[Senate Hearing 115-43]
[From the U.S. Government Publishing Office]
NOMINATION OF THE HONORABLE MICK MULVANEY, OF SOUTH CAROLINA, 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 FIFTEENTH CONGRESS
FIRST SESSION
__________
January 24, 2017--HEARING ON THE NOMINATION OF THE HONORABLE MICK
MULVANEY, OF SOUTH CAROLINA, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT
AND BUDGET
February 2, 2017--EXECUTIVE BUSINESS MEETING ON THE NOMINATION OF THE
HONORABLE MICK MULVANEY, OF SOUTH CAROLINA, TO BE DIRECTOR OF THE
OFFICE OF MANAGEMENT AND BUDGET
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for use of the Senate Budget Committee
__________
U.S. GOVERNMENT PUBLISHING OFFICE
26-024 PDF WASHINGTON : 2017
----------------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected]
COMMITTEE ON THE BUDGET
MICHAEL B. ENZI, Wyoming, Chairman
CHARLES E. GRASSLEY, Iowa BERNARD SANDERS, Vermont
JEFF SESSIONS, Alabama PATTY MURRAY, Washington
MIKE CRAPO, Idaho RON WYDEN, Oregon
LINDSEY O. GRAHAM, South Carolina DEBBIE STABENOW, Michigan
PATRICK TOOMEY, Pennsylvania SHELDON WHITEHOUSE, Rhode Island
RON JOHNSON, Wisconsin MARK R. WARNER, Virginia
BOB CORKER, Tennessee JEFF MERKLEY, Oregon
DAVID A. PERDUE, Georgia TIM KAINE, Virginia
CORY GARDNER, Colorado ANGUS S. KING, Jr., Maine
JOHN KENNEDY, Louisiana CHRIS VAN HOLLEN, Maryland
JOHN BOOZMAN, Arkansas KAMALA HARRIS, California
Eric Ueland, Republican Staff Director
Warren Gunnels, Minority Staff Director
C O N T E N T S
----------
HEARING
Page
January 24, 2017--Hearing on the Nomination of The Honorable Mick
Mulvaney, of South Carolina, to be Director of the Office of
Management and Budget.......................................... 1
OPENING STATEMENTS BY COMMITTEE MEMBERS
Chairman Enzi.................................................... 1
Ranking Member Sanders........................................... 2
WITNESSES
Honorable Tom Cotton, A United States Senator from the State of
Arkansas....................................................... 6
Honorable Lindsey Graham, A United States Senator from the State
of South Carolina.............................................. 5
Honorable Mick Mulvaney, of South Carolina, Nominee to be
Director of the Office of Management and Budget
MATERIALS SUBMITTED FOR THE RECORD
Statement of Biographical and Financial Information Requested of
Presidential Nominee Mick Mulvaney to be Director of the Office
of Management and Budget....................................... 104
Pre-hearing questions from Chairman Enzi with answers by Mick
Mulvaney....................................................... 133
Pre-hearing questions from Ranking Member Sanders with answers by
Mick Mulvaney.................................................. 137
Pre-hearing questions from Senator Merkley with answers by Mick
Mulvaney....................................................... 142
Post-hearing questions from Ranking Member Sanders with answers
by Mick Mulvaney............................................... 160
Post-hearing questions from Budget Committee members with answers
by Mick Mulvaney............................................... 145
Senator Corker............................................... 146
Senator Grassley............................................. 147
Senator Merkley.............................................. 148
Senator Murray............................................... 154
Senator Stabenow............................................. 175
Senator Warner............................................... 180
Senator Whitehouse........................................... 192
Senator Wyden................................................ 208
EXECUTIVE BUSINESS MEETING
February 2, 2017--Executive Business Meeting on the Nomination of
The Honorable Mick Mulvaney, of South Carolina, to be Director
of the Office of Management and Budget......................... 239
Committee Votes.................................................. 242
OPENING STATEMENTS BY COMMITTEE MEMBERS
Chairman Enzi.................................................... 239
Ranking Member Sanders........................................... 240
STATEMENTS SUBMITTED FOR THE RECORD
Senator Merkley.................................................. 244
Senator Murray................................................... 245
Senator Whitehouse............................................... 249
THE NOMINATION OF THE HONORABLE MICK MULVANEY, OF SOUTH CAROLINA, TO BE
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
----------
TUESDAY, JANUARY 24, 2017
United States Senate,
Committee on the Budget,
Washington, DC.
The Committee met, pursuant to notice, at 10:31 a.m., in
Room SD-608, Dirksen Senate Office Building, Hon. Michael B.
Enzi, Chairman of the Committee, presiding.
Present: Senators Enzi, Grassley, Crapo, Graham, Toomey,
Johnson, Corker, Perdue, Gardner, Kennedy, Boozman, Sanders,
Murray, Stabenow, Whitehouse, Warner, Merkley, Kaine, King, Van
Hollen, and Harris.
Staff Present: Dan Kowalski, Republican Deputy Staff
Director; George Everly, Chief Counsel; for the Minority:
Warren Gunnels, Minority Staff Director; Robert Etter, Minority
Chief Counsel; and Joshua Smith, Budget Policy Director
OPENING STATEMENT OF CHAIRMAN ENZI
Chairman Enzi. Good morning, and welcome to everyone here.
I will call this hearing to order.
We are here today to consider the nomination of
Representative Mick Mulvaney of South Carolina to be the next
Director of the Office of Management and Budget. I am going to
try to keep my opening remarks brief since we have a pair of
Senators before us who are going to give some introductory
remarks of their own concerning the nominee.
President Trump indicated his intent to nominate
Representative Mulvaney for this position a little over a month
ago. I think all the members of this Committee can agree that
we would like to see a confirmed OMB Director in place as soon
as possible, so I am happy to note that the other committee of
jurisdiction over OMB, the Homeland Security and Governmental
Affairs Committee, will be convening this afternoon to hold
their own hearing with Representative Mulvaney.
We need an OMB Director in place with so many pressing
budgetary issues requiring the attention of the new
administration. Foremost among these is the staggering $20
trillion debt burden America now shoulders. Congress needs an
OMB Director who we can work with to put our Nation on a
responsible fiscal path. That is why I am pleased that
President Trump nominated a fiscal conservative for this key
post. The Representative has been a vigilant budget hawk during
his 6 years in Congress, including during his tenure on the
House Budget and Oversight committees. He has been a vocal
contributor to the great budget debates of recent years,
focused on questions of how we ultimately stop the Federal
Government from overspending while continuing to fund the
country's core priorities and responsibilities.
Representative Mulvaney has been a prominent voice arguing
for fiscal restraint, balanced budgets, and honest budgeting
that avoids the use of gimmicks such as emergency funding
designation for non-emergencies. I have also discussed with
Representative Mulvaney the urgent need to reform the broken
budget process, which has contributed to the budgetary
stalemate and recurrent continuing resolutions to which
Congress now routinely resorts in order to postpone hard
decisions about spending and debt.
There is an urgent need for important reforms to the
process such as implementing biennial budgeting and the
overhaul of outdated budget accounting concepts that have
outlived their usefulness. Ultimately, my goal is to produce
comprehensive and lasting budget process reforms that put our
Nation on a better fiscal path.
Despite its significance, the preparation of the
President's annual budget submission is only one of the
responsibilities of OMB. As an entity within the Executive
Office of the President, OMB has numerous government wide
management responsibilities in addition to budgeting and
spending that concern various activities carried out by Federal
agencies. These include: agency rulemaking, contracting, grants
management, financial management, information technology,
program assessment, personnel policy, property management, and
several others.
I am particularly interested in hearing Representative
Mulvaney's view on the role played by the Office of Information
and Regulatory Affairs, or OIRA, in vetting agency regulations.
This Committee has been exploring the concept of a regulatory
budget as one way to produce a check on the growing burden of
regulations on the American economy and more so to small
business.
Also, since he is the House sponsor of a companion bill to
recently enacted legislation concerning improper payments, I am
interested in Representative Mulvaney's view on how he believes
we can reduce the growing volume of improper payments made by
the Federal Government each year. The annual amount reached
$144 billion in 2016, and the cumulative amount of improper
payments since we started counting them in 2003 exceeds $1
trillion.
Senator Sanders.
OPENING STATEMENT OF SENATOR SANDERS
Senator Sanders. Mr. Chairman, thank you very much, and we
welcome the discussion that we will be having with Mr. Mulvaney
for this very, very important position. And I would also like
to take this opportunity to welcome the new members of this
Committee, Senator Van Hollen and Senator Harris on our side,
and Senator Gardner, Senator Kennedy, and Senator Boozman on
your side. And I look forward to working with all of you.
Mr. Chairman, you and I may not agree on too much, but I
think we can all agree that President Trump ran a very
unconventional campaign and that he told the American people
that he would govern as a very unconventional Republican. I
think that is fair. We can maybe get unanimous consent on that
one.
And over and over again, in fact, the cornerstone--one of
the cornerstones of his campaign was that he was not going to
cut Social Security, Medicare, and Medicaid. He was not
ambiguous about this. He did not say this in an ambush
interview at 3 o'clock in the morning. He said this over and
over and over again. And I suspect that many millions of senior
citizens in this country or millions of working-class people
who do not want to see Social Security, Medicare, or Medicaid
cut voted for him for that reason. And I am just going to read
a few of the quotes--with your permission, Mr. Chairman, I
would enter into the record many of the quotes--that President
Trump said on the campaign trail.
He said on May 7, 2015, ``I was the first and only
potential GOP candidate to state there will be no cuts to
Social Security, Medicare, and Medicaid.''
April 18, 2015, Trump said, ``Every Republican wants to do
a big number on Social Security. They want to do it on
Medicare; they want to do it on Medicaid. And we cannot do
that. And it is not fair to the people that have been paying in
for years. And now all of a sudden, they want to be cut.''
August 10, 2015, Trump said, ``I will save Medicare,
Medicaid, and Social Security without cuts. We have to do it.
People have been paying in for years, and now many of these
candidates want to cut it.''
Last quote, March 29, 2016, Trump said, ``You know, Paul
Ryan wants to knock out Social Security, knock it down, way
down. He wants to knock Medicare way down. And, frankly, well,
two things: number one, you are going to lose the election if
you are going to do that. I am not going to cut it. And I am
not going to raise ages, and I am not going to do all of the
things they want to do. But they want to really cut it, and
they want to cut it very substantially, the Republicans. And I
am not going to do that.''
Those are quotes from the President of the United States
when he was on the campaign trail.
Now the election is over. Mr. Trump or President Trump
still sends out a whole lot of tweets. But, surprisingly
enough, I have not seen that tweet where he says, ``I am going
to keep my campaign promise, and I will not cut Social
Security, Medicare, and Medicaid.'' I am waiting eagerly for
that tweet, as are millions of seniors and working people in
this country.
So the issue that we are discussing today is: A, will the
President keep his campaign promises, and B, will he appoint
people to his Cabinet who will help him keep those campaign
promises?
And now we get to Congressman Mulvaney. And to Congressman
Mulvaney, I want to thank him for coming into our office. We
had, I thought, a very productive, interesting discussion. But
his views on Social Security, Medicare, and Medicaid are
exactly opposite of what Trump campaigned on. Let me quickly
run through Congressman Mulvaney's record.
May 15, 2011, Congressman Mulvaney said on Fox Business
News, ``We have to end Medicare as we know it.''
April 28, 2011, Congressman Mulvaney said, ``Medicare as it
exists today is finished.''
August 1, 2011, Congressman Mulvaney said, ``You have to
raise the retirement age, lower a payout, change the
reimbursement system. You simply cannot leave Social Security
the way it is.''
On May 17, 2011, Congressman Mulvaney said, ``I honestly do
not think we went far enough with the Ryan budget because it
did not cut Social Security and Medicare rapidly enough.''
And, in fact, just last year, Congressman Mulvaney voted
against the budget proposed by House Budget Committee Chairman
Tom Price and House Speaker Ryan, opting instead to vote in
favor of an even more extreme budget by the Republican Study
Committee.
This radical right-wing budget that Congressman Mulvaney
supported cut Medicare by $69 billion more than the Price-Ryan
budget. It cut Social Security by $184 billion more, and it cut
Medicaid and other health programs by $255 billion more than
the budget proposed by Chairman Price and Speaker Ryan.
Moreover--and this is also interesting--in May of 2009,
when Congressman Mulvaney was a member of the South Carolina
State Senate, he voted for an amendment declaring Social
Security, Medicaid, and the U.S. Department of Education
unconstitutional. And let me read the text of that amendment:
``Whereas, many Federal mandates, such as those which
created the U.S. Department of Education, Medicaid, and the
United States Social Security Administration, are directly in
violation of the Tenth Amendment to the United States
Constitution.'' That amendment in the South Carolina Senate was
defeated by a vote of 35-6. Mr. Mulvaney was one of the six.
In my view, the opinions and ideas of Mr. Mulvaney are way
out of touch with what the American people want and, more
importantly, they are way, way out of touch with what President
Trump campaigned on. And while we can all disagree on many
issues, I would hope we can agree that if somebody campaigns--
as I am sure many of my Republican colleagues have, you
campaign on a set of issues--that you keep your promise. And I
suspect Chairman Enzi does that. He tells people how he feels,
and then he keeps his word. We disagree; he keeps his word. But
it does not make sense to me to have a key adviser to the
President having views directly in opposition to what the
President campaigned on.
Last point: I have come to learn during the confirmation
review process--we have come to learn during the nominating
process here that Mr. Mulvaney failed to pay over $15,000 in
taxes for a nanny that he employed from 2000 to 2004. And here
is what Congressman Mulvaney wrote about this issue in response
to a question that I asked him on January 11th: ``I have come
to learn during the confirmation review process that I failed
to pay FICA and Federal and State unemployment taxes on a
household employee for the years 2000 through 2004. Upon
discovery of that shortfall, I paid the Federal taxes. The
amount in question for Federal FICA and unemployment was
$15,583.60, exclusive of penalties and interest which are not
yet determined. The State amounts are not yet determined.''
Mr. Chairman, this is a serious issue. As you will recall,
8 years ago Senator Daschle withdrew his nomination as
Secretary of HHS after it was discovered that he failed to pay
his fair share of taxes.
Mr. Chairman, on this issue I agree with Minority Leader
Schumer, who said, ``When other previous Cabinet nominees
failed to pay their fair share in taxes, Senate Republicans
forced those nominees to withdraw from consideration. If
failure to pay taxes was disqualifying for Democratic nominees,
then the same should be true for Republican nominees.'' End of
Schumer quote.
In 2015, Mr. Chairman, Congressman Mulvaney voted for a
bill in the House that clearly stated, and I quote, ``Any
individual who has a seriously delinquent tax debt should be
ineligible to be appointed or to continue serving as an
employee of the Federal Government.''
Mr. Chairman, I look forward to asking Mr. Mulvaney
questions, and thank you for the time.
Chairman Enzi. Thank you, Senator Sanders.
Before we swear in the witness and hear his testimony, we
will hear today a little about the nominee from our Budget
Committee colleague, Senator Graham, as well as Senator Cotton.
Senator Graham and Representative Mulvaney are fellow South
Carolinians, and Senator Cotton served in the House with
Representative Mulvaney.
Senator Graham.
STATEMENT OF THE HONORABLE LINDSEY GRAHAM, A UNITED STATES
SENATOR FROM THE STATE OF SOUTH CAROLINA
Senator Graham. Well, thank you, Mr. Chairman. I am honored
to be here to introduce Congressman Mulvaney, ``Mick.'' He is
my buddy. We do not agree on everything, but I think he is one
of the most capable people I have met during my time in public
service. And we have a real friendship. We play golf. He always
beats me. I accept that.
He has a beautiful wife and triplets. Just remember that
when you talk to him.
He is sincere. Clearly, Senator Sanders would not have
chosen him for his OMB Director. I think we have established
that. Why would Trump, President Trump, pick a man, according
to Senator Sanders, that does not agree with anything he stands
for? I would argue that he picked Congressman Mulvaney because
he understands he knows the budget, he will be a good overseer
of the Government, he is a practical guy, and he will follow
the President's vision.
President Trump understands everything you said about
Congressman Mulvaney, and he has confidence in this man's
ability to do a job for his administration. I share that
confidence.
To those on the defense side, he will follow the call of
the President to increase defense spending. He does believe in
entitlement reform, and I think he is right to do so, to save
these programs. So from a personal point of view, I have never
had an occasion where he would not tell me exactly what he
believed even if he knew I disagreed with it. And he is able to
disagree with people in an honorable fashion, and he is
incredibly smart. He has made it his life's work to understand
what is wrong with our Government, and he will be dedicated to
fixing it.
And one final point of personal privilege. I voted, I
think, for every nominee of President Obama. I think every one
of them. I asked myself why I did that now. The reason I did it
is I think elections have consequences. And while I disagreed
with almost every nominee about the basic structure of
Government, I understood that President Obama needed his team
and deserved his team, if they were qualified. And here is what
I would ask this Committee to consider: Give this man's life
experience, his background in the public sector and the private
sector, his time in Congress, do you believe he is qualified to
understand how the Federal Government works and to reform it
consistent with what the President will direct him to do? I
believe that with all my heart and soul, and I appreciate you
listening to Congressman Mulvaney. And any hard question you
can ask, you are doing your job. Just realize elections have
consequences for you as they did for me.
Chairman Enzi. Thank you.
Senator Cotton.
STATEMENT OF THE HONORABLE TOM COTTON, A UNITED STATES SENATOR
FROM THE STATE OF ARKANSAS
Senator Cotton. Chairman Enzi, Senator Sanders, thank you
for allowing me to appear today.
I want to add my voice in support of confirming Mick
Mulvaney as the next Director of the Office of Management and
Budget. Mick and I have known each other for many years now. We
served together in the House of Representatives. He is a good
friend of mine and a trusted confidant. So I speak from
personal experience when I say he will serve our President and
our Nation with distinction.
The way I see it, the Director's chief job is to give the
President the unvarnished truth. He has to tell the President
exactly what things cost, partly to the President's agenda, but
mostly to the taxpayer. The President, of course, sets the
agenda, but he deserves a clear-eyed view, not rose-colored
glasses.
And for the last 6 years, Mick has been telling many hard
truths: We are spending too much. Regulations are strangling
our small businesses. And short-changing our military will only
cost us more in the long run.
He also understands perhaps the hardest truth of all, at
least for the big spenders in Washington: It is the American
people who earned this money through their hard work and
sacrifice. Mick will treat every taxpayer dollar as if it were
his own. And trust me, that means he will watch it like a hawk.
In Arkansas, many people stop me to ask what we are doing
about the national debt. It is a huge concern. So with his
eagle-eyed focus on spending, Mick will be a crucial voice in
the Cabinet. He will represent millions of Americans who are
deeply worried about the burden we are leaving our children.
And while Mick is deeply principled, he knows how to work with
others and make progress wherever we can.
In short, Mick is a fine choice to run the Office of
Management and Budget, so I urge you not only to advance his
nomination, but to do so as soon as possible. Under the law,
the President is required to submit a budget to Congress early
next month, which will be very difficult without a new
Director. I hope the full Senate will also confirm him
promptly.
Thank you for your time today and your consideration of a
passionate advocate for the taxpayer, a bold truth teller, and
my friend, Mick Mulvaney.
Chairman Enzi. Thank you, Senator Graham and Senator
Cotton. You have done a great job speaking about Representative
Mulvaney, so I will keep my own remarks very brief.
Representative Mulvaney is now in his fourth term as a
Member of the U.S. House of Representatives, representing the
5th District of South Carolina. He holds an undergraduate
degree from Georgetown University and a law degree from the
University of North Carolina. He is a husband, and he is the
father of triplets.
We thank you for joining us today, Representative Mulvaney,
and we look forward to a productive dialogue, which will begin
with your own testimony. But, first, under the rules of the
Committee, nominees are required to testify under oath. So
would you please join me as I administer the oath? Do you swear
the testimony that you will give to the Senate Budget Committee
will be the truth, the whole truth, and nothing but the truth?
Mr. Mulvaney. I do.
Chairman Enzi. If asked to do so and if given reasonable
notice, will you agree to appear before this Committee in the
future and answer any questions that members of the Committee
might have?
Mr. Mulvaney. Yes, sir.
Chairman Enzi. Thank you. Please be seated. We now have a
chance to hear from you.
TESTIMONY OF THE HONORABLE MICK MULVANEY, OF SOUTH CAROLINA, TO
BE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Mr. Mulvaney. I thank the Committee, I thank the Chairman,
I thank the Ranking Member. It is an honor to be here today to
present my qualifications and my vision for the Office of
Management and Budget.
I want to thank the President for nominating me and showing
confidence in me in doing so.
I thank especially Senators Graham and Cotton, friends of
mind, for their kind words.
I want to thank especially, before we get started, my
family. As the members of this Committee know, the burdens of
our public service so often fall on those at home, and I am--we
do not get a chance to say this nearly enough, and we certainly
do not get a chance to say it very often on national
television: I am extraordinarily proud of the young people that
my 17-year-old triplets have become. I do not know if it is
because I have been away from home or despite the fact I have
been away from home, but the fact that they are the young
people they are is a tremendous testament to my wife, who is
with me today. The children are back in school. I am
extraordinarily happy and proud to have her in my life, and I
could not be here today but for the support of my family.
Finally, I am grateful to the members of the Committee for
taking all the time over the course of the last couple of weeks
to get together and talk about the issues, as we talked about
my vision for the OMB and what type of OMB Director I might be,
if you see fit to confirm me. I look forward to continuing
those conversations and getting your guidance and wisdom,
because I think we all know that no one--no one--can do this
job alone. Perhaps a Member of Congress knows that better than
most. Several former Members of these bodies have served at
OMB. Senator Portman, Jim Nussle, Leon Panetta--they all served
with distinction, and they all set a very high bar and provided
a good example of how OMB is supposed to function to serve the
President and to work with Congress and the American people. If
confirmed, I will use them as models. You deserve the truth
about budget matters, as do the American people and the
President, and it is the OMB Director's responsibility to tell
you and the President the truth, even from time to time when
that might be hard to hear.
One truth is this: For the first time in America's history,
the next generation could be less prosperous than the previous.
I know that is unacceptable to every single person in this
room, as it is unacceptable to me. We can turn the economy
around. We can turn the country around. But it is going to take
difficult decisions today in order to avoid nearly impossible
decisions tomorrow.
Our gross national debt has increased to almost $20
trillion. That is a number so large as to almost defy
description. I choose to look at it in a different fashion. I
choose to look at it through the lens of the ordinary American
family. If you are an ordinary American family, the equivalent
to you of a $20 trillion debt is a credit card bill of
$260,000. American families know what that would mean to them,
and it is time that this Government learns what it means to us.
I believe, as a matter of principle, that the debt is a
problem that must be addressed sooner rather than later. I also
know that fundamental changes are necessary in the way
Washington spends and taxes if we truly want a healthy economy.
This must include changing our Government's long term fiscal
path, which is unsustainable.
Part of that also means taking a hard look at Government
waste--and ending it. American taxpayers deserve a Government
that is efficient, effective, and accountable. They earn their
money honestly, and they deserve a Government that spends it in
the same fashion.
But fixing the economy does not mean just taking a green
eyeshade approach to the budget. Our country is more than just
numbers. A strong, healthy economy also allows us to take care
of our most vulnerable. My mother-in-law relied on Social
Security in her retirement; she relied on Medicare to help her
before she died of cancer. Pam and I were happy to have that
safety net there for her. Pam and I would also like that safety
net to be there for her grandchildren, our triplets.
All of that being said, I know many of the members of this
Committee will want to know my positions, should I be Director,
as OMB Director. I am, of course, not yet in that position and
do not presume to know about decisions I might make, much less
what decisions the President might make after consulting with
his Cabinet and his advisers.
I do know what I believe, however, and I look forward to
discussing whatever topics you consider relevant today. I have
not exactly been a shy Member of Congress in my 6 years here,
and I do not expect to end that today, or as Director of OMB if
you see fit to confirm me.
At the same time, I recognize that good public service--
whether that in the State legislature, the House, the Senate,
OMB--takes both courage and wisdom, the courage to lead, and
the wisdom to listen. I have learned in my time in Washington
that I do not have a monopoly on good ideas. Facts--and the
cogent arguments of others--matter. My commitment to you today
is to take a fact-based approach and to listen to various ideas
on how to get our financial house in order.
OMB also fulfills significant management responsibilities,
performs a regulatory role, has a bunch of other
responsibilities that I know you folks are as familiar with as
anybody, and I look forward to talking about those today as
well. I look forward to talking about all of those issues, my
qualifications, and anything else the Committee sees fit. If
confirmed, I look forward to working with Congress--and serving
the President--to address all the challenges on behalf of the
American people.
Again, Mr. Chairman, I thank you for your time and for the
opportunity to be here.
[The prepared statement of Mr. Mulvaney follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Enzi. Thank you.
Now we will turn to questions for Representative Mulvaney.
Let me take a minute to explain the process for all Committee
members before we start. Each member will have 5 minutes for
questions, beginning with myself and Senator Sanders. Following
the two of us, I will alternate questions between the
Republicans and the minority. All members who were in
attendance when the hearing began will be recognized in order
of seniority. For those who arrived after the hearing began,
you are on the list in the order of arrival. If it is your turn
to be on the list to be recognized and you are not here, you
will be moved to the bottom of the list and get to ask
questions at that point. When everyone else is done, you will
be recognized.
Now, once all the Senators present have had an opportunity
to question the nominee, I will allow a second round of
questions if there is interest in doing that. Representative
Mulvaney is scheduled to appear before the Homeland Security
and Governmental Affairs Committee later this afternoon, so
this hearing will end no later than 1:30 p.m. to accommodate
that schedule.
With that, I have a few questions. I believe that
significant savings could be found by eliminating duplication
and waste, fraud, and overpayment across the Federal
Government. You introduced the companion bill in the House to
legislation signed into law last Congress as the Federal
Improper Payments Coordination Act. That was a bipartisan bill
that addresses a very real and growing problem that you would
be in a position to help tackle as OMB Director. I even saw a
recent report that the Department of Defense lost $125 billion.
I do not know what ``lost'' means.
Do you believe that significant budgetary savings can be
found by reducing duplication, waste, fraud, and overpayment?
And what do you see is the role of OMB in identifying and
addressing these problems?
Mr. Mulvaney. Chairman, I think you mentioned in your
opening statement the recent finding that the amount of
improper payments has now grown to historic levels. It is now
past $100 million and on its way to--excuse me, $100 billion
and on its way to $200 billion. I think it is one of the
reasons that the improper payments bill, which I believe
Senator Johnson and Mrs. McCaskill, Senator McCaskill, also
worked on in the Senate, and passed on a bipartisan basis in
the House.
I will never forget when we actually started working on
that bill in the House. I was working on it with Patrick Murphy
from Florida, and he is a Democrat, and we were talking about
it one day. And I said, ``Patrick, it is kind of unusual
working on this together.'' He said, ``Mick, what you have to
understand is that I am a Democrat and I believe the Government
should be doing more. You are Republican, and you probably
believe that Government should be doing less. But we all hate
bad Government.'' And I think that is right, and I think you
have hit the nail on the head on an opportunity that we have on
a bipartisan basis to be better stewards of the taxpayer
dollars.
The Improper Payments Act, as I understand it, has gotten
off to a choppy start. The report that is required by the
legislation I believe is either finished or close to being
finished. But in terms of actually putting the plan of action
into place, it is already behind schedule. And to your point
about who can help fix that, the answer is OMB. OMB could use
the budget function to make sure that these agencies comply
with the law. They are required by law to start using these
best management practices, to start using--there are several
agencies that do a great job of preventing improper payments. I
will never forget when my uncle died a few years ago, I got a
letter--I was the executor of his estate. I got a letter within
a week of his death from the Social Security Administration
saying, ``When you get his next check, do not cash it, or else
you will be violating Federal law.''
So, clearly, there are agencies that do a good job. The
question is: Why aren't those agencies sharing their best
practices? That was part of the motivation behind the improper
payments bill that we passed. I just think that it is time to
take it a little bit more seriously, and if given the
opportunity at OMB, I would certainly do that.
Chairman Enzi. Thank you, and I appreciate your service and
your willingness to serve. It was mentioned in the opening
remarks of the Ranking Member, and I notice that you chose to
bring to the attention of this Committee an issue recently
identified that resulted in you amending prior tax returns. Can
you describe this issue and whether you brought it to the
attention of the IRS or whether it was discovered through an
audit? Have you voluntarily paid any and all additional taxes,
fees, and penalties that you discovered that you owed?
Mr. Mulvaney. I have, Senator. Thank you for that, and I
have been happy to discuss it with anybody who has raised it
during my various meetings.
In 2000, we had triplets. When they came home, we hired
someone to help my wife take care of the children. In our
minds, she was a babysitter. She did not live with us. She did
not spend the night there. She did not cook, she did not clean,
she did not educate the children. She helped my wife with the
kids. I did not consider her a household employee for purposes
of withholding and did not withhold--and did not think about it
again until 2 days after the President had nominated me for
this position. And during the transition, I got a checklist:
Have you ever had a babysitter, a nanny, an au pair, a
governess, whatever? And I said yes. And then they sent me an
IRS circular. It was the first time I had seen it, and I read
it, and it made it immediately clear to me that I had made a
mistake and that the IRS viewed our babysitter as a household
employee for whom we should have withheld taxes.
I did the only thing I knew to do, which is simply tell
everybody who I thought would care. I told the President, I
told the transition team. I called my CPA and said, ``Look,
what is the best way to fix this? It is a mistake. It has been
made. I now know about it. How do we fix it?''
The CPA and I went through the process of filing, I
believe, Schedule H for the relevant years. We paid the taxes,
also notified the IRS of what we were doing and why. And then I
told everybody on this Committee--in fact, I told everybody in
the Senate and apparently told the media as well. It is the
only thing I knew to do, Mr. Chairman. We made a mistake in my
family, and as soon as it was brought to my attention, I did
the only thing I knew to do, which was to take every step to
fix it. I will pay any penalties, any interest, any late fees,
and abide by the law to the best of my ability.
Chairman Enzi. Thank you. And to put this in context for
the Committee, in 1993, President Clinton nominated Mr. Ron
Brown to be the Secretary of Commerce and Mr. Federico Pena to
be the Secretary of Transportation. Both of these nominees had
to pay back taxes on domestic employees, and yet both were
confirmed.
President Clinton also nominated Mrs. Zoe Baird to be the
Attorney General. Mrs. Baird withdrew her nomination because
she had hired an illegal immigrant and failed to pay taxes.
While she did not become Attorney General, Mrs. Baird did serve
in the Clinton administration on the Foreign Intelligence
Advisory Committee and in the Obama administration on the U.S.
Secretary of Commerce's Digital Economy Board of Advisers.
In 2009, President Obama nominated Mr. Timothy Geithner to
be the Secretary of the Treasury. Even though Mr. Geithner
failed to pay $35,000 in Social Security and Medicare payroll
taxes on his own income and was in charge of the IRS after
being confirmed, he was confirmed.
Mr. Sanders.
Senator Sanders. Thank you, Mr. Chairman.
Congressman Mulvaney, I have talked to some Members of the
House whose views are very different than yours, but they say
you are a straight shooter, that you are honest, and I
appreciate that. That is a good quality in a Member of
Congress.
Over the weekend, I happened to bump into a psychologist,
and she told me that her patients are getting very nervous,
those who are on disability benefits, that they might lose
their benefits. And, in fact, their conditions are getting
worse. I have heard that all over the country, that people now
are worried that they may lose Social Security, may lose
Medicare, may lose Medicaid, disability benefits.
I happen to believe that Social Security is one of the most
significant and important and positive programs that the United
States Government has; that Medicare, by and large, is an
enormously successful health care program; and, in fact, the
majority of the American people would like to see Medicare
expanded to all Americans, something that I believe; and that
Medicaid right now is saving the lives of millions of people.
But you are on record time after time after time--and I read
the quotes--as saying cut Social Security, cut Medicare, cut
Medicaid.
Now, what concerns me is you are more than entitled to your
views. You get elected by the people in your own district. But
what does disturb me is we have a President who ran on a set of
principles that he would not cut Social Security, Medicare, and
Medicaid, and yet he is nominating somebody whose views are
very, very different. So I have a real problem with that.
So my question to you is: What will you tell the President
when he says, ``I ran on a set of principles that I will not
cut Social Security, Medicare, and Medicaid''? Will you tell
the President of the United States, ``Mr. President, keep your
word, be honest with the American people, do not cut Social
Security, Medicare, and Medicaid''?
Mr. Mulvaney. Senator, your question was what would I tell
the President, and I listened as Senator Cotton was giving his
introduction, and I really liked what he said. I did not know
what he was going to say until he said it. But he gave you the
answer, which is the only thing I know to do is to tell the
President the truth, and the truth is that if we do not reform
these programs that are so important to your constituents in
Vermont and to mine in South Carolina, I believe in 9 or 10
years the Medicaid trust fund is empty. In roughly 17 or 18
years, the Social Security trust fund is empty.
We can choose to do something about that now, or we can
choose to do something about that----
Senator Sanders. Well, there is a lot--forgive me for
interrupting. I only have 5 minutes. There is a lot that we can
do, including lifting the cap on income above $250,000, which
would enable us to extend and expand Social Security very
significantly. But the problem that I am having right now is
not just your nomination but the integrity and the honesty of
somebody who ran for office on one set of principles,
nominating somebody else whose views are very different.
But let me ask you another question. When you were a member
of the South Carolina Senate, you voted for a proposition that
said Social Security is unconstitutional. Do you believe that
Social Security is unconstitutional?
Mr. Mulvaney. No, sir. That was brought to my attention
this morning before the hearing. I do not remember the vote,
but I can assure you as I sit here today, I do not believe that
Social Security or Medicare are unconstitutional.
Senator Sanders. You were one of six members of the South
Carolina State Legislature to vote on a proposition that said
Social Security, the Department of Education, and Medicaid are
in violation of the Tenth Amendment. You no longer hold the
view that Social Security is unconstitutional?
Mr. Mulvaney. I believe you, Senator. I have no reason to
disbelieve that. But, again, as I sit here, I will not be
arguing to the President of the United States that Social
Security and Medicare are unconstitutional.
Senator Sanders. Mr. Mulvaney, Congressman, in July 2015,
you wrote a letter stating, and I quote, ``I vehemently urge
House Republican leadership to use every available tool to
strip Planned Parenthood of any and all taxpayer funds and take
measures to prevent the group from receiving taxpayer dollars
in the future.''
Some 2.5 million Americans, many of them low-income women,
now get their health care through Planned Parenthood. At a time
when we have 28 million people who have no health insurance
today, despite the gains of the Affordable Care Act, you really
believe that we should tell 2.5 million Americans, many of them
low-income women, who get high quality care at Planned
Parenthood, that they should no longer have access to Planned
Parenthood? I hear a lot of talk in this body from our
Republican friends about choice, we want to give people choice.
Two and a half million Americans, many low-income women, choose
Planned Parenthood as their choice for health care. Why would
you deny them that choice?
Mr. Mulvaney. Senator, I do not have the letter in front of
me, but I do remember the debate, and I also remember what I
voted for, and it may have been addressed in the letter. The
proposal that the House put forward in July of 2015 would have
moved the money from Planned Parenthood to the federally
qualified health care clinics, which are more prevalent, more
available, and actually serve more needy women than Planned----
Senator Sanders. Congressman, I know a lot about the
community health centers. I am one of the leading advocates for
them here and helped increase funding for them. But 2.5 million
people, mostly women, have chosen Planned Parenthood. And after
all the talk about choice, that we want a health care system
which allows people to go anyplace they want, your
recommendation is that we should deny 2.5 million women their
choice of health care.
Thank you, Mr. Chairman.
Chairman Enzi. Thank you.
Senator Graham.
Senator Graham. What percent of GDP will be spent on
defense if we go back into sequestration by 2021?
Mr. Mulvaney. Let me see. If we go back into sequestration
by twenty--it is going to be down, Lindsey--excuse me, Senator
Graham, it is going to be well below 4 percent. It may be
closer to 2. But it is between 2 and 4 percent.
Senator Graham. 2.3 percent.
Mr. Mulvaney. Okay.
Senator Graham. Okay. What is the historical average of
defense spending since World War II?
Mr. Mulvaney. 4-ish?
Senator Graham. Closer to 5.
Mr. Mulvaney. Okay.
Senator Graham. Do you support President Trump's initiative
to increase defense spending?
Mr. Mulvaney. I do.
Senator Graham. Are you aware that almost 50 percent of
defense spending involves personnel costs?
Mr. Mulvaney. I do.
Senator Graham. So if you want a bigger army, you are going
to have more personnel costs. If you want a bigger navy, you
are going to have personnel costs.
Mr. Mulvaney. That is what the numbers would tell you, yes.
Senator Graham. Are you willing to reform personnel
programs to make it more sustainable, generous but sustainable?
Mr. Mulvaney. I am looking forward to having the
opportunity to do just that.
Senator Graham. Entitlement reform: What drives the debt?
What is the chief driver of the debt?
Mr. Mulvaney. The entitlement programs--Medicare, Medicaid,
and Social Security.
Senator Graham. Okay. The deficit and the debt are
different things. Explain it very quickly, the difference
between the deficit and the debt.
Mr. Mulvaney. The deficit is this year's shortfalls between
revenues and expenditures. The debt is the accumulation of
deficits over the years.
Senator Graham. The baby-boom generation will be retiring
en masse here. What happens to Medicare and Social Security
over the next 25 years?
Mr. Mulvaney. They go up.
Senator Graham. Okay. In 1950, how many workers were there
for every Social Security recipient?
Mr. Mulvaney. 15, 16 at some point.
Senator Graham. 16. How many are there today?
Mr. Mulvaney. Three.
Senator Graham. How many will there be in 20 years?
Mr. Mulvaney. Two.
Senator Graham. How can two people do what 16 people used
to do?
Mr. Mulvaney. The short answer is that they cannot.
Senator Graham. Are we living longer or shorter?
Mr. Mulvaney. Longer.
Senator Graham. So we are living longer, there are fewer
workers, and more people are retiring.
Mr. Mulvaney. Those are the hard facts, yes, sir.
Senator Graham. Will you tell President Trump that if he
ignores that, he can never get us out of debt?
Mr. Mulvaney. Yes, sir.
Senator Graham. Will you tell him that the promise you made
about Medicare and Social Security is going to lead to their
demise if you do not change that promise?
Mr. Mulvaney. Yes, sir.
Senator Graham. Will you tell him that there is a
bipartisan way to do this that has been studied extensively
without gutting the program but saving the program?
Mr. Mulvaney. I am familiar with that, yes, sir.
Senator Graham. Would you agree with me that for younger
workers, they may have to work longer before they enter the
program to save the program?
Mr. Mulvaney. I have already told my children to prepare
for exactly that.
Senator Graham. Ronald Reagan and Tip O'Neill adjusted the
age of retirement from 65 to 67 to save Social Security. Is
that accurate?
Mr. Mulvaney. That is true.
Senator Graham. Do you think we need to look at adjusting
the age yet again because we live longer?
Mr. Mulvaney. I do, yes, sir.
Senator Graham. Do you think people in my income level
should get a subsidy to pay their Medicare bill?
Mr. Mulvaney. I believe that Medicare benefits should and
could be means-tested.
Senator Graham. What percentage of Medicare comes from the
general treasury?
Mr. Mulvaney. Senator, that is one I do not know.
Senator Graham. I think it is over 60 percent. Isn't it
true that if we do not change that, Medicare, Medicaid, and
Social Security combined will consume all the revenue that the
American people send in taxes by 2042?
Mr. Mulvaney. Yes, sir. In fact, I think this year it will
be close to 75 percent for just those three major programs
alone.
Senator Graham. Isn't it true that if we do nothing, we are
going to have to either dramatically increase taxes or cut
benefits in the next decade to 15 years?
Mr. Mulvaney. If we do nothing, then by the time I retire,
there will be an across-the-board 22-percent cut to Social
Security benefits.
Senator Graham. Are you in a situation where you could give
up some of your promised benefits from Social Security if you
had to?
Mr. Mulvaney. Senator, if I may--and I enjoy the rapid fire
because this is what we do when we talk, right? But I would
want to take a second to tell a story. I talked about the ideas
to save Social Security at a Sun City Retirement Community in
my district. You have been there several times. And I talked
about slowly raising the retirement age. And there was a
gentleman there who was 59--you have to be 55 to live there--
and he goes, ``Well, I do not want to work until I am 70.'' And
I said, ``Well, no, our proposal''--at the time in the House--
``would require you to work an extra 2 months.'' And he was
flabbergasted. He said, ``Wait a second. You mean I can help
fix this by working 2 more months?'' And I said yeah. And he
was angry that it was actually that easy to do. And I said,
``Well, if you want to really be angry, if we had fixed it 20
years ago, it might be 2 extra weeks. But if we wait another 10
years, it might be 2 years.'' So we do have the chance to fix
these programs now.
Senator Graham. Very well said. Senator Sanders says that
one way to save Social Security is to increase--lift the cap on
people that make over $250,000. Can you repair the gap between
Medicare and the unfunded liability by doing that?
Mr. Mulvaney. No, sir. As I have told people and as I have
shared with----
Senator Graham. You cannot even come close.
Mr. Mulvaney. No, sir. Social Security----
Senator Graham. So if you took the entire wealth of the 1
percent, everything including their dogs, could you repair the
gap?
Mr. Mulvaney. You can confiscate everything they have, and
the answer to your question would be no.
Senator Graham. Could you grow the economy at 8 percent and
close the gap?
Mr. Mulvaney. No, sir.
Senator Graham. Thank you.
Chairman Enzi. Senator Stabenow.
Senator Stabenow. Well, thank you very much, Mr. Chairman.
And welcome, Congressman Mulvaney, to you and your family. I
have to say after that interchange, I think folks on Social
Security and Medicare ought to be really worried, and it just
demonstrated the difference between what President Trump has
indicated he would do and what, in fact, you will be advising
him, Congressman Mulvaney, if, in fact, as you indicated and
Senator Cotton indicated, you would give him the unvarnished
truth.
So I believe people sitting on this side of the aisle
believe Medicare and Social Security are great American success
stories that have lifted a generation of seniors out of poverty
and created health care certainty for many, many Americans. And
I am thinking after that exchange that for the 57 million
seniors and people with disabilities and surviving spouses and
children who receive Social Security benefits, the alarm bells
should be going off right now.
But let me go back. As a straight shooter, which I
certainly respect, you did indicate that Social Security is a
Ponzi scheme. Is that something that you will say to the
President? And you did indicate that both Social Security and
Medicaid and the Department of Education were unconstitutional.
So just keeping it to Social Security, do you intend to
indicate to the President that you believe Social Security is a
Ponzi scheme?
Mr. Mulvaney. Thank you for that, Senator, and I had a very
similar conversation on this exact same topic with Senator
Sanders in his office when he asked me about that.
And I said, ``Well, what I described it as was a plan that
takes money from people now in order to give money to people
now.'' And he explained--and I think he was accurate in doing
so--that Social Security has always been like that. So I would
not read too much into the description of it as a ``Ponzi
scheme.'' It is simply describing to people how the cash flows.
And the difficulty that we face was contained in what Mr.
Graham just laid through, which is 50 years ago, 15 people were
paying in and 1 person was taking out. And by the time my kids
are paying for my retirement, two of them will be paying in for
every one that is taking out.
Senator Stabenow. And is it also true, though--you and I
talked in the office about the fact the cap was set in 1983,
awhile ago, at 90 percent of wage income. And it goes up a
little bit. But one significant way to take a burden off of
Social Security and keep it going strong for those who rely on
it--and, by the way, about a third of seniors basically live on
the money solely from Social Security, maybe a little bit of a
pension, but those pensions are being challenged right now as
well.
So do you think the cap should be increased as a basic
sense of fairness in terms of the fact that the last cap was
set in 1983?
Mr. Mulvaney. Thank you for that. If the Senate sees fit to
confirm me, Senator--and I believe I had this conversation with
just about everybody from both parties that I met with,
including the Independent, who is not from any party--there are
really five levers in Social Security that you can pull----
Senator Stabenow. No, I understand all five, and I am
sorry, because I have one more question I want to ask after
this.
Mr. Mulvaney. Sure.
Senator Stabenow. I know there are five. I am asking you
about one.
Mr. Mulvaney. And you have mentioned one, and I think if
you pull one lever, you have to pull it a long way. And if you
pulled three or four or five levers, you do not have to pull
them nearly as far.
Senator Stabenow. Okay. Thank you. And I want to completely
change to something that I may be the only one to raise,
although a couple of colleagues on the other side may as well,
and that is, a very important part of the budget called ``the
farm bill,'' which is less than 2 percent of Federal spending
and affects every small town in Michigan, every farmer, as well
as all of our food assistance programs. And in the last go-
around, we were very proud on a bipartisan basis to be the only
Committee to actually cut spending in our own jurisdiction of
$23 billion. And we are now coming into another time where we
fully expect to work together on a bipartisan basis to invest
in rural economy, small towns, agriculture, food programs, and
so on. We are in a better position in the sense that food
program spending has actually gone down because of the economy
getting better. But do you intend to propose reductions to farm
bill investments in rural America in your budget, despite the
fact that farmers and families already contributed significant
savings towards deficit reduction?
Mr. Mulvaney. Senator, I know that the farm bill is
absolutely critical to you, as it is to many other members,
including Mr. Grassley, and he and I spoke about this. I
apologize. It has been several years now, I think, since the
House has taken it up, so I am not in a position to give you an
intelligent answer to the question, but would look forward to
talking to members of all parties about how to both maintain
and to improve and make more efficient the farm bill.
Senator Stabenow. Thank you.
Chairman Enzi. Senator Toomey.
Senator Toomey. Thanks very much, Mr. Chairman. And,
Congressman Mulvaney, welcome. Thanks for being here. Thank you
for your willingness to serve, and thanks for the great work
you have done in the House of Representatives.
Let me follow up on a couple of the subject matters that
have been raised. First of all, is it your understanding that
historically the reason that we have had a cap on the wages
subject to the Social Security tax is because we also have a
cap on the benefits that are paid out to somebody? Is that your
understanding?
Mr. Mulvaney. It is my understanding, yes, Senator.
Senator Toomey. And that remains the case?
Mr. Mulvaney. Yes, sir.
Senator Toomey. And, in addition, if we eliminated the cap,
we would not solve the problem.
Mr. Mulvaney. Correct.
Senator Toomey. Right. Getting back to the bigger budget
picture, it is my understanding that today the revenue the
Federal Government takes in as a percentage of GDP is greater
than its post-war historical average. Is that your
understanding?
Mr. Mulvaney. Correct. I think it will be about 18.5, 19
percent this year.
Senator Toomey. And an average of like 17.9. So we are
taking in more revenue than we historically have done.
Discretionary spending has been declining as a percentage of
GDP--in fact, even in some recent years, in absolute terms. Is
that your understanding?
Mr. Mulvaney. That is correct.
Senator Toomey. So revenue is higher than it has
historically been. Discretionary spending is lower than it has
historically been. And yet we have got large deficits, and the
projection is that they will get worse.
Isn't it pretty unavoidable to look at the entitlement
programs and acknowledge that this is the problem?
Mr. Mulvaney. It is the problem, and I think Congress has
done a pretty good job over the course of the last couple of
years to deal with the discretionary part of the budget.
Senator Toomey. So one of my colleagues suggested that
people on Social Security should be concerned about the things
you have said. So if you are a Pennsylvanian who is in his or
her, I do not know, early 70s and has a modest income and
depends on Social Security, are you advocating cuts to their
benefits?
Mr. Mulvaney. No, sir.
Senator Toomey. You are not advocating cuts to their----
Mr. Mulvaney. No.
Senator Toomey. What about somebody who is 69 and receiving
Social Security? Are you advocating that their benefits be cut?
Mr. Mulvaney. I do not think that any proposal that the
House has come up and certainly no proposal that I would take
to the President, should I be confirmed, would suggest that we
touch folks anywhere who are already--I am not making my
parents go back to work. They are 74 years old. That is not
what this is about. This is about trying to preserve those
programs. Those folks--Senator Stabenow has stepped out. The
folks who are 75 years old and relying on Social Security, be
it in Pennsylvania or in Michigan, they do not have to worry
about----
Senator Toomey. Is there anybody of any age on Social
Security where you want to cut their benefits?
Mr. Mulvaney. I am sorry, sir?
Senator Toomey. Is there anybody of any age on Social
Security where you want to cut their benefits that they are
receiving now?
Mr. Mulvaney. No, sir.
Senator Toomey. You do not want to cut any existing
benefits?
Mr. Mulvaney. Absolutely not. I would not recommend that to
the President.
Senator Toomey. So then it is not at all clear to me why
someone who is currently on Social Security needs to be afraid
of this.
How about somebody who is 40 years old and is expected to
work for another, I do not know, 25 or 30 years? Can we deliver
on the promise that Social Security currently makes to that
person? Is there any way that, without change to the structure
of the program, we are going to be able to follow through on
that commitment?
Mr. Mulvaney. Without changing the current Social Security
program, a 40-year-old today will receive roughly 77 percent of
what they have been promised for their adult life.
Senator Toomey. So to continue to suggest that we do not
have to do anything here is just being dishonest to the young
people, and if I understand correctly, the changes that you
would advocate would be for people who have many years left in
their working lives to plan accordingly and to prepare for the
eventuality. Is that fair?
Mr. Mulvaney. Correct. It would require--I think one of the
proposals would require me to work an extra couple of months
before I retire. It would require my children to work until
they are 70.
Senator Toomey. And you are how old?
Mr. Mulvaney. I am--I am still 49.
Senator Toomey. I think it is public information.
Mr. Mulvaney. I am 49.
Senator Toomey. Okay. Let me switch real quickly to the
regulatory side. When I have met with small business owners and
other people who are working across Pennsylvania, they have
been stunned by the avalanche of new regulations and the
cumulative weight of all of these regulations, whether it is
Obamacare, Dodd-Frank, and EPA, the entire alphabet soup of
agencies. In my view--and I have heard this from them--it is
having a devastating effect on economic growth.
The OMB Director is responsible for the Office of
Information and Regulatory Affairs, and in that capacity you
have a lot of say about new regulations.
So, number one, do you support the REINS Act, which would
hold that any major new regulation has to be approved by
Congress before it goes into effect?
Mr. Mulvaney. I do, sir, and I have voted for that in the
House.
Senator Toomey. How do you feel about a regulatory PAYGO
system where, before we impose new regulations, we look at
outdated, excessive, counterproductive regulations and repeal
them before we impose new ones?
Mr. Mulvaney. Actually, I think the law currently requires
OMB to do a retrospective analysis of regulations, and it has
probably been falling short on that. So I would approve of such
a system and think it is actually already the law.
Senator Toomey. And just lastly, how high a priority do you
think the administration should assign to rolling back the
current level of regulation? And do you have any other
procedures or analyses that you would intend to use to achieve
that?
Mr. Mulvaney. Thank you, Senator. My very distinct
impression from working with the transition team is that
regulatory reform is going to be an absolute priority for this
President. In fact, I think you saw him mention yesterday that
he wants to cut 75 percent of the regulations. He is absolutely
dead serious about this. I believe he is the first person to
campaign for President on regulatory reform since Ronald
Reagan.
I have some plans or ideas of how OMB could help to do
that, but I absolutely believe that you will see this be a
priority for President Trump.
Senator Toomey. Thank you very much.
Thank you, Mr. Chairman.
Chairman Enzi. Senator Whitehouse.
Senator Whitehouse. Let me lead with an observation, Mr.
Chairman, and that is that in the time that I have been in the
Senate, I do not think I have actually ever seen a sincere
effort at regulatory reform or relief. What I have seen is a
really good game of talk about regulatory reform. But every
time it rears its ugly head, it is for one of two special
interests: Wall Street or polluters. Period. And sure enough,
the two examples that the Senator from Pennsylvania just used
were--guess what?--Dodd-Frank on Wall Street and the EPA on
polluters.
I would suggest to you that on our side of the aisle, there
may be a much broader appetite for regulatory reform if it were
not simply a device, a curtain to put over helping Wall Street
and big polluters, and I urge you to explore that.
Second, you indicated in response to the question regarding
lifting the Social Security contribution cap so that really,
really high earners are not capped from contributing to Social
Security, the question was if we raised the cap, we would not
solve the problem, and you answered a simple yes. But isn't it
true that that would sure contribute significantly to solving
the problem? It is one of the levers that should be on the
table?
Mr. Mulvaney. Sure. As I mentioned, Senator--and, again, I
think when we talked--you could raise the retirement age to
100, and that would solve the problems in Social Security. You
can pull every lever a long way and fix it. I guess you could
take the tax rate to 75 percent. I do not know what the number
would be.
Senator Whitehouse. I just want to make sure you do not
dismiss that particular lever simply because it affects high-
income people.
Mr. Mulvaney. No, sir. Again, my intention is to lay
exactly what you and I have discussed--and I have discussed
this--out for the President and say, ``Mr. President, if you
want to look at Social Security, here are your five levers.
Where would you like us to focus?''
Senator Whitehouse. One of the issues that we focus on in
this Committee is the question of how you balance the budget.
And what we have here is different levels of expenditure for
different kind of things. Over on the far right is $560 billion
in 2016 for non-defense discretionary, the entire non-defense
appropriated budget; $607 billion for defense discretionary,
our entire military operation; $910 billion out the door in
Social Security, not counting what comes in; and $1.1 trillion
in all the Federal health care programs together--Medicare,
Medicaid, veterans' benefits, the works.
What is here is tax expenditures, and we have had your
former Speaker say that tax expenditures are just another way
of spending money for people. We have had Ronald Reagan's
Budget adviser say if you want to get after the budget problem,
you have got to get after tax expenditures; it is just another
way of spending money. It is a particularly tricky way of
spending money, though, because it tends to help people who pay
big taxes so that they can get big benefits through the tax
code, corporations, billionaires, and so forth. And it tends to
be baked into the tax code. So unlike an appropriation you have
got to fight for year after year and it gets reviewed by the
Appropriations Committee year after year, there it is, there it
sits, there it stays.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The problem that I have with some of my colleagues on the
other side of the aisle is they talk a really big game about
the debt and the deficit. But when it comes to the biggest
expenditure, the tax expenditures, we cannot get them to budge
on anything--not the carried interest exception that lets
billionaires pay lower tax rates than their chauffeurs, than
brick masons, than truck drivers. That is just, I think, an
outrage from simple fairness. Cannot get it touched.
Fossil fuel companies make more money than any other
companies on the face of the planet. They get big subsidies
from the taxpayer. Makes no sense.
Private jet owners can depreciate their jets faster than
the airlines that fly regular people around. Makes no sense.
We cannot get one piece of that through the other side of
the aisle. They will go to the mat to defend every special
interest, in my experience. We have never been able to do it.
So if you want to put something together on this, I would
urge that this administration, which says it is different from
everything else before and is not just purely allied to
Republican special interests, really take a hard look at these
tax expenditures. More money goes out the back door of the tax
code than goes out through any of these individual programs. A
one-word answer.
Mr. Mulvaney. Yes, sir, it may be that you and the
President get to the same place through a different avenue, but
you may have just made a very effective case for why we need
tax reform in this country.
That being said, if I can borrow your graph, that would be
great.
Senator Whitehouse. You got it.
Mr. Mulvaney. Thanks.
Chairman Enzi. Senator Corker.
Senator Corker. Thank you, Mr. Chairman. And, Mr. Mulvaney,
thank you for being here. You told me in the office that being
OMB Director was your dream job, I think that's slightly odd,
but I thank you for your----
[Laughter.]
Senator Corker [continuing]. Desire to want to do this.
I was looking at the forecasts that were laid out today. We
are $20.355 trillion in debt, and over the next 10 years, we
are going to add $9.7 trillion. And in spite of some of the
comments, I think there is actually a large group of people
here that realize the immorality of that. People speak a great
deal about jerking the rug out from under seniors. I do not
think anybody has ever proposed anything like that. But we all,
I think, are disgusted at ourselves with the immorality of
living in comfort here today in the United States Senate and
Congress and not dealing with these issues which we know will
be hugely problematic.
Do you believe that this is one of the greatest threats to
our Nation today?
Mr. Mulvaney. I do, and that really sank in for me,
Senator, my very first week here. When I arrived in 2011, I was
fortunate enough to get on the Budget Committee over in the
House, and we had a presentation, and one of the--I cannot
remember if he was there or if someone was talking about his
presentation, but the Chairman of the Joint Chiefs of Staff,
Admiral Mullen, had recently made a comment that he thought
that the national debt was the greatest threat to the national
security of the United States. And as a new Member of Congress,
that put the fear of God in me in a hurry.
Senator Corker. Only 31 percent of our expenditures are
discretionary spending. I find actually what you said earlier
about the five levers--I certainly would not want to focus on
any of my friends on the other side of the aisle, but my guess
is there are numbers of them that would be willing to look at
all five of those levers to solve problems. And so I actually
find your views today to be very much in the mainstream, that
these are the kinds of things that we all know we need to deal
with, knowing we face two workers down the road for every one
person retired. I think most of us fear that we are not going
to deal with this issue until we are in crisis mode.
My question is: Mr. Trump did say some things during the
campaign that I wish he had not said. They are totally
unrealistic, make no sense whatsoever. And I just wonder, is it
your sense when you talk with him about the five levers and
when you talk with him about the fact that it is impossible for
us to balance the budget with 31 percent of our spending being
discretionary without dealing with these other programs, do you
think he understands that?
Mr. Mulvaney. Senator, I think Senator Graham made this
comment during his opening statement, which is that--and as I
mentioned, I have not been quiet and shy since I have been
here. It is fairly easy to find quotations from me and so
forth.
I have to imagine that the President knew what he was
getting when he asked me to fill this role, so I look forward--
--
Senator Corker. So you think he understands that we have to
deal with all of these issues to solve----
Mr. Mulvaney. I would like to think it is why he hired me--
or wanted to hire me.
Senator Corker. Let me ask you this: All of us love and
greatly respect the men and women in uniform, people like Tim
Kaine's son and the two people who introduced you. When people
serve in our military, we just have the utmost respect and
admiration. But do you think OCO funding is an intelligent way
of building a budget using overseas contingency operations ad
infinitum, year after year, as a way of solving our budget
problems?
Mr. Mulvaney. No, sir, I do not. In fact, I think it is
beyond not being intelligent. I think it is----
Senator Corker. It is dishonest, isn't it?
Mr. Mulvaney. That is the word I was going to use.
Senator Corker. Okay. Let me ask you this, and in spite of
the fact that we love our men and women in uniform who serve on
our behalf, do you think the Pentagon is well run?
Mr. Mulvaney. I do. I think it does a tremendous job of
defending the Nation.
Senator Corker. In acquisitions programs, do you think it
is a well-run organization?
Mr. Mulvaney. I look forward to doing more investigation
and possibly reforming there when possible.
Senator Corker. What bothers me is we, in the name of
patriotism, get to the end of a budget, and just about the time
we are pressing the Pentagon to do some things that it should
do, we let the pressure off with OCO. And to me, it is
irresponsible, and I hope you are going to correct that.
I know that my time is almost up. You and I talked about
Freddie and Fannie, the two organizations that have to do with
housing reform. It is your belief, as I understand it, that
anything related to reforming our housing finance system and to
the conservatorship that Fannie and Freddie, should be
legislated by Congress and not done by the executive branch
through the flick of a pen. Is that correct?
Mr. Mulvaney. I think the law needs to be changed, yes,
sir.
Senator Corker. Thank you so much.
Chairman Enzi. Senator Warner.
Senator Warner. Thank you, Mr. Chairman. And I have a
series of areas I want to go into, Mr. Mulvaney. I enjoyed our
conversation, but I first want to follow up on Senator Corker's
last comment.
As someone on this issue of Fannie and Freddie, I was
gravely concerned about legislation that you introduced that
allowed basically a recap and release. Mr. Mnuchin last week in
his hearing also agreed that we needed to do this through
legislation. That recap and release that would, frankly,
greatly have enhanced the financial position of a lot of the
hedge funds who bought in at very cheap rates would not--if
they recap and release, would leave a system in place that
would allow private sector gain when things are going well and
the taxpayer holding the bag when things happened as they did
in 2008; we had to put up $188 billion. My hope would be you
would work with Congress on reform and not simply advocate to
the President the recap-and-release approach.
Mr. Mulvaney. Thank you, Senator. I think that various
members of both the House and Senate have different ideas on
Fannie and Freddie. I am heartened by the fact that I think we
are all trying to get to the same end, which is to protect the
taxpayer, to make sure what happened before does not happen
again.
Senator Warner. Again, this is not the time--we do not have
enough time to go through it, but I believe that the
legislation you had introduced would not address that.
I have got a couple other areas I want to get cleared up
with you. Again, last week, with Mr. Mnuchin, one of the things
I did like about what he said was, you know, the United States
is the reserve currency; the United States debt obligations are
absolutely sacrosanct. We should never jeopardize the full
faith and credit of the United States.
Mr. Mnuchin said that the U.S. Government should absolutely
not have the ability to prioritize our payments and there
should be no uncertainty when it comes to paying our bills,
although in the House you voted for prioritization, which in
effect would say we are going to repay bond holders at a higher
level than perhaps payments to States or payments to FBI or CIA
employees. I think that would dramatically undermine the full
faith and credit, and I think most experts have said that
prioritization scheme would be a disaster.
Do you still share that view that prioritization of our
debts is a reasonable approach? And would that not jeopardize
the full faith and credit of the United States?
Mr. Mulvaney. Well, I think it is undesirable to get to a
situation, Senator, where this is a relevant conversation. But
if we are simply talking about the principles involved, I do
believe that the GAO letter from 1985 is still--it is not law,
but it is good guidance.
Senator Warner. I sincerely disagree with you, and we will
again have a chance perhaps to continue this.
Mr. Mulvaney. Sure.
Senator Warner. Also, I appreciate your comments about
Social Security. I would take exception to what the Senator
from Pennsylvania said. It is true that Federal revenues are
slightly above the 50-year average. I would point out, over
that 50-year average, we have run deficits every year that we
have run at that average. And as a matter of fact, the United
States, when you consider Federal, State, and local taxes
combined, is actually 31st out of 34 OECD nations in terms of
total revenues. Now, we can argue--I do not want us to go to
those European areas, but you have also signed the Grover
Norquist no-tax pledge. If you are going to be willing to take
a look at revenues on Social Security or revenues in terms of
tax reform, are you going to be able to remain faithful to that
taxpayer protection pledge? Don't you think having all things
on the table would be a more appropriate role if you were
accepted as OMB Director?
Mr. Mulvaney. Senator, very briefly, because I know your
time is limited, and we can go into it longer if you would like
to. But the pledge I think applies to candidates for office,
which I am giving up, if you all see fit to confirm me. So I
will not be bound by that. What I would be bound to is telling
the President the truth and telling him what I believe his
options to be.
Senator Warner. Well, I hope that would mean, as you have
said here today, that that would look at both sides of the
balance sheet, and clearly, as you list the various levers in
Social Security, one of those would be looking at additional
revenues.
When we met, I am concerned about the administration's
current position on Federal workers. Many of these Federal
workers serve their country, and they do jobs with enormous
passion and pride. They view it as a calling. I know the
President-elect--or the President has put in place a Federal
employee hiring freeze. He says that was to address the
dramatic expansion of the Federal workforce in recent years.
But, Mr. Mulvaney, are you aware that the size of the Federal
civilian workforce relative to the country's population has
actually declined dramatically over the last number of decades
and that it is actually smaller now than it was under President
Reagan?
Mr. Mulvaney. I was not aware of that piece of data.
Senator Warner. I would hope you would relay that. Are you
aware that, according to the GAO, nearly one-third of the
Federal workforce is eligible for retirement between now and
2019?
Mr. Mulvaney. I was not aware of that, but that does not
surprise me.
Senator Warner. Do you agree that if we are going to
recruit and retain the best workers--and they are going to have
to do a job that continues there are going to be challenges as
we all look at ways that we can get our budget into balance.
How are we going to do that when we have got disparity between
public and private sector payment, when we send these kind of
messages about the value of Federal workers on a going-forward
basis? How will you reinforce that value statement to a
workforce that right now is very concerned?
Mr. Mulvaney. Senator, as I think you and I discussed, I
think the Federal Government probably could do better in
dealing with employees who are exemplary and better with
dealing with employees who fall below our expectations. And all
I can say to you is I look forward to figuring out a way to
solve both ends of that problem.
Senator Warner. Thank you, Mr. Chairman.
Chairman Enzi. Senator Kennedy.
Senator Kennedy. Congressman, I am new here, which means I
have lived in America longer than I have lived in Washington,
and I want to share a perspective. A lot of Americans are very
frustrated about what goes on here. Not all of them, but many
of them. They believe that our country was founded by geniuses
but it is being run by idiots. They look around, and they see
incredible things happening in our country. Our people can
unravel the human genome. They can take a diseased human heart
and replace it with a new one and make it beat. They can send a
person to the moon. But their representatives cannot balance a
budget like they have to do at home or in their small business.
Now, here is what I would like to know. I do not have
enough time for you to give me an elaborate answer, but if you
could give me the high points. If you were king for a day, how
would you balance our budget?
Mr. Mulvaney. That is a very tempting question, Senator, to
ask any elected official, and I am trying to remind myself that
my goal--my role at OMB is to advise the President. So maybe--
--
Senator Kennedy. I understand, but I am asking you.
Mr. Mulvaney. What would we do? We would grow the economy
first, Senator. In fact, that is probably the only way that we
ever balance the budget, truly, given the political situation
that exists in Washington, D.C. There are folks amongst us who
would want to take a bigger slice of the existing pie. I do not
think that is a formula for healthy economic growth or success,
and certainly not----
Senator Kennedy. Okay. Grow the economy is one. What else?
Mr. Mulvaney. Well, if you grow the economy, if you end up
with 10 years of 3- or 4-percent growth, you are talking about
doubling the size of the economy, which doubles the size of
Federal receipts, which allows you to balance the budget. In
fact, I believe it was Mr. Warner or maybe Mr. Whitehouse who
correctly pointed out that one of the times that we have been
able to balance the budget was when the economy was growing so
rapidly.
Senator Kennedy. I do not mean to interrupt you, but I have
only got 5 minutes. Anything else?
Mr. Mulvaney. I would like to figure out a way to end waste
in Government. If you even assume it is 10 percent within the
discretionary budget, that is almost $100 billion this year.
Senator Kennedy. Okay. Let me ask you about waste.
Mr. Mulvaney. Yes, sir.
Senator Kennedy. In 2012, Dr. Donald Berwick, a very
accomplished physician, Harvard trained, he ran CMS for
President Obama. He testified before Congress that 10 percent
of our Medicaid spending is fraud.
Mr. Mulvaney. Okay.
Senator Kennedy. Not just fraud by patients. Fraud by
providers. In some States, they get $2 of Federal money for $1
of State money. So for some, not all, there is not an incentive
to combat fraud. Is there any way you can use the power at OMB
to incent States to try to combat Medicaid fraud?
Mr. Mulvaney. Sir, I do not know off the top of my head. I
would be happy to take a look at that. And, again, I think I
will get specific instructions from the President to explore
doing exactly that, because I think if you say one thing about
this President, it is that he will not tolerate the type of
waste and fraud that you have mentioned.
Senator Kennedy. Okay. I hear from a lot of Louisianians
and other Americans, not all but many. They believe that--and I
want to ask you if you agree with this. They believe that part
of the problem in American society today and with our economy
and with our culture is that we have too many undeserving--I
want to emphasize ``undeserving,'' because I do not want to
paint with too broad a brush. We have too many undeserving
people at the top getting bailouts, as Sheldon pointed out, and
we have too many undeserving, not all but too many undeserving
people at the bottom getting handouts. And the people in the
middle get stuck with the bill, and they cannot pay it anymore,
because their health insurance has gone up and their taxes have
gone up and their kids' tuition has gone up. Do you agree with
that?
Mr. Mulvaney. Senator, I think those folks would be
heartened by what they saw out of the President on Saturday,
because I believe that was the theme of the inaugural speech
that he gave, that those folks who have been forgotten for so
long will not be forgotten anymore, and that he will listen to
them. And if I get the opportunity to work at OMB, I will do
whatever I can to help him do just that.
Senator Kennedy. Thank you, Congressman. I think you will
do a great job at OMB.
Mr. Mulvaney. Thank you, Senator. Welcome here.
Chairman Enzi. Senator Kaine.
Senator Kaine. Thank you, Congressman. Great meeting in my
office.
In announcing as a candidate in October that he would do a
Federal hiring freeze, Candidate Trump said that it was
necessary to reduce ``corruption and special interest
collusion.'' If you know, why is the administration pitching
the false view that Federal workers are corrupt or beholden to
special interests?
Mr. Mulvaney. I am not familiar with the statement, Senator
Kaine, so I am not really comfortable commenting on it.
Senator Kaine. Okay. A freeze has a lot of effects. The
most direct effect would be on people seeking to work with the
Trump administration. Why would there be an assumption that
people coming to work with the Trump administration would come
with corruption or special interest collusion problems?
Mr. Mulvaney. Again, I do not think there is an assumption
hard-wired in to any system that the Federal workers are
corrupt. I think you and I both know as----
Senator Kaine. I am happy to hear you do not share what the
President stated was the reason for this. Let me ask you this--
--
Mr. Mulvaney. There are--yes, sir.
Senator Kaine. You had legislation on hiring freezes that
said if three people left by attrition or got other jobs, you
could hire one in. My understanding of the hiring freeze that
was announced yesterday, it is even more strict than that.
Isn't that your understanding, no new hires?
Mr. Mulvaney. I am not familiar with the details of what
they laid out yesterday. I am happy to talk about my own bill,
if you like.
Senator Kaine. Many applicants for Federal employment are
veterans because of a significant veteran's preference. It
seems like a bad idea to me to do a freeze that would have the
effect of putting roadblocks up to veterans seeking Federal
employment.
Do you worry, like I do, about backlogs in processing of
Social Security disability claims, veterans' benefit claims,
backlogs in getting drugs permitted, potentially lifesaving
drugs permitted to go on the market?
Mr. Mulvaney. I worry about inefficiencies at many levels
of Government.
Senator Kaine. And I am concerned that hiring freezes in
some of these areas where we are already seeing backlogs could
have the effect of even making it harder for citizens to get
the service they need. Am I wrong to be concerned about that?
Mr. Mulvaney. I do not think you are wrong to be concerned
about it, Senator. I do not think it automatically follows that
hiring more people will create more efficiency.
Senator Kaine. Have you read the GAO studies of blanket
hiring freezes under earlier administrations, Democratic and
Republican, that suggest that they are ineffective, that they
hurt service to citizens and they may cost more money than they
save?
Mr. Mulvaney. I have not seen those, sir.
Senator Kaine. Do you know whether the administration
reviewed those before announcing the hiring freeze?
Mr. Mulvaney. I do not know.
Senator Kaine. The House resurrected the Holman rule,
allowing Congress the power to slash individual Federal
workers' salaries as low as $1 per year. Did you vote for that?
Mr. Mulvaney. I believe I did, yes, sir.
Senator Kaine. There have been reports about the incoming
administration----
Mr. Mulvaney. Excuse me. I am sorry. Senator, let me
correct that. I believe that may have been contained in our
rules package this year, and if that is the case, then I did
not vote on it. I apologize.
Senator Kaine. Okay. We will check the record. Thanks for
that clarification. Did you support it?
Mr. Mulvaney. As you and I have discussed, I do support
some application of the Holman rule in some circumstances.
Senator Kaine. Okay. There have been reports that the
incoming administration has been trying to gather intelligence
about whether employees worked on priorities that they do not
like, for example, Department of Energy employees that worked
on climate activities. Were you aware of those reports?
Mr. Mulvaney. I am not; no, sir.
Senator Kaine. So you were not aware that they have been
widely perceived as sort of being intimidating of employees
that worked on priorities that the President does not share?
Mr. Mulvaney. Again, I am not familiar with them.
Senator Kaine. Do you want a high-morale, high performance
Federal workforce or a low-morale, low performance Federal
workforce?
Mr. Mulvaney. High morale, high performance.
Senator Kaine. How is calling Federal employees ``corrupt''
and ``beholden to special interests,'' freezing any new hiring
into Federal employment, gathering information about employees
who have worked on priorities that the new President does not
share, and supporting a role that could target individual
employees for massive salary reductions likely to build a high-
morale, high-performance organization?
Mr. Mulvaney. I think that rhetoric taps into a concern,
shared by many, including yourself, that there are Federal
workers who do not live up to our expectations, and it is
hard----
Senator Kaine. But we should not paint them with a broad
brush, should we, Congressman?
Mr. Mulvaney. Anytime you paint with a broad brush,
Senator, you run the risk of going outside the lines.
Senator Kaine. In your prepared testimony, you state, ``I
have learned that I do not have a monopoly on good ideas.
Facts--and the cogent arguments of others--matter. I will be
loyal to the facts and to the American people . . . I serve.''
Let me ask you some questions about facts.
Mr. Mulvaney. Sure.
Senator Kaine. Agree or disagree. A full repeal of the ACA
with no replacement will cause many people to lose health
insurance. Agree or----
Mr. Mulvaney. With no replacement, that is a true
statement.
Senator Kaine. A full repeal of the ACA with no replacement
will be a massive tax break for wealthy Americans because of
two high-earner taxes in the law. Agree or disagree?
Mr. Mulvaney. Again, I have seen these lists, Senator, but
I do not think anybody is proposing that we repeal without
replacing. So the answer to your question is yes.
Senator Kaine. A full repeal of the ACA with no replacement
will increase the deficit. Agree or disagree?
Mr. Mulvaney. Again, if you assume that there is no
replacement, I think that--no, actually, I think the CBO report
says that a full repeal with no replacement actually decreases
the deficit.
Senator Kaine. No. The CBO says it increases the deficit by
$137 billion a year in 10 years if you assume dynamic scoring,
$350 billion a year if you do not, over 10 years.
Mr. Mulvaney. I saw the report that I think Mr. Enzi asked
for in 2015 that gave a different conclusion, but I would be
happy to look at the one you----
Senator Kaine. All right. Thank you. A full repeal of the
ACA with no replacement would once again allow insurance
companies to discriminate against women and those with
preexisting health conditions.
Mr. Mulvaney. Again, I have not seen reports on that, but--
--
Senator Kaine. With no replacement.
Mr. Mulvaney. But no one is proposing no replacement.
Senator Kaine. A full repeal of the ACA with no replacement
would raise prescription drug costs for seniors under Medicare
Part D because of reopening the donut hole.
Mr. Mulvaney. I am not sure about that one.
Senator Kaine. Okay. Climate change, driven partly by
human-generated CO2 emissions, is a huge risk. Agree
or disagree?
Mr. Mulvaney. Again, you and I have talked about this. I
have talked about this with Mr. Sanders. I am not really sure
of the nexus between the OMB operation----
Senator Kaine. I am not asking about OMB. I am off OMB now.
Mr. Mulvaney. Okay.
Senator Kaine. Just a statement of fact, agree or disagree.
You are going to follow the facts. Climate change, driven
partly by human-generated CO2 emissions, is a huge
risk. Agree or disagree?
Mr. Mulvaney. I am not convinced we are at the point where
we have to--start to require American citizens to pay high
prices----
Senator Kaine. I am just asking do you agree with the fact.
Is climate change, driven by human-generated CO2
emissions, a huge risk?
Mr. Mulvaney. Yeah, I challenge the premise of your fact.
Senator Kaine. You do not agree with--and, finally, the
Federal workforce is at its lowest as a percentage of the total
workforce in 70 years. Agree or disagree?
Mr. Mulvaney. Mr. Warner mentioned that, and I have no
reason to believe he was not telling me the truth.
Senator Kaine. Okay. Thank you.
Thank you, Mr. Chair.
Chairman Enzi. Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
Congressman Mulvaney, Mrs. Mulvaney, I really want to thank
both you and your family for your willingness to serve. I know
Senator Corker used the word ``odd.'' I think when we met, I
said ``crazy.''
Mr. Mulvaney. I have been called worse.
Senator Johnson. I hope you are enjoying this.
As an accountant, as a business person, what drives me nuts
in the Federal Government is lack of information, cherrypicking
of information. I think we have seen some of that already
today. I would say, as Chairman of Homeland Security, I am
often asked: What is the greatest threat facing this country
right now? And it is not climate change. I have been answering,
and sometimes I am usually saying the denial of reality. We
simply are not facing up to these enormous problems.
I want to talk to you a little bit about real information,
what is really going to drive this, but I want to go back to
Senator Kennedy talking from my standpoint, the number one
component of the solution, which is growth. And let us talk
about actual information in terms of how effective that would
be. If we go from 2 to 3 percent, that is another $14 trillion
added to our economy over 10 years; 2 to 4 percent is $29
trillion. Even with the meager economic growth we have had
since 2009, revenues flowing into the Federal Government have
increased by $1.1 trillion. So, clearly, focusing on economic
growth is the number one component to the solution.
For me, there are four elements, and I want to talk about
two because it is going to completely fall in your bailiwick as
OMB Director. The first one, though, is energy, and it looks
like this administration is dedicated to utilizing our energy
resource, which is a good thing. We have to reform our tax
code. It is a disaster, costs somewhere $200 to $300 billion to
comply with, which is part of that regulatory burden, which is
in your bailiwick. We have numerous studies saying it is coming
close to $2 trillion per year to comply with Federal
regulations.
You have debt per household, $260,000 per household. The
regulatory burden is $14,800 per household. That is an enormous
burden.
Then we can talk about debt, but let us focus a little bit
just on providing information so we can actually start managing
the Federal Government properly. Social Security--no, let us
talk about debt, deficit. Over the next 30 years, the deficit,
according to CBO, will accumulate $103 trillion. That is tacked
onto our $20 trillion. Now, that is clearly unsustainable. We
were talking about Social Security earlier. Of that $103
trillion, $14 trillion is in Social Security, $34 trillion is
in Medicare, over $50 trillion is in interest on the debt. So
if we do not want to pay creditors over the next 30 years, $50
trillion interest on the debt, we have to address Social
Security and Medicare.
And, again, I want to talk a little--again, we use the
demagoguery. We can talk about, you know, hey, just raise the
retirement age. According to the Social Security trustees,
increasing the retirement age from 67 to 70, over 4 years,
fills $1 trillion of that $14 trillion deficit of Social
Security. So, again, I agree with you. You have got multiple
levers. You are going to have to pull all of them.
Just talk to me about your dedication as OMB Director to
provide Congress and, even more importantly, the American
people with real information on a macro basis so we can
actually address these problems.
Mr. Mulvaney. Senator, you left off one, at the risk of
trying to correct a Senator in the middle of a Senate hearing.
Senator Johnson. Be my guest.
Mr. Mulvaney. And we have not talked about it today. There
is a CBO report out--and I cannot remember if it is 2054 or
2044--where under the current baseline, the assumptions that
things stay the way that we are, 100 percent--by the mid-2050s,
100 percent of what we take in goes to one item and one item
only, and that is interest payments on the debt. No money for
Social Security, none for Medicare, none for Medicaid, none for
national defense, none for any of the things we have talked
about here today. That frightens me. I do not want to be
alarmist, but the point of the matter is we have allowed things
to get in a bad situation, and now it will fall to us to make
some very difficult decisions.
What do I see as my job? And why do I think I might be good
at it? I see my job as giving some really, really hard facts to
some really, really important people under very difficult
circumstances. I think I have the ability to do that. It is not
easy to go into a retirement community and tell people, ``Look,
we have to talk about ways to fix Social Security.'' I think
that probably pales in comparison to walking into the Oval
Office and saying, ``Now, Mr. President, here is where we stand
on Social Security, here is where we stand on Medicare, here is
where we stand on all of the other items.'' That is not easy to
do. So maybe you are right and I am crazy to want to have this
job, but somebody has to do it, because we cannot get to a
point 20 years from now where people throw their hands up and
say, ``Well, I did not know this was going to happen.'' We know
it is going to happen, and the time to start trying to fix it
is now.
Senator Johnson. So my only question is: Are you dedicated
to providing us the information, the facts, so we can start
ending the denial of reality and start addressing these
enormous challenges? Because this is clearly unsustainable.
Mr. Mulvaney. It is one of the few things that would allow
me to leave my family for the next several years, as long as
the President would have me, so that I could do just that. I
could look at my kids 20 years from now and say the time that I
was away from you, from age 11 to age whatever, was worth it
because I was able to do exactly what you just said.
Senator Johnson. Thank you for your willingness to do that.
Thank you, Mr. Chairman.
Mr. Mulvaney. Thank you, Senator.
Chairman Enzi. Senator Van Hollen.
Senator Van Hollen. Thank you, Mr. Chairman.
Mr. Mulvaney, great to see you. It was good to serve with
you in the House and on the Budget Committee, and I have told
my colleagues who asked that you were a straight shooter and
that you had a consistent set of views--I would argue in many
cases consistently wrong, but, clearly, you have held to your
positions and you have been straight in your communications
with members in this Committee.
One area where I think you have got it exactly right--and I
think this came out in the questioning by Senator Corker--was
with respect to the fact that Congress has tried to use the
overseas contingency account, the war savings account, as a
slush fund in order to escape the budget agreement. Do you
still hold the view that that is a runaround on the budget
agreement, and that if we are going to address those issues, we
should address them in a straightforward manner rather than
what was referred to by Senator Corker, I think, as a dishonest
manner?
Mr. Mulvaney. And I think this has become fairly an
orthodox position in both parties, is that everyone admits now
that the overseas contingency operations budget, the war
budget, is used for that specific purpose. In fact, I think it
was part of the omnibus agreement last year to use OCO for
items that were not war related.
Senator Van Hollen. And do you agree that that is a wrong--
that is an abuse of the budget process?
Mr. Mulvaney. I do. It is not emergency spending. It puts
us in a situation--imagine, Mr. Van Hollen, if the budget was
balanced----
Senator Van Hollen. I have limited time.
Mr. Mulvaney. Yes. The answer is yes.
Senator Van Hollen. You agree it is an abuse of the
process, and as OMB Director, if you are confirmed, you will
not pursue----
Mr. Mulvaney. I will look forward to having an opportunity
to explain to the President why I think it is not a good way to
spend American taxpayer dollars.
Senator Van Hollen. Okay. My concern relates largely to
some of the judgments you have made on issues, and some of them
were raised earlier by Senator Warner and others. One incident
was around the whole issue of the debt ceiling, because we were
introduced over the weekend to the phrase, the expression
``alternative facts.'' And I think as OMB Director and as a
country, we have got to be very rooted in reality and not in
alternative reality.
Here is what the former chief Republican economist of this
Budget Committee said about getting too close to the debt
ceiling--too close, not even going over it: ``New research from
academics and the GAO strongly indicates that the movement
toward expiration is accompanied by an increase in the
Government's cost of issuing new debt.'' Translation: Taxpayers
pay more.
Douglas Holtz-Eakin, former CBO Director appointed by
Republicans: ``Failure to raise the debt ceiling leads to very
bad economic outcomes and chaos in the financial markets.''
Translation: It hurts the economy, it hurts working people.
You have been part of legislation in the past to suggest
that the Federal Government could violate its obligations, and
so long as it was not an obligation to bond holders, like the
Chinese Government and others, that that would be somehow
acceptable.
As OMB Director, will you abandon that view, or are you
going to continue to pursue that view?
Mr. Mulvaney. Certainly bumping up against the debt ceiling
is an undesired situation. We know what is going to happen.
There are additional facts, however, which you left off, which
is the fact is that historically--and this goes back to the
Roosevelt administration--the debt ceiling was always used and
has regularly been used as the opportunity for us to sit back
and say, ``Now, wait a second. Why do we have to raise the debt
ceiling again?'' So it is a fact that it has regularly been
used to try and pass reform legislation to help solve some of
the issues that are driving the debt in the first place.
Senator Van Hollen. Do you dispute the GAO finding that it
cost the taxpayers over $1 billion the last time we had a real
showdown on this issue? Do you dispute--I am just asking a
question. Do you dispute the GAO finding? You cited them for
other--in positive ways. Do you dispute that finding?
Mr. Mulvaney. I do not dispute there was a short-term cost.
I do not know if I agree with the exact billion dollar figure.
Senator Van Hollen. Yeah, and that was--we did not even
breach it, right? And so, obviously, if you actually breach it,
you are going to have a huge cost to taxpayers.
Let me ask you a question, to pursue Senator Whitehouse's
earlier chart. It is absolutely true the Congressional Budget
Office says the tax expenditure category is far greater than
what we pay on Social Security.
In other words, if you add up all the tax breaks, all the
tax loopholes, on an annual basis that is a greater number than
we spend on Social Security, a greater number than we spend on
discretionary spending.
Simple question: The President has said that he wants to
close the carried interest tax break. Will you agree to close
that tax break for the purpose of reducing the deficit and the
debt?
Mr. Mulvaney. I have not had the opportunity to talk with
the President about that. I look forward to having that
conversation. I will tell you that I have seen various tax
reform proposals that do that along with----
Senator Van Hollen. Well, it is a simple question, because
it goes to your statements about how important it is to reduce
the deficit and the debt. I agree we have a long-term
challenge. You have signed in the past the Grover Norquist
pledge that says you will not reduce one tax break for the
purpose of reducing the deficit, that every contribution from
closing the carried interest tax loophole, for example, has to
go into reducing tax rates for somebody else.
If we are going to address the deficit and the debt, aren't
we going to have to look at new tax revenue, including closing
down special interest tax breaks for that purpose?
Mr. Mulvaney. You have raised a couple different issues.
One short answer would be that one way to get new tax revenues
would be to grow the size of the economy. But to the specific
point about the role going forward--and I think I have
mentioned this before--I fully recognize and accept and welcome
the fact I am changing from being a Representative of 750,000
people back home to advising the President of the United
States.
Senator Van Hollen. Thank you.
Thank you, Mr. Chairman.
Chairman Enzi. Senator Grassley.
Senator Grassley. In our office meeting, we discussed the
continued inability of the Defense Department to get its books
in order so that a clean financial audit can be justified.
Without accurate and complete financial information, the
leadership does not know how the money is being spent and what
things cost. Bad information leads to bad decisions.
It is important that you as OMB Director take a personal
interest in helping get the Defense Department's audit
readiness initiative back on track. Unfortunately, the upcoming
statutory deadline of September 30th this year that was
actually set 6 years ago to be audit ready is becoming a sham.
It is time to either deploy a finance and accounting system
that can generate reliable information or clean house in DOD's
chief financial office.
So I hope you are willing to hold the Defense Department's
feet to the fire and see that they are taking meaningful action
to be audit ready. That is a question.
Mr. Mulvaney. Yes, sir, and I have been more than a little
pleased about my very brief discussion so far with General, now
Secretary Mattis, who I believe shares your, my, and apparently
the President's commitment to driving efficiencies in to the
operations at the Defense Department.
Senator Grassley. The next question leads to the point that
your work as Management Director as opposed to Budget Director
may actually do more good for our country. I do not have a
question, but I would like you to hear me out and commit to
consider my point of view on pending regulations relating to
EB-5 Immigrant Visa Program. The program was intended to bring
much needed jobs and capital to rural and economically
distressed areas. But as we have proven over and over, the EB-5
Regional Center Program has been plagued by fraud and abuse.
The Obama administration produced regulations, thank God, to
improve the EB-5 Immigrant Visa Program. The regulations would
clean up the program by stopping gerrymandering and increasing
investment levels for the first time since this program was
created in 1991.
I bring this up because right now these regulations were
published last week and need to be finalized and need to be
kept by the Trump administration. This is a bipartisan and
bicameral issue, and all Judiciary leadership in both the House
and Senate, Republican and Democrat, support the regulations.
So I hope you will take our support for these regulations
seriously.
Mr. Mulvaney. I will, and I was pleased to have the
opportunity for you to inform me about some of the things I was
not aware of, for example, the gerrymandering issue. And you
have my commitment that I will take that directly to the
President if given the opportunity.
Senator Grassley. Okay. The Chairman brought this issue up.
I want to bring it up in a little different way. I have worked
for years to tackle abuse of Federal charge cards. In 2012,
Congress passed my legislation to establish a set of controls
for each agency that they must have in place to prevent misuse
of Government-issued charge cards. Of course, your agency is in
charge of issuing guidance and ensuring agency compliance.
While there have been reductions in abuse, agencies must remain
vigilant. OMB needs to make sure the agencies continue to
comply. I know you were an active Member in Congress to reduce
improper payments. Will you commit that OMB under your
leadership will remain vigilant in ensuring agencies do
everything they can to prevent misuse of Government-issued
charge cards?
Mr. Mulvaney. Senator, this President will not tolerate the
type of abuse that you just referenced, and you have my
absolute commitment to do just as you request.
Senator Grassley. Okay. Last question. The previous
administration believed in deficit spending in order to invest
in Government initiatives to help the middle class. CBO has
analyzed in great detail the long-term consequences of deficit
spending. They have found that in future years, a growing
portion of people's savings would go towards buying Government
debt rather than productive capital investment. That is
crowding out, as you know. The smaller capital stock would
result in lower wages and incomes, making future generations
worse off.
Now, this may sound like a softball question, but it is
very basic. What is your view on the impact of deficits and
debt on future generations?
Mr. Mulvaney. The crowding out is real. The numbers I have
seen in the academic research would indicate that, give or
take, when debt approaches 85 percent of GDP, you start to see
real effects of crowding out. And there is a correlation
between the size of the debt and the reduction in the growth of
GDP and the reduction in the growth of employment.
I think the current CBO projections are that--the way they
measure the debt will be at 85 percent roughly by 2024 or 2025.
This is a very real and pressing issue. It affects your family;
it affects my children, their ability to get a job going
forward, and I take it deadly seriously, sir.
Senator Grassley. Thank you for your good answers.
Chairman Enzi. Senator King.
Senator King. Thank you, Mr. Chairman.
Congressman Mulvaney, welcome. First, I want to associate
myself with the comments of Senator Corker and yourself on OCO.
OCO is too easy, and it is really not an honest way to deal
with the defense budget, which has real needs, but it should
not be done through the borrowing and not paying for it.
Also, I completely share your view that the debt and the
deficit are a grave issue facing this country. My particular
concern is about interest rates. Interest rates, as you know,
are at a historic low right now, and it is pretty easy to
calculate. For every 1 percent an interest rate goes up, we are
out 100--well, now $200 billion. And that can very rapidly eat
up almost the entire current discretionary budget in a hurry,
just by forces over which we have no control. So absolutely
right to be concerned about that.
Let me talk a bit about the issue of management. The title
of your job is the Office of Management and Budget. Most of
today has been talking about budget. The Chairman at the
beginning talked about overpayments in the Federal Government,
something like $144 billion. Another piece of that is
undercollection of revenues by the IRS, which is estimated as
high as $500 to $600 billion. Most of us pay our taxes that are
owed. Some people do not. Those who do not are not paying their
fair share. If you put those two together, $600 billion a year,
that would eliminate the current deficit just through better
management.
Now, the problem is it is going to take more people to
provide that management. You cannot expect the IRS to improve
their collection with fewer people. So I hope that you will
take seriously these opportunities, but you cannot move in two
directions at once by reducing the Federal workforce and still
expecting more results in terms of monitoring overpayments or
collecting more efficiently through the IRS.
Mr. Mulvaney. I recognize that, and that is an excellent
point, Senator. I would encourage you at the same time to
consider that another way to increase collection without having
to hire more people is to have a simpler tax code, and that one
of the reasons--certainly there are people who choose not to
pay. They are devious. They do not want to follow the law. They
get all that. But there are a lot of folks who do not pay just
because it is really, really hard to do. And it might make it
actually easier to collect if we had a tax code that was easier
for folks to comply with.
Senator King. I remember once when I worked here many years
ago, there was a proposal that Members of Congress should have
to prepare their own tax returns. That might solve a lot of
these complexity problems.
Should tax cuts be revenue neutral?
Mr. Mulvaney. If I have a chance to sit and talk to the
President about this, I would encourage him to look first and
foremost on the effects on the overall economy, on the effects
of growth of any tax cuts, because as I have mentioned here a
couple times today, given the political situation we face in
this country, I think the best chance you have to reduce the
deficit or balance the budget is to accomplish economic growth.
That should be the first-
Senator King. I would agree with that, but there is this
theology out there that lowering taxes equals greater economic
growth. I have tried seriously to find economic studies that
substantiate that. I have not been able to find them. For the
record, I would appreciate your supplying whatever data you
have or studies that have indicated that that is the case. The
Bush tax cuts in the middle of the last decade did not have
that effect. My understanding of the experiment going on in
Kansas is that it has not had that effect.
So I think we need to be careful with a cavalier assumption
that tax cuts will indeed stimulate growth and, therefore, be
self-funding. That is an idea that kicks around here. But I do
not think there is much data to support it, and the problem is
if it does not work, you have only dug the hole deeper. And if
you add the proposed tax cuts, $450, $500 billion a year, to
increased defense spending, to the current deficit, you are
talking about a $1 trillion a year further deficits.
Mr. Mulvaney. And I would like, Senator, for you to share
that information as well. My commitment to you in the opening
statement stands. In fact, it is how I look at the job, very
seriously, which I want to take a fact-based approach when
advising the President. So if there is data that you would like
me to see on that point, I would welcome it.
Senator King. Well, and on the question of tax cuts, I had
a friend, a guy in a hardware store, a clerk, tell me that
there is no such thing as a tax cut when you are in a deficit
situation because if you cut taxes and borrow the money to fill
the hole, all you are really doing is shifting those taxes to
your kids. And I think that is an important point. So we have
to be really careful about this, that we not simply give
ourselves a tax cut and then lay it on our kids who are going
to have to eventually pay it with interest.
Mr. Mulvaney. It is amazing sometimes how much sage advice
you can get in a rural hardware store. I have had the same
experience.
Senator King. Particularly in Maine. [Laughter.]
Mr. Mulvaney. I like the ones in South Carolina, but I take
you at your word.
Senator King. A final quick question. There has been some
discussion about the debt ceiling, and you voted against it,
and you feel this is an opportunity for a conversation. Will
you counsel the President that violating the debt ceiling is
not a big deal?
Mr. Mulvaney. I will counsel the President as to the
ramifications of raising the debt ceiling and of not raising
the debt ceiling. I feel like I have a grasp of both sides of
that issue and look forward to conveying both--all of the
arguments to him so that he can make the best decision
possible. And then I will----
Senator King. I hope you will----
Mr. Mulvaney [continuing]. Defend his position.
Senator King. I hope you will take that very seriously,
because I have never seen any particular data or studies that
indicate that violating the debt ceiling would be good for the
American economy. Thank you, Congressman Mulvaney.
Mr. Mulvaney. Thank you, Senator.
Senator King. Thank you, Mr. Chairman.
Chairman Enzi. Senator Boozman.
Senator Boozman. Thank you, Mr. Chairman. And thank you for
being here. We have talked a lot about the fact that we are $20
trillion in debt, looking at significant indebtedness in the
next 10 years. The point that Senator King brought up about the
interest rate, I would like to follow up on that in the sense
that--what is the interest rate that we are paying now on the
national debt? Not as far as dollars, but the percent.
Mr. Mulvaney. I think your effective rate is probably right
around 2 percent. You are going to pay about $400 billion of
interest this year.
Senator Boozman. And we talk about the economy heating up,
which we desperately want, and yet that is going to cause
interest rates to go up.
Is it true that traditionally the debt is serviced at 5 to
6 percent?
Mr. Mulvaney. I think the historical 40-year average, which
is roughly my adult lifetime, is about 6 percent, yes, sir. And
it has been as high as 16 or 18 in the 1970s and 1980s.
Senator Boozman. But 5 or 6 percent is a conservative
number----
Mr. Mulvaney. Yes, sir.
Senator Boozman [continuing]. That we could all agree on.
What does it cost for every 1 percent increase in the----
Mr. Mulvaney. A good rule of thumb right now is $200
billion.
Senator Boozman. $200 billion per year?
Mr. Mulvaney. Yes.
Senator Boozman. Okay. Very good. So you are talking about
a tremendous amount of money over a 10-year period.
Mr. Mulvaney. Yes, sir.
Senator Boozman. And as Senator King pointed out, you get
in a situation, just like individuals get, where you simply
cannot service the debt. So $200 billion, that is a third of
our defense budget.
Mr. Mulvaney. That is correct. Yes, sir. It is almost
exactly that.
Senator Boozman. So, again, I think it really highlights
the importance of getting these things under control, as my
constituents understand.
Mr. Mulvaney. Yes, sir.
Senator Boozman. One of the things I think we can all agree
here is that the budget process, the appropriations process, is
broken. Here we are into almost February. The fiscal year
started in October, and we are not going to have this thing
resolved for another couple months as far as fiscal year 2017,
much less fiscal year 2018. So how do our agencies, how can
they spend efficiently? We talk a lot about Government waste.
How can you be efficient when you are facing that kind of
scenario?
Senator Enzi, myself, I talked to you when you were in the
office about biennial budgeting, things like that. Do you have
any ideas as to how we can, again, as a Congress, attack the
situation that we have so that we can make the process more
efficient and ultimately save a lot of money?
Mr. Mulvaney. You are exactly right, Senator. The
Government agencies, most specifically the Defense Department,
struggle to operate efficiently under a continuing resolution,
which is typically what we have done here for the last several
years. And as I have discussed with you and many members of
this Committee, reinvigorating the ordinary regular
appropriations process should be not only a priority of
Congress, but I hope to help make it a priority for the
administration and have the opportunity to explain to the
President why it is important that appropriations work, not
only for political purposes but for actual practical purposes
and why having an appropriations bill allows the Department of
Defense, for example, to operate more efficiently.
So I am hopeful that you will have whatever support you
need from the White House in order to reinvigorate the
appropriations process.
Senator Boozman. Very good. On the issue of improper
payments, which we have talked about, during your time on the
House Oversight Committee, you sponsored legislation to empower
States to access Treasury's Do Not Pay database. Despite
similar legislation actually being signed into law, it appears
OMB has yet to give States the access. Can we look forward to
seeing these resources being made available to the States for
their use?
Mr. Mulvaney. Yes, sir. I think one of the advantages of
having one of the co-authors of an improper payments bill
running OMB is that you can pretty much count on the fact that
we will take that very, very seriously.
Senator Boozman. Very good. Under President George W. Bush,
OMB instituted an administrative PAYGO rule requiring any rules
or other administrative actions which increase the deficit be
offset by other actions that would reduce the deficit.
President Obama opted not to use this ability. Will you go back
to enforcing this rule as OMB Director?
Mr. Mulvaney. Yeah, I would like to point out I believe
that rule was actually originally attached to a debt ceiling
debate. That is one of the specific examples of how we do take
that opportunity to step back and try and reform our spending
system. I look forward to advocating to the President that it
would be fiscally sound for this administration to encourage
PAYGO.
Senator Boozman. One of the problems we have had not only
in the past administrations but administrations in general is,
as we ask for things from OMB, ask for things from the various
agencies, sometimes those are not given to us in a timely
fashion. I know you have been frustrated with this as a Member
of Congress. I think everybody in this room has been
frustrated.
Will you tell us that you will be very responsible in doing
that so that we can get the information that we request?
Mr. Mulvaney. As I believe I mentioned in my opening
statement, I have been on the other side of that. Having been a
Member of Congress and seeing what it does to the way we
operate when we do not talk to each other, do not communicate,
and one side hides information from another, it is not helpful
to anybody, and it is certainly not helpful to the people that
we represent. So I do look forward to helping the information
flow again and to having a good relationship with all parties
on both sides of the Hill.
Senator Boozman. Good. Thank you, Mr. Chairman.
Chairman Enzi. Senator Merkley.
Senator Merkley. Thank you very much, Mr. Chairman. We have
a lot of hearings in different parts of the building, in this
case in the Capitol, and I wanted to start with where Senator
Cotton was when he was introducing you, which he referred to
you as a ``bold truth teller.''
I have behind me two pictures that were taken at about the
same time of day in 2009 and 2017. Which crowd is larger--the
2009 crowd or the 2017 crowd?
Mr. Mulvaney. Senator, if you will allow me to give the
disclaimer that I am not really sure how this ties to OMB, I
will be happy to answer your question, which is: From that
picture, it does appear that the crowd on the left-hand side is
bigger than the crowd on the right-hand side.
Senator Merkley. Thank you. The President disagreed about
this in his news report. He said, ``It is a lie. We caught
them. We caught them in a beauty,'' referring to the press
reporting. He said, ``It looked like a million, a million and a
half people.''
The reason I am raising this is because budgets often
contain buried deceptions. You and I talked in my office about
the magic asterisks. This is an example of where the
President's team on something very simple and straightforward
wants to embrace a fantasy rather than a reality. In fact, it
has come up a lot because Sean Spicer, the Press Secretary,
said that the photographers framed their photos to minimize the
enormous support on The Mall--in other words, a conspiracy
thesis--and went on to say it was ``the largest audience to
witness an inauguration, period.'' I gather you would disagree
with the Press Secretary.
Mr. Mulvaney. Again, I would be happy to comment on the
photograph----
Senator Merkley. With your caveat.
Mr. Mulvaney. I am not familiar with the statements. I do
agree that the photographs were as you represented them.
Senator Merkley. Thank you. Chuck Todd noted in his
conversation with Kellyanne Conway that you had just had a
Press Secretary at the start of his time in his office present
a falsehood to the press and to the American people. And
Kellyanne Conway responded, ``You are saying it is a falsehood.
Sean Spicer gave alternative facts.''
Are you comfortable, as you proceed as a key budget
adviser, presenting falsehoods as simply an alternative fact?
Mr. Mulvaney. As you and I discussed in your office, I have
every intent and believe that I have shown up to this point in
my time in Congress that I am deadly serious about giving you
hard numbers, and I intend to follow through on that.
Senator Merkley. One of the false facts that has been
repeated in previous budgets is to say that tax cuts for
corporations and tax cuts for the rich in America will increase
revenue. I have gone through the numbers from 1981, from 2001,
and 2003. I am sure you are familiar with this. Did President
Reagan's 1981 tax cut increase or decrease revenue?
Mr. Mulvaney. Senator, we just had a chance to discuss that
with Senator King, and I will invite him to do--you to do the
same thing I invited him to do, which is, as I commit to you to
take a fact-based approach to the budget, I would welcome any
information you have on those types of matters.
Senator Merkley. Are you unfamiliar with the 1981 tax cut?
Mr. Mulvaney. I am familiar with it generally. I was 14
years old.
Senator Merkley. Did revenue go up or down in the 2 or 3
years following that?
Mr. Mulvaney. I honestly do not remember, sir.
Senator Merkley. Okay. It went down. In 2001, President
Bush's tax cut, did it increase or decrease revenue?
Mr. Mulvaney. I do not know.
Senator Merkley. It went down substantially. In his 2003
tax cut, did it increase or decrease revenue?
Mr. Mulvaney. I am not familiar with the numbers.
Senator Merkley. So if you review the numbers and you see
that this is a falsehood, this argument, this kind of magic
gift, if we can cut taxes for the rich and powerful but somehow
it will increase revenue, if you find that that is false, will
you take that truth, the falsity of that often repeated claim,
and make sure the President knows what is true and what is
false?
Mr. Mulvaney. Senator, let me say--let me answer your
question this way, and I will try to be as straightforward as I
can. In order to do the best possible job for the President, I
think it is incumbent upon me to present him with all possible
cogent arguments on both sides. And if there is data that--and
I have no reason to think you are lying to me. I actually
believe you to be telling the truth. But if there is data that
backs that up, if there are academic studies, I would tend to
use those, just as I would if there are academic studies on the
other side of that argument.
Senator Merkley. Often this strategy is used to say--and
this is particularly true, unfortunately, in Republican
administrations--that this is a way we can claim to be fiscally
responsible while doing a lot of favors for very powerful
people we like, and not talking about the many giveaways that
are already in the tax code for the very rich and powerful.
There is a CBO study that lays out an extensive--I think it
was a 2011 study. I will be happy to--I will not put it in the
record because it is so long, but I will be happy to make sure
you have a copy that goes through multitudinous strategies for
improving the deficit, decreasing the deficit. But a lot of
those things that would improve the deficit are the result of
tax code positions taken that are making the affluent more
affluent and increasing income inequality.
Will you take a serious look at these opportunities and not
just be in the mode of let us cut taxes on the rich and
decrease services for struggling American families?
Mr. Mulvaney. And I think it was Senator Whitehouse and I
who discussed this earlier, but I told him that I think that
maybe he and the President were getting to the same conclusion
by different roads, which is that the tax code needs to be
reformed so that it is fairer and simpler.
Senator Merkley. But a strategy that decreases taxes on the
rich while decreasing programs for struggling families, would
you oppose or support that?
Mr. Mulvaney. Again, my job will be to advise the President
of the economic ramifications of all of the options that are
presented to him.
Senator Merkley. Your sense of internal justice, though, is
that just? Decreasing taxes on the rich, decreasing programs
for struggling American families?
Mr. Mulvaney. Again, Senator, I am not in a position to
give a comment on a tax plan I have not seen yet. If you are
asking my sense of justice of robbing from the rich and giving
to the poor----
Senator Merkley. No, that was not what I was asking.
Mr. Mulvaney. Okay.
Senator Merkley. But tax fairness for the rich and program
fairness for struggling families.
Mr. Mulvaney. I agree with you on tax fairness, yes, sir.
Chairman Enzi. Senator Perdue.
Senator Perdue. You do not really want to call on me right
now, Mr. Chairman. I am thoroughly disgusted. It is amazing to
me. This is what is wrong--and I apologize to you, Congressman.
I have sat in here for the better part of this meeting, and I
have to tell you, this is probably one of the most blatant
partisan committees that I sit on, and, unfortunately, it deals
with the financial future of our kids and grandkids, as you
well point out.
Would you agree, sir, that our budget process is broken?
You have been on the House Budget Committee for 6 years, as I
understand it.
Mr. Mulvaney. No, sir. I have served 2 years, but I did
additional work on budget matters after that.
Senator Perdue. Would you agree or disagree that the
overall budget process is broken in Congress?
Mr. Mulvaney. Yes, sir.
Senator Perdue. In my opinion--and let me just offer some
observations. I fully support your nomination. We had a great
opportunity in my office to go through my questions. I have a
statement, Mr. Chairman, that I would like to submit for the
record.
Chairman Enzi. Without objection.
[The prepared statement of Senator Perdue follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Perdue. In 2000, under Bill Clinton, President
Clinton, our Federal Government spent $2.4 trillion running
itself, total, all in. That is all mandatory, all
discretionary, everything, 2.4. Last year, we spent 3.7. So one
Democratic administration, one Republican administration. We
have exploded the Federal Government from $2.4 to $3.7
trillion. And that is not military expense.
At the same time, we grew revenue from $2.4 trillion to
$3.4 trillion. Those are constant 2015 dollars. So I would
submit that the process is broken. As a matter of fact, the
evidence is there. Since 1974, when the Budget Act was created,
we have only funded the Government the way that Budget Act
calls for in its law, we have only done that as a Congress four
times. As a matter of fact, in those 42 years, we have used 175
continuing resolutions to fund the Government.
As a matter of fact, over those 42 years, now up until 2000
we had 13 appropriation bills. Post 2000, we had 12
appropriation bills that we have to appropriate and pass in
order to fund the Federal Government. It shocked me to find out
that the average number of appropriation bills is only two and
a half, the average, per year of actually being passed into
law.
You made a comment earlier that you wanted the President of
the United States to rely on that process. I would submit, sir,
that it is broken process, it will not ever work. It
contributes to this debt. We are going to--in the last 10
years--or in the last 8 years, we have borrowed 35 percent of
what we spent as a Federal Government. Over the next 10 years,
we are going to borrow--under the baseline, as you said, we are
going to borrow another 30 percent, which will add about $9.5
trillion to a $20 trillion debt.
Today, if interest rates were just at their 30-year average
of about 5 percent--we can do the math--it is untenable. There
is no way that we can fund $1 trillion of interest.
So all the conversations we have here, all the
polarizations you see in here, is because fundamentally the
budget process is broken. It does not give us a politically
neutral platform upon which to have the debate about tax
expenditures, about tax cuts, about spending cuts, about all
the things that both sides think are important in terms of
solving the debt crisis.
My question to you, sir, this morning is very simple. At
OMB, you have looked--I presume you will or have looked at the
1921 act that created the Office of Management and Budget.
Mr. Mulvaney. Yes.
Senator Perdue. I have two concerns. One is we need help
breaking through this gridlock here in Congress. Can you do
that from OMB? And, two, does the office of OMB today, because
of the legislative total dysfunction, total fraudulent
dishonesty that this Congress and every Congress since 1974 has
perpetrated on the American people--because of that withdrawal
from its responsibility in Congress, OMB in my opinion has
overstepped what was outlined in the 1921 act and certainly in
Article II. Are you concerned that with this dysfunction in
Congress that OMB is, in fact, overstepping its Article II
restrictions?
Mr. Mulvaney. I am not familiar with the specific mandate
of Article II. I can----
Senator Perdue. Would you look at that some time as you get
your feet on the ground? That is one that I would love to
engage on.
Mr. Mulvaney. On your first point about what we could do to
help break the gridlock, your point is well made, which is that
it is going to be something that Congress will have to drive
the process on because it is a congressional appropriations
process. But, again, I will be encouraging the President to do
everything he can to allow that appropriations process to work.
What does that mean? For the last several Congresses, I am of
the opinion that various elements in the Congress have used the
defense appropriations bill as a hostage, that we probably
could have passed a defense appropriations bill and one that I
voted for from time to time and that could have been signed by
the President but was held up intentionally in order to
leverage items on other appropriations bills, and it created a
logjam and part of that gridlock that you create--that you
correctly reference.
And so one of the things that I would be encouraging the
President to do is, ``Mr. President, not only should you allow
the appropriations process to flow, but you should actively
engage to encourage it to happen, because it is the best way to
spend taxpayer dollars.''
Senator Perdue. Thank you.
Thank you, Mr. Chairman.
Chairman Enzi. Senator Harris.
Senator Harris. I think you are nearing the end. I think I
am number 98 among all the Senators. [Laughter.]
Mr. Mulvaney. But number one in my heart, Senator.
Senator Harris. Oh, oh. You must have a very big heart. So,
Congressman, in January of 2013, you opposed Federal relief for
families and businesses in New Jersey and New York that were
hit by Hurricane Sandy, and at the time you said it was because
it was not paid for. But in 2015, South Carolina benefitted
from Federal relief for flooding even though it was not paid
for.
In advocating for that relief, you said there will ``be a
time for a discussion about aid and how to pay for it, but that
time is not now.''
As you probably know, California has had its share of
natural disasters, whether it be drought or forest fires or
earthquakes or severe storms, which result in safety hazards
for millions of people and millions of dollars of damage to
infrastructure and in some cases death.
For me to consider your nomination as the Director of OMB,
the main person, of course, who would be in charge of assessing
governmental spending, can you assure me that when natural
disasters hit various parts of the country like California,
that you will be willing to put the immediate interests of
people in need as the first priority for you? Or will you
insist that the budget cuts be made before agreeing to provide
critical assistance to those victims?
Mr. Mulvaney. Thank you, Senator. A couple different
answers to your question, or ways to answer your question.
First of all, I do believe that there is a proper Federal
role in dealing with natural disaster relief. Sandy is a
tremendous example. It is something that is simply so large, it
is too large for one State or local government to deal with. It
is an appropriate function of the Federal Government.
Senator Harris. And you would agree that the need is
immediate after a disaster?
Mr. Mulvaney. I did, and that is why I want to point out
your quotation, because I believe your quotation--I believe it
to be accurate, but I believe the circumstance for this was
that I believe I was asked by the media on the day of the event
how I was going to pay for this, and that gave rise to my
response. There will be a discussion about how to pay for it,
but the time is not now because the event was actually
happening. It was not at the time that we appropriated the
relief.
On the appropriated relief for South Carolina, I believe
that my position was entirely consistent. My position on Sandy
was that I wanted to help the folks who had been injured----
Senator Harris. So can you assure me that if a natural
disaster hits other States, like California, for example, that
you will not hold up relief for the State waiting to determine
whether there are going to be budget cuts or cuts in order to
provide that relief? Or are you going to sit back and crunch
the numbers while people are waiting for help?
Mr. Mulvaney. I see my role in that particular circumstance
as advising the President: ``Mr. President, here is what we
have done in the past. Here is how it has worked out. Here is
how I think we should proceed in this circumstance, and here is
why.'' And then whatever the President says to do, I will
enforce.
Senator Harris. Even if the Governor of those various
States suggests to you that people may be harmed because of
that delay?
Mr. Mulvaney. I can only imagine that that would carry a
great deal of weight with the President, but it would not be up
to me to respond to the Governors. My responsibility would be
to the President of the United States.
Senator Harris. Okay. In September of 2016, you voted
against funding for the Zika outbreak, and then on Facebook you
said, ``Do we really need Government-funded research at all?''
I assume you must be in favor of supporting American innovation
and new industries. Is that correct?
Mr. Mulvaney. Yes, ma'am. Generally, on the Zika matter, I
do recall that.
Senator Harris. So let me--I am not finished.
Mr. Mulvaney. Sure.
Senator Harris. And I am sure you agree that scientific
innovation and breakthroughs can create entirely new
industries, which, of course, will spur growth and economic
development.
Mr. Mulvaney. I think our American history shows that to be
true.
Senator Harris. So let me read you what a globally leading
scientist says about this issue: ``America has made big
scientific breakthroughs for decades because Federal funding
allows scientists to pursue research that businesses would not
fund because they have no immediate commercial application.
Breakthroughs from federally funded curiosity-driven research
have not only created new business, but entire new
industries.'' That is a quote from a woman who happens to be at
the University of California and won the Breakthrough Prize for
advances in genetics. Do you agree with that statement that she
made?
Mr. Mulvaney. Again, I do not recall the entire statement,
but generally----
Senator Harris. Shall I read it to you again?
Mr. Mulvaney. No. Generally, yes. Generally, I do believe
that there is a proper role for the Federal Government in
research, but I think you hit the nail on the head in that
quote when they said that where the private sector would not go
in because of the circumstances and time. And I have actually
supported that, Senator.
Senator Harris. Fantastic. And so, in fact, NSF and NIH
spent more than $4.4 billion in research grants for California
in 2016. This money has dealt with some of our Nation's most
difficult diseases, and scientists are trying to discover, of
course, new ways to provide food, water, and energy for our
Nation's growing population.
Do you believe that Government-funded research should be a
priority?
Mr. Mulvaney. I believe that when we look at grant
programs, like the one that you just mentioned, the key is not
the amount of the grant to begin with but what we are getting
for the taxpayer dollars.
Senator Harris. So you are not opposed----
Mr. Mulvaney. I have hopefully answered the question.
Senator Harris [continuing]. To the notion of Government
funding research for scientific purposes?
Mr. Mulvaney. I have actually supported funding what they
call ``orphan diseases.'' You and I may have a chance to talk
about that more.
Senator Harris. I would like that.
Mr. Mulvaney. Thank you.
Senator Harris. Thank you.
Chairman Enzi. Patient Senator Gardner.
Senator Gardner. Thank you, Mr. Enzi.
Mr. Mulvaney, Congressman Mulvaney, thank you for your
willingness to serve. To your family, thank you very much for
your willingness to serve as well. This is a public service
commitment.
When we came into Congress together in 2010, I remember
hearing your thought process on budget, talking to you about
the way we could make this Government be a better Government,
more effective, more efficient for the people of this country.
And I commend you for your time in the House and the work that
you have done, and I thank you for it. And while not always
agreeing with everyone, while not always agreeing with
leadership, sometimes being accused perhaps of being a thorn in
the side of some, you have never been one who just prides
himself in being that thorn but has found a way to work forward
to find a solution. And I think that is what this place needs,
somebody who is not just go-along, get-along, but somebody who
is going to try to figure out a way forward given the resources
and the challenges that this country faces.
Mr. Mulvaney. Thank you, Senator.
Senator Gardner. When we have difficult days like today,
where you have a Commerce Committee hearing and we confirmed a
couple of nominees out of the Commerce Committee today, and the
Foreign Relations Committee that I also serve on, we had Nikki
Haley's nomination today, and I am bouncing back and forth
between this Committee and those other two hearings, I only get
to hear parts and pieces of the questions. And coming into this
Committee at times, I heard several different questions that
you were asked which can only lead me to conclude that some
must believe that you only think that we are a better country
if the poor get poorer. That is absolutely incorrect. And I
think that this--what I have heard from some people here who
believe that if we simply raised taxes, then the inequalities
of this country will disappear.
What has happened over the past 8 years has actually
increased the challenges in this country, and I would just ask
you a question. Have the wealthy become wealthier over the last
8 years?
Mr. Mulvaney. Yes, sir.
Senator Gardner. And so it is not the policies of
increasing taxes that we can look--that were the problem,
because that happened over the last 8 years in some respects.
And so actually if we decrease taxes, decrease regulation, it
is going to lift everyone up. Is that correct?
Mr. Mulvaney. There used to be a Democrat around here who
said that a rising tide raises all ships.
Senator Gardner. And so just a couple basic questions.
Does overregulation hurt our economy?
Mr. Mulvaney. It does.
Senator Gardner. Is there any doubt that overregulation
hurts the economy?
Mr. Mulvaney. No, sir.
Senator Gardner. Left or right, liberal economists, do they
believe that overregulation is bad?
Mr. Mulvaney. No, and it has actually been encouraging to
me as I have talked to members of both parties, that there does
seem to be some common ground and some bipartisan work in favor
of regulatory relief because we see it from our constituents in
these offices every single day.
Senator Gardner. Does economic growth help the budget?
Mr. Mulvaney. It helps everybody.
Senator Gardner. And so if you have overregulation, then it
hurts the budget. Is that correct?
Mr. Mulvaney. Correct.
Senator Gardner. So by eliminating overregulation, then you
can help the budget, correct?
Mr. Mulvaney. There is some really good academic
literature----
Senator Gardner. Is there any debate on that?
Mr. Mulvaney [continuing]. That suggests that regulatory
cost is actually one of the most regressive taxes that we have,
that it falls most heavily on the poor.
Senator Gardner. And there is no university think tank out
there that says we will grow our way out of this budget problem
through overregulation.
Mr. Mulvaney. I have never seen that.
Senator Gardner. Do you agree that we are in a state of
overregulation at this point?
Mr. Mulvaney. I do. I have seen it firsthand.
Senator Gardner. Now, it seems like that is the entire
premise that I have listened to, at least in the times that I
have come in and out of this Committee today, talk of very
different approaches to our budget and our economy. But I think
everybody, as you just identified agrees with that basic point,
that overregulation is bad, growth of the economy is good, and
that helps the budget. We have a significant debt. What are our
outstanding liabilities on our balance sheet today?
Mr. Mulvaney. Almost $20 trillion.
Senator Gardner. Almost $20 trillion.
Mr. Mulvaney. That is what is reported. I think if you
wanted to actually project, it could be closer to 100. But the
actual on--the ones we report right now. $20 trillion.
Senator Gardner. And there is no way under our current
economic growth that we have a way to pay for that, those
obligations that we have spent?
Mr. Mulvaney. I do not believe so. No, sir.
Senator Gardner. And one of the ways, I think, that we
could grow this economy is legislation that Senator Lee and I
have introduced. It is called the ``Reducing Excessive
Government Act,'' or the REG Act. This is an idea that if we
increase the debt limit--which this place has done. If we
increase the debt limit, then we also ought to decrease the
amount of regulations that are in--on the economy at some
degree in order to help grow the economy, as you have
identified, which helps the budget. So our idea is for every $1
in debt limit increase, then you reduce regulations by a
commensurate 15 percent. Is that something that we could work
with you on?
Mr. Mulvaney. I would love to see something about that,
because I believe, as I think you do, that probably the best
thing we can do immediately to help the economy would be to
reform the regulatory climate.
Senator Gardner. And the other thing that I think we have
to talk about when it comes to budget is finding ways that the
private sector can help reduce spending. One of the things that
you and I have talked about, you have been very effective in,
is energy savings performance contracts. If you think about
what we can do with the private sector, without spending a
single dime in taxpayer funding, we have the potential to save
$20 billion in taxpayer spending, simply by making our
Government buildings, the millions and millions of square feet
in office space that this Government has right now, more energy
efficient. Will you pledge to continue working with this
administration and me on energy efficiency?
Mr. Mulvaney. It would be easy for me to make that
commitment. One of the first bills I wrote was with my friend
Peter Welch from Vermont on that exact topic.
Senator Gardner. Mr. Mulvaney, thank you for your patience
and perseverance today, the grace with which you have handled
this, and I look forward to working with you to grow and expand
our economy.
Mr. Mulvaney. Thank you, Senator.
Chairman Enzi. And now the senior person on the Committee
and very patient Senator Murray.
Senator Murray. Well, thank you very much, Chairman Enzi.
Welcome, Congressman Mulvaney. I know we have not found time in
our schedules to do a one-on-one meeting. I look forward to
hopefully being able to do that.
I do want to be very up front. I have serious concerns with
your nomination. I am, of course, troubled by your failure to
pay taxes and comply with the law over a period of several
years, and it is simply not credible to me it never crossed
your mind before now that you might owe taxes on behalf of your
household employee. And I do think the failure to pay taxes
just kind of underlines the need for all committees to require
tax reforms from our nominees as Democrats are asking in the
HELP Committee that I am on and committees that do not
currently receive taxes.
Unpaid taxes, however, are not my only concern with your
fitness for this job. I am a former Chairman of this Committee.
I am very proud of the work that we have been able to do to
reach across the aisle and move away from the constant budget
crises. We were able to do that because we set aside some
serious differences and worked to find common ground. And,
frankly, I do not see a similar willingness to do that in your
background.
You were a member of the Tea Party, correct?
Mr. Mulvaney. I was a member of the Tea Party Caucus, yes,
ma'am, in the previous Congress.
Senator Murray. You supported shutting down the Government
in the fall of 2013, correct?
Mr. Mulvaney. I think that is, in all fairness, Senator, an
oversimplification. I did believe that the House bill that
passed was a good bill that would have delayed the individual
mandate for a year. The Senate refused to take that up, and as
a result, there was a lapse in appropriations, which the media
now called ``a Government shutdown.''
Senator Murray. Well, it was a support of getting to that.
And you opposed, my understanding is, the subsequent bipartisan
deal that I reached with now-Speaker Ryan later that year to
keep the Government open, correct?
Mr. Mulvaney. I opposed the approval of the deal and then
voted for the omnibus spending bill that grew out of it.
Senator Murray. Well, I understand, in fact, you also
opposed the Budget Control Act in the 2015 bipartisan deal,
correct?
Mr. Mulvaney. That is a true statement.
Senator Murray. Okay. Do you acknowledge that you will have
to work with Democrats in the next round of budget and debt
limit deals?
Mr. Mulvaney. Oh, sure, and I have worked with Democrats
many, many times in the past, so I have no difficulties and no
concerns about my ability to do that in the job, should the
Senate confirm me.
Senator Murray. So will you commit to pushing back against
the Tea Party if they pressure you to not work on a bipartisan
basis?
Mr. Mulvaney. My commitment, if you confirm me, is to the
President of the United States. My commitment right now,
Senator, is to the 750,000 people that I represent in South
Carolina, a very conservative place. They seem to like the job
that I have been doing. But my boss would change upon
confirmation, and my commitment would be to represent the
President of the United States to the best of my ability.
Senator Murray. Okay. Well, let me just say there are
reports that the transition team is preparing a first Trump
budget with $10.5 trillion in spending cuts within that, and I
sort of put those two things together. And, clearly, we, to me,
are headed right back to more Tea Party extremism and
ideological purity and dysfunction and brinkmanship and
partisanship, all that went with that. And that approach is
going to have very harmful consequences.
I want to just give one small example. I was really honored
to participate in the Women's March on Saturday, and I want
those that are watching this to know that I stand ready to do
whatever it takes to protect the health and safety of women. So
I was outraged actually to read that the $10.5 trillion in cuts
is built from a blueprint that, among other massive cuts that
we can all talk about, would eliminate the funding for the
Violence Against Women Act that actually helps support
survivors of sexual assault and violence. Is that really the
message that this new administration wants to send to women?
Mr. Mulvaney. Senator, I have read some of the same
newspaper reports you have, but I am not familiar with the
details of the budget. In fact, my understanding is that--and
there are some strange rules that I am not familiar with on
transitions. I have not been allowed to see the details of that
budget, so I am not comfortable commenting on them.
Senator Murray. I will just say I just still am outraged at
the comments that were recorded by President Trump where he was
bragging about kissing and groping and having sex with women
without their consent. Those kind of cuts would double down on
that type of behavior, and I would just say I hope one of the
first actions of this President is not to eliminate the very
funding that protects women against violence.
So let me just ask you this, Mr. Mulvaney. Have you
previously supported eliminating funding for VAWA?
Mr. Mulvaney. I voted against a lot of funding bills,
Senator Murray. I am not familiar if there was a specific one
on funding for VAWA.
Senator Murray. Well, let me just say, if confirmed, would
you commit today to oppose eliminating or cutting funding that
protects women from violence?
Mr. Mulvaney. My commitment has been as it has been all day
today, is to try to advise the President to the best of my
ability and then enforce the policies that he sets.
Senator Murray. Well, Mr. Chairman, as someone who has sat
in that chair and knows the numbers, I do not believe that you
can cut $10.5 trillion without having serious impact, as
Senator Sanders talks to us about all the time, on Medicare and
Medicaid and Social Security, but also on programs that are
extremely important to protecting people in this country, many
of them who were out on the streets last Saturday.
Chairman Enzi. Thank you.
That, I think, completes the first round. We will begin a
second round. Again, we have a deadline of 1:30 for completing
this round so that he can get ready for the Homeland Security
questions at 2:30. So I will begin the second round I hope with
a little easier question than some of them. How does this
hearing compare with the bar exam? [Laughter.]
Mr. Mulvaney. In fact, a good friend of mine and my law
school roommate is here. We took the bar exam together.
He came up to give me moral support, and I pointed out to
him it was very similar to taking the bar exam, except it is on
television and my mom and dad are watching this. So that does
make it a little different. [Laughter.]
Chairman Enzi. Yes. Well, again, we appreciate your
willingness to serve. And one of the things that this Committee
has been working on is trying to come up with a budget process
that will actually make a difference. One of the problems that
we noted was that the President's budget is not the same as the
congressional budget, which is not the same as the
appropriations spending, which is not the same in some of the
departments to any of those. And after we looked at it, we kind
of came up with the impression that maybe that was intentional
so that nobody could follow the dollars.
So I hope that you would agree that it would be helpful to
harmonize the format of the President's budget submission with
the congressional budget, with the appropriations budget, and
particularly with the Department of Defense so that--they have
not been able to have a clean audit yet, and I hope you would
agree with that.
Mr. Mulvaney. It goes deeper than that, actually, Mr.
Chairman, I think. We did not get a chance to talk today about
the DATA Act and some of the reforms that we tried to be put in
place on a bipartisan basis. It is almost as if the computer
systems in the agencies are set up to not even allow the men
and women working there to understand how the money is getting
spent. So you are right, there will be a lot of structural
reforms that we could put in place that OMB could drive in
order to make it easier to understand how the Government works.
We are living in an age of big data, and then here we are
as the Federal Government, and we probably have some of the
best big data available anywhere, but we cannot use it because
no one can share it or read it.
Chairman Enzi. Another one of the things that we have
talked about is having a capital budget. What we found out was
that we do not even know what the Federal Government owns, let
alone how long it will last and when we need to replace it.
And, of course, we replace everything out of cash. So what do
you think about having a capital budget?
Mr. Mulvaney. I remember when I got here, Senator, and I
had been familiar with budgets in one of my businesses, and
remember remarking, ``There is no capital budget. There is no
budget versus actual. There is no this year versus last year.''
I think ultimately you can find them deep, deep down in the
appendices.
But one of the things I struggled to sort of explain to my
friends who were still in the private sector that the
Government budget process is similar to the private sector
budgeting that many of us were familiar with before we got here
in the word only. They both use the word ``budget'' but the
system they describe is entirely different. Not to say that you
could entirely run the Government like a business or that you
could budget for it like a business, but there are some
structural inefficiencies into the way our budget and
appropriations system run that could benefit from more exposure
to outside forces.
Chairman Enzi. I look forward to working with you on that.
We have talked a little bit about having a debt-to GDP number
as some guardrails to work into the future to get to that
balanced budget and to keep our Government afloat. And Senator
Kaine has been a strong advocate on that. We had a lot of
bipartisan things that we thought could help to straighten
things out.
Another thing was biennial budgeting. Since we do not seem
to be able to make it through the process every year, maybe we
could make it through once every 2 years. And, of course, one
of the provisions that I put out there was one of having the
budgets divided into--the 12 budgets into two halves so that we
do the six tough ones right after an election and the six easy
ones just before an election.
Do you have any ideas on things that we might do with the
budget?
Mr. Mulvaney. Yes, sir, I will always remember that
conversation because you put a House Member in the very, very
difficult situation of having to admit that the Senate bill
might be better than the House bill.
I was a cosponsor of the biennial bill in the House and was
very intrigued by your comments and your ideas about taking
that 2-year budget and bifurcating it so you had rolling
appropriations bills of six each year for 2 years and allowing
the appropriations process to function, giving the
appropriations process the deference and the respect that it
deserves, at the same time doing what biennial budgets do,
which is to increase the horsepower available to do oversight
on the budget process and on the appropriations process. So I
was very enthusiastic about that and look forward to extolling
the praises of that to the President, if given the chance.
Chairman Enzi. Well, when you are confirmed, I look forward
to working with you on all of these things and hope that we can
pull the Committee together for some good bipartisan
suggestions for ways that will help to improve knowing where we
are and where we are going.
Senator Sanders.
Senator Sanders. Thank you, Mr. Chairman.
Congressman, my friends in the House have said that you are
honest and a straight shooter, and I think that is how you have
presented yourself today, and I appreciate that.
Mr. Mulvaney. Thank you, Senator.
Senator Sanders. Let me ask you a philosophical question
because, if selected, if appointed, you will be a key adviser
to the President. As I mentioned earlier, the President made a
cornerstone of his campaign his belief that Social Security,
Medicare, and Medicaid should not be cut in any way. He said it
over and over again, and I suspect he won the election based on
that promise.
You disagree with him, and that is certainly your right.
You believe we should raise the retirement age. You have voted
over and over again to cut Social Security in one way or
another.
When you talk to the President about Social Security,
Medicare, and Medicaid, do you tell the President that it is
more important that he keep faith with democracy, keep faith
with what he told the American people, or should he acknowledge
that he lied and then change his views and cut Social Security?
What is----
Mr. Mulvaney. Senator, I have no reason to believe that the
President has changed his mind from the statements he made
during the campaign. As we have talked about here today,
though, my job is to do exactly what you just said in your very
kind introduction, which is to be completely and brutally
honest with him about----
Senator Sanders. Do you believe then that the President
will keep his word and not cut Social Security,
Medicare, and Medicaid?
Mr. Mulvaney. I have no basis right now for telling you
what the President of the United States is thinking. I know
what I want to be able to do as the OMB chairman, which is lay
out the facts----
Senator Sanders. But my question was--and it is an
interesting question, because you do advise the President on
budget. But it is a deeper sense. You know and I know and
everybody here knows, no matter what our politics may be, there
is a lot of disgust with politics in America today.
People run for office, they say one thing; they get
elected, they do something else.
Would you tell the President that it is more important to
keep his word, keep faith with the American people, or do what
you think is better policy? That is my question.
Mr. Mulvaney. It is a fair question, Senator. I think you
are probably asking the wrong person. I do not think it is the
role of the Director of the Office of Management and Budget to
advise the President on that. My role would be to advise him on
the financial and economic ramifications of the decisions he
makes.
Senator Sanders. I think close advisers to the President
will advise him on many things.
All right. Let me ask you this. You know, we have talked a
lot today about the deficit and the debt. Important issues.
What we have not talked about is the grotesque level of income
and wealth inequality in America. What we have not talked about
is that from 1985 to 2013 there has been a massive transfer of
wealth from the middle class to the top one-tenth of 1 percent.
Okay?
My question is: When we talk about the budget, we have
multi-billionaires like Donald Trump who proudly tell the
American people he has not paid a nickel in Federal taxes. And
yet we have people talking about cutting Social Security,
Medicare, and Medicaid. Do you think it is more important that
we tell billionaires like President Trump and others, that we
tell large multinational corporations like General Electric and
others, who in a given year did not pay a nickel in Federal
taxes because they harbor their money in the Cayman Islands and
elsewhere, do you think it is more important to tell the rich
and the powerful that maybe they should start paying their fair
share of taxes before we cut Social Security, Medicare, and
Medicaid or the Violence Against Women Act or defund Planned
Parenthood?
Mr. Mulvaney. Senator, I think the most important thing to
tell people is the truth, which is what I see my role being.
Senator Sanders. Is it true, Congressman, that over the
last 30 years we have seen a massive shift in wealth from the
middle class to the top one-tenth of 1 percent? Is that true?
Mr. Mulvaney. I will not split hairs with you on what the
term ``massive'' means, but if you give me a chance, I will
agree with you and say that I do believe that income inequality
is growing and it is unhealthy----
Senator Sanders. Well, there has been--well, right, we can
argue about what ``massive'' means. It is trillions of dollars.
Right now you have the top one-tenth of 1 percent owning almost
as much wealth as the bottom 90 percent. So my question is:
Given that massive, grotesque level of income and wealth
inequality, and having people like President Trump not paying a
nickel in Federal taxes, and then having people wanting to cut
programs for the elderly or the sick and the poor, don't you
think maybe we would want to go to the very, very wealthy, the
top one-tenth of 1 percent, and maybe to large corporations
that do not pay a nickel in taxes?
Mr. Mulvaney. Senator, I welcome the philosophical
conversation. I did enjoy the conversation in your office and
look forward to doing it again. If you ask me about the
disparities between the most wealthy and the worst off, I am
more concerned in the wealth that is controlled by the folks
who do not have----
Senator Sanders. But that has shrunk--the middle-class
wealth has shrunk. In fact, from 1985 to 2013, the bottom 90
percent has seen its share of wealth go down from 35 percent to
22.8 percent. That is a huge contraction of wealth for the
middle class, is it not?
Mr. Mulvaney. And I think what you saw on Saturday is
President Trump's ideas on how to fix that problem.
Senator Sanders. No. What I saw on Sunday were millions of
people saying that we do not want more tax breaks for
billionaires.
Mr. Mulvaney. I said Saturday. I meant Friday. I apologize.
Senator Sanders. Okay. Thank you very much.
Mr. Mulvaney. Thank you, Senator.
Chairman Enzi. Senator Whitehouse.
Senator Whitehouse.. Thank you, Chairman.
Congressman, let me show you----
Mr. Mulvaney. You have another chart for me?
Senator Whitehouse [continuing]. Another chart, in the
grand traditions of Kent Conrad, who used to be a chart-master
here. So this is a fairly self-explanatory chart. Going up this
axis is life expectancy, starting at 72 years of life up to 86
years of life. And across the bottom is the amount that the
society spends on health care, going from zero dollars per year
per capita to $9,000 per year per capita. And the thing that I
take away--this is OECD data from 2014. It is the latest we
have. What I see in this graph is these boxes right here, the
ones that I have shaded lightly just now with my handy-dandy
little pen, that covers--if you are in that box, you have a
country whose life expectancy is between 80 and 84 years. And
if you are in that box, your per capita expenditure on health
care is $3,000 to $5,000. And as you can see, the bulk of our
economic competitors are in that box. And here we are, way the
heck out there.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Now, I am a believer in American exceptionalism, but not in
this way, because our life expectancy is equivalent to like
Czechoslovakia and Croatia. That is not where it should be
compared to all of our competitor economies. And our spending
is worse than Switzerland and the Netherlands, which are the
least efficient and most expensive per capita health care
systems among those OECD nations.
So it seems to me that it should not be asking too much of
us to try to get into a place where we are competitive with
England and France and Germany and Australia and Austria and so
many other countries who manage to provide good health care to
their populations at a reasonable cost.
So with that background, I think what I am trying to urge
you here is that when you go back to our other graph, everybody
is super excited on the Republican side about figuring out how
you cut the health programs, block grant in Medicaid so you can
cut it, let fewer people on Medicare so you can cut it, reduce
benefits so you can cut it. But it seems to me that if this is
really going to be your focus, even though it is a small number
than all the tax stuff going out the back door that we already
talked about to special interests mostly, or largely, then in
addressing that number, trying to figure out how we get to be
more like what so many other civilized and economically
developed societies have figured out how to do, which is to
improve our Nation's life expectancy and reducing the cost of
care, should be a prime mechanism in making that adjustment
with that number.
And, you know, the whole prospect of delivery system reform
is making progress. The two largest primary care providers in
Rhode Island have reduced their per capita expenditure for
their patients, one by $4 million in a year, the other by $24
million over 3 years. That is not big money for an OMB guy, but
in a small State, that is real money, and those are real
reductions in cost. And they were accompanied by better service
to the patients. They were accompanied by having nurse managers
on at night to take phone calls. They were accompanied by being
engaged more with the patient and making sure that they stayed
healthy--a little bit like the article in the recent New Yorker
by Atul Gawande, that primary care stuff works if people are
compensated in the right way and have the right flexibility to
actually treat their patients as human beings and not just as
ways to grind the machine for money, and everybody is better
off.
So I am urging you very, very strongly that in your
position you focus on that. I know our friends want to have all
this political brouhaha about repealing Obamacare. That is a
fine fight. If you want to have it, great, good luck to you.
You have not got an alternative. Everything is a complete
wreck, as I can tell, on your side of the aisle in terms of
trying to generate an alternative. If you want to drive into
that wreck, great. But I think if you pay attention to delivery
system reform, pay attention to increasing the ways we improve
the quality of care and report the quality of care, increasing
information in the health care space, and increasing the way in
which we compensate doctors for keeping their people healthy,
not only will you make a big difference on that graph, not only
will you bring down what you say is the biggest cost in the
out-years, which is our health care expenditure, but you will
also find an open lane with all of us, because there really is
room for progress there.
Could you comment?
Mr. Mulvaney. I could make a lot of comments. It is always
nice to find another graph fanatic, and I can tell I am going
to look forward to working with you, should you confirm me. You
and I may disagree on the conclusions, but I would enjoy going
through the process.
If I was going to agree or disagree with something, I would
like to take the graph down to the President, along with the
other one, to show him. But I would hope you would understand
that your graph does have some weaknesses in it. It assumes a
direct causal effect between the two components on the graph,
and I think you might agree that there are other things that
may contribute to life expectancy at birth in the United States
of America other than just health care.
Chairman Enzi. Senator Kaine.
Senator Kaine. Thank you, Mr. Chair. First, two items for
the record. I would like to put into the record a chart from--
it was published in the Washington Post, but the source is the
Federal Reserve Bank of St. Louis showing that the Federal
workforce is at its lowest as a percentage of the total non-
farm workforce in 70 years.
Chairman Enzi. Without objection.
[The chart follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Kaine. And, second, a CBO report, Budgetary and
Economic Effects of Repealing the Affordable Care Act.
Chairman Enzi. Without objection.
[The report follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Kaine. Congressman, to follow up on an answer that
was right at the end of my first line of questioning, I was
asking you about climate change, and from the look on your
face, I kind of thought like you were thinking, ``Wait a
minute. I am the OMB guy.'' I just wanted to come back to it.
We spend a lot of money dealing with climate-related
issues: storm relief from Superstorm Sandy, rewriting the
Federal Flood Insurance Program, dealing with sea level rise in
Virginia and South Carolina, military budgets that try to move
infrastructure around because of sea level rise or drought or
other climate conditions. That was why I asked you the
question, and I asked you just to agree or disagree with
something that actually had a couple of facts in it. Climate
change, driven partly by human-generated CO2
emissions, is a huge risk. You disagreed with my premise, my
factual premise. That was your statement. Do you disagree that
there is climate change? Do you disagree that it is driven
partly by human-generated CO2 emissions? Or do you
disagree that it is a huge risk? Or do you disagree with all
three of those things?
Mr. Mulvaney. Let me see if I can break that one down.
Again, as much as I enjoy the conversation, I still keep trying
to come back to the issue of how this relates to OMB, and I
think I found it, Mr. Kaine----
Senator Kaine. Yeah, because you will put these investments
in the budget or not.
Mr. Mulvaney. Well, and what you have just described are
costs, right? Or benefits, depending on the side of the
equation that you are under. And what I see my job as doing is
analyzing the costs and the benefits of various regulatory
policies, various legislation. If the House or the Senate were
to pass climate change regulation, it would fall to the OMB to
brief the President on those issues, and I would see that one
of the roles that I would have is to lay out the costs and the
benefits to the President.
Again, my opinion may enter into the analysis a little
bit----
Senator Kaine. Well, here is why I think it enters----
Mr. Mulvaney [continuing]. But for the most part, I do not
think it does.
Senator Kaine. Here is where I think it enters in. If you
do not believe in climate change, say right now somebody does
not, you are not going to be proposing investments to help
military bases deal with the effects of climate change.
Mr. Mulvaney. Yeah, but I do not know----
Senator Kaine. If you do not believe in the fact, you will
not be proposing budgetary allocations to deal with it. So I am
curious. Just on this factual question, do you accept that
climate change is caused by human activity, at least in part,
and that poses a risk?
Mr. Mulvaney. That is the straightforward question. I am
sorry I did not--if that is what you are getting at, because I
have had this exact same conversation with Mr. Sanders. I
recognize the fact there is some science that would indicate
that. I am not yet convinced that it is a direct correlation
between manmade activity and the change in the climate, which I
do believe is real.
Senator Kaine. Thank you for answering the question.
Mr. Mulvaney. You are welcome.
Senator Kaine. Did you have anything to do with the
President's first Executive order that increased fees on low-
and moderate-income home buyers who get loans through the FHA
by about $500 a year?
Mr. Mulvaney. No, sir.
Senator Kaine. Now let me ask you a question that is a hard
question, but it is a very low bar for an answer, because I
have asked witnesses this for 4 years, Obama nominees, outside
witnesses, Republican-called nominees. I have not yet gotten a
coherent answer--even a coherent one that I disagreed with. We
talk about debt and a lot of your job at OMB is producing
budgets that will have effect on deficit and debt.
What level of debt is too dangerous? How do you look at
that question? When I was a Governor, we never looked at a
number, just, you know, $20 trillion, that is too dangerous. We
looked at ratios. We looked at a ratio of debt to State GDP, or
we looked at a ratio, as the Chairman said, of debt service
payment to outlay. But when I asked from Janet Yellen to every
witness that appears before this Committee, what level of debt
is acceptable and what level of debt is dangerous, nobody gives
me a coherent answer. I would like to hear how you are going to
approach that question as you prepare budgets.
Mr. Mulvaney. Let me see if I can do that, because I think
I got asked earlier--you may have been out of the room. There
is probably some disagreement as to the specific level amongst
some of the academic research that I have seen. I have seen
numbers ranging as low as 65 percent of GDP to 105 percent of
GDP.
Senator Kaine. And that is for publicly held debt to GDP?
Mr. Mulvaney. Correct. I think we are talking about the
same thing. And it seems like the sweet spot, for sake of the
discussion, is about 85 percent, which is about where we expect
to be under the current CBO projections in roughly 6 or 7
years.
Senator Kaine. If we make no changes.
Mr. Mulvaney. That is correct. Then beyond that, then you
start to really--you will see some evidence of the economic
concept of crowding out at any level of debt, because every
level of private dollars that leaves the private marketplace to
go into the public debt markets is not available for private
investment. So you see some crowding out on dollar one. But the
real question, I think your question, is: At what point does
that sort of really start to negatively impact? I can put it to
you there is a negative impact now because we are spending $400
billion this year on interest instead of spending it on
programs that you all might prioritize over interest.
Senator Kaine. But States send money on debt and families
spend money on debt.
Mr. Mulvaney. Exactly. So I think the best I can do to
answer your question is say that the evidence that I have seen
so far would indicate that that point of no return may be 85
percent of GDP.
Senator Kaine. Thanks for answering the question.
Thanks, Mr. Chair.
Chairman Enzi. Thank you.
Senator Merkley.
Senator Merkley. Thank you very much, Mr. Chairman.
I wanted to turn to the Consumer Financial Protection
Bureau. I believe that there was a time at which you were quite
critical of the CFPB, stating that--and I have got to get the
right page in front of me, but if I paraphrase, that it is a
sad, sick joke.
Now, millions of people have gotten reimbursements back
because the CFPB has held financial agencies accountable to the
law. They have returned approximately $12 billion to consumers,
consumers who thought they had nobody in their square fighting
for them, making sure that there were honest dealings with
financial organizations. Do you still believe that CFPB is a
sad, sick joke?
Mr. Mulvaney. Yes, sir, I do, and I will be happy to tell
you why. It is to me, sir, one of the most offensive concepts,
I think, in a representative Government, which is an almost
completely unaccountable Government bureaucracy, Government
regulatory agency. One of the most frustrating experiences I
have had since I have been in Congress is people walking into
my office and asking me for help and having me look them in the
eye and say, ``I am sorry. There is no way under any
circumstance that I can help you.'' And that is what I have
been forced to do with the CFPB, because they are off
appropriations, because we do not budget for them, because they
are run by essentially a one-person dictator who believes he
cannot even be fired by the President but for cause.
We have created, perhaps inadvertently, the very worst kind
of Government entity.
Senator Merkley. So let me stop you there and just say I
understand you do not like the structure of the CFPB.
Mr. Mulvaney. Yes, sir.
Senator Merkley. But when you look at the fact that they
have returned millions of dollars from organizations that
essentially admitted--because these were largely settlements--
admitted that they had misled borrowers or cheated them outside
the law, isn't that a good thing to have somebody holding those
folks accountable?
Mr. Mulvaney. It is a fair point, Senator. I would suggest
to you there is no evidence that the same or a better result
would have been reached under the regime that existed
beforehand. As you know, the CFPB essentially took over
functions that were already being performed by various
regulatory agencies, and there is evidence that the CFPB has
actually failed miserably in some very high circumstance--or
high-profile circumstances, such as the Wells Fargo debacle
where I think CFPB may have been resident in Wells Fargo for 4
years and still failed to discover the wrongdoing that was
taking place there.
Senator Merkley. Recently, the CFPB is suing Navient, which
it says, and I quote, ``misled borrowers, illegally driving up
loan repayment for millions of students.'' Do you consider that
to be a positive thing that we have an organization that is
taking on actions that are deliberately misleading our students
who have enormous loan debts?
Mr. Mulvaney. Oh, I absolutely do believe it is a good idea
to have an organization that would enforce the law. I would
question whether or not the CFPB is the best way to do that,
question whether or not that enforcement would have taken
place. And I would remind everyone who discusses this issue
that what is alleged--and I have no facts and circumstances to
know one way or the other--is already against the law and would
be against the law regardless of whether or not the CFPB
existed.
Senator Merkley. A lot of the challenge that we have in
that in ordinary transactions companies have arbitration
clauses that make it basically impossible for them to have any
leverage. If you are familiar with how an arbitration clause
works, the individual has to go to someone selected by the
company, and that individual does not get business unless they
find on the company's behalf. So it is a terribly rigged
system.
But here we have a way, an effective strategy, that has
taken on misdeeds in all kinds of groups. You say they did not
act fast enough on Wells Fargo, but they have acted more
quickly than any other agency. And you also said that just the
same would have happened in the previous period, if we compare
it before we had the CFPB. But that is just not the case. We
did not get this kind of action on behalf of consumers before.
We did not get $12 billion returned to 29 million consumers.
So given there are 29 million people out there who have
benefitted--you have a dispute over the structure of the
funding and the structure of the board. I hear that. But isn't
that kind of looking at the tree and not the forest?
Mr. Mulvaney. No, sir. I think that there is a fundamental
objection, a principled objection to an agency that is not
accountable to the people that it is supposed to serve. So----
Senator Merkley. But it actually was designed this way, in
fact, so it would be accountable, and you have to understand
that the reason why is because ordinary citizens have very
little power compared to the fabulous power concentrated in
Wall Street. Large financial institutions do not want there to
be a consumer watchdog that holds them accountable to the law.
We finally have that consumer watchdog. We know what would
happen if we had structured the funding differently. You would
have stepped on the air hose--not you personally, but Congress,
with the enormous clout of Wall Street pushing them, would have
stepped on the air hose and shut them down. And we have seen
the--you want a type of board that has worked miserably for all
kinds of other organizations where there is no quorum or it is
a 2-2 tie and no action. This has actually worked. I mean, if
you take a look at how to create an effective organization
fighting for ordinary working Americans, I mean, this is it.
Mr. Mulvaney. Senator, all I can tell you is I have had
probably more complaints about the CFPB in my office from small
local banks and credit unions, which I am not from a big bank
area, than every other Government agency put together. So I
would respectfully disagree with you, sir.
Senator Merkley. Well, I can tell you----
Chairman Enzi. Senator Merkley, you----
Senator Merkley. I have been gaveled down. But it is an
important debate because the President said he campaigned on
fighting for working people, and this is working for working
people, and it sounds like you are going to go in and say,
``No, do not help working people. Help big banks.''
Chairman Enzi. I am happy to have that discussion with you
as well. I am the one who got an Inspector General for the CFPB
and found out that he had no right to inspect.
Senator Merkley. I would love to----
Chairman Enzi. There is no oversight by Congress----
Senator Merkley. I would love to have this Committee have a
full examination, including inviting the public to come in and
testify about the many times that this has been the only way
that they have gained justice.
Chairman Enzi. We will be doing something in that area, I
assure you.
I want to thank the witness for his testimony and all the
people that showed up to ask questions today.
I also have several letters that I want to make a part of
the record in support of the nominee. Without objection.
[The letters follow:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Enzi. I want to thank the witness.
As information, all Senators' questions for the record are
due by 6:00 p.m. today, with a hard copy delivered to the
Committee clerk in Dirksen 624. Under our rules, the witness
will have 7 days from receipt of our questions to respond with
answers.
With no further business, the hearing is adjourned.
[Whereupon, at 1:21 p.m., the Committee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
EXECUTIVE BUSINESS MEETING ON THE NOMINATION OF THE HONORABLE MICK
MULVANEY, OF SOUTH CAROLINA, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT
AND BUDGET
----------
THURSDAY, FEBRUARY 2, 2017
United States Senate,
Committee on the Budget,
Washington, DC.
The Committee met, pursuant to notice, at 11:11 a.m., in
Room SD-608, Dirksen Senate Office Building, Hon. Michael B.
Enzi, Chairman of the Committee, presiding.
Present: Senators Enzi, Grassley, Sessions, Crapo, Graham,
Toomey, Johnson, Corker, Perdue, Gardner, Kennedy, Boozman,
Sanders, Murray, Stabenow, Whitehouse, Warner, Merkley, Kaine,
King, Van Hollen, and Harris.
Staff Present: Eric Ueland, Republican Staff Director; and
Warren Gunnels, Minority Staff Director.
OPENING STATEMENT OF CHAIRMAN ENZI
Chairman Enzi. I will call this meeting to order.
I want to thank you for meeting today to consider the
nomination of Representative Mick Mulvaney to be the Director
of the Office of Management and Budget. I believe that Mr.
Mulvaney's experience as a small business owner and Member of
Congress makes him uniquely qualified to lead the Office of
Management and Budget. He is a proven budget hawk that has been
vocal about our need to rein in Government overspending and
debt. I strongly support Mr. Mulvaney and will be voting
favorably to report his nomination.
Now, Committee practice and precedent allow for statements
from the Chairman and Ranking Member before moving immediately
to a vote. Other Committee members may submit statements for
the record prior to 6:00 p.m. this evening. This is how Budget
Chairmen from both sides of the aisle have conducted the
Committee's previous nomination hearings, and today's hearing
will follow those precedents.
Committee members have had a month to review Representative
Mulvaney's background and financial information. He complied
with Committee rules by submitting all required documents on
time; he responded in a timely fashion to all pre- and post-
hearing questions; and he participated in a thorough public
hearing in which members were allowed two full rounds of
questioning.
There are many pressing budgetary issues requiring the
attention of a new administration. Foremost among those is the
staggering $20 trillion debt burden that America now shoulders.
We need the OMB Director confirmed as quickly as possible so
that the administration can confront these hard fiscal
realities and explain to us how they are going to solve them.
The nominee has received full consideration by this Committee
and deserves a vote today.
Would Senator Sanders like to make a statement?
Senator Sanders. I would and I will. I would hope--Mr.
Chairman, given the importance of this nomination, this nominee
will be the most important one that this Committee deals with.
I would hope that members on both sides would be able to make
brief statements given the importance of this nomination. Is
that something that you would consider?
Chairman Enzi. Actually, the precedent on this has been for
people to submit their statements, and they become a part of
the record.
Senator Sanders. Well, I think that is unfortunate because
I think this is a nomination of significant consequence, and I
know that members on my side would like the opportunity to say
a few words. I do not know about your side.
Chairman Enzi. I appreciate that. I delayed this vote by a
day so that you would have the opportunity to review the FBI
files.
Senator Sanders. Which I did.
Chairman Enzi. I would like to get on with it. So do you
want to give your statement?
OPENING STATEMENT OF SENATOR SANDERS
Senator Sanders. I do, and the essence of my statement is
really less about Mick Mulvaney, who seems to be an honest and
straightforward gentleman who has an extreme right wing
economic point of view, which is his prerogative. But what
disturbs me very much about this nomination is that virtually
everything economically that Mr. Mulvaney stands for and has
fought for is in direct contrast to what President Bush told
the American people----
Senator Murray. Trump.
Senator Sanders. And that bothers me very much. President
Bush, when he campaigned----
Staff. Trump.
Senator Sanders. Trump, Trump. Thank you. Sorry.
[Laughter.]
Senator Sanders. President Trump, when he campaigned, when
he campaigned for his office, said to the elderly and working
people that he was going to stand with them, that he would not
cut Social Security, that he would not cut Medicare, that he
would not cut Medicaid. And yet you have a nominee who prides
himself, who is a deficit hawk, who has said over and over
again that he will do exactly the opposite of what President
Trump campaigned on. As I mentioned before, on November 3,
2015, Trump said, ``I will save Social Security, I will save
Medicare. People love Medicare. I am not going to cut it.''
But Mr. Mulvaney has a different point of view. When he
talked about programs like Social Security, he called it a
``Ponzi scheme.'' He talked about raising the retirement age of
Social Security to 70 years of age. Now, that is his point of
view, and as a Congressman, more than entitled to hold that
point of view. But it is not the point of view that President
Trump talked to the American people about.
The truth is we have a major retirement crisis in this
country today. Half of older workers in America, not widely
talked about, have zero in their savings account as they
prepare for retirement. And yet we have a nominee who thinks it
is appropriate to cut Social Security and a President who has
nominated that gentleman.
In 2015, Congressman Mulvaney led the effort to shut down
the Federal Government in order to deny 2.5 million women the
health care they need by defunding Planned Parenthood.
Last week, Congressman Mulvaney told this Committee that he
doubted that human beings are contributing to climate change,
in direct opposition to what virtually the entire scientific
community believes. And they believe that climate change is a
great threat to this planet.
Finally, Mr. Chairman, there is the issue of Mr. Mulvaney's
taxes. After Congressman Mulvaney was nominated to become the
next OMB Director, it was revealed that he failed to pay over
$15,000 in taxes for a nanny that he employed from 2000 to
2004. Here is what Congressman Mulvaney wrote about this issue
in response to a question I asked him on January 11th, and he
said, and I quote: ``I have come to learn during the
confirmation review process that I failed to pay FICA and
Federal and State unemployment taxes on a household employee
for the years 2000 to 2004. Upon discovery of that shortfall, I
paid the Federal taxes. The amount in question for Federal FICA
and unemployment was $15,583.60, exclusive of penalties and
interest, which are not yet determined. The State amounts are
not yet determined.''
Now, Mr. Chairman, this is a very serious issue. As you
will recall, 8 years ago Senator Daschle withdrew his
nomination as Secretary of HHS after it was discovered that he
failed to pay taxes for one of his domestic workers.
Mr. Chairman, on this issue I agree wholeheartedly with
Minority Leader Schumer, who said, ``When other previous
Cabinet nominees failed to pay their fair share in taxes,
Senate Republicans forced those nominees to withdraw from
consideration. If failure to pay taxes was disqualifying for
Democratic nominees, then the same should be true for
Republican nominees.''
So, in conclusion, we have a nominee whose ideology is in
direct contrast to what President Trump ran on. Trump told
working people and seniors he would not cut Social Security,
Medicare, and Medicaid. Congressman Mulvaney is on record as
wanting to cut Social Security, Medicare, and Medicaid. So over
and beyond Mr. Mulvaney's, Congressman Mulvaney's
qualifications is the issue of whether we should be voting for
somebody whose views are in direct contrast to what the
President of the United States campaigned on.
Thank you, Mr. Chairman.
Chairman Enzi. Thank you, Senator Sanders. And I would be
remiss if I did not mention that the Secretary of the Treasury,
Mr. Geithner, did not pay personal income taxes and headed up
the IRS after being confirmed. So it is not--and on Daschle, I
do not think that it was Republicans that drove him out. It was
the thought of what was going to happen.
So Senator Sanders has requested a roll call vote, so we
will proceed to that now. ``No'' votes can be by proxy, but
``aye'' votes have to be present.
The question before the Committee is the nomination of Mick
Mulvaney to be the Director of the Office of Management and
Budget. A quorum is present. I support the nominee and urge a
``yes'' vote. I move that the Committee report this nomination
to the Senate with the recommendation that the nominee be
confirmed. Is there a second?
Senator Grassley. I second.
Chairman Enzi. There is. The clerk will call the roll.
The Clerk. Mr. Grassley.
Senator Grassley. Aye.
The Clerk. Mr. Sessions.
Senator Sessions. Aye.
The Clerk. Mr. Crapo.
Senator Crapo. Aye.
The Clerk. Mr. Graham.
Senator Graham. Aye.
The Clerk. Mr. Toomey.
Senator Toomey. Aye.
The Clerk. Mr. Johnson.
Senator Johnson. Aye.
The Clerk. Mr. Corker.
Senator Corker. Aye.
The Clerk. Mr. Perdue.
Senator Perdue. Aye.
The Clerk. Mr. Gardner.
Senator Gardner. Aye.
The Clerk. Mr. Kennedy.
Senator Kennedy. Aye.
The Clerk. Mr. Boozman.
Senator Boozman. Yes.
The Clerk. Mr. Chairman.
Chairman Enzi. Aye.
The Clerk. Mr. Sanders.
Senator Sanders. No.
The Clerk. Mrs. Murray.
Senator Murray. No.
The Clerk. Mr. Wyden.
Senator Sanders. No, by proxy.
The Clerk. Ms. Stabenow.
Senator Sanders. No, by proxy.
The Clerk. Mr. Whitehouse.
Senator Whitehouse. No.
The Clerk. Mr. Warner.
Senator Warner. No.
The Clerk. Mr. Merkley.
Senator Merkley. No.
The Clerk. Mr. Kaine.
Senator Kaine. No.
The Clerk. Mr. King.
Senator King. No.
The Clerk. Mr. Van Hollen.
Senator Van Hollen. No.
The Clerk. Ms. Harris.
Senator Harris. No.
Chairman Enzi. The clerk will report.
The Clerk. Mr. Chairman, 12 yeas, 11 nays.
Chairman Enzi. The nomination is reported with the
recommendation that the nominee be confirmed. Thank you for
your time. Statements can be submitted until 6:00 p.m. tonight.
The meeting is adjourned.
[Whereupon, at 11:38 a.m., the Committee was adjourned.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]