Government accountability, the report of the nations Fiscal Health. Today the Budget Committee will hear from congress nonpartisan watchdog on the nations Fiscal Health and the importance of confronting our critical fiscal challenges. I welcome back mr. Dodaro who is the most usual and best witness providing information throughout the year that it is extremely helpful heading off some of the future crises that will happen if we dont Pay Attention. This hearing will kick off a series of hearings and discussions about that will form Bipartisan Solutions for the problems we face this year and help build a foundation for next years budget cycle. The next few years should be significant for the Budget Committee. The committee has been the working hard to enact reforms that improve transparency and accountability in the budget process and help put us on a more sustainable fiscal path. Last year senator whitehouse and i introduced the bipartisan congressional budget reform act and i want to emphasize that word bipartisan because its the first time any reform bill has gotten out of this committee in a bipartisan way since 1990. We were successful in turning when we were successful at turning the spill into a law next congress would process the first budget cycle covered by its reforms. Next year will also mark the first budget cycle in ten years not constrained by the budget control act Discretionary Spending caps. In the months ahead we will begin to lay the groundwork for returning regular budgie digging through the series of discussion focused on the major fiscal issues on our countrys rise. With that in mind we are meeting today for an update on the most pressing threats to our nations fiscal stability. Im pleased to welcome back the committee gene dodaro the comptroller general of the United States and head of the u. S. Government accountAbility Office. Today gao is issuing its Fourth Annual update on the nations Fiscal Health. For several years now the support 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 legislation enacted in 2019. Last year gao predicted that death as a percentage of Gross Domestic Product which compares the size of our debt to the size of our economy would surpass its historical high of 106 by 2038. Now gao projects we will hit that grim milestone by 2034. If current laws do not change. The Congressional Budget Office recent budget outlook also shows the cost of legislation enacted since last june has taken on our already unsustainable fiscal situation. Due to this legislation, namely last years spending agreement which cbo attributes one and seven tenths million and i still have trouble with that word truly in his spending increase over ten years and the fy 2020 appropriations package with writers that repeal the pay force for the Affordable Care act and they now project that death as a percentage of gdp will soar to 174 of gdp by 2049, 30 increase from last years projection. Cbo warns that feeling to the front tower rising debt will mean a future of slower Economic Growth, higher Interest Rates and a greater risk of the school crisis. As the deficit growth and we borrow even more money to fund the government the Interest Payments on the money we borrow will overtake all other spendi spending. It 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 services all combined. By 2041 gao 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 and by 2049 Interest Payments will exceed total Discretionary Spending. We can and do have spirited debates on what our Spending Priorities should be but Interest Payment on our debt arent even debatable. We do not get to decide whether we want to spend that money on healthcare, defense or Retirement Security but its already committed. Its the most mandatory funding that we do and if we stay on the path we are uptodate debt interest will become the largest category of federal spending. I mention this committee had advanced on a bipartisan vote in the budget process reforms that senator whitehouse and i introduced and you all amended to make it an even better bill. Our belt takes several steps toward a more active thoughtful and functional budget process. This includes reorienting the budget, resolution to a two year cycle and 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 longerterm fiscal targets based on National Debt as a percentage of the overall economy. A debt to gdp glide slope with 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, perdue and langford. I expect the comptroller general is familiar with the spill that grew out of a hearing we had last october. The reform proposals it would standardize response polities to enhance strategic decisionmaking and strengthen deputy cfo authority to ensure continuity when vacancies occur. It also calls for revised planning requirements and metrics to help address longstanding challenges. Like better linking cost and Performance Measures and modernizing outdated legacy systems. I should mention that at gaos suggestion we have put in a request to omb to give us a list of all federal programs. I have not gotten 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 printout. All of the payments that go to any entity, if an entity is getting money from us its one of our programs. This is my last year in the senate and my sincere hope that we can take concrete steps toward a sustainable fiscal future before i leave. I return a sensible budget would be a good start and i hope that members to date will Pay Attention to the urgent message from congress nonpartisan watchdog, current federal fiscal situation is unsustainable and we must act before it is too late. I want to thank comptroller dodaro for being here again and again and for all the delightful information that he shares with us. When we follow up on it we get results. I look forward to his testimony and i dont think we have a Ranking Member statement today. I think it might be preparation for a debate coming up. I dont know if senator grassley wanted to make any comments. [inaudible] okay. We will move on to our witnesses but it is gene dodaro, head of government account Ability 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 and was confirmed in december 2010 after serving as acting comptroller general since march 28. He is been with gao for more than 40 years and served nine years as the chief operating officer, the number two leadership position at the agency. Prior to that he headed gaos accounting and Information Management division which specialized in Financial ManagementComputer Technology and budget issues. What a diverse background of information that has been extremely helpful and has been noted every time that you have testified. With that comptroller general, you may begin. Thank you very much, mr. Chairman paid senator grassley, senator braun, its a pleasure to be here today to discuss our latest report on the physical health of federal government. As we convene this discussion today our countries confronting a pandemic that is threatening the health, safety and economic wellbeing of our citizens, businesses and our economy. I make that point because its relevant to our message today of 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 flex ability to marshal resources to deal with emergency situations. I am concerned, as our report talks about, that the debt to gdp ratio as of the end of last fiscal year was 79 . That is the highest it has been since world war ii when we hit the historic high of 106 of debt to gdp ratio. That also contrasts with the debt to gdp ratio since 1946 with only 46 so we are heavily leveraged in debt, added a time when we will be facing a steady, annual deficit of 1 trillion a year for as far as the eye can see. This will mean that our debt to gdp ratio, absent any fiscal policy changes, will hit the historic high of over 100 of gdp within 1114 years and depending on the estimates that are made by gao, cbo and the Financial Report of the federal government issued by treasury and all and be they all result in the same conclusion, more importantly than that is that that debt will continue to grow to 200, 300, 400, five 100 of gdp. This is why we believe the current path is unsustainable. The Social Security program is already at 1 trillion, medicare, medicaid is expected to hit one chilean dollars each by 2026, this includes state money for medicaid. The interest on the debt will hit 1 trillion by 2032. Right now our total for our budgets 4. 5 trillion in those four programs are activities alone will be 4 trillion relatively soon. That will crowd out a lot of other opportunities for spending in vital areas ranging from defense to the whole panoply of discretionary programs important to the country. We need a plan to deal with this. I recognize that we need to deal with shortterm, National Priorities and to make sure we have strong Economic Growth but we also need a plan to put us on a better path. I was pleased, mr. Chairman, to see the bipartisan bill that was passed out of this committee that would set the gdp targets and would also be another troublesome area that i pointed out in the past which would be to have a different approach to setting the debt limit. The debt limit approach right now, those that control the debt, it is dangerous and the fact that it can disrupt treasury securities if it is not raised in time and the treasury market and increased Interest Rates of pro governments we need a different approach and your approach included in the bill is a good approach and one of the options that we suggest tying it to the budget resolution. In addition to these fiscal policy decisions that need to be made there are still many opportunities to save additional money. Weve pointed out in our report that this years the amount of improper payments across federal government jumped from 150 1502175000000, largely driven by an increase in medicaid and proper payments. I think that number will go up higher and am happy to talk about that later. There is also opportunities to consolidate over lap and defecation and fragmentation and so far actions on our recommendations have saved 262 billion dollars and we have outstanding recommendations that can save tens of billions of dollars more but there is a lot to be done to deal with this issue and again, im closing and applaud the committee for taking action in this regard oath on the bar bipartisan reform bill and the cfo legislation. I would be happy to respond to questions, mr. Chairman. Thank you very much. Thank you. Thank you for the document you provided with a lot more information. I will turn to senator grassley for questions. I will take you up on that and go to the agricultural committee. Mr. Dodaro, your written testimony says the pension benefit corporations, multiemployer tension trust fund, is protected to be depleted by 2025 and im aware of that we are working on legislation to try to help that out along with other aspects of multiemployer so after 2025 if nothing is done premiums wont be enough to pay benefits inside the insolvent plans and so alexander and i, jurisdiction over some of this, we are trying to work on that and there are other proposals as well and i think everyone recognizes that the longer we wait the worse of the problem becomes. I wonder if you could comment on the need for action to shore up the multiemployer Pension System and whether you think that should or would be proven to be continue to delay action. Senator grassley, i think one of the most urgent issues facing congress and ive been concerned about the multiemployer plan for years. I wrote a special message to the congress about this back in 2014. Congress took some action at that time but it wasnt sufficient in the longerterm problem. If congress does not act there is about 11 Million People that are insured and the multiemployer pension plan and the once it goes insolvent the only benefits the government will be able to pay is 2000 a year, if that, to these people for a pension. Hardly adequate. The government will fail these individuals if it does not act and i encourage you to continue your efforts and your colleagues to act on this issue. Also, the singer Employer Program while its in current surplus situation, has terminus exposure over the long term as well. About 168 billion of potential losses to that program as well but the multiemployer plan is most urgent and i want to encourage swift action on the part of the congress to allay concerns by these americans that would be affected. I want to go to entitlements for your agency, cbo and others have been telling us for a long time about Social Security and healthcare entitlements and interest issues on the debt are unsustainable. In order to do that we have to reduce deficits and debt, Social Security will exhaust it by 2034 and we will be paying a heck of a lot less and Social Security benefits if we dont do something about that. I want to get to healthcare spending. I have a bill with senator wyden to reduce drug prices, save taxpayers money and reduce healthcare cost generally. We cant allow overall healthcare spending and 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 and federal spending on healthcare and entitlements . Absolutely. Congress needs to do that. The Fastest Growing class in the federal government or healthcare and interest on the debt in the healthcare cross 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 and the Medicare Hospital Trust Fund to pay 89 cents on the dollar of the benefits. That is right around the corner and that would affect millions of americans that rely on the Medicare Hospital Trust Fund cost and put enormous pressure on the federal government. The suggestions that you make are good ones but we also have other open recommendations in addition to being down drug costs. For example, if you if your payment by the federal government depends for doctor visits depends on where you go and will place you get in if you go to a Doctors Office affiliated with a hospital medicare pays you more money than if you visited that same doctor in a private practice location for if you equalize those benefits you say billions of dollars. We have had a number of open recommendations and i will provide them to this committee for the record. And provide them to your staff as well but you absolutely have to control healthcare costs. That is the most common gated part of this whole equation. If you dont control healthcare costs you really dont have much of a prayer of reducing the federal government deficit and debt issues. Thank you. Thank you for your courtesy. Thank you. I will let you go to the agricultural meeting. Im sure you just came from judiciary. [laughter] senator braun. Thank you, mr. Chairman. Ive been here a little over a year and probably the First Committee meeting that vividly stuck in my mind is when you were here roughly one year ago and of course, you said basically everything then that you are telling us now and i guess what amazes me most about this place is out we seem to shrug it off like its never going to have impact in the present. Healthcare costs undoubtedly are the driver. I took it on in my own company 13 years ago and there are dilutions. Mostly, the reason were not making any headway on healthcare costs, is ive never seen an industry more dog in and stubborn and wanting to maintain the status quo. When you have 80 u. S. Senators that come up with some idea of how to fix your business that is like the two by four across the head and nobody is paying any attention from pharma to hospitals and the whole gamut, practitioners as well. Then you have the Health Insurance industry which is like the darth vader out there that keeps everything behind closed doors. Does not embrace any of the elements of most free markets which would be no barriers to entry, full transparency, robust competition and an engaged consumer. We have none of that. Chairman grassley probably has been most aggressive and this is all mild stuff weve been trying to get done. Im on that committee and health, labor and pension but we still have not settled surprised radical bills. That will have to be the easiest, lowest hanging fruit you could ever imagine to pick to solve an issue and i dont have not talked to anyone who likes a surprise bill. You got the doctors arguing with the insurance comedies on how to fix that. Sadly, i dont think we will do much but the guy thats been most aggressive and instrumental has been the president and whenever he tries to do things like advancing pbm discounts directly to the pharmacy or the individual it hits the court system the next day or when you try to push the transparency bill and i use the opportunity then and i do it now and i do it often because its my microphone is probably the biggest assets we have as a senator if we get nothing done in general. Healthcare could be solved in the onus is on the ceos that run this increasingly concentrated industry to embrace some of this stuff. I dont know whether we can legislate quickly enough to get anything done where it will be in time. Theres a guy out there named bernie that has a different point of view and his case that the system is broken is 100 correct. Do we go to a one payer system to fix it or do we do what could be done and what i did in my own company, take the best of what weve got, shrink it, by the industry embracing what other Free Enterprises do, i dont know. Im going to ask you this question and then i will sure we have room for more questions. Sadly, this should be the most well attended committee here and its dealing with the subject that nobody wants to give into the weeds about. What do you see looking into the future because we know all the information. You dont need to have much more than a finance 101 to know how much in peril we are. What are the what is the event or a few events that happen down the trail that put this whole place into a higher alert which would mean solving it by a crisis . What you see the most likely thing or two occurring . Our report and testimony has a timeline of some significant events that will occur and that will force congress to act. Weve already discussed one of those with senator grassley here with this question on the multiemployer pension plan and that is right around the corner of 2025, devastating effect on the people that were supposed to be protected by that program and if Congress Fails to act. One year after that the Medicare Hospital Trust Fund, as i mentioned, will only have 89 cents on the dollar but congress will have to act at that point. The Medicare Beneficiaries are not going to be able to step up to cover that cost without causing calamity with their own personal finances and we have an aging population so more and more people being covered under the Medicare Program and the Social Security program by 2034 which is not much further would only have enough to pay 77 cents on the dollar. I dont think congress or the American Public would accept the 23 cut in the Social Security benefits for a lot of people whose sole reliance of income is the so security system. As i testified before the Senate Aging Committee people arent saving much on their own some people in high incomes are doing well but a lot of people are not. And so, theres not a savings. The Federal ReserveSocial Security was what percentage of benefits . You only pay 77 . Thats for the old age survivors. The disability part is different but the old age survivor and the main one that people rely on for income, millions, tens of millions of americans rely on that system so you have these inflection points that will force congress to act. The message ive been trying to convey is the longer you wait the more draconian the changes will have to be made. You cant phase them in overtime paid one of the things with Social Security there are a lot of proposals and bills that have been introduced in the congress to solve that and that i wont say its easy to solve but compared to healthcare i think its more solvable but the sooner you do that you allow people to adjust their own circumstances to this. If you wait much longer now, the fourth issue i would bring up that will cause action will be the rise in Interest Rate costs. Even at low Interest Rate costs we have right now the cost of or on our debt has gone up 113 billion in two years from 2017 to 2019 so it is up to 76 billion right now. Even low Interest Rate environment and 61 of the debts we have held by the public which is almost 17 trillion will have to be refinanced over the next several years so you are not only financing the trillion dollars that we debt but refinance old debt. Rates are still low but that doesnt always have to be the case. I think, flight to safety helps treasury securities but on the other hand 40 of our debt is held by foreign interests, china and japan primarily but a lot of other countries that i dont know if we want to rely on that as a source and the more that the government takes up of deficit financing and less investment there is for the private Sector Investment so it will have a dampening effect on Economic Growth over time. These are the things that is almost like a cancer that you have that you cant see and it is eating away at our ability to maintain longterm stability and strength in our economy and have the flex ability to deal with things like natural disasters or pandemics that we are dealing with right now that will cost a lot more money and potentially damage the revenue stream to the federal government so it will have a double whammy. We need to be a more have more physical room to deal with these issues in the future and deal with these major entitlement programs. That is the scenario i see. There will be other unforeseen events like we are dealing with right now that will come up as well but if there is a spike in Interest Rates we will be in a bad, bad situation. Thank you. Thank you for your questions and i appreciate you mentioning this prize medical bills. I tried to make a distinction there, the Surprise Medical Bills are when people receive a bill thats much bigger than their Insurance Company will cover but one that would solve a lot of problems for people is prompt billing and i have a bill that would have originally required hospitals to give you a list of services you got as you leave the hospital, no amounts, just so you can check and see if thats what you really got. And then within 30 days fill in the amounts and you can check them off so you can see whether they are paid or not. They told me 30 days was not sufficient and it ought to be 45 and they moved it to 60. I agreed that we could do it in 60. With [inaudible] outside their list of providers but they want 90 days now. If businesses had that same billing process they would all be out of business. Thanks for bringing that up. Again, i appreciate all the great answers that you give. Your report points out that are going debt to gdp ratio means current federal fiscal path is unsustainable for it as you mentioned in your testimony the budget process reform bill this committee reported the senate last november uses debt to gdp target as a metric in measuring how well congress is adhering to the physical blueprint. Did you discuss the benefits of establishing the shared physical target particularly debt to gdp target . Yes. First, the debt to gdp ratio is a wellrecognized International Standard of a countrys ability to repay the debt that they have and a lot of countries use it as fiscal targets in carbonation with fiscal rules and operating procedures. I think its terribly important, mr. Chairman, in your opening remarks you mentioned that 2021 is last year the budget control act mandates cap on Discretionary Spending so once that goes away there really are no guard rails and there is no guidelines and there is the federal policy as to how much debt we want to take on as a country and without gdp, debt to gdp ratio we have no, nothing we are planning for and i think it would mean the deficit and debt situations would grow unchecked and i think thats a dangerous, dangerous path. Having a target having a glide path, as you outlined in your plans where you can check it along the way and have operational rules on controlling expenses and expenditures over a period of time is important and there has to be some effort to deal with mandatory spending. The entitlement programs, we have to look at the revenue, side of government and we have to look, that was the weakness in my opinion of the budget control act as it only focused on Discretionary Spending which was not the main driver of the deficit and debt situation. That is where you make longterm investments to an infrastructure and other areas so you know, it brought in different dimensions and i dont think it solved longterm problem nor does it really provide the proper framework for Investment Decisions that need to be made by the government. Having the debt to gdp ratio and physical rules to the company is a good approach. I appreciate those comments and in particular you mentioning revenues and spending. There will be something done in both those categories. Senator bramhall and. Thank you, mr. Chairman. Welcome, mr. Comptroller. I want to ask you a couple questions about strengthening the control act in the bill for the past out of the committee and the bipartisan congressional budget reform act that we had a bipartisan amendment that i proposed that was adopted to do that and as you know congress currently faces a very real problem with our budget process and that is the process for ensuring that when Congress Appropriates funds they are spent as congress directed. The empowerment control act creates a process by which a president can notify congress if he is deferring awning temporarily which is allowed only in limited circumstances or president can propose rescissions for funding that he believes that he believes is no longer needed. One of the provisions in the amendment stop adopted by the credit would require the office of management budget omb to publicly disclose their proportionate so there are appropriations, federal law gives omb a portion and power to control when appropriated funds are released to agencies. My question is if omb publicly disclosed their actions in real time with that provide information to you at gao that could help you enforce the empowerment control act. Additional disclosures would be helpful in that regard and i would ask mr. Chairman with your permission for two things but one, yesterday Tom Armstrong who is a company here to the hearing testified before the house Budget Committee and outlined all the suggestions we have for strengthening the empowerment and control act so it asked that his testimony be entered into the record in todays hearing with your permission and i like tom to elaborate on my answer, if it is okay. All right. Certainly with permission but appreciation. And maybe what we can do is instead of going through each of these questions if it is okay with you will start with general counsel and they could tick off those key elements that you mentioned the other day because we are working on Bipartisan Legislation to make and strengthen the ability to enforce the control act. Im happy to pick good morning everyone. I do think that requiring omb to publicly post the schedules and the reapportionments because during the course of the fiscal year they engaged in re apportioning activities as well so Something Else that they could do would be as they apportion funds they could send the schedules to this committee to house Budget Committee and to the Appropriations Committee and to the committees with oversight programs that are funded by that appropriation and that schedule and 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 information when the president submits a special message proposing a rescission or a deferral. That helps us hit the ground were quickly and move on those things more quickly. Couple other things that we would suggest that we had a situation a few years ago where there was a proposal that the administration could propose rescissions during the last 45 days of the fiscal year of the funds that would expire by operation of law at the end of the fiscal year and we issued a decision saying that there was no authority to do that. If you make that clear in the act i think that would be helpful. The consequence would be if a president were to engage in that kind of activity is that a president then would effectively rescind money that you guys have appropriated but without any action by congress and the reason i ask that you might think about legislation is there has been some back and forth between my office and omb and omb advising general counsels executive agencies that they can disregard gaos decision so you can reinforce that the decision and you can make it clear legislatively. Final thing that we would recommend and i dont mean this to sound too draconian but the antideficiency act has penalties for violations of the act. You might consider penalties for the control act as well like the penalties in the antideficiency act. When i say that im not trying to pound on the civil i like the controller general have been a civil severance for more than 40 years and i am suggesting that those penalties do get attention and do act as a deterrent. I will tell you that my office we provide a lot of appropriations like training through exec agencies and executive officials and when we talk about the antideficiency act one thing someone always says in the class is i dont look good in an 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 to have a statutory right to come to gao for a decision. Right now heads of agencies and Agency Components have it right but if you make it available to budget officials to Program Officials and two Contracting Officers i thank you will get more attention to it. Thank you, i appreciate that and will have questions for the record about also your ability to expedite any lawsuits that you might bring in the event that you identify a violation. That would be helpful because there is the 25 day period and that is would impede on our ability to act quickly. Also, if you could 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 but we had some cases where we have not gotten a response in a timely manner or not a response at all. I think that is detrimental to our ability to help congress to enforce its power of the purse. I appreciate that. Mr. Chairman, i hope to work with you and other members on this because we all have an interest, i think, regardless of party in making sure that executives, president s, whoever they may be, comply with the law with respect to appropriations but i think we have a shared interest in making sure that happens. Thank you. I will look forward to the answers to your more technical questions which i appreciate you putting in writing because that will be more helpful and i want to thank you for including that amendment. One of the reasons that it is imperative that we do the budget reform is that at this time in the election cycle we have the same reasonableness that we had four years ago when we didnt know who would be the president or who would be the majority and so the body was reasonable and we had a series of about 12 bills that could have been passed by unanimous consent that could assault a bunch of these problems but now we have one bill that isnt going to move by unanimous consent, i am sure, but hopefully is bipartisan enough that we can get it through and this includes the specifications to make sure that the first strings are in the control of congress. We appreciate your efforts on that and for joining us on the bipartisan part of that and all of these things are absolutely essential for us to get done before the next election. Thank you. I will continue with questions and 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 paired we did not mention the Highway Trust Fund which has been depleted or will be depleted in two more years but we talked about medicare and Social Security some of the other trust funds. It fascinates me that when i came here there was a trust fund for abandoned mine lands and wyoming had some of those abandoned mine lands that have been painting into it for the call money for a long time and weve never gotten any of the money to solve it so when i got here i said how do i get that money released and they said well, you will have to put money in the fund in order to take money out. I never heard of a trust fund like that. [laughter] we did get the money moving but these trust funds do not have money in them. One of the things that bothers me. The highway one we did talk about is a very devastating to our ability as a nation to deal with aging infrastructure issues and transportation requirements. Cbo estimates will need about 188 billion between now and the funding expires through the fast act of 2030 in order to maintain federal spending over a period of time. We keep a list of highest risk areas for our government and have finance Service Transformation on the high list since 2007. This is an issue that has to be solved hopefully in order to make sure we make the necessary investments that are critical to the Economic Activity and it is not just the traveling public but thats important to congress. Getting goods and services around and getting tourists around is pretty critical and all involved in that info structure and i do remember thae raised and the gas tax needed to be and the user fee for gas needed to be raised, one nickel a year for five years and then adjust for the cost of inflation and we didnt Pay Attention to that and ive even tried one just for the cost of inflation but that is why that trust fund is running out of money, technically it is out of money. Roma cfo vision act that you encouraged us to do and that we have put in, i am pleased that im finding any opposition to it yet but we do not have it passed and i appreciate many senators that are cosponsoring that now but could you discuss the role that the agencys played in ensuring that fiscal sustainability and any time were up dating the current law could help the managers . The cfos are really at the epicenter of fiscal stewardship within the individual agencies and departments. Now, upgrading modernizing the act will help in a number of respects. One is that will give all cfos the budget formulation responsibility as well as monitoring budget execution so it will put them more central in decisionmaking on how to save money and blink, as you mentioned in your Opening Statement, cross performance data. Right now they are not involved in other cases in that kind of decisionmaking and tradeoffs about investments or where money could be saved, how you could get same performance, lower costs and so if they are not involved in the formulation of the budget submissions they are missing out on playing a key role in the decisionmaking. Also, i think they could play a more significant in the modernization with improper payments problem we have. Last time i was here senator braun mentioned that it was growing improper payments rather than solving them and that certainly since ive been here last year it has increased 24 billion. That is not a complete estimate. We have a big problem and if the cfos could be more involved in that and then also, mr. Chairman, as you point it out there are integrated federal systems where you cant make timely decisions and the cfo act revisions that youve set forth would provide for more modern Financial Systems to help make better decisions at the agency so it will strengthen the cfos ability to help manage the cost of government better, not just accounts for the money that we have but manage the cost, not the help in this regard but it had a conversation with number of house leaders of the committees that were there and had jurisdiction over the cfo act refinements to lay the groundwork a little bit as well. Hopefully it will expedite giving this done this year. Thank you for that and they suggested we needed better continuity and that succession on those cfos two. You also brought us the necessity for having a federal Program Inventory. We are continuing to push omb to amend its requirement to publish inventory federal programs because we need it timely information. It seems that people would rather not know what our return on investment is for some of those programs. Who needs to do what in order for us to make progress on that federal Program Inventory and to start Getting Better linked to cost and performance data. We are not having success. Omb is really the main actor here and they needs to publish and make transparent what the approach should be for developing the Program Inventory. In the past they have led each agency decide on their own what is the program and therefore you dont really have a consistent inventory across government to identify, overlap, depletion or fragmentation but it takes us a lot of time and digging in order to recommend issues to the congress in that area but it should be totally invisible and we been pushing omb to move theyve moved recently to do this but they are the ones that need to act to develop the inventory and they are at the responsibility with the agencies in order to give them guidance so that is consistent across government paid many of the management Reforms Congress passed most recently with the Transparency Act standards to be consistent across government and to require publication of all federal spending as you pointed out in your Opening Statements if you know where the spending is you know where the programs are and so they should use that information as a starting point and weve also given them a taxonomy of how they can approach the development and inventory that i think will be helpful for them to use read the continued pressure on omb i sent a letter to the director of omb every year to emphasize the abundance of moving in this area and last year finally they started to show signs of life in this area so i hope they will follow through. There are two things that i think startle america and one is we dont have a list of programs that we have and the other one is that we dont vote on mandatory spending. 73 of the budget its just out the door without anybody looking at it apparently and it brings me to another thing that you been suggesting which is the portfolio budgeting and a number of members the committee have recognized the need for this and i will use this as an example of the Housing Program is 160 programs over 20 agencies with nobody in charge and nobody setting goals and a bunch of the programs that have not been looked at in years so we are pretty sure we are employing people to do that but we are just not sure if anything is happening in the real world so you touch on that in your report and a good portion of the nations spending is devoted to the programs within the portfolio areas covered by more than one Budget Committee and i do remember when i first got here i found out senator kennedy and i chairman and Ranking Member and we found 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 you cannot get it below 45 is that they were in our jurisdiction. It is the problem we have with a lot of these things but a good portion of the spending is devoted to programs in these multi areas and our committees budget process directs gao and cbo to review certain portfolios of spending on a periodic and repeated basis and will this new structure help improve oversight and provide better stewardship of taxpayers dollars two. Absolutely. I think its very important. The work we do in overlap and duplication of fragmentation producing our annual report this year will produce our tenth report in that area. As i mentioned in my Opening Statement is already saved 262 billion and theres tens of billions of additional dollars that could be saved or high risk and is somewhat of a beginning of a portfolio analysis but you also will be able to look at not only federal spending in a particular area say housing or the stem area of science and technology and engineering and math and look at tax expenditures in addition to the federal programs. Theres a 1. 3 billion of estimated tax expenditures that gets no scrutiny every year but we dont know whether they are solving the problem or whether they are overlapping the duplication between the federal programs and activities. One example we highlighted in our first report on overlap jubilation as we had an ethanol tax credit but we also had the renewable fuel standard. While you might have needed the tax credit at the beginning to get started once you with the standard in place you do not need both so congress let tax expenditure expire and that saved about 6 billion a year so but unless you look at expanding or tax expenditures or contracts and grants and 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 supportive of the portfolio and we stand ready to implement that. Thank you. Senator whitehouse particularly will thank you for mentioning tax expenditures. [laughter] my final question, senator brown, any additional questions . My final question would be budgeting for emergencies and if i did not ask you its been on everybodys mind lately. We just keep passing everything as an emergency proposition so it doesnt go against any members but it goes right to the debt and doing that with coronavirus right now. Providing billions to respond to a crisis and undoubtedly more will be on the way if we cant predict the exact certainty where or when these types will strike i think congress could do a better job of budgeting for emergencies. How to think the federal government can improve the way that it budgets for emergencies . Is the reality that the federal government needs to respond to these types of emergencies meaning we ought to find some white were not driving up the deficit as we do it with this nonemergency spending . There are several opportunities, i think, to improve the budgeting and management of preparedness for natural disasters, pandemics or unforeseen events. Number one, provide funding for a quicker response. Congress, at the request of experts and others, established, for example, Public Health fund. But the amount of money that was put in there has quickly evaporated and thus has to be replenished. The budgeting to make sure that if you can make a quicker response and the faster you could respond the more you can bring down your total costs of handling whatever the disaster it is or pandemics or whatever. Having an investment to have a Quick Response so congress does not have to do a supplemental and the agencies could move immediately. Second, preparedness. We have spent in the federal government level tens of billions of dollars to give the money through fema and global jurisdictions to improve their preparedness. Fema still doesnt really have a way to determine whether people are prepared or not. We have made a number of recommendations in that area that they tried to come up with a better measure of preparedness. When we are making an investment of the size that weve made we should know whether we are better prepared or not over a period of time. That is an issue. Thirdly, i would suggest that the way budgeting could be improved is the bill more resilience in at the state and local level to provide federal incentives for building codes and structures and investments in Public Health systems that we can move on and theres been a lot of discussion recently about how many beds we have for intensive care and how many ventilators and other types 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. So forth, the deferment 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 system and people move and thats normal but we need to have a better system. Weve been urging that for a number of and i hope that this finally creates the incentive for that to be creative in conjunction with hhs and the department of Homeland Security because if you are not prepared like this you are scrambling and dont make good decisions and you lose confidence in the public and they lose confidence in government because its not prepared. The criteria for when the federal government decides to declare a national emergency. Its still based on a per capita income level the house and then adjusted for inflation since 1980. Theres been some adjustments but not fully. We calculated if you just adjusted for inflation. There could be more efforts and congress required them to come up with new criteria that should be available later this year if they adhere to their schedule. Its very important from the government standpoint because the more disasters they are involved in, the further they are stretched across the capabilities and they dont really than half the workforce they need if there is a major disaster that only the federal government can help respond to. So those are my suggestions. A lot of great ideas. They get a bill across the finish line senate bill 375 payment integrity information act which is motivated by both senator johnson and i heard last year and then senator carper and peters joined me so it does raise the profile and enables the various agencies to look harder for what ought to be obvious. Something happened based upon your growing attention to it. I dont know how closely you paid attention to the income side of it. Senator van hollen said that that is the efforts of why we keep doing what they are doing. Im interested in the rv at the sweet spot of Revenue Generation in the sense that i thought it was going to drive the economy when tax reform in december of 17. First of all i dont think the corporations needed much help because they had an effective rate of 18 said they are already under the new nominal rate of 21. The main street usa proprietorships, partnerships we went from 396 to 296 and i think that is almost solely the driver when it comes to how hot the economy is. They are up 7 in revenues. The first five months of the fiscal year. Its growing to 2 so we did something with the tax policy. Do you interact with the omb about the revenue side and the only place i would be unfair that you could tax to generate more revenue i dont think it would raise more than 10 102 mae 200 billion maximum which doesnt get into the structural deficit would be on high liquid incomes from either the investment side probably mostly as well as 1099 and folks that benefit from big paychecks. How can we make the case that at some point weve got to focus on spending but i dont think that we are going to get to that unless he honestly looked to see if there is som isnt some way o generate revenue without paying the economy. There are several things. A lot of the policy issues are joint committee on taxation, treasury. We dont enter into that phrase very often unless we are looking at a specific request from the committees. But where we do enter in is the Tax Administration and the tax gap. I mentioned this before there are new estimates from the irs and theres 441 billion gross tax gap annually at a deficit of 381 billion expected. They wanted to find the tax gap . Its between the taxes owed and taxes paid. The main reason is under reporting of income. Second is that adequate reporting that they are not paying. And the third category, the smallest category isnt that against the wall . They are not filing as well. Its been on the high risk for years. There are several things we think the congress can do and we have the recommendations here. This would raise taxes on anybody. Its collecting what should be collecting. 381 billion annually. About 38 of the deficit. Yes. So, it is a big number. If you consider that 175 going out the door in improper payments that shouldnt be going out the door, its not going to solve the problem longterm. It will make adjustments to do so a lot easier. We find some areas and the earned income tax credit and secondly more information reporting for the thirdparty sources. Theres people that have the payroll taxes deducted or thirdparty reporting. We have outstanding recommendations. What about getting back to the question of the sweet spot of taxation. Do you ever think about it outside of what your job is . I dont entertain discretionary things. No, i really havent thought about that. If you take the 381 billion, that is a big figure, rather than regulating or monitoring the tax preparers, is there anything else . You can give authority where they have administrative records that would show when they get a return if it doesnt match the data that they have, they could make an adjustment right then and there and if the taxpayer thinks thats not right, then they can enter into a discussion with the irs. But i would say on the other side though, just so we understand on the improper payments there is legislation thats been introduced. They are paying people that are not eligible. Some cases we are paying people that are deceased. One of the reasons is the Social Security administration will not share of the total masterfile with the Treasury Department said there is a piece of legislation senator kennedy was on the committee that we talked about last year that would help a lot. The other thing is on medicaid i think the Congress Needs to focus on this because they havenhaveinflicted the beneficy eligibility since the Affordable Care act was passed in 2014. For five years, for 17 states that jumped up to 20 billion. That number is going to continue to grow. Do you interact at all in terms of forecasting, i know they forecasted 1. 5 trillion. To me it doesnt look like thats happening and if you look at the most recent information, do you ever get involved to make sure that information has some integrity to it . We leave that up to the Budget Committees. I dont want to get in the business of competing forecasts with cbo. Thank you. 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 a dynamic approach and trying to anticipate what the change would think from a financial standpoint. Even though we know that it would end score everything that way that is where the deficit comes from. I know that the money has been coming in excess of what they had before. We have to go ten years before we know whether the economists are trapped in the guess of what it would be. I want to thank you again for appearing. If we could quit doing things comprehensively around here and take it one little problem at a time and do in an extendable solution to that. Theres other things in there that are very controversial and its through something essential and at least a lot of disasters but i just cant thank you enough. You present one idea after another that is grounded in reality from your years of experience and ive always been amazed at the breadth of your knowledge. Ive got pages of things here and neither you nor i want to be a prophet. We want to be a solution. We need to be some problem solvers. I didnt ask of capital budgeting. Im still pressing for the hoping we dont end up with a spending virus around here. It will be a crisis before we do anything about it. This concludes the hearing and if theres questions they want to sub it. Weve always appreciated your response and answers and expertise that you bring. Thank you. The hearing is adjourned. [inaudible conversations] [inaudible conversations] at the beginning of the story, the United States didnt have the pacific coast. There was territory in oregon that was disputed and then there was california, which belonged to mexico. Fremont encouraged the american settlement of oregon and took the conquest of california just in time for the gold rush. And so he does play a role in changing the map of the United States. A hearing on the impact of the ro