This here of the Senate Budget committee. The hearing on Government Accountability offices annual report on the nations Fiscal Health. Today the Budget Committee will hear from congress is nonpartisan, watchdog on the nations Fiscal Health and the importance of confronting our critical fiscal challenges. I welcome back mr. Dara who is our most usual and best witness providing information throughout the year that is extremely helpful, hitting off some of the future crises that are going to happen if we dont Pay Attention. This hearing will kick off a series of hearings and discussions that i hope will help inform Bipartisan Solutions to the problems we face this year and help build a foundation for next years budget cycle. And next to you should be significant for the Budget Committee. Committee has been working hard to enact reforms that improve transparency and accountability in the budget process, and helped put us on a more sustainable fiscal path. Last year senator white house and i introduced the bipartisan congressional bubbly format, emphasize or bipartisan and considers the first time any reform bill has gotten out of this committee on a bipartisan way since 1990. We were successful in returning, when we are successful or turning this bill into a law, the next congress would process the first budget cycle covered by its reform. Next year will also mark the first budget cycle in ten years not constrained by the budget control access dictionary spending caps and sequester, in the months ahead we will begin to lay the groundwork for more regular budget during a series of discussions, focused on the major fiscal issues of our countries horizon. With that in mind, we are meeting today for an update on the most pressing threats regarding fiscal stability. Im pleased to welcome back, committee gene l. Dodaro, the comptroller general the United States ahead of the u. S. Government accountability office. Today, they are issuing their Fourth Annual update on the nations Fiscal Health. For several years now, this year has warned that the federal government is on an unsustainable fiscal path. Unfortunately, the budget outlook has grown even more dismal since last years report, thanks to legislative that acted in 2019. Last year, gao predicted that debt as a percentage of Gross Domestic Product which compares the size of our debt to the size of our economy. What surpasses its historical high of 106 by 2038. Now, gao projects that it will hit that grim miles dont by 2034 if current laws dont change. The Congressional Budget Office recent budget outlook, also shows the cost of legislation and acted since last june has taken on our already unsustainable fiscal situation. Due to this legislation, namely, last years spending agreement which cbo attributes one seven tenths million, trillion in spending increases over ten years, the fy 2020 appropriations package that reveals the pay Affordable Care act. Cbo now projects that debt is a pretended of gdp will sort to 174 of gdp by 2049. A 30 inch point increase from last years projection. Cbo warns that feeling to confront our rising debt wont mean a future of slower Economic Growth, higher Interest Rates, and a greater risk of a fiscal crisis. As the deficit grows, we borrow even more money to fund the government, the Interest Payments on the money we borrow it will overtake all other spending. This should be a major red flag for everyone. Already, the annual Interest Payments on our debt exceed what we spend on agriculture, transportation, and Veterans Benefits and services. All combined. By 2041, geo projects our annual Interest Payments will be more than what we spend on medicare. By 2044, Interest Payments will exceed what we spend on Social Security. By 2049, Interest Payments will exceed total Discretionary Spending. We can i do have spared debates on what our Spending Party should be, but Interest Payments on our debt, arent even debatable. We do not get to decide whether we want to spend that money on health care, defense, or retirement security. It is already committed. It is the most mandatory funding that we do. If we stay on the path we are on today, that interest will become the largest category of federal spending. I mention this committee in a vast on a bipartisan vote the budget process reforms and senator white house and i introduced, and you all amended, to make it an even better bill. Our bill take several steps toward a more active, thoughtful, and functional budget process. This includes read orienting the budget resolution to a twoyear cycle. Incorporating the debt limit into the budget process, in a way that would minimize the threat of default. We are also calling for integrating into the budget resolution, longer term fiscal targets, based on National Debt as a percentage of the overall economy. A debt to gdp, glide slope, this would emphasize our fiscal trajectory and help to get us on a more sustainable fiscal path. One thing we will certainly need, as we confront the hard decisions ahead, is reliable, financial, and performance data. Earlier this year, i introduced the cfo vision act with senator warner, grassley, johnson, purdue, and lankford. I expect the general is for this bill as a grew out of a hearing we had with him last october on the cfo act. The reform proposes with standard cfo responsibilities to enhance strategic side dishes and megan strengthened w. Cfo authority to ensure continuity when vacancies occurred. It also calls for revised planning requirements and metrics to help address longstanding challenges. Like better linking cost and performance majors, modernizing outdated like to see systems. I should mention the suggestion we have put in a request to omb to get us a list of all federal programs. Havent got it yet. Seems to be some problem with the definition of what a federal program is. I think i can help with that, if they would just give us a print out. All of the payments that go to any entity, if an entity is getting money from us, it is one of our programs. This is my last year in the senate, it is my sincere hope that we can take concrete steps toward a sustainable fiscal future before i leave. A return to sensible budgeting would be a good start. I hope that members today will Pay Attention to the urgent message from congress is nonpartisan watchdog, our current federal, fiscal situation is unsustainable, and we must act before it is too late. I want to thank comptroller mr. Dodaro for being here again, and again. And for all the delightful information he shares with us. When we follow up on it, we get results. I look forward to his testimony, and i dont think that we have a Ranking Member statement today. I think it might be preparation for a debate that is coming up. So, i dont know if senator grassley wanted to make any comments . Ill ask questions. Okay. We will move on to our witness this morning. As i mentioned is gene l. Dodaro, the head of Government Accountability office and comptroller general of the United States. Mr. Dodaro testifies frequently before congress, and i am pleased to welcome him back to this committee, he is the eighth comptroller general of the United States. He was confirmed in december of 2010 after serving as acting comptroller general since march of 2008. Mr. Dodaro has been with the gao for more than 40 years. He served nine years ofs the chief operating officer of the number two leadership assertion at the agency. Prior to that he had a gaos accounting Information Management division, which specialized in financial management, computer technology, and budget issues. That requires a diverse background of information thats been extremely helpful and has gotten noted every time that you have testified, so with that control to the general you can begin. German sir thank you very much mister chairman, senator grassley senator brown. It is a pleasure to be here today to discuss our latest report on the fiscal help and government. As we convene this discussion today, our country is confronting a pandemic that is threatening the Health Safety and economic wellbeing of our citizens, our businesses and our economy. I make that point because it is relevant to our message today. Why it is important to put the federal government on a more longterm sustainable fiscal path because the federal government needs to have the budgetary flexibility to marshal resources to deal with a myth emergency situations. Im concerned our report talks about that our deputy ratio as of the end of last year or 79 . That is the highest it has been since world war ii when we had the historic high as 160 of debt to gdp ratio. And that also contracts with that to be gdp ratio since 1946 to only 46 so we are very leverage than that at a time when we are going to be facing a steady annual deficits of a trillion dollars a year for as far as the eye can see. This will mean that our death gdp ratio and fiscal policy changes will hit their historic high of over 100 of gdp within 11 to 14 years. And depending on the estimates that are made by gao cbo, the financial reporter, the federal government issued by treasury and omb, they all result in the same conclusion. More importantly than that, is that that that will continue to grow to 200, 300, 400, 500 of gdp. This is why we believe the current path is unsustainable. The Social Security programs is already at one trillion dollars. Medicare and medicaid is expected to hit a trillion dollars each by 2026 which include state money for medicaid. And the interest on the debt will hit a trillion dollars by 2032 so right now, our total federal budget is 4. 5 trillion dollars. Those four programs are active with these alone will be four chilean dollars relatively soon. That will crash out a lot of other opportunities for spending and ranging from the fence to the whole panoply of discretionary programs to the country. So we need a plan, to deal with this. I recognize that we need to deal with short term student prior to National Priorities and make sure we have strong Economic Growth, but we also need a plan to put us on a better path. I was very pleased, mister chairman, to see the bipartisan bill that was passed out in this committee that would set the debt to gdp targets and with also dealing with another trouble scenario that i pointed out in the past setting the debt limit approach it does not control the deck, it is dangerous and the fact that it can disrupt treasury securities if it is not raised in time. Treasury securities marking and increase inches across the four governments we need a different approach. Youre approach that is included in the bill is a good approach. It is one of the options that we suggest of tying into the budget resolution. In addition to this fiscal policy decisions that need to be made there is still many opportunities to save additional money. We have pointed out in our report that this year the amount of improper payments across our government jumped from 151 billion to 175 billion, largely driven by an increase in medicaid an improper payments and i think that number will go up higher but we can talk about that later. There is also opportunity to consolidate overlap, duplication and fragmentation of the federal government. So far actions on recommendations that save 262 billion dollars. We have outstanding recommendations that could save tens of billions of dollars more. There is a lot that can be done to deal with this issue. I, again, and closing, applaud the committee for taking action in this regard. Both on the bipartisan budget, reform bill, as well as the cfo legislation. I would be happy to respond to questions mister chairman. Thank you very much. Thank you, and thank you for the documentary provided with a lot more information than that. I will turn to senator grassley questions. I will take you up on that, and i will go to the agricultural committee. Mr. Durham, your testimony said that Pension Benefit Guaranty Corporation and trust funds protected to be depleted by 2025. I am aware of that and we are working on legislation to try and help that out along with other aspects of multi employer. After 2025, if nothing is done bbcs premiums will not be enough to pay benefits to the and solve it plans and so alexander and i, jurisdiction over some of this we are trying to work on that. There are other proposals as well. I think everyone recognizes the longer we wait the worse the problem becomes. I wonder if you can comment on the need for action to shore up to multi employer Pension System and whether you think that would be prudent to continue to delay action. . Senator grassley, i think it is one of the most urgent issues facing congress. Ive been concerned about the multi employer plan for a number of years. I wrote a special message to congress about this back in 2014. Congress took some action at that time but it was not sufficient enough to deal with the longer term problem if congress does not act there is about 11 Million People that are insured in the Pension Plans and once it goes insolvent the only benefits the government will be able to pay his 2000 dollars a year. If that. To these people, or pension. It is hardly adequate. The government will fail these individuals if it does not act i encourage you to continue your efforts and your colleagues to act on this issue. Also, the Single Employer Program while it isnt a current surplus situation, has tremendous exposure over the long term as well. Said 160 billion dollars of potential losses to that program as well, but the multi employer plan is the most urgent and i want to encourage swift action on part of the congress to address concerns by these americans that would be affected. I want to entitlement series and see cbo and others have been telling us for a long time about Social Security and Health Care Entitlements and our interest issues on the debt that are unsustainable. In order to do that we have to reduce deficits and debt, Social Security will exhaust by 2024 and we will be paying a heck of a lot less Social Security benefits if we do not do something about that. I want to get to health care spending. I have a bill with senator widened to reduce drug braces in save taxpayers money we can allow over all health scare spending subsidies to go faster than the economy grows. If we are serious about reducing our debt, my question to you is dont we have to control the growth in federal spending on health care and entitlements . Absolutely. Congress needs to do that. The Fastest Growing class in the government are health care across and interest on the debt. The Health Care Cost as you point out senator are growing faster than the economy and are projected to continue to do so in the future. There has to be some changes. By 2026 there will only be enough money in the medicare house spittle trust fund to pay 89 cents on the dollar of benefits. That is right around the corner. That would affect millions of americans that rely on the Medicare Hospital Trust Fund cross and put enormous pressure on the federal government. Any suggestions that you make are good ones. We have other open recommendations, and in addition to bringing down drug costs, for example if you if payment on the federal government on medicare, for doctor visits depends on what you go and would place you get. If you go to a Doctors Office that is affiliated with a hospital, medicare pays you more money than if you visited that same doctor in a private practice. If you equalized benefits he would save billions of dollars in that area. We have a number of open recommendations. I will provide them to this committee for the record. I will provide them to your staff as well, but you absolutely have to control Health Care Costs. That is the most complicated part of this whole equation. If you do not control Health Care Costs, you really do not have much of a prayer of reducing the federal governments deficit and debt issues. Thank you for your courtesy. Thank you. We will let you go to the egg meeting from where he just came from judiciary. Senator brown. Thank you mister chairman. Ive been here a little over a year, and probably, the First Committee meeting said vividly stuck in my mind is when you were here roughly a year ago. Of course, who said basically everything than that you are telling us now. I guess what amazes me most about this place is highly seemed to shrug it off like its never going to have impact in the president. Health care costs, undoubtedly, are the driver. I took it on in my own company 15 years ago in there are solutions. Mostly, the reason we are not making any headway on Health Care Costs as i have never seen an industry more doug is, stubborn and wanting to maintain the status quo. When you have 80 u. S. Senators have not come up with some idea with how to fix your business, that is like that to buy for across the head, and nobody is paying any attention. From pharma to hospitals, the whole him of practitioners as well. Then you have the Health Insurance industry which is kind of the darth vader out there which keeps everything behind closed doors. It is not embrace any of the elements in most free markets which would be north barrier to entry, fools transparency, robust competition in unengaged consumer. We have none of that. Senator grassley, has been most aggressive and this is all mild stuff we have been trying to get done. Health education labor and pensions are among that committees. We still have not settled surprised medical fills. That has got to be the easiest lowest hanging fruit you could ever imagine to pick to solve an issue. And i have not talked to anyone who likes a surprise building. Youve got the doctors arguing with Insurance Companies on how to fix that. Sadly, i do not think were going to do much. The guy that has been most aggressive and instrumental has been the president , and whenever he tries to do things like advancing pbms this counts directly to the pharmacy or the individual, it hits the court system the next day. When you tried to push a transparency bill. I use the opportunity then, and i do it now and i do it often. Because this microphone is probably the biggest asset we have as the senator since we get nothing done and general. Health care could be solved. So the onus is on the ceos that it runs this increasingly concentrated industry to embrace some of the stuff. I dont know whether we can legislate quickly enough to get anything done to get anything in time. There is a guy out there named bernie who has a different point of view, and his case that the system is broken is 100 correct. Do we go to a win payer system to fix it . Where do we do what could be done, what i did in my own company, take the best of what weve got, shrink it, by the industry embracing without what all an other Free Enterprise is due . I dont know. Im going to ask you this question is and i am sure looks like we have room for more questions. Sadly this should be the most well intended committee here, and it is dealing with the subject that no but he wants to get into the weeds about. What do you see, looking into the future, because we know all the information, you do not need much more to have than a finance 1 01 degree to know how our peril we are. What is the event, or a few events that happened down the trails to sweat this whole place into a higher alert which would mean solving fire crisis . What do you see the most likely thing or two occurring . Our report and testimony has a timeline of some significant events that will occur, that will force congress to act. I have already discussed one of those with senator grassley here with his question on the multi employer pension plan. That is right around the corner of 2025. Devastating effect on the people that were supposed to be protected by that program. If Congress Fails to act. The year after that the Medicare Hospital Trust Fund as i mentioned, we only have 89 cents on the dollar. Congress will have to act at that point. The medicare and beneficiaries are not going to be able to step up to cover that cost without causing calamity with their own personal finances. We have an aging population, so there are more people being covered and the medicare program. The Social Security program by 2034 which isnt much further, would only have enough to pay 77 cents on the dollar. I do not think congress or the American Public would accept the 23 cut and Social Security benefits for a lot of people whose sole reliance of income is the Social Security system. As i have testified before, people are not saving much on their own. Some people in high incomes are doing well but a lot of people are not. There is not a saving. The Federal Reserve what percentage of benefits once you crash it in 2030 . Four you can only pay 77 . That is for the old age survivors market. The civility part is different at the old age survivor, the main one that people rely on for income. Tens of millions of americans rely on that system. So you have these inflection points that will force congress to act. The message that i have been trying to convey is the longer you wait, the more draconian changes are going to have to be made. You cannot face them in overtime. One of the things with Social Security, there are a lot of proposals and some bills have been introduced in the congress to solve this. I wont say it is easy to solve, but compared to health care, i think it is more sociable, but the sooner you do that, you allow people to adjust their own circumstances to this. If you wait much longer now, the fourth if issue i would playing up that will cause action will be the rise in Interest Rate cost even the low Interest Rate cost that we have right now, the cost of on our debt, has gone up 113 billion dollars in two years from 2017 to 2019. It is up to 300 or 76 billion dollars right now. We are up from 263. Even our low Interest Rate environment, and 61 of the debt we have held by the public which is almost 17 trillion dollars will have to be refinanced over the next several years. You are not only financing a trillion dollars of new debt every year you have to finance now rates are still low but that does not always have to be the case. I think we are flight to safety helps treasury securities, but on the other hand 40 of our debt is held by foreign interest. China and japan primarily, little lot of other countries, and i dont know if we want to rely on that as a source. The more that the government takes up of deficit financing the last investment there is for the private sector investment, so it will have a dampening effect on Economic Growth overtime. These are things its almost like a cancer that you have that you cannot see and it is eating away at our ability to maintain long term ability and strength and our economy, and had the flexibility to deal with things like natural disasters or pandemic that we are dealing with right now. That is going to cost a lot more money. Potentially, the damage the revenue stream it will have a double whammy. Cars will go up revenues will go. Down we need to have have more fiscal room to deal with these issues in the future, and to deal with these major entitlement programs. So that is the scenario icy. There will be other unforeseen events like we are dealing with right now that will come up as well, but the spikes and Interest Rates, we are going to be in a bad situation. Thank you. Thank you questions thank you for your questions and i appreciate you mentioning the surprise medical bills. I was trying to make a distinction there, the surprised medical bills are when people receive a bill that is much more bigger than the Insurance Company will cover, but when that would solve a lot of problems for people is prompt billing. I have a bill that would require that originally would require the hospitals to gives you a list of services you got as you leave the hospital. No amounts. Just so you can check and see if that is what you really got. Then, within 30 days, fill in the amounts and you can check them up so you can see whether they are paid or not. They told me that 30 days was not sufficient and it ought to be 45 and they moved it to 60, and i agree that we can do it and 60. But with comfy pewters today we ought to be able to give the amounts as you leave the hospital except for those that are outside of their list of providers. But they want 90 days now. If businesses had that same kind of a billing process they would all be out of business. So thank you for bringing that up. Again, i appreciate all of the great answers that you give. You report points that are growing debt to gdp ratio means a current federal fiscal path is unsustainable. You mentioned in your testimony the budget process reform bill this committee reported to the senate last november uses that gdp target as a metric and measuring how well congress is adhering to the fiscal blueprint. Could you discuss the benefits of establishing the shared fiscal target particularly and debt to gdp target . Yes. First the debt to gdp ratio is a well recognized International Standard of the countrys ability to repay the debt that they have. A lot of other countries use it as fiscal targets and combinations with the school rules and operating procedures. I think it is terribly important, mister chairman in your opening remarks you mentioned that 2021 is the last year that the budget control act mandates caps on Discretionary Spending. So once that goes away, there really are no hardware. As there is no guidelines, there is no federal policies to how much debt that we want to take on as a country. Without gdp debt to gdp ratio, we have nothing that we are planning for, and i think it would mean that the deficit that situations will grow unchecked. I think that that is a really dangerous dangerous path. I think having a target, having a glide path as you outlined in your path in your plan where we can check along the way, have operational rules on controlling expenses, and expect expenditures rather, over a period of time, its important. There has to be some effort to deal with mandatory spending and entitlement programs, we have to look at the revenue side of government, and we have to look at that was the weakness in my opinion of the budget control act, is it only focused on Discretionary Spending which was not the main driver of the deficit and that situation. That is where we make long Term Investments to. An infrastructure in other areas. Its brought in different dimensions i do not think solved a long term problem nor does it really provide the proper framework work for Investment Decisions that need to be made by the government so having the debt to gdp ratio in fiscal rules that accompany it is a good approach. I appreciate those comments. Particularly you mentioning revenue and spending. That is going to be something done both those categories. Senator. Thank you mister chairman. I want to ask you a couple of questions about strengthening the coming control act in the bill that passed out of the committee the bipartisan congressional reform. Acts we had a bipartisan amendment that i propose that was adopted to do that. As you know, congress, currently faces a real problem with our budget process, making sure when Congress Appropriates funds they are actually spent as congress directed. In the empowerment control act creates the process by which a president can notify congress diffuse deferring off temporarily which is allowed only in limited circumstances or the president can proposal citizens for fundings which he believes or she believes are no longer needed. One of the provisions in the amendment that was adopted by the committee would require the office of management and budget omb to publicly disclose their a portion acts. In order to prevent agencies from overspending their appropriations federal gives omb fortunate powers to control when appropriated funds are released to agencies so my question is if a win be publicly disclose their apportionment actions in realtime, which that provide information to you at gao, that could help you enforce the empowerment control act . I think additional disclosures would be helpful in that regard. I would ask mr. Chairman with your permission for two things one yesterday Tom Armstrong the company tray here to the hearing testify before the house Budget Committee and outlined all the suggestions we have for strengthening the obama control act. I would ask that his testimony be entered into the record in todays hearing with your permission, and also i would like tom to elaborate on my answer if it is okay. And maybe with clinician and white appreciation. Thank you mister chairman and maybe what we can do is instead of like going through each of these questions, if its okay with you, but the general counsel could just quickly take off those key elements that you mentioned the other day. Because we are working on Bipartisan Legislation now to try and make sure that we strengthen the ability to enforce the empowerment control act. Would be very happy to good morning everyone. I do think that requiring the only to publicly host the apportionment schedules and the reapportioneds because during the course of the fiscal year, they engage in reapportioned divvies as well. I think Something Else that they can do with you as they apportions funds they can send the abortion and schedules to this committee the house Budget Committee, to the appropriations committees and to the committee with oversight of the programs that are funded by that appropriation in that apportionment schedule. Another thing that would help us carry out our responsibilities under the act is if the act is amended to require omb to provide more detailed more information on the president summits a special message, promote proposing a recision or a deferral. That helps us hit the ground more quickly, and move on these things more quickly. A couple other things that we would suggest situation. We had a situation a few years ago where there was a proposal that really administration could pose recisions during the last 45 days of the fiscal year funds that would expire by operation of law at the end of the fiscal years. And we entered into a decision saying there was no into authority to do that. If you make that clear in the act, i think that that would be helpful. The consequence would be, if a president were to engage in that kind of activity, a president would then effectively resend money that you guys have appropriated but without any action by congress. The reason i ask that you might think about legislating that is, there has been some back and forth between my office and omb and omb advising general councils of executive agencies if they can disregard gaos decisions. You can reinforce the decision and you can make it clear legislatively. The final thing we would recommend, and i do not mean this to sound too draconian, but the anti deficiency act has penalties for violations of the act. You might considers penalties for violating the control act like the penalties in the anti deficiency act. When i say that i am not trying to pound on Civil Servants. I like the control of general have been a Civil Servant for more than 40 years. I am suggesting that those penalties do get attention and they do act as a deterrent, and i will tell you that in my office, we provide a lot of appropriations, trainings two executive agencies and officials, and when we talk about the anti deficiency act, one thing somebody always says in the classroom, i do not look good in an arched orange jumpsuit. They want to make sure they are in compliance with the law. And collateral to imposing penalties i think would be, to expand the officials of the executive branch we have a statutory right to come to gao for a decision. Right now heads of agencies and Agency Components have that right, but if you make it available to budget officials, Program Officials Contracting Officers i think you will get more attention to. It thank you i will appreciate that i will recourse your realty to expedite the lawsuits that you might bring in the event that you identify a violation of the impoundment control act. That would be very helpful because theres the 25 day period and that would impede on our ability to act quickly also if you can make clear in the amendments that when there is a gao request for the agencys legal basis for withholding the money, they expeditiously give us a response. We have had some cases where we have not gotten a response in a timely manner or no response at all. I think that that is detrimental to our ability to enforce i appreciate. That mister chairman i hope to work with you on this because we all have an interest i think regardless of party and making sure that executives, president s whoever they may be, comply with the law with respect to appropriations. I think we have a shared interest and making sure that happened so thank you. I look forward to the answers to your more technical questions which i appreciate you putting in writing because that will be more helpful to us to. I want to thank you for including that amendment one of the reasons it is imperative that we do the budget reforms is that at this point in the election cycle, we have the same reasonableness that we had four years ago when we did not know who was going to be the president or the majorities. So everybody was reasonable, and we had a series of about 12 bill that i thought couldve passed by unanimous consent that could have solved a bunch of these problems now we have one bill that is not going to move by unanimous consent im sure that, im sure hopefully is bipartisan enough that im sure we could get it through. It includes hes best vocations to make sure the control of congress so i appreciate your efforts on that and for joining us on the bipartisan part of that only things are absolutely essentially for these to get done before the next elections thank you. I will continue with some questions. I want to make it as expedited as possible for the members that showed up and i appreciate senator grassley and senator brown for covering the trust fund aspect, who did not mention the Highway Trust Fund which will be depleted into more years. We talked about medicare, Social Security and some of the other trust funds. It kind of fascinates me, when i came here there was a trust fund for abandoned mine lance. Wyoming had some of those in my blended mind lands and paying coal money for a long time and that we have never gotten any of the money to solve any of it so when i got here is that how do i get that money released . He said well you will have to put some money in the fund in order to take money out. I never heard of a trust fund like that. So we got the money we did get the money moving but, please trust funds dont have any money in them. One of the things that bothers. Me the highway one so we did talk about, that is very devastating to our ability as a nation to deal with aging infrastructure issues and transportation requirements. Cbo estimates were only about 188 build billion dollars between now and the finding expires to the fast act of 2030 in order to maintain federal spending over that period of time, so we keep a list of all the highest government we have that Financing Service transportation since 2007 so this is an issue that has to be saw and hopefully in order to make sure we make the necessary investment that are critical to economic activity. It is not just the traveling public but commerce. And getting goods and services around and getting tourists around is pretty critical and that is all involved in that infrastructure and i do remember the simpson bowl said it needed to be raised. That the gas taxes, the user fee for gas needed to be raised a nickel a year for five years and then adjust the cost inflation. We did not pay any attention to that. I havent even tried one for just the cost of inflation. That is why that trust fund is running out of money i think technically is out of money. Its only the cfo vision act that you encouraged us to do and that we have put in, i am pleased that im not finding any opposition to it yet. But we do not have a pass and i appreciate that many senators are cosponsoring that now. Can you discuss the role at the agencys cfos play and ensuring that fiscal fiscal sustainability and and areas where updating the current law could help the Agency Managers . The cfos are really at the epicenter of fiscal stewardship within the individual agencies departments. Now upgrading modernizing he act will help with a number of respects. One is that it will give all cfos the budget formulation responsibility as well as monitoring but execution. So it will put down more sensual in decisionmaking, on how to save money and blank costs and performance data, right now theyre not involved in all cases and that kind of Decision Making and tradeoffs about investments or where money can be saved and how you can get the same performance that lower costs. So if they are not involved in the formulation and budget submissions, they are really missing out on playing a key role in decisionmaking. Also i think they can play a more significant role in the modernization with the improper payment problem that we have. Last time i was here, it seems like were growing an improper payments rather than solving them and that certainly has gone up since i have been here last year it has increased 24 billion dollars in the annual estimate and that is not a complete estimate so we have a big problem. Cfos can be more involved in that and also, mister chairman, there are a lot of the equated federal systems where you cannot make tent timely decisions, and the cfo acts provisions that you have set forth would provides for more modern Financial Systems to help make better decisions at the agency so it will strengthen strengthen the cfos ability to help manage the cost of government better. Not just account for the money that we have had, that manage the cost. To help in this regard, i have had conversations with a number of house leaders in the committees that would have jurisdiction over the cfo refinements to help set later groundwork a little bit as well to hopefully expedite thank you for that and the suggestion that we need better continuity in that succession on those cfos as well. You also brought us the necessity for having a federal Program Inventory. We are continuing to push omb public inventory and federal programs. We need that timely information. It seems that people would rather not know what our return on investment is on some of those programs. Who needs to do what in order for us to make progress on that federal Program Inventory to start Getting Better linked to cost and performance data . So far we are not having success. Omb is really the main actor here. It needs to publish and make transparent with the approach should be for developing the Program Inventory in the past have left each agency decide what is their program and therefore you dont really have a consistent inventory across the government to identify overlapping fragmentation. It takes us a lot of time in digging in order to recommend issues to the congress in that area. It should be totally visible. We have been pushing omb to move and they have moved recently to try to do this but they need theyre the ones that need to act to develop the inventory and they are at the focus of responsibility with the agencies in order to give them guidance so that it is consistent across government. Many of the managing reforms congressman passed most recently digital accountability financial standards to be consistent across government and to reap require publication as you point out in your Opening Statements if you know where youre spending as you know where the program saw. They should use that information as a starting point we have also given them a taxonomy on how they can approach the development, the inventory that i think will be helpful for them to use. So the continued pressure on omb have sent letters to the director of own me to emphasize the importance of moving, and last year finally they have started to show some signs of life in this area. I hope that they will follow through. Two things i think that startle america one as we do not have a list of programs that we have. The other one is, that we do not vote on mandatory spending. 73 of the budget, we just its just out the door without anybody looking at it apparently. It leads me to another thing which you have been suggesting. It is the portfolio budgeting. And the number of members the committee have recognized the need for this. Housing program as an example. 160 programs over 20 agencies with nobody in charge, nobody setting goals, and a bunch of the programs have been looked at in years. We are pretty sure that we are employing people to do that. We are just not sure that anything is happening out in the real world you touch on that in your report and a good portion of the nations spending is devoted to the program in those areas within the portfolio areas governed by more than one Budget Committee. I do remember when i first got here, i found out we found out that there were 119 preschool programs, and we started looking at them and found a whole bunch of duplication and we were able to get that down to 45. But the reason we could not get it below 45 is because they were not in our jurisdiction. This is the problem we have with a lot of these things but, its a good portion of the spending is devoted to programs and these multi areas, and our Committee Budget process correct gao and studio to reviews p budgets on this new structure provides better stewardship for taxpayers dollars . Absolutely i think it is very important the work that we do and overlap duplication and fragmentation producing our annual report this year we will reputed report as i mentioned in my Opening Statements 262 billion dollars that could be saved our highrisk lists somewhat of a beginnings of a portfolio now but we also could be able to look at not only federal spending and a particular area, say housing only the stem areas science technology, and engineering and math. Look at tax expenditures in addition to federal programs. There is a 1. 3 billion dollars of estimated tax expenditures that gets no scrutiny every year. We do not know whether they are solving or overlapping duplication between the federal programs and activities. When example, we highlighted in the our first report on duplications, we had an ethanol tax credit, but we also had the renewable fuel standard, and while you might have needed the tax credit from the beginning to get started, once you put the standard in place you did not meet both. So congress alleged tax expenditure expire. It saved about six billion dollars a year. Unless you look at the spending, tax expenditures, contracts, grants and the portfolio fashion across government, you are not able to frame the type of decisions that need to be made to streamline government and make it more efficient and effective. Im very supportive of the portfolio. We stand ready to implement that. Thank you. For mentioning tax expenditures. My final question senator brown did you have an additional questions . My final question will be budgeting form urgency this as if i did not ask you, it has been on everybodys mind lately but we just keep passing everything is an emergency proposition so it does not go against any members that it goes right to the debt and we are doing that with coronavirus right now. Providing billions of dollars on supplemental appropriations to respond to a crisis. Undoubtedly, more will be on the way. While we cannot predict the exact certainty where and when these types will strike, i think the congress can do with better job of budgeting for emergencies. How do you think the federal government can improve the way that its budgets form urgencys . Does the reality of the federal government needs to respond to these types of emergencies means that we ought to find some way that we are not driving up the deficit as we do it with emergency spending . There are several opportunities to improve budgeting and management preparedness for natural disasters, pandemics or unforeseen events. Number one is to provide a funding for a quicker response. Congress said the request of experts and others established for example, Public Health funds. But the amount of money that was put in their quickly evaporated and thus has to be replenished. I think budgeting, to make sure if you can make a quicker response, the faster you can respond the more you can bring down your total cost of handling whatever disaster it is or pandemic, or whatever. Having an investment to have a quick response, so congress doesnt have to do a supplemental. The agencies can move immediately. Second friends and preparedness. We have spent in the federal government, tens of billions of dollars to give money through fema for local jurisdictions because they dont prove their preparedness. Fema does not have a way to determine whether people are prepared or not. We have made a number of recommendations in that area. They try to come up with a bitter measures preparedness. We are making an investment of the size that we have made. We should know whether we are better prepared or not over a period of time. So that is an issue. Thirdly, i would suggest where budgeting can be improved is to build more resilience in, at the state and local levels, to provide federal incentives for building codes and structures and investments and Public Health systems that we can move out. Theres been a lot of discussions about how many beds we have for intensive care, how many ventilators, other type of things that are needed. We have had a number of recommendations. In 2015 we recommended that the department of transportation develop a strategy for our Airline Industry in dealing with pandemics and communicable diseases. And so far the department of transportation has done nothing. Five years later we are in the midst of a pandemic and a lot of this happened because of Global Transportation systems and people groove, and that is normal. But we need to have a better system, so we have been urging that for a number of years. I hope that this, finally, creates an incentive for that to be created in conjunction with hhs and the department of homeland security. If you are not prepared like this, you are scrambling, you do not make it decisions, you lose confidence in the public, the public loses confidence in government because it is not prepared. Quick response, assess return on investment for preparedness, have better planning to build resilience up front, particularly at state and local levels, provide incentives, Better Climate information so they can plan better. Lastly, i would say, there is a need to sort out what emergencies the federal government should or shouldnt participate in. Whether or not there should be other state and local governments or even private sector or wherever that should stephen. We have had outstanding recommendations for years, because we have never adjusted the criteria for when the federal government he decides to declare national emergencies. It is still based on a per capita income level that has not been adjusted for inflation since 1980. There has been some adjustment and later years but not fully. We calculated, if you just adjusted for inflation the federal federal government would have participated in about 40 fewer disasters because there could be more efforts. Congress is required to come up with the new criteria it should be available later this year if they adhere to their schedule. This is very important, two from the government standpoint with fema. The more disasters they are involved in, the further their stretched across their capabilities, and they do not have the workforce they need if there is a major disaster that the government can help and respond. To those are my suggestions mister chairman, and i think there is plenty of room for improvement in budgeting for these issues. A lot of great ideas a lot of great ideas. Senator brown. Thank you. Last year we talked about improper payments. We did get a bill across the finish line. The senate bill three 75 payment integrity information act which was motivated by what senator johnson and i heard last year and senator carper and peters joined in on it. It does raise the profile and enables various agencies to look harder for what ought to be obvious, so at least something happened based upon your drawing attention to it. Income. I do not know how closely Pay Attention to the income side of it, because obviously we have no political well here. Senator van hollen said that is the essence of why we keep doing what we are doing. That was last year in one of the Budget Committee meetings. Im interested in, are we at the sweet spot of Revenue Generation in the sense that, i know, and i felt it was really going to drive the economy when tax reform in december 17, first of all i dont think big corporations really needed much help because they had a nominal of 35 with with an effective rate of 18 . They are already under the new nominal rate of 21 now. But main street usa, proprietorships partnerships, llc, services, we went from 39 six to 29 six and i think that that is almost solely the driver of when it comes to how hot the economy is. Oftentimes not mentioned. We are up 7 in revenues. The first five months of the fiscal year. Still, spending more than that, of course the gdp is maybe growing two to two and a halfs. So we really did something with the tax policy. Do you interact with the sea neoonb about the revenue side and the only place i would be aware of that you could tax the generate to generate more revenue, i dont think it would raise more than 100 to 200 billion max which does not get into the structural deficit, wed be on high liquid and comes. From either the investment side, probably mostly, as well as ten 99 of w. To folks that benefit from big paychecks. How can we make the case that at some point weve got to focus on spending . But i do not think we are going to get to that unless we honestly look to see if there is someone to generate revenue without taking the economy . There are several things. A lot of the policy issues, tax policy issues or john showing Company Issues on taxation cbo treasury. We do not enter into that very often unless we are looking at a specific request from the committees. But, what we do entering its attacks administration and the tax gap i mentioned this before there are new estimates now from irs there is 144 billion dollars grow gross tax gap annual. That is about 380 point billion dollars. Do you want to define the tax gap . This is the gap between taxes owed and taxes paid. Collections . Collections. The main reason is under reporting of income. Secondly, there is adequate reporting but they are not paying, and third category, smallest category. Isnt that against the law . Yes and im not filing as well. This is been on our high risk for years. There are several things that we think congress can do and we have open recommendations here. This would not raise taxes on anybody. This is just collecting which should be collected and you agree . 181 billion dollars annually. About 38 of our deficit. Yes. So it is a big number. If you consider that and 175 dollars going out the door an improper payments that should not be going out the door, this will not solve our problems long term, but it will make adjustments to do so a lot easier. One, as regular regulate pay tax preparedness. Tax prepare air rates in some areas particularly in earning incomes income tax credit learning area. Secondly have more information reporting for Third Party Sources where there is people that have their payroll taxes detected and thirdparty reporting, the compliance rates are much better than they are when there is no income reporting. We have outstanding recommendations if we can if we just did it. With some efficiency you can bridge a lot of the deficit. What about getting back to the questions of the sweet spot of taxation . Is there nothing you can. You dont think about it outside of what your job is . I have plenty to think about at my job, so i do not entertain discretionary do not have responsibility for, no. I really havent thought about that. Okay. If we just focus, if you take in that 381 billion that is a big figure, other than regulating or monitoring tax prepares, is there anything else . You can give irs or whats called map authority, where they have administrative records that would show when they get a return, if it does not match the data that they have, they can make an adjustment, and that right then and there. They do not have to go through a detailed audit, they do not have to go through things and if the taxpayer things that that is not right, then they can enter into a discussion with irs but i would see to on the other side, just so you understand on the improper payments, there is legislation that has been introduced year to. A big problem is we are paying people that are not eligible. In some cases, we are paying people who are deceased. One of the reasons is, the Social Security administration will not share the total death master file with the treasury department. So there is a piece of legislation, senator kennedy who is on this committee, we talked about this last year. That would help a lot. The other thing is on medicaid, i think the Congress Really needs to focus on us because the estimate this year jumped because they had not look that beneficiary eligibility since the Affordable Care act was passed in 2014. Starting to be implemented. So for five years for 17 states, it jumped up to 20 billion dollars. They will do the other states and thirds, so that number is going to continue to grow. One final question. Do you interact with the cbo at all in terms of their forecasting to see if that makes sense or not. I know they forecasted a 1. 5 trillion over tenyear negative impact from the tax cut jobs act of 2017. To me it doesnt look like that is happening. If you look at this most recent information, do you ever get involved there to make sure that that information that is out there has some integrity to it . No we leave that up to the budget in committees to do. I do not want to get into the business of competing forecast with cbo. Okay thank you. Half information some Additional Information on that. We had problems with the Affordable Care act getting information quickly enough to be able to do amendments. Because of the dynamic approach and trying to anticipate with the change would make from a financial standpoint so when we did the tax cuts and jobs act and said imagine it will have no effect whatsoever on the economy . Even though we know that it would. And score everything that way, that is where the trillion and a half deficit comes from. Recognizing from the economists that there will be some effect on the economy and we hope it is a trillion and a half and i know that the money has been coming in excess of what we had before, but we have to go ten years before we know that we are correct and whether the economists are correct in their guesstimate on how much that would be. I want to thank you again for appearing here. I have lists of ideas that you have passed down we will see if we can get into reality. I have always been an advocate that if we could quickly filling things comprehensively around here and take one little problem at a time and do an understandable solution to that one step, that we ought to be able to pass a lot of things out of here, maybe by unanimous consent. Our problem is that we always want to tuck other things in there that are very controversial and wedge them through along with something that is essential, and it leads to a lot of disasters. I just cant thank you enough. You present one idea after another that is grounded in reality from your years of experience. I am always amazed at the breath of your knowledge. I have got pages of things here, and i know that neither you nor i want to be a profit. We want to be a solution. There is a lot of doom and gloom out there. If we dont make some changes. We need to be some problem solvers. I did not ask about you Capital Budget were still pressing for that. We are hoping that we do not wind up with a spending virus around here. There has to be a crisis before we do anything about it so maybe that will bloom it into a crisis. Again, thank you for being here. That concludes our hearing. If anybody has written questions that they want to submit they should do that by the closing business tomorrow. We always appreciate your Rapid Response and answers and the expertise that you bring to this. Thank you. The hearing is adjourned
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