[Senate Hearing 111-737]
[From the U.S. Government Publishing Office]
S. Hrg. 111-737
NOMINATION OF THE HONORABLE JACOB J. LEW, OF NEW YORK, TO BE DIRECTOR
OF THE OFFICE OF MANAGEMENT AND BUDGET
=======================================================================
HEARING & EXECUTIVE BUSINESS MEETING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
----------
September 16, 2010--HEARING ON THE NOMINATION OF THE HONORABLE JACOB J.
LEW, OF NEW YORK, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
September 23, 2010--EXECUTIVE BUSINESS MEETING ON THE NOMINATION OF THE
HONORABLE JACOB J. LEW TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET
Printed for use of the Senate Budget Committee
NOMINATION OF THE HONORABLE JACOB J. LEW, OF NEW YORK, TO BE DIRECTOR
OF THE OFFICE OF MANAGEMENT AND BUDGET
S. Hrg. 111-737
NOMINATION OF THE HONORABLE JACOB J. LEW, OF NEW YORK, TO BE DIRECTOR
OF THE OFFICE OF MANAGEMENT AND BUDGET
=======================================================================
HEARING & EXECUTIVE BUSINESS MEETING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
September 16, 2010--HEARING ON THE NOMINATION OF THE HONORABLE JACOB J.
LEW, OF NEW YORK, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
September 23, 2010--EXECUTIVE BUSINESS MEETING ON THE NOMINATION OF THE
HONORABLE JACOB J. LEW TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET
U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON THE BUDGET
KENT CONRAD, North Dakota, Chairman
PATTY MURRAY, Washington JUDD GREGG, New Hampshire
RON WYDEN, Oregon CHARLES E. GRASSLEY, Iowa
RUSSELL D. FEINGOLD, Wisconsin MICHAEL ENZI, Wyoming
BILL NELSON, Florida JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan JIM BUNNING, Kentucky
BENJAMIN L. CARDIN, Maryland MIKE CRAPO, Idaho
BERNARD SANDERS, Vermont JOHN ENSIGN, Nevada
SHELDON WHITEHOUSE, Rhode Island JOHN CORNYN, Texas
MARK R. WARNER, Virginia LINDSEY O. GRAHAM, South Carolina
JEFF MERKLEY, Oregon LAMAR ALEXANDER, Tennessee
MARK BEGICH, Alaska
CARTE P. GOODWIN, West Virginia
Mary Naylor, Majority Staff Director
Cheryl Reidy, Minority Staff Director
(ii)
C O N T E N T S
__________
HEARING
Page
September 16, 2010--Hearing on the Nomination of The Honorable
Jacob J. Lew, of New York, to be Director of the Office of
Management and Budget.......................................... 1
STATEMENTS BY COMMITTEE MEMBERS
Chairman Kent Conrad............................................. 1
Ranking Member Judd Gregg........................................ 2
WITNESS STATEMENT
Lew, Jacob J., of New York, Nominee to be Director of the Office
of Management and Budget....................................... 3, 6
MATERIALS SUBMITTED FOR THE RECORD
Statement of Biographical and Financial Information Requested of
Presidential Nominee Jacob J. Lew to be Director of the Office
of Management and Budget....................................... 36
Pre-hearing questions from Chairman Kent Conrad with answers by
Jacob J. Lew................................................... 43
Pre-hearing questions from Ranking Member Judd Gregg with answers
by Jacob J. Lew................................................ 49
Post-hearing questions from Ranking Member Judd Gregg with
answers by Jacob J. Lew........................................ 54
Post-hearing questions from Budget Committee members with answers
by Jacob J. Lew................................................
Senator Murray............................................. 59
Senator Wyden.............................................. 66
Senator Stabenow........................................... 71
Senator Sanders............................................ 72
Senator Merkley............................................ 75
Senator Begich............................................. 76
Senator Grassley........................................... 77
Senator Enzi............................................... 78
Senator Sessions........................................... 81
Senator Bunning............................................ 89
Senator Crapo.............................................. 90
Senator Cornyn............................................. 95
EXECUTIVE BUSINESS MEETING
Executive Business Meeting on the Nomination of The Honorable
Jacob J. Lew to be Director of the Office of Manangement and
Budget......................................................... 97
Committee Votes.................................................. 97
NOMINATION OF THE HONORABLE JACOB J. LEW, OF NEW YORK, TO BE DIRECTOR
OF THE OFFICE OF MANAGEMENT AND BUDGET
----------
THURSDAY, SEPTEMBER 16, 2010
U.S. Senate,
Committee on the Budget,
Washington, DC.
The Committee met, pursuant to notice, at 9 a.m., in room
SD-608, Dirksen Senate Office Building, Hon. Kent Conrad,
Chairman of the Committee, presiding.
Present: Senators Conrad, Murray, Nelson, Cardin, Sanders,
Whitehouse, Warner, Merkley, Begich, Gregg, Sessions, Crapo,
Ensign, and Alexander.
Staff present: Mary Ann Naylor, Majority Staff Director;
and Cheri Reidy, Minority Staff Director.
OPENING STATEMENT OF CHAIRMAN CONRAD
Chairman Conrad. The hearing will come to order. I want to
welcome everybody to the Senate Budget Committee today. We are
considering President Obama's nomination of Jack Lew to be the
next Director of the Office of Management and Budget.
I want to first welcome Jack back to the Committee. He is
well known and well respected by the members of this Committee.
I also want to welcome Jack's family who are with him today,
including his wife, Ruth, and his daughter, Shoshana. We are
pleased that they could be here as well. Welcome. We hope Jack
will introduce them when he makes his opening statement. I am
sure he will.
As everyone knows in public service, we could not do our
jobs without the incredible support of our families, and we
recognize and very much appreciate the sacrifice that the Lew
family has made in the previous assignments Jack has had,
including as head of the OMB.
I believe Jack is a superb choice for this position. When I
was asked by the White House my reaction, I told them, ``I do
not think you could make a better choice than Jack Lew.'' Not
only has he already served in this critical post and done so
with real distinction, but he brings with him a wide range of
public and private sector experience, including his current
position as Deputy Secretary of State for Management and
Resources, which in itself is a challenging posting.
Importantly, Jack knows how to make the touch choices that
will be needed to put our country back on a sound fiscal
course. When he completed his service at OMB, the country had a
surplus of more than $200 billion. And Jack knows how to reach
across the aisle to find bipartisan agreement. He was
instrumental in putting together the 1997 bipartisan deficit
reduction package that helped create those surpluses. And Jack
has the highest integrity. Anyone who has worked closely with
him over the years knows that. He has repeatedly proven himself
to be an outstanding public servant.
So Jack Lew brings with him exactly the kind of knowledge,
experience, bipartisan spirit, and integrity that we need at
OMB right now. He is the ideal person to lead this critical
agency.
The economic and budget challenges facing the Nation are
great. In the near term, we need to strengthen the economic
recovery and promote job creation; and at the same time, to
address the Nation's long-term fiscal crisis, we must begin now
to put in place a deficit reduction policy that will kick in
after the economy is on stronger footing. That is why the work
of the President's bipartisan Fiscal Commission is so
important.
Combining these policies of short-term job creation and
long-term deficit reduction is no easy task, but the
fundamental economic security of the country depends on it. In
these challenging times, it is imperative that we have strong
leadership at OMB. I hope we can move quickly on this
nomination. We cannot afford to leave this position vacant at
such a critical time.
It is my hope to schedule a Committee vote on this
nomination soon so that the full Senate has time to confirm the
nominee before it adjourns for the election.
Before we swear in the witness and hear his testimony, we
will turn first to Senator Gregg, the Ranking Member of this
Committee, for his opening statement. I want to thank Senator
Gregg for accommodating this change in the schedule because of
votes that are to come in the Senate this morning. And I also
want to express my very strong appreciation to Senator Gregg
for the support that he has already shown for this nomination.
Senator Gregg.
OPENING STATEMENT OF SENATOR GREGG
Senator Gregg. Thank you, Mr. Chairman, and let me
associate myself with your comments relative to the nominee. I
apologize that I will have to leave early.
There are people throughout our Government who make the
Government work. I mean, a lot of people do not think it works,
but large segments of our Government work well, and it is
because of people who have dedicated themselves to public
service and have gone the extra mile in that area. And
certainly Jack Lew falls in that category.
I have had the great pleasure of knowing Jack for years. He
probably did not know me when I was a junior Member of the
House and he was working for Speaker O'Neill. But I know of
Jack. And since then, I have watched him do many jobs, all of
them very well and with great integrity and great
forthrightness. He always give you the straight answer. It may
not be one you agree with, but it is always a straight answer.
And he is willing to make the tough calls that have to be made
at OMB. He has already done it once. The fact that he is
willing to go back again may question his thought process.
[Laughter.]
Senator Gregg. But it is great that you are, and the Nation
is fortunate to have you assume this position during this time
when clearly, in my opinion, the biggest threat to this Nation
after the potential of a terrorist using a weapon of mass
destruction is our financial health. And we need leadership in
the area of disciplining ourselves financially, and I look
forward to working with you to accomplish that, and I thank you
again for being willing to take on this job. I especially
appreciate your wife's understanding in allowing you to take on
this job.
Thank you, Jack.
Chairman Conrad. Under the Committee rules, we are required
to put the witness under oath, so we will do that. Will you
please rise? Do you swear that the testimony that you are about
to give will be the truth, the whole truth, and nothing but the
truth?
Mr. Lew. Yes, sir.
Chairman Conrad. If asked to do so and if given reasonable
notice, will you agree to appear before this Committee and
answer any questions that members of this Committee might have?
Mr. Lew. Yes, sir.
Chairman Conrad. Please be seated. You may proceed with
your testimony. I again want to thank Senator Gregg for
changing his schedule to accommodate this early beginning
because of votes that are to follow. We know that he has
prescheduled--there are other things that he has to go to, but
he will no doubt return.
Again, welcome to the Committee and please proceed.
TESTIMONY OF THE HONORABLE JACOB J. LEW, OF NEW YORK, TO BE
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
Mr. Lew. Thank you very much, Mr. Chairman, and I thank
Senator Gregg as well for the kind welcome and the very kind
words of introduction. It has really been my honor to work with
both of you for many years, and I think that it really is a
testimony to the possibility of bipartisan cooperation. But I
have known Senator Gregg for decades, and while we have not
always agreed, we have always been able to work together in a
constructive way, and we have reached good results.
I take great pride in my current and prior Government
service, and it is really an honor to be considered today as
the nominee to be Director of the Office of Management and
Budget.
I am delighted that joining me today are my wife, Ruth, and
my daughter, Shoshi. Together with my son, Danny, and my
daughter-in-law, Zahava, who could not be here today--they are
in New York--my family has supported me unfailingly and
unconditionally during my career in public service--often
through long hours, late nights, and, unfortunately, more than
a few missed family events. Their daily sacrifices have made
possible my public service, and for that I am very grateful.
I am also blessed to have had role models whose influence
is always with me. My parents--Ruth and Irving Lew--taught me
the importance of being involved in the community and world
around us. The late Speaker Thomas P. O'Neill, Jr., was not
just my boss for 8 years early in my career, but he was a
mentor who shared his wisdom about the legislative and the
policymaking process and more generally about how to forge
consensus.
It has been my honor and privilege to serve under President
Clinton and, most recently, as a deputy to Secretary of State
Clinton, and I am deeply grateful to both of them for the
opportunity to serve and for their continuing friendship.
Finally, I am grateful to President Obama for nominating me
to serve as the next Director of the Office of Management and
Budget. I am humbled by the confidence he has shown in me as we
face the enormous challenges that lie ahead.
This is neither my first time testifying before the
Committee nor my first time testifying before the Committee
about budget issues.
My familiarity with OMB gives me a knowledge of the
institution's workings and gives me a respect for it that is
deep and heartfelt. I appreciate the centrality of OMB to the
efficient and effective operation of the Federal Government,
and I have the greatest respect and admiration for the women
and men who work there to fulfill this critical mission.
Since my previous service at OMB, I have worked in similar
management and budget roles in large nonprofit and private
sector organizations, and I have experienced firsthand that all
large organizations wrestle with the same challenge of how to
fulfill strategic core missions with scarce resources and
competing demands.
Indeed, the process of forging consensus behind priorities,
directing new resources where they are most critical, and
finding internal savings to support these initiatives is an
universal challenge.
In addition, in my current role at the State Department, I
have now been on the front lines, not just setting policy but
working to implement it--often to the very finest details and
with the greatest of stakes: the safety of our brave men and
women who volunteer to serve in dangerous assignments.
Together, these experiences from the past decade have
broadened the perspective I would bring to the position for
which you are considering me.
As we all know too well, President Obama has asked me to
serve in this position at a time that is very different from
when I last sat in the Director's office.
In the late 1990's, our challenge was how to maintain a
prudent fiscal policy while transitioning into a world of
budget surpluses and robust economic growth.
Today, a series of policy choices and the worst economic
downturn since the Great Depression present us with very
different challenges. With millions of Americans who are
desperately looking for work and are still unable to find jobs,
our first task is to sustain and deepen the economic recovery
to spur new job creation in the face of unsustainable budget
deficits. At the same time, we must put our Nation back on a
sustainable fiscal course in the medium term while making
investments critical to long-term economic growth; and we need
to do this in a way that strengthens our fiscal position for
decades to come.
Indeed, the coming months may be the most critical time in
fiscal policy in recent memory.
As the President has said, it will take tough choices--and
putting partisan differences aside--to do what is right for the
country today, what is right for our children, and what is
right for our grandchildren.
Throughout my career, I have tried to work collaboratively
across partisan and ideological divides to cut through gridlock
and to help solve what seem like intractable problems. If
confirmed as OMB Director, I will work in that bipartisan
fashion again--with the members of this Committee, the
leadership of both chambers, and with all those committed to
taking constructive steps to rejuvenating our Nation's economy
and its fiscal standing.
And while we should aspire to never waste taxpayer dollars
regardless of whether the budget is in surplus or deficit, the
management of the Federal Government is particularly important
during lean times. I look forward to working with this
Committee, if confirmed, to make sure that every dollar we
spend has the desired impact and makes a difference.
Getting our economy back on track and our fiscal house in
order will take hard work. I am honored that the President has
asked me to join him in this endeavor, and I am grateful to
this Committee for its consideration of my nomination.
Thank you very much, and I look forward to answering any
questions that you have.
[The prepared statement of Mr. Lew follows:]
[GRAPHIC] [TIFF OMITTED] T8157.001
[GRAPHIC] [TIFF OMITTED] T8157.002
Chairman Conrad. Thanks again, Jack. Thanks for your
previous service, and thank you very much for being willing to
step up to the plate once again at really a remarkably
challenging time.
First of all, we faced the greatest economic downturn since
the Great Depression. I will never forget in 2008 being called
to an emergency meeting in the Majority Leader's office,
arriving there at about 6 o'clock one evening, and there was
the head of the Federal Reserve, the Secretary of the Treasury
in the previous administration, all the leaders of Congress,
Republicans and Democrats; and they were to tell us they were
taking over AIG the next morning. And they told us very clearly
they were not there to ask our approval, they were not there to
seek our approval. They were there to tell us they had made the
decision to do it, and they believed if they did not do it,
there would be a financial collapse in days.
That is as sobering a news as anyone can receive, and they
gave their rationale--the Chairman of the Federal Reserve, the
Secretary of the Treasury--why they believed that would occur.
And so we confronted a circumstance that if the Government
had not stepped forward and taken a series of very dramatic
actions, we well could have faced another depression. In fact,
we now have economic analysis from two very distinguished
economists of differing philosophical backgrounds who tell us
had these actions not been taken, we would currently have an
unemployment rate of 16 percent, and we would still be in a
very severe economic downturn.
While things remain difficult and challenging, unemployment
stubbornly high and underemployment too high, nonetheless, we
have been brought back from the brink. We were losing 800,000
jobs a month when President Obama took office. We are now
seeing the creation of tens of thousands of jobs a month,
although not nearly as much as what all of us would hope for.
Economic growth was a negative 6 percent in the first
quarter the President was in office. It has now turned
positive, although not as strongly positive as I think all of
us would hope for.
So that is the circumstance that you inherit. You walk into
a situation in which we have been brought back from the brink
of what could have been a financial collapse--and, by the way,
not just here but globally. And that meant the explosion of
debt because the Government had to come in to prevent this
collapse. That meant dramatically increased expenditures,
dramatically reduced revenues, as we both cut taxes and spent
money in order to prevent a collapse.
But all of that is unsustainable. Even before this downturn
occurred, we were on a long-term path that was unsustainable. I
have warned my colleagues many times that the debt is the
threat. I believe that deeply.
So while we have had to see an increase in debt in the
short term to avert a collapse, we now need to pivot and focus
like a laser at bringing down this debt. What recommendations
will you bring to the President for coping with this longer-
term crisis?
Mr. Lew. Senator, I could not agree more that the situation
that this administration inherited demanded immediate action.
We were headed off the cliff in terms of where the economy
might go. There was no obvious bottom, and the actions taken
helped restore the ability for there to be a recovery. And we
are seeing a recovery. None of us are satisfied with the rate
of the recovery. None of us are satisfied with the sustained
high levels of unemployment.
History tells the story of the path taken, not the path not
taken. If we had not responded to the very, very severe
economic crisis, we would indeed be seeing much worse economic
circumstances with much higher rates of unemployment.
I think as we look ahead, it is a very, very significant
challenge to simultaneously focus on the fact that we have to
continue to encourage economic growth, we have to continue to
encourage job creation; but we cannot put off for years
worrying about the deficit. We have to be able to think about
both in the same timeframe.
I think that the key challenge is for us to begin to take
actions which will not have an effect today or tomorrow because
I do not believe that putting the brakes on today or tomorrow
is the right answer, but that we take actions that will send a
signal of real confidence that right over the horizon we are
putting in place the policies that will put us back on a path
toward fiscal discipline.
I think it is possible to do that. I think it can only be
done in a bipartisan way. I think that the President has
appointed a Commission, which you serve on, which we are
looking very, very hopefully for the results of as being a
place where the beginning of a bipartisan consensus can begin
to develop.
I do not think we have faced a more significant fiscal
challenge in my lifetime, and we will be judged based on our
ability to respond.
Chairman Conrad. I think that is true.
Let me ask you this question: The President has put in
place a Fiscal Commission. Senator Gregg and I tried to get
that Commission authorized by law. Unfortunately, we fell
somewhat short of the super majority required. We did have a
majority vote in the U.S. Senate for that proposition. The
President then went to his authority to name by Executive order
a Commission, 18 members, a bipartisan Commission, with the
requirement that if 14 of the 18 of us can agree on a plan--and
both Senator Gregg and I serve on that Commission. If 14 of the
18 of us can agree--there will be a report on December 1st, and
we have had a commitment from leadership in both the House and
the Senate that if 14 of the 18 can agree, there will be a vote
in Congress before the end of this year.
The circumstance we confront is very clear. Revenue is the
lowest it has been as a share of our gross domestic product in
60 years. Spending is the highest it has been as a share of our
gross domestic product in 60 years. Clearly we need to reduce
spending as a share of the economy, and we need to raise
revenue.
Let me just say my own belief is, before we raise taxes on
anyone, we ought to collect the taxes that are already due from
people who are not now paying what they owe. If we collected
what was owed, we would not need any additional revenue
increase by my calculation--if we just collected what is owed.
Unfortunately, by my calculation we are only collecting about
80 percent of what is owed, partly because of the explosion of
offshore tax havens, partly as a result of abusive tax shelters
that have grown geometrically.
Let me just ask you: What is your view of the interaction
between the Office of Management and Budget and the work of
this Fiscal Commission leading up to a decision in December of
what we will recommend?
Mr. Lew. Senator, let me begin by saying I think that the
challenge we have is to leave things on the table because the
answer will not be one or another thing. This will require many
elements for us to make the kind of progress that needs to be
made.
I think that the administration has taken, wisely, the view
of not restricting the space in which the Commission can work.
In an environment like this, I have watched commissions work
really since 1983 with the Social Security Commission. It is a
place where ideas can be safely pursued outside of the
political spotlight, and when you look to a commission, I think
what you can do from the point of view of either the Congress
or the executive branch is to give it a little bit of room so
that the exploration of ideas, whether they are ideas that you
end up agreeing to or not, does not become in and of itself
something that is too dangerous.
The political environment has made it very challenging to
pursue ideas that might ultimately not be chosen because just
the thought process of going through, looking at the options,
becomes a liability.
So I think the administration has widely stepped back a
little bit, giving the Commission room, and said that we are
open to the Commission's recommendations, we look forward to
being able to work with the Commission's recommendations; and I
think most importantly, if there can be the beginning of a
bipartisan process in the Commission, take that forward and use
it as a basis to work together in the year to come.
As far as the process goes that you described, you know, I
am aware of the commitments that have been made. That is really
a set of congressional decisions, but the President remains
committed to the idea, as I understand it, that if there is a
positive recommendation, it should be brought forward for a
vote.
Chairman Conrad. I thank you. I think that is an excellent
answer.
Let me just reserve at this point Senator Gregg's time and
turn to Senator Sessions. We will do 5-minute rounds for the
beginning, given the notice by leadership last night that we
are going to have votes starting in the 10:30-10:45 time range.
I just wanted to thank Senator Sessions and thank all of our
colleagues for accommodating this last- minute change, moving
up the schedule, because they gave us the indication that there
are going to be votes on the floor at 10:30 to 10:45.
Senator Sessions.
Senator Sessions. Thank you, Mr. Chairman, and thank you
for many of the comments that you have made in opening, because
we are indeed facing a financial challenge of great import. I
have a Judiciary hearing at 10, so I will have to be leaving,
and I appreciate the opportunity to make a few comments and ask
a few questions.
President Obama's budget outlines an appropriate transition
from economic recovery to fiscal discipline. In your answers to
questions in response to the Committee, you stated, ``It lays
out a path that brings deficits''--annual deficits, not debt--
``as a share of the economy from 10 percent of GDP this year to
4 percent of GDP in 2013.'' That is a goal that can be
achieved, I am confident probably more could be achieved, but,
Mr. Lew, having been in this world before, you know it will not
be easy. There will be a lot of people that feel they should
not take any haircut, any trimming, any lack of growth in their
budget because what they are doing is so important it just must
be funded. And that is the psychology we are dealing with, and
it is not an easy one.
But I have trouble accepting that as an example of real
fiscal discipline. It plans to double the publicly held debt
under the President's budget from $5.8 trillion to $11.6
trillion by 2012, and triple it in 10 years to $17.6 trillion
by 2018. Those are the CBO numbers that we have seen. Interest
payments skyrocket from $187 billion in 2009 to an annual
interest payment of $916 billion in 2020, which I think will be
significantly higher than any other Government expense at that
time, or at least higher than the Defense Department budgets
today, which are the highest. And that is a burden. There is no
free lunch. To spend money today we do not have puts burdens
that we carry forever unless we start paying down the debt.
The President's budget basically calls for a Fiscal
Commission which we can hope is successful. It has got some
good people on it. And I know you will work hard to support it.
But the goal of this Commission, I have got to tell you, as
stated by the President, is unacceptable. The goal of it is to
stabilize the deficit at 3 percent of GDP, close quote. Three
percent of GDP. Well, that would be an annual deficit in the
year 2015 of $552 billion, which is higher than what President
Bush's highest deficit was, and he had a growing number of
deficits. It caused quite a bit of concern and criticism.
So you were OMB Director and rightly deserve credit for
seeing the budget balanced--actually, it balanced not long
after I came to the Senate. Do I get credit?
[Laughter.]
Chairman Conrad. A little bit. A little bit.
Senator Sessions. But I would just suggest, in all honesty,
that some of those 1994 Republicans who shut the Government
down over spending deserve some credit for balancing that
budget. And they stood up and made tough choices, resisted
increased spending, resisted President Clinton's desire to
spend more money year after year on various different things,
and essentially all of you together worked and balanced the
budget.
But the goal was to balance the budget, not to reach an
area where we have got a 3-percent annual deficit as a
percentage of GDP. Hopefully our economy will be growing in the
future, and 3 percent would be above the $552 billion. Don't
you think that is a fundamental flaw? Don't you think, Mr. Lew,
that if we are going to ask the American people to stand up and
put us on a sound financial footing, our goal within a
foreseeable, reasonable period of time should be to reach
balance?
Mr. Lew. Senator, I was very proud on my last day as OMB
Director to sit in this chair and have a chart to my right
which showed interest on the debt being eliminated if we stayed
on the path that we were on at the time when I left the Office
of Management and Budget. There is no doubt that we are in an
unsustainable fiscal situation right now.
I think that if you look at the goal of the Fiscal
Commission, it is not the final goal. It is the next goal. The
President's budget had a plan to get the deficit down to 4
percent of GDP. The Commission was asked to bring it to 3
percent of GDP. We cannot get to balance until we stabilize the
debt, until we stabilize the deficit and the debt that follows.
I think that the ultimate goal has to be to do more than
that, but I do not think that given the forecasts that everyone
is working from right now, given the options that it will take
to get to 3 percent, that we should minimize how important it
is to accomplish that goal of stabilizing the deficit.
I think if the Commission is able to help build a set of
bipartisan options where we look at a range of mechanisms that
will help us to bring the deficit to a level that is
sustainable, we will then be sitting down and having the
conversation about how to take the next step.
In terms of bipartisan cooperation, I think it is very
important to remember that 1997 was a bipartisan balanced
budget agreement. 1990 was a bipartisan balanced budget
agreement. That is the right way to do it.
In 1993, it is also important to remember that there was
extremely significant deficit reduction, and that was part of
solving the problem, and that was not a bipartisan effort. I do
not think that we should be looking at the 1993 model. We
should be looking at 1990 and 1997. That is what is good for
the country. That is where I think ultimately the answers lie.
I do not think that anyone in the administration is saying
that 3 percent of GDP forever is where the deficit should be.
But it would be a huge accomplishment to go from 10 percent to
3 percent.
Senator Sessions. Well, it would be progress. There is no
doubt about that, Mr. Lew, and I believe you have much to
offer, and I look forward to working with you in that effort.
But I just do not think leadership is setting a goal to reach
an annual deficit of $550 billion. I believe we have got to
have more clarity and more commitment to go further than that.
And we might surprise ourselves where we end up.
I would note you did not have a Deficit Commission in the
1990's. Basically it was battled out on the floor of the House
and the Senate year after year, spending bill after spending
bill, vetoes and so forth--oh, I am sorry, Mr. Chairman. Thank
you.
Chairman Conrad. Thank you. I would just say that the goal
of the Commission--the 3 percent is an interim goal, but the
charge to the Commission is much broader, and I think it would
be a failure if that is all we accomplished.
I think what is absolutely essential is we put the country
on a long-term, sustainable fiscal basis, and that is going to
take--I would agree with the Senator. That is going to take a
lot more than achieving the interim goal of 3 percent. In fact,
my own belief is we have got to try to get the debt as a share
of GDP--not just stabilize it. The first thing is to stabilize
it. But then we have actually got to reduce it so we have room
for things that might occur in the future, whether it is a
natural disaster or whether it is a foreign attack or what
other exigencies might occur.
Senator Sessions. Mr. Chairman, I would note that we have
had some bipartisan effort. I appreciate Senator Begich and
Senator Warner working with Senator McCaskill and myself to try
to enforce the President's spending levels that he has
proposed. If we could do that, that would be a small step but a
significant one.
Thank you.
Chairman Conrad. Senator Murray.
Senator Murray. Thank you very much, Mr. Chairman.
Mr. Lew, welcome, and thank you to you and your family for
your willingness to do this. I, too, appreciate your integrity
and your dedication to public service and willingness to take
on this position.
You are not new to this scene, and I, too, remember the
meeting that Senator Conrad described in the office late at
night, but the troubles of our economy started much longer
before that, when we saw the Bush economic policies of paying
for pretty much everything off budget, from wars to tax cuts.
And I think we have learned some important lessons from that.
But I want to go back to the lessons that you might be able
to share with us because when you came in under President
Clinton, we were facing an annual budget deficit of about $300
million with no end in sight.
Mr. Lew. Billion.
Senator Murray. Three hundred billion. Sorry, $300 billion,
with no end in sight. And we had to craft our way out of that
to a point by the time that you left, we were looking at a
surplus.
I wondered if you could share with us some of the policies
that you implemented back in the 1990's to help us reduce that
deficit, and can those lessons be applied today?
Mr. Lew. I think that it is very important to remember that
in the 1990's we operated in an environment with rules that
said that fiscal discipline is important. We had PAYGO rules,
so you could not have tax cuts or spending increases without
having offsets. I think it was incredibly important, and the
fact that the PAYGO rules lapsed and we went through a long
period of time where there was freedom to both reduce taxes and
increase spending without regard to whether there was an offset
was a very significant contributing factor.
No doubt the wars and the economic downturn contributed to
building up the deficit and the debt that we are now dealing
with, but an awful lot of it was a result of a lack of
discipline and not paying for policy as it was being made.
Those rules actually preceded the administration that I
served in. They were established in the previous budget
agreement, but they were honored by the administration I served
in. And that meant saying no to an awful lot of things that we
would have liked to have done.
In 1993, there were very difficult measures taken both to
reduce spending and to increase revenue. It was done in a
balanced way that was meant to be fair, not impose a burden on
working Americans where it could be avoided. And it showed a
dedication to the principle that fiscal discipline matters.
I think it is incredibly important that from 1993 to 1997
there was a sustained focus on fiscal discipline, and it was
very important that it was bipartisan after 1993. There were
indeed members of the other party that were very vocal speaking
about fiscal discipline. In 1997, we had a bipartisan
agreement.
I think that the relationship between what we do in the
Federal Government as a matter of fiscal policy and the larger
economy is one that it is hard to map in economic equations. I
think it is as much psychology as it is math.
I think that the business community looks to what we are
doing, and they ask, Are we confident that they are dedicated
and heading in the right direction or not?
I think the fact that we are now in a place where the size
of the deficit and the lack of a serious conversation about how
to reduce it causes a great deal of unease and uncertainty,
which I think is one of the reasons why businesses across the
country are sitting on an awful lot of resources, cash, that
could be invested in plant and equipment and hiring.
I think we need to come together not just about specific
policies, but to show this kind of dedication that we are going
to stay at it. There is not a silver bullet. It is not going to
be solved with one or another individual policy. I think one of
the most important things for us to remember is that it is
going to take concerted effort with multiple elements and
everybody finding room to compromise. And it will not probably
be done all at once. We will make progress, and then we will
have to make more progress.
I think in the 1990's the key was we stayed at it and we
got the job done.
Senator Murray. Thoughtful, and I think something all of us
need to really focus on as we move forward, so I appreciate
that.
Now, I did want to also ask you about the Environmental
Management (EM) program that we talked about when you came to
my office. This is the program that is responsible for cleaning
up our Federal Government's legal and moral obligation for
nuclear waste across the country, like Hanford in my State, and
it is extremely important. As you know, the EM mission is about
25 percent of DOE's budget, and I have been very clear with
this administration. We have to be consistent with this funding
and meet our legal and moral obligations. This administration
has fallen short in meeting that, and that waste that remains
in my State and across the country from the Manhattan Projects
and cold war efforts were from a war effort, and now that we
are hearing that we may be seeing a 5-percent cut in the EM
budget. I want you to really think about the fact that this is
defense spending, and it cannot be just defense when it suits
the Government. And I want to talk with you about making sure
that we have a robust annual budget for EM that will meet those
legal obligations that we have to clean up Hanford and other
sites around the country, and I also would like your commitment
to that. And if you could give that to me today, I would
appreciate it.
Mr. Lew. Senator, I understand the issue of dealing with
these waste sights is a very important. It is critical not just
at Hanford but in a number of parts of the country, and it is
an important environmental and health and safety challenge that
we have to address.
I, if confirmed, will work with the staff at OMB and the
team at the Department of Energy to fully understand the
issues, and I will work with you to try and see if we can come
up with the best possible solution.
Senator Murray. OK. I assure you we will have many
conversations, but this is extremely important, so thank you
very much.
Chairman Conrad. I would just like to on that point second
what Senator Murray has said. I do not think I will ever forget
being at a secure briefing--and I cannot discuss all of what
was revealed there, but this issue is critically important. It
is a national priority. Senator Murray able represents the
State that is most involved or one of the most involved, but
this really is a national priority, and it is clearly important
that we address it in that way.
Next we will go to Senator Crapo. Senator Crapo, we had
indicated earlier we are going to 5-minute rounds this morning
because of the votes that have been announced on the floor.
I also want to say Senator Crapo is a valued member of the
Fiscal Commission.
Senator Crapo. Thank you very much, Senator Conrad, and,
Mr. Lew, I appreciate you appearing here before us today. I
would also like to join in support of the comments that were
made by Senator Murray and Senator Conrad about the importance
of our EM budget. It is critical that it receive the attention
that it needs.
Following along that, I want to talk to you first about the
DOE loan guarantees for nuclear power production in the United
States. I am a very strong proponent of these loan guarantees,
and this is a program that was authorized in 2005. It is
critical, frankly, in my opinion, to the success of our
movement into nuclear power as one of the more important parts
of our National Energy Policy.
Unfortunately, we have faced, in my opinion, difficulty
between DOE and OMB, and I am not quite sure why. But it
appears to me that there is a problem with these two agencies
working together effectively on this issue. We have had
unnecessary bureaucratic hold-ups from what appears to be
infighting between OMB and DOE. And I do not know if I have
correctly described that, but something is wrong because we
cannot seem to get proper and timely movement forward on the
process.
As an example, I inquired about some specifics in late
November of 2009 with several other Senators and did not even
get a response after repeated attempts until just very
recently.
And I want to be clear about this because it is so
important that this program function effectively and is not
undermined by bureaucratic delays.
OMB, in my opinion, must be a close and transparent partner
with DOE in this process. And, in my opinion, from what I have
observed, DOE is doing a good job and in my view trying to get
these loans out the door and get the program implemented. But
somewhere along the road there is a blockage of some sort. And
I do not know exactly how to tell you what the problem is, but
there is a problem, and I would just like to get your
commitment that you will take a personal interest in this and
try to see that whatever the issue is between OMB and DOE, that
we resolve it and we get to a smooth operation in terms of
implementing this program.
Mr. Lew. Senator, I must confess that I am not terribly
familiar with the details of this. It was enacted while I was
out of Government, and I have not been involved in it from my
current vantage point at the State Department.
I do have a good relationship with Secretary Chu. I have a
great deal of respect for him. I think that one of the
important functions that OMB should play is to focus on what
issues need to be resolved and to run a process that permits
the issues to be addressed so that Government can move forward
effectively and smoothly. And, if confirmed, I would bring the
appropriate people together so that I can get up to speed
quickly on this issue.
Senator Crapo. Well, I appreciate that, and I look forward
to working with you on it, and hopefully we can resolve these
problems.
One other thing I would like to get to before my time runs
out, just changing subjects entirely, is the Secure Rural
Schools and Communities Self-Determination Act. Are you
familiar with it?
Mr. Lew. I am generally familiar with it. I would not
pretend to be as familiar in the detail that you are.
Senator Crapo. Sure. Well, I understand, and just as a
quick summary, this is legislation, this is a program that is
designed to help those communities and counties in the country
where there is heavy Federal ownership of property and,
therefore, lack of a property tax base in the county, to have
the Federal Government pay its fair share of operations in the
county. That is a very quick summary of it.
The problem we have is that we continue to have to fight
cycle after cycle for reauthorization of the program, and we
are coming up again in the near future with the need to
reauthorize the program after the end of 2011 funding. And I
would just like to be sure that the administration is aware of
this need, that the administration puts the reauthorization in
the budget and proposes to move it forward so that we do not
have to have that fight yet once again here in Congress as we
move forward to try to get this program reauthorized.
Mr. Lew. Senator, while I am not familiar with the details
of that provision, I generally am familiar with the impact of
the kinds of approaches, and I have always thought it is
important to be careful as we look at programs like that to
make sure that we are appropriately compensating for the impact
and not creating much larger programs than we otherwise would
and that they be targeted appropriately.
If confirmed, I would work with the OMB staff to make sure
I understand that issue, and I would be happy to speak with you
about it. I do not have the detailed knowledge to respond at a
detailed level.
Senator Crapo. All right. Well, I will followup with you
then after you get fully engaged on this, but it is a critical
program which has broad national support, and we just do not
need to be going through this continuous cycle of trying to
work it into the budget, and we would appreciate your help and
support on that.
Mr. Lew. Thank you.
Senator Crapo. Thank you.
Chairman Conrad. Thank you, Senator Crapo.
Senator Cardin.
Senator Cardin. Thank you very much, Mr. Chairman.
Let me followup on Senator Crapo's point as it relates to
these guarantees for nuclear power. We have the same concerns,
and it seems that there is a disagreement between OMB and DOE
as to how the cost is calculated under Title 17 of the Energy
Policy Act, that there is a disagreement as to whether to use a
generic cost recovery, 55 percent, or whether it should be
sensitive to the individual transaction.
We have a project moving forward at Calvert Cliffs in
Maryland. This is thousands of jobs. It is ready. It is
important for our energy policy in our country, and it has the
strong support of our State and local communities. The
bureaucracy is not working as effectively as it should. So I
want you to know there is bipartisan interest to resolve this
issue so we can move forward. We are concerned that investors
are getting nervous because of the delays, and I would second
Senator Crapo's point and ask you to give this your personal
attention to resolve this so we can move forward with a policy
that the Obama administration is supporting.
Mr. Lew. Right.
Senator Cardin. And one which has support here in Congress.
Mr. Lew. Senator, at the risk of speculating about
something that I have already said I do not start out with a
detailed knowledge of, I suspect it is a credit budget scoring
issue where we have one law that tells us how to score credit
issues and we have another law that has designed a nuclear loan
guarantee program, and the challenge is reconciling the two.
I understand that is an important function that OMB plays
to be in the middle of that space and that coming to a
resolution is important. I will have to go back and study the
issue, if confirmed, to make sure I understand precisely what
the resolution might look like.
Senator Cardin. You are a quick study. We are very
confident you will pick this up quickly and use your talent to
resolve it so that we can move forward with a policy that we
all agree is right for this country.
I want to take my time to first thank you for being willing
to do this again and thank your family. You have had an
incredible record of public service, and we thank you for your
contributions to the Congress, to several administrations, and
your work currently in the State Department, and now going back
to OMB. We thank you for being willing to do this. This is
tough work, and I think we all recognize that we have to get
back to the fiscal discipline that we had in the 1990's.
I think the challenge is as we started the 21st century,
that discipline was not there on tax cuts, it was not there on
military spending; and most recently, with our major concern of
getting out of a major economic recession and we had to figure
out how to get our economy moving, fiscal discipline was not
there either. We must restore fiscal discipline, and the good
news is that we all understand it and the American public
understands it, that we need to get this budget into balance.
There is genuine concern that our economy cannot sustain the
types of deficits that we are currently have and that we are
projecting for the future.
I would underscore the lesson that you mentioned from the
1990's on fiscal discipline and PAYGO, and I say that because
we are currently considering certain extensions of tax
policies. I do not hear in Congress the type of discipline I
would like to hear related to not only non-defense spending,
but also revenues and military spending. Everything needs to be
subject to the same type of discipline if we are going to have
a plan that will meet the Chairman's expectations and the
President's expectations of where we need to be for this
Nation. Secretary Lew, I think you can be extremely helpful to
us in this debate. Your credibility on this subject is well
earned. You have accomplished a great deal. And I thank you for
moving forward, and I ask that you be very open and frank with
us in getting us to focus on this issue that is so critically
important to America's future.
Mr. Lew. Thank you, Senator. I believe that as we go
forward, it is critical that we ask ourselves every time how
are we going to pay for the things that we want to do. But I
also think it is important to distinguish the actions that were
taken to respond to the fiscal crisis from normal spending. In
order to create millions of jobs, in order to create economic
growth where it did not existing, it was, I think, critically
important at the beginning of this administration to actually
increase the deficit. That was the exception to the rule. That
was the way to stimulate the economy. It cannot become the
normal rule. If it becomes the normal rule, we are on a path
that goes nowhere good.
But I do not think that I would compare the actions taken
on, say, Recovery Act to the actions taken on the other
measures that you are describing.
Senator Cardin. I totally agree with you. I was just trying
to point out that we have got to work together on fiscal
discipline.
Mr. Lew. Absolutely.
Senator Cardin. There is no question that managing the debt
and managing spending are critically important of economic
activities you need to get out of a recession. To me, that is
basic economics, and I fully supported those policies.
What I am suggesting, though, is that you cannot use this
indefinitely, and you need to recognize that now the deficit is
a drag on our economy, and that deficit reduction must be part
of the equation as we develop the next round of fiscal
policies.
Mr. Lew. And it is always hard to change gears.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Chairman Conrad. Thank you. And I thank the Senator for his
strong statement as well.
Senator Begich.
Senator Begich. Thank you very much, and I want to echo
thank you for your willingness to serve and go through these
types of hearings. And I am sure once you are appointed that
there will be plenty more that you will be subjected to and
wonder why you decided to do this again. But thank you very
much for your----
Mr. Lew. It is my honor.
Senator Begich. Thank you.
I want to followup on a couple commission people had, but
before I do that, I want to talk about one specific Alaska
program. It is called the Denali Commission. You may or may not
be familiar with it. I am assuming if you have been around a
while, you probably are familiar to some degree with it. You
know, it is in the process of once again going through a
reauthorization process. We have seen incredible success in
Alaska with it where the overhead is less than 5 percent to
administer incredible projects and develop infrastructure,
whether it be clinics or water and sewer projects in very rural
areas. And OMB has always taken a view that--they have not been
very kind to it, to be very frank with you. But I can name
program after program in the Federal Government that is very
inefficient compared to this one, which actually matches local
dollars, Federal dollars, and talks about sustainability, kind
of what I think you are talking about today, is how do you
create these budgetary situations that create sustainability.
I am not asking you to make a comment on it right now. I
would like to have further discussion. But in order to do that,
to be very frank with you, you need to come to Alaska. I would
be remiss if I did not invite you, but also, we have had seven
Cabinet Secretaries up there over the last year and a half; we
have had multiple Department heads. Once they see the living
conditions in some of these areas and why the Commission is
critical--and it is kind of a one-shot in, and then the local
communities take it from there. There are no operating
requirements afterwards by the Federal Government. I hope you
would look kindly to that offer and opportunity.
Mr. Lew. Well, I thank you for the invitation. I actually
had hoped at one point to go to Alaska and because of a family
illness had to cancel the trip, and it has been something I
have always meant to get back to. So I am familiar with the
Denali Commission. The years when I was working on the budget,
when Senator Stevens chaired the Appropriations Committee, I
became very familiar with the geography of Alaska, and I would
look forward to working with you on these issues.
Senator Begich. Great. And we recognize there are some
issues within it that need to be resolved, and that is why in
the reauthorization we hope to do that.
A couple things in a broader context, if I can. You know,
over the last week here we have been struggling with resolving
this 1099 issue and trying to find a proper pay-for. As you
know, two amendments were up, both failed. We have introduced
an amendment. I have put it on the table with Senator Ben
Nelson from Nebraska as well as some other sponsors trying to
resolve this issue. And I guess the question I have for you is:
Now, that the President has also now said that that provision
should be--he did not say repealed. I say repealed, because I
think it is onerous, and I am probably one of the only people
in the U.S. Senate who actually fills 1099s out as a small
business owner.
Is OMB willing to step up to the plate and help us resolve
this and get a good pay-for on this in very short order?
Mr. Lew. Senator, I am familiar with the provision, and I
concur that it is important to find a way to make the provision
not be as onerous, and that would require a pay-for.
Senator Begich. Correct.
Mr. Lew. I am not familiar with the conversations that have
been going on so, if confirmed, I would become familiar with
them at a detailed level. But I do concur that it is in our
mutual interest to find a solution because it is a provision
that is kind of--while it was a pay-for in the health reform
bill, it is not central to it.
Senator Begich. Correct.
Mr. Lew. It was just a means of financing.
Senator Begich. Right.
Mr. Lew. And I am not sure, as I understand it, that it was
well understood what the scope of the impact might have been at
the time it was designed, and having filled out 1099s, I
understand----
Senator Begich. You know exactly what I am talking about,
and if you are small businessperson, it is a lot of additional
paperwork, and on goods, it is even more cumbersome. And my
issue was that the IRS never could tell you what the compliance
rate was on the existing 1099 format they have for services, so
how could they determine what their success rate would be on
this? You know, I will not go into my rant about how CBO
scores, because I do not get it, to be very frank with you, the
way they do it. Things that should be scored they do not score.
Things that do not make any sense, they score. But I will leave
that for another discussion, because I do think after you are
confirmed--and I am hoping you will be--one of the things I
would like to find out over the longer term is how accurate
these scores have been, because we spend so much time here
debating the score, and then we move on to the next time. We
never look back and see was it accurate or not. So that is,
again, another discussion for another day, and I would be
looking forward to that.
The last comment I guess I would like to--I have several
other questions, but just one really quick, and that is on the
tax policy for the country. As you know, we are tinkering with
the Bush tax cuts and what is going to be, what is not going to
be. We will spend our time, you know, a lot of work on it, and
then we will come back a year from now or 2 years from now or 6
months from now. And I guess I would like OMB to take a serious
look at a bill that I have now cosponsored, which is the Gregg-
Wyden bill, which really gets rid of a lot of loopholes,
flattens the tax rates out for individuals to three rates--15,
25, 35 rates; takes the corporate rate from 35 to 24, giving us
a more competitive edge in the world market; keeps the hard-
core issues that benefit middle class, help small business.
It seems like, you know, 2 years from now we will be back
at this whole debate again about, you know, what special
interest group is lobbying us for what special tax provision
they want so they can go tell their client they have done a
good job versus let us do something once and for all that is
good for the American people, and also gives certainty to the
business community. Because I think these tax policies we are
going to be tinkering with will not give certainty to the
business community to unleash those dollars you mentioned in
your opening that are sitting idle. They are looking for long-
term policy--I do not know if you have a quick comment on that.
I am well over my time.
Mr. Lew. Yes, Senator, I think that it has been a long time
since there has been a serious discussion about the kind of
basic structure of the Tax Code. I think the general principle
that loophole closing is an important thing, because if for no
other reason it promotes trust in the tax system because it
promotes a sense of fairness that people in comparable
positions face comparable tax liabilities.
I am not familiar with all the pending proposals that are
out there now. As you know, it is principally the Department of
Treasury that handles tax policy, but OMB is very much involved
in matters of fiscal policy. And I would imagine, if confirmed,
I will be engaged in those conversations.
Senator Begich. Great. Thank you very much.
Thank you, Mr. Chairman.
Chairman Conrad. Thank you, Senator.
Senator Alexander, would you defer to Senator Whitehouse
for 5 minutes? He has a Judiciary----
Senator Alexander. I will be happy to.
Chairman Conrad. I thank the gentleman for his courtesy.
Senator Whitehouse.
Senator Whitehouse. I thank the distinguished Senator from
Tennessee, and I thank Mr. Lew for his willingness to serve and
for his distinguished record of service to date.
My questions will relate to health care, and let me ask you
first, as you look at the looming fiscal liabilities that our
country faces, where in that array do you see our fiscal
liability regarding health care?
Mr. Lew. I think that there is no way of denying that
health care is an enormous part of our economy. It is roughly
18 percent of our total economy, and one can hardly talk about
the----
Senator Whitehouse. And the forward-looking liabilities
eclipse all others, do they not?
Mr. Lew. It has been growing in the past, and I think one
of the challenges is to put the kinds of reforms in place that
begin to create some downward pressures on what the growth in
health care costs are.
Senator Whitehouse. Good. Let me ask you about that, with
around 18 percent of GDP being spent on health care, when we
compare that to our competitor nations around the globe, no one
is even close to having to carry that kind of a fiscal burden
for their health care program, are they?
Mr. Lew. It has for many years been the case that we have
had the anomalous situation of devoting more of our GDP to
health care while we have had less people with coverage than
some of our competitors, which is one of the reasons health
care reform was so important----
Senator Whitehouse. And in addition, we have had----
Mr. Lew [continuing]. And we had to begin by closing the
gaps.
Senator Whitehouse. In addition, when we do international
comparisons on health outcomes for the American people compared
to others, it is patently clear that we are getting nowhere
near our money's worth for this colossal expenditure of
national wealth. Is that not also correct?
Mr. Lew. Well, I think that what is clear is that we need
to have more knowledge about outcomes and policy needs to be
informed by that. One of the things that the health reform bill
does, it sets up mechanisms that will for the first time put in
place those kinds of mechanisms.
Senator Whitehouse. Let me duck into that, because that is
exactly the place where I am going. The President's Council on
Economic Advisers said not too long ago that it should be
possible to cut total health expenditures about 30 percent
without worsening outcomes, which would suggest that savings on
the order of 5 percent of GDP could be feasible.
Now, just to do the math quickly, something on the order of
5 percent of GDP is something on the order of $700 billion, is
it not?
Mr. Lew. The simple arithmetic--I am not familiar with the
report, but that is the arithmetic, yes.
Senator Whitehouse. Yes. So I guess my point is there are
very big stakes here, and everybody from your predecessor,
Director Orszag, to Dr. Gawande, who is one of the more lucid
writers on this issue, have pointed out that the way to get to
that $700 billion is an iterative, dynamic path of what Dr.
Gawande called experimentation and learning as we use the tools
in the health reform bill and others to learn our way through
how to improve outcomes while improving the quality of care.
The concern that I have is that for reasons of it being
that kind of an iterative and dynamic process that needs to go
forward, it exceeds the ability of CBO to score it. It exceeds
the ability of OMB to score it. And my worry is that as we go
into an environment in which we need to show progress on the
deficit, this issue--reducing the cost of health care by
improving the quality of care, by improving outcomes and
lowering costs and getting as much of that $700 billion in
savings as we can--will fade, not because it is not important,
not because it is not the biggest number, not because it is not
a win-win for the American people, but because there is not a
hard score attached to it.
My primary question to you is: Are you willing to take off
the goggles of scoring and look at the larger policy issues and
the potentials, recognize the limitations of the scoring, and
assure that, to the extent you can in this administration and
as the Director of OMB, you give this issue of health care
reform the full energy and attention and interest that it
deserves?
Mr. Lew. Senator, one of the issues that I have worked most
intently on in my 20 years in public service is health care,
and it is an issue for which I have a great deal of passion and
more than a little bit of experience.
I think that the Affordable Care Act was a historic piece
of legislation that both created a path to coverage for
millions of Americans and set in motion forces to lead to the
kinds of reforms that you are describing.
I think the implementation of the Affordable Care Act is
one of this administration's highest priorities. As OMB
Director, the President made it clear to me that he expected
me, if confirmed, to pay a great deal of attention to it. And
it is something I look forward to participating in.
Senator Whitehouse. Good. We will work well together, then.
I appreciate your appreciation of this as a very significant
priority. And I again the distinguished Senator from Tennessee
for his courtesy to me. I appreciate it.
Chairman Conrad. Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman.
Mr. Lew, welcome, and thank you for being willing to serve.
If I am not mistaken, entitlement spending is about 56 percent
of the budget. Is that about right?
Mr. Lew. More or less, yes.
Senator Alexander. Would you think in this time of what I
think is overspending, with an alarming deficit, it would be a
good idea to not have new entitlement spending?
Mr. Lew. I think that the growth of entitlements is
principally driven by health care and Social Security. And I
think that----
Senator Alexander. But I mean to authorize new entitlement
spending. Don't you think it would be a good idea not to have
any more new entitlement spending?
Mr. Lew. I think as we go forward, the challenge is, in an
environment defined by PAYGO rules, to make sure that anything
that we do in this area we pay for. I think that the challenge
of finding savings is very real, and we have to begin by not
creating new long-term expenditures without worrying about how
we are paying for them.
Senator Alexander. But don't you see a difference between
entitlement and discretionary in the sense that if it is
entitlement it is just on automatic pilot and we never get
control of it; if it is discretionary, we have to approve it
every year?
Mr. Lew. I think that, you know, the programs like Social
Security, Medicare, and Medicaid that have been set up the way
they are, are not outside of our purview. I know that in the
case of Medicare and Medicaid, I have on many occasions
participated in processes that have changed those programs.
Senator Alexander. Hard to do, though, isn't it?
Mr. Lew. It is hard, but I would not--I do not think we
should think of them as beyond our reach. We have to be careful
about what we do because people have a right to the benefits
that they paid for and expect to earn. But I do not agree with
the notion that they are kind of on automatic pilot and outside
of our control. In 1983, we proved to the contrary by having
very significant Social Security reforms that created a
generation of stability in the program.
Senator Alexander. The Obama administration has proposed
converting the entire Pell grant program to the mandatory side
of the budget, then provide an annual increase of CPI plus 1
percent a year. This would shift about $300 billion over 10
years to the mandatory side of the budget, plus $118 billion to
fund the maximum grant award, plus another $69 billion to
increase and index the maximum award.
Now, that is a lot of money. I mean, Republicans on the
Appropriations Committee have suggested that we spend about
$300 billion over 10 years less than the President has asked
for this year, and the Majority Leader has said he agrees with
that. And we all think--that just affects 30 percent of the
budget, not counting the emergency spending. And we are all
proud of the fact that we may be able to save $300 billion
right now, but here the administration is coming along and
proposing erasing that effort and spending nearly a half
trillion, moving from discretionary to mandatory. Isn't that an
unwise thing to do in the middle of such spending problems?
Mr. Lew. Senator, I would begin by saying that, you know,
the Pell grant program is an enormously important program. If
we look to the future of this country, the education of the
young men and women who go through the Pell grant program----
Senator Alexander. Let us say you and I agree on that.
Mr. Lew. That is key to our future, both in terms of our
economic growth and the fairness of this country.
I think that the proposal in the President's budget, as I
understand it--and I was not at OMB designing it, so I have an
outsider's knowledge of it. But my understanding of it, it was
in the context of an overall budget that observed the PAYGO
rules that would have paid for it.
So I think that it is important to ask the question not
should we make that kind of a change in Pell, but are we truly
in a position to pay for it.
Senator Alexander. So if we can pay for it, you see no
problem with adding a half trillion dollars, taking a half
trillion from the discretionary side and putting it on
automatic pilot?
Mr. Lew. I think that the bipartisan support for Pell
grants over the 20-plus years I have worked on Pell grant
funding suggests that there is going to be substantial funding
for Pell grants, whichever side it is on.
I think that the proposal was not so much to increase the
spending except on the margin, but it was----
Senator Alexander. You are ducking my question. You are
basically saying you think it is OK to add a half trillion
dollars in mandatory spending at a time when the President's
proposals would double the debt in 5 years and triple it in 10.
Mr. Lew. I am saying the question is: Are we paying for it?
Senator Alexander. When you were OMB Director during the
Clinton administration, you supported biennial budgeting. Do
you still think that is a good idea?
Mr. Lew. You know, I testified several times before the
Congress on it, and I observed at the time, as I believe now,
that the annual budget process gives us precious little time to
focus on program implementation, both in the executive branch
and in the legislative branch.
I think there are many challenges to biennial budgeting.
The systems of Congress are well established. Dealing with
annual appropriations is more than a tradition. It is a deeply
ingrained mode of thinking and functioning. It would require
changing the way everyone thinks and acts in a dramatic way.
I think that the goal of creating a space to focus on
program management and implementation is a worthy one. In the
many years that it has been discussed, I have never seen the
consensus form around it, but I think it is the kind of
conversation that is very much worth pursuing because the
effective implementation of programs is, I think, one of the
challenges both at OMB and in the Congress that we all need to
pay a great deal of attention to.
Senator Alexander. Mr. Chairman, my time is up. Could I
make an observation in response to that?
Chairman Conrad. Yes, sir.
Senator Alexander. Well, thank you, Mr. Lew, for that
comment. I hope we can continue that conversation because that
idea, the idea of a 2-year budget, has bipartisan roots, and it
has more support today on the Republican side and among
appropriators than it did 20 years ago or 10 years ago. And we
feel, many of us on the Republican side--and I am sure my
colleagues on the Democrat side may feel the same way--we have
done a poor job at oversight. And as you say, spending 1 year
on appropriations and the next year on program implementation,
repeal and review of excessive regulations would be a very
healthy thing from a Government that has grown too complicated
and too big. So maybe that is an area where we can have further
discussion.
Mr. Lew. And I would just add that every proposal for a
biennial budget has recognized the need for mid-course
corrections because decisions that are made on a long-term
basis undoubtedly would run into changed circumstances that
would need to be addressed. So it is both the oversight but
also the effective mechanism for mid-course corrections that
would need to be worked through.
Senator Alexander. Thank you, Mr. Chairman.
Chairman Conrad. Thank you.
On this point, if I can just for a moment, I have been a
long-time opponent of biennial budgeting. I do not know of any
large institution that does not budget every year. But with
that said, given what I have now seen over these last many
years, in the election years it has now become the rule rather
than the exception that we do not have a budget. That is not a
healthy thing. And it may well require that we move to a form
of biennial budgeting so that we can assure there is a budget
blueprint in place.
The only time we have been able to break that in the last
number of years was 2008. I was able to get a budget through in
an election year. But if you go back, Republicans, Democrats in
charge of the Senate, we are now falling into a pattern in
which we do not do a budget in an election year.
And so I must say, my attitude is changing very
dramatically on this issue, and I would be happy to work with
the Senator and others to see if we cannot form a proposal that
could get adopted and we would put in place an effective plan
that would assure a budget blueprint.
Senator Alexander. The State of Texas has a 2-year budget.
Chairman Conrad. Well, I am not sure I want to be copying
Texas.
[Laughter.]
Chairman Conrad. Senator Nelson.
Senator Nelson. I understand the subject came up about the
deficit reduction Commission. Would you offer some further
comments, please?
Mr. Lew. Senator, I think that the deficit reduction
Commission was given one of the most important challenges and
assignments that we face as a country today: How do we get our
fiscal house in order and get back on a path to having a
sustainable level of debt and deficit?
It is a very hard challenge. Getting from 10 percent of GDP
deficits to 3 percent of GDP deficits requires a broad array of
difficult decisions and choices. One of the keys to the way the
Commission was set up is it was set up on a bipartisan basis
with people of integrity on both sides, and the call to come
together and try and find areas where there could possibly be
bipartisan consensus.
The administration has taken the view, I think correctly,
that it should give some space to the Commission and let that
work be done outside of the 24-hour news cycle, without the
things being taken off the table prematurely. And that does not
mean embracing everything that might be discussed in the
Commission.
Certainly there will be things that are discussed in the
Commission that not everyone on the Commission will agree to
and those outside of the Commission might have issue with. But
I think it is very important that there be a space where the
Commission can do its work and hopefully come back in early
December with a report that has a bipartisan consensus.
Senator Nelson. You worked for Tip O'Neill, and if you will
recall, one of the most successful acts in Government was a
bipartisan Commission to save Social Security in 1983. I would
like your opinion on the experience of that success compared to
the present attempt, given the fact that you basically had two
old Irishmen back then--one who was President and one who was
Speaker--that basically threw their weight behind the
bipartisan Commission and kept Social Security off the table as
an election issue at the next election. That does not seem to
be the case in this toxic, highly partisan atmosphere that we
have now.
Your observations?
Mr. Lew. Senator, I was proud to be Speaker O'Neill's
liaison to the 1983 Social Security Commission, and the
successful work of that Commission is something that I am proud
to have been associated with.
I think that the challenge at the time was to be in a
political environment that was highly charged while not taking
specific things off the table so that there was nothing to talk
about in the Commission. And I know that my role working for
the Speaker at the time was to help him think through how could
he take a position that was very principled in terms of
defending Social Security and standing up for a program that he
and I both believe is one of the greatest things that we have
done in this country while leaving open some space for people
of good will to come to a set of recommendations that would
solve a problem without which the American people would not
have confidence in this great program.
There were a number of components of the Social Security
Commission report that easily could have been taken off the
table in a political season. The fact that they were not is one
of the reasons that that Commission was able to succeed. And I
think it was important that there was a discussion of those
ideas taking place outside of the kind of heat of the political
environment because at the time Social Security was, as it
still is called, the third rail of American politics. I do not
think that there is a soul alive who would question Speaker
O'Neill's commitment to the Social Security program. I for one
think that he showed the greatest respect and loyalty to that
program by permitting that discussion to take place and then
embracing it would President Reagan which, by the two of them
coming forward, made it possible to take what was a historic
and important action.
Senator Nelson. Can you imagine President Obama and Senator
McConnell and Leader Boehner coming forward after this election
and embracing a report of the deficit Commission that would be
passed, has to be passed by 14 of the 18 members?
Mr. Lew. Look, I think it is highly premature to think
about the outcomes, the specific outcomes of the Commission.
One of the elements of giving it space is that we have not
commented a lot on the specific work of the Commission, and I
think that is appropriate.
One thing I will observe as a general principle is that we
have almost always been surprised by unlikely allies coming
together when there has been real bipartisan progress. People
were surprised when President Reagan and Speaker O'Neill came
together in 1983. People were surprised when Speaker Gingrich
and President Clinton came together in 1997. So I do believe in
the possibility of things that do not look the most likely from
where we sit today.
Senator Nelson. I would just say in conclusion that one of
the things I learned when I sat at the knee of Tip O'Neill was
that he and President Reagan would fight like the dickens, but
they would walk out the door at the end of the day as personal
friends. And that personal relationship led to an atmosphere by
which, when it was time to build a consensus, they could do it.
I am fearful that those personal relationships do not exist
today.
Chairman Conrad. I thank the Senator. I would just say on
this Committee they do. Senator Gregg and I fight mightily on
issues of policy, but at the end of the day, we are personal
friends, and I do think that helped us get a Commission formed.
And I also want to acknowledge that in the negotiating of that
Commission, Senator Nelson played a key role. And when I needed
a strong ally to go to the Vice President's residence on a
weekend, Senator Nelson volunteered for the effort and played a
very constructive role.
Senator Ensign.
Senator Ensign. Thank you, Mr. Chairman. I think it is just
because you and Senator Gregg have such sweet personalities.
[Laughter.]
Senator Ensign. Mr. Lew, thank you for volunteering at this
really critical time in our country's history. We had a nice
visit in my office yesterday, and I appreciated that time with
you. And I know we have some philosophical differences, but I
certainly respect the work and your intellect. You have a huge
challenge ahead of us at this critical time.
I think what Senator Nelson said about us needing
bipartisanship at this time, because this debt crisis that we
have--I mean, just look at the chart displayed up there, that
represents the interest that we are going to pay on our debt
each year. And these are the President's numbers going in 2011
to over $200 billion, to over $900 billion by 2020. And we know
those numbers are scary because we do not get anything for it.
It is like a family that has a credit card. If you think about
this as our national credit card, we do not get anything for
the money that we pay on interest on our national credit card.
It is just wasted money. We do not build any roads; we do not
get any veterans' benefits for it; we do not get any Social
Security benefits for it. been That is just money that goes out
the door, and it is because we have overspending for too many
years. And this debt Commission certainly is important if we
have the potential courage to embrace its recommendations.
You know, I realize we have different philosophies about
how to get the economy going. But certainly, getting the
economy going is something we all can agree on. How to do it is
difference. I believe that we should be cutting taxes and
cutting spending. Obviously the administration has a different
philosophy on that. But, you know, once the economy is growing,
we still have this massive spending that is going on here in
Washington, D.C., to deal with. And it is not just from the
stimulus bill. We have dramatically increased discretionary
spending in all the appropriations, especially non-security
appropriations, over the last couple of years. And everybody is
talking about fiscal responsibility now, but when it comes to
votes, we are not getting those kinds of votes. I am not sure
exactly when that is going to happen, but we absolutely need it
to happen.
If you could pull up the next slide, please? This is the
debt held by the public as a percentage of GDP, and we can see
what it has done historically. It has had its ups and downs,
but it is not anything compared to what according to the
President's budget is going to do over the next 10 years. I
mean, these numbers are completely unsustainable.
If you go to the next slide, this shows what people have
been talking about, about debt held by the public, that it
doubles in 5 years and triples in 10 years.
You know, I just look at this from a simple perspective. A
family, a business, State governments, local governments,
Federal Governments, debt at a certain point causes collapse.
Whether it is personal bankruptcy or whether it is a country's
bankruptcy, debt becomes too big at some point. And we as a
Nation we have a AAA rating on our debt right now. Well, that
AAA rating is in trouble. I mean, you hear talks about it right
now. And we do not know when the rating agencies are going to
decide that America is maybe not the safest place and so it
does not deserve that AAA rating. But if it does happen, we are
in trouble. We are in absolute trouble. We know that that is a
possibility.
What we saw happen in Greece on our television sets earlier
this year, Greece needed the European Union to bail them out.
We do not have anybody to bail us out. If the United States
goes down, the rest of the world's economy comes down with us.
And that is why I believe it is so critical for us at this
juncture in history to join together as Republicans and
Democrats, forget our party labels. This debt is such a serious
problem.
I actually am one of those people who as far as the tax
cuts are concerned, would rather see those tax cuts offset with
spending cuts. If you are going to keep the tax rates the same,
which I believe that they should be, I do believe in spending
reductions to pay for that policy. I think that the more that
we can hold down this deficit and this debt, the better that we
are going to be long term as far as economic health for this
country is concerned.
If given the choice whether to keep taxes where they are
and not pay for them or to raise taxes, I would choose keeping
taxes where they are and not pay for them. But my ideal
situation would be keep taxes where they are and to cut
spending so we are not increasing the deficit. I think it over
history it has shown that that is the best way to go.
But my basic plea to you is--you are going to be our new
OMB chairman upon your confirmation--that you do everything you
can to encourage the administration to reach across the aisle.
To join those of us who are willing to join you and to attack
this serious debt problem that we have in the United States,
because it is absolutely, I believe, unsustainable and is going
to threaten the very future of the United States economy. And
when you threaten the future of the United States economy, you
threaten the future of our very existence as a constitutional
republic.
So, Mr. Chairman, I know I did not have any questions in
there, but I think that this is important to talk about and so
critical for us as Senators up here and the Members of the
House, Senators, and the White House to be working together on
this as we go forward.
Chairman Conrad. I thank the Senator.
Senator Sanders. Thank you very much, Mr. Chairman. And,
Mr. Lew, thanks very much for joining us.
Let me just say to my good friend Mr. Ensign, I am very
glad that our Republican friends are concerned about the debt
and the deficit, but let me just remind them. Some of us voted
for the war in Iraq, which will end up costing $3 trillion. It
was not paid for. Not me. Not many others.
Some of us voted for huge tax breaks for the rich, many,
many hundreds of billions of dollars, which added to part of
the problem of how under Bush we almost doubled the national
debt. Some of us voted for it. Some of us did not.
Some of us voted for the Medicare Part D prescription drug
program written by the insurance companies that was not paid
for. Some of us voted for it. Some of us did not----
Senator Ensign. No, some of us did not.
Senator Sanders. OK. I was not talking about you in
particular, but it did pass under Republican leadership.
Some of us voted for the Wall Street bailout. A lot of that
money was repaid. Some of it was. Some of it was not. Some of
us did not vote.
So before we talk about the seriousness of the debt--and I
certainly agree with you, it is a serious issue--let us
remember how we got there, who voted for these unpaid programs
and who did not.
But, Mr. Lew, welcome and thank you very much for your
service.
Senator Ensign and Senator Alexander and others are
absolutely right. Debt is a very serious problem. We have to
deal with it. But it is one of many problems. Among other
things, the middle class in America is collapsing. Poverty
reduction is increasing. When President Bush was President, the
middle class saw a $2,000-a-year decline in median family
income.
The issue I want to talk about, which I hear very little
discussion about and I want your views on, is the fact that the
United States today has the most unequal distribution of income
and wealth of any major country on Earth. Sometimes we talk
about the economy like we are all in this together. We clearly
are not.
Now, I want your judgment and tell me what you think. In
2007, the wealthiest 1 percent earned 23.5 percent of all
income in America. In the 1970's, that number was 8 percent.
The top 1 percent in the 1970's earned 8 percent. The top 1
percent now is earning almost 24 percent of all income.
Do you think that that is OK? Do you think that that is an
issue that the President should focus on? Do you think it is
morally OK? Do you think it is economically OK?
Mr. Lew. You know, I think that the distribution of income
is a challenge and a problem, and it is something that we need
to focus on. I think as a matter of Federal policy, it is
really one of the things that drives the debate on whether or
not to extend the tax cuts for people earning over $250,000 a
year. It would be the wrong thing to do at a time when we have
the disparity of income distribution that you are describing.
I think that the real challenge we face is how to grow the
economy, grow jobs, create the kinds of better income earning
opportunities for more working Americans.
Senator Sanders. We certainly agree, and that is what
everybody says. But the reality is over the last 30 years
almost all of the new income created has gone to the top 1
percent, and, in fact, today the top one-tenth of 1 percent
earns 11 percent of the income. Do you think that that is
morally acceptable?
Mr. Lew. I think that it is very important that we focus on
what are the income levels of working Americans, middle-income
Americans, and the decline of incomes is not a good thing.
Senator Sanders. In your judgment--and certainly it was
exacerbated during the Bush years, but it would be wrong to say
it was only the Bush years--why has over the last 30 years the
middle class collapsed or significantly declined, the rich
become much richer, and poverty increased in America? In your
judgment, why has that happened?
Mr. Lew. I think that there have been trends in our economy
that have done tremendous damage to the manufacturing base of
the economy. The loss of manufacturing jobs has had a lot to do
with it. I think that we need to look at the kinds of trends
that you are talking about and ask how do our policies affect
that, if our policies affect that.
I know over the years I have worked hard on things like
earned income tax credits to address issues like that. There
are Federal responses that have been very effective, though not
effective enough, because----
Senator Sanders. If I can, I am sorry. Time is short. You
touch on manufacturing. I think that is an extremely important
point. I think you are right. I know in my State, which is not
a major manufacturing State, we lost about 25 percent of our
manufacturing jobs in the last 6 years. I think under Bush we
lost over 4 million manufacturing jobs.
Many of us believe that one of the reasons--not the only
reason--is a disastrous trade policy which has basically said
to corporate America, Of course, you can throw American workers
out on the street, hire people in China for 50 cents an hour,
and bring your product back into this country. I myself voted
against NAFTA, Permanent Normal Trade relations with China and
so forth and so on.
What do you think about trade policies? Are they working or
have they helped destroy manufacturing in America?
Mr. Lew. I think that it is important that we look at these
issues for both the benefits that come from enhanced trade,
free trade, and the potential costs.
Senator Sanders. You think the benefits have outweighed the
losses?
Mr. Lew. I think that the risk to the United States of
closing off from the world----
Senator Sanders. That was not the question.
Mr. Lew [continuing]. Are very great.
Senator Sanders. Going back in history, do you think the
unfettered free trade policies that have gone on from Reagan,
under Republicans and Democrats, have benefited the American
worker or hurt the American worker?
Mr. Lew. I think for a worker who has lost their job----
Senator Sanders. That was not my question. Of course, for a
worker----
Mr. Lew. I cannot speak to the statistical averages. I
would have to go back and look at them. My understanding of the
trade policies has been there have been many benefits as well
as costs. I think the costs are things we have to focus on. We
have to look at the reason. We have to ask the question: Is
that because of unfair policies? Is that because of countries--
--
Senator Sanders. I think the reason is not that
complicated. When you can hire people for 30 cents an hour,
that is a pretty good reason to go abroad, and that is what
people----
Mr. Lew. Senator, I think it is very important as we look
at trade agreements to ask whether the kinds of laws that
protect worker rights, the kinds of laws that protect
environmental standards are in effect.
Senator Sanders. We heard that under President Clinton as
well. He was wrong then, and I am afraid those who are touting
that line are wrong today.
We are in the midst of a horrendous recession right now; 16
percent of our people are unemployed or underemployed. Clearly
the immediate precipitating factor was the collapse on Wall
Street. Do you believe that the deregulation of Wall Street
pushed by people like Alan Greenspan and Robert Rubin
contributed significantly to the disaster we saw on Wall Street
several years ago?
Mr. Lew. Senator, when we discussed it, as I mentioned to
you, I do not consider myself an expert in some of these
aspects of the financial industry. My experience in the
financial industry has been as a manager, not as an investment
adviser.
My sense, as someone who has generally been familiar with
these trends, is that the problems in the financial industry
preceded deregulation. There was an increasing emphasis on
highly abstract leveraged derivative products that got us to
the point that in the period of time leading up to the
financial crisis risks were taken. They were not fully
embraced. They were not well understood.
I do not personally know the extent to which deregulation
drove it, but I do not believe that deregulation was the
proximate cause. I would defer to others who are more expert
about the industry to try and parse it better than that.
Senator Sanders. Thank you, Mr. Lew. And thank you for the
extra time, Mr. Chairman.
Chairman Conrad. Let me just say I think these are very
important points. My own assessment of what led to the collapse
was a combination, really a toxic brew of overly loose fiscal
policy, an explosion of debt in the previous administration
when times were good, an overly loose fiscal policy following
9/11, the Federal Reserve keeping interest rates abnormally low
for an extended period of time, and the result being an overly
loose fiscal policy and an overly loose monetary policy at the
same time--something you rarely see in economic history--
coupled with deregulation.
I think the Senator is entirely right. I think
deregulation--part of that toxic brew--has a central
responsibility in the near collapse. And I do not know how it
can be otherwise.
We had trillions of dollars of derivatives, exotic
insurance products that were deployed to try to defend against
people taking outsize risks. Major financial houses that were
not satisfied with 11:1 leverage wanted 30:1 leverage and got
30:1 leverage under the previous administration. Got 30:1
leverage. It works great when things are going up. It does not
work so good when things are going down. And the previous
administration looked the other way. They absolutely did. I
think the economic history of it is clear.
I just read the book, by the way, ``The Big Short.'' If you
want an interesting education on what occurred, read that book,
``The Big Short.''
Senator Merkley.
Senator Merkley. Thank you very much, Mr. Chair. And Bear
Stearns actually hit 40:1. In fact, went from 20:1 to 40:1 in a
single year during that period. Just phenomenal.
Chairman Conrad. The Senator is talking about leverage.
Senator Merkley. Yes. Yes, 40:1 leverage.
Chairman Conrad. There were firms that were well over 40:1
leverage, which worked, which means if something you are
betting on goes up a dollar, you make $40. It also means if it
goes down a dollar, you lose $40.
Senator Merkley. It means you crash overnight when the
market turns, and you melt down the entire economy, and that is
where we are now.
I want to turn to a piece of the Oregon economy, which is
an arrangement regarding our forests. In 1908, the Federal
Government worked out a deal that said, hey, we are not--our
forests take up big chunks of counties throughout Oregon, and
in other States, and we are not paying any property taxes, and
clearly you have to maintain the infrastructure, so we will
have a 25-percent revenue-sharing arrangement for the timber
cut.
Well, along comes this century and a variety of
environmental overlays have proceeded to take land that was
specifically set aside, the ONC lands, for the counties, and
essentially timber cannot be cut on it.
And so a deal was worked in 2000 that extended until now in
a few different iterations that said, We understand we are not
allowing you to cut, we understand there is no revenue sharing,
so we are going to now compensate by filling in that hole of
those revenues that are needed for the infrastructure of the
counties.
This is a century-plus deal between the Federal Government
and the communities. Oregon is dramatically affected; so are
many other States. And President Obama said during his campaign
that he understood this and that he would bring people
together, that he would forge a long-term solution, that he was
supportive.
Well, this latest piece of this is expiring in 2011, and
this contract needs to be honored between the Federal
Government and the people of my State that have large tracts of
forest.
Are you prepared to make that happen?
Mr. Lew. Senator, I am generally familiar with the issue
and, if confirmed, I obviously would become much more familiar
with the issue. In general, I know the question of what the
impact of Federal policies are on districts is something that
has been challenging to calculate what the right kind of
compensation is. I would certainly commit to working through
those issues, understanding them and working with you.
Senator Merkley. I must say that is not satisfactory. Our
President made a commitment. This commitment is central to the
economies of my State. The Secretary of Agriculture is working
on it; the Secretary of the Interior is working on it. But
getting this into the budget is essential--that is being put
together right now. And I would like you to come up to speed on
this topic and have your commitment that you are going to get
this done before you are confirmed because this is the
lifeblood--33 of my 36 counties are profoundly affected by this
long-term contract with the Federal Government over the use of
the forest lands. Now, they would much prefer to be able to
log. That creates jobs. But as long as the Federal rules have
turned back that possibility, at a minimum the revenues
necessary to operate the infrastructure of the county or
contribute to that effort needs to be sustained in this deal.
And so if you are not adequately familiar to make that
commitment today, I am asking that you come up to speed on it.
I certainly feel like it is essential that anyone heading up
this position not only understand this historic structure,
understand why it is essential, and plans to honor the contract
that was developed between timber counties and the Federal
Government.
Mr. Lew. Senator, I certainly agree in principle that
commitments made should be honored, and I have to confess that
there are a number of details of the Federal budget that I have
not focused on in the last 10 years with the same detail that I
did when I was at OMB the last time. I can make the commitment
to come up to speed quickly, and I would be happy to have
appropriate interaction with you on it.
Senator Merkley. I will look forward to that. Thank you.
Thank you, Mr. Chair.
Chairman Conrad. Thank you, Senator Merkley.
Let me just say that I think Senator Merkley has expressed
this very clearly and very forcefully to those of us on the
Committee, and we understand the central importance this plays
in the economy of his State, and I intend to be supportive of
Senator Merkley on this issue. He has made very, very clear to
the members of this Committee the importance of it to him and
to his State. So I want to rivet the point.
Senator Merkley. Thank you very much, Mr. Chair, and I
appreciated your support when we put a space holder for this
program in our budget plan. That was very helpful, and it
recognizes the fact that this needs to be a contract honored.
Chairman Conrad. And I have committed to the Senator on
this matter and intend to absolutely keep that commitment.
You know, there are these issues that are in each of our
States that are critically important. I have an issue in my
State that I want to raise as well, because we have a Federal
working group that is considering options to dealing with the
crisis in my State. The crisis is in the Devils Lake Basin. We
have a lake that has gone up 30 feet in the last 17 years, and
it is a lake that is three times the size of the District of
Columbia. And there is nothing else like it anywhere in the
country, to have a runaway lake that has gone from 49,000 acres
to 180,000 acres. And it is now 6 feet from an uncontrolled
release. This is after going up 30 feet in the last 17 years.
It had gone up 3-1/5 feet last year, went up over 2 feet this
year. We are now within 6 feet of having an uncontrolled
release from this lake, which would create massive flooding
problems not only in the Devils Lake Basin but for every city
and town downstream, towns that have just had massive flooding
2 years ago. If this were an uncontrolled release of water,
their flood stages would be 5 feet above what they experienced
in 2008, and the water would stay high for 30 days. Now, this
is almost Biblical in terms of the threat to the eastern part
of my State.
I have had a series of hearings all across the State in
every affected area. I have had a Flood Summit with every
Federal agency that has a responsibility represented. We have
asked the administration and they agreed to put together a
Federal working group. OMB is a very important part of that
working group. They are about to issue their report. I am
extremely concerned about what I hear might be in that report.
I have not seen anything in writing, but I can tell you that
there are certain things that simply must be done. We must move
additional water off that lake. We must change water quality
provisions in order to do that. We must relax the water quality
standards in order to be able to do that.
There is no serious option, because if we do not do that,
if we do not move more water off the west side of the lake
where the water quality is dramatically better than out of the
east end of the lake where an uncontrolled release would occur.
It is very hard for people to get their minds around it. The
water quality out of the east end of the lake is 5 times worse
than the water quality out of the west side of the lake. So if
there is an uncontrolled release of water out of the east end,
we will face extremely serious consequences downstream. So it
just makes common sense to release more water. We are already
releasing water out of the west end through a State-operated
outlet. But we are constrained by water quality issues. That
simply must be addressed. We also must construct a structure on
the east end to prevent an uncontrolled release that would be
an absolute catastrophe.
Now, some counsel, well, let us just have some more
meetings and we will enter into more discussions. There is no
time for that. We are now in a timeline--this next spring, the
town of Minnewaukan, which is on the edge of the lake now--when
all this started, it was 8 miles from the lake. Now Minnewaukan
is virtually in the lake.
So I now that you are not yet confirmed. You are not in a
position to influence the outcome of this officially, this
report. I would just say to you this to me is a matter of
extraordinary importance to the people that I represent and to
me.
Mr. Lew. Senator, I remember the issue well from when I was
at OMB the last time, and I worked with you and the delegation
on issues related to Devils Lake at the time. I know there is a
commission working on it, but I have not been involved with the
commission. So you may know more than I do about where the
Commission is heading. But I would look forward to continuing
the conversation with you.
Chairman Conrad. They have committed to issuing a report by
the 20th of this month, and it would be an extremely serious
matter if that is not an aggressive approach to dealing with
this problem, because we are past the point of more
conversations. We need action and it is absolutely imperative
that it be done in the interest of everyone, those in the
basin, those downstream.
We had a meeting here with the mayors of all the affected
communities, with the Governor of the State, and we were
unanimous in our position. Unanimous. Very rare in today's
political climate. Republicans, Democrats, local officials,
county officials, State officials, the Federal delegation,
absolutely unanimous with respect to what has to be done.
With that, I want to indicate to members that we would like
all written questions to be submitted by the end of business
today. It is my intention that we move this nomination as
expeditiously as possible. We have a 48-hour notice
requirement. I will be visiting with Senator Gregg about when
we give that notice. But it is my intention that we will vote
on this early next week.
I thank all the members for their attendance today, for
their interest, for their courtesy. I thank Jack Lew for his
willingness to serve. We certainly appreciate that, and for his
family as well.
The hearing will be adjourned.
Mr. Lew. Thank you, Mr. Chairman.
[Whereupon, at 10:48 a.m., the Committee was adjourned.]
STATEMENT OF BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF
PRESIDENTIAL NOMINEES
A. BIOGRAPHICAL INFORMATION
1. Name: Jacob Joseph Lew/Jack Lew
2. Position to which nominated: Director Office of Management
and Budget
3. Date of nomination: August 5, 2010
4. Address: (REDACTED)
5. Date and place of birth: New York, NY; August 29, 1955
6. Martial status: Married to Ruth N. Schwartz
7. Names and ages of children: (REDACTED)
8. Education:
Carleton College 9/72 - 6/73
Harvard College 9/75 - 6/78 (AB, 1978)
Georgetown University Law Center 8/79 - 9/83 (JD, 1983)
9. Employment Record:
- City of Boston, Office of Management and Budget, Deputy
Director of Program Analysis, 1978-1979 (Boston, MA)
-US House Democratic Steering and Policy Committee (Washington,
DC)
Deputy Director, 1979-1985
Executive Director, 1985-1987
-Van Ness, Feldmen and Curtiss (Washington, DC)
Attorney, 1987
Partner, 1988-1991
-Democratic National Committee, Campaign '88 Issues Director,
1988 (Washington, DC)
-Center for Middle East Research, Executive Director, 1992-1993
(Washington, DC)
-White House, Special Assistant to the President, 1993-1994
(Washington, DC)
-Office of Management and Budget (Washington, DC)
Assistant Direct, 1994
Executive Associate Director, 1995
Deputy Director, 1995-1998
Director, 1998-2001
-Georgetown University Public Policy Institute, Research
Professor, 2001 (Washington, DC)
-New York University, Executive Vice President and Clinical
Professor of Public Policy, 2001-2006 (New York, NY)
-Citigroup (New York, NY)
Managing Director and Chief Operating Officer of Global Wealth
Management division, 2006-2007
Managing Director and Chief Operating Office of Citi
Alternative Investments division, 2008-2009
-Department of State, Deputy Secretary of State for Management
and Resources, 2009-present (Washington, DC)
10. Government Experience:
White House Commission on Aviation Security, Member, 1997
Corporation for National and Community Service, Board Member,
2004-2008 (Washington, DC)
11. Business relationships:
Kaiser Family Foundation, Trustee (2007-2009)
College Board Task Force on Higher Education Reform (2006)
Center on Budget and Policy Priorities, Board Member (2008-
2009)
Tobin Project Board Member (2006-2009)
Hamilton Project, Brookings Institution, Advisory Board Member
(2006-2009)
City Year New York, Advisory Board Chair (2003-2009)
Institute for Policy Integrity, NYU Law, Advisory Board Member
(2008-2009)
IDT Corporation, Board Member (2001-2003)
CVCI Private Equity Fund, Limited Partner (207-present)
Citigroup, Managing Director (2006-2009)
12. Memberships:
-Brookings Institution, Hamilton Project, Advisory Board Member
(2006-2008
-Hebrew Institute of Riverdale, Member (2001-present)
-Council on Foreign Relations, Member (2006-2008)
-National Academy of Social Insurance, Member (2002-208)
-Council on Excellence in Government, Member (2001-2008)
-Beth Sholom Congregation and Talmud Torah (1992-present)
13. Political affiliations and activities:
(a) List all offices with a political party which you have held
or any public office for which you been a candidate.
Democratic National Committee, Campaign '88 Issues Director,
1988 (Washington, DC)
(b) List all memberships and offices hild in and services
rendered to all political parties or election committees during
the last 10 years.
None.
(c) Itemize all political contributions to any individual,
campaign organization, political party, political action
committee, or similar entity of $50 or more for the past 5
years.
Jacob Lew:
-2/8/06-Friends of Hillary Clinton-$1000
-2/8/06-Judy Feder for Congress-$1000
-3/22/06-Joseph Courtney for Congress-$250
-7/26/06-Friends of Joseph Lieberman-$1000
-10/20/06-Judy Feder for Congress-$1000
-2/24/07-Rangel for Congress-$1000
-3/2/07-Hillary Clinton for President-$2300
-9/25/07-Judy Feder for Congress-$250
-2007-Citigroup PAC-$2080
-8/28/08-Friends of Hillary Clinton-$2300
-8/31/08-Obama for America-$2300
-10/24/08-Judy Feder for Congress-$250
-2008-Citigroup PAC-$4784
Ruth Schwartz:
-3/2/07-Hillary Clinton for President-$2300
-2/7/08-Hillary CLinton for President-$2300
14. Honors and awards:
Council on Foreign Relations (member)
National Academy of Social Insurance (member)
Council on Excellence in Government (member)
15. Published writings:
-US Department of State, The Ambassador's Review: Positioning
the State Department to Achieve the Obama Administration's
Policy Goals (Spring 2009)
-Center for American Progress, Change for America, Chapter:
Ensuring Fiscal Responsibility and Government Accountability
(with Sally Katzen) (2008)
-Center on Budget and Policy Priorities, A Balanced Approach to
Restoring Fiscal Responsibility (with Henry Aaron, et al) (July
9, 2008)
-``A Budget That Doesn't Add Up,'' The New York Times (March 1,
2001)
-``Medicare: A Clinton Success,'' The Washington Post (March
19, 1999)
-``Using the Surplus to Invest in Our future,'' The Hill (March
3, 1999)
-``A Budget for America's Cities,'' Nation's City Weekly
(Febrary 22, 1999)
-``Our Debt to the Future,'' The Washington Post (with Robert
E. Rubin) (February 4, 1999)
16. Speeches:
August 5, 2010-Remarks at Center for Strategic and
International Studies (CSIS) on ``The Next Phase in America's
Relationship with Iraq''
July 27, 2010-Press Conference with Admiral Michael Mullen,
Iraq
July 23, 2010-Remarks-Iraq Transition Conference, National
Defense University
June 2, 2010-Remarks at the Association for Safe International
Road Travel (ASIRT) Dinner
April 21, 2010-Remarks at the First Annual U.S.-African Union
High Level Bilateral Meetings
April 16, 2010-Special State Department Briefing, Subject: Jack
Lew and Rajiv Shah's Trip to Afghanistan and Pakistan
March 25, 2010-Remarks at the Signing a Letter of Intent
Regarding Cooperation in Construction of Priority Roads in
Pakistan Ceremony
March 24, 2010-Plenary Remarks at the Opening Session of the
U.S.-Pakistan Strategic Dialogue
March 18, 2010-Speech at the Center for Strategic and
International Studies: Rollout of the Smart Global Health
Policy's Final Report
March 4, 2010-Council on Foreign Relations, Closed Session
February 1, 2010-Remarks at DipCorps
February 1, 2010-Special State Department Briefing, Subject:
2011 State Department Budget
January 6, 2010-Remarks to National Institute of Health,
``Plans for Research and Innovation in the Global Health
Initiative''
December 9, 2009-Remarks to InterAction
December 1, 2009-Remarks at the World Bank, Subject: World Aids
Day
November 19, 2009-Town Hall Meeting with Students, Staff and
Trainers the Camp Atterbury-Muscatatuck Center for Complex
Operations
November 9, 2009-Media Roundtable at Camp Atterbury-Muscatatuck
Center for Complex Operations
October 26, 2009-Special State Department Briefing, Subject:
State Department Assistance to Military Efforts in Afghanistan
and Pakistan
October 14, 2009-Remarks to U.S. Global Leadership Coalition
October 8, 2009-Remarks at National Defense University
Interagency Symposium
September 11, 2009-Special State Department Briefing, Subject:
Recent Trip to South Asia (Iraq, India, Pakistan and
Afghanistan)
September 4, 2009-Press Roundtable at The American Center, New
Delhi, India
July 27, 2009-U/S China S&ED Pleanary Remarks
July 10, 2009-Regular State Department Briefing, Subject:
Quadrennial Diplomacy and Development Review
June 24, 2009-Opening Remarks for Deputy Secretary Lew's Press
Availability, OECD, Paris
June 4, 2009-Remarks at the Conference on the Future of Foreign
Ministries, Panel 2: Aligning the Ministry with Government
Priorities, Toronto, Canada
June 2, 2009-GACI Board of Directors Reception, World Bank
May 5, 2009-The White House Regular Briefing, Subject: Global
Health Strategy
April 30, 2009-Press Conference, Subject: Swine Flu, or H1N1
March 4, 2009-Remarks at the Center for U.S. Global Engagement
Meeting, Subject: Putting Smart Power to Work
December 9, 2009-Hearing of the Senate Foreign Relations
Committee, Subject: The New Afghanistan Strategy
December 3, 2009-Hearing of the House Armed Services Committee,
Subject: Afghanistan: The Results of the Strategic Review, Part
I
May 13, 2009-Hearing of the House Foreign Affairs Committee,
Subject: Building Capacity to Protect U.S. National Security:
The Fiscal Year 2010 International Affairs Budget
April 22, 2010-Hearing of the Senate Foreign Relations
Committee, Subject: Promoting Global Food Security: Next Steps
for Congress and the Administration
January 22, 2009-Hearing of the Senate Foreign Relations
Committee, Subject: Nominations of James Steinberg and Jacob
Lew for Deputy Secretary of State
17. Selection:
(a) What do you believe in your background or employment
experience affirmatively qualifies for this particular
appointment?
I believe the sum of my experience, including prior service as
OMB Director, make me well qualified for this nomination. If
confirmed, I look forward to undertaking the responsibilities
of this office.
(b) Were any conditions, expressed or implied, attached to your
nomination? If so, please explain.
No.
(c) Have you made any commitment(s) with respect to the
policies and principles you will attemt to implement in the
position for which you have been nominated? If so, please
identify such commitment(s) and all persons to whom such
commitments have been made.
No.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, business associations or business organizations
if you are confirmed by the Senate?
If confirmed, I will remain an employee of the US Government.
2. Do you have any plans, commitments or agreements to pursue
outside employment, with or without compensation, during your
service with the government? If so, please explain.
No.
3. Do you have any plans, commitments or agreements after
completing government service to resume employment, affiliation
or practice with your previous employer, business firm,
association or organization?
No.
4. Has anybody made a commitment to employ your services in any
capacity after you leave government service? If so, please
identify such person(s) and commitment(s) and explain.
No.
5. If confirmed, do you expect to serve out your full term or
until the next Presidential election, whichever is applicable?
If not, please explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. If confirmed, are there any issues from which you may have
to recuse or disqualify yourself because of a conflict of
interest or the appearance of a conflict of interest? If so,
please explain.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
2. Identify and describe all investments, obligations,
liabilities, business relationships, dealings, financial
transactions, and other financial relationships which you
currently have or have had during the last 10 years, whether
for yourself, on behalf of a client, or acting as an agent,
that could in any way constitute or result in a possible
conflict of interest in the position to which you have been
nominated.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
3. Describe any activity during the past 10 years in which you
have engaged for the purpose of directly or indirectly
influencing the passage, defeat or modification of any
legislation or affecting the administration and execution of
law or public policy other than while in a federal government
capacity.
Apart from my duties as a government official during the past
10 years, I have had minimal engagement in legislation and
policy-making. While employed by New York University, I had
occasional meetings with members of congress and local
government officials on education policy.
4. Do you agree to have written opinions provided to the
Committee by the designated agency ethics officer of the Office
of Management and Budget and by the Office of Government Ethics
concerning potential conflicts of interest or any legal
impediments to your serving in this position?
Yes.
5. Explain how you will resolve potential conflicts of
interest, including any disclosed by your response to the above
questions.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
D. LEGAL MATTERS
1. Have you ever been disciplined or cited for a breach of
ethics for unprofessional conduct by, or been the subject of a
complaint to any court, administrative agency, professional
association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. To your knowledge, have you ever been investigated,
arrested, charged or convicted (including pleas of guilty or
nolo contendre) by any Federal, State, or other law enforcement
authority for violation of any Federal, State, county or
municipal law, regulation, or ordinance, other than a minor
traffic offense? If so, provide details.
No.
3. Have you or any business of which you are or were an
officer, director or owner ever been involved as a party of
interest in any administrative agency proceeding or civil
litigation? If so, provide details.
As large institutions, Citigroup and New York University are
routinely involved in litigation, and were during the periods I
was working for them. However, to my knowledge, no suit
involved allegations related to my own conduct, and I was not
involved in any legal proceedings.
4. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be considered
in connection with our nomination.
None.
E. TESTIFYING BEFORE CONGRESS
1. If confirmed, are you willing to appear and testify before
any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If confirmed, are you willing to provide such information as
may be requested by any committee of the Congress?
Yes.
F. FINANCIAL DATA
All information requested under this heading must be
provided for yourself, your spouse, and your dependents.
1. Please provide personal financial information not already
listed on the SF278 Financial Disclosure form that identifies
and states the value of all:
(a) assets of $10,000 or more held directly or indirectly,
including but not limited to bank accounts, securities,
commodities futures, real estate, trusts (including the terms
of any beneficial or blind trust of which you, your spouse, or
any of your dependents may be a beneficiary), investments, and
other personal property held in a trade or business or for
investment other than household furnishings, personal effects,
clothing, and automobiles; and
(REDACTED)
(b) liabilities of $10,000 or more including but not
limited to debts, mortgages,loans, and other financial
obligations for which you, your spouse, or your dependents have
a direct or indirect liability or which may be guaranteed by
you, your spouse, or your dependents; and for each such
liability indicate the nature of the liability, the amount, the
name of the creditor, the terms of payment, the security or
collateral, and the current status of the debt repayment. If
the aggregate of your consumer debts exceeds $10,000, please
include the total as a liability. Please include additional
information, as necessary, to assist the Committee in
determining your financial solvency. The Committee reserves the
right to request additional information if a solvency
determination cannot be made definitively from the information
provided.
(REDACTED)
2. List sources, amounts and dates of all anticipated receipts
from deferred income arrangements, stock options, executory
contracts and other future benefits which you expect to derive
from current or previous business relationships, professional
services and firm memberships, employers, clients and
customers. If dates or amounts are estimated, please so state.
Please only include those items not listed on the SF 278
Financial Disclosure form.
(REDACTED)
3. Provide the identity of and a description of the nature of
any interest in an option, registered copyright, or patent held
during the past 12 months and indicate which, if any, from
which you have divested and the date of divestment unless
already indicated on the personal financial statement.
(REDACTED)
4. Provide a description of any power of attorney which you
hold for or on behalf of any other person.
(REDACTED)
5. List sources and amounts of all gifts exceeding $500 in
value received by you, your spouse, and your dependents during
each of the last three years. Gifts received from members of
your immediate family need not be listed.
(REDACTED)
6. Have you filed a Federal income tax return for each of the
past 10 years? If not, please explain.
(REDACTED)
7. Have your taxes always been paid on time including taxes on
behalf of any employees? If not, please explain.
(REDACTED)
8. Were all your taxes, Federal, State, and local, current
(filed and paid) as of the date of your nomination? If not,
please explain.
(REDACTED)
9. Has the Internal Revenue Service or any other state or local
tax authority ever audited your Federal, State, local, or other
tax return? If so, what resulted from the audit?
(REDACTED)
10. Have any tax liens, either Federal, State, or local, been
filed against you or against any real property or personal
property which you own either individually, jointly, or in
partnership? If so, please give the particulars, including the
date(s) and the nature and amount of the lien. State the
resolution of the matter.
(REDACTED)
11. Provide for the Committee copies of your Federal income tax
returns for the past 3 years. These documents will be made
available only to Senators and staff persons designated by the
Chairman and Ranking Minority Member. They will not be
available for public inspection.
These documents are provided to the committee.
12. Have you ever been late in paying court-ordered child
support? If so, provide details.
(REDACTED)
13. Have you ever filed for bankruptcy or been a party to any
bankruptcy proceeding? If so, provide details.
(REDACTED)
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EXECUTIVE BUSINESS MEETING ON THE NOMINATION OF THE HONORABLE JACOB J.
LEW TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
THURSDAY, SEPTEMBER 23, 2010
U.S. Senate,
Committee on the Budget,
Washington, DC.
The Committee met, pursuant to notice, at 12:44 p.m. in
Room S-219, The Capitol, Hon. Kent Conrad Chairman of the
Committee presiding.
Present: Senators Conrad, Murray, Wyden, Feingold,
Stabenow, Cardin, Sanders, Whitehouse, Warner, Merkley, Begich,
Goodwin, Gregg, Enzi, Sessions, Bunning, Ensign, and Alexander.
Also present: Ronald Storhaug, Clerk.
Chairman Conrad. The meeting of the committee will come to
order. We're meeting to vote on the nomination of Jack Lew to
be next Director of the Office of Management and Budget. We
will withhold statements at this time. I do intend to support
the nomination. I hope others will as well. Unless Senator
Gregg has something to add, we'll move directly to a vote on
the nomination.
Senator Gregg. I suggest we vote. I intend to vote for him.
Chairman Conrad. The Clerk will call the roll.
The Clerk: Mrs. Murray.
Senator Murray. Aye.
The Clerk: Mr. Wyden.
Senator Wyden. Aye.
The Clerk: Mr. Feingold.
Chairman Conrad. Aye by proxy.
The Clerk: Mr. Nelson.
[No response.]
The Clerk: Ms. Stabenow.
Senator Stabenow. Aye.
The Clerk: Mr. Cardin.
Senator Cardin. Aye.
The Clerk: Mr. Sanders.
Senator Sanders. No.
The Clerk: Mr. Whitehouse.
Senator Whitehouse. Aye.
The Clerk: Mr. Warner.
Senator Warner. Aye.
The Clerk: Mr. Merkley.
Senator Merkley. Aye.
The Clerk: Mr. Begich.
Senator Begich. Aye.
The Clerk: Mr. Goodwin.
[No response.]
The Clerk: Mr. Gregg.
Senator Gregg. Aye.
The Clerk: Mr. Grassley.
[No response.]
The Clerk: Mr. Enzi.
Senator Gregg. Aye by proxy.
The Clerk: Mr. Sessions.
Senator Sessions. Aye.
The Clerk: Mr. Bunning.
Senator Bunning. Aye.
The Clerk: Mr. Crapo.
Senator Gregg. Aye by proxy.
The Clerk: Mr. Ensign.
Senator Ensign. Aye.
The Clerk: Mr. Cornyn.
Senator Gregg. Aye by proxy.
The Clerk: Mr. Graham.
Senator Gregg. Aye by proxy.
The Clerk: Mr. Alexander.
Senator Alexander. Aye.
The Clerk: Mr. Chairman.
Chairman Conrad. Aye.
Senator Gregg. Would the Clerk note that Mr. Grassley votes
aye by proxy.
Chairman Conrad. And we will leave the vote open for the
next 15 minutes to allow other members to cast their vote.
Thank you all.
[Pause.]
Senator Feingold. Aye.
[Pause.]
Senator Goodwin. Aye.
Chairman Conrad. Senator Nelson votes aye by proxy.
The vote is?
The Clerk: 22 to 1.
[Whereupon, at 12:58 p.m., the meeting was adjourned.]