President s 2019 budget request. He faced questions on the 4. 4 trillion proposed budget which increases the federal deficit. Director mulvaney acknowledged that he would have voted against the white house budget as a member of congress. This Senate Budget Committee Hearing is just under two hours. Good morning. I will call to order this Senate Budget Committee Hearing. Good morning and welcome to the Senate Budget committees hearing on the president s Budget Proposal for fiscal year 2019. This budget submission comes to us on the heels of a very first, very busy first year for President Trump. Im proud of all the hard work and leadership that went into passing the tax cuts and jobs act, historic progrowth tax bill thats already bringing investments back to america and boosting takehome pay for workers. With the president s new budget submission im interested in learning how the administration plans to build on this momentum and further strengthen our economy. One of my greatest concerns as United States senator is the countrys national debt, a figure thats now eclipsed 20 trillion. To secure our economy long term for future generations, we must tackle this growing problem while lowering taxes is proving to bolster our economy which will bring in new revenue, we must more closely examine the Spending Priorities and habits of the federal government. We have a spending problem in america and so i look forward to hearing from our witnesses our witness which ways the administration believes we can use taxpayer dollars more efficiently. Today we have the opportunity to hear from office of management and budget director mick mulvaney. Director mulvaney, thank you for coming this morning to discuss the president s fiscal year 2019 budget request. We look forward to your testimony and the opportunity to discuss possible solutions to the nations budgetary woes. I also want to congratulate you on the documents, i only brought two of them that came yesterday, the two lightest ones. I want to congratulate you on how concise they are, how explicit they are and the difficulty that you went to to not only explain the budget but also to very specifically point out the major savings and reforms that are being suggested. Its one of the clear presentations that i have seen and i have seen a lot of them. The submission of the president s annual Budget Proposal marks an important first step in what should be an orderly budget process. Over the years, however, under successive congresses and administrations, this process has broken down, leaving behind a confusing, illogical, wasteful maze of legislation and ad hoc governing. A perfect example of which was on display last week with the latest budgetbusting spending deal. Instead of funding the federal government, week by week or month by month, we must address the structural deficiencies of our budget process, returning to a system that actually works. Serving on the budget exit committee for 15 years i tried to solve our budget problems. In 2016 i devoted much of the year to working on bipartisan ideas to fix americas broken budget process. We were able to get a conversation started through hearings and meetings with experts, 13 of them, while we made some Good Progress at the Committee Level for a variety of reasons, we did not succeed in advancing the kind of reforms we need. Im hopeful that learning from our recent experience with continuing resolutions and caps deals, the time to really reform the budget process is now. To be successful, we have to have bipartisan support. Which is why im again extending my hand to the other side of the aisle looking for willing partners to join me. I hope this renewed call for budget reform receives support from my colleagues in the senate and even from director mulvaney this morning. I welcome all my colleagues ideas on budget process reform, even on budget and on the programatic proposals in the president s budget. While these issues often divide i believe we can find Common Ground and make progress. This is the way the legislative process is supposed to work. The way to approach the task ahead for us is to focus on what i call the 80 rule. Focusing on the 80 of issues that we have general agreement rather than the 20 that not only lack consensus but we have been fighting over for years. That way we arent sidetracked and can achieve real results. Thats the way ted kennedy and this former shoe salesman from wyoming were able to get things done on the health, education, labor and Pension Committee in years past. The American People are counting on us to Work Together to fix the nations fiscal mess. We must start now because one thing is clear, ignoring the tough problems today will not make them disappear and the longer they persist, the more difficult they will be to fix. Every year we spend 4 trillion, i dont think anybody really knows how much that is, but its a lot of money, and we try to spend that amount and make the decisions on spending that amount every year. We really dont make changes. We just increase for inflation and what i call the panic factor. Well, its not quite true. We do make changes. We add new programs but we do it without eliminating or even consolidating existing programs, or even updating the old programs. The spending deal has a provision for fixing the broken budget process. The budget is supposed to be our roadmap to the future. We talk about the need for infrastructure, budgets one of those infrastructures that we better be working on if were going to have a better budget process. Its a tough road ahead, but im confident that we can find success together. Senator sanders . Mr. Chairman, thanks very much for holding this hearing and director mulvaney, thanks very much for being with us this morning. I dont have to tell anybody that in america today, there is a lot of political demoralization. Congress is held in one of the lowest today favorable levels at any time in history. Vast majority of the people think we do a terrible job. President trumps favorable ratings are the lowest i believe for any president who has served a length of time that he has served. So people look at washington and they dont see much that they feel very good about and i think there are a couple of reasons for that, which this budget really demonstrates. Number one, there are politicians who run for office and they say one thing. President trump, when he was a candidate, ran for office and he said im a different type of republican, im not the m, ck mulvaney type of republican, im different. Im going to stand with working families, we are going to take on the establishment and so forth and so on. Turns out he did exactly the opposite and this budget is a clear manifestation of him doing exactly the opposite. Second of all, i think what the American People understand is their one vote, their one voice, matters relatively little in a congress which is dominated by big money, wealthy campaign contributors. The Koch Brothers are going to spend some 400 million in the coming campaign and you know what . This budget is the budget of the Koch Brothers. It is the budget of the billionaire class and the American People understand it. This is a budget which will make it harder for our children to get a decent education. Harder for working families to get the health care they desperately need. Harder to protect the air that we breathe and the water we drink, and harder for the elderly to live out their retirement years with dignity and respect. This is not a budget as candidate donald trump talked about that takes on the political establishment. This is a budget of the political establishment. This is the robin hood principle in reverse. It is a budget that takes from the poor and gives to the very wealthy. During the campaign, as we will all recall, donald trump told us that quote, the rich will not be gaining at all, end quote, under his tax reform plan. Rich will not be gaining at all. But as president , the tax reform legislation trump signed into law a few weeks ago provides 83 of the benefits to the top 1 , raises taxes on millions of middle class families, and drives up the deficit by 1. 7 trillion by the end of the decade. If you were wondering how President Trump plans to pay for his massive tax cuts to millionaires, billionaires and large corporations, this budget answers that question for you by breaking his Campaign Pledge not to cut medicare, medicaid and Social Security. In fact, President Trumps budget would slash medicaid by over 1. 3 trillion, cut medicare by over 500 billion and reduce Social Security by nearly 25 billion. Mr. Chairman, as you know, medicaid now pays for more than twothirds of all nursing home care in our country. What happens to Senior Citizens who have their nursing home coverage paid for by medicaid if that program is cut by 1. 3 trillion . Think about it. People now in Nursing Homes with alzheimers, serious illnesses, massive cuts, what happens to them . What happens to their families . Its not just seniors. Today, medicaid covers millions of children with special needs. We are the only major country on earth not to guarantee health care to all people and this budget would then throw millions more people off the Health Insurance they have. We have an Opioid Epidemic that every person up here talks about every day, but when you slash medicaid by 1 trillion, you make it infinitely harder for communities, cities, states, to deal with this terrible crisis. During his campaign, donald trump told the American People that he was going to provide, i quote, Health Insurance for everybody, end quote, with much lower deductibles. President trumps budget would throw an estimated 32 Million People off the health care they currently have. 32 Million People. At the same time, it would substantially raise premiums for older americans. Mr. Chairman, what this budget is about is a massive transfer of wealth from working families, the elderly, the children, the sick and the poor and the most Vulnerable People in our country to the top 1 and large corporations. As a candidate, trump said that he understood the pain that working families across the country were feeling. Well, mr. President , you are not responding to that pain when you propose a budget that would throw over a million children off afterschool programs. Youre not a champion of working families. Youre not responding to pain when your budget would kick half a million families out of their homes by gutting Affordable Housing. We have a massive crisis in Affordable Housing from coast to coast. This budget would make it much, much worse. You dont help working families, mr. President or mr. Mulvaney, by throwing more than 100,000 children off of head start. We need to move to universal prek. Every family in america should know their kids have good quality child care. You dont throw 100,000 children off of head start. You dont help working families when your budget would eliminate Financial Aid to more than a million and a half low income college students. Kids are graduating school 30,000, 40,000, 100,000 in debt. This budget makes their problems even worse. Youre not a quote, different kind of republican by proposing a budget that would eliminate heating assistance to nearly seven million families in this country. Let me tell the president , mr. Mulvaney, it gets cold in vermont and many other parts of this country. Many of our elderly people keep warm in the wintertime through the low income heating assistance program. Dont eliminate it. Mr. Chairman, while President Trump tells us we dont have enough money to help the working people of this country, he does believe we have enough money to provide a massive, massive, massive increase in the pentagon, an agency of government that has not been able to do an audit and where study after study shows us that there are hundreds and hundreds of millions of dollars in waste. Mr. Chairman, the good news is this budget is going nowhere. Everybody knows that. But it does indicate where trump and his friends are coming from, and the American People have got to understand that. Weve got to stand up and say no, these are not the priorities of this country. Thank you, mr. Chairman. Thank you, senator sanders. I will now introduce the witness. Our witness this morning is mick mulvaney, director of the office of management and budget. Director mulvaney has held this office since february of 2017 and is charged with assisting the president to fulfill his vision through the production of the federal budget and its implementation across the executive branch. Prior to his time as director of the office of management and budget he served the people of the Fifth District of South Carolina as their congressman, where he was first elected in 2010. During his time in congress, he has served on both the Budget Committee and the joint economic committee. For the information of colleagues, dr. Mulvaney will take less than seven minutes for his Opening Statement, followed by questions. We look forward to receiving your testimony. Director, please begin. Thank you, mr. Chairman. Ranking member sanders. Thank you for the promotion. My mother would be glad to know i finally did get that doctorate. Appreciate the opportunity to be here. Chairman, i have already submitted a formal Opening Statement for the record. Im going to depart from that substantially just to say a few things before i start taking your questions. To explain really what we have sent you in the last 24 hours. Last year when i sat here, i had sort of half a budget. We had what was called a skinny budget at the time, the very first time i came before you, which was just the discretionary side of the spending which is not unusual during a transition year. This year, i have sort of come down with two budgets. What we sent you in the last couple of hours, actually just since yesterday, takes our 18 budget and makes an effort to bring that budget from last year sort of into compliance or at least into line with the caps deal you all cut on friday. In addition, we also have sort of two 19 budgets. We have the 19 budget we have been working on at the office of management and budget since last summer which we also tried to sort of bring up to speed in light of the caps deal. Let me make it very clear that the numbers that you get are extraordinarily good. They are solid numbers. Theres no question about it. But its impossible to do six months worth of work in a weekend, especially when we also had a brief Government Shutdown on top of that. So the numbers i will talk about today, they are solid numbers. Theres no question. But still expect over the course of the next couple weeks and months to see additional tweaks. The example i give, gentlemen, is that the caps deal, for example, extends the mandatory sequester by two years. It will take us several weeks if not months to run that number through the system. Instead of however waiting until april or may to give you this budget, we decided to come forth with these numbers here today. What have we done with the 18 and 19 budgets. We tried to deliver two messages. Two messages at the same time. The messages from the administration is this. I recognize the fact a budget is a messaging document. We can sort of beat you to the punch and ask the question whether or not its dead on arrival. I will never forget senator leahy called me last year after i sent down the first budget and said young man, dont feel bad, this budget is no more or less dead on arrival than the other 40 i have seen since ive been here. But it remains a messaging document. So what are those messages . There are two primary messages in what we bring to you today. Number one, you dont have to spend all of the money that you just allocated or provided for in the caps. But if you do, heres how the administration would prefer to spend it. You dont have to spend it all. Thats what we have put in the 19 budget. Yes, we added money back to the 19 budget. Money in addition to what we would have sent you if there was no caps deal, but we do not spend all the way up to the caps on the 19 budget. Second half of that first message is but if you do spend it, here are the administrations priorities. Thats the 18 budget. We have taken the 18 budget and added back i think 117 billion worth of nondefense spending to 18 to spend up to the caps in 18, in addition to the 26 billion we add to the 18 budget for defense spending. So that you have in front of you the administrations two positions. You dont have to spend it all and if something happens between now and the appropriations bill that you pass in march, or the appropriations bill that you pass for 19, between the end of march and september of this year, if you decide not to spend all the way up to the caps, then you have the administrations guidance on how we would prefer to do that and that is in our 19 budget. Conversely, if you decide in 18 or 19 or in both to spend all the way up to the caps and you are curious as to how the administration would prefer to spend that money, that is the 18 budget. That is what we have sent to you. We do believe that that message still has value even though you folks changed the numbers in the last three days and we signed it so its not like you did it to us. We all did it together. We respect that. Also interestingly, i say this to my democrat colleagues, folks have asked us if the 19 budget is evidence of the administration reanythineging o implied agreement on the caps deal, no, if you are interested in spending all the way up which is what the caps deal contemplates, the 18 budget is there. Keep in mind, the 18 and 19 caps numbers are only 10 billion difference. The difference between i think the 18 number is 80 for defense and 63 for nondefense. The 19 numbers were 85 and 68. So its only a 10 billion difference in the caps deal between the two years. So the two things do stand as information from the administration as to how we would spend it. We will close by saying this. It doesnt balance. It doesnt balance within the tenyear window. I think i said to you folks, i know i said to my members in the house last year that i worried that when i came to you last year, that it would be the last chance i would have to bring to you a budget that balanced in ten years. I said at that time that if congress did not take steps last year and the administration did not take steps last year to change the trajectory of our spending, that i would not be able to balance the budget within ten years this year, and that has been the case. I would contend to you that the numbers this year are even more solid. I know my good friend senator van hollen and i like to go back on the numbers. Im even more comfortable this year that the numbers are more solid. There are fewer plugs this year because we had a chance to digest a years worth of information to put policies to numbers and as the numbers firmed up, it would have been possible to probably bring you today a balanced budgets if i had fudged the numbers but i would rather bring you numbers that are true and honest, that set forth a better picture of our fiscal condition than lie to you and tell you the budget would balance in ten years. It doesnt balance within ten years. We will talk about that today as well. Mr. Chairman, i appreciate the opportunity to make an Opening Statement and look forward to answering questions from members of the committee. Thank you, director. Now we will turn to questions. Let me take a moment to explain again the process. Each member will have five minutes for questioning beginning with myself and senator sanders. Following the two of us, we will alternate questions between republicans and the minority. All members who are in attendance when we started will be recognized in order of seniority. For those who arrived after the hearing began it will be listed in onrder of arrival. If you arent here at the time you are called on, you move to the bottom of the list. With that, i will begin my questions. The broken budget process that i discussed in my Opening Statement was on full display last week with the latest caps deal. This legislative action occurred too late to incorporate in the president s Budget Proposal. I appreciate your explanation. You did release an addendum with Supplemental Information on the administrations vision for spending in light of the bipartisan budget act. Can you explain how the Administration Proposes to adjust spending levels as a result of the legislation passed last week and to what extent it is using this opportunity to address some of the more egregious budget gimmicks . Thank you, senator. I will deal with the gimmicks separately. We took advantage of the caps deals, ladies and gentlemen, in both 18 and 19 to do a couple things. We moved a tremendous amount of money off of the oco budget and into the base. We did that in both defense and nondefense. I think it was 12 billion in nondefense for this year. I cant remember what the total number was in nondefense but we started transition off of oco and into the base as part of our longer term projections, you will see in the budget we actually dramatically reduced oco beginning in 2020. I think we take the total oco budget down to no more than 20 billion in our projections beginning in the out years. We also got rid of a lot of the chips which i know immediately puts everybody to sleep. The gimmicks for lack of a better word that both houses and administrations have used in the past to justify additional spending so we took as much opportunity as we could, given the additional money that was available under the caps, to try and give a more transparent view into our actual spending. As regards to the actual Spending Priorities, mr. Chairman, as i mentioned, in the 18 budget when we went back to plus up the budget from last year to match the caps, we haddd 26 billion for defense, 117 billion to nondefense. 34. 5 billion of that was for infrastructure of which roughly 20 contemplates the president s infrastructure package that was introduced yesterday. An additional 15. 7 billion went for Border Security. That would bring, gentlemen, the total for the border wall for 18 and 19 to about 18 billion which is the actual cost of the physical structure. Keep in mind you may have heard the number of 25 billion for southern Border Security. The 18 billion is for the wall. The rest of it is for technology, personnel and so forth. What does that mean. That means that the proposal that we sent you actually contemplates a daca immigration deal being done. Because we recognize the fact that you have no interest in giving us money for the full border wall unless its part of a larger comprehensive immigration bill so we fully contemplate that that deal is reached. Yes, we have asked for small amounts in 18, 1. 6 billion in 18, 1. 6 billion in 19 as part of the ordinary appropriations process. But we fully anticipate in these proposals that a daca deal is reached and that we have full funding for the wall. We have 3 billion additional in opioid spending for 2018, additional half a billion dollars for i. T. Modernization, not very glamorous, not very sexy but something i think we all take very seriously. We spend about 80 billion a year, thats 80 billion with a b on i. T. In this administration or this government. The overwhelming majority of it is for maintenance of outdated systems. We have additional 9 billion for research and development, keeping in mind in both the 18 and 19 budgets, r d total spending increases. Dont be misled by some of the nondefense discretionary reductions. Overall, r d is increased in both of the budgets. We mentioned already the oco to base shifts and the budget gimmicks i talked about represent almost 18 billion. In the 19 budget, mr. Chairman, i wont take a lot of time to go down but the biggest increases would include an add back, almost 16 billion in health and human services, of which over 9 billion is nih budget i came to last year. I dont know if you are aware you did this, but i came to you last year with a proposal to reduce the nih budget as an effort to get them to look at their administrative budgets. I tried to make the case that if the nih only allocated or only spent as much money on their administrative portion of their grants as they did from private grant money, that we could actually reduce their spending by 9 billion but actually get the same amount of research. Not only did that not sway very many people in the legislature, but you all actually added something in the april omnibus that said its against the law for us to go in and look at the administrative costs. So i know when im beaten and we actually added back the 9 billion to the nih budget throubut theres a long list of addbacks as we try to reprioritize the additional money made available during the caps. Thank you for being that concise. Sorry. Thats fine. Appreciate the information. Senator sanders . Thank you, mr. Chairman. You know, budgets deal with trillions of dollars and thousands of pages and words after words after words and numbers after numbers after numbers, but the truth is, as im sure director mulvaney knows, these numbers have real meaning to the lives of ordinary people. Mr. Chairman, i want to put into the record if i might an article from politifact dated june 27, 2017. Without objection. Without going into all of what the article says, it basically confirms that when you throw many millions of people off of the Health Insurance they have, thousands of them will die. This budget calls once again for the repeal of the Affordable Care act. The estimate is that some 32 million americans will lose their Health Insurance. And what study after study shows is that when you throw 32 Million People off of their Health Insurance, tense of thousands of them will die. Will die. Director mulvaney, tell me about the morality of a budget which supports tax breaks for billionaires, throws 32 Million People off the Health Insurance they have, resulting in the deaths of tens of thousands of fellow americans. Do you really think this is something that we should be doing in the year 2018 . Actually, i dont think its something we are actually doing, senator. Again, im not familiar with the article that you have mentioned. My guess is that it references the cbo report regarding various republican proposals to repeal and replace obamacare. I do remember one of the major points of contention regarding the way the cbo scored the proposals was that it would assume that several tens of millions of people would be, to why your terminology, kicked off of Health Insurance by the repeal of the individual mandate. When we drilled down into that, senator, what we found was the cbo assumed that if we got rid of the individual mandate, that millions of people would voluntarily give up medicaid expansion. Mr. Director, i apologize. We just dont have a whole lot of time. I understand individual mandate. This goes beyond. You are proposing a cut of over 1 trillion in medicaid. Independent analyses have indicated, we can argue about nobody knows for sure, is it 25 Million People going to be thrown off, 30 million, i dont know, to be honest with you. You dont know. But what we do know is when you throw tens of millions of people off, they will die. Some of them will die. Studies show that thousands of them will die. I would just suggest that in the United States of america, the only major country not to guarantee health care to all people, we should not be making a very bad situation worse by throwing tens of millions of people off of Health Insurance. Let me ask you another question. Mr. Director, according to americans for tax fairness, the Koch Brothers, the third wealthiest family in america, worth 94 billion, and a family dedicated with a few of their billionaire friends to put hundreds of millions of dollars into the coming election, will receive a tax break of up to 1. 4 billion a year from the trump tax plan. Meanwhile, this budget eliminates funding as i indicated earlier for the Liheap Program that keeps almost seven million families warm in the wintertime. The vast majority of these families have children or they are Senior Citizens or they are people with disabilities. Explain to me the morality of a process by which we give the third wealthiest family in america, a major contributor, i might add, to the republican party, over 1 billion a year in tax breaks and yet we cut a program which keeps children and the elderly warm in the winter. Heres the morality of the liheap proposal, senator. 11,000 dead people got that benefit the last time the gao looked at it. Thats not moral. To take your money, to take my money, to ma mon 11,000 people, we should correct that, but seven Million People get the program. To say that 11,000 out of seven million, deal with that. I grow with yagree with you. All 50 states now have programs designed to prevent the cutoff of utilities during winter in the north or summer in the south which is what the program was originally designed to do. Mr. Mulvaney, when it gets 20 below zero, i come from a state which tries to do its best. Vermont and other states around this country including wyoming dont have the resources to keep people warm when it gets 20 below zero. You have just created a situation, not you, the president must take responsibility for this budget, created a situation where people will go cold, some may freeze to death. That is not what we should be doing in america. Senator grassley . In all my years in the United States senate, i have never seen such positive results just because we passed a tax bill so soon. I have seen positive results down the road a ways but not within a month of the passage of the bill. So i want you to know that i appreciate the administrations focus on maximizing Economic Growth as part of its first two budgets. We simply cant settle for the anemic growth of under 2 experienced under the last administration. The passage of the tax bill in december is a key component of this administrations effort to achieve annual average Economic Growth of about 3 , which is the average of the 50 years before 2008. We have already started to see the positive effects. Many businesses have announced pay raises, employee bonuses, increased investment in the u. S. Additionally, this month, employees are beginning to see bigger paychecks as less tax is withheld. So under reconciliation, we can only pass tax legislation for ten years so director mulvaney, can you speak to the importance of tax permanence in achieving longterm Sustainable Growth envisioned in the president s budget . I can, thank you, senator. In fact, we assume that for the largest portions of the tax bill, we assume that in our budget, even though the tax bill that passed ends the individual tax rate reduction after five years, we assume its permanence. You will see theres a variation between the cbo baseline for revenues over the course of the next ten years and our budget, fully half a trillion dollars of that is associated with that extension. We dont extend some of the smaller tax reductions. I think there were some specific one and two year programs that are not extended but under the proposals in this budget, the individual tax rates and the Corporate Tax rates would be permanent. I have heard the rule that the administration put out that for striking or implementing regulations, two have to be repealed. I have heard the president speak about hundreds of regulations being reduced. I would like to have you give me some data that will show the benefits of such, because maybe you reduce, you are eliminating regulations that havent been in force for the last 20 years. What good does that do. Im not badmouthing what the president s trying to accomplish here, because i think less regulations has had a great deal to do with increasing the Economic Growth, but can you put some quantifiable terms so we can see what this is doing to benefit the economy . I can. I can do it a couple different ways. First, i want to thank congress for taking up under the cra revision i think it was 15, 16 or 17 different regulations and want to reinforce the fact that while the administration can take steps to undo regulations, it can be slow, it can be tedious, and it might not be permanent. When yall take it up under the cra, you make sure that no future administration ever makes a similar rule so i want to thank you on behalf of the administration for the work you have undertaken there. The actual ratio that we have achieved this year instead of 2 1 was 22 1 on major regulations. We had 22 major rules and regs revoked versus i think only three or four brand new ones total. The total number of rules, regulations, other limitations that were either withdrawn, made inactive or delayed is approaching 1600. The net present value benefit of that to the economy last year was 8 billion. That will go forward now. So we really do believe, in fact, i think if you go back and talk about Economic Growth, we actually saw increases in Economic Growth, improvements in Economic Growth before the tax bill was even actually fleshed out let alone passed. We absolutely believe the work the administration and congress did to roll back the Regulatory Burden had an Immediate Impact on the Economic Health of this country and that that is sustainable and structural. Its not stimulus, its not a sugar high. Its something that fixes the economy longterm so its something we look forward to continuing. The president continues to make it a priority for the administration and we will continue to make it a priority as we move forward next year. I got three seconds left. I dont expect you to answer this question but i want to make sure that you know its important to me by instead of putting it in an email to you. As you know, the senate has been working to try to stabilize the Durable Medical Equipment medicaid benefit medicare benefit. This benefit is important because it allows patients to remain in their homes, avoiding hospitalization. The Obama Administration put in place a rule that applied Competitive Bidding rates to rural and other areas that were expressly excluded from the Competitive Bidding program. In some cases, these changes resulted in rates being below the costs suppliers incur for providing services and equipment and i was encouraged in august last year when i saw that cms sent an interim final rule to omb that would mitigate these changes. However, this rule has been pending since then. So i want you to tell me in writing specific steps you are taking to make sure that the omb reviews and releases that rule. Thank you. Thank you, senator. Senator stabenow . Thank you very much, mr. Chairman. Welcome. First, i have to start, director mulvaney, and say i cant believe here you go again on the great lakes. I cant believe this. Last year the administration zeroed out the Great Lakes Restoration Initiative which is a Bipartisan Initiative strongly supported in the house and the senate to make sure that we have dollars available for emergencies as well as Water Quality issues and so on, and after you zeroed it out last year, we put the full funding back in. Strong support from the entire region and now youre back again with almost zeroing it out. So i just dont understand it. I know that last year you said this was a local issue, but believe it or not, theres another country that cares about this right next to us called canada, and we have a Great Lakes Initiative with eight states. Its funded federal, state, local and internationally. But the administration doesnt seem to understand that 20 of the worlds fresh water surrounding the great lakes is important. So please explain this to me. Thank you, senator. You are absolutely correct. We did zero that out last year. I believe that after the caps deal, one of the addbacks we made either to 18 or 19 was for 30 billion for split between that and the some of the work we are doing in the chesapeake bay. What our Research Indicated over the course of the last year, you did raise this with our office as did many members of the area, both the house and senate from both parties, was that theres some federal longterm monitoring programs ongoing. We propose to continue to fund that but also send a message at the same time this is not something we are interested in doing longterm. We do consider it to be regional. We consider it to be something the states are capable of doing. And that we would very much like to see us get out of that business in the long term. This is a major resource for our country. I dont know. Have you seen the great lakes . You ever been . Yes, maam. We are like the ocean without the salt. Its pretty big. One out of five jobs in michigan comes from the water. Its a very big deal. 16 billion boating industry. 7 billion fishing industry. I could go on and on. Thats just michigan. So the idea of taking what is a commitment every year of 300 million to be able to tackle things like asian carp which we are trying to keep out of the lakes and instead put in 30 million, again, we are going to go right back at it again and do our level best to make sure that this doesnt happen. But i dont understand why this major Natural Resource for our country, where 40 Million People get their drinking water, from the entire region, is something that this administration doesnt understand. So we are going to go back at it again and hopefully be able to keep the funding going. Something else i wanted to ask you about and that relates to michigan and canada again. We trade everything across a bridge and tunnels and so on except prescription drugs. We are not allowed and we have probably the highest prices for prescription drugs in the world, and we can drive ten minutes across a bridge and lower the prices oftentimes 40 , 50 for seniors and others. Were not talking about luxuries here. We are talking about in many cases, whether or not people are going to get their cancer medicine, their insulin. Its life and death. So President Trump has made promises about lowering the cost of prescription drugs and the administration could open the border right now to safe importation and senator sanders is offering a bill that i cosponsor. I have taken bus trips with seniors to canada over the years, and im wondering, we havent seen any action so far, so is it fair to say the president doesnt support opening up the border to reimport safe prescription drugs into the United States . I will say this, senator. I believe that it is a promise the president has already started to keep. The things that we have done in the administration already this year as part of the changes at cms have actually already saved our seniors this year, 2018, over 300 million. Have prices been going down . Im sorry. Where are prices going down . Either within medicare or medicaid in 17 for the First Time Since 2012. On reimportation . No, maam. We dont address that in the budget. There are other ways to get at this issue. I believe you may have heard the president actually mentioned lowering drug prices in the state of the union address. The budget contains a series of proposals including a doubling of the funding for the fda, an extra 100 billion this year in order to work on generics. We had successes there already and look forward to continuing those. I do support generic drugs and more competition in that area. I think thats very important. But i also know there are things that he could do right away. His own commission that looked at the Opioid Crisis recommended that there be immediate negotiation to bring down the price of naloxone and that hasnt been done. That could be done. Opening up the border to be able to bring lower cost prescription drugs can come back. Im very concerned that at this point, we have seen, i will conclude, mr. Chairman, that when we look at what is actually happening in the marketplace for seniors, because folks arent talking about prices going down. They are talking about prices going up. What im concerned about is we have seen major windfalls from the tax cut and the effective tax rate will be cut to 9 . Corporate rate was 35 , to 9 and others as well. I will just say i havent seen anybody lowering prices because they got a big windfall in the tax cut. That would be something that would be very nice for the president to focus on. Thank you, mr. Chairman. Senator corker . Thank you, mr. Chairman. Director mulvaney, welcome back. I do want to applaud for creating a more real budget. It seems that every year we have these fake budgets that balance in ten years, it doesnt matter who the administration is or what side of the aisle theyre on. We have these fictitious budgets that create imaginary things that are never going to occur and you didnt do that. I want to thank you for that. I know that you and i are of the sa same ilk. We care deeply about the deficits our nation has. I know you were a strong proponent of balanced budgets when you were in the house. Now you are in this position and we as a nation, as you know, are on an unsustainable path and i dont want to get into specifics right now. I think we all understand where we are as a nation. I was somewhat discouraged that the cap deal that was reached last week was really far above what even the president had asked for. I think we have to say that congress in this particular case went way beyond what the president was even requesting, as strong of a military supporter as he is and i am, Congress Went way beyond that, both on military spending and on nonmilitary spending. So youve had to actually jack your budget up so as people are giving you a hard time today about deficits, you actually requested less money and at the last moment, had to elevate everything to take into account what congress on its own accord did to create even bigger deficits. So what i would like to ask you is just philosophically, where do we go . By 2028, we are going to be at 91 debt to gdp. I know that our military leaders would tell us that our deficits are the greatest threat to our nation, not russia, not isis, not the many things that we are dealing with in the middle east and around the world, but our debt. I know that you care about that. So just philosophically tell me where we go from here. I think the budget gives some insight into that, senator. Keep in mind even though it doesnt balance within the tenyear window, this budget still represents a 3 trillion reduction in spending over the course of the tenyear window. Thats the second largest reduction in proposed spending of any budget ever. The only one thats larger was the budget we introduced last year. In fact, but for the caps deal it probably would have been larger this year. Thats a 1. 7 trillion reduction of that three in mandatory spending. We, to senator sanders point, i would contend to you that we absolutely keep our promises. We do not take a look at or make any reforms to Social Security retirement. We do not take a look at or make any reforms to medicare recipients, services that they get, but there are other monies that can be saved. We saved 1. 7 trillion in mandatory spending here by doing looking at things like the way drugs are priced within medicare. We do some tremendous i think new ideas on things like food stamps and the farm bill, other mandatory spending. There are some good ideas out there in this budget that the legislature could take up to get real longterm savings and could make a dent in that gdp ratio. I think you see by the end of our budget even though we dont balance, we are getting very close. We do bend the curve down in terms of its gdp, debt for gdp, down below 1. 5 by the end of this window. Thats a tremendous move in the right direction. So over the longer term, i think most of us realize that with maybe boomer generation, this is going to go on for some time. Over the longer term, based on the way you see Congress Acting and you see the other pressures that we have to invest in things like infrastructure, you are actually more hopeful, because it doesnt feel that way to me that we are heading in a hopeful direction as it relates to solving our nations deficits. I consider myself to be an optimist, with no disrespect to my democrat friends. I think one of the reasons im a republican is that im an optimist. I will tell you, though, there was a very interesting dynamic in going through the plussing up of the budgets, its a lot more fun to spend money than it is to reduce. Its a lot harder to reduce spending in the long term than it is to spend. I think its incumbent upon all of us to start making difficult decisions, to decide together as a legislature, as an administration, are these deficits that we really are willing to tolerate. We arent, as an administration, which is why we have a budget that bends that curve down in the appropriate direction, and we hope that the Legislature Takes us up on some of the ideas that we offer this year. One last question. My time is expiring. Theres a huge plusup in several areas. That take some of the agencies that are plussed up per this last cap deal, including the pentagon which i support making sure that our military has what it needs, but the plusup is so large that you could have a situation where people are just rushing to get contracts out the door to take advantage of the moneys that are available that year. What are yall doing to ensure that we dont end up doing multiple wasteful things in light of these massive plusups in onier . I will give you one example. One thing the administration is extraordinarily proud of in addition to increasing the spending of the Defense Department for the First Time Ever as of september, the dod now tells us they are ready to be audited, that we are starting that process. In fact, we have already seen the first fruits of that. You saw a report last week about the pentagons inability to track about 800 million. Thats a good thing because that was something we have been able to expose and now we will be able to fix. So we absolutely take that risk seriously and hope to be able to do better with it now that we have made some improvements. Thank you, mr. Chairman. Senator whitehouse. Thank you, chairman. I share senator corkers frustrations with where we are and i think you, mr. Chairman, have expressed similar frustrations. We have a ridiculous budget process and as a result of that, we end up with ridiculous budgets. This budget is going no place. We all know that. It was cooked up in the laboratories of the Koch Brothers and a bunch of other creepy billionaires who want to remake america in ayn rands image. It is cooked up in laboratories of polluters who want absolutely no regulations so they can spoil at will. It includes over 1 trillion in medicaid cuts that are clearly going no place. It is completely out of step with the funding bill that the president just signed and touted. Its off by 58 billion just from the nondefense discretionary part of the funding bill that the president just signed. It knocks down hhs with a 21 cut as opposed to the funding bill that we just passed which has 6 billion in Opioid Funding that i think americans desperately need. The funding bill we just passed added 20 billion in infrastructure related investments. This cuts it by 40 billion for a 60 billion delta going the wrong way on infrastructure, and part of the reason that these silly things are in here is because the process is so silly. It is completely partisan which is why it ends up cooked up in extremist laboratories and its unrelated to the funding process because of its failures. We have a budget process over here that ends up producing nothing and we have a funding process thats led by leadership and the appropriators that ends up actually doing the work of putting the funding measures of government together. Theres virtually no relationship between the two. The budget is like a firework that goes off with a big bang and everybody pays attention to it because its noisy and bright, and it has zero effect on the people who actually make the decisions year in and year out on funding the government. I think its a shame. I think the signals that this is wrong are first of all, that there is no bipartisanship whatsoever. Thats been a problem for a long time. Its a vehicle for one party to express its political persuasion, to express its loyalty to its big funders, and to create a path for another purely partisan vote using the reconciliation measure. Thats basically all it accomplishes. A budget process that worked would also look at tax expenditures, more money goes out the back door of the tax code than gets spent through most of these appropriations, and yet we dont look at that. The Health Care Expenditure of the country, of the federal government in the tenyear out period has been estimated to have fallen by about 3 trillion. Thats a big number and we dont know why. I think it has something to do with acos and pavement reform and treatment of doctors who are actually driving down per patient year over year cost. But we dont know that. We ought to be vitally interested how we got that 3 trillion, and how we can get more of it if were getting that proved patient care. We have to have the budget have some parliamentary effect if its going to be meaningful. Right now it has zero parliamentary effect because the 60 medium is for appropriations. And finally weve got to look at revenues. For crying out loud we cannot have passion about deficits and then at the same time abandon our passion about deficits as soon as it runs up against the carried interest exception that protects the biggest billionaires on wall street. We cannot maintain a passion for deficits that evaporates as soon as it bumps up against tax benefits for big oil, for crying out loud. The companies that need to least tax relief of any companies in the world. And yet there is this magic disappearing passion about deficits when they bump up against some very obvious ways to raise revenue. Now, we each have our own politics on either side to bring to this. And we can keep ricochetting back and forth from one extreme to the other. But until and unless we have a bipartisan process that actually looks at tax expenditures and takes a responsible look at health care so we can reduce costs and looks at revenues and has some parliamentary effect, all were doing here is noise making and firing off fireworks into the sky that people look at and think oh, that must be really interesting. In fact, everybody thats in on the scheme knows it has no effect whatsoever, and the appropriators and leaders are going to get together and make a deal like they just did. And thats how this is going to continue. We have got to fix our budget process, and one of the best things in the recent funding bill we just passed is to take a look at our committee in how we solve a broken process. The way the budget works is by a path to bipartisanship. We have to create such a road. Thank you, chairman. And by the way i sincerely appreciate your leadership on this particular question. You may not agree with every word i have said, but i think we have the common cause of knowing the budget leadership needs reform. Thank you for your comments. Senator gardener. Thank you, mr. Chairman and director mulvaney for your time today and your service to our country. The process has been in place since the 1970s. Its worked two or three times. My gosh, this is disaster thats unfolding with the American People. And weve got to find a reform that will hold and stick and work for the American People. 1,500 bonuses. And i think this is something to talk about, the fact people are earning more wages, benefit packages are increasing. I think a colleague from vermont talked about utility rates. Weve seen utilities reducing their utility rates because of the tax cut bill. Director mulvaney, what laeps when people earn more money from a revenue standpoint . It goes up. One of the things he mentioned was to look at the revenues. And one of the beneficial impacts of the tax bill is that the revenues are actually umon our projections versus the cbo baseline. In fact, in 2027 we expect the government will take in almost 350 million more if youre looking at a utility rate that may average 120 for somebody, 120 a month is perhaps the region right here, 300,000 plus could cover utility. Do you think thats crumb snz. I do not. Do you think is salary boost is crumb . Only a wealthy person from San Francisco would think thats a crumb. You anticipate on making this permanent, correct . We do, yes, sir. I want to skip to some of the other ideas that are in the legislation. One of the most important things for colorados economy is the outdoor economy. Its a huge economic driver. Last year we passed bipartisan bill to take a look at the economy and make sure its measured as a part of our economic activities, almost a trillion dollars in terms of Economic Development taking place as a result every year of our outdoor reck ration economy spending, et cetera. The budget does zero out Land Acquisition under land and Water Conservation fund. I am concerned about that. It doesnt come from tax dollars. It actually is funded through other revenue mechanisms throughout the budget. I would just like to better understand the administrations thinking behind the budget request for Something Like land, Water Conservation plan. And senator, weve reached a point i dont know that off the top of my head. We do have am it ideas of what would be beneficial out west, but i do not go the answer off the top of my head for that. And that is important for colorado. I thank you for that. If only we knew the director of the office of interior. Thank you. Also Energy Dominance speaking of the director of interior. American Energy Dominance is a great thing to be part of and pursue. American Energy Dominance is powerful diplomatic tool as well as economic driver. The budget does have about 1 ti . 3 billion cuts. Number two what the budget does reflect is a refocusing and reprioritization of basic research. Were saying thats the stuff the private sector should be able to take care of. Lets refocus our efforts in those areas. Daca, this week were debating daca. Hundreds of thousands of workers right now in colorado that are going to be affected by the decision this senate makes, this Congress Makes over the next several weeks. Were looking at a population in jobs right now that could be responsible for as much as 3. 4 of gdp. And if that were a group of people to be eliminated out the work force, i think that would have an affect. Nafta, critical to our economy and growth were building into our budgets. Obviously trade overall is. And any kind of decision on nafta that could affect our tried dominance, so to speak, could negatively affect if its in a negative way, could negatively affect the gdp growth we face as well. And finally if you could get back to me, i dont know we were talking about concerns on revenues. Have you given any thought or the administration to monetizing fredd fredd freddie mae, fan ae mack, whatever it is. There is a serious discussion about what to do about federally funded enterprises. I cant talk about this at length, but very, very disturbed that the Trump Administration on the longstanding plan to consolidate the fbi campus in a way that would provide a more secure setting. We can have that conversation later. So back in 2016 during the Campaign Candidate trump called himself the quote, king of death. Its pretty clear this is one of it promises he has kept as the president of the United States. To senator corker, this is the first time we have seen an honest budget. Actually, president obama presented a budget that was very honest, they did not balance in ten years. What we saw was borrowing 1. 5 trillion to give wind fall tax breaks to cooprporations. Our legislator is trying to pass laws to stop taxes on marylanders especially incomes within 25,000 and 50,000. I want to and you about what you say in here. The more i look at these numbers it looks like the Trump Administration is simply benefitting from the continuation of the obama economy. You say here that trump economics is working. You cite the fact that 2 million jobs were added in the calendar year of page 17 in your testimony. Its great more jobs were created. Thats fewer jobs than were created the Previous Year in 2016, isnt it . I dont have the numbers in front of me, senator, bullet i believe you. Its fewer than the year before and fewer than 2015, isnt it . Again, i dont have historical data. The reality is its fewer than it was in 2011. So im glad were heralding this. I want to look at the rate of Economic Growth. Economic growth last year was actually slower than it was in 2015 and 2014. And i went back and i looked at what the cbo projected. What the cbo projected for Economic Growth in 2017. Do you know what they projected in 2017 . Again, i dont have the historical numbers. I know we projected 2. 3. In last years budget you accused me of being way too optimistic. Actually, i did not accuse you of being way too optimistic. That was what the cbo had. You said last years budget was very optimistic with respect to out years. Actually i think we beat those numbers. My question is this because im just puzzled by these claims that the first year of the Trump Administration deregulation brought all this added Economic Growth. The cbo protected 2. 7 growth in 2017. That wasnt based on any assumptions of trump economics. That was just based on where they saw the economy growing. In fact the trump the economy grew at 2. 25 , a little lower than what cbo projected. So im trying to figure out the basis for your comment. You just made it again that the first year, deregulation, all this Economic Growth when it was actually slightly lower than what cbo protected and they didnt take into account any of those claims. Two quarters over 3 , the Fourth Quarter was just under 4 with some tremendous financials. I think atlanta fed just predicted growth in the neighborhood of 5. 4 . I think everybody admitted the economy last year grew faster than expected. Actually it was slightly lower than that, so this sounds a lot more than reality. As you know your predecessor at cfpb filed a lawsuit against some scam artist. One of them was Golden Valley which charged like 150 Interest Rates. I mean this is higher than loan sharks. Its reported you dropped that lawsuit and the spokesperson for cfpb first said you were not part of the decision and then said you were. Simple questions, were you part of the decision to drop the case against Golden Valley . Yes, sir. Okay. Ill follow up with that. I think its an outrageous decision. Keep in mind, there was an Ongoing Investigation into Golden Valley, so itd be unlikely id be able to answer any of your questions other than what you just asked. It sounds like you dropped the lawsuit. Again, very be clear in my wording because i have a lawyer sitting behind me here, theres an Ongoing Investigation against Golden Valley. So i cant answer the specific question as you asked me. Thank you, mr. Chairman. Follow up. Senator bozeman. Thank you, mr. Chairman. Thank you for being here today. We appreciate all of your hard work. The Administration Budget projects a debt to the gdp ratio to decline in 2023 and ultimately reduce to prerecession levels. Presumably this change of directory as well as restraining spending. Can you explain some of the key policies congress should consider in order to put our country back on a fiscally sustainable path . And also what is a healthy debt to gdp ratio in your estimation . Ill deal with the second question first. I think a lot of the academic literature would suggest to you that 80 really is sort of that danger zone. So if we could keep it below that that would be great. Id like to see it back below 0 60, which i think are the prerecession numbers. Regarding the question i would consider congress to consider, on the revenue side, senator, you may not have been here earlier when we mentioned this budget assumes that the individualu individual tax rates, the reductions expire five years into the current window, we assume those to pea permanent. And i will tell you that our assumptions with longterm growth assume theyre permanent. If the revenues turn out to bethe way we expect them to be, and again we expect revenues to decline in the shortterm. Itll start to increase almost immediately and turn positive under the baseline of 2023 and almost 1,500 to the positive. On the spending side, senator, weve offered 3 trillion in longterm savings over the course of the budget, 1. 7 of that is on the mandatory side. I think you and i share a concern that the mandatory side of the budget continues to eat into a larger share of our spending every single year. And why fiscal restraint in any form is to be encouraged, certainly taking a look at that spending would be helpful. Whats the gtp to deficits . Where are we at right now . Senator, right now oh, the deficits i think were approaching 5 in the next year or two. Well get down to 1. 1 or 1. 2 in the tenyear window, thats better than zero. If youre going to run a little bit of deficit, keeping it as low as possible would be advised. Actually, lets put it to you this way, i would love to see revenues growing faster than expenses. And that allows us to shrink the side of the deficit as percentage of gdp every year. Thats a good point. Tell me, were in the process now of the daca voting and things, you know, trying to get that sorted out. One of the things thats very important to the president , very important to myself and so many others is securing the border. Wed like to make it such that we have a significant amount of money, you know, going that way because its going to take that. How do we do that in a way that we can get some money up front and yet protect that money into the future but also very importantly, making sure that we have the oversight that we need going forward. The good news, senator, is that as we sat down to look at the caps deal that was signed, it does provide considerable additional funding, but we actually take a big chunk of that and put that towards boarder wall security, including Border Security and the wall. I think you heard me say earlier our budget assumes a daca deal, an immigration deal is reached. We want to be reached. We made that very clear for the administration, and we made it explicit and one idea is we set aside a trust fund so we dont have a situation like we had 2006 where Border Security was authorized but was never appropriated. No, i agree with that totally. As far as the oversight, what would be your i mentioned earlier weve finally been able to bring the Defense Department to an auditable position after years of trying. It was finished in september of this year. We would encourage at least that same level of oversight if not more. We dont want the border wall to be on the cfpb. I absolutely agree with that, senator. One of risks you run is not only that its not spent but its misspent to get that appropriations out the door that year and to be able to take a longerterm view than you would with a trust fund. Agree. We need to make sure we create a hybrid so both of those can be accomplished but also with the oversight its going require. I absolutely agree. Senator markey. Thank you, mr. Chairman. Weave some cuts in this budget. Just going to take four line items, health and medicare and food. That is 1. 5 trillion right there. Big outline for america. Lets give 1. 5 trillion tax cuts to the wealthiest americans and continue tocut health to our seniors as well, and cut the affordability of college because, you know, the rich are okay, they can pay their college, dont worry about the rest of americans. And oh, by the way, the hungry america, too bad. Let those children go hungry. Theyre from poor families. They dont matter. What kind of a message does this send about this administration . Irk working families, we want to address the health and education, and right here it hits enormously the foundations that help families drive. And how about the 3. 4 billion to feeding and an offset to wells fargo of the same amount. Whats more important, mr. Director . The Heating Program or the tax cut to wells fargo, which has defrauded so many hundreds of thousands of people across this country. Which one is more important to you . Actually, senator, im familiar with the 3. 5 billion in leahy. Im just asking which one is more important to you. Ive noticed youre not answering questions from democrats. But im giving you the chance. How about the cuts to housing. But you want to do a 4. 3 billion cut in rental assistance while giving 6 billion to exxonmobil. You believe answer one way or another. I think the public would like to know. It is. But i dont want to answer questions that are rhetorical and may not be correct. That is the amount in your budget. You should be aware of that. Lets turn to the after school programs, stem programs, our ability to undertake high tech advancements in our economy. Youve got about 1. 2 trillion to the coke brothers. Which is more important, educating our children or more money for the coke brothers . Again, i cant even see that do you think the coke brothers say theyll spend 4 million in the next election and then they get you to give them a 1. 4 billion tax break . I have noal idea whether that is accurate. Everything we see in this budget is about help to the powerful and an assault on working americans. And i hear a lot of bragging were going to help americans with the tax cut, but you put a provision that will help raise premiums more than 10 for the rest. That in itself wipes out any gains from the tax bill. Im really disappointed to see that the philosophy of this administration fighting for americans, became this is an administration by and for the powerful. Its about undermining the opportunity for ordinary families to thrive. Now lets turn to our other role. You seem to take great pleasure in having wiped out the payday loan rule and allowed Interest Rates to 500 to 1,000 . Far more than the mafia would have charged. Were going to take additional comments on additional rule making. Did you or did you not suspend implementation of the payday rule . We just noticed we were going to take additional comment for additional ruling. You delayed it. You can call it whenever you meant, but you prevented it from it going into effect. You seem pretty happy to have done so to prevent payday loan compani companies charging 500 to 1,000 . Why do you want to dodge the question . Weve given notice were going to take additional comments for additional rule making. How about equifax. 143 million americans lost the integrity of their data and you let them off the hook. How about that concept being embedded in the work of what was our consumer watchdog that now is our consumer rollover and let the bill companies scratch its belly organization . On equifax i can tell you senator theres been no change of the cfpb regarding equifax. Right. If youre going to make these decisions you might as well own them and defend them, thanks. Thank you. Good morning. About priorities i want to thank you and the president for negotiating a budget agreement that gives long overdue relief to the military on behalf of men and women who have been serving who have been asked to do a lot with a little bit. Thanks. I just cannot tell you how important it is that we set aside the sequestration cuts for next two years and build our military. And i want to thank you you and the president for this great leadership. You mentioned this in the budget, is that correct . Yes, sir. We hope it passes. Can you explain to committee here why you think it should pass . Theres a couple of things. Writ large it transfers control of this issue, this very important issue of health care to the states. And we just think thats a more efficient way to provide that service. You and i both served in the carolina state legislator, and i absolutely believe in my heart of hearts that South Carolinaens know better for carolinaens how to provide them health care. Oftentimes we hear folks say lets just give it to the states, but we dont give the funds necessary to do it, the Unfunded Mandates we hear so much about at the state funded level grant cassidy does not do that. It is by far the best idea weve seen come down the pipeline for a long time. If i could build on what you said. Four states received 30 of the money under obamacare funding as it is today. Maryland, massachusetts, new york, and california, all great folks. Theyre 22 of the population. Grad gram cassidy we tried in a tenyear period do you think thats a fair way to deliver health care . No. Again, thats one of the reasons we support the Graham Cassidy bill. Quell, i think every state benefit and will try to make it the least amount of pain as possible compare today the other states. I asked you questions two years ago about alternatives to mox. Can i just send you these questions or do doe. I think youre aware of ours. Right, so what ill do is ill send a copy to basic questions to you and secretary ferris. Do you think its 30 complete . My projection is might not be considered until the 2030s. As the budget direct, that really, really worries me. I think its 70 complete. And i dont think theres a viable alternative. But the state department, if you dont fund the state department fully, then i need to buy more ammunition. Ultimately that was general mattis when he was sitting com commander. Do you doubt that statement . I dont, senator. I would encourage folks to look at the state Department Budget. And the state Department Budget does contain a lot of that foreign aid. So its a 20 reduction in the state departments budget. It is, but i think weve increased spending on humanitarian assistance. We do lower commitments to multilateral institutions to support what Ambassador Haley is doing. Were very aware of your concerns and look forward to working with you to make the state department more effective. Do you believe that state department is another form as general mattis indicated . Yes, sir, the two are intricately entwined. So i will look forward to working with you to make sure we do not take off the table dismat diplomatic options. And general mattis said better than ever could ever say, this is steep cut to state department that will lead to instability, put our people at risk overseas. I think youre doing a really good job, and i appreciate the steady hand youve provided when it comes to budget matters and your willingness to compromise. So thank you very much. Were all proud of you. Thank you, senator. I wish i got back there more often. Senator murray. Thank you, chairman. Before i turn to director mulvaney, i want to turn to budget appropriations process. I expect well be hearing a lot about that in the coming months, and i just want to make my views very clear. Republicans spent 2017 hijacking the budget process for two things. First of all, a partisan attempt to take Health Care Away from millions of families, which thankfully crashed and burn. And a permanent tax cut for corporations without even trying to work with democrats on ways we can help the middle class. Now in 2018 things have been a little different. Republicans came to the table and worked with us on a twoyear budget deal that increased funding for education, and health care, and child care and other domestic opportunities. Now we have clarity and were able to get to work and pass our bills by the march deadline. So with all due respect to my house and Senate Republican colleagues, we dont need a new select community to tell us what the problem is. Its very obvious. This Budget Committee has been unable to do its job. So we had to lunch together before the rest of congress could come together and cleanup a mess. I continue to hope this committee can do its job and not rely on select committees that continue to pass the buck instead of making the tough calls. And just wanted to make that clear. Drr director mulvaney, if this were a normal budget hearing, i would dig into the various budget cuts. If this were a normal Budget Committee i would point out the socalled Budget Proposals it includes are wasteful, divisive. Id point out its widely misguided and simply wrong for working families who need a hand up to bear the passive cuts while trillions are being spent on tax cuts for the rich and austerity is flying out the window. If this were a normal Budget Committee hearing, i would point out how it is to cut 200 billion in Financial Aid while students are struggling to afford college and keep their heads above water. And also the funding for veterans care. Director mulvaney, this is anything but a normal budget and budget hearing. President trump just signed a twoyear budget agreement into law that makes this request irrelevant. Democrats and republicans have ignored President Trumps budget request before in the interest of trying to get something done, and this one will be no different. So it seems this Budget Proposal is only good for one thing. Reminding people across the country that President Trump cares more about giving tax cuts to the wealthiest americans and biggest corporations than he does about investing in health care and education and child care and middle class priorities. So director mulvaney, for years ive heard you rail against deficit spending. You called yourself a deficit hog. You claimed to take our debt very seriously. You called for balance budget amendments. You said our debt is quote, so large as to defy description. Well, the debts only grown since. Approaching a trillion dollars this year and next. And it cant, quote, defy description because youve described it in the pages of this Budget Proposal. And dont even try to hold yourself to the standard you held president obama to when you were a member of congress. So i was prepared to call you out today on hypocrisy but then i heard you on sunday if you were on congress you would have voted against the legislation that President Trump just signed. So i want to give you a chance today to step back from the hypocrisy. If you were in congress would you have voted for this budget youre proposing . Sure, ill give the same answer i gave on sunday. Which as a member of congress representing the Fifth District of South Carolina, i probably would have found enough shortcomings. But my job is to try to fund the president s priorities. So you would say no as the member of congress . Yes, i think ive said that before. I dont think that affects my opinion of it as a member of the administration. Just trying to give an honest answer. I appreciate it. Republicans have bested our budget with tax cuts for the rich, and this budget starts asking the middle class to start paying for that. You have said before you would like to cut Social Security and medicare. Can you commit today you will not be asking for a penny of cuts to benefits for either of this critical cuts in future budgets to pay for these tax cuts . The proposals that you see that touch on Social Security do not deal with old age retirement benefits, core security as last year. We tried to address some reforms with Social Security disability insurance. What do you propose . Lets talk about medicare. We do not propose any changes to any benefits, any service to beneficiaries. We try to focus on lowering drug prices within medicare. We proposed to cut medicare by half a trillion dollars, thats just not right. Most of its tied up in drug reforms and proposals. Your medicare money actually goes to pay for graduate medical school tuition. It goes to pay for bad debts from nonmedicare patients at hospitals. And we proposed to move that funding. We do actually move that onto another part of the budget so we actually pay those but we dont move them out of the trust fund. I got it. And were out of time. Thank you. Thank you. Senator kennedy. Mr. Director, im over here. Youre on my right. I know that, senator kennedy. Yes, sir. Thats right the correct place to be. Thats right. This is america. We all are entitled to our opinion. But i think youre doing a great job. Thank you, sir. I know you to be a fiscal conservative. I think you share you share my, i dont know, concern, disbelief, curiosity. I dont understand why taking care of our generation requires robbing the next generation. I want to thank you you in your budget for emphasizing our need to do something about improper payments. We as you know better than i do, weve got 144 billion of improper payments being made every year. And were not going to stop all of them. But if we stop 20 , thats 30 billion. Ive introduced a bill with senator carper called the stop paying dead people act. And i was just amazed we cant make this stuff up. Weve got a death file at Social Security, but Social Security wont share it with its sister agencies. So people are being dead people are getting checks and theyre being cashed. Obviously theres fraud. In some states you can vote when your dead but casting a government check is just a breach too far as far as im concern. So i hope youll continue that. In the few minutes i have left i want to get a little maybe meta physical here. We talked about the need for a balanced budget, but sometimes and i support a balanced budget. But sometimes i think we conflate balanced budget with government responding. And heres what i mean. Weve got a 20 trillion economy. Thats all the goodies and services we produce every year. If government is spending 4 trillion, i know the president s budget comes in a little higher. But if the governments spending 4 trillion, the governments taking 4 trillion out of lets say, 20 trillion are you with me so far . Okay, do you think america would be better off if we had a balanced budget of 4 trillion of Government Spending and 4 trillion in taxes. Or would we better if we had 2 trillion worth of Government Spending and 2 trillion in taxes and therefore wouldnt have to borrow . If you believe the less individual freedom you have, then by definition youd be better from an individual standpoint having that 2 trillion government expenditure versus 1 trillion being taken out of the government economy. Take liberties out of the equation and look at capital. If i give 4 trillion to the government it is likely to misapply a lot of that and spend it efficiently. Whereas if i let people spend their own money, they are going to make it more efficient. I think in many ways youd be better off by having that smaller footprint. Well, i want to be clear. I support a balanced budget, and i know you do, too. But would one way to skin this cat be to approach legislation that would limit Government Spending to a certain percentage of gdp . Certainly in theory, yes, sir. Okay. Do you think the president would support Something Like that . I know that came up a couple of times in the house, senator. I know you and have not talked about this before, but i think that actually came up in the past as part of a debate regarding a budget amendment. Would we cap government expenditures. The theory being it was okay to grow the government as long as you are growing the economy at the same time. Going back to my comments before about your revenues growing faster than your expenses. Its wrong to grow the revenue faster than the economies of the people who can pay for it. Im out of time. Thank you for your services. Im a big admirer. Senator perdue. Senator, thank you for surviving another one. Its interesting. It was a lot easier the first time. They dont get easier for sure. One, is i take a different view totally from the senator from washington. I respect her work over the years, but we have got to fix this budget process. Weve had this conversation. Im not asking you on the record right now, but i want to make the comment the budget process has only worked four times in 44 years. Were not going to solve our debt crisis unless and until we fix this debt crisis. I applaud the house and senate and the white house and support of the select committee and i look forward to its outcome later this year. I want to comment to the question on it debt. The size of this government last year was 2. 4 trillion. Theres our problem. The largest growth of that, though, was in the mandatory side. 75 of that is mandatory. Only about 25 is discretionary. Thats what you have to work with primarily. In the last administration we borrowed about 35 . It looks like the next ten years well borrow about 25 . Each year for all we spend its fundamentally borrowed. Its new debt. Help us understand sort of the longterm investment return concept i know the white house has in terms of dealing with the debt. There are things we have to invest in growing the economy, building the infrastructure and all of that, that will yield return as i understand it, and i believe that. The question is are we moving toward a longerterm solution . Outside a tenyear window that is directional pathway towards getting this debt down to some more meaningful percentage of gdp. We talk about trending, of the 1. 4 trillion discretionary, the balance thereof 3350 is to all the discretionary programs still out it. Give me some comfort that we have at least an eye towards the longterm solution towards this mounting debt crisis. We do. And weve got an example that works. We actually balanced the budget during my adult lifetime back in the 1980s. On a per year basis. On a per year basis. If you look generally to the concept, what happened was we figured out a way to grow the economy faster than we expected, and we had had fiscal strength. The truth of the matter was the government grew slower than the economy. And if you could do that long enough revenues will catch up. In terms of, weve talk today administration a lot of times about prioritizing deficits. Theres also different types of deficits. Deficits that allow people to keep their own money, is actually a fairly relative efficient deficit. In the middle you might have things like infrastructure where you might get some return on that. The moleast efficient would be Something Like a you have to figure out a way to grow an economy faster than youre growing your government. With regard to Infrastructure Investment as you just said, investments that hopefully will produce a return unlike the trillion dollars we threw towards investment and infrastructure back in 2011. That was not made with those priorities. I callout one type of investment, particularly when we talk about spending the money were talk about on infrastructure, the question is are we prioritizing based on the return that we get in terms of Economic Growth and contribution then in turn to reducing this longterm debt . And i specifically callout an issue i believe is caught between current authorizations and future investment. These are our ports, our eastern ports that are all trying to accommodate the shifts that would dramatically improve our ability to compete around the world. I believe those investments are caught up in the army corpe of engineers being cut. And these actually offer a higher rate return. Can you address that . I would. At the risk of making a small correction, we absolutely anticipate the deep water ports be part of the infrastructure bill. In fact, the largest part, 100 pillion is sort of in our minds set aside for programs that can contribute their own portion of the funding. And as you know the port of suvena dos savannah does exactly that. We had the deep water ports in mind. Thank you, mr. Chairman. Thank you. And i want to thank the director for his comments. I do want to and an additional question here just from some confusion about gdp we were talking about earlier. The president s budget projects a gdp growth of 3 annually with a blind of 2. 8 . This longterm trend is 0. 9 Percentage Points higher. Theres been down pressure in the longterm projections due to geographic changes. How will the tax cuts jobs act encourage the Labor Force Participation . At the risk of getting deep down in the weeds and showing my inner geek, we were fairly disappointed in the gdp numbers in the Fourth Quarter. If you drill down into the details one of the things youll see in the Capital Investment are almost four times than what we expected. We expected something of 0. 8 , 0. 9 and they came down to 3 . The Corporate Tax rate and depreciation rules in order to get the rate we need longterm, giving the demographic challenges we face we need gdp to increase. You invest in new technology, invest in education and you get individual productivity up. And we think weve seen the seeds of that planted almost immediately. Someone mentioned earlier weve seen benefits of the tax bill far quickly than we thought we would. Everyone pays attention to the bonuses that were given and the wage increases that were given. But if you look deep into the numbers and see the vestments that companies are making into america, we see the seeds of longterm improvement to our productivity and thats our Economic Health. Im counting on that proving out. I did and for a static score when we were working on taxes because during the Health Care Debate we asked for a dynamic score, and i found out that was going to require six weeks for every amendment to be evaluated. And we dont do legislation where we have six weeks between amendments. It might seem like that, but we dont. So i was not able to do that. So i want to thank you for your testimony today. Your full statement will be included in the record. I think you did an outstanding job of presenting the president s suggestions and priorities. Because the constitution actually specifies were the ones who are going to be doing the actual work on that. I do hope we find a Better Process for doing that actual work. Another little inconsistency that i heard this morning was saying that for preschool there needs to be a program for preschool. Ive been saying that all along since i got here. There was 119 when i started. We got down to 145 programs. It seems one or two reviewed again and reauthorized might be better. I check there are 106 housing programs and nobodys checking goal tuesday see if theyre being met. So how can we say a decrease in the housing funding would put people out on the streets . We might actually come up with some better solutions. A little note that i found in reading through your documents was a suggestion that colleges have some risk accepted on student loans. Thats kind of a novel concept. We kind of made the forprofit schools do the same thing, and we put them out of business. But there ought to be some kind of risk acceptance in it. I appreciate your comments about capital budgeting, and you used an example of the fbi building for that. Ive been talking about capital budgeting since i got here. I think separating that out might make our job a little bit easier. I would mention if anybody has any additional questions those questions can be submitted for the record by 6 00 p. M. Today with a signed hard copy delivered to the clerk at 6 24. And youll have seven days to respond to those questions to get additional good information so we can understand this budget swells we can so that we can do our budget. Thank you very much. Thank you, senator. For an out standing presentation. Adjourned. Coming up the treasury secretary Steven Mnuchin certifies before the Senate Finance committee on it president s 2019 Budget Proposal. Well join his testimony live starting at 10 30 a. M. Eastern here on cspan 3. Veterans Affairs Secretary David Shulkin testifies about his agencys 2019 Budget Proposal thursday. He apoopears before the veteran House Committee here on cspan 3. President trump and first laid amelania trump hosted a white house reception for africanamerican history month. From the white house east room this is 15 minutes
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