President s 2019 budget request. He faced questions on the 4. 4 trillion proposed budget which increases the federal deficit. Director mulvaney acknowledged that he would have voted against the white house budget as a member of congress. This Senate BudgetCommittee Hearing is just under two hours. Good morning. I will call to order this Senate BudgetCommittee Hearing. Good morning and welcome to the Senate Budget committees hearing on the president s Budget Proposal for fiscal year 2019. This budget submission comes to us on the heels of a very first, very busy first year for President Trump. Im proud of all the hard work and leadership that went into passing the tax cuts and jobs act, historic progrowth tax bill thats already bringing investments back to america and boosting takehome pay for workers. With the president s new budget submission im interested in learning how the administration plans to build on this momentum and further strengthen our economy. One of my greatest concerns as United States senator is the countrys national debt, a figure thats now eclipsed 20 trillion. To secure our economy long term for future generations, we must tackle this growing problem while lowering taxes is proving to bolster our economy which will bring in new revenue, we must more closely examine the Spending Priorities and habits of the federal government. We have a spending problem in america and so i look forward to hearing from our witnesses our witness which ways the administration believes we can use taxpayer dollars more efficiently. Today we have the opportunity to hear from office of management and budget director mick mulvaney. Director mulvaney, thank you for coming this morning to discuss the president s fiscal year 2019 budget request. We look forward to your testimony and the opportunity to discuss possible solutions to the nations budgetary woes. I also want to congratulate you on the documents, i only brought two of them that came yesterday, the two lightest ones. I want to congratulate you on how concise they are, how explicit they are and the difficulty that you went to to not only explain the budget but also to very specifically point out the major savings and reforms that are being suggested. Its one of the clear presentations that i have seen and i have seen a lot of them. The submission of the president s annual Budget Proposal marks an important first step in what should be an orderly budget process. Over the years, however, under successive congresses and administrations, this process has broken down, leaving behind a confusing, illogical, wasteful maze of legislation and ad hoc governing. A perfect example of which was on display last week with the latest budgetbusting spending deal. Instead of funding the federal government, week by week or month by month, we must address the structural deficiencies of our budget process, returning to a system that actually works. Serving on the budget exit committee for 15 years i tried to solve our budget problems. In 2016 i devoted much of the year to working on bipartisan ideas to fix americas broken budget process. We were able to get a conversation started through hearings and meetings with experts, 13 of them, while we made some Good Progress at the Committee Level for a variety of reasons, we did not succeed in advancing the kind of reforms we need. Im hopeful that learning from our recent experience with continuing resolutions and caps deals, the time to really reform the budget process is now. To be successful, we have to have bipartisan support. Which is why im again extending my hand to the other side of the aisle looking for willing partners to join me. I hope this renewed call for budget reform receives support from my colleagues in the senate and even from director mulvaney this morning. I welcome all my colleagues ideas on budget process reform, even on budget and on the programatic proposals in the president s budget. While these issues often divide i believe we can find Common Ground and make progress. This is the way the legislative process is supposed to work. The way to approach the task ahead for us is to focus on what i call the 80 rule. Focusing on the 80 of issues that we have general agreement rather than the 20 that not only lack consensus but we have been fighting over for years. That way we arent sidetracked and can achieve real results. Thats the way ted kennedy and this former shoe salesman from wyoming were able to get things done on the health, education, labor and Pension Committee in years past. The American People are counting on us to Work Together to fix the nations fiscal mess. We must start now because one thing is clear, ignoring the tough problems today will not make them disappear and the longer they persist, the more difficult they will be to fix. Every year we spend 4 trillion, i dont think anybody really knows how much that is, but its a lot of money, and we try to spend that amount and make the decisions on spending that amount every year. We really dont make changes. We just increase for inflation and what i call the panic factor. Well, its not quite true. We do make changes. We add new programs but we do it without eliminating or even consolidating existing programs, or even updating the old programs. The spending deal has a provision for fixing the broken budget process. The budget is supposed to be our roadmap to the future. We talk about the need for infrastructure, budgets one of those infrastructures that we better be working on if were going to have a better budget process. Its a tough road ahead, but im confident that we can find success together. Senator sanders . Mr. Chairman, thanks very much for holding this hearing and director mulvaney, thanks very much for being with us this morning. I dont have to tell anybody that in america today, there is a lot of political demoralization. Congress is held in one of the lowest today favorable levels at any time in history. Vast majority of the people think we do a terrible job. President trumps favorable ratings are the lowest i believe for any president who has served a length of time that he has served. So people look at washington and they dont see much that they feel very good about and i think there are a couple of reasons for that, which this budget really demonstrates. Number one, there are politicians who run for office and they say one thing. President trump, when he was a candidate, ran for office and he said im a different type of republican, im not the m, ck mulvaney type of republican, im different. Im going to stand with working families, we are going to take on the establishment and so forth and so on. Turns out he did exactly the opposite and this budget is a clear manifestation of him doing exactly the opposite. Second of all, i think what the American People understand is their one vote, their one voice, matters relatively little in a congress which is dominated by big money, wealthy campaign contributors. The Koch Brothers are going to spend some 400 million in the coming campaign and you know what . This budget is the budget of the Koch Brothers. It is the budget of the billionaire class and the American People understand it. This is a budget which will make it harder for our children to get a decent education. Harder for working families to get the health care they desperately need. Harder to protect the air that we breathe and the water we drink, and harder for the elderly to live out their retirement years with dignity and respect. This is not a budget as candidate donald trump talked about that takes on the political establishment. This is a budget of the political establishment. This is the robin hood principle in reverse. It is a budget that takes from the poor and gives to the very wealthy. During the campaign, as we will all recall, donald trump told us that quote, the rich will not be gaining at all, end quote, under his tax reform plan. Rich will not be gaining at all. But as president , the tax reform legislation trump signed into law a few weeks ago provides 83 of the benefits to the top 1 , raises taxes on millions of middle class families, and drives up the deficit by 1. 7 trillion by the end of the decade. If you were wondering how President Trump plans to pay for his massive tax cuts to millionaires, billionaires and large corporations, this budget answers that question for you by breaking his Campaign Pledge not to cut medicare, medicaid and Social Security. In fact, President Trumps budget would slash medicaid by over 1. 3 trillion, cut medicare by over 500 billion and reduce Social Security by nearly 25 billion. Mr. Chairman, as you know, medicaid now pays for more than twothirds of all nursing home care in our country. What happens to Senior Citizens who have their nursing home coverage paid for by medicaid if that program is cut by 1. 3 trillion . Think about it. People now in Nursing Homes with alzheimers, serious illnesses, massive cuts, what happens to them . What happens to their families . Its not just seniors. Today, medicaid covers millions of children with special needs. We are the only major country on earth not to guarantee health care to all people and this budget would then throw millions more people off the Health Insurance they have. We have an Opioid Epidemic that every person up here talks about every day, but when you slash medicaid by 1 trillion, you make it infinitely harder for communities, cities, states, to deal with this terrible crisis. During his campaign, donald trump told the American People that he was going to provide, i quote, Health Insurance for everybody, end quote, with much lower deductibles. President trumps budget would throw an estimated 32 Million People off the health care they currently have. 32 Million People. At the same time, it would substantially raise premiums for older americans. Mr. Chairman, what this budget is about is a massive transfer of wealth from working families, the elderly, the children, the sick and the poor and the most Vulnerable People in our country to the top 1 and large corporations. As a candidate, trump said that he understood the pain that working families across the country were feeling. Well, mr. President , you are not responding to that pain when you propose a budget that would throw over a million children off afterschool programs. Youre not a champion of working families. Youre not responding to pain when your budget would kick half a million families out of their homes by gutting Affordable Housing. We have a massive crisis in Affordable Housing from coast to coast. This budget would make it much, much worse. You dont help working families, mr. President or mr. Mulvaney, by throwing more than 100,000 children off of head start. We need to move to universal prek. Every family in america should know their kids have good quality child care. You dont throw 100,000 children off of head start. You dont help working families when your budget would eliminate Financial Aid to more than a million and a half low income college students. Kids are graduating school 30,000, 40,000, 100,000 in debt. This budget makes their problems even worse. Youre not a quote, different kind of republican by proposing a budget that would eliminate heating assistance to nearly seven million families in this country. Let me tell the president , mr. Mulvaney, it gets cold in vermont and many other parts of this country. Many of our elderly people keep warm in the wintertime through the low income heating assistance program. Dont eliminate it. Mr. Chairman, while President Trump tells us we dont have enough money to help the working people of this country, he does believe we have enough money to provide a massive, massive, massive increase in the pentagon, an agency of government that has not been able to do an audit and where study after study shows us that there are hundreds and hundreds of millions of dollars in waste. Mr. Chairman, the good news is this budget is going nowhere. Everybody knows that. But it does indicate where trump and his friends are coming from, and the American People have got to understand that. Weve got to stand up and say no, these are not the priorities of this country. Thank you, mr. Chairman. Thank you, senator sanders. I will now introduce the witness. Our witness this morning is mick mulvaney, director of the office of management and budget. Director mulvaney has held this office since february of 2017 and is charged with assisting the president to fulfill his vision through the production of the federal budget and its implementation across the executive branch. Prior to his time as director of the office of management and budget he served the people of the Fifth District of South Carolina as their congressman, where he was first elected in 2010. During his time in congress, he has served on both the Budget Committee and the joint economic committee. For the information of colleagues, dr. Mulvaney will take less than seven minutes for his Opening Statement, followed by questions. We look forward to receiving your testimony. Director, please begin. Thank you, mr. Chairman. Ranking member sanders. Thank you for the promotion. My mother would be glad to know i finally did get that doctorate. Appreciate the opportunity to be here. Chairman, i have already submitted a formal Opening Statement for the record. Im going to depart from that substantially just to say a few things before i start taking your questions. To explain really what we have sent you in the last 24 hours. Last year when i sat here, i had sort of half a budget. We had what was called a skinny budget at the time, the very first time i came before you, which was just the discretionary side of the spending which is not unusual during a transition year. This year, i have sort of come down with two budgets. What we sent you in the last couple of hours, actually just since yesterday, takes our 18 budget and makes an effort to bring that budget from last year sort of into compliance or at least into line with the caps deal you all cut on friday. In addition, we also have sort of two 19 budgets. We have the 19 budget we have been working on at the office of management and budget since last summer which we also tried to sort of bring up to speed in light of the caps deal. Let me make it very clear that the numbers that you get are extraordinarily good. They are solid numbers. Theres no question about it. But its impossible to do six months worth of work in a weekend, especially when we also had a brief Government Shutdown on top of that. So the numbers i will talk about today, they are solid numbers. Theres no question. But still expect over the course of the next couple weeks and months to see additional tweaks. The example i give, gentlemen, is that the caps deal, for example, extends the mandatory sequester by two years. It will take us several weeks if not months to run that number through the system. Instead of however waiting until april or may to give you this budget, we decided to come forth with these numbers here today. What have we done with the 18 and 19 budgets. We tried to deliver two messages. Two messages at the same time. The messages from the administration is this. I recognize the fact a budget is a messaging document. We can sort of beat you to the punch and ask the question whether or not its dead on arrival. I will never forget senator leahy called me last year after i sent down the first budget and said young man, dont feel bad, this budget is no more or less dead on arrival than the other 40 i have seen since ive been here. But it remains a messaging document. So what are those messages . There are two primary messages in what we bring to you today. Number one, you dont have to spend all of the money that you just allocated or provided for in the caps. But if you do, heres how the administration would prefer to spend it. You dont have to spend it all. Thats what we have put in the 19 budget. Yes, we added money back to the 19 budget. Money in addition to what we would have sent you if there was no caps deal, but we do not spend all the way up to the caps on the 19 budget. Second half of that first message is but if you do spend it, here are the administrations priorities. Thats the 18 budget. We have taken the 18 budget and added back i think 117 billion worth of nondefense spending to 18 to spend up to the caps in 18, in addition to the 26 billion we add to the 18 budget for defense spending. So that you have in front of you the administrations two positions. You dont have to spend it all and if something happens between now and the appropriations bill that you pass in march, or the appropriations bill that you pass for 19, between the end of march and september of this year, if you decide not to spend all the way up to the caps, then you have the administrations guidance on how we would prefer to do that and that is in our 19 budget. Conversely, if you decide in 18 or 19 or in both to spend all the way up to the caps and you are curious as to how the administration would prefer to spend that money, that is the 18 budget. That is what we have sent to you. We do believe that that message still has value even though you folks changed the numbers in the last three days and we signed it so its not like you did it to us. We all did it together. We respect that