Good morning. The hearing will come to order. Welcome to the committee on the Budget Hearing on the president s fiscal year 2019 budget. Today we will hear testimony from the director of the office of management and budget, the honorable mick mulvaney. During our hearing we will hear directly from the director of omb and we appreciate you being with us here today, mr. Director. Your insight will be very help of in our understanding. We see that the president s budget each year marks the beginning of the federal budgeting process or budget season as we like to call it, and the white house officially kicked it off on monday. While congress ultimately controls the purse strings, the president s budget request is still an important document for lawmakers to consider along the way. Each fiscal year the administrations budget documents documents the president s policy and spending priority. These are important for both changes to consider as work crafting the budget resolution begins in earnest. Without question there are plenty of worth while ideas included in the president s budget this year. First, im encouraged that the administration prioritizes and boosts the investment in our national defense. With mounting threats to our security both at home and abroad, it is critical that we provide for a strong and capable military. We must ensure our war fighters have the necessary resources and training to complete the missions with which they are tasked today and those with which they will be tasked in the future. Im also glad to see the Administration Confront headon the issue of opioid abuse which has turned into a nationwide epidemic. More than 115 americans die every single day from opioid overdoses, so we can all agree it is a serious, rampant problem that can no longer be ignored. Additionally, the administrations budget request calls forei enhancement and security at the borders, reflecting President Trumps commitment to address tinge broken immigration system. Theres no question that the infrastructure is in dire need of attention. It proposes overhaul of the infrastructure. More detail on the initiative was released earlier in the week. I welcome the president s plan to cure decades of neglect and to build an infrastructure to meet the needs of the American People and the economy. Last in the list of examples but certainly not least, i appreciate that the president s budget, an american budget, acknowledges fiscal reality and takes significant steps towards reducing the deficit. The president s budget projects 3 trillion in deficit reduction including 1. 7 trillion in mandatory savings, bringing us within 1 of gdp in the 10year window. The budget emphasizes a need for efficient, effective and accountable use of taxpayer dollars and takes real steps to target waste, fraud and abuse in government. These are all good things for our country and we will certainly consider embracing the president s best ideas. However, it is important to remember that even with the positive Economic Impact of tax reform thats being felt across the nation by hardworking americans, the financial state of our country is still undeniably grave. The president s budget certainly highlights this sobering reality. While there are many worthy policy proposals in this budget request, it is also very telling of our financial situation that the proposal does not get to balance. It should always be the goal to balance our books. Every year we neglect to do so the task becomes more daunting and more difficult. In order to slow down and ultimately pay down our nations unsustainable debt we have to make some tough choices. So our work writing the budget resolution begins within the house Budget Committee. Balance does remain the ultimate goal. However, today and in the coming days our committee will carefully consider the president s suggestions and work to incorporate many of his budget ideas. Thank you for this initial time. With that i will yield to the Ranking Member, the gentleman from the common weflwealth of kentucky, mr. Yarmouth. Thank you very much. Thank you, director mulvaney, for coming to answer our questions. I would like to thank you for coming to meet with our democratic members yesterday. I know it was valuable for us. I hope it was good for you too. Last year when we received the president s budget for 2018 i described it as a betrayal with a long list of broken promises, which it was. This year im going to start with the positive. In this budget the Trump Administration has done something extraordinary. They have finally realized that you cant balance the federal budget by cutting taxes. You cant balance the federal budget by cutting spending, and you cant balance the federal budget through gimmicks. God knows we have tried all of those. With this new acknowledgement or enlightenment, whichever the case may be, maybe theres hope we can Work Together in a bipartisan way to advance a responsible budget that truly addresses the needs and priorities of the American People. It cant start with the values reflected in the rest of the trump budget. Lets be clear. This is an irresponsibly extreme budget that reflect the disdain for working families as well as a disheartening lack of vision for a Stronger Society. This budget calls for massive cuts to health care, antipoverty programs, and investments in Economic Growth, all to blunt the deficitexploding impact of the president s tax cuts. It takes i am at the bipartisan budget agreement the president signed into law just last week, cutting nondefense spending in 2019 by at least 57 billion below the levels called for in the twoyear agreement. This is funding that would go to veterans programs, law enforcement, diplomatic operations, education, research and other investments to boost jobs, revitalize communities and improve economic security. Beyond 2019 the budget sets nondefense spending on a steep and steady downward trajectory so by 2028 nondefense discretionary funding would be cut by 33 below the bipartisan budget agreement level for this year, and thats without accounting for inflation. That is such a dangerously low level of funding it would leave the government unable to carry out its basic functions. The budget then goes directly after mandatory spending, brutally targeting programs that help americans living paycheck to paycheck. It cuts 263 billion from mandatory programs that safeguard basic Living Standards, including a 214 billion cut to the Supplemental Nutrition Assistance Program that protects 44 Million People including 20 million children from going hungry each night. It takes 72 billion from disability programs including Social Security and more than half a trillion dollars from medicare, a full betrayal of the promises the president made to the American People not to touch either program. Despite the publics outright rejection last summer, the president s budget continues the republican obsession with dismantling and destabilizing health care for million also of americans. It makes another attempt to repeal the Affordable Care act and replace it with a plan that would leave millions without meaning of coverage. As part of this continuing attack, the budget cuts 1. 4 trillion from medicaid, jeopardizing care for seniors in nursing homes, children with disabilities and low income families. Even where the budget claims to increase investments it fails. This proposal pretends to make infrastructure a priority with 210 billion in federal funding, a figure that falls short of the nations needs. Again, the budget simultaneously cuts 122 billion in highway programs while eliminating or limiting other Infrastructure Investments the cities and states needs. Even after these reckless cuts the budget cant hide the true devastation of the tax cuts. It once again relies on unrealistic Economic Projections to make it look less ominous. Even though independent economists predict high growth rates are not sustainable given trends in our labor supply. So while the budget includes some honesty by acknowledging that the tax cuts didnt pay for themselves, it turns to gimmicks to hide full consequences of the cuts while decimating critical investments the American People need. The federal budget is about choices that have major impact on the American People. Not a single millionaire would have gone hungry without the tax cuts my republican colleagues gave them, but Many American families will not be able to put food on the table under this budget. Others wouldnt be able to afford health care, housing or heat their homes in the winter. These are choices my republican colleagues are making and they are reprehensible. Our task here is to build a Stronger Society and to do what we need and to do that we need investments in education, health care, job training, innovation, infrastructure and more. If you believe america is better off by gutting these investments, you fundamentally misunderstand the true source of our nations strength. I yield back. I thank the gentleman. In the interest of time, if other members have Opening Statements they would like to make, i ask you submit them for the record. Then i would like to introduce and recognize the director of the office of management and budget, director mulvaney. We appreciate your time today, mr. Director. The committees received your written statement. It will be made part of the formal hearing record. You have ten minutes for your opening remarks and the floor is yours. Thank you, chairman. Thank you, Ranking Member yarmouth. Former chairwoman black, it is good to be back in the committee. Thank you for having me and giving me the opportunity today to talk about the president s budget. Im not going the read the Opening Statement that we submitted for the record. Lets talk very briefly about sort of an introduction and move straight to your questions. When i was before you last year, it was an unusual year. We had sort of broken the budget into two pieces, a skinny budget and a discorrectionary budget and a fuller budget late last spring which is unusual in a transition year. This year has been another unusual year in that the congress and the white house negotia negotiated and signed a caps deal as recently as i think early friday morning, which as you can imagine through all of the budget process in a good bit of turmoil. What we have brought to you today is almost two buckets. What we have submitted to congress is an addendum to the 2018 budget which purports to take the budget we have previously submitted to you in the spring and add back, bring back the spending, bring up the spending to the level of the caps deal that was executed a couple of days ago. In addition, weve also sent you the original 19 budget we were working on until friday that went through last years caps level. However, that changed as well. We have decided not to write an addendum to the 19 budget that takes us all the way up to the caps, but instead spend less than the caps. Why is that . Because this is, as everyone is quick to point out, a messaging document from the administration to the legislature. What is the message by doing those two budgets . A couple of different messages. Number one, we dont believe you have to spend all of the money. In fact, you saw the president s tweets over the weekend that said that we believed that we had to spend more or pay out more in nondefensive discretionary during the negotiation in order to get the defense spending that we wanted in the administration. We dont think you have to spend all of that money. That is reflected in the 19 budget, in the 19 addendum. If you do, you have the 18 budget and addendum that spends up to the caps. If you look at the two numbers, it is not that different. It is a 10 billion difference from one year to the next. If you decide going into the omni bus appropriation that i believe you will have before the end of march and decide to end up to the caps, which we fully expect you will, you have a guide as to how the administration would purport to spend that amount of money. Between march and the end of the fiscal year in september if you decide to spend up to the caps on 19, you could use the 18 number as a guide because the numbers are not that different. If, however, intervening circumstances prompt you for whatever reason not to want to spend up to the cap, you have guidance in your hand from the administration on how we would spend that money. That is the 19 budget with the 19 addendum. That first message is that you dont have to spend it all, but if you do, here is how we would spend it. The second message behind this budget is pretty straightforward, which is that we are not condemned, we are not condemned to year after year after year of trillion dollar deficits. There is a way to get off of that ride. That is the larger overarching message of the budget, that there is a way probably more than one way, but we have offered at least one way to get off of that cycle of trillion dollar deficits. So as you start looking at the out years in this budget, you will see that we dramatically reduced the overall size of the deficit and the deficit the debt as a percentage of gdp. No, it does not balance. I believe that i said to you when i was here last year that we worked very hard last year to try to show a budget that balanced in ten years. I also pointed out, as many of you have individually especially in the republican side of the room that if we did not start to make changes earlier rather than later, it would become more and more difficult to balance the budget every single year. I think i actually told a couple of folks last year that i was unlikely to be able to balance the budget this year. That turned out to be the case. In hindsight, i probably could have brought you a budget today that balanced, but it would have been made up of funny numbers. I didnt want to do that. I wanted to give you a budget that you could look at and know the numbers were solid, know that they were truth of, know that theres a lot of transparency in this budget, and know that this budget, especially for 18 and 19 reflect the actual fiscal condition of the country. Even though it doesnt balance were extraordinarily proud of it. To that end by the way, i read in the newspaper that said i would not support the budget if i was in congress. Thats absolutely false. I absolutely support this budget. I think someone was making a reference to the caps deal. This is a good budget. You may have been able to do better than this. The chairman and i have talked about things that might be done in addition to it or instead of it, but we are very proud of the budget and i whole heartly support it and would vote for it if it would come to the floor, which was my job when i was here. With that, im happy to go over the details over the course of the next couple of hours, but we welcome the opportunity to come in here and show you give you example also of the specific message that the administration has for the congress when it comes to the fy 18 and the fy 19 budget. Thank you. Thank you for your opening remarks. We appreciate your being here today. Youre going to get an opportunity im sure because i have absolute confidence to the people to my right and left that theyre going to ask some really direct questions and give you an opportunity to expound. Im going to lead off here this morning. I am glad to hear you talk about deficits and debt because at the end of the day what we do with our budgets and how we appropriate the dollars that fund our government has to be checked by what were doing to future generations insofar as running up deficits and piling up more debt that will surely fall on future generations. I am reminded of the many times that people on my side of the aisle have talked about shrinking the size of government, the cost of government, and giving some relief to the fact that theres just a certain amount of money out there and sometimes we kind of overpromise our government to our people. Generally speaking, what is the we talk about this in terms of numbers. Sometimes these numbers are so large in fact, theyre often so large that they just fly over the head of most people because of the number of zeros and the number of commas in these numbers. What is our moral obligation as the legislative branch of government who has the article 1 authority to fund this government . What is our moral obligation to make sure that we get our arms around these deficits and debt . I know youre disappointed, mr. Mcclintock stepped out because im going to use one of his lines i have always liked which is theres no such thing always a deficit, it is a future tax increase delayed. If you assume were going to pay all of our debts, which i think everybody in the room assumes that we will, youre going to have to pay for it at some point in time. Since the only way the government raises money is through taxes, all were simply doing is spending money now that were going to raise in the future. So i think the moral obligation there is to do as little of that as you possibly can. Does it disappointment that we do not balance in ten years . It does. Do i think it is a failure because of that . I do not. It is a Budget Proposal with 3 trillion in savings against the baseline, which is essentially what we would spend but for the budget. That is the second largest reduction in spending of any Administration Budget in history, exceeded only by last years budget. Theres 1. 7 trillion did i say billion . I meant trillion. It runs together after a while. We say 1. 7 trillion against the baseline in mandatory spending. The administration has been accused of not tackling the difficult question of mandatory spending. 1. 7 trillion in this budget, the largest ever by the administration. We make difficult decisions. Is it easier to spend money than cut . Absolutely. In fact, i did it. We went through the process when we took the 18 budget and spent to the cap as part of the addendum and took the 19 budget and spent up to the cap. The meetings are more fun when you get to spend money than when you have to cut, but this is not supposed to be fun. This is supposed to be responsible and