[Senate Hearing 113-230]
[From the U.S. Government Publishing Office]
S. Hrg. 113-230
NOMINATION OF HONORABLE SYLVIA MATHEWS BURWELL, OF WEST VIRGINIA, TO BE
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
----------
April 10, 2013--NOMINATION OF HONORABLE SYLVIA MATHEWS BURWELL, OF WEST
VIRGINIA, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
S. Hrg. 113-230
NOMINATION OF HONORABLE SYLVIA MATHEWS BURWELL, OF WEST VIRGINIA, TO BE
DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
April 10, 2013--NOMINATION OF HONORABLE SYLVIA MATHEWS BURWELL, OF WEST
VIRGINIA, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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COMMITTEE ON THE BUDGET
PATTY MURRAY, WASHINGTON, CHAIRMAN
RON WYDEN, OREGON JEFF SESSIONS, ALABAMA
BILL NELSON, FLORIDA CHARLES E. GRASSLEY, IOWA
DEBBIE STABENOW, MICHIGAN MICHAEL B. ENZI, WYOMING
BERNARD SANDERS, VERMONT MIKE CRAPO, IDAHO
SHELDON WHITEHOUSE, RHODE ISLAND LINDSEY O. GRAHAM, SOUTH CAROLINA
MARK R. WARNER, VIRGINIA ROB PORTMAN, OHIO
JEFF MERKLEY, OREGON PAT TOOMEY, PENNSYLVANIA
CHRISTOPHER A. COONS, DELAWARE RON JOHNSON, WISCONSIN
TAMMY BALDWIN, WISCONSIN KELLY AYOTTE, NEW HAMPSHIRE
TIM KAINE, VIRGINIA ROGER F. WICKER, MISSISSIPPI
ANGUS S. KING, JR., MAINE
Evan T. Schatz, Staff Director
Eric Ueland, Republican Staff Director
(ii)
C O N T E N T S
__________
HEARING
Page
April 10, 2013--Nomination of Honorable Sylvia Mathews Burwell,
of West Virginia, to be the Director of the Office of
Management and Budget.......................................... 1
STATEMENTS BY COMMITTEE MEMBERS
Chairman Murray.................................................. 1
Ranking Member Sessions.......................................... 8
WITNESSES
The Honorable Joe Manchin Iii, A United States Senator From The
State Of West Virginia......................................... 10
BIOGRAPHICAL INFORMATION
Statement of Biographical and Financial Information Requested of
Presidential Nominee Honorable Sylvia Mathews Burwell to be
Director of the Office of Management and Budget................ 41
ANSWERS TO QUESTIONS SUBMITTED
Chairman Murray.................................................. 61
Ranking Member Sessions.......................................... 72
Senator Wyden.................................................... 87
Senator Portman.................................................. 89
Senator Crapo.................................................... 90
Senator Enzi..................................................... 93
Senator King..................................................... 96
THE NOMINATION OF THE HONORABLE SYLVIA MATHEWS BURWELL, OF WEST
VIRGINIA, TO BE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
----------
WEDNESDAY, APRIL 10, 2013
United States Senate,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to notice, at 10:31 a.m., in
Room SD-608, Dirksen Senate Office Building, Hon. Patty Murray,
Chairman of the Committee, presiding.
Present: Senators Murray, Sanders, Whitehouse, Warner,
Merkley, Kaine, King, Sessions, Grassley, Crapo, Portman,
Johnson, and Ayotte.
Staff Present: Evan T. Schatz, Majority Staff Director; and
Marcus Peacock, Minority Staff Director.
OPENING STATEMENT OF CHAIRMAN MURRAY
Chairman Murray. Good morning. This hearing will come to
order. I want to thank my Ranking Member, Senator Sessions, and
all of our colleagues for joining us here today, as well as
members of the public who are here or watching online.
Today we are considering President Obama's nomination of
Sylvia Mathews Burwell to be the next Director of the Office of
Management and Budget.
Sylvia, thank you so much for joining us here today.
I also want to welcome your husband, Stephen Burwell, and
your sister, Stephanie O'Keefe, who I understand are with you
today. Welcome to both of you.
As everyone in this room knows, those of us in public
service could not do our jobs without the support of our
families. So we really appreciate your being here and all you
do, and I want to recognize that at the top.
I also want to recognize Jeff Zients this morning for his
outstanding service as Acting Director of OMB. Jeff's
leadership at OMB has been instrumental during a critical time
for our country. As Acting Director, Jeff has helped us tackle
some of our most pressing fiscal issues over the past few
years, and we have been very fortunate to have his skilled
leadership, and I want to thank him again for his service. And,
of course, we will hear from him tomorrow in this Committee on
the President's 2014 budget.
As we all know, our country faces serious fiscal and
economic challenges that we need to work together to address.
Right now the economy is recovering, but far too slowly.
Millions of workers are still looking for too few jobs.
Millions of families are still worrying about staying in their
homes or putting food on the table.
And we have serious long-term deficit and debt challenges
that we need to tackle since we certainly do not want to leave
our children and grandchildren with a pile of unmanageable
bills.
And the American people are, of course, sick and tired of
the gridlock that has paralyzed the budget process here in
Washington, D.C. So they are looking to us to end the constant
artificial crises and political brinkmanship that is
threatening our fragile economic recovery. And they want us to
come together around fair solutions that work for the middle
class, help our economy grow, and tackle our deficit and debt
responsibly.
That is why I am proud of the work we did here in this
Budget Committee and on the Senate floor last month to write,
debate, and pass a responsible budget plan that puts economic
growth and the middle class first.
The Senate budget that we passed invests in jobs and
economic growth, tackles our deficit and debt fairly and
responsibly with an equal mix of spending cuts and new revenue
from the wealthiest Americans, and it keeps the promises we
have made to our seniors, our veterans, our families, and our
communities. But passage of our budget is not the end of the
discussion. The work needs to continue until we get the
balanced and bipartisan deal the American people expect and
deserve.
That is why now, more than ever, it is so important that we
continue to have strong leadership at the Office of Budget
Management, which is why I am very pleased that we are here
today and have a very qualified and exceptional nominee in
Sylvia Burwell.
Sylvia knows what it means to invest in job creation in the
short term while working to put our country on a strong path to
responsible and sustainable deficit and debt reduction over the
medium and long term.
In the 1990s, she was a critical part of President
Clinton's economic team, serving as Deputy Director of the
Office of Management and Budget, Deputy Chief of Staff to the
President, and Chief of Staff to the Secretary of the Treasury.
During her tenure in the Clinton administration, we saw
broad-based economic growth and responsible budgets that worked
for our middle class. As Deputy Director of OMB in the late
1990s, Sylvia helped preside over three of the four budget
surpluses experienced in a row.
Businesses saw Government taking a credible and sustainable
approach to our Federal budget, and it gave them the confidence
to hire new workers and invest in their growth. Middle-class
workers were getting better jobs, spending their money, and
building prosperity.
This economic growth, built from the middle out, along with
the balanced and responsible fiscal stewardship, turned our
deficit and debt challenges around then. Federal revenue
increased from 17.5 percent of GDP to 20.6 percent. At the same
time, responsible spending cuts lowered Federal spending by
almost four percentage points. And as a result, a 4.7-percent
deficit was turned into a 2.4-percent surplus in 8 years.
The lessons of the 1990s are vital to the discussions we
are having today about our budget and our economy. So I believe
that Sylvia's experience working on a balanced, responsible
approach to deficit reduction will bring important knowledge
and a key perspective to OMB.
Following her work in the Clinton administration, Sylvia
continued her public service by leading major organizations in
the nonprofit and foundation world.
At the Gates Foundation, she served as the president of the
Global Development Program and chief operating officer, working
to expand their global efforts to improve the lives of others
across the world.
Most recently, as president of the Walmart Foundation,
Sylvia has continued to create a positive impact on our
communities, focusing on critical issues such as hunger relief
and women's economic empowerment.
Sylvia's experience managing billion-dollar global budgets,
combined with her leadership on domestic fiscal policy in the
1990s, make her a uniquely qualified candidate to lead OMB and
to help shape our country's economic future.
And not only does Sylvia's professional experience make her
a strong nominee for this position; she also brings an
important personal outlook to the job. Raised in West Virginia
as the granddaughter of Greek immigrants, Sylvia grew up with
the values of hard work and the promise of American
opportunity.
She has seen firsthand that budgets are not just about
abstract numbers and the partisan back-and-forth that too often
dominates the conversation. She knows they are reflections of
our values and our priorities, and they are about our families
across the country whose lives and futures are impacted by the
decisions that we make.
There are tough challenges before Sylvia and all of us here
on the Budget Committee.
I have had the opportunity to sit down personally with
Sylvia and to discuss the approach she will take to these
important issues. And I am confident that she possesses the
kind of experience, integrity, and expertise necessary to
succeed in this position, and that she will work to tackle our
debt and deficit issues in a balanced way, by prioritizing
fairness, opportunity, and a return to the responsible fiscal
and economic policies that have worked for our country before.
Especially during these difficult economic times, it is
critical that we continue having strong and consistent
leadership at OMB. The Committee's Ranking Member, Senator
Sessions, and I agree that it is time to return to a pattern of
stability and continuity with regard to our budget process.
The Senate budget we passed last month was a key step
towards that. And Senator Sessions and I agree that confirming
a permanent Director of OMB is another important part of this
effort. So I hope that we can move quickly as a Committee on
this nomination since we cannot continue to have uncertainty in
this position. And I hope to schedule a Committee vote, for the
information of our Senators, on this nomination soon so that
the full Senate can confirm the nominee in a timely manner.
Senator Manchin will be joining us in just a moment, and he
will introduce Sylvia. I look forward to asking you some
questions. And before we do that, I am going to turn to Senator
Sessions, my Ranking Member, for his comments.
OPENING STATEMENT OF SENATOR SESSIONS
Senator Sessions. Thank you, Madam Chairman, and this is
the third time during the President's administration that we
have been called upon to advise and consent on a nominee to be
the Director of the Office of Management and Budget. The
primary responsibility of OMB is to assist the President in
overseeing the preparation of the Federal budget. The office is
supposed to help the President formulate his spending plan by
evaluating the effectiveness of agency programs, policies, and
procedures in order to set funding priorities.
Notwithstanding this, one of the first actions of this
administration was to eliminate the Program Assessment Rating
Tool, the PART program, designed to evaluate the effectiveness
of agency programs, I have to say drafted and the architect of
that is Marcus Peacock, my chief Staff Director here on the
Committee. It was a good program. I think it was the right
thing to do.
Ms. Burwell will be called upon to right the ship, the
financial ship of state. The previous Directors have not
submitted timely or responsible budgets. Indeed, we are going
to receive the President's budget today, which was due,
according to Federal law, by the first Monday in February. The
budget is over 2 months overdue.
By all accounts, Ms. Burwell is well liked, an able leader
with a commitment to public service. She brings some relevant
experience to the task, having previously served as Deputy
Director of OMB, and has other budgetary experience as the
Chief of Staff to the Secretary of the Treasury and the Staff
Director for the National Economic Council.
But her most recent experience has been in the charitable
sector with the Walmart and Bill and Melinda Gates Foundations.
So it has been more than a decade since she has been at OMB.
The Director of OMB is one of the most crucial positions in
our Government. There is just no doubt about it. In addition to
preparing the budget, the OMB Director must evaluate program
effectiveness throughout the Government, set priorities,
represent the President, and have the strength to say no to
agency demands that just cannot be met. The Director needs to
protect the taxpayers.
We would normally look for someone with a proven record,
perhaps like a Governor who has managed a State and balanced a
budget. But Ms. Burwell will have that opportunity to prove
that she is up to that task.
But make no mistake. It is a tough job. The OMB Director
must be able to say no.
I believe the next Director should be committed to offering
a balanced budget. The national debt is currently $16.7
trillion and growing every week, every month. This is an
unsustainable debt course. The actions of the new Director will
reflect whether deficits matter for this administration. We
will tell immediately by seeing the budget.
Will the next Director lead or take the path of former
Director Jack Lew? Mr. Lew said of his 2011 budget, ``Our
budget will get us over the next several years to the point
where we can look the American people in the eye and say we are
not adding to the debt anymore, and we are spending money we
have each year. And then we can work on bringing down our
national debt.''
That was not accurate. It just was not true.
We must have honesty in the OMB Director. Mr. Lew's--
Senator Manchin, it is great to have you.
Senator Manchin. It is always get to be here.
Senator Sessions. And we are glad to have West Virginia
values before us today in full force.
Mr. Lew's budget that he submitted never had a single year
with less than $600 billion in deficit. So it came nowhere
close to what he indicated to the American people his budget
would do.
The American people must be given the truth about our
financial situation. You cannot ask them to make changes and
make tough decisions if they do not know what the real facts
are. You must not repeat that performance. You and I have
talked about it.
Will the next Director take the view of liberal economist
Paul Krugman, who has indicated that even wasteful spending is
good? This is what he said recently: ``Whether it is
entitlements or not, even if it is defense, even if it is
wasteful spending, it is going to hurt the economy if you cut
it right now. It does not mean we should not look for ways to
cure waste, but now to a large effect, spending is spending.''
In other words, spending is good even if it is borrowed, even
if it is on a wasteful program. That is not the correct view.
Just yesterday, the Government Accountability Office
released its third annual report highlighting extensive
duplication and overlap in hundreds of Federal programs. In the
last two reports, GAO has identified more than 1,300
overlapping programs, costing the taxpayers more than $365
billion each year. This widespread duplication is costing
hundreds of billions of dollars in excess Government spending.
It can be eliminated. It must be eliminated.
The taxpayers of this country deserve a Government that is
lean, efficient, and productive. The Nation will benefit from
such a Government. But, unfortunately, this administration
seems to be more inclined to spend, more inclined to follow the
Krugman approach. I hope that will change.
Finally, it has become clear that our debt level is already
pulling down economic growth and job creation. The Rogoff-
Reinhart report that dealt with the threshold level of 90
percent of GDP is pretty well known in this Committee. But the
International Monetary Fund, the European Central Bank, and the
Bank for International Settlements have also done studies that
indicate the debt level of the United States today is already
above the level at which it begins to slow growth. We have to
understand that. The recent job numbers, the recent fourth
quarter sad growth numbers are indicative that we are not
growing at the level we need to. I am more and more convinced,
as these studies indicate, that the already high debt level is
pulling down economic growth, curtailing job creation, and we
have to get off that path.
So this is an important hearing, Madam Chair. I look
forward to asking Ms. Burwell her views on the state of the
Nation's financial condition and her plans for helping us fix
it.
Chairman Murray. Thank you very much, Senator sessions.
And, with that, we are delighted to have Senator Manchin
join us today to introduce Ms. Burwell. He knows that she is a
native West Virginian and shares the values that I think are so
important to him and to the country. So, Senator Manchin, thank
you.
STATEMENT OF THE HONORABLE JOE MANCHIN III, A UNITED STATES
SENATOR FROM THE STATE OF WEST VIRGINIA
Senator Manchin. Madam Chairman, thank you so much. I am
sorry for my tardiness, but it definitely is important for me
to be here with my dear friend.
Sylvia Mathews Burwell to your Committee is going to be
someone that you are going to enjoy working with, I know. She
is a great American. She is a great West Virginian from the
great town of Hinton, West Virginia, in Summers County, a
little town in the foothills of beautiful New River that flows
through Hinton Reservoir. And she is going to make just a great
Director of the Office of Management and Budget.
I am proud to support Sylvia's nomination for this
prestigious position, one in which she will be responsible for
managing our Federal spending as we make the tough decisions to
put our fiscal house in order. She will be a great partner in
that effort with each and every one of you.
Sylvia and her family reflect the heart and soul of West
Virginia, a State where people are defined by their deeds as
much as their words. This lady is grounded. She understands
where she comes from. She understands who she is.
It does not surprise any of us who know the Mathews family
count them among our dearest friends. Her parents are truly my
friends. They are community leaders in Hinton. For over half a
century, her father, Dr. William Mathews, is a long-time
optometrist and a leading proponent of his wife, Cleo, which is
her mother, who is our town mayor. And she was also head of the
State Board of Education for two terms. So this lady's DNA is
rooted deep with public service. Not only did Cleo serve as our
mayor of Hinton; she spent 8 years on the State Board, two as
the president of the State Board of Education. She was on the
Development Board, served as vice president of the National
Association of State Boards of Education. She served on the
Board of Directors of the West Virginia Municipal League, and
it goes on and on.
Indeed, Sylvia has traveled the world over, but she has
never lost touch with her West Virginia roots. She went off to
Harvard and was a Rhodes Scholar. But no matter where she is,
one day each week of her life, each week since she has left
West Virginia, like clockwork, she is on the phone with two of
her best friends that she made in the first grade in Hinton,
West Virginia. That tells you that she is grounded, and they
are here, right? There we go.
I would hope that you would give Sylvia's resume a quick
glance, and you can see that she could earn a fortune in the
corporate world if she wanted to. But instead she has spent her
life helping people all over the world.
I share the beaming pride that her parents and her husband,
Stephen, have in her life and in her life's work. As many of
you know, Sylvia dedicated the last 11 years to serving the
greater good, helping the least fortunate among us both in the
United States and throughout the world as a visionary leader
with the Bill and Melinda Gates Foundation and more recently
with the Walmart Foundation.
She served as chief operating officer and executive
director at the Gates Foundation from its inception in 2001
until 2006 at which point it was firmly established as a global
philanthropy leader.
Sylvia then transitioned to the Gates Foundation Global
Development Program where she served as president until 2012
and led the foundation's $725 million annual effort to improve
the lives of more than 200 million people worldwide. Under her
leadership, the foundation broke new ground in pursuing
sustainable investments in agricultural development, low-income
financial services, water and sanitation, global literacy,
emergency relief, and poverty alleviation.
Finally, as president of the Walmart Foundation throughout
2012, she led the company's charitable giving efforts and the
Global Women's Economic Empowerment Initiative.
While her philanthropic achievements speak great volumes
about her character, we should remember that she is no stranger
to Washington or the Office of Management and Budget. She
served as Deputy Director of the OMB from 1998 to 2001, our
last era of fiscal responsibility, when balanced deficit
reduction gave us balanced Federal budgets. We all know that
Sylvia was a key part of the Clinton White House team that
reached across the aisle and negotiated those balanced budgets
with the Republican Congress. This experience as a problem
solver and a bridge builder is in high demand these days. We
should take to heart the advice Clinton White House Chief of
Staff Erskine Bowles gave her: ``You attract more bees with
honey.''
Of course, the 6 years she had previously spent in the
Clinton administration prepared her well for those tough
negotiations. Assistant to the President, Deputy Chief of
Staff, Deputy Chief of Staff to the Treasury Secretary, Staff
Director for the National Economic Council, and Special
Assistant to the head of the National Economic Council, Sylvia
Mathews Burwell is uniquely qualified to serve as the Director
of the Office of Management and Budget. Not only is she an
expert on budgetary and domestic policies, but she also has a
proven record of working in a bipartisan way to produce
meaningful and enduring results. She understands that a
bipartisan solution is a lasting solution.
Madam Chairwoman, I can only say this about Sylvia: She
understands the value of a dollar. Where we come from, we have
to stretch that dollar as far as we can, and I implore all of
my friends on both sides of the aisle to truly accept this
wonderful lady who is as grounded as any grounded West
Virginian or American that I know to do the job that she will
do for this great country. I present to you Sylvia Mathews
Burwell.
Chairman Murray. Thank you very much, Senator Manchin, for
that very gracious statement, and I appreciate your
participating today. I know you have a very busy schedule.
Senator Manchin. I am so sorry.
Chairman Murray. Not a problem if you need to go ahead and
leave. That is all right. We will go ahead and work through our
questions with her. But thank you very, very much for that.
Senator Manchin. Thank you.
Senator Sessions. Thank you, Senator Manchin. We value your
opinion.
Senator Manchin. Thank you, sir. I appreciate it.
Chairman Murray. Under the rules of the Committee, we are
now required to testify under oath, so, Ms. Burwell, if you
want to rise so I can administer the oath. Do you swear the
testimony that you will give to the Senate Budget Committee
will be the truth, the whole truth, and nothing but the truth?
Ms. Burwell. I do.
Chairman Murray. If asked to do so and if given reasonable
notice, will you agree to appear before this Committee in the
future and answer any questions that members of this Committee
might have?
Ms. Burwell. I will.
Chairman Murray. Please be seated.
We will now have a chance to hear from Ms. Burwell, and,
again, thank you so much for being here, to you and your
family. Senator Manchin?
Senator Manchin. If I could say one thing, I also have a
statement from Senator Rockefeller. As you know, we both
totally are in agreement and extreme support, so I want to also
present for the record his statement.
Chairman Murray. Absolutely. We will include that in the
record as well.
Senator Manchin. Thank you.
Chairman Murray. Thank you very much.
Chairman Murray. With that, Ms. Burwell, it is a delight to
have you here. I am glad you have your support team of your
family and best friends. Go ahead and proceed with your
testimony.
TESTIMONY OF THE HONORABLE SYLVIA MATHEWS BURWELL, OF WEST
VIRGINIA, TO BE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Ms. Burwell. Thank you, Chairman Murray and Ranking Member
Sessions and the members of the Committee, for welcoming me
today. It is a privilege to be considered by this Committee as
the President's nominee to be Director of the Office of
Management and Budget.
I want to thank Senator Manchin for his gracious and kind
introduction and, as a West Virginian, thank him for his
service both here and in our State when he was Governor. I feel
very privileged to actually know both of my Senators for an
extended period of time, so it is a great privilege to be
introduced by both of them.
And I am pleased that my family could join me today: my
husband, Stephen, and my sister, Stephanie. Our 5-year-old
Helene and our 3-year-old Matthew thought that the park was a
better option than listening to Mommy answer questions, so they
are not with us today. I understand the sacrifices entailed by
public service, and I recognize that the biggest burden falls
on one's family members. So I deeply appreciate their support
as I seek to take on this new challenge.
I am also grateful to President Obama for nominating me to
serve in this position as the Director of the Office of
Management and Budget. It is an honor to be considered for this
position at this important time.
Finally, I want to thank the members of this Committee and
their staffs for making the time to meet with me over the last
few weeks and for sharing your insights. For those of you that
we have not had the opportunity to meet with face to face, I
look forward to that. And if I am confirmed, I very much look
forward to continuing our conversations that we have started.
I believe in the greatness of our Nation. As a second-
generation Greek American, my family and I have benefitted
greatly by the opportunities this country has to offer.
Our Nation has made important progress over the last 4
years. We pulled out of a deep economic downturn. Our financial
markets have stabilized. Businesses are hiring again. And we
have begun the very long journey to put our fiscal house in
order.
The President and the Congress together have made progress
on the deficit, but there is much more to do. And we need to
focus on making our economy work for middle-class families and
American business, in both the short and the long term.
If I am confirmed, my primary focus will be to contribute
to achieving balanced deficit reduction, increased efficiency
and effectiveness in how our Government works, and targeted
investments that grow the economy and create jobs for the
American people.
The President is actively engaged with Members of Congress
on this subject. And if I am confirmed, I will do everything in
my power to keep this dialogue going and to continue to build
on the relationships between the administration and the members
on both sides of the aisle.
From my experience in the Clinton administration--at OMB,
the White House, and the Treasury Department--I learned the
importance of working together in a bipartisan fashion to get
things done. I saw firsthand how the deficit reduction
agreements of the late 1990s were reached. I know that when we
all come to the table, we come with firm convictions and the
belief that we know the right answer. We also, though, come
with the same conviction to serve the American people, which I
hope will drive us to find common ground to move the country
forward.
There is no question that the road ahead will be difficult.
The challenges we face are sobering. But I am confident we can
come together on a comprehensive plan.
I am pleased with the prospect of returning to OMB. I have
tremendous respect for the institution and the incredibly
talented men and women who work there. I am hopeful that, if I
am confirmed, I can contribute to ensuring OMB is a place where
talented people want to go and that the institution is strong
for other administrations. Although OMB is most well known for
its work on the Federal budget, the management side of OMB is
critical as well.
In the current fiscal environment, it is more important
than ever that we are operating the Government in the most
efficient and effective manner.
I want to credit Acting Director Zients for his strong
leadership in these areas. If I am confirmed, I want to work to
build on those efforts and the success and to continue to
increase the efficiency and effectiveness of taxpayer dollars.
By governing smartly and being good stewards, we can reduce the
deficit and increase the value of what that we deliver.
As someone who has been out of Government now for 12 years,
I am hopeful that I can bring a fresh perspective to the fiscal
debates underway. From my positions at the Walmart Foundation
and the Bill and Melinda Gates Foundation, I have seen the
important role that both Government and the private sector play
in the lives of the American people.
If I am confirmed, it would be an honor to dedicate myself
to using the tools at OMB to ensuring that our Government
delivers for the American people.
Again, I want to thank the President for giving me this
opportunity and the Committee for considering my nomination. I
look forward to answering the questions that you may have.
Chairman Murray. Thank you very much.
Let me begin. Ms. Burwell, you previously served as Deputy
Director of OMB for 3 years. Correct?
Ms. Burwell. Two.
Chairman Murray. Two years. And before that, you were Chief
of Staff to Secretary Rubin at Treasury as well as Deputy to
White House Chief of Staff Erskine Bowles, two people who are
well known and respected by this Committee. Correct?
Ms. Burwell. That is correct.
Chairman Murray. Okay. And following your time at OMB, you
continued working in similar financial and management roles for
some of the largest philanthropic institutions in the world.
Right?
Ms. Burwell. Yes.
Chairman Murray. While very different from your Federal
service, I expect you experienced similar challenges at those
large nonprofit institutions regarding how best to fulfill core
missions given scarce resources, competing demands, and diverse
workforces. Correct?
Ms. Burwell. That is correct.
Chairman Murray. And now you are returning somewhat full
circle back to Government service and facing and political and
budgetary climate that is pretty different than the one you
left 12 years ago.
So I wanted to offer you the opportunity this morning to
really comment on the challenges and the opportunities that you
see today and to tell this Committee how you view your
extensive experience in the Federal and nonprofit sectors as
helping you meet those challenges.
Ms. Burwell. Thank you, Chairman Murray.
In terms of the challenges, I think I spoke to those a
little bit in my statement. I think we have challenges with
regard to making sure that the current economic recovery gets
on its way and continues for the American people. When I think
about the role of OMB Director, I start at the end and start
with the people in Hinton, start with the American people. That
is the end, and that is where our outcome is. Often in
philanthropy you talk about measurement, and you talk about
outputs and outcome. The outcome is what we do for the American
people, and that is why we think about the budget. That is why
we think about any of the things that we are working on. It is
about an outcome.
And I think the challenge is to make sure that we are
producing the best outcome in terms of a healthy economy for
working Americans and American business. And I think right now
that is a particular challenge for a number of reasons. It is a
particular challenge because we have a very large hole. We are
in a place where we have--as was reflected in comments, we have
a large deficit, and we have a large debt. And to work our way
out of that is a very important thing.
At the same time, we have recovery that is starting, and
that is something that we have to consider so that we make sure
we can stay on the path that we are currently on, where there
is actually job creation for Americans who want to work, and
have the ability. The last part that I think is a challenge in
terms of your question is thinking through the issues that we
are responsible for the investments now in both the short and
long term that will keep this economy healthy and be able to
deliver on commitments we have made as a Nation. I think those
are three extremely large challenges.
With regard to my experience, I would say there are a
number of things. First, working in philanthropy--and this gets
back to a comment that Senator Sessions made--most of my days
are filled with no. There are many more noes than yeses,
actually, when one works in philanthropy. And so that is an
experience that I have on a daily basis. And being able to say
no in ways that are respectful, you can imagine the many great
things that I see every day that people want to fund, and there
are great things, but doing it in a respectful way. So the
ability to say no.
The other things that I think my experience over the last
years since I was in Government helped with is how I think
about problem solving and focus. I think about things like
strategy, structure, people in terms of that framing. I think
about the importance of measurement and focusing deeply on
impact. And the other thing that I think I have learned a
tremendous amount about in the last 12 years is the importance
of culture of an institution and culture that a leader sets in
terms of as a leader it is very important that you set the tone
at the top.
So those are some of the elements that I hope I would bring
if I am confirmed.
Chairman Murray. I am assuming being the mother of two
small children, the ability to say no in a good way is also
part of your life.
Ms. Burwell. It is. As my husband and I experienced this
morning.
[Laughter.]
Chairman Murray. All right. Well, one area that you and I
talked about when we visited was the importance of re-
establishing regular order. It is something Senator Sessions
and I have really focused on together. We did our part here
last month by passing a budget on time through the Senate, and
I know from our discussions you have similar concerns regarding
the current overreliance on budgeting by crisis.
Can you talk a little bit about the importance of regular
order and the role that it had in creating some of the
successes that we had in the 1990s?
Ms. Burwell. Yes, Senator. Thank you. I think that regular
order was an important part of the process, because I think the
order that has been set up, the processes that the Congress
follows and that the executive branch follows--and I will start
by saying you have my commitment to do everything in my power
to deliver a budget on time, which is a part of regular order.
And so in terms of what I can do to do that, that is something
I would start with.
But in terms of how the regular order helps the process,
the regular order is about bringing people together to
prioritize. I think that is one of the most difficult things
that we all need to do, and especially in difficult budget
times, is that prioritization. And it first starts in the
process of this Committee and what this Committee does to set
the major pieces to guide the appropriations process so that it
can do its next level of prioritization. And so that we afford
both the expertise of the Committees and the experience of the
Committees to apply and use that order to do that
prioritization. And I think those were important parts of what
contributed to a process that afforded us the opportunity to
get to agreements during that time.
Chairman Murray. And I assume getting a permanent OMB
Director is part of that regular order as well.
Ms. Burwell. Yes, I think it is a part of the regular
order.
Chairman Murray. Okay. Before I turn it over to Senator
Sessions, I just wanted to clarify one thing. I know the
President's budget is coming out today, sometime here shortly
if it is not out, and I know a lot of our members are really
interested in the details. For the record, I want to make it
clear, Ms. Burwell, you were not involved in developing the
President's 2014 budget submission. Is that an accurate
statement?
Ms. Burwell. That is an accurate statement. This process
has been different than the last time when I came through the
process to be Deputy Director. At that point I was in
Government, so I was in a very different position. At this
point I am a private citizen and so have not been privy to the
conversations or the budget itself. So my knowledge is limited
to whatever knowledge everyone has from a public perspective.
Chairman Murray. Okay. I appreciate that, and I would
remind all of our Committee members that Acting Director Jeff
Zients will be here tomorrow to discuss the President's budget,
so we will have a great opportunity then to ask questions on
that side.
Thank you very much, Ms. Burwell, and I will turn it over
to Senator Sessions.
Senator Sessions. Thank you, Madam Chair. I believe we were
in a position to move forward with this nomination, you know,
rapidly. I do not know of any problems at this stage. If
something develops, we will raise that with you, Madam Chair,
but we would be cooperative in moving forward to a vote.
At this point I would yield to Senator Grassley, who has a
scheduling difficulty, and I will allow him to take my slot for
questions.
Senator Grassley. I appreciate that very much, and I
appreciate your coming to my office to have a conversation. And
I feel that you probably will have smooth riding unless
something happens here all of a sudden that we do not know
about.
You have already answered one of my questions, but I still
want to go back to it, and it was a question that the
Chairwoman asked about delivering a budget on time. So,
obviously, you said--you have expressed it as a concern of
yours, and you said you do want to improve and deliver a budget
on time. Considering the fact that--and I was going to start
out with this statistic. It is not just the recent budget, but
we have budgets for February, we have a mid-session review, and
we have a financial report at the end of the year. And all of
these deadlines, out of the last 15, 14 of them have been
missed.
So do you really think that you can improve upon that? I
hope you can, but, I mean, I am challenging you.
Ms. Burwell. Senator, I think that I can improve. One of
the things that I will do when I get into the organization is
to understand which ones I can influence on which timetable. As
you know, some of these processes are in train, so you
mentioned the mid-session and that, of course, is on my mind as
I think about it and even as the budget is coming out today, I
was thinking about the mid-session.
I do not know what processes are in train and that sort of
thing, but I think that I can over time influence it. The
immediacy of my influence when I come in is something that is
fair to ask the question. But over the long term, yes, I think
I can, and that is something that I believe is an important
part of putting together plans and approaches to trying to meet
these deadlines.
Senator Grassley. Okay. I want to go to kind of the
management aspect of your--but it also comes from a budget
decision that we made, and that is sequester. It is my
understanding that the office now had put out 3 or 4 months
ago, in anticipation of sequester, memos that there needs to be
a priority for national defense, law enforcement, health, and
safety. So you get these oddities about meat-packing plants
going to shut down, which obviously deals with health or
safety, because of sequester. Or you are going to lay off 700
FBI agents or furlough them because of sequester.
It seems to me those things come in the area of law
enforcement and health and safety, so what power do you have
over these agencies following your recommendations that these
things ought to have priority? Because it seems to me there are
a lot of things in these departments that ought to be
sequestered before furloughing FBI agents or shutting down
meat-packing plants?
Ms. Burwell. Senator, if confirmed, I think one of the
first things I would do is try and understand and work with the
departments to understand how they have thought about the
prioritization. I think you articulate the part that I do know,
which is departments were told to prioritize mission, and you
articulated some specific missions in terms of that. And what I
would do is work to understand how they are thinking about
those choices as they work through that.
I think the budget process itself, as we start to think
about the next year--because OMB will already start to think
about the next year--will be an important process for how I
will engage and the entire Office of Management and Budget will
engage with departments as they think about that
prioritization.
Senator Grassley. Does your office, though, have the power
to enforce those priorities or not? I mean, that is what the
law says, not what you might want to do or not do.
Ms. Burwell. In terms of the enforcement of sequestration
and exactly how it is implemented, I am going to say I will
have to check exactly who sits with the authority. But I think
what one wants to get to a place where we are all working
towards the same objectives of making sure we are protecting as
much of the mission as we can and go about doing that in the
right way.
Senator Grassley. The next question I ask because of a
statement that Gene Sperling made. Can you really raise $1
trillion in new taxes without hitting the middle class? And he
said that you would not be able to raise that amount of money
without harming the middle class.
Ms. Burwell. I think that right now when I think about the
question, the broad question of revenues and where we are in
the revenue space, and when I think about ATRA and the work
that was done in ATRA in terms of $620 billion and I understand
perhaps it was not everyone's first choice, and I think that is
part of compromise--that there was an ability to do that. And
so I think we are talking about at this point, as was
articulated and what is public--and I understand the fiscal
cliff portion_is another 580 billion. So I think the number
that we are then talking about is can you find $580 billion in
the context of what we would think about is wasteful spending,
loopholes, things that people agree that people should not have
certain of these advantages. And I think that is where you
would get to that larger number.
Senator Grassley. Without hurting the middle class?
Ms. Burwell. I think you are hopeful that you can do it,
and I think some of the examples that have been talked about
that are public--again, as the Chairman said, I am not familiar
with all the examples that will be in today's budget, but the
issue of the 28 percent and what types of deductions people are
able to take, and so you align that more across the board in
terms of the maximum amount that many are able to take.
Chairman Murray. Thank you.
Senator Whitehouse?
Senator Whitehouse. Thank you. I want to assure Senator
Grassley that I can give him a trillion-dollar list that gets
you there without hurting the middle class. I look forward to
working with you on that.
Senator Grassley. He did not agree with you.
Senator Whitehouse. He did not see my list.
I have a couple of quick points I would like to see if I
can get through in my short time. My colleagues know that I
talk about health care delivery system reform all the time in
this Committee. There is a bipartisan and nonpartisan agreement
from lots of leading folks that the savings per year, between
$700 billion and $1 trillion, and that you get there by
improving the quality of care.
In that battle, we need OMB to be supporting HHS as they
try to implement the 45 noncontroversial provisions in the
Affordable Care Act that improve our health care system and
lower cost, and we need you to be working with us to try to
figure out better ways to fit that into our budgeting process
because of the scoring dilemmas.
Will you work with us on that as a priority?
Ms. Burwell. Senator, as the Director of OMB, it is one of
the responsibilities to look at the scoring issues and talk
about the scoring issues, whether those are specific ones or
broader ones that we might discuss today.
Senator Whitehouse. And to support HHS in its efforts to
move that regulation forward, which takes me to my second
point. OMB has in some places become the place where
regulations just go to die. You are supposed to get regulations
out in 120 days. EPA's draft guidance on identifying waters
protected by the Clean Water Act has been sitting there 414
days, and the Chemicals of Concern List has been sitting there
for 1,064 days.
There are issues I think both with delay and with
transparency at OMB. Once regulations get into OMB's private
chambers, who is making the tweaks? And I would like to have
your assurance that you will work with us on both the delay and
transparency issues.
Ms. Burwell. Yes, sir, if confirmed, I will.
Senator Whitehouse. Regulatory capture is a very well known
phenomenon. I think that OMB is well suited to be a place that
sounds the alarm where it looks like there might be instances
of regulatory capture in the Federal Government. Clearly, at
Minerals Management within the Department of Interior, at the
SEC, and Mine Safety, we have seen episodes that sure look a
lot like regulatory capture by the regulated industry, and I
hope that we can work together on finding ways that OMB can
take a more active role in looking for the benchmarks that
should set off alarms that a regulatory body may now be the
tool of the regulated industry and not serving the public
interest. Would you work with us on that?
Ms. Burwell. Yes, sir, I would. I first learned of the
concept I guess in 1986, and then it was Hugh Heclo's iron
triangle in my academic work many, many years ago. So a concept
I learned about from an academic perspective many years ago,
and having served in Government, understanding it, would look
for the opportunity to think about that.
Senator Whitehouse. A great piece on that not too long ago
in the editorial page of the Wall Street Journal. It is a
bipartisan concern.
And the last thing is on cyber. As a former United States
Attorney, I can assure you that trying to make cases, criminal
cases, in cyberspace is an extremely complicated, difficult,
and expensive proposition. The result is that for all that we
have heard about the raiding by China of our corporate
intellectual property through the cyber infrastructure, the
Department of Justice has yet to bring a single pure cyber
case. And in terms of cleaning up the Web from botnets, they
have only brought one case, and the group disbanded after that
case was done.
I think that there are resource issues behind that problem.
They will not talk to me about resource issues because they are
so scared of you, of OMB: ``Oh, we cannot talk about anything
because we are locked in with OMB.''
I really need you to promise me that you will send the
Justice person at OMB to sit down with me and with folks from
the Department of Justice and the FBI to have a joint
discussion about what the right level of support is for our
prosecutors as they try to pick apart these Chinese networks
that are raiding our corporations.
Ms. Burwell. Senator, if I am confirmed, I look forward to
the opportunity to having the discussion about cybersecurity
and how we think about its priorities as well as its funding.
Senator Whitehouse. Thank you. In my last 20 seconds, let
me point out that we need to distinguish in this Committee
between what is economics and what is ideology. And the theory
that you can always cut your way to economic recovery is simply
not economics. The IMF, Goldman Sachs, Oxford Economics, the
Financial Times, numerous studies have been presented recently
showing that our fiscal multiplier is now over 1, indeed well
over 1, because of the State of our economy and interest rates.
And the fiscal multiplier being over 1 means that Government
spending or cuts actually do more good when it is money spent
and more harm when it is cut than in ordinary times. There is a
difference between economics and ideology. We need to reflect
that in this Committee, and I thank the Chairman for the time.
Chairman Murray. Thank you very much.
Senator Sessions?
Senator Sessions. Senator Portman. I would note that
Senator Portman, of course, is a former OMB Director, and I
suppose he should get credit for having submitted a balanced
budget. It did not pass, but he submitted one. Senator Portman?
Senator Portman. Thanks for that reminder.
[Laughter.]
Senator Portman. It was a few years ago. Can you imagine a
balanced budget today? This was in 5 years, actually, a 5-year
balanced budget. But there are tough choices to be made. There
were back in 2007, and, of course, the choices are even more
challenging today, so thank you for being willing to step
forward, and congratulations on your nomination. I enjoyed our
conversations about the job, and as I mentioned yesterday at a
hearing at the Governmental Affairs Committee, your measure of
success will be sort of an unusual one, which is not how
popular you are but how unpopular you are among your Cabinet
colleagues. And it is a hard job, but you are doing it at a
historic time. And being the champion for fiscal discipline is
more important than ever.
Yesterday we had a discussion that I was a little
discouraged about because it was just about are you willing to
follow statutory deadlines, and that had to do with the
regulatory reviews that I think we need to have here in order
to be smart on the regulatory front. I know Senator Grassley
mentioned this, but let me give you some more data on what has
happened prior to your involvement, of course. And I do expect
that you will be confirmed, and as you said, you have the
ability to bring a fresh perspective on this.
But no administration has a perfect record, but this is an
extraordinary record. I have looked at all the reports due by
OMB, 12 of the 19 reports. This includes budgets, it includes
the Medicare trigger and so on. Twelve of the 19 have been
late. Another six have never been issued at all. This means
only one report or budget has been submitted within the time
frame required by law. These are statutory.
So I do hope, without getting into a long discussion about
this, that you will commit to trying to meet these statutory
deadlines, because when you do not get the mid-session review
on time, when you do not get the budget on time--we just did
our budget. We did not have the input from the administration
because you guys did not submit it-- they did not submit it.
Sorry. It is not you, yet. But it will be you, and you will
have the opportunity.
So, again, I do not want to get into a long discussion of
this, but just to raise this with my colleagues who on a
bipartisan basis should want to have what Chairman Murray said
at the beginning of this hearing, more stability and continuity
in the budget process. We cannot have it without this
information. And we are not getting it. And so I would hope
that your fresh perspective will include that.
If you would like to respond briefly, I would be happy to
hear from you, but I think, again, this is not asking too much.
Ms. Burwell. Senator, as I stated at the beginning, you
have my commitment that I will do everything in my power to get
the budget on time, the mid-session on time, the things that I
can influence as soon as I get there, as well as the reports
that we discussed yesterday.
Senator Portman. I would add the Medicare trigger to that.
I know the administration has talked about constitutional
issues. CRS, by the way, disagrees with that, as do other
lawyers, so we also need help on Medicare when you hit that 45-
percent level under, I think it was, the 2003 law. You know, if
anything, of course, Medicare has become a much more difficult
problem to deal with from a budget perspective, so we need that
report as well.
In terms of fresh perspective, what do you see as the
problem? What is the nature of the problem we face as a
country? I will give you the CBO analysis from a few weeks ago
that I know you have seen, which is that if we do not do
something on the entitlement side--incredibly important
programs, vital, safety nets--then they will increase by about
100 percent. This is Medicare, Medicaid, and Social Security.
The health care side increases 110 percent in the next 10
years. And so the President has said he refuses to pass this
problem on to another generation of Americans. That is his
quote. But that is exactly what is happening. I mean, if you
look at what CBO has projected, they have said that if you are
going to maintain all the promised benefits, it would require
eventually putting the middle class into a 63-percent tax
bracket, small businesses into an 88-percent tax bracket.
Obviously, this is unsustainable. You cannot catch the level of
spending that CBO has projected with enough revenue.
Do you have some thoughts on that with regard to what OMB's
role can be going forward in terms of looking at, again, our
important but unsustainable entitlement programs, with interest
on the debt now 62 percent of the budget, the fastest growing
part of the budget, again, nearly a 100-percent increase over
the next 10 years? What do you think OMB's role should be
there?
Ms. Burwell. I think that the role of OMB is to be a
partner with the other players that play in the space, that
Treasury plays as well as HHS and the entire economic chain.
I agree that the issue of mandatory spending is an
essential part of what we are looking at with regard to the
size and magnitude of the current deficit, and as we look at
what growth occurs because of the baby-boom generation coming
on, also, and health care costs as we have seen them. And how I
think about that issue is that we need to have it front and
center. I think we need to implement some of the savings that
we knew--that were stated in the Affordable Care Act. That is a
start on the process.
As I think about the issue, when I think about the
mandatory side and health care, a lot of this involves health
care costs. And coming back from the private sector right now,
the issue of health care costs are an issue both for the
Government and for our larger economy.
And so when I think about those issues, trying to find
solutions, even though we might not always be able to, that
actually bend the curve, because the other thing about bending
the curve is the benefit is to the U.S. Government; it is also
to the private sector. But usually those types of solutions
often lead to greater quality, and they actually start to
benefit--the benefits we will get in terms of savings will
build on each other. It will be an upward spiral of savings
versus just a constant. So those are some of the thoughts I
have about what I consider a very important part.
I also believe it is important for us to think through how
we maintain the commitments that we have made as a Nation to
people who are on that verge of retiring and the most
vulnerable in our country.
Senator Portman. I thank you, and I think members of this
Committee would agree, including those of us who want to work
on prevention and wellness and other issues in health care, and
it does drive it.
Just one final point to your comment about it is a big part
of the problem. Look at the CBO numbers, look at your own
numbers, and as a percent of GDP, the spending increase, it is
the only problem. In other words, all of the increase in the
debt and deficit projected going out into future years is
attributable to those very important vital programs. In other
words, what we are doing here in the annual appropriations is
actually relatively flat. The other entitlement programs are
increasing, but not at a level that necessarily catches up to
the economy. You could argue and it is accurate to say that the
entire increase and this huge increase in the budget deficit
and debt is attributable to those three programs based on the
CBO numbers. So it is not just one of the problems. It is the
problem.
Thank you.
Ms. Burwell. Thank you.
Chairman Murray. Thank you.
Senator Warner?
Senator Warner. Ms. Burwell, it is good to see you again,
and I look forward to working with you. I very much enjoyed our
session. I actually want to pick up where my friend Senator
Portman left off. I concur with him that entitlement reform has
to be a piece of this debate.
I would also say that no matter what we cut or tax, we have
to have a growth economy as well. And one of the things, as a
former investor and business guy and somebody who did balance
budgets as a Governor, I am very concerned about, for example,
the proposals the House laid out that would take domestic
discretionary spending from its current about 16 percent of the
Federal budget down to less than 5 percent. I would never
invest in a company that spent less than 5 percent of its
revenues on educating its workforce, building its
infrastructure, staying ahead of the competition through
research and development. So I hope as well we can talk about
how we have policies. The private sector will grow most of the
economy, but the Government has a role as well in providing
that framework.
I also think it is important as we talk about both sides of
the balance sheet, both the spending side and the revenue side,
that we--and I get terribly frustrated at this at times, and I
want to keep our taxes as low as possible. But somehow in this
debate we seem to always forget the fact that while entitlement
spending continues to go up at an unsustainable rate, on the
other side of the ledger, when this body made tax cuts in the
2003 time frame on a 10-year basis, we took $4.5 trillion out
of the revenue stream on a 10-year run rate. Just as
entitlement spending may be unsustainable, I think that plan on
the revenue side was unsustainable.
And what I sometimes find interesting is that even if you
take the Senate budget, take the New Year's Eve, and combine
those together on the revenue side, nobody is talking about
putting all that $4.5 trillion back into the revenue stream.
Most of us on our side are not even talking about putting half
of that back in. We are literally talking about returning about
a third of that revenue back to the revenue stream as we make
targeted cuts, as we do entitlement reform.
Again, I just want us to make sure that we have this
discussion that is constantly refreshed. We have to deal with
entitlements. We have to grow our economy. But we have to
recognize that the revenue base--not to grow the Government but
just to pay our bills, and a revenue base that--even with
slimmed-down entitlement programs, with the baby boomers it is
going to push up the spending as a percentage of GDP no matter
almost what, that we have to have this balance on both sides.
I guess my question that will come out of this--and I want
to come to the management side in a moment--is my concern is
that in many ways, while we have limped through budget crisis
after budget crisis, with, I think, not the comprehensive
approach that we need--we have still got another $2 trillion,
roughly, to do--I feel and fear that too often we are simply
redebating the deal points from June of 2011. And what I hope
that you will be open to in this new role--and I know this will
be not just your role, but as a leading figure in the
administration--is new ideas both on the revenue side and new
ideas on the entitlement reform side that may not even be in
the President's 2014 budget going forward.
Ms. Burwell. Senator, if confirmed, I look forward to
hearing about those ideas. These are hard problems, and so
innovation and ideas as potential ways to help us all go
forward in a way that we can agree on I think is an important
thing, and I hope that you will find me always willing to
listen to new ideas.
Senator Warner. Well, thank you.
Let me move to the management side of the house, and,
again, I want to echo some of the comments that were made by
actually some of my colleagues on the other side, and Senator
Whitehouse. One of the things we can also do is how we save
money in terms of inefficiencies and duplication. One of the
concerns I have, as the author of the Government Performance
and Results Modernization Act, GPRA--and I appreciate this
Committee's support of that--was that for the first time ever
we have a requirement in place where agencies actually have to
identify not only their most successful programs but their
least successful programs. And, quite honestly, OMB has not
been as forthcoming as we would like on that. There have been
some times that have been missed. There is also supposed to be
a requirement of trying to narrow down each agency's amount of
goals. Anybody that has managed anything knows that if you have
50 goals, you do not really have any goals at all. This
legislation required a targeting of the top three to five goals
per department and agency. And we would love to see more
collaboration and cooperation on implementation of GPRA.
Ms. Burwell. With regard to GPRA, it has changed since I
was here before, and the GPRA modernization legislation I think
was an important change. Also, in terms of what I have been
briefed on so far, we have actually seen improvements in where
that is. A long way to go, but I think we have moved from a
box-checking exercise to a strategic planning and
prioritization. And I think this is something where one has to
learn the skills, and I think hopefully if I am confirmed, as
part of the leadership at OMB, that we can continue to work on
it.
I think one of the most important points--and it comes back
to one of the things that I mentioned in terms of lessons
learned--is culture and creating a culture of this is not a
box-checking exercise, this is a management tool that will help
you deliver impact, and getting that to be a tool that is
embraced in terms of thinking about how can I do my job better.
And so that culture shift is something that I am hopeful that
working with this Committee and the other Committee that I
spent time with yesterday, that we can work on together to get
the kind of savings and clear movement towards impact that is
definable and recognizable.
Senator Warner. My last comment, Madam Chair, is just that,
you know, example, this is the GAO report that just came out
yesterday on duplication. You know, this is not sexy stuff.
This is hard, grind-it-out, lots and lots of focus on how we
tax and spend, but the management component has to be a higher,
higher priority, and I look forward to working with you.
Thank you, Madam Chair.
Chairman Murray. Thank you very much.
Senator Sessions?
Senator Sessions. I will yield to Senator Johnson.
Senator Johnson. Thank you, Madam Chair, and, Senator
Sessions, I appreciate you yielding your time.
Ms. Burwell, again, welcome here, and I want to reiterate,
as I said yesterday, I appreciate the fact you are willing to
sacrifice, you and your husband. This is a big job, and I do
appreciate your willingness to serve.
You mentioned in your opening comment a couple phrases that
were dear to my heart: ``problem solving,'' ``management''--or
``measurement'' and ``leadership.'' So let us talk about those
because I think that really is the key role of OMB.
I was one of those Senators that President Obama invited to
dinner, and it was interesting, as we listened to him behind
closed doors, describing the problem pretty accurately. You
know, it is health care spending. He talked about Medicare,
particularly in the second and third decade. He made the
comment that the problem with Medicare reform is for every
dollar that Americans pay in, they are going to get about $3
out in benefits. And we have been saying that. It comes from a
study by the Urban Institute. He also said most Americans do
not understand that, which is a problem in solving the problem.
Let us talk about that.
From my standpoint--and I have solved a lot of problems in
business--the first step in any 12-step program is raising your
hand and admitting you have a problem. And I think right behind
that is you have to properly define the problem.
So, first of all, do you agree with President Obama's
assessment that the problem with Medicare is $1 in, $3 out?
Ms. Burwell. I agree that the actual dollars in and dollars
out, and then the next question is: What is that rooted in? Is
it rooted in cost? Is it rooted in numbers? Going to the next
step.
Senator Johnson. But, again, all I have ever heard
President Obama say publicly is we just need modest reforms to
Medicare. But when Medicare is a $575 billion a year program
and you have $1 in and $3 going out, would you agree that
implies more than modest reform is going to be required to save
that program, a very important program for Americans?
Ms. Burwell. I think that very important program to
Americans, what I think is important is thinking about it in
terms of how do we meet the appropriate level of commitments
that we have made at the same time that we address the dollar-
in/dollar-out problem that you--
Senator Johnson. That is serious reform that is required,
though, wouldn't you agree, not just modest?
Ms. Burwell. I think that the reforms that are required,
when we start looking at some of the numbers--and, again, I'll
work off what I have, which is the fiscal offer. And when we
see that additional $400 billion in that health care space, I
think we are starting to talk about actually large numbers. And
large numbers that, if done in a way that comes back to that
earlier point I made about bending the cost curve, then we can
start to get even more over longer periods of time, when you
start to get that kind of cost savings embedded. And so those
start to become large savings.
Senator Johnson. Okay. Let us switch to Social Security,
which is obviously an incredibly important program, and we want
to do everything we can to honor those promises. I have some
charts that we are going to put up on the screen here. Are we
ready with those?
This is from the Social Security Administration. I hope you
would acknowledge--these are accurate--that over the next 20
years basically Social Security will run a cash deficit of $5.1
trillion. Now, I have certainly made the point publicly that I
do not believe this is a sustainable-- first of all, a solvent
program. The only reason anybody can claim that is the fiction
of the Social Security Trust Fund.
It is true that we ran the surpluses, accumulated more than
$2.5 trillion, but the problem is the Social Security Trust
Fund holds an asset called U.S. Treasury bonds, which in the
hands of the Federal Government really has no value. It is the
same thing as if you had $20, spent it, and that money is
spent, it is gone, wrote yourself a pretty note, said $20
stuffed in your pocket and say, ``Hey, I got 20 bucks.'' You do
not. You just have a piece of paper that you have to basically
offer somebody else and entice them to give you $20 in exchange
for that promissory note. I mean, would you acknowledge that
point?
Ms. Burwell. Senator, when I think about the trust fund and
those commitments, I do think about those commitments in the
context of the commitments that we actually make in the public
markets. And I also think about it in terms of harkening back
to the years when I had the opportunity to work on balanced
budgets, that there was the creation of something called the
Social Security lockbox. And so while those--
Senator Johnson. Let me just say, do you think that has
value to the Federal Government? Do you believe the trust fund
has value to the Federal Government, that it can actually pay
out and meet that $5.1 trillion deficit?
Ms. Burwell. What I think it has is value to the trust fund
and the ability that there is a commitment that we will pay.
Senator Johnson. Okay. So let us go to the next couple
slides here. This comes from the Office of Management and
Budget's 2010 Analytical Perspective. Will you put the next one
up here? Let me--the next slide. Anytime.
We have a technical problem here. Okay. Let me paraphrase.
These balances, referring to the trust fund, are available for
future benefit, but only in a bookkeeping sense. They are not
assets of the Government as a whole that can be drawn down to
fund future benefits. It goes on to say basically there are
claims on the Treasury.
So, in general, when you are talking about a consolidated
statement, you have the Social Security Trust Fund, it holds
$2.5, $2.6 trillion worth of bonds; but, on the other hand, you
have the U.S. Treasury Department that has the liability. So
you have an asset on one hand, liability on the other, and the
Office of Management and Budget, when you consolidate those
statements, claims that nets to zero.
So my point is, as the Director of the Office of Management
and Budget, would you acknowledge that to the Federal
Government the Social Security Trust Fund has no value in terms
of paying off that $5.1 trillion of deficit spending over the
next 20 years?
Ms. Burwell. But as we consider our deficit numbers, these
commitments are in the consideration as we think about our
long-term--
Senator Johnson. Does it have any value, is there any value
drawn out of that Social Security Trust Fund to fund the $5.1
trillion worth of promised benefits? Do you believe that has
any value to the Federal Government? Are you disputing what OMB
has basically published here?
Ms. Burwell. What I do believe is it has value in terms of
the trust and how we think about the trust. The first chart I
think did not--
Senator Johnson. It has no dollar value. There are no
dollars there; there is nothing of value to pay those benefits.
Isn't that correct?
Ms. Burwell. When we think about the issuance of debt that
we do on a regular basis in the public markets in terms of how
we think about that as well. So right now we have a very large
deficit. There are investors all over the world purchasing that
debt. And the question is: How do we think about that?
Senator Johnson. So basically we have made promises to
seniors which we are going to honor, but the only way we honor
those promises is for the Treasury Department to basically
increase taxes on the American public or float more bonds.
There is nothing that they can cash in from the Social Security
Trust Fund that has any value to pay those benefits. Isn't that
correct?
Ms. Burwell. So until 2033, at that point, that is the
point where the interest of these investments stop, earlier, am
I right that--
Senator Johnson. But the investments are worth zero to the
Federal Government. That is my point. The Social Security Trust
Fund will give those bonds, and then how does the Federal
Government fund those bonds? How do they make the payment on
those bonds?
Ms. Burwell. They make the payment--the trust fund has been
self-funding for many years. As you reflected in the chart,
there comes a time and point where that shifts. And then we
draw down on the assets, because during--
Senator Johnson. How do you pay off with assets?
Chairman Murray. Senator, Senator, with all due respect--
Senator Johnson. Okay. I am sorry.
Chairman Murray. --you are over your time.
Senator Johnson. Thank you, Madam Chair. Thank you, Ms.
Burwell.
Ms. Burwell. Thank you.
Chairman Murray. Senator Merkley?
Senator Merkley. Thank you very much, Madam Chair.
First, I wanted to ask about a specific program important
to my timber communities, the Secure Rural Schools, which I
mentioned when we met. It is in the budget that was released
today, which is very good. I wanted to ask if you feel like you
have your hands around an understanding of the role that that
program plays as the Federal Government has changed the mission
of the timber stands that have contributed to the enormous
success of our timber counties and now they are much more
challenged with those additional restrictions.
Ms. Burwell. Senator, I think that I have more to learn in
that space. The two things that I do recall is back when I was
previously in the administration, I learned through the
conversations around the spotted owl and other things in the
timber space. I think there has been much going on. And the
only other thing I would say is reflecting upon the comments of
Senator Manchin and Senator Rockefeller yesterday, being from a
rural community and having my mother at the age of 65 become
mayor and talk to me about rural economic development, I have
some familiarity with the challenges in rural communities
today.
Senator Merkley. Thank you, and I will look forward to
continuing that conversation with you. We are working hard to
try to create a balance, setting aside environmentally
sensitive lands within the forest, but then having a
sustainable supply of saw logs from the balance. But,
meanwhile, because the Government has changed the mission of
the lands, it has undercut deeply the financial foundation for
those counties and, therefore, pledged to compensate for that.
And that pledge must be honored, and that is the pledge I hope
you will continue to understand and support. And as I
mentioned, it is in the President's budget.
Ms. Burwell. Senator, I look forward to continuing these
conversations.
Senator Merkley. Thank you.
I wanted to ask you about tax expenditures. They have grown
enormously since 1986 when Senator Packwood led the reform of
the Tax Code. We spend over $1 trillion a year on deductions
and credits and ways of bypassing accountability or
responsibility to pay taxes, including offshore strategies.
Those areas have grown enormously and include some very
wasteful spending.
As you envision your responsibility for OMB, do you include
in your portfolio the challenge of understanding the money that
we spend on tax loopholes?
Ms. Burwell. As a member first having been at the Treasury
Department, I, of course, defer to the role of Treasury as the
lead on tax issues. But my previous experience and my
expectation of what will happen is that the economic team are
all part of that conversation, and I would look forward to
being a contributor where Treasury leads.
Senator Merkley. I think that was a yes. Is that a yes?
Ms. Burwell. I will be a part of the conversation. I do
respect that Treasury has the analytical capability and plays
the lead role, as does the Finance Committee and Ways and Means
here on the Hill.
Senator Merkley. The tax expenditures very much impact the
deficits in the budget and the allocation of resources, so I
hope you will understand that spending in the Tax Code is very
much spending and needs to be part of a holistic understanding
of the allocation of responsibly shaping the way we spend
resources in this country.
Third, I wanted to turn to the cost/benefit
responsibilities of the department, of OMB, and certainly part
of that is to try to quantify the benefits not just that are,
if you will, obvious economic pluses and minuses, but also the
social impacts. Are you kind of familiar with that broad
framework? And can I count on OMB to really address the broad
social and economic impacts when they are evaluating the impact
of regulations?
Ms. Burwell. Yes, as we work through at OMB, and if I am
confirmed, and in the management of OIRA making sure that as we
think about regulation that we are very conscious of what the
core objectives of a regulation are in the sense of public
safety, public health, and the environment, and that that is a
part of the consideration as one looks at the costs and
benefits of any regulation.
Senator Merkley. Well, I am delighted to hear that. We are
seeing in Oregon just recently massive forest fires. We had the
biggest forest fires in a century, one the size of the entire
State of Rhode Island last summer, enormous growth of pine
beetle infestations because of the warmer winters. We have a
big problem in our oyster farming because the oyster seed are
having trouble being propagated because of a slight increase in
the acidity of the ocean. And that is just within the State of
Oregon.
And so when the rules are related to our challenge of
controlling the warming of the planet, the warming here in
America that impacts my State in so many ways, those are costs
that would fit into the framework of OMB's responsibility to do
cost/benefit analysis?
Ms. Burwell. As we think through those issues, the issues
of climate change I think are extremely important and some that
the administration and the President has said that will be
prioritized. And if I am confirmed, I look forward to having
the opportunity to understand how those types of things that
you have articulated weigh into that process. I think EPA will
be a part of that, and I look forward to a good and strong
working relationship with EPA.
Senator Merkley. Thank you. I am out of time here, so I
will put it this way: I realize you cannot speak to the
individual pieces, such as is there really a problem in the
oyster seed or is there really a problem with pine beetles. But
in terms of your understanding of the theory of the
responsibility for cost/benefit analysis, are such social
impacts ones you intend to make sure are weighed in that
responsibility?
Ms. Burwell. It was my experience before at OMB and OIRA
that certain social impacts in terms of whether it is impact on
an individual or others are weighed in the process.
Senator Merkley. Thank you very much, and thank you, Madam
Chair.
Chairman Murray. Thank you.
Senator Sessions?
Senator Sessions. Thank you.
Ms. Burwell, you mentioned the savings under the Affordable
Care Act. The savings under the Affordable Care Act were spent
to fund--from Medicare were spent and are projected to be spent
over time to fund the Affordable Care Act. Is that not correct?
Ms. Burwell. Senator, my understanding is that CBO has
scored that $100 billion would be over the first decade, and in
the second decade, when you start to get the type of positive
spiral that I was talking about, that they have scored that at
$1 trillion.
Senator Sessions. Well, what they said was--and I asked
them explicitly this fact--that the money that was saved by
reducing provider payments in Medicare was used to fund the new
Affordable Care Act and cannot, therefore, simultaneously be
used to fund Medicare. The money has been spent. This is not a
matter of real dispute. I do not want to go into it. But you
need to understand that. And they said, in fact, it is double
counting the money in a letter they sent to me. And I would
submit to you Senator Johnson is exactly correct. There are no
assets in the notes that are held by Social Security and
Medicare to fund future expenses. The Federal Government is
going to have to borrow that money on the world market or raise
taxes to honor those commitments because the money has been
spent. There are no assets there. You need to know that. This
is going to be an important issue. And the spin has been
different over time, but it is not accurate. What I told you is
accurate.
With regard to the budget, you have talked to the
President, I assume, that you will be submitting next year. Do
you plan to submit a budget that will balance in 10 years?
Ms. Burwell. Senator, the question of balance comes back to
a comment that I made earlier about how I think about the role
of the budget. I believe that the role of the budget is a
reflection of how we meet--``we'' the Government--our
responsibilities to the American people. And I believe that
those responsibilities are in three areas, and so the question
of balance--
Senator Sessions. Well, my only question is: Do you expect
to submit a budget in which the revenues are equal to the
expenditures and balances?
Ms. Burwell. Senator, we are in a very, very deep hole, and
when one thinks about how quickly one wants to come out of that
hole, I think you have to connect that to the results for the
American people in terms of the economy, and that--
Senator Sessions. You would acknowledge that the President
has not submitted a balanced budget in each of his years in
office and this year will not either? Isn't that correct?
Ms. Burwell. Senator, I will not speak to the 2014 budget,
as we have discussed. With regard to the historical budgets,
the 2013 budget, I think what the President has done is
proposed a budget that is--and I know we have disagreements
about the word ``balance.'' There is ``balanced budget'' and
there is the word ``balanced approach.'' And so I know there
are very different points of view on that and do not--
Senator Sessions. My colleagues used that ``balanced'' word
230 times in the budget debate, and their budget, of course,
did anything but balance. The President is not going to submit
a balanced budget. You know it and I know it, and you are not
going to submit one. Isn't that correct? You are not going to
submit a budget that you expect to balance next year?
Ms. Burwell. Senator, I want to--
Senator Sessions. Can you answer that yes or no?
Ms. Burwell. Senator, I actually do not know that the
economy--if the economy takes off and does an incredible, an
incredible job this year, if there are incredible dynamics. One
of the things that I do not think I can foresee right now and
commit to is we could have never known about 9/11, and then the
commitments that we then as a Nation had to make after that. We
did not know about 2007--
Senator Sessions. Well, okay. I acknowledge that you will
not answer my question, and I will tell you, you are not going
to submit a balanced budget next year, and the President has
dismissed the value of the idea, and I disagree, and I think
the American people disagree.
Let me ask you this: What is the current level of debt as a
percentage of GDP?
Ms. Burwell. The current level of debt as a percentage of
GDP is around the 77-percent range.
Senator Sessions. Is that public or gross debt?
Ms. Burwell. That is public.
Senator Sessions. And do you know what the gross debt is?
Ms. Burwell. The gross debt numbers, I think, depending on
which baseline you use, the CBO baseline, the Senate budget
baseline, or the House baseline all differ slightly, but are
around the 100 level.
Senator Sessions. 104 percent. Are you aware that the
Reinhart-Rogoff study in their best-selling book, ``This Time
Is Different,'' that when gross debt reaches 90 percent of GDP,
that begins to bring down economic growth?
Ms. Burwell. My understanding of the Reinhart-Rogoff
analysis was that it is actually based on a number of
international countries, and so not just the U.S., and that
when one compares, the most comparable thing that you actually
have to go to public debt, debt held by the public, not gross
public debt--
Senator Sessions. I have to correct you on that. I want you
to look at this. That will be my request to you. It is so
important. That is not--we examined their study. It is based on
gross debt, and the European Central Bank, the International
Monetary Fund, and the Bank for International Settlements have
also done studies dealing with the impact of large debt on a
nation's economy. They have concluded that debt levels that we
are at today will pull down growth. And it is the gross debt.
You have to look at that number.
Ms. Burwell. Senator, where I think we--
Senator Sessions. So if I am correct, we are seeing slowed
growth today, I believe--and I believe we are--as a result of
this debt. But you think that is not so, so I will let you
explain that.
Ms. Burwell. Senator, where I think we both agree is that
we both believe that debt as a percentage of GDP should be on a
downward trajectory. I think that is a place where we all
agree, and I believe that that is a place that when one
connects to that point which is closest to the American people
and jobs in terms of measures that are closest, in terms of
outputs that help us think about that outcome, that that is a
place where we all agree we want that to be a downward
trajectory.
With regard to the study, I am happy to and will look at it
again. I have a different understanding of what they were using
as a basis for the study, and I look forward to having the
opportunity to look at that again.
Senator Sessions. Thank you, and that is the quote in the
report: ``Above the threshold of 90 percent, median growth
rates fall by 1 percent, and average growth rates fall
considerably more.'' And I would note--if we have that chart, I
think this is important for my colleagues. Debt is already
hurting growth, in my opinion. Look at this chart. The blue
line was based on what was predicted for growth 2 years
previously by CBO. In 2008, they predicted 3.1 percent growth;
it came in at 2.4 percent. In 2009, they predicted 4 percent
growth for 2011; it came in at less than half of that. In 2010,
they predicted 4.4 percent growth for 2012; it came in at 2.2
percent.
I believe we are seeing delayed slow growth as a result of
the size of debt we have now, and, therefore, I think it is
imperative for us to have growth to get the debt middle-coming
down in a substantial way, not just a token way.
Ms. Burwell. Senator, as I said, I believe there is a place
that we do agree and that that is the numbers should come down.
With regard to these questions of growth, as one of your
colleagues earlier said, I think there are different points of
view in terms of why we have the current growth rates that we
have and in terms of why those growth rates are not where they
should be.
The other thing--and that harkens back to a comment that I
think the Chairman made that everyone agrees on--a return to
regular order actually is an important part of how the economy
views things. Having had the opportunity to be in the private
sector for a period of time now, the crisis-to-crisis lurching
and the uncertainty that that creates does affect GDP because
it affects businesses' willingness to invest and think about
how they are going to manage.
So I think there are a number of contributing factors to
when we think about that number and some differences of
opinion.
Chairman Murray. Thank you very much.
Senator Kaine?
Senator Kaine. Thank you, Ms. Burwell. I look forward to
supporting your nomination. I think you are the right person at
this challenging time. Both your governmental and private
sector background well equip you for the role, and I think you
bring some good karma, having been part of a budget operation
and having as part of your legacy balanced budgets. And the
President you served and the Congresspeople that you served
with have that as part of their legacy as well, and I believe
that will be brought to bear in a positive way should you be
confirmed, and I am confident you will be.
A comment and just one question. My comment is on the
regular order point, and this is, sadly, to put pressure on
you. I think the concerns about the submissions of budget on
time are shared by both parties. And I know many have expressed
them to you, and I did in my meeting.
I have puzzled about why this President, this
administration--and I support him so much and feel like so many
of the aspects of the President's achievements from, you know,
getting Bin Laden and the al Qaeda leadership to CAF?
standards, to a stock market that is rising, to hiring and not
job reductions, so many things the President can say with his
team that I have put my thumbprints on something that is really
going in a positive direction. But I do view, frankly, your
portfolio as the one where this President really is still
looking for a very signature achievement in the budget area.
The late submissions of budgets probably to some seems
inconsequential, and yet it is statutory. And just to tell you
from the outside, the way that it looks, it is not a question
of competence because the people who are doing this work, as
you pointed out, in OMB and elsewhere, highly competent, highly
intelligent, highly talented. And it is not a question of
decisiveness because in so many ways the President and the team
demonstrate the quality of decisiveness.
Late budget submissions send the message of lack of
concern, that it is not that important, and yet in terms of
where we are right now, you know, open any newspaper, turn on
any news account for the last few years, everyone has been
saying how important this is.
And so one of the things that is really important for you
to do is to help us as we wrestle toward, you know, finding the
big-picture budget deal and to cement, you know, what by all
rights should be this President's accomplishments in the budget
area. And I am very happy that he has picked you to do this,
and that is just a comment. The pressure is on. This President
has done so many things so well. In this particular area, I
think he is still looking for a very solid achievement, and you
are the person that he has relied on to help deliver that. And
I view that as a very weighty responsibility.
My one question is this: In the votes surrounding the
passage of the Senate budget, an interesting point came up, and
it was an amendment that was proposed by Senator Isakson on the
floor, and it was passed by a fairly sizable vote, 68-31, the
notion of beginning to explore, as many States do, a 2-year
budgeting process where you would do a budget, a full budget
over a 2-year course, and then use the mid-year as sort of a
truing-up year, while revenues were not exactly what we
projected, expenses were not either. I think many States find
this is something that helps them a little bit with planning.
It can help a little bit for incoming Members of Congress to
come in in a true-up year rather than a write-the-full-budget
year. So it has some appeal to the legislators, and I can see
why it passed when it was proposed in the Senate.
I would just like your general thoughts about budget
process and whether the notion of a 2-year budget is something
that you have thought about, and if so, what is your take on
it?
Ms. Burwell. The issue of biennial budgeting is one that I
had the opportunity to speak to when I was at the Office of
Management and Budget before, and I think there are some
positive aspects to the issues that you can do-- most of which
you articulated in your explanation.
I think the question is what is it that will most help us
get back to a regular order and a process that works. And if I
am confirmed at the Director of OMB, while something like that
is very much a legislative decision and a decision with
appropriators and a decision with this Committee, what I would
commit to is being a part of that conversation in terms of what
it would mean from the executive branch standpoint, to think
about how we can work together to get to a place where, if that
can contribute to getting us back to a regular order, where we
have that prioritization, because to me, as I have reflected as
I am entering back in and thinking about these issues and
studying and that sort of thing, the thing that is missing is
the form for prioritization. The conversations are in their
pieces, and conversations in their pieces do not require us to
bring it together, and, therefore, actually stand above our
particular interests as represented--of course, everyone
represents their State. Of course, everyone represents their
district to the best of their ability. But they also represent
the American people broadly. And it is only in those fora where
we bring everyone together where they have to make the
decisions together that you actually act in that other role as
well.
And so if things like biennial budgeting can help with
that, that is something that I would love to be a part of the
conversation, as I say, as appropriate, because I also respect
that is a decision of the Congress.
Senator Kaine. Thank you very much.
Chairman Murray. Senator King.
Senator King. Ms. Burwell, thank you very much. I agree,
one of the most interesting votes was the 2-year budget vote.
Of course, any vote that occurs at 2:00 in the morning you have
to--
[Laughter.]
Senator King. Senator Portman raised a question about
health care costs. I have a slightly different view of it that
I would like to share and ask your reaction. I believe that
virtually the entire Federal budget deficit problem on an
ongoing basis is health care. It is the cost of health care
that the Government buys in very large quantities in terms of
Medicare, Medicaid, and Federal health benefits.
To me, though, the solution is not to try to squeeze and
change Medicare. It is to try to deal with the overall health
care escalation, which affects all of us as private citizens
and businesses and everything else. I think you have touched on
this, but what I am interested in is how can we as governmental
entities affect the larger issue of health care costs. One way
I have thought of is we are a very big customer, and maybe as a
customer we could start to affect--for example, Medicare should
require every provider they deal with to have electronic
medical records as a customer, just say this is something we
are going to do. You know, I have been hearing about electronic
medical records forever, and it just does not seem to be
happening. It is happening on a piecemeal basis, very
expensive.
Thoughts on this idea?
Ms. Burwell. Senator, you touch upon an issue that I
actually raised yesterday in my hearing yesterday, the issue of
electronic medical records. I had the opportunity to be on the
board of a major health institution, the University of
Washington Medical Center, as they were starting on that
process of transferring to those records, and now I am in a
health care system where they are fully transferred, in the
Mercy Hospital system in northwest Arkansas. And the experience
both in quality of care and cost savings is one that you see
every day.
So I am able to see the results of my children's tests on
my computer in the evening, and so that calling back and forth
with the nurse, that step is eliminated. That is a cost
savings. It is actually better quality care because I get the
answers and know the answers as best possible.
In addition, when I go in or take the children in, when we
go in with our children, all the tests are there. They know--it
also helps with preventive care. I had, you know, one of the
nuns question me on why I had not gotten my flu shot. It is
recorded. It is there. And so the elements of those types of
things I think are extremely important to--
Senator King. But do you see my point that we are the
world's largest customer, we can influence these decisions?
Ms. Burwell. And I think those are questions that we would
work through with the Office of Personnel Management in how we
do that. I think the question of customer influence, I think
the question of how we implement and how we legislate, I think
those are all tools that we have to think through. The customer
one is one that I welcome, and I welcome understanding what we
are and are not doing, having been out--
Senator King. I judge a health care provider by whether
they hand you a clipboard when you walk in. If they do, they
are behind the times.
Changing the subject entirely, you were there at a time of
a balanced budget, I think the only balanced budgets in the
last living memory, 40 years or something like that. It is very
easy to spend, and it is very hard to tax. My question is: Do
you think the time has come to consider some kind of external
restraint in the nature of a balanced budget amendment or
something like that to compel the Federal Government to
ultimately get to a balanced budget? I realize we are not
talking about next year or 5 years or 10 years, but at some
point. I just wonder if the realities of American politics, the
will, if you will, has to be governed by some constraint. All
my life I have been opposed to such a thing, but I am coming to
believe that, given the realities, maybe we have to do that.
Ms. Burwell. Senator, I think that we should be able to
make the decisions without the question of a balanced budget
amendment. I think we have talked about it all today. It is
where everyone wants to go in terms of taking that debt-to-GDP
ratio down, getting us to the right place. As you reflect, I
had the opportunity to work on balanced budgets. Those were in
a particular context of a number of things, what I believe is
fiscal discipline, revenues at a certain level, and good
economic health. And I think how you put those together at
different times and different needs for the Nation, one needs
to take care, and that that is the job about the judgment of
when and how we do that.
I would be hopeful that we can make our way to a place
without an amendment specifically.
Senator King. I guess I would fall back on President
Reagan: Trust, but verify. I think there has to be something to
force the verification, you know, just looking at history.
A final question. One of the roles of OMB is in the
regulatory review area, and there has been some discussion of
that today. When I talk to businesses in Maine, small
businesses in particular, the regulatory burden is the biggest
thing that they mention. It is the first thing they mention. I
hope that you will take very seriously the regulatory review
process and certainly meet the deadlines on a timely basis, as
Senator Whitehouse talked about, but to really try to assess
what will the impacts of this be. Are there ways that this goal
can be accomplished without increasing cost burdens in time?
It was very interesting. I talked to companies about the
Affordable Care Act. They are more concerned about the
regulatory requirements than they are the costs. At least that
is what I am hearing, and the number of forms they have to fill
out. These are companies that have their own health insurance.
They still have to go through a long regulatory process, and I
hope that this will also be an important part of your attention
when you are in this position.
Ms. Burwell. I think that the issue of small business
actually is a role throughout OMB. You specifically mentioned
it in the context of regulatory and rulemaking, and I think
that is an important role that OMB brings, bringing the voice
of small business, whether it is through the executive branch
or more broadly, making sure that small business is at the
table. But I think it actually occurs in other places in OMB,
such as the strategic sourcing initiatives and making sure that
when one thinks about the Strategic Sourcing Leadership
Council, it is the seven largest departments of contracting,
but it also includes small business.
So I think there are a number of places where OMB has a
role in ensuring that the interests of small business are
expressed and understood.
Senator King. Thank you very much, and I really appreciate
your willingness to take on this task. It is one of the most
important jobs in the country, and I am delighted that you are
willing to do what it takes to make this happen for our
country. Thank you.
Ms. Burwell. Thank you, Senator.
Chairman Murray. Thank you.
Senator Sessions? I am sorry. Senator Sanders?
Senator Sanders. You have confused Mr. Sessions with me?
[Laughter.]
Chairman Murray. No. We were going back and forth. I would
not do that, Senator Sanders.
Senator Sanders. Ms. Burwell, thank you very much for being
here. I look at your opening remarks, and you indicate that
your primary focus will be deficit reduction, increased
efficiency and effectiveness in how Government works, and
targeted investments that grow the economy and create jobs. It
seems to me those are all important initiatives, but you are
missing one that is very important, and that is the issue of
distribution of wealth and income in this country.
In the last several years, we have seen modest economic
growth, but it did not mean anything to working families
because all of the increase in income went to the top 1
percent.
As one of the major financial advisers, if you are
appointed, to the President, is the issue of distribution of
wealth and income, which is now the widest of any major country
on Earth and worse than at any time since the 1920s, is that an
issue of concern to you?
Ms. Burwell. Yes, sir, Senator, it is. The issue of that
and how a healthy economy--to me the definition of a healthy
economy actually includes the point you are making, which I
think is a very important point. Healthy means not just--for a
few, it means across the economy as we think about what happens
when there is growth. And so thinking about it broadly is
something that is important to me, Senator.
Senator Sanders. So is it a major concern to you that
between 2009 and 2011 all--A-L-L--of the new income went to the
top 1 percent?
Ms. Burwell. Senator, it is a concern and one that, while I
have not seen the President's budget, I think the President's
announcement about the minimum wage issues is one that I think
is important.
Senator Sanders. Yes, it is, but cuts in Social Security
are also important, which would move us in exactly the wrong
direction.
In terms of revenue--and I know Senator Warner raised the
issue--in 2012, at 15.8 percent, revenue as a percentage of GDP
was the lowest in 60 years. And yet at a time when corporate
profits are at an all-time high, corporate income tax revenue
as a percentage of GDP is near a record low. Corporate profits,
all-time high; as a percentage of GDP, corporate revenue is at
an all-time low.
The President has just brought forth a budget in which he
wants to see tax reform as revenue neutral. When one out of
four major corporations pay zero in taxes, do you not think
that we have an opportunity to bring in substantial amounts of
revenue as part of corporate tax reform?
Ms. Burwell. Senator, I think that the--when we think about
revenue and think about it in its entirety and those
percentages and how they work, I think we are up to 17 percent
when we include ATRA and the effects of that. And so moving in
that direction, I think as you and I have discussed, I do
believe there is an opportunity in the revenue space.
As we think about the corporate issue--and, again, I will
defer to my colleagues at Treasury, and I think Director Lew
will be here tomorrow--will be actually on the other side
tomorrow talking about these issues. I would defer to them. But
I think the questions of how we think about corporate tax
issues and tax overall, when I think about tax overall, I think
about three principles: simplicity, progressivity, and thinking
about its contribution to deficit reduction.
Senator Sanders. Well, in 2011, corporations paid just 12
percent of their profits in taxes, the lowest since 1972.
Before we cut programs like Social Security or Medicare, do you
not think it is a good idea that we look to corporate America
for more tax revenue?
Ms. Burwell. Senator, I think a balanced or comprehensive
approach to the issues of deficit reduction require us to look
at all options as we think through things. I think the question
of in the corporate tax space, are the changes that we need
broadening of the base and a closing of the loopholes that will
then, as the economy gains steam, result in changes in revenue?
Senator Sanders. Why do you think--the issue of health care
has, appropriately enough, been discussed by a number of
Senators. At the end of the day, the United States spends
almost twice as much per capita on health care as any other
major nation. We are the only major country on Earth without a
national health care program guaranteeing health care to all
people. Do you think there might be a connection between the
fact that we spend so much, our outcomes are often not as good
as other countries', and we do not have a national health care
program?
Ms. Burwell. I think that the issue of health care costs
and actually provision of health care are ones that are both
equally important, both the cost issue and actually the
provision of care as a Nation, which is why I think the
Affordable Care Act is an important part of a step forward in
providing--
Senator Sanders. My question was--I do not think we have a
Medicare or a Medicaid problem. We have a health care problem.
Our health care system spends as a Nation almost twice as much
as many other countries, and our health care outcomes in many
cases are worse. We are the only major nation without a
national health care system. Do you think there is a connection
in the fact that we spend so much and we do not have a system?
Ms. Burwell. I think the question of what is at the root
cause, probably a number of things, but I think you
articulated--I agree with what you articulated, is that
connection between costs and outcome. And then I think the
question is: What is the best way to get that connection
between outcome and cost? Because I think we often, in the
construct of our current systems, have trouble doing that, and
that is--
Senator Sanders. Do we have a health care system? I was not
aware that we had a health care system in America.
Ms. Burwell. When I used the phrase ``health care system,''
I meant broadly for the Nation as a whole in terms of the
marketplace.
Senator Sanders. Marketplace, yes. And do you think that
marketplace health care system might be one of the reasons we
spend almost twice as much as any other country on health care,
the role of private, for-profit health insurance companies?
Ms. Burwell. I think that it is a combination--and I will
come back to what I think is a core point, which is, How do we
align the outcomes with what we are paying for? And I think
that gets to some of the parts of the conversation that we have
had in a number of different places. And I think at the root of
trying to bend those curves and get those--both the costs down
and the quality of the result up. When people are trying to
measure what they are doing against an outcome--in other words,
a health result--I think that makes a difference.
We had conversations in yesterday's hearing about this with
regard to looking at some of the results that both Cleveland
Clinic and Mayo are having in terms of the quality of their
outcome in a cost-efficient manner. And I think that is at the
root of the issue.
Senator Sanders. Okay. My time has long expired. Thanks,
Madam Chairman.
Chairman Murray. Thank you very much.
Senator Sessions, did you have any final--
Senator Sessions. Yes, thank you so much, Madam Chairman,
for the hearing, and I appreciate you, Ms. Burwell, and look
forward to working with you. I think things will go well with
you in this confirmation process.
I will say, in all honesty, I think you were using some of
the spin tactics that the administration has been using on this
debt. We are going to have to be able to talk directly about
what real numbers are, what the real finances are. When we are
talking about trillions of dollars, we cannot have confusion
about this.
Mr. Lew came in and spun his way and I guess got an
election successful. But it is not the right way for us to
reach a bipartisan agreement.
I would note that the President's budget--the embargo has
now just been lifted--is out today. It proposes $1.1 trillion
in new taxes--that is one thousand one hundred billion--and he
proposes $946 billion in new spending.
So basically it is a tax-and-spend budget. The idea that we
have a balanced plan where we raise taxes and equal that with
the reduction in spending has never been what has been
presented to Congress by this administration. It has always
been raise taxes and raise spending, and that is why we remain
on an unsustainable course, in my opinion.
Your former boss, Mr. Erskine Bowles, said this Nation has
never faced--in that very seat--a more predictable financial
crisis because we were on an unsustainable path. And I just
would say to you I look forward to working with you. You are
very good to talk with. I think we can have an open
relationship. But it is a crisis time. And if I am correct that
the debt already is impacting our growth rate, then we have an
even stronger imperative to reduce--and the Ryan budget, which
balances--the House budget, which balances, shows you can grow
spending 3.4 percent a year and the budget will balance. It
just cannot grow at 5.4 percent a year. So we can increase
spending each year and balance a budget, and that is the kind
of concrete goal we need. This vague idea of a sustainable plan
or sustainable deficits, those kind of words create no
accountability, no firm goal which we can adhere to and fight
for.
So I look forward to working with you. This will be a
challenge. I am worried about the growth that we are not
seeing, and if we get this thing on the right course, I think
America will bounce back. I believe there is a lot of vibrancy
out there and a lot of potential, but there are some clouds
that we need to remove.
So thank you very much for your testimony today.
Ms. Burwell. Thank you.
Chairman Murray. Thank you very much, Senator Sessions. We
will have a chance to debate those numbers you put out about
the President's budget, which I think we will have a debate
about, and certainly continue to the debate about whether or
not the Ryan budget is a balanced budget in many different
aspects, as we continue forward.
Ms. Burwell, thank you very, very much for your testimony
today and for your willingness to participate in public service
at a very challenging and important time. We greatly appreciate
the sacrifice of both you and your family, so thank you very,
very much.
As a reminder to all of my colleagues, additional
statements for today's hearing are due in by 6:00 p.m. today to
be signed and submitted. And also for the information of my
colleagues, again, it is my intention to move to Ms. Burwell's
nomination as expeditiously as possible. This Committee does
have a 48-hour notice requirement, but-- Senator Sessions, I
will work with you--I would like to do it as quickly as
possible early next week.
Senator Sessions. We have a few questions to submit
questions, as normal, but I think they can be handled
expeditiously.
Chairman Murray. Very good.
And, finally, again, just a reminder to all of our
Committee members, we will have Acting Director Jeff Zients
here tomorrow to discuss the President's budget.
With that, I will call this hearing to a close.
[Whereupon, at 12:18 p.m., the Committee was adjourned.]
STATEMENT OF BIOGRAPHICAL AND FINANCIAL INFORMATION REQUESTED OF
PRESIDENTIAL NOMINEES
A. BIOGRAPHICAL INFORMATION
1. Name: Sykvia Mathews Burwell, Sylvia Mary Mathews
2. Position to which nominated: Director of the Office of
Management and Budget
3. Date of nomination: March 8, 2013
4. Address: (Redacted)
5. Date and place of birth: June 23, 1956, Hinton, WV
6. Martial status: Married to Stephen Roderick Burwell
7. Names and ages of children: (Redacted)
8. Education:
-Harvard College, Septemnber 1983-June 1987, Bachelor of Art
-Oxford University, Worcester College 1987-June 1990, Bachelor
of Art
9. Employment Record:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
10. Government Experience:
None
11. Business relationships:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
12. Memberships:
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13. Political affiliations and activities:
(a) List all offices with a political party which you have held
or any public office for which you been a candidate.
(None)
(b) List all memberships and offices held in and services
rendered to all political parties or election committees during
the last 10 years.
My husband and I were co-hosts of an Obama fundraiser at my
25th college reunion in May 2012.
(c) Itemize all political contributions to any individual,
campaign organization, political party, political action
committee, or similar entity of $50 or more for the past 5
years.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
14. Honors and awards:
Rhodes Scholar
Institute of Politics Fellow, Harvard University
Senior Fellow, UCLA School of Public Policy
Honorary Degrees: West Virginai University, Doctor of Humane
Letters, 2003Northeastern University, Doctor of Philanthropy,
2011
15. Published writings:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
16. Speeches:
In my official capacity at the Walmart and the Bill and Melinda
Gates Foundation, I delivered speeches that focused on global
development (E.g. increasing productivity for small holder
farmers) and philanthropy. None of these speeches were on
topics relevant to the position for which I am being nominated,
and thus copies are not provided.
17. Selection:
(a) What do you believe in your background or employment
experience affirmatively qualifies (YOU) for this particular
appointment?
I believe that my prior professional experience at Office of
Management and Budget, the White House, U.S. Department of the
Treasury, and the National Economic Council as well as my
private sector experience at Walmart, the Bill and Melinda
Gates Foundation, and MetLife qualifies me for this
appointment.
(b) Were any conditions, expressed or implied, attached to your
nomination? If so, please explain.
No.
(c) Have you made any commitment(s) with respect to the
policies and principles you will attempt to implement in the
position for which you have been nominated? If so, please
identify such commitment(s) and all persons to whom such
commitments have been made.
No.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, business associations or business organizations
if you are confirmed by the Senate?
Yes,
2. Do you have any plans, commitments or agreements to pursue
outside employment, with or without compensation, during your
service with the government? If so, please explain.
No.
3. Do you have any plans, commitments or agreements after
completing government service to resume employment, affiliation
or practice with your previous employer, business firm,
association or organization?
No.
4. Has anybody made a commitment to employ your services in any
capacity after you leave government service? If so, please
identify such person(s) and commitment(s) and explain.
No.
5. If confirmed, do you expect to serve out your full term or
until the next Presidential election, whichever is applicable?
If not, please explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. If confirmed, are there any issues from which you may have
to recuse or disqualify yourself because of a conflict of
interest or the appearance of a conflict of interest? If so,
please explain.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
2. Identify and describe all investments, obligations,
liabilities, business relationships, dealings, financial
transactions, and other financial relationships which you
currently have or have had during the last 10 years, whether
for yourself, on behalf of a client, or acting as an agent,
that could in any way constitute or result in a possible
conflict of interest in the position to which you have been
nominated.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
3. Describe any activity during the past 10 years in which you
have engaged for the purpose of directly or indirectly
influencing the passage, defeat or modification of any
legislation or affecting the administration and execution of
law or public policy other than while in a federal government
capacity.
Apart from my duties as a government official during the past
10 years, I have had minimal engagement in legislation and
policy-making. While employed by New York University, I had
occasional meetings with members of congress and local
government officials on education policy.
4. Do you agree to have written opinions provided to the
Committee by the designated agency ethics officer of the Office
of Management and Budget and by the Office of Government Ethics
concerning potential conflicts of interest or any legal
impediments to your serving in this position?
Yes.
5. Explain how you will resolve potential conflicts of
interest, including any disclosed by your response to the above
questions.
In connection with the nomination process, I have consulted
with the Office of Government Ethics and the Office of
Management and Budget's designated agency ethics official to
identify potential conflicts of interest. Any potential
conflicts of interest will be resolved in accordance with the
terms of an ethics agreement that I have entered into with
OMB's designated agency ethics official and that has been
provided to this Committee. I am not aqare of any other
potential conflicts of interest.
D. LEGAL MATTERS
1. Have you ever been disciplined or cited for a breach of
ethics for unprofessional conduct by, or been the subject of a
complaint to any court, administrative agency, professional
association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. To your knowledge, have you ever been investigated,
arrested, charged or convicted (including pleas of guilty or
nolo contendre) by any Federal, State, or other law enforcement
authority for violation of any Federal, State, county or
municipal law, regulation, or ordinance, other than a minor
traffic offense? If so, provide details.
No.
3. Have you or any business of which you are or were an
officer, director or owner ever been involved as a party of
interest in any administrative agency proceeding or civil
litigation? If so, provide details.
As a member of the MetLife Board I may have been named in
individual matters, however, to my knowledge, none of these
cases involved allegations of wrongdoing by me in my official
or individual capacity. Walmart as a company has various
proceedings and lititgation; however, I was not involved in any
of these matters.
4. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be considered
in connection with our nomination.
None to my knowledge.
E. TESTIFYING BEFORE CONGRESS
1. If confirmed, are you willing to appear and testify before
any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If confirmed, are you willing to provide such information as
may be requested by any committee of the Congress?
Yes.
F. FINANCIAL DATA
All information requested under this heading must be
provided for yourself, your spouse, and your dependents.
1. Please provide personal financial information not already
listed on the SF278 Financial Disclosure form that identifies
and states the value of all:
(a) assets of $10,000 or more held directly or indirectly,
including but not limited to bank accounts, securities,
commodities futures, real estate, trusts (including the terms
of any beneficial or blind trust of which you, your spouse, or
any of your dependents may be a beneficiary), investments, and
other personal property held in a trade or business or for
investment other than household furnishings, personal effects,
clothing, and automobiles; and
(Redacted)
(b) liabilities of $10,000 or more including but not
limited to debts, mortgages, loans, and other financial
obligations for which you, your spouse, or your dependents have
a direct or indirect liability or which may be guaranteed by
you, your spouse, or your dependents; and for each such
liability indicate the nature of the liability, the amount, the
name of the creditor, the terms of payment, the security or
collateral, and the current status of the debt repayment. If
the aggregate of your consumer debts exceeds $10,000, please
include the total as a liability. Please include additional
information, as necessary, to assist the Committee in
determining your financial solvency. The Committee reserves the
right to request additional information if a solvency
determination cannot be made definitively from the information
provided.
(Redacted)
2. List sources, amounts and dates of all anticipated receipts
from deferred income arrangements, stock options, executory
contracts and other future benefits which you expect to derive
from current or previous business relationships, professional
services and firm memberships, employers, clients and
customers. If dates or amounts are estimated, please so state.
Please only include those items not listed on the SF 278
Financial Disclosure form.
(Redacted)
3. Provide the identity of and a description of the nature of
any interest in an option, registered copyright, or patent held
during the past 12 months and indicate which, if any, from
which you have divested and the date of divestment unless
already indicated on the personal financial statement.
(Redacted)
4. Provide a description of any power of attorney which you
hold for or on behalf of any other person.
(Redacted)
5. List sources and amounts of all gifts exceeding $500 in
value received by you, your spouse, and your dependents during
each of the last three years. Gifts received from members of
your immediate family need not be listed.
(Redacted)
6. Have you filed a Federal income tax return for each of the
past 10 years? If not, please explain.
(Redacted)
7. Have your taxes always been paid on time including taxes on
behalf of any employees? If not, please explain.
(Redacted)
8. Were all your taxes, Federal, State, and local, current
(filed and paid) as of the date of your nomination? If not,
please explain.
(Redacted)
9. Has the Internal Revenue Service or any other state or local
tax authority ever audited your Federal, State, local, or other
tax return? If so, what resulted from the audit?
(Redacted)
10. Have any tax liens, either Federal, State, or local, been
filed against you or against any real property or personal
property which you own either individually, jointly, or in
partnership? If so, please give the particulars, including the
date(s) and the nature and amount of the lien. State the
resolution of the matter.
(Redacted)
11. Provide for the Committee copies of your Federal income tax
returns for the past 3 years. These documents will be made
available only to Senators and staff persons designated by the
Chairman and Ranking Minority Member. They will not be
available for public inspection.
(Redacted)
12. Have you ever been late in paying court-ordered child
support? If so, provide details.
(Redacted)
13. Have you ever filed for bankruptcy or been a party to any
bankruptcy proceeding? If so, provide details.
(Redacted)
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Answers to Questions Submitted
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