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43–288 PDF 2008

S. HRG. 110–585 

THE PRESIDENT’S FISCAL YEAR 2008 WAR 

SUPPLEMENTAL REQUEST 

HEARING 

BEFORE THE

COMMITTEE ON APPROPRIATIONS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SPECIAL HEARING 

APRIL 16, 2008—WASHINGTON, DC 

Printed for the use of the Committee on Appropriations 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 
(II) 

COMMITTEE ON APPROPRIATIONS 

ROBERT C. BYRD, West Virginia, Chairman 

DANIEL K. INOUYE, Hawaii 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

BARBARA A. MIKULSKI, Maryland 

HERB KOHL, Wisconsin 

PATTY MURRAY, Washington 

BYRON L. DORGAN, North Dakota 

DIANNE FEINSTEIN, California 

RICHARD J. DURBIN, Illinois 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

JACK REED, Rhode Island 

FRANK R. LAUTENBERG, New Jersey 

BEN NELSON, Nebraska 

THAD COCHRAN, Mississippi 

TED STEVENS, Alaska 

ARLEN SPECTER, Pennsylvania 

PETE V. DOMENICI, New Mexico 

CHRISTOPHER S. BOND, Missouri 

MITCH MCCONNELL, Kentucky 

RICHARD C. SHELBY, Alabama 

JUDD GREGG, New Hampshire 

ROBERT F. BENNETT, Utah 

LARRY CRAIG, Idaho 

KAY BAILEY HUTCHISON, Texas 

SAM BROWNBACK, Kansas 

WAYNE ALLARD, Colorado 

LAMAR ALEXANDER, Tennessee 

CHARLES KIEFFER, Staff Director 

BRUCE EVANS, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

Opening Statement of Chairman Robert C. Byrd ................................................. 1 

Statement of Senator Thad Cochran ...................................................................... 3 

Statement of Hon. Jim Nussle, Director, Office of Management and Budget .... 4 

Prepared Statement ......................................................................................... 7 

Prepared Statement of Senator Ben Nelson .......................................................... 35 

Additional Committee Questions ............................................................................ 38 

Question Submitted by Senator Robert C. Byrd ................................................... 38 

Questions Submitted by Senator Daniel K. Inouye .............................................. 39 

Questions Submitted by Senator Patrick J. Leahy ............................................... 41 

State and Local Law Enforcement Assistance Grants ......................................... 41 

Crime Victims Fund ................................................................................................ 42 

Transportation/Infrastructure Needs ..................................................................... 44 

Government Contractors Avoiding U.S. Payroll Taxes ........................................ 45 

(1) 

THE PRESIDENT’S FISCAL YEAR 2008 WAR 

SUPPLEMENTAL REQUEST 

WEDNESDAY, APRIL 16, 2008 

U.S. SENATE, 

COMMITTEE ON APPROPRIATIONS, 

Washington, DC. 

The committee met at 12 noon, in room SD–106, Dirksen Senate 

Office Building, Hon. Robert C. Byrd (chairman) presiding. 

Present: Senators Byrd, Inouye, Leahy, Harkin, Mikulski, Kohl, 

Murray, Dorgan, Feinstein, Durbin, Landrieu, Reed, Nelson, Cochran, Stevens, Gregg, Bennett, and Craig. 

OPENING STATEMENT OF CHAIRMAN ROBERT C. BYRD

Chairman BYRD. Good afternoon, ladies and gentlemen. 

Senator Specter announced yesterday that his health has hit a 

small bump in the road. While many of us know what it is like to 

face a health challenge, I know this man. His strong, fighting spirit 

will quickly lead him on the path to recovery. 

On September 26, 2007, we heard from Secretary of Defense 

Gates and Deputy Secretary of State Negroponte. Today we will 

hear testimony from the Director of the Office of Management and 

Budget, Jim Nussle. Welcome, Mr. Nussle. 

Eleven months ago, Congress sent the President a war funding 

supplemental that included clear direction to bring our troops home 

by December 2007. The President chose to veto that bill. If he had 

signed that bill, most of our troops would already be home. But instead of bringing our troops home, the President decided to increase our commitment of U.S. troops and treasure to a war that 

has now entered its sixth year. Over 4,000 U.S. servicemembers 

have died, dead, dead, dead. Over 30,000 U.S. servicemembers 

have been wounded. By the end of 2008, the war in Iraq will have 

cost a whopping—did you hear that? A whopping $600 billion, 

spelled with a ‘‘B’’. $600 billion. 

In the next few weeks, the Appropriations Committee will con- sider the President’s request for Congress to approve another $108 

billion of emergency funding, mostly for this war in Iraq. We will 

be considering the President’s request at a time when the U.S. 

economy is by most accounts in serious trouble, and I do not mean 

maybe. Under the President’s fiscal leadership, the U.S. Government will have piled up the five largest deficits in the history of 

this republic. It took 212 years. Remember that. 212 years and 42 

U.S. Presidents to accumulate $1 trillion of foreign-held debt. But 

in only 7 years, President George W. Bush has more than doubled 
2 

the debt our country owes to China, Japan, and other foreign countries. 

Economic growth came to a virtual halt at the end of 2007, with 

the gross domestic product for our economy falling from 4.9 percent 

in the third quarter to 0.6 percent in the fourth quarter. The unemployment rate rose in March to 5 percent from 4.8 percent in February. The construction trades have lost 394,000 jobs since September 2006. Manufacturing employment has fallen by 310,000 

jobs within the last 12 months. Since March 2007, the number of 

unemployed has increased by 1.1 million workers to 7.8 million. 

Meanwhile, food and fuel prices are climbing dramatically. Dramatically I say. 8.8 million homeowners have mortgages that exceed the value of their homes, and foreclosures have increased 57 

percent. 

A careful review of President Bush’s request reveals no evidence—none—of funding to bolster our country’s economy or to 

help Americans deal with lost jobs or mortgages, foreclosures, and 

the rising cost of living. Food costs have grown by 10 percent, and 

yet there is nothing—nothing in the President’s supplemental request to strengthen the Women, Infants, and Children’s (WIC) Nutrition Program. 

Home heating oil costs have climbed 37 percent, and yet there 

is no additional funding for low income home energy assistance. 

None. 

And there is nothing in the President’s request to address the 

alarming crumbling of our infrastructure. Yet, the President has 

thrown down the gauntlet and threatens to veto the supplemental 

bill if the Congress has the temerity—get that—to add one thin 

dime to his request in order to help our citizens cope with the situation. 

What a contrast to the President’s request for assistance for Iraq. We have already poured $45 billion—B—capital B—$45 billion of 

our citizens’ hard-earned tax dollars and poured our citizens’ sweat 

and blood and tears into reconstruction projects in Iraq, projects 

that have done little to promote political reconciliation. That is 45 

billion American dollars gifted to Iraq despite the fact that the 

Iraqi Government is running a huge surplus due to its excess oil 

revenues. 

Now, the President is asking this Congress to shovel yet another 

$3 billion of American taxpayers’ dollars to continue rebuilding 

Iraq. Well, I say charity begins at home. The President wants 

money to build schools in Sadr City but not in Seattle. Why does 

he demand money for roads in Ramadi and nothing for roads in 

Richmond? Why? Why I say? The President wants money for Mosul 

but not one thin dime for Minneapolis. Why is he determined to reconstruct Baghdad but nothing for Baltimore, or Biloxi, or Birmingham? 

Mr. Director, the President repeatedly states that Congress 

should show support for the troops by rubber stamping a $108 billion war supplemental that ignores American needs. 

We supported the troops last year when we sent the President 

a war supplemental that increased funding to provide better 

healthcare to our service members, better healthcare to our veterans, more funding to equip and train the National Guard and Re-
3 

serves, more funding for mine resistant vehicles, and clear direction to bring our troops home. 

This year, we will once again take good care of our troops, but 

we must also invest in our own economy and take care of our people here at home. To fail to do so will only further dampen our 

economy, work a hardship on our citizens, and deplete our ability 

to pay these endless—endless—ever-climbing requests for more 

money to fund this dreadful, intolerable, hateful war in Iraq. The 

well is running dry and it is time to prime the pump. 

One note to the audience. You better listen now. I will not, 

n-o-t, not—tolerate disruptions of this hearing. I have instructed 

the Capitol Police to immediately remove any member—and do not 

think I will not do it—any member of the audience—any member 

of the audience who attempts to disrupt or interfere with this proceeding. Did you hear that? 

Director Nussle, we look forward to your testimony today. 

I now turn to Senator Cochran for any opening statement that 

he may wish to make. 

STATEMENT OF SENATOR THAD COCHRAN

Senator COCHRAN. Mr. Chairman, I am pleased to welcome the 

Director of the Office of Management and Budget (OMB), Jim 

Nussle, to our committee. 

It has now been over 14 months since the President submitted 

his fiscal year 2008 supplemental request to support our efforts in 

Iraq and Afghanistan. The President requested these funds to give 

our armed forces and our diplomatic core the tools they need to implement the policies of the United States Government, to advance 

our national security interests, and to improve the opportunity for 

the people of Afghanistan and Iraq for a free and stable future. Of the President’s initial request, more than $108 billion has yet 

to be acted on by Congress. I hope this hearing is an indication 

that the committee and the Congress as a whole is prepared to act 

expeditiously on the remainder of the request. 

At the end of last year, Congress approved only $70 billion of the 

President’s outstanding supplemental request. Enacting even that 

amount required a protracted struggle between the House and the 

Senate and the President. As a result, the Department of Defense 

(DOD) had to issue furlough notices, make a series of transfers and 

reprogramming of funds, and it undermined its efficiency in the 

process. 

I hope that we will not repeat that process, but I fear we are 

headed in that direction. Perhaps Director Nussle can tell us today 

how much time we have to work with and the ramifications of our 

failing to act promptly. 

I am not suggesting that this committee or the Congress simply 

approve the President’s request without any question. We have a 

duty to analyze the request and make changes where we think 

they are appropriate. But we must not lose sight of a greater duty 

to give the men and women of our armed forces and diplomatic 

corps the resources they need to succeed in their mission. 

We have had the President’s request for 14 months. We have 

held hearings. Members and staff have had numerous meetings 

with administration officials and other interested parties and we 
4 

have received an updated report from General Petraeus and Ambassador Crocker. 

It is time to act and to get this supplemental to the President. 

Chairman BYRD. Mr. Nussle. 

STATEMENT OF HON. JIM NUSSLE, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET 

Mr. NUSSLE. Thank you, Mr. Chairman. I appreciate the opportunity and the invitation to appear before you today. I look forward 

to discussing the critical and urgent needs of our men and women 

in uniform and diplomatic corps, and I thank you for the bipartisan 

support that has been shown for previous war funding requests. 

The President has two key budget priorities that he keeps in 

mind constantly that I am instructed in my position to uphold, and 

that is to keep America safe and secure and to strengthen the U.S. 

economy. These twin goals of national security and economic 

growth are really interlinked. Our country really cannot prosper 

and cannot be successful if we are not both safe and free at the 

same time. 

Our war funding request, which has been pending before Congress now for more than 1 year, directly addresses the President’s 

national security goal, and last week the President asked Congress 

to quickly pass a fiscally responsible bill that meets the needs of 

our troops and does not tie the hands of our military commanders. 

And he did pledge, as the chairman said, to veto a bill that does 

not meet this criteria or spends more than the requested amount 

of $108.1 billion. The Secretary of Defense has provided you with 

the most up-to-date details that we have and that he has to support the needs of our troops in the field and to support this process. 

The timely consideration of the bill is as important as its contents. Congress, I believe, needs to fund our troops by Memorial 

Day. Senator Cochran mentioned when. I believe Memorial Day is 

the time that we need to function under. Failure to act quickly 

could result in an unfortunate replay of what happened last December when furlough warnings were issued by the Department of 

Defense. So I suggest that no one here believes that would be an 

acceptable outcome. It is not good as a way to budget, and it is certainly not good for the morale of our troops and members of the 

diplomatic corps and their families. 

So while strengthening our national defense, the President also 

continues to focus his attention and time to helping to ensure that 

our economy builds momentum. He worked with you and the rest 

of the Congress on a bipartisan $160 billion stimulus package that 

was aimed at bolstering economic growth. And you passed it and 

he signed it in a bipartisan way. Families will soon be receiving the 

tax rebates. Small businesses are already beginning to use the incentives to encourage new investment and job creation, and the administration has also taken concrete steps to help Americans stay 

in their homes. 

To help aid in job creation, he also proposes to open new markets 

for American farmers and manufacturers and workers. And to 

bring certainty in an uncertain economic environment, the President’s budget seeks to make tax relief permanent, a step that will 

prevent over 116 million taxpayers from facing an average tax hike 
5 

in the next 2 years of about $1,800. So that is an important part 

of the dynamic here today. 

In addition to all of this, we had prompt administrative action. 

We are still, I believe, needing to do work together on housing, and 

I urge the Congress to consider and approve the Federal Housing 

Administration (FHA) reform that was first submitted by the administration to the Congress more than 2 years ago. 

We share your economic concerns. However, we need to trust and 

allow the bipartisan stimulus that we all agreed to—give that 

package time to work, as we all agreed to back in January. The answer is, I believe, not at this point in time to meet our economic 

challenges, to take more money away from families and from small 

businesses and individuals and just use it for more Government 

spending. Expanding Government in my opinion does not create 

one more job in my hometown of Manchester, Iowa, but it does 

take money out of the private economy that would, I believe, help 

put families in a better position. It would be put to better use by 

those families and small businesses and people that are creating 

jobs in my hometown and all of yours. 

There are always many worthy ideas that, if could be funded, 

would be funded if resources were unlimited. And I can say that 

after 7 months in my job here at OMB, I can testify to you with 

certainty that many of these ideas that we are asked to fund reflect 

a sort of a sky is the limit mind set, but this money does not belong 

to us, as the chairman well knows. It belongs to the people of 

America. It belongs to the taxpayers. 

As you are well aware, there are two processes for allocating 

Federal funding that this committee steers: the regular appropriations process and, of course, the emergency supplemental appropriation process. And I believe we have a different philosophy in 

approaching these two types of funding. 

The administration chose to request war funding as an emergency supplemental in order to provide flexibility to the Department of Defense and our military commanders in order to address 

the changes that inevitably occur on the ground. The ability to respond to changing conditions and requirements in the field has and 

will continue to ensure that our troops have the very best resources 

to succeed in their mission. We also chose to request war funding 

as an emergency to ensure that when our troops come home, we 

have not left the Department of Defense with an over-inflated 

budget that could be difficult to adjust in the future. 

This is the request that has been pending before the Congress 

basically for the past 14 months. This committee heard testimony, 

as the chairman said, from the Secretaries of Defense and State approximately 1 year ago. But today, we need to act. 

I believe we are here today, unfortunately, to discuss how we can 

add to that bill and load up the troop funding bill with tens of billions of additional dollars of spending, perhaps because it may be 

viewed by members and Senators as the last money train out of 

town. Having served in the Congress, I understand that tendency. 

The President has made it clear that he will veto any attempt to 

hijack this much needed troop funding bill. 

So let me be clear. That is not to say that Congress in its wisdom, obviously, cannot pursue funding for other items it deems im-
6 

portant. Of course, that is appropriate, and I do not need to tell you 

that. But there is a time and place that we believe these programs 

should be debated and considered on their merits, and that is during the annual appropriations process. This committee is poised to 

consider 12 appropriation bills, totaling nearly $1 trillion, and I believe within that total proposed by the President, Congress would 

be able to find room for many good ideas that the members have 

in order to address the concerns and priorities. And I believe it can 

and should be done soon. 

I know this committee wants to get its work done and wants to 

get it done on time and wants to get it done within budget. But 

it is disturbing to hear from some corners of Congress that we 

should put the Government on auto pilot until next year. If that 

is so important to possibly get a better deal from the next President, if it is so important to the economy, if it is so important to 

the priorities that I am sure we will talk about here today and in 

the future, then I think it is also important to accelerate the process of the annual appropriations process rather than deflect or 

delay that responsibility for the next President. 

So I hope the committee will consider to deliberate over providing funding for programs critical to many of our most vulnerable 

citizens, but holding troop funding hostage for this purpose I do not 

believe is acceptable to any American. 

And just adding more Government spending does not really solve 

our Nation’s economic challenges, especially when measured 

against the already large $3 trillion annual budget that is spent for 

many of those purposes. Any infrastructure that is necessary and 

appropriate for Federal spending can and should be funded like 

any other regular appropriation bill and priority through that annual process. 

A bill to fund our troops that are serving in harm’s way should 

not be transformed into a vehicle for lawmakers to fund domestic 

programs that were underfunded last year during the appropriations process and possibly even push the deficit even higher. It will 

be a difficult road ahead to balance the budget. We know that for 

the short term, but it still remains a high priority, I believe, on 

both sides of the aisle and on both sides of Pennsylvania Avenue. 

But we believe that the war funding request before you is already 

factored not only into those budget projections, but the tens of billions of additional spending in the committee that may be considered over and above that have not been factored into that consideration and the deficit would only go higher. 

So I look forward to hearing the committee’s perspective and answering the questions. And, Mr. Chairman, it is an honor to be before you here today. If I may say personally, having been a chairman myself, if I could write the contract today to look as good as 

you do today as a chairman, I would sign up for it. And I appreciate the honor of being before you here today. Thank you. 

Chairman BYRD. Thank you. You get an A-plus for that. 

Mr. NUSSLE. I am doing the best I can, Mr. Chairman. 

Chairman BYRD. You are doing all right. 

[The statement follows:] 
7 

PREPARED STATEMENT OF JIM NUSSLE

Mr. Chairman, Senator Cochran, and members of the Committee, I thank you for 

the opportunity to appear before you today. I look forward to discussing the critical 

and urgent needs of our men and women in uniform, and I thank you for the bipartisan support for previous war funding requests. 

The President has two key budget priorities: keeping Americans safe and secure, 

and strengthening the U.S. economy. These twin goals of national security and economic growth are interlinked. Our country cannot prosper if it is not both safe and 

free. 

Our war funding request, which has been pending before Congress for more than 

a year, directly addresses the President’s national security goal. Last week, the 

President asked Congress to quickly pass a fiscally responsible bill that meets the 

needs of our troops and does not tie the hands of military commanders. And he 

pledged to veto a bill that doesn’t meet these criteria or spends more than the requested amount of $108.1 billion. The Secretary of Defense has provided you the 

most up to date details to support these needs for our troops in the field. 

The timely consideration of the bill is as important as its contents. Congress 

needs to fund our troops by Memorial Day. Failure to act quickly could result in 

an unfortunate replay of last December, when furlough warnings were issued by the 

Department of Defense. No one thinks that is an acceptable outcome—it’s not a good 

way to budget and it’s bad for the morale of our troops and their families. 

While strengthening our national security, the President continues his focus on 

helping our economy build momentum. He worked with Congress on a bipartisan 

$160 billion stimulus package aimed at bolstering economic growth. Families will 

soon receive the tax rebate payments, small businesses are beginning to use incentives that encourage new investment and the Administration has also taken concrete steps to help Americans stay in their homes. 

To help aid job creation, he proposes to open new markets for American farmers, 

manufacturers and workers. And to bring certainty in an uncertain economic environment, the President’s budget makes tax relief permanent—a step that will prevent 116 million taxpayers from facing an average tax hike of $1,800. In addition 

to prompt Administrative action, there is still work to do on housing, and I urge 

Congress to approve the FHA reform first submitted by the Administration more 

than two years ago. We share your economic concerns, however we should trust and 

allow the bipartisan stimulus time to work. 

The answer to our economic challenges is not to take more money away from people through higher taxes to then use it for more government spending in Washington. Expanding government doesn’t create one job in my hometown of Manchester, Iowa but it does take money out of the private economy that would be put 

to better use by families and job-creators. There are many worthy ideas that could 

be funded if resources were unlimited. And after seven months in this OMB job, I 

can testify that many of the ideas we’re asked to fund reflect a sky is the limit 

mindset. But this money doesn’t belong to us—it’s the taxpayers’ money. 

As you are all well aware, there are two processes for allocating federal funding 

that this Committee steers: The regular appropriations process, and emergency supplemental bills. I believe we have two very different philosophies with respect to 

these types of funding. 

This Administration chose to request war funding as an emergency supplemental 

request to provide flexibility to the Department of Defense and our military commanders to address changes on the ground. The ability to respond to changing conditions or requirements in the field has and will continue to ensure our troops have 

the very best resources to succeed in their mission. We also chose to request war 

funding as an emergency to ensure that when our troops come home we have not 

left the Department of Defense with an over-inflated budget that could be difficult 

to adjust in the future. 

This is the request that has been pending before Congress basically for the last 

14 months. This Committee heard testimony on this request from the Secretaries 

of Defense and State approximately one year ago. But today, rather than acting on 

that request, I believe we are here today discussing the desire of some in Congress 

to load up this troop funding bill with tens of billions in additional spending, perhaps because it’s viewed as the last big money train out of town before the election. 

The President has made clear that he will veto any attempt to hijack this much 

needed troop funding bill. 

Let me be clear—that it is not to say Congress in its wisdom cannot pursue funding for other items it deems important. But there is a time and a place for these 

programs to be debated and considered on their merits, and that is during the annual appropriations process. This Committee is poised to consider 12 annual spend-
8 

ing bills totaling nearly one trillion dollars, and within that total proposed by the 

President, Congress should be able to find room for whatever good ideas members 

may have, and do so soon. 

I know this Committee wants to get its work done, on time and within budget, 

but it’s disturbing to hear from some corners of Congress that we should put the 

government on auto pilot until next year. If it is so important for the economy to 

accelerate new spending, then why would Congress punt until the next President? 

I hope this Committee will seek to deliberate over and provide funding for programs 

critical to many of our most vulnerable citizens, but holding troop funding hostage 

for this purpose should not be acceptable to any American. 

Just adding more government spending does not solve our Nation’s economic challenges—especially when measured against an already large $3 trillion annual budget. Any infrastructure spending that is necessary and appropriate for Federal spending can and should be funded like any other regular Federal priority, through the 

annual spending bills. A bill to fund our troops serving in harm’s way should not 

be transformed into a vehicle for lawmakers to fund domestic programs that were 

last year and to push the deficit even higher. 

It will be a difficult road to balance the budget in the short-term, but it remains 

a high priority not just for the Administration, but more importantly, for the American people. The war funding request before you is already factored into our budget 

projections. The tens of billions in additional spending this Committee may consider 

are not. 

I look forward to hearing the Committee’s perspective and answering your questions. 

Chairman BYRD. Director Nussle, according to the American Society of Engineers, our Nation has 590,000 bridges, and one out of 

every four is structurally deficient or functionally obsolete. One of 

those bridges was the I–35 bridge that collapsed in Minnesota last 

year. Because of congested roads, Americans sit in traffic for 3.5 

billion hours annually at a cost of $63 billion to the economy. 

Our airways are not much better. Airports are struggling to accommodate an increasing number of airplanes and jumbo jets, and 

passengers are forced to wait interminably on runways. 

Inter-city passenger rail service is in a precarious state of near 

bankruptcy. 

There are 3,500 deficient and unsafe dams, posing a direct risk 

to human life should they fail. 

Water facilities are unable to comply with safe drinking water 

regulations. Outdated wastewater facilities discharge billions—with 

a ‘‘B’’—billions of gallons of untreated sewage into surface waters 

every year. 

Existing transmission facilities within the national power grid 

are overwhelmed by bottlenecks which elevate the risk of regional 

blackouts. 

In your written testimony, you noted that expanded Government 

will not create one job in your hometown of Manchester, Iowa. But 

when you came to Washington, your plane took off from an airport 

funded with public funds and the Federal Aviation Administration 

(FAA) controllers helped you to get here safely. You drove on a 

highway across a bridge that was federally funded and you drank 

water from a system that was supported with U.S. tax dollars. 

When this committee meets to mark up the supplemental, I will 

recommend that we approve a significant supplemental for infrastructure spending across the Nation. I believe that this committee 

has a responsibility to help our State and local partners provide an 

infrastructure that will create jobs in the short term and promote 

a growing economy in the long term. 
9 

Why is it, may I say, that President Bush is satisfied with leaving a legacy built on a crumbling infrastructure? 

Mr. NUSSLE. Mr. Chairman, I do not believe the President either 

wants to have that legacy or, for that matter, will have that legacy. 

Since 2003, obviously together, the administration and the Congress have increased transportation investment in this country by 

17 percent, an 11 percent increase this year alone. Certainly jobs 

are created in that kind of a purview. But the concern that we have 

is that this can be done and should be done in the annual appropriations process. That is where these expenditures have been increased. That is where the commitment has been made, again on 

both sides, and it again can and should be done now. 

And the concern the administration has and that I expressed 

today is that if, in fact, it is urgent, it would seem to me that moving the transportation appropriation bill and moving it quickly 

through the process in both the House and the Senate would be a 

priority. So it concerns us when we hear that, in fact, we may be 

operating under a continuing resolution at the end of the year and 

that, in fact, we have heard directly from the Senate Majority 

Leader that, in fact, he may decide to wait for, I believe as he put 

it, a better deal from the next President. 

So those are the reasons why I believe we are concerned, but I 

do not believe either one of us has a legacy of not supporting our 

infrastructure. And I believe that bears out in the kinds of bills 

and budgets that we have passed over the last number of years. 

Chairman BYRD. The President proposes in fiscal year 2009 to reduce grants to State and local governments by over $13 billion, including cuts of over $4.4 billion for infrastructure. He has threatened to veto any appropriations bill that exceeds his request. So in 

reality, the President intends to block any effort—any effort—to 

improve our infrastructure. 

Senator Cochran. 

Senator COCHRAN. Mr. Chairman, Mr. Nussle, we are more than 

halfway through the fiscal year and the Department of Defense and 

the Department of State have received less than half of the funding 

the administration has requested to carry out the missions of those 

two Departments. 

The two military services most committed in Iraq and Afghanistan are the Army and the Marine Corps. At what point do the 

Army and Marine Corps run out of funding that they need to fight 

the global war on terrorism? 

Mr. NUSSLE. Thank you, Senator Cochran. As the Senator and 

other members of the committee know, this is not an exact science. 

The exact date and hour when that occurs is not something that 

can be perfectly precise, but I have asked that question of our Department of Defense and Secretary Gates and England, and I am 

informed that will occur in early summer, toward the end of June. 

And that is why we continue to be as concerned and express the 

urgency for the funding before any notices of furlough go out, 

which are, according to the practice that occurred in December, approximately 30 days. Or that is what it is by law. It could be 60, 

but 30 days, I believe, is what the Department of Defense was contemplating in December. That being the case, Memorial Day and 
10 

that recess is the timeframe that I testified to today for that reason. 

Chairman BYRD. Senator Inouye. 

Senator INOUYE. Thank you very much, Mr. Chairman. 

Mr. Director, contrary to requirements of current law, the President’s budget request for fiscal year 2009 does not include an estimate of the full-year cost of the ongoing operations in Iraq and Afghanistan. Instead, the administration submitted a $70 billion 

placeholder without any details, which it says will fund roughly 6 

months of operation. 

Are we to conclude from this that the Department plans to repro- gram an additional $70 billion for its peacetime budget to support 

operations in Iraq and Afghanistan for the second half of fiscal year 

2009? 

Mr. NUSSLE. No, sir. Senator, what we did—I guess two parts to 

this. First—when I served in the Congress and was chairman of 

the Budget Committee, I joined with many of you and colleagues 

that said the President should include the war funding in the budget when it is submitted. And that practice occurred. In fact, we are 

still discussing the emergency supplemental that embodied that 

practice as the President included it in his fiscal year 2008 budget. 

However, because of how long it has taken for consideration, 

starting with, number one, and number two, because the President 

made the decision that he did not want to tie the hands of the next 

Commander in Chief in determining what the strategy and corresponding funding would be after taking office after the election 

this year, we would put a placeholder in there, recognizing the 

tendency and the practice on the part of Congress to fund a bridge 

as you did in the last emergency supplemental and may very well 

contemplate to do again this year. 

So it was not at all—and I testified when I came to the Senate 

the last time to roll out the budget that we recognize this is not 

the full cost. We acknowledge that. Secretary Gates testified to that 

as well. But we felt it was the appropriate responsible practice, 

given the way Congress was managing the resources and we were 

doing that together and also to embody what the President was 

concerned about, and that was tying the hands of the commanders 

or the next Commander in Chief. 

Senator INOUYE. In this supplemental request, the administra- tion included something over $4.8 billion for reconstruction efforts 

in Iraq, while at the same time Iraq is benefiting from a budget 

surplus and billions in oil revenues. Why are we continuing to finance these projects and not increase the pressure on the Government of Iraq to execute their budget toward the projects proposed 

with U.S. taxpayer financing? 

Mr. NUSSLE. Well, Senator, this is a narrow question of a bigger 

one that I know you and I know I did when I served in the Congress received every time I went home. Why are we sending money 

overseas? Why do we fund the Foreign Service? Why do we have 

foreign aid? And it is always a complicated question to explain to 

your constituents why it is, when there are certainly priorities at 

home, why you would be funding these types of activities. 

But we know with Iraq—and it was testified much more ably 

than I could here today by Ambassador Crocker and General 
11 

Petraeus—that in order for us to have that return on success, in 

order for Iraq and Afghanistan and, for that matter, many other 

challenges around the world to be successful, that it does require 

resources in order for us to accomplish that. 

I would be very interested in exploring a change in that direction, to have Iraq step up even to a greater extent than it is now. 

And it has, as Ambassador Crocker has testified to, to a much 

greater extent for security, much greater extent for reconstruction. 

That is something that could and I believe should be discussed 

with Iraq as we consider moving forward. 

But here and now today, and judging from what we need over 

the next 2 months, we believe we submitted a supplemental that 

meets those needs and addresses those concerns so that we can be 

successful and continue to be successful and our men and women 

can come home. 

Senator INOUYE. But as you know, Mr. Director, when we provide foreign aid or assistance programs to places like Darfur in Africa, those people are poor. They do not have any surplus. Here in 

Iraq, we are told that the Iraqi Government has a surplus, a big 

one, in billions of dollars. We are paying high gas prices so that 

they can have a surplus and the income they make in oil. 

How do we explain to our constituents that here is a country 

with surpluses, something we do not have, here is a country that 

is making billions of dollars at our expense, and yet we are paying 

for their reconstruction? That is the question. 

Mr. NUSSLE. Well, first of all, Iraq is paying for more and more 

of its reconstruction and more and more of its security. I am certainly not suggesting that they are poor, but I do not know if that 

can be measured specifically or distinctly by the fact that they have 

a surplus. They may be rich in their bank account, but they do not 

yet have a rich tradition of democracy. They do not yet have a rich 

tradition of security. They do not have yet a rich tradition and 

demonstration of political stability. That is coming, as it was reported to you. It is improving. It is building, but it is not to the 

point yet where the lack of support from the American people and 

the generosity of the American people would result in further success. And it was their concern, expressed again more ably than I 

could, that now would not be the time to change that policy. And 

it is for that reason that I make the request on behalf of the President. 

Senator INOUYE. Can you give us an estimate of how much surplus Iraq should gather before they can help themselves? 

Mr. NUSSLE. I believe that is something that should not be determined unilaterally between two sovereign countries, but rather 

something that should be worked out between those two countries. 

As I said, I would be open and I believe the administration would 

be open to that consideration. I do not have a proposal I can 

present to you today either procedurally or in dollar amount, but 

I would believe, working together, that we can achieve that. But it 

is something that needs to be done together and not in a unilateral 

but in a bilateral type approach and agreement so as not to destabilize and have any less success than we have seen of late. 

Chairman BYRD. I note that Iraq is expecting a $16 billion surplus this year. 
12 

Senator Gregg. 

Senator GREGG. Mr. Chairman, thank you. 

I want to follow up on that question and the point made by the 

chairman because I do think this is a legitimate issue. It does seem 

to me that Iraq is not bearing a fair portion of the load here, especially in light of its surpluses and especially in light of the fact that 

the Inspector General, Mr. Bowen, came up with a number. I believe it was $9 billion that he has identified of funds which were 

supposed to be spent on reconstruction which have been stolen, 

misplaced, lost, or in some bank account that we do not know 

about. Is that the right number? $9 billion? Or was it $15 billion? 

Mr. NUSSLE. I am doing this from recollection. That sounds right, 

but again, that would only be from my recollection. 

Senator GREGG. So should we not put in this bill fairly significant and stringent language which says that any dollars we spend 

on reconstruction should at least be matched one for one by the 

Iraqi Government? 

Mr. NUSSLE. Well, Senator Gregg, I like you am in a position 

where, obviously, if they could pay for more, that would be a positive. I agree with that. But I am not in a position to be able to negotiate on that point on behalf of the United States with the Iraqi 

Government. That is something that the Secretary of State should 

do not in a unilateral fashion, but in a bilateral fashion, working 

out an agreement between the—— 

Senator GREGG. Well, I simply note that we are funding in a unilateral fashion. We are not funding in a bilateral fashion. We are 

spending this money unilaterally. It seems to me that the Iraqi 

Government has been grotesquely irresponsible with the money we 

have given them and that before we put more money into reconstruction, we ought to be getting some sort of commitment from 

them that they are going to bear a larger share of the burden. 

On another issue, I like other Senators am concerned with the 

fact that the administration did not send up a realistic figure for 

next year, $70 billion. And I am equally concerned that the Democratic budget as passed by the Congress does not have a realistic 

figure. They took the leadership of the White House and did $70 

billion. 

What was the number that Secretary Gates or that the Pentagon 

actually believes it will cost next year? 

Mr. NUSSLE. I do not have that number. 

Senator GREGG. I believe he said it was $170 billion. 

Mr. NUSSLE. Actually what he said was he could guess, but he 

would be pulling a number out of the air. And I do not think he 

was either expecting or wanting to be held to that number, but he 

was testifying and was asked to make a guess. And so he said he 

would pull a number out of the air, and that is where that came 

from. 

Senator GREGG. Well, it is certainly closer to a realistic number 

than $70 billion, would you not say, since it came from the Secretary of Defense out of the air? 

Mr. NUSSLE. Unfortunately, though, we have not seen action 

from the Congress on budgeting that far in advance. Rather it—— 

Senator GREGG. Well, it is hard for the Congress to lead when 

the White House does not lead. You have given this Congress, this 
13 

Democratic Congress, all the cover they need to not put the money 

necessary to fund the troops in the budget, and I think you have 

acted irresponsibly there. 

Let me go to another issue which I am concerned about on this 

whole budget question. This will be the sixth year that we are 

going to get a supplemental, and it is going to be designated as 

emergency. What claim does this proposal have on the term ‘‘emergency?’’ 

I mean, I can understand that you want to keep it separate and 

you should keep it separate from the underlying operational budget 

of the Pentagon so that we do not end up merging these funds in. 

But I cannot see any logic any longer for a claim that this is an 

emergency. It is almost a matter of course. I mean, we have got 

troops in field. We know they are in the field. We know they are 

going to be in the field for this year and next year and certainly 

for the terms of this budget, and they have been in the field for 

the last 5 to 6 years. 

Under what justification do you call this an emergency other 

than the fact that gives you protection, procedural protection? 

Mr. NUSSLE. Well, it has not given us much procedural protection. 

Senator GREGG. It gives you a lot of procedural protection in the 

Senate. If you do not want the emergency designation, I am sure 

my colleagues on the other side would be happy to remove it. 

Mr. NUSSLE. Well, the designation for us is based on the fact that 

we are believing that this should not be built into the base of 

the—— 

Senator GREGG. That is not the issue. You can send a supplemental out that is not built into the base without using the term 

‘‘emergency’’ to designate it. The issue is why do you claim this to 

continue to be an emergency and be given the procedural protection 

that emergencies get. 

Mr. NUSSLE. There are only two requests that we can make. We 

can make it during the regular budget as part of the regular appropriations, or we can do it as a supplemental request. 

Senator GREGG. That is correct. 

Mr. NUSSLE. And we are making it as a supplemental request. 

Senator GREGG. So you do not want emergency designation on 

this supplemental. Is that what you are saying? 

Mr. NUSSLE. I will leave that to the judgment of the Senate. That 

is not something that I am sure you will pay much attention to the 

administration’s instruction on that anyway. So I will leave that to 

your designation. 

But we believe this is something that is over and above what is 

necessary for the regular operations of the Defense Department. 

Therefore, as a result—and many other expenditures for wars in 

the past have been funded in a similar way, and it is for that reason that we make the request the way we do. 

Senator GREGG. Well, that is good clarification. I appreciate that. 

Thank you. 

Chairman BYRD. Senator Leahy. 

Senator LEAHY. Thank you, Mr. Chairman. Thank you for having 

this hearing. I think it is extremely important. It is good to see you 

here. 
14 

Chairman BYRD. I am glad to see you. 

Senator LEAHY. Thank you. 

Chairman BYRD. And all the others here. 

Senator LEAHY. Director Nussle, I was reading, when you were 

nominated by the President, that one of your main accomplishments, according to the press, over in the other body was wearing 

a bag over your head during a debate, and I am glad you are not 

doing that today. 

But I listened to your statement. It sounds almost as though 

George Orwell wrote it. Also the answers, as Senator Inouye and 

Senator Gregg and Senator Byrd have pointed out, do not necessarily respond to the questions. Let us take a look at what we have. We spent nearly $700 billion 

on the President’s war. The latest supplemental request would increase that by about $108 billion. Overall costs of the Iraq war will 

soon exceed an incredible $1 trillion. 

Doing it as an emergency supplemental, you simply put it on the 

credit card, put it on the national debt, borrow all the money from 

China, Saudi Arabia, and whatnot and pass it on to the next generation. 

Now, budgets are expressions of a government’s real priorities. It 

appears that the Bush administration’s priorities are in Iraq, not 

here at home. The President and those who support him seem to 

find no inconsistencies. Every few months, they demand billions, 

almost a blank check, earmark for Iraq. We do not have the money 

for healthcare, education, housing, security, infrastructure, heating 

needs here in the United States. 

I am not saying we should not be helping Iraq rebuild. As chairman of the subcommittee that handles the Senate’s work in drafting the budget for foreign assistance, I know the need for funds for 

stabilization and construction programs in Iraq, and I have voted 

for those. I think it is also time we started telling the Iraq Government to begin contributing part of those rebuilding costs. We are paying close to $4 a gallon for gasoline certainly in my 

State of Vermont. Iraq is getting well over $100 a barrel for their 

oil. They are going to have a budget surplus over $25 billion. But 

we cannot pay for things here at home. In fact, the President says 

he will veto any supplemental that pays for those things at home 

and does not go into the blank check for Iraq. 

I think this war has cost Americans far too much, too much 

money, too much damage to our lives, most importantly, too many 

deaths, too many maimed soldiers coming home, too many families 

destroyed. 

Now, let us take one of the things here at home. Violent crime 

has been rising, but the administration has dismantled front-line 

support for State and local law enforcement here in the United 

States. But the administration’s view is that no expense is too 

large for the hiring and equipment needs of the Iraqi police force 

at around $21 billion and very questionable results. 

It is a very different story for our own police departments in the 

United States that have been stretched thin for years. And what 

we spend in just 5 days—5 days—on the Iraq war, we could fully 

fund the COPS program. We could fully fund the Byrne justice assistance grant. That alone would be put 9,000 new police officers 
15 

on the beat to make American communities safer instead of just 

going down and disappearing in Iraq. It would allow us to shore 

up our multi-jurisdictional drug and gang task force efforts. This 

is National Crime Victims Week. Let us think what some of that 

money would do for the crime victims fund, which has also been 

cut. 

You know, unlike us, the Iraqi Government actually has a surplus, and we cannot pay for law enforcement here. I use that as 

one example. 

So let me ask you this. Would the administration support asking 

the Iraqi Government to assume part of what the United States is 

paying for the Iraqi police force? Yes? No? Easy answer. 

Mr. NUSSLE. Let me just give you a couple of these because I 

think these are important. The Iraqis have outspent the United 

States in 2008 by more than 10 to 1 on reconstruction. 

Senator LEAHY. No, no. Please, Mr. Nussle, there is only a certain amount of time, and you have a wonderful habit of answering 

a question different than the one that was asked, as you did with 

Senator Inouye, and he called you on it. 

I am asking you about the police force. Are they willing to pay 

part of the costs of the money we are funneling in there so maybe 

we could use some of that money to pay for police officers in the 

United States of America? 

Mr. NUSSLE. All right. The Iraq budget provides more than $9 

billion for security forces this year alone, which is three-quarters 

of what it needs in order to provide the security for Iraq. 

Senator LEAHY. So the money that is going to the police force is 

being well spent? I understand we sent over thousands of handguns. We could not even find out what happened to them. We sent 

them to the police department—until they started being used 

against our brave men and women over there. 

Mr. NUSSLE. Well, I will trust the testimony of Ambassador 

Crocker and General Petraeus on those issues. All I can report to 

you—you asked me how much and what we were providing, and I 

can respond to that. 

Senator LEAHY. Well, we have provided a total of $33 billion for 

the readiness and effectiveness of training efforts of both Afghan 

and Iraqi security forces. On the front page of the paper today, the 

Americans begged them to actually stay where they were doing 

something for security. They packed up and left. 

In the President’s budget, he has proposed rescinding all 

amounts in the crime victims fund, leave the fund empty. Again, 

we keep sending money over there. Now, this is a program that is 

funded entirely through criminal fines, forfeited bail bonds, penalties and special assessments, not taxpayer dollars or appropriations. What is the administration’s reason in gutting it? 

Mr. NUSSLE. Well, what we did was we provided—instead of a 

number of stovepipe grant programs, we consolidated all of those 

grants into four so that they could be better administered and easier for local law enforcement to take full advantage of those funds 

at home and use them in a much more flexible way as opposed to 

the stovepipe way that we currently have. 

Senator LEAHY. But is it true that you have proposed rescinding 

all the amounts remaining in the crime victims fund? 
16 

Mr. NUSSLE. To be used for that purpose. To be used for those 

purposes, yes. 

Senator LEAHY. It would be nice—some of us, though, have voted 

to have it used for the purposes of the crime victims. 

My time is up, Mr. Chairman, but I thank you again for being 

here and I thank you for holding this hearing. I think it is very 

important to the Senate. 

Chairman BYRD. Thank you. 

Senator Craig. 

Senator CRAIG. Mr. Chairman, thank you very much. 

Jim, thank you for being with us. We appreciate your testimony 

and your directness as we deal with this issue. 

I must tell you I am extremely frustrated. I understand your admonishment about a clean emergency supplemental or supplemental depending on the words we wish to use in titling it. And 

the reason I am frustrated by that is because while we do not know 

for sure yet, it appears it is the collective will of the leadership of 

this Congress not to work the appropriation process this year in a 

timely and responsible manner for a variety of reasons expressed 

by some in our leadership. 

And yet, I and members of this committee are continuing to have 

hearings on the budget. Each one of our particular areas of expertise is being properly vented with administration people. And it appears, Mr. Chairman, we are shaping bills, and I am wondering 

what all of that means if, in fact, we do not plan to act because 

if we do not plan to act, there are emergency or near-emergency 

situations that some of us would like to deal with in a timely fashion this year. 

Senator Feinstein and I out in agriculture country are hearing 

phenomenal appeals from agricultural America that the workforce 

is diminishing so rapidly it may send us into an agricultural crisis. 

We would at least like to do something in a temporary and an 

emergency fashion to supply a workforce. 

We have firefighting needs on our public lands that may be very 

dramatic, Mr. Chairman, if we go through another fire scenario of 

the kind that we have gone through in the last several years. 

So I am extremely frustrated that the only vehicle potentially 

moving, other than DOD and a few others, may be this supplemental, no matter how we describe it. And there will be a great 

tendency on the part of this Senator and others to try to add things 

to it if it appears that we are not in a timely and responsible fashion going to complete our work here this year. That frustrates me 

a great deal. 

This is not necessarily a question, Jim, but it is in response to 

the appeal from the administration to keep it clean. We are in a 

phenomenal catch-22 at this moment that is going to create the 

kind of pressures that could well establish a loggerhead on this 

issue. 

Last, Mr. Chairman—and I will not use all of my time—I think 

it is responsible for this committee to address the Iraqi Government in a way that causes them to spend their money in an appropriate and responsible fashion in cooperation with some of our resources. I am going to have a very difficult time going home and 

telling the people of Idaho that we are going to spend their money 
17 

while the Iraqi money is drawing interest in some bank somewhere 

in the world. We invested in their infrastructure to get their oil 

systems back in place and flowing into the world oil supply. It appears that has been accomplished and they are now reaping the 

benefits of it. 

So I think it is going to be very important for you—and you have 

done some of that already, Jim—to express where this money is 

going and how it is being spent. We have only heard of lump sums 

so far. There has to be much greater transparency in that process 

of understanding how much is going to be spent and what is out 

there drawing interest before this Senator is going to find it easy 

to keep supplying money into infrastructure, not to our troops, not 

to our men and women in uniform who stand at risk at this moment, but building the kind of infrastructure when ours goes wanting. 

Thank you. Thank you, Mr. Chairman. 

Chairman BYRD. Thank you. 

Senator Harkin. 

Senator HARKIN. Director Nussle, good to see you again. 

I just want to point out in your written testimony you did say 

you chose to request war funding as an emergency supplemental, 

and you also chose to request war funding as an emergency. I 

heard that exchange between you and Senator Gregg, but it says 

right here that you are requesting it as an emergency. So I just 

wanted to clear that up. 

Second, I cannot help but comment on this statement of yours 

here about after ‘‘7 months in this OMB job, many of the ideas we 

are asked to fund reflect a sky is the limit mind set. But this 

money does not belong to us. It is the taxpayers’ money.’’ We hear 

that a lot. It is the taxpayers’ money. It is true. It is the taxpayers’ 

money. 

But you know what I hear from the taxpayers in your home 

county and all over Iowa? They want better roads. They want safer 

bridges. They need their schools repaired. They need clean water. 

We have got over $3 billion in backlog for rural water and wastewater. We put some of that out a few years ago and it went out 

right away. And these are systems that the engineering work is 

done. The plans are there. All they need is the money to put them 

in. And I can tell you our small towns and communities all over 

our State of Iowa need this. Right now, a lot of them are being 

asked to pay enormous amounts of money for water and wastewater, and they are not meeting some of the environmental regulations that they need to meet. So we have got a big unmet need out 

there. 

So, again, it just seems to me that—from your standpoint, it 

seems to me, and this administration—you represent the administration—that Government spending for reconstruction is fine in 

Iraq, but somehow it is onerous here in America. And then you go 

to great lengths in your statement to say there is a time and a 

place for that. Well, do it in a regular, not an emergency supplemental. Well, it seems to me the time and the place for it is when 

the need is here, and the need is here right now for the things I 

just mentioned. 
18 

I read your testimony earlier and you mentioned about Manchester. You said expanding Government does not create one job in 

my hometown of Manchester. Well, quite frankly, I was just looking lately just on school construction alone, Delaware County got 

$295,199 for school reconstruction. That put jobs in those communities and made the schools safer for our kids. 

Road projects. The Iowa Department of Transportation wants to 

do a bridge and culvert replacement near Edgewood. Well, that is 

jobs that could go to people this summer in the State of Iowa and 

in your home county and put people to work and get the jobs done. 

I suppose it could wait another year, but everything can be put off 

I guess. But then it costs more and more money to get it back up 

the longer you wait. 

So just put me down as someone who says, yes, I recognize this 

is the taxpayers’ money too, but I also recognize that some of these 

things cannot be done by an individual taxpayer. They cannot be 

done by a family. They cannot even be done by the community. It 

has to be the community at large, the United States of America. 

And that is our job as appropriators. 

And so I think the need is there now with us facing—we do not 

know if it is a recession or what it is. We know it is a downturn, 

and we know that we have unmet reconstruction needs here in our 

own country. So I would hope that we would look upon the need 

here just as greatly as we look upon the need in Iraq. 

So that is my speech. I took a little too long on that. I assume 

that is just a philosophical difference that we have. 

But I do want to know about one thing, and Senator Mikulski 

is certainly our lead on this in terms of funding for the Byrne grant 

program. You know this as well as anybody, Jim, and you know 

what it has done in Iowa, what it has done for our drug task forces. 

In Iowa, cuts that occurred in 2008 will eliminate 15 of 21 successful drug task forces unless we restore it. The cuts in the Byrne 

grant program, that the President asked for, will have a devastating effect on our law enforcement all over Iowa. I just say 

Iowa because I represent Iowa, but it is true of the Nation at large. 

And I would like to know what you, as OMB Director, are doing 

within the framework of the White House to get the Byrne funding 

back up to where it should be. Again, we cannot wait till next year, 

Jim. We have got to do it now on this bill—on this bill. And I would 

like to have your thoughts on whether or not you would be willing 

to accept the increase, the bump-up—I think it is about $490 million to get it to $660 million for the Byrne grant program to get 

it to last year’s level that passed the Senate, and do it on this supplemental. 

Mr. NUSSLE. Well, first, to my friend from Iowa, thank you. 

With regard to Byrne—and I think that may be as good a place 

to jump off as any. First, on moving forward on the budget that we 

are requesting—and I was just stating this before—what we have 

tried to do is we have tried to take a lot of successful, in many instances, often well-meaning grant programs, many of them across 

the Justice Department and consolidate them into four so that our 

law enforcement agencies back home can take better advantage of 

them. Byrne would be included in that. So it is not that it is cut. 

It has been adjusted. 
19 

The cut—the interesting part about this, which I was surprised 

about too is that actually Congress decided last year to cut funding. 

Almost $350 million was cut in 2008 in the appropriation from the 

2007 level. 

So I think we know there are limited resources. I think both 

Congress and the President recognize that, and what we are trying 

to do is say how can we best spend those resources, how can we 

get them out as efficiently as possible to the law enforcement who 

are on the front lines, as the Senator knows, as well as I do, doing 

that work. And that is the reason that we made the request in this 

year’s budget the way we did. 

So I believe there is a regular appropriations process to deal with 

this and deal with it effectively, but we should not make up for an 

omnibus bill or an omnibus appropriation that cut the funding just 

now 5 months later by increasing it again and suggesting that that 

is somehow now an emergency. 

Senator HARKIN. Well, I am sorry to hear you say that because 

I think it is an emergency. Plus the fact, you put those four together. Then you cut the funding. So everything takes a cut. Those 

four you put together, if you add up all the funding for those, it 

is more than what you put in for that combined program. 

Mr. NUSSLE. That is correct. But also, that is in part because we recognize that Congress cut $350 million from the Byrne grant program just this last year alone. 

Senator HARKIN. Well, that was only after the President vetoed 

the bill. We did not cut it before, did we? No. We only cut it after 

the President vetoed the bill and insisted on huge domestic spending cuts. So that is what we were confronted with. 

Mr. NUSSLE. What he insisted on was that the budget conform 

to a top line, recognizing we did not want the deficit to go up or, 

for that matter, taxes to go up. And so, obviously, tradeoffs within 

that budget had to be made. And that is the reason that the President made that suggestion, but Congress made the determination 

of where that priority—— 

Senator HARKIN. And I hate to go on, but under the Byrne grant 

program, the amount that we have missed from last October to 

right now—we have had a little bit of a cushion. People have been 

able to make it up. If we have to go to next October before it is 

funded again, we are going to lose a lot of these people. The task 

forces will be decimated. They will lose a lot of the things that they 

have built up. 

So we could take a little gap, but we cannot take a year’s gap. 

And that is what you are asking us to do. And that is why I think 

it is so necessary to put the Byrne money in this supplemental before we lose all those people and our law enforcement people that 

are in place right now because of the Byrne program. 

Mr. NUSSLE. Well, again, we believe that is a discussion that 

needs to happen within the regular appropriations process, and we 

should not hold up the troop funding in order to have that debate. 

Senator HARKIN. Well, we will not hold up the troop funding. We 

will just add it. We will not hold it up. We will just add it to the 

troop funding. 

Mr. NUSSLE. But it has already been 14 months since it was sent 

up. So it has been held up, we feel, a long time. 
20 

Senator HARKIN. Well, it is not holding it. We are just going to 

add it. 

I am sorry I ran over my time. Thank you, Mr. Chairman. 

Chairman BYRD. Thank you. 

Senator Bennett. 

Senator BENNETT. Thank you, Mr. Chairman. 

Mr. Nussle, you have one of the toughest jobs in town and today’s experience will confirm that. 

I am sympathetic with the issue that Senator Craig raised. I am 

caught between the desire to support the President in his request 

for a clean supplemental and the recognition that this, in many 

cases, is the only vehicle leaving town because we are probably 

looking at an omnibus bill that we will deal with after the election 

in a lame duck session. And we have done that enough times in 

the past to realize that it is not the most orderly of processes when 

we get to that, and a lot of the issues that we need to deal with 

in an orderly process could be dealt with in this supplemental if, 

indeed, we do what Senator Harkin has just asked and break the 

requirement that it be a clean one. So it is a dilemma that we are 

all in, and I am sympathetic with the administration. I like the 

idea of a clean supplemental, but I also recognize the reality that 

there are some other problems that we have to tackle. 

So let me take one that came up in our hearing yesterday with 

Senator Kohl’s chairmanship in the Agriculture Subcommittee. In 

this supplemental, you are asking for $350 million in additional 

funding for Public Law 480, title II grants. Interestingly enough, 

last year the administration asked for $350 million in additional 

funding for Public Law 480, title II grants. The year before that, 

the administration asked for $350 million in additional funding for 

Public Law 480, title II grants. 

This is a pretty striking coincidence that 3 years in a row it is exactly $350 million that is the additional amount that is needed. 

It raises the obvious question of why is this not in the annual 

budget submission. If it is going to be $350 million more every 

year, why is $350 million more not included every year? If it is, indeed, a 1-year kind of thing, why is it always $350 million? That 

seems to be a number you have fixed on. 

Now, the World Food Program has said we need an additional 

$500 million to deal with increased food and transportation costs. 

One of the major problems that we face around the world is that 

food costs are going up very dramatically. In our subcommittee, we 

have to increase the amount of money for WIC just to keep the 

number of WIC participants level. We are not sending the money 

up to take care of an increased workload. Just to take care of the 

people we have and feed them the same amount of food, the dollar 

cost goes up. 

The corn cost is going up dramatically as we plant more and 

more corn in order to turn it into ethanol, and that is another issue 

that I will not get into with the Senator and the former Congressman from Iowa. I have demonstrated that I will never run for 

President because I voted against ethanol. So I am not going to be 

campaigning in Iowa. 

But as the corn prices go up, there are segments of our population for whom corn is the dominant food staple. And then people 
21 

start plowing up their wheat fields in order to plant more corn in 

order to get in on the ethanol boom, and the wheat prices go up. 

So it is not surprising to me that there is an amount in here for 

additional Public Law 480 grants, but it seems to be insufficient. 

And if we were to add something to that, would that draw a veto 

threat from the President? 

Mr. NUSSLE. Well, Senator, first of all, with regard to your point about it is always $350 million, I am not sure I can directly respond to that, but it is and continues to be frustrating anytime you 

have to request something outside of the annual appropriations 

process and where you cannot plan ahead. I can only report to you 

that I believe those accounts and amounts were necessary at the 

time they were requested. 

Senator BENNETT. I do not question that they are necessary. I 

think they are turning out to be predictable is my point. 

Mr. NUSSLE. Well, and in that regard, if they, in fact, are that 

predictable, then they should be candidates for consideration as 

part of the regular budget. 

In this instance, we believe that we have addressed both of those 

concerns first with an announcement that was made, I believe, just 

a couple of days ago from the White House where another $200 

million would be increased for emergency food aid through a drawdown from the Emerson Trust. 

Senator BENNETT. Yes. I am familiar with that, but that is not 

the same kind of thing. 

Mr. NUSSLE. No, but it is something that we believe will help address the concerns that you raised. 

Senator BENNETT. Right. 

Mr. NUSSLE. And in addition to that, with regard to the WIC program, as the Senator, I am sure, is aware, there is a contingency 

fund at the Department of Agriculture for those types of—— 

Senator BENNETT. I am not talking about putting WIC in this 

budget. I just use that as an example of the upward pressure on 

food prices that is hitting Public Law 480 in a very real way. 

Mr. NUSSLE. Well, but to use those as the examples, in an instance where we do not have the flexibility, we request the funds. 

That is Public Law 480. In an instance where we do have the flexibility and where contingency funds are available such as WIC, we 

will make a transfer, and in fact, notification to Congress I believe 

is forthcoming on a transfer from that contingency fund to WIC in 

order to meet that need. But those are, again, flexibilities that we 

currently have that does not require us then to add to the supplemental for those purposes, and they can be dealt with during the 

regular appropriations process. 

Senator BENNETT. One last quick question. The other thing that 

came out of our hearing yesterday was the status of the Food and 

Drug Administration (FDA). The FDA regulates 20 percent of all 

consumer expenditures, nearly $1.5 trillion. And the Science Board 

has said that in order to fulfill its mission, the FDA needs an increase of $375 million. Now, Dr. von Eschenbach said we could not 

absorb $375 million in 1 year. Yet the increase for FDA just to take 

care of the cost-of-living increase in pay is $59 million, and they 

need an additional $50 million plus over that $59 million to take 

care of its duties. 
22 

We have gone through this with Dr. von Eschenbach, but I just 

wanted to alert you to the fact that we are paying attention to that 

and that is one thing we would like to increase, if not in this supplemental, we would like to increase—this is my only shot at you. 

So this is a warning that FDA funding is one that on the Agriculture Subcommittee at least we think has been inadequate. 

Mr. NUSSLE. I would be happy to take your call anytime. So this 

hopefully will not be your only shot. 

But I share your concern about the regular appropriations process. If it is, in fact, as you say, a reality that this is the last train, 

I can understand why you and anyone else would want to be on 

that train. But I hope it is not the last train, and I believe the 

President is hoping that it is not the last train and that more work 

can and should be done if, in fact, the urgency and the needs are 

there. And I think they have been very well expressed here today 

that, in fact, we need to get that regular appropriations process 

moving and not wait till after the election or, for that matter, the 

next President to help make that determination. 

Senator BENNETT. Thank you. 

Mr. NUSSLE. Thank you. 

Chairman BYRD. Senator Mikulski. 

Senator MIKULSKI. Thank you, Mr. Chairman. And thank you 

very much for calling this hearing. I think it is an essential thing 

we need to do. 

Mr. Nussle, I got to tell you I am really disappointed in your testimony. It has been some time that I have heard the kind of tone 

that has been expressed by a representative of the Bush administration. Your testimony has been disappointing in both tone and 

substance. I personally take offense at the snarky, scolding, 

dismissive way that this testimony was presented, and I think it 

is inappropriate. 

We just left an excellent bipartisan hearing on military medicine 

about how we can support our troops. Later on this afternoon at 

2 o’clock, I will be chairing a hearing on the Federal Bureau of Investigation (FBI) with my dear colleague, Senator Shelby, again in 

the spirit of bipartisanship. 

Your testimony is an ideological commentary, not the testimony 

of OMB. So since you are pugnacious, guess what. I am going to 

be pretty pugnacious too, only my pugnaciousness is not going to 

be directed at the Congress. It is going to be pugnacious about the 

people I represent. So let us get to it. Pugnacious? You bet. 

Let us pick up on what Leahy and Harkin said about Byrne 

grants. You want the regular order? I am the regular order. I chair 

the Commerce, Justice, Science (CJS) Subcommittee and what this 

administration has done here has been outrageous. 

Number one, let us go to safety and security. We have funded the 

surge at Baghdad, but we have not funded the surge of violent 

crime in Baltimore, Biloxi, or other places. You have zeroed out the 

COPS program. You have zeroed out the Byrne grant program. 

When Shelby and Mikulski tried to do something last year in the 

regular budget, we were told eat $3 billion or face a veto threat. 

So we foraged and we skimped and we squeezed in to be able to 

make sure that our bill did not get a veto threat, and we came up 

with $170 million. 
23 

You can talk about all your smoke stacks and whatever, but you 

bet there is smoke. There is smoke right here now and there is 

frustration from State and local police officers that say they need 

help. They need help. And this administration has funded $5 billion over the last couple of years to fund the training of Iraqi police. You bet they need training, but I am telling you I need the 

money. Senator Shelby and I need the money to make sure that 

our local law enforcement, the thin blue line, gets the money that 

they need to fight violent crime. 

So I am going to ask in plain English if, in fact, we can, through 

this supplemental, restore the Byrne grants and only the Byrne 

grants to the needed level of $660 million, will you support it or 

will we face a veto threat? 

Mr. NUSSLE. Well, Senator, I can only repeat what the President 

has said on—— 

Senator MIKULSKI. The President did not say anything about 

this. You think if I went to see the President, he would say no? 

Mr. NUSSLE. Senator, I can only repeat what the President said, 

and his two priorities that he stated were that the bill stay within 

the $108.1 billion request and that it support the troops. That is 

what he has said on the topic. Beyond that, I do not believe he 

has—I think the Senator is correct—not spoken directly to those 

issues. But I also believe that the regular appropriations process is 

the time and the place to deal with those challenges that—— 

Senator MIKULSKI. But you eliminated it. You eliminated the 

COPS program and you eliminated the Byrne grant program in 

your regular appropriations request. So you are saying do not fund 

it in the supplemental. The President does not request it in the 

regular order, and now you are telling me you cannot accept it in 

the supplemental because the President did not talk about it. And 

when you sent us the CJS President’s request, it is not in there for 

2009. 

Mr. NUSSLE. Well, Senator, I apologize in advance if this appears 

to be snarky, but when I hear from the Majority Leader that he 

is going to wait until next year to resolve this issue, that to me 

sends a signal to the President and to our administration that, in 

fact, this is not urgent. It is not something that needs to be dealt 

with now. Otherwise, it is possible—and having been a Member of 

Congress, I am aware, as you are—for the appropriations process 

to continue and to be done expeditiously and to deal with those 

challenges. 

Senator MIKULSKI. Let us come back to the Byrne grant program. We can get tone later. Let us come back to the Byrne program. If I am successful, working with Senator Byrd and Senator 

Cochran—and when I say I, I mean, Senator Shelby and myself, 

again, a bipartisan effort to keep the streets and neighborhoods of 

America safe—will you encourage the President to issue a veto 

threat? 

Mr. NUSSLE. I would encourage the President to veto anything 

that was over $108.1 billion, did not meet the needs of our troops, 

for that matter, in this instance, dealt with a problem that could 

have been handled in the 2008 appropriations process but was underfunded by the Congress by—— 
24 

Senator MIKULSKI. It was underfunded because you had a veto 

threat. I sat there for hours with Senator Shelby and myself trying 

to comply with yet every little bit and piece from the White House 

about this. We were ready to go. We had the money in the Federal 

checkbook. We had worked assiduously on a bipartisan basis to 

fund State and local government. Do not tell me Congress underfunded it. You had a veto threat of over $3 billion on my CJS bill. 

Mr. NUSSLE. It was not because the CJS bill was over its 

amount. It was because the Congress had decided that all the appropriations added together were over the top line that the President had put forward in his budget. So it was not specifically for 

Byrne grant programs. It was not specifically on these issues. It 

was overall the Congress was not living within what the President 

felt was a reasonable and fiscally responsible top line Federal 

budget. 

Senator MIKULSKI. I totally disagree with you. I disagree on your 

recollection of history. I disagree with you on the President’s budget submission to you, and I disagree with you on this matter. 

I have other questions related to the National Guard, which I 

feel has been treated like an Orphan Annie in this President’s appropriation both in funding for equipment and return home. I will 

put that there. 

And then we are going to have a big deal on trying to deal with 

the census. 

But my time is up, Mr. Chairman. I am going to force this issue. 

Mr. Chairman, with your cooperation, I hope that we fund it. If we 

are talking about a safe and secure America, I want to make sure 

the streets of the United States of America are safe and secure, 

and I will work on a bipartisan basis to do it. 

Chairman BYRD. Right on. 

Senator Murray. 

Senator MURRAY. Mr. Chairman, thank you very much for having this hearing. 

Mr. Nussle, I share the anger, frustration, I guess pugnaciousness of the Senator from Maryland. It is extremely disturbing to 

me that we are getting an emergency supplemental request for 

Iraq and Afghanistan 51⁄2 years into this war that is being paid for 

off the books. I listened to your testimony. You say that this has 

to be emergency because of changes on the ground. 

Well, what about the changes on the ground here at home? What 

about those? What about the fact that we have many, many road 

projects that are a result of floods, natural disasters that have occurred, that are changes on the ground here at home? What about 

the changes on the ground in the economy where people are being 

laid off in community after community, where mortgages are going 

into foreclosure, where housing is a number one concern for Americans? What about the healthcare crisis? What about the fact that 

your budget that you sent to us is absolutely inadequate when it 

comes to investment in our infrastructure? Those are changes on 

the ground that we have an obligation to respond to. 

Now, here we are 51⁄2 years into this war and we are getting a 

supplemental request that takes care of Iraq. Well, we are creating 

jobs in Iraq. We are building schools in Iraq. We are building roads 

in Iraq, and we have a President and a White House who is fight-
25 

ing this Congress’ efforts to try and build schools here, to try and 

take care of our roads, to try and take care of the infrastructure, 

to try and give our families here at home security again. So, yes, 

you are seeing a little bit of anger here. 

My friend and colleague, Senator Dorgan, has talked about the 

waste, fraud, and abuse—and I share that concern—uncovered by 

the Government Accountability Office (GAO) and the inspector general when it comes to these funds. Yes, we are having a hearing 

on that. But we are also having a hearing because we believe that 

there are emergencies here at home and infrastructure costs here 

at home that have to be paid for and met. 

And you bet our constituents are angry that their taxpayer dollars that you so jealously guard are going over to Iraq and Afghanistan to rebuild them when, as you heard, they have oil revenues 

that are sitting in our banks here, $60 billion I have heard, $34 

billion to $60 billion. No wonder you are hearing the frustration on 

a bipartisan level here from all of us. We are frustrated, 51⁄2 years 

into the war, that we are facing an administration who can blithely 

come before this committee and say the only emergency we have 

is a war that has lasted 51⁄2 years. There are emergencies in every 

one of our communities, and we have a responsibility to address 

them. 

Once again, we have a supplemental request sent to us that does 

not have one dime for the men and women who are fighting for us 

when they come home. As Senator Mikulski said, we had a very 

good bipartisan hearing this morning to listen to the medical personnel talk to us about the long-term costs for those soldiers who 

are coming home with those invisible wounds of war of post-traumatic stress syndrome and TBI, and it is going to cost us going into 

the future. And we have got an administration that says they are 

not part of the cost of war. 

Well, this Congress disagrees. Last year we added $1.8 billion on 

the supplemental. We said they are a cost of war. And again, we 

have to look at that because we do not get a request from this administration that is real. And I find it just really disconcerting that 

this administration continues to deny that the cost of caring for our 

soldiers is a part of the cost of war. 

Now, Mr. Nussle, my obligation as chairman of Transportation 

and Housing is to look at what those requests that are coming from 

your administration. Once again, in this budget, we are seeing requests in a supplemental for roads and bridges not here at home 

but in Iraq and Afghanistan. The President has committed to improving the infrastructure in Iraq and Afghanistan as a way to improve the lives of their citizens. Well, when you look across the 

board at the supplemental requests in the Defense Department, 

State Department, and military construction, you are asking for 

more than three-quarters of $1 billion for road construction in Iraq 

and Afghanistan. 

Meanwhile, right here at home, we have a Federal highway 

emergency relief program that is shut down because it is out of 

money. There is a backlog of eligible requests of more than $560 

million for roads and bridges not in Iraq but here at home that 

have been damaged or destroyed and declared disasters in 21 of 

our States. None of them are going to get a dime without a supple-
26 

mental appropriation. But somehow you are saying that we have 

to take care of roads in Iraq and Afghanistan, funding over $725 

million, and here at home our roads that are in need of emergency 

repair that are in backlog do not get requested a dime. 

And I hear you sitting here saying that you are going to recommend a veto if we add those to the supplemental, and those are 

roads and bridges that our constituents need to cross to get to 

work, to take care of their families, and to make sure they have 

got security here at home. So perhaps you could explain to us why 

you are going to recommend vetoing those emergency road repairs 

here at home. 

Mr. NUSSLE. Well, first, Senator, I do not take your tone or Senator Mikulski’s tone as anything but passion for the issues you are 

concerned about and for your constituents. I do not take it any 

other way than that. Number one. 

Number two, when it comes to transportation, certainly there are 

funds that are needed in Iraq in order to fund the transportation 

needs—— 

Senator MURRAY. Aside from Iraq, what about the ones here at 

home? 

Mr. NUSSLE [continuing]. That directly support—— 

Senator MURRAY. What about our emergency requests for here at 

home? 

Mr. NUSSLE. But I think it is here for you to understand or for 

you to hear that those directly support the troops and their movements in Iraq. It is not just—— 

Senator MURRAY. Fair enough. I am not saying—— 

Mr. NUSSLE [continuing]. Building a bridge—— 

Senator MURRAY. I am not saying we are not going to fund that. 

I am asking you about the ones here at home. 

Mr. NUSSLE. Okay. And the Senator has, obviously, taken a leadership role. We have had a 17 percent increase in the last 3 years. 

We have an 11 percent increase that we have right now in 2008 

for these transportation projects. 

Senator MURRAY. The emergency funds are at zero. 

Mr. NUSSLE. There are other funds that can be reobligated within and transferred within those accounts in order to meet those 

challenges when there are emergencies. 

Senator MURRAY. Mr. Chairman, I would just like to point out 

that the President’s budget request for 2009 slashes our highway 

and airport investments by $2.6 billion. I am not sure where we 

are going to be transferring funds from. 

Mr. NUSSLE. Well, as the Senator is well aware, it is in part because the Highway Trust Fund itself is running out of money because of the challenges of not only over obligation but also challenges from the gas tax. 

Senator MURRAY. Absolutely, and Congress needs to deal with 

that. But the fact is that when you send over a budget request that 

is $2.6 billion below what we need, we are going to have to make 

that up. 

And I take exception, in my last 15 seconds here, to your comments that, well, Congress is not doing its job because we are not 

doing our appropriations. And you have heard the Majority Leader 

say he may do it after the election. No surprise. When we get budg-
27 

et requests that are well below what any Member of Congress can 

support. We cannot fund them because they do not adequately 

meet the needs of America and what we hear—we get budgets from 

your office that slash highway and airport funding by $2.6 billion. 

We had hearings in Senator Dorgan’s subcommittee on the Corps 

of Engineers projects, and those poor individuals are sent over here 

to testify before us and have to defend their budgets when they 

know they cannot because we are not adequately investing in critical projects across the country or for Hanford cleanup where the 

administration’s budget didn’t even come close to meeting its moral 

and legal obligations. And yet, you say to us, we make up those 

funds, they get vetoed. 

So rightfully, we are saying, well, we are not going to pass budgets that are just going to go over there and get vetoed one after 

the other simply on some partisan basis. We are going to do them 

in a responsible way, and if that means that we have to wait until 

we get a President who is willing to meet us and work with us, 

that is what this Congress is going to do. 

Chairman BYRD. That is right, Patty. 

Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you very much. 

Director Nussle, I am not going to ask you a question, but I am 

going to tell you what disturbs me. You told us what disturbs you 

and you have a right to come at our invitation and tell us what is 

disturbing to you. So let me tell you what is disturbing to me. 

With this request and the two requests we expect next year, including a placeholder and the money above the placeholder, I estimate that we will be at $974 billion—$974 billion—2001 to 2008 

for the war in Iraq and Afghanistan. That is almost $1 trillion, all 

of it required by this President as an emergency, all of it borrowed. 

So the President sent soldiers to war, asked them to strap on body 

armor in the morning, get shot at during the day, but he did not 

have the courage to ask the American people to pay for the war. 

In fact, he said we will send soldiers to war and let us offer more 

tax cuts. That is disturbing to me. It is unbelievable to me. 

Fighting this war, a war whose justification, by the way, was 

based on bad intelligence and would never be authorized today 

with what we now know and fighting it on borrowed money, year 

after year after year declared as an emergency by this President 

when he knows it is not an emergency—he knows that he is supposed to put this in the budget. Senator Byrd required him to put 

it in the budget, but they do not do it. 

Now, let me tell you what else is disturbing to me. Last year you 

asked for urgent money. We provided urgent money. I want to tell 

you where—only because of some really good work by the New 

York Times do we know this, by the way. Oversight that is not 

done by the administration or by this Congress. Let me show you 

what the New York Times with some really thoughtful investigative reporting has shown us. 

One-third of $1 billion, nearly, went to this man, 22-year-old 

Ephraim Devaroli, chief executive officer (CEO) of a firm in Florida. CEO, okay? Now, he had a vice chairman of his firm. Let me 

show you a picture of the vice chairman. He is a massage therapist. 

This company they had was a shell company by the CEO’s dad. 
28 

Well, the CEO becomes 22. He has got a massage therapist as a 

vice chairman of the firm or vice president of the firm. They get 

over $300 million from this Defense Department to provide ammunition to the Iraqi fighters. And guess what. The Iraqi fighters end 

up with a box full of shells, some of it from the mid-1960’s from 

China. 

Now, I would like to ask how on Earth does over $300 million 

go to a company like this. It is shameful. And this is just one small 

chapter. I have held 12 hearings in the policy committee on these 

issues. This is just one. 

I would like the general who heads the Army Sustainment Command to sit at this table and explain that, and I would like to have 

subpoenaed both of these folks. In fact, I have written to the chairman on this point. 

This is just one. One. I could sit here and describe a dozen exactly like it. That is disturbing to me. I think it is shameful this 

is happening. Waste, fraud, and abuse, the most significant in the 

history of this country. 

Now, we know that Kellogg, Brown & Root, Halliburton, are hiring people, sending them—because they get contracts from this 

Government, I assume with this money, and they run the payroll 

through the Cayman Islands so they can avoid paying payroll taxes 

to this Government. Shameful in my judgment. Does anybody care 

about it? They are still getting contracts. Is anybody doing anything about it? I think it shameful. 

Judge al-Rahdi showed up, by the way. Judge al-Rahdi came to 

this committee, sat where you are sitting. And you know what? He 

was appointed by Bremer when we had Bremer in Iraq. Judge alRahdi was the head of the Iraq Commission on Public Integrity appointed by Mr. Bremer. They tried to kill him three times. He sat 

just where you are sitting a month ago, and he told us $18 billion 

of waste was uncovered, most of it American money. $5 billion in 

the defense ministry in Iraq, $3 billion in electricity, $2 billion in 

transportation, all of that American money, all of that from the 

U.S. taxpayer. 

Now, instead of plugging the rat hole, what you are suggesting 

is to let us just throw more money at this. 

It is just unbelievable to me. And at some point, we have got to 

stop it. 

Chairman BYRD. Right. 

Senator DORGAN. You show up here on behalf of the President 

saying I want more money, it is urgent, I want it as an emergency, 

I do not want you to pay for it, get us up to $1 trillion, it does not 

matter. I am saying to you the game is over. At some point, this 

Congress has to say we are not going to do this. 

Chairman BYRD. Right. 

Senator DORGAN. Somebody justify to me that $300 million goes 

to a 22 year old in a shell company with a massage therapist for 

a vice president and the American taxpayer should pay for that. 

Somebody needs to come and answer for these things. And it is 

hundreds of examples just exactly like it. 

So that is what disturbs me. I am disturbed we are sitting here. 

This administration is conservative? No, no. Conservatives would 

never ask that we send soldiers to war and not pay for it. In fact, 
29 

not only ask, this President insisted that we send soldiers to war, 

demand the money for it, and we insist that it not be paid for. 

Now, you say, Mr. Nussle, that our budget deficit this year is $400 billion plus. It is not. Take a look at what you are going to 

borrow in fiscal policy. You are going to borrow over $800 billion. 

This country is so far off track it is unbelievable. You think the 

currency traders and the electronic herd out there that take a look 

at the fundamentals of a country do not recognize this? It seems 

to me responsibility starts in the White House and your office, and 

yes, it belongs here as well. I am tired of rubber stamping so-called 

urgent requests that send $300 million to a company that is going 

to buy 45-year-old ammunition and have the American taxpayer 

pay for it, ship it to the Afghan fighters who say the ammunition 

is no good. 

I must also say that it bothers me that it took some enterprising 

reporting by the New York Times to get this. It should have not 

taken that. 

So you came and you told us why you are disturbed. I am telling 

you why I am disturbed. I am not going to just sit here anymore 

and say, yes, let us just keep playing this game. You know better. 

The President knows better, and so does this Congress. This has 

to stop. You want money? Then tell us how you want to pay for 

it. At some point, you have got to stop saying to soldiers, we will 

send you to war, and by the way, when you come back, you and 

your kids can pay the bill. 

Now, I am sorry for sounding angry. I am angry because all of 

us have been a part of this, and we have allowed this to happen. 

And there comes a time when we say we are not going to allow this 

anymore. Somehow, some way, some day, somebody has got to stay 

stop. 

Chairman BYRD. Mr. Nussle, do you want to respond? Take a 

couple minutes. 

Senator DORGAN. I did not ask him any questions, Mr. Chairman, but I certainly understand the need to respond. 

Mr. NUSSLE. No, I do not feel I need to respond except to say I 

agree with much of what the Senator said, particularly with regard 

to responsibility and oversight. And I appreciate not only the tone, 

but I share it particularly with the case that the Senator has 

brought up. So I do not have any other response other than to say 

thank you for bringing that to our attention, and I will follow up. 

Thank you. 

Chairman BYRD. Senator Feinstein. 

Senator FEINSTEIN. Thank you very much, Mr. Chairman. 

I think, Mr. Nussle, that my colleagues said it very well. I think 

it is more than frustration. I think we see this Nation really going 

into a period of great financial jeopardy. The debt has gone up 68 

percent during this administration. Entitlements and interest on 

that debt are now 62 percent of everything that is spent in a year. 

Everything that people ask us for, the expenditure for those items, 

every single domestic Department is just 18 percent of what is 

spent, and defense is another 20 percent. 

Mr. Chairman, I do not think we should do a supplemental this 

large. I think we ought to break it down. I think we ought to know 

where every dime goes. Never before in history has a war been 
30 

funded on the debt. Every single war has been fought with additional revenues, except for this one. And the debt is now at what? 

$9 trillion and going up. I think it is a very real problem for the 

survival of the Nation in a healthy way. I think it is going to be 

very hard to vote for a $108 billion emergency supplemental that 

puts that amount on the debt. And I think Senator Dorgan and 

Senator Murray have said it really very, very well. 

I left home yesterday and CNN had the weather map up and a 

big swath of the United States was under threat of catastrophic 

fire. Yesterday we had a hearing on the Interior appropriations bill. 

Secretary Kempthorne testified. And the bill eliminates everything 

for wildfire firefighting, and we are $350 million short for fire suppression in this country. We have just lost people in Colorado in 

a fire. And I do not understand. 

And so we fight over this 18 percent that is left, and it is not 

enough. We cannot fix levees in California that could inundate 20 

percent or 30 percent of Sacramento with 20 feet of water. We cannot fix bridges. Senator Murray is absolutely right. We cannot take 

care of the transportation needs of our people on this 18 percent 

of what we are spending. And as Senator Dorgan pointed out, there 

is so much waste, fraud, and abuse in the Iraq money. 

So my question to you is why should we not break it down—I mean $10 billion is a lot of money—and really monitor every dollar 

and where it goes. Why should, with this record, we give you $108 

billion with essentially no accountability, not budgeted, on the 

debt? 

Mr. NUSSLE. Well, Senator, first of all, I do believe there is accountability. There should be accountability. I join you in that and 

I share your and Senator Dorgan’s anger and frustration whenever 

a dollar is wasted. Period. I think you both have said it very well. 

As far as holding accountable, I also believe that you should, as 

you have with me today, haul up the people who are responsible 

and ask them those questions, which has been done. There have 

been hearings on this supplemental for the Secretary of Defense, 

the Deputy Secretary of Defense, both the Secretary and Deputy 

Secretary for State, as well as the Joint Chiefs. So I believe you 

are expressing that accountability and that oversight. 

I am not suggesting you could not do more. We all could. Clearly, 

there are funds, as Senator Dorgan stated and stated quite well, 

that continue to slip through the cracks not just in Iraq, but even 

here at home. That continues to happen. And we monitor a high 

risk list of inappropriate payments that we and the GAO work on 

constantly. We have made some progress. Never enough. 

So I share your anger whenever a dollar is wasted, and I believe 

that type of oversight should be done. And we have joined you in 

that and will continue to join you in that. 

But as far as splitting it up, splitting it up suggests to me that 

you may also be talking about splitting up the appropriations, 

which for this at least, we believe is difficult to do particularly in 

theater over in the Middle East. 

Senator FEINSTEIN. My problem is I have got a part of the State 

that could well burn this summer again. We cannot provide the 

amount of money we need for wildfire protection. It seems to me 

that if you are going to come here with an Iraq supplemental, it 
31 

is just as much an emergency that we have adequate law enforcement, adequate firefighting protection in the United States as Iraq. 

And maybe the administration ought to think about that a little 

bit because it is rather cynical what happens. You fund the war off 

budget on the debt and you press for continued tax reductions and 

everything that is hurt is the domestic agenda. So the bridges collapse. The gridlock is more. We cannot fight wildfire appropriately. 

We cannot support our law enforcement people. And maybe that is 

what you all want. That is the result. That is the result. If you do 

not fund the war based on present-day revenues, it all goes on the 

debt. 

I think maybe the time has come when we do have to put our 

foot down and say we are not going to continue to do it. 

Chairman BYRD. Let us have order. 

Senator FEINSTEIN. So, Mr. Chairman, this is bigger than Mr. 

Nussle, but it is really for us. I am going to have a very hard time 

voting for $108 billion knowing what is happening in the United 

States, knowing the violence is going up, knowing that we need to 

do some things just to protect our own people and cannot do it. It 

is not right. It is not why we came to this place. 

And the administration will not sit down, will not work in a collegial style, will not say let us work it out. It is your way or the 

highway. And you reach a point where you get filled up to here 

with it and just make a decision not to do it anymore. I think that 

is where some of us are. 

Thank you, Mr. Chairman. 

Chairman BYRD. I thank the Senator. 

By agreement with our witness, Mr. Nussle needs to leave at 2 

p.m., and we have a floor vote at 2:15. I beg the indulgence of the 

three remaining Senators to limit their remarks to 5 minutes. Senator Durbin. 

Senator DURBIN. Thank you, Senator Byrd, and thank you for 

this hearing. It has been a good one, an important one, and I appreciate you gathering us together. Mr. Nussle, thank you for joining us too. 

In your opening statement, you have what I think really tells the 

story when you refer to your hometown and you say expanding 

Government does not create one job in my hometown of Manchester, Iowa. I have seen that movie before. I saw that movie in 

1994, if you will recall, when the Gingrich folks closed down the 

Government, and Rush Limbaugh said nobody is going to notice. 

But they did because whether you like it or not or want to concede 

it or not, there are some fundamental functions of Government 

which are important to every American. 

And you never know what tomorrow will bring. Do you think 

that Senator Landrieu had any idea a month in advance what was 

going to happen to her poor town of New Orleans? Do you think 

she anticipated that if something awful happened to New Orleans, 

as you might anticipate in Manchester, Iowa with maybe a tornado, 

that the Government would be prepared to respond? She counted 

on it and it did not happen. 

This mind set that you peddle, that the Government is our 

enemy, there is nothing they do that is right, we do not really need 

them, if it went away, life would not change, is just plain wrong. 
32 

You and I were on an airplane together recently flying out here to 

Washington, trusting that the air traffic controllers were well 

skilled and there were enough of them to land that plane safely 

and that somebody had inspected that plane to make sure that it 

was safe to get on board for you and your wife and for me. So this 

concept, this notion that Government can be dismissed and ignored 

and it really is not important—I am afraid the record of this administration proves just the opposite. 

I share the frustration of others here. I voted against this war, 

and for the longest time, I voted to fund it believing that was the 

only way to do the right thing for the troops and bring it to a conclusion. And now I have reached a different conclusion. Sending a 

blank check to this President for this war is going to prolong the 

killing, prolong the deaths, the injuries that will return, and this 

President wants to hand off the ball on January 20, 2009 and walk 

away. That is not the way we should deal with it. We should deal 

with it honestly in terms of what is happening on the ground. 

To think in this room that we celebrated the first anniversary of 

a temporary surge—next year does the military want to celebrate 

the second anniversary of a temporary surge? There comes a point 

where it is not temporary anymore. There comes a point where this 

is not an emergency spending bill. Emergency suggests something 

unanticipated. Sadly, we have had to anticipate another year of 

war for the last 5 and maybe beyond. 

But let me get down to a real emergency. A lot of things have 

been mentioned here, and this is something unanticipated. 

I left here to go out in the hall and meet with the head of the 

world food program. She is a lovely woman who is doing her 

darnedest to try to feed a lot of starving people around the world. 

She is in trouble. There has been a dramatic increase in food 

prices. The price of rice in the last few months has gone up 83 percent. There are people starving. Mr. Zoellick at the World Bank 

warns us that over 30 nations may be facing food riots and instability. We may see their governments fall because of this. Now, 

that was unanticipated. Maybe somebody saw it coming. I did not. 

So I just have to tell you when she asked for $500 million more 

in food aid, I want to ask you do you believe that is the kind of 

emergency we should include in this supplemental to avert a crisis 

of starvation and political instability around the world. 

I met with Secretary Rice last week and had breakfast with her, 

and she said we need it. Give us the authority to buy some things 

locally so we can stretch it even further, but we need it. 

So based on that, do you believe this administration should take 

this world food crisis and put it in the emergency category of things 

we need to do right now? 

Mr. NUSSLE. Well, first of all, Senator, you know this from both 

of our proud traditions from the corn belt and the food belt that 

we stand behind absolutely no one in the world when it comes to 

the generosity of the American people. 

Senator DURBIN. It is not enough, Jim. It is not enough. They 

need more. 

Mr. NUSSLE. But we should not forget that that is also done, I 

would say very respectfully. We do a lot. We do more than any 

other country. We take leadership roles in this. 
33 

Senator DURBIN. But is that the reason to do nothing now? 

Mr. NUSSLE. See, that is the reason I bring that up because that 

is suggesting we are doing nothing now, and that is simply not the 

case. 

Senator DURBIN. We need to do more, Jim. If your neighbor is 

starving—— 

Mr. NUSSLE. And we are doing more. 

Senator DURBIN [continuing]. Even though you have helped them 

yesterday and they are starving today, what are you going to do 

about it? 

Mr. NUSSLE. But we are helping them today. 

Senator DURBIN. Say do you not remember the good things we 

did yesterday? 

Mr. NUSSLE. But we are helping them today. 

Senator DURBIN. No. We are not helping enough. $200 million 

under the Emerson program is not enough. She made it clear to me 

in the hallway. She needs $500 million, emergency money. Do you 

believe that is the kind of emergency that should be included in the 

supplemental? 

Mr. NUSSLE. I believe it should not be forgotten what the American people already do and the generosity we already show—— 

Senator DURBIN. So the answer is no? 

Mr. NUSSLE [continuing]. To the rest of the world. And we are 

doing more, as we just announced on Monday. 

Senator DURBIN. So the answer is yes or no. 

Mr. NUSSLE. And we need partners around the world to step up 

in order to help assist in this as well. 

Senator DURBIN. Come on, Jim. Stick with me, buddy. Yes or no. 

Mr. NUSSLE. I believe that not only have we requested funds not 

only in this appropriation but in others to meet that challenge, plus 

the announcement that we made Monday. 

Senator DURBIN. Straight-talking Iowa talk. Yes or no. 

Mr. NUSSLE. We have $500 million in this request alone. 

Senator DURBIN. $500 million in this supplemental request for 

world—— 

Mr. NUSSLE. 40 percent of this is what we have been asked for of the $500 million. At least, that was my understanding. 

Senator DURBIN. No, no. 

Mr. NUSSLE. And that is what we announced on Monday. 

Senator DURBIN. No. Let me just tell you. This is a crisis and we 

cannot avert it. Some day someone is going to play back the videotape after this global food crisis and say why did America’s Director of OMB not acknowledge the obvious if the head of the World 

Bank is acknowledging it. 

Mr. Chairman, you have been kind with your time. I yield. 

Chairman BYRD. Senator Landrieu. 

Senator LANDRIEU. Thank you, Mr. Director. 

When you came to my office some time ago to talk about the confirmation process, Mr. Director, you assured me that you would remember the emergency situation on the gulf coast. I have looked 

through all of the pages of this request for $108 billion. I do not 

see one page on the gulf coast recovery which is still an emergency 

which happened less than 3 years ago. Is there some reason that 

it was left out? Was it done inadvertently or intentionally? 
34 

Mr. NUSSLE. It was done based on the amount of appropriations 

that are already in the process, already in the stream, as well as 

the fact that we have requested funds for the next—in the coming 

year in order to meet those needs. So we believe those needs are 

being met based on the regular appropriations that have been 

done, as well as the emergency supplemental appropriations that 

have been requested and granted by the Congress in the past and 

the ones that we are requesting for the future. We are requesting 

$5.8 billion of emergency funding for 2009 alone. 

Senator LANDRIEU. Let me ask you that. That is a good place to stop. You are asking for $5 billion in the regular appropriations 

bill, which is Byron Dorgan’s subcommittee. Do you know how 

much the country spends on new construction every year for the 

whole entire country? 

Mr. NUSSLE. I do not have that at my fingertips. 

Senator LANDRIEU. It is less than $5 billion. So explain in 30 seconds or less how I am going to go to the committee to get 100 percent of all the money Byron Dorgan has to fix the levee in New Orleans when there have got to be thousands of miles of levees 

around the country? How are we going to do that? 

Mr. NUSSLE. We have asked for those funds as an emergency 

over and above the regular appropriations process. 

Senator LANDRIEU. In the regular budget. In this supplemental. 

Mr. NUSSLE. Not in this supplemental, but for 2009. We believe 

there is enough resources right now in order to meet the current 

needs. That has been already agreed to and already funded. But for 

2009, which we hope begins—at least fiscal year 2009 begins in October, we have requested $5.8 billion in emergency funding over 

and above the regular appropriations for Katrina. 

Senator LANDRIEU. Well, let me ask you this. On what basis did 

you all recommend the shift in cost share, which is normally 25/ 

75, to 35/65 for that project when it was Federal levees that failed 

at no fault to the local community? On what basis was that cost 

share shifted? 

Mr. NUSSLE. Well—— 

Senator LANDRIEU. And if you do not have the answer readily, 

you can get it back to me—— 

Mr. NUSSLE. Why do I not do that rather than try and find that 

because I would be happy to—— 

Senator LANDRIEU [continuing]. Because this is truly an emergency when the Federal levees that should have held failed and 80 

percent of the city went underwater and 100 percent of St. Bernard 

went underwater. That is truly an emergency, just like the fires in 

California or the tornadoes, totally unexpected, thought about but 

unexpected. 

The second question I have is the Byrne grant program, which 

is something that our law enforcement feel very strongly about. It 

provides critical support to sheriffs and police around the country. 

Many of my colleagues have worked to restore it. Can we count on 

the White House’s support to restore the Byrne grant, and if not, 

why? 

Mr. NUSSLE. What we have done, Senator, is we have taken all 

of those stovepipe grant programs within Justice and moved them 

into four that our local law enforcement, we believe, can access 
35 

easier, can use in a much more flexible, local-need priority. And 

that is the reason that we have done that. 

Senator LANDRIEU. Well, let the record reflect that you have con- solidated programs that each individually, let us say, cost $1 billion. You took four $1 billion programs each and put them into one 

program and attached $2 billion to it and claim that you are increasing support for local law enforcement. If you admitted that 

you reduced support for local law enforcement, we could accept it, 

but you do it and claim that you are adding money. 

And finally, let me say in my 20 seconds that is left I want to 

associate myself with the remarks of particularly Senator Dorgan. 

The legacy that this President will leave is that he drove the country into a war and then for the next 6 years—and that might be 

8, it might be 9 depending on how long—refused to submit a plan 

whatsoever to pay for it. 

There is nothing, Director, clean about this bill. It is either a 

dirty, rotten trick, it is a messy cover up, or it is a sloppy sales job. 

But this is not a clean bill. 

Chairman BYRD. Senator Nelson. 

Senator NELSON. Thank you, Mr. Chairman, and I would like to 

submit a written statement for the record. 

[The statement follows:] 

PREPARED STATEMENT OF SENATOR BEN NELSON

Mr. Nussle, as we all know, the war in Iraq has come at a great cost to this na- tion in both lives and taxpayer dollars. This war has cost us over $500 billion so 

far and continues to increase at a rate of nearly $12 billion per month. This cost 

is borne by the American taxpayer and goes directly to the national debt—financed 

by China and other foreign countries. Nearly every dollar spent on this war has 

been straight-to-debt spending—outside the budget process, not paid for and a debt 

passed along to future generations. The United States has spent more than $45 billion on Iraq’s reconstruction. Meanwhile, Iraq is expected to collect a windfall in oil revenue this year and will experience a surplus, while our nation faces record prices at the pump, continued deficits 

and a declining economic situation. It is time to end this blank check policy to the 

Iraqi government, and once again look out for our interests at home. 

While continuing this policy we have had to make deep cuts in critical domestic 

programs such as Byrne Justice Assistance Grants which helps our local law enforcement combat violent crime and makes an enormous difference in rural areas. 

In Nebraska, we use the bulk of our very modest allocation of Byrne funds to operate multijurisdictional anti-drug task forces. If the 70 percent cut in Byrne funding 

for 2008 is not addressed, most of our task forces face elimination this summer 

which is simply unacceptable. 

I am proud to have joined over 50 of my colleagues in requesting Byrne funding 

in this supplemental. Ask anyone involved in law enforcement in Nebraska, and 

they will tell you the irresponsible Byrne cuts made in fiscal year 2008 have without 

a doubt left us in an emergency situation where one of our most effective law enforcement tools is facing total elimination. 

I understand OMB’s Program Assessment Rating Tool—or PART, for short—has 

assigned a rating of ‘‘Results Not Demonstrated’’ to the Byrne grant program. No 

doubt this is one of the reasons it recommend ‘‘replacing the program because 

it . . . cannot demonstrate results.’’ Well, that’s just not true in Nebraska—I have 

the 2007 results right here... and keep in mind that our share of the Byrne formula is just slightly more than one-half of one percent. In 2007, Nebraska’s Byrne 

task forces made 4,380 arrests; seized almost 1,000 pounds of cocaine and methamphetamine and over 9,000 pounds of marijuana; developed 511 confidential informants, made 1,412 controlled drug buys, and seized over $1.3 million in cash and 

goods. These results speak for themselves, and I think it certainly qualifies as an 

emergency that all the progress Nebraska law enforcement has made with Byrne 

funds over the years could be undone with one stroke of the President’s pen. Mr. 

Nussle, I hope you will reconsider your threats to veto any additional spending in 

this bill. 
36 

In addition, as our budgets have become more and more constrained we have not 

been able to address a looming transportation infrastructure crisis. If the supplemental is used as a vehicle for additional stimulus funding, transportation infrastructure spending should be included. As we invest in reconstruction in Iraq, we 

are facing an infrastructure funding crisis here at home. During debate on the fiscal 

year 2009 Budget Act, I was successful in getting $7 billion set aside for economic 

stimulus spending for ‘‘ready-to-go’’ infrastructure projects. This additional spending 

will not only stimulate the economy in the short term, but will also begin to address 

the long-term investment we need to make in our country’s transportation system. 

State departments of transportation have already identified billions of dollars worth 

of projects that could be underway in a very short time. Targeted spending on these 

kinds of projects would create jobs and have an immediate impact on the economy. 

I also believe we must waive any state and local matching requirements to ensure 

this money can be used as quickly as possible. Waiving the match will allow more 

projects to be undertaken in a shorter amount of time. 

Investing in infrastructure makes sense. We can immediately impact the economy 

in a positive manner, while reaping the long-term benefits of an investment in our 

infrastructure that will outlive the current economic downturn. Again, if a stimulus 

package is added to the supplemental, I advocate for including infrastructure spending. 

With that, I would just reiterate that during debate of the fiscal year 2008 Supplemental, Senator Collins, Senator Bayh and I intend to require any reconstruction 

funding to the Iraqi government be made in the form of a loan and I hope that the 

committee can address the most critical domestic priorities as a part of this process. 

Senator NELSON. Mr. Nussle, you have heard it several times 

from my colleagues, as I understand it, that there is a concern 

about the United States continuing to fund largely the war in Iraq 

without much in the way of support from the Iraqi budget for our 

total costs. In 2003, Senator Evan Bayh and I introduced legislation—it passed the Senate. It got blocked by the administration 

and the House—which would have required all reconstruction 

money to be in the form of a loan. Now, $45 billion later and expenditures in that reconstruction account, we have nothing to show 

for it in terms of an IOU or a loan or what have you. 

As we look to the future expenditures to avoid having what I 

truly believe has become a blank check policy, I think we ought to 

look at loaning where lending is appropriate. We ought to insist on 

direct payments where direct payments are appropriate, and we 

should seek reimbursement where appropriate. 

Fortunately, Steven Hadley, the National Security Adviser, 

agreed this last Sunday on one of the talk shows. 

As we do that, are you looking at ways that we might be able 

to recover or avoid having to pay directly and could get reimbursed, 

for example, for fuel that we pay for at the current time in connection with Iraq? 

Mr. NUSSLE. I think all of those areas could or should be explored. I do not have a plan I can propose to you today, but I do 

appreciate your leadership on that issue and many others who 

have led on that issue, and I believe that it is a notion that is 

worth continuing to explore, but not in a unilateral way, I would 

just suggest, in a bilateral way between our country and the sovereign country of Iraq. 

Senator NELSON. Well, I am not averse to trying to do it bilaterally. I wish we had done it bilaterally before. So far it has been 

unilaterally. 

In that regard, would it not be appropriate to include as part of 

this supplemental an approach that Senators Collins and Bayh and 

I and others will be introducing to do just that as part of this sup-
37 

plemental? Certainly it would be germane to what we are doing in 

appropriating money to go to Iraq. We ought to have a way to recover it at the same time that we are seeking to appropriate it. I 

would like your thoughts about that. 

Mr. NUSSLE. It is awkward, Senator, for the President’s Budget 

Director to try and act like the Secretary of State, so I will not. But 

I would suggest that from an OMB standpoint, I believe it is a worthy notion and one that we should continue to explore. And I believe Steven Hadley made that same case. I believe it is now in the 

proper lane of the Secretary of State to begin to explore that kind 

of possibility or arrangement on a bilateral basis with the country 

of Iraq rather than—I say I think it may be awkward for us to demand in that kind of nature to change that kind of a situation with 

Iraq given the lack of stability tradition that has not yet taken 

maybe full foothold there. 

Senator NELSON. What is awkward for me is to explain to my 

grandchildren that we are borrowing from their future, borrowing 

from China to provide for the cost of a war as we grow a deficit 

and grow our debt at the same time that the Iraqi Government 

continues to increase its surplus, maybe $50 billion to $60 billion 

this year, $25 billion to $30 billion in banks in New York unspent, 

not necessarily going to be spent. Fraud, waste, and abuse prevents 

some of it from being spent. It is also awkward to continue the status quo the way we are doing it, and yet that is what we are going 

to be asked to do with this supplement. 

So I think it is totally appropriate and I hope you do not think 

it is inappropriate if we try to put forth some sort of requirements 

in connection with loans, direct payments, and/or reimbursements. 

Mr. NUSSLE. Again, I find it awkward for me is all I am suggesting to act like the Secretary of State—— 

Senator NELSON. I know that you are a Director and not Secretary of State. 

Mr. NUSSLE [continuing]. Not something I ought to do. So I 

would refer you to her for that purpose. 

But as I suggested, I believe it is a worthy goal and notion, and 

I believe it is something that can and should be pursued. It does 

not have to be pursued in an appropriation bill in order to accomplish it, but I will leave that to your determination. 

Senator NELSON. But once the money is spent, we are unable to do it after the fact. $45 billion that would be in the way of an IOU 

today has been an outright grant because of the blocking of the effort in 2003. I guess I can take from what you are saying we should 

not look for you to block it if we try to do it. 

Mr. NUSSLE. No. In fact, I may very well be likely to be part of 

the team that tries to help figure it out, but I am just saying with 

regard to directly negotiating with Iraq and making the determination what the different provisions would be in order to accomplish 

that, I would have to leave that to the Secretary of State. 

Senator NELSON. We may have an idea or two on it too, Mr. Director. 

Mr. NUSSLE. I have no doubt, and I appreciate that. 

Senator NELSON. Thank you, and thank you, Mr. Chairman. 

Chairman BYRD. Thank you. 

Senator Cochran, do you have any closing remarks? 
38 

Senator COCHRAN. Mr. Chairman, my observations are and recollections of our earlier conversation with the witness are that there 

is no doubt that the continued delay in the approval of requested 

funds for our troops in Iraq and Afghanistan is putting in jeopardy 

our opportunities to help bring peace and stability to that region. 

In closing, I just want to be sure I understood the Director of 

OMB correctly, that further delays are going to put in jeopardy our 

ability to furnish the troops in the field with the equipment they 

need, with training they need, and the ability to succeed in this 

war against terrorism in that very volatile region of the world. Is 

that correct? 

Mr. NUSSLE. I believe that to be true, yes, sir. 

Senator COCHRAN. And is it not also true that continued delays 

and approval of the administration’s request for procurement programs to pay contractors, to pay for the materials and armaments 

that we need will also add to the risk that we run in losing this 

battle against terrorism? 

Mr. NUSSLE. I also believe that to be true, yes. 

Senator COCHRAN. Mr. Chairman, thank you very much for your 

patience through the hearings and your evenhanded way in which 

you handled this hearing. 

Chairman BYRD. Thank you, Senator. 

Director Nussle, the President has said that he will veto the supplemental if it exceeds his request. He has said that he will veto 

any of the regular appropriation bills if they exceed his request. 

Well, this does not leave much room—any room—for the Congress to meet a critical need to invest in infrastructure and to help 

the American people to deal with a troubled economy. That is why 

you are hearing frustration from Senators on both sides of the 

aisle. In the next few weeks, the committee will mark up a supplemental that meets the needs of our troops and the American people. I hope that the President will listen to the voices of the American people and the Congress. 

ADDITIONAL COMMITTEE QUESTIONS

I thank Senator Cochran and all Senators for their cooperation 

and the Director for his testimony. 

[The following questions were not asked at the hearing, but were 

submitted to the Department for response subsequent to the hearing:] 

QUESTION SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Since 2002, Congress has provided over $525 billion to fund the ongoing 

war in Iraq. The President is requesting another $100 billion for DOD in the supplemental. All of that money has been borrowed. My grandchildren will be paying for 

this war. The Committee recently learned that despite widespread reports of fraud 

and corruption in both Iraq and Afghanistan amounting to billions of dollars, the 

Federal Bureau of Investigation has only five people in Iraq, Kuwait, and Afghanistan devoted to investigating these abuses. Five. By comparison, the FBI has over 

760 people devoted to investigating health care fraud here in the United States. 

There are no funds in the President’s supplemental request to increase fraud investigations in Iraq. Why is it that the President is satisfied with only five FBI 

agents investigating waste and fraud in Iraq and Afghanistan? 

Answer. The Administration supports all efforts to identify, investigate, and prosecute fraud and corruption. The Department of Justice (DOJ) has established a unified and coordinated approach to combat procurement fraud, including fraud relating to the wars in Iraq and Afghanistan and reconstruction efforts in those coun-
39 

tries. The 2009 President’s budget continues to provide resources for the Criminal 

Division, U.S. Attorney’s Offices, the Federal Bureau of Investigation, and the Office 

of the Inspector General to ensure that reports of contract fraud are investigated 

in a timely manner and, where appropriate, prosecuted. 

In addition to DOJ’s internal efforts, DOJ and the FBI both contribute to government-wide efforts to address contractor fraud and abuse. In coordination with DOJ, 

a number of law enforcement agencies, including FBI, DOD OIG, Department of 

State OIG, USAID OIG, and the Special Inspector General for Iraq Reconstruction 

(SIGIR), have established the International Contract Corruption Task Force 

(ICCTF). The mission of the ICCTF is that of a joint agency task force to detect and 

investigate corruption and contract fraud resulting primarily from the GWOT. The 

ICCTF member agencies currently have agents deployed throughout Europe and the 

Middle East, including 5 FBI agents deployed in Iraq, Kuwait, and Afghanistan. 

The 2009 President’s budget continues to provide support for these activities. 

The Administration has supported significant funding for the Special Inspector 

General for Iraq Reconstruction (SIGIR) to look into waste, fraud, and abuse in our 

reconstruction programs in Iraq. To date, SIGIR has been appropriated $134 million 

to conduct audit oversight and refer potential criminal cases to the Department of 

Justice. SIGIR is also required, by law, to conduct a ‘‘final forensic audit’’ of reconstruction funds in Iraq. The Administration sought additional funding for SIGIR in 

the fiscal year 2009 ‘‘bridge’’ to ensure that SIGIR has the resources necessary to 

conduct proper oversight. 

In Afghanistan, the Inspector General Offices of Defense, State, and USAID are 

providing comprehensive oversight of reconstruction and development programs in 

the country through their collective presence in the country. 

QUESTIONS SUBMITTED BY SENATOR DANIEL K. INOUYE

Question. Mr. Nussle, the Administration submitted its supplemental budget request for fiscal year 2008 15 months ago. Since that time, many of the underlying 

assumptions in that request have changed. Given the fluidity of the situation, why 

did the Administration limit the types of changes that could be made in the October 

2007 budget amendment and why hasn’t the Administration submitted a subsequent budget amendment to reflect the true requirements of the Department of Defense? 

Answer. The President’s fiscal year 2008 war request, submitted in February 

2007, funded military, intelligence, and foreign affairs operations in support of the 

Global War on Terror (GWOT). Conditions in Iraq and Afghanistan have evolved 

since then. Our goal in submitting the fiscal year 20008 supplemental amendment 

in October 2007 was to provide Congress with the most up-to-date information regarding the requirements of the commanders and diplomats on the ground—in particular, funding to produce, field, and support Mine Resistant Ambush Protected vehicles, other war-related procurement and extension of the surge. Subsequently, the 

Department of Defense (DOD) conferred with the appropriate congressional committees regarding additional adjustments to the pending fiscal year 2008 request to ensure that the Congress was fully briefed on DOD’s current requirements. The President is committed to providing DOD with the resources necessary for the GWOT 

and appreciates Congressional action which led to the enactment of the fiscal year 

2008 Supplemental on June 30th. 

Question. Mr. Nussle, the Department of Defense has proposed transferring $174 

million of requested supplemental funds for the Global War on Terror to the Department of State. I am told that Secretary Rice sought OMB’s help with these additional resources and was directed to request these funds from the Department of 

Defense. If the Administration supports these additional requirements, why didn’t 

you submit a budget amendment to request the funds for the Department of State? 

Answer. The adjustment in the fiscal year 2008 supplemental request was proposed to help meet Department of State priority GWOT needs in fiscal year 2008. 

The Department of Defense supported this additional funding for the Department 

of State and sought to enable a funding shift by reallocating from within DOD’s existing request. The Administration proposed that, on a one-time basis, DOD would 

use a small amount of its funding to pay expenses incurred by the Department of 

State for DOD-provided services in Iraq. Due to the anticipated mark-up of the 

pending fiscal year 2008 supplemental request, informal discussions seemed to be 

the most expeditious method to convey this request to the Congress. 

Question. Mr. Nussle, the President’s budget request for fiscal year 2009 included 

a bridge fund of $70 billion for the Global War on Terror but has not provided Congress with any details. It was my understanding that details on the $70 billion re-
40 

quest would be submitted to Congress after General Patreaus’ testimony, yet no additional information has been provided. When will the Administration be submitting 

the details of the $70 billion request? 

Answer. On May 2, 2008, the President submitted for Congress’ timely action 

amendments to his fiscal year 2009 budget that would provide necessary resources 

for ongoing military and intelligence operations, as well as foreign assistance activities in support of the Global War on Terror (GWOT). These amendments distribute 

by account $70 billion of discretionary budget authority, and do not affect the total 

discretionary budget authority proposed in the fiscal year 2009 President’s budget. 

Of the $70 billion allocation, $63 billion is for the Department of Defense (DOD), 

$4 billion is for State Department programs, and another $3 billion is for classified 

activities. 

More than half of the State request is for diplomatic operations and assistance 

programs in Iraq and Afghanistan. Funds are also included to deal with Iraqi refugees. $45.1 billion of the request is needed to sustain combat operations in Iraq and Afghanistan. The additional $3 billion in funding for classified programs would fund 

a portion of the National Intelligence Program’s fiscal year 2009 GWOT requirements, including intelligence activities that Congress has funded through previous 

supplemental requests. 

Additional detail for the request can be found in the budget amendments transmitted to Congress on May 2, 2008. 

Question. Mr. Nussle, for decades, the economies of the U.S. territorial economies 

were supported by special tax and trade policies to compensate for their inherent 

economic disadvantages. However, recent trends in trade globalization and tax policy have eroded the value of these policies. In the past few years, the Northern Mariana Islands has lost 35 percent of government revenue. American Samoa may soon 

lose 70 percent of revenue with the likely departure of its only industry, fish canning. Does the Administration recognize the crises in these two communities and 

have contingency plans for emergency funding to assure maintenance of essential 

services? 

Answer. The Administration closely monitors the economic and fiscal conditions 

in both CNMI and American Samoa, and recognizes the ongoing challenges due to 

declines in economic activity in both of these territories. 

The Administration remains committed to working with the territorial governments to address these challenges by monitoring of economic conditions within the 

territories, focusing current resources on the highest priority needs of the territories, 

and helping the governments to plan for various contingencies. 

Question. Mr. Nussle, in January, the Department of Labor reported that the 

Samoa and Northern Mariana Islands economies are particularly vulnerable to disruption. Given the unique circumstances in these two communities, does the Administration support a delay in the scheduled increase in their minimum wage levels? 

Answer. The Administration would support a delay in the scheduled minimum 

wage increase in American Samoa and the Commonwealth of the Northern Mariana 

Islands (CNMI). 

As noted in the Department of Labor’s January 2008 report, ‘‘Impact of Increased 

Minimum Wages on the Economies of American Samoa and the Commonwealth of 

the Northern Mariana Islands,’’ future increases in the minimum wage rate have 

the potential to cause economic and financial harm to the territories, which face 

unique challenges in attracting private sector businesses because of their geographic 

isolation and location in a part of the world where neighboring economies have 

lower minimum wages and living standards. 

In American Samoa, minimum wage increases have the potential to threaten the 

viability of tuna canneries, a significant component of the private sector economy. 

There appears to be genuine cause for concern that production will be shifted to facilities outside U.S. jurisdiction where labor costs are significantly lower. Without 

the canneries as an anchor for the private sector tax base, cutbacks in local government operations and services could be necessary. 

The scheduled minimum wage increases for CNMI are expected to add further 

challenges to an already declining economy. With both of its major industries—the 

tourism and garment industries—in decline, its current economic situation makes 

it especially vulnerable to additional shocks. While data are not available to precisely quantify the impact of the recent and scheduled future minimum wage increases, it seems likely that minimum wage increases may worsen the current economic situation. 

Question. Mr. Nussle, the U.S. military has begun a substantial military buildup in Guam that is expected to increase the population by at least 20 percent. The 

DOD budget, and funding from the Government of Japan, will meet the new infra-
41 

structure needs of the military. What steps has OMB taken to assure that there is 

a coordinated plan among Federal agencies and Guam to identify the infrastructure 

needs of Guam’s civilian community and to identify a source of funds to meet these 

needs? For example, has OMB requested an interagency MOA among Federal Departments and Guam to identify needs, costs, and funding sources? 

Answer. The Interagency Task Force on Guam co-led by the Joint Guam Project 

Office from DOD and Interior’s Office of Insular Affairs is meeting regularly with 

federal agencies (including Departments of Labor, Education, Health and Human 

Services, Transportation, Agriculture and agencies such as the Small Business Administration and Environmental Protection Agency) and the Government of Guam. 

The Task Force will determine what infrastructure and social system needs Guam 

should have as a result of DOD’s construction project and the increased military and 

civilian personnel presence once the Marines move to Guam. The Task Force is also 

identifying assistance different agencies can provide to Guam. OMB staff have been 

participating in these interagency meetings, and due to the strong commitment of 

all participating agencies, OMB believes the interagency process, with the active 

participation of the Government of Guam, is a more effective means for addressing 

the current and future resourcing needs of the Government of Guam than the development of an MOA among federal agencies and the Government of Guam. OMB is 

also reviewing potential sources of Federal funding for high priority infrastructure 

improvements associated with the buildup. 

QUESTIONS SUBMITTED BY SENATOR PATRICK J. LEAHY

STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE GRANTS

Question. Violent crime here at home has been rising, but the Administration has 

dismantled front-line support for State and local law enforcement here at home. 

Compare this with the Administration’s view that no expense is too large for the 

hiring and equipment needs of the Iraqi police force, on which we have spent nearly 

$21 billion, with questionable results. 

It’s a different story for our own police departments, which have been stretched 

thin for years as they shoulder both traditional crime fighting duties and new homeland security demands. In what we spend in just five days on the Iraq War, we 

could fully fund the COPS Program at $1.15 billion and Byrne/Justice Assistance 

Grants at $1.095 billion. That alone would put 9,000 new police officers on the beat 

to make our communities safer, and it would allow us to shore up our multi-jurisdictional drug and gang task force efforts. And during this National Crime Victims 

Week, I would ask the Bush Administration to reflect on what its proposed cuts to 

the Crime Victims Fund will mean to crime victims across this nation. 

It is past time for this Administration to cooperate with Congress and to get the 

real priorities of the American people straight. How about if we start by asking Iraq 

to shoulder part of the burden of its own law enforcement needs? After all, the 

major revenue source for the Iraqi government is oil, which has risen dramatically 

over the past year to more than $114 a barrel. Unlike us, the Iraqi government actually is running a budget surplus! For a tiny fraction of the money we spend each 

year on the Iraq War, we could make our own towns and cities safer in practical, 

proven and successful ways. Instead, the Bush Administration sends us a 2009 

budget that cuts the help to state and local law enforcement agencies by $1.6 billion—that’s a staggering 64 percent. 

Director Nussle, would the Administration support asking the Iraqi government 

to assume part of what the United States is paying for the Iraqi police force? We 

should dedicate those savings from an Iraqi cost share to restoring the cuts that you 

have proposed in the COPS and Byrne/JAG programs. 

Answer. The Administration supports the Government of Iraq increasing its 

resourcing for the Iraqi police force, budgeting more than 3 times the U.S. government contribution in 2008. While the U.S. government contribution for Iraqi police 

forces has steadily declined, the U.S. funding has significantly developed police force 

capabilities and ministerial capacity within the Ministry of Interior. This partnership has permitted the Iraqi government to assume greater responsibility and control of the internal security of their nation, as shown by the transfer of control to 

the Iraqis of 9 of their 18 provinces. However, there are no savings to redirect toward the COPS and Byrne/JAG programs. 

Question. Why does the Administration keep trying to eliminate programs that 

are universally acknowledged to work in the bringing down crime rates? 

Answer. The Administration believes that the federal government should be a reliable partner with state and local law enforcement and that taxpayer dollars must 
42 

be spent wisely to help meet that goal. Competition should be the guiding principle 

used to ensure that Department of Justice state and local law enforcement assistance flows to the areas of greatest need. The fiscal year 2009 budget proposes $1 

billion in spending for state and local law enforcement assistance programs, and 

consolidates more than 70 different programs, many of which are small, earmarked, 

or have not demonstrated results, into four flexible grants. Each grant program will 

permit States and localities to compete for funding based on local needs, as well as 

national priorities. The Byrne JAG, which is formula-based, and COPS grants programs, which have $269 million in earmarks in fiscal year 2008, are among those 

that would become part of the new, flexible grant structure. 

One of the competitive programs we propose, the Violent Crime Reduction Partnership (VCRP) Initiative, will help State and local law enforcement agencies form 

multi-jurisdictional partnerships with Federal law enforcement agencies to tackle 

the most serious crime issues in their areas. This new program, funded at $200 million, focuses on building and supporting multi-jurisdictional partnerships to prevent 

and, where necessary, investigate and prosecute particular types of crime where 

they are becoming too great a challenge for local law enforcement to handle alone. 

Question. Congress has raised considerable concerns about the readiness and effectiveness of training efforts of both Afghan and Iraqi security forces, but we have 

provided a total of $33 billion for these purposes because of the high stakes involved. What oversight mechanisms do we have in place to monitor that these funds 

are being used effectively? 

Answer. The Administration takes the oversight of funding provided to the Afghan and Iraqi security forces very seriously. The Department of Defense (DOD) has 

policies and procedures in place to ensure that all of its funding is used effectively 

and responsibly, including the Iraq Security Forces Fund (ISFF) and the Afghan Security Forces Fund (ASFF). War zones pose unique challenges to rigorous financial 

management, though DOD has worked consistently to improve its accounting and 

budgeting practices in both Afghanistan and Iraq. The DOD Inspector General has 

ongoing projects that assess the financial management of the ISFF and ASFF, 

which have led to greater transparency and accountability. DOD has also benefited 

from the reviews and recommendations of the Special Inspector General for Iraq Reconstruction (SIGIR) and will work closely with the Special Inspector General for 

Afghanistan Reconstruction (SIGAR). 

CRIME VICTIMS FUND

Question. The week of April 13 marks the 27th National Crime Victims Rights 

Week where as a nation we honor and renew our commitment to crime victims and 

their families. In particular, I have been honored to support passage of the Victims 

of Crime Act of 1984 (VOCA), which established the Crime Victims Fund (‘‘the 

Fund’’). The Fund allows the Federal Government to provide grants to State crime 

victim compensation programs, direct victim assistance services and services to victims of federal crimes. 

In the President’s fiscal year 2009 budget proposal, the Administration has yet 

again proposed rescinding all amounts remaining in the Crime Victims Fund, an estimated total of $2.024 billion, which will leave the Fund empty at the start of 2010. 

A rescission of the Fund combined with the proposals to lower the cap of the Fund, 

will leave victim assistance programs nationwide at risk of large cuts to their programs or even having to discontinue services. 

In my home State of Vermont, the President’s proposal would be devastating. 

Many of the programs that VOCA provides funding for help the most vulnerable 

populations in Vermont. For example, transitional housing programs funded 

through VOCA allowed a mother and her 9 year old daughter to escape a sexually 

abusive husband and father. Through counseling services and emergency financial 

assistance they are now living independently and free from abuse. Emergency legal 

advocacy funded by VOCA grants helped 75-year old Mary stop a cycle of abuse by 

her husband during his visits to her nursing home. These support services and dozens of others would be in jeopardy should the president’s proposal go forward. 

For a program that is funded entirely through criminal fines, forfeited bail bonds, 

penalties, and special assessments—not taxpayer dollars or appropriations—what is 

the Administration’s reason, other than recording a budgetary savings, for gutting 

a program that provides essential services for victims of crime? 

Answer. The Administration has not proposed reducing assistance for crime victims. In fact, the fiscal year 2009 budget proposes the same level of funding—$590 

million—as allocated by the Congress in fiscal year 2008 for the crime victims’ programs funded by the Crime Victims Fund. 
43 

Each year, the Congress imposes an obligation limitation on the Fund, permitting 

excess balances to roll forward and scoring a budgetary savings that frees up spending for other discretionary programs. By proposing to cancel $2 billion in excess balances, the Administration is proposing to end what has become a recurring budget 

gimmick. 

Question. When I asked you about where the rescinded monies from the Crime 

Victims Fund during the April 16 hearing before the Appropriations Committee, you 

answered that the rescinded funds would be put towards the four ‘‘stovepipe’’ programs for state and local law enforcement assistance and would therefore aid victims of crime. This is incorrect, as there is no proposal in the President’s budget 

request to designate these funds for those purposes. In reality, the rescinded monies 

will go toward paying down the budget deficit accrued by this Administration. 

Please explain why you stated what you did and explain your response. 

Answer. The Administration has proposed to consolidate 70∂ state and local law 

enforcement grant programs, and to consolidate these programs into just four competitive grants. However, this proposal does not affect the crime victims’ compensation and assistance programs funded by the Crime Victims Fund. 

The Administration is proposing to cancel excess Crime Victims Fund balances in 

order to end a recurring practice of scoring budget savings from obligation limitations imposed by the Congress each year. Like an obligation limitation, the cancellation of balances will yield a budget savings in fiscal year 2009. However, this will 

be a one-time impact and does have the benefit of ending a recurring discretionary 

budget offset used by both the Congress and the Administration. The effect in fiscal 

year 2009 of both the President’s proposal and what Congress regularly includes in 

annual appropriations bills, is to make available for spending on other priorities an 

amount of funding equivalent to the excess Crime Victims Fund balances. Congress 

does this through a gimmick that allows it to score ‘‘savings’’ on the same CVF resources, year after year. The Administration’s proposal includes no such gimmick 

and would therefore achieve savings only for one year. 

Question. Please state whether you believe that the $1 billion requested by the 

Administration for all grants assistance programs within the Office of Justice Programs, COPS, the Weed and Seed Program and the Office on Violence Against 

Women will be sufficient to meet the needs required by State and local law enforcement to combat rising violent crime and assist crime victim survivors, and explain 

your response in detail. 

Answer. While the crime rate has fluctuated recently in selected cities, the overall 

violent crime rate remains well below historical levels. In fact, FBI data shows that, 

nationally, violent crime dropped by 1.8 percent in the first half of 2007 compared 

to a year ago. Nevertheless, the Administration remains concerned about violent 

crime and believes that the Federal government must be a reliable and effective 

partner for state and local law enforcement. Taxpayer dollars must be spent smarter 

to help meet that goal, however. The Administration believes that it is possible to 

provide effective assistance without spending $675 million on earmarks, over $500 

million on formulas, and $400 million on programs that do not influence crime (e.g., 

the State Criminal Alien Assistance Program). Competition and merit should be the 

guiding principles used to ensure that state and local law enforcement assistance 

flows to the States, communities, and organizations that are most deserving of assistance. Further, the Administration’s proposal introduces more flexibility for the 

grantees by consolidating more than 70 different stovepiped programs into four, 

which will enable States and localities to compete for funding based on local needs, 

as well as national priorities. The Administration believes that it is possible to provide assistance to state and local law enforcement more wisely, and more effectively, 

as the fiscal year 2009 budget proposes. 

One of the competitive programs proposed in the fiscal year 2009 budget, the Violent Crime Reduction Partnership (VCRP) Initiative, is intended specifically to help 

State and local law enforcement agencies form multi-jurisdictional partnerships 

with Federal law enforcement agencies to tackle the most serious and violent crime 

issues in their communities. The Byrne Public Safety and Protection Program, for 

which the budget requests $200 million, will be used to address high priority crime 

problems and multiple public safety needs. The budget also proposes the Violence 

Against Women Grants ($280 million) and the Child Safety and Juvenile Justice 

Program ($185 million)—which will better target the traditional, multiple funding 

streams for programs violence against women, child safety, and juvenile justice to 

the areas of greatest need. In addition, the budget also provides $148 million for 

information sharing among law enforcement agencies, criminal justice statistics and 

research, and other programs. 

Question. Given that the Justice Department has yet to submit to Congress a detailed plan for this consolidated ‘‘stovepipe’’ approach, the fact that the President 
44 

has proposed a $1.6 billion cut to law enforcement assistance with this approach, 

and that the Administration basically eliminates the dedicated funding stream for 

victims services, how do you mean to ensure that funding is set aside for victims? 

Answer. The Department of Justice shared draft authorizing legislation with the 

Congress following the release of the fiscal year 2008 budget, which would implement the Administration’s consolidated grant proposal. We would be happy to share 

the draft legislation again. Again, the aim of this proposal is to consolidate more 

than 70 stovepiped programs into four competitive and flexible grants. 

The Administration has proposed cancelling excess balances from the Crime Victims Fund, but does not propose changing the funding mechanism for the crime victims’ compensation and services programs provided for by the Fund. As in the past, 

those programs will continue to be financed by continued collection of criminal fines 

and penalties, just as they are now. The fiscal year 2009 budget proposes appropriations language that would permit funding for the crime victims’ programs to be 

made available at the beginning of each fiscal year, to be repaid by fines and penalties collected throughout the year. 

TRANSPORTATION/INFRASTRUCTURE NEEDS

Question. While the Bush administration has spent billions to rebuild roads and 

bridges in Iraq, it has neglected the critical transportation infrastructure needs of 

this country. The Transportation Secretary recently chaired a national commission 

on transportation financing that concluded we are not spending nearly enough to 

build and maintain our transportation infrastructure. That panel determined that 

the United States needs over $225 billion in new infrastructure investment in order 

to upgrade our aging transportation system. 

In Vermont, for instance, we face a transportation funding shortfall of over $100 

million for projects that are just sitting on the shelf waiting for funding—including 

a highway and bridge backlog of over $55 million; a public transit bus replacement 

backlog of over $18 million; and a rail backlog of over $10 million. 

Yet instead of spending limited taxpayer resources on important projects that 

could jumpstart the U.S. economy and create American jobs, this administration has 

made the conscious decision to fritter those precious American dollars a world away 

on the infrastructure of Iraq. To top it off, we’re once again being asked to spend 

billions on roads and bridges in Iraq, no questions asked, but we cannot move a bill 

in the Senate this week that for a fraction of the cost would fix U.S. infrastructure 

and provide hardworking Americans with jobs. It boggles the mind. 

Since you have to take the big picture view of the President’s budget request, do 

you think that American taxpayers are being treated fairly and equitably under this 

budget proposal that time and time again emphasizes the priorities of Iraq over the 

priorities of the United States? 

Answer. The President is committed to both the priorities of American people at 

home and abroad. The current level of annual Federal funding requested by the 

President for domestic needs is evidence of his support of the American taxpayers 

and their domestic priorities. 

With regard to infrastructure specifically, it is important to note that Federal 

spending on transportation infrastructure is on the rise and has been for some time. 

Transportation spending is projected to jump significantly this year—the President’s 

2009 budget request for DOT will result in a 53 percent increase in grant outlays 

to states and localities compared to 2001. The 2009 budget also estimates that, in 

total, DOT programs will outlay 10 percent more grants to state and local governments in 2008 than in 2007, including an 11 percent increase by Federal Aid Highways. 

At a national level, we have seen tangible improvements in the condition of infrastructure. For example, the percentage of Vehicle Miles Traveled (VMT) on National 

Highway System (NHS) pavement with good to very good ride quality (i.e., International Roughness Index (IRI) of less than or equal to 95 in/mi) has increased from 

52 percent in 2002 to 57 percent in 2007. The percentage of bridge deck area on 

National Highway System (NHS) bridges that are rated as either structurally deficient or functionally obsolete has decreased from 32.6 percent in 1998 to 29.6 percent in 2007, and has decreased from 32.5 percent in 1998 to 30.5 in 2007 for nonNHS bridges. 

However, the Administration continues to believe that the overall funding model 

for transportation infrastructure—involving thousands of earmarks and inadequate 

targeting based on need and cost-benefit—is broken. As is noted in the Minority 

Views section of the report that you are referencing, which was advanced by the 

Secretary and two Commissioners, continuing to rely on a tax-based financing system that has little or nothing to do with the true costs of using or providing trans-
45 

portation infrastructure is a flawed mechanism for improving system performance 

and reliability. Furthermore, the Minority Views called for a much more focused 

Federal role in funding transportation infrastructure, consistent with the views of 

the Government Accountability Office. The next surface transportation authorization will provide an opportunity to advance more fundamental reform, which would 

have a far more profound effect on the condition of the country’s transportation infrastructure than additional Federal spending at this time. 

GOVERNMENT CONTRACTORS AVOIDING U.S. PAYROLL TAXES

Question. While our domestic spending priorities suffer because of the ongoing 

war in Iraq, several enriched defense contractors have set up offshore shell companies to avoid U.S. Social Security and Medicare payroll taxes. 

According to recent press reports in the Boston Globe, Kellogg Brown & Root has 

avoided U.S. payroll taxes by hiring workers through shell companies in the Cayman Islands. Through a loophole in our tax code, American companies that are benefiting from U.S. government contracts are able to set up foreign subsidiaries in tax 

havens and treat American workers employed in connection with the contract as 

employees of the subsidiary. As a result, these employers can avoid paying Social 

Security and Medicare payroll taxes. 

Director Nussle, do you agree with me that Defense contractors should be paying 

their fair share of payroll taxes? 

Answer. Yes, I do. Regarding offshore companies, we generally would not object 

to the concept of holding U.S. companies liable for collecting and paying payroll 

taxes on U.S. employees working on government contracts overseas, even if they are 

employed by a foreign subsidiary. However, I would refer the question to the Department of the Treasury to provide technical assistance because this requirement 

could have unintended consequences, such as creating artificial hurdles for foreign 

companies to hire U.S. workers overseas or disrupting international social security 

agreements. 

In addition, we are concerned that a minority of contractors continue to owe tax 

debts. It is unacceptable for contractors doing business with the government to be 

delinquent in paying their taxes. The Administration is taking significant steps to 

boost accountability and ensure contractor tax compliance. 

On April 22nd, a rule was published in the Federal Register amending the Federal Acquisition Regulation (FAR) to authorize federal officials to use tax delinquency as sufficient grounds for proposing debarment or suspension. The rule is 

available for viewing at: http://federalregister.gov/OFRUpload/OFRData/2008- 

08508lPI.pdf 

In addition, the Federal Contractor Tax Compliance Task Force, led by the Department of the Treasury has made a number of significant improvements to policies and processes that directly result in increased debt collection. Levy collections 

from Federal payments to contractors increased from $7 million in fiscal year 2003 

to $48 million in fiscal year 2007. This number reflects only collections received 

through the levy program and does not include additional collections paid to IRS 

upon the contractor’s receipt of the due process notice of the intended levy action. 

CONCLUSION OF HEARING

Chairman BYRD. The committee is recessed. 

[Whereupon, at 2:09 p.m., Wednesday, April 16, the hearing was 

concluded, and the committee was recessed, to reconvene subject to 

the call of the Chair.] 

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