of the Agency
programs, assesses competing funding demands, and sets
priorities. The Deputy Director plays a central role in
carrying out these missions.
This is a demanding job at any time. It is especially
demanding in a time of spending imperatives and revenue
constraints. Despite the strong growth in Federal revenues this
year, the Federal budget remains under considerable pressure.
Some of this pressure can be attributed to the war on terrorism
and to unprecedented natural disasters, like Hurricane Katrina.
But even without these factors, our Nation faces an ongoing
structural deficit that will become an increasing challenge in
the coming years.
While the Administration's latest estimates are that the
Federal deficit will decline to $127 billion by the year 2011,
total debt is expected to increase to more than $11 trillion
that same year. As alarming as this figure is, this level of
debt will be reached even before the retirement of much of the
baby-boom generation, which will present our Nation with its
most serious challenge yet in funding Social Security,
Medicare, and other entitlement programs.
Our Nation's economy has always shown a remarkable ability
to absorb shocks and to overcome even the gravest of
challenges. The growth we have seen since the attacks on our
country on September 11 is a striking demonstration of this
resiliency. That attack deepened the economic downturn we were
experiencing at the time, but since the recovery began, our
economy has added 5.3 million jobs, 2 million in the past year
alone.
The strong growth we are now experiencing is yet another
sign of the fundamental health of our economy. Earlier this
week, the Administration predicted that by the end of 2006, the
GDP will expand by 3.5 percent, above the historical average,
and unemployment will fall to 4.7 percent, below the historical
average. This growth has boosted tax revenues by nearly $250
billion above last year's levels, helping to produce a deficit
considerably smaller than the Administration projected just 6
months ago--good news indeed.
While this is excellent news, our long-term forecasts
remain clouded by the implications of the retirement of the
baby-boom generation. We must be mindful that the slightest
slowdown in our economic growth rate can present us with an
even greater budget challenge than we are predicting today.
Given all the extraordinary budget issues we face, never
before has it been more important to have experienced,
competent, dedicated leadership at OMB. OMB has able leaders in
Rob Portman and Clay Johnson. It is important that this Deputy
Director position is filled with a similarly strong candidate.
Our nominee, I am pleased to say, appears to have the
experience and qualifications to be an effective deputy. Since
November 2005, Steve McMillin has served as the Deputy
Assistant to the President and Advisor to the Chief of Staff.
Before joining the White House, he served as Associate Director
for General Government Programs for OMB. Prior to joining the
Administration, Mr. McMillin served on the staff of the Senate
Committee on Banking, Housing, and Urban Affairs for 3 years
and on the staff of Senator Phil Gramm for 9 years.
I should add that Senator Gramm called me personally to
indicate his support for this nominee, describing him as
``brilliant and principled,'' high praise, indeed.
I welcome Mr. McMillin to the Committee, and I look forward
to his testimony and answers to the questions today.
I know that Senator Hutchison hoped to be here to introduce
the nominee. Because of the unexpected votes this afternoon,
she is unable to join us at this time, but her endorsement does
carry great weight with the Committee.
Mr. McMillin has filed the responses to a biographical and
financial questionnaire, answered pre-hearing questions
submitted by the Committee, and has had his financial
statements reviewed by the Office of Government Ethics.
Without objection, this information will be made part of
the hearing record, with the exception of the financial data,
which are on file and available for public inspection in the
Committee's offices.
Our Committee rules require that all witnesses at
nomination hearings give their testimony under oath, so Mr.
McMillin, if you will please stand and raise your right hand so
I can administer the oath. Do you swear that the testimony you
are about to give will be the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. McMillin. I do.
Chairman Collins. Please be seated.
Mr. McMillin, it looks to me as if you have family members
present, and I would invite you to introduce them to the
Committee at this time.
TESTIMONY OF STEPHEN S. McMILLIN,\1\ TO BE DEPUTY DIRECTOR,
OFFICE OF MANAGEMENT AND BUDGET
Mr. McMillin. Thank you, Madam Chairman. First, my wife,
Dawn McMillin.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. McMillin appears in the Appendix
on page 13.
---------------------------------------------------------------------------
Chairman Collins. Hello.
Mr. McMillin. And then our two sons, Spencer and Christian.
Chairman Collins. We want to particularly thank the boys
for their patience. I am sure it was hard waiting almost 2
hours to see your father, but this is a very important position
that the President has selected him for, so that is a pretty
big deal, and we are glad to have you here. We welcome your
wife, as well.
Mr. McMillin. We made quite a few paper airplanes
downstairs. [Laughter.]
Chairman Collins. Mr. McMillin, I would invite you to
proceed with your statement.
Mr. McMillin. Thank you, Madam Chairman, and thank you for
recognizing my family. Obviously, those of us in public service
couldn't do the things we do without their help, love, and
support. I am forever in their debt for all they have done for
me in the past and all they will do for me during my time at
OMB.
I am also grateful that Senator Hutchison was willing to
come and introduce me before the Committee. Unfortunately, she
couldn't make it, but I spent enough time here in the Senate to
know that predicting votes and keeping a schedule in the
afternoon is sometimes a bit of a challenge, but I thank you
for pressing ahead with the hearing nevertheless.
Chairman Collins, I want to thank you, Senator Lieberman,
who also could not attend, and the Members of the Committee for
the opportunity to appear today. If I am confirmed as Deputy
Director of OMB, I will be assisting Director Portman in
dealing with many challenging issues facing the Administration
and the Congress. OMB has a unique role in American Government,
with responsibilities that cover a broad range of policy,
fiscal, and management issues. OMB's most visible role is the
preparation of the President's annual budget request, but
throughout the year, OMB supports the President and his
Administration in a variety of ways. If confirmed, I will work
closely with Members of Congress and this Committee from both
parties to ensure that we are addressing the tough issues on
behalf of the American people and to ensure that their tax
dollars are spent wisely.
As you are aware, Madam Chairman, I began my government
service here in the Senate many years ago, serving as an aide
to Senator Phil Gramm and to the Senate Banking Committee. In
my nearly 12 years of service, I developed a deep love and
respect for the history, traditions, and principles embodied in
this great institution. In the Senate, everyone's opinion
counts. Everyone has a right to be heard, sometimes to be heard
at great length. And everyone has a right to put forward their
ideas and have them considered by their colleagues. This is a
reflection of the fact that no one person, Administration,
Committee, or party has a monopoly on wisdom or good ideas, and
it is through dialogue and working together that truly great
achievements are often possible.
I know this Committee is particularly concerned with many
of the management issues faced by OMB. In my view, good
management and responsible budgeting are inseparable. When I
first joined OMB in late 2001 as an Associate Director, I was
struck by the strong concern and emphasis placed on management
issues throughout the Administration. If confirmed, I look
forward to working with the Members of this Committee to ensure
continued progress on the President's management agenda and the
execution of OMB's important management responsibilities.
Madam Chairman, you made reference to the new figures
released earlier this week through the mid-session review, some
of the strong economic performance we have seen lately. I won't
repeat all of those facts. I will observe, as you have, that to
make continued progress on this deficit, we need to continue
the policies that helped create the strong economic performance
and we need to continue our combined efforts to restrain
spending. Working together, Congress and the President have
reduced the growth of non-discretionary spending every year the
President has been in office, and last year, Congress passed
bills that actually cut this type of spending. And earlier this
year, Congress passed the first spending reconciliation bill in
nearly a decade.
In the near term, budget process reforms and tools like the
line-item veto can help us control spending growth, eliminate
wasteful spending items, and improve accountability. I am
encouraged that the House has already passed the line-item veto
with a strong bipartisan vote, and that the Senate is actively
engaged in considering budget process reform, including the
line-item veto.
In the long term, as you mentioned, our major entitlement
programs are projected to grow faster than inflation, faster
than GDP, and faster than our economy's ability to sustain
them. Millions of our citizens rely on these important
programs, and we have a responsibility to preserve them for
future generations. To do so will require sound and innovative
reforms, and if confirmed, I would welcome your input, that of
your colleagues, and your advice on how we can best achieve
them.
Again, I appreciate the Committee's consideration of my
nomination. I look forward to answering any questions you may
have.
Chairman Collins. Thank you for your statement.
I am going to begin my questioning this afternoon with
three standard questions that we ask of all nominees. First, is
there anything you are aware of in your background which might
present a conflict of interest with the duties of the office
for which you have been nominated?
Mr. McMillin. Madam Chairman, as I earlier informed the
Committee in writing, due to my wife's employment with American
Airlines, if confirmed, I would recuse myself as appropriate
from matters dealing with American. Other than that, there are
no such issues.
Chairman Collins. Thank you. Second, do you know of
anything, personal or otherwise, that would in any way prevent
you from fully and honorably discharging the responsibilities
of this office?
Mr. McMillin. No.
Chairman Collins. Third, do you agree without reservation
to respond to any reasonable summons to appear and testify
before any duly constituted Committee of Congress if you are
confirmed?
Mr. McMillin. Yes.
Chairman Collins. I would now like to turn to some policy
issues. I have had the opportunity to meet with you previously.
I will try not to duplicate all of those questions.
I want to talk to you this afternoon about the role that
OMB could play to help cut down on the incidence of waste,
fraud, and abuse in the Federal Government. This Committee has
held many oversight hearings that have documented hundreds of
millions of dollars--in the case of Hurricane Katrina, over $2
billion in wasted funds, whether the waste was due to outright
fraud or whether it was poor contracting decisions that caused
the taxpayers to pay more than they should for goods and
services.
What do you see as OMB's role in helping to curb the
wasteful spending of taxpayer dollars?
Mr. McMillin. Madam Chairman, I believe one of OMB's most
critical functions is to be the watchdog of the Federal
Government on those types of questions. I believe that one of
the best things OMB can do in leading efforts to deal with
waste, fraud, and abuse is to ensure that government-wide, we
improve the quality and capability of the financial control
systems we have at our agencies. Many times, and I think
Hurricane Katrina is an excellent example, the relative lack of
sophistication of those systems has made it difficult for CFOs
and those responsible in the agencies to get a good feel for
where the dollars are going and whether they are being
obligated in an appropriate fashion until it is too late.
Second, the Deputy Director of Management plays a critical
role as the head of the IG community across the agencies. It is
very easy, I have learned, in the Executive Branch to come to a
view that an IG perhaps is not part of the team--someone who is
perhaps antagonistic to the agency.
I think it is a mistake to fall into that kind of trap. If
you are going to have an independent IG community, clearly,
they are going to need to be able to speak their minds freely
on occasion, criticize the leadership of our agencies. We need
to recognize that they have important duties to perform. They
have a perspective and expertise that the folks charged with
running the programs themselves don't have. I have seen a
number of examples in various agencies where the IG has been
seen as a resource who can help the agency perform better, not
just in terms of financial management and dealing with waste,
fraud, and abuse, but also in exploring the effectiveness of
programs and making sure that they can achieve better results
on behalf of the American people.
Chairman Collins. What do you see as the relationship
between the Deputy Director and the Deputy Director for
Management? Do you see your role as being exclusively on the
budget side of OMB or also as having responsibility for some of
the management of the Executive Branch--management policies, I
should say?
Mr. McMillin. I view the role of the Deputy Director as a
true deputy for the entire agency. That means that, if
confirmed, I would need to be attuned to not just the budget
and policy-related issues, but also the entire scope of OMB's
management responsibilities and how those are integrated with
the budget and policy side. Obviously, the Congress in creating
the Deputy Director for Management position wanted to have a
senior person dedicated to those questions full time, and
certainly Clay Johnson is a very effective and capable Deputy
Director for Management, and like any manager in any
organization, I think Director Portman and I, if confirmed,
will continue to look to Mr. Johnson to provide the leadership
in that area, but certainly not to simply cede responsibility
or just leave him off unattended to the side. The issues that
Clay is responsible for are very much the responsibility of the
Deputy Director and the Director, as well.
Chairman Collins. Every 2 years, the Government
Accountability Office issues a list of programs or systems in
the Federal Government that it views as being at high risk. By
high risk, the GAO means that these programs or systems are
either at high risk of failing or they are excessively
vulnerable to waste, fraud, and abuse. Some of the systems, and
programs have been on the list for a decade. What do you think
OMB's role ought to be when it comes to improving the
performance and reducing the vulnerability of programs or
systems on the high-risk list?
Mr. McMillin. I think there is an opportunity for OMB to
form a partnership of sorts with the GAO on addressing programs
on the high-risk list. GAO is another good example of an agency
with a very important job to do, where it is important that we
not view criticism as antagonism, but rather an opportunity to
understand the challenges we face in some of these difficult
programs and find some new ideas for solutions.
I personally would hate to see an Executive Branch that was
so timid that we didn't take on a few high-risk projects from
time to time. It is certainly helpful to ensure that both GAO
and OMB provide a heightened level of focus on the
implementation of those programs and systems and it requires
the input of a variety of things that OMB can bring to the
table. In some cases, that means using the statutory management
offices as a resource to share best practices with some of the
agencies that are working on these systems. In some cases, it
means the budget side of the House has got to enforce some
discipline when the planning or execution of a program is not
proceeding as it should be.
One of the worst things we can do, having identified a
high-risk program, is to basically continue pouring money into
it, hoping that will solve the problems when we may or may not
have the right plans and management oversight in place to make
sure that they are a success.
Chairman Collins. I would really encourage you to tackle
that list. It is unacceptable to have programs and systems
listed year after year on the high-risk list, to have GAO point
to these programs as being at risk of failure or excessively
vulnerable to waste, fraud, and abuse, and yet no one does
anything to improve the management of these programs. I think
that is a really obvious list to start with. This Committee has
held hearings on some of the programs to try to get the
attention of agency leadership. But I really believe OMB could
play a critical role in helping us to get programs off the
high-risk list due to improved management.
Mr. McMillin. That is excellent advice.
Chairman Collins. Senator Bennett.
OPENING STATEMENT OF SENATOR BENNETT
Senator Bennett. Thank you very much, Madam Chairman. I
thought we would have a bigger attendance after the vote. I
came down before the vote and found out it was postponed.
I am old enough, Mr. McMillin, to remember when it was the
Bureau of the Budget, and it was during the Nixon
Administration that it got renamed the Office of Management and
Budget, but the ``M'' has been honored in the breach and the
``B'' has continued to dominate. The change of name hasn't
changed the function nearly as much as perhaps it should.
I simply add my voice to that of the Chairman to say the
more attention we can pay to the management side, the ``M'' in
OMB, and make that name change a reality--now I am overstating
the case, but we always do that in Congress. We are in the
business of overstating. I do recognize that there are a lot of
good things that have gone on on the management side, but I
think the Chairman's emphasis on focusing on management and not
just the creation of a budget is very well placed. I would
encourage you in your position to do what you can to look at
the management challenges.
I have been a supporter of the idea that we have a 2-year
budget, which would mean you would have more time. It would
probably mean we would have a few more supplementals, but it
would presumably mean you would have more time in a 2-year
congressional cycle to focus on some of these management issues
rather than being constantly consumed with having to put
together next year's budget.
I congratulate you on your willingness to serve. These are
not glamorous kinds of positions, but they are absolutely vital
to the function of government, and we are grateful to you for
your willingness to accept this assignment.
Mr. McMillin. Thank you, Senator.
Senator Bennett. Thank you.
Chairman Collins. Thank you, Senator.
As Senator Bennett was talking, I was thinking about how we
often are penny-wise and pound-foolish in our approach to the
budget. There are programs that would benefit from a greater
up-front investment that would end up saving you a great deal
of money in the long run. I want to give you three examples.
One we discussed during your courtesy call and that is the
Low-Income Heating Assistance Program, known as LIHEAP. If we
were to fund this program so that the money were available in
the Northeast in the summer months, you would be able to
stretch the dollars further because the price of home heating
oil is less in the summer months than at the height of the
winter. Yet this funding is usually not released until there is
an emergency situation at the height of the winter when prices
are the highest.
The second example is the Deepwater program, an ambitious
and much-needed recapitalization of the Coast Guard's assets.
The Coast Guard has one of the oldest fleets in the world. Its
cutters are aging. Its helicopters and planes are frequently
down for maintenance. There is a commitment by the
Administration to rebuild its assets, but it is a commitment
that the Administration has proposed lengthening over a 20-year
period. I have had studies done that indicate that if you were
to recapitalize the Coast Guard over a 10-year period instead,
not only would you give the Coast Guard the assets it
desperately needs much sooner, but you would also literally
save billions of dollars.
The third example is in naval shipbuilding. In this case,
we have uneconomical production rates. You see this with other
defense systems, as well. There isn't a question of not needing
more ships, but for budget reasons, funding plans are stretched
out, and as a result, we are underfunding shipbuilding. The end
result is that the shipbuilding yards cannot plan their work
effectively--and the Federal Government ends up paying far more
per ship than it would if we had a more economical production
line.
What can we do to encourage a more long-term view to
budgeting, realizing that in some cases, an investment up front
can save you literally billions of dollars later?
Mr. McMillin. Well, Madam Chairman, it often strikes me
that as we are budgeting, especially in the discretionary side
of the account, there often is a tendency to basically look at
last year's level and do percentage adjustments to it. As you
extend that sort of mathematical parsing of one big top-line
allocation down into individual programs and accounts, it often
can be hard for managers of a relatively small program to see
how significant capital investments are possible, much less
advisable, when they look at some of their near-term
operational requirements.
I think it is up to folks like OMB and the senior levels of
agencies--you look at DOD in particular with an annual base
budget of well over $400 billion now--and it should be possible
as we are doing our long-term planning in the defense area and
some other areas, as well, to be able to step back and say that
this particular capital investment is in the Nation's interest.
It is appropriate for us to deviate from the everybody gets 3
percent, everybody gets 1 percent type of approach that I
believe budgeting can sometimes slip into. So identifying those
opportunities up front, ensuring consistent top-level focus
throughout OMB, and then working with the senior levels at the
agencies, I think that is probably our best opportunity to
prioritize those types of investments.
Chairman Collins. You talked in your opening statement
about the need for a line-item veto to give the President
additional tools to control spending. Some of us are concerned
about altering the balance of power, if you will, between the
Executive and the Legislative Branches. What is your response
to that concern?
Mr. McMillin. Well, Senator, the version of the line-item
veto proposed by the President and under consideration in the
Congress now is significantly different from the one given to
President Clinton back in the 1990s. That version exercised by
President Clinton did not require any further review by the
Legislative Branch. It was simply a unilateral act by the
Executive Branch.
In this case, the line-item veto we are talking about would
allow the President to send up a series of rescission
proposals, which the Congress would consider under expedited
procedures. While there is some diminution of the right of any
individual member to amend, delay, or block that particular
legislation, it is not a unique situation. There are a variety
of situations, whether the Congressional Review Act or Trade
Promotion Authority, things of that nature, where Congress has
chosen to enact expedited procedures for the consideration of
important matters. And so in this case, there is an opportunity
for Congress to speak after the President has made a proposal
and I think it represents an appropriate respect for Congress'
prerogatives.
Chairman Collins. Senator Bennett.
Senator Bennett. Thank you, Madam Chairman.
I supported the line-item veto that we gave to President
Clinton, and he disillusioned me really fast. When I saw how it
was used, I stood up on the floor of the Senate and said, ``I
hereby withdraw my support.'' I was delighted when the Supreme
Court struck it down. So I am willing to look at the details of
this. I won't say automatically no, but I remember the
statement of Pat Moynihan, who probably served more Presidents
than any Member of the Senate in history, starting with John F.
Kennedy, Lyndon Johnson and Richard Nixon, Gerald Ford, and
then he came to the Senate. He said if Lyndon Johnson had had
the line-item veto, he would have been an emperor, and we don't
want to run that risk.
I will look at the details of what you are presenting, but
I think it is appropriate that you raise that, Madam Chairman.
Chairman Collins. Thank you, Senator.
Mr. McMillin, your family has had to wait a very long time
today so I am going to ask you just one more question so that
they can get home before it gets too late, and then I will be
submitting the remainder of my questions for you to answer for
the record.
We have talked about the line-item veto as being a budget
tool. Another budget tool that Congress had at one point was
what is known as PAYGO rules, the pay-as-you-go rules. Those
are budget enforcement policies. I know you are familiar with
them from your time in the Senate. I also asked you a pre-
hearing question about this.
With respect to the application of PAYGO rules, I have
consistently supported rules that would apply equally to new
tax cuts and to new entitlement spending. The Administration,
however, has a different view and contends that PAYGO rules
should not apply to the tax side of the ledger. In your answers
to the questions submitted to you prior to the hearing, you
indicated agreement with the Administration's position.
If we are truly serious about regaining control of the
budget, why wouldn't we want to apply PAYGO rules to both sides
of the ledger, both the spending and the revenue side?
Mr. McMillin. Well, Madam Chairman, as I understand the
facts that informed the Administration's position on this, we
are in a situation where revenues are now and are projected to
be going forward at approximately the historical level as a
share of GDP, a little over 18 percent. As we look at the long-
term projections going forward, we see that spending, in
particular driven by entitlement growth, is projected to grow
substantially as a share of the economy. In that sense, I think
it is appropriate perhaps to apply further scrutiny on the
spending side, but I agree with you, we should not ignore the
revenue side of the equation.
In my opinion, Section 311 of the Budget Act provides the
Congress a good opportunity for exercising that kind of
discipline. In the budget resolution, the Congress, a majority
of the House and the Senate, can agree upon an aggregate level
of revenues that legislation should not cause the Federal
Government to go below. That decision can be made in the
context of an overall budget so that we can decide what type of
revenues we need consistent with our fiscal goals. Then as
individual legislation is proposed, Section 311 imposes that
super-majority hurdle on proposals that would take our revenue
below that level.
So there is certainly a need for discipline on both sides
of the equation. I think some of the reluctance on PAYGO also
derives from the baseline rules, which in some cases treat
taxes in particular, the 2001-2003 tax cuts that the President
proposed and the Congress enacted, the baseline treats those a
little bit differently than they do some spending programs.
Many spending programs are assumed in the baseline to go on
forever even if that is not current law. So then the question
becomes in enforcing a PAYGO requirement, proposals need to be
offset compared to what? So that is the basis of my view there.
Chairman Collins. Thank you. I want to thank you for
appearing before the Committee today and for your patience and
that of your family. I will be submitting additional questions
for the record. I don't think that the absence of my colleagues
indicates a lack of interest in your nomination but rather many
competing demands this afternoon. I do expect that we may have
some other questions submitted for the record. Without
objection, the record will be kept open until 5 p.m. tomorrow
for the submission of any written questions or statements for
the record.
Again, Mr. McMillin, I want to thank you for being here
today, for your willingness to serve. It does require a great
sacrifice on the part of your family, so I want to thank them,
as well.
This hearing is now adjourned.
[Whereupon, at 4:57 p.m., the Committee was adjourned.]
A P P E N D I X
----------
PREPARED STATEMENT OF SENATOR LIEBERMAN
Thank you, Madam Chairman, and welcome, Mr. McMillin. I
congratulate you on your nomination as Deputy Director of the Office of
Management and Budget.
Your previous experience at OMB as Associate Director for General
Government Programs from 2001 to 2005 should help prepare you for your
new post.
Before his confirmation as head of OMB, your new boss Rob Portman
promised ``to work closely with Congress on a bipartisan basis'' as we
try to get our exploding Federal deficit under control.
As Deputy Director of OMB, I would hold you to the same promise.
President Bush has said: ``A budget is more than a collection of
numbers. A budget is a reflection of a Nation's priorities, its needs
and its promise.''
I agree, but would add: A budget must also be about delivering on
those priorities . . . those needs . . . those promises, or else it
really is just a collection of numbers without meaning or mission.
Your job will be to assist Director Portman in helping the
President prepare the budget and execute it across 14 cabinet agencies
and more than 100 executive agencies, boards, and commissions.
You will be part of the team that recommends where every dollar of
our budget is spent, how each agency's programs are managed, and that
oversees the review of vital rules for public health and safety, worker
safety, and environmental protection.
I have concerns about how these responsibilities have been carried
out for the last 5 years.
Let's start with the budget. If we are going to get our fiscal
house in order, everything has to be on the table, not just entitlement
programs and discretionary spending, but our tax policies as well.
We recently passed a $70 billion tax package that showers tax
breaks on the Nation's wealthiest, who don't need the help, the oil
industry, which is enjoying record profits, and increases the already
enormous national debt, placing a hidden tax on our children and
grandchildren.
This also leads to a lack of resources to adequately fund vital
programs most of us agree are essential to our Nation's priorities,
needs, and promise.
For example, I supported No Child Left Behind because I want to
ensure a high-quality education for all of our students, regardless of
income. I believed it was important to try new ideas. But these ideas
demanded additional resources.
We have not delivered those resources. Under the President's
budget, the NCLB shortfall will be $15.4 billion next year. As a
result, the Title I budgets of most school districts across the country
will be frozen or cut.
In Connecticut, 122 out of 166 school districts will see Title I
cuts this year. That is wrong.
I fear we are about to repeat the underfunding mistake of No Child
Left Behind with the President's recently announced ``National Strategy
for Pandemic Influenza Implementation Plan.'' That plan relies heavily
on States and localities to carry the burden. But experts tell me these
State and local programs are significantly underfunded.
Second, Homeland Security also needs more help. Yet, whenever I
challenged the Administration's budget for homeland security, officials
countered by citing how much spending has grown in recent years.
Of course it has grown! We were caught unprepared on September 11,
2001. The question is not whether we are spending more, but whether we
are spending enough to meet the government's fundamental obligation to
protect its citizens.
Too often, the answer is no. We are shortchanging port security,
interoperable communications, bioterror preparedness, and more.
And as we have learned all too painfully with Hurricane Katrina, we
are shortchanging preparedness for catastrophic natural disasters, as
well as terrorist attacks.
Finally, on an important matter of budget process, we are now more
than 3 years into the wars in Iraq and Afghanistan.
There is no good reason why the costs of these engagements are
still being handled in separate supplemental budget requests.
This approach harms us in two ways.
First, it hides the true costs of our defense by putting a large
part of the costs off budget. That reduces the scrutiny and discipline
our defense budgeting needs and adds to the bill our children must pay.
Second, it also encourages our military to put core programs into
the supplemental. When--not if--the supplementals come to an end, those
programs will be unsustainable.
I do not agree that the costs of Iraq and Afghanistan are
unknowable and that we can't budget for them.
I do agree that a budget is a statement of our priorities, needs,
and promises. But without proper funding in the beginning--and good
execution afterward--it is just numbers with no meaning or mission.
And that means it fails the American people.
Thank you, Madam Chairman.
__________
PREPARED STATEMENT OF SENATOR STEVENS
Mr. McMillin, in FY 2003 and FY 2005, Congress--at my request--
appropriated a total of $5 million to the Tribal Partnership Program.
It was our intention that this funding would go to the Alaska Village
Erosion Tribal Partnership. This partnership was set up to assist the
U.S. Army Corps of Engineers in prioritizing the needs of 184 Alaska
villages that have been severely damaged by coastal erosion. This joint
effort--which is known as the erosion baseline study--is an essential
part of our efforts to address the erosion crisis in our Alaska
villages.
In June, I learned that the Corps of Engineers had reprogrammed
$2.168 million of this funding to projects outside of the Alaska
District. I sent a letter to Secretary Woodley, Assistant Secretary for
Public Works at the U.S. Department of the Army. I told Secretary
Woodley that I believe it is improper for the Corps to take funding
away from this vital project. I also told him it is unacceptable to
continually expect me to restore funding to address this urgent
situation. Reprogramming is an important tool which the Corps can use
to move projects forward. However, in this case, their decision to
reprogram has had the opposite effect--it has ground the erosion
baseline study of our villages to a halt.
One hundred eighty four of our State's villages have been seriously
impacted by coastal erosion and flooding. Four villages are in imminent
danger and must relocate. The Corps and the Administration are well
aware of this dire situation. Yet, the President's budget this year did
not include any funding to address coastal erosion in our State.
The coastal erosion crisis in our villages warrants support from
OMB. The citizens of rural Alaska deserve the same attention and
concern as those impacted by Hurricanes Katrina and Rita. When entire
communities are forced to relocate due to erosion, it should be a
funding priority.
I intend to oppose this nomination as a protest against OMB. OMB
must recognize the plight of our villages, which have been severely
damaged by storms and some of which have been declared national
disaster areas by the President. It is my hope that by opposing this
nomination, OMB will finally take the erosion crisis in our villages
seriously and provide the funding needed.
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