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67–117 PDF 2012

S. Hrg. 112–194 

ENHANCING THE PRESIDENT’S AUTHORITY 

TO ELIMINATE WASTEFUL SPENDING AND REDUCE 

THE BUDGET DEFICIT 

HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

OF THE

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 15, 2011 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

H605-41331-79W7 with DISTILLER

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

JOHN ENSIGN, Nevada 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK L. PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

MARK BEGICH, Alaska 

SCOTT P. BROWN, Massachusetts 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

JOHN KILVINGTON, Staff Director 

BILL WRIGHT, Minority Staff Director 

DEIRDRE G. ARMSTRONG, Chief Clerk 

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(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator McCain ................................................................................................ 4 

Senator Brown .................................................................................................. 5 

Senator Begich .................................................................................................. 6 

Prepared statements: 

Senator Carper ................................................................................................. 43 

WITNESSES 

TUESDAY, MARCH 15, 2011 

Maya MacGuineas, President, The Committee for a Responsible Federal 

Budget ................................................................................................................... 8 

Virginia McMurtry, Ph.D., Specialist in American National Government, Congressional Research Service ................................................................................ 10 

Todd Tatelman, Legislative Attorney, American Law Division, Congressional 

Research Service .................................................................................................. 13 

Thomas Schatz, President, Citizens Against Government Waste ....................... 15 

ALPHABETICAL LIST OF WITNESSES

MacGuineas, Maya: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 46 

McMurtry, Virginia Ph.D.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 51 

Schatz, Thomas: 

Testimony .......................................................................................................... 15 

Prepared statement .......................................................................................... 78 

Tatelman, Todd: 

Testimony .......................................................................................................... 13 

Prepared statement .......................................................................................... 67 

APPENDIX 

Questions and responses for the Record from: 

Ms. MacGuineas ............................................................................................... 82 

Ms. McMurtry ................................................................................................... 83 

Mr. Schatz ......................................................................................................... 87 

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(1) 

ENHANCING THE PRESIDENT’S AUTHORITY 

TO ELIMINATE WASTEFUL SPENDING AND 

REDUCE THE BUDGET DEFICIT 

TUESDAY, MARCH 15, 2011 

U.S. SENATE,

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT,

GOVERNMENT INFORMATION, FEDERAL SERVICES,

AND INTERNATIONAL SECURITY,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 

Chairman of the Subcommittee, presiding. 

Present: Senators Carper, Levin, Begich, Brown and McCain. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Our hearing will come to order, not that it is 

in disorder, but our hearing will come to order. Welcome, one and 

all. Senator McCain and I are delighted that you are here. We will 

be joined by some of our colleagues. Our caucus lunch is just breaking up. We will be joined by some of our colleagues here in a little 

bit. 

But as we gather here today for this afternoon’s hearing, our Na- tion’s debt stands at $14 trillion. Ten years ago on this date, it 

stood at less than half that amount, $5.7 trillion to be precise. If 

we remain on our current course, it may double again by the end 

of this decade. 

The debt of our Federal Government held by the public as a percentage of Gross Domestic Product (GDP) has risen to 63 percent. 

That is up from 33 percent a decade ago. The last time it was this 

high was at the end of World War II. In fact, the only time it has 

ever been this high was at the end of that war. 

That level of debt was not sustainable then and it is not sustainable today. We need only ask our friends in Greece and in Ireland 

about that. The Fiscal Commission led by Erskine Bowles, former 

White House Chief of Staff under Bill Clinton, and by former Senator Alan Simpson, provided us with a roadmap out of this morass. 

We see at least one person sitting at this table today who worked 

on that, maybe more than just one. So we thank you for that. 

They provided us with a roadmap out of this morass, reducing 

the cumulative deficits for the Federal Government over the next 

decade by some $4 trillion. That roadmap offers a balanced apH605-41331-79W7 with DISTILLER

2 

proach to fixing our long-term fiscal problems, with about a third 

of the savings coming from new revenues and about two-thirds 

coming from spending reductions that would touch domestic spending, defense spending, and entitlements. 

However, if we really want to dig our way out of this mess, we 

are going to have to explore a number of innovative ideas and address the problems from all angles. Sometimes when Congress 

passes appropriations bills, a spending item or two, maybe three, 

may be included that do not make much sense. And while the majority of lawmakers, along with the Administration, may view those 

specific items as wasteful and unnecessary, there is no practical 

mechanism that enables them to single out the egregious items. 

Oftentimes, these items are contained in must-pass legislation 

that we are considering just days or hours before the end of session 

or the expiration of a continuing resolution (CR). Far too often, we 

accept a handful of spending items that are truly wasteful as the 

cost of doing business in just getting bills passed. 

A common sense way to prevent this from occurring is to modify 

the President’s ability to get Congress to consider spending cuts. 

Under current law, the President has the authority to suggest rescissions. The President has had this authority since 1974 with legislation, I think it was called, John, I think it was called the Impoundment Act. It was signed into law by, maybe by former President Nixon. 

Any time we send the President a spending bill under current 

law now, he or she can sign it and then propose that the Congress 

consider rescinding or either reducing or eliminating certain items, 

spending items, in that bill. However, Congress has no obligation 

to vote on these rescissions and, in point of fact, rarely does. 

If no action is taken within 45 days, the President releases the 

funding. The past two Presidential Administrations, I am told, 

have abandoned usage of this tool due to its ineffectiveness. My 

staff tells me that not a single rescission has been proposed in the 

last decade, which is pretty amazing if it is actually true. 

Congress did pass legislation in 1996 that aimed to increase the 

President’s rescission powers. It was called the Line Item Veto Act 

(LIVA). It permanently enabled the President to veto any spending 

or revenue measures within legislation unless both chambers 

voted, by a super-majority, to override the President’s action. 

It did not say the President—it just said the President could veto 

spending items, line items in spending bills, in appropriations bills, 

so the President could go into entitlement legislation and veto, line 

item veto, items there; and also, do the same thing with revenue 

measures. And that those vetoes, those line item vetoes within discretionary spending, entitlement programs, and in revenues would 

become law unless two-thirds of the House and two-thirds of the 

Senate voted to override those cuts. 

The Supreme Court unanimously, I think, rejected that change 

in law, in part, I presume, because they thought it was unconstitutional. If nothing else, I will tell you this, it sure was a major, 

major shift in the power between the three branches of government. 

I talked to one of my colleagues today, Senator McCain, who was 

here in 1996, and I was trying to convince him to sign as a co-sponH605-41331-79W7 with DISTILLER

3 

sor of our legislation, and I compared our legislation to a 4-year 

test drive, which really was a statutory line in the veto powers to 

the President, and I said, ‘‘Compare this to what was available in 

1996.’’ I said, ‘‘In 1996, it was like giving the President a bazooka 

to keep under his desk.’’ And then my colleague, our colleague, 

said, ‘‘Oh, in 1996 I was no good.’’ I said, ‘‘You voted for it.’’ 

And so, my hope is that some folks who voted for that who now 

think it was too extreme will look at what we are trying to do here 

and say, ‘‘This is just about right.’’ The story of the three bears, 

three little bears, too hot, too cold, just about right? My hope is 

that a lot of people say, ‘‘This might be just about right.’’ 

Well, I am not interested in a proposal like that, but I do believe 

there is a way to enhance the President’s existing authority without overstepping constitutional boundaries. Senator McCain and I 

have introduced legislation to do just that. We did this in the last 

Congress with Russ Feingold, our former colleague from Wisconsin, 

but we introduced the Reduce Unnecessary Spending Act that 

seeks to do just that, and that is to strengthen the President’s rescission powers without violating the Constitution. 

It does not change—our legislation does not change how the 

President proposes rescissions, but it does require Congress to actually vote on them in a timely manner. Our bill would provide this 

authority only through 2015, creating something akin to what I call 

a 4-year test drive, a 4-year test drive for statutory line item veto 

powers. 

This would allow the Congress to see how well or not the new 

authority works to determine whether to extend it, amend it, or 

allow it to expire after 2015. I believe that the 1996 Line Item Veto 

Act ceded far too much power to the Executive Branch, and it came 

at the expense of the Legislative Branch. Our proposal would simply update an existing budget process to give the President a targeted, effective tool that he or she can use to single out individual 

line items in appropriations bills. Our measure is not a bazooka. 

By the same token, our measure is not a BB gun. It is not a .22. 

Some might say it is the McCain-Carper rifle, and that is about 

where we need to be. Congress would still have a strong voice in 

the process and we would have to approve the President’s proposed 

rescissions, but the expedited rescission authority would help root 

out some questionable spending that makes it more difficult to 

reach our deficit reduction goals. 

I am not the only one who thinks this legislation takes the right 

approach in reducing wasteful spending. Over a third of the Senate 

has now joined Senator McCain and myself—one of them sitting 

right here beside me—and a number—actually, we will see who 

shows up for this hearing, but most of the people, I think, on this 

Subcommittee, I think a majority of people on this Subcommittee, 

have now co-sponsored our legislation. 

But we have over a third of the Senate joining us as co-sponsors. 

I think it is a balanced mix of Democrats and Republicans. In addition, the Administration is strongly supportive of the proposal and 

helped us actually craft the legislation. Sitting here, my colleagues 

may recall about a week ago, was a woman, a young woman who 

has been nominated by the President to be our Deputy Office of 

Management and Budget (OMB) Director. I believe her name is 

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4 

Heather Higginbottom. I think that is her name. And she was here 

and embraced the idea as well, even though she is just a nominee. 

But the Administration supports it. 

Now, I know, as I said earlier, there is not a silver bullet or 

magic solution, but in order to get our fiscal house in order, it is 

going to take a combination of approaches and a willingness to put 

everything on the table, entitlements, revenues, domestic discretionary spending, defense spending as well, and, frankly, a lot of 

ineffective spending. 

I like to say—I mentioned this to some of the folks in the Administration this morning. Everything that I do I know I can do better. 

I think the same is true of all of us. Part of our challenge is to figure out how do we get, from programs A to Z, how do we get better 

results for less money. That is it. How do we get better results for 

less money or how do we get better results for not a whole lot more 

money. 

An expedited rescission authority may prove to be a useful tool 

in our toolbox at a time when our Nation is rapidly approaching 

our statutory debt limit. We should seriously consider many ideas 

and implement common sense changes like the Reduce Unnecessary Spending Act. 

And now, I am not sure who I should turn to first, Senator 

Brown as the Ranking Member of this Subcommittee, or to Senator 

McCain as the lead sponsor of the bill. Senator Brown, what do you 

think? 

Senator BROWN. I am happy to have Senator McCain go before 

me. 

Senator CARPER. Are you? OK. All right. Fair enough. Senator 

McCain, you are recognized. Thanks very much. 

OPENING STATEMENT OF SENATOR MCCAIN 

Senator MCCAIN. Well, thank you, Mr. Chairman. I think you 

covered the issue very adequately. I want to thank the witnesses 

and finally, after more than 20 years of fighting this issue, maybe 

we are going to succeed. I know that Tom Schatz did not have a 

gray hair on his head when we started this, and I think Maya was 

without children. Is that right? So anyway, I want to thank the 

witnesses for—she was in grade school. 

So I want to thank the witnesses and thank you, Mr. Chairman, 

for your, really, determination, strong determination to get this 

done with me and I am very grateful. Obviously, I think it is a very 

important time. I thank you, Mr. Chairman. 

Senator CARPER. You bet. Happy to be a wing man on this one. 

If Senator Lieberman, our Chairman of our full Committee were 

here, he would probably use a biblical injunction here. He would 

probably say, ‘‘We are like Moses standing on the mountain top 

looking at the promised land. The Children of Israel marched for 

40 years until they finally found the promised land.’’ We have been 

at this, you about 20, me 19 years, and I do not want to go another 

20 years. We have to get to the promised land this year, and I 

think this actually will help us, and frankly, this will help us with 

more than just this. I think this will be helpful in us putting together a broader compromise on deficit reduction that we desperately need. All right. 

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5 

Senator Brown and then we are over here to the former Mayor 

of Anchorage, Alaska, and now our Senator from Alaska, Mark 

Begich. 

OPENING STATEMENT OF SENATOR BROWN 

Senator BROWN. Thank you, Mr. Chairman. Thank you, Senator 

McCain, for your leadership in this issue. I will make a brief statement and then I will look to Senator Begich and then obviously the 

witnesses. 

As you know, $1.6 trillion is what we face for a deficit for this 

fiscal year (FY), and it is the highest ever. When I got here it was 

$11.95 trillion national debt. It is over 14—almost over 14 and continuing to rise, as you can see by the charts here. The level of our 

spending is just—there is no end in sight, unfortunately, and it is 

out of control. It is unsustainable. I think we have all agreed on 

that. 

It is interesting, Mr. Chairman. We have had about 55 or 60 

hours of hearings—I am sorry—informal meetings, I should say, bipartisan. About 70 percent of Senators are getting together to try 

to figure out what is real and what is not, what is fact and what 

is fiction. It is the numbers. Are the numbers real or is it just kind 

of all made up? 

I think we have all agreed collectively that the numbers are real. 

It is just a question of how we get there. Do we go this way or that 

way? Do we kind of do a little bit of everything and put everything 

on the table, as you have indicated? All the leaders and other members are sounding the alarm about the looming fiscal crisis; yet, we 

have a lot of difficult decisions ahead of us as to how to get a handle on them and how to actually fix and avert a catastrophe. 

I feel and I have been public—respectful, but public about the 

fact that the President put forth a task force to come up with—the 

Debt Commission. We moved on it. We had a State of the Union 

speech; yet, we have had no real leadership in moving forward with 

what to do. It would be nice to know what his priorities are so we 

can actually move forward on them together, collectively, because 

right now, people are still hurting. They still want us to solve the 

problems. They not only want us to deal with the debt and deficit, 

they just want jobs. 

That is it, debt, deficit, taxes, jobs, spending, national security. 

That is it. While most of these challenges cannot be fixed overnight, as I said, I am hopeful that we will get some leadership on 

these very important issues so we have an idea of what can ultimately be signed, because there is only one person that can sign 

on the dotted line and have a bill be in effect and that is the President. 

I am hopeful that he will, in fact, move forward and work with 

us on this issue. So obviously, the current moratorium on earmarks 

is encouraging. Ever since it happened, the Senator to my right has 

been the happiest guy in the world. He is a totally different man. 

And it is up to the Congress to take, obviously, responsibility to 

control spending more seriously. As I said, ‘‘we cannot do it alone.’’ 

I am looking forward to continuing on with our efforts on this 

Subcommittee. I fought to get on this Subcommittee and wanted to 

do so because of your leadership and because of the issues that we 

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6 

are tackling, and obviously the Washington spending culture is 

real. It is not hard to fix, though, if we just work together to do 

it. 

I am looking forward—for example, I have a Taxpayer Receipt 

Act, which is a bipartisan bill that I have introduced with Senator 

Nelson from Florida, also, that I am hoping you will sign onto 

which basically gives people the knowledge that they need to advocate on their own behalf and on their family’s behalf as to where 

the money is going. 

Here we are, we are doing this. Well, why can we not also have 

a transparent effort to show what is going for defense, what is 

going for welfare, what is going for this. It will cost hardly any 

money. It would be something they could just reconfigure their 

computers to do so. 

The McCain-Carper bill demonstrates that common ground does 

exist for meaningful action and it needs to be taken now. I think 

we all agree on that. So I am looking forward to hearing the testimony and then working together to solve these problems. Thank 

you. 

Senator CARPER. Thanks very much and thank you for your 

strong support of this measure and for your work in these other 

areas as well. Former Mayor of the largest city in Alaska. 

Senator BEGICH. Thank you very much. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much, Mr. Chairman, and first 

I want to say, for all the reasons that Senator Brown mentioned, 

I think this Committee has a huge opportunity for oversight and 

what we can do to help the Federal Government operate in a much 

better way. 

When you first came to me, and I know, Senator McCain, this 

piece of legislation, Reduce Unnecessary Spending Act, the concept 

of it with the rescission power for the President, I have to tell you, 

I am a line item veto guy, so I like this. I know when I was Mayor, 

I would actually show up at the assembly meetings with a yellow 

folder that actually had a blank veto message that I would just fill 

in if I did not like what they were doing. 

We had a very strong form of government and it sure did get disciplined to the budget process, to be very frank with you. So when 

I heard about this legislation, not only last year did I support it, 

this year I support it. I think it is the right move. I am not a lawyer, but I know a lot of lawyers have views on this, but I think this 

is the right approach. It does not go to the level I would love, because I know there is a constitutional issue there, but it does do 

a level of engaging in some constraint by individuals in the way 

they deal with the budgets here. 

The one thing I know in the art of compromise in purveying a 

piece of legislation, I know this would expire in 2015. I would be 

one of those that would not want it to expire. It is a power. It does 

not matter if it is a Democrat or Republican White House, they 

should have the capacity to do this. So I think the work you are 

doing on this is very positive. I am supportive of it. 

The other thing I would say to Senator Brown, I think your receipt idea, I am more likely going to be signing on because I think 

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7 

it is a great idea. We did something very similar in local government where people want to just know if we spend this money in 

taxes, where does it go? Who gets it? 

And when we did that, we had an incredibly positive response 

also, Senator, as you can imagine, people would call us up and say, 

Why are we doing that? And we had to justify it. If we could not 

justify it, out it went. So it is actually a very good idea. 

So again, Mr. Chairman, I like this Committee for a lot of the 

reasons that I have just stated, but also, the oversight capacity of 

Congress has not been as aggressive as I would have hoped in their 

last 2 years and this may have a new opportunity for us. So thank 

you very much for allowing me to be here, but also to our witnesses. 

Of course, I am biased. I hope you look fondly on the piece of legislation that we are looking at, but you will have your opinions, I 

am sure, but I do think it is incredible to let needs be part of this 

equation in order for us to get some additional discipline to the 

spending habits of this Congress or any future Congress. I will 

leave it at that, Mr. Chairman. 

Senator CARPER. Thanks very much. Thank you for bringing your 

previous role as Mayor of a large city and a leader of the Nation’s 

Mayors to these issues. Thank you. 

All right. Maya MacGuineas, no stranger to most of us on this 

side of the dais, but Ms. MacGuineas comes to us from The Committee for a Responsible Federal Budget (CRFB). The Committee 

for a Responsible Federal Budget is a bipartisan, non-profit organization committed to educating the public about issues that have 

significant fiscal policy implications. 

Ms. MacGuineas is the President, the President of The Committee for a Responsible Federal Budget, and she frequently appears before congressional hearings like this, and the national 

media, to offer insights on a wide range of budgetary issues and, 

I think, played a modest, not inconsiderable role in helping to 

guide the work of the Fiscal Commission led by Erskine Bowles 

and Alan Simpson. Ms. MacGuineas, we welcome you to the hearing. We look forward to hearing your comments and to help us not 

just on this issue, but more broadly. You are probably uniquely 

qualified to do that. 

Our next witness is Dr. Virginia McMurtry—did I get that right, 

McMurtry. 

Ms. MCMURTRY. McMurtry. 

Senator CARPER. McMurtry, McMurtry.—from the Congressional 

Research Service (CRS). The Congressional Research Service is the 

only non-partisan research arm of the Legislative Branch. The Congressional Research Service strives to provide comprehensive legislative research and analysis to Members of Congress and their 

staff. They are really quite a treasure and we are grateful for all 

that you do in providing us with guidance and counsel. 

Dr. McMurtry is a Specialist in American National Government 

in the Executive Branch Operations Section of the Congressional 

Research Service. She has dedicated over 30 years to the organization. She specializes in the Federal budget and the Office of Management and Budget and relations between the President and the 

Congress. We thank you very much for joining us. 

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8 

1The prepared statement of Ms. MacGuineas appears in the appendix on page 46. 

Also from the congressional Research Service, we will be receiving testimony from Todd—I want to say Tatelman. Is that 

Tatelman? 

Mr. TATELMAN. Yes. 

Senator CARPER. Oh, good. Todd, welcome. Todd is a Legislative 

Attorney in the American Law Division at the Congressional Research Service. He specializes in congressional laws and procedures 

and constitutional law, administrative law, transportation law, and 

international law. Thanks so much for being with us today. 

Our last witness, certainly not the least, is Tom Schatz. Mr. 

Schatz, President of Citizens Against Government Waste (CAGW), 

a non-partisan organization dedicated to eliminating government 

waste and someone and whose organization we see as a real partner in this effort with us. He has been at Citizens Against Government Waste for almost 25 months. Is that right? Is it 25 months? 

Mr. SCHATZ. Years. 

Senator CARPER. Twenty-five years, since its inception, almost 

since your inception. And has testified before Congress on numerous occasions about government waste. Prior to joining Citizens 

Against Government Waste, Mr. Schatz spent 6 years as the Legislative Director for my old colleague and friend, Congressman Hamilton Fish. Thanks so much for your testimony. 

I would just say to each of our witnesses, this will not come as 

a surprise, but your entire statements will be made part of our 

record. You are welcome to summarize it as you see fit. I will ask 

you to stay pretty close to 5 minutes. If you go a little bit beyond 

that, that is OK. If you go way beyond that, we will have to rein 

you back in. 

Ms. MacGuineas, you are welcome to lead us off. Thank you so 

much for joining us. 

STATEMENT OF MAYA MACGUINEAS, PRESIDENT,1 THE 

COMMITTEE FOR A RESPONSIBLE BUDGET 

Ms. MACGUINEAS. Thank you, Chairman Carper and Members of 

the Subcommittee. It is an honor to be joining you today. Senator 

McCain, since you brought up my son, I will tell you, today is his 

7th birthday, so I invited him to come, spend the afternoon with 

me, come to the hearing, and he, of course, said, ‘‘Mom, the budget 

is so boring. Have you not fixed it yet? ’’ Which is like the attitude 

I get at home. 

Senator MCCAIN. Wise young man. 

Senator CARPER. How old is he? 

Ms. MACGUINEAS. He just turned seven. 

Senator CARPER. Maybe when he is eight. 

Ms. MACGUINEAS. Yes, exactly. Future budgeteer. 

Clearly, we face a dangerous fiscal situation and deficits and 

debt are rising as far as we can see. And under reasonable assumptions that we project, that the debt held by the public will be nearly 90 percent of the economy by the end of the decade. Interest obligations will be almost a trillion dollars and they will exceed spending on all domestic discretionary parts of the budget. 

H605-41331-79W7 with DISTILLER

9 

I doubt we would make it to that point. Markets are forwardlooking and not only is our debt too high, it is projected to escalate 

at an increasing pace as the aging of the population and health 

care costs push up spending and borrowing. At some point, we will 

be hit by a fiscal crisis as credit markets lose face in the U.S. political system’s ability to fix the problem. 

Our creditors would either abandon U.S. debt or ask for extraordinarily high interest rates. The economy would take a huge hit 

and there would be no chance for lawmakers to respond with 

thoughtful, coherent budget reforms as there is now. 

Instead, we would be in triage mode and tax rates would be 

hiked dramatically, new taxes created, critical investments abandoned, and the social safety net decimated. So the effects on businesses, seniors, and families would be devastating. 

The solution is a multi-year, comprehensive fiscal plan that tackles all areas of the budget. The sooner we enact such a plan, the 

better. We need to reform entitlements, cut spending, raise revenues through fundamental overhaul of the Tax Code. Putting a 

plan in place would—we can put a plan in place immediately and 

that would give us even more fiscal space to allow the economy to 

continue to recover. 

In addition to supporting necessary policy reforms, the Committee for a Responsible Federal Budget has long worked to find 

ways to improve the budget process and institute fiscal rules. That 

is where expedited rescission authority comes in, and we believe rescission authority can be an effective tool in promoting fiscal discipline. 

The Reduce Unnecessary Spending Act allows the President to 

identify wasteful or unnecessary spending in legislation for cancellation and would create an expedited procedure for approving or 

rejecting rescissions. It would increase accountability and transparency in the budget process while respecting the responsibilities 

of both the White House and Congress. 

In 1998, the Supreme Court found the Pure Line Item Veto to 

be unconstitutional because it shifted too much budgeting authority 

from Congress to the White House. This modified rescissions process both provides the White House with responsibility in ensuring 

that wasteful measures are not included in new spending bills, but 

it also retains the final decisionmaking power with Congress in a 

balanced and bicameral way. So as I think you suggested, Senator 

Carper, it kind of hits that Goldilocks sweet spot. 

By limiting the number of requests per bill, it is also crafted to 

be effective without being overly demanding or allowing the President to consume the legislative calendar. Currently Congress can 

too easily ignore the President’s rescissions requests. According to 

the Congressional Budget Office (CBO), only about a third of the 

Presidential rescissions made from 1976 to 2005 were approved by 

Congress, and as a result, only about $25 billion over those 30 

years have been saved through the Presidential rescission authority. 

Giving the President more of a central role could increase accountability and serve as a deterrent to members for adding low 

priority spending that is likely to be included in a rescissions packH605-41331-79W7 with DISTILLER

10 

1The prepared statement of Ms. McMurtry appears in the appendix on page 51. 

age. Furthermore, the plan would sunset in 2015, which would 

allow Congress to review its overall effectiveness. 

I believe it will be beneficial to broaden the rescissions tool to 

new mandatory spending as well as tax expenditures. So much of 

the budget is now run through the Tax Code that these so-called 

tax expenditures are, in most cases, more like spending than tax 

cuts. Not applying the same type of oversights to this side of the 

budget opens up loopholes, and I realize, though, that this may be 

more challengingly legislatively, but it is an area of the budget that 

needs to be treated with high levels of scrutiny as well. 

Strengthening the current rescissions process could help to build 

trust with the public for broader and deeper deficit reduction efforts. One of the most common misperceptions about our fiscal 

problems is that we can solve them by eliminating waste. This is 

not true. But eliminating waste should, nonetheless, be a given. 

It is harder to make an important and legitimate case that fixing 

our budget will require shared sacrifices from everyone and all 

parts of the budget when wasteful items are still stuck in spending 

bills and tax bills with depressing regularity. Bridges to nowhere 

undermine the important case that Social Security has to be 

changed, health care costs controlled, outdated programs eliminated, and tax breaks ended. 

However, the point cannot be emphasized enough that cutting 

waste is no substitute for making the difficult choices that are necessary to rein in our deficits and debt. Our situation will require 

that lawmakers keep every part of the budget open to changes. 

Passing important budget reforms should build momentum for the 

effort, not be used as an excuse to delay them. 

So, Senators Carper and McCain, I congratulate you on this important bill and your excellent line-up of bipartisan co-sponsors, 

and I hope we can move quickly forward with this idea. I think just 

to conclude, I would reinforce the point you made, Chairman Carper, which is we really have to figure out how we are going to get 

better results for less money in this new time of fiscal constraint. 

That is one of the things we need to focus on better, oversight, in 

order for us to spend our dollars more wisely. 

So thank you so much for the opportunity to come today. 

Senator CARPER. Thanks so much. Thanks not only for being 

here today and for your testimony today, thank you for fighting 

this good fight in a very informed, intellectually, bright smart way 

for years. Thank you. 

Ms. MACGUINEAS. Thank you. 

Senator CARPER. Dr. Virginia McMurtry, please proceed. 

STATEMENT OF VIRGINIA MCMURTRY,1 PH.D., SPECIALIST IN 

AMERICAN NATIONAL GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE 

Ms. MCMURTRY. Thank you, Chairman Carper. 

Senator CARPER. Make sure your microphone is on, please. 

Ms. MCMURTRY. I am sorry? 

Senator CARPER. Make sure your microphone is on. We do not 

want to miss a word. 

H605-41331-79W7 with DISTILLER

11 

Ms. MCMURTRY. OK. I think I have activated it now. 

Chairman Carper, Senator Brown, and Members of the Subcommittee, thank you for inviting me to testify today in conjunction 

with the Subcommittee’s consideration of S. 102. You asked that I 

provide some data regarding the use of rescission authority by 

Presidents since 1974. 

You also requested that I review the use of this existing rescission authority and consider whether expedited rescission authority 

for the President, as provided in S. 102 and now in H.R. 1043, 

might facilitate efforts by an Administration to curtail non-essential expenditures by the Federal Government. 

As Chairman Carper indicated, the Impoundment Control Act 

(ICA), enacted as Title X of the Congressional Budget Impoundment Control Act back in 1974, established a new framework for 

congressional notification and review of rescissions from the President. The 1974 law requires that the President inform Congress of 

any proposed rescission or permanent withholding of appropriated 

funds in a special message, and the special message must contain 

specified information on each of the designated rescission proposals. 

With regard to congressional participation, after receiving the rescission proposals from the President, the law provides that the 

funds must be made available for obligation unless both houses of 

Congress take action to approve the rescission within 45 days. 

Congress may alter the amount proposed for rescission by the 

President, either increasing or decreasing it, as well as approving 

the requested rescission in toto. In addition, independent of any 

specific request from the President, Congress may initiate rescission actions by canceling previously appropriated funds in a subsequent law. 

Based on data compiled by the Government Accountability Office 

(GAO), and I am happy that it is very similar to that cited from 

the Congressional Budget Office, between fiscal year 1974 and fiscal year 2008, Presidents requested over 1,000 rescissions under 

the ICA, totaling over $76 billion. Close to 40 percent of the proposals were approved by Congress, with slightly more than a third 

of the dollar amounts or around $25 billion enacted. 

This sum of rescissions requested by the President and subsequently enacted since 1974 exceeded $1 billion in only 4 years. 

Meanwhile, in this same period, Congress initiated close to 2,000 

rescission actions totaling over $197 billion, or nearly eight times 

the total of the Presidentially requested rescissions, which reflects 

a trend toward the increasing number of rescissions and rescinded 

funds originating in Congress. 

When reviewing this data on rescission actions since 1974, some 

have questioned whether Presidents have used the ICA—why 

Presidents have used the framework so infrequently. A variety of 

factors may be involved here such as limitations in the ICA framework allowing Congress to ignore rescission messages, to the consternation of the Executive Branch. 

At a House Budget Committee hearing last June, Dr. Jeffrey 

Liebman, testifying for the Office of Management and Budget, 

made a statement in favor of the expedited rescission bill that was 

introduced last year, and at this hearing, some members urged 

H605-41331-79W7 with DISTILLER

12 

OMB to submit rescission requests under the existing framework 

suggesting that it could at least send a useful signal to help build 

a consensus on the need to reduce spending. 

In response to a direct question as to whether the Administration 

would transmit rescission messages pursuant to the ICA, Dr. 

Liebman replied, ‘‘We are concerned that when one does it now, 

one does not get an up or down vote, and that basically, it is a 

fruitless process.’’ That view from OMB last June. 

Another consideration in assessing the effectiveness of the ICA 

since 1974, or the potential impact of expedited rescission authority 

for the President, is the so-called deterrent effect. Representative 

Paul Ryan has characterized the threat of inclusion in a Presidential rescission package as, quote, ‘‘the power of embarrassment 

in transparency.’’ 

OMB’s Acting Deputy Director referred to this potential in a 

statement last spring and said, ‘‘Knowing this expedited rescission 

procedure exists may also discourage policymakers from enacting 

such unnecessary spending in the first place.’’ 

The scope of the deterrent effect ultimately depends on political 

calculations by each Member of Congress. If lawmakers decide that 

a project is of value to their district or State and will be appreciated by their constituents, they arguably will not be deterred by 

the prospect of a President singling out their project in a rescission 

bill. 

There are other factors that may influence whether a President 

may make use of rescission authority in the ICA such as collegial 

solidarity when the Executive and Legislative Branches are controlled by the same political party, or a President’s disinclination 

to cut funding for agencies or departments under his control. Finally, a serious problem associated with rescissions is the challenge 

of coming up with agreed-upon guidelines on which to base rescission decisions. 

In conclusion, the framework established by the ICA in 1974 has 

provided the opportunity for greater accountability in reporting of 

rescissions and for increased congressional oversight and control of 

impoundment actions. Total budgetary savings of $25 billion from 

Presidential rescission requests approved by Congress since 1974 

may appear rather inconsequential, with total Federal outlays and 

annual budget deficits both in the trillions. 

Yet, any budgetary mechanism that helps restrain spending, 

even in a small way, arguably may prove useful for deficit reduction. It remains an open question whether providing the President 

with expedited rescission authority would increase the employment 

or effectiveness of the rescission tool in reducing unnecessary 

spending. 

Senator CARPER. Thanks so much, Dr. McMurtry. And Todd 

Tatelman is next. Todd, you are up. Thanks for being with us. 

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1The prepared statement of Mr. Tatelman appears in the appendix on page 67. 

STATEMENT OF TODD TATELMAN,1 LEGISLATIVE ATTORNEY, 

AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH 

SERVICE 

Mr. TATELMAN. Thank you, Mr. Chairman, Senator Brown, and 

Members of the Subcommittee. Before I start, I would like to take 

a brief second and recognize the exceptional contributions of one of 

my colleagues in the American Law Division, Todd Garvey, sitting 

behind me, who assisted me greatly in preparing today. 

Senator CARPER. Would Mr. Garvey raise his hand, please? 

Thank you. Would you raise the other hand? [Laughter.] 

Mr. TATELMAN. His assistance on the written statement was invaluable to the contribution that Congressional Research Service is 

able to make this afternoon. 

Briefly, in the remarks I will prepare here today, or deliver here 

today, the Subcommittee asked that we discuss the constitutionality and the constitutional basis for the Supreme Court’s decision in the Line Item Veto Act case, Clinton versus city of New 

York. And the Subcommittee also asked that we review S. 102, the 

Reduce Unnecessary Spending Act of 2011, and discuss its constitutional—any constitutional questions or issues that may arise. 

So really briefly, in order to do that, I have to go back over some 

of the provisions of the Line Item Veto Act of 1996, as it was enacted by Congress. That law applied to any amount of discretionary 

budget authority, item of new direct spending, or limited tax benefit. It permitted the President, by special message to the Congress, 

to cancel provisions within 5 days of their passage by the Legislative Branch. 

The rescissions or cancellations authorized by the Line Item Veto 

took effect upon receipt of that special message by either the House 

or the Senate, whichever received it first. The only way that those 

cancellations could be overcome was by passage of a disapproval 

bill by two-thirds vote, which rendered the President’s cancellation, 

quote, null and void. 

This law, when it was enacted in 1996, was immediately challenged by several members of the Senate who had voted against it. 

This first constitutional challenge was what lawyers would call a 

facial constitutional challenge. Senator Byrd and others who challenged the law claimed that it was unconstitutional basically on its 

face as written, before any president had ever attempted to exercise the authority. 

This case, Raines versus Byrd, made it all the way to the Supreme Court. However, the Supreme Court decided not to rule on 

the constitutionality of the underlying statute; instead, choosing to 

discuss the case based on the standing of the various Members of 

Congress who had brought the suit. 

In that decision, however, the Court strongly indicated that in an 

as-applied challenge, once a President had actually utilized the authority, would, in fact, be something that the Court would be interested in entertaining. 

About a year later or so, when President Clinton vetoed three 

provisions, one in the Balanced Budget Act of 1997, and two in the 

Taxpayer Relief Act of 1997, another case was brought to the 

H605-41331-79W7 with DISTILLER

14 

Court’s attention, this one making it all the way to the Supreme 

Court, by the city of New York and other affected parties who were 

the subject of those provisions that had been rescinded. 

The Supreme Court case, Clinton versus the city of New York, 

is what we would call an as-applied challenge. It was challenging 

the constitutionality of the President’s actions under the Line Item 

Veto as it was applied to those budgetary provisions that he canceled. 

The Supreme Court, in a six to three decision in Clinton versus 

city of New York, held the Line Item Veto Act unconstitutional on 

the grounds that it violated Article I, Section 7 of the Constitution, 

the bicameralism and presentment clauses. 

Essentially, the Court argued that the Line Item Veto Act violated what the Court considered to be, quote, the single, finely 

wrought, and exhaustively considered procedure, end quote, for 

adopting laws under the Constitution. Phrased another way, the 

Court believed that the actions by the President under the Line 

Item Veto Act of 1996 did not satisfy those parts of the Constitution. 

The Court noted the possibility that Presidents had to veto legislation and cited historical examples from Presidents George Washington on forward, which indicated that Presidential vetoes were 

an all or nothing proposition. In other words, Presidents had to 

veto entire pieces of legislation or sign them in their entirety into 

law. The possibility of only vetoing specific sections was something 

that the Constitution did not contemplate. 

The Court further differentiated the line item veto from the traditional veto which is provided for in Article II of the Constitution 

by noting that the traditional veto takes place before a law is 

signed by the President. Whereas, the line item veto occurs after 

the President has signed the bill into law. These combinations of 

effects led the Court to conclude that the act was unconstitutional. 

Turning to S. 102, the Reduce Unnecessary Spending Act of 

2011, as has been described by my colleagues on the panel, this 

does present somewhat of a different situation. Under the S. 102, 

the President is permitted to submit rescissions from a general 

version of what is called funding, which is defined as new budget 

authority and obligation limits except for entitlement funding. 

Here requests must be made within 45 calendar days, and the 

Congress is given the opportunity to vote up or down on whether 

or not those rescissions are to be accepted. The important part here 

is, is that unlike the Line Item Veto Act, the rescissions under S. 

102 would not take effect until after Congress has approved the 

President’s requests. Under the Line Item Veto Act, the rescissions 

took place, you will recall, upon receipt of the President’s message. 

So there was no need for Congress to act and, in fact, Congress 

could only act after the President had already made his decision. 

So it seems entirely plausible to argue that S. 102 is differentiable from the Line Item Veto Act which was held unconstitutional 

by the Court in Clinton, and here one might argue very cogently 

that S. 102 does not present the same sorts of constitutional concerns that the Line Item Veto Act did. 

H605-41331-79W7 with DISTILLER

15 

1The prepared statement of Mr. Schatz appears in the appendix on page 78. 

Again, I would thank the Chairman and Senator Brown and the 

Members of the Subcommittee for the opportunity to testify here 

this afternoon. 

Senator CARPER. Mr. Tatelman, thank you. We will close, at least 

the testimony part, with Tom Schatz. Mr. Schatz, please proceed. 

STATEMENT OF THOMAS SCHATZ,1 PRESIDENT, CITIZENS 

AGAINST GOVERNMENT WASTE 

Mr. SCHATZ. Thank you, Mr. Chairman, and Members of the 

Subcommittee, and Senator McCain for his many years of support 

for this legislation. We certainly cannot improve on CRS saying it 

is constitutional or Maya’s expertise as well, but when the, quoteunquote, unconstitutional Line Item Veto was passed in 1995, it 

passed the House by a voice vote and by 69 to 31 in the Senate. 

So there was a great deal of support back then, a Republican Congress with a Democratic President. Now we have a split Congress 

with a Democratic President and it does not really matter who is 

where. It is something that should be done. 

Given our fiscal situation, this is as good a time as any to move 

forward with this proposal. It will not eliminate the $1.6 trillion 

deficit or reduce the debt all that much, but it will help identify 

areas where the President says Congress has gone too far. 

While there is currently an earmark moratorium, there are rumblings over in the House about redefining earmarks, coming up 

with some way to continue to earmark money for either transportation or the Army Corps of Engineers (ACE) or some other areas. 

While we believe the leadership when they say they will not 

change the definition, which was proposed by Democrats in 2006 

and has been carried forward, they are still getting used to the idea 

that earmarks are not there. They are still talking about trying to 

do something that sounds like an earmark. 

Whether it is an earmark or a program or any other form of 

spending that would be subject to the rescission authority, it does 

restore at least a little bit of balance between the White House and 

Congress, which many believe was really lost under the Impoundment Act of 1974. In fact, many argue that we are in our situation 

today because of the way that this legislation was passed and 

adopted, and that the entire budget process needs to be reformed, 

as I know many Members of this Subcommittee have proposed over 

the years. 

So while the line item veto did exist, President Clinton used it 

to cancel $355 million in spending in 1998, .002 percent of that 

year’s budget. It was minuscule, but it made the point that there 

was some desire to use that particular tool. 

We agree that this is a constitutional form of the legislation. The 

prior law, the current law allows the rescissions to be ignored, nobody is using it, and this would not tilt the power over the Nation’s 

purse strings in favor of the President. It would hold both the Legislative and Executive Branches more accountable for the expenditure of our tax dollars. 

The bill would allow the President to only propose cutting discretionary and certain non-entitlement mandatory spending. I agree 

H605-41331-79W7 with DISTILLER

16 

with the gentleman from Alaska that we should allow much more 

to be done, and perhaps this will lay the groundwork for something 

stronger in the future, but it would be difficult to argue that this 

should not be done given the situation that we find ourselves in, 

and we are not just facing our own problems here. 

Unfortunately, what has happened in Japan is going to have an 

impact on our deficit and debt. Some of the money that had previously been lent to the United States will not be there anymore. 

So it will have an impact on this. We do not know what it is yet, 

but a lot of things can increase interest rates. Interest on the debt 

is going to be a massive part of our budget and something that we 

can only control by controlling how much we spend and the size of 

the deficit and debt. 

Any concern that these rescissions would give the President unlimited power is really unfounded and I am glad to see a bipartisan 

effort to move this legislation forward. The Government Accountability Office estimated in 1992 that a Presidential line item veto 

could have cut $70.7 billion in pork barrel spending for fiscal years 

1984 through 1989. That is money that would have, during that 

time, helped to reduce the deficit. 

And the expedited rescissions are not the same as a line item 

veto, but it would serve the same purpose and help restore some 

control over the budget process. And if earmarks come back, and 

they might, it would certainly allow the President to weigh parochial expenditures which benefit the few against the common good 

and the priorities of many. The American people do not like the 

way business is being done here in Washington. They are seeking 

changes and this is one change that should be very easy to move 

forward. Thank you for the opportunity to appear here today. 

Senator CARPER. Thanks so much, Tom, for your testimony 

today. Thanks a lot for all that you and Citizens Against Government Waste have been doing for 25 years. 

I noticed as this hearing has gone on and as our witnesses have 

been testifying, we have been joined by some young people sitting 

back in the back couple of rows here. You are probably wondering, 

What is going on here? I will just say to our young guests, Mark 

Begich, who just walked out of here, is a Senator from Alaska. He 

is the former Mayor of Anchorage, Alaska. I am a former Governor 

of Delaware. 

Most Governors and a lot of Mayors have what we call line item 

veto power. That is when they sign a bill into law, a spending bill 

into law, we can actually go back and see whether certain lines of 

that particular spending bill they did not like or they thought were 

inappropriate. 

And they can say, I would like to veto that provision or reduce 

the amount of spending in that provision, and then send it back to 

the legislative body and say, All right, I think this is a good bill 

that you sent us, but there is one provision or these couple of provisions make no sense, we ought to not do them, and then the legislative body, in this case the Congress, would have to vote or not. 

The President has these kinds of authorities. The President can 

sign the spending bill into law. The President can pick out from 

that spending bill that he or she signed into law and send to Senator Brown and me and the rest of the Senate and the House, a 

H605-41331-79W7 with DISTILLER

17 

list of items that he or she thinks are inappropriate, wasteful, if 

you will. 

Under current law, we do not have to vote for those. We can ignore them if we choose to, and for the most part, in the last 30- 

some years, Congress has chosen to ignore them. And it is almost 

like they go away, almost like they were written in invisible ink, 

and the Congress never has to take a stand on the proposed further reductions in spending. 

Senator Brown and I, Senator McCain, who is our co-sponsor, 

leading Republican co-sponsor of this bill, Senator Begich and I 

think that the Congress should have to vote on the President’s proposals, we call them rescissions, reducing, rescinding spending, 

think that the Congress should have to vote on that. So that is 

what we are doing here. We are running a deficit this year of about $1.5 trillion. We need 

to look at almost every corner of our budget, where we spend 

money, and try to do something about it. So for those of you who 

are wondering what is going on here, that is what is going on here. 

So welcome, we are glad you have joined us. We have a good panel 

here, so you have their backs. You have their backs. Keep an eye 

on them. Give them plenty of backup. 

Let me come to Ms. MacGuineas, we will just start with you, if 

I could. Let me just ask really the first question of each of you. 

What would you change about our proposal? If you could change 

some portion of our proposal and still believe you could get it enacted, get it through the House and through the Senate and by the 

President, if you could change something and still think you would 

have a good shot at getting it enacted, what would you change? Ms. 

MacGuineas, do you want to lead off with that? 

Ms. MACGUINEAS. Sure. Well, I had the answer until you said 

had to get enacted, because it takes a while to lay a foundation for 

things. So I think you stick with what you have and I think you 

probably are going to get this enacted. My fingers are crossed. 

What I think we need to push for is expanding this so that it 

does look at changes in entitlement programs and tax expenditures. And I think that drawing up that legislation is more complicated and I think it is politically more challenging. But particularly focusing on treating tax expenditures more like spending, 

which is really what they are, I think, holds a lot of promise. 

So I would not change a thing about the way the bill is, but I 

would extend it and expand it as soon as possible to other areas 

of the budget. 

Senator CARPER. All right. Thanks very much. Dr. McMurtry, 

you always struck me as kind of a legislative strategist. What 

would you change, if anything, and still be able to get something 

passed, enacted? 

Ms. MCMURTRY. Well, I agree with that. 

Senator CARPER. Go ahead and use your microphone, if you will. 

I know you do not want to. 

Ms. MCMURTRY. I agree with that statement—— 

Senator CARPER. Would you pull the microphone down just a little closer to your mouth, please? Thanks. There you go, perfect. 

Ms. MCMURTRY. OK. In terms of getting something passed, probably the existing package is the most practical way to proceed. But 

H605-41331-79W7 with DISTILLER

18 

I think that it would be useful, at least, to reconsider other aspects 

of what was available under the Line Item Veto Act of 1996. New 

items of direct spending were available. In other words, the President could not go in and touch an existing entitlement, but if there 

were a change that would increase the amount of the entitlement, 

that could come under the authority to send it back to Congress. 

Now, clearly, with this framework in S. 102, it would be a different framework from the LIVA in terms of it not being canceled 

and then Congress having to re-institute it, but—just in terms of 

Congress taking a second look at it. And the same thing with tax 

expenditures, or as they were called in 1996, tax benefits that were 

only useful to under a hundred recipients. 

So again, there were problems that were worked on with expansion of the coverage of the expanded rescission authority in 1996. 

I guess the one other thing that has been mentioned since then— 

I do not necessarily—I do not have an opinion on it, but that would 

be to cover tariff benefits. That has been seen in some of the recent 

bills as well, that the President could single out some of those for 

reconsideration and send it back. 

Senator CARPER. OK, thanks. Mr. Tatelman. 

Mr. TATELMAN. Well, Mr. Chairman, as merely a humble attorney and expert in constitutional law, the budget process is far beyond my area of expertise, so I would not have an opinion about 

what you could change other than to stress that you need to maintain the current structure with respect to requiring that Congress 

be the actor in order to satisfy the bicameralism and the presentment requirements. 

As long as you leave that portion of it alone, on constitutional 

grounds, you are at least different from the Line Item Veto Act and 

probably OK with at least to respect to what the Court has said 

thus far. I will defer to my colleagues on how you fix the policy side 

on the budget stuff as that is something I do not know nearly 

enough about or only know enough to be dangerous. 

Senator CARPER. OK, good. Thanks. Mr. Schatz, and then I am 

going to yield to Senator Brown. 

Mr. SCHATZ. Looking at the definition of an earmark, it includes 

appropriations authorizations and tax expenditures or tax—tariffs 

and taxes, as I understand it, tax expenditures. So I think you 

have to cover these tax expenditures. They are very targeted. They 

are objectionable, in many cases. 

Dr. McMurtry mentioned that under a hundred people could be 

benefiting. There is a lot more that could be covered. I do not know 

if that particular provision would increase any opposition, but there 

might be a way to tie it to the earmark definition to say the President would not even be able to rescind anything that we define as 

an earmark. So I think that is worth looking at. 

Senator CARPER. Good. Thanks very much. I will come back for 

a second round. Senator Brown, you are on and I am going to slip 

out. We have some folks, I think, from the Dover Air Force Base, 

out in the anteroom. I have to go spend a few minutes with them 

and then I will be back. In the meantime, pass as much legislation 

as you want to. 

Senator BROWN. Well, thank you, Mr. Chairman. 

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19 

In Dr. McMurtry’s testimony, she concludes that if you add up 

all the rescissions since fiscal year 1974, including both Presidential and congressional, that the amounts appear modest compared to the total Federal outlay, topping $3.5 trillion in fiscal year 

2008. Dr. McMurtry posed a similar question in her testimony, but 

I will ask everyone, why have the Presidents employed—why have 

the Presidents employed the original ICA framework so infrequently, do you think? Do you want to take a shot? 

Mr. SCHATZ. Well, I think because of the process that currently 

exists. They come here, the President might be taking some risk in 

identifying these proposals, and he knows that nothing will happen. So if you are sending something that is not going to go anywhere, I believe the view is that it is just not worth doing. 

In a sense, a better question is, why is it taking Congress so 

long, since 1996, to come up with something that is getting this 

kind of support? Because I think that could—— 

Senator BROWN. Well, I think it is obvious, because right now we 

have never been in this fiscal mess to the point where we are right 

now and everything is on the table, and sometimes it takes something like this to push people forward in a bicameral, bipartisan 

manner, to do just that. 

Mr. SCHATZ. Well, it would be better if we were proactive instead 

of reactive. 

Senator BROWN. I do not disagree with that at all. I am up beating that drum regularly. But we are here, fortunately, and I am 

hopeful that it will continue to move forward. I did not mean to interrupt. 

Mr. SCHATZ. No, that is fine. I am just making the point that I 

think it is something that they viewed as fruitless and therefore 

did not bother with. There is enough going on with the budget generally that this required an additional amount of work and they, 

I imagine, did not see it as something that would be helpful to 

them. 

Senator BROWN. Anyone else have any thoughts at all? Maya. 

Ms. MACGUINEAS. Sure. I mean, I think basically the point is, 

they did not do it very much because they thought it was not going 

to work, and now you have the reverse, assuming you pass this legislation, which means people are going to be less inclined to slip 

things into bills now because it is not going to work. 

It is not going to be as effective as it was before, which actually 

can serve to magnify the overall effect of this, which is, you will 

be able to remove unnecessary and wasteful pieces of legislation, 

but you will also be able to create an effective deterrent, which we 

have not had before because people know that these will be identified, publicly so. Hopefully there will be some shame factor in it. 

So I think that the effect can actually be larger just because of that 

deterrent factor. 

Senator BROWN. So I know that President Bush did not use it at 

all and President Clinton, over 5 years, only used it sparingly, saving about $600 million over a 5-year period. Do you think this is 

more of a result of the limitations in the original framework or a 

lack of political will? 

Mr. SCHATZ. Again, I think it is the framework. Clearly there 

was a desire to reduce the deficit all along so it would not grow 

H605-41331-79W7 with DISTILLER

20 

quite as large as it is now, and given the current situation, given 

the new legislation, I would expect that there would be more use 

of it. The President has said he wants it, and I think more vocally 

than, I think, has been said recently. 

Looking at the way the Congress is concerned about spending, 

this is something that should move fairly quickly because it is 

probably one of the least controversial aspects of deciding what to 

do about the budget. 

Senator BROWN. I noticed there seems to be a consensus based, 

Todd, on your commentary about the constitutionality of it, that it 

would survive constitutional muster based on the way it is being 

presented. It seems to be the challenges would be more from the 

political side of the house, obviously, versus the constitutional. Is 

that a fair assessment? 

Mr. TATELMAN. At least based on what we know the Supreme 

Court has said so far. I mean, again, we can only use precedent to 

give us a guideline. In this case, I think, as I testified to and as 

the written statement indicates, the bill that is currently before the 

Senate and a companion piece before the House, are distinguishable from what has come before. 

But the Court has never actually passed on an expedited rescission procedure like this. There are other—all that we can say is 

there are certainly other examples of legislative fast-tracking, as it 

is sometimes referred to, or expedited procedures that are out 

there. And to my knowledge, Senator, none of them have been held 

to be unconstitutional. So based on that precedent, I would tend to 

agree at this point. 

Senator BROWN. And, Dr. McMurtry, particularly with the first 

Bush Administration, you mentioned in your testimony that the 

use of rescissions became a controversial and highly partisan political issue to the extent not seen since Nixon. Why do you think it 

was such—and obviously, I was not around here then and I am still 

somewhat new. Why do you think it was such a contentious issue, 

and do you think these issues are still relevant today? 

Ms. MCMURTRY. Well, I think part of it was—— 

Senator BROWN. Turn on your microphone again. We are testing 

you today. 

Ms. MCMURTRY. Yes, you are. 

I think part of it was the fact that in 1992, it was a Presidential 

election year and that President Bush wanted to try and establish 

a record of trying to save Federal moneys. So it began at the beginning of the year, and there were just a series of these rescission 

requests that were sent to Congress, and eventually, the House and 

Senate Appropriations Committees came up with an alternate proposal. 

I believe the President’s total rescission in all the different requests totaled $7 billion, and the congressional plan that got approved was $800 billion—I mean, $8 billion, another billion more. 

And yet, they had taken things that they considered as examples 

that the Executive Branch was being wasteful. 

I think this whole issue of guidelines or any kind of objective criteria to try and use in determining whether a given expenditure is 

wasteful or necessary is an issue that may be addressed in time. 

I know there was discussion at the House Budget Committee hearH605-41331-79W7 with DISTILLER

21 

ing in June 2010 in terms of things that the White House considered unnecessary, not necessarily just one member with an earmark, but a contingent of Members of Congress might consider as 

essential and not unnecessary. 

Senator BROWN. And for Ms. MacGuineas and Dr. McMurtry 

again, a witness in a previous Subcommittee hearing in 2009 commented that expedited rescission authority is sometimes sold as a 

deficit reduction tool, and if that is how you sell it, it is easy to 

dismiss it. Would you both agree with that statement? 

Ms. MACGUINEAS. I think it is one of the tools in the toolbox that 

is necessary here. I think in terms of deficit reduction, we obviously 

are at the point where we are going to need to do as much as possible as quickly as possible, and that is why I emphasize the need 

for a broad-based, multi-year fiscal plan, and none of us should fool 

ourselves into thinking that any process changes any fiscal rules 

are going to make that task accomplished on its own. 

That said, there is still a lot of mistrust about how funds are 

spent, and any steps that we can take quickly that do not divert 

attention from an overall package of fiscal reforms, but can improve the budget process, can improve the oversight, can improve 

the transparency, and can improve our ability to generate savings, 

are very important trust builders with the public. 

We are soon going to have to turn to the entire public and say, 

We need everybody to sacrifice in order to get a fiscal package 

done. We are going to have to look at entitlements. We are going 

to have to look at defense. We are going to have to look at domestic 

discretionary spending, and we are going to have to look at tax reform. 

And in order to do that, you need to be able to say to the public, 

And we are doing everything possible to make sure that your 

money is well spent. So that is what I look at this as, as a very 

useful and credible piece of building trust. But what it should not 

do is stop the momentum for the broader fiscal reforms that we 

need to turn our attention to as quickly as possible. 

Senator BROWN. I am just going to ask one more question and 

then I will turn it over to Senator Levin. In the earlier testimony 

you were talking about tax issues also should be looked at as a 

form of an earmark. I think, Mr. Schatz, you said that. Could you 

just explain that to me a little bit more? I do not think I have ever 

heard that because the folks that I work with and speak to, whether they are working down at the local market or they are heads of 

businesses, they say, ‘‘You know what? ’’ It is really the people’s 

money. It is not the government’s money. And we give it to the government for a certain type of usage and sometimes we are happy 

and sometimes we are not. So how do you figure it out as an earmark? 

Mr. SCHATZ. Well, it is the definition that was originally passed 

in House Resolution 6 in 2007. It is in Section 404 and I do not 

have it memorized, but I know—— 

Senator BROWN. So you are referring to institutional knowledge? 

Mr. SCHATZ. Correct. 

Senator BROWN. OK. I was just wondering. 

Mr. SCHATZ. Right. The definition of earmark—— 

Senator BROWN. I have heard that as well. 

H605-41331-79W7 with DISTILLER

22 

Mr. SCHATZ [continuing]. Right, that the Senate and the House 

are using. 

Senator BROWN. I thought I was missing something. 

Mr. SCHATZ. Oh, no, no. I am all in favor of letting people keep 

their money. 

Senator BROWN. No, no problem. Thank you very much. 

Mr. Chairman, I think Senator Levin. 

Senator CARPER. Senator Levin, glad to see you. Please jump 

right in here. Thank you. 

Senator LEVIN. One of the things which we have to worry about 

is giving some people the money which other people should be paying to the Treasury. In other words, if you have a tax expenditure, 

there are tax loopholes. There are all kinds of tax loopholes in this 

tax law of ours that gives special benefits to special interest groups 

that are able to get a tax loophole for themselves. That is called 

a tax expenditure, like any other. 

I do not know whether you want to put your imprimatur on 

every single one of those loopholes, but I sure would not. It is the 

people’s money, but I sure as heck do not want to provide an incentive to people who move their businesses offshore and create a tax 

loophole so that the cost of doing that is deductible now, but the 

income that they make offshore is not taxable until later on. 

I consider that to be a tax expenditure that I do not favor, but 

it is an expenditure. It is something which we ought to get to. And 

I was kind of interested in, actually, I think it was your testimony, 

Mr. Tatelman, that we ought to consider including tax expenditures in the rescission power that the President would be given 

here. Is that true? Was it you who said that? 

Mr. TATELMAN. Not me, Mr. Levin. 

Senator LEVIN. No, I am sorry. It was Ms. MacGuineas. 

Ms. MACGUINEAS. Yes, I did say that. Tax expenditures, I mean, 

if you look at tax expenditures, where they have grown since 1986 

reforms, we now are facing over one trillion dollars in lost revenue 

to the Federal Government a year because of these tax expenditures. And I think they do not fit the test of good tax policy more 

often than not. 

So when they are created, they do not get the same kind of scrutiny that a normal government program would. They do not receive 

the same kind of oversight once they are in place. They are generally quite regressive. And they are very poorly targeted. So if you 

look at one of the best places to start looking at functional budget 

reforms, it is going to this whole tax expenditure budget, which is 

basically this trillion-dollar-plus shadow budget. 

So I think one of the keys, in thinking about budget process and 

rules and reforms, is treating that piece of the budget the same 

way that we do as spending as often as possible. 

Senator LEVIN. We sure are not doing it right now—— 

Ms. MACGUINEAS. No, we are not. 

Senator LEVIN [continuing]. As we are looking at discretionary 

spending cuts. We are not even looking at tax expenditures, which 

I happen to agree with you, in many cases are inappropriately lost 

revenue, just as much as some of the expenditures are, but they 

are not included in this rescission authority. Is that correct? 

H605-41331-79W7 with DISTILLER

23 

Ms. MACGUINEAS. That is correct and we said that they should 

be, but we also acknowledge that legislatively it is much more difficult to craft. So we were making the point as well that it is important to go forward with this and try to expand it wherever possible. 

Tax expenditures present their own problems in all sorts of different budget process reforms. But we always think that they 

should be included wherever possible. Agreed. 

Mr. SCHATZ. Mr. Levin, if I may? 

Senator LEVIN. Yes. 

Mr. SCHATZ. Because when—the question I was answering was 

in regard to expanding the definition. What I was talking about is 

the current definition of an earmark, which includes some of these 

tax issues and tariff issues, but not all of them. 

So I thought that would be a good place to start because people 

were asking—the Chairman was asking, what else would you include. And while we think this legislation should move quickly and 

perhaps be expanded later, this was at least something else that 

could be considered. It would be consistent with what Congress has 

already agreed to. 

Senator LEVIN. Which is that tax expenditures are included in 

the earmark definition in our rules. Is that correct? 

Mr. SCHATZ. Yes, correct. 

Senator LEVIN. But all the focus these days is on discretionary 

spending. It is not on tax expenditures. It is not on revenues. It is 

just on discretionary spending, even though—what was your number? One point what trillion? 

Ms. MACGUINEAS. 1.5 trillion. 

Senator LEVIN. Lost in tax expenditures, some of which are just 

as abusive, as far as I am concerned, even more so than some of 

the expenditures that are made under the discretionary domestic 

rubric or any other discretionary rubric, for that matter. 

Would you say, Mr. Tatelman, that an enhanced rescission authority would be added power for the Executive Branch? 

Mr. TATELMAN. No, I do not know that I would say that it is an 

added power considering that the President already has the ability, 

under the Impoundment Control Act, to make the rescissions to 

Congress, and he already has the constitutional authority to make 

any—to recommend legislation in almost any form that he wants, 

that he deems necessary and appropriate. So I do not know that 

I would consider it an added power. I think that the—— 

Senator LEVIN. It is enhanced. 

Mr. TATELMAN. Yes, I believe that there is a more accurate way 

of saying it. 

Senator LEVIN. Would you say that this enhances the authority 

of the Executive Branch? 

Mr. TATELMAN. No, I do not know that I would say that either. 

Senator LEVIN. Like its title says? 

Mr. TATELMAN. I think that it enhances the likelihood that the 

Congress will—— 

Senator CARPER. Are you suggsting—are you suggesting that 

there is a problem with truth in advertising here? 

Senator LEVIN. No, I would not do that, no. 

Senator CARPER. All right. 

H605-41331-79W7 with DISTILLER

24 

Mr. TATELMAN. Senator, I think it would enhance the President’s 

faith in the Legislative Branch to take on his requests. Even if they 

did not enact them, I think the knowledge that the President would 

gain—that it would get an up or down vote or get consideration by 

the Legislative Branch, the argument would be that would spur 

him to make more requests than Presidents have currently been 

doing. 

Senator LEVIN. I think Senator Brown made reference to the requests for rescissions made by—I assume that was the first President Bush? 

Ms. MCMURTRY. Correct. We were talking about 1992, in particular. 

Senator LEVIN. 1992. And I noticed that the more recent President Bush did not even ask for rescissions, according to the CRS 

report. Is that right? 

Ms. MCMURTRY. President George W. Bush did not ask for any 

rescission requests under the framework of the Impoundment Control Act. However, in a rather curious move, there was forwarded 

to the agencies a package of cancellations, which the President said 

were distinct from rescissions, and they were simply identifying 

unspent balances in accounts that had been around for awhile. 

But ultimately, there was an exchange between OMB and the 

Government Accountability Office, which is kind of the policeman 

for the Impoundment Control Act, to make sure that things are 

going according to the rules. And GAO said, You may be calling 

these cancellations, but they amount to rescissions because the 

agencies were withholding money in anticipation that there were 

going to be cancellations. 

So that is the long way around, but if you consider those cancellations as otherwise named rescission requests, then there have 

been some in the last decade. 

Senator LEVIN. What happened to them? Did President Bush 

honor the GAO decision? 

Ms. MCMURTRY. Right. And OMB issued a clarifying memorandum to the agency saying, Oh, we did not mean that you were 

to withhold money, no, no, no, they are not rescissions. And so, 

after that, there was no confusion. After that, in fact, there was not 

any more mention of cancellations, that I recall. 

Senator LEVIN. And were there any requests for rescissions to 

Congress from President Bush? 

Ms. MCMURTRY. No. 

Senator LEVIN. According to your chart here, there were none. 

Ms. MCMURTRY. No, there were not any under the Impoundment 

Control Act. I was just saying this little cancellations episode was 

kind of an interesting footnote. 

Senator LEVIN. I think he was the first President on your list 

here that never requested a rescission from Congress, right? 

Ms. MCMURTRY. That is correct. President Obama has also not— 

did not make any rescissions requests in the first 2 years. 

Senator LEVIN. Yes, right. But so far, President Bush is the only 

one except for President Obama, who is still in his first term—— 

Ms. MCMURTRY. That is correct. 

Senator LEVIN [continuing]. Who has not requested a rescission. 

Ms. MCMURTRY. That is correct. 

H605-41331-79W7 with DISTILLER

25 

Senator LEVIN. And Congress, as I understand your numbers, 

has rescinded more money than all the Presidents put together 

during the same years as your study; is that correct? 

Ms. MCMURTRY. Oh, yes, considerably more. The congressionally 

initiated rescissions are several times the total of the Presidential 

requests that were enacted. 

Senator LEVIN. My time is up. Thank you. 

Senator CARPER. Senator Levin, good questions, very good questions. Senator Begich, please. 

Senator BEGICH. Thank you very much. I have just a couple 

questions, but first, again, I just want to echo my support for the 

legislation, and actually, your comments on the tax expenditures— 

I have only been here 2 years, but as I look at all the budgets, that 

is a significant portion of what we do. Discretionary is like, you 

know, it is a sliver of everything, and then you add the mandatory 

and that is another big chunk. 

Do you think there is a legal framework that, at some time, we 

could figure out how to get down that path, I guess is the question? 

I do not know if you want to—I am not a lawyer, so my view in 

life is as a former Mayor. With or without this law, if I did not like 

the program, I think it was wasteful, I probably would not have 

spent the money and let my assembly fight me. The reality is, executive power is much more stronger than legislative power, at the 

end of the day, is my own personal view. So I would have a different approach. 

But could there be something crafted that could get down this 

path on tax expenditures? 

Ms. MACGUINEAS. Well, I certainly will not weigh in on the legalities of doing that—— 

Senator BEGICH. OK. 

Ms. MACGUINEAS [continuing]. Because I am ill-suited to do that. 

Senator BEGICH. That is fair. 

Ms. MACGUINEAS. But without question, first off, right now, tax 

expenditures are one of the most important areas in the budget for 

the overall need to reform the fiscal situation that we have to look 

at. If you look at budget concepts, which is something that we have 

not, as a country, kind of overhauled in decades, but it is basically 

how we think about a lot of these concepts, tax expenditures are 

so similar to spending in so many ways, far more than they are tax 

cuts. And that is probably why they are so popular and so much 

easier to do legislation, which is a tax cut that also achieves a goal 

than it is to actually cut spending or to have broad-based tax reductions. 

But if we were to reframe these and look at them as spending 

programs, which in many ways they are—— 

Senator BEGICH. They are. 

Ms. MACGUINEAS [continuing]. They are much more closely related to spending programs, then it is much easier to apply the 

same levels. In fact, on spending programs as well, we need to increase the levels of oversight, evaluation, rules, kind of capping the 

growth of things. 

When we talk about spending caps, tax expenditures need to be 

a part of that discussion as well. So I think the objective here is 

to shine the light on this huge trillion-dollar piece of the budget 

H605-41331-79W7 with DISTILLER

26 

that has basically been going under the radar and saying we need 

to treat it as close to spending as possible, sort of legal challenges 

aside, and figure out how, in terms of budgeting, to recognize them 

for what they are, which is really spending through the Tax Code. 

Senator BEGICH. Very good. On a separate subject, and this is 

really—is it Schatz? Is that right? 

Mr. SCHATZ. Schatz. 

Senator BEGICH. Schatz. If I could ask you this question, there 

is a piece of legislation that Senator Coburn and I introduced on 

what we call orphan earmarks, earmarks that are 9 years or older 

and less than 10 percent of it has been expended and you get a 

year to figure it out. If not, it is sucked back in or rescinded back 

in. 

Has your organization looked at that and taken any thought on 

that at this point? The only reason I am taking advantage of this 

moment is because you happen to be here, I happen to be here, and 

here we are. 

Mr. SCHATZ. Did you or Senator Coburn offer an amendment on 

this, as I recall—— 

Senator BEGICH. We had legislation and we tagged it onto the 

FAA bill on the Full Overall Government—— 

Mr. SCHATZ. Right. And you got about 30-something votes on 

that? 

Senator BEGICH. No, it actually passed. 

Mr. SCHATZ. Oh, it passed? 

Senator BEGICH. It was actually—we got it unanimous consent. 

Mr. SCHATZ. Oh, then that surprises me. 

Senator BEGICH. How is that for—— 

Mr. SCHATZ. I thought it was interesting that members would 

even object to turning over earmarks that would never be spent, especially since there is now a moratorium, and obviously it is money 

that, again, should be easy to get back—— 

Senator BEGICH. Right. 

Mr. SCHATZ [continuing]. Out of the system. And certainly, I 

would imagine that most taxpayers would be surprised that money 

sits around for 3, 4, 5, 6, 7, 8, 9 years and never gets spent. 

Senator BEGICH. Ten, twenty. 

Mr. SCHATZ. Especially under these circumstances, there is a 

moratorium on earmarks at all being requested or being included 

in legislation. The President has said he would veto bills with earmarks, so yes, it makes a lot of sense to get this money back. And 

hopefully, you will find even more than you have already found. 

Senator BEGICH. I think so. Well, obviously, as you guys look at 

legislation, please look at that. I would only say now, Senator 

Coburn and I disagree on the earmark concept. I am a supporter 

of earmarks. I think legislative power is—part of what we do is 

represent our constituency and it does not add, it rearranges the 

deck of resources, not adds to the requirements of the Federal Government. 

But that is another debate at another time. But I think this was 

the right public policy. As I did as Mayor, we cleared the books 

many times of stuff that was old, so we thought this was a good 

approach. 

H605-41331-79W7 with DISTILLER

27 

Let me ask, again in general back on the legislation in front of 

us, one, it is bipartisan which I think is a huge statement on that. 

For those that make the claim that this is just kind of a back-door 

line item veto attempt, even though to be very frank, as I said earlier, I would be all fine with line item because it keeps legislative 

bodies in check and there is a process to override it, which I can 

tell you, I only exercised it once when I was Mayor, but when I was 

on the assembly, we had a Mayor that did about 40 vetoes a year, 

we averaged about. We overrode probably 85 percent of them. So 

it is a process. 

So how do you, those that are supportive of this type of legislation, how do you respond to that when people say, This is just another line item veto and we will have the same constitutional problems? Anyone want to—— 

Mr. SCHATZ. Well, I would certainly leave that up to CRS, but 

I mentioned earlier that the Senate approved the prior version 69 

to 31 and the House approved it by voice vote, so they approved 

something that was much stronger when the deficit was much 

lower. 

I think that this is certainly something that has met all of those 

constitutional parameters and should be a lot easier to get through 

this time. But as I said, CRS has said this; a lot of the attorneys 

outside of Congress have said that. It meets those qualifications 

now. 

Senator BEGICH. Go ahead, Todd. 

Mr. TATELMAN. Well, Senator, I mean, I think that one has to 

distinguish between the strict sort of formalist constitutional debate that was had over the Line Item Veto Act versus one who 

might take a more sort of practical or political view of the relationship between executive and legislative powers. 

I think if you can confine the constitutional discussion to that 

sort of formalism that the Court used in-—or the majority of the 

Court used in the 1997 Line Item Veto decision, I think you will 

reach the same conclusion that I did, which is that this bill and 

others like it are, at least, distinguishable and operate differently 

than the Line Item Veto Act did, and those differences seem to 

meet the Court’s criteria for what would pass constitutional muster. 

I think those that are looking at it more from what we would call 

a functional standpoint or purely the political interplay between 

the branches might come to the conclusion or might make the argument that suggests that you have sort of shifted some power away 

from the Legislature toward the Executive and that, in some ways, 

is either too much or potentially offensive or subject to abuse, 

whatever line they choose to take. 

I mean, it becomes a question of degrees at that point. There is 

no doubt you are moving some powers, is this too much, too little, 

or just the right amount, as the Chairman indicated in his opening. 

I think that is a debatable proposition. 

Senator BEGICH. Let me ask you, because my time is up, as an 

Attorney, what is your confidence level on the way this is drafted 

now, that it will withstand constitutional challenge? 

Mr. TATELMAN. If the constitutional challenge is similar to—in 

other words, on the similar basis that it was brought in 1997, I 

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think the likelihood is fairly good that this would withstand constitutional challenge. There are, however, potential other questions 

that might get raised that the Court did not address because it did 

not have to in 1997. 

Senator BEGICH. Sure. 

Mr. TATELMAN. And for those, of course, I do not know what the 

outcome would be. But I think, again, if we can take it to a similar 

constitutional challenge on Article I, Section 7 grounds on 

bicamerals and presentment issues, I think the likelihood is that 

this would withstand those challenges. Others, I do not know. 

Senator BEGICH. Very good. Thank you very much, Mr. Chairman. 

Senator CARPER. Good questions. Thank you, Senator, thanks 

very much. 

Let me raise a couple of practical examples, if I could. We are 

joined by the Chairman of the Armed Services Committee, Senator 

Levin, who has forgotten more about defense spending that most 

of us will know. He has led the fight to try to make sure we spend 

our tax dollars in a more cost-effective way in the way we buy 

weapons systems. 

We have had hearings in this Subcommittee that were—GAO 

has come and testified that earlier this last decade, our major cost 

overruns for major weapons system was almost $300 billion per 

year. One of the weapons systems that we ended up having a debate on—I am sure the Chairman will remember—a year or so ago 

was the F–22, where the F–22—the Administration was not asking 

for more F–22s. 

As it turns out, the cost of the F–22—Mr. Chairman, do you recall what the cost per item for an F–22 is? It is about $200 million. 

It is roughly $200 million, I think. And the cost per flight hour for 

flying an F–22 is about $45,000. I am an old Navy P–3 mission 

commander. I think the cost per flight hour of a Navy P–3 13-man 

aircraft, four engines, I think it was about maybe $10,000. F–22 

$45,000 per flight hour. 

At any given point in time, the mission capable rate for the F– 

22 was about 55 percent. So that means that if you had a hundred 

of them, only 55 of them could actually fly the mission. If you look 

at the work we have done with F–22s in Iraq or Afghanistan, the 

number of missions they have flown, sorties they have flown in 

Iraq is zero. The number of missions they have flown in Afghanistan, zero. 

And yet, we had a lot of folks who wanted to keep buying them. 

Really, in a down economy it was almost like a jobs machine. We 

finally, with the leadership of this man to my left and Senator 

McCain and this President, we basically pulled the plug on the F– 

22. 

A similar kind of situation with the C–17, although the C–17 

cargo aircraft, not a maligned aircraft, actually an aircraft that 

gives a great mission capable rate, does the job that we need, we 

just have too many of them. It is made in about 45 States, and 

while the last President, last Secretary of Defense, current President, current Secretary of Defense said, We have enough C–17s. 

Thank you. We do not need anymore. 

H605-41331-79W7 with DISTILLER

29 

Why don’t we modernize those C–5s that are bigger, carry more, 

fly further, cost about half as much to modernize. Modernizing two 

or three C–5s, we can get—they fly twice as far, carry twice as 

much as a C–17, and it will be good for another 30 or 40 years. 

So the last President, this President, current Secretary of Defense 

said, ‘‘Why don’t we stop buying more C–17s? ’’ 

Let me just ask, in those situations, how would a President, exercise his or her discretion under this rescission legislation to be able 

to stop buying more C–17s, stop buying more F–22s? How might 

it work? Anyone? Because I thought we had a tough time. I was 

not killing those programs, but stopping those programs. Had a 

tough time. How might they have been addressed if the President 

had this kind of authority and the Congress was required to vote 

on it? Anybody? 

Mr. SCHATZ. Well, the way the legislation reads is the President 

can only propose changing spending levels, so I do not believe he 

can eliminate the entire program. But he might be able to say, If 

you want to spend $20 billion on a particular defense project—— 

Senator CARPER. Weapons system. 

Mr. SCHATZ [continuing]. Weapons system, we can drop it to $15 

billion. I believe that is the accurate way of describing the—— 

Senator CARPER. Or in the case of the F–22 to take it to zero and 

then the Congress would have to vote, as I understand it. We 

would have to vote. 

Mr. SCHATZ. Right. 

Senator CARPER. And we could say yes or no. And if 51 Senators 

said no, then basically the money is restored. Is not that the way 

it would work? Yes, I think it is. Everybody seems to say yes. 

Mr. SCHATZ. Yes. 

Senator CARPER. OK, good. Could we talk a little bit about—and 

it has been an interesting discussion here, Senator Levin. For the 

most part, the witnesses have said they think this would be constitutional, what we have proposed would be constitutional. They 

think it would be helpful. It does not go nearly as far as the 1996 

legislation, which I think you, along with Senator Byrd and others, 

challenged whether it was unconstitutional. 

But the witnesses seem to believe it would be constitutional, that 

it would be helpful. They also said it would be, I think, helpful to 

see how it works and let us get some experience under our belts 

and if it makes sense to look at tax expenditures later on or maybe 

to look at other kinds of spending later on, then maybe we should 

do that. But first, let us see if we can get this passed, see if it 

works. I tend to agree with that. 

One of the ideas behind this legislation, I think, is to—it deals 

with mandatory spending, mandatory spending. Can any of our 

witnesses give us some practical examples of how this legislation 

might address or affect mandatory spending? Can anybody just 

think of something, have some good concrete examples that come 

to mind, anybody? 

Ms. MCMURTRY. I think—— 

Senator CARPER. Go ahead and make sure your—you can just 

leave that on, if you want. 

Ms. MCMURTRY. OK. I think that in the section by section that 

OMB submitted along with the draft legislation last year, this was 

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mentioned in passing, but no examples were given in terms of 

being non entitlement direct spending, which would be provided in 

other than appropriations acts. But I have not been able to come 

up with a particular example. They must exist or OMB would not 

have used that language. 

Senator CARPER. All right. I am going to ask you all to answer 

that question for the record, if you would, just whenever we send 

you some questions in writing. Mr. Schatz, you want to say something? 

Mr. SCHATZ. I would agree. I cannot think of anything off the top 

of my head. 

Senator CARPER. All right. We would like for you to do that—— 

Mr. SCHATZ. They have all been in this a long time. 

Senator CARPER [continuing]. For the record. The other thing I 

want to say, I had an interesting conversation with some folks over 

at the White House this morning and saying to them, We need for 

the White House, the Executive Branch, to provide stronger leadership on long-term deficit reduction. We do not expect them to be 

involved up to their eyeballs in this 3-week CR stuff, continuing 

resolution stuff. But certainly for the continuing resolution for the 

balance of the fiscal year and then a multi-year deficit reduction 

plan, we certainly expect them to be fully engaged with us and I 

think they are going to be. 

But one of the things that we talked about today was entitlement 

spending, and a lot of people say, Well, so much of the budget is 

really not—is uncontrollable. We actually cannot affect it because 

it is entitlements that some of the people are entitled to. 

But even in an entitlement setting, we had a hearing here last 

week that Senator Levin and I have talked a little bit about, and 

the issue was an entitlement program for people that serve on active duty in our armed forces. I popped out here just a minute ago 

when Senator Levin was coming into the hearing room. I had about 

six or seven Air Force folks, officers and enlisted, out in the hall 

from Dover Air Force Base. 

We have Dover Air Force Base active duty and reserve folks who 

participate in a program called Tuition Assistance Payment (TAP). 

Senator Levin knows a lot about that. But if you happen to be at 

Dover or anyplace in Michigan or any other active duty base 

around the country, they can sign up for college credits, college 

courses, off base at a local college or university, on base where a 

college or university actually offers the courses on base, or they can 

sign up for distance learning courses that could be offered by a 

local college or university, or by a college or university on the other 

side of the country. 

We are just trying to drill down on that program to see if we are 

getting our money’s worth, taxpayer money’s worth. A lot of these 

programs, about 90 percent of the money—and the way it works is, 

let us say we are all on active duty someplace. We sign up for college courses. The way it works, we have to pass the course, but if 

we do, we get, for every credit hour, we get $250 reimbursement 

to us that we pay for out of our pockets. 

So for a 3-hour course, you get $750. In the course of a year, I 

think you can get up to, I want to say, about $2,500 in money back 

for the courses that our active duty personnel have taken. 

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Too many cases and it is not just for-profits. For-profits get the 

biggest tip for this, but it can be non-profits, public colleges and 

universities. It can be private colleges and universities. Where a lot 

of times folks who should not, frankly, are not prepared to take college level courses, are sort of signed up, recruited to be in those 

programs. 

They do not get the kind of support they need in terms of mentoring, tutoring. They basically are set up for failure and they do. 

It reminds me a little bit of sub prime lending where a lot of people 

were sucked into buying homes that they could not afford, they did 

not have the ability to pay for, frankly, to maintain. It is actually 

very, very similar. 

I have said this to Senator Levin and I am going to kind of kick 

this out to our panel. What I said to Senator Levin, we have our 

incentives in a number of our entitlement programs that deal with 

tuition assistance. Really important stuff, tuition assistance, trying 

to improve the credentials of our workforce, strengthen our workforce in this country. 

But incentives are set up not to incentivize colleges and universities, whether they are for-profit, whether they are distance learning, or local. The incentives do not really incentivize those institutions to make sure that people are prepared that are being recruited into those programs, to make sure that they get the—the 

students get the help they need, and to make sure that we 

incentivize colleges and universities for quality, not for quantity. 

So that is—people say to me, Well, we cannot do anything about 

those entitlement programs. Yes, we can. We had a hearing here 

last week where we had—we looked at improper payments. For 

last year, the Administration says, Improper payments all in, not 

including Medicare Parts C and D, maybe not including Department of Defense, improper payments, about $125 billion. 

We had a guy here from the Department of Justice (DOJ) who 

said, Well, Eric Holder, the Attorney General, says that fraud on 

top of that in Medicare alone is anywhere from $30 to $60 billion. 

I mean, there is a lot out there. To say that we cannot do anything 

about entitlements to stop improper spending, I just do not agree 

with it. We have to do it all. We have to do it all. 

Do you all just want—it is kind of a brain dump there, but just 

react to a little bit of what I just said. Thank you. 

Mr. SCHATZ. Mr. Chairman, on top of what you have described, 

I am sure you are well aware of the GAO report on duplication that 

came out 2 weeks ago, and my understanding is that they will be 

providing some additional information about the savings that could 

be achieved, more specific responses on that, and I know that 

Chairman Issa has looked at this as well, and I would imagine that 

you will on this side. 

Perhaps in some sense, there could be more coordination on 

those kinds of issues from this Subcommittee and the House Government Oversight and Reform Committee, because so many of 

these things are fairly obvious and should be addressed on a bicameral basis. Legislation can move a lot more quickly if the two 

committees had just some larger oversight on these issues like improper payments and the duplication. 

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32 

I know that I was pleased to see that the President signed into 

law the Improper Payments Improvement Act because I remember 

the first Improper Payments Act simply said to issue a report; 

nothing happened. It went from $20 billion to $125 billion, and as 

you mentioned, that does not even include the new prescription 

drug program where we expect there will be some improper payments. 

And that is just a management issue, having been on this Subcommittee for many years and as Chairman Levin knows, not the 

most exciting thing that gets done around here, but there are literally hundreds of billions of dollars that could be, at least spent 

more effectively if the management practice is improved. 

Senator CARPER. Others, please. 

Ms. MACGUINEAS. Sure. I would like to sort of like to take a step 

back and reinforce what I think you have said. 

Senator CARPER. OK. 

Ms. MACGUINEAS. And if you think about what is going on right 

now and the focus on spending cuts and the CR, it is a strange discussion that we are in the middle of, where, at least in my mind, 

I feel like we are moving too quickly in aggressive spending cuts 

given where we are in the pace of the recovery, something you 

could slow down if you put in place a multi-year budget plan that 

could reassure markets. 

We are doing it in too short a timeframe because you want to be 

thoughtful and have oversight of Federal spending, and we need to 

expand this whole discussion out to the rest of the budget. 

But what is happening and is going to happen is that there is 

a new focus on spending reductions and that is here to stay. That 

is going to be part of the fiscal reality that we face, and that is a 

good thing when it is used in the right way. 

And so, I think the spotlight on spending cuts means that we 

really need to hone in on spending that is unnecessary, on spending that is wasteful, on spending that has the wrong incentives, 

and on spending that does not work. And that is a lot of what you 

are talking about here in figuring out different tools to really work 

on that. 

We are going to have to do that all. I cannot not make the point, 

however, of course, that it is not going to be painless, the overall 

fiscal situation that we have to contend with, so it is going to require more than that. That is the necessary component of tackling 

all the things that we have to look at, from Social Security to controlling health care costs to defense spending to new revenues, and 

that all of that has to be put in a new framework of how we are 

going to do what we do well, how we are going to do it as part of 

economic growth, and that these tools are necessary to do government better in a time of kind of real fiscal restraints. But we cannot run away from those issues as well. 

Senator CARPER. Thank you. Dr. McMurtry, I am not going to let 

you out of this one. Any reaction? 

Ms. MCMURTRY. Well, I think that since the discretionary piece 

of the budget is not much over a third at this point, you are going 

to have to look at other components of the entitlement programs 

and the revenue side of things to try and get things in balance, ultimately. 

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Senator CARPER. All right. Thank you very much. Senator Levin, 

you have been very patient. Thanks. 

Senator LEVIN. [Presiding.] When we say ‘‘ultimately,’’ it is the 

wrong word as far as I am concerned. It is now. It is always ultimately when we look at hard things. It is never now. Let me tell 

you some of the problems that I have with the bill. I am sorry that 

Senator Carper has left because I wanted him to hear this, but I 

will find him at another time to share it with him. 

First of all, we talk about wasteful and unnecessary spending. I 

do not know of anybody who wants to support wasteful and unnecessary spending. I think the vote is a hundred to nothing on that. 

The problem is that we have a very different view as to what is 

wasteful and what is unnecessary. 

A lot of the differences between Members of Congress and each 

other, Members of Congress and the President, is over priorities. 

It is just simply a difference of priorities. It is not wasteful, it is 

not unnecessary, it is just that something else, in someone’s view, 

is a higher priority than in someone else’s view. 

We wanted to add more drones and unmanned aerial vehicles a 

few years back. It was not in the President’s budget. We did it anyway. We thought, in the Armed Services Committee, By God, that 

is a weapon system which is really important and will really give 

us a capability. We added them. It was not in the President’s budget. 

I guess if he had one of these rescissions he could have put a rescission package together which included that, and there may have 

been some things in that package that some people wanted to rescind, other people did not, but it would be an up or down vote, 

unamendable. 

So we favored the unmanned aerial vehicles when the President 

did not ask for them and could have put the finding for them in 

a rescission package that we could not amend. Those vehicles have 

now saved an awful lot of American lives and accomplished an 

awful lot of missions 5 or 10 years later. We would have seen that 

gone down the drain because the President had the power to put 

together a package which is unamendable. 

That is not waste. That is priorities. It is one view of what is important. It happens all the time. It is totally legitimate, and if we 

all agree to what is important and what is not important, you 

would only need one Member of Congress and one President. So it 

is a very important, honest difference in many cases that we are 

talking about here. 

I disagree with this President on the second engine, by the way, 

the so-called second engine on our new fighter plane. I have always 

favored a second engine because I believe competition will drive the 

price of that engine down, and if you sole source that engine, you 

are going to end up with a very expensive engine. It is not wasteful 

spending. 

The President says it is wasteful spending. Secretary Gates says 

it is wasteful spending. Half of the Senate and less than half of the 

House say it is wasteful spending. But in my view, it is mighty useful spending. I do not have any back home interest in it. I have 

wanted competition in that engine. There never has been competition in that engine. Do you believe in competition or not? I do. 

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Senator LEVIN. So label it wasteful. That is what some of the ads 

say. About half of the ads that oppose the second engine will say 

it is wasteful. The ads in favor will say it is not. But just to say 

we are going after wasteful spending in this kind of a bill is really 

ignoring, to me, a very important point, which is—I am glad the 

Chairman is back here now. 

These are debates frequently over priorities. If you label something wasteful, everybody is opposed to it and there is not much 

of an argument. When you say, Well, what are the Congress’s priorities or Members of Congress’s priorities and how does that differ 

from the President’s priorities, now you are going to get into an 

honest debate over priorities and who should have the power. 

And when you say there is no enhanced authority granted to the 

President here, I could not disagree with you more. We cannot get 

something voted on around here without amending it. We cannot 

get something done around here without being able to table it. But 

the President, under this bill, would be able to. So it is an enhanced power of the President. It is a serious business. 

I do not know whether it is unconstitutional, by the way. I kind 

of agree with you that it probably is not unconstitutional, probably 

not, but I would not want to assume it is not since I was one of 

the plaintiffs going after line item veto, as our Chairman said, with 

Senator Byrd when he was alive, and bless his memory. Senator 

Byrd worried about things like this, enhanced power to the Executive Branch. 

We just gave the—or tried to give the OMB a whole bunch of 

power the other day by saying, They could just rescind any unobligated balance. I did not vote for it, but that is what the majority 

did. OK? That is their right. But to just suggest that such a rescission is not additional power to the President is simply wrong. It 

clearly is. His OMB, unilaterally, under that authority, can just rescind any unobligated expenditure. That is a huge shift of power 

to the Executive Branch. 

We are supposed to have the power of the purse around here. 

The President can veto it. He can veto a bill which has items in 

it he does not like. That is his first shot at rescission, is veto the 

bill. That is our choice. We are put in that position all the time. 

There are things in bills that are comprehensive bills which most 

of us do not like, there are some things there that most of us do 

not like. And those who vote for it think the positive outweighs the 

negative. That is the position we are in, but this gives the President that ability to force an up or down vote, unamendable, cannot 

be tabled, which is a power we do not even have, I do not think, 

unless we take it away from ourselves, which we sometimes have. 

In rare cases, we have taken it away. 

So I think we have to look at this for what it is. You may favor 

it. And by the way, I admire the testimony of those of you who said 

this is not going to do much in terms of deficit reduction because 

it will not. And I know a number of you in your testimony or in 

your answers to questions have said this is not going to do much 

for deficit reduction. 

It is going to do a little in terms of giving the President even 

more power, and I am leery about giving any executive more 

power. Now, we have a lot of former Governors and former Mayors 

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that understand the need for executives to have power. I am an old 

legislator. I come out of the Legislative Branch of local government. 

I am not a former Mayor. I am a former City Councilman. So as 

far as I am concerned, Presidents have plenty of power, if they 

want to use it. 

I am very leery about giving Presidents more power. In any 

event, that is a long speech. I did say that I had hoped that you 

would be here because I do have some issues with this bill, particularly the fact that it is—and I guess I am out of time—that it is 

unamendable and that it cannot be tabled. I think that is giving 

a real power to the President that we do not even have most of the 

time. I am leery about giving that kind of power to the President. 

I also have, by the way, procedural concerns. The Committee has 

to act in 3 days? It is a minor point, because I have problems with 

the whole bill, but to say that the Committee of jurisdiction has 3 

days to act on a rescission message and then it is ousted of jurisdiction? Wow. Three days? That is way too short a period of time, but 

that is not the major issue that I have. 

I would suggest to even the people who favor the bill that they 

should take a look at that provision. I think that after 3 days on 

the calendar, anybody can force a vote on it. So you may want to 

look at that just from a practical point of view. But I just think we 

have to be very careful here. It is enhanced power to the President. 

I just disagree with you. 

Mr. TATELMAN. May I respond for 1 minute there, Senator? 

Senator LEVIN. Please. The Chairman would want to give you 

time and so do I. 

Mr. TATELMAN. Senator, actually, I do not think we disagree as 

much as you think we do, and let me just try to explain why I 

think that is. When you asked the question about whether or not 

this was an enhanced power to the President, I was—my response 

was narrow with respect to the fact that the President merely 

sends up the bill. Your comment that he sends up the rescission 

request just like he would make any other recommendations, just 

like he sends up here a budget or sends up here proposed legislation on education programs or social entitlements or whatever it is 

that the President thinks is in the best interest of the Nation. 

Your comments—and I actually would agree with them with respect to how Congress chooses to receive that message and what 

it does with that message are not Presidential powers. Those are 

determinations that Congress itself has made and has the authority to make under Article I, Section 5 in setting its own rules and 

regulations for procedures. 

And, in fact, Senator, I think you do, in fact, have the power to 

make things unamendable and move them quickly through the 

committee process. It is much more difficult here on the Senate 

side of the chamber because of the way the history, practice, and 

traditions of the Senate have operated, and I know that you are 

very familiar with those. 

On the House side, though, it is much, much easier. Many, many 

bills on the House side are taken up without the ability to amend 

on the floor, without the ability for extended debate. The House 

Rules Committee, which controls procedural elements over there, 

acts very, very differently than the Senate does. 

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36 

Senator CARPER. [Presiding.] Would you let me? Would you say 

a majority of the bills that the House takes up are brought to the 

floor without the opportunity for amendment? 

Mr. TATELMAN. In the past. I believe that there are some statistics that would support that claim. I am not 100 percent sure. 

Senator CARPER. Brought up on a suspension calendar. Brought 

up on a suspension calendar when you need a two-thirds vote. If 

you get a two-thirds vote, that is it. I think they do a lot of business on the suspension calendar over there. 

Mr. TATELMAN. I do believe so. 

Senator LEVIN. I agree with that. It is too bad that there is only 

one house that can have extended debate. As far as I am concerned, it is a pity that you cannot offer amendments in the House 

of Representatives and that both parties have denied other parties 

the opportunity to amend bills. I am talking about the Senate 

where this power is—better preserved, folks. It is the only place it 

exists. It sure does not exist in the House. 

I happen to agree with our Chairman. It does not exist in the 

House. It does exist here. And your point that we can give away 

that power? Sure, we can. But should we give it away? That is the 

question. Not whether we have the power to give it up. 

Mr. TATELMAN. My point, Senator, was merely that you have not 

given it to the President. What you have given it is to that particular piece of legislation, if you want to think about it in that 

sense. The President’s power ends, even under this type of a piece 

of legislation, the President’s power ends when he sticks it in an 

envelope and sends it up Pennsylvania Avenue. His ability to turn 

it over, it becomes then the Senate’s and the House’s call. 

Senator LEVIN. That is excessively—— 

Mr. TATELMAN. Legalistic? 

Senator LEVIN. Excessively legalistic. He has the power to—— 

Mr. TATELMAN. It is a sickness, being a lawyer, Senator. 

Senator LEVIN. Well, I have the same problem. 

Senator CARPER. I am not encumbered by a legal education. 

Senator LEVIN. The power is to obtain something from Congress. 

That is the power. If we give it to him, he can obtain something. 

He can obtain a vote on an item by itself. I cannot. He can. Members of Congress cannot unless we, for some reason or another, 

through unanimous consent or through filibuster—when I say 

Members of Congress, by the way, you are correct. I should say 

members of the Senate. 

So we are giving him a power, a power to obtain something very, 

very important. 

Mr. TATELMAN. I understand. 

Senator LEVIN. Obtain an up or down vote on an item, separate 

from everything else, if he chooses to send us a message. That is 

a very important power. His message cannot be amended and it 

cannot be tabled. I wish Senator Robert Byrd were here, for a lot 

of reasons, but the power to amend is an incredibly important 

power and I will not give it away. Thank you. 

Senator CARPER. You bet. Thank you so much for being here with 

us, Senator. 

Senator LEVIN. I thank our witnesses, too. 

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Senator CARPER. I want to close out with just another thought. 

Let me say while Senator Levin is still here, if you think about the 

legislation that was voted on and approved by, I think, 69 Senators 

in 1996 that said basically, the President can come in here and line 

item, if you will, appropriations bills, entitlement spending, revenue legislation, and the only way to undo that is for a two-thirds 

vote of the House and the Senate, and in a combination, undo that 

Presidential power. 

What a huge shift of power that represented. I would not have 

favored that, and I described it before you got here as giving the 

President—like putting a bazooka under the President’s desk. I am 

not interested in giving any President, ours or Republican, a bazooka under their desk. 

What I want to do is to provide for a reasonable response when 

a President says, my hands are tied, I really cannot do more than 

we have done in terms of deficit reduction, and really to say to the 

Congress, we all have to share some accountability and responsibility here in getting this job done. 

But if all we do is focus on domestic discretionary spending or 

defense spending, if all we do is focus on entitlement spending, and 

not also focus on the revenue policy, or tax policy, then think we 

missed the boat, to some extent. 

If you go back and look at the years where we actually had a balanced budget—did we have two or three at the end of the Clinton 

Administration? 

Ms. MACGUINEAS. Three. 

Senator CARPER. Three. But I think there was some good work 

with respect to reining in the growth of spending on the entitlement side and on the domestic and defense spending side. We also, 

presumably, did some reasonable work. I was not here. I was trying to govern my little State. But I think some work was done on 

the tax side, too. 

But the other big factor then, you may recall, we were in a tech 

bubble and we just saw an enormous growth of revenues. I do not 

want another tech bubble, I do not want another housing bubble. 

We have had bites out of those apples. But we really do need to 

grow revenues and we need to make sure that the policies that we 

adopt, whether they are spending or tax policies, actually do promote growth. 

And that is something that we are sort of losing sight of. The 

President has continued to call for the United States on educating, 

on innovating, on competing with the rest of the world. That is awfully important. 

A guy named John Chambers, who was the CEO of Cisco, said 

the two most important things for us to do to make sure that we 

are going to grow jobs in this country, or any country, is No. 1, create a world class productive workforce. It cannot be with anybody 

else. No. 2, world class infrastructure, broadly defined. 

And I would add to that maybe a third one, to make sure, particularly on the tax side, that we are actually encouraging investments in research and development that will actually lead to the 

creation of new technologies, new innovation, new products that we 

can build, stamp Made in America, and sell them all over the 

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world. I think that is critically important that we do, do all three 

of those. 

Senator LEVIN. Can I just add to that in terms of the tax side? 

That we eliminate those tax loopholes which give incentives to people to move jobs offshore. I have to get that in. 

Senator CARPER. Thanks for getting that in. 

Let me just—we have had a chance to go at it for awhile and the 

hour is growing late. I like to sometimes give our panels an opportunity to give like a short benediction, each of you, and then I will 

maybe close it out with an even shorter benediction. 

Ms. MACGUINEAS. Well—— 

Senator CARPER. Mr. Schatz, why don’t you go first and then we 

will just go from your right to your further right. 

Mr. SCHATZ. As we discussed right at the beginning, we hope 

that this will be the last time of looking at this legislation, other 

than to improve it in the future. So I hope that this Subcommittee 

moves it forward quickly, and putting on the hat that is our lobbying arm, we will fully support it and urge Senators to vote for 

it. 

Senator CARPER. Thanks so much. Mr. Tatelman. 

Mr. TATELMAN. I would just take the opportunity again to thank 

the Chairman for his support of the Congressional Research Service and for the opportunity to testify here this afternoon. Thank 

you very much. 

Senator CARPER. We are grateful for the work you do. Thank 

you. Dr. McMurtry. 

Ms. MCMURTRY. I might just add a footnote to what Senator 

Levin was saying in terms of sometimes having a difference of priorities and not just a difference of something being necessary or 

unnecessary, essential or un-essential. I do not believe I mentioned 

it in my earlier remarks, but ultimately, the scope and the impact 

of the deterrent effect depends on the political calculations of the 

respective Members of Congress. 

If the lawmakers determine that a particular project is of value 

to their State or district and that their constituents are going to 

appreciate it, just like the one Member of the Subcommittee stated, 

not everyone thinks that earmarks are bad, and to the extent that 

members will stand by their earmarks, so to speak, the deterrent 

effect, which is incalculable at the moment, we just do not know 

how that is going to play out with expedited rescission should that 

be granted. 

Senator CARPER. Thank you. I have used this analogy before, I 

think, in this Subcommittee or in this Committee, and in our experience in Delaware, we had something akin to earmarks. In Delaware, we have three budgets for our State. We have an operating 

budget, we have a capital budget, and we have something called a 

grant and aid budget. The Governor proposes an operating budget 

and proposes a capital budget in our State. 

The legislature is really—they are really the people who craft the 

grant and aid budget. And for the most part, the items that are included in the grant and aid budget are Boys and Girls Clubs, Boy 

Scouts, Girl Scouts, any number of good organizations who do 

worthwhile work that would be, frankly, hard for most of us to 

criticize or question. 

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But one of the problems we ran into in the 1990’s was, at a time 

when we were constrained for a while with revenue growth, we saw 

the operating budget, the capital budget constrained at a time 

when we actually needed to invest in our infrastructure. But the 

grant and aid budget continued to grow apace. 

And we finally decided, maybe what we should do is just put a 

cap on the grant and aid budget. I think we capped it at maybe 

2 percent of revenues, and that was basically it. It provided pretty 

good restraint. We still have a grant and aid budget, but it is no 

longer growing like topsy. 

I think on earmarks the argument—I do not know if Senator 

Levin made it while I was out of the room, but if we have a grant 

program, we will say it is a transportation program, so we have 

like $100 in it, and somebody comes along and we have like a dollar’s worth—a hundred dollars goes out for earmarks around the 

country. That does not mean we spend $101. It means we spend $99-plus 

for that one. But what I think we may want to consider—we have 

this moratorium on earmarks. If we ever go back in a future Congress and say we are going to restore earmarks in the appropriations process, maybe we could do this: Put a cap like some percentage of revenues that earmarks cannot exceed. 

No. 2, I think we are trying to do this, is to provide a whole lot 

of transparency. We are all Representatives or Senators and if we 

have a request for a particular earmark, it has to be very clear who 

is asking for it, one of us; who will it benefit, make it very clear; 

and the idea that if it is not in the House or Senate version of a 

bill, we are not going to sort of air drop it and it is going to appear 

like magic in a conference committee. 

That sort of approach, for me, and maybe it is 1 percent or it has 

to be less than 1 percent, I do not know, but that kind of approach 

might, make some sense. 

If we were to restore earmarks in that limited way with a lot of 

transparency, the idea of having the legislation before us, actually 

signed into law, I think would be helpful in an earmarks restored 

world, to say, All right, let us make sure that the stuff that some 

enterprising Senator or Representative has put in a bill, let us just 

make sure it stands the test of time and a test of further scrutiny, 

and just say, The Senate and/or the House we would like to give 

you the opportunity to revisit this one. I think it would be helpful. 

Mr. SCHATZ. Not to take away from Maya over there, but it is 

difficult for me not to say something about earmarks. I would very 

much enjoy debating everyone who has talked about it today, but 

that would be a different hearing and I would welcome the opportunity to discuss this in the future. 

Senator CARPER. Good, thanks. We may have that opportunity. 

Thanks. Ms. MacGuineas. 

Ms. MACGUINEAS. A couple of quick comments. So I think it is 

absolutely impossible in this environment to argue against the 

need for additional transparency and accountability. That has to be 

worked into the budget process at every single opportunity and 

every way that we find that we can do it. 

In terms of fiscal policy, I completely agree with you and I think, 

as the focus in this country and the world is turning to fiscal polH605-41331-79W7 with DISTILLER

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icy, we cannot lose that it is all piece of a picture of how to promote 

economic growth. And that means not just getting the numbers to 

add up, but doing it in a way that is smart. And that means protecting public investments in a way that we shift our budget, which 

is now very consumption oriented, to become an investment oriented budget. 

I think it also means protecting the safety net so that we do not 

shred programs that are very important for people who depend on 

them. And likewise, I think changing our tax system, which is remarkably outdated, into one that is competitive for the century in 

which we are competing on a global basis, is necessary. And, of 

course, you cannot run unsustainable levels of debt. But it is not 

just because those of us who are deficit hawks like getting the 

numbers to add up. It is because it is how you create a competitive 

growing economy. 

And I do believe that transparency and oversight are a critical 

part of that, and I think the balance of this bill has it right, because what it basically says is that nothing happens unless Congress affirmatively enacts these changes. But it is an opportunity 

to go back over bills and give them more scrutiny, all of which is 

going to increase the faith that what government is doing it is 

doing well, and that is all a piece of this. 

So I really—I applaud you and your colleagues and I hope that 

we move forward on it. 

Senator CARPER. Well, thank you. Thanks for those comments. 

And really, our thanks to each and every one of you for joining us 

today, for your preparation, for your testimony, for your responses 

to our questions, and for your willingness to maybe answer, if a 

couple of us send follow-up questions in writing, that you are willing to respond to those. Let me just ask, Stefan Wirth, Stefan, how 

long would these witnesses have, our witnesses have to respond? 

Is it 2 weeks? 

Mr. WIRTH. Two weeks. 

Senator CARPER. I think it is 2 weeks, so if you get some questions in writing, if you would respond to those in 2 weeks, that 

would be great. 

The last thing I will say, one of the things that I have sort of 

become interested in is the last year or two is the grant process, 

whether we have grants that are distributed to the States, Federal 

grants distributed to the States on like a formula basis, number of 

people, number of miles, or whatever, highway, whatever it might 

be, poverty, or whether the grants should be distributed on a different kind of criteria, and I will use like a transportation grant. 

One of the things that seems to make sense, at least to me so 

that we put more transportation money out on the basis of competition, where the criteria would include, particularly an investment 

in transportation, that it reduce congestion. Does it reduce pollution? Does it reduce our dependence on foreign oil? Does it enhance 

public safety? Does it reduce accidents? And that sort of thing. 

So that is an approach that I think makes a whole lot of sense. 

I would like to—and I am still kind of new at considering this 

broadly, but I think that is an approach that we need to move or 

migrate toward. 

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41 

People say to me, Why do you—even today at the train station 

in Wilmington waiting for the train and it pulled in right on time— 

some folks said to me, It has to be tough working down there in 

the Senate these days. It must be kind of miserable. And I said, 

Actually, I am encouraged by what we are doing in these big deficits in a struggle to get an economy moving. I think we are. 

But I am actually encouraged that we are seeing a little bit of 

a restoration of bipartisan spirit in the Senate, which is good. We 

have passed the FAA reauthorization bill. It took us years to get 

that done and we have done that, I think, in a responsible way. We 

have just passed, in the last week or two, patent reform to help us 

on the innovation side of our economy. 

We are working this week on, I think, some very thoughtful legislation that encourages investments in R&D, particularly for 

smaller businesses. And we are seeing some pretty good bipartisan 

cooperation. So I am encouraged by that. 

The other thing is I am encouraged that my colleagues, Democrat 

and Republican, House and Senate, and the Administration are beginning to think, a good part of this budget, the way we spend 

money, it is not sacrosanct. And we just really do need to drill 

down and to see the ways we can get better results for less money 

across the board, or better results for not much more money. That 

is very encouraging. 

What we are doing here today is looking for one more tool to get 

better results for less money or maybe better results for not a 

whole lot more money. We really do appreciate your testimony in 

helping us to realize that goal. 

With that having been said, this hearing is concluded and we 

look forward to seeing and working with you again. Thanks so 

much. 

[Whereupon, at 4:29 p.m., the subcommittee was adjourned.] 

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