[Senate Hearing 110-585]
[From the U.S. Government Publishing Office]
S. Hrg. 110-585
THE PRESIDENT'S FISCAL YEAR 2008 WAR SUPPLEMENTAL REQUEST
=======================================================================
HEARING
before the
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
SPECIAL HEARING
APRIL 16, 2008--WASHINGTON, DC
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
__________
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COMMITTEE ON APPROPRIATIONS
ROBERT C. BYRD, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont TED STEVENS, Alaska
TOM HARKIN, Iowa ARLEN SPECTER, Pennsylvania
BARBARA A. MIKULSKI, Maryland PETE V. DOMENICI, New Mexico
HERB KOHL, Wisconsin CHRISTOPHER S. BOND, Missouri
PATTY MURRAY, Washington MITCH McCONNELL, Kentucky
BYRON L. DORGAN, North Dakota RICHARD C. SHELBY, Alabama
DIANNE FEINSTEIN, California JUDD GREGG, New Hampshire
RICHARD J. DURBIN, Illinois ROBERT F. BENNETT, Utah
TIM JOHNSON, South Dakota LARRY CRAIG, Idaho
MARY L. LANDRIEU, Louisiana KAY BAILEY HUTCHISON, Texas
JACK REED, Rhode Island SAM BROWNBACK, Kansas
FRANK R. LAUTENBERG, New Jersey WAYNE ALLARD, Colorado
BEN NELSON, Nebraska LAMAR ALEXANDER, Tennessee
Charles Kieffer, Staff Director
Bruce Evans, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Chairman Robert C. Byrd..................... 1
Statement of Senator Thad Cochran................................ 3
Statement of Hon. Jim Nussle, Director, Office of Management and
Budget......................................................... 4
Prepared Statement........................................... 7
Prepared Statement of Senator Ben Nelson......................... 35
Additional Committee Questions................................... 38
Question Submitted by Senator Robert C. Byrd..................... 38
Questions Submitted by Senator Daniel K. Inouye.................. 39
Questions Submitted by Senator Patrick J. Leahy.................. 41
State and Local Law Enforcement Assistance Grants................ 41
Crime Victims Fund............................................... 42
Transportation/Infrastructure Needs.............................. 44
Government Contractors Avoiding U.S. Payroll Taxes............... 45
THE PRESIDENT'S FISCAL YEAR 2008 WAR SUPPLEMENTAL REQUEST
----------
WEDNESDAY, APRIL 16, 2008
U.S. Senate,
Committee on Appropriations,
Washington, DC.
The committee met at 12 noon, in room SD-106, Dirksen
Senate Office Building, Hon. Robert C. Byrd (chairman)
presiding.
Present: Senators Byrd, Inouye, Leahy, Harkin, Mikulski,
Kohl, Murray, Dorgan, Feinstein, Durbin, Landrieu, Reed,
Nelson, Cochran, Stevens, Gregg, Bennett, and Craig.
opening statement of chairman robert c. byrd
Chairman Byrd. Good afternoon, ladies and gentlemen.
Senator Specter announced yesterday that his health has hit
a small bump in the road. While many of us know what it is like
to face a health challenge, I know this man. His strong,
fighting spirit will quickly lead him on the path to recovery.
On September 26, 2007, we heard from Secretary of Defense
Gates and Deputy Secretary of State Negroponte. Today we will
hear testimony from the Director of the Office of Management
and Budget, Jim Nussle. Welcome, Mr. Nussle.
Eleven months ago, Congress sent the President a war
funding supplemental that included clear direction to bring our
troops home by December 2007. The President chose to veto that
bill. If he had signed that bill, most of our troops would
already be home. But instead of bringing our troops home, the
President decided to increase our commitment of U.S. troops and
treasure to a war that has now entered its sixth year. Over
4,000 U.S. servicemembers have died, dead, dead, dead. Over
30,000 U.S. servicemembers have been wounded. By the end of
2008, the war in Iraq will have cost a whopping--did you hear
that? A whopping $600 billion, spelled with a ``B''. $600
billion.
In the next few weeks, the Appropriations Committee will
consider the President's request for Congress to approve
another $108 billion of emergency funding, mostly for this war
in Iraq. We will be considering the President's request at a
time when the U.S. economy is by most accounts in serious
trouble, and I do not mean maybe. Under the President's fiscal
leadership, the U.S. Government will have piled up the five
largest deficits in the history of this republic. It took 212
years. Remember that. 212 years and 42 U.S. Presidents to
accumulate $1 trillion of foreign-held debt. But in only 7
years, President George W. Bush has more than doubled the debt
our country owes to China, Japan, and other foreign countries.
Economic growth came to a virtual halt at the end of 2007,
with the gross domestic product for our economy falling from
4.9 percent in the third quarter to 0.6 percent in the fourth
quarter. The unemployment rate rose in March to 5 percent from
4.8 percent in February. The construction trades have lost
394,000 jobs since September 2006. Manufacturing employment has
fallen by 310,000 jobs within the last 12 months. Since March
2007, the number of unemployed has increased by 1.1 million
workers to 7.8 million. Meanwhile, food and fuel prices are
climbing dramatically. Dramatically I say. 8.8 million
homeowners have mortgages that exceed the value of their homes,
and foreclosures have increased 57 percent.
A careful review of President Bush's request reveals no
evidence--none--of funding to bolster our country's economy or
to help Americans deal with lost jobs or mortgages,
foreclosures, and the rising cost of living. Food costs have
grown by 10 percent, and yet there is nothing--nothing in the
President's supplemental request to strengthen the Women,
Infants, and Children's (WIC) Nutrition Program.
Home heating oil costs have climbed 37 percent, and yet
there is no additional funding for low income home energy
assistance. None.
And there is nothing in the President's request to address
the alarming crumbling of our infrastructure. Yet, the
President has thrown down the gauntlet and threatens to veto
the supplemental bill if the Congress has the temerity--get
that--to add one thin dime to his request in order to help our
citizens cope with the situation.
What a contrast to the President's request for assistance
for Iraq. We have already poured $45 billion--B--capital B--$45
billion of our citizens' hard-earned tax dollars and poured our
citizens' sweat and blood and tears into reconstruction
projects in Iraq, projects that have done little to promote
political reconciliation. That is 45 billion American dollars
gifted to Iraq despite the fact that the Iraqi Government is
running a huge surplus due to its excess oil revenues.
Now, the President is asking this Congress to shovel yet
another $3 billion of American taxpayers' dollars to continue
rebuilding Iraq. Well, I say charity begins at home. The
President wants money to build schools in Sadr City but not in
Seattle. Why does he demand money for roads in Ramadi and
nothing for roads in Richmond? Why? Why I say? The President
wants money for Mosul but not one thin dime for Minneapolis.
Why is he determined to reconstruct Baghdad but nothing for
Baltimore, or Biloxi, or Birmingham?
Mr. Director, the President repeatedly states that Congress
should show support for the troops by rubber stamping a $108
billion war supplemental that ignores American needs.
We supported the troops last year when we sent the
President a war supplemental that increased funding to provide
better healthcare to our service members, better healthcare to
our veterans, more funding to equip and train the National
Guard and Reserves, more funding for mine resistant vehicles,
and clear direction to bring our troops home.
This year, we will once again take good care of our troops,
but we must also invest in our own economy and take care of our
people here at home. To fail to do so will only further dampen
our economy, work a hardship on our citizens, and deplete our
ability to pay these endless--endless--ever-climbing requests
for more money to fund this dreadful, intolerable, hateful war
in Iraq. The well is running dry and it is time to prime the
pump.
One note to the audience. You better listen now. I will
not,
n-o-t, not--tolerate disruptions of this hearing. I have
instructed the Capitol Police to immediately remove any
member--and do not think I will not do it--any member of the
audience--any member of the audience who attempts to disrupt or
interfere with this proceeding. Did you hear that?
Director Nussle, we look forward to your testimony today.
I now turn to Senator Cochran for any opening statement
that he may wish to make.
statement of senator thad cochran
Senator Cochran. Mr. Chairman, I am pleased to welcome the
Director of the Office of Management and Budget (OMB), Jim
Nussle, to our committee.
It has now been over 14 months since the President
submitted his fiscal year 2008 supplemental request to support
our efforts in Iraq and Afghanistan. The President requested
these funds to give our armed forces and our diplomatic core
the tools they need to implement the policies of the United
States Government, to advance our national security interests,
and to improve the opportunity for the people of Afghanistan
and Iraq for a free and stable future.
Of the President's initial request, more than $108 billion
has yet to be acted on by Congress. I hope this hearing is an
indication that the committee and the Congress as a whole is
prepared to act expeditiously on the remainder of the request.
At the end of last year, Congress approved only $70 billion
of the President's outstanding supplemental request. Enacting
even that amount required a protracted struggle between the
House and the Senate and the President. As a result, the
Department of Defense (DOD) had to issue furlough notices, make
a series of transfers and reprogramming of funds, and it
undermined its efficiency in the process.
I hope that we will not repeat that process, but I fear we
are headed in that direction. Perhaps Director Nussle can tell
us today how much time we have to work with and the
ramifications of our failing to act promptly.
I am not suggesting that this committee or the Congress
simply approve the President's request without any question. We
have a duty to analyze the request and make changes where we
think they are appropriate. But we must not lose sight of a
greater duty to give the men and women of our armed forces and
diplomatic corps the resources they need to succeed in their
mission.
We have had the President's request for 14 months. We have
held hearings. Members and staff have had numerous meetings
with administration officials and other interested parties and
we have received an updated report from General Petraeus and
Ambassador Crocker.
It is time to act and to get this supplemental to the
President.
Chairman Byrd. Mr. Nussle.
STATEMENT OF HON. JIM NUSSLE, DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Nussle. Thank you, Mr. Chairman. I appreciate the
opportunity and the invitation to appear before you today. I
look forward to discussing the critical and urgent needs of our
men and women in uniform and diplomatic corps, and I thank you
for the bipartisan support that has been shown for previous war
funding requests.
The President has two key budget priorities that he keeps
in mind constantly that I am instructed in my position to
uphold, and that is to keep America safe and secure and to
strengthen the U.S. economy. These twin goals of national
security and economic growth are really interlinked. Our
country really cannot prosper and cannot be successful if we
are not both safe and free at the same time.
Our war funding request, which has been pending before
Congress now for more than 1 year, directly addresses the
President's national security goal, and last week the President
asked Congress to quickly pass a fiscally responsible bill that
meets the needs of our troops and does not tie the hands of our
military commanders. And he did pledge, as the chairman said,
to veto a bill that does not meet this criteria or spends more
than the requested amount of $108.1 billion. The Secretary of
Defense has provided you with the most up-to-date details that
we have and that he has to support the needs of our troops in
the field and to support this process.
The timely consideration of the bill is as important as its
contents. Congress, I believe, needs to fund our troops by
Memorial Day. Senator Cochran mentioned when. I believe
Memorial Day is the time that we need to function under.
Failure to act quickly could result in an unfortunate replay of
what happened last December when furlough warnings were issued
by the Department of Defense. So I suggest that no one here
believes that would be an acceptable outcome. It is not good as
a way to budget, and it is certainly not good for the morale of
our troops and members of the diplomatic corps and their
families.
So while strengthening our national defense, the President
also continues to focus his attention and time to helping to
ensure that our economy builds momentum. He worked with you and
the rest of the Congress on a bipartisan $160 billion stimulus
package that was aimed at bolstering economic growth. And you
passed it and he signed it in a bipartisan way. Families will
soon be receiving the tax rebates. Small businesses are already
beginning to use the incentives to encourage new investment and
job creation, and the administration has also taken concrete
steps to help Americans stay in their homes.
To help aid in job creation, he also proposes to open new
markets for American farmers and manufacturers and workers. And
to bring certainty in an uncertain economic environment, the
President's budget seeks to make tax relief permanent, a step
that will prevent over 116 million taxpayers from facing an
average tax hike in the next 2 years of about $1,800. So that
is an important part of the dynamic here today.
In addition to all of this, we had prompt administrative
action. We are still, I believe, needing to do work together on
housing, and I urge the Congress to consider and approve the
Federal Housing Administration (FHA) reform that was first
submitted by the administration to the Congress more than 2
years ago.
We share your economic concerns. However, we need to trust
and allow the bipartisan stimulus that we all agreed to--give
that package time to work, as we all agreed to back in January.
The answer is, I believe, not at this point in time to meet our
economic challenges, to take more money away from families and
from small businesses and individuals and just use it for more
Government spending. Expanding Government in my opinion does
not create one more job in my hometown of Manchester, Iowa, but
it does take money out of the private economy that would, I
believe, help put families in a better position. It would be
put to better use by those families and small businesses and
people that are creating jobs in my hometown and all of yours.
There are always many worthy ideas that, if could be
funded, would be funded if resources were unlimited. And I can
say that after 7 months in my job here at OMB, I can testify to
you with certainty that many of these ideas that we are asked
to fund reflect a sort of a sky is the limit mind set, but this
money does not belong to us, as the chairman well knows. It
belongs to the people of America. It belongs to the taxpayers.
As you are well aware, there are two processes for
allocating Federal funding that this committee steers: the
regular appropriations process and, of course, the emergency
supplemental appropriation process. And I believe we have a
different philosophy in approaching these two types of funding.
The administration chose to request war funding as an
emergency supplemental in order to provide flexibility to the
Department of Defense and our military commanders in order to
address the changes that inevitably occur on the ground. The
ability to respond to changing conditions and requirements in
the field has and will continue to ensure that our troops have
the very best resources to succeed in their mission. We also
chose to request war funding as an emergency to ensure that
when our troops come home, we have not left the Department of
Defense with an over-inflated budget that could be difficult to
adjust in the future.
This is the request that has been pending before the
Congress basically for the past 14 months. This committee heard
testimony, as the chairman said, from the Secretaries of
Defense and State approximately 1 year ago. But today, we need
to act.
I believe we are here today, unfortunately, to discuss how
we can add to that bill and load up the troop funding bill with
tens of billions of additional dollars of spending, perhaps
because it may be viewed by members and Senators as the last
money train out of town. Having served in the Congress, I
understand that tendency. The President has made it clear that
he will veto any attempt to hijack this much needed troop
funding bill.
So let me be clear. That is not to say that Congress in its
wisdom, obviously, cannot pursue funding for other items it
deems important. Of course, that is appropriate, and I do not
need to tell you that. But there is a time and place that we
believe these programs should be debated and considered on
their merits, and that is during the annual appropriations
process. This committee is poised to consider 12 appropriation
bills, totaling nearly $1 trillion, and I believe within that
total proposed by the President, Congress would be able to find
room for many good ideas that the members have in order to
address the concerns and priorities. And I believe it can and
should be done soon.
I know this committee wants to get its work done and wants
to get it done on time and wants to get it done within budget.
But it is disturbing to hear from some corners of Congress that
we should put the Government on auto pilot until next year. If
that is so important to possibly get a better deal from the
next President, if it is so important to the economy, if it is
so important to the priorities that I am sure we will talk
about here today and in the future, then I think it is also
important to accelerate the process of the annual
appropriations process rather than deflect or delay that
responsibility for the next President.
So I hope the committee will consider to deliberate over
providing funding for programs critical to many of our most
vulnerable citizens, but holding troop funding hostage for this
purpose I do not believe is acceptable to any American.
And just adding more Government spending does not really
solve our Nation's economic challenges, especially when
measured against the already large $3 trillion annual budget
that is spent for many of those purposes. Any infrastructure
that is necessary and appropriate for Federal spending can and
should be funded like any other regular appropriation bill and
priority through that annual process.
A bill to fund our troops that are serving in harm's way
should not be transformed into a vehicle for lawmakers to fund
domestic programs that were underfunded last year during the
appropriations process and possibly even push the deficit even
higher. It will be a difficult road ahead to balance the
budget. We know that for the short term, but it still remains a
high priority, I believe, on both sides of the aisle and on
both sides of Pennsylvania Avenue. But we believe that the war
funding request before you is already factored not only into
those budget projections, but the tens of billions of
additional spending in the committee that may be considered
over and above that have not been factored into that
consideration and the deficit would only go higher.
So I look forward to hearing the committee's perspective
and answering the questions. And, Mr. Chairman, it is an honor
to be before you here today. If I may say personally, having
been a chairman myself, if I could write the contract today to
look as good as you do today as a chairman, I would sign up for
it. And I appreciate the honor of being before you here today.
Thank you.
Chairman Byrd. Thank you. You get an A-plus for that.
Mr. Nussle. I am doing the best I can, Mr. Chairman.
Chairman Byrd. You are doing all right.
[The statement follows:]
Prepared Statement of Jim Nussle
Mr. Chairman, Senator Cochran, and members of the Committee, I
thank you for the opportunity to appear before you today. I look
forward to discussing the critical and urgent needs of our men and
women in uniform, and I thank you for the bipartisan support for
previous war funding requests.
The President has two key budget priorities: keeping Americans safe
and secure, and strengthening the U.S. economy. These twin goals of
national security and economic growth are interlinked. Our country
cannot prosper if it is not both safe and free.
Our war funding request, which has been pending before Congress for
more than a year, directly addresses the President's national security
goal. Last week, the President asked Congress to quickly pass a
fiscally responsible bill that meets the needs of our troops and does
not tie the hands of military commanders. And he pledged to veto a bill
that doesn't meet these criteria or spends more than the requested
amount of $108.1 billion. The Secretary of Defense has provided you the
most up to date details to support these needs for our troops in the
field.
The timely consideration of the bill is as important as its
contents. Congress needs to fund our troops by Memorial Day. Failure to
act quickly could result in an unfortunate replay of last December,
when furlough warnings were issued by the Department of Defense. No one
thinks that is an acceptable outcome--it's not a good way to budget and
it's bad for the morale of our troops and their families.
While strengthening our national security, the President continues
his focus on helping our economy build momentum. He worked with
Congress on a bipartisan $160 billion stimulus package aimed at
bolstering economic growth. Families will soon receive the tax rebate
payments, small businesses are beginning to use incentives that
encourage new investment and the Administration has also taken concrete
steps to help Americans stay in their homes.
To help aid job creation, he proposes to open new markets for
American farmers, manufacturers and workers. And to bring certainty in
an uncertain economic environment, the President's budget makes tax
relief permanent--a step that will prevent 116 million taxpayers from
facing an average tax hike of $1,800. In addition to prompt
Administrative action, there is still work to do on housing, and I urge
Congress to approve the FHA reform first submitted by the
Administration more than two years ago. We share your economic
concerns, however we should trust and allow the bipartisan stimulus
time to work.
The answer to our economic challenges is not to take more money
away from people through higher taxes to then use it for more
government spending in Washington. Expanding government doesn't create
one job in my hometown of Manchester, Iowa but it does take money out
of the private economy that would be put to better use by families and
job-creators. There are many worthy ideas that could be funded if
resources were unlimited. And after seven months in this OMB job, I can
testify that many of the ideas we're asked to fund reflect a sky is the
limit mindset. But this money doesn't belong to us--it's the taxpayers'
money.
As you are all well aware, there are two processes for allocating
federal funding that this Committee steers: The regular appropriations
process, and emergency supplemental bills. I believe we have two very
different philosophies with respect to these types of funding.
This Administration chose to request war funding as an emergency
supplemental request to provide flexibility to the Department of
Defense and our military commanders to address changes on the ground.
The ability to respond to changing conditions or requirements in the
field has and will continue to ensure our troops have the very best
resources to succeed in their mission. We also chose to request war
funding as an emergency to ensure that when our troops come home we
have not left the Department of Defense with an over-inflated budget
that could be difficult to adjust in the future.
This is the request that has been pending before Congress basically
for the last 14 months. This Committee heard testimony on this request
from the Secretaries of Defense and State approximately one year ago.
But today, rather than acting on that request, I believe we are here
today discussing the desire of some in Congress to load up this troop
funding bill with tens of billions in additional spending, perhaps
because it's viewed as the last big money train out of town before the
election. The President has made clear that he will veto any attempt to
hijack this much needed troop funding bill.
Let me be clear--that it is not to say Congress in its wisdom
cannot pursue funding for other items it deems important. But there is
a time and a place for these programs to be debated and considered on
their merits, and that is during the annual appropriations process.
This Committee is poised to consider 12 annual spending bills totaling
nearly one trillion dollars, and within that total proposed by the
President, Congress should be able to find room for whatever good ideas
members may have, and do so soon.
I know this Committee wants to get its work done, on time and
within budget, but it's disturbing to hear from some corners of
Congress that we should put the government on auto pilot until next
year. If it is so important for the economy to accelerate new spending,
then why would Congress punt until the next President? I hope this
Committee will seek to deliberate over and provide funding for programs
critical to many of our most vulnerable citizens, but holding troop
funding hostage for this purpose should not be acceptable to any
American.
Just adding more government spending does not solve our Nation's
economic challenges--especially when measured against an already large
$3 trillion annual budget. Any infrastructure spending that is
necessary and appropriate for Federal spending can and should be funded
like any other regular Federal priority, through the annual spending
bills. A bill to fund our troops serving in harm's way should not be
transformed into a vehicle for lawmakers to fund domestic programs that
were last year and to push the deficit even higher.
It will be a difficult road to balance the budget in the short-
term, but it remains a high priority not just for the Administration,
but more importantly, for the American people. The war funding request
before you is already factored into our budget projections. The tens of
billions in additional spending this Committee may consider are not.
I look forward to hearing the Committee's perspective and answering
your questions.
Chairman Byrd. Director Nussle, according to the American
Society of Engineers, our Nation has 590,000 bridges, and one
out of every four is structurally deficient or functionally
obsolete. One of those bridges was the I-35 bridge that
collapsed in Minnesota last year. Because of congested roads,
Americans sit in traffic for 3.5 billion hours annually at a
cost of $63 billion to the economy.
Our airways are not much better. Airports are struggling to
accommodate an increasing number of airplanes and jumbo jets,
and passengers are forced to wait interminably on runways.
Inter-city passenger rail service is in a precarious state
of near bankruptcy.
There are 3,500 deficient and unsafe dams, posing a direct
risk to human life should they fail.
Water facilities are unable to comply with safe drinking
water regulations. Outdated wastewater facilities discharge
billions--with a ``B''--billions of gallons of untreated sewage
into surface waters every year.
Existing transmission facilities within the national power
grid are overwhelmed by bottlenecks which elevate the risk of
regional blackouts.
In your written testimony, you noted that expanded
Government will not create one job in your hometown of
Manchester, Iowa. But when you came to Washington, your plane
took off from an airport funded with public funds and the
Federal Aviation Administration (FAA) controllers helped you to
get here safely. You drove on a highway across a bridge that
was federally funded and you drank water from a system that was
supported with U.S. tax dollars.
When this committee meets to mark up the supplemental, I
will recommend that we approve a significant supplemental for
infrastructure spending across the Nation. I believe that this
committee has a responsibility to help our State and local
partners provide an infrastructure that will create jobs in the
short term and promote a growing economy in the long term.
Why is it, may I say, that President Bush is satisfied with
leaving a legacy built on a crumbling infrastructure?
Mr. Nussle. Mr. Chairman, I do not believe the President
either wants to have that legacy or, for that matter, will have
that legacy. Since 2003, obviously together, the administration
and the Congress have increased transportation investment in
this country by 17 percent, an 11 percent increase this year
alone. Certainly jobs are created in that kind of a purview.
But the concern that we have is that this can be done and
should be done in the annual appropriations process. That is
where these expenditures have been increased. That is where the
commitment has been made, again on both sides, and it again can
and should be done now.
And the concern the administration has and that I expressed
today is that if, in fact, it is urgent, it would seem to me
that moving the transportation appropriation bill and moving it
quickly through the process in both the House and the Senate
would be a priority. So it concerns us when we hear that, in
fact, we may be operating under a continuing resolution at the
end of the year and that, in fact, we have heard directly from
the Senate Majority Leader that, in fact, he may decide to wait
for, I believe as he put it, a better deal from the next
President.
So those are the reasons why I believe we are concerned,
but I do not believe either one of us has a legacy of not
supporting our infrastructure. And I believe that bears out in
the kinds of bills and budgets that we have passed over the
last number of years.
Chairman Byrd. The President proposes in fiscal year 2009
to reduce grants to State and local governments by over $13
billion, including cuts of over $4.4 billion for
infrastructure. He has threatened to veto any appropriations
bill that exceeds his request. So in reality, the President
intends to block any effort--any effort--to improve our
infrastructure.
Senator Cochran.
Senator Cochran. Mr. Chairman, Mr. Nussle, we are more than
halfway through the fiscal year and the Department of Defense
and the Department of State have received less than half of the
funding the administration has requested to carry out the
missions of those two Departments.
The two military services most committed in Iraq and
Afghanistan are the Army and the Marine Corps. At what point do
the Army and Marine Corps run out of funding that they need to
fight the global war on terrorism?
Mr. Nussle. Thank you, Senator Cochran. As the Senator and
other members of the committee know, this is not an exact
science. The exact date and hour when that occurs is not
something that can be perfectly precise, but I have asked that
question of our Department of Defense and Secretary Gates and
England, and I am informed that will occur in early summer,
toward the end of June. And that is why we continue to be as
concerned and express the urgency for the funding before any
notices of furlough go out, which are, according to the
practice that occurred in December, approximately 30 days. Or
that is what it is by law. It could be 60, but 30 days, I
believe, is what the Department of Defense was contemplating in
December. That being the case, Memorial Day and that recess is
the timeframe that I testified to today for that reason.
Chairman Byrd. Senator Inouye.
Senator Inouye. Thank you very much, Mr. Chairman.
Mr. Director, contrary to requirements of current law, the
President's budget request for fiscal year 2009 does not
include an estimate of the full-year cost of the ongoing
operations in Iraq and Afghanistan. Instead, the administration
submitted a $70 billion placeholder without any details, which
it says will fund roughly 6 months of operation.
Are we to conclude from this that the Department plans to
reprogram an additional $70 billion for its peacetime budget to
support operations in Iraq and Afghanistan for the second half
of fiscal year 2009?
Mr. Nussle. No, sir. Senator, what we did--I guess two
parts to this. First--when I served in the Congress and was
chairman of the Budget Committee, I joined with many of you and
colleagues that said the President should include the war
funding in the budget when it is submitted. And that practice
occurred. In fact, we are still discussing the emergency
supplemental that embodied that practice as the President
included it in his fiscal year 2008 budget.
However, because of how long it has taken for
consideration, starting with, number one, and number two,
because the President made the decision that he did not want to
tie the hands of the next Commander in Chief in determining
what the strategy and corresponding funding would be after
taking office after the election this year, we would put a
placeholder in there, recognizing the tendency and the practice
on the part of Congress to fund a bridge as you did in the last
emergency supplemental and may very well contemplate to do
again this year.
So it was not at all--and I testified when I came to the
Senate the last time to roll out the budget that we recognize
this is not the full cost. We acknowledge that. Secretary Gates
testified to that as well. But we felt it was the appropriate
responsible practice, given the way Congress was managing the
resources and we were doing that together and also to embody
what the President was concerned about, and that was tying the
hands of the commanders or the next Commander in Chief.
Senator Inouye. In this supplemental request, the
administration included something over $4.8 billion for
reconstruction efforts in Iraq, while at the same time Iraq is
benefiting from a budget surplus and billions in oil revenues.
Why are we continuing to finance these projects and not
increase the pressure on the Government of Iraq to execute
their budget toward the projects proposed with U.S. taxpayer
financing?
Mr. Nussle. Well, Senator, this is a narrow question of a
bigger one that I know you and I know I did when I served in
the Congress received every time I went home. Why are we
sending money overseas? Why do we fund the Foreign Service? Why
do we have foreign aid? And it is always a complicated question
to explain to your constituents why it is, when there are
certainly priorities at home, why you would be funding these
types of activities.
But we know with Iraq--and it was testified much more ably
than I could here today by Ambassador Crocker and General
Petraeus--that in order for us to have that return on success,
in order for Iraq and Afghanistan and, for that matter, many
other challenges around the world to be successful, that it
does require resources in order for us to accomplish that.
I would be very interested in exploring a change in that
direction, to have Iraq step up even to a greater extent than
it is now. And it has, as Ambassador Crocker has testified to,
to a much greater extent for security, much greater extent for
reconstruction. That is something that could and I believe
should be discussed with Iraq as we consider moving forward.
But here and now today, and judging from what we need over
the next 2 months, we believe we submitted a supplemental that
meets those needs and addresses those concerns so that we can
be successful and continue to be successful and our men and
women can come home.
Senator Inouye. But as you know, Mr. Director, when we
provide foreign aid or assistance programs to places like
Darfur in Africa, those people are poor. They do not have any
surplus. Here in Iraq, we are told that the Iraqi Government
has a surplus, a big one, in billions of dollars. We are paying
high gas prices so that they can have a surplus and the income
they make in oil.
How do we explain to our constituents that here is a
country with surpluses, something we do not have, here is a
country that is making billions of dollars at our expense, and
yet we are paying for their reconstruction? That is the
question.
Mr. Nussle. Well, first of all, Iraq is paying for more and
more of its reconstruction and more and more of its security. I
am certainly not suggesting that they are poor, but I do not
know if that can be measured specifically or distinctly by the
fact that they have a surplus. They may be rich in their bank
account, but they do not yet have a rich tradition of
democracy. They do not yet have a rich tradition of security.
They do not have yet a rich tradition and demonstration of
political stability. That is coming, as it was reported to you.
It is improving. It is building, but it is not to the point yet
where the lack of support from the American people and the
generosity of the American people would result in further
success. And it was their concern, expressed again more ably
than I could, that now would not be the time to change that
policy. And it is for that reason that I make the request on
behalf of the President.
Senator Inouye. Can you give us an estimate of how much
surplus Iraq should gather before they can help themselves?
Mr. Nussle. I believe that is something that should not be
determined unilaterally between two sovereign countries, but
rather something that should be worked out between those two
countries. As I said, I would be open and I believe the
administration would be open to that consideration. I do not
have a proposal I can present to you today either procedurally
or in dollar amount, but I would believe, working together,
that we can achieve that. But it is something that needs to be
done together and not in a unilateral but in a bilateral type
approach and agreement so as not to destabilize and have any
less success than we have seen of late.
Chairman Byrd. I note that Iraq is expecting a $16 billion
surplus this year.
Senator Gregg.
Senator Gregg. Mr. Chairman, thank you.
I want to follow up on that question and the point made by
the chairman because I do think this is a legitimate issue. It
does seem to me that Iraq is not bearing a fair portion of the
load here, especially in light of its surpluses and especially
in light of the fact that the Inspector General, Mr. Bowen,
came up with a number. I believe it was $9 billion that he has
identified of funds which were supposed to be spent on
reconstruction which have been stolen, misplaced, lost, or in
some bank account that we do not know about. Is that the right
number? $9 billion? Or was it $15 billion?
Mr. Nussle. I am doing this from recollection. That sounds
right, but again, that would only be from my recollection.
Senator Gregg. So should we not put in this bill fairly
significant and stringent language which says that any dollars
we spend on reconstruction should at least be matched one for
one by the Iraqi Government?
Mr. Nussle. Well, Senator Gregg, I like you am in a
position where, obviously, if they could pay for more, that
would be a positive. I agree with that. But I am not in a
position to be able to negotiate on that point on behalf of the
United States with the Iraqi Government. That is something that
the Secretary of State should do not in a unilateral fashion,
but in a bilateral fashion, working out an agreement between
the----
Senator Gregg. Well, I simply note that we are funding in a
unilateral fashion. We are not funding in a bilateral fashion.
We are spending this money unilaterally. It seems to me that
the Iraqi Government has been grotesquely irresponsible with
the money we have given them and that before we put more money
into reconstruction, we ought to be getting some sort of
commitment from them that they are going to bear a larger share
of the burden.
On another issue, I like other Senators am concerned with
the fact that the administration did not send up a realistic
figure for next year, $70 billion. And I am equally concerned
that the Democratic budget as passed by the Congress does not
have a realistic figure. They took the leadership of the White
House and did $70 billion.
What was the number that Secretary Gates or that the
Pentagon actually believes it will cost next year?
Mr. Nussle. I do not have that number.
Senator Gregg. I believe he said it was $170 billion.
Mr. Nussle. Actually what he said was he could guess, but
he would be pulling a number out of the air. And I do not think
he was either expecting or wanting to be held to that number,
but he was testifying and was asked to make a guess. And so he
said he would pull a number out of the air, and that is where
that came from.
Senator Gregg. Well, it is certainly closer to a realistic
number than $70 billion, would you not say, since it came from
the Secretary of Defense out of the air?
Mr. Nussle. Unfortunately, though, we have not seen action
from the Congress on budgeting that far in advance. Rather it--
--
Senator Gregg. Well, it is hard for the Congress to lead
when the White House does not lead. You have given this
Congress, this Democratic Congress, all the cover they need to
not put the money necessary to fund the troops in the budget,
and I think you have acted irresponsibly there.
Let me go to another issue which I am concerned about on
this whole budget question. This will be the sixth year that we
are going to get a supplemental, and it is going to be
designated as emergency. What claim does this proposal have on
the term ``emergency?''
I mean, I can understand that you want to keep it separate
and you should keep it separate from the underlying operational
budget of the Pentagon so that we do not end up merging these
funds in. But I cannot see any logic any longer for a claim
that this is an emergency. It is almost a matter of course. I
mean, we have got troops in field. We know they are in the
field. We know they are going to be in the field for this year
and next year and certainly for the terms of this budget, and
they have been in the field for the last 5 to 6 years.
Under what justification do you call this an emergency
other than the fact that gives you protection, procedural
protection?
Mr. Nussle. Well, it has not given us much procedural
protection.
Senator Gregg. It gives you a lot of procedural protection
in the Senate. If you do not want the emergency designation, I
am sure my colleagues on the other side would be happy to
remove it.
Mr. Nussle. Well, the designation for us is based on the
fact that we are believing that this should not be built into
the base of the----
Senator Gregg. That is not the issue. You can send a
supplemental out that is not built into the base without using
the term ``emergency'' to designate it. The issue is why do you
claim this to continue to be an emergency and be given the
procedural protection that emergencies get.
Mr. Nussle. There are only two requests that we can make.
We can make it during the regular budget as part of the regular
appropriations, or we can do it as a supplemental request.
Senator Gregg. That is correct.
Mr. Nussle. And we are making it as a supplemental request.
Senator Gregg. So you do not want emergency designation on
this supplemental. Is that what you are saying?
Mr. Nussle. I will leave that to the judgment of the
Senate. That is not something that I am sure you will pay much
attention to the administration's instruction on that anyway.
So I will leave that to your designation.
But we believe this is something that is over and above
what is necessary for the regular operations of the Defense
Department. Therefore, as a result--and many other expenditures
for wars in the past have been funded in a similar way, and it
is for that reason that we make the request the way we do.
Senator Gregg. Well, that is good clarification. I
appreciate that. Thank you.
Chairman Byrd. Senator Leahy.
Senator Leahy. Thank you, Mr. Chairman. Thank you for
having this hearing. I think it is extremely important. It is
good to see you here.
Chairman Byrd. I am glad to see you.
Senator Leahy. Thank you.
Chairman Byrd. And all the others here.
Senator Leahy. Director Nussle, I was reading, when you
were nominated by the President, that one of your main
accomplishments, according to the press, over in the other body
was wearing a bag over your head during a debate, and I am glad
you are not doing that today.
But I listened to your statement. It sounds almost as
though George Orwell wrote it. Also the answers, as Senator
Inouye and Senator Gregg and Senator Byrd have pointed out, do
not necessarily respond to the questions.
Let us take a look at what we have. We spent nearly $700
billion on the President's war. The latest supplemental request
would increase that by about $108 billion. Overall costs of the
Iraq war will soon exceed an incredible $1 trillion.
Doing it as an emergency supplemental, you simply put it on
the credit card, put it on the national debt, borrow all the
money from China, Saudi Arabia, and whatnot and pass it on to
the next generation.
Now, budgets are expressions of a government's real
priorities. It appears that the Bush administration's
priorities are in Iraq, not here at home. The President and
those who support him seem to find no inconsistencies. Every
few months, they demand billions, almost a blank check, earmark
for Iraq. We do not have the money for healthcare, education,
housing, security, infrastructure, heating needs here in the
United States.
I am not saying we should not be helping Iraq rebuild. As
chairman of the subcommittee that handles the Senate's work in
drafting the budget for foreign assistance, I know the need for
funds for stabilization and construction programs in Iraq, and
I have voted for those. I think it is also time we started
telling the Iraq Government to begin contributing part of those
rebuilding costs.
We are paying close to $4 a gallon for gasoline certainly
in my State of Vermont. Iraq is getting well over $100 a barrel
for their oil. They are going to have a budget surplus over $25
billion. But we cannot pay for things here at home. In fact,
the President says he will veto any supplemental that pays for
those things at home and does not go into the blank check for
Iraq.
I think this war has cost Americans far too much, too much
money, too much damage to our lives, most importantly, too many
deaths, too many maimed soldiers coming home, too many families
destroyed.
Now, let us take one of the things here at home. Violent
crime has been rising, but the administration has dismantled
front-line support for State and local law enforcement here in
the United States. But the administration's view is that no
expense is too large for the hiring and equipment needs of the
Iraqi police force at around $21 billion and very questionable
results.
It is a very different story for our own police departments
in the United States that have been stretched thin for years.
And what we spend in just 5 days--5 days--on the Iraq war, we
could fully fund the COPS program. We could fully fund the
Byrne justice assistance grant. That alone would be put 9,000
new police officers on the beat to make American communities
safer instead of just going down and disappearing in Iraq. It
would allow us to shore up our multi-jurisdictional drug and
gang task force efforts. This is National Crime Victims Week.
Let us think what some of that money would do for the crime
victims fund, which has also been cut.
You know, unlike us, the Iraqi Government actually has a
surplus, and we cannot pay for law enforcement here. I use that
as one example.
So let me ask you this. Would the administration support
asking the Iraqi Government to assume part of what the United
States is paying for the Iraqi police force? Yes? No? Easy
answer.
Mr. Nussle. Let me just give you a couple of these because
I think these are important. The Iraqis have outspent the
United States in 2008 by more than 10 to 1 on reconstruction.
Senator Leahy. No, no. Please, Mr. Nussle, there is only a
certain amount of time, and you have a wonderful habit of
answering a question different than the one that was asked, as
you did with Senator Inouye, and he called you on it.
I am asking you about the police force. Are they willing to
pay part of the costs of the money we are funneling in there so
maybe we could use some of that money to pay for police
officers in the United States of America?
Mr. Nussle. All right. The Iraq budget provides more than
$9 billion for security forces this year alone, which is three-
quarters of what it needs in order to provide the security for
Iraq.
Senator Leahy. So the money that is going to the police
force is being well spent? I understand we sent over thousands
of handguns. We could not even find out what happened to them.
We sent them to the police department--until they started being
used against our brave men and women over there.
Mr. Nussle. Well, I will trust the testimony of Ambassador
Crocker and General Petraeus on those issues. All I can report
to you--you asked me how much and what we were providing, and I
can respond to that.
Senator Leahy. Well, we have provided a total of $33
billion for the readiness and effectiveness of training efforts
of both Afghan and Iraqi security forces. On the front page of
the paper today, the Americans begged them to actually stay
where they were doing something for security. They packed up
and left.
In the President's budget, he has proposed rescinding all
amounts in the crime victims fund, leave the fund empty. Again,
we keep sending money over there. Now, this is a program that
is funded entirely through criminal fines, forfeited bail
bonds, penalties and special assessments, not taxpayer dollars
or appropriations. What is the administration's reason in
gutting it?
Mr. Nussle. Well, what we did was we provided--instead of a
number of stovepipe grant programs, we consolidated all of
those grants into four so that they could be better
administered and easier for local law enforcement to take full
advantage of those funds at home and use them in a much more
flexible way as opposed to the stovepipe way that we currently
have.
Senator Leahy. But is it true that you have proposed
rescinding all the amounts remaining in the crime victims fund?
Mr. Nussle. To be used for that purpose. To be used for
those purposes, yes.
Senator Leahy. It would be nice--some of us, though, have
voted to have it used for the purposes of the crime victims.
My time is up, Mr. Chairman, but I thank you again for
being here and I thank you for holding this hearing. I think it
is very important to the Senate.
Chairman Byrd. Thank you.
Senator Craig.
Senator Craig. Mr. Chairman, thank you very much.
Jim, thank you for being with us. We appreciate your
testimony and your directness as we deal with this issue.
I must tell you I am extremely frustrated. I understand
your admonishment about a clean emergency supplemental or
supplemental depending on the words we wish to use in titling
it. And the reason I am frustrated by that is because while we
do not know for sure yet, it appears it is the collective will
of the leadership of this Congress not to work the
appropriation process this year in a timely and responsible
manner for a variety of reasons expressed by some in our
leadership.
And yet, I and members of this committee are continuing to
have hearings on the budget. Each one of our particular areas
of expertise is being properly vented with administration
people. And it appears, Mr. Chairman, we are shaping bills, and
I am wondering what all of that means if, in fact, we do not
plan to act because if we do not plan to act, there are
emergency or near-emergency situations that some of us would
like to deal with in a timely fashion this year.
Senator Feinstein and I out in agriculture country are
hearing phenomenal appeals from agricultural America that the
workforce is diminishing so rapidly it may send us into an
agricultural crisis. We would at least like to do something in
a temporary and an emergency fashion to supply a workforce.
We have firefighting needs on our public lands that may be
very dramatic, Mr. Chairman, if we go through another fire
scenario of the kind that we have gone through in the last
several years.
So I am extremely frustrated that the only vehicle
potentially moving, other than DOD and a few others, may be
this supplemental, no matter how we describe it. And there will
be a great tendency on the part of this Senator and others to
try to add things to it if it appears that we are not in a
timely and responsible fashion going to complete our work here
this year. That frustrates me a great deal.
This is not necessarily a question, Jim, but it is in
response to the appeal from the administration to keep it
clean. We are in a phenomenal catch-22 at this moment that is
going to create the kind of pressures that could well establish
a loggerhead on this issue.
Last, Mr. Chairman--and I will not use all of my time--I
think it is responsible for this committee to address the Iraqi
Government in a way that causes them to spend their money in an
appropriate and responsible fashion in cooperation with some of
our resources. I am going to have a very difficult time going
home and telling the people of Idaho that we are going to spend
their money while the Iraqi money is drawing interest in some
bank somewhere in the world. We invested in their
infrastructure to get their oil systems back in place and
flowing into the world oil supply. It appears that has been
accomplished and they are now reaping the benefits of it.
So I think it is going to be very important for you--and
you have done some of that already, Jim--to express where this
money is going and how it is being spent. We have only heard of
lump sums so far. There has to be much greater transparency in
that process of understanding how much is going to be spent and
what is out there drawing interest before this Senator is going
to find it easy to keep supplying money into infrastructure,
not to our troops, not to our men and women in uniform who
stand at risk at this moment, but building the kind of
infrastructure when ours goes wanting.
Thank you. Thank you, Mr. Chairman.
Chairman Byrd. Thank you.
Senator Harkin.
Senator Harkin. Director Nussle, good to see you again.
I just want to point out in your written testimony you did
say you chose to request war funding as an emergency
supplemental, and you also chose to request war funding as an
emergency. I heard that exchange between you and Senator Gregg,
but it says right here that you are requesting it as an
emergency. So I just wanted to clear that up.
Second, I cannot help but comment on this statement of
yours here about after ``7 months in this OMB job, many of the
ideas we are asked to fund reflect a sky is the limit mind set.
But this money does not belong to us. It is the taxpayers'
money.'' We hear that a lot. It is the taxpayers' money. It is
true. It is the taxpayers' money.
But you know what I hear from the taxpayers in your home
county and all over Iowa? They want better roads. They want
safer bridges. They need their schools repaired. They need
clean water. We have got over $3 billion in backlog for rural
water and wastewater. We put some of that out a few years ago
and it went out right away. And these are systems that the
engineering work is done. The plans are there. All they need is
the money to put them in. And I can tell you our small towns
and communities all over our State of Iowa need this. Right
now, a lot of them are being asked to pay enormous amounts of
money for water and wastewater, and they are not meeting some
of the environmental regulations that they need to meet. So we
have got a big unmet need out there.
So, again, it just seems to me that--from your standpoint,
it seems to me, and this administration--you represent the
administration--that Government spending for reconstruction is
fine in Iraq, but somehow it is onerous here in America. And
then you go to great lengths in your statement to say there is
a time and a place for that. Well, do it in a regular, not an
emergency supplemental. Well, it seems to me the time and the
place for it is when the need is here, and the need is here
right now for the things I just mentioned.
I read your testimony earlier and you mentioned about
Manchester. You said expanding Government does not create one
job in my hometown of Manchester. Well, quite frankly, I was
just looking lately just on school construction alone, Delaware
County got $295,199 for school reconstruction. That put jobs in
those communities and made the schools safer for our kids.
Road projects. The Iowa Department of Transportation wants
to do a bridge and culvert replacement near Edgewood. Well,
that is jobs that could go to people this summer in the State
of Iowa and in your home county and put people to work and get
the jobs done. I suppose it could wait another year, but
everything can be put off I guess. But then it costs more and
more money to get it back up the longer you wait.
So just put me down as someone who says, yes, I recognize
this is the taxpayers' money too, but I also recognize that
some of these things cannot be done by an individual taxpayer.
They cannot be done by a family. They cannot even be done by
the community. It has to be the community at large, the United
States of America. And that is our job as appropriators.
And so I think the need is there now with us facing--we do
not know if it is a recession or what it is. We know it is a
downturn, and we know that we have unmet reconstruction needs
here in our own country. So I would hope that we would look
upon the need here just as greatly as we look upon the need in
Iraq.
So that is my speech. I took a little too long on that. I
assume that is just a philosophical difference that we have.
But I do want to know about one thing, and Senator Mikulski
is certainly our lead on this in terms of funding for the Byrne
grant program. You know this as well as anybody, Jim, and you
know what it has done in Iowa, what it has done for our drug
task forces. In Iowa, cuts that occurred in 2008 will eliminate
15 of 21 successful drug task forces unless we restore it. The
cuts in the Byrne grant program, that the President asked for,
will have a devastating effect on our law enforcement all over
Iowa. I just say Iowa because I represent Iowa, but it is true
of the Nation at large.
And I would like to know what you, as OMB Director, are
doing within the framework of the White House to get the Byrne
funding back up to where it should be. Again, we cannot wait
till next year, Jim. We have got to do it now on this bill--on
this bill. And I would like to have your thoughts on whether or
not you would be willing to accept the increase, the bump-up--I
think it is about $490 million to get it to $660 million for
the Byrne grant program to get it to last year's level that
passed the Senate, and do it on this supplemental.
Mr. Nussle. Well, first, to my friend from Iowa, thank you.
With regard to Byrne--and I think that may be as good a
place to jump off as any. First, on moving forward on the
budget that we are requesting--and I was just stating this
before--what we have tried to do is we have tried to take a lot
of successful, in many instances, often well-meaning grant
programs, many of them across the Justice Department and
consolidate them into four so that our law enforcement agencies
back home can take better advantage of them. Byrne would be
included in that. So it is not that it is cut. It has been
adjusted.
The cut--the interesting part about this, which I was
surprised about too is that actually Congress decided last year
to cut funding. Almost $350 million was cut in 2008 in the
appropriation from the 2007 level.
So I think we know there are limited resources. I think
both Congress and the President recognize that, and what we are
trying to do is say how can we best spend those resources, how
can we get them out as efficiently as possible to the law
enforcement who are on the front lines, as the Senator knows,
as well as I do, doing that work. And that is the reason that
we made the request in this year's budget the way we did.
So I believe there is a regular appropriations process to
deal with this and deal with it effectively, but we should not
make up for an omnibus bill or an omnibus appropriation that
cut the funding just now 5 months later by increasing it again
and suggesting that that is somehow now an emergency.
Senator Harkin. Well, I am sorry to hear you say that
because I think it is an emergency. Plus the fact, you put
those four together. Then you cut the funding. So everything
takes a cut. Those four you put together, if you add up all the
funding for those, it is more than what you put in for that
combined program.
Mr. Nussle. That is correct. But also, that is in part
because we recognize that Congress cut $350 million from the
Byrne grant program just this last year alone.
Senator Harkin. Well, that was only after the President
vetoed the bill. We did not cut it before, did we? No. We only
cut it after the President vetoed the bill and insisted on huge
domestic spending cuts. So that is what we were confronted
with.
Mr. Nussle. What he insisted on was that the budget conform
to a top line, recognizing we did not want the deficit to go up
or, for that matter, taxes to go up. And so, obviously,
tradeoffs within that budget had to be made. And that is the
reason that the President made that suggestion, but Congress
made the determination of where that priority----
Senator Harkin. And I hate to go on, but under the Byrne
grant program, the amount that we have missed from last October
to right now--we have had a little bit of a cushion. People
have been able to make it up. If we have to go to next October
before it is funded again, we are going to lose a lot of these
people. The task forces will be decimated. They will lose a lot
of the things that they have built up.
So we could take a little gap, but we cannot take a year's
gap. And that is what you are asking us to do. And that is why
I think it is so necessary to put the Byrne money in this
supplemental before we lose all those people and our law
enforcement people that are in place right now because of the
Byrne program.
Mr. Nussle. Well, again, we believe that is a discussion
that needs to happen within the regular appropriations process,
and we should not hold up the troop funding in order to have
that debate.
Senator Harkin. Well, we will not hold up the troop
funding. We will just add it. We will not hold it up. We will
just add it to the troop funding.
Mr. Nussle. But it has already been 14 months since it was
sent up. So it has been held up, we feel, a long time.
Senator Harkin. Well, it is not holding it. We are just
going to add it.
I am sorry I ran over my time. Thank you, Mr. Chairman.
Chairman Byrd. Thank you.
Senator Bennett.
Senator Bennett. Thank you, Mr. Chairman.
Mr. Nussle, you have one of the toughest jobs in town and
today's experience will confirm that.
I am sympathetic with the issue that Senator Craig raised.
I am caught between the desire to support the President in his
request for a clean supplemental and the recognition that this,
in many cases, is the only vehicle leaving town because we are
probably looking at an omnibus bill that we will deal with
after the election in a lame duck session. And we have done
that enough times in the past to realize that it is not the
most orderly of processes when we get to that, and a lot of the
issues that we need to deal with in an orderly process could be
dealt with in this supplemental if, indeed, we do what Senator
Harkin has just asked and break the requirement that it be a
clean one. So it is a dilemma that we are all in, and I am
sympathetic with the administration. I like the idea of a clean
supplemental, but I also recognize the reality that there are
some other problems that we have to tackle.
So let me take one that came up in our hearing yesterday
with Senator Kohl's chairmanship in the Agriculture
Subcommittee. In this supplemental, you are asking for $350
million in additional funding for Public Law 480, title II
grants. Interestingly enough, last year the administration
asked for $350 million in additional funding for Public Law
480, title II grants. The year before that, the administration
asked for $350 million in additional funding for Public Law
480, title II grants.
This is a pretty striking coincidence that 3 years in a row
it is exactly $350 million that is the additional amount that
is needed. It raises the obvious question of why is this not in
the annual budget submission. If it is going to be $350 million
more every year, why is $350 million more not included every
year? If it is, indeed, a 1-year kind of thing, why is it
always $350 million? That seems to be a number you have fixed
on.
Now, the World Food Program has said we need an additional
$500 million to deal with increased food and transportation
costs. One of the major problems that we face around the world
is that food costs are going up very dramatically. In our
subcommittee, we have to increase the amount of money for WIC
just to keep the number of WIC participants level. We are not
sending the money up to take care of an increased workload.
Just to take care of the people we have and feed them the same
amount of food, the dollar cost goes up.
The corn cost is going up dramatically as we plant more and
more corn in order to turn it into ethanol, and that is another
issue that I will not get into with the Senator and the former
Congressman from Iowa. I have demonstrated that I will never
run for President because I voted against ethanol. So I am not
going to be campaigning in Iowa.
But as the corn prices go up, there are segments of our
population for whom corn is the dominant food staple. And then
people start plowing up their wheat fields in order to plant
more corn in order to get in on the ethanol boom, and the wheat
prices go up.
So it is not surprising to me that there is an amount in
here for additional Public Law 480 grants, but it seems to be
insufficient. And if we were to add something to that, would
that draw a veto threat from the President?
Mr. Nussle. Well, Senator, first of all, with regard to
your point about it is always $350 million, I am not sure I can
directly respond to that, but it is and continues to be
frustrating anytime you have to request something outside of
the annual appropriations process and where you cannot plan
ahead. I can only report to you that I believe those accounts
and amounts were necessary at the time they were requested.
Senator Bennett. I do not question that they are necessary.
I think they are turning out to be predictable is my point.
Mr. Nussle. Well, and in that regard, if they, in fact, are
that predictable, then they should be candidates for
consideration as part of the regular budget.
In this instance, we believe that we have addressed both of
those concerns first with an announcement that was made, I
believe, just a couple of days ago from the White House where
another $200 million would be increased for emergency food aid
through a drawdown from the Emerson Trust.
Senator Bennett. Yes. I am familiar with that, but that is
not the same kind of thing.
Mr. Nussle. No, but it is something that we believe will
help address the concerns that you raised.
Senator Bennett. Right.
Mr. Nussle. And in addition to that, with regard to the WIC
program, as the Senator, I am sure, is aware, there is a
contingency fund at the Department of Agriculture for those
types of----
Senator Bennett. I am not talking about putting WIC in this
budget. I just use that as an example of the upward pressure on
food prices that is hitting Public Law 480 in a very real way.
Mr. Nussle. Well, but to use those as the examples, in an
instance where we do not have the flexibility, we request the
funds. That is Public Law 480. In an instance where we do have
the flexibility and where contingency funds are available such
as WIC, we will make a transfer, and in fact, notification to
Congress I believe is forthcoming on a transfer from that
contingency fund to WIC in order to meet that need. But those
are, again, flexibilities that we currently have that does not
require us then to add to the supplemental for those purposes,
and they can be dealt with during the regular appropriations
process.
Senator Bennett. One last quick question. The other thing
that came out of our hearing yesterday was the status of the
Food and Drug Administration (FDA). The FDA regulates 20
percent of all consumer expenditures, nearly $1.5 trillion. And
the Science Board has said that in order to fulfill its
mission, the FDA needs an increase of $375 million. Now, Dr.
von Eschenbach said we could not absorb $375 million in 1 year.
Yet the increase for FDA just to take care of the cost-of-
living increase in pay is $59 million, and they need an
additional $50 million plus over that $59 million to take care
of its duties.
We have gone through this with Dr. von Eschenbach, but I
just wanted to alert you to the fact that we are paying
attention to that and that is one thing we would like to
increase, if not in this supplemental, we would like to
increase--this is my only shot at you. So this is a warning
that FDA funding is one that on the Agriculture Subcommittee at
least we think has been inadequate.
Mr. Nussle. I would be happy to take your call anytime. So
this hopefully will not be your only shot.
But I share your concern about the regular appropriations
process. If it is, in fact, as you say, a reality that this is
the last train, I can understand why you and anyone else would
want to be on that train. But I hope it is not the last train,
and I believe the President is hoping that it is not the last
train and that more work can and should be done if, in fact,
the urgency and the needs are there. And I think they have been
very well expressed here today that, in fact, we need to get
that regular appropriations process moving and not wait till
after the election or, for that matter, the next President to
help make that determination.
Senator Bennett. Thank you.
Mr. Nussle. Thank you.
Chairman Byrd. Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman. And thank you
very much for calling this hearing. I think it is an essential
thing we need to do.
Mr. Nussle, I got to tell you I am really disappointed in
your testimony. It has been some time that I have heard the
kind of tone that has been expressed by a representative of the
Bush administration. Your testimony has been disappointing in
both tone and substance. I personally take offense at the
snarky, scolding, dismissive way that this testimony was
presented, and I think it is inappropriate.
We just left an excellent bipartisan hearing on military
medicine about how we can support our troops. Later on this
afternoon at 2 o'clock, I will be chairing a hearing on the
Federal Bureau of Investigation (FBI) with my dear colleague,
Senator Shelby, again in the spirit of bipartisanship.
Your testimony is an ideological commentary, not the
testimony of OMB. So since you are pugnacious, guess what. I am
going to be pretty pugnacious too, only my pugnaciousness is
not going to be directed at the Congress. It is going to be
pugnacious about the people I represent. So let us get to it.
Pugnacious? You bet.
Let us pick up on what Leahy and Harkin said about Byrne
grants. You want the regular order? I am the regular order. I
chair the Commerce, Justice, Science (CJS) Subcommittee and
what this administration has done here has been outrageous.
Number one, let us go to safety and security. We have
funded the surge at Baghdad, but we have not funded the surge
of violent crime in Baltimore, Biloxi, or other places. You
have zeroed out the COPS program. You have zeroed out the Byrne
grant program. When Shelby and Mikulski tried to do something
last year in the regular budget, we were told eat $3 billion or
face a veto threat. So we foraged and we skimped and we
squeezed in to be able to make sure that our bill did not get a
veto threat, and we came up with $170 million.
You can talk about all your smoke stacks and whatever, but
you bet there is smoke. There is smoke right here now and there
is frustration from State and local police officers that say
they need help. They need help. And this administration has
funded $5 billion over the last couple of years to fund the
training of Iraqi police. You bet they need training, but I am
telling you I need the money. Senator Shelby and I need the
money to make sure that our local law enforcement, the thin
blue line, gets the money that they need to fight violent
crime.
So I am going to ask in plain English if, in fact, we can,
through this supplemental, restore the Byrne grants and only
the Byrne grants to the needed level of $660 million, will you
support it or will we face a veto threat?
Mr. Nussle. Well, Senator, I can only repeat what the
President has said on----
Senator Mikulski. The President did not say anything about
this. You think if I went to see the President, he would say
no?
Mr. Nussle. Senator, I can only repeat what the President
said, and his two priorities that he stated were that the bill
stay within the $108.1 billion request and that it support the
troops. That is what he has said on the topic. Beyond that, I
do not believe he has--I think the Senator is correct--not
spoken directly to those issues. But I also believe that the
regular appropriations process is the time and the place to
deal with those challenges that----
Senator Mikulski. But you eliminated it. You eliminated the
COPS program and you eliminated the Byrne grant program in your
regular appropriations request. So you are saying do not fund
it in the supplemental. The President does not request it in
the regular order, and now you are telling me you cannot accept
it in the supplemental because the President did not talk about
it. And when you sent us the CJS President's request, it is not
in there for 2009.
Mr. Nussle. Well, Senator, I apologize in advance if this
appears to be snarky, but when I hear from the Majority Leader
that he is going to wait until next year to resolve this issue,
that to me sends a signal to the President and to our
administration that, in fact, this is not urgent. It is not
something that needs to be dealt with now. Otherwise, it is
possible--and having been a Member of Congress, I am aware, as
you are--for the appropriations process to continue and to be
done expeditiously and to deal with those challenges.
Senator Mikulski. Let us come back to the Byrne grant
program. We can get tone later. Let us come back to the Byrne
program. If I am successful, working with Senator Byrd and
Senator Cochran--and when I say I, I mean, Senator Shelby and
myself, again, a bipartisan effort to keep the streets and
neighborhoods of America safe--will you encourage the President
to issue a veto threat?
Mr. Nussle. I would encourage the President to veto
anything that was over $108.1 billion, did not meet the needs
of our troops, for that matter, in this instance, dealt with a
problem that could have been handled in the 2008 appropriations
process but was underfunded by the Congress by----
Senator Mikulski. It was underfunded because you had a veto
threat. I sat there for hours with Senator Shelby and myself
trying to comply with yet every little bit and piece from the
White House about this. We were ready to go. We had the money
in the Federal checkbook. We had worked assiduously on a
bipartisan basis to fund State and local government. Do not
tell me Congress underfunded it. You had a veto threat of over
$3 billion on my CJS bill.
Mr. Nussle. It was not because the CJS bill was over its
amount. It was because the Congress had decided that all the
appropriations added together were over the top line that the
President had put forward in his budget. So it was not
specifically for Byrne grant programs. It was not specifically
on these issues. It was overall the Congress was not living
within what the President felt was a reasonable and fiscally
responsible top line Federal budget.
Senator Mikulski. I totally disagree with you. I disagree
on your recollection of history. I disagree with you on the
President's budget submission to you, and I disagree with you
on this matter.
I have other questions related to the National Guard, which
I feel has been treated like an Orphan Annie in this
President's appropriation both in funding for equipment and
return home. I will put that there.
And then we are going to have a big deal on trying to deal
with the census.
But my time is up, Mr. Chairman. I am going to force this
issue. Mr. Chairman, with your cooperation, I hope that we fund
it. If we are talking about a safe and secure America, I want
to make sure the streets of the United States of America are
safe and secure, and I will work on a bipartisan basis to do
it.
Chairman Byrd. Right on.
Senator Murray.
Senator Murray. Mr. Chairman, thank you very much for
having this hearing.
Mr. Nussle, I share the anger, frustration, I guess
pugnaciousness of the Senator from Maryland. It is extremely
disturbing to me that we are getting an emergency supplemental
request for Iraq and Afghanistan 5\1/2\ years into this war
that is being paid for off the books. I listened to your
testimony. You say that this has to be emergency because of
changes on the ground.
Well, what about the changes on the ground here at home?
What about those? What about the fact that we have many, many
road projects that are a result of floods, natural disasters
that have occurred, that are changes on the ground here at
home? What about the changes on the ground in the economy where
people are being laid off in community after community, where
mortgages are going into foreclosure, where housing is a number
one concern for Americans? What about the healthcare crisis?
What about the fact that your budget that you sent to us is
absolutely inadequate when it comes to investment in our
infrastructure? Those are changes on the ground that we have an
obligation to respond to.
Now, here we are 5\1/2\ years into this war and we are
getting a supplemental request that takes care of Iraq. Well,
we are creating jobs in Iraq. We are building schools in Iraq.
We are building roads in Iraq, and we have a President and a
White House who is fighting this Congress' efforts to try and
build schools here, to try and take care of our roads, to try
and take care of the infrastructure, to try and give our
families here at home security again. So, yes, you are seeing a
little bit of anger here.
My friend and colleague, Senator Dorgan, has talked about
the waste, fraud, and abuse--and I share that concern--
uncovered by the Government Accountability Office (GAO) and the
inspector general when it comes to these funds. Yes, we are
having a hearing on that. But we are also having a hearing
because we believe that there are emergencies here at home and
infrastructure costs here at home that have to be paid for and
met.
And you bet our constituents are angry that their taxpayer
dollars that you so jealously guard are going over to Iraq and
Afghanistan to rebuild them when, as you heard, they have oil
revenues that are sitting in our banks here, $60 billion I have
heard, $34 billion to $60 billion. No wonder you are hearing
the frustration on a bipartisan level here from all of us. We
are frustrated, 5\1/2\ years into the war, that we are facing
an administration who can blithely come before this committee
and say the only emergency we have is a war that has lasted
5\1/2\ years. There are emergencies in every one of our
communities, and we have a responsibility to address them.
Once again, we have a supplemental request sent to us that
does not have one dime for the men and women who are fighting
for us when they come home. As Senator Mikulski said, we had a
very good bipartisan hearing this morning to listen to the
medical personnel talk to us about the long-term costs for
those soldiers who are coming home with those invisible wounds
of war of post-traumatic stress syndrome and TBI, and it is
going to cost us going into the future. And we have got an
administration that says they are not part of the cost of war.
Well, this Congress disagrees. Last year we added $1.8
billion on the supplemental. We said they are a cost of war.
And again, we have to look at that because we do not get a
request from this administration that is real. And I find it
just really disconcerting that this administration continues to
deny that the cost of caring for our soldiers is a part of the
cost of war.
Now, Mr. Nussle, my obligation as chairman of
Transportation and Housing is to look at what those requests
that are coming from your administration. Once again, in this
budget, we are seeing requests in a supplemental for roads and
bridges not here at home but in Iraq and Afghanistan. The
President has committed to improving the infrastructure in Iraq
and Afghanistan as a way to improve the lives of their
citizens. Well, when you look across the board at the
supplemental requests in the Defense Department, State
Department, and military construction, you are asking for more
than three-quarters of $1 billion for road construction in Iraq
and Afghanistan.
Meanwhile, right here at home, we have a Federal highway
emergency relief program that is shut down because it is out of
money. There is a backlog of eligible requests of more than
$560 million for roads and bridges not in Iraq but here at home
that have been damaged or destroyed and declared disasters in
21 of our States. None of them are going to get a dime without
a supplemental appropriation. But somehow you are saying that
we have to take care of roads in Iraq and Afghanistan, funding
over $725 million, and here at home our roads that are in need
of emergency repair that are in backlog do not get requested a
dime.
And I hear you sitting here saying that you are going to
recommend a veto if we add those to the supplemental, and those
are roads and bridges that our constituents need to cross to
get to work, to take care of their families, and to make sure
they have got security here at home. So perhaps you could
explain to us why you are going to recommend vetoing those
emergency road repairs here at home.
Mr. Nussle. Well, first, Senator, I do not take your tone
or Senator Mikulski's tone as anything but passion for the
issues you are concerned about and for your constituents. I do
not take it any other way than that. Number one.
Number two, when it comes to transportation, certainly
there are funds that are needed in Iraq in order to fund the
transportation needs----
Senator Murray. Aside from Iraq, what about the ones here
at home?
Mr. Nussle [continuing]. That directly support----
Senator Murray. What about our emergency requests for here
at home?
Mr. Nussle. But I think it is here for you to understand or
for you to hear that those directly support the troops and
their movements in Iraq. It is not just----
Senator Murray. Fair enough. I am not saying----
Mr. Nussle [continuing]. Building a bridge----
Senator Murray. I am not saying we are not going to fund
that. I am asking you about the ones here at home.
Mr. Nussle. Okay. And the Senator has, obviously, taken a
leadership role. We have had a 17 percent increase in the last
3 years. We have an 11 percent increase that we have right now
in 2008 for these transportation projects.
Senator Murray. The emergency funds are at zero.
Mr. Nussle. There are other funds that can be reobligated
within and transferred within those accounts in order to meet
those challenges when there are emergencies.
Senator Murray. Mr. Chairman, I would just like to point
out that the President's budget request for 2009 slashes our
highway and airport investments by $2.6 billion. I am not sure
where we are going to be transferring funds from.
Mr. Nussle. Well, as the Senator is well aware, it is in
part because the Highway Trust Fund itself is running out of
money because of the challenges of not only over obligation but
also challenges from the gas tax.
Senator Murray. Absolutely, and Congress needs to deal with
that. But the fact is that when you send over a budget request
that is $2.6 billion below what we need, we are going to have
to make that up.
And I take exception, in my last 15 seconds here, to your
comments that, well, Congress is not doing its job because we
are not doing our appropriations. And you have heard the
Majority Leader say he may do it after the election. No
surprise. When we get budget requests that are well below what
any Member of Congress can support. We cannot fund them because
they do not adequately meet the needs of America and what we
hear--we get budgets from your office that slash highway and
airport funding by $2.6 billion. We had hearings in Senator
Dorgan's subcommittee on the Corps of Engineers projects, and
those poor individuals are sent over here to testify before us
and have to defend their budgets when they know they cannot
because we are not adequately investing in critical projects
across the country or for Hanford cleanup where the
administration's budget didn't even come close to meeting its
moral and legal obligations. And yet, you say to us, we make up
those funds, they get vetoed.
So rightfully, we are saying, well, we are not going to
pass budgets that are just going to go over there and get
vetoed one after the other simply on some partisan basis. We
are going to do them in a responsible way, and if that means
that we have to wait until we get a President who is willing to
meet us and work with us, that is what this Congress is going
to do.
Chairman Byrd. That is right, Patty.
Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
Director Nussle, I am not going to ask you a question, but
I am going to tell you what disturbs me. You told us what
disturbs you and you have a right to come at our invitation and
tell us what is disturbing to you. So let me tell you what is
disturbing to me.
With this request and the two requests we expect next year,
including a placeholder and the money above the placeholder, I
estimate that we will be at $974 billion--$974 billion--2001 to
2008 for the war in Iraq and Afghanistan. That is almost $1
trillion, all of it required by this President as an emergency,
all of it borrowed. So the President sent soldiers to war,
asked them to strap on body armor in the morning, get shot at
during the day, but he did not have the courage to ask the
American people to pay for the war. In fact, he said we will
send soldiers to war and let us offer more tax cuts. That is
disturbing to me. It is unbelievable to me.
Fighting this war, a war whose justification, by the way,
was based on bad intelligence and would never be authorized
today with what we now know and fighting it on borrowed money,
year after year after year declared as an emergency by this
President when he knows it is not an emergency--he knows that
he is supposed to put this in the budget. Senator Byrd required
him to put it in the budget, but they do not do it.
Now, let me tell you what else is disturbing to me. Last
year you asked for urgent money. We provided urgent money. I
want to tell you where--only because of some really good work
by the New York Times do we know this, by the way. Oversight
that is not done by the administration or by this Congress. Let
me show you what the New York Times with some really thoughtful
investigative reporting has shown us.
One-third of $1 billion, nearly, went to this man, 22-year-
old Ephraim Devaroli, chief executive officer (CEO) of a firm
in Florida. CEO, okay? Now, he had a vice chairman of his firm.
Let me show you a picture of the vice chairman. He is a massage
therapist. This company they had was a shell company by the
CEO's dad. Well, the CEO becomes 22. He has got a massage
therapist as a vice chairman of the firm or vice president of
the firm. They get over $300 million from this Defense
Department to provide ammunition to the Iraqi fighters. And
guess what. The Iraqi fighters end up with a box full of
shells, some of it from the mid-1960's from China.
Now, I would like to ask how on Earth does over $300
million go to a company like this. It is shameful. And this is
just one small chapter. I have held 12 hearings in the policy
committee on these issues. This is just one.
I would like the general who heads the Army Sustainment
Command to sit at this table and explain that, and I would like
to have subpoenaed both of these folks. In fact, I have written
to the chairman on this point.
This is just one. One. I could sit here and describe a
dozen exactly like it. That is disturbing to me. I think it is
shameful this is happening. Waste, fraud, and abuse, the most
significant in the history of this country.
Now, we know that Kellogg, Brown & Root, Halliburton, are
hiring people, sending them--because they get contracts from
this Government, I assume with this money, and they run the
payroll through the Cayman Islands so they can avoid paying
payroll taxes to this Government. Shameful in my judgment. Does
anybody care about it? They are still getting contracts. Is
anybody doing anything about it? I think it shameful.
Judge al-Rahdi showed up, by the way. Judge al-Rahdi came
to this committee, sat where you are sitting. And you know
what? He was appointed by Bremer when we had Bremer in Iraq.
Judge al-Rahdi was the head of the Iraq Commission on Public
Integrity appointed by Mr. Bremer. They tried to kill him three
times. He sat just where you are sitting a month ago, and he
told us $18 billion of waste was uncovered, most of it American
money. $5 billion in the defense ministry in Iraq, $3 billion
in electricity, $2 billion in transportation, all of that
American money, all of that from the U.S. taxpayer.
Now, instead of plugging the rat hole, what you are
suggesting is to let us just throw more money at this.
It is just unbelievable to me. And at some point, we have
got to stop it.
Chairman Byrd. Right.
Senator Dorgan. You show up here on behalf of the President
saying I want more money, it is urgent, I want it as an
emergency, I do not want you to pay for it, get us up to $1
trillion, it does not matter. I am saying to you the game is
over. At some point, this Congress has to say we are not going
to do this.
Chairman Byrd. Right.
Senator Dorgan. Somebody justify to me that $300 million
goes to a 22 year old in a shell company with a massage
therapist for a vice president and the American taxpayer should
pay for that. Somebody needs to come and answer for these
things. And it is hundreds of examples just exactly like it.
So that is what disturbs me. I am disturbed we are sitting
here. This administration is conservative? No, no.
Conservatives would never ask that we send soldiers to war and
not pay for it. In fact, not only ask, this President insisted
that we send soldiers to war, demand the money for it, and we
insist that it not be paid for.
Now, you say, Mr. Nussle, that our budget deficit this year
is $400 billion plus. It is not. Take a look at what you are
going to borrow in fiscal policy. You are going to borrow over
$800 billion. This country is so far off track it is
unbelievable. You think the currency traders and the electronic
herd out there that take a look at the fundamentals of a
country do not recognize this? It seems to me responsibility
starts in the White House and your office, and yes, it belongs
here as well. I am tired of rubber stamping so-called urgent
requests that send $300 million to a company that is going to
buy 45-year-old ammunition and have the American taxpayer pay
for it, ship it to the Afghan fighters who say the ammunition
is no good.
I must also say that it bothers me that it took some
enterprising reporting by the New York Times to get this. It
should have not taken that.
So you came and you told us why you are disturbed. I am
telling you why I am disturbed. I am not going to just sit here
anymore and say, yes, let us just keep playing this game. You
know better. The President knows better, and so does this
Congress. This has to stop. You want money? Then tell us how
you want to pay for it. At some point, you have got to stop
saying to soldiers, we will send you to war, and by the way,
when you come back, you and your kids can pay the bill.
Now, I am sorry for sounding angry. I am angry because all
of us have been a part of this, and we have allowed this to
happen. And there comes a time when we say we are not going to
allow this anymore. Somehow, some way, some day, somebody has
got to stay stop.
Chairman Byrd. Mr. Nussle, do you want to respond? Take a
couple minutes.
Senator Dorgan. I did not ask him any questions, Mr.
Chairman, but I certainly understand the need to respond.
Mr. Nussle. No, I do not feel I need to respond except to
say I agree with much of what the Senator said, particularly
with regard to responsibility and oversight. And I appreciate
not only the tone, but I share it particularly with the case
that the Senator has brought up. So I do not have any other
response other than to say thank you for bringing that to our
attention, and I will follow up. Thank you.
Chairman Byrd. Senator Feinstein.
Senator Feinstein. Thank you very much, Mr. Chairman.
I think, Mr. Nussle, that my colleagues said it very well.
I think it is more than frustration. I think we see this Nation
really going into a period of great financial jeopardy. The
debt has gone up 68 percent during this administration.
Entitlements and interest on that debt are now 62 percent of
everything that is spent in a year. Everything that people ask
us for, the expenditure for those items, every single domestic
Department is just 18 percent of what is spent, and defense is
another 20 percent.
Mr. Chairman, I do not think we should do a supplemental
this large. I think we ought to break it down. I think we ought
to know where every dime goes. Never before in history has a
war been funded on the debt. Every single war has been fought
with additional revenues, except for this one. And the debt is
now at what? $9 trillion and going up. I think it is a very
real problem for the survival of the Nation in a healthy way. I
think it is going to be very hard to vote for a $108 billion
emergency supplemental that puts that amount on the debt. And I
think Senator Dorgan and Senator Murray have said it really
very, very well.
I left home yesterday and CNN had the weather map up and a
big swath of the United States was under threat of catastrophic
fire. Yesterday we had a hearing on the Interior appropriations
bill. Secretary Kempthorne testified. And the bill eliminates
everything for wildfire firefighting, and we are $350 million
short for fire suppression in this country. We have just lost
people in Colorado in a fire. And I do not understand.
And so we fight over this 18 percent that is left, and it
is not enough. We cannot fix levees in California that could
inundate 20 percent or 30 percent of Sacramento with 20 feet of
water. We cannot fix bridges. Senator Murray is absolutely
right. We cannot take care of the transportation needs of our
people on this 18 percent of what we are spending. And as
Senator Dorgan pointed out, there is so much waste, fraud, and
abuse in the Iraq money.
So my question to you is why should we not break it down--I
mean $10 billion is a lot of money--and really monitor every
dollar and where it goes. Why should, with this record, we give
you $108 billion with essentially no accountability, not
budgeted, on the debt?
Mr. Nussle. Well, Senator, first of all, I do believe there
is accountability. There should be accountability. I join you
in that and I share your and Senator Dorgan's anger and
frustration whenever a dollar is wasted. Period. I think you
both have said it very well.
As far as holding accountable, I also believe that you
should, as you have with me today, haul up the people who are
responsible and ask them those questions, which has been done.
There have been hearings on this supplemental for the Secretary
of Defense, the Deputy Secretary of Defense, both the Secretary
and Deputy Secretary for State, as well as the Joint Chiefs. So
I believe you are expressing that accountability and that
oversight.
I am not suggesting you could not do more. We all could.
Clearly, there are funds, as Senator Dorgan stated and stated
quite well, that continue to slip through the cracks not just
in Iraq, but even here at home. That continues to happen. And
we monitor a high risk list of inappropriate payments that we
and the GAO work on constantly. We have made some progress.
Never enough.
So I share your anger whenever a dollar is wasted, and I
believe that type of oversight should be done. And we have
joined you in that and will continue to join you in that.
But as far as splitting it up, splitting it up suggests to
me that you may also be talking about splitting up the
appropriations, which for this at least, we believe is
difficult to do particularly in theater over in the Middle
East.
Senator Feinstein. My problem is I have got a part of the
State that could well burn this summer again. We cannot provide
the amount of money we need for wildfire protection. It seems
to me that if you are going to come here with an Iraq
supplemental, it is just as much an emergency that we have
adequate law enforcement, adequate firefighting protection in
the United States as Iraq.
And maybe the administration ought to think about that a
little bit because it is rather cynical what happens. You fund
the war off budget on the debt and you press for continued tax
reductions and everything that is hurt is the domestic agenda.
So the bridges collapse. The gridlock is more. We cannot fight
wildfire appropriately. We cannot support our law enforcement
people. And maybe that is what you all want. That is the
result. That is the result. If you do not fund the war based on
present-day revenues, it all goes on the debt.
I think maybe the time has come when we do have to put our
foot down and say we are not going to continue to do it.
Chairman Byrd. Let us have order.
Senator Feinstein. So, Mr. Chairman, this is bigger than
Mr. Nussle, but it is really for us. I am going to have a very
hard time voting for $108 billion knowing what is happening in
the United States, knowing the violence is going up, knowing
that we need to do some things just to protect our own people
and cannot do it. It is not right. It is not why we came to
this place.
And the administration will not sit down, will not work in
a collegial style, will not say let us work it out. It is your
way or the highway. And you reach a point where you get filled
up to here with it and just make a decision not to do it
anymore. I think that is where some of us are.
Thank you, Mr. Chairman.
Chairman Byrd. I thank the Senator.
By agreement with our witness, Mr. Nussle needs to leave at
2 p.m., and we have a floor vote at 2:15. I beg the indulgence
of the three remaining Senators to limit their remarks to 5
minutes. Senator Durbin.
Senator Durbin. Thank you, Senator Byrd, and thank you for
this hearing. It has been a good one, an important one, and I
appreciate you gathering us together. Mr. Nussle, thank you for
joining us too.
In your opening statement, you have what I think really
tells the story when you refer to your hometown and you say
expanding Government does not create one job in my hometown of
Manchester, Iowa. I have seen that movie before. I saw that
movie in 1994, if you will recall, when the Gingrich folks
closed down the Government, and Rush Limbaugh said nobody is
going to notice. But they did because whether you like it or
not or want to concede it or not, there are some fundamental
functions of Government which are important to every American.
And you never know what tomorrow will bring. Do you think
that Senator Landrieu had any idea a month in advance what was
going to happen to her poor town of New Orleans? Do you think
she anticipated that if something awful happened to New
Orleans, as you might anticipate in Manchester, Iowa with maybe
a tornado, that the Government would be prepared to respond?
She counted on it and it did not happen.
This mind set that you peddle, that the Government is our
enemy, there is nothing they do that is right, we do not really
need them, if it went away, life would not change, is just
plain wrong. You and I were on an airplane together recently
flying out here to Washington, trusting that the air traffic
controllers were well skilled and there were enough of them to
land that plane safely and that somebody had inspected that
plane to make sure that it was safe to get on board for you and
your wife and for me. So this concept, this notion that
Government can be dismissed and ignored and it really is not
important--I am afraid the record of this administration proves
just the opposite.
I share the frustration of others here. I voted against
this war, and for the longest time, I voted to fund it
believing that was the only way to do the right thing for the
troops and bring it to a conclusion. And now I have reached a
different conclusion. Sending a blank check to this President
for this war is going to prolong the killing, prolong the
deaths, the injuries that will return, and this President wants
to hand off the ball on January 20, 2009 and walk away. That is
not the way we should deal with it. We should deal with it
honestly in terms of what is happening on the ground.
To think in this room that we celebrated the first
anniversary of a temporary surge--next year does the military
want to celebrate the second anniversary of a temporary surge?
There comes a point where it is not temporary anymore. There
comes a point where this is not an emergency spending bill.
Emergency suggests something unanticipated. Sadly, we have had
to anticipate another year of war for the last 5 and maybe
beyond.
But let me get down to a real emergency. A lot of things
have been mentioned here, and this is something unanticipated.
I left here to go out in the hall and meet with the head of
the world food program. She is a lovely woman who is doing her
darnedest to try to feed a lot of starving people around the
world. She is in trouble. There has been a dramatic increase in
food prices. The price of rice in the last few months has gone
up 83 percent. There are people starving. Mr. Zoellick at the
World Bank warns us that over 30 nations may be facing food
riots and instability. We may see their governments fall
because of this. Now, that was unanticipated. Maybe somebody
saw it coming. I did not.
So I just have to tell you when she asked for $500 million
more in food aid, I want to ask you do you believe that is the
kind of emergency we should include in this supplemental to
avert a crisis of starvation and political instability around
the world.
I met with Secretary Rice last week and had breakfast with
her, and she said we need it. Give us the authority to buy some
things locally so we can stretch it even further, but we need
it.
So based on that, do you believe this administration should
take this world food crisis and put it in the emergency
category of things we need to do right now?
Mr. Nussle. Well, first of all, Senator, you know this from
both of our proud traditions from the corn belt and the food
belt that we stand behind absolutely no one in the world when
it comes to the generosity of the American people.
Senator Durbin. It is not enough, Jim. It is not enough.
They need more.
Mr. Nussle. But we should not forget that that is also
done, I would say very respectfully. We do a lot. We do more
than any other country. We take leadership roles in this.
Senator Durbin. But is that the reason to do nothing now?
Mr. Nussle. See, that is the reason I bring that up because
that is suggesting we are doing nothing now, and that is simply
not the case.
Senator Durbin. We need to do more, Jim. If your neighbor
is starving----
Mr. Nussle. And we are doing more.
Senator Durbin [continuing]. Even though you have helped
them yesterday and they are starving today, what are you going
to do about it?
Mr. Nussle. But we are helping them today.
Senator Durbin. Say do you not remember the good things we
did yesterday?
Mr. Nussle. But we are helping them today.
Senator Durbin. No. We are not helping enough. $200 million
under the Emerson program is not enough. She made it clear to
me in the hallway. She needs $500 million, emergency money. Do
you believe that is the kind of emergency that should be
included in the supplemental?
Mr. Nussle. I believe it should not be forgotten what the
American people already do and the generosity we already show--
--
Senator Durbin. So the answer is no?
Mr. Nussle [continuing]. To the rest of the world. And we
are doing more, as we just announced on Monday.
Senator Durbin. So the answer is yes or no.
Mr. Nussle. And we need partners around the world to step
up in order to help assist in this as well.
Senator Durbin. Come on, Jim. Stick with me, buddy. Yes or
no.
Mr. Nussle. I believe that not only have we requested funds
not only in this appropriation but in others to meet that
challenge, plus the announcement that we made Monday.
Senator Durbin. Straight-talking Iowa talk. Yes or no.
Mr. Nussle. We have $500 million in this request alone.
Senator Durbin. $500 million in this supplemental request
for world----
Mr. Nussle. 40 percent of this is what we have been asked
for of the $500 million. At least, that was my understanding.
Senator Durbin. No, no.
Mr. Nussle. And that is what we announced on Monday.
Senator Durbin. No. Let me just tell you. This is a crisis
and we cannot avert it. Some day someone is going to play back
the videotape after this global food crisis and say why did
America's Director of OMB not acknowledge the obvious if the
head of the World Bank is acknowledging it.
Mr. Chairman, you have been kind with your time. I yield.
Chairman Byrd. Senator Landrieu.
Senator Landrieu. Thank you, Mr. Director.
When you came to my office some time ago to talk about the
confirmation process, Mr. Director, you assured me that you
would remember the emergency situation on the gulf coast. I
have looked through all of the pages of this request for $108
billion. I do not see one page on the gulf coast recovery which
is still an emergency which happened less than 3 years ago. Is
there some reason that it was left out? Was it done
inadvertently or intentionally?
Mr. Nussle. It was done based on the amount of
appropriations that are already in the process, already in the
stream, as well as the fact that we have requested funds for
the next--in the coming year in order to meet those needs. So
we believe those needs are being met based on the regular
appropriations that have been done, as well as the emergency
supplemental appropriations that have been requested and
granted by the Congress in the past and the ones that we are
requesting for the future. We are requesting $5.8 billion of
emergency funding for 2009 alone.
Senator Landrieu. Let me ask you that. That is a good place
to stop. You are asking for $5 billion in the regular
appropriations bill, which is Byron Dorgan's subcommittee. Do
you know how much the country spends on new construction every
year for the whole entire country?
Mr. Nussle. I do not have that at my fingertips.
Senator Landrieu. It is less than $5 billion. So explain in
30 seconds or less how I am going to go to the committee to get
100 percent of all the money Byron Dorgan has to fix the levee
in New Orleans when there have got to be thousands of miles of
levees around the country? How are we going to do that?
Mr. Nussle. We have asked for those funds as an emergency
over and above the regular appropriations process.
Senator Landrieu. In the regular budget. In this
supplemental.
Mr. Nussle. Not in this supplemental, but for 2009. We
believe there is enough resources right now in order to meet
the current needs. That has been already agreed to and already
funded. But for 2009, which we hope begins--at least fiscal
year 2009 begins in October, we have requested $5.8 billion in
emergency funding over and above the regular appropriations for
Katrina.
Senator Landrieu. Well, let me ask you this. On what basis
did you all recommend the shift in cost share, which is
normally 25/75, to 35/65 for that project when it was Federal
levees that failed at no fault to the local community? On what
basis was that cost share shifted?
Mr. Nussle. Well----
Senator Landrieu. And if you do not have the answer
readily, you can get it back to me----
Mr. Nussle. Why do I not do that rather than try and find
that because I would be happy to----
Senator Landrieu [continuing]. Because this is truly an
emergency when the Federal levees that should have held failed
and 80 percent of the city went underwater and 100 percent of
St. Bernard went underwater. That is truly an emergency, just
like the fires in California or the tornadoes, totally
unexpected, thought about but unexpected.
The second question I have is the Byrne grant program,
which is something that our law enforcement feel very strongly
about. It provides critical support to sheriffs and police
around the country. Many of my colleagues have worked to
restore it. Can we count on the White House's support to
restore the Byrne grant, and if not, why?
Mr. Nussle. What we have done, Senator, is we have taken
all of those stovepipe grant programs within Justice and moved
them into four that our local law enforcement, we believe, can
access easier, can use in a much more flexible, local-need
priority. And that is the reason that we have done that.
Senator Landrieu. Well, let the record reflect that you
have consolidated programs that each individually, let us say,
cost $1 billion. You took four $1 billion programs each and put
them into one program and attached $2 billion to it and claim
that you are increasing support for local law enforcement. If
you admitted that you reduced support for local law
enforcement, we could accept it, but you do it and claim that
you are adding money.
And finally, let me say in my 20 seconds that is left I
want to associate myself with the remarks of particularly
Senator Dorgan. The legacy that this President will leave is
that he drove the country into a war and then for the next 6
years--and that might be 8, it might be 9 depending on how
long--refused to submit a plan whatsoever to pay for it.
There is nothing, Director, clean about this bill. It is
either a dirty, rotten trick, it is a messy cover up, or it is
a sloppy sales job. But this is not a clean bill.
Chairman Byrd. Senator Nelson.
Senator Nelson. Thank you, Mr. Chairman, and I would like
to submit a written statement for the record.
[The statement follows:]
Prepared Statement of Senator Ben Nelson
Mr. Nussle, as we all know, the war in Iraq has come at a
great cost to this nation in both lives and taxpayer dollars.
This war has cost us over $500 billion so far and continues to
increase at a rate of nearly $12 billion per month. This cost
is borne by the American taxpayer and goes directly to the
national debt--financed by China and other foreign countries.
Nearly every dollar spent on this war has been straight-to-debt
spending--outside the budget process, not paid for and a debt
passed along to future generations.
The United States has spent more than $45 billion on Iraq's
reconstruction. Meanwhile, Iraq is expected to collect a
windfall in oil revenue this year and will experience a
surplus, while our nation faces record prices at the pump,
continued deficits and a declining economic situation. It is
time to end this blank check policy to the Iraqi government,
and once again look out for our interests at home.
While continuing this policy we have had to make deep cuts
in critical domestic programs such as Byrne Justice Assistance
Grants which helps our local law enforcement combat violent
crime and makes an enormous difference in rural areas. In
Nebraska, we use the bulk of our very modest allocation of
Byrne funds to operate multijurisdictional anti-drug task
forces. If the 70 percent cut in Byrne funding for 2008 is not
addressed, most of our task forces face elimination this summer
which is simply unacceptable.
I am proud to have joined over 50 of my colleagues in
requesting Byrne funding in this supplemental. Ask anyone
involved in law enforcement in Nebraska, and they will tell you
the irresponsible Byrne cuts made in fiscal year 2008 have
without a doubt left us in an emergency situation where one of
our most effective law enforcement tools is facing total
elimination.
I understand OMB's Program Assessment Rating Tool--or PART,
for short--has assigned a rating of ``Results Not
Demonstrated'' to the Byrne grant program. No doubt this is one
of the reasons it recommend ``replacing the program because it
. . . cannot demonstrate results.'' Well, that's just not true
in Nebraska--I have the 2007 results right here . . . and keep
in mind that our share of the Byrne formula is just slightly
more than one-half of one percent. In 2007, Nebraska's Byrne
task forces made 4,380 arrests; seized almost 1,000 pounds of
cocaine and methamphetamine and over 9,000 pounds of marijuana;
developed 511 confidential informants, made 1,412 controlled
drug buys, and seized over $1.3 million in cash and goods.
These results speak for themselves, and I think it certainly
qualifies as an emergency that all the progress Nebraska law
enforcement has made with Byrne funds over the years could be
undone with one stroke of the President's pen. Mr. Nussle, I
hope you will reconsider your threats to veto any additional
spending in this bill.
In addition, as our budgets have become more and more
constrained we have not been able to address a looming
transportation infrastructure crisis. If the supplemental is
used as a vehicle for additional stimulus funding,
transportation infrastructure spending should be included. As
we invest in reconstruction in Iraq, we are facing an
infrastructure funding crisis here at home. During debate on
the fiscal year 2009 Budget Act, I was successful in getting $7
billion set aside for economic stimulus spending for ``ready-
to-go'' infrastructure projects. This additional spending will
not only stimulate the economy in the short term, but will also
begin to address the long-term investment we need to make in
our country's transportation system. State departments of
transportation have already identified billions of dollars
worth of projects that could be underway in a very short time.
Targeted spending on these kinds of projects would create jobs
and have an immediate impact on the economy. I also believe we
must waive any state and local matching requirements to ensure
this money can be used as quickly as possible. Waiving the
match will allow more projects to be undertaken in a shorter
amount of time.
Investing in infrastructure makes sense. We can immediately
impact the economy in a positive manner, while reaping the
long-term benefits of an investment in our infrastructure that
will outlive the current economic downturn. Again, if a
stimulus package is added to the supplemental, I advocate for
including infrastructure spending.
With that, I would just reiterate that during debate of the
fiscal year 2008 Supplemental, Senator Collins, Senator Bayh
and I intend to require any reconstruction funding to the Iraqi
government be made in the form of a loan and I hope that the
committee can address the most critical domestic priorities as
a part of this process.
Senator Nelson. Mr. Nussle, you have heard it several times
from my colleagues, as I understand it, that there is a concern
about the United States continuing to fund largely the war in
Iraq without much in the way of support from the Iraqi budget
for our total costs. In 2003, Senator Evan Bayh and I
introduced legislation--it passed the Senate. It got blocked by
the administration and the House--which would have required all
reconstruction money to be in the form of a loan. Now, $45
billion later and expenditures in that reconstruction account,
we have nothing to show for it in terms of an IOU or a loan or
what have you.
As we look to the future expenditures to avoid having what
I truly believe has become a blank check policy, I think we
ought to look at loaning where lending is appropriate. We ought
to insist on direct payments where direct payments are
appropriate, and we should seek reimbursement where
appropriate.
Fortunately, Steven Hadley, the National Security Adviser,
agreed this last Sunday on one of the talk shows.
As we do that, are you looking at ways that we might be
able to recover or avoid having to pay directly and could get
reimbursed, for example, for fuel that we pay for at the
current time in connection with Iraq?
Mr. Nussle. I think all of those areas could or should be
explored. I do not have a plan I can propose to you today, but
I do appreciate your leadership on that issue and many others
who have led on that issue, and I believe that it is a notion
that is worth continuing to explore, but not in a unilateral
way, I would just suggest, in a bilateral way between our
country and the sovereign country of Iraq.
Senator Nelson. Well, I am not averse to trying to do it
bilaterally. I wish we had done it bilaterally before. So far
it has been unilaterally.
In that regard, would it not be appropriate to include as
part of this supplemental an approach that Senators Collins and
Bayh and I and others will be introducing to do just that as
part of this supplemental? Certainly it would be germane to
what we are doing in appropriating money to go to Iraq. We
ought to have a way to recover it at the same time that we are
seeking to appropriate it. I would like your thoughts about
that.
Mr. Nussle. It is awkward, Senator, for the President's
Budget Director to try and act like the Secretary of State, so
I will not. But I would suggest that from an OMB standpoint, I
believe it is a worthy notion and one that we should continue
to explore. And I believe Steven Hadley made that same case. I
believe it is now in the proper lane of the Secretary of State
to begin to explore that kind of possibility or arrangement on
a bilateral basis with the country of Iraq rather than--I say I
think it may be awkward for us to demand in that kind of nature
to change that kind of a situation with Iraq given the lack of
stability tradition that has not yet taken maybe full foothold
there.
Senator Nelson. What is awkward for me is to explain to my
grandchildren that we are borrowing from their future,
borrowing from China to provide for the cost of a war as we
grow a deficit and grow our debt at the same time that the
Iraqi Government continues to increase its surplus, maybe $50
billion to $60 billion this year, $25 billion to $30 billion in
banks in New York unspent, not necessarily going to be spent.
Fraud, waste, and abuse prevents some of it from being spent.
It is also awkward to continue the status quo the way we are
doing it, and yet that is what we are going to be asked to do
with this supplement.
So I think it is totally appropriate and I hope you do not
think it is inappropriate if we try to put forth some sort of
requirements in connection with loans, direct payments, and/or
reimbursements.
Mr. Nussle. Again, I find it awkward for me is all I am
suggesting to act like the Secretary of State----
Senator Nelson. I know that you are a Director and not
Secretary of State.
Mr. Nussle [continuing]. Not something I ought to do. So I
would refer you to her for that purpose.
But as I suggested, I believe it is a worthy goal and
notion, and I believe it is something that can and should be
pursued. It does not have to be pursued in an appropriation
bill in order to accomplish it, but I will leave that to your
determination.
Senator Nelson. But once the money is spent, we are unable
to do it after the fact. $45 billion that would be in the way
of an IOU today has been an outright grant because of the
blocking of the effort in 2003. I guess I can take from what
you are saying we should not look for you to block it if we try
to do it.
Mr. Nussle. No. In fact, I may very well be likely to be
part of the team that tries to help figure it out, but I am
just saying with regard to directly negotiating with Iraq and
making the determination what the different provisions would be
in order to accomplish that, I would have to leave that to the
Secretary of State.
Senator Nelson. We may have an idea or two on it too, Mr.
Director.
Mr. Nussle. I have no doubt, and I appreciate that.
Senator Nelson. Thank you, and thank you, Mr. Chairman.
Chairman Byrd. Thank you.
Senator Cochran, do you have any closing remarks?
Senator Cochran. Mr. Chairman, my observations are and
recollections of our earlier conversation with the witness are
that there is no doubt that the continued delay in the approval
of requested funds for our troops in Iraq and Afghanistan is
putting in jeopardy our opportunities to help bring peace and
stability to that region.
In closing, I just want to be sure I understood the
Director of OMB correctly, that further delays are going to put
in jeopardy our ability to furnish the troops in the field with
the equipment they need, with training they need, and the
ability to succeed in this war against terrorism in that very
volatile region of the world. Is that correct?
Mr. Nussle. I believe that to be true, yes, sir.
Senator Cochran. And is it not also true that continued
delays and approval of the administration's request for
procurement programs to pay contractors, to pay for the
materials and armaments that we need will also add to the risk
that we run in losing this battle against terrorism?
Mr. Nussle. I also believe that to be true, yes.
Senator Cochran. Mr. Chairman, thank you very much for your
patience through the hearings and your evenhanded way in which
you handled this hearing.
Chairman Byrd. Thank you, Senator.
Director Nussle, the President has said that he will veto
the supplemental if it exceeds his request. He has said that he
will veto any of the regular appropriation bills if they exceed
his request.
Well, this does not leave much room--any room--for the
Congress to meet a critical need to invest in infrastructure
and to help the American people to deal with a troubled
economy. That is why you are hearing frustration from Senators
on both sides of the aisle. In the next few weeks, the
committee will mark up a supplemental that meets the needs of
our troops and the American people. I hope that the President
will listen to the voices of the American people and the
Congress.
ADDITIONAL COMMITTEE QUESTIONS
I thank Senator Cochran and all Senators for their
cooperation and the Director for his testimony.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Question Submitted by Senator Robert C. Byrd
Question. Since 2002, Congress has provided over $525 billion to
fund the ongoing war in Iraq. The President is requesting another $100
billion for DOD in the supplemental. All of that money has been
borrowed. My grandchildren will be paying for this war. The Committee
recently learned that despite widespread reports of fraud and
corruption in both Iraq and Afghanistan amounting to billions of
dollars, the Federal Bureau of Investigation has only five people in
Iraq, Kuwait, and Afghanistan devoted to investigating these abuses.
Five. By comparison, the FBI has over 760 people devoted to
investigating health care fraud here in the United States.
There are no funds in the President's supplemental request to
increase fraud investigations in Iraq. Why is it that the President is
satisfied with only five FBI agents investigating waste and fraud in
Iraq and Afghanistan?
Answer. The Administration supports all efforts to identify,
investigate, and prosecute fraud and corruption. The Department of
Justice (DOJ) has established a unified and coordinated approach to
combat procurement fraud, including fraud relating to the wars in Iraq
and Afghanistan and reconstruction efforts in those countries. The 2009
President's budget continues to provide resources for the Criminal
Division, U.S. Attorney's Offices, the Federal Bureau of Investigation,
and the Office of the Inspector General to ensure that reports of
contract fraud are investigated in a timely manner and, where
appropriate, prosecuted.
In addition to DOJ's internal efforts, DOJ and the FBI both
contribute to government-wide efforts to address contractor fraud and
abuse. In coordination with DOJ, a number of law enforcement agencies,
including FBI, DOD OIG, Department of State OIG, USAID OIG, and the
Special Inspector General for Iraq Reconstruction (SIGIR), have
established the International Contract Corruption Task Force (ICCTF).
The mission of the ICCTF is that of a joint agency task force to detect
and investigate corruption and contract fraud resulting primarily from
the GWOT. The ICCTF member agencies currently have agents deployed
throughout Europe and the Middle East, including 5 FBI agents deployed
in Iraq, Kuwait, and Afghanistan. The 2009 President's budget continues
to provide support for these activities.
The Administration has supported significant funding for the
Special Inspector General for Iraq Reconstruction (SIGIR) to look into
waste, fraud, and abuse in our reconstruction programs in Iraq. To
date, SIGIR has been appropriated $134 million to conduct audit
oversight and refer potential criminal cases to the Department of
Justice. SIGIR is also required, by law, to conduct a ``final forensic
audit'' of reconstruction funds in Iraq. The Administration sought
additional funding for SIGIR in the fiscal year 2009 ``bridge'' to
ensure that SIGIR has the resources necessary to conduct proper
oversight.
In Afghanistan, the Inspector General Offices of Defense, State,
and USAID are providing comprehensive oversight of reconstruction and
development programs in the country through their collective presence
in the country.
______
Questions Submitted by Senator Daniel K. Inouye
Question. Mr. Nussle, the Administration submitted its supplemental
budget request for fiscal year 2008 15 months ago. Since that time,
many of the underlying assumptions in that request have changed. Given
the fluidity of the situation, why did the Administration limit the
types of changes that could be made in the October 2007 budget
amendment and why hasn't the Administration submitted a subsequent
budget amendment to reflect the true requirements of the Department of
Defense?
Answer. The President's fiscal year 2008 war request, submitted in
February 2007, funded military, intelligence, and foreign affairs
operations in support of the Global War on Terror (GWOT). Conditions in
Iraq and Afghanistan have evolved since then. Our goal in submitting
the fiscal year 20008 supplemental amendment in October 2007 was to
provide Congress with the most up-to-date information regarding the
requirements of the commanders and diplomats on the ground--in
particular, funding to produce, field, and support Mine Resistant
Ambush Protected vehicles, other war-related procurement and extension
of the surge. Subsequently, the Department of Defense (DOD) conferred
with the appropriate congressional committees regarding additional
adjustments to the pending fiscal year 2008 request to ensure that the
Congress was fully briefed on DOD's current requirements. The President
is committed to providing DOD with the resources necessary for the GWOT
and appreciates Congressional action which led to the enactment of the
fiscal year 2008 Supplemental on June 30th.
Question. Mr. Nussle, the Department of Defense has proposed
transferring $174 million of requested supplemental funds for the
Global War on Terror to the Department of State. I am told that
Secretary Rice sought OMB's help with these additional resources and
was directed to request these funds from the Department of Defense. If
the Administration supports these additional requirements, why didn't
you submit a budget amendment to request the funds for the Department
of State?
Answer. The adjustment in the fiscal year 2008 supplemental request
was proposed to help meet Department of State priority GWOT needs in
fiscal year 2008. The Department of Defense supported this additional
funding for the Department of State and sought to enable a funding
shift by reallocating from within DOD's existing request. The
Administration proposed that, on a one-time basis, DOD would use a
small amount of its funding to pay expenses incurred by the Department
of State for DOD-provided services in Iraq. Due to the anticipated
mark-up of the pending fiscal year 2008 supplemental request, informal
discussions seemed to be the most expeditious method to convey this
request to the Congress.
Question. Mr. Nussle, the President's budget request for fiscal
year 2009 included a bridge fund of $70 billion for the Global War on
Terror but has not provided Congress with any details. It was my
understanding that details on the $70 billion request would be
submitted to Congress after General Patreaus' testimony, yet no
additional information has been provided. When will the Administration
be submitting the details of the $70 billion request?
Answer. On May 2, 2008, the President submitted for Congress'
timely action amendments to his fiscal year 2009 budget that would
provide necessary resources for ongoing military and intelligence
operations, as well as foreign assistance activities in support of the
Global War on Terror (GWOT). These amendments distribute by account $70
billion of discretionary budget authority, and do not affect the total
discretionary budget authority proposed in the fiscal year 2009
President's budget. Of the $70 billion allocation, $63 billion is for
the Department of Defense (DOD), $4 billion is for State Department
programs, and another $3 billion is for classified activities.
More than half of the State request is for diplomatic operations
and assistance programs in Iraq and Afghanistan. Funds are also
included to deal with Iraqi refugees.
$45.1 billion of the request is needed to sustain combat operations
in Iraq and Afghanistan. The additional $3 billion in funding for
classified programs would fund a portion of the National Intelligence
Program's fiscal year 2009 GWOT requirements, including intelligence
activities that Congress has funded through previous supplemental
requests.
Additional detail for the request can be found in the budget
amendments transmitted to Congress on May 2, 2008.
Question. Mr. Nussle, for decades, the economies of the U.S.
territorial economies were supported by special tax and trade policies
to compensate for their inherent economic disadvantages. However,
recent trends in trade globalization and tax policy have eroded the
value of these policies. In the past few years, the Northern Mariana
Islands has lost 35 percent of government revenue. American Samoa may
soon lose 70 percent of revenue with the likely departure of its only
industry, fish canning. Does the Administration recognize the crises in
these two communities and have contingency plans for emergency funding
to assure maintenance of essential services?
Answer. The Administration closely monitors the economic and fiscal
conditions in both CNMI and American Samoa, and recognizes the ongoing
challenges due to declines in economic activity in both of these
territories.
The Administration remains committed to working with the
territorial governments to address these challenges by monitoring of
economic conditions within the territories, focusing current resources
on the highest priority needs of the territories, and helping the
governments to plan for various contingencies.
Question. Mr. Nussle, in January, the Department of Labor reported
that the Samoa and Northern Mariana Islands economies are particularly
vulnerable to disruption. Given the unique circumstances in these two
communities, does the Administration support a delay in the scheduled
increase in their minimum wage levels?
Answer. The Administration would support a delay in the scheduled
minimum wage increase in American Samoa and the Commonwealth of the
Northern Mariana Islands (CNMI).
As noted in the Department of Labor's January 2008 report, ``Impact
of Increased Minimum Wages on the Economies of American Samoa and the
Commonwealth of the Northern Mariana Islands,'' future increases in the
minimum wage rate have the potential to cause economic and financial
harm to the territories, which face unique challenges in attracting
private sector businesses because of their geographic isolation and
location in a part of the world where neighboring economies have lower
minimum wages and living standards.
In American Samoa, minimum wage increases have the potential to
threaten the viability of tuna canneries, a significant component of
the private sector economy. There appears to be genuine cause for
concern that production will be shifted to facilities outside U.S.
jurisdiction where labor costs are significantly lower. Without the
canneries as an anchor for the private sector tax base, cutbacks in
local government operations and services could be necessary.
The scheduled minimum wage increases for CNMI are expected to add
further challenges to an already declining economy. With both of its
major industries--the tourism and garment industries--in decline, its
current economic situation makes it especially vulnerable to additional
shocks. While data are not available to precisely quantify the impact
of the recent and scheduled future minimum wage increases, it seems
likely that minimum wage increases may worsen the current economic
situation.
Question. Mr. Nussle, the U.S. military has begun a substantial
military build-up in Guam that is expected to increase the population
by at least 20 percent. The DOD budget, and funding from the Government
of Japan, will meet the new infrastructure needs of the military. What
steps has OMB taken to assure that there is a coordinated plan among
Federal agencies and Guam to identify the infrastructure needs of
Guam's civilian community and to identify a source of funds to meet
these needs? For example, has OMB requested an interagency MOA among
Federal Departments and Guam to identify needs, costs, and funding
sources?
Answer. The Interagency Task Force on Guam co-led by the Joint Guam
Project Office from DOD and Interior's Office of Insular Affairs is
meeting regularly with federal agencies (including Departments of
Labor, Education, Health and Human Services, Transportation,
Agriculture and agencies such as the Small Business Administration and
Environmental Protection Agency) and the Government of Guam. The Task
Force will determine what infrastructure and social system needs Guam
should have as a result of DOD's construction project and the increased
military and civilian personnel presence once the Marines move to Guam.
The Task Force is also identifying assistance different agencies can
provide to Guam. OMB staff have been participating in these interagency
meetings, and due to the strong commitment of all participating
agencies, OMB believes the interagency process, with the active
participation of the Government of Guam, is a more effective means for
addressing the current and future resourcing needs of the Government of
Guam than the development of an MOA among federal agencies and the
Government of Guam. OMB is also reviewing potential sources of Federal
funding for high priority infrastructure improvements associated with
the buildup.
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Questions Submitted by Senator Patrick J. Leahy
state and local law enforcement assistance grants
Question. Violent crime here at home has been rising, but the
Administration has dismantled front-line support for State and local
law enforcement here at home. Compare this with the Administration's
view that no expense is too large for the hiring and equipment needs of
the Iraqi police force, on which we have spent nearly $21 billion, with
questionable results.
It's a different story for our own police departments, which have
been stretched thin for years as they shoulder both traditional crime
fighting duties and new homeland security demands. In what we spend in
just five days on the Iraq War, we could fully fund the COPS Program at
$1.15 billion and Byrne/Justice Assistance Grants at $1.095 billion.
That alone would put 9,000 new police officers on the beat to make our
communities safer, and it would allow us to shore up our multi-
jurisdictional drug and gang task force efforts. And during this
National Crime Victims Week, I would ask the Bush Administration to
reflect on what its proposed cuts to the Crime Victims Fund will mean
to crime victims across this nation.
It is past time for this Administration to cooperate with Congress
and to get the real priorities of the American people straight. How
about if we start by asking Iraq to shoulder part of the burden of its
own law enforcement needs? After all, the major revenue source for the
Iraqi government is oil, which has risen dramatically over the past
year to more than $114 a barrel. Unlike us, the Iraqi government
actually is running a budget surplus! For a tiny fraction of the money
we spend each year on the Iraq War, we could make our own towns and
cities safer in practical, proven and successful ways. Instead, the
Bush Administration sends us a 2009 budget that cuts the help to state
and local law enforcement agencies by $1.6 billion--that's a staggering
64 percent.
Director Nussle, would the Administration support asking the Iraqi
government to assume part of what the United States is paying for the
Iraqi police force? We should dedicate those savings from an Iraqi cost
share to restoring the cuts that you have proposed in the COPS and
Byrne/JAG programs.
Answer. The Administration supports the Government of Iraq
increasing its resourcing for the Iraqi police force, budgeting more
than 3 times the U.S. government contribution in 2008. While the U.S.
government contribution for Iraqi police forces has steadily declined,
the U.S. funding has significantly developed police force capabilities
and ministerial capacity within the Ministry of Interior. This
partnership has permitted the Iraqi government to assume greater
responsibility and control of the internal security of their nation, as
shown by the transfer of control to the Iraqis of 9 of their 18
provinces. However, there are no savings to redirect toward the COPS
and Byrne/JAG programs.
Question. Why does the Administration keep trying to eliminate
programs that are universally acknowledged to work in the bringing down
crime rates?
Answer. The Administration believes that the federal government
should be a reliable partner with state and local law enforcement and
that taxpayer dollars must be spent wisely to help meet that goal.
Competition should be the guiding principle used to ensure that
Department of Justice state and local law enforcement assistance flows
to the areas of greatest need. The fiscal year 2009 budget proposes $1
billion in spending for state and local law enforcement assistance
programs, and consolidates more than 70 different programs, many of
which are small, earmarked, or have not demonstrated results, into four
flexible grants. Each grant program will permit States and localities
to compete for funding based on local needs, as well as national
priorities. The Byrne JAG, which is formula-based, and COPS grants
programs, which have $269 million in earmarks in fiscal year 2008, are
among those that would become part of the new, flexible grant
structure.
One of the competitive programs we propose, the Violent Crime
Reduction Partnership (VCRP) Initiative, will help State and local law
enforcement agencies form multi-jurisdictional partnerships with
Federal law enforcement agencies to tackle the most serious crime
issues in their areas. This new program, funded at $200 million,
focuses on building and supporting multi-jurisdictional partnerships to
prevent and, where necessary, investigate and prosecute particular
types of crime where they are becoming too great a challenge for local
law enforcement to handle alone.
Question. Congress has raised considerable concerns about the
readiness and effectiveness of training efforts of both Afghan and
Iraqi security forces, but we have provided a total of $33 billion for
these purposes because of the high stakes involved. What oversight
mechanisms do we have in place to monitor that these funds are being
used effectively?
Answer. The Administration takes the oversight of funding provided
to the Afghan and Iraqi security forces very seriously. The Department
of Defense (DOD) has policies and procedures in place to ensure that
all of its funding is used effectively and responsibly, including the
Iraq Security Forces Fund (ISFF) and the Afghan Security Forces Fund
(ASFF). War zones pose unique challenges to rigorous financial
management, though DOD has worked consistently to improve its
accounting and budgeting practices in both Afghanistan and Iraq. The
DOD Inspector General has ongoing projects that assess the financial
management of the ISFF and ASFF, which have led to greater transparency
and accountability. DOD has also benefited from the reviews and
recommendations of the Special Inspector General for Iraq
Reconstruction (SIGIR) and will work closely with the Special Inspector
General for Afghanistan Reconstruction (SIGAR).
crime victims fund
Question. The week of April 13 marks the 27th National Crime
Victims Rights Week where as a nation we honor and renew our commitment
to crime victims and their families. In particular, I have been honored
to support passage of the Victims of Crime Act of 1984 (VOCA), which
established the Crime Victims Fund (``the Fund''). The Fund allows the
Federal Government to provide grants to State crime victim compensation
programs, direct victim assistance services and services to victims of
federal crimes.
In the President's fiscal year 2009 budget proposal, the
Administration has yet again proposed rescinding all amounts remaining
in the Crime Victims Fund, an estimated total of $2.024 billion, which
will leave the Fund empty at the start of 2010. A rescission of the
Fund combined with the proposals to lower the cap of the Fund, will
leave victim assistance programs nationwide at risk of large cuts to
their programs or even having to discontinue services.
In my home State of Vermont, the President's proposal would be
devastating. Many of the programs that VOCA provides funding for help
the most vulnerable populations in Vermont. For example, transitional
housing programs funded through VOCA allowed a mother and her 9 year
old daughter to escape a sexually abusive husband and father. Through
counseling services and emergency financial assistance they are now
living independently and free from abuse. Emergency legal advocacy
funded by VOCA grants helped 75-year old Mary stop a cycle of abuse by
her husband during his visits to her nursing home. These support
services and dozens of others would be in jeopardy should the
president's proposal go forward.
For a program that is funded entirely through criminal fines,
forfeited bail bonds, penalties, and special assessments--not taxpayer
dollars or appropriations--what is the Administration's reason, other
than recording a budgetary savings, for gutting a program that provides
essential services for victims of crime?
Answer. The Administration has not proposed reducing assistance for
crime victims. In fact, the fiscal year 2009 budget proposes the same
level of funding--$590 million--as allocated by the Congress in fiscal
year 2008 for the crime victims' programs funded by the Crime Victims
Fund.
Each year, the Congress imposes an obligation limitation on the
Fund, permitting excess balances to roll forward and scoring a
budgetary savings that frees up spending for other discretionary
programs. By proposing to cancel $2 billion in excess balances, the
Administration is proposing to end what has become a recurring budget
gimmick.
Question. When I asked you about where the rescinded monies from
the Crime Victims Fund during the April 16 hearing before the
Appropriations Committee, you answered that the rescinded funds would
be put towards the four ``stovepipe'' programs for state and local law
enforcement assistance and would therefore aid victims of crime. This
is incorrect, as there is no proposal in the President's budget request
to designate these funds for those purposes. In reality, the rescinded
monies will go toward paying down the budget deficit accrued by this
Administration. Please explain why you stated what you did and explain
your response.
Answer. The Administration has proposed to consolidate 70+ state
and local law enforcement grant programs, and to consolidate these
programs into just four competitive grants. However, this proposal does
not affect the crime victims' compensation and assistance programs
funded by the Crime Victims Fund.
The Administration is proposing to cancel excess Crime Victims Fund
balances in order to end a recurring practice of scoring budget savings
from obligation limitations imposed by the Congress each year. Like an
obligation limitation, the cancellation of balances will yield a budget
savings in fiscal year 2009. However, this will be a one-time impact
and does have the benefit of ending a recurring discretionary budget
offset used by both the Congress and the Administration. The effect in
fiscal year 2009 of both the President's proposal and what Congress
regularly includes in annual appropriations bills, is to make available
for spending on other priorities an amount of funding equivalent to the
excess Crime Victims Fund balances. Congress does this through a
gimmick that allows it to score ``savings'' on the same CVF resources,
year after year. The Administration's proposal includes no such gimmick
and would therefore achieve savings only for one year.
Question. Please state whether you believe that the $1 billion
requested by the Administration for all grants assistance programs
within the Office of Justice Programs, COPS, the Weed and Seed Program
and the Office on Violence Against Women will be sufficient to meet the
needs required by State and local law enforcement to combat rising
violent crime and assist crime victim survivors, and explain your
response in detail.
Answer. While the crime rate has fluctuated recently in selected
cities, the overall violent crime rate remains well below historical
levels. In fact, FBI data shows that, nationally, violent crime dropped
by 1.8 percent in the first half of 2007 compared to a year ago.
Nevertheless, the Administration remains concerned about violent crime
and believes that the Federal government must be a reliable and
effective partner for state and local law enforcement. Taxpayer dollars
must be spent smarter to help meet that goal, however. The
Administration believes that it is possible to provide effective
assistance without spending $675 million on earmarks, over $500 million
on formulas, and $400 million on programs that do not influence crime
(e.g., the State Criminal Alien Assistance Program). Competition and
merit should be the guiding principles used to ensure that state and
local law enforcement assistance flows to the States, communities, and
organizations that are most deserving of assistance. Further, the
Administration's proposal introduces more flexibility for the grantees
by consolidating more than 70 different stovepiped programs into four,
which will enable States and localities to compete for funding based on
local needs, as well as national priorities. The Administration
believes that it is possible to provide assistance to state and local
law enforcement more wisely, and more effectively, as the fiscal year
2009 budget proposes.
One of the competitive programs proposed in the fiscal year 2009
budget, the Violent Crime Reduction Partnership (VCRP) Initiative, is
intended specifically to help State and local law enforcement agencies
form multi-jurisdictional partnerships with Federal law enforcement
agencies to tackle the most serious and violent crime issues in their
communities. The Byrne Public Safety and Protection Program, for which
the budget requests $200 million, will be used to address high priority
crime problems and multiple public safety needs. The budget also
proposes the Violence Against Women Grants ($280 million) and the Child
Safety and Juvenile Justice Program ($185 million)--which will better
target the traditional, multiple funding streams for programs violence
against women, child safety, and juvenile justice to the areas of
greatest need. In addition, the budget also provides $148 million for
information sharing among law enforcement agencies, criminal justice
statistics and research, and other programs.
Question. Given that the Justice Department has yet to submit to
Congress a detailed plan for this consolidated ``stovepipe'' approach,
the fact that the President has proposed a $1.6 billion cut to law
enforcement assistance with this approach, and that the Administration
basically eliminates the dedicated funding stream for victims services,
how do you mean to ensure that funding is set aside for victims?
Answer. The Department of Justice shared draft authorizing
legislation with the Congress following the release of the fiscal year
2008 budget, which would implement the Administration's consolidated
grant proposal. We would be happy to share the draft legislation again.
Again, the aim of this proposal is to consolidate more than 70
stovepiped programs into four competitive and flexible grants.
The Administration has proposed cancelling excess balances from the
Crime Victims Fund, but does not propose changing the funding mechanism
for the crime victims' compensation and services programs provided for
by the Fund. As in the past, those programs will continue to be
financed by continued collection of criminal fines and penalties, just
as they are now. The fiscal year 2009 budget proposes appropriations
language that would permit funding for the crime victims' programs to
be made available at the beginning of each fiscal year, to be repaid by
fines and penalties collected throughout the year.
transportation/infrastructure needs
Question. While the Bush administration has spent billions to
rebuild roads and bridges in Iraq, it has neglected the critical
transportation infrastructure needs of this country. The Transportation
Secretary recently chaired a national commission on transportation
financing that concluded we are not spending nearly enough to build and
maintain our transportation infrastructure. That panel determined that
the United States needs over $225 billion in new infrastructure
investment in order to upgrade our aging transportation system.
In Vermont, for instance, we face a transportation funding
shortfall of over $100 million for projects that are just sitting on
the shelf waiting for funding--including a highway and bridge backlog
of over $55 million; a public transit bus replacement backlog of over
$18 million; and a rail backlog of over $10 million.
Yet instead of spending limited taxpayer resources on important
projects that could jumpstart the U.S. economy and create American
jobs, this administration has made the conscious decision to fritter
those precious American dollars a world away on the infrastructure of
Iraq. To top it off, we're once again being asked to spend billions on
roads and bridges in Iraq, no questions asked, but we cannot move a
bill in the Senate this week that for a fraction of the cost would fix
U.S. infrastructure and provide hardworking Americans with jobs. It
boggles the mind.
Since you have to take the big picture view of the President's
budget request, do you think that American taxpayers are being treated
fairly and equitably under this budget proposal that time and time
again emphasizes the priorities of Iraq over the priorities of the
United States?
Answer. The President is committed to both the priorities of
American people at home and abroad. The current level of annual Federal
funding requested by the President for domestic needs is evidence of
his support of the American taxpayers and their domestic priorities.
With regard to infrastructure specifically, it is important to note
that Federal spending on transportation infrastructure is on the rise
and has been for some time. Transportation spending is projected to
jump significantly this year--the President's 2009 budget request for
DOT will result in a 53 percent increase in grant outlays to states and
localities compared to 2001. The 2009 budget also estimates that, in
total, DOT programs will outlay 10 percent more grants to state and
local governments in 2008 than in 2007, including an 11 percent
increase by Federal Aid Highways.
At a national level, we have seen tangible improvements in the
condition of infrastructure. For example, the percentage of Vehicle
Miles Traveled (VMT) on National Highway System (NHS) pavement with
good to very good ride quality (i.e., International Roughness Index
(IRI) of less than or equal to 95 in/mi) has increased from 52 percent
in 2002 to 57 percent in 2007. The percentage of bridge deck area on
National Highway System (NHS) bridges that are rated as either
structurally deficient or functionally obsolete has decreased from 32.6
percent in 1998 to 29.6 percent in 2007, and has decreased from 32.5
percent in 1998 to 30.5 in 2007 for non-NHS bridges.
However, the Administration continues to believe that the overall
funding model for transportation infrastructure--involving thousands of
earmarks and inadequate targeting based on need and cost-benefit--is
broken. As is noted in the Minority Views section of the report that
you are referencing, which was advanced by the Secretary and two
Commissioners, continuing to rely on a tax-based financing system that
has little or nothing to do with the true costs of using or providing
transportation infrastructure is a flawed mechanism for improving
system performance and reliability. Furthermore, the Minority Views
called for a much more focused Federal role in funding transportation
infrastructure, consistent with the views of the Government
Accountability Office. The next surface transportation authorization
will provide an opportunity to advance more fundamental reform, which
would have a far more profound effect on the condition of the country's
transportation infrastructure than additional Federal spending at this
time.
government contractors avoiding u.s. payroll taxes
Question. While our domestic spending priorities suffer because of
the ongoing war in Iraq, several enriched defense contractors have set
up offshore shell companies to avoid U.S. Social Security and Medicare
payroll taxes.
According to recent press reports in the Boston Globe, Kellogg
Brown & Root has avoided U.S. payroll taxes by hiring workers through
shell companies in the Cayman Islands. Through a loophole in our tax
code, American companies that are benefiting from U.S. government
contracts are able to set up foreign subsidiaries in tax havens and
treat American workers employed in connection with the contract as
employees of the subsidiary. As a result, these employers can avoid
paying Social Security and Medicare payroll taxes.
Director Nussle, do you agree with me that Defense contractors
should be paying their fair share of payroll taxes?
Answer. Yes, I do. Regarding offshore companies, we generally would
not object to the concept of holding U.S. companies liable for
collecting and paying payroll taxes on U.S. employees working on
government contracts overseas, even if they are employed by a foreign
subsidiary. However, I would refer the question to the Department of
the Treasury to provide technical assistance because this requirement
could have unintended consequences, such as creating artificial hurdles
for foreign companies to hire U.S. workers overseas or disrupting
international social security agreements.
In addition, we are concerned that a minority of contractors
continue to owe tax debts. It is unacceptable for contractors doing
business with the government to be delinquent in paying their taxes.
The Administration is taking significant steps to boost accountability
and ensure contractor tax compliance.
On April 22nd, a rule was published in the Federal Register
amending the Federal Acquisition Regulation (FAR) to authorize federal
officials to use tax delinquency as sufficient grounds for proposing
debarment or suspension. The rule is available for viewing at: http://
federalregister.gov/OFRUpload/OFRData/2008-08508_PI.pdf
In addition, the Federal Contractor Tax Compliance Task Force, led
by the Department of the Treasury has made a number of significant
improvements to policies and processes that directly result in
increased debt collection. Levy collections from Federal payments to
contractors increased from $7 million in fiscal year 2003 to $48
million in fiscal year 2007. This number reflects only collections
received through the levy program and does not include additional
collections paid to IRS upon the contractor's receipt of the due
process notice of the intended levy action.
CONCLUSION OF HEARING
Chairman Byrd. The committee is recessed.
[Whereupon, at 2:09 p.m., Wednesday, April 16, the hearing
was concluded, and the committee was recessed, to reconvene
subject to the call of the Chair.]
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