[Senate Hearing 115-292]
[From the U.S. Government Publishing Office]
S. Hrg. 115-292
NOMINATION OF HON. J. MICHAEL MULVANEY
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
NOMINATION OF THE HONORABLE J. MICHAEL MULVANEY TO BE DIRECTOR, OFFICE
OF MANAGEMENT AND BUDGET
__________
JANUARY 24, 2017
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
26-767 PDF WASHINGTON : 2018
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Margaret E. Daum, Minority Staff Director
Anna E. Laitin, Minority Senior Advisor
Laura W. Kilbride, Chief Clerk
Bonni E. Dinerstein, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 3
Senator McCaskill............................................ 6
Senator McCain............................................... 14
Senator Carper............................................... 17
Senator Paul................................................. 20
Senator Tester............................................... 22
Senator Lankford............................................. 25
Senator Peters............................................... 28
Senator Daines............................................... 32
Senator Hassan............................................... 34
Senator Heitkamp............................................. 37
Senator Portman.............................................. 39
Senator Hoeven............................................... 48
Prepared statements:
Senator Johnson.............................................. 55
Senator McCaskill............................................ 56
WITNESSES
Tuesday, January 24, 2017
Hon. Lindsey Graham, a U.S. Senator from the State of South
Carolina 1
Hon. Tom Cotton, a U.S. Senator from the State of Arkansas....... 2
Prepared statement........................................... 61
Hon. J. Michael ``Mick'' Mulvaney to be Director, Office of
Management and Budget
Testimony.................................................... 8
Prepared statement........................................... 62
Biographical and financial information....................... 66
Letter from the Office of Government Ethics.................. 104
Responses to pre-hearing questions........................... 108
Responses to post-hearing questions.......................... 169
APPENDIX
30-year Projected Deficits chart submitted by Senator Johnson.... 254
Federal Budget FY16 chart submitted by Senator Johnson........... 255
Income statement submitted by Senator Johnson.................... 256
NOMINATION OF THE HONORABLE
J. MICHAEL MULVANEY
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TUESDAY, JANUARY 24, 2017
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:35 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Ron Johnson,
Chairman of the Committee, presiding.
Present: Senators Johnson, McCain, Portman, Paul, Lankford,
Hoeven, Daines, McCaskill, Carper, Tester, Heitkamp, Peters,
Hassan, and Harris.
Chairman Johnson. This hearing of the Senate Committee on
Homeland Security and Governmental Affairs will come to order.
We are here to have a confirmation hearing for Congressman Mick
Mulvaney for the position of the Director of Office of
Management and Budget (OMB).
I am going to switch the script around a little bit to be
respectful of our Senators' time here who are going to be doing
some introductions, so I certainly want to welcome Senator
Cotton and Senator Graham. Lindsey, you have a whole new
calling in life, introducing Cabinet appointees. [Laughter.]
Senator Graham. Yes, I am looking for a fallback plan.
Chairman Johnson. We will go with seniority, and we will
have Senator Graham start with his introduction of Congressman
Mulvaney.
OPENING STATEMENT OF THE HONORABLE LINDSEY GRAHAM, A UNITED
STATES SENATOR FROM THE STATE OF SOUTH CAROLINA
Senator Graham. Well, thank you, Mr. Chairman. I know you
were at the Budget Committee hearing today, and I just want to
tell Mick I thought you did a very good job of answering hard
questions and being yourself.
To the Committee, I am honored to be here. It is a pleasure
to introduce Congressman Mulvaney. He is from South Carolina.
We are a small State, so we know each other pretty well.
President Trump has picked a lot of talented people, some
people from the private sector without a whole lot of
experience in the job which they have been nominated for. I
think President Obama did that also, and that is a good thing.
People can learn jobs if they have the right skill set.
The one thing I can tell you about the nominee here is he
understands the budget. He is not a guy who is going to need to
get caught up on how the Federal Government works. He has made
it sort of his passion in politics to be involved in all things
fiscal.
I have known him personally for many years now--and we all
say we are friends. And, in the Senate it is very well true
because it is such a small group. But we play golf together. We
actually are friends. He beats me all the time. And he is
meticulously honest on the golf course, which is a good
indication of what kind of public servant would be.
I like him. He has a beautiful wife and triplets. Anybody
who can raise triplets probably can help the government.
From an academic background, he is very gifted. From his
time in Congress, he has been a very fiscally conservative
person. Sometimes we do not agree about this part of the
government versus that part of the government.
I think I voted for every President Obama nominee without
exception. Maybe there is one or two I did not. And let me tell
you why I chose to support President Obama's nominees as a
point of personal privilege. Consequences to an election really
matter, and the people he nominated, I had different views of
what they should do in their job, but I came to conclude they
were qualified.
The one thing I can say without any hesitation, whether you
agree with Congressman Mulvaney about a particular issue, I
think he is extremely capable and qualified. It is up to you
how to vote. You can use any standard you would like. I have
chosen to kind of look at the person's qualifications.
You will soon hear over the next few hours a man who
understands the budget, and it was brought up that he is so
different than President Trump in terms of entitlements and
spending on certain areas of the government. I think President
Trump sees in Congressman Mulvaney somebody that he can trust,
that is smart, and will speak truth to power.
I completely disagree with President Trump's view about
entitlements. If we do not reform them, we are going to lose
them. And you are going to hear a man who will be
excruciatingly honest, who has the background to go into the
job from day one, and understands what the job is all about.
Whether you agree with him or not, if he disagrees with you, it
is not because of anything other than he just disagrees. In his
own way, he is trying to help the country as much as you are.
And sincerity goes a long way with me, and Congressman Mulvaney
is very smart, talented, but incredibly sincere.
Thank you for having me.
Chairman Johnson. Thank you, Senator Graham. Senator
Cotton.
OPENING STATEMENT OF THE HONORABLE TOM COTTON,\1\ A UNITED
STATES SENATOR FROM THE STATE OF ARKANSAS
Senator Cotton. Mr. Chairman, Ranking Member, thank you for
allowing me to appear. I want to add your voice in support of
confirming Mick Mulvaney as the next Director of the Office of
Management and Budget. Mick and I have known each other for
many years now. We served together in the House of
Representatives. He is a good friend and a trusted confidant,
so I speak today from personal experience when I say he will
serve our President and our Nation with distinction, as you may
have seen this morning at the Budget Committee.
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\1\ The prepared statement of Senator Cotton appears in the
Appendix on page 61.
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The way I see it, the Director's job is to give the
President the unvarnished truth. He has to tell the President
exactly what things cost, partly for the President's agenda,
but mostly for the taxpayer. The President, of course, sets the
agenda, but he deserves a clear-eyed view, not rose-colored
glasses.
And for the last 6 years, Mick has been telling many hard
truths: We are spending too much. Regulations are strangling
our small businesses. And short-changing our military will only
cost us more in the long run.
Mick also understands the hardest truth of all, at least
for big spenders here in Washington: It is the American people
who earned this money through their hard work and sacrifice.
Mick will treat every taxpayer dollar as if it were his own.
And trust me, that means that he will watch those dollars like
a hawk.
In Arkansas, many people still stop to ask me what we are
doing about the national debt. It is a huge concern. So with
his eagle-eyed focus on spending, Mick will be a crucial voice
in the President's Cabinet. He will represent millions of
Americans who are deeply worried about the burden we are
leaving our children. And while Mick is deeply principled, he
also knows how to work with others and make progress wherever
we can.
In short, Mick is a fine choice to run the Office of
Management and Budget. I urge you not only to advance his
nomination, but also to do so as soon as possible. Under the
law, the President is required to submit a budget to Congress
early next month, which will be very difficult without a new
Director. I also hope the full Senate will confirm him
promptly.
Thank you for your time today and for your consideration of
this passionate advocate for the taxpayer, a bold truth teller,
and my friend, Mick Mulvaney.
OPENING STATEMENT OF CHAIRMAN JOHNSON
Chairman Johnson. Thank you, Senator Cotton. And, again,
thank you Senator Graham.
Congressman Mulvaney, we would like to welcome you, your
wife, Pam. Did your son James get through the tunnel?
Mr. Mulvaney. He just barely made it in time.
Chairman Johnson. Well, that is great. Again, we thank you
for your past service to this country and your willingness to
serve again. And we certainly thank your family. This will be
more than a full-time job, so you are also making a sacrifice.
I was at the Budget Committee hearing, and obviously we
focused on the budgetary aspects of this job. But it is the
Office of Management and Budget. This Committee has a mission
statement: to enhance the economic and national security of
America. Your position is going to be critical in terms of that
enhancement. And no matter what problem we are dealing with, no
matter what challenge this Nation faces, from my standpoint the
number one component of the solution is economic growth.
But we are not even coming close to realizing the full
potential of the American economy. Since the Great Depression,
our economy has grown about 3.2 percent. Since the Great
Recession, it has been growing right about 2 percent.
From my standpoint, there are four basic reasons for that.
We are not utilizing our energy resources to the extent we
should; we must begin to. We do not have a competitive tax
system. But the other two main reasons, I would argue, come
fully under the jurisdiction of this Committee, but also under
the purview of your new responsibility if you are confirmed as
Office of Management and Budget Director, and it is regulation
and debt and the deficit.
I would like to start on a couple charts here. I know in
the Budget Committee Senator Whitehouse had a pretty good chart
that you liked. I have my own. We will start with the 30-year
deficit.\1\ Just like a family that is in debt over its head,
you could ask that family: How can you grow your personal
economy if every cent of income is really devoted to the basic
necessities and servicing the debt? Well, a nation-state is the
exact same way. And not only are we almost $20 trillion in
debt--in other words, we are in debt over our head as a
Nation--but over the next 30 years, according to the
Congressional Budget Office (CBO), the deficit is projected to
be $103 trillion--$10 trillion the first decade, $20 trillion
the second, $68 trillion the third. And that compares, by the
way, just to show you the magnitude of this, to the entire net
private asset base of America at $116 trillion. Clearly, that
is unsustainable. It is something that the Federal Government
have to grapple with, or we will never achieve the type of
economic prosperity that certainly our children should expect
from our economy.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 254.
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That is why I want to just throw up the fiscal year (FY)
2016 Federal budget as a bar chart.\2\ Get that up there. You
will notice on this bar chart there are two colors: there is
red and there is blue.
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\2\ The chart referenced by Senator Johnson appears in the Appendix
on page 255.
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Red represents all the mandatory spending--Social Security,
Medicare, Medicaid, interest on the debt. So many dollars are
spent where there is no appropriation. It is on automatic
pilot, and it is out of control. It is about 70 percent of our
budget.
The blue represents discretionary spending. That is what we
fight over in terms of the budget. That is what is
appropriated. It is a little over $1 trillion out of our $3,854
billion current year budget.
This clearly has to be brought under control if we are ever
going to restrain the growth in debt so we can achieve the type
of prosperity we need.
The components--and everybody has these charts in front of
them in terms of a piece of paper. I have another piece of
paper in front of the Senators. I think it might be in front of
you, Congressman Mulvaney. I call this the income statement\3\
of the United States, and this is over that same 30-year
period, just demonstrating that the component of that $103
trillion deficit is $14 trillion over the next 30 years of
deficit in Social Security, $34 trillion Medicare, and the
rest, $54, $55 trillion, is interest on the debt. So if we do
not want to pay over the next 30 years $55 trillion to our
creditors, we have to address the unsustainable situation in
both Social Security, but in particular Medicare.
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\3\ The chart referenced by Senator Johnson appears in the Appendix
on page 256.
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So those are just the facts. Those are the realities. That
is the reality that collectively here in the Federal Government
we have been denying for far too many years. But at some point
in time there will be a point of reckoning. So, again, that is
the budget reality that we are faced with.
The other thing we are going to have to grapple with in
terms of economic growth, the other thing that is really
restraining the growth of our economy, is overregulation. It is
a massive burden. We have held a number of hearings in this
Committee on it. A number of studies show that we are
approaching $2 trillion per year as the cost of complying with
Federal regulations.
I know in your testimony, Congressman, you talk about the
debt burden per family. I will not steal your thunder. But the
regulatory burden is about $14,800 per year per family.
I was talking to a Chief Executive Officer (CEO) of a
Wisconsin paper manufacturer. By the way, I cannot tell you who
it is because that CEO feared retaliation by his government,
which is a pretty sad commentary. But he did the cost
calculation on just four regulations recently issued. The cost
was the equivalent of $12,000 per year per employee. Just four
regulations. Now, that is $12,000 that the Wisconsin paper
manufacturer does not have available for increasing wages and
benefits and investing in the business to grow it to create
more jobs. It is that regulatory burden that really is, I
think, the number one reason why our economy is not realizing
its full potential.
One last anecdote on overregulation. For the last 2 years,
the chancellor of the University of Wisconsin-Madison has come
into my office complaining about overregulation as it relates
to the university system. This last year, she came in with a
study commissioned by other research universities. The
conclusion of that study said that 42 percent of researcher
time spent on Federal Government grants was spent complying
with Federal regulations. Think of the opportunity cost, think
of the diseases where we are spending 42 percent of the time
filling out paperwork as opposed to trying to determine a cure
for those.
So the overregulation has an enormous cost to our economy,
and that is something that, as Director of OMB, hopefully you
will have a great deal of input in terms of cutting back and
curbing so we can realize our full potential.
I do have a written statement that I would ask unanimous
consent to enter into the record.\1\
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\1\ The prepared statement of Senator Johnson appears in the
Appendix on page 55.
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With that, I will turn it over to Senator McCaskill, my
Ranking Member.
OPENING STATEMENT OF SENATOR MCCASKILL\1\
Senator McCaskill. Thank you. Thank you, Congressman
Mulvaney, for being here, and thank you, Mr. Chairman. I wish I
did not have to begin my opening talking about process. Mr.
Mulvaney has submitted all the necessary documents for
consideration by the Committee, including 3 years of tax
returns, and the Office of Government Ethics has completed its
review of conflicts. And we have a signed letter regarding
Congressman Mulvaney's agreement to address potential conflicts
of interest.
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\1\ The prepared statement of Senator McCaskill appears in the
Appendix on page 56.
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However, I am not aware that there has been a precedent for
us going forward with a hearing when we have not had an
opportunity to review the nominee's Federal Bureau of
Investigation (FBI) background check. I was told we would see
it last week, and then it was moved up to yesterday, and then
we learned today that it is still was not ready.
I do not fault the nominee for this, but it is evidence of
a rushed process that we are witnessing. I am disappointed that
we are holding this hearing without the FBI review being
completed. I think it is a bad precedent for this Committee to
do that, and I would like to work with you and the FBI to
ensure this does not happen with any future nominees.
I look forward to a commitment from you that we will not
hold a markup or a vote on moving forward on this nomination to
the full Senate for confirmation.
Chairman Johnson. You can have that commitment. I want to
see the FBI file, as you do, too. We will do our due diligence.
You will have plenty of time, I am sure, Congressman Mulvaney
will come back in and answer any questions we have based on
whatever that FBI file tells us.
Senator McCaskill. Since November 9th, Americans have been
searching to understand what is next for this country. The
growth of our economy and the jobs of so many Americans depend
on our country remaining a stable and relatively predictable
place to do business--where businesses and the Federal
Government alike have the ability to plan for the future.
Despite this, to date the Trump Administration's plan for
the economy changes with each news cycle, and the strategy
appears to shift depending on which nominee or which member of
the transition team is speaking.
Just last week at a hearing, Mr. Mnuchin, the nominee for
the Secretary of the Treasury, said that after the
inauguration, the Trump Administration would speak with ``a
unified voice.''
Four days ago, President Trump was sworn in, and the Trump
Administration began. Despite the transition of power and the
start of a new Administration, on issues like Social Security,
health care, Medicare, and taxes, we are still searching for
that unified voice.
The Director of the Office of Management and Budget is
charged with implementing and articulating the President's
policy agenda. If confirmed, Representative Mulvaney, you will
hold a post that influences policy proposals, budget
appropriations, the management of Federal workers, and the
safeguarding of our regulatory process. Your core job will be
to take the President's ideas and make them clear and cohesive
policy.
Despite your willingness to serve, I cannot help but
question how you will achieve this when the views that you have
expressed for so long do not align with those of the President
or other members of the Cabinet. You are a self-described
``hard-core conservative.'' You support cuts to Medicare and
Social Security and drastically shrinking the size of
government through the elimination of agencies, Federal
programs, and Federal workers. You have voted for and supported
the shutdown of the Federal Government several times and have
dismissed concerns about failing to lift the debt ceiling as
``just posturing.'' You have said that, ``We have to end
Medicare as we know it.'' And you have advocated cuts and full-
scale overhauls of the program. Meanwhile, during his campaign
President Trump said that he would make no changes to Medicare.
Representative Price, the nominee for Secretary of the
Department of Health and Human Services (HHS), who has also
advocated for changes in the Medicare system and block granting
Medicaid, told a Senate Committee last week that the
President's plan remains the same.
The situation is almost the exact same on Social Security.
You have advocated changes and cuts and at one point in time
actually called Social Security like a ``Ponzi scheme,'' while
the President said during his campaign he would not alter
Social Security at all.
In voting against emergency funding after Hurricane Sandy,
you said, ``We have mismanaged our own finances to the point
where we are now no longer capable of taking care of our own.''
The President has made clear that he intends to increase
spending by initiating massive infrastructure projects, such as
the Wall, even if we have to pay for it, as promised on Friday
during his inaugural address, building ``new roads, highways,
bridges, airports, tunnels, and railways all across our
wonderful Nation.''
After this hearing, we will understand more about your
background and beliefs, but we may not have a better
understanding of how and whether those beliefs will have any
impact on the Trump Administration. How will we know which
policies will be implemented when the President and his Cabinet
have such different views on such important topics?
Not only am I worried that we will not have the stability
we are looking for from the incoming Administration, I am not
certain that you, a man who has stuck to his principles
admirably and has not often been forced to compromise, fully
grasp the responsibilities of the position that you have been
nominated to.
Many of your proposals, like your willingness to allow the
Federal Government to default on its obligations, would have
far worse implications than I believe you are willing to
concede. In fact, you once said that you had yet to meet
someone who could articulate the negative consequences of the
United States failing to raise the debt ceiling. If that is the
case, you simply have not been listening to the economists, the
Treasury Secretary, to the nominee for Treasury Secretary of
this President, or even former OMB Directors of both parties,
who tell a much different story.
But perhaps there was comfort in being able to say these
things knowing that cooler heads would prevail and no one would
ever have to find out the consequences of your rhetoric. But
now you are seeking confirmation to a Cabinet-level post with
great responsibility and power. What will happen if your views
and proposals are adopted wholesale? If that happens, I fear
the American people and the global economy are in for a rude
awakening.
Throughout this hearing I will be listening closely to
better understand how you will reconcile your beliefs with
those of the President and how as Director of the Office of
Management and Budget you will implement the vision of a Trump
Administration that speaks with ``a unified voice.'' I look
forward to hearing your answers. Thank you, Congressman.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator McCaskill.
It is the tradition of this Committee to swear in
witnesses, so please rise and raise your right hand. Do you
swear the testimony you will give before this Committee will be
the truth, the whole truth, and nothing but the truth, so help
you, God?
Mr. Mulvaney. I do.
Chairman Johnson. Please be seated.
Congressman Mick Mulvaney has represented the 5th District
of South Carolina since 2010 and was a State representative
from 2006 to 2010. In the House of Representatives, Congressman
Mulvaney has served on the Oversight and Government Reform
Committee, the Budget Committee, and the Financial Services
Committee. He is a graduate of Georgetown University and holds
a law degree from the University of North Carolina and an
executive degree from Harvard Business School. If confirmed,
Congressman Mulvaney will bring with him to the position, in
addition to that experience in government, a wealth of
knowledge from his experience as a small business owner in the
real estate, construction, and restaurant industries.
Congressman Mulvaney.
TESTIMONY OF THE HONORABLE J. MICHAEL ``MICK'' MULVANEY\1\ TO
BE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Mr. Mulvaney. Chairman Johnson, Ranking Member McCaskill,
thank you again for having me. It is an honor and a privilege
to be here, and I am pleased to offer my qualifications for the
position of the Director of the Office of Management and
Budget. I also want to thank the President for the confidence
that he has shown in me in nominating me for this post.
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\1\ The prepared statement of Mr. Mulvaney appears in the Appendix
on page 62.
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I also want to especially thank Senators Graham and Cotton
for taking the time to introduce me. It is nice to have my
friends be able to do that.
I also want to especially thank my family, a few of whom
are here today. My wife is seated behind me, and you saw one of
the triplets slip in a little bit late, but at least he put on
a tie, which is kind of nice. James is here. His siblings
Caroline and Finnegan are home in South Carolina at school.
I think as Members of this Committee know as well as
anybody, the burdens of what we do, the public service we do,
falls probably most heavily on our families, and we probably do
not get a chance often enough to say this, and we certainly do
not get a chance to do it on national television. So with the
permission of the Chairman, I am going to say this: I am
extraordinarily proud of my family, my children, the young
people that they have become, and my wife. I was asked during
this process one time to sum up who I was in one sentence, and
all I could think to say was that I love my wife, and I am glad
that she is here today and in my life.
Finally, I am grateful to the Members of the Committee for
taking the time over the course of the last couple weeks to sit
down and talk about issues, to talk about your views. And
should I be confirmed, I look forward to continuing to do that
because I think anyone who is familiar with the Office of
Management and Budget knows that you cannot do this job alone.
And I think maybe a Member of Congress knows that better than
most. Several former members of the House and the Senate,
including Senator Portman, Mr. Nussle, and Mr. Panetta, have
all served in the Office of OMB with distinction. They have set
an extraordinarily high bar and provided a good example for all
of those who follow, set a good example of how the OMB Director
should interact with and serve the President, the Congress, and
the American people. And if confirmed, I will use those as role
models.
You deserve the truth, as do the American public, and it is
the OMB Director's responsibility to tell you--and the
President--the truth, even when that might be hard to hear.
Part of the thing that is hard to hear is that for the
first time in our history, there is a chance that the next
generation may be less prosperous than that that preceded it.
To me, and to the people in this room, I know that that is
completely unacceptable. We can turn this economy around. We
can turn this country around. But it is going to take difficult
decisions today in order to avoid taking nearly impossible
decisions tomorrow.
Our gross national debt is roughly $20 trillion. That
number that is so large, it is hard for most people, myself
included, to grasp. I prefer to look at it another way: If you
convert that amount of money in what we make or take in as a
Nation every single year to the ordinary American family that
makes $55,000 a year as a household, that is the equivalent of
that family having a credit card debt of $260,000. American
families know what that would mean to them, and it is time for
government to figure out that same lesson.
I believe as a matter of principle, that the debt is a
problem that must be addressed sooner rather than later. I also
know that fundamental changes are needed in the way we spend
and tax if we truly want a healthy economy. This must include
changing our long-term fiscal path, which is unsustainable.
Part of fixing our problem also means taking a hard look at
government waste and then ending it. American taxpayers deserve
a government that is efficient, effective, and accountable.
American families earn their money honestly; they deserve to
have us spend it in the same fashion.
But fixing the economy does not mean just taking a green
eyeshade approach to the budget. Our government is more than
just numbers. A strong and healthy economy allows us to take
care of our most vulnerable. Pam's mom relied on Social
Security in her retirement. She relied on Medicare before she
passed away from cancer. We were glad that that safety net was
there for her. We would like very much for that safety net to
be there for her grandchildren, our triplets.
All that being said, I know many of the Members of this
Committee will want to know what my positions will be as the
OMB Director. I am, of course, not yet in the position, and I
do not presume to know about decisions I might make, much less
what the decisions of the President will be after consulting
his Cabinet and other advisors. I do know what I believe,
however, and I look forward to discussing whatever topics you
consider relevant today. I have not exactly been a shy Member
of Congress for the last 6 years, and I do not expect to begin
today or, should you confirm me, over at the Office of
Management and Budget.
At the same time, I recognize that good public service--
whether it is the State legislature, the Federal legislature,
or in the Executive Branch--takes both courage and wisdom, the
courage to lead and the wisdom to listen. I have learned that I
do not have a
monopoly of good ideas. Facts--and the cogent arguments of
others--matter. And my commitment to you today is to take a
fact-based approach and to listen to various ideas about how to
get our financial house in order.
As you know, OMB also performs other significant functions
regarding management, plays a significant role in the
regulatory climate, as well as many other duties, as all of you
folks know. I look forward to talking to you about all of those
issues as you see fit. And if confirmed, I look forward to
working with Congress--and serving the President--to address
the challenges on behalf of all the American people.
With that, I thank you for your time, Mr. Chairman.
Chairman Johnson. Thank you, Congressman Mulvaney.
There are three questions the Committee asks of every
nominee for the record. First, is there anything you are aware
of in your background that might present a conflict of interest
for the duties of the office to which you have been nominated?
Mr. Mulvaney. No, sir.
Chairman Johnson. Do you know of anything, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Mulvaney. No, sir.
Chairman Johnson. Do you agree without reservation to
comply with any request or summons to appear and testify before
any duly constituted Committee of Congress if you are
confirmed?
Mr. Mulvaney. I will fully cooperate with all those
requests.
Chairman Johnson. Thank you. Let me just ask one question,
and then I will reserve the balance of my time. I know you are
very forthright regarding the issue you had with paying back
taxes and payroll taxes for a babysitter, so I would like to
give you this opportunity to start off the hearing to explain
the situation with the babysitter for your premature triplets?
Mr. Mulvaney. Sure, and I would be happy to do that, and I
think we had a chance to talk about it with various Members of
the Committee. My children were born, the triplets were born in
2000, and when they came home, we hired someone to help with
them. And we hired what we considered to be a babysitter. It
was a young woman who did not live with us, did not teach the
children, did not cook or clean. She helped my wife with the
children. And we did not withhold Federal taxes or State and
Federal unemployment taxes on them. And, honestly, I did not
think about it again until December.
When you are nominated for one of these positions, you get
information from the transition team, and one of them was a
checklist that says, ``Have you ever had a babysitter, nanny,
governess, or au pair?'' And I checked, ``Yes.'' And they
immediately sent me an Internal Revenue Service (IRS) circular.
And when I looked at it, I immediately realized that we had
made a mistake and that we should have withheld those taxes and
should have paid unemployment.
I did the only thing I know to do under the circumstances,
which is to simply tell everybody. I told the transition team.
They communicated to the President. I told my accountant. And
we sat down trying to figure out how to make amends, how to
redress the situation.
And so what we have done is we notified the IRS; we paid
all the taxes that were outstanding. We refiled I think
Schedule H for the relevant years, and we are waiting to hear
back from the Federal Government regarding penalties, late
fees, and so forth.
I recognize the fact that I made a mistake. It was my
responsibility. But once it was brought to my attention, I did
the only thing I know to do, which is simply be straightforward
about it, admit the problem, and then try and fix it.
Chairman Johnson. Thank you. Again, I will reserve the
balance of my time. Senator McCaskill.
Senator McCaskill. Thank you. I want to explore a little
bit the inconsistencies, if I could, and see if we can try to
reconcile any of them. Let me start first on the debt limit,
and I am going to start with your quote:
``I have heard people say that if we do not raise the debt
limit, it will be the end of the world. I have yet to meet
someone who can articulate the negative consequences.''
And, in fact, in my office, we had a chance to talk about
how you would prioritize payments if we did not raise the debt
ceiling, who would get paid first and who would be at the end
of the line, envisioning a potential failure to raise the debt
ceiling.
I was then surprised when we questioned Steve Mnuchin, the
nominee to be Treasury Secretary, when he said absolutely
raising the debt ceiling, that is not about spending, that is
about paying obligations that have already been made. He went
on to say that he supported raising the debt ceiling 100
percent. He said, ``The President-elect has made it perfectly
clear''--I am quoting him now--``that honoring the U.S. debt is
the most important thing.'' And, finally, he said in the
hearing, ``I would like to see us raise the debt ceiling sooner
rather than later.''
Now, how do you reconcile those two positions, Congressman?
Mr. Mulvaney. Thank you for that, Senator. A couple
different things.
As you will recall, back during, I believe, the last time
we had a debt ceiling discussion in this country was 2013, and
the rhetoric was extraordinarily high. My comment that you made
was something I believe I said--the statement is accurate--was
that I had not found anybody yet who could explain to me
exactly why that rhetoric was so high. And I was surprised to
find that at the time the Treasury Secretary, who you would
expect to be out trying to calm markets, was actually doing the
exact opposite.
We did happen to find out after the fact, by the way, that
while he was publicly saying that we would default, he was
privately telling the primary dealers in Federal debt that he
would pay the interest on the debt. So I think that goes to the
environment at the time.
Senator McCaskill. But, Congressman, let me interrupt you
there just to try to point this out. The discussion about
whether or not we are going to raise the debt ceiling is a
debate on whether or not we are going to honor our obligations.
That, of course, is going to roil the markets. It does not
matter who is Secretary Treasury. I mean, the whole discussion
that it would be considered that we would not raise the debt
ceiling in order to meet previous obligations, with some of the
rhetoric, in all due respect, from your side of the equation,
gave people the impression that raising the debt ceiling was
allowing more spending. And that is just not true.
Mr. Mulvaney. That is a true statement. Raising the debt
ceiling does not allow more spending. That is appropriations
bills that do that. But I encourage you to recognize the fact
that this is not a new discussion. Yes, we had one recently in
2013. But debt ceiling debates go back a long ways. As a matter
of fact, there is a Government Accountability Office (GAO)
letter that was issued in 1985, which I still believe it is
technically not law, but it is still effective guidance--that
dealt with what would happen in terms of prioritization back in
1985 if we bumped up against the debt ceiling.
So, again, my interest was in lowering the temperature of
the rhetoric, not in stirring things up.
Senator McCaskill. OK. So you disagree with the would-be
Secretary of Treasury, Secretary Mnuchin. Will you try to
influence him that, in fact, you should withhold support for
raising the debt ceiling?
Mr. Mulvaney. No, ma'am. A couple different things. I think
the quotation you attributed to him was that he thought that
paying debts was the most important thing we could----
Senator McCaskill. No. Raising the debt ceiling.
Mr. Mulvaney. I thought----
Senator McCaskill. He said sooner rather than later. He
said, ``I would like to raise the debt ceiling sooner rather
than later.''
Mr. Mulvaney. Then I believe he went on and said that
paying the debts was one of the most important things we could
do.
Senator McCaskill. I am quoting Mnuchin saying, ``The
President-elect has made it perfectly clear that honoring the
U.S. debt is the most important thing.''
Mr. Mulvaney. I could agree with that.
Senator McCaskill. OK. And what about the Congress raising
the debt ceiling? Will you be over here lobbying for Congress
to raise the debt ceiling?
Mr. Mulvaney. I will be doing whatever the President asks
me to do. I hope----
Senator McCaskill. OK. That is what I wanted to hear.
Mr. Mulvaney. Right.
Senator McCaskill. I also want to point out that in 2013
you said, ``We believe the 2013 government shutdown was good
policy.'' Do you still believe that?
Mr. Mulvaney. Yes, ma'am. I think the last bill that the
House sent over to you--I think the discussion in 2013 turned
on something that was counterfactual. It said that we tried to
shut the government down over defunding Obamacare, which is
wrong at many levels. What the House did is send an
appropriations bill that would delay the implementation of
Obamacare's individual mandate for 1 year.
Senator McCaskill. OK.
Mr. Mulvaney. We did that for a reason, because the
President had just recently given that exact accommodation to
corporations in this country.
Senator McCaskill. You were trying to make a point with it.
Mr. Mulvaney. That is correct.
Senator McCaskill. I get that. And it was a point that you
felt very strongly about, which I respect. But I am just
wondering if you still believe a government shutdown could be
good policy if it is to make a political point.
Mr. Mulvaney. A government shutdown is never a desirable
end.
Senator McCaskill. OK. Defense spending. I hate to cut in
my friend's questioning because I have a feeling he might ask
about this, but I am quoting you now: ``Defense has to be cut.
It has to be on the table, no question.''
Once again, another quote: ``I am comfortable that the
government will continue to exist after the sequester.''
Versus the President, who said, ``As soon as I take office,
I will ask Congress to fully eliminate the defense sequester
and will submit a new budget to rebuild our military.''
Have you changed your mind about military cuts?
Mr. Mulvaney. No, ma'am. I have voted many times for
exactly what the President just laid out, which was to increase
the top-line defense number. And I have had a chance to discuss
with General Mattis, although we have not talked specifics
because I do not want to get into that prior to the Senate
making its determination. But I am absolutely in lockstep with
the President in terms of trying to figure out ways to increase
the top-line defense number.
Your first statement, which I think harkens back to when I
first got here, is something that I have been talking about
since I arrived here, which is that I think it is incumbent
upon my party to treat all waste equally.
Senator McCaskill. OK.
Mr. Mulvaney. That waste in the welfare department and
waste in the Agriculture Department is waste just like waste in
the Defense Department, and that if we are not willing to talk
about those things equally, it undermines our credibility.
Senator McCaskill. OK. On health care, ``I do not believe
that health care is a fundamental right, because once you
declare that it is a fundamental right, that means someone has
a fundamental obligation to pay for it.'' You said that in
2010.
Versus the President, who said: ``You know, there are many
people talking about many forms of health care where people
with no money are not covered. We cannot have that.''
Do you agree with the President that we cannot have people
with no money not having health care?
Mr. Mulvaney. I think it is important to recognize that in
each of these examples, what you have done is correctly point
out a position that I took as an elected Representative of the
5th District of South Carolina, and I have done the very best I
could to represent those people to the best of my ability. I
come from a very conservative part of South Carolina, and I
think they are very happy with my representation.
Senator McCaskill. You are not telling the people of South
Carolina you are going to get more liberal now that you are
working for President Trump, are you?
Mr. Mulvaney. No. I will tell you the same thing I tell
them, which my role is getting ready to change. I would like to
think that the President has invited me to join his Cabinet in
order to bring those perspectives to the table. But at the end
of the day, when the President gets together with all of his
advisers and says, ``Here is the plan going forward,'' then it
would be my job to enforce those policies to the best of my
ability. And I am absolutely comfortable doing that.
Senator McCaskill. Thank you, Mr. Chairman. I will save the
rest of mine for next.
Chairman Johnson. Senator McCain.
OPENING STATEMENT OF SENATOR MCCAIN
Senator McCain. Mr. Mulvaney, in 2011, did you vote for the
immediate withdrawal of U.S. troops from Afghanistan?
Mr. Mulvaney. You and I talked about that in your office,
and I believe that I----
Senator McCain. Please, I have a short period of time.
Mr. Mulvaney. Sure.
Senator McCain. It is a pretty simple question. Did you
vote for the immediate withdrawal of U.S. troops from
Afghanistan?
Mr. Mulvaney. I believe that I did, sir, yes.
Senator McCain. In 2012, did you vote to withdraw two
brigade combat teams from Europe?
Mr. Mulvaney. That one I do not remember.
Senator McCain. I think I would remember if I wanted to
withdraw troops from Europe.
In 2013, did you vote to withdraw the 2nd Cavalry Regiment
from Europe?
Mr. Mulvaney. Again, I do not remember the specifics. I
know that I have taken similar votes in the past, yes, sir.
Senator McCain. In 2011, did you offer an amendment to cut
the defense top line by $17 billion?
Mr. Mulvaney. I believe that was an Overseas Contingency
Operations (OCO) budget. I do not think it was the top-line
defense appropriations bill.
Senator McCain. So you voted against OCO, so we are talking
semantics here. Did you vote to cut $17 billion from our
defense?
Mr. Mulvaney. From the overseas contingency operation
budget, yes, sir.
Senator McCain. I see. Did you offer an amendment in 2013
to cut the budget by $3.5 billion?
Mr. Mulvaney. That I do not remember.
Senator McCain. Well, I will tell you, I would remember if
I voted to cut our defenses the way that you did, Congressman.
Maybe you do not take it with the seriousness that it deserves.
I am not interested in playing semantic games with you. I
am interested in what our military needs and whether they are
receiving it. It is clear from your record that you have been
an impediment to that for years.
Do you believe we should repeal the Budget Control Act?
Mr. Mulvaney. I believe that we should repeal it or replace
it with something that is more efficient. Yes, sir. I voted
against the Budget Control Act for just that reason.
Senator McCain. Do you believe that defense increases must
be conditioned on offsets elsewhere?
Mr. Mulvaney. I believe that we made a promise in 2011 as
part of a debt ceiling increase to save money, and I am
interested in keeping that promise.
Senator McCain. What is the highest priority--reducing the
debt or rebuilding the military?
Mr. Mulvaney. The number one priority of the United States
Federal Government is to defend the Nation.
Senator McCain. It is nice to hear that you believe they
are important because you have spent your entire congressional
career pitting the debt against our military, and each time, at
least for you, our military was less important.
As OMB Director, you will be advising the President on
ongoing budget matters. In your response to the Committee, you
have stated that government shutdowns ``always contain some
element of good policy.'' Will you be advising the President
that a government shutdown or, as you--and maybe George
Orwell--would like to call it, as you did in your responses to
questions, ``temporary lapse in appropriations'' are an
acceptable outcome during budget negotiations?
Mr. Mulvaney. Actually, the term ``temporary lapse in
appropriation'' is the term that the government used to
describe that circumstance up until, I believe, 1994.
Senator McCain. That is what you believe it is?
Mr. Mulvaney. To get to your direct point, I do not intend
to be recommending to the President that we negotiate or govern
by crisis.
Senator McCain. But you supported the government shutdowns?
Mr. Mulvaney. I voted for an appropriations bill that the
Senate failed to take up. I think in a system, Senator, where
you have to have the approval of the House----
Senator McCain. Did you make statements in support of the
shutdown during the shutdown?
Mr. Mulvaney. I made statements in support of the House
bill to keep the government open.
Senator McCain. Which you knew would not succeed because it
was not going to pass the U.S. Senate.
Mr. Mulvaney. I do not pretend to know, sir, what the
Senate chooses to do.
Senator McCain. Will there be a corresponding increase in
the defense base budget for every dollar of OCO, which you have
opposed, transferred to the base?
Mr. Mulvaney. I have proposed moving stuff from the OCO to
the top-line defense budget because I think it is more
transparent.
Senator McCain. So you believe there should be--the
President has advocated increases in defense spending. Do you
believe that that should be tied to decreases in spending in
other areas of government?
Mr. Mulvaney. I have voted regularly and hope to continue
to advise the President that the best possible route forward is
to raise the top-line defense number and have corresponding
reductions in the non-defense discretionary.
Senator McCain. And if you are not able through Congress to
reduce the spending, will you still support increases in
defense spending?
Mr. Mulvaney. I will make my case to the President. Again,
I think he is looking for my perspective----
Senator McCain. I am asking for your personal opinion
before this Committee, not what you would advise the President.
I want to know whether you would support an increase in defense
spending without a commensurate cut in non-defense spending?
Mr. Mulvaney. I would make the argument--again, I recognize
what you are asking me, Senator, but you also asked me what I
would do as an elected official, and that is not my job. My job
is to make the case to the President, and I am trying to answer
your question to the best of my ability, which is I would lay
out to the President what the implications of doing that would
be.
Senator McCain. Well, since it is obvious that you and your
friends supported the shutdown--in fact, I remember it
vividly--as a ``temporary lapse in appropriations,'' I would
like you to maybe go to Arizona and tell the folks up around
the Grand Canyon when we shut down the Grand Canyon and we had
to fly food up to them, the concessions around the Grand
Canyon. And I remember it very well, and I think it is a
shameful chapter, and I think it is a reason why the people
have such a low opinion of us and the work we do when we have
``temporary lapses in appropriations,'' as you described them.
All I can say to you, sir, is that I am deeply concerned
about your lack of support for our military, about your
continued votes of withdrawals from Europe when we see a world
on fire, withdrawing combat teams. What were you thinking,
honestly, when you voted for an immediate withdrawal of all
U.S. troops from Afghanistan? Help me out here.
Mr. Mulvaney. Senator, if you would give me the time, I
will tell you the story, because it is a true story. With your
indulgence, I had----
Senator McCain. I have about 50 seconds. Go ahead.
Mr. Mulvaney. I had a group of Vietnam veterans come into
my office--a gentleman about 6-foot-5, long gray hair in a
ponytail, leather vest--to come and talk to me about the
Department of Veterans Affairs (VA) issues, which was
appropriate at the time. At the end of the meeting, walking out
in the parking lot, he pulled me aside. This giant mountain of
a man pulled me aside and started crying and said, ``Look, I
have done thus and such for my country. My son has been
overseas now four times in 5 years, and it is killing his
family. You know South Carolina''----
Senator McCain. So the answer to that is withdraw all
troops from Afghanistan?
Mr. Mulvaney. I was doing the best----
Senator McCain. Congressman, that is crazy.
Mr. Mulvaney. I was doing the best I could to represent the
people in South Carolina.
Senator McCain. Because one person came up----
Mr. Mulvaney. I was doing the best I can----
Senator McCain. Because one person came up to you and was
subject to the sacrifices that the men and women make, then you
voted to withdraw all troops from Afghanistan? Don't you know
where September 11, 2001 (9/11) came from?
Mr. Mulvaney. Senator, you know as well as any how pro-
military South Carolina is, and I could tell you had the full
support----
Senator McCain. I can tell you that from--I know one thing
about South Carolina. The majority of them do not support a
vote in favor of withdrawing all troops from Afghanistan. I can
tell you that. And I will take a poll anytime, that they do not
want to--there is too much many sacrifices. That is where 9/11
began. I know of no reputable member of the military leadership
that would say that because of that we should withdraw all
troops from Afghanistan.
My time has expired.
Chairman Johnson. Senator Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thanks, Mr. Chairman.
Mr. Mulvaney, welcome. It is good to see you. Thanks for
stopping by and visiting with me yesterday.
Mr. Mulvaney. Yes, sir.
Senator Carper. Do you recall when you met with President
Trump and when he subsequently nominated you for this post?
Mr. Mulvaney. Yes, sir. I met President Trump the first
week in December, I believe.
Senator Carper. And do you recall the last time you met
with him?
Mr. Mulvaney. That is the only time I have met with the
President personally.
Senator Carper. So since that time you have not met with
him?
Mr. Mulvaney. That is correct, sir.
Senator Carper. All right. He has spoken, as I am sure you
know, in favor of a number of steps or actions that are of
interest to us, I think to us all. One, he has called for what
I would describe almost as ``massive tax cuts.'' Some would
suggest that they are largely to benefit people in upper-income
levels. But that is one of the things. And he has also proposed
raising defense spending by quite a bit.
Medicare and Social Security, apparently he has said those
were off limits and we are not going to touch those.
I understand he has said and continues to say that we ought
to build a wall. He says that the Mexicans will pay for it. I
am not sure they are ready to do that. But the cost is anywhere
from $15 to $25 billion.
He wants to repeal the Affordable Care Act (ACA), but the
Committee for a Responsible Budget tells us that the cost of
doing so in terms of our budget deficit is to increase it by
anywhere from $150 to $350 billion.
I think when Senator Cotton talked about you earlier when
he introduced you, he said something about ``speaking truth to
power.'' Somebody needs to speak the truth to our President
about how you cannot do all those things and reduce our budget
deficit. Are you that person?
Mr. Mulvaney. I like to think so, yes, sir. In fact, I am
looking forward to fulfilling that exact role. I see my role as
telling the President the facts as I can determine them, giving
him options as I see fit or as I figure out a way to present
him with a range of options, and then to try to advise him to
the best of my ability, and then to follow through on his
policies once he establishes them.
Senator Carper. We had a couple of people who have been
nominated by the President--one, General Kelly, and the other
fellow's nickname is ``Mad Dog.'' And they were asked if they
were essentially asked by the President to do something that
they felt was wrong, they gave him their advice, and they said,
``I think that is wrong,'' and it was not accepted, I believe
they both said that they would step down just as a matter of
principle.
Let me ask a similar kind of question of you. If you
present your best judgment to the President that he is
literally going down the wrong track--and I mentioned some of
the very expensive ideas that he has put forward. But if he
chooses to ignore what you have recommended in terms of having
a more balanced and responsible fiscal policy, what would you
do? And that is not an easy question, but what would you do?
Mr. Mulvaney. No, it is not an easy question, but it is not
a particularly hard question. I do not think any of us expect--
I know I do not--to have the President agree with me all of the
time. And I do expect there will be circumstances where I make
the best case for what I happen to believe on a particular
issue, and that based upon other information or the advice of
other counselors the President may make a decision that I would
not have made myself, but I do not think that prompts one to
leave the office.
Senator Carper. OK. Thank you.
The last time we had a balanced budget--actually, we had
four of them in a row, as you will recall--I think it was
fiscal years 1998 to 2001, the last four budgets of the Clinton
Administration. And those were also part of 8 years where we
had the most jobs created in the history of the country in an
8-year period.
During those 4 years when we had balanced budgets, revenues
as a percentage of gross domestic product (GDP) were just about
20 percent in each of those years, spending also about 20
percent for each of those years. Do you recall what last year
revenues were as a percentage of GDP and spending as a
percentage of GDP?
Mr. Mulvaney. Ballpark, I think revenues were about 18.5
and spending was about 20 or 21. Twenty?
Senator Carper. All right. Do you believe that we need just
to focus on the spending side, or is there some reasonable
balance where, as they found in the 4 years of the Clinton
Administration when we actually had four balanced budgets in a
row, that there is some need for revenues? I shared a story
with you yesterday from a town hall meeting where a lady at one
of my town hall meetings when I was a Congressman, she said to
me, ``I do not mind paying extra taxes. I just do not want you
to waste my money.'' But is there a role for both spending and
smarter spending and revenues?
Mr. Mulvaney. I think the lady that you reference probably
represents a lot of the American public. They do not mind
paying their taxes as long as they do not think we are wasting
it.
Senator Carper. OK.
Mr. Mulvaney. I think the difference between it, Senator,
would be when some of us talk about looking at the revenue
side, they talk about looking at the pie as its current size
and taking a bigger slice of it; whereas, I look at the revenue
side looking at a bigger pie but taking a smaller slice.
Senator Carper. The regulatory process has been mentioned.
Earlier we had something--I think the name of the law under
which we develop regulations is the Administrative Procedures
Act (APA), if I am not mistaken.
Mr. Mulvaney. Part of it is.
Senator Carper. And it calls for, when a Federal agency is
interested in thinking about promulgating regulation, they put
out a notice and say, ``We are thinking about promulgating a
regulation in a particular area.'' Then folks who are
interested in that, business groups or others who are
interested in that, individuals, those of us who are interested
in it as legislators, we can make some comments and say,
``Well, that is a good idea. You do need to do something.'' Or,
``That is a crazy idea.'' And the agency can then act on that
or choose not to. They can do nothing, or they can actually
propose draft regulations. They are generally taking comments
throughout the drafting period of time, and ultimately, when
they finish their drafting, eventually they may or may not
promulgate a final regulation.
But between the time they promulgate the draft until they
promulgate the final regulation, we again have the opportunity
to weigh in, all of us, if we want to, and to say that we think
that is a good idea or not.
At the end of the day, if they promulgate something that we
think is crazy, people can sue, and they do all the time, as
you know.
What is wrong with that process?
Mr. Mulvaney. The first thing that comes to mind, Senator,
with the process is the role of the cost-benefit analysis that
is done as part of that process and to the type of data that is
used. Sometimes I think we use extraordinarily good data; other
times I think you could raise a question as to whether or not
the data is defensible. And I think that we could probably do a
good job, and I hope at OMB, which has a role in that process
as you just laid out, one of the things I hope to be able to
do, should I be confirmed, is to make sure that we are using
data not just from one source but from a variety of sources so
we can try and get the best information we possibly can.
Senator Carper. In conclusion, I would just say that one of
the things you said is we can turn this economy around. Well,
that is what happened 8 years ago, and over the last 8 years we
have turned the economy around. You remember where we were 8
years ago, and we are just coming off the end of the longest,
continuously running economic expansion in the history of the
country, 16 million new jobs have been created, and we are
covering a lot of people for health care. We can do better than
that. But I remember where we were 8 years ago, and I know
where we are today as we shift the baton to a new leadership
team. I would be careful about turning it around because I
remember what it was 8 years ago.
Thank you.
Mr. Mulvaney. Thank you, sir.
Chairman Johnson. Thank you, Senator Carper.
I am going to use a minute of my time here just to lay out
a couple facts on economic growth. Since the Great Depression,
the economy has grown about 3.2 percent on average. Since the
Great Recession, it has grown about 2 percent. That is a
tremendous difference. If you go from 2 to 3 percent growth,
that is $14 trillion of added economic activity just in a 10-
year period; 2 to 4 percent is $29 trillion. Even with the 2-
percent growth we have had since 2009, revenue has increased to
the Federal Government by $1.1 trillion. So that is why I think
regulatory reform, having a competitive tax system, using
energy resources is just crucial.
The other point I want to make is we have heard now a
couple times talking about the government shutdown. I just want
to quick ask Congressman Mulvaney, do you have a handle on how
much the government actually shut down? I know they shut down
the painful parts, like, concessions at the Grand Canyon. But
do you have any sense of that? I cannot get a real figure on
it, but I----
Mr. Mulvaney. It depends on how you want to measure it. The
number that I have used is that about 15 percent of the
government shut down. I think that number has been confirmed,
if you look at it in terms of the amount of dollars that still
flowed out the door.
Chairman Johnson. OK. Thank you. Senator Paul.
OPENING STATEMENT OF SENATOR PAUL
Senator Paul. Congratulations, Congressman Mulvaney, on
your nomination. You said in your testimony that the number one
priority, either yours or of the Federal Government, is to
defend the country. Is that correct?
Mr. Mulvaney. I think it is one of the few things that are
actually affirmatively stated in the Constitution.
Senator Paul. Admiral Michael Mullen is a career military
guy. Nobody would question his honor or whether he served
honorably. Are you familiar with his statement when he said
that the greatest risk to our national security is our debt?
Mr. Mulvaney. It was raised at my very first Budget
Committee hearing in 2011, and it put the fear of God in me as
soon as I got to Washington, D.C.
Senator Paul. Do you think it is fair, people can
characterize you or your positions in any way, but do you think
it is fair maybe to characterize your concern for debt as being
also a concern for national defense, that maybe we cannot be a
strong Nation if we are indebted or if we borrow $1 million a
minute, maybe we will not be able to afford, and there might be
a day that there is a calamitous economic crisis concerning our
debt and that would make us vulnerable to invasion?
Mr. Mulvaney. I think history would teach us--and I think
perhaps Admiral Mullen was considering this--that great nations
throughout history have traditionally failed from within, they
have rotted from within because of their inability to manage
their finances.
Senator Paul. I think sometimes in partisan politics people
tend to question the motives of their opponents, and I think
that is a mistake. We have many disagreements, Republican and
Democrat, on how we fix things. Even among our own party we
have some disagreement on how to fix things. But, I think that
understanding that your motives are for your country, for
defending the country, and that your concern over the debt is
not over numbers but over a concern for the future of your
country.
When we talked about raising the debt ceiling--and much has
been made about, oh, you are advocating for shutdown. I
remember those debates. I had just gotten here, and I think you
had just gotten here. And the debates in 2011 were not over
advocates for shutdown. They were over whether or not we should
reform the process at the same time we raise the debt ceiling.
So there was a bill at that time that I believe you supported,
Cut, Cap, and Balance, and this was a bill that said basically
we will agree to raise the debt ceiling. It is going to have to
go up at some time. But when we had this big, calamitous
debate, we should try to fix things instead of doing the same-
old, same-old.
Some of the discussion has been over waste. I am all for
getting rid of waste and fraud. You know why it has been here
forever? I remember as a kid in high school seeing the Golden
Fleece report. Senator William Proxmire would talk about this
waste. The reason it is here is we do not do our job. Our job
is to pass the individual appropriations bill. And what do we
do? We lump them all together in one enormous bill called a
``continuing resolution (CR),'' which I am sure you voted
against a few, as I have, because we do not fix the problem.
But it does not mean we are against all the spending in
government. We want to fix the problems, do our job, pass the
individual appropriations bills.
But I think the thing is that it is a mischaracterization,
I think, of your position and many conservatives that we are
for shutting the government down. No, we are for not keeping it
open without reforming it. We want to reform it. And when we
have these debates and we come to a head, should it be easy to
raise the debt ceiling? Some on the other side want to have the
debt ceiling just go up automatically. In fact, the last time
we raised the debt ceiling, they raised it without a dollar
amount. They just said, oh, let it go up as much as it can for
a year and a half.
With regard to entitlements, I saw the care and, I believe,
the emotion in your voice about taking care of your mother-in-
law and stuff. What are your motives? Are your goals to try to
preserve Social Security and preserve Medicare? Are your
motives to destroy the entitlements? What are your motives?
Mr. Mulvaney. I think I have said many times that the real
risk we run is doing nothing, and by doing nothing, we will
ruin those programs. We will make sure that when you and I
retire there will be a 22-percent across-the-board reduction.
Senator Paul. And these statistics are coming from the
Social Security trustees saying that this is going to happen.
Within about a decade or so, we would have a massive across-
the-board cut.
And so, really, the debate should not be, oh, these people
do not care about the elderly. We all have parents, we all have
grandparents. We all care about the elderly. It is about how we
fix it. But I think what is really inexcusable are those who
berate one side and say, oh, you do not care, when in reality I
think doing nothing shows a lack of caring. If you do nothing
to fix Medicare, if you do nothing to fix Social Security--and,
sure, we can attach emotions to this and attach false motives,
but I think we should listen to what our candidates say, listen
to what the electorate said, and really try to judge people on
whether or not you think they are honest and sincere.
He went above and beyond the law to pay taxes on something
that was well beyond what the law would have said. He did it
because he was honest in answering his questionnaire.
So I wish you the best of luck in your position. I hope
people on the other side will not question your motives, will
look at that it is a sincerely held belief that the debt is
hurting the country, that the debt hurts our national defense;
that if you could expand national defense and not add to the
debt, that should be a commendable position, not something that
we should denigrate.
So I wish you the best of luck going forward, and I think
there needs to be a balance of concern for debt and
expenditure. And I thank you for your service.
Mr. Mulvaney. Thank you, Senator.
Chairman Johnson. Thank you, Senator Paul. Senator Tester.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. Thank you, Mr. Chairman, Ranking Member,
for this hearing. And thank you for being here, Congressman
Mulvaney. I am going to call you ``Mick,'' if that is OK.
We had a good meeting in my office, and I appreciate you
coming in. There is an issue that came up, and I am sorry I was
not here for the opening statement because I understand that
you did talk about it some. But it deals with the nanny.
Mr. Mulvaney. Sure.
Senator Tester. How many hours a week did she work for you?
Mr. Mulvaney. She was with us roughly full-time.
Senator Tester. OK, so 40 hours a week. And then for how
long?
Mr. Mulvaney. Up until the time the kids left for school.
Senator Tester. So how many years was that?
Mr. Mulvaney. We could not remember if it was three or
four, so we filed for five.
Senator Tester. All right. Well, OK, sounds good. So there
were 3 or 4 years that you paid back taxes on her?
Mr. Mulvaney. No, we paid back taxes on all five.
Senator Tester. OK. All right. Sounds good. Thank you.
The President announced a hiring freeze today. There was
some question on who it applied to. I just came out of a VA
hearing, and it applies to the entirety of the VA, is what I
was told. I am sure you are familiar with the VA and its job.
Do you believe its mission is for the VA to provide timely care
to the folks who serve this country?
Mr. Mulvaney. I do, yes, sir.
Senator Tester. Do you believe that the veterans of this
country are having trouble accessing care?
Mr. Mulvaney. I have seen it firsthand. I know it to be the
case.
Senator Tester. All right.
Mr. Mulvaney. By the way, Senator, the story I hear from my
veterans is that the quality of care they get is actually
excellent, once they get it.
Senator Tester. You hear the same story I hear.
Mr. Mulvaney. It is just difficult getting it.
Senator Tester. To get through the door. And so I would
assume, with your answer to the previous two, that you would
agree that there is a medical workforce shortage within the VA?
You do not have to. Do not let me put words in----
Mr. Mulvaney. That I do not have any information on.
Senator Tester. OK. USA Today reported 41,500 medical
professional vacancies within the VA.
So the question becomes--and you are in a very important
position that nobody knows about on the street. The question
becomes: How do we address the backlog in the VA with this
hiring freeze? Yes, go ahead.
Mr. Mulvaney. Well, a couple of different things, Senator,
off the top of my head. I am having a difficult time
automatically coming to the conclusion that the best way to
make the VA more efficient is to hire more people. I would
certainly be willing to consider, as I think I filled out
either the questionnaire for this Committee or another
Committee, that there may be circumstances where you can
actually provide a more cost-effective and efficient government
by adding people in certain areas. That might be limited
examples, but they could certainly exist. But I would be more
than willing to work with you and your office on trying to
figure out a way to do that because I am just as interested as
you are in taking care of our vets.
Senator Tester. Let me give you an example. In eastern
Montana, east of Billings, it is about 200 miles to the North
Dakota border, and at the last check, there might be two or
three psychologists, psychiatrists, family counselors in that
region. How do we address mental health issues, post-traumatic
stress disorder (PTSD), traumatic brain injury (TBI) if we do
not hire additional folks?
Mr. Mulvaney. I think the Veterans Choice Act that Senator
McCain worked so hard on was part of addressing that, allowing
them to access the private system, especially in
circumstances----
Senator Tester. But those three I am talking about are not
people within the VA. That is the private sector and the works.
Mr. Mulvaney. Oh, I got you. I have not been to Montana.
That sounds like it is a pretty sparsely populated area.
Senator Tester. Well, the problem is we have a ton of
veterans that live there because it is sparsely populated, and
they still need to get the benefits.
I look forward to working with you on these issues. I think
they are critically important. And oftentimes I agree with you
that manpower does not necessarily result in good results. But
when you have the kind of backlog they have in the VA, manpower
does have its impacts.
I want to talk about Medicaid block grants for a second. Do
you support turning Medicaid into a block grant program?
Mr. Mulvaney. I have voted for that when given the chance
in the House. As I have told many Members of this Committee and
other committees, if there are other ways to find efficiencies
and savings in Medicaid, I am more than willing to talk about
that. I think that Medicaid and Medicare probably present
bigger challenges to us in terms of their complexity.
Senator Tester. So with that previous support for Medicaid
block grants, would you also support a cap on Medicaid block
grants?
Mr. Mulvaney. I believe that was part of the proposal that
the House made in order to give the States the incentive
necessary to reform and drive some efficiencies in their
programs.
Senator Tester. In your previous life--and excuse me for
not knowing this. I came out of the State legislature.
Mr. Mulvaney. So did I.
Senator Tester. And I can tell you that in Montana the
State is not exactly flush with dough, and they do have that
balanced budget amendment that you talked about with the
previous Senator. They are not going to be able to absorb, so
is their option going to be to cut benefits or kick folks off?
Mr. Mulvaney. Well, I do not know what the options are. You
would like to think----
Senator Tester. If they do not have the dough, what other
options do they have?
Mr. Mulvaney. Well, this is my experience in the South
Carolina Legislature. I remember we had a program come down,
and it was very clear that the program for Medicaid--we were
required to use it--was aimed toward providing Medicaid care in
urban areas. We do not have very many of those in South
Carolina, and we would have very much liked to have come up
with our own plan to provide for our most needy because we
wanted to do that, despite what people said, to Senator Paul's
point. We want to provide for those folks as well, but we
thought there was a better way to do it given the locale of
South Carolina. But we did not have that flexibility because of
the Federal law.
Senator Tester. I got you. The problem that I see--and
enlighten me if I am looking at this wrong--is, populated areas
differ on the size of the State. We have two cities of 100,000
people. Those are big cities for Montana. We have a lot of
other cities that are less than 50,000 and a lot of them less
than 1,000. And in all three of those cases, there are tons of
folks that are on Medicaid, and my concern is that whether they
are in a rural frontier or what we would call ``bigger
cities,'' we have folks that are depending on it, that if it is
block-granted in and the State cannot make up the difference,
they are going to be without care.
Mr. Mulvaney. Senator, again, it sounds like we have some
of the same experiences, and if there are other ideas on how to
fix Medicaid, I would be more than happy to do it. I would like
to give the States the flexibility to try. It might be that
Montana and South Carolina do not solve them, but if Wyoming
does, maybe it provides a model that other States could follow.
Senator Tester. Yes, I mean, I guess my concern is in the
meantime, there are a lot of folks that are going to be really
in life-and-death situations. That is my concern.
Real quickly, and I will put this in for the record, but it
deals with the National Background Investigation Bureau (NBIB).
We stood that up last year, I believe, for background checks.
You are a critical component in bringing the Director of
National Intelligence (DNI) and the Office of Personnel
Management (OPM) and Department of Defense (DOD) together to
make sure these work, and they were brought about because we
were failing miserably on our background checks. And I look
forward to working, upon confirmation, with you on that.
Thank you, Mr. Chairman. Oh, by the way, just for a side
remark, in 2008 we were losing 800,000 jobs a month, and today,
for the past year, we gained about 220,000 jobs a month. So I
guess it depends upon the metric. Thank you very much.
Chairman Johnson. Senator Lankford.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Thank you, Mr. Chairman.
Congressman Mulvaney, good to see you again.
Mr. Mulvaney. Senator.
Senator Lankford. You and I came in the same class, in
2011. We got to now each other from orientation on and had the
opportunity to be able to serve together in the House for 4
years.
I do have to tell you I was very pleased when I saw the
announcement from the Trump Administration of your selection
because of what I saw from you in our time serving together in
the House. You were a serious student. You looked hard at
difficult issues, understood there were difficult decisions
that needed to be made, and made proposals to do that.
You have a fairly decent business background as well and
working with businesses before that, in addition to Georgetown
University, graduating with honors in international economics,
commerce, finance as an honors scholar, law school in North
Carolina, Chapel Hill, and then Harvard Business School. That
is not a bad background to be able to walk into this type of
role.
But as you know, every person that enters into the
Administration is on the job, and it is on-the-job training. It
is an entirely different role. So I would like to get some
background from you just on some key philosophical perspectives
that you and I have talked about some as well, when we talk
about regulatory issues and regulatory priorities and how we
can fix the regulatory State. Senator Carper brought it up
earlier. I can assure you Senator Heitkamp and I would bring it
up to you often as we work together on regulatory reform.
What do you see as key aspects of regulatory reform?
Mr. Mulvaney. I think a couple of different things,
Senator. I think it offers us perhaps the best opportunity to
have an immediate impact on getting the economy ramped up even
further. There seems to be, in talking with all the folks on
this Committee and the other Committee, a good bit of
bipartisan support in this House--or in this chamber for
regulatory reform, and I have seen some really good academic
data that would suggest that the number one thing we could do
to boost GDP, to boost economic activity, would be to engage in
significant regulatory reform.
We also have the advantage of being able to do it rather
quickly, not only because there is some bipartisan support for
it, but there are certain things the President can do by
himself in a perfectly legitimate exercise of his Executive
authority.
So the general idea is that regulatory reform offers us
probably the best option right now to help get the economy
doing even better.
Senator Lankford. So the grand challenge of this is I could
find 50-plus of my colleagues easily in regulatory reform for
President Obama. Now I am going to work with a Republican
Administration, and I still have the same perspective. We need
to do regulatory reform. We need to be able to fix the process
of how regulations are done. And I think there will be a
greater eagerness from my Democratic colleagues to say, yes,
this is a great time to reform the process of regulations. For
Senator Heitkamp and I, as we walk through this, we are looking
for a partner in the Administration that is not just looking at
what controls now but looks toward the future and says for
every President and how we do regulations, there should be a
predictable, reliable system of that.
Mr. Mulvaney. Something broke down, Senator. When I meet
with a Domino's Pizza or a Papa John's pizza franchisee--I used
to be in a franchise business--and they lay out for me that if
they followed the regulations regarding disclosures on caloric
intake on their product, the boards that you see when you walk
into a restaurant would be the size of football fields in order
to follow the law. When that happens, then something has broken
down in the process.
Now, granted, we did fix that one, but the simple fact that
that got beyond all of the process and actually made it into
the real world before someone caught that means that we do have
a regulatory process problem that I will look forward to
helping you work on.
Senator Lankford. You brought up earlier one of the major
key reforms would be the cost-benefit analysis. I had mentioned
to you when we visited in the office that my fear is that the
cost-benefit analysis from any Administration has become a
justification because there is a way to be able to find a
benefit large enough to be able to say no matter what the cost
is on you, I found a benefit large enough that you are going to
do this, rather than looking for what is the least expensive,
most effective option that is out there.
What are some ideas that you have on the cost-benefit side
of things to be able to help reform that process?
Mr. Mulvaney. As I sit here and I contemplate what it would
be like at the OMB should you all confirm me, it would be to go
to the President and say, look, here is data, here is real hard
data. It may be from this source; it may be from that source;
it may be from a variety of sources. In fact, I think we can do
a better job of getting information from a variety of sources
as we drive these cost-benefit analyses. And then explain to
the President what the real-world implication of these
regulations would be, not in a justification standpoint, not in
terms of shoe-horning a regulation that we say we want into--a
square peg into a round hole, so to speak, but to actually look
at the facts and the circumstances of these regulations. And
the President to say, you know what, that one makes sense and
those four do not.
One of the things I am very excited about coming in with
this Administration is that everything the President has talked
about on the campaign trail has included regulatory reform. He
has I think, in his second day full-time in office, today or
yesterday, he talked about regulatory reform. He made a very
high profile hiring of Carl Icahn to help deal with regulatory
reform. You read his books, and you will actually see chapters
about how government regulation is an impediment to growth.
So say what you want to about the President, he has his
critics and his supporters, but I am absolutely convinced that
his dedication to fixing the regulatory requirement will work
hand in hand with yours.
Senator Lankford. OK. We will work through that process in
the days ahead. Obviously, as we work through budget issues--it
has been a major part of what you worked on in the House as
well--one of the hardest things to get in Washington, D.C., is
the real number for anything. How can you help us get the real
number coming from the White House and coming from your
estimates from OMB?
Mr. Mulvaney. Well, the first step, obviously, is to get
them myself, right? Which is why the Digital Accountability and
Transparency Act of 2014 (DATA) is so important. It is behind
schedule, as I understand, as we try and figure out a way to
get data that we can actually all use. In this age of big data,
the government has all of this data, but it is incapable of
using it because it cannot even talk to itself about the
numbers.
So, of course, one of the keys is to try and figure out a
way to fix the system so that the data that we all have access
to is the best possible number, and then simply be honest about
those numbers with the President and say, look, Mr. President,
this is a hard number, this is real. And if we do this, then
that will happen; if we do that, then this will happen. And to
try and give him the best possible advice I have and the best
possible data that I have. But the first is trying to figure
out a way to allow the government to function properly so that
every single one of us in decisionmaking position has good
information.
Senator Lankford. Well, I would hope to get that. I would
hope that we could also work together on all the budget
gimmicks that are out there, whether we change the mandatory
programs, whether it be multiple other entities that are out
there in the budget system that gives us fake numbers rather
than real numbers, that we can help agree on a set of numbers.
I would tell you as well Senator McCaskill and I have
worked for the past couple of years on something called the
``Taxpayer's Right to Know.'' We worked extensively with the
previous OMB to be able to negotiate a process so that we can
deal with duplication and exposing that. I would anticipate
that she and I would come back to you pretty quickly as well to
be able to help finalize this with you as OMB Director so we
can deal with the duplication in government. We cannot deal
with duplication if you cannot see it, and it is something she
and I have worked extensively on, and we hope that we can get
this finished in the days ahead.
With that, thank you, Mr. Chairman.
Mr. Mulvaney. Thank you, Senator.
Chairman Johnson. Senator Peters.
OPENING STATEMENT OF SENATOR PETERS
Senator Peters. Thank you, Mr. Chairman. And, Mr. Mulvaney,
thank you for being here--and congratulations on your
nomination--and taking our questions here today.
You mentioned you have a fair amount of business
experience. You had a franchise?
Mr. Mulvaney. I did, yes, sir.
Senator Peters. What sort of franchise?
Mr. Mulvaney. We were in the fast, fresh Mexican business.
I was a franchisor and a franchisee.
Senator Peters. OK. And you ran a law firm as well?
Mr. Mulvaney. I have done that as well. I get bored easily,
yes, sir.
Senator Peters. Well, a lot of activities on your plate.
Well, I know you mentioned the issue of your nanny and how
you dealt with the payment of back taxes, and I believe from a
question earlier that she was employed by you for about 4 years
or so. Is that correct?
Mr. Mulvaney. Yes, sir.
Senator Peters. And I believe you also said that she worked
40 hours a week?
Mr. Mulvaney. Roughly, yes, sir.
Senator Peters. A full work week, then.
Mr. Mulvaney. Yes, sir.
Senator Peters. How much did she make?
Mr. Mulvaney. $400 a week.
Senator Peters. About $400 a week.
Mr. Mulvaney. That was our recollection, that the last
payments were $400 per week, yes.
Senator Peters. OK. So at the same time that you employed
your nanny, you were then running the law firm. Is that
accurate?
Mr. Mulvaney. No, sir. I am trying to think. I transitioned
from running the law firm to working for the family real estate
business about that same time.
Senator Peters. So you were involved in another business at
that time?
Mr. Mulvaney. Yes, sir.
Senator Peters. And you had employees at that time as well?
Mr. Mulvaney. I did. Yes, sir.
Senator Peters. And how many hours a week did those
employees work?
Mr. Mulvaney. They worked full-time. Sometimes that would
be 40; sometimes that would be more.
Senator Peters. So they were working the same number of
hours as your nanny basically?
Mr. Mulvaney. From time to time, yes, sir.
Senator Peters. And did you pay employment taxes for each
of these employees?
Mr. Mulvaney. Yes, we did. Yes, sir.
Senator Peters. And did you collect and retain I-9s for all
of the employees that worked in those firms?
Mr. Mulvaney. I would imagine that we probably did. Yes,
sir.
Senator Peters. So I guess what I am failing to see here
is: What is the difference between your nanny, who clearly was
working full-time, as you mentioned, over 40 hours, and the
employees that worked at the law firm or all of these other
firms? What was the difference there?
Mr. Mulvaney. It is a fair question, sir, and it is easy
now in hindsight to look back and say that I was wrong, and we
fully admit that. I think at the time there was simply a
differentiation in my mind between someone who came into my
house to help with the children and the folks who worked at the
law firm, worked at the restaurant, or worked at the real
estate company.
Senator Peters. So what is the difference? Is the value of
the work different?
Mr. Mulvaney. No, sir. Again, we never considered that a
babysitter would fall into that category. I fully admit that--I
wish now that I had seen the IRS circular at the time, but I
did not and was not aware of this until December, recognize
that I should have done it differently, would have done it
differently if I had known. But again, I have done everything
that I know to do to make it right.
Senator Peters. So you did not consider an employee a
household employee. What would you define a household
employee--how would you define one that you would have paid?
You are an experienced business person. You are not someone who
has never had a deal with collecting taxes and dealing with I-
9s. You had to----
Mr. Mulvaney. And the reason we did not----
Senator Peters [continuing]. Deal with those regulations
that you want to eliminate.
Mr. Mulvaney. True, and I guess the reason that we did not
consider her a nanny was for some of the reasons I mentioned:
she did not live with us, and my impression of a nanny is
someone who stays over; did not do any housekeeping, cleaning.
She simply helped Pam with the children. We considered here a
babysitter.
Senator Peters. So simply taking care of your children
really is not something you thought was that valuable or really
an employee.
Mr. Mulvaney. Oh, no, sir. It was very valuable. I just did
not think it fell into what the IRS clearly does, in fact,
consider to be a household employee.
Senator Peters. OK. Well, I would like to take a look at
some of the work that you did in the Congress. In my
understanding, you were very involved in the Republican Study
Committee, a leader in that committee.
Mr. Mulvaney. I was active in it the first two terms, yes,
sir. I have been a member all three, but was not very active
the last 2 years.
Senator Peters. OK. Fair enough. So I think it is
important, as the OMB Director, you are going to have the
President's ear. You are going to be talking about things that
you believe that he should be doing. He obviously nominated you
because he wants to hear your advice. He believes that that is
good advice and things that he will very likely follow, I would
expect, or you probably would not have taken this job if you
did not think you would have the opportunity to have his ear
and hopefully be able to convince him.
So I want to look at the budgets that you have voted for
because I think the American people should just have an
understanding----
Mr. Mulvaney. Sure.
Senator Peters [continuing]. As you are looking at how we
deal with the fiscal situation in the country as to what these
cuts really mean. And I think you may have mentioned this at a
previous hearing, but you voted in the House to raise the
Social Security full retirement age to 70. So you believe it
should be 70 years old as the retirement age?
Mr. Mulvaney. I did. We did that as--and, again, I have had
a chance to talk about this at the other Committee and again
with several members in terms of how to fix the ideas available
to fix Social Security, the five levers, one of them being----
Senator Peters. So 70 is where you would like to see it, 70
as the retirement age?
Mr. Mulvaney. Given the fact that people live longer, I do
not think that is inappropriate. I think my children would have
enough time to adjust. I am not requiring anybody or would not
ever think to ask anybody who is 65 now to change to 70, but my
17-year-old triplets, I have already told them that I do not
expect to be able to have them retire at 67, and they should
make plans now----
Senator Peters. So you are saying not at 65, but if I look
at the legislation, those who are age 60 and under would now
have to start to move up toward 70? Is that what you are
saying?
Mr. Mulvaney. Correct. The proposal----
Senator Peters. If you are 60 years old or under, under
your plan, plan to wait until 70 for full retirement?
Mr. Mulvaney. I think it was 59 is where we started,
Senator, and we have done this a couple times, so I apologize
if I do not have the exact details, because they may have
changed slightly from year to year. But one of the proposals
was that if you were 59 years old, instead of retiring at 67,
you might retire at 67 plus 2 months.
Senator Peters. And the same for Medicare, the eligibility
would be 67. You would raise it to 67? That is what you will be
advising the President to do?
Mr. Mulvaney. Well, there is two different--you did not ask
me that question the first time.
Senator Peters. No. This is Medicare now. I apologize. So
Medicare.
Mr. Mulvaney. You asked me what I voted for. When I come to
advise the President, my intention, if you all give me the
chance to do so, is to lay out a list of options for the
President, say, ``Mr. President, if you want to balance the
budget in X number of years, here is what you would have to do.
If you want to balance it in this many years, this is what you
would have to do.'' So I see my job at OMB as giving the
President a many viable options as possible and as good
information as possible. I am sorry. I thought you asked me
about things that I had voted for.
Senator Peters. That is true.
Mr. Mulvaney. The roles are different.
Senator Peters. I did. But I assume when you vote for
something, it is something that you believe should be the law
of the land.
Mr. Mulvaney. It is.
Senator Peters. You went back to tell your constituents,
``This is how I voted.'' It was not, ``I just did this for the
heck of it, and I have a variety of other ideas.''
Mr. Mulvaney. No, absolutely, Senator. I am not trying to
avoid--I voted for those things, and it gets that seal of
approval that goes with the vote. But when you are in the
policymaking and advising position to the President, I do think
you get a chance to lay out more options. As you know,
sometimes we do not get to choose what we vote for. We can
either vote it up or vote it down. And by the time it comes
before us, all of that work has already happened. I am looking
forward to being involved earlier in the process to be able to
lay out the options for the President.
Senator Peters. Very good. I think I am out of time. Thank
you.
Chairman Johnson. Thank you, Senator Peters.
Again, just to reinforce, I will take another minute. Over
the next 30 years, according to the Social Security trustees,
Social Security will pay out about $14 trillion more in
benefits than it brings in in payroll tax. And I think,
Congressman, you testified that if we do nothing, when the
accounting convention of the trust fund with the U.S.
Government bonds being brought to the Treasury for
reimbursement, when that accounting convention runs out,
according to law, Social Security benefits will be reduced by
22 percent if we do nothing.
Mr. Mulvaney. That is the current number that I have seen
from the CBO, yes, sir.
Chairman Johnson. So your attempts in terms of voting--I
would say courageous votes because people get attacked for
trying to solve these problems--was just that: you are
addressing that reality, a $14 trillion shortfall over the next
30 years, so that hopefully you do not have a 22-percent cut in
benefits somewhere in the 2030 timeframe.
Mr. Mulvaney. We have to do something.
Chairman Johnson. OK. Senator Daines.
OPENING STATEMENT OF SENATOR DAINES
Senator Daines. Thank you, Mr. Chairman. And I want to
congratulate you on your nomination, Congressman Mulvaney. It
was an honor to serve with you in the U.S. House as well. I
share Senator Lankford's comments as well on the respect that
you had in the House. I am grateful that your wife, Pamela, and
one of the triplets, James, is here today as well. I am the
father of four children, and I think sometimes up here in this
job we lose sight of the forest because the trees get in the
way.
You said in the first question on your questionnaire, it
says, ``Did the President-elect give you any specific reasons
why he nominated you to be the next Director of the Office of
Management and Budget?'' And you answered it: ``When President-
elect Trump announced my nomination, he noted that our Nation
is nearly $20 trillion in debt.''
If you stop by my office in Hart 320, you will see the debt
clock. Every Montanan that walks into my office sees that.
Every person who walks into my office sees that.
I think what Senator Johnson pointed out earlier is this
chart\1\ that shows what is going to happen here in our debt.
We are going to add $10 trillion to our debt over the course of
the next 10 years, and then the 10 years following that, we are
going to add another $28 trillion. That is $60 trillion all in
between now and the year 2035 of debt. That is staggering when
we think about it.
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\1\ The chart referenced by Senator Daines appears in the Appendix
on page 254.
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And as Senator Paul mentioned--in fact, I met Admiral
Mullen's son this weekend--Admiral Mullen who was the Chairman
of the Joint Chief of Staff, did say the most significant
threat to our Nation--and I went back and Googled it. He
doubled down, he tripled down on his statement. He said, ``The
most significant threat to our national security is our debt,''
coming from the former Chairman of the Joint Chiefs of Staff.
We spoke in my office, Congressman, in great detail. I know
you know the importance of balancing a budget. But unlike
hardworking families in this country, Congress is not required
to pass a balanced budget. In my home State of Montana, our
legislature is meeting as we speak. I did not serve in the
legislature. I was 28 years in the private sector. I know when
I am in the private sector, I had to produce a budget that not
only balanced but revenues need to exceed expenses. That is
called profit. But in my State of Montana, it is
constitutionally required that the State balance its budget.
But year after year up here in Washington, D.C., we
continue to leverage the future of our children, James' future,
your triplets' future, with an unsustainable fiscal path. And
there will be a day when the piper is going to have to be paid.
That is why for the third Congress in a row I have introduced a
simple bill--it is very simple. It simply states this: ``If
Members of Congress cannot pass a balanced budget, then they
should not get paid.'' We need to put the pain back on the
Members of Congress. It is the way it works when you are in
business. It is the way it works in the real world. It does not
work that way up here.
Congressman, I know we spoke about my bill, and that was
referred to this very Committee, in fact. Do you support my
bill?
Mr. Mulvaney. I do, Senator. Thank you for the question. I
want to make one thing perfectly clear, is that, if I am
confirmed, I will no longer be a voting member of the
legislature. So if I may, I would couch it in different terms,
which is that if your bill were to become law and it comes down
to OMB, as all bills do--they go to OMB for review before
presentation to the President--I would give the President the
unqualified recommendation that he sign that into law.
Senator Daines. And you will be presenting the budgets here
to the Hill once you are confirmed. What are your views of
ensuring that that budget balances over a 10-year period?
Mr. Mulvaney. My hope, if I am confirmed, is to get to work
very quickly because we owe you a budget by the end of
February. I recognize that deadline sometimes moves during a
transition year, but there is work to be done immediately. And
what I hope to be able to do is to go to the President with a
range of options and say, ``Mr. President, here is one that
balances in a year; here is one that balances in 8; here is one
that balances in 15,'' and to explain to him what it would take
to accomplish that and what it would mean to choose one over
another.
You and I have both worked very hard to make sure in the
past that the budgets that our parties have presented here in
the Senate and House are balanced within 10 years, and I intend
to maintain that attitude if I get the chance to advise the
President on that issue.
Senator Daines. I think you also have a great opportunity
to help bring clarity to the spending picture. I think up here
we are oftentimes drowning in data, we are starving for wisdom.
I think you could bring much needed guidance to that
organization.
As I mentioned, Congressman, I did spend 28 years in the
private sector before coming to the Hill. In fact, the last 12
years was as an executive of a cloud computing company, which
was eventually acquired by Oracle. In 28 years, I never
received a letter when I was in the private sector that my own
personal information had been compromised, that I had been
hacked. It was not until I became a Federal employee that I
received a letter from the OPM.
This past October, OMB launched cyber.gov where agencies
can now find the best practices in cybersecurity. And, by the
way, I was the very first Senator to call for the resignation
of the Director of OPM when over 20 million American Federal
employees' information was compromised where we had our
Personal Identifiable Information (PII) in the hands of
potential adversaries.
But I was glad to see the cyber.gov site come up. It is a
long overdue website. It was meant to guard against hacks like
we saw at OPM.
Tell me that you are going to continue to strengthen these
efforts and protect Americans' cybersecurity.
Mr. Mulvaney. I hope to be able to do just that, Senator.
We actually saw something similar to the OPM hack--not similar.
We did a hearing on the risks that are out there today, and I
think one of the things we learned is that the Defense
Department actually does a pretty good job in defending against
cyber attacks, and that is in large part because of the culture
that exists within the defense community, that they know they
are under attack all the time.
But for some reason, that culture does not extend to many
of the other non-defense agencies, and that is where the
weaknesses should be--which really should worry us, because
there is a great deal of information about you, me, Senator
Hassan's children at the Department of Education (DOE), at the
Internal Revenue Service. There is real information out there
that we need to protect. So I can give you the commitment to
continue to try and improve the defenses in those areas.
Senator Daines. I think you will have a great opportunity,
when confirmed, to not only change the outcomes and the
results, but also change the culture of that entire
organization, which I look forward to working with you in doing
so.
Mr. Mulvaney. Thank you.
Senator Daines. Thank you.
Chairman Johnson. Senator Hassan.
OPENING STATEMENT OF SENATOR HASSAN
Senator Hassan. Well, thank you, Mr. Chairman and Ranking
Member McCaskill. Thanks for being here, Congressman Mulvaney,
and I did enjoy our meeting in my office, and you and I found
some common ground on the importance of fiscal responsibility.
We are both firmly committed to good government. And we agreed
on some steps we could take to improve the Federal budget
process. For instance, biennial budgeting is something we do in
my home State of New Hampshire.
But I did want to take a minute to reiterate a couple of
things that we have touched on here today. I was Governor of
New Hampshire when the 2013 Federal Government shutdown
occurred, and I can tell you it had a major impact in my State.
It shut down facilities in the White Mountain National Forest
over Columbus Day weekend, which is the height of our leaf
peeping season and one of our biggest tourism weekends of the
year. Hundreds of New Hampshire National Guard employees were
furloughed. Other furloughs happened at the State level. Not
only did that impact those families, but obviously businesses
throughout my State were impacted. When people do not have
their paychecks, they do not engage in consumer activity.
So I would ask you, in light of your earlier comments that
have been highlighted here already, about the shutdown being
good policy, just to understand that when people actually live
through it, it is not an abstract concept or idea. It really
hurts. It hurt our economy, and it hurt a lot of people. When I
furlough National Guard employees, it compromises my State.
So do you still really think it was good policy?
Mr. Mulvaney. I appreciate that, Senator. I appreciated
having the chance to talk about it in your office, and I do
hear your criticisms of what happened. And let me put it to you
this way: I do not believe that shutdown is a strategy. I do
not believe that shutdown is desirable. What I do believe is
that sometimes it is an unfortunate result of us not being able
to agree. People say, ``You voted for the shutdown.'' That is
not true. There was no such thing as a vote for a shutdown. I
voted for an appropriations bill that did not pass.
So I look forward to being able to encourage the President
not to use that as a tool because it is not an effective tool.
Senator Hassan. It is not an ineffective tool; it hurts
people. And I think our job here is not to just refer to it as
``unfortunate,'' but to acknowledge that it impacts real
people.
I wanted to talk a little bit, too, about the impact and
importance of Medicaid, especially to the substance abuse
epidemic that my State and many others are facing.
Drug overdose deaths now kill more than 50,000 people per
year in our country. That is more than other leading causes of
death such as car crashes. My State of New Hampshire has the
second highest rate of drug overdose deaths in the country. And
as Governor, I worked with Republicans in my State as well as
the business community to expand Medicaid to cover over 50,000
hardworking Granite Staters. Thousands in New Hampshire are now
getting coverage for substance use disorder treatment, and
experts have said it is an absolutely critical tool for
addressing this epidemic. And Medicaid expansion is now under
attack from this Administration, as we talk about--this
Administration talks about repealing the Affordable Care Act.
And then there is this discussion of block-granting
Medicaid which would likely result in a 20-to 30-percent cut in
Medicaid funding to States within just a few years, which has
raised concern from Republican as well as Democratic Governors.
Republicans Governors like John Kasich, Rick Snyder, and
Charlie Baker have been speaking out against block grants and
Medicaid cuts that would hurt their States. So you have
supported Medicaid cuts, such as the ones that are being
suggested, in the past. So can you agree that substance use
experts say that Medicaid is critical for combating the crisis?
And you do not think that removing Federal assistance for
treatment will harm people suffering from substance use
disorders?
Mr. Mulvaney. I can say this, Senator, which is that I know
the President talked about those exact same things on the
campaign trail. In fact, I think he may have talked about it in
your State or certainly in your part of the country, and I know
it is important to him. So I see my role, if he sets out the
policy, our policy of the Trump Administration is going to be X
on opioid abuse, then my goal is to try to figure out a way how
to pay for that, how to implement that as efficiently as
possible, work with whatever other Federal agencies are
involved so that we can satisfy and meet the President's
policy.
You have asked me again, as many people here have today,
how I voted in the past, and I defend those votes. Again, I was
voting on behalf of the people I represent in South Carolina.
But I do see my role changing to an adviser and then an
implementer of the Presidential policy.
Senator Hassan. Well, and I thank you for that, and I do
appreciate it. I will just ask you all to consider as you
advise the President that we have Medicaid expansion in place.
In my State it was a bipartisan plan. It has helped us begin to
build the kind of treatment infrastructure we need, and to
repeal it and destabilize it, even if you replace it with
something else, seems to me to be less than wise. So I hope you
will take that back.
Toward that end, I just wanted to touch on one other area
where your new role may be perhaps at odds with past votes. One
of the most trusted family planning and reproductive health
providers in the country is Planned Parenthood. In your
potential role at OMB, the goal is to assess the quality of
agency programs and procedures. So I am troubled with your
record that indicates a bias in opposition to programs that
impact women's health. Programs like the Title X family
planning program help provide essential family planning and
preventive health services to women nationwide.
As a steward of good government, I believe that when we
award grants to organizations, we need to take an account which
organizations are best able to provide the services. I think
funds should be awarded based on a provider's ability to serve
patients and not based on an ideological or politically
motivated agenda. Do you agree?
Mr. Mulvaney. Senator, I do believe that money should be
allocated based upon an ability to serve patients. I would
point out that the President has said very complimentary things
about Planned Parenthood during the campaign, except as it
comes to the providing of abortion. Where I think he and I are
probably on the same page as to what I have supported in the
past, what I might recommend to him in the future is that
moving money to the federally qualified health care clinics
could be an even more effective way to provide those services.
Senator Hassan. And I am going to interrupt you just
because my time is almost up.
Mr. Mulvaney. Yes, ma'am.
Senator Hassan. My federally qualified health centers say
they cannot absorb the thousands of women in New Hampshire who
use Planned Parenthood. A lot of those women do not have
geographical proximity to those centers. I will let you know
that when I was at Planned Parenthood in New Hampshire, one of
the centers there just a couple of weeks ago, most of what they
do is family planning and reproductive health services for
women who cannot get their care otherwise. There were women
there who, once they got private insurance, still went to
Planned Parenthood because they said the care was so superb.
And Planned Parenthood also takes care of women during their
pregnancies when women want to continue their pregnancies, and
do a superb job of that as well. It is a really important
resource, and it is a very cost-effective one from all the
data.
So I hope that we can get to making data-driven decisions
around settled law and recognize the importance of this
particular provider nationwide to the women of our country.
Thank you.
Mr. Mulvaney. Thank you, Senator.
Chairman Johnson. Senator Heitkamp.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. Thank you, Mr. Chairman.
Not for reply, but I find it ironic almost that the mantra
on the Affordable Care Act is the concern about if you like
your doctor, you can keep your doctor, except if your doctor is
employed by Planned Parenthood. There is a certain amount of
hypocrisy to that statement. So I move beyond.
One of the things I want to examine is your position on
Social Security. You have said that you would not affect anyone
who is 60 or over, right? So it would not require that they
wait until they are 70 in order to basically access the Social
Security program. That means the 59-year-old oil rig worker
would now have to work until they are 70. That is hard work. I
can tell you that, and lots of problems in terms of health care
and maintaining. But yet my husband, who is a physician, who
maxes out on the cap, he is not asked to sacrifice anything.
And he can clearly work until he is 70 because he is not
working outside in the elements.
I am not sure I understand how that philosophy could ever
be consistent with the President who has really, I think,
spoken to that oil rig worker saying, ``We are on your team. We
are on your side.''
So I just ask you to be really careful when you look at
broad generalities, especially as it relates to Social
Security, and especially when every person here gets a tax
break every year when they reach the cap. So if we are looking
at solving the problem of Social Security--and we recognize you
all took a pledge, but that pledge is not necessarily good
public policy. From my standpoint, we have to solve the
problem. But we have to be intellectually honest about the
other side of solving this budget crisis.
And so I am going to ask in response to Senator McCain's
discussion, you said, look, we are going to cut domestic
programs to basically plus-up on the defense side. Obviously,
OCO, you and I can share an opinion about whether that is real
money or not. But let us examine on that domestic-side, non-
defense domestic. Where are you cutting? Because programs like
funding for flood control programs are critically important to
my State and important to those same folks who live in housing
where they are going to see huge increases in their flood
insurance without a flood program.
We have to be really careful about how we do this and how
we respond to the needs of the American people. So right off
the bat, not looking at so-called entitlement programs, where
would you see an opportunity to cut domestic spending?
Mr. Mulvaney. Senator, thank you, and I have read, as I
believe I may have mentioned earlier--the two hearings are
starting to run together--that I have read some of the same
things you did about the early versions of the budget. But I
have not been involved with those, so I have no idea what the
proposals are or even if the reports have been accurate. I
think the rules are that I am supposed to be excluded from
that, which I agree with. So I am not familiar with the
proposals that the President has made.
Senator Heitkamp. I am really concerned, and I think we can
take a look at Medicaid funding, and we can say if we stop
research on Alzheimer's and Parkinson's--you think you have a
Medicaid funding problem right now? You are going to have a
bigger Medicaid funding problem going forward.
And so let us not be so quick to criticize things like
flood control and the domestic programs because those are
investments that could, in fact, in the long run save our
budget and really, I think, make investments.
I do not have a lot of time. I want to get to the Export-
Import (Ex-Im) Bank. I am probably a one-note person here
frequently, but for the life of me, I do not understand, other
than kowtowing to maybe folks who write things like ``Crony
Capitalism,'' why there would ever be opposition to the Ex-Im
Bank. We have billions of dollars of export financing in the
pipeline right now that could mean American jobs. In fact, in
your own State, we have lost thousands of jobs in South
Carolina because we have not had a quorum on the Ex-Im Bank.
This should be a no-brainer.
Explain to me your opposition to the Ex-Im Bank and why you
took the position that you took.
Mr. Mulvaney. Sure, and, again, you are asking about
something that I did when I was an elected official.
Senator Heitkamp. Right.
Mr. Mulvaney. I am hoping to change that, but if the
President came to me and said, ``Mulvaney, what do you think
about the Ex-Im Bank?'' I would try and lay out for him some of
the impacts it has on the market about favoring exporters over
domestic producers. The example is fairly easy to give to the
President: Mr. President, if Senator Heitkamp and I are both in
the business of making glasses and she happens to export some
of hers and I do not, we compete domestically but she also
exports, she has advantages that are available to her--low
interest financing, can buy equipment cheaper--that she can use
to compete against me that actually come from the government.
And I think that warps the marketplace and puts our purely
domestic producers at risk.
To the larger point about is there a better way to do it, I
did participate in and would be happy to talk to the President
about some of the ideas that came out of it--not a bipartisan
group but a Republican group that included people who were
opposed to the Ex-Im Bank and those who supported it. I think
one of the things that there was a rally of support for was
using the Bank as a true lender of last resort.
Senator Heitkamp. Well, I would be curious about all that
because, obviously, I was heavily involved in negotiation of
the reauthorization and very concerned about what is happening
right now with export finance. I did have a chance to talk to
then-President-elect Trump who I believe has some varying
opinions about the Ex-Im Bank than what you do.
Finally, I want to extend the opportunity to work on reg
reform. Senator Portman and I are in discussions, along with
Senator Lankford. We think that there is a real opportunity
here. We want to make sure that reg reform gets done sooner
rather than later and that we have a process that provides a
real opportunity for Americans to participate and a real cost-
benefit analysis that we can evaluate. I think it is critically
important.
The last point I want to make is carried interest, and we
have talked so much about the expenditure side, but I like to
make this point: That same rig worker pays a higher percentage
in tax than someone who has the good fortune to be born into a
family with a trust fund. There are some real problems with
that as well. I would ask you to at least consider the other
side of this and eliminate what I consider the inequities to
the working people in this country.
Mr. Mulvaney. Thank you, Senator.
Senator Heitkamp. Thank you.
Chairman Johnson. Senator Portman.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Thank you, Chairman. And let me follow up
on regulations, but first to welcome you to the Committee, tell
you you are about to join the ranks of the OMB where you have a
number of just incredibly qualified career people, as I talked
to you about in our meeting.
Mr. Mulvaney. I also said nice things about you before you
came here.
Senator Portman. Ok.
Senator McCaskill. He did. I will testify.
Senator Portman. Did he? OK. I guess I should not say this:
It is also the worst job in Washington--unless you like saying
no to people, then it is really fun, because you are in a
position of telling Cabinet members as they come to you with
all their grand ideas and new spending programs. We have to
keep this thing under control. We have a budget that is now
approaching over the next 10 years, we were just told by CBO
today with their new baseline, $1.4 trillion a year deficits in
10 years. We are looking at another $8 trillion roughly on top
of the almost $20 trillion of debt. So it is a tough job, and I
know based on your background that you are willing to make
tough decisions. So I know wish you luck and look forward to
working with you.
On regulatory reform, Senator Heitkamp is right. We have a
great opportunity here. And it has been bipartisan, typically.
Over here on this side of the Capitol, we have been able to get
some things done. In fact, Senator McCaskill and I did a
permitting bill together that is really making a difference. It
is to streamline construction projects. And what better time to
do that when we are talking about infrastructure. We actually
slipped it into the highway bill in 2015. It requires
accountability, one agency in charge. It requires more
transparency, a dashboard where anybody can go online and find
out where a project is. It reduces the statute of limitations
from 6 years to 2 years, which is really important. It also
sets up a new council over at OMB. OMB was not really wild
about having this council, but we knew it was the right place
to put it because OMB is such a powerful job. And the council
is called the ``Federal Permitting Improvement Steering
Council,'' and we have been concerned that the previous
Administration was not moving quickly enough in terms of
getting an executive director in place, getting this moving.
And I will say I have been concerned about that.
I would want you to work with us on that. I wonder if you
would make a commitment to me today to ensure that we find a
strong executive director for this council and that we fully
implement this legislation to ensure we can ensure that this
money that is going toward infrastructure and other projects is
better spent.
Mr. Mulvaney. I can commit to that and also commit to you
to encourage the President to give us whatever tools we need
necessary for OMB to do that.
Senator Portman. Excellent.
With regard to regulations, there is legislation called the
``Regulatory Accountability Act.'' Senator Johnson is very
interested in this bill, and Senator McCaskill. Senator
Heitkamp just mentioned Senator Lankford. It has always been
bipartisan. We have introduced it in each of the Congresses
over the past 6 years. It is the first major reform to the APA
that you talked about with Senator Carper earlier, the
Administrative Procedures Act, in almost 70 years, and it
basically says cost-benefit analysis for everybody, it has to
be more rigorous. You also have to go through a much more
transparent process as you make rules, and including for major
rules, having a separate hearing.
It also talks about your issue you talked earlier about,
which is information. I would ask you this question: Do you
agree that agencies should be required to use the best
available scientific, technical, and economic data when writing
rules?
Mr. Mulvaney. Absolutely. In fact, I was a little surprised
to find out they were not already required to do that.
Senator Portman. That is the legislation because they are
not. It also codified, as you know, the famous Executive Order
12866 that President Reagan initially issued and then President
Clinton after him and every President since. So it puts into
statute what is required in terms of cost-benefit.
Do you agree that independent agencies that have more and
more authority out there should be required to go through a
cost-benefit analysis much like the executive branch agencies
are?
Mr. Mulvaney. I do, sir. I think it would help add
accountability to those agencies.
Senator Portman. That is in the legislation, too, so we
look forward to working with you on a number of items, but this
is one where I actually think we can get it done--again,
assuming that working with my colleagues on both sides of the
aisle we are able to get it through the House and the Senate.
It has passed the House before, as you know. You voted for it.
And I think you had 16 Democrats on board during that time
period where you frankly had a pretty partisan atmosphere with
other reg reform bills that were not bipartisan.
Let me ask you a little about just your view of management.
You and I talked about the OMB focusing more on ``B'' and less
on ``M'' sometimes and the management function being so
important, particularly as you are looking to try to reduce
costs and increase efficiency in government. Waste in
government is something I know you have talked about and the
President has talked about.
We took a full review of the mission effectiveness and
efficiency of every Federal program when I was there. It was
called the Program Assessment Rating Tool (PART) program. It
took a lot of time. Not everybody loved it. Some of the career
people thought it was too time-consuming. It was an enormous
undertaking. But this tool, having this Program Assessment
Rating Tool, really helped to force us to dig more deeply into
every program and determine if there was a better way of doing
things.
The result was that in our budget, some programs were
increased in their funding that had performed well; others were
reduced or reformed. Others were eliminated altogether. And I
just wondered if you had considered undertaking a similar
initiative as Director of OMB.
Mr. Mulvaney. I have. Yes, sir. In fact, I appreciated the
opportunity to talk to you about your expert with the PART
program, and I think we talked about the importance of adding
quantitative data to OMB's analysis, that ending the PART
program denied us that management tool. You cannot manage
exclusively by connotative data, it is pretty difficult to
manage at all with no quantitative data at all.
So whether or not we reinstitute PART in its old form or do
something similar, I am looking forward to adding to OMB's
management tools along the same lines you have when you were
there.
Senator Portman. Great. Again, we would love to work with
you on that, and you are right, there is some controversy about
what you use as your qualitative and quantitative data.
Mr. Mulvaney. Yes.
Senator Portman. But if you do not have any, you do not
have anything to help direct these agencies and make tough
decisions because the priorities are going to be difficult in
this budget climate.
Mr. Mulvaney. And it is hard to measure if you do not have
a yardstick.
Senator Portman. President Trump just made a lot of
promises. Rebuilding our military, cutting taxes, while
important, they also create budgetary challenges, particularly
the kind of tax reform commitments that he has generally made.
We do not know the specifics yet. And even without these
policies, as I said, CBO today told us the situation is getting
worse, not better, in terms of our debt and deficit.
CBO also tells us that Social Security, health care, and
interest on the national debt are responsible for 84 percent of
all projected new spending over the next decade and nearly 100
percent of the increased budget deficits projected over the
next several decades.
So we know on the mandatory side is where we see the big
increases. Simply put, we cannot avert these massive deficits
coming forward without some sort of reform of these programs.
They are incredibly important programs. They are safety net
programs, but they have to be reformed and saved. It is not
about green eyeshade accounting either, because as you know, we
are looking at the Social Security Trust Fund that is going
belly up and Medicare going bankrupt, 17 years and 11 years,
respectively, which could be devastating to millions of
seniors.
So my question to you is: What steps do you plan to take to
ensure that saving entitlements remains a priority in this new
Administration?
Mr. Mulvaney. I intend to make it a priority in my
discussions with the President on fiscal matters. We had a
chance to talk here earlier today about going to the President
with information regarding the ramifications of various
decisions: ``Mr. President, if we do not do anything on Social
Security and Medicare, here is what happens.'' You have
mentioned some of the things, about the trust funds going to
zero--I do not like to use the term ``going bankrupt'' because
that is not an accurate statement.
Senator Portman. Insolvent.
Mr. Mulvaney. Exactly. ``Here is what happens if you do not
do anything. And if you do not do anything, then 11 years from
now there could be a 22-percent across-the-board cut. Here are
some of the options available to you to make improvements to
the system, to not only make sure it will be there for the next
generations, but also to impact positively the deficit
situation that you just laid out.''
So, no, I expect to be having regular conversations with
the President, with all the rest of the advisers, about the
fiscal impacts of the entitlement programs. It will ultimately
be up to the President what we decide to do because that is his
call, but I see it as my job to make sure he understands
exactly the economic and fiscal ramifications of any of those
decisions.
Senator Portman. Great. Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator Portman.
Congressman Mulvaney, we have talked in the Budget hearing
and a number of people have brought up just information, and I
told you in the Budget Committee hearing it drives me nuts as
an accountant, as a businessperson, it is just so hard to get
information out of the government and to really drive the
management decisions.
Certainly, in terms of this Committee, the Government
Accountability Office, Inspectors General (IGs), these are
sources of really good information, and yet we do not utilize
the information to the full extent. For example, GAO has done
their case studies. Agencies and departments have implemented
about 41 percent of those recommendations saving $56 billion
from 2010 to 2015, with the projection of another $69 billion
potential.
Senator Grassley and I wrote to the IGs and asked them to
report on different recommendations that had been
unimplemented; over 15,000, with a potential cost saving of $87
billion.
As head of OMB, what would be your thoughts in terms of how
do you actually utilize that information, how to put pressure
on departments and agencies to utilize them so that we can save
literally more than $100 billion?
Mr. Mulvaney. Yes, and as a numbers guy, you can probably
appreciate one of the things that jumped out in the work that
you and Senator Grassley and various others had done on the
IGs' offices, the return is like 14:1. For every $1 that an
Inspector General uses, they end up saving $14 of taxpayer
money. That is a pretty good return.
So I do appreciate the work that you all have done. I
understand that OMB is directly involved in that. I think that
the Deputy Director for Management, which is one of the
positions within OMB, actually sits on that Council of the
Inspectors General on Integrity and Efficiency (CIGIE). We deal
with it over on the Oversight and Government Reform (OGR)
Committee in the House as well. I think we are underutilizing a
tool. In fact, certain agencies are simply abusing the
Inspector General and do not even pay any attention to them at
all. But, generally speaking, the concept of having this person
in those agencies, resident in those agencies, who can give us
good information--I cannot tell you--and, again, your
experience may be the same here. Most of the data, a lot of
times, that we have in our Oversight and Government Reform
hearings are driven by the Inspectors General. We do not have
the ability, because of all the things that are on our plate,
to do all the oversight that we want to, and Congress needs to
have those Inspectors General, the President needs to have
those Inspectors General doing their job and helping us give
information, helping us collect information so that we can make
good decisions about how to fix and reform various
institutions.
So I do look forward to making that a priority at OMB. I
have learned firsthand, as you have, how frustrating it is when
Inspectors General are ignored or when no one can give them
data. I think I learned today, for example, in a previous
hearing from Senator Enzi that the Inspector General at the
Consumer Financial Protection Bureau (CFPB) actually has no
authority at all. That was news to me.
So I do look forward to reinvigorating the Inspector
General's office, giving them the respect and the credibility
that they need. They are an absolutely critical function of
government when it comes to trying to make government more
accountable and more efficient.
Chairman Johnson. There are a number of rules that we
impose on ourselves that, from my standpoint, prevent us from
making good policy decisions, whether it is a tax law or
whatever. One of them is just the difference between dynamic
and static scoring. Can you give us your thoughts on that,
particularly when I will go back to the benefit of growth, and
if we do not take into account the reality of increasing taxes,
taxes are going to harm economic growth, oftentimes decreasing
taxes can produce more revenue than you are getting on a static
basis? Can you just kind of give us your thoughts on that?
Mr. Mulvaney. Sure. And, of course, the relevance here is
that OMB does play a process in sort of the executive branch
process of doing economic analysis, and that the short answer
is we live in a dynamic world, not a static world. I do believe
that there is an implicit bias into a static model for tax
increases over economic growth. It is very difficult to measure
future economic growth, for example, fairly easy to measure,
well, if you had that $16 trillion economy last year and you
generated $2 trillion worth of revenues, if you double taxes,
you take in four. Those are the type of misleading results that
I think a static model gives.
Dynamic models are not perfect. It is very difficult to
model out an economy that is $16, $18, $20 trillion in size.
But to completely ignore macroeconomic feedback I think is
probably shortsighted of us, and I look forward to possibly
bringing reforms to that area at OMB.
Chairman Johnson. One area I want to go back to because you
have been accused a number of times of voting for a shutdown,
and I think you very, appropriately said you did not vote for a
shutdown. I just want to give you the opportunity to describe
that in greater detail, because I think that it really is that
type of misrepresentation of what you are doing that--as I have
talked about, too, we never shut down the government, the full
government. We shut down actually a relatively small portion of
it, oftentimes with the greatest amount of pain. But just talk
a little bit about exactly what happened.
Mr. Mulvaney. I think if you go back in time, what was
happening--Obamacare was rolling on. Obamacare, the Affordable
Care Act, did not turn on at one time. It came in in bits and
pieces. And we had noticed with great interest that the
President had issued certain unilateral waivers or delays,
specifically, as I mentioned earlier, to corporations. We also
know that the Department of Health and Human Services had given
special privileges to various businesses all across the country
but not given them to anybody. That was violative of some
principles that many of us--myself--had regarding equal
protection under the law. If we are going to have the
Affordable Care Act, it should affect businesses in South
Carolina, Wisconsin, and all the way across the Nation the
same.
And so what we decided to do was try and make a point there
by adding to the appropriations language a 1-year delay in the
individual mandate under the theory that if it was good enough
for the President to give to corporations, it was good enough
for us to give to our individual citizens. That is what we
bogged down over. The House passed a bill. The Senate did not.
We passed individual smaller spending bills to open the parks
in the various States because we do know, to Senator Hassan's
point, it is real, and we do recognize that there were impacts
in your State and in my State, which is why the House passed a
series of smaller bills that would open the Federal parks, fund
a Planned Parenthood, believe it or not, do all of those things
while still trying to drive that discussion about equal
protection and fairness.
Again, anytime you have a system where the House, the
Senate, and the White House have to agree on something, if they
do not agree, that is when you end up in----
Chairman Johnson. Which, by the way, the way the process
should work is the House should pass individual appropriation
bills. You tried to do that. It just was not taken up in the
Senate.
Mr. Mulvaney. Correct. And one of the things I would like
to say--we did not get a chance to talk about it in this
Committee; we did get a chance to talk about it in Budget--is
the importance, and I hope to be able to have the opportunity
to drive home for the President the importance to both parties,
to the Nation, of a properly functioning appropriations
process. It is the way the Constitution set it out for us to
function, and I think we need to do what we can in the
Administration, if I am lucky enough to be there, to encourage
you folks to get back to the properly functioning appropriation
process.
Chairman Johnson. Thank you. Senator McCaskill.
Senator McCaskill. Yes, and this is an equal opportunity
sin. I heard for years, ``Oh, the Democrats have not done a
budget.'' Then the Republicans take over and guess what
happens? There is no budget. So it is really, the partisan
back-and-forth sometimes is hard, especially around the subject
of who is failing when it comes to regular order on
appropriations and doing budget bills, because from where I
stand, Democrats have been guilty, but so have Republicans. So
I do not know how we get that fixed, Congressman.
Let me talk to you about something that I think is pretty
important, and that is, the hiring freeze as it relates to
contractors. Do you have any idea what percentage of the
workforce is contractors as you go into this job?
Mr. Mulvaney. I do not know, ma'am.
Senator McCaskill. Well, I will tell you. It is way more
than you think it is. The Department of Energy, for example, is
primarily contractors. There are not that many full-time
employees (FTEs). And the thing that is so frustrating to me is
that people who lead this government sometimes think that by--
and, frankly, during the Bush Administration, they actually did
a pretty good job of limiting the growth of FTEs in the Federal
Government. But guess what happened? They blew up contracting.
You go to Homeland Security, you go to Energy, you go to the
Department of Defense. I cannot tell you how many times in this
Committee room I have asked people who run giant agencies,
``How much of your workforce is contractors?'' and they go, ``I
do not know. I do not know.''
So there was no freeze on contractors that the President
enacted, correct?
Mr. Mulvaney. I am not familiar with the freeze that they
imposed yesterday. I am familiar with our discussions about the
importance of treating them the same, if you are going to look
at them in that fashion.
Senator McCaskill. Yes, and, this cost-benefit analysis,
that door needs to swing both ways. I think there has been
analysis of the private workers that has been compared to FTEs,
and in many instances it has not saved us a dime. In fact, it
has driven up costs, not driven down costs.
So I think it is really on the backs of Federal employees
to say that, making sure we freeze them. And you know what is
going to happen at the VA for those critical medical positions?
They are going to hire contractors. So it is not like we are
stopping the hiring of workers.
So I would implore you to explain to the President that if
you are going to do a freeze on employees, maybe you ought to
freeze contractors first and freeze employees later, because I
do not think we have had the kind of oversight on contractors
that we have on employees.
Mr. Mulvaney. You and I have had a chance to discuss this,
and I think I agreed with you. This was one of your written
questions, and I think the response I gave is what I would hope
to be able to advocate to the President, that painting with a
broad brush may not be the most effective way to deal with the
issue and what needs to drive the discussion regarding FTEs
versus contractors is the economic consideration. And I agreed
with you that there may be circumstances under which it is
actually more cost-effective and better for the taxpayer to use
an FTE versus a contractor. And I welcome further discussions
about those specific examples.
Senator McCaskill. Great. I think we can work together on
that.
Mr. Mulvaney. Yes, ma'am.
Senator McCaskill. I am worried about data coming out of
your shop, and I am going to be honest with you. This is an
awkward and uncomfortable line of questioning for me, but I
think it is really important we put it on the record.
I have been astounded over the last 3 days at what has
occurred, that the President sent his Press Secretary out to
utter falsehoods in a press briefing that had been--there was
not only photographic evidence but numeric evidence to show
that they were just simply not true. You had one of his
advisers go on TV on Sunday and say, well, they were
``alternative facts.'' And then, yesterday, he says he was
denied the popular vote because of millions of illegal
immigrants, and there is not one iota of evidence to back up
that claim.
Now, I get campaigning, I get campaign promises. But I want
to ask you, Congressman, if the President asks you to not issue
real data or asks you to alter data according to his narrative,
what would your reaction be?
Mr. Mulvaney. Thank you for that, Senator. The credibility
that I think I bring to this job is that I believe very firmly
in real numbers. My job is to tell the President the truth. My
job is to tell you the truth.
Senator McCaskill. What if he tells you to say something
other than the truth? Do you resign at that point?
Mr. Mulvaney. Well, I do not imagine the President of the
United States would tell me to lie.
Senator McCaskill. I beg your pardon. He told Sean Spicer
to go out there and say things that were demonstrably untrue.
Mr. Mulvaney. I am not privy to the conversations between
the President and Mr. Spicer, so I cannot comment on that. I am
not sure if that conversation took place or not.
Senator McCaskill. OK. But you get my point.
Mr. Mulvaney. Yes, ma'am.
Senator McCaskill. And you will not do it.
Mr. Mulvaney. Like I said, my value in this job is my
credibility when it comes to numbers. We have had discussions,
I think, today about the magic asterisk and about making
assumptions that are completely unreasonable. I have been one
of the biggest critics of that during this administration. I do
not plan on exposing myself to claims of hypocrisy.
Senator McCaskill. I think that is great, and I appreciate
that answer on the record.
OMB has to review rules. This week we are in new territory
also with President Trump because he is going to hold onto all
of his businesses. He is not divesting. And he has made it very
clear he is going back to his businesses when he leaves office.
So whatever happens to those businesses in the meantime will
directly impact how much money he has. So, I mean, he even
said, ``If I go back to my businesses when I am done being
President and my sons have not done a good job, I am going to
fire them.'' So we know that what happens to the Trump
enterprises, international businesses, between now and when he
leaves office will impact his fiscal bottom line. So that means
every regulation that is changed, every regulation that is
enacted, could have an impact on the finances of the President
of the United States. Will you analyze those regulations and be
transparent with the public when the President is going to make
money off the regulations that you change?
Mr. Mulvaney. Senator, I am not familiar with the
President's businesses or his plans on divestiture. I thought I
saw----
Senator McCaskill. Well, let us just assume he has
licensing deals in 22 countries, that he has hotels and golf
courses, he has loads of employees, he has--I mean, I think you
kind of know what his business--we do not know because we have
not seen any documents, but we kind of know what his businesses
are, and obviously they are going to be impacted by rule
changes.
Mr. Mulvaney. Yes, and without that information myself, I
am not sure how I could do it. My job would be to explain to
the President what the general impacts are. I do not foresee a
situation where I say this company will be impacted this way or
that company impacted that way. I will be looking at the
macroeconomic implications of what decisions we are making.
And, again, I am not trying to be----
Senator McCaskill. Do you believe there is a duty that the
President has to the American people to be transparent about
making money off changes of regulations that you would, in
fact, push for?
Mr. Mulvaney. I believe in transparency, Senator McCaskill,
but I do not know if I am in a position to tell the President
how to conduct himself.
Senator McCaskill. OK. I would you urge him to be more
transparent about when regulations are going to affect his
financial status?
Mr. Mulvaney. Again, I am not sure if that is the role of
the OMB Director. My job would be to say, ``Look, this is how
this particular regulation will affect the economy.'' Again, I
do not know if it is the proper role of the OMB Director to do
anything more than that.
Senator McCaskill. You understand this is completely
uncharted territory, we have never had this situation before
where a government run by a businessman who has not divested
could, in fact, enrich himself by what his government does. You
understand that has not occurred before.
Mr. Mulvaney. I believe it has been a long time, if ever,
that we have had a person with this business----
Senator McCaskill. I would love you to tell me in history
who it was that----
Mr. Mulvaney. I cannot--I said it has been a long time. I
do not remember.
Senator McCaskill. Yes.
Mr. Mulvaney. I know that the----
Senator McCaskill. OK. Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator McCaskill.
Just before I turn it over to Senator Hoeven, just for
accuracy, in fact, when Republicans took over control of the
Senate, we did pass a budget. We reconciled with the House for
fiscal year 2015. There was a budget deal that set the top-line
figures for fiscal year 2016----
Senator McCaskill. Oh, no. I am talking about last year,
Ron.
Chairman Johnson. Well, I am just laying out the facts. We
did pass a budget reconciled, had a budget agreement that set
the top-line figures. I believe, Senator Hoeven, you are on the
Appropriations Committee. We passed all 12 appropriation bills
for fiscal year 2015. We were blocked from bringing those on
the floor of the Senate. Passed an awful lot of appropriation
bills this year, repeatedly blocked us on defense appropriation
bills.
Senator McCaskill. We could go back and forth, Ron, because
we did the same thing--we passed all the appropriations bills,
and you guys blocked it. I remember the day it happened.
Chairman Johnson. Just trying to be accurate.
Senator McCaskill. And there was no budget last year. Just
to be accurate. If you are going to do this, I am going to come
back.
Chairman Johnson. We had a top-line number. Senator Hoeven.
OPENING STATEMENT OF SENATOR HOEVEN
Senator Hoeven. Congressman, thanks for being here today.
Welcome to the Senate.
Mr. Mulvaney. I am having a good time, Senator.
Senator Hoeven. Yes, good to have you here. I want to ask
you questions in three areas. One is: How do we get on top of
the regulatory burden? You have a role, obviously, or will have
a role, if confirmed, with the Office of Information and
Regulatory Affairs (OIRA). How do we get on top of that
regulatory burden so we can get this economy growing and help
our small businesses?
The second area is: How do we get the debt and deficit down
and under control, get back to fiscal responsibility? And,
obviously, that is something that you will work with at OMB.
And then the third area is I just want to ask if you are
familiar with P3 projects, public-private partnerships, and do
you see them as a way to both not only get things done like
building infrastructure but also helping to cut into the
backlog of projects and do it in a way where we leverage
resources and, again, save money for the taxpayer.
So we can start with the regulatory burden. Do you think a
Federal one-size-fits-all is the way to go? Or do you think we
ought to give States flexibility and more control over what
goes on in their State? Because there are differences among the
50 States, and they are the laboratories of democracy.
Mr. Mulvaney. Yes, and I think it is always a good idea to
look at the States for an opportunity for new ideas and being
more creative. We talked earlier today about Medicaid, for
example, not a regulatory issue but there may be ideas out
there for how to use Medicaid in the Carolinas or the Dakotas
or a different way than they are used in New Hampshire,
Missouri, or California. So that is always something that I
think we should explore.
Other things you could do to get on top of the regulatory
burden would be to actually enforce the laws that exist today
regarding retroactive analysis of regulations. I do not think
we have done a very good job with that. We have not cleared old
regulations off the books after they become no longer
pertinent.
You could improve the cost-benefit analysis process during
the regulatory process. That involves getting better
information.
So there are many things you can do within the regulatory
regime to try and improve the process and end what we have
ended up with right now, which is this system where somehow we
have the very best of intentions with regulations at the
beginning of the pipeline, and at the end of the pipeline a
regulation comes out that crushes small business and often does
not even accomplish what the intention was at the beginning.
So the regulatory process is broken. OMB can play a role in
fixing that, and I look forward to doing that with members of
both parties on both sides of the Hill.
Senator Hoeven. Do you believe in the role as OMB Director
you should help provide legal and regulatory certainty and that
you should help encourage and empower investment in our economy
and job growth?
Mr. Mulvaney. Absolutely, and that goes to your second
point, which is what is one of the things you can do to get the
debt under control. I think if we would be perfectly candid
with each other, the best way for us to reduce the size of the
deficit is to grow the economy. And as Chairman Johnson has
pointed out several times here today, moving from 2-percent
growth to 3-percent growth could be an extra $16 trillion, I
think it was, going to 4 percent an extra $29 trillion in terms
of the size of the pie. And I can assure you if the government
continues to take 17 or 18 percent out, it is better from a
balanced budget possible to take 17 or 18 percent of $32
trillion than it is 16.
Senator Hoeven. Talk about your role in terms of savings
and reforms and those kind of things as we work to both grow
the economy and then find savings. How do you go about that at
OMB?
Mr. Mulvaney. That is one of the things I am most excited
about. I think we are in a situation now where so many of
us--and I imagine the same thing has happened to you in your
time here on the Hill. The number one complaint of people who
take time out of their day to come visit me over in the Rayburn
Office Building is, ``Look, this is how regulation is crushing
me.'' To be perfectly candid, I get that a lot more than I get
questions about taxes. And I think enough members of both
parties have finally gotten to the point where they realize
maybe the regulatory burden has gotten out of control. So now
you have that critical mass, I hope, in the House and the
Senate. You have a President for the first time since the 1980s
who ran explicitly on regulatory reform. You have various
agency heads who he has nominated, some of which the Senate has
already confirmed, who have said that driving efficiencies into
their departments is one of their priorities. Again, I harken
back to the conversation I had earlier this week with General
Mattis where I assured him that he could count on me to help
look at the top-line defense needs. If I could count on him to
help look at driving efficiency in the DOD, I look forward to
being his partner in that.
So I think we have finally reached a critical mass where
all of the stars have aligned and we get a chance to actually
reform our regulatory process and environment.
Senator Hoeven. In regard to some of the questions asked by
the Ranking Member, you do have a reputation in the House as
somebody who speaks truth to power pretty directly and have
been more than willing to get out there in uncomfortable
situations and say just exactly what you think and be very
transparent about it.
Mr. Mulvaney. That may be the nicest way that anybody has
ever described it.
Senator Hoeven. And then talk about P3. I have spent a lot
of time working on P3 projects, particular U.S. Army Corps of
Engineers. They have a huge backlog. But with P3, we have an
opportunity for States and localities that have funding ready
to go and have private sector companies that want to co-invest
in some of these innovative infrastructure projects that may be
a way to reduce the Federal cost share and cut into that big
backlog. And we need to build infrastructure in this country
very badly. And the Trump Administration has made this an
absolute priority, and it is a priority for us. So talk a
little bit about your sense of P3 projects.
Mr. Mulvaney. Not only has the President made it a
priority, from what I know about some of his nominations to key
Cabinet positions, he is actually seeking to hire people who
know a great deal about this. So I get every impression, again,
that the President is deadly serious about figuring out new and
creative ways specifically to build infrastructure, and public-
private partnerships do offer an opportunity to do just that.
Under the theory of speaking truth to power, I will tell
you my reservation, but the one thing I will be looking out for
at OMB is to make sure that when the government does partner
with private industry, that we do in a way that is entirely
transparent so as to avoid any appearance of impropriety and
giving favors to well-connected corporations over those who
have perhaps fewer relationships.
Senator Hoeven. Well, transparency is very important, and
clearly this Administration wants to be creative and move
forward on infrastructure. At OMB, you will play a key role in
making sure we can do it, doing it right, doing it in a
transparent way. But you will have a big role to play there. My
understanding is that you are supportive of not only the
infrastructure development but looking at these innovative ways
to make things happen.
Mr. Mulvaney. Oh, I have told the President--not the
President because I have not had a chance to talk with him
directly, but I have told other nominees and folks in all of
these committees that I would support an infrastructure
program. I think it is one of those appropriate functions of
government in many circumstances. I am interested in how it is
going to be paid for. I am not interested in seeing us blow a
$1 trillion hole in the balance sheet in order to accomplish
this, but I think I will give the President's transition team
some credit. I have seen some very creative ideas on how to pay
for things, including public-private partnerships.
Senator Hoeven. Well, and that is the key, is it not?
Finding a way to do it and pay for it and get the economy
growing. I think it all goes together.
Mr. Mulvaney. Yes, sir.
Senator Hoeven. Again, thanks for being here today.
Mr. Mulvaney. Thank you for having me.
Chairman Johnson. Thank you, Senator Hoeven.
By the way, I totally agree with you. Over the last 6
years, it has been almost universal. The first thing out of
anybody I meet with, they are talking about what can we do to
reduce the regulatory burden. The good news for you is the
President has set a pretty low bar, only a 75-percent
reduction. Actually, I would call that a ``stretch budget.''
Senator Hassan.
Senator Hassan. Thank you very much, and, Congressman,
thank you for putting up with a long stretch of questions. You
have had a long day, and I appreciate that very much. And I
just wanted to follow up quickly on a couple of things and then
just ask one question.
There has been a lot of discussion about reforming Medicaid
and flexibility in the program, and should you be confirmed, I
would like to offer to work with you on that since, in my
experience as a Governor, there has been a lot of flexibility
in the Medicaid program. We are going through an 1115 waiver
process right now in New Hampshire, which is really allowing us
to integrate our behavioral health and primary care in ways
that are very promising. And so before kind of throwing the
baby out with the bath water here, you might want to learn from
Governors who are currently working well with the Federal
Government and finding that the government is willing to be
quite flexible to help us meet the needs of our States.
Mr. Mulvaney. I absolutely welcome the opportunity to do
that.
Senator Hassan. Well, thank you.
The question I wanted to ask was on climate change. Earlier
today, it is my understanding that you had an exchange with
Senator Kaine about climate change. I obviously was not there,
but my understanding is that you told him that you agreed the
climate is changing, but the science on how much impact humans
are having is unsettled.
Mr. Mulvaney. I do not think that is verbatim, but that is
a fair recalculation, yes, ma'am.
Senator Hassan. OK. So I am a little concerned with that
because, first of all, the OMB Director does have a significant
role to play when it comes to climate change. You need to know
the science in order to allocate the budget effectively. You
need to know the science in order to run the OIRA process
effectively. You just had a really good exchange with Senator
Portman about the importance of data and evidence-based
policymaking.
So here is what scientists say. They are clear in their
understanding of the climate change science. The American
Association for the Advancement of Science says the scientific
evidence is clear. Global climate change caused by human
activities is occurring now, and it is a growing threat to
society.
The American Geophysical Union said humanity is the major
influence on the global climate change observed over the past
50 years.
The American Meteorological Society says it is clear from
extensive scientific evidence that the dominant cause of the
rapid change in climate of the past half-century is human-
induced increases in the amount of atmospheric greenhouse
gases.
The Intergovernmental Panel on Climate Change says warming
of the climate system is unequivocal and human influence on the
climate system is clear.
So I would like to understand what you find unclear about
this science that these scientists have been so clear about and
why you or I, with our non-scientific backgrounds, would be
qualified to disagree with these climate scientists in their
area of expertise.
Mr. Mulvaney. It is fair enough, and, again, every time I
have a conversation about climate change--I had some very, as
you can imagine, colorful conversations with Senator Sanders
about this in his office. I will try and figure out a way to
draw it back to OMB, and the way I do that is by recognizing
the fact that OMB may be called upon at some point to give an
opinion on some type of regulation regarding carbon, for the
sake of this discussion. OK?
In my role as OMB Director overseeing the Office of
Information and Regulatory Affairs, it would be my job to look
at exactly what you have just laid out and also look at those
folks who have other sides of that opinion and then try and
balance that with things such as the costs related with the
regulation, bearing in mind in particular that regulatory costs
have been described as some of the most regressive costs that
we have. It falls on the poor much more than it does on the
rich.
So it is a complex dance that the OMB Director has to do
before giving the President an opinion. Do I bring certain
biases to that? Yes. Would you? Certainly. That is what we do.
It is the nature of our business. But my job would be to take
that information that you just laid out, see if there is other
information that may be to the contrary, and try and give the
very best summary to the President of the United States as I
possibly can.
Senator Hassan. And I respect that. I would ask you to look
at peer-reviewed science, not----
Mr. Mulvaney. Yes, ma'am.
Senator Hassan [continuing]. Industry-based attempts to
mask the science, which we have seen a fair amount of. And in
terms of regulatory burden, I have worked as a Governor, we
have all worked to reduce regulations. But, when you talk about
burdens, when we have polluted air, more kids get asthma. When
more kids get asthma, especially if they are low-income and
especially if we do things like repeal the Affordable Care Act
and they cannot get access to primary care and health
insurance, that costs us money in different ways. There is a
reason my business community in New Hampshire supported
Medicaid expansion so strongly, because they understand the
value of a healthy workforce.
When we do not have clean water, that costs us enormously,
and it particularly costs low-income families who do not have
the budgets to go out and buy bottled water. Right?
So I just would ask you to think about the balance in terms
of regulations, not just with a dollar amount and not just from
concerns that I understand--I was a business attorney for 25
years--about how hard it can be to navigate regulations when
you are running a business and the impact that that can have.
But there is an impact on families. There is an impact on
natural resources. There is an impact on the economy. I can
tell you, the maple sugarers in New Hampshire feel the impact
of climate change, and so does my ski industry. And so it
really behooves us to listen to the scientists, the predictions
they made about climate change, and the impact of human
behavior on it decades ago is playing out in front of us. So we
might want to really just start listening to them.
Mr. Mulvaney. Thank you, Senator.
Chairman Johnson. Thank you, Senator Hassan.
Congressman Mulvaney, you have had a long day in the
witness chair, not only in this Committee hearing but also in
the Budget hearing, so this is a pretty good time to end your
day. I want to thank you for your testimony, for being willing
to subject yourself to this process. I want to thank you, your
wife, Pam, and your three children for your willingness to
sacrifice your time and your willingness to serve this Nation.
So I really do appreciate it.
The nominee has made financial disclosures and provided
responses to biographical and prehearing questions submitted by
the Committee. Without objection, this information will be made
part of the hearing record,\1\ with the exception of the
financial data, which are on file and available for public
inspection in the Committee offices.
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\1\ The information submitted by Congressman Mulvaney appears in
the Appendix on page 66.
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Senator McCaskill, I will again reiterate my commitment
that we will not hold a markup----
Senator McCaskill. Thank you so much, Mr. Chairman.
Chairman Johnson [continuing]. Until we get that background
check. And, Congressman Mulvaney, you will agree to answer any
questions that might arise from that.
Mr. Mulvaney. Absolutely.
Chairman Johnson. With that, the hearing record will remain
open until 5 p.m. tomorrow, January 25th, for the submission of
statements and questions for the record.
This hearing is adjourned.
[Whereupon, at 4:59 p.m., the Committee was adjourned.]
A P P E N D I X
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