U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

67–954—PDF 2010

S. HRG. 111–1062 

NOMINATIONS OF JEFFREY ALAN GOLDSTEIN, 

FRANCISCO SANCHEZ, AND SHERRY GLIED 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

ON THE

NOMINATIONS OF 

JEFFREY ALAN GOLDSTEIN, TO BE UNDER SECRETARY OF DOMESTIC 

FINANCE, DEPARTMENT OF THE TREASURY; FRANCISCO SANCHEZ, TO 

BE UNDER SECRETARY OF COMMERCE FOR INTERNATIONAL TRADE, 

DEPARTMENT OF COMMERCE; AND SHERRY GLIED, TO BE ASSISTANT 

SECRETARY FOR PLANNING AND EVALUATION, DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

MARCH 2, 2010 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Nelson, Hon. Bill, a U.S. Senator from Florida ..................................................... 3 

ADMINISTRATION NOMINEES 

Goldstein, Jeffrey Alan, nominated to be Under Secretary of Domestic Finance, Department of the Treasury, Washington, DC ...................................... 4 

Sanchez, Francisco, nominated to be Under Secretary of Commerce for International Trade, Department of Commerce, Washington, DC ........................... 6 

Glied, Dr. Sherry, nominated to be Assistant Secretary for Planning and 

Evaluation, Department of Health and Human Services, Washington, DC ... 7 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 25 

Glied, Dr. Sherry: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 27 

Biographical information ................................................................................. 29 

Responses to questions from committee members ......................................... 40 

Goldstein, Jeffrey Alan: 

Testimony .......................................................................................................... 4 

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

Biographical information ................................................................................. 48 

Responses to questions from committee members ......................................... 59 

Grassley, Hon. Chuck: 

Prepared statement .......................................................................................... 69 

Responses from Jeffrey Goldstein to follow-up questions concerning the 

use of blocker corporations by Hellman and Friedman ............................. 71 

Letter from the Department of Health and Human Services Administration for Children and Families to the Corporation to Develop Communities of Tampa, Inc., dated February 3, 2010 ........................................... 78 

Letter from the Department of Health and Human Services Office of 

the Secretary to Senator Grassley, dated February 5, 2010 ..................... 80 

LeMieux, Hon. George S.: 

Letter to Senators Baucus and Grassley in support of the nomination 

of Francisco Sanchez, dated March 2, 2010 ................................................ 81 

Nelson, Hon. Bill: 

Opening statement ........................................................................................... 3 

Sanchez, Francisco: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 82 

Biographical information ................................................................................. 84 

Responses to questions from committee members ......................................... 94 

(III) 

(1) 

NOMINATIONS OF JEFFREY ALAN 

GOLDSTEIN, TO BE UNDER SECRETARY OF 

DOMESTIC FINANCE, DEPARTMENT OF THE 

TREASURY; FRANCISCO SANCHEZ, TO BE 

UNDER SECRETARY OF COMMERCE FOR 

INTERNATIONAL TRADE, DEPARTMENT OF 

COMMERCE; AND SHERRY GLIED, TO BE 

ASSISTANT SECRETARY FOR PLANNING 

AND EVALUATION, DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

TUESDAY, MARCH 2, 2010 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 11:29 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Wyden, Cantwell, Nelson, Menendez, Grassley, 

and Roberts. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Ayesha Khanna, International Trade 

Counsel; Andrew Hu, Health Research Assistant; and Mary Baker, 

Detailee. Republican Staff: Kolan Davis, Staff Director and Chief 

Counsel; Michael Park, Health Policy Counsel; Jim Lyons, Tax 

Counsel; Tony Coughlan, Tax Counsel, and Nick Wyatt, Tax and 

Nominations Professional Staff. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

In 1961, President-elect John F. Kennedy said that public servants would be judged by whether they were ‘‘truly people of dedication, with an honor mortgaged to no single individual or group, but 

devoted solely to serving the public good and the national interest.’’ 

To our witnesses today I say, President Obama has nominated 

each of you to serve the public good and the national interest. Each 

of you has traveled a long road to get here today, and in so doing 

you have shown dedication to the positions for which you have been 

nominated, to our President, and to our country. 

But history will judge you—and indeed, all of us—not by the 

dedication that we have shown so far. History will judge us by the 

2 

dedication that we will show until the last moment that we serve 

the American people. 

Mr. Goldstein, President Obama has nominated you to be the 

Under Secretary of Treasury for Domestic Finance. In this role, you 

will oversee our domestic financial system and fiscal policy. As we 

seek to recover from the Great Recession, create good jobs here in 

America, and create sustainable economic growth, we will have to 

rewrite the rules by which our domestic financial system works. 

We cannot reward those who put America’s economic stability in 

peril by taking untenable risks. We cannot create economic growth 

by borrowing at unsustainable levels. Rather, we must spur private 

sector job creation and we must put the good of the country before 

the good of any individual person or company. 

Mr. Goldstein, I urge you, once confirmed, to fill the position of 

Under Secretary with honor. I urge you always to put the stability 

of the American economy and the fiscal health of our Nation first. 

If you accomplish this, history will judge you as a person of dedication. 

Mr. Sanchez, President Obama has nominated you to be Under 

Secretary of Commerce for International Trade. In this capacity, 

you will head the Commerce Department’s international trade initiatives. You will push forward the President’s recently announced 

initiative to help double America’s exports in 5 years, you will administer U.S. antidumping and countervailing duty laws, and you 

will monitor foreign compliance with U.S. trade agreements. 

Mr. Sanchez, I urge you, once confirmed, to fill the position of 

Under Secretary with honor, and I urge you to put the competitiveness of our country first. In so doing, I urge you to remember the 

needs of small- and medium-sized businesses like those in Montana. Companies in rural States like Montana support their local 

economies. They are pillars of the community. They offer worldclass products, and our trade programs should help them to sell in 

global markets. If you accomplish this task, history will judge you, 

too, as a person of dedication. 

Dr. Glied, President Obama has nominated you to be the Assistant Secretary for Planning and Evaluation at Health and Human 

Services. Planning and Evaluation is one of the least recognized, 

but most important functions in the Department. The research and 

analysis, policy development, and the planning and evaluation 

functions in which your office is engaged underpin much of the Department’s activities. 

The Department must have a strong foundation of evidence to 

support its decision-making. The Department must evaluate legislation that has been implemented, and the Department must understand the effects of potential changes under consideration. 

Dr. Glied, I urge you, once confirmed, to fill your position with 

honor. I also encourage you to put the needs of the American people first and evaluate the effects that HHS policies will have on the 

American people. 

One of your responsibilities will be to bring the office back up to 

par. You will need to restore the excellent reputation and status 

that it once had. If you accomplish this task, history will judge you 

as a person of dedication. 

3 

I congratulate each of you on the dedication and perseverance 

that you have shown thus far. I encourage you to bring even more 

dedication to your future positions, and I am confident that the 

American public and our national interest will be better for your 

service. 

Senator Grassley, who will be joining us momentarily, will deliver his opening statement at that time. But in the meantime, we 

will now turn to our witnesses. 

Today’s panel begins with Jeffrey Goldstein, who has been nominated to be the Under Secretary of Domestic Finance at the Department of the Treasury. Next, we have Francisco Sanchez, and 

Senator Nelson has asked to introduce this witness. Finally, we 

will hear from Sherry Glied, who has been nominated to be Assistant Secretary of Health and Human Services for Planning and 

Evaluation. 

Thank you all for coming. As is our usual practice, your prepared 

statement will automatically be made a part of the record, so I 

urge you to use your time to summarize. 

First, though, Mr. Sanchez, I think Senator Nelson wants to introduce you. But let me first ask Mr. Goldstein if you have family 

here. 

Mr. GOLDSTEIN. I do, Senator. Thank you very much. 

The CHAIRMAN. Could you have them stand up and introduce 

them, please? 

Mr. GOLDSTEIN. Thank you. This is my wife Nancy, my wife of 

22 years; my daughter Lauren, who’s a sixth grader; my son Jeremy, who is a senior in high school; and my son Joshua, who is a 

sophomore in college. 

The CHAIRMAN. That is great. Let us give them all a round of applause. [Applause.] 

Mr. GOLDSTEIN. Thank you, Senator. 

The CHAIRMAN. All right. Senator Nelson, you wanted to introduce Mr. Sanchez? 

Senator NELSON. Frank, are any of your family here? 

Mr. SANCHEZ. No. But through the wonders of technology, they 

are all watching via the webcast. 

OPENING STATEMENT OF HON. BILL NELSON, 

A U.S. SENATOR FROM FLORIDA 

Senator NELSON. Well, Mr. Chairman, I had the pleasure of introducing Frank Sanchez back last year, almost a year ago in May, 

on the same nomination in front of the Senate Banking Committee. 

Today’s Finance Committee hearing is a long time coming, but it 

has come. I hope we will go ahead and swiftly get him out of the 

committee and to the floor, because this position on international 

trade in the Department of Commerce is obviously very, very important. Poor Frank has been down there, but he cannot be officially the Under Secretary. But he is raring to go. He is like the 

thoroughbred who is at the starting gate, and we just need to open 

the gate so that thoroughbred can run. 

Now, he has significant interest in trade and labor issues, and 

when he is confirmed he will lead the International Trade Administration, the Tourism Policy Council, and the National Intellectual 

Property Council. All of these are very critical. We just passed the 

4 

Trade Promotion Act. Well, finally we are getting around to what 

was shut down in the 1980s, where we are going to encourage visitors to come by doing advertising overseas. That is like exports for 

us. It is a no-brainer. But it has taken us since the mid-1980s to 

finally get back to this. He will be in a very important position 

there in the Tourism Policy Council. He is going to oversee the U.S. 

Commercial Service. 

I have known Frank for years. He has been a very prominent 

Floridian. He has served our former colleague, Bob Graham, when 

he was Governor of Florida, and he was director of our State’s first 

Caribbean Basin Initiative. For the last 15 years, he has worked 

in several companies on projects involving complex transactions, 

labor management negotiations, litigation settlement, and negotiation strategy. He advised the president of Ecuador, in negotiations, 

to settle a 56-year-old border dispute with Peru. 

Frank speaks fluent Spanish, and we had better turn our attention south of the border. Thus far, with the world’s other problems, 

we have had our attention in other parts of the world. Well, he is 

going to be in a special position to help. 

He has also been a special assistant to President Clinton. Then 

in the campaign, he picked him out, a Senator named Obama, and 

he was a policy advisor. So, I want us to go on and get this going. 

It is for the good of the country. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Mr. Sanchez, I think you have a fan in Senator Nelson. [Laughter.] 

Mr. SANCHEZ. Thank you, Senator. 

The CHAIRMAN. Dr. Glied, do you have family here you would 

like to introduce? 

Dr. GLIED. I do. I appreciate the chance to introduce them. My 

husband, Professor Richard Briffault, our daughter Olivia, and our 

son Jonathan. Olivia is in the 9th grade and Jonathan is in 5th 

grade. 

The CHAIRMAN. That is great. Congratulations, all of you, very, 

very much. [Applause.] 

Thank you so much. 

Mr. Goldstein, why don’t you begin? 

STATEMENT OF JEFFREY ALAN GOLDSTEIN, NOMINATED TO 

BE UNDER SECRETARY OF DOMESTIC FINANCE, DEPARTMENT OF THE TREASURY, WASHINGTON, DC 

Mr. GOLDSTEIN. Thank you, Senator. Chairman Baucus, Ranking 

Member Grassley, distinguished members of the committee, thank 

you for the opportunity to appear before you today. I am honored 

to have been nominated by President Obama to serve as the Under 

Secretary of the Treasury for Domestic Finance, and I am grateful 

to Secretary Geithner for recommending me to the President. 

I also want to thank your staffs for meeting with me to discuss 

my qualifications for the position to which I have been nominated. 

Chairman Baucus, thank you for the opportunity to introduce my 

family. My three children, Joshua, Jeremy, and Lauren are the 

greatest gifts I have been given, and I am exceptionally proud of 

each one of them. Their mother and my wife of 22 years is a dediVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
5 

cated doctor, who has continued the medical practice started by her 

father 55 years ago. Our partnership, friendship, and good humor 

have made my life possible. 

I have been fortunate to have a wide-ranging career. I have 

spent time in academia, in the private sector, as well as in public 

service. I received an undergraduate degree from Vassar College 

and a Ph.D. in Economics from Yale University. I was employed by 

the Brookings Institution, the Treasury Department, and Princeton 

University, focused on financial policy issues. 

My time in the private sector, including 15 years at the Wolfington firm and 5 years at Hellman and Friedman gave me insights 

into a broad range of banks and other financial institutions. That 

work required the practical application of economic, financial, and 

business analyses. In those positions, I worked to build businesses 

and create jobs. 

My experience in the public sector, notably at the World Bank, 

built on this practical application of analysis, with the goal of fighting poverty. There, I oversaw the World Bank’s work with member 

countries and strengthening their financial and capital market systems. I was the bank’s chief financial officer. I served as its representative to a variety of international bodies, including those concerned with financial market stability. 

I believe that these three phases of my career, in academics, the 

private sector, and public service, have together provided me with 

a strong background for this position. This background would help 

me address the financial policy questions we face as the Nation 

continues to emerge from a severe financial crisis and economic recession. 

While confidence in our financial markets has improved and the 

economy has started to grow again, unemployment is far too high 

and too many families are having to struggle to make ends meet. 

The rehabilitation and reform of the financial system remains incomplete. Our economy cannot reach its potential without a fair, effective, and resilient financial system. But I know that, in partnership with Congress, we can ensure that the U.S. financial system 

can and will fulfill its promise in supporting economic growth and 

prosperity all across America. 

If approved by this committee and confirmed by the Senate, I 

would welcome the opportunity to help meet the economic challenges confronting our country. It would be a high honor to serve 

alongside the men and the women at the U.S. Treasury Department. 

Again, thank you for allowing me to appear before you today, and 

I am happy and pleased to answer any of your questions. 

The CHAIRMAN. Thank you, Mr. Goldstein. 

[The prepared statement of Mr. Goldstein appears in the appendix.] 

The CHAIRMAN. Why don’t you proceed next, Mr. Sanchez? I have 

to step out for a few minutes, but if you have finished, Dr. Glied, 

just go next. I will be right back. Thanks. 

6 

STATEMENT OF FRANCISCO SANCHEZ, NOMINATED TO BE 

UNDER SECRETARY OF COMMERCE FOR INTERNATIONAL 

TRADE, DEPARTMENT OF COMMERCE, WASHINGTON, DC 

Mr. SANCHEZ. Thank you, Chairman Baucus, Ranking Member 

Grassley, and members of the committee. Let me thank, again, 

Senator Nelson for his kind words. 

There is no greater call than to serve one’s country, and so I am 

honored by President Obama’s nomination to serve as Under Secretary of Commerce for International Trade. 

I am humbled by the trust that the President and Secretary 

Locke are placing in me. I also want to take just a moment to 

thank my mother, who is watching via webcast, and my late father 

for their support and encouragement throughout my career. I credit 

them for my love of public service, so I thank you mom, dad. 

As Secretary Locke has said, the role of the Department of Commerce is to be an engine of innovation, job growth, and economic 

renewal. The Department’s mission is to help create jobs through 

trade, which has been enhanced by the National Export Initiative 

announced by the President in his State of the Union address. 

In a changing economy, we should not underestimate the role of 

exports in creating jobs, and, if confirmed, I look forward to working with you to advance our Nation’s economic well-being through 

international trade. 

Almost 95 percent of the world’s consumers reside outside U.S. 

borders. The International Monetary Fund forecasted that nearly 

87 percent of world growth during the next 5 years will take place 

outside the United States. America cannot reach its full potential 

for generating new jobs without selling more good and services 

globally. 

My experiences in the public and private sectors have prepared 

me for these challenges and for this role at the International Trade 

Administration. I have had the honor of serving former Senator 

Bob Graham while he was Governor of Florida as the first director 

of the State’s Caribbean Basin Initiative. I later served in the Clinton administration in the Office of the Special Envoy for the Americas, a role that required carefully balancing foreign policy goals 

while advancing U.S. economic interests. 

Subsequently, I served as Assistant Secretary of Transportation 

for Aviation and International Affairs. As a businessman, I have 

had the opportunity to work with American corporations, including 

multi-national corporations, small businesses, and international organizations in nearly 30 countries, from Colombia to Turkey. My 

work has included projects with the World Bank and the InterAmerican Development Bank. These opportunities have given me 

a unique perspective on the expansion and viability of American 

business in the global marketplace. 

With that in mind, if confirmed, I would pursue five specific priorities to help the Department and ITA contribute to the Nation’s 

economic growth. The first is targeting emerging markets, where 

new opportunities lie for American businesses that can then hire 

more workers at home if those opportunities are developed. The 

global market is growing, and its prospects for American companies 

and American workers can be highly rewarding. 

7 

The second is to focus on how emerging technologies created here 

in the United States, especially green and clean technologies, can 

generate new opportunities for American businesses in foreign 

markets. Manufactured right here at home, these products can be 

an engine, driving new jobs of the future. 

The third priority is to work closely with businesses of all sizes, 

with a special emphasis on small- and medium-sized enterprises to 

increase their capacity to export. Companies looking to expand 

their markets and their workforces are our business. I welcome the 

opportunity to be a champion for all U.S. companies. 

As the number of companies exporting grows, my fourth priority 

will prove crucial: to vigorously enforce trade laws and rules so 

that our businesses can compete around the globe. If confirmed to 

serve as the country’s chief trade enforcement officer, it will be my 

duty to ensure that we have the necessary personnel and policies 

to protect American businesses from unfair trade practices. 

My fifth priority is closely related to this last one: to be always 

a vigorous and forceful voice for American competitiveness in the 

inter-agency and policy-making process. 

In summary, few things are more important than the economic 

development and recovery of our Nation. If confirmed, I look forward to working closely with this committee and ITA’s hardworking and dedicated team of professionals to support American 

innovation and entrepreneurship and to open global markets for 

American-made goods and services, while creating new jobs and 

economic growth here at home. 

Thank you very much. I look forward to your questions. 

Senator MENENDEZ. Thank you, Mr. Sanchez. 

[The prepared statement of Mr. Sanchez appears in the appendix.] 

Senator MENENDEZ. The chairman has asked me, Dr. Glied, to 

have you go next, if you would do so. 

STATEMENT OF DR. SHERRY GLIED, NOMINATED TO BE ASSISTANT SECRETARY FOR PLANNING AND EVALUATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC 

Dr. GLIED. Thank you, Senator Menendez, thank you, Mr. Chairman, thank you, Senator Grassley and members of the committee. 

I am very pleased to appear before you today, and I appreciate the 

opportunity to have introduced my family. 

For the past 20 years, I have worked as a health care economist, 

studying the functioning of the American health care system, and 

particularly its impact on vulnerable populations. I am currently 

professor of health policy and management at Columbia University’s Mailman School of Public Health, and for 11 years before my 

nomination I served as chair of that department. 

My research has throughout been very closely engaged with policy. I have particular expertise in modeling the effects of health 

care policy changes and have long served as a consultant, both formally and informally, to the Congressional Budget Office’s health 

care team. 

As the chairman has noted, the Office of the Assistant Secretary 

for Planning and Evaluation at HHS has a long and illustrious hisVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
8 

tory. For the over 40 years that the office has existed, the ASPE 

has served as the Secretary’s principal policy advisor, with responsibility for policy coordination, implementation planning, and evaluation of the many programs under the HHS umbrella. 

Many very distinguished policy analysts have served in this capacity, and I am awed and humbled by this nomination to follow 

in their path. This is an extraordinary opportunity at a critical 

time to bring analysis and research to bear across the President’s 

and Secretary’s broad agendas. 

I am one of a number of researchers at universities, think tanks, 

Federal and State government agencies, and research institutes 

around the country who have devoted our careers to the study of 

health insurance and the uninsured. I am proud that this research 

contributed to the congressional debate concerning national health 

reform legislation that began last summer. 

If confirmed, I look forward to joining with my colleagues in HHS 

and throughout the administration who are working closely with 

congressional leaders to bring costs under control and reduce the 

number of uninsured Americans. 

An important part of that effort will be to combine insights of researchers outside government with those of the exceptionally 

skilled, dedicated, and knowledgeable staff within the office of the 

ASPE. Of course, the scope of work at the office of the ASPE extends well beyond national health policy. My prior research in mental health policy and on the health of children has made me wellaware of the significance of the broad spectrum of HHS programs. 

HHS programs provide support for needy families, the aged and 

disabled, sponsor path-breaking biomedical research, ensure the 

safety of our food and drugs, monitor the spread of infectious disease, and the list goes on and on. The health of our Nation depends 

on the effective functioning of this extensive range of programs, 

and I believe the ASPE is in a unique position to promote efficiency 

by facilitating effective policy coordination between these programs. 

If confirmed, I look forward to contributing to providing analytic 

support to planning and evaluation in all these areas and throughout the Department, and to working closely with Congress. 

Thank you very much. I would be happy to answer your questions. 

[The prepared statement of Dr. Glied appears in the appendix.] 

The CHAIRMAN. I have standard questions, three of them, that 

we ask all nominees. 

Is there anything that you are aware of in your background that 

might present a conflict of interest with the duties of the office to 

which you have been nominated? 

Mr. Goldstein? 

Mr. GOLDSTEIN. No, Senator. 

The CHAIRMAN. Mr. Sanchez? 

Mr. SANCHEZ. No, Mr. Chairman. 

The CHAIRMAN. Dr. Glied? 

Dr. GLIED. No, Senator. 

The CHAIRMAN. Do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably 

discharging the responsibilities of the office to which you have been 

nominated? 

9 

Mr. GOLDSTEIN. No. 

Mr. SANCHEZ. No, Mr. Chairman. 

Dr. GLIED. No, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Do you agree, without reservation, to respond to any reasonable 

summons to appear and testify before any duly constituted committee of Congress, if you are confirmed? 

Mr. GOLDSTEIN. Yes, Mr. Chairman. 

Mr. SANCHEZ. Yes, sir. 

Dr. GLIED. Yes, I do. 

The CHAIRMAN. Thank you. All right. 

First, a couple of questions for you, Mr. Goldstein. This revolves 

around the use of hedge funds using offshore jurisdictions to enable 

American taxpayers to avoid paying taxes. Much concern about the 

Cayman Islands hedge funds and corporate blockers results from 

the abuse of these entities by some investors who deliberately hide 

from the IRS and do not pay the taxes that they owe. Last year 

I introduced a package of offshore loophole closures that will largely eliminate the ability of U.S. taxpayers with foreign accounts to 

go undetected by the IRS. I am happy to see these were passed by 

the Senate on February 24. 

A cornerstone of the package is a 30-percent withholding tax on 

U.S.-source payments unless the offshore entity agrees to tell the 

IRS who its U.S. account holders are. Do you support the policy of 

these offshore loophole closures? In addition, how do you expect 

that this legislation will affect the use of Cayman hedge funds and 

corporate blockers by firms like your former employer? 

Mr. GOLDSTEIN. Senator, thank you for asking that question. I 

fully support the intent of that legislation. With respect to the use 

of so-called blockers by private equity and other investment funds, 

there is a certain tradition and long history of these practices in 

the industry. 

These are customary and standard industry practice. The purpose of these blockers is not to do anything other than help administratively for many tax-exempt investors, and also to help maintain tax-exempt income for tax-exempt investors. The entities that 

would use blockers, Mr. Chairman, would be, for example, pension 

plans for fire fighters, for teachers, foundations, and charities, universities, et cetera. So I think that I fully support the intent of the 

legislation. The use of blockers is actually trying to achieve a somewhat different objective, but is also an important policy question. 

The CHAIRMAN. But the blockers do have the effect of enabling 

American taxpayers to avoid paying income tax. Is that correct? 

Mr. GOLDSTEIN. The blockers allow tax-exempt organizations to 

keep their income tax-exempt. Yes, sir. 

The CHAIRMAN. What about taxable entities? Do blockers minimize or reduce the income taxes that otherwise would be owed? 

Mr. GOLDSTEIN. I am not a tax expert, Mr. Chairman, but it is 

my understanding that these blockers are used almost exclusively, 

if not totally, for the purpose of tax-exempt entities in the United 

States. 

The CHAIRMAN. Then why would a tax-exempt entity have to employ one of these devices if its taxes were exempt in the first place? 

10 

Mr. GOLDSTEIN. It is my understanding—and I am sorry I am 

not an expert in this area—that this practice is done because otherwise certain income for the tax-exempt entities would in fact be 

taxable. 

The CHAIRMAN. How much income, in a general sense, otherwise 

owed by U.S. taxpayers is not paid because of these kinds of arrangements? That is, income which, in the minds of average, ordinary Americans, should be taxable? Most folks pay income taxes. 

The guy who works the assembly line, the small business person. 

He does not have a lot of money, and he is not able to hire highpriced lawyers, high-priced tax accountants to figure out highpriced ways to minimize and lower income taxes with offshore accounts. 

So how many of these products, these arrangements that are 

being set up, some of them called blockers, really, even though they 

are currently legal, probably do minimize and reduce income taxes 

that otherwise would be owed, and certainly in the minds of most 

American people? I am not getting at whether some of these procedures should be declared illegal. I am not getting to that question 

yet. I am just asking kind of the moral question: is it right, is it 

not right? 

Mr. GOLDSTEIN. Senator, I totally agree with the need for total 

transparency. I totally agree that every U.S. taxpayer should be responsible to pay fully their taxes. These blocker entities, as I understand it, are largely set up for the administrative convenience 

of organizations that are otherwise exempt from taxation, like pension plans and universities and foundations. So the purpose of the 

blocker corporations is to maintain tax-exempt income for taxexempt investors. 

The CHAIRMAN. But do these devices not enable an entity to 

avoid paying unrelated business tax which otherwise would be 

paid? 

Mr. GOLDSTEIN. Yes, Senator. 

The CHAIRMAN. Is that a good thing to do, to allow entities to 

avoid paying unrelated business taxes? If they are operating solely 

within the United States, they would pay those taxes? 

Mr. GOLDSTEIN. I think it is an important policy question, Senator. If confirmed, I would look forward to engaging with you and 

your staff and my Treasury colleagues who are more expert in the 

tax arena to try to make that determination. 

The CHAIRMAN. Thank you. 

Senator Grassley, you were not here when we began, so, if you 

want to make an opening statement, now is the time to do it, or 

questions, whatever you wish to do. 

Senator GRASSLEY. Yes. Questions. Thank you. 

I would like to put my opening statement in the record. 

The CHAIRMAN. All right. 

Senator GRASSLEY. And there are some addendums with that, 

too. 

The CHAIRMAN. All right. Without objection, it will be included. 

[The prepared statement of Senator Grassley appears in the appendix, with addendums.] 

Senator GRASSLEY. And, Mr. Goldstein, I am going to ask questions along the lines of what has just been asked here about the 

11 

blockers. As you know, many tax-exempt entities, including pension 

funds, private foundations, and university endowments, invest in 

offshore UBIT blockers. They are called UBIT blockers because the 

sole purpose for investing in them is for these tax-exempt entities 

to avoid Unrelated Business Income Tax, or UBIT, for short. These 

blockers are created by hedge funds and private equity firms. 

These firms set up these foreign corporations in low-tax foreign 

countries, including the Cayman Islands. We have heard testimony 

in this committee many times by different members about over 

12,000 corporations residing at the Ugland House in the Cayman 

Islands, and that is an example of that. So, 12,000 corporations residing at that one address. Other firms, including yours, used 

Walker House, just a few blocks from the Ugland House. That 

would tell you where that is. 

The members of the committee understand the use of blocker corporations is very legal; however, I could raise the same questions 

that the chairman just raised. I appreciate very much your saying 

you are willing to work with us on these issues; however, their now 

being legal, we are working to close tax avoidance loopholes. Since 

the President campaigned on cracking down on offshore corporations set up for the purpose of avoiding U.S. tax, I hope that we 

can work with him in shutting down these UBIT blockers. 

In the meantime, given your experience with private equity firms 

that use blocker corporations, I would like to follow up with some 

of the written answers that you provided me in advance of this 

hearing. 

So, here are some questions, and I hope you can answer them 

just ‘‘yes’’ or ‘‘no,’’ because I think it will not take a lot of explanation. In one response, you stated, ‘‘The blockers used by Hellman 

and Friedman for its tax-exempt investors help minimize or eliminate unrelated business tax for those tax-exempt entities.’’ 

So I want to be clear about this. One of the purposes of the 

blocker used by your firm was to minimize, or even eliminate, U.S. 

taxes for some investors. Is that right? 

Mr. GOLDSTEIN. That is correct, sir, for tax-exempt investors. 

Senator GRASSLEY. Thank you. 

You also stated that another advantage to investing in the Cayman Islands includes ‘‘a Commonwealth heritage, including a legal 

system with many similarities to the U.S. legal system.’’ But obviously, if one wants a legal system similar to the U.S. legal system, 

one would get the most similar legal system to the United States 

right here in the United States. Is that right? 

Mr. GOLDSTEIN. I think, sir, as I said before, you raise a very important policy question. I would be pleased and honored to work 

with my Treasury colleagues in trying to address this issue, if confirmed. 

Senator GRASSLEY. All right. 

You also wrote that another advantage to investing in the Cayman Islands is ‘‘English as a common language.’’ But we still have 

English as a common language in the United States, right, so that 

is not a problem here? 

Mr. GOLDSTEIN. Yes. Yes, Senator. 

Senator GRASSLEY. All right. 

12 

Fourth, you also cited as a reason to invest in the Cayman Islands being the ‘‘close geographic and time zone proximity to the 

United States.’’ But, if somebody wants to be close to the United 

States, would they not be even closer to more of the United States 

by actually being in the United States? Right? 

Mr. GOLDSTEIN. Yes, Senator. 

Senator GRASSLEY. All right. Thank you. 

You also wrote that another reason to invest in the Cayman Islands was a ‘‘stable government and investment structure.’’ As stable as the Cayman Islands might be, you, nominated by the President of the United States to serve in the U.S. Government, are not 

claiming that it is more stable than the U.S. Government, are you? 

Mr. GOLDSTEIN. No, sir. 

Senator GRASSLEY. All right. 

And, as a former Wall Street person, you are not claiming that 

the Cayman Islands has a more stable investment structure than 

the United States, are you? 

Mr. GOLDSTEIN. No, sir. 

Senator GRASSLEY. All right. 

My last question. So the only real difference that I hear between 

investing in the Cayman Islands and investing in the United 

States, or the only way that the Cayman Islands investments are 

superior, is the possibility of avoiding U.S. tax. I do not think that 

that is something the American public would agree with or appreciate. I think we have had some inference from you today—not inference, a right-out statement—that you are willing to work with 

us to look at that. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. GOLDSTEIN. Thank you, Senator. 

The CHAIRMAN. Senator Menendez? 

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

First of all, my congratulations to all the nominees. I want to 

focus for a moment on Mr. Sanchez’s nomination, and I would like 

to echo Senator Nelson’s introduction and say I really believe the 

importance of the committee moving expeditiously on the nomination and voting him out of committee. 

I know that there were many questions. I think all of those questions have been answered. This is a critically important position for 

the Nation in terms of trying to create the exports that create the 

jobs here at home at a time in which the creation of jobs and economic growth is incredibly important to the country. 

I want to just emphasize some of the points of Mr. Sanchez’s experience that are relevant to this position. And I think he comes 

eminently qualified for it, as a director of Florida’s Caribbean 

Basin Initiative—that was basically, as members of this committee 

well know, a trade initiative, looking at the Caribbean, how we 

strengthen it, but also how we ultimately enhance our opportunities in that part of this hemisphere; serving in the Office of the 

Special Envoy for the Americas under the Clinton administration— 

incredibly important for the opportunities to open up markets within this hemisphere; Assistant Secretary of Transportation for International Negotiations—in essence, trade negotiations in international forums and spheres, with tremendous expertise, with a 

focus in the context of opening routes and markets in a trade conVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
13 

text, aviation among others, but ultimately with the experience 

that is critically necessary in that respect; working with the World 

Bank and the Inter-American Development Bank. These are economic equations to the advocacy for trade that are incredibly important, and they bring an economic macro level to it as well. 

So, for all these reasons, I think Mr. Sanchez is very wellqualified. Having expressed a view that he is very well-qualified, 

let me add that, as one member of this committee, I take it extremely importantly to have diversity in all of our Federal departments. I am pleased that this nominee adds to that diversity of our 

country. When we are wont to advocate abroad, I think it is critically important that that advocacy be among the most highly qualified people—Mr. Sanchez is—but also shows the face of the Nation 

in its advocacy abroad. That is why national organizations like the 

National Council of La Raza, the League of United Latin American 

Citizens, and others have strongly endorsed his nomination. So add 

me, Mr. Chairman, to Senator Nelson in the fan club here. 

But I have a question. You do not get off that easy. I recently 

joined 13 of my colleagues in the Senate in encouraging President 

Obama to work actively towards the development of a jobs-oriented 

policy in export promotion efforts in addition to offering a bipartisan partnership to develop such a strategy, and I am pleased that 

the President, in his State of the Union address, talked about doubling exports over the next 5 years. 

What role do you see the agency, the division that you would 

head, ITA, under your leadership, playing in the administration’s 

efforts to promote exports through the National Export Initiative? 

Mr. SANCHEZ. Well, first, Senator, thank you for your kind 

words. I appreciate it very much. ITA will play a central role in 

achieving the President’s goal of doubling exports in 5 years, and 

thereby supporting 2 million-plus jobs. I see my role as putting 

forth priorities that can help us achieve that. I mentioned in my 

opening statement five, and I would like to just briefly touch on 

them. 

First, emerging markets. Emerging markets that have a high 

growth rate provide incredible opportunities for American business, 

so we are going to be focusing on those emerging markets. We are 

going to have a 5-year strategy plan so that we are looking ahead 

on where we need to be in each of those critical emerging markets. 

Number two, emerging technology. The United States still invests more in innovation and R&D than any other country in the 

world, and we need to be using that competitive advantage by exporting that technology abroad. So we will be focusing on emerging 

technologies, and in particular clean and green energy. 

Number three, capacity building. As Chairman Baucus mentioned in his opening statement, small business is critical to the 

economic vitality of our country. I want to make sure that, as 

Under Secretary, I am representing all companies, including smalland medium-sized companies, so we are going to focus on capacity 

building to export, whether it be new to export, or if you are a 

small business that has been exporting to one or two markets, get 

you to look at other markets. 

Fourth, as we get more companies exporting, it will be vitally important to vigorously enforce our trade laws and trade agreements. 

14 

If confirmed, I pledge to this committee that I will work very hard 

to make sure that we do just that. 

Fifth, I believe it is very important that American competitiveness have a voice in the inter-agency process and in the policymaking process, and, if confirmed, I look forward to being that 

voice. 

Senator MENENDEZ. Well, we look forward to working with you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator. 

Senator Roberts, you are next. 

Senator ROBERTS. Thank you very much, Mr. Chairman. I want 

to thank all of the witnesses and say good luck in regards to your 

nominations. I am sorry, Mr. Sanchez, you have been held up for 

so long. Most of my comments are going to be directed to Dr. Glied 

because of her unique position in working with Kathleen Sebelius, 

who is a personal friend of mine, the former Governor of Kansas. 

So I am particularly interested in hearing from you, Doctor, on 

your thoughts on what seems to be a preferred method of containing health care costs in the current administration, and I am 

going to say it is rationing. I know that sometimes that is a pejorative, it is controversial. People say we are not rationing, or the 

people point out that there is language, if they can find it, in the 

2,700-page health care bill. 

But regarding the link between cost containment and government rationing, the President has said this: ‘‘The chronically ill and 

those toward the end of their lives are counting for potentially 80 

percent of the total health care bill.’’ He is correct in that regard, 

and it is a real challenge. ‘‘There is going to have to be a very difficult democratic conversation that takes place,’’ said the President. 

And he later said that ‘‘as patients get older, maybe you’re better 

off not having the surgery, but taking the shots and the painkiller 

instead.’’ The President seems to be endorsing the ideas of Dr. Ezekiel Emanuel, Special Advisor to the President, who developed this 

Brave New World graph that now sits behind me. 

As you can see—a very handy prop—the younger and the older 

that you are, the less care that you receive under Dr. Emanuel’s 

plan. The reason I used my cane is that I have taken too many 

shots and painkillers and therapy, and there are a lot of people 

that are even more mature, which is not too easy a task here when 

you hit 70. I think, if you take the average age of Senators, why, 

we are right about here. This is just basically a graph that the doctor has come up with and said, let us take a look at the people who 

contribute to America and those who do not, and those who are undergoing the most cost, and see if we cannot do something about 

it. 

In your book, ‘‘Chronic Condition,’’ you also seem to agree with 

this approach. You speak approvingly of health care rationing via 

waiting lines and other practices that ultimately delay access to 

care. Now, we know that the government already rations health 

care. It is a fact that, despite all of the current enunciations of private insurers for denying coverage for medical claims, it was actually Medicare that had the highest percentage and largest number 

of denied medical claims in 2008, not to mention Medicare’s payment policies for providers that pay doctors only 80 percent and 

15 

hospitals 70 percent. We are trying to do something about that, if 

we possibly can. Medicaid is even worse. We just lost 10 percent, 

but the State decided they were going to cut Medicaid by 10 percent in Kansas. 

As I am sure you are aware, the Centers for Medicare and Medicaid Services, or CMS, has been trying to establish its authority 

to further ration seniors’ health care through a regulatory policy 

known as the ‘‘least costly alternative.’’ However, there is a court 

ruling that said ‘‘whoa!’’ on that. But now the government has a 

new policy with which to ration health care. It is called comparative effectiveness research, or CER. As you know, Doctor, CER is 

research that compares the effectiveness of two or more treatments 

for the same condition. 

As I have said countless times before, I am not against the idea 

of CER, nor am I against advancement of medical science. That 

would be very foolish. However, I firmly believe that, absent some 

very strict patient protection, CER can and will be used to support 

cost containment. 

The stimulus bill from last year included over $1 billion to fund 

comparative effectiveness research; however, that law contains zero 

dollars for directions or restrictions on how that money was to be 

used, and absolutely no patient protection against rationing despite 

the efforts of Senator Kyl and myself. Can you tell me what this 

billion dollars has been used for so far and what your plans are for 

using it in the future, in 34 seconds? 

Dr. GLIED. All right. I very much appreciate your concern about 

ensuring that all Americans have access to appropriate and timely 

medical care, and I share that concern. I think comparative effectiveness research, as you have pointed out, is an important step 

that can help ensure that the care that is delivered is the best possible care. We need to know if research is really necessary within 

the medical enterprise. 

I do not know how the billion dollars is being spent. I am not 

yet in a position to really know that. But I assure you that, if I 

am confirmed as ASPE, I would like to work with you to make sure 

that we get appropriate treatments to all Americans in appropriate 

time. 

Senator ROBERTS. I thank you for that. 

Mr. Chairman, my time has expired. I would like to ask for a second round; I have some additional questions. 

The CHAIRMAN. We will do our very best to accommodate that, 

Senator. A vote has just begun, but let us see what we can do here. 

Senator Nelson is not here. Senator Wyden, you are next. 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Sanchez, I am looking forward to supporting your nomination. We are very encouraged by some of the ideas you are pursuing, and I want to talk about the export initiative in particular. 

Obviously this is a key area that our citizens look to for additional good-paying jobs. What the people of this country want, what 

the people in my State want, is they want to make things, they 

want to grow things, they want to add value to them, and then 

they want to ship them somewhere. That, of course, is what much 

of the Oregon economy is all about. So we are encouraged by the 

National Export Initiative of doubling exports over the next 5 

16 

years, but I think what is important is that we get substantially 

more direction about exactly what is going to happen on a year-byyear basis. 

So my first question to you is, what would you think of the idea, 

as part of this administration effort, we get year-by-year information about what is actually accomplished and what the goals are? 

For example, the number of new businesses that are exporting, the 

number of markets that the businesses sell to. I just do not want 

to, in effect, have us waiting for 5 years and people saying, well, 

gosh, what happened a year and a half into this? What would you 

think about the idea of approaching this on a year-by-year basis, 

both in terms of the key numbers and whether that is attaining the 

goal that the administration wants? 

Mr. SANCHEZ. Senator, I agree with that approach. ITA and 

other agencies that are involved in export promotion need to be 

held accountable and making sure that the programs are doing 

what they are intended to do. If they are not, we need to make 

some mid-course corrections within that 5-year plan. So, I look forward to working with you and this committee to make sure that 

our programs are effective, to be held accountable, and, if we need 

to make changes, do so. 

Senator WYDEN. Mr. Chairman, that is an area I would like to 

work closely with you on. I think I learned, essentially, from some 

of the approaches you have been talking about, that we need this 

on a regular basis so that there is some accountability. 

The CHAIRMAN. Right. 

Senator WYDEN. That is something I would like to work with you 

on. 

The CHAIRMAN. You bet. Good point. 

Senator WYDEN. The second point, Mr. Sanchez, if you get the 

additional resources that you all are asking for, how is that going 

to let you better combat unfair trade practices? I note that the ITA 

is asking for substantially new resources in this area. The focus is 

going to be on combatting unfair trade practices, which I strongly 

support. What would you do if you get the extra money to better 

combat these inequitable practices that undermine our industries? 

Mr. SANCHEZ. Well, if confirmed, I would consider it one of my 

most important roles as the chief trade law enforcement officer, so 

I want to make sure we have the resources and the personnel in 

place to make sure that here at home our companies are playing 

on a level playing field. Equally as important is market access 

issues around the country, particularly market access issues in 

emerging markets where we want American business to be. I believe that we need to take a fresh look and see that we have the 

resources we need in countries like China, India, and others. 

Senator WYDEN. Would you see, for example, putting additional 

individuals in embassies, for example, to identify these unfair trade 

practices? I would like to be able to stand up at a town hall meeting at home and say, when our trade folks are getting this additional money to combat unfair trade practices, this is what they are 

going to do to better deal with it. So how would you see using this 

additional money? 

Mr. SANCHEZ. Well, Senator, if confirmed, one of the first things 

I need to do is make an assessment of what personnel we have in 

17 

the field. I suspect in certain markets like China we probably could 

use additional resources to look at market access issues, to look at 

monitoring to make sure that we have a level playing field. If confirmed, I would look forward to working closely with you and with 

this committee in making sure that we are making the right 

choices in that regard. 

Senator WYDEN. I am pleased to hear you mention China specifically, because this is an important trading partner. I do think that 

we need to do more in this area. We want to talk to you about personnel in the embassies and some of the ideas that we have explored informally with staff folks, because this is a 2-part drill. We 

have to pry open markets—pry open markets for our value-added 

goods and services that are so important to grow this economy, but 

we have to do a better job of combatting unfair trade practices, and 

I want to follow up with you on that. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Cantwell? 

Senator CANTWELL. Thank you, Mr. Chairman, and congratulations to all the nominees. 

Mr. Goldstein, I have a question for you. I know your responsibilities are going to be at the Office of Financial Stability, the implementation of the regulatory reform issues and implementation of 

the TARP program. Do you think that foreign currency swaps 

should be transparent, traded on exchanges and clearinghouses? 

Mr. GOLDSTEIN. Yes, Senator. 

Senator CANTWELL. And so, why do you think there are other 

people at Treasury who disagree with that? 

Mr. GOLDSTEIN. I think that the Treasury has put forward a 

comprehensive regulatory reform package, including improvements 

in the trading practices of OTC derivatives, including capital 

charges for non-traded OTC derivatives. I think the package, taken 

as a whole, is meant to restore confidence in the financial system 

and make sure that we do not put the taxpayers at risk in the way 

that took place at the height of the financial crisis. 

Senator CANTWELL. Well, last year Treasury promised to pull all 

derivatives on regulated exchanges and clearinghouses, but then 

lobbied Congress to leave the foreign exchange swaps, which is now 

a $50-trillion market, out of the new regulatory proposal. I do not 

know. I just look at this situation that has happened with Goldman 

Sachs in Greece. 

I mean, basically Greece paid Goldman Sachs $300 million in 

fees for arranging derivative deals that hid their true debt, and 

then when things looked weak, Goldman Sachs turned around and 

did credit default swaps betting against Greece, and obviously we 

know what happened. I mean, it is all perfectly legal, but in my 

opinion it is a scam and we ought to have these regulated on exchanges and have them be transparent and have them go through 

clearinghouses. You just said you agree? 

Mr. GOLDSTEIN. I am sorry, I misspoke as it relates to foreign exchange, based upon my understanding of the administration’s proposal. I would say to you, Senator, that the administration has put 

forward strong language to ensure that markets are not abused, 

that there is total transparency, that the regulators have the caVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
18 

pacity to step in when they think that markets are not functioning 

properly, where there is not transparency, or there is abusive market practices. 

Senator CANTWELL. All right. I am confused. Maybe you can look 

at what Treasury has done, but you are saying that you support 

putting them on exchanges, clearinghouses and exchanges? 

Mr. GOLDSTEIN. I think, if my understanding is correct, that the 

Treasury proposal—— 

Senator CANTWELL. No, no. I am asking about you, not the 

Treasury proposal. I am asking what you think. 

Mr. GOLDSTEIN. I believe that there is a place for some exemptions with respect to certain specific securities, but I think that the 

intent of the legislation should be identical to the principle that 

you have articulated, Senator. 

Senator CANTWELL. What would those exemptions be? 

Mr. GOLDSTEIN. I think that the exemptions would be in certain 

markets where you could adversely affect the trading in important 

securities, including the dollar, including dollar swaps and other 

things. But I look forward to digging into this in more detail and 

working with you, if confirmed. 

Senator CANTWELL. What worries me is like the ‘‘Volcker rule’’ 

and prop trading. Like, you know, yes, all right, that is a big loophole, too. So I cannot tell if what you are saying is you—because 

right now it is a $50-trillion market for foreign currency swaps, 

and we saw what havoc just happened with Greece. So I do not 

want to see—I mean, Treasury originally advocated for that, but 

then backed away and said, no, it is all right to have loopholes, 

which would mean basically an unregulated market, a huge percentage of these products unregulated. 

So, I guess what I will try to do is get a little more detail out 

of you, because I have another question that it is very important 

that I ask. But maybe we could come back in writing with you on 

what these loopholes are that you would support, because I am certainly not going to support something that I think is going to continue to promulgate the problem that we have. 

On the small business area, which you are also going to have 

oversight over, what are your feelings on how we basically expand 

the viability standards for community banks so we can get more 

lending to small business? 

Mr. GOLDSTEIN. I think that the administration has put forward 

a proposal to try to stimulate credit availability to small- and 

medium-sized enterprises. That, however, would be to banks that 

are deemed to be viable. The objective of that standard is to make 

sure that, if a bank accepts capital, it stimulates additional lending. 

At least in my view, if you change the viability standard for 

banks so that it gets capital only to remain viable, you have not 

achieved the primary objective. The primary objective is to stimulate incremental lending to small- and medium-sized enterprises 

that create jobs in America. 

Senator CANTWELL. Well, first of all, the IG has been critical of 

the fact that Treasury has not gotten a program implemented so 

far, and I remain very concerned that, if capital is not flowing 

through small community banks to small businesses, that our econVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
19 

omy is going to continue to drag. So this is about getting this fixed 

and getting this moving. 

I still advocate that Treasury has the ability to implement this 

program under TARP. I think people are considering moving ahead 

with the legislative proposal, but I still have not seen a proposal 

out of the administration that gives us exactly how this is going to 

work on viability. I think that is the very issue that the administration needs to drill down on. 

I think the American people are frustrated that they are getting 

performing loans canceled right out from under them, and when 

somebody asked about the viability of AIG or some of these other 

institutions, there was no question about viability, the money was 

just turned over to them. So, what are we going to do to actually 

get capital flowing again to small business? I think it is an urgent 

matter, Mr. Chairman. 

The CHAIRMAN. All right. Thank you very much, Senator. I very 

much agree. 

We do not have much time left on this vote, but I will turn the 

hearing over to Senator Grassley. 

Mr. Sanchez, I do believe in benchmarks. I would like you to 

send to this committee, on a semi-annual basis, the progress you 

are making in doubling exports over the next 5 years. That is, 

given your Department, your resources, and what you are doing to 

achieve that. I appreciate that very much. 

Mr. SANCHEZ. If confirmed, I will look forward to doing that. 

The CHAIRMAN. We are going to make sure you get confirmed. 

Mr. SANCHEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Roberts? 

Senator ROBERTS. Thank you. We are calling the floor and saying 

I am limping over there as fast as I can. 

The CHAIRMAN. Right. 

Senator ROBERTS. I have one final question I would like to ask 

for Dr. Glied, if that is all right. 

As I have illustrated in the charts behind me, the four rationers 

are coming. That is not a TV show, but it is something that concerns every doctor, every hospital, every home health care outfit, 

every pharmaceutical—anybody connected with Medicare. The four 

rationers are, and I will use my pointer again, the PatientCentered Outcome Research Institute, the Independent Medicare 

Advisory Board, CMS Innovation Center, and the U.S. Preventive 

Services Task Force. There is a doctor looking down—he has to 

abide by all of these regulations and get these people the advice 

that they do not want, and that is why they have a frowning face. 

They are somewhat elderly, and obviously being touched. 

The Patient-Centered Outcome Research Institute—that is a 

fancy name for the agency that will conduct CER. Independent 

Medicare Advisory Board. That name has changed many times, but 

its authority to ration via payment policy decisions by unelected experts has remained constant. The CMS Innovation Center. They 

grant even more rationing authority to administer Medicare and 

Medicaid. 

Finally, the U.S. Preventive Services Task Force, which became 

famous when they said that women should not get regular mammoVerDate Nov 24 2008 17:00 Sep 08, 2011 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\67954.000 TIMD
20 

grams to detect breast cancer starting at 40, despite longstanding 

advice to the contrary. I would just like to ask, if you could use the 

CMS Innovation Center to deny payment for patient care based on 

the decisions of the U.S. Preventive Service Task Force, such as the 

one concerning availability of mammograms, basically what are you 

going to do with the advice of all of these rationers? 

We have about 3 minutes, but I have to go vote. So I know what 

you are going to say: you are going to work with us in a way to 

protect patient care, and that you are not going to have all these 

outfits telling you what to do with cost containment, and you and 

Kathleen Sebelius will do a good job, right? 

Dr. GLIED. That is exactly what I am going to say. 

Senator ROBERTS. Thank you very much. I appreciate it. 

Senator GRASSLEY. I believe that my series of questions will be 

the last ones, and then Senator Baucus said I could adjourn the 

hearing. But if some other member comes back, then I will leave 

that up to them to make that decision. 

I am going to start with Mr. Sanchez. You were nominated a 

long time ago, and I know you are anxious to get to work, so I 

would like to describe why your hearing has been so long in coming. HSS has been conducting a review of the Corporation for the 

Development of Communities in Tampa, FL, pertaining to administration of a grant loan. 

Given your leadership roles with both the CDC of Tampa and the 

company the loan was made to, this committee’s oversight responsibilities with respect to presidential nominations dictated that this 

committee wait until that review was concluded. 

So would you please describe the circumstances of the loan to 

Renaissance Steel and how you came to be CEO of Renaissance 

Steel after the loan was made by the CDC of Tampa? And specifically a question: why was Renaissance Steel unable to pay back the 

loan to the CDC of Tampa? 

Mr. SANCHEZ. Yes, Senator. Thank you for the opportunity to address this matter. 

I was approached by the president and CEO of the Community 

Development Corporation of Tampa, otherwise known as the CDC 

of Tampa, to serve on its board in the summer of 2003. I was 

drawn to accept that offer because of the mission of the CDC. Its 

role is to bring economic revitalization to one of the poorest parts 

of my hometown of Tampa, so I accepted. 

The CDC, in the summer of 2005, began discussions with investors in a start-up company called Renaissance Steel about locating 

their new operation in east Tampa. From those discussions, the 

staff of the CDC came to the board with a proposal, and that was 

to seek a grant from the Department of Health and Human Services, the proceeds of which would be given in the form of a loan 

to Renaissance Steel for job training, for capital equipment purchases, and for working capital. 

In September of 2005, HHS awarded that grant to the CDC. The 

following year, in approximately April of 2006, I was approached 

by the shareholders of Renaissance Steel to consider joining Renaissance as their chief executive officer. In part, I was attracted to 

the offer because of the role they were playing in east Tampa in 

helping revitalize that part of our city. 

21 

The CDC staff brought before the CDC board the final request 

to disburse the monies to Renaissance Steel, and I recused myself 

because I now had a relationship with Renaissance Steel. Subsequently, I resigned from the CDC board. As you noted, a few weeks 

ago the HHS review was completed and found that CDC acted appropriately. 

Renaissance Steel was a company that manufactured light-gauge 

steel walls and trusses for houses and for commercial buildings, 

and, although it got off to a slow start, it picked up, and sales were 

doing well. Unfortunately, it had some operational challenges and, 

with the downturn in the economy, things got progressively worse 

for this young company. 

It worked for 2 years and provided jobs for those 2 years, but unfortunately, in November of 2007, had to close its doors because it 

did not have sufficient resources to go forward, and unfortunately 

it left some debts open, including the one to the CDC. 

Senator GRASSLEY. All right. I thank you for your transparency 

on that issue. 

I do have a policy question to ask you about trade. I ask this 

question of a lot of trade people who come before this committee; 

in fact, tomorrow we will be talking with the Special Trade Representative. The administration has been talking a lot about the 

need to increase exports as a way of creating jobs, and yet there 

has been no progress on what should be a core part of that strategy, implementing trade agreements with Colombia, Panama, and 

South Korea. Instead of leveling the playing field, we are allowing 

our trading partners to tilt it further away from us. The administration’s refusal to act on these three agreements discredits its export strategy, in my view. 

Do you agree that implementing these agreements would help increase exports, and, if confirmed, will you promote prompt implementation of these trade agreements? 

Mr. SANCHEZ. Yes, I do, Senator. I believe that the pending free 

trade agreements, and free trade agreements generally, play an important role in the expansion of our exports. If confirmed, I look 

forward to working with you, with this committee, and with USTR 

to resolve whatever remaining issues are left with respect to Colombia, Panama, and South Korea so we can bring them before the 

Congress and have them passed. 

Senator GRASSLEY. Yes. 

And Dr. Glied, I have a couple of questions that I ask a lot of 

people who come before us, because they are kind of nut-and-bolt 

type questions, and I like to know what a person’s view is. They 

kind of relate to either the faithful execution of the law or the 

checks and balances between Congress and the executive branch. 

The Constitution established a system of checks and balances intended to ensure the American people of a fair and honest and 

transparent government. 

Congressional oversight of the executive branch operation is a 

linchpin of the checks and balances system. Oversight of HHS programs and activities requires review of documents and interviews 

with agency officials and other employees who work there. 

In furtherance of our oversight responsibilities, we often ask the 

Government Accountability Office to evaluate HHS programs and 

22 

activities. In addition, we ask the HHS Office of Inspector General 

to follow up on complaints regarding specific agencies and/or programs. 

Would you commit to working with Congress, the Government 

Accountability Office, and OIG in a timely and constructive manner 

to address the oversight and other needs of Congress, and will you 

encourage others to do so? 

Dr. GLIED. Yes, sir, I will. 

Senator GRASSLEY. Yes. I know you are very sincere about answering it, but let me tell you what the practice is. We write letters. Sometimes we get answers to the letters, sometimes we do 

not. I am not talking just about your department, I am speaking 

generally. I think there is an institutional disease that wants to 

drag its feet anytime Congress asks questions, so we get answers 

to letters, and you get partial answers, and you send letters back. 

But there is really—not just in your department but a lot of departments. I could hold a chart up here, as I did for Secretary 

Sebelius, and say there was one letter that is 370 days old that is 

not answered yet, and that was probably 20 days ago, so 390 days 

today. So, I hope that people will take seriously transparency of 

government. The public’s business ought to be public, except maybe 

for national security, intelligence, and privacy issues. Otherwise, 

what is the big deal? 

I often like to remind people that it seems like the struggle to 

not answer questions takes more time than just answering the 

questions. A lot of times a lot of people in positions like yours actually end up in more of a problem than if they had just answered 

the questions. So there has to be—and I am not talking about 

Democratic administrations any more than Republican administrations, I hope you know that. It is just something on which I wish 

that we could get complete cooperation. 

The second one deals with a favorite of mine, because I got it 

passed in 1986: amendments to the False Claims Act. I think you 

probably know what that is; if you do not, I will explain it. As author, and last year getting even some amendments to it to correct 

some court decisions where the court gets everything wrong and 

you have to go back to square one—so we got some of that done, 

called the FERA bill, of a year ago, the Fraud Enforcement and Recovery Act. I worked with Senator Leahy on that. So I am obviously 

a supporter of the False Claims Act. Primarily, I like to make use 

of, and protect, qui tam provisions. 

Three questions I have: will you work cooperatively with the Justice Department to vigorously enforce the False Claims Act? 

Dr. GLIED. Absolutely. 

Senator GRASSLEY. Will you oppose efforts by industry groups— 

now, you may think these things never happen, but I am telling 

you—— 

Dr. GLIED. No, I am sure they do. 

Senator GRASSLEY. Would you oppose efforts by industry groups, 

including the health care industry, to weaken the False Claims Act 

and qui tam provisions of the False Claims Act? 

Dr. GLIED. I would oppose such efforts. 

Senator GRASSLEY. Would you agree to promote a close working 

relationship between qui tam relators and the Department of 

23 

Health and Human Services for the purposes of reducing fraud and 

abuse in the Federal Government health care programs? 

Dr. GLIED. Yes, sir. 

Senator GRASSLEY. And will you work cooperatively with who? 

With me—— 

Dr. GLIED. With you. 

Senator GRASSLEY [continuing]. To ensure the original intent of 

the False Claims Act, that it is adhered to? 

Dr. GLIED. I look forward to working cooperatively with you on 

that, and other issues as well. 

Senator GRASSLEY. You ought to get a unanimous vote. [Laughter.] 

Thank you all very much. 

The hearing is adjourned. 

[Whereupon, at 12:42 p.m., the hearing was concluded.] 

(25) 

A P P E N D I X 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD


67954001.eps
26 


67954.002
27 


67954.003
28 


67954.004
29 


67954.005
30 


67954.006
31 


67954.007
32 


67954.008
33 


67954.009
34 


67954.010
35 


67954.011
36 


67954.012
37 


67954.013
38 


67954.014
39 


67954.015
40 


67954.016
41 


67954.017
42 


67954.018
43 


67954.019
44 


67954.020
45 


67954.021
46 


67954.022
47 


67954.023
48 


67954.024
49 


67954.025
50 


67954.026
51 


67954.027
52 


67954.028
53 


67954.029
54 


67954.030
55 


67954.031
56 


67954.032
57 


67954.033
58 


67954.034
59 


67954.035
60 


67954.036
61 


67954.037
62 


67954.038
63 


67954.039
64 


67954.040
65 


67954.041
66 


67954.042
67 


67954.043
68 


67954.044
69 


67954045.eps
70 


67954046.eps
71 


67954047.eps
72 


67954.048
73 


67954.049
74 


67954.050
75 


67954.051
76 


67954.052
77 


67954.053
78 


67954.054
79 


67954.055
80 


67954.056
81 


67954.057
82 


67954.058
83 


67954.059
84 


67954.060
85 


67954.061
86 


67954.062
87 


67954.063
88 


67954.064
89 


67954.065
90 


67954.066
91 


67954.067
92 


67954.068
93 


67954.069
94 


67954.070
95 


67954.071
96 


67954.072
97 


67954.073
98 


67954.074
99 


67954.075
100 


67954.076
101 


67954.077
102 


67954.078
103 


67954.079
104 


67954.080
105 


67954.081
106 


67954.082
107 


67954.083
108 


67954.084
109 


67954.085
110 


67954.086
111 


67954.087
112 


67954.088
113 

Æ 


67954089.eps