[Senate Hearing 110-161]
[From the U.S. Government Printing Office]



                                                    S. HRG. 110-161 
 
                 NOMINATION OF HON. JIM NUSSLE, OF 
                  IOWA, TO BE DIRECTOR OF THE OFFICE OF
                   MANAGEMENT AND BUDGET 
--------------------------------------------------------------------- 


                         HEARING & EXECUTIVE 

                               MEETING

                                OF THE 

                       COMMITTEE ON THE BUDGET 
                         UNITED STATES SENATE

                      ONE HUNDRED TENTH CONGRESS 

                            FIRST SESSION 

                             ------------

     July 26, 2007--NOMINATION OF HON. JIM NUSSLE, OF IOWA, TO BE 
       DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET

                  August 2, 2007--EXECUTIVE MEETING

        Printed for the use of the Committee on the Budget 




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                    COMMITTEE ON THE BUDGET 

KENT CONRAD, North Dakota, Chairman 
PATTY MURRAY, Washington JUDD GREGG, New Hampshire 
RON WYDEN, Oregon PETE V. DOMENICI, New Mexico 
RUSSELL D. FEINGOLD, Wisconsin CHARLES E. GRASSLEY, Iowa 
ROBERT C. BYRD, West Virginia WAYNE ALLARD, Colorado 
BILL NELSON, Florida MICHAEL ENZI, Wyoming 
DEBBIE STABENOW, Michigan JEFF SESSIONS, Alabama 
ROBERT MENENDEZ, New Jersey JIM BUNNING, Kentucky 
FRANK R. LAUTENBERG, New Jersey MIKE CRAPO, Idaho 
BENJAMIN CARDIN, Maryland JOHN ENSIGN, Nevada 
BERNARD SANDERS, Vermont JOHN CORNYN, Texas 
SHELDON WHITEHOUSE, Rhode Island LINDSEY O. GRAHAM, South Carolina 
MARY NAYLOR, Majority Staff Director 
SCOTT GUDES, Minority Staff Director 


                         C O N T E N T S 
                           ------------

                             HEARING 

                                                              Page 
July 26, 2007--Nomination of Hon. Jim Nussle, of Iowa, to be Director 
of the Office of Management and Budget .............................................................. 1 

                     MATERIALS SUBMITTED FOR THE RECORD 

Statement of Biographical and Financial Information Requested 
of Presidential Nominee Jim Nussle of Iowa.....................  51
Pre-hearing questions and answers ............................. 104
Post-hearing questions and answers............................. 149

                               EXECUTIVE MEETING 

Statements for the Record ..................................... 160 
Committee Vote................................................. 162


iii 


                 NOMINATION OF THE HONORABLE JIM 
                  NUSSLE, OF IOWA, TO BE DIRECTOR OF 
                  THE OFFICE OF MANAGEMENT AND BUDGET 
                              ----------

                     THURSDAY, JULY 26, 2007 

                                       U.S. SENATE, 
                               COMMITTEE ON THE BUDGET, 
                                        Washington, DC. 

The committee met, pursuant to notice, at 10 a.m., in room SD- 
608, Dirksen Senate Office Building, Hon. Kent Conrad, chairman 
of the committee, presiding. 

Present: Senators Conrad, Murray, Wyden, Nelson, Stabenow, 
Cardin, Sanders, Whitehouse, Gregg, Domenici, Grassley, Allard, 
Bunning, and Crapo. 

Staff present: Mary Naylor, Majority Staff Director, Scott Gudes, 
Staff Director for the Minority. 

            OPENING STATEMENT OF CHAIRMAN KENT CONRAD 

    Chairman CONRAD. The hearing will come to order. 
I want to welcome everyone here for the hearing on the confirmation 
of Congressman Jim Nussle of Iowa for the position of the Director 
of the Office of Management and Budget. I want to welcome 
everyone to the hearing this morning. 

This is the way we will proceed this morning. I just want to advise 
my colleagues we will allow those as a courtesy who are here 
to introduce the Congressman to go first, starting with Congressman 
Spratt, the Chairman of the House Budget Committee, who 
we are very pleased to have on this side of the aisle. Congressman 
Spratt and then we will, if Senator Grassley is here, have him go 
with his statement so that they can be excused. 

And then Senator Gregg and I will make our opening statements, 
and then we will swear the witness, and then we will give 
Congressman Nussle a chance to make his statement. And then we will 
go to questioning rounds. 

For the advice of my colleagues, we thought this morning we 
would limit the questions to 6 minutes a Senator because we know 
we are going to have a lot of attendance this morning. So that will 
be the order. 

I see Senator Grassley entering now. Senator Grassley, who is a 
very respected member of this Committee, as well as a very important 
member of the Senate Finance Committee that we work with 
very closely. So we are delighted that Congressman Nussle has 

                                 (1) 


                                   2 

these two very distinguished speakers here this morning to introduce 
him. 

               OPENING STATEMENT OF CONGRESSMAN SPRATT 

With that, we will turn to the House Budget Committee Chairman, 
Congressman Spratt, a very dear friend, for his introduction. 

Mr. SPRATT. Thank you, Mr. Chairman, Mr. Gregg, Ranking 
Member, Senator Wyden. Thank you for this opportunity. 

I should say, and I should have explained this to Jim Nussle before 
I agreed to undertake this assignment, that the last time I 
testified in support of a candidate here was a special experience. 
It was a classmate of mine from high school who was getting his third 
star and becoming Deputy Chief of Staff of the Army. 

He was one of these generals who had managed to spend most 
of his career in the field, not the Pentagon, and being in a 
Congressional setting like this was a little unusual for him. 

I spoke to Senator Exon before I came in. My old classmate sat 
down. A few minutes later, with a wrinkled brow, he turned to me 
and handed me a piece of paper. I unfolded it and it was a note 
from Exon to the nominee. It said having Spratt speak on your 
behalf is not a fatal mistake, but it will help your cause 
enormously if you dissociate yourself from him and denounce him 
thoroughly in any remarks you make. 

[Laughter.] 

Mr. SPRATT. So Jim, I do not know whether you realized what 
you were getting yourself into when you invited me to do this. 

During all the years that Jim Nussle was the Chairman of the 
House Budget Committee, I sat next to him as the ranking member. 
Our working relationship became one of comity and respect. 
Despite our disagreements on the budget, and they were significant, 
Jim Nussle was collegial not just toward me but toward other 
Democrats on the Committee. He agreed to ground rules for 
committee proceedings that allowed Democratic members who were in 
the minority a fair chance to be heard, not to win a vote mind you, 
but to make a point or to raise a question. 

A good example of that is markup. When we marked the budget 
resolution, his side could have required our side to do what we 
must do on the House floor under the House rules, and that is offer 
only amendments which are full substitutes. We instead negotiated 
a plan that allowed our side to offer and argue some 35, 40 
amendments which we arranged in three tiers. The top tier got 20 
minutes and the bottom tier 10 minutes. This led to marathon 
markups, over which Jim presided in an evenhanded manner late 
into the night, long after he would have gladly gaveled the 
meetings to a close. 

Off the hearing room stage, Jim dealt with us fairly on 
administrative issues, allowing us for example the computers and 
equipment we needed and a staff allotment equal to a third of the 
professional staff. Our minority staff were located behind the 
Cannon building in an old motel. I think it was an old Howard 
Johnson's motel. The most you could say for it was that each staffer 
got his own bathroom, tub included. We were delighted to learn 
that the building was scheduled for demolition until we found that 
that 

                              3 

would mean we were going to be on the street. There was nowhere 
else for us to go. 

Having wandered around the basement of the three buildings on 
the House side for several days, we went to Jim. He intervened on 
our behalf with the Speaker's office and we found space in the 
Cannon basement that was tight but adequate. 

I cannot point to any bipartisan budget agreement on which Jim 
and I collaborated, unfortunately. But then the only bipartisan 
budget on which I have worked for the last 10 years was the Balanced 
Budget Agreement of 1997. At that time John Kasich was 
Chairman of the House Budget Committee. But if Jim Nussle had 
been chairman instead, I feel sure the outcome would have been 
the same. I have no doubt that he would have worked in earnest 
with us to find common ground. 

At the same time, he would have stayed in line with his leadership 
and his fellow Republicans because, make no mistake, he is 
a team player. 

When he was still a back bencher on the budget, Jim asked John 
Kasich to let him chair a task force to study improvements in the 
budget process. Kasich agreed and at my recommendation named 
Senator Cardin cochair. In the end, I did not agree with many of 
the suggestions the task force put forth, for example making the 
budget resolution a joint resolution. But Jim Nussle came to me 
several times repeatedly and sought my input. I saw that there 
was a separation between us on the uses but there was a potential 
still for working together. 

Having overseen the assembly of several budget resolutions, Jim 
Nussle is conversant with the budget. Having chaired the Committee 
within the last year, he can easily pick up where he left off. 

At OMB, Jim will assume the task of defending the President's 
budget and it may arrive at an acrimonious time if vetoes start 
flying, as the White House has threatened. 

But regardless of who is Director of OMB, I am afraid we are 
likely to continue having disagreements over major budget policy. 
For example, everyone, myself included, admires the current 
director, Rob Portman, but we have not achieved a lot of 
conversion unfortunately on budget issues under his tenure. But to 
his credit, he has sought to initiate negotiations over 
entitlements. 

Given our history on the Budget Committee, I consider Jim 
Nussle a worthy adversary, able, knowledgeable, and fair. I am 
pleased to share with you just a few of my experiences with him 
and to recommend his appointment, confirmation of his appointment, 
for Director of OMB. 

Thank you very much. 

Chairman CONRAD. Thank you, Chairman Spratt. 

I would say to Congressman Nussle, you have got a real friend 
there. It matters a lot to the deliberations of this Committee, and 
I can say to this Chairman, that Chairman Spratt has endorsed 
your candidacy so warmly. 

We are also joined this morning by Senator Grassley, the senior 
Senator from Iowa, and a very respected member of this Committee. 
And also a real powerhouse on the Senate Finance Committee. 


                                 4 

Welcome, Senator Grassley. It is good to have you in this position 
today, as well. 

                OPENING STATEMENT OF SENATOR GRASSLEY 

Senator GRASSLEY. Thank you, Mr. Chairman. 

I am very pleased to be here to introduce the nominee. I think 
I take off where you left off, and that is in regard to Chairman 
Spratt being here. I do not think there is any higher commendation 
that a Republican can have, appointed by a Republican president, 
of why Jim Nussle ought to be confirmed. 

Because in that position of Director of OMB, Congressman 
Nussle, if confirmed, will have to be negotiating for the President 
between Congress and the President and, of course, representing 
the President because the President has been elected and the 
President has the right to choose his OMB Director. 

But knowing of the interactions that have gone on between 
Congressman Spratt and other Democrats over the years that 
Congressman Nussle has been in the Congress, then I think that 
that ought to be very meaningful to us in the Senate as we try 
to work for some comity on budget issues. 

I have known Jim Nussle for nearly 27 years. I first met him 
when he was a student at Luther College in Northeast Iowa. He 
drove me around in an old Ford during my campaign in 1980. He 
did not charge anything for doing it. 

Chairman CONRAD. Did he ever get you lost? 

Senator GRASSLEY. He never got me--I do not think he ever got 
me lost. At least it is not memorable. 

When he decided to run for Congress at age 29, he was elected 
when he was 30, it was a sort of a thing where after he got the 
nomination he asked me to help him. I was very glad to help him 
because you know I had five kids, I wanted one of them to be in 
politics. They hated politics because I had been in it and spent so 
much time with it. 

So I saw Jim as a little Grassley, and an opportunity for me to 
have somebody who would work with me and carry on a tradition 
that I think is a great tradition, and that is of public service. 
Not for just Chuck Grassley, for everybody that is in public 
service. And I like young people to do it. 

And so I worked for him in his campaign and I made it very 
clear to the voters that I considered him like part of the family. 

So he was elected and he has demonstrated that leadership well 
within the Congress of the United States and he has not done 
anything to let me down while he has been in the Congress of the 
United States. So I absolutely have no regret working for him for 
Congress. He has been a great public servant and I think he is 
going to be a great Director of OMB. 

I think he has shown himself to be a wise steward of taxpayer�s 
money. I think that he took seriously this responsibility very early 
in his congressional career. Ferreting out wasteful and unnecessary 
spending is an obligation we all have. 

And I think that he has always been looking toward long-term 
challenges, not just short-term goals as well. I think some of the 
long-term goals would best be evidenced by his work on the Deficit 
Reduction Act when we saved the taxpayers $40 billion over 5 


                                     5 

years with that DRA. He has not considered the budget process a 
perfect process because he chaired the Bipartisan Task Force that 
came up with the Comprehensive Budget Process Reform Act of 
1998 and he did that in a bipartisan way, working with Congressman 
Ben Cardin, now a member of our body. 

So he has demonstrated, as best demonstrated by Congressman 
Spratt being here, working across the aisles. 

Now in addition to that, I have had excellent testimony in support 
of his nomination when Senator Harkin testified on his behalf 
before the Senate Homeland security and Governmental Affairs 
Committee just this week. He noted that Congressman Nussle is 
superbly qualified. 

Given Congressman Nussle's experience, knowledge, and commitment to 
public service, it is fitting that he has been nominated to 
be Director of the Office of Management and Budget. He's highly 
qualified, knows the budget, knows Congress, and most importantly, 
he is a decent and honorable man. 

So I commend him to you, Mr. Chairman. 

Chairman CONRAD. Thank you very much, Senator Grassley. 
And again, we appreciate very much your being here to introduce 
your colleague. That also carries special weight with this Committee 
because of your valued service here. 

It also carries special weight with me because I have come to 
know you as somebody who is absolutely honorable and somebody 
who can rise above partisan positions to try to get something done 
that is important for the country. We very much appreciate your 
providing witness here today. 

I would now indicate to Chairman Spratt and Senator Grassley 
that you are excused. We will now go to the opening statements of 
myself and Senator Gregg, and then we will turn to questioning 
rounds after the Congressman has a chance to make his opening 
statement. So let me just begin with a brief opening statement. 

Again, welcome, Congressman Nussle, to the Senate Budget 
Committee. By the way, you could not have had better introducers 
than Chairman Spratt and Senator Grassley. 

                OPENING STATEMENT OF CHAIRMAN CONRAD 

Chairman CONRAD. I think we all know this is an important 
nomination. The Office of Management and Budget is the person 
that represents the president of the United States on these issues, 
on these questions. I think all of us know, in this Committee, that 
our country faces very serious physical challenges, both short-term 
and long-term and that we have got to work together to solve them. 
Certainly the long-term challenges are not going to be resolved 
unless there is a bipartisan consensus. 

And so I look forward very much to hearing from Mr. Nussle on 
how he intends to work constructively and cooperatively with 
Congress to address these challenges. And I hope that we will hear 
from you, Congressman Nussle, some concrete steps we can take to 
break the current logjam that exists with respect to the outstanding 
issues for this year. 

As my colleagues know, I have very serious concerns about the 
budget condition of the country and the fiscal policies of this Ad 


                                   6 

ministration. Let me just run through briefly a couple of charts 
that make the point and raise the concerns that I have. 

This is what has happened with spending under this Administration. 
Spending has gone up almost 50 percent. And all of us know 
that that has been driven in large measure by the war and by 
homeland security. But nonetheless, spending is up sharply. Let us 
go to the next slide. 


While spending is up sharply, revenue has stagnated. Real revenue, 
that is adjusted for inflation, is just now getting back to 
where it was in 2000. So while spending has gone up sharply, revenue 
has been largely stagnant in real terms over this Administration's 
life. And that has led to an explosion of the debt. The debt 
of the United States has gone from $5.8 trillion at the end of the 
President's first year to an estimated $9 trillion at the end of this 
year. 


                                8


Of course, that means we have had to borrow more and more 
money and, increasingly, that money is being borrowed from 
abroad. Let�s go to the next slide. 

Foreign held debt, that is the U.S. debt held by foreign countries, 
has exploded more than 100 percent increase in foreign held debt. 
That means that increasingly we are in hock to China, Japan. 


                                 9


Let this go to the next that shows Japan we owe over $600 billion; 
China we all over $400 billion; the United Kingdom over $160 
billion; and on it goes, the oil exporters over $120 billion. 
This is a deep concern. 

                                 10


Let us go to the next slide, if we could. 

At the same time, we have had significant tax reductions and they 
have been heavily weighted to those who are the most fortunate 
among us. You can see in 2006 those with incomes of over $1 
million a year got an average tax reduction of over $118,000. 


                                11 

Let us go to the next slide, if we can. 

The Administration has told us that the tax cuts have fueled 
economic growth. Unfortunately, when we look at this recovery 
compared to the nine previous recoveries since World 
War II, looked at the nine major recoveries since World War II, 
we see that this recovery is running well short of the average of 
those other nine major recoveries since World War II. In fact, 
on revenue we are still $86 billion short of the typical recovery. 


                                 12 

It is not just on revenue, let us go to the next slide. We see the 
same thing with respect to job creation. Job creation, again, if we 
look at the nine recoveries since World War II, take the average 
and compare this recovery, we see we are still 7.3 million private 
sector jobs short of the typical recovery. 


                                 13 


The final point is on business investment. This is perhaps the 
most striking. Again, comparing this recovery to the nine major 
recoveries since World War II and averaging all of them, we see 
this recovery running 69 percent behind, on business investment, 
those other recoveries. 


                                 14 

Something is wrong. I am increasingly concerned with the direction 
of the economy. We all know the subprime market is raising 
questions. Interest rates are rising. Markets are unsettled. So we 
have got a lot of work to do. 

And of course, the biggest hurdle of all are the long-term 
challenges. This is a place where, Congressman Nussle, I think you 
and I and Senator Gregg are perhaps in very close agreement, at 
least in the diagnosis of the problem. We all know that we are 
headed for a cliff. We have got an unsustainable course here for 
the country and it is going to take working together to have any 
chance to deal with it. 

We have heard the President say that the budget resolution 
adopted by this Congress spends too much. Let me just put up a 
slide that shows the difference between the spending--the overall 
spending between what the President called for, $2.91 trillion, 
versus what is in the budget, $2.94 trillion. That is less than 
a 1 percent difference. 


                                15 


Goodness, if we cannot resolve this matter, how are we ever 
going to resolve the question of the long-term imbalances that 
exist, especially the looming challenge of the health care accounts, 
which is the 800-pound gorilla. It is the thing that can swamp 
about and we have absolutely got to turn our attention and do it 
in a bipartisan way to addressing that challenge. 

I would like to make just a final point on the tax cut. CBO, let 
me just go to that last slide, CBO now tells us that we would not 
have a deficit if we did not have the tax cuts for this year. Now 
I do not think any of us take the position that none of these tax 
cuts should be extended. I certainly do not take that position. I 
think certainly those tax cuts aimed at the middle class need to be 
extended. 


                                   16

I think we also really owe it to the country to review our entire 
tax system. I am increasingly convinced that it is badly outdated, 
does not deal with the challenge currently facing the country. We 
have got the Alternative Minimum Tax hanging out there, it cost 
$800 billion to fix. It is the old millionaire�s tax, rapidly 
turning into a middle class tax trap. We have got all of these 
other tax provisions that are going to not be extended past 2010. 
That, I think, is an impetus to reform. 

And most of all, our competitive position in the world ought to 
be an impetus for us to thoroughly revamp the current tax system. 

We have got the looming prospect of a demographic tsunami 
called the baby boom generation. And all of us know that we are 
going to have to fundamentally reform our long-term entitlements. 
If we fail in that, we put the country�s long-term fiscal strength at 
risk. 

With that, I want to turn to my very able colleague, the ranking 
member, Senator Gregg. 


                                  17 


                OPENING STATEMENT OF SENATOR GREGG 

Senator GREGG. Thank you, Mr. Chairman, and Congressman 
Nussle. I would join with the Chairman in saying that having 
Congressman Spratt and Senator Grassley introduce you is certainly a 
very strong statement of bipartisan support for your nomination 
and reflective of your years of work here and the fact that it 
has been well received and seen as fair and constructive. 

Being called a little Grassley, however, that could really do some 
damage. 

[Laughter.] 

Senator GREGG. As a practical matter, I had not intended to 
spend a lot of time on the large picture. I was going to focus more 
on your qualifications, which I think are extraordinary. I mean, 
you bring to the table obviously great talent and ability, the fact 
that you were Chairman of the Budget Committee, the fact that 
you were cochairman with Senator Cardin of the Budget Reform 
Task Force, and the fact that you ran the Budget Committee on the 
House side in a fair, open way. 

The budget is inherently a partisan document. Regrettably, but 
it is. And it has always been that way. There has been, I guess, 
one exception to that. It would be nice if there were more. But as 
a practical matter that is the way the structure works. 

So the key to doing this document, however, has always been-- 
and I congratulate Senator Conrad for his handling of it in this 
way--is to recognize it may be partisan. But that does not mean 
the opposition does not get a fair hearing at the table, get to make 
their points, and have a chance to make their case. Obviously, in 
the final count, the vote is usually going to be whatever the ratio 
is of the majority to the minority. 

And you did that. And I enjoyed working with you when I 
chaired this Committee and found our relationship to be open, 
frank, and constructive, and very professional. 

I think that is what we need at the OMB job. The OMB job really is 
very much a liaison with the Congress. Obviously, you are the 
traffic cop within the administration for spending, as OMB 
Director. But equally important, you are the person that, as we 
go into the appropriating process, the Congress works with most 
often in order to resolve issues of how the day to day operation 
of the Government is going to occur and how appropriations bill 
are going to be structured. 

So your knowledge and your track record of bipartisanship and 
willingness to work across the aisle is critical and I think very 
much a positive here. 

On the larger issue which has been referred to by the Senator 
from North Dakota, and I did not bring my charts today--I thought 
I would give everybody a break. 

Chairman CONRAD. He has got a very good charts, by the way. 

Senator GREGG. Excellent charts. But let�s cite just three basic 
statistics which I think call into question the general theme that 
the economy is a disaster and the policies of this Administration 
have been a disaster on the issue of fiscal policy, which is I think 
the theme of the Senator from North Dakota, along with the theme 
that I do agree with, which is that we have to address entitlement 
spending. 


                                18 

But three statistics. The first, is that the economy is in good 
shape. The unemployment rate in this Nation is, I think, about 4.6 
percent. It is extremely low. And we have, I think it is 25 straight 
quarters of economic growth. And we have had added somewhere 
over 8 million new jobs. That represents a pretty robust economy 
and essentially a fully employed economy. 

The second statistic which I think is important is that revenue 
of the Federal Government now exceeds the historic norm. The 
historic norm has been, since World War II, about 18.2 percent 
of gross domestic product has come into the Federal Government in 
revenue. We are now up to about 18.6 percent of gross domestic 
product in revenue. 

And that has been a function, I believe, of having a tax law-- 
which is a product of the work of Senator Grassley--which is 
fair, which says that if you are an entrepreneur, go out and 
invest, take a risk, and as a result create jobs for Americans. 
And as a result of doing that, people have gone out and taken 
a risk, been entrepreneurs, and created jobs for Americans. 

The practical effect of that is that more revenue has come into 
the Federal Government because more people have been working 
and there has been more capital activity. And capital has been 
more efficiently used instead of inefficiently used. 

And so we now have revenues above their historical norm. No 
matter what chart you want to hold up, that is the basic test. 
Are we generating the revenues that the Federal Government needs 
in order to fund itself at its historic levels? Yes, we are. Are 
we spending too much money? Yes, we are doing that, too. But that 
is primarily a function of entitlement spending and the war. 

The third statistic which I would cite is that these tax policies 
which Senator Grassley evolved with the help of the President, 
have created a distribution which is extremely progressive. High 
income individuals today are paying a larger percentage of the tax 
burden than they paid under the Clinton Administration. The top 
20 percent of people with income in this country are paying 85 
percent of the income tax burden of this Government, 85 percent. 
That is a pretty big number. Under the Clinton Administration they 
were paying 82 percent. 

On the other end of the scale, the bottom 40 percent of people 
with income in this country are receiving more back because, as a 
practical matter, they do not pay income taxes. They are receiving 
more back from the Government than they have received under the 
Clinton Administration by a factor of about two. 

So the lower income individuals are getting more benefit from 
the Government, higher income individuals are paying more into 
the Government as a percentage of the cost of the burden of 
taxes, and that is progressivity. 

And it is a function of the fact that we have created a tax law 
in this country which basically taxes capital fairly so that 
people are undertaking investments which are taxable. Instead of 
avoiding investments by looking for tax shelters, high income 
individuals are willing to do taxable activity. 

The response of the other side of the aisle in the short time that 
they have been here was basically summed up by the Senator from 
North Dakota�s chart which essentially represented that we are not 


                                 19 

paying enough taxes. They want to raise taxes. They basically want 
to repeal the present tax rate on capital gains, the present tax rate 
on dividends, and the rate of the upper bracket. They want to raise 
that. Significant tax increases are essentially the game plan of the 
other side of the aisle. 

In addition to that, not only are they restive about the fact that 
we have got a tax law which has generated all this revenue because 
we have created a fair tax on capital, they essentially want 
to go out and even expand that effort and through regulatory 
activity, intend to pursue capital formation in a way that is 
going to drive capital overseas. 

It is really a cutoff your nose to spite your face policy because 
the thing that has been generating this economic recovery has been 
the fact that we have created an atmosphere where capital 
formation, entrepreneurial activity, and the resulting jobs that 
occur have generated the income to the Government. 

In addition, spending is exploding around here. You can use all 
the charts you want to try to make it look like these lines are 
coming together, but it is not. Every time we turn around we are 
seeing on the floor of the Senate proposals to spend a heck of a 
lot more money in nondefense areas. It is not healthy to this 
economy. 

The supplemental that came through here for the Defense Department, 
which was supposed to fight the war, had put into it $17 
billion of spending which had nothing to do with our national 
defense but was basically a price to pay which was required by the 
other side of the aisle before they would support funding the troops 
in the field. 

The budget which was passed by the other side of the aisle had 
$23 billion of spending over the President�s request on the 
nondefense domestic discretionary side. And we are seeing a variety 
of expansion of program in the entitlement account area which is 
not paid for. 

So spending is growing and growing dramatically. And that is 
one of the things that is maybe driving the other side of the aisle 
to say that we should be raising taxes. 

So there is a philosophical difference. I think our numbers are 
even more defensible than the other numbers. 

But that brings us back to your nomination, which should be the 
topic of this discussion. 

[Laughter.] 

Senator GREGG. I think what you will bring to the table, and 
what I know that this process requires, is that you will be seen as 
a fair arbiter, obviously someone who is going to be carrying the 
message of the administration but somebody who will listen fairly 
to the other side, who will work effectively with the Congress 
because you understand the Congress, and who can hopefully bridge 
some of these differences so that we, as a Government, do not end 
up in the situation we are under right now which is functioning 
under a continuing resolution but can actually proceed to 
appropriate the funds necessary to manage the Government as we go 
into the next fiscal year. 

Chairman CONRAD. Thank you, Senator Gregg. You can see, you 
know, we are in almost complete agreement here in the Senate 
Budget Committee, except when we are not. 


                                      20 

If you will please stand and raise your right hand, do you swear 
that the testimony that you are about to give will be the truth, the 
whole truth, and nothing but the truth? 

Mr. NUSSLE. I do. 

Chairman CONRAD. Again, we want to welcome you, Congressman Nussle, 
to the Committee. Please proceed with your statement. 

Then again, for the advice of my colleagues, what we intend to 
do after Congressmen Nussle makes his opening statement, and I 
hope he will take that opportunity to introduce his wife who is with 
him and other guests who have accompanied him, we will then 
have 6 minute rounds. We have agreed to 6 minute rounds because 
of the number of Senators who are interested in getting time in. 

We have also been advised we can expect a vote, a roll call vote, 
at about 11:35, which is about an hour. 

Again, welcome to the Committee. 

STATEMENT OF HON. JIM NUSSLE, OF IOWA, NOMINEE TO BE 
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET 

Mr. NUSSLE. Mr. Chairman, thank you very much. 

As many of you know, when you go for a job interview oftentimes 
you speak before people, you are interviewed by people who have 
not met you before, never worked with you before, do not know 
anything about you. And that is probably not the case here today. 
I have worked with three members of this Committee as chairman, 
and I am honored that they are here today. I have good memories 
from all three of those encounters and I appreciated your service. 

I have members that I served with in the House, I believe nine 
on the Committee all told, that I served with in the House. In fact, 
two that are here that I came in with as classmates, and I am honored 
by your service. 

And also members that I have worked with in a partisan way 
and in a bipartisan way over the years, on committees, in the 
House, and I am honored by the reintroduction to all of you. 

Even some staff here that went over the wall from the House 
that are now here in the August Senate and I hope the promotion 
is going well for you and I am honored that you are here, as well. 

Mr. Chairman and Ranking Member Gregg, thank you for your 
comments. I appreciate the opportunity to be here before the 
Committee and I thank you both for the time you have taken in 
counseling me and giving me advice, not only previous to this 
nomination but also subsequent to the nomination. I look forward 
to continuing those conversations and meetings on a regular basis. 

I want to thank Senator Grassley. As you said, and I understand 
the circumstance in which we find ourselves. I have to tell you a 
little bit about John Spratt. When I first called him about this 
nomination, he volunteered to do this. When I picked up the phone 
he had heard about it and he said if you need me to come over, 
I will be happy to do it. He volunteered to do that. 

You can say a lot about people but when they make that kind 
of a personal effort on your behalf, it is something you are honored 
by and will remember. John Spratt and I have had, as he said we 
both regret the fact that--both because we could not and sometimes 
because we would not agree on different things over the 


                                 21 

years. Possibly our hands were tied. Possibly it was not the right 
timing. The budget, as Senator Gregg said, is such a partisan 
process. I regret that.  

Senator Cardin and I, I believe, in our reform package, attempted 
to take a little bit of that sting out. I do not know if it 
would have. That was certainly our intention, to try and bring 
some of these big decisions more forward in the process and look 
for agreement earlier in the process. 

But be that as it may, it is a partisan process and it is something 
I think we all regret because there is so much that we agree on. 

If you would permit me, I really did listen to what both our 
Senators, my friends, and the Chairman and ranking member just 
said. If I could recap, and I know this is dangerous because I 
have to be careful that I was listening carefully. 

But if I would be permitted, let me suggest that both of you said 
that jobs were growing but maybe they could grow faster. Both of 
you said that economic growth was up but economic growth we 
would all want to be growing faster. The deficit is down but it 
could come down faster. And it is a short-term priority only we 
know, as you both said, that the long-term is the real challenge. 

You both have indicated and are leaders in the effort to look at 
our tax code. 

And last but not least, I guarantee you, having been the Chairman of 
the Budget Committee, that while there is a disagreement 
between $933 billion and $955 billion, I guarantee you within both 
of those numbers there is a lot of agreement. 

We disagree on the top line possibly, that may be the debate and 
conversation and rhetoric today. But we all know embedded within 
those numbers is a lot of agreement on how to secure our country, 
how to make sure our next generation is prepared, how to make 
sure that our families have the kind of security they need for the 
long term. There is so much that we agree on. 

And I believe, as the Chairman said, and he asked if I could 
maybe point the way. First of all, I wish I could today. I am not 
at liberty yet to negotiate. Nominees find themselves in an awkward 
position--I do not know if it is limbo or what you call it-- 
where you may know a lot or you may think you know a lot about 
the process but you are not yet equipped either with any authority 
or the responsibility to do much about it. 

I would be honored with your consideration for confirmation to 
get to work to do just that. 

I am anxious to work on these areas where I know we have common 
ground. We are going to have a difficult challenge in bridging 
that and finding exactly where the particular common ground is. 
But the mere fact that we agree on the challenges oftentimes, 
I believe, is a pretty important foundation to move forward. 

I am spirited by the opportunity for this challenge. I am an 
optimist and I am someone who enjoys that kind of challenge. 
I would say to all of my friends and Senators and colleagues, 
former colleagues on this Committee, that I want to be able to 
help with that. 

Also, I kind of got off my statement here. I just want to thank 
a couple of other people if I may, Mr. Chairman. John Spratt's 
current staff director was also here, he may still be, Tom 
Kahn, was and is also good friend. My former chief of staff, 
Rich Meade, they

                                    22 

worked together and they still are friends and work together. I 
think one thing that John and I were able---- 

Chairman CONRAD. If I could stop you there, Rich enjoys a good 
reputation over here, too. Let met just say I talked to my staff 
this morning and they tell me they have always been able to work 
well with Rich. We welcome you to the Committee, as well, Rich. 

Mr. NUSSLE. I think one of the things that we all know is that 
when we lead by example, the people who work with us also follow 
that lead. They have the same kind of positive rapport. 

I also want to introduce my wife, Mr. Chairman. Karen is here 
with me. We all know that our spouses are our anchor and they 
have to put up with a lot whenever we go into public service. And 
she does it with grace, as our spouses do. It is because of her 
that I am able to be here today and do that. And so I want to 
thank her and introduce her to the Committee, as well. 

Chairman CONRAD. Karen, you are more than welcome here. We 
enjoyed meeting you before the hearing began. Welcome to the Senate 
Budget Committee. 

And we promise, we will be respectful with your husband. 

Mr. NUSSLE. Mr. Chairman, too, the one thing that you do not 
know about when you take on a responsibility like this is how 
much support you will need. When the President asked me to do 
this, I have never been through this before so you do not really 
know what happens next. In fact, if I would have known a little 
bit more about this maybe it would have been a little bit different 
process. 

But the OMB staff has just been fantastic. I am sure that they 
shudder every time a question gets asked and they wait for my 
answer. But they have done just an outstanding job. It is such a 
professional staff. 

I knew that when I was Chairman but I have gotten to see it 
firsthand. And I know many of you have enjoyed working with the 
great professionals at OMB. I am honored that they have tried to 
help prepare me for today. 

Mr. Chairman, as I stated, when the President nominated me, I 
am really humbled and privileged by this opportunity. If confirmed, 
I look forward to helping to develop the policies that we talked 
about on behalf of the President, trying to keep the economy going 
and growing, creating jobs, balancing the budget by 2012. 

And then looking, as we were just talking about, how we can 
deal with the unsustainable growth in entitlement spending in 
Medicare, Medicaid, and Social Security. If I should be confirmed 
by the Senate, I intend to work everyday, wake up everyday and 
work on these challenges that we have talked about in private with 
many of you and that we will discuss here today. 

I also have to tell you, it feels good to be back here in Congress. 
I learned some amazing things in this body. I had the honor of 
working with so many of you and forged a number of lifetime 
friendships and also lifetime experiences that not very many people 
get to have. I am honored by that, as well. 

If confirmed, I also have the opportunity to follow in the footsteps 
of some great people. In particular friends, Rob Portman, who 
was my Vice Chair on the Committee, and also Josh Bolton are two 
that have blazed the trail before me and our good mentors. These 


                             23 

two people give public service a real good name and I am honored 
to be able to work with them. 

As I was sitting trying to figure out what to say today, I kept 
having this flashback to a classroom 30 years ago in Decorah, Iowa 
where it was when it was I had that Ford that I drove Senator 
Grassley around in. I was sitting in my Intro to Congress Class, 
I was a political science major and had an economics minor. I was 
sitting in class and the professor, Joan Thompson, decided she was 
going to teach us about the Federal budget process. 

I thought to myself, as I know all of us have had this experience, 
you think when you are in school in particular, when in the world 
am I ever going to use this information? Do I really need to know 
this stuff? Is this going to be on the exam? I think is probably 
what you think. 

But something happened during that. I got hooked. I am an admitted 
budget wonk. I love the budget. I love the process of the 
budget. She taught me, and I have learned through my experience 
here, that so much is interwoven in what we do in the budget, 
what you do in the budget here. 

I have to say I never thought, as a 19-year-old at Luther College, 
that I would ever be chosen by my peers to be the Budget Chairman, 
let alone be sitting here in front of all of you nominated by 
the President and under your consideration to be the OMB Director. 

It is truly an awesome thought and I hope it is something I hope 
my teenage kids take a lesson from. I hope many students do, and 
that is you never know where life is going to take you. You ought 
to pay attention. Pay attention, listen, learn, because you really 
do not know what is going to be on that the final exam. I have a 
feeling that I am going to get some of those tough questions on that 
exam here today. 

Listening and learning is something I took very much to heart 
in my role as a representative. I feel that we all govern better 
when we listen to our constituents and learn from them. So should 
I be confirmed by the Senate, I intend to continue those 
philosophies which I first learned from my parents and which were 
instilled in me by my constituents about listening and learning and 
teamwork and being open and honest. 

This is not easy work. We know there are huge challenges ahead 
of us. 

But I congratulate you, Senator Conrad, on passing the budget. 
I know how challenging that is. And I congratulate the work that 
this Committee does. And I very much am eager to get to work, if 
confirmed, to work on these challenges. I know they are going to 
be difficult but I believe that I have the tools necessary in my 
toolbox to help us find some of those answers, even if they are 
not obviously apparent here today. 

I thank you for the opportunity to come before you and testify. 

[The prepared statement of Mr. Nussle follows:] 




                                   26 

Chairman CONRAD. Thank you, Congressman Nussle, for that 
statement. 

Let me just ask a housekeeping question first, which is when 
asked, will you agree to appear before this Committee, given reasonable notice? 

Mr. NUSSLE. Yes, sir. 

Chairman CONRAD. We thank you for that. 

Second, will you agree to answer questions put to you by this 
Committee when you are not called as a witness, but to answer 
questions that this Committee or members of this Committee 
might have? 

Mr. NUSSLE. Yes, sir. 

Chairman CONRAD. We appreciate that. 

Let me just go to this first question. I listened very closely to my 
colleague, Senator Gregg, and he talked about revenue being at a 
level that is somewhat above the average. The problem with that 
is if we had revenue at the average level the last 20 years, none 
of the budgets would be balanced. The problem is the bottom line. 
The bottom line is when you put spending together with revenue, 
the amount of spending we are doing with the amount of revenue 
we are raising, the two do not match. We are spending far more 
than we are taking in. And we are doing it before the baby boomers 
retire. 

The result is this is what has happened to the debt. Let me ask 
you this question. Is this dramatic increase in the debt during this 
Administration a good thing, a bad thing, or does it not much 
matter? What would be your assessment of what this increase in the 
debt means to the country? 

Mr. NUSSLE. As the Senator knows as well--if not better--than 
I, there are many reasons why our debt is going up and has gone 
up. I consider it a huge challenge, a fiscal challenge, for our 
country, an enormous challenge that we have to grapple with. It is not 
a short-term challenge. It will not be addressed this year or in the 
next budget in total. 

But we have to, as you know, I think I have heard you say and 
I have heard others say--I have probably said it myself--when you 
are in a hole the best thing to do is to stop digging. 

So I agree and I believe it is a shared--it is one of those shared 
principles that all of us agree, that we need to do our best to 
reverse that trend as quickly as possible and get back on the road 
toward responsibility. 

Chairman CONRAD. And why does it matter? Why should anybody be 
concerned about this trend line? 

Mr. NUSSLE. Again, the Senator can, the Chairman can--and I 
appreciate you asking me that question. The reason I am concerned 
about the trend line is because of the opportunities that are often 
missed either today or in the future by being saddled with debt. 
This is true whether you are a farmer or in small business or an 
individual with high credit card debt, or it is true as a Nation. 

Having said that, there is, I believe, some silver lining, if there 
is. The fact that we are an economy that can grow at amazing rates 
when we are growing, the fact that our debt is debt that is 
attractive and purchased by others is a positive. There are some 
coun


                             27 

tries where people are running away from the indebtedness 
instruments. So there is a lot of silver lining, too. 

But I would concur with you and I believe there is bipartisan 
support in the area of concern over growing debt. 

Chairman CONRAD. Let me just go to the second one, on foreign 
holdings of debt. Let me ask you your view on this issue. This is 
what has happened to foreign holdings of our debt during this 
Administration. It really is quite striking. It took 42 
presidents 224 years to run up $1 trillion of U.S. debt held 
abroad. This president has more than doubled that amount in 
just these 6 years. 

Does this trend line of foreign holding of U.S. debt concern you 
or not? I would ask the same question I asked previously, is this 
a good thing? Is this a bad thing? Or does it not much matter? 

Mr. NUSSLE. I am concerned about it, Mr. Chairman. Obviously 
when you--and all of us are, I compliment you on your chart. 
There are many ways to construct a chart. If you compare that 
indebtedness to a denominator which I think is a common 
denominator that all of us would choose to compare these big 
numbers to something, when you compare it to GDP we, I think, 
see a much more reasonable indication of our debt compared 
with our ability, our strength of our economy to pay it back. 

But I will not quibble with your chart. It is a challenge. You 
held up another chart involving the different countries. 
I believe 9 percent, as an example, is held by Communist 
China. Again, it could be a lot higher. It is good that our 
indebtedness is something that is attractive to be purchased. 
But I consider that and others to be a concern that we should 
never shy away from. 

Chairman CONRAD. Why is it a concern? Why does it matter that 
we have this doubling of U.S. debt held abroad? Why should 
somebody listening and watching this perhaps care? 

Mr. NUSSLE. Obviously at some point in time it may need to be 
paid back. That is the most important indication. 

Probably the second, however, is that we currently do not have 
an agreement on a plan by both sides or between the Congress and 
the President to address that long-term unsustainable growth in 
entitlements. We have seen good proposals but we do not yet have 
a meeting of the minds and active reform legislation to deal with 
those challenges. 

It is true with anybody who has problems with their debt, whether 
it is their credit cards or their mortgages or whatever it might 
be, if you do not have a plan to deal with it, how much you have 
is less relevant than how much you are going to continue to 
accumulate if you do not deal with that long-term challenge. 

Chairman CONRAD. Let me just say this to you, Senator Gregg 
and I have a proposal that we will be introducing in the near 
future that suggests with respect to the long-term challenges 
that we face that we put together a working group, 16 members, 
eight Democrats, eight Republicans, two of whom would be 
representatives of the administration. We contemplate the 
Secretary of the Treasury being the chairman of this working 
group. We would really anticipate--obviously the president 
would decide who his other representative would be but it 
would likely be you. And that these people be given an assignment 
to come up with a plan to deal with these long-term entitlements. 


                              28 

If you are confirmed and if this plan goes forward, is that something 
that you would be willing to devote your time and attention 
to, coming up with a plan that could be presented to a future 
Congress? 

Mr. NUSSLE. If confirmed, yes sir. 

Chairman CONRAD. Senator Gregg. 

Senator GREGG. Thank you, Mr. Chairman. 

Senator DOMENICI. Mr. Chairman, could I ask before you do that, 
did you mention names name for that commission you were talking 
about or just the job? 

Chairman CONRAD. Just the job. 

Senator DOMENICI. Thank you. 

Senator GREGG. Mr. Chairman, thank you. 

Congressman Nussle, following up on the Chairman�s questions, 
the concept that we have been working on is that this would be 
fast tracked, it would not be amendable, and that any report would 
be bipartisan. Of the 16 people on the commission, at least 12 
would have to be in favor of any recommendation. We would hope 
it would be unanimous. And that the members of the commission 
would be experts, within the Congress primarily, on these issues. 
And that any final passage would require 60 votes. So you would 
have fairness and bipartisanship as the underpinning of the proposals. 

Obviously if this went forward, you would play a role in it as 
OMB Director, I would hope. 

On another issue, however, we are headed for a self-inflicted 
train wreck here on the appropriations process. The Senate has not 
taken up but one appropriations bill and here we are 2 weeks before 
the break for August. It is very obvious that there is not a plan 
in place to take up the rest of the appropriation bills, or at least 
not many of them, and to conference them. And to get them back 
to the president before the end of the fiscal year on September 30th 
is a physical impossibility due to the fact that they have not been 
brought to the floor. So it is purely self-inflicted. 

I guess I would be interested in your thoughts on how we sort 
through that type of situation. I recognize you are not OMB Director 
yet, but as a former Chairman of the Budget Committee and 
an active member of the House, any thoughts for how we work 
through this, what appears to be an intended train wreck? 

Mr. NUSSLE. Senator, I have watched this process, as you have, 
for quite some time. And I have noted that in those years--and it 
seems as though there is always a pretty healthy rumor of a train 
wreck. It has happened in divided government times and it is also 
happened, strangely enough, in times where one party controlled 
all of the different branches, we have heard this word train wreck. 

This is why in my budget reform proposals I have always tried 
to accelerate the process by which we discover that there is a 
challenge--that there are actually two trains heading down the 
track at one another, but also to provide a mechanism to begin 
the process of talking. 

Again, I am not suggesting any of you need to support a joint 
resolution but that was one way that you would have an early 
warning and an opportunity to bring all parties to the table in 
order to accomplish that. We do not have that mechanism today. 


                                    29 

What I would commit to you, if confirmed, and I would commit 
this to all members, that the Administration and the Congress 
need to begin communicating as quickly as possible on these matters 
where we agree and where we disagree. I understand, I have 
seen in the media a flurry of letters and meetings and I think all 
of that is a positive step forward. I hope, and I am as anxious as 
I can report to you, that I have the opportunity, if confirmed, to 
be part of that process. 

I believe, not only having a little bit of an understanding of 
where the Administration is coming from, but maybe even more 
importantly the advantage Rob Portman had is he understood a little 
bit about what was happening up here on the Hill on the part 
of members. I think all of that would give me some ability to help 
in this process and I would want to be able to use my efforts in 
that regard. 

Senator GREGG. I think that is certainly an appropriate approach 
and obviously I understand there is going to be a meeting down at 
the White House on this issue with the Democratic leadership next 
week, I think it is, which will be constructive. 

But this is a self-inflicted event. There was obviously a conscious 
decision made that appropriation bills would not be brought to the 
floor of the Senate and would not be conferenced individually because 
of the issue of a veto having been put forward on bills that 
exceeded the President�s budget. And under the budget passed by 
the Democratic leadership here, they exceeded the President�s 
budget by $23 billion. So the event, the die was cast. 

How you work through this now becomes a very interesting exercise. 
The problem, of course, was that in the last Congress we had 
a continuing resolution which ended up going for the whole year. 
Our side of the aisle was properly excoriated by the other side of 
the aisle for not passing the bills and having a continuing 
resolution which went for the whole year. It appears that we are 
going to be in a position where that might happen again, or 
something similar might happen again. 

I guess I would be interested in your thoughts on continuing 
resolutions which run for the whole year, what effect they have on 
running a government efficiently? 

Mr. NUSSLE. Senator, I am of the view that continuing resolutions 
do not define success. And I would just suggest that both 
sides are losers when that is the case. 

Now there are some who may suggest that there may be some 
victory in that, and I can understand where that might be the 
attitude. But my view is that it does not define success. The 
president is not able to move his agenda and priorities forward 
under a continuing resolution. Congress is not able to work its 
will and exercise its authority of the power of the purse under 
Article I in a continuing resolution. 

I do not believe anyone wins. It certainly is a better answer than 
a closure but it is, to me, not a successful conclusion to the 
process because of both sides having an inability to move their 
agenda forward in any positive way. 

Senator GREGG. Thank you. 

Chairman CONRAD. I would just briefly observe, on this question, 
there is no decision on our side not to bring the appropriations 
bills 

                                  30 

to the floor in a regular order. In fact, I have just attended a 
meeting in which the overwhelming sentiment was to try to conclude 
work on the appropriations bills in the regular order. 

This discussion at the White House with the leadership of the 
House and the Senate that is going to occur, as we discussed before 
the hearing began, very, very important, very important. I commend 
you for your statement on a continuing resolution. 

I think all of us--those of us who have been deeply involved in 
the budget process would agree this is just not the right way to do 
business here. We are much better off if we are able to complete 
the appropriations bills in the regular order, to give full 
consideration so that we can prioritize the use of resources. CR 
is just taking last year�s and continuing it. So I think you have 
made an important statement here. 

Senator WYDEN. 

Senator WYDEN. Thank you, Mr. Chairman. 

Good to see you, Mr. Nussle. I have appreciated our working 
relationship and certainly serving as OMB Director is not a job 
for the fainthearted. I am looking forward to your responses this 
morning. 

You could get a little bit of a sense of the back and forth here 
in this Committee. I sure hope you can revive tax reform, for 
example, in the administration. 

I have a proposal, S. 1111, the Fair Flat Tax. I have asked the 
President several times if he would like to work on a bipartisan 
basis. It does not, for example, raise the top rate. It holds the 
rates down for everybody, gives everybody a chance to get ahead. 
So I wish you well in terms of being able to pump some new life 
back into the tax reform talks. 

The questions I want to zero in on first are what I think are the 
overriding issues of our time, and that is changing course in Iraq 
and fixing American health care. Both issues involve hundreds of 
billions of dollars and go right to the heart of what you will be 
tasked to do if confirmed at OMB. 

On the Iraq war, I believe that there has been a systematic effort 
by the Bush Administration to hide the real costs of the war in 
Iraq. I think we very much need some truth in budgeting with respect 
to the war�s costs. 

So let me ask you first about several actions you have been 
involved in. First, to your credit, I noted that when you were 
Chairman you did criticize the Bush Administration for not including 
war funding in the budget and instead relying on just the 
supplementals. But when the bipartisan leadership of the Budget 
Committee sent a letter to the President urging him to include 
foreseeable war costs, you did not sign the letter. 

Why wouldn't you have signed a bipartisan letter, given the fact 
that you had an interest as stated? 

Mr. NUSSLE. Thank you, Senator, for your comments and for 
your question. 

Frankly, I do not remember the context of that letter and I do 
not know why I would not have because I was probably the 
earliest--certainly the earliest Republican House leader that 
came out in favor of including and recognizing the out-year 
challenges of the 

                                31 

war within our budget. So it sounds like a letter I probably could 
have drafted and probably should have drafted. 

But I am not familiar with that letter or why I would not that 
have signed it. But I would be happy to try and take a look at it 
and give you a straight answer on that. 

Senator WYDEN. Thank you. 

For the fiscal year 2008 budget the Bush Administration, for the 
first time, included some of the funding for Iraq and Afghanistan. 
It included a $50 billion placeholder for 2009 at a time when the 
country is spending $10 billion per month on the war and nothing 
was included for 2010 and future fiscal years. Do you think that 
is truth in budgeting? And what would you do again to make sure 
that the American people really see what costs are involved here? 

Mr. NUSSLE. Senator, I would first indicate to you that, of course, 
I did not write that budget. I cannot answer the question of why 
the number was chosen. I would reflect on the fact that it is a 
number that I, actually, together with then Chairman Gregg, 
negotiated as part of the first indication of long-term obligation 
for the war was $50 billion. We used it as what we call, as you 
all know, a plugged number because we did not know exactly what 
that cost would be from a Congressional standpoint. 

My assumption, it is dangerous to do so sometimes, is that they 
have continued that practice. The good news is that the 
Administration is starting to recognize that. I would work with 
you and with the Congress, if confirmed, to do a better job. 

If I may point out one other thing, too---- 

Senator WYDEN. Let me, if I might, because I think that is a 
constructive response and I appreciate it. It is going to be 
especially important given the stories we saw 2 days ago with 
General Petraeus talking about a deep commitment for several 
more years. 
And so we are going to need your involvement in this question of 
additional efforts to be transparent and offer more information on 
the budgeting. And I appreciate your answer. 

I wanted to get into one other area and that is the health care 
issue that you and I talked about in my office. 

Senator Bennett and I have brought to the Senate the first 
bipartisan health care overall in more than 13 years. I think there 
is a real opportunity, even in this session of Congress, to act. 
The Administration has focused on tax changes with respect to health 
care. I happen to think the tax code is a mess with respect to 
health. And I am willing to meet them halfway in that effort. 

But just changing the tax code is not going to do it. Because if 
all you do is change the tax code, folks are still going to go out 
into the broken marketplace, insurance companies can cherry pick, 
people get discriminated against. 

My question to you is are you open to working with us on a 
bipartisan basis to say yes, we do need to make those changes in the 
tax code but we are also going to have to look at some of these 
reforms along the lines of what I mentioned and others because the 
two go hand-in-hand and they will be a prerequisite to fixing 
health care? 

Mr. NUSSLE. Yes, Senator. I had an opportunity to visit with 
Senator Bennett and you both on your proposal. I believe it is 
something that we need to continue to work on. And if confirmed, 


                               32 

I would be honored to continue that conversation and work. And 
I applaud you and he, as well as on your work for tax reform, in 
both those areas. Because they are, as we discussed earlier, part 
of the pieces of the puzzle I believe if we are going to have 
longer term fiscal responsibility for our country. 

Thank you. 

Senator WYDEN. My time is up and I will have some additional 
questions on a second round. 

Thank you, Mr. Chairman. 

Chairman CONRAD. Senator Bunning. 

Senator BUNNING. Thank you, Mr. Chairman. And welcome, Congressman 
Nussle. 

We served together on the Ways and Means Committee and on 
the Budget Committee in the House, so I have some experience and 
knowledge about Congressman Nussle. 

Let me start out with a couple of questions. You have said that 
it is your goal to work constructively with Congress on 
appropriation bills. As the Senate continues to consider 
House-passed appropriation bills, we consistently find ourselves 
in a situation in which spending exceeds the limit proposed by the 
President. How do you plan to work with Congress to bring our 
appropriation bills back to the point where they are consistent 
with the President's request? 

Mr. NUSSLE. Senator, as a nominee it is awkward--it is impossible, 
let alone awkward--to begin that negotiation here today. So 
I do not have a proposal that I can make for you on either how to 
do it or what the substance of that might be. 

I think we all share a concern about growing spending, about the 
deficit, about the debt, about our need to rein in our entitlements. 
And I believe, as I said in my opening, if we can work from where 
we do agree I believe we may be able to set a foundation that all 
of us can then work from to build an agreement around. 

Senator BUNNING. Just to followup on Senator Wyden�s questioning, in 
the past the Department of Defense has been criticized 
for its budgeting practices. Last year they made some progress, and 
you and Senator Gregg made progress, by putting a plug in of $50 
billion in anticipation of what was coming. 

Yet emergency supplementals are still needed to meet the operational 
cost of the war in Iraq and the Global War on Terror. 

In the past, some of my colleagues have argued that more of the 
costs are needed to be added to the baseline budget. But this could 
inflate the defense budget. 

How do you plan to work with the Department of Defense to ensure 
that they have a fiscally responsible budget, yet still have the 
flexibility to meet the needs in this time of the war? 

Mr. NUSSLE. You are hitting the nail on the head, Senator. As 
you well know, and this Committee knows, your question is the one 
big challenge. Senator Wyden was bringing it up, as well. 

This is one big challenge about budgeting for the war, and that 
is you plow this into the baseline of the defense budget and then 
they buildupon that as if that kind of spending needs to continue 
forever and we do not recoup any advantage or any reforms or any 
changes in the out years. 

Senator if I am confirmed, I will work with you and others, 
particularly with this Committee who I think recognizes his challenge 


                                  33 

more acutely than maybe anyone else, in trying to ensure that 
while we are finding what we agree upon and what is determined 
to be agreed upon for the war and what is needed, and to do so 
in a responsible way that does not just inflate the baseline for the 
Defense Department at a time when we all know the Defense Department 
needs more oversight not less when it comes to their financial 
management and the potential for waste within their budget. 

Senator BUNNING. This one has something to do with that same 
type of budgeting. 

I have been working with OMB on the budget analysis of long-
term contracts for jet fuel. Unlike the rest of the aviation industry, 
our military is stuck with short-term market price contracts for 
fuel where they were $1.6 billion over budget for jet fuel in the last 
year, just the last year. The Air Force has strongly supported this 
new authority. 

What is your view on the long-term contracts that provide secure 
fuel for our military? Will you work with me to create long-term 
contracts authority that are fiscally sound? 

Mr. NUSSLE. Senator, first of all, yes, I will work with you. This 
is not an area that I have had particular information or knowledge 
about. But this gives, I think, all of us an indication of the M in 
OMB and why good fiscal management is so crucial to whether or 
not we are going to spend the taxpayer dollars wisely. 

So I would be honored to learn more about this. Since you have 
obviously done some work in this area and taken a lead in this 
area, I would work with you to first learn about it and then see 
if we cannot do a better job with regard to it. 

Senator BUNNING. The last question, because my time is about 
to run out, for the last 30 years the Abandoned Mine Land Program 
collected taxes from current coal producers to pay for future 
reclamation projects. While the program was required to provide 50 
percent of the money collected to the States, the States' share has 
been locked up. Locked up, by the Administration. Thanks to 
legislation passed by Congress, States like Kentucky are finally going 
to receive the money they are owed. 

And I must say Wyoming is owed a lot more than Kentucky. 

Can you assure me that OMB will move quickly to distribute 
these funds as Congress intends, if you are confirmed? 

Mr. NUSSLE. Senator, if confirmed, I will certainly work with you 
on that. This is another one of those areas that I have to admit 
that I have not studied and had any particular briefing on. But let 
me get back to you on that. I think it is clear that this is area of 
concern for you. That is obvious. And you deserve an answer. 

If for some reason it is not going to move in an expeditious way, 
you deserve an answer on that. So let me, if I may, get back and 
work with you, if confirmed, on that important issue. 

Senator BUNNING. Thank you. 

Mr. Chairman, I would like to put my opening statement in the 
record. 

Thank you. 

[The prepared statement of Senator Bunning follows:] 


                                     34 




                                      35 

Chairman CONRAD. Thank you, Senator Bunning. 

Senator CARDIN. 

Senator CARDIN. Thank you very much, Mr. Chairman. 

Mr. Nussle, welcome. It is nice to have you here. 

As has been pointed out already, we have had the opportunity 
to serve together on the Ways and Means Committee for many 
years. I admired your service on that committee and I thank you 
for your public service. 

Some of our colleagues have already mentioned the committee 
that you and I cochaired on budget reform. It is true, we did work 
in a very bipartisan manner on that committee. We brought out a 
very aggressive recommendation, and one that, had it been adopted, 
would have avoided some of the problems that we confront 
today by having a budget resolution that confronted the executive 
branch earlier, dealing with accrual accounting rather than just so 
much cash accounting, dealing with entitlement spending and 
being fiscally responsible. 

But as you know, we ran into bipartisan opposition to that effort. 
So hopefully we will have a better go of it here. 

I want to followup on Senator Wyden�s point, first, that we can 
view things in the short-term and long-term. And the long-term, 
clearly the Chairman and the Ranking Member�s point about 
entitlement spending is something that we need to get involved with 
in this next year and a half. We cannot let it go. We have to start 
confronting those issues. But there are certainly longer-term 
problems. 

Senator Wyden mentioned health care. And I do think that we 
need to initiate a better working relationship between the Executive
and legislative branches when it comes to dealing with health 
care. The amount of resources it takes, not just from the Government 
funding but from our entire economy, drains our ability to 
provide access to affordable quality health care to all of our 
citizens. 

So we really do need to engage and come up with a strategy that 
will make our system much more cost-effective, because the results 
just are not there today. 

In the meantime, we have short-term issues. This Congress, 
through the budget resolution that was passed and through the 
work of the Senate Finance Committee, is working on a proposal 
now to expand the SCHIP program. It received strong bipartisan 
support in the Senate Finance Committee. It came out of that 
Committee with a 17 to four vote. 

I had discussions yesterday with some of my Republican colleagues 
in the House about how that bill will provide preventive 
health care, and lower the costs of our health care system. Because 
if you provide children with health care services, they are going to 
have better health care outcomesduring their lives. 

I mention that because we already are setting up a conflict with 
the President on that particular program. 

You are going to have to use your talents to bring together 
different views between the White House and Congress. We have very 
strong views about moving forward with the children�s health care 
initiative. We have very strong views on some of the appropriations 
bills that are moving through Congress. I believe that the home 


                              36 

land security bill passed by a unanimous vote in the Senate 
Appropriations Committee and it is $2 billion more than the 
President's number. 

How do you intend to deal with the issues such as CHIP? How 
are you going to use your negotiated skills to convince the White 
House that they are going to have to move, and yes Congress is 
going to have to move, if we are to have a successful year on the 
budget? 

Mr. NUSSLE. First of all, Senator, if I may, the interesting thing 
about your question is that it is a question that came up in a lot 
of our--Senator Whitehouse brought this up, Senator Wyden obviously 
brought this up. 

The challenge I see is, and this is sometimes typical in my 
observation of the way things sometimes operate in Congress, is that 
we know there is a huge challenge out there. We look for the train 
that is moving at that moment and we try and solve that big 
challenge on the small train that is moving. 

I think the challenge that we have here with SCHIP, if I may 
just from observation, is that we all know there is an uninsured 
challenge out there, a number of families, children, adults, young 
people who are uninsured. We see a reauthorization process moving 
down the track for SCHIP. I think there is an effort to try and 
resolve not just reauthorizing an important program that started 
and intended to reach out to children at 200 percent of poverty 
who were not covered by Medicaid, and expand it to help solve a 
much bigger problem that maybe should move through a process that 
you just described or that Senator Wyden described or that Senator 
Whitehouse described to me in our meeting. 

That is not much of an answer except to say that if we continue 
to have a stalemate on the conversation of these big issues, we will 
look for forced ways to solve them that are awkward and oftentime 
fly in the face of either the other party or the Administration and 
I think that is what we see here. 

What the Chairman described, as far as a task force or a commission, I applaud. You have served on those in the past. I have 
as well. We need to tackle those bigger issues so that we do not 
force those big issues into smaller authorization processes that are 
moving through, in my judgment. 

Senator CARDIN. I agree with you that we have to deal with the 
big picture. And I think Senator Wyden is right on target in having 
us look at the overall health care system. 

But in the next year and a half, we have got to move forward 
on some of these issues. And we are not going to accomplish the 
big picture as aggressively as we would like in the next year and 
a half. We need to make some progress, on the long-term and also 
on getting things accomplished by enacting legislation in this 
Congress. 

With the children's health care initiative, we have a chance to 
get something done that can help. I see what is happening my own 
state of Maryland and I saw a young child, a 12-year-old, die 
because he could not get care for a toothache. He lived six miles 
from here and could not get care for a toothache. He fell through 
the system. 


                                   37 

We know that children who do not have health care are very vulnerable 
in our society. We have got to make some progress. And 
you are going to have a chance, as OMB Director, to do something 
about it. You have to bridge the gaps between what the White 
House is doing and what we are doing here in Congress. 

You have those talents and you are going to have to be aggressive. 
Otherwise were going to lose the opportunity over the next 
year and a half. 

Thank you, Mr. Chairman. 

Chairman CONRAD. Let me just say to my colleagues, they have 
got a vote that they are telling us will be roughly 11:35. I have 
called over and asked them to delay that somewhat to 11:45, because 
I think we might be able to conclude if we are able to do 
that. So I would just ask my colleagues to keep that in mind. 

Senator ALLARD. 

Senator ALLARD. Thank you, Mr. Chairman. 

I also would like to join my colleagues in saying that it was a 
pleasure to serve with you on the Budget Committee on the House 
side when I had an opportunity to serve over there. Senator Nussle 
and I both had an opportunity to work on a number of issues together, 
and I have always appreciated his openness and willingness to listen. 

First of all, I think it is remarkable that you got Senator Grass-
ley to come up and say some words. Every time I want to talk to 
him, I have to get up at five o�clock in the morning and go jogging 
with him. 

So my question to you, if Senator Grassley and I want to talk to 
you about an issue, will you get up at five o�clock in the morning 
and go jogging with us? 

Mr. NUSSLE. I am usually running away from things. I do not 
know if running with you is probably the best way for us to come 
to much agreement. But if that is the best way, I will do it. 

Senator ALLARD. I just wanted to check out your commitment, 
how far you would go to listen to us. So thank you. Thank you, 
Congressman, for your service. 

On a more serious note, I do have a great deal of concern about 
accountability in the bureaucracy. We have passed legislation 
through the Congress, where the bureaucracy is expected to set 
some goals and objectives in a measurable way, such as the PART 
program. 

An important part of your responsibilities, as well as working 
with the numbers, is to work with the agencies and review them 
to make sure that they have a way of measuring how they are 
proceeding along when they set goals. I do think it is important 
because your budget is tied to setting those measurable objectives. 
Hopefully we can work closely to tie our budget, as we move along, 
toward that. 

So I would like to hear some comments from you about the PART 
program. I think it is important. Both the Chairman and I have 
talked about holding some hearings on the PART program. And 
again, we may very well call you as a witness on that. So I would 
like to hear some of your thoughts about the PART program and 
the way it has been implemented. 


                                    38 

Are there ways that we can improve it? Do you think it is serving 
us as it should at this point in time? 

Mr. NUSSLE. First, Senator, I would be honored to come back and 
visit with you. I would also hope that you would include--I am 
sure you would--the Deputy Director for Management, Clay Johnson, 
who has really taken the lead in this area. 

The Program Assessment Rating Tool is just that, a tool. It is 
one of the tools in the toolbox that we should all use to provide the 
oversight that is deserved both on the part of the Administration, 
also on the part of Congress in order to determine whether or not 
a program is doing the kind of job it should be doing, using the 
money appropriately, getting the results necessary, and interacting 
with the rest of the Government programs in an appropriate way 
to make sure that the people or the issue that we are trying to 
serve is served. 

I take the M part of OMB very seriously, and I would be pleased 
to come up and continue that conversation either as a colleague or 
also as a witness in the future. 

Chairman CONRAD. Can I interrupt on that point? 

Senator ALLARD. My time is running but go ahead, Mr. Chairman. 

Chairman CONRAD. I will extend your time. 

I will say this, that this really is very important. If there is one 
thing I think we all know, we do not do enough oversight. The M 
is distinctly lacking many times. Senator Allard and I are 
committed to try to make this program work better and we would 
appreciate your help. 

Mr. NUSSLE. You know, Mr. Chairman, this is one of the areas 
that, like you, I felt that there was not enough emphasis on the M. 
But I have to tell you, in the last number of weeks in visiting with 
the OMB staff, this is probably one of those less glamorous parts 
of the job and therefore we do not hear about it a lot. But there 
is a lot of M going on. There is a lot of management going on. 

I was impressed by that and I think it would be good to inform 
the Committee. If confirmed, I would be honored to keep that 
conversation going. 

Senator ALLARD. One other thing, just following up on this. An 
important part of it too, I think, is keeping the public informed as 
to which agencies are performing. Such as you do through the 
website Expectmore.gov. I would like to get a commitment from 
you that you keep that as user friendly as you possibly can so that 
in the public can look at that and see how their favorite agency or 
maybe least favorite agency is performing or not performing. I 
think that that is a valuable aspect, so I would hope that you 
would keep up that webpage and get a chance to review it from 
time to time. 

Mr. NUSSLE. Yes, sir. If confirmed, I would be happy to do that. 

Senator ALLARD. You know, another issue that comes up is static 
scoring versus dynamic scoring. My time is getting short here, but 
it is, I think, a source of some of our debate as to what the budget 
is going to look like, what our revenue is going to look like out in 
the future. Can you share any thoughts with us about static scoring 
as opposed to dynamic scoring when we look at these future figures? 


                                     39 

Mr. NUSSLE. It is a fair question and probably deserves a much 
more in-depth answer. I will be very brief and suggest to you that 
I always adopted the view that even though static scoring was 
imperfect, it was the perfect that we knew at the time. And that 
dynamic scoring needed a lot more work before it was ready for 
prime time. 

I certainly worked with the CBO directors and others on this 
issue. But I never assumed that we could--the challenge with all 
of the scoring is trying to give Congress the best information 
possible to make decisions. And at this point in time, I believe 
the static scoring, so called, is far better than any other 
tool that I am aware of. 

Chairman CONRAD. If I can interrupt just to alert my colleagues, 
here is the situation we face. The 11:35 vote is locked in. It was 
locked in by unanimous consent and cannot be moved. So that creates 
a bit of a challenge for us. 

I think the best thing we can do is go to 5-minute rounds and 
try to complete before that vote. 

Senator ALLARD. I am going to yield right now. I expected to 
yield to my colleagues in respect for their time. 

Chairman CONRAD. Senator Allard, I thank you for your courtesy. 

Senator SANDERS. 

Senator SANDERS. Thank you very much. Jim, it is good to see 
you. I have known Jim Nussle, we came in together 16 years ago. 
It is good to see you. 

Jim, let me tell you the concerns that I have with your nomination. 
It is not that you are not smart. The partisanship does not 
bother me. I think if you stand up and fight for it, you believe. And 
where I come from that is not something to be held against people. 

This is my concern, Jim. I think the American people believe that 
President Bush is increasingly out of touch with reality in many 
areas. It is not just Iraq. It really has to do with the economy. 

Today we have heard from Senator Gregg and others that the 
economy is really robust, is the word they use here in Washington. 

Let me ask you this: since Bush has been president over 5 million 
people have slipped into poverty, nearly least 7 million Americans 
have lost their health insurance, median household income 
has gone down by nearly $1,300, 3 million manufacturing jobs have 
been lost, 3 million American workers have lost their pensions, 
home foreclosures are now the highest on record, the personal 
savings rate is below zero which has not happened since the 
Great Depression, the real earnings of college graduates have 
gone down by about 5 percent in the last few years, entry-level 
wages for male and female high school graduates have fallen by 
over 3 percent, wages and salaries are now at their lowest share 
of GDP since 1929. 

Now I will concede that President Bush has done a wonderful job 
for the wealthiest people in this country and for the CEOs of large 
corporations. If you receive this position, a very important 
position as head of OMB, are you prepared to go into the office 
and say Mr. President, you have got to represent more than the 
wealthiest 1 percent, that the middle class is shrieking and 
poverty is increas 


                                     40 

ing, and Mr. President we need policies to address the concerns of 
ordinary Americans? 

Mr. NUSSLE. Senator, as I said to the Chairman, I am not satisfied, 
even though there are statistics to show that there is growth. 
You pointed out a number that show that we are lacking, and that 
there are people that are still not able to succeed in our country. 
There are many reasons for that. I am not sure it can be pointed 
at either one person or one policy. But I would concur with you 
that our work is not done yet. 

I, as you indicated, some call it partisanship, I call it being 
passionate, when you believe in something. I have not shrunk from 
that, in talking either with my colleagues. But I would not shrink 
from that in speaking with the president, either. 

Senator SANDERS. Jim, the President has insisted that at the 
time when we have the highest rate of childhood poverty, an issue 
that we do not talk enough about. But as you may know, over 18 
percent of the children in this country live in poverty. The highest 
rate by far of any country on earth. 

The President believes that we should completely repeal the 
inheritance tax in a way that applies only to the wealthiest 
0.2 percent. 

If we repealed the inheritance tax the Walton family, which owns 
Wal-Mart, one of the wealthiest families in America, would receive 
over $32 billion in tax breaks. 

Do you think it is appropriate to give $32 billion in tax breaks 
to the wealthiest, to one of the wealthiest families in this country 
at the same time when we have 9 million children living without 
health insurance in this country and the highest rate of childhood 
poverty? Is that a good sense of priorities, in your judgment? 

Mr. NUSSLE. First of all, Senator, any witness, any nominee on 
the part of an administration will most likely represent that 
administration. I concede that. That would be true under the Clinton 
Administration, the Bush Administration. No matter who the 
administration is, the people that they nominate need to work with 
them. We serve at the pleasure---- 

Senator SANDERS. Do you know my question? 

Mr. NUSSLE. I know your question and I respect it because I 
know you and I---- 

Senator SANDERS. $32 billion in tax breaks for one family and 
the President cuts back on programs for our children. Does that 
make sense to you? 

Mr. NUSSLE. I also know, Senator, that if you increase the taxes 
on that one family you would not solve the problem either. There 
is a lot of work to be done within our tax code. We just had a 
conversation about how our tax code is not performing, it is not 
doing the job it needs to. 

Senator SANDERS. Do you think we should repeal the inheritance 
tax so that one family gains $32 billion? 

Mr. NUSSLE. Well, not for that purpose. No, sir, Senator. But I 
did vote on that issue in the House. So I have already voted on 
that, and my vote was yes, I will report to you as I know you know. 

Senator SANDERS. I know I know. You know I know. 

Jim, this country has by far the most unequal distribution of 
income and wealth. Senator Gregg was talking about how the 


                                      41 

wealthy are paying all of the taxes. He forgot to tell us that the 
top 300,000 Americans now earn nearly as much income as the bottom 
150 million Americans. 300,000, 150 million, the gap between 
the rich and the poor is growing wider. These hedge fund guys are 
making more money than anyone could possibly imagine. 

Does that growing gap between the rich and the poor in America, 
which is now by far the highest in the industrialized world, concern 
you? 

Mr. NUSSLE. Yes, sir, it does. But I would say to my friend that 
my view is that we should do everything we can to help the people 
who are not succeeding, who are poor, succeed. And I do not think 
that has to be done to the detriment of people who have been 
successful. 

Senator SANDERS. I would just say that that is the line that we 
have heard. But in reality what has happened in the last 6 years 
is that spread has become much wider. We have given tax breaks 
to billionaires and cut back programs for the middle class and 
working families. 

I think, Mr. Chairman, my time has expired. 

Chairman CONRAD. I thank the Senator. 

Senator GRASSLEY. 

Senator GRASSLEY. The Senator from Vermont is a friend of mine 
and works with me, and I am not going to take issue with him. I 
do not know the family he is talking about. 

But the other side of the coin is you can do like the Buffets or 
the Gates do and give $34 billion and $60 billion to foundations 
and not pay taxes on it, either. So we think we are going to get 
that money into the Federal Treasury, it is not as certain as not 
repealing the estate tax is. 

I would ask the Chairman before I start my questioning, I hope 
that there is a good feeling about, that I sense at this hearing, 
that we will able to move this nomination along. I am not going 
to ask you to comment on that. But that is my feeling. And I would 
think that, based upon this hearing, that we would be able to move 
it along. 

I want to get back to some of the issues that has been brought 
up about taxes because I am on that committee that has responsibility 
over tax policy. 

Some on the other side have been highly critical of the Bipartisan 
Tax Relief Plans of 2001, 2003, and 2006. One of their criticisms 
is that the Federal budget picture would be much brighter 
if the Bipartisan Tax Relief Plan had not been enacted. That seems 
to be the way that these critics framed the questions to the 
Congressional Budget Office in a recent letter that we have heard 
so much about in the press. Estimates such as those cited by the CBO 
letter are produced to guide decisions that we in Congress need to 
make. Estimates often vary quite a bit from actual Federal fiscal 
results. 

Fortunately, over the last several years, the actual performance 
of the receipts side of the budget has been much brighter than 
estimates when we passed those tax relief measures. 

The charge of the critics is that the bipartisan majority screwed 
up. We should not have done--we should have done something different. 
That criticism is framed solely from the view of the revenue 


                                     42 

loss of the policies. Let me be clear, there is revenue loss over a 
10-year period when you provide tax relief to virtually every 
American taxpayer. 

I have got a chart here that shows the revenue loss of these policies 
on an ongoing forward basis. It is a big number, $1.9 trillion 
over a 10-year period of time. 

A fair question to ask of both supporters and critics is to look at 
the tax relief category by category and then ask whether it would 
be a wise decision, whether the policy was a wise decision. And 
depending upon where the person comes down, should we extend the 
particular tax policy beyond 2011? 

So we have heard today that you were one of the architects of 
this policy. So I would like to go through this category by category. 

Marginal tax rates, $553 billion over 10 years. Was it a mistake? 
Should we let it expire in 2011? 

Mr. NUSSLE. Senator, as a Member of Congress, as a former 
Member of Congress, and judging my record, my answer would be 
no, I do not believe that was a mistake. 

Senator GRASSLEY. The 10 percent bracket, $299 billion over 10 
years. That was to help low-income people. Should we let that in 
expire in 2011? 

Mr. NUSSLE. Senator, as someone who wants to be the Director 
and as a nominee, I have to be careful. I cannot speak yet on behalf 
of the Administration. But I can tell you my personal opinion and 
what I would be an advocate for and that is I believe that should 
be extended. 

Senator GRASSLEY. The President has advocated that we make 
these permanent so you are not going against what the President 
said. 

Mr. NUSSLE. I know but I am trying to be a little careful. 

Senator GRASSLEY. The child tax credit, $216 billion over 10 
years. That is helping lower middle income and low income people. 
Should we let that expire in 2011? 

Mr. NUSSLE. Again, I do not believe so. 

Senator GRASSLEY. The capital gains and dividends lower tax 
rates, $216 billion over 10 years. Was it a mistake? Should we let 
that expire in 2011? 

Mr. NUSSLE. Again, I do not believe so. 

Senator GRASSLEY. And the marriage penalty, I mean how can 
you justify a penalty if you are married? And we did away with 
that. It had been on the books for a long time. That is $52 billion 
over 10 years. Was that a mistake? Should we let that expire? 

Mr. NUSSLE. I do not believe it was a mistakes, sir. 

Senator GRASSLEY. Small business expensing, something to encourage 
investment, to make small business efficient and effective 
to compete, and to create the 80 percent of the jobs that it created 
in America. That cost $19 billion over 10 years. Should we let that 
expire? 

Mr. NUSSLE. Again, I do not believe so. 

Senator GRASSLEY. Education tax relief, $12 billion over 10 
years. Was it a mistake? Should we let it expire? 

Mr. Nussle. I do not believe so. 

Senator GRASSLEY. I think that when you get down to this piece 
by piece it is pretty difficult to make a case that the tax cuts of 


                                   43 

2001, 2003 were mistakes, particularly when Chairman Greenspan 

says it is the reason why we created 8.2 2 million new jobs. 

I yield the floor. 

Chairman CONRAD. Senator Stabenow. 

Senator STABENOW. Thank you, Mr. Chairman. 

And first, welcome Congressman Nussle. it was a pleasure to 
serve you in the House and it is a pleasure to have you today. 

Mr. Chairman, I first want to start, as our distinguished ranking 
member was speaking about appropriations, I actually looked 
around to see if we were on the Daily Show or if there his tongue 
was planted firmly in his cheek when he was talking about 
appropriations and the concern about where we are in appropriations. 
Because just for the record, it has been our--the Republican 
leadership that has filibustered every single move we have tried 
to make in order to be able to get to appropriations. 

So just for the record, and I know that the Chairman and I know 
that the distinguished members of appropriations and our leadership 
is working very hard not to be in any situation that would involve 
a continuing resolution. And we are certainly committed to 
that and we certainly are committed to doing everything we can 
not to have a train wreck that was talked about earlier. 

I do think it is important, though, and you have a tough job, 
Congressman, coming into this position. Because we are in a situation 
where in the first 6 years, the last 6 years I should say, the 
President did not veto any appropriations bills. There were not 
veto threats in the last 6 years. We know it was a different 
Congress, it was a Republican Congress and now it is a Democratic 
Congress. 

But we have on the one hand to no vetoes to the President saying he 
is going to veto all nine appropriation bills coming out of the 
House. So you have a very tough job ahead of you to try to figure 
out how we go from no vetoes to vetoing everything and averting 
that train wreck. 

Because I would agree with you that continuing resolution is not 
a success for anybody. 

I am also very concerned that we are working on things in a 
bipartisan basis here, a number of things. Senator Cardin talked 
about the children�s health care program. This is a bipartisan 
effort. It came out of the Finance Committee, of which I am a 
member, 17 to four. The leaders, certainly Senator Grassley 
certainly being a key leader in that effort. And yet, the President 
says he is going to veto that. 

We have a homeland security bill in front of us now. The only 
difference is the President says it should have a 6 percent increase. 
We say 8 percent increase, certainly given the reports that we have 
recently received and concerns about safety and homeland security 
and the threats to families and communities in the country. But it 
is only a 2 percent difference. And now we hear the President 
talking about veto. 

I am also very concerned that we passed last week, with 78 votes 
in the Senate, we passed a very important student aid bill. It is a 
very significant bill for young people and older people wanting to 
go college, to get the skills that they need to be able to compete 
in the global economy. 


                                      44 

You know as well as I know, this was a very important effort 
that has been going on in the House and Senate to create more 
opportunity, and particularly for middle-class families that feel 
squeezed on all sides right now, trying to be able to help them, 
help students not come out of college with this huge debt. And all 
of us who have had college students appreciate and understand 
what that is about. $19 billion for families and students fully paid 
for. The President says he cannot support the bill, 78 votes in the 

U.S. Senate. 
So I guess my question to you is do you think it is wise for the 
President? What is your perspective on the President indicating he 
is going to veto a bill that had 78 votes in the U.S. Senate or veto 
a bill on children�s health care before he even saw the legislative 
language, he said it was going to veto it, something that came out 
overwhelmingly out of committee. 

We want to work together. We do not want a train wreck. We 
want to move forward and have things happen that are really important 
for the families of this country. 

How do you come into this? You are, unfortunately, walking into 
a situation that is pretty tough. 

Mr. NUSSLE. I realize my timing is--or maybe Rob�s timing was 
not---- 

Senator STABENOW. Maybe it was on purpose. 

Mr. NUSSLE [continuing]. Was not perfect. No, I do not believe 
that at all. He is a friend. 

Let me go to your question. First of all, I was not privileged to 
be part of those conversations so I am not sure I can report to you 
on the conversation and exactly how that was developed. I can 
make some guesses but I do not think that is probably appropriate 
as an answer. 

If I may observe, and I think you rightfully asked the question 
why weren�t there vetoes in the past and why all of a sudden is 
this coming? 

Let me just step back into my own shoes of having been the 
Chairman of the Budget Committee. I actually thought there were 
some times it would have been good to have a couple of vetoes, I 
would say to start with. 

No. 2, in all of those years, again and I am not going to suggest 
this is perfect but I think it is a fact nonetheless, there was a top 
line agreement between the administration and those Republican 
Congresses on the top line number. That was a lot of disagreement 
within. But as I recall, and I may be mistaken, I am sure there 
was negotiation as I recall, as well. But there was at least a final 
top line agreement on what that top line appropriation number 
would be. 

As part of that, I believe that the administration gave some leeway 
within the appropriation bills for puts and takes, recognizing 
that Congress has to work its will. I believe that is there, as well, 
even in this regard. 

But I believe that is the biggest reason why all of a sudden there 
was a difference. That is just my belief watching this, having been 
a private citizen for 6 months and reading the papers. And so I 
have not spoken and have not been part of those meetings but that 
is what I observe as possibly the reason that triggered this. 


                                    45 

But as I say to start with, there were many of us that thought 
it would have been good to have a couple of vetoes during that 
time, if for no other reason just to wake a few of us up. 

Senator STABENOW. Thank you, Mr. Chairman. 

Chairman CONRAD. Thank you, Senator. 

Senator DOMENICI. 

Senator DOMENICI. Thank you very much, Mr. Chairman. 

I learned a lesson today. If I want to ask questions, I had better 
get here early. I will run over here as fast as I can and get my seat 
but I will be in my tennis shoes when I do that. Then I will leave 
and go do a little work and come back. I will still have my seat; 
right? OK. 

Chairman CONRAD. Early bird rule. 

Senator DOMENICI. I will try to use only a couple of minutes. 

I told him when I was chairman, I used to have some pity for 
older chairmen and I would let them go ahead. He looked at me 
and said well, he did, this chairman looked at me and said well, 
that was not very good because you were the only chairman they 
ever had. 

[Laughter.] 

Senator DOMENICI. I think that might have been true. I said no, 
I was talking about the Democrats. 

Mr. NUSSLE. Pity is a new face for you. I have never noticed that 
with you, Senator. 

Senator DOMENICI. I do not ever want to wear that. 

But I have a question that is a tough one for you and it is going 
to require some solution, I am afraid, some serious declarations on 
your part, on the part of the Administration, before you can get 
confirmed. 

This has to do with an issue called loan guarantees., if you have 
not heard of it yet, as it applies to the Department of Energy and 
the bill that we passed in 2005 the Energy Policy Act, a big energy 
bill. It contained within it a provision, an entire chapter, that had 
nothing to do with anything other than making sure that loans 
were going to be made available to the public from the Department 
of Energy for clean energy development. 

It is very clear that it is a self financing program. It is very clear 
that they have to pay the risk factor up front, that is determined 
and it says that in the statute. And it is clear that if that was set 
in law properly, in regs properly by OMB, that would be all anybody
would have to pay because that is what the risk factor is, a 
given amount, maybe 10 percent, as high as 10 percent. 

But OMB has been dragging their feet and I do not know which 
cabinet members have been involved. I surmise as of now the Secretary 
of Treasury is himself involved. 

But I can tell you, Mr. Nussle, that this is one of the most 
important provisions of the Energy Act. It should have already 
been done and it should have had $25 billion to $30 billion in 
the loan guaranteed fund. It is still not ready and the recommended 
amount by OMB is $9 billion. That will not fly. 

This is a pot of money that is there in case a nuclear power plant 
wants to borrow to build a nuclear power plant. They may never 
do that. But if they need, they need $1 billion, not 50 cents. 


                                 46 

We have got two or three new coal plants that are needed that 
are new hybrids. We expect to get them built with loans from the 
Federal Government. One of them cost $540 million. 

I know that somebody in Government and maybe in OMB does 
not think that this is the way we ought to do things. But you know 
it is too bad. When you write the law, the president signs the bill, 
it becomes the law of the land and you read and reread it and 
reread it and it cannot come out any other way. 

Now you got some very smart people over there, I do not feel like 
calling you Jim. I never did know you that well before I worked 
with you, so I will call you secretary or whatever it is, Mr. OMB 
Director Nussle. 

I can guarantee you that they are not going to read this one the 
way they have been reading it because they have been reading it 
wrong and causing nothing but trouble. 

It seems to me all the work that has been done, you have got 
about 48 hours, to sit down and get this fixed. I can give you a 
piece of paper that outlines all of the problems. I cannot fit them 
on less than two. I can give you those and do not expect anything 
from you since you might not even want to agree with what I have 
said. 

I would rather that you just acknowledge that Domenici, who 
was chairman when this was all passed, gave me those pieces of 
paper and I am looking at them. 

Is that a fair answer on your part? 

Mr. NUSSLE. Senator, I believe that is very fair. I met with you 
on this topic. I know you are very serious about this. And if I am 
confirmed, I will work with you on this. In the meantime, I will 
make sure your message is delivered to current Director Portman. 

Senator DOMENICI. Well, that may be OK, but you understand 
that sometimes we expect the people who are not yet current to 
write something down too, as to how they feel. 

Mr. Chairman, I am thinking that I feel that way about this 
nomination versus this very, very major, major error that has been 
made that makes plenty of people sick. We should have had $10 
billion or $12 billion invested out there. You know it. You would 
be on my side in a minute. You helped us write it. 

Chairman CONRAD. Yes, sir. I am on your side. 

Senator DOMENICI. You helped us write it. You said that is the 
only way to do it, put in the bill how it should be constructed. Do 
not leave OMB constructing it because we know what will happen, 
it will not get done. So that is where we are. 

Other than that, I think you are wonderful. 

Mr. NUSSLE. Thank you very much. 

Senator DOMENICI. And your wife also. I remember you were just 
getting married when you left the chairmanship or went home to 
get married and I did not get a chance to meet her. But that is her 
there, right? 

Mr. NUSSLE. Yes, it is. Thank you. 

Chairman CONRAD. Thank you, Senator Domenici. 

Let me just conclude where I began. We have only got just a couple 
of minutes left on this vote. 

This is really, I think, the toughest question. Here is, I think, the 
toughest question. This is what is happened to the debt during this 


                                   47 

Administration. You were, as House Budget Committee Chairman, 
one of the architects of the policy that has led to this explosion of 
debt. 

Why, as a policy matter, separate from our feelings about you as 
an individual--and let me just say publicly, I always felt I got 
along well with you, Jim Nussle. I like you. And I always thought 
we had a very constructive working relationship. My staff feels 
good about your staff. 

But this is apart from personal feelings. This is a question of policy. 

I think this is a--I think this has been a very serious--well 
frankly, I think it is a disaster for the country, this run up of debt 
before the baby boomers retire. This has been the record of this Administration. You were one of the architects of this policy. 

Why should we confirm you if the intention is to follow this policy? To continue this policy? 

Mr. NUSSLE. Senator, it is a very fair question. I will report to 
you, as I think you know, there was no intent is a direct policy 
matter to run up debt. It was a reaction to challenges that faced 
us in 2001 that you and I worked on in a bipartisan way in many 
of those responses. 

Obviously the dot-com bubble bursting, the corporate scandals, 
the recession, the 9/11 attacks, what that did to the marketplace, 
the response, the emergency response to 9/11 which we worked on 
and did in a bipartisan way and was done cheerfully in a bipartisan 
way in the best interests of our country. 

Certainly part of that was the tax relief to try and jumpstart the 
economy, which Chairman Greenspan said was the right tax relief 
at the right time in order to deal with that, as well as the new 
Department of Homeland Security and the war. Each one of those red 
dots on that map are those policies. 

Chairman CONRAD. Let me ask you this, Senator Grassley put up 
a list of things that he would like extended. There is no suggestion 
of paying for any of it, no suggestion of paying for it. 

You earlier said, in response to my question, you do not want to 
dig the hole deeper. But now, in response to the questions from 
Senator Grassley, he wants to spend $2 trillion here and not pay 
for it. And you have endorsed that. 

That gives me great concern that while I hear you saying you do 
not want to dig the hole deeper, when you ask the specific policy 
questions all I hear is the whole is going to get dug deeper. And 
we are going to go more in debt at the worst possible time, before 
the baby boomers retire. 

One of the things we have done, and I am proud of doing in this 
budget resolution, is reinstating PAYGO. So we say if we want 
more tax cut you can have them but you have to pay for them. If 
you want more mandatory spending you can have it but you have 
to pay for it. 

Do you believe that the PAYGO procedure ought to be followed? 

Mr. NUSSLE. First, with regard to digging the whole, Senator, 
there are two entities that have shovels. The Government has a 
shovel that is shoveling it out and the American people have a 
shovel that is shoveling it in. And I am concerned about the ones 


                                      48 

that are shoveling it in, as I know you are, too. I am not suggesting 
you do not. 

But I do believe that economic growth is a very--and I have 
heard you give very eloquent speeches on our need for expanded 
economic growth. The tax code is one way to accomplish that. It is 
not the only way but it is one of, I believe, the best ways for us 
to help with making sure that we are not all doing the shoveling 
on just this end. 

With regard to PAYGO, in the bipartisan agreement that I had 
with Senator Cardin, you may be interested to know that we, in 
a bipartisan way, agreed to extend PAYGO. I have had the belief 
that there are ways that we can work together in order to provide 
speed bumps to spending as well as speed bumps to all sorts of 
things in order to prevent that hole from digging deeper. 

The President has indicated his position on that and, if 
nominated--excuse me, if confirmed, obviously I will be someone who 
works at his pleasure and will help instill those policies. 

But I also know there are ways that we can work together to reform 
the process to provide more fiscal responsibility, and I would 
look at any reform proposal that comes forward as we consider 
ways to improve that process. 

Chairman CONRAD. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman, and I will just sprint 
on this. 

Mr. Nussle, as you know, the Bush Administration is trying to 
change on a dime 100 years worth of history in the rural west 
where the Federal Government owns most of the land. We have got 
communities in Oregon that literally are talking about going out of 
business, shutting down. 

Will you commit today to taking a fresh look and working with 
us Westerners on a bipartisan basis so we can get a responsible 
multiyear program? So we get enough time so they can transition 
to a different fiscal approach? 

Mr. NUSSLE. Senator, after our meeting when you brought this 
issue to my attention, I went back and asked the questions about 
it. I have learned a little bit more about it. 

Yes, if confirmed, I would be happy to look into this with you and 
take a fresh open-minded approach. 

Senator WYDEN. Thank you. 

Thank you for the extra time, Mr. Chairman. 

Chairman CONRAD. Yes, sir. 

I would just indicate for members of the Committee and other 
members, we will hold the hearing record open until noon tomorrow. 
That is a hard deadline. I do not intend to extend it. so the 
hearing record will be open until noon tomorrow. 

Thank you, Congressman Nussle, for your appearance here 
today. Thank you for your willingness to continue in public service. 

We will close the hearing. 

[Whereupon, at 11:58 a.m., the Committee was adjourned.] 


                                       49 

PREPARED STATEMENT 



                                        50




United States Senate 

COMMITTEE ON THE BUDGET
ROOM SD-624
(202) 224-0642
WASHINGTON, DC 20510


STATEMENT OF BIOGRAPHICAL AND FINANCIAL 
INFORMATION REQUESTED OF PRESIDENTIAL NOMINEES 

A. BIOGRAPHICAL INFORMATION 
1. Name: 
Jim Nussle, James Nussle 

2. Position to which nominated: 
Director of the Office of Management and Budget 

3. Date of nomination: 
June 25, 2007 

4. Address: (redacted). 
5. Date and place of birth: 
June 27, 1960; Des Moines, Iowa 

6. Marital status: 
Married; Kim 

7. Names and ages of children: (redacted). 
8. Education: 
Luther College, 1979-1983, BA, May 1983 
Drake University, 1983-1985, JD, December 1985 

9. Employment Record: 
1/2007-6/2007 
Navigating Strategies, LLC 
Chairman 
2265 Meadowbrook Drive SE 
Cedar Rapids, IA 52403 

1/1991-1/2007 

U.S. House of Representatives, 
Member of Congress 
U.S. Capitol 
Washington, DC 20515 
6/1986-12/1990
Delaware County, 
IA County Attorney 
301 East Main Street 
Manchester, IA 52057


3/1985-11/1985
Governor Terry Branstad, 


                                           (51) 

                                           (52)    

Intern 
Iowa State Capitol 
Des Moines, IA 

5/1982-8/1983 
Tom Tauke for Congress 
Campaign aide 
Locust Street 
Dubuque, Iowa 52001 

1/1982-5/1982 
Office of Congressman Tauke 
Intern 
319 Cannon House Office Building 
Washington, DC 20515, n/a 

6/1981-9/1981 
Marko Dumlija Contractor 
Painter 
Tinley Park, Illinois 
773-206-2002 

6/1980-8/1980, 7/1979-9/1979 
Viking Metal Cabinets 
General Labor 
5321 W. 65th Street 
Chicago, IL 60638 
708-594-1111 

10. Government Experience: 
5/1985-8/1985 
District Court Judge George Bergeson 
Clerk 
Polk County, IA 

11. Business relationships: 
Navigating Strategies, L.L.C., Chairman 
Rudy Giuliani Presidential Exploratory Committee, Advisor 
Roche Pharmaceuticals, Consultant 
University of Dubuque Board of Trustees, Member 

12. Memberships: 
Delaware County Farm Bureau 
Delaware County Volunteer Firefighter 
University of Dubuque, Board of Directors 
International Rett Syndrome Association 

13. Political affiliations and activities: 
(a) List all office with a political party which you have held or 
any public office for which you have been a candidate. 
Delaware County Prosecutor, US Representative from Iowa, candidate 
for Governor of Iowa 

(b) List all memberships and office held in and services rendered 
to all political parties or election committees during the last 
10 years. 

US Representative from Iowa 
Candidate for Governor of Iowa 
Rudy Giuliani Presidential Exploratory Committee Advisor 

(c) Itemize all political contributions to any individual, campaign organization, political party, political action committee, or similar 
entity of $50 or more for the past 5 years. 
7/1/03, Bush-Cheney �04, $1000 (personal contribution) 

14. Honors and awards: 
American for Tax Reform Award, National Taxpayers Union Award, Citizens 
Against Government Waste Award, the Council for Government Reform 
Award, the 

                                     53 

National Tax-Limitation Committee Award, the Concord Coalition 
Award, and the Farm Bureau Golden Plow Award 

15. Published writings: 

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16. Speeches: 


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17. Selection: 
(a) What do you believe in your background or employment experience 
affirmatively qualifies you for this particular appointment? 
The President chose to nominate me because of my background and 
budget experience, my relationship with my former colleagues on 
Capitol Hill and because of my overall support of the President's 
fiscal agenda. 

(b) Were any conditions, expressed or implied, attached to your 
nomination: If so, please explain. 
No. 


                                   100 

(c) Have you made any commitment(s) with respect to the policies and principles you will attempt to implement in the position for which 
you have been nominated? 

If so, please identify such commitment(s) and all persons to whom 
such commitments have been made. 
No. 

B. FUTURE EMPLOYMENT RELATIONSHIPS 
1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations 
if you are confirmed by the Senate? 

Yes. 

2. Do you have any plans, commitments or agreements to pursue outside employment, with or without compensation, during your service with the government? If 
so, please explain. 
No. 

3. Do you have any plans, commitments or agreements after completing government 
service to resume employment, affiliation or practice with your previous employer, 
business firm, association or organization? 
No. 

4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? If so, please identify 
such person(s) and commitment(s) and explain. 
No. 

5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? If not, 
please explain. 
Yes. 

C. POTENTIAL CONFLICTS OF INTEREST 
1. If confirmed, are there any issues from which you may have to 
recuse or disqualify yourself because of a conflict of interest or 
the appearance of a conflict of interest? If so, please explain. 
See ethics agreement letter. 

2. Identify and describe all investments, obligations, liabilities, 
business relationships, dealings, financial transactions, and other 
financial relationships which you currently have or have had during 
the last 10 years, whether for yourself, on behalf 
of a client, or acting as an agent, that could in any way constitute 
or result in a possible conflict of interest in the position to which 
you have been nominated. 
I was on contract for 3 months this year with Roche Pharmaceutical 
advising them on the issue of appropriations for Tamiflu. 

3. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting 
the administration and execution of law or public policy 
other than while in a federal government capacity. 
Advice to Roche on legislative and administration strategy. 

4. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the Office of Management 
and Budget and by the Office of Government Ethics concerning 
potential conflicts of interest or any legal impediments to your 
serving in this position? 
Yes. 

5. Explain how you will resolve potential conflicts of interest, 
including any disclosed by your response to the above questions. 
See ethics agreement letter. 


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D. LEGAL MATTERS 
1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a complaint 
to any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. 
No. 

2. To your knowledge, have you ever been investigated, arrested, 
charged or convicted (including pleas of guilty or nolo contendre) 
by any Federal, State, or other law enforcement authority for 
violation of any Federal, State, county or municipal 
law, regulation, or ordinance, other than a minor traffic offense? 
If so, provide details. 
To my knowledge, no investigations as such. But one contact with 
police relating to a pizza ordered while in college, for which the 
vendor made a routine complaint to local police because student 
payment by check did not clear; after notification, complaint was 
dropped when payment was made in full. Amount involved was less 
than $10. 

3. Have you or any business of which you are or were an officer, 
director or owner ever been involved as a party of interest in 
any administrative agency proceeding or civil litigation? If so, 
provide details. 
No. 

4. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with our nomination. 
None. 

E. TESTIFYING BEFORE CONGRESS 
1. If confirmed, are you willing to appear and testify before any 
duly constituted committee of the Congress on such occasions as you 
may be reasonably requested to do so? 
Yes. 

2. If confirmed, are you willing to provide such information as may 
be requested by any committee of the Congress? 
Yes. 

F. FINANCIAL DATA 
All information requested under this heading must be provided for 
yourself, your spouse, and your dependents. 

1. Please provide personal financial information not already listed 
on the SF278 Financial Disclosure form that identifies and states 
the value of all: 
(a) assets of $10,000 or more held directly or indirectly, including 
but not limited to bank accounts, securities, commodities futures, 
real estate, trusts (including the terms of any beneficial or blind 
trust of which you, your spouse, or any of your dependents may be 
a beneficiary), investments, and other personal property held in 
a trade or business or for investment other than household 
furnishings, personal effects, clothing, and automobiles; and 
(redacted). 

(b) liabilities of $10,000 or more including but not limited to debts, mortgages, loans, and other financial obligations for which you, 
your spouse, or your dependents have a direct or indirect liability 
or which may be guaranteed by you, your spouse, or your dependents; 
and for each such liability indicate the nature of the liability, 
the amount, the name of the creditor, the terms of payment, the 
security or collateral, and the current status of the debt 
repayment. If the aggregate of your consumer debts exceeds $10,000, 
please include the total as a liability. Please include 
additional information, as necessary, to assist the Committee in 
determining your financial solvency. The Committee reserves the 
right to request additional information if a solvency determination 
cannot be made definitively from the information provided. 

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(redacted). 

2. List sources, amounts and dates of all anticipated receipts from 
deferred income arrangements, stock options, executory contracts 
and other future benefits which you expect to derive from current or 
previous business relationships, professional services and firm 
memberships, employers, clients and customers. If dates or 
amounts are estimated, please so state. Please only include those 
items not listed on the SF278 Financial Disclosure form. 
(redacted). 

3. Provide the identity of and a description of the nature of any 
interest in an option, registered copyright, or patent held during 
the past 12 months and indicate which, if any, from which you have 
divested and the date of divestment unless already indicated on 
the personal financial statement. 
(redacted). 

4. Provide a description of any power of attorney which you hold for 
or on behalf of any other person. 
(redacted). 

5. List sources and amounts of all gifts exceeding $500 in value 
received by you, your spouse, and your dependents during each of 
the last three years. Gifts received from members of your 
immediate family need not be listed. 
(redacted). 

6. Have you filed a Federal income tax return for each of the past 
10 years? If not, please explain. 
(redacted). 

7. Have your taxes always been paid on time including taxes on 
behalf of any employees? If not, please explain. 
(redacted). 

8. Were all your taxes, Federal, State, and local, current 
(filed and paid) as of the date of your nomination? If not, 
please explain. 
(redacted). 

9. Has the Internal Revenue Service or any other state or local 
tax authority ever audited your Federal, State, local, or other 
tax return? If so, what resulted from the audit? 
(redacted). 

10. Have any tax liens, either Federal, State, or local, been filed 
against you or against any real property or personal property 
which you own either individually, jointly, or in partnership? 
If so, please give the particulars, including the date(s) and 
the nature and amount of the lien. State the resolution of the 
matter. 
(redacted). 

11. Provide for the Committee copies of your Federal income tax 
returns for the past 3 years. These documents will be made 
available only to Senators and staff persons designated by the 
Chairman and Ranking Minority Member. They will not be available 
for public inspection. 
(redacted). 

12. Have you ever been late in paying court-ordered child support? 
If so, provide details. 
(redacted). 

13. Have you ever filed for bankruptcy or been a party to any 
bankruptcy proceeding? If so, provide details. 
(redacted). 


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EXECUTIVE MEETING PREPARED STATEMENTS 



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COMMITTEE VOTES 

YEA NAY 

Mr. Chairman Senator Sanders 

Senator Murray 

Senator Wyden 

Senator Feingold 

Senator Byrd 

Senator Nelson 

Senator Stabenow 

Senator Menendez 

Senator Lautenberg 

Senator Cardin 

Senator Whitehouse 

Ranking Member Gregg 

Senator Domenici 

Senator Grassley 

Senator Allard 

Senator Enzi 

Senator Sessions 

Senator Bunning 

Senator Crapo 

Senator Ensign 

Senator Cornyn 

Senator Graham