[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
THE PRESIDENT'S 2020 BUDGET
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HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, D.C., MARCH 12, 2019
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Serial No. 116-5
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Printed for the use of the Committee on the Budget
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COMMITTEE ON THE BUDGET
JOHN A. YARMUTH, Kentucky, Chairman
SETH MOULTON, Massachusetts, STEVE WOMACK, Arkansas,
Vice Chairman Ranking Member
HAKEEM S. JEFFRIES, New York ROB WOODALL, Georgia
BRIAN HIGGINS, New York BILL JOHNSON, Ohio,
BRENDAN F. BOYLE, Pennsylvania Vice Ranking Member
RO KHANNA, California JASON SMITH, Missouri
ROSA L. DELAURO, Connecticut BILL FLORES, Texas
LLOYD DOGGETT, Texas GEORGE HOLDING, North Carolina
DAVID E. PRICE, North Carolina CHRIS STEWART, Utah
JANICE D. SCHAKOWSKY, Illinois RALPH NORMAN, South Carolina
DANIEL T. KILDEE, Michigan CHIP ROY, Texas
JIMMY PANETTA, California DANIEL MEUSER, Pennsylvania
JOSEPH D. MORELLE, New York WILLIAM R. TIMMONS IV, South
STEVEN HORSFORD, Nevada Carolina
ROBERT C. ``BOBBY'' SCOTT, Virginia DAN CRENSHAW, Texas
SHEILA JACKSON LEE, Texas KEVIN HERN, Oklahoma
BARBARA LEE, California TIM BURCHETT, Tennessee
PRAMILA JAYAPAL, Washington
ILHAN OMAR, Minnesota
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
JIM COOPER, Tennessee
Professional Staff
Ellen Balis, Staff Director
Dan Keniry, Minority Staff Director
CONTENTS
Page
Hearing held in Washington D.C., March 12, 2019.................. 1
Hon. John A. Yarmuth, Chairman, Committee on the Budget...... 1
Prepared statement of.................................... 4
Hon. Steve Womack, Ranking Member, Committee on the Budget... 7
Prepared statement of.................................... 9
Russell Vought, Acting Director, Office of Management and
Budget..................................................... 11
Prepared statement of.................................... 13
Hon. Daniel Kildee, Member, Committee on the Budget, article
submitted for the record................................... 47
Hon. Steven Horsford, Member, Committee on the Budget, letter
submitted for the record................................... 76
Hon. Sheila Jackson Lee, Member, Committee on the Budget,
statement submitted for the record......................... 84
Hon. Barbara Lee, Member, Committee on the Budget, questions
submitted for the record................................... 89
Hon. Rosa L. DeLauro, Member, Committee on the Budget,
questions submitted for the record......................... 93
Hon. Daniel Meuser, Member, Committee on the Budget,
questions submitted for the record......................... 94
Answers to questions submitted for the record................ 95
THE PRESIDENT'S 2020 BUDGET
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TUESDAY, MARCH 12, 2019
House of Representatives,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to notice, at 10:00 a.m., in
Room 210, Cannon House Office Building, Hon. John A. Yarmuth,
[Chairman of the Committee] presiding.
Present: Representatives Yarmuth, Moulton, Higgins, Khanna,
Sires, Peters, Cooper, Doggett, Price, Scott, Kildee, Jackson
Lee, Morelle, Jayapal, Jeffries, Panetta, Lee, Omar,
Schakowsky, Horsford, Boyle; Womack, Woodall, Johnson, Flores,
Holding, Stewart, Norman, Hern, Meuser, Burchett, Roy,
Crenshaw, Smith, and Timmons.
Chairman Yarmuth. The hearing will come to order.
I want to welcome everyone to this hearing on the
President's budget submission and certainly welcome the Acting
Director of OMB, Russell Vought.
I will now make my opening statement and yield to myself.
I would like to welcome in Acting Director Vought. Thank
you for coming here today to testify on the President's 2020
budget proposal.
Let's dive right in. The purpose of this hearing is for us
to be the eyes and ears of the American taxpayers on the
priorities of the Trump Administration as we begin the budget
and appropriations process for 2020.
Unfortunately, when you look at the budget the Trump
Administration has produced, it is not responsible or even
usable. I described the President's first budget as a betrayal,
harsh words for a harsh budget that abandoned working Americans
and families.
The second proposal continued this pattern, relying on
extreme cuts to blunt the deficit-exploding impact of the
Republican tax scam at the expense of those same working
families and Americans.
Now, this third budget proposal offers more of the same. It
is a recipe for American decline and relies on a patchwork of
gimmicks, fantasy projections, and extreme cuts that forfeit
any responsibility for the well-being of the American people
and our nation.
What this Administration is saying to our constituents is
that the federal government will no longer have a role in
making sure we remain an opportunity-based society, that the
American Dream is out of their reach.
In 2020 alone, this proposal would have us do the
unthinkable: a 9 percent cut, not 5 percent as the White House
claims, in non-defense discretionary funds. Over the course of
the decade, it would slash non-defense discretionary spending
by more than $1 trillion, crippling our economic and national
security by disinvesting in education, public health, energy,
health care research, infrastructure, and activities directly
related to our national security, including homeland security,
diplomatic operations, veterans' health care, law enforcement,
food safety, disease prevention and control.
In short, it is a complete abandonment of our
responsibility to the American people, and it is intentional.
You cannot cut Medicare by a half a trillion dollars
without knowing it will hurt our nation's seniors.
You cannot cut Medicaid by a similar amount without knowing
it will result in families losing health care coverage.
You cannot cut student loans by more than $200 billion
without knowing it will make it harder, if not impossible, for
young people to go to college.
You cannot cut nutrition assistance by more than $220
billion without knowing it will leave families without food to
put on the table.
And you cannot gut the EPA by more than 30 percent without
knowing it will make our air less safe and our water less
clean.
These cuts in the Trump budget are not a tightening of the
belt or a trimming of the fat or even a serious attempt at
reining in spending. They are extreme to a level that is
malicious, a level that is intended to do harm.
But that is not all. On top of all the damage done in the
name of so-called fiscal restraint, this budget calls for a
trillion dollars in additional tax cuts for the wealthy. This
is on top of the tax scam enacted in 2017 that showered tax
cuts on the rich and wealthy corporations while adding
trillions to our deficits.
None of it adds up or makes sense, which explains some of
the more creative aspects of the President's budget. The
Administration uses every gimmick, ``alternative projection,''
and accounting trick in the book to disguise its true
ramifications.
One of the most striking parts in this budget is the
inclusion of $165 billion for overseas contingency operations,
a stunning figure. Director Vought, you are not even trying to
hide this attempt to skirt the cap on defense funding and
obscure the true cost of military operations.
In your op-ed, you implore fiscal conservatives to accept
this gimmick as a backdoor way to supercharge defense spending
and avoid negotiating realistic and responsible budget caps for
both defense and non-defense funding.
I am sorry, but you do not get many points for being honest
about being dishonest. It does not work that way. This is a
gimmick, and it deserves the swift bipartisan dismissal with
which it has been met.
The only way we can begin a productive budget and
appropriations process is by committing to honest and realistic
budgeting and reaching an agreement to raise the caps for
discretionary spending.
It is my hope that through this hearing we can conduct an
open and honest examination of the priorities set forth by the
Trump Administration and begin to craft a budget that truly
reflects the needs and priorities of the American people.
Once again, I want to thank Acting Director Vought for
being here today. I look forward to your testimony.
I now yield to the Ranking Member.
[The prepared statement of Chairman Yarmuth follows:]
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Mr. Womack. Thank you, Mr. Chairman.
And thank you, Acting Director Vought for joining us today.
As this Committee works to craft a budget resolution for
the fiscal year ahead, we appreciate the opportunity to discuss
President Trump's budget and its spending priorities with you
today.
As you know, while the Constitution gives Congress the
power of the purse, funding the priorities of the American
people while addressing our nation's fiscal challenges is not
an easy task. It requires collaboration on both sides of the
aisle, both chambers of the Capitol, and both ends of
Pennsylvania Avenue.
This is particularly true when the American people have
sent a divided government to Washington, as they have for the
116th Congress. That is why hearing from the Administration
today is so important.
As the Congressional Budget Office warned earlier this
year, our nation is nearing a fiscal crisis. I would argue we
are already in one. It may not seem like one. The markets have
not responded yet, but I sense that there is some smoldering
going on that could lead to a potential raging fire, as it
were, regarding the nation's deficit and debt.
At our current spending levels over the next decade,
deficits will total $11.6 trillion, and the national debt will
rise to nearly $34 trillion. Over the same period, the share of
debt held by the American people will reach 93 percent of GDP,
the highest debt level since just after World War II.
We cannot continue down this path. We have to lead by
example, making touch choices necessary to reverse course.
While there is still much work to do to put our spending back
on a sustainable path, the President's budget takes steps in
the right direction.
It reduces the deficit by $2.8 trillion between 2020 and
2029, whereas under current law, annual deficits are nearing $1
trillion annually. In 2029, under this proposal, the annual
deficit will be lowered to $202 billion.
Further, this budget reduces the share of the debt held by
the public from nearly 80 percent of GDP to just over 71
percent of the GDP. That is a vast improvement from the
historically high debt levels projected for 2029 under current
law.
Additionally, there are a number of priorities I am pleased
to see in the budget. For example, the budget takes steps to
secure our borders and support our troops and veterans. As
someone who has served in the military, I believe ensuring the
safety and security of the American people is the most
fundamental purpose of the federal government, and I appreciate
the Administration's clear commitment to these priorities.
I also appreciate the Administration's focus in this budget
on improving the long-term health of the American people by
investing in lifesaving medical research, efforts to combat the
opioid epidemic, and reforms to improve our health care system.
As I have said before, our biggest threat to all of these
priorities and to the long-term security, health, and
prosperity of our nation is out-of-control mandatory spending.
Today mandatory programs account for 70 percent of all federal
spending and are projected to increase to 78 percent by 2029.
These programs have grown far beyond their intended size
and scope and have far exceeded what we can afford. Without
action not only will these programs crowd out resources for
other priorities, they will be unable to deliver the benefit
workers today expect for the future.
My colleagues on the other side of the aisle are choosing
to ignore that reality and introducing ideas for new mandatory
programs, while also looking to raise the Budget Control Act
spending caps for fiscal year 2020. As we move forward in the
budget process, I again ask: what is your plan to offset these
increases?
At our Members' Day hearing last week, we were pleased to
hear from the distinguished Majority Leader of the House, Mr.
Hoyer. It was a very productive discussion about the need for a
caps deal.
However, I notice we have not heard much from our friends
on the other side about how they would pay for such a deal. It
has been suggested that we should use the Ryan-Murray deal from
2013 as a model for a caps deal. If that is our benchmark, I
look forward to hearing recommendations for offsetting
increases in discretionary spending by addressing out-of-
control mandatory spending.
Mr. Chairman, before I yield back, as late as last night I
saw news that suggested that there is a debate about whether
the majority party even plans to do a budget. I want you to
know I feel your pain. I have been there.
But it is like asking if we are going to do our jobs, and I
know I am speaking to the choir a little bit with my friend,
the Budget Chairman, because we were in agreement on the budget
process changes that we were advocating last year in the Joint
Select Committee on Budget Process Reform.
I will say again it is a flawed and broken process. It
needs to change. We need budget process reform.
And with that, Mr. Chairman, I look forward to today's
discussion, and I yield back.
[The prepared statement of Steve Womack follows:]
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Chairman Yarmuth. I thank the Ranking Member, and I look
forward to working with you as we work through the issues of
the budget process reform, as we tried to do last year, very
collegially, I might add.
Thank you.
And if any other members have opening statements, they may
submit them, and they will be published in the record.
I now once again introduce the Acting Director of the
Office of Management and Budget, Mr. Russell Vought, and I
yield 5 minutes to him for his remarks.
The floor is yours.
STATEMENT OF RUSSELL VOUGHT, ACTING DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Vought. Thank you, Mr. Chairman.
Chairman Yarmuth, Ranking Member Womack, members of the
Committee, thank you for this opportunity to testify on
President Trump's fiscal year 2020 budget.
Yesterday I submitted my full statement for the record.
However, for my oral testimony today I just want to hit a few
key points.
Over the past two years, President Trump has unleashed the
American economy through his pro-growth agenda, which we have
coined ``MAGAnomics,'' resulting in a return to prosperity for
the American people.
Working alongside many of you on this Committee, President
Trump signed historic tax reform into law, marking the first
time in more than 30 years that our nation's tax code was
updated and improved. It provided much needed relieve to all
Americans, especially the middle class.
Throughout his Administration, President Trump has
implemented a robust regulatory agenda, resulting in small
businesses in the American economy saving more than $33 billion
in burdensome regulatory costs.
However, these great achievements will be challenging to
maintain if we do not get our fiscal house in order. Annual
deficits are continuing to rise and will exceed $1 trillion a
year. Interest payments on the national debt are projected to
exceed military spending in 2024.
The national debt nearly doubled under the previous
Administration and is now more than $22 trillion. This level of
debt is unsustainable and threatens the prosperity and economic
freedom of future generations.
The President's commitment to fiscal responsibility has
been outlined in previous budgets, and again today he is
requesting more reductions to both discretionary and mandatory
spending than any other President in history.
Yet each time this President has called for fiscal
restraint and spending reform, he has been blatantly ignored.
Instead, those opposed to decreasing Washington spending have
called for large tax increases as a means to reduce deficits.
However, not only would this punish taxpayers, destroy
jobs, and slow America's economic engine, but it would also
ignore the reality of our current fiscal situation. Contrary to
fearful predictions of the passage of the historic tax reform,
revenues are increasing and are in line with 50-year historic
averages.
The problem is not that Americans tax too little. It is
that Washington spends too much.
This budget is yet another fiscally responsible and common-
sense spending plan from President Trump. I look forward to
working with members of this Committee and Congress and remain
hopeful that we can prove to the American people that their
government is capable of balancing the budget by prioritizing
efficient and effective spending.
Thank you for your time. I look forward to answering your
questions.
[The prepared statement of Russell Vought follows:]
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Chairman Yarmuth. I thank the witness.
And as is our pattern, the Ranking Member and I will defer
our questions until all of the other members have had their
chance.
So with that, I yield 5 minutes to the Vice Chairman of the
Committee, Mr. Moulton of Massachusetts.
Mr. Moulton. Mr. Vought, thank you very much for joining us
here today.
I want to share a quote from a prominent politician who has
talked about endless deficits and said that they would, quote,
``weigh the country down like an anchor and that we are on the
verge of a debt crisis.''
Do you know who said that?
Mr. Vought. Not----
Mr. Moulton. It was Speaker Paul Ryan in 2013. He was
commenting on the Obama Administration in the midst of the
fourth straight year of reducing the federal deficit as a
percentage of GDP.
In reality, how much have deficits and the debt exploded
due to the Republican tax law?
Mr. Vought. Deficits have certainly worsened in the first
two years, but over 10 years, we believe that deficits will
improve and that as a result of the tax cuts and the overall
economic program----
Mr. Moulton. You believe the deficits will improve?
Mr. Vought. Absolutely.
Mr. Moulton. That is interesting because the OMB
consistently has revised up its estimates since the tax law was
passed for how big the deficits will be.
Mr. Vought. Our economic program over the life of 10
years----
Mr. Moulton. Mr. Vought, is that true that you have revised
up your deficit estimate since the tax law was passed?
Mr. Vought. Our estimates have been revised to account for
the fact that the tax cut in the short term has led to an
increase in----
Mr. Moulton. So they have been revised up; is that correct?
Mr. Vought. In the short term, but not over the long term.
Mr. Moulton. Yes, they have been revised up.
So $1.9 trillion is the estimate that we have over 10
years. That is the estimate that you have produced. I am just
curious. How many of Mr. Trump's $8.6 billion walls could he
build with $1.9 trillion?
Mr. Vought. I have not done the math on that, sir.
Mr. Moulton. It is more than 220, 220, not 220 miles; 220
of his full walls.
Now, just to compare that to some Democratic priorities,
what do you think $1.9 trillion would do for education funding
in the United States? Would that make a difference in our kids'
lives?
Mr. Vought. We believe this budget fully funds what is
necessary to continue to educate our children. We have $50
billion----
Mr. Moulton. So that we can continue falling behind South
Korea, China, other competitors around the world in our
education standards? Is that what you would like to continue--
--
Mr. Vought. It is one of the reasons why we are putting
forward a different type of proposal. We have $50 billion in
school choice tax credits that can be done at both the public
level or at the private level. It is a paradigm shift that we
think is important.
We do not think that----
Mr. Moulton. But $1.9 trillion devoted to education, that
would not be important?
Mr. Vought. We believe that we need to fund the education
programs that work, that are efficient, that lead to student
outcomes that are beneficial, and we also think it is important
to look at different ways to be able to invest in our children.
We do not believe that a dollar spent necessarily equates
with a dollar of caring.
Mr. Moulton. Oh, I agree with you. There is no debate
there.
Mr. Vought. But it is a matter of who is doing the
spending. Our view is that parents and families, states and
localities can often do a better job of educating our children.
Mr. Moulton. Sometimes they can, but $1.9 trillion would
not help?
Mr. Vought. We believe we are fully funding----
Mr. Moulton. Would it help?
Mr. Vought.----what is necessary to educate our children to
invest in----
Mr. Moulton. Okay. That is all. It would not help.
How many years did President Trump claim it would take to
eliminate the national debt under his program?
Mr. Vought. The President made a commitment to the American
people to get our fiscal house in order----
Mr. Moulton. How many years did he say?
Mr. Vought.----and start the conversation.
Mr. Moulton. Do you know how many years?
Mr. Vought. And to be able to do it within eight years.
Mr. Moulton. You work for him, Mr. Vought. How many years
did he say?
Mr. Vought. He said he would work on getting a fiscal plan
within eight years.
Mr. Moulton. Eight years, right. Eight years, 2017 to 2024.
How high does the CBO project the budget deficit to be in 2024,
at the end of those eight years?
Mr. Vought. We will still be looking at trillion-dollar
deficits.
Mr. Moulton. Over a trillion dollars, over a trillion
dollars, surpassing the federal deficit during President
Obama's last year in office by nearly $500 billion.
I want to jump quickly to veterans. The budget quotes
President Trump's statement that, quote, ``it is our moral and
solemn obligation to demonstrate to our veterans our continuing
gratitude, unwavering support, and meaningful encouragement.''
Mr. Vought, how is cutting veterans' disability benefits by
rounding down cost-of-living increases consistent with this
statement?
Should we be making veterans pay for exploding deficits by
denying them the full cost-of-living adjustments?
Mr. Vought. Sir, this budget has incredibly high increases
for veteran spending. We have an eight----
Mr. Moulton. Then why are you decreasing the cost of
living? Do you think the cost of living in the United States is
going down for veterans?
Mr. Vought. We have an 8 percent increase for veteran
spending. We fully----
Mr. Moulton. I am just asking you why you are decreasing
cost-of-living adjustments?
Mr. Vought. We look for ways to improve programs to ensure
that veterans' programs over 10 years----
Mr. Moulton. So it will improve lives for veterans by
decreasing their cost-of-living adjustment? That is what you
are saying, Mr. Vought?
Mr. Vought. There are proposals that have been proposed in
the past, and we do not think they will have any adverse impact
on veterans.
Mr. Moulton. No adverse impact. No adverse impact. No
adverse impact----
Mr. Vought. That is correct.
Mr. Moulton.----to the decreased cost-of-living
adjustments.
Mr. Vought. That is correct.
Mr. Moulton. I think you should speak to some veterans, Mr.
Vought.
Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Georgia, Mr. Woodall,
for 5 minutes.
Mr. Woodall. Thank you, Mr. Chairman.
Thank you, Mr. Vought, for what you do.
I have only gotten to serve with two Presidents while I
have been in Congress. President Obama I believe loved this
country, but never once sent a budget to Capitol Hill that
balanced ever, not in five years, not in 10 years, not in 15
years, not in 60 years, and so I want you to know I know you
are making tough decisions, but I appreciate the President
sending a budget that balanced.
If it was easy, we would have done it by now, but we have
not.
I was listening intently about the cuts that were going on.
My first two years in Congress, we actually reduced total
federal spending year over year, not funny Washington, D.C.
math, but actual outlays declined one year to the next and then
declined one year to the next, two years in a row.
How often in the President's budget proposal are we
spending less the next year than we were spending in the
previous year?
Mr. Vought. In this President's, the budget we are
proposing right now?
Mr. Woodall. That is correct.
Mr. Vought. As it pertains to discretionary spending, we
will be spending 2 percent less from one year to the next.
Mr. Woodall. Undoubtedly, folks are looking for ways to cut
what can be done in an efficient manner, but year over year, as
I look at your numbers, you are investing more in America every
year the next year than you did before.
Now, in large part that is because tax revenues are rising
every year from one year to the next. We talk a lot about the
tax proposal, that $1.9 trillion as adjusted by interest, the
$1.5 trillion as realized by my constituents. That is going
right into pockets back home.
And to your point, only about 10 percent of our education
dollars come from the Washington, D.C. area. Most of it comes
from our county and from our state, and that is why we have
some of the finest education programs in the nation.
I appreciate your not trying to supplant our local control
in this budget, but I want to be clear. I am looking at those
tax revenue lines. They appear to increase not just one year,
not just in the out-years, but every single year of this
budget.
We are already collecting record tax revenues in this
country. Is it your position that not only are we collecting
more money today than we ever have in American history, but we
are going to continue to collect more and more and more in
every year of the President's budget?
Mr. Vought. Absolutely, and let me walk you through some of
the specifics. In fiscal year 2017, we received $3.31 trillion
in revenues. In 2018, we will generate $3.329 in revenues. In
2019, we will generate $3.4 in revenues. In 2020, we will
generate $3.6 trillion, and on and on.
It is why over 10 years, we are confident that the economic
policies of this Administration, which we assume in our budget;
CBO does not assume what is not current law. We assume that the
economic policies of this Administration will more than pay for
the cost of the tax cut.
We think that the tax cut was important from the standpoint
of getting the economy going and allowing people to have more
of their hard-earned money to be able to build and invest in
their communities.
Mr. Woodall. Let me get off script for a second. I think
back to one of President Obama's budgets where he introduced
chain CPI, something that Republicans had long been advocating
for as responsible budgeting. The moment he put it in his
budget, the Republicans began to kick him in the shins for
cutting benefits here, there, and elsewhere.
Rather than taking yes for an answer, we turned it into a
political talking point. I do not know the answer to this
question. So I am a little reluctant to ask it, but is there
anything in the President's budget that perhaps I might like
less as a conservative Republican, but my colleagues on the
other side of the aisle maybe ought to take yes for an answer
as opposed to turning the President's budgets into political
talking points, as we do day in and day out?
Mr. Vought. I am sure I am going to get this question later
on, but we believe that many of our Medicare reforms, which
continue to increase Medicare spending every single year, but
also allow for certain program integrity proposals to improve
the programs, to be able to offer common-sense reforms about
ensuring that where you pay for particular services within
Medicare applies no matter what the site of care is.
These are proposals that were in President Obama's budget.
We think that they are bipartisan reforms, and we think that if
there is just a factual basis for understanding what we are
proposing, that we can achieve common ground.
But I fully expect to be walking through what the proposals
are under our Medicare later on in questioning.
Mr. Woodall. Mr. Chairman, with your leadership, I know we
will be able to take yes for an answer in those places that we
can. Folks will do what they have to do in this hearing today,
but I surely do hope that where we do find agreement, we will
do it for the American people.
Thank you. I yield back.
Chairman Yarmuth. Thank you.
And I might add you said you went off script. I have never
known you to be scripted.
Mr. Woodall. Thank you.
Chairman Yarmuth. I now yield 5 minutes to the gentleman
from New York, Mr. Higgins.
Mr. Higgins. Thank you, Mr. Chairman.
Mr. Acting Budget Director, do corporate tax cuts pay for
themselves, generally speaking?
Mr. Vought. We believe that the corporate tax cuts are
very, very important for our economic growth numbers, and
specifically because they lead to capital formulation in the
years ahead. It is one of the more crucial provisions in the
tax cut from the standpoint of ensuring that this prolonged
economic growth.
Mr. Higgins. Was that a yes or a no?
Mr. Vought. We believe over time, yes.
Mr. Higgins. The most optimistic estimates of corporate tax
cuts are that for every dollar that you give away you can
recapture about 32 cents. So that is about a 68 percent loss in
terms of investment.
And I do not think there is any credible evidence to
suggest that these corporate tax cuts in and of themselves pay
for themselves.
So the deficit that everybody likes to talk about is a big
problem, but we also have, as you know, a growth problem in the
American economy. We hit 2, 2.5 percent growth, which is not
the 3 or 4 percent that the President had talked about. There
is very little investment in here relative to infrastructure.
Infrastructure, unlike corporate tax cuts, pay for
themselves. For every dollar that you spend on infrastructure,
you can expect minimally a $2 return. That is a 100 percent
return on investment as it relates to infrastructure.
The disappointment here is that there is not a greater
investment toward the growth of the American economy because
last time we had 4 percent sustained growth over an eight-year
period, we did not have budgetary deficits. We had a budgetary
surplus of almost $300 billion.
I just want to move on to the issue of cancer research.
This budget is showing that there will be a cut in cancer
research of about $900 million. What is the justification for
that?
Mr. Vought. We keep NIH spending at a little bit above what
it received in fiscal year 2017 enacted. We think that the
levels to which Congress has been appropriating money towards
the National Institutes of Health is something that we can no
longer sustain, although we are very supportive of the NIH
spending.
I just want to tell you as the father of a child with
cystic fibrosis, we are on the verge of cutting-edge drugs that
would prolong her life. So from the standpoint of the NIH, we
are very supportive of the types of research that they perform.
But I would also just say that no agency can spend well
when they do not live in a resource constrained world, and when
we put forward proposals in Congress just without analysis,
puts additional spending increases on the table, we actually
think that that degrades the ability for NIH to do research and
perform lifesaving----
Mr. Higgins. So justification for cutting general cancer
research by $900 million is that the Administration is focusing
on other diseases from which to fund important research?
Mr. Vought. Generally, we take a top line reduction for
NIH, and we allocate it across the board, with some exceptions
like pediatric cancer.
We are trying to prompt a debate, which we have for the
first two budgets, about ways that NIH might be able to do
things better if they did not have as high administrative
costs. They often pay more for Administration costs than other
private sector researchers, and we think that is a problem, and
it is an important debate to have.
Mr. Higgins. Yes, but look. When you deal with cancer
research, in particular, the only failure in the research is
when you quit or you are forced to quit because of lack of
funding.
The National Cancer Institute funded about 97 percent of
all FDA approved cancer drugs in the past eight years. So you
know, new treatment that is delayed is new treatment that is
denied.
And at a time when you have incredible promise in the area
of immunotherapy that is being clinically trialed and tested at
places like Roswell Park Cancer Institute in Buffalo, New York,
it just seems very shortsighted that the Administration is
picking winners and losers as it relates to what diseases we
decide to invest in toward the goal of developing new,
promising treatments because it costs not only money, but it
also costs lives as well.
With that, I will yield back.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from North Carolina, Mr.
Holding, for 5 minutes.
Mr. Holding. Thank you, Mr. Chair.
Like many of my friends that you are hearing from today, I
am deeply concerned about our mandatory spending trajectory.
Today mandatory spending accounts for 70 percent of the federal
budget. In 10 years, mandatory spending plus our federal debt
will consume all of our federal revenue.
And despite this, my colleagues on the other side of the
aisle want to actually increase mandatory spending through the
creation of Medicare for All, free college tuition, and other
things.
Further, the interest payments on the debt are the fastest
growing line item in our entire budget. This year taxpayers
will spend nearly $400 billion in debt interest alone. This is
hundreds of billions of dollars that are being needlessly
wasted because Congress has failed to address our massive debt
problem.
So without real reforms, mandatory spending will continue
to crowd out discretionary spending, leaving less and less
resource for other critical areas, including of course defense,
which is our principal concern as a government.
So, Mr. Vought, the President's budget proposes over $2
trillion in mandatory reductions over two years, and that is
good. So I am going to give you the opportunity to expand a bit
further on how you would achieve these $2 trillion of savings
over two years, specifically the proposed changes to Medicaid
and the payment structures of Medicare Parts B and D.
Mr. Vought. Thank you, Congressman.
What I would like to do is just unpack the $2.7 trillion in
savings that we propose for in this budget. $1.9 trillion of
those are reductions in savings and mandatory reforms. Again,
these are programs that will continue to increase every year.
So these are not cuts. These are savings over the life of the
10-year window.
We achieve about $517 billion in savings in Medicare, as I
have already mentioned. Many of the numbers that you have seen
out in the press in the last 24 hours are inaccurate.
And, again, what we are trying to do in Medicare is lower
drug prices, and when we lower drug prices, it has the result
of achieving savings in Medicare.
We also think it is important that Medicare does not pay
for the uncompensated care within the Medicare program for
people who are not Medicare beneficiaries. So, again, we do not
actually not pay for uncompensated care, but we move it outside
the Medicare Program with a slower rate of growth.
Another big, large amount of savings is student loans.
Student loans, we have about $209 billion in savings. Again, we
think the proposal would benefit students; that right now there
is a patchwork of all sorts of income-driven repayment plans.
We provide one to be able to say 12.5 percent of your income
you are going to be expected pay to repay your loans, but at
the end of 15 years, you are done. At the end of 30 years, if
you are a graduate student, you are done.
We also think that welfare reform is important. We have
about $300 billion in savings in welfare reform. Much of it is
simply with the proposal to have a work requirement within
different programs, such as like housing, food stamps,
Medicaid.
And we have hardship exemptions within these. No one is
wanting people who cannot work to be able to work, but we do
value work, and it is something from the standpoint of human
dignity. We want to be able to transition individuals and
families and households to self-sufficiency.
We saw that in historic reforms in the 1990s. We have long
said we want to build on it. We do that in this budget.
Mr. Holding. Thank you.
And I appreciate you coming forward, you know, with a
timely budget, and I really urge the chairman and my friends on
the other side of the aisle to come forward with a budget
yourselves. I think it is important for the American people to
see where we are coming from.
And budgets sometimes are described as aspirational, but I
do think they serve a very important purpose of setting forth
in real concrete dollars and cents terms to the American people
where we want to go with this use, were we able to wave that
magic wand and get 218 people to agree with us in how we want
to go forward.
So thank you.
Mr. Chairman, I yield back.
Chairman Yarmuth. I thank the gentleman.
I now yield 5 minutes to the gentleman from California, Mr.
Khanna.
Mr. Khanna. Thank you, Mr. Chairman.
I just want to get some facts out, not in any partisan way.
Your budget proposal, as you put it, reduces Medicare spending
by $845 billion. You described it as efficiency and reduction
of waste; is that correct?
Mr. Vought. No, it is not correct. There is a gross federal
savings for Medicare line in the budget, but when you add back
the proposals that we include for an uncompensated care pool
outside of Medicare for children's GME, Medicare GME----
Mr. Khanna. And what is the number when you add that?
Mr. Vought. The number is about $517 billion in savings.
Mr. Khanna. So you are saying that it reduces Medicare
spending by not $500 billion? The report suggests that $500
billion of the, quote, unquote, savings would go to the
deficit.
You are saying it is less than that?
Mr. Vought. No. So I thought you were asking about the
number that has been reported in the press, $845 billion.
Mr. Khanna. What would you say the accurate number should
be?
Mr. Vought. The accurate number, again, we increase
Medicare spending every year. This is not----
Mr. Khanna. Not a long answer. Give me a number.
Mr. Vought. I am providing an answer for you. Five hundred
and seventeen billion in savings within Medicare over 10 years
is the net Medicare savings number.
Mr. Khanna. So you are going to cut by $517 billion?
Mr. Vought. No, sir. Medicare spending, as I mentioned,
will continue to rise each and every year. We have----
Mr. Khanna. But you are reducing the Medicare budget by
$517 billion?
Mr. Vought. We are identifying savings that would result
from common sense proposals like reducing drug pricing costs.
Obviously----
Mr. Khanna. Have you endorsed the Doggett bill on that?
Would you be open to the Doggett bill, which reduces drug
costs?
I mean, I know you are saying let's reduce drug costs, and
that is a great thought, but what specifically? How are you
going to do it?
So far, the President has not supported the Doggett bill.
The President has not supported any bills. Would you commit
today that the Doggett bill, which actually could reduce costs,
you would consider supporting that?
Mr. Vought. We will certainly look at analyzing any piece
of legislation that is out there. As it pertains to drug
proposals----
Mr. Khanna. Does the President have legislation on how he
is going to achieve these drug reductions?
Mr. Vought. We do.
Mr. Khanna. What is the legislation? Is there an H.R. or
Senate bill? I mean, what legislation is he----
Mr. Vought. We are happy to work with Congress. We are
hoping that Congress introducing many of the----
Mr. Khanna. But has he proposed any legislation?
Mr. Vought. We have proposals that we hope you can turn
into----
Mr. Khanna. But has anyone introduced the legislation?
Mr. Vought. We are working with Congress. Part of the----
Mr. Khanna. I know you are working. What legislation is
there? I mean, there are thousands of bills introduced. Is
there a single bill the President has introduced to be able to
get the savings that you want?
Mr. Vought. Congressman, we do not introduce bills.
Mr. Khanna. No, but you suggest bills. I mean, have you
proposed?
And you do. I mean, you wrote the tax bill.
Mr. Vought. We specifically propose policies that Congress
can turn into----
Mr. Khanna. You have not worked with any single member of
Congress to introduce any legislation to get this $500-some
billion of reduction that you say you want?
Mr. Vought. I do not think that is true. I think that----
Mr. Khanna. Is there a single member of Congress or bill
you can point to?
Mr. Vought. I think the Health and Human Service Department
has an active legislative office that is working to turn these
policies into actual proposals. I do not----
Mr. Khanna. I do not want to belabor it, but if you could
maybe submit for the record what legislation we can get behind
that would get $517 billion of drug cost savings. So far, I
only know of the Doggett bill. I mean, maybe there is some
other magic solution.
The other thing I want to quickly go over you propose a
billion dollars of cuts in the National Science Foundation; is
that correct?
Mr. Vought. We have cuts to the National Science
Foundation.
Mr. Khanna. I was with Secretary Condoleezza Rice the other
day. She is near my district at Stanford. She said the single
biggest thing we can do for the national security of this
country is double our National Science Foundation.
Would it be accurate to say the President would disagree
with her characterization?
Mr. Vought. No. We have in the time of trillion-dollar
deficits, we believe that $7 billion for the National Science
Foundation is a very healthy budget, and----
Mr. Khanna. But would you disagree with her
characterization that we need to double it?
By definition you are saying we need to cut it by a
billion, correct?
Mr. Vought. We think that the National Science Foundation
is very important. We think----
Mr. Khanna. I get all that, but you would disagree with her
characterization that we need to double the budget?
I mean, your----
Mr. Vought. I have not had a conversation with Secretary
Rice about this. I would just point out that the National
Science Foundation does not need to be immune from looking at
waste, fraud, and abuse. To the extent that they spend money on
wine making programs, they are supposed to be investing in
science, and yet we still find that waste, fraud, and abuse is
not something that they are free from.
That is the conversation we want to have. How do we----
Mr. Khanna. You are cutting the National Institutes of
Health budget by $4.9 billion; is that correct?
Mr. Vought. We bring the National Institutes of Health down
to about $33 billion.
Mr. Khanna. Do you see why? I mean, I am not trying to be
partisan. Do you see why some people may think that you do not
believe in science and technology when you are cutting the
National Science Foundation by a billion, when you are cutting
the National Institutes of Health by $4 billion, which the
Republican Congress, by the way, increased $2 billion last
time, and when you are disagreeing with people like Condoleezza
Rice?
Do you see why that perception might be there?
Mr. Vought. I do not believe I understand why that
perception would be there because we look at the fact that we
are spending $134 billion in research and development, and that
is exactly what we spent in the last two years, and we allocate
it differently, but it is something that we prioritize a great
deal.
Mr. Khanna. Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Utah, Mr. Stewart, for 5
minutes.
Mr. Stewart. Thank you, Mr. Chairman.
And I am going to move fairly quickly. There are a couple
of things I want to hit that I think are important.
First, Mr. Vought, thank you for being here. I cannot
imagine you slept very well last night. This has got to be one
of your least favorite days of the year coming here, and
frankly, Mr. Woodall talked about going off script. I think we
are fairly following the script, and that is some of the things
we say are very predictable, and I am sure you anticipated some
of that.
And I do wish some of our colleagues would give you a
chance to answer the questions that they present before you. I
think that is common courtesy to give you a chance to respond.
I would like to go through for the benefit, again, of some
of our colleagues on this committee two very simple economic
facts, just economic realities, and allow you to respond to
them, to either agree or disagree if you would like.
The first is that deficits are a function of two things and
only two things, and this is simple math. This does not take a
genius at all to figure this out. Deficits are a function of
revenue and spending. You take the difference of those two
things, what the government takes in and what the government
spends, and that is your deficit or in some cases your surplus.
Would you agree with that? That is very simple. True?
Mr. Vought. Yes, Congressman.
Mr. Stewart. Okay. Thank you.
And so can you have an honest conversation about deficits
and only talk about revenue, only talk about some tax policy
that either increased or decreased the revenue, or do you have
to talk about spending as well?
Mr. Stewart. You have to talk about spending.
Mr. Stewart. Of course you do because it is those two
things.
And I think any time we have a conversation on this
Committee where we are pointing the finger at deficits and only
talking about tax policy, it is fundamentally a dishonest
conversation at that moment because you have to consider
spending as well.
And I will give you a good example, and I will bet you know
that because you are obviously very, very bright, and it is
amazing to me that you can come up with these numbers and
answers off the top of your head. It is a very, very
complicated and intricate budget.
But going back to when I was younger, Ronald Reagan was
famous for tax cuts, and yet after the 1982 recession, I am
curious. Do you know what happened to government revenue after
those tax cuts and the recession was over?
Mr. Vought. The revenue increased.
Mr. Stewart. Every year that he was in office. Every year
after the recession, his government revenue increased because
of his tax cuts.
And, once again, I think that is just an economic fact that
you can have economic growth which leads to revenue increases
as a result of tax cuts. And again, it is a dishonest argument
when you are not willing to recognize that.
I would ask you to respond to what I have said here and
proposed. Is there anything that you would add or that you
think is worth emphasizing?
Mr. Vought. I just think that it is important to reflect on
the fact that in the 1960s, we had spending and taxes as a
percent of GDP roughly in the 16 percent range. Since the
1960s, we have seen spending skyrocket to in the neighborhood
of 22 percent of the percent of GDP, whereas revenues have
ticked up to be in the neighborhood of 17 percent. The last 50-
year average is around 17 percent.
So one of the reasons why we think it is important to
maintain revenues where they are and not go in that direction
is that revenues under this budget, even though they have a
slight dip in the short term, will average at exactly their 50-
year average of 17.3 percent.
So we think spending is a problem. We have been up front
about that, and that is not even getting into the fact that
when you are raising taxes, not only are you increasing the
burden on the American people, but you are also worsening the
economy, and we would not want to do that either.
Mr. Stewart. Well, and so you had a more technical and
precise way of making the point that I just made, and I
appreciate that.
I want to hit something really quickly in a minute and 10
seconds. I was a former military member, Air Force pilot. When
I was flying, we had something like 156 fighter squadrons.
Several years ago we had 57, 156 down to 57.
When I was flying, there was no question in the world that
we were the best military in the world and that we could take
on any adversary and win and defeat them in combat, and as you
may have seen in a recent RAND study and some others, there are
serious questions about whether that remains true.
Would you address the importance of increasing the military
spending and why that is a priority for you and for this
President?
Mr. Vought. It is very important. I just talked with him
about it yesterday, and the importance of this $750 billion
defense budget being used to procure the aircraft that we need,
the battleships that we need, the research and development that
we need, the missile defense that we need, 110 new aircrafts,
12 battleships putting online with this budget.
It continues to be something that is a major priority.
Look. The President wants the world to know that we have the
most awe-inspiring military that has ever been known in the
world. We believe that we can have peace through strength.
He does not want to have the perception that this is about
promulgating endless wars. You know the President has had a
long conversation with the American people about that.
He wants to be able to continue to increase and rebuild
this military so that we do not have to fight wars in the
future because the world knows that we are the strongest
military on the face of the planet.
Mr. Stewart. Thank you.
I yield back.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from New Jersey, Mr. Sires.
Mr. Sires. Mr. Vought, thank you for being here.
Mr. Vought, if these tax bills, the tax cuts do not deliver
what you are projecting, are you going back to cut more of the
Medicare, Medicaid, Social Security Programs?
Mr. Vought. We think they will deliver, sir. We believe
that over the life----
Mr. Sires. Let's make a projection they do not.
Mr. Vought. Again, we think that the most accurate way to
look at the next 10 years is to assume the economic growth
assumptions that we have put forward of 3 percent. Over the
first two years, we have been the most accurate Administration
in history. We have projected 2.5 percent and 3.1 percent.
When Larry Summers said that that was ridiculous and
outrageous and that we were delusional, instead we not only hit
those numbers, but we have been the most accurate.
And so we think that over 10 years----
Mr. Sires. Well, let's say you are not as accurate.
Mr. Vought. Okay.
Mr. Sires. Where would you go to get the money?
Mr. Vought. It will mean we are not suggesting that we are
going to make any changes to the budgets, although the aspect
about budget is that you look at what is coming in and you look
at what is going out, and each and every year you make
adjustments.
That is the importance of the federal budget process. It is
certainly broken. I agree with the Chairman and the Ranking
Member that we can certainly make reforms.
But I would also say that, look, that budgets are about
putting our visions forward for the American people, and as I
mentioned last night----
Mr. Sires. Well, I get that. I get all that, you know.
Mr. Vought. But the importance of----
Mr. Sires. Let's bring it to something more local. I am
sure many members here served in local office. Why is it that
the President and the people always feel that eliminating the
community development block grants is necessary?
I mean, this is a program which helps communities that
cannot apply for the fundings. So yet every year you want to
eliminate this program. This is a tax saver for the
communities.
I just do not understand why they feel it necessary to just
abolish. Have you talked to people who serve in local office
and have used these grants?
Mr. Vought. We have spoken with those people. We look at
this program, and we have looked at it, its record, since 1972,
1974, when it was initiated, and it is about $170 billion that
we have spent on this program, and we have seen no economic
results as a result of it in terms of----
Mr. Sires. Well, look. I disagree with you there. I have
served in local office, and many people here have served in
local offices. This is a tax saver for that community.
Rather than increasing taxes in a community, you get a
grant for $100,000 to do a street. That means you do not pass
it on to the taxpayers.
Mr. Vought. All of those taxpayers, sir, are federal
taxpayers as well, and we have a trillion-dollar deficit that
we cannot afford.
Mr. Sires. I agree with you, and this tax cut does not
help.
Mr. Vought. We think it does. We think that it puts more
money in the pockets of harder working American people to be
able to spend their----
Mr. Sires. I hate to disagree with you, but----
Mr. Vought.----in their communities.
Mr. Sires.----it is already hurting New Jersey badly. We
are probably one of the states that are hurt the most by these
tax cuts.
The other issue that I have problems with is cutting
affordable housing money. Have you made any contingency plan
once you start cutting these programs that you are going to
have more homeless people on the streets?
What are you going to do for those people?
Mr. Vought. Our budget projections, and I appreciate the
question because one of the questions that is at the top of my
mind every time we write the budget for the Department of
Housing and Urban Development is to make sure that we are not
causing homelessness. I do not want any of the proposals that
we put forward to have that result in any way.
So all of the reforms that you have in here would not lead
to additional homelessness, but the reality is that we have
housing programs, because they are contingent on local rent
rates, which are increasing, that the housing programs are
almost acting like a mandatory program in the drain that they
have within the discretionary budget.
So we are trying to put forward reforms and update----
Mr. Sires. Where do veterans fit on this? I mean, we need
housing for veterans, and if we cut affordable housing, where
do veterans fit in all of this?
Mr. Vought. Again, we do not think that there will be any
increase in homelessness as a result of this budget. We have a
healthy, ongoing increase of 7.5 percent for the Department
Veterans Affairs specifically because we want to ensure that
veterans are fully funded.
Mr. Sires. My time is up. Thank you, Chairman.
Chairman Yarmuth. I thank the gentleman.
I now recognize Mr. Johnson of Ohio for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
Acting Director Vought, I really appreciate your being here
today to present the President's budget request, and I
appreciate that this budget addresses a mounting problem of
unsustainable debt that we are facing in our country,
especially on the mandatory side of the ledger where about 70
percent of federal spending happens, as well as discretionary
policies to right size the government so that it works for all
Americans.
I also think the proposal to continue the tax relief
provided by the Tax Cuts and Jobs Act is a wise policy, given
what we heard from the CBO Director earlier this year, that
increasing taxes, which would obviously be a requirement to
fund all of the new spending programs that my colleagues on the
other side are presenting, that increasing taxes would dampen
economic growth, job creation, and wage increases.
So I am glad to see that the budget proposal includes $2
trillion in savings from reforms to mandatory programs.
Director Vought, do you agree that mandatory spending is the
true driver of our debt?
Mr. Vought. I think it is a definite driver of our debt and
our spending problem, certainly structurally in the years
ahead, particularly after the 10-year window.
But I would not want there to be an impression that
discretionary spending is also not a driver of our national
debt. We have 30 percent that is spent on discretionary
spending. We have trillion-dollar non-defense budgets every
single year.
And I think one of the things that this budget is trying to
articulate and prompt a conversation with Congress about is
that we often say that we are for getting a handle on mandatory
spending, and then we pass $350 billion budget agreements that
we cannot afford because we have never grappled with the
paradigm between a dollar of non-defense increase for a dollar
of defense.
And the problem with that is (a) we think we need to have a
debate about all of those non-defense dollars, and we want to
find waste, fraud, and abuse as well in defense dollars, and I
do not want to let that off the table.
Mr. Johnson. But I want to get to the mandatory side of the
ledger because we do not work over there. I mean, I get all of
the discretionary and defense spending. I get that. But as you
mentioned, that is a very small part of what the federal
government spends.
And even if we zeroed out all of that, the spending curve
is still going in the wrong direction. So, again, would you
agree that mandatory spending is the biggest driver of our
national debt?
Mr. Vought. It is a very, very large driver of our national
debt.
Mr. Johnson. How can you say it is not the biggest driver
if it is two-thirds of what we are spending?
Mr. Vought. Because I do not want to leave the impression
that discretionary spending----
Mr. Johnson. I did not say it was not important. I did not
say discretionary was not important, but we have got to
continue to make the case that mandatory spending is the main
driver, and without that, without addressing it, we are never
going to get out of this debt crisis we are in.
So could you outline some of the key mandatory spending
reforms that are proposed in the budget?
Mr. Vought. Sure. We have proposals to find savings in
student loans by consolidating programs and offering one
student debt income repayment plan.
We have savings and reforms in welfare, to provide a work
requirement in welfare and expand the current work requirement
to other programs.
We have savings and reforms to federal retirement benefits
to more appropriately align with the private sector.
We have reforms to health care, to reform and continue to
repeal and replace Obamacare and find savings in that.
We want to restore a balance in Medicaid, and we offer a
state health care block grant that lowers the cost so that we
can allow states to target the most directly eligible
participants in Medicaid so that Medicaid focuses on those
individuals.
So again, we have $1.9 trillion in mandatory savings. I do
not want you to come away with the view that we do not think it
is absolutely important, but I do want to prompt a debate to
suggest that to the extent that we just say mandatory is the
problem so we are going to keep increasing discretionary and
then when we do these cap deals and the mandatory savings that
were at least in the first two rounds and not the third, the
mandatory reforms that we are talking about are not the type
that are in our budget.
There are things like extending user fees. They are
extending laws that were already in place. We do not think that
that is actually the types of reforms that allow us to fix the
exact problem that you are addressing.
But I do appreciate the question.
Mr. Johnson. Okay. All right. Mr. Chairman, I yield back.
Chairman Yarmuth. I thank the gentleman.
I now recognize the gentleman from California, Mr. Peters,
for 5 minutes.
Mr. Peters. Thank you. Thank you, Mr. Chairman.
Thank you, Mr. Vought, for being here.
Your budget assumes long-term growth rates that are a full
percentage point above projections by CBO and the federal
Reserve and most private forecasters, and it is one thing to
wish for economic growth that is 50 percent stronger than
everyone else. It is another thing to build your budget based
on it.
Now, you have explained the basis for your confidence in
your 3 percent projection, but what would the deficit impact be
if the economy grew around 2 percent over the long run as most
other forecasters believe?
Mr. Vought. Sure. Thanks for the question.
My answer is two parts. Number one, we have had an
understanding that has turned out to be true that our economic
policies would lead to growth we projected over the first two
years of this budget. We were the most accurate Administration
in history.
Mr. Peters. I do not mean to interrupt. I just have a
little bit of time. I want to hear your answer, but what would
it be if it were 2 percent?
I understand you believe it would----
Mr. Vought. We have not run alternative scenarios because
we believe that we are going to be vindicated when it comes to
the growth rates that we have assumed in this budget.
In part, part of your question was why do we think that 3
percent----
Mr. Peters. No, I did not ask that. You addressed that
before. I asked what would it be if it was 2 percent, and I
think that the problem is that, you know, as your mom taught
you, pray for the best, but plan for the worst.
We are pretty exposed if growth comes in at around 2
percent and we have not planned for it.
Let me ask you a question about energy. Your budget cuts
energy research and development programs by more than 60
percent, while eliminating tax benefits for businesses and
households that invest in renewable energy, energy efficiency,
and electric vehicles.
But the Administration's own assessments conducted by
independent evaluation experts show that the Department of
Energy's clean energy programs have provided at least $7 in
benefits for every $1 invested and probably much more compared
to what the private sector would have achieved on its own.
We talk about dynamic scoring in the context of tax cuts,
but here is an example where we are getting a return on our
investment. Why would your budget slash programs that are
successfully supporting U.S. innovation, competitiveness, and
job creation in emerging clean energy industries that are also
protecting the environment and public health?
Mr. Vought. We believe that in a time of trillion-dollar
deficits, the resources that the Department of Energy has
should be devoted towards basic research that would not
otherwise be done by the private sector. It should not be
focused on applied research that are the types of activities
that the private sector could continue to do.
That said, we fully fund basic R&D. We keep all of the labs
open, and we are cognizant of this important activity being
funded by the private sector.
Mr. Peters. I notice your budget proposes larger cuts for
renewable energy and energy efficiency than for the well-
established and highly profitable fossil fuel industry. Is
there a reason for that?
Mr. Vought. There is not a specific reason when we set
those budgets.
Mr. Peters. Do you believe that the fossil fuel extraction
industries still need propping up?
Mr. Vought. We have generally taken an approach of all of
the above from an energy perspective in this budget. We do have
some specific investments.
For instance, we have a new fast test reactor to support
the nuclear industry, which is something that many, many
experts say is absolutely vital to have a thriving nuclear
industry.
Mr. Peters. I am just referring to the tax support for
fossil fuel extraction.
Mr. Vought. Sure. Again, our tax policies are over time
trying to align with our view that spending in this case
subsidies should be devoted towards basic R&D as opposed to
more later stage.
Mr. Peters. Maybe we will get to equal treatment over time.
With respect to the border, responsible border governance
includes protecting migrants and honoring our international
obligations for asylum claims. There are thousands of asylum-
seeking women, children, and men.
Whatever you think of the law as it is, we need to process
those folks. How does the budget increase our capacity to
process asylum claims quickly and humanely?
And specifically, are we putting more money into asylum
officers and other related personnel? If so, how much?
Mr. Vought. I am happy to get back to you on what we are
specifically providing for asylum officers, but it is an
absolutely priority of this budget to deal with the emergency
on our southern border. We continue to request funding for the
humanitarian crisis that we actually found common agreement
with this body on, and so----
Mr. Peters. I would like to hear from that.
I guess the other question I had is you have got 171
Customs and Border Protection officers in the budget designated
as Office of Field Operations officers to staff ports of entry.
We would like to seek clarity on that as well. We want to make
sure that that is----
Mr. Vought. I am happy to provide that, sir.
Mr. Peters. Finally, any thoughts on the effectiveness of
IRS enforcement? Do they need more resources to be more
effective and to make sure that everyone is paying their fair
share of taxes?
Mr. Vought. We do think that a dollar spent for IRS
collection is a dollar well spent, and it is one of the reasons
that we have a program integrity cap adjustment in this budget
to make sure that IRS gets the necessary resources within this
budget, and it actually causes us to be able to generate
savings over the life of the 10-year window.
Mr. Peters. Okay. Thank you.
My time has expired.
Chairman Yarmuth. I thank the gentleman.
I now recognize the gentleman from South Carolina, Mr.
Norman for 5 minutes.
Mr. Norman. Thank you, Mr. Vought.
I appreciate you coming today and presenting the
President's budget.
Let me just make a comment. You know, I think I join most
Americans who are tired of hearing big numbers. They are tired
of hearing deficits. They know something is not right, and they
want it done now.
And while I would have liked to have seen more cuts in this
budget, at least it is a start.
And I heard one, in fact it was yesterday, one of the de
facto leads, the new leader of the Democratic Party when they
asked her how she was going to pay for free medical care, free
education. She said, ``We just are.''
And I have got a solution. Again, I am from the private
sector. I am real estate developer. Here is my solution. I
would go along with her free medical care. Get the doctors to
work for free.
I will go along with the free education. Get the tenured
professors to work for free. That solves the whole problem.
And maybe even let Congress work for free, sacrifice our
salaries.
That being said, I keep hearing about the wall, you know,
the dollars funding for the wall. Will you agree that not
having any type of border security is costing this country a
dollar amount?
Mr. Vought. Yes, I would.
Mr. Norman. Would you entertain maybe $111 billion a year,
more or less?
Mr. Vought. We have not done any specific analysis along
those lines, but we definitely think that there are savings
that over time we would be able to achieve by continuing to
invest in our border, and we think it is a very, very important
aspect of this budget is to secure the necessary resources
along our southwest border.
Mr. Norman. So your $8.6 billion, there will be a return on
investment, and it is far more even in 12 months than the cost.
Mr. Vought. We believe there will be a return. I would not
want to anchor it specifically in a dollar amount.
Mr. Norman. The rescission package that most of my friends
on the left voted against, which basically took unallocated
escrow dollars, is that taken into account in this budget?
Mr. Vought. The rescission bill that we sent up last year?
Mr. Norman. Correct.
Mr. Vought. It is. This is one of the ways that we go from
the 5 percent cut from the fiscal year 2019 level. We take that
down with a 5 percent cut to be in the 560s, and then the rest
is to be able to use many of the same rescissions that Congress
has used in the past, money that was never going to be spent
within Children's Health Insurance Program. Again, this is
money that was not going to be spent.
Congress since 2011 has used these CHIMPs, these
rescissions to the tune of $58 billion, and yet the minute that
we try to use that to actually deal with our deficit or to
remove them from the appropriations process so they cannot be
used as an offset, somehow we are hurting Families and
Children's Health Insurance Program.
So, yes, we do rely on them to get down to the actual cap
level, and we think that they will be absolutely no impact on
Children's Health Programs.
Mr. Norman. What you just said was exactly what Mick
Mulvaney said when he mentioned he could not understand why
there was any argument over this $15 billion in cuts. The money
could not be used even if they wanted to. So this is not a cut.
Let's go over what Mr. Johnson mentioned about you would
agree that the biggest cost or, I guess, the biggest factor is
mandatory spending.
Mr. Vought. Again, I would agree that it is one of the
largest drivers, and I might actually agree that it is the
biggest.
But when I say that, I am trying to avoid conceding the
fact that we have not dealt with our discretionary problem, and
that that in many ways is how you start as a country getting
hold of your fiscal challenges, is by identifying the waste and
the abuse and the inefficiencies in the votes that members take
every single year.
This is the process that is not on autopilot, and so what
we are trying to prompt a debate with this Congress is to say,
yes, let's talk about mandatory spending. We propose more
savings than any President's budget in history, but not at the
expense of continuing to increase agencies year-over-year in
what they are allowed to spend because, quite frankly, those
have a significant impact on the American people.
Mr. Norman. Well, I appreciate this effort, and I
appreciate you presenting a budget that is at least the first
step in this long stairway of getting financially independent
and not leaving our children with a $70,000 debt for every man,
woman, and child in this country.
And thank you for your efforts. I look forward to working
with you further.
And I yield the balance of my time.
Chairman Yarmuth. I thank the gentleman.
I now recognize the gentleman from Texas, Mr. Doggett, for
5 minutes.
Mr. Doggett. Thank you.
And thank you for your testimony.
I chair the Subcommittee on Health, and as I review the
portions of your budget concerning prescription drugs, you
know, I think my main complaint is that the folks who prepared
this budget did not listen carefully to President Trump.
You do on page 41 quote him as saying one of his greatest
priorities is reducing the cost of prescription drugs, but when
it comes to doing anything to achieve that objective, I think
your proposal accomplishes as little as his Rose Garden press
conferences in the last two years in which the prices of
prescription drugs have continued to go up.
President Trump did not campaign on a slogan, ``Elect me
and the price of prescription drugs will not go up quite as
fast as it has been over the last few years.'' He talked about
bringing the cost of prescription prices down.
He said, and he said it very boldly, that we could save
billions of dollars by what he called bidding on prescription
drugs. Outside estimates are that hundreds of billions of
dollars could be saved not only for Medicare beneficiaries, but
for the taxpayers on Medicare if we had an effective
prescription drug negotiation proposal.
As you know, I have one. I think Mr. Khanna referred to it.
One hundred and 20 members of this House have signed onto that
proposal.
Whether you like the specifics of it or not, all I want to
know is whether the Administration, your office, currently
agrees with what President Trump said, that an important part
of addressing the cost of prescription drugs is direct Medicare
negotiation for the prices of those drugs.
Mr. Vought. Sir, President Trump has not put forward those
policies in this----
Mr. Doggett. He has not proposed what he advocated as a
candidate?
Mr. Vought. This Administration has put forward a number of
proposals to lower drug costs. We see many of the same issues
that you do.
Mr. Doggett. But Medicare prescription drug negotiation is
not one of them and are you against it?
Mr. Vought. We currently have not proposed those policies
as an Administration, and we want to be----
Mr. Doggett. Does not mean you are against it, you are just
kind of agnostic on it?
Mr. Vought. I think we want to continue to have a
conversation with Congress about----
Mr. Doggett. Well, that is good.
Mr. Vought.----all of the proposals that you all have put
forward, similar to how we would do on infrastructure. We have
an open mind.
Mr. Doggett. Well, I want to talk about that next.
Mr. Vought. Sure.
Mr. Doggett. Because I have some questions about that as
well.
But I want that genuine conversation. Let me ask you a more
specific issue. You and all of our colleagues are well aware of
the opioid crisis we have in this country. Big Pharma has
exploited that crisis by raising the cost by 700 percent of the
lifesaving opioid overdose drug Naloxone.
It is a burden that is borne largely by our first
responders, by our police, our firefighters, and our EMS, and
taxes local taxpayers to provide it.
President Trump's own Opioid Commission recommended that we
at least negotiate the price of Naloxone, and last week in the
House Oversight hearing, the Office of National Drug Control
Policy Director, Jim Carroll, part of your Administration, said
he could not agree more with the need to negotiate the prices
of Naloxone.
Could you agree we at least ought to do that and help our
first responders provide this lifesaving drug at a reasonable
price instead of being gouged by Big Pharma?
Mr. Vought. I would defer to the statements of the other
members of the Administration that have been more acutely
involved in this issue and happy to work with you on lowering
the cost of drug prices.
Mr. Doggett. Thank you.
Now, you mentioned infrastructure. We have gone now over
two years, and all we have now is the same one-page description
of the President's plan that we had this time last year.
I say all we have because it actually includes one-third
less in resources than you provided in the one-pager last year.
You propose in this same budget that you solve the people that
are stuck in traffic all over America today by cutting the
Department of Transportation budget by 20 percent.
I do not see how cutting the Transportation budget by 20
percent, reducing by a third the amount of resources that you
want to provide is going to get people out of the gridlock that
we have all over the country today.
We need a bolder infrastructure program, and just like on
prescription drugs, we need this Administration to lead. That
is the only way our Republican colleagues can be supportive of
the revenue needed to deal with our infrastructure problems.
We were told only last week in the Ways and Means Committee
that it will take $160 billion over the next 10 years just to
keep the third-rate system we have got now. If we are going to
upgrade it, we have to have more revenue, more resources to do
that.
Finally, with reference to education, I am greatly troubled
that at a time when we face a physician shortage, a growing
shortage, you propose to eliminate all of the loan forgiveness
programs that are available to get those physicians, as well as
law enforcement and teachers, into underserved areas.
This is a great step backwards, as are your cuts in student
financial assistance. I hope you will reconsider those.
I do hope that our Republican colleagues, because this does
so much embody the values of the Trump Administration, will put
your entire budget up for a vote. We need an up or down vote on
your budget as you proposed it, 100 percent the way it is to
see whether they want to go along with these cuts to education,
to health care, to Medicare, and not doing enough about
prescription drugs.
And with that, Mr. Chairman, I yield back.
Chairman Yarmuth. I thank you. The gentleman's time has
expired.
Would the witness care to respond to any of that? I do not
think there was a question in there.
Mr. Vought. Just real briefly on infrastructure spending.
It continues to be a major priority of this Administration. We
put forward $200 billion, which is the same amount of previous
budgets.
From the standpoint of why less detail, I do think it is an
important clarification. We are responding to the fact that the
further details that you all have soundly not proposed
legislation as a result of, you have your own views as to how
we could structure an infrastructure package. We want to allow
you to do that, and we are very interested in what you all send
our way.
Mr. Doggett. With all due respect, is that your response to
why you cut the Department of Transportation by 20 percent and
why you reduced the amount of total resources from $1.5
trillion last year to $1 trillion this year?
Mr. Vought. Yes, just real briefly.
Mr. Doggett. It looks like you are going backwards.
Mr. Vought. It is not going backwards, sir. As you know,
when the last caps deal was struck and there was a substantial
increase in non-defense spending above what we allocated for in
our budget, we asked Congress to say use a portion of that non-
defense spending to really invest on the discretionary side of
the Transportation Department.
It was in some respects a one-time bunt. The Department of
Transportation is being set at above the fiscal year 2017
level. So we feel like we are continuing high levels of
infrastructure and continue to be committed to it in the years
ahead.
Chairman Yarmuth. Okay. The gentleman's time has expired.
I now recognize the gentleman from Oklahoma, Mr. Hern, for
5 minutes.
Mr. Hern. Mr. Vought, I want to thank you for testifying
today, and I appreciate your work and this Administration's
commitment to lowering our national debt, protecting our
nation's borders, and rebuilding our military, the greatest
threats to our national sovereignty.
You know, as a reminder to us all here, the federal
government has no money. It only has our taxpayers' money, and
we are supposed to be good stewards of that, and most out there
outside the Beltway would say we have been a terrible steward
of the money they have sent us now.
And like a majority of the politicians in Washington, D.C.,
I have been a small business owner for over 30 years, a job
creator, on the other side of the legislation and the laws that
we passed, and it is refreshing to see an Administration
operating its budget as efficiently as a business.
As I know and as the President knows, in business there are
three things to consider when evaluating a budget. Either there
is a revenue problem, a spending problem, or both.
As a small business owner, my businesses never had an open
checkbook. We had to make a budget, just like a house. We could
not spend more than we bring in. When a business person needs
to raise revenue, he or she has three options. They can raise
prices, which result in the customers going to a competitor to
get a better deal; increase sales, meaning your existing
customers buying more of your product; or increase your
customer base, meaning you get more new customers coming
through the door.
Similarly, when the government needs to raise revenues, it
can raise taxes, which will discourage innovation,
entrepreneurship, and economic activity, or stimulate the
economy by cutting taxes. We see this working with the Tax Cuts
and Jobs Act with companies giving out large bonuses, benefits,
increases, and raises. Or increase the number of people working
by deregulating businesses.
When the government gets out of the way it allows for
businesses to grow and hire, which result in a larger taxpayer
base, which again, we have seen this in the Trump
Administration's enacting this basic principle, and it is
working terrifically. In fact, I think you call it MAGAnomics.
My questions to you are some critics contend that your
economic forecast is overly optimistic. Nevertheless, is your
forecast not, which sees real economic growth averaging 2.9
percent a year, in line with the long-term average historical
growth rate of GDP here in the United States, roughly 3
percent?
Mr. Vought. I have never done the math that way, but I will
trust your facts.
Mr. Hern. Okay. I always like that.
Regarding work requirements, does the President agree that
the aim of government assistance programs should be to move as
many people as possible off public assistance and into self-
sufficiency?
Mr. Vought. We do. We want to ensure that we maintain a
social safety net that is important to provide the basic
necessities, but we do not want that to be the permanent
situation for families across this country. We want to move
families and individuals to self-sufficiency.
It is one of the reasons that we believe that welfare
reform is so important. It is one of the reasons why we believe
that work is so important. Even though we do provide certain
hardship exemptions, we know that there are some exceptions
that are needing to be provided, but we want to be able to
increase human dignity by encouraging people to work and
getting them to self-sufficiency and off of federal programs.
Mr. Hern. I appreciate the President's wanting to help
those who need help, but those who can help themselves need to
find a job. There are plenty of jobs out there. In fact, after
the tax reform plan was enacted, many economists boosted their
forecast of U.S. economic growth over the next year. CBO
projected the Tax Cuts and Jobs Act will create approximately 1
million jobs over the next decade.
How much do you think the tax reform has boosted the
economy's growth potential?
Mr. Vought. Well, we think that the tax cuts are one of the
major aspects of our economic program, and we think of the
economic program as holistically. We think that it will lead to
3 percent economic growth in the years ahead, which if you
really unpack that, what is going on there? What separates the
difference between our numbers and, say, CBO's numbers?
And it is because we are assuming that businesses will
invest in capital formulation. We look at the fact that non-
residential fixed income has increased by 7 percent. What does
that look like? That is businesses investing in their companies
and expanding it, leading to additional jobs.
And that is why there are long-term implications. This is
not just some juicing of the economy. This is long, structural
change to our economic growth that will pay dividends for
decades.
Mr. Hern. Thank you, Mr. Vought.
I would like to also point out that under the Trump
Administration we have seen unprecedented job creation with
unemployment at 50-year lows across all sectors, with record
low unemployment of minority and women.
And with that, Mr. Chairman, I yield back.
Chairman Yarmuth. I thank the gentleman.
I now recognize the gentleman from Virginia, Mr. Scott, for
5 minutes.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Director, do I understand you to say that the tax cuts
are going to pay for themselves?
Mr. Vought. The economic program of which the tax cuts is a
major part, yes, we believe will pay for themselves.
Mr. Scott. Okay. When you talk about tax cuts, do some tax
cuts create better economic stimulation than others?
Mr. Vought. We do think that tax policies do not come in
the ability to impact economic growth, but we do think that the
policies that were contained in----
Mr. Scott. And the ones that simulate the best are those
aimed at the low and moderate income ranges and the least
effective are corporate and high income tax cuts; is that
right?
Mr. Vought. No, we would not say that. We would say that
the policies that are included in the tax cuts that the
President signed----
Mr. Scott. You would not say that tax cuts aimed at low and
moderate income simulate the economy better than those for
corporations and the high income?
Mr. Vought. From the standpoint of economic growth, no, I
would not rank those higher in terms of their ability to
provide long-term economic growth. I would say that the
policies that were included are all important for various
economic reasons.
Mr. Scott. Thank you.
One former member said he had never been here with a
balanced budget. You can see that I have been here when we had
a balanced budget. In fact, there is a pattern on that. If you
look at the blue areas, each blue President going back to
President Carter had a better deficit than he started, and
every red President going back to Nixon ended up worse than
they started. Is that true?
Mr. Vought. I note your chart. I also note that President
Clinton benefitted from a Republican Congress that was
committed to balancing the budget.
Mr. Scott. And he had to shut down the government to stop
them from messing up his budget. So do not give them any credit
for going into surplus.
In fact, when Bush came in, can you tell me what happened
during the Bush Administration with the Republican Congress
that messed up the budget?
Mr. Vought. It did lead to an increase in the deficit.
Mr. Scott. That is right. What did they do to accomplish
that feat?
Mr. Vought. We are not here to say that spending control
has not been a bipartisan problem. We are saying the exact
opposite.
Mr. Scott. Wait a minute. We already established that under
Democratic Presidents against that under Republican Presidents,
it goes worse.
Under the education budget, it has been pointed out that
you cut the Education Department by how much? About 12 percent;
is that right?
Mr. Vought. We contributed another $50 billion to
education. So we think that more than offsets the 12 percent
reduction that you note in terms of Department of Education.
Mr. Scott. Okay. And is it $5 billion a year, the Choice
Program?
Mr. Vought. It is.
Mr. Scott. Fifty billion over 10 years. How do you limit it
to $5 billion?
Where do we get some details on the program?
Mr. Vought. We are happy to provide additional details from
the Department of Education. It is an amount of money that we
felt that we could justify in the current deficit.
Mr. Scott. And the details, how do you limit it?
On April 15th, when people file their taxes, how do you
know it is going to only be $5 billion?
Mr. Vought. Treasury will be providing guidance. If you all
see fit to enact it into law, states will have quite a bit of
discretion to design their programs. Their discretion would be
based on Treasury rules that----
Mr. Scott. So this thing would have to get through Congress
before----
Mr. Vought. Absolutely.
Mr. Scott.----you could, and you do not have any details
yet.
On the student loan crisis, what do you do to help students
pay off their student loans? So I understand you cut student
loan assistance by over $200 billion.
Mr. Vought. We find savings in the student loan programs,
but we feel like we have put forward a proposal that will----
Mr. Scott. Savings like eliminating the public service loan
forgiveness program, subsidized loans, and payments for account
maintenance fees?
Mr. Vought. We consolidate programs to be able to offer one
student income-driven repayment plan that we think will provide
certainty and allow anyone that is receiving a payment now to
be eligible under that.
And we think it will be certainty and very generous. After
15 years, you can walk away from your debt, and for a graduate
student, after 30 years you can walk away from your debt.
Mr. Scott. And how does that change present law?
Mr. Vought. It consolidates. It puts forward a new proposal
to do that.
Mr. Scott. Does your budget recognize the pending multi-
employer pension fund crisis?
Mr. Vought. We do. We put forward premium increases to be
able to further----
Mr. Scott. Premium increases are not going to deal with the
hundreds of billions of dollars we are going to be on the hook
for if these plans go broke.
Do you have a plan to address the multi-employer pension
fund crisis?
We have had studies at our last hearing on the Education
Committee that showed that there will be hundreds of billions
of dollars in adverse impact on the federal budget.
These things go broke because pensioners will not be paying
as much tax. They are going to be more likely to use food
stamps and Medicaid, and it will have an impact of hundreds of
billions of dollars if we do not do something.
Is there a proposal to do something?
Mr. Vought. It is not the proposal that we might agree on,
but there is a proposal to address this. We definitely see an
issue.
Mr. Scott. Do you agree or recognize the adverse impact
that doing nothing will have?
Mr. Vought. Absolutely. We do not want that to happen.
Mr. Scott. Is that in the budget?
Mr. Vought. We have a proposal that is in the budget to
increase premiums to deal with some of these pension crises.
Mr. Scott. And that is it?
Chairman Yarmuth. The gentleman's time has expired.
Thank you.
And I now recognize Mr. Meuser of Pennsylvania for 5
minutes.
Mr. Meuser. Thank you, Mr. Chairman.
Director Vought, thank you for coming before the Committee
today.
In the fiscal year 2020 budget, your office has outlined a
plan to invest in important programs that are central to many
Americans, while also reducing our discretionary spending and
reducing the growth of mandatory spending.
I am concerned about our nation's rising debt, and I do
appreciate the fact that the President is putting us on a plan
that moves us toward fiscal responsibility, decreasing spending
on non-defense discretionary programs by 5 percent next year,
as well as reducing mandatory spending growth through reforms
targeted at waste, fraud, and abuse and lowering drug prices,
and as well as welfare reform.
Our federal revenue growth projected for 2020 is 4.9
percent. Does that number ring true with you?
Mr. Vought. Yes.
Mr. Meuser. Four, point, nine percent?
Most states in our country would love to have that sort of
revenue growth. That only ones that probably have it would
occur after a sizable tax increase.
Four, point, nine percent revenue growth is very strong. Of
course, our problem is that our spending levels are quite a bit
higher than that.
Would you say that it is accurate that during the previous
Administration, President Obama presidency, that our national
debt went from $9.5 trillion to $19.5 trillion in an eight-year
period?
Mr. Vought. It sounds about right.
Mr. Meuser. It sounds about right.
Can you quantify the general impact of the Affordable Care
Act on our current mandatory spending levels? I think it is
roughly--well, why do you not answer first please?
Mr. Vought. Sure. It is a sizable aspect of our mandatory
programs. Health care expenditures in general from Medicare to
Medicaid to the Affordable Care Act's expansions of Medicaid
and their exchange premiums collectively absorb a very large
portion of the mandatory side.
Mr. Meuser. Right. And in spite of there being various
taxes that went along with the Affordable Care Act, would it be
fair to say that our current deficit has approximately $300
billion to $400 billion in it due to the Affordable Care Act
increasing the debt by as much as $300 billion to $400 billion
in 2020?
Mr. Vought. I have not looked at those numbers recently,
but I take your word for it.
Mr. Meuser. My colleagues on the other side of the dais
argue that this year's projected deficit is grown by the
enactment of the 2017 Tax Cuts and Jobs Act. My understanding
is that this does add to the deficit, but approximately $150
billion. Is that about accurate?
Mr. Vought. The Affordable Care Act certainly did not help
us from a federal spending trajectory. I would certainly agree
with that.
Mr. Meuser. Right. Okay. But the tax cuts, the deficit,
current deficit, the tax cuts have attributed to approximately
in current year or in the next fiscal year about $150 billion,
closing rapidly, but $150 billion?
Mr. Vought. Yes, that is about right.
Mr. Meuser. Okay. And then since the enactment of the tax
cut bill, we have had 3 million private sector jobs created.
What would you say the estimate of these jobs would be? Would
you say that perhaps two-thirds or better have received
employer-based health care?
Mr. Vought. That would be my assumption. You have 5 million
new jobs that have been created since this Administration took
office. Many of these, given the fact that we have employer-
provided health care in this country, would receive incredible
health care as a result.
And I would certainly think that that is an intuitive
assumption from that.
Mr. Meuser. So, you know, just doing some easy math on
that, that would add up, taking people not just off of the
unemployment rolls, but also providing them health care. I
mean, that can add up to 50 or $60 billion right there.
Mr. Vought. Perhaps.
Mr. Meuser. Okay. So, one last question. In your modeling
for our economic growth, and I suppose the answer to this is no
because I do not think you engage in too much dynamic using
current law, but have the plans for opening up trade worldwide,
the President's goal of reciprocal trade, lowering tariffs with
the goal of getting to zero percent tariffs, is that worked
into your economic formula at all?
Mr. Vought. They are. It is one of the reasons that I
categorize our economic policies as a whole when I talk about
the revenues that are generated. So, we include the tax cuts
impact. We include better trade agreements. We actually include
infrastructure spending, which we do think has an impact on
economic growth, to one of the questions that I received.
We will have to wait until the Council of Economic
Advisors' report coming up in the next few weeks as to be able
to provide more details on the breakdown amongst all of those
different categories, but it is an ongoing story that we intend
to tell.
Mr. Meuser. Thank you, Mr. Chairman.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Michigan, Mr. Kildee for
5 minutes.
Mr. Kildee. Thank you, Mr. Chairman.
Thank you, Mr. Vought, for being here.
I have a couple things that I want to try to cover, but I
want to follow up on a statement that you made not that long
ago regarding a program that I am quite familiar with, having
spent 25 years in local government, and that is the community
development block grant program.
And I want to make sure I got this right. I think I heard
you say that it is your analysis or the analysis of the
Administration that the community development block grant
program has demonstrated no economic value. Is that accurate?
Is that an accurate statement of your views?
Mr. Vought. It is that we think that the program has been
effective from the standpoint of federal taxpayers. We
understand that it will certainly offset costs that states and
localities would have to----
Mr. Kildee. Is that the reason that Democrats and
Republicans have come together to fund CDBG, just to offset
local government costs, or is there something greater than
that?
In other words, has it been traditionally a legitimate
public investment that has a return to the federal government?
Mr. Vought. We would disagree as to whether the return to
the federal government has been worth the cost, but I am
certainly open to----
Mr. Kildee. Do you think that federal government benefits,
for example, when there is a reduction in crime in a community?
Is that a public value that the government has a stake in?
Mr. Vought. Certainly, but we would not say that the CDBG
program is the only way to reduce crime.
Mr. Kildee. So on what analysis, on what basis have you
come to the conclusion that the CDBG program does not
contribute to a reduction in crime?
I mean, do you have, for example, any published, peer
reviewed studies that demonstrate that the CDBG program does
not deliver economic value to the federal government?
Mr. Vought. We do not have----
Mr. Kildee. And even specifically on the issue of reduction
in crime or any other subject, any other category?
Mr. Vought. We believe it is important to reduce crime. We
believe that is something that we adequately fund as Department
of Justice resources.
Mr. Kildee. So you think crime is adequately funded;
fighting crime in this country is adequately funded?
We do not need to do anything else to help communities
create infrastructure that reduces crime. Let me just give you
an example because this is a very sore subject for me, having
spent a lot of time working in communities across the country
and in my own hometown to deal with blight and abandoned
property and seeing the impact it has.
I have here a published, peer reviewed study from the
Journal of Criminal Justice that points out that the eligible
activities in CDBG, which include demolition of vacant and
abandoned properties, has a positive impact on violent crime.
And it is just one of many studies that I would cite.
In fact, if I could ask unanimous consent to have this
study included in the record of the Committee, I would
certainly appreciate that.
Chairman Yarmuth. Without objection.
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Mr. Kildee. I guess the question I have, just to move from
this because obviously I think you and I disagree, and of
course, many of my Democratic and Republican colleagues who
seem quite willing to show up at ribbon cutting ceremonies that
include CDBG dollars obviously also disagree with you on this
subject.
But I understand your point that you assert that cutting
taxes contributes to economic growth and has a positive overall
impact ultimately on tax revenues. I disagree with the
analysis, but I understand that is your point of view.
Do you ever believe that there is a circumstance where
increased spending has the effect of reducing a deficit?
Mr. Vought. I cannot think of a scenario.
Mr. Kildee. You do not believe that, for example, if the
National Institutes of Health were able to somehow, through the
work of this Congress, double the amount of research into
diabetes, and if the amount of research going into diabetes led
to in five years a cure for diabetes, do you think that would
have a positive impact on deficits, on spending, on the overall
impact that that dreaded disease has on our economy?
Mr. Vought. It would certainly have positive impact.
Mr. Kildee. So, cutting the National Institutes of Health
by definition then could reduce the possibility of that
positive impact; is that correct?
Mr. Vought. We do not think so, and not by definition is
there an assumption that when you take money from federal
taxpayers and you contribute it to worthy investments, which we
believe that $33 billion is a worthy investment for the
National Institute of Health----
Mr. Kildee. Not worthy enough to maintain it at its current
level; not worthy enough to take the bet, for example, that
those people out there who happen to be United States taxpayers
who are suffering with diseases like diabetes, multiple
sclerosis, Alzheimer's should not at least be able to be given
a chance by supporting important research that would not only
potentially ease their suffering, which for me is ample
justification and I think actually for most Americans would be
ample justification, but using your values, which I do not
think we necessarily share, it potentially and probably almost
certainly will lead to significant reductions in the cost of
health care in this country.
Easing suffering does not necessarily mean we cannot also
do something positive and have a positive economic impact. So
whether it is research into dreaded diseases, cleaning up
abandoned houses in beat up, old neighborhoods, or for example,
the reduction that----
Chairman Yarmuth. The gentleman's time has expired.
Mr. Kildee.----you propose in drinking water, clean
drinking water, what I would simply suggest is consider
internalizing the positive and negative externalities in these
decisions, and I think what you will find is that a different
set of priorities would take us a lot further.
I yield back.
Mr. Vought. May I briefly respond?
Chairman Yarmuth. You may respond.
Mr. Vought. I think it is a fair point, sir, and I do not
want to suggest that some of the research advances that we make
at National Institute of Health would not have a long-term
impact on the cost of paying for coverage for those diseases
for the people that benefit from health care programs. We have
not done the sorts of economic analysis to tell you what those
would be.
But I do think it matters as to where the investments that
we are making and not making, just a blanket statement that
just because a dollar of federal spending, that it is going to
result in some kind of dynamic growth.
I think that is what I would reject on the back end, but I
take your point.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Tennessee, Mr. Burchett,
for 5 minutes.
Mr. Burchett. Thank you, Mr. Chairman, Ranking Member.
Mr. Vought, thank you so much for being here.
I grew up in a pretty cool home. I can remember Daddy had a
little thing on his mirror, and it said, ``You deny me before
man, and I will deny you before the gates of heaven.''
And I wanted to thank you for your service to our country
right now.
And in preparing for this, I noticed that when you
testified before the Senate, I thought you were unfairly
attacked for your faith, and I thought it was outrageous at the
time, and it seems to me it is an appropriate moment just to
say thank you for being in the public square as a person of
faith.
And it troubles me that a U.S. Senator would ignore the
First Amendment and would question the motives of anybody,
anybody, any public official based on religion.
And I wondered if you would want to comment on that or what
preluded that. If not, we are good.
Mr. Vought. Sir, I do not have any comment. I am here to be
representing the Administration on the budget policies that the
President's budget puts forward.
Mr. Burchett. Thank you.
All right. Well, let me start off by stating I am in full
agreement of the President's goal of fiscal responsibility
specifically with education. I compliment him on this.
I believe the states should have the full authority over
education. I have stated the Department of Education, I think
we would be better off if they dissolved it and sent the money
to the states directly.
I think the people at the state and the local level, at the
school board level, know exactly what is going on in the
classroom. Some bureaucrat up here does not, I do not think,
have a clue other than to preserve their jobs and the jobs of
others.
Where do you see the education budget moving forward?
And could we see any savings in that by giving the money
back to the states?
And do you see any movement in that direction?
Mr. Vought. We hope so. That is one of the reasons we put
forward the policies in this budget.
As I said, we had a $50 billion investment of allowing
people to keep more of their own money to be able to invest in
state scholarship programs, either public or private school
choice. So we think that that is a better way to invest in
students and communities and our education system.
We also want to make sure that we continue to be able to
focus precious federal dollars that we are stewards of from a
taxpayer perspective on programs that work. So we continue to
fund programs that we do think that work, many of the formula
programs within the Department of Education, but we also look
to eliminate programs that don't work.
You know, one program, the 21st Centuries Community
Education Program, these are centers that don't work. They do
not have an increase in proficiency in reading and math.
Students stay in these centers a very short amount of time.
And so it is one of those things from an effective
standpoint we have looked at and said this is just a dollar
that is not well spent.
In some cases in this budget when we have a program that is
not working, we try to reform it, like we do with Job Corps. In
this instance, we did not think that we could reform it. We
would rather focus the dollars elsewhere.
Mr. Burchett. And you can pass this on to the President. I
have a degree in education. I was actually certified to teach,
and my mama taught forever, and my daddy was a long-time dean,
and my sister still is an educator.
And I have never ever seen a federal bureaucrat in our
classrooms, ever, and yet they seem to just always want to pass
it down to our locals, and that drives me crazy.
I also want to compliment the President on his proposal
regarding HIV. A lady in my district very close to me, she is
not in my political party, but her name is Julia Tucker, and
she lost her son to HIV, and she helped start an organization
called Positively Living, which I am proud to support. My wife
is going to be sitting at her table at an event, I believe,
Thursday.
Could you provide some more details on how the goal is
going to be achieved regarding HIV?
I know the President said basically he wanted to just
eliminate it, and of course it has changed so much. I have
friends that I grew up with. I am pretty sure some of them died
of HIV, and they were just more or less ostracized, but now it
seems we have got medication. We have got things, but it is so
daggone expensive.
Is there some way you could address that please?
Mr. Vought. Sure. Thank you for the question.
It is one of those initiatives in this budget that we are
very proud of. As we went through the budget process, we worked
with the Department of Health and Human Services, and they put
forward a proposal.
They said, ``Look. You know, we can make serious gains in
here based on the drugs that are out there, but we need people
to be tested.''
And one of the--the $300 million investment in this budget.
It is allocated within HHS. There is money for HRSA. There is
money for the Ryan White Health Care Programs. There is some
money for Indian Health Services.
And we are really predominantly trying to increase the
testing to be able to make sure that people can get the
lifesaving medications that have now been developed and can
fundamentally change and prolong their life, which is
fantastic.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from New York, Mr. Morelle.
Mr. Morelle. Thank you, Mr. Chairman.
Mr. Vought, thank you for your testimony today.
A couple of quick observations and then a couple of
questions if I might.
The tax cut bill which has been referred to, I think, is
generally perceived to be a tax cut for the wealthiest
Americans, and the consensus by economists that the stimulus
was largely unnecessary as it relates to tax policy during an
economic expansion, which was well underway for six years prior
to this Administration.
In fact, if you look at charts from 2010 on employment,
wages, unemployment rates have continued on an upward path
since 2010.
The tax cut did not pay for itself. I think that has been
pretty well established, and it does not appear to have added
to the long-term economic expansion, although there may have
been some short-term stimulus.
And the tax bill also capped state and local tax
deductibility, which has long been a part of our income tax
structure since it was created in the 19th Century.
Would the President and the Administration support
elimination of the cap on the SALT deduction?
Mr. Vought. As the President has stated, sir, he is willing
to consider it, but it is something that he feels that Congress
should take a look at, and if they want to send him a bill, he
is willing to consider it, but it is a debate that he thinks
should start with Congress.
And we have not assumed any changes in our revenue
policies.
Mr. Morelle. I want to go back to something that I think
was raised by the gentleman from California, Mr. Peters,
earlier. He talked about, and I just want to make sure that I
get this, related to not only the CBO's budget projections or
economic projections rather, but the federal Reserve and most
private economists do not agree with the Administration's
assessment on the rate of growth.
In fact, I know a number have indicated they think 3
percent is unlikely to be maintained in the long run; that we
barely got to 3 percent in 2018. It may have been impacted
somewhat by a temporary stimulus, and they forecast, I think
the CBO forecasts annual average growth rate of less than 2
percent.
You indicate in your testimony that you had not even
considered or projected a lower than expected growth rate. But
given the fact that there is a substantial body of economists
both in the public sector and private sector who do not agree,
I cannot imagine you have not looked at projections that are
not at 3 percent.
Is that what your testimony was, that you have not even
considered that?
Mr. Vought. We know it will have an impact on it, and we
have had some rough modeling, but it is not the type of
precision that we would be able to put forward like we do with
the economic report of the President.
I would mention with regard to the private forecasters,
they were wrong the first two years. They said it was
outrageous and ludicrous, and we were proven right in both
years.
We are the most accurate Administration in history as far
as the data that has been collected.
Mr. Morelle. I do note that even in the budget as I
understand it, 2025, which is when it is likely, the CBO
estimates, that it will boost moderately, economic growth, but
ultimately serves as a drag on growth rates beginning in 2025.
And I wondered in your modeling, it obviously is different
from CBO, how do you adjust for that?
What is your explanation of what is different in the two
models?
And I do note also even in the President's budget, that in
2025 it does show a substantial dip in the growth of receipts
starting in 2025.
Mr. Vought. Specifically, the difference between us and CBO
as it pertains to the out-year growth rates has to do with
capital formulation and the fact that CBO does not, we believe,
track with the economic literature that suggests that there
will be significant increases in capital investment.
We are already seeing that year to year with the figure
that I gave earlier with the increase in nonresidential fixed
investment of increasing 7 percent. So this is an example
where, as a result of capital investment, companies are
expanding their businesses, making investments, and we believe
that that is the fundamental reason for why this tax cut is not
just juicing the economy to move on with our lives, but is
actually producing long-term, fundamental, structural higher
revenues and economic growth for the country to benefit from.
Mr. Morelle. Well, I do note that it is not only
Congressional Budget Office, but private economists and the
federal Reserve do not necessarily concur with that assumption.
Let me quickly move on, and I recognize I am almost out of
time. So I would like to come back to you perhaps offline to
talk about some of the Medicare challenges, but your estimate
is that a half a trillion-dollar reduction in the rate of
growth over the next 10 years as a result of your policies?
Mr. Vought. Yes, we have $517 billion in savings in
Medicare. These are program integrity, drug pricing reductions,
and a number of scenarios where we think that just common sense
would dictate that we pay particular sites of care the same
whether they are skilled nursing facility or a long-term care
hospital.
Mr. Morelle. Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Texas, Mr. Roy, for 5
minutes.
Mr. Roy. Thank you, Mr. Chairman.
Mr. Vought, thank you for taking the time to come in here
and address the Committee. I appreciate your service to the
country, and I would echo the comments of Mr. Burchett about
your willingness to stand up with respect to the attacks that
were levied against your faith unfairly in the United States
Senate. So thank you for being here.
A couple of questions. Would you agree that when you
balance your budget at home or that most American people
balance their budget, they look at revenues, on the one side,
that is, the income they receive, and they balance that against
what they need to spend, on the other side? And they are trying
to spend within the amount that they bring in in revenues.
Mr. Vought. Yes.
Mr. Roy. And should that be the goal of the United States,
that we look at our revenues and then we look at what we have
got, and then we spend within our means?
Mr. Vought. It absolutely should be.
Mr. Roy. Is that the goal of this budget presented by the
President to set us on a path towards spending within the
means?
Mr. Vought. It is, absolutely. And I think--I appreciate
the question, Congressman, because it would be easy when you do
not balance within 10 years, which is the normal budget window
that budgets provide for, to say balance is not important.
We don't believe that. We believe that balance is
important, that it is the debate that every family has across
this country about what they can spend versus what they bring
in.
And we want the federal government to operate more like an
American family from that standpoint, which is one of the
reasons we said, ``All right. What can we do outside the normal
window?'' We can get there within 15, and we did so.
Mr. Roy. Well, thank you.
And I appreciate you presenting a budget that actually
balances, albeit in 15 years. You know as well as I do, I would
rather see that in 10 or five, but I appreciate you at least
submitting one that balances.
Question: in order to do that on the revenue side, right,
we need to get revenues up or keep them up, and is that what
you are assuming based on the economic growth under this
President's policies, that we are getting revenues up?
Mr. Vought. Absolutely, yes.
Mr. Roy. And in doing so, I have heard a lot of concerns
about the cost of the tax cut, the so-called cost of the tax
cut. Would you agree that the CBO last year said that that cut
initially would cost $1.69 trillion, but amended that based
on--CBO, by the way, not y'all--amended that based on increases
in revenue, amended that down that we save $1.1 trillion out of
that because of economic growth because we would have $6.1
trillion bigger economy by 2027?
We would have $150 billion on the entitlement side of the
ledger, and that would leave us with a $440 billion net cost
because of tax increases.
Does that sound right with what CBO said?
Mr. Vought. I do believe it sounds right with what CBO
said.
The basic point, I think, is that there has been a debate
the last three years. It is: do tax cuts lead to economic
growth? Does it increase revenues?
And we believe the CBO is coming our way in saying that
since the President took office, there has been $1.3 trillion
in additional receipts generated from economic growth.
Mr. Roy. Right.
Mr. Vought. They are not making the same claims that we are
with regard to our economic policies covering the cost of the
tax cut. I am not here to say that they are.
But we do think that they are providing data points that
argue in favor of what we have been arguing for two years.
Mr. Roy. And on the other side of the coin, when we talk
about spending, is it about 30 percent discretionary and 70
percent mandatory?
Mr. Vought. Correct.
Mr. Roy. And within mandatory, can you please tell me what
you feel about the great big press conference that was held on
the front of the Capitol on a bipartisan basis with massive
proposals to deal with mandatory spending and entitlements?
Do you agree with all of the points made by members on both
sides of the aisle when they stood up and talked about all of
the reforms to Medicare and Social Security that we saw on the
steps of the Capitol recently?
Mr. Vought. I do not recall specifically which press
conference you are referring to, but I know that mandatory
spending is a significant issue, and often Congress has put
forward increases to mandatory spending. We are seeing that
with proposals that are being offered for Medicare for All.
Mr. Roy. Right.
Mr. Vought. Which could be in the neighborhood of $32
trillion.
Mr. Roy. And so you do not recall that because it did not
happen, right?
Are you aware of any serious proposal in Congress to
massively reform entitlements spending?
Mr. Vought. I am not aware of that.
Mr. Roy. On either side of the aisle?
Mr. Vought. I think that one side of the aisle has
attempted to look at mandatory spending over the last several
years, but again, spending is a bipartisan problem. I am not
here to say otherwise.
Mr. Roy. And have you seen any serious political capital
being spent to promote such a plan? No.
Mr. Vought. Not that we have seen so far.
Mr. Roy. So now on the discretionary side of the ledger,
half defense and half non-defense discretionary, on the non-
defense discretionary, does this chart roughly reflect what we
have seen with respect to caps and busting caps over the last
six or seven years?
Mr. Vought. Yes.
Mr. Roy. The chart that my colleague from Virginia, Mr.
Scott, put forward talking about deficit spending year by year
under different Presidents, you rightly noted that in 1994 we
had a Republican Congress that came in to work with the
President who, by the way, at least admitted that the era of
big government was over and tried to work with us. Then we
noted that deficit spending under President Obama increased
massively.
What happened in 2011 that caused those deficits to reduce?
Mr. Vought. What happened in 2011? I do not know off the
top of my head.
Mr. Roy. With the budget. Was the BCA----
Mr. Vought. Oh, yeah. The BCA agreements, certainly the
two, we put forward a series of spending caps that were
designed to limit and pay for the debt limit increase at the
time.
Unfortunately, Congress has walked those spending caps back
every two years and increased our spending as a result.
Mr. Roy. Thank you, Mr. Vought.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentlelady from Texas, Ms. Jackson Lee.
Ms. Jackson Lee. I thank the Chairman very much, and the
Ranking Member. I thank the Director for his presence here.
We are all committed to the American people, but as I look
up and raise up this budget that says ``for a better America,''
you know that I have a completely contrary view of this. In
fact, I think this hurts the most vulnerable in American and
people who have worked in America, seniors who have worked in
America. And so, I want to pose questions along those lines.
First of all, I think it is important to note that the top
10 percent of America's population now average more than nine
times as much income as the bottom 90 percent, nine times.
Americans in the top 1 percent average over 40 times more
income than the bottom 90 percent. The nation's top 0.1 percent
are taking in over 198 times the income of the bottom 90
percent.
That is a lot of people, and African American families with
just over $3,500 own just 2 percent of the wealth. I do not
believe that this budget that is interested in cutting from the
very heart of the needs of people, from education to health
care, to the environment, $2.7 trillion, is seriously committed
to working in a bipartisan manner to provide for the great
America so that all people have the ability.
My questions to you involve issues around Medicare, $850-
plus billion. How does that in any way make America better when
you attack the most vulnerable?
Mr. Vought. As I mentioned earlier, thank you for your
statement. I do believe that budgets are about our visions for
the country. It is inaccurate to say that our budget cuts
Medicare by $845 billion. We increase Medicare every single
year. The savings that we include and assume in this budget is
$517 billion.
The $845 billion number that has been reported in the press
comes from the fact that there is not an assumption that we are
other places outside of Medicare providing for uncompensated
care in graduate medical education at our hospitals. We are.
Ms. Jackson Lee. If I might.
Mr. Vought. We are providing for that.
Ms. Jackson Lee. If I might, reclaiming my time, if I
might, those kinds of shenanigans and manipulation may sound
good, but it is accurate that there are cuts coming out of
Medicare of $845 billion, almost $850 billion.
Also, I want to take note of the fact that here is a
President who engages with Russia, North Korea, wants to pull
troops out of Syria and Afghanistan. So why in the world are
you asking for $750 billion for defense in contrast to the
enormity of the amount of millions of dollars, billions of
dollars that you are cutting from education, environment,
Medicaid, Medicare?
What is the purpose of using non-defense discretionary,
this statement of mandatory which makes it sound negative, of
course, from the very beginning; why is that always the target
when vulnerable people from seniors to young people, to
minorities who have not had equal opportunities in many
instances, as you have indicated, the income of African
Americans, to the contrary, of this Administration's
representation, it has not been good for them; why are you
going after the vulnerable in this budget?
Mr. Vought. We do not think we are going after the
vulnerable in this budget, Congresswoman. We think that we are
trying to find reforms that make sense and that would improve
the lives of beneficiaries.
I think one of the two points that I think are reflected in
your comments that I do want to get to, I think it is fair to
say why are we always looking on the mandatory side. One of the
reasons that I have been trying to have a conversation with the
members on this side of the aisle is that we think that non-
defense discretionary spending is an area where we need to do
our best to continue to look for efficiencies and get rid of
wasteful programs.
Ms. Jackson Lee. Well, reclaiming my time, if I might, and
I appreciate the interest of engagement, let me make it very
clear as I end, this budget attacks the most vulnerable in this
nation. It is unequal in wealth. The tax scam is still the most
powerful undermining of growth and prosperity in this nation by
pushing money toward the top 0.1 percent or the top 1 percent
and leaving those who can add to the economy along the highway
of despair. This budget will not go.
I yield back.
Chairman Yarmuth. The gentlelady yields back.
Any further comments from the witness?
Mr. Vought. No, sir.
Chairman Yarmuth. Okay. Thank you.
I now recognize the gentleman from Texas, Mr. Crenshaw for
5 minutes.
Mr. Crenshaw. Thank you, Mr. Chairman.
Mr. Vought, thank you for being here and for your
testimony, and I would like to thank you for your hard work and
tough choices that went into the formulation of this budget.
One of the benefits of always going last is that I really
get to observe the philosophical differences between Democrats
and Republicans, and here are a couple of my observations.
There is a key difference in how we view spending and where
it should occur. There is a key difference in where we view
where government services should occur. On the Democratic side,
I believe they are overlooking the fact that we have local and
state governments.
Every single problem, and some of these are real problems;
some of these are real investments, but there is this belief
that it always has to be solved at the federal level, always,
and I believe your budget takes note of that. I believe your
budget takes note of the fact that maybe, just maybe some of
these things, and some of them have been mentioned today--maybe
it is law enforcement, maybe it is housing, maybe it is clean
water, education--maybe some of these things can be solved by
state and local actors, where constituents can go down the
street and knock on the door of their representation and say,
``Yeah, you can raise my taxes, but I want it going towards
this,'' as opposed to the federal government, which they really
have no idea where their taxes are going oftentimes.
It is also really interesting to note this idea that more
must always be better, that the bigger the dollar sign is the
bigger your heart is, you know.
And there is this notion that if we want to cut back on
programs, and in many cases as you noted, and we will get to
this, what a cut really means, but just because you might want
to cut down on something that is not benefitting the American
people, that you are now anti-science or anti-health care.
That is a moral accusation. That is an accusation against
our intentions, and that is not right. We have different views
of how we should spend this money. It really is as simple as
that.
I want to give you an opportunity again to explain to us,
because there has been a lot of confusion over this, what a cut
is versus what slowing growth is.
So, it has been noted over and over again that maybe we
should reform the pattern of growth on Medicaid and Medicare.
Are we actually cutting these programs?
Because you have said it over and over again, but I want to
clarify. These programs seem to be increasing their budget
every single year, pretty drastically actually.
Mr. Vought. They are, Congressman, and we would have, I
think, a similar definition of a cut, which is that a dollar
amount less than the previous year, not a dollar amount less
than a projection from someone from the year before.
Mr. Crenshaw. Well, I would just hope that we could have
honest conversations about this because your regular listener
who is watching the news and watching the lies being told on
media that we are cutting programs, what they are thinking is,
``Hey, we spent $100 on it this year, and next year we are
spending $90 on it.''
But that is not true, is it?
Mr. Vought. No.
Mr. Crenshaw. That is unfortunate. I wish we could have an
honest conversation, and I wish people would understand why we
might want to reform some of these programs.
Social Security disability insurance, why would I want to
reform that? Maybe because I was eligible for it. I was
eligible to get thousands of dollars of taxpayer money as soon
as I retired from the military. The federal government told me
I should get on that. The military told me I should get on that
program
I am not disabled. I have a thing going on here, kind of a
disability, but I am not disabled. I should not get that money,
but that program says I should. There is something wrong there.
I am perfectly capable of working.
I want to get to another couple of details in my time left
here. This budget talks about increasing what people can
contribute to their health savings accounts.
Does that include direct primary care?
Mr. Vought. Let me get back to you on that particular
question, but we are excited about the reforms that we have in
health savings accounts, both in Medicare and outside.
One of the situations that we see is that the rules of the
HSA programs are too restrictive, and so if you have an
insurance product that attempts to provide--to absorb the cost
for generics or take care of other preventive medicine to lower
their cost and the cost to the beneficiary over time, that if
they offer those kinds of insurance products, that then the
individual is no longer eligible for an HSA.
So what we are trying to do is to say what is an actuarial
way in which we can make that assessment and expand those
programs.
Mr. Crenshaw. That is good. I do not have enough time to
get you to answer this question, but I want to commend y'all
for putting paid family leave in there. I think Republicans
need to come up with a conservative, sustainable solution to
that.
In my last 10 seconds, I want to ask you about the cuts to
the Army Corps of Engineers' budget and why that may be the
case. What is the justification for this?
There is a backlog of about $100 million for infrastructure
investment. In places like Houston, we care a great deal about
that, and it is a worthy investment for the future. So I will
let you take that?
Thank you.
Chairman Yarmuth. The witness may respond.
Mr. Vought. I would like to respond.
One of the things that we have been most frustrated with
the Army Corps is how slow they are with many of the projects.
We are trying with this budget to say continue to focus on the
backlog and things that are already underway and making a line
in the sand to say not to go forward with new-starts,
particularly when there is so much disaster money that is in
the system that needs to get spent as well.
So we certainly get it. We do support Army Corps of
Engineers' spending, and we do think that this is a sustainable
level, but we also understand where you are coming from.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentlelady from Washington, Ms.
Jayapal, for 5 minutes.
Ms. Jayapal. Thank you, Mr. Chairman.
And thank you, Mr. Vought, for being here.
In December of last year, somebody made a statement that
said this. ``The U.S. spent $716 billion this year. Crazy.'' Do
you agree with that statement?
Mr. Vought. No, I do not agree with that statement.
Ms. Jayapal. You do not agree with that statement.
And then in October, there was another statement that was
made that said we need to, quote, ``get rid of the fat, get rid
of the waste,'' and a suggestion was made for a defense budget
of $700 billion, which would have been a 2 percent cut over the
previous fiscal year.
Do you agree with that proposal?
Mr. Vought. I remember the conversation we had in terms of
developing the defense budget for this budget, where we----
Ms. Jayapal. Do you agree with that statement that the
defense budget should be cut by 2 percent and that we should
get rid of the fat and get rid of the waste? Yes or no?
Mr. Vought. I certainly agree that we need to eliminate the
fat and the waste.
Ms. Jayapal. So you agree with that.
Mr. Vought. I do not agree with that we should have a
reduction of 2 percent.
Ms. Jayapal. Okay. So you have just disagreed with the
President of the United States. Both of those statements were
made by Donald Trump.
In December, Donald Trump tweeted, ``The U.S. spent $716
billion this year. Crazy.''
And then in October, Defense News reported that Trump told
the cabinet to, quote, ``get rid of the fat, get rid of the
waste,'' and suggested the defense budget of $700 billion,
which would have been a 2 percent cut over the previous year.
Strange, strange support, bipartisan support between what
President Trump said and what some of us have been saying for
some time.
So, Acting Director Vought, how much did the President cut
total national defense spending by in his 2020 budget, the
budget you have before us today?
Mr. Vought. We are increasing the budget by 5 percent.
And can I respond to the comments the President made?
Ms. Jayapal. No. Let me just go through, and if I have time
at the end, I would like to have the chairman give you the
opportunity.
So you actually are proposing an increase of 5 percent to
DOD spending, not a decrease of 2 percent, which is what the
President said he wanted in October.
And did non-defense spending also go up by 4.7 or 5 percent
in your budget?
Mr. Vought. No, it did not. Non-defense spending went down
by 5 percent.
Ms. Jayapal. I have that it was cut by 9 percent, but is it
5 percent?
Mr. Vought. It is 5 percent from the fiscal year 2019
discretionary cap level.
Ms. Jayapal. So overall the cut is what?
Mr. Vought. Overall it is a larger cut.
Ms. Jayapal. Which is what?
Mr. Vought. Which is 5 percent from the cap level.
Ms. Jayapal. What is the overall cut to non-defense
discretionary spending?
Mr. Vought. Well, if you include all of the gimmicks that
Congress uses to hide the cost that the agencies spend at, that
is much higher than we----
Ms. Jayapal. But do you know what it is? What is the
number?
Mr. Vought.----the fiscal year. We have roughly about an
average 10 percent.
Ms. Jayapal. Double cut, double cut. The increase is 5
percent for defense, and the cut is 10 percent of non-defense
discretionary, which, by the way, is education, health care, a
number of other critical priorities.
Now, let me ask you about OCO, which we call the slush
fund. Mick Mulvaney, your boss, who is now serving as the
President's Chief of Staff, referred to the overseas
contingency operations funding as a slush fund. He agreed with
us then back when he was in Congress.
And the House Armed Services Chairman Smith has also called
OCO a slush fund, and so let me ask you. In this budget how
much does the President propose cutting the Defense
Department's slush fund in fiscal year 2020?
Mr. Vought. We propose increasing the----
Ms. Jayapal. How much are you proposing to increase it by?
Mr. Vought. Increase it up from $69 billion to $164
billion.
Ms. Jayapal. So you are proposing to increase a slush fund
that has been called by the President's Chief of Staff and by
our chairman of the Armed Services Committee by 138 percent to
$165 billion over 2019.
Now I want to ask you. You made a statement earlier in this
hearing. You said the National Science Foundation does not need
to be immune from waste, fraud, and abuse, correct?
Mr. Vought. I said that the National Science Foundation is
not immune from waste, fraud, and abuse.
Ms. Jayapal. Is not. Okay. Does not need to be, is not
immune.
So let me ask you. Do you think that the Defense Department
should be immune from waste, fraud, and abuse?
Mr. Vought. I do not, no.
Ms. Jayapal. Okay. And do you know when Congress mandated
that all government agencies, including the Pentagon, should
undergo an audit? Do you know when that happened, what year?
Mr. Vought. A long time ago. Thankfully it----
Ms. Jayapal. In 1990.
Mr. Vought. Thankfully, it finally happened.
Ms. Jayapal. It was 1990, almost three decades ago.
And tell me, Mr. Vought, when was the first audit,
comprehensive audit of the Pentagon done?
Mr. Vought. This year, under this Administration.
Ms. Jayapal. This year. So almost 30 years later, we do an
audit of an agency that has a $716 billion budget right now.
You're proposing a significant increase, and how many of the 21
individual audits that were part of this comprehensive audit of
the Pentagon, how many of those failed?
So where did the Pentagon just fail all of these audits? Do
you know out of the 21?
Mr. Vought. Off the top of my head, no, but I am sure you
do.
Ms. Jayapal. Fourteen out of 21. So two-thirds of all of
these audits failed, and in fact, two just received a passing
grade, and auditors estimated that the Pentagon made improper
payments, and that's their term, which is not necessarily
fraud, but it is payments that lack sufficient or appropriate
documentation or approvals, which means we have no idea where
that money went, of $957 million in 2017 and $1.2 billion in
2018.
So let me ask you, Mr. Vought. Do you think that we should
continue to increase the Defense Department's budget when we
have no idea where that money is actually going, and the
Pentagon cannot even pass an audit and, in fact, did not even
do an audit for almost 30 years?
Mr. Vought. Congresswoman, we think that one of the
promises kept of this budget is that we are the first
Administration to actually comply with the statutes of
Congress, to actually do the audit, and that it is a work in
progress.
Ms. Jayapal. Well, that is good, and hopefully you take
that on before you ask for more money.
Thank you, Mr. Chairman. I yield back.
Chairman Yarmuth. The gentlelady's time has expired.
I now recognize the gentleman from Missouri, Mr. Smith, for
5 minutes.
Mr. Smith. Thank you, Mr. Chairman.
Acting Director Vought, thank you for being here.
I believe that Trump's economic policies are clearly
working. You testified to a lot of the statistics. Over 5
million-plus new jobs. It's clearly the work of President Trump
and the Republican Congress in passing the Tax Cut and Jobs
Act, reducing unnecessary regulations, creating an energy
policy that is now going to be number one in the world, various
aspects.
It's truly the policies of serving the American people and
not the government itself.
In the President's budget, he makes some difficult spending
decisions. While I do not agree with all of them, I commend the
President for making these tough calls.
The budget cuts $2 trillion in mandatory spending, reins in
the cost of health care by giving control back to states and
patients, reforms welfare programs while maintaining the safety
net, and maintains the historic reforms from the Tax Cuts and
Jobs Act.
In particular, I am glad that President Trump shares my
views on the importance of making the 20 percent pass-through
rate for small businesses permanent. This is an important
reform from the tax cut bill that expires in 2025 if we do not
act.
Thanks to this provision and others from the tax bill,
today our economy continues to create jobs and grow at a record
rate. And recent polling shows that small business owner
optimism is at an all-time high.
Mr. Vought, how do you think small businesses would be
impacted if the 20 percent pass-through rate were allowed to
expire?
Mr. Vought. We think it would be impacted very negatively
and that one of the reasons that we want to extend the tax cuts
in this budget is we want to provide certainty to the
businesses that are making investment.
I am not sure as a small business owner how you can make
long-term investments when you are facing an expiration of some
of the tax provisions. So again, when we talk about promises
kept, we are talking about keeping our promise to American
taxpayers, in the case of your question small business owners,
to be able to say this was not just a one-time tax cut, but we
are actually extending these provisions into permanent law.
Mr. Smith. I also was very glad to hear in the President's
State of the Union address about the attempt to increase
investment in fighting pediatric cancer research. Could you
explain a little bit about that in the President's budget?
Mr. Vought. Sure. It's a line item that is not just a line
item. It is a spending initiative that is very important to the
President. We are taking spending for pediatric cancer from
about $548 million to $598 million, an increase of $50 million
every single year because we think it is so important.
Mr. Smith. I totally agree, and I appreciate seeing that.
I am pretty excited that, you know, this is how the process
has started. The President has brought forth his budget to
Congress, and it is a beginning point. I just hope, and I
reiterate to my colleagues on the other side of the aisle,
after eight years of voting against Republican budgets, I hope
that the leadership on the other side will find time to present
a bill to the floor of the House of Representatives where the
entire Congress can vote on a budget.
The President has done the heavy lifting. You have done the
heavy lifting by presenting a budget. They have done a good job
at attacking. Now, let's see the Democrat alternative. Let's
have a vote on the House floor of the Democrat alternative, and
let's do the people's business and put people before politics.
I yield back.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from California, Mr. Panetta,
for 5 minutes.
Mr. Panetta. Thank you, Mr. Chairman. I appreciate this
opportunity.
And, Mr. Vought, thank you for being here. Thank you for
your time and preparation, as well as coming yesterday to our
pre-meeting. I appreciate that.
I am going to talk about the Supplement Nutrition
Assistance Program. Normally the gentlewoman from Connecticut
would be asking you a lot of questions about this, but
fortunately for me, she is not here. So I get to ask these
questions. She may come a little bit later, and I will be
throwing you some softballs compared to her hardballs. I can
tell you that much.
You are well aware what the Supplemental Nutrition
Assistance Program is, SNAP. I am sure you are well aware of
the 42 million people in this nation that rely on it, as well
as 18 million children and 74,000 people in my district on the
central coast of California who rely on the Supplemental
Nutrition Assistance Program, otherwise known as food stamps.
Now, in this budget, you find savings of over $220 billion
over 10 years from that program specifically, correct?
Mr. Vought. We do have savings of that magnitude.
Mr. Panetta. Okay. And three months ago, you are aware that
the Farm Bill was passed obviously, right?
Mr. Vought. Yes.
Mr. Panetta. And in that process of getting to a Farm Bill,
and I would call it a bipartisan Farm Bill, Democrats and
Republicans voted on it in which they rejected the mandatory
work requirements that are being imposed in this proposal, this
budget right now, correct?
Mr. Vought. You are right, that there was not a work
requirement in the Farm Bill that the President signed.
Mr. Panetta. Even though it was proposed initially on that
Farm Bill, but then rejected in order to pass the Farm Bill,
correct?
Mr. Vought. Correct.
Mr. Panetta. Thank you.
And one of the reasons I can tell you, as being on the
Agriculture Committee at that time, one of the reasons why that
proposal failed was because there was absolutely no evidence
that those proposals would work. It was based on ideology, not
policy. It was based on emotion, not evidence.
And as a former prosecutor, I knew early on that I could
not just stand up in court and say someone is guilty and sit
back down. I had to prove my case.
That proposal could not be proved. Therefore, it was
rejected by Democrats and Republicans. That is how we were able
to get to a Farm Bill.
What evidence do you have that this proposal will work?
Mr. Vought. Well, we just would look at the history of the
1990s and what we have seen since then, which is when work
requirements were put in TANF, that it reduced caseloads. Many
people went back to work, and people who were exiting welfare
were able to achieve much higher levels of income with the
incentive to go back to work.
Mr. Panetta. Okay. But you would not look at the evidence.
You do not have any pilot programs or anything of that nature
that it would actually work right now, correct?
Mr. Vought. Again, we would look at the----
Mr. Panetta. Okay. Reclaiming my time, reclaiming my time.
Thank you.
And part of the proposal, part of the savings that you talk
about is a proposal to spend $5.8 billion to serve food stamp
participants with a Blue Apron style food box delivery service
in lieu of cash benefits for low income families, correct?
Mr. Vought. Not in lieu of all cash benefits. We will
continue to provide cash benefits in addition to providing the
Harvest Box, which you mentioned.
Mr. Panetta. Okay. Great. And this Harvest Box, it was
already, well, I would not say proposed. It was floated out
there during the build-up of the 2018 Farm Bill, and it was
widely rejected by food assistance experts, correct?
Mr. Vought. Not all good ideas' time has come, and we
continue to put forward a reform that we think is one that we
are excited about. It was proposed in last year's budget. It
was not enacted in the Farm Bill, and we continue to see the
value in it.
Mr. Panetta. Because there were such issues like
distribution. Do you know whether or not this food box would be
distributed door to door?
Mr. Vought. Those are the kinds of questions that we think
that the policy process and working with Congress would answer.
But we have had a lot of feedback from working with the
private sector that would be interested in engaging with us on
this, and so we think it has a lot of merit.
Mr. Panetta. And what would happen when people are not
home, Mr. Vought?
What would happen in the time of natural disasters?
Would it be distributed through a distribution center?
Do you know any of these details?
Mr. Vought. We are not prepared to offer a lot of details
in the proposal, but other than that----
Mr. Panetta. Okay. That is fine. That is fine.
Mr. Vought.----to say that we think that----
Mr. Panetta. That is fine. Reclaiming my time, thank you.
Do you know what would be in this food box? Yes or no,
please.
Mr. Vought. We have been working with the United States
Department of Agriculture to ensure that a balance diet of all
the----
Mr. Panetta. Okay. Let me tell you what was in the last
food box that was proposed: juice, cereals, pasta, peanut
butter, canned fruits and vegetables, shelf-stable milk, oh,
and I forgot. Canned meat.
Now, I have not ate today at all today, and it is
lunchtime, but I am not hungry right now after reading that.
Are you hungry?
Mr. Vought. Again, this was not meant to replace the
benefits that are currently receiving. There would still be
cash benefits, and I would just say these are the types of
details that we would actually hope that we can work with you
on.
It is not a static proposal. We think that the basic
concept is something that works in the private sector for
people who are not on food stamps.
Let me just give you an example from the standpoint of a
daughter who relies on medicine that comes at a certain time,
and if we are not home, the impact on us is that it goes back
to FedEx and we are out of pocket substantial amount of dollars
because we were not home.
So we are fully confident that individuals are responsible
enough, whether they are on food stamps or not, to be able to
work with their federal government or whoever the contractor is
to be able to deliver and have them at home to be able to
receive the food that is necessary.
And we are willing to work with you to make sure that what
people actually would receive is something that they would be
excited about. It certainly is something with regard to the
private sector options that are out there.
Mr. Panetta. Mr. Vought, thank you very much. I appreciate
it and look forward to working with you.
I yield back my time.
Chairman Yarmuth. The gentleman's time has expired.
I am going to have to leave the hearing and turn over the
chair in about 5 minutes. So I am just going to take my time
right now, just one point and a couple of brief questions.
One is I want to remind my colleagues on the other side
that when CBO scored the Affordable Care Act just before its
enactment, they estimated the legislation would reduce federal
deficits by $124 billion over the 2010 to 2019 period, and by
roughly one-half percent of GDP over the ensuing decade.
Moreover, CBO's March 2010 baseline, before enactment of
the ACA, projected Medicare spending for 2019 to be $828
billion. CBO's latest baseline projection of Medicare spending
for 2019 is $632 billion. So projected Medicare spending is
almost one-quarter less than it was before the ACA, in part due
to the significant cost containment measures and delivery
system reforms in the law.
And I might mention that I remember well during 2009 and
2010 when we proposed $750 billion in cost savings to Medicare
and my colleagues on the other side, many of whom that are now
on the Committee were not there then, but battered Democrats
for the same argument that you are now making with regard to
your reductions in Medicare.
But my one question is your budget contemplates the full
repeal of the Affordable Care Act; is that correct?
Mr. Vought. I would not say it is the full repeal at all.
Chairman Yarmuth. You repeal Medicaid expansion in the
budget.
Mr. Vought. We have a repeal and replace of Medicaid with
state health care block grants.
Chairman Yarmuth. Right.
Mr. Vought. And so what we say, the fair way for comparison
is to add the Medicare Program dollars going forward and those
state health care block grants to figure out what is the amount
of money that states would have to meet the needs under the
statutes to provide health care coverage.
Chairman Yarmuth. The current structure of Medicaid
expansion would be replaced.
Mr. Vought. Yes.
Chairman Yarmuth. So, in Kentucky where nearly a half
million of 4.4 million residents now receive their health care
through the Medicaid expansion would be in serious jeopardy of
losing their care, correct?
Mr. Vought. We don't believe so, sir. Let me just walk you
through the numbers on Medicaid. We have $1.48 trillion in
savings in Medicaid, but we replace that with $1.2 trillion in
spending for the state block grants, in which we assume a lot
of the policies of the Graham-Cassidy legislation that would
continue to ensure that populations are covered with health
care.
Chairman Yarmuth. Right now, under the ACA, the federal
share of Medicaid reimbursement is 90 percent under the law. It
would not be under your replacement plan; is that correct?
Mr. Vought. That is correct.
Chairman Yarmuth. Or assuming that a state even continued
to insure the same amount of people, the federal contribution
would be significantly lower.
Mr. Vought. Correct, and we think that is an important part
of the reform, that with the ACA we have moved away from paying
57 percent, on average, for the most important and needy
populations, and now we are paying for 90 percent of the cost
for populations that Medicaid was never intended to cover.
We think that as a result from a program perspective, that
Medicaid has lost focus on the disabled; that Medicaid has lost
focus when it comes to women and children as opposed to able-
bodied adults that Medicaid expansion now covers.
We think that this is a fundamental incentive problem
within the current Medicaid program.
Chairman Yarmuth. You would get a significant argument from
the 80,000 people in my district who now have Medicaid coverage
because of the expansion and the other 420,000 in Kentucky.
So I will yield back my time and recognize Ms. Omar of
Minnesota for 5 minutes.
Ms. Omar. Thank you, Chair.
Thank you, Mr. Vought, for your testimony today.
I wanted to talk a little bit about how your budget
proposal is going to have impact on the millions of vulnerable
children across this country.
I wanted to tell you a little bit about the impact that I
see that it will have because I don't feel like you or this
Administration or Trump gets it.
In America, one out of five children struggle with hunger,
and for many of these children, the free lunch and breakfast
that they get in school is often the only meal they get to
have.
Yet the budget that you are proposing, and this
Administration and Trump is proposing, makes a $1.7 billion cut
from school meals over the next 10 years, a cut that largely
would result in more than 29,000 children losing access to free
school meals program in my home state of Minnesota alone.
What this budget does is quite literally take food out of
the mouths of children. How can these kids be expected to be
present and fully present in classes to learn in the same space
as other kids?
How can we expect them to reach their full potential?
And how can we expect them to be able to be on the same
footing as other kids around the world?
I often say that budgets are a value statement, as you have
many times in this Committee, and you said that we are
committed to having promises kept. What does this budget and
your proposal in cutting the child nutrition programs say about
the promises that we want to keep to children and where our
values really are?
Mr. Vought. Thank you for the question, Congresswoman.
We don't think that our budget cuts the programs that you
refer to. Specifically, we think that it is important that high
income schools that are currently grouped together right now to
receive benefits because they are grouped with low income
schools, that that is unfair for the programs themselves.
Similarly, some of the reductions you have talked about are
with regard to one-time rescissions that are not needed to be
able to cover all of these children that we current project.
And we know Congress does this same analysis.
Ms. Omar. Yes. How is the assessment, what child deserves
to eat and what child does not?
My understanding is that we should care about every single
child arriving in that school having the resources that they
need to be able to get educated and be fully present.
We have parents who might fall off the threshold of
whatever that income is who might not be able to pack a lunch
or a breakfast or milk or a cookie or an apple for their kids.
Should those kids not be able to have meals in the school so
that they can be fully present in that classroom? Is that what
this Administration values?
Mr. Vought. We believe it is important that communities
that are otherwise ineligible to receive these types of
benefits not receive these benefits, and that only the
communities that are eligible receive them. We think that is
important from the standpoint----
Ms. Omar. But how is the judgment of what the value of the
benefits is made? We are talking about children in our
classrooms. We are talking about America's most vulnerable.
Earlier you talked about the Harvest Box. You said if they
are not home that they should pay a price.
Mr. Vought. No, I did not say that.
Ms. Omar. That was the example that you used, that if you
are not home, then you pay a fee.
Mr. Vought. No.
Ms. Omar. So what penalty would you think should we propose
for people who might not be home to receive juice or a cereal
box or a canned meat?
Mr. Vought. I specifically was not referring to, suggesting
that they pay a penalty. The point I was making, Congresswoman,
is that we do not think that it matters where you are on the
income scale to be able to determine a certain level of
responsibility to receive in the mail that which you are
expecting to receive in the mail.
We think that human beings are responsible from that
standpoint.
Ms. Omar. I get that. What I am saying is we have a
responsibility to make sure that here in the United States
people are fed. We are talking about food. We are talking about
children having food.
Mr. Vought. We agree.
Ms. Omar. We give humanitarian assistance to people around
the world because we believe people should not experience food
insecurity; people should not starve.
But here in the United States we decide to increase a
defense budget that might lead to not having our budgets be
fully intact, but we decide to say that we do not have enough
money to feed our most vulnerable.
Mr. Moulton. [Presiding] Thank you.
Ms. Omar. That is the decision we are making.
Mr. Moulton. Thank you, Ms. Omar. The time has expired.
The chair will now recognize Ms. Schakowsky from Illinois
for 5 minutes.
Ms. Schakowsky. Thank you.
It is incredible to me, and I want to associate myself with
the remarks of Congresswoman Omar. One out of five American
children is considered food insecure. That is scandalous, I
think.
I want to say that this budget envisions really, I think, a
radically different America than I believe most Americans can
and want to envision. This budget is built on the politics, I
think, of division, the politics of resentment, which, on the
one hand, should not surprise anyone given the President who
kicked off his campaign by attacks on people of color and
immigrants.
Anyway, on the other hand though I think it should surprise
a lot and does surprise a lot of people since at his June 2015
press conference announcing his candidacy he said, ``Save
Medicare, Medicaid, and Social Security without cuts. Have to
do it,'' he said.
And yet the budget, you do not want to hear $845 billion,
so I will say your number, $517 billion will come out of
Medicare. The budget before us cuts Medicaid by $1.5 trillion
before really, in my view, cannibalizing it by converting it
into a block grant.
The budget before us cuts Social Security by $25 billion.
Oh, yes, those terrible entitlements that are so precious to
millions and millions, the majority of American families.
So, Mr. Vought, did President Trump acknowledge he was
breaking a key campaign promise when he agreed to a budget that
cuts Medicare by what are we saying now, $517 billion?
Mr. Vought. The President does not believe he is breaking
his commitment to the American people at all. There are no
structural changes to Medicare. There is no cut to Medicare.
Medicare continues to grow each and every year.
The President also committed to the American people that he
was going to attempt to lower drug prices, and so many of the
reforms within Medicare that generate savings simply because
the federal government pays for the drugs of seniors is because
we are trying to lower and we have proposals to lower drug
costs.
Ms. Schakowsky. That is so interesting that you would want
to predict. You know, usually when we do budgeting, it is
really not dynamic. You are predicting that the President is,
in fact, going to end up lowering these drug prices. You build
that in and, therefore, cut Medicare by the projected amount
that you think is actually going to be saved.
Mr. Vought, did President Trump acknowledge that he was
breaking a key campaign promise when he supported the cuts to
Medicaid and then turn it into a block grant?
Mr. Vought. He does not, we do not believe that we are
breaking the commitment to Medicaid in the least; that Medicaid
spending, in addition to where we transfer our reforms to
Medicaid, the state health care block grant, will continue to
grow every year.
Ms. Schakowsky. You think that all the states in the
nation, you predict that, are going to continue to make sure
that low income people, most of whom are children, are going to
have as much money for Medicaid by transferring all of that
authority to the states to decide?
Mr. Vought. We think that the reforms that we put forward
with the assumptions to have a state health care block grant
can lead to better coverage at the state and local level.
Medicaid is not what we would view as the optimal program.
I remember when Henry Waxman said that there is not a lot of
millionaires on Medicaid and would not want to be on Medicaid,
and we ask the question: why is that? Why is it that Deamonte
Driver dies from a toothache in Medicaid because he never
receives care?
We don't think Medicaid is the optimal way to continue to
provide health care coverage, and it is why we are supportive
of many of the reforms that were in the Graham-Cassidy
legislation. It is why we moved forward with state health care
block grants, because we're trying to do it better.
We are trying to make sure that the populations that
Medicaid was designed to cover get the care that they need.
Ms. Schakowsky. It is interesting that there is not anyone
involved in the Medicaid program, who is involved in delivering
care, that really believes that this is a reform.
And the good news is this budget will never become law.
And I yield back.
Mr. Moulton. Thank you.
The chair now recognizes Mr. Horsford from New York for 5
minutes.
Mr. Horsford. From Nevada, Thank you, Mr. Chairman.
Mr. Moulton. From Nevada. My apologies.
Mr. Horsford. I appreciate this hearing very much.
Thank you for being here, Acting Director.
Vice President Biden used to say, quote, ``Show me your
budget, and I will tell you what you value.''
Well, based on this budget, Trump values corporate profits
over Medicare. He plans to cut Medicare by anywhere from half a
trillion dollars to $840 billion.
He values continuing tax breaks for the rich while imposing
devastating cuts to needy children, families on Medicaid and
child nutrition assistance, and seniors on Medicare.
This is his budget. This is the GOP budget. Sadly, few of
my colleagues on the other side are here to continue to defend
this budget. You have a tough job.
I hope a vote is scheduled on this bill so that every
single member of this body has to demonstrate where they stand
and what their values are.
You talked about vision. I think it speaks a lot to our
values.
First, I want to cover something specific to my district
and address the Yucca Mountain Nuclear Waste Repository located
in Nevada 4th District about 90 miles northwest of Las Vegas.
The state of Nevada has filed 218 contentions against
storing radioactive waste at Yucca, many of which challenge the
Department of Energy's research and analysis, and the people of
Nevada don't want it. Even the President said he agreed with
us.
In a visit to our state in October of 2018, President Trump
said, and I quote, ``I think you should do things where people
want them to happen. So, I would be very inclined to be against
it. We will be looking at it very seriously over the next few
weeks, and I agree with the people of Nevada.''
Well, Mr. President, if you agree, what changed?
I would like to enter into the record a letter from
Governor Sisolak from the state of Nevada, dated February 27th,
to President Trump, requesting a meeting to express our
objections and to hear directly from the President why he
includes this in his budget.
Mr. Moulton. Without objection.
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Mr. Horsford. Thank you.
So why is the President breaking his promise that he made
to the people in October of 2018 in Nevada by proposing $116
million of funding for Yucca Mountain?
Mr. Vought. He is not breaking his promise, and he is very
open to the conversation that he----
Mr. Horsford. Will you make sure he receives this letter
from our governor?
Mr. Vought. Absolutely.
Mr. Horsford. Thank you.
On to military construction, the President requested $3.6
billion for a 2020 Department of Defense emergency fund to
backfill the 2019 military construction projects that he is
deferring for his emergency declaration for the wall. Mr.
Director, the President's proposal threatens to cut federal
funding from previously approved projects for active duty
military efforts in my district.
In my district, we have Creech Air Force Base. It is at
risk of losing $59 million. This is a base that is performing
critical military missions across the world. Nellis Air Force
Base is at risk of losing $5.9 million, and the National Guard
Readiness Center in North Las Vegas, all in my district, are at
risk of losing $32 million.
Can you assure me that none of these projects in my
district will be delayed or have funds stripped away to pay for
a useless border wall?
Mr. Vought. Here is what I can say, Congressman. All of the
projects that you have just mentioned, I don't have the ability
to say one way or the other. I do not know if these are----
Mr. Horsford. Yes or no, will they be delayed? Will these
projects that are providing critical missions for our national
security?
And we talk about national security in this hearing all the
time, and you guys are proposing to move money from active duty
military that is in need in order for these individuals to meet
their obligations.
Mr. Vought. We have not identified the projects that would
be eligible for a delay and----
Mr. Horsford. But you have identified the $3.6 billion you
are moving from that fund.
Mr. Vought. We have identified the level of funding that we
think we would be comfortable based on certain requirements.
The type of projects----
Mr. Horsford. Let me reclaim my time.
Mr. Vought.----when the projects later in the----
Mr. Horsford. Let me reclaim my time. Today we are also
talking about cuts to Medicaid. More than 640,000 Nevadans rely
on Medicaid. There is a proposal in here based on the Graham-
Cassidy bill, a bill that could not even pass the Republican
controlled Senate, House, and White House, and now you have
this in your budget.
It was opposed by nine Republican governors, including
Nevada's former governor, Brian Sandoval.
Why is your Administration pushing a failed proposal once
again?
Mr. Vought. Because we think it is good policy and will
lead to better outcomes.
Mr. Horsford. You couldn't get it passed by your own
colleagues in the last Congress. Why do you think it is going
to change now that we are in the majority?
Mr. Vought. Because this Administration's budget is about
putting forward our vision for the country.
Mr. Horsford. This Administration's budget is dead on
arrival in the House.
Mr. Moulton. I want to thank the gentleman from Nevada.
I now recognize the Ranking Member from Arkansas, Mr.
Womack.
Mr. Womack. Thank you very much, Mr. Moulton.
And, Mr. Vought, thanks again for being here today. I will
try not to take up all of my time.
You have got a tough job. I mean, how do you--if you look
at the spectrum of the federal government, what we fund, how is
it possible to come up with any kind of a plan, any kind of a
budget that could satisfy all of the desires, all of the pet
projects, all of the needs, all of the urgencies?
How is it possible to do that when you have a limited
amount of resources with which to work? How do you do it?
Mr. Vought. You cannot. We live in a resource constrained
world. Every family across the country lives in a resource
constrained world, and so you try to accomplish what is
absolutely vital under the Constitution in terms of the role of
the federal government, and then you try to make all of the
investments that are necessary and prudent.
And we take a long time to compose these budgets because
it's a labor-intensive work product.
Mr. Womack. Is it fair to say that the priorities change
from year to year? There are different sets of urgent matters
that come up from time to time that you have to take a look at?
In other words, it is kind of a fluid budgetary
environment, is it not?
Mr. Vought. Sure. That is one of the reasons why we believe
in budgeting every year. We think we should be doing more
budgeting, not less.
Mr. Womack. Do you think the American people that may be
watching this hearing or catching excerpts of it can relate to
the fact that there are always more things you want or need
than there are resources to provide?
Do they do this at home?
Mr. Vought. They do, and I think they understand the
exercise that we are called by statute to do, which is to
attempt to budget for the federal government along the lines of
how they do it.
Mr. Womack. So, along the course of time, in a family
budget, much like the federal budget, on a much smaller scale,
from time to time there will be not enough resources to do the
things that you would like to see on the expense side of the
ledger. So, what do they do?
What do you do at your house?
Mr. Vought. We figure out what money is coming in, and we
figure out how much we can afford, and we allocate our spending
accordingly. And we just do the best we possibly can.
We try to avoid debt. That is something that every family
tries to do. When they are trying to get serious about their
fiscal house, what do they do? They tear up their credit cards.
Mr. Womack. Do you make some tough choices?
Mr. Vought. We do.
Mr. Womack. And these choices sometimes can be somewhat
painful. They can deny you some things that you might otherwise
have that makes life a little easier to go through day upon
day.
But at the end of the day, you have got to make some tough
choices, do you not?
Mr. Vought. We do.
Mr. Womack. Have you ever weaned a calf?
Mr. Vought. I have not.
Mr. Womack. You have not? Do you know happens when--I am
from cattle country--do you know what happens when you wean a
calf?
Mr. Vought. I would be interested to hear.
Mr. Womack. It is one of the noisiest, loudest,
heartbreaking events that a cattleman goes through, but he
knows he has to do it, and I use this example at the risk of
somebody from the other side saying that the Ranking Member
wants to compare people to cattle.
I do not. I just suggest that any time that you take
somebody off of something they have become dependent on, and in
the case of weaning a calf, a calf and its mama, there is a
wailing and gnashing of teeth unlike you see.
So, when you present a budget that makes some of the tough
choices I just talked about, you can expect that there is going
to be a lot of angst to go along with that, right?
Would you not suggest that we have to do those tough
choices in order to prepare ourselves to be stronger in the
future fiscally?
Mr. Vought. I agree with that, sir. I think that is one of
the importance of a fiscal goal. When you have a fiscal goal,
it allows you to make tradeoffs. That is why we think balance
is so important, even if it is over a 15-year window. It is
because it allows us to enter every one of the decisions that
you are just referring to and saying, ``All right. Can we
afford this? And if not, how do we either pay for it or not
spend on it?''
Mr. Womack. So there are things on the expense side of the
ledger that are must do. Federal government, it says ``provide
for the common defense.'' We can argue about how much, but we
have to do that, do we not? It is in the Constitution.
Mr. Vought. We do. It is one of the most vital roles of the
federal government.
Mr. Womack. Now, provide for the general welfare, I mean,
that is kind of a broad subject, and I think we can have a
debate that goes a long time about what constitutes general
welfare and what does not.
But there was a comment. I am using one example of many
that came up in this hearing today on the other side about
CDBG. And I'm an old mayor. So, I am very familiar with the
Community Development Block Grant Program, and the budget
proposes to eliminate it, correct?
Mr. Vought. It does.
Mr. Womack. Are you familiar with the revenue sharing that
the federal government used to do?
Mr. Vought. Not in particular.
Mr. Womack. It was a program. It was federal revenue
sharing. I think it was introduced to the nation and I want to
say Nixon signed it into law. I could be wrong, but it was
around 1971-1972 that federal revenue sharing, and I think it
was born out of a need in New York with a big budget deficit,
that we were going to take federal money and share it with
other political subdivisions beneath the federal government,
state and local.
And then I remember because I was a city council member in
the early 1980s when federal revenue sharing ended, and much
like the bawling of a calf at weaning, there were mayors and
others associated with local government that screamed to high
heaven that this was going to be terribly damaging to the
balance sheets of a lot of our cities and towns.
And it seems like they survived. We did, but we became
dependent on something, and it was part of our regular revenue
stream, and so therefore, we just assumed it was always going
to be there.
Twenty-two trillion dollars in debt is a lot of money. Do
you not agree?
Mr. Vought. I totally agree.
Mr. Womack. A trillion-dollar deficit, and it will feed
into that $22 trillion, is a lot of money. Would you not agree?
Mr. Vought. I totally agree.
Mr. Womack. So in order to make the tough choices we talked
about earlier, we are going to have examine the spectrum of the
federal government, and as you said early on in your testimony,
I think it was in response. It may have been in your opening,
but it was certainly early on in one of your responses you
talked about how it was important for federal bureaucracies on
the discretionary side, because we spend a lot of time talking
about mandatory spending, but you said on the discretionary
side we cannot forget that there are places where we can
reanalyze our priorities and approach our budget perspective in
a sense that we are addressing the urgent needs with an eye on
fiscal responsibility, did you not?
Mr. Vought. I did say that.
Mr. Womack. And so as part of your budget, you do advocate
that the discretionary budget of the federal government cannot
be held exempt from a lot of the examination that we have
talked about on the mandatory side.
Mr. Vought. Absolutely. We do not believe any part of the
federal government or spending should be exempt.
Mr. Womack. You have got a difficult job, and before I
close, I just want to acknowledge a number of people that are
seated behind you. I am assuming that a lot of these folks are
staff. I know there is one guy back there with red hair that
used to work for me. So I know he is part of your staff.
And I just want to give a shout-out to your staff because
they have spent a lot of midnight oil trying to prepare a
document that a lot of people are going to throw a lot of
tomatoes at.
But between now and the time that we fund the government on
October 1st of 2020, we have still got a lot of ground to plow
and a lot of decisions to make. Between the legislative and
executive branch, we will do our best to put America's
priorities.
Mr. Vought. I appreciate that and your saying that,
Congressman, and I appreciate the staff, as you mentioned, that
has done so much to prepare this budget. It is a six-month
process, and it takes a lot of late nights. And so I thank you
for reflecting that.
Mr. Womack. Thank you very much for your testimony.
I yield back.
Mr. Moulton. I want to thank the Ranking Member.
This is obviously a difficult and contentious process. I
certainly agree with you on that.
Mr. Vought, I certainly hope that, to pick up the analogy
of weaning calves, that it is clear from your budget that the
Administration hears the bawling, the angst of the most
privileged in America who are afraid of losing their tax cuts,
and I just hope that the Administration can also hear the
bawling, the angst of the least privileged Americans who are
just trying to feed their families.
Thank you, Acting Director Vought, for being with us today.
Please be advised members can submit written questions to
be answered later in writing. Those questions and your answers
will be made part of the formal hearing record. Any member who
wishes to submit a question for the record may do so within
seven days.
Without objection, this hearing is adjourned.
[Whereupon, at 12:50 p.m., the committee was adjourned.]
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