Their approval to become the white house budget director. Next, his appearance before the Senate Budget committee. It is about three hours. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] good morning and welcome to everyone here. I will call this here in short order. We are here today to consider the nomination of representative Mick Mulvaney of South Carolina to be the next director of the office of management and budget. Im going to try to keep my opening remarks brief since we have a pair of senators before us for going to give some introductory remarks of their own concerning their nominee. President trump indicated his intent to nominate representative of any for this position a little over a month ago. I think we would like to see a confirmed director in place as soon as possible. So i am happy to note that the other Committee Jurisdiction over omb d awe need an omb director in place with so many causing budgetary issues requiring the attention of the new administration and most among these foremost is a 20 trillion debt burden american shoulders. Congress needs an omb director who can awe can work with to put the nation on a responsible fiscal path. Thats why am pleased that he nominated fiscal conservative for this key post. The representative has been vigilant and budget aand six years in congress including his tenure on the house budget and oversight committee. He has been a vocal contributor to the great budget debates of recent years. Focus on questions and how he ultimately stopped the federal government from overspending while continuing to fund the countrys core priorities and responsibilities. Representative mulvaney has been a prominent voice arguing for fiscal restraint, balance budgets and honest budgeting that does not use gimmicks for nonemergencies. I have also discussed with representative mulvaney the urgent need to reform the broken budget process. Which has contributed to the budgetary stalemate and recurrent continuing resolutions in which congress now read tinley resorts in order to postpone hard decisions about spending and debt. There is an urgent need for important reforms to the process. Such as implementing budgeting and the overhaul of outdated budget accounts and concepts that have outlived their usefulness. Ultimately, my goal is to produce comprehensive and lasting budget process reforms that puts our nation on a better fiscal path. Despite its significance, the preparation of the president s annual budget submission is only one of the responsibilities of omb. As with any executive office omb has numerous governmentwide management responsibilities in addition to budgeting and spending that concern various activities carried out by federal agencies. These include agency rulemaking, contracting, grants management, financial management, information technology, program assessment, personal policy, Property Management and several others. I particularly am interested in hearing his view on the role played by the office of information and Regulatory Affairs and bedding agency regulations. This committee has been exploring the concept of a regulatory budget as one way to produce a check on the growing burden of regulation on the American Economy more so to Small Business. Also since he is the house sponsor with a recently enacted legislation with improper payments, i am interested in his view on how we can reduce the growing volume of improper payments made by the federal government each year. The annual amount reached 144 billion in 2016. The cumulative amount of improper payments densely started counting in 2003 exceeds 1 trillion. Senator sanders. Chairman. Thank you very much. And we welcome the discussion that we will be having with mr. Mulvaney for this very important position. And i would also like to take this opportunity to welcome the new members of this committee. Senators ben holland and harris and senator gardner, senator kennedy and ai look forward to working with all of you. Chairman you and i may not agree on too much. But i think we can all agree that President Trump ran a very unconventional campaign. And that he told the American People that he would govern as a very unconventional republican. I think that is fair that we can get unanimous consent on that one. And over and over again, in fact the cornerstone, one of the cornerstones of his campaign was that he was not going to cut Social Security medicare and medicaid. He was not ambiguous about this. He did not say this in an ambush interview at 3 oclock in the morning. He said this over and over and over again. And i suspect that millions of Senior Citizens of this country and millions of working class people that do not want to see Social Security, medicare or medicaid cuts for that reason. And i will just read a view of the quotes with your permission mr. Chairman. Into the record. Many of the quotes. That President Trump said on the campaign trail. He said on may 7, 2015 quote a i was the first and only potential gop candidate to state there will be no cuts to Social Security, medicare and medicaid. April 18, donald trump said quote aevery republican wants to do a number on Social Security. They want to do it on medicare, medicaid and we cant do that. And it is not fair to the people that have been paying him for years. And now all of the sudden they want to be cut. August 10, donald trump said i will save medicare, medicaid and Social Security without cuts. We have to do it. People have been paying him for years and now many of these candidates want to cut it. Last quotes, march 29, 2016, donald trump said, you know, paul ryan wants to knock out Social Security. Knock it down, way down. He was not medicare way down. Frankly well two things, but for when you will not lose, youre going to lose the election if youre going to do that. Im not going to cut it. And i will not raise ages and im not going to do all of the things they want to do. What they really want, they really want to cut it. And they want to cut it very substantially. The republicans. And im not going to do that. That is quotes from the president when he was on the campaign trail. Now that this is over President Trump still sends out a whole lot of tweets. But surprisingly enough i have not seen that tweet where he says that. Im waiting eagerly for that as millions of seniors and working people in this country are. Issue that we are discussing today is will the president keep his Campaign Promises and will he appoint people to his cabinet who will help them keep those Campaign Promises . Now we go to congressman mulvaney. And i want to thank him for coming into our very productive interesting discussion. But, his views on Social Security, medicare and medicaid are exactly opposite of what donald trump campaigned on. Let me quickly run through congressman mulvaneys record. May 15, 2011 he said we have to end medicare as we know it. April 28 2008 he said quote a medicare as it exists today is finished. August 1, 2011 he said quote a you have to raise the retirement age, lower pay cuts, change the reimbursement system. He simply cannot leave Social Security the way it is. On may 17, 2011 he said, i honestly dont think we went far enough with the ryan budget because it did not cut Social Security and medicare rapidly enough. And in fact, just last year congressman mulvaney voted against the budget proposed by House Budget Committee chairman tom price. And House Speaker ryan. They voted in favor of a more extreme budget by the republican committee. This radical rightwing budget that congressman mulvaney supported cuts medicare by 59 billion more than the price ryan budget. He cut Social Security by 184 billion more and it cut medicaid and other Health Programs by 255 billion more than the budget proposed by chairman price and speaker ryan. This is also interesting. In may 2009 when congressman mulvaney was a member of the South Carolina state senate, he voted for an amendment declaring Social Security, medicaid and Us Department of education unconstitutional. Let me read the text of that amendment. Quote awhere as many federal mandates in which those that created the Us Department of education, medicaid and the United States Social Security administration are directly and violation of the 10th amendment to the United States constitution. That amendment in the South Carolina senate was defeated by a vote of 35 to 6. Mr. Mulvaney was one of the six. In my view, the opinions and ideas of mr. Mulvaney are way out of touch with where the American People want and more importantly, they are way out of touch with what President Trump campaigned on. And while we can all disagree on many issues, i would hope we can agree that if somebody campaigns, i am sure many my republican athat you keep your promise. And i suspect that chairman enzi does that. He tells what he feels and he keeps his word. But it does not make sense to me to have a key advisor to the president having direct opposition and what the president campaigned on. Last point, i have come during the confirmation review process awe have come to learn during the nominating process here that mr. Mulvaney failed to pay over 15,000 in taxes for a nanny that he employed from 2000 to 2004. Here is what congressman mulvaney wrote about the issue in response to a question i asked him on january 11. Quote aive come to learn during the confirmation review process that failed to pay fica and federal and state unemployment taxes on a household employee for the years 2000 to 2004. Upon discovery of that shortfall i paid the federal taxes the amount in question federal i can unemployment it was 15,583. 60. Exclusive of penalties and interest that you were not yet determined. The state amounts are not yet determined. Mr. Chairman, this is a serious issue. As you will recall eight years ago senator awithdrew his nomination of secretary of a after it was discovered he failed to pay his fair share of taxes. On this issue i agree with minority leader schumer says quote awhen other previous cabinet nominees failed to pay their fair share in taxes, then it republicans force those nominees to withdraw from consideration. The failure to pay taxes was disqualifying for democratic nominees than the same should be true for republican nominees. That is the end of schumers quote. In 2015 mr. Chairman, congressman mulvaney voted for a bill in the house that clearly stated and i quote a any individual who has a seriously delinquent tax that should be an intelligible to continue serving as an employee of the federal government. Mr. Chairman i look forward to asking mr. Mulvaney questions. Thank you for the time. Thank you senator sanders. Before we swear in the witness and hear his testimony, we will hear today a little bit about the nominee from our committee colleagues, senator graham as well as aand senator graham and mulvaney or fellow South Carolina hands. And senator cotten said in house with mr. Mulvaney. Thank you mr. Chairman. Im honored to be here. To introduce congressman mulvaney. He is my buddy. We do not agree on everything but i think he is one of the most capable people i have met through my time in Public Service. And we have a real friendship. We play golf. He always beats me. [laughter] i accept that. He has a beautiful wife and triplets. Just remember that when you talk to him. He is sincere. Clearly, senator sanders would not have chosen him for his director. I think we established that. Why would donald trump, President Trump taken man according to senator sanders, that does not agree to anything he stands for . I would argue that he picked congressman mulvaney because he understands he knows the budget, he will be a good overseer of the government. He is a practical guide. And he will follow the president. President trump understands everything that you said about congressman mulvaney and he has confidence that this mans ability to do a job for his administration. I share that confidence. To those on the defense side he will follow the call of the president to increase defense spending. He does believe in and reform and i think he is right to do so. To save these programs. So from a personal point of view, ive never had an occasion where he would not tell me exactly what he believed even if he knew i would disagree with him. And he is able to disagree with people in an honorable fashion, he is incredibly smart. He has made it his lifes work to understand what is wrong with our government. He his dedicated to fixing. One final personal ai think i voted for every i asked myself where did that and appeared reason i did it, i think elections have consequences. And while i disagree with almost every nominee about the basic structure of government, i understood that president obama needed his team and deserved his team if they were qualified. And here is what i would ask this committee to consider. Given this mans life experience, his background, the Public Sector and private sector. His time in congress, do you believe he is qualified to understand how the federal Government Works and reform it consistent with what the president will direct him to do. I believe that with all of my heart and soul. And i appreciate you listening to congressman mulvaney. In any hard question you can ask, youre doing your job. Just realized elections have consequences for you as they did for me. Thank you. Senator cotton. Thank you. Mulvaney and i have known each other for many years. We serve together and house of representatives. He is a friend and i speak from personal experience when i say he will serve our president and our nation with distinction. The way i see it, the directors chief job is to give president the unvarnished truth. He is a telling president exactly what things cost. Partly to his agenda but mostly to the taxpayer. The president of course sets the agenda but he deserves a clear eyed view. Not rosecolored glasses there for the past six years mick has been telling many hard truths. Presenting we are spending too much, and shortchanging the military will only cost us more in the long run. He also understands afor the big spenders in washington. It is the American People who earned this money through their hard work and sacrifice. He will treat every tax dollar like it was his own. And trust me it means he will watch it like a hawk. Many people stopped me to ask about the National Debt. It is a huge concern. So with his eagle eyed focus on spending, mick will be a crucial voice. He will represent americans are deeply worried about the burden of where we are leaving our children and while he is deeply principled he knows how to work with others and make progress wherever we can. In short, mick is a fine choice to run the office of management and budget. So i urge you not only to advance his nomination but you do so as soon as possible. Under the law the president is required to submit budget to Congress Early next month which will be very difficult without a new director. I hope the senate will also confirm him promptly. Thank you for your time today and your consideration of a passionate advocate for the taxpayer, a bold truth teller in my friend, mulvaney. Thank you senator graham and senator cotton. I will keep my remarks brief. Mr. Mulvaney is representing the Fifth District of South Carolina. He holds an undergraduate degree from Georgetown University and a law degree from the university of north carolina. He has a husband and the father of triplets. We thank you for joining us today to and begin with you on testimony but first, under the rules of the Committee Nominees are required to testify under oath. So would you please join me as i administer the oath. Do you swear the testimony that you will give to the Senate Budget committee will be the truth, the whole truth and nothing but the truth . I quietly agree to appear before the committee and answer any questions that they might have . Yes. You may be seated. Now we have a chance to hear from you. Thank you committee, dickie chairman, thank you it is an honor to be here today to present my qualifications and my vision for the office of management and budget. I want to thank the president for nominating me and showing confidence in me in doing so. Especially mr. Graham and cotton for their kind words. I want to think especially before we get started my family. As members of this committee know the burdens of our Public Service often fall on those at home and we do not get a chance to say this nearly enough we certainly do not get enough on national television. I mixed ordinarily proud of the young people that my 17yearold triplets have become. I do not know if its because i have been away from home or despite the fact of being away but the fact that they are the young people they are is a tremendous testament to my wife was with me today. The children are back in school. I am extraordinarily happy and proud to have her in my life and it could not be here today if not for the support of my family. Finally am grateful for members of the committee to take the time over the course of the last couple of weeks to get together and talk about the issues as we talked about my vision for the omb if you see fit to ai think we all know that no one, no one can do this job alone. Perhaps the member of Congress Knows better than most many of these have served omb. Senator portman, russell, they all served with distinction and they all set a high bar and a good example of how a omb is supposed to function. To serve the president and to work with congress and the American People. If confirm that we use them as models. You deserve the truth about budget matters as do the American People and president. And as the omb it is responsibility to you give and the president the truth. Even when it is hard to hear. For the first time in americas history the next generation to be less prosperous than the previous. I know that is unacceptable to every Single Person in this room as it is unacceptable to me. We can turn the economy around. We can turn the country around. But it will take difficult decisions today in order to avoid the impossible decisions tomorrow. The debt has increased that is a number so large. I choose to look after the lens of the ordinary american family. If you were an ordinary american family, equivalent to a 20 trillion debt is a critical ability hundred 260,000. American families know what that mean to them and that is what it means to us. I believe it must be addressed sooner rather than later. Also fundamental changes are necessary. In the way washington spends and taxes if we truly want to help the economy. This must include the physical path. Part of that also means taking a hard look at government waste and ending it. American taxpayers deserve the government does official effective and accountable. They earn their money honestly. And they deserve a government that spends in the same fashion. This does not mean taking an approach to the gut budget, our country is more than just numbers. A Strong Healthy economy also allows us to take care of our most vulnerable. My motherinlaw relied on Social Security in her retirement. She relied on medicare to help her before she died of cancer. Pam and i were happy to have that safety net there for her. Pam and i would also like that safety net there for her grandchildren. I would triplets. That being said i know members of this committee would like to know my positions should i be director of omb. Im not in the position and do not presume what decisions i might make much like the president. I do know what i believe however. And i am going to discuss whatever topics you find relative today. Ive not been a shy member of congress in my six years here and i do not expect to end that today. Or as director of the omb if you see fit to confirm me. I recognize that Public Service whether it be the state legislature, house, or omb takes courage and wisdom. The courage to lead and the wisdom to listen. I have learned in my time in washington that i do have a monopoly on good ideas. Facts and the arguments of others matter. My commitment to you today is to seek a fact based approach and listen to various ideas on how to get our financial house in order. This is also comes with responsibilities, i know you are as familiar with them is everybody and i look forward to talking about those today as well. I look forward to talking about all of those issues, my qualifications and whatever you see fit. If confirmed i look forward to working with congress and serving the president to address all of the challenges on behalf of the American People. Again, mr. Chairman i think you for your time and the opportunity to be here. Thank you. Now we will turn to questions for representative mulvaney. Let me take a minute to explain the process for all Committee Members before we start. Each member will have five minutes for questions beginning with myself and senator sanders. Following the two of us, i will alternate questions between the republicans in the minority. All members who are in attendance when the hearing began will be recognizing order of seniority. For those who arrived after the hearing began youre on the list in the order of arrival. If it is your turn to be on the list and youre not here you will be moved to the bottom of the list. And you will get to ask questions at that point. When everyone else is done a once all of the senators present have had an opportunity to question the nominee i will always second round of questions if there is interest in doing that. Representative mulvaney is scheduled to appear before two other committees this afternoon so this hearing will end no later than 1 30 p. M. To accommodate that schedule. With that i have a few questions. I believe significant savings could be found by eliminating duplication and waste and brought overpayment over the government. You introduce the companion bill in the house legislation signed into law last congress that the federal improper payments coordination act. That was a bipartisan bill that addresses a very real and growing problem. Youll be in a position to help tackle this as omb director. Even saw a recent report that the department of defense lost 125 million. I do not know what lost means. You believe that significant budgetary savings can be found by reducing duplication waste fraud and overpayment . And what do you see the role of omb in identifying and addressing these problems . Chairman i think you mentioned in your Opening Statement, the recent finding that the amount of improper payments has now grown to the historic levels. It has now passed 100 million and on his way to 100 billion on its way to 200 billion. I think it is one of the reasons that the improper payments bill, which i believe senator johnson and senator a also worked on pass on a bipartisan basis. And and will never forget when we started working on that bill in the house i was working on with Patrick Murphy from florida. And he is a democrat. We were talking about this one day. And i said patrick it is unusual work on this together. He said you have to understand im a democrat and i believe the government should do more. Your republican and you probably believe they should be doing less. But we all hate aand i think thats right. I think you hit the nail on the head on an opportunity that we have and i bipartisan basis. Improper payments act as i understand it has gotten off to a choppy start. The report that is required by the legislation i believe is either finished or close to being finished. But in terms of actually putting the plan of action into place. It is already behind schedule. And to your point about who can help fix that, the answer is omb. It could use the budget function to make sure the agency is comply with the law. They are required to use best Management Practices here there several agencies that do a great job of this. My uncle died a few years ago i got a letter as executive of his estate. Within a week of his death from Social Security administration saying when you get his next check, do not cash or you will be violating federal law. So clearly there are agencies that do a good job. The question is why arent those agencies sharing their best practices . That is part of the motivation behind the improper payments bill that we passed. I just think that it is a good time to take it a little more seriously and if given the opportunity and omb i will do that. Thank you and i appreciate your service and your willingness to serve. It was mentioned in the opening remarks that the Ranking Member and i noticed that you chose to bring to the attention of this committee, an issue recently identified that resulted in you amending tax returns. Can you describe this issue and the board at the attention of the irs or whether it was discovered through an audit . Having voluntarily paid any and all additional taxes, fees and penalties that you discovered that you owed . I have center. I am happy to discuss it with anyone during my various meetings. In 2000 we had triplets. When they came home we hired someone to help my wife take care of the children. In our mind she was a babysitter. She did not live with us, she did not spend the night, she did not cook, clean or educate the children. She helped my wife with the kids. I did not consider her a household employee or purpose is withholding or not withholding. I did not think about it again until two days after the president nominated me for this position. And during the transition i got a checklist have you ever had a babysitter, nanny, au pair, governess or whatever . And i said yes. They sent me an irs circuit. It was the first time i read it. It was immediately clear to me i made a mistake and that the irs viewed our babysitter as a household employee which i should have withheld taxes. I told everyone. I said look, what is the best way to fix this . It is a mistake. Now i know about it. How do we fix it . The cpa and i went through the process of filing i believe schedule h for the relevant years. We pay the taxes. Also notify the irs of what we were doing and why. And then i told everybody on this Committee Like i told everybody in the senate and apparently the media as well. It is the only thing i need to do mr. Chairman. We made a mistake in my family and as soon as it was brought to my attention i knew the only thing i knew which was to take every step to fix it. I will pay any penalties, interest and late fees and abide by the lodge my best of my ability. Thank you. And to put this in context for the committee in 1993 president clinton nominated mr. Brown and mr. Kania to be secretary of transportation. Both nominees had to pay back taxes on domestic employees and yet both were conference. President clinton also nominated mr. Zoe baird to be the attorney general. She had hired an illegal immigrant and failed to pay taxes. While she did not become attorney general she did serve in the Clinton Administration on foreign Intelligence Advisory Committee and in the Obama Administration on the us secretary of commerce is Digital Economy board of advisors. In 2009 president obama nominated mr. Timothy ato be secretary of the treasury. Even though he failed to pay 35,000 in Social Security and medicare payroll taxes on his own income, and was in charge of the irs after being confirmed, he was confirmed. Mr. Senators. Thank you mr. Chairman. Congressman trent and i have talked to some members of the house whose views are very different than yours. They say you are a straight shooter. You are honest and i appreciate that. It is a good quality and a member of congress. Over the weekend i happened to bump into a psychologist. She told me that her patients are getting very nervous. Those who are on disability benefits. That they might lose their benefits. And in fact there conditions are getting worse. I have heard that all of the country. People now are worried that they may lose Social Security, medicare, may lose medicaid, disability benefits. I happen to believe that Social Security is one of the most significant and important and positive programs that the United States government has. That medicare by and large is an enormously Successful Healthcare Program in effect the majority of the American People would like to see medicare expanded to all americans. Something i believe. And that medicaid right now is saving the lives of millions of people. But you are in record time after time after time. Anna read the quotes. If they cut Social Security, cut medicare, cut medicaid. Now what concerns me is you are more than entitled to your views. You get elected by the people in your own district. But what disturbs me is that we have a president who ran on a set of principles that he would not cut Social Security and medicare and medicaid and yet he is nominating somebody whose views are very very different. So i have a real problem with that. My question to you is, what will you tell the president when he says i ran on a set of principles i will not cut Social Security, medicare and medicaid. Will you tell the president of the United States congress the president keep your word, be honest with the American People, do not cut Social Security, medicare and medicaid . Senator jeff question is what would i tell the president. And i listened as senator awas given introduction and i really whether hes said. I didnt know what he was going to say until he said it. When he gave the answer. Which is that i, the only thing i know to do is to tell the president the truth. And the truth is that if we do not reform these programs are so important to your constituents in vermont and mine in South Carolina, i believe in nine or 10 years the Medicaid Trust fund is empty. In roughly 17 or 18 years of Social Security trust fund is empty. We can choose to do something about that now or we can choose to do something about that . Forgive me for interrupting i only have five minutes. There is a lot that we can do. Including lifting the cap on income above 250,000. Which would enable us to extend and expand Social Security very significantly. But the problem im having right now is not just your nomination but the integrity and the honesty of somebody who ran for office onset of principles, nominating somebody else whose views are very different. But let me ask you another question. When youre a member of the South Carolina senate, you voted for a proposition that said Social Security is unconstitutional. Do you believe that socialist security is unconstitutional . Wax no sir it was brought to my attention this morning before the hearing. I do not remember the boat but i assure you today i do not believe Social Security or medicare are unconstitutional. You are one of six members of the South Carolina state legislature to vote on a proposition that said Social Security and the department of education, medicaid are in violation of the sent 10th amendment. You no longer hold that view that Social Security is unconstitutional . Ive no reason to disbelieve that but again, this in here i will not be arguing to the president of the United States that Social Security or medicare unconstitutional. Mr. Mulvaney, and congressman in july 2015 you said quote i urge House Republican leaders to use every available tool to strip planned parenthood of every taxpayer funds and to prevent them from receiving taxpayer dollars in the user. Some two andahalfmillion americans, many of them low income women now get their healthcare through planned parenthood. At a time only 28 Million People who have no Health Insurance today, despite the games of the Affordable Care act, do you really believe we should strip to an halfmillion americans, many of them low income women get highquality care at planned parenthood that they should no longer have access to planned parenthood . I hear a lot of talk from my republican friends about choice. You want to give people choice. To an halfmillion americans, many low income women choose planned parenthood as their choice for healthcare. Why would you deny them the choice . Wax senator i do not have a letter from me but i do remember the debate. And also what i voted for. And may have addressed in the letter. The proposal that the house put forward in july 2015 would have moved the money from planned parenthood to the federally qualified healthcare clinics. Which are more prevalent more available and serve more women then a i know about these Health Centers i am one of their advocates. But to an halfMillion People mostly women have chosen. All joy Healthcare System that allows people to go anything they want, your recommendation is that we should deny to an halfmillion women their choice of healthcare. Thank you mr. Chairman. Thinking. Senator graham. What percent of gdp will be spent on defense if we go back about a2021 . That will be down it will be well below four percent. Maybe closer to two. Between two and four. 2. 3 percent. What is the historical average of spending since world war ii . For. Closer to five. Do support President Trumps initiative of increasing spending . I do. A d aif you want a bigger army you will have more personal cost. Thats with the number will tell you. Are you willing to reform personal programs to make them more sustainable . I look forward to have the opportunity to do just that. Entitlement reform. What drives the debt . What is achieved driver of the debt . Medicare, medicaid and Social Security. Those are two different things. Explain the difference. Deficit is this years shortfalls between revenues and expenditures. The debt is the accumulation of debts over the years. The baby boom generation will be retiring and mascara what happens to medicare and Social Security in next 25 years . They go up. In 1950 how many workers work for how many are there today . Three. How many in ayears. Are we living longer or shorter . Longer. So were living longer, fewer workers and more people retiring. Those are the hard facts. Yes sir. We told President Trump if he ignores that we will not get out of debt . Yes sir. Will he tell him the promise that you made about Social Security will lead to their demise if you do not change that . Yes, sir. We told him theres a bipartisan way to do this that has been studied extensively without getting the program for saving the program . Yes, sir. When you will grow aagree with me that younger workers will have to work harder to get to the program . I have already told my children that. The Social Security was saved by . That is true. Do think we need to look at adjusting the age again because we live longer . Yes, sir. Do you think people should pay their medicare bill . I believe medicare benefits should and could be means tested. What percentage of medicare comes from the general treasury . Senator, that is when i do not know. I think it is over 60 percent. Isnt it true that if we do not change that medicare, medicaid and Social Security combined will consume all of the revenue that the American People spend in taxes by 2042 . Yes, sir. I think this year we will be close to 75 percent for just those three major programs alone. Is an entry if we do nothing we will have to either dramatically increase taxes or cut benefits in the next decade to 15 years . If we do nothing, then by the time i retire there will be acrosstheboard 22 percent cuts in Social Security benefits. Are you in a situation where you can give up some of your promise benefits from Social Security if you had to . Senator if i may, i enjoy this this is what we do when we talk right . I would take a second to tell a story. I talked about the ideas that save Social Security at a Sun City Retirement Community in my district. You have been there several times. I talked about slowly raising the retirement age and there was a gentleman there who is 59. Give me 55 to live there. And he said well i dont want to work until im 70. And i said no, our proposal would require that you work an extra two months. And he was flabbergasted. He said wait you know i can fix this by working two more months . And i said yes. He was angry that it was actually that easy to do. And i said well if you want to really be angry, if we had fixed it 20 years ago it might be two extra weeks. But if we wait another 10 years and might be two years. So we do have the chance to fix these . Lets get back. Very well said. Senator sanders said that one way to save Social Security is to increase, lift the cap on people who make over 250,000. Can you repair the gap between medicare and the unfunded liability by doing that . No, sir. As i told people . You cannot even come close. No, sir. Of each of the entire one percent everything including the dogs, could you repair the gap . You can confiscate everything and the answer would be no. Could you where the economy at eight percent and close the gap . No, sir. Thank you. Thank you very much mr. Chairman. Welcome congressman mulvaney. To you and your family. I had to say after that interchange, i think folks on Social Security and medicare ought to be really worried. And just demonstrating the difference between what President Trump has indicated he would do and what in fact you will be advising him congressman mulvaney. If in fact, you indicated as senator cotton indicated, you would give him the unvarnished. So i believe people sitting on this side, i believe medicare and Social Security have Great American Success Stories that have lifted a generation of seniors out of poverty. And created healthcare that certainty for many many americans. I am thinking after that exchange that for the 57 million seniors and people with disabilities and surviving spouses and children who receive Social Security benefits, the alarm bells should be going off right now. Let me go back as a straight shooter which i certainly respect. You did indicate that Social Security is a scheme. Is that something that you will say to the president and you did indicate that both Social Security and medicaid and the department of education were unconstitutional. So just keeping it test. Test. Security, do you intend to indicate to the. A ponzi scheme . Thank you for that senator. I had a very similar conversation with senator sanders in his office and he asked me about that. I said i described as a plan that takes money from people now in order to give money to people now. And he explained and i think he was accurate. Social security has always been like that. So i would not read too much into the description of it as a ponzi scheme. It is simply describing to people how the cash flows. And the difficulty that we face was contained in what mr. Graham just went through which is 50 years ago, 15 people were paying and one person was taking out. By the time my kids are paying for my retirement, two were paying and for everyone paying out. It is also true though, you and i talked to the office about the fact the we are sending was set a wild at 90 percent of wage income. And it goes up a little bit. But one significant way to take a burden off of Social Security and keep it going strong for those who rely on it and by the way about the third of seniors basically live on the money solely from Social Security. Maybe a little bit of a pension but pensions are being challenged right now as well. So, do you think they should be increased as a basic sense of fairness in terms of the fact that the last cap was set in 1983 . Thank you for that. If the senate feels bit to confirm the senator. I believe had his conversation with everyone from both parties that i met with. Including the independence. There is really five levers in Social Security. I understand all five. I have one more question want to ask after this. I know there are five. Im asking about one. In dimension one and i think if you pull one lever you have to pull it a long way. And if you pull three or four or five levers you do not have to pull them nearly as much. Thank you. And i want to completely change to something that i may be the only one to raise other couple of tallies may as well. That is a very important part of the budget called the farm bill which is less than two percent of federal spending. It affects every small town in michigan, every farmer as well as the Food Assistance programs. In the last go around we were very proud and a bipartisan basis to be the only committee to actually cut spending. In our own jurisdiction on 23 billion. And we are now coming into another time where we fully expect to Work Together on a bipartisan basis to invest in rural economy, small towns, agriculture, food programs and so on. Were any better position in a sense that food Program Spending is actually going down because the economy Getting Better but do you intend to propose reductions to farm bill and investments and Rural America in your budget . Despite the fact that farmers and families are ready contributed significant savings towards the deficit reduction . Another farm bill is important to you as it is to many other members including a who i spoke with us about. I apologize it has been several years as the house has taken it up so i am not in a position to give you an intelligent answer to the question. I look forward to talking to members of all parties out how to both maintain and improve and make more efficient. The farm bill. Thank you. Senator toomey. Thank you mr. Chairman and congressman mulvaney. Welcome and thank you for being here. Thank you for your willingness to serve and thank you for the great work you have done and house of representatives. Let me follow on a couple of the subject matters that have been raised. First of all is it your understanding that historically the reason that we have had a cap on the wages subject of Social Security tax is because we also have a cap on the benefits that are paid out. . Yes it is. And additionally if we limited the we would not solve the problem . Yes. Getting back to the bigger budget picture. Is my understanding that today the revenue of the federal government taking in as a percentage of gdp is greater than its post war historical average. Is that your understanding . Yes it is 18 and a half or 90 percent. The average is 17. 9. So we are taking in more revenue than historically. Discretionary spending aand some recent years absolute. That is correct. So revenue is higher, Discretionary Spending is lower than historically but yet a large deficit and projection that they will get worse. Is it pretty unavoidable to look at the entitlement programs and acknowledged that this is the problem . It is a problem and i think congress has done a pretty good job over the course of the last couple of years. To deal with the discretionary part of the budget. One of my colleagues suggested that the people on Social Security should be concerned about the things that you said. aif you are a pennsylvanian who is in his or her i dont know, early 70s and has modest income and depends on Social Security are you advocating cuts to their benefits . No, sir. You are not . What about someone who is 69 and receiving Social Security. Are you kidding that their benefits because . I do not think any proposal of the house come up with and no proposal that i would take to the president should i be confirmed would suggest that we touch both anywhere who are ai am not making my parents go back to work. There 74 years old. That is not what this is about. This is about trying to preserve those programs. Those folks, the folks who are 75 years old and relying on Social Security, be in pennsylvania or in michigan, they do not have to worry about that. Anybody of any age on Social Security where you want to cut benefits . Sorry sir . Is there any age on Social Security that you want to cut benefits that they are receiving now . No. You do not want to cut benefits . No sir. That is not clear to me was going on Social Securitys to be afraid of this. How about someone who is 40 years old and expected to work for another 25 or 30 years. Can we deliver on a promise that Social Security currently makes to that person. Is there any way that without change to the structure of the program we will be able to follow through on that commitment . Without changing the current Social Security program, a 40yearold today will receive roughly 77 percent of what they have been promised for their adult life. So to continue to can suggest we dont have to do a thing is dishonest to the young people. And if i understand correctly, the changes that you had advocate will be for people to have many years left in their working lives to plan accordingly and to prepare for the eventuality. Is that fair . Correctly require i think one of the proposals would require me to work an extra couple of months before i retire. And it would require my children alexi or how old . I am still 49. I think it is public information. Let me switch quickly to the regulatory side. When i met with Small Business owners and other people who are working across pennsylvania, they have been stunned by the avalanche of new regulations. And the cumulative weight of all of these regulations whether it is obamacare, epa, the entire alphabet soup of agencies. In my view, and i have heard this from them, it is having a devastating effect on Economic Growth. The omb directive is responsive for Regulatory Affairs and in that capacity, you have a lot of say about new regulations. Number one, do support the rains act which would, which would hold any major new regulation has to be approved by congress before it goes into effect a i do sir and i voted for that. I do, sir, and i have voted for that ordinance. How do you feel about the regulatory system where before we proposed new regulations and you had counterproductive regulations and repealed them . I think the law currently requires omd to do a ret retrospective analysis. I think its already the the law. And lastly, how high a priority do you think the administration should assign to rolling back the current level of regulation and do you have any other procedures or analyses you would use to achieve that . Thank you, senator. My distinct impression working with the Transition Team is that Regulatory Reform is an absolute priority for this president. I think you saw him mention yesterday hes going to cut 75 of the regulations. Hes absolutely dead serious about this. I believe hes the first person to campaign for president on Regulatory Reform since ronald reagan. I have some plans or ideas of how omd would help do that but this will be a priority for President Trump. Thank you very much, mr. Chairman. Let me lead with an observation, mr. Chairman and that is, in the time in the senate, i dont think ive ever seen a sincere effort at Regulatory Reform or relief. What i have seen is is a really good game of talk about Regulatory Reform and every time it rears its ugly head. One of two interests, wall street or polluters. Period. And sure enough, the two examples that the senator from pennsylvania just used were dodd frank on wall street and the epa on polluters. I would suggest on our side of the aisle, may be a much broader appetite for Regulatory Reform if it werent simply a device, a curtain to put over helping wall street and big polluters and i urge you to explore that. Second, you indicated in response to the question that, regarding lifting the Social Security contribution cap so that really high arent capped from contributing to Social Security. The question was, if we raised the cap, we wouldnt solve the problem and you answered a simple yes but isnt it true that would contribute significantly to solving the problem . Its one of the levers that should be on the table. As i mentioned, you could raise the retirement age to 100 and that would solve the problems in Social Security. You can pull every lever a long way and fix it. I guess you could take the tax rate to 75 . I dont know what the number would be. I want to make sure you dont dismiss because it affects high income people. No, sir, and my intention is to lay exactly what you and i have discussed out for the president. I say, president , if you want to look at Social Security, here are your five levers. Where would you like us to focus . One of the issues we focused on in this committee is the question of how you balance the budget and what we have here is different level of expenditures for different things. 560 billion in 2016 for nondefense discretionary. 600 billion for your entire military operation and 910 billion out the door in Social Security, not counting what comes in and 1. 1 trillion in all the federal Health Care Programs together. Medicare, medicaid, veterans wen fit , benefits, the works. Whats here is tax expenditures and weve had your former speaker say that tax expenditures are just another way of spending money for people. Weve had Ronald Reagans budget advisors say that you want to get after the budget problem, you want to get after tax expenditures, just another way of spending money. Its a particularly tricky way of spending money because it tends to help people who pay big taxes to get big benefits through the tax code, corporations, billionaires, so forth. And then it tends to be baked into the tax code. So unlike an appropriation, youve got to fight year after year against review by the Appropriations Committee year after year. There it is, there it sits, there it sit sttays. The problem on the other side of the aisle is that they talked a really big game about the debt and deficit but when it comes to the biggest expenditure, the tax expenditure, we cant get them to budge on anything. Not the carried interest exemption, the billionaires aless than brick masons and truck drivers, that is an outrage from simple fairness. Cant get it touched. Fossil fuel Companies Make more than anyone else and get big subsidies on behalf of the taxpayers. Private jet owners can depreciate faster than the airlines that fly regular people around. Makes no sense. We cant get one piece of that through the other side of the aisle. They will go to the mat to defend every special interest in my experience. Weve never been able to do it. If you want to put something together on this, i would suggest its not just purely to Republican Special interests. Really take a hard look at these tax expenditures. More money goes out the back door of the tax code than any other individual programs. Oh, one word answer. Yes, sir, it may be that you and the president get to the same place, but may be a very effective case why we need tax reform in this country but if i can borrow your graph, that would with great. You got it. Thanks. Corker. Thank you, mr. Chairman. And mulvaney, thank you for being here. Omd director was your dream job, so youre slightly odd, but i thank you for your desire to want to do this. I was looking at the forecast that was laid out today. Weve got 20. 355 trillion in indebtedness and over the next 10 years, well add 9. 7 10 yea trillion in debt and in spite of the comments, theres a large group of people here who realize the the immorality of that. People speak a great deal about jerking the rug out and i dont think anybody has proposed anything like that. But we all, i think, are disgusted at ourselves with the immorality of living today in comfort here in the United States senate and congress and not dealing with these issues which we though are goiknow are hugely problematic. Do you believe this is one of the greatest threats to our nation today . I do. And that really sank in for me, senator. My very first week here when i arrived in 2011, i was fortunate enough to get on the Budget Committee over in the house and we had a presentation and i cant remember if he was there or someone talking about the presentation, but the chairman of the joint chiefs of staff admiral mullen had recently made a comment that he thought that the National Debt was the greatest threat to the National Security of the United States and as a new member of congress, that put the fear of god in me in a hurry. Only 31 are Discretionary Spending. I find what you said earlier. And i would not want to focus on my friends on the other side of the aisle but my guess is theres numbers of them that would be willing to look at all five of those levers to solve problems. Actually, find your views to be very much in the mainstream. These are the things we all know we need to deal with down the road for every one person retired. I think most of us fear that were not going to be dealing with the issue but in crisis mode. My question is, mr. Trump did say some things during the campaign that i wish he had not said. Theyre totally unrealistic. Made no sense whatsoever. And i just wonder if your sense that when you talk with him about the five levers or the fact that its impossible for us to balance the budget with 31 of the sending being discretionary, without dealing with the other programs, do you think he understands that . Senator, i think senator graham made this comment during his Opening Statement. Which is that, and as i mentioned, i havent been quiet and shy since ive been here. Its fairly easy to find quotations for me going forth. I have to imagine the president knew what he was getting when he filled this role. Do you think he understands we have to deal with all of these issues . Id like to think its why he hired me. We love the men and women in uniform that tim kaines son and the two people who introduced you. When people serve in our military, we just have the utmost respect and admiration but weve been doing some things around here oko funding. Do you think thats an intelligent way of building a budget using overseas contingency operations, item year after year as a way of solving budget problems . No, sir, i dont. In fact, i think its beyond not being intelligent. Its dishonest. Thats the word i was going to use. Despite the fact we love our men and women, do you think the pentagon is well run . Yes. Acquisitions program, a well run organization . I look toward to doing more investigation and possibly reforming there when possible. What bothers me that we all in the name of patriotism get to the end of the budget and about the time we get pressure placed on the pentagon to do some things it should do, let the pressure off by dealing with oko in the way that we do and with me, its irresponsible and i hope youre going to correct that. I know that my time is almost up. You and i talked about freddie and fannie and the two organizations that have to do with housing reform. Its your belief that anything not to do with the finance system and dealing with the conservatorship that any of that should be legislated by congress and not done by the administrative, by the executive branch, is that correct . I think a law needs to be changed, yes, sir. Thank you so much. Senator warner. Thank you, lmr. Chairman. I first want to follow up on senator corkers last comment. Someone on this issue of fannie and freddie. I was greatly encouraged by legislation you introduced that allowed a recap in release with mr. Manu chnuchin last week and we need to do this with legislation. It would enhance at very cheap rates, would not if they recap and release would leave a system in place that would allow private sector gain when things are going well and taxpayer holding the bag. When things happened as they did in 2008, put up 108 billion. My hope would be that you would work with congress on reform and not simply advocate to the president to recap your release approach. Thank you, senator. I think that various members of both the house and senate have different ideas on fannie and freddie. Im heartened by the fact i think were trying to get to the same end which is to protect the taxpayer to make sure it doesnt happen. We dont have enough time to go through, but the legislation would introduce to address that. A couple of other areas to get clarified with you. Last week with mr. Mnuchin, one of the things i did like about what he said is that the United States is the reserve currency and debt obligations are absolutely sacrosanct. Never jeopardize the full faith and credit of the United States. The u. S. Government should absolutely not have the ability to prioritize our payments and should be no uncertainty when it comes to paying our bills. Although in the house, you voted for prioritizatioprioritization. Pay fbi or cia employees. I think that would dramatically undermine the full pate and credit and i think most experts have said that prioritization scheme would be a disaster. Do you still share that view that prioritization of our debts is a reasonable approach and wouldnt that jeopardize the full faith and credit of the United States . I think its undesirable to get to a situation where there is a relevant conversation, but if were talking about the principles involved, i do believe that the g. A. O. Letter from 1985 is still, its not law but good guidance. I sincerely disagree with you and well have a chance perhaps to continue this. I also appreciate your comments about Social Security. I would take exception to what the senator from pennsylvania said. It is true that federal revenues are slightly above the t50 year average and weve run deficits every year that weve run at the average. As a matter of fact, the United States when you consider federal, state, and local taxes combined, its actually 31st out of the 34 oecd nations in terms of total revenues. I dont want to go to the european areas but youve also signed the Grover Norquist no tax pledge. If youre willing to take a look at revenues on Social Security or revenues in terms of tax reform, are you . I think its applying candidates for office, which im giving up if you see fit. So im not bound by that but by telling the president the truth and telling him what i believe his options to be. I hope that would mean, as youve said here today, that that would look at both sides of the Balance Sheet and clearly, as you list the various levers on Social Security. One of those would be looking at additional revenues. When we met, im concerned about the administrations current position on federal workers. Many of these federal workers serve their country and do jobs with enormous passion and pride. They view it as a calling. I know that president elect or the president has put in place a federal employee hiring freeze as he says that was to address the dramatic expansion federal workforce in recent years but are you aware that the size of the federal civilian workforce relative to the countrys population has actually declined dramatically over the last number of decades and its actually smaller now than it was under president reagan . I was not aware of that piece of data. I hope you relay that. Are you aware according to onethird of the federal workforce is eligible for retirement between now and 2019 . I was not aware of that but it doesnt surprise me. Do you agree if were going to recruit and contain the best workers and theyre going to have to do a job that continues with challenges as we look at ways that we can get our budget into balance, how are we going to do that when weve got disparity between public and private sector payment when we send these kind of messages about the tvalue of federal workers . How do you reinforce that statement . I think you and i discussed, i think the federal government roebl could be bett could probably be better in dealing with employees who fall below expectations and all i can say is i look forward to figuring out a way to solve both ends of that problem. Thank you, mr. Chairman. Senator kennedy. Congressman, im new here, which means ive lived in america longer than ive lived in washington. And i want to share a perspective. A lot of americans are very frustrated about what goes on here. Not all of them but many of them. They believe that our country was founded by geniuses but its being run by idiots. They look around and they see incredible things happening in our country. I mean, our people can unravel the human gentlemen gnoome. They can take an old heart and make a new one beat. Send a person to the moon but the representatives cant balance a budget. Like they have to do at home or in their Small Business. Now, heres what id like to know. I dont have enough time to give me an elaborate answer but the high points. If you were king for a day, how would you balance our budget . Thats a very tempting question to ask any elected official and remind myself by role at omd is to advise the president. But im asking you. What would we do . Wed grow the economy first, senator. In fact, thats roeprobably the only way to truly balance the budget given the political situation in washington, dc. Theres folks amongst us to take a bigger slice of the existing pie. I dont think thats a formula for a healthy economy growth. Grow the economy is one. What else . If you grow the economy, end up with ten years with 3 or 4 growth, youre talking about doubling the size of the economy which doubles the size of federal receipts which allows you to balance the budget. I believe it was mr. Warner or white house that correctly pointed out when we could balance the budget is when the economy was growing rapidly. Anything else . A way to end waste in government, if you even assume its 10 with a discretionary budget, thats almost 100 billion this year. Let me ask you about waste. Sq yes, sir. Dr. Donald burke ran cns for president obama. He testified before congress that 10 of our medicaid spending is fraud. Not just fraud by patience but by providers. In some states, they get 2 of federal money for 1 of state money. So for some, not all, theres not an incentive to combat fraud. Any way you could use the power after omb to combat medicaid fraud . I dont know off the top of my head. Id be happy to take a look at that and i think i will get specific instructions trt president to explore doing exactly that. One thing about this president is that he will not tolerate the type of waste and fraud that you mentioned. Okay. I hear from a lot of louisianians. And other americans, not all, but many. They believe that, and ill ask if you agree with this, they believe that part of the problem in American Society today and with our economy and with our culture is that we have too many undeserving, i wont emphasize undeserving because i dont want to paint with too broad a brush, too many people at the top getting bailouts as shel ddon pointed out and too many undeserving, not all, but too many undeserving people at the bottom getting handouts and people in the middle get stuck with the bill and they cant pay it anymore. Because their insurance has gone up and taxes have gone up and their kids tuition has gone up. Do you agree with that . Senator, i think those folks would be heartened by what they saw out of the president on saturday because i believe that was the theme of the inaugural speech he gave. That those folks who have been forgotten for so long will not be forgotten anymore. He will listen to them and if i get the opportunity to work at omb, well do whatever i can to do just that. Thank you, congressman. I think youll do a great job at omb. Thank you, senator. Great meeting in my office. In announcing as a candidate in october that he would do a federal hiring freeze, candidate trump said that it was necessary to reduce, quote, corruption and special interest collusion. If you know, why is the administration pitching the false view that federal workers are corrupt or beholden to special interests . Im not familiar with the statement. I am not comfortable commenting on it. A freeze has a lot of effects. The most direct effect would be on people seeking to work with a trump administration. Why is there an assumption that people would come with corruption or special interests, collusion problems . Again, i dont think theres an assumption hard wired into any system that federal workers are corrupt. I think you and i both know. Im happy to hear you dont share the president stated is the reason for this. Yes, sir . You have legislation that on hiring freezes that said, if three people left by attrition or got other jobs, you could hire one in. My understanding of the hiring freeze was even more strict than that. Isnt that your understanding . No new hires. Im not familiar with the details but happy to talk about my own bill if youd like. Many applicants are veterans because of a veterans preference. It seems a bad idea to do a freeze that would have the effect of putting road blocks up to veterans seeking federal employment. Do you worry like i do about backlogs in processing of Social Security disability claims, veterans benefit claims, backlogs in getting drugs permitted to potentially life saving drugs permitted to go on the market . I worry about inefficiencies at many levels of government. Im concerned that the t backlogs could make it harder for individuals to get the services they need. I dont think youre wrong to be concerned but i dont think it automatically follows that hiring more people will create more efficiency. Have you read the g. A. O. Studies of hiring freezes under democratic and republican that suggest that theyre ineffective and hurt service to citizens and cost more money than they save . I have not seen those, sir. Do you know where they have those . I do not know. The house resurrected the rule that allows to slash individual federal worker sal r salaries. Sir, let me correct. I believe that may have been contained in the rules packet this year, and if thats the case, i did not vote on it. Well check the record, but thanks for the clarification. Did you support it . As i talked with you, i support some application in some circumstances. Theres reports that the Incoming Administration is trying to gather intelligence about whether employees worked on priorities they dont like. For example, department of energy that worked on climate activities. Are you aware of the reports . No. Widely perceived of being intimidated that president doesnt share . Im not familiar with that. Do you want a high morale High Performance or low morale and low performance . High morale. Gathering on priorities that the new president doesnt share and supporting a role that could target individual employees for massive Salary Reductions likely to build a high morale, High Performance organization . I think that rhetoric taps into a concern shared by many, including yourself, that there are federal workers who dont live up to or expectations and it is hard. We shouldnt paint with a broad brush. You run the risk of going outside the lines. I do not have a i will be loyal to the American People and ta facts. Heres a fact. A full repeal will cause many people to lose Health Insurance. No replacement, that is a true statement. A full repeal of the aca with no replacement will be a massive tax break for wealthy americans because of two high earner taxes. Ive seen these lists, but i dont think anybody is proposing we repeal without replacing. So yes. A full repeal without in replacement will increase the deficit. If you assume theres no relacement, no, i think the full repeal with no replacement actually decreases. It increases by 137 billion a year in ten years if you assume dynamic scoring, 350 billion a year if you dont over ten years. I saw the report that i think mr. Enzie asked for that gave a different conclusion, but id be happy to look at the one you mentioned. A full repeal with no replacement allow Insurance Companies to discriminate against women and those with preexisting health conditions. No reports on that. A full repeal to raise Prescription Drug costs for medica Medicare Part d because of reopening the donut holement. Im not sure about that one. Climate change is a huge risk by co2. You and i have talked about this and with mr. Sanders. Im not sure the connection. Its a huge risk. Im not convinced the point where we have to start to require american citizens to pay high prices. Do you agree with the fact . Is Climate Change driven by co2 emissions a huge risk . I challenge the premise of your fact. You do not agree. And finally, the federal workforce at the lowest as a percentage of the total workforce, agree or disagree . I have no reason to believe mr. Warner wasnt telling me the truth. Mr. Mulvaney, thank you for your willingness to serve. Hope youre enjoying this. As an accountant, as a business person, it drives me nuts in the federal government, lack of information, cherry picking of information. Weve seen some of that already today. I would say and as chairman of Homeland Security, whats the f country right now . Someone usually saying the denial of reality but we simply arent facing up to the enormous problems. I want to talk to you a little bit about real information, whats really going to drive this, but i want to go back to senator kennedy talking from my standpoint the number one component solution which is growth. And lets talk about actual information in terms of how effective that would be. The we go from 2 to 3 , another 14 trillion added to the economy over ten years. 2 to 4 is 29 trillion. Even with the meager Economic Growth weve had since 2009, revenues flowed in federal government to increase by 1. 1 trillion. Clearly, focusing on Economic Growth is the number one solution. For me, there are four elements and i want to talk about two because it will completely fall on yours as omb director but first is energy and this administration is dedicated to utilizing the energy resources, a good thing. We have to reform the tax code. Its a disaster. Costs somewhere, 200 billion to 300 billion to comply with part of the Regulatory Burden. You have debt for households, 260,000 per household and Regulatory Burden is 400,000 per household. Thats an enormous burden and then talk about debt but lets focus on providing information to start managing the federal government properly. Social security. Lets talk about deficit. Over the next 30 years, the deficit according to cbo will accumulate 120 trillion. Thats clearly unsustainable. Of the 103 trillion, 34 trillion in medicare. Over 50 trillion in debt. If we dont want to pay creditors over the next years, we have to address Social Security and medicare. And again, i want to talk about, we use the demagogue and talk about, just raise the retirement age. According to Social Security trustees, increase in the retirement age from 67 to 70, over four years fuels 1 trillion of the deficit. Youve got multiple levers to pull, all of them. Just talk about your dedication as omb director to provide congress and more importantly the American People with real information on a macro basis so that we can actually address these problems. Senator, you left off one at the risk of trying to correct the senator in the middle of the senate hearing. I would not talk about it today. The cvo report, 2054 or 2044, under the current baseline, the assumption that things stay the way we are, 100 by the mid 2050s, 100 goes to one item only and thats Interest Payments on the debt. No money for Social Security. None for medicaid, medicare, national defense, nothing weve talked about today. That frightens me. I dont want to be alarmist, but the point of the matter is, we have allowed things to get in a bad situation and now it will fall to us to make some very difficult decisions. Where do i see my job and why do i think i might be good at it . See my job as giving some really hard facts to some really, really important people under very difficult circumstances. I think i have the ability to do that. Its not easy to go into a Retirement Community and tell people, look, we have to talk about ways to fix Social Security. I think that probably pales in comparison to walking in, mr. Preside president , heres where we stand on Social Security and medicare and the other items. Thats not easy to do. So you are right and im crazy to want this job but somebody has to do it. Because we cannot get to a point 20 years from now well people didnt know it was going to happen. The time to fix it is now. Are you dedicated to providing the information, the facts to start ending the denial of reality and start addressing these enormous challenges because this is clearly unsustainable. Its one of the few things that would allow me to leave my family for the next several years as long as the president would have me, so that i could do just that. To look at my kids and say, the time i was away from you from age 11 to age whatever was worth it because i was able to do catholic what you just said. Thank you for your willingness to do that. Thank you, mr. Chairman. Mr. Mulvaney, great to see you. Good to serve in the house and the Budget Committee and i told my colleagues who asked that you were a straight shooter and that you had a consistent set of views. I would argue consistently wrong, but clearly, youve held your positions and youve been straight in your communications with members in this committee. One area where i think youve got it exactly right and i think this came out in the questioning by senator corker was with respect to the fact that congress has tried the use the overseas contingency account, the war saving account as a slush fund in order to escape the budget agreement. Do you still hold the view that that is a runaround on the budget agreement and that if were going to address those issues, we should address them in a straightforward manner rather than what was referred to by senator corker as a dishonest manner . I think this is fairly lly unorthodox view. Its used for that specific purpose, i think it was part of the omnibus agreement last year for items not war related. You agree thats a wrong, an abuse of the budget process. Its not emergency spending. It puts us in the situation. Imagine if the budget was balanced. A limited time. You agree its a abuse of the process and if confirmed, you will not i will explain why its not a good way to spend taxpayer dollars. My concern is largely some of the judgments youve made on issues in some of the morays. The expression, alternative facts. And i think as omb director and a country, weve got to be very rooted in reality and not alternative reality. Heres what the former chief economists said about getting too close to the debt ceiling. Too close. Not even going over. New research from the academics indicate the Movement Towards exploration is by increase in the governments cost of issuing new debt. Translation, taxpayers pay more. Former cbo director, failure to raise the debt ceiling leads to bad economic outcomes chaos. It hurts working people. Youve been part of legislation that suggests that the federal government could violate its obligations and so long as it wasnt an obligation to bondholders like china, the chinese government, others, that that would be somehow acceptable. As omb director, will you abandon that view or continue to pursue that view . Certainly bumping up against the debt ceiling is an undesired situation. We know whats going to happen. There are additional facts which you left off, the fact that historically and this goes back to the Roosevelt Administration that debt ceiling was always used and regularly within us ll say, why do we have to raise the debt ceiling again . Its a fact its been regularly used to try to pass reform legislation to help solve some of the issues that are driving the debt in the first place. Do you dispute the gao finding that it costs taxpayers over a billion dollars the last time we had a real showdown on the issue . Do you dispute the gao finding . Do you dispute the finding . I dont know if i agree with the exact billion dollar figure. We didnt even breach it. Ya youll have a huge cost to taxpayers. It is true the tcongressional Budget Office that its far greater than what we pay on Social Security. In other words, if you add up all the tax breaks, all the tax loopholes, on an annual basis, thats greater than Social Security and Discretionary Spending. Simple question. The president has said he wants to close the carried interest tax break. Will you agree to close that tax break for the purpose of reducing the deficit and debt . Ive not had the opportunity to talk with the president about that but look bard to having that conversation. I will tell you ive seen various tax proposals that do that along with let me just stand by. Its a simple question because it goes to your statements about how important it is to reduce the deficit and the debt. I agree we have a longterm challenge. You have signed in the past, the Grover Norquist pledge that says you will not reduce one tax break for the purpose of reducing the deficit, that every contribution from clesing the carried interest loophole, for example, has to go into reducing tax rates for somebody else. If were going to address the deficit and the debt, arent we going to have to look at new tax revenue including closing down special interest tax breaks for that purpose . You raised a couple of different issues. One way to get new tax revenues is to grow the size of the economy but the specific point about the role Going Forward and i think i mentioned thisbefore, i welcome the fact that going from people back home to advising the president of the United States. Thank you. Senator grassley. In our office meeting, we discussed the continued inability of the Defense Department to get his books this order so that a clean financial audit can be justified without accurate and complete information that the leader doesnt know how the money is being spent and what things cost, Bad Information leads to bad decisions. Its important that you as omb director take a personal interest in helping get the defense audits Ready Initiative back on track. Unfortunately, the upcoming statutory deadline of september 30th this year that was actually set six years ago to be audit ready is becoming a sham. Its time to either deploy a finance and Accounting System that can generate reliable information or clean house and dods chief financial office. So i hope youre willing to hold the Defense Departments feet to the fire and see theyre taking meaningful action to be audit ready, thats a question. Yes, sir. And i have been more than a little pleased about my very brief discussion so far with general, now secretary mattis, who i believe shares your, my, and apparently the president s commitment to driving efficiencies into the operations at the Defense Department. The next question leads to the point that your work as management director, as opposed to budget director may actually do more good for our country. I dont have a question but id like you to hear me out and commit to consider my point of view on pending regulations related to immigrant visa program. The program was intended to bring much needed jobs and capital to rural and economically distressed areas, but as we have proven over and over, the eb5 Regional Program is plagued by fraud and abuse. The Obama Administration produced regulations, thank god, to improve the eb5 immigrant visa program. The regulations would clean up the program by stopping gerrymandering and increasing investment levels for the First Time Since the program was created in 1992. I bring this up because right now, these regulations were published last week and need to be finalized and need to be kept by the trump administration. This is a bipartisan issue and all judiciary leadership in both the house and senate, republican and democrat support the regulations. So i hope youll take our support for these regulations seriously. I will. And i was pleased to have the opportunity for you to inform me about the things i wasnt aware of like the gerrymandering issue and you have my commitment to take that directly to the president dwicgiven the opportu. Okay. The chairman brought this issue up. I want to bring it up in a little different way. I worked for years to tackle abuse of federal charge cards. In 2012, Congress Passed my legislation to establish controls for each agency that they must have in place to prevent misuse of government issue charge cards. Of course, your agency is in charge of issuing guidance and ensuring agency compliance. While theres reductions in abuse, agencies must remain vigilant, omb needs to make sure the agencies continue to comply and i know you were an active member in congress to reduce improper payments. Will you commit omb will remain vigilant to do everything they can to prevent misuse of government issue charge cards . This president will not tolerate that issue. Deficit and help the middle class. Cbo has analyzed in great detail and found in future years, a growing portion of peoples savings will go towards buying Government Debt rather than productive capital investment. Ha thats crowding out the smaller Capital Stock in lower wages and incomes making future generations worse off. Now, this may sound like a softball question but its very basic. What is your view on the impact of the deficits and debt on future generations . The crowding out is real. The numbers ive seen is that give or take when debt approaches 85 of gdp, you start to see real effects of crowding out and its a correlation with the size of the debt and reduction of growth with the gdp and of employment. I think the current cbo projections are the way they measure the debt are at 85 roughly. And its a real and pressing issue. It affects your family and my children and their ability to get a job Going Forward and take it deadly seriously, sir. Its so easy and not an honest way to deal with the Defense Budget which has real needs but it shouldnt be done through the borrowing and not paying for it. Also, i completely share your view that the debt and deficit are a grave issue facing this country. My particular concern is about Interest Rates. As you know, its a historic low right now and pretty easy to calculate for every 1 an Interest Rate go up and now 200 million and that can very rapidly eat up almost the entire current discretionary budget in a hurry. And absolutely right to be concerned about that. Let me talk about the issue of management. The title of your job is office of management and budget. Most of today has been talking about budget. The chairman at the beginning talked about overpayments like 144 billion and another piece is undercollection of revenues by the irs estimated high as 500 billion to 600 billion. Most of us pay taxes owed, some decent dont. Those who dont arent paying their fair share. If you put those together, that would eliminate the current deficit just through better management. Now the problem is its going to take more people to provide that management. You cant expect the irs to improve their collection with fewer people. So i hope youll take seriously these opportunities but you cant reduce the federal workforce and still expect more results in terms of monitoring overpayments or collecting more efficiently through the irs sfwl i re. I would encourage you at the same time that another way to increase collections without having to hire more people is to have a simpler ax code atax cod. Theres some people who dont want to pay or devious, but a lot of folks because its really hard to do. And it might make it easier to collect if we had a tax code that was easier for folks. There was a proposal with members of congress should have to prepare their own tax returns. That might solve a lot of these complexity problems. Should tax cuts be revenue neutral . I would encourage him to look first and foremost about the effects on the overall economy. The growth of any tax cuts. As i mentioned here, a couple times today, given the political situation we face in this country, i think the best chance you have to reduce the deficit or balance the budget is accomplish Economic Growth. I would agree with that. But theres this theology out there that lowering taxes equals greater Economic Growth. I have tried seriously to find economic studies that substantiate that. I would appreciate applying your studies that have indicated thats the case. The bush cuts in the middle of the last decade did not have that effect. My understanding of the experiment going on in kansas is that it has not had that effect. I think we need to be careful with cavalier assumption that tax cuts will indeed stimulate growth and therefore be selffunding. Thats an idea that kicks around here but i dont think theres much data to support it. And the problem is if it doesnt work, youve only dug the hole deeper and add the proposed tax cuts, 455 billion a year to increase spending, youre talking about a talking about 1 trillion a year further deficits. I would like, senator, for you to share that information as well. My commitment to you in the Opening Statement stands. It is how i look at job very seriously. I want to take a factbased approach when advising the president. If theres data you would like me to see on that point, i would welcome it. On the question of tax cuts, i had a friend, a guy in a Hardware Store clerk tell me theres no such thing as a tax cut if youre in a deficit situation. If you cut taxes and borrow money to fill the hole, all youre doing is shifting those taxes to your kids. I think thats an important point. So we have to be really careful about this. That we not simply give ourselves a tax cut and then lay it on our kids that will eventually have to pay it with interest. Its amazing how much sage advice you can get in rural Hardware Stores. Ive had the same experience. Particularly in maine. I like the ones in South Carolina, but i take you at your word. Final quick question. Theres been some discussion about the debt ceiling and you voted against it. You feel it is an opportunity for conversation. Will you counsel the president that violating the debt ceiling is not a big deal . I will counsel the president as to the ramifications of raising the debt ceiling and not raising the debt ceiling. I feel like i have a grasp of both sides of that issue, and i will help convey both sides of the argument to him and help him make the best decision possible. I hope you will take that very seriously. Because i have never seen any particular data or studies that indicates violating the debt ceiling would be good for the American Economy. Thank you. Thank you, senator. Thank you, mr. Chairman. Senator boozman. Thank you, mr. Chairman, and thank you for being here. We talked a lot about the fact that were 20 trillion in debt. Looking at significant indebtedness in the next ten years. The point that senator kaine brought up about the Interest Rate, id like to follow up on that in the sense that what is the Interest Rate that were paying now on the National Debt . Not as far as dollars, but the percent . I think your effective rate is probably right around 2 . Youre going to pay 400 billion of interest this year. And we talk about the economy heating up. Which we desperately want. Yet thats going to cause Interest Rates to go up. Is it true that traditionally the debt is serviced at 5 to 6 . I think the historical 40year average, which is roughly my adult lifetime, is about 6 , yes, sir. It has been as high as 17 or 18. The 5 or 6 is a conservative number. Yes, sir. That we could all agree on. What does it cost for every 1 increase in the the good rule of thumb is 200 billion. 200 billion per year . Mmhmm. Very good. Youre talking about a tremendous amount of money over a tenyear period. Yes, sir. As senator kaine pointed out, you get in a situation, just like individuals get, where you simply cant service the debt. So 200 billion, thats a third of our Defense Budget . Thats correct. Again, thats i think it really highlights the importance of getting these things under control, as my constituents understand. Yes, sir. One of the things i think we can all agree here is the budget process, the appropriations process is broken. Here we are, its were into almost february. The fiscal year started in october. And were not going to have this thing resolved for another couple months as far as fiscal year 17. Much less fiscal year 18. So how do our agencies, how can they spend efficiently . We talked a lot about government waste. How can you be efficient when youre facing that kind of scenario . Senator enzi, myself, i talked to you in the office about budgeting and things like that. Do you have any ideas, again, how we as a congress can attack this situation so we can make the process more efficient and ultimately save a lot of money . Youre exactly right, senator. The government agencies, most specifically, the Defense Department struggle to operate efficiently under a continuing resolution which is typically what weve done here for the last several years. As i discussed with you and many members of the xhs committee, reinvigorating the appropriations process should not only be a priority of congress, but i hope to make it a priority to the administration. And explain to the president why its important that appropriations work, not only for political purposes, but for actual practical purposes and why having an appropriations bill allows the department of defense to operate more efficiently. Im hopeful you will have whatever support you need from the white house in order to reinvigorate the appropriations process. Very good. On the issue of improper payments which we talked about, during your time on the House Oversight committee, you sponsored legislation to empower treasurys do not pay database. Despite similar legislation, actually being signed into law, it appears omb has yet to give states the access. Can we look forward to seeing these resources being made available to the states for their use . Yes, sir, i think one of the advantages of having one of the coauthors of improper payment bills running the omb is you can count on the fact we will take that very, very seriously. Very good. Under president george w. Bush, it was requiring any rules or administrative actions which increased the deficit be offset by other actions that would reduce the deficit. President obama opted not to use this ability. Will you go back to enforcing this rule, director . Id like to point out, i believe that rule was originally attached to a debt ceiling debate. One of the specific examples of how we do take that opportunity to step back and try and reform our spending system. I look forward to speaking to the president that it would be fiscally sound to encourage it. One of the problems weve had not only in the past administrations, but administrations in general, is, as we ask for things from omb, ask for things from the various agencies, sometimes those are not given to us in a timely fashion. I know youve been frustrated with this as a member of congress. I think everybody in this room has been frustrated. Will you tell us that youll be very responsible in doing that, so we can get the information that we request . As i believe i mentioned in my Opening Statement, i have been on the other side of that. Having been a member of congress, and seeing what it does to the way we operate, when we dont talk to each other, dont communicate, one side hides information from another isnt helpful to anybody. Its certainly not helpful to the people we represent. So i do look forward to helping the information flow again and have a Good Relationship with all parties on both sides of the hill. Thank you, mr. Chairman. Senator merkley . Thank you very much, mr. Chairman. Theres been a lot of hearings in different parts of the capitol. I wanted to start with where senator cotton was when he was introducing you, which he referred to you as a bolt truth teller. I have behind me two pictures that were taken at about the same time of day in 2009. And 2017. Which crowd is larger, the 2009 crowd or the 2017 crowd . Senator, if you allow me to give the disclaimer im not sure how this ties to omb. From that picture, it appears the crowd on the lefthand side is bigger than the crowd on the righthand side. Thank you. The president disagreed about this in his news report. He said its a lie. We caught them. We caught them in a beauty. Referring to the press reporting. He said it looked like a million, million and a half people. The reason im raising this is because budget often contain buried deceptions. You and i talked in my office about the magic asterisk. This is an example of where the president s team on something very simple and straightforward wants to embrace a fantasy rather than a reality. In fact, its come up a lot because sean spicer, the press secretary, said that the photographers framed their photos to minimize the enormous support on the mall. In other words, a conspiracy thesis. And said it was the largest audience to witness an inauguration, period. I gather you would disagree with the press secretary . Again, i happened with your caveat. Im not familiar with the statements. I do agree the photographs were as you represented. Thank you. Chuck todd noted in his conversation with Kellyanne Conway that you had just had a press secretary at the start time of his office present a falsehood to the press and American People. Youre saying its a falsehood. Sean spicer gave alternative facts. Are you comfortable as you proceed as a key budget adviser presenting falsehoods as simply an alternative fact . As you and i discussed in your office, i have every intent and believe ive shown up to this point in time in congress about being deadly serious about giving hard numbers. I intend to follow through on that. One of the false facts is to say tax cuts for corporations and tax cuts for the rich in america will increase revenue. Ive gone through the numbers from 1981, from 2001, 2003, im sure youre familiar with this. Did president reagans 1981 tax cut increase or decrease revenue . Senator, we just had a chance to discuss that with senator kaine. Ill invite you to do the same thing, ill commit to you to take a factbased approach to the budget, i would welcome any information you have on those types of matters. Are you unfamiliar with the 1981 tax cut . Im familiar with it generally. It went down. In 2001, president bushs tax cut, did it increase or decrease revenue . I do not know. It went down substantially. In his 2003 tax cut, did it increase or decrease revenue . Im not familiar with the numbers. If you review the numbers and see that this is a falsehood, this argument, this kind of magic gift, that we can cut taxes for the rich and powerful but somehow it will increase revenue, if you find that thats false, will you take that truth, the falsity of that often repeated claim and make sure the president knows whats true and whats false . Senator, let me answer your question this way. Ill try to be as straightforward as i can. In order to do the best possible job for the president its incumbent on me to present all possible cogent arguments on both sides. If theres data that backs that up, i would tend to use those. Just as i would on the other side of the argument. Often the strategy is used to say, this is particularly true in, unfortunately in republican administrations, that this is a way we can claim to be fiscally responsible by doing a lot of favors for very powerful people we like. And not talking about the many giveaways that are already in the tax code for the very rich and powerful. There is a cbo study that lays out an extensive list, i think ill be happy to make sure it goes through multitiudinous strategies for improving the deficit, decreasing the deficit. But a lot of those things that would improve the deficit are the result of tax code positions taken that are making the affluent more affluent and increasing income inequality. Will you take a serious look at these opportunities and not just be in the mode of lets cut taxes on the rich and decrease services for struggling American Families . I think it was senator whitehouse who said this earlier, i told him that i think maybe he and the president were getting to the same conclusion by different roads, which is that the tax code needs to be reformed so it is fairer and simpler. But a strategy that decreases taxes on the rich while decreasing programs for struggling families, would you oppose or support that . Again, my job will be to advise the president of the economic ramifications of all of the options that are presented to him. Your sense of internal justice, is that just . Im sorry decreasing taxes on the rich, decreasing programs for struggling American Families . Senator, im not in a position to give an opinion on a tax plan i havent seen yet. If youre asking my justice for robbing from the rich and giving to the poor no, that wasnt what i was asking. Tax fairness for the rich and and program fairness for struggling families. Agree with you on tax fairness, yes, sir. Senator purdue. You dont really want to call me right now, mr. Chairman. Im thoroughly disgusted. It is amazing to me. This is whats wrong. And i apologize to you, congressman. Ive sat in here for the better part of this meeting and i have to tell you, this is probably one of the most blatant partisan committees that i sit on. And unfortunately it deals with the financial future of our kids and grandkids as you well pointed out. Would you agree, sir, that our budget process youve been on the House Budget Committee for six years. As i understand it. No, i did two years but did additional work on budget matters. Would you agree or disagree that the overall budget process is broken in congress . Yes, sir. In my opinion let me just offer some observations. I fully support your nomination. Weve had a great opportunity in my office to go through my questions. I have a statement, mr. Chairman, i would like to submit for the record. In 2000, under bill clinton, president clinton, we ran 2. 4 billion running everything. All mandatory, all discretionary, everything. 2. 4. Last year we spent 3. 7. One democratic administration, one republican administration, weve exploded the federal government from 2. 4 to 3. 7 trillion. Thats not military expense. At the same time we grew revenue from 2. 4 trillion to 3. 4 trillion. Those are constant 2015 dollars. I would submit the process is broken. As a matter of fact, the evidence is there. Since 1974 when the budget act was created, we have only funded the government the way that budget act calls for in law as a congress four times. As a matter of fact, in those 42 years, we have used 175 continuing resolutions to fund the government. As a matter of fact, over those 42 years, now, up until 2000, we had 13 appropriations bill. Post 2000 we had less in order to fund federal government. Its shocked to find out the number of Appropriations Bills is only two and a half, the average, per year, of actually being passed into law. You made a comment earlier that you wanted the president of the United States to rely on that process. I would submit, sir, that its a broken process. It wont ever work. It contributes to this debt. In the last ten years, or the last eight years weve borrowed 35 of what we spent as a federal government. Were going to borrow another 30 , which will add about 9. 5 trillion to a 20 trillion debt. Today if Interest Rates were just at the 30year average of about 5 , we can do the math, its untenable. There is no way we can fund 1 trillion of interest. So all the conversations we have here, all the polarizations you see in here is because fundamentally the budget process is broken. It does not give us a politically neutral platform upon which to have the debate about tax expenditures, about tax cuts, about spending cuts, about all the things that both sides think are important in terms of solving the debt crisis. My question to you, sir, this morning is very simple. At omb, i presume you have looked at the 21 act that created the office of management budget. Mmhmm. I have two concerns. We need help breaking through the gridlock in congress. Can you do that in omb . And two, does the office of omb today because of the total fraudulent dishonesty that this congress and every Congress Since 1974 have perpetrated on the American People, because of that withdrawal from its responsibility in congress, omb in my opinion has overstepped what was outlined in the 21 act and certainly in article 2. Are you concerned that with this dysfunction in congress, that omb is in fact overstepping its article 2 restrictions . Im not familiar with the specific mandate of article 2. Would you look at that sometime . I would be happy to. As you get your feet on the ground, thats one i would love to engage on. On your first point of what we can do to break the gridlock, your point is well made. Its going to be something that congress will have to drive the process on because its a congressional appropriations process. I will be encouraging the president to do everything he can to allow that appropriations process to work. What does that mean, for the last several congresses, im of the opinion that various elements in the congress have used the defense appropriations bill as a hostage. That we probably could have passed a defense appropriations bill and one i voted for from time to time. And that could have been signed by the president. But was held up intentionally in order to leverage items on other Appropriations Bills. It created a log jam and part of the gridlock that you correctly referenced. So one of the things i would be encouraging the president to do, not only should you allow the appropriations process to flow, but you should actively engage to encourage it to happen because it is the best way to spend taxpayer dollars. Thank you. Thank you, mr. Chairman. Senator harris . I think youre nearing the end. I think im number 98. Among all the senators. But number one in my heart . You must have a very big heart. So, congressman, in january of 2013, you opposed federal relief for families and businesses in new jersey and new york that were hit by hurricane sandy. At the time you said it was because it was not paid for. But in 2015, South Carolina benefited from federal relief for flooding, even though it was not paid for. In advocating for that relief, you said there will, quote, be a time for a discussion about aid and how to pay for it, but that time is not now. As you probably know, california has had its share of Natural Disasters. Whether it be drought or forest fires or earthquakes or severe storms. Which result in safety hazards for millions of people. And millions of dollars of damage to infrastructure and in some cases death. For me to consider your nomination, as the director of omb, the main person, of course, would be in charge of assessing governmental spending, can you assure me when Natural Disasters hit various parts of the country like california, that you will be willing to put the immediate interests of people in need as a First Priority for you . Or will you insist that the budget cuts be made before agreeing to provide critical assistance to those victims . Thank you, senator. A couple different answers to your question, ways to answer your question. First of all, i do believe theres a proper federal role in dealing with Natural Disaster relief. Sandy is a tremendous example. Something thats so large, its too large for one state or local government to deal with. Its an appropriate function of the federal government. You would agree that the need is immediate after a disaster . I did. Thats why i want to point out your quotation. I believe your quotation to be accurate, but i believe the circumstance was that i believe i was asked by the media on the day of the event how i was going to pay for this. And that gave rise to my response. There will be a discussion about how to pay for it. But the time is not now because the event was actually happening. It was not the time we appropriated the relief. On the appropriated relief for South Carolina, i believe that my position was entirely consistent. My position on sandy was that i wanted to help the folks who had been injured. Can you assure me if a Natural Disaster hits other states, like california, for example, that you will not hold up relief for the state waiting to determine whether theyre going to be budget cuts or cuts to provide that relief . Or are you going to sit back and crunch the numbers while people are waiting for help . I see my role in that particular circumstance is advising the president. Heres how i think we should proceed in this circumstance. And heres why. And whatever the president says to do, i will enforce. Even if the governor of those various states suggest to you that people may be harmed because of that delay . I can only imagine that would carry a great deal of weight with the president. It wouldnt be up to me to respond to the governors. My responsibility would be to the president of the United States. In september of 2016, you voted against funding for the zika outbreak. Then on facebook, you said, quote, do we really need government funded research at all . I assume you must be in favor of supporting american enknow vacation ainnovation and new industries, correct . Yes, i do recall that. Im not finished. And im sure that you agree scientific innovations and breakthroughs can create entirely new industries which will spur growth and Economic Development . I think American History shows that to be true. Let me read you what a globally leading scientist says about this issue. America has made big scientific breakthroughs for decades because federal funding allows scientists to pursue research that businesses would not fund because they have no immediate commercial application. Breakthroughs from federally funded Curiosity Driven Research have not only created new business, but entire new industries. That is a quote from a woman who happens to be at the university of california. And one of the breakthrough prizes for advances in genetics. Do you agree with that statement that she made . Again, i dont recall the entire statement. But generally shall i read it to you no, yes, generally, yes, there is a proper role for federal government in the research. But i think you hit the nail on the head in that quote when they said the private sector would not go in because of the circumstances at the time. Ive actually supported that, senator. Fantastic. And so in fact, nsf and nih spent more than 4. 4 billion for california in 2016 for research grants. This money dealt with some of our nations most difficult diseases and scientists are trying to discover, of course, new ways to provide food, water and energy for our nations growing population. Do you believe that government funded research should be a priority . I believe that when we look at Grant Programs like you just mentioned, the key is not the amount of the grant to begin with but what were getting for the taxpayer dollars. So youre not opposed to the notion of Government Funding Research for scientific purposes . Ive actually supported funding, what they call orphan diseases. You and i may have a chance to talk about that more. Id like that. Thank you. Thank you. Thank you, mr. Enzi. Mr. Mulvaney, congressman mulvaney, thank you for your willingness to serve to your family. Thank you for your willingness to serve as well. This is a Public Service commitment. When we came into congress together in 2010, i remember hearing your thought process on budget, the way we can make this be a more effective government. And i commend you for the time in the house and the work youve done and i thank you you for it. While not always agreeing with everyone, while not always agreeing with leadership, sometimes being accused of being a thorn in the side of some, you have found a way to work forward to find a solution. I think thats what this place needs. Somebody who is not just go along, get along, but somebody who will try to figure out a way forward given the resources and challenges that this country faces. Thank you, senator. When we have difficult days like today where you have a Commerce Committee hearing and we confirmed a couple of nominees, in the Foreign Relations committee, and nikki haleys nomination today, and im bouncing back and forth, i only get to hear parts and pieces of the questions. And coming into this committee at times i heard several different questions that you were asked. Which can only lead me to conclude that some must believe that you only think that we are a better country if the poor get poorer. Thats absolutely incorrect. And i think that what ive heard from some people here who believe if we simply raise taxes, then the the inequalities of this country will disappear. Whats happened over the last eight years has actually increased the challenges in this country. Have the wealthier become wealthy over the past eight years . Yes, sir. So its not the increasing taxes that were the problem, because that happened over the last eight years. In some respects. And so actually, if we decrease taxes, decrease regulation, its going to lift everyone up, is that correct . There used to be a democrat around here who said a rising tide raises all ships. Just a couple basic questions. Does overregulation hurt our economy . It does. Is there any doubt that overregulation hurts the economy . No, sir. Left or right. Do they believe overregulation is bad . Its been encouraging to me as i talk to both parties there does seem to be Common Ground in favor of regulatory relief because we see it from our constituents in these offices every single day. Does Economic Growth help the budget . It helps everybody. If you have overregulation, it hurts the budget . Correct. By eliminating overregulation, you can help the budget, correct . Theres really good is there any debate on that . That suggest regulatory cost is one of the most regressive taxes that we have. It falls most heavily on theres no University Think Tank that says we will grow our way out of this budget problem through overregulation . Ive never seen that. Do you agree were in a state of overregulation right now . I do. Ive seen it firsthand. It seems like thats the entire premise that ive listened to at, at least in the times ive come in on this committee today, talk of very different approaches to our budget and our economy. But i think everybody, as you just identified, agrees with that basic point, that overregulation is bad, growth in the economy is good and that helps the budget. We have a significant debt. What are our outstanding liabilities on our Balance Sheet today . Almost 20 trillion. Thats whats reported. If you want to actually project, it could be closer to 100 trillion. The ones we report now, 20 trillion. And there is no way we have a way to pay for the obligations that we expect . I dont believe so, no, sir. And the legislation that senator lee and i have introduced called the reducing excessive government act. The reg act. This is an idea that if we increase the debt limit, which this place has done, if we increase the debt limit, then we also ought to decrease the amount of regulations that are in the economy, at some kind of at some degree in order to help grow the economy which helps the budget. Our idea is for every 1 in debt limit increase that you reduce regulations by a commensurate 15 . Is that something we could work with you on . I would love to see about that. I think as you do probably the best thing we can do immediately to help the economy is reform the regulatory climate. The other thing i think we have to talk about when it comes to budget is finding ways that the private sector can help reduce spending. One thing we have talked about, youve been very effective in Energy Savings performance contracts. You think about what we can do with the private sector without spending a single dime in taxpayer funding. We have the potential to save 20 billion in taxpayer spending simply by making our government buildings, millions and millions of Square Feet Office Space more energy efficient. Will you pledge to work with this administration on Energy Efficiency . It would be easy for me to make that commitment. I spoke with peter welsh on that exact topic. Thank you for the grace with which youve handled this. I look forward to working with you to grow and expand our economy. Thank you, senator. And now the senior person on the committee, and very patient be senator murray. Thank you very much, chairman enzi. Welcome, congressman mulvaney. I know we havent found time on our schedules to do one on one meeting. I look forward to hopefully being able to do that. I do want to be upfront. I have serious concerns with your nomination. I am, of course, troubled by your failure to pay taxes and comply with a law over several years. Its simply not credible to me, it never crossed your mind before now that you might owe taxes on behalf of your household employee. I do think the failure to pay taxes just kind of underlines the need for all committees to require tax reforms from our nominees, as democrats are asking the committee that im on and the committees that dont currently receive taxes. Unpaid taxes are not my only concern with your fitness for this job. I am a former chairman of this committee. Im very proud of the work that we have been able to do to reach across the aisle. And move away from the constant budget crises. We were able to do that because we set aside some serious differences and worked to find Common Ground. And frankly, i dont see a similar willingness to do that in your background. You were a member of the tea party, correct . Im a member of the tea party caucus, yes, in the previous congress. You supported shutting down the government in the fall of 2013, correct . I think thats in all fairness, senator, oversimplification. I did believe the house bill passed was a good bill that would have delayed the individual mandate for a year. The senate refused to take that up and there was a lapse in appropriations that the media now calls the government shutdown. It was support of getting to that. And you opposed, my understanding is, the subsequent bipartisan deal that i reached with now speaker ryan later that year to keep the government open, correct . I opposed the approval of the deal and then voted for the omnibus spending bill that grew out of it. I understand you in fact, you also opposed the budget control act in the 2015 bipartisan deal, correct . That is a true statement. Do you acknowledge that you will have to work with democrats in the next round of budget and debt limit deals . Oh, sure. Ive worked with democrats many, many times in the past. I have no difficulties and no concerns about my ability to do that in this current in the job should the Senate Confirm me. So will you commit to pushing back against the tea party if they pressure you to not work on a bipartisan basis . My commitment, if you confirm me is to the president of the United States. My commitment now, senator, is to the 750,000 people that i represent in South Carolina. Very conservative place, they seem to like the job ive been doing. My boss would change upon confirmation and my commitment would be to represent the president of the United States to the best of my ability. Let me just say there are reports that the Transition Team is preparing a first trump budget with a 10. 5 trillion in spending cuts in that. I put those two things together and we are headed right back to more Tea Party Extremism and ideological purity and dysfunction and brinksmanship and partisanship, all that went with that. And that approach is going to have very harmful consequences. I want to just give one small example. I was really honored to participate in the womans march on saturday. I want those watching this to know that i stand ready to do whatever it takes to protect the health and safety of women. I was outraged actually to read that the 10. 5 trillion in cuts is built from a blueprint that among other massive cuts that we can all talk about would eliminate the funding for the violence against women act that actually helps support survivors of Sexual Assault and violence. Is that really the message that this new administration wants to send to women . Senator, ive read some of the new same newspaper reports youve had, but im not familiar with the details of the budget. In fact, my understanding is that, and theres some strange rules that im not familiar with on transitions, ive not been allowed to see the details of that budget. Im not comfortable commenting on them. Ill just say, i still am outraged at the comments that were recorded by President Trump where he was bragging about kissing and groping and having sex with women without their consent. Those kinds of cuts would double down on that type of behavior. I would hope the actions of this president is not eliminate the funding that protects women against violence. So let me just ask you this, mr. Mulvaney, have you previously supported eliminating funding for vowa . I voted against a lot of funding bills, senator murray. Im not familiar with, if there was a specific one on funding for vowa. Let me just say, if confirmed, would you commit today to oppose eliminating or cutting funding that protects women from violence . My commitment as its been all day today, to advise the president to the best of my ability, and then enforce the policies that he sets. Well, mr. Chairman, as someone who has sat in that chair, and knows the numbers, i do not believe that you can cut 10. 5 trillion without having serious impact as senator sanders talks to us about all the time on medicare and medicaid and Social Security. But also on programs that are extremely important to protecting people in this country, many of them who were out in the streets last saturday. Thank you. I think that completes the first round. Well begin the second round. We have a deadline of 1 30 for completing this round so that he can get ready for the Homeland Security questions at 2 30. So ill begin the second one, i hope, with a little easier question than some of them. How does this hearing compare with the bar exam . A good friend of mine, we took the bar exam together, he came up to give me moral support and i pointed out it was similar to the bar exam, except its on television and my mom and dad are watching this. That does make it a little different. Yes, well, we, again, appreciate your willingness to serve, and one of the things that this committee has been working on is trying to come up with a budget process that will actually make a difference. One of the problems that we noted was that the president s budget is not the same as the congressional budget, which is not the same as the appropriations spending, which is not the same in some of the departments to any of those. And after we looked at it, we kind of came up with the impression that maybe that was intentional. So that nobody could follow the dollars. So i hope that you would agree that it would be helpful to harmonize the president s Budget Mission with the congressional budget, with the appropriations budget, and particularly with the department of defense so that they havent been able to have a clean audit yet. And i hope youd agree with that. It goes deeper than that, actually, mr. Chairman. We didnt get a chance to talk today about the data act. And some of the reforms that were tried to put in place on a bipartisan basis. It was almost as if the Computer Systems in the agencies to not allow the men and women working there to understand how the money is getting spent. There will be a lot of Structural Reforms that we could put in place that omb could drive in order to make it easier to understand how the Government Works. Were living in an age of big data, and here we are as a federal government and we probably have some of the best big Data Available anywhere, but we cant use it, because no one can share it or read it. Another one of the things that weve talked about is having a Capital Budget. What we found out was that we dont even know what the federal government owns. Let alone how long it will last, and when we need to replace it. Of course, we replace everything out of cash. So what do you think about having a Capital Budget . I remember when i got here, senator, and had been familiar with budgets in one of my businesses, and remember remarking there is no Capital Budget. There is no budget versus actual. There is no this year versus last year. I think ultimately you can find them deep, deep down in the appendices. But one of the things i struggled to sort of explain to my friends who are still in the private sector that the government budget process is similar to the private sector budgeting that many of us were familiar with before we got here, in the word only. They both used the word budget but the systems they describe is entirely different. Not to say you could entirely run the government like a business or that you could budget for it like a business, but there are some structural inefficiencies into the way our budget and appropriations system run that could benefit from more exposure to outside forces. Look forward to working with you on that. Weve talked a little bit about having a debttogdp number, as some guardrails to work into the future to get to that balanced budget, and to keep our government afloat. And senator kaine has been a strong advocate on that. We had a lot of bipartisan things that we thought could help to straighten things out. Another thing was by any old budgeting, since we dont seem to be able to make it through the process every year, maybe we could make it once every two years. One of the provisions i put out there was having the budgets divided into the two halves, so we do the six tough ones after the election and six easy ones before the election. Are there any ideas on how things we might do with the budget . I remember that conversation because you put a house member in the very, very difficult situation of having to admit that the senate bill might be better than the house bill. I was a cosponsor of the by annual bill in the house. I was intrigued by your comments and ideas about taking that to your budget. And bifurcating it so you had rolling Appropriations Bills of six each year for two years, and allowing the process to function, and giving the respect that it deserves. At the same time, doing what biannual budgets do, to increase the horsepower available to do oversight on the budget process and on the appropriations process. So i was very enthusiastic about that. And look forward to extolling the praises of that to the president if given the chance. When youre confirmed, i look forward to working with you on all these things and hope that we can pull the committee together for some good bipartisan suggestions for ways that will help to improve knowing where we are, and where were going. Senator sanders . Thank you, mr. Chairman. Congressman, my friends in the house have said that you are honest and a straight shooter, and i think thats how you have presented yourself today, and i appreciate that. Thank you, senator. Let me ask you a philosophical question. If selected, if appointed, you will be a key adviser to the president. As i mentioned earlier, the president made a cornerstone of his campaign his belief that Social Security, medicare and medicaid should not be cut in any way. Said it over and over again and i suspect he won the election based on that promise. You disagree with him, and thats certainly your right. You believe we should raise the retirement age. You have voted over and over again to cut Social Security in one way or another. When you talk to the president about Social Security, medicare and medicaid, do you tell the president that it is more important that he keep faith with democracy, keep faith with what he told the American People, or should he acknowledge that he lied and then change his views and cut Social Security . Senator, i have no reason to believe the president has changed his mind from the statements he made during the campaign. As weve talked about here today, though, my job is to do exactly what you just said in your very kind introduction, which is to be completely and brutally honest with him about it. Do you believe, then, that the president will keep his word and not cut Social Security, medicare and medicaid . I have no basis right now for telling you what the president of the United States is thinking. I know what i want to be able to do as the omb chair which is to lay out the facts. My question is. Its an interesting question. Because you do advise the president on budget. But its a deeper sense. You know and i know and everybody here knows no matter what our politics may be, theres a lot of disgust with politics in america today. People run for office, they say one thing, they get elected, they do something else. Would you tell the president that it is more important to keep his word, keep faith with the American People, or do what you think is better policy . Thats my question. Its a fair question, senator. I think youre probably asking the wrong person. I dont think its the role of the office of the manager of budget to advise the president on that. My role would be to advise him on the financial ramifications advisers to the president will advise him on many things. Let me ask you this. We talked a lot today about the deficit and the debt, important issues. What we havent talked about is the grotesque level of income and wealth inequality in america. What we havent talk about is that from 1985 to 2013 there has been a massive transfer of wealth from the middle class to the top onetenth of 1 , okay . My question is, when we talk about the budget, we have multibillionaires like donald trump who proudly tell the American People he has not paid a nickel in federal taxes, and yet we have people talking about cutting Social Security, medicare and medicaid. Do you think it is more important that we tell billionaires like President Trump and others that we tell large multinational corporations like General Electric and others who in a given year did not pay a nickel in federal taxes, because they harbor their money in the Cayman Islands and elsewhere . Do you think its more important to tell the rich and powerful that maybe they should start paying their fair share of taxes before we cut Social Security, medicare and medicaid or the violence against women act or defund planned parenthood . Senator, i think the most important thing to tell people is the truth, which is what i see my role being. Is it true, congressman, that over the last 30 years, we have seen a massive shift in wealth from the middle class to the top onetenth of 1 , is that true . I wont split hairs with you on what massive means. But if you give me a chance, i will agree with you and say i believe that income inequality is growing and its unhealthy. We can argue what massive is. We have right now, you have the top onetenth of 1 owning almost as much wealth as the bottom 90 . So my question is, given that massive grotesque level of income inequality, and having people like President Trump not paying a nickel in federal taxes, and then having people wanting to cut programs for the elderly or the sick and the poor, dont you think maybe we want to go to the very, very wealthy, the top onetenth of 1 and maybe to large corporations that dont pay a nickel in taxes . I welcome the philosophical conversation. I did enjoy the conversation in your office and look forward to doing it again. If you ask me about the disparities between the most wealthy and the worst off, im more concerned in the wealth thats controlled by the folks who dont but that has shrunk the middle class wealth has shrunk in fact from 1985 to 2013, the bottom 90 has seen its share of wealth go down from 35 to 22. 8 . That is a huge contraction of wealth for the middle class, is it not . I think what you saw on saturday is President Trumps ideas on how to fix that problem. No, what i saw on sunday were millions of people saying, that we dont want more tax breaks for billionaires. I said saturday, i meant friday, i apologize. Thank you. Thank you, senator. Thank you, chairman. Congressman, let me show you another chart. In the grand traditions of kent conrad who used to be a chart meister here. So this is a fairly selfexplanatory chart going up this axis is Life Expectancy starting at 72 years of life up to 86 years of life. And across the bottom is the amount that the society spends on health care, going from zero dollars per year per capita, to 9,000 per year per capita. And the thing that i take away, this is oecd data from 2014, the latest we have. What i see in this graph is these boxes right here, the ones that ive shaded lightly, just now with my handy dandy little pen, and that covers, if youre in that box, you have a country whose Life Expectancy is between 80 and 84 years, and if youre in that box, your per capita on health care is 3,000 to 5,000. As you can see, the bulk of our economic competitors are in that box. And here we are way the heck out there. Im a believer in american exceptionalism, but not in this way, because our Life Expectancy is equivalent to czechoslovakia and croatia. And thats not the way it should be. And our spending is worse than switzerland and netherlands which are the least efficient and most expensive per Capita Health care systems among those oecd nations. So it seems to me that it shouldnt be asking too much of us to try to get into a place where were competitive with england and france and germany and australia and austria and so many other countries who manage to provide Good Health Care to their populations at a reasonable cost. So with that background, i think what i would what im trying to urge you here is that when you go back to our other graph, everybody is super excited on the republican side about figuring out how you cut the Health Programs. Block grant and medicaid, so you can cut it. Leave less people on medicare, reduce benefits so you can cut it. But it seems to me that if this is really going to be your focus, even though its a smaller number than tax stuff going out the back door that we already talked about to special interests, mostly, or largely, then in addressing that number, trying to figure out how we get to be more like what so many other civilized and economically developed societies have figured out how to do, which is to improve our Life Expectancy and reducing the cost of care should be a prime mechanism in making that adjustment with that number. And, you know, the whole prospect of Delivery System reform is making progress. The two largest primary care providers in rhode island have reduced their per capita expenditure for their patients. One by 4 million in a year, the other by 24 million over three years. Thats not big money for an omb guy, but in a small state, thats real money. And those are real reductions in cost. And they were accompanied by Better Service to the patients. They were accompanied by having nurse managers on at night to take phone calls. Theyre accompanied by being engaged more with the patient and making sure that they stayed healthy. A little bit like the article in the recent new yorker, the primary care stuff works if people are compensated in the right way and have the right flexibility to actually treat their patients as human beings and not just as ways to grind the machine for money, and everybody is better off. So i am urging you very, very strongly that in your position, you focus on that. I know our friends want to have all this political brouhaha about repealing obamacare. Thats a fine fight if you want to have it. Great. Good luck to you. You havent got an alternative. Everything is a complete wreck as i can tell on your side of the aisle in terms of trying to generate an alternative. If you want to drive into that wreck, great. I think if you Pay Attention to Delivery System reform, Pay Attention to increasing information in the health care space, and increasing the way in which we compensate doctors for keeping their people healthy, not only will you make a big difference on that graph, not only will you bring down what you say is the biggest cost in the out years, which is our health care expenditure, but youll also find an open lane with all of us, because there really is room for progress there. Could you comment . I could make a lot of comments. Its always nice to find another graph fanatic. I look forward to working with you should you confirm me. You and i may disagree on the conclusions but i would enjoy going through the process. If i was going to agree or disagree with something, i would like to take the graph down to the president along with the other one to show him, but i would hope you would understand that your graph does have some weaknesses in it. It assumes a direct causal effect between the two components on the graph. I think you might agree there may be other things that contribute to the Life Expectancy other than just health care. Senator kaine . Thank you, mr. Chair. First, two items for the record. I would like to put into the record a chart from, it was published in the washington post, but it shows that the federal work force is at its lowest as a percentage of the total work nonfarm work force. And second, a cbo report budgetary and economic effects of repealing the Affordable Care act. Without objection. Congressman, to follow up on an answer at the end of my first line of questioning, i was asking you about Climate Change, and from the look on your face i kind of thought like you with were thinking, wait a minute, im the omb guy. I just wanted to come back to it. We spend a lot of money dealing with climate related issues. From super storm sandy, dealing with Sea Level Rise in virginia, South Carolina, military budgets that try to move infrastructure around because of Sea Level Rise or drought or other climate conditions. That was why i asked you the question. And i asked you just to agree or disagree with something that actually had a couple of facts in it. Climate change driven by partly human generated c02 emissions is a huge risk. You disagreed with my premise, my factual premise, that was my statement. Do you disagree theres Climate Change, do you disagree that it is driven partly by c02 emissions or do you disagree its a huge risk or do you disagree with all three of those things . See if i can break that one down. Again, as much as i enjoy the conversation, i still keep trying to come back to the issue of how it relates to obm. I think i found it. Yeah, because youll put these investments in the budget or not. What youve just described are costs. Right . Or benefits depending on the side of the equation youre under. And what i see my job as doing is analyzing the costs and the benefits of various regulatory policies, various legislation. If the house or the senate were to pass Climate Change regulation that would fall to the omb to brief the president on those issues, and id see that one of the roles is to lay out the costs and benefits to the president. Again, my opinion may enter into the heres why i think it enters in. For the most part i dont think it does. If you dont believe in Climate Change, say right now, somebody doesnt, youre not going to be proposing investments to help military bases deal with the effects of Climate Change. But i dont if you dont believe in the fact, you wont be proposing budgetary allocations to deal with it. Im curious on this factual question, do you accept that Climate Change is caused about i human activity at least in part . Thats a straightforward question. Ive had this exact same conversation with mr. Sanders. I recognize the fact there is some science that would indicate that. Im not yet convinced that theres a direct correlation between manmade activity and the change in the climate. Which i do believe is real. Thank you for answering the question. Youre welcome. Did you have anything to do with the president s First Executive order that increased fees on low and moderate income home buyers that get loans through the fha by about 500 a year . No, sir. A hard question, but its a very low bar for an answer, because i have asked witnesses this for four years. Obama nominees, outside witnesses, republican nominees, ive not yet gotten a coherent answer. Even a coherent one i disagree with. We talk about debt and a lot of your job at omb is producing budgets that will have effect on deficit and debt. What level of debt is too dangerous . How do you look at that question . When i was a governor, we never looked at a number. Just, you know, 20 trillion, thats too dangerous. We looked at ratios. We looked at a ratio of debt to state gdp or we looked at a ratio of Debt Service Payment to outlay. But when i asked from janet yellen to every witness that appears before this committee, what level of debt is acceptable and what level of debt is dangerous, no one gives me a coherent answer . Id like to know how youre going to approach that question. Let me see if i can do that. Because i think i got asked earlier, you may have been out of the room, there is probably some disagreement as to the specific level amongst some of the Academic Research that ive seen. Ive seen numbers ranging as low as 65 gdp to 105 . And thats for publicly held debt to gdp. Correct. I think were talk ing about the same thing. It seems like the sweet spot for sake of the discussion is about 85 . Which is about where we expect to be under the current cbo projections in roughly 6 or 7 years. If we mick no changes. Thats correct. And beyond that, you start to you will see some evidence of the economic concept of crowding out at any level of debt because every level of private dollars that leaves the private marketplace to go into the public debt markets is not available for private investment. You see some crowding out on dollar one. But the real question i think your question is that at what point does that sort of really start to negatively impact . I could put it to you there is a negative impact now because were spending 400 billion this year on interest instead of spending it on programs that you might prioritize over interest. State spend money on debt and families spend money on debt. The best i could do to answer your question, the evidence ive seen so far would indicate that point of no return may be 85 of gdp. Thank you for answering the question. Thank you, mr. Chair. Thank you. Senator merkley. Thank you very much, mr. Chairman. I want to turn to the Consumer Financial protection bureau. I believe that there was a time at which you were quite critical of the cfpb stating that i got to get right page in front of me, but if i paraphrase, that it is a sad, sick joke. Now, millions of people have gotten reimbursements back because of cfpb has held financial agencies accountable to the law. They have returned approximately 12 billion to consumers, consumers who thought they had nobody in their square fighting for them, making sure that there were honest dealings with financial organizations. Do you still believe that cfpb is a sad, sick joke . Yes, sir, i do. And ill be happy to tell you why. It is, to me, sir, one of the most offensive concepts, i think, in a representative government, which is almost completely unaccountable government bureaucracy. Government regulatory agency. One of the most frustrating experience ive had since ive been in congress is people walking into my office and asking me for help and having me look them in the eye and say, im sorry, theres no way under any circumstance that i can help you. Under any circumstance tha i can help you, and thats what i have been forced to do with the cfpb, because they are off of the appropriation, and because we dont budget them, and they are run by one person dictator who doesnt believe he can be fired by the president but for cause and we have created inadvertently the very worst kind of government entity. Let me stop you there and say that i understand that you dont like the structure of the cfpb. Yes, sir. And when you look at the fact that they have returned tr trillions of dollars from organizations that essentially admitted, because these were largely settlements that they had misled the borrowers or cheated them outside of the law, isnt that a good thing to have somebody accountable . Well, it is a fair point, senator, but i suggest that there is no evidence that the same or the better result would have been reached under the are regime that existed beforehand. As you know the cfpb essentially took over the functions already performed by various regulatory agencies, and there is evidence that the cfpb is actually failing miserably in the high profile circumstances such as the wells fargo debacle. Where i think that cfpb was are resident in wells fargo for four years and still failed to discover the wrongdoing that was taking place there. And recently, the cfpb is suing naviant which is to illegal driving up the loan payment payments for millions of students. Do you consider that to be a positive thing that we have an organization that is taking on actions that are deliberately misleading our students who have enormous loan debts. Well, it is a good idea to have an organization to ens for the law. I would question whether or not the cfpb is the best way the do it. And question whether or not that enforcement would have taken place, and reremind everyone who discusses this issue that what isle alleged and i have no facts and circumstances to know one way or another is already against the law, ad it would be against the law regardless of whether or not the cfpb existed. A lot of the challenge that we have is that ordinary action, and companies have arbitration clauses that make it impossible for them to have leverage, if you are familiar with the way that the arbitration clause works, the individual has to go to someone selected by the company, and that is an individual who wont get business unless they find on the clients behalf, and so it is a rigged system. So here, we have an effective strategy, and it has taken on the misdeeds in all kinds of groups. You say that it did not on wells far ego, and also just the same would have happened in the previous period when we compare it and before we had the cfpb, and this is not the case. We didnt get action on behalf of consumers and 12 billion returned to 29 Million Consumers and so given 29 Million People out there who have benefited, you have a dispute over the structure of the funding and the structure of the board. I hear that. But isnt that kind of looking at the tree and not the forest . No, s shg, sir. Will there is a fundamental objection and principled objection to the agency that is not accountable to the people that it is supposed to serve. But it is actually designed this way in fact so that it would be accountable, and you have to understand that the reason why is because ordinary citizens have very little powerle compared to the fabulous power concentrated in wall street. Large Financial Institutions do not want there to be a consumer watchdog that holds them account fobl the law. We finally have that consumer watchdog, and we know what would have happened if we structured the funding differently and you would have stepped on the air hose and not you personally, but congress with the enormous clout of congress pushing them would have stepped on the air hose and shut them down. And you want to have a type of board that has worked miserably for the organizations where there is no quorum or a 22 tie, and no action, and this is actually worked. If you are taking a look at how to create an Effective Organization and fightinging for the ordinary working american, this is it. Senator, all i can tell you is that i have more complaints in the cfpb this in my office from small local banks and Credit Unions which are not from a big bank area than every other Government Agency put together so i are respectfully disagree with you. I will the tell you that i have been gavelled down. It is important debate, because of the president said that he campaigned on fighting for working people, and this is working for working people, and it sounds like you are going to go in and say, no, dont help the work people, but help the big banks. I am happy to have that discussion with you as well. Im the one who got the Inspector General for the pfpb and found out he had no right to respect. I would love to have this committee to have a full examination including inviting the public to come in to testify about the many times that this has been the only way they have gained justice. We will be doing somein that area, i assure you. I want to thank the witness for his testimony, and all of the people who showed up to ask questi questions today. I have several letters that i want to make a part of the record in support of the nominee. Objection. And i want to say that all questions by the senators are due for the record by 6 00 p. M. Today and hard copy delivered to the clerk in dirkson, 624. Under the rules the witness has seven days are from the are receipt of the questions to respond with answers. With no further business, the hearing is adjourned. The annual march for life ally on the mall here in washington, d. C. , is today. Vice president mike pence, white house adviser Kellyanne Conway, and joni ernst and mia love will be speaking at that gathering. It is underway at noon eastern and you can watch it live on cspan. Also, President Trump and theresa may will be holding a joint press conference at the white house. You see it on our companion cspan 2 at 1 00 p. M. Eastern. Cspan where history unfolds daily. In 1979, cspan was created as a Public Service by American Television companies and brought the you by your cable or satellite provider. Up next on cspan3, a conversation from the u. S. Institute of peace on National Security challenges facing the trump administration. We will hear from former secretary of state Madeleine Albright, and republican senator tom cotton. It is great to be here. Thanks to the institute of peace. I think that everybody here probably knows these panelists, so i am going to be brief and you have them in the program as well. We will start with secretary Madeleine Albright who served under president bill clinton as secretary of state from 1997 to 2001 following four years as u. S. Am bba
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